UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-3114
Fidelity Select Portfolios
(Exact name of registrant as specified in charter)
82 Devonshire St., Boston, Massachusetts 02109
(Address of principal executive offices) (Zip code)
Eric D. Roiter, Secretary
82 Devonshire St.
Boston, Massachusetts 02109
(Name and address of agent for service)
Registrant's telephone number, including area code: 617-563-7000
Date of fiscal year end: | February 28 |
Date of reporting period: | August 31, 2006 |
Fidelity®
Select Portfolios®
Utilities Sector
Telecommunications
Utilities Growth
Wireless
Semiannual Report
August 31, 2006
(2_fidelity_logos) (Registered_Trademark)
Contents
Chairman's Message | ||
Shareholder Expense Example | ||
Fund Updates* | ||
Utilities Sector | ||
Telecommunications | ||
Utilities Growth | ||
Wireless | ||
Notes to Financial Statements | ||
Proxy Voting Results | ||
Board Approval of Investment Advisory Contracts and Management Fees | ||
*Fund updates for each Select Portfolio include: Investment Changes, Investments, and Financial Statements.
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit www.fidelity.com/proxyvotingresults or visit the Securities and Exchange Commission's (SEC) web site at 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 Corp. or an affiliated company.
This report and the financial statements contained herein are submitted for the general information of the shareholders of the funds. This report is not authorized for distribution to prospective investors in the funds unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent quarterly holdings report, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com/holdings.
NOT FDIC INSURED · MAY LOSE VALUE · NO BANK GUARANTEE
Neither the funds nor Fidelity Distributors Corporation is a bank.
Annual Report
Chairman's Message
(Photograph of Edward C. Johnson 3d.)
Dear Shareholder:
Stock and bond markets around the world have seen largely positive results year to date, although weakness in the technology sector and growth stocks in general have tempered performance. While financial markets are always unpredictable, there are a number of time-tested principles that can put the historical odds in your favor.
One of the basic tenets is to invest for the long term. Over time, riding out the markets' inevitable ups and downs has proven much more effective than selling into panic or chasing the hottest trend. Even missing only a few of the markets' best days can significantly diminish investor returns. Patience also affords the benefits of compounding - of earning interest on additional income or reinvested dividends and capital gains. There are tax advantages and cost benefits to consider as well. The more you sell, the more taxes you pay, and the more you trade, the higher the costs. While staying the course doesn't eliminate risk, it can considerably lessen the effect of short-term declines.
You can further manage your investing risk through diversification. And today, more than ever, geographic diversification should be taken into account. Studies
indicate that asset allocation is the single most important determinant of a portfolio's long-term success. The right mix of stocks, bonds and cash - aligned to your particular risk tolerance and investment objective - is very important. Age-appropriate rebalancing is also an essential aspect of asset allocation. For younger investors, an emphasis on equities - which historically have been the best performing asset class over time - is encouraged. As investors near their specific goal, such as retirement or sending a child to college, consideration may be given to replacing volatile assets (e.g. common stocks) with more-stable fixed investments (bonds or savings plans).
A third investment principle - investing regularly - can help lower the average cost of your purchases. Investing a certain amount of money each month or quarter helps ensure you won't pay for all your shares at market highs. This strategy - known as dollar cost averaging - also reduces unconstructive "emotion" from investing, helping shareholders avoid selling weak performers just prior to an upswing, or chasing a hot performer just before a correction.
We invite you to contact us via the Internet, through our Investor Centers or over the phone. It is our privilege to provide you the information you need to make the investments that are right for you.
Sincerely,
/s/Edward C. Johnson 3d
Edward C. Johnson 3d
Semiannual Report
Shareholder Expense Example
As a shareholder of a Fund, you incur two types of costs: (1) transaction costs, including redemption fees, exchange 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 (March 1, 2006 to August 31, 2006).
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.
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.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Beginning | Ending | Expenses Paid | |
Telecommunications Portfolio | |||
Actual | $1,000.00 | $1,046.70 | $5.26 |
HypotheticalA | $1,000.00 | $1,020.06 | $5.19 |
Utilities Growth Portfolio | |||
Actual | $1,000.00 | $1,092.30 | $5.12 |
HypotheticalA | $1,000.00 | $1,020.32 | $4.94 |
Wireless Portfolio | |||
Actual | $1,000.00 | $940.90 | $4.79 |
HypotheticalA | $1,000.00 | $1,020.27 | $4.99 |
A5% return per year before expenses
*Expenses are equal to each Fund's annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period).
Annualized | |
Telecommunications Portfolio | 1.02% |
Utilities Growth Portfolio | .97% |
Wireless Portfolio | .98% |
Semiannual Report
Investment Changes
Top Ten Stocks as of August 31, 2006 | ||
% of fund's | % of fund's net assets | |
AT&T, Inc. | 15.2 | 11.2 |
Qwest Communications International, Inc. | 14.7 | 12.1 |
Verizon Communications, Inc. | 11.6 | 10.4 |
BellSouth Corp. | 6.3 | 4.8 |
Corning, Inc. | 4.6 | 2.7 |
Cisco Systems, Inc. | 4.5 | 3.9 |
Motorola, Inc. | 4.5 | 3.2 |
QUALCOMM, Inc. | 4.4 | 5.6 |
ALLTEL Corp. | 4.3 | 2.4 |
Level 3 Communications, Inc. | 3.1 | 0.0 |
73.2 | ||
Top Industries (% of fund's net assets) | |||
As of August 31, 2006 | |||
 | Diversified Telecommunication Services | 55.5% | |
 | Communications Equipment | 29.4% | |
 | Wireless Telecommunication Services | 12.0% | |
 | All Others* | 3.1% | |
As of February 28, 2006 | |||
| Diversified Telecommunication Services | 39.9% | |
| Communications Equipment | 38.0% | |
 | Wireless Telecommunication Services | 17.9% | |
 | Media | 2.7% | |
| All Others* | 1.5% | |
*Includes short-term investments and net other assets. |
Prior period industry classifications reflect the categories in place as of the date indicated and have not been adjusted to reflect current industry classifications. |
Semiannual Report
Telecommunications Portfolio
Investments August 31, 2006 (Unaudited)
Showing Percentage of Net Assets
Common Stocks - 96.9% | |||
Shares | Value (Note 1) | ||
COMMUNICATIONS EQUIPMENT - 29.4% | |||
Communications Equipment - 29.4% | |||
ADC Telecommunications, Inc. (a) | 130,400 | $1,779,960 | |
Alcatel SA sponsored ADR (d) | 493,100 | 6,178,543 | |
CIENA Corp. (a) | 942,800 | 3,724,060 | |
Cisco Systems, Inc. (a)(d) | 851,200 | 18,717,888 | |
Comverse Technology, Inc. (a) | 298,000 | 6,228,200 | |
Corning, Inc. (a) | 848,300 | 18,866,192 | |
Juniper Networks, Inc. (a) | 735,000 | 10,782,450 | |
Motorola, Inc. | 790,300 | 18,477,214 | |
Nokia Corp. sponsored ADR | 350,100 | 7,310,088 | |
Nortel Networks Corp. (a) | 4,016,900 | 8,395,332 | |
Powerwave Technologies, Inc. (a) | 100,000 | 758,000 | |
QUALCOMM, Inc. | 482,400 | 18,172,008 | |
Sonus Networks, Inc. (a) | 217,100 | 1,055,106 | |
Tellabs, Inc. (a) | 87,600 | 892,644 | |
121,337,685 | |||
DIVERSIFIED TELECOMMUNICATION SERVICES - 55.5% | |||
Alternative Carriers - 6.5% | |||
Broadwing Corp. (a) | 350,000 | 4,007,500 | |
Global Crossing Ltd. (a) | 109,200 | 1,830,192 | |
Level 3 Communications, Inc. (a)(d) | 2,846,600 | 12,610,438 | |
Time Warner Telecom, Inc. Class A (sub. vtg.) (a)(d) | 466,900 | 8,390,193 | |
26,838,323 | |||
Integrated Telecommunication Services - 49.0% | |||
AT&T, Inc. (d) | 2,017,642 | 62,809,196 | |
BellSouth Corp. | 634,800 | 25,849,056 | |
Embarq Corp. | 3,188 | 150,314 | |
NTELOS Holding Corp. | 175,000 | 2,402,750 | |
Qwest Communications International, Inc. (a)(d) | 6,892,344 | 60,721,551 | |
Telenor ASA sponsored ADR | 60,200 | 2,303,252 | |
Verizon Communications, Inc. | 1,360,924 | 47,877,306 | |
Windstream Corp. | 15,008 | 198,106 | |
202,311,531 | |||
TOTAL DIVERSIFIED TELECOMMUNICATION SERVICES | 229,149,854 | ||
Shares | Value (Note 1) | ||
WIRELESS TELECOMMUNICATION SERVICES - 12.0% | |||
Wireless Telecommunication Services - 12.0% | |||
ALLTEL Corp. | 326,800 | $17,715,828 | |
American Tower Corp. Class A (a) | 245,000 | 8,785,700 | |
Bharti Airtel Ltd. (a) | 250,000 | 2,401,270 | |
Crown Castle International Corp. | 108,300 | 3,721,188 | |
Dobson Communications Corp. Class A | 508,200 | 3,491,334 | |
Leap Wireless International, Inc. (a) | 40,100 | 1,855,026 | |
Sprint Nextel Corp. | 683,498 | 11,564,786 | |
49,535,132 | |||
TOTAL COMMON STOCKS (Cost $378,770,626) | 400,022,671 | ||
Money Market Funds - 21.6% | |||
Fidelity Cash Central Fund, 5.31% (b) | 10,797,617 | 10,797,617 | |
Fidelity Securities Lending Cash Central Fund, 5.33% (b)(c) | 78,506,675 | 78,506,675 | |
TOTAL MONEY MARKET FUNDS (Cost $89,304,292) | 89,304,292 | ||
TOTAL INVESTMENT PORTFOLIO - 118.5% (Cost $468,074,918) | 489,326,963 | ||
NET OTHER ASSETS - (18.5)% | (76,283,746) | ||
NET ASSETS - 100% | $413,043,217 | ||
Legend |
(a)Non-income producing |
(b)Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. |
(c)Investment made with cash collateral received from securities on loan. |
(d)Security or a portion of the security is on loan at period end. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the fund from the affiliated Central funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $196,511 |
Fidelity Securities Lending Cash Central Fund | 83,589 |
Total | $280,100 |
Income Tax Information |
At February 28, 2006, the fund had a capital loss carryforward of approximately $525,296,523 of which $351,665,365, $161,866,685, and $11,764,473 will expire on February 28, 2010, 2011 and February 29, 2012, respectively. |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Telecommunications Portfolio
Financial Statements
Statement of Assets and Liabilities
August 31, 2006 (Unaudited) | ||
Assets | ||
Investment in securities, at value (including securities loaned of $75,977,047) - See accompanying schedule: Unaffiliated issuers (cost $378,770,626) | $400,022,671 | |
Affiliated Central Funds (cost $89,304,292) | 89,304,292 | |
Total Investments (cost $468,074,918) | $489,326,963 | |
Receivable for fund shares sold | 3,157,458 | |
Dividends receivable | 70,148 | |
Interest receivable | 17,504 | |
Prepaid expenses | 350 | |
Other receivables | 9,984 | |
Total assets | 492,582,407 | |
Liabilities | ||
Payable for fund shares redeemed | $656,844 | |
Accrued management fee | 187,248 | |
Other affiliated payables | 125,410 | |
Other payables and accrued expenses | 63,013 | |
Collateral on securities loaned, at value | 78,506,675 | |
Total liabilities | 79,539,190 | |
Net Assets | $413,043,217 | |
Net Assets consist of: | ||
Paid in capital | $890,838,434 | |
Undistributed net investment income | 3,683,875 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (502,699,426) | |
Net unrealized appreciation (depreciation) on investments | 21,220,334 | |
Net Assets, for 9,416,519 shares outstanding | $413,043,217 | |
Net Asset Value, offering price and redemption price per share ($413,043,217 ÷ 9,416,519 shares) | $43.86 | |
Statement of Operations
Six months ended August 31, 2006 (Unaudited) | ||
Investment Income | ||
Dividends | $4,540,041 | |
Special dividends | 1,230,657 | |
Income from affiliated Central Funds | 280,100 | |
Total income | 6,050,798 | |
Expenses | ||
Management fee | $1,288,362 | |
Transfer agent fees | 741,679 | |
Accounting and security lending fees | 113,830 | |
Independent trustees' compensation | 941 | |
Custodian fees and expenses | 16,522 | |
Registration fees | 76,026 | |
Audit | 17,076 | |
Legal | 4,959 | |
Interest | 15,851 | |
Miscellaneous | 19,377 | |
Total expenses before reductions | 2,294,623 | |
Expense reductions | (15,427) | 2,279,196 |
Net investment income (loss) | 3,771,602 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers | 27,432,284 | |
Foreign currency transactions | (6,414) | |
Total net realized gain (loss) | 27,425,870 | |
Change in net unrealized appreciation (depreciation) on investment securities (net of increase in deferred foreign taxes of $31,711) | (16,410,297) | |
Net gain (loss) | 11,015,573 | |
Net increase (decrease) in net assets resulting from operations | $14,787,175 | |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Statement of Changes in Net Assets
Six months ended | Year ended | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $3,771,602 | $3,338,999 |
Net realized gain (loss) | 27,425,870 | 55,407,188 |
Change in net unrealized appreciation (depreciation) | (16,410,297) | 10,244,776 |
Net increase (decrease) in net assets resulting from operations | 14,787,175 | 68,990,963 |
Distributions to shareholders from net investment income | (1,053,022) | (3,005,035) |
Share transactions | 314,669,958 | 116,810,248 |
Reinvestment of distributions | 1,012,385 | 2,869,866 |
Cost of shares redeemed | (318,819,312) | (116,998,712) |
Net increase (decrease) in net assets resulting from share transactions | (3,136,969) | 2,681,402 |
Redemption fees | 112,126 | 25,069 |
Total increase (decrease) in net assets | 10,709,310 | 68,692,399 |
Net Assets | ||
Beginning of period | 402,333,907 | 333,641,508 |
End of period (including undistributed net investment income of $3,683,875 and undistributed net investment income of $965,295, respectively) | $413,043,217 | $402,333,907 |
Other Information Shares | ||
Sold | 7,156,977 | 3,070,553 |
Issued in reinvestment of distributions | 22,664 | 74,920 |
Redeemed | (7,349,934) | (3,137,526) |
Net increase (decrease) | (170,293) | 7,947 |
Financial Highlights
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Investment Changes
Top Ten Stocks as of August 31, 2006 | ||
% of fund's | % of fund's net assets | |
AT&T, Inc. | 9.9 | 12.6 |
BellSouth Corp. | 9.9 | 10.7 |
Verizon Communications, Inc. | 9.9 | 13.7 |
Sprint Nextel Corp. | 6.7 | 8.6 |
Exelon Corp. | 5.3 | 4.6 |
Qwest Communications International, Inc. | 5.1 | 4.6 |
TXU Corp. | 4.8 | 3.1 |
ALLTEL Corp. | 4.6 | 3.0 |
FPL Group, Inc. | 4.6 | 2.4 |
Entergy Corp. | 4.4 | 3.1 |
65.2 | ||
Top Industries (% of fund's net assets) | |||
As of August 31, 2006 | |||
| Diversified Telecommunication Services | 40.2% | |
 | Electric Utilities | 22.7% | |
 | Wireless Telecommunication Services | 12.2% | |
 | Multi-Utilities | 10.9% | |
| Independent Power Producers & Energy Traders | 10.3% | |
| All Others* | 3.7% | |
As of February 28, 2006 | |||
| Diversified Telecommunication Services | 44.0% | |
| Electric Utilities | 20.2% | |
| Wireless Telecommunication Services | 13.0% | |
| Independent Power Producers & Energy Traders | 10.5% | |
| Multi-Utilities | 7.6% | |
| All Others* | 4.7% | |
*Includes short-term investments and net other assets. |
Prior period industry classifications reflect the categories in place as of the date indicated and have not been adjusted to reflect current industry classifications. |
Semiannual Report
Utilities Growth Portfolio
Investments August 31, 2006 (Unaudited)
Showing Percentage of Net Assets
Common Stocks - 96.3% | |||
Shares | Value (Note 1) | ||
DIVERSIFIED TELECOMMUNICATION SERVICES - 40.2% | |||
Alternative Carriers - 2.9% | |||
Global Crossing Ltd. (a) | 70,300 | $1,178,228 | |
Level 3 Communications, Inc. (a)(d) | 2,037,000 | 9,023,910 | |
Time Warner Telecom, Inc. Class A (sub. vtg.) (a) | 146,100 | 2,625,417 | |
12,827,555 | |||
Integrated Telecommunication Services - 37.3% | |||
Alaska Communication Systems Group, Inc. | 304,000 | 4,192,160 | |
AT&T, Inc. | 1,427,626 | 44,441,997 | |
BellSouth Corp. | 1,091,400 | 44,441,808 | |
Embarq Corp. | 76,551 | 3,609,380 | |
NTELOS Holding Corp. | 25,000 | 343,250 | |
Qwest Communications International, Inc. (a) | 2,579,100 | 22,721,871 | |
Verizon Communications, Inc. (d) | 1,260,910 | 44,358,814 | |
Windstream Corp. | 247,533 | 3,267,436 | |
167,376,716 | |||
TOTAL DIVERSIFIED TELECOMMUNICATION SERVICES | 180,204,271 | ||
ELECTRIC UTILITIES - 22.7% | |||
Electric Utilities - 22.7% | |||
Allegheny Energy, Inc. (a) | 256,000 | 10,685,440 | |
American Electric Power Co., Inc. | 82,400 | 3,005,952 | |
Edison International | 226,400 | 9,880,096 | |
Entergy Corp. | 255,800 | 19,862,870 | |
Exelon Corp. | 388,300 | 23,678,534 | |
FirstEnergy Corp. | 27,200 | 1,552,032 | |
FPL Group, Inc. (d) | 460,900 | 20,487,005 | |
Pepco Holdings, Inc. | 57,600 | 1,462,464 | |
PPL Corp. | 325,400 | 11,379,238 | |
101,993,631 | |||
INDEPENDENT POWER PRODUCERS & ENERGY TRADERS - 10.3% | |||
Independent Power Producers & Energy Traders - 10.3% | |||
AES Corp. (a) | 787,400 | 16,724,376 | |
Dynegy, Inc. Class A (a) | 391,600 | 2,427,920 | |
NRG Energy, Inc. | 107,600 | 5,448,864 | |
TXU Corp. | 326,200 | 21,597,702 | |
46,198,862 | |||
MULTI-UTILITIES - 10.9% | |||
Multi-Utilities - 10.9% | |||
Ameren Corp. | 24,500 | 1,311,975 | |
Shares | Value (Note 1) | ||
CMS Energy Corp. (a) | 409,900 | $6,000,936 | |
Dominion Resources, Inc. | 83,700 | 6,686,793 | |
Duke Energy Corp. | 364,400 | 10,932,000 | |
Public Service Enterprise Group, Inc. | 210,100 | 14,711,202 | |
Sempra Energy | 190,000 | 9,446,800 | |
49,089,706 | |||
WIRELESS TELECOMMUNICATION SERVICES - 12.2% | |||
Wireless Telecommunication Services - 12.2% | |||
ALLTEL Corp. | 381,169 | 20,663,171 | |
American Tower Corp. Class A (a) | 34,685 | 1,243,804 | |
Dobson Communications Corp. Class A | 309,200 | 2,124,204 | |
Leap Wireless International, Inc. (a) | 7,300 | 337,698 | |
Sprint Nextel Corp. (d) | 1,780,423 | 30,124,757 | |
54,493,634 | |||
TOTAL COMMON STOCKS (Cost $397,960,611) | 431,980,104 | ||
Money Market Funds - 11.0% | |||
Fidelity Cash Central Fund, 5.31% (b) | 14,910,885 | 14,910,885 | |
Fidelity Securities Lending Cash Central Fund, 5.33% (b)(c) | 34,477,275 | 34,477,275 | |
TOTAL MONEY MARKET FUNDS (Cost $49,388,160) | 49,388,160 | ||
TOTAL INVESTMENT PORTFOLIO - 107.3% (Cost $447,348,771) | 481,368,264 | ||
NET OTHER ASSETS - (7.3)% | (32,547,585) | ||
NET ASSETS - 100% | $448,820,679 | ||
Legend |
(a)Non-income producing |
(b)Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. |
(c)Investment made with cash collateral received from securities on loan. |
(d)Security or a portion of the security is on loan at period end. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the fund from the affiliated Central funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $160,371 |
Fidelity Securities Lending Cash Central Fund | 20,670 |
Total | $181,041 |
Income Tax Information |
At February 28, 2006, the fund had a capital loss carryforward of approximately $94,867,710 all of which will expire on February 28, 2011. |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Utilities Growth Portfolio
Financial Statements
Statement of Assets and Liabilities
August 31, 2006 (Unaudited) | ||
Assets | ||
Investment in securities, at value (including securities loaned of $33,910,304) - See accompanying schedule: Unaffiliated issuers (cost $397,960,611) | $431,980,104 | |
Affiliated Central Funds (cost $49,388,160) | 49,388,160 | |
Total Investments (cost $447,348,771) | $481,368,264 | |
Receivable for investments sold | 8,661,238 | |
Receivable for fund shares sold | 4,001,117 | |
Dividends receivable | 831,754 | |
Interest receivable | 61,512 | |
Prepaid expenses | 355 | |
Other receivables | 8,786 | |
Total assets | 494,933,026 | |
Liabilities | ||
Payable for investments purchased | $7,984,535 | |
Payable for fund shares redeemed | 3,312,466 | |
Accrued management fee | 200,343 | |
Other affiliated payables | 111,269 | |
Other payables and accrued expenses | 26,459 | |
Collateral on securities loaned, at value | 34,477,275 | |
Total liabilities | 46,112,347 | |
Net Assets | $448,820,679 | |
Net Assets consist of: | ||
Paid in capital | $504,962,050 | |
Undistributed net investment income | 3,184,841 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (93,345,809) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 34,019,597 | |
Net Assets, for 8,859,513 shares outstanding | $448,820,679 | |
Net Asset Value, offering price and redemption price per share ($448,820,679 ÷ 8,859,513 shares) | $50.66 | |
Statement of Operations
Six months ended August 31, 2006 (Unaudited) | ||
Investment Income | ||
Dividends | $4,651,736 | |
Interest | 293 | |
Income from affiliated Central Funds | 181,041 | |
Total income | 4,833,070 | |
Expenses | ||
Management fee | $922,547 | |
Transfer agent fees | 491,486 | |
Accounting and security lending fees | 82,171 | |
Independent trustees' compensation | 703 | |
Custodian fees and expenses | 10,341 | |
Registration fees | 51,430 | |
Audit | 16,674 | |
Legal | 3,061 | |
Miscellaneous | 10,525 | |
Total expenses before reductions | 1,588,938 | |
Expense reductions | (2,849) | 1,586,089 |
Net investment income (loss) | 3,246,981 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers | 7,658,518 | |
Foreign currency transactions | 13 | |
Total net realized gain (loss) | 7,658,531 | |
Change in net unrealized appreciation (depreciation) on: Investment securities | 20,698,806 | |
Assets and liabilities in foreign currencies | 104 | |
Total change in net unrealized appreciation (depreciation) | 20,698,910 | |
Net gain (loss) | 28,357,441 | |
Net increase (decrease) in net assets resulting from operations | $31,604,422 | |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Statement of Changes in Net Assets
Six months ended August 31, 2006 (Unaudited) | Year ended | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $3,246,981 | $5,521,599 |
Net realized gain (loss) | 7,658,531 | 62,384,092 |
Change in net unrealized appreciation (depreciation) | 20,698,910 | (16,994,242) |
Net increase (decrease) in net assets resulting from operations | 31,604,422 | 50,911,449 |
Distributions to shareholders from net investment income | (377,840) | (6,178,163) |
Share transactions | 215,197,624 | 150,205,440 |
Reinvestment of distributions | 359,583 | 5,869,756 |
Cost of shares redeemed | (96,439,394) | (227,229,266) |
Net increase (decrease) in net assets resulting from share transactions | 119,117,813 | (71,154,070) |
Redemption fees | 105,356 | 60,121 |
Total increase (decrease) in net assets | 150,449,751 | (26,360,663) |
Net Assets | ||
Beginning of period | 298,370,928 | 324,731,591 |
End of period (including undistributed net investment income of $3,184,841 and undistributed net investment income of $315,700, respectively) | $448,820,679 | $298,370,928 |
Other Information Shares | ||
Sold | 4,460,366 | 3,527,344 |
Issued in reinvestment of distributions | 7,697 | 135,825 |
Redeemed | (2,033,304) | (5,348,558) |
Net increase (decrease) | 2,434,759 | (1,685,389) |
Financial Highlights
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Investment Changes
Top Ten Stocks as of August 31, 2006 | ||
% of fund's | % of fund's net assets | |
ALLTEL Corp. | 10.0 | 5.5 |
QUALCOMM, Inc. | 8.7 | 9.0 |
American Tower Corp. Class A | 8.0 | 5.2 |
Motorola, Inc. | 7.9 | 5.4 |
Sprint Nextel Corp. | 6.9 | 8.5 |
Comverse Technology, Inc. | 6.8 | 5.1 |
Nokia Corp. sponsored ADR | 4.5 | 0.7 |
Verizon Communications, Inc. | 4.4 | 3.5 |
Harris Corp. | 4.4 | 5.3 |
Telenor ASA sponsored ADR | 4.1 | 0.3 |
65.7 | ||
Top Industries (% of fund's net assets) | |||
As of August 31, 2006 | |||
| Communications Equipment | 37.7% | |
| Wireless Telecommunication Services | 36.6% | |
| Diversified Telecommunication Services | 17.8% | |
| Electronic Equipment & Instruments | 2.1% | |
| Semiconductors & Semiconductor Equipment | 2.0% | |
| All Others* | 3.8% | |
As of February 28, 2006 | |||
| Communications Equipment | 38.7% | |
| Wireless Telecommunication Services | 38.0% | |
| Diversified Telecommunication Services | 8.8% | |
| Electronic Equipment & Instruments | 4.4% | |
| Semiconductors & Semiconductor Equipment | 3.4% | |
| All Others* | 6.7% | |
*Includes short-term investments and net other assets. |
Prior period industry classifications reflect the categories in place as of the date indicated and have not been adjusted to reflect current industry classifications. |
Semiannual Report
Wireless Portfolio
Investments August 31, 2006 (Unaudited)
Showing Percentage of Net Assets
Common Stocks - 97.6% | |||
Shares | Value (Note 1) | ||
COMMUNICATIONS EQUIPMENT - 37.7% | |||
Communications Equipment - 37.7% | |||
Andrew Corp. (a) | 175,900 | $1,627,075 | |
Arris Group, Inc. (a) | 243,000 | 2,784,780 | |
Comverse Technology, Inc. (a) | 1,044,220 | 21,824,198 | |
Harris Corp. | 316,600 | 13,905,072 | |
Motorola, Inc. | 1,079,280 | 25,233,566 | |
Nokia Corp. sponsored ADR | 687,200 | 14,348,736 | |
Powerwave Technologies, Inc. (a) | 570,400 | 4,323,632 | |
QUALCOMM, Inc. | 738,450 | 27,817,412 | |
Research In Motion Ltd. (a) | 30,800 | 2,541,000 | |
Tekelec (a) | 165,000 | 2,194,500 | |
Telefonaktiebolaget LM Ericsson (B Shares) sponsored ADR | 102,200 | 3,413,480 | |
120,013,451 | |||
DIVERSIFIED TELECOMMUNICATION SERVICES - 17.8% | |||
Alternative Carriers - 0.6% | |||
Global Crossing Ltd. (a) | 105,500 | 1,768,180 | |
Integrated Telecommunication Services - 17.2% | |||
AT&T, Inc. | 413,500 | 12,872,255 | |
BellSouth Corp. | 292,600 | 11,914,672 | |
NTELOS Holding Corp. | 224,000 | 3,075,520 | |
Telenor ASA sponsored ADR (d) | 338,600 | 12,954,836 | |
Verizon Communications, Inc. | 399,200 | 14,043,856 | |
54,861,139 | |||
TOTAL DIVERSIFIED TELECOMMUNICATION SERVICES | 56,629,319 | ||
ELECTRONIC EQUIPMENT & INSTRUMENTS - 2.1% | |||
Electronic Manufacturing Services - 2.1% | |||
Trimble Navigation Ltd. (a) | 139,300 | 6,821,521 | |
INTERNET SOFTWARE & SERVICES - 1.4% | |||
Internet Software & Services - 1.4% | |||
Openwave Systems, Inc. (a) | 547,441 | 4,428,798 | |
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 2.0% | |||
Semiconductors - 2.0% | |||
Atheros Communications, Inc. (a) | 20,600 | 335,162 | |
Atmel Corp. (a) | 760,400 | 4,387,508 | |
RF Micro Devices, Inc. (a) | 228,200 | 1,510,684 | |
6,233,354 | |||
Shares | Value (Note 1) | ||
WIRELESS TELECOMMUNICATION SERVICES - 36.6% | |||
Wireless Telecommunication Services - 36.6% | |||
ALLTEL Corp. | 587,488 | $31,847,724 | |
American Tower Corp. Class A (a) | 708,992 | 25,424,453 | |
Bharti Airtel Ltd. (a) | 191,941 | 1,843,609 | |
Crown Castle International Corp. | 311,000 | 10,685,960 | |
Dobson Communications Corp. Class A | 1,248,200 | 8,575,134 | |
Leap Wireless International, Inc. (a) | 223,500 | 10,339,110 | |
NII Holdings, Inc. (a) | 110,700 | 5,905,845 | |
Sprint Nextel Corp. (d) | 1,306,331 | 22,103,121 | |
116,724,956 | |||
TOTAL COMMON STOCKS (Cost $303,126,263) | 310,851,399 | ||
Money Market Funds - 9.4% | |||
Fidelity Cash Central Fund, 5.31% (b) | 7,207,651 | 7,207,651 | |
Fidelity Securities Lending Cash Central Fund, 5.33% (b)(c) | 22,749,200 | 22,749,200 | |
TOTAL MONEY MARKET FUNDS (Cost $29,956,851) | 29,956,851 | ||
TOTAL INVESTMENT PORTFOLIO - 107.0% (Cost $333,083,114) | 340,808,250 | ||
NET OTHER ASSETS - (7.0)% | (22,150,472) | ||
NET ASSETS - 100% | $318,657,778 | ||
Legend |
(a)Non-income producing |
(b)Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. |
(c)Investment made with cash collateral received from securities on loan. |
(d)Security or a portion of the security is on loan at period end. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the fund from the affiliated Central funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $143,684 |
Fidelity Securities Lending Cash Central Fund | 90,330 |
Total | $234,014 |
Other Information |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: |
United States of America | 88.3% |
Finland | 4.5% |
Norway | 4.1% |
Sweden | 1.1% |
Others (individually less than 1%) | 2.0% |
100.0% |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Wireless Portfolio
Financial Statements
Statement of Assets and Liabilities
August 31, 2006 (Unaudited) | ||
Assets | ||
Investment in securities, at value (including securities loaned of $22,311,334) - See accompanying schedule: Unaffiliated issuers (cost $303,126,263) | $310,851,399 | |
Affiliated Central Funds (cost $29,956,851) | 29,956,851 | |
Total Investments (cost $333,083,114) | $340,808,250 | |
Receivable for investments sold | 1,691,727 | |
Receivable for fund shares sold | 320,260 | |
Dividends receivable | 88,614 | |
Interest receivable | 21,416 | |
Prepaid expenses | 391 | |
Other receivables | 7,118 | |
Total assets | 342,937,776 | |
Liabilities | ||
Payable for fund shares redeemed | $1,230,247 | |
Accrued management fee | 151,341 | |
Other affiliated payables | 110,026 | |
Other payables and accrued expenses | 39,184 | |
Collateral on securities loaned, at value | 22,749,200 | |
Total liabilities | 24,279,998 | |
Net Assets | $318,657,778 | |
Net Assets consist of: | ||
Paid in capital | $313,528,835 | |
Undistributed net investment income | 2,713,259 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (5,300,396) | |
Net unrealized appreciation (depreciation) on investments | 7,716,080 | |
Net Assets, for 49,963,145 shares outstanding | $318,657,778 | |
Net Asset Value, offering price and redemption price per share ($318,657,778 ÷ 49,963,145 shares) | $6.38 | |
Statement of Operations
Six months ended August 31, 2006 (Unaudited) | ||
Investment Income | ||
Dividends | $2,922,142 | |
Special dividends | 1,475,599 | |
Interest | 950 | |
Income from affiliated Central Funds | 234,014 | |
Total income | 4,632,705 | |
Expenses | ||
Management fee | $1,219,116 | |
Transfer agent fees | 686,234 | |
Accounting and security lending fees | 108,731 | |
Independent trustees' compensation | 893 | |
Custodian fees and expenses | 17,504 | |
Registration fees | 19,886 | |
Audit | 17,009 | |
Legal | 4,610 | |
Interest | 1,337 | |
Miscellaneous | 28,058 | |
Total expenses before reductions | 2,103,378 | |
Expense reductions | (25,813) | 2,077,565 |
Net investment income (loss) | 2,555,140 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers (net of foreign taxes of $138,770) | (894,215) | |
Foreign currency transactions | (42,793) | |
Total net realized gain (loss) | (937,008) | |
Change in net unrealized appreciation (depreciation) on investment securities (net of decrease in deferred foreign taxes of $86,617) | (33,462,074) | |
Net gain (loss) | (34,399,082) | |
Net increase (decrease) in net assets resulting from operations | $(31,843,942) | |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Statement of Changes in Net Assets
Six months ended August 31, 2006 (Unaudited) | Year ended | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $2,555,140 | $183,237 |
Net realized gain (loss) | (937,008) | 122,872,136 |
Change in net unrealized appreciation (depreciation) | (33,462,074) | (26,620,651) |
Net increase (decrease) in net assets resulting from operations | (31,843,942) | 96,434,722 |
Distributions to shareholders from net realized gain | (30,965,055) | - |
Share transactions | 67,584,896 | 340,148,847 |
Reinvestment of distributions | 29,981,050 | - |
Cost of shares redeemed | (218,834,571) | (306,680,611) |
Net increase (decrease) in net assets resulting from share transactions | (121,268,625) | 33,468,236 |
Redemption fees | 32,908 | 94,936 |
Total increase (decrease) in net assets | (184,044,714) | 129,997,894 |
Net Assets | ||
Beginning of period | 502,702,492 | 372,704,598 |
End of period (including undistributed net investment income of $2,713,259 and undistributed net investment income of $161,188, respectively) | $318,657,778 | $502,702,492 |
Other Information Shares | ||
Sold | 9,776,662 | 52,205,281 |
Issued in reinvestment of distributions | 4,216,744 | - |
Redeemed | (33,866,407) | (47,885,529) |
Net increase (decrease) | (19,873,001) | 4,319,752 |
Financial Highlights
Six months ended August 31, 2006 | Years ended February 28, | |||||
(Unaudited) | 2006 | 2005 | 2004 H | 2003 | 2002 | |
Selected Per-Share Data | ||||||
Net asset value, beginning of period | $7.20 | $5.69 | $4.85 | $2.42 | $3.68 | $7.22 |
Income from Investment Operations | ||||||
Net investment income (loss) E | .04 F | - I | (.01) | (.03) | (.03) | (.04) |
Net realized and unrealized gain (loss) | (.42) | 1.51 | .85 | 2.46 | (1.23) | (3.50) |
Total from investment operations | (.38) | 1.51 | .84 | 2.43 | (1.26) | (3.54) |
Distributions from net realized gain | (.44) | - | - | - | - | - |
Redemption fees added to paid in capital E | - I | - I | - I | - I | - I | - I |
Net asset value, end of period | $6.38 | $7.20 | $5.69 | $4.85 | $2.42 | $3.68 |
Total Return B, C, D | (5.91)% | 26.54% | 17.32% | 100.41% | (34.24)% | (49.03)% |
Ratios to Average Net Assets G | ||||||
Expenses before reductions | .98% A | 1.00% | 1.04% | 1.55% | 2.17% | 1.59% |
Expenses net of fee waivers, if any | .98%A | 1.00% | 1.04% | 1.55% | 2.17% | 1.59% |
Expenses net of all reductions | .97%A | .89% | .97% | 1.43% | 2.01% | 1.54% |
Net investment income (loss) | 1.19%A,F | .04% | (.27)% | (.77)% | (1.16)% | (.72)% |
Supplemental Data | ||||||
Net assets, end of period (000 omitted) | $318,658 | $502,702 | $372,705 | $283,040 | $51,720 | $77,266 |
Portfolio turnover rate | 167%A | 162% | 96% | 79% | 110% | 148% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the former sales charges. E Calculated based on average shares outstanding during the period. F Investment income per share reflects a special dividend which amounted to $.02 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been .50%. G Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. H For the year ended February 29. I Amount represents less than $.01 per share. | ||||||
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Notes to Financial Statements
For the period ended August 31, 2006 (Unaudited)
1. Significant Accounting Policies.
Telecommunications Portfolio, Utilities Growth Portfolio, and Wireless Portfolio (the Funds) are non-diversified funds of Fidelity Select Portfolios (the trust). The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Funds invest primarily in securities of companies whose principal business activities fall within specific industries. Each Fund is authorized to issue an unlimited number of shares. Certain Funds may invest in affiliated money market central funds (Money Market Central Funds), which are open-end investment companies available to investment companies and other accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. The following summarizes the significant accounting policies of the Funds:
Security Valuation. Investments are valued and net asset value (NAV) per share is calculated (NAV calculation) as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time. During the period, each Fund also calculated a NAV each hour on the hour (commencing at 10:00 a.m. Eastern time until one hour prior to the close of business on the NYSE). Effective October 1, 2006, each Fund will eliminate the hourly NAV calculation.
Wherever possible, each Fund uses independent pricing services approved by the Board of Trustees to value its investments. Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price. Investments in open-end mutual funds are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or do not accurately reflect fair value, valuations may be determined in accordance with procedures adopted by the Board of Trustees. For example, when developments occur between the close of a market and the close of the NYSE that may materially affect the value of some or all of the securities, or when trading in a security is halted, those securities may be fair valued. Factors used in the determination of fair value may include monitoring news to identify significant market or security specific events such as changes in the value of U.S. securities markets, reviewing developments in foreign markets and evaluating the performance of ADRs, futures contracts and exchange-traded funds. Because each Fund's utilization of fair value pricing depends on market activity, the frequency with which fair value pricing is used can not be predicted and may be utilized to a significant extent. The value of securities used for NAV calculation under fair value pricing may differ from published prices for the same securities.
Foreign Currency. Certain Funds may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. Security transactions are accounted for as of trade date. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Funds are informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Funds estimate the components of distributions received that may be considered return of capital distributions or capital gain distributions. Large, non-recurring dividends recognized by the Funds are presented separately on the Statement of Operations as "Special Dividends" and the impact of these dividends is presented in the Financial Highlights. Interest income is accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
1. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders. Each year, each Fund intends to qualify as a regulated investment company by distributing all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code. As a result, no provision for income taxes is required in the accompanying financial statements. Foreign taxes are provided for based on each Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. In addition, certain funds claimed a portion of the payment made to redeeming shareholders as a distribution for income tax purposes.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, certain foreign taxes, non-taxable dividends, deferred trustees compensation, capital loss carryforwards and losses deferred due to wash sales.
The federal tax cost of investments and unrealized appreciation (depreciation) as of period end were as follows for each Fund:
Cost for Federal | Unrealized | Unrealized | Net Unrealized | |
Telecommunications Portfolio | $474,948,496 | $50,973,398 | $(36,594,931) | $14,378,467 |
Utilities Growth Portfolio | 453,931,017 | 44,105,795 | (16,668,548) | 27,437,247 |
Wireless Portfolio | 335,599,129 | 23,643,733 | (18,434,612) | 5,209,121 |
Trading (Redemption) Fees. Shares in the Funds held less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, including any estimated redemption fees paid by FMR, are retained by the Fund and accounted for as an addition to paid in capital. Shareholders are also subject to an additional $7.50 fee for shares exchanged into another Fidelity fund (see Note 4).
New Accounting Pronouncements. In July 2006, Financial Accounting Standards Board Interpretation No. 48, Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement 109 (FIN 48), was issued and is effective for fiscal years beginning after December 15, 2006. FIN 48 sets forth a threshold for financial statement recognition, measurement and disclosure of a tax position taken or expected to be taken on a tax return. Management is currently evaluating the impact, if any, the adoption of FIN 48 will have on the Funds' net assets, results of operations and financial statement disclosures.
In addition, in September 2006, Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157), was issued and is effective for fiscal years beginning after November 15, 2007. SFAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. Management is currently evaluating the impact the adoption of SFAS 157 will have on the Funds' financial statement disclosures.
2. Operating Policies.
Repurchase Agreements. FMR has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits certain Funds and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts which are then invested in repurchase agreements. Certain Funds may also invest directly with institutions in repurchase agreements. Repurchase agreements are collateralized by government or non-government securities. Upon settlement date, collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. Each applicable Fund monitors, on a daily basis, the value of the collateral to ensure it is at least equal to the principal amount of the repurchase agreement (including accrued interest). In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the value of the collateral may decline.
3. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, are noted in the table below.
Purchases ($) | Sales ($) | |
Telecommunications Portfolio | 526,103,815 | 533,432,977 |
Utilities Growth Portfolio | 256,641,105 | 142,555,178 |
Wireless Portfolio | 351,405,615 | 499,740,711 |
Semiannual Report
4. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the Funds with investment management related services for which the Funds pay a monthly management fee. The management fee is the sum of an individual fund fee rate and a group fee rate. The individual fund fee rate is applied to each Fund's average net assets. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, each Fund's annualized management fee rate expressed as a percentage of each Fund's average net assets was as follows:
Individual Rate | Group Rate | Total | |
Telecommunications Portfolio | .30% | .27% | .57% |
Utilities Growth Portfolio | .30% | .27% | .56% |
Wireless Portfolio | .30% | .27% | .57% |
Transfer Agent Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, is the Funds' transfer, dividend disbursing and shareholder servicing agent. FSC receives account fees and asset-based fees that vary according to account size and type of account. FSC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, the transfer agent fees were equivalent to the following annualized rates expressed as a percentage of average net assets:
Telecommunications Portfolio | .33% |
Utilities Growth Portfolio | .30% |
Wireless Portfolio | .32% |
Accounting and Security Lending Fees. FSC maintains each Fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Affiliated Central Funds. Certain Funds may invest in Money Market Central Funds which seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
The Money Market Central Funds do not pay a management fee.
Exchange Fees. During the period, FSC received the proceeds of a $7.50 fee to cover administrative costs associated with exchanges out of the Funds to any other Fidelity Select fund or to any other Fidelity fund made through non-automated channels. Effective October 1, 2006, the exchange fees will be eliminated. For the period, exchange fees retained by FSC were as follows:
Retained | |
Telecommunications Portfolio | $4,088 |
Utilities Growth Portfolio | 1,253 |
Wireless Portfolio | 5,940 |
Brokerage Commissions. Certain Funds placed a portion of their portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were as follows:
Amount | |
Telecommunications Portfolio | $36,201 |
Utilities Growth Portfolio | 2,558 |
Wireless Portfolio | 4,631 |
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Funds, along with other registered investment companies having management contracts with FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the Funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. Each applicable Fund's activity in this program during the period for which loans were outstanding was as follows:
Borrower | Average Daily | Weighted | Interest | |
Telecommunications Portfolio | Borrower | $9,539,417 | 4.98% | $15,851 |
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
5. Committed Line of Credit.
Certain Funds participate with other funds managed by FMR in a $4.2 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The participating funds have agreed to pay commitment fees on their pro rata portion of the line of credit, which is reflected in Miscellaneous Expense on the Statement of Operations, and is as follows:
Telecommunications Portfolio | $605 |
Utilities Growth Portfolio | 404 |
Wireless Portfolio | 674 |
During the period, there were no borrowings on this line of credit.
6. Security Lending.
Certain Funds lend portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, each applicable Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Funds and any additional required collateral is delivered to the Funds on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on each applicable Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented on each applicable Fund's Statement of Operations as a component of income from affiliated central funds. Net income from lending portfolio securities during the period amounted to:
Telecommunications Portfolio | $83,589 |
Utilities Growth Portfolio | 20,670 |
Wireless Portfolio | 90,330 |
7. Bank Borrowings.
Each Fund is permitted to have bank borrowings for temporary or emergency purposes to fund shareholder redemptions. Each Fund has established borrowing arrangements with certain banks. The interest rate on the borrowings is the bank's base rate, as revised from time to time. At period end, there were no bank borrowings outstanding. Each applicable Fund's activity in this program during the period for which loans were outstanding was as follows:
Average Daily | Weighted Average | |
Wireless Portfolio | $5,034,500 | 4.78% |
8. Expense Reductions.
Many of the brokers with whom FMR places trades on behalf of certain Funds provided services to these Funds in addition to trade execution. These services included payments of expenses on behalf of each applicable Fund. In addition, through arrangements with each applicable Fund's transfer agent, credits realized as a result of uninvested cash balances were used to reduce each applicable Fund's expenses. All of the applicable expense reductions are noted in the table below.
Brokerage Service Arrangements | Transfer Agent | |
Telecommunications Portfolio | $13,153 | $2,274 |
Utilities Growth Portfolio | - | 2,849 |
Wireless Portfolio | 22,892 | 2,921 |
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.
Semiannual Report
Proxy Voting Results
A special meeting of Fidelity Select Portfolios' shareholders was held on September 20, 2006. The results of votes taken among shareholders on the proposal before them are reported below. Each vote reported represents one dollar of net asset value held on the record date for the meeting.
PROPOSAL 1 | ||
To elect a Board of Trustees. A | ||
# of | % of | |
Dennis J. Dirks | ||
Affirmative | 13,182,341,755.09 | 94.980 |
Withheld | 696,736,162.41 | 5.020 |
TOTAL | 13,879,077,917.50 | 100.000 |
Albert R. Gamper, Jr. | ||
Affirmative | 13,177,593,614.43 | 94.946 |
Withheld | 701,484,303.07 | 5.054 |
TOTAL | 13,879,077,917.50 | 100.000 |
Robert M. Gates | ||
Affirmative | 13,141,235,622.81 | 94.684 |
Withheld | 737,842,294.69 | 5.316 |
TOTAL | 13,879,077,917.50 | 100.000 |
George H. Heilmeier | ||
Affirmative | 13,140,073,210.00 | 94.675 |
Withheld | 739,004,707.50 | 5.325 |
TOTAL | 13,879,077,917.50 | 100.000 |
Edward C. Johnson 3d | ||
Affirmative | 13,106,284,587.54 | 94.432 |
Withheld | 772,793,329.96 | 5.568 |
TOTAL | 13,879,077,917.50 | 100.000 |
Stephen P. Jonas | ||
Affirmative | 13,168,282,872.88 | 94.879 |
Withheld | 710,795,044.62 | 5.121 |
TOTAL | 13,879,077,917.50 | 100.000 |
James H. KeyesB | ||
Affirmative | 13,164,603,089.66 | 94.852 |
Withheld | 714,474,827.84 | 5.148 |
TOTAL | 13,879,077,917.50 | 100.000 |
Marie L. Knowles | ||
Affirmative | 13,169,356,779.66 | 94.886 |
Withheld | 709,721,137.84 | 5.114 |
TOTAL | 13,879,077,917.50 | 100.000 |
Ned C. Lautenbach | ||
Affirmative | 13,166,485,155.52 | 94.866 |
Withheld | 712,592,761.98 | 5.134 |
TOTAL | 13,879,077,917.50 | 100.000 |
William O. McCoy | ||
Affirmative | 13,129,548,996.59 | 94.600 |
Withheld | 749,528,920.91 | 5.400 |
TOTAL | 13,879,077,917.50 | 100.000 |
Robert L. Reynolds | ||
Affirmative | 13,180,813,649.06 | 94.969 |
Withheld | 698,264,268.44 | 5.031 |
TOTAL | 13,879,077,917.50 | 100.000 |
# of | % of | |
Cornelia M. Small | ||
Affirmative | 13,170,500,616.42 | 94.895 |
Withheld | 708,577,301.08 | 5.105 |
TOTAL | 13,879,077,917.50 | 100.000 |
William S. Stavropoulos | ||
Affirmative | 13,143,284,328.22 | 94.699 |
Withheld | 735,793,589.28 | 5.301 |
TOTAL | 13,879,077,917.50 | 100.000 |
Kenneth L. Wolfe | ||
Affirmative | 13,162,946,758.47 | 94.840 |
Withheld | 716,131,159.03 | 5.160 |
TOTAL | 13,879,077,917.50 | 100.000 |
ADenotes trust-wide proposal and voting results. BEffective on or about January 1, 2007. | ||
Semiannual Report
Board Approval of Investment Advisory Contracts and Management Fees
Select Telecommunications
Select Utilities Growth
Select Wireless
Each year, typically in July, the Board of Trustees, including the Independent Trustees (together, the Board), votes on the renewal of the management contract and sub-advisory agreements (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 throughout the year.
The Board meets regularly each month except August and takes into account throughout the year matters bearing on Advisory Contracts. The Board, acting directly and through its separate committees, considers at each of its meetings factors that are relevant to the annual renewal of each fund's Advisory Contracts, including the services and support provided to each fund and its shareholders. At the time of the renewal, the Board had 12 standing committees, each composed of 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. Each committee has adopted a written charter outlining the structure and purposes of the committee. One such committee, the Equity Contract Committee, meets periodically as needed throughout the year to consider matters specifically related to the annual renewal of Advisory Contracts. The committee requests and receives information on, and makes recommendations to the Independent Trustees concerning, the approval and annual review of the Advisory Contracts.
At its July 2006 meeting, the Board of Trustees, including the Independent Trustees, unanimously determined to renew the Advisory Contracts for each fund. 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 the management fee and total expenses of each fund; (iii) the total costs of the services to be provided by and the profits to be realized by the investment adviser and its affiliates from the relationship with each fund; (iv) the extent to which economies of scale 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 determining whether to renew the Advisory Contracts for each fund, the Board ultimately reached a determination, with the assistance of fund counsel and Independent Trustees' counsel, that the renewal of the Advisory Contracts and the compensation to be received by Fidelity under the management contracts is consistent with Fidelity's fiduciary duty under applicable law. In addition to evaluating the specific factors noted above, the Board, in reaching its determination, is aware that shareholders in each fund have a broad range of investment choices available to them, including a wide choice among mutual funds offered by competitors to Fidelity, and that each fund's shareholders, with 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, managed by Fidelity.
Nature, Extent, and Quality of Services Provided. The Board considered staffing within the investment adviser, FMR, and the sub-advisers (together, the Investment Advisers), including the backgrounds of the funds' portfolio managers and the funds' investment objectives and disciplines. 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.
Resources Dedicated to Investment Management and Support Services. The Board reviewed the size, education, and experience of the Investment Advisers' investment staff, their use of technology, and the Investment Advisers' approach to recruiting, training, and retaining portfolio managers and other research, advisory, and management personnel. The Board considered Fidelity's extensive global research capabilities that enable the Investment Advisers to aggregate data from various sources in an effort to produce positive investment results. The Board noted that Fidelity's analysts have access to a variety of technological tools that enable them to perform both fundamental and quantitative analysis and to specialize in various disciplines. The Board also considered that Fidelity's portfolio managers and analysts have access to daily portfolio attribution that allows for monitoring of a fund's portfolio, as well as an electronic communication system that provides immediate real-time access to research concerning issuers and credit enhancers.
Shareholder and Administrative Services. The Board considered (i) the nature, extent, quality, and cost of administrative, distribution, 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 Investment Advisers' 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 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 also considered that Fidelity voluntarily pays for market data out of its own resources.
The Board noted that the growth of fund assets 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 phone representatives and over the Internet, and investor education materials and asset allocation tools.
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 for a large variety of mutual fund investor services. The Board noted that, since the last Advisory Contract renewals in July 2005, Fidelity has taken a number of actions that benefited particular funds, including (i) dedicating additional resources to investment research and to restructure the investment research teams; (ii) voluntarily entering into contractual arrangements with certain brokers pursuant to which Fidelity pays for research products and services separately out of its own resources, rather than bundling with fund commissions; (iii) launching the Fidelity Advantage Class of its five Spartan stock index funds and three Spartan bond index funds, which is a lower-fee class available to shareholders with higher account balances; (iv) contractually agreeing to impose expense limitations on Fidelity U.S. Bond Index Fund and reducing the fund's initial investment minimum; and (v) offering shareholders of each of the Fidelity Institutional Money Market Funds the privilege of exchanging shares of the fund for shares of other Fidelity funds.
Semiannual Report
Board Approval of Investment Advisory Contracts and Management Fees - continued
Investment Performance and Compliance. The Board considered whether each fund has operated within its investment objective, as well as its record of compliance with its investment restrictions. It also reviewed each fund's absolute investment performance, as well as each fund's relative investment performance measured against (i) a proprietary custom index (Telecommunications Portfolio and Wireless Portfolio) or a Goldman Sachs index that reflects the market sector in which the fund invests (Utilities Growth Portfolio), and (ii) a peer group of mutual funds over multiple periods. For each of Telecommunications Portfolio and Wireless Portfolio, the following charts considered by the Board show, over the one-, three-, and five-year periods ended December 31, 2005, the fund's cumulative total returns, the cumulative total returns of a proprietary custom index ("benchmark"), and a range of cumulative total returns of a peer group of mutual funds identified by Lipper Inc. as having an investment objective similar to that of the fund. For Utilities Growth Portfolio, the following charts considered by the Board show, over the one-, three-, and five-year periods ended December 31, 2005, the fund's cumulative total returns, the cumulative total returns of a Goldman Sachs index ("benchmark"), and a range of cumulative total returns of a peer group of mutual funds identified by Lipper Inc. as having an investment objective similar to that of the fund. The box within each chart shows the 25th percentile return (bottom of box) and the 75th percentile return (top of box) of the Lipper peer group. Returns shown above the box are in the first quartile and returns shown below the box are in the fourth quartile. The percentage beaten number noted below each chart corresponds to the percentile box and represents the percentage of funds in the Lipper peer group whose performance was equal to or lower than that of the fund. For each fund (other than Utilities Growth Portfolio), the fund's proprietary custom index is an index developed and periodically revised by FMR that is a market-capitalization weighted index of securities that meet the fund's 80% name test.
Telecommunications Portfolio
The Board reviewed the fund's relative investment performance against its Lipper peer group and stated that the performance of the fund was in the third quartile for the one-year period, the fourth quartile for the three-year period, and the second quartile for the five-year period. The Board also stated that the relative investment performance of the fund was higher than its benchmark for the one- and five-year periods, although the fund's three-year cumulative total return was lower than its benchmark. The Board discussed with FMR actions to be taken by FMR to improve the fund's more recent disappointing performance. The Board will continue to closely monitor the performance of the fund in the coming year.
Semiannual Report
Utilities Growth Portfolio
The Board reviewed the fund's relative investment performance against its Lipper peer group and stated that the performance of the fund was in the third quartile for the one-year period, the second quartile for the three-year period, and the fourth quartile for the five-year period. The Board also stated that the relative investment performance of the fund compared favorably to its benchmark for all the periods shown.
Wireless Portfolio
The Board reviewed the fund's relative investment performance against its Lipper peer group and stated that the performance of the fund was in the first quartile for the one- and three-year periods and the second quartile for the five-year period. The Board noted that FMR does not consider that Lipper peer group to be a meaningful comparison for the fund, however, because the funds in the peer group typically have broader investment mandates than the fund, which focuses on a particular subset of companies within the telecommunications industry. The Board also stated that the relative investment performance of the fund compared favorably to its benchmark for the one- and three-year periods, although the fund's five-year cumulative total return was lower than its benchmark.
The Board considered that FMR has taken steps to refocus and strengthen equity research, equity portfolio management, and compliance. The Board noted with favor FMR's reorganization of its senior management team in 2005 and FMR's dedication of additional resources to investment research, and participated in the process that led to those changes.
Semiannual Report
Board Approval of Investment Advisory Contracts and Management Fees - continued
Based on its review, and giving particular weight to the nature and quality of the resources dedicated by the Investment Advisers to maintain and improve relative performance, the Board concluded that the nature, extent, and quality of the services provided to each fund will benefit each fund's shareholders, particularly in light of the Board's view that each fund's shareholders benefit from investing in a fund that is part of a large family of funds offering a variety of investment disciplines and services.
Competitiveness of Management Fee and Total Fund Expenses. The Board considered each fund's management fee and total expenses compared to "mapped groups" of competitive funds and classes. Fidelity creates "mapped groups" by combining similar Lipper investment objective categories that have comparable management fee characteristics. Combining Lipper investment objective categories aids the Board's management fee and total expense comparisons by broadening the competitive group used for comparison and by reducing the number of universes to which various Fidelity funds are compared.
The Board considered two proprietary management fee comparisons for the 12-month periods 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" and, for the reasons explained above, is broader than the Lipper peer group used by the Board for performance comparisons. The Total Mapped Group comparison focuses on a fund's standing relative to the total universe of comparable funds available to investors, in terms of gross management fees before expense reimbursements or caps. "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 TMG % of 21% would mean that 79% of the funds in the Total Mapped Group had higher management fees than a fund. The "Asset-Size Peer Group" (ASPG) comparison focuses on a fund's standing relative to non-Fidelity funds similar in size to the fund within the Total Mapped Group. The ASPG represents at least 15% of the funds in the Total Mapped Group with comparable asset size and management fee characteristics, 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 ranked, is also included in the charts and considered by the Board.
Telecommunications Portfolio
Semiannual Report
Utilities Growth Portfolio
Wireless Portfolio
The Board noted that each fund's management fee ranked below the median of its Total Mapped Group and below the median of its ASPG for 2005.
Based on its review, the Board concluded that each fund's management fee was fair and reasonable in light of the services that the fund receives and the other factors considered.
In its review of each fund's total expenses, 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 the effects of any waivers and reimbursements on fees and expenses. As part of its review, the Board also considered current and historical total expenses 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 expenses ranked below its competitive median for 2005.
In its review of total expenses, the Board also considered Fidelity fee structures and other information on clients that FMR and its affiliates service in other competitive markets, such as other mutual funds advised or subadvised by FMR or its affiliates, pension plan clients, and other institutional clients.
Semiannual Report
Board Approval of Investment Advisory Contracts and Management Fees - continued
Based on its review, the Board concluded that each fund's total expenses were 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 each fund and its shareholders. The Board also considered the level of Fidelity's profits in respect of all the Fidelity funds.
On an annual basis, FMR presents to the Board Fidelity's profitability for each fund. Fidelity calculates the profitability for each fund, as well as aggregate profitability for groups of Fidelity funds and all Fidelity funds, using a series of detailed revenue and cost allocation methodologies which originate with the audited books and records of Fidelity. The Audit Committee of the Board reviews any significant changes from the prior year's methodologies.
PricewaterhouseCoopers LLP (PwC), independent registered 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 results of Fidelity's profitability analysis. 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 surrounding the mathematical accuracy of fund profitability and its conformity to allocation methodologies. After considering PwC's reports issued under the engagement and information provided by Fidelity, the Board believes that while other allocation methods may also be reasonable, Fidelity's profitability methodologies are reasonable in all material respects.
The Board has also reviewed Fidelity's non-fund businesses and any 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 determined that the amount of profit is a fair entrepreneurial profit for the management of each fund.
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 through increased services to the fund, through waivers or reimbursements, or through fee or expense reductions, including reductions that occur through operation of the transfer agent agreement. The transfer agent fee varies in part based on the number of accounts in each fund. If the number of accounts decreases or the average account size increases, the overall transfer agent fee rate decreases.
The Board recognized that each fund's management contract incorporates a "group fee" structure, which provides for lower fee rates as total fund assets under FMR's management increase, and for higher fee rates as total fund assets under FMR's management decrease. The Board considered that the group fee is designed to deliver the benefits of economies of scale to fund shareholders when total fund 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 achieve a certain level of economies of scale as assets under FMR's management increase at the fund complex level, regardless of whether Fidelity achieves any such economies of scale.
The Board further concluded that any potential economies of scale are being shared between fund shareholders and Fidelity in an appropriate manner.
Additional Information Requested by the Board. In order to develop fully the factual basis for consideration of the Advisory Contracts, the Board requested additional information on several topics, including (i) Fidelity's fund profitability methodology and profitability trends within certain funds; (ii) portfolio manager compensation; (iii) the extent to which any economies of scale exist and are shared between the funds and Fidelity; (iv) the total expenses of certain funds and classes relative to competitors, including the extent to which the expenses of certain funds have been or could be capped; (v) fund performance trends; and (vi) Fidelity's fee structures, including use of performance fees.
Based on its evaluation of all of the conclusions noted above, and after considering all material factors, the Board ultimately concluded that the advisory fee structures are fair and reasonable, and that each fund's Advisory Contracts should be renewed.
Semiannual Report
Managing Your Investments
Fidelity offers several ways to conveniently manage your personal investments via your telephone or PC. You can access your account information, conduct trades and research your investments 24 hours a day.
By Phone
Fidelity Automated Service Telephone provides a single toll-free number to access account balances, positions, quotes and trading. It's easy to navigate the service, and on your first call, the system will help you create a personal identification number (PIN) for security.
(phone_graphic)
Fidelity Automated Service Telephone (FAST®)
1-800-544-5555
Press
1 For mutual fund and brokerage trading.
2 For quotes.*
3 For account balances and holdings.
4 To review orders and mutual fund activity.
5 To change your PIN.
*0 To speak to a Fidelity representative.
By PC
Fidelity's web site on the Internet provides a wide range of information, including daily financial news, fund performance, interactive planning tools and news about Fidelity products and services.
(computer_graphic)
Fidelity's Web Site
www.fidelity.com
* When you call the quotes line, please remember that a fund's yield and return will vary and, except for money market funds, share price will also vary. This means that you may have a gain or loss when you sell your shares. There is no assurance that money market funds will be able to maintain a stable $1 share price; an investment in a money market fund is not insured or guaranteed by the U.S. government. Total returns are historical and include changes in share price, reinvestment of dividends and capital gains, and the effects of any sales charges.
Semiannual Report
To Write Fidelity
We'll give your correspondence immediate attention and send you written confirmation upon completion of your request.
(letter_graphic)
Making Changes
To Your Account
(such as changing name, address, bank, etc.)
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0002
(letter_graphic)
For Non-Retirement
Accounts
Buying shares
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003
Overnight Express
Fidelity Investments
Attn: Distribution Services
100 Crosby Parkway - KC1H
Covington, KY 41015
Selling shares
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0035
Overnight Express
Fidelity Investments
Attn: Distribution Services
100 Crosby Parkway - KC1H
Covington, KY 41015
General Correspondence
Fidelity Investments
P.O. Box 500
Merrimack, NH 03054-0500
(letter_graphic)
For Retirement
Accounts
Buying shares
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003
Selling shares
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0035
Overnight Express
Fidelity Investments
Attn: Distribution Services
100 Crosby Parkway - KC1H
Covington, KY 41015
General Correspondence
Fidelity Investments
P.O. Box 500
Merrimack, NH 03054-0500
Semiannual Report
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
FMR Co., Inc.
Fidelity Management & Research
(U.K.) Inc.
Fidelity Research & Analysis Company (formerly Fidelity
Management & Research (Far East) Inc.)
Fidelity Investments Japan Limited
Fidelity International Investment Advisors
Fidelity International Investment Advisors
(U.K. Limited)
General Distributor
Fidelity Distributors Corporation
Boston, MA
Transfer and Service Agent
Fidelity Service Company, Inc.
Boston, MA
Custodian
Brown Brothers Harriman & Co.
Boston, MA
Corporate Headquarters
82 Devonshire Street
Boston, MA 02109
1-800-544-8888
The Fidelity Telephone Connection
Mutual Fund 24-Hour Service
Exchanges/Redemptions
and Account Assistance1-800-544-6666
Product Information1-800-544-8888
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(8 a.m. - 9 p.m.)
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for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
Fidelity Automated Service
Telephone (FAST®) (automated graphic) 1-800-544-5555
(automated graphic) Automated line for quickest service
SELUTL-USAN-1006
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Corporate Headquarters
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www.fidelity.com
Fidelity®
Select Portfolios®
Money Market
Semiannual Report
August 31, 2006
(2_fidelity_logos) (Registered_Trademark)
Contents
Chairman's Message | Ned Johnson's message to shareholders | |
Shareholder Expense Example | An example of Shareholder Expenses | |
Fund Update * | ||
Money Market | ||
Notes to Financial Statements | Notes to the Financial Statements | |
Proxy Voting Results | ||
Board Approval of |
*Fund update includes: Investment Changes, Investments, and Financial Statements.
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit www.fidelity.com/proxyvotingresults or visit the Securities and Exchange Commission's (SEC) web site at 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 Corp. or an affiliated company.
This report and the financial statements contained herein are submitted for the general information of the shareholders of the fund. This report is not authorized for distribution to prospective investors in the fund unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent quarterly holdings report, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com/holdings.
NOT FDIC INSURED · MAY LOSE VALUE · NO BANK GUARANTEE
Neither the funds nor Fidelity Distributors Corporation is a bank.
Semiannual Report
Chairman's Message
(Photograph of Edward C. Johnson 3d.)
Dear Shareholder:
Stock and bond markets around the world have seen largely positive results year to date, although weakness in the technology sector and growth stocks in general have tempered performance. While financial markets are always unpredictable, there are a number of time-tested principles that can put the historical odds in your favor.
One of the basic tenets is to invest for the long term. Over time, riding out the markets' inevitable ups and downs has proven much more effective than selling into panic or chasing the hottest trend. Even missing only a few of the markets' best days can significantly diminish investor returns. Patience also affords the benefits of compounding - of earning interest on additional income or reinvested dividends and capital gains. There are tax advantages and cost benefits to consider as well. The more you sell, the more taxes you pay, and the more you trade, the higher the costs. While staying the course doesn't eliminate risk, it can considerably lessen the effect of short-term declines.
You can further manage your investing risk through diversification. And today, more than ever, geographic diversification should be taken into account. Studies
indicate that asset allocation is the single most important determinant of a portfolio's long-term success. The right mix of stocks, bonds and cash - aligned to your particular risk tolerance and investment objective - is very important. Age-appropriate rebalancing is also an essential aspect of asset allocation. For younger investors, an emphasis on equities - which historically have been the best performing asset class over time - is encouraged. As investors near their specific goal, such as retirement or sending a child to college, consideration may be given to replacing volatile assets (e.g. common stocks) with more-stable fixed investments (bonds or savings plans).
A third investment principle - investing regularly - can help lower the average cost of your purchases. Investing a certain amount of money each month or quarter helps ensure you won't pay for all your shares at market highs. This strategy - known as dollar cost averaging - also reduces unconstructive "emotion" from investing, helping shareholders avoid selling weak performers just prior to an upswing, or chasing a hot performer just before a correction.
We invite you to contact us via the Internet, through our Investor Centers or over the phone. It is our privilege to provide you the information you need to make the investments that are right for you.
Sincerely,
/s/Edward C. Johnson 3d
Edward C. Johnson 3d
Semiannual Report
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, 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 (March 1, 2006 to August 31, 2006).
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.
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.
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.
Beginning | Ending | Expenses Paid | |
Actual | $1,000.00 | $1,023.90 | $2.04 |
Hypothetical (5% return per year before expenses) | $1,000.00 | $1,023.19 | $2.04 |
*Expenses are equal to the Fund's annualized expense ratio of .40%; multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period).
Annual Report
Investment Changes
Maturity Diversification | |||
Days | % of fund's | % of fund's | % of fund's |
0 - 30 | 67.7 | 70.8 | 72.5 |
31 - 90 | 20.7 | 19.5 | 21.3 |
91 - 180 | 6.9 | 5.3 | 2.0 |
181 - 397 | 4.7 | 4.4 | 4.2 |
Weighted Average Maturity | |||
8/31/06 | 2/28/06 | 8/31/05 | |
Money Market Portfolio | 43 Days | 39 Days | 36 Days |
All Taxable Money Market Fund's Average * | 38 Days | 39 Days | 36 Days |
Asset Allocation (% of fund's net assets) | |||
As of August 31, 2006 | |||
 | Commercial Paper27.7% | ||
 | Bank CDs, BAs, TDs, | ||
 | Government Securities2.1% | ||
 | Repurchase Agreements21.2% | ||
 | Other Investments2.1% | ||
 | Net Other Assets **(4.1)% | ||
As of February 28, 2006 | |||
 | Commercial Paper31.9% | ||
 | Bank CDs, BAs, TDs, | ||
 | Government Securities1.1% | ||
 | Repurchase Agreements19.8% | ||
 | Other Investments1.8% | ||
| Net Other Assets **(3.3)% | ||
**Net Other Assets are not included in the pie chart.
*Source: iMoneyNet, Inc.
Semiannual Report
Money Market Portfolio
Investments August 31, 2006 (Unaudited)
Showing Percentage of Net Assets
Corporate Bonds - 1.1% | ||||
Due | Yield (a) | Principal Amount | Value | |
Conoco Funding Co. | ||||
10/15/06 | 4.77% | $4,635,000 | $4,637,959 | |
Household Finance Corp. | ||||
1/30/07 | 4.64 | 7,300,000 | 7,326,390 | |
Virginia Electric & Power Co. | ||||
2/1/07 | 5.51 | 5,000,000 | 4,994,550 | |
TOTAL CORPORATE BONDS | 16,958,899 | |||
Certificates of Deposit - 18.5% | ||||
Domestic Certificates Of Deposit - 0.9% | ||||
PNC Bank NA, Pittsburgh | ||||
1/24/07 | 5.15 | 500,000 | 499,281 | |
Washington Mutual Bank FA | ||||
9/20/06 to 7/5/07 | 5.34 to 5.75 | 14,000,000 | 14,000,000 | |
14,499,281 | ||||
London Branch, Eurodollar, Foreign Banks - 5.4% | ||||
Barclays Bank PLC | ||||
10/24/06 to 6/11/07 | 5.33 to 5.44 | 15,000,000 | 15,000,000 | |
Calyon | ||||
10/4/06 to 2/12/07 | 4.40 to 5.00 | 8,000,000 | 8,000,000 | |
Credit Agricole SA | ||||
11/8/06 to 12/18/06 | 5.40 | 20,000,000 | 20,000,000 | |
Credit Industriel et Commercial | ||||
9/18/06 to 3/30/07 | 4.76 to 5.34 | 19,000,000 | 19,000,000 | |
Deutsche Bank AG | ||||
1/30/07 | 4.86 | 5,000,000 | 5,000,000 | |
Dresdner Bank AG | ||||
3/5/07 | 5.40 | 5,000,000 | 5,000,000 | |
HBOS Treasury Services PLC | ||||
12/5/06 | 5.35 | 5,000,000 | 5,000,000 | |
Landesbank Hessen-Thuringen | ||||
12/8/06 | 5.36 | 5,000,000 | 5,000,000 | |
Societe Generale | ||||
12/6/06 | 4.80 | 5,000,000 | 5,000,000 | |
87,000,000 | ||||
New York Branch, Yankee Dollar, Foreign Banks - 12.2% | ||||
Bank Tokyo-Mitsubishi UFJ Ltd. | ||||
9/20/06 | 5.31 | 17,000,000 | 17,000,000 | |
Barclays Bank PLC | ||||
9/5/06 | 5.21 | 9,000,000 | 9,000,000 | |
BNP Paribas SA | ||||
11/8/06 to 6/11/07 | 4.93 to 5.45 | 15,000,000 | 15,000,000 | |
Canadian Imperial Bank of Commerce | ||||
9/15/06 | 5.41 (d) | 14,000,000 | 14,000,000 | |
Credit Industriel et Commercial | ||||
11/22/06 | 5.30 | 5,000,000 | 5,000,000 | |
Due | Yield (a) | Principal Amount | Value | |
Credit Suisse First Boston | ||||
9/12/06 to 10/23/06 | 5.28 to 5.50% (d) | $20,000,000 | $20,000,000 | |
Credit Suisse Group | ||||
6/4/07 | 5.44 | 3,000,000 | 3,000,000 | |
Deutsche Bank AG | ||||
9/5/06 | 5.24 (d) | 5,000,000 | 5,000,000 | |
Landesbank Baden-Wuert | ||||
9/22/06 | 5.46 | 5,000,000 | 5,000,000 | |
Mizuho Corporate Bank Ltd. | ||||
11/7/06 to 1/29/07 | 5.37 to 5.56 | 37,000,000 | 37,000,000 | |
Skandinaviska Enskilda Banken AB | ||||
12/1/06 to 3/30/07 | 5.35 to 5.60 | 9,590,000 | 9,568,007 | |
Sumitomo Mitsui Banking Corp. | ||||
9/5/06 to 12/29/06 | 5.34 to 5.41 | 31,000,000 | 31,000,000 | |
UBS AG | ||||
9/20/06 | 5.33 | 20,000,000 | 20,000,000 | |
Unicredito Italiano Spa | ||||
11/20/06 | 5.26 | 5,000,000 | 5,000,000 | |
195,568,007 | ||||
TOTAL CERTIFICATES OF DEPOSIT | 297,067,288 | |||
Commercial Paper - 27.7% | ||||
Aegis Finance LLC | ||||
9/18/06 | 5.42 | 4,000,000 | 3,989,891 | |
Aquifer Funding LLC | ||||
9/6/06 | 5.40 | 5,000,000 | 4,996,271 | |
Bavaria TRR Corp. | ||||
9/5/06 to 9/27/06 | 5.31 to 5.42 | 25,000,000 | 24,932,322 | |
British Telecommunications PLC | ||||
10/12/06 to 11/2/06 | 5.54 to 5.55 | 3,000,000 | 2,976,929 | |
Capital One Multi-Asset Execution Trust | ||||
10/20/06 | 5.33 | 2,000,000 | 1,985,599 | |
Charta LLC | ||||
10/12/06 | 5.33 | 2,000,000 | 1,987,962 | |
Citigroup Funding, Inc. | ||||
10/26/06 | 5.45 | 10,000,000 | 9,917,806 | |
Countrywide Financial Corp. | ||||
9/5/06 to 11/1/06 | 5.31 to 5.43 | 21,000,000 | 20,922,099 | |
Cullinan Finance Corp. | ||||
9/5/06 | 5.23 (b) | 3,602,000 | 3,599,935 | |
CVS Corp. | ||||
9/28/06 | 5.36 | 5,000,000 | 4,979,975 | |
DaimlerChrysler NA Holding Corp. | ||||
9/5/06 to 11/3/06 | 5.41 to 5.57 | 6,500,000 | 6,463,124 | |
Davis Square Funding V Corp. | ||||
9/15/06 | 5.33 | 1,000,000 | 997,939 | |
Commercial Paper - continued | ||||
Due | Yield (a) | Principal Amount | Value | |
Devon Energy Corp. | ||||
10/2/06 to 11/16/06 | 5.43 to 5.48% | $2,000,000 | $1,984,009 | |
Dominion Resources, Inc. | ||||
9/12/06 | 5.36 | 3,000,000 | 2,995,105 | |
DZ Bank AG | ||||
10/23/06 | 5.33 | 5,000,000 | 4,961,867 | |
Emerald (MBNA Credit Card Master Note Trust) | ||||
9/6/06 to 11/21/06 | 5.26 to 5.47 | 22,000,000 | 21,818,390 | |
FCAR Owner Trust | ||||
9/8/06 to 1/24/07 | 5.36 to 5.57 | 25,000,000 | 24,783,497 | |
Fortune Brands, Inc. | ||||
9/11/06 to 11/6/06 | 5.43 to 5.56 | 5,000,000 | 4,979,539 | |
France Telecom SA | ||||
9/20/06 to 11/20/06 | 5.42 to 5.50 (b) | 3,000,000 | 2,975,309 | |
Giro Funding US Corp. | ||||
9/6/06 to 10/27/06 | 5.33 to 5.36 | 11,000,000 | 10,946,856 | |
Grampian Funding LLC | ||||
10/23/06 to 12/11/06 | 5.39 to 5.52 | 10,000,000 | 9,887,065 | |
Harrier Finance Funding LLC | ||||
9/5/06 to 10/20/06 | 5.30 to 5.33 (b) | 51,987,000 | 51,923,501 | |
HBOS Treasury Services PLC | ||||
11/22/06 | 5.37 | 1,000,000 | 987,928 | |
John Deere Capital Corp. | ||||
11/2/06 | 5.47 | 1,000,000 | 990,700 | |
Kellogg Co. | ||||
9/20/06 | 5.48 | 1,000,000 | 997,134 | |
Michigan Gen. Oblig. | ||||
10/11/06 | 5.27 | 9,500,000 | 9,500,000 | |
Monument Gardens Funding | ||||
10/23/06 | 5.34 | 5,000,000 | 4,961,794 | |
Motown Notes Program | ||||
9/6/06 to 11/14/06 | 5.35 to 5.52 | 8,000,000 | 7,939,238 | |
Nissan Motor Acceptance Corp. | ||||
9/13/06 to 11/2/06 | 5.33 to 5.53 | 5,250,000 | 5,214,234 | |
Paradigm Funding LLC | ||||
9/18/06 to 9/20/06 | 5.30 to 5.31 | 30,000,000 | 29,920,900 | |
Park Granada LLC | ||||
11/28/06 to 1/29/07 | 5.36 to 5.52 | 13,781,000 | 13,482,265 | |
Park Sienna LLC | ||||
9/20/06 | 5.31 | 20,000,000 | 19,944,267 | |
Sheffield Receivables Corp. | ||||
9/11/06 | 5.30 | 5,000,000 | 4,992,674 | |
Skandinaviska Enskilda Banken AB | ||||
9/29/06 | 5.30 (b)(d) | 2,000,000 | 1,999,876 | |
Strand Capital LLC | ||||
9/18/06 to 9/22/06 | 5.12 to 5.46 | 9,000,000 | 8,974,351 | |
Due | Yield (a) | Principal Amount | Value | |
Stratford Receivables Co. LLC | ||||
9/19/06 to 10/11/06 | 5.30 to 5.33% | $64,988,000 | $64,778,646 | |
Thames Asset Global Securities No. 1, Inc. | ||||
10/26/06 | 5.45 | 16,138,000 | 16,005,355 | |
The Walt Disney Co. | ||||
9/7/06 | 5.34 | 1,000,000 | 999,112 | |
Time Warner, Inc. | ||||
9/1/06 to 12/1/06 | 5.33 to 5.47 (b) | 10,000,000 | 9,921,219 | |
Verizon Global Funding Corp. | ||||
9/12/06 to 9/25/06 | 5.32 to 5.47 | 3,000,000 | 2,992,084 | |
Viacom, Inc. | ||||
9/1/06 to 11/16/06 | 5.53 to 5.68 (b) | 4,567,000 | 4,553,852 | |
Vodafone Group PLC | ||||
9/1/06 | 5.46 (b) | 1,000,000 | 1,000,000 | |
Weatherford International Ltd. | ||||
9/1/06 to 9/18/06 | 5.33 to 5.48 (b) | 2,500,000 | 2,496,411 | |
WellPoint, Inc. | ||||
10/24/06 | 5.38 | 1,000,000 | 992,138 | |
Whirlpool Corp. | ||||
9/14/06 to 9/29/06 | 5.34 to 5.36 | 4,000,000 | 3,986,823 | |
Xcel Energy, Inc. | ||||
10/17/06 | 5.35 | 1,000,000 | 993,343 | |
TOTAL COMMERCIAL PAPER | 443,629,334 | |||
Federal Agencies - 2.1% | ||||
Fannie Mae - 1.0% | ||||
9/5/07 | 5.53 | 15,000,000 | 15,000,000 | |
Federal Home Loan Bank - 1.1% | ||||
8/15/07 to 9/14/07 | 5.42 to 5.56 (c) | 18,000,000 | 17,999,477 | |
TOTAL FEDERAL AGENCIES | 32,999,477 | |||
Master Notes - 1.8% | ||||
Asset Funding Co. III LLC | ||||
9/5/06 | 5.40 (d)(f) | 9,000,000 | 9,000,000 | |
Goldman Sachs Group, Inc. | ||||
9/11/06 | 5.42 to 5.43 (d)(f) | 20,000,000 | 20,000,000 | |
TOTAL MASTER NOTES | 29,000,000 | |||
Medium-Term Notes - 29.6% | ||||
Due | Yield (a) | Principal Amount | Value | |
AIG Matched Funding Corp. | ||||
10/3/06 to 11/15/06 | 5.40 to 5.52% (d) | $20,000,000 | $20,000,000 | |
Australia & New Zealand Banking Group Ltd. | ||||
9/25/06 | 5.32 (b)(d) | 2,000,000 | 2,000,000 | |
Banco Santander Totta SA | ||||
9/18/06 | 5.33 (b)(d) | 10,000,000 | 10,000,000 | |
Bank of New York Co., Inc. | ||||
9/27/06 | 5.39 (b)(d) | 5,000,000 | 5,000,000 | |
Banque Federative du Credit Mutuel (BFCM) | ||||
9/13/06 | 5.33 (b)(d) | 28,000,000 | 28,000,000 | |
Bayerische Landesbank Girozentrale | ||||
11/20/06 | 5.43 (d) | 5,000,000 | 5,000,000 | |
BellSouth Corp. | ||||
4/26/07 | 5.34 (b) | 10,000,000 | 9,925,160 | |
BMW U.S. Capital LLC | ||||
9/15/06 | 5.33 (d) | 1,000,000 | 1,000,000 | |
BNP Paribas SA | ||||
11/20/06 | 5.36 (b)(d) | 5,000,000 | 5,000,000 | |
Calyon New York Branch | ||||
9/5/06 | 5.33 (d) | 5,000,000 | 4,998,363 | |
Commonwealth Bank of Australia | ||||
9/25/06 | 5.33 (d) | 2,000,000 | 2,000,000 | |
ConocoPhillips | ||||
10/11/06 | 5.51 (d) | 2,000,000 | 2,000,000 | |
Countrywide Bank, Alexandria, Virginia | ||||
9/15/06 to 9/18/06 | 5.34 (d) | 5,000,000 | 4,999,855 | |
Credit Agricole SA | ||||
10/23/06 | 5.48 (d) | 15,000,000 | 15,000,000 | |
Cullinan Finance Corp. | ||||
11/27/06 to 6/25/07 | 5.36 to 5.38% (b)(d) | 17,000,000 | 16,997,000 | |
DnB NOR ASA | ||||
9/25/06 | 5.31 (b)(d) | 14,500,000 | 14,499,954 | |
General Electric Capital Corp. | ||||
9/7/06 to 9/18/06 | 5.43 to 5.49 (d) | 24,000,000 | 24,005,841 | |
Genworth Life Insurance Co. | ||||
9/1/06 | 5.48 (d)(f) | 5,000,000 | 5,000,000 | |
HBOS Treasury Services PLC | ||||
9/11/06 | 5.34 (b)(d) | 5,000,000 | 4,999,565 | |
9/25/06 | 5.53 (d) | 10,000,000 | 10,000,000 | |
HSBC Finance Corp. | ||||
9/25/06 | 5.36 (d) | 2,000,000 | 2,000,000 | |
HSH Nordbank AG | ||||
9/25/06 | 5.35 (b)(d) | 2,000,000 | 2,000,000 | |
Huntington National Bank, Columbus | ||||
11/1/06 | 5.57 (d) | 1,000,000 | 1,000,509 | |
ING USA Annuity & Life Insurance Co. | ||||
9/25/06 | 5.54 (d)(f) | 1,000,000 | 1,000,000 | |
Due | Yield (a) | Principal Amount | Value | |
Intesa Bank Ireland PLC | ||||
9/25/06 | 5.32% (b)(d) | $15,000,000 | $15,000,000 | |
K2 (USA) LLC | ||||
9/11/06 to 12/11/06 | 5.33 to 5.36 (b)(d) | 5,000,000 | 4,999,587 | |
Kestrel Funding PLC/US LLC 144A | ||||
9/1/06 | 5.34 (b)(d) | 1,000,000 | 1,000,000 | |
Links Finance LLC | ||||
9/19/06 | 5.28 (b)(d) | 10,000,000 | 9,999,552 | |
Merrill Lynch & Co., Inc. | ||||
9/5/06 to 9/25/06 | 5.31 to 5.58 (d) | 22,000,000 | 22,002,405 | |
Metropolitan Life Insurance Co. | ||||
9/6/06 | 5.42 (b)(d) | 2,213,000 | 2,213,000 | |
Morgan Stanley | ||||
9/1/06 to 9/15/06 | 5.39 to 5.46 (d) | 8,000,000 | 8,000,000 | |
Natexis Banq CD | ||||
9/5/06 | 5.35 (d) | 14,000,000 | 13,997,723 | |
Nationwide Building Society | ||||
9/28/06 | 5.55 (b)(d) | 5,000,000 | 5,001,748 | |
Nordea Bank AB | ||||
9/5/06 | 5.33 (d) | 16,000,000 | 15,994,790 | |
Pacific Life Global Funding | ||||
9/5/06 | 5.45 (b)(d) | 2,000,000 | 2,000,954 | |
RACERS | ||||
9/22/06 | 5.35 (b)(d) | 10,000,000 | 10,000,000 | |
Royal Bank of Scotland PLC | ||||
9/21/06 | 5.32 (b)(d) | 5,000,000 | 5,000,000 | |
Security Life of Denver Insurance Co. | ||||
11/28/06 | 5.48 (d)(f) | 1,000,000 | 1,000,000 | |
Sigma Finance, Inc. | ||||
12/11/06 | 5.36 (b)(d) | 10,000,000 | 9,999,000 | |
Skandinaviska Ensk Banken | ||||
9/7/06 | 5.36 (d) | 9,000,000 | 8,997,515 | |
SLM Corp. | ||||
10/25/06 | 5.71 (d) | 20,000,000 | 20,040,172 | |
Societe Generale | ||||
9/29/06 | 5.28 (d) | 25,000,000 | 24,994,115 | |
9/5/06 | 5.36 (b)(d) | 5,000,000 | 5,000,000 | |
UniCredito Italiano Bank (Ireland) PLC | ||||
9/11/06 to 9/15/06 | 5.34 to 5.38 (b)(d) | 11,000,000 | 10,999,932 | |
9/29/06 | 5.30 (d) | 5,000,000 | 4,998,877 | |
Verizon Global Funding Corp. | ||||
9/15/06 | 5.44 (b)(d) | 20,000,000 | 20,000,003 | |
Washington Mutual Bank | ||||
11/20/06 to 11/30/06 | 5.38 to 5.39 (d) | 13,000,000 | 13,000,000 | |
Washington Mutual Bank FA | ||||
10/31/06 | 5.47 (b)(d) | 13,000,000 | 13,000,000 | |
9/25/06 | 5.31 (d) | 10,000,000 | 10,000,000 | |
Medium-Term Notes - continued | ||||
Due | Yield (a) | Principal Amount | Value | |
Washington Mutual Bank, California | ||||
9/20/06 | 5.39% (d) | $4,000,000 | $4,000,000 | |
Wells Fargo & Co. | ||||
9/5/06 to 9/15/06 | 5.34 to 5.44 (d) | 10,000,000 | 10,000,000 | |
WestLB AG | ||||
9/11/06 to 9/29/06 | 5.41 to 5.53 (b)(d) | 7,500,000 | 7,500,572 | |
TOTAL MEDIUM-TERM NOTES | 475,166,192 | |||
Short-Term Notes - 0.6% | ||||
Metropolitan Life Insurance Co. | ||||
10/2/06 | 5.63 (d)(f) | 5,000,000 | 5,000,000 | |
New York Life Insurance Co. | ||||
9/29/06 | 5.58 (d)(f) | 5,000,000 | 5,000,000 | |
TOTAL SHORT-TERM NOTES | 10,000,000 | |||
Asset-Backed Securities - 0.4% | ||||
Master Funding Trust I | ||||
1/25/07 to 2/25/07 | 5.35 (d) | 4,000,000 | 3,999,965 | |
Wind Master Trust Notes | ||||
9/25/06 | 5.32 (b)(d) | 1,000,000 | 1,000,000 | |
Wind Trust | ||||
2/25/07 | 5.32 (b)(d) | 1,000,000 | 1,000,000 | |
TOTAL ASSET-BACKED SECURITIES | 5,999,965 | |||
Municipal Securities - 1.1% | ||||
Connecticut Hsg. Fin. Auth. | 5,000,000 | 5,000,000 | |
Florida Hurricane Catastrophe | 10,000,000 | 10,000,000 | |
New York State Dorm. Auth. Revs. | 2,900,000 | 2,900,000 |
TOTAL MUNICIPAL SECURITIES | 17,900,000 | |||
Repurchase Agreements - 21.2% | |||
Maturity | Value | ||
In a joint trading account (Collateralized by U.S. Government Obligations dated 8/31/06 due 9/1/06 at 5.3%) | $647,095 | $647,000 | |
With: | |||
Banc of America Securities LLC At 5.42%, dated 8/31/06 due 9/1/06 (Collateralized by Corporate Obligations valued at $12,600,000, 5.88%, 7/15/16) | 12,001,807 | 12,000,000 | |
Barclays Capital, Inc. At 5.35%, dated 8/31/06 due 9/1/06 (Collateralized by Corporate Obligations valued at $56,100,000, 4.13% - 7.13%, 3/7/07 - 6/29/09) | 55,008,174 | 55,000,000 | |
Citigroup Global Markets, Inc. At 5.36%, dated 8/31/06 due 9/1/06 (Collateralized by Commercial Paper Obligations valued at $70,380,000, 0%, 9/6/06 - 10/18/06) | 69,010,273 | 69,000,000 | |
Credit Suisse First Boston, Inc. At 5.37%, dated 8/31/06 due 9/1/06 (Collateralized by Corporate Obligations valued at $57,125,499, 4.58% - 9.25%, 6/1/07 - 12/1/49) | 56,008,353 | 56,000,000 | |
Deutsche Bank Securities, Inc. At 5.35%, dated 8/10/06 due 9/11/06 (Collateralized by Mortgage Loan Obligations valued at $5,250,000, 6.19%, 12/25/34) | 5,023,778 | 5,000,000 | |
Goldman Sachs & Co. At 5.41%, dated: | |||
8/21/06 due 11/21/06: | |||
(Collateralized by Corporate Obligations valued at $13,650,000, 8.5% 8/1/14) (d)(e) | 13,179,723 | 13,000,000 | |
(Collateralized by Corporate Obligations valued at $18,360,001, 6.47% - 6.5%, 11/25/35 - 4/25/36) (d)(e) | 18,248,860 | 18,000,000 | |
8/31/06 due 9/1/06 (Collateralized by Corporate Obligations valued at $19,950,000, 7.63% - 12.67%, 3/1/11 - - 11/15/12) | 19,002,857 | 19,000,000 | |
J.P. Morgan Securities, Inc. At 5.41%, dated: | |||
8/9/06 due 9/21/06 (Collateralized by Corporate Obligations valued at $13,739,436, 7.19% - 8.75%, 12/29/10 - 4/1/11) (d)(e) | 13,084,005 | 13,000,000 | |
Repurchase Agreements - continued | |||
Maturity | Value | ||
8/31/06 due 9/1/06 (Collateralized by Corporate Obligations valued at $61,950,842, 8.75%, 12/29/10) | $59,008,866 | $59,000,000 | |
Merrill Lynch, Pierce, Fenner & Smith At 5.42%, dated 7/19/06 due 10/17/06 (Collateralized by Mortgage Loan Obligations valued at $10,521,100, 8.5% 11/15/08) (d)(e) | 10,103,883 | 10,000,000 | |
Morgan Stanley & Co. At 5.38%, dated 8/9/06 due 9/21/06 (Collateralized by Mortgage Loan Obligations valued at $10,602,765, 6%, 7/25/36) | 10,064,261 | 10,000,000 | |
TOTAL REPURCHASE AGREEMENTS | 339,647,000 | ||
TOTAL INVESTMENT PORTFOLIO - 104.1% | 1,668,368,155 | ||
NET OTHER ASSETS - (4.1)% | (66,194,273) | ||
NET ASSETS - 100% | $1,602,173,882 | ||
Security Type Abbreviations |
VRDNVARIABLE RATE DEMAND NOTE |
Legend |
(a)Yield represents either the annualized yield at the date of purchase, or the stated coupon rate, or, for floating rate securities, the rate at period end. |
(b)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 $300,606,130 or 18.8% of net assets. |
(c)Security or a portion of the security purchased on a delayed delivery or when-issued basis. |
(d)Coupon rates for floating and adjustable rate securities reflect the rates in effect at period end. Due dates for these security types are the next interest rate reset date or, when applicable, the final maturity date. |
(e)The maturity amount is based on the rate at period end. |
(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 $46,000,000 or 2.9% of net assets. |
Additional information on each holding is as follows: |
Security | Acquisition Date | Cost |
Asset Funding Co. III LLC 5.40%, 9/5/06 | 8/29/06 | $9,000,000 |
Genworth Life Insurance Co. 5.48%, 9/1/06 | 7/31/06 | $5,000,000 |
Goldman Sachs Group, Inc.: | 1/9/06 | $15,000,000 |
5.43%, 9/11/06 | 11/10/05 | $5,000,000 |
ING USA Annuity & Life Insurance Co. 5.54%, 9/25/06 | 6/23/05 | $1,000,000 |
Metropolitan Life Insurance Co. 5.63%, 10/2/06 | 3/26/02 | $5,000,000 |
New York Life Insurance Co. 5.58%, 9/29/06 | 2/28/02 | $5,000,000 |
Security Life of Denver Insurance Co. 5.48%, 11/28/06 | 8/26/05 | $1,000,000 |
Income Tax Information |
At February 28, 2006, the fund had a capital loss carryforward of approximately $138,740 of which $19,605, $93,644 and $25,491 will expire on February 29, 2012, February 28, 2013 and 2014, respectively. |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Money Market Portfolio
Financial Statements
Statement of Assets and Liabilities
August 31, 2006 (Unaudited) | ||
Assets | ||
Investment in securities, at value (including repurchase agreements of $339,647,000) - See accompanying schedule: Unaffiliated issuers (cost $1,668,368,155) | $1,668,368,155 | |
Cash | 208,146 | |
Receivable for fund shares sold | 14,067,616 | |
Interest receivable | 5,628,050 | |
Prepaid expenses | 610 | |
Total assets | 1,688,272,577 | |
Liabilities | ||
Payable for investments purchased | $51,016,279 | |
Delayed delivery | 8,000,000 | |
Payable for fund shares redeemed | 26,126,063 | |
Distributions payable | 451,104 | |
Accrued management fee | 308,944 | |
Other affiliated payables | 164,617 | |
Other payables and accrued expenses | 31,688 | |
Total liabilities | 86,098,695 | |
Net Assets | $1,602,173,882 | |
Net Assets consist of: | ||
Paid in capital | $1,602,407,154 | |
Distributions in excess of net investment income | (94,823) | |
Accumulated undistributed net realized gain (loss) on investments | (138,449) | |
Net Assets, for 1,602,195,481 shares outstanding | $1,602,173,882 | |
Net Asset Value, offering price and redemption price per share ($1,602,173,882 ÷ 1,602,195,481 shares) | $1.00 | |
Statement of Operations
Six months ended August 31, 2006 (Unaudited) | ||
Investment Income | ||
Interest (including $17,394 from affiliated interfund lending) | $30,805,324 | |
Expenses | ||
Management fee | $1,390,440 | |
Transfer agent fees | 789,586 | |
Accounting fees and expenses | 63,331 | |
Independent trustees' compensation | 2,095 | |
Custodian fees and expenses | 21,953 | |
Registration fees | 62,044 | |
Audit | 18,350 | |
Legal | 1,281 | |
Interest | 15,334 | |
Miscellaneous | 13,501 | |
Total expenses before reductions | 2,377,915 | |
Expense reductions | (20,848) | 2,357,067 |
Net investment income | 28,448,257 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers | 291 | |
Net increase in net assets resulting from operations | $28,448,548 | |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Money Market Portfolio
Financial Statements - continued
Statement of Changes in Net Assets
Six months ended | Year ended | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income | $28,448,257 | $23,835,548 |
Net realized gain (loss) | 291 | 9,709 |
Net increase in net assets resulting from operations | 28,448,548 | 23,845,257 |
Distributions to shareholders from net investment income | (28,449,749) | (23,834,293) |
Share transactions at net asset value of $1.00 per share | 1,909,358,501 | 1,877,724,222 |
Reinvestment of distributions | 26,398,435 | 22,431,760 |
Cost of shares redeemed | (1,225,378,253) | (1,593,125,497) |
Net increase (decrease) in net assets and shares resulting from share transactions | 710,378,683 | 307,030,485 |
Total increase (decrease) in net assets | 710,377,482 | 307,041,449 |
Net Assets | ||
Beginning of period | 891,796,400 | 584,754,951 |
End of period (including distributions in excess of net investment income of $94,823 and distributions in excess of net investment income of $93,331, respectively) | $1,602,173,882 | $891,796,400 |
Financial Highlights
Six months ended | Years ended February 28, | |||||
(Unaudited) | 2006 | 2005 | 2004 F | 2003 | 2002 | |
Selected Per-Share Data | ||||||
Net asset value, beginning of period | $1.00 | $1.00 | $1.00 | $1.00 | $1.00 | $1.00 |
Income from Investment Operations | ||||||
Net investment income | .024 | .033 | .013 | .009 | .015 | .033 |
Distributions from net investment income | (.024) | (.033) | (.013) | (.009) | (.015) | (.033) |
Net asset value, end of period | $1.00 | $1.00 | $1.00 | $1.00 | $1.00 | $1.00 |
Total Return B, C, D | 2.39% | 3.32% | 1.29% | .86% | 1.50% | 3.30% |
Ratios to Average Net Assets E | ||||||
Expenses before reductions | .40% A | .40% | .39% | .40% | .38% | .37% |
Expenses net of fee waivers, if any | .40% A | .40% | .39% | .40% | .38% | .37% |
Expenses net of all reductions | .39% A | .40% | .39% | .40% | .38% | .37% |
Net investment income | 4.74% A | 3.34% | 1.26% | .86% | 1.45% | 3.38% |
Supplemental Data | ||||||
Net assets, end of period (000 omitted) | $1,602,174 | $891,796 | $584,755 | $607,620 | $1,079,578 | $1,037,869 |
BTotal returns for periods of less than one year are not annualized.
CTotal returns would have been lower had certain expenses not been reduced during the periods shown.
DTotal returns do not include the effect of the former sales charges.
EExpense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund.
FFor the year ended February 29.
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Notes to Financial Statements
For the period ended August 31, 2006 (Unaudited)
1. Significant Accounting Policies.
Money Market Portfolio (the Fund) is a 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 financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. The following summarizes the significant accounting policies of the Fund:
Security Valuation. Net asset value per share is calculated as of the close of business of the New York Stock Exchange, normally 4:00 p.m. Eastern time. As permitted by compliance with certain conditions under Rule 2a-7 of the 1940 Act, securities are valued at amortized cost, which approximates value.
Investment Transactions and Income. Security transactions are accounted for as of trade date. Gains and losses on securities sold are determined on the basis of identified cost. Interest income is accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company by distributing all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code. As a result, no provision for income taxes is required in the accompanying financial statements.
Dividends are declared daily and paid monthly from net investment income. Distributions from realized gains, if any, are recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to deferred trustees compensation, capital loss carryforwards and losses deferred due to wash sales.
The federal tax cost of investments and unrealized appreciation (depreciation) as of period end were as follows:
Unrealized appreciation | $- | |
Unrealized depreciation | - | |
Net unrealized appreciation (depreciation) | $- | |
Cost for federal income tax purposes | $1,668,368,155 |
New Accounting Pronouncements. In July 2006, Financial Accounting Standards Board Interpretation No. 48, Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement 109 (FIN 48), was issued and is effective for fiscal years beginning after December 15, 2006. FIN 48 sets forth a threshold for financial statement recognition, measurement and disclosure of a tax position taken or expected to be taken on a tax return. Management is currently evaluating the impact, if any, the adoption of FIN 48 will have on the Fund's net assets, results of operations and financial statement disclosures.
In addition, in September 2006, Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157), was issued and is effective for fiscal years beginning after November 15, 2007. SFAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. Management is currently evaluating the impact the adoption of SFAS 157 will have on the Fund's financial statement disclosures.
2. Operating Policies.
Repurchase Agreements. Fidelity Management & Research Company (FMR) has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits the Fund and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts which are then invested in repurchase agreements. The Fund may also invest directly with institutions in repurchase agreements. Repurchase agreements are collateralized by government or non-government securities. Upon settlement date, collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. The Fund monitors, on a daily basis, the value of the collateral to ensure it is at least equal to the principal amount of the repurchase agreement (including accrued interest). In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the value of the collateral may decline.
Reverse Repurchase Agreements. To enhance its yield, the Fund may enter into reverse repurchase agreements whereby the Fund transfers securities to a counterparty who then agrees to transfer them back to the Fund at a future date and agreed upon price, reflecting a rate of interest below market rate. The Fund receives cash proceeds, which are invested in other securities, and agrees to repay the proceeds plus accrued interest in return for the same securities transferred. The Fund continues to receive interest payments on the transferred securities during the term of the reverse
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
2. Operating Policies - continued
Reverse Repurchase Agreements - continued
repurchase agreement. During the period that a reverse repurchase agreement is outstanding, the Fund identifies cash and liquid securities as segregated in its custodian records with a value at least equal to its obligation under the agreement. If the counterparty defaults on its obligation, because of insolvency or other reasons, the Fund could experience delays and costs in recovering the security or in gaining access to the collateral. The average daily balance during the period for which reverse repurchase agreements were outstanding amounted to $6,758,053. The weighted average interest rate was 4.30%. At period end, there were no reverse repurchase agreements outstanding.
Delayed Delivery Transactions and When-Issued Securities. The Fund may purchase or sell securities on a delayed delivery or when-issued basis. Payment and delivery may take place after the customary settlement period for that security. The price of the underlying securities and the date when the securities will be delivered and paid for are fixed at the time the transaction is negotiated. During the time a delayed delivery sell is outstanding, the contract is marked-to-market daily and equivalent deliverable securities are held for the transaction. The value of the securities purchased on a delayed delivery or when-issued basis are identified as such in the Fund's Schedule of Investments. The Fund may receive compensation for interest forgone in the purchase of a delayed delivery or when-issued security. With respect to purchase commitments, the Fund identifies securities as segregated in its records with a value at least equal to the amount of the commitment. Losses may arise due to changes in the value of the underlying securities or if the counterparty does not perform under the contract's terms, or if the issuer does not issue the securities due to political, economic, or other factors.
Restricted Securities. The Fund may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities is included at the end of the Fund's Schedule of Investments.
3. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is calculated on the basis of a group fee rate plus a total income-based component. The group fee rate averaged .12% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. The total income-based component is calculated according to a graduated schedule providing for different rates based on the Fund's gross annualized yield. The rate increases as the Fund's gross yield increases.
During the period the income-based portion of this fee was $675,257 or an annualized rate of .11% of the Fund's average net assets. For the period, the Fund's total annualized management fee rate was .23% of the Fund's average net assets.
Transfer Agent Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, is the Fund's transfer, dividend disbursing and shareholder servicing agent. FSC receives account fees and asset-based fees that vary according to account size and type of account. FSC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, the transfer agent fees were equivalent to an annualized rate of .13% of average net assets.
Accounting Fees. FSC maintains the Fund's accounting records. The fee is based on the level of average net assets for the month.
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Fund, along with other registered investment companies having management contracts with FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the Funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. The Fund's activity in this program during the period for which loans were outstanding was as follows:
Borrower or Lender | Average Daily | Weighted |
Lender | $6,456,211 | 5.10% |
4. Expense Reductions.
Through arrangements with the Fund's custodian and transfer agent, credits realized as a result of uninvested cash balances were used to reduce the Fund's expenses. During the period, these credits reduced the Fund's custody and transfer agent expenses by $1,003 and $19,845, respectively.
5. 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.
Semiannual Report
Proxy Voting Results
A special meeting of Fidelity Select Portfolios' shareholders was held on September 20, 2006. The results of votes taken among shareholders on the proposal before them are reported below. Each vote reported represents one dollar of net asset value held on the record date for the meeting.
PROPOSAL 1 | ||
To elect a Board of Trustees. A | ||
# of | % of | |
Dennis J. Dirks | ||
Affirmative | 13,182,341,755.09 | 94.980 |
Withheld | 696,736,162.41 | 5.020 |
TOTAL | 13,879,077,917.50 | 100.000 |
Albert R. Gamper, Jr. | ||
Affirmative | 13,177,593,614.43 | 94.946 |
Withheld | 701,484,303.07 | 5.054 |
TOTAL | 13,879,077,917.50 | 100.000 |
Robert M. Gates | ||
Affirmative | 13,141,235,622.81 | 94.684 |
Withheld | 737,842,294.69 | 5.316 |
TOTAL | 13,879,077,917.50 | 100.000 |
George H. Heilmeier | ||
Affirmative | 13,140,073,210.00 | 94.675 |
Withheld | 739,004,707.50 | 5.325 |
TOTAL | 13,879,077,917.50 | 100.000 |
Edward C. Johnson 3d | ||
Affirmative | 13,106,284,587.54 | 94.432 |
Withheld | 772,793,329.96 | 5.568 |
TOTAL | 13,879,077,917.50 | 100.000 |
Stephen P. Jonas | ||
Affirmative | 13,168,282,872.88 | 94.879 |
Withheld | 710,795,044.62 | 5.121 |
TOTAL | 13,879,077,917.50 | 100.000 |
James H. KeyesB | ||
Affirmative | 13,164,603,089.66 | 94.852 |
Withheld | 714,474,827.84 | 5.148 |
TOTAL | 13,879,077,917.50 | 100.000 |
Marie L. Knowles | ||
Affirmative | 13,169,356,779.66 | 94.886 |
Withheld | 709,721,137.84 | 5.114 |
TOTAL | 13,879,077,917.50 | 100.000 |
Ned C. Lautenbach | ||
Affirmative | 13,166,485,155.52 | 94.866 |
Withheld | 712,592,761.98 | 5.134 |
TOTAL | 13,879,077,917.50 | 100.000 |
William O. McCoy | ||
Affirmative | 13,129,548,996.59 | 94.600 |
Withheld | 749,528,920.91 | 5.400 |
TOTAL | 13,879,077,917.50 | 100.000 |
Robert L. Reynolds | ||
Affirmative | 13,180,813,649.06 | 94.969 |
Withheld | 698,264,268.44 | 5.031 |
TOTAL | 13,879,077,917.50 | 100.000 |
# of | % of | |
Cornelia M. Small | ||
Affirmative | 13,170,500,616.42 | 94.895 |
Withheld | 708,577,301.08 | 5.105 |
TOTAL | 13,879,077,917.50 | 100.000 |
William S. Stavropoulos | ||
Affirmative | 13,143,284,328.22 | 94.699 |
Withheld | 735,793,589.28 | 5.301 |
TOTAL | 13,879,077,917.50 | 100.000 |
Kenneth L. Wolfe | ||
Affirmative | 13,162,946,758.47 | 94.840 |
Withheld | 716,131,159.03 | 5.160 |
TOTAL | 13,879,077,917.50 | 100.000 |
ADenotes trust-wide proposal and voting results. BEffective on or about January 1, 2007. | ||
Semiannual Report
Board Approval of Investment Advisory Contracts and Management Fees
Select Money Market Portfolio
Each year, typically in June, the Board of Trustees, including the Independent Trustees (together, the Board), votes on the renewal of the management contract and sub-advisory agreements (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 throughout the year.
The Board meets regularly each month except August and takes into account throughout the year matters bearing on Advisory Contracts. The Board, acting directly and through its separate committees, considers at each of its meetings factors that are relevant to the annual renewal of the fund's Advisory Contracts, including the services and support provided to the fund and its shareholders. At the time of the renewal, the Board had 12 standing committees, each composed of 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. Each committee has adopted a written charter outlining the structure and purposes of the committee. One such committee, the Fixed-Income Contract Committee, meets periodically as needed throughout the year to consider matters specifically related to the annual renewal of Advisory Contracts. The committee requests and receives information on, and makes recommendations to the Independent Trustees concerning, the approval and annual review of the Advisory Contracts.
At its June 2006 meeting, the Board of Trustees, including the Independent Trustees, unanimously determined to renew the Advisory Contracts for the fund. 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 management fee and total expenses of the fund; (iii) the total costs of the services to be provided by and the profits to be realized by the investment adviser and its affiliates from the relationship with the fund; (iv) the extent to which economies of scale 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 determining whether to renew the Advisory Contracts for the fund, the Board ultimately reached a determination, with the assistance of fund counsel and Independent Trustees' counsel, that the renewal of the Advisory Contracts and the compensation to be received by Fidelity under the management contract is consistent with Fidelity's fiduciary duty under applicable law. In addition to evaluating the specific factors noted above, the Board, in reaching its determination, is aware that shareholders in the fund have a broad range of investment choices available to them, including a wide choice among mutual funds offered by competitors to Fidelity, and that the fund's shareholders, with 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, managed by Fidelity.
Nature, Extent, and Quality of Services Provided. The Board considered staffing within the investment adviser, FMR, and the sub-advisers (together, the Investment Advisers), including the background of the fund's portfolio manager and the fund's investment objective and discipline. 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.
Resources Dedicated to Investment Management and Support Services. The Board reviewed the size, education, and experience of the Investment Advisers' investment staff, their use of technology, and the Investment Advisers' approach to recruiting, training, and retaining portfolio managers and other research, advisory, and management personnel. The Board considered Fidelity's extensive global research capabilities that enable the Investment Advisers to aggregate data from various sources in an effort to produce positive investment results. The Board noted that Fidelity's analysts have access to a variety of technological tools that enable them to perform both fundamental and quantitative analysis and to specialize in various disciplines. The Board also considered that Fidelity's portfolio managers and analysts have access to daily portfolio attribution that allows for monitoring of a fund's portfolio, as well as an electronic communication system that provides immediate real-time access to research concerning issuers and credit enhancers. In addition, the Board considered the trading resources that are an integrated part of the fixed-income portfolio management investment process.
Shareholder and Administrative Services. The Board considered (i) the nature, extent, quality, and cost of administrative, distribution, and shareholder services performed by the Investment Advisers and their affiliates under the Advisory Contracts and under separate agreements covering transfer agency and pricing and bookkeeping services for the fund; (ii) the nature and extent of the Investment Advisers' 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 noted that the growth of fund assets 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 phone representatives and over the Internet, and investor education materials and asset allocation tools.
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 for a large variety of mutual fund investor services. For example, fund shareholders are offered the privilege of exchanging shares of the fund for shares of other Fidelity funds, as set forth in the fund's prospectus, without paying a sales charge. The Board noted that, since the last Advisory Contract renewals in June 2005, Fidelity has taken a number of actions that benefited particular funds, including (i) dedicating additional resources to investment research and to restructure the investment research teams; (ii) voluntarily entering into contractual arrangements with certain brokers pursuant to which Fidelity pays for research products and services separately out of its own resources, rather than bundling with fund commissions; (iii) launching the Fidelity Advantage Class of its five Spartan stock index funds and three Spartan bond index funds, which is a lower-fee class available to shareholders with higher account balances; (iv) contractually agreeing to impose expense limitations on Fidelity U.S. Bond Index Fund and reducing the fund's initial investment minimum; and (v) offering shareholders of each of the Fidelity Institutional Money Market Funds the privilege of exchanging shares of the fund for shares of other Fidelity funds.
Semiannual Report
Board Approval of Investment Advisory Contracts and Management Fees - continued
Investment Performance. The Board considered whether the fund has operated within its investment objective, as well as its record of compliance with its investment restrictions. It also reviewed the fund's absolute investment performance, as well as the fund's relative investment performance measured against a peer group of mutual funds deemed appropriate by the Board over multiple periods. The following charts considered by the Board show, over the one-, three-, and five-year periods ended December 31, 2005, the fund's cumulative total returns and a range of cumulative total returns of a peer group of mutual funds identified by Lipper Inc. as having an investment objective similar to that of the fund. The box within each chart shows the 25th percentile return (bottom of box) and the 75th percentile return (top of box) of the Lipper peer group. Returns shown above the box are in the first quartile and returns shown below the box are in the fourth quartile. The percentage beaten number noted below each chart corresponds to the percentile box and represents the percentage of funds in the Lipper peer group whose performance was equal to or lower than that of the fund.
Select Money Market Portfolio
The Board reviewed the fund's relative investment performance against its Lipper peer group and stated that the performance of the fund was in the first quartile for all the periods shown.
Based on its review, and giving particular weight to the nature and quality of the resources dedicated by the Investment Advisers to maintain and improve relative performance, the Board concluded that the nature, extent, and quality of the services provided to the fund will benefit the fund's shareholders, particularly in light of the Board's view that the fund's shareholders benefit from investing in a fund that is part of a large family of funds offering a variety of investment disciplines and services.
Competitiveness of Management Fee and Total Fund Expenses. The Board considered the fund's management fee and total expenses compared to "mapped groups" of competitive funds and classes. Fidelity creates "mapped groups" by combining similar Lipper investment objective categories that have comparable management fee characteristics. Combining Lipper investment objective categories aids the Board's management fee and total expense comparisons by broadening the competitive group used for comparison and by reducing the number of universes to which various Fidelity funds are compared.
The Board considered two proprietary management fee comparisons for the 12-month periods 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" and, for the reasons explained above, is broader than the Lipper peer group used by the Board for performance comparisons. The Total Mapped Group comparison focuses on a fund's standing relative to the total universe of comparable funds available to investors, in terms of gross management fees before expense reimbursements or caps. "TMG %" represents the percentage of funds in the Total Mapped Group that had management fees that were lower than the fund's. For example, a TMG % of 7% means that 93% of the funds in the Total Mapped Group had higher management fees than the fund. The "Asset-Size Peer Group" (ASPG) comparison focuses on a fund's standing relative to non-Fidelity funds similar in size to the fund within the Total Mapped Group. The ASPG represents at least 15% of the funds in the Total Mapped Group with comparable asset size and management fee characteristics, 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 the fund's management fee ranked, is also included in the chart and considered by the Board. The Board also recognized that the income-based component of the fund's management fee varies depending on the level of the fund's monthly gross income, providing for higher fees at higher income levels, and for lower fees at lower income levels.
Semiannual Report
Select Money Market Portfolio
The Board noted that the fund's management fee ranked below the median of its Total Mapped Group and below the median of its ASPG for 2005. Based on its review, the Board concluded that the fund's management fee was fair and reasonable in light of the services that the fund receives and the other factors considered.
In its review of the fund's total expenses, 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 the effects of any waivers and reimbursements on fees and expenses. As part of its review, the Board also considered current and historical total expenses 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 expenses ranked below its competitive median for 2005.
In its review of total expenses, the Board also considered Fidelity fee structures and other information on clients that FMR and its affiliates service in other competitive markets, such as other mutual funds advised or subadvised by FMR or its affiliates, pension plan clients, and other institutional clients.
Based on its review, the Board concluded that the fund's total expenses were 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 its shareholders. The Board also considered the level of Fidelity's profits in respect of all the Fidelity funds.
On an annual basis, FMR presents to the Board Fidelity's profitability for the fund. Fidelity calculates the profitability for each fund, as well as aggregate profitability for groups of Fidelity funds and all Fidelity funds, using a series of detailed revenue and cost allocation methodologies which originate with the audited books and records of Fidelity. The Audit Committee of the Board reviews any significant changes from the prior year's methodologies.
PricewaterhouseCoopers LLP (PwC), independent registered 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 results of Fidelity's profitability analysis. 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 surrounding the mathematical accuracy of fund profitability and its conformity to allocation methodologies. After considering PwC's reports issued under the engagement and information provided by Fidelity, the Board believes that while other allocation methods may also be reasonable, Fidelity's profitability methodologies are reasonable in all material respects.
Semiannual Report
Board Approval of Investment Advisory Contracts and Management Fees - continued
The Board has also reviewed Fidelity's non-fund businesses and any 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 fund's 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 determined that the amount of profit is a fair entrepreneurial profit for the management of the fund.
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 through increased services to the fund, through waivers or reimbursements, or through fee or expense reductions, including reductions that occur through operation of the transfer agent agreement. The transfer agent fee varies in part based on the number of accounts in the fund. If the number of accounts decreases or the average account size increases, the overall transfer agent fee rate decreases.
The Board recognized that the fund's management contract incorporates a "group fee" structure, which provides for lower fee rates as total fund assets under FMR's management increase, and for higher fee rates as total fund assets under FMR's management decrease. The Board considered that the group fee is designed to deliver the benefits of economies of scale to fund shareholders when total fund 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 achieve a certain level of economies of scale as assets under FMR's management increase at the fund complex level, regardless of whether Fidelity achieves any such economies of scale.
The Board further concluded that any potential economies of scale are being shared between fund shareholders and Fidelity in an appropriate manner.
Additional Information Requested by the Board. In order to develop fully the factual basis for consideration of the Advisory Contracts, the Board requested additional information on several topics, including (i) Fidelity's fund profitability methodology and profitability trends within certain funds; (ii) funds and accounts managed by Fidelity other than the Fidelity funds, including fee arrangements; (iii) the total expenses of certain funds and classes relative to competitors; (iv) fund performance trends; and (v) Fidelity's fee structures.
Based on its evaluation of all of the conclusions noted above, and after considering all material factors, the Board ultimately concluded that the advisory fee structures are fair and reasonable, and that the fund's Advisory Contracts should be renewed.
Semiannual Report
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
Fidelity Investments Money Management, Inc.,
Fidelity International Investment Advisors
Fidelity International Investment Advisors
(U.K. Limited)
Fidelity Research & Analysis Company
(formerly Fidelity Management & Research (Far East) Inc.)
General Distributor
Fidelity Distributors Corporation
Boston, MA
Transfer and Service Agent
Fidelity Service Company, Inc.
Boston, MA
Custodian
The Bank of New York
New York, NY
Corporate Headquarters
82 Devonshire Street
Boston, MA 02109
1-800-544-8888
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and Account Assistance1-800-544-6666
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Fidelity®
Select Portfolios®
Technology Sector
Communications Equipment (formerly Developing Communications)
Computers
Electronics
IT Services (formerly Business Services and Outsourcing)
Networking and Infrastructure
Software and Computer Services
Technology
Semiannual Report
August 31, 2006
(2_fidelity_logos) (Registered_Trademark)
Contents
Chairman's Message | ||
Shareholder Expense Example | ||
Fund Updates* | ||
Technology Sector | ||
Communications Equipment | ||
Computers | ||
Electronics | ||
IT Services | ||
Networking and Infrastructure | ||
Software and Computer Services | ||
Technology | ||
Notes to Financial Statements | ||
Proxy Voting Results | ||
Board Approval of Investment Advisory Contracts and Management Fees | ||
*Fund updates for each Select Portfolio include: Investment Changes, Investments, and Financial Statements.
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit www.fidelity.com/proxyvotingresults or visit the Securities and Exchange Commission's (SEC) web site at 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 Corp. or an affiliated company.
This report and the financial statements contained herein are submitted for the general information of the shareholders of the funds. This report is not authorized for distribution to prospective investors in the funds unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent quarterly holdings report, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com/holdings.
NOT FDIC INSURED · MAY LOSE VALUE · NO BANK GUARANTEE
Neither the funds nor Fidelity Distributors Corporation is a bank.
Annual Report
Chairman's Message
(Photograph of Edward C. Johnson 3d.)
Dear Shareholder:
Stock and bond markets around the world have seen largely positive results year to date, although weakness in the technology sector and growth stocks in general have tempered performance. While financial markets are always unpredictable, there are a number of time-tested principles that can put the historical odds in your favor.
One of the basic tenets is to invest for the long term. Over time, riding out the markets' inevitable ups and downs has proven much more effective than selling into panic or chasing the hottest trend. Even missing only a few of the markets' best days can significantly diminish investor returns. Patience also affords the benefits of compounding - of earning interest on additional income or reinvested dividends and capital gains. There are tax advantages and cost benefits to consider as well. The more you sell, the more taxes you pay, and the more you trade, the higher the costs. While staying the course doesn't eliminate risk, it can considerably lessen the effect of short-term declines.
You can further manage your investing risk through diversification. And today, more than ever, geographic diversification should be taken into account. Studies
indicate that asset allocation is the single most important determinant of a portfolio's long-term success. The right mix of stocks, bonds and cash - aligned to your particular risk tolerance and investment objective - is very important. Age-appropriate rebalancing is also an essential aspect of asset allocation. For younger investors, an emphasis on equities - which historically have been the best performing asset class over time - is encouraged. As investors near their specific goal, such as retirement or sending a child to college, consideration may be given to replacing volatile assets (e.g. common stocks) with more-stable fixed investments (bonds or savings plans).
A third investment principle - investing regularly - can help lower the average cost of your purchases. Investing a certain amount of money each month or quarter helps ensure you won't pay for all your shares at market highs. This strategy - known as dollar cost averaging - also reduces unconstructive "emotion" from investing, helping shareholders avoid selling weak performers just prior to an upswing, or chasing a hot performer just before a correction.
We invite you to contact us via the Internet, through our Investor Centers or over the phone. It is our privilege to provide you the information you need to make the investments that are right for you.
Sincerely,
/s/Edward C. Johnson 3d
Edward C. Johnson 3d
Semiannual Report
Shareholder Expense Example
As a shareholder of a Fund, you incur two types of costs: (1) transaction costs, including redemption fees, exchange 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 (March 1, 2006 to August 31, 2006).
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.
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.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Beginning | Ending | Expenses Paid | |
Communications Equipment Portfolio | |||
Actual | $1,000.00 | $904.50 | $4.90 |
HypotheticalA | $1,000.00 | $1,020.06 | $5.19 |
Computers Portfolio | |||
Actual | $1,000.00 | $941.70 | $5.04 |
HypotheticalA | $1,000.00 | $1,020.01 | $5.24 |
Electronics Portfolio | |||
Actual | $1,000.00 | $910.30 | $4.43 |
HypotheticalA | $1,000.00 | $1,020.57 | $4.69 |
IT Services Portfolio | |||
Actual | $1,000.00 | $981.90 | $5.79 |
HypotheticalA | $1,000.00 | $1,019.36 | $5.90 |
Networking and Infrastructure Portfolio | |||
Actual | $1,000.00 | $876.00 | $5.20 |
HypotheticalA | $1,000.00 | $1,019.66 | $5.60 |
Software and Computer Services Portfolio | |||
Actual | $1,000.00 | $1,074.30 | $4.86 |
HypotheticalA | $1,000.00 | $1,020.52 | $4.74 |
Technology Portfolio | |||
Actual | $1,000.00 | $951.00 | $4.77 |
HypotheticalA | $1,000.00 | $1,020.32 | $4.94 |
A5% return per year before expenses
*Expenses are equal to each Fund's annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period).
Annualized | |
Communications Equipment Portfolio | 1.02% |
Computers Portfolio | 1.03% |
Electronics Portfolio | .92% |
IT Services Portfolio | 1.16% |
Networking and Infrastructure Portfolio | 1.10% |
Software and Computer Services Portfolio | .93% |
Technology Portfolio | .97% |
Semiannual Report
Communications Equipment Portfolio
Investment Changes
Top Ten Stocks as of August 31, 2006 | ||
% of fund's | % of fund's net assets | |
Corning, Inc. | 8.7 | 5.5 |
QUALCOMM, Inc. | 7.6 | 7.4 |
Powerwave Technologies, Inc. | 5.3 | 0.0 |
Comverse Technology, Inc. | 5.3 | 4.6 |
Motorola, Inc. | 4.6 | 4.6 |
Google, Inc. Class A (sub. vtg.) | 4.2 | 9.9 |
Nortel Networks Corp. | 3.7 | 6.5 |
Juniper Networks, Inc. | 2.4 | 2.7 |
F5 Networks, Inc. | 2.3 | 3.1 |
Ulticom, Inc. | 1.9 | 1.7 |
46.0 | ||
Top Industries (% of fund's net assets) | |||
As of August 31, 2006 | |||
| Communications Equipment | 62.0% | |
| Semiconductors & Semiconductor Equipment | 13.5% | |
| Internet Software & Services | 5.9% | |
| Wireless Telecommunication Services | 4.2% | |
| Software | 2.9% | |
| All Others * | 11.5% | |
As of February 28, 2006 | |||
| Communications Equipment | 59.0% | |
| Wireless Telecommunication Services | 13.0% | |
| Internet Software & Services | 12.5% | |
| Semiconductors & Semiconductor Equipment | 7.1% | |
| Software | 2.8% | |
| All Others * | 5.6% | |
* Includes short-term investments and net other assets. |
Prior period industry classifications reflect the categories in place as of the date indicated and have not been adjusted to reflect current industry classifications. |
Semiannual Report
Communications Equipment Portfolio
Investments August 31, 2006 (Unaudited)
Showing Percentage of Net Assets
Common Stocks - 96.0% | |||
Shares | Value (Note 1) | ||
COMMERCIAL SERVICES & SUPPLIES - 0.8% | |||
Diversified Commercial & Professional Services - 0.8% | |||
Tele Atlas NV (a)(d) | 162,000 | $2,955,575 | |
COMMUNICATIONS EQUIPMENT - 61.8% | |||
Communications Equipment - 61.8% | |||
3Com Corp. (a) | 293,500 | 1,300,205 | |
ADC Telecommunications, Inc. (a) | 192,200 | 2,623,530 | |
Adtran, Inc. | 174,900 | 4,349,763 | |
ADVA AG Optical Networking (a) | 264,161 | 1,952,817 | |
Alvarion Ltd. (a) | 124,600 | 877,184 | |
Andrew Corp. (a) | 455,400 | 4,212,450 | |
Arris Group, Inc. (a) | 132,100 | 1,513,866 | |
AudioCodes Ltd. (a) | 492,990 | 4,900,321 | |
Bookham, Inc. (a)(d) | 734,828 | 2,336,753 | |
C-COR, Inc. (a) | 33,600 | 267,120 | |
Ceragon Networks Ltd. (a) | 478,000 | 2,184,460 | |
CIENA Corp. (a) | 1,565,044 | 6,181,924 | |
CommScope, Inc. (a) | 9,400 | 274,574 | |
Comtech Group, Inc. (a)(d) | 282,200 | 3,146,530 | |
Comverse Technology, Inc. (a) | 989,610 | 20,682,849 | |
Corning, Inc. (a) | 1,536,000 | 34,160,638 | |
CSR PLC (a) | 170,100 | 3,796,060 | |
ECI Telecom Ltd. (a) | 198,400 | 1,418,560 | |
F5 Networks, Inc. (a) | 180,900 | 9,061,281 | |
Foundry Networks, Inc. (a) | 351,800 | 4,281,406 | |
Foxconn International Holdings Ltd. (a) | 80,000 | 211,386 | |
Ixia (a) | 191,000 | 1,919,550 | |
JDS Uniphase Corp. (a) | 1,470,800 | 3,338,716 | |
Juniper Networks, Inc. (a) | 637,959 | 9,358,859 | |
Lucent Technologies, Inc. (a) | 1,685,200 | 3,926,516 | |
Motorola, Inc. | 772,500 | 18,061,050 | |
MRV Communications, Inc. (a)(d) | 329,083 | 819,417 | |
Nokia Corp. sponsored ADR | 178,600 | 3,729,168 | |
Nortel Networks Corp. (a) | 6,975,700 | 14,579,232 | |
Orckit Communications Ltd. (a) | 143,300 | 1,309,762 | |
Powerwave Technologies, Inc. (a)(d) | 2,768,800 | 20,987,504 | |
QUALCOMM, Inc. | 792,600 | 29,857,242 | |
Research In Motion Ltd. (a) | 72,100 | 5,948,250 | |
Riverstone Networks, Inc. (a) | 1,129,500 | 1,016,550 | |
Sandvine Corp. (e) | 1,957,600 | 4,118,958 | |
Sonus Networks, Inc. (a) | 1,083,796 | 5,267,249 | |
Stratex Networks, Inc. (a) | 445,200 | 1,624,980 | |
Symmetricom, Inc. (a) | 448,200 | 3,343,572 | |
Tekelec (a) | 171,900 | 2,286,270 | |
Telefonaktiebolaget LM Ericsson (B Shares) sponsored ADR | 1,848 | 61,723 | |
Telson Electronics Co. Ltd. (a) | 850,529 | 0 | |
Terayon Communication Systems, Inc. (a) | 187,000 | 185,130 | |
TomTom Group BV (a) | 29,000 | 1,183,009 | |
Tut Systems, Inc. (a)(d) | 109,700 | 126,155 | |
242,782,539 | |||
Shares | Value (Note 1) | ||
COMPUTERS & PERIPHERALS - 2.8% | |||
Computer Hardware - 1.1% | |||
Compal Electronics, Inc. | 247,627 | $216,797 | |
Concurrent Computer Corp. (a) | 2,656,478 | 4,090,976 | |
NEC Corp. sponsored ADR | 700 | 4,053 | |
4,311,826 | |||
Computer Storage & Peripherals - 1.7% | |||
msystems Ltd. (a) | 29,900 | 1,326,962 | |
Novatel Wireless, Inc. (a)(d) | 131,000 | 1,460,650 | |
Synaptics, Inc. (a) | 157,500 | 3,983,175 | |
6,770,787 | |||
TOTAL COMPUTERS & PERIPHERALS | 11,082,613 | ||
DIVERSIFIED TELECOMMUNICATION SERVICES - 1.1% | |||
Alternative Carriers - 0.3% | |||
Level 3 Communications, Inc. (a)(d) | 232,400 | 1,029,532 | |
Integrated Telecommunication Services - 0.8% | |||
Embarq Corp. | 1,035 | 48,800 | |
NeuStar, Inc. Class A | 72,800 | 2,054,416 | |
Philippine Long Distance Telephone Co. sponsored ADR | 33,400 | 1,250,496 | |
3,353,712 | |||
TOTAL DIVERSIFIED TELECOMMUNICATION SERVICES | 4,383,244 | ||
ELECTRICAL EQUIPMENT - 0.1% | |||
Electrical Components & Equipment - 0.1% | |||
Energy Conversion Devices, Inc. (a) | 14,600 | 511,730 | |
ELECTRONIC EQUIPMENT & INSTRUMENTS - 1.8% | |||
Electronic Equipment & Instruments - 1.4% | |||
AU Optronics Corp. sponsored ADR | 3,573 | 52,094 | |
Chi Mei Optoelectronics Corp. | 415,617 | 492,744 | |
Dolby Laboratories, Inc. Class A (a) | 40,000 | 867,600 | |
HannStar Display Corp. | 2,368,000 | 317,456 | |
LG.Philips LCD Co. Ltd. sponsored ADR (a)(d) | 96,800 | 1,923,416 | |
Nippon Electric Glass Co. Ltd. | 48,000 | 1,165,297 | |
Photon Dynamics, Inc. (a) | 43,484 | 583,990 | |
5,402,597 | |||
Electronic Manufacturing Services - 0.4% | |||
Molex, Inc. | 25,700 | 937,279 | |
Trimble Navigation Ltd. (a) | 13,500 | 661,095 | |
1,598,374 | |||
TOTAL ELECTRONIC EQUIPMENT & INSTRUMENTS | 7,000,971 | ||
HOUSEHOLD DURABLES - 0.3% | |||
Consumer Electronics - 0.3% | |||
Directed Electronics, Inc. | 85,300 | 1,251,351 | |
Common Stocks - continued | |||
Shares | Value (Note 1) | ||
INTERNET SOFTWARE & SERVICES - 5.9% | |||
Internet Software & Services - 5.9% | |||
aQuantive, Inc. (a) | 41,200 | $1,021,760 | |
Google, Inc. Class A (sub. vtg.) (a) | 43,407 | 16,430,852 | |
Openwave Systems, Inc. (a) | 582,919 | 4,715,815 | |
RADVision Ltd. (a) | 72,800 | 1,208,480 | |
23,376,907 | |||
MEDIA - 0.8% | |||
Broadcasting & Cable TV - 0.8% | |||
EchoStar Communications Corp. Class A (a) | 97,100 | 3,082,925 | |
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 13.5% | |||
Semiconductor Equipment - 0.6% | |||
EMCORE Corp. (a)(d) | 223,800 | 1,689,690 | |
MEMC Electronic Materials, Inc. (a) | 22,500 | 870,300 | |
2,559,990 | |||
Semiconductors - 12.9% | |||
Actel Corp. (a) | 19,449 | 301,848 | |
Advanced Analogic Technologies, Inc. | 224,100 | 2,133,432 | |
AMIS Holdings, Inc. (a) | 242,100 | 2,205,531 | |
ANADIGICS, Inc. (a)(d) | 199,700 | 1,489,762 | |
Applied Micro Circuits Corp. (a) | 443,268 | 1,210,122 | |
ARM Holdings PLC sponsored ADR | 232,100 | 1,578,280 | |
Broadcom Corp. Class A (a) | 192,200 | 5,658,368 | |
Conexant Systems, Inc. (a) | 432,400 | 890,744 | |
Exar Corp. (a) | 6,701 | 93,680 | |
Freescale Semiconductor, Inc. Class A (a) | 208,300 | 6,394,810 | |
Ikanos Communications, Inc. | 1,700 | 21,692 | |
Intersil Corp. Class A | 78,900 | 2,000,115 | |
Marvell Technology Group Ltd. (a) | 45,200 | 791,452 | |
Microtune, Inc. (a) | 276,300 | 1,663,326 | |
Mindspeed Technologies, Inc. (a) | 440,463 | 841,284 | |
MIPS Technologies, Inc. (a) | 48,602 | 338,270 | |
Netlogic Microsystems, Inc. (a)(d) | 70,900 | 2,092,259 | |
Novatek Microelectronics Corp. | 571,591 | 2,814,906 | |
O2Micro International Ltd. sponsored ADR (a) | 357,600 | 2,149,176 | |
Pericom Semiconductor Corp. (a) | 58,100 | 540,330 | |
Pixelplus Co. Ltd. sponsored ADR (d) | 123,700 | 218,949 | |
PLX Technology, Inc. (a) | 48,400 | 518,848 | |
PMC-Sierra, Inc. (a) | 1,200 | 8,208 | |
PowerDsine Ltd. (a) | 142,300 | 1,316,275 | |
RF Micro Devices, Inc. (a) | 164,800 | 1,090,976 | |
Shares | Value (Note 1) | ||
Sigma Designs, Inc. (a) | 210,512 | $2,940,853 | |
Silicon On Insulator Technologies SA (SOITEC) (a) | 79,300 | 2,419,076 | |
SiRF Technology Holdings, Inc. (a) | 7,600 | 200,108 | |
Skyworks Solutions, Inc. (a) | 264,600 | 1,225,098 | |
Spansion, Inc. Class A (d) | 139,600 | 2,399,724 | |
Transmeta Corp. (a) | 236,700 | 279,306 | |
Trident Microsystems, Inc. (a) | 123,000 | 2,537,490 | |
Vimicro International Corp. sponsored ADR | 22,939 | 244,989 | |
50,609,287 | |||
TOTAL SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT | 53,169,277 | ||
SOFTWARE - 2.9% | |||
Application Software - 2.2% | |||
ECtel Ltd. (a) | 2,790 | 11,746 | |
NAVTEQ Corp. (a) | 36,400 | 966,784 | |
Ulticom, Inc. (a) | 711,278 | 7,639,126 | |
8,617,656 | |||
Home Entertainment Software - 0.3% | |||
Ubisoft Entertainment SA (a)(d) | 23,600 | 1,259,040 | |
Systems Software - 0.4% | |||
Wind River Systems, Inc. (a) | 145,900 | 1,483,803 | |
TOTAL SOFTWARE | 11,360,499 | ||
WIRELESS TELECOMMUNICATION SERVICES - 4.2% | |||
Wireless Telecommunication Services - 4.2% | |||
American Tower Corp. Class A (a) | 105,000 | 3,765,300 | |
Crown Castle International Corp. | 100,800 | 3,463,488 | |
MTN Group Ltd. | 154,700 | 1,226,450 | |
NII Holdings, Inc. (a) | 9,900 | 528,165 | |
SBA Communications Corp. Class A (a) | 73,200 | 1,884,168 | |
Sprint Nextel Corp. | 210,900 | 3,568,428 | |
Vimpel Communications sponsored ADR (a) | 29,200 | 1,586,144 | |
WiderThan Co. Ltd. ADR | 25,600 | 336,640 | |
16,358,783 | |||
TOTAL COMMON STOCKS (Cost $430,666,901) | 377,316,414 | ||
Convertible Bonds - 0.2% | ||||
Principal Amount | ||||
COMMUNICATIONS EQUIPMENT - 0.2% | ||||
Communications Equipment - 0.2% | ||||
CIENA Corp. 0.25% 5/1/13 | $700,000 | 617,470 | ||
Money Market Funds - 7.4% | |||
Shares | Value (Note 1) | ||
Fidelity Cash Central Fund, 5.31% (b) | 6,238,051 | $6,238,051 | |
Fidelity Securities Lending Cash Central Fund, 5.33% (b)(c) | 22,696,725 | 22,696,725 | |
TOTAL MONEY MARKET FUNDS (Cost $28,934,776) | 28,934,776 | ||
TOTAL INVESTMENT PORTFOLIO - 103.6% (Cost $460,301,677) | 406,868,660 | ||
NET OTHER ASSETS - (3.6)% | (14,032,570) | ||
NET ASSETS - 100% | $392,836,090 | ||
Legend |
(a)Non-income producing |
(b)Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. |
(c)Investment made with cash collateral received from securities on loan. |
(d)Security or a portion of the security is on loan at period end. |
(e)Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the end of the period, the value of these securities amounted to $ 4,118,958 or 1.0% of net assets. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the fund from the affiliated Central funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $66,210 |
Fidelity Securities Lending Cash Central Fund | 116,018 |
Total | $182,228 |
Other Information |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: |
United States of America | 81.4% |
Canada | 6.2% |
Israel | 3.6% |
United Kingdom | 1.4% |
Netherlands | 1.1% |
Taiwan | 1.0% |
Others (individually less than 1%) | 5.3% |
100.0% |
Income Tax Information |
At February 28, 2006, the fund had a capital loss carryforward of approximately $1,232,103,818 of which $876,655,867 and $355,447,951 will expire on February 28, 2010 and 2011, respectively. |
The fund intends to elect to defer to its fiscal year ending February 28, 2007 approximately $7,544,000 of losses recognized during the period November 1, 2005 to February 28, 2006. |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Communications Equipment Portfolio
Financial Statements
Statement of Assets and Liabilities
August 31, 2006 (Unaudited) | ||
Assets | ||
Investment in securities, at value (including securities loaned of $21,731,616) - See accompanying schedule: Unaffiliated issuers (cost $431,366,901) | $377,933,884 | |
Affiliated Central Funds (cost $28,934,776) | 28,934,776 | |
Total Investments (cost $460,301,677) | $406,868,660 | |
Foreign currency held at value (cost $28) | 28 | |
Receivable for investments sold | 1,677,912 | |
Receivable for fund shares sold | 7,748,028 | |
Dividends receivable | 141,798 | |
Interest receivable | 19,468 | |
Prepaid expenses | 470 | |
Other receivables | 18,660 | |
Total assets | 416,475,024 | |
Liabilities | ||
Payable for fund shares redeemed | $596,770 | |
Accrued management fee | 173,040 | |
Other affiliated payables | 136,403 | |
Other payables and accrued expenses | 35,996 | |
Collateral on securities loaned, at value | 22,696,725 | |
Total liabilities | 23,638,934 | |
Net Assets | $392,836,090 | |
Net Assets consist of: | ||
Paid in capital | $1,676,117,609 | |
Accumulated net investment loss | (1,537,310) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (1,228,311,174) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (53,433,035) | |
Net Assets, for 20,042,568 shares outstanding | $392,836,090 | |
Net Asset Value, offering price and redemption price per share ($392,836,090 ÷ 20,042,568 shares) | $19.60 | |
Statement of Operations
Six months ended August 31, 2006 (Unaudited) | ||
Investment Income | ||
Dividends | $580,709 | |
Interest | 720 | |
Income from affiliated Central Funds (including $116,018 from security lending) | 182,228 | |
763,657 | ||
Less foreign taxes withheld | (50,080) | |
Total income | 713,577 | |
Expenses | ||
Management fee | $1,251,426 | |
Transfer agent fees | 808,052 | |
Accounting and security lending fees | 112,039 | |
Independent trustees' compensation | 903 | |
Custodian fees and expenses | 20,980 | |
Registration fees | 24,495 | |
Audit | 17,107 | |
Legal | 4,688 | |
Interest | 2,585 | |
Miscellaneous | 19,689 | |
Total expenses before reductions | 2,261,964 | |
Expense reductions | (11,866) | 2,250,098 |
Net investment income (loss) | (1,536,521) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers | 15,530,312 | |
Foreign currency transactions | (1,919) | |
Total net realized gain (loss) | 15,528,393 | |
Change in net unrealized appreciation (depreciation) on: Investment securities | (60,154,910) | |
Assets and liabilities in foreign currencies | (18) | |
Total change in net unrealized appreciation (depreciation) | (60,154,928) | |
Net gain (loss) | (44,626,535) | |
Net increase (decrease) in net assets resulting from operations | $(46,163,056) | |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Communications Equipment Portfolio
Financial Statements - continued
Statement of Changes in Net Assets
Six months ended August 31, 2006 (Unaudited) | Year ended | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $(1,536,521) | $(2,247,890) |
Net realized gain (loss) | 15,528,393 | 28,080,137 |
Change in net unrealized appreciation (depreciation) | (60,154,928) | 65,837,387 |
Net increase (decrease) in net assets resulting from operations | (46,163,056) | 91,669,634 |
Share transactions | 86,172,792 | 135,493,900 |
Cost of shares redeemed | (127,337,184) | (258,336,137) |
Net increase (decrease) in net assets resulting from share transactions | (41,164,392) | (122,842,237) |
Redemption fees | 36,728 | 89,299 |
Total increase (decrease) in net assets | (87,290,720) | (31,083,304) |
Net Assets | ||
Beginning of period | 480,126,810 | 511,210,114 |
End of period (including accumulated net investment loss of $1,537,310 and accumulated net investment loss of $789, respectively) | $392,836,090 | $480,126,810 |
Other Information Shares | ||
Sold | 3,978,132 | 6,969,732 |
Redeemed | (6,089,712) | (13,742,323) |
Net increase (decrease) | (2,111,580) | (6,772,591) |
Financial Highlights
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Investment Changes
Top Ten Stocks as of August 31, 2006 | ||
% of fund's | % of fund's net assets | |
Apple Computer, Inc. | 7.6 | 9.7 |
Hewlett-Packard Co. | 7.6 | 0.0 |
Intel Corp. | 5.1 | 5.8 |
International Business Machines Corp. | 5.0 | 4.9 |
Texas Instruments, Inc. | 4.4 | 0.0 |
EMC Corp. | 4.3 | 5.3 |
Corning, Inc. | 4.0 | 1.8 |
Best Buy Co., Inc. | 3.6 | 4.5 |
Cisco Systems, Inc. | 3.2 | 5.0 |
Sun Microsystems, Inc. | 2.9 | 1.6 |
47.7 | ||
Top Industries (% of fund's net assets) | |||
As of August 31, 2006 | |||
| Computers & Peripherals | 39.9% | |
| Semiconductors & Semiconductor Equipment | 32.1% | |
| Communications Equipment | 8.1% | |
| Specialty Retail | 6.1% | |
| Electronic Equipment & Instruments | 4.2% | |
| All Others * | 9.6% | |
As of February 28, 2006 | |||
| Computers & Peripherals | 35.2% | |
| Semiconductors & Semiconductor Equipment | 31.8% | |
| Communications Equipment | 11.0% | |
| Specialty Retail | 9.6% | |
| Electronic Equipment & Instruments | 5.3% | |
| All Others * | 7.1% | |
*Includes short-term investments and net other assets. |
Prior period industry classifications reflect the categories in place as of the date indicated and have not been adjusted to reflect current industry classifications. |
Semiannual Report
Computers Portfolio
Investments August 31, 2006 (Unaudited)
Showing Percentage of Net Assets
Common Stocks - 97.3% | |||
Shares | Value (Note 1) | ||
COMMUNICATIONS EQUIPMENT - 8.1% | |||
Communications Equipment - 8.1% | |||
Cisco Systems, Inc. (a) | 660,500 | $14,524,395 | |
Corning, Inc. (a) | 810,300 | 18,021,072 | |
CSR PLC (a) | 89,500 | 1,997,339 | |
ITF Optical Technologies, Inc. Series A (e) | 31,365 | 0 | |
JDS Uniphase Corp. (a) | 861,000 | 1,954,470 | |
36,497,276 | |||
COMPUTERS & PERIPHERALS - 39.9% | |||
Computer Hardware - 27.3% | |||
Apple Computer, Inc. (a)(d) | 508,100 | 34,474,586 | |
Dell, Inc. (a) | 413,200 | 9,317,660 | |
Diebold, Inc. | 28,500 | 1,194,435 | |
Hewlett-Packard Co. | 933,200 | 34,117,792 | |
International Business Machines Corp. | 277,200 | 22,444,884 | |
NCR Corp. (a) | 121,800 | 4,237,422 | |
Neoware Systems, Inc. (a)(d) | 151,800 | 1,958,220 | |
Sun Microsystems, Inc. (a) | 2,660,100 | 13,273,899 | |
Wistron Corp. | 2,097,828 | 2,330,885 | |
123,349,783 | |||
Computer Storage & Peripherals - 12.6% | |||
ASUSTeK Computer, Inc. | 466,400 | 1,046,353 | |
Brocade Communications Systems, Inc. (a) | 599,100 | 3,714,420 | |
Electronics for Imaging, Inc. (a) | 52,200 | 1,202,688 | |
EMC Corp. (a) | 1,673,500 | 19,496,275 | |
Lexmark International, Inc. Class A (a) | 40,800 | 2,287,656 | |
Network Appliance, Inc. (a) | 377,400 | 12,922,176 | |
Phison Electronics Corp. | 305,285 | 1,271,421 | |
QLogic Corp. (a) | 169,700 | 3,119,086 | |
Rackable Systems, Inc. (a) | 34,700 | 963,272 | |
SanDisk Corp. (a) | 141,500 | 8,337,180 | |
Seagate Technology | 50,000 | 1,112,500 | |
Xyratex Ltd. (a) | 60,700 | 1,153,907 | |
56,626,934 | |||
TOTAL COMPUTERS & PERIPHERALS | 179,976,717 | ||
ELECTRONIC EQUIPMENT & INSTRUMENTS - 4.2% | |||
Electronic Equipment & Instruments - 2.8% | |||
LG.Philips LCD Co. Ltd. sponsored ADR (a)(d) | 640,900 | 12,734,683 | |
Technology Distributors - 1.4% | |||
CDW Corp. | 32,800 | 1,912,240 | |
Ingram Micro, Inc. Class A (a) | 92,500 | 1,665,000 | |
Insight Enterprises, Inc. (a) | 22,900 | 412,429 | |
Wolfson Microelectronics PLC (a) | 253,200 | 2,306,996 | |
6,296,665 | |||
TOTAL ELECTRONIC EQUIPMENT & INSTRUMENTS | 19,031,348 | ||
Shares | Value (Note 1) | ||
HOUSEHOLD DURABLES - 0.3% | |||
Consumer Electronics - 0.3% | |||
LG Electronics, Inc. | 23,290 | $1,560,258 | |
INTERNET SOFTWARE & SERVICES - 0.1% | |||
Internet Software & Services - 0.1% | |||
VeriSign, Inc. (a) | 20,000 | 404,800 | |
IT SERVICES - 0.3% | |||
IT Consulting & Other Services - 0.3% | |||
Cognizant Technology Solutions Corp. Class A (a) | 17,500 | 1,223,425 | |
MACHINERY - 1.9% | |||
Industrial Machinery - 1.9% | |||
Shin Zu Shing Co. Ltd. | 1,553,000 | 8,427,004 | |
OFFICE ELECTRONICS - 2.2% | |||
Office Electronics - 2.2% | |||
Xerox Corp. (a) | 683,100 | 10,116,711 | |
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 32.1% | |||
Semiconductors - 32.1% | |||
Actions Semiconductor Co. Ltd. ADR | 214,200 | 1,711,458 | |
Advanced Micro Devices, Inc. (a)(d) | 187,280 | 4,680,127 | |
Agere Systems, Inc. (a) | 67,900 | 1,034,796 | |
Altera Corp. (a) | 300,800 | 6,085,184 | |
AMIS Holdings, Inc. (a) | 176,700 | 1,609,737 | |
Analog Devices, Inc. | 210,170 | 6,439,609 | |
Broadcom Corp. Class A (a) | 356,300 | 10,489,472 | |
Cypress Semiconductor Corp. (a) | 95,400 | 1,492,056 | |
Freescale Semiconductor, Inc. Class A (a) | 86,600 | 2,658,620 | |
Hynix Semiconductor, Inc. (a) | 33,600 | 1,286,258 | |
Intel Corp. | 1,165,900 | 22,781,686 | |
Linear Technology Corp. | 229,400 | 7,801,894 | |
LSI Logic Corp. (a) | 185,100 | 1,490,055 | |
Marvell Technology Group Ltd. (a) | 422,400 | 7,396,224 | |
Maxim Integrated Products, Inc. | 138,600 | 4,033,260 | |
MediaTek, Inc. | 102,300 | 932,954 | |
Microchip Technology, Inc. | 154,600 | 5,281,136 | |
Micron Technology, Inc. (a) | 238,000 | 4,112,640 | |
National Semiconductor Corp. | 264,600 | 6,427,134 | |
NVIDIA Corp. (a) | 285,000 | 8,296,350 | |
O2Micro International Ltd. sponsored ADR (a) | 226,700 | 1,362,467 | |
Powerchip Semiconductor Corp. | 1,746,400 | 1,154,693 | |
Powertech Technology, Inc. | 422,050 | 1,180,362 | |
ProMOS Technologies, Inc. (a) | 3,001,000 | 1,236,143 | |
Qimonda AG Sponsored ADR (a) | 93,000 | 1,501,950 | |
RF Micro Devices, Inc. (a) | 111,400 | 737,468 | |
Silicon On Insulator Technologies SA (SOITEC) (a) | 50,000 | 1,525,269 | |
Spansion, Inc. Class A (d) | 273,000 | 4,692,870 | |
Texas Instruments, Inc. | 603,900 | 19,681,101 | |
Xilinx, Inc. | 242,500 | 5,545,975 | |
144,658,948 | |||
Common Stocks - continued | |||
Shares | Value (Note 1) | ||
SOFTWARE - 2.1% | |||
Application Software - 1.6% | |||
Autodesk, Inc. (a) | 12,000 | $417,120 | |
Cognos, Inc. (a) | 34,900 | 1,134,948 | |
Hyperion Solutions Corp. (a) | 32,900 | 1,089,648 | |
NAVTEQ Corp. (a) | 93,000 | 2,470,080 | |
Sonic Solutions, Inc. (a) | 148,100 | 2,222,981 | |
7,334,777 | |||
Home Entertainment Software - 0.5% | |||
Electronic Arts, Inc. (a) | 42,400 | 2,161,128 | |
TOTAL SOFTWARE | 9,495,905 | ||
SPECIALTY RETAIL - 6.1% | |||
Computer & Electronics Retail - 3.6% | |||
Best Buy Co., Inc. | 346,100 | 16,266,700 | |
Specialty Stores - 2.5% | |||
Staples, Inc. | 506,100 | 11,417,616 | |
TOTAL SPECIALTY RETAIL | 27,684,316 | ||
TOTAL COMMON STOCKS (Cost $459,993,021) | 439,076,708 | ||
Money Market Funds - 9.7% | |||
Fidelity Cash Central Fund, 5.31% (b) | 12,141,089 | 12,141,089 | |
Fidelity Securities Lending Cash Central Fund, 5.33% (b)(c) | 31,614,533 | 31,614,533 | |
TOTAL MONEY MARKET FUNDS (Cost $43,755,622) | 43,755,622 | ||
TOTAL INVESTMENT PORTFOLIO - 107.0% (Cost $503,748,643) | 482,832,330 | ||
NET OTHER ASSETS - (7.0)% | (31,598,722) | ||
NET ASSETS - 100% | $451,233,608 | ||
Legend |
(a)Non-income producing |
(b)Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. |
(c)Investment made with cash collateral received from securities on loan. |
(d)Security or a portion of the security is on loan at period end. |
(e)Restricted securities - Investment in securities not registered under the Securities Act of 1933 (excluding 144A issues). At the end of the period, the value of restricted securities (excluding 144A issues) amounted to $0 or 0.0% of net assets. |
Additional information on each holding is as follows: |
Security | Acquisition Date | Acquisition Cost |
ITF Optical Technologies, Inc. | 10/11/00 | $1,575,000 |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the fund from the affiliated Central funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $338,133 |
Fidelity Securities Lending Cash Central Fund | 56,751 |
Total | $394,884 |
Other Information |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: |
United States of America | 87.9% |
Taiwan | 4.0% |
Korea (South) | 3.4% |
Bermuda | 1.9% |
United Kingdom | 1.0% |
Others (individually less than 1%) | 1.8% |
100.0% |
Income Tax Information |
At February 28, 2006, the fund had a capital loss carryforward of approximately $801,330,392 of which $549,550,193 and $251,780,199 will expire on February 28, 2010 and 2011, respectively. |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Computers Portfolio
Financial Statements
Statement of Assets and Liabilities
August 31, 2006 (Unaudited) | ||
Assets | ||
Investment in securities, at value (including securities loaned of $31,063,248) - See accompanying schedule: Unaffiliated issuers (cost $459,993,021) | $439,076,708 | |
Affiliated Central Funds (cost $43,755,622) | 43,755,622 | |
Total Investments (cost $503,748,643) | $482,832,330 | |
Foreign currency held at value (cost $17) | 17 | |
Receivable for fund shares sold | 1,496,902 | |
Dividends receivable | 427,768 | |
Interest receivable | 24,277 | |
Prepaid expenses | 604 | |
Other receivables | 40,026 | |
Total assets | 484,821,924 | |
Liabilities | ||
Payable for investments purchased | $721,682 | |
Payable for fund shares redeemed | 861,101 | |
Accrued management fee | 198,209 | |
Other affiliated payables | 152,869 | |
Other payables and accrued expenses | 39,922 | |
Collateral on securities loaned, at value | 31,614,533 | |
Total liabilities | 33,588,316 | |
Net Assets | $451,233,608 | |
Net Assets consist of: | ||
Paid in capital | $1,262,425,273 | |
Accumulated net investment loss | (616,140) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (789,658,702) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (20,916,823) | |
Net Assets, for 12,762,234 shares outstanding | $451,233,608 | |
Net Asset Value, offering price and redemption price per share ($451,233,608 ÷ 12,762,234 shares) | $35.36 | |
Statement of Operations
Six months ended August 31, 2006 (Unaudited) | ||
Investment Income | ||
Dividends | $1,325,931 | |
Interest | 37 | |
Income from affiliated Central Funds(including $56,751 from security lending) | 394,884 | |
Total income | 1,720,852 | |
Expenses | ||
Management fee | $1,315,153 | |
Transfer agent fees | 855,366 | |
Accounting and security lending fees | 116,573 | |
Independent trustees' compensation | 923 | |
Custodian fees and expenses | 30,698 | |
Registration fees | 16,180 | |
Audit | 17,257 | |
Legal | 7,889 | |
Interest | 1,640 | |
Miscellaneous | 22,019 | |
Total expenses before reductions | 2,383,698 | |
Expense reductions | (47,590) | 2,336,108 |
Net investment income (loss) | (615,256) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers | 14,383,945 | |
Foreign currency transactions | (69,543) | |
Total net realized gain (loss) | 14,314,402 | |
Change in net unrealized appreciation (depreciation) on: Investment securities | (43,205,440) | |
Assets and liabilities in foreign currencies | (6,243) | |
Total change in net unrealized appreciation (depreciation) | (43,211,683) | |
Net gain (loss) | (28,897,281) | |
Net increase (decrease) in net assets resulting from operations | $(29,512,537) | |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Computers Portfolio
Financial Statements - continued
Statement of Changes in Net Assets
Six months ended August 31, 2006 (Unaudited) | Year ended | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $(615,256) | $(3,248,250) |
Net realized gain (loss) | 14,314,402 | 47,860,490 |
Change in net unrealized appreciation (depreciation) | (43,211,683) | (1,330,783) |
Net increase (decrease) in net assets resulting from operations | (29,512,537) | 43,281,457 |
Share transactions | 25,360,860 | 56,362,094 |
Cost of shares redeemed | (76,331,728) | (235,793,382) |
Net increase (decrease) in net assets resulting from share transactions | (50,970,868) | (179,431,288) |
Redemption fees | 9,851 | 55,832 |
Total increase (decrease) in net assets | (80,473,554) | (136,093,999) |
Net Assets | ||
Beginning of period | 531,707,162 | 667,801,161 |
End of period (including accumulated net investment loss of $616,140 and accumulated net investment loss of $884, respectively) | $451,233,608 | $531,707,162 |
Other Information Shares | ||
Sold | 724,032 | 1,603,028 |
Redeemed | (2,122,977) | (6,713,561) |
Net increase (decrease) | (1,398,945) | (5,110,533) |
Financial Highlights
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Investment Changes
Top Ten Stocks as of August 31, 2006 | ||
% of fund's | % of fund's net assets | |
National Semiconductor Corp. | 6.2 | 5.9 |
Applied Materials, Inc. | 5.9 | 1.9 |
Intel Corp. | 5.7 | 6.9 |
Maxim Integrated Products, Inc. | 5.1 | 5.5 |
KLA-Tencor Corp. | 4.7 | 3.1 |
Analog Devices, Inc. | 4.4 | 5.6 |
Broadcom Corp. Class A | 4.3 | 0.0 |
Marvell Technology Group Ltd. | 4.0 | 4.8 |
Hon Hai Precision Industry Co. Ltd. (Foxconn) | 3.4 | 4.4 |
Arrow Electronics, Inc. | 3.4 | 2.2 |
47.1 | ||
Top Industries (% of fund's net assets) | |||
As of August 31, 2006 | |||
| Semiconductors & Semiconductor Equipment | 74.9% | |
| Electronic Equipment & Instruments | 13.7% | |
| Electrical Equipment | 2.2% | |
| Communications Equipment | 2.0% | |
| Computers & Peripherals | 1.3% | |
| All Others* | 5.9% | |
As of February 28, 2006 | |||
| Semiconductors & Semiconductor Equipment | 71.2% | |
| Electronic Equipment & Instruments | 13.2% | |
| Computers & Peripherals | 3.8% | |
| Electrical Equipment | 2.9% | |
| Communications Equipment | 2.5% | |
| All Others* | 6.4% | |
*Includes short-term investments and net other assets. |
Prior period industry classifications reflect the categories in place as of the date indicated and have not been adjusted to reflect current industry classifications. |
Semiannual Report
Electronics Portfolio
Investments August 31, 2006 (Unaudited)
Showing Percentage of Net Assets
Common Stocks - 95.6% | |||
Shares | Value (Note 1) | ||
BUILDING PRODUCTS - 0.3% | |||
Building Products - 0.3% | |||
Asahi Glass Co. Ltd. | 600,000 | $7,870,863 | |
CHEMICALS - 1.2% | |||
Specialty Chemicals - 1.2% | |||
Nitto Denko Corp. | 175,000 | 12,566,548 | |
Tokuyama Corp. | 1,000,000 | 13,859,193 | |
26,425,741 | |||
COMMUNICATIONS EQUIPMENT - 2.0% | |||
Communications Equipment - 2.0% | |||
CSR PLC (a) | 1,500,000 | 33,474,957 | |
Harris Corp. | 250,000 | 10,980,000 | |
Powerwave Technologies, Inc. (a) | 300,000 | 2,274,000 | |
46,728,957 | |||
COMPUTERS & PERIPHERALS - 1.3% | |||
Computer Hardware - 0.1% | |||
High Tech Computer Corp. | 60,000 | 1,513,885 | |
Computer Storage & Peripherals - 1.2% | |||
Ichia Technologies, Inc. (a) | 3,000,000 | 3,520,238 | |
msystems Ltd. (a) | 350,000 | 15,533,000 | |
Phison Electronics Corp. | 909,362 | 3,787,223 | |
TPV Technology Ltd. | 4,000,000 | 4,274,004 | |
27,114,465 | |||
TOTAL COMPUTERS & PERIPHERALS | 28,628,350 | ||
ELECTRICAL EQUIPMENT - 2.0% | |||
Electrical Components & Equipment - 2.0% | |||
Evergreen Solar, Inc. (a)(d) | 2,500,000 | 25,450,000 | |
Q-Cells AG (d) | 175,000 | 7,712,824 | |
SolarWorld AG | 75,000 | 4,438,397 | |
Suntech Power Holdings Co. Ltd. sponsored ADR | 250,025 | 7,250,725 | |
44,851,946 | |||
ELECTRONIC EQUIPMENT & INSTRUMENTS - 13.7% | |||
Electronic Equipment & Instruments - 4.2% | |||
Amphenol Corp. Class A | 100,000 | 5,747,000 | |
AU Optronics Corp. sponsored ADR (d) | 1,000,000 | 14,580,000 | |
LG.Philips LCD Co. Ltd. sponsored ADR (a)(d) | 2,000,000 | 39,740,000 | |
Motech Industries, Inc. | 1,000,000 | 24,653,828 | |
Phoenix Precision Technology Corp. | 2,500,000 | 3,708,714 | |
Photon Dynamics, Inc. (a) | 500,000 | 6,715,000 | |
95,144,542 | |||
Electronic Manufacturing Services - 4.6% | |||
Hon Hai Precision Industry Co. Ltd. (Foxconn) | 14,000,000 | 78,946,969 | |
Jabil Circuit, Inc. | 1,000,000 | 26,830,000 | |
105,776,969 | |||
Shares | Value (Note 1) | ||
Technology Distributors - 4.9% | |||
Arrow Electronics, Inc. (a) | 2,755,000 | $76,864,500 | |
Avnet, Inc. (a) | 1,200,114 | 23,474,230 | |
Wolfson Microelectronics PLC (a) | 1,200,000 | 10,933,629 | |
111,272,359 | |||
TOTAL ELECTRONIC EQUIPMENT & | 312,193,870 | ||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 74.9% | |||
Semiconductor Equipment - 19.4% | |||
Applied Materials, Inc. | 8,000,000 | 135,040,000 | |
ASML Holding NV (NY Shares) (a) | 1,000,000 | 22,060,000 | |
Brooks Automation, Inc. (a) | 654,600 | 9,098,940 | |
Cohu, Inc. | 600,000 | 10,062,000 | |
Cymer, Inc. (a) | 450,000 | 18,517,500 | |
Entegris, Inc. (a) | 900,000 | 9,774,000 | |
KLA-Tencor Corp. (d) | 2,450,000 | 107,579,500 | |
Lam Research Corp. (a)(d) | 1,250,000 | 53,487,500 | |
MEMC Electronic Materials, Inc. (a) | 700,000 | 27,076,000 | |
MKS Instruments, Inc. (a) | 600,000 | 12,534,000 | |
Photronics, Inc. (a) | 200,000 | 2,902,000 | |
Teradyne, Inc. (a) | 600,000 | 8,424,000 | |
Varian Semiconductor Equipment Associates, Inc. (a) | 400,000 | 14,124,000 | |
Verigy Ltd. | 650,000 | 11,245,000 | |
441,924,440 | |||
Semiconductors - 55.5% | |||
Actel Corp. (a)(d) | 150,000 | 2,328,000 | |
Advanced Analogic Technologies, Inc. | 300,000 | 2,856,000 | |
Altera Corp. (a) | 2,500,000 | 50,575,000 | |
Analog Devices, Inc. (d) | 3,300,000 | 101,112,000 | |
ARM Holdings PLC sponsored ADR (d) | 7,500,000 | 51,000,000 | |
Broadcom Corp. Class A (a) | 3,300,000 | 97,152,000 | |
Cree, Inc. (a)(d) | 547,130 | 10,187,561 | |
Cypress Semiconductor Corp. (a) | 500,000 | 7,820,000 | |
Exar Corp. (a) | 350,000 | 4,893,000 | |
Freescale Semiconductor, Inc.: | |||
Class A (a) | 450,000 | 13,815,000 | |
Class B (a) | 450,000 | 13,909,500 | |
Hittite Microwave Corp. (a) | 150,000 | 6,777,000 | |
Holtek Semiconductor, Inc. | 5,000,766 | 8,893,156 | |
Integrated Device Technology, Inc. (a) | 400,000 | 6,892,000 | |
Intel Corp. | 6,600,000 | 128,964,000 | |
Linear Technology Corp. (d) | 2,150,000 | 73,121,500 | |
LSI Logic Corp. (a) | 3,000,000 | 24,150,000 | |
Marvell Technology Group Ltd. (a) | 5,247,200 | 91,878,472 | |
Maxim Integrated Products, Inc. | 4,000,000 | 116,400,000 | |
Nanya Technology Corp. | 5,000,000 | 3,488,319 | |
National Semiconductor Corp. (d) | 5,800,031 | 140,882,753 | |
ON Semiconductor Corp. (a) | 500,000 | 3,005,000 | |
PMC-Sierra, Inc. (a) | 1,250,300 | 8,552,052 | |
Power Integrations, Inc. (a) | 400,000 | 7,360,000 | |
Powerchip Semiconductor Corp. | 13,000,000 | 8,595,401 | |
Common Stocks - continued | |||
Shares | Value (Note 1) | ||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - CONTINUED | |||
Semiconductors - continued | |||
ProMOS Technologies, Inc. (a) | 28,000,000 | $11,533,493 | |
Saifun Semiconductors Ltd. | 300,000 | 7,524,000 | |
Samsung Electronics Co. Ltd. | 70,000 | 47,331,739 | |
Silicon On Insulator Technologies SA (SOITEC) (a) | 1,000,000 | 30,505,372 | |
Siliconware Precision Industries Co. Ltd. sponsored ADR (d) | 3,000,034 | 17,610,200 | |
Spansion, Inc. Class A (d) | 600,000 | 10,314,000 | |
Taiwan Semiconductor Manufacturing Co. Ltd. sponsored ADR | 2,499,975 | 23,274,767 | |
Texas Instruments, Inc. | 1,500,000 | 48,885,000 | |
Trident Microsystems, Inc. (a) | 250,000 | 5,157,500 | |
Vimicro International Corp. sponsored ADR (d) | 1,200,000 | 12,816,000 | |
Volterra Semiconductor Corp. (a)(d) | 500,043 | 7,540,648 | |
Xilinx, Inc. | 2,600,000 | 59,462,000 | |
1,266,562,433 | |||
TOTAL SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT | 1,708,486,873 | ||
SOFTWARE - 0.1% | |||
Application Software - 0.1% | |||
Cadence Design Systems, Inc. (a) | 200,000 | 3,286,000 | |
TEXTILES, APPAREL & LUXURY GOODS - 0.1% | |||
Apparel, Accessories & Luxury Goods - 0.1% | |||
Under Armour, Inc. Class A (sub. vtg.) | 46,400 | 1,598,016 | |
TOTAL COMMON STOCKS (Cost $2,270,166,016) | 2,180,070,616 | ||
Convertible Bonds - 0.2% | ||||
Principal Amount | ||||
ELECTRICAL EQUIPMENT - 0.2% | ||||
Electrical Components & Equipment - 0.2% | ||||
Evergreen Solar, Inc. 4.375% 7/1/12 (e) | $2,980,000 | 4,335,900 | ||
Money Market Funds - 9.2% | |||
Shares | Value (Note 1) | ||
Fidelity Cash Central Fund, 5.31% (b) | 61,130,375 | $61,130,375 | |
Fidelity Securities Lending Cash Central Fund, 5.33% (b)(c) | 148,417,246 | 148,417,246 | |
TOTAL MONEY MARKET FUNDS (Cost $209,547,621) | 209,547,621 | ||
TOTAL INVESTMENT PORTFOLIO - 105.0% (Cost $2,482,693,637) | 2,393,954,137 | ||
NET OTHER ASSETS - (5.0)% | (113,448,503) | ||
NET ASSETS - 100% | $2,280,505,634 | ||
Legend |
(a)Non-income producing |
(b)Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. |
(c)Investment made with cash collateral received from securities on loan. |
(d)Security or a portion of the security is on loan at period end. |
(e)Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the end of the period, the value of these securities amounted to $ 4,335,900 or 0.2% of net assets. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the fund from the affiliated Central funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $743,435 |
Fidelity Securities Lending Cash Central Fund | 779,215 |
Total | $1,522,650 |
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, |
|
|
| Value, |
Cohu, Inc. | $29,568,000 | $- | $14,597,686 | $132,000 | $- |
Other Information |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: |
United States of America | 72.1% |
Taiwan | 9.0% |
Bermuda | 4.2% |
United Kingdom | 4.1% |
Korea (South) | 3.8% |
Japan | 1.5% |
France | 1.3% |
Israel | 1.0% |
Netherlands | 1.0% |
Others (individually less than 1%) | 2.0% |
100.0% |
Income Tax Information |
At February 28, 2006, the fund had a capital loss carryforward of approximately $2,795,466,298 of which $1,213,182,479, $1,514,779,921 and $67,503,898 will expire on February 28, 2010, 2011 and February 29, 2012, respectively. |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Electronics Portfolio
Financial Statements
Statement of Assets and Liabilities
August 31, 2006 (Unaudited) | ||
Assets | ||
Investment in securities, at value (including securities loaned of $143,156,538) - See accompanying schedule: Unaffiliated issuers (cost $2,273,146,016) | $2,184,406,516 | |
Affiliated Central Funds (cost $209,547,621) | 209,547,621 | |
Total Investments (cost $2,482,693,637) | $2,393,954,137 | |
Foreign currency held at value (cost $12,726) | 12,728 | |
Receivable for investments sold | 40,723,054 | |
Receivable for fund shares sold | 2,761,185 | |
Dividends receivable | 4,402,148 | |
Interest receivable | 250,477 | |
Prepaid expenses | 2,749 | |
Other receivables | 284,569 | |
Total assets | 2,442,391,047 | |
Liabilities | ||
Payable for investments purchased | $8,335,119 | |
Payable for fund shares redeemed | 3,351,266 | |
Accrued management fee | 1,028,596 | |
Other affiliated payables | 641,258 | |
Other payables and accrued expenses | 111,928 | |
Collateral on securities loaned, at value | 148,417,246 | |
Total liabilities | 161,885,413 | |
Net Assets | $2,280,505,634 | |
Net Assets consist of: | ||
Paid in capital | $5,022,932,487 | |
Undistributed net investment income | 1,628,404 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (2,655,312,543) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (88,742,714) | |
Net Assets, for 53,764,029 shares outstanding | $2,280,505,634 | |
Net Asset Value, offering price and redemption price per share ($2,280,505,634 ÷ 53,764,029 shares) | $42.42 | |
Statement of Operations
Six months ended August 31, 2006 (Unaudited) | ||
Investment Income | ||
Dividends (including $132,000 received from other affiliated issuers) | $12,296,674 | |
Interest | 69,185 | |
Income from affiliated Central Funds (including $779,215 from security lending) | 1,522,650 | |
13,888,509 | ||
Less foreign taxes withheld | (1,197,996) | |
Total income | 12,690,513 | |
Expenses | ||
Management fee | $6,918,002 | |
Transfer agent fees | 3,406,741 | |
Accounting and security lending fees | 478,834 | |
Independent trustees' compensation | 4,975 | |
Depreciation in deferred trustee compensation account | (837) | |
Custodian fees and expenses | 247,918 | |
Registration fees | 42,306 | |
Audit | 22,522 | |
Legal | 24,429 | |
Interest | 11,225 | |
Miscellaneous | 73,530 | |
Total expenses before reductions | 11,229,645 | |
Expense reductions | (205,754) | 11,023,891 |
Net investment income (loss) | 1,666,622 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers | 146,631,670 | |
Other affiliated issuers | (3,677,242) | |
Foreign currency transactions | (224,328) | |
Total net realized gain (loss) | 142,730,100 | |
Change in net unrealized appreciation (depreciation) on: Investment securities | (377,775,112) | |
Assets and liabilities in foreign currencies | (29,755) | |
Total change in net unrealized appreciation (depreciation) | (377,804,867) | |
Net gain (loss) | (235,074,767) | |
Net increase (decrease) in net assets resulting from operations | $(233,408,145) | |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Electronics Portfolio
Financial Statements - continued
Statement of Changes in Net Assets
Six months ended August 31, 2006 (Unaudited) | Year ended | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $1,666,622 | $(4,568,551) |
Net realized gain (loss) | 142,730,100 | 254,398,033 |
Change in net unrealized appreciation (depreciation) | (377,804,867) | 224,891,343 |
Net increase (decrease) in net assets resulting from operations | (233,408,145) | 474,720,825 |
Share transactions | ||
Proceeds from sales of shares | 178,445,810 | 798,575,652 |
Cost of shares redeemed | (505,270,818) | (1,230,676,689) |
Net increase (decrease) in net assets resulting from share transactions | (326,825,008) | (432,101,037) |
Redemption fees | 168,774 | 626,614 |
Total increase (decrease) in net assets | (560,064,379) | 43,246,402 |
Net Assets | ||
Beginning of period | 2,840,570,013 | 2,797,323,611 |
End of period (including undistributed net investment income of $1,628,404 and accumulated net investment loss of $38,218, respectively) | $2,280,505,634 | $2,840,570,013 |
Other Information Shares | ||
Sold | 4,195,093 | 18,890,263 |
Redeemed | (11,388,984) | (29,782,062) |
Net increase (decrease) | (7,193,891) | (10,891,799) |
Financial Highlights
Six months ended | Years ended February 28, | |||||
(Unaudited) | 2006 | 2005 | 2004 G | 2003 | 2002 | |
Selected Per-Share Data | ||||||
Net asset value, beginning of period | $46.60 | $38.93 | $43.67 | $24.90 | $44.26 | $48.25 |
Income from Investment Operations | ||||||
Net investment income (loss) E | .03 | (.07) | (.17) | (.25) | (.26) | (.29) |
Net realized and unrealized gain (loss) | (4.21) | 7.73 | (4.58) | 19.01 | (19.12) | (3.73) |
Total from investment operations | (4.18) | 7.66 | (4.75) | 18.76 | (19.38) | (4.02) |
Redemption fees added to paid in capital E | - H | .01 | .01 | .01 | .02 | .03 |
Net asset value, end of period | $42.42 | $46.60 | $38.93 | $43.67 | $24.90 | $44.26 |
Total Return B, C, D | (8.97)% | 19.70% | (10.85)% | 75.38% | (43.74)% | (8.27)% |
Ratios to Average Net Assets F | ||||||
Expenses before reductions | .92% A | .95% | .96% | 1.08% | 1.14% | .99% |
Expenses net of fee waivers, if any | .92% A | .95% | .96% | 1.08% | 1.14% | .99% |
Expenses net of all reductions | .90% A | .88% | .89% | 1.06% | 1.06% | .97% |
Net investment income (loss) | .14% A | (.17)% | (.45)% | (.70)% | (.78)% | (.59)% |
Supplemental Data | ||||||
Net assets, end of period (000 omitted) | $2,280,506 | $2,840,570 | $2,797,324 | $4,110,073 | $2,204,036 | $4,539,791 |
Portfolio turnover rate | 104% A | 80% | 119% | 50% | 70% | 57% |
A Annualized BTotal returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the former sales charges. E Calculated based on average shares outstanding during the period. F Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. G For the year ended February 29. H Amount represents less than $.01 per share. | ||||||
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Investment Changes
Top Ten Stocks as of August 31, 2006 | ||
% of fund's | % of fund's net assets | |
First Data Corp. | 11.9 | 8.5 |
Open Solutions, Inc. | 9.7 | 0.6 |
Paychex, Inc. | 7.5 | 3.7 |
Hypercom Corp. | 7.0 | 0.0 |
Moody's Corp. | 4.5 | 2.5 |
MoneyGram International, Inc. | 4.5 | 0.5 |
Fair, Isaac & Co., Inc. | 4.3 | 0.0 |
Cognizant Technology Solutions Corp. Class A | 4.2 | 2.7 |
CyberSource Corp. | 3.2 | 0.0 |
Robert Half International, Inc. | 3.1 | 1.9 |
59.9 | ||
Top Industries (% of fund's net assets) | |||
As of August 31, 2006 | |||
| IT Services | 44.0% | |
| Software | 16.1% | |
| Commercial Services & Supplies | 9.6% | |
| Computers & Peripherals | 8.9% | |
| Internet Software & Services | 5.8% | |
| All Others * | 15.6% | |
As of February 28, 2006 | |||
 | IT Services | 59.8% | |
| Commercial Services & Supplies | 8.9% | |
| Health Care Providers & Services | 6.6% | |
| Capital Markets | 6.2% | |
| Software | 4.6% | |
| All Others * | 13.9% | |
*Includes short-term investments and net other assets. |
Prior period industry classifications reflect the categories in place as of the date indicated and have not been adjusted to reflect current industry classifications. |
Semiannual Report
IT Services Portfolio
Investments August 31, 2006 (Unaudited)
Showing Percentage of Net Assets
Common Stocks - 98.0% | |||
Shares | Value (Note 1) | ||
CAPITAL MARKETS - 2.0% | |||
Asset Management & Custody Banks - 2.0% | |||
State Street Corp. | 11,300 | $698,340 | |
COMMERCIAL SERVICES & SUPPLIES - 9.6% | |||
Commercial Printing - 0.3% | |||
Banta Corp. | 2,400 | 112,920 | |
Diversified Commercial & Professional Services - 5.9% | |||
Cintas Corp. | 17,000 | 629,510 | |
Dun & Bradstreet Corp. (a) | 1,100 | 77,341 | |
Equifax, Inc. | 19,950 | 634,211 | |
Global Cash Access Holdings, Inc. | 45,600 | 703,608 | |
2,044,670 | |||
Human Resource & Employment Services - 3.4% | |||
CDI Corp. | 900 | 18,855 | |
Kenexa Corp. (a) | 2,800 | 71,568 | |
Robert Half International, Inc. | 35,000 | 1,082,900 | |
1,173,323 | |||
TOTAL COMMERCIAL SERVICES & SUPPLIES | 3,330,913 | ||
COMPUTERS & PERIPHERALS - 8.9% | |||
Computer Storage & Peripherals - 8.9% | |||
Hypercom Corp. (a) | 261,300 | 2,440,542 | |
USA Technologies, Inc. (a) | 89,800 | 642,070 | |
3,082,612 | |||
DIVERSIFIED CONSUMER SERVICES - 2.2% | |||
Education Services - 1.7% | |||
Apollo Group, Inc. Class A (a) | 12,100 | 607,541 | |
Specialized Consumer Services - 0.5% | |||
Coinmach Service Corp. Class A | 6,700 | 66,330 | |
Jackson Hewitt Tax Service, Inc. | 500 | 15,800 | |
Weight Watchers International, Inc. | 2,000 | 84,920 | |
167,050 | |||
TOTAL DIVERSIFIED CONSUMER SERVICES | 774,591 | ||
DIVERSIFIED FINANCIAL SERVICES - 4.7% | |||
Specialized Finance - 4.7% | |||
Moody's Corp. | 25,500 | 1,560,090 | |
NETeller PLC (a) | 8,300 | 66,063 | |
1,626,153 | |||
FOOD & STAPLES RETAILING - 0.6% | |||
Food Distributors - 0.6% | |||
Sysco Corp. | 6,000 | 188,340 | |
HEALTH CARE PROVIDERS & SERVICES - 2.7% | |||
Health Care Services - 2.7% | |||
DaVita, Inc. (a) | 6,000 | 350,160 | |
Quest Diagnostics, Inc. | 9,000 | 578,520 | |
928,680 | |||
Shares | Value (Note 1) | ||
INTERNET SOFTWARE & SERVICES - 5.8% | |||
Internet Software & Services - 5.8% | |||
CyberSource Corp. (a) | 101,500 | $1,111,425 | |
Digital Insight Corp. (a) | 27,600 | 717,876 | |
Google, Inc. Class A (sub. vtg.) (a) | 500 | 189,265 | |
2,018,566 | |||
IT SERVICES - 44.0% | |||
Data Processing & Outsourced Services - 30.8% | |||
Affiliated Computer Services, Inc. | 9,100 | 467,194 | |
Automatic Data Processing, Inc. | 14,600 | 689,120 | |
Ceridian Corp. (a) | 38,200 | 911,834 | |
Convergys Corp. (a) | 400 | 8,348 | |
DST Systems, Inc. (a)(d) | 1,700 | 100,351 | |
eFunds Corp. (a) | 4,600 | 106,812 | |
First Data Corp. | 96,100 | 4,129,416 | |
Hewitt Associates, Inc. Class A (a) | 2,900 | 65,163 | |
Mastercard, Inc. Class A | 100 | 5,590 | |
MoneyGram International, Inc. | 49,500 | 1,554,300 | |
Paychex, Inc. | 72,287 | 2,595,826 | |
Total System Services, Inc. | 400 | 8,916 | |
10,642,870 | |||
IT Consulting & Other Services - 13.2% | |||
Accenture Ltd. Class A | 31,000 | 919,460 | |
BearingPoint, Inc. (a) | 16,800 | 140,448 | |
CACI International, Inc. Class A (a) | 3,000 | 159,180 | |
Cognizant Technology Solutions Corp. Class A (a) | 20,808 | 1,454,687 | |
Forrester Research, Inc. (a) | 6,200 | 183,024 | |
Gartner, Inc. Class A (a) | 1,500 | 23,385 | |
HCL Infosystems Ltd. | 13,609 | 47,825 | |
HCL Technologies Ltd. | 22,622 | 283,311 | |
Kanbay International, Inc. (a) | 6,000 | 111,060 | |
NCI, Inc. Class A | 4,400 | 49,060 | |
Ness Technologies, Inc. (a) | 17,300 | 199,988 | |
Sapient Corp. (a) | 157,600 | 767,512 | |
Satyam Computer Services Ltd. sponsored ADR | 400 | 15,268 | |
SRA International, Inc. Class A (a) | 8,200 | 229,682 | |
4,583,890 | |||
TOTAL IT SERVICES | 15,226,760 | ||
MEDIA - 1.4% | |||
Advertising - 1.4% | |||
Interpublic Group of Companies, Inc. (a) | 791 | 7,261 | |
Omnicom Group, Inc. | 5,500 | 480,810 | |
488,071 | |||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 0.0% | |||
Semiconductors - 0.0% | |||
Exar Corp. (a) | 900 | 12,582 | |
Common Stocks - continued | |||
Shares | Value (Note 1) | ||
SOFTWARE - 16.1% | |||
Application Software - 16.1% | |||
EPIQ Systems, Inc. (a) | 33,900 | $504,432 | |
Fair, Isaac & Co., Inc. | 42,700 | 1,494,927 | |
NAVTEQ Corp. (a) | 7,200 | 191,232 | |
Open Solutions, Inc. (a) | 114,092 | 3,370,278 | |
5,560,869 | |||
TOTAL COMMON STOCKS (Cost $30,579,524) | 33,936,477 | ||
Money Market Funds - 2.1% | |||
Fidelity Cash Central Fund, 5.31% (b) | 656,320 | 656,320 | |
Fidelity Securities Lending Cash Central Fund, 5.33% (b)(c) | 66,825 | 66,825 | |
TOTAL MONEY MARKET FUNDS (Cost $723,145) | 723,145 | ||
TOTAL INVESTMENT PORTFOLIO - 100.1% (Cost $31,302,669) | 34,659,622 | ||
NET OTHER ASSETS - (0.1)% | (40,964) | ||
NET ASSETS - 100% | $34,618,658 | ||
Legend |
(a)Non-income producing |
(b)Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. |
(c)Investment made with cash collateral received from securities on loan. |
(d)Security or a portion of the security is on loan at period end. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the fund from the affiliated Central funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $38,858 |
Fidelity Securities Lending Cash Central Fund | 162 |
Total | $39,020 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
IT Services Portfolio
Financial Statements
Statement of Assets and Liabilities
August 31, 2006 (Unaudited) | ||
Assets | ||
Investment in securities, at value (including securities loaned of $64,933) - See accompanying schedule: Unaffiliated issuers (cost $30,579,524) | $33,936,477 | |
Affiliated Central Funds (cost $723,145) | 723,145 | |
Total Investments (cost $31,302,669) | $34,659,622 | |
Cash | 24,969 | |
Receivable for investments sold | 102,362 | |
Receivable for fund shares sold | 52,608 | |
Dividends receivable | 7,052 | |
Interest receivable | 2,625 | |
Prepaid expenses | 33 | |
Other receivables | 3,082 | |
Total assets | 34,852,353 | |
Liabilities | ||
Payable for investments purchased | $71,653 | |
Payable for fund shares redeemed | 47,171 | |
Accrued management fee | 16,674 | |
Other affiliated payables | 12,605 | |
Other payables and accrued expenses | 18,767 | |
Collateral on securities loaned, at value | 66,825 | |
Total liabilities | 233,695 | |
Net Assets | $34,618,658 | |
Net Assets consist of: | ||
Paid in capital | $27,671,317 | |
Accumulated net investment loss | (96,109) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 3,687,296 | |
Net unrealized appreciation (depreciation) on investments | 3,356,154 | |
Net Assets, for 2,105,776 shares outstanding | $34,618,658 | |
Net Asset Value, offering price and redemption price per share ($34,618,658 ÷ 2,105,776 shares) | $16.44 | |
Statement of Operations
Six months ended August 31, 2006 (Unaudited) | ||
Investment Income | ||
Dividends | $98,863 | |
Interest | 9 | |
Income from affiliated Central Funds (including $162 from security lending) | 39,020 | |
Total income | 137,892 | |
Expenses | ||
Management fee | $115,704 | |
Transfer agent fees | 72,192 | |
Accounting and security lending fees | 10,242 | |
Independent trustees' compensation | 79 | |
Custodian fees and expenses | 7,337 | |
Registration fees | 8,745 | |
Audit | 18,418 | |
Legal | 3,021 | |
Miscellaneous | 1,532 | |
Total expenses before reductions | 237,270 | |
Expense reductions | (3,269) | 234,001 |
Net investment income (loss) | (96,109) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers (net of foreign taxes of $3,957) | 3,710,807 | |
Foreign currency transactions | (900) | |
Total net realized gain (loss) | 3,709,907 | |
Change in net unrealized appreciation (depreciation) on investment securities (net of decrease in deferred foreign taxes of $6,075) | (4,848,881) | |
Net gain (loss) | (1,138,974) | |
Net increase (decrease) in net assets resulting from operations | $(1,235,083) | |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Statement of Changes in Net Assets
Six months ended August 31, 2006 (Unaudited) | Year ended | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $(96,109) | $(60,983) |
Net realized gain (loss) | 3,709,907 | 2,848,409 |
Change in net unrealized appreciation (depreciation) | (4,848,881) | 3,037,491 |
Net increase (decrease) in net assets resulting from operations | (1,235,083) | 5,824,917 |
Distributions to shareholders from net realized gain | (1,688,574) | (1,570,115) |
Share transactions | 23,486,674 | 21,849,620 |
Reinvestment of distributions | 1,623,213 | 1,513,925 |
Cost of shares redeemed | (26,979,451) | (25,398,907) |
Net increase (decrease) in net assets resulting from share transactions | (1,869,564) | (2,035,362) |
Redemption fees | 19,874 | 7,908 |
Total increase (decrease) in net assets | (4,773,347) | 2,227,348 |
Net Assets | ||
Beginning of period | 39,392,005 | 37,164,657 |
End of period (including accumulated net investment loss of $96,109 and $0, respectively) | $34,618,658 | $39,392,005 |
Other Information Shares | ||
Sold | 1,385,316 | 1,348,274 |
Issued in reinvestment of distributions | 96,562 | 98,617 |
Redeemed | (1,635,498) | (1,585,831) |
Net increase (decrease) | (153,620) | (138,940) |
Financial Highlights
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Networking and Infrastructure Portfolio
Investment Changes
Top Ten Stocks as of August 31, 2006 | ||
% of fund's | % of fund's net assets | |
Broadcom Corp. Class A | 8.1 | 4.6 |
Corning, Inc. | 7.7 | 5.5 |
Google, Inc. Class A (sub. vtg.) | 4.7 | 9.5 |
Sun Microsystems, Inc. | 4.7 | 4.8 |
Network Appliance, Inc. | 4.4 | 4.3 |
National Semiconductor Corp. | 3.4 | 2.1 |
Marvell Technology Group Ltd. | 3.3 | 4.0 |
Agilent Technologies, Inc. | 2.8 | 4.0 |
Nortel Networks Corp. | 2.7 | 5.1 |
Juniper Networks, Inc. | 2.6 | 2.8 |
44.4 | ||
Top Industries (% of fund's net assets) | |||
As of August 31, 2006 | |||
| Communications Equipment | 33.9% | |
| Semiconductors & Semiconductor Equipment | 27.7% | |
| Computers & Peripherals | 12.7% | |
| Internet Software & Services | 8.8% | |
| Electronic Equipment & Instruments | 7.8% | |
| All Others* | 9.1% | |
As of February 28, 2006 | |||
| Communications Equipment | 40.2% | |
| Semiconductors & Semiconductor Equipment | 19.6% | |
| Computers & Peripherals | 16.8% | |
| Internet Software & Services | 12.1% | |
| Electronic Equipment & Instruments | 6.2% | |
| All Others* | 5.1% | |
* Includes short-term investments and net other assets. |
Prior period industry classifications reflect the categories in place as of the date indicated and have not been adjusted to reflect current industry classifications. |
Semiannual Report
Networking and Infrastructure Portfolio
Investments August 31, 2006 (Unaudited)
Showing Percentage of Net Assets
Common Stocks - 94.8% | |||
Shares | Value (Note 1) | ||
BUILDING PRODUCTS - 0.3% | |||
Building Products - 0.3% | |||
Asahi Glass Co. Ltd. | 25,000 | $327,953 | |
COMMUNICATIONS EQUIPMENT - 33.7% | |||
Communications Equipment - 33.7% | |||
3Com Corp. (a) | 187,700 | 831,511 | |
ADC Telecommunications, Inc. (a) | 26,128 | 356,647 | |
Adtran, Inc. | 43,200 | 1,074,384 | |
ADVA AG Optical Networking (a) | 80,000 | 591,402 | |
Andrew Corp. (a) | 91,400 | 845,450 | |
AudioCodes Ltd. (a) | 95,600 | 950,264 | |
Bookham, Inc. (a)(d) | 230,100 | 731,718 | |
Ceragon Networks Ltd. (a) | 214,700 | 981,179 | |
CIENA Corp. (a) | 510,628 | 2,016,981 | |
Comtech Group, Inc. (a)(d) | 56,900 | 634,435 | |
Comverse Technology, Inc. (a) | 71,200 | 1,488,080 | |
Corning, Inc. (a) | 372,200 | 8,277,728 | |
F5 Networks, Inc. (a) | 35,900 | 1,798,231 | |
Finisar Corp. (a)(d) | 448,700 | 1,664,677 | |
Foundry Networks, Inc. (a) | 90,600 | 1,102,602 | |
Foxconn International Holdings Ltd. (a) | 40,000 | 105,693 | |
Ixia (a) | 16,400 | 164,820 | |
Juniper Networks, Inc. (a) | 188,609 | 2,766,894 | |
MRV Communications, Inc. (a)(d) | 67,800 | 168,822 | |
Nortel Networks Corp. (a) | 1,406,800 | 2,940,216 | |
Oplink Communications, Inc. (a) | 40,900 | 802,867 | |
Optical Communication Products, Inc. (a) | 36,100 | 72,200 | |
Orckit Communications Ltd. (a) | 29,900 | 273,286 | |
Powerwave Technologies, Inc. (a) | 142,700 | 1,081,666 | |
Research In Motion Ltd. (a) | 12,700 | 1,047,750 | |
Riverstone Networks, Inc. (a) | 94,100 | 84,690 | |
Sandvine Corp. (e) | 273,800 | 576,099 | |
Sonus Networks, Inc. (a) | 153,300 | 745,038 | |
Stratex Networks, Inc. (a) | 78,800 | 287,620 | |
Symmetricom, Inc. (a) | 96,900 | 722,874 | |
Tekelec (a) | 62,900 | 836,570 | |
Terayon Communication Systems, Inc. (a) | 55,900 | 55,341 | |
Tut Systems, Inc. (a)(d) | 66,700 | 76,705 | |
36,154,440 | |||
COMPUTERS & PERIPHERALS - 12.7% | |||
Computer Hardware - 5.7% | |||
Concurrent Computer Corp. (a) | 682,100 | 1,050,434 | |
Sun Microsystems, Inc. (a) | 1,008,500 | 5,032,415 | |
6,082,849 | |||
Computer Storage & Peripherals - 7.0% | |||
Network Appliance, Inc. (a) | 135,800 | 4,649,792 | |
Novatel Wireless, Inc. (a)(d) | 29,690 | 331,044 | |
Shares | Value (Note 1) | ||
Read-Rite Corp. (a) | 44,000 | $4 | |
Synaptics, Inc. (a)(d) | 98,400 | 2,488,536 | |
7,469,376 | |||
TOTAL COMPUTERS & PERIPHERALS | 13,552,225 | ||
ELECTRICAL EQUIPMENT - 0.4% | |||
Electrical Components & Equipment - 0.4% | |||
Energy Conversion Devices, Inc. (a) | 13,000 | 455,650 | |
ELECTRONIC EQUIPMENT & INSTRUMENTS - 7.8% | |||
Electronic Equipment & Instruments - 4.4% | |||
Agilent Technologies, Inc. (a) | 92,400 | 2,971,584 | |
Chi Mei Optoelectronics Corp. | 3,888 | 4,610 | |
Coherent, Inc. (a) | 15,400 | 558,404 | |
LG.Philips LCD Co. Ltd. sponsored ADR (a)(d) | 15,000 | 298,050 | |
Nippon Electric Glass Co. Ltd. | 18,000 | 436,986 | |
Orbotech Ltd. (a) | 18,900 | 453,789 | |
4,723,423 | |||
Electronic Manufacturing Services - 3.4% | |||
Hon Hai Precision Industry Co. Ltd. (Foxconn) | 74,400 | 419,547 | |
Jabil Circuit, Inc. | 98,400 | 2,640,072 | |
Smart Modular Tech WWH, Inc. | 58,800 | 582,120 | |
3,641,739 | |||
TOTAL ELECTRONIC EQUIPMENT & INSTRUMENTS | 8,365,162 | ||
HOUSEHOLD DURABLES - 0.6% | |||
Consumer Electronics - 0.6% | |||
Directed Electronics, Inc. | 30,600 | 448,902 | |
Thomson SA | 12,500 | 200,027 | |
648,929 | |||
INDUSTRIAL CONGLOMERATES - 0.3% | |||
Industrial Conglomerates - 0.3% | |||
Orkla ASA (A Shares) | 6,800 | 333,449 | |
INTERNET SOFTWARE & SERVICES - 8.8% | |||
Internet Software & Services - 8.8% | |||
aQuantive, Inc. (a) | 14,200 | 352,160 | |
Ariba, Inc. (a) | 25,100 | 207,828 | |
Baidu.com, Inc. sponsored ADR | 800 | 62,160 | |
Google, Inc. Class A (sub. vtg.) (a) | 13,300 | 5,034,449 | |
Marchex, Inc. Class B | 12,000 | 197,040 | |
Openwave Systems, Inc. (a) | 168,900 | 1,366,401 | |
VeriSign, Inc. (a) | 106,900 | 2,163,656 | |
9,383,694 | |||
IT SERVICES - 0.1% | |||
IT Consulting & Other Services - 0.1% | |||
Sapient Corp. (a) | 21,700 | 105,679 | |
Common Stocks - continued | |||
Shares | Value (Note 1) | ||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 27.7% | |||
Semiconductor Equipment - 0.7% | |||
Cymer, Inc. (a) | 4,200 | $172,830 | |
EMCORE Corp. (a) | 40,700 | 307,285 | |
MEMC Electronic Materials, Inc. (a) | 7,100 | 274,628 | |
754,743 | |||
Semiconductors - 27.0% | |||
Altera Corp. (a) | 52,800 | 1,068,144 | |
AMIS Holdings, Inc. (a) | 23,000 | 209,530 | |
ANADIGICS, Inc. (a)(d) | 76,000 | 566,960 | |
Applied Micro Circuits Corp. (a) | 242,600 | 662,298 | |
Broadcom Corp. Class A (a)(d) | 293,350 | 8,636,223 | |
Conexant Systems, Inc. (a) | 223,200 | 459,792 | |
Cree, Inc. (a) | 2,700 | 50,274 | |
Cypress Semiconductor Corp. (a) | 33,300 | 520,812 | |
Ikanos Communications, Inc. | 300 | 3,828 | |
Integrated Device Technology, Inc. (a) | 58,800 | 1,013,124 | |
Intersil Corp. Class A | 32,500 | 823,875 | |
LSI Logic Corp. (a) | 115,100 | 926,555 | |
Marvell Technology Group Ltd. (a) | 200,480 | 3,510,405 | |
Maxim Integrated Products, Inc. | 8,300 | 241,530 | |
Microtune, Inc. (a) | 128,600 | 774,172 | |
Mindspeed Technologies, Inc. (a) | 325,333 | 621,386 | |
MIPS Technologies, Inc. (a) | 43,500 | 302,760 | |
National Semiconductor Corp. | 151,200 | 3,672,648 | |
Netlogic Microsystems, Inc. (a)(d) | 35,000 | 1,032,850 | |
O2Micro International Ltd. sponsored ADR (a) | 60,300 | 362,403 | |
PowerDsine Ltd. (a) | 40,500 | 374,625 | |
RF Micro Devices, Inc. (a) | 39,400 | 260,828 | |
Saifun Semiconductors Ltd. | 10,500 | 263,340 | |
Sigma Designs, Inc. (a) | 23,000 | 321,310 | |
Silicon On Insulator Technologies SA (SOITEC) (a) | 30,500 | 930,414 | |
Skyworks Solutions, Inc. (a) | 58,100 | 269,003 | |
Spansion, Inc. Class A (d) | 32,900 | 565,551 | |
Trident Microsystems, Inc. (a) | 21,700 | 447,671 | |
Vimicro International Corp. sponsored ADR | 3,000 | 32,040 | |
28,924,351 | |||
TOTAL SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT | 29,679,094 | ||
SOFTWARE - 2.4% | |||
Application Software - 1.8% | |||
Cognos, Inc. (a) | 2,400 | 78,048 | |
Shares | Value (Note 1) | ||
Informatica Corp. (a) | 36,800 | $538,752 | |
Ulticom, Inc. (a) | 117,900 | 1,266,246 | |
1,883,046 | |||
Systems Software - 0.6% | |||
Wind River Systems, Inc. (a) | 68,600 | 697,662 | |
TOTAL SOFTWARE | 2,580,708 | ||
TOTAL COMMON STOCKS (Cost $115,324,856) | 101,586,983 | ||
Convertible Bonds - 0.2% | ||||
Principal Amount | ||||
COMMUNICATIONS EQUIPMENT - 0.2% | ||||
Communications Equipment - 0.2% | ||||
CIENA Corp. 0.25% 5/1/13 | $240,000 | 211,704 | ||
Money Market Funds - 14.7% | |||
Shares | |||
Fidelity Cash Central Fund, 5.31% (b) | 5,736,189 | 5,736,189 | |
Fidelity Securities Lending Cash Central Fund, 5.33% (b)(c) | 10,006,350 | 10,006,350 | |
TOTAL MONEY MARKET FUNDS (Cost $15,742,539) | 15,742,539 | ||
TOTAL INVESTMENT PORTFOLIO - 109.7% (Cost $131,307,395) | 117,541,226 | ||
NET OTHER ASSETS - (9.7)% | (10,413,550) | ||
NET ASSETS - 100% | $107,127,676 | ||
Legend |
(a)Non-income producing |
(b)Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. |
(c)Investment made with cash collateral received from securities on loan. |
(d)Security or a portion of the security is on loan at period end. |
(e)Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the end of the period, the value of these securities amounted to $ 576,099 or 0.5% of net assets. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the fund from the affiliated Central funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $49,506 |
Fidelity Securities Lending Cash Central Fund | 53,688 |
Total | $103,194 |
Other Information |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: |
United States of America | 85.0% |
Canada | 4.3% |
Bermuda | 3.3% |
Israel | 3.1% |
France | 1.1% |
Others (individually less than 1%) | 3.2% |
100.0% |
Income Tax Information |
At February 28, 2006, the fund had a capital loss carryforward of approximately $196,502,774 of which $109,595,892, $83,559,188 and $3,347,694 will expire on February 28, 2010, 2011 and 2013, respectively. |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Networking and Infrastructure Portfolio
Financial Statements
Statement of Assets and Liabilities
August 31, 2006 (Unaudited) | ||
Assets | ||
Investment in securities, at value (including securities loaned of $9,417,626) - See accompanying schedule: Unaffiliated issuers (cost $115,564,856) | $101,798,687 | |
Affiliated Central Funds (cost $15,742,539) | 15,742,539 | |
Total Investments (cost $131,307,395) | $117,541,226 | |
Receivable for investments sold | 597,081 | |
Receivable for fund shares sold | 1,564,241 | |
Dividends receivable | 19,034 | |
Interest receivable | 13,016 | |
Prepaid expenses | 103 | |
Other receivables | 6,880 | |
Total assets | 119,741,581 | |
Liabilities | ||
Payable for investments purchased | $2,065,007 | |
Payable for fund shares redeemed | 440,744 | |
Accrued management fee | 45,498 | |
Other affiliated payables | 34,717 | |
Other payables and accrued expenses | 21,589 | |
Collateral on securities loaned, at value | 10,006,350 | |
Total liabilities | 12,613,905 | |
Net Assets | $107,127,676 | |
Net Assets consist of: | ||
Paid in capital | $312,196,019 | |
Accumulated net investment loss | (551,826) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (190,750,308) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (13,766,209) | |
Net Assets, for 47,317,587 shares outstanding | $107,127,676 | |
Net Asset Value, offering price and redemption price per share ($107,127,676 ÷ 47,317,587 shares) | $2.26 | |
Statement of Operations
Six months ended August 31, 2006 (Unaudited) | ||
Investment Income | ||
Dividends | $42,386 | |
Interest | 241 | |
Income from affiliated Central Funds (including $53,688 from security lending) | 103,194 | |
Total income | 145,821 | |
Expenses | ||
Management fee | $362,490 | |
Transfer agent fees | 237,742 | |
Accounting and security lending fees | 32,672 | |
Independent trustees' compensation | 257 | |
Custodian fees and expenses | 19,638 | |
Registration fees | 25,192 | |
Audit | 16,162 | |
Legal | 1,300 | |
Miscellaneous | 5,390 | |
Total expenses before reductions | 700,843 | |
Expense reductions | (3,196) | 697,647 |
Net investment income (loss) | (551,826) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers | 5,868,461 | |
Foreign currency transactions | 1,795 | |
Total net realized gain (loss) | 5,870,256 | |
Change in net unrealized appreciation (depreciation) on: Investment securities | (22,722,645) | |
Assets and liabilities in foreign currencies | (40) | |
Total change in net unrealized appreciation (depreciation) | (22,722,685) | |
Net gain (loss) | (16,852,429) | |
Net increase (decrease) in net assets resulting from operations | $(17,404,255) | |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Statement of Changes in Net Assets
Six months ended | Year ended | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $(551,826) | $(851,863) |
Net realized gain (loss) | 5,870,256 | 8,428,855 |
Change in net unrealized appreciation (depreciation) | (22,722,685) | 10,418,364 |
Net increase (decrease) in net assets resulting from operations | (17,404,255) | 17,995,356 |
Share transactions | 109,122,762 | 99,416,849 |
Cost of shares redeemed | (110,030,215) | (102,088,170) |
Net increase (decrease) in net assets resulting from share transactions | (907,453) | (2,671,321) |
Redemption fees | 72,435 | 82,946 |
Total increase (decrease) in net assets | (18,239,273) | 15,406,981 |
Net Assets | ||
Beginning of period | 125,366,949 | 109,959,968 |
End of period (including accumulated net investment loss of $551,826 and $0, respectively) | $107,127,676 | $125,366,949 |
Other Information Shares | ||
Sold | 42,311,882 | 42,500,481 |
Redeemed | (43,552,515) | (45,315,892) |
Net increase (decrease) | (1,240,633) | (2,815,411) |
Financial Highlights
Six months ended | Years ended February 28, | |||||
(Unaudited) | 2006 | 2005 | 2004 G | 2003 | 2002 | |
Selected Per-Share Data | ||||||
Net asset value, beginning of period | $2.58 | $2.14 | $2.66 | $1.52 | $2.38 | $4.14 |
Income from Investment Operations | ||||||
Net investment income (loss) E | (.01) | (.02) | (.02) | (.02) | (.03) | (.03) |
Net realized and unrealized gain (loss) | (.31) | .46 | (.50) | 1.16 | (.84) | (1.74) |
Total from investment operations | (.32) | .44 | (.52) | 1.14 | (.87) | (1.77) |
Redemption fees added to paid in capital E | - H | - H | - H | - H | .01 | .01 |
Net asset value, end of period | $2.26 | $2.58 | $2.14 | $2.66 | $1.52 | $2.38 |
Total Return B,C,D | (12.40)% | 20.56% | (19.55)% | 75.00% | (36.13)% | (42.51)% |
Ratios to Average Net Assets F | ||||||
Expenses before reductions | 1.10% A | 1.14% | 1.17% | 1.43% | 1.93% | 1.58% |
Expenses net of fee waivers, if any | 1.10% A | 1.14% | 1.17% | 1.43% | 1.93% | 1.58% |
Expenses net of all reductions | 1.10% A | 1.02% | 1.07% | 1.39% | 1.78% | 1.52% |
Net investment income (loss) | (.87)% A | (.84)% | (.89)% | (1.00)% | (1.45)% | (1.03)% |
Supplemental Data F | ||||||
Net assets, end of period (000 omitted) | $107,128 | $125,367 | $109,960 | $211,468 | $77,981 | $110,547 |
Portfolio turnover rate | 182% A | 201% | 160% | 57% | 120% | 177% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the former sales charges. E Calculated based on average shares outstanding during the period. F Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. G For the year ended February 29. H Amount represents less than $.01 per share. | ||||||
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Software and Computer Services Portfolio
Investment Changes
Top Ten Stocks as of August 31, 2006 | ||
% of fund's | % of fund's net assets | |
Google, Inc. Class A (sub. vtg.) | 9.6 | 10.1 |
Symantec Corp. | 9.0 | 14.7 |
Quest Software, Inc. | 5.8 | 0.0 |
Nintendo Co. Ltd. | 5.3 | 4.8 |
Microsoft Corp. | 4.7 | 12.5 |
Yahoo!, Inc. | 4.5 | 3.3 |
FileNET Corp. | 4.5 | 2.0 |
Oracle Corp. | 4.4 | 4.9 |
Electronic Arts, Inc. | 3.4 | 0.0 |
Affiliated Computer Services, Inc. Class A | 2.9 | 3.9 |
54.1 | ||
Top Industries (% of fund's net assets) | |||
As of August 31, 2006 | |||
| Software | 58.1% | |
| Internet Software & Services | 15.5% | |
| IT Services | 9.4% | |
| Computers & Peripherals | 2.7% | |
| Communications Equipment | 2.5% | |
| All Others* | 11.8% | |
As of February 28, 2006 | |||
| Software | 54.2% | |
| Internet Software & Services | 19.0% | |
| IT Services | 12.4% | |
| Computers & Peripherals | 4.9% | |
| Specialty Retail | 3.3% | |
| All Others* | 6.2% | |
* Includes short-term investments and net other assets. |
Prior period industry classifications reflect the categories in place as of the date indicated and have not been adjusted to reflect current industry classifications. |
Semiannual Report
Software and Computer Services Portfolio
Investments August 31, 2006 (Unaudited)
Showing Percentage of Net Assets
Common Stocks - 94.6% | |||
Shares | Value (Note 1) | ||
CAPITAL MARKETS - 1.4% | |||
Asset Management & Custody Banks - 1.4% | |||
Aberdeen Asset Management PLC | 2,875,000 | $8,635,915 | |
COMMERCIAL SERVICES & SUPPLIES - 0.9% | |||
Human Resource & Employment Services - 0.9% | |||
Taleo Corp. Class A | 488,900 | 5,138,339 | |
COMMUNICATIONS EQUIPMENT - 2.5% | |||
Communications Equipment - 2.5% | |||
Blue Coat Systems, Inc. (a) | 173,219 | 2,946,455 | |
Comverse Technology, Inc. (a) | 571,200 | 11,938,080 | |
14,884,535 | |||
COMPUTERS & PERIPHERALS - 2.7% | |||
Computer Hardware - 1.5% | |||
Cray, Inc. (a) | 83,472 | 1,064,268 | |
International Business Machines Corp. | 1,000 | 80,970 | |
Sun Microsystems, Inc. (a) | 1,553,700 | 7,752,963 | |
8,898,201 | |||
Computer Storage & Peripherals - 1.2% | |||
ActivIdentity Corp. (a) | 892,200 | 4,416,390 | |
Rackable Systems, Inc. (a) | 97,400 | 2,703,824 | |
SimpleTech, Inc. (a) | 74,900 | 526,547 | |
7,646,761 | |||
TOTAL COMPUTERS & PERIPHERALS | 16,544,962 | ||
DIVERSIFIED FINANCIAL SERVICES - 0.6% | |||
Specialized Finance - 0.6% | |||
The NASDAQ Stock Market, Inc. (a) | 120,000 | 3,421,200 | |
ELECTRONIC EQUIPMENT & INSTRUMENTS - 1.1% | |||
Electronic Equipment & Instruments - 0.4% | |||
National Instruments Corp. | 83,900 | 2,329,064 | |
Technology Distributors - 0.7% | |||
CDW Corp. | 70,900 | 4,133,470 | |
TOTAL ELECTRONIC EQUIPMENT & INSTRUMENTS | 6,462,534 | ||
HEALTH CARE TECHNOLOGY - 0.8% | |||
Healthcare Technology - 0.8% | |||
IMS Health, Inc. | 182,200 | 4,972,238 | |
INTERNET & CATALOG RETAIL - 0.6% | |||
Internet Retail - 0.6% | |||
Expedia, Inc. (a) | 230,100 | 3,755,232 | |
INTERNET SOFTWARE & SERVICES - 15.5% | |||
Internet Software & Services - 15.5% | |||
Google, Inc. Class A (sub. vtg.) (a)(d) | 152,000 | 57,536,561 | |
Interwoven, Inc. (a) | 111,200 | 1,219,864 | |
Supportsoft, Inc. (a) | 491,700 | 1,956,966 | |
Shares | Value (Note 1) | ||
Vitria Technology, Inc. (a)(e) | 2,128,482 | $5,470,199 | |
Yahoo!, Inc. (a) | 945,800 | 27,257,956 | |
93,441,546 | |||
IT SERVICES - 9.4% | |||
Data Processing & Outsourced Services - 5.4% | |||
Affiliated Computer Services, Inc. | 337,800 | 17,342,652 | |
First Data Corp. | 110,900 | 4,765,373 | |
The BISYS Group, Inc. (a) | 857,000 | 8,818,530 | |
VeriFone Holdings, Inc. (a) | 75,000 | 1,736,250 | |
32,662,805 | |||
IT Consulting & Other Services - 4.0% | |||
HCL Technologies Ltd. | 207,287 | 2,595,997 | |
Infosys Technologies Ltd. sponsored ADR | 270,800 | 12,145,380 | |
Kanbay International, Inc. (a) | 494,411 | 9,151,548 | |
23,892,925 | |||
TOTAL IT SERVICES | 56,555,730 | ||
SOFTWARE - 58.1% | |||
Application Software - 21.7% | |||
Altiris, Inc. (a) | 8,900 | 201,140 | |
Ansys, Inc. (a) | 91,700 | 4,286,058 | |
Autodesk, Inc. (a) | 219,100 | 7,615,916 | |
BEA Systems, Inc. (a) | 932,600 | 12,804,598 | |
Fair, Isaac & Co., Inc. | 142,500 | 4,988,925 | |
FileNET Corp. (a) | 776,286 | 27,123,433 | |
Informatica Corp. (a) | 887,100 | 12,987,144 | |
NAVTEQ Corp. (a) | 347,000 | 9,216,320 | |
Parametric Technology Corp. (a) | 515,000 | 8,296,650 | |
Quest Software, Inc. (a) | 2,482,314 | 34,578,634 | |
SAP AG sponsored ADR | 4,200 | 200,508 | |
SPSS, Inc. (a) | 1,400 | 35,518 | |
TIBCO Software, Inc. (a) | 870,000 | 6,838,200 | |
Verint Systems, Inc. (a) | 43,010 | 1,421,481 | |
130,594,525 | |||
Home Entertainment Software - 10.5% | |||
Electronic Arts, Inc. (a) | 398,840 | 20,328,875 | |
Nintendo Co. Ltd. | 155,200 | 31,834,540 | |
Ubisoft Entertainment SA (a)(d) | 202,634 | 10,810,355 | |
62,973,770 | |||
Systems Software - 25.9% | |||
Check Point Software Technologies Ltd. (a) | 460,300 | 8,556,977 | |
Microsoft Corp. | 1,108,600 | 28,479,934 | |
Moldflow Corp. (a) | 63,846 | 773,175 | |
Oracle Corp. (a) | 1,679,800 | 26,288,870 | |
Protect Data AB | 403,900 | 6,158,711 | |
Red Hat, Inc. (a) | 215,000 | 4,996,600 | |
Symantec Corp. (a)(d) | 2,915,071 | 54,336,923 | |
Utimaco Safeware AG (a)(e) | 870,741 | 11,825,290 | |
Common Stocks - continued | |||
Shares | Value (Note 1) | ||
SOFTWARE - CONTINUED | |||
Systems Software - continued | |||
WatchGuard Technologies, Inc. (a)(e) | 2,056,312 | $8,533,695 | |
Wind River Systems, Inc. (a) | 625,000 | 6,356,250 | |
156,306,425 | |||
TOTAL SOFTWARE | 349,874,720 | ||
SPECIALTY RETAIL - 1.0% | |||
Computer & Electronics Retail - 1.0% | |||
Circuit City Stores, Inc. | 252,800 | 5,968,608 | |
TOTAL COMMON STOCKS (Cost $552,963,664) | 569,655,559 | ||
Money Market Funds - 8.1% | |||
Fidelity Cash Central Fund, 5.31% (b) | 31,676,845 | 31,676,845 | |
Fidelity Securities Lending Cash Central Fund, 5.33% (b)(c) | 17,100,257 | 17,100,257 | |
TOTAL MONEY MARKET FUNDS (Cost $48,777,102) | 48,777,102 | ||
TOTAL INVESTMENT PORTFOLIO - 102.7% (Cost $601,740,766) | 618,432,661 | ||
NET OTHER ASSETS - (2.7)% | (16,008,796) | ||
NET ASSETS - 100% | $602,423,865 | ||
Legend |
(a)Non-income producing |
(b)Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. |
(c)Investment made with cash collateral received from securities on loan. |
(d)Security or a portion of the security is on loan at period end. |
(e)Affiliated company |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the fund from the affiliated Central funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $402,545 |
Fidelity Securities Lending Cash Central Fund | 10,435 |
Total | $412,980 |
Other Affiliated Issuers |
An affiliated company is a company in which the fund has ownership of at least 5% of the voting securities. Fiscal year to date transactions with companies which are or were affiliates are as follows: |
Affiliates | Value, beginning of period | Purchases | Sales Proceeds | Dividend Income | Value, |
Utimaco Safeware AG | $- | $11,957,464 | $- | $- | $11,825,290 |
Vitria Technology, Inc. | 5,523,254 | 279,008 | - | - | 5,470,199 |
WatchGuard Technologies, Inc. | 7,224,007 | 1,462,403 | 316,164 | - | 8,533,695 |
Total | $12,747,261 | $13,698,875 | $316,164 | $- | $25,829,184 |
Other Information |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: |
United States of America | 84.6% |
Japan | 5.3% |
India | 2.5% |
Germany | 2.0% |
France | 1.8% |
United Kingdom | 1.4% |
Israel | 1.4% |
Sweden | 1.0% |
100.0% |
Income Tax Information |
At February 28, 2006, the fund had a capital loss carryforward of approximately $101,031,277 all of which will expire on February 28, 2011. |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Software and Computer Services Portfolio
Financial Statements
Statement of Assets and Liabilities
August 31, 2006 (Unaudited) | ||
Assets | ||
Investment in securities, at value (including securities loaned of $16,501,006) - See accompanying schedule: Unaffiliated issuers (cost $525,213,498) | $543,826,375 | |
Affiliated Central Funds (cost $48,777,102) | 48,777,102 | |
Other affiliated issuers (cost $27,750,166) | 25,829,184 | |
Total Investments (cost $601,740,766) | $618,432,661 | |
Foreign currency held at value (cost $12) | 12 | |
Receivable for investments sold | 1,428,500 | |
Receivable for fund shares sold | 7,845,970 | |
Dividends receivable | 105,448 | |
Interest receivable | 142,955 | |
Prepaid expenses | 627 | |
Other receivables | 2,324 | |
Total assets | 627,958,497 | |
Liabilities | ||
Payable for investments purchased | $7,367,292 | |
Payable for fund shares redeemed | 620,311 | |
Accrued management fee | 261,831 | |
Other affiliated payables | 152,316 | |
Other payables and accrued expenses | 32,625 | |
Collateral on securities loaned, at value | 17,100,257 | |
Total liabilities | 25,534,632 | |
Net Assets | $602,423,865 | |
Net Assets consist of: | ||
Paid in capital | $695,128,423 | |
Accumulated net investment loss | (1,080,554) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (108,318,701) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 16,694,697 | |
Net Assets, for 10,395,840 shares outstanding | $602,423,865 | |
Net Asset Value, offering price and redemption price per share ($602,423,865 ÷ 10,395,840 shares) | $57.95 | |
Statement of Operations
Six months ended August 31, 2006 (Unaudited) | ||
Investment Income | ||
Dividends | $1,029,682 | |
Interest | 33 | |
Income from affiliated Central Funds (including $10,435 from security lending) | 412,980 | |
Total income | 1,442,695 | |
Expenses | ||
Management fee | $1,546,578 | |
Transfer agent fees | 773,115 | |
Accounting and security lending fees | 133,795 | |
Independent trustees' compensation | 1,104 | |
Custodian fees and expenses | 25,310 | |
Registration fees | 22,316 | |
Audit | 19,391 | |
Legal | 8,131 | |
Interest | 882 | |
Miscellaneous | 16,721 | |
Total expenses before reductions | 2,547,343 | |
Expense reductions | (25,298) | 2,522,045 |
Net investment income (loss) | (1,079,350) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers (net of foreign taxes of $6,322) | (994,159) | |
Other affiliated issuers | 108,482 | |
Foreign currency transactions | (17,279) | |
Total net realized gain (loss) | (902,956) | |
Change in net unrealized appreciation (depreciation) on: Investment securities (net of decrease in deferred foreign taxes of $51,970) | 42,144,175 | |
Assets and liabilities in foreign currencies | 1,243 | |
Total change in net unrealized appreciation (depreciation) | 42,145,418 | |
Net gain (loss) | 41,242,462 | |
Net increase (decrease) in net assets resulting from operations | $40,163,112 | |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Software and Computer Services Portfolio
Financial Statements - continued
Statement of Changes in Net Assets
Six months ended August 31, 2006 (Unaudited) | Year ended | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $(1,079,350) | $(3,088,414) |
Net realized gain (loss) | (902,956) | 57,039,650 |
Change in net unrealized appreciation (depreciation) | 42,145,418 | 21,863,267 |
Net increase (decrease) in net assets resulting from operations | 40,163,112 | 75,814,503 |
Share transactions | 72,385,063 | 171,883,514 |
Cost of shares redeemed | (73,936,244) | (364,978,616) |
Net increase (decrease) in net assets resulting from share transactions | (1,551,181) | (193,095,102) |
Redemption fees | 13,263 | 90,805 |
Total increase (decrease) in net assets | 38,625,194 | (117,189,794) |
Net Assets | ||
Beginning of period | 563,798,671 | 680,988,465 |
End of period (including accumulated net investment loss of $1,080,554 and accumulated net investment loss of $1,204, respectively) | $602,423,865 | $563,798,671 |
Other Information Shares | ||
Sold | 1,288,282 | 3,386,990 |
Redeemed | (1,345,189) | (7,240,815) |
Net increase (decrease) | (56,907) | (3,853,825) |
Financial Highlights
Six months ended August 31, 2006 | Years ended February 28, | |||||
(Unaudited) | 2006 | 2005 | 2004 I | 2003 | 2002 | |
Selected Per-Share Data | ||||||
Net asset value, beginning of period | $53.94 | $47.60 | $51.37 | $35.48 | $41.84 | $45.33 |
Income from Investment Operations | ||||||
Net investment income (loss) E | (.11) | (.25) | .53 F | (.24) G | (.24) | (.26) |
Net realized and unrealized gain (loss) | 4.12 | 6.58 | (3.79) | 16.12 | (6.13) | (3.02) |
Total from investment operations | 4.01 | 6.33 | (3.26) | 15.88 | (6.37) | (3.28) |
Distributions from net investment income | - | - | (.51) | - | - | - |
Distributions from net realized gain | - | - | - | - | - | (.24) |
Total distributions | - | - | (.51) | - | - | (.24) |
Redemption fees added to paid in capital E | - J | .01 | - J | .01 | .01 | .03 |
Net asset value, end of period | $57.95 | $53.94 | $47.60 | $51.37 | $35.48 | $41.84 |
Total Return B, C, D | 7.43% | 13.32% | (6.43)% | 44.79% | (15.20)% | (7.08)% |
Ratios to Average Net Assets H | ||||||
Expenses before reductions | .93% A | .96% | .98% | 1.09% | 1.18% | 1.09% |
Expenses net of fee waivers, if any | .93% A | .96% | .98% | 1.09% | 1.18% | 1.09% |
Expenses net of all reductions | .92% A | .91% | .92% | 1.06% | 1.05% | 1.05% |
Net investment income (loss) | (.39)%A | (.49)% | 1.09% F | (.53)% | (.65)% | (.57)% |
Supplemental Data | ||||||
Net assets, end of period (000 omitted) | $602,424 | $563,799 | $680,988 | $846,946 | $617,904 | $782,519 |
Portfolio turnover rate | 101% A | 59% | 94% | 81% | 198% | 325% |
A Annualized BTotal returns for periods of less than one year are not annualized. CTotal returns would have been lower had certain expenses not been reduced during the periods shown. DTotal returns do not include the effect of the former sales charges. ECalculated based on average shares outstanding during the period. FInvestment income per share reflects a special dividend which amounted to $.76 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.48)%. GInvestment income per share reflects a special dividend which amounted to $.03 per share. HExpense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. IFor the year ended February 29. JAmount represents less than $.01 per share. | ||||||
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Investment Changes
Top Ten Stocks as of August 31, 2006 | ||
% of fund's | % of fund's net assets | |
Google, Inc. Class A (sub. vtg.) | 6.5 | 5.2 |
Intel Corp. | 5.8 | 6.9 |
eBay, Inc. | 5.0 | 1.8 |
International Business Machines Corp. | 4.5 | 0.0 |
National Semiconductor Corp. | 3.2 | 1.8 |
Apple Computer, Inc. | 3.1 | 3.7 |
QUALCOMM, Inc. | 3.1 | 0.0 |
Maxim Integrated Products, Inc. | 2.6 | 1.0 |
Dell, Inc. | 2.4 | 6.5 |
Hon Hai Precision Industry Co. Ltd. (Foxconn) | 2.1 | 1.7 |
38.3 | ||
Top Industries (% of fund's net assets) | |||
As of August 31, 2006 | |||
| Semiconductors & Semiconductor Equipment | 31.9% | |
| Computers & Peripherals | 14.8% | |
| Internet Software & Services | 12.7% | |
| Communications Equipment | 9.6% | |
| Software | 7.9% | |
| All Others * | 23.1% | |
As of February 28, 2006 | |||
| Semiconductors & Semiconductor Equipment | 22.6% | |
| Software | 16.9% | |
| Computers & Peripherals | 16.3% | |
| Communications Equipment | 13.7% | |
| Internet Software & Services | 9.0% | |
| All Others * | 21.5% | |
*Includes short-term investments and net other assets. |
Prior period industry classifications reflect the categories in place as of the date indicated and have not been adjusted to reflect current industry classifications. |
Semiannual Report
Technology Portfolio
Investments August 31, 2006 (Unaudited)
Showing Percentage of Net Assets
Common Stocks - 93.9% | |||
Shares | Value (Note 1) | ||
AUTO COMPONENTS - 0.2% | |||
Auto Parts & Equipment - 0.2% | |||
Fuel Systems Solutions, Inc. (a) | 250,000 | $3,445,000 | |
COMMUNICATIONS EQUIPMENT - 9.6% | |||
Communications Equipment - 9.6% | |||
Alcatel SA sponsored ADR | 650,000 | 8,144,500 | |
Arris Group, Inc. (a) | 200,000 | 2,292,000 | |
Comverse Technology, Inc. (a) | 500,000 | 10,450,000 | |
Corning, Inc. (a) | 1,000,000 | 22,240,000 | |
CSR PLC (a) | 750,000 | 16,737,479 | |
F5 Networks, Inc. (a) | 100,000 | 5,009,000 | |
ITF Optical Technologies, Inc. Series A (f) | 65,118 | 1 | |
Juniper Networks, Inc. (a) | 1,250,000 | 18,337,500 | |
Lucent Technologies, Inc. (a) | 3,000,000 | 6,990,000 | |
Motorola, Inc. | 300,000 | 7,014,000 | |
Nortel Networks Corp. (a) | 3,500,000 | 7,315,010 | |
QUALCOMM, Inc. | 1,350,000 | 50,854,500 | |
Sandvine Corp. (e) | 2,000,000 | 4,208,171 | |
159,592,161 | |||
COMPUTERS & PERIPHERALS - 14.8% | |||
Computer Hardware - 11.9% | |||
Apple Computer, Inc. (a) | 750,000 | 50,887,500 | |
Dell, Inc. (a) | 1,750,000 | 39,462,500 | |
Hewlett-Packard Co. | 500,000 | 18,280,000 | |
International Business Machines Corp. | 925,000 | 74,897,250 | |
NCR Corp. (a) | 100,000 | 3,479,000 | |
Sun Microsystems, Inc. (a) | 2,000,000 | 9,980,000 | |
196,986,250 | |||
Computer Storage & Peripherals - 2.9% | |||
Brocade Communications Systems, Inc. (a) | 275,000 | 1,705,000 | |
EMC Corp. (a) | 1,750,000 | 20,387,500 | |
Emulex Corp. (a) | 100,000 | 1,732,000 | |
Hypercom Corp. (a) | 350,000 | 3,269,000 | |
msystems Ltd. (a) | 200,000 | 8,876,000 | |
Network Appliance, Inc. (a) | 250,000 | 8,560,000 | |
Rackable Systems, Inc. (a) | 900 | 24,984 | |
TPV Technology Ltd. | 3,000,000 | 3,205,503 | |
47,759,987 | |||
TOTAL COMPUTERS & PERIPHERALS | 244,746,237 | ||
DIVERSIFIED CONSUMER SERVICES - 0.5% | |||
Education Services - 0.5% | |||
Apollo Group, Inc. Class A (a) | 150,000 | 7,531,500 | |
DIVERSIFIED FINANCIAL SERVICES - 0.2% | |||
Specialized Finance - 0.2% | |||
NETeller PLC (a) | 401,200 | 3,193,290 | |
ELECTRICAL EQUIPMENT - 4.3% | |||
Electrical Components & Equipment - 4.0% | |||
Energy Conversion Devices, Inc. (a) | 175,000 | 6,133,750 | |
Shares | Value (Note 1) | ||
Evergreen Solar, Inc. (a)(d) | 1,950,000 | $19,851,000 | |
SolarWorld AG (d) | 550,000 | 32,548,246 | |
Suntech Power Holdings Co. Ltd. sponsored ADR | 275,000 | 7,975,000 | |
66,507,996 | |||
Heavy Electrical Equipment - 0.3% | |||
Suzlon Energy Ltd. | 200,000 | 5,183,032 | |
TOTAL ELECTRICAL EQUIPMENT | 71,691,028 | ||
ELECTRONIC EQUIPMENT & INSTRUMENTS - 6.6% | |||
Electronic Equipment & Instruments - 1.4% | |||
Amphenol Corp. Class A | 100,000 | 5,747,000 | |
Motech Industries, Inc. | 600,000 | 14,792,297 | |
Photon Dynamics, Inc. (a) | 250,000 | 3,357,500 | |
23,896,797 | |||
Electronic Manufacturing Services - 2.4% | |||
Hon Hai Precision Industry Co. Ltd. (Foxconn) | 5,999,965 | 33,834,218 | |
Jabil Circuit, Inc. | 200,000 | 5,366,000 | |
39,200,218 | |||
Technology Distributors - 2.8% | |||
Arrow Electronics, Inc. (a) | 942,419 | 26,293,490 | |
Avnet, Inc. (a) | 503,200 | 9,842,592 | |
CDW Corp. | 175,000 | 10,202,500 | |
46,338,582 | |||
TOTAL ELECTRONIC EQUIPMENT & INSTRUMENTS | 109,435,597 | ||
HOTELS, RESTAURANTS & LEISURE - 0.1% | |||
Hotels, Resorts & Cruise Lines - 0.1% | |||
eLong, Inc. sponsored ADR (a) | 150,000 | 2,008,500 | |
HOUSEHOLD DURABLES - 0.4% | |||
Consumer Electronics - 0.4% | |||
Directed Electronics, Inc. | 400,000 | 5,868,000 | |
INTERNET SOFTWARE & SERVICES - 12.7% | |||
Internet Software & Services - 12.7% | |||
aQuantive, Inc. (a) | 150,000 | 3,720,000 | |
CNET Networks, Inc. (a) | 500,000 | 4,715,000 | |
eBay, Inc. (a) | 3,000,000 | 83,580,000 | |
Equinix, Inc. (a) | 125,000 | 7,208,750 | |
Google, Inc. Class A (sub. vtg.) (a) | 285,000 | 107,881,049 | |
LoopNet, Inc. | 150,000 | 1,957,500 | |
Openwave Systems, Inc. (a) | 300,010 | 2,427,081 | |
211,489,380 | |||
IT SERVICES - 4.0% | |||
Data Processing & Outsourced Services - 2.1% | |||
First Data Corp. | 575,000 | 24,707,750 | |
Paychex, Inc. | 300,000 | 10,773,000 | |
35,480,750 | |||
Common Stocks - continued | |||
Shares | Value (Note 1) | ||
IT SERVICES - CONTINUED | |||
IT Consulting & Other Services - 1.9% | |||
Cognizant Technology Solutions Corp. Class A (a) | 125,000 | $8,738,750 | |
HCL Technologies Ltd. | 250,000 | 3,130,922 | |
Infosys Technologies Ltd. | 300,000 | 11,669,251 | |
Satyam Computer Services Ltd. sponsored ADR (d) | 200,000 | 7,634,000 | |
31,172,923 | |||
TOTAL IT SERVICES | 66,653,673 | ||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 31.9% | |||
Semiconductor Equipment - 6.6% | |||
Applied Materials, Inc. | 1,800,000 | 30,384,000 | |
ASML Holding NV (NY Shares) (a) | 500,000 | 11,030,000 | |
Brooks Automation, Inc. (a) | 200,000 | 2,780,000 | |
Cohu, Inc. | 200,000 | 3,354,000 | |
Cymer, Inc. (a) | 116,700 | 4,802,205 | |
Entegris, Inc. (a) | 250,000 | 2,715,000 | |
KLA-Tencor Corp. | 500,000 | 21,955,000 | |
Lam Research Corp. (a) | 300,000 | 12,837,000 | |
MEMC Electronic Materials, Inc. (a) | 250,000 | 9,670,000 | |
MKS Instruments, Inc. (a) | 175,000 | 3,655,750 | |
Varian Semiconductor Equipment Associates, Inc. (a) | 200,000 | 7,062,000 | |
110,244,955 | |||
Semiconductors - 25.3% | |||
Altera Corp. (a) | 700,000 | 14,161,000 | |
Analog Devices, Inc. | 800,000 | 24,512,000 | |
ARM Holdings PLC sponsored ADR | 2,000,000 | 13,600,000 | |
Broadcom Corp. Class A (a) | 700,000 | 20,608,000 | |
Cree, Inc. (a) | 25,000 | 465,500 | |
Ersol Solar Energy AG | 75,000 | 5,258,045 | |
Freescale Semiconductor, Inc.: | |||
Class A (a) | 150,000 | 4,605,000 | |
Class B (a) | 400,000 | 12,364,000 | |
Intel Corp. | 4,900,000 | 95,746,000 | |
Linear Technology Corp. | 500,000 | 17,005,000 | |
LSI Logic Corp. (a) | 400,000 | 3,220,000 | |
Marvell Technology Group Ltd. (a) | 1,300,100 | 22,764,751 | |
Maxim Integrated Products, Inc. | 1,500,000 | 43,650,000 | |
National Semiconductor Corp. | 2,200,000 | 53,438,000 | |
PMC-Sierra, Inc. (a) | 225,000 | 1,539,000 | |
Samsung Electronics Co. Ltd. | 35,000 | 23,665,870 | |
Silicon On Insulator Technologies SA (SOITEC) (a) | 275,000 | 8,388,977 | |
Taiwan Semiconductor Manufacturing Co. Ltd. sponsored ADR | 1,899,985 | 17,688,860 | |
Texas Instruments, Inc. | 500,000 | 16,295,000 | |
Shares | Value (Note 1) | ||
Vimicro International Corp. sponsored ADR | 400,000 | $4,272,000 | |
Xilinx, Inc. | 700,000 | 16,009,000 | |
419,256,003 | |||
TOTAL SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT | 529,500,958 | ||
SOFTWARE - 7.9% | |||
Application Software - 2.9% | |||
Adobe Systems, Inc. (a) | 250,000 | 8,110,000 | |
Amdocs Ltd. (a) | 100,000 | 3,795,000 | |
Autodesk, Inc. (a) | 300,000 | 10,428,000 | |
Autonomy Corp. PLC (a) | 300,000 | 2,224,999 | |
Cognos, Inc. (a) | 100,000 | 3,252,000 | |
Compuware Corp. (a) | 750,000 | 5,700,000 | |
Hyperion Solutions Corp. (a) | 150,000 | 4,968,000 | |
NAVTEQ Corp. (a) | 100,000 | 2,656,000 | |
Quest Software, Inc. (a) | 200,000 | 2,786,000 | |
Salesforce.com, Inc. (a) | 150,000 | 5,172,000 | |
49,091,999 | |||
Home Entertainment Software - 1.6% | |||
Nintendo Co. Ltd. | 80,000 | 16,409,557 | |
Take-Two Interactive Software, Inc. (a)(d) | 500,000 | 6,100,000 | |
THQ, Inc. (a) | 150,000 | 3,870,000 | |
26,379,557 | |||
Systems Software - 3.4% | |||
Check Point Software Technologies Ltd. (a) | 500,000 | 9,295,000 | |
Fast Search & Transfer ASA (a) | 500,000 | 1,637,192 | |
McAfee, Inc. (a) | 200,000 | 4,552,000 | |
Oracle Corp. (a) | 1,000,000 | 15,650,000 | |
Symantec Corp. (a) | 1,250,000 | 23,300,000 | |
Utimaco Safeware AG (a) | 125,000 | 1,697,590 | |
56,131,782 | |||
TOTAL SOFTWARE | 131,603,338 | ||
WIRELESS TELECOMMUNICATION SERVICES - 0.7% | |||
Wireless Telecommunication Services - 0.7% | |||
China Mobile (Hong Kong) Ltd. sponsored ADR | 200,000 | 6,662,000 | |
Crown Castle International Corp. | 150,000 | 5,154,000 | |
11,816,000 | |||
TOTAL COMMON STOCKS (Cost $1,622,662,945) | 1,558,574,662 | ||
Convertible Preferred Stocks - 0.0% | |||
COMMUNICATIONS EQUIPMENT - 0.0% | |||
Communications Equipment - 0.0% | |||
Chorum Technologies, Inc. Series E (a)(f) | 33,100 | 0 | |
Convertible Bonds - 0.2% | ||||
Principal Amount | Value | |||
ELECTRICAL EQUIPMENT - 0.2% | ||||
Electrical Components & Equipment - 0.2% | ||||
Evergreen Solar, Inc. 4.375% 7/1/12 (e) | $2,020,000 | $2,939,100 | ||
Money Market Funds - 8.4% | |||
Shares | |||
Fidelity Cash Central Fund, 5.31% (b) | 78,547,742 | 78,547,742 | |
Fidelity Securities Lending Cash Central Fund, 5.33% (b)(c) | 61,879,485 | 61,879,485 | |
TOTAL MONEY MARKET FUNDS (Cost $140,427,227) | 140,427,227 | ||
TOTAL INVESTMENT PORTFOLIO - 102.5% (Cost $1,765,606,734) | 1,701,940,989 | ||
NET OTHER ASSETS - (2.5)% | (42,004,348) | ||
NET ASSETS - 100% | $1,659,936,641 | ||
Legend |
(a)Non-income producing |
(b)Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. |
(c)Investment made with cash collateral received from securities on loan. |
(d)Security or a portion of the security is on loan at period end. |
(e)Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the end of the period, the value of these securities amounted to $ 7,147,271 or 0.4% of net assets. |
(f)Restricted securities - Investment in securities not registered under the Securities Act of 1933 (excluding 144A issues). At the end of the period, the value of restricted securities (excluding 144A issues) amounted to $1 or 0.0% of net assets. |
Additional information on each holding is as follows: |
Security | Acquisition Date | Acquisition Cost |
Chorum Technologies, Inc. | 9/19/00 | $496,562 |
ITF Optical Technologies, Inc. | 10/11/00 | $3,269,910 |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the fund from the affiliated Central funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $780,268 |
Fidelity Securities Lending Cash Central Fund | 383,261 |
Total | $1,163,529 |
Other Information |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: |
United States of America | 80.3% |
Taiwan | 4.1% |
United Kingdom | 2.3% |
Germany | 2.3% |
India | 1.7% |
Bermuda | 1.6% |
Korea (South) | 1.4% |
Israel | 1.2% |
France | 1.0% |
Japan | 1.0% |
Canada | 1.0% |
Others (individually less than 1%) | 2.1% |
100.0% |
Income Tax Information |
At February 28, 2006, the fund had a capital loss carryforward of approximately $2,622,811,486 of which $1,844,360,998 and $778,450,488 will expire on February 28, 2010 and 2011, respectively. |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Technology Portfolio
Financial Statements
Statement of Assets and Liabilities
August 31, 2006 (Unaudited) | ||
Assets | ||
Investment in securities, at value (including securities loaned of $59,783,541) - See accompanying schedule: Unaffiliated issuers (cost $1,625,179,507) | $1,561,513,762 | |
Affiliated Central Funds (cost $140,427,227) | 140,427,227 | |
Total Investments (cost $1,765,606,734) | $1,701,940,989 | |
Foreign currency held at value (cost $652,713) | 652,713 | |
Receivable for investments sold | 38,114,758 | |
Receivable for fund shares sold | 2,318,399 | |
Dividends receivable | 1,876,736 | |
Interest receivable | 228,618 | |
Prepaid expenses | 1,906 | |
Other receivables | 110,829 | |
Total assets | 1,745,244,948 | |
Liabilities | ||
Payable for investments purchased | $18,867,490 | |
Payable for fund shares redeemed | 2,541,599 | |
Accrued management fee | 751,830 | |
Other affiliated payables | 511,653 | |
Other payables and accrued expenses | 756,250 | |
Collateral on securities loaned, at value | 61,879,485 | |
Total liabilities | 85,308,307 | |
Net Assets | $1,659,936,641 | |
Net Assets consist of: | ||
Paid in capital | $4,312,844,067 | |
Distributions in excess of net investment income | (2,425,080) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (2,586,149,468) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (64,332,878) | |
Net Assets, for 26,756,521 shares outstanding | $1,659,936,641 | |
Net Asset Value, offering price and redemption price per share ($1,659,936,641 ÷ 26,756,521 shares) | $62.04 | |
Statement of Operations
Six months ended August 31, 2006 (Unaudited) | ||
Investment Income | ||
Dividends | $4,778,132 | |
Interest | 44,626 | |
Income from affiliated Central Funds (including $383,261 from security lending) | 1,163,529 | |
Total income | 5,986,287 | |
Expenses | ||
Management fee | $4,946,272 | |
Transfer agent fees | 2,895,338 | |
Accounting and security lending fees | 348,861 | |
Independent trustees' compensation | 3,475 | |
Custodian fees and expenses | 122,613 | |
Registration fees | 32,933 | |
Audit | 22,310 | |
Legal | 18,244 | |
Miscellaneous | 67,470 | |
Total expenses before reductions | 8,457,516 | |
Expense reductions | (48,233) | 8,409,283 |
Net investment income (loss) | (2,422,996) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers | 50,291,706 | |
Foreign currency transactions | (168,106) | |
Total net realized gain (loss) | 50,123,600 | |
Change in net unrealized appreciation (depreciation) on: Investment securities (net of increase in deferred foreign taxes of $383,990) | (139,507,187) | |
Assets and liabilities in foreign currencies | (7,251) | |
Total change in net unrealized appreciation (depreciation) | (139,514,438) | |
Net gain (loss) | (89,390,838) | |
Net increase (decrease) in net assets resulting from operations | $(91,813,834) | |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Technology Portfolio
Financial Statements - continued
Statement of Changes in Net Assets
Six months ended August 31, 2006 (Unaudited) | Year ended | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $(2,422,996) | $(8,274,738) |
Net realized gain (loss) | 50,123,600 | 159,248,895 |
Change in net unrealized appreciation (depreciation) | (139,514,438) | 78,145,959 |
Net increase (decrease) in net assets resulting from operations | (91,813,834) | 229,120,116 |
Share transactions | 125,758,211 | 453,428,844 |
Cost of shares redeemed | (297,382,609) | (713,469,270) |
Net increase (decrease) in net assets resulting from share transactions | (171,624,398) | (260,040,426) |
Redemption fees | 58,543 | 219,628 |
Total increase (decrease) in net assets | (263,379,689) | (30,700,682) |
Net Assets | ||
Beginning of period | 1,923,316,330 | 1,954,017,012 |
End of period (including distributions in excess of net investment income of $2,425,080 and distributions in excess of net investment income of $2,084, respectively) | $1,659,936,641 | $1,923,316,330 |
Other Information Shares | ||
Sold | 1,996,237 | 7,377,352 |
Redeemed | (4,720,443) | (11,808,572) |
Net increase (decrease) | (2,724,206) | (4,431,220) |
Financial Highlights
Six months ended August 31,2006 | Years ended February 28, | |||||
(Unaudited) | 2006 | 2005 | 2004 H | 2003 | 2002 | |
Selected Per-Share Data | ||||||
Net asset value, beginning of period | $65.24 | $57.62 | $61.94 | $38.44 | $52.07 | $69.00 |
Income from Investment Operations | ||||||
Net investment income (loss) E | (.09) | (.27) | .11 F | (.42) | (.37) | (.45) |
Net realized and unrealized gain (loss) | (3.11) | 7.88 | (4.28) | 23.91 | (13.28) | (16.50) |
Total from investment operations | (3.20) | 7.61 | (4.17) | 23.49 | (13.65) | (16.95) |
Distributions from net investment income | - | - | (.16) | - | - | - |
Redemption fees added to paid in capital E | - I | .01 | .01 | .01 | .02 | .02 |
Net asset value, end of period | $62.04 | $65.24 | $57.62 | $61.94 | $38.44 | $52.07 |
Total Return B, C, D | (4.90)% | 13.22% | (6.73)% | 61.13% | (26.18)% | (24.54)% |
Ratios to Average Net Assets G | ||||||
Expenses before reductions | .97% A | .99% | 1.01% | 1.19% | 1.39% | 1.19% |
Expenses net of fee waivers, if any | .97% A | .99% | 1.01% | 1.19% | 1.39% | 1.19% |
Expenses net of all reductions | .96% A | .93% | .94% | 1.14% | 1.22% | 1.13% |
Net investment income (loss) | (.28)% A | (.44)% | .20% F | (.80)% | (.86)% | (.73)% |
Supplemental Data | ||||||
Net assets, end of period (000 omitted) | $1,659,937 | $1,923,316 | $1,954,017 | $2,599,172 | $1,484,150 | $2,245,312 |
Portfolio turnover rate | 96% A | 100% | 104% | 127% | 153% | 184% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the former sales charges. E Calculated based on average shares outstanding during the period. F Investment income per share reflects a special dividend which amounted to $.48 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.65)%. G Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. H For the year ended February 29. I Amount represents less than $.01 per share. | ||||||
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Notes to Financial Statements
For the period ended August 31, 2006 (Unaudited)
1. Significant Accounting Policies.
Communications Equipment Portfolio, Computers Portfolio, Electronics Portfolio, IT Services Portfolio, Networking and Infrastructure Portfolio, Software and Computer Services Portfolio, and Technology Portfolio (the Funds) are non-diversified funds of Fidelity Select Portfolios (the trust). On April 20, 2006, the Board of Trustees approved changes to the names of Business Services and Outsourcing Portfolio and Developing Communications Portfolio to IT Services Portfolio and Communications Equipment Portfolio effective October 1, 2006. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Funds invest primarily in securities of companies whose principal business activities fall within specific industries. Each Fund is authorized to issue an unlimited number of shares. Certain Funds investments in emerging markets can be subject to social, economic, regulatory, and political uncertainties and can be extremely volatile. Certain Funds may invest in affiliated money market central funds (Money Market Central Funds), which are open-end investment companies available to investment companies and other accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. The following summarizes the significant accounting policies of the Funds:
Security Valuation. Investments are valued and net asset value (NAV) per share is calculated (NAV calculation) as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time. During the period each Fund also calculated a NAV each hour on the hour (commencing at 10:00 a.m. Eastern time until one hour prior to the close of business on the NYSE). Effective October 1, 2006, each Fund will eliminate the hourly NAV calculation.
Wherever possible, each Fund uses independent pricing services approved by the Board of Trustees to value its investments. Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price. Debt securities, including restricted securities, for which quotations are readily available, are valued by independent pricing services or by dealers who make markets in such securities. Pricing services consider yield or price of bonds of comparable quality, coupon, maturity and type as well as dealer supplied prices. Investments in open-end mutual funds are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or do not accurately reflect fair value, valuations may be determined in accordance with procedures adopted by the Board of Trustees. For example, when developments occur between the close of a market and the close of the NYSE that may materially affect the value of some or all of the securities, or when trading in a security is halted, those securities may be fair valued. Factors used in the determination of fair value may include monitoring news to identify significant market or security specific events such as changes in the value of U.S. securities markets, reviewing developments in foreign markets and evaluating the performance of ADRs, futures contracts and exchange-traded funds. Because each Fund's utilization of fair value pricing depends on market activity, the frequency with which fair value pricing is used can not be predicted and may be utilized to a significant extent. The value of securities used for NAV calculation under fair value pricing may differ from published prices for the same securities.
Foreign Currency. Certain Funds may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. Security transactions are accounted for as of trade date. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Funds are informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Funds estimate the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income is accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
1. Significant Accounting Policies - continued
Expenses. Most expenses of each trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Deferred Trustee Compensation. Under a Deferred Compensation Plan (the Plan) for Electronics Portfolio, Independent Trustees must defer receipt of a portion of, and may elect to defer receipt of an additional portion of, their annual compensation. Deferred amounts are invested in a cross-section of Fidelity funds, are marked-to-market and remain in the Fund until distributed in accordance with the Plan. The investment of deferred amounts and the offsetting payable to the Trustees are included in the accompanying Statement of Assets and Liabilities.
Income Tax Information and Distributions to Shareholders. Each year, each Fund intends to qualify as a regulated investment company by distributing all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code. As a result, no provision for income taxes is required in the accompanying financial statements. Foreign taxes are provided for based on each Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. In addition, certain Funds claimed a portion of the payment made to redeeming shareholders as a distribution for income tax purposes.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to short-term capital gains, foreign currency transactions, certain foreign taxes, 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 investments and unrealized appreciation (depreciation) as of period end were as follows for each Fund:
Cost for Federal | Unrealized | Unrealized | Net Unrealized | |
Communications Equipment Portfolio | $466,192,529 | $20,165,704 | $(79,489,573) | $(59,323,869) |
Computers Portfolio | 516,455,663 | 19,274,725 | (52,898,058) | (33,623,333) |
Electronics Portfolio | 2,499,146,424 | 209,632,148 | (314,824,435) | (105,192,287) |
IT Services Portfolio | 31,429,311 | 4,576,213 | (1,345,902) | 3,230,311 |
Networking and Infrastructure Portfolio | 131,900,508 | 5,718,331 | (20,077,613) | (14,359,282) |
Software and Computer Services Portfolio | 608,215,539 | 70,423,288 | (60,206,166) | 10,217,122 |
Technology Portfolio | 1,772,910,857 | 137,015,259 | (207,985,127) | (70,969,868) |
Trading (Redemption) Fees. Shares in the Funds held less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, including any estimated redemption fees paid by FMR, are retained by the Fund and accounted for as an addition to paid in capital. Shareholders are also subject to an additional $7.50 fee for shares exchanged into another Fidelity fund (see Note 4).
New Accounting Pronouncements. In July 2006, Financial Accounting Standards Board Interpretation No. 48, Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement 109 (FIN 48), was issued and is effective for fiscal years beginning after December 15, 2006. FIN 48 sets forth a threshold for financial statement recognition, measurement and disclosure of a tax position taken or expected to be taken on a tax return. Management is currently evaluating the impact, if any, the adoption of FIN 48 will have on the Funds' net assets, results of operations and financial statement disclosures.
In addition, in September 2006, Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157), was issued and is effective for fiscal years beginning after November 15, 2007. SFAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. Management is currently evaluating the impact the adoption of SFAS 157 will have on the Funds' financial statement disclosures.
2. Operating Policies.
Repurchase Agreements. FMR has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits certain Funds and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts which are then invested in repurchase agreements. Certain Funds may also invest directly with institutions in repurchase agreements. Repurchase agreements are collateralized by government or non-government securities. Upon settlement date, collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. Each applicable Fund monitors, on a daily basis, the value of the collateral to ensure it is at least equal to the principal amount of the repurchase agreement (including accrued interest). In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the value of the collateral may decline.
Semiannual Report
2. Operating Policies - continued
Restricted Securities. Certain Funds may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities is included at the end of each applicable Fund's Schedule of Investments.
3. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, are noted in the table below.
Purchases ($) | Sales ($) | |
Communications Equipment Portfolio | 312,861,463 | 370,666,677 |
Computers Portfolio | 526,301,968 | 588,442,793 |
Electronics Portfolio | 1,268,558,742 | 1,647,540,093 |
IT Services Portfolio | 33,391,323 | 36,840,451 |
Networking and Infrastructure Portfolio | 114,662,690 | 121,722,690 |
Software and Computer Services Portfolio | 271,826,527 | 298,612,053 |
Technology Portfolio | 831,491,934 | 1,088,020,901 |
4. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the Funds with investment management related services for which the Funds pay a monthly management fee. The management fee is the sum of an individual fund fee rate and a group fee rate. The individual fund fee rate is applied to each Fund's average net assets. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, each Fund's annualized 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% | .27% | .57% |
Computers Portfolio | .30% | .27% | .57% |
Electronics Portfolio | .30% | .27% | .57% |
IT Services Portfolio | .30% | .27% | .57% |
Networking and Infrastructure Portfolio | .30% | .27% | .57% |
Software and Computer Services Portfolio | .30% | .27% | .57% |
Technology Portfolio | .30% | .27% | .57% |
Transfer Agent Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, is the Funds' transfer, dividend disbursing and shareholder servicing agent. FSC receives account fees and asset-based fees that vary according to account size and type of account. FSC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, the transfer agent fees were equivalent to the following annualized rates expressed as a percentage of average net assets:
Communications Equipment Portfolio | .37% | |
Computers Portfolio | .37% | |
Electronics Portfolio | .28% | |
IT Services Portfolio | .35% | |
Networking and Infrastructure Portfolio | .37% | |
Software and Computer Services Portfolio | .28% | |
Technology Portfolio | .33% |
Accounting and Security Lending Fees. FSC maintains each Fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Affiliated Central Funds. Certain Funds may invest in Money Market Central Funds which seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
The Money Market Central Funds do not pay a management fee.
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
4. Fees and Other Transactions with Affiliates - continued
Exchange Fees. During the period, FSC received the proceeds of a $7.50 fee to cover administrative costs associated with exchanges out of the Funds to any other Fidelity Select fund or to any other Fidelity fund made through non-automated channels. Effective October 1, 2006, the exchange fees will be eliminated. For the period, exchange fees retained by FSC were as follows:
Retained | |
Communications Equipment Portfolio | $6,180 |
Computers Portfolio | 6,383 |
Electronics Portfolio | 20,873 |
IT Services Portfolio | 1,635 |
Networking and Infrastructure Portfolio | 1,965 |
Software and Computer Services Portfolio | 3,323 |
Technology Portfolio | 15,608 |
Brokerage Commissions. Certain Funds placed a portion of their portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were as follows:
Amount | |
Communications Equipment Portfolio | $29,120 |
Computers Portfolio | 5,124 |
Electronics Portfolio | 14,064 |
IT Services Portfolio | 1,513 |
Networking and Infrastructure Portfolio | 17,309 |
Software and Computer Services Portfolio | 20,021 |
Technology Portfolio | 13,877 |
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Funds, along with other registered investment companies having management contracts with FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the Funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. Each applicable Fund's activity in this program during the period for which loans were outstanding was as follows:
Borrower or | Average Daily | Weighted | Interest | |
Communications Equipment Portfolio | Borrower | $3,026,500 | 5.13% | $2,585 |
Computers Portfolio | Borrower | 11,916,000 | 4.95% | 1,640 |
Electronics Portfolio | Borrower | 13,185,500 | 5.11% | 11,225 |
Software and Computer Services Portfolio | Borrower | 6,197,000 | 5.12% | 882 |
5. Committed Line of Credit.
Certain Funds participate with other funds managed by FMR in a $4.2 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The participating funds have agreed to pay commitment fees on their pro rata portion of the line of credit, which is reflected in Miscellaneous Expense on the Statement of Operations, and is as follows:
Communications Equipment Portfolio | $664 |
Computers Portfolio | 715 |
Electronics Portfolio | 3,765 |
IT Services Portfolio | 57 |
Networking and Infrastructure Portfolio | 184 |
Software and Computer Services Portfolio | 804 |
Technology Portfolio | 2,610 |
During the period, there were no borrowings on this line of credit.
Semiannual Report
6. Security Lending.
Certain Funds lend portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, each applicable Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Funds and any additional required collateral is delivered to the Funds on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on each applicable Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented on each applicable Fund's Statement of Operations as a component of income from affiliated central funds.
7. Expense Reductions.
Many of the brokers with whom FMR places trades on behalf of certain Funds provided services to these Funds in addition to trade execution. These services included payments of expenses on behalf of each applicable Fund. In addition, through arrangements with each applicable Fund's custodian and transfer agent, credits realized as a result of uninvested cash balances were used to reduce each applicable Fund's expenses. All of the applicable expense reductions are noted in the table below.
Brokerage Service | Custody | Transfer | |
Communications Equipment Portfolio | $9,619 | $- | $2,247 |
Computers Portfolio | 44,387 | - | 3,203 |
Electronics Portfolio | 191,603 | 188 | 13,963 |
IT Services Portfolio | 3,269 | - | - |
Networking and Infrastructure Portfolio | 2,563 | - | 633 |
Software and Computer Services Portfolio | 22,105 | 645 | 2,548 |
Technology Portfolio | 30,493 | - | 17,740 |
8. 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.
Semiannual Report
Proxy Voting Results
A special meeting of Fidelity Select Portfolios' shareholders was held on September 20, 2006. The results of votes taken among shareholders on the proposals before them are reported below. Each vote reported represents one dollar of net asset value held on the record date for the meeting.
PROPOSAL 1 | ||
To elect a Board of Trustees. A | ||
# of | % of | |
Dennis J. Dirks | ||
Affirmative | 13,182,341,755.09 | 94.980 |
Withheld | 696,736,162.41 | 5.020 |
TOTAL | 13,879,077,917.50 | 100.000 |
Albert R. Gamper, Jr. | ||
Affirmative | 13,177,593,614.43 | 94.946 |
Withheld | 701,484,303.07 | 5.054 |
TOTAL | 13,879,077,917.50 | 100.000 |
Robert M. Gates | ||
Affirmative | 13,141,235,622.81 | 94.684 |
Withheld | 737,842,294.69 | 5.316 |
TOTAL | 13,879,077,917.50 | 100.000 |
George H. Heilmeier | ||
Affirmative | 13,140,073,210.00 | 94.675 |
Withheld | 739,004,707.50 | 5.325 |
TOTAL | 13,879,077,917.50 | 100.000 |
Edward C. Johnson 3d | ||
Affirmative | 13,106,284,587.54 | 94.432 |
Withheld | 772,793,329.96 | 5.568 |
TOTAL | 13,879,077,917.50 | 100.000 |
Stephen P. Jonas | ||
Affirmative | 13,168,282,872.88 | 94.879 |
Withheld | 710,795,044.62 | 5.121 |
TOTAL | 13,879,077,917.50 | 100.000 |
James H. KeyesB | ||
Affirmative | 13,164,603,089.66 | 94.852 |
Withheld | 714,474,827.84 | 5.148 |
TOTAL | 13,879,077,917.50 | 100.000 |
Marie L. Knowles | ||
Affirmative | 13,169,356,779.66 | 94.886 |
Withheld | 709,721,137.84 | 5.114 |
TOTAL | 13,879,077,917.50 | 100.000 |
Ned C. Lautenbach | ||
Affirmative | 13,166,485,155.52 | 94.866 |
Withheld | 712,592,761.98 | 5.134 |
TOTAL | 13,879,077,917.50 | 100.000 |
William O. McCoy | ||
Affirmative | 13,129,548,996.59 | 94.600 |
Withheld | 749,528,920.91 | 5.400 |
TOTAL | 13,879,077,917.50 | 100.000 |
Robert L. Reynolds | ||
Affirmative | 13,180,813,649.06 | 94.969 |
Withheld | 698,264,268.44 | 5.031 |
TOTAL | 13,879,077,917.50 | 100.000 |
# of | % of | |
Cornelia M. Small | ||
Affirmative | 13,170,500,616.42 | 94.895 |
Withheld | 708,577,301.08 | 5.105 |
TOTAL | 13,879,077,917.50 | 100.000 |
William S. Stavropoulos | ||
Affirmative | 13,143,284,328.22 | 94.699 |
Withheld | 735,793,589.28 | 5.301 |
TOTAL | 13,879,077,917.50 | 100.000 |
Kenneth L. Wolfe | ||
Affirmative | 13,162,946,758.47 | 94.840 |
Withheld | 716,131,159.03 | 5.160 |
TOTAL | 13,879,077,917.50 | 100.000 |
PROPOSAL 4A & 7A | ||
To modify the fund's fundamental "invests primarily" policy (the investment policy concerning the fund's primary investments). | ||
Communications Equipment Portfolio | ||
# of | % of | |
Affirmative | 168,688,858.20 | 84.770 |
Against | 10,025,316.66 | 5.038 |
Abstain | 8,835,301.16 | 4.440 |
Broker Non-Votes | 11,446,932.29 | 5.752 |
TOTAL | 198,996,408.31 | 100.000 |
IT Services Portfolio | ||
# of | % of | |
Affirmative | 19,358,948.48 | 85.091 |
Against | 1,812,263.15 | 7.966 |
Abstain | 956,663.07 | 4.205 |
Broker Non-Votes | 623,012.85 | 2.738 |
TOTAL | 22,750,887.55 | 100.000 |
PROPOSAL 4B & 7B | ||
To modify the fund's investment concentration policy. | ||
Communications Equipment Portfolio | ||
# of | % of | |
Affirmative | 168,085,859.71 | 84.467 |
Against | 10,284,988.86 | 5.168 |
Abstain | 9,178,627.45 | 4.613 |
Broker Non-Votes | 11,446,932.29 | 5.752 |
TOTAL | 198,996,408.31 | 100.000 |
IT Services Portfolio | ||
# of | % of | |
Affirmative | 18,677,110.78 | 82.094 |
Against | 2,365,740.10 | 10.398 |
Abstain | 1,085,023.82 | 4.770 |
Broker Non-Votes | 623,012.85 | 2.738 |
TOTAL | 22,750,887.55 | 100.000 |
ADenotes trust-wide proposal and voting results. BEffective on or about January 1, 2007. | ||
Semiannual Report
Board Approval of Investment Advisory Contracts and Management Fees
Select IT Services (formerly known as Select Business Services and Outsourcing)
Select Computers
Select Communications Equipment (formerly known as Select Developing Communications)
Select Electronics
Select Networking and Infrastructure
Select Software and Computer Services
Select Technology
Each year, typically in July, the Board of Trustees, including the Independent Trustees (together, the Board), votes on the renewal of the management contract and sub-advisory agreements (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 throughout the year.
The Board meets regularly each month except August and takes into account throughout the year matters bearing on Advisory Contracts. The Board, acting directly and through its separate committees, considers at each of its meetings factors that are relevant to the annual renewal of each fund's Advisory Contracts, including the services and support provided to each fund and its shareholders. At the time of the renewal, the Board had 12 standing committees, each composed of 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. Each committee has adopted a written charter outlining the structure and purposes of the committee. One such committee, the Equity Contract Committee, meets periodically as needed throughout the year to consider matters specifically related to the annual renewal of Advisory Contracts. The committee requests and receives information on, and makes recommendations to the Independent Trustees concerning, the approval and annual review of the Advisory Contracts.
At its July 2006 meeting, the Board of Trustees, including the Independent Trustees, unanimously determined to renew the Advisory Contracts for each fund. 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 the management fee and total expenses of each fund; (iii) the total costs of the services to be provided by and the profits to be realized by the investment adviser and its affiliates from the relationship with each fund; (iv) the extent to which economies of scale 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 determining whether to renew the Advisory Contracts for each fund, the Board ultimately reached a determination, with the assistance of fund counsel and Independent Trustees' counsel, that the renewal of the Advisory Contracts and the compensation to be received by Fidelity under the management contracts is consistent with Fidelity's fiduciary duty under applicable law. In addition to evaluating the specific factors noted above, the Board, in reaching its determination, is aware that shareholders in each fund have a broad range of investment choices available to them, including a wide choice among mutual funds offered by competitors to Fidelity, and that each fund's shareholders, with 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, managed by Fidelity.
Nature, Extent, and Quality of Services Provided. The Board considered staffing within the investment adviser, FMR, and the sub-advisers (together, the Investment Advisers), including the backgrounds of the funds' portfolio managers and the funds' investment objectives and disciplines. 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.
Resources Dedicated to Investment Management and Support Services. The Board reviewed the size, education, and experience of the Investment Advisers' investment staff, their use of technology, and the Investment Advisers' approach to recruiting, training, and retaining portfolio managers and other research, advisory, and management personnel. The Board considered Fidelity's extensive global research capabilities that enable the Investment Advisers to aggregate data from various sources in an effort to produce positive investment results. The Board noted that Fidelity's analysts have access to a variety of technological tools that enable them to perform both fundamental and quantitative analysis and to specialize in various disciplines. The Board also considered that Fidelity's portfolio managers and analysts have access to daily portfolio attribution that allows for monitoring of a fund's portfolio, as well as an electronic communication system that provides immediate real-time access to research concerning issuers and credit enhancers.
Shareholder and Administrative Services. The Board considered (i) the nature, extent, quality, and cost of administrative, distribution, 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 Investment Advisers' 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 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 also considered that Fidelity voluntarily pays for market data out of its own resources.
Semiannual Report
Board Approval of Investment Advisory Contracts and Management Fees - continued
The Board noted that the growth of fund assets 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 phone representatives and over the Internet, and investor education materials and asset allocation tools.
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 for a large variety of mutual fund investor services. The Board noted that, since the last Advisory Contract renewals in July 2005, Fidelity has taken a number of actions that benefited particular funds, including (i) dedicating additional resources to investment research and to restructure the investment research teams; (ii) voluntarily entering into contractual arrangements with certain brokers pursuant to which Fidelity pays for research products and services separately out of its own resources, rather than bundling with fund commissions; (iii) launching the Fidelity Advantage Class of its five Spartan stock index funds and three Spartan bond index funds, which is a lower-fee class available to shareholders with higher account balances; (iv) contractually agreeing to impose expense limitations on Fidelity U.S. Bond Index Fund and reducing the fund's initial investment minimum; and (v) offering shareholders of each of the Fidelity Institutional Money Market Funds the privilege of exchanging shares of the fund for shares of other Fidelity funds.
Investment Performance and Compliance. The Board considered whether each fund has operated within its investment objective, as well as its record of compliance with its investment restrictions. It also reviewed each fund's absolute investment performance, as well as each fund's relative investment performance measured against (i) a proprietary custom index (or a Goldman Sachs index that reflects the market sector in which the fund invests, in the case of Technology Portfolio), and (ii) a peer group of mutual funds over multiple periods. For each fund, the following charts considered by the Board show, over the one-, three-, and five-year periods ended December 31, 2005, the fund's cumulative total returns, the cumulative total returns of a proprietary custom index (or a Goldman Sachs index, in the case of Technology Portfolio) ("benchmark"), and a range of cumulative total returns of a peer group of mutual funds identified by Lipper Inc. as having an investment objective similar to that of the fund. The box within each chart shows the 25th percentile return (bottom of box) and the 75th percentile return (top of box) of the Lipper peer group. Returns shown above the box are in the first quartile and returns shown below the box are in the fourth quartile. The percentage beaten number noted below each chart corresponds to the percentile box and represents the percentage of funds in the Lipper peer group whose performance was equal to or lower than that of the fund. For each fund (other than Technology Portfolio), the fund's proprietary custom index is an index developed and periodically revised by FMR that is a market-capitalization weighted index of securities that meet the fund's 80% name test.
IT Services Portfolio
The Board reviewed the fund's relative investment performance against its Lipper peer group and stated that the performance of the fund was in the second quartile for the one- and three-year periods and the third quartile for the five-year period. The Board noted that FMR does not consider that Lipper peer group to be a meaningful comparison for the fund, however, because the peer group includes funds that focus on different industries and sectors than the fund. The Board also stated that the relative investment performance of the fund compared favorably to its benchmark for the three- and five-year periods, although the fund's one-year cumulative total return was lower than its benchmark.
Semiannual Report
Computers Portfolio
The Board reviewed the fund's relative investment performance against its Lipper peer group and stated that the performance of the fund was in the third quartile for the one- and three-year periods and the second quartile for the five-year period. The Board noted that FMR does not consider that Lipper peer group to be a meaningful comparison for the fund, however, because the funds in the peer group typically have broader investment mandates than the fund, which focuses on a particular subset of companies within the science and technology industries. The Board also stated that the relative investment performance of the fund was lower than its benchmark for all the periods shown. In the absence of a meaningful peer group comparison for the fund and in consideration of the fund's exposure to a narrow market sector, the Board focused its review on the fund's relative investment performance measured against its benchmark. In light of that comparison, the Board discussed with FMR actions to be taken by FMR to improve the fund's below-benchmark performance.
Communications Equipment Portfolio
The Board reviewed the fund's relative investment performance against its Lipper peer group and stated that the performance of the fund was in the third quartile for the one-year period, the first quartile for the three-year period, and the second quartile for the five-year period. The Board noted that FMR does not consider that Lipper peer group to be a meaningful comparison for the fund, however, because the funds in the peer group typically have broader investment mandates than the fund, which focuses on a particular subset of companies within the science and technology industries. The Board also stated that the relative investment performance of the fund was lower than its benchmark for all the periods shown. In the absence of a meaningful peer group comparison for the fund and in consideration of the fund's exposure to a narrow market sector, the Board focused its review on the fund's relative investment performance measured against its benchmark. In light of that comparison, the Board discussed with FMR actions to be taken by FMR to improve the fund's below-benchmark performance.
Semiannual Report
Board Approval of Investment Advisory Contracts and Management Fees - continued
Electronics Portfolio
The Board reviewed the fund's relative investment performance against its Lipper peer group and stated that the performance of the fund was in the first quartile for the one-year period and the second quartile for the three and five-year periods. The Board noted that FMR does not consider that Lipper peer group to be a meaningful comparison for the fund, however, because the funds in the peer group typically have broader investment mandates than the fund, which focuses on a particular subset of companies within the science and technology industries. The Board also stated that the relative investment performance of the fund compared favorably to its benchmark for the one- and three-year periods, although the fund's five-year cumulative total return was lower than its benchmark.
Networking and Infrastructure Portfolio
The Board reviewed the fund's relative investment performance against its Lipper peer group and stated that the performance of the fund was in the fourth quartile for the one- and five-year periods and the third quartile for the three-year period. The Board noted that FMR does not consider that Lipper peer group to be a meaningful comparison for the fund, however, because the funds in the peer group typically have broader investment mandates than the fund, which focuses on a particular subset of companies within the science and technology industries. The Board also stated that the relative investment performance of the fund was lower than its benchmark for the one- and three-year periods, although the fund's five-year cumulative total return compared favorably to its benchmark. In the absence of a meaningful peer group comparison for the fund and in consideration of the fund's exposure to a narrow market sector, the Board focused its review on the fund's relative investment performance measured against its benchmark. In light of that comparison, the Board discussed with FMR actions to be taken by FMR to improve the fund's below-benchmark performance.
Semiannual Report
Software and Computer Services Portfolio
The Board reviewed the fund's relative investment performance against its Lipper peer group and stated that the performance of the fund was in the fourth quartile for the one- and three-year periods and the first quartile for the five-year period. The Board noted that FMR does not consider that Lipper peer group to be a meaningful comparison for the fund, however, because the funds in the peer group typically have broader investment mandates than the fund, which focuses on a particular subset of companies within the science and technology industries. The Board also stated that the relative investment performance of the fund was lower than its benchmark for the one- and three-year periods, although the fund's five-year cumulative total return compared favorably to its benchmark. In the absence of a meaningful peer group comparison for the fund and in consideration of the fund's exposure to a narrow market sector, the Board focused its review on the fund's relative investment performance measured against its benchmark. In light of that comparison, the Board discussed with FMR actions to be taken by FMR to improve the fund's below-benchmark performance.
Technology Portfolio
The Board reviewed the fund's relative investment performance against its Lipper peer group and stated that the performance of the fund was in the third quartile for the one-year period and the second quartile for the three- and five-year periods. The Board also stated that the relative investment performance of the fund compared favorably to its benchmark for all the periods shown.
Semiannual Report
Board Approval of Investment Advisory Contracts and Management Fees - continued
The Board considered that FMR has taken steps to refocus and strengthen equity research, equity portfolio management, and compliance. The Board noted with favor FMR's reorganization of its senior management team in 2005 and FMR's dedication of additional resources to investment research, and participated in the process that led to those changes.
Based on its review, and giving particular weight to the nature and quality of the resources dedicated by the Investment Advisers to maintain and improve relative performance, the Board concluded that the nature, extent, and quality of the services provided to each fund will benefit each fund's shareholders, particularly in light of the Board's view that each fund's shareholders benefit from investing in a fund that is part of a large family of funds offering a variety of investment disciplines and services.
Competitiveness of Management Fee and Total Fund Expenses. The Board considered each fund's management fee and total expenses compared to "mapped groups" of competitive funds and classes. Fidelity creates "mapped groups" by combining similar Lipper investment objective categories that have comparable management fee characteristics. Combining Lipper investment objective categories aids the Board's management fee and total expense comparisons by broadening the competitive group used for comparison and by reducing the number of universes to which various Fidelity funds are compared.
The Board considered two proprietary management fee comparisons for the 12-month periods 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" and, for the reasons explained above, is broader than the Lipper peer group used by the Board for performance comparisons. The Total Mapped Group comparison focuses on a fund's standing relative to the total universe of comparable funds available to investors, in terms of gross management fees before expense reimbursements or caps. "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 TMG % of 4% means that 96% of the funds in the Total Mapped Group had higher management fees than a fund. The "Asset-Size Peer Group" (ASPG) comparison focuses on a fund's standing relative to non-Fidelity funds similar in size to the fund within the Total Mapped Group. The ASPG represents at least 15% of the funds in the Total Mapped Group with comparable asset size and management fee characteristics, 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 ranked, is also included in the charts and considered by the Board.
IT Services Portfolio
Semiannual Report
Computers Portfolio
Communications Equipment Portfolio
Semiannual Report
Board Approval of Investment Advisory Contracts and Management Fees - continued
Electronics Portfolio
Networking and Infrastructure Portfolio
Semiannual Report
Software and Computer Services Portfolio
Technology Portfolio
The Board noted that each fund's management fee ranked below the median of its Total Mapped Group and below the median of its ASPG for 2005.
Based on its review, the Board concluded that each fund's management fee was fair and reasonable in light of the services that the fund receives and the other factors considered.
In its review of each fund's total expenses, 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 the effects of any waivers and reimbursements on fees and expenses. As part of its review, the Board also considered current and historical total expenses 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 expenses ranked below its competitive median for 2005.
In its review of total expenses, the Board also considered Fidelity fee structures and other information on clients that FMR and its affiliates service in other competitive markets, such as other mutual funds advised or subadvised by FMR or its affiliates, pension plan clients, and other institutional clients.
Semiannual Report
Board Approval of Investment Advisory Contracts and Management Fees - continued
Based on its review, the Board concluded that each fund's total expenses were 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 each fund and its shareholders. The Board also considered the level of Fidelity's profits in respect of all the Fidelity funds.
On an annual basis, FMR presents to the Board Fidelity's profitability for each fund. Fidelity calculates the profitability for each fund, as well as aggregate profitability for groups of Fidelity funds and all Fidelity funds, using a series of detailed revenue and cost allocation methodologies which originate with the audited books and records of Fidelity. The Audit Committee of the Board reviews any significant changes from the prior year's methodologies.
PricewaterhouseCoopers LLP (PwC), independent registered 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 results of Fidelity's profitability analysis. 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 surrounding the mathematical accuracy of fund profitability and its conformity to allocation methodologies. After considering PwC's reports issued under the engagement and information provided by Fidelity, the Board believes that while other allocation methods may also be reasonable, Fidelity's profitability methodologies are reasonable in all material respects.
The Board has also reviewed Fidelity's non-fund businesses and any 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 determined that the amount of profit is a fair entrepreneurial profit for the management of each fund.
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 through increased services to the fund, through waivers or reimbursements, or through fee or expense reductions, including reductions that occur through operation of the transfer agent agreement. The transfer agent fee varies in part based on the number of accounts in each fund. If the number of accounts decreases or the average account size increases, the overall transfer agent fee rate decreases.
The Board recognized that each fund's management contract incorporates a "group fee" structure, which provides for lower fee rates as total fund assets under FMR's management increase, and for higher fee rates as total fund assets under FMR's management decrease. The Board considered that the group fee is designed to deliver the benefits of economies of scale to fund shareholders when total fund 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 achieve a certain level of economies of scale as assets under FMR's management increase at the fund complex level, regardless of whether Fidelity achieves any such economies of scale.
The Board further concluded that any potential economies of scale are being shared between fund shareholders and Fidelity in an appropriate manner.
Additional Information Requested by the Board. In order to develop fully the factual basis for consideration of the Advisory Contracts, the Board requested additional information on several topics, including (i) Fidelity's fund profitability methodology and profitability trends within certain funds; (ii) portfolio manager compensation; (iii) the extent to which any economies of scale exist and are shared between the funds and Fidelity; (iv) the total expenses of certain funds and classes relative to competitors, including the extent to which the expenses of certain funds have been or could be capped; (v) fund performance trends; and (vi) Fidelity's fee structures, including use of performance fees.
Based on its evaluation of all of the conclusions noted above, and after considering all material factors, the Board ultimately concluded that the advisory fee structures are fair and reasonable, and that each fund's Advisory Contracts should be renewed.
Semiannual Report
Investment Adviser
Fidelity Management & Research Company
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SELTEC-USAN-1006
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Fidelity®
Select Portfolios®
Consumer Sector
Consumer Discretionary (formerly Consumer Industries)
Consumer Staples (formerly Food and Agriculture)
Leisure
Multimedia
Retailing
Semiannual Report
August 31, 2006
(2_fidelity_logos) (Registered_Trademark)
Contents
Chairman's Message | ||
Shareholder Expense Example | ||
Fund Updates* | ||
Consumer Sector | ||
Consumer Discretionary | ||
Consumer Staples | ||
Leisure | ||
Multimedia | ||
Retailing | ||
Notes to Financial Statements | ||
Proxy Voting Results | ||
Board Approval of Investment Advisory Contracts and Management Fees |
*Fund updates for each Select Portfolio include: Investment Changes, Investments, and Financial Statements.
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit www.fidelity.com/proxyvotingresults or visit the Securities and Exchange Commission's (SEC) web site at 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 Corp. or an affiliated company.
This report and the financial statements contained herein are submitted for the general information of the shareholders of the funds. This report is not authorized for distribution to prospective investors in the funds unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent quarterly holdings report, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com/holdings.
NOT FDIC INSURED · MAY LOSE VALUE · NO BANK GUARANTEE
Neither the funds nor Fidelity Distributors Corporation is a bank.
Annual Report
Chairman's Message
(Photograph of Edward C. Johnson 3d.)
Dear Shareholder:
Stock and bond markets around the world have seen largely positive results year to date, although weakness in the technology sector and growth stocks in general have tempered performance. While financial markets are always unpredictable, there are a number of time-tested principles that can put the historical odds in your favor.
One of the basic tenets is to invest for the long term. Over time, riding out the markets' inevitable ups and downs has proven much more effective than selling into panic or chasing the hottest trend. Even missing only a few of the markets' best days can significantly diminish investor returns. Patience also affords the benefits of compounding - of earning interest on additional income or reinvested dividends and capital gains. There are tax advantages and cost benefits to consider as well. The more you sell, the more taxes you pay, and the more you trade, the higher the costs. While staying the course doesn't eliminate risk, it can considerably lessen the effect of short-term declines.
You can further manage your investing risk through diversification. And today, more than ever, geographic diversification should be taken into account. Studies
indicate that asset allocation is the single most important determinant of a portfolio's long-term success. The right mix of stocks, bonds and cash - aligned to your particular risk tolerance and investment objective - is very important. Age-appropriate rebalancing is also an essential aspect of asset allocation. For younger investors, an emphasis on equities - which historically have been the best performing asset class over time - is encouraged. As investors near their specific goal, such as retirement or sending a child to college, consideration may be given to replacing volatile assets (e.g. common stocks) with more-stable fixed investments (bonds or savings plans).
A third investment principle - investing regularly - can help lower the average cost of your purchases. Investing a certain amount of money each month or quarter helps ensure you won't pay for all your shares at market highs. This strategy - known as dollar cost averaging - also reduces unconstructive "emotion" from investing, helping shareholders avoid selling weak performers just prior to an upswing, or chasing a hot performer just before a correction.
We invite you to contact us via the Internet, through our Investor Centers or over the phone. It is our privilege to provide you the information you need to make the investments that are right for you.
Sincerely,
/s/Edward C. Johnson 3d
Edward C. Johnson 3d
Semiannual Report
Shareholder Expense Example
As a shareholder of a Fund, you incur two types of costs: (1) transaction costs, including redemption fees, exchange 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 (March 1, 2006 to August 31, 2006).
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.
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.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Beginning | Ending | Expenses Paid | |
Consumer Discretionary Portfolio | |||
Actual | $1,000.00 | $1,010.00 | $5.62 |
HypotheticalA | $1,000.00 | $1,019.61 | $5.65 |
Consumer Staples Portfolio | |||
Actual | $1,000.00 | $1,098.00 | $5.34 |
HypotheticalA | $1,000.00 | $1,020.11 | $5.14 |
Leisure Portfolio | |||
Actual | $1,000.00 | $981.40 | $4.89 |
HypotheticalA | $1,000.00 | $1,020.27 | $4.99 |
Multimedia Portfolio | |||
Actual | $1,000.00 | $997.90 | $5.39 |
HypotheticalA | $1,000.00 | $1,019.81 | $5.45 |
Retailing Portfolio | |||
Actual | $1,000.00 | $983.60 | $5.50 |
HypotheticalA | $1,000.00 | $1,019.66 | $5.60 |
A5% return per year before expenses
*Expenses are equal to each Fund's annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period).
Annualized | |
Consumer Discretionary Portfolio | 1.11% |
Consumer Staples Portfolio | 1.01% |
Leisure Portfolio | .98% |
Multimedia Portfolio | 1.07% |
Retailing Portfolio | 1.10% |
Semiannual Report
Consumer Discretionary Portfolio
Investment Changes
Top Ten Stocks as of August 31, 2006 | ||
% of fund's | % of fund's net assets | |
Nestle SA sponsored ADR | 5.5 | 2.1 |
Procter & Gamble Co. | 5.4 | 6.7 |
Federated Department Stores, Inc. | 5.3 | 1.2 |
Altria Group, Inc. | 5.2 | 0.0 |
Wal-Mart Stores, Inc. | 5.0 | 2.7 |
PepsiCo, Inc. | 4.7 | 3.7 |
The Coca-Cola Co. | 3.6 | 2.3 |
Unilever NV (NY Shares) | 3.4 | 0.0 |
CVS Corp. | 2.7 | 1.1 |
Walgreen Co. | 2.5 | 1.9 |
43.3 | ||
Top Industries (% of fund's net assets) | |||
As of August 31, 2006 | |||
 | Food Products | 13.6% | |
 | Food & Staples Retailing | 12.8% | |
 | Beverages | 12.4% | |
 | Specialty Retail | 12.3% | |
 | Multiline Retail | 9.7% | |
 | All Others* | 39.2% | |
As of February 28, 2006 | |||
| Hotels, Restaurants & Leisure | 12.5% | |
| Specialty Retail | 11.8% | |
| Internet Software & Services | 10.6% | |
| Media | 10.2% | |
| Multiline Retail | 8.3% | |
| All Others* | 46.6% | |
*Includes short-term investments and net other assets. |
Prior period industry classifications reflect the categories in place as of the date indicated and have not been adjusted to reflect current industry classifications. |
Semiannual Report
Consumer Discretionary Portfolio
Investments August 31, 2006 (Unaudited)
Showing Percentage of Net Assets
Common Stocks - 96.6% | |||
Shares | Value (Note 1) | ||
AUTOMOBILES - 0.6% | |||
Motorcycle Manufacturers - 0.6% | |||
Harley-Davidson, Inc. | 5,100 | $298,401 | |
BEVERAGES - 12.4% | |||
Brewers - 1.1% | |||
InBev SA | 5,600 | 290,791 | |
SABMiller PLC | 14,700 | 289,567 | |
580,358 | |||
Distillers & Vintners - 1.2% | |||
Diageo PLC sponsored ADR | 3,900 | 278,850 | |
Pernod Ricard SA | 1,600 | 349,101 | |
627,951 | |||
Soft Drinks - 10.1% | |||
Coca-Cola Enterprises, Inc. | 18,300 | 408,090 | |
Coca-Cola Hellenic Bottling Co. SA sponsored ADR | 8,700 | 291,276 | |
Hansen Natural Corp. (a)(d) | 8,800 | 242,176 | |
PepsiCo, Inc. | 37,600 | 2,454,528 | |
The Coca-Cola Co. | 42,300 | 1,895,463 | |
5,291,533 | |||
TOTAL BEVERAGES | 6,499,842 | ||
DIVERSIFIED CONSUMER SERVICES - 1.0% | |||
Specialized Consumer Services - 1.0% | |||
Sothebys Class A (ltd. vtg.) | 10,000 | 278,000 | |
Weight Watchers International, Inc. | 6,400 | 271,744 | |
549,744 | |||
DIVERSIFIED FINANCIAL SERVICES - 0.6% | |||
Specialized Finance - 0.6% | |||
Moody's Corp. | 4,900 | 299,782 | |
ELECTRICAL EQUIPMENT - 0.7% | |||
Electrical Components & Equipment - 0.7% | |||
Evergreen Solar, Inc. (a) | 21,100 | 214,798 | |
SolarWorld AG | 2,400 | 142,029 | |
356,827 | |||
FOOD & STAPLES RETAILING - 12.8% | |||
Drug Retail - 5.2% | |||
CVS Corp. | 42,700 | 1,432,585 | |
Walgreen Co. | 26,600 | 1,315,636 | |
2,748,221 | |||
Food Distributors - 0.2% | |||
United Natural Foods, Inc. (a) | 4,100 | 119,105 | |
Food Retail - 2.4% | |||
Kroger Co. | 24,500 | 583,345 | |
Safeway, Inc. | 21,600 | 668,088 | |
1,251,433 | |||
Shares | Value (Note 1) | ||
Hypermarkets & Super Centers - 5.0% | |||
Wal-Mart Stores, Inc. | 58,800 | $2,629,536 | |
TOTAL FOOD & STAPLES RETAILING | 6,748,295 | ||
FOOD PRODUCTS - 13.6% | |||
Agricultural Products - 0.9% | |||
Archer-Daniels-Midland Co. | 11,400 | 469,338 | |
Packaged Foods & Meats - 12.7% | |||
Cadbury Schweppes PLC sponsored ADR | 8,100 | 346,437 | |
Groupe Danone | 2,500 | 344,002 | |
Kellogg Co. | 13,800 | 699,660 | |
Koninklijke Numico NV | 5,900 | 274,092 | |
Lindt & Spruengli AG (participation certificate) | 107 | 233,006 | |
Nestle SA sponsored ADR | 33,500 | 2,877,649 | |
Tyson Foods, Inc. Class A | 9,000 | 132,570 | |
Unilever NV (NY Shares) | 74,600 | 1,778,464 | |
6,685,880 | |||
TOTAL FOOD PRODUCTS | 7,155,218 | ||
HOTELS, RESTAURANTS & LEISURE - 6.5% | |||
Casinos & Gaming - 2.0% | |||
Boyd Gaming Corp. | 2,600 | 94,016 | |
International Game Technology | 7,800 | 301,704 | |
Penn National Gaming, Inc. (a) | 6,800 | 225,216 | |
WMS Industries, Inc. (a) | 4,900 | 131,320 | |
Wynn Resorts Ltd. (a) | 3,600 | 278,676 | |
1,030,932 | |||
Hotels, Resorts & Cruise Lines - 1.2% | |||
Ctrip.com International Ltd. sponsored ADR | 2,500 | 129,075 | |
Starwood Hotels & Resorts Worldwide, Inc. | 9,900 | 527,274 | |
656,349 | |||
Leisure Facilities - 0.3% | |||
Vail Resorts, Inc. (a) | 4,500 | 169,290 | |
Restaurants - 3.0% | |||
Buffalo Wild Wings, Inc. (a) | 14,354 | 500,237 | |
CBRL Group, Inc. | 7 | 265 | |
Domino's Pizza, Inc. | 5,450 | 133,253 | |
Panera Bread Co. Class A (a) | 3,900 | 202,410 | |
Starbucks Corp. (a) | 14,500 | 449,645 | |
Wendy's International, Inc. | 4,600 | 293,940 | |
1,579,750 | |||
TOTAL HOTELS, RESTAURANTS & LEISURE | 3,436,321 | ||
Common Stocks - continued | |||
Shares | Value (Note 1) | ||
HOUSEHOLD PRODUCTS - 7.9% | |||
Household Products - 7.9% | |||
Colgate-Palmolive Co. | 21,900 | $1,310,934 | |
Procter & Gamble Co. (d) | 46,400 | 2,872,160 | |
4,183,094 | |||
INTERNET & CATALOG RETAIL - 1.7% | |||
Catalog Retail - 1.7% | |||
Coldwater Creek, Inc. (a) | 31,900 | 876,293 | |
INTERNET SOFTWARE & SERVICES - 1.2% | |||
Internet Software & Services - 1.2% | |||
Google, Inc. Class A (sub. vtg.) (a) | 1,654 | 626,089 | |
MEDIA - 6.4% | |||
Advertising - 0.0% | |||
Interpublic Group of Companies, Inc. (a) | 6 | 55 | |
Broadcasting & Cable TV - 0.3% | |||
Grupo Televisa SA de CV (CPO) sponsored ADR | 6,800 | 129,472 | |
Movies & Entertainment - 4.5% | |||
News Corp. Class A | 54,300 | 1,033,329 | |
The Walt Disney Co. | 35,700 | 1,058,505 | |
Viacom, Inc. Class B (non-vtg.) (a) | 7,400 | 268,620 | |
2,360,454 | |||
Publishing - 1.6% | |||
McGraw-Hill Companies, Inc. | 10,600 | 592,646 | |
R.H. Donnelley Corp. | 4,900 | 266,168 | |
858,814 | |||
TOTAL MEDIA | 3,348,795 | ||
MULTILINE RETAIL - 9.7% | |||
Department Stores - 7.9% | |||
Federated Department Stores, Inc. | 73,700 | 2,799,126 | |
JCPenney Co., Inc. | 13,800 | 869,952 | |
Saks, Inc. | 33,000 | 476,190 | |
4,145,268 | |||
General Merchandise Stores - 1.8% | |||
Target Corp. | 19,300 | 933,927 | |
TOTAL MULTILINE RETAIL | 5,079,195 | ||
PERSONAL PRODUCTS - 1.5% | |||
Personal Products - 1.5% | |||
Avon Products, Inc. | 18,400 | 528,264 | |
Herbalife Ltd. (a) | 8,400 | 274,428 | |
802,692 | |||
REAL ESTATE INVESTMENT TRUSTS - 0.0% | |||
Specialized REITs - 0.0% | |||
Host Hotels & Resorts, Inc. | 5 | 113 | |
Shares | Value (Note 1) | ||
REAL ESTATE MANAGEMENT & DEVELOPMENT - 0.0% | |||
Real Estate Management & Development - 0.0% | |||
Move, Inc. | 12 | $55 | |
SOFTWARE - 0.0% | |||
Home Entertainment Software - 0.0% | |||
Activision, Inc. (a) | 3 | 39 | |
SPECIALTY RETAIL - 12.3% | |||
Apparel Retail - 7.1% | |||
Abercrombie & Fitch Co. Class A | 2,400 | 154,872 | |
Aeropostale, Inc. (a) | 6,700 | 170,180 | |
American Eagle Outfitters, Inc. | 6,300 | 243,369 | |
AnnTaylor Stores Corp. (a) | 3,100 | 123,380 | |
Casual Male Retail Group, Inc. (a) | 14,800 | 166,500 | |
Charlotte Russe Holding, Inc. (a) | 10,400 | 277,680 | |
Chico's FAS, Inc. (a) | 5,000 | 92,200 | |
Gymboree Corp. (a) | 10,500 | 352,275 | |
Limited Brands, Inc. | 15,700 | 403,961 | |
The Children's Place Retail Stores, Inc. (a) | 4,500 | 260,865 | |
TJX Companies, Inc. | 17,800 | 476,150 | |
Tween Brands, Inc. (a) | 20,900 | 711,854 | |
Urban Outfitters, Inc. (a) | 7,600 | 119,244 | |
Zumiez, Inc. (a) | 7,000 | 156,030 | |
3,708,560 | |||
Automotive Retail - 0.7% | |||
AutoZone, Inc. (a) | 3,000 | 270,900 | |
O'Reilly Automotive, Inc. (a) | 3,400 | 100,946 | |
371,846 | |||
Computer & Electronics Retail - 2.0% | |||
Best Buy Co., Inc. | 17,050 | 801,350 | |
Gamestop Corp. Class B (a) | 6,200 | 250,480 | |
1,051,830 | |||
Specialty Stores - 2.5% | |||
Office Depot, Inc. (a) | 15,000 | 552,600 | |
OfficeMax, Inc. | 6,600 | 274,098 | |
Staples, Inc. | 16,350 | 368,856 | |
Tiffany & Co., Inc. | 4,000 | 126,400 | |
1,321,954 | |||
TOTAL SPECIALTY RETAIL | 6,454,190 | ||
TEXTILES, APPAREL & LUXURY GOODS - 1.7% | |||
Apparel, Accessories & Luxury Goods - 1.4% | |||
Coach, Inc. (a) | 10,700 | 323,033 | |
Polo Ralph Lauren Corp. Class A | 7,200 | 424,728 | |
747,761 | |||
Footwear - 0.3% | |||
Deckers Outdoor Corp. (a) | 4,100 | 168,141 | |
TOTAL TEXTILES, APPAREL & LUXURY GOODS | 915,902 | ||
Common Stocks - continued | |||
Shares | Value (Note 1) | ||
TOBACCO - 6.0% | |||
Tobacco - 6.0% | |||
Altria Group, Inc. | 32,600 | $2,723,078 | |
British American Tobacco PLC sponsored ADR | 5,300 | 295,475 | |
Loews Corp. - Carolina Group | 2,500 | 143,150 | |
3,161,703 | |||
TOTAL COMMON STOCKS (Cost $45,814,019) | 50,792,590 | ||
Money Market Funds - 6.7% | |||
Fidelity Cash Central Fund, 5.31% (b) | 1,774,911 | 1,774,911 | |
Fidelity Securities Lending Cash Central Fund, 5.33% (b)(c) | 1,736,550 | 1,736,550 | |
TOTAL MONEY MARKET FUNDS (Cost $3,511,461) | 3,511,461 | ||
TOTAL INVESTMENT PORTFOLIO - 103.3% (Cost $49,325,480) | 54,304,051 |
NET OTHER ASSETS - (3.3)% | (1,732,263) | ||
NET ASSETS - 100% | $52,571,788 | ||
Legend |
(a)Non-income producing |
(b)Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. |
(c)Investment made with cash collateral received from securities on loan. |
(d)Security or a portion of the security is on loan at period end. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the fund from the affiliated Central funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $27,011 |
Fidelity Securities Lending Cash Central Fund | 10,030 |
Total | $37,041 |
Other Information |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: |
United States of America | 84.2% |
Switzerland | 5.9% |
Netherlands | 3.9% |
United Kingdom | 2.2% |
France | 1.4% |
Others (individually less than 1%) | 2.4% |
100.0% |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Consumer Discretionary Portfolio
Financial Statements
Statement of Assets and Liabilities
August 31, 2006 (Unaudited) | ||
Assets | ||
Investment in securities, at value (including securities loaned of $1,698,314) - See accompanying schedule: Unaffiliated issuers (cost $45,814,019) | $50,792,590 | |
Affiliated Central Funds (cost $3,511,461) | 3,511,461 | |
Total Investments (cost $49,325,480) | $54,304,051 | |
Receivable for fund shares sold | 56,149 | |
Dividends receivable | 36,108 | |
Interest receivable | 9,064 | |
Prepaid expenses | 41 | |
Other receivables | 2,272 | |
Total assets | 54,407,685 | |
Liabilities | ||
Payable for fund shares redeemed | 38,351 | |
Accrued management fee | 24,502 | |
Other affiliated payables | 16,211 | |
Other payables and accrued expenses | 20,283 | |
Collateral on securities loaned, at value | 1,736,550 | |
Total liabilities | 1,835,897 | |
Net Assets | $52,571,788 | |
Net Assets consist of: | ||
Paid in capital | $45,765,368 | |
Undistributed net investment income | 42,820 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 1,784,997 | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 4,978,603 | |
Net Assets, for 2,068,326 shares outstanding | $52,571,788 | |
Net Asset Value, offering price and redemption price per share ($52,571,788 ÷ 2,068,326 shares) | $25.42 | |
Statement of Operations
Six months ended August 31, 2006 (Unaudited) | ||
Investment Income | ||
Dividends | $288,416 | |
Interest | 77 | |
Income from affiliated Central Funds (including $10,030 from security lending) | 37,041 | |
Total income | 325,534 | |
Expenses | ||
Management fee | $145,783 | |
Transfer agent fees | 84,286 | |
Accounting and security lending fees | 13,129 | |
Independent trustees' compensation | 98 | |
Custodian fees and expenses | 10,263 | |
Registration fees | 13,467 | |
Audit | 16,024 | |
Legal | 498 | |
Miscellaneous | 1,907 | |
Total expenses before reductions | 285,455 | |
Expense reductions | (2,755) | 282,700 |
Net investment income (loss) | 42,834 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers | 1,916,448 | |
Foreign currency transactions | (1,649) | |
Total net realized gain (loss) | 1,914,799 | |
Change in net unrealized appreciation (depreciation) on: Investment securities | (1,458,145) | |
Assets and liabilities in foreign currencies | 32 | |
Total change in net unrealized appreciation (depreciation) | (1,458,113) | |
Net gain (loss) | 456,686 | |
Net increase (decrease) in net assets resulting from operations | $499,520 | |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Consumer Discretionary Portfolio
Financial Statements - continued
Statement of Changes in Net Assets
Six months ended August 31, 2006 (Unaudited) | Year ended | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $42,834 | $(45,197) |
Net realized gain (loss) | 1,914,799 | 1,980,108 |
Change in net unrealized appreciation (depreciation) | (1,458,113) | 1,133,559 |
Net increase (decrease) in net assets resulting from operations | 499,520 | 3,068,470 |
Distributions to shareholders from net realized gain | (1,174,057) | (484,881) |
Share transactions | 10,954,685 | 26,870,735 |
Reinvestment of distributions | 1,158,737 | 473,921 |
Cost of shares redeemed | (8,557,065) | (20,002,209) |
Net increase (decrease) in net assets resulting from share transactions | 3,556,357 | 7,342,447 |
Redemption fees | 7,941 | 8,138 |
Total increase (decrease) in net assets | 2,889,761 | 9,934,174 |
Net Assets | ||
Beginning of period | 49,682,027 | 39,747,853 |
End of period (including undistributed net investment income of $42,820 and accumulated net investment loss of $14, respectively) | $52,571,788 | $49,682,027 |
Other Information Shares | ||
Sold | 433,607 | 1,077,885 |
Issued in reinvestment of distributions | 44,515 | 18,542 |
Redeemed | (339,920) | (806,579) |
Net increase (decrease) | 138,202 | 289,848 |
Financial Highlights
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Investment Changes
Top Ten Stocks as of August 31, 2006 | ||
% of fund's | % of fund's net assets | |
Nestle SA sponsored ADR | 7.5 | 8.4 |
Altria Group, Inc. | 6.5 | 6.4 |
Unilever NV (NY Shares) | 6.2 | 6.5 |
The Coca-Cola Co. | 5.8 | 6.1 |
PepsiCo, Inc. | 5.3 | 6.5 |
McDonald's Corp. | 5.3 | 5.8 |
Kellogg Co. | 4.0 | 4.4 |
Kroger Co. | 3.7 | 3.5 |
Sysco Corp. | 3.4 | 3.0 |
General Mills, Inc. | 3.1 | 3.4 |
50.8 | ||
Top Industries (% of fund's net assets) | |||
As of August 31, 2006 | |||
| Food Products | 29.7% | |
| Beverages | 20.0% | |
| Hotels, Restaurants & Leisure | 12.3% | |
| Food & Staples Retailing | 11.8% | |
| Tobacco | 9.1% | |
| All Others* | 17.1% | |
As of February 28, 2006 | |||
| Food Products | 30.2% | |
| Beverages | 23.8% | |
| Hotels, Restaurants & Leisure | 16.7% | |
| Food & Staples Retailing | 10.6% | |
| Tobacco | 8.4% | |
| All Others* | 10.3% | |
*Includes short-term investments and net other assets. |
Prior period industry classifications reflect the categories in place as of the date indicated and have not been adjusted to reflect current industry classifications. |
Semiannual Report
Consumer Staples Portfolio
Investments August 31, 2006 (Unaudited)
Showing Percentage of Net Assets
Common Stocks - 91.7% | |||
Shares | Value (Note 1) | ||
BEVERAGES - 20.0% | |||
Brewers - 3.0% | |||
Efes Breweries International NV unit (a)(e) | 1,000 | $33,750 | |
InBev SA | 42,500 | 2,206,899 | |
Molson Coors Brewing Co. Class B | 31,300 | 2,200,390 | |
SABMiller PLC | 112,900 | 2,223,953 | |
6,664,992 | |||
Distillers & Vintners - 2.9% | |||
Constellation Brands, Inc. Class A | 60,000 | 1,637,400 | |
Diageo PLC sponsored ADR | 31,000 | 2,216,500 | |
Pernod Ricard SA | 12,350 | 2,694,626 | |
6,548,526 | |||
Soft Drinks - 14.1% | |||
Coca-Cola Enterprises, Inc. (d) | 172,200 | 3,840,060 | |
Coca-Cola Femsa SA de CV sponsored ADR | 17,500 | 516,600 | |
Coca-Cola Hellenic Bottling Co. SA sponsored ADR | 32,900 | 1,101,492 | |
Fomento Economico Mexicano SA de CV sponsored ADR | 5,500 | 516,560 | |
Hansen Natural Corp. (a) | 38,000 | 1,045,760 | |
PepsiCo, Inc. | 183,000 | 11,946,240 | |
The Coca-Cola Co. | 291,700 | 13,071,077 | |
32,037,789 | |||
TOTAL BEVERAGES | 45,251,307 | ||
BIOTECHNOLOGY - 0.2% | |||
Biotechnology - 0.2% | |||
Senomyx, Inc. (a) | 34,000 | 527,000 | |
CHEMICALS - 3.8% | |||
Fertilizers & Agricultural Chemicals - 3.8% | |||
Agrium, Inc. | 23,400 | 543,452 | |
Bodisen Biotech, Inc. (a)(d) | 47,300 | 558,140 | |
Monsanto Co. | 126,600 | 6,005,904 | |
Mosaic Co. | 33,200 | 539,168 | |
Potash Corp. of Saskatchewan, Inc. | 5,700 | 558,429 | |
Syngenta AG sponsored ADR | 11,000 | 324,610 | |
8,529,703 | |||
FOOD & STAPLES RETAILING - 11.8% | |||
Drug Retail - 0.7% | |||
CVS Corp. | 48,300 | 1,620,465 | |
Food Distributors - 3.4% | |||
Sysco Corp. (d) | 245,000 | 7,690,550 | |
Food Retail - 7.3% | |||
Convenience Retail Asia Ltd. | 2,000 | 735 | |
Kroger Co. | 351,200 | 8,362,072 | |
Shares | Value (Note 1) | ||
Safeway, Inc. | 214,400 | $6,631,392 | |
Whole Foods Market, Inc. | 30,900 | 1,656,858 | |
16,651,057 | |||
Hypermarkets & Super Centers - 0.4% | |||
Wal-Mart Stores, Inc. | 19,400 | 867,568 | |
TOTAL FOOD & STAPLES RETAILING | 26,829,640 | ||
FOOD PRODUCTS - 29.7% | |||
Agricultural Products - 3.4% | |||
Archer-Daniels-Midland Co. | 147,300 | 6,064,341 | |
Bunge Ltd. | 9,900 | 557,766 | |
Corn Products International, Inc. | 31,500 | 1,086,750 | |
7,708,857 | |||
Packaged Foods & Meats - 26.3% | |||
Cadbury Schweppes PLC sponsored ADR | 37,800 | 1,616,706 | |
General Mills, Inc. (d) | 130,600 | 7,082,438 | |
Groupe Danone | 7,700 | 1,059,527 | |
Kellogg Co. | 177,000 | 8,973,900 | |
Koninklijke Numico NV | 23,400 | 1,087,078 | |
Kraft Foods, Inc. Class A (d) | 96,900 | 3,285,879 | |
Lindt & Spruengli AG | 47 | 1,096,043 | |
McCormick & Co., Inc. (non-vtg.) | 60,500 | 2,203,410 | |
Nestle SA sponsored ADR | 198,600 | 17,059,741 | |
Tyson Foods, Inc. Class A | 35,300 | 519,969 | |
Unilever NV (NY Shares) | 593,900 | 14,158,576 | |
Wm. Wrigley Jr. Co. | 34,250 | 1,589,885 | |
59,733,152 | |||
TOTAL FOOD PRODUCTS | 67,442,009 | ||
HOTELS, RESTAURANTS & LEISURE - 12.3% | |||
Restaurants - 12.3% | |||
Applebee's International, Inc. | 25,100 | 520,825 | |
Buffalo Wild Wings, Inc. (a) | 77,714 | 2,708,333 | |
Chipotle Mexican Grill, Inc. Class A | 2,100 | 103,614 | |
Domino's Pizza, Inc. | 51,800 | 1,266,510 | |
McCormick & Schmick's Seafood Restaurants (a) | 9,300 | 184,326 | |
McDonald's Corp. | 332,300 | 11,929,570 | |
P.F. Chang's China Bistro, Inc. (a) | 15,100 | 532,275 | |
Red Robin Gourmet Burgers, Inc. (a) | 37,000 | 1,561,770 | |
Sonic Corp. (a) | 23,600 | 517,548 | |
Starbucks Corp. (a)(d) | 163,500 | 5,070,135 | |
Texas Roadhouse, Inc. Class A (a) | 100 | 1,208 | |
The Cheesecake Factory, Inc. (a) | 21,500 | 535,135 | |
Tim Hortons, Inc. (d) | 7,200 | 187,272 | |
Yum! Brands, Inc. | 56,700 | 2,771,496 | |
27,890,017 | |||
HOUSEHOLD DURABLES - 0.2% | |||
Housewares & Specialties - 0.2% | |||
Fortune Brands, Inc. | 7,300 | 529,980 | |
Common Stocks - continued | |||
Shares | Value (Note 1) | ||
HOUSEHOLD PRODUCTS - 2.9% | |||
Household Products - 2.9% | |||
Colgate-Palmolive Co. | 54,650 | $3,271,349 | |
Procter & Gamble Co. | 53,097 | 3,286,704 | |
6,558,053 | |||
MACHINERY - 0.7% | |||
Construction & Farm Machinery & Heavy Trucks - 0.7% | |||
AGCO Corp. (a) | 18,500 | 459,725 | |
CNH Global NV | 25,700 | 565,143 | |
Deere & Co. | 7,400 | 577,940 | |
1,602,808 | |||
PERSONAL PRODUCTS - 1.0% | |||
Personal Products - 1.0% | |||
Avon Products, Inc. | 19,000 | 545,490 | |
Herbalife Ltd. (a) | 32,800 | 1,071,576 | |
Playtex Products, Inc. (a) | 44,300 | 582,545 | |
2,199,611 | |||
TOBACCO - 9.1% | |||
Tobacco - 9.1% | |||
Altria Group, Inc. | 175,100 | 14,626,103 | |
British American Tobacco PLC sponsored ADR | 39,000 | 2,174,250 | |
Japan Tobacco, Inc. | 136 | 517,841 | |
Loews Corp. - Carolina Group | 37,500 | 2,147,250 | |
Reynolds American, Inc. | 16,600 | 1,080,162 | |
20,545,606 | |||
TOTAL COMMON STOCKS (Cost $172,051,346) | 207,905,734 | ||
Money Market Funds - 18.6% | |||
Shares | Value (Note 1) | ||
Fidelity Cash Central Fund, 5.31% (b) | 25,169,141 | $25,169,141 | |
Fidelity Securities Lending Cash Central Fund, 5.33% (b)(c) | 16,974,800 | 16,974,800 | |
TOTAL MONEY MARKET FUNDS (Cost $42,143,941) | 42,143,941 | ||
TOTAL INVESTMENT PORTFOLIO - 110.3% (Cost $214,195,287) | 250,049,675 |
NET OTHER ASSETS - (10.3)% | (23,379,163) | ||
NET ASSETS - 100% | $226,670,512 | ||
Legend |
(a)Non-income producing |
(b)Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. |
(c)Investment made with cash collateral received from securities on loan. |
(d)Security or a portion of the security is on loan at period end. |
(e)Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the end of the period, the value of these securities amounted to $33,750 or 0.0% of net assets. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the fund from the affiliated Central funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $168,732 |
Fidelity Securities Lending Cash Central Fund | 40,276 |
Total | $209,008 |
Other Information |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: |
United States of America | 76.3% |
Switzerland | 8.1% |
Netherlands | 6.9% |
United Kingdom | 3.7% |
France | 1.7% |
Belgium | 1.0% |
Others (individually less than 1%) | 2.3% |
100.0% |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Consumer Staples Portfolio
Financial Statements
Statement of Assets and Liabilities
August 31, 2006 (Unaudited) | ||
Assets | ||
Investment in securities, at value (including securities loaned of $16,624,091) - See accompanying schedule: Unaffiliated issuers (cost $172,051,346) | $207,905,734 | |
Affiliated Central Funds (cost $42,143,941) | 42,143,941 | |
Total Investments (cost $214,195,287) | $250,049,675 | |
Cash | 140,005 | |
Receivable for investments sold | 3,147,374 | |
Receivable for fund shares sold | 3,297,888 | |
Dividends receivable | 145,118 | |
Interest receivable | 63,898 | |
Prepaid expenses | 125 | |
Other receivables | 6,528 | |
Total assets | 256,850,611 | |
Liabilities | ||
Payable for investments purchased | $12,763,924 | |
Payable for fund shares redeemed | 271,113 | |
Accrued management fee | 93,006 | |
Other affiliated payables | 54,091 | |
Other payables and accrued expenses | 23,165 | |
Collateral on securities loaned, at value | 16,974,800 | |
Total liabilities | 30,180,099 | |
Net Assets | $226,670,512 | |
Net Assets consist of: | ||
Paid in capital | $188,660,991 | |
Undistributed net investment income | 931,364 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 1,223,665 | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 35,854,492 | |
Net Assets, for 3,998,997 shares outstanding | $226,670,512 | |
Net Asset Value, offering price and redemption price per share ($226,670,512 ÷ 3,998,997 shares) | $56.68 | |
Statement of Operations
Six months ended August 31, 2006 (Unaudited) | ||
Investment Income | ||
Dividends | $1,490,731 | |
Interest | 49 | |
Income from affiliated Central Funds (including $40,276 from security lending) | 209,008 | |
Total income | 1,699,788 | |
Expenses | ||
Management fee | $422,769 | |
Transfer agent fees | 235,122 | |
Accounting and security lending fees | 38,410 | |
Independent trustees' compensation | 297 | |
Custodian fees and expenses | 16,216 | |
Registration fees | 22,683 | |
Audit | 16,255 | |
Legal | 1,218 | |
Miscellaneous | 5,100 | |
Total expenses before reductions | 758,070 | |
Expense reductions | (760) | 757,310 |
Net investment income (loss) | 942,478 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers | 1,688,486 | |
Foreign currency transactions | 781 | |
Total net realized gain (loss) | 1,689,267 | |
Change in net unrealized appreciation (depreciation) on: Investment securities | 12,830,510 | |
Assets and liabilities in foreign currencies | 363 | |
Total change in net unrealized appreciation (depreciation) | 12,830,873 | |
Net gain (loss) | 14,520,140 | |
Net increase (decrease) in net assets resulting from operations | $15,462,618 | |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Consumer Staples Portfolio
Financial Statements - continued
Statement of Changes in Net Assets
Six months ended August 31, 2006 (Unaudited) | Year ended | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $942,478 | $1,263,331 |
Net realized gain (loss) | 1,689,267 | 8,287,843 |
Change in net unrealized appreciation (depreciation) | 12,830,873 | (385,129) |
Net increase (decrease) in net assets resulting from operations | 15,462,618 | 9,166,045 |
Distributions to shareholders from net investment income | (122,419) | (1,049,605) |
Distributions to shareholders from net realized gain | (1,273,148) | (6,158,772) |
Total distributions | (1,395,567) | (7,208,377) |
Share transactions | 115,029,012 | 47,926,666 |
Reinvestment of distributions | 1,319,076 | 6,802,073 |
Cost of shares redeemed | (28,774,361) | (71,028,865) |
Net increase (decrease) in net assets resulting from share transactions | 87,573,727 | (16,300,126) |
Redemption fees | 23,219 | 20,664 |
Total increase (decrease) in net assets | 101,663,997 | (14,321,794) |
Net Assets | ||
Beginning of period | 125,006,515 | 139,328,309 |
End of period (including undistributed net investment income of $931,364 and undistributed net investment income of $237,173, respectively) | $226,670,512 | $125,006,515 |
Other Information Shares | ||
Sold | 2,118,243 | 932,427 |
Issued in reinvestment of distributions | 25,011 | 133,891 |
Redeemed | (540,123) | (1,380,263) |
Net increase (decrease) | 1,603,131 | (313,945) |
Financial Highlights
Six months ended August 31, 2006 | Years ended February 28, | |||||
(Unaudited) | 2006 | 2005 | 2004 G | 2003 | 2002 | |
Selected Per-Share Data | ||||||
Net asset value, beginning of period | $52.18 | $51.42 | $46.50 | $35.71 | $44.68 | $46.01 |
Income from Investment Operations | ||||||
Net investment income (loss) E | .34 | .50 | .29 | .22 | .25 | .34 |
Net realized and unrealized gain (loss) | 4.72 | 3.25 | 4.90 | 10.80 | (8.06) | 2.79 |
Total from investment operations | 5.06 | 3.75 | 5.19 | 11.02 | (7.81) | 3.13 |
Distributions from net investment income | (.05) | (.44) | (.29) | (.24) | (.32) | (.21) |
Distributions from net realized gain | (.52) | (2.56) | - | - | (.88) | (4.28) |
Total distributions | (.57) | (3.00) | (.29) | (.24) | (1.20) | (4.49) |
Redemption fees added to paid in capital E | .01 | .01 | .02 | .01 | .04 | .03 |
Net asset value, end of period | $56.68 | $52.18 | $51.42 | $46.50 | $35.71 | $44.68 |
Total Return B,C,D | 9.80% | 7.50% | 11.24% | 30.94% | (17.85)% | 7.76% |
Ratios to Average Net Assets F | ||||||
Expenses before reductions | 1.01% A | 1.04% | 1.06% | 1.27% | 1.25% | 1.24% |
Expenses net of fee waivers, if any | 1.01% A | 1.04% | 1.06% | 1.27% | 1.25% | 1.24% |
Expenses net of all reductions | 1.01% A | 1.03% | 1.05% | 1.25% | 1.17% | 1.14% |
Net investment income (loss) | 1.26% A | .97% | .61% | .55% | .59% | .79% |
Supplemental Data | ||||||
Net assets, end of period (000 omitted) | $226,671 | $125,007 | $139,328 | $104,436 | $88,123 | $119,980 |
Portfolio turnover rate | 32% A | 75% | 86% | 62% | 225% | 315% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the former sales charges. E Calculated based on average shares outstanding during the period. F Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. G For the year ended February 29. | ||||||
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Investment Changes
Top Ten Stocks as of August 31, 2006 | ||
% of fund's | % of fund's net assets | |
Yahoo!, Inc. | 7.0 | 7.3 |
Viacom, Inc. Class B (non-vtg.) | 5.9 | 0.0 |
Google, Inc. Class A (sub. vtg.) | 5.3 | 7.5 |
International Game Technology | 4.8 | 0.0 |
McDonald's Corp. | 4.6 | 2.1 |
The Walt Disney Co. | 4.1 | 3.9 |
Penn National Gaming, Inc. | 3.9 | 3.0 |
Vail Resorts, Inc. | 3.2 | 2.1 |
Starwood Hotels & Resorts Worldwide, Inc. | 3.0 | 3.5 |
Boyd Gaming Corp. | 2.9 | 2.1 |
44.7 | ||
Top Industries (% of fund's net assets) | |||
As of August 31, 2006 | |||
| Hotels, Restaurants & Leisure | 47.9% | |
| Media | 22.6% | |
| Internet Software & Services | 13.4% | |
| Software | 3.5% | |
| Leisure Equipment & Products | 2.8% | |
| All Others* | 9.8% | |
As of February 28, 2006 | |||
| Hotels, Restaurants & Leisure | 40.4% | |
| Media | 19.7% | |
| Internet Software & Services | 19.3% | |
| Multiline Retail | 2.1% | |
| Leisure Equipment & Products | 2.0% | |
| All Others* | 16.5% | |
*Includes short-term investments and net other assets. |
Prior period industry classifications reflect the categories in place as of the date indicated and have not been adjusted to reflect current industry classifications. |
Semiannual Report
Leisure Portfolio
Investments August 31, 2006 (Unaudited)
Showing Percentage of Net Assets
Common Stocks - 97.7% | |||
Shares | Value (Note 1) | ||
BEVERAGES - 1.0% | |||
Distillers & Vintners - 1.0% | |||
Constellation Brands, Inc. Class A | 75,200 | $2,052,208 | |
COMMERCIAL SERVICES & SUPPLIES - 0.5% | |||
Commercial Printing - 0.5% | |||
R.R. Donnelley & Sons Co. | 30,100 | 975,842 | |
COMMUNICATIONS EQUIPMENT - 0.8% | |||
Communications Equipment - 0.8% | |||
SeaChange International, Inc. (a) | 193,400 | 1,634,230 | |
COMPUTERS & PERIPHERALS - 0.1% | |||
Computer Storage & Peripherals - 0.1% | |||
SimpleTech, Inc. (a) | 26,600 | 186,998 | |
CONSUMER FINANCE - 0.4% | |||
Consumer Finance - 0.4% | |||
Cash Systems, Inc. (a) | 103,600 | 672,364 | |
DIVERSIFIED TELECOMMUNICATION SERVICES - 0.0% | |||
Integrated Telecommunication Services - 0.0% | |||
AT&T, Inc. | 100 | 3,113 | |
BellSouth Corp. | 100 | 4,072 | |
Verizon Communications, Inc. | 100 | 3,518 | |
10,703 | |||
ELECTRONIC EQUIPMENT & INSTRUMENTS - 0.5% | |||
Electronic Equipment & Instruments - 0.4% | |||
Photon Dynamics, Inc. (a) | 63,100 | 847,433 | |
Technology Distributors - 0.1% | |||
PFSweb, Inc. (a) | 244,800 | 190,993 | |
TOTAL ELECTRONIC EQUIPMENT & INSTRUMENTS | 1,038,426 | ||
HOTELS, RESTAURANTS & LEISURE - 47.9% | |||
Casinos & Gaming - 25.0% | |||
Aristocrat Leisure Ltd. (d) | 109,500 | 1,095,274 | |
Bally Technologies, Inc. (a) | 133,200 | 2,096,568 | |
Boyd Gaming Corp. | 165,800 | 5,995,328 | |
Harrah's Entertainment, Inc. | 42,300 | 2,637,828 | |
International Game Technology | 252,900 | 9,782,172 | |
Isle of Capri Casinos, Inc. (a) | 122,700 | 2,500,626 | |
Las Vegas Sands Corp. (a) | 83,100 | 5,801,211 | |
MGM MIRAGE (a) | 57,000 | 2,033,760 | |
Multimedia Games, Inc. (a)(d) | 154,400 | 1,479,152 | |
Penn National Gaming, Inc. (a) | 241,000 | 7,981,920 | |
Pinnacle Entertainment, Inc. (a) | 12,700 | 327,406 | |
Progressive Gaming International Corp. (a) | 2,600 | 19,214 | |
Station Casinos, Inc. (d) | 37,300 | 2,172,725 | |
WMS Industries, Inc. (a) | 74,400 | 1,993,920 | |
Wynn Resorts Ltd. (a)(d) | 64,800 | 5,016,168 | |
50,933,272 | |||
Shares | Value (Note 1) | ||
Hotels, Resorts & Cruise Lines - 12.2% | |||
Accor SA | 10,900 | $697,556 | |
Carnival Corp. unit | 119,000 | 4,986,100 | |
eLong, Inc. sponsored ADR (a) | 1,100 | 14,729 | |
Gaylord Entertainment Co. (a) | 88,300 | 3,860,476 | |
Hilton Hotels Corp. | 59,600 | 1,518,012 | |
Marriott International, Inc. Class A | 75,800 | 2,854,628 | |
Morgans Hotel Group Co. | 245,928 | 3,270,842 | |
Royal Caribbean Cruises Ltd. | 41,200 | 1,502,976 | |
Starwood Hotels & Resorts Worldwide, Inc. | 113,100 | 6,023,706 | |
24,729,025 | |||
Leisure Facilities - 3.2% | |||
Vail Resorts, Inc. (a) | 173,400 | 6,523,308 | |
Restaurants - 7.5% | |||
Buffalo Wild Wings, Inc. (a) | 63,015 | 2,196,073 | |
McDonald's Corp. | 260,000 | 9,334,000 | |
Starbucks Corp. (a)(d) | 67,100 | 2,080,771 | |
Wendy's International, Inc. | 24,800 | 1,584,720 | |
15,195,564 | |||
TOTAL HOTELS, RESTAURANTS & LEISURE | 97,381,169 | ||
INTERNET & CATALOG RETAIL - 0.8% | |||
Catalog Retail - 0.0% | |||
dELiA*s, Inc. (a) | 143 | 1,030 | |
Internet Retail - 0.8% | |||
Expedia, Inc. (a) | 99,300 | 1,620,576 | |
TOTAL INTERNET & CATALOG RETAIL | 1,621,606 | ||
INTERNET SOFTWARE & SERVICES - 13.4% | |||
Internet Software & Services - 13.4% | |||
China LotSynergy Holdings Ltd. (a) | 12,400,000 | 1,594,394 | |
CMGI, Inc. (a) | 87,100 | 96,681 | |
eBay, Inc. (a) | 23,300 | 649,138 | |
Google, Inc. Class A (sub. vtg.) (a) | 28,200 | 10,674,546 | |
Yahoo!, Inc. (a)(d) | 491,404 | 14,162,263 | |
27,177,022 | |||
LEISURE EQUIPMENT & PRODUCTS - 2.8% | |||
Leisure Products - 2.8% | |||
Aruze Corp. | 219,900 | 4,757,834 | |
Brunswick Corp. | 26,700 | 766,290 | |
Polaris Industries, Inc. (d) | 5,500 | 209,550 | |
Pool Corp. | 500 | 19,035 | |
5,752,709 | |||
MEDIA - 22.6% | |||
Advertising - 2.0% | |||
Interpublic Group of Companies, Inc. (a) | 384 | 3,525 | |
Lamar Advertising Co. Class A (a)(d) | 28,300 | 1,480,090 | |
Omnicom Group, Inc. | 28,300 | 2,473,986 | |
3,957,601 | |||
Common Stocks - continued | |||
Shares | Value (Note 1) | ||
MEDIA - CONTINUED | |||
Broadcasting & Cable TV - 2.9% | |||
Comcast Corp. Class A (a) | 106,700 | $3,734,500 | |
EchoStar Communications Corp. Class A (a) | 47,300 | 1,501,775 | |
Salem Communications Corp. Class A | 29,500 | 359,605 | |
XM Satellite Radio Holdings, Inc. Class A | 23,535 | 305,014 | |
5,900,894 | |||
Movies & Entertainment - 16.0% | |||
Lions Gate Entertainment Corp. (a) | 238,000 | 2,191,982 | |
News Corp. Class A | 301,296 | 5,733,663 | |
Playboy Enterprises, Inc. Class B (non-vtg.) (a) | 153,300 | 1,459,416 | |
The Walt Disney Co. | 281,800 | 8,355,370 | |
Time Warner, Inc. | 163,800 | 2,722,356 | |
Viacom, Inc. Class B (non-vtg.) (a) | 330,200 | 11,986,260 | |
32,449,047 | |||
Publishing - 1.7% | |||
McGraw-Hill Companies, Inc. | 63,500 | 3,550,285 | |
TOTAL MEDIA | 45,857,827 | ||
MULTILINE RETAIL - 0.5% | |||
General Merchandise Stores - 0.5% | |||
99 Cents Only Stores (a) | 93,300 | 1,059,888 | |
REAL ESTATE INVESTMENT TRUSTS - 2.1% | |||
Specialized REITs - 2.1% | |||
Hersha Hospitality Trust | 56,500 | 568,955 | |
Host Hotels & Resorts, Inc. | 141,639 | 3,192,543 | |
Strategic Hotel & Resorts, Inc. | 21,900 | 446,760 | |
4,208,258 | |||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 0.6% | |||
Semiconductors - 0.6% | |||
California Micro Devices Corp. (a) | 288,381 | 1,274,644 | |
SOFTWARE - 3.5% | |||
Application Software - 0.6% | |||
NAVTEQ Corp. (a) | 7,700 | 204,512 | |
Plato Learning, Inc. (a) | 178,671 | 1,002,344 | |
1,206,856 | |||
Shares | Value (Note 1) | ||
Home Entertainment Software - 2.9% | |||
Electronic Arts, Inc. (a) | 65,600 | $3,343,632 | |
NCsoft Corp. (a) | 46,470 | 2,576,564 | |
5,920,196 | |||
TOTAL SOFTWARE | 7,127,052 | ||
SPECIALTY RETAIL - 0.2% | |||
Apparel Retail - 0.2% | |||
Pacific Sunwear of California, Inc. (a) | 34,900 | 466,264 | |
TOTAL COMMON STOCKS (Cost $175,348,650) | 198,497,210 | ||
Money Market Funds - 10.8% | |||
Fidelity Cash Central Fund, 5.31% (b) | 5,727,461 | 5,727,461 | |
Fidelity Securities Lending Cash Central Fund, 5.33% (b)(c) | 16,292,405 | 16,292,405 | |
TOTAL MONEY MARKET FUNDS (Cost $22,019,866) | 22,019,866 | ||
TOTAL INVESTMENT PORTFOLIO - 108.5% (Cost $197,368,516) | 220,517,076 |
NET OTHER ASSETS - (8.5)% | (17,257,325) | ||
NET ASSETS - 100% | $203,259,751 | ||
Legend |
(a)Non-income producing |
(b)Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. |
(c)Investment made with cash collateral received from securities on loan. |
(d)Security or a portion of the security is on loan at period end. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the fund from the affiliated Central funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $179,918 |
Fidelity Securities Lending Cash Central Fund | 74,768 |
Total | $254,686 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Leisure Portfolio
Financial Statements
Statement of Assets and Liabilities
August 31, 2006 (Unaudited) | ||
Assets | ||
Investment in securities, at value (including securities loaned of $15,946,587) - See accompanying schedule: Unaffiliated issuers (cost $175,348,650) | $198,497,210 | |
Affiliated Central Funds (cost $22,019,866) | 22,019,866 | |
Total Investments (cost $197,368,516) | $220,517,076 | |
Receivable for investments sold | 901,989 | |
Receivable for fund shares sold | 1,734,452 | |
Dividends receivable | 102,410 | |
Interest receivable | 41,662 | |
Prepaid expenses | 205 | |
Other receivables | 7,509 | |
Total assets | 223,305,303 | |
Liabilities | ||
Payable for investments purchased | $3,373,115 | |
Payable for fund shares redeemed | 201,943 | |
Accrued management fee | 93,619 | |
Other affiliated payables | 60,302 | |
Other payables and accrued expenses | 24,168 | |
Collateral on securities loaned, at value | 16,292,405 | |
Total liabilities | 20,045,552 | |
Net Assets | $203,259,751 | |
Net Assets consist of: | ||
Paid in capital | $169,151,671 | |
Accumulated net investment loss | (237,340) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 11,196,864 | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 23,148,556 | |
Net Assets, for 2,650,380 shares outstanding | $203,259,751 | |
Net Asset Value, offering price and redemption price per share ($203,259,751 ÷ 2,650,380 shares) | $76.69 | |
Statement of Operations
Six months ended August 31, 2006 (Unaudited) | ||
Investment Income | ||
Dividends | $554,961 | |
Interest | 366 | |
Income from affiliated Central Funds (including $74,768 from security lending) | 254,686 | |
Total income | 810,013 | |
Expenses | ||
Management fee | $619,096 | |
Transfer agent fees | 328,161 | |
Accounting and security lending fees | 56,772 | |
Independent trustees' compensation | 451 | |
Custodian fees and expenses | 15,364 | |
Registration fees | 27,166 | |
Audit | 16,469 | |
Legal | 2,122 | |
Miscellaneous | 7,842 | |
Total expenses before reductions | 1,073,443 | |
Expense reductions | (26,611) | 1,046,832 |
Net investment income (loss) | (236,819) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers | 11,436,498 | |
Foreign currency transactions | 9,496 | |
Total net realized gain (loss) | 11,445,994 | |
Change in net unrealized appreciation (depreciation) on: Investment securities | (15,579,082) | |
Assets and liabilities in foreign currencies | (10) | |
Total change in net unrealized appreciation (depreciation) | (15,579,092) | |
Net gain (loss) | (4,133,098) | |
Net increase (decrease) in net assets resulting from operations | $(4,369,917) | |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Leisure Portfolio
Financial Statements - continued
Statement of Changes in Net Assets
Six months ended August 31, 2006 (Unaudited) | Year ended | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $(236,819) | $(736,502) |
Net realized gain (loss) | 11,445,994 | 14,588,568 |
Change in net unrealized appreciation (depreciation) | (15,579,092) | 8,408,643 |
Net increase (decrease) in net assets resulting from operations | (4,369,917) | 22,260,709 |
Distributions to shareholders from net realized gain | (7,849,327) | (7,936,173) |
Share transactions | 66,943,805 | 52,967,028 |
Reinvestment of distributions | 7,429,389 | 7,524,369 |
Cost of shares redeemed | (64,209,332) | (75,943,707) |
Net increase (decrease) in net assets resulting from share transactions | 10,163,862 | (15,452,310) |
Redemption fees | 24,934 | 12,071 |
Total increase (decrease) in net assets | (2,030,448) | (1,115,703) |
Net Assets | ||
Beginning of period | 205,290,199 | 206,405,902 |
End of period (including accumulated net investment loss of $237,340 and accumulated net investment loss of $521, respectively) | $203,259,751 | $205,290,199 |
Other Information Shares | ||
Sold | 807,209 | 699,664 |
Issued in reinvestment of distributions | 87,549 | 98,957 |
Redeemed | (790,256) | (1,002,364) |
Net increase (decrease) | 104,502 | (203,743) |
Financial Highlights
Six months ended August 31, 2006 | Years ended February 28, | |||||
(Unaudited) | 2006 | 2005 | 2004 G | 2003 | 2002 | |
Selected Per-Share Data | ||||||
Net asset value, beginning of period | $80.64 | $75.07 | $74.40 | $48.60 | $61.57 | $66.22 |
Income from Investment Operations | ||||||
Net investment income (loss) E | (.09) | (.28) | (.20) | (.24) | (.33) | (.29) |
Net realized and unrealized gain (loss) | (1.16) | 8.83 | 5.55 | 26.03 | (12.66) | (4.37) |
Total from investment operations | (1.25) | 8.55 | 5.35 | 25.79 | (12.99) | (4.66) |
Distributions from net realized gain | (2.71) | (2.98) | (4.70) | - | - | - |
Redemption fees added to paid in capital E | .01 | - H | .02 | .01 | .02 | .01 |
Net asset value, end of period | $76.69 | $80.64 | $75.07 | $74.40 | $48.60 | $61.57 |
Total Return B,C,D | (1.86)% | 11.67% | 7.43% | 53.09% | (21.07)% | (7.02)% |
Ratios to Average Net Assets F | ||||||
Expenses before reductions | .98% A | .99% | 1.01% | 1.15% | 1.27% | 1.12% |
Expenses net of fee waivers, if any | .98% A | .99% | 1.01% | 1.15% | 1.27% | 1.12% |
Expenses net of all reductions | .96% A | .94% | .96% | 1.09% | 1.19% | 1.09% |
Net investment income (loss) | (.22)% A | (.37)% | (.28)% | (.38)% | (.62)% | (.46)% |
Supplemental Data | ||||||
Net assets, end of period (000 omitted) | $203,260 | $205,290 | $206,406 | $204,354 | $112,147 | $211,055 |
Portfolio turnover rate | 172% A | 107% | 117% | 156% | 124% | 60% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the former sales charges. E Calculated based on average shares outstanding during the period. F Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. G For the year ended February 29. H Amount represents less than $.01 per share. | ||||||
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Investment Changes
Top Ten Stocks as of August 31, 2006 | ||
% of fund's | % of fund's net assets | |
Google, Inc. Class A (sub. vtg.) | 8.9 | 10.0 |
McGraw-Hill Companies, Inc. | 7.5 | 6.6 |
Viacom, Inc. Class B (non-vtg.) | 6.9 | 5.2 |
Yahoo!, Inc. | 6.3 | 7.0 |
Omnicom Group, Inc. | 5.8 | 5.3 |
News Corp. Class A | 5.8 | 5.1 |
Time Warner, Inc. | 5.0 | 0.0 |
The Walt Disney Co. | 4.8 | 6.7 |
Clear Channel Communications, Inc. | 4.7 | 1.5 |
Comcast Corp. Class A | 3.9 | 0.0 |
59.6 | ||
Top Industries (% of fund's net assets) | |||
As of August 31, 2006 | |||
| Media | 74.0% | |
| Internet Software & Services | 18.2% | |
| Hotels, Restaurants & Leisure | 2.1% | |
| Software | 2.0% | |
| Real Estate Management & Development | 0.6% | |
| All Others* | 3.1% | |
As of February 28, 2006 | |||
| Media | 60.9% | |
| Internet Software & Services | 25.2% | |
| Software | 3.3% | |
| Hotels, Restaurants & Leisure | 2.4% | |
| Internet & Catalog Retail | 2.4% | |
| All Others* | 5.8% | |
*Includes short-term investments and net other assets. |
Prior period industry classifications reflect the categories in place as of the date indicated and have not been adjusted to reflect current industry classifications. |
Semiannual Report
Multimedia Portfolio
Investments August 31, 2006 (Unaudited)
Showing Percentage of Net Assets
Common Stocks - 96.9% | |||
Shares | Value (Note 1) | ||
ELECTRONIC EQUIPMENT & INSTRUMENTS - 0.0% | |||
Electronic Equipment & Instruments - 0.0% | |||
Dolby Laboratories, Inc. Class A (a) | 100 | $2,169 | |
HOTELS, RESTAURANTS & LEISURE - 2.1% | |||
Hotels, Resorts & Cruise Lines - 2.1% | |||
Ctrip.com International Ltd. sponsored ADR | 19,600 | 1,011,948 | |
eLong, Inc. sponsored ADR (a) | 83,600 | 1,119,404 | |
2,131,352 | |||
INTERNET & CATALOG RETAIL - 0.0% | |||
Internet Retail - 0.0% | |||
Expedia, Inc. (a) | 100 | 1,632 | |
INTERNET SOFTWARE & SERVICES - 18.2% | |||
Internet Software & Services - 18.2% | |||
AD Pepper Media International NV (a) | 58 | 817 | |
aQuantive, Inc. (a) | 40,900 | 1,014,320 | |
CNET Networks, Inc. (a) | 400 | 3,772 | |
Digitas, Inc. (a) | 122,100 | 1,091,574 | |
Equinix, Inc. (a) | 6,500 | 374,855 | |
Google, Inc. Class A (sub. vtg.) (a) | 23,500 | 8,895,455 | |
NHN Corp. | 4,968 | 469,255 | |
WebSideStory, Inc. (a) | 100 | 1,267 | |
Yahoo!, Inc. (a) | 220,850 | 6,364,897 | |
18,216,212 | |||
MEDIA - 74.0% | |||
Advertising - 10.9% | |||
Focus Media Holding Ltd. ADR (a) | 16,500 | 973,500 | |
Harte-Hanks, Inc. | 200 | 5,300 | |
Interpublic Group of Companies, Inc. (a) | 181,447 | 1,665,683 | |
Lamar Advertising Co. Class A (a) | 32,100 | 1,678,830 | |
Omnicom Group, Inc. | 67,300 | 5,883,366 | |
Valassis Communications, Inc. (a) | 36,800 | 725,696 | |
10,932,375 | |||
Broadcasting & Cable TV - 22.2% | |||
Cablevision Systems Corp. - NY Group Class A | 79,500 | 1,850,760 | |
Central European Media Enterprises Ltd. Class A (a) | 100 | 6,199 | |
Clear Channel Communications, Inc. | 161,400 | 4,687,056 | |
Comcast Corp. Class A (a) | 111,700 | 3,909,500 | |
E.W. Scripps Co. Class A | 32,800 | 1,491,416 | |
EchoStar Communications Corp. Class A (a) | 66,000 | 2,095,500 | |
Gestevision Telecinco SA | 12,200 | 314,176 | |
Grupo Televisa SA de CV (CPO) sponsored ADR | 25,600 | 487,424 | |
Impresa SGPS (a) | 49,900 | 303,676 | |
Liberty Global, Inc.: | |||
Class A | 44,775 | 1,057,138 | |
Class C | 430 | 9,924 | |
Shares | Value (Note 1) | ||
Liberty Media Holding Corp. - Capital Series A (a) | 11,700 | $1,010,061 | |
Mediaset Spa | 48,200 | 557,020 | |
NTL, Inc. | 300 | 7,947 | |
TiVo, Inc. (a)(d) | 74,600 | 615,450 | |
TVN SA (a) | 24,080 | 835,786 | |
Univision Communications, Inc. Class A (a) | 89,900 | 3,106,944 | |
22,345,977 | |||
Movies & Entertainment - 26.0% | |||
Carmike Cinemas, Inc. (d) | 26,500 | 495,285 | |
DreamWorks Animation SKG, Inc.Class A (a) | 37,200 | 788,268 | |
News Corp.: | |||
Class A | 306,982 | 5,841,867 | |
Class B | 25,200 | 500,724 | |
Playboy Enterprises, Inc. Class B (non-vtg.) (a) | 107,260 | 1,021,115 | |
Regal Entertainment Group Class A | 33,200 | 655,036 | |
The Walt Disney Co. (d) | 164,100 | 4,865,565 | |
Time Warner, Inc. | 301,300 | 5,007,606 | |
Viacom, Inc. Class B (non-vtg.) (a) | 190,500 | 6,915,150 | |
26,090,616 | |||
Publishing - 14.9% | |||
ADVO, Inc. | 100 | 2,859 | |
Dow Jones & Co., Inc. | 23,700 | 853,674 | |
McGraw-Hill Companies, Inc. | 135,600 | 7,581,396 | |
R.H. Donnelley Corp. | 36,600 | 1,988,112 | |
Reuters Group PLC sponsored ADR | 100 | 4,614 | |
The McClatchy Co. Class A | 38,900 | 1,578,173 | |
Tribune Co. | 94,900 | 2,961,829 | |
14,970,657 | |||
TOTAL MEDIA | 74,339,625 | ||
REAL ESTATE MANAGEMENT & DEVELOPMENT - 0.6% | |||
Real Estate Management & Development - 0.6% | |||
Move, Inc. | 127,500 | 583,950 | |
SOFTWARE - 2.0% | |||
Application Software - 1.0% | |||
NDS Group PLC sponsored ADR (a) | 21,900 | 1,008,495 | |
Home Entertainment Software - 1.0% | |||
Activision, Inc. (a) | 38,066 | 491,051 | |
Electronic Arts, Inc. (a) | 9,500 | 484,215 | |
Shanda Interactive Entertainment Ltd. sponsored ADR (a) | 200 | 3,284 | |
978,550 | |||
TOTAL SOFTWARE | 1,987,045 | ||
Common Stocks - continued | |||
Shares | Value (Note 1) | ||
WIRELESS TELECOMMUNICATION SERVICES - 0.0% | |||
Wireless Telecommunication Services - 0.0% | |||
American Tower Corp. Class A (a) | 130 | $4,662 | |
TOTAL COMMON STOCKS (Cost $79,167,978) | 97,266,647 | ||
Money Market Funds - 15.2% | |||
Fidelity Cash Central Fund, 5.31% (b) | 10,759,436 | 10,759,436 | |
Fidelity Securities Lending Cash Central Fund, 5.33% (b)(c) | 4,520,725 | 4,520,725 | |
TOTAL MONEY MARKET FUNDS (Cost $15,280,161) | 15,280,161 | ||
TOTAL INVESTMENT PORTFOLIO - 112.1% (Cost $94,448,139) | 112,546,808 |
NET OTHER ASSETS - (12.1)% | (12,115,070) | ||
NET ASSETS - 100% | $100,431,738 | ||
Legend |
(a)Non-income producing |
(b)Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. |
(c)Investment made with cash collateral received from securities on loan. |
(d)Security or a portion of the security is on loan at period end. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the fund from the affiliated Central funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $69,530 |
Fidelity Securities Lending Cash Central Fund | 26,321 |
Total | $95,851 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Multimedia Portfolio
Financial Statements
Statement of Assets and Liabilities
August 31, 2006 (Unaudited) | ||
Assets | ||
Investment in securities, at value (including securities loaned of $4,443,550) - See accompanying schedule: Unaffiliated issuers (cost $79,167,978) | $97,266,647 | |
Affiliated Central Funds (cost $15,280,161) | 15,280,161 | |
Total Investments (cost $94,448,139) | $112,546,808 | |
Receivable for investments sold | 5,426,834 | |
Receivable for fund shares sold | 84,092 | |
Dividends receivable | 80,620 | |
Interest receivable | 22,545 | |
Prepaid expenses | 84 | |
Other receivables | 4,279 | |
Total assets | 118,165,262 | |
Liabilities | ||
Payable for investments purchased | $13,008,576 | |
Payable for fund shares redeemed | 114,390 | |
Accrued management fee | 42,603 | |
Other affiliated payables | 26,244 | |
Other payables and accrued expenses | 20,986 | |
Collateral on securities loaned, at value | 4,520,725 | |
Total liabilities | 17,733,524 | |
Net Assets | $100,431,738 | |
Net Assets consist of: | ||
Paid in capital | $80,110,658 | |
Accumulated net investment loss | (60,469) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 2,282,880 | |
Net unrealized appreciation (depreciation) on investments | 18,098,669 | |
Net Assets, for 2,265,439 shares outstanding | $100,431,738 | |
Net Asset Value, offering price and redemption price per share ($100,431,738 ÷ 2,265,439 shares) | $44.33 | |
Statement of Operations
Six months ended August 31, 2006 (Unaudited) | ||
Investment Income | ||
Dividends | $281,073 | |
Interest | 36 | |
Income from affiliated Central Funds (including $26,321 from security lending) | 95,851 | |
Total income | 376,960 | |
Expenses | ||
Management fee | $230,844 | |
Transfer agent fees | 137,557 | |
Accounting and security lending fees | 21,184 | |
Independent trustees' compensation | 155 | |
Custodian fees and expenses | 10,425 | |
Registration fees | 17,232 | |
Audit | 16,115 | |
Legal | 862 | |
Miscellaneous | 3,368 | |
Total expenses before reductions | 437,742 | |
Expense reductions | (392) | 437,350 |
Net investment income (loss) | (60,390) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers | 2,376,545 | |
Foreign currency transactions | (1,384) | |
Total net realized gain (loss) | 2,375,161 | |
Change in net unrealized appreciation (depreciation) on: Investment securities | (1,851,417) | |
Assets and liabilities in foreign currencies | (176) | |
Total change in net unrealized appreciation (depreciation) | (1,851,593) | |
Net gain (loss) | 523,568 | |
Net increase (decrease) in net assets resulting from operations | $463,178 | |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Multimedia Portfolio
Financial Statements - continued
Statement of Changes in Net Assets
Six months ended August 31, 2006 (Unaudited) | Year ended | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $(60,390) | $(243,191) |
Net realized gain (loss) | 2,375,161 | 8,623,430 |
Change in net unrealized appreciation (depreciation) | (1,851,593) | (81,731) |
Net increase (decrease) in net assets resulting from operations | 463,178 | 8,298,508 |
Distributions to shareholders from net realized gain | (5,041,094) | (1,681,202) |
Share transactions | 49,013,330 | 36,474,405 |
Reinvestment of distributions | 4,822,277 | 1,612,799 |
Cost of shares redeemed | (29,547,290) | (89,613,233) |
Net increase (decrease) in net assets resulting from share transactions | 24,288,317 | (51,526,029) |
Redemption fees | 6,034 | 8,889 |
Total increase (decrease) in net assets | 19,716,435 | (44,899,834) |
Net Assets | ||
Beginning of period | 80,715,303 | 125,615,137 |
End of period (including accumulated net investment loss of $60,469 and accumulated net investment loss of $79, respectively) | $100,431,738 | $80,715,303 |
Other Information Shares | ||
Sold | 1,111,876 | 781,583 |
Issued in reinvestment of distributions | 104,424 | 33,434 |
Redeemed | (656,193) | (1,993,938) |
Net increase (decrease) | 560,107 | (1,178,921) |
Financial Highlights
Six months ended August 31, 2006 | Years ended February 28, | |||||
(Unaudited) | 2006 | 2005 | 2004 G | 2003 | 2002 | |
Selected Per-Share Data | ||||||
Net asset value, beginning of period | $47.33 | $43.55 | $44.83 | $32.10 | $37.38 | $41.91 |
Income from Investment Operations | ||||||
Net investment income (loss) E | (.03) | (.12) | (.18) | (.31) | (.20) | (.18) |
Net realized and unrealized gain (loss) | .05 | 4.70 | .19 | 16.49 | (5.14) | (4.36) |
Total from investment operations | .02 | 4.58 | .01 | 16.18 | (5.34) | (4.54) |
Distributions from net realized gain | (3.02) | (.80) | (1.30) | (3.47) | - | - |
Redemption fees added to paid in capital E | - H | - H | .01 | .02 | .06 | .01 |
Net asset value, end of period | $44.33 | $47.33 | $43.55 | $44.83 | $32.10 | $37.38 |
Total Return B,C,D | (.21)% | 10.48% | .01% | 50.99% | (14.13)% | (10.81)% |
Ratios to Average Net Assets F | ||||||
Expenses before reductions | 1.07% A | 1.07% | 1.07% | 1.17% | 1.29% | 1.13% |
Expenses net of fee waivers, if any | 1.07% A | 1.07% | 1.07% | 1.17% | 1.29% | 1.13% |
Expenses net of all reductions | 1.07% A | 1.04% | 1.03% | 1.09% | 1.13% | 1.10% |
Net investment income (loss) | (.15)% A | (.27)% | (.42)% | (.75)% | (.59)% | (.46)% |
Supplemental Data | ||||||
Net assets, end of period (000 omitted) | $100,432 | $80,715 | $125,615 | $163,826 | $100,111 | $140,070 |
Portfolio turnover rate | 106% A | 48% | 88% | 208% | 272% | 74% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the former sales charges. E Calculated based on average shares outstanding during the period. F Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. G For the year ended February 29. H Amount represents less than $.01 per share. | ||||||
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Investment Changes
Top Ten Stocks as of August 31, 2006 | ||
% of fund's | % of fund's net assets | |
Federated Department Stores, Inc. | 6.8 | 6.6 |
Wal-Mart Stores, Inc. | 5.2 | 5.1 |
Target Corp. | 5.2 | 5.2 |
CVS Corp. | 4.1 | 3.6 |
eBay, Inc. | 3.9 | 4.2 |
Deckers Outdoor Corp. | 3.9 | 2.8 |
Best Buy Co., Inc. | 3.2 | 3.5 |
Walgreen Co. | 3.2 | 2.4 |
McDonald's Corp. | 3.1 | 4.1 |
JCPenney Co., Inc. | 2.9 | 2.8 |
41.5 | ||
Top Industries (% of fund's net assets) | |||
As of August 31, 2006 | |||
| Specialty Retail | 33.0% | |
| Multiline Retail | 21.2% | |
| Food & Staples Retailing | 20.4% | |
| Textiles, Apparel & Luxury Goods | 8.0% | |
| Hotels, Restaurants & Leisure | 6.6% | |
| All Others* | 10.8% | |
As of February 28, 2006 | |||
| Specialty Retail | 34.4% | |
| Multiline Retail | 20.9% | |
| Food & Staples Retailing | 16.3% | |
| Hotels, Restaurants & Leisure | 10.3% | |
| Textiles, Apparel & Luxury Goods | 7.9% | |
| All Others* | 10.2% | |
*Includes short-term investments and net other assets. |
Prior period industry classifications reflect the categories in place as of the date indicated and have not been adjusted to reflect current industry classifications. |
Semiannual Report
Retailing Portfolio
Investments August 31, 2006 (Unaudited)
Showing Percentage of Net Assets
Common Stocks - 95.9% | |||
Shares | Value (Note 1) | ||
DIVERSIFIED CONSUMER SERVICES - 0.3% | |||
Specialized Consumer Services - 0.3% | |||
Sothebys Class A (ltd. vtg.) | 7,400 | $205,720 | |
FOOD & STAPLES RETAILING - 20.4% | |||
Drug Retail - 8.2% | |||
CVS Corp. | 71,500 | 2,398,825 | |
Rite Aid Corp. | 125,000 | 542,500 | |
Walgreen Co. | 37,500 | 1,854,750 | |
4,796,075 | |||
Food Retail - 4.7% | |||
Kroger Co. | 57,000 | 1,357,170 | |
Safeway, Inc. | 38,000 | 1,175,340 | |
Whole Foods Market, Inc. | 1,000 | 53,620 | |
Wild Oats Markets, Inc. (a)(d) | 10,000 | 163,400 | |
2,749,530 | |||
Hypermarkets & Super Centers - 7.5% | |||
BJ's Wholesale Club, Inc. (a) | 5,700 | 150,195 | |
Costco Wholesale Corp. (d) | 16,500 | 772,035 | |
Wal-Mart de Mexico SA de CV Series V | 123,911 | 424,072 | |
Wal-Mart Stores, Inc. | 68,000 | 3,040,960 | |
4,387,262 | |||
TOTAL FOOD & STAPLES RETAILING | 11,932,867 | ||
HOTELS, RESTAURANTS & LEISURE - 6.6% | |||
Restaurants - 6.6% | |||
Buffalo Wild Wings, Inc. (a) | 3,500 | 121,975 | |
Domino's Pizza, Inc. | 5,000 | 122,250 | |
McDonald's Corp. | 51,500 | 1,848,850 | |
Red Robin Gourmet Burgers, Inc. (a) | 4,000 | 168,840 | |
Starbucks Corp. (a)(d) | 20,000 | 620,200 | |
Wendy's International, Inc. | 15,000 | 958,500 | |
Yum! Brands, Inc. | 800 | 39,104 | |
3,879,719 | |||
INTERNET & CATALOG RETAIL - 2.5% | |||
Catalog Retail - 1.7% | |||
Coldwater Creek, Inc. (a) | 37,000 | 1,016,390 | |
Internet Retail - 0.8% | |||
Amazon.com, Inc. (a) | 5,100 | 157,233 | |
Blue Nile, Inc. (a) | 8,000 | 274,560 | |
431,793 | |||
TOTAL INTERNET & CATALOG RETAIL | 1,448,183 | ||
INTERNET SOFTWARE & SERVICES - 3.9% | |||
Internet Software & Services - 3.9% | |||
eBay, Inc. (a) | 83,000 | 2,312,380 | |
MULTILINE RETAIL - 21.2% | |||
Department Stores - 15.8% | |||
Federated Department Stores, Inc. | 104,000 | 3,949,920 | |
Shares | Value (Note 1) | ||
JCPenney Co., Inc. | 27,000 | $1,702,080 | |
Kohl's Corp. (a) | 20,000 | 1,250,200 | |
Nordstrom, Inc. | 8,000 | 298,800 | |
Saks, Inc. | 43,000 | 620,490 | |
Sears Holdings Corp. (a) | 9,864 | 1,421,501 | |
9,242,991 | |||
General Merchandise Stores - 5.4% | |||
Target Corp. | 62,500 | 3,024,375 | |
Tuesday Morning Corp. (d) | 10,000 | 134,800 | |
3,159,175 | |||
TOTAL MULTILINE RETAIL | 12,402,166 | ||
SPECIALTY RETAIL - 33.0% | |||
Apparel Retail - 15.9% | |||
Abercrombie & Fitch Co. Class A | 11,000 | 709,830 | |
Aeropostale, Inc. (a)(d) | 17,500 | 444,500 | |
American Eagle Outfitters, Inc. | 3,000 | 115,890 | |
AnnTaylor Stores Corp. (a) | 7,000 | 278,600 | |
bebe Stores, Inc. | 7,000 | 155,960 | |
Casual Male Retail Group, Inc. (a)(d) | 70,000 | 787,500 | |
Charlotte Russe Holding, Inc. (a) | 25,000 | 667,500 | |
Chico's FAS, Inc. (a) | 13,000 | 239,720 | |
Gymboree Corp. (a) | 18,000 | 603,900 | |
Hot Topic, Inc. (a) | 10,000 | 98,800 | |
J. Crew Group, Inc. | 3,100 | 78,523 | |
Limited Brands, Inc. | 35,500 | 913,415 | |
New York & Co., Inc. (a) | 10,000 | 114,200 | |
Pacific Sunwear of California, Inc. (a) | 3,000 | 40,080 | |
Ross Stores, Inc. | 7,000 | 171,430 | |
The Children's Place Retail Stores, Inc. (a) | 14,000 | 811,580 | |
TJX Companies, Inc. | 54,000 | 1,444,500 | |
Tween Brands, Inc. (a) | 29,000 | 987,740 | |
Urban Outfitters, Inc. (a) | 14,000 | 219,660 | |
Wet Seal, Inc. Class A (a) | 5,000 | 28,550 | |
Zumiez, Inc. (a) | 17,500 | 390,075 | |
9,301,953 | |||
Automotive Retail - 0.4% | |||
AutoZone, Inc. (a) | 2,600 | 234,780 | |
Computer & Electronics Retail - 6.9% | |||
Best Buy Co., Inc. (d) | 40,000 | 1,880,000 | |
Circuit City Stores, Inc. | 47,000 | 1,109,670 | |
Gamestop Corp. Class A (a) | 13,063 | 570,592 | |
RadioShack Corp. | 28,400 | 512,904 | |
4,073,166 | |||
Home Improvement Retail - 3.4% | |||
Home Depot, Inc. | 30,000 | 1,028,700 | |
Lowe's Companies, Inc. (d) | 35,000 | 947,100 | |
1,975,800 | |||
Specialty Stores - 6.4% | |||
s Group, Inc. | 13,000 | 248,690 | |
Michaels Stores, Inc. | 4,000 | 172,200 | |
Common Stocks - continued | |||
Shares | Value (Note 1) | ||
SPECIALTY RETAIL - CONTINUED | |||
Specialty Stores - continued | |||
Office Depot, Inc. (a) | 36,000 | $1,326,240 | |
OfficeMax, Inc. | 8,000 | 332,240 | |
PETsMART, Inc. | 12,500 | 313,750 | |
Staples, Inc. | 43,000 | 970,080 | |
Tiffany & Co., Inc. | 12,000 | 379,200 | |
3,742,400 | |||
TOTAL SPECIALTY RETAIL | 19,328,099 | ||
TEXTILES, APPAREL & LUXURY GOODS - 8.0% | |||
Apparel, Accessories & Luxury Goods - 3.7% | |||
Coach, Inc. (a) | 31,500 | 950,985 | |
Liz Claiborne, Inc. | 1,000 | 37,370 | |
Phillips-Van Heusen Corp. | 7,500 | 289,800 | |
Polo Ralph Lauren Corp. Class A | 12,500 | 737,375 | |
Under Armour, Inc. Class A (sub. vtg.) (d) | 5,000 | 172,200 | |
2,187,730 | |||
Footwear - 4.3% | |||
Deckers Outdoor Corp. (a)(d) | 55,000 | 2,255,550 | |
Skechers U.S.A., Inc. Class A (sub. vtg.) (a) | 7,000 | 158,480 | |
Stride Rite Corp. | 5,000 | 68,750 | |
2,482,780 | |||
TOTAL TEXTILES, APPAREL & LUXURY GOODS | 4,670,510 | ||
TOTAL COMMON STOCKS (Cost $46,537,455) | 56,179,644 | ||
Money Market Funds - 16.0% | |||
Shares | Value (Note 1) | ||
Fidelity Cash Central Fund, 5.31% (b) | 2,699,311 | $2,699,311 | |
Fidelity Securities Lending Cash Central Fund, 5.33% (b)(c) | 6,696,750 | 6,696,750 | |
TOTAL MONEY MARKET FUNDS (Cost $9,396,061) | 9,396,061 | ||
TOTAL INVESTMENT PORTFOLIO - 111.9% (Cost $55,933,516) | 65,575,705 |
NET OTHER ASSETS - (11.9)% | (6,980,282) | ||
NET ASSETS - 100% | $58,595,423 | ||
Legend |
(a)Non-income producing |
(b)Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. |
(c)Investment made with cash collateral received from securities on loan. |
(d)Security or a portion of the security is on loan at period end. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the fund from the affiliated Central funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $23,905 |
Fidelity Securities Lending Cash Central Fund | 31,569 |
Total | $55,474 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Retailing Portfolio
Financial Statements
Statement of Assets and Liabilities
August 31, 2006 (Unaudited) | ||
Assets | ||
Investment in securities, at value (including securities loaned of $6,552,880) - See accompanying schedule: Unaffiliated issuers (cost $46,537,455) | $56,179,644 | |
Affiliated Central Funds (cost $9,396,061) | 9,396,061 | |
Total Investments (cost $55,933,516) | $65,575,705 | |
Cash | 10,948 | |
Receivable for investments sold | 746,576 | |
Receivable for fund shares sold | 11,818 | |
Dividends receivable | 34,244 | |
Interest receivable | 8,573 | |
Prepaid expenses | 109 | |
Other receivables | 1,683 | |
Total assets | 66,389,656 | |
Liabilities | ||
Payable for investments purchased | $953,614 | |
Payable for fund shares redeemed | 78,895 | |
Accrued management fee | 27,067 | |
Other affiliated payables | 18,531 | |
Other payables and accrued expenses | 19,376 | |
Collateral on securities loaned, at value | 6,696,750 | |
Total liabilities | 7,794,233 | |
Net Assets | $58,595,423 | |
Net Assets consist of: | ||
Paid in capital | $46,854,118 | |
Undistributed net investment income | 68,253 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 2,030,863 | |
Net unrealized appreciation (depreciation) on investments | 9,642,189 | |
Net Assets, for 1,211,740 shares outstanding | $58,595,423 | |
Net Asset Value, offering price and redemption price per share ($58,595,423 ÷ 1,211,740 shares) | $48.36 | |
Statement of Operations
Six months ended August 31, 2006 (Unaudited) | ||
Investment Income | ||
Dividends | $207,031 | |
Special dividends | 152,000 | |
Interest | 39 | |
Income from affiliated Central Funds (including $31,569 from security lending) | 55,474 | |
Total income | 414,544 | |
Expenses | ||
Management fee | $177,655 | |
Transfer agent fees | 101,959 | |
Accounting and security lending fees | 16,319 | |
Independent trustees' compensation | 140 | |
Custodian fees and expenses | 13,047 | |
Registration fees | 17,699 | |
Audit | 16,075 | |
Legal | 630 | |
Miscellaneous | 2,433 | |
Total expenses before reductions | 345,957 | |
Expense reductions | (33) | 345,924 |
Net investment income (loss) | 68,620 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers | 2,333,460 | |
Foreign currency transactions | (485) | |
Total net realized gain (loss) | 2,332,975 | |
Change in net unrealized appreciation (depreciation) on investment securities | (3,550,153) | |
Net gain (loss) | (1,217,178) | |
Net increase (decrease) in net assets resulting from operations | $(1,148,558) | |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Retailing Portfolio
Financial Statements - continued
Statement of Changes in Net Assets
Six months ended August 31, 2006 (Unaudited) | Year ended | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $68,620 | $(167,502) |
Net realized gain (loss) | 2,332,975 | 13,946,935 |
Change in net unrealized appreciation (depreciation) | (3,550,153) | (4,974,621) |
Net increase (decrease) in net assets resulting from operations | (1,148,558) | 8,804,812 |
Distributions to shareholders from net realized gain | (2,197,938) | (10,046,481) |
Share transactions | 14,389,469 | 80,507,255 |
Reinvestment of distributions | 2,090,006 | 9,613,165 |
Cost of shares redeemed | (21,568,397) | (127,275,863) |
Net increase (decrease) in net assets resulting from share transactions | (5,088,922) | (37,155,443) |
Redemption fees | 21,750 | 59,867 |
Total increase (decrease) in net assets | (8,413,668) | (38,337,245) |
Net Assets | ||
Beginning of period | 67,009,091 | 105,346,336 |
End of period (including undistributed net investment income of $68,253 and accumulated net investment loss of $367, respectively) | $58,595,423 | $67,009,091 |
Other Information Shares | ||
Sold | 289,030 | 1,540,646 |
Issued in reinvestment of distributions | 40,363 | 193,514 |
Redeemed | (437,201) | (2,484,756) |
Net increase (decrease) | (107,808) | (750,596) |
Financial Highlights
Six months ended August 31, 2006 | Years ended February 28, | |||||
(Unaudited) | 2006 | 2005 | 2004 H | 2003 | 2002 | |
Selected Per-Share Data | ||||||
Net asset value, beginning of period | $50.78 | $50.89 | $47.39 | $30.72 | $41.67 | $46.34 |
Income from Investment Operations | ||||||
Net investment income (loss) E | .05 F | (.10) | (.01) | (.19) | (.28) | (.23) |
Net realized and unrealized gain (loss) | (.79) | 6.24 | 4.00 | 16.83 | (10.70) | (3.05) |
Total from investment operations | (.74) | 6.14 | 3.99 | 16.64 | (10.98) | (3.28) |
Distributions from net investment income | - | - | (.01) | - | - | - |
Distributions from net realized gain | (1.70) | (6.29) | (.50) | - | - | (1.47) |
Total distributions | (1.70) | (6.29) | (.51) | - | - | (1.47) |
Redemption fees added to paid in capital E | .02 | .04 | .02 | .03 | .03 | .08 |
Net asset value, end of period | $48.36 | $50.78 | $50.89 | $47.39 | $30.72 | $41.67 |
Total Return B,C,D | (1.64)% | 12.77% | 8.47% | 54.26% | (26.28)% | (6.85)% |
Ratios to Average Net Assets G | ||||||
Expenses before reductions | 1.10% A | 1.06% | 1.08% | 1.31% | 1.32% | 1.29% |
Expenses net of fee waivers, if any | 1.10% A | 1.06% | 1.08% | 1.31% | 1.32% | 1.29% |
Expenses net of all reductions | 1.10% A | 1.04% | 1.03% | 1.28% | 1.25% | 1.16% |
Net investment income (loss) | .22% A,F | (.20)% | (.02)% | (.46)% | (.74)% | (.54)% |
Supplemental Data | ||||||
Net assets, end of period (000 omitted) | $58,595 | $67,009 | $105,346 | $87,086 | $63,627 | $127,194 |
Portfolio turnover rate | 89% A | 114% | 94% | 85% | 149% | 280% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. DTotal returns do not include the effect of the former sales charges. E Calculated based on average shares outstanding during the period. F Investment income per share reflects a special dividend which amounted to $.12 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.27) %. G Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. H For the year ended February 29. | ||||||
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Notes to Financial Statements
For the period ended August 31, 2006 (Unaudited)
1. Significant Accounting Policies.
Consumer Discretionary Portfolio, Consumer Staples Portfolio, Leisure Portfolio, Multimedia Portfolio, and Retailing Portfolio (the Funds) are non-diversified funds of Fidelity Select Portfolios (the trust). On April 20, 2006, the Board of Trustees approved changes to the names of Consumer Industries Portfolio and Food and Agriculture Portfolio to Consumer Discretionary Portfolio and Consumer Staples Portfolio effective October 1, 2006. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Funds invest primarily in securities of companies whose principal business activities fall within specific industries. Each Fund is authorized to issue an unlimited number of shares. Certain Funds may invest in affiliated money market central funds (Money Market Central Funds), which are open-end investment companies available to investment companies and other accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. The following summarizes the significant accounting policies of the Funds:
Security Valuation. Investments are valued and net asset value (NAV) per share is calculated (NAV calculation) as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time. During the period each Fund also calculated a NAV each hour on the hour (commencing at 10:00 a.m. Eastern time until one hour prior to the close of business on the NYSE). Effective October 1, 2006, each Fund will eliminate the hourly NAV calculation.
Wherever possible, each Fund uses independent pricing services approved by the Board of Trustees to value its investments. Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price. Investments in open-end mutual funds are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or do not accurately reflect fair value, valuations may be determined in accordance with procedures adopted by the Board of Trustees. For example, when developments occur between the close of a market and the close of the NYSE that may materially affect the value of some or all of the securities, or when trading in a security is halted, those securities may be fair valued. Factors used in the determination of fair value may include monitoring news to identify significant market or security specific events such as changes in the value of U.S. securities markets, reviewing developments in foreign markets and evaluating the performance of ADRs, futures contracts and exchange-traded funds. Because each Fund's utilization of fair value pricing depends on market activity, the frequency with which fair value pricing is used can not be predicted and may be utilized to a significant extent. The value of securities used for NAV calculation under fair value pricing may differ from published prices for the same securities.
Foreign Currency. Certain Funds may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. Security transactions are accounted for as of trade date. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Funds are informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Funds estimate the components of distributions received that may be considered return of capital distributions or capital gain distributions. Large, non-recurring dividends recognized by the Funds are presented separately on the Statement of Operations as "Special Dividends" and the impact of these dividends is presented in the Financial Highlights. Interest income is accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
1. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders. Each year, each Fund intends to qualify as a regulated investment company by distributing all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code. As a result, no provision for income taxes is required in the accompanying financial statements. Foreign taxes are provided for based on each Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. In addition, certain Funds claimed a portion of the payment made to redeeming shareholders as a distribution for income tax purposes.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to short-term capital gains, foreign currency transactions, deferred trustees compensation, net operating losses and losses deferred due to wash sales and excise tax regulations.
The federal tax cost of investments and unrealized appreciation (depreciation) as of period end were as follows for each Fund:
Cost for Federal | Unrealized | Unrealized | Net Unrealized | |
Consumer Discretionary Portfolio | $49,442,882 | $6,122,869 | $(1,261,700) | $4,861,169 |
Consumer Staples Portfolio | 214,719,500 | 36,526,694 | (1,196,519) | 35,330,175 |
Leisure Portfolio | 197,699,414 | 30,401,223 | (7,583,561) | 22,817,662 |
Multimedia Portfolio | 94,972,245 | 19,220,791 | (1,646,228) | 17,574,563 |
Retailing Portfolio | 56,267,955 | 11,864,482 | (2,556,732) | 9,307,750 |
Trading (Redemption) Fees. Shares in the Funds held less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, including any estimated redemption fees paid by Fidelity Management & Research Company (FMR), are retained by the Fund and accounted for as an addition to paid in capital. Shareholders are also subject to an additional $7.50 fee for shares exchanged into another Fidelity fund (see Note 4).
New Accounting Pronouncements. In July 2006, Financial Accounting Standards Board Interpretation No. 48, Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement 109 (FIN 48), was issued and is effective for fiscal years beginning after December 15, 2006. FIN 48 sets forth a threshold for financial statement recognition, measurement and disclosure of a tax position taken or expected to be taken on a tax return. Management is currently evaluating the impact, if any, the adoption of FIN 48 will have on the Funds' net assets, results of operations and financial statement disclosures.
In addition, in September 2006, Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157), was issued and is effective for fiscal years beginning after November 15, 2007. SFAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. Management is currently evaluating the impact the adoption of SFAS 157 will have on the Funds' financial statement disclosures.
2. Operating Policies.
Repurchase Agreements. FMR has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits certain Funds and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts which are then invested in repurchase agreements. Certain Funds may also invest directly with institutions in repurchase agreements. Repurchase agreements are collateralized by government or non-government securities. Upon settlement date, collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. Each applicable Fund monitors, on a daily basis, the value of the collateral to ensure it is at least equal to the principal amount of the repurchase agreement (including accrued interest). In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the value of the collateral may decline.
Restricted Securities. Certain Funds may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities is included at the end of each applicable Fund's Schedule of Investments.
Semiannual Report
3. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, are noted in the table below.
Purchases ($) | Sales ($) | |
Consumer Discretionary Portfolio | 35,493,363 | 33,781,215 |
Consumer Staples Portfolio | 92,347,954 | 23,448,341 |
Leisure Portfolio | 186,855,799 | 181,399,228 |
Multimedia Portfolio | 59,340,493 | 42,851,533 |
Retailing Portfolio | 27,659,448 | 35,639,862 |
4. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the Funds with investment management related services for which the Funds pay a monthly management fee. The management fee is the sum of an individual fund fee rate and a group fee rate. The individual fund fee rate is applied to each Fund's average net assets. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, each Fund's annualized management fee rate expressed as a percentage of each Fund's average net assets was as follows:
Individual Rate | Group Rate | Total | |
Consumer Discretionary Portfolio | .30% | .27% | .57% |
Consumer Staples Portfolio | .30% | .27% | .56% |
Leisure Portfolio | .30% | .27% | .57% |
Multimedia Portfolio | .30% | .27% | .56% |
Retailing Portfolio | .30% | .27% | .57% |
Transfer Agent Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, is the Funds' transfer, dividend disbursing and shareholder servicing agent. FSC receives account fees and asset-based fees that vary according to account size and type of account. FSC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, the transfer agent fees were equivalent to the following annualized rates expressed as a percentage of average net assets:
Consumer Discretionary Portfolio | .33% |
Consumer Staples Portfolio | .31% |
Leisure Portfolio | .30% |
Multimedia Portfolio | .34% |
Retailing Portfolio | .33% |
Accounting and Security Lending Fees. FSC maintains each Fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Affiliated Central Funds. Certain Funds may invest in Money Market Central Funds which seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
The Money Market Central Funds do not pay a management fee.
Exchange Fees. During the period FSC received the proceeds of a $7.50 fee to cover administrative costs associated with exchanges out of the Funds to any other Fidelity Select fund or to any other Fidelity fund made through non-automated channels. Effective October 1, 2006, the exchange fees will be eliminated. For the period, exchange fees retained by FSC were as follows:
Retained | |
Consumer Discretionary Portfolio | $180 |
Consumer Staples Portfolio | 840 |
Leisure Portfolio | 840 |
Multimedia Portfolio | 653 |
Retailing Portfolio | 345 |
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
4. Fees and Other Transactions with Affiliates - continued
Brokerage Commissions. Certain Funds placed a portion of their portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were as follows:
Amount | |
Consumer Discretionary Portfolio | $171 |
Consumer Staples Portfolio | 1,153 |
Leisure Portfolio | 1,678 |
Multimedia Portfolio | 430 |
Retailing Portfolio | 338 |
5. Committed Line of Credit.
Certain Funds participate with other funds managed by FMR in a $4.2 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The participating funds have agreed to pay commitment fees on their pro rata portion of the line of credit, which is reflected in Miscellaneous Expense on the Statement of Operations, and is as follows:
Consumer Discretionary Portfolio | 70 |
Consumer Staples Portfolio | 182 |
Leisure Portfolio | 304 |
Multimedia Portfolio | 116 |
Retailing Portfolio | 91 |
During the period, there were no borrowings on this line of credit.
6. Security Lending.
Certain Funds lend portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, each applicable Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Funds and any additional required collateral is delivered to the Funds on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on each applicable Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented on each applicable Fund's Statement of Operations as a component of income from affiliated central funds.
7. Expense Reductions.
Many of the brokers with whom FMR places trades on behalf of certain Funds provided services to these Funds in addition to trade execution. These services included payments of expenses on behalf of each applicable Fund. In addition, through arrangements with each applicable fund's custodian and transfer agent, credits realized as a result of uninvested cash balances were used to reduce each applicable fund's expenses. All of the applicable expense reductions are noted in the table below.
Brokerage Service Arrangements | Custody | Transfer Agent | |
Consumer Dicretionary Portfolio | $2,279 | $- | $476 |
Consumer Staples Portfolio | 213 | 68 | 479 |
Leisure Portfolio | 24,674 | 1,048 | 889 |
Multimedia Portfolio | 134 | - | 258 |
Retailing Portfolio | - | - | 33 |
8. 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.
Semiannual Report
Proxy Voting Results
A special meeting of Fidelity Select Portfolios' shareholders was held on September 20, 2006. The results of votes taken among shareholders on the proposals before them are reported below. Each vote reported represents one dollar of net asset value held on the record date for the meeting.
PROPOSAL 1 | ||
To elect a Board of Trustees. A | ||
# of | % of | |
Dennis J. Dirks | ||
Affirmative | 13,182,341,755.09 | 94.980 |
Withheld | 696,736,162.41 | 5.020 |
TOTAL | 13,879,077,917.50 | 100.000 |
Albert R. Gamper, Jr. | ||
Affirmative | 13,177,593,614.43 | 94.946 |
Withheld | 701,484,303.07 | 5.054 |
TOTAL | 13,879,077,917.50 | 100.000 |
Robert M. Gates | ||
Affirmative | 13,141,235,622.81 | 94.684 |
Withheld | 737,842,294.69 | 5.316 |
TOTAL | 13,879,077,917.50 | 100.000 |
George H. Heilmeier | ||
Affirmative | 13,140,073,210.00 | 94.675 |
Withheld | 739,004,707.50 | 5.325 |
TOTAL | 13,879,077,917.50 | 100.000 |
Edward C. Johnson 3d | ||
Affirmative | 13,106,284,587.54 | 94.432 |
Withheld | 772,793,329.96 | 5.568 |
TOTAL | 13,879,077,917.50 | 100.000 |
Stephen P. Jonas | ||
Affirmative | 13,168,282,872.88 | 94.879 |
Withheld | 710,795,044.62 | 5.121 |
TOTAL | 13,879,077,917.50 | 100.000 |
James H. KeyesB | ||
Affirmative | 13,164,603,089.66 | 94.852 |
Withheld | 714,474,827.84 | 5.148 |
TOTAL | 13,879,077,917.50 | 100.000 |
Marie L. Knowles | ||
Affirmative | 13,169,356,779.66 | 94.886 |
Withheld | 709,721,137.84 | 5.114 |
TOTAL | 13,879,077,917.50 | 100.000 |
Ned C. Lautenbach | ||
Affirmative | 13,166,485,155.52 | 94.866 |
Withheld | 712,592,761.98 | 5.134 |
TOTAL | 13,879,077,917.50 | 100.000 |
William O. McCoy | ||
Affirmative | 13,129,548,996.59 | 94.600 |
Withheld | 749,528,920.91 | 5.400 |
TOTAL | 13,879,077,917.50 | 100.000 |
Robert L. Reynolds | ||
Affirmative | 13,180,813,649.06 | 94.969 |
Withheld | 698,264,268.44 | 5.031 |
TOTAL | 13,879,077,917.50 | 100.000 |
# of | % of | |
Cornelia M. Small | ||
Affirmative | 13,170,500,616.42 | 94.895 |
Withheld | 708,577,301.08 | 5.105 |
TOTAL | 13,879,077,917.50 | 100.000 |
William S. Stavropoulos | ||
Affirmative | 13,143,284,328.22 | 94.699 |
Withheld | 735,793,589.28 | 5.301 |
TOTAL | 13,879,077,917.50 | 100.000 |
Kenneth L. Wolfe | ||
Affirmative | 13,162,946,758.47 | 94.840 |
Withheld | 716,131,159.03 | 5.160 |
TOTAL | 13,879,077,917.50 | 100.000 |
PROPOSAL 2A & 5A | ||
To modify the fund's fundamental "invests primarily" policy (the investment policy concerning the fund's primary investments). | ||
Consumer Discretionary Portfolio | ||
# of | % of | |
Affirmative | 31,466,469.89 | 84.262 |
Against | 777,329.52 | 2.082 |
Abstain | 574,751.87 | 1.539 |
Broker Non-Votes | 4,524,985.68 | 12.117 |
TOTAL | 37,343,536.96 | 100.000 |
Consumer Staples Portfolio | ||
# of | % of | |
Affirmative | 75,186,262.69 | 73.992 |
Against | 12,513,957.55 | 12.315 |
Abstain | 4,755,941.37 | 4.681 |
Broker Non-Votes | 9,157,134.36 | 9.012 |
TOTAL | 101,613,295.97 | 100.000 |
PROPOSAL 2B & 5B | ||
To modify the fund's investment concentration policy. | ||
Consumer Discretionary Portfolio | ||
# of | % of | |
Affirmative | 31,287,196.22 | 83.782 |
Against | 958,558.54 | 2.567 |
Abstain | 572,796.52 | 1.534 |
Broker Non-Votes | 4,524,985.68 | 12.117 |
TOTAL | 37,343,536.96 | 100.000 |
Consumer Staples Portfolio | ||
# of | % of | |
Affirmative | 75,739,148.90 | 74.536 |
Against | 11,467,272.86 | 11.285 |
Abstain | 5,249,739.85 | 5.167 |
Broker Non-Votes | 9,157,134.36 | 9.012 |
TOTAL | 101,613,295.97 | 100.000 |
ADenotes trust-wide proposal and voting results. BEffective on or about January 1, 2007. | ||
Semiannual Report
Board Approval of Investment Advisory Contracts and Management Fees
Select Consumer Discretionary (formerly known as Select Consumer Industries)
Select Consumer Staples (formerly known as Select Food and Agriculture)
Select Leisure
Select Multimedia
Select Retailing
Each year, typically in July, the Board of Trustees, including the Independent Trustees (together, the Board), votes on the renewal of the management contract and sub-advisory agreements (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 throughout the year.
The Board meets regularly each month except August and takes into account throughout the year matters bearing on Advisory Contracts. The Board, acting directly and through its separate committees, considers at each of its meetings factors that are relevant to the annual renewal of each fund's Advisory Contracts, including the services and support provided to each fund and its shareholders. At the time of the renewal, the Board had 12 standing committees, each composed of 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. Each committee has adopted a written charter outlining the structure and purposes of the committee. One such committee, the Equity Contract Committee, meets periodically as needed throughout the year to consider matters specifically related to the annual renewal of Advisory Contracts. The committee requests and receives information on, and makes recommendations to the Independent Trustees concerning, the approval and annual review of the Advisory Contracts.
At its July 2006 meeting, the Board of Trustees, including the Independent Trustees, unanimously determined to renew the Advisory Contracts for each fund. 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 the management fee and total expenses of each fund; (iii) the total costs of the services to be provided by and the profits to be realized by the investment adviser and its affiliates from the relationship with each fund; (iv) the extent to which economies of scale 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 determining whether to renew the Advisory Contracts for each fund, the Board ultimately reached a determination, with the assistance of fund counsel and Independent Trustees' counsel, that the renewal of the Advisory Contracts and the compensation to be received by Fidelity under the management contracts is consistent with Fidelity's fiduciary duty under applicable law. In addition to evaluating the specific factors noted above, the Board, in reaching its determination, is aware that shareholders in each fund have a broad range of investment choices available to them, including a wide choice among mutual funds offered by competitors to Fidelity, and that each fund's shareholders, with 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, managed by Fidelity.
Nature, Extent, and Quality of Services Provided. The Board considered staffing within the investment adviser, FMR, and the sub-advisers (together, the Investment Advisers), including the backgrounds of the funds' portfolio managers and the funds' investment objectives and disciplines. 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.
Resources Dedicated to Investment Management and Support Services. The Board reviewed the size, education, and experience of the Investment Advisers' investment staff, their use of technology, and the Investment Advisers' approach to recruiting, training, and retaining portfolio managers and other research, advisory, and management personnel. The Board considered Fidelity's extensive global research capabilities that enable the Investment Advisers to aggregate data from various sources in an effort to produce positive investment results. The Board noted that Fidelity's analysts have access to a variety of technological tools that enable them to perform both fundamental and quantitative analysis and to specialize in various disciplines. The Board also considered that Fidelity's portfolio managers and analysts have access to daily portfolio attribution that allows for monitoring of a fund's portfolio, as well as an electronic communication system that provides immediate real-time access to research concerning issuers and credit enhancers.
Shareholder and Administrative Services. The Board considered (i) the nature, extent, quality, and cost of administrative, distribution, 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 Investment Advisers' 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 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 also considered that Fidelity voluntarily pays for market data out of its own resources.
The Board noted that the growth of fund assets 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 phone representatives and over the Internet, and investor education materials and asset allocation tools.
Semiannual Report
Board Approval of Investment Advisory Contracts and Management Fees - continued
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 for a large variety of mutual fund investor services. The Board noted that, since the last Advisory Contract renewals in July 2005, Fidelity has taken a number of actions that benefited particular funds, including (i) dedicating additional resources to investment research and to restructure the investment research teams; (ii) voluntarily entering into contractual arrangements with certain brokers pursuant to which Fidelity pays for research products and services separately out of its own resources, rather than bundling with fund commissions; (iii) launching the Fidelity Advantage Class of its five Spartan stock index funds and three Spartan bond index funds, which is a lower-fee class available to shareholders with higher account balances; (iv) contractually agreeing to impose expense limitations on Fidelity U.S. Bond Index Fund and reducing the fund's initial investment minimum; and (v) offering shareholders of each of the Fidelity Institutional Money Market Funds the privilege of exchanging shares of the fund for shares of other Fidelity funds.
Investment Performance and Compliance. The Board considered whether each fund has operated within its investment objective, as well as its record of compliance with its investment restrictions. It also reviewed each fund's absolute investment performance, as well as each fund's relative investment performance measured against (i) a proprietary custom index (or a Goldman Sachs index that reflects the market sector in which the fund invests, in the case of Consumer Discretionary Portfolio), and (ii) a peer group of mutual funds over multiple periods. For each fund, the following charts considered by the Board show, over the one-, three-, and five-year periods ended December 31, 2005, the fund's cumulative total returns, the cumulative total returns of a proprietary custom index (or a Goldman Sachs index, in the case of Consumer Discretionary Portfolio) ("benchmark"), and a range of cumulative total returns of a peer group of mutual funds identified by Lipper Inc. as having an investment objective similar to that of the fund. The box within each chart shows the 25th percentile return (bottom of box) and the 75th percentile return (top of box) of the Lipper peer group. Returns shown above the box are in the first quartile and returns shown below the box are in the fourth quartile. The percentage beaten number noted below each chart corresponds to the percentile box and represents the percentage of funds in the Lipper peer group whose performance was equal to or lower than that of the fund. For each fund (other than Consumer Discretionary Portfolio), the fund's proprietary custom index is an index developed and periodically revised by FMR that is a market-capitalization weighted index of securities that meet the fund's 80% name test.
Consumer Discretionary Portfolio
The Board reviewed the fund's relative investment performance against its Lipper peer group and stated that the performance of the fund was in the third quartile for the one-year period and the fourth quartile for the three- and five-year periods. The Board noted that FMR does not consider that Lipper peer group to be a meaningful comparison for the fund, however, because the peer group includes funds that focus on different industries and sectors than the fund. The Board also stated that the relative investment performance of the fund compared favorably to its benchmark for the one- and three-year periods, although the fund's five-year cumulative total return was lower than its benchmark.
Semiannual Report
Consumer Staples Portfolio
The Board reviewed the fund's relative investment performance against its Lipper peer group and stated that the performance of the fund was in the second quartile for the one- and five-year periods and the fourth quartile for the three-year period. The Board noted that FMR does not consider that Lipper peer group to be a meaningful comparison for the fund, however, because the peer group includes funds that focus on different industries and sectors than the fund. The Board also stated that the relative investment performance of the fund was lower than its benchmark for the three- and five-year periods, although the fund's one-year cumulative total return compared favorably to its benchmark.
Leisure Portfolio
The Board reviewed the fund's relative investment performance against its Lipper peer group and stated that the performance of the fund was in the second quartile for all the periods shown. The Board noted that FMR does not consider that Lipper peer group to be a meaningful comparison for the fund, however, because the peer group includes funds that focus on different industries and sectors than the fund. The Board also stated that the relative investment performance of the fund compared favorably to its benchmark for all the periods shown.
Semiannual Report
Board Approval of Investment Advisory Contracts and Management Fees - continued
Multimedia Portfolio
The Board reviewed the fund's relative investment performance against its Lipper peer group and stated that the performance of the fund was in the second quartile for all the periods shown. The Board noted that FMR does not consider that Lipper peer group to be a meaningful comparison for the fund, however, because the peer group includes funds that focus on different industries and sectors than the fund. The Board also stated that the relative investment performance of the fund compared favorably to its benchmark for all the periods shown.
Retailing Portfolio
The Board reviewed the fund's relative investment performance against its Lipper peer group and stated that the performance of the fund was in the second quartile for all the periods shown. The Board noted that FMR does not consider that Lipper peer group to be a meaningful comparison for the fund, however, because the peer group includes funds that focus on different industries and sectors than the fund. The Board also stated that the relative investment performance of the fund was lower than its benchmark for the three- and five-year periods, although the fund's one-year cumulative total return compared favorably to its benchmark.
The Board considered that FMR has taken steps to refocus and strengthen equity research, equity portfolio management, and compliance. The Board noted with favor FMR's reorganization of its senior management team in 2005 and FMR's dedication of additional resources to investment research, and participated in the process that led to those changes.
Semiannual Report
Based on its review, and giving particular weight to the nature and quality of the resources dedicated by the Investment Advisers to maintain and improve relative performance, the Board concluded that the nature, extent, and quality of the services provided to each fund will benefit each fund's shareholders, particularly in light of the Board's view that each fund's shareholders benefit from investing in a fund that is part of a large family of funds offering a variety of investment disciplines and services.
Competitiveness of Management Fee and Total Fund Expenses. The Board considered each fund's management fee and total expenses compared to "mapped groups" of competitive funds and classes. Fidelity creates "mapped groups" by combining similar Lipper investment objective categories that have comparable management fee characteristics. Combining Lipper investment objective categories aids the Board's management fee and total expense comparisons by broadening the competitive group used for comparison and by reducing the number of universes to which various Fidelity funds are compared.
The Board considered two proprietary management fee comparisons for the 12-month periods 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" and, for the reasons explained above, is broader than the Lipper peer group used by the Board for performance comparisons. The Total Mapped Group comparison focuses on a fund's standing relative to the total universe of comparable funds available to investors, in terms of gross management fees before expense reimbursements or caps. "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 TMG % of 4% means that 96% of the funds in the Total Mapped Group had higher management fees than a fund. The "Asset-Size Peer Group" (ASPG) comparison focuses on a fund's standing relative to non-Fidelity funds similar in size to the fund within the Total Mapped Group. The ASPG represents at least 15% of the funds in the Total Mapped Group with comparable asset size and management fee characteristics, 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 ranked, is also included in the charts and considered by the Board.
Consumer Discretionary Portfolio
Semiannual Report
Board Approval of Investment Advisory Contracts and Management Fees - continued
Consumer Staples Portfolio
Leisure Portfolio
Semiannual Report
Multimedia Portfolio
Retailing Portfolio
The Board noted that each fund's management fee ranked below the median of its Total Mapped Group and below the median of its ASPG for 2005.
Based on its review, the Board concluded that each fund's management fee was fair and reasonable in light of the services that the fund receives and the other factors considered.
In its review of each fund's total expenses, 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 the effects of any waivers and reimbursements on fees and expenses. As part of its review, the Board also considered current and historical total expenses 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 expenses ranked below its competitive median for 2005.
In its review of total expenses, the Board also considered Fidelity fee structures and other information on clients that FMR and its affiliates service in other competitive markets, such as other mutual funds advised or subadvised by FMR or its affiliates, pension plan clients, and other institutional clients.
Semiannual Report
Board Approval of Investment Advisory Contracts and Management Fees - continued
Based on its review, the Board concluded that each fund's total expenses were 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 each fund and its shareholders. The Board also considered the level of Fidelity's profits in respect of all the Fidelity funds.
On an annual basis, FMR presents to the Board Fidelity's profitability for each fund. Fidelity calculates the profitability for each fund, as well as aggregate profitability for groups of Fidelity funds and all Fidelity funds, using a series of detailed revenue and cost allocation methodologies which originate with the audited books and records of Fidelity. The Audit Committee of the Board reviews any significant changes from the prior year's methodologies.
PricewaterhouseCoopers LLP (PwC), independent registered 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 results of Fidelity's profitability analysis. 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 surrounding the mathematical accuracy of fund profitability and its conformity to allocation methodologies. After considering PwC's reports issued under the engagement and information provided by Fidelity, the Board believes that while other allocation methods may also be reasonable, Fidelity's profitability methodologies are reasonable in all material respects.
The Board has also reviewed Fidelity's non-fund businesses and any 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 determined that the amount of profit is a fair entrepreneurial profit for the management of each fund.
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 through increased services to the fund, through waivers or reimbursements, or through fee or expense reductions, including reductions that occur through operation of the transfer agent agreement. The transfer agent fee varies in part based on the number of accounts in each fund. If the number of accounts decreases or the average account size increases, the overall transfer agent fee rate decreases.
The Board recognized that each fund's management contract incorporates a "group fee" structure, which provides for lower fee rates as total fund assets under FMR's management increase, and for higher fee rates as total fund assets under FMR's management decrease. The Board considered that the group fee is designed to deliver the benefits of economies of scale to fund shareholders when total fund 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 achieve a certain level of economies of scale as assets under FMR's management increase at the fund complex level, regardless of whether Fidelity achieves any such economies of scale.
The Board further concluded that any potential economies of scale are being shared between fund shareholders and Fidelity in an appropriate manner.
Additional Information Requested by the Board. In order to develop fully the factual basis for consideration of the Advisory Contracts, the Board requested additional information on several topics, including (i) Fidelity's fund profitability methodology and profitability trends within certain funds; (ii) portfolio manager compensation; (iii) the extent to which any economies of scale exist and are shared between the funds and Fidelity; (iv) the total expenses of certain funds and classes relative to competitors, including the extent to which the expenses of certain funds have been or could be capped; (v) fund performance trends; and (vi) Fidelity's fee structures, including use of performance fees.
Based on its evaluation of all of the conclusions noted above, and after considering all material factors, the Board ultimately concluded that the advisory fee structures are fair and reasonable, and that each fund's Advisory Contracts should be renewed.
Semiannual Report
Managing Your Investments
Fidelity offers several ways to conveniently manage your personal investments via your telephone or PC. You can access your account information, conduct trades and research your investments 24 hours a day.
By Phone
Fidelity Automated Service Telephone provides a single toll-free number to access account balances, positions, quotes and trading. It's easy to navigate the service, and on your first call, the system will help you create a personal identification number (PIN) for security.
(phone_graphic)
Fidelity Automated Service Telephone (FAST®)
1-800-544-5555
Press
1 For mutual fund and brokerage trading.
2 For quotes.*
3 For account balances and holdings.
4 To review orders and mutual fund activity.
5 To change your PIN.
*0 To speak to a Fidelity representative.
By PC
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Semiannual Report
Semiannual Report
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Fidelity®
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Health Care Sector
Biotechnology
Health Care
Medical Delivery
Medical Equipment and Systems
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Semiannual Report
August 31, 2006
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Contents
Chairman's Message | ||
Shareholder Expense Example | ||
Fund Updates* | ||
Health Care Sector | ||
Biotechnology | ||
Health Care | ||
Medical Delivery | ||
Medical Equipment and Systems | ||
Pharmaceuticals | ||
Notes to Financial Statements | ||
Proxy Voting Results | ||
Board Approval of Investment Advisory Contracts and Management Fees |
*Fund updates for each Select Portfolio include Investment Changes, Investments, and Financial Statements.
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit www.fidelity.com/proxyvotingresults or visit the Securities and Exchange Commission's (SEC) web site at 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 Corp. or an affiliated company.
This report and the financial statements contained herein are submitted for the general information of the shareholders of the funds. This report is not authorized for distribution to prospective investors in the funds unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent quarterly holdings report, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com/holdings.
NOT FDIC INSURED · MAY LOSE VALUE · NO BANK GUARANTEE
Neither the funds nor Fidelity Distributors Corporation is a bank.
Semiannual Report
Chairman's Message
(Photograph of Edward C. Johnson 3d.)
Dear Shareholder:
Stock and bond markets around the world have seen largely positive results year to date, although weakness in the technology sector and growth stocks in general have tempered performance. While financial markets are always unpredictable, there are a number of time-tested principles that can put the historical odds in your favor.
One of the basic tenets is to invest for the long term. Over time, riding out the markets' inevitable ups and downs has proven much more effective than selling into panic or chasing the hottest trend. Even missing only a few of the markets' best days can significantly diminish investor returns. Patience also affords the benefits of compounding - of earning interest on additional income or reinvested dividends and capital gains. There are tax advantages and cost benefits to consider as well. The more you sell, the more taxes you pay, and the more you trade, the higher the costs. While staying the course doesn't eliminate risk, it can considerably lessen the effect of short-term declines.
You can further manage your investing risk through diversification. And today, more than ever, geographic diversification should be taken into account. Studies
indicate that asset allocation is the single most important determinant of a portfolio's long-term success. The right mix of stocks, bonds and cash - aligned to your particular risk tolerance and investment objective - is very important. Age-appropriate rebalancing is also an essential aspect of asset allocation. For younger investors, an emphasis on equities - which historically have been the best performing asset class over time - is encouraged. As investors near their specific goal, such as retirement or sending a child to college, consideration may be given to replacing volatile assets (e.g. common stocks) with more-stable fixed investments (bonds or savings plans).
A third investment principle - investing regularly - can help lower the average cost of your purchases. Investing a certain amount of money each month or quarter helps ensure you won't pay for all your shares at market highs. This strategy - known as dollar cost averaging - also reduces unconstructive "emotion" from investing, helping shareholders avoid selling weak performers just prior to an upswing, or chasing a hot performer just before a correction.
We invite you to contact us via the Internet, through our Investor Centers or over the phone. It is our privilege to provide you the information you need to make the investments that are right for you.
Sincerely,
/s/Edward C. Johnson 3d
Edward C. Johnson 3d
Semiannual Report
Shareholder Expense Example
As a shareholder of a Fund, you incur two types of costs: (1) transaction costs, including redemption fees, exchange 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 (March 1, 2006 to August 31, 2006).
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.
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.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Beginning | Ending | Expenses Paid | |
Biotechnology Portfolio | |||
Actual | $1,000.00 | $887.30 | $4.52 |
HypotheticalA | $1,000.00 | $1,020.42 | $4.84 |
Health Care Portfolio | |||
Actual | $1,000.00 | $1,000.90 | $4.49 |
HypotheticalA | $1,000.00 | $1,020.72 | $4.53 |
Medical Delivery Portfolio | |||
Actual | $1,000.00 | $950.20 | $4.72 |
HypotheticalA | $1,000.00 | $1,020.37 | $4.89 |
Medical Equipment and Systems Portfolio | |||
Actual | $1,000.00 | $999.80 | $4.74 |
HypotheticalA | $1,000.00 | $1,020.47 | $4.79 |
Pharmaceuticals Portfolio | |||
Actual | $1,000.00 | $1,054.70 | $5.44 |
HypotheticalA | $1,000.00 | $1,019.91 | $5.35 |
A5% return per year before expenses
*Expenses are equal to each Fund's annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period).
Annualized | |
Biotechnology Portfolio | .95% |
Health Care Portfolio | .89% |
Medical Delivery Portfolio | .96% |
Medical Equipment and Systems Portfolio | .94% |
Pharmaceuticals Portfolio | 1.05% |
Semiannual Report
Investment Changes
Top Ten Stocks as of August 31, 2006 | ||
% of fund's | % of fund's net assets | |
Biogen Idec, Inc. | 6.8 | 6.3 |
Celgene Corp. | 6.8 | 6.3 |
Genentech, Inc. | 5.9 | 6.3 |
Gilead Sciences, Inc. | 5.8 | 5.9 |
Genzyme Corp. | 5.3 | 4.2 |
Amgen, Inc. | 5.1 | 5.5 |
MedImmune, Inc. | 4.7 | 5.0 |
Amylin Pharmaceuticals, Inc. | 4.5 | 2.8 |
Sepracor, Inc. | 3.7 | 3.9 |
Cephalon, Inc. | 3.3 | 4.7 |
51.9 | ||
Top Industries (% of fund's net assets) | |||
As of August 31, 2006 | |||
| Biotechnology | 76.7% | |
| Life Sciences Tools & Services | 10.7% | |
| Pharmaceuticals | 10.1% | |
| Health Care Equipment & Supplies | 2.1% | |
| Health Care Providers & Services | 0.2% | |
| All Others* | 0.2% | |
As of February 28, 2006 | |||
| Biotechnology | 90.0% | |
| Pharmaceuticals | 8.2% | |
| Health Care Equipment & Supplies | 1.2% | |
| All Others* | 0.6% | |
 | |||
*Includes short-term investments and net other assets. |
Prior period industry classifications reflect the categories in place as of the date indicated and have not been adjusted to reflect current industry classifications. |
Semiannual Report
Biotechnology Portfolio
Investments August 31, 2006 (Unaudited)
Showing Percentage of Net Assets
Common Stocks - 99.6% | |||
Shares | Value (Note 1) | ||
BIOTECHNOLOGY - 76.5% | |||
Biotechnology - 76.5% | |||
Acadia Pharmaceuticals, Inc. (a)(d) | 589,500 | $5,105,070 | |
Alexion Pharmaceuticals, Inc. (a) | 1,062,200 | 39,885,610 | |
Alkermes, Inc. (a)(d) | 1,096,557 | 17,928,707 | |
Alnylam Pharmaceuticals, Inc. (a) | 279,100 | 3,633,882 | |
Altus Pharmaceuticals, Inc. | 116,270 | 1,688,240 | |
Amgen, Inc. (a)(d) | 1,088,000 | 73,907,840 | |
Amylin Pharmaceuticals, Inc. (a)(d) | 1,449,398 | 65,701,211 | |
Arena Pharmaceuticals, Inc. (a)(d) | 302,900 | 3,716,583 | |
Biogen Idec, Inc. (a) | 2,256,742 | 99,612,593 | |
BioMarin Pharmaceutical, Inc. (a)(d) | 1,414,000 | 23,528,960 | |
Celgene Corp. (a) | 2,441,334 | 99,337,880 | |
Cephalon, Inc. (a)(d) | 846,240 | 48,252,605 | |
Combinatorx, Inc. (d) | 353,100 | 2,665,905 | |
Cubist Pharmaceuticals, Inc. (a) | 442,400 | 10,378,704 | |
Genentech, Inc. (a)(d) | 1,033,500 | 85,284,420 | |
Genomic Health, Inc. | 224,400 | 3,177,504 | |
Genzyme Corp. (a) | 1,168,800 | 77,409,624 | |
Gilead Sciences, Inc. (a) | 1,329,800 | 84,309,320 | |
Human Genome Sciences, Inc. (a)(d) | 1,855,800 | 20,840,634 | |
ICOS Corp. (a) | 425,600 | 10,461,248 | |
ImClone Systems, Inc. (a) | 193,000 | 5,770,700 | |
Isis Pharmaceuticals, Inc. (a)(d) | 473,000 | 3,613,720 | |
Ligand Pharmaceuticals, Inc. Class B (a)(d) | 542,600 | 5,501,964 | |
MannKind Corp. (a)(d) | 614,600 | 11,320,932 | |
Martek Biosciences (a)(d) | 332,500 | 9,998,275 | |
Medarex, Inc. (a) | 1,035,800 | 11,124,492 | |
MedImmune, Inc. (a) | 2,493,720 | 68,926,421 | |
Momenta Pharmaceuticals, Inc. (a)(d) | 322,092 | 5,111,600 | |
Myogen, Inc. (a) | 849,208 | 29,552,438 | |
Myriad Genetics, Inc. (a) | 334,600 | 8,462,034 | |
Neurocrine Biosciences, Inc. (a) | 222,200 | 2,575,298 | |
Novacea, Inc. | 120,500 | 782,045 | |
ONYX Pharmaceuticals, Inc. (a) | 100 | 1,511 | |
OSI Pharmaceuticals, Inc. (a)(d) | 1,089,800 | 40,616,846 | |
PDL BioPharma, Inc. (a) | 1,329,200 | 26,185,240 | |
Pharmion Corp. (a)(d) | 300,600 | 5,585,148 | |
Regeneron Pharmaceuticals, Inc. (a) | 445,800 | 7,079,304 | |
Renovis, Inc. (a)(d) | 418,000 | 6,161,320 | |
SGX Pharmaceuticals, Inc. | 136,725 | 334,976 | |
Tanox, Inc. (a) | 679,200 | 10,194,792 | |
Tercica, Inc. (a) | 422,200 | 2,828,740 | |
Theravance, Inc. (a) | 455,500 | 12,088,970 | |
United Therapeutics Corp. (a) | 67,300 | 3,673,907 | |
Vertex Pharmaceuticals, Inc. (a)(d) | 1,380,200 | 47,547,890 | |
ViaCell, Inc. (a) | 17,500 | 71,225 | |
Zymogenetics, Inc. (a) | 700,100 | 13,539,934 | |
1,115,476,262 | |||
Shares | Value (Note 1) | ||
HEALTH CARE EQUIPMENT & SUPPLIES - 2.1% | |||
Health Care Equipment - 1.3% | |||
IDEXX Laboratories, Inc. (a) | 206,900 | $19,036,869 | |
Health Care Supplies - 0.8% | |||
Gen-Probe, Inc. (a) | 236,800 | 11,510,848 | |
TOTAL HEALTH CARE EQUIPMENT & SUPPLIES | 30,547,717 | ||
HEALTH CARE PROVIDERS & SERVICES - 0.2% | |||
Health Care Services - 0.2% | |||
Oracle Healthcare Acquisition Corp. unit | 267,600 | 2,274,600 | |
LIFE SCIENCES TOOLS & SERVICES - 10.7% | |||
Life Science Tools & Services - 10.7% | |||
Affymetrix, Inc. (a)(d) | 170,960 | 3,643,158 | |
Albany Molecular Research, Inc. (a) | 373,500 | 3,660,300 | |
Applera Corp.: | |||
- Applied Biosystems Group | 1,236,400 | 37,895,660 | |
- Celera Genomics Group (a) | 1,065,800 | 14,835,936 | |
Bruker BioSciences Corp. (a) | 318,900 | 2,251,434 | |
Charles River Laboratories International, Inc. (a) | 648,200 | 26,342,848 | |
Diversa Corp. (a) | 156,500 | 1,439,800 | |
Exelixis, Inc. (a) | 944,800 | 9,192,904 | |
Invitrogen Corp. (a) | 551,254 | 33,543,806 | |
Luminex Corp. (a) | 328,900 | 6,252,389 | |
Techne Corp. (a) | 347,000 | 17,662,300 | |
156,720,535 | |||
PHARMACEUTICALS - 10.1% | |||
Pharmaceuticals - 10.1% | |||
Abraxis BioScience, Inc. (a) | 30,500 | 758,840 | |
Adams Respiratory Therapeutics, Inc. (a) | 385,400 | 15,724,320 | |
Adolor Corp. (a) | 29,349 | 732,258 | |
Barrier Therapeutics, Inc. (a)(d) | 239,300 | 1,411,870 | |
Cardiome Pharma Corp. (a) | 450,900 | 6,241,536 | |
Cypress Bioscience, Inc. (a) | 525,900 | 3,786,480 | |
Elan Corp. PLC sponsored ADR (a) | 1,401,600 | 23,168,448 | |
Kos Pharmaceuticals, Inc. (a) | 408,608 | 19,980,931 | |
MGI Pharma, Inc. (a) | 21,777 | 329,486 | |
New River Pharmaceuticals, Inc. (a)(d) | 547,300 | 14,273,584 | |
Pozen, Inc. (a)(d) | 54,800 | 680,068 | |
Sepracor, Inc. (a)(d) | 1,153,300 | 54,216,633 | |
Somaxon Pharmaceuticals, Inc. | 56,600 | 789,570 | |
Xenoport, Inc. (a) | 209,900 | 4,605,206 | |
146,699,230 | |||
TOTAL COMMON STOCKS (Cost $1,250,296,881) | 1,451,718,344 | ||
Preferred Stocks - 0.2% | |||
Shares | Value (Note 1) | ||
Convertible Preferred Stocks - 0.2% | |||
BIOTECHNOLOGY - 0.2% | |||
Biotechnology - 0.2% | |||
Xenon Pharmaceuticals, Inc. Series E (a)(e) | 981,626 | $3,416,058 | |
Nonconvertible Preferred Stocks - 0.0% | |||
LIFE SCIENCES TOOLS & SERVICES - 0.0% | |||
Life Science Tools & Services - 0.0% | |||
GeneProt, Inc. Series A (a)(e) | 180,000 | 2 | |
TOTAL PREFERRED STOCKS (Cost $7,698,817) | 3,416,060 | ||
Money Market Funds - 17.1% | |||
Fidelity Securities Lending Cash Central Fund, 5.33% (b)(c) | 248,639,525 | 248,639,525 | |
TOTAL INVESTMENT PORTFOLIO - 116.9% (Cost $1,506,635,223) | 1,703,773,929 | ||
NET OTHER ASSETS - (16.9)% | (246,430,099) | ||
NET ASSETS - 100% | $1,457,343,830 | ||
Legend |
(a)Non-income producing |
(b)Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. |
(c)Investment made with cash collateral received from securities on loan. |
(d)Security or a portion of the security is on loan at period end. |
(e)Restricted securities - Investment in securities not registered under the Securities Act of 1933 (excluding 144A issues). At the end of the period, the value of restricted securities (excluding 144A issues) amounted to $3,416,060 or 0.2% of net assets. |
Additional information on each holding is as follows: |
Security | Acquisition Date | Acquisition Cost |
GeneProt, Inc. Series A | 7/7/00 | $974,679 |
Xenon Pharmaceuticals, Inc. Series E | 3/23/01 | $6,724,138 |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the fund from the affiliated Central funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $93,485 |
Fidelity Securities Lending Cash Central Fund | 826,264 |
Total | $919,749 |
Income Tax Information |
At February 28, 2006, the fund had a capital loss carryforward of approximately $650,622,260 all of which will expire on February 28, 2011. |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Biotechnology Portfolio
Financial Statements
Statement of Assets and Liabilities
August 31, 2006 (Unaudited) | ||
Assets | ||
Investment in securities, at value (including securities loaned of $242,996,738) - See accompanying schedule: Unaffiliated issuers (cost $1,257,995,698) | $1,455,134,404 | |
Affiliated Central Funds (cost $248,639,525) | 248,639,525 | |
Total Investments (cost $1,506,635,223) | $1,703,773,929 | |
Receivable for investments sold | 4,127,039 | |
Receivable for fund shares sold | 1,975,127 | |
Dividends receivable | 52,547 | |
Interest receivable | 9,810 | |
Prepaid expenses | 1,642 | |
Other receivables | 144,842 | |
Total assets | 1,710,084,936 | |
Liabilities | ||
Payable to custodian bank | $213,948 | |
Payable for investments purchased | 755,809 | |
Payable for fund shares redeemed | 1,936,792 | |
Accrued management fee | 683,297 | |
Other affiliated payables | 444,114 | |
Other payables and accrued expenses | 67,621 | |
Collateral on securities loaned, at value | 248,639,525 | |
Total liabilities | 252,741,106 | |
Net Assets | $1,457,343,830 | |
Net Assets consist of: | ||
Paid in capital | $1,902,833,667 | |
Accumulated net investment loss | (6,454,646) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (636,173,897) | |
Net unrealized appreciation (depreciation) on investments | 197,138,706 | |
Net Assets, for 24,130,859 shares outstanding | $1,457,343,830 | |
Net Asset Value, offering price and redemption price per share ($1,457,343,830 ÷ 24,130,859 shares) | $60.39 | |
Statement of Operations
Six months ended August 31, 2006 (Unaudited) | ||
Investment Income | ||
Dividends | $109,408 | |
Interest | 49 | |
Income from affiliated Central Funds (including $826,264 from security lending) | 919,749 | |
Total income | 1,029,206 | |
Expenses | ||
Management fee | $4,493,606 | |
Transfer agent fees | 2,472,477 | |
Accounting and security lending fees | 341,604 | |
Independent trustees' compensation | 2,832 | |
Custodian fees and expenses | 41,541 | |
Registration fees | 53,835 | |
Audit | 20,112 | |
Legal | 15,845 | |
Interest | 4,708 | |
Miscellaneous | 55,355 | |
Total expenses before reductions | 7,501,915 | |
Expense reductions | (21,898) | 7,480,017 |
Net investment income (loss) | (6,450,811) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers | 28,527,233 | |
Foreign currency transactions | (6,319) | |
Total net realized gain (loss) | 28,520,914 | |
Change in net unrealized appreciation (depreciation) on: Investment securities | (231,497,024) | |
Assets and liabilities in foreign currencies | 4,275 | |
Total change in net unrealized appreciation (depreciation) | (231,492,749) | |
Net gain (loss) | (202,971,835) | |
Net increase (decrease) in net assets resulting from operations | $(209,422,646) | |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Biotechnology Portfolio
Financial Statements - continued
Statement of Changes in Net Assets
Six months ended August 31, 2006 (Unaudited) | Year ended | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $(6,450,811) | $(13,520,627) |
Net realized gain (loss) | 28,520,914 | 158,681,966 |
Change in net unrealized appreciation (depreciation) | (231,492,749) | 384,296,736 |
Net increase (decrease) in net assets resulting from operations | (209,422,646) | 529,458,075 |
Share transactions | 204,329,020 | 414,412,377 |
Cost of shares redeemed | (349,232,447) | (619,998,822) |
Net increase (decrease) in net assets resulting from share transactions | (144,903,427) | (205,586,445) |
Redemption fees | 177,571 | 220,761 |
Total increase (decrease) in net assets | (354,148,502) | 324,092,391 |
Net Assets | ||
Beginning of period | 1,811,492,332 | 1,487,399,941 |
End of period (including accumulated net investment loss of $6,454,646 and accumulated net investment loss of $3,835, respectively) | $1,457,343,830 | $1,811,492,332 |
Other Information Shares | ||
Sold | 3,217,568 | 7,153,448 |
Redeemed | (5,703,819) | (10,864,160) |
Net increase (decrease) | (2,486,251) | (3,710,712) |
Financial Highlights
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Investment Changes
Top Ten Stocks as of August 31, 2006 | ||
% of fund's | % of fund's net assets | |
Pfizer, Inc. | 9.2 | 8.8 |
Johnson & Johnson | 7.8 | 4.2 |
Merck & Co., Inc. | 5.1 | 4.4 |
UnitedHealth Group, Inc. | 4.9 | 5.1 |
Amgen, Inc. | 4.6 | 4.1 |
Genentech, Inc. | 4.3 | 3.5 |
Wyeth | 3.9 | 5.2 |
Allergan, Inc. | 2.8 | 2.3 |
WellPoint, Inc. | 2.8 | 2.5 |
Baxter International, Inc. | 2.6 | 1.3 |
48.0 | ||
Top Industries (% of fund's net assets) | |||
As of August 31, 2006 | |||
| Pharmaceuticals | 39.4% | |
| Health Care Providers & Services | 23.1% | |
| Biotechnology | 15.1% | |
| Health Care Equipment & Supplies | 14.2% | |
| Life Sciences Tools & Services | 2.1% | |
| All Others* | 6.1% | |
As of February 28, 2006 | |||
| Pharmaceuticals | 32.8% | |
| Health Care Providers & Services | 29.2% | |
 | Health Care Equipment & Supplies | 17.6% | |
| Biotechnology | 16.9% | |
| Personal Products | 1.0% | |
| All Others* | 2.5% | |
*Includes short-term investments and net other assets. |
Prior period industry classifications reflect the categories in place as of the date indicated and have not been adjusted to reflect current industry classifications. |
Semiannual Report
Health Care Portfolio
Investments August 31, 2006 (Unaudited)
Showing Percentage of Net Assets
Common Stocks - 96.8% | |||
Shares | Value (Note 1) | ||
BIOTECHNOLOGY - 15.1% | |||
Biotechnology - 15.1% | |||
Acadia Pharmaceuticals, Inc. (a) | 100,000 | $866,000 | |
Actelion Ltd. (Reg.) (a) | 17,000 | 2,276,428 | |
Alizyme PLC (a) | 71,600 | 159,514 | |
Alnylam Pharmaceuticals, Inc. (a) | 184,800 | 2,406,096 | |
Altus Pharmaceuticals, Inc. | 49,400 | 717,288 | |
Amgen, Inc. (a) | 1,497,904 | 101,752,619 | |
Amylin Pharmaceuticals, Inc. (a) | 187,900 | 8,517,507 | |
Biogen Idec, Inc. (a) | 360,800 | 15,925,712 | |
BioSphere Medical, Inc. | 71,500 | 455,455 | |
Celgene Corp. (a) | 481,700 | 19,600,373 | |
Cephalon, Inc. (a) | 68,600 | 3,911,572 | |
DOV Pharmaceutical, Inc. (a) | 49,100 | 46,645 | |
DUSA Pharmaceuticals, Inc. (a) | 250,138 | 995,549 | |
Genentech, Inc. (a) | 1,141,700 | 94,213,084 | |
Genzyme Corp. (a) | 208,000 | 13,775,840 | |
Gilead Sciences, Inc. (a) | 354,400 | 22,468,960 | |
MannKind Corp. (a) | 20,300 | 373,926 | |
MedImmune, Inc. (a) | 215,770 | 5,963,883 | |
Millennium Pharmaceuticals, Inc. (a) | 303,200 | 3,292,752 | |
Myogen, Inc. (a) | 39,900 | 1,388,520 | |
Neopharm, Inc. (a) | 8,400 | 41,748 | |
OSI Pharmaceuticals, Inc. (a) | 505,000 | 18,821,350 | |
PDL BioPharma, Inc. (a) | 148,000 | 2,915,600 | |
Solexa, Inc. (a) | 105,685 | 919,460 | |
Telik, Inc. (a) | 65,000 | 1,158,950 | |
Tercica, Inc. (a)(d) | 680,700 | 4,560,690 | |
Theravance, Inc. (a) | 19,900 | 528,146 | |
Vertex Pharmaceuticals, Inc. (a) | 120,100 | 4,137,445 | |
332,191,112 | |||
CHEMICALS - 0.6% | |||
Diversified Chemicals - 0.1% | |||
Bayer AG sponsored ADR | 44,000 | 2,182,400 | |
Fertilizers & Agricultural Chemicals - 0.5% | |||
Agrium, Inc. | 72,200 | 1,676,806 | |
Monsanto Co. | 26,300 | 1,247,672 | |
Mosaic Co. | 81,300 | 1,320,312 | |
Potash Corp. of Saskatchewan, Inc. | 22,500 | 2,204,325 | |
Sinochem Hong Kong Holding Ltd. | 6,500,000 | 2,381,947 | |
Syngenta AG (Switzerland) | 20,000 | 2,951,000 | |
11,782,062 | |||
TOTAL CHEMICALS | 13,964,462 | ||
COMMERCIAL SERVICES & SUPPLIES - 0.3% | |||
Diversified Commercial & Professional Services - 0.2% | |||
FTI Consulting, Inc. (a) | 190,000 | 4,244,600 | |
Shares | Value (Note 1) | ||
Human Resource & Employment Services - 0.1% | |||
On Assignment, Inc. (a) | 136,058 | $1,296,633 | |
Watson Wyatt Worldwide, Inc. Class A | 30,000 | 1,189,800 | |
2,486,433 | |||
Office Services & Supplies - 0.0% | |||
Mine Safety Appliances Co. | 100 | 3,545 | |
TOTAL COMMERCIAL SERVICES & SUPPLIES | 6,734,578 | ||
DIVERSIFIED CONSUMER SERVICES - 0.1% | |||
Specialized Consumer Services - 0.1% | |||
Service Corp. International (SCI) | 178,700 | 1,501,080 | |
FOOD & STAPLES RETAILING - 0.2% | |||
Food Retail - 0.2% | |||
Safeway, Inc. | 103,100 | 3,188,883 | |
FOOD PRODUCTS - 0.2% | |||
Packaged Foods & Meats - 0.2% | |||
Groupe Danone | 35,700 | 4,912,351 | |
Koninklijke Numico NV | 9,400 | 436,689 | |
5,349,040 | |||
HEALTH CARE EQUIPMENT & SUPPLIES - 14.2% | |||
Health Care Equipment - 10.2% | |||
Advanced Medical Optics, Inc. (a) | 82,500 | 3,972,375 | |
Baxter International, Inc. | 1,289,500 | 57,228,010 | |
Becton, Dickinson & Co. | 322,000 | 22,443,400 | |
BioLase Technology, Inc. (a) | 107,900 | 705,666 | |
Boston Scientific Corp. (a) | 1,525,000 | 26,596,000 | |
C.R. Bard, Inc. | 204,100 | 15,344,238 | |
Cytyc Corp. (a) | 213,800 | 5,107,682 | |
Edwards Lifesciences Corp. (a) | 57,800 | 2,698,682 | |
Hospira, Inc. (a) | 192,840 | 7,063,729 | |
Imaging Dynamics Co. Ltd. (a) | 764,600 | 2,455,741 | |
Intuitive Surgical, Inc. (a) | 38,800 | 3,662,720 | |
Kinetic Concepts, Inc. (a) | 44,500 | 1,406,200 | |
Medtronic, Inc. (d) | 855,460 | 40,121,074 | |
Mentor Corp. | 56,300 | 2,732,802 | |
Optos PLC | 620,700 | 1,944,235 | |
PhotoMedex, Inc. (a) | 284,089 | 400,565 | |
ResMed, Inc. (a) | 99,900 | 4,063,932 | |
Respironics, Inc. (a) | 99,100 | 3,657,781 | |
Restore Medical, Inc. | 144,000 | 1,008,000 | |
St. Jude Medical, Inc. (a) | 361,400 | 13,158,574 | |
Stereotaxis, Inc. (a) | 375,371 | 4,177,879 | |
The Spectranetics Corp. (a) | 7,200 | 78,480 | |
Varian Medical Systems, Inc. (a) | 100,100 | 5,335,330 | |
225,363,095 | |||
Health Care Supplies - 4.0% | |||
Alcon, Inc. | 382,700 | 45,078,233 | |
Arrow International, Inc. | 64,198 | 2,074,237 | |
Cooper Companies, Inc. | 57,800 | 2,888,844 | |
DENTSPLY International, Inc. | 98,000 | 3,192,840 | |
Common Stocks - continued | |||
Shares | Value (Note 1) | ||
HEALTH CARE EQUIPMENT & SUPPLIES - CONTINUED | |||
Health Care Supplies - continued | |||
DJO, Inc. (a) | 129,000 | $4,975,530 | |
Gen-Probe, Inc. (a) | 59,400 | 2,887,434 | |
Immucor, Inc. (a) | 142,000 | 2,949,340 | |
Inverness Medical Innovations, Inc. (a) | 253,565 | 8,562,890 | |
Inverness Medical Innovations, Inc. (a)(e) | 42,205 | 1,418,088 | |
Inverness Medical Innovations, Inc. (a)(e) | 12,500 | 378,000 | |
Lifecore Biomedical, Inc. (a) | 123,500 | 1,887,080 | |
Nutraceutical International Corp. (a) | 138,600 | 1,943,172 | |
PolyMedica Corp. | 225,000 | 9,132,750 | |
87,368,438 | |||
TOTAL HEALTH CARE EQUIPMENT & SUPPLIES | 312,731,533 | ||
HEALTH CARE PROVIDERS & SERVICES - 23.1% | |||
Health Care Distributors & Services - 3.7% | |||
AmerisourceBergen Corp. | 209,200 | 9,238,272 | |
Cardinal Health, Inc. | 551,700 | 37,195,614 | |
Henry Schein, Inc. (a) | 169,700 | 8,462,939 | |
McKesson Corp. | 429,300 | 21,808,440 | |
Patterson Companies, Inc. (a) | 176,600 | 5,442,812 | |
82,148,077 | |||
Health Care Facilities - 4.7% | |||
Acibadem Saglik Hizmetleri AS | 316,340 | 3,606,799 | |
Apollo Hospitals Enterprise Ltd. | 231,375 | 2,194,924 | |
Brookdale Senior Living, Inc. | 770,000 | 36,829,100 | |
Bumrungrad Hospital PCL (For. Reg.) | 5,478,400 | 5,284,513 | |
Capital Senior Living Corp. (a) | 623,100 | 5,975,529 | |
Community Health Systems, Inc. (a) | 289,600 | 11,224,896 | |
Emeritus Corp. (a) | 108,000 | 2,125,440 | |
HCA, Inc. | 433,300 | 21,370,356 | |
Manor Care, Inc. | 100,200 | 5,230,440 | |
NovaMed Eyecare, Inc. (a) | 12,500 | 97,750 | |
Sun Healthcare Group, Inc. (a) | 66,500 | 702,905 | |
U.S. Physical Therapy, Inc. (a) | 63,404 | 927,601 | |
United Surgical Partners International, Inc. (a) | 135,300 | 3,818,166 | |
VCA Antech, Inc. (a) | 88,300 | 3,127,586 | |
102,516,005 | |||
Health Care Services - 5.2% | |||
Caremark Rx, Inc. | 376,300 | 21,802,822 | |
Chemed Corp. | 235,700 | 9,288,937 | |
DaVita, Inc. (a) | 127,500 | 7,440,900 | |
Diagnosticos Da America SA (a) | 462,500 | 9,021,339 | |
Emergency Medical Services Corp. Class A | 151,800 | 2,398,440 | |
Express Scripts, Inc. (a) | 154,500 | 12,990,360 | |
HAPC, Inc. unit | 627,500 | 3,727,350 | |
Health Grades, Inc. (a) | 874,920 | 3,867,146 | |
HMS Holdings Corp. (a) | 15,900 | 231,027 | |
Medco Health Solutions, Inc. (a) | 365,500 | 23,161,735 | |
Shares | Value (Note 1) | ||
Omnicare, Inc. | 316,500 | $14,340,615 | |
QMed, Inc. (a) | 25,000 | 116,000 | |
ResCare, Inc. (a) | 279,511 | 5,604,196 | |
113,990,867 | |||
Managed Health Care - 9.5% | |||
Aetna, Inc. | 202,400 | 7,543,448 | |
Coventry Health Care, Inc. (a) | 111,700 | 6,058,608 | |
Health Net, Inc. (a) | 234,100 | 9,787,721 | |
Humana, Inc. (a) | 208,400 | 12,697,812 | |
Magellan Health Services, Inc. (a) | 37,200 | 1,788,204 | |
Sierra Health Services, Inc. (a) | 16,500 | 707,850 | |
UnitedHealth Group, Inc. | 2,079,320 | 108,020,674 | |
Wellcare Health Plans, Inc. (a) | 10,800 | 605,664 | |
WellPoint, Inc. (a) | 787,200 | 60,937,152 | |
208,147,133 | |||
TOTAL HEALTH CARE PROVIDERS & SERVICES | 506,802,082 | ||
HEALTH CARE TECHNOLOGY - 0.7% | |||
Healthcare Technology - 0.7% | |||
Cerner Corp. (a) | 65,100 | 2,998,506 | |
Eclipsys Corp. (a) | 343,000 | 5,865,300 | |
Emdeon Corp. (a) | 163,430 | 1,936,646 | |
Systems Xcellence, Inc. (a) | 17,875 | 269,589 | |
WebMD Health Corp. Class A (d) | 120,989 | 4,471,753 | |
15,541,794 | |||
HOTELS, RESTAURANTS & LEISURE - 0.2% | |||
Leisure Facilities - 0.2% | |||
Life Time Fitness, Inc. (a) | 103,900 | 4,668,227 | |
INSURANCE - 0.0% | |||
Life & Health Insurance - 0.0% | |||
Prudential Financial, Inc. | 12,500 | 917,625 | |
INTERNET & CATALOG RETAIL - 0.0% | |||
Internet Retail - 0.0% | |||
NutriSystem, Inc. (a)(d) | 18,821 | 935,027 | |
LIFE SCIENCES TOOLS & SERVICES - 2.1% | |||
Life Science Tools & Services - 2.1% | |||
Affymetrix, Inc. (a) | 86,484 | 1,842,974 | |
Applera Corp. - Applied Biosystems Group | 123,278 | 3,778,471 | |
Charles River Laboratories International, Inc. (a) | 65,400 | 2,657,856 | |
Covance, Inc. (a) | 89,300 | 5,614,291 | |
Exelixis, Inc. (a) | 265,500 | 2,583,315 | |
Fisher Scientific International, Inc. (a) | 27,000 | 2,112,210 | |
Illumina, Inc. (a) | 20,700 | 697,176 | |
Invitrogen Corp. (a) | 76,700 | 4,667,195 | |
Millipore Corp. (a) | 75,330 | 4,834,679 | |
Pharmaceutical Product Development, Inc. | 89,300 | 3,404,116 | |
Common Stocks - continued | |||
Shares | Value (Note 1) | ||
LIFE SCIENCES TOOLS & SERVICES - CONTINUED | |||
Life Science Tools & Services - continued | |||
QIAGEN NV (a) | 28,800 | $416,448 | |
Thermo Electron Corp. (a) | 335,900 | 13,167,280 | |
45,776,011 | |||
PERSONAL PRODUCTS - 0.5% | |||
Personal Products - 0.5% | |||
Herbalife Ltd. (a) | 339,100 | 11,078,397 | |
PHARMACEUTICALS - 39.4% | |||
Pharmaceuticals - 39.4% | |||
Abbott Laboratories | 685,800 | 33,398,460 | |
Adams Respiratory Therapeutics, Inc. (a) | 145,805 | 5,948,844 | |
Allergan, Inc. | 535,200 | 61,312,512 | |
Altana AG sponsored ADR (d) | 3,400 | 200,600 | |
Atherogenics, Inc. (a) | 115,000 | 1,610,000 | |
Barr Pharmaceuticals, Inc. (a) | 259,800 | 14,678,700 | |
Bristol-Myers Squibb Co. | 1,180,200 | 25,669,350 | |
Eli Lilly & Co. (d) | 365,000 | 20,414,450 | |
Endo Pharmaceuticals Holdings, Inc. (a) | 234,700 | 7,752,141 | |
Forest Laboratories, Inc. (a) | 454,000 | 22,690,920 | |
Johnson & Johnson | 2,646,084 | 171,095,791 | |
Kos Pharmaceuticals, Inc. (a) | 37,603 | 1,838,787 | |
Medicis Pharmaceutical Corp. Class A | 63,800 | 1,868,702 | |
Merck & Co., Inc. | 2,781,400 | 112,785,770 | |
MGI Pharma, Inc. (a) | 90,800 | 1,373,804 | |
Mylan Laboratories, Inc. (d) | 193,600 | 3,933,952 | |
New River Pharmaceuticals, Inc. (a) | 56,500 | 1,473,520 | |
Novartis AG sponsored ADR | 193,400 | 11,047,008 | |
Pfizer, Inc. | 7,331,310 | 202,050,904 | |
Roche Holding AG (participation certificate) | 113,075 | 20,847,256 | |
Schering-Plough Corp. | 1,907,300 | 39,957,935 | |
Sepracor, Inc. (a) | 59,800 | 2,811,198 | |
Shire PLC sponsored ADR | 43,700 | 2,239,625 | |
Teva Pharmaceutical Industries Ltd. sponsored ADR | 310,000 | 10,775,600 | |
Valeant Pharmaceuticals International | 118,200 | 2,323,812 | |
Wyeth | 1,759,770 | 85,700,799 | |
865,800,440 | |||
REAL ESTATE INVESTMENT TRUSTS - 0.1% | |||
Specialized REITs - 0.1% | |||
Ventas, Inc. | 30,000 | 1,201,500 | |
TOTAL COMMON STOCKS (Cost $1,699,846,475) | 2,128,381,791 | ||
Nonconvertible Preferred Stocks - 0.0% | |||
Shares | Value (Note 1) | ||
LIFE SCIENCES TOOLS & SERVICES - 0.0% | |||
Life Science Tools & Services - 0.0% | |||
GeneProt, Inc. Series A (a)(e) | 111,000 | $1 | |
Money Market Funds - 4.3% | |||
Fidelity Cash Central Fund, 5.31% (b) | 69,973,735 | 69,973,735 | |
Fidelity Securities Lending Cash Central Fund, 5.33% (b)(c) | 24,127,675 | 24,127,675 | |
TOTAL MONEY MARKET FUNDS (Cost $94,101,410) | 94,101,410 | ||
TOTAL INVESTMENT PORTFOLIO - 101.1% (Cost $1,794,548,937) | 2,222,483,202 | ||
NET OTHER ASSETS - (1.1)% | (24,790,199) | ||
NET ASSETS - 100% | $2,197,693,003 | ||
Legend |
(a)Non-income producing |
(b)Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. |
(c)Investment made with cash collateral received from securities on loan. |
(d)Security or a portion of the security is on loan at period end. |
(e)Restricted securities - Investment in securities not registered under the Securities Act of 1933 (excluding 144A issues). At the end of the period, the value of restricted securities (excluding 144A issues) amounted to $1,796,089 or 0.1% of net assets. |
Additional information on each holding is as follows: |
Security | Acquisition Date | Acquisition Cost |
GeneProt, Inc. Series A | 7/7/00 | $601,052 |
Inverness Medical Innovations, Inc. | 2/8/06 | $1,030,224 |
Inverness Medical Innovations, Inc. | 8/17/06 | $378,125 |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the fund from the affiliated Central funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $264,972 |
Fidelity Securities Lending Cash Central Fund | 339,005 |
Total | $603,977 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Health Care Portfolio
Financial Statements
Statement of Assets and Liabilities
August 31, 2006 (Unaudited) | ||
Assets | ||
Investment in securities, at value (including securities loaned of $24,136,840) - See accompanying schedule: Unaffiliated issuers (cost $1,700,447,527) | $2,128,381,792 | |
Affiliated Central Funds (cost $94,101,410) | 94,101,410 | |
Total Investments (cost $1,794,548,937) | $2,222,483,202 | |
Receivable for investments sold | 27,409,525 | |
Receivable for fund shares sold | 1,991,627 | |
Dividends receivable | 4,706,089 | |
Interest receivable | 163,058 | |
Prepaid expenses | 2,143 | |
Other receivables | 94,784 | |
Total assets | 2,256,850,428 | |
Liabilities | ||
Payable for investments purchased | $29,217,706 | |
Payable for fund shares redeemed | 4,119,346 | |
Accrued management fee | 1,015,617 | |
Other affiliated payables | 605,622 | |
Other payables and accrued expenses | 71,459 | |
Collateral on securities loaned, at value | 24,127,675 | |
Total liabilities | 59,157,425 | |
Net Assets | $2,197,693,003 | |
Net Assets consist of: | ||
Paid in capital | $1,729,163,279 | |
Undistributed net investment income | 4,431,684 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 36,155,226 | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 427,942,814 | |
Net Assets, for 17,356,630 shares outstanding | $2,197,693,003 | |
Net Asset Value, offering price and redemption price per share ($2,197,693,003 ÷ 17,356,630 shares) | $126.62 | |
Statement of Operations
Six months ended August 31, 2006 (Unaudited) | ||
Investment Income | ||
Dividends | $13,549,077 | |
Interest | 4,720 | |
Income from affiliated Central Funds (including $339,005 from security lending) | 603,977 | |
Total income | 14,157,774 | |
Expenses | ||
Management fee | $6,147,841 | |
Transfer agent fees | 2,919,795 | |
Accounting and security lending fees | 421,016 | |
Independent trustees' compensation | 4,265 | |
Depreciation in deferred trustee compensation account | (1,008) | |
Custodian fees and expenses | 45,633 | |
Registration fees | 36,333 | |
Audit | 21,563 | |
Legal | 20,038 | |
Interest | 14,030 | |
Miscellaneous | 58,554 | |
Total expenses before reductions | 9,688,060 | |
Expense reductions | (20,020) | 9,668,040 |
Net investment income (loss) | 4,489,734 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers | 39,251,579 | |
Foreign currency transactions | (23,751) | |
Total net realized gain (loss) | 39,227,828 | |
Change in net unrealized appreciation (depreciation) on: Investment securities | (48,978,733) | |
Assets and liabilities in foreign currencies | 17,759 | |
Total change in net unrealized appreciation (depreciation) | (48,960,974) | |
Net gain (loss) | (9,733,146) | |
Net increase (decrease) in net assets resulting from operations | $(5,243,412) | |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Health Care Portfolio
Financial Statements - continued
Statement of Changes in Net Assets
Six months ended August 31, 2006 (Unaudited) | Year ended | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $4,489,734 | $(2,671,642) |
Net realized gain (loss) | 39,227,828 | 467,925,520 |
Change in net unrealized appreciation (depreciation) | (48,960,974) | (62,069,040) |
Net increase (decrease) in net assets resulting from operations | (5,243,412) | 403,184,838 |
Distributions to shareholders from net investment income | - | (592,623) |
Distributions to shareholders from net realized gain | (208,004,456) | (214,985,606) |
Total distributions | (208,004,456) | (215,578,229) |
Share transactions | 165,631,508 | 714,309,159 |
Reinvestment of distributions | 195,913,163 | 202,655,649 |
Cost of shares redeemed | (330,963,330) | (630,625,737) |
Net increase (decrease) in net assets resulting from share transactions | 30,581,341 | 286,339,071 |
Redemption fees | 36,293 | 126,010 |
Total increase (decrease) in net assets | (182,630,234) | 474,071,690 |
Net Assets | ||
Beginning of period | 2,380,323,237 | 1,906,251,547 |
End of period (including undistributed net investment income of $4,431,684 and accumulated net investment loss of $58,050, respectively) | $2,197,693,003 | $2,380,323,237 |
Other Information Shares | ||
Sold | 1,330,752 | 5,197,779 |
Issued in reinvestment of distributions | 1,579,816 | 1,471,110 |
Redeemed | (2,667,033) | (4,557,268) |
Net increase (decrease) | 243,535 | 2,111,621 |
Financial Highlights
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Investment Changes
Top Ten Stocks as of August 31, 2006 | ||
% of fund's | % of fund's net assets | |
UnitedHealth Group, Inc. | 7.8 | 9.1 |
Medco Health Solutions, Inc. | 5.2 | 6.8 |
McKesson Corp. | 5.1 | 5.2 |
WellPoint, Inc. | 5.0 | 4.3 |
HCA, Inc. | 4.4 | 0.0 |
Health Net, Inc. | 4.3 | 5.4 |
Humana, Inc. | 4.0 | 5.4 |
Express Scripts, Inc. | 3.8 | 0.0 |
Caremark Rx, Inc. | 3.6 | 4.6 |
Omnicare, Inc. | 3.4 | 6.3 |
46.6 | ||
Top Industries (% of fund's net assets) | |||
As of August 31, 2006 | |||
| Health Care Providers & Services | 72.5% | |
| Health Care Equipment & Supplies | 5.3% | |
| Diversified Consumer Services | 3.8% | |
| Pharmaceuticals | 3.3% | |
| Health Care Technology | 3.0% | |
| All Others* | 12.1% | |
As of February 28, 2006 | |||
| Health Care Providers & Services | 81.8% | |
| Diversified Consumer Services | 5.3% | |
| Health Care Equipment & Supplies | 5.2% | |
| Pharmaceuticals | 2.7% | |
| Food & Staples Retailing | 1.4% | |
| All Others* | 3.6% | |
*Includes short-term investments and net other assets. |
Prior period industry classifications reflect the categories in place as of the date indicated and have not been adjusted to reflect current industry classifications. |
Semiannual Report
Medical Delivery Portfolio
Investments August 31, 2006 (Unaudited)
Showing Percentage of Net Assets
Common Stocks - 97.4% | |||
Shares | Value (Note 1) | ||
BIOTECHNOLOGY - 2.0% | |||
Biotechnology - 2.0% | |||
Alnylam Pharmaceuticals, Inc. (a) | 28,000 | $364,560 | |
Cepheid, Inc. (a) | 70,000 | 570,500 | |
deCODE genetics, Inc. (a) | 100,000 | 564,000 | |
MannKind Corp. (a) | 6,300 | 116,046 | |
Myogen, Inc. (a) | 15,000 | 522,000 | |
OSI Pharmaceuticals, Inc. (a)(e) | 358,100 | 13,346,387 | |
Theravance, Inc. (a) | 12,800 | 339,712 | |
15,823,205 | |||
CHEMICALS - 0.0% | |||
Fertilizers & Agricultural Chemicals - 0.0% | |||
Bodisen Biotech, Inc. (a)(e) | 33,100 | 390,580 | |
COMMERCIAL SERVICES & SUPPLIES - 0.8% | |||
Diversified Commercial & Professional Services - 0.7% | |||
Advisory Board Co. (a) | 45,000 | 2,286,900 | |
FTI Consulting, Inc. (a) | 127,500 | 2,848,350 | |
5,135,250 | |||
Human Resource & Employment Services - 0.1% | |||
Kforce, Inc. (a) | 69,700 | 858,007 | |
TOTAL COMMERCIAL SERVICES & SUPPLIES | 5,993,257 | ||
DIVERSIFIED CONSUMER SERVICES - 3.8% | |||
Specialized Consumer Services - 3.8% | |||
Carriage Services, Inc. Class A | 506,549 | 2,309,863 | |
Service Corp. International (SCI) | 1,161,830 | 9,759,372 | |
Weight Watchers International, Inc. | 422,900 | 17,956,334 | |
30,025,569 | |||
FOOD & STAPLES RETAILING - 0.3% | |||
Food Retail - 0.3% | |||
Safeway, Inc. | 72,700 | 2,248,611 | |
HEALTH CARE EQUIPMENT & SUPPLIES - 5.3% | |||
Health Care Equipment - 2.1% | |||
Abiomed, Inc. (a) | 500 | 7,460 | |
Aspect Medical Systems, Inc. (a) | 401,100 | 7,749,252 | |
BioLase Technology, Inc. (a) | 50,000 | 327,000 | |
IDEXX Laboratories, Inc. (a) | 800 | 73,608 | |
Imaging Dynamics Co. Ltd. (a) | 100,000 | 321,180 | |
Kinetic Concepts, Inc. (a) | 108,500 | 3,428,600 | |
NeuroMetrix, Inc. (a) | 57,700 | 1,564,247 | |
Phonak Holding AG | 15,000 | 895,832 | |
Quidel Corp. (a) | 40,000 | 457,600 | |
Stereotaxis, Inc. (a) | 80,000 | 890,400 | |
Sysmex Corp. | 10,000 | 411,431 | |
William Demant Holding AS (a) | 5,000 | 369,696 | |
16,496,306 | |||
Health Care Supplies - 3.2% | |||
Align Technology, Inc. (a) | 5,000 | 31,250 | |
Inverness Medical Innovations, Inc. (a) | 455,200 | 15,337,764 | |
Shares | Value (Note 1) | ||
Inverness Medical Innovations, Inc. (a)(h) | 4,600 | $139,104 | |
PolyMedica Corp. | 233,834 | 9,491,322 | |
24,999,440 | |||
TOTAL HEALTH CARE EQUIPMENT & SUPPLIES | 41,495,746 | ||
HEALTH CARE PROVIDERS & SERVICES - 72.0% | |||
Health Care Distributors & Services - 9.8% | |||
Cardinal Health, Inc. | 150,000 | 10,113,000 | |
Henry Schein, Inc. (a) | 277,700 | 13,848,899 | |
McKesson Corp. | 800,000 | 40,640,000 | |
MWI Veterinary Supply, Inc. | 72,000 | 2,499,120 | |
Patterson Companies, Inc. (a) | 342,135 | 10,544,601 | |
77,645,620 | |||
Health Care Facilities - 14.2% | |||
Acibadem Saglik Hizmetleri AS | 276,000 | 3,146,856 | |
Apollo Hospitals Enterprise Ltd. | 801,565 | 7,603,994 | |
Bangkok Dusit Medical Service PCL (For. Reg.) | 1,622,600 | 1,241,345 | |
Brookdale Senior Living, Inc. | 427,500 | 20,447,325 | |
Bumrungrad Hospital PCL (For. Reg.) | 3,168,200 | 3,056,074 | |
Capital Senior Living Corp. (a) | 175,700 | 1,684,963 | |
Community Health Systems, Inc. (a) | 315,300 | 12,221,028 | |
Emeritus Corp. (a) | 131,500 | 2,587,920 | |
HCA, Inc. | 701,800 | 34,612,776 | |
HealthSouth Corp. | 2,180 | 10,595 | |
Kindred Healthcare, Inc. (a) | 100 | 3,114 | |
LifePoint Hospitals, Inc. (a) | 2,200 | 74,910 | |
Manor Care, Inc. | 115,000 | 6,003,000 | |
Medi-Clinic Corp. Ltd. | 280,000 | 814,581 | |
Network Healthcare Holdings Ltd. | 975,000 | 1,581,081 | |
Odyssey Healthcare, Inc. (a) | 43,400 | 696,136 | |
Orpea (a) | 23,000 | 1,591,250 | |
Radiation Therapy Services, Inc. (a)(e) | 70,964 | 2,052,279 | |
Sun Healthcare Group, Inc. (a) | 241,532 | 2,552,993 | |
Sunrise Senior Living, Inc. (a) | 37,900 | 1,118,429 | |
U.S. Physical Therapy, Inc. (a) | 291,552 | 4,265,406 | |
United Surgical Partners International, Inc. (a) | 38,750 | 1,093,525 | |
Universal Health Services, Inc. Class B | 63,700 | 3,606,694 | |
112,066,274 | |||
Health Care Services - 23.7% | |||
Allion Healthcare, Inc. (e) | 302,396 | 1,315,423 | |
AMN Healthcare Services, Inc. (a) | 208,700 | 5,008,800 | |
Apria Healthcare Group, Inc. (a) | 10,500 | 214,095 | |
Caremark Rx, Inc. | 489,500 | 28,361,630 | |
DaVita, Inc. (a) | 205,200 | 11,975,472 | |
Diagnosticos Da America SA (a) | 322,500 | 6,290,555 | |
Emergency Medical Services Corp. Class A | 240,600 | 3,801,480 | |
Express Scripts, Inc. (a) | 360,400 | 30,302,432 | |
Health Grades, Inc. (a)(f) | 1,936,675 | 8,560,104 | |
HMS Holdings Corp. (a) | 146,629 | 2,130,519 | |
Common Stocks - continued | |||
Shares | Value (Note 1) | ||
HEALTH CARE PROVIDERS & SERVICES - CONTINUED | |||
Health Care Services - continued | |||
LHC Group, Inc. (a) | 52,100 | $1,250,400 | |
Lincare Holdings, Inc. (a) | 100 | 3,703 | |
Medco Health Solutions, Inc. (a) | 650,600 | 41,228,522 | |
Nighthawk Radiology Holdings, Inc. | 104,600 | 1,813,764 | |
Omnicare, Inc. (e) | 589,300 | 26,701,183 | |
Providence Service Corp. (a) | 46,700 | 1,112,394 | |
Rural/Metro Corp. (a)(e)(f) | 1,957,400 | 14,660,926 | |
Visicu, Inc. | 34,492 | 418,388 | |
VistaCare, Inc. Class A (a) | 131,100 | 1,730,520 | |
186,880,310 | |||
Managed Health Care - 24.3% | |||
Aetna, Inc. | 114,400 | 4,263,688 | |
AMERIGROUP Corp. (a) | 2,700 | 85,158 | |
Centene Corp. (a) | 1,800 | 27,810 | |
Coventry Health Care, Inc. (a) | 288,300 | 15,637,392 | |
Health Net, Inc. (a) | 821,200 | 34,334,372 | |
Healthspring, Inc. | 265,500 | 5,286,105 | |
Humana, Inc. (a) | 516,700 | 31,482,531 | |
Molina Healthcare, Inc. (a) | 1,473 | 54,560 | |
Sierra Health Services, Inc. (a) | 6,000 | 257,400 | |
UnitedHealth Group, Inc. | 1,188,301 | 61,732,236 | |
WellPoint, Inc. (a) | 505,000 | 39,092,050 | |
192,253,302 | |||
TOTAL HEALTH CARE PROVIDERS & SERVICES | 568,845,506 | ||
HEALTH CARE TECHNOLOGY - 3.0% | |||
Healthcare Technology - 3.0% | |||
Cerner Corp. (a) | 187,201 | 8,622,478 | |
Computer Programs & Systems, Inc. | 24,926 | 847,983 | |
Eclipsys Corp. (a) | 317,500 | 5,429,250 | |
Emageon, Inc. (a) | 126,298 | 1,946,252 | |
Per-Se Technologies, Inc. (a) | 37,561 | 856,015 | |
Vital Images, Inc. (a) | 122,597 | 3,599,448 | |
WebMD Health Corp. Class A (e) | 63,400 | 2,343,264 | |
23,644,690 | |||
HOTELS, RESTAURANTS & LEISURE - 0.7% | |||
Leisure Facilities - 0.7% | |||
Life Time Fitness, Inc. (a) | 74,900 | 3,365,257 | |
Town Sports International Holdings, Inc. (a) | 170,000 | 2,187,900 | |
5,553,157 | |||
INDUSTRIAL CONGLOMERATES - 0.1% | |||
Industrial Conglomerates - 0.1% | |||
Max India Ltd. (a) | 75,000 | 1,097,949 | |
Shares | Value (Note 1) | ||
INSURANCE - 1.2% | |||
Life & Health Insurance - 1.1% | |||
China Life Insurance Co. Ltd. ADR (e) | 15,000 | $1,066,050 | |
Universal American Financial Corp. (a) | 515,504 | 7,902,676 | |
8,968,726 | |||
Reinsurance - 0.1% | |||
Platinum Underwriters Holdings Ltd. | 15,000 | 445,500 | |
TOTAL INSURANCE | 9,414,226 | ||
LIFE SCIENCES TOOLS & SERVICES - 2.6% | |||
Life Science Tools & Services - 2.6% | |||
Covance, Inc. (a) | 167,200 | 10,511,864 | |
Exelixis, Inc. (a) | 80,000 | 778,400 | |
Pharmaceutical Product Development, Inc. | 128,300 | 4,890,796 | |
PRA International (a) | 170,478 | 4,429,018 | |
20,610,078 | |||
PERSONAL PRODUCTS - 1.7% | |||
Personal Products - 1.7% | |||
Herbalife Ltd. (a) | 373,100 | 12,189,177 | |
Natura Cosmeticos SA | 111,100 | 1,420,878 | |
13,610,055 | |||
PHARMACEUTICALS - 3.3% | |||
Pharmaceuticals - 3.3% | |||
Allergan, Inc. | 47,200 | 5,407,232 | |
Atherogenics, Inc. (a)(e) | 66,465 | 930,510 | |
New River Pharmaceuticals, Inc. (a)(e) | 50,500 | 1,317,040 | |
Pfizer, Inc. | 100,000 | 2,756,000 | |
Teva Pharmaceutical Industries Ltd. sponsored ADR | 450,100 | 15,645,476 | |
26,056,258 | |||
SOFTWARE - 0.6% | |||
Systems Software - 0.6% | |||
DATATRAK International, Inc. (a)(e) | 65,000 | 388,700 | |
Quality Systems, Inc. | 107,500 | 4,310,750 | |
4,699,450 | |||
TOTAL COMMON STOCKS (Cost $651,153,113) | 769,508,337 | ||
Nonconvertible Bonds - 0.5% | ||||
Principal Amount | ||||
HEALTH CARE PROVIDERS & SERVICES - 0.5% | ||||
Health Care Facilities - 0.2% | ||||
HealthSouth Corp. 10.75% 6/15/16 (g) | $1,500,000 | 1,530,000 | ||
Nonconvertible Bonds - continued | ||||
Principal Amount | Value | |||
HEALTH CARE PROVIDERS & SERVICES - CONTINUED | ||||
Health Care Services - 0.3% | ||||
Rural/Metro Corp.: | ||||
0% 3/15/16 (d) | $2,790,000 | $2,015,775 | ||
9.875% 3/15/15 | 20,000 | 20,400 | ||
2,036,175 | ||||
TOTAL HEALTH CARE PROVIDERS & SERVICES | 3,566,175 | |||
TOTAL NONCONVERTIBLE BONDS (Cost $3,298,910) | 3,566,175 | ||
Money Market Funds - 3.8% | |||
Shares | |||
Fidelity Cash Central Fund, 5.31% (b) | 10,909,458 | 10,909,458 | |
Fidelity Securities Lending Cash Central Fund, 5.33% (b)(c) | 19,302,733 | 19,302,733 | |
TOTAL MONEY MARKET FUNDS (Cost $30,212,191) | 30,212,191 | ||
TOTAL INVESTMENT PORTFOLIO - 101.7% (Cost $684,664,214) | 803,286,703 | ||
NET OTHER ASSETS - (1.7)% | (13,502,450) | ||
NET ASSETS - 100% | $789,784,253 | ||
Legend |
(a)Non-income producing |
(b)Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. |
(c)Investment made with cash collateral received from securities on loan. |
(d)Security initially issued in zero coupon form which converts to coupon form at a specified rate and date. The rate shown is the rate at period end. |
(e)Security or a portion of the security is on loan at period end. |
(f)Affiliated company |
(g)Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the end of the period, the value of these securities amounted to $1,530,000 or 0.2% of net assets. |
(h)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 $139,104 or 0.0% of net assets. |
Additional information on each holding is as follows: |
Security | Acquisition Date | Acquisition Cost |
Inverness Medical Innovations, Inc. | 8/17/06 | $139,150 |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the fund from the affiliated Central funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $124,963 |
Fidelity Securities Lending Cash Central Fund | 163,182 |
Total | $288,145 |
Other Affiliated Issuers |
An affiliated company is a company in which the fund has ownership of at least 5% of the voting securities. Fiscal year to date transactions with companies which are or were affiliates are as follows: |
Affiliate | Value, | Purchases | Sales | Dividend | Value, |
Health Grades, Inc. | $5,154,280 | $4,560,700 | $12,377 | $- | $8,560,104 |
Rural/Metro Corp. | 16,872,788 | - | - | - | 14,660,926 |
Total | $22,027,068 | $4,560,700 | $12,377 | $- | $23,221,030 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Medical Delivery Portfolio
Financial Statements
Statement of Assets and Liabilities
August 31, 2006 (Unaudited) | ||
Assets | ||
Investment in securities, at value (including securities loaned of $18,749,088) - See accompanying schedule: Unaffiliated issuers (cost $630,261,011) | $749,853,482 | |
Affiliated Central Funds (cost $30,212,191) | 30,212,191 | |
Other affiliated issuers (cost $24,191,012) | 23,221,030 | |
Total Investments (cost $684,664,214) | $803,286,703 | |
Foreign currency held at value (cost $909,356) | 908,466 | |
Receivable for investments sold | 14,163,406 | |
Receivable for fund shares sold | 1,952,598 | |
Dividends receivable | 293,588 | |
Interest receivable | 77,238 | |
Prepaid expenses | 1,242 | |
Other receivables | 31,305 | |
Total assets | 820,714,546 | |
Liabilities | ||
Payable for investments purchased | $7,991,308 | |
Payable for fund shares redeemed | 2,969,421 | |
Accrued management fee | 371,224 | |
Other affiliated payables | 242,733 | |
Other payables and accrued expenses | 52,874 | |
Collateral on securities loaned, at value | 19,302,733 | |
Total liabilities | 30,930,293 | |
Net Assets | $789,784,253 | |
Net Assets consist of: | ||
Paid in capital | $630,320,170 | |
Accumulated net investment loss | (2,537,707) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 43,382,174 | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 118,619,616 | |
Net Assets, for 15,538,403 shares outstanding | $789,784,253 | |
Net Asset Value, offering price and redemption price per share ($789,784,253 ÷ 15,538,403 shares) | $50.83 | |
Statement of Operations
Six months ended August 31, 2006 (Unaudited) | ||
Investment Income | ||
Dividends | $1,690,104 | |
Interest | 144,218 | |
Income from affiliated Central Funds (including $163,182 from security lending) | 288,145 | |
Total income | 2,122,467 | |
Expenses | ||
Management fee | $2,747,130 | |
Transfer agent fees | 1,444,216 | |
Accounting and security lending fees | 209,564 | |
Independent trustees' compensation | 2,068 | |
Custodian fees and expenses | 72,056 | |
Registration fees | 59,191 | |
Audit | 23,572 | |
Legal | 12,466 | |
Interest | 69,269 | |
Miscellaneous | 31,561 | |
Total expenses before reductions | 4,671,093 | |
Expense reductions | (11,872) | 4,659,221 |
Net investment income (loss) | (2,536,754) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers (net of foreign taxes of $20,744) | 45,337,005 | |
Other affiliated issuers | (3,166) | |
Foreign currency transactions | 15,131 | |
Total net realized gain (loss) | 45,348,970 | |
Change in net unrealized appreciation (depreciation) on: Investment securities (net of decrease in deferred foreign taxes of $214,748) | (120,844,443) | |
Assets and liabilities in foreign currencies | (3,967) | |
Total change in net unrealized appreciation (depreciation) | (120,848,410) | |
Net gain (loss) | (75,499,440) | |
Net increase (decrease) in net assets resulting from operations | $(78,036,194) | |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Statement of Changes in Net Assets
Six months ended August 31, 2006 (Unaudited) | Year ended | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $(2,536,754) | $(7,632,320) |
Net realized gain (loss) | 45,348,970 | 87,118,185 |
Change in net unrealized appreciation (depreciation) | (120,848,410) | 181,514,309 |
Net increase (decrease) in net assets resulting from operations | (78,036,194) | 261,000,174 |
Distributions to shareholders from net realized gain | (34,630,155) | (63,142,749) |
Share transactions | 153,740,599 | 1,611,776,758 |
Reinvestment of distributions | 33,010,520 | 60,447,547 |
Cost of shares redeemed | (754,294,997) | (1,106,838,737) |
Net increase (decrease) in net assets resulting from share transactions | (567,543,878) | 565,385,568 |
Redemption fees | 133,432 | 435,074 |
Total increase (decrease) in net assets | (680,076,795) | 763,678,067 |
Net Assets | ||
Beginning of period | 1,469,861,048 | 706,182,981 |
End of period (including accumulated net investment loss of $2,537,707 and accumulated net investment loss of $953, respectively) | $789,784,253 | $1,469,861,048 |
Other Information Shares | ||
Sold | 3,013,537 | 31,776,334 |
Issued in reinvestment of distributions | 626,981 | 1,194,823 |
Redeemed | (14,835,049) | (21,329,025) |
Net increase (decrease) | (11,194,531) | 11,642,132 |
Financial Highlights
Six months ended August 31, 2006 | Years ended February 28, | |||||
(Unaudited) | 2006 | 2005 | 2004 G | 2003 | 2002 | |
Selected Per-Share Data | ||||||
Net asset value, beginning of period | $54.98 | $46.80 | $32.76 | $22.84 | $26.49 | $25.74 |
Income from Investment Operations | ||||||
Net investment income (loss) E | (.13) | (.31) | (.28) | (.30) | (.28) | (.20) |
Net realized and unrealized gain (loss) | (2.57) | 11.41 | 14.28 | 10.20 | (3.46) | .91 |
Total from investment operations | (2.70) | 11.10 | 14.00 | 9.90 | (3.74) | .71 |
Distributions from net realized gain | (1.46) | (2.94) | - | - | - | - |
Redemption fees added to paid in capital E | .01 | .02 | .04 | .02 | .09 | .04 |
Net asset value, end of period | $50.83 | $54.98 | $46.80 | $32.76 | $22.84 | $26.49 |
Total Return B, C, D | (4.98)% | 24.54% | 42.86% | 43.43% | (13.78)% | 2.91% |
Ratios to Average Net Assets F | ||||||
Expenses before reductions | .96% A | .95% | 1.03% | 1.30% | 1.25% | 1.22% |
Expenses net of fee waivers, if any | .96% A | .95% | 1.03% | 1.30% | 1.25% | 1.22% |
Expenses net of all reductions | .96% A | .91% | .92% | 1.24% | 1.13% | 1.19% |
Net investment income (loss) | (.52)% A | (.60)% | (.72)% | (1.11)% | (.99)% | (.77)% |
Supplemental Data | ||||||
Net assets, end of period (000 omitted) | $789,784 | $1,469,861 | $706,183 | $210,255 | $117,635 | $139,252 |
Portfolio turnover rate | 92% A | 106% | 244% | 196% | 269% | 106% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the former sales charges. E Calculated based on average shares outstanding during the period. F Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. G For the year ended February 29. | ||||||
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Medical Equipment and Systems Portfolio
Investment Changes
Top Ten Stocks as of August 31, 2006 | ||
% of fund's | % of fund's net assets | |
Allergan, Inc. | 10.2 | 8.6 |
Johnson & Johnson | 9.4 | 9.5 |
Inverness Medical Innovations, Inc. | 6.6 | 3.8 |
Becton, Dickinson & Co. | 6.5 | 6.4 |
Baxter International, Inc. | 6.3 | 6.2 |
Alcon, Inc. | 5.6 | 5.5 |
C.R. Bard, Inc. | 5.0 | 4.2 |
Cooper Companies, Inc. | 4.7 | 4.0 |
St. Jude Medical, Inc. | 3.9 | 5.2 |
Brookdale Senior Living, Inc. | 2.4 | 0.0 |
60.6 | ||
Top Industries (% of fund's net assets) | |||
As of August 31, 2006 | |||
| Health Care Equipment & Supplies | 63.7% | |
| Pharmaceuticals | 20.2% | |
| Health Care Providers & Services | 5.0% | |
| Health Care Technology | 2.6% | |
| Biotechnology | 2.4% | |
| All Others* | 6.1% | |
As of February 28, 2006 | |||
| Health Care Equipment & Supplies | 72.2% | |
| Pharmaceuticals | 18.2% | |
| Biotechnology | 5.2% | |
| Health Care Providers & Services | 3.2% | |
| Chemicals | 0.3% | |
| All Others* | 0.9% | |
*Includes short-term investments and net other assets. |
Prior period industry classifications reflect the categories in place as of the date indicated and have not been adjusted to reflect current industry classifications. |
Semiannual Report
Medical Equipment and Systems Portfolio
Investments August 31, 2006 (Unaudited)
Showing Percentage of Net Assets
Common Stocks - 97.6% | |||
Shares | Value (Note 1) | ||
BIOTECHNOLOGY - 2.4% | |||
Biotechnology - 2.4% | |||
Alnylam Pharmaceuticals, Inc. (a)(d) | 545,800 | $7,106,316 | |
BioSphere Medical, Inc. (a) | 36,509 | 232,562 | |
deCODE genetics, Inc. (a)(d) | 783,161 | 4,417,028 | |
DUSA Pharmaceuticals, Inc. (a)(d)(e) | 950,699 | 3,783,782 | |
Epigenomics AG (a) | 63,300 | 324,400 | |
MannKind Corp. (a)(d) | 86,000 | 1,584,120 | |
Sirna Therapeutics, Inc. (a)(d) | 122,400 | 691,560 | |
Solexa, Inc. (a)(d) | 277,261 | 2,412,171 | |
20,551,939 | |||
CHEMICALS - 0.3% | |||
Fertilizers & Agricultural Chemicals - 0.1% | |||
Bodisen Biotech, Inc. (a)(d) | 89,800 | 1,059,640 | |
Specialty Chemicals - 0.2% | |||
Lonza Group AG | 24,283 | 1,584,403 | |
TOTAL CHEMICALS | 2,644,043 | ||
COMMERCIAL SERVICES & SUPPLIES - 0.2% | |||
Diversified Commercial & Professional Services - 0.2% | |||
Advisory Board Co. (a) | 35,500 | 1,804,110 | |
HEALTH CARE EQUIPMENT & SUPPLIES - 63.7% | |||
Health Care Equipment - 43.9% | |||
Advanced Medical Optics, Inc. (a) | 317,894 | 15,306,596 | |
American Medical Systems Holdings, Inc. (a) | 333,277 | 5,852,344 | |
ArthroCare Corp. (a) | 58,800 | 2,681,868 | |
Aspect Medical Systems, Inc. (a) | 947,006 | 18,296,156 | |
Baxter International, Inc. | 1,236,220 | 54,863,444 | |
Becton, Dickinson & Co. (d) | 805,800 | 56,164,260 | |
BioLase Technology, Inc. (a) | 113,200 | 740,328 | |
Boston Scientific Corp. (a) | 1,150,743 | 20,068,958 | |
C.R. Bard, Inc. | 579,200 | 43,544,256 | |
Cochlear Ltd. | 53,500 | 2,054,751 | |
Conceptus, Inc. (a) | 390,100 | 6,729,225 | |
Conor Medsystems, Inc. (a) | 156,700 | 4,230,900 | |
Cytyc Corp. (a) | 464,700 | 11,101,683 | |
DexCom, Inc. (a)(d) | 401,285 | 5,152,499 | |
Edwards Lifesciences Corp. (a) | 202,000 | 9,431,380 | |
GN Store Nordic AS (d) | 59,300 | 873,354 | |
Greatbatch, Inc. (a) | 170,500 | 4,170,430 | |
IntraLase Corp. (a) | 58,300 | 1,096,623 | |
IRIS International, Inc. (a) | 28,798 | 282,508 | |
Kinetic Concepts, Inc. (a) | 136,900 | 4,326,040 | |
Kyphon, Inc. (a) | 186,400 | 6,749,544 | |
Mentor Corp. | 104,800 | 5,086,992 | |
Meridian Bioscience, Inc. | 1,050 | 25,053 | |
NeuroMetrix, Inc. (a) | 618,800 | 16,775,668 | |
NMT Medical, Inc. (a)(d) | 136,904 | 1,935,823 | |
Nobel Biocare Holding AG (Switzerland) | 9,033 | 2,201,918 | |
Shares | Value (Note 1) | ||
Northstar Neuroscience, Inc. | 2,300 | $27,025 | |
NuVasive, Inc. (a) | 101,600 | 2,088,896 | |
Phonak Holding AG | 18,600 | 1,110,831 | |
ResMed, Inc. (a) | 199,200 | 8,103,456 | |
Respironics, Inc. (a) | 247,800 | 9,146,298 | |
Restore Medical, Inc. | 487,222 | 3,410,554 | |
Sonic Innovations, Inc. (a) | 97,700 | 402,524 | |
St. Jude Medical, Inc. (a) | 923,400 | 33,620,994 | |
Stereotaxis, Inc. (a) | 522,029 | 5,810,183 | |
Straumann Holding AG | 5,049 | 1,048,200 | |
Syneron Medical Ltd. (a) | 71,300 | 1,689,810 | |
The Spectranetics Corp. (a) | 218,800 | 2,384,920 | |
Thermogenesis Corp. (a) | 1,990,388 | 8,359,630 | |
Thoratec Corp. (a) | 231,600 | 3,395,256 | |
William Demant Holding AS (a) | 14,200 | 1,049,937 | |
381,391,115 | |||
Health Care Supplies - 19.8% | |||
Alcon, Inc. | 410,100 | 48,305,679 | |
Bausch & Lomb, Inc. | 145,100 | 7,024,291 | |
Cooper Companies, Inc. | 810,600 | 40,513,788 | |
DJO, Inc. (a) | 66,900 | 2,580,333 | |
Gen-Probe, Inc. (a) | 100 | 4,861 | |
Haemonetics Corp. (a) | 18,500 | 861,730 | |
Immucor, Inc. (a) | 125,800 | 2,612,866 | |
Inverness Medical Innovations, Inc. (a) | 1,699,900 | 57,250,923 | |
Inverness Medical Innovations, Inc. (a)(f) | 20,683 | 694,949 | |
Inverness Medical Innovations, Inc. (a)(f) | 5,000 | 151,200 | |
Medical Action Industries, Inc. (a) | 10,830 | 264,685 | |
Merit Medical Systems, Inc. (a) | 255,800 | 3,586,316 | |
NUCRYST Pharmaceuticals Corp. | 577,105 | 7,153,115 | |
Shamir Optical Industry Ltd. (a) | 2,000 | 16,200 | |
Utah Medical Products, Inc. | 35,500 | 1,081,685 | |
172,102,621 | |||
TOTAL HEALTH CARE EQUIPMENT & SUPPLIES | 553,493,736 | ||
HEALTH CARE PROVIDERS & SERVICES - 5.0% | |||
Health Care Facilities - 2.6% | |||
Brookdale Senior Living, Inc. | 434,400 | 20,777,352 | |
Odyssey Healthcare, Inc. (a) | 119,000 | 1,908,760 | |
22,686,112 | |||
Health Care Services - 2.2% | |||
Air Methods Corp. (a) | 55,800 | 1,300,140 | |
Chemed Corp. | 84,000 | 3,310,440 | |
DaVita, Inc. (a) | 25,400 | 1,482,344 | |
Fresenius Medical Care AG sponsored ADR | 33,600 | 1,473,360 | |
Gentiva Health Services, Inc. (a) | 78,400 | 1,416,688 | |
Health Grades, Inc. (a) | 276,400 | 1,221,688 | |
Healthways, Inc. (a) | 110,000 | 5,678,200 | |
HMS Holdings Corp. (a) | 38,300 | 556,499 | |
Nighthawk Radiology Holdings, Inc. | 37,550 | 651,117 | |
QMed, Inc. (a) | 60,900 | 282,576 | |
Common Stocks - continued | |||
Shares | Value (Note 1) | ||
HEALTH CARE PROVIDERS & SERVICES - CONTINUED | |||
Health Care Services - continued | |||
Visicu, Inc. | 1,100 | $13,343 | |
VistaCare, Inc. Class A (a) | 112,500 | 1,485,000 | |
18,871,395 | |||
Managed Health Care - 0.2% | |||
Magellan Health Services, Inc. (a) | 36,500 | 1,754,555 | |
TOTAL HEALTH CARE PROVIDERS & SERVICES | 43,312,062 | ||
HEALTH CARE TECHNOLOGY - 2.6% | |||
Healthcare Technology - 2.6% | |||
Allscripts Healthcare Solutions, Inc. (a) | 113,600 | 2,312,896 | |
Cerner Corp. (a) | 279,800 | 12,887,588 | |
Eclipsys Corp. (a) | 260,000 | 4,446,000 | |
Omnicell, Inc. (a) | 82,500 | 1,478,400 | |
WebMD Health Corp. Class A (d) | 39,630 | 1,464,725 | |
22,589,609 | |||
HOTELS, RESTAURANTS & LEISURE - 0.5% | |||
Leisure Facilities - 0.5% | |||
Town Sports International Holdings, Inc. (a) | 341,200 | 4,391,244 | |
LIFE SCIENCES TOOLS & SERVICES - 2.3% | |||
Life Science Tools & Services - 2.3% | |||
Affymetrix, Inc. (a) | 213,830 | 4,556,717 | |
Exelixis, Inc. (a) | 214,800 | 2,090,004 | |
Illumina, Inc. (a) | 32,474 | 1,093,724 | |
Millipore Corp. (a) | 36,900 | 2,368,242 | |
QIAGEN NV (a) | 293,200 | 4,239,672 | |
Thermo Electron Corp. (a) | 128,700 | 5,045,040 | |
Ventana Medical Systems, Inc. (a) | 9,100 | 424,424 | |
19,817,823 | |||
PERSONAL PRODUCTS - 0.2% | |||
Personal Products - 0.2% | |||
Herbalife Ltd. (a) | 57,300 | 1,871,991 | |
PHARMACEUTICALS - 20.2% | |||
Pharmaceuticals - 20.2% | |||
Allergan, Inc. | 772,200 | 88,463,232 | |
BioMimetics Therapeutics, Inc. | 285,000 | 1,881,000 | |
Johnson & Johnson | 1,264,500 | 81,762,570 | |
Medicis Pharmaceutical Corp. Class A | 63,500 | 1,859,915 | |
Valeant Pharmaceuticals International | 93,900 | 1,846,074 | |
175,812,791 | |||
Shares | Value (Note 1) | ||
SOFTWARE - 0.2% | |||
Systems Software - 0.2% | |||
Quality Systems, Inc. | 47,900 | $1,920,790 | |
TOTAL COMMON STOCKS (Cost $695,937,395) | 848,210,138 | ||
Money Market Funds - 4.5% | |||
Fidelity Cash Central Fund, 5.31% (b) | 9,919,803 | 9,919,803 | |
Fidelity Securities Lending Cash Central Fund, 5.33% (b)(c) | 29,012,775 | 29,012,775 | |
TOTAL MONEY MARKET FUNDS (Cost $38,932,578) | 38,932,578 | ||
TOTAL INVESTMENT PORTFOLIO - 102.1% (Cost $734,869,973) | 887,142,716 | ||
NET OTHER ASSETS - (2.1)% | (18,565,199) | ||
NET ASSETS - 100% | $868,577,517 | ||
Legend |
(a)Non-income producing |
(b)Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. |
(c)Investment made with cash collateral received from securities on loan. |
(d)Security or a portion of the security is on loan at period end. |
(e)Affiliated company |
(f)Restricted securities - Investment in securities not registered under the Securities Act of 1933 (excluding 144A issues). At the end of the period, the value of restricted securities (excluding 144A issues) amounted to $846,149 or 0.1% of net assets. |
Additional information on each holding is as follows: |
Security | Acquisition Date | Acquisition Cost |
Inverness Medical Innovations, Inc. | 2/8/06 | $504,872 |
Inverness Medical Innovations, Inc. | 8/17/06 | $151,250 |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the fund from the affiliated Central funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $126,674 |
Fidelity Securities Lending Cash Central Fund | 165,768 |
Total | $292,442 |
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, |
DUSA Pharmaceuticals, Inc. | $8,302,700 | $240,615 | $1,690,471 | $- | $3,783,782 |
Seracare Life Sciences, Inc. | 8,349,208 | - | 5,001,763 | - | - |
Total | $16,651,908 | $240,615 | $6,692,234 | $- | $3,783,782 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Medical Equipment and Systems Portfolio
Financial Statements
Statement of Assets and Liabilities
August 31, 2006 (Unaudited) | ||
Assets | ||
Investment in securities, at value (including securities loaned of $28,484,786) - See accompanying schedule: Unaffiliated issuers (cost $687,469,207) | $844,426,356 | |
Affiliated Central Funds (cost $38,932,578) | 38,932,578 | |
Other affiliated issuers (cost $8,468,188) | 3,783,782 | |
Total Investments (cost $734,869,973) | $887,142,716 | |
Receivable for investments sold | 11,122,286 | |
Receivable for fund shares sold | 1,299,229 | |
Dividends receivable | 596,340 | |
Interest receivable | 72,786 | |
Prepaid expenses | 1,122 | |
Other receivables | 30,011 | |
Total assets | 900,264,490 | |
Liabilities | ||
Payable for investments purchased | $1,063,398 | |
Payable for fund shares redeemed | 918,381 | |
Accrued management fee | 399,171 | |
Other affiliated payables | 249,160 | |
Other payables and accrued expenses | 44,088 | |
Collateral on securities loaned, at value | 29,012,775 | |
Total liabilities | 31,686,973 | |
Net Assets | $868,577,517 | |
Net Assets consist of: | ||
Paid in capital | $706,748,752 | |
Accumulated net investment loss | (1,040,308) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 10,596,252 | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 152,272,821 | |
Net Assets, for 36,804,437 shares outstanding | $868,577,517 | |
Net Asset Value, offering price and redemption price per share ($868,577,517 ÷ 36,804,437 shares) | $23.60 | |
Statement of Operations
Six months ended August 31, 2006 (Unaudited) | ||
Investment Income | ||
Dividends | $2,928,183 | |
Interest | 5,617 | |
Income from affiliated Central Funds (including $165,768 from security lending) | 292,442 | |
Total income | 3,226,242 | |
Expenses | ||
Management fee | $2,579,160 | |
Transfer agent fees | 1,379,506 | |
Accounting and security lending fees | 200,453 | |
Independent trustees' compensation | 1,867 | |
Custodian fees and expenses | 26,387 | |
Registration fees | 20,815 | |
Audit | 18,390 | |
Legal | 9,992 | |
Interest | 20,091 | |
Miscellaneous | 30,757 | |
Total expenses before reductions | 4,287,418 | |
Expense reductions | (20,868) | 4,266,550 |
Net investment income (loss) | (1,040,308) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers | 21,703,133 | |
Other affiliated issuers | (4,835,500) | |
Foreign currency transactions | (5,009) | |
Total net realized gain (loss) | 16,862,624 | |
Change in net unrealized appreciation (depreciation) on: Investment securities | (24,387,694) | |
Assets and liabilities in foreign currencies | (253) | |
Total change in net unrealized appreciation (depreciation) | (24,387,947) | |
Net gain (loss) | (7,525,323) | |
Net increase (decrease) in net assets resulting from operations | $(8,565,631) | |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
Six months ended August 31, 2006 (Unaudited) | Year ended | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $(1,040,308) | $(2,022,638) |
Net realized gain (loss) | 16,862,624 | 89,919,444 |
Change in net unrealized appreciation (depreciation) | (24,387,947) | (6,935,199) |
Net increase (decrease) in net assets resulting from operations | (8,565,631) | 80,961,607 |
Distributions to shareholders from net realized gain | (41,429,250) | (39,838,684) |
Share transactions | 94,896,642 | 565,874,282 |
Reinvestment of distributions | 39,751,814 | 38,098,805 |
Cost of shares redeemed | (331,215,982) | (496,658,412) |
Net increase (decrease) in net assets resulting from share transactions | (196,567,526) | 107,314,675 |
Redemption fees | 22,870 | 100,516 |
Total increase (decrease) in net assets | (246,539,537) | 148,538,114 |
Net Assets | ||
Beginning of period | 1,115,117,054 | 966,578,940 |
End of period (including accumulated net investment loss of $1,040,308 and $0, respectively) | $868,577,517 | $1,115,117,054 |
Other Information Shares | ||
Sold | 4,127,011 | 23,177,404 |
Issued in reinvestment of distributions | 1,728,340 | 1,520,304 |
Redeemed | (14,335,441) | (20,201,783) |
Net increase (decrease) | (8,480,090) | 4,495,925 |
Financial Highlights
Six months ended August 31, 2006 | Years ended February 28, | |||||
(Unaudited) | 2006 | 2005 | 2004 G | 2003 | 2002 | |
Selected Per-Share Data | ||||||
Net asset value, beginning of period | $24.62 | $23.70 | $20.99 | $15.63 | $16.02 | $16.19 |
Income from Investment Operations | ||||||
Net investment income (loss) E | (.03) | (.04) | (.06) | (.09) | (.08) | (.07) |
Net realized and unrealized gain (loss) | - H | 1.80 | 2.88 | 5.97 | (.21) | .23 |
Total from investment operations | (.03) | 1.76 | 2.82 | 5.88 | (.29) | .16 |
Distributions from net realized gain | (.99) | (.84) | (.11) | (.53) | (.11) | (.34) |
Redemption fees added to paid in capital E | -H | -H | -H | .01 | .01 | .01 |
Net asset value, end of period | $23.60 | $24.62 | $23.70 | $20.99 | $15.63 | $16.02 |
Total Return B, C, D | (.02)% | 7.36% | 13.49% | 37.94% | (1.76)% | 1.37% |
Ratios to Average Net Assets F | ||||||
Expenses before reductions | .94% A | .96% | 1.00% | 1.18% | 1.33% | 1.26% |
Expenses net of fee waivers, if any | .94% A | .96% | 1.00% | 1.18% | 1.33% | 1.26% |
Expenses net of all reductions | .93% A | .92% | .98% | 1.15% | 1.29% | 1.23% |
Net investment income (loss) | (.23)% A | (.18)% | (.28)% | (.46)% | (.55)% | (.49)% |
Supplemental Data | ||||||
Net assets, end of period (000 omitted) | $868,578 | $1,115,117 | $966,579 | $571,596 | $155,970 | $146,665 |
Portfolio turnover rate | 61% A | 99% | 28% | 33% | 82% | 87% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the former sales charges. E Calculated based on average shares outstanding during the period. F Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. G For the year ended February 29. H Amount represents less than $.01 per share. | ||||||
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Investment Changes
Top Ten Stocks as of August 31, 2006 | ||
% of fund's | % of fund's net assets | |
Merck & Co., Inc. | 10.7 | 9.6 |
Pfizer, Inc. | 10.0 | 7.0 |
Novartis AG sponsored ADR | 6.2 | 6.5 |
Eli Lilly & Co. | 5.2 | 0.0 |
Roche Holding AG (participation certificate) | 5.2 | 3.1 |
Bristol-Myers Squibb Co. | 5.1 | 0.0 |
Wyeth | 4.8 | 6.0 |
AstraZeneca PLC sponsored ADR | 4.6 | 3.4 |
GlaxoSmithKline PLC sponsored ADR | 4.3 | 0.0 |
Takeda Pharamaceutical Co. Ltd. | 4.3 | 3.1 |
60.4 | ||
Top Industries (% of fund's net assets) | |||
As of August 31, 2006 | |||
| Pharmaceuticals | 86.2% | |
| Biotechnology | 4.6% | |
| Health Care Providers & Services | 4.5% | |
| Health Care Equipment & Supplies | 0.6% | |
| Health Care Technology | 0.4% | |
| All Others* | 3.7% | |
As of February 28, 2006 | |||
| Pharmaceuticals | 69.0% | |
| Health Care Providers & Services | 11.5% | |
| Biotechnology | 8.6% | |
| Health Care Equipment & Supplies | 6.9% | |
| Chemicals | 1.2% | |
| All Others* | 2.8% | |
*Includes short-term investments and net other assets. |
Prior period industry classifications reflect the categories in place as of the date indicated and have not been adjusted to reflect current industry classifications. |
Semiannual Report
Pharmaceuticals Portfolio
Investments August 31, 2006 (Unaudited)
Showing Percentage of Net Assets
Common Stocks - 96.5% | |||
Shares | Value (Note 1) | ||
BIOTECHNOLOGY - 4.6% | |||
Biotechnology - 4.6% | |||
Acambis PLC (a) | 27,600 | $72,000 | |
Alnylam Pharmaceuticals, Inc. (a) | 13,000 | 169,260 | |
Amgen, Inc. (a) | 1,500 | 101,895 | |
Amylin Pharmaceuticals, Inc. (a) | 6,060 | 274,700 | |
Antigenics, Inc. (a) | 12,100 | 23,353 | |
Arena Pharmaceuticals, Inc. (a) | 1,100 | 13,497 | |
Biogen Idec, Inc. (a) | 9,100 | 401,674 | |
BioMarin Pharmaceutical, Inc. (a) | 3,400 | 56,576 | |
BioSphere Medical, Inc. (a) | 24,800 | 157,976 | |
Cephalon, Inc. (a) | 5,400 | 307,908 | |
CSL Ltd. | 16,965 | 658,692 | |
deCODE genetics, Inc. (a) | 18,900 | 106,596 | |
Genentech, Inc. (a) | 14,600 | 1,204,792 | |
Genmab AS (a) | 5,100 | 190,078 | |
Genzyme Corp. (a) | 1,500 | 99,345 | |
Gilead Sciences, Inc. (a) | 3,000 | 190,200 | |
Grifols SA | 12,052 | 103,918 | |
Human Genome Sciences, Inc. (a) | 16,100 | 180,803 | |
Incyte Corp. (a) | 35,000 | 178,850 | |
Insmed, Inc. (a) | 60,000 | 72,600 | |
Isis Pharmaceuticals, Inc. (a) | 30,000 | 229,200 | |
MannKind Corp. (a)(d) | 90,000 | 1,657,800 | |
MedImmune, Inc. (a) | 3,600 | 99,504 | |
Metabasis Therapeutics, Inc. (a) | 3,000 | 17,670 | |
Myogen, Inc. (a) | 17,500 | 609,000 | |
Neopharm, Inc. (a) | 36,300 | 180,411 | |
OSI Pharmaceuticals, Inc. (a) | 24,000 | 894,480 | |
Panacos Pharmaceuticals, Inc. (a) | 19,200 | 108,480 | |
Progenics Pharmaceuticals, Inc. (a) | 4,500 | 101,880 | |
Regeneron Pharmaceuticals, Inc. (a) | 6,400 | 101,632 | |
Renovis, Inc. (a) | 20,200 | 297,748 | |
Sangamo Biosciences, Inc. (a)(d) | 25,000 | 138,250 | |
SGX Pharmaceuticals, Inc. | 7,800 | 19,110 | |
Speedel Holding AG | 790 | 102,642 | |
Tanox, Inc. (a) | 484 | 7,265 | |
Tercica, Inc. (a)(d) | 53,200 | 356,440 | |
Theravance, Inc. (a) | 2,900 | 76,966 | |
Vion Pharmaceuticals, Inc. (a) | 77,400 | 94,428 | |
9,657,619 | |||
CHEMICALS - 0.0% | |||
Diversified Chemicals - 0.0% | |||
Bayer AG sponsored ADR | 1,800 | 89,280 | |
HEALTH CARE EQUIPMENT & SUPPLIES - 0.6% | |||
Health Care Equipment - 0.4% | |||
Becton, Dickinson & Co. | 1,400 | 97,580 | |
BioLase Technology, Inc. (a) | 11,700 | 76,518 | |
EPIX Pharmaceuticals, Inc. (a) | 13,400 | 86,698 | |
Hospira, Inc. (a) | 2,700 | 98,901 | |
NeuroMetrix, Inc. (a) | 9,600 | 260,256 | |
NuVasive, Inc. (a) | 3,800 | 78,128 | |
Shares | Value (Note 1) | ||
St. Jude Medical, Inc. (a) | 4,000 | $145,640 | |
Varian Medical Systems, Inc. (a) | 2,000 | 106,600 | |
950,321 | |||
Health Care Supplies - 0.2% | |||
Bausch & Lomb, Inc. | 2,100 | 101,661 | |
Cooper Companies, Inc. | 200 | 9,996 | |
Gen-Probe, Inc. (a) | 4,300 | 209,023 | |
320,680 | |||
TOTAL HEALTH CARE EQUIPMENT & SUPPLIES | 1,271,001 | ||
HEALTH CARE PROVIDERS & SERVICES - 4.5% | |||
Health Care Distributors & Services - 3.2% | |||
AmerisourceBergen Corp. | 29,700 | 1,311,552 | |
Cardinal Health, Inc. | 56,162 | 3,786,442 | |
McKesson Corp. | 32,530 | 1,652,524 | |
6,750,518 | |||
Health Care Facilities - 0.4% | |||
Brookdale Senior Living, Inc. | 14,700 | 703,101 | |
Community Health Systems, Inc. (a) | 2,600 | 100,776 | |
803,877 | |||
Health Care Services - 0.4% | |||
Caremark Rx, Inc. | 1,700 | 98,498 | |
Express Scripts, Inc. (a) | 1,200 | 100,896 | |
Healthways, Inc. (a) | 10,300 | 531,686 | |
Medco Health Solutions, Inc. (a) | 2,400 | 152,088 | |
883,168 | |||
Managed Health Care - 0.5% | |||
CIGNA Corp. | 900 | 101,763 | |
UnitedHealth Group, Inc. | 16,000 | 831,200 | |
932,963 | |||
TOTAL HEALTH CARE PROVIDERS & SERVICES | 9,370,526 | ||
HEALTH CARE TECHNOLOGY - 0.4% | |||
Healthcare Technology - 0.4% | |||
Cerner Corp. (a) | 17,400 | 801,444 | |
TriZetto Group, Inc. (a) | 7,400 | 101,528 | |
902,972 | |||
LIFE SCIENCES TOOLS & SERVICES - 0.2% | |||
Life Science Tools & Services - 0.2% | |||
Exelixis, Inc. (a) | 24,400 | 237,412 | |
Third Wave Technologies, Inc. (a) | 25,100 | 102,910 | |
340,322 | |||
PHARMACEUTICALS - 86.2% | |||
Pharmaceuticals - 86.2% | |||
Abbott Laboratories | 2,100 | 102,270 | |
Abraxis BioScience, Inc. (a) | 15,300 | 380,664 | |
Adams Respiratory Therapeutics, Inc. (a) | 8,100 | 330,480 | |
Adolor Corp. (a) | 3,900 | 97,305 | |
Allergan, Inc. | 36,150 | 4,141,344 | |
Common Stocks - continued | |||
Shares | Value (Note 1) | ||
PHARMACEUTICALS - CONTINUED | |||
Pharmaceuticals - continued | |||
Altana AG | 34,770 | $2,053,632 | |
Astellas Pharma, Inc. | 108,600 | 4,403,390 | |
AstraZeneca PLC sponsored ADR | 149,730 | 9,753,412 | |
Atherogenics, Inc. (a) | 1,400 | 19,600 | |
AVANIR Pharmaceuticals Class A (a) | 15,450 | 109,232 | |
Barr Pharmaceuticals, Inc. (a) | 18,550 | 1,048,075 | |
Biovail Corp. | 31,210 | 508,825 | |
Bristol-Myers Squibb Co. | 490,000 | 10,657,500 | |
Cardiome Pharma Corp. (a) | 8,200 | 113,508 | |
Chugai Pharmaceutical Co. Ltd. | 3,700 | 81,946 | |
Daiichi Sankyo Co. Ltd. | 139,800 | 3,858,358 | |
Eisai Co. Ltd. | 74,900 | 3,566,515 | |
Elan Corp. PLC sponsored ADR (a) | 74,300 | 1,228,179 | |
Eli Lilly & Co. (d) | 196,800 | 11,007,024 | |
Endo Pharmaceuticals Holdings, Inc. (a) | 16,700 | 551,601 | |
Forest Laboratories, Inc. (a)(d) | 76,920 | 3,844,462 | |
GlaxoSmithKline PLC sponsored ADR | 161,100 | 9,147,258 | |
H. Lundbeck AS | 36,880 | 850,368 | |
Inspire Pharmaceuticals, Inc. (a) | 3,000 | 15,450 | |
King Pharmaceuticals, Inc. (a) | 7,400 | 120,028 | |
Kos Pharmaceuticals, Inc. (a) | 4,000 | 195,600 | |
Labopharm, Inc. (a) | 14,400 | 105,137 | |
Medicines Co. (a) | 4,400 | 99,264 | |
Medicis Pharmaceutical Corp. Class A | 6,400 | 187,456 | |
Merck & Co., Inc. | 556,300 | 22,557,963 | |
MGI Pharma, Inc. (a) | 5,200 | 78,676 | |
Mylan Laboratories, Inc. (d) | 35,347 | 718,251 | |
New River Pharmaceuticals, Inc. (a) | 800 | 20,864 | |
Novartis AG sponsored ADR | 229,240 | 13,094,189 | |
Novo Nordisk AS: | |||
Series B | 17,650 | 1,305,027 | |
Series B sponsored ADR (d) | 31,800 | 2,346,204 | |
Ono Pharmaceutical Co. Ltd. | 19,500 | 908,599 | |
Pfizer, Inc. | 765,400 | 21,094,424 | |
Roche Holding AG (participation certificate) | 59,683 | 11,003,553 | |
Sanofi-Aventis | 100 | 8,990 | |
Sanofi-Aventis sponsored ADR | 125,356 | 5,634,752 | |
Shares | Value (Note 1) | ||
Schering-Plough Corp. | 363,190 | $7,608,831 | |
Shionogi & Co. Ltd. | 56,000 | 1,006,516 | |
Shire PLC | 3,600 | 61,146 | |
Taisho Pharmaceutical Co. Ltd. | 49,000 | 957,920 | |
Takeda Pharamaceutical Co. Ltd. | 138,100 | 9,140,397 | |
Teva Pharmaceutical Industries Ltd. sponsored ADR | 148,901 | 5,175,799 | |
Valeant Pharmaceuticals International | 9,700 | 190,702 | |
ViroPharma, Inc. (a) | 1,800 | 22,518 | |
Wyeth | 206,120 | 10,038,044 | |
181,551,248 | |||
TOTAL COMMON STOCKS (Cost $186,644,364) | 203,182,968 | ||
Money Market Funds - 12.6% | |||
Fidelity Cash Central Fund, 5.31% (b) | 8,526,237 | 8,526,237 | |
Fidelity Securities Lending Cash Central Fund, 5.33% (b)(c) | 18,065,075 | 18,065,075 | |
TOTAL MONEY MARKET FUNDS (Cost $26,591,312) | 26,591,312 | ||
TOTAL INVESTMENT PORTFOLIO - 109.1% (Cost $213,235,676) | 229,774,280 | ||
NET OTHER ASSETS - (9.1)% | (19,154,154) | ||
NET ASSETS - 100% | $210,620,126 | ||
Legend |
(a)Non-income producing |
(b)Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. |
(c)Investment made with cash collateral received from securities on loan. |
(d)Security or a portion of the security is on loan at period end. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the fund from the affiliated Central funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $44,206 |
Fidelity Securities Lending Cash Central Fund | 76,139 |
Total | $120,345 |
Other Information |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: |
United States of America | 58.5% |
Switzerland | 11.5% |
Japan | 11.3% |
United Kingdom | 8.9% |
France | 2.7% |
Israel | 2.5% |
Denmark | 2.2% |
Germany | 1.0% |
Others (individually less than 1%) | 1.4% |
100.0% |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Pharmaceuticals Portfolio
Financial Statements
Statement of Assets and Liabilities
August 31, 2006 (Unaudited) | ||
Assets | ||
Investment in securities, at value (including securities loaned of $17,749,930) - See accompanying schedule: Unaffiliated issuers (cost $186,644,364) | $203,182,968 | |
Affiliated Central Funds (cost $26,591,312) | 26,591,312 | |
Total Investments (cost $213,235,676) | $229,774,280 | |
Receivable for investments sold | 714,875 | |
Receivable for fund shares sold | 4,543,059 | |
Dividends receivable | 652,188 | |
Interest receivable | 12,480 | |
Prepaid expenses | 101 | |
Other receivables | 16,224 | |
Total assets | 235,713,207 | |
Liabilities | ||
Payable for investments purchased | $6,442,157 | |
Payable for fund shares redeemed | 411,608 | |
Accrued management fee | 89,860 | |
Other affiliated payables | 58,339 | |
Other payables and accrued expenses | 26,042 | |
Collateral on securities loaned, at value | 18,065,075 | |
Total liabilities | 25,093,081 | |
Net Assets | $210,620,126 | |
Net Assets consist of: | ||
Paid in capital | $194,524,584 | |
Undistributed net investment income | 865,289 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (1,307,959) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 16,538,212 | |
Net Assets, for 19,778,587 shares outstanding | $210,620,126 | |
Net Asset Value, offering price and redemption price per share ($210,620,126 ÷ 19,778,587 shares) | $10.65 | |
Statement of Operations
Six months ended August 31, 2006 (Unaudited) | ||
Investment Income | ||
Dividends | $1,536,197 | |
Interest | 7 | |
Income from affiliated Central Funds (including $76,139 from security lending) | 120,345 | |
Total income | 1,656,549 | |
Expenses | ||
Management fee | $458,683 | |
Transfer agent fees | 278,525 | |
Accounting and security lending fees | 41,579 | |
Independent trustees' compensation | 295 | |
Custodian fees and expenses | 25,145 | |
Registration fees | 28,737 | |
Audit | 16,299 | |
Legal | 1,342 | |
Interest | 1,585 | |
Miscellaneous | 5,726 | |
Total expenses before reductions | 857,916 | |
Expense reductions | (9,039) | 848,877 |
Net investment income (loss) | 807,672 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers | (809,631) | |
Foreign currency transactions | 49,735 | |
Total net realized gain (loss) | (759,896) | |
Change in net unrealized appreciation (depreciation) on: Investment securities (net of decrease in deferred foreign taxes of $192) | 8,344,871 | |
Assets and liabilities in foreign currencies | (511) | |
Total change in net unrealized appreciation (depreciation) | 8,344,360 | |
Net gain (loss) | 7,584,464 | |
Net increase (decrease) in net assets resulting from operations | $8,392,136 | |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Statement of Changes in Net Assets
Six months ended August 31, 2006 (Unaudited) | Year ended | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $807,672 | $259,282 |
Net realized gain (loss) | (759,896) | 9,714,264 |
Change in net unrealized appreciation (depreciation) | 8,344,360 | 10,590,843 |
Net increase (decrease) in net assets resulting from operations | 8,392,136 | 20,564,389 |
Distributions to shareholders from net investment income | (141,797) | (167,947) |
Distributions to shareholders from net realized gain | (4,395,701) | - |
Total distributions | (4,537,498) | (167,947) |
Share transactions | 130,786,219 | 127,608,958 |
Reinvestment of distributions | 4,294,563 | 139,899 |
Cost of shares redeemed | (70,811,542) | (101,231,583) |
Net increase (decrease) in net assets resulting from share transactions | 64,269,240 | 26,517,274 |
Redemption fees | 24,854 | 56,069 |
Total increase (decrease) in net assets | 68,148,732 | 46,969,785 |
Net Assets | ||
Beginning of period | 142,471,394 | 95,501,609 |
End of period (including undistributed net investment income of $865,289 and undistributed net investment income of $128,024, respectively) | $210,620,126 | $142,471,394 |
Other Information Shares | ||
Sold | 12,658,796 | 13,503,357 |
Issued in reinvestment of distributions | 415,737 | 14,823 |
Redeemed | (6,981,227) | (10,882,911) |
Net increase (decrease) | 6,093,306 | 2,635,269 |
Financial Highlights
Six months ended August 31, 2006 | Years ended February 28, | |||||
(Unaudited) | 2006 | 2005 | 2004G | 2003 | 2002 I | |
Selected Per-Share Data | ||||||
Net asset value, beginning of period | $10.41 | $8.64 | $8.95 | $7.00 | $9.23 | $10.00 |
Income from Investment Operations | ||||||
Net investment income (loss) E | .05 | .02 | -H | (.01) | (.02) | (.03) |
Net realized and unrealized gain (loss) | .51 | 1.77 | (.31) | 1.95 | (2.22) | (.75) |
Total from investment operations | .56 | 1.79 | (.31) | 1.94 | (2.24) | (.78) |
Distributions from net investment income | (.01) | (.02) | - | - | - | - |
Distributions from net realized gain | (.31) | - | - | - | - | - |
Total distributions | (.32) | (.02) | - | - | - | - |
Redemption fees added to paid in capital E | - H | -H | -H | .01 | .01 | .01 |
Net asset value, end of period | $10.65 | $10.41 | $8.64 | $8.95 | $7.00 | $9.23 |
Total Return B, C, D | 5.47% | 20.68% | (3.46)% | 27.86% | (24.16)% | (7.70)% |
Ratios to Average Net Assets F | ||||||
Expenses before reductions | 1.05% A | 1.11% | 1.20% | 1.59% | 1.80% | 1.69% A |
Expenses net of fee waivers, if any | 1.05% A | 1.11% | 1.20% | 1.59% | 1.80% | 1.69% A |
Expenses net of all reductions | 1.04% A | 1.03% | 1.19% | 1.57% | 1.74% | 1.68% A |
Net investment income (loss) | .99% A | .23% | .05% | (.10)% | (.26)% | (.40)% A |
Supplemental Data | ||||||
Net assets, end of period (000 omitted) | $210,620 | $142,471 | $95,502 | $87,158 | $50,456 | $60,706 |
Portfolio turnover rate | 176% A | 207% | 42% | 80% | 140% | 26% A |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the former sales charges. E Calculated based on average shares outstanding during the period. F Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of long-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. G For the year ended February 29. H Amount represents less than $.01 per share. I For the period June 18, 2001 (commencement of operations) to February 28, 2002. | ||||||
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Notes to Financial Statements
For the period ended August 31, 2006 (Unaudited)
1. Significant Accounting Policies.
Biotechnology Portfolio, Health Care Portfolio, Medical Delivery Portfolio, Medical Equipment and Systems Portfolio, and Pharmaceuticals Portfolio (the Funds) are non-diversified funds of Fidelity Select Portfolios (the trust). The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Funds invest primarily in securities of companies whose principal business activities fall within specific industries. Each Fund is authorized to issue an unlimited number of shares. The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. The following summarizes the significant accounting policies of the Funds:
Security Valuation. Investments are valued and net asset value (NAV) per share is calculated (NAV calculation) as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time. During the period each Fund also calculated a NAV each hour on the hour (commencing at 10:00 a.m. Eastern time until one hour prior to the close of business on the NYSE). Effective October 1, 2006, each Fund will eliminate the hourly NAV calculation.
Wherever possible, each Fund uses independent pricing services approved by the Board of Trustees to value its investments. Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price. Debt securities, including restricted securities, for which quotations are readily available, are valued by independent pricing services or by dealers who make markets in such securities. Pricing services consider yield or price of bonds of comparable quality, coupon, maturity and type as well as dealer supplied prices. Investments in open-end mutual funds are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or do not accurately reflect fair value, valuations may be determined in accordance with procedures adopted by the Board of Trustees. For example, when developments occur between the close of a market and the close of the NYSE that may materially affect the value of some or all of the securities, or when trading in a security is halted, those securities may be fair valued. Factors used in the determination of fair value may include monitoring news to identify significant market or security specific events such as changes in the value of U.S. securities markets, reviewing developments in foreign markets and evaluating the performance of ADRs, futures contracts and exchange-traded funds. Because each Fund's utilization of fair value pricing depends on market activity, the frequency with which fair value pricing is used can not be predicted and may be utilized to a significant extent. The value of securities used for NAV calculation under fair value pricing may differ from published prices for the same securities.
Foreign Currency. Certain Funds may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. Security transactions are accounted for as of trade date. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Funds are informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Funds estimate the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income is accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Deferred Trustee Compensation. Under a Deferred Compensation Plan (the Plan) for Health Care Portfolio, Independent Trustees must defer receipt of a portion of, and may elect to defer receipt of an additional portion of, their annual compensation. Deferred amounts are invested in a cross-section of Fidelity funds, are marked-to-market and remain in the Fund until distributed in accordance with the Plan. The investment of deferred amounts and the offsetting payable to the Trustees are included in the accompanying Statement of Assets and Liabilities.
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
1. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders. Each year, each Fund intends to qualify as a regulated investment company by distributing all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code. As a result, no provision for income taxes is required in the accompanying financial statements. Foreign taxes are provided for based on each Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. In addition, certain Funds will claim a portion of the payment made to redeeming shareholders as a distribution for income tax purposes.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to short-term capital gains, foreign currency transactions, 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 investments and unrealized appreciation (depreciation) as of period end were as follows for each Fund:
Cost for Federal | Unrealized | Unrealized | Net Unrealized | |
Biotechnology Portfolio | $1,527,574,500 | $291,948,158 | $(115,748,729) | $176,199,429 |
Health Care Portfolio | 1,798,152,643 | 466,858,105 | (42,527,546) | 424,330,559 |
Medical Delivery Portfolio | 685,821,581 | 138,442,744 | (20,977,622) | 117,465,122 |
Medical Equipment and Systems Portfolio | 737,569,854 | 187,279,327 | (37,706,465) | 149,572,862 |
Pharmaceuticals Portfolio | 215,891,878 | 19,090,886 | (5,208,484) | 13,882,402 |
Trading (Redemption) Fees. Shares in the Funds held less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, including any estimated redemption fees paid by Fidelity Management & Research Company (FMR), are retained by the Fund and accounted for as an addition to paid in capital. Shareholders are also subject to an additional $7.50 fee for shares exchanged into another Fidelity fund (see Note4).
New Accounting Pronouncements. In July 2006, Financial Accounting Standards Board Interpretation No. 48, Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement 109 (FIN 48), was issued and is effective for fiscal years beginning after December 15, 2006. FIN 48 sets forth a threshold for financial statement recognition, measurement and disclosure of a tax position taken or expected to be taken on a tax return. Management is currently evaluating the impact, if any, the adoption of FIN 48 will have on the Funds' net assets, results of operations and financial statement disclosures.
In addition, in September 2006, Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157), was issued and is effective for fiscal years beginning after November 15, 2007. SFAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. Management is currently evaluating the impact the adoption of SFAS 157 will have on the Funds' financial statement disclosures.
2. Operating Policies.
Repurchase Agreements. FMR has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits certain Funds and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts which are then invested in repurchase agreements. Certain Funds may also invest directly with institutions in repurchase agreements. Repurchase agreements are collateralized by government or non-government securities. Upon settlement date, collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. Each applicable Fund monitors, on a daily basis, the value of the collateral to ensure it is at least equal to the principal amount of the repurchase agreement (including accrued interest). In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the value of the collateral may decline.
Restricted Securities. Certain Funds may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities is included at the end of each applicable Fund's Schedule of Investments.
Semiannual Report
3. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, are noted in the table below.
Purchases | Sales | |
Biotechnology Portfolio | $270,838,852 | $413,467,625 |
Health Care Portfolio | 797,403,712 | 1,034,449,859 |
Medical Delivery Portfolio | 455,854,739 | 1,074,619,608 |
Medical Equipment and Systems Portfolio | 281,192,347 | 538,499,578 |
Pharmaceuticals Portfolio | 198,309,424 | 143,883,390 |
4. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the Funds with investment management related services for which the Funds pay a monthly management fee. The management fee is the sum of an individual fund fee rate and a group fee rate. The individual fund fee rate is applied to each Fund's average net assets. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, each Fund's annualized management fee rate expressed as a percentage of each Fund's average net assets was as follows:
Individual | Group | Total | |
Biotechnology Portfolio | .30% | .27% | .57% |
Health Care Portfolio | .30% | .27% | .57% |
Medical Delivery Portfolio | .30% | .27% | .57% |
Medical Equipment and Systems Portfolio | .30% | .27% | .57% |
Pharmaceuticals Portfolio | .30% | .27% | .56% |
Transfer Agent Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, is the Funds' transfer, dividend disbursing and shareholder servicing agent. FSC receives account fees and asset-based fees that vary according to account size and type of account. FSC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, the transfer agent fees were equivalent to the following annualized rates expressed as a percentage of average net assets:
Biotechnology Portfolio | .31% |
Health Care Portfolio | .27% |
Medical Delivery Portfolio | .30% |
Medical Equipment and Systems Portfolio | .30% |
Pharmaceuticals Portfolio | .34% |
Accounting and Security Lending Fees. FSC maintains each Fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Affiliated Central Funds. Certain Funds may invest in Money Market Central Funds which seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
The Money Market Central Funds do not pay a management fee.
Exchange Fees. During the period, FSC received the proceeds of a $7.50 fee to cover administrative costs associated with exchanges out of the Funds to any other Fidelity Select fund or to any other Fidelity fund made through non-automated channels. Effective October 1, 2006, the exchange fees will be eliminated. For the period, exchange fees retained by FSC were as follows:
Retained | |
Biotechnology Portfolio | $14,115 |
Health Care Portfolio | 10,890 |
Medical Delivery Portfolio | 23,760 |
Medical Equipment and Systems Portfolio | 11,888 |
Pharmaceuticals Portfolio | 1,343 |
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
4. Fees and Other Transactions with Affiliates - continued
Brokerage Commissions. Certain Funds placed a portion of their portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were as follows:
Amount | |
Biotechnology Portfolio | $2,479 |
Health Care Portfolio | 2,280 |
Medical Delivery Portfolio | 9,385 |
Medical Equipment and Systems Portfolio | 2,749 |
Pharmaceuticals Portfolio | 439 |
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Funds, along with other registered investment companies having management contracts with FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the Funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. Each applicable fund's activity in this program during the period for which loans were outstanding was as follows:
Borrower or | Average Daily | Weighted | Interest | |
Biotechnology Portfolio | Borrower | $4,921,286 | 4.92% | $4,708 |
Health Care Portfolio | Borrower | 4,183,174 | 4.94% | 13,201 |
Medical Delivery Portfolio | Borrower | 11,021,731 | 4.93% | 39,278 |
Medical Equipment and Systems Portfolio | Borrower | 5,437,741 | 4.93% | 20,091 |
Pharmaceuticals Portfolio | Borrower | 1,860,500 | 5.11% | 1,585 |
5. Committed Line of Credit.
Certain Funds participate with other funds managed by FMR in a $4.2 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The participating funds have agreed to pay commitment fees on their pro rata portion of the line of credit, which is reflected in Miscellaneous Expense on the Statement of Operations, and is as follows:
Biotechnology Portfolio | $2,333 |
Health Care Portfolio | 3,156 |
Medical Delivery Portfolio | 1,757 |
Medical Equipment and Systems Portfolio | 1,450 |
Pharmaceuticals Portfolio | 205 |
During the period, there were no borrowings on this line of credit.
6. Security Lending.
Certain Funds lend portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, each applicable Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Funds and any additional required collateral is delivered to the Funds on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on each applicable Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented on each applicable Fund's Statement of Operations as a component of income from affiliated central funds.
Semiannual Report
7. Bank Borrowings.
Each Fund is permitted to have bank borrowings for temporary or emergency purposes to fund shareholder redemptions. Each Fund has established borrowing arrangements with certain banks. The interest rate on the borrowings is the bank's base rate, as revised from time to time. At period end, there were no bank borrowings outstanding. Each applicable Fund's activity in this program during the period for which loans were outstanding was as follows:
Average Daily | Weighted Average | |
Health Care Portfolio | $1,422,250 | 5.25% |
Medical Delivery Portfolio | $15,322,500 | 5.03% |
8. Expense Reductions.
Many of the brokers with whom FMR places trades on behalf of certain Funds provided services to these Funds in addition to trade execution. These services included payments of expenses on behalf of each applicable Fund. In addition, through arrangements with each applicable fund's transfer agent, credits realized as a result of uninvested cash balances were used to reduce each applicable fund's expenses. All of the applicable expense reductions are noted in the table below.
Brokerage | Transfer Agent | |
Biotechnology Portfolio | $11,654 | $10,244 |
Health Care Portfolio | - | 20,020 |
Medical Delivery Portfolio | 6,452 | 5,420 |
Medical Equipment and Systems Portfolio | 16,474 | 4,394 |
Pharmaceuticals Portfolio | 8,388 | 651 |
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.
Semiannual Report
Proxy Voting Results
A special meeting of Fidelity Select Portfolios' shareholders was held on September 20, 2006. The results of votes taken among shareholders on the proposal before them are reported below. Each vote reported represents one dollar of net asset value held on the record date for the meeting.
PROPOSAL 1 | ||
To elect a Board of Trustees. A | ||
# of | % of | |
Dennis J. Dirks | ||
Affirmative | 13,182,341,755.09 | 94.980 |
Withheld | 696,736,162.41 | 5.020 |
TOTAL | 13,879,077,917.50 | 100.000 |
Albert R. Gamper, Jr. | ||
Affirmative | 13,177,593,614.43 | 94.946 |
Withheld | 701,484,303.07 | 5.054 |
TOTAL | 13,879,077,917.50 | 100.000 |
Robert M. Gates | ||
Affirmative | 13,141,235,622.81 | 94.684 |
Withheld | 737,842,294.69 | 5.316 |
TOTAL | 13,879,077,917.50 | 100.000 |
George H. Heilmeier | ||
Affirmative | 13,140,073,210.00 | 94.675 |
Withheld | 739,004,707.50 | 5.325 |
TOTAL | 13,879,077,917.50 | 100.000 |
Edward C. Johnson 3d | ||
Affirmative | 13,106,284,587.54 | 94.432 |
Withheld | 772,793,329.96 | 5.568 |
TOTAL | 13,879,077,917.50 | 100.000 |
Stephen P. Jonas | ||
Affirmative | 13,168,282,872.88 | 94.879 |
Withheld | 710,795,044.62 | 5.121 |
TOTAL | 13,879,077,917.50 | 100.000 |
James H. KeyesB | ||
Affirmative | 13,164,603,089.66 | 94.852 |
Withheld | 714,474,827.84 | 5.148 |
TOTAL | 13,879,077,917.50 | 100.000 |
Marie L. Knowles | ||
Affirmative | 13,169,356,779.66 | 94.886 |
Withheld | 709,721,137.84 | 5.114 |
TOTAL | 13,879,077,917.50 | 100.000 |
Ned C. Lautenbach | ||
Affirmative | 13,166,485,155.52 | 94.866 |
Withheld | 712,592,761.98 | 5.134 |
TOTAL | 13,879,077,917.50 | 100.000 |
William O. McCoy | ||
Affirmative | 13,129,548,996.59 | 94.600 |
Withheld | 749,528,920.91 | 5.400 |
TOTAL | 13,879,077,917.50 | 100.000 |
Robert L. Reynolds | ||
Affirmative | 13,180,813,649.06 | 94.969 |
Withheld | 698,264,268.44 | 5.031 |
TOTAL | 13,879,077,917.50 | 100.000 |
# of | % of | |
Cornelia M. Small | ||
Affirmative | 13,170,500,616.42 | 94.895 |
Withheld | 708,577,301.08 | 5.105 |
TOTAL | 13,879,077,917.50 | 100.000 |
William S. Stavropoulos | ||
Affirmative | 13,143,284,328.22 | 94.699 |
Withheld | 735,793,589.28 | 5.301 |
TOTAL | 13,879,077,917.50 | 100.000 |
Kenneth L. Wolfe | ||
Affirmative | 13,162,946,758.47 | 94.840 |
Withheld | 716,131,159.03 | 5.160 |
TOTAL | 13,879,077,917.50 | 100.000 |
ADenotes trust-wide proposal and voting results. BEffective on or about January 1, 2007. | ||
Semiannual Report
Board Approval of Investment Advisory Contracts and Management Fees
Select Biotechnology
Select Health Care
Select Medical Delivery
Select Medical Equipment and Systems
Select Pharmaceuticals
Each year, typically in July, the Board of Trustees, including the Independent Trustees (together, the Board), votes on the renewal of the management contract and sub-advisory agreements (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 throughout the year.
The Board meets regularly each month except August and takes into account throughout the year matters bearing on Advisory Contracts. The Board, acting directly and through its separate committees, considers at each of its meetings factors that are relevant to the annual renewal of each fund's Advisory Contracts, including the services and support provided to each fund and its shareholders. At the time of the renewal, the Board had 12 standing committees, each composed of 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. Each committee has adopted a written charter outlining the structure and purposes of the committee. One such committee, the Equity Contract Committee, meets periodically as needed throughout the year to consider matters specifically related to the annual renewal of Advisory Contracts. The committee requests and receives information on, and makes recommendations to the Independent Trustees concerning, the approval and annual review of the Advisory Contracts.
At its July 2006 meeting, the Board of Trustees, including the Independent Trustees, unanimously determined to renew the Advisory Contracts for each fund. 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 the management fee and total expenses of each fund; (iii) the total costs of the services to be provided by and the profits to be realized by the investment adviser and its affiliates from the relationship with each fund; (iv) the extent to which economies of scale 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 determining whether to renew the Advisory Contracts for each fund, the Board ultimately reached a determination, with the assistance of fund counsel and Independent Trustees' counsel, that the renewal of the Advisory Contracts and the compensation to be received by Fidelity under the management contracts is consistent with Fidelity's fiduciary duty under applicable law. In addition to evaluating the specific factors noted above, the Board, in reaching its determination, is aware that shareholders in each fund have a broad range of investment choices available to them, including a wide choice among mutual funds offered by competitors to Fidelity, and that each fund's shareholders, with 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, managed by Fidelity.
Nature, Extent, and Quality of Services Provided. The Board considered staffing within the investment adviser, FMR, and the sub-advisers (together, the Investment Advisers), including the backgrounds of the funds' portfolio managers and the funds' investment objectives and disciplines. 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.
Resources Dedicated to Investment Management and Support Services. The Board reviewed the size, education, and experience of the Investment Advisers' investment staff, their use of technology, and the Investment Advisers' approach to recruiting, training, and retaining portfolio managers and other research, advisory, and management personnel. The Board considered Fidelity's extensive global research capabilities that enable the Investment Advisers to aggregate data from various sources in an effort to produce positive investment results. The Board noted that Fidelity's analysts have access to a variety of technological tools that enable them to perform both fundamental and quantitative analysis and to specialize in various disciplines. The Board also considered that Fidelity's portfolio managers and analysts have access to daily portfolio attribution that allows for monitoring of a fund's portfolio, as well as an electronic communication system that provides immediate real-time access to research concerning issuers and credit enhancers.
Shareholder and Administrative Services. The Board considered (i) the nature, extent, quality, and cost of administrative, distribution, 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 Investment Advisers' 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 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 also considered that Fidelity voluntarily pays for market data out of its own resources.
The Board noted that the growth of fund assets 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 phone representatives and over the Internet, and investor education materials and asset allocation tools.
Semiannual Report
Board Approval of Investment Advisory Contracts and Management Fees - continued
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 for a large variety of mutual fund investor services. The Board noted that, since the last Advisory Contract renewals in July 2005, Fidelity has taken a number of actions that benefited particular funds, including (i) dedicating additional resources to investment research and to restructure the investment research teams; (ii) voluntarily entering into contractual arrangements with certain brokers pursuant to which Fidelity pays for research products and services separately out of its own resources, rather than bundling with fund commissions; (iii) launching the Fidelity Advantage Class of its five Spartan stock index funds and three Spartan bond index funds, which is a lower-fee class available to shareholders with higher account balances; (iv) contractually agreeing to impose expense limitations on Fidelity U.S. Bond Index Fund and reducing the fund's initial investment minimum; and (v) offering shareholders of each of the Fidelity Institutional Money Market Funds the privilege of exchanging shares of the fund for shares of other Fidelity funds.
Investment Performance and Compliance. The Board considered whether each fund has operated within its investment objective, as well as its record of compliance with its investment restrictions. It also reviewed each fund's absolute investment performance, as well as each fund's relative investment performance measured against (i) a proprietary custom index (or a Goldman Sachs index that reflects the market sector in which the fund invests, in the case of Health Care Portfolio), and (ii) a peer group of mutual funds over multiple periods. For each of Biotechnology Portfolio, Health Care Portfolio, Medical Delivery Portfolio, and Medical Equipment and Systems Portfolio, the following charts considered by the Board show, over the one-, three-, and five-year periods ended December 31, 2005, the fund's cumulative total returns, the cumulative total returns of a proprietary custom index (or a Goldman Sachs index, in the case of Health Care Portfolio) ("benchmark"), and a range of cumulative total returns of a peer group of mutual funds identified by Lipper Inc. as having an investment objective similar to that of the fund. Because Pharmaceuticals Portfolio had been in existence less than five calendar years, the following charts considered by the Board show, over the one- and three-year periods ended December 31, 2005, the fund's cumulative total returns, the cumulative total returns of a proprietary custom index ("benchmark"), and a range of cumulative total returns of a peer group of mutual funds identified by Lipper Inc. as having an investment objective similar to that of the fund. The box within each chart shows the 25th percentile return (bottom of box) and the 75th percentile return (top of box) of the Lipper peer group. Returns shown above the box are in the first quartile and returns shown below the box are in the fourth quartile. The percentage beaten number noted below each chart corresponds to the percentile box and represents the percentage of funds in the Lipper peer group whose performance was equal to or lower than that of the fund. For each fund (other than Health Care Portfolio), the fund's proprietary custom index is an index developed and periodically revised by FMR that is a market-capitalization weighted index of securities that meet the fund's 80% name test.
Biotechnology Portfolio
The Board reviewed the fund's relative investment performance against its Lipper peer group and stated that the performance of the fund was in the second quartile for the one- and three-year periods and the fourth quartile for the five-year period. The Board noted that FMR does not consider that Lipper peer group to be a meaningful comparison for the fund, however, because the funds in the peer group typically have broader investment mandates than the fund, which focuses on a particular subset of companies within the health and biotechnology industries. The Board also stated that the relative investment performance of the fund was lower than its benchmark for all the periods shown. In the absence of a meaningful peer group comparison for the fund and in consideration of the fund's exposure to a narrow market sector, the Board focused its review on the fund's relative investment performance measured against its benchmark. In light of that comparison, the Board discussed with FMR actions to be taken by FMR to improve the fund's below-benchmark performance.
Semiannual Report
Health Care Portfolio
The Board reviewed the fund's relative investment performance against its Lipper peer group and stated that the performance of the fund was in the first quartile for the one-year period, the third quartile for the three-year period, and the second quartile for the five-year period. The Board also stated that the relative investment performance of the fund compared favorably to its benchmark for all the periods shown.
Medical Delivery Portfolio
The Board reviewed the fund's relative investment performance against its Lipper peer group and stated that the performance of the fund was in the first quartile for all the periods shown. The Board noted that FMR does not consider that Lipper peer group to be a meaningful comparison for the fund, however, because the funds in the peer group typically have broader investment mandates than the fund, which focuses on a particular subset of companies within the health and biotechnology industries. The Board also stated that the relative investment performance of the fund compared favorably to its benchmark for the three- and five-year periods, although the fund's one-year cumulative total return was lower than its benchmark.
Semiannual Report
Board Approval of Investment Advisory Contracts and Management Fees - continued
Medical Equipment and Systems Portfolio
The Board reviewed the fund's relative investment performance against its Lipper peer group and stated that the performance of the fund was in the third quartile for the one-year period and the first quartile for the three- and five-year periods. The Board noted that FMR does not consider that Lipper peer group to be a meaningful comparison for the fund, however, because the funds in the peer group typically have broader investment mandates than the fund, which focuses on a particular subset of companies within the health and biotechnology industries. The Board also stated that the relative investment performance of the fund was lower than its benchmark for the three- and five-year periods, although the fund's one-year cumulative total return compared favorably to its benchmark.
Pharmaceuticals Portfolio
The Board reviewed the fund's relative investment performance against its Lipper peer group and stated that the performance of the fund was in the second quartile for the one-year period and the fourth quartile for the three-year period. The Board noted that FMR does not consider that Lipper peer group to be a meaningful comparison for the fund, however, because the funds in the peer group typically have broader investment mandates than the fund, which focuses on a particular subset of companies within the health and biotechnology industries. The Board also stated that the relative investment performance of the fund was lower than its benchmark for the one-year period, although the fund's three-year cumulative total return compared favorably to its benchmark.
Semiannual Report
The Board considered that FMR has taken steps to refocus and strengthen equity research, equity portfolio management, and compliance. The Board noted with favor FMR's reorganization of its senior management team in 2005 and FMR's dedication of additional resources to investment research, and participated in the process that led to those changes.
Based on its review, and giving particular weight to the nature and quality of the resources dedicated by the Investment Advisers to maintain and improve relative performance, the Board concluded that the nature, extent, and quality of the services provided to each fund will benefit each fund's shareholders, particularly in light of the Board's view that each fund's shareholders benefit from investing in a fund that is part of a large family of funds offering a variety of investment disciplines and services.
Competitiveness of Management Fee and Total Fund Expenses. The Board considered each fund's management fee and total expenses compared to "mapped groups" of competitive funds and classes. Fidelity creates "mapped groups" by combining similar Lipper investment objective categories that have comparable management fee characteristics. Combining Lipper investment objective categories aids the Board's management fee and total expense comparisons by broadening the competitive group used for comparison and by reducing the number of universes to which various Fidelity funds are compared.
The Board considered two proprietary management fee comparisons for the 12-month (or shorter) periods 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" and, for the reasons explained above, is broader than the Lipper peer group used by the Board for performance comparisons. The Total Mapped Group comparison focuses on a fund's standing relative to the total universe of comparable funds available to investors, in terms of gross management fees before expense reimbursements or caps. "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 TMG % of 4% means that 96% of the funds in the Total Mapped Group had higher management fees than a fund. The "Asset-Size Peer Group" (ASPG) comparison focuses on a fund's standing relative to non-Fidelity funds similar in size to the fund within the Total Mapped Group. The ASPG represents at least 15% of the funds in the Total Mapped Group with comparable asset size and management fee characteristics, 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 ranked, is also included in the charts and considered by the Board.
Biotechnology Portfolio
Semiannual Report
Board Approval of Investment Advisory Contracts and Management Fees - continued
Health Care Portfolio
Medical Delivery Portfolio
Semiannual Report
Medical Equipment and Systems Portfolio
Pharmaceuticals Portfolio
The Board noted that each fund's management fee ranked below the median of its Total Mapped Group and below the median of its ASPG for 2005.
Based on its review, the Board concluded that each fund's management fee was fair and reasonable in light of the services that the fund receives and the other factors considered.
In its review of each fund's total expenses, 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 the effects of any waivers and reimbursements on fees and expenses. As part of its review, the Board also considered current and historical total expenses 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 expenses ranked below its competitive median for 2005.
In its review of total expenses, the Board also considered Fidelity fee structures and other information on clients that FMR and its affiliates service in other competitive markets, such as other mutual funds advised or subadvised by FMR or its affiliates, pension plan clients, and other institutional clients.
Semiannual Report
Board Approval of Investment Advisory Contracts and Management Fees - continued
Based on its review, the Board concluded that each fund's total expenses were 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 each fund and its shareholders. The Board also considered the level of Fidelity's profits in respect of all the Fidelity funds.
On an annual basis, FMR presents to the Board Fidelity's profitability for each fund. Fidelity calculates the profitability for each fund, as well as aggregate profitability for groups of Fidelity funds and all Fidelity funds, using a series of detailed revenue and cost allocation methodologies which originate with the audited books and records of Fidelity. The Audit Committee of the Board reviews any significant changes from the prior year's methodologies.
PricewaterhouseCoopers LLP (PwC), independent registered 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 results of Fidelity's profitability analysis. 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 surrounding the mathematical accuracy of fund profitability and its conformity to allocation methodologies. After considering PwC's reports issued under the engagement and information provided by Fidelity, the Board believes that while other allocation methods may also be reasonable, Fidelity's profitability methodologies are reasonable in all material respects.
The Board has also reviewed Fidelity's non-fund businesses and any 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 determined that the amount of profit is a fair entrepreneurial profit for the management of each fund.
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 through increased services to the fund, through waivers or reimbursements, or through fee or expense reductions, including reductions that occur through operation of the transfer agent agreement. The transfer agent fee varies in part based on the number of accounts in each fund. If the number of accounts decreases or the average account size increases, the overall transfer agent fee rate decreases.
The Board recognized that each fund's management contract incorporates a "group fee" structure, which provides for lower fee rates as total fund assets under FMR's management increase, and for higher fee rates as total fund assets under FMR's management decrease. The Board considered that the group fee is designed to deliver the benefits of economies of scale to fund shareholders when total fund 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 achieve a certain level of economies of scale as assets under FMR's management increase at the fund complex level, regardless of whether Fidelity achieves any such economies of scale.
The Board further concluded that any potential economies of scale are being shared between fund shareholders and Fidelity in an appropriate manner.
Additional Information Requested by the Board. In order to develop fully the factual basis for consideration of the Advisory Contracts, the Board requested additional information on several topics, including (i) Fidelity's fund profitability methodology and profitability trends within certain funds; (ii) portfolio manager compensation; (iii) the extent to which any economies of scale exist and are shared between the funds and Fidelity; (iv) the total expenses of certain funds and classes relative to competitors, including the extent to which the expenses of certain funds have been or could be capped; (v) fund performance trends; and (vi) Fidelity's fee structures, including use of performance fees.
Based on its evaluation of all of the conclusions noted above, and after considering all material factors, the Board ultimately concluded that the advisory fee structures are fair and reasonable, and that each fund's Advisory Contracts should be renewed.
Semiannual Report
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
FMR Co., Inc.
Fidelity Management & Research
(U.K.) Inc.
Fidelity Research & Analysis Company
Fidelity Investments Japan Limited
Fidelity International Investment Advisors
Fidelity International Investment Advisors
(U.K. Limited)
General Distributor
Fidelity Distributors Corporation
Boston, MA
Transfer and Service Agent
Fidelity Service Company, Inc.
Boston, MA
Custodian
Brown Brothers Harriman & Co.
Boston, MA
Corporate Headquarters
82 Devonshire Street
Boston, MA 02109
1-800-544-8888
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and Account Assistance1-800-544-6666
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Fidelity®
Select Portfolios®
Natural Resources Sector
Energy
Energy Service
Gold
Natural Gas
Natural Resources
Paper and Forest Products
Semiannual Report
August 31, 2006
(2_fidelity_logos) (Registered_Trademark)
Contents
Chairman's Message | ||
Shareholder Expense Example | ||
Fund Updates* | ||
Natural Resources Sector | ||
Energy | ||
Energy Service | ||
Gold | ||
Natural Gas | ||
Natural Resources | ||
Paper and Forest Products | ||
Notes to Financial Statements | ||
Proxy Voting Results | ||
Board Approval of Investment Advisory Contracts and Management Fees |
*Fund updates for each Select Portfolio include: Investment Changes, Investments, and Financial Statements.
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit www.fidelity.com/proxyvotingresults or visit the Securities and Exchange Commission's (SEC) web site at 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 Corp. or an affiliated company.
This report and the financial statements contained herein are submitted for the general information of the shareholders of the funds. This report is not authorized for distribution to prospective investors in the funds unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent quarterly holdings report, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com/holdings.
NOT FDIC INSURED · MAY LOSE VALUE · NO BANK GUARANTEE
Neither the funds nor Fidelity Distributors Corporation is a bank.
Annual Report
Chairman's Message
(Photograph of Edward C. Johnson 3d.)
Dear Shareholder:
Stock and bond markets around the world have seen largely positive results year to date, although weakness in the technology sector and growth stocks in general have tempered performance. While financial markets are always unpredictable, there are a number of time-tested principles that can put the historical odds in your favor.
One of the basic tenets is to invest for the long term. Over time, riding out the markets' inevitable ups and downs has proven much more effective than selling into panic or chasing the hottest trend. Even missing only a few of the markets' best days can significantly diminish investor returns. Patience also affords the benefits of compounding - of earning interest on additional income or reinvested dividends and capital gains. There are tax advantages and cost benefits to consider as well. The more you sell, the more taxes you pay, and the more you trade, the higher the costs. While staying the course doesn't eliminate risk, it can considerably lessen the effect of short-term declines.
You can further manage your investing risk through diversification. And today, more than ever, geographic diversification should be taken into account. Studies
indicate that asset allocation is the single most important determinant of a portfolio's long-term success. The right mix of stocks, bonds and cash - aligned to your particular risk tolerance and investment objective - is very important. Age-appropriate rebalancing is also an essential aspect of asset allocation. For younger investors, an emphasis on equities - which historically have been the best performing asset class over time - is encouraged. As investors near their specific goal, such as retirement or sending a child to college, consideration may be given to replacing volatile assets (e.g. common stocks) with more-stable fixed investments (bonds or savings plans).
A third investment principle - investing regularly - can help lower the average cost of your purchases. Investing a certain amount of money each month or quarter helps ensure you won't pay for all your shares at market highs. This strategy - known as dollar cost averaging - also reduces unconstructive "emotion" from investing, helping shareholders avoid selling weak performers just prior to an upswing, or chasing a hot performer just before a correction.
We invite you to contact us via the Internet, through our Investor Centers or over the phone. It is our privilege to provide you the information you need to make the investments that are right for you.
Sincerely,
/s/Edward C. Johnson 3d
Edward C. Johnson 3d
Semiannual Report
Shareholder Expense Example
As a shareholder of a Fund, you incur two types of costs: (1) transaction costs, including redemption fees, exchange 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 (March 1, 2006 to August 31, 2006).
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.
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.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Beginning | Ending | Expenses Paid | |
Energy Portfolio | |||
Actual | $1,000.00 | $1,054.20 | $4.66 |
Hypothetical A | $1,000.00 | $1,020.67 | $4.58 |
Energy Service Portfolio | |||
Actual | $1,000.00 | $1,018.60 | $4.53 |
Hypothetical A | $1,000.00 | $1,020.72 | $4.53 |
Gold Portfolio | |||
Actual | $1,000.00 | $1,105.60 | $4.83 |
Hypothetical A | $1,000.00 | $1,020.62 | $4.63 |
Natural Gas Portfolio | |||
Actual | $1,000.00 | $1,054.30 | $4.66 |
Hypothetical A | $1,000.00 | $1,020.67 | $4.58 |
Natural Resources Portfolio | |||
Actual | $1,000.00 | $1,052.50 | $4.86 |
Hypothetical A | $1,000.00 | $1,020.47 | $4.79 |
Paper and Forest Products Portfolio | |||
Actual | $1,000.00 | $1,005.00 | $6.32 |
Hypothetical A | $1,000.00 | $1,018.90 | $6.36 |
A5% return per year before expenses
*Expenses are equal to each Fund's annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period).
Annualized | |
Energy Portfolio | .90% |
Energy Service Portfolio | .89% |
Gold Portfolio | .91% |
Natural Gas Portfolio | .90% |
Natural Resources Portfolio | .94% |
Paper and Forest Products Portfolio | 1.25% |
Semiannual Report
Investment Changes
Top Ten Stocks as of August 31, 2006 | ||
% of fund's | % of fund's net assets | |
Halliburton Co. | 6.1 | 5.9 |
ConocoPhillips | 5.7 | 3.7 |
Exxon Mobil Corp. | 5.4 | 1.7 |
Schlumberger Ltd. (NY Shares) | 5.3 | 4.9 |
Smith International, Inc. | 4.3 | 2.8 |
Valero Energy Corp. | 4.3 | 3.2 |
National Oilwell Varco, Inc. | 4.1 | 4.3 |
GlobalSantaFe Corp. | 3.9 | 4.1 |
Chesapeake Energy Corp. | 2.9 | 2.5 |
Noble Corp. | 2.7 | 1.5 |
44.7 | ||
Top Industries (% of fund's net assets) | |||
As of August 31, 2006 | |||
| Oil, Gas & Consumable Fuels | 49.7% | |
| Energy Equipment & Services | 38.1% | |
| Independent Power Producers & Energy Traders | 2.8% | |
| Machinery | 1.9% | |
| Construction & Engineering | 1.7% | |
| All Others* | 5.8% | |
As of February 28, 2006 | |||
| Oil, Gas & Consumable Fuels | 50.4% | |
| Energy Equipment & Services | 37.3% | |
| Independent Power Producers & Energy Traders | 3.1% | |
| Construction & Engineering | 2.6% | |
| Machinery | 2.3% | |
| All Others* | 4.3% | |
*Includes short-term investments and net other assets. |
Prior period industry classifications reflect the categories in place as of the date indicated and have not been adjusted to reflect current industry classifications. |
Semiannual Report
Energy Portfolio
Investments August 31, 2006 (Unaudited)
Showing Percentage of Net Assets
Common Stocks - 99.1% | |||
Shares | Value (Note 1) | ||
AIRLINES - 0.1% | |||
Airlines - 0.1% | |||
UAL Corp. (a) | 90,800 | $2,270,000 | |
CHEMICALS - 0.4% | |||
Diversified Chemicals - 0.3% | |||
Ashland, Inc. | 144,100 | 9,098,474 | |
Specialty Chemicals - 0.1% | |||
Tokuyama Corp. | 78,600 | 1,089,333 | |
TOTAL CHEMICALS | 10,187,807 | ||
CONSTRUCTION & ENGINEERING - 1.7% | |||
Construction & Engineering - 1.7% | |||
Chicago Bridge & Iron Co. NV (NY Shares) | 335,000 | 9,048,350 | |
Fluor Corp. | 192,300 | 16,618,566 | |
Jacobs Engineering Group, Inc. (a) | 113,500 | 9,884,715 | |
SNC-Lavalin Group, Inc. | 409,100 | 11,285,134 | |
46,836,765 | |||
ELECTRIC UTILITIES - 1.0% | |||
Electric Utilities - 1.0% | |||
Exelon Corp. | 438,700 | 26,751,926 | |
Reliant Energy, Inc. (a) | 23,800 | 320,348 | |
27,072,274 | |||
ELECTRICAL EQUIPMENT - 1.3% | |||
Electrical Components & Equipment - 0.4% | |||
Energy Conversion Devices, Inc. (a) | 251,500 | 8,815,075 | |
Evergreen Solar, Inc. (a) | 289,800 | 2,950,164 | |
Suntech Power Holdings Co. Ltd. sponsored ADR | 36,300 | 1,052,700 | |
12,817,939 | |||
Heavy Electrical Equipment - 0.9% | |||
Vestas Wind Systems AS (a) | 855,200 | 23,941,810 | |
TOTAL ELECTRICAL EQUIPMENT | 36,759,749 | ||
ENERGY EQUIPMENT & SERVICES - 38.1% | |||
Oil & Gas Drilling - 12.2% | |||
Diamond Offshore Drilling, Inc. | 987,000 | 71,537,760 | |
ENSCO International, Inc. | 112,600 | 5,032,094 | |
GlobalSantaFe Corp. | 2,178,900 | 107,245,458 | |
Noble Corp. | 1,135,900 | 74,276,501 | |
Pride International, Inc. (a) | 1,947,216 | 50,491,311 | |
Transocean, Inc. (a) | 427,900 | 28,562,325 | |
337,145,449 | |||
Oil & Gas Equipment & Services - 25.9% | |||
Baker Hughes, Inc. | 936,650 | 66,670,747 | |
BJ Services Co. | 252,200 | 8,652,982 | |
Halliburton Co. | 5,146,364 | 167,874,394 | |
Hydril Co. (a) | 114,000 | 7,461,300 | |
Shares | Value (Note 1) | ||
Key Energy Services, Inc. (a) | 530,000 | $7,950,000 | |
National Oilwell Varco, Inc. (a) | 1,745,950 | 114,010,535 | |
Oil States International, Inc. (a) | 355,800 | 11,371,368 | |
Schlumberger Ltd. (NY Shares) (d) | 2,356,460 | 144,450,998 | |
Smith International, Inc. | 2,834,297 | 118,955,445 | |
Superior Energy Services, Inc. (a) | 569,100 | 18,171,363 | |
Veritas DGC, Inc. (a) | 88,400 | 5,265,988 | |
W-H Energy Services, Inc. (a) | 141,400 | 7,136,458 | |
Weatherford International Ltd. (a) | 793,600 | 34,124,800 | |
712,096,378 | |||
TOTAL ENERGY EQUIPMENT & SERVICES | 1,049,241,827 | ||
GAS UTILITIES - 0.9% | |||
Gas Utilities - 0.9% | |||
Questar Corp. | 183,900 | 15,914,706 | |
Xinao Gas Holdings Ltd. | 9,239,000 | 8,790,845 | |
24,705,551 | |||
INDEPENDENT POWER PRODUCERS & ENERGY TRADERS - 2.8% | |||
Independent Power Producers & Energy Traders - 2.8% | |||
AES Corp. (a) | 1,390,500 | 29,534,220 | |
Dynegy, Inc. Class A (a) | 263,000 | 1,630,600 | |
Mirant Corp. (a) | 717,600 | 20,788,872 | |
NRG Energy, Inc. | 301,000 | 15,242,640 | |
TXU Corp. | 133,400 | 8,832,414 | |
76,028,746 | |||
MACHINERY - 1.9% | |||
Construction & Farm Machinery & Heavy Trucks - 1.9% | |||
Bucyrus International, Inc. Class A | 626,000 | 32,320,380 | |
Joy Global, Inc. | 455,100 | 19,815,054 | |
52,135,434 | |||
MULTI-UTILITIES - 1.2% | |||
Multi-Utilities - 1.2% | |||
Dominion Resources, Inc. (d) | 408,800 | 32,659,032 | |
OIL, GAS & CONSUMABLE FUELS - 49.7% | |||
Coal & Consumable Fuels - 4.0% | |||
Arch Coal, Inc. | 344,800 | 11,292,200 | |
CONSOL Energy, Inc. | 1,246,800 | 45,470,796 | |
Foundation Coal Holdings, Inc. | 346,000 | 12,428,320 | |
Peabody Energy Corp. | 896,300 | 39,499,941 | |
108,691,257 | |||
Integrated Oil & Gas - 18.7% | |||
BG Group PLC sponsored ADR | 29,500 | 1,928,415 | |
BP PLC sponsored ADR | 21,300 | 1,449,465 | |
Chevron Corp. | 1,131,532 | 72,870,661 | |
ConocoPhillips | 2,453,826 | 155,646,183 | |
ENI Spa sponsored ADR | 488,950 | 29,904,182 | |
Exxon Mobil Corp. | 2,195,110 | 148,543,094 | |
Hess Corp. | 5,200 | 238,056 | |
Husky Energy, Inc. | 122,400 | 8,469,331 | |
Common Stocks - continued | |||
Shares | Value (Note 1) | ||
OIL, GAS & CONSUMABLE FUELS - CONTINUED | |||
Integrated Oil & Gas - continued | |||
OAO Gazprom sponsored ADR | 409,750 | $19,155,813 | |
Occidental Petroleum Corp. | 765,800 | 39,048,142 | |
OMV AG | 204,590 | 10,909,464 | |
Royal Dutch Shell PLC Class A sponsored ADR | 1,300 | 89,622 | |
Suncor Energy, Inc. (d) | 350,800 | 27,183,588 | |
Total SA sponsored ADR | 3,700 | 249,491 | |
515,685,507 | |||
Oil & Gas Exploration & Production - 20.3% | |||
Cabot Oil & Gas Corp. | 593,100 | 30,283,686 | |
Canadian Natural Resources Ltd. | 1,399,900 | 73,496,966 | |
Chesapeake Energy Corp. | 2,527,900 | 79,805,803 | |
Comstock Resources, Inc. (a) | 156,300 | 4,495,188 | |
EnCana Corp. | 309,876 | 16,260,570 | |
Energy Partners Ltd. (a)(d) | 735,500 | 18,350,725 | |
EOG Resources, Inc. | 129,700 | 8,407,154 | |
Forest Oil Corp. (a) | 25,600 | 867,072 | |
Houston Exploration Co. (a) | 234,200 | 15,023,930 | |
Hugoton Royalty Trust | 416,107 | 11,759,184 | |
Mariner Energy, Inc. (a) | 133,218 | 2,517,820 | |
Nexen, Inc. | 304,300 | 17,727,203 | |
Plains Exploration & Production Co. (a) | 1,025,305 | 45,123,673 | |
Quicksilver Resources, Inc. (a) | 636,350 | 23,939,487 | |
Range Resources Corp. | 2,254,500 | 63,080,910 | |
Talisman Energy, Inc. | 1,118,900 | 19,638,704 | |
Ultra Petroleum Corp. (a) | 1,320,200 | 65,534,728 | |
UTS Energy Corp. (a) | 2,736,400 | 11,759,613 | |
XTO Energy, Inc. | 1,126,400 | 51,555,328 | |
559,627,744 | |||
Oil & Gas Refining & Marketing - 4.3% | |||
Valero Energy Corp. | 2,052,932 | 117,838,297 | |
Oil & Gas Storage & Transport - 2.4% | |||
El Paso Corp. | 564,600 | 8,197,992 | |
Energy Transfer Equity LP | 236,500 | 6,411,515 | |
Enterprise GP Holdings LP | 169,400 | 6,013,700 | |
OMI Corp. | 1,051,500 | 23,679,780 | |
Shares | Value (Note 1) | ||
Overseas Shipholding Group, Inc. | 226,500 | $15,107,550 | |
Williams Companies, Inc. | 266,300 | 6,558,969 | |
65,969,506 | |||
TOTAL OIL, GAS & CONSUMABLE FUELS | 1,367,812,311 | ||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 0.0% | |||
Semiconductors - 0.0% | |||
Renewable Energy Corp. AS | 5,800 | 81,195 | |
TOTAL COMMON STOCKS (Cost $2,268,723,116) | 2,725,790,691 | ||
Money Market Funds - 2.8% | |||
Fidelity Cash Central Fund, 5.31% (b) | 32,271,501 | 32,271,501 | |
Fidelity Securities Lending Cash Central Fund, 5.33% (b)(c) | 44,566,550 | 44,566,550 | |
TOTAL MONEY MARKET FUNDS (Cost $76,838,051) | 76,838,051 | ||
TOTAL INVESTMENT PORTFOLIO - 101.9% (Cost $2,345,561,167) | 2,802,628,742 |
NET OTHER ASSETS - (1.9)% | (52,153,699) | ||
NET ASSETS - 100% | $2,750,475,043 | ||
Legend |
(a)Non-income producing |
(b)Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. |
(c)Investment made with cash collateral received from securities on loan. |
(d)Security or a portion of the security is on loan at period end. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the fund from the affiliated Central funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $1,087,094 |
Fidelity Securities Lending Cash Central Fund | 171,462 |
Total | $1,258,556 |
Other Information |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: |
United States of America | 74.2% |
Canada | 9.1% |
Cayman Islands | 6.9% |
Netherlands Antilles | 5.3% |
Italy | 1.1% |
Others (individually less than 1%) | 3.4% |
100.0% |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Energy Portfolio
Financial Statements
Statement of Assets and Liabilities
August 31, 2006 (Unaudited) | ||
Assets | ||
Investment in securities, at value (including securities loaned of $42,659,744) - See accompanying schedule: Unaffiliated issuers (cost $2,268,723,116) | $2,725,790,691 | |
Affiliated Central Funds (cost $76,838,051) | 76,838,051 | |
Total Investments (cost $2,345,561,167) | $2,802,628,742 | |
Receivable for investments sold | 656,654 | |
Receivable for fund shares sold | 3,381,903 | |
Dividends receivable | 3,776,871 | |
Interest receivable | 174,990 | |
Prepaid expenses | 1,714 | |
Other receivables | 23,171 | |
Total assets | 2,810,644,045 | |
Liabilities | ||
Payable for investments purchased | $190,530 | |
Payable for fund shares redeemed | 13,263,688 | |
Accrued management fee | 1,335,506 | |
Other affiliated payables | 729,708 | |
Other payables and accrued expenses | 83,020 | |
Collateral on securities loaned, at value | 44,566,550 | |
Total liabilities | 60,169,002 | |
Net Assets | $2,750,475,043 | |
Net Assets consist of: | ||
Paid in capital | $2,145,077,395 | |
Undistributed net investment income | 3,105,838 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 145,223,410 | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 457,068,400 | |
Net Assets, for 55,474,306 shares outstanding | $2,750,475,043 | |
Net Asset Value, offering price and redemption price per share ($2,750,475,043 ÷ 55,474,306 shares) | $49.58 | |
Statement of Operations
Six months ended August 31, 2006 (Unaudited) | ||
Investment Income | ||
Dividends | $14,267,106 | |
Interest | 41,138 | |
Income from affiliated Central Funds | 1,258,556 | |
Total income | 15,566,800 | |
Expenses | ||
Management fee | $7,810,202 | |
Transfer agent fees | 3,727,418 | |
Accounting and security lending fees | 527,350 | |
Independent trustees' compensation | 5,372 | |
Custodian fees and expenses | 67,698 | |
Registration fees | 132,474 | |
Audit | 23,018 | |
Legal | 23,946 | |
Interest | 15,138 | |
Miscellaneous | 67,361 | |
Total expenses before reductions | 12,399,977 | |
Expense reductions | (17,105) | 12,382,872 |
Net investment income (loss) | 3,183,928 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers | 151,624,699 | |
Foreign currency transactions | 26,487 | |
Total net realized gain (loss) | 151,651,186 | |
Change in net unrealized appreciation (depreciation) on: Investment securities | (40,364,020) | |
Assets and liabilities in foreign currencies | (1,239) | |
Total change in net unrealized appreciation (depreciation) | (40,365,259) | |
Net gain (loss) | 111,285,927 | |
Net increase (decrease) in net assets resulting from operations | $114,469,855 | |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Statement of Changes in Net Assets
Six months ended | Year ended | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $3,183,928 | $5,195,545 |
Net realized gain (loss) | 151,651,186 | 241,102,758 |
Change in net unrealized appreciation (depreciation) | (40,365,259) | 263,292,874 |
Net increase (decrease) in net assets resulting from operations | 114,469,855 | 509,591,177 |
Distributions to shareholders from net investment income | (1,032,361) | (4,035,148) |
Distributions to shareholders from net realized gain | (121,302,415) | (107,681,031) |
Total distributions | (122,334,776) | (111,716,179) |
Share transactions | 867,271,083 | 2,697,973,308 |
Reinvestment of distributions | 117,901,557 | 107,368,613 |
Cost of shares redeemed | (775,136,877) | (1,805,743,615) |
Net increase (decrease) in net assets resulting from share transactions | 210,035,763 | 999,598,306 |
Redemption fees | 505,009 | 1,466,118 |
Total increase (decrease) in net assets | 202,675,851 | 1,398,939,422 |
Net Assets | ||
Beginning of period | 2,547,799,192 | 1,148,859,770 |
End of period (including undistributed net investment income of $3,105,838 and undistributed net investment income of $1,501,978, respectively) | $2,750,475,043 | $2,547,799,192 |
Other Information Shares | ||
Sold | 16,849,040 | 61,223,035 |
Issued in reinvestment of distributions | 2,292,912 | 2,375,548 |
Redeemed | (15,447,649) | (41,499,308) |
Net increase (decrease) | 3,694,303 | 22,099,275 |
Financial Highlights
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Investment Changes
Top Ten Stocks as of August 31, 2006 | ||
% of fund's | % of fund's net assets | |
National Oilwell Varco, Inc. | 8.4 | 7.0 |
Noble Corp. | 6.5 | 6.9 |
GlobalSantaFe Corp. | 6.2 | 7.3 |
Diamond Offshore Drilling, Inc. | 5.9 | 6.8 |
Schlumberger Ltd. (NY Shares) | 5.8 | 4.9 |
Halliburton Co. | 5.6 | 7.0 |
Weatherford International Ltd. | 5.5 | 4.9 |
Baker Hughes, Inc. | 4.4 | 4.9 |
Transocean, Inc. | 3.8 | 4.0 |
McDermott International, Inc. | 3.5 | 1.0 |
55.6 | ||
Top Industries (% of fund's net assets) | |||
As of August 31, 2006 | |||
| Energy Equipment & Services | 91.8% | |
| Industrial Conglomerates | 3.5% | |
| Oil, Gas & Consumable Fuels | 3.2% | |
| Electrical Equipment | 0.8% | |
| Electronic Equipment & Instruments | 0.6% | |
| All Others* | 0.1% | |
As of February 28, 2006 | |||
| Energy Equipment & Services | 94.3% | |
| Oil, Gas & Consumable Fuels | 4.4% | |
| Construction & Engineering | 1.0% | |
| All Others* | 0.3% | |
*Includes short-term investments and net other assets. |
Prior period industry classifications reflect the categories in place as of the date indicated and have not been adjusted to reflect current industry classifications. |
Semiannual Report
Energy Service Portfolio
Investments August 31, 2006 (Unaudited)
Showing Percentage of Net Assets
Common Stocks - 100.0% | |||
Shares | Value (Note 1) | ||
ELECTRICAL EQUIPMENT - 0.8% | |||
Heavy Electrical Equipment - 0.8% | |||
Vestas Wind Systems AS (a) | 457,000 | $12,793,975 | |
ELECTRONIC EQUIPMENT & INSTRUMENTS - 0.6% | |||
Electronic Equipment & Instruments - 0.6% | |||
Sunpower Corp. Class A (d) | 335,500 | 10,756,130 | |
ENERGY EQUIPMENT & SERVICES - 91.8% | |||
Oil & Gas Drilling - 29.2% | |||
Atwood Oceanics, Inc. (a)(d) | 202,100 | 8,690,300 | |
Diamond Offshore Drilling, Inc. (d) | 1,382,300 | 100,189,104 | |
ENSCO International, Inc. | 851,500 | 38,053,535 | |
GlobalSantaFe Corp. | 2,142,310 | 105,444,498 | |
Grey Wolf, Inc. (a) | 1,200 | 8,772 | |
Helmerich & Payne, Inc. | 7,200 | 176,616 | |
Hercules Offshore, Inc. | 241,900 | 7,721,448 | |
Noble Corp. | 1,687,650 | 110,355,434 | |
Patterson-UTI Energy, Inc. | 1,300 | 35,620 | |
Petrojarl ASA sponsored ADR | 24,800 | 260,400 | |
Pride International, Inc. (a) | 1,760,786 | 45,657,181 | |
Rowan Companies, Inc. | 386,100 | 13,204,620 | |
TODCO Class A | 3,300 | 122,199 | |
Transocean, Inc. (a) | 967,827 | 64,602,452 | |
494,522,179 | |||
Oil & Gas Equipment & Services - 62.6% | |||
Acergy SA (a) | 289,000 | 5,097,203 | |
Baker Hughes, Inc. | 1,058,336 | 75,332,356 | |
Basic Energy Services, Inc. | 418,200 | 11,960,520 | |
BJ Services Co. | 472,074 | 16,196,859 | |
Cameron International Corp. (a) | 1,119,500 | 53,635,245 | |
Carbo Ceramics, Inc. | 3,800 | 151,772 | |
Compagnie Generale de Geophysique SA (a) | 23,700 | 3,825,919 | |
Complete Production Services, Inc. | 286,700 | 6,364,740 | |
Core Laboratories NV (a) | 187,600 | 13,764,212 | |
Dresser-Rand Group, Inc. | 555,800 | 11,366,110 | |
Dril-Quip, Inc. (a) | 235,200 | 18,061,008 | |
FMC Technologies, Inc. (a)(d) | 560,700 | 32,980,374 | |
Global Industries Ltd. (a) | 837,800 | 15,013,376 | |
Grant Prideco, Inc. (a) | 1,195,005 | 49,628,558 | |
Halliburton Co. | 2,890,234 | 94,279,433 | |
Hanover Compressor Co. (a)(d) | 636,100 | 11,971,402 | |
Hornbeck Offshore Services, Inc. (a) | 406,300 | 13,655,743 | |
Hydril Co. (a) | 302,600 | 19,805,170 | |
Key Energy Services, Inc. (a) | 1,200 | 18,000 | |
Shares | Value (Note 1) | ||
Lone Star Technologies, Inc. (a) | 95,400 | $4,324,482 | |
Maverick Tube Corp. (a) | 4,400 | 282,788 | |
National Oilwell Varco, Inc. (a) | 2,177,695 | 142,203,486 | |
Oceaneering International, Inc. (a) | 1,134,400 | 40,804,368 | |
Oil States International, Inc. (a) | 575,500 | 18,392,980 | |
Petroleum Geo-Services ASA sponsored ADR (a) | 24,800 | 1,289,600 | |
RPC, Inc. | 506,950 | 10,362,058 | |
Schlumberger Ltd. (NY Shares) | 1,598,590 | 97,993,567 | |
Smith International, Inc. | 1,005,356 | 42,194,791 | |
Superior Energy Services, Inc. (a) | 583,500 | 18,631,155 | |
Superior Well Services, Inc. (a) | 51,100 | 1,100,183 | |
TETRA Technologies, Inc. (a) | 632,200 | 17,581,482 | |
TGS Nopec Geophysical Co. ASA (a) | 523,000 | 9,265,715 | |
Tidewater, Inc. | 5,800 | 276,138 | |
Universal Compression Holdings, Inc. (a) | 464,400 | 25,277,292 | |
Veritas DGC, Inc. (a) | 468,100 | 27,884,717 | |
W-H Energy Services, Inc. (a) | 1,119,900 | 56,521,353 | |
Warrior Energy Service Corp. (a) | 8,400 | 160,440 | |
Weatherford International Ltd. (a) | 2,168,810 | 93,258,830 | |
1,060,913,425 | |||
TOTAL ENERGY EQUIPMENT & SERVICES | 1,555,435,604 | ||
INDUSTRIAL CONGLOMERATES - 3.5% | |||
Industrial Conglomerates - 3.5% | |||
McDermott International, Inc. (a) | 1,230,650 | 59,317,330 | |
MACHINERY - 0.1% | |||
Construction & Farm Machinery & Heavy Trucks - 0.1% | |||
Joy Global, Inc. | 50,400 | 2,194,416 | |
OIL, GAS & CONSUMABLE FUELS - 3.2% | |||
Oil & Gas Exploration & Production - 2.9% | |||
Cabot Oil & Gas Corp. | 84,900 | 4,334,994 | |
EOG Resources, Inc. | 55,700 | 3,610,474 | |
Helix Energy Solutions Group, Inc. (a) | 785,600 | 30,214,176 | |
Plains Exploration & Production Co. (a) | 103,800 | 4,568,238 | |
Quicksilver Resources, Inc. (a) | 80,062 | 3,011,932 | |
Ultra Petroleum Corp. (a) | 70,700 | 3,509,548 | |
49,249,362 | |||
Oil & Gas Refining & Marketing - 0.3% | |||
Valero Energy Corp. | 101,800 | 5,843,320 | |
TOTAL OIL, GAS & CONSUMABLE FUELS | 55,092,682 | ||
TOTAL COMMON STOCKS (Cost $1,280,862,052) | 1,695,590,137 | ||
Money Market Funds - 2.1% | |||
Shares | Value (Note 1) | ||
Fidelity Cash Central Fund, 5.31% (b) | 15,831,973 | $15,831,973 | |
Fidelity Securities Lending Cash Central Fund, 5.33% (b)(c) | 19,101,325 | 19,101,325 | |
TOTAL MONEY MARKET FUNDS (Cost $34,933,298) | 34,933,298 | ||
TOTAL INVESTMENT PORTFOLIO - 102.1% (Cost $1,315,795,350) | 1,730,523,435 |
NET OTHER ASSETS - (2.1)% | (35,310,427) | ||
NET ASSETS - 100% | $1,695,213,008 | ||
Legend |
(a)Non-income producing |
(b)Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. |
(c)Investment made with cash collateral received from securities on loan. |
(d)Security or a portion of the security is on loan at period end. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the fund from the affiliated Central funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $545,221 |
Fidelity Securities Lending Cash Central Fund | 95,244 |
Total | $640,465 |
Other Information |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: |
United States of America | 75.1% |
Cayman Islands | 12.7% |
Netherlands Antilles | 5.8% |
Panama | 3.5% |
Others (individually less than 1%) | 2.9% |
100.0% |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Energy Service Portfolio
Financial Statements
Statement of Assets and Liabilities
August 31, 2006 (Unaudited) | ||
Assets | ||
Investment in securities, at value (including securities loaned of $18,887,602) - See accompanying schedule: Unaffiliated issuers (cost $1,280,862,052) | $1,695,590,137 | |
Affiliated Central Funds (cost $34,933,298) | 34,933,298 | |
Total Investments (cost $1,315,795,350) | $1,730,523,435 | |
Receivable for fund shares sold | 1,878,820 | |
Dividends receivable | 531,220 | |
Interest receivable | 13,114 | |
Prepaid expenses | 1,024 | |
Other receivables | 35,098 | |
Total assets | 1,732,982,711 | |
Liabilities | ||
Payable for investments purchased | $751,353 | |
Payable for fund shares redeemed | 16,554,219 | |
Accrued management fee | 842,087 | |
Other affiliated payables | 459,763 | |
Other payables and accrued expenses | 60,956 | |
Collateral on securities loaned, at value | 19,101,325 | |
Total liabilities | 37,769,703 | |
Net Assets | $1,695,213,008 | |
Net Assets consist of: | ||
Paid in capital | $1,207,926,264 | |
Accumulated net investment loss | (4,372,107) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 76,930,780 | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 414,728,071 | |
Net Assets, for 24,988,861 shares outstanding | $1,695,213,008 | |
Net Asset Value, offering price and redemption price per share ($1,695,213,008 ÷ 24,988,861 shares) | $67.84 | |
Statement of Operations
Six months ended August 31, 2006 (Unaudited) | ||
Investment Income | ||
Dividends | $3,415,792 | |
Interest | 2,951 | |
Income from affiliated Central Funds | 640,465 | |
Total income | 4,059,208 | |
Expenses | ||
Management fee | $5,354,573 | |
Transfer agent fees | 2,376,533 | |
Accounting and security lending fees | 371,454 | |
Independent trustees' compensation | 3,785 | |
Custodian fees and expenses | 41,645 | |
Registration fees | 166,333 | |
Audit | 20,900 | |
Legal | 16,551 | |
Interest | 60,033 | |
Miscellaneous | 41,258 | |
Total expenses before reductions | 8,453,065 | |
Expense reductions | (22,707) | 8,430,358 |
Net investment income (loss) | (4,371,150) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers | 89,561,289 | |
Foreign currency transactions | 7,199 | |
Total net realized gain (loss) | 89,568,488 | |
Change in net unrealized appreciation (depreciation) on: Investment securities | (93,459,134) | |
Assets and liabilities in foreign currencies | (159) | |
Total change in net unrealized appreciation (depreciation) | (93,459,293) | |
Net gain (loss) | (3,890,805) | |
Net increase (decrease) in net assets resulting from operations | $(8,261,955) | |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Statement of Changes in Net Assets
Six months ended August 31, 2006 (Unaudited) | Year ended | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $(4,371,150) | $(2,557,504) |
Net realized gain (loss) | 89,568,488 | 59,949,764 |
Change in net unrealized appreciation (depreciation) | (93,459,293) | 254,167,467 |
Net increase (decrease) in net assets resulting from operations | (8,261,955) | 311,559,727 |
Distributions to shareholders from net realized gain | (40,157,576) | - |
Share transactions | 926,683,101 | 1,674,189,408 |
Reinvestment of distributions | 38,491,076 | - |
Cost of shares redeemed | (957,448,889) | (1,149,311,141) |
Net increase (decrease) in net assets resulting from share transactions | 7,725,288 | 524,878,267 |
Redemption fees | 1,831,176 | 1,385,968 |
Total increase (decrease) in net assets | (38,863,067) | 837,823,962 |
Net Assets | ||
Beginning of period | 1,734,076,075 | 896,252,113 |
End of period (including accumulated net investment loss of $4,372,107 and accumulated net investment loss of $957, respectively) | $1,695,213,008 | $1,734,076,075 |
Other Information Shares | ||
Sold | 12,372,132 | 27,015,130 |
Issued in reinvestment of distributions | 516,174 | - |
Redeemed | (13,390,438) | (19,650,559) |
Net increase (decrease) | (502,132) | 7,364,571 |
Financial Highlights
Six months ended August 31, 2006 | Years ended February 28, | |||||
(Unaudited) | 2006 | 2005 | 2004 I | 2003 | 2002 | |
Selected Per-Share Data | ||||||
Net asset value, beginning of period | $68.03 | $49.44 | $35.65 | $29.73 | $30.75 | $38.51 |
Income from Investment Operations | ||||||
Net investment income (loss) D | (.17) | (.12) F | (.20) | (.24) | (.21) E | (.14) |
Net realized and unrealized gain (loss) | 1.51 G | 18.64 | 13.95 | 6.14 | (.85) | (7.71) |
Total from investment operations | 1.34 | 18.52 | 13.75 | 5.90 | (1.06) | (7.85) |
Distributions from net realized gain | (1.60) | - | - | - | - | - |
Redemption fees added to paid in capital D | .07 | .07 | .04 | .02 | .04 | .09 |
Net asset value, end of period | $67.84 | $68.03 | $49.44 | $35.65 | $29.73 | $30.75 |
Total Return B, C | 1.86% | 37.60% | 38.68% | 19.91% | (3.32)% | (20.15)% |
Ratios to Average Net Assets H | ||||||
Expenses before reductions | .89% A | .94% | .98% | 1.14% | 1.15% | 1.13% |
Expenses net of fee waivers, if any | .89% A | .94% | .98% | 1.14% | 1.15% | 1.13% |
Expenses net of all reductions | .89% A | .91% | .96% | 1.13% | 1.12% | 1.07% |
Net investment income (loss) | (.46)% A | (.21)% F | (.53)% | (.79)% | (.68)% | (.46)% |
Supplemental Data | ||||||
Net assets, end of period (000 omitted) | $1,695,213 | $1,734,076 | $896,252 | $463,384 | $455,122 | $526,138 |
Portfolio turnover rate | 98% A | 58% | 34% | 23% | 64% | 90% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Calculated based on average shares outstanding during the period. E Investment income per share reflects a special dividend which amounted to $.01 per share. F Investment income per share reflects a special dividend which amounted to $.08 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.34)%. G The amount shown for a share outstanding does not correspond with the aggregate net gain (loss) on investments for the period due to the timing of sales and repurchases of shares in relation to fluctuating market values of the investments of the Fund. H Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. I For the year ended February 29. | ||||||
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Investment Changes
Top Ten Stocks as of August 31, 2006 | ||
% of fund's | % of fund's net assets | |
Meridian Gold, Inc. | 9.5 | 9.5 |
Newcrest Mining Ltd. | 9.1 | 6.9 |
Aber Diamond Corp. | 8.2 | 7.7 |
Cambior, Inc. | 6.2 | 4.9 |
Barrick Gold Corp. | 5.4 | 6.1 |
Newmont Mining Corp. | 4.6 | 8.4 |
Teck Cominco Ltd. Class B (sub. vtg.) | 4.3 | 3.3 |
Compania de Minas Buenaventura SA | 3.8 | 4.0 |
Freeport-McMoRan Copper & Gold, Inc. Class B | 3.8 | 0.4 |
Lonmin PLC | 3.4 | 0.9 |
58.3 | ||
Top Industries (% of fund's net assets) | |||
As of August 31, 2006 | |||
| Gold | 54.8% | |
| Precious Metals & Minerals | 26.4% | |
| Diversified Metals & Mining | 9.2% | |
| All Others* | 9.6% | |
As of February 28, 2006 | |||
| Gold | 57.2% | |
| Precious Metals & Minerals | 23.0% | |
| Diversified Metals & Mining | 5.2% | |
| All Others* | 14.6% | |
*Includes short-term investments and net other assets. |
Prior period industry classifications reflect the categories in place as of the date indicated and have not been adjusted to reflect current industry classifications. |
Semiannual Report
Gold Portfolio
Investments August 31, 2006 (Unaudited)
Showing Percentage of Net Assets
Common Stocks - 90.4% | |||
Shares | Value (Note 1) | ||
Australia - 9.5% | |||
METALS & MINING - 9.5% | |||
Gold - 9.3% | |||
Bendigo Mining Ltd. (a) | 2,000,000 | $2,420,454 | |
Newcrest Mining Ltd. | 9,499,971 | 141,447,205 | |
143,867,659 | |||
Precious Metals & Minerals - 0.2% | |||
Central Asia Gold Ltd. (a)(e) | 12,025,834 | 3,948,400 | |
TOTAL METALS & MINING | 147,816,059 | ||
Bermuda - 1.2% | |||
METALS & MINING - 1.2% | |||
Precious Metals & Minerals - 1.2% | |||
Aquarius Platinum Ltd. (Australia) | 1,063,500 | 18,636,213 | |
Canada - 52.3% | |||
METALS & MINING - 52.3% | |||
Diversified Metals & Mining - 4.3% | |||
Teck Cominco Ltd. Class B (sub. vtg.) | 1,000,000 | 66,588,257 | |
Gold - 34.2% | |||
Arizona Star Resource Corp. (a)(e) | 2,800,000 | 30,398,987 | |
Barrick Gold Corp. | 2,500,000 | 83,687,687 | |
Bema Gold Corp. (a) | 5,000,000 | 27,096,716 | |
Bema Gold Corp. unit (a) | 1,200,000 | 7,723,298 | |
Cambior, Inc. (a)(e) | 27,500,000 | 96,783,679 | |
Coral Gold Resources Ltd. (a) | 319,500 | 1,133,122 | |
Crystallex International Corp. (a)(d)(e) | 14,000,000 | 38,758,708 | |
Goldcorp, Inc. (d) | 1,300,000 | 35,931,421 | |
High River Gold Mines Ltd.: | |||
warrants 10/26/06 (a) | 1,500,000 | 368,799 | |
warrants 1/27/08 (a) | 332,500 | 219,372 | |
IAMGOLD Corp. | 3,500,000 | 38,252,058 | |
Meridian Gold, Inc. (a) | 5,000,000 | 147,878,402 | |
Orezone Resources, Inc. Class A (a)(e) | 10,000,000 | 15,742,332 | |
Tone Resources Ltd. (a)(e) | 1,472,800 | 2,198,607 | |
White Knight Resources Ltd. (a) | 2,242,500 | 4,260,608 | |
530,433,796 | |||
Precious Metals & Minerals - 13.8% | |||
Aber Diamond Corp. (e) | 3,499,990 | 126,218,765 | |
Minefinders Corp. Ltd. (a)(e) | 4,275,900 | 41,780,259 | |
Nevada Pacific Gold Ltd. (a) | 1,981,900 | 2,402,738 | |
Pan American Silver Corp. (a)(d) | 500,000 | 11,340,003 | |
Shore Gold, Inc. (a) | 6,000,000 | 30,127,567 | |
SouthernEra Diamonds, Inc. Class A (a) | 2,389,500 | 886,361 | |
212,755,693 | |||
TOTAL METALS & MINING | 809,777,746 | ||
Shares | Value (Note 1) | ||
Cayman Islands - 1.6% | |||
METALS & MINING - 1.6% | |||
Precious Metals & Minerals - 1.6% | |||
Apex Silver Mines Ltd. (a) | 1,500,000 | $25,005,000 | |
Papua New Guinea - 1.9% | |||
METALS & MINING - 1.9% | |||
Gold - 1.9% | |||
Lihir Gold Ltd. (a) | 13,000,020 | 29,679,234 | |
Peru - 3.8% | |||
METALS & MINING - 3.8% | |||
Precious Metals & Minerals - 3.8% | |||
Compania de Minas Buenaventura SA | 400,000 | 11,041,924 | |
Compania de Minas Buenaventura SA sponsored ADR (d) | 1,700,000 | 47,515,000 | |
58,556,924 | |||
South Africa - 6.0% | |||
METALS & MINING - 6.0% | |||
Diversified Metals & Mining - 0.5% | |||
African Rainbow Minerals Ltd. (a) | 1,000,000 | 8,322,938 | |
Gold - 3.1% | |||
Gold Fields Ltd. sponsored ADR | 1,000,000 | 19,880,000 | |
Harmony Gold Mining Co. Ltd. (a) | 1,211,990 | 16,664,863 | |
Harmony Gold Mining Co. Ltd. sponsored ADR (a) | 588,010 | 8,085,138 | |
Western Areas Ltd. | 500,000 | 3,045,045 | |
47,675,046 | |||
Precious Metals & Minerals - 2.4% | |||
Impala Platinum Holdings Ltd. | 200,000 | 37,006,237 | |
TOTAL METALS & MINING | 93,004,221 | ||
United Kingdom - 5.3% | |||
METALS & MINING - 5.3% | |||
Diversified Metals & Mining - 0.6% | |||
African Platinum PLC (a)(d) | 18,000,000 | 9,511,229 | |
Gold - 1.3% | |||
Randgold Resources Ltd. sponsored ADR (a)(d) | 900,000 | 20,196,000 | |
Precious Metals & Minerals - 3.4% | |||
Lonmin PLC | 1,008,803 | 51,710,957 | |
TOTAL METALS & MINING | 81,418,186 | ||
United States of America - 8.8% | |||
METALS & MINING - 8.8% | |||
Diversified Metals & Mining - 3.8% | |||
Freeport-McMoRan Copper & Gold, Inc. Class B (d) | 1,000,000 | 58,210,000 | |
Common Stocks - continued | |||
Shares | Value (Note 1) | ||
United States of America - continued | |||
METALS & MINING - CONTINUED | |||
Gold - 5.0% | |||
Newmont Mining Corp. | 1,400,000 | $71,750,000 | |
US Gold Corp. (subscription receipt) (f) | 728,400 | 6,140,874 | |
77,890,874 | |||
TOTAL METALS & MINING | 136,100,874 | ||
TOTAL COMMON STOCKS (Cost $1,142,443,671) | 1,399,994,457 | ||
Money Market Funds - 11.1% | |||
Fidelity Cash Central Fund, 5.31% (b) | 138,186,057 | 138,186,057 | |
Fidelity Securities Lending Cash Central Fund, 5.33% (b)(c) | 34,313,980 | 34,313,980 | |
TOTAL MONEY MARKET FUNDS (Cost $172,500,037) | 172,500,037 | ||
TOTAL INVESTMENT PORTFOLIO - 101.5% (Cost $1,314,943,708) | 1,572,494,494 |
NET OTHER ASSETS - (1.5)% | (22,743,626) | ||
NET ASSETS - 100% | $1,549,750,868 | ||
Legend |
(a)Non-income producing |
(b)Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. |
(c)Investment made with cash collateral received from securities on loan. |
(d)Security or a portion of the security is on loan at period end. |
(e)Affiliated company |
(f)Restricted securities - Investment in securities not registered under the Securities Act of 1933 (excluding 144A issues). At the end of the period, the value of restricted securities (excluding 144A issues) amounted to $6,140,874 or 0.4% of net assets. |
Additional information on each holding is as follows: |
Security | Acquisition Date | Acquisition Cost |
US Gold Corp. (subscription receipt) | 2/8/06 | $3,277,800 |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the fund from the affiliated Central funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $4,602,013 |
Fidelity Securities Lending Cash Central Fund | 333,531 |
Total | $4,935,544 |
Other Affiliated Issuers |
An affiliated company is a company in which the fund has ownership of at least 5% of the voting securities. Fiscal year to date transactions with companies which are or were affiliates are as follows: |
Affiliates | Value, | Purchases | Sales | Dividend | Value, |
Aber Diamond Corp. | $101,949,189 | $42,793,742 | $12,253,783 | $1,380,631 | $126,218,765 |
Arizona Star Resource Corp. | 15,418,356 | 10,415,853 | - | - | 30,398,987 |
Bolivar Gold Corp. | 31,025,393 | - | 31,022,986 | - | - |
Cambior, Inc. | 65,449,104 | 18,819,726 | - | - | 96,783,679 |
Central Asia Gold Ltd. | - | 4,104,140 | - | - | 3,948,400 |
Crystallex International Corp. | 42,908,067 | - | 6,023,354 | - | 38,758,708 |
Minefinders Corp. Ltd. | 29,636,932 | 4,727,146 | 203,700 | - | 41,780,259 |
Orezone Resources, Inc. Class A | 14,417,110 | 5,744,298 | - | - | 15,742,332 |
Tone Resources Ltd. | - | 2,251,225 | - | - | 2,198,607 |
Total | $300,804,151 | $88,856,130 | $49,503,823 | $1,380,631 | $355,829,737 |
Income Tax Information |
The fund has a capital loss carryforward of $11,923,858 which was acquired in the merger with Select Precious Metals and Minerals and is available to offset future capital gains of the fund up to $5,961,929 per year as provided by regulations. |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Gold Portfolio
Financial Statements
Statement of Assets and Liabilities
August 31, 2006 (Unaudited) | ||
Assets | ||
Investment in securities, at value (including securities loaned of $32,958,664) - See accompanying schedule: Unaffiliated issuers (cost $849,344,878) | $1,044,164,720 | |
Affiliated Central Funds (cost $172,500,037) | 172,500,037 | |
Other affiliated issuers (cost $293,098,793) | 355,829,737 | |
Total Investments (cost $1,314,943,708) | $1,572,494,494 | |
Receivable for investments sold | 18,410,531 | |
Receivable for fund shares sold | 4,359,941 | |
Dividends receivable | 152,590 | |
Interest receivable | 673,667 | |
Prepaid expenses | 637 | |
Other receivables | 29,732 | |
Total assets | 1,596,121,592 | |
Liabilities | ||
Payable for investments purchased | $7,320,432 | |
Payable for fund shares redeemed | 3,567,423 | |
Accrued management fee | 719,349 | |
Other affiliated payables | 377,297 | |
Other payables and accrued expenses | 72,243 | |
Collateral on securities loaned, at value | 34,313,980 | |
Total liabilities | 46,370,724 | |
Net Assets | $1,549,750,868 | |
Net Assets consist of: | ||
Paid in capital | $1,284,815,729 | |
Undistributed net investment income | 6,383,629 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 1,054,846 | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 257,496,664 | |
Net Assets, for 43,319,642 shares outstanding | $1,549,750,868 | |
Net Asset Value, offering price and redemption price per share ($1,549,750,868 ÷ 43,319,642 shares) | $35.77 | |
Statement of Operations
Six months ended August 31, 2006 (Unaudited) | ||
Investment Income | ||
Dividends (including $1,380,631 received from other affiliated issuers) | $5,455,876 | |
Special dividends | 2,671,632 | |
Interest | 598 | |
Income from affiliated Central Funds | 4,935,544 | |
Total income | 13,063,650 | |
Expenses | ||
Management fee | $4,245,577 | |
Transfer agent fees | 1,937,486 | |
Accounting and security lending fees | 302,587 | |
Independent trustees' compensation | 3,176 | |
Custodian fees and expenses | 167,832 | |
Registration fees | 118,345 | |
Audit | 19,626 | |
Legal | 12,675 | |
Miscellaneous | 31,645 | |
Total expenses before reductions | 6,838,949 | |
Expense reductions | (161,599) | 6,677,350 |
Net investment income (loss) | 6,386,300 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers | 52,386,862 | |
Other affiliated issuers | 10,976,203 | |
Foreign currency transactions | (319,601) | |
Total net realized gain (loss) | 63,043,464 | |
Change in net unrealized appreciation (depreciation) on: Investment securities | 48,767,196 | |
Assets and liabilities in foreign currencies | (216,491) | |
Total change in net unrealized appreciation (depreciation) | 48,550,705 | |
Net gain (loss) | 111,594,169 | |
Net increase (decrease) in net assets resulting from operations | $117,980,469 | |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Statement of Changes in Net Assets
Six months ended August 31, 2006 (Unaudited) | Year ended | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $6,386,300 | $1,051,643 |
Net realized gain (loss) | 63,043,464 | 215,186,894 |
Change in net unrealized appreciation (depreciation) | 48,550,705 | 130,381,517 |
Net increase (decrease) in net assets resulting from operations | 117,980,469 | 346,620,054 |
Distributions to shareholders from net investment income | (754,152) | (507,609) |
Distributions to shareholders from net realized gain | (152,346,932) | (106,134,254) |
Total distributions | (153,101,084) | (106,641,863) |
Share transactions | 940,643,028 | 1,098,070,139 |
Reinvestment of distributions | 146,439,112 | 102,614,627 |
Cost of shares redeemed | (829,494,630) | (821,889,539) |
Net increase (decrease) in net assets resulting from share transactions | 257,587,510 | 378,795,227 |
Redemption fees | 1,618,489 | 1,675,648 |
Total increase (decrease) in net assets | 224,085,384 | 620,449,066 |
Net Assets | ||
Beginning of period | 1,325,665,484 | 705,216,418 |
End of period (including undistributed net investment income of $6,383,629 and undistributed net investment income of $1,049,798, respectively) | $1,549,750,868 | $1,325,665,484 |
Other Information Shares | ||
Sold | 26,063,494 | 35,716,956 |
Issued in reinvestment of distributions | 3,963,166 | 3,522,978 |
Redeemed | (23,618,803) | (28,011,502) |
Net increase (decrease) | 6,407,857 | 11,228,432 |
Financial Highlights
Six months ended August 31, 2006 | Years ended February 28, | |||||
(Unaudited) | 2006 | 2005 | 2004 I | 2003 | 2002 | |
Selected Per-Share Data | ||||||
Net asset value, beginning of period | $35.91 | $27.46 | $27.21 | $22.73 | $18.25 | $12.38 |
Income from Investment Operations | ||||||
Net investment income (loss) D | .15 E | .04 | .02 F | (.01) | .05 | .25 G |
Net realized and unrealized gain (loss) | 3.73 | 12.21 | .18 | 5.85 | 4.67 | 5.78 |
Total from investment operations | 3.88 | 12.25 | .20 | 5.84 | 4.72 | 6.03 |
Distributions from net investment income | (.02) | (.02) | - | (1.42) | (.36) | (.22) |
Distributions from net realized gain | (4.04) | (3.84) | - | - | - | - |
Total distributions | (4.06) | (3.86) | - | (1.42) | (.36) | (.22) |
Redemption fees added to paid in capital D | .04 | .06 | .05 | .06 | .12 | .06 |
Net asset value, end of period | $35.77 | $35.91 | $27.46 | $27.21 | $22.73 | $18.25 |
Total Return B, C | 10.56% | 48.84% | .92% | 26.79% | 26.68% | 49.79% |
Ratios to Average Net Assets H | ||||||
Expenses before reductions | .91% A | .97% | 1.00% | 1.12% | 1.18% | 1.29% |
Expenses net of fee waivers, if any | .91% A | .97% | 1.00% | 1.12% | 1.18% | 1.29% |
Expenses net of all reductions | .89% A | .82% | .89% | 1.04% | 1.11% | 1.24% |
Net investment income (loss) | .85% A, E | .13% | .07% F | (.03)% | .22% | 1.76% |
Supplemental Data | ||||||
Net assets, end of period (000 omitted) | $1,549,751 | $1,325,665 | $705,216 | $735,744 | $686,029 | $443,849 |
Portfolio turnover rate | 61% A | 108% | 79% | 41% | 44% | 49% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Calculated based on average shares outstanding during the period. E Investment income per share reflects a special dividend which amounted to $.06 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been .50%. F Investment income per share reflects a special dividend which amounted to $.04 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.08)%. G Investment income per share reflects a special dividend which amounted to $.04 per share. H Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. I For the year ended February 29. | ||||||
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Investment Changes
Top Ten Stocks as of August 31, 2006 | ||
% of fund's | % of fund's net assets | |
Range Resources Corp. | 8.8 | 6.0 |
Plains Exploration & Production Co. | 8.3 | 5.4 |
Valero Energy Corp. | 7.7 | 6.1 |
Quicksilver Resources, Inc. | 7.1 | 4.6 |
Canadian Natural Resources Ltd. | 4.6 | 5.8 |
Ultra Petroleum Corp. | 3.8 | 3.2 |
Halliburton Co. | 3.3 | 3.5 |
Forest Oil Corp. | 3.1 | 2.7 |
Smith International, Inc. | 2.8 | 1.9 |
Chesapeake Energy Corp. | 2.7 | 3.2 |
52.2 | ||
Top Industries (% of fund's net assets) | |||
As of August 31, 2006 | |||
| Oil, Gas & Consumable Fuels | 73.0% | |
| Energy Equipment & Services | 21.6% | |
| Metals & Mining | 1.5% | |
| Independent Power Producers & Energy Traders | 0.9% | |
| Machinery | 0.8% | |
| All Others* | 2.2% | |
As of February 28, 2006 | |||
| Oil, Gas & Consumable Fuels | 71.6% | |
| Energy Equipment & Services | 19.7% | |
| Independent Power Producers & Energy Traders | 2.1% | |
| Electric Utilities | 2.0% | |
| Multi-utilities | 1.4% | |
| All Others* | 3.2% | |
*Includes short-term investments and net other assets. |
Prior period industry classifications reflect the categories in place as of the date indicated and have not been adjusted to reflect current industry classifications. |
Semiannual Report
Natural Gas Portfolio
Investments August 31, 2006 (Unaudited)
Showing Percentage of Net Assets
Common Stocks - 99.4% | |||
Shares | Value (Note 1) | ||
CHEMICALS - 0.2% | |||
Commodity Chemicals - 0.2% | |||
MG Technologies AG | 128,400 | $2,099,098 | |
CONSTRUCTION & ENGINEERING - 0.2% | |||
Construction & Engineering - 0.2% | |||
Fluor Corp. | 39,400 | 3,404,948 | |
ELECTRIC UTILITIES - 0.5% | |||
Electric Utilities - 0.5% | |||
Exelon Corp. | 116,200 | 7,085,876 | |
ELECTRICAL EQUIPMENT - 0.2% | |||
Heavy Electrical Equipment - 0.2% | |||
Vestas Wind Systems AS (a) | 98,900 | 2,768,762 | |
ENERGY EQUIPMENT & SERVICES - 21.6% | |||
Oil & Gas Drilling - 9.4% | |||
Cathedral Energy Services Income Trust (d) | 476,000 | 4,349,588 | |
Diamond Offshore Drilling, Inc. | 93,800 | 6,798,624 | |
ENSCO International, Inc. | 354,400 | 15,838,136 | |
GlobalSantaFe Corp. | 731,900 | 36,024,118 | |
Noble Corp. | 546,100 | 35,709,479 | |
Pride International, Inc. (a) | 957,000 | 24,815,010 | |
Rowan Companies, Inc. | 190,400 | 6,511,680 | |
Savanna Energy Services Corp. (a) | 68,700 | 1,513,476 | |
131,560,111 | |||
Oil & Gas Equipment & Services - 12.2% | |||
Baker Hughes, Inc. | 17,500 | 1,245,650 | |
Carbo Ceramics, Inc. | 185,400 | 7,404,876 | |
Complete Production Services, Inc. | 28,100 | 623,820 | |
Halliburton Co. | 1,416,800 | 46,216,016 | |
Hydril Co. (a) | 105,100 | 6,878,795 | |
National Oilwell Varco, Inc. (a) | 477,128 | 31,156,458 | |
Schlumberger Ltd. (NY Shares) | 195,900 | 12,008,670 | |
Smith International, Inc. | 931,190 | 39,082,044 | |
TETRA Technologies, Inc. (a) | 250,600 | 6,969,186 | |
Veritas DGC, Inc. (a) | 104,100 | 6,201,237 | |
W-H Energy Services, Inc. (a) | 171,700 | 8,665,699 | |
Weatherford International Ltd. (a) | 65,200 | 2,803,600 | |
169,256,051 | |||
TOTAL ENERGY EQUIPMENT & SERVICES | 300,816,162 | ||
GAS UTILITIES - 0.2% | |||
Gas Utilities - 0.2% | |||
Energen Corp. | 49,400 | 2,155,816 | |
INDEPENDENT POWER PRODUCERS & ENERGY TRADERS - 0.9% | |||
Independent Power Producers & Energy Traders - 0.9% | |||
AES Corp. (a) | 257,300 | 5,465,052 | |
Shares | Value (Note 1) | ||
Canadian Hydro Developers, Inc. (a) | 272,800 | $1,280,948 | |
NRG Energy, Inc. | 122,700 | 6,213,528 | |
12,959,528 | |||
INDUSTRIAL CONGLOMERATES - 0.3% | |||
Industrial Conglomerates - 0.3% | |||
McDermott International, Inc. (a) | 80,000 | 3,856,000 | |
MACHINERY - 0.8% | |||
Construction & Farm Machinery & Heavy Trucks - 0.8% | |||
Bucyrus International, Inc. Class A | 218,400 | 11,275,992 | |
METALS & MINING - 1.5% | |||
Diversified Metals & Mining - 0.2% | |||
Titanium Metals Corp. | 120,600 | 3,111,480 | |
Steel - 1.3% | |||
Oregon Steel Mills, Inc. (a) | 363,600 | 17,514,612 | |
TOTAL METALS & MINING | 20,626,092 | ||
OIL, GAS & CONSUMABLE FUELS - 73.0% | |||
Coal & Consumable Fuels - 2.3% | |||
Alpha Natural Resources, Inc. (a) | 213,400 | 3,868,942 | |
Cameco Corp. | 69,400 | 2,840,546 | |
CONSOL Energy, Inc. | 150,100 | 5,474,147 | |
International Coal Group, Inc. (a)(d) | 962,100 | 6,003,504 | |
KFX, Inc. (a)(d) | 596,500 | 9,555,930 | |
Peabody Energy Corp. | 87,100 | 3,838,497 | |
31,581,566 | |||
Integrated Oil & Gas - 1.1% | |||
Hess Corp. | 109,100 | 4,994,598 | |
OAO Gazprom sponsored ADR | 230,300 | 10,766,525 | |
15,761,123 | |||
Oil & Gas Exploration & Production - 60.1% | |||
Apache Corp. | 408,200 | 26,647,296 | |
Aurora Oil & Gas Corp. (d) | 2,878,100 | 13,124,136 | |
Cabot Oil & Gas Corp. | 217,400 | 11,100,444 | |
Canadian Natural Resources Ltd. | 1,221,400 | 64,125,434 | |
Chesapeake Energy Corp. (d) | 1,204,900 | 38,038,693 | |
Denbury Resources, Inc. (a) | 273,900 | 8,493,639 | |
EnCana Corp. | 244,100 | 12,809,011 | |
Encore Acquisition Co. (a) | 176,950 | 4,786,498 | |
Energy Partners Ltd. (a)(d) | 423,600 | 10,568,820 | |
EOG Resources, Inc. | 560,400 | 36,325,128 | |
Forest Oil Corp. (a) | 1,277,200 | 43,258,764 | |
Gastar Exploration Ltd. (a) | 431,400 | 1,202,128 | |
Goodrich Petroleum Corp. (d) | 44,900 | 1,422,432 | |
Helix Energy Solutions Group, Inc. (a) | 179,700 | 6,911,262 | |
Hugoton Royalty Trust | 98,726 | 2,789,997 | |
Mariner Energy, Inc. (a) | 429,289 | 8,113,562 | |
Newfield Exploration Co. (a) | 358,500 | 15,501,540 | |
Noble Energy, Inc. | 693,100 | 34,253,002 | |
Paramount Resources Ltd. Class A (a) | 41,400 | 1,288,483 | |
Penn Virginia Corp. | 39,800 | 2,825,402 | |
Common Stocks - continued | |||
Shares | Value (Note 1) | ||
OIL, GAS & CONSUMABLE FUELS - CONTINUED | |||
Oil & Gas Exploration & Production - continued | |||
Penn West Energy Trust (d) | 55,100 | $2,290,641 | |
Plains Exploration & Production Co. (a) | 2,632,900 | 115,873,929 | |
Quicksilver Resources, Inc. (a)(d) | 2,620,700 | 98,590,734 | |
Range Resources Corp. (d) | 4,361,600 | 122,037,567 | |
Southwestern Energy Co. (a) | 853,800 | 29,328,030 | |
Talisman Energy, Inc. | 2,102,000 | 36,893,875 | |
Ultra Petroleum Corp. (a) | 1,053,700 | 52,305,668 | |
XTO Energy, Inc. | 755,600 | 34,583,812 | |
835,489,927 | |||
Oil & Gas Refining & Marketing - 8.6% | |||
Tesoro Corp. | 101,200 | 6,538,532 | |
Valero Energy Corp. | 1,867,100 | 107,171,540 | |
Western Refining, Inc. | 247,600 | 5,835,932 | |
119,546,004 | |||
Oil & Gas Storage & Transport - 0.9% | |||
DCP Midstream Partners LP | 73,100 | 2,059,227 | |
Plains All American Pipeline LP | 124,400 | 5,722,400 | |
Williams Partners LP | 129,100 | 4,625,653 | |
12,407,280 | |||
TOTAL OIL, GAS & CONSUMABLE FUELS | 1,014,785,900 | ||
TOTAL COMMON STOCKS (Cost $1,136,719,184) | 1,381,834,174 | ||
Money Market Funds - 9.1% | |||
Shares | Value (Note 1) | ||
Fidelity Cash Central Fund, 5.31% (b) | 6,331,067 | $6,331,067 | |
Fidelity Securities Lending Cash Central Fund, 5.33% (b)(c) | 119,619,575 | 119,619,575 | |
TOTAL MONEY MARKET FUNDS (Cost $125,950,642) | 125,950,642 | ||
TOTAL INVESTMENT PORTFOLIO - 108.5% (Cost $1,262,669,826) | 1,507,784,816 |
NET OTHER ASSETS - (8.5)% | (118,349,977) | ||
NET ASSETS - 100% | $1,389,434,839 | ||
Legend |
(a)Non-income producing |
(b)Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. |
(c)Investment made with cash collateral received from securities on loan. |
(d)Security or a portion of the security is on loan at period end. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the fund from the affiliated Central funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $396,400 |
Fidelity Securities Lending Cash Central Fund | 137,954 |
Total | $534,354 |
Other Information |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: |
United States of America | 79.3% |
Canada | 13.1% |
Cayman Islands | 5.2% |
Others (individually less than 1%) | 2.4% |
100.0% |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Natural Gas Portfolio
Financial Statements
Statement of Assets and Liabilities
August 31, 2006 (Unaudited) | ||
Assets | ||
Investment in securities, at value (including securities loaned of $116,416,177) - See accompanying schedule: Unaffiliated issuers (cost $1,136,719,184) | $1,381,834,174 | |
Affiliated Central Funds (cost $125,950,642) | 125,950,642 | |
Total Investments (cost $1,262,669,826) | $1,507,784,816 | |
Receivable for investments sold | 21,263,660 | |
Receivable for fund shares sold | 1,842,817 | |
Dividends receivable | 538,762 | |
Interest receivable | 49,017 | |
Prepaid expenses | 1,128 | |
Other receivables | 34,226 | |
Total assets | 1,531,514,426 | |
Liabilities | ||
Payable for investments purchased | $16,078,306 | |
Payable for fund shares redeemed | 5,278,787 | |
Accrued management fee | 673,531 | |
Other affiliated payables | 377,378 | |
Other payables and accrued expenses | 52,010 | |
Collateral on securities loaned, at value | 119,619,575 | |
Total liabilities | 142,079,587 | |
Net Assets | $1,389,434,839 | |
Net Assets consist of: | ||
Paid in capital | $1,080,237,868 | |
Distributions in excess of net investment income | (2,135,558) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 66,216,796 | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 245,115,733 | |
Net Assets, for 34,888,187 shares outstanding | $1,389,434,839 | |
Net Asset Value, offering price and redemption price per share ($1,389,434,839 ÷ 34,888,187 shares) | $39.83 | |
Statement of Operations
Six months ended August 31, 2006 (Unaudited) | ||
Investment Income | ||
Dividends | $3,770,051 | |
Interest | 955 | |
Income from affiliated Central Funds | 534,354 | |
Total income | 4,305,360 | |
Expenses | ||
Management fee | $4,045,132 | |
Transfer agent fees | 1,924,915 | |
Accounting and security lending fees | 295,059 | |
Independent trustees' compensation | 2,880 | |
Custodian fees and expenses | 34,611 | |
Registration fees | 54,775 | |
Audit | 19,702 | |
Legal | 15,229 | |
Interest | 19,686 | |
Miscellaneous | 39,245 | |
Total expenses before reductions | 6,451,234 | |
Expense reductions | (10,395) | 6,440,839 |
Net investment income (loss) | (2,135,479) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers | 69,728,665 | |
Foreign currency transactions | (53,086) | |
Total net realized gain (loss) | 69,675,579 | |
Change in net unrealized appreciation (depreciation) on: Investment securities | 5,474,857 | |
Assets and liabilities in foreign currencies | 2,443 | |
Total change in net unrealized appreciation (depreciation) | 5,477,300 | |
Net gain (loss) | 75,152,879 | |
Net increase (decrease) in net assets resulting from operations | $73,017,400 | |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Statement of Changes in Net Assets
Six months ended August 31, 2006 (Unaudited) | Year ended | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $(2,135,479) | $(3,363,919) |
Net realized gain (loss) | 69,675,579 | 165,345,128 |
Change in net unrealized appreciation (depreciation) | 5,477,300 | 100,302,804 |
Net increase (decrease) in net assets resulting from operations | 73,017,400 | 262,284,013 |
Distributions to shareholders from net realized gain | (42,196,975) | (152,139,802) |
Share transactions | 388,769,857 | 1,819,254,857 |
Reinvestment of distributions | 40,440,009 | 145,498,281 |
Cost of shares redeemed | (626,535,022) | (1,468,412,444) |
Net increase (decrease) in net assets resulting from share transactions | (197,325,156) | 496,340,694 |
Redemption fees | 360,863 | 1,555,343 |
Total increase (decrease) in net assets | (166,143,868) | 608,040,248 |
Net Assets | ||
Beginning of period | 1,555,578,707 | 947,538,459 |
End of period (including distributions in excess of net investment income of $2,135,558 and accumulated net investment loss of $79, respectively) | $1,389,434,839 | $1,555,578,707 |
Other Information Shares | ||
Sold | 9,654,725 | 48,076,717 |
Issued in reinvestment of distributions | 990,206 | 4,018,204 |
Redeemed | (15,789,065) | (39,599,586) |
Net increase (decrease) | (5,144,134) | 12,495,335 |
Financial Highlights
Six months ended August 31, 2006 | Years ended February 28, | |||||
(Unaudited) | 2006 | 2005 | 2004 F | 2003 | 2002 | |
Selected Per-Share Data | ||||||
Net asset value, beginning of period | $38.86 | $34.41 | $23.00 | $17.42 | $17.91 | $23.26 |
Income from Investment Operations | ||||||
Net investment income (loss) D | (.06) | (.09) | .01 | (.09) | .05 | .14 |
Net realized and unrealized gain (loss) | 2.19 | 8.58 | 11.83 | 5.65 | (.45) | (5.35) |
Total from investment operations | 2.13 | 8.49 | 11.84 | 5.56 | (.40) | (5.21) |
Distributions from net investment income | - | - | (.02) | - | (.10) | (.03) |
Distributions from net realized gain | (1.17) | (4.08) | (.44) | - | - | (.13) |
Total distributions | (1.17) | (4.08) | (.46) | - | (.10) | (.16) |
Redemption fees added to paid in capital D | .01 | .04 | .03 | .02 | .01 | .02 |
Net asset value, end of period | $39.83 | $38.86 | $34.41 | $23.00 | $17.42 | $17.91 |
Total Return B, C | 5.43% | 26.28% | 52.01% | 32.03% | (2.17)% | (22.47)% |
Ratios to Average Net Assets E | ||||||
Expenses before reductions | .90% A | .95% | .98% | 1.21% | 1.30% | 1.17% |
Expenses net of fee waivers, if any | .90% A | .95% | .98% | 1.21% | 1.30% | 1.17% |
Expenses net of all reductions | .90% A | .88% | .94% | 1.14% | 1.24% | 1.13% |
Net investment income (loss) | (.30)% A | (.24)% | .02% | (.46)% | .27% | .67% |
Supplemental Data | ||||||
Net assets, end of period (000 omitted) | $1,389,435 | $1,555,579 | $947,538 | $224,475 | $163,005 | $185,685 |
Portfolio turnover rate | 58% A | 148% | 190% | 171% | 108% | 68% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Calculated based on average shares outstanding during the period. E Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. F For the year ended February 29. | ||||||
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Investment Changes
Top Ten Stocks as of August 31, 2006 | ||
% of fund's | % of fund's net assets | |
Schlumberger Ltd. (NY Shares) | 4.5 | 3.3 |
GlobalSantaFe Corp. | 4.0 | 4.4 |
ConocoPhillips | 3.9 | 3.5 |
Halliburton Co. | 3.6 | 4.2 |
Valero Energy Corp. | 3.6 | 2.5 |
National Oilwell Varco, Inc. | 3.5 | 3.9 |
Alcoa, Inc. | 3.3 | 3.0 |
Smith International, Inc. | 3.3 | 3.1 |
Chesapeake Energy Corp. | 3.0 | 1.7 |
Exxon Mobil Corp. | 2.9 | 0.2 |
35.6 | ||
Top Industries (% of fund's net assets) | |||
As of August 31, 2006 | |||
| Oil, Gas & Consumable Fuels | 41.5% | |
| Energy Equipment & Services | 30.6% | |
| Metals & Mining | 14.9% | |
| Machinery | 2.4% | |
| Chemicals | 1.9% | |
| All Others* | 8.7% | |
As of February 28, 2006 | |||
| Oil, Gas & Consumable Fuels | 36.9% | |
| Energy Equipment & Services | 29.3% | |
| Metals & Mining | 16.5% | |
| Machinery | 3.7% | |
| Construction & Engineering | 3.2% | |
| All Others* | 10.4% | |
*Includes short-term investments and net other assets. |
Prior period industry classifications reflect the categories in place as of the date indicated and have not been adjusted to reflect current industry classifications. |
Semiannual Report
Natural Resources Portfolio
Investments August 31, 2006 (Unaudited)
Showing Percentage of Net Assets
Common Stocks - 99.1% | |||
Shares | Value (Note 1) | ||
AIRLINES - 0.2% | |||
Airlines - 0.2% | |||
AirTran Holdings, Inc. (a) | 162,580 | $1,861,541 | |
CHEMICALS - 1.9% | |||
Commodity Chemicals - 0.3% | |||
Celanese Corp. Class A | 35,600 | 658,244 | |
Formosa Chemicals & Fibre Corp. | 1,456,830 | 2,101,399 | |
Georgia Gulf Corp. | 20,650 | 548,051 | |
Tokai Carbon Co. Ltd. | 22,000 | 150,858 | |
3,458,552 | |||
Diversified Chemicals - 0.3% | |||
Ashland, Inc. | 54,300 | 3,428,502 | |
Fertilizers & Agricultural Chemicals - 1.2% | |||
Agrium, Inc. | 67,900 | 1,576,941 | |
CF Industries Holdings, Inc. | 170,200 | 2,699,372 | |
Mosaic Co. | 481,200 | 7,814,688 | |
Terra Nitrogen Co. LP | 89,401 | 1,815,734 | |
13,906,735 | |||
Specialty Chemicals - 0.1% | |||
Tokuyama Corp. | 132,000 | 1,829,413 | |
TOTAL CHEMICALS | 22,623,202 | ||
COMMERCIAL SERVICES & SUPPLIES - 0.0% | |||
Environmental & Facility Services - 0.0% | |||
Clean Harbors, Inc. | 7,200 | 300,888 | |
CONSTRUCTION & ENGINEERING - 1.3% | |||
Construction & Engineering - 1.3% | |||
Chicago Bridge & Iron Co. NV (NY Shares) | 387,500 | 10,466,375 | |
Fluor Corp. | 44,800 | 3,871,616 | |
Infrasource Services, Inc. (a) | 64,700 | 1,118,663 | |
15,456,654 | |||
CONTAINERS & PACKAGING - 0.6% | |||
Metal & Glass Containers - 0.0% | |||
Owens-Illinois, Inc. | 8,900 | 134,924 | |
Paper Packaging - 0.6% | |||
Smurfit-Stone Container Corp. | 297,700 | 3,390,803 | |
Temple-Inland, Inc. | 74,200 | 3,303,384 | |
6,694,187 | |||
TOTAL CONTAINERS & PACKAGING | 6,829,111 | ||
ELECTRICAL EQUIPMENT - 1.2% | |||
Electrical Components & Equipment - 0.3% | |||
Q-Cells AG | 53,200 | 2,344,699 | |
Suntech Power Holdings Co. Ltd. sponsored ADR | 53,000 | 1,537,000 | |
3,881,699 | |||
Shares | Value (Note 1) | ||
Heavy Electrical Equipment - 0.9% | |||
Areva (investment certificates)(non-vtg.) | 100 | $61,485 | |
Vestas Wind Systems AS (a) | 383,400 | 10,733,501 | |
10,794,986 | |||
TOTAL ELECTRICAL EQUIPMENT | 14,676,685 | ||
ELECTRONIC EQUIPMENT & INSTRUMENTS - 0.2% | |||
Electronic Equipment & Instruments - 0.2% | |||
Itron, Inc. (a) | 38,300 | 2,144,034 | |
ENERGY EQUIPMENT & SERVICES - 30.6% | |||
Oil & Gas Drilling - 11.2% | |||
Diamond Offshore Drilling, Inc. | 272,700 | 19,765,296 | |
ENSCO International, Inc. | 48,600 | 2,171,934 | |
GlobalSantaFe Corp. | 980,600 | 48,265,132 | |
Nabors Industries Ltd. (a) | 2,600 | 85,488 | |
Noble Corp. | 447,600 | 29,268,564 | |
Patterson-UTI Energy, Inc. | 50,000 | 1,370,000 | |
Pride International, Inc. (a) | 733,500 | 19,019,655 | |
Rowan Companies, Inc. | 1,000 | 34,200 | |
TODCO Class A | 1,400 | 51,842 | |
Transocean, Inc. (a) | 192,000 | 12,816,000 | |
132,848,111 | |||
Oil & Gas Equipment & Services - 19.4% | |||
Baker Hughes, Inc. | 259,190 | 18,449,144 | |
BJ Services Co. | 143,400 | 4,920,054 | |
Cameron International Corp. (a) | 3,000 | 143,730 | |
FMC Technologies, Inc. (a) | 2,300 | 135,286 | |
Global Industries Ltd. (a) | 4,900 | 87,808 | |
Grant Prideco, Inc. (a) | 13,700 | 568,961 | |
Halliburton Co. | 1,302,700 | 42,494,074 | |
Hydril Co. (a) | 64,700 | 4,234,615 | |
Key Energy Services, Inc. (a) | 219,300 | 3,289,500 | |
Maverick Tube Corp. (a) | 2,400 | 154,248 | |
National Oilwell Varco, Inc. (a) | 636,911 | 41,590,288 | |
Oceaneering International, Inc. (a) | 14,300 | 514,371 | |
Oil States International, Inc. (a) | 4,400 | 140,624 | |
RPC, Inc. | 3,550 | 72,562 | |
Saipem Spa | 4,500 | 100,883 | |
Schlumberger Ltd. (NY Shares) | 883,352 | 54,149,475 | |
Smith International, Inc. | 926,100 | 38,868,417 | |
Veritas DGC, Inc. (a) | 49,000 | 2,918,930 | |
W-H Energy Services, Inc. (a) | 60,700 | 3,063,529 | |
Weatherford International Ltd. (a) | 357,490 | 15,372,070 | |
231,268,569 | |||
TOTAL ENERGY EQUIPMENT & SERVICES | 364,116,680 | ||
FOOD PRODUCTS - 0.5% | |||
Agricultural Products - 0.5% | |||
Archer-Daniels-Midland Co. | 3,100 | 127,627 | |
Common Stocks - continued | |||
Shares | Value (Note 1) | ||
FOOD PRODUCTS - CONTINUED | |||
Agricultural Products - continued | |||
Corn Products International, Inc. | 176,211 | $6,079,280 | |
Global Bio-Chem Technology Group Co. Ltd. | 78,700 | 26,209 | |
6,233,116 | |||
GAS UTILITIES - 0.1% | |||
Gas Utilities - 0.1% | |||
Questar Corp. | 17,500 | 1,514,450 | |
INDEPENDENT POWER PRODUCERS & ENERGY TRADERS - 1.2% | |||
Independent Power Producers & Energy Traders - 1.2% | |||
Mirant Corp. (a) | 286,900 | 8,311,493 | |
NRG Energy, Inc. | 16,100 | 815,304 | |
TXU Corp. | 67,300 | 4,455,933 | |
13,582,730 | |||
INDUSTRIAL CONGLOMERATES - 0.5% | |||
Industrial Conglomerates - 0.5% | |||
McDermott International, Inc. (a) | 107,500 | 5,181,500 | |
Walter Industries, Inc. | 1,900 | 104,576 | |
5,286,076 | |||
INVESTMENT COMPANIES - 0.0% | |||
Investment Companies - 0.0% | |||
Canfor Pulp Income Fund | 34 | 371 | |
MACHINERY - 2.4% | |||
Construction & Farm Machinery & Heavy Trucks - 2.4% | |||
Bucyrus International, Inc. Class A | 349,105 | 18,024,291 | |
Joy Global, Inc. | 228,750 | 9,959,775 | |
Trinity Industries, Inc. | 28,200 | 940,752 | |
28,924,818 | |||
METALS & MINING - 14.9% | |||
Aluminum - 3.9% | |||
Alcan, Inc. | 900 | 40,477 | |
Alcoa, Inc. | 1,368,300 | 39,119,697 | |
Century Aluminum Co. (a) | 1,900 | 65,949 | |
Novelis, Inc. | 335,600 | 7,007,734 | |
46,233,857 | |||
Diversified Metals & Mining - 4.6% | |||
Falconbridge Ltd. | 324,700 | 18,331,023 | |
Freeport-McMoRan Copper & Gold, Inc. Class B | 1,363 | 79,340 | |
Inco Ltd. | 46,500 | 3,626,016 | |
Phelps Dodge Corp. | 1,200 | 107,400 | |
RTI International Metals, Inc. (a) | 143,538 | 6,225,243 | |
Teck Cominco Ltd. Class B (sub. vtg.) | 116,300 | 7,744,214 | |
Titanium Metals Corp. | 680,776 | 17,564,021 | |
VSMPO-AVISMA Corp. warrants (UBS Warrant Programme) 9/28/06 (a) | 5,900 | 1,333,400 | |
55,010,657 | |||
Shares | Value (Note 1) | ||
Gold - 3.7% | |||
Bema Gold Corp. (a) | 242,900 | $1,316,358 | |
Eldorado Gold Corp. (a) | 612,700 | 3,032,180 | |
Meridian Gold, Inc. (a) | 439,100 | 12,986,681 | |
Newmont Mining Corp. | 509,100 | 26,091,375 | |
Sasamat Capital Corp. (a) | 61 | 168 | |
43,426,762 | |||
Precious Metals & Minerals - 0.2% | |||
Aquarius Platinum Ltd. (United Kingdom) | 84,700 | 1,487,015 | |
Shore Gold, Inc. (a) | 244,000 | 1,225,188 | |
2,712,203 | |||
Steel - 2.5% | |||
Allegheny Technologies, Inc. | 222,000 | 12,731,700 | |
Hitachi Metals Ltd. | 10,000 | 99,493 | |
Mittal Steel Co. NV Class A (NY Shares) | 3,700 | 126,725 | |
Oregon Steel Mills, Inc. (a) | 354,000 | 17,052,180 | |
30,010,098 | |||
TOTAL METALS & MINING | 177,393,577 | ||
OIL, GAS & CONSUMABLE FUELS - 41.5% | |||
Coal & Consumable Fuels - 4.1% | |||
Arch Coal, Inc. | 156,200 | 5,115,550 | |
Cameco Corp. | 322,300 | 13,191,760 | |
CONSOL Energy, Inc. | 283,500 | 10,339,245 | |
Foundation Coal Holdings, Inc. | 186,000 | 6,681,120 | |
Peabody Energy Corp. | 307,800 | 13,564,746 | |
USEC, Inc. | 1,600 | 16,176 | |
48,908,597 | |||
Integrated Oil & Gas - 13.4% | |||
BP PLC sponsored ADR | 3,064 | 208,505 | |
Chevron Corp. | 464,032 | 29,883,661 | |
ConocoPhillips | 727,230 | 46,128,199 | |
ENI Spa sponsored ADR | 164,900 | 10,085,284 | |
Exxon Mobil Corp. | 510,715 | 34,560,084 | |
Hess Corp. | 2,400 | 109,872 | |
Husky Energy, Inc. | 50,300 | 3,480,452 | |
MOL Magyar Olay-es Gazipari RT Series A (For. Reg.) | 600 | 60,786 | |
OAO Gazprom sponsored ADR | 193,257 | 9,034,765 | |
Occidental Petroleum Corp. | 194,200 | 9,902,258 | |
OMV AG | 74,735 | 3,985,135 | |
Suncor Energy, Inc. (d) | 151,600 | 11,747,526 | |
159,186,527 | |||
Oil & Gas Exploration & Production - 17.9% | |||
Anadarko Petroleum Corp. | 1,800 | 84,438 | |
Apache Corp. | 800 | 52,224 | |
Cabot Oil & Gas Corp. | 183,800 | 9,384,828 | |
Canadian Natural Resources Ltd. | 330,400 | 17,346,523 | |
Chesapeake Energy Corp. (d) | 1,116,700 | 35,254,219 | |
Comstock Resources, Inc. (a) | 1,300 | 37,388 | |
Denbury Resources, Inc. (a) | 2,300 | 71,323 | |
Common Stocks - continued | |||
Shares | Value (Note 1) | ||
OIL, GAS & CONSUMABLE FUELS - CONTINUED | |||
Oil & Gas Exploration & Production - continued | |||
Devon Energy Corp. | 800 | $49,992 | |
EnCana Corp. | 157,984 | 8,290,122 | |
Energy Partners Ltd. (a) | 78,400 | 1,956,080 | |
EOG Resources, Inc. | 312,100 | 20,230,322 | |
EXCO Resources, Inc. | 3,600 | 48,096 | |
Forest Oil Corp. (a) | 39,300 | 1,331,091 | |
Goodrich Petroleum Corp. | 4,300 | 136,224 | |
Houston Exploration Co. (a) | 25,900 | 1,661,485 | |
Hugoton Royalty Trust | 19,957 | 563,985 | |
Mariner Energy, Inc. (a) | 49,324 | 932,224 | |
Newfield Exploration Co. (a) | 1,800 | 77,832 | |
Nexen, Inc. | 128,500 | 7,485,855 | |
Penn West Energy Trust (d) | 75,800 | 3,151,190 | |
Plains Exploration & Production Co. (a) | 139,400 | 6,134,994 | |
Pogo Producing Co. | 1,300 | 57,733 | |
Quicksilver Resources, Inc. (a) | 100,250 | 3,771,405 | |
Range Resources Corp. | 968,973 | 27,111,865 | |
Southwestern Energy Co. (a) | 1,800 | 61,830 | |
Talisman Energy, Inc. | 1,011,000 | 17,744,866 | |
Ultra Petroleum Corp. (a) | 514,200 | 25,524,888 | |
W&T Offshore, Inc. | 45,400 | 1,456,886 | |
XTO Energy, Inc. | 520,100 | 23,804,977 | |
213,814,885 | |||
Oil & Gas Refining & Marketing - 3.6% | |||
ERG Spa | 3,400 | 74,994 | |
Frontier Oil Corp. | 6,000 | 196,200 | |
Neste Oil Oyj | 2,600 | 81,946 | |
Valero Energy Corp. | 737,788 | 42,349,031 | |
Western Refining, Inc. | 5,800 | 136,706 | |
42,838,877 | |||
Oil & Gas Storage & Transport - 2.5% | |||
El Paso Corp. | 384,100 | 5,577,132 | |
Kinder Morgan, Inc. | 13,700 | 1,429,732 | |
OMI Corp. | 271,000 | 6,102,920 | |
Overseas Shipholding Group, Inc. | 81,500 | 5,436,050 | |
Plains All American Pipeline LP | 36,800 | 1,692,800 | |
TransCanada Corp. | 110,900 | 3,606,031 | |
Williams Companies, Inc. | 229,500 | 5,652,585 | |
29,497,250 | |||
TOTAL OIL, GAS & CONSUMABLE FUELS | 494,246,136 | ||
PAPER & FOREST PRODUCTS - 1.5% | |||
Forest Products - 1.2% | |||
Canfor Corp. New (a) | 341 | 3,508 | |
Shares | Value (Note 1) | ||
Sino-Forest Corp. (a) | 1,013,100 | $4,124,627 | |
Weyerhaeuser Co. | 173,200 | 10,738,400 | |
14,866,535 | |||
Paper Products - 0.3% | |||
Aracruz Celulose SA (PN-B) sponsored ADR (non-vtg.) | 60,100 | 3,120,993 | |
TOTAL PAPER & FOREST PRODUCTS | 17,987,528 | ||
REAL ESTATE INVESTMENT TRUSTS - 0.1% | |||
Specialized REITs - 0.1% | |||
Plum Creek Timber Co., Inc. | 47,300 | 1,647,459 | |
ROAD & RAIL - 0.4% | |||
Railroads - 0.4% | |||
Burlington Northern Santa Fe Corp. | 68,200 | 4,565,990 | |
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 0.0% | |||
Semiconductors - 0.0% | |||
Renewable Energy Corp. AS | 2,400 | 33,598 | |
TOTAL COMMON STOCKS (Cost $1,048,185,208) | 1,179,424,644 | ||
Money Market Funds - 4.9% | |||
Fidelity Cash Central Fund, 5.31% (b) | 13,613,281 | 13,613,281 | |
Fidelity Securities Lending Cash Central Fund, 5.33% (b)(c) | 44,351,900 | 44,351,900 | |
TOTAL MONEY MARKET FUNDS (Cost $57,965,181) | 57,965,181 | ||
TOTAL INVESTMENT PORTFOLIO - 104.0% (Cost $1,106,150,389) | 1,237,389,825 |
NET OTHER ASSETS - (4.0)% | (47,073,101) | ||
NET ASSETS - 100% | $1,190,316,724 | ||
Legend |
(a)Non-income producing |
(b)Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. |
(c)Investment made with cash collateral received from securities on loan. |
(d)Security or a portion of the security is on loan at period end. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the fund from the affiliated Central funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $462,456 |
Fidelity Securities Lending Cash Central Fund | 83,781 |
Total | $546,237 |
Other Information |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: |
United States of America | 68.6% |
Canada | 14.5% |
Cayman Islands | 6.6% |
Netherlands Antilles | 4.5% |
Others (individually less than 1%) | 5.8% |
100.0% |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Natural Resources Portfolio
Financial Statements
Statement of Assets and Liabilities
August 31, 2006 (Unaudited) | ||
Assets | ||
Investment in securities, at value (including securities loaned of $42,884,763) - See accompanying schedule: Unaffiliated issuers (cost $1,048,185,208) | $1,179,424,644 | |
Affiliated Central Funds (cost $57,965,181) | 57,965,181 | |
Total Investments (cost $1,106,150,389) | $1,237,389,825 | |
Foreign currency held at value (cost $7) | 7 | |
Receivable for investments sold | 499,045 | |
Receivable for fund shares sold | 5,654,273 | |
Dividends receivable | 1,298,248 | |
Interest receivable | 85,541 | |
Prepaid expenses | 411 | |
Other receivables | 13,506 | |
Total assets | 1,244,940,856 | |
Liabilities | ||
Payable for investments purchased | $1,366,141 | |
Payable for fund shares redeemed | 7,952,762 | |
Accrued management fee | 576,852 | |
Other affiliated payables | 328,046 | |
Other payables and accrued expenses | 48,431 | |
Collateral on securities loaned, at value | 44,351,900 | |
Total liabilities | 54,624,132 | |
Net Assets | $1,190,316,724 | |
Net Assets consist of: | ||
Paid in capital | $1,025,107,561 | |
Undistributed net investment income | 1,341,908 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 32,627,549 | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 131,239,706 | |
Net Assets, for 44,788,775 shares outstanding | $1,190,316,724 | |
Net Asset Value, offering price and redemption price per share ($1,190,316,724 ÷ 44,788,775 shares) | $26.58 | |
Statement of Operations
Six months ended August 31, 2006 (Unaudited) | ||
Investment Income | ||
Dividends | $6,029,026 | |
Interest | 10,568 | |
Income from affiliated Central Funds | 546,237 | |
Total income | 6,585,831 | |
Expenses | ||
Management fee | $3,178,524 | |
Transfer agent fees | 1,600,545 | |
Accounting and security lending fees | 236,162 | |
Independent trustees' compensation | 2,042 | |
Custodian fees and expenses | 66,088 | |
Registration fees | 89,487 | |
Audit | 18,587 | |
Legal | 8,347 | |
Interest | 19,047 | |
Miscellaneous | 29,411 | |
Total expenses before reductions | 5,248,240 | |
Expense reductions | (65,570) | 5,182,670 |
Net investment income (loss) | 1,403,161 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers | 37,462,155 | |
Foreign currency transactions | (19,334) | |
Total net realized gain (loss) | 37,442,821 | |
Change in net unrealized appreciation (depreciation) on: Investment securities | (19,762,858) | |
Assets and liabilities in foreign currencies | (4,807) | |
Total change in net unrealized appreciation (depreciation) | (19,767,665) | |
Net gain (loss) | 17,675,156 | |
Net increase (decrease) in net assets resulting from operations | $19,078,317 | |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Natural Resources Portfolio
Financial Statements - continued
Statement of Changes in Net Assets
Six months ended August 31, 2006 (Unaudited) | Year ended | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $1,403,161 | $1,106,763 |
Net realized gain (loss) | 37,442,821 | 43,520,153 |
Change in net unrealized appreciation (depreciation) | (19,767,665) | 95,731,911 |
Net increase (decrease) in net assets resulting from operations | 19,078,317 | 140,358,827 |
Distributions to shareholders from net investment income | (361,062) | (980,210) |
Distributions to shareholders from net realized gain | (24,191,127) | (22,978,849) |
Total distributions | (24,552,189) | (23,959,059) |
Share transactions | 709,203,163 | 885,245,672 |
Reinvestment of distributions | 23,746,391 | 23,245,108 |
Cost of shares redeemed | (418,390,685) | (453,189,533) |
Net increase (decrease) in net assets resulting from share transactions | 314,558,869 | 455,301,247 |
Redemption fees | 392,188 | 443,375 |
Total increase (decrease) in net assets | 309,477,185 | 572,144,390 |
Net Assets | ||
Beginning of period | 880,839,539 | 308,695,149 |
End of period (including undistributed net investment income of $1,341,908 and undistributed net investment income of $367,985, respectively) | $1,190,316,724 | $880,839,539 |
Other Information Shares | ||
Sold | 25,480,794 | 37,984,838 |
Issued in reinvestment of distributions | 851,736 | 995,604 |
Redeemed | (15,595,672) | (20,310,503) |
Net increase (decrease) | 10,736,858 | 18,669,939 |
Financial Highlights
Six months ended | Years ended February 28, | |||||
(Unaudited) | 2006 | 2005 | 2004 F | 2003 | 2002 | |
Selected Per-Share Data | ||||||
Net asset value, beginning of period | $25.87 | $20.07 | $14.90 | $11.04 | $12.78 | $14.11 |
Income from Investment Operations | ||||||
Net investment income (loss) D | .03 | .05 | .09 | .03 | - G | .05 |
Net realized and unrealized gain (loss) | 1.35 | 6.72 | 5.42 | 3.82 | (1.73) | (.98) |
Total from investment operations | 1.38 | 6.77 | 5.51 | 3.85 | (1.73) | (.93) |
Distributions from net investment income | (.01) | (.04) | (.07) | - | (.02) | (.01) |
Distributions from net realized gain | (.67) | (.95) | (.28) | - | - | (.40) |
Total distributions | (.68) | (.99) | (.35) | - | (.02) | (.41) |
Redemption fees added to paid in capital D | .01 | .02 | .01 | .01 | .01 | .01 |
Net asset value, end of period | $26.58 | $25.87 | $20.07 | $14.90 | $11.04 | $12.78 |
Total Return B, C | 5.25% | 34.50% | 37.51% | 34.96% | (13.48)% | (6.73)% |
Ratios to Average Net Assets E | ||||||
Expenses before reductions | .94% A | .99% | 1.04% | 1.59% | 1.75% | 1.61% |
Expenses net of fee waivers, if any | .94% A | .99% | 1.04% | 1.59% | 1.75% | 1.61% |
Expenses net of all reductions | .92% A | .93% | 1.00% | 1.59% | 1.72% | 1.56% |
Net investment income (loss) | .25% A | .21% | .55% | .24% | .01% | .36% |
Supplemental Data | ||||||
Net assets, end of period (000 omitted) | $1,190,317 | $880,840 | $308,695 | $76,778 | $27,198 | $27,962 |
Portfolio turnover rate | 121% A | 119% | 101% | 32% | 70% | 115% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Calculated based on average shares outstanding during the period. E Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. 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.
Semiannual Report
Paper and Forest Products Portfolio
Investment Changes
Top Ten Stocks as of August 31, 2006 | ||
% of fund's | % of fund's net assets | |
Weyerhaeuser Co. | 6.7 | 6.6 |
Temple-Inland, Inc. | 6.5 | 5.4 |
Smurfit-Stone Container Corp. | 6.2 | 8.5 |
Longview Fibre Co. | 5.7 | 2.0 |
Plum Creek Timber Co., Inc. | 5.4 | 4.6 |
Sealed Air Corp. | 5.3 | 4.5 |
Sonoco Products Co. | 5.1 | 4.1 |
Bemis Co., Inc. | 5.1 | 5.0 |
Kimberly-Clark Corp. | 4.9 | 4.1 |
Rayonier, Inc. | 4.8 | 5.5 |
55.7 | ||
Top Industries (% of fund's net assets) | |||
As of August 31, 2006 | |||
| Containers & Packaging | 34.9% | |
| Paper & Forest Products | 32.8% | |
| Real Estate Investment Trusts | 20.5% | |
| Household Products | 5.9% | |
| Textiles, Apparel & Luxury Goods | 1.3% | |
| All Others* | 4.6% | |
As of February 28, 2006 | |||
| Paper & Forest Products | 36.6% | |
| Containers & Packaging | 36.6% | |
| Real Estate | 15.2% | |
| Household Products | 5.1% | |
| Leisure Equipment & Products | 1.7% | |
| All Others* | 4.8% | |
*Includes short-term investments and net other assets. |
Prior period industry classifications reflect the categories in place as of the date indicated and have not been adjusted to reflect current industry classifications. |
Semiannual Report
Paper and Forest Products Portfolio
Investments August 31, 2006 (Unaudited)
Showing Percentage of Net Assets
Common Stocks - 98.7% | |||
Shares | Value (Note 1) | ||
CONTAINERS & PACKAGING - 34.9% | |||
Metal & Glass Containers - 2.3% | |||
Ball Corp. | 2,415 | $97,421 | |
Owens-Illinois, Inc. | 12,700 | 192,532 | |
Silgan Holdings, Inc. | 6,000 | 212,400 | |
502,353 | |||
Paper Packaging - 32.6% | |||
Bemis Co., Inc. | 33,700 | 1,088,510 | |
Packaging Corp. of America | 34,700 | 802,958 | |
Rock-Tenn Co. Class A | 7,300 | 141,036 | |
Sealed Air Corp. | 22,000 | 1,141,140 | |
Smurfit-Stone Container Corp. | 117,570 | 1,339,122 | |
Sonoco Products Co. | 32,600 | 1,091,448 | |
Temple-Inland, Inc. | 31,200 | 1,389,024 | |
6,993,238 | |||
TOTAL CONTAINERS & PACKAGING | 7,495,591 | ||
ELECTRONIC EQUIPMENT & INSTRUMENTS - 1.0% | |||
Electronic Equipment & Instruments - 1.0% | |||
Metrologic Instruments, Inc. (a)(d) | 13,600 | 219,504 | |
HOUSEHOLD PRODUCTS - 5.9% | |||
Household Products - 5.9% | |||
Kimberly-Clark Corp. | 16,500 | 1,047,750 | |
Procter & Gamble Co. | 3,500 | 216,650 | |
1,264,400 | |||
INVESTMENT COMPANIES - 0.4% | |||
Investment Companies - 0.4% | |||
Canfor Pulp Income Fund | 8,690 | 94,739 | |
MACHINERY - 0.3% | |||
Industrial Machinery - 0.3% | |||
Kadant, Inc. (a) | 2,800 | 73,864 | |
MEDIA - 0.4% | |||
Publishing - 0.4% | |||
McGraw-Hill Companies, Inc. | 1,600 | 89,456 | |
PAPER & FOREST PRODUCTS - 32.8% | |||
Forest Products - 14.2% | |||
Canfor Corp. New (a) | 86,900 | 893,923 | |
West Fraser Timber Co. Ltd. | 21,500 | 721,659 | |
Weyerhaeuser Co. | 23,200 | 1,438,400 | |
3,053,982 | |||
Paper Products - 18.6% | |||
Abitibi-Consolidated, Inc. | 103,700 | 281,462 | |
Aracruz Celulose SA (PN-B) sponsored ADR (non-vtg.) (d) | 6,900 | 358,317 | |
Bowater, Inc. | 7,200 | 163,656 | |
Buckeye Technologies, Inc. (a) | 21,700 | 176,421 | |
Domtar, Inc. | 86,900 | 554,279 | |
International Paper Co. | 18,600 | 646,722 | |
Shares | Value (Note 1) | ||
Lee & Man Paper Manufacturing Ltd. | 48,000 | $80,975 | |
MeadWestvaco Corp. | 36,300 | 927,465 | |
Mercer International, Inc. (SBI) (a) | 14,000 | 132,300 | |
Neenah Paper, Inc. | 1,700 | 57,069 | |
Nine Dragons Paper (Holdings) Ltd. | 12,000 | 11,001 | |
P.H. Glatfelter Co. | 21,600 | 309,960 | |
Wausau-Mosinee Paper Corp. | 21,600 | 293,976 | |
3,993,603 | |||
TOTAL PAPER & FOREST PRODUCTS | 7,047,585 | ||
REAL ESTATE INVESTMENT TRUSTS - 20.5% | |||
Specialized REITs - 20.5% | |||
Longview Fibre Co. | 58,318 | 1,215,347 | |
Plum Creek Timber Co., Inc. | 33,200 | 1,156,356 | |
Potlatch Corp. | 25,779 | 987,593 | |
Rayonier, Inc. | 26,387 | 1,042,287 | |
4,401,583 | |||
REAL ESTATE MANAGEMENT & DEVELOPMENT - 1.2% | |||
Real Estate Management & Development - 1.2% | |||
Consolidated-Tomoka Land Co. | 3,800 | 253,232 | |
TEXTILES, APPAREL & LUXURY GOODS - 1.3% | |||
Textiles - 1.3% | |||
Xerium Technologies, Inc. | 24,600 | 268,632 | |
TOTAL COMMON STOCKS (Cost $23,021,786) | 21,208,586 | ||
Money Market Funds - 3.5% | |||
Fidelity Cash Central Fund, 5.31% (b) | 224,782 | 224,782 | |
Fidelity Securities Lending Cash Central Fund, 5.33% (b)(c) | 528,400 | 528,400 | |
TOTAL MONEY MARKET FUNDS (Cost $753,182) | 753,182 | ||
TOTAL INVESTMENT PORTFOLIO - 102.2% (Cost $23,774,968) | 21,961,768 |
NET OTHER ASSETS - (2.2)% | (476,879) | ||
NET ASSETS - 100% | $21,484,889 | ||
Legend |
(a)Non-income producing |
(b)Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. |
(c)Investment made with cash collateral received from securities on loan. |
(d)Security or a portion of the security is on loan at period end. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the fund from the affiliated Central funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $8,909 |
Fidelity Securities Lending Cash Central Fund | 1,573 |
Total | $10,482 |
Other Information |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: |
United States of America | 86.1% |
Canada | 11.8% |
Brazil | 1.7% |
Others (individually less than 1%) | 0.4% |
100.0% |
Income Tax Information |
At February 28, 2006, the fund had a capital loss carryforward of approximately $4,421,794 of which $1,564,044 and $2,857,750 will expire on February 28, 2010 and 2011, respectively. |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Paper and Forest Products Portfolio
Financial Statements
Statement of Assets and Liabilities
August 31, 2006 (Unaudited) | ||
Assets | ||
Investment in securities, at value (including securities loaned of $505,821) - See accompanying schedule: Unaffiliated issuers (cost $23,021,786) | $21,208,586 | |
Affiliated Central Funds (cost $753,182) | 753,182 | |
Total Investments (cost $23,774,968) | $21,961,768 | |
Receivable for fund shares sold | 75,207 | |
Dividends receivable | 59,003 | |
Interest receivable | 606 | |
Prepaid expenses | 20 | |
Other receivables | 727 | |
Total assets | 22,097,331 | |
Liabilities | ||
Payable for fund shares redeemed | 47,785 | |
Accrued management fee | 11,131 | |
Other affiliated payables | 7,879 | |
Other payables and accrued expenses | 17,247 | |
Collateral on securities loaned, at value | 528,400 | |
Total liabilities | 612,442 | |
Net Assets | $21,484,889 | |
Net Assets consist of: | ||
Paid in capital | $28,127,582 | |
Undistributed net investment income | 490,106 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (5,319,603) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (1,813,196) | |
Net Assets, for 709,444 shares outstanding | $21,484,889 | |
Net Asset Value, offering price and redemption price per share ($21,484,889 ÷ 709,444 shares) | $30.28 | |
Statement of Operations
Six months ended August 31, 2006 (Unaudited) | ||
Investment Income | ||
Dividends | $377,252 | |
Special dividends | 255,606 | |
Interest | 25 | |
Income from affiliated Central Funds | 10,482 | |
Total income | 643,365 | |
Expenses | ||
Management fee | $66,933 | |
Transfer agent fees | 43,322 | |
Accounting and security lending fees | 5,926 | |
Independent trustees' compensation | 49 | |
Custodian fees and expenses | 13,101 | |
Registration fees | 15,904 | |
Audit | 15,976 | |
Legal | 302 | |
Miscellaneous | 1,294 | |
Total expenses before reductions | 162,807 | |
Expense reductions | (16,001) | 146,806 |
Net investment income (loss) | 496,559 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers | (200,026) | |
Foreign currency transactions | 3,654 | |
Total net realized gain (loss) | (196,372) | |
Change in net unrealized appreciation (depreciation) on: Investment securities | (86,150) | |
Assets and liabilities in foreign currencies | 889 | |
Total change in net unrealized appreciation (depreciation) | (85,261) | |
Net gain (loss) | (281,633) | |
Net increase (decrease) in net assets resulting from operations | $214,926 | |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Statement of Changes in Net Assets
Six months ended August 31, 2006 (Unaudited) | Year ended | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $496,559 | $600,245 |
Net realized gain (loss) | (196,372) | 1,357,825 |
Change in net unrealized appreciation (depreciation) | (85,261) | (1,962,608) |
Net increase (decrease) in net assets resulting from operations | 214,926 | (4,538) |
Distributions to shareholders from net investment income | (455,271) | (163,629) |
Share transactions | 9,645,557 | 68,917,639 |
Reinvestment of distributions | 419,172 | 148,392 |
Cost of shares redeemed | (17,059,884) | (67,907,502) |
Net increase (decrease) in net assets resulting from share transactions | (6,995,155) | 1,158,529 |
Redemption fees | 4,427 | 40,871 |
Total increase (decrease) in net assets | (7,231,073) | 1,031,233 |
Net Assets | ||
Beginning of period | 28,715,962 | 27,684,729 |
End of period (including undistributed net investment income of $490,106 and undistributed net investment income of $448,818, respectively) | $21,484,889 | $28,715,962 |
Other Information Shares | ||
Sold | 311,293 | 2,357,344 |
Issued in reinvestment of distributions | 13,169 | 4,956 |
Redeemed | (552,607) | (2,299,721) |
Net increase (decrease) | (228,145) | 62,579 |
Financial Highlights
Six months ended August 31, 2006 | Years ended February 28, | |||||
(Unaudited) | 2006 | 2005 | 2004 H | 2003 | 2002 | |
Selected Per-Share Data | ||||||
Net asset value, beginning of period | $30.63 | $31.64 | $31.64 | $24.07 | $28.78 | $25.00 |
Income from Investment Operations | ||||||
Net investment income (loss) D | .64 E | .61 F | .14 | (.05) | (.02) | .11 |
Net realized and unrealized gain (loss) | (.47) | (1.53) | (.06) | 7.59 | (4.74) | 3.71 |
Total from investment operations | .17 | (.92) | .08 | 7.54 | (4.76) | 3.82 |
Distributions from net investment income | (.53) | (.13) | (.12) | - | - | (.16) |
Redemption fees added to paid in capital D | .01 | .04 | .04 | .03 | .05 | .12 |
Net asset value, end of period | $30.28 | $30.63 | $31.64 | $31.64 | $24.07 | $28.78 |
Total Return B, C | .50% | (2.77)% | .37% | 31.45% | (16.37)% | 15.82% |
Ratios to Average Net Assets G | ||||||
Expenses before reductions | 1.38% A | 1.31% | 1.33% | 2.01% | 1.81% | 1.82% |
Expenses net of fee waivers, if any | 1.25% A | 1.25% | 1.32% | 2.01% | 1.81% | 1.82% |
Expenses net of all reductions | 1.24% A | 1.21% | 1.30% | 1.94% | 1.73% | 1.69% |
Net investment income (loss) | 4.20% A, E | 2.10% F | .45% | (.20)% | (.07)% | .42% |
Supplemental Data | ||||||
Net assets, end of period (000 omitted) | $21,485 | $28,716 | $27,685 | $28,818 | $21,308 | $26,076 |
Portfolio turnover rate | 79% A | 207% | 65% | 188% | 201% | 247% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Calculated based on average shares outstanding during the period. E Investment income per share reflects a special dividend which amounted to $.33 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been 2.04%. F Investment income per share reflects a special dividend which amounted to $.42 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been .64%. G Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. H For the year ended February 29. | ||||||
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Notes to Financial Statements
For the period ended August 31, 2006 (Unaudited)
1. Significant Accounting Policies.
Energy Portfolio, Energy Service Portfolio, Gold Portfolio, Natural Gas Portfolio, Natural Resources Portfolio, and Paper and Forest Products 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. The Gold Portfolio and Natural Resources Portfolio may also invest in certain precious metals. Certain Funds may invest in affiliated money market central funds (Money Market Central Funds), which are open-end investment companies available to investment companies and other accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. The following summarizes the significant accounting policies of the Funds:
Security Valuation. Investments are valued and net asset value (NAV) per share is calculated (NAV calculation) as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time. During the period each Fund also calculated a NAV each hour on the hour (commencing at 10:00 a.m. Eastern time until one hour prior to the close of business on the NYSE). Effective October 1, 2006, each Fund will eliminate the hourly NAV calculation.
Wherever possible, each Fund uses independent pricing services approved by the Board of Trustees to value its investments. Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price. Investments in open-end mutual funds are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or do not accurately reflect fair value, valuations may be determined in accordance with procedures adopted by the Board of Trustees. For example, when developments occur between the close of a market and the close of the NYSE that may materially affect the value of some or all of the securities, or when trading in a security is halted, those securities may be fair valued. Factors used in the determination of fair value may include monitoring news to identify significant market or security specific events such as changes in the value of U.S. securities markets, reviewing developments in foreign markets and evaluating the performance of ADRs, futures contracts and exchange-traded funds. Because each Fund's utilization of fair value pricing depends on market activity, the frequency with which fair value pricing is used can not be predicted and may be utilized to a significant extent. The value of securities used for NAV calculation under fair value pricing may differ from published prices for the same securities.
Foreign Currency. Certain Funds may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. Security transactions are accounted for as of trade date. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Funds are informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Funds estimate the components of distributions received that may be considered return of capital distributions or capital gain distributions. Large, non-recurring dividends recognized by the Funds are presented separately on the Statement of Operations as "Special Dividends" and the impact of these dividends is presented in the Financial Highlights. Interest income is accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
1. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders. Each year, each Fund intends to qualify as a regulated investment company by distributing all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code. As a result, no provision for income taxes is required in the accompanying financial statements. Foreign taxes are provided for based on each Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. In addition, Certain Funds claimed a portion of the payment made to redeeming shareholders as a distribution for income tax purposes.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to short-term capital gains, foreign currency transactions, passive foreign investment companies (PFIC), deferred trustees compensation, net operating losses, capital loss carryforwards and losses deferred due to wash sales.
The federal tax cost of investments and unrealized appreciation (depreciation) as of period end were as follows for each Fund:
Cost for | Unrealized | Unrealized | Net Unrealized | |
Energy Portfolio | $2,357,323,053 | $515,712,962 | $(70,407,273) | $445,305,689 |
Energy Service Portfolio | 1,322,560,965 | 465,523,593 | (57,561,123) | 407,962,470 |
Gold Portfolio | 1,331,426,624 | 286,320,165 | (45,252,295) | 241,067,870 |
Natural Gas Portfolio | 1,266,149,371 | 264,447,440 | (22,811,995) | 241,635,445 |
Natural Resources Portfolio | 1,114,772,874 | 169,395,482 | (46,778,531) | 122,616,951 |
Paper and Forest Products Portfolio | 23,969,430 | 571,464 | (2,579,126) | (2,007,662) |
Trading (Redemption) Fees. Shares in the Funds held less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, including any estimated redemption fees paid by Fidelity Management & Research Company (FMR), are retained by the Fund and accounted for as an addition to paid in capital. Shareholders are also subject to an additional $7.50 fee for shares exchanged into another Fidelity fund (see Note 4).
New Accounting Pronouncements. In July 2006, Financial Accounting Standards Board Interpretation No. 48, Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement 109 (FIN 48), was issued and is effective for fiscal years beginning after December 15, 2006. FIN 48 sets forth a threshold for financial statement recognition, measurement and disclosure of a tax position taken or expected to be taken on a tax return. Management is currently evaluating the impact, if any, the adoption of FIN 48 will have on the Funds' net assets, results of operations and financial statement disclosures.
In addition, in September 2006, Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157), was issued and is effective for fiscal years beginning after November 15, 2007. SFAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. Management is currently evaluating the impact the adoption of SFAS 157 will have on the Funds' financial statement disclosures.
2. Operating Policies.
Repurchase Agreements. FMR has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits certain Funds and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts which are then invested in repurchase agreements. Certain Funds may also invest directly with institutions in repurchase agreements. Repurchase agreements are collateralized by government or non-government securities. Upon settlement date, collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. Each applicable Fund monitors, on a daily basis, the value of the collateral to ensure it is at least equal to the principal amount of the repurchase agreement (including accrued interest). In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the value of the collateral may decline.
Restricted Securities. Certain Funds may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities is included at the end of each applicable Fund's Schedule of Investments.
Semiannual Report
3. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, are noted in the table below.
Purchases ($) | Sales ($) | |
Energy Portfolio | 1,491,499,646 | 1,402,981,866 |
Energy Service Portfolio | 913,335,913 | 942,778,540 |
Gold Portfolio | 560,887,878 | 404,705,923 |
Natural Gas Portfolio | 418,585,050 | 654,605,567 |
Natural Resources Portfolio | 948,851,487 | 665,519,424 |
Paper and Forest Products Portfolio | 9,406,834 | 15,726,159 |
4. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the Funds with investment management related services for which the Funds pay a monthly management fee. The management fee is the sum of an individual fund fee rate and a group fee rate. The individual fund fee rate is applied to each Fund's average net assets. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, each Fund's annualized 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% | .27% | .57% |
Energy Service Portfolio | .30% | .27% | .57% |
Gold Portfolio | .30% | .27% | .57% |
Natural Gas Portfolio | .30% | .27% | .57% |
Natural Resources Portfolio | .30% | .27% | .57% |
Paper and Forest Products Portfolio | .30% | .27% | .57% |
Transfer Agent Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, is the Funds' transfer, dividend disbursing and shareholder servicing agent. FSC receives account fees and asset-based fees that vary according to account size and type of account. FSC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, the transfer agent fees were equivalent to the following annualized rates expressed as a percentage of average net assets:
Energy Portfolio | .27% |
Energy Service Portfolio | .25% |
Gold Portfolio | .26% |
Natural Gas Portfolio | .27% |
Natural Resources Portfolio | .29% |
Paper and Forest Products Portfolio | .37% |
Accounting and Security Lending Fees. FSC maintains each Fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Affiliated Central Funds. Certain Funds may invest in Money Market Central Funds which seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
The Money Market Central Funds do not pay a management fee.
Exchange Fees. During the period, FSC received the proceeds of a $7.50 fee to cover administrative costs associated with exchanges out of the Funds to any other Fidelity Select fund or to any other Fidelity fund made through non-automated channels. Effective October 1, 2006 the exchange fees will be eliminated. For the period, exchange fees retained by FSC were as follows:
Retained | |
Energy Portfolio | $13,658 |
Energy Service Portfolio | 12,818 |
Gold Portfolio | 8,580 |
Natural Gas Portfolio | 17,505 |
Natural Resources Portfolio | 5,693 |
Paper and Forest Products Portfolio | 158 |
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
4. Fees and Other Transactions with Affiliates - continued
Brokerage Commissions. Certain Funds placed a portion of their portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were as follows:
Energy Portfolio | $5,184 |
Energy Service Portfolio | 408 |
Gold Portfolio | 54 |
Natural Gas Portfolio | 3,235 |
Natural Resources Portfolio | 4,176 |
Paper and Forest Products Portfolio | 202 |
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Funds, along with other registered investment companies having management contracts with FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the Funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. Each applicable fund's activity in this program during the period for which loans were outstanding was as follows:
Borrower | Average Daily | Weighted | Interest | |
Energy Portfolio | Borrower | $12,033,111 | 5.03% | $15,138 |
Energy Service Portfolio | Borrower | 15,656,148 | 5.11% | 60,033 |
Natural Gas Portfolio | Borrower | 6,737,238 | 5.01% | 19,686 |
Natural Resources Portfolio | Borrower | 11,115,750 | 5.14% | 19,047 |
5. Committed Line of Credit.
Certain Funds participate with other funds managed by FMR in a $4.2 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The participating funds have agreed to pay commitment fees on their pro rata portion of the line of credit, which is reflected in Miscellaneous Expense on the Statement of Operations, and is as follows:
Energy Portfolio | $3,721 |
Energy Service Portfolio | 2,613 |
Gold Portfolio | 1,949 |
Natural Gas Portfolio | 2,224 |
Natural Resources Portfolio | 1,368 |
Paper and Forest Products Portfolio | 42 |
During the period, there were no borrowings on this line of credit.
6. Security Lending.
Certain Funds lend portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, each applicable Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Funds and any additional required collateral is delivered to the Funds on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on each applicable Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Net income from lending portfolio securities during the period amounted to:
Energy Portfolio | $171,462 |
Energy Service Portfolio | 95,244 |
Gold Portfolio | 333,531 |
Natural Gas Portfolio | 137,954 |
Natural Resources Portfolio | 83,781 |
Paper and Forest Products Portfolio | 1,573 |
Semiannual Report
7. Expense Reductions.
FMR voluntarily agreed to reimburse funds to the extent annual operating expenses exceeded certain levels of average net assets as noted in the table below. Some expenses, for example interest expense, are excluded from this reimbursement.
The following funds were in reimbursement during the period:
Expense | Reimbursement | |
Paper and Forest Products Portfolio | 1.25% | $14,560 |
Many of the brokers with whom FMR places trades on behalf of certain Funds provided services to these Funds in addition to trade execution. These services included payments of expenses on behalf of each applicable Fund. In addition, through arrangements with each applicable fund's custodian and transfer agent, credits realized as a result of uninvested cash balances were used to reduce each applicable fund's expenses. All of the applicable expense reductions are noted in the table below.
Brokerage Service Arrangements | Custody | Transfern Agent | |
Energy Portfolio | $1,268 | $- | $15,837 |
Energy Service Portfolio | 14,050 | 821 | 7,836 |
Gold Portfolio | 150,555 | 1,841 | 9,203 |
Natural Gas Portfolio | - | 1,126 | 9,269 |
Natural Resources Portfolio | 50,425 | - | 15,145 |
Paper and Forest Products Portfolio | 1,441 | - | - |
8. 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.
Semiannual Report
Proxy Voting Results
A special meeting of Fidelity Select Portfolios' shareholders was held on September 20, 2006. The results of votes taken among shareholders on the proposal before them are reported below. Each vote reported represents one dollar of net asset value held on the record date for the meeting.
PROPOSAL 1 | ||
To elect a Board of Trustees. A | ||
# of | % of | |
Dennis J. Dirks | ||
Affirmative | 13,182,341,755.09 | 94.980 |
Withheld | 696,736,162.41 | 5.020 |
TOTAL | 13,879,077,917.50 | 100.000 |
Albert R. Gamper, Jr. | ||
Affirmative | 13,177,593,614.43 | 94.946 |
Withheld | 701,484,303.07 | 5.054 |
TOTAL | 13,879,077,917.50 | 100.000 |
Robert M. Gates | ||
Affirmative | 13,141,235,622.81 | 94.684 |
Withheld | 737,842,294.69 | 5.316 |
TOTAL | 13,879,077,917.50 | 100.000 |
George H. Heilmeier | ||
Affirmative | 13,140,073,210.00 | 94.675 |
Withheld | 739,004,707.50 | 5.325 |
TOTAL | 13,879,077,917.50 | 100.000 |
Edward C. Johnson 3d | ||
Affirmative | 13,106,284,587.54 | 94.432 |
Withheld | 772,793,329.96 | 5.568 |
TOTAL | 13,879,077,917.50 | 100.000 |
Stephen P. Jonas | ||
Affirmative | 13,168,282,872.88 | 94.879 |
Withheld | 710,795,044.62 | 5.121 |
TOTAL | 13,879,077,917.50 | 100.000 |
James H. KeyesB | ||
Affirmative | 13,164,603,089.66 | 94.852 |
Withheld | 714,474,827.84 | 5.148 |
TOTAL | 13,879,077,917.50 | 100.000 |
Marie L. Knowles | ||
Affirmative | 13,169,356,779.66 | 94.886 |
Withheld | 709,721,137.84 | 5.114 |
TOTAL | 13,879,077,917.50 | 100.000 |
Ned C. Lautenbach | ||
Affirmative | 13,166,485,155.52 | 94.866 |
Withheld | 712,592,761.98 | 5.134 |
TOTAL | 13,879,077,917.50 | 100.000 |
William O. McCoy | ||
Affirmative | 13,129,548,996.59 | 94.600 |
Withheld | 749,528,920.91 | 5.400 |
TOTAL | 13,879,077,917.50 | 100.000 |
Robert L. Reynolds | ||
Affirmative | 13,180,813,649.06 | 94.969 |
Withheld | 698,264,268.44 | 5.031 |
TOTAL | 13,879,077,917.50 | 100.000 |
# of | % of | |
Cornelia M. Small | ||
Affirmative | 13,170,500,616.42 | 94.895 |
Withheld | 708,577,301.08 | 5.105 |
TOTAL | 13,879,077,917.50 | 100.000 |
William S. Stavropoulos | ||
Affirmative | 13,143,284,328.22 | 94.699 |
Withheld | 735,793,589.28 | 5.301 |
TOTAL | 13,879,077,917.50 | 100.000 |
Kenneth L. Wolfe | ||
Affirmative | 13,162,946,758.47 | 94.840 |
Withheld | 716,131,159.03 | 5.160 |
TOTAL | 13,879,077,917.50 | 100.000 |
ADenotes trust-wide proposal and voting results. BEffective on or about January 1, 2007. | ||
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees
Select Energy
Select Energy Service
Select Gold
Select Natural Gas
Select Natural Resources
Select Paper and Forest Products
Each year, typically in July, the Board of Trustees, including the Independent Trustees (together, the Board), votes on the renewal of the management contract and sub-advisory agreements (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 throughout the year.
The Board meets regularly each month except August and takes into account throughout the year matters bearing on Advisory Contracts. The Board, acting directly and through its separate committees, considers at each of its meetings factors that are relevant to the annual renewal of each fund's Advisory Contracts, including the services and support provided to each fund and its shareholders. At the time of the renewal, the Board had 12 standing committees, each composed of 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. Each committee has adopted a written charter outlining the structure and purposes of the committee. One such committee, the Equity Contract Committee, meets periodically as needed throughout the year to consider matters specifically related to the annual renewal of Advisory Contracts. The committee requests and receives information on, and makes recommendations to the Independent Trustees concerning, the approval and annual review of the Advisory Contracts.
At its July 2006 meeting, the Board of Trustees, including the Independent Trustees, unanimously determined to renew the Advisory Contracts for each fund. 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 the management fee and total expenses of each fund; (iii) the total costs of the services to be provided by and the profits to be realized by the investment adviser and its affiliates from the relationship with each fund; (iv) the extent to which economies of scale 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 determining whether to renew the Advisory Contracts for each fund, the Board ultimately reached a determination, with the assistance of fund counsel and Independent Trustees' counsel, that the renewal of the Advisory Contracts and the compensation to be received by Fidelity under the management contracts is consistent with Fidelity's fiduciary duty under applicable law. In addition to evaluating the specific factors noted above, the Board, in reaching its determination, is aware that shareholders in each fund have a broad range of investment choices available to them, including a wide choice among mutual funds offered by competitors to Fidelity, and that each fund's shareholders, with 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, managed by Fidelity.
Nature, Extent, and Quality of Services Provided. The Board considered staffing within the investment adviser, FMR, and the sub-advisers (together, the Investment Advisers), including the backgrounds of the funds' portfolio managers and the funds' investment objectives and disciplines. 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.
Resources Dedicated to Investment Management and Support Services. The Board reviewed the size, education, and experience of the Investment Advisers' investment staff, their use of technology, and the Investment Advisers' approach to recruiting, training, and retaining portfolio managers and other research, advisory, and management personnel. The Board considered Fidelity's extensive global research capabilities that enable the Investment Advisers to aggregate data from various sources in an effort to produce positive investment results. The Board noted that Fidelity's analysts have access to a variety of technological tools that enable them to perform both fundamental and quantitative analysis and to specialize in various disciplines. The Board also considered that Fidelity's portfolio managers and analysts have access to daily portfolio attribution that allows for monitoring of a fund's portfolio, as well as an electronic communication system that provides immediate real-time access to research concerning issuers and credit enhancers.
Shareholder and Administrative Services. The Board considered (i) the nature, extent, quality, and cost of administrative, distribution, 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 Investment Advisers' 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 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 also considered that Fidelity voluntarily pays for market data out of its own resources.
Semiannual Report
Board Approval of Investment Advisory Contracts and Management Fees - continued
The Board noted that the growth of fund assets 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 phone representatives and over the Internet, and investor education materials and asset allocation tools.
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 for a large variety of mutual fund investor services. The Board noted that, since the last Advisory Contract renewals in July 2005, Fidelity has taken a number of actions that benefited particular funds, including (i) dedicating additional resources to investment research and to restructure the investment research teams; (ii) voluntarily entering into contractual arrangements with certain brokers pursuant to which Fidelity pays for research products and services separately out of its own resources, rather than bundling with fund commissions; (iii) launching the Fidelity Advantage Class of its five Spartan stock index funds and three Spartan bond index funds, which is a lower-fee class available to shareholders with higher account balances; (iv) contractually agreeing to impose expense limitations on Fidelity U.S. Bond Index Fund and reducing the fund's initial investment minimum; and (v) offering shareholders of each of the Fidelity Institutional Money Market Funds the privilege of exchanging shares of the fund for shares of other Fidelity funds.
Investment Performance and Compliance. The Board considered whether each fund has operated within its investment objective, as well as its record of compliance with its investment restrictions. It also reviewed each fund's absolute investment performance, as well as each fund's relative investment performance measured against (i) a proprietary custom index (or a Goldman Sachs index that reflects the market sector in which the fund invests, in the case of Natural Resources Portfolio), and (ii) a peer group of mutual funds over multiple periods. For each fund, the following charts considered by the Board show, over the one-, three-, and five-year periods ended December 31, 2005, the fund's cumulative total returns, the cumulative total returns of a proprietary custom index (or a Goldman Sachs index, in the case of Natural Resources Portfolio) ("benchmark"), and a range of cumulative total returns of a peer group of mutual funds identified by Lipper Inc. as having an investment objective similar to that of the fund. The box within each chart shows the 25th percentile return (bottom of box) and the 75th percentile return (top of box) of the Lipper peer group. Returns shown above the box are in the first quartile and returns shown below the box are in the fourth quartile. The percentage beaten number noted below each chart corresponds to the percentile box and represents the percentage of funds in the Lipper peer group whose performance was equal to or lower than that of the fund. For each fund (other than Natural Resources Portfolio), the fund's proprietary custom index is an index developed and periodically revised by FMR that is a market-capitalization weighted index of securities that meet the fund's 80% name test.
Energy Portfolio
The Board reviewed the fund's relative investment performance against its Lipper peer group and stated that the performance of the fund was in the first quartile for the one-year period and the second quartile for the three- and five-year periods. The Board noted that FMR does not consider that Lipper peer group to be a meaningful comparison for the fund, however, because the funds in the peer group typically have broader investment mandates than the fund, which focuses on a particular subset of companies within the natural resources industry. The Board also stated that the relative investment performance of the fund compared favorably to its benchmark for all the periods shown.
Semiannual Report
Energy Service Portfolio
The Board reviewed the fund's relative investment performance against its Lipper peer group and stated that the performance of the fund was in the first quartile for the one-year period and the third quartile for the three- and five-year periods. The Board noted that FMR does not consider that Lipper peer group to be a meaningful comparison for the fund, however, because the funds in the peer group typically have broader investment mandates than the fund, which focuses on a particular subset of companies within the natural resources industry. The Board also stated that the relative investment performance of the fund compared favorably to its benchmark for the one-and five-year periods, although the fund's three-year cumulative total return was lower than its benchmark.
Gold Portfolio
The Board reviewed the fund's relative investment performance against its Lipper peer group and stated that the performance of the fund was in the first quartile for the one-year period, the fourth quartile for the three-year period, and the third quartile for the five-year period. The Board also stated that the relative investment performance of the fund was lower than its benchmark for the one- and three-year periods, although the fund's five-year cumulative total return compared favorably to its benchmark.
Semiannual Report
Board Approval of Investment Advisory Contracts and Management Fees - continued
Natural Gas Portfolio
The Board reviewed the fund's relative investment performance against its Lipper peer group and stated that the performance of the fund was in the second quartile for the one-year period, the first quartile for the three-year period, and the third quartile for the five-year period. The Board noted that FMR does not consider that Lipper peer group to be a meaningful comparison for the fund, however, because the funds in the peer group typically have broader investment mandates than the fund, which focuses on a particular subset of companies within the natural resources industry. The Board also stated that the relative investment performance of the fund compared favorably to its benchmark for all the periods shown.
Natural Resources Portfolio
The Board reviewed the fund's relative investment performance against its Lipper peer group and stated that the performance of the fund was in the second quartile for the one-year period and the third quartile for the three- and five-year periods. The Board also stated that the relative investment performance of the fund compared favorably to its benchmark for all the periods shown.
Semiannual Report
Paper and Forest Products Portfolio
The Board reviewed the fund's relative investment performance against its Lipper peer group and stated that the performance of the fund was in the fourth quartile for the one- and three-year periods and the third quartile for the five-year period. The Board noted that FMR does not consider that Lipper peer group to be a meaningful comparison for the fund, however, because the peer group includes funds that focus on different industries and sectors than the fund. The Board also stated that the relative investment performance of the fund was lower than its benchmark for all the periods shown. In the absence of a meaningful peer group comparison for the fund and in consideration of the fund's exposure to a narrow market sector, the Board focused its review on the fund's relative investment performance measured against its benchmark. In light of that comparison, the Board discussed with FMR actions to be taken by FMR to improve the fund's below-benchmark performance.
The Board considered that FMR has taken steps to refocus and strengthen equity research, equity portfolio management, and compliance. The Board noted with favor FMR's reorganization of its senior management team in 2005 and FMR's dedication of additional resources to investment research, and participated in the process that led to those changes.
Based on its review, and giving particular weight to the nature and quality of the resources dedicated by the Investment Advisers to maintain and improve relative performance, the Board concluded that the nature, extent, and quality of the services provided to each fund will benefit each fund's shareholders, particularly in light of the Board's view that each fund's shareholders benefit from investing in a fund that is part of a large family of funds offering a variety of investment disciplines and services.
Competitiveness of Management Fee and Total Fund Expenses. The Board considered each fund's management fee and total expenses compared to "mapped groups" of competitive funds and classes. Fidelity creates "mapped groups" by combining similar Lipper investment objective categories that have comparable management fee characteristics. Combining Lipper investment objective categories aids the Board's management fee and total expense comparisons by broadening the competitive group used for comparison and by reducing the number of universes to which various Fidelity funds are compared.
The Board considered two proprietary management fee comparisons for the 12-month periods 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" and, for the reasons explained above, is broader than the Lipper peer group used by the Board for performance comparisons. The Total Mapped Group comparison focuses on a fund's standing relative to the total universe of comparable funds available to investors, in terms of gross management fees before expense reimbursements or caps. "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 TMG % of 4% means that 96% of the funds in the Total Mapped Group had higher management fees than a fund. The "Asset-Size Peer Group" (ASPG) comparison focuses on a fund's standing relative to non-Fidelity funds similar in size to the fund within the Total Mapped Group. The ASPG represents at least 15% of the funds in the Total Mapped Group with comparable asset size and management fee characteristics, 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 ranked, is also included in the charts and considered by the Board.
Semiannual Report
Board Approval of Investment Advisory Contracts and Management Fees - continued
Energy Portfolio
Energy Service Portfolio
Semiannual Report
Gold Portfolio
Natural Gas Portfolio
Semiannual Report
Board Approval of Investment Advisory Contracts and Management Fees - continued
Natural Resources Portfolio
Paper and Forest Products Portfolio
The Board noted that each fund's management fee ranked below the median of its Total Mapped Group and below the median of its ASPG for 2005.
Based on its review, the Board concluded that each fund's management fee was fair and reasonable in light of the services that the fund receives and the other factors considered.
In its review of each fund's total expenses, 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 the effects of any waivers and reimbursements on fees and expenses. As part of its review, the Board also considered current and historical total expenses 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 expenses ranked below its competitive median for 2005.
In its review of total expenses, the Board also considered Fidelity fee structures and other information on clients that FMR and its affiliates service in other competitive markets, such as other mutual funds advised or subadvised by FMR or its affiliates, pension plan clients, and other institutional clients.
Semiannual Report
Based on its review, the Board concluded that each fund's total expenses were 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 each fund and its shareholders. The Board also considered the level of Fidelity's profits in respect of all the Fidelity funds.
On an annual basis, FMR presents to the Board Fidelity's profitability for each fund. Fidelity calculates the profitability for each fund, as well as aggregate profitability for groups of Fidelity funds and all Fidelity funds, using a series of detailed revenue and cost allocation methodologies which originate with the audited books and records of Fidelity. The Audit Committee of the Board reviews any significant changes from the prior year's methodologies.
PricewaterhouseCoopers LLP (PwC), independent registered 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 results of Fidelity's profitability analysis. 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 surrounding the mathematical accuracy of fund profitability and its conformity to allocation methodologies. After considering PwC's reports issued under the engagement and information provided by Fidelity, the Board believes that while other allocation methods may also be reasonable, Fidelity's profitability methodologies are reasonable in all material respects.
The Board has also reviewed Fidelity's non-fund businesses and any 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 determined that the amount of profit is a fair entrepreneurial profit for the management of each fund.
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 through increased services to the fund, through waivers or reimbursements, or through fee or expense reductions, including reductions that occur through operation of the transfer agent agreement. The transfer agent fee varies in part based on the number of accounts in each fund. If the number of accounts decreases or the average account size increases, the overall transfer agent fee rate decreases.
The Board recognized that each fund's management contract incorporates a "group fee" structure, which provides for lower fee rates as total fund assets under FMR's management increase, and for higher fee rates as total fund assets under FMR's management decrease. The Board considered that the group fee is designed to deliver the benefits of economies of scale to fund shareholders when total fund 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 achieve a certain level of economies of scale as assets under FMR's management increase at the fund complex level, regardless of whether Fidelity achieves any such economies of scale.
The Board further concluded that any potential economies of scale are being shared between fund shareholders and Fidelity in an appropriate manner.
Additional Information Requested by the Board. In order to develop fully the factual basis for consideration of the Advisory Contracts, the Board requested additional information on several topics, including (i) Fidelity's fund profitability methodology and profitability trends within certain funds; (ii) portfolio manager compensation; (iii) the extent to which any economies of scale exist and are shared between the funds and Fidelity; (iv) the total expenses of certain funds and classes relative to competitors, including the extent to which the expenses of certain funds have been or could be capped; (v) fund performance trends; and (vi) Fidelity's fee structures, including use of performance fees.
Based on its evaluation of all of the conclusions noted above, and after considering all material factors, the Board ultimately concluded that the advisory fee structures are fair and reasonable, and that each fund's Advisory Contracts should be renewed.
Semiannual Report
Managing Your Investments
Fidelity offers several ways to conveniently manage your personal investments via your telephone or PC. You can access your account information, conduct trades and research your investments 24 hours a day.
By Phone
Fidelity Automated Service Telephone provides a single toll-free number to access account balances, positions, quotes and trading. It's easy to navigate the service, and on your first call, the system will help you create a personal identification number (PIN) for security.
(phone_graphic)
Fidelity Automated Service Telephone (FAST®)
1-800-544-5555
Press
1 For mutual fund and brokerage trading.
2 For quotes.*
3 For account balances and holdings.
4 To review orders and mutual fund activity.
5 To change your PIN.
*0 To speak to a Fidelity representative.
By PC
Fidelity's web site on the Internet provides a wide range of information, including daily financial news, fund performance, interactive planning tools and news about Fidelity products and services.
(computer_graphic)
Fidelity's Web Site
www.fidelity.com
* When you call the quotes line, please remember that a fund's yield and return will vary and, except for money market funds, share price will also vary. This means that you may have a gain or loss when you sell your shares. There is no assurance that money market funds will be able to maintain a stable $1 share price; an investment in a money market fund is not insured or guaranteed by the U.S. government. Total returns are historical and include changes in share price, reinvestment of dividends and capital gains, and the effects of any sales charges.
Semiannual Report
To Write Fidelity
We'll give your correspondence immediate attention and send you written confirmation upon completion of your request.
(letter_graphic)
Making Changes
To Your Account
(such as changing name, address, bank, etc.)
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0002
(letter_graphic)
For Non-Retirement
Accounts
Buying shares
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003
Overnight Express
Fidelity Investments
Attn: Distribution Services
100 Crosby Parkway - KC1H
Covington, KY 41015
Selling shares
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0035
Overnight Express
Fidelity Investments
Attn: Distribution Services
100 Crosby Parkway - KC1H
Covington, KY 41015
General Correspondence
Fidelity Investments
P.O. Box 500
Merrimack, NH 03054-0500
(letter_graphic)
For Retirement
Accounts
Buying shares
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003
Selling shares
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0035
Overnight Express
Fidelity Investments
Attn: Distribution Services
100 Crosby Parkway - KC1H
Covington, KY 41015
General Correspondence
Fidelity Investments
P.O. Box 500
Merrimack, NH 03054-0500
Semiannual Report
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
FMR Co., Inc.
Fidelity Management & Research
(U.K.) Inc.
Fidelity Research & Analysis Company (formerly Fidelity
Management & Research (Far East) Inc.)
Fidelity Investments Japan Limited
Fidelity International Investment Advisors
Fidelity International Investment Advisors
(U.K. Limited)
General Distributor
Fidelity Distributors Corporation
Boston, MA
Transfer and Service Agent
Fidelity Service Company, Inc.
Boston, MA
Custodian
Brown Brothers Harriman & Co.
Boston, MA
Corporate Headquarters
82 Devonshire Street
Boston, MA 02109
1-800-544-8888
The Fidelity Telephone Connection
Mutual Fund 24-Hour Service
Exchanges/Redemptions
and Account Assistance1-800-544-6666
Product Information1-800-544-8888
Retirement Accounts1-800-544-4774
(8 a.m. - 9 p.m.)
TDD Service1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
Fidelity Automated Service
Telephone (FAST®) (automated graphic) 1-800-544-5555
(automated graphic) Automated line for quickest service
SELNR-USAN-1006
1.813653.101
(Fidelity Investment logo)(registered trademark)
Corporate Headquarters
82 Devonshire St., Boston, MA 02109
www.fidelity.com
Fidelity®
Select Portfolios®
Cyclicals Sector
Air Transportation
Automotive
Chemicals
Construction and Housing
Defense and Aerospace
Environmental
Industrials (fomerly Cyclical Industries)
Industrial Equipment
Materials (formerly Industrial Materials)
Transportation
Semiannual Report
August 31, 2006
(2_fidelity_logos) (Registered_Trademark)
Contents
Chairman's Message | ||
Shareholder Expense Example | ||
Fund Updates* | ||
Cyclicals Sector | ||
Air Transportation | ||
Automotive | ||
Chemicals | ||
Construction and Housing | ||
Defense and Aerospace | ||
Environmental | ||
Industrials | ||
Industrial Equipment | ||
Materials | ||
Transportation | ||
Notes to Financial Statements | ||
Proxy Voting Results | ||
Board Approval of Investment Advisory Contracts and Management Fees |
*Fund updates for each Select Portfolio include: Investment Changes, Investments, and Financial Statements.
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit www.fidelity.com/proxyvotingresults or visit the Securities and Exchange Commission's (SEC) web site at 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 Corp. or an affiliated company.
This report and the financial statements contained herein are submitted for the general information of the shareholders of the funds. This report is not authorized for distribution to prospective investors in the funds unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent quarterly holdings report, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com/holdings.
NOT FDIC INSURED · MAY LOSE VALUE · NO BANK GUARANTEE
Neither the funds nor Fidelity Distributors Corporation is a bank.
Annual Report
Chairman's Message
(Photograph of Edward C. Johnson 3d.)
Dear Shareholder:
Stock and bond markets around the world have seen largely positive results year to date, although weakness in the technology sector and growth stocks in general have tempered performance. While financial markets are always unpredictable, there are a number of time-tested principles that can put the historical odds in your favor.
One of the basic tenets is to invest for the long term. Over time, riding out the markets' inevitable ups and downs has proven much more effective than selling into panic or chasing the hottest trend. Even missing only a few of the markets' best days can significantly diminish investor returns. Patience also affords the benefits of compounding - of earning interest on additional income or reinvested dividends and capital gains. There are tax advantages and cost benefits to consider as well. The more you sell, the more taxes you pay, and the more you trade, the higher the costs. While staying the course doesn't eliminate risk, it can considerably lessen the effect of short-term declines.
You can further manage your investing risk through diversification. And today, more than ever, geographic diversification should be taken into account. Studies
indicate that asset allocation is the single most important determinant of a portfolio's long-term success. The right mix of stocks, bonds and cash - aligned to your particular risk tolerance and investment objective - is very important. Age-appropriate rebalancing is also an essential aspect of asset allocation. For younger investors, an emphasis on equities - which historically have been the best performing asset class over time - is encouraged. As investors near their specific goal, such as retirement or sending a child to college, consideration may be given to replacing volatile assets (e.g. common stocks) with more-stable fixed investments (bonds or savings plans).
A third investment principle - investing regularly - can help lower the average cost of your purchases. Investing a certain amount of money each month or quarter helps ensure you won't pay for all your shares at market highs. This strategy - known as dollar cost averaging - also reduces unconstructive "emotion" from investing, helping shareholders avoid selling weak performers just prior to an upswing, or chasing a hot performer just before a correction.
We invite you to contact us via the Internet, through our Investor Centers or over the phone. It is our privilege to provide you the information you need to make the investments that are right for you.
Sincerely,
/s/Edward C. Johnson 3d
Edward C. Johnson 3d
Semiannual Report
Shareholder Expense Example
As a shareholder of a Fund, you incur two types of costs: (1) transaction costs, including redemption fees, exchange 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 (March 1, 2006 to August 31, 2006).
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.
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.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Beginning | Ending | Expenses Paid | |
Air Transportation Portfolio | |||
Actual | $1,000.00 | $986.40 | $5.16 |
HypotheticalA | $1,000.00 | $1,020.01 | $5.24 |
Automotive Portfolio | |||
Actual | $1,000.00 | $988.10 | $6.26 |
HypotheticalA | $1,000.00 | $1,018.90 | $6.36 |
Chemicals Portfolio | |||
Actual | $1,000.00 | $993.80 | $5.58 |
HypotheticalA | $1,000.00 | $1,019.61 | $5.65 |
Construction and Housing Portfolio | |||
Actual | $1,000.00 | $892.60 | $4.96 |
HypotheticalA | $1,000.00 | $1,019.96 | $5.30 |
Defense and Aerospace Portfolio | |||
Actual | $1,000.00 | $989.00 | $4.71 |
HypotheticalA | $1,000.00 | $1,020.47 | $4.79 |
Environmental Portfolio | |||
Actual | $1,000.00 | $944.10 | $5.64 |
HypotheticalA | $1,000.00 | $1,019.41 | $5.85 |
Industrials Portfolio | |||
Actual | $1,000.00 | $984.80 | $5.70 |
HypotheticalA | $1,000.00 | $1,019.46 | $5.80 |
Industrial Equipment Portfolio | |||
Actual | $1,000.00 | $986.60 | $5.16 |
HypotheticalA | $1,000.00 | $1,020.01 | $5.24 |
Materials Portfolio | |||
Actual | $1,000.00 | $1,035.30 | $5.23 |
HypotheticalA | $1,000.00 | $1,020.06 | $5.19 |
Transportation Portfolio | |||
Actual | $1,000.00 | $931.10 | $5.16 |
HypotheticalA | $1,000.00 | $1,019.86 | $5.40 |
A5% return per year before expenses
*Expenses are equal to each Fund's annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period).
Semiannual Report
Investments
Annualized | |
Air Transportation Portfolio | 1.03% |
Automotive Portfolio | 1.25% |
Chemicals Portfolio | 1.11% |
Construction and Housing Portfolio | 1.04% |
Defense and Aerospace Portfolio | .94% |
Environmental Portfolio | 1.15% |
Industrials Portfolio | 1.14% |
Industrial Equipment Portfolio | 1.03% |
Materials Portfolio | 1.02% |
Transportation Portfolio | 1.06% |
Semiannual Report
Investment Changes
Top Ten Stocks as of August 31, 2006 | ||
% of fund's | % of fund's net assets | |
Expeditors International of Washington, Inc. | 8.9 | 5.1 |
Rockwell Collins, Inc. | 7.9 | 5.6 |
Precision Castparts Corp. | 7.6 | 5.4 |
General Dynamics Corp. | 6.7 | 6.1 |
C.H. Robinson Worldwide, Inc. | 6.0 | 6.1 |
The Boeing Co. | 5.6 | 0.9 |
AMR Corp. | 4.9 | 4.7 |
Titanium Metals Corp. | 4.1 | 2.1 |
UAL Corp. | 3.8 | 2.0 |
US Airways Group, Inc. | 3.3 | 2.4 |
58.8 | ||
Top Industries (% of fund's net assets) | |||
As of August 31, 2006 | |||
| Aerospace & Defense | 42.8% | |
| Airlines | 21.8% | |
| Air Freight & Logistics | 21.4% | |
| Metals & Mining | 5.0% | |
| Commercial Services & Supplies | 3.2% | |
| All Others * | 5.8% | |
As of February 28, 2006 | |||
| Aerospace & Defense | 36.6% | |
| Airlines | 24.1% | |
| Air Freight & Logistics | 20.9% | |
| Metals & Mining | 4.2% | |
| Oil, Gas & Consumable Fuels | 3.1% | |
| All Others * | 11.1% | |
*Includes short-term investments and net other assets. |
Prior period industry classifications reflect the categories in place as of the date indicated and have not been adjusted to reflect current industry classifications. |
Semiannual Report
Air Transportation Portfolio
Investments August 31, 2006 (Unaudited)
Showing Percentage of Net Assets
Common Stocks - 97.7% | |||
Shares | Value (Note 1) | ||
AEROSPACE & DEFENSE - 42.8% | |||
Aerospace & Defense - 42.8% | |||
Alliant Techsystems, Inc. (a) | 11,700 | $894,933 | |
BE Aerospace, Inc. (a) | 55,500 | 1,324,230 | |
Bombardier, Inc. Class B (sub. vtg.) | 789,600 | 2,400,304 | |
EADS NV | 22,200 | 669,540 | |
General Dynamics Corp. | 75,200 | 5,079,760 | |
Goodrich Corp. | 50,500 | 1,966,975 | |
Hexcel Corp. (a)(d) | 100,500 | 1,509,510 | |
Honeywell International, Inc. | 1,300 | 50,336 | |
L-3 Communications Holdings, Inc. | 3,600 | 271,404 | |
Lockheed Martin Corp. | 200 | 16,520 | |
Orbital Sciences Corp. (a) | 60,200 | 1,089,018 | |
Precision Castparts Corp. | 98,300 | 5,744,652 | |
Raytheon Co. | 19,600 | 925,316 | |
Rockwell Collins, Inc. | 113,300 | 5,940,319 | |
Rolls-Royce Group PLC | 2,300 | 19,106 | |
The Boeing Co. (d) | 56,500 | 4,231,850 | |
United Technologies Corp. | 2,200 | 137,962 | |
32,271,735 | |||
AIR FREIGHT & LOGISTICS - 21.4% | |||
Air Freight & Logistics - 21.4% | |||
C.H. Robinson Worldwide, Inc. (d) | 99,600 | 4,563,672 | |
EGL, Inc. (a) | 42,109 | 1,287,272 | |
Expeditors International of Washington, Inc. | 168,000 | 6,698,159 | |
FedEx Corp. | 5,650 | 570,820 | |
Forward Air Corp. | 25,400 | 816,356 | |
Hub Group, Inc. Class A | 46,200 | 1,076,460 | |
United Parcel Service, Inc. Class B | 200 | 14,010 | |
UTI Worldwide, Inc. | 48,900 | 1,127,145 | |
16,153,894 | |||
AIRLINES - 21.8% | |||
Airlines - 21.8% | |||
AirTran Holdings, Inc. (a) | 134,500 | 1,540,025 | |
Alaska Air Group, Inc. (a) | 100 | 3,787 | |
AMR Corp. | 177,500 | 3,665,375 | |
ExpressJet Holdings, Inc. Class A (a) | 200 | 1,398 | |
Frontier Airlines Holdings, Inc. (a) | 5 | 35 | |
JetBlue Airways Corp. (a)(d) | 218,242 | 2,234,798 | |
Pinnacle Airlines Corp. (a) | 600 | 4,470 | |
Republic Airways Holdings, Inc. (a) | 71,200 | 1,134,928 | |
Ryanair Holdings PLC sponsored ADR (a) | 14,700 | 806,589 | |
SkyWest, Inc. | 200 | 4,834 | |
Southwest Airlines Co. (d) | 84,325 | 1,460,509 | |
UAL Corp. (a) | 114,900 | 2,872,500 | |
US Airways Group, Inc. (a) | 59,566 | 2,516,664 | |
WestJet Airlines Ltd. (a) | 22,050 | 191,314 | |
16,437,226 | |||
Shares | Value (Note 1) | ||
COMMERCIAL SERVICES & SUPPLIES - 3.2% | |||
Diversified Commercial & Professional Services - 3.2% | |||
The Brink's Co. | 42,500 | $2,421,225 | |
COMMUNICATIONS EQUIPMENT - 2.0% | |||
Communications Equipment - 2.0% | |||
Harris Corp. | 34,900 | 1,532,808 | |
ENERGY EQUIPMENT & SERVICES - 0.5% | |||
Oil & Gas Equipment & Services - 0.5% | |||
Hornbeck Offshore Services, Inc. (a) | 10,500 | 352,905 | |
METALS & MINING - 5.0% | |||
Diversified Metals & Mining - 4.8% | |||
RTI International Metals, Inc. (a) | 6,200 | 268,894 | |
Titanium Metals Corp. (d) | 121,300 | 3,129,540 | |
VSMPO-AVISMA Corp. warrants (UBS Warrant Programme) 9/28/06 (a) | 1,180 | 266,680 | |
3,665,114 | |||
Steel - 0.2% | |||
Allegheny Technologies, Inc. | 2,300 | 131,905 | |
TOTAL METALS & MINING | 3,797,019 | ||
OIL, GAS & CONSUMABLE FUELS - 1.0% | |||
Integrated Oil & Gas - 0.6% | |||
ConocoPhillips | 6,700 | 424,981 | |
Oil & Gas Refining & Marketing - 0.4% | |||
Valero Energy Corp. | 5,800 | 332,920 | |
Oil & Gas Storage & Transport - 0.0% | |||
Ship Finance International Ltd. (NY Shares) | 18 | 363 | |
TOTAL OIL, GAS & CONSUMABLE FUELS | 758,264 | ||
TOTAL COMMON STOCKS (Cost $61,781,877) | 73,725,076 | ||
Money Market Funds - 21.2% | |||
Fidelity Securities Lending Cash Central Fund, 5.33% (b)(c) | 15,998,769 | 15,998,769 | |
TOTAL INVESTMENT PORTFOLIO - 118.9% (Cost $77,780,646) | 89,723,845 | ||
NET OTHER ASSETS - (18.9)% | (14,265,507) | ||
NET ASSETS - 100% | $75,458,338 | ||
Legend |
(a)Non-income producing |
(b)Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. |
(c)Investment made with cash collateral received from securities on loan. |
(d)Security or a portion of the security is on loan at period end. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the fund from the affiliated Central funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $113,897 |
Fidelity Securities Lending Cash Central Fund | 48,998 |
Total | $162,895 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Air Transportation Portfolio
Financial Statements
Statement of Assets and Liabilities
August 31, 2006 (Unaudited) | ||
Assets | ||
Investment in securities, at value (including securities loaned of $15,675,483) - See accompanying schedule: Unaffiliated issuers (cost $61,781,877) | $73,725,076 | |
Affiliated Central Funds (cost $15,998,769) | 15,998,769 | |
Total Investments (cost $77,780,646) | $89,723,845 | |
Receivable for investments sold | 5,851,014 | |
Receivable for fund shares sold | 121,144 | |
Dividends receivable | 63,983 | |
Interest receivable | 3,028 | |
Prepaid expenses | 35 | |
Other receivables | 12,066 | |
Total assets | 95,775,115 | |
Liabilities | ||
Payable to custodian bank | $1,858,401 | |
Payable for fund shares redeemed | 2,369,594 | |
Accrued management fee | 41,833 | |
Other affiliated payables | 29,266 | |
Other payables and accrued expenses | 18,914 | |
Collateral on securities loaned, at value | 15,998,769 | |
Total liabilities | 20,316,777 | |
Net Assets | $75,458,338 | |
Net Assets consist of: | ||
Paid in capital | $62,599,282 | |
Accumulated net investment loss | (66,644) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 982,459 | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 11,943,241 | |
Net Assets, for 1,797,652 shares outstanding | $75,458,338 | |
Net Asset Value, offering price and redemption price per share ($75,458,338 ÷ 1,797,652 shares) | $41.98 | |
Statement of Operations
Six months ended August 31, 2006 (Unaudited) | ||
Investment Income | ||
Dividends | $383,403 | |
Interest | 6 | |
Income from affiliated Central Funds (including $48,998 from security lending) | 162,895 | |
Total income | 546,304 | |
Expenses | ||
Management fee | $342,382 | |
Transfer agent fees | 169,746 | |
Accounting and security lending fees | 31,425 | |
Independent trustees' compensation | 229 | |
Custodian fees and expenses | 10,812 | |
Registration fees | 41,150 | |
Audit | 16,220 | |
Legal | 1,006 | |
Interest | 3,749 | |
Miscellaneous | 2,596 | |
Total expenses before reductions | 619,315 | |
Expense reductions | (6,387) | 612,928 |
Net investment income (loss) | (66,624) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers | 1,098,440 | |
Foreign currency transactions | 13,489 | |
Total net realized gain (loss) | 1,111,929 | |
Change in net unrealized appreciation (depreciation) on: Investment securities | (3,609,372) | |
Assets and liabilities in foreign currencies | 42 | |
Total change in net unrealized appreciation (depreciation) | (3,609,330) | |
Net gain (loss) | (2,497,401) | |
Net increase (decrease) in net assets resulting from operations | $(2,564,025) | |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Air Transportation Portfolio
Financial Statements - continued
Statement of Changes in Net Assets
Six months ended | Year ended | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $(66,624) | $(53,317) |
Net realized gain (loss) | 1,111,929 | 4,743,341 |
Change in net unrealized appreciation (depreciation) | (3,609,330) | 9,148,901 |
Net increase (decrease) in net assets resulting from operations | (2,564,025) | 13,838,925 |
Distributions to shareholders from net investment income | - | (11,065) |
Distributions to shareholders from net realized gain | (2,125,381) | (1,175,691) |
Total distributions | (2,125,381) | (1,186,756) |
Share transactions | 107,083,353 | 140,976,982 |
Reinvestment of distributions | 1,995,463 | 1,075,872 |
Cost of shares redeemed | (146,642,642) | (72,407,983) |
Net increase (decrease) in net assets resulting from share transactions | (37,563,826) | 69,644,871 |
Redemption fees | 70,268 | 52,151 |
Total increase (decrease) in net assets | (42,182,964) | 82,349,191 |
Net Assets | ||
Beginning of period | 117,641,302 | 35,292,111 |
End of period (including accumulated net investment loss of $66,644 and accumulated net investment loss of $20, respectively) | $75,458,338 | $117,641,302 |
Other Information Shares | ||
Sold | 2,367,044 | 3,522,772 |
Issued in reinvestment of distributions | 44,079 | 26,955 |
Redeemed | (3,340,577) | (1,877,480) |
Net increase (decrease) | (929,454) | 1,672,247 |
Financial Highlights
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Investment Changes
Top Ten Stocks as of August 31, 2006 | ||
% of fund's | % of fund's net assets | |
Toyota Motor Corp. | 7.5 | 7.2 |
Honda Motor Co. Ltd. sponsored ADR | 7.2 | 4.4 |
Johnson Controls, Inc. | 5.7 | 8.4 |
Nissan Motor Co. Ltd. sponsored ADR | 5.6 | 4.5 |
AutoZone, Inc. | 5.1 | 4.0 |
Renault SA | 4.0 | 0.0 |
Genuine Parts Co. | 3.2 | 1.6 |
Eaton Corp. | 3.0 | 1.8 |
BorgWarner, Inc. | 2.9 | 4.4 |
DaimlerChrysler AG | 2.8 | 2.3 |
47.0 | ||
Top Industries (% of fund's net assets) | |||
As of August 31, 2006 | |||
| Automobiles | 37.6% | |
| Auto Components | 23.6% | |
| Specialty Retail | 16.1% | |
| Machinery | 12.0% | |
| Distributors | 3.6% | |
| All Others * | 7.1% | |
As of February 28, 2006 | |||
| Automobiles | 30.7% | |
| Auto Components | 30.6% | |
| Specialty Retail | 8.7% | |
| Leisure Equipment & Products | 6.0% | |
| Machinery | 5.7% | |
| All Others * | 18.3% | |
*Includes short-term investments and net other assets. |
Prior period industry classifications reflect the categories in place as of the date indicated and have not been adjusted to reflect current industry classifications. |
Semiannual Report
Automotive Portfolio
Investments August 31, 2006 (Unaudited)
Showing Percentage of Net Assets
Common Stocks - 99.7% | |||
Shares | Value (Note 1) | ||
AUTO COMPONENTS - 23.6% | |||
Auto Parts & Equipment - 22.2% | |||
Aisin Seiki Co. Ltd. | 1,500 | $45,487 | |
Akebono Brake Industry Co. Ltd. | 4,000 | 33,630 | |
American Axle & Manufacturing Holdings, Inc. | 8,496 | 141,798 | |
Amerigon, Inc. (a) | 17,200 | 120,916 | |
ArvinMeritor, Inc. | 4,800 | 71,280 | |
Bharat Forge Ltd. | 9,944 | 69,334 | |
BorgWarner, Inc. | 7,500 | 425,325 | |
Exedy Corp. | 1,200 | 33,630 | |
Gentex Corp. | 26,100 | 377,928 | |
Hyundai Mobis | 1,580 | 144,802 | |
Johnson Controls, Inc. | 11,790 | 848,055 | |
Kongsberg Automotive AS | 8,700 | 71,562 | |
Lear Corp. | 4,700 | 95,598 | |
LKQ Corp. (a) | 5,500 | 114,235 | |
Magna International, Inc. Class A | 400 | 28,705 | |
Nippon Seiki Co. Ltd. | 2,000 | 43,784 | |
Nissin Kogyo Co. Ltd. | 2,100 | 44,184 | |
Tenneco, Inc. (a) | 6,700 | 152,425 | |
TRW Automotive Holdings Corp. (a) | 10,200 | 251,532 | |
Visteon Corp. (a) | 22,100 | 189,397 | |
3,303,607 | |||
Tires & Rubber - 1.4% | |||
Continental AG | 800 | 85,584 | |
Goodyear Tire & Rubber Co. (a)(d) | 6,700 | 91,120 | |
Michelin SA (Compagnie Generale des Etablissements) Series B | 600 | 40,742 | |
217,446 | |||
TOTAL AUTO COMPONENTS | 3,521,053 | ||
AUTOMOBILES - 37.6% | |||
Automobile Manufacturers - 36.9% | |||
Bayerische Motoren Werke AG (BMW) | 5,800 | 300,508 | |
DaimlerChrysler AG | 8,000 | 422,240 | |
Ford Motor Co. | 35,600 | 297,972 | |
Ford Otomotiv Sanayi AS | 10,000 | 71,687 | |
General Motors Corp. (d) | 9,300 | 271,374 | |
Honda Motor Co. Ltd. sponsored ADR | 31,600 | 1,070,608 | |
Hyundai Motor Co. | 2,030 | 171,050 | |
Isuzu Motors Ltd. (d) | 26,000 | 84,382 | |
Maruti Udyog Ltd. | 1,473 | 27,321 | |
Monaco Coach Corp. | 2,700 | 28,512 | |
Nissan Motor Co. Ltd. sponsored ADR (d) | 36,700 | 835,659 | |
Peugeot Citroen SA | 1,400 | 79,047 | |
Renault SA | 5,100 | 593,952 | |
Tofas Turk Otomobil Fabrikasi AS | 13,000 | 35,502 | |
Toyota Motor Corp. | 20,700 | 1,121,320 | |
Winnebago Industries, Inc. | 2,900 | 84,680 | |
5,495,814 | |||
Shares | Value (Note 1) | ||
Motorcycle Manufacturers - 0.7% | |||
Bajaj Auto Ltd. | 1,880 | $109,136 | |
TOTAL AUTOMOBILES | 5,604,950 | ||
COMMERCIAL SERVICES & SUPPLIES - 2.3% | |||
Diversified Commercial & Professional Services - 2.3% | |||
Adesa, Inc. | 7,400 | 163,466 | |
Copart, Inc. (a) | 6,400 | 179,648 | |
343,114 | |||
DISTRIBUTORS - 3.6% | |||
Distributors - 3.6% | |||
Genuine Parts Co. | 11,400 | 471,162 | |
Keystone Automotive Industries, Inc. (a) | 1,800 | 61,902 | |
533,064 | |||
ELECTRONIC EQUIPMENT & INSTRUMENTS - 0.2% | |||
Electronic Equipment & Instruments - 0.2% | |||
Iteris, Inc. (a) | 13,100 | 32,750 | |
HOUSEHOLD DURABLES - 3.1% | |||
Consumer Electronics - 2.4% | |||
Directed Electronics, Inc. | 3,000 | 44,010 | |
Harman International Industries, Inc. | 3,900 | 316,368 | |
360,378 | |||
Household Appliances - 0.7% | |||
Snap-On, Inc. | 2,300 | 100,510 | |
TOTAL HOUSEHOLD DURABLES | 460,888 | ||
LEISURE EQUIPMENT & PRODUCTS - 0.7% | |||
Leisure Products - 0.7% | |||
MarineMax, Inc. (a) | 4,400 | 100,012 | |
MACHINERY - 12.0% | |||
Construction & Farm Machinery & Heavy Trucks - 9.0% | |||
Cummins, Inc. | 2,300 | 264,086 | |
Deere & Co. | 1,000 | 78,100 | |
Navistar International Corp. (a) | 6,400 | 146,816 | |
Oshkosh Truck Co. | 7,900 | 408,430 | |
PACCAR, Inc. (d) | 6,087 | 332,776 | |
Tata Motors Ltd. sponsored ADR | 1,900 | 35,055 | |
Terex Corp. (a) | 2,000 | 87,860 | |
1,353,123 | |||
Industrial Machinery - 3.0% | |||
Eaton Corp. | 6,700 | 445,550 | |
TOTAL MACHINERY | 1,798,673 | ||
SOFTWARE - 0.5% | |||
Application Software - 0.5% | |||
NAVTEQ Corp. (a) | 2,900 | 77,024 | |
Common Stocks - continued | |||
Shares | Value (Note 1) | ||
SPECIALTY RETAIL - 16.1% | |||
Automotive Retail - 16.1% | |||
Advance Auto Parts, Inc. | 6,300 | $189,756 | |
Asbury Automotive Group, Inc. | 2,700 | 55,323 | |
AutoNation, Inc. (a) | 14,700 | 285,621 | |
AutoZone, Inc. (a) | 8,500 | 767,550 | |
CarMax, Inc. (a) | 2,500 | 94,225 | |
Group 1 Automotive, Inc. | 2,800 | 126,840 | |
Lithia Motors, Inc. Class A (sub. vtg.) | 4,200 | 107,184 | |
Monro Muffler Brake, Inc. | 2,300 | 74,129 | |
O'Reilly Automotive, Inc. (a) | 13,600 | 403,784 | |
Sonic Automotive, Inc. Class A (sub. vtg.) | 3,500 | 74,025 | |
United Auto Group, Inc. | 10,700 | 218,494 | |
2,396,931 | |||
TOTAL COMMON STOCKS (Cost $15,602,830) | 14,868,459 | ||
Money Market Funds - 9.7% | |||
Shares | Value (Note 1) | ||
Fidelity Cash Central Fund, 5.31% (b) | 60,320 | $60,320 | |
Fidelity Securities Lending Cash Central Fund, 5.33% (b)(c) | 1,379,125 | 1,379,125 | |
TOTAL MONEY MARKET FUNDS (Cost $1,439,445) | 1,439,445 | ||
TOTAL INVESTMENT PORTFOLIO - 109.4% (Cost $17,042,275) | 16,307,904 | ||
NET OTHER ASSETS - (9.4)% | (1,399,044) | ||
NET ASSETS - 100% | $14,908,860 | ||
Legend |
(a)Non-income producing |
(b)Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. |
(c)Investment made with cash collateral received from securities on loan. |
(d)Security or a portion of the security is on loan at period end. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the fund from the affiliated Central funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $8,447 |
Fidelity Securities Lending Cash Central Fund | 10,680 |
Total | $19,127 |
Other Information |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: |
United States of America | 62.5% |
Japan | 22.2% |
Germany | 5.4% |
France | 4.7% |
Korea (South) | 2.2% |
India | 1.6% |
Others (individually less than 1%) | 1.4% |
100.0% |
Income Tax Information |
At February 28, 2006, the fund had a capital loss carryforward of approximately $4,454,347 of which $663,753, $947,164, $1,663,938 and $1,179,492 will expire on February 29, 2008, and February 28, 2009, 2010 and 2011, respectively. |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Automotive Portfolio
Financial Statements
Statement of Assets and Liabilities
August 31, 2006 (Unaudited) | ||
Assets | ||
Investment in securities, at value (including securities loaned of $1,360,263) - See accompanying schedule: Unaffiliated issuers (cost $15,602,830) | $14,868,459 | |
Affiliated Central Funds (cost $1,439,445) | 1,439,445 | |
Total Investments (cost $17,042,275) | $16,307,904 | |
Receivable for fund shares sold | 22,989 | |
Dividends receivable | 8,506 | |
Interest receivable | 757 | |
Prepaid expenses | 18 | |
Receivable from investment adviser for expense reductions | 2,021 | |
Other receivables | 1,214 | |
Total assets | 16,343,409 | |
Liabilities | ||
Payable to custodian bank | $1,775 | |
Payable for fund shares redeemed | 25,180 | |
Accrued management fee | 6,524 | |
Other affiliated payables | 5,174 | |
Other payables and accrued expenses | 16,771 | |
Collateral on securities loaned, at value | 1,379,125 | |
Total liabilities | 1,434,549 | |
Net Assets | $14,908,860 | |
Net Assets consist of: | ||
Paid in capital | $20,023,121 | |
Undistributed net investment income | 17,636 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (4,398,441) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (733,456) | |
Net Assets, for 439,258 shares outstanding | $14,908,860 | |
Net Asset Value, offering price and redemption price per share ($14,908,860 ÷ 439,258 shares) | $33.94 | |
Statement of Operations
Six months ended August 31, 2006 (Unaudited) | ||
Investment Income | ||
Dividends | $102,725 | |
Interest | 68 | |
Income from affiliated Central Funds (including $10,680 from security lending) | 19,127 | |
Total income | 121,920 | |
Expenses | ||
Management fee | $47,834 | |
Transfer agent fees | 31,803 | |
Accounting and security lending fees | 4,348 | |
Independent trustees' compensation | 37 | |
Custodian fees and expenses | 19,595 | |
Registration fees | 14,432 | |
Audit | 21,629 | |
Legal | 2,831 | |
Miscellaneous | 800 | |
Total expenses before reductions | 143,309 | |
Expense reductions | (39,281) | 104,028 |
Net investment income (loss) | 17,892 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers (net of foreign taxes of $5,285) | 200,140 | |
Foreign currency transactions | (1,687) | |
Total net realized gain (loss) | 198,453 | |
Change in net unrealized appreciation (depreciation) on: Investment securities (net of decrease in deferred foreign taxes of $12,563) | (665,478) | |
Assets and liabilities in foreign currencies | (236) | |
Total change in net unrealized appreciation (depreciation) | (665,714) | |
Net gain (loss) | (467,261) | |
Net increase (decrease) in net assets resulting from operations | $(449,369) | |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Statement of Changes in Net Assets
Six months ended | Year ended | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $17,892 | $30,429 |
Net realized gain (loss) | 198,453 | 272,925 |
Change in net unrealized appreciation (depreciation) | (665,714) | (886,750) |
Net increase (decrease) in net assets resulting from operations | (449,369) | (583,396) |
Distributions to shareholders from net investment income | - | (29,914) |
Share transactions | 12,132,728 | 32,879,236 |
Reinvestment of distributions | - | 27,917 |
Cost of shares redeemed | (12,140,750) | (33,914,891) |
Net increase (decrease) in net assets resulting from share transactions | (8,022) | (1,007,738) |
Redemption fees | 5,296 | 27,708 |
Total increase (decrease) in net assets | (452,095) | (1,593,340) |
Net Assets | ||
Beginning of period | 15,360,955 | 16,954,295 |
End of period (including undistributed net investment income of $17,636 and accumulated net investment loss of $256, respectively) | $14,908,860 | $15,360,955 |
Other Information Shares | ||
Sold | 345,368 | 942,833 |
Issued in reinvestment of distributions | - | 823 |
Redeemed | (353,320) | (993,625) |
Net increase (decrease) | (7,952) | (49,969) |
Financial Highlights
Six months ended | Years ended February 28, | |||||
(Unaudited) | 2006 | 2005 | 2004 H | 2003 | 2002 | |
Selected Per-Share Data | ||||||
Net asset value, beginning of period | $34.35 | $34.10 | $32.36 | $21.27 | $25.93 | $20.80 |
Income from Investment Operations | ||||||
Net investment income (loss) E | .04 | .06 | (.11) | (.22) | (.13) | (.05) |
Net realized and unrealized gain (loss) | (.46) | .21 F | 1.81 | 11.29 | (4.59) | 5.10 |
Total from investment operations | (.42) | .27 | 1.70 | 11.07 | (4.72) | 5.05 |
Distributions from net investment income | - | (.07) | - | - | - | - |
Redemption fees added to paid in capital E | .01 | .05 | .04 | .02 | .06 | .08 |
Net asset value, end of period | $33.94 | $34.35 | $34.10 | $32.36 | $21.27 | $25.93 |
Total Return B, C, D | (1.19)% | .94% | 5.38% | 52.14% | (17.97)% | 24.66% |
Ratios to Average Net Assets G | ||||||
Expenses before reductions | 1.70% A | 1.59% | 1.64% | 1.78% | 1.71% | 1.90% |
Expenses net of fee waivers, if any | 1.25% A | 1.25% | 1.58% | 1.78% | 1.71% | 1.90% |
Expenses net of all reductions | 1.23% A | 1.19% | 1.56% | 1.77% | 1.68% | 1.87% |
Net investment income (loss) | .21% A | .17% | (.34)% | (.77)% | (.52)% | (.20)% |
Supplemental Data | ||||||
Net assets, end of period (000 omitted) | $14,909 | $15,361 | $16,954 | $21,438 | $15,241 | $27,688 |
Portfolio turnover rate | 196% A | 206% | 188% | 125% | 217% | 180% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the former sales charges. E Calculated based on average shares outstanding during the period. F The amount shown for a share outstanding does not correspond with the aggregate net gain (loss) on investments for the period due to the timing of sales and repurchases of shares in relation to fluctuating market values of the investments of the Fund. G Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. H For the year ended February 29. | ||||||
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Investment Changes
Top Ten Stocks as of August 31, 2006 | ||
% of fund's | % of fund's net assets | |
FMC Corp. | 9.0 | 10.4 |
Monsanto Co. | 6.9 | 5.6 |
Air Products & Chemicals, Inc. | 6.2 | 6.1 |
3M Co. | 6.1 | 6.4 |
Cytec Industries, Inc. | 5.5 | 4.3 |
Chemtura Corp. | 5.4 | 5.3 |
Rohm & Haas Co. | 5.2 | 4.5 |
Georgia Gulf Corp. | 5.2 | 4.2 |
Praxair, Inc. | 4.8 | 6.6 |
UAP Holding Corp. | 4.0 | 3.0 |
58.3 | ||
Top Industries (% of fund's net assets) | |||
As of August 31, 2006 | |||
| Chemicals | 85.7% | |
| Industrial Conglomerates | 6.1% | |
| Trading Companies & Distributors | 4.0% | |
| Metals & Mining | 1.1% | |
| Marine | 0.8% | |
| All Others * | 2.3% | |
As of February 28, 2006 | |||
| Chemicals | 88.0% | |
| Industrial Conglomerates | 6.4% | |
| Trading Companies & Distributors | 3.0% | |
| Marine | 1.2% | |
| Metals & Mining | 1.0% | |
| All Others * | 0.4% | |
*Includes short-term investments and net other assets. |
Prior period industry classifications reflect the categories in place as of the date indicated and have not been adjusted to reflect current industry classifications. |
Semiannual Report
Chemicals Portfolio
Investments August 31, 2006 (Unaudited)
Showing Percentage of Net Assets
Common Stocks - 97.9% | |||
Shares | Value (Note 1) | ||
AEROSPACE & DEFENSE - 0.2% | |||
Aerospace & Defense - 0.2% | |||
Hexcel Corp. (a) | 13,400 | $201,268 | |
CHEMICALS - 85.7% | |||
Commodity Chemicals - 13.7% | |||
Arkema (a)(d) | 11,000 | 428,856 | |
Celanese Corp. Class A | 158,786 | 2,935,953 | |
Georgia Gulf Corp. | 166,816 | 4,427,297 | |
NL Industries, Inc. (d) | 36,600 | 378,810 | |
Pioneer Companies, Inc. (a) | 33,400 | 813,624 | |
Spartech Corp. | 29,300 | 660,129 | |
Westlake Chemical Corp. | 70,700 | 2,118,172 | |
11,762,841 | |||
Diversified Chemicals - 19.1% | |||
Ashland, Inc. | 10,300 | 650,342 | |
BASF AG sponsored ADR | 200 | 16,516 | |
Dow Chemical Co. | 11,900 | 453,747 | |
E.I. du Pont de Nemours & Co. | 83,500 | 3,337,495 | |
Eastman Chemical Co. | 23,500 | 1,232,575 | |
FMC Corp. | 126,356 | 7,722,879 | |
Hercules, Inc. (a) | 23,500 | 366,600 | |
PPG Industries, Inc. | 41,200 | 2,610,432 | |
16,390,586 | |||
Fertilizers & Agricultural Chemicals - 14.0% | |||
Agrium, Inc. | 19,500 | 452,877 | |
Israel Chemicals Ltd. | 123,900 | 591,973 | |
Monsanto Co. | 125,100 | 5,934,744 | |
Mosaic Co. | 127,400 | 2,068,976 | |
Potash Corp. of Saskatchewan, Inc. | 7,488 | 733,599 | |
Syngenta AG sponsored ADR | 30,900 | 911,859 | |
The Scotts Miracle-Gro Co. Class A | 31,200 | 1,339,104 | |
12,033,132 | |||
Industrial Gases - 13.7% | |||
Air Products & Chemicals, Inc. | 79,900 | 5,296,571 | |
Airgas, Inc. | 51,500 | 1,844,730 | |
L'Air Liquide SA | 2,310 | 487,442 | |
Praxair, Inc. | 71,460 | 4,102,519 | |
11,731,262 | |||
Specialty Chemicals - 25.2% | |||
Albemarle Corp. | 48,300 | 2,651,670 | |
Arch Chemicals, Inc. | 44,050 | 1,221,947 | |
Chemtura Corp. | 532,973 | 4,631,535 | |
Cytec Industries, Inc. | 88,200 | 4,705,470 | |
Ecolab, Inc. | 16,400 | 731,112 | |
Ferro Corp. | 23,900 | 408,212 | |
H.B. Fuller Co. | 45,114 | 867,542 | |
Minerals Technologies, Inc. | 10,000 | 519,900 | |
OM Group, Inc. (a) | 15,400 | 616,000 | |
Shares | Value (Note 1) | ||
PolyOne Corp. (a) | 61,400 | $532,338 | |
Rohm & Haas Co. | 101,200 | 4,462,920 | |
Valspar Corp. | 9,100 | 242,060 | |
21,590,706 | |||
TOTAL CHEMICALS | 73,508,527 | ||
INDUSTRIAL CONGLOMERATES - 6.1% | |||
Industrial Conglomerates - 6.1% | |||
3M Co. | 72,700 | 5,212,590 | |
MARINE - 0.8% | |||
Marine - 0.8% | |||
Odfjell ASA (A Shares) | 28,800 | 466,956 | |
Stolt-Nielsen SA (d) | 10,500 | 258,273 | |
725,229 | |||
METALS & MINING - 1.1% | |||
Diversified Metals & Mining - 1.1% | |||
Compass Minerals International, Inc. | 34,500 | 922,185 | |
TRADING COMPANIES & DISTRIBUTORS - 4.0% | |||
Trading Companies & Distributors - 4.0% | |||
UAP Holding Corp. | 162,600 | 3,386,958 | |
TOTAL COMMON STOCKS (Cost $67,634,508) | 83,956,757 | ||
Money Market Funds - 3.2% | |||
Fidelity Cash Central Fund, 5.31% (b) | 1,775,083 | 1,775,083 | |
Fidelity Securities Lending Cash Central Fund, 5.33% (b)(c) | 972,900 | 972,900 | |
TOTAL MONEY MARKET FUNDS (Cost $2,747,983) | 2,747,983 | ||
TOTAL INVESTMENT PORTFOLIO - 101.1% (Cost $70,382,491) | 86,704,740 | ||
NET OTHER ASSETS - (1.1)% | (952,740) | ||
NET ASSETS - 100% | $85,752,000 | ||
Legend |
(a)Non-income producing |
(b)Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. |
(c)Investment made with cash collateral received from securities on loan. |
(d)Security or a portion of the security is on loan at period end. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the fund from the affiliated Central funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $26,245 |
Fidelity Securities Lending Cash Central Fund | 4,234 |
Total | $30,479 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Chemicals Portfolio
Financial Statements
Statement of Assets and Liabilities
August 31, 2006 (Unaudited) | ||
Assets | ||
Investment in securities, at value (including securities loaned of $927,938) - See accompanying schedule: Unaffiliated issuers (cost $67,634,508) | $83,956,757 | |
Affiliated Central Funds (cost $2,747,983) | 2,747,983 | |
Total Investments (cost $70,382,491) | $86,704,740 | |
Receivable for fund shares sold | 62,140 | |
Dividends receivable | 188,380 | |
Interest receivable | 2,580 | |
Prepaid expenses | 206 | |
Other receivables | 605 | |
Total assets | 86,958,651 | |
Liabilities | ||
Payable to custodian bank | $33,727 | |
Payable for fund shares redeemed | 107,860 | |
Accrued management fee | 39,642 | |
Other affiliated payables | 30,984 | |
Other payables and accrued expenses | 21,538 | |
Collateral on securities loaned, at value | 972,900 | |
Total liabilities | 1,206,651 | |
Net Assets | $85,752,000 | |
Net Assets consist of: | ||
Paid in capital | $64,355,374 | |
Undistributed net investment income | 352,925 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 4,721,450 | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 16,322,251 | |
Net Assets, for 1,296,620 shares outstanding | $85,752,000 | |
Net Asset Value, offering price and redemption price per share ($85,752,000 ÷ 1,296,620 shares) | $66.14 | |
Statement of Operations
Six months ended August 31, 2006 (Unaudited) | ||
Investment Income | ||
Dividends | $866,717 | |
Income from affiliated Central Funds (including $4,234 from security lending) | 30,479 | |
Total income | 897,196 | |
Expenses | ||
Management fee | $269,922 | |
Transfer agent fees | 174,216 | |
Accounting and security lending fees | 24,170 | |
Independent trustees' compensation | 209 | |
Custodian fees and expenses | 12,756 | |
Registration fees | 21,547 | |
Audit | 18,879 | |
Legal | 1,041 | |
Interest | 4,428 | |
Miscellaneous | 4,583 | |
Total expenses before reductions | 531,751 | |
Expense reductions | (605) | 531,146 |
Net investment income (loss) | 366,050 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers | 5,180,509 | |
Foreign currency transactions | (4,608) | |
Total net realized gain (loss) | 5,175,901 | |
Change in net unrealized appreciation (depreciation) on: Investment securities | (6,756,328) | |
Assets and liabilities in foreign currencies | 2 | |
Total change in net unrealized appreciation (depreciation) | (6,756,326) | |
Net gain (loss) | (1,580,425) | |
Net increase (decrease) in net assets resulting from operations | $(1,214,375) | |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Chemicals Portfolio
Financial Statements - continued
Statement of Changes in Net Assets
Six months ended | Year ended | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $366,050 | $1,392,660 |
Net realized gain (loss) | 5,175,901 | 8,464,954 |
Change in net unrealized appreciation (depreciation) | (6,756,326) | (19,060,117) |
Net increase (decrease) in net assets resulting from operations | (1,214,375) | (9,202,503) |
Distributions to shareholders from net investment income | (376,426) | (1,112,957) |
Distributions to shareholders from net realized gain | (3,778,203) | (3,981,293) |
Total distributions | (4,154,629) | (5,094,250) |
Share transactions | 26,078,170 | 165,619,044 |
Reinvestment of distributions | 3,994,414 | 4,584,255 |
Cost of shares redeemed | (53,712,358) | (278,412,897) |
Net increase (decrease) in net assets resulting from share transactions | (23,639,774) | (108,209,598) |
Redemption fees | 31,536 | 91,100 |
Total increase (decrease) in net assets | (28,977,242) | (122,415,251) |
Net Assets | ||
Beginning of period | 114,729,242 | 237,144,493 |
End of period (including undistributed net investment income of $352,925 and undistributed net investment income of $599,195, respectively) | $85,752,000 | $114,729,242 |
Other Information Shares | ||
Sold | 381,457 | 2,445,897 |
Issued in reinvestment of distributions | 59,308 | 70,266 |
Redeemed | (794,876) | (4,180,989) |
Net increase (decrease) | (354,111) | (1,664,826) |
Financial Highlights
Six months ended | Years ended February 28, | |||||
(Unaudited) | 2006 | 2005 | 2004 G | 2003 | 2002 | |
Selected Per-Share Data | ||||||
Net asset value, beginning of period | $69.50 | $71.52 | $51.75 | $36.79 | $43.09 | $39.95 |
Income from Investment Operations | ||||||
Net investment income (loss) E | .26 | .52 | .45 H | .46 | .38 | .32 |
Net realized and unrealized gain (loss) | (.66) | (.33) | 19.83 | 14.82 | (6.21) | 2.98 |
Total from investment operations | (.40) | .19 | 20.28 | 15.28 | (5.83) | 3.30 |
Distributions from net investment income | (.27) | (.52) | (.18) | (.37) | (.39) | (.32) |
Distributions from net realized gain | (2.71) | (1.72) | (.38) | - | (.14) | - |
Total distributions | (2.98) | (2.24) | (.56) | (.37) | (.53) | (.32) |
Redemption fees added to paid in capital E | .02 | .03 | .05 | .05 | .06 | .16 |
Net asset value, end of period | $66.14 | $69.50 | $71.52 | $51.75 | $36.79 | $43.09 |
Total Return B, C, D | (.62)% | .51% | 39.38% | 41.73% | (13.49)% | 8.68% |
Ratios to Average Net Assets F | ||||||
Expenses before reductions | 1.11% A | 1.04% | 1.08% | 1.48% | 1.54% | 1.34% |
Expenses net of fee waivers, if any | 1.11% A | 1.04% | 1.08% | 1.48% | 1.54% | 1.34% |
Expenses net of all reductions | 1.11% A | .99% | 1.04% | 1.43% | 1.50% | 1.23% |
Net investment income (loss) | .77% A | .78% | .73% H | 1.03% | .91% | .79% |
Supplemental Data | ||||||
Net assets, end of period (000 omitted) | $85,752 | $114,729 | $237,144 | $50,502 | $28,339 | $41,761 |
Portfolio turnover rate | 41% A | 141% | 73% | 107% | 114% | 221% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the former sales charges. E Calculated based on average shares outstanding during the period. F Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. G For the year ended February 29. H As a result of the change in the estimate of the return of capital component of dividend income realized in the year ended February 29, 2004, net investment income per share and the ratio of the net investment income to average net assets for the year ended February 28, 2005 have been reduced by $0.07 per share and .12%, respectively. The change in estimate has no impact on total net assets or total return of the fund. | ||||||
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Construction and Housing Portfolio
Investment Changes
Top Ten Stocks as of August 31, 2006 | ||
% of fund's | % of fund's net assets | |
Fannie Mae | 7.1 | 6.0 |
Caterpillar, Inc. | 6.8 | 6.4 |
Danaher Corp. | 6.5 | 5.9 |
Home Depot, Inc. | 5.9 | 5.0 |
Fluor Corp. | 5.6 | 3.6 |
Masco Corp. | 4.6 | 0.0 |
D.R. Horton, Inc. | 3.9 | 7.4 |
Lowe's Companies, Inc. | 3.7 | 4.6 |
Countrywide Financial Corp. | 3.6 | 2.7 |
Pulte Homes, Inc. | 3.5 | 4.9 |
51.2 | ||
Top Industries (% of fund's net assets) | |||
As of August 31, 2006 | |||
| Household Durables | 15.9% | |
| Machinery | 15.0% | |
| Specialty Retail | 12.2% | |
| Construction & Engineering | 11.8% | |
| Thrifts & Mortgage Finance | 10.7% | |
| All Others * | 34.4% | |
As of February 28, 2006 | |||
| Household Durables | 29.9% | |
| Machinery | 14.4% | |
| Specialty Retail | 11.9% | |
| Thrifts & Mortgage Finance | 8.7% | |
| Construction & Engineering | 7.6% | |
| All Others * | 27.5% | |
*Includes short-term investments and net other assets. |
Prior period industry classifications reflect the categories in place as of the date indicated and have not been adjusted to reflect current industry classifications. |
Semiannual Report
Construction and Housing Portfolio
Investments August 31, 2006 (Unaudited)
Showing Percentage of Net Assets
Common Stocks - 99.5% | |||
Shares | Value (Note 1) | ||
BUILDING PRODUCTS - 9.4% | |||
Building Products - 9.4% | |||
American Standard Companies, Inc. | 123,200 | $5,146,064 | |
Masco Corp. (d) | 254,600 | 6,978,586 | |
NCI Building Systems, Inc. (a) | 19,200 | 1,043,328 | |
Quixote Corp. | 32,300 | 546,516 | |
Wienerberger Baustoffindust AG | 12,400 | 595,281 | |
14,309,775 | |||
COMMUNICATIONS EQUIPMENT - 1.5% | |||
Communications Equipment - 1.5% | |||
Dycom Industries, Inc. (a) | 70,600 | 1,429,650 | |
MasTec, Inc. (a) | 71,800 | 832,162 | |
2,261,812 | |||
CONSTRUCTION & ENGINEERING - 11.8% | |||
Construction & Engineering - 11.8% | |||
Chicago Bridge & Iron Co. NV (NY Shares) | 47,000 | 1,269,470 | |
Fluor Corp. | 99,400 | 8,590,148 | |
Granite Construction, Inc. | 17,100 | 917,415 | |
Hochtief AG | 11,300 | 643,238 | |
Infrasource Services, Inc. (a) | 49,700 | 859,313 | |
Jacobs Engineering Group, Inc. (a) | 12,800 | 1,114,752 | |
Perini Corp. (a) | 25,600 | 613,632 | |
Shaw Group, Inc. (a) | 41,600 | 1,046,656 | |
Skanska AB (B Shares) | 35,300 | 555,307 | |
URS Corp. (a) | 31,400 | 1,273,270 | |
Veidekke ASA | 16,400 | 553,861 | |
YIT-Yhtyma OY | 23,600 | 512,506 | |
17,949,568 | |||
CONSTRUCTION MATERIALS - 9.1% | |||
Construction Materials - 9.1% | |||
Cemex SA de CV sponsored ADR | 58,986 | 1,704,106 | |
Eagle Materials, Inc. | 25,200 | 903,420 | |
Florida Rock Industries, Inc. | 57,675 | 2,144,933 | |
Martin Marietta Materials, Inc. | 34,300 | 2,824,948 | |
Rinker Group Ltd. sponsored ADR (d) | 10,900 | 573,231 | |
Texas Industries, Inc. | 13,200 | 619,608 | |
Vulcan Materials Co. | 65,100 | 5,117,511 | |
13,887,757 | |||
ELECTRICAL EQUIPMENT - 0.7% | |||
Electrical Components & Equipment - 0.7% | |||
Genlyte Group, Inc. (a) | 15,600 | 1,022,268 | |
HEALTH CARE PROVIDERS & SERVICES - 0.2% | |||
Health Care Facilities - 0.2% | |||
Brookdale Senior Living, Inc. | 8,000 | 382,640 | |
Shares | Value (Note 1) | ||
HOUSEHOLD DURABLES - 15.9% | |||
Home Furnishings - 0.3% | |||
Samson Holding Ltd. | 1,025,000 | $428,333 | |
Homebuilding - 15.6% | |||
Barratt Developments PLC | 67,200 | 1,271,271 | |
D.R. Horton, Inc. | 274,166 | 6,012,460 | |
KB Home | 69,300 | 2,963,268 | |
Lennar Corp. Class A | 71,400 | 3,201,576 | |
Pulte Homes, Inc. (d) | 179,400 | 5,322,798 | |
Ryland Group, Inc. | 7,000 | 298,690 | |
Standard Pacific Corp. (d) | 60,600 | 1,450,158 | |
Toll Brothers, Inc. (a) | 123,300 | 3,257,586 | |
23,777,807 | |||
TOTAL HOUSEHOLD DURABLES | 24,206,140 | ||
INDUSTRIAL CONGLOMERATES - 0.5% | |||
Industrial Conglomerates - 0.5% | |||
Walter Industries, Inc. (d) | 14,800 | 814,592 | |
MACHINERY - 15.0% | |||
Construction & Farm Machinery & Heavy Trucks - 8.5% | |||
A.S.V., Inc. (a)(d) | 20,600 | 316,622 | |
Bucyrus International, Inc. Class A | 13,100 | 676,353 | |
Caterpillar, Inc. | 156,100 | 10,357,235 | |
Joy Global, Inc. | 16,800 | 731,472 | |
Toro Co. | 20,600 | 824,206 | |
12,905,888 | |||
Industrial Machinery - 6.5% | |||
Danaher Corp. (d) | 149,500 | 9,910,355 | |
TOTAL MACHINERY | 22,816,243 | ||
REAL ESTATE INVESTMENT TRUSTS - 3.8% | |||
Residential REITs - 1.8% | |||
Equity Residential (SBI) | 37,800 | 1,885,086 | |
United Dominion Realty Trust, Inc. (SBI) | 26,596 | 811,444 | |
2,696,530 | |||
Retail REITs - 2.0% | |||
General Growth Properties, Inc. | 68,100 | 3,086,973 | |
TOTAL REAL ESTATE INVESTMENT TRUSTS | 5,783,503 | ||
REAL ESTATE MANAGEMENT & DEVELOPMENT - 4.3% | |||
Real Estate Management & Development - 4.3% | |||
AV Jennings Homes Ltd. | 768,664 | 636,801 | |
China Overseas Land & Investment Ltd. | 2,006,000 | 1,379,935 | |
China Overseas Land & Investment Ltd. warrants 7/18/07 | 255,000 | 37,378 | |
The St. Joe Co. (d) | 87,800 | 4,474,288 | |
6,528,402 | |||
Common Stocks - continued | |||
Shares | Value (Note 1) | ||
SPECIALTY RETAIL - 12.2% | |||
Home Improvement Retail - 11.8% | |||
Home Depot, Inc. | 262,650 | $9,006,269 | |
Lowe's Companies, Inc. | 206,100 | 5,577,066 | |
Sherwin-Williams Co. | 66,300 | 3,423,732 | |
18,007,067 | |||
Homefurnishing Retail - 0.4% | |||
Pier 1 Imports, Inc. | 106,600 | 681,174 | |
TOTAL SPECIALTY RETAIL | 18,688,241 | ||
THRIFTS & MORTGAGE FINANCE - 10.7% | |||
Thrifts & Mortgage Finance - 10.7% | |||
Countrywide Financial Corp. | 160,581 | 5,427,638 | |
Fannie Mae | 207,000 | 10,898,550 | |
16,326,188 | |||
TRADING COMPANIES & DISTRIBUTORS - 4.0% | |||
Trading Companies & Distributors - 4.0% | |||
Beacon Roofing Supply, Inc. (a)(d) | 67,800 | 1,246,164 | |
MSC Industrial Direct Co., Inc. Class A | 17,100 | 673,056 | |
Watsco, Inc. | 9,700 | 426,218 | |
WESCO International, Inc. (a)(d) | 64,700 | 3,784,950 | |
6,130,388 | |||
TRANSPORTATION INFRASTRUCTURE - 0.4% | |||
Highways & Railtracks - 0.4% | |||
Cintra Concesiones de Infrastructuras de Transporte SA | 45,800 | 608,501 | |
TOTAL COMMON STOCKS (Cost $134,282,443) | 151,716,018 | ||
Money Market Funds - 15.9% | |||
Shares | Value (Note 1) | ||
Fidelity Cash Central Fund, 5.31% (b) | 126,122 | $126,122 | |
Fidelity Securities Lending Cash Central Fund, 5.33% (b)(c) | 24,166,425 | 24,166,425 | |
TOTAL MONEY MARKET FUNDS (Cost $24,292,547) | 24,292,547 | ||
TOTAL INVESTMENT PORTFOLIO - 115.4% (Cost $158,574,990) | 176,008,565 | ||
NET OTHER ASSETS - (15.4)% | (23,534,512) | ||
NET ASSETS - 100% | $152,474,053 | ||
Legend |
(a)Non-income producing |
(b)Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. |
(c)Investment made with cash collateral received from securities on loan. |
(d)Security or a portion of the security is on loan at period end. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the fund from the affiliated Central funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $41,791 |
Fidelity Securities Lending Cash Central Fund | 64,450 |
Total | $106,241 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Construction and Housing Portfolio
Financial Statements
Statement of Assets and Liabilities
August 31, 2006 (Unaudited) | ||
Assets | ||
Investment in securities, at value (including securities loaned of $23,809,865) - See accompanying schedule: Unaffiliated issuers (cost $134,282,443) | $151,716,018 | |
Affiliated Central Funds (cost $24,292,547) | 24,292,547 | |
Total Investments (cost $158,574,990) | $176,008,565 | |
Receivable for investments sold | 1,903,431 | |
Receivable for fund shares sold | 89,852 | |
Dividends receivable | 149,058 | |
Interest receivable | 479 | |
Prepaid expenses | 309 | |
Other receivables | 24,618 | |
Total assets | 178,176,312 | |
Liabilities | ||
Payable to custodian bank | $24,507 | |
Payable for fund shares redeemed | 1,351,860 | |
Accrued management fee | 74,357 | |
Other affiliated payables | 59,972 | |
Other payables and accrued expenses | 25,138 | |
Collateral on securities loaned, at value | 24,166,425 | |
Total liabilities | 25,702,259 | |
Net Assets | $152,474,053 | |
Net Assets consist of: | ||
Paid in capital | $125,435,114 | |
Undistributed net investment income | 460,785 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 9,144,579 | |
Net unrealized appreciation (depreciation) on investments | 17,433,575 | |
Net Assets, for 3,556,638 shares outstanding | $152,474,053 | |
Net Asset Value, offering price and redemption price per share ($152,474,053 ÷ 3,556,638 shares) | $42.87 | |
Statement of Operations
Six months ended August 31, 2006 (Unaudited) | ||
Investment Income | ||
Dividends | $1,394,098 | |
Income from affiliated Central Funds (including $64,450 from security lending) | 106,241 | |
Total income | 1,500,339 | |
Expenses | ||
Management fee | $568,498 | |
Transfer agent fees | 358,696 | |
Accounting and security lending fees | 52,163 | |
Independent trustees' compensation | 422 | |
Custodian fees and expenses | 13,909 | |
Registration fees | 24,745 | |
Audit | 16,559 | |
Legal | 2,311 | |
Miscellaneous | 8,713 | |
Total expenses before reductions | 1,046,016 | |
Expense reductions | (6,494) | 1,039,522 |
Net investment income (loss) | 460,817 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers | 9,988,615 | |
Foreign currency transactions | 340 | |
Total net realized gain (loss) | 9,988,955 | |
Change in net unrealized appreciation (depreciation) on investment securities | (33,558,457) | |
Net gain (loss) | (23,569,502) | |
Net increase (decrease) in net assets resulting from operations | $(23,108,685) | |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Construction and Housing Portfolio
Financial Statements - continued
Statement of Changes in Net Assets
Six months ended | Year ended | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $460,817 | $9,821 |
Net realized gain (loss) | 9,988,955 | 6,319,571 |
Change in net unrealized appreciation (depreciation) | (33,558,457) | 8,021,493 |
Net increase (decrease) in net assets resulting from operations | (23,108,685) | 14,350,885 |
Distributions to shareholders from net investment income | - | (48,224) |
Distributions to shareholders from net realized gain | (6,642,918) | (2,067,434) |
Total distributions | (6,642,918) | (2,115,658) |
Share transactions | 21,206,098 | 370,971,483 |
Reinvestment of distributions | 6,431,458 | 2,048,294 |
Cost of shares redeemed | (89,834,964) | (380,317,030) |
Net increase (decrease) in net assets resulting from share transactions | (62,197,408) | (7,297,253) |
Redemption fees | 19,960 | 260,223 |
Total increase (decrease) in net assets | (91,929,051) | 5,198,197 |
Net Assets | ||
Beginning of period | 244,403,104 | 239,204,907 |
End of period (including undistributed net investment income of $460,785 and distributions in excess of net investment income of $32, respectively) | $152,474,053 | $244,403,104 |
Other Information Shares | ||
Sold | 449,064 | 7,902,684 |
Issued in reinvestment of distributions | 131,308 | 49,218 |
Redeemed | (1,969,532) | (8,226,702) |
Net increase (decrease) | (1,389,160) | (274,800) |
Financial Highlights
Six months ended | Years ended February 28, | |||||
(Unaudited) | 2006 | 2005 | 2004 H | 2003 | 2002 | |
Selected Per-Share Data | ||||||
Net asset value, beginning of period | $49.42 | $45.82 | $36.04 | $22.55 | $28.41 | $22.22 |
Income from Investment Operations | ||||||
Net investment income (loss) E | .11 | - I | .02 | (.05) F | (.10) | (.04) |
Net realized and unrealized gain (loss) | (5.24) | 3.99 | 10.78 | 13.52 | (5.81) | 6.34 |
Total from investment operations | (5.13) | 3.99 | 10.80 | 13.47 | (5.91) | 6.30 |
Distributions from net investment income | - | (.01) | - | - | - | - |
Distributions from net realized gain | (1.42) | (.42) | (1.06) | - | - | (.17) |
Total distributions | (1.42) | (.43) | (1.06) | - | - | (.17) |
Redemption fees added to paid in capital E | - | .04 | .04 | .02 | .05 | .06 |
Net asset value, end of period | $42.87 | $49.42 | $45.82 | $36.04 | $22.55 | $28.41 |
Total Return B, C, D | (10.74)% | 8.98% | 30.28% | 59.82% | (20.63)% | 28.87% |
Ratios to Average Net Assets G | ||||||
Expenses before reductions | 1.04% A | 1.05% | 1.09% | 1.37% | 1.44% | 1.45% |
Expenses net of fee waivers, if any | 1.04% A | 1.05% | 1.09% | 1.37% | 1.44% | 1.45% |
Expenses net of all reductions | 1.04% A | 1.01% | 1.08% | 1.35% | 1.41% | 1.44% |
Net investment income (loss) | .46% A | -% | .04% | (.15)% | (.37)% | (.15)% |
Supplemental Data | ||||||
Net assets, end of period (000 omitted) | $152,474 | $244,403 | $239,205 | $97,338 | $47,083 | $83,536 |
Portfolio turnover rate | 38% A | 154% | 119% | 71% | 133% | 111% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the former sales charges. E Calculated based on average shares outstanding during the period. F Investment income per share reflects a special dividend which amounted to $.05 per share. G Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. H For the year ended February 29. I Amount represents less than $.01 per share. | ||||||
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Defense and Aerospace Portfolio
Investment Changes
Top Ten Stocks as of August 31, 2006 | ||
% of fund's | % of fund's net assets | |
Harris Corp. | 7.5 | 5.8 |
General Dynamics Corp. | 7.3 | 6.6 |
Raytheon Co. | 7.2 | 5.1 |
Rockwell Collins, Inc. | 6.9 | 6.0 |
Precision Castparts Corp. | 6.7 | 6.4 |
EchoStar Communications Corp. Class A | 5.9 | 4.3 |
Alliant Techsystems, Inc. | 5.2 | 3.2 |
L-3 Communications Holdings, Inc. | 4.7 | 5.7 |
The Boeing Co. | 4.7 | 3.0 |
BE Aerospace, Inc. | 4.6 | 2.8 |
60.7 | ||
Top Industries (% of fund's net assets) | |||
As of August 31, 2006 | |||
| Aerospace & Defense | 70.2% | |
| Communications Equipment | 8.5% | |
| Media | 6.5% | |
| Metals & Mining | 4.7% | |
| IT Services | 4.3% | |
| All Others * | 5.8% | |
As of February 28, 2006 | |||
| Aerospace & Defense | 69.8% | |
| Communications Equipment | 6.9% | |
| Media | 5.1% | |
| IT Services | 4.4% | |
| Electronic Equipment & Instruments | 3.6% | |
| All Others * | 10.2% | |
*Includes short-term investments and net other assets. |
Prior period industry classifications reflect the categories in place as of the date indicated and have not been adjusted to reflect current industry classifications. |
Semiannual Report
Defense and Aerospace Portfolio
Investments August 31, 2006 (Unaudited)
Showing Percentage of Net Assets
Common Stocks - 98.1% | |||
Shares | Value (Note 1) | ||
AEROSPACE & DEFENSE - 70.2% | |||
Aerospace & Defense - 70.2% | |||
AAR Corp. (a) | 1,270,500 | $28,344,855 | |
Alliant Techsystems, Inc. (a) | 628,455 | 48,070,523 | |
BE Aerospace, Inc. (a) | 1,750,350 | 41,763,351 | |
DRS Technologies, Inc. | 797,700 | 33,000,849 | |
DynCorp International, Inc. Class A | 357,100 | 3,885,248 | |
EADS NV | 435,600 | 13,137,456 | |
EDO Corp. (d) | 270,300 | 6,306,099 | |
Essex Corp. (a) | 489,800 | 7,288,224 | |
GenCorp, Inc. (non-vtg.) (a)(d) | 665,300 | 9,161,181 | |
General Dynamics Corp. | 993,500 | 67,110,925 | |
Goodrich Corp. | 888,350 | 34,601,233 | |
Hexcel Corp. (a) | 714,700 | 10,734,794 | |
Honeywell International, Inc. | 120,900 | 4,681,248 | |
K&F Industries Holdings, Inc. | 266,000 | 4,995,480 | |
L-3 Communications Holdings, Inc. | 576,500 | 43,462,335 | |
Lockheed Martin Corp. | 30,400 | 2,511,040 | |
Meggitt PLC | 560 | 3,351 | |
MTC Technologies, Inc. (a) | 187,700 | 3,941,700 | |
MTU Aero Engines Holding AG | 9,200 | 318,250 | |
Northrop Grumman Corp. | 30,348 | 2,027,550 | |
Orbital Sciences Corp. (a) | 1,153,792 | 20,872,097 | |
Precision Castparts Corp. | 1,053,000 | 61,537,320 | |
Raytheon Co. | 1,392,752 | 65,751,822 | |
Rockwell Collins, Inc. | 1,200,200 | 62,926,486 | |
Rolls-Royce Group PLC | 348,900 | 2,898,261 | |
The Boeing Co. (d) | 579,400 | 43,397,060 | |
Triumph Group, Inc. (a) | 199,800 | 8,783,208 | |
United Technologies Corp. | 205,000 | 12,855,550 | |
644,367,496 | |||
COMMUNICATIONS EQUIPMENT - 8.5% | |||
Communications Equipment - 8.5% | |||
Anaren, Inc. (a) | 109,700 | 2,474,832 | |
Harris Corp. | 1,562,600 | 68,629,390 | |
Powerwave Technologies, Inc. (a) | 80,932 | 613,465 | |
REMEC, Inc. | 235,064 | 258,570 | |
ViaSat, Inc. (a) | 233,400 | 6,313,470 | |
78,289,727 | |||
ELECTRONIC EQUIPMENT & INSTRUMENTS - 3.1% | |||
Electronic Equipment & Instruments - 0.7% | |||
Aeroflex, Inc. (a) | 628,300 | 6,546,886 | |
CPI International, Inc. | 4,700 | 59,220 | |
6,606,106 | |||
Electronic Manufacturing Services - 2.4% | |||
Mercury Computer Systems, Inc. (a) | 85,700 | 1,064,394 | |
Trimble Navigation Ltd. (a) | 417,950 | 20,467,012 | |
21,531,406 | |||
TOTAL ELECTRONIC EQUIPMENT & INSTRUMENTS | 28,137,512 | ||
Shares | Value (Note 1) | ||
IT SERVICES - 4.3% | |||
IT Consulting & Other Services - 4.3% | |||
CACI International, Inc. Class A (a) | 196,200 | $10,410,372 | |
ManTech International Corp. Class A (a) | 159,500 | 4,855,180 | |
NCI, Inc. Class A (e) | 490,862 | 5,473,111 | |
SI International, Inc. (a) | 6,300 | 182,007 | |
SRA International, Inc. Class A (a) | 671,000 | 18,794,710 | |
39,715,380 | |||
MACHINERY - 0.4% | |||
Industrial Machinery - 0.4% | |||
RBC Bearings, Inc. | 161,899 | 3,443,592 | |
MEDIA - 6.5% | |||
Broadcasting & Cable TV - 6.5% | |||
EchoStar Communications Corp. Class A (a) | 1,708,000 | 54,229,000 | |
The DIRECTV Group, Inc. (a) | 297,811 | 5,595,869 | |
59,824,869 | |||
METALS & MINING - 4.7% | |||
Diversified Metals & Mining - 3.4% | |||
Sumitomo Titanium Corp. (d) | 2,700 | 550,833 | |
Titanium Metals Corp. (d) | 927,100 | 23,919,180 | |
Toho Titanium Co. Ltd. (d) | 112,200 | 6,957,843 | |
31,427,856 | |||
Steel - 1.3% | |||
Allegheny Technologies, Inc. | 204,300 | 11,716,605 | |
TOTAL METALS & MINING | 43,144,461 | ||
SOFTWARE - 0.4% | |||
Application Software - 0.4% | |||
NAVTEQ Corp. (a) | 137,400 | 3,649,344 | |
TOTAL COMMON STOCKS (Cost $744,605,435) | 900,572,381 | ||
Money Market Funds - 3.7% | |||
Shares | Value (Note 1) | ||
Fidelity Cash Central Fund, 5.31% (b) | 12,746,622 | $12,746,622 | |
Fidelity Securities Lending Cash Central Fund, 5.33% (b)(c) | 21,276,565 | 21,276,565 | |
TOTAL MONEY MARKET FUNDS (Cost $34,023,187) | 34,023,187 | ||
TOTAL INVESTMENT PORTFOLIO - 101.8% (Cost $778,628,622) | 934,595,568 | ||
NET OTHER ASSETS - (1.8)% | (16,262,329) | ||
NET ASSETS - 100% | $918,333,239 | ||
Legend |
(a)Non-income producing |
(b)Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. |
(c)Investment made with cash collateral received from securities on loan. |
(d)Security or a portion of the security is on loan at period end. |
(e)Affiliated company |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the fund from the affiliated Central funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $686,206 |
Fidelity Securities Lending Cash Central Fund | 117,167 |
Total | $803,373 |
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, |
NCI, Inc. Class A | $2,213,442 | $4,026,853 | $- | $- | $5,473,111 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Defense and Aerospace Portfolio
Financial Statements
Statement of Assets and Liabilities
August 31, 2006 (Unaudited) | ||
Assets | ||
Investment in securities, at value (including securities loaned of $20,527,644) - See accompanying schedule: Unaffiliated issuers (cost $738,825,469) | $895,099,270 | |
Affiliated Central Funds (cost $34,023,187) | 34,023,187 | |
Other affiliated issuers (cost $5,779,966) | 5,473,111 | |
Total Investments (cost $778,628,622) | $934,595,568 | |
Receivable for investments sold | 16,030,903 | |
Receivable for fund shares sold | 1,874,572 | |
Dividends receivable | 712,318 | |
Interest receivable | 88,981 | |
Prepaid expenses | 773 | |
Other receivables | 24,089 | |
Total assets | 953,327,204 | |
Liabilities | ||
Payable for investments purchased | $10,440,680 | |
Payable for fund shares redeemed | 2,532,460 | |
Accrued management fee | 431,808 | |
Other affiliated payables | 268,084 | |
Other payables and accrued expenses | 44,368 | |
Collateral on securities loaned, at value | 21,276,565 | |
Total liabilities | 34,993,965 | |
Net Assets | $918,333,239 | |
Net Assets consist of: | ||
Paid in capital | $718,865,327 | |
Undistributed net investment income | 349,868 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 43,145,818 | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 155,972,226 | |
Net Assets, for 12,030,154 shares outstanding | $918,333,239 | |
Net Asset Value, offering price and redemption price per share ($918,333,239 ÷ 12,030,154 shares) | $76.34 | |
Statement of Operations
Six months ended August 31, 2006 (Unaudited) | ||
Investment Income | ||
Dividends | $4,115,863 | |
Interest | 1,110 | |
Income from affiliated Central Funds (including $117,167 from security lending) | 803,373 | |
Total income | 4,920,346 | |
Expenses | ||
Management fee | $2,728,782 | |
Transfer agent fees | 1,462,729 | |
Accounting and security lending fees | 209,039 | |
Independent trustees' compensation | 1,832 | |
Custodian fees and expenses | 16,596 | |
Registration fees | 66,426 | |
Audit | 18,335 | |
Legal | 8,526 | |
Miscellaneous | 29,789 | |
Total expenses before reductions | 4,542,054 | |
Expense reductions | (18,822) | 4,523,232 |
Net investment income (loss) | 397,114 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers | 43,610,222 | |
Foreign currency transactions | 40,690 | |
Total net realized gain (loss) | 43,650,912 | |
Change in net unrealized appreciation (depreciation) on: Investment securities | (59,717,184) | |
Assets and liabilities in foreign currencies | 5,280 | |
Total change in net unrealized appreciation (depreciation) | (59,711,904) | |
Net gain (loss) | (16,060,992) | |
Net increase (decrease) in net assets resulting from operations | $(15,663,878) | |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Defense and Aerospace Portfolio
Financial Statements - continued
Statement of Changes in Net Assets
Six months ended | Year ended | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $397,114 | $1,419,609 |
Net realized gain (loss) | 43,650,912 | 67,339,025 |
Change in net unrealized appreciation (depreciation) | (59,711,904) | 88,845,184 |
Net increase (decrease) in net assets resulting from operations | (15,663,878) | 157,603,818 |
Distributions to shareholders from net investment income | (249,043) | (1,154,317) |
Distributions to shareholders from net realized gain | (21,915,716) | (34,919,985) |
Total distributions | (22,164,759) | (36,074,302) |
Share transactions | 297,456,506 | 520,738,976 |
Reinvestment of distributions | 21,284,026 | 34,754,666 |
Cost of shares redeemed | (264,712,476) | (358,203,751) |
Net increase (decrease) in net assets resulting from share transactions | 54,028,056 | 197,289,891 |
Redemption fees | 85,042 | 112,951 |
Total increase (decrease) in net assets | 16,284,461 | 318,932,358 |
Net Assets | ||
Beginning of period | 902,048,778 | 583,116,420 |
End of period (including undistributed net investment income of $349,868 and undistributed net investment income of $237,024, respectively) | $918,333,239 | $902,048,778 |
Other Information Shares | ||
Sold | 3,725,737 | 7,213,251 |
Issued in reinvestment of distributions | 266,819 | 475,557 |
Redeemed | (3,394,347) | (4,936,594) |
Net increase (decrease) | 598,209 | 2,752,214 |
Financial Highlights
Six months ended | Years ended February 28, | |||||
(Unaudited) | 2006 | 2005 | 2004 G | 2003 | 2002 | |
Selected Per-Share Data | ||||||
Net asset value, beginning of period | $78.91 | $67.18 | $55.07 | $36.30 | $46.08 | $42.83 |
Income from Investment Operations | ||||||
Net investment income (loss) E | .03 | .13 | .25 | (.09) | - H | .15 |
Net realized and unrealized gain (loss) | (.83) | 15.04 | 12.28 | 18.85 | (9.77) | 3.59 |
Total from investment operations | (.80) | 15.17 | 12.53 | 18.76 | (9.77) | 3.74 |
Distributions from net investment income | (.02) | (.11) | (.19) | - | (.04) | (.05) |
Distributions from net realized gain | (1.76) | (3.34) | (.25) | - | - | (.49) |
Total distributions | (1.78) | (3.45) | (.44) | - | (.04) | (.54) |
Redemption fees added to paid in capital E | .01 | .01 | .02 | .01 | .03 | .05 |
Net asset value, end of period | $76.34 | $78.91 | $67.18 | $55.07 | $36.30 | $46.08 |
Total Return B, C, D | (1.10)% | 23.02% | 22.82% | 51.71% | (21.16)% | 9.09% |
Ratios to Average Net Assets F | ||||||
Expenses before reductions | .94% A | .97% | 1.02% | 1.28% | 1.25% | 1.23% |
Expenses net of fee waivers, if any | .94% A | .97% | 1.02% | 1.28% | 1.25% | 1.23% |
Expenses net of all reductions | .94% A | .95% | 1.00% | 1.24% | 1.21% | 1.19% |
Net investment income (loss) | .08% A | .19% | .41% | (.19)% | -% | .37% |
Supplemental Data | ||||||
Net assets, end of period (000 omitted) | $918,333 | $902,049 | $583,116 | $321,915 | $264,301 | $286,831 |
Portfolio turnover rate | 61% A | 50% | 38% | 47% | 79% | 76% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the former sales charges. E Calculated based on average shares outstanding during the period. F Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. G For the year ended February 29. H Amount represents less than $.01 per share. | ||||||
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Investment Changes
Top Ten Stocks as of August 31, 2006 | ||
% of fund's | % of fund's net assets | |
Waste Management, Inc. | 11.5 | 7.6 |
Millipore Corp. | 7.2 | 4.1 |
Ecolab, Inc. | 6.8 | 3.8 |
Veolia Environnement sponsored ADR | 6.0 | 5.5 |
Ormat Technologies, Inc. | 5.0 | 1.8 |
Pentair, Inc. | 4.7 | 3.1 |
Allied Waste Industries, Inc. | 4.6 | 2.0 |
Republic Services, Inc. | 4.5 | 3.4 |
Stericycle, Inc. | 4.5 | 4.7 |
Waste Connections, Inc. | 4.5 | 3.1 |
59.3 | ||
Top Industries (% of fund's net assets) | |||
As of August 31, 2006 | |||
| Commercial Services & Supplies | 35.5% | |
| Food & Staples Retailing | 8.6% | |
| Chemicals | 7.4% | |
| Life Sciences Tools & Services | 7.2% | |
| Independent Power Producers & Energy Traders | 6.7% | |
| All Others * | 34.6% | |
As of February 28, 2006 | |||
| Commercial Services & Supplies | 25.6% | |
| Machinery | 19.3% | |
| Chemicals | 8.1% | |
| Food & Staples Retailing | 7.3% | |
| Multi-utilities | 5.5% | |
| All Others * | 34.2% | |
*Includes short-term investments and net other assets. |
Prior period industry classifications reflect the categories in place as of the date indicated and have not been adjusted to reflect current industry classifications. |
Semiannual Report
Environmental Portfolio
Investments August 31, 2006 (Unaudited)
Showing Percentage of Net Assets
Common Stocks - 88.1% | |||
Shares | Value (Note 1) | ||
AUTO COMPONENTS - 1.7% | |||
Auto Parts & Equipment - 1.7% | |||
Ballard Power Systems, Inc. (a)(d) | 171,700 | $1,059,390 | |
CHEMICALS - 7.4% | |||
Commodity Chemicals - 0.6% | |||
Calgon Carbon Corp. (d) | 71,300 | 332,971 | |
Specialty Chemicals - 6.8% | |||
Ecolab, Inc. | 94,700 | 4,221,726 | |
TOTAL CHEMICALS | 4,554,697 | ||
COMMERCIAL SERVICES & SUPPLIES - 35.5% | |||
Diversified Commercial & Professional Services - 2.1% | |||
Tetra Tech, Inc. (a) | 80,700 | 1,339,620 | |
Environmental & Facility Services - 33.4% | |||
Allied Waste Industries, Inc. (d) | 271,700 | 2,809,378 | |
Bennett Environmental, Inc. (a) | 45,900 | 57,308 | |
Clean Harbors, Inc. | 47,800 | 1,997,562 | |
Marsulex, Inc. (a) | 38,000 | 287,415 | |
Republic Services, Inc. | 72,400 | 2,807,672 | |
Stericycle, Inc. (a) | 42,000 | 2,800,980 | |
Waste Connections, Inc. (a) | 75,200 | 2,765,104 | |
Waste Management, Inc. | 208,093 | 7,133,428 | |
20,658,847 | |||
TOTAL COMMERCIAL SERVICES & SUPPLIES | 21,998,467 | ||
CONSTRUCTION & ENGINEERING - 1.6% | |||
Construction & Engineering - 1.6% | |||
Insituform Technologies, Inc. Class A (a) | 44,200 | 1,014,390 | |
ELECTRICAL EQUIPMENT - 3.1% | |||
Electrical Components & Equipment - 1.5% | |||
FuelCell Energy, Inc. (d) | 74,200 | 722,708 | |
Hydrogenics Corp. (a) | 128,900 | 229,443 | |
952,151 | |||
Heavy Electrical Equipment - 1.6% | |||
Capstone Turbine Corp. (a)(d) | 198,200 | 378,562 | |
Plug Power, Inc. (a)(d) | 124,600 | 590,604 | |
969,166 | |||
TOTAL ELECTRICAL EQUIPMENT | 1,921,317 | ||
ENERGY EQUIPMENT & SERVICES - 1.1% | |||
Oil & Gas Equipment & Services - 1.1% | |||
Newpark Resources, Inc. (a) | 125,500 | 695,270 | |
FOOD & STAPLES RETAILING - 8.6% | |||
Food Distributors - 3.8% | |||
United Natural Foods, Inc. (a) | 81,400 | 2,364,670 | |
Shares | Value (Note 1) | ||
Food Retail - 4.8% | |||
Whole Foods Market, Inc. | 42,700 | $2,289,574 | |
Wild Oats Markets, Inc. (a)(d) | 40,800 | 666,672 | |
2,956,246 | |||
TOTAL FOOD & STAPLES RETAILING | 5,320,916 | ||
FOOD PRODUCTS - 1.8% | |||
Packaged Foods & Meats - 1.8% | |||
Green Mountain Coffee Roasters, Inc. (a) | 10,500 | 404,985 | |
SunOpta, Inc. (a) | 80,800 | 677,104 | |
1,082,089 | |||
INDEPENDENT POWER PRODUCERS & ENERGY TRADERS - 6.7% | |||
Independent Power Producers & Energy Traders - 6.7% | |||
Nevada Geothermal Power, Inc. (a)(e) | 1,300,000 | 882,113 | |
Nevada Geothermal Power, Inc. warrants 4/4/08 (a) | 1,300,000 | 163,430 | |
Ormat Technologies, Inc. (d) | 84,500 | 3,074,955 | |
4,120,498 | |||
LIFE SCIENCES TOOLS & SERVICES - 7.2% | |||
Life Science Tools & Services - 7.2% | |||
Millipore Corp. (a) | 69,600 | 4,466,928 | |
MACHINERY - 6.5% | |||
Construction & Farm Machinery & Heavy Trucks - 0.8% | |||
Lindsay Manufacturing Co. | 17,400 | 496,248 | |
Industrial Machinery - 5.7% | |||
Kadant, Inc. (a) | 24,200 | 638,396 | |
Pentair, Inc. | 96,300 | 2,879,370 | |
3,517,766 | |||
TOTAL MACHINERY | 4,014,014 | ||
MULTI-UTILITIES - 6.0% | |||
Multi-Utilities - 6.0% | |||
Veolia Environnement sponsored ADR | 66,300 | 3,732,027 | |
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 0.9% | |||
Semiconductor Equipment - 0.9% | |||
Asyst Technologies, Inc. (a) | 73,800 | 552,762 | |
TOTAL COMMON STOCKS (Cost $54,453,773) | 54,532,765 | ||
Money Market Funds - 11.8% | |||
Shares | Value (Note 1) | ||
Fidelity Cash Central Fund, 5.31% (b) | 125,918 | $125,918 | |
Fidelity Securities Lending Cash Central Fund, 5.33% (b)(c) | 7,200,475 | 7,200,475 | |
TOTAL MONEY MARKET FUNDS (Cost $7,326,393) | 7,326,393 | ||
TOTAL INVESTMENT PORTFOLIO - 99.9% (Cost $61,780,166) | 61,859,158 | ||
NET OTHER ASSETS - 0.1% | 52,808 | ||
NET ASSETS - 100% | $61,911,966 | ||
Legend |
(a)Non-income producing |
(b)Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. |
(c)Investment made with cash collateral received from securities on loan. |
(d)Security or a portion of the security is on loan at period end. |
(e)Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the end of the period, the value of these securities amounted to $ 882,113 or 1.4% of net assets. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the fund from the affiliated Central funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $121,322 |
Fidelity Securities Lending Cash Central Fund | 89,462 |
Total | $210,784 |
Other Information |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: |
United States of America | 88.5% |
France | 6.0% |
Canada | 5.5% |
100.0% |
Income Tax Information |
At February 28, 2006, the fund had a capital loss carryforward of approximately $10,408 all of which will expire on February 29, 2012. |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Environmental Portfolio
Financial Statements
Statement of Assets and Liabilities
August 31, 2006 (Unaudited) | ||
Assets | ||
Investment in securities, at value (including securities loaned of $6,984,776) - See accompanying schedule: Unaffiliated issuers (cost $54,453,773) | $54,532,765 | |
Affiliated Central Funds (cost $7,326,393) | 7,326,393 | |
Total Investments (cost $61,780,166) | $61,859,158 | |
Receivable for investments sold | 2,917,098 | |
Receivable for fund shares sold | 5,039,790 | |
Dividends receivable | 70,100 | |
Interest receivable | 264 | |
Prepaid expenses | 23 | |
Other receivables | 8,441 | |
Total assets | 69,894,874 | |
Liabilities | ||
Payable for fund shares redeemed | $710,839 | |
Accrued management fee | 28,711 | |
Other affiliated payables | 23,410 | |
Other payables and accrued expenses | 19,473 | |
Collateral on securities loaned, at value | 7,200,475 | |
Total liabilities | 7,982,908 | |
Net Assets | $61,911,966 | |
Net Assets consist of: | ||
Paid in capital | $67,211,424 | |
Undistributed net investment income | 7,514 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (5,385,964) | |
Net unrealized appreciation (depreciation) on investments | 78,992 | |
Net Assets, for 3,780,481 shares outstanding | $61,911,966 | |
Net Asset Value, offering price and redemption price per share ($61,911,966 ÷ 3,780,481 shares) | $16.38 | |
Statement of Operations
Six months ended August 31, 2006 (Unaudited) | ||
Investment Income | ||
Dividends | $347,283 | |
Interest | 4,560 | |
Income from affiliated Central Funds (including $89,462 from security lending) | 210,784 | |
Total income | 562,627 | |
Expenses | ||
Management fee | $282,705 | |
Transfer agent fees | 165,217 | |
Accounting and security lending fees | 26,272 | |
Independent trustees' compensation | 206 | |
Custodian fees and expenses | 10,660 | |
Registration fees | 42,359 | |
Audit | 15,982 | |
Legal | 700 | |
Interest | 18,680 | |
Miscellaneous | 3,090 | |
Total expenses before reductions | 565,871 | |
Expense reductions | (10,981) | 554,890 |
Net investment income (loss) | 7,737 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers | (4,834,033) | |
Foreign currency transactions | (8,913) | |
Total net realized gain (loss) | (4,842,946) | |
Change in net unrealized appreciation (depreciation) on investment securities | (3,876,188) | |
Net gain (loss) | (8,719,134) | |
Net increase (decrease) in net assets resulting from operations | $(8,711,397) | |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Statement of Changes in Net Assets
Six months ended | Year ended | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $7,737 | $(29,976) |
Net realized gain (loss) | (4,842,946) | 1,298,153 |
Change in net unrealized appreciation (depreciation) | (3,876,188) | 3,984,704 |
Net increase (decrease) in net assets resulting from operations | (8,711,397) | 5,252,881 |
Share transactions | 159,769,082 | 75,524,136 |
Cost of shares redeemed | (144,629,859) | (37,407,839) |
Net increase (decrease) in net assets resulting from share transactions | 15,139,223 | 38,116,297 |
Redemption fees | 86,721 | 23,557 |
Total increase (decrease) in net assets | 6,514,547 | 43,392,735 |
Net Assets | ||
Beginning of period | 55,397,419 | 12,004,684 |
End of period (including undistributed net investment income of $7,514 and accumulated net investment loss of $223, respectively) | $61,911,966 | $55,397,419 |
Other Information Shares | ||
Sold | 8,871,799 | 4,815,847 |
Redeemed | (8,285,041) | (2,492,334) |
Net increase (decrease) | 586,758 | 2,323,513 |
Financial Highlights
Six months ended | Years ended February 28, | |||||
(Unaudited) | 2006 | 2005 | 2004 G | 2003 | 2002 | |
Selected Per-Share Data | ||||||
Net asset value, beginning of period | $17.35 | $13.80 | $13.29 | $9.71 | $11.58 | $12.98 |
Income from Investment Operations | ||||||
Net investment income (loss) E | - H | (.02) | (.14) | (.25) | (.20) | (.17) |
Net realized and unrealized gain (loss) | (.99) | 3.55 | .64 | 3.83 | (1.68) | (1.25) |
Total from investment operations | (.99) | 3.53 | .50 | 3.58 | (1.88) | (1.42) |
Redemption fees added to paid in capital E | .02 | .02 | .01 | - H | .01 | .02 |
Net asset value, end of period | $16.38 | $17.35 | $13.80 | $13.29 | $9.71 | $11.58 |
Total Return B, C, D | (5.59)% | 25.72% | 3.84% | 36.87% | (16.15)% | (10.79)% |
Ratios to Average Net Assets F | ||||||
Expenses before reductions | 1.15% A | 1.40% | 1.87% | 2.57% | 2.64% | 2.00% |
Expenses net of fee waivers, if any | 1.15% A | 1.25% | 1.83% | 2.50% | 2.50% | 2.00% |
Expenses net of all reductions | 1.13% A | 1.16% | 1.74% | 2.50% | 2.45% | 1.98% |
Net investment income (loss) | .02% A | (.14)% | (1.06)% | (2.12)% | (1.92)% | (1.32)% |
Supplemental Data | ||||||
Net assets, end of period (000 omitted) | $61,912 | $55,397 | $12,005 | $12,269 | $9,987 | $12,471 |
Portfolio turnover rate | 266% A | 166% | 220% | 90% | 67% | 109% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the former sales charges. E Calculated based on average shares outstanding during the period. F Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. G For the year ended February 29. H Amount represents less than $.01 per share. | ||||||
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Investment Changes
Top Ten Stocks as of August 31, 2006 | ||
% of fund's | % of fund's net assets | |
General Electric Co. | 8.0 | 8.0 |
United Technologies Corp. | 4.1 | 2.4 |
Fluor Corp. | 3.3 | 4.4 |
Honeywell International, Inc. | 3.0 | 2.6 |
3M Co. | 3.0 | 2.8 |
Tyco International Ltd. | 2.9 | 3.0 |
Illinois Tool Works, Inc. | 2.2 | 0.0 |
E.I. du Pont de Nemours & Co. | 2.1 | 0.7 |
Dow Chemical Co. | 2.0 | 1.2 |
Caterpillar, Inc. | 1.9 | 2.3 |
32.5 | ||
Top Industries (% of fund's net assets) | |||
As of August 31, 2006 | |||
| Aerospace & Defense | 16.4% | |
| Industrial Conglomerates | 15.1% | |
| Chemicals | 14.7% | |
| Machinery | 10.9% | |
| Construction & Engineering | 8.0% | |
| All Others * | 34.9% | |
As of February 28, 2006 | |||
| Aerospace & Defense | 15.4% | |
| Industrial Conglomerates | 14.8% | |
| Chemicals | 12.5% | |
| Construction & Engineering | 9.7% | |
| Machinery | 8.5% | |
| All Others * | 39.1% | |
*Includes short-term investments and net other assets. |
Prior period industry classifications reflect the categories in place as of the date indicated and have not been adjusted to reflect current industry classifications. |
Semiannual Report
Industrials Portfolio
Investments August 31, 2006 (Unaudited)
Showing Percentage of Net Assets
Common Stocks - 99.8% | |||
Shares | Value (Note 1) | ||
AEROSPACE & DEFENSE - 16.4% | |||
Aerospace & Defense - 16.4% | |||
Alliant Techsystems, Inc. (a) | 900 | $68,841 | |
BAE Systems PLC sponsored ADR | 8,500 | 244,375 | |
DRS Technologies, Inc. | 1,400 | 57,918 | |
EADS NV | 33,600 | 1,013,357 | |
EDO Corp. | 5,700 | 132,981 | |
General Dynamics Corp. | 4,000 | 270,200 | |
Goodrich Corp. | 14,300 | 556,985 | |
Hexcel Corp. (a) | 62,456 | 938,089 | |
Honeywell International, Inc. | 51,700 | 2,001,824 | |
L-3 Communications Holdings, Inc. | 4,000 | 301,560 | |
Lockheed Martin Corp. | 8,200 | 677,320 | |
Meggitt PLC | 18,400 | 110,102 | |
Precision Castparts Corp. | 9,600 | 561,024 | |
Raytheon Co. | 17,800 | 840,338 | |
Rockwell Collins, Inc. | 3,940 | 206,574 | |
Rolls-Royce Group PLC | 12,892 | 107,092 | |
The Boeing Co. | 340 | 25,466 | |
United Technologies Corp. | 42,500 | 2,665,175 | |
10,779,221 | |||
AIR FREIGHT & LOGISTICS - 4.6% | |||
Air Freight & Logistics - 4.6% | |||
C.H. Robinson Worldwide, Inc. | 10,700 | 490,274 | |
Expeditors International of Washington, Inc. | 7,300 | 291,051 | |
FedEx Corp. | 5,400 | 545,562 | |
Forward Air Corp. | 2,670 | 85,814 | |
Hub Group, Inc. Class A | 11,722 | 273,123 | |
United Parcel Service, Inc. Class B | 13,200 | 924,660 | |
UTI Worldwide, Inc. | 18,188 | 419,233 | |
3,029,717 | |||
AIRLINES - 1.5% | |||
Airlines - 1.5% | |||
AirTran Holdings, Inc. (a) | 34,800 | 398,460 | |
JetBlue Airways Corp. (a) | 100 | 1,024 | |
Midwest Air Group, Inc. (a)(d) | 9,700 | 66,542 | |
Republic Airways Holdings, Inc. (a) | 8,612 | 137,275 | |
Ryanair Holdings PLC sponsored ADR (a) | 1,500 | 82,305 | |
UAL Corp. (a) | 10,800 | 270,000 | |
955,606 | |||
AUTO COMPONENTS - 2.1% | |||
Auto Parts & Equipment - 1.9% | |||
Amerigon, Inc. (a) | 33,527 | 235,695 | |
BorgWarner, Inc. | 3,300 | 187,143 | |
Gentex Corp. | 28,200 | 408,336 | |
Johnson Controls, Inc. | 5,600 | 402,808 | |
1,233,982 | |||
Shares | Value (Note 1) | ||
Tires & Rubber - 0.2% | |||
Continental AG | 1,200 | $128,376 | |
TOTAL AUTO COMPONENTS | 1,362,358 | ||
AUTOMOBILES - 2.8% | |||
Automobile Manufacturers - 2.8% | |||
Bayerische Motoren Werke AG (BMW) | 9,800 | 507,755 | |
Ford Motor Co. | 61,500 | 514,755 | |
General Motors Corp. (d) | 12,600 | 367,668 | |
Renault SA | 2,800 | 326,091 | |
Toyota Motor Corp. sponsored ADR | 900 | 97,506 | |
1,813,775 | |||
BUILDING PRODUCTS - 1.4% | |||
Building Products - 1.4% | |||
American Standard Companies, Inc. | 10,010 | 418,118 | |
Goodman Global, Inc. | 500 | 6,295 | |
Masco Corp. | 17,710 | 485,431 | |
909,844 | |||
CHEMICALS - 14.7% | |||
Commodity Chemicals - 2.0% | |||
Arkema (a) | 7,900 | 307,997 | |
Celanese Corp. Class A | 21,500 | 397,535 | |
Georgia Gulf Corp. | 7,900 | 209,666 | |
NOVA Chemicals Corp. | 4,100 | 130,756 | |
Pioneer Companies, Inc. (a) | 3,600 | 87,696 | |
Westlake Chemical Corp. | 6,000 | 179,760 | |
1,313,410 | |||
Diversified Chemicals - 5.2% | |||
Ashland, Inc. | 4,300 | 271,502 | |
Dow Chemical Co. | 34,400 | 1,311,672 | |
E.I. du Pont de Nemours & Co. | 34,400 | 1,374,968 | |
FMC Corp. | 8,300 | 507,296 | |
3,465,438 | |||
Fertilizers & Agricultural Chemicals - 2.5% | |||
Agrium, Inc. | 7,900 | 183,473 | |
Monsanto Co. | 11,700 | 555,048 | |
Mosaic Co. | 26,400 | 428,736 | |
Potash Corp. of Saskatchewan, Inc. | 4,400 | 431,068 | |
The Scotts Miracle-Gro Co. Class A | 1,300 | 55,796 | |
1,654,121 | |||
Industrial Gases - 2.3% | |||
Air Products & Chemicals, Inc. | 5,400 | 357,966 | |
Airgas, Inc. | 2,600 | 93,132 | |
Linde AG | 3,899 | 344,133 | |
Praxair, Inc. | 12,200 | 700,402 | |
1,495,633 | |||
Specialty Chemicals - 2.7% | |||
Albemarle Corp. | 5,300 | 290,970 | |
Chemtura Corp. | 25,141 | 218,475 | |
Cytec Industries, Inc. | 11,400 | 608,190 | |
Common Stocks - continued | |||
Shares | Value (Note 1) | ||
CHEMICALS - CONTINUED | |||
Specialty Chemicals - continued | |||
Ecolab, Inc. | 8,600 | $383,388 | |
Ferro Corp. | 7,400 | 126,392 | |
Lubrizol Corp. | 100 | 4,349 | |
Minerals Technologies, Inc. | 100 | 5,199 | |
Rohm & Haas Co. | 2,800 | 123,480 | |
1,760,443 | |||
TOTAL CHEMICALS | 9,689,045 | ||
COMMERCIAL SERVICES & SUPPLIES - 2.2% | |||
Diversified Commercial & Professional Services - 0.2% | |||
The Brink's Co. | 2,200 | 125,334 | |
Environmental & Facility Services - 1.4% | |||
Allied Waste Industries, Inc. | 22,300 | 230,582 | |
Republic Services, Inc. | 2,700 | 104,706 | |
Waste Connections, Inc. (a) | 3,850 | 141,565 | |
Waste Management, Inc. | 12,600 | 431,928 | |
908,781 | |||
Human Resource & Employment Services - 0.6% | |||
CDI Corp. | 11,400 | 238,830 | |
Robert Half International, Inc. | 5,800 | 179,452 | |
418,282 | |||
TOTAL COMMERCIAL SERVICES & SUPPLIES | 1,452,397 | ||
COMMUNICATIONS EQUIPMENT - 0.6% | |||
Communications Equipment - 0.6% | |||
Dycom Industries, Inc. (a) | 4,400 | 89,100 | |
Harris Corp. | 7,075 | 310,734 | |
399,834 | |||
CONSTRUCTION & ENGINEERING - 8.0% | |||
Construction & Engineering - 8.0% | |||
Chicago Bridge & Iron Co. NV (NY Shares) | 41,600 | 1,123,616 | |
Comfort Systems USA, Inc. | 11,200 | 145,936 | |
Fluor Corp. | 25,400 | 2,195,068 | |
Foster Wheeler Ltd. (a) | 2,600 | 113,022 | |
Infrasource Services, Inc. (a) | 16,000 | 276,640 | |
Jacobs Engineering Group, Inc. (a) | 3,000 | 261,270 | |
Shaw Group, Inc. (a) | 31,700 | 797,572 | |
SNC-Lavalin Group, Inc. | 13,500 | 372,401 | |
5,285,525 | |||
CONSTRUCTION MATERIALS - 0.6% | |||
Construction Materials - 0.6% | |||
Martin Marietta Materials, Inc. | 900 | 74,124 | |
Vulcan Materials Co. | 3,900 | 306,579 | |
380,703 | |||
Shares | Value (Note 1) | ||
CONTAINERS & PACKAGING - 0.2% | |||
Metal & Glass Containers - 0.2% | |||
Crown Holdings, Inc. (a) | 4,300 | $79,077 | |
Owens-Illinois, Inc. | 3,120 | 47,299 | |
126,376 | |||
ELECTRICAL EQUIPMENT - 4.0% | |||
Electrical Components & Equipment - 3.1% | |||
AMETEK, Inc. | 1,600 | 68,608 | |
Cooper Industries Ltd. Class A | 3,300 | 270,204 | |
Emerson Electric Co. | 13,700 | 1,125,455 | |
Hubbell, Inc. Class B | 2,600 | 120,900 | |
Rockwell Automation, Inc. | 5,800 | 327,004 | |
Roper Industries, Inc. | 1,960 | 90,905 | |
Thomas & Betts Corp. (a) | 1,300 | 58,708 | |
2,061,784 | |||
Heavy Electrical Equipment - 0.9% | |||
ABB Ltd. sponsored ADR | 23,900 | 318,826 | |
Global Power Equipment Group, Inc. (a) | 36,000 | 79,920 | |
Vestas Wind Systems AS (a) | 6,600 | 184,771 | |
583,517 | |||
TOTAL ELECTRICAL EQUIPMENT | 2,645,301 | ||
ELECTRONIC EQUIPMENT & INSTRUMENTS - 0.1% | |||
Electronic Equipment & Instruments - 0.1% | |||
Cogent, Inc. (a) | 2,300 | 32,844 | |
CPI International, Inc. | 300 | 3,780 | |
FARO Technologies, Inc. (a) | 3,200 | 56,352 | |
92,976 | |||
FOOD PRODUCTS - 0.2% | |||
Packaged Foods & Meats - 0.2% | |||
Imperial Sugar Co. | 4,300 | 132,268 | |
HOUSEHOLD DURABLES - 1.8% | |||
Homebuilding - 1.8% | |||
D.R. Horton, Inc. | 10,700 | 234,651 | |
KB Home | 8,200 | 350,632 | |
Pulte Homes, Inc. | 6,100 | 180,987 | |
Ryland Group, Inc. (d) | 7,120 | 303,810 | |
Toll Brothers, Inc. (a) | 3,500 | 92,470 | |
1,162,550 | |||
INDEPENDENT POWER PRODUCERS & ENERGY TRADERS - 0.0% | |||
Independent Power Producers & Energy Traders - 0.0% | |||
Mirant Corp. (a) | 592 | 17,150 | |
INDUSTRIAL CONGLOMERATES - 15.1% | |||
Industrial Conglomerates - 15.1% | |||
3M Co. | 27,760 | 1,990,392 | |
General Electric Co. | 153,760 | 5,237,065 | |
Smiths Group PLC | 15,200 | 248,910 | |
Common Stocks - continued | |||
Shares | Value (Note 1) | ||
INDUSTRIAL CONGLOMERATES - CONTINUED | |||
Industrial Conglomerates - continued | |||
Textron, Inc. | 6,600 | $553,476 | |
Tyco International Ltd. | 71,430 | 1,867,895 | |
9,897,738 | |||
IT SERVICES - 0.5% | |||
IT Consulting & Other Services - 0.5% | |||
CACI International, Inc. Class A (a) | 2,400 | 127,344 | |
ManTech International Corp. Class A (a) | 4,400 | 133,936 | |
NCI, Inc. Class A | 700 | 7,805 | |
SI International, Inc. (a) | 1,600 | 46,224 | |
315,309 | |||
LIFE SCIENCES TOOLS & SERVICES - 0.1% | |||
Life Science Tools & Services - 0.1% | |||
Varian, Inc. (a) | 700 | 32,676 | |
MACHINERY - 10.9% | |||
Construction & Farm Machinery & Heavy Trucks - 5.6% | |||
AGCO Corp. (a) | 2,500 | 62,125 | |
American Railcar Industries, Inc. | 100 | 3,029 | |
Bucyrus International, Inc. Class A | 3,471 | 179,208 | |
Caterpillar, Inc. | 18,900 | 1,254,015 | |
Deere & Co. | 15,700 | 1,226,170 | |
Joy Global, Inc. | 5,575 | 242,736 | |
Manitowoc Co., Inc. | 5,000 | 221,000 | |
Navistar International Corp. (a) | 3,970 | 91,072 | |
Samsung Heavy Industries Ltd. | 290 | 6,939 | |
Terex Corp. (a) | 3,200 | 140,576 | |
Toro Co. | 6,000 | 240,060 | |
Wabash National Corp. | 3,300 | 45,507 | |
3,712,437 | |||
Industrial Machinery - 5.3% | |||
Actuant Corp. Class A | 500 | 22,550 | |
Atlas Copco AB (B Shares) | 10,500 | 253,560 | |
Danaher Corp. | 8,800 | 583,352 | |
Dover Corp. | 4,300 | 209,066 | |
Illinois Tool Works, Inc. | 32,500 | 1,426,750 | |
ITT Industries, Inc. | 9,200 | 450,340 | |
KCI Konecranes Oyj | 16,750 | 332,632 | |
Pentair, Inc. | 2,160 | 64,584 | |
Schindler Holding AG (participation certificate) | 2,644 | 137,925 | |
3,480,759 | |||
TOTAL MACHINERY | 7,193,196 | ||
MARINE - 0.7% | |||
Marine - 0.7% | |||
Alexander & Baldwin, Inc. | 1,320 | 57,895 | |
Camillo Eitzen & Co. ASA (d) | 9,900 | 109,621 | |
Shares | Value (Note 1) | ||
Odfjell ASA (A Shares) | 9,800 | $158,895 | |
Stolt-Nielsen SA (d) | 6,200 | 152,504 | |
478,915 | |||
METALS & MINING - 3.9% | |||
Steel - 3.9% | |||
Allegheny Technologies, Inc. | 9,200 | 527,620 | |
Carpenter Technology Corp. | 2,500 | 239,600 | |
IPSCO, Inc. | 1,300 | 119,779 | |
Mittal Steel Co. NV Class A (NY Shares) | 22,500 | 770,625 | |
Nucor Corp. | 6,600 | 322,542 | |
Oregon Steel Mills, Inc. (a) | 6,800 | 327,556 | |
United States Steel Corp. | 4,700 | 273,399 | |
2,581,121 | |||
OIL, GAS & CONSUMABLE FUELS - 0.3% | |||
Coal & Consumable Fuels - 0.3% | |||
CONSOL Energy, Inc. | 3,200 | 116,704 | |
Massey Energy Co. | 1,700 | 42,908 | |
159,612 | |||
Oil & Gas Storage & Transport - 0.0% | |||
Overseas Shipholding Group, Inc. | 100 | 6,670 | |
TOTAL OIL, GAS & CONSUMABLE FUELS | 166,282 | ||
REAL ESTATE INVESTMENT TRUSTS - 0.2% | |||
Specialized REITs - 0.2% | |||
Potlatch Corp. | 2,842 | 108,877 | |
ROAD & RAIL - 5.7% | |||
Railroads - 3.7% | |||
Burlington Northern Santa Fe Corp. | 10,100 | 676,195 | |
CSX Corp. | 27,700 | 837,094 | |
Kansas City Southern | 200 | 5,270 | |
Norfolk Southern Corp. | 18,020 | 769,995 | |
Union Pacific Corp. | 1,500 | 120,525 | |
2,409,079 | |||
Trucking - 2.0% | |||
Con-way, Inc. | 5,300 | 253,605 | |
Laidlaw International, Inc. | 4,588 | 123,876 | |
Landstar System, Inc. | 19,918 | 850,499 | |
Old Dominion Freight Lines, Inc. (a) | 3,200 | 102,144 | |
1,330,124 | |||
TOTAL ROAD & RAIL | 3,739,203 | ||
SPECIALTY RETAIL - 0.2% | |||
Computer & Electronics Retail - 0.0% | |||
Gamestop Corp. Class B (a) | 600 | 24,240 | |
Home Improvement Retail - 0.2% | |||
Sherwin-Williams Co. | 2,300 | 118,772 | |
TOTAL SPECIALTY RETAIL | 143,012 | ||
Common Stocks - continued | |||
Shares | Value (Note 1) | ||
TRADING COMPANIES & DISTRIBUTORS - 1.0% | |||
Trading Companies & Distributors - 1.0% | |||
H&E Equipment Services, Inc. | 200 | $5,214 | |
MSC Industrial Direct Co., Inc. Class A | 13,300 | 523,488 | |
Watsco, Inc. | 1,700 | 74,698 | |
WESCO International, Inc. (a) | 1,300 | 76,050 | |
679,450 | |||
TRANSPORTATION INFRASTRUCTURE - 0.0% | |||
Airport Services - 0.0% | |||
Grupo Aeroportuario del Pacifico SA de CV sponsored ADR | 200 | 6,790 | |
Marine Ports & Services - 0.0% | |||
Eitzen Maritime Services ASA (a) | 3,923 | 1,458 | |
TOTAL TRANSPORTATION INFRASTRUCTURE | 8,248 | ||
TOTAL COMMON STOCKS (Cost $58,590,101) | 65,578,673 | ||
Nonconvertible Preferred Stocks - 0.0% | |||
AEROSPACE & DEFENSE - 0.0% | |||
Aerospace & Defense - 0.0% | |||
Rolls-Royce Group PLC Series B | 1,118,609 | 2,183 | |
Money Market Funds - 1.4% | |||
Shares | Value (Note 1) | ||
Fidelity Cash Central Fund, 5.31% (b) | 206,032 | $206,032 | |
Fidelity Securities Lending Cash Central Fund, 5.33% (b)(c) | 683,164 | 683,164 | |
TOTAL MONEY MARKET FUNDS (Cost $889,196) | 889,196 | ||
TOTAL INVESTMENT PORTFOLIO - 101.2% (Cost $59,481,287) | 66,470,052 | ||
NET OTHER ASSETS - (1.2)% | (766,377) | ||
NET ASSETS - 100% | $65,703,675 | ||
Legend |
(a)Non-income producing |
(b)Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. |
(c)Investment made with cash collateral received from securities on loan. |
(d)Security or a portion of the security is on loan at period end. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the fund from the affiliated Central funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $58,486 |
Fidelity Securities Lending Cash Central Fund | 23,161 |
Total | $81,647 |
Other Information |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: |
United States of America | 85.9% |
Netherlands | 4.4% |
Canada | 2.0% |
Germany | 1.5% |
United Kingdom | 1.2% |
France | 1.0% |
Others (individually less than 1%) | 4.0% |
100.0% |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Industrials Portfolio
Financial Statements
Statement of Assets and Liabilities
August 31, 2006 (Unaudited) | ||
Assets | ||
Investment in securities, at value (including securities loaned of $658,940) - See accompanying schedule: Unaffiliated issuers (cost $58,592,091) | $65,580,856 | |
Affiliated Central Funds (cost $889,196) | 889,196 | |
Total Investments (cost $59,481,287) | $66,470,052 | |
Cash | 100,053 | |
Receivable for fund shares sold | 76,576 | |
Dividends receivable | 105,206 | |
Interest receivable | 1,114 | |
Prepaid expenses | 62 | |
Other receivables | 4,122 | |
Total assets | 66,757,185 | |
Liabilities | ||
Payable for fund shares redeemed | $289,287 | |
Accrued management fee | 31,258 | |
Other affiliated payables | 25,259 | |
Other payables and accrued expenses | 24,542 | |
Collateral on securities loaned, at value | 683,164 | |
Total liabilities | 1,053,510 | |
Net Assets | $65,703,675 | |
Net Assets consist of: | ||
Paid in capital | $55,479,534 | |
Undistributed net investment income | 227,711 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 3,007,589 | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 6,988,841 | |
Net Assets, for 3,260,188 shares outstanding | $65,703,675 | |
Net Asset Value, offering price and redemption price per share ($65,703,675 ÷ 3,260,188 shares) | $20.15 | |
Statement of Operations
Six months ended August 31, 2006 (Unaudited) | ||
Investment Income | ||
Dividends | $685,907 | |
Interest | 12 | |
Income from affiliated Central Funds (including $23,161 from security lending) | 81,647 | |
Total income | 767,566 | |
Expenses | ||
Management fee | $263,653 | |
Transfer agent fees | 154,417 | |
Accounting and security lending fees | 23,468 | |
Independent trustees' compensation | 182 | |
Custodian fees and expenses | 31,093 | |
Registration fees | 16,842 | |
Audit | 16,151 | |
Legal | 779 | |
Interest | 16,942 | |
Miscellaneous | 3,257 | |
Total expenses before reductions | 526,784 | |
Expense reductions | (5,280) | 521,504 |
Net investment income (loss) | 246,062 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers | 3,199,182 | |
Foreign currency transactions | (6,004) | |
Total net realized gain (loss) | 3,193,178 | |
Change in net unrealized appreciation (depreciation) on: Investment securities | (6,761,113) | |
Assets and liabilities in foreign currencies | 749 | |
Total change in net unrealized appreciation (depreciation) | (6,760,364) | |
Net gain (loss) | (3,567,186) | |
Net increase (decrease) in net assets resulting from operations | $(3,321,124) | |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Industrials Portfolio
Financial Statements - continued
Statement of Changes in Net Assets
Six months ended | Year ended | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $246,062 | $216,156 |
Net realized gain (loss) | 3,193,178 | 6,498,549 |
Change in net unrealized appreciation (depreciation) | (6,760,364) | 2,768,625 |
Net increase (decrease) in net assets resulting from operations | (3,321,124) | 9,483,330 |
Distributions to shareholders from net investment income | (95,712) | (167,989) |
Distributions to shareholders from net realized gain | (2,440,643) | (4,339,314) |
Total distributions | (2,536,355) | (4,507,303) |
Share transactions | 72,643,026 | 57,428,807 |
Reinvestment of distributions | 2,419,700 | 4,328,731 |
Cost of shares redeemed | (87,223,053) | (48,044,834) |
Net increase (decrease) in net assets resulting from share transactions | (12,160,327) | 13,712,704 |
Redemption fees | 41,095 | 22,519 |
Total increase (decrease) in net assets | (17,976,711) | 18,711,250 |
Net Assets | ||
Beginning of period | 83,680,386 | 64,969,136 |
End of period (including undistributed net investment income of $227,711 and undistributed net investment income of $108,975, respectively) | $65,703,675 | $83,680,386 |
Other Information Shares | ||
Sold | 3,384,216 | 2,929,253 |
Issued in reinvestment of distributions | 113,494 | 230,791 |
Redeemed | (4,228,399) | (2,550,620) |
Net increase (decrease) | (730,689) | 609,424 |
Financial Highlights
Six months ended | Years ended February 28, | |||||
(Unaudited) | 2006 | 2005 | 2004 G | 2003 | 2002 | |
Selected Per-Share Data | ||||||
Net asset value, beginning of period | $20.97 | $19.21 | $16.22 | $11.04 | $14.69 | $14.47 |
Income from Investment Operations | ||||||
Net investment income (loss) E | .06 | .06 | .05 | .02 | (.05) | (.04) |
Net realized and unrealized gain (loss) | (.36) | 3.06 | 3.99 | 5.46 | (3.61) | .26 |
Total from investment operations | (.30) | 3.12 | 4.04 | 5.48 | (3.66) | .22 |
Distributions from net investment income | (.02) | (.05) | (.02) | (.01) | - | - |
Distributions from net realized gain | (.51) | (1.32) | (1.04) | (.30) | - | (.01) |
Total distributions | (.53) | (1.37) | (1.06) | (.31) | - | (.01) |
Redemption fees added to paid in capital E | .01 | .01 | .01 | .01 | .01 | .01 |
Net asset value, end of period | $20.15 | $20.97 | $19.21 | $16.22 | $11.04 | $14.69 |
Total Return B, C, D | (1.52)% | 17.23% | 25.60% | 49.87% | (24.85)% | 1.59% |
Ratios to Average Net Assets F | ||||||
Expenses before reductions | 1.14% A | 1.12% | 1.19% | 1.60% | 1.94% | 1.79% |
Expenses net of fee waivers, if any | 1.14% A | 1.12% | 1.19% | 1.60% | 1.94% | 1.79% |
Expenses net of all reductions | 1.12% A | 1.07% | 1.15% | 1.57% | 1.91% | 1.78% |
Net investment income (loss) | .53% A | .34% | .27% | .14% | (.40)% | (.32)% |
Supplemental Data | ||||||
Net assets, end of period (000 omitted) | $65,704 | $83,680 | $64,969 | $36,797 | $15,132 | $22,694 |
Portfolio turnover rate | 188% A | 168% | 151% | 166% | 162% | 67% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the former sales charges. E Calculated based on average shares outstanding during the period. F Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. G For the year ended February 29. | ||||||
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Industrial Equipment Portfolio
Investment Changes
Top Ten Stocks as of August 31, 2006 | ||
% of fund's | % of fund's net assets | |
Tyco International Ltd. | 6.5 | 6.3 |
Honeywell International, Inc. | 6.2 | 7.0 |
Halliburton Co. | 5.8 | 4.8 |
General Electric Co. | 5.5 | 6.8 |
Emerson Electric Co. | 5.3 | 2.1 |
Caterpillar, Inc. | 4.9 | 5.3 |
Deere & Co. | 3.9 | 3.2 |
Applied Materials, Inc. | 3.8 | 4.1 |
Danaher Corp. | 3.4 | 3.1 |
Dover Corp. | 2.6 | 2.6 |
47.9 | ||
Top Industries (% of fund's net assets) | |||
As of August 31, 2006 | |||
| Machinery | 35.5% | |
| Industrial Conglomerates | 13.3% | |
| Electrical Equipment | 11.0% | |
| Semiconductors & Semiconductor Equipment | 9.0% | |
| Aerospace & Defense | 8.3% | |
| All Others * | 22.9% | |
As of February 28, 2006 | |||
| Machinery | 30.2% | |
| Industrial Conglomerates | 14.9% | |
| Aerospace & Defense | 9.2% | |
| Electrical Equipment | 7.8% | |
| Semiconductors & Semiconductor Equipment | 7.6% | |
| All Others * | 30.3% | |
*Includes short-term investments and net other assets. |
Prior period industry classifications reflect the categories in place as of the date indicated and have not been adjusted to reflect current industry classifications. |
Semiannual Report
Industrial Equipment Portfolio
Investments August 31, 2006 (Unaudited)
Showing Percentage of Net Assets
Common Stocks - 99.9% | |||
Shares | Value (Note 1) | ||
AEROSPACE & DEFENSE - 8.3% | |||
Aerospace & Defense - 8.3% | |||
Bombardier, Inc. Class B (sub. vtg.) | 83,700 | $254,440 | |
Honeywell International, Inc. | 127,200 | 4,925,184 | |
Precision Castparts Corp. | 24,400 | 1,425,936 | |
6,605,560 | |||
AUTO COMPONENTS - 0.5% | |||
Auto Parts & Equipment - 0.5% | |||
Johnson Controls, Inc. | 5,300 | 381,229 | |
BUILDING PRODUCTS - 2.8% | |||
Building Products - 2.8% | |||
American Standard Companies, Inc. | 40,500 | 1,691,685 | |
Goodman Global, Inc. | 1,100 | 13,849 | |
Jacuzzi Brands, Inc. (a) | 39,000 | 386,880 | |
Trex Co., Inc. (a)(d) | 4,500 | 121,185 | |
2,213,599 | |||
COMMERCIAL SERVICES & SUPPLIES - 0.6% | |||
Office Services & Supplies - 0.6% | |||
IKON Office Solutions, Inc. | 33,100 | 471,675 | |
COMMUNICATIONS EQUIPMENT - 0.3% | |||
Communications Equipment - 0.3% | |||
TANDBERG ASA | 26,800 | 274,495 | |
COMPUTERS & PERIPHERALS - 1.5% | |||
Computer Hardware - 0.5% | |||
NCR Corp. (a) | 9,900 | 344,421 | |
Computer Storage & Peripherals - 1.0% | |||
EMC Corp. (a) | 24,900 | 290,085 | |
Intermec, Inc. (a) | 17,100 | 512,316 | |
802,401 | |||
TOTAL COMPUTERS & PERIPHERALS | 1,146,822 | ||
CONSTRUCTION & ENGINEERING - 2.2% | |||
Construction & Engineering - 2.2% | |||
EMCOR Group, Inc. (a) | 15,500 | 859,320 | |
SNC-Lavalin Group, Inc. | 15,200 | 419,296 | |
URS Corp. (a) | 11,900 | 482,545 | |
1,761,161 | |||
ELECTRICAL EQUIPMENT - 11.0% | |||
Electrical Components & Equipment - 11.0% | |||
A.O. Smith Corp. | 7,000 | 280,770 | |
American Power Conversion Corp. | 14,800 | 260,036 | |
AMETEK, Inc. | 18,600 | 797,568 | |
Cooper Industries Ltd. Class A | 12,700 | 1,039,876 | |
Emerson Electric Co. | 50,600 | 4,156,790 | |
Hubbell, Inc. Class B | 7,600 | 353,400 | |
Rockwell Automation, Inc. | 23,800 | 1,341,844 | |
Roper Industries, Inc. | 9,600 | 445,248 | |
8,675,532 | |||
Shares | Value (Note 1) | ||
ELECTRONIC EQUIPMENT & INSTRUMENTS - 1.2% | |||
Electronic Equipment & Instruments - 0.6% | |||
Cognex Corp. | 3,900 | $99,567 | |
Napco Security Systems, Inc. (a)(d) | 36,275 | 351,505 | |
451,072 | |||
Electronic Manufacturing Services - 0.6% | |||
Molex, Inc. | 13,600 | 495,992 | |
TOTAL ELECTRONIC EQUIPMENT & INSTRUMENTS | 947,064 | ||
ENERGY EQUIPMENT & SERVICES - 5.8% | |||
Oil & Gas Equipment & Services - 5.8% | |||
Halliburton Co. | 140,100 | 4,570,062 | |
HOUSEHOLD DURABLES - 0.3% | |||
Household Appliances - 0.3% | |||
Blount International, Inc. (a) | 21,700 | 196,385 | |
INDUSTRIAL CONGLOMERATES - 13.3% | |||
Industrial Conglomerates - 13.3% | |||
General Electric Co. | 127,950 | 4,357,977 | |
Textron, Inc. | 12,000 | 1,006,320 | |
Tyco International Ltd. | 196,200 | 5,130,629 | |
10,494,926 | |||
MACHINERY - 35.5% | |||
Construction & Farm Machinery & Heavy Trucks - 14.0% | |||
AGCO Corp. (a) | 11,700 | 290,745 | |
American Railcar Industries, Inc. | 100 | 3,029 | |
Astec Industries, Inc. (a) | 11,000 | 259,490 | |
Bucyrus International, Inc. Class A | 11,950 | 616,979 | |
Caterpillar, Inc. | 58,400 | 3,874,840 | |
Cummins, Inc. | 4,600 | 528,172 | |
Deere & Co. | 39,425 | 3,079,093 | |
Manitowoc Co., Inc. | 9,600 | 424,320 | |
Navistar International Corp. (a) | 24,200 | 555,148 | |
Oshkosh Truck Co. | 10,900 | 563,530 | |
Toro Co. | 8,100 | 324,081 | |
Toromont Industries Ltd. | 19,800 | 437,990 | |
Wabash National Corp. | 11,100 | 153,069 | |
11,110,486 | |||
Industrial Machinery - 21.5% | |||
Actuant Corp. Class A | 14,800 | 667,480 | |
Albany International Corp. Class A | 3,800 | 132,696 | |
Atlas Copco AB (B Shares) | 18,100 | 437,089 | |
Crane Co. | 1,600 | 63,968 | |
Danaher Corp. | 40,800 | 2,704,632 | |
Donaldson Co., Inc. | 10,800 | 360,504 | |
Dover Corp. | 42,900 | 2,085,798 | |
Harsco Corp. | 9,100 | 723,996 | |
IDEX Corp. | 5,000 | 209,950 | |
Illinois Tool Works, Inc. | 45,800 | 2,010,620 | |
Ingersoll-Rand Co. Ltd. Class A | 22,400 | 851,648 | |
ITT Industries, Inc. | 38,900 | 1,904,155 | |
Common Stocks - continued | |||
Shares | Value (Note 1) | ||
MACHINERY - CONTINUED | |||
Industrial Machinery - continued | |||
KCI Konecranes Oyj | 58,550 | $1,162,721 | |
Palfinger AG | 8,900 | 878,006 | |
Pentair, Inc. | 12,700 | 379,730 | |
RBC Bearings, Inc. | 23,400 | 497,718 | |
Schindler Holding AG (participation certificate) | 18,604 | 970,486 | |
SPX Corp. | 13,100 | 691,680 | |
Wajax Income Fund | 1,000 | 36,017 | |
Watts Water Technologies, Inc. Class A | 6,700 | 207,767 | |
16,976,661 | |||
TOTAL MACHINERY | 28,087,147 | ||
MARINE - 0.5% | |||
Marine - 0.5% | |||
Kirby Corp. (a) | 13,800 | 404,754 | |
OFFICE ELECTRONICS - 2.5% | |||
Office Electronics - 2.5% | |||
Xerox Corp. (a) | 102,300 | 1,515,063 | |
Zebra Technologies Corp. Class A (a) | 12,900 | 436,536 | |
1,951,599 | |||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 9.0% | |||
Semiconductor Equipment - 9.0% | |||
Applied Materials, Inc. | 180,100 | 3,040,088 | |
Brooks Automation, Inc. (a) | 36,000 | 500,400 | |
Cascade Microtech, Inc. (a) | 4,700 | 55,507 | |
FormFactor, Inc. (a) | 5,900 | 284,734 | |
KLA-Tencor Corp. | 22,300 | 979,193 | |
Lam Research Corp. (a) | 16,700 | 714,593 | |
Novellus Systems, Inc. (a) | 34,400 | 960,448 | |
Teradyne, Inc. (a) | 44,400 | 623,376 | |
7,158,339 | |||
SPECIALTY RETAIL - 1.1% | |||
Home Improvement Retail - 1.1% | |||
Sherwin-Williams Co. | 17,500 | 903,700 | |
Shares | Value (Note 1) | ||
TRADING COMPANIES & DISTRIBUTORS - 3.5% | |||
Trading Companies & Distributors - 3.5% | |||
Fastenal Co. | 21,800 | $799,624 | |
Finning International, Inc. | 13,400 | 481,663 | |
H&E Equipment Services, Inc. | 200 | 5,214 | |
Interline Brands, Inc. (a) | 20,200 | 505,808 | |
W.W. Grainger, Inc. | 4,700 | 313,960 | |
Watsco, Inc. | 15,100 | 663,494 | |
2,769,763 | |||
TOTAL COMMON STOCKS (Cost $67,808,157) | 79,013,812 | ||
Money Market Funds - 0.4% | |||
Fidelity Cash Central Fund, 5.31% (b) | 17,365 | 17,365 | |
Fidelity Securities Lending Cash Central Fund, 5.33% (b)(c) | 315,600 | 315,600 | |
TOTAL MONEY MARKET FUNDS (Cost $332,965) | 332,965 | ||
TOTAL INVESTMENT PORTFOLIO - 100.3% (Cost $68,141,122) | 79,346,777 | ||
NET OTHER ASSETS - (0.3)% | (210,375) | ||
NET ASSETS - 100% | $79,136,402 | ||
Legend |
(a)Non-income producing |
(b)Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. |
(c)Investment made with cash collateral received from securities on loan. |
(d)Security or a portion of the security is on loan at period end. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the fund from the affiliated Central funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $55,769 |
Fidelity Securities Lending Cash Central Fund | 3,719 |
Total | $59,488 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Industrial Equipment Portfolio
Financial Statements
Statement of Assets and Liabilities
August 31, 2006 (Unaudited) | ||
Assets | ||
Investment in securities, at value (including securities loaned of $299,332) - See accompanying schedule: Unaffiliated issuers (cost $67,808,157) | $79,013,812 | |
Affiliated Central Funds (cost $332,965) | 332,965 | |
Total Investments (cost $68,141,122) | $79,346,777 | |
Receivable for investments sold | 389,433 | |
Receivable for fund shares sold | 23,373 | |
Dividends receivable | 133,313 | |
Interest receivable | 1,326 | |
Prepaid expenses | 41 | |
Other receivables | 1,214 | |
Total assets | 79,895,477 | |
Liabilities | ||
Payable to custodian bank | $44,181 | |
Payable for fund shares redeemed | 321,325 | |
Accrued management fee | 37,717 | |
Other affiliated payables | 21,370 | |
Other payables and accrued expenses | 18,882 | |
Collateral on securities loaned, at value | 315,600 | |
Total liabilities | 759,075 | |
Net Assets | $79,136,402 | |
Net Assets consist of: | ||
Paid in capital | $69,150,223 | |
Undistributed net investment income | 105,461 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (1,325,155) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 11,205,873 | |
Net Assets, for 2,768,503 shares outstanding | $79,136,402 | |
Net Asset Value, offering price and redemption price per share ($79,136,402 ÷ 2,768,503 shares) | $28.58 | |
Statement of Operations
Six months ended August 31, 2006 (Unaudited) | ||
Investment Income | ||
Dividends | $518,254 | |
Interest | 39 | |
Income from affiliated Central Funds (including $3,719 from security lending) | 59,488 | |
Total income | 577,781 | |
Expenses | ||
Management fee | $254,223 | |
Transfer agent fees | 122,434 | |
Accounting and security lending fees | 22,678 | |
Independent trustees' compensation | 167 | |
Custodian fees and expenses | 24,433 | |
Registration fees | 19,587 | |
Audit | 16,131 | |
Legal | 723 | |
Miscellaneous | 1,946 | |
Total expenses before reductions | 462,322 | |
Expense reductions | (1,671) | 460,651 |
Net investment income (loss) | 117,130 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers | (1,146,021) | |
Foreign currency transactions | (1,810) | |
Total net realized gain (loss) | (1,147,831) | |
Change in net unrealized appreciation (depreciation) on: Investment securities | (2,107,448) | |
Assets and liabilities in foreign currencies | 226 | |
Total change in net unrealized appreciation (depreciation) | (2,107,222) | |
Net gain (loss) | (3,255,053) | |
Net increase (decrease) in net assets resulting from operations | $(3,137,923) | |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Industrial Equipment Portfolio
Financial Statements - continued
Statement of Changes in Net Assets
Six months ended | Year ended | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $117,130 | $125,878 |
Net realized gain (loss) | (1,147,831) | 3,137,422 |
Change in net unrealized appreciation (depreciation) | (2,107,222) | 3,947,920 |
Net increase (decrease) in net assets resulting from operations | (3,137,923) | 7,211,220 |
Distributions to shareholders from net investment income | (59,642) | (36,844) |
Distributions to shareholders from net realized gain | (506,956) | (3,199,441) |
Total distributions | (566,598) | (3,236,285) |
Share transactions | 72,636,612 | 46,137,172 |
Reinvestment of distributions | 540,163 | 3,125,450 |
Cost of shares redeemed | (65,144,204) | (24,786,422) |
Net increase (decrease) in net assets resulting from share transactions | 8,032,571 | 24,476,200 |
Redemption fees | 38,280 | 13,961 |
Total increase (decrease) in net assets | 4,366,330 | 28,465,096 |
Net Assets | ||
Beginning of period | 74,770,072 | 46,304,976 |
End of period (including undistributed net investment income of $105,461 and undistributed net investment income of $88,453, respectively) | $79,136,402 | $74,770,072 |
Other Information Shares | ||
Sold | 2,406,279 | 1,655,158 |
Issued in reinvestment of distributions | 17,839 | 119,637 |
Redeemed | (2,220,567) | (934,451) |
Net increase (decrease) | 203,551 | 840,344 |
Financial Highlights
Six months ended | Years ended February 28, | |||||
(Unaudited) | 2006 | 2005 | 2004 G | 2003 | 2002 | |
Selected Per-Share Data | ||||||
Net asset value, beginning of period | $29.15 | $26.85 | $24.60 | $16.00 | $22.54 | $21.69 |
Income from Investment Operations | ||||||
Net investment income (loss) E | .04 | .07 | (.04) | (.02) | (.12) | (.03) |
Net realized and unrealized gain (loss) | (.43) | 4.02 | 3.26 | 8.59 | (6.43) | .88 |
Total from investment operations | (.39) | 4.09 | 3.22 | 8.57 | (6.55) | .85 |
Distributions from net investment income | (.02) | (.02) | - | - | - | - |
Distributions from net realized gain | (.17) | (1.78) | (.98) | - | - | (.03) |
Total distributions | (.19) | (1.80) | (.98) | - | - | (.03) |
Redemption fees added to paid in capital E | .01 | .01 | .01 | .03 | .01 | .03 |
Net asset value, end of period | $28.58 | $29.15 | $26.85 | $24.60 | $16.00 | $22.54 |
Total Return B, C, D | (1.34)% | 16.17% | 13.37% | 53.75% | (29.02)% | 4.07% |
Ratios to Average Net Assets F | ||||||
Expenses before reductions | 1.03% A | 1.03% | 1.07% | 1.37% | 1.77% | 1.46% |
Expenses net of fee waivers, if any | 1.03% A | 1.03% | 1.07% | 1.37% | 1.77% | 1.46% |
Expenses net of all reductions | 1.03% A | 1.02% | 1.06% | 1.33% | 1.76% | 1.45% |
Net investment income (loss) | .26% A | .27% | (.17)% | (.08)% | (.62)% | (.16)% |
Supplemental Data | ||||||
Net assets, end of period (000 omitted) | $79,136 | $74,770 | $46,305 | $66,383 | $17,459 | $24,775 |
Portfolio turnover rate | 89% A | 40% | 51% | 95% | 123% | 131% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the former sales charges. E Calculated based on average shares outstanding during the period. F Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. G For the year ended February 29. | ||||||
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Investment Changes
Top Ten Stocks as of August 31, 2006 | ||
% of fund's | % of fund's net assets | |
Dow Chemical Co. | 5.4 | 0.0 |
E.I. du Pont de Nemours & Co. | 5.2 | 3.6 |
Alcoa, Inc. | 4.8 | 6.6 |
Burlington Northern Santa Fe Corp. | 4.0 | 5.9 |
Canadian National Railway Co. | 3.8 | 4.6 |
CONSOL Energy, Inc. | 3.4 | 2.3 |
Alcan, Inc. | 3.3 | 0.0 |
United States Steel Corp. | 3.1 | 1.3 |
Praxair, Inc. | 3.1 | 3.9 |
Inco Ltd. | 2.9 | 0.0 |
39.0 | ||
Top Industries (% of fund's net assets) | |||
As of August 31, 2006 | |||
| Metals & Mining | 34.7% | |
| Chemicals | 21.9% | |
| Road & Rail | 15.2% | |
| Oil, Gas & Consumable Fuels | 11.4% | |
| Construction Materials | 4.5% | |
| All Others * | 12.3% | |
As of February 28, 2006 | |||
| Metals & Mining | 32.5% | |
| Road & Rail | 21.2% | |
| Chemicals | 17.2% | |
| Oil, Gas & Consumable Fuels | 9.7% | |
| Construction Materials | 4.8% | |
| All Others * | 14.6% | |
*Includes short-term investments and net other assets. |
Prior period industry classifications reflect the categories in place as of the date indicated and have not been adjusted to reflect current industry classifications. |
Semiannual Report
Materials Portfolio
Investments August 31, 2006 (Unaudited)
Showing Percentage of Net Assets
Common Stocks - 95.1% | |||
Shares | Value (Note 1) | ||
BUILDING PRODUCTS - 1.0% | |||
Building Products - 1.0% | |||
American Standard Companies, Inc. | 50,000 | $2,088,500 | |
CHEMICALS - 21.9% | |||
Diversified Chemicals - 10.6% | |||
Dow Chemical Co. | 299,000 | 11,400,868 | |
E.I. du Pont de Nemours & Co. (d) | 275,600 | 11,015,732 | |
22,416,600 | |||
Fertilizers & Agricultural Chemicals - 1.9% | |||
Agrium, Inc. | 136,100 | 3,160,850 | |
Potash Corp. of Saskatchewan, Inc. | 8,800 | 862,136 | |
4,022,986 | |||
Industrial Gases - 6.2% | |||
Air Products & Chemicals, Inc. | 81,200 | 5,382,748 | |
Airgas, Inc. | 28,300 | 1,013,706 | |
Praxair, Inc. | 114,300 | 6,561,963 | |
12,958,417 | |||
Specialty Chemicals - 3.2% | |||
Albemarle Corp. | 30,200 | 1,657,980 | |
Chemtura Corp. | 79,500 | 690,855 | |
Cytec Industries, Inc. | 17,400 | 928,290 | |
Rohm & Haas Co. | 77,700 | 3,426,570 | |
6,703,695 | |||
TOTAL CHEMICALS | 46,101,698 | ||
CONSTRUCTION & ENGINEERING - 1.6% | |||
Construction & Engineering - 1.6% | |||
SNC-Lavalin Group, Inc. | 121,800 | 3,359,886 | |
CONSTRUCTION MATERIALS - 4.5% | |||
Construction Materials - 4.5% | |||
Martin Marietta Materials, Inc. | 28,100 | 2,314,316 | |
Polaris Minerals Corp. (e) | 1,000,000 | 4,541,753 | |
Vulcan Materials Co. | 33,900 | 2,664,879 | |
9,520,948 | |||
CONTAINERS & PACKAGING - 3.7% | |||
Metal & Glass Containers - 0.7% | |||
Pactiv Corp. (a) | 57,300 | 1,531,629 | |
Paper Packaging - 3.0% | |||
Packaging Corp. of America | 55,000 | 1,272,700 | |
Smurfit-Stone Container Corp. | 433,800 | 4,940,982 | |
6,213,682 | |||
TOTAL CONTAINERS & PACKAGING | 7,745,311 | ||
MACHINERY - 1.1% | |||
Construction & Farm Machinery & Heavy Trucks - 1.1% | |||
Deere & Co. | 31,100 | 2,428,910 | |
Shares | Value (Note 1) | ||
METALS & MINING - 34.7% | |||
Aluminum - 8.1% | |||
Alcan, Inc. | 153,400 | $6,899,045 | |
Alcoa, Inc. | 350,298 | 10,015,020 | |
Novelis, Inc. | 40 | 835 | |
16,914,900 | |||
Diversified Metals & Mining - 11.4% | |||
Birch Mountain Resources Ltd. (a) | 561,900 | 2,165,651 | |
Coalcorp Mining, Inc. (a) | 7,183,000 | 3,899,213 | |
Coalcorp Mining, Inc. warrants 2/8/11 (a) | 89,000 | 20,533 | |
FNX Mining Co., Inc. (a) | 160,500 | 1,894,983 | |
Inco Ltd. | 79,500 | 6,199,317 | |
Phelps Dodge Corp. | 59,900 | 5,361,050 | |
Skye Resources, Inc. (a) | 191,000 | 2,422,709 | |
Teck Cominco Ltd. Class B (sub. vtg.) | 30,200 | 2,010,965 | |
23,974,421 | |||
Gold - 4.4% | |||
Agnico-Eagle Mines Ltd. | 70,200 | 2,666,241 | |
Cambior, Inc. (a) | 936,500 | 3,295,924 | |
Meridian Gold, Inc. (a) | 112,300 | 3,321,349 | |
9,283,514 | |||
Steel - 10.8% | |||
A.M. Castle & Co. | 54,000 | 1,526,040 | |
Chaparral Steel Co. (a) | 46,800 | 3,342,456 | |
IPSCO, Inc. | 65,800 | 6,062,673 | |
Nucor Corp. | 89,900 | 4,393,413 | |
Schnitzer Steel Industries, Inc. Class A | 28,700 | 911,225 | |
United States Steel Corp. | 112,900 | 6,567,393 | |
22,803,200 | |||
TOTAL METALS & MINING | 72,976,035 | ||
OIL, GAS & CONSUMABLE FUELS - 11.4% | |||
Coal & Consumable Fuels - 9.3% | |||
Arch Coal, Inc. | 49,100 | 1,608,025 | |
Cameco Corp. | 117,600 | 4,813,376 | |
CONSOL Energy, Inc. | 196,400 | 7,162,708 | |
Massey Energy Co. | 16,300 | 411,412 | |
Peabody Energy Corp. | 128,100 | 5,645,367 | |
19,640,888 | |||
Integrated Oil & Gas - 1.0% | |||
Suncor Energy, Inc. (d) | 28,000 | 2,169,728 | |
Oil & Gas Exploration & Production - 1.1% | |||
UTS Energy Corp. (a) | 525,000 | 2,256,175 | |
TOTAL OIL, GAS & CONSUMABLE FUELS | 24,066,791 | ||
ROAD & RAIL - 15.2% | |||
Railroads - 15.2% | |||
Burlington Northern Santa Fe Corp. | 126,600 | 8,475,870 | |
Canadian National Railway Co. | 184,800 | 7,883,217 | |
Common Stocks - continued | |||
Shares | Value (Note 1) | ||
ROAD & RAIL - CONTINUED | |||
Railroads - continued | |||
CSX Corp. | 153,800 | $4,647,836 | |
Norfolk Southern Corp. | 144,500 | 6,174,485 | |
Union Pacific Corp. | 59,200 | 4,756,720 | |
31,938,128 | |||
TOTAL COMMON STOCKS (Cost $186,943,522) | 200,226,207 | ||
Money Market Funds - 8.8% | |||
Fidelity Cash Central Fund, 5.31% (b) | 12,348,592 | 12,348,592 | |
Fidelity Securities Lending Cash Central Fund, 5.33% (b)(c) | 6,284,950 | 6,284,950 | |
TOTAL MONEY MARKET FUNDS (Cost $18,633,542) | 18,633,542 | ||
TOTAL INVESTMENT PORTFOLIO - 103.9% (Cost $205,577,064) | 218,859,749 | ||
NET OTHER ASSETS - (3.9)% | (8,307,200) | ||
NET ASSETS - 100% | $210,552,549 | ||
Legend |
(a)Non-income producing |
(b)Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. |
(c)Investment made with cash collateral received from securities on loan. |
(d)Security or a portion of the security is on loan at period end. |
(e)Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the end of the period, the value of these securities amounted to $ 4,541,753 or 2.2% of net assets. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the fund from the affiliated Central funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $263,850 |
Fidelity Securities Lending Cash Central Fund | 31,883 |
Total | $295,733 |
Other Information |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: |
United States of America | 66.7% |
Canada | 33.3% |
100.0% |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Materials Portfolio
Financial Statements
Statement of Assets and Liabilities
August 31, 2006 (Unaudited) | ||
Assets | ||
Investment in securities, at value (including securities loaned of $6,080,848) - See accompanying schedule: Unaffiliated issuers (cost $186,943,522) | $200,226,207 | |
Affiliated Central Funds (cost $18,633,542) | 18,633,542 | |
Total Investments (cost $205,577,064) | $218,859,749 | |
Receivable for fund shares sold | 517,278 | |
Dividends receivable | 303,558 | |
Interest receivable | 47,969 | |
Prepaid expenses | 112 | |
Other receivables | 16,577 | |
Total assets | 219,745,243 | |
Liabilities | ||
Payable for fund shares redeemed | $2,715,359 | |
Accrued management fee | 102,869 | |
Other affiliated payables | 66,056 | |
Other payables and accrued expenses | 23,460 | |
Collateral on securities loaned, at value | 6,284,950 | |
Total liabilities | 9,192,694 | |
Net Assets | $210,552,549 | |
Net Assets consist of: | ||
Paid in capital | $186,037,691 | |
Undistributed net investment income | 904,279 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 10,327,177 | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 13,283,402 | |
Net Assets, for 4,519,809 shares outstanding | $210,552,549 | |
Net Asset Value, offering price and redemption price per share ($210,552,549 ÷ 4,519,809 shares) | $46.58 | |
Statement of Operations
Six months ended August 31, 2006 (Unaudited) | ||
Investment Income | ||
Dividends | $1,664,767 | |
Interest | 1,871 | |
Income from affiliated Central Funds (including $31,883 from security lending) | 295,733 | |
Total income | 1,962,371 | |
Expenses | ||
Management fee | $603,088 | |
Transfer agent fees | 324,781 | |
Accounting and security lending fees | 54,451 | |
Independent trustees' compensation | 390 | |
Custodian fees and expenses | 16,341 | |
Registration fees | 56,725 | |
Audit | 16,419 | |
Legal | 1,644 | |
Interest | 2,189 | |
Miscellaneous | 6,155 | |
Total expenses before reductions | 1,082,183 | |
Expense reductions | (39,052) | 1,043,131 |
Net investment income (loss) | 919,240 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers | 10,467,839 | |
Foreign currency transactions | 24,315 | |
Total net realized gain (loss) | 10,492,154 | |
Change in net unrealized appreciation (depreciation) on: Investment securities | (15,068,074) | |
Assets and liabilities in foreign currencies | 307 | |
Total change in net unrealized appreciation (depreciation) | (15,067,767) | |
Net gain (loss) | (4,575,613) | |
Net increase (decrease) in net assets resulting from operations | $(3,656,373) | |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Materials Portfolio
Financial Statements - continued
Statement of Changes in Net Assets
Six months ended | Year ended | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $919,240 | $1,058,337 |
Net realized gain (loss) | 10,492,154 | 8,503,088 |
Change in net unrealized appreciation (depreciation) | (15,067,767) | 6,934,391 |
Net increase (decrease) in net assets resulting from operations | (3,656,373) | 16,495,816 |
Distributions to shareholders from net investment income | (302,945) | (770,963) |
Distributions to shareholders from net realized gain | (5,187,932) | (3,187,200) |
Total distributions | (5,490,877) | (3,958,163) |
Share transactions | 212,076,576 | 177,007,921 |
Reinvestment of distributions | 5,224,052 | 3,742,752 |
Cost of shares redeemed | (167,346,131) | (168,316,528) |
Net increase (decrease) in net assets resulting from share transactions | 49,954,497 | 12,434,145 |
Redemption fees | 222,801 | 108,867 |
Total increase (decrease) in net assets | 41,030,048 | 25,080,665 |
Net Assets | ||
Beginning of period | 169,522,501 | 144,441,836 |
End of period (including undistributed net investment income of $904,279 and undistributed net investment income of $394,580, respectively) | $210,552,549 | $169,522,501 |
Other Information Shares | ||
Sold | 4,308,852 | 4,217,962 |
Issued in reinvestment of distributions | 108,631 | 93,814 |
Redeemed | (3,554,764) | (4,196,527) |
Net increase (decrease) | 862,719 | 115,249 |
Financial Highlights
Six months ended | Years ended February 28, | |||||
(Unaudited) | 2006 | 2005 | 2004 I | 2003 | 2002 | |
Selected Per-Share Data | ||||||
Net asset value, beginning of period | $46.35 | $40.78 | $35.99 | $23.83 | $25.89 | $23.11 |
Income from Investment Operations | ||||||
Net investment income (loss) E | .21 | .32 | .15 | .13 F | .04 F | .10 |
Net realized and unrealized gain (loss) | 1.42 G | 6.40 | 5.47 | 12.07 | (1.69) | 2.81 |
Total from investment operations | 1.63 | 6.72 | 5.62 | 12.20 | (1.65) | 2.91 |
Distributions from net investment income | (.08) | (.25) | (.12) | (.12) | (.46) | (.20) |
Distributions from net realized gain | (1.37) | (.93) | (.74) | - | - | - |
Total distributions | (1.45) | (1.18) | (.86) | (.12) | (.46) | (.20) |
Redemption fees added to paid in capital E | .05 | .03 | .03 | .08 | .05 | .07 |
Net asset value, end of period | $46.58 | $46.35 | $40.78 | $35.99 | $23.83 | $25.89 |
Total Return B, C, D | 3.53% | 17.01% | 16.09% | 51.73% | (6.16)% | 12.98% |
Ratios to Average Net Assets H | ||||||
Expenses before reductions | 1.02% A | 1.05% | 1.06% | 1.31% | 1.57% | 1.57% |
Expenses net of fee waivers, if any | 1.02% A | 1.05% | 1.06% | 1.31% | 1.57% | 1.57% |
Expenses net of all reductions | .98% A | 1.01% | 1.02% | 1.17% | 1.42% | 1.49% |
Net investment income (loss) | .86% A | .78% | .42% | .43% | .16% | .42% |
Supplemental Data | ||||||
Net assets, end of period (000 omitted) | $210,553 | $169,523 | $144,442 | $135,131 | $41,275 | $27,461 |
Portfolio turnover rate | 158% A | 124% | 89% | 175% | 226% | 230% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the former sales charges. E Calculated based on average shares outstanding during the period. F Investment income per share reflects a special dividend which amounted to $.07 per share. G The amount shown for a share outstanding does not correspond with the aggregate net gain (loss) on investments for the period due to the timing of sales and repurchases of shares in relation to fluctuating market values of the investments of the Fund. H Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. I For the year ended February 29. | ||||||
Semiannual Report
See accompanying notes which are an integral part of the financial statements.
Investment Changes
Top Ten Stocks as of August 31, 2006 | ||
% of fund's | % of fund's net assets | |
CSX Corp. | 6.7 | 3.6 |
Burlington Northern Santa Fe Corp. | 6.2 | 6.4 |
Norfolk Southern Corp. | 5.4 | 7.1 |
Union Pacific Corp. | 5.0 | 3.6 |
Canadian National Railway Co. | 4.8 | 5.5 |
Expeditors International of Washington, Inc. | 4.7 | 5.9 |
C.H. Robinson Worldwide, Inc. | 3.9 | 4.1 |
United Parcel Service, Inc. Class B | 3.7 | 1.0 |
FedEx Corp. | 3.3 | 2.4 |
JetBlue Airways Corp. | 2.8 | 0.6 |
46.5 | ||
Top Industries (% of fund's net assets) | |||
As of August 31, 2006 | |||
| Road & Rail | 38.8% | |
| Air Freight & Logistics | 20.9% | |
| Airlines | 13.2% | |
| Machinery | 7.9% | |
| Oil, Gas & Consumable Fuels | 5.6% | |
| All Others * | 13.6% | |
As of February 28, 2006 | |||
| Road & Rail | 40.3% | |
| Air Freight & Logistics | 19.9% | |
| Airlines | 12.6% | |
| Oil, Gas & Consumable Fuels | 8.5% | |
| Machinery | 5.5% | |
| All Others * | 13.2% | |
*Includes short-term investments and net other assets. |
Prior period industry classifications reflect the categories in place as of the date indicated and have not been adjusted to reflect current industry classifications. |
Semiannual Report
Transportation Portfolio
Investments August 31, 2006 (Unaudited)
Showing Percentage of Net Assets
Common Stocks - 98.8% | |||
Shares | Value (Note 1) | ||
AEROSPACE & DEFENSE - 4.4% | |||
Aerospace & Defense - 4.4% | |||
AAR Corp. (a) | 17,800 | $397,118 | |
Bombardier, Inc. Class B (sub. vtg.) | 681,900 | 2,072,907 | |
Hexcel Corp. (a) | 28,000 | 420,560 | |
Precision Castparts Corp. | 15,600 | 911,664 | |
Rockwell Collins, Inc. | 8,800 | 461,384 | |
4,263,633 | |||
AIR FREIGHT & LOGISTICS - 20.9% | |||
Air Freight & Logistics - 20.9% | |||
C.H. Robinson Worldwide, Inc. (d) | 81,900 | 3,752,658 | |
EGL, Inc. (a) | 26,700 | 816,219 | |
Expeditors International of Washington, Inc. | 113,220 | 4,514,081 | |
FedEx Corp. | 31,200 | 3,152,136 | |
Forward Air Corp. | 14,650 | 470,851 | |
Hub Group, Inc. Class A | 56,460 | 1,315,518 | |
Pacer International, Inc. | 10,400 | 286,312 | |
United Parcel Service, Inc. Class B | 51,000 | 3,572,550 | |
UTI Worldwide, Inc. | 93,900 | 2,164,395 | |
20,044,720 | |||
AIRLINES - 13.2% | |||
Airlines - 13.2% | |||
AirTran Holdings, Inc. (a)(d) | 195,900 | 2,243,055 | |
AMR Corp. | 109,200 | 2,254,980 | |
Gol Linhas Aereas Inteligentes SA sponsored ADR | 7,800 | 272,298 | |
JetBlue Airways Corp. (a)(d) | 259,414 | 2,656,399 | |
Republic Airways Holdings, Inc. (a) | 36,100 | 575,434 | |
Ryanair Holdings PLC sponsored ADR (a) | 17,938 | 984,258 | |
Southwest Airlines Co. (d) | 105,087 | 1,820,107 | |
TAM SA (PN) sponsored ADR (ltd. vtg.) | 17,200 | 534,920 | |
UAL Corp. (a) | 52,300 | 1,307,500 | |
12,648,951 | |||
AUTO COMPONENTS - 0.6% | |||
Auto Parts & Equipment - 0.6% | |||
TRW Automotive Holdings Corp. (a) | 23,300 | 574,578 | |
COMMUNICATIONS EQUIPMENT - 0.4% | |||
Communications Equipment - 0.4% | |||
Harris Corp. | 8,000 | 351,360 | |
ENERGY EQUIPMENT & SERVICES - 0.5% | |||
Oil & Gas Equipment & Services - 0.5% | |||
Halliburton Co. | 8,100 | 264,222 | |
Hornbeck Offshore Services, Inc. (a) | 7,300 | 245,353 | |
509,575 | |||
INSURANCE - 0.2% | |||
Multi-Line Insurance - 0.2% | |||
American International Group, Inc. | 3,200 | 204,224 | |
Shares | Value (Note 1) | ||
MACHINERY - 7.9% | |||
Construction & Farm Machinery & Heavy Trucks - 6.0% | |||
American Railcar Industries, Inc. | 6,100 | $184,769 | |
Bucyrus International, Inc. Class A | 11,800 | 609,234 | |
Caterpillar, Inc. | 3,200 | 212,320 | |
Deere & Co. | 2,400 | 187,440 | |
FreightCar America, Inc. | 1,500 | 87,300 | |
Joy Global, Inc. | 6,800 | 296,072 | |
Navistar International Corp. (a) | 9,000 | 206,460 | |
Oshkosh Truck Co. | 27,400 | 1,416,580 | |
PACCAR, Inc. (d) | 21,350 | 1,167,205 | |
Terex Corp. (a) | 5,200 | 228,436 | |
Trinity Industries, Inc. | 33,850 | 1,129,236 | |
5,725,052 | |||
Industrial Machinery - 1.9% | |||
Eaton Corp. | 27,500 | 1,828,750 | |
TOTAL MACHINERY | 7,553,802 | ||
MARINE - 3.1% | |||
Marine - 3.1% | |||
Alexander & Baldwin, Inc. | 9,400 | 412,284 | |
American Commercial Lines, Inc. | 30,091 | 1,579,778 | |
Kirby Corp. (a) | 32,000 | 938,560 | |
2,930,622 | |||
METALS & MINING - 2.2% | |||
Diversified Metals & Mining - 1.9% | |||
RTI International Metals, Inc. (a) | 3,200 | 138,784 | |
Titanium Metals Corp. | 66,900 | 1,726,020 | |
1,864,804 | |||
Steel - 0.3% | |||
Allegheny Technologies, Inc. | 4,100 | 235,135 | |
TOTAL METALS & MINING | 2,099,939 | ||
OIL, GAS & CONSUMABLE FUELS - 5.6% | |||
Oil & Gas Refining & Marketing - 1.3% | |||
Valero Energy Corp. | 19,300 | 1,107,820 | |
World Fuel Services Corp. | 3,800 | 136,952 | |
1,244,772 | |||
Oil & Gas Storage & Transport - 4.3% | |||
General Maritime Corp. | 12,600 | 473,256 | |
OMI Corp. | 33,400 | 752,168 | |
Overseas Shipholding Group, Inc. | 19,800 | 1,320,660 | |
Teekay Shipping Corp. | 36,900 | 1,633,194 | |
4,179,278 | |||
TOTAL OIL, GAS & CONSUMABLE FUELS | 5,424,050 | ||
ROAD & RAIL - 38.8% | |||
Railroads - 31.6% | |||
Burlington Northern Santa Fe Corp. | 88,300 | 5,911,685 | |
Common Stocks - continued | |||
Shares | Value (Note 1) | ||
ROAD & RAIL - CONTINUED | |||
Railroads - continued | |||
Canadian National Railway Co. | 109,000 | $4,649,733 | |
Canadian Pacific Railway Ltd. | 53,900 | 2,647,942 | |
CSX Corp. | 212,200 | 6,412,683 | |
Guangshen Railway Co. Ltd. sponsored ADR | 1,000 | 20,520 | |
Kansas City Southern | 25,550 | 673,243 | |
Norfolk Southern Corp. | 120,600 | 5,153,238 | |
Union Pacific Corp. | 60,400 | 4,853,140 | |
30,322,184 | |||
Trucking - 7.2% | |||
Con-way, Inc. | 30,400 | 1,454,640 | |
Dollar Thrifty Automotive Group, Inc. (a) | 7,100 | 303,028 | |
Heartland Express, Inc. | 41,400 | 665,712 | |
J.B. Hunt Transport Services, Inc. | 14,900 | 292,785 | |
Laidlaw International, Inc. | 41,500 | 1,120,500 | |
Landstar System, Inc. | 46,970 | 2,005,619 | |
Swift Transportation Co., Inc. (a) | 35,700 | 827,883 | |
Universal Truckload Services, Inc. (a) | 9,700 | 267,720 | |
6,937,887 | |||
TOTAL ROAD & RAIL | 37,260,071 | ||
SOFTWARE - 0.6% | |||
Application Software - 0.6% | |||
NAVTEQ Corp. (a) | 20,000 | 531,200 | |
TRADING COMPANIES & DISTRIBUTORS - 0.4% | |||
Trading Companies & Distributors - 0.4% | |||
GATX Corp. | 11,000 | 408,210 | |
TOTAL COMMON STOCKS (Cost $77,596,777) | 94,804,935 | ||
Money Market Funds - 11.5% | |||
Shares | Value (Note 1) | ||
Fidelity Cash Central Fund, 5.31% (b) | 2,677,877 | $2,677,877 | |
Fidelity Securities Lending Cash Central Fund, 5.33% (b)(c) | 8,401,500 | 8,401,500 | |
TOTAL MONEY MARKET FUNDS (Cost $11,079,377) | 11,079,377 | ||
TOTAL INVESTMENT PORTFOLIO - 110.3% (Cost $88,676,154) | 105,884,312 | ||
NET OTHER ASSETS - (10.3)% | (9,913,994) | ||
NET ASSETS - 100% | $95,970,318 | ||
Legend |
(a)Non-income producing |
(b)Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. |
(c)Investment made with cash collateral received from securities on loan. |
(d)Security or a portion of the security is on loan at period end. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the fund from the affiliated Central funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $104,471 |
Fidelity Securities Lending Cash Central Fund | 22,095 |
Total | $126,566 |
Other Information |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: |
United States of America | 83.0% |
Canada | 9.8% |
Marshall Islands | 3.0% |
British Virgin Islands | 2.3% |
Ireland | 1.0% |
Others (individually less than 1%) | 0.9% |
100.0% |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Transportation Portfolio
Financial Statements
Statement of Assets and Liabilities
August 31, 2006 (Unaudited) | ||
Assets | ||
Investment in securities, at value (including securities loaned of $8,217,410) - See accompanying schedule: Unaffiliated issuers (cost $77,596,777) | $94,804,935 | |
Affiliated Central Funds (cost $11,079,377) | 11,079,377 | |
Total Investments (cost $88,676,154) | $105,884,312 | |
Receivable for investments sold | 109,040 | |
Receivable for fund shares sold | 169,120 | |
Dividends receivable | 108,919 | |
Interest receivable | 4,142 | |
Prepaid expenses | 62 | |
Other receivables | 10,830 | |
Total assets | 106,286,425 | |
Liabilities | ||
Payable for fund shares redeemed | $1,804,951 | |
Accrued management fee | 49,496 | |
Other affiliated payables | 38,235 | |
Other payables and accrued expenses | 21,925 | |
Collateral on securities loaned, at value | 8,401,500 | |
Total liabilities | 10,316,107 | |
Net Assets | $95,970,318 | |
Net Assets consist of: | ||
Paid in capital | $85,180,635 | |
Undistributed net investment income | 30,042 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (6,448,517) | |
Net unrealized appreciation (depreciation) on investments | 17,208,158 | |
Net Assets, for 2,093,682 shares outstanding | $95,970,318 | |
Net Asset Value, offering price and redemption price per share ($95,970,318 ÷ 2,093,682 shares) | $45.84 | |
Statement of Operations
Six months ended August 31, 2006 (Unaudited) | ||
Investment Income | ||
Dividends | $574,071 | |
Interest | 6 | |
Income from affiliated Central Funds (including $22,095 from security lending) | 126,566 | |
Total income | 700,643 | |
Expenses | ||
Management fee | $354,500 | |
Transfer agent fees | 202,370 | |
Accounting and security lending fees | 31,660 | |
Independent trustees' compensation | 232 | |
Custodian fees and expenses | 14,318 | |
Registration fees | 38,933 | |
Audit | 16,217 | |
Legal | 996 | |
Miscellaneous | 3,774 | |
Total expenses before reductions | 663,000 | |
Expense reductions | (2,897) | 660,103 |
Net investment income (loss) | 40,540 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers | (6,241,346) | |
Foreign currency transactions | 6,853 | |
Total net realized gain (loss) | (6,234,493) | |
Change in net unrealized appreciation (depreciation) on investment securities | (8,679,645) | |
Net gain (loss) | (14,914,138) | |
Net increase (decrease) in net assets resulting from operations | $(14,873,598) | |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Statement of Changes in Net Assets
Six months ended | Year ended | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $40,540 | $309,175 |
Net realized gain (loss) | (6,234,493) | 5,340,781 |
Change in net unrealized appreciation (depreciation) | (8,679,645) | 8,140,215 |
Net increase (decrease) in net assets resulting from operations | (14,873,598) | 13,790,171 |
Distributions to shareholders from net investment income | (46,855) | (250,837) |
Distributions to shareholders from net realized gain | (2,366,175) | (2,277,096) |
Total distributions | (2,413,030) | (2,527,933) |
Share transactions | 138,047,023 | 147,323,750 |
Reinvestment of distributions | 2,323,916 | 2,429,834 |
Cost of shares redeemed | (131,144,979) | (139,120,153) |
Net increase (decrease) in net assets resulting from share transactions | 9,225,960 | 10,633,431 |
Redemption fees | 104,185 | 72,847 |
Total increase (decrease) in net assets | (7,956,483) | 21,968,516 |
Net Assets | ||
Beginning of period | 103,926,801 | 81,958,285 |
End of period (including undistributed net investment income of $30,042 and undistributed net investment income of $58,316, respectively) | $95,970,318 | $103,926,801 |
Other Information Shares | ||
Sold | 2,677,323 | 3,256,955 |
Issued in reinvestment of distributions | 45,239 | 54,997 |
Redeemed | (2,698,231) | (3,190,130) |
Net increase (decrease) | 24,331 | 121,822 |
Financial Highlights
Six months ended | Years ended February 28, | |||||
(Unaudited) | 2006 | 2005 | 2004 H | 2003 | 2002 | |
Selected Per-Share Data | ||||||
Net asset value, beginning of period | $50.22 | $42.08 | $32.84 | $22.80 | $30.95 | $29.20 |
Income from Investment Operations | ||||||
Net investment income (loss) E | .02 | .17 | .20 F | (.12) | (.18) | (.06) |
Net realized and unrealized gain (loss) | (3.41) | 8.99 | 9.24 | 10.13 | (8.02) | 1.99 |
Total from investment operations | (3.39) | 9.16 | 9.44 | 10.01 | (8.20) | 1.93 |
Distributions from net investment income | (.02) | (.10) | (.11) | - | - | - |
Distributions from net realized gain | (1.01) | (.96) | (.13) | - | - | (.23) |
Total distributions | (1.03) | (1.06) | (.24) | - | - | (.23) |
Redemption fees added to paid in capital E | .04 | .04 | .04 | .03 | .05 | .05 |
Net asset value, end of period | $45.84 | $50.22 | $42.08 | $32.84 | $22.80 | $30.95 |
Total Return B, C, D | (6.89)% | 22.24% | 28.86% | 44.04% | (26.33)% | 6.85% |
Ratios to Average Net Assets G | ||||||
Expenses before reductions | 1.06% A | 1.13% | 1.17% | 1.57% | 1.77% | 1.44% |
Expenses net of fee waivers, if any | 1.06% A | 1.13% | 1.17% | 1.57% | 1.77% | 1.44% |
Expenses net of all reductions | 1.06% A | 1.11% | 1.14% | 1.53% | 1.75% | 1.40% |
Net investment income (loss) | .07% A | .40% | .53% F | (.40)% | (.67)% | (.21)% |
Supplemental Data | ||||||
Net assets, end of period (000 omitted) | $95,970 | $103,927 | $81,958 | $37,583 | $21,820 | $71,526 |
Portfolio turnover rate | 151% A | 142% | 148% | 86% | 47% | 155% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the former sales charges. E Calculated based on average shares outstanding during the period. F Investment income per share reflects a special dividend which amounted to $.09 per share and an in-kind dividend received in a corporate reorganization which amounted to $.08 per share. Excluding these dividends, the ratio of net investment income to average net assets would have been .06%. G Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. H For the year ended February 29. | ||||||
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Notes to Financial Statements
For the period ended August 31, 2006 (Unaudited)
1. Significant Accounting Policies.
Air Transportation Portfolio, Automotive Portfolio, Chemicals Portfolio, Construction and Housing Portfolio, Defense and Aerospace Portfolio, Environmental Portfolio, Industrials Portfolio, Industrial Equipment Portfolio, Materials Portfolio, and Transportation Portfolio (the Funds) are non-diversified funds of Fidelity Select Portfolios (the trust). On April 20, 2006, the Board of Trustees approved changes to the names of Cyclical Industries Portfolio and Industrial Materials Portfolio to Industrials Portfolio and Materials Portfolio effective October 1, 2006. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Funds invest primarily in securities of companies whose principal business activities fall within specific industries. Each Fund is authorized to issue an unlimited number of shares. Certain Funds may invest in affiliated money market central funds (Money Market Central Funds), which are open-end investment companies available to investment companies and other accounts managed by Fidelity Management & Research Company (FMR), and its affiliates. The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. The following summarizes the significant accounting policies of the Funds:
Security Valuation. Investments are valued and net asset value (NAV) per share is calculated (NAV calculation) as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time. During the period each Fund also calculated a NAV each hour on the hour (commencing at 10:00 a.m. Eastern time until one hour prior to the close of business on the NYSE). Effective October 1, 2006, each Fund will eliminate the hourly NAV calculation.
Wherever possible, each Fund uses independent pricing services approved by the Board of Trustees to value its investments. Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price. Investments in open-end mutual funds are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or do not accurately reflect fair value, valuations may be determined in accordance with procedures adopted by the Board of Trustees. For example, when developments occur between the close of a market and the close of the NYSE that may materially affect the value of some or all of the securities, or when trading in a security is halted, those securities may be fair valued. Factors used in the determination of fair value may include monitoring news to identify significant market or security specific events such as changes in the value of U.S. securities markets, reviewing developments in foreign markets and evaluating the performance of ADRs, futures contracts and exchange-traded funds. Because each Fund's utilization of fair value pricing depends on market activity, the frequency with which fair value pricing is used can not be predicted and may be utilized to a significant extent. The value of securities used for NAV calculation under fair value pricing may differ from published prices for the same securities.
Foreign Currency. Certain Funds may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. Security transactions are accounted for as of trade date. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Funds are informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Funds estimate the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income is accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
1. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders. Each year, each Fund intends to qualify as a regulated investment company by distributing all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code. As a result, no provision for income taxes is required in the accompanying financial statements. Foreign taxes are provided for based on each Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. In addition, certain Funds claimed a portion of the payment made to redeeming shareholders as a distribution for income tax purposes.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to short-term capital gains, foreign currency transactions, certain foreign taxes, passive foreign investment companies (PFIC), deferred trustees compensation, net operating losses, capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.
The federal tax cost of investments and unrealized appreciation (depreciation) as of period end were as follows for each Fund:
Cost for | Unrealized | Unrealized | Net Unrealized | |
Air Transportation Portfolio | $78,604,955 | $15,134,607 | $(4,015,717) | $11,118,890 |
Automotive Portfolio | 17,127,510 | 483,898 | (1,303,504) | (819,606) |
Chemicals Portfolio | 70,718,214 | 20,603,194 | (4,616,668) | 15,986,526 |
Construction and Housing Portfolio | 158,720,249 | 26,362,270 | (9,073,954) | 17,288,316 |
Defense and Aerospace Portfolio | 778,957,026 | 195,903,629 | (40,265,087) | 155,638,542 |
Environmental Portfolio | 62,059,393 | 3,606,347 | (3,806,582) | (200,235) |
Industrials Portfolio | 59,694,271 | 9,423,805 | (2,648,024) | 6,775,781 |
Industrial Equipment Portfolio | 68,230,791 | 13,855,206 | (2,739,220) | 11,115,986 |
Materials Portfolio | 206,602,106 | 25,018,559 | (12,760,916) | 12,257,643 |
Transportation Portfolio | 89,600,269 | 22,172,049 | (5,888,006) | 16,284,043 |
Trading (Redemption) Fees. Shares in the Funds held less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, including any estimated redemption fees paid by FMR are retained by the Fund and accounted for as an addition to paid in capital. Shareholders are also subject to an additional $7.50 fee for shares exchanged into another Fidelity fund (see Note 4).
New Accounting Pronouncements. In July 2006, Financial Accounting Standards Board Interpretation No. 48, Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement 109 (FIN 48), was issued and is effective for fiscal years beginning after December 15, 2006. FIN 48 sets forth a threshold for financial statement recognition, measurement and disclosure of a tax position taken or expected to be taken on a tax return. Management is currently evaluating the impact, if any, the adoption of FIN 48 will have on the Funds' net assets and results of operations and financial statement disclosures.
In addition, in September 2006, Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157), was issued and is effective for fiscal years beginning after November 15, 2007. SFAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. Management is currently evaluating the impact the adoption of SFAS 157 will have on the Funds' financial statement disclosures.
2. Operating Policies.
Repurchase Agreements. FMR has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits certain Funds and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts which are then invested in repurchase agreements. Certain Funds may also invest directly with institutions in repurchase agreements. Repurchase agreements are collateralized by government or non-government securities. Upon settlement date, collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. Each applicable Fund monitors, on a daily basis, the value of the collateral to ensure it is at least equal to the principal amount of the repurchase agreement (including accrued interest). In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the value of the collateral may decline.
Restricted Securities. Certain Funds may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities is included at the end of each applicable Fund's Schedule of Investments.
Semiannual Report
3. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, are noted in the table below.
Purchases ($) | Sales ($) | |
Air Transportation Portfolio | 92,666,505 | 126,827,822 |
Automotive Portfolio | 16,545,392 | 16,409,864 |
Chemicals Portfolio | 19,788,966 | 48,790,043 |
Construction and Housing Portfolio | 37,398,918 | 92,013,759 |
Defense and Aerospace Portfolio | 348,493,473 | 282,757,734 |
Environmental Portfolio | 132,953,578 | 117,130,766 |
Industrials Portfolio | 84,023,317 | 96,581,107 |
Industrial Equipment Portfolio | 51,156,445 | 38,318,069 |
Materials Portfolio | 201,421,323 | 158,585,684 |
Transportation Portfolio | 95,866,172 | 86,793,659 |
4. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the Funds with investment management related services for which the Funds pay a monthly management fee. The management fee is the sum of an individual fund fee rate and a group fee rate. The individual fund fee rate is applied to each Fund's average net assets. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, each Fund's annualized management fee rate expressed as a percentage of each Fund's average net assets was as follows:
Individual Rate | Group Rate | Total | |
Air Transportation Portfolio | .30% | .27% | .57% |
Automotive Portfolio | .30% | .27% | .57% |
Chemicals Portfolio | .30% | .27% | .57% |
Construction and Housing Portfolio | .30% | .27% | .57% |
Defense and Aerospace Portfolio | .30% | .27% | .57% |
Environmental Portfolio | .30% | .27% | .57% |
Industrials Portfolio | .30% | .27% | .57% |
Industrial Equipment Portfolio | .30% | .27% | .57% |
Materials Portfolio | .30% | .27% | .57% |
Transportation Portfolio | .30% | .27% | .57% |
Transfer Agent Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, is the Funds' transfer, dividend disbursing and shareholder servicing agent. FSC receives account fees and asset-based fees that vary according to account size and type of account. FSC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, the transfer agent fees were equivalent to the following annualized rates expressed as a percentage of average net assets:
Air Transportation Portfolio | .28% | |
Automotive Portfolio | .38% | |
Chemicals Portfolio | .36% | |
Construction and Housing Portfolio | .36% | |
Defense and Aerospace Portfolio | .30% | |
Environmental Portfolio | .34% | |
Industrials Portfolio | .33% | |
Industrial Equipment Portfolio | .27% | |
Materials Portfolio | .31% | |
Transportation Portfolio | .33% |
Accounting and Security Lending Fees. FSC maintains each Fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Affiliated Central Funds. Certain Funds may invest in Money Market Central Funds which seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
The Money Market Central Funds do not pay a management fee.
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
4. Fees and Other Transactions with Affiliates - continued
Exchange Fees. During the period, FSC received the proceeds of a $7.50 fee to cover administrative costs associated with exchanges out of the Funds to any other Fidelity Select fund or to any other Fidelity fund made through non-automated channels. Effective October 1, 2006, the exchange fees will be eliminated. For the period, exchange fees retained by FSC were as follows:
Retained | |
Air Transportation Portfolio | $2,483 |
Automotive Portfolio | 143 |
Chemicals Portfolio | 690 |
Construction and Housing Portfolio | 3,143 |
Defense and Aerospace Portfolio | 3,428 |
Environmental Portfolio | 1,358 |
Industrials Portfolio | 443 |
Industrial Equipment Portfolio | 443 |
Materials Portfolio | 2,873 |
Transportation Portfolio | 1,508 |
Brokerage Commissions. Certain Funds placed a portion of their portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were as follows:
Amount | |
Air Transportation Portfolio | $2,573 |
Automotive Portfolio | 1,290 |
Chemicals Portfolio | 355 |
Construction and Housing Portfolio | 142 |
Defense and Aerospace Portfolio | 7,193 |
Environmental Portfolio | 2,109 |
Industrials Portfolio | 944 |
Industrial Equipment Portfolio | 1,637 |
Materials Portfolio | 483 |
Transportation Portfolio | 1,912 |
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Funds, along with other registered investment companies having management contracts with FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the Funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. Each applicable fund's activity in this program during the period for which loans were outstanding was as follows:
Borrower or | Average | Weighted | Interest | |
Air Transportation Portfolio | Borrower | $4,368,333 | 5.15% | $3,749 |
Chemicals Portfolio | Borrower | 6,874,800 | 4.64% | 4,428 |
Environmental Portfolio | Borrower | 12,292,000 | 5.12% | 3,499 |
Industrials Portfolio | Borrower | 5,517,500 | 5.16% | 1,581 |
Materials Portfolio | Borrower | 7,629,000 | 5.17% | 2,189 |
Semiannual Report
5. Committed Line of Credit.
Certain Funds participate with other funds managed by FMR in a $4.2 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The participating funds have agreed to pay commitment fees on their pro rata portion of the line of credit, which is reflected in Miscellaneous Expense on the Statement of Operations, and is as follows:
Air Transportation Portfolio | $152 |
Automotive Portfolio | 25 |
Chemicals Portfolio | 151 |
Construction and Housing Portfolio | 329 |
Defense and Aerospace Portfolio | 1,282 |
Environmental Portfolio | 111 |
Industrials Portfolio | 125 |
Industrial Equipment Portfolio | 111 |
Materials Portfolio | 262 |
Transportation Portfolio | 150 |
During the period, there were no borrowings on this line of credit.
6. Security Lending.
Certain Funds lend portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, each applicable Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Funds and any additional required collateral is delivered to the Funds on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on each applicable Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented on each applicable Fund's Statement of Operations as a component of income from affiliated central funds.
7. Bank Borrowings.
Each Fund is permitted to have bank borrowings for temporary or emergency purposes to fund shareholder redemptions. Each Fund has established borrowing arrangements with certain banks. The interest rate on the borrowings is the bank's base rate, as revised from time to time. At period end, there were no bank borrowings outstanding. Each applicable Fund's activity in this program during the period for which loans were outstanding was as follows:
Average Daily | Weighted Average | |
Environmental Portfolio | $8,662,667 | 5.26% |
Industrials Portfolio | 19,882,800 | 5.56% |
8. Expense Reductions.
FMR voluntarily agreed to reimburse funds to the extent annual operating expenses exceeded certain levels of average net assets as noted in the table below. Some expenses, for example interest expense, are excluded from this reimbursement.
The following funds were in reimbursement during the period:
Expense | Reimbursement | |
Automotive Portfolio | 1.25% | $37,664 |
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
8. Expense Reductions - continued
Many of the brokers with whom FMR places trades on behalf of certain Funds provided services to these Funds in addition to trade execution. These services included payments of expenses on behalf of each applicable Fund. In addition, through arrangements with each applicable fund's custodian and transfer agent, credits realized as a result of uninvested cash balances were used to reduce each applicable fund's expenses. All of the applicable expense reductions are noted in the table below.
Brokerage | Transfer Agent | |
Air Transportation Portfolio | $6,252 | $135 |
Automotive Portfolio | 1,617 | - |
Chemicals Portfolio | - | 605 |
Construction and Housing Portfolio | 4,960 | 1,534 |
Defense and Aerospace Portfolio | 12,207 | 6,615 |
Environmental Portfolio | 10,921 | 60 |
Industrials Portfolio | 3,652 | 1,628 |
Industrial Equipment Portfolio | 1,435 | 236 |
Materials Portfolio | 38,736 | 316 |
Transportation Portfolio | 2,554 | 343 |
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.
10. Litigation.
In October 2002, a lawsuit was commenced against Construction and Housing Portfolio and numerous other defendants as a defendants' class action suit by the Chapter 11 estate of Owens Corning. The Owens Corning estate alleges that 16 dividend payments made by Owens Corning between 1996 and the filing of Owens Corning's petition for Chapter 11 relief in October 2000 were fraudulent conveyances and, thus, the Owens Corning estate seeks to recover those dividends. During this period Construction and Housing Portfolio received dividends in the amount of $42,780.
On September 26, 2006, the Bankruptcy Court for the District of Delaware approved Owens Corning's Plan of Reorganization. This lawsuit will be dismissed when the Plan of Reorganization becomes effective on or about October 30, 2006.
Semiannual Report
Proxy Voting Results
A special meeting of Fidelity Select Portfolios' shareholders was held on September 20, 2006. The results of votes taken among shareholders on the proposals before them are reported below. Each vote reported represents one dollar of net asset value held on the record date for the meeting.
PROPOSAL 1 | ||
To elect a Board of Trustees. A | ||
# of | % of | |
Dennis J. Dirks | ||
Affirmative | 13,182,341,755.09 | 94.980 |
Withheld | 696,736,162.41 | 5.020 |
TOTAL | 13,879,077,917.50 | 100.000 |
Albert R. Gamper, Jr. | ||
Affirmative | 13,177,593,614.43 | 94.946 |
Withheld | 701,484,303.07 | 5.054 |
TOTAL | 13,879,077,917.50 | 100.000 |
Robert M. Gates | ||
Affirmative | 13,141,235,622.81 | 94.684 |
Withheld | 737,842,294.69 | 5.316 |
TOTAL | 13,879,077,917.50 | 100.000 |
George H. Heilmeier | ||
Affirmative | 13,140,073,210.00 | 94.675 |
Withheld | 739,004,707.50 | 5.325 |
TOTAL | 13,879,077,917.50 | 100.000 |
Edward C. Johnson 3d | ||
Affirmative | 13,106,284,587.54 | 94.432 |
Withheld | 772,793,329.96 | 5.568 |
TOTAL | 13,879,077,917.50 | 100.000 |
Stephen P. Jonas | ||
Affirmative | 13,168,282,872.88 | 94.879 |
Withheld | 710,795,044.62 | 5.121 |
TOTAL | 13,879,077,917.50 | 100.000 |
James H. KeyesB | ||
Affirmative | 13,164,603,089.66 | 94.852 |
Withheld | 714,474,827.84 | 5.148 |
TOTAL | 13,879,077,917.50 | 100.000 |
Marie L. Knowles | ||
Affirmative | 13,169,356,779.66 | 94.886 |
Withheld | 709,721,137.84 | 5.114 |
TOTAL | 13,879,077,917.50 | 100.000 |
Ned C. Lautenbach | ||
Affirmative | 13,166,485,155.52 | 94.866 |
Withheld | 712,592,761.98 | 5.134 |
TOTAL | 13,879,077,917.50 | 100.000 |
William O. McCoy | ||
Affirmative | 13,129,548,996.59 | 94.600 |
Withheld | 749,528,920.91 | 5.400 |
TOTAL | 13,879,077,917.50 | 100.000 |
Robert L. Reynolds | ||
Affirmative | 13,180,813,649.06 | 94.969 |
Withheld | 698,264,268.44 | 5.031 |
TOTAL | 13,879,077,917.50 | 100.000 |
# of | % of | |
Cornelia M. Small | ||
Affirmative | 13,170,500,616.42 | 94.895 |
Withheld | 708,577,301.08 | 5.105 |
TOTAL | 13,879,077,917.50 | 100.000 |
William S. Stavropoulos | ||
Affirmative | 13,143,284,328.22 | 94.699 |
Withheld | 735,793,589.28 | 5.301 |
TOTAL | 13,879,077,917.50 | 100.000 |
Kenneth L. Wolfe | ||
Affirmative | 13,162,946,758.47 | 94.840 |
Withheld | 716,131,159.03 | 5.160 |
TOTAL | 13,879,077,917.50 | 100.000 |
PROPOSAL 3A, 6A, 8A | ||
To modify the fund's fundamental "invests primarily" policy (the investment policy concerning the fund's primary investments). | ||
Industrials Portfolio | ||
# of | % of | |
Affirmative | 30,619,544.53 | 88.165 |
Against | 2,307,189.64 | 6.643 |
Abstain | 814,036.55 | 2.344 |
Broker Non-Votes | 989,077.44 | 2.848 |
TOTAL | 34,729,848.16 | 100.000 |
Materials Portfolio | ||
# of | % of | |
Affirmative | 108,411,437.40 | 81.739 |
Against | 7,936,411.09 | 5.983 |
Abstain | 5,272,593.97 | 3.976 |
Broker Non-Votes | 11,011,327.60 | 8.302 |
TOTAL | 132,631,770.06 | 100.000 |
Construction and Housing Portfolio | ||
# of | % of | |
Affirmative | 73,567,140.71 | 82.331 |
Against | 6,217,844.92 | 6.959 |
Abstain | 3,955,488.54 | 4.426 |
Broker Non-Votes | 5,614,725.82 | 6.284 |
TOTAL | 89,355,199.99 | 100.000 |
PROPOSAL 3B, 6B, 8B | ||
To modify the fund's investment concentration policy. | ||
Industrials Portfolio | ||
# of | % of | |
Affirmative | 30,585,896.92 | 88.068 |
Against | 2,358,363.88 | 6.791 |
Abstain | 796,509.92 | 2.293 |
Broker Non-Votes | 989,077.44 | 2.848 |
TOTAL | 34,729,848.16 | 100.000 |
Materials Portfolio | ||
# of | % of | |
Affirmative | 108,476,307.14 | 81.788 |
Against | 7,596,656.39 | 5.727 |
Abstain | 5,547,478.93 | 4.183 |
Broker Non-Votes | 11,011,327.60 | 8.302 |
TOTAL | 132,631,770.06 | 100.000 |
Construction and Housing Portfolio | ||
# of | % of | |
Affirmative | 72,316,588.92 | 80.931 |
Against | 6,462,062.23 | 7.231 |
Abstain | 4,961,822.98 | 5.554 |
Broker Non-Votes | 5,614,725.86 | 6.284 |
TOTAL | 89,355,199.99 | 100.000 |
ADenotes trust-wide proposal and voting results. BEffective on or about January 1, 2007. | ||
Semiannual Report
Board Approval of Investment Advisory Contracts and Management Fees
Select Air Transportation
Select Automotive
Select Chemicals
Select Construction and Housing
Select Industrials (formerly known as Select Cyclical Industries)
Select Defense and Aerospace
Select Environmental
Select Industrial Equipment
Select Materials (formerly known as Select Industrial Materials)
Select Transportation
Each year, typically in July, the Board of Trustees, including the Independent Trustees (together, the Board), votes on the renewal of the management contract and sub-advisory agreements (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 throughout the year.
The Board meets regularly each month except August and takes into account throughout the year matters bearing on Advisory Contracts. The Board, acting directly and through its separate committees, considers at each of its meetings factors that are relevant to the annual renewal of each fund's Advisory Contracts, including the services and support provided to each fund and its shareholders. At the time of the renewal, the Board had 12 standing committees, each composed of 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. Each committee has adopted a written charter outlining the structure and purposes of the committee. One such committee, the Equity Contract Committee, meets periodically as needed throughout the year to consider matters specifically related to the annual renewal of Advisory Contracts. The committee requests and receives information on, and makes recommendations to the Independent Trustees concerning, the approval and annual review of the Advisory Contracts.
At its July 2006 meeting, the Board of Trustees, including the Independent Trustees, unanimously determined to renew the Advisory Contracts for each fund. 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 the management fee and total expenses of each fund; (iii) the total costs of the services to be provided by and the profits to be realized by the investment adviser and its affiliates from the relationship with each fund; (iv) the extent to which economies of scale 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 determining whether to renew the Advisory Contracts for each fund, the Board ultimately reached a determination, with the assistance of fund counsel and Independent Trustees' counsel, that the renewal of the Advisory Contracts and the compensation to be received by Fidelity under the management contracts is consistent with Fidelity's fiduciary duty under applicable law. In addition to evaluating the specific factors noted above, the Board, in reaching its determination, is aware that shareholders in each fund have a broad range of investment choices available to them, including a wide choice among mutual funds offered by competitors to Fidelity, and that each fund's shareholders, with 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, managed by Fidelity.
Nature, Extent, and Quality of Services Provided. The Board considered staffing within the investment adviser, FMR, and the sub-advisers (together, the Investment Advisers), including the backgrounds of the funds' portfolio managers and the funds' investment objectives and disciplines. 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.
Resources Dedicated to Investment Management and Support Services. The Board reviewed the size, education, and experience of the Investment Advisers' investment staff, their use of technology, and the Investment Advisers' approach to recruiting, training, and retaining portfolio managers and other research, advisory, and management personnel. The Board considered Fidelity's extensive global research capabilities that enable the Investment Advisers to aggregate data from various sources in an effort to produce positive investment results. The Board noted that Fidelity's analysts have access to a variety of technological tools that enable them to perform both fundamental and quantitative analysis and to specialize in various disciplines. The Board also considered that Fidelity's portfolio managers and analysts have access to daily portfolio attribution that allows for monitoring of a fund's portfolio, as well as an electronic communication system that provides immediate real-time access to research concerning issuers and credit enhancers.
Shareholder and Administrative Services. The Board considered (i) the nature, extent, quality, and cost of administrative, distribution, 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 Investment Advisers' 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 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 also considered that Fidelity voluntarily pays for market data out of its own resources.
Semiannual Report
Board Approval of Investment Advisory Contracts and Management Fees - continued
The Board noted that the growth of fund assets 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 phone representatives and over the Internet, and investor education materials and asset allocation tools.
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 for a large variety of mutual fund investor services. The Board noted that, since the last Advisory Contract renewals in July 2005, Fidelity has taken a number of actions that benefited particular funds, including (i) dedicating additional resources to investment research and to restructure the investment research teams; (ii) voluntarily entering into contractual arrangements with certain brokers pursuant to which Fidelity pays for research products and services separately out of its own resources, rather than bundling with fund commissions; (iii) launching the Fidelity Advantage Class of its five Spartan stock index funds and three Spartan bond index funds, which is a lower-fee class available to shareholders with higher account balances; (iv) contractually agreeing to impose expense limitations on Fidelity U.S. Bond Index Fund and reducing the fund's initial investment minimum; and (v) offering shareholders of each of the Fidelity Institutional Money Market Funds the privilege of exchanging shares of the fund for shares of other Fidelity funds.
Investment Performance and Compliance. The Board considered whether each fund has operated within its investment objective, as well as its record of compliance with its investment restrictions. It also reviewed each fund's absolute investment performance, as well as each fund's relative investment performance measured against (i) a proprietary custom index (or a Goldman Sachs index that reflects the market sector in which the fund invests, in the case of Industrials Portfolio), and (ii) a peer group of mutual funds over multiple periods. For each fund, the following charts considered by the Board show, over the one-, three-, and five-year periods ended December 31, 2005, the fund's cumulative total returns, the cumulative total returns of a proprietary custom index (or a Goldman Sachs index, in the case of Industrials Portfolio) ("benchmark"), and a range of cumulative total returns of a peer group of mutual funds identified by Lipper Inc. as having an investment objective similar to that of the fund. The box within each chart shows the 25th percentile return (bottom of box) and the 75th percentile return (top of box) of the Lipper peer group. Returns shown above the box are in the first quartile and returns shown below the box are in the fourth quartile. The percentage beaten number noted below each chart corresponds to the percentile box and represents the percentage of funds in the Lipper peer group whose performance was equal to or lower than that of the fund. For each fund (other than Industrials Portfolio), the fund's proprietary custom index is an index developed and periodically revised by FMR that is a market-capitalization weighted index of securities that meet the fund's 80% name test.
Air Transportation Portfolio
The Board reviewed the fund's relative investment performance against its Lipper peer group and stated that the performance of the fund was in the first quartile for the one- and three-year periods and the third quartile for the five-year period. The Board noted that FMR does not consider that Lipper peer group to be a meaningful comparison for the fund, however, because the peer group includes funds that focus on different industries and sectors than the fund. The Board also stated that the relative investment performance of the fund compared favorably to its benchmark for all the periods shown.
Semiannual Report
Automotive Portfolio
The Board reviewed the fund's relative investment performance against its Lipper peer group and stated that the performance of the fund was in the fourth quartile for the one-year period, the third quartile for the three-year period, and the first quartile for the five-year period. The Board noted that FMR does not consider that Lipper peer group to be a meaningful comparison for the fund, however, because the peer group includes funds that focus on different industries and sectors than the fund. The Board also stated that the relative investment performance of the fund compared favorably to its benchmark for the one- and five-year periods, although the fund's three-year cumulative total return was lower than its benchmark.
Chemicals Portfolio
The Board reviewed the fund's relative investment performance against its Lipper peer group and stated that the performance of the fund was in the third quartile for the one-year period and the first quartile for the three- and five-year periods. The Board noted that FMR does not consider that Lipper peer group to be a meaningful comparison for the fund, however, because the peer group includes funds that focus on different industries and sectors than the fund. The Board also stated that the relative investment performance of the fund compared favorably to its benchmark for all the periods shown.
Semiannual Report
Board Approval of Investment Advisory Contracts and Management Fees - continued
Construction and Housing Portfolio
The Board reviewed the fund's relative investment performance against its Lipper peer group and stated that the performance of the fund was in the first quartile for all the periods shown. The Board noted that FMR does not consider that Lipper peer group to be a meaningful comparison for the fund, however, because the peer group includes funds that focus on different industries and sectors than the fund. The Board also stated that the relative investment performance of the fund compared favorably to its benchmark for all the periods shown.
Industrials Portfolio
The Board reviewed the fund's relative investment performance against its Lipper peer group and stated that the performance of the fund was in the first quartile for all the periods shown. The Board noted that FMR does not consider that Lipper peer group to be a meaningful comparison for the fund, however, because the peer group includes funds that focus on different industries and sectors than the fund. The Board also stated that the relative investment performance of the fund compared favorably to its benchmark for all the periods shown.
Semiannual Report
Defense and Aerospace Portfolio
The Board reviewed the fund's relative investment performance against its Lipper peer group and stated that the performance of the fund was in the first quartile for all the periods shown. The Board noted that FMR does not consider that Lipper peer group to be a meaningful comparison for the fund, however, because the peer group includes funds that focus on different industries and sectors than the fund. The Board also stated that the relative investment performance of the fund compared favorably to its benchmark for the one- and five-year periods, although the fund's three-year cumulative total return was lower than its benchmark.
Environmental Portfolio
The Board reviewed the fund's relative investment performance against its Lipper peer group and stated that the performance of the fund was in the first quartile for the one-year period and the third quartile for the three- and five-year periods. The Board noted that FMR does not consider that Lipper peer group to be a meaningful comparison for the fund, however, because the peer group includes funds that focus on different industries and sectors than the fund. The Board also stated that the relative investment performance of the fund compared favorably to its benchmark for all the periods shown.
Semiannual Report
Board Approval of Investment Advisory Contracts and Management Fees - continued
Industrial Equipment Portfolio
The Board reviewed the fund's relative investment performance against its Lipper peer group and stated that the performance of the fund was in the second quartile for all the periods shown. The Board noted that FMR does not consider that Lipper peer group to be a meaningful comparison for the fund, however, because the peer group includes funds that focus on different industries and sectors than the fund. The Board also stated that the relative investment performance of the fund was lower than its benchmark for the three- and five-year periods, although the fund's one-year cumulative total return compared favorably to its benchmark.
Materials Portfolio
The Board reviewed the fund's relative investment performance against its Lipper peer group and stated that the performance of the fund was in the first quartile for all the periods shown. The Board noted that FMR does not consider that Lipper peer group to be a meaningful comparison for the fund, however, because the peer group includes funds that focus on different industries and sectors than the fund. The Board also stated that the relative investment performance of the fund compared favorably to its benchmark for all the periods shown.
Semiannual Report
Transportation Portfolio
The Board reviewed the fund's relative investment performance against its Lipper peer group and stated that the performance of the fund was in the first quartile for all the periods shown. The Board noted that FMR does not consider that Lipper peer group to be a meaningful comparison for the fund, however, because the peer group includes funds that focus on different industries and sectors than the fund. The Board also stated that the relative investment performance of the fund compared favorably to its benchmark for all the periods shown.
The Board considered that FMR has taken steps to refocus and strengthen equity research, equity portfolio management, and compliance. The Board noted with favor FMR's reorganization of its senior management team in 2005 and FMR's dedication of additional resources to investment research, and participated in the process that led to those changes.
Based on its review, and giving particular weight to the nature and quality of the resources dedicated by the Investment Advisers to maintain and improve relative performance, the Board concluded that the nature, extent, and quality of the services provided to each fund will benefit each fund's shareholders, particularly in light of the Board's view that each fund's shareholders benefit from investing in a fund that is part of a large family of funds offering a variety of investment disciplines and services.
Competitiveness of Management Fee and Total Fund Expenses. The Board considered each fund's management fee and total expenses compared to "mapped groups" of competitive funds and classes. Fidelity creates "mapped groups" by combining similar Lipper investment objective categories that have comparable management fee characteristics. Combining Lipper investment objective categories aids the Board's management fee and total expense comparisons by broadening the competitive group used for comparison and by reducing the number of universes to which various Fidelity funds are compared.
The Board considered two proprietary management fee comparisons for the 12-month periods 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" and, for the reasons explained above, is broader than the Lipper peer group used by the Board for performance comparisons. The Total Mapped Group comparison focuses on a fund's standing relative to the total universe of comparable funds available to investors, in terms of gross management fees before expense reimbursements or caps. "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 TMG % of 4% means that 96% of the funds in the Total Mapped Group had higher management fees than a fund. The "Asset-Size Peer Group" (ASPG) comparison focuses on a fund's standing relative to non-Fidelity funds similar in size to the fund within the Total Mapped Group. The ASPG represents at least 15% of the funds in the Total Mapped Group with comparable asset size and management fee characteristics, 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 ranked, is also included in the charts and considered by the Board.
Semiannual Report
Board Approval of Investment Advisory Contracts and Management Fees - continued
Air Transportation Portfolio
Automotive Portfolio
Semiannual Report
Chemicals Portfolio
Construction and Housing Portfolio
Semiannual Report
Board Approval of Investment Advisory Contracts and Management Fees - continued
Industrials Portfolio
Defense and Aerospace Portfolio
Semiannual Report
Environmental Portfolio
Industrial Equipment Portfolio
Semiannual Report
Board Approval of Investment Advisory Contracts and Management Fees - continued
Materials Portfolio
Transportation Portfolio
The Board noted that each fund's management fee ranked below the median of its Total Mapped Group and below the median of its ASPG for 2005.
Based on its review, the Board concluded that each fund's management fee was fair and reasonable in light of the services that the fund receives and the other factors considered.
In its review of each fund's total expenses, 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 the effects of any waivers and reimbursements on fees and expenses. As part of its review, the Board also considered current and historical total expenses 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 expenses ranked below its competitive median for 2005.
In its review of total expenses, the Board also considered Fidelity fee structures and other information on clients that FMR and its affiliates service in other competitive markets, such as other mutual funds advised or subadvised by FMR or its affiliates, pension plan clients, and other institutional clients.
Semiannual Report
Based on its review, the Board concluded that each fund's total expenses were 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 each fund and its shareholders. The Board also considered the level of Fidelity's profits in respect of all the Fidelity funds.
On an annual basis, FMR presents to the Board Fidelity's profitability for each fund. Fidelity calculates the profitability for each fund, as well as aggregate profitability for groups of Fidelity funds and all Fidelity funds, using a series of detailed revenue and cost allocation methodologies which originate with the audited books and records of Fidelity. The Audit Committee of the Board reviews any significant changes from the prior year's methodologies.
PricewaterhouseCoopers LLP (PwC), independent registered 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 results of Fidelity's profitability analysis. 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 surrounding the mathematical accuracy of fund profitability and its conformity to allocation methodologies. After considering PwC's reports issued under the engagement and information provided by Fidelity, the Board believes that while other allocation methods may also be reasonable, Fidelity's profitability methodologies are reasonable in all material respects.
The Board has also reviewed Fidelity's non-fund businesses and any 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 determined that the amount of profit is a fair entrepreneurial profit for the management of each fund.
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 through increased services to the fund, through waivers or reimbursements, or through fee or expense reductions, including reductions that occur through operation of the transfer agent agreement. The transfer agent fee varies in part based on the number of accounts in each fund. If the number of accounts decreases or the average account size increases, the overall transfer agent fee rate decreases.
The Board recognized that each fund's management contract incorporates a "group fee" structure, which provides for lower fee rates as total fund assets under FMR's management increase, and for higher fee rates as total fund assets under FMR's management decrease. The Board considered that the group fee is designed to deliver the benefits of economies of scale to fund shareholders when total fund 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 achieve a certain level of economies of scale as assets under FMR's management increase at the fund complex level, regardless of whether Fidelity achieves any such economies of scale.
The Board further concluded that any potential economies of scale are being shared between fund shareholders and Fidelity in an appropriate manner.
Additional Information Requested by the Board. In order to develop fully the factual basis for consideration of the Advisory Contracts, the Board requested additional information on several topics, including (i) Fidelity's fund profitability methodology and profitability trends within certain funds; (ii) portfolio manager compensation; (iii) the extent to which any economies of scale exist and are shared between the funds and Fidelity; (iv) the total expenses of certain funds and classes relative to competitors, including the extent to which the expenses of certain funds have been or could be capped; (v) fund performance trends; and (vi) Fidelity's fee structures, including use of performance fees.
Based on its evaluation of all of the conclusions noted above, and after considering all material factors, the Board ultimately concluded that the advisory fee structures are fair and reasonable, and that each fund's Advisory Contracts should be renewed.
Semiannual Report
Managing Your Investments
Fidelity offers several ways to conveniently manage your personal investments via your telephone or PC. You can access your account information, conduct trades and research your investments 24 hours a day.
By Phone
Fidelity Automated Service Telephone provides a single toll-free number to access account balances, positions, quotes and trading. It's easy to navigate the service, and on your first call, the system will help you create a personal identification number (PIN) for security.
(phone_graphic)
Fidelity Automated Service Telephone (FAST®)
1-800-544-5555
Press
1 For mutual fund and brokerage trading.
2 For quotes.*
3 For account balances and holdings.
4 To review orders and mutual fund activity.
5 To change your PIN.
*0 To speak to a Fidelity representative.
By PC
Fidelity's web site on the Internet provides a wide range of information, including daily financial news, fund performance, interactive planning tools and news about Fidelity products and services.
(computer_graphic)
Fidelity's Web Site
www.fidelity.com
* When you call the quotes line, please remember that a fund's yield and return will vary and, except for money market funds, share price will also vary. This means that you may have a gain or loss when you sell your shares. There is no assurance that money market funds will be able to maintain a stable $1 share price; an investment in a money market fund is not insured or guaranteed by the U.S. government. Total returns are historical and include changes in share price, reinvestment of dividends and capital gains, and the effects of any sales charges.
Semiannual Report
To Write Fidelity
We'll give your correspondence immediate attention and send you written confirmation upon completion of your request.
(letter_graphic)
Making Changes
To Your Account
(such as changing name, address, bank, etc.)
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0002
(letter_graphic)
For Non-Retirement
Accounts
Buying shares
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003
Overnight Express
Fidelity Investments
Attn: Distribution Services
100 Crosby Parkway - KC1H
Covington, KY 41015
Selling shares
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0035
Overnight Express
Fidelity Investments
Attn: Distribution Services
100 Crosby Parkway - KC1H
Covington, KY 41015
General Correspondence
Fidelity Investments
P.O. Box 500
Merrimack, NH 03054-0500
(letter_graphic)
For Retirement
Accounts
Buying shares
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003
Selling shares
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0035
Overnight Express
Fidelity Investments
Attn: Distribution Services
100 Crosby Parkway - KC1H
Covington, KY 41015
General Correspondence
Fidelity Investments
P.O. Box 500
Merrimack, NH 03054-0500
Semiannual Report
To Visit Fidelity
For directions and hours,
please call 1-800-544-9797.
Arizona
7001 West Ray Road
Chandler, AZ
15445 N. Scottsdale Road
Scottsdale, AZ
California
815 East Birch Street
Brea, CA
1411 Chapin Avenue
Burlingame, CA
851 East Hamilton Avenue
Campbell, CA
19200 Von Karman Avenue
Irvine, CA
601 Larkspur Landing Circle
Larkspur, CA
10100 Santa Monica Blvd.
Los Angeles, CA
27101 Puerta Real
Mission Viejo, CA
73-575 El Paseo
Palm Desert, CA
251 University Avenue
Palo Alto, CA
123 South Lake Avenue
Pasadena, CA
16995 Bernardo Ctr. Drive
Rancho Bernardo, CA
1220 Roseville Parkway
Roseville, CA
1740 Arden Way
Sacramento, CA
7676 Hazard Center Drive
San Diego, CA
11943 El Camino Real
San Diego, CA
8 Montgomery Street
San Francisco, CA
3793 State Street
Santa Barbara, CA
1200 Wilshire Boulevard
Santa Monica, CA
21701 Hawthorne Boulevard
Torrance, CA
2001 North Main Street
Walnut Creek, CA
6300 Canoga Avenue
Woodland Hills, CA
Colorado
1625 Broadway
Denver, CO
9185 Westview Road
Lone Tree, CO
Connecticut
48 West Putnam Avenue
Greenwich, CT
265 Church Street
New Haven, CT
300 Atlantic Street
Stamford, CT
29 South Main Street
West Hartford, CT
Delaware
400 Delaware Avenue
Wilmington, DE
Florida
4400 N. Federal Highway
Boca Raton, FL
121 Alhambra Plaza
Coral Gables, FL
2948 N. Federal Highway
Ft. Lauderdale, FL
4671 Town Center Parkway
Jacksonville, FL
1907 West State Road 434
Longwood, FL
8880 Tamiami Trail, North
Naples, FL
3501 PGA Boulevard
Palm Beach Gardens, FL
3550 Tamiami Trail, South
Sarasota, FL
1502 N. Westshore Blvd.
Tampa, FL
2465 State Road 7
Wellington, FL
Georgia
3445 Peachtree Road, N.E.
Atlanta, GA
1000 Abernathy Road
Atlanta, GA
Illinois
One North LaSalle Street
Chicago, IL
875 North Michigan Ave.
Chicago, IL
1415 West 22nd Street
Oak Brook, IL
1572 East Golf Road
Schaumburg, IL
3232 Lake Avenue
Wilmette, IL
Indiana
4729 East 82nd Street
Indianapolis, IN
Kansas
5400 College Boulevard
Overland Park, KS
Maine
Three Canal Plaza
Portland, ME
Maryland
7315 Wisconsin Avenue
Bethesda, MD
One W. Pennsylvania Ave.
Towson, MD
Massachusetts
801 Boylston Street
Boston, MA
155 Congress Street
Boston, MA
300 Granite Street
Braintree, MA
44 Mall Road
Burlington, MA
238 Main Street
Cambridge, MA
405 Cochituate Road
Framingham, MA
416 Belmont Street
Worcester, MA
Michigan
500 E. Eisenhower Pkwy.
Ann Arbor, MI
280 Old N. Woodward Ave.
Birmingham, MI
43420 Grand River Avenue
Novi, MI
29155 Northwestern Hwy.
Southfield, MI
Minnesota
7600 France Avenue South
Edina, MN
Missouri
1524 South Lindbergh Blvd.
St. Louis, MO
Nevada
2225 Village Walk Drive
Henderson, NV
New Jersey
150 Essex Street
Millburn, NJ
56 South Street
Morristown, NJ
396 Route 17, North
Paramus, NJ
3518 Route 1 North
Princeton, NJ
530 Broad Street
Shrewsbury, NJ
New York
1055 Franklin Avenue
Garden City, NY
37 West Jericho Turnpike
Huntington Station, NY
1271 Avenue of the Americas
New York, NY
980 Madison Avenue
New York, NY
61 Broadway
New York, NY
350 Park Avenue
New York, NY
200 Fifth Avenue
New York, NY
733 Third Avenue
New York, NY
11 Penn Plaza
New York, NY
2070 Broadway
New York, NY
1075 Northern Blvd.
Roslyn, NY
799 Central Park Avenue
Scarsdale, NY
North Carolina
4611 Sharon Road
Charlotte, NC
7011 Fayetteville Road
Durham, NC
Ohio
3805 Edwards Road
Cincinnati, OH
1324 Polaris Parkway
Columbus, OH
28699 Chagrin Boulevard
Woodmere Village, OH
Oregon
7493 SW Bridgeport Road
Tigard, OR
Pennsylvania
600 West DeKalb Pike
King of Prussia, PA
1735 Market Street
Philadelphia, PA
12001 Perry Highway
Wexford, PA
Rhode Island
47 Providence Place
Providence, RI
Tennessee
6150 Poplar Avenue
Memphis, TN
Texas
10000 Research Boulevard
Austin, TX
4001 Northwest Parkway
Dallas, TX
12532 Memorial Drive
Houston, TX
2701 Drexel Drive
Houston, TX
6560 Fannin Street
Houston, TX
6500 N. MacArthur Blvd.
Irving, TX
6005 West Park Boulevard
Plano, TX
14100 San Pedro
San Antonio, TX
1576 East Southlake Blvd.
Southlake, TX
19740 IH 45 North
Spring, TX
Utah
279 West South Temple
Salt Lake City, UT
Virginia
1861 International Drive
McLean, VA
Washington
411 108th Avenue, N.E.
Bellevue, WA
1518 6th Avenue
Seattle, WA
Washington, DC
1900 K Street, N.W.
Washington, DC
Wisconsin
595 North Barker Road
Brookfield, WI
Fidelity Brokerage Services, Inc., 100 Summer St., Boston, MA 02110 Member NYSE/SIPC
Semiannual Report
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
FMR Co., Inc.
Fidelity Management & Research
(U.K.) Inc.
Fidelity Research & Analysis Company
Fidelity Investments Japan Limited
Fidelity International Investment Advisors
Fidelity International Investment Advisors
(U.K. Limited)
General Distributor
Fidelity Distributors Corporation
Boston, MA
Transfer and Service Agent
Fidelity Service Company, Inc.
Boston, MA
Custodian
Brown Brothers Harriman & Co.
Boston, MA
Corporate Headquarters
82 Devonshire Street
Boston, MA 02109
1-800-544-8888
The Fidelity Telephone Connection
Mutual Fund 24-Hour Service
Exchanges/Redemptions
and Account Assistance1-800-544-6666
Product Information1-800-544-8888
Retirement Accounts1-800-544-4774
(8 a.m. - 9 p.m.)
TDD Service1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
Fidelity Automated Service
Telephone (FAST®) (automated graphic) 1-800-544-5555
(automated graphic) Automated line for quickest service
SELCI-USAN-1006
1.813659.101
(Fidelity Investment logo)(registered trademark)
Corporate Headquarters
82 Devonshire St., Boston, MA 02109
www.fidelity.com
Fidelity®
Select Portfolios®
Financial Services Sector
Banking
Brokerage and Investment Management
Financial Services
Home Finance
Insurance
Semiannual Report
August 31, 2006
(2_fidelity_logos) (Registered_Trademark)
Contents
Chairman's Message | ||
Shareholder Expense Example | ||
Fund Updates* | ||
Financial Services Sector | ||
Banking | ||
Brokerage and Investment Management | ||
Financial Services | ||
Home Finance | ||
Insurance | ||
Notes to Financial Statements | ||
Proxy Voting Results | ||
Board Approval of Investment Advisory Contracts and Management Fees |
*Fund updates for each Select Portfolio include: Investment Changes, Investments, and Financial Statements.
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit www.fidelity.com/proxyvotingresults or visit the Securities and Exchange Commission's (SEC) web site at 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 Corp. or an affiliated company.
This report and the financial statements contained herein are submitted for the general information of the shareholders of the funds. This report is not authorized for distribution to prospective investors in the funds unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent quarterly holdings report, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com/holdings.
NOT FDIC INSURED · MAY LOSE VALUE · NO BANK GUARANTEE
Neither the funds nor Fidelity Distributors Corporation is a bank.
Semiannual Report
Chairman's Message
(Photograph of Edward C. Johnson 3d.)
Dear Shareholder:
Stock and bond markets around the world have seen largely positive results year to date, although weakness in the technology sector and growth stocks in general have tempered performance. While financial markets are always unpredictable, there are a number of time-tested principles that can put the historical odds in your favor.
One of the basic tenets is to invest for the long term. Over time, riding out the markets' inevitable ups and downs has proven much more effective than selling into panic or chasing the hottest trend. Even missing only a few of the markets' best days can significantly diminish investor returns. Patience also affords the benefits of compounding - of earning interest on additional income or reinvested dividends and capital gains. There are tax advantages and cost benefits to consider as well. The more you sell, the more taxes you pay, and the more you trade, the higher the costs. While staying the course doesn't eliminate risk, it can considerably lessen the effect of short-term declines.
You can further manage your investing risk through diversification. And today, more than ever, geographic diversification should be taken into account. Studies
indicate that asset allocation is the single most important determinant of a portfolio's long-term success. The right mix of stocks, bonds and cash - aligned to your particular risk tolerance and investment objective - is very important. Age-appropriate rebalancing is also an essential aspect of asset allocation. For younger investors, an emphasis on equities - which historically have been the best performing asset class over time - is encouraged. As investors near their specific goal, such as retirement or sending a child to college, consideration may be given to replacing volatile assets (e.g. common stocks) with more-stable fixed investments (bonds or savings plans).
A third investment principle - investing regularly - can help lower the average cost of your purchases. Investing a certain amount of money each month or quarter helps ensure you won't pay for all your shares at market highs. This strategy - known as dollar cost averaging - also reduces unconstructive "emotion" from investing, helping shareholders avoid selling weak performers just prior to an upswing, or chasing a hot performer just before a correction.
We invite you to contact us via the Internet, through our Investor Centers or over the phone. It is our privilege to provide you the information you need to make the investments that are right for you.
Sincerely,
/s/Edward C. Johnson 3d
Edward C. Johnson 3d
Semiannual Report
Shareholder Expense Example
As a shareholder of a Fund, you incur two types of costs: (1) transaction costs, including redemption fees, exchange 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 (March 1, 2006 to August 31, 2006).
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.
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.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Beginning | Ending | Expenses Paid | |
Banking Portfolio | |||
Actual | $1,000.00 | $1,036.50 | $4.83 |
HypotheticalA | $1,000.00 | $1,020.47 | $4.79 |
Brokerage and Investment Management Portfolio | |||
Actual | $1,000.00 | $957.90 | $4.49 |
HypotheticalA | $1,000.00 | $1,020.62 | $4.63 |
Financial Services Portfolio | |||
Actual | $1,000.00 | $1,012.40 | $4.82 |
HypotheticalA | $1,000.00 | $1,020.42 | $4.84 |
Home Finance Portfolio | |||
Actual | $1,000.00 | $1,011.30 | $4.82 |
HypotheticalA | $1,000.00 | $1,020.42 | $4.84 |
Insurance Portfolio | |||
Actual | $1,000.00 | $1,005.70 | $5.11 |
HypotheticalA | $1,000.00 | $1,020.11 | $5.14 |
A5% return per year before expenses
*Expenses are equal to each Fund's annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period).
Annualized | |
Banking Portfolio | .94% |
Brokerage and Investment Management Portfolio | .91% |
Financial Services Portfolio | .95% |
Home Finance Portfolio | .95% |
Insurance Portfolio | 1.01% |
Semiannual Report
Banking Portfolio
Investment Changes
Top Ten Stocks as of August 31, 2006 | ||
% of fund's | % of fund's net assets | |
Wells Fargo & Co. | 7.7 | 6.0 |
Wachovia Corp. | 5.9 | 6.9 |
Bank of America Corp. | 5.2 | 5.5 |
PNC Financial Services Group, Inc. | 4.9 | 4.6 |
JPMorgan Chase & Co. | 4.2 | 4.2 |
Bank of New York Co., Inc. | 4.0 | 4.0 |
Mellon Financial Corp. | 3.2 | 3.1 |
Zions Bancorp | 3.1 | 2.0 |
SunTrust Banks, Inc. | 3.0 | 4.0 |
BB&T Corp. | 2.7 | 2.0 |
43.9 | ||
Top Industries (% of fund's net assets) | |||
As of August 31, 2006 | |||
| Commercial Banks | 69.3% | |
| Capital Markets | 11.4% | |
| Diversified Financial Services | 10.7% | |
| Insurance | 1.4% | |
| Real Estate Investment Trusts | 0.9% | |
| All Others* | 6.3% | |
As of February 28, 2006 | |||
| Commercial Banks | 68.6% | |
| Capital Markets | 10.7% | |
| Diversified Financial Services | 7.9% | |
| Insurance | 2.6% | |
| Real Estate | 0.5% | |
| All Others* | 9.7% | |
* Includes short-term investments and net other assets. |
Prior period industry classifications reflect the categories in place as of the date indicated and have not been adjusted to reflect current industry classifications. |
Semiannual Report
Banking Portfolio
Investments August 31, 2006 (Unaudited)
Showing Percentage of Net Assets
Common Stocks - 94.9% | |||
Shares | Value (Note 1) | ||
CAPITAL MARKETS - 11.4% | |||
Asset Management & Custody Banks - 10.9% | |||
Bank of New York Co., Inc. | 476,616 | $16,085,790 | |
Investors Financial Services Corp. | 73,700 | 3,416,732 | |
Mellon Financial Corp. | 342,100 | 12,736,383 | |
Northern Trust Corp. | 187,500 | 10,498,125 | |
State Street Corp. | 16,000 | 988,800 | |
43,725,830 | |||
Diversified Capital Markets - 0.3% | |||
UBS AG: | |||
(NY Shares) | 3,500 | 198,695 | |
(Reg.) | 14,028 | 796,370 | |
995,065 | |||
Investment Banking & Brokerage - 0.2% | |||
TD Ameritrade Holding Corp. | 44,500 | 779,640 | |
TOTAL CAPITAL MARKETS | 45,500,535 | ||
COMMERCIAL BANKS - 69.3% | |||
Diversified Banks - 19.9% | |||
Allied Irish Banks PLC sponsored ADR | 7,800 | 409,656 | |
Alpha Bank AE | 30,400 | 808,570 | |
Anglo Irish Bank Corp. PLC | 26,500 | 437,978 | |
Bank Hapoalim BM (Reg.) | 458,300 | 2,016,478 | |
Bank of Piraeus | 31,300 | 818,874 | |
DnB NOR ASA | 64,200 | 830,199 | |
EFG Eurobank Ergasias SA | 27,400 | 828,475 | |
Finansbank AS | 97,685 | 383,484 | |
ICICI Bank Ltd. | 110,000 | 1,464,677 | |
Kookmin Bank sponsored ADR | 16,900 | 1,361,802 | |
National Australia Bank Ltd. Sponsored ADR (d) | 7,200 | 996,120 | |
Sberbank (Savings Bank of the Russian Federation) GDR | 7,600 | 2,005,847 | |
Societe Generale Series A | 5,100 | 823,299 | |
Sumitomo Trust & Banking Co. Ltd. | 93,000 | 991,039 | |
Turkiye Garanti Bankasi AS | 195,000 | 569,810 | |
U.S. Bancorp, Delaware | 247,500 | 7,937,325 | |
Uniao de Bancos Brasileiros SA (Unibanco) GDR | 21,600 | 1,562,760 | |
Unicredito Italiano Spa | 76,000 | 606,136 | |
Wachovia Corp. (d) | 434,992 | 23,763,613 | |
Wells Fargo & Co. (d) | 892,200 | 31,003,947 | |
79,620,089 | |||
Regional Banks - 49.4% | |||
AmSouth Bancorp. | 128,000 | 3,667,200 | |
Associated Banc-Corp. | 127,320 | 4,015,673 | |
Banco Pastor SA | 17,400 | 246,782 | |
BancorpSouth, Inc. | 96,700 | 2,713,402 | |
Bank of Yokohama Ltd. | 49,000 | 387,342 | |
Banner Corp. | 33,900 | 1,404,138 | |
BB&T Corp. | 256,142 | 10,962,878 | |
BOK Financial Corp. | 83,300 | 4,331,600 | |
Shares | Value (Note 1) | ||
Cathay General Bancorp | 25,900 | $965,811 | |
Center Financial Corp., California | 82,500 | 2,013,000 | |
City National Corp. | 98,000 | 6,448,400 | |
Colonial Bancgroup, Inc. | 154,800 | 3,791,052 | |
Community Bank of Nevada (a) | 30,300 | 1,027,170 | |
Compass Bancshares, Inc. (d) | 151,110 | 8,764,380 | |
Cullen/Frost Bankers, Inc. | 60,000 | 3,537,600 | |
East West Bancorp, Inc. | 50,100 | 2,029,050 | |
Fifth Third Bancorp | 201,400 | 7,923,076 | |
Flag Financial Corp. | 80,173 | 2,001,118 | |
Frontier Financial Corp., Washington | 10,300 | 421,167 | |
Fulton Financial Corp. | 159,000 | 2,655,300 | |
Glacier Bancorp, Inc. | 13,000 | 422,240 | |
Greater Bay Bancorp | 74,000 | 2,106,780 | |
Home Bancshares, Inc. | 18,800 | 397,620 | |
International Bancshares Corp. | 13,900 | 396,289 | |
KeyCorp | 175,500 | 6,456,645 | |
M&T Bank Corp. | 89,000 | 10,898,940 | |
Marshall & Ilsley Corp. | 202,100 | 9,423,923 | |
Metrocorp Bancshares, Inc. | 12,600 | 400,050 | |
Nara Bancorp, Inc. | 54,600 | 1,010,100 | |
National City Corp. | 166,589 | 5,760,648 | |
North Fork Bancorp, Inc., New York | 193,900 | 5,320,616 | |
PNC Financial Services Group, Inc. | 279,800 | 19,807,042 | |
Preferred Bank, Los Angeles California | 17,600 | 986,480 | |
PrivateBancorp, Inc. | 22,100 | 981,240 | |
Regions Financial Corp. | 188,400 | 6,780,516 | |
South Financial Group, Inc. | 22,100 | 597,363 | |
Sterling Financial Corp., Washington | 23,900 | 790,134 | |
SunTrust Banks, Inc. | 157,348 | 12,021,387 | |
SVB Financial Group (a) | 48,600 | 2,196,234 | |
Synovus Financial Corp. | 308,700 | 8,976,996 | |
Texas Capital Bancshares, Inc. (a) | 53,300 | 1,058,005 | |
Texas Regional Bancshares, Inc. Class A | 51,855 | 1,984,491 | |
Tokyo Tomin Bank Ltd. | 23,200 | 990,093 | |
UCBH Holdings, Inc. | 130,100 | 2,360,014 | |
UnionBanCal Corp. | 81,334 | 4,871,907 | |
Valley Bancorp, Nevada (a) | 8,800 | 395,032 | |
Valley National Bancorp | 105,895 | 2,716,207 | |
Westamerica Bancorp. | 32,800 | 1,568,824 | |
Whitney Holding Corp. | 51,000 | 1,793,670 | |
Wilmington Trust Corp., Delaware | 7,700 | 339,185 | |
Wintrust Financial Corp. | 39,900 | 2,007,369 | |
Zions Bancorp | 158,601 | 12,527,893 | |
197,650,072 | |||
TOTAL COMMERCIAL BANKS | 277,270,161 | ||
CONSUMER FINANCE - 0.5% | |||
Consumer Finance - 0.5% | |||
Capital One Financial Corp. | 27,200 | 1,988,320 | |
Common Stocks - continued | |||
Shares | Value (Note 1) | ||
DIVERSIFIED FINANCIAL SERVICES - 10.7% | |||
Other Diversifed Financial Services - 10.7% | |||
African Bank Investments Ltd. | 181,100 | $638,305 | |
Bank of America Corp. | 402,969 | 20,740,814 | |
Citigroup, Inc. | 82,600 | 4,076,310 | |
FirstRand Ltd. | 249,100 | 616,277 | |
JPMorgan Chase & Co. | 364,426 | 16,639,691 | |
Kotak Mahindra Bank Ltd. sponsored GDR (e) | 18,732 | 125,695 | |
42,837,092 | |||
Specialized Finance - 0.0% | |||
Singapore Exchange Ltd. | 26,000 | 65,754 | |
TOTAL DIVERSIFIED FINANCIAL SERVICES | 42,902,846 | ||
INSURANCE - 1.4% | |||
Insurance Brokers - 0.2% | |||
Willis Group Holdings Ltd. | 22,300 | 807,706 | |
Life & Health Insurance - 0.2% | |||
Lincoln National Corp. | 13,300 | 807,310 | |
Multi-Line Insurance - 0.1% | |||
American International Group, Inc. | 6,100 | 389,302 | |
Property & Casualty Insurance - 0.2% | |||
Aspen Insurance Holdings Ltd. | 13,200 | 326,436 | |
The St. Paul Travelers Companies, Inc. | 9,000 | 395,100 | |
721,536 | |||
Reinsurance - 0.7% | |||
Endurance Specialty Holdings Ltd. | 27,200 | 877,744 | |
Platinum Underwriters Holdings Ltd. | 67,500 | 2,004,750 | |
2,882,494 | |||
TOTAL INSURANCE | 5,608,348 | ||
REAL ESTATE INVESTMENT TRUSTS - 0.9% | |||
Mortgage REITs - 0.9% | |||
CapitalSource, Inc. | 153,300 | 3,725,190 | |
THRIFTS & MORTGAGE FINANCE - 0.7% | |||
Thrifts & Mortgage Finance - 0.7% | |||
BankAtlantic Bancorp, Inc. Class A (non-vtg.) | 14,900 | 209,643 | |
Shares | Value (Note 1) | ||
Clayton Holdings, Inc. | 17,500 | $215,950 | |
Franklin Bank Corp. | 20,100 | 399,588 | |
Hudson City Bancorp, Inc. | 75,800 | 989,948 | |
NetBank, Inc. | 73,500 | 451,290 | |
Washington Federal, Inc. | 26,600 | 591,052 | |
2,857,471 | |||
TOTAL COMMON STOCKS (Cost $272,432,725) | 379,852,871 | ||
Money Market Funds - 9.0% | |||
Fidelity Cash Central Fund, 5.31% (b) | 20,763,261 | 20,763,261 | |
Fidelity Securities Lending Cash Central Fund, 5.33% (b)(c) | 15,410,350 | 15,410,350 | |
TOTAL MONEY MARKET FUNDS (Cost $36,173,611) | 36,173,611 | ||
TOTAL INVESTMENT PORTFOLIO - 103.9% (Cost $308,606,336) | 416,026,482 |
NET OTHER ASSETS - (3.9)% | (15,523,614) | ||
NET ASSETS - 100% | $400,502,868 | ||
Legend |
(a)Non-income producing |
(b)Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. |
(c)Investment made with cash collateral received from securities on loan. |
(d)Security or a portion of the security is on loan at period end. |
(e)Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the end of the period, the value of these securities amounted to $ 125,695 or 0.0% of net assets. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the fund from the affiliated Central funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $551,241 |
Fidelity Securities Lending Cash Central Fund | 13,628 |
Total | $564,869 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Banking Portfolio
Financial Statements
Statement of Assets and Liabilities
August 31, 2006 (Unaudited) | ||
Assets | ||
Investment in securities, at value (including securities loaned of $15,009,735) - See accompanying schedule: Unaffiliated issuers (cost $272,432,725) | $379,852,871 | |
Affiliated Central Funds (cost $36,173,611) | 36,173,611 | |
Total Investments (cost $308,606,336) | $416,026,482 | |
Foreign currency held at value (cost $807,626) | 807,430 | |
Receivable for fund shares sold | 357,299 | |
Dividends receivable | 1,057,280 | |
Interest receivable | 113,966 | |
Prepaid expenses | 439 | |
Other receivables | 32,686 | |
Total assets | 418,395,582 | |
Liabilities | ||
Payable for investments purchased | $22,065 | |
Payable for fund shares redeemed | 2,105,261 | |
Accrued management fee | 187,950 | |
Other affiliated payables | 106,397 | |
Other payables and accrued expenses | 60,691 | |
Collateral on securities loaned, at value | 15,410,350 | |
Total liabilities | 17,892,714 | |
Net Assets | $400,502,868 | |
Net Assets consist of: | ||
Paid in capital | $274,603,126 | |
Undistributed net investment income | 4,104,943 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 14,405,823 | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 107,388,976 | |
Net Assets, for 10,739,857 shares outstanding | $400,502,868 | |
Net Asset Value, offering price and redemption price per share ($400,502,868 ÷ 10,739,857 shares) | $37.29 | |
Statement of Operations
Six months ended August 31, 2006 (Unaudited) | ||
Investment Income | ||
Dividends | $5,315,261 | |
Interest | 56 | |
Income from affiliated Central Funds | 564,869 | |
Total income | 5,880,186 | |
Expenses | ||
Management fee | $1,046,118 | |
Transfer agent fees | 513,869 | |
Accounting and security lending fees | 93,146 | |
Independent trustees' compensation | 724 | |
Custodian fees and expenses | 30,733 | |
Registration fees | 28,992 | |
Audit | 16,833 | |
Legal | 3,422 | |
Miscellaneous | 11,940 | |
Total expenses before reductions | 1,745,777 | |
Expense reductions | (29,663) | 1,716,114 |
Net investment income (loss) | 4,164,072 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers | 14,639,693 | |
Foreign currency transactions | (10,940) | |
Total net realized gain (loss) | 14,628,753 | |
Change in net unrealized appreciation (depreciation) on: Investment securities (net of increase in deferred foreign taxes of $31,154) | (5,761,952) | |
Assets and liabilities in foreign currencies | 100 | |
Total change in net unrealized appreciation (depreciation) | (5,761,852) | |
Net gain (loss) | 8,866,901 | |
Net increase (decrease) in net assets resulting from operations | $13,030,973 | |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Banking Portfolio
Financial Statements - continued
Statement of Changes in Net Assets
Six months ended August 31, 2006 (Unaudited) | Year ended | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $4,164,072 | $8,332,734 |
Net realized gain (loss) | 14,628,753 | 39,193,239 |
Change in net unrealized appreciation (depreciation) | (5,761,852) | (20,357,590) |
Net increase (decrease) in net assets resulting from operations | 13,030,973 | 27,168,383 |
Distributions to shareholders from net investment income | (1,450,719) | (6,336,315) |
Distributions to shareholders from net realized gain | (5,609,444) | (32,980,078) |
Total distributions | (7,060,163) | (39,316,393) |
Share transactions | 96,816,658 | 85,190,205 |
Reinvestment of distributions | 6,655,623 | 37,286,501 |
Cost of shares redeemed | (76,000,267) | (218,870,245) |
Net increase (decrease) in net assets resulting from share transactions | 27,472,014 | (96,393,539) |
Redemption fees | 51,182 | 41,260 |
Total increase (decrease) in net assets | 33,494,006 | (108,500,289) |
Net Assets | ||
Beginning of period | 367,008,862 | 475,509,151 |
End of period (including undistributed net investment income of $4,104,943 and undistributed net investment income | $400,502,868 | $367,008,862 |
Other Information Shares | ||
Sold | 2,632,660 | 2,286,589 |
Issued in reinvestment of distributions | 185,756 | 1,042,335 |
Redeemed | (2,076,246) | (5,850,883) |
Net increase (decrease) | 742,170 | (2,521,959) |
Financial Highlights
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Brokerage and Investment Management Portfolio
Investment Changes
Top Ten Stocks as of August 31, 2006 | ||
% of fund's | % of fund's net assets | |
Morgan Stanley | 6.0 | 2.4 |
TD Ameritrade Holding Corp. | 5.2 | 5.2 |
American International Group, Inc. | 5.2 | 9.3 |
UBS AG (NY Shares) | 5.1 | 4.8 |
Franklin Resources, Inc. | 5.1 | 5.0 |
Merrill Lynch & Co., Inc. | 5.0 | 5.0 |
Charles Schwab Corp. | 5.0 | 0.9 |
American Express Co. | 4.2 | 4.7 |
JPMorgan Chase & Co. | 4.0 | 0.0 |
T. Rowe Price Group, Inc. | 3.8 | 3.5 |
48.6 | ||
Top Industries (% of fund's net assets) | |||
As of August 31, 2006 | |||
| Capital Markets | 65.4% | |
| Diversified Financial Services | 15.6% | |
| Insurance | 10.2% | |
| Consumer Finance | 4.2% | |
| Commercial Banks | 1.1% | |
| All Others* | 3.5% | |
As of February 28, 2006 | |||
| Capital Markets | 64.1% | |
| Insurance | 18.3% | |
| Diversified Financial Services | 5.6% | |
| Consumer Finance | 4.7% | |
| Commercial Banks | 2.2% | |
| All Others* | 5.1% | |
* Includes short-term investments and net other assets. |
Prior period industry classifications reflect the categories in place as of the date indicated and have not been adjusted to reflect current industry classifications. |
Semiannual Report
Brokerage and Investment Management Portfolio
Investments August 31, 2006 (Unaudited)
Showing Percentage of Net Assets
Common Stocks - 97.2% | |||
Shares | Value (Note 1) | ||
CAPITAL MARKETS - 65.4% | |||
Asset Management & Custody Banks - 21.8% | |||
Affiliated Managers Group, Inc. (d) | 194,700 | $18,015,591 | |
American Capital Strategies Ltd. (d) | 594,900 | 23,040,477 | |
Federated Investors, Inc. Class B (non-vtg.) | 152,300 | 5,099,004 | |
Franklin Resources, Inc. | 468,900 | 46,144,449 | |
Investors Financial Services Corp. | 399,260 | 18,509,694 | |
Janus Capital Group, Inc. | 2,000 | 35,560 | |
Legg Mason, Inc. (d) | 321,548 | 29,344,470 | |
State Street Corp. | 372,400 | 23,014,320 | |
T. Rowe Price Group, Inc. | 787,600 | 34,701,656 | |
197,905,221 | |||
Diversified Capital Markets - 5.1% | |||
UBS AG (NY Shares) | 817,300 | 46,398,121 | |
Investment Banking & Brokerage - 38.5% | |||
A.G. Edwards, Inc. | 162,700 | 8,593,814 | |
Charles Schwab Corp. | 2,776,100 | 45,278,191 | |
Daiwa Securities Group, Inc. | 462,000 | 5,505,669 | |
E*TRADE Financial Corp. | 1,341,600 | 31,648,344 | |
Evercore Partners, Inc. Class A (a) | 100 | 2,875 | |
GFI Group, Inc. (a) | 219,200 | 10,192,800 | |
Greenhill & Co., Inc. (d) | 540,200 | 29,727,206 | |
IL&FS Investsmart Ltd. | 650,023 | 2,104,456 | |
Jefferies Group, Inc. | 516,500 | 12,871,180 | |
KKR Private Equity Investors, L.P. Restricted Depositary Units (e) | 104,600 | 2,362,914 | |
Lazard Ltd. Class A | 520,300 | 19,589,295 | |
Merrill Lynch & Co., Inc. | 617,450 | 45,401,099 | |
Morgan Stanley | 819,700 | 53,928,064 | |
optionsXpress Holdings, Inc. | 713,393 | 18,633,825 | |
TD Ameritrade Holding Corp. | 2,714,449 | 47,557,146 | |
Thomas Weisel Partners Group, Inc. | 80,400 | 1,168,212 | |
TradeStation Group, Inc. (a) | 951,813 | 13,944,060 | |
348,509,150 | |||
TOTAL CAPITAL MARKETS | 592,812,492 | ||
COMMERCIAL BANKS - 1.1% | |||
Diversified Banks - 1.1% | |||
Kookmin Bank sponsored ADR | 121,600 | 9,798,528 | |
CONSUMER FINANCE - 4.2% | |||
Consumer Finance - 4.2% | |||
American Express Co. | 732,200 | 38,469,788 | |
DIVERSIFIED FINANCIAL SERVICES - 15.6% | |||
Other Diversifed Financial Services - 4.0% | |||
JPMorgan Chase & Co. | 784,400 | 35,815,704 | |
Specialized Finance - 11.6% | |||
CBOT Holdings, Inc. Class A (d) | 214,200 | 25,164,216 | |
Chicago Mercantile Exchange Holdings, Inc. Class A | 48,800 | 21,472,000 | |
IntercontinentalExchange, Inc. | 498,312 | 31,523,217 | |
Shares | Value (Note 1) | ||
NYSE Group, Inc. (a)(d) | 428,300 | $25,398,190 | |
Primus Guaranty Ltd. (a) | 176,100 | 2,044,521 | |
105,602,144 | |||
TOTAL DIVERSIFIED FINANCIAL SERVICES | 141,417,848 | ||
INSURANCE - 10.2% | |||
Insurance Brokers - 1.9% | |||
Marsh & McLennan Companies, Inc. (d) | 492,300 | 12,878,568 | |
National Financial Partners Corp. | 124,100 | 4,569,362 | |
17,447,930 | |||
Multi-Line Insurance - 7.3% | |||
American International Group, Inc. | 737,300 | 47,054,486 | |
Assurant, Inc. | 185,700 | 9,554,265 | |
Hartford Financial Services Group, Inc. | 105,500 | 9,058,230 | |
65,666,981 | |||
Property & Casualty Insurance - 0.5% | |||
Aspen Insurance Holdings Ltd. | 189,500 | 4,686,335 | |
Reinsurance - 0.5% | |||
Endurance Specialty Holdings Ltd. | 147,300 | 4,753,371 | |
TOTAL INSURANCE | 92,554,617 | ||
REAL ESTATE INVESTMENT TRUSTS - 0.5% | |||
Mortgage REITs - 0.5% | |||
KKR Financial Corp. | 116,000 | 2,773,560 | |
New Century Financial Corp. (d) | 43,300 | 1,676,143 | |
4,449,703 | |||
THRIFTS & MORTGAGE FINANCE - 0.2% | |||
Thrifts & Mortgage Finance - 0.2% | |||
Accredited Home Lenders Holding Co. (a) | 51,800 | 1,653,974 | |
TOTAL COMMON STOCKS (Cost $729,419,357) | 881,156,950 | ||
Money Market Funds - 14.8% | |||
Fidelity Cash Central Fund, 5.31% (b) | 28,970,544 | 28,970,544 | |
Fidelity Securities Lending Cash Central Fund, 5.33% (b)(c) | 104,751,925 | 104,751,925 | |
TOTAL MONEY MARKET FUNDS (Cost $133,722,469) | 133,722,469 | ||
TOTAL INVESTMENT PORTFOLIO - 112.0% (Cost $863,141,826) | 1,014,879,419 | ||
NET OTHER ASSETS - (12.0)% | (108,365,135) | ||
NET ASSETS - 100% | $906,514,284 | ||
Legend |
(a)Non-income producing |
(b)Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. |
(c)Investment made with cash collateral received from securities on loan. |
(d)Security or a portion of the security is on loan at period end. |
(e)Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration normally to qualified institutional buyers. At the end of the period, the value of these securities amounted to $2,362,914 or 0.3% of net assets. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the fund from the affiliated Central funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $397,041 |
Fidelity Securities Lending Cash Central Fund | 324,765 |
Total | $721,806 |
Other Information |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: |
United States of America | 89.3% |
Switzerland | 5.1% |
Bermuda | 3.4% |
Korea (South) | 1.1% |
Others (individually less than 1%) | 1.1% |
100.0% |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Brokerage and Investment Management Portfolio
Financial Statements
Statement of Assets and Liabilities
August 31, 2006 (Unaudited) | ||
Assets | ||
Investment in securities, at value (including securities loaned of $102,773,371) - See accompanying schedule: Unaffiliated issuers (cost $729,419,357) | $881,156,950 | |
Affiliated Central Funds (cost $133,722,469) | 133,722,469 | |
Total Investments (cost $863,141,826) | $1,014,879,419 | |
Receivable for investments sold | 226,478 | |
Receivable for fund shares sold | 1,627,717 | |
Dividends receivable | 376,523 | |
Interest receivable | 102,324 | |
Prepaid expenses | 490 | |
Other receivables | 98,943 | |
Total assets | 1,017,311,894 | |
Liabilities | ||
Payable to custodian bank | $226,478 | |
Payable for investments purchased | 74,433 | |
Payable for fund shares redeemed | 5,038,000 | |
Accrued management fee | 425,477 | |
Other affiliated payables | 240,168 | |
Other payables and accrued expenses | 41,129 | |
Collateral on securities loaned, at value | 104,751,925 | |
Total liabilities | 110,797,610 | |
Net Assets | $906,514,284 | |
Net Assets consist of: | ||
Paid in capital | $704,539,638 | |
Undistributed net investment income | 3,549,884 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 46,687,148 | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 151,737,614 | |
Net Assets, for 12,897,137 shares outstanding | $906,514,284 | |
Net Asset Value, offering price and redemption price per share ($906,514,284 ÷ 12,897,137 shares) | $70.29 | |
Statement of Operations
Six months ended August 31, 2006 (Unaudited) | ||
Investment Income | ||
Dividends | $7,554,654 | |
Interest | 23,177 | |
Income from affiliated Central Funds | 721,806 | |
Total income | 8,299,637 | |
Expenses | ||
Management fee | $2,968,627 | |
Transfer agent fees | 1,388,428 | |
Accounting and security lending fees | 228,164 | |
Independent trustees' compensation | 2,108 | |
Custodian fees and expenses | 49,424 | |
Registration fees | 58,621 | |
Audit | 22,623 | |
Legal | 12,548 | |
Interest | 38,578 | |
Miscellaneous | 24,178 | |
Total expenses before reductions | 4,793,299 | |
Expense reductions | (38,506) | 4,754,793 |
Net investment income (loss) | 3,544,844 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers (net of foreign taxes of $473,330) | 48,185,974 | |
Foreign currency transactions | (26,163) | |
Total net realized gain (loss) | 48,159,811 | |
Change in net unrealized appreciation (depreciation) on: Investment securities (net of decrease in deferred foreign taxes of $149,940) | (101,890,256) | |
Assets and liabilities in foreign currencies | (599) | |
Total change in net unrealized appreciation (depreciation) | (101,890,855) | |
Net gain (loss) | (53,731,044) | |
Net increase (decrease) in net assets resulting from operations | $(50,186,200) | |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Brokerage and Investment Management Portfolio
Financial Statements - continued
Statement of Changes in Net Assets
Six months ended August 31, 2006 (Unaudited) | Year ended | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $3,544,844 | $9,820,701 |
Net realized gain (loss) | 48,159,811 | 103,309,298 |
Change in net unrealized appreciation (depreciation) | (101,890,855) | 153,341,117 |
Net increase (decrease) in net assets resulting from operations | (50,186,200) | 266,471,116 |
Distributions to shareholders from net investment income | (5,400,074) | (2,635,364) |
Distributions to shareholders from net realized gain | (38,118,163) | (49,077,063) |
Total distributions | (43,518,237) | (51,712,427) |
Share transactions | 410,567,774 | 905,653,225 |
Reinvestment of distributions | 41,428,488 | 49,399,557 |
Cost of shares redeemed | (698,276,960) | (338,928,303) |
Net increase (decrease) in net assets resulting from share transactions | (246,280,698) | 616,124,479 |
Redemption fees | 201,474 | 178,219 |
Total increase (decrease) in net assets | (339,783,661) | 831,061,387 |
Net Assets | ||
Beginning of period | 1,246,297,945 | 415,236,558 |
End of period (including undistributed net investment income of $3,549,884 and undistributed net investment income | $906,514,284 | $1,246,297,945 |
Other Information Shares | ||
Sold | 5,562,414 | 13,298,513 |
Issued in reinvestment of distributions | 564,190 | 708,725 |
Redeemed | (9,602,728) | (5,190,450) |
Net increase (decrease) | (3,476,124) | 8,816,788 |
Financial Highlights
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Services Portfolio
Investment Changes
Top Ten Stocks as of August 31, 2006 | ||
% of fund's | % of fund's net assets | |
American International Group, Inc. | 9.0 | 8.1 |
Bank of America Corp. | 6.3 | 5.7 |
JPMorgan Chase & Co. | 5.4 | 5.1 |
Wachovia Corp. | 4.3 | 3.5 |
Wells Fargo & Co. | 3.6 | 3.4 |
Merrill Lynch & Co., Inc. | 3.0 | 3.6 |
ACE Ltd. | 2.7 | 2.7 |
Endurance Specialty Holdings Ltd. | 2.7 | 2.0 |
Platinum Underwriters Holdings Ltd. | 2.3 | 1.4 |
Fannie Mae | 2.1 | 2.2 |
41.4 | ||
Top Industries (% of fund's net assets) | |||
As of August 31, 2006 | |||
| Insurance | 29.7% | |
| Commercial Banks | 18.9% | |
| Capital Markets | 16.9% | |
| Diversified Financial Services | 15.9% | |
| Thrifts & Mortgage Finance | 7.8% | |
| All Others* | 10.8% | |
As of February 28, 2006 | |||
| Insurance | 29.8% | |
| Commercial Banks | 23.7% | |
| Capital Markets | 18.8% | |
| Diversified Financial Services | 9.1% | |
| Thrifts & Mortgage Finance | 8.0% | |
| All Others* | 10.6% | |
* Includes short-term investments and net other assets. |
Prior period industry classifications reflect the categories in place as of the date indicated and have not been adjusted to reflect current industry classifications. |
Semiannual Report
Financial Services Portfolio
Investments August 31, 2006 (Unaudited)
Showing Percentage of Net Assets
Common Stocks - 98.7% | |||
Shares | Value (Note 1) | ||
CAPITAL MARKETS - 16.9% | |||
Asset Management & Custody Banks - 6.4% | |||
Affiliated Managers Group, Inc. | 12,700 | $1,175,131 | |
American Capital Strategies Ltd. | 68,800 | 2,664,624 | |
Ameriprise Financial, Inc. | 38,240 | 1,748,715 | |
Bank of New York Co., Inc. | 71,436 | 2,410,965 | |
Federated Investors, Inc. Class B (non-vtg.) | 16,750 | 560,790 | |
Franklin Resources, Inc. | 52,100 | 5,127,161 | |
Investors Financial Services Corp. | 102,700 | 4,761,172 | |
Legg Mason, Inc. | 16,200 | 1,478,412 | |
Northern Trust Corp. | 48,300 | 2,704,317 | |
Nuveen Investments, Inc. Class A | 31,700 | 1,513,358 | |
State Street Corp. | 91,700 | 5,667,060 | |
Technology Investment Capital Corp. | 65,700 | 982,872 | |
30,794,577 | |||
Diversified Capital Markets - 1.1% | |||
UBS AG (NY Shares) | 96,700 | 5,489,659 | |
Investment Banking & Brokerage - 9.4% | |||
Bear Stearns Companies, Inc. | 13,200 | 1,720,620 | |
Charles Schwab Corp. | 183,400 | 2,991,254 | |
Daiwa Securities Group, Inc. | 74,000 | 881,860 | |
E*TRADE Financial Corp. | 250,000 | 5,897,500 | |
E*TRADE Securities Co. Ltd. (d) | 312 | 380,050 | |
KKR Private Equity Investors, L.P. Restricted Depositary Units (e) | 47,000 | 1,061,730 | |
Lazard Ltd. Class A | 64,700 | 2,435,955 | |
MCF Corp. (a) | 455,100 | 318,570 | |
Merrill Lynch & Co., Inc. | 194,900 | 14,330,997 | |
Morgan Stanley | 152,100 | 10,006,659 | |
Nikko Cordial Corp. | 55,500 | 704,417 | |
Nomura Holdings, Inc. | 58,600 | 1,128,050 | |
optionsXpress Holdings, Inc. | 33,600 | 877,632 | |
TD Ameritrade Holding Corp. | 65,965 | 1,155,707 | |
TradeStation Group, Inc. (a) | 110,239 | 1,615,001 | |
45,506,002 | |||
TOTAL CAPITAL MARKETS | 81,790,238 | ||
COMMERCIAL BANKS - 18.9% | |||
Diversified Banks - 15.5% | |||
ABN-AMRO Holding NV sponsored ADR | 41,600 | 1,188,096 | |
Absa Group Ltd. | 50,900 | 728,120 | |
Banco Bilbao Vizcaya Argentaria SA | 64,400 | 1,474,763 | |
Banco Popolare di Verona e Novara | 118,800 | 3,534,236 | |
Bank Hapoalim BM (Reg.) | 178,000 | 783,184 | |
Bank of Montreal | 83,300 | 5,043,369 | |
HDFC Bank Ltd. sponsored ADR | 35,000 | 1,990,800 | |
HSBC Holdings PLC: | |||
(United Kingdom) (Reg.) | 93,200 | 1,695,125 | |
sponsored ADR | 18,400 | 1,673,296 | |
ICICI Bank Ltd. | 125,811 | 1,675,204 | |
Shares | Value (Note 1) | ||
Kookmin Bank | 16,530 | $1,337,807 | |
Mizrahi Tefahot Bank Ltd. (a) | 115,300 | 643,050 | |
Standard Chartered PLC (United Kingdom) | 100,436 | 2,514,875 | |
State Bank of India | 50,969 | 1,223,080 | |
Toronto-Dominion Bank | 58,400 | 3,374,657 | |
U.S. Bancorp, Delaware | 210,300 | 6,744,321 | |
Unicredito Italiano Spa | 167,100 | 1,332,701 | |
Wachovia Corp. | 376,296 | 20,557,050 | |
Wells Fargo & Co. | 495,500 | 17,218,625 | |
74,732,359 | |||
Regional Banks - 3.4% | |||
Boston Private Financial Holdings, Inc. | 200 | 4,992 | |
Cathay General Bancorp | 75,123 | 2,801,337 | |
Center Financial Corp., California | 72,800 | 1,776,320 | |
City National Corp. | 11,600 | 763,280 | |
East West Bancorp, Inc. | 19,423 | 786,632 | |
Kansai Urban Banking Corp. (a) | 237,000 | 989,224 | |
M&T Bank Corp. | 10,600 | 1,298,076 | |
Nara Bancorp, Inc. | 46,141 | 853,609 | |
North Fork Bancorp, Inc., New York | 47,332 | 1,298,790 | |
SVB Financial Group (a) | 58,700 | 2,652,653 | |
The Keiyo Bank Ltd. | 106,000 | 611,287 | |
UCBH Holdings, Inc. | 55,300 | 1,003,142 | |
UnionBanCal Corp. | 29,400 | 1,761,060 | |
16,600,402 | |||
TOTAL COMMERCIAL BANKS | 91,332,761 | ||
CONSUMER FINANCE - 4.3% | |||
Consumer Finance - 4.3% | |||
American Express Co. | 190,300 | 9,998,362 | |
Capital One Financial Corp. | 59,000 | 4,312,900 | |
Dollar Financial Corp. (a) | 143,279 | 2,735,196 | |
SLM Corp. | 75,700 | 3,673,721 | |
20,720,179 | |||
DIVERSIFIED FINANCIAL SERVICES - 15.9% | |||
Other Diversifed Financial Services - 13.6% | |||
Bank of America Corp. | 596,731 | 30,713,745 | |
Citigroup, Inc. | 147,234 | 7,265,998 | |
FirstRand Ltd. | 298,500 | 738,493 | |
ING Groep NV sponsored ADR | 25,100 | 1,090,093 | |
JPMorgan Chase & Co. | 570,645 | 26,055,651 | |
65,863,980 | |||
Specialized Finance - 2.3% | |||
Asset Acceptance Capital Corp. (a) | 67,938 | 1,004,803 | |
CBOT Holdings, Inc. Class A (d) | 9,700 | 1,139,556 | |
CIT Group, Inc. | 9,700 | 437,082 | |
IntercontinentalExchange, Inc. | 51,800 | 3,276,868 | |
Marlin Business Services Corp. (a) | 44,234 | 988,630 | |
Common Stocks - continued | |||
Shares | Value (Note 1) | ||
DIVERSIFIED FINANCIAL SERVICES - CONTINUED | |||
Specialized Finance - continued | |||
NETeller PLC (a) | 178,600 | $1,421,539 | |
The NASDAQ Stock Market, Inc. (a) | 90,600 | 2,583,006 | |
10,851,484 | |||
TOTAL DIVERSIFIED FINANCIAL SERVICES | 76,715,464 | ||
HOUSEHOLD DURABLES - 0.5% | |||
Homebuilding - 0.5% | |||
D.R. Horton, Inc. | 120,285 | 2,637,850 | |
INSURANCE - 29.7% | |||
Insurance Brokers - 0.7% | |||
National Financial Partners Corp. | 54,200 | 1,995,644 | |
Willis Group Holdings Ltd. | 34,800 | 1,260,456 | |
3,256,100 | |||
Life & Health Insurance - 4.0% | |||
AFLAC, Inc. | 88,000 | 3,966,160 | |
Lincoln National Corp. | 31,300 | 1,899,910 | |
MetLife, Inc. | 95,300 | 5,244,359 | |
Protective Life Corp. | 10,500 | 483,315 | |
Prudential Financial, Inc. | 49,600 | 3,641,136 | |
Shin Kong Financial Holding Co. Ltd. | 977,128 | 846,564 | |
Sun Life Financial, Inc. | 79,300 | 3,265,843 | |
19,347,287 | |||
Multi-Line Insurance - 10.1% | |||
American International Group, Inc. | 680,351 | 43,420,001 | |
Hartford Financial Services Group, Inc. | 64,400 | 5,529,384 | |
48,949,385 | |||
Property & Casualty Insurance - 8.5% | |||
ACE Ltd. | 246,400 | 13,271,104 | |
Allied World Assurance Co. Holdings Ltd. | 33,800 | 1,302,990 | |
Allstate Corp. | 73,800 | 4,275,972 | |
Aspen Insurance Holdings Ltd. | 240,300 | 5,942,619 | |
Axis Capital Holdings Ltd. | 60,200 | 1,952,286 | |
Berkshire Hathaway, Inc. Class B (a) | 950 | 3,043,325 | |
MBIA, Inc. | 43,300 | 2,668,579 | |
The St. Paul Travelers Companies, Inc. | 143,800 | 6,312,820 | |
XL Capital Ltd. Class A | 41,000 | 2,691,240 | |
41,460,935 | |||
Reinsurance - 6.4% | |||
Endurance Specialty Holdings Ltd. | 410,870 | 13,258,775 | |
Everest Re Group Ltd. | 12,800 | 1,202,944 | |
IPC Holdings Ltd. | 6,200 | 173,290 | |
Max Re Capital Ltd. | 97,699 | 2,267,594 | |
PartnerRe Ltd. | 19,700 | 1,266,710 | |
Shares | Value (Note 1) | ||
Platinum Underwriters Holdings Ltd. | 381,888 | $11,342,074 | |
Swiss Reinsurance Co. (Reg.) | 17,963 | 1,370,542 | |
30,881,929 | |||
TOTAL INSURANCE | 143,895,636 | ||
REAL ESTATE INVESTMENT TRUSTS - 4.3% | |||
Mortgage REITs - 0.2% | |||
Annaly Capital Management, Inc. | 98,900 | 1,237,239 | |
Office REITs - 0.5% | |||
Duke Realty Corp. | 29,100 | 1,105,218 | |
Reckson Associates Realty Corp. | 31,400 | 1,343,606 | |
2,448,824 | |||
Residential REITs - 1.7% | |||
Equity Lifestyle Properties, Inc. | 16,300 | 730,729 | |
Equity Residential (SBI) | 96,500 | 4,812,455 | |
United Dominion Realty Trust, Inc. (SBI) | 87,900 | 2,681,829 | |
8,225,013 | |||
Retail REITs - 1.9% | |||
CBL & Associates Properties, Inc. | 30,360 | 1,236,866 | |
Developers Diversified Realty Corp. | 42,100 | 2,277,610 | |
General Growth Properties, Inc. | 18,500 | 838,605 | |
Kimco Realty Corp. | 25,800 | 1,071,990 | |
Simon Property Group, Inc. | 42,100 | 3,569,659 | |
8,994,730 | |||
TOTAL REAL ESTATE INVESTMENT TRUSTS | 20,905,806 | ||
REAL ESTATE MANAGEMENT & DEVELOPMENT - 0.4% | |||
Real Estate Management & Development - 0.4% | |||
Mitsui Fudosan Co. Ltd. | 78,000 | 1,747,434 | |
THRIFTS & MORTGAGE FINANCE - 7.8% | |||
Thrifts & Mortgage Finance - 7.8% | |||
Countrywide Financial Corp. | 131,835 | 4,456,023 | |
Doral Financial Corp. | 26,150 | 131,012 | |
Downey Financial Corp. | 8,100 | 497,259 | |
Fannie Mae | 194,900 | 10,261,485 | |
Freddie Mac | 41,800 | 2,658,480 | |
Golden West Financial Corp., Delaware | 70,000 | 5,284,300 | |
Hudson City Bancorp, Inc. | 260,811 | 3,406,192 | |
MGIC Investment Corp. | 21,400 | 1,238,418 | |
Radian Group, Inc. | 24,000 | 1,437,120 | |
Sovereign Bancorp, Inc. | 98,355 | 2,049,718 | |
The PMI Group, Inc. | 27,300 | 1,180,452 | |
W Holding Co., Inc. | 137,307 | 693,400 | |
Washington Mutual, Inc. | 106,400 | 4,457,096 | |
37,750,955 | |||
TOTAL COMMON STOCKS (Cost $346,837,710) | 477,496,323 | ||
Money Market Funds - 1.0% | |||
Shares | Value (Note 1) | ||
Fidelity Cash Central Fund, 5.31% (b) | 4,667,871 | $4,667,871 | |
Fidelity Securities Lending Cash Central Fund, 5.33% (b)(c) | 215,379 | 215,379 | |
TOTAL MONEY MARKET FUNDS (Cost $4,883,250) | 4,883,250 | ||
TOTAL INVESTMENT PORTFOLIO - 99.7% (Cost $351,720,960) | 482,379,573 |
NET OTHER ASSETS - 0.3% | 1,437,119 | ||
NET ASSETS - 100% | $483,816,692 | ||
Legend |
(a)Non-income producing |
(b)Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. |
(c)Investment made with cash collateral received from securities on loan. |
(d)Security or a portion of the security is on loan at period end. |
(e)Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration normally to qualified institutional buyers. At the end of the period, the value of these securities amounted to $1,061,730 or 0.2% of net assets. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the fund from the affiliated Central funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $64,628 |
Fidelity Securities Lending Cash Central Fund | 33,169 |
Total | $97,797 |
Other Information |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: |
United States of America | 77.8% |
Bermuda | 8.8% |
Cayman Islands | 2.7% |
Canada | 2.4% |
United Kingdom | 1.7% |
Switzerland | 1.4% |
Japan | 1.3% |
India | 1.0% |
Italy | 1.0% |
Others (individually less than 1%) | 1.9% |
100.0% |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Services Portfolio
Financial Statements
Statement of Assets and Liabilities
August 31, 2006 (Unaudited) | ||
Assets | ||
Investment in securities, at value (including securities loaned of $207,324) - See accompanying schedule: Unaffiliated issuers (cost $346,837,710) | $477,496,323 | |
Affiliated Central Funds (cost $4,883,250) | 4,883,250 | |
Total Investments (cost $351,720,960) | $482,379,573 | |
Receivable for investments sold | 4,918,793 | |
Receivable for fund shares sold | 582,121 | |
Dividends receivable | 1,201,961 | |
Interest receivable | 25,950 | |
Prepaid expenses | 454 | |
Other receivables | 9,614 | |
Total assets | 489,118,466 | |
Liabilities | ||
Payable to custodian bank | $19,750 | |
Payable for investments purchased | 4,135,404 | |
Payable for fund shares redeemed | 524,604 | |
Accrued management fee | 224,475 | |
Other affiliated payables | 136,644 | |
Other payables and accrued expenses | 45,518 | |
Collateral on securities loaned, at value | 215,379 | |
Total liabilities | 5,301,774 | |
Net Assets | $483,816,692 | |
Net Assets consist of: | ||
Paid in capital | $329,923,464 | |
Undistributed net investment income | 3,573,428 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 19,674,275 | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 130,645,525 | |
Net Assets, for 4,112,932 shares outstanding | $483,816,692 | |
Net Asset Value, offering price and redemption price per share ($483,816,692 ÷ 4,112,932 shares) | $117.63 | |
Statement of Operations
Six months ended August 31, 2006 (Unaudited) | ||
Investment Income | ||
Dividends | $5,727,537 | |
Interest | 28 | |
Income from affiliated Central Funds | 97,797 | |
Total income | 5,825,362 | |
Expenses | ||
Management fee | $1,351,935 | |
Transfer agent fees | 700,793 | |
Accounting and security lending fees | 120,124 | |
Independent trustees' compensation | 939 | |
Custodian fees and expenses | 27,056 | |
Registration fees | 22,289 | |
Audit | 19,341 | |
Legal | 4,289 | |
Miscellaneous | 14,895 | |
Total expenses before reductions | 2,261,661 | |
Expense reductions | (24,182) | 2,237,479 |
Net investment income (loss) | 3,587,883 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers (net of foreign taxes of $55,641) | 20,747,433 | |
Foreign currency transactions | 3,562 | |
Total net realized gain (loss) | 20,750,995 | |
Change in net unrealized appreciation (depreciation) on: Investment securities (net of increase in deferred foreign taxes of $7,333) | (18,581,877) | |
Assets and liabilities in foreign currencies | 948 | |
Total change in net unrealized appreciation (depreciation) | (18,580,929) | |
Net gain (loss) | 2,170,066 | |
Net increase (decrease) in net assets resulting from operations | $5,757,949 | |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Services Portfolio
Financial Statements - continued
Statement of Changes in Net Assets
Six months ended August 31, 2006 (Unaudited) | Year ended | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $3,587,883 | $5,848,396 |
Net realized gain (loss) | 20,750,995 | 29,891,242 |
Change in net unrealized appreciation (depreciation) | (18,580,929) | 27,118,166 |
Net increase (decrease) in net assets resulting from operations | 5,757,949 | 62,857,804 |
Distributions to shareholders from net investment income | (1,135,326) | (5,599,282) |
Distributions to shareholders from net realized gain | (14,232,113) | (34,940,068) |
Total distributions | (15,367,439) | (40,539,350) |
Share transactions | 56,405,678 | 130,389,343 |
Reinvestment of distributions | 14,620,210 | 38,466,222 |
Cost of shares redeemed | (67,862,542) | (188,068,301) |
Net increase (decrease) in net assets resulting from share transactions | 3,163,346 | (19,212,736) |
Redemption fees | 23,974 | 59,944 |
Total increase (decrease) in net assets | (6,422,170) | 3,165,662 |
Net Assets | ||
Beginning of period | 490,238,862 | 487,073,200 |
End of period (including undistributed net investment income of $3,573,428 and undistributed net investment income | $483,816,692 | $490,238,862 |
Other Information Shares | ||
Sold | 483,460 | 1,151,335 |
Issued in reinvestment of distributions | 126,824 | 360,852 |
Redeemed | (582,428) | (1,673,743) |
Net increase (decrease) | 27,856 | (161,556) |
Financial Highlights
Six months ended | Years ended February 28, | |||||
(Unaudited) | 2006 | 2005 | 2004 G | 2003 | 2002 | |
Selected Per-Share Data | ||||||
Net asset value, beginning of period | $120.01 | $114.70 | $121.09 | $84.14 | $99.95 | $108.59 |
Income from Investment Operations | ||||||
Net investment income (loss) E | .87 | 1.41 | 1.11 | .96 | .74 | .96 |
Net realized and unrealized gain (loss) | .53 | 13.73 | 2.75 | 36.92 | (15.75) | (4.95) |
Total from investment operations | 1.40 | 15.14 | 3.86 | 37.88 | (15.01) | (3.99) |
Distributions from net investment income | (.28) | (1.34) | (.89) | (.94) | (.82) | (1.03) |
Distributions from net realized gain | (3.51) | (8.50) | (9.37) | - | - | (3.64) |
Total distributions | (3.79) | (9.84) | (10.26) | (.94) | (.82) | (4.67) |
Redemption fees added to paid in capital E | .01 | .01 | .01 | .01 | .02 | .02 |
Net asset value, end of period | $117.63 | $120.01 | $114.70 | $121.09 | $84.14 | $99.95 |
Total Return B, C, D | 1.24% | 14.51% | 3.29% | 45.17% | (15.06)% | (3.58)% |
Ratios to Average Net Assets F | ||||||
Expenses before reductions | .95% A | .97% | .97% | 1.09% | 1.12% | 1.07% |
Expenses net of fee waivers, if any | .95% A | .97% | .97% | 1.09% | 1.12% | 1.07% |
Expenses net of all reductions | .94% A | .95% | .94% | 1.07% | 1.09% | 1.03% |
Net investment income (loss) | 1.50% A | 1.26% | .96% | .92% | .79% | .93% |
Supplemental Data | ||||||
Net assets, end of period (000 omitted) | $483,817 | $490,239 | $487,073 | $555,577 | $389,392 | $560,002 |
Portfolio turnover rate | 32% A | 47% | 101% | 51% | 76% | 127% |
AAnnualized BTotal returns for periods of less than one year are not annualized. CTotal returns would have been lower had certain expenses not been reduced during the periods shown. DTotal returns do not include the effect of the former sales charges. ECalculated based on average shares outstanding during the period. FExpense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. GFor the year ended February 29. | ||||||
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Home Finance Portfolio
Investment Changes
Top Ten Stocks as of August 31, 2006 | ||
% of fund's | % of fund's net assets | |
Fannie Mae | 6.4 | 6.9 |
Freddie Mac | 5.9 | 5.8 |
Wells Fargo & Co. | 5.6 | 4.3 |
Radian Group, Inc. | 4.8 | 4.4 |
Countrywide Financial Corp. | 4.7 | 6.8 |
North Fork Bancorp, Inc., New York | 4.6 | 1.0 |
MGIC Investment Corp. | 4.2 | 4.2 |
Old Republic International Corp. | 4.2 | 4.1 |
PNC Financial Services Group, Inc. | 4.0 | 4.4 |
Fidelity National Financial, Inc. | 3.8 | 3.8 |
48.2 | ||
Top Industries (% of fund's net assets) | |||
As of August 31, 2006 | |||
| Thrifts & Mortgage Finance | 51.5% | |
| Commercial Banks | 23.3% | |
| Insurance | 14.2% | |
| Diversified Financial Services | 5.2% | |
| Real Estate Investment Trusts | 2.7% | |
| All Others* | 3.1% | |
As of February 28, 2006 | |||
| Thrifts & Mortgage Finance | 61.0% | |
| Commercial Banks | 17.9% | |
| Insurance | 14.7% | |
| Diversified Financial Services | 4.1% | |
| Real Estate | 1.2% | |
| All Others* | 1.1% | |
* Includes short-term investments and net other assets. |
Prior period industry classifications reflect the categories in place as of the date indicated and have not been adjusted to reflect current industry classifications. |
Semiannual Report
Home Finance Portfolio
Investments August 31, 2006 (Unaudited)
Showing Percentage of Net Assets
Common Stocks - 99.5% | |||
Shares | Value (Note 1) | ||
COMMERCIAL BANKS - 23.3% | |||
Diversified Banks - 6.7% | |||
HDFC Bank Ltd. sponsored ADR | 27,900 | $1,586,952 | |
ICICI Bank Ltd. sponsored ADR | 53,000 | 1,414,570 | |
Wells Fargo & Co. | 427,000 | 14,838,250 | |
17,839,772 | |||
Regional Banks - 16.6% | |||
Center Financial Corp., California | 29,788 | 726,827 | |
Colonial Bancgroup, Inc. | 310,600 | 7,606,594 | |
Commerce Bancorp, Inc., New Jersey (d) | 19,000 | 632,890 | |
EuroBancshares, Inc. (a) | 41,700 | 390,312 | |
Nara Bancorp, Inc. | 14,300 | 264,550 | |
North Fork Bancorp, Inc., New York | 441,359 | 12,110,891 | |
PNC Financial Services Group, Inc. | 150,700 | 10,668,053 | |
TCF Financial Corp. | 104,600 | 2,726,922 | |
TD Banknorth, Inc. | 283,675 | 8,396,780 | |
UCBH Holdings, Inc. | 29,244 | 530,486 | |
44,054,305 | |||
TOTAL COMMERCIAL BANKS | 61,894,077 | ||
CONSUMER FINANCE - 2.3% | |||
Consumer Finance - 2.3% | |||
American Express Co. | 44,200 | 2,322,268 | |
Capital One Financial Corp. | 51,800 | 3,786,580 | |
6,108,848 | |||
DIVERSIFIED FINANCIAL SERVICES - 5.2% | |||
Other Diversifed Financial Services - 4.9% | |||
Bank of America Corp. | 59,500 | 3,062,465 | |
JPMorgan Chase & Co. | 221,100 | 10,095,426 | |
13,157,891 | |||
Specialized Finance - 0.3% | |||
Moody's Corp. | 13,600 | 832,048 | |
TOTAL DIVERSIFIED FINANCIAL SERVICES | 13,989,939 | ||
INSURANCE - 14.2% | |||
Multi-Line Insurance - 3.2% | |||
Genworth Financial, Inc. Class A (non-vtg.) (d) | 248,135 | 8,543,288 | |
Property & Casualty Insurance - 11.0% | |||
Fidelity National Financial, Inc. | 256,266 | 10,309,581 | |
Shares | Value (Note 1) | ||
First American Corp., California | 195,100 | $7,924,962 | |
Old Republic International Corp. | 533,275 | 11,145,448 | |
29,379,991 | |||
TOTAL INSURANCE | 37,923,279 | ||
REAL ESTATE INVESTMENT TRUSTS - 2.7% | |||
Mortgage REITs - 1.4% | |||
Annaly Capital Management, Inc. | 107,000 | 1,338,570 | |
CapitalSource, Inc. | 69,013 | 1,677,016 | |
HomeBanc Mortgage Corp., Georgia | 96,900 | 649,230 | |
3,664,816 | |||
Office REITs - 1.3% | |||
American Financial Realty Trust (SBI) | 298,800 | 3,427,236 | |
TOTAL REAL ESTATE INVESTMENT TRUSTS | 7,092,052 | ||
REAL ESTATE MANAGEMENT & DEVELOPMENT - 0.3% | |||
Real Estate Management & Development - 0.3% | |||
Move, Inc. | 164,359 | 752,764 | |
THRIFTS & MORTGAGE FINANCE - 51.5% | |||
Thrifts & Mortgage Finance - 51.5% | |||
Astoria Financial Corp. | 180,600 | 5,544,420 | |
BankAtlantic Bancorp, Inc. Class A (non-vtg.) | 46,400 | 652,848 | |
Capitol Federal Financial | 83,400 | 2,830,596 | |
Clayton Holdings, Inc. | 69,774 | 861,011 | |
Countrywide Financial Corp. | 370,500 | 12,522,900 | |
Dime Community Bancshares, Inc. | 30,500 | 435,845 | |
Doral Financial Corp. (d) | 156,692 | 785,027 | |
Downey Financial Corp. | 4,300 | 263,977 | |
Fannie Mae | 323,700 | 17,042,804 | |
FirstFed Financial Corp., Delaware (a) | 15,100 | 767,986 | |
Freddie Mac | 245,600 | 15,620,160 | |
Golden West Financial Corp., Delaware | 110,000 | 8,303,900 | |
MGIC Investment Corp. (d) | 193,600 | 11,203,632 | |
New York Community Bancorp, Inc. | 454,337 | 7,455,670 | |
People's Bank, Connecticut | 212,800 | 7,692,720 | |
Radian Group, Inc. | 212,400 | 12,718,512 | |
Sovereign Bancorp, Inc. (d) | 483,943 | 10,085,372 | |
The PMI Group, Inc. | 111,657 | 4,828,049 | |
Triad Guaranty, Inc. (a) | 16,400 | 824,428 | |
Washington Federal, Inc. | 170,462 | 3,787,666 | |
Washington Mutual, Inc. (d) | 192,700 | 8,072,203 | |
Webster Financial Corp. | 97,900 | 4,624,796 | |
136,924,522 | |||
TOTAL COMMON STOCKS (Cost $206,149,752) | 264,685,481 | ||
Money Market Funds - 8.3% | |||
Shares | Value (Note 1) | ||
Fidelity Cash Central Fund, 5.31% (b) | 111,439 | $111,439 | |
Fidelity Securities Lending Cash Central Fund, 5.33% (b)(c) | 21,961,950 | 21,961,950 | |
TOTAL MONEY MARKET FUNDS (Cost $22,073,389) | 22,073,389 | ||
TOTAL INVESTMENT PORTFOLIO - 107.8% (Cost $228,223,141) | 286,758,870 |
NET OTHER ASSETS - (7.8)% | (20,771,917) | ||
NET ASSETS - 100% | $265,986,953 | ||
Legend |
(a)Non-income producing |
(b)Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. |
(c)Investment made with cash collateral received from securities on loan. |
(d)Security or a portion of the security is on loan at period end. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the fund from the affiliated Central funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $189,409 |
Fidelity Securities Lending Cash Central Fund | 20,561 |
Total | $209,970 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Home Finance Portfolio
Financial Statements
Statement of Assets and Liabilities
August 31, 2006 (Unaudited) | ||
Assets | ||
Investment in securities, at value (including securities loaned of $21,509,552) - See accompanying schedule: Unaffiliated issuers (cost $206,149,752) | $264,685,481 | |
Affiliated Central Funds (cost $22,073,389) | 22,073,389 | |
Total Investments (cost $228,223,141) | $286,758,870 | |
Receivable for investments sold | 1,359,733 | |
Receivable for fund shares sold | 110,386 | |
Dividends receivable | 385,727 | |
Interest receivable | 6,714 | |
Prepaid expenses | 355 | |
Other receivables | 4,148 | |
Total assets | 288,625,933 | |
Liabilities | ||
Payable for fund shares redeemed | 448,444 | |
Accrued management fee | 125,714 | |
Other affiliated payables | 78,716 | |
Other payables and accrued expenses | 24,156 | |
Collateral on securities loaned, at value | 21,961,950 | |
Total liabilities | 22,638,980 | |
Net Assets | $265,986,953 | |
Net Assets consist of: | ||
Paid in capital | $196,557,508 | |
Undistributed net investment income | 2,144,308 | |
Accumulated undistributed net realized gain (loss) on investments | 8,749,408 | |
Net unrealized appreciation (depreciation) on investments | 58,535,729 | |
Net Assets, for 5,143,720 shares outstanding | $265,986,953 | |
Net Asset Value, offering price and redemption price per share ($265,986,953 ÷ 5,143,720 shares) | $51.71 | |
Statement of Operations
Six months ended August 31, 2006 (Unaudited) | ||
Investment Income | ||
Dividends | $3,297,718 | |
Interest | 1,079 | |
Income from affiliated Central Funds | 209,970 | |
Total income | 3,508,767 | |
Expenses | ||
Management fee | $796,198 | |
Transfer agent fees | 415,794 | |
Accounting and security lending fees | 71,969 | |
Independent trustees' compensation | 576 | |
Custodian fees and expenses | 4,154 | |
Registration fees | 18,792 | |
Audit | 16,639 | |
Legal | 3,360 | |
Interest | 1,277 | |
Miscellaneous | 9,483 | |
Total expenses before reductions | 1,338,242 | |
Expense reductions | (2,811) | 1,335,431 |
Net investment income (loss) | 2,173,336 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers | 11,318,663 | |
Change in net unrealized appreciation (depreciation) on investment securities | (10,459,361) | |
Net gain (loss) | 859,302 | |
Net increase (decrease) in net assets resulting from operations | $3,032,638 | |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Home Finance Portfolio
Financial Statements - continued
Statement of Changes in Net Assets
Six months ended August 31, 2006 (Unaudited) | Year ended | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $2,173,336 | $7,870,259 |
Net realized gain (loss) | 11,318,663 | 40,457,175 |
Change in net unrealized appreciation (depreciation) | (10,459,361) | (47,918,726) |
Net increase (decrease) in net assets resulting from operations | 3,032,638 | 408,708 |
Distributions to shareholders from net investment income | (1,090,821) | (5,380,189) |
Distributions to shareholders from net realized gain | (2,727,055) | (37,238,765) |
Total distributions | (3,817,876) | (42,618,954) |
Share transactions | 29,930,809 | 36,144,380 |
Reinvestment of distributions | 3,655,702 | 40,625,810 |
Cost of shares redeemed | (58,948,811) | (138,541,892) |
Net increase (decrease) in net assets resulting from share transactions | (25,362,300) | (61,771,702) |
Redemption fees | 10,239 | 18,308 |
Total increase (decrease) in net assets | (26,137,299) | (103,963,640) |
Net Assets | ||
Beginning of period | 292,124,252 | 396,087,892 |
End of period (including undistributed net investment income of $2,144,308 and undistributed net investment income | $265,986,953 | $292,124,252 |
Other Information Shares | ||
Sold | 574,315 | 643,172 |
Issued in reinvestment of distributions | 71,428 | 783,468 |
Redeemed | (1,137,946) | (2,490,689) |
Net increase (decrease) | (492,203) | (1,064,049) |
Financial Highlights
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Insurance Portfolio
Investment Changes
Top Ten Stocks as of August 31, 2006 | ||
% of fund's | % of fund's net assets | |
American International Group, Inc. | 8.6 | 8.7 |
ACE Ltd. | 6.3 | 5.7 |
Hartford Financial Services Group, Inc. | 5.8 | 4.9 |
MetLife, Inc. | 5.5 | 4.3 |
The St. Paul Travelers Companies, Inc. | 5.2 | 5.4 |
AFLAC, Inc. | 4.3 | 4.1 |
Prudential Financial, Inc. | 4.2 | 3.9 |
Allstate Corp. | 3.9 | 4.1 |
UnitedHealth Group, Inc. | 3.7 | 0.0 |
The Chubb Corp. | 3.5 | 2.9 |
51.0 | ||
Top Industries (% of fund's net assets) | |||
As of August 31, 2006 | |||
| Insurance | 93.4% | |
| Health Care Providers & Services | 3.9% | |
| Thrifts & Mortgage Finance | 2.1% | |
 | Diversified Financial Services | 0.3% | |
| Capital Markets | 0.1% | |
| All Others* | 0.2% | |
As of February 28, 2006 | |||
| Insurance | 92.0% | |
| Health Care Providers & Services | 4.7% | |
| Thrifts & Mortgage Finance | 2.0% | |
| Capital Markets | 0.6% | |
| Diversified Financial Services | 0.3% | |
| All Others* | 0.4% | |
* Includes short-term investments and net other assets. |
Prior period industry classifications reflect the categories in place as of the date indicated and have not been adjusted to reflect current industry classifications. |
Semiannual Report
Insurance Portfolio
Investments August 31, 2006 (Unaudited)
Showing Percentage of Net Assets
Common Stocks - 99.8% | |||
Shares | Value (Note 1) | ||
CAPITAL MARKETS - 0.1% | |||
Asset Management & Custody Banks - 0.1% | |||
Ameriprise Financial, Inc. | 7,300 | $333,829 | |
DIVERSIFIED FINANCIAL SERVICES - 0.3% | |||
Multi-Sector Holdings - 0.3% | |||
Leucadia National Corp. | 20,600 | 530,038 | |
HEALTH CARE PROVIDERS & SERVICES - 3.9% | |||
Managed Health Care - 3.9% | |||
Health Net, Inc. (a) | 7,300 | 305,213 | |
UnitedHealth Group, Inc. | 132,500 | 6,883,375 | |
7,188,588 | |||
INSURANCE - 93.4% | |||
Insurance Brokers - 4.4% | |||
Aon Corp. | 45,600 | 1,576,392 | |
Brown & Brown, Inc. | 13,300 | 398,202 | |
Hilb Rogal & Hobbs Co. | 9,800 | 424,046 | |
Marsh & McLennan Companies, Inc. | 40,000 | 1,046,400 | |
National Financial Partners Corp. | 22,500 | 828,450 | |
USI Holdings Corp. (a) | 93,300 | 1,247,421 | |
Willis Group Holdings Ltd. | 72,700 | 2,633,194 | |
8,154,105 | |||
Life & Health Insurance - 20.0% | |||
AFLAC, Inc. | 176,200 | 7,941,334 | |
American Equity Investment Life Holding Co. | 19,800 | 229,086 | |
Lincoln National Corp. | 101,430 | 6,156,801 | |
Manulife Financial Corp. | 72,522 | 2,363,379 | |
MetLife, Inc. (d) | 183,500 | 10,098,005 | |
Protective Life Corp. | 13,300 | 612,199 | |
Prudential Financial, Inc. | 106,000 | 7,781,460 | |
Shin Kong Financial Holding Co. Ltd. | 393,403 | 340,836 | |
StanCorp Financial Group, Inc. | 20,100 | 936,057 | |
T&D Holdings, Inc. | 6,700 | 497,100 | |
36,956,257 | |||
Multi-Line Insurance - 18.0% | |||
American Financial Group, Inc., Ohio | 27,600 | 1,289,472 | |
American International Group, Inc. | 247,800 | 15,814,595 | |
Assurant, Inc. | 36,800 | 1,893,360 | |
Genworth Financial, Inc. Class A (non-vtg.) | 79,200 | 2,726,856 | |
Hartford Financial Services Group, Inc. | 124,200 | 10,663,812 | |
HCC Insurance Holdings, Inc. | 24,800 | 805,752 | |
33,193,847 | |||
Property & Casualty Insurance - 36.7% | |||
ACE Ltd. | 216,449 | 11,657,943 | |
Admiral Group PLC | 60,300 | 777,333 | |
Alleghany Corp. | 1,572 | 443,383 | |
Allied World Assurance Co. Holdings Ltd. | 800 | 30,840 | |
Shares | Value (Note 1) | ||
Allstate Corp. (d) | 123,600 | $7,161,384 | |
AMBAC Financial Group, Inc. | 14,950 | 1,294,521 | |
Aspen Insurance Holdings Ltd. | 156,400 | 3,867,772 | |
Axis Capital Holdings Ltd. | 112,500 | 3,648,375 | |
Berkshire Hathaway, Inc. Class A (a) | 9 | 864,873 | |
Catlin Group Ltd. | 152,000 | 1,366,113 | |
Fidelity National Financial, Inc. | 26,484 | 1,065,451 | |
Fidelity National Title Group, Inc. | 29,702 | 598,792 | |
Markel Corp. (a) | 3,000 | 1,089,990 | |
MBIA, Inc. | 54,000 | 3,328,020 | |
Navigators Group, Inc. (a) | 20,700 | 953,856 | |
Old Republic International Corp. | 78,725 | 1,645,353 | |
Philadelphia Consolidated Holdings Corp. (a) | 18,800 | 679,808 | |
RLI Corp. | 19,900 | 973,110 | |
Specialty Underwriters' Alliance, Inc. (a) | 81,800 | 651,128 | |
The Chubb Corp. | 129,058 | 6,473,549 | |
The St. Paul Travelers Companies, Inc. | 216,891 | 9,521,515 | |
United America Indemnity Ltd. | 47,500 | 1,020,300 | |
W.R. Berkley Corp. | 148,643 | 5,202,505 | |
XL Capital Ltd. Class A | 51,900 | 3,406,716 | |
67,722,630 | |||
Reinsurance - 14.3% | |||
Benfield Group PLC | 123,100 | 864,939 | |
Endurance Specialty Holdings Ltd. | 194,400 | 6,273,288 | |
Everest Re Group Ltd. | 36,500 | 3,430,270 | |
IPC Holdings Ltd. | 49,000 | 1,369,550 | |
Max Re Capital Ltd. | 35,900 | 833,239 | |
Montpelier Re Holdings Ltd. | 25,700 | 463,885 | |
Muenchener Rueckversicherungs-Gesellschaft AG (Reg.) | 5,200 | 783,346 | |
PartnerRe Ltd. | 42,500 | 2,732,750 | |
Platinum Underwriters Holdings Ltd. | 145,825 | 4,331,003 | |
RAM Holdings Ltd. | 22,500 | 296,775 | |
Reinsurance Group of America, Inc. | 34,800 | 1,798,464 | |
RenaissanceRe Holdings Ltd. | 19,795 | 1,019,443 | |
Scottish Re Group Ltd. | 135,000 | 1,225,800 | |
Swiss Reinsurance Co. (Reg.) | 8,313 | 634,266 | |
Transatlantic Holdings, Inc. | 6,562 | 403,038 | |
26,460,056 | |||
TOTAL INSURANCE | 172,486,895 | ||
THRIFTS & MORTGAGE FINANCE - 2.1% | |||
Thrifts & Mortgage Finance - 2.1% | |||
MGIC Investment Corp. (d) | 29,200 | 1,689,804 | |
Radian Group, Inc. | 20,000 | 1,197,600 | |
The PMI Group, Inc. | 22,500 | 972,900 | |
3,860,304 | |||
TOTAL COMMON STOCKS (Cost $138,884,403) | 184,399,654 | ||
Money Market Funds - 10.7% | |||
Shares | Value (Note 1) | ||
Fidelity Cash Central Fund, 5.31% (b) | 299,039 | $299,039 | |
Fidelity Securities Lending Cash Central Fund, 5.33% (b)(c) | 19,463,775 | 19,463,775 | |
TOTAL MONEY MARKET FUNDS (Cost $19,762,814) | 19,762,814 | ||
TOTAL INVESTMENT PORTFOLIO - 110.5% (Cost $158,647,217) | 204,162,468 |
NET OTHER ASSETS - (10.5)% | (19,461,921) | ||
NET ASSETS - 100% | $184,700,547 | ||
Legend |
(a)Non-income producing |
(b)Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. |
(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 the affiliated Central funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $19,242 |
Fidelity Securities Lending Cash Central Fund | 18,612 |
Total | $37,854 |
Other Information |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: |
United States of America | 71.6% |
Bermuda | 17.4% |
Cayman Islands | 7.6% |
Canada | 1.3% |
Others (individually less than 1%) | 2.1% |
100.0% |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Insurance Portfolio
Financial Statements
Statement of Assets and Liabilities
August 31, 2006 (Unaudited) | ||
Assets | ||
Investment in securities, at value (including securities loaned of $19,126,452) - See accompanying schedule: Unaffiliated issuers (cost $138,884,403) | $184,399,654 | |
Affiliated Central Funds (cost $19,762,814) | 19,762,814 | |
Total Investments (cost $158,647,217) | $204,162,468 | |
Foreign currency held at value (cost $2) | 2 | |
Receivable for fund shares sold | 167,368 | |
Dividends receivable | 244,420 | |
Interest receivable | 592 | |
Prepaid expenses | 182 | |
Other receivables | 3,137 | |
Total assets | 204,578,169 | |
Liabilities | ||
Payable for fund shares redeemed | 247,313 | |
Accrued management fee | 85,354 | |
Other affiliated payables | 58,288 | |
Other payables and accrued expenses | 22,892 | |
Collateral on securities loaned, at value | 19,463,775 | |
Total liabilities | 19,877,622 | |
Net Assets | $184,700,547 | |
Net Assets consist of: | ||
Paid in capital | $127,937,799 | |
Undistributed net investment income | 568,695 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 10,678,583 | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 45,515,470 | |
Net Assets, for 2,692,413 shares outstanding | $184,700,547 | |
Net Asset Value, offering price and redemption price per share ($184,700,547 ÷ 2,692,413 shares) | $68.60 | |
Statement of Operations
Six months ended August 31, 2006 (Unaudited) | ||
Investment Income | ||
Dividends | $1,508,735 | |
Interest | 16 | |
Income from affiliated Central Funds | 37,854 | |
Total income | 1,546,605 | |
Expenses | ||
Management fee | $544,363 | |
Transfer agent fees | 318,829 | |
Accounting and security lending fees | 48,373 | |
Independent trustees' compensation | 380 | |
Custodian fees and expenses | 7,801 | |
Registration fees | 23,191 | |
Audit | 16,414 | |
Legal | 1,918 | |
Miscellaneous | 6,981 | |
Total expenses before reductions | 968,250 | |
Expense reductions | (1,994) | 966,256 |
Net investment income (loss) | 580,349 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers | 11,327,282 | |
Foreign currency transactions | (2,342) | |
Total net realized gain (loss) | 11,324,940 | |
Change in net unrealized appreciation (depreciation) on: Investment securities | (11,196,911) | |
Assets and liabilities in foreign currencies | (271) | |
Total change in net unrealized appreciation (depreciation) | (11,197,182) | |
Net gain (loss) | 127,758 | |
Net increase (decrease) in net assets resulting from operations | $708,107 | |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Insurance Portfolio
Financial Statements - continued
Statement of Changes in Net Assets
Six months ended August 31, 2006 (Unaudited) | Year ended | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $580,349 | $2,044,551 |
Net realized gain (loss) | 11,324,940 | 6,240,077 |
Change in net unrealized appreciation (depreciation) | (11,197,182) | 15,534,827 |
Net increase (decrease) in net assets resulting from operations | 708,107 | 23,819,455 |
Distributions to shareholders from net investment income | (173,810) | (1,925,489) |
Distributions to shareholders from net realized gain | (1,274,609) | (4,025,157) |
Total distributions | (1,448,419) | (5,950,646) |
Share transactions | 34,243,481 | 160,969,117 |
Reinvestment of distributions | 1,391,653 | 5,726,500 |
Cost of shares redeemed | (59,134,338) | (149,078,874) |
Net increase (decrease) in net assets resulting from share transactions | (23,499,204) | 17,616,743 |
Redemption fees | 13,002 | 64,892 |
Total increase (decrease) in net assets | (24,226,514) | 35,550,444 |
Net Assets | ||
Beginning of period | 208,927,061 | 173,376,617 |
End of period (including undistributed net investment income of $568,695 and undistributed net investment income of $356,778, respectively) | $184,700,547 | $208,927,061 |
Other Information Shares | ||
Sold | 508,604 | 2,435,562 |
Issued in reinvestment of distributions | 20,883 | 85,883 |
Redeemed | (877,440) | (2,270,942) |
Net increase (decrease) | (347,953) | 250,503 |
Financial Highlights
Six months ended August 31, 2006 | Years ended February 28, | |||||
(Unaudited) | 2006 | 2005 | 2004H | 2003 | 2002 | |
Selected Per-Share Data | ||||||
Net asset value, beginning of period | $68.72 | $62.15 | $59.67 | $41.06 | $50.79 | $47.12 |
Income from Investment Operations | ||||||
Net investment income (loss)E | .20 | .70 F | .23 | .08 | .02 | .13 |
Net realized and unrealized gain (loss) | .18 | 7.71 | 2.92 | 19.88 | (8.14) | 3.83 |
Total from investment operations | .38 | 8.41 | 3.15 | 19.96 | (8.12) | 3.96 |
Distributions from net investment income | (.06) | (.60) | (.10) | (.08) | (.09) | (.03) |
Distributions from net realized gain | (.44) | (1.26) | (.59) | (1.29) | (1.55) | (.30) |
Total distributions | (.50) | (1.86) | (.69) | (1.37) | (1.64) | (.33) |
Redemption fees added to paid in capital E | - I | .02 | .02 | .02 | .03 | .04 |
Net asset value, end of period | $68.60 | $68.72 | $62.15 | $59.67 | $41.06 | $50.79 |
Total Return B, C, D | .57% | 13.68% | 5.35% | 49.04% | (16.41)% | 8.56% |
Ratios to Average Net Assets G | ||||||
Expenses before reductions | 1.01% A | 1.03% | 1.05% | 1.24% | 1.26% | 1.20% |
Expenses net of fee waivers, if any | 1.01% A | 1.03% | 1.05% | 1.24% | 1.26% | 1.20% |
Expenses net of all reductions | 1.00% A | 1.02% | 1.04% | 1.23% | 1.24% | 1.17% |
Net investment income (loss) | .60% A | 1.08% F | .39% | .16% | .05% | .28% |
Supplemental Data | ||||||
Net assets, end of period (000 omitted) | $184,701 | $208,927 | $173,377 | $151,875 | $88,150 | $143,213 |
Portfolio turnover rate | 45% A | 44% | 50% | 59% | 95% | 104% |
AAnnualized BTotal returns for periods of less than one year are not annualized. CTotal returns would have been lower had certain expenses not been reduced during the periods shown. DTotal returns do not include the effect of the former sales charges. ECalculated based on average shares outstanding during the period. FInvestment income per share reflects a special dividend which amounted to $.38 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been .50%. GExpense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. HFor the year ended February 29. IAmount represents less than $.01 per share. | ||||||
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Notes to Financial Statements
For the period ended August 31, 2006 (Unaudited)
1. Significant Accounting Policies.
Banking Portfolio, Brokerage and Investment Management Portfolio, Financial Services Portfolio, Home Finance Portfolio, and Insurance Portfolio (the Funds) are funds of Fidelity Select Portfolios (the trust). The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Funds are non-diversified with the exception of Fidelity Select Home Finance, Financial Services, and Banking. The Funds invest primarily in securities of companies whose principal business activities fall within specific industries. Each Fund is authorized to issue an unlimited number of shares. Certain Funds may invest in affiliated money market central funds (Money Market Central Funds), which are open-end investment companies available to investment companies and other accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. The following summarizes the significant accounting policies of the Funds:
Security Valuation. Investments are valued and net asset value (NAV) per share is calculated (NAV calculation) as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time. During the period, each Fund also calculated a NAV each hour on the hour (commencing at 10:00 a.m. Eastern time until one hour prior to the close of business on the NYSE). Effective October 1, 2006, each Fund will eliminate the hourly NAV calculation. Wherever possible, each Fund uses independent pricing services approved by the Board of Trustees to value its investments.
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price. Investments in open-end mutual funds are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or do not accurately reflect fair value, valuations may be determined in accordance with procedures adopted by the Board of Trustees. For example, when developments occur between the close of a market and the close of the NYSE that may materially affect the value of some or all of the securities, or when trading in a security is halted, those securities may be fair valued. Factors used in the determination of fair value may include monitoring news to identify significant market or security specific events such as changes in the value of U.S. securities markets, reviewing developments in foreign markets and evaluating the performance of ADRs, futures contracts and exchange-traded funds. Because each Fund's utilization of fair value pricing depends on market activity, the frequency with which fair value pricing is used can not be predicted and may be utilized to a significant extent. The value of securities used for NAV calculation under fair value pricing may differ from published prices for the same securities.
Foreign Currency. Certain Funds may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. Security transactions are accounted for as of trade date. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Funds are informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Funds estimate the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income is accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, each Fund intends to qualify as a regulated investment company by distributing all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code. As a result, no provision for income taxes is
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
1. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
required in the accompanying financial statements. Foreign taxes are provided for based on each Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. In addition, certain Funds claimed a portion of the payment made to redeeming shareholders as a distribution for income tax purposes.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to losses deferred due to wash sales.
The federal tax cost of investments and unrealized appreciation (depreciation) as of period end were as follows for each Fund:
Cost for Federal | Unrealized | Unrealized | Net Unrealized | |
Banking Portfolio | $308,943,989 | $110,721,606 | $(3,639,113) | $107,082,493 |
Brokerage and Investment Management Portfolio | 865,213,475 | 162,108,196 | (12,442,252) | 149,665,944 |
Financial Services Portfolio | 352,644,811 | 138,587,785 | (8,853,023) | 129,734,762 |
Home Finance Portfolio | 230,343,084 | 64,575,544 | (8,159,758) | 56,415,786 |
Insurance Portfolio | 159,463,314 | 47,735,443 | (3,036,289) | 44,699,154 |
Trading (Redemption) Fees. Shares in the Funds held less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, including any estimated redemption fees paid by FMR, are retained by the Fund and accounted for as an addition to paid in capital. Shareholders are also subject to an additional $7.50 fee for shares exchanged into another Fidelity fund (see Note 4).
New Accounting Pronouncements. In July 2006, Financial Accounting Standards Board Interpretation No. 48, Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement 109 (FIN 48), was issued and is effective for fiscal years beginning after December 15, 2006. FIN 48 sets forth a threshold for financial statement recognition, measurement and disclosure of a tax position taken or expected to be taken on a tax return. Management is currently evaluating the impact, if any, the adoption of FIN 48 will have on the Funds' net assets, results of operations and financial statement disclosures.
In addition, in September 2006, Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157), was issued and is effective for fiscal years beginning after November 15, 2007. SFAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. Management is currently evaluating the impact the adoption of SFAS 157 will have on the Funds' financial statement disclosures.
2. Operating Policies.
Repurchase Agreements. FMR has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits certain Funds and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts which are then invested in repurchase agreements. Certain Funds may also invest directly with institutions in repurchase agreements. Repurchase agreements are collateralized by government or non-government securities. Upon settlement date, collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. Each applicable Fund monitors, on a daily basis, the value of the collateral to ensure it is at least equal to the principal amount of the repurchase agreement (including accrued interest). In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the value of the collateral may decline.
Restricted Securities. Certain Funds may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities is included at the end of each applicable Fund's Schedule of Investments.
Semiannual Report
3. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, are noted in the table below.
Purchases ($) | Sales ($) | |
Banking Portfolio | 194,188,404 | 156,602,170 |
Brokerage and Investment Management Portfolio | 451,105,858 | 712,157,485 |
Financial Services Portfolio | 77,520,676 | 88,209,257 |
Home Finance Portfolio | 45,929,493 | 71,231,517 |
Insurance Portfolio | 43,135,395 | 67,015,779 |
4. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the Funds with investment management related services for which the Funds pay a monthly management fee. The management fee is the sum of an individual fund fee rate and a group fee rate. The individual fund fee rate is applied to each Fund's average net assets. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, each Fund's annualized management fee rate expressed as a percentage of each Fund's average net assets was as follows:
Individual Rate | Group Rate | Total | |
Banking Portfolio | .30% | .27% | .57% |
Brokerage and Investment Management Portfolio | .30% | .27% | .57% |
Financial Services Portfolio | .30% | .27% | .57% |
Home Finance Portfolio | .30% | .27% | .57% |
Insurance Portfolio | .30% | .27% | .57% |
Transfer Agent Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, is the Funds' transfer, dividend disbursing and shareholder servicing agent. FSC receives account fees and asset-based fees that vary according to account size and type of account. FSC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, the transfer agent fees were equivalent to the following annualized rates expressed as a percentage of average net assets:
Banking Portfolio | .28% | |
Brokerage and Investment Management Portfolio | .26% | |
Financial Services Portfolio | .29% | |
Home Finance Portfolio | .30% | |
Insurance Portfolio | .33% |
Accounting and Security Lending Fees. FSC maintains each Fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Affiliated Central Funds. Certain Funds may invest in Money Market Central Funds which seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
The Money Market Central Funds do not pay a management fee.
Exchange Fees. During the period, FSC received the proceeds of a $7.50 fee to cover administrative costs associated with exchanges out of the Funds to any other Fidelity Select fund or to any other Fidelity fund made through non-automated channels. Effective October 1, 2006, the exchange fees will be eliminated. For the period, exchange fees retained by FSC were as follows:
Retained | |
Banking Portfolio | $ 1,793 |
Brokerage and Investment Management Portfolio | 7,845 |
Financial Services Portfolio | 1,883 |
Home Finance Portfolio | 2,078 |
Insurance Portfolio | 1,275 |
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
4. Fees and Other Transactions with Affiliates - continued
Brokerage Commissions. Certain Funds placed a portion of their portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were as follows:
Amount | |
Banking Portfolio | $568 |
Brokerage and Investment Management Portfolio | 1,675 |
Financial Services Portfolio | 444 |
Home Finance Portfolio | 755 |
Insurance Portfolio | 1,389 |
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Funds, along with other registered investment companies having management contracts with FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the Funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. Each applicable fund's activity in this program during the period for which loans were outstanding was as follows:
Borrower or | Average Daily Loan Balance | Weighted | Interest Expense | |
Brokerage and Investment Management Portfolio | Borrower | $7,991,879 | 5.10% | $37,395 |
Home Finance Portfolio | Borrower | 9,896,000 | 4.65% | 1,277 |
5. Committed Line of Credit.
Certain Funds participate with other funds managed by FMR in a $4.2 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The participating funds have agreed to pay commitment fees on their pro rata portion of the line of credit, which is reflected in Miscellaneous Expense on the Statement of Operations, and is as follows:
Banking Portfolio | $ 507 |
Brokerage and Investment Management Portfolio | 1,553 |
Financial Services Portfolio | 675 |
Home Finance Portfolio | 408 |
Insurance Portfolio | 281 |
During the period, there were no borrowings on this line of credit.
6. Security Lending.
Certain Funds lend portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, each applicable Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Funds and any additional required collateral is delivered to the Funds on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on each applicable Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented on each applicable Fund's Statement of Operations as a component of income from affiliated central funds. Net income from lending portfolio securities during the period amounted to:
Banking Portfolio | $13,628 |
Brokerage and Investment Management Portfolio | 324,765 |
Financial Services Portfolio | 33,169 |
Home Finance Portfolio | 20,561 |
Insurance Portfolio | 18,612 |
Semiannual Report
7. Bank Borrowings.
Each Fund is permitted to have bank borrowings for temporary or emergency purposes to fund shareholder redemptions. Each Fund has established borrowing arrangements with certain banks. The interest rate on the borrowings is the bank's base rate, as revised from time to time. At period end, there were no bank borrowings outstanding. Each applicable Fund's activity in this program during the period for which loans were outstanding was as follows:
Average Daily | Weighted Average | |
Brokerage and Investment Management Portfolio | $4,020,000 | 5.30% |
8. Expense Reductions.
Many of the brokers with whom FMR places trades on behalf of certain Funds provided services to these Funds in addition to trade execution. These services included payments of expenses on behalf of each applicable Fund. In addition, through arrangements with each applicable fund's custodian and transfer agent, credits realized as a result of uninvested cash balances were used to reduce each applicable fund's expenses. All of the applicable expense reductions are noted in the table below.
Brokerage Service Arrangements | Custody | Transfer | |
Banking Portfolio | $28,094 | $339 | $1,230 |
Brokerage and Investment Management Portfolio | 36,084 | - | 2,422 |
Financial Services Portfolio | 18,311 | - | 5,871 |
Home Finance Portfolio | 769 | - | 2,042 |
Insurance Portfolio | 1,151 | - | 843 |
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.
Semiannual Report
Proxy Voting Results
A special meeting of Fidelity Select Portfolios' shareholders was held on September 20, 2006. The results of votes taken among shareholders on the proposals before them are reported below. Each vote reported represents one dollar of net asset value held on the record date for the meeting.
PROPOSAL 1 | ||
To elect a Board of Trustees. A | ||
# of | % of | |
Dennis J. Dirks | ||
Affirmative | 13,182,341,755.09 | 94.980 |
Withheld | 696,736,162.41 | 5.020 |
TOTAL | 13,879,077,917.50 | 100.000 |
Albert R. Gamper, Jr. | ||
Affirmative | 13,177,593,614.43 | 94.946 |
Withheld | 701,484,303.07 | 5.054 |
TOTAL | 13,879,077,917.50 | 100.000 |
Robert M. Gates | ||
Affirmative | 13,141,235,622.81 | 94.684 |
Withheld | 737,842,294.69 | 5.316 |
TOTAL | 13,879,077,917.50 | 100.000 |
George H. Heilmeier | ||
Affirmative | 13,140,073,210.00 | 94.675 |
Withheld | 739,004,707.50 | 5.325 |
TOTAL | 13,879,077,917.50 | 100.000 |
Edward C. Johnson 3d | ||
Affirmative | 13,106,284,587.54 | 94.432 |
Withheld | 772,793,329.96 | 5.568 |
TOTAL | 13,879,077,917.50 | 100.000 |
Stephen P. Jonas | ||
Affirmative | 13,168,282,872.88 | 94.879 |
Withheld | 710,795,044.62 | 5.121 |
TOTAL | 13,879,077,917.50 | 100.000 |
James H. KeyesB | ||
Affirmative | 13,164,603,089.66 | 94.852 |
Withheld | 714,474,827.84 | 5.148 |
TOTAL | 13,879,077,917.50 | 100.000 |
Marie L. Knowles | ||
Affirmative | 13,169,356,779.66 | 94.886 |
Withheld | 709,721,137.84 | 5.114 |
TOTAL | 13,879,077,917.50 | 100.000 |
Ned C. Lautenbach | ||
Affirmative | 13,166,485,155.52 | 94.866 |
Withheld | 712,592,761.98 | 5.134 |
TOTAL | 13,879,077,917.50 | 100.000 |
William O. McCoy | ||
Affirmative | 13,129,548,996.59 | 94.600 |
Withheld | 749,528,920.91 | 5.400 |
TOTAL | 13,879,077,917.50 | 100.000 |
Robert L. Reynolds | ||
Affirmative | 13,180,813,649.06 | 94.969 |
Withheld | 698,264,268.44 | 5.031 |
TOTAL | 13,879,077,917.50 | 100.000 |
# of | % of | |
Cornelia M. Small | ||
Affirmative | 13,170,500,616.42 | 94.895 |
Withheld | 708,577,301.08 | 5.105 |
TOTAL | 13,879,077,917.50 | 100.000 |
William S. Stavropoulos | ||
Affirmative | 13,143,284,328.22 | 94.699 |
Withheld | 735,793,589.28 | 5.301 |
TOTAL | 13,879,077,917.50 | 100.000 |
Kenneth L. Wolfe | ||
Affirmative | 13,162,946,758.47 | 94.840 |
Withheld | 716,131,159.03 | 5.160 |
TOTAL | 13,879,077,917.50 | 100.000 |
PROPOSAL 9A & 10A | ||
To modify the fund's fundamental "invests primarily" policy (the investment policy concerning the fund's primary investments). | ||
Banking Portfolio | ||
# of | % of | |
Affirmative | 169,347,655.70 | 78.441 |
Against | 15,304,588.89 | 7.089 |
Abstain | 9,861,771.47 | 4.568 |
Broker Non-Votes | 21,378,320.82 | 9.902 |
TOTAL | 215,892,336.88 | 100.000 |
Home Finance Portfolio | ||
# of | % of | |
Affirmative | 124,571,494.04 | 80.299 |
Against | 8,458,103.51 | 5.452 |
Abstain | 6,962,928.43 | 4.488 |
Broker Non-Votes | 15,142,939.20 | 9.761 |
TOTAL | 155,135,465.18 | 100.000 |
PROPOSAL 9B & 10B | ||
To modify the fund's investment concentration policy. | ||
Banking Portfolio | ||
# of | % of | |
Affirmative | 169,194,304.87 | 78.370 |
Against | 15,339,699.77 | 7.105 |
Abstain | 9,980,011.42 | 4.623 |
Broker Non-Votes | 21,378,320.82 | 9.902 |
TOTAL | 215,892,336.88 | 100.000 |
Home Finance Portfolio | ||
# of | % of | |
Affirmative | 124,140,803.97 | 80.021 |
Against | 8,317,343.44 | 5.361 |
Abstain | 7,534.378.57 | 4.857 |
Broker Non-Votes | 15,142,939.20 | 9.761 |
TOTAL | 155,135,465.18 | 100.000 |
ADenotes trust-wide proposal and voting results. BEffective on or about January 1, 2007. | ||
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees
Select Banking
Select Brokerage and Investment Management
Select Financial Services
Select Home Finance
Select Insurance
Each year, typically in July, the Board of Trustees, including the Independent Trustees (together, the Board), votes on the renewal of the management contract and sub-advisory agreements (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 throughout the year.
The Board meets regularly each month except August and takes into account throughout the year matters bearing on Advisory Contracts. The Board, acting directly and through its separate committees, considers at each of its meetings factors that are relevant to the annual renewal of each fund's Advisory Contracts, including the services and support provided to each fund and its shareholders. At the time of the renewal, the Board had 12 standing committees, each composed of 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. Each committee has adopted a written charter outlining the structure and purposes of the committee. One such committee, the Equity Contract Committee, meets periodically as needed throughout the year to consider matters specifically related to the annual renewal of Advisory Contracts. The committee requests and receives information on, and makes recommendations to the Independent Trustees concerning, the approval and annual review of the Advisory Contracts.
At its July 2006 meeting, the Board of Trustees, including the Independent Trustees, unanimously determined to renew the Advisory Contracts for each fund. 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 the management fee and total expenses of each fund; (iii) the total costs of the services to be provided by and the profits to be realized by the investment adviser and its affiliates from the relationship with each fund; (iv) the extent to which economies of scale 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 determining whether to renew the Advisory Contracts for each fund, the Board ultimately reached a determination, with the assistance of fund counsel and Independent Trustees' counsel, that the renewal of the Advisory Contracts and the compensation to be received by Fidelity under the management contracts is consistent with Fidelity's fiduciary duty under applicable law. In addition to evaluating the specific factors noted above, the Board, in reaching its determination, is aware that shareholders in each fund have a broad range of investment choices available to them, including a wide choice among mutual funds offered by competitors to Fidelity, and that each fund's shareholders, with 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, managed by Fidelity.
Nature, Extent, and Quality of Services Provided. The Board considered staffing within the investment adviser, FMR, and the sub-advisers (together, the Investment Advisers), including the backgrounds of the funds' portfolio managers and the funds' investment objectives and disciplines. 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.
Resources Dedicated to Investment Management and Support Services. The Board reviewed the size, education, and experience of the Investment Advisers' investment staff, their use of technology, and the Investment Advisers' approach to recruiting, training, and retaining portfolio managers and other research, advisory, and management personnel. The Board considered Fidelity's extensive global research capabilities that enable the Investment Advisers to aggregate data from various sources in an effort to produce positive investment results. The Board noted that Fidelity's analysts have access to a variety of technological tools that enable them to perform both fundamental and quantitative analysis and to specialize in various disciplines. The Board also considered that Fidelity's portfolio managers and analysts have access to daily portfolio attribution that allows for monitoring of a fund's portfolio, as well as an electronic communication system that provides immediate real-time access to research concerning issuers and credit enhancers.
Shareholder and Administrative Services. The Board considered (i) the nature, extent, quality, and cost of administrative, distribution, 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 Investment Advisers' 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 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 also considered that Fidelity voluntarily pays for market data out of its own resources.
The Board noted that the growth of fund assets 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 phone representatives and over the Internet, and investor education materials and asset allocation tools.
Semiannual Report
Board Approval of Investment Advisory Contracts and Management Fees - continued
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 for a large variety of mutual fund investor services. The Board noted that, since the last Advisory Contract renewals in July 2005, Fidelity has taken a number of actions that benefited particular funds, including (i) dedicating additional resources to investment research and to restructure the investment research teams; (ii) voluntarily entering into contractual arrangements with certain brokers pursuant to which Fidelity pays for research products and services separately out of its own resources, rather than bundling with fund commissions; (iii) launching the Fidelity Advantage Class of its five Spartan stock index funds and three Spartan bond index funds, which is a lower-fee class available to shareholders with higher account balances; (iv) contractually agreeing to impose expense limitations on Fidelity U.S. Bond Index Fund and reducing the fund's initial investment minimum; and (v) offering shareholders of each of the Fidelity Institutional Money Market Funds the privilege of exchanging shares of the fund for shares of other Fidelity funds.
Investment Performance and Compliance. The Board considered whether each fund has operated within its investment objective, as well as its record of compliance with its investment restrictions. It also reviewed each fund's absolute investment performance, as well as each fund's relative investment performance measured against (i) a proprietary custom index (or a Goldman Sachs index that reflects the market sector in which the fund invests, in the case of Financial Services Portfolio), and (ii) a peer group of mutual funds over multiple periods. For each fund, the following charts considered by the Board show, over the one-, three-, and five-year periods ended December 31, 2005, the fund's cumulative total returns, the cumulative total returns of a proprietary custom index (or a Goldman Sachs index, in the case of Financial Services Portfolio) ("benchmark"), and a range of cumulative total returns of a peer group of mutual funds identified by Lipper Inc. as having an investment objective similar to that of the fund. The box within each chart shows the 25th percentile return (bottom of box) and the 75th percentile return (top of box) of the Lipper peer group. Returns shown above the box are in the first quartile and returns shown below the box are in the fourth quartile. The percentage beaten number noted below each chart corresponds to the percentile box and represents the percentage of funds in the Lipper peer group whose performance was equal to or lower than that of the fund. For each fund (other than Financial Services Portfolio), the fund's proprietary custom index is an index developed and periodically revised by FMR that is a market-capitalization weighted index of securities that meet the fund's 80% name test.
Banking Portfolio
The Board reviewed the fund's relative investment performance against its Lipper peer group and stated that the performance of the fund was in the fourth quartile for the one- and three-year periods and the second quartile for the five-year period. The Board noted that FMR does not consider that Lipper peer group to be a meaningful comparison for the fund, however, because the funds in the peer group typically have broader investment mandates than the fund, which focuses on a particular subset of companies within the financial services industry. The Board also stated that the relative investment performance of the fund was lower than its benchmark for all the periods shown. In the absence of a meaningful peer group comparison for the fund and in consideration of the fund's exposure to a narrow market sector, the Board focused its review on the fund's relative investment performance measured against its benchmark. In light of that comparison, the Board discussed with FMR actions to be taken by FMR to improve the fund's below-benchmark performance.
Semiannual Report
Brokerage and Investment Management Portfolio
The Board reviewed the fund's relative investment performance against its Lipper peer group and stated that the performance of the fund was in the first quartile for the one- and three-year periods and the second quartile for the five-year period. The Board noted that FMR does not consider that Lipper peer group to be a meaningful comparison for the fund, however, because the funds in the peer group typically have broader investment mandates than the fund, which focuses on a particular subset of companies within the financial services industry. The Board also stated that the relative investment performance of the fund was lower than its benchmark for the three- and five-year periods, although the fund's one-year cumulative total return compared favorably to its benchmark.
Financial Services Portfolio
The Board reviewed the fund's relative investment performance against its Lipper peer group and stated that the performance of the fund was in the second quartile for the one-year period and the third quartile for the three- and five-year periods. The Board also stated that the relative investment performance of the fund was lower than its benchmark for all the periods shown.
Semiannual Report
Board Approval of Investment Advisory Contracts and Management Fees - continued
Home Finance Portfolio
The Board reviewed the fund's relative investment performance against its Lipper peer group and stated that the performance of the fund was in the fourth quartile for the one- and three-year periods and the second quartile for the five-year period. The Board noted that FMR does not consider that Lipper peer group to be a meaningful comparison for the fund, however, because the funds in the peer group typically have broader investment mandates than the fund, which focuses on a particular subset of companies within the financial services industry. The Board also stated that the relative investment performance of the fund was lower than its benchmark for all the periods shown. In the absence of a meaningful peer group comparison for the fund and in consideration of the fund's exposure to a narrow market sector, the Board focused its review on the fund's relative investment performance measured against its benchmark. In light of that comparison, the Board discussed with FMR actions to be taken by FMR to improve the fund's below-benchmark performance.
Insurance Portfolio
The Board reviewed the fund's relative investment performance against its Lipper peer group and stated that the performance of the fund was in the first quartile for the one-year period and the second quartile for the three- and five-year periods. The Board noted that FMR does not consider that Lipper peer group to be a meaningful comparison for the fund, however, because the funds in the peer group typically have broader investment mandates than the fund, which focuses on a particular subset of companies within the financial services industry. The Board also stated that the relative investment performance of the fund was lower than its benchmark for the one- and three-year periods, although the fund's five-year cumulative total return compared favorably to its benchmark.
Semiannual Report
The Board considered that FMR has taken steps to refocus and strengthen equity research, equity portfolio management, and compliance. The Board noted with favor FMR's reorganization of its senior management team in 2005 and FMR's dedication of additional resources to investment research, and participated in the process that led to those changes.
Based on its review, and giving particular weight to the nature and quality of the resources dedicated by the Investment Advisers to maintain and improve relative performance, the Board concluded that the nature, extent, and quality of the services provided to each fund will benefit each fund's shareholders, particularly in light of the Board's view that each fund's shareholders benefit from investing in a fund that is part of a large family of funds offering a variety of investment disciplines and services.
Competitiveness of Management Fee and Total Fund Expenses. The Board considered each fund's management fee and total expenses compared to "mapped groups" of competitive funds and classes. Fidelity creates "mapped groups" by combining similar Lipper investment objective categories that have comparable management fee characteristics. Combining Lipper investment objective categories aids the Board's management fee and total expense comparisons by broadening the competitive group used for comparison and by reducing the number of universes to which various Fidelity funds are compared.
The Board considered two proprietary management fee comparisons for the 12-month periods 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" and, for the reasons explained above, is broader than the Lipper peer group used by the Board for performance comparisons. The Total Mapped Group comparison focuses on a fund's standing relative to the total universe of comparable funds available to investors, in terms of gross management fees before expense reimbursements or caps. "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 TMG % of 4% means that 96% of the funds in the Total Mapped Group had higher management fees than a fund. The "Asset-Size Peer Group" (ASPG) comparison focuses on a fund's standing relative to non-Fidelity funds similar in size to the fund within the Total Mapped Group. The ASPG represents at least 15% of the funds in the Total Mapped Group with comparable asset size and management fee characteristics, 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 ranked, is also included in the charts and considered by the Board.
Banking Portfolio
Semiannual Report
Board Approval of Investment Advisory Contracts and Management Fees - continued
Brokerage and Investment Management Portfolio
Financial Services Portfolio
Semiannual Report
Home Finance Portfolio
Insurance Portfolio
The Board noted that each fund's management fee ranked below the median of its Total Mapped Group and below the median of its ASPG for 2005.
Based on its review, the Board concluded that each fund's management fee was fair and reasonable in light of the services that the fund receives and the other factors considered.
In its review of each fund's total expenses, 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 the effects of any waivers and reimbursements on fees and expenses. As part of its review, the Board also considered current and historical total expenses 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 expenses ranked below its competitive median for 2005.
In its review of total expenses, the Board also considered Fidelity fee structures and other information on clients that FMR and its affiliates service in other competitive markets, such as other mutual funds advised or subadvised by FMR or its affiliates, pension plan clients, and other institutional clients.
Semiannual Report
Board Approval of Investment Advisory Contracts and Management Fees - continued
Based on its review, the Board concluded that each fund's total expenses were 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 each fund and its shareholders. The Board also considered the level of Fidelity's profits in respect of all the Fidelity funds.
On an annual basis, FMR presents to the Board Fidelity's profitability for each fund. Fidelity calculates the profitability for each fund, as well as aggregate profitability for groups of Fidelity funds and all Fidelity funds, using a series of detailed revenue and cost allocation methodologies which originate with the audited books and records of Fidelity. The Audit Committee of the Board reviews any significant changes from the prior year's methodologies.
PricewaterhouseCoopers LLP (PwC), independent registered 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 results of Fidelity's profitability analysis. 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 surrounding the mathematical accuracy of fund profitability and its conformity to allocation methodologies. After considering PwC's reports issued under the engagement and information provided by Fidelity, the Board believes that while other allocation methods may also be reasonable, Fidelity's profitability methodologies are reasonable in all material respects.
The Board has also reviewed Fidelity's non-fund businesses and any 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 determined that the amount of profit is a fair entrepreneurial profit for the management of each fund.
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 through increased services to the fund, through waivers or reimbursements, or through fee or expense reductions, including reductions that occur through operation of the transfer agent agreement. The transfer agent fee varies in part based on the number of accounts in each fund. If the number of accounts decreases or the average account size increases, the overall transfer agent fee rate decreases.
The Board recognized that each fund's management contract incorporates a "group fee" structure, which provides for lower fee rates as total fund assets under FMR's management increase, and for higher fee rates as total fund assets under FMR's management decrease. The Board considered that the group fee is designed to deliver the benefits of economies of scale to fund shareholders when total fund 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 achieve a certain level of economies of scale as assets under FMR's management increase at the fund complex level, regardless of whether Fidelity achieves any such economies of scale.
The Board further concluded that any potential economies of scale are being shared between fund shareholders and Fidelity in an appropriate manner.
Additional Information Requested by the Board. In order to develop fully the factual basis for consideration of the Advisory Contracts, the Board requested additional information on several topics, including (i) Fidelity's fund profitability methodology and profitability trends within certain funds; (ii) portfolio manager compensation; (iii) the extent to which any economies of scale exist and are shared between the funds and Fidelity; (iv) the total expenses of certain funds and classes relative to competitors, including the extent to which the expenses of certain funds have been or could be capped; (v) fund performance trends; and (vi) Fidelity's fee structures, including use of performance fees.
Based on its evaluation of all of the conclusions noted above, and after considering all material factors, the Board ultimately concluded that the advisory fee structures are fair and reasonable, and that each fund's Advisory Contracts should be renewed.
Semiannual Report
Managing Your Investments
Fidelity offers several ways to conveniently manage your personal investments via your telephone or PC. You can access your account information, conduct trades and research your investments 24 hours a day.
By Phone
Fidelity Automated Service Telephone provides a single toll-free number to access account balances, positions, quotes and trading. It's easy to navigate the service, and on your first call, the system will help you create a personal identification number (PIN) for security.
(phone_graphic)
Fidelity Automated Service Telephone (FAST®)
1-800-544-5555
Press
1 For mutual fund and brokerage trading.
2 For quotes.*
3 For account balances and holdings.
4 To review orders and mutual fund activity.
5 To change your PIN.
*0 To speak to a Fidelity representative.
By PC
Fidelity's web site on the Internet provides a wide range of information, including daily financial news, fund performance, interactive planning tools and news about Fidelity products and services.
(computer_graphic)
Fidelity's Web Site
www.fidelity.com
* When you call the quotes line, please remember that a fund's yield and return will vary and, except for money market funds, share price will also vary. This means that you may have a gain or loss when you sell your shares. There is no assurance that money market funds will be able to maintain a stable $1 share price; an investment in a money market fund is not insured or guaranteed by the U.S. government. Total returns are historical and include changes in share price, reinvestment of dividends and capital gains, and the effects of any sales charges.
Semiannual Report
To Write Fidelity
We'll give your correspondence immediate attention and send you written confirmation upon completion of your request.
(letter_graphic)
Making Changes
To Your Account
(such as changing name, address, bank, etc.)
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0002
(letter_graphic)
For Non-Retirement
Accounts
Buying shares
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003
Overnight Express
Fidelity Investments
Attn: Distribution Services
100 Crosby Parkway - KC1H
Covington, KY 41015
Selling shares
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0035
Overnight Express
Fidelity Investments
Attn: Distribution Services
100 Crosby Parkway - KC1H
Covington, KY 41015
General Correspondence
Fidelity Investments
P.O. Box 500
Merrimack, NH 03054-0500
(letter_graphic)
For Retirement
Accounts
Buying shares
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003
Selling shares
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0035
Overnight Express
Fidelity Investments
Attn: Distribution Services
100 Crosby Parkway - KC1H
Covington, KY 41015
General Correspondence
Fidelity Investments
P.O. Box 500
Merrimack, NH 03054-0500
Semiannual Report
To Visit Fidelity
For directions and hours,
please call 1-800-544-9797.
Arizona
7001 West Ray Road
Chandler, AZ
15445 N. Scottsdale Road
Scottsdale, AZ
California
815 East Birch Street
Brea, CA
1411 Chapin Avenue
Burlingame, CA
851 East Hamilton Avenue
Campbell, CA
19200 Von Karman Avenue
Irvine, CA
601 Larkspur Landing Circle
Larkspur, CA
10100 Santa Monica Blvd.
Los Angeles, CA
27101 Puerta Real
Mission Viejo, CA
73-575 El Paseo
Palm Desert, CA
251 University Avenue
Palo Alto, CA
123 South Lake Avenue
Pasadena, CA
16995 Bernardo Ctr. Drive
Rancho Bernardo, CA
1220 Roseville Parkway
Roseville, CA
1740 Arden Way
Sacramento, CA
7676 Hazard Center Drive
San Diego, CA
11943 El Camino Real
San Diego, CA
8 Montgomery Street
San Francisco, CA
3793 State Street
Santa Barbara, CA
1200 Wilshire Boulevard
Santa Monica, CA
21701 Hawthorne Boulevard
Torrance, CA
2001 North Main Street
Walnut Creek, CA
6300 Canoga Avenue
Woodland Hills, CA
Colorado
1625 Broadway
Denver, CO
9185 Westview Road
Lone Tree, CO
Connecticut
48 West Putnam Avenue
Greenwich, CT
265 Church Street
New Haven, CT
300 Atlantic Street
Stamford, CT
29 South Main Street
West Hartford, CT
Delaware
400 Delaware Avenue
Wilmington, DE
Florida
4400 N. Federal Highway
Boca Raton, FL
121 Alhambra Plaza
Coral Gables, FL
2948 N. Federal Highway
Ft. Lauderdale, FL
4671 Town Center Parkway
Jacksonville, FL
1907 West State Road 434
Longwood, FL
8880 Tamiami Trail, North
Naples, FL
3501 PGA Boulevard
Palm Beach Gardens, FL
3550 Tamiami Trail, South
Sarasota, FL
1502 N. Westshore Blvd.
Tampa, FL
2465 State Road 7
Wellington, FL
Georgia
3445 Peachtree Road, N.E.
Atlanta, GA
1000 Abernathy Road
Atlanta, GA
Illinois
One North LaSalle Street
Chicago, IL
875 North Michigan Ave.
Chicago, IL
1415 West 22nd Street
Oak Brook, IL
1572 East Golf Road
Schaumburg, IL
3232 Lake Avenue
Wilmette, IL
Indiana
4729 East 82nd Street
Indianapolis, IN
Kansas
5400 College Boulevard
Overland Park, KS
Maine
Three Canal Plaza
Portland, ME
Maryland
7315 Wisconsin Avenue
Bethesda, MD
One W. Pennsylvania Ave.
Towson, MD
Massachusetts
801 Boylston Street
Boston, MA
155 Congress Street
Boston, MA
300 Granite Street
Braintree, MA
44 Mall Road
Burlington, MA
238 Main Street
Cambridge, MA
405 Cochituate Road
Framingham, MA
416 Belmont Street
Worcester, MA
Michigan
500 E. Eisenhower Pkwy.
Ann Arbor, MI
280 Old N. Woodward Ave.
Birmingham, MI
43420 Grand River Avenue
Novi, MI
29155 Northwestern Hwy.
Southfield, MI
Minnesota
7600 France Avenue South
Edina, MN
Missouri
1524 South Lindbergh Blvd.
St. Louis, MO
Nevada
2225 Village Walk Drive
Henderson, NV
New Jersey
150 Essex Street
Millburn, NJ
56 South Street
Morristown, NJ
396 Route 17, North
Paramus, NJ
3518 Route 1 North
Princeton, NJ
530 Broad Street
Shrewsbury, NJ
New York
1055 Franklin Avenue
Garden City, NY
37 West Jericho Turnpike
Huntington Station, NY
1271 Avenue of the Americas
New York, NY
980 Madison Avenue
New York, NY
61 Broadway
New York, NY
350 Park Avenue
New York, NY
200 Fifth Avenue
New York, NY
733 Third Avenue
New York, NY
11 Penn Plaza
New York, NY
2070 Broadway
New York, NY
1075 Northern Blvd.
Roslyn, NY
799 Central Park Avenue
Scarsdale, NY
North Carolina
4611 Sharon Road
Charlotte, NC
7011 Fayetteville Road
Durham, NC
Ohio
3805 Edwards Road
Cincinnati, OH
1324 Polaris Parkway
Columbus, OH
28699 Chagrin Boulevard
Woodmere Village, OH
Oregon
7493 SW Bridgeport Road
Tigard, OR
Pennsylvania
600 West DeKalb Pike
King of Prussia, PA
1735 Market Street
Philadelphia, PA
12001 Perry Highway
Wexford, PA
Rhode Island
47 Providence Place
Providence, RI
Tennessee
6150 Poplar Avenue
Memphis, TN
Texas
10000 Research Boulevard
Austin, TX
4001 Northwest Parkway
Dallas, TX
12532 Memorial Drive
Houston, TX
2701 Drexel Drive
Houston, TX
6560 Fannin Street
Houston, TX
6500 N. MacArthur Blvd.
Irving, TX
6005 West Park Boulevard
Plano, TX
14100 San Pedro
San Antonio, TX
1576 East Southlake Blvd.
Southlake, TX
19740 IH 45 North
Spring, TX
Utah
279 West South Temple
Salt Lake City, UT
Virginia
1861 International Drive
McLean, VA
Washington
411 108th Avenue, N.E.
Bellevue, WA
1518 6th Avenue
Seattle, WA
Washington, DC
1900 K Street, N.W.
Washington, DC
Wisconsin
595 North Barker Road
Brookfield, WI
Fidelity Brokerage Services, Inc., 100 Summer St., Boston, MA 02110 Member NYSE/SIPC
Semiannual Report
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
FMR Co., Inc.
Fidelity Management & Research
(U.K.) Inc.
Fidelity Research & Analysis Company
Fidelity Investments Japan Limited
Fidelity International Investment Advisors
Fidelity International Investment Advisors
(U.K. Limited)
General Distributor
Fidelity Distributors Corporation
Boston, MA
Transfer and Service Agent
Fidelity Service Company, Inc.
Boston, MA
Custodian
Brown Brothers Harriman & Co.
Boston, MA
Corporate Headquarters
82 Devonshire Street
Boston, MA 02109
1-800-544-8888
The Fidelity Telephone Connection
Mutual Fund 24-Hour Service
Exchanges/Redemptions
and Account Assistance1-800-544-6666
Product Information1-800-544-8888
Retirement Accounts1-800-544-4774
(8 a.m. - 9 p.m.)
TDD Service1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
Fidelity Automated Service
Telephone (FAST®) (automated graphic) 1-800-544-5555
(automated graphic) Automated line for quickest service
SELFIN-USAN-1006
1.813665.101
(Fidelity Investment logo)(registered trademark)
Corporate Headquarters
82 Devonshire St., Boston, MA 02109
www.fidelity.com
Item 1. Reports to Stockholders
Item 2. Code of Ethics
Not applicable.
Item 3. Audit Committee Financial Expert
Not applicable.
Item 4. Principal Accountant Fees and Services
Not applicable.
Item 5. Audit Committee of Listed Registrants
Not applicable.
Item 6. Schedule of Investments
Not applicable.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies
Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies
Not applicable.
Item 9. Purchase of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders
There were no material changes to the procedures by which shareholders may recommend nominees to the Fidelity Select Portfolios's Board of Trustees.
Item 11. Controls and Procedures
(a)(i) The President and Treasurer and the Chief Financial Officer have concluded that the Fidelity Select Portfolios's (the "Trust") 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) | Not applicable. |
(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/Christine Reynolds |
Christine Reynolds | |
President and Treasurer | |
Date: | October 20, 2006 |
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/Christine Reynolds |
Christine Reynolds | |
President and Treasurer | |
Date: | October 20, 2006 |
By: | /s/Joseph B. Hollis |
Joseph B. Hollis | |
Chief Financial Officer | |
Date: | October 20, 2006 |