UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-3114
Fidelity Select Portfolios
(Exact name of registrant as specified in charter)
82 Devonshire St., Boston, Massachusetts 02109
(Address of principal executive offices) (Zip code)
Scott C. Goebel, Secretary
82 Devonshire St.
Boston, Massachusetts 02109
(Name and address of agent for service)
Registrant's telephone number, including area code: 617-563-7000
Date of fiscal year end: | February 29 |
|
|
Date of reporting period: | February 29, 2012 |
Item 1. Reports to Stockholders
Fidelity®
Select Portfolios®
Consumer Discretionary Sector
Automotive Portfolio
Construction and Housing Portfolio
Consumer Discretionary Portfolio
Leisure Portfolio
Multimedia Portfolio
Retailing Portfolio
Annual Report
February 29, 2012
(Fidelity Cover Art)
Contents
Shareholder Expense Example |
| |
Automotive Portfolio | Performance | |
| Management's Discussion | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
Construction and Housing Portfolio | Performance | |
| Management's Discussion | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
Consumer Discretionary Portfolio | Performance | |
| Management's Discussion | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
Leisure Portfolio | Performance | |
| Management's Discussion | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
Multimedia Portfolio | Performance | |
| Management's Discussion | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
Retailing Portfolio | Performance | |
| Management's Discussion | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
Notes to Financial Statements |
| |
Report of Independent Registered Public Accounting Firm |
| |
Trustees and Officers |
| |
Distributions |
|
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com/proxyvotingresults or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov. You may also call 1-800-544-8544 to request a free copy of the proxy voting guidelines.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company.
Annual Report
This report and the financial statements contained herein are submitted for the general information of the shareholders of the funds. This report is not authorized for distribution to prospective investors in the funds unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com, http://www.advisor.fidelity.com, or http://www.401k.com, as applicable.
NOT FDIC INSURED • MAY LOSE VALUE • NO BANK GUARANTEE
Neither the funds nor Fidelity Distributors Corporation is a bank.
Annual Report
Shareholder Expense Example
As a shareholder of a Fund, you incur two types of costs: (1) transaction costs, including redemption fees, and (2) ongoing costs, including management fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Funds and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (September 1, 2011 to February 29, 2012).
Actual Expenses
The first line of the accompanying table for each fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, each Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each fund provides information about hypothetical account values and hypothetical expenses based on a fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, each Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Annualized | Beginning | Ending | Expenses Paid |
Automotive Portfolio | .91% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,141.30 | $ 4.84 |
Hypothetical A |
| $ 1,000.00 | $ 1,020.34 | $ 4.57 |
Construction and Housing Portfolio | .95% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,235.20 | $ 5.28 |
Hypothetical A |
| $ 1,000.00 | $ 1,020.14 | $ 4.77 |
Consumer Discretionary Portfolio | .87% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,155.70 | $ 4.66 |
Hypothetical A |
| $ 1,000.00 | $ 1,020.54 | $ 4.37 |
Leisure Portfolio | .86% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,158.70 | $ 4.62 |
Hypothetical A |
| $ 1,000.00 | $ 1,020.59 | $ 4.32 |
Multimedia Portfolio | .89% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,166.60 | $ 4.79 |
Hypothetical A |
| $ 1,000.00 | $ 1,020.44 | $ 4.47 |
Retailing Portfolio | .89% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,127.90 | $ 4.71 |
Hypothetical A |
| $ 1,000.00 | $ 1,020.44 | $ 4.47 |
A 5% return per year before expenses
* Expenses are equal to each Fund's annualized expense ratio, multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
Annual Report
Automotive Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 29, 2012 | Past 1 | Past 5 | Past 10 |
Automotive Portfolio | -13.06% | 1.76% | 5.45% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Automotive Portfolio on February 28, 2002. The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period.
Annual Report
Automotive Portfolio
Management's Discussion of Fund Performance
Market Recap: U.S. stocks rose for the 12 months ending February 29, 2012, as encouraging economic news sparked a strong late-period rally that lifted major equity benchmarks past a number of significant milestones. Stocks recovered from early-period uncertainty that followed the March 2011 earthquake, tsunami and nuclear meltdown in Japan, but plummeted during the summer amid Europe's debt woes and a historic U.S. credit-rating downgrade. Despite continued volatility and mixed economic news, markets began to recover in early October. Investors gravitated toward defensive sectors and the perceived safety of larger, more-established and dividend-paying names, helping the Dow Jones® Industrial Average advance 8.83%, and close above the psychologically important 13,000 mark in late February - for the first time since May 2008. The rally accelerated late in the period and the market broadened, as investor confidence improved amid encouraging manufacturing, housing and employment data, and signs of progress in Europe. For the year, the S&P 500® Index added 5.12%, closing near a four-year high on the period's second-to-last day. Of the 10 major market sectors in the S&P 500®, three defensive areas led the way - consumer staples, health care and utilities - while financials, materials and energy finished in negative territory. The technology-laden Nasdaq Composite® Index added 7.73%, flirting with the 3,000 mark, its highest level in 12 years. Foreign developed-markets stocks reeled over Europe's turmoil, and the MSCI® EAFE® (Europe, Australasia, Far East) Index fell 7.35%.
Comments from Michael Weaver, Portfolio Manager of Automotive Portfolio: For the year, the fund returned -13.06%, trailing the -10.62% return of its industry benchmark, the S&P® Custom Automobiles & Components Index, and the S&P 500®. Relative to its industry benchmark, the fund's position in General Motors - which consisted of common stock, warrants and bonds -as well as adverse positioning in construction/farm machinery/heavy trucks and motorcycle manufacturers, hurt relative performance, as did a modest cash stake. On the plus side, solid stock selection in automobile manufacturers, automotive retail - which is not in the benchmark - and auto parts/equipment aided relative results. Beginning in June, I generally trimmed the fund's GM position, believing there were better investment opportunities elsewhere. I sold the fund's holdings of the company's warrants and most of the GM bonds I held were converted to common shares. Additional individual detractors included largely avoiding Westport Innovations, a supplier of natural gas engines, not holding index component Standard Motor Products, which makes replacement parts for the automotive aftermarket, and overweighting battery manufacturer Exide Technologies. The top individual contributors were an out-of-benchmark investment in Delphi Automotive, a leader in electronics, power-train and fuel-economy technologies, and underweightings in Meritor, a supplier of axles and other drive train components for heavy-duty trucks, and index heavyweight Johnson Controls, which produces automotive interiors and batteries.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Automotive Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 29, 2012 | ||
| % of fund's | % of fund's net assets |
Toyota Motor Corp. sponsored ADR | 12.9 | 9.4 |
Ford Motor Co. | 10.2 | 11.1 |
Honda Motor Co. Ltd. sponsored ADR | 9.4 | 8.6 |
General Motors Co. | 5.4 | 8.1 |
Johnson Controls, Inc. | 5.4 | 4.1 |
TRW Automotive Holdings Corp. | 5.2 | 6.6 |
Autoliv, Inc. | 4.7 | 4.8 |
Tenneco, Inc. | 3.3 | 4.8 |
Magna International, Inc. Class A (sub. vtg.) | 3.2 | 3.8 |
Harley-Davidson, Inc. | 3.2 | 3.4 |
| 62.9 | |
Top Industries (% of fund's net assets) | |||
As of February 29, 2012 | |||
 | Auto Components | 48.9% |
|
 | Automobiles | 42.4% |
|
 | Machinery | 2.5% |
|
 | Household Durables | 0.4% |
|
 | Software | 0.4% |
|
 | All Others* | 5.4% |
|
As of August 31, 2011 | |||
| Auto Components | 53.0% |
|
 | Automobiles | 43.7% |
|
 | Specialty Retail | 1.1% |
|
| Machinery | 0.7% |
|
| All Others* | 1.5% |
|
* Includes short-term investments and net other assets. |
Annual Report
Automotive Portfolio
Investments February 29, 2012
Showing Percentage of Net Assets
Common Stocks - 94.5% | |||
Shares | Value | ||
AUTO COMPONENTS - 48.9% | |||
Auto Parts & Equipment - 46.1% | |||
American Axle & Manufacturing Holdings, Inc. (a) | 360,500 | $ 4,106,095 | |
Amerigon, Inc. (a) | 37,100 | 546,112 | |
Autoliv, Inc. (e) | 120,355 | 8,015,643 | |
BorgWarner, Inc. (a)(e) | 56,000 | 4,639,040 | |
Dana Holding Corp. | 332,100 | 5,313,600 | |
Delphi Automotive PLC (e) | 168,673 | 5,397,536 | |
Delphi Automotive PLC (f) | 106,105 | 3,055,824 | |
Dorman Products, Inc. (a) | 23,300 | 1,058,053 | |
Drew Industries, Inc. (a) | 50,000 | 1,370,000 | |
Exide Technologies (a) | 254,400 | 755,568 | |
Federal-Mogul Corp. Class A (a) | 68,624 | 1,181,019 | |
Fuel Systems Solutions, Inc. (a) | 32,200 | 833,980 | |
Gentex Corp. | 95,200 | 2,251,480 | |
Johnson Controls, Inc. | 279,370 | 9,115,843 | |
Lear Corp. | 117,100 | 5,294,091 | |
Linamar Corp. | 69,100 | 1,284,737 | |
Magna International, Inc. Class A | 114,484 | 5,452,060 | |
Martinrea International, Inc. (a) | 129,100 | 1,271,889 | |
Modine Manufacturing Co. (a) | 113,500 | 1,030,580 | |
Spartan Motors, Inc. | 118,700 | 677,777 | |
Stoneridge, Inc. (a) | 74,289 | 718,375 | |
Tenneco, Inc. (a) | 146,146 | 5,626,621 | |
Tower International, Inc. (a) | 41,200 | 524,888 | |
TRW Automotive Holdings Corp. (a) | 193,700 | 8,859,838 | |
| 78,380,649 | ||
Tires & Rubber - 2.8% | |||
Cooper Tire & Rubber Co. | 109,300 | 1,814,380 | |
The Goodyear Tire & Rubber Co. (a) | 231,626 | 2,978,710 | |
| 4,793,090 | ||
TOTAL AUTO COMPONENTS | 83,173,739 | ||
AUTOMOBILES - 42.3% | |||
Automobile Manufacturers - 39.1% | |||
Ford Motor Co. | 1,395,961 | 17,281,997 | |
General Motors Co. (a) | 355,844 | 9,259,061 | |
Honda Motor Co. Ltd. sponsored ADR | 420,400 | 16,025,648 | |
Thor Industries, Inc. | 41,400 | 1,348,398 | |
Toyota Motor Corp. sponsored ADR (e) | 265,600 | 21,967,775 | |
Winnebago Industries, Inc. (a)(e) | 67,400 | 601,208 | |
| 66,484,087 | ||
Motorcycle Manufacturers - 3.2% | |||
Harley-Davidson, Inc. | 116,100 | 5,407,938 | |
TOTAL AUTOMOBILES | 71,892,025 | ||
| |||
Shares | Value | ||
HOUSEHOLD DURABLES - 0.4% | |||
Consumer Electronics - 0.4% | |||
Harman International Industries, | 13,800 | $ 677,994 | |
MACHINERY - 2.5% | |||
Construction & Farm Machinery & Heavy Trucks - 2.5% | |||
Meritor, Inc. (a) | 155,500 | 1,152,255 | |
Westport Innovations, Inc. (a)(e) | 75,000 | 3,035,250 | |
| 4,187,505 | ||
SOFTWARE - 0.4% | |||
Application Software - 0.4% | |||
Solera Holdings, Inc. | 13,400 | 643,200 | |
TOTAL COMMON STOCKS (Cost $129,253,516) |
| ||
Nonconvertible Bonds - 0.1% | ||||
| Principal Amount |
| ||
AUTOMOBILES - 0.1% | ||||
Automobile Manufacturers - 0.1% | ||||
General Motors Corp. 6.75% 5/1/28 (d) | $ 31,005,000 |
| ||
Money Market Funds - 26.5% | |||
Shares |
| ||
Fidelity Cash Central Fund, 0.12% (b) | 9,282,237 | 9,282,237 | |
Fidelity Securities Lending Cash Central Fund, 0.12% (b)(c) | 35,830,185 | 35,830,185 | |
TOTAL MONEY MARKET FUNDS (Cost $45,112,422) |
| ||
TOTAL INVESTMENT PORTFOLIO - 121.1% (Cost $174,650,294) | 205,894,619 | ||
NET OTHER ASSETS (LIABILITIES) - (21.1)% | (35,878,850) | ||
NET ASSETS - 100% | $ 170,015,769 | ||
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Non-income producing - Security is in default. |
(e) Security or a portion of the security is on loan at period end. |
(f) Restricted securities - Investment in securities not registered under the Securities Act of 1933 (excluding 144A issues). At the end of the period, the value of restricted securities (excluding 144A issues) amounted to $3,055,824 or 1.8% of net assets. |
Additional information on each restricted holding is as follows: |
Security | Acquisition | Acquisition |
Delphi Automotive PLC | 3/25/10 - 12/14/10 | $ 1,568,408 |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 3,305 |
Fidelity Securities Lending Cash Central Fund | 57,848 |
Total | $ 61,153 |
Other Information |
The following is a summary of the inputs used, as of February 29, 2012, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the tables below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities: | ||||
Common Stocks | $ 160,574,463 | $ 157,518,639 | $ 3,055,824 | $ - |
Nonconvertible Bonds | 207,734 | - | - | 207,734 |
Money Market Funds | 45,112,422 | 45,112,422 | - | - |
Total Investments in Securities: | $ 205,894,619 | $ 202,631,061 | $ 3,055,824 | $ 207,734 |
The following is a reconciliation of Investments in Securities for which Level 3 inputs were used in determining value: |
Investments in Securities: | |
Beginning Balance | $ - |
Total Realized Gain (Loss) | - |
Total Unrealized Gain (Loss) | 976,015 |
Cost of Purchases | - |
Proceeds of Sales | (10,534,856) |
Amortization/Accretion | - |
Transfers in to Level 3 | 9,766,575 |
Transfers out of Level 3 | - |
Ending Balance | $ 207,734 |
The change in unrealized gain (loss) for the period attributable to Level 3 securities held at February 29, 2012 | $ 976,015 |
The information used in the above reconciliation represents fiscal year to date activity for any Investments in Securities identified as using Level 3 inputs at either the beginning or the end of the current fiscal period. Transfers in or out of Level 3 represent the beginning value of any Security or Instrument where a change in the pricing level occurred from the beginning to the end of the period. Significant transfers from Level 2 to Level 3 were attributable to the default of debt securities which under went restructuring and a lack of observable market data for these securities. The cost of purchases and the proceeds of sales may include securities received or delivered through corporate actions or exchanges. Realized and unrealized gains (losses) disclosed in the reconciliation are included in Net Gain (Loss) on the Fund's Statement of Operations. |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 66.1% |
Japan | 22.3% |
Canada | 6.6% |
Bailiwick of Jersey | 5.0% |
| 100.0% |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Automotive Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2012 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $34,354,415) - See accompanying schedule: Unaffiliated issuers (cost $129,537,872) | $ 160,782,197 |
|
Fidelity Central Funds (cost $45,112,422) | 45,112,422 |
|
Total Investments (cost $174,650,294) |
| $ 205,894,619 |
Cash |
| 183,930 |
Receivable for fund shares sold | 1,764,573 | |
Dividends receivable | 188,546 | |
Distributions receivable from Fidelity Central Funds | 16,312 | |
Prepaid expenses | 351 | |
Other receivables | 3,972 | |
Total assets | 208,052,303 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 1,720,950 | |
Payable for fund shares redeemed | 354,150 | |
Accrued management fee | 71,579 | |
Other affiliated payables | 30,551 | |
Other payables and accrued expenses | 29,119 | |
Collateral on securities loaned, at value | 35,830,185 | |
Total liabilities | 38,036,534 | |
|
|
|
Net Assets | $ 170,015,769 | |
Net Assets consist of: |
| |
Paid in capital | $ 143,827,769 | |
Distribution in excess of net investment income | (77) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (5,055,760) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 31,243,837 | |
Net Assets, for 4,468,755 shares outstanding | $ 170,015,769 | |
Net Asset Value, offering price and redemption price per share ($170,015,769 ÷ 4,468,755 shares) | $ 38.05 | |
Statement of Operations
| Year ended February 29, 2012 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 1,440,506 |
Interest |
| 42,688 |
Income from Fidelity Central Funds (including $57,848 from security lending) |
| 61,153 |
Total income |
| 1,544,347 |
|
|
|
Expenses | ||
Management fee | $ 880,441 | |
Transfer agent fees | 392,005 | |
Accounting and security lending fees | 68,575 | |
Custodian fees and expenses | 6,531 | |
Independent trustees' compensation | 991 | |
Registration fees | 38,231 | |
Audit | 38,098 | |
Legal | 710 | |
Interest | 1,080 | |
Miscellaneous | 1,508 | |
Total expenses before reductions | 1,428,170 | |
Expense reductions | (3,746) | 1,424,424 |
Net investment income (loss) | 119,923 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 4,452,164 | |
Foreign currency transactions | (4,760) | |
Total net realized gain (loss) |
| 4,447,404 |
Change in net unrealized appreciation (depreciation) on: Investment securities | (41,641,528) | |
Assets and liabilities in foreign currencies | (316) | |
Total change in net unrealized appreciation (depreciation) |
| (41,641,844) |
Net gain (loss) | (37,194,440) | |
Net increase (decrease) in net assets resulting from operations | $ (37,074,517) | |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 119,923 | $ (375,782) |
Net realized gain (loss) | 4,447,404 | 9,012,397 |
Change in net unrealized appreciation (depreciation) | (41,641,844) | 57,048,655 |
Net increase (decrease) in net assets resulting from operations | (37,074,517) | 65,685,270 |
Distributions to shareholders from net investment income | (45,425) | - |
Distributions to shareholders from net realized gain | (9,238,375) | (3,086,154) |
Total distributions | (9,283,800) | (3,086,154) |
Share transactions | 130,281,367 | 420,037,518 |
Reinvestment of distributions | 8,936,839 | 2,936,075 |
Cost of shares redeemed | (296,538,707) | (258,021,780) |
Net increase (decrease) in net assets resulting from share transactions | (157,320,501) | 164,951,813 |
Redemption fees | 62,990 | 58,011 |
Total increase (decrease) in net assets | (203,615,828) | 227,608,940 |
|
|
|
Net Assets | ||
Beginning of period | 373,631,597 | 146,022,657 |
End of period (including distribution in excess of net investment income of $77 and accumulated net investment loss of $6,345, respectively) | $ 170,015,769 | $ 373,631,597 |
Other Information Shares | ||
Sold | 3,433,091 | 10,011,164 |
Issued in reinvestment of distributions | 246,291 | 85,450 |
Redeemed | (7,183,045) | (6,740,636) |
Net increase (decrease) | (3,503,663) | 3,355,978 |
Financial Highlights
Years ended February 28, | 2012 F | 2011 | 2010 | 2009 | 2008 F |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 46.87 | $ 31.63 | $ 10.07 | $ 34.23 | $ 40.24 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | .03 | (.08) | (.06) | .42 | .18 |
Net realized and unrealized gain (loss) | (6.45) | 15.94 | 21.67 | (24.30) | (4.98) |
Total from investment operations | (6.42) | 15.86 | 21.61 | (23.88) | (4.80) |
Distributions from net investment income | (.02) | - | (.07) | (.28) | (.13) |
Distributions from net realized gain | (2.41) | (.63) | - | (.01) | (1.11) |
Total distributions | (2.42) G | (.63) | (.07) | (.29) | (1.24) |
Redemption fees added to paid in capital B | .02 | .01 | .02 | .01 | .03 |
Net asset value, end of period | $ 38.05 | $ 46.87 | $ 31.63 | $ 10.07 | $ 34.23 |
Total Return A | (13.06)% | 50.90% | 215.39% | (69.99)% | (12.11)% |
Ratios to Average Net Assets C,E |
|
|
|
|
|
Expenses before reductions | .90% | .91% | .99% | 1.47% | 1.19% |
Expenses net of fee waivers, if any | .90% | .91% | .99% | 1.15% | 1.15% |
Expenses net of all reductions | .90% | .91% | .97% | 1.15% | 1.15% |
Net investment income (loss) | .08% | (.19)% | (.23)% | 1.73% | .44% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 170,016 | $ 373,632 | $ 146,023 | $ 7,581 | $ 25,823 |
Portfolio turnover rate D | 49% | 91% | 156% | 156% | 258% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown. B Calculated based on average shares outstanding during the period. C Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. D Amount does not include the portfolio activity of any underlying Fidelity Central Funds. E Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. F For the year ended February 29. G Total distributions of $2.42 per share is comprised of distributions from net investment income of $0.015 and distributions from net realized gain of $2.408 per share. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Construction and Housing Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 29, 2012 | Past 1 | Past 5 | Past 10 |
Construction and Housing Portfolio | 7.65% | 0.97% | 7.14% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Construction and Housing Portfolio on February 28, 2002. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index performed over the same period.
Annual Report
Construction and Housing Portfolio
Management's Discussion of Fund Performance
Market Recap: U.S. stocks rose for the 12 months ending February 29, 2012, as encouraging economic news sparked a strong late-period rally that lifted major equity benchmarks past a number of significant milestones. Stocks recovered from early-period uncertainty that followed the March 2011 earthquake, tsunami and nuclear meltdown in Japan, but plummeted during the summer amid Europe's debt woes and a historic U.S. credit-rating downgrade. Despite continued volatility and mixed economic news, markets began to recover in early October. Investors gravitated toward defensive sectors and the perceived safety of larger, more-established and dividend-paying names, helping the Dow Jones® Industrial Average advance 8.83%, and close above the psychologically important 13,000 mark in late February - for the first time since May 2008. The rally accelerated late in the period and the market broadened, as investor confidence improved amid encouraging manufacturing, housing and employment data, and signs of progress in Europe. For the year, the S&P 500® Index added 5.12%, closing near a four-year high on the period's second-to-last day. Of the 10 major market sectors in the S&P 500®, three defensive areas led the way - consumer staples, health care and utilities - while financials, materials and energy finished in negative territory. The technology-laden Nasdaq Composite® Index added 7.73%, flirting with the 3,000 mark, its highest level in 12 years. Foreign developed-markets stocks reeled over Europe's turmoil, and the MSCI® EAFE® (Europe, Australasia, Far East) Index fell 7.35%.
Comments from Daniel Kelley, Co-Portfolio Manager of Construction and Housing Portfolio: For the year, the fund returned 7.65%, beating the 6.20% gain of its benchmark, the MSCI® U.S. IM Custom Construction & Housing 25/50 Index, and the S&P 500®. Relative to the MSCI index, industry allocation had the most significant impact overall, followed by security selection. The biggest boost came from strong security selection and an overweighting in the homebuilding segment. In terms of individual contributors, small-cap construction and engineering company Dycom Industries aided performance. Its shares rallied as the telecom industry's push for more bandwidth led to a record backlog of orders. Timely ownership of homebuilder PulteGroup and an investment in national homebuilder D.R. Horton also contributed, as sales trends improved. Stock picks in the home improvement retail space hurt. An overweighting in Equity Residential, a relatively cheap apartment real estate investment trust (REIT) that was able to increase rents, contributed. Lastly, a stake in wallboard manufacturer USG worked like a champ. We bought it late in the period, shortly before it pushed through a price increase that drove the stock higher. Conversely, security selection in the home improvement retail space hurt. The biggest individual detractor was oil and gas engineering and construction company Foster Wheeler. Its shares fell sharply, pressured by a sluggish global economic outlook, an unexpected management change and market share losses. The stock of Quanex Building Products, which makes windows and doors, declined along with the entire building products group. The fund also lost ground from its underexposure to American Campus Community, a student housing REIT with a very strong balance sheet whose shares did especially well during the volatile third quarter of 2011. Quanex and American Campus were not held in the portfolio at period end.
_____________________________________
Note to shareholders: Holger Boerner became Co-Portfolio Manager of the fund on January 12, 2012.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Construction and Housing Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 29, 2012 | ||
| % of fund's | % of fund's net assets |
Home Depot, Inc. | 19.2 | 24.4 |
Lowe's Companies, Inc. | 16.0 | 9.3 |
Fluor Corp. | 6.6 | 5.1 |
Equity Residential (SBI) | 6.4 | 9.3 |
D.R. Horton, Inc. | 4.5 | 2.7 |
Jacobs Engineering Group, Inc. | 3.1 | 1.5 |
Toll Brothers, Inc. | 2.5 | 4.6 |
Lennar Corp. Class A | 2.3 | 3.8 |
Quanta Services, Inc. | 2.3 | 0.0 |
Camden Property Trust (SBI) | 2.2 | 4.4 |
| 65.1 | |
Top Industries (% of fund's net assets) | |||
As of February 29, 2012 | |||
| Specialty Retail | 35.2% |
|
| Construction & Engineering | 20.3% |
|
| Real Estate Investment Trusts | 20.1% |
|
| Household Durables | 12.5% |
|
| Building Products | 5.5% |
|
| All Others* | 6.4% |
|
As of August 31, 2011 | |||
| Specialty Retail | 33.7% |
|
| Real Estate Investment Trusts | 25.9% |
|
| Construction & Engineering | 18.5% |
|
| Household Durables | 13.5% |
|
| Building Products | 4.4% |
|
| All Others* | 4.0% |
|
* Includes short-term investments and net other assets. |
Annual Report
Construction and Housing Portfolio
Investments February 29, 2012
Showing Percentage of Net Assets
Common Stocks - 98.7% | |||
Shares | Value | ||
BUILDING PRODUCTS - 5.5% | |||
Building Products - 5.5% | |||
Armstrong World Industries, Inc. (a) | 25,600 | $ 1,311,232 | |
Lennox International, Inc. | 41,900 | 1,639,547 | |
Masco Corp. | 226,400 | 2,689,632 | |
Owens Corning (a) | 97,569 | 3,088,059 | |
USG Corp. (a)(d) | 44,600 | 635,550 | |
| 9,364,020 | ||
CONSTRUCTION & ENGINEERING - 20.3% | |||
Construction & Engineering - 20.3% | |||
AECOM Technology Corp. (a) | 119,400 | 2,787,990 | |
Dycom Industries, Inc. (a) | 60,900 | 1,295,952 | |
Fluor Corp. | 186,400 | 11,273,472 | |
Foster Wheeler AG (a) | 95,600 | 2,354,628 | |
Jacobs Engineering Group, Inc. (a) | 116,400 | 5,380,008 | |
KBR, Inc. | 79,200 | 2,876,544 | |
MasTec, Inc. (a) | 91,400 | 1,607,726 | |
Quanta Services, Inc. (a) | 185,200 | 3,870,680 | |
Shaw Group, Inc. (a) | 47,150 | 1,364,521 | |
URS Corp. | 47,671 | 2,080,839 | |
| 34,892,360 | ||
CONSTRUCTION MATERIALS - 3.0% | |||
Construction Materials - 3.0% | |||
Eagle Materials, Inc. | 46,300 | 1,452,894 | |
Martin Marietta Materials, Inc. (d) | 42,600 | 3,658,062 | |
| 5,110,956 | ||
HOUSEHOLD DURABLES - 12.5% | |||
Homebuilding - 12.5% | |||
D.R. Horton, Inc. | 537,237 | 7,703,979 | |
Lennar Corp. Class A (d) | 167,478 | 3,915,636 | |
PulteGroup, Inc. (a) | 350,483 | 3,091,260 | |
Ryland Group, Inc. | 92,856 | 1,683,479 | |
Standard Pacific Corp. (a) | 163,800 | 717,444 | |
Toll Brothers, Inc. (a) | 187,250 | 4,392,885 | |
| 21,504,683 | ||
REAL ESTATE INVESTMENT TRUSTS - 20.1% | |||
Residential REITs - 19.7% | |||
Apartment Investment & Management Co. Class A | 74,171 | 1,842,408 | |
AvalonBay Communities, Inc. | 22,659 | 2,938,193 | |
BRE Properties, Inc. | 58,100 | 2,813,783 | |
Camden Property Trust (SBI) | 61,500 | 3,813,000 | |
Colonial Properties Trust (SBI) | 20,600 | 422,712 | |
Education Realty Trust, Inc. | 67,100 | 689,788 | |
Equity Lifestyle Properties, Inc. | 14,700 | 977,697 | |
Equity Residential (SBI) | 194,200 | 11,048,038 | |
Essex Property Trust, Inc. | 14,000 | 1,959,860 | |
Mid-America Apartment Communities, Inc. | 18,890 | 1,178,169 | |
| |||
Shares | Value | ||
Post Properties, Inc. | 84,000 | $ 3,668,280 | |
Sun Communities, Inc. | 39,300 | 1,626,627 | |
UDR, Inc. | 31,138 | 779,073 | |
| 33,757,628 | ||
Retail REITs - 0.4% | |||
CBL & Associates Properties, Inc. | 44,500 | 784,535 | |
TOTAL REAL ESTATE INVESTMENT TRUSTS | 34,542,163 | ||
REAL ESTATE MANAGEMENT & DEVELOPMENT - 2.1% | |||
Diversified Real Estate Activities - 1.1% | |||
The St. Joe Co. (a) | 111,600 | 1,797,876 | |
Real Estate Operating Companies - 1.0% | |||
Forest City Enterprises, Inc. | 117,000 | 1,710,540 | |
TOTAL REAL ESTATE MANAGEMENT & DEVELOPMENT | 3,508,416 | ||
SPECIALTY RETAIL - 35.2% | |||
Home Improvement Retail - 35.2% | |||
Home Depot, Inc. | 691,090 | 32,875,150 | |
Lowe's Companies, Inc. | 970,134 | 27,532,403 | |
Lumber Liquidators Holdings, Inc. (a) | 1,100 | 24,079 | |
| 60,431,632 | ||
TOTAL COMMON STOCKS (Cost $153,649,512) |
| ||
Money Market Funds - 4.3% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.12% (b) | 594,360 | 594,360 | |
Fidelity Securities Lending Cash Central Fund, 0.12% (b)(c) | 6,741,535 | 6,741,535 | |
TOTAL MONEY MARKET FUNDS (Cost $7,335,895) |
| ||
TOTAL INVESTMENT PORTFOLIO - 103.0% (Cost $160,985,407) | 176,690,125 | ||
NET OTHER ASSETS (LIABILITIES) - (3.0)% | (5,176,196) | ||
NET ASSETS - 100% | $ 171,513,929 | ||
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 1,907 |
Fidelity Securities Lending Cash Central Fund | 135,624 |
Total | $ 137,531 |
Other Information |
All investments are categorized as Level 1 under the Fair Value Hierarchy. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Construction and Housing Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2012 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $6,707,381) - See accompanying schedule: Unaffiliated issuers (cost $153,649,512) | $ 169,354,230 |
|
Fidelity Central Funds (cost $7,335,895) | 7,335,895 |
|
Total Investments (cost $160,985,407) |
| $ 176,690,125 |
Receivable for investments sold | 2,689,889 | |
Receivable for fund shares sold | 679,488 | |
Dividends receivable | 17,040 | |
Distributions receivable from Fidelity Central Funds | 2,144 | |
Prepaid expenses | 137 | |
Other receivables | 175 | |
Total assets | 180,078,998 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 246,809 | |
Payable for fund shares redeemed | 1,421,613 | |
Accrued management fee | 82,929 | |
Other affiliated payables | 40,913 | |
Other payables and accrued expenses | 31,270 | |
Collateral on securities loaned, at value | 6,741,535 | |
Total liabilities | 8,565,069 | |
|
|
|
Net Assets | $ 171,513,929 | |
Net Assets consist of: |
| |
Paid in capital | $ 163,049,690 | |
Distributions in excess of net investment income | (52,526) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (7,187,953) | |
Net unrealized appreciation (depreciation) on investments | 15,704,718 | |
Net Assets, for 4,286,581 shares outstanding | $ 171,513,929 | |
Net Asset Value, offering price and redemption price per share ($171,513,929 ÷ 4,286,581 shares) | $ 40.01 | |
Statement of Operations
| Year ended February 29, 2012 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 1,415,902 |
Income from Fidelity Central Funds (including $135,624 from security lending) |
| 137,531 |
Total income |
| 1,553,433 |
|
|
|
Expenses | ||
Management fee | $ 562,690 | |
Transfer agent fees | 282,424 | |
Accounting and security lending fees | 40,673 | |
Custodian fees and expenses | 9,946 | |
Independent trustees' compensation | 562 | |
Registration fees | 28,115 | |
Audit | 36,632 | |
Legal | 339 | |
Miscellaneous | 856 | |
Total expenses before reductions | 962,237 | |
Expense reductions | (4,052) | 958,185 |
Net investment income (loss) | 595,248 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 5,618,100 | |
Foreign currency transactions | (12,217) | |
Total net realized gain (loss) |
| 5,605,883 |
Change in net unrealized appreciation (depreciation) on investment securities | 5,586,759 | |
Net gain (loss) | 11,192,642 | |
Net increase (decrease) in net assets resulting from operations | $ 11,787,890 | |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 595,248 | $ 569,270 |
Net realized gain (loss) | 5,605,883 | 5,292,320 |
Change in net unrealized appreciation (depreciation) | 5,586,759 | 10,423,658 |
Net increase (decrease) in net assets resulting from operations | 11,787,890 | 16,285,248 |
Distributions to shareholders from net investment income | (636,876) | (783,306) |
Share transactions | 114,698,637 | 85,158,733 |
Reinvestment of distributions | 621,770 | 743,388 |
Cost of shares redeemed | (67,163,181) | (88,789,200) |
Net increase (decrease) in net assets resulting from share transactions | 48,157,226 | (2,887,079) |
Redemption fees | 5,297 | 23,680 |
Total increase (decrease) in net assets | 59,313,537 | 12,638,543 |
|
|
|
Net Assets | ||
Beginning of period | 112,200,392 | 99,561,849 |
End of period (including distributions in excess of net investment income of $52,526 and $0, respectively) | $ 171,513,929 | $ 112,200,392 |
Other Information Shares | ||
Sold | 3,099,736 | 2,478,458 |
Issued in reinvestment of distributions | 17,775 | 21,868 |
Redeemed | (1,828,259) | (2,833,936) |
Net increase (decrease) | 1,289,252 | (333,610) |
Financial Highlights
Years ended February 28, | 2012 F | 2011 | 2010 | 2009 | 2008 F |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 37.43 | $ 29.89 | $ 18.01 | $ 33.19 | $ 45.98 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | .21 | .18 | .22 | .31 | .26 |
Net realized and unrealized gain (loss) | 2.62 | 7.63 | 11.91 | (14.35) | (8.49) |
Total from investment operations | 2.83 | 7.81 | 12.13 | (14.04) | (8.23) |
Distributions from net investment income | (.25) | (.28) | (.25) | (.30) | (.16) |
Distributions from net realized gain | - | - | - | (.85) | (4.41) |
Total distributions | (.25) | (.28) | (.25) | (1.15) | (4.57) |
Redemption fees added to paid in capital B | - G | .01 | - G | .01 | .01 |
Net asset value, end of period | $ 40.01 | $ 37.43 | $ 29.89 | $ 18.01 | $ 33.19 |
Total Return A | 7.65% | 26.24% | 67.46% | (43.68)% | (18.11)% |
Ratios to Average Net Assets C,E |
|
|
|
|
|
Expenses before reductions | .96% | .98% | 1.01% | 1.03% | .98% |
Expenses net of fee waivers, if any | .96% | .98% | 1.01% | 1.03% | .98% |
Expenses net of all reductions | .96% | .98% | 1.01% | 1.02% | .97% |
Net investment income (loss) | .59% | .55% | .84% | 1.14% | .63% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 171,514 | $ 112,200 | $ 99,562 | $ 82,219 | $ 84,685 |
Portfolio turnover rate D | 81% | 101% | 82% | 85% | 102% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown. B Calculated based on average shares outstanding during the period. C Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. D Amount does not include the portfolio activity of any underlying Fidelity Central Funds. E Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. F For the year ended February 29. G Amount represents less than $.01 per share. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Consumer Discretionary Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 29, 2012 | Past 1 | Past 5 | Past 10 |
Consumer Discretionary Portfolio A | 8.67% | 3.26% | 4.47% |
A Prior to October 1, 2006, Consumer Discretionary Portfolio operated under certain different investment policies. The historical performance for the fund may not represent its current investment policies.
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Consumer Discretionary Portfolio on February 28, 2002. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index performed over the same period.
Annual Report
Consumer Discretionary Portfolio
Management's Discussion of Fund Performance
Market Recap: U.S. stocks rose for the 12 months ending February 29, 2012, as encouraging economic news sparked a strong late-period rally that lifted major equity benchmarks past a number of significant milestones. Stocks recovered from early-period uncertainty that followed the March 2011 earthquake, tsunami and nuclear meltdown in Japan, but plummeted during the summer amid Europe's debt woes and a historic U.S. credit-rating downgrade. Despite continued volatility and mixed economic news, markets began to recover in early October. Investors gravitated toward defensive sectors and the perceived safety of larger, more-established and dividend-paying names, helping the Dow Jones® Industrial Average advance 8.83%, and close above the psychologically important 13,000 mark in late February - for the first time since May 2008. The rally accelerated late in the period and the market broadened, as investor confidence improved amid encouraging manufacturing, housing and employment data, and signs of progress in Europe. For the year, the S&P 500® Index added 5.12%, closing near a four-year high on the period's second-to-last day. Of the 10 major market sectors in the S&P 500®, three defensive areas led the way - consumer staples, health care and utilities - while financials, materials and energy finished in negative territory. The technology-laden Nasdaq Composite® Index added 7.73%, flirting with the 3,000 mark, its highest level in 12 years. Foreign developed-markets stocks reeled over Europe's turmoil, and the MSCI® EAFE® (Europe, Australasia, Far East) Index fell 7.35%.
Comments from John Harris, Portfolio Manager of Consumer Discretionary Portfolio for the period covered by this update: For the year, the fund returned 8.67%, underperforming the 11.29% gain of the MSCI® U.S. IM Consumer Discretionary 25/50 Index, but outperforming the S&P 500®. Relative to the MSCI index, a large portion of the fund's underperformance was due to weak stock picking in restaurants and unfavorable positioning in movies/entertainment. Within restaurants, the fund was hurt by underweighting fast-food industry giant and major index component McDonald's, as well as not owning Yum! Brands - operator of KFC, Pizza Hut and Taco Bell. In movies/entertainment, underweighting media giant News Corp. was the fund's biggest individual detractor, as the stock rebounded as concerns receded about risks to the company from a phone-hacking scandal and in response to better-than-expected earnings. Elsewhere, a stake in office supply retailer OfficeMax hurt, with its stock price falling on failed turnaround initiatives. Some poor choices in apparel retail detracted, including overweightings in urban-oriented off-price chain Citi Trends and lifestyle clothier Urban Outfitters. In hotels/resorts/cruise lines, an investment in Starwood Hotels & Resorts Worldwide hurt when the company suffered from its exposure to Europe during a time of economic uncertainty there. Lastly, unfavorable stock selection in Internet retail and leisure products hampered results. On the positive side, favorable positioning in automobile manufacturers boosted relative performance, including underweightings in benchmark heavyweights Ford Motor and General Motors, which underperformed along with the entire domestic auto industry. Automotive-related plays also paid off, including not owning index component and major domestic auto manufacturer supplier Johnson Controls in the auto parts/equipment area. Casinos/gaming was a bright spot, with a significant overweighting in Las Vegas Sands generating strong results. Within specialty stores, overweighting farm equipment retailer Tractor Supply buoyed performance. The fund also benefited from favorable stock picking in home furnishings, including a position in premium mattress manufacturer Tempur-Pedic. A number of the stocks I've discussed here were sold from the fund prior to period end.
_____________________________________
Note to shareholders: Effective April 30, 2012, Gordon Scott will become Portfolio Manager of the fund.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Consumer Discretionary Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 29, 2012 | ||
| % of fund's | % of fund's net assets |
McDonald's Corp. | 6.2 | 5.8 |
The Walt Disney Co. | 6.1 | 2.9 |
Amazon.com, Inc. | 4.9 | 6.6 |
Comcast Corp. Class A | 4.8 | 0.0 |
Home Depot, Inc. | 4.2 | 4.4 |
Lowe's Companies, Inc. | 4.1 | 3.5 |
Time Warner, Inc. | 3.6 | 3.2 |
Starbucks Corp. | 3.5 | 2.9 |
Bed Bath & Beyond, Inc. | 3.4 | 2.9 |
NIKE, Inc. Class B | 3.2 | 0.8 |
| 44.0 | |
Top Industries (% of fund's net assets) | |||
As of February 29, 2012 | |||
| Specialty Retail | 25.2% |
|
| Media | 23.4% |
|
| Hotels, Restaurants & Leisure | 20.1% |
|
| Textiles, Apparel & Luxury Goods | 7.9% |
|
| Internet & Catalog Retail | 6.2% |
|
| All Others* | 17.2% |
|
As of August 31, 2011 | |||
| Specialty Retail | 23.2% |
|
| Media | 21.7% |
|
| Hotels, Restaurants & Leisure | 21.6% |
|
| Internet & Catalog Retail | 8.7% |
|
| Textiles, Apparel & Luxury Goods | 6.6% |
|
| All Others* | 18.2% |
|
* Includes short-term investments and net other assets. |
Annual Report
Consumer Discretionary Portfolio
Investments February 29, 2012
Showing Percentage of Net Assets
Common Stocks - 99.4% | |||
Shares | Value | ||
AUTO COMPONENTS - 1.2% | |||
Auto Parts & Equipment - 1.2% | |||
Delphi Automotive PLC | 53,900 | $ 1,724,800 | |
Tenneco, Inc. (a) | 43,130 | 1,660,505 | |
| 3,385,305 | ||
AUTOMOBILES - 3.7% | |||
Automobile Manufacturers - 3.7% | |||
Bayerische Motoren Werke AG (BMW) | 22,270 | 2,059,856 | |
Ford Motor Co. | 661,894 | 8,194,248 | |
| 10,254,104 | ||
DIVERSIFIED CONSUMER SERVICES - 1.9% | |||
Education Services - 0.1% | |||
Apollo Group, Inc. Class A (non-vtg.) (a) | 5,935 | 253,068 | |
Specialized Consumer Services - 1.8% | |||
Sotheby's Class A (Ltd. vtg.) | 45,091 | 1,773,880 | |
Steiner Leisure Ltd. (a) | 12,733 | 637,159 | |
Weight Watchers International, Inc. | 31,940 | 2,490,681 | |
| 4,901,720 | ||
TOTAL DIVERSIFIED CONSUMER SERVICES | 5,154,788 | ||
HOTELS, RESTAURANTS & LEISURE - 20.1% | |||
Casinos & Gaming - 4.0% | |||
International Game Technology | 73,600 | 1,105,472 | |
Las Vegas Sands Corp. | 155,850 | 8,666,819 | |
Melco PBL Entertainment (Macau) Ltd. sponsored ADR (a) | 111,600 | 1,409,508 | |
| 11,181,799 | ||
Hotels, Resorts & Cruise Lines - 1.2% | |||
Wyndham Worldwide Corp. | 79,530 | 3,498,525 | |
Restaurants - 14.9% | |||
Arcos Dorados Holdings, Inc. | 23,100 | 485,562 | |
BJ's Restaurants, Inc. (a) | 41,584 | 2,064,646 | |
Bravo Brio Restaurant Group, Inc. (a) | 31,781 | 612,738 | |
Darden Restaurants, Inc. | 47,290 | 2,411,317 | |
Dunkin' Brands Group, Inc. (a)(d) | 32,160 | 933,926 | |
McDonald's Corp. | 173,445 | 17,219,618 | |
Ruth's Hospitality Group, Inc. (a) | 353,390 | 2,201,620 | |
Starbucks Corp. | 201,015 | 9,761,288 | |
Texas Roadhouse, Inc. Class A | 340,300 | 5,693,219 | |
| 41,383,934 | ||
TOTAL HOTELS, RESTAURANTS & LEISURE | 56,064,258 | ||
HOUSEHOLD DURABLES - 2.9% | |||
Consumer Electronics - 0.7% | |||
Harman International Industries, Inc. | 38,425 | 1,887,820 | |
Home Furnishings - 1.3% | |||
Tempur-Pedic International, Inc. (a) | 45,300 | 3,578,700 | |
| |||
Shares | Value | ||
Homebuilding - 0.9% | |||
Lennar Corp. Class A (d) | 107,789 | $ 2,520,107 | |
TOTAL HOUSEHOLD DURABLES | 7,986,627 | ||
INTERNET & CATALOG RETAIL - 6.2% | |||
Internet Retail - 6.2% | |||
Amazon.com, Inc. (a) | 75,495 | 13,565,697 | |
Groupon, Inc. Class A (a)(d) | 85,200 | 1,679,718 | |
Priceline.com, Inc. (a) | 3,000 | 1,881,060 | |
| 17,126,475 | ||
INTERNET SOFTWARE & SERVICES - 0.7% | |||
Internet Software & Services - 0.7% | |||
Bankrate, Inc. | 29,000 | 691,360 | |
Google, Inc. Class A (a) | 2,200 | 1,360,150 | |
| 2,051,510 | ||
LEISURE EQUIPMENT & PRODUCTS - 0.8% | |||
Leisure Products - 0.8% | |||
Hasbro, Inc. | 63,882 | 2,256,312 | |
MEDIA - 23.4% | |||
Broadcasting - 3.2% | |||
CBS Corp. Class B | 142,325 | 4,255,518 | |
Discovery Communications, Inc. (a) | 40,300 | 1,879,995 | |
Liberty Media Corp. Capital Series A (a) | 31,618 | 2,842,142 | |
| 8,977,655 | ||
Cable & Satellite - 9.0% | |||
Comcast Corp. Class A | 456,878 | 13,423,076 | |
DIRECTV (a) | 15,524 | 719,072 | |
DISH Network Corp. Class A | 79,401 | 2,316,127 | |
Sirius XM Radio, Inc. (a)(d) | 1,852,500 | 4,186,650 | |
Time Warner Cable, Inc. | 20,514 | 1,627,581 | |
Virgin Media, Inc. | 108,225 | 2,727,270 | |
| 24,999,776 | ||
Movies & Entertainment - 11.2% | |||
News Corp. Class A | 212,263 | 4,217,666 | |
The Walt Disney Co. | 405,030 | 17,007,210 | |
Time Warner, Inc. | 269,909 | 10,043,314 | |
| 31,268,190 | ||
TOTAL MEDIA | 65,245,621 | ||
MULTILINE RETAIL - 4.9% | |||
General Merchandise Stores - 4.9% | |||
Dollar Tree, Inc. (a) | 57,983 | 5,132,075 | |
Target Corp. | 150,155 | 8,512,287 | |
| 13,644,362 | ||
Common Stocks - continued | |||
Shares | Value | ||
SOFTWARE - 0.5% | |||
Home Entertainment Software - 0.5% | |||
Take-Two Interactive Software, Inc. (a) | 89,000 | $ 1,375,050 | |
Zynga, Inc. (d) | 677 | 8,916 | |
| 1,383,966 | ||
SPECIALTY RETAIL - 25.2% | |||
Apparel Retail - 5.7% | |||
Body Central Corp. (a) | 25,824 | 718,940 | |
Express, Inc. (a) | 69,200 | 1,646,960 | |
Limited Brands, Inc. | 129,540 | 6,027,496 | |
TJX Companies, Inc. | 203,700 | 7,457,457 | |
| 15,850,853 | ||
Automotive Retail - 2.8% | |||
Advance Auto Parts, Inc. | 42,974 | 3,668,690 | |
AutoZone, Inc. (a) | 8,000 | 2,995,840 | |
O'Reilly Automotive, Inc. (a) | 12,800 | 1,107,200 | |
| 7,771,730 | ||
Computer & Electronics Retail - 0.9% | |||
Best Buy Co., Inc. | 107,500 | 2,655,250 | |
Home Improvement Retail - 8.8% | |||
Home Depot, Inc. | 242,500 | 11,535,725 | |
Lowe's Companies, Inc. | 406,009 | 11,522,535 | |
Lumber Liquidators Holdings, Inc. (a)(d) | 65,400 | 1,431,606 | |
| 24,489,866 | ||
Homefurnishing Retail - 4.2% | |||
Bed Bath & Beyond, Inc. (a) | 157,031 | 9,381,032 | |
Mattress Firm Holding Corp. (d) | 21,700 | 721,308 | |
Pier 1 Imports, Inc. (a) | 99,600 | 1,710,132 | |
| 11,812,472 | ||
Specialty Stores - 2.8% | |||
Sally Beauty Holdings, Inc. (a) | 86,900 | 2,068,220 | |
Tractor Supply Co. | 42,123 | 3,600,253 | |
Ulta Salon, Cosmetics & Fragrance, Inc. (a) | 24,130 | 2,008,581 | |
| 7,677,054 | ||
TOTAL SPECIALTY RETAIL | 70,257,225 | ||
TEXTILES, APPAREL & LUXURY GOODS - 7.9% | |||
Apparel, Accessories & Luxury Goods - 4.1% | |||
Coach, Inc. | 26,300 | 1,968,292 | |
| |||
Shares | Value | ||
PVH Corp. | 33,802 | $ 2,873,508 | |
Ralph Lauren Corp. | 17,350 | 3,014,216 | |
VF Corp. | 23,786 | 3,473,945 | |
| 11,329,961 | ||
Footwear - 3.8% | |||
Deckers Outdoor Corp. (a)(d) | 24,300 | 1,816,668 | |
NIKE, Inc. Class B | 82,078 | 8,857,858 | |
| 10,674,526 | ||
TOTAL TEXTILES, APPAREL & LUXURY GOODS | 22,004,487 | ||
TOTAL COMMON STOCKS (Cost $224,625,029) |
| ||
Money Market Funds - 6.2% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.12% (b) | 4,686,834 | 4,686,834 | |
Fidelity Securities Lending Cash Central Fund, 0.12% (b)(c) | 12,522,000 | 12,522,000 | |
TOTAL MONEY MARKET FUNDS (Cost $17,208,834) |
| ||
TOTAL INVESTMENT PORTFOLIO - 105.6% (Cost $241,833,863) | 294,023,874 | ||
NET OTHER ASSETS (LIABILITIES) - (5.6)% | (15,499,835) | ||
NET ASSETS - 100% | $ 278,524,039 | ||
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 3,550 |
Fidelity Securities Lending Cash Central Fund | 189,904 |
Total | $ 193,454 |
Other Information |
All investments are categorized as Level 1 under the Fair Value Hierarchy. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Consumer Discretionary Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2012 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $11,943,860) - See accompanying schedule: Unaffiliated issuers (cost $224,625,029) | $ 276,815,040 |
|
Fidelity Central Funds (cost $17,208,834) | 17,208,834 |
|
Total Investments (cost $241,833,863) |
| $ 294,023,874 |
Receivable for investments sold | 5,019,382 | |
Receivable for fund shares sold | 299,698 | |
Dividends receivable | 331,682 | |
Distributions receivable from Fidelity Central Funds | 40,635 | |
Prepaid expenses | 501 | |
Other receivables | 2,867 | |
Total assets | 299,718,639 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 8,409,226 | |
Payable for fund shares redeemed | 50,698 | |
Accrued management fee | 123,762 | |
Other affiliated payables | 56,118 | |
Other payables and accrued expenses | 32,796 | |
Collateral on securities loaned, at value | 12,522,000 | |
Total liabilities | 21,194,600 | |
|
|
|
Net Assets | $ 278,524,039 | |
Net Assets consist of: |
| |
Paid in capital | $ 228,970,592 | |
Undistributed net investment income | 208,928 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (2,845,492) | |
Net unrealized appreciation (depreciation) on investments | 52,190,011 | |
Net Assets, for 10,725,236 shares outstanding | $ 278,524,039 | |
Net Asset Value, offering price and redemption price per share ($278,524,039 ÷ 10,725,236 shares) | $ 25.97 | |
Statement of Operations
| Year ended February 29, 2012 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 3,285,062 |
Income from Fidelity Central Funds (including $189,904 from security lending) |
| 193,454 |
Total income |
| 3,478,516 |
|
|
|
Expenses | ||
Management fee | $ 1,218,810 | |
Transfer agent fees | 532,974 | |
Accounting and security lending fees | 86,516 | |
Custodian fees and expenses | 24,019 | |
Independent trustees' compensation | 1,268 | |
Registration fees | 25,098 | |
Audit | 43,199 | |
Legal | 722 | |
Miscellaneous | 1,682 | |
Total expenses before reductions | 1,934,288 | |
Expense reductions | (26,524) | 1,907,764 |
Net investment income (loss) | 1,570,752 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers (net of foreign taxes of $23,045) | (1,855,538) | |
Foreign currency transactions | (55,403) | |
Total net realized gain (loss) |
| (1,910,941) |
Change in net unrealized appreciation (depreciation) on: Investment securities | 19,673,113 | |
Assets and liabilities in foreign currencies | 120 | |
Total change in net unrealized appreciation (depreciation) |
| 19,673,233 |
Net gain (loss) | 17,762,292 | |
Net increase (decrease) in net assets resulting from operations | $ 19,333,044 | |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 1,570,752 | $ 336,057 |
Net realized gain (loss) | (1,910,941) | 11,411,359 |
Change in net unrealized appreciation (depreciation) | 19,673,233 | 22,349,720 |
Net increase (decrease) in net assets resulting from operations | 19,333,044 | 34,097,136 |
Distributions to shareholders from net investment income | (1,192,808) | (368,849) |
Distributions to shareholders from net realized gain | (7,465,053) | (911,441) |
Total distributions | (8,657,861) | (1,280,290) |
Share transactions | 134,058,752 | 196,721,754 |
Reinvestment of distributions | 8,554,881 | 1,230,039 |
Cost of shares redeemed | (77,852,268) | (104,711,980) |
Net increase (decrease) in net assets resulting from share transactions | 64,761,365 | 93,239,813 |
Redemption fees | 4,336 | 15,686 |
Total increase (decrease) in net assets | 75,440,884 | 126,072,345 |
|
|
|
Net Assets | ||
Beginning of period | 203,083,155 | 77,010,810 |
End of period (including undistributed net investment income of $208,928 and $0, respectively) | $ 278,524,039 | $ 203,083,155 |
Other Information Shares | ||
Sold | 5,545,938 | 8,739,845 |
Issued in reinvestment of distributions | 353,027 | 50,160 |
Redeemed | (3,302,815) | (4,637,683) |
Net increase (decrease) | 2,596,150 | 4,152,322 |
Financial Highlights
Years ended February 28, | 2012 F | 2011 | 2010 | 2009 | 2008 F |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 24.98 | $ 19.37 | $ 11.67 | $ 19.70 | $ 26.85 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss)B | .17 | .05 | .06 | .10 | .01 |
Net realized and unrealized gain (loss) | 1.91 | 5.71 | 7.70 | (8.05) | (3.95) |
Total from investment operations | 2.08 | 5.76 | 7.76 | (7.95) | (3.94) |
Distributions from net investment income | (.12) | (.05) | (.06) | (.08) | (.06) |
Distributions from net realized gain | (.97) | (.10) | - | (.01) | (3.15) |
Total distributions | (1.09) | (.15) | (.06) | (.09) | (3.21) |
Redemption fees added to paid in capital B | - G | - G | - G | .01 | - G |
Net asset value, end of period | $ 25.97 | $ 24.98 | $ 19.37 | $ 11.67 | $ 19.70 |
Total Return A | 8.67% | 29.75% | 66.54% | (40.37)% | (16.15)% |
Ratios to Average Net Assets C,E |
|
|
|
|
|
Expenses before reductions | .89% | .96% | 1.10% | 1.19% | 1.12% |
Expenses net of fee waivers, if any | .89% | .96% | 1.10% | 1.15% | 1.12% |
Expenses net of all reductions | .88% | .95% | 1.08% | 1.15% | 1.12% |
Net investment income (loss) | .72% | .23% | .37% | .62% | .03% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 278,524 | $ 203,083 | $ 77,011 | $ 21,325 | $ 24,297 |
Portfolio turnover rate D | 174% | 196% | 134% | 71% | 108% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown. B Calculated based on average shares outstanding during the period. C Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. D Amount does not include the portfolio activity of any underlying Fidelity Central Funds. E Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. F For the year ended February 29. G Amount represents less than $.01 per share. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Leisure Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 29, 2012 | Past 1 | Past 5 | Past 10 |
Leisure Portfolio | 16.85% | 8.06% | 9.27% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Leisure Portfolio on February 28, 2002. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index performed over the same period.
Annual Report
Leisure Portfolio
Management's Discussion of Fund Performance
Market Recap: U.S. stocks rose for the 12 months ending February 29, 2012, as encouraging economic news sparked a strong late-period rally that lifted major equity benchmarks past a number of significant milestones. Stocks recovered from early-period uncertainty that followed the March 2011 earthquake, tsunami and nuclear meltdown in Japan, but plummeted during the summer amid Europe's debt woes and a historic U.S. credit-rating downgrade. Despite continued volatility and mixed economic news, markets began to recover in early October. Investors gravitated toward defensive sectors and the perceived safety of larger, more-established and dividend-paying names, helping the Dow Jones® Industrial Average advance 8.83%, and close above the psychologically important 13,000 mark in late February - for the first time since May 2008. The rally accelerated late in the period and the market broadened, as investor confidence improved amid encouraging manufacturing, housing and employment data, and signs of progress in Europe. For the year, the S&P 500® Index added 5.12%, closing near a four-year high on the period's second-to-last day. Of the 10 major market sectors in the S&P 500®, three defensive areas led the way - consumer staples, health care and utilities - while financials, materials and energy finished in negative territory. The technology-laden Nasdaq Composite® Index added 7.73%, flirting with the 3,000 mark, its highest level in 12 years. Foreign developed-markets stocks reeled over Europe's turmoil, and the MSCI® EAFE® (Europe, Australasia, Far East) Index fell 7.35%.
Comments from Jean Park, Portfolio Manager of Leisure Portfolio: For the year, the fund rose 16.85%, ahead of the 14.80% return of the MSCI® U.S. IM Consumer Services 25/50 Index and the broad-based S&P 500®. Relative to the MSCI index, security selection, most notably in the hotels/resorts/cruise lines category, was the primary contributor. An underweighting in education services also was helpful, though partially offset by my picks in this group. While stock selection among restaurants was positive, much of the benefit was countered by an underweighting in this strong-performing category. The fund's top individual contributor was Starbucks, which continued to draw upon its success from solid same-store-sales and expansion into the instant coffee, single-serving coffee pod and grocery channel markets. In casinos/gaming, an out-of-index position in casino operator Melco PBL Entertainment, whose stock gained on its casino operations in the Macau gaming market, also added to performance. Among hotels, Wyndham Worldwide provided a boost, as business travel ticked upward and the economic landscape improved. Lastly, underweighting two cruise lines, Royal Caribbean Cruises and Carnival, proved beneficial. I sold Royal Caribbean by period end. Conversely, stock selection in leisure products hurt, as did holdings in casinos/gaming and apparel accessories/luxury goods. Looking at individual stocks, the fund's large underweighting in fast-food chain McDonald's was the largest relative detractor. Despite holding an average of 15% of the fund's assets in this strong, steadily growing company, versus roughly 23% for the MSCI index, I sought to capture higher rates of growth by emphasizing other stocks - mostly from the smaller-capitalization tier - where I believed the fund could reap more rewards. Also within restaurants, underweighting quick-service restaurant company Yum! Brands, which owns the Pizza Hut, Taco Bell and KFC chains, proved harmful. I opted to own larger stakes in Starbucks and McDonald's because I believed Yum! was relatively overvalued in comparison. However, later in the year, Yum! earnings beat analysts' expectations, the stock rose strongly and the fund missed out on that gain. Turning to casinos/gaming, overweighting slot machine manufacturer WMS Industries hurt. Anticipated demand for new machines did not materialize, and I sold the stock in August.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Leisure Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 29, 2012 | ||
| % of fund's | % of fund's net assets |
Starbucks Corp. | 17.5 | 14.6 |
McDonald's Corp. | 15.6 | 15.5 |
Las Vegas Sands Corp. | 9.3 | 6.2 |
Wyndham Worldwide Corp. | 5.8 | 4.0 |
Chipotle Mexican Grill, Inc. | 4.8 | 3.6 |
Yum! Brands, Inc. | 4.7 | 4.1 |
Starwood Hotels & Resorts Worldwide, Inc. | 3.9 | 4.9 |
Panera Bread Co. Class A | 3.5 | 3.0 |
Las Vegas Sands Corp. warrants 11/16/13 | 2.2 | 2.4 |
International Game Technology | 2.2 | 0.0 |
| 69.5 | |
Top Industries (% of fund's net assets) | |||
As of February 29, 2012 | |||
| Hotels, Restaurants & Leisure | 85.0% |
|
| Diversified Consumer Services | 6.9% |
|
| Textiles, Apparel & Luxury Goods | 2.5% |
|
| Household Durables | 1.3% |
|
| Leisure Equipment & Products | 1.1% |
|
| All Others* | 3.2% |
|
As of August 31, 2011 | |||
| Hotels, Restaurants & Leisure | 82.0% |
|
| Diversified Consumer Services | 6.9% |
|
| Leisure Equipment & Products | 1.3% |
|
| Textiles, Apparel & Luxury Goods | 1.2% |
|
| Software | 0.6% |
|
| All Others* | 8.0% |
|
* Includes short-term investments and net other assets. |
Annual Report
Leisure Portfolio
Investments February 29, 2012
Showing Percentage of Net Assets
Common Stocks - 98.6% | |||
Shares | Value | ||
DIVERSIFIED CONSUMER SERVICES - 6.9% | |||
Education Services - 3.0% | |||
DeVry, Inc. | 152,000 | $ 5,400,560 | |
ITT Educational Services, Inc. (a)(d) | 50,812 | 3,487,736 | |
K12, Inc. (a)(d) | 203,246 | 4,381,984 | |
| 13,270,280 | ||
Specialized Consumer Services - 3.9% | |||
Carriage Services, Inc. | 210,002 | 1,257,912 | |
Steiner Leisure Ltd. (a) | 151,523 | 7,582,211 | |
Stewart Enterprises, Inc. Class A | 287,852 | 1,790,439 | |
Weight Watchers International, Inc. | 81,160 | 6,328,857 | |
| 16,959,419 | ||
TOTAL DIVERSIFIED CONSUMER SERVICES | 30,229,699 | ||
HOTELS, RESTAURANTS & LEISURE - 84.9% | |||
Casinos & Gaming - 17.3% | |||
International Game Technology | 634,300 | 9,527,186 | |
Las Vegas Sands Corp. | 737,100 | 40,990,131 | |
Las Vegas Sands Corp. warrants 11/16/13 (a) | 11,700 | 9,674,007 | |
Melco PBL Entertainment (Macau) Ltd. sponsored ADR (a)(d) | 662,301 | 8,364,862 | |
MGM Mirage, Inc. (a) | 167,160 | 2,301,793 | |
Penn National Gaming, Inc. (a) | 6,812 | 289,851 | |
Pinnacle Entertainment, Inc. (a) | 455,000 | 5,009,550 | |
| 76,157,380 | ||
Hotels, Resorts & Cruise Lines - 12.0% | |||
Carnival Corp. unit | 228,705 | 6,927,474 | |
Orient Express Hotels Ltd. Class A (a) | 314,140 | 3,106,845 | |
Starwood Hotels & Resorts Worldwide, Inc. | 315,800 | 17,021,620 | |
Wyndham Worldwide Corp. | 584,800 | 25,725,352 | |
| 52,781,291 | ||
Leisure Facilities - 0.9% | |||
Cedar Fair LP (depository unit) | 135,400 | 3,857,546 | |
Restaurants - 54.7% | |||
Arcos Dorados Holdings, Inc. | 30,500 | 641,110 | |
BJ's Restaurants, Inc. (a) | 106,500 | 5,287,725 | |
Bravo Brio Restaurant Group, Inc. (a) | 76,100 | 1,467,208 | |
Brinker International, Inc. | 175,500 | 4,842,045 | |
Chipotle Mexican Grill, Inc. (a) | 54,109 | 21,114,414 | |
Darden Restaurants, Inc. | 43,200 | 2,202,768 | |
Denny's Corp. (a) | 1,223,794 | 5,078,745 | |
Dunkin' Brands Group, Inc. (a)(d) | 170,760 | 4,958,870 | |
McDonald's Corp. | 691,400 | 68,642,192 | |
Panera Bread Co. Class A (a) | 100,600 | 15,550,748 | |
Ruth's Hospitality Group, Inc. (a) | 502,122 | 3,128,220 | |
Spur Corp. Ltd. | 1,373,500 | 2,808,248 | |
Starbucks Corp. | 1,588,600 | 77,142,415 | |
| |||
Shares | Value | ||
Texas Roadhouse, Inc. Class A | 457,000 | $ 7,645,610 | |
Yum! Brands, Inc. | 312,200 | 20,680,128 | |
| 241,190,446 | ||
TOTAL HOTELS, RESTAURANTS & LEISURE | 373,986,663 | ||
HOUSEHOLD DURABLES - 1.3% | |||
Household Appliances - 0.5% | |||
iRobot Corp. (a)(d) | 79,000 | 2,016,080 | |
Housewares & Specialties - 0.8% | |||
Tupperware Brands Corp. | 59,900 | 3,755,131 | |
TOTAL HOUSEHOLD DURABLES | 5,771,211 | ||
INTERNET & CATALOG RETAIL - 0.5% | |||
Internet Retail - 0.5% | |||
Groupon, Inc. Class A (a)(d) | 124,000 | 2,444,660 | |
LEISURE EQUIPMENT & PRODUCTS - 1.1% | |||
Leisure Products - 1.1% | |||
Hasbro, Inc. | 98,400 | 3,475,488 | |
Summer Infant, Inc. (a) | 209,253 | 1,253,425 | |
| 4,728,913 | ||
PERSONAL PRODUCTS - 0.5% | |||
Personal Products - 0.5% | |||
Nu Skin Enterprises, Inc. Class A | 39,900 | 2,304,624 | |
SOFTWARE - 0.5% | |||
Application Software - 0.5% | |||
Intuit, Inc. | 39,100 | 2,261,544 | |
SPECIALTY RETAIL - 0.4% | |||
Apparel Retail - 0.1% | |||
Express, Inc. (a) | 26,100 | 621,180 | |
Specialty Stores - 0.3% | |||
MarineMax, Inc. (a) | 138,477 | 1,118,894 | |
TOTAL SPECIALTY RETAIL | 1,740,074 | ||
TEXTILES, APPAREL & LUXURY GOODS - 2.5% | |||
Apparel, Accessories & Luxury Goods - 1.8% | |||
Christian Dior SA | 14,000 | 2,171,886 | |
G-III Apparel Group Ltd. (a) | 54,900 | 1,368,108 | |
PVH Corp. | 53,500 | 4,548,035 | |
| 8,088,029 | ||
Footwear - 0.7% | |||
Deckers Outdoor Corp. (a) | 40,000 | 2,990,400 | |
TOTAL TEXTILES, APPAREL & LUXURY GOODS | 11,078,429 | ||
TOTAL COMMON STOCKS (Cost $282,570,425) |
| ||
Convertible Bonds - 0.1% | ||||
| Principal Amount | Value | ||
HOTELS, RESTAURANTS & LEISURE - 0.1% | ||||
Casinos & Gaming - 0.1% | ||||
MGM Mirage, Inc. 4.25% 4/15/15 | $ 300,000 | $ 321,375 | ||
Money Market Funds - 4.9% | |||
Shares |
| ||
Fidelity Securities Lending Cash Central Fund, 0.12% (b)(c) | 21,352,668 |
| |
TOTAL INVESTMENT PORTFOLIO - 103.6% (Cost $304,223,093) | 456,219,860 | ||
NET OTHER ASSETS (LIABILITIES) - (3.6)% | (15,712,429) | ||
NET ASSETS - 100% | $ 440,507,431 | ||
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 13,119 |
Fidelity Securities Lending Cash Central Fund | 207,388 |
Total | $ 220,507 |
Other Information |
The following is a summary of the inputs used, as of February 29, 2012, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities: | ||||
Common Stocks | $ 434,545,817 | $ 424,871,810 | $ 9,674,007 | $ - |
Convertible Bonds | 321,375 | - | 321,375 | - |
Money Market Funds | 21,352,668 | 21,352,668 | - | - |
Total Investments in Securities: | $ 456,219,860 | $ 446,224,478 | $ 9,995,382 | $ - |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Leisure Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2012 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $20,485,858) - See accompanying schedule: Unaffiliated issuers (cost $282,870,425) | $ 434,867,192 |
|
Fidelity Central Funds (cost $21,352,668) | 21,352,668 |
|
Total Investments (cost $304,223,093) |
| $ 456,219,860 |
Receivable for investments sold | 14,418,590 | |
Receivable for fund shares sold | 1,826,436 | |
Dividends receivable | 583,130 | |
Interest receivable | 4,781 | |
Distributions receivable from Fidelity Central Funds | 46,019 | |
Prepaid expenses | 792 | |
Other receivables | 1,696 | |
Total assets | 473,101,304 | |
|
|
|
Liabilities | ||
Payable to custodian bank | $ 1,421,379 | |
Payable for investments purchased | 5,911,145 | |
Payable for fund shares redeemed | 3,577,156 | |
Accrued management fee | 204,606 | |
Other affiliated payables | 95,113 | |
Other payables and accrued expenses | 31,806 | |
Collateral on securities loaned, at value | 21,352,668 | |
Total liabilities | 32,593,873 | |
|
|
|
Net Assets | $ 440,507,431 | |
Net Assets consist of: |
| |
Paid in capital | $ 290,279,736 | |
Undistributed net investment income | 598,610 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (2,367,770) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 151,996,855 | |
Net Assets, for 4,134,985 shares outstanding | $ 440,507,431 | |
Net Asset Value, offering price and redemption price per share ($440,507,431 ÷ 4,134,985 shares) | $ 106.53 | |
Statement of Operations
| Year ended February 29, 2012 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 5,667,437 |
Interest |
| 12,750 |
Income from Fidelity Central Funds (including $207,388 from security lending) |
| 220,507 |
Total income |
| 5,900,694 |
|
|
|
Expenses | ||
Management fee | $ 2,143,788 | |
Transfer agent fees | 896,648 | |
Accounting and security lending fees | 152,664 | |
Custodian fees and expenses | 24,132 | |
Independent trustees' compensation | 2,299 | |
Registration fees | 35,423 | |
Audit | 37,525 | |
Legal | 1,329 | |
Interest | 879 | |
Miscellaneous | 3,747 | |
Total expenses before reductions | 3,298,434 | |
Expense reductions | (7,755) | 3,290,679 |
Net investment income (loss) | 2,610,015 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 3,824,502 | |
Foreign currency transactions | (12,329) | |
Total net realized gain (loss) |
| 3,812,173 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 51,611,175 | |
Assets and liabilities in foreign currencies | 165 | |
Total change in net unrealized appreciation (depreciation) |
| 51,611,340 |
Net gain (loss) | 55,423,513 | |
Net increase (decrease) in net assets resulting from operations | $ 58,033,528 | |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fund Name
Financial Statements - continued
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 2,610,015 | $ 2,293,959 |
Net realized gain (loss) | 3,812,173 | 18,442,157 |
Change in net unrealized appreciation (depreciation) | 51,611,340 | 59,702,313 |
Net increase (decrease) in net assets resulting from operations | 58,033,528 | 80,438,429 |
Distributions to shareholders from net investment income | (358,648) | (2,395,694) |
Distributions to shareholders from net realized gain | (19,922) | - |
Total distributions | (378,570) | (2,395,694) |
Share transactions | 191,824,059 | 420,614,456 |
Reinvestment of distributions | 362,956 | 2,282,644 |
Cost of shares redeemed | (220,590,207) | (314,230,216) |
Net increase (decrease) in net assets resulting from share transactions | (28,403,192) | 108,666,884 |
Redemption fees | 17,007 | 64,309 |
Total increase (decrease) in net assets | 29,268,773 | 186,773,928 |
|
|
|
Net Assets | ||
Beginning of period | 411,238,658 | 224,464,730 |
End of period (including undistributed net investment income of $598,610 and undistributed net investment income of $354,950, respectively) | $ 440,507,431 | $ 411,238,658 |
Other Information Shares | ||
Sold | 2,002,224 | 5,018,455 |
Issued in reinvestment of distributions | 3,903 | 25,808 |
Redeemed | (2,377,349) | (3,745,003) |
Net increase (decrease) | (371,222) | 1,299,260 |
Financial Highlights
Years ended February 28, | 2012 F | 2011 | 2010 | 2009 | 2008 F |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 91.26 | $ 69.99 | $ 46.24 | $ 69.03 | $ 79.61 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | .64 | .55 | .43 | .60 | .69 |
Net realized and unrealized gain (loss) | 14.73 | 21.22 | 23.73 | (22.57) | (5.73) |
Total from investment operations | 15.37 | 21.77 | 24.16 | (21.97) | (5.04) |
Distributions from net investment income | (.09) | (.52) | (.41) | (.54) | (.55) |
Distributions from net realized gain | (.01) | - | - | (.28) | (4.99) |
Total distributions | (.10) | (.52) | (.41) | (.82) | (5.54) |
Redemption fees added to paid in capital B | - G | .02 | - G | - G | - G |
Net asset value, end of period | $ 106.53 | $ 91.26 | $ 69.99 | $ 46.24 | $ 69.03 |
Total Return A | 16.85% | 31.16% | 52.35% | (32.07)% | (7.09)% |
Ratios to Average Net Assets C,E |
|
|
|
|
|
Expenses before reductions | .86% | .90% | .94% | .93% | .91% |
Expenses net of fee waivers, if any | .86% | .90% | .94% | .93% | .91% |
Expenses net of all reductions | .86% | .89% | .93% | .93% | .91% |
Net investment income (loss) | .68% | .66% | .70% | 1.00% | .86% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 440,507 | $ 411,239 | $ 224,465 | $ 159,115 | $ 210,424 |
Portfolio turnover rate D | 77% | 112% | 99% | 120% | 74% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown. B Calculated based on average shares outstanding during the period. C Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. D Amount does not include the portfolio activity of any underlying Fidelity Central Funds. E Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. F For the year ended February 29. G Amount represents less than $.01 per share. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Multimedia Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 29, 2012 | Past 1 | Past 5 | Past 10 |
Multimedia Portfolio | 2.73% | 4.41% | 7.29% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Multimedia Portfolio on February 28, 2002. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index performed over the same period.
Annual Report
Multimedia Portfolio
Management's Discussion of Fund Performance
Market Recap: U.S. stocks rose for the 12 months ending February 29, 2012, as encouraging economic news sparked a strong late-period rally that lifted major equity benchmarks past a number of significant milestones. Stocks recovered from early-period uncertainty that followed the March 2011 earthquake, tsunami and nuclear meltdown in Japan, but plummeted during the summer amid Europe's debt woes and a historic U.S. credit-rating downgrade. Despite continued volatility and mixed economic news, markets began to recover in early October. Investors gravitated toward defensive sectors and the perceived safety of larger, more-established and dividend-paying names, helping the Dow Jones® Industrial Average advance 8.83%, and close above the psychologically important 13,000 mark in late February - for the first time since May 2008. The rally accelerated late in the period and the market broadened, as investor confidence improved amid encouraging manufacturing, housing and employment data, and signs of progress in Europe. For the year, the S&P 500® Index added 5.12%, closing near a four-year high on the period's second-to-last day. Of the 10 major market sectors in the S&P 500®, three defensive areas led the way - consumer staples, health care and utilities - while financials, materials and energy finished in negative territory. The technology-laden Nasdaq Composite® Index added 7.73%, flirting with the 3,000 mark, its highest level in 12 years. Foreign developed-markets stocks reeled over Europe's turmoil, and the MSCI® EAFE® (Europe, Australasia, Far East) Index fell 7.35%.
Comments from Kristina Salen, Portfolio Manager of Multimedia Portfolio: For the one-year period ending February 29, 2012, the fund returned 2.73%, lagging the 5.12% result of its industry benchmark, the MSCI® U.S. IM Media 25/50 Index, and the broad-based S&P 500® Index. Versus the MSCI index, NII Holdings, Interpublic Group of Companies and AOL all hurt results, as each company suffered from disappointing earnings during the 12 months. Cable provider NII Holdings was hampered by a multitude of issues in the third quarter, including the delayed rollout of one of its services, along with adverse currency exposure to emerging markets. An untimely overweighting in Interpublic Group, an advertising agency conglomerate, hurt when the company announced it missed earnings and revenue expectations, and the stock plunged in July. On average, the fund was underweighted in the stock. I sold AOL from the fund by period end. An out-of-index stake in Demand Media was the biggest relative detractor. The online content developer produces the website eHow.com and is the largest supplier of content to Internet search engine Google. Concern that a change to Google's patented search algorithm would negatively affect Demand hampered its stock. Elsewhere, an underweighting in McGraw-Hill proved detrimental. The firm is both a textbook publisher and the owner of credit-rating agency Standard & Poor's, another division of the company I was negative on. McGraw-Hill's intention to split its ratings agency from the publishing division helped the stock, but I still believed its textbook business would suffer from a lack of state-funded purchases of new schoolbooks, due to budget shortages. On the flip side, underweighting Cablevision Systems, the third-largest cable/video service provider in the U.S., helped the most. The company faced increasing competition during the period, and concern about Cablevision's long-term management structure, coupled with continued earnings misses, led the stock to underperform. The fund's out-of-benchmark position in Dentsu was the right call. The firm is the largest ad agency in Japan, the company's headquarters. Some successful global acquisitions later in the period helped buoy the stock. The fund has had a longstanding overweighting in Discovery Communications, owner of the Discovery Channel and other digital media services. I've believed that, over time, Discovery would have outsized growth relative to other cable networks, particularly in affiliate fees and advertising. The stock benefited from positive earnings surprises during the period, which helped lift the fund's results. Not owning ad firm and index constituent China MediaExpress Holdings was helpful, as the stock plummeted in May on news of an accounting fraud scandal at the company.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Multimedia Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 29, 2012 | ||
| % of fund's | % of fund's net assets |
The Walt Disney Co. | 14.2 | 14.0 |
Comcast Corp. Class A | 10.7 | 9.6 |
Time Warner, Inc. | 6.3 | 8.0 |
News Corp. Class A | 6.0 | 6.0 |
Time Warner Cable, Inc. | 5.0 | 5.0 |
CBS Corp. Class B | 4.2 | 4.2 |
DIRECTV | 4.0 | 8.8 |
Viacom, Inc. Class B (non-vtg.) | 3.9 | 5.0 |
Liberty Media Corp. Capital | 3.5 | 3.5 |
Sirius XM Radio, Inc. | 3.0 | 1.8 |
| 60.8 | |
Top Industries (% of fund's net assets) | |||
As of February 29, 2012 | |||
| Media | 93.0% |
|
| Internet Software & Services | 1.8% |
|
| Software | 1.1% |
|
| Internet & Catalog Retail | 0.4% |
|
| Wireless Telecommunication Services | 0.1% |
|
| All Others* | 3.6% |
|
As of August 31, 2011 | |||
| Media | 90.8% |
|
| Internet Software & Services | 5.0% |
|
| Internet & Catalog Retail | 0.7% |
|
| Wireless Telecommunication Services | 0.6% |
|
| All Others* | 2.9% |
|
* Includes short-term investments and net other assets. |
Annual Report
Multimedia Portfolio
Investments February 29, 2012
Showing Percentage of Net Assets
Common Stocks - 96.4% | |||
Shares | Value | ||
INTERNET & CATALOG RETAIL - 0.4% | |||
Internet Retail - 0.4% | |||
Amazon.com, Inc. (a) | 1,300 | $ 233,597 | |
Groupon, Inc. Class A (a)(d) | 23,300 | 459,360 | |
| 692,957 | ||
INTERNET SOFTWARE & SERVICES - 1.8% | |||
Internet Software & Services - 1.8% | |||
Active Network, Inc. | 29,300 | 468,800 | |
Baidu.com, Inc. sponsored ADR (a) | 5,700 | 779,190 | |
Bankrate, Inc. | 21,600 | 514,944 | |
Demand Media, Inc. (a)(d) | 26,700 | 183,162 | |
Mail.ru Group Ltd. GDR (Reg. S) (a) | 11,800 | 466,690 | |
Yandex NV | 36,300 | 773,190 | |
| 3,185,976 | ||
MEDIA - 93.0% | |||
Advertising - 5.2% | |||
Aegis Group PLC | 345,150 | 948,235 | |
Interpublic Group of Companies, Inc. | 225,804 | 2,646,423 | |
Lamar Advertising Co. Class A (a) | 15,900 | 519,930 | |
National CineMedia, Inc. | 23,000 | 365,930 | |
Omnicom Group, Inc. | 89,300 | 4,414,992 | |
ReachLocal, Inc. (a) | 90,900 | 709,020 | |
| 9,604,530 | ||
Broadcasting - 15.1% | |||
Antena 3 de Television SA | 20,500 | 122,895 | |
Belo Corp. Series A | 226,900 | 1,626,873 | |
CBS Corp. Class B | 260,200 | 7,779,980 | |
Discovery Communications, Inc. (a) | 68,150 | 3,179,198 | |
Discovery Communications, Inc. Class C (non-vtg.) (a) | 74,050 | 3,218,213 | |
Entercom Communications Corp. | 81,000 | 567,000 | |
Liberty Media Corp. Capital Series A (a) | 71,193 | 6,399,539 | |
LIN TV Corp. Class A (a) | 248,700 | 1,024,644 | |
Scripps Networks Interactive, Inc. Class A | 46,000 | 2,079,200 | |
Sinclair Broadcast Group, Inc. Class A | 140,700 | 1,606,794 | |
| 27,604,336 | ||
Cable & Satellite - 33.8% | |||
Cablevision Systems Corp. - NY Group Class A | 177,600 | 2,527,248 | |
Charter Communications, Inc. Class A (a) | 17,700 | 1,122,357 | |
Comcast Corp.: | |||
Class A | 667,450 | 19,609,681 | |
Class A (special) (non-vtg.) | 127,100 | 3,633,789 | |
DIRECTV (a) | 157,813 | 7,309,898 | |
DISH Network Corp. Class A | 128,500 | 3,748,345 | |
Liberty Global, Inc.: | |||
Class A (a) | 45,175 | 2,266,882 | |
Class C (a) | 42,100 | 2,018,695 | |
Sirius XM Radio, Inc. (a)(d) | 2,446,860 | 5,529,904 | |
| |||
Shares | Value | ||
Time Warner Cable, Inc. | 114,669 | $ 9,097,838 | |
Virgin Media, Inc. (d) | 198,100 | 4,992,120 | |
| 61,856,757 | ||
Movies & Entertainment - 34.0% | |||
Cinemark Holdings, Inc. | 91,200 | 1,907,904 | |
DreamWorks Animation SKG, Inc. | 80,100 | 1,382,526 | |
Lions Gate Entertainment Corp. (a)(d) | 116,700 | 1,596,456 | |
News Corp. Class A | 550,582 | 10,940,064 | |
Regal Entertainment Group Class A (d) | 133,200 | 1,840,824 | |
The Walt Disney Co. | 619,504 | 26,012,971 | |
Time Warner, Inc. | 309,066 | 11,500,346 | |
Viacom, Inc. Class B (non-vtg.) | 149,200 | 7,104,904 | |
| 62,285,995 | ||
Publishing - 4.9% | |||
E.W. Scripps Co. Class A (a) | 116,300 | 1,107,176 | |
Gannett Co., Inc. | 124,000 | 1,840,160 | |
John Wiley & Sons, Inc. Class A | 15,500 | 703,700 | |
McGraw-Hill Companies, Inc. | 108,600 | 5,054,244 | |
The New York Times Co. Class A (a) | 52,600 | 346,634 | |
| 9,051,914 | ||
TOTAL MEDIA | 170,403,532 | ||
SOFTWARE - 1.1% | |||
Home Entertainment Software - 1.1% | |||
Electronic Arts, Inc. (a) | 21,600 | 352,728 | |
Nexon Co. Ltd. (d) | 17,500 | 252,937 | |
Take-Two Interactive Software, Inc. (a) | 82,100 | 1,268,445 | |
Zynga, Inc. (d) | 13,900 | 183,063 | |
| 2,057,173 | ||
WIRELESS TELECOMMUNICATION SERVICES - 0.1% | |||
Wireless Telecommunication Services - 0.1% | |||
NII Holdings, Inc. (a) | 14,100 | 252,108 | |
TOTAL COMMON STOCKS (Cost $128,849,681) |
| ||
Money Market Funds - 12.3% | |||
Shares | Value | ||
Fidelity Cash Central Fund, 0.12% (b) | 6,011,517 | $ 6,011,517 | |
Fidelity Securities Lending Cash Central Fund, 0.12% (b)(c) | 16,417,050 | 16,417,050 | |
TOTAL MONEY MARKET FUNDS (Cost $22,428,567) |
| ||
TOTAL INVESTMENT PORTFOLIO - 108.7% (Cost $151,278,248) | 199,020,313 | ||
NET OTHER ASSETS (LIABILITIES) - (8.7)% | (15,863,673) | ||
NET ASSETS - 100% | $ 183,156,640 | ||
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 3,973 |
Fidelity Securities Lending Cash Central Fund | 237,274 |
Total | $ 241,247 |
Other Information |
All investments are categorized as Level 1 under the Fair Value Hierarchy. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Multimedia Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2012 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $15,402,748) - See accompanying schedule: Unaffiliated issuers (cost $128,849,681) | $ 176,591,746 |
|
Fidelity Central Funds (cost $22,428,567) | 22,428,567 |
|
Total Investments (cost $151,278,248) |
| $ 199,020,313 |
Receivable for investments sold | 327,740 | |
Receivable for fund shares sold | 463,834 | |
Dividends receivable | 225,725 | |
Distributions receivable from Fidelity Central Funds | 9,859 | |
Prepaid expenses | 458 | |
Other receivables | 166 | |
Total assets | 200,048,095 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 150,143 | |
Payable for fund shares redeemed | 170,808 | |
Accrued management fee | 82,638 | |
Other affiliated payables | 40,616 | |
Other payables and accrued expenses | 30,200 | |
Collateral on securities loaned, at value | 16,417,050 | |
Total liabilities | 16,891,455 | |
|
|
|
Net Assets | $ 183,156,640 | |
Net Assets consist of: |
| |
Paid in capital | $ 139,156,244 | |
Distributions in excess of net investment income | (52,199) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (3,689,482) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 47,742,077 | |
Net Assets, for 3,777,772 shares outstanding | $ 183,156,640 | |
Net Asset Value, offering price and redemption price per share ($183,156,640 ÷ 3,777,772 shares) | $ 48.48 | |
Statement of Operations
| Year ended February 29, 2012 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 2,603,732 |
Income from Fidelity Central Funds (including $237,274 from security lending) |
| 241,247 |
Total income |
| 2,844,979 |
|
|
|
Expenses | ||
Management fee | $ 1,030,406 | |
Transfer agent fees | 466,748 | |
Accounting and security lending fees | 74,790 | |
Custodian fees and expenses | 9,688 | |
Independent trustees' compensation | 1,094 | |
Registration fees | 32,058 | |
Audit | 41,533 | |
Legal | 742 | |
Interest | 803 | |
Miscellaneous | 1,570 | |
Total expenses before reductions | 1,659,432 | |
Expense reductions | (5,659) | 1,653,773 |
Net investment income (loss) | 1,191,206 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | (3,289,088) | |
Foreign currency transactions | (11,728) | |
Total net realized gain (loss) |
| (3,300,816) |
Change in net unrealized appreciation (depreciation) on: Investment securities | (611,263) | |
Assets and liabilities in foreign currencies | 12 | |
Total change in net unrealized appreciation (depreciation) |
| (611,251) |
Net gain (loss) | (3,912,067) | |
Net increase (decrease) in net assets resulting from operations | $ (2,720,861) | |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 1,191,206 | $ 531,648 |
Net realized gain (loss) | (3,300,816) | 6,655,221 |
Change in net unrealized appreciation (depreciation) | (611,251) | 40,182,225 |
Net increase (decrease) in net assets resulting from operations | (2,720,861) | 47,369,094 |
Distributions to shareholders from net investment income | (1,167,605) | (507,699) |
Distributions to shareholders from net realized gain | (1,177,808) | - |
Total distributions | (2,345,413) | (507,699) |
Share transactions | 125,782,043 | 216,653,527 |
Reinvestment of distributions | 2,273,089 | 493,404 |
Cost of shares redeemed | (145,769,203) | (134,405,987) |
Net increase (decrease) in net assets resulting from share transactions | (17,714,071) | 82,740,944 |
Redemption fees | 16,532 | 9,440 |
Total increase (decrease) in net assets | (22,763,813) | 129,611,779 |
|
|
|
Net Assets | ||
Beginning of period | 205,920,453 | 76,308,674 |
End of period (including distributions in excess of net investment income of $52,199 and undistributed net investment income of $26,807, respectively) | $ 183,156,640 | $ 205,920,453 |
Other Information Shares | ||
Sold | 2,698,656 | 5,457,270 |
Issued in reinvestment of distributions | 50,831 | 11,609 |
Redeemed | (3,279,398) | (3,379,951) |
Net increase (decrease) | (529,911) | 2,088,928 |
Financial Highlights
Years ended February 28, | 2012 H | 2011 | 2010 | 2009 | 2008 H |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 47.80 | $ 34.39 | $ 18.27 | $ 35.30 | $ 47.31 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss)B | .29 | .14 | .13 E | .06 | .01 |
Net realized and unrealized gain (loss) | .96 F | 13.39 | 16.12 | (16.17) | (5.79) |
Total from investment operations | 1.25 | 13.53 | 16.25 | (16.11) | (5.78) |
Distributions from net investment income | (.32) | (.12) | (.13) | (.06) | - |
Distributions from net realized gain | (.25) | - | - | (.86) | (6.23) |
Total distributions | (.57) | (.12) | (.13) | (.92) | (6.23) |
Redemption fees added to paid in capital B,I | - | - | - | - | - |
Net asset value, end of period | $ 48.48 | $ 47.80 | $ 34.39 | $ 18.27 | $ 35.30 |
Total Return A | 2.73% | 39.37% | 88.96% | (46.75)% | (13.88)% |
Ratios to Average Net Assets C,G |
|
|
|
|
|
Expenses before reductions | .90% | .94% | 1.08% | 1.07% | .99% |
Expenses net of fee waivers, if any | .90% | .94% | 1.08% | 1.07% | .99% |
Expenses net of all reductions | .90% | .94% | 1.07% | 1.07% | .98% |
Net investment income (loss) | .64% | .37% | .44% E | .22% | .01% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 183,157 | $ 205,920 | $ 76,309 | $ 26,183 | $ 62,141 |
Portfolio turnover rate D | 85% | 76% | 40% | 39% | 68% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown. B Calculated based on average shares outstanding during the period. C Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. D Amount does not include the portfolio activity of any underlying Fidelity Central Funds. E Investment income per share reflects a large, non-recurring dividend which amounted to $.10 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .10%. F The amount shown for a share outstanding does not correspond with the aggregate net gain (loss) on investments for the period due to the timing of sales and repurchases of shares in relation to fluctuating market values of the investments of the Fund. G Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. H For the year ended February 29. I Amount represents less than $.01 per share. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Retailing Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 29, 2012 | Past 1 | Past 5 | Past 10 |
Retailing Portfolio | 15.70% | 7.75% | 8.87% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Retailing Portfolio on February 28, 2002. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index performed over the same period.
Annual Report
Retailing Portfolio
Management's Discussion of Fund Performance
Market Recap: U.S. stocks rose for the 12 months ending February 29, 2012, as encouraging economic news sparked a strong late-period rally that lifted major equity benchmarks past a number of significant milestones. Stocks recovered from early-period uncertainty that followed the March 2011 earthquake, tsunami and nuclear meltdown in Japan, but plummeted during the summer amid Europe's debt woes and a historic U.S. credit-rating downgrade. Despite continued volatility and mixed economic news, markets began to recover in early October. Investors gravitated toward defensive sectors and the perceived safety of larger, more-established and dividend-paying names, helping the Dow Jones® Industrial Average advance 8.83%, and close above the psychologically important 13,000 mark in late February - for the first time since May 2008. The rally accelerated late in the period and the market broadened, as investor confidence improved amid encouraging manufacturing, housing and employment data, and signs of progress in Europe. For the year, the S&P 500® Index added 5.12%, closing near a four-year high on the period's second-to-last day. Of the 10 major market sectors in the S&P 500®, three defensive areas led the way - consumer staples, health care and utilities - while financials, materials and energy finished in negative territory. The technology-laden Nasdaq Composite® Index added 7.73%, flirting with the 3,000 mark, its highest level in 12 years. Foreign developed-markets stocks reeled over Europe's turmoil, and the MSCI® EAFE® (Europe, Australasia, Far East) Index fell 7.35%.
Comments from Peter Dixon, Portfolio Manager of Retailing Portfolio: For the one-year period ending February 29, 2012, the fund gained 15.70%, modestly trailing the 16.84% return of the MSCI® U.S. IM Retailing 25/50 Index, but significantly outpacing the broad-based S&P 500®. Looking at individual detractors versus the MSCI index, an out-of-index investment in one leisure product name - toy maker Hasbro, which I established in May - hurt results. I thought the company had a significant amount of underappreciated international growth potential, and that operating leverage and margin expansion would result in earnings ahead of expectations as international markets began to see growth and the U.S. began to stabilize. I still believed this scenario could play out in time, and remained invested in Hasbro at period end. Elsewhere, positioning in home improvement retail was a miss, as were stock choices in Internet retail, although that negative was largely offset by an underweighting in the group during the first half of the period, when it struggled. A larger-than-benchmark position in OfficeMax was the fund's biggest relative detractor. I believed this office supply chain would be able to grow earnings through cost cutting and other initiatives, even in a slower-growth environment, but, unfortunately, that didn't pan out during the period. Citi Trends is an off-price retailer whose primary customers were hurt by limited discretionary spending amid high unemployment and a challenging economic environment. I remained positive about the stock - despite trimming the fund's position during the period - as the firm offers a differentiated product, has very little competition and a promising new CEO. Underweighting Home Depot - a large benchmark component - worked against the fund's results. The home improvement retailer's business fundamentals and earnings were better than expected throughout the year. On the flip side, positioning in apparel retail and department stores buoyed results, as did security selection in general merchandising stores and automotive retail. Looking at individual contributors, many of the top names were poor-performing index components that I underweighted, including Staples, which helped the most on a relative basis. I felt that expectations were inflated and valuations were too high for the stock of the office supply retailer. This turned out to be the right call, as the company missed earnings and revenue expectations for two consecutive quarters early in the period. I remained negative on the stock, and sold it by period end. Overweighting Limited Brands, owner of the Victoria's Secret and Bath & Body Works chains, was productive, as the company continued to execute well, growing same-store sales and expanding margins. Another contributor was TJX Companies, an off-price retailer that buys end-of-season goods from other stores. The firm was able to produce better-than-expected sales and margins during the period, and its stock outperformed. Some of the stocks I've mentioned were sold from the fund by period end.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Retailing Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 29, 2012 | ||
| % of fund's | % of fund's net assets |
Lowe's Companies, Inc. | 11.2 | 2.8 |
Amazon.com, Inc. | 11.2 | 16.2 |
Home Depot, Inc. | 6.8 | 7.4 |
Target Corp. | 6.3 | 5.3 |
TJX Companies, Inc. | 5.7 | 5.9 |
Limited Brands, Inc. | 5.5 | 5.3 |
Bed Bath & Beyond, Inc. | 4.4 | 5.6 |
Ross Stores, Inc. | 3.9 | 0.0 |
Priceline.com, Inc. | 3.6 | 4.9 |
AutoZone, Inc. | 3.5 | 4.1 |
| 62.1 | |
Top Industries (% of fund's net assets) | |||
As of February 29, 2012 | |||
| Specialty Retail | 60.9% |
|
| Internet & Catalog Retail | 16.2% |
|
| Multiline Retail | 11.8% |
|
| Textiles, Apparel & Luxury Goods | 7.0% |
|
| Leisure Equipment & Products | 1.4% |
|
| All Others* | 2.7% |
|
As of August 31, 2011 | |||
| Specialty Retail | 53.7% |
|
| Internet & Catalog Retail | 24.6% |
|
| Multiline Retail | 8.0% |
|
| Textiles, Apparel & Luxury Goods | 2.7% |
|
 | Leisure Equipment & Products | 2.1% |
|
| All Others* | 8.9% |
|
* Includes short-term investments and net other assets. |
Annual Report
Retailing Portfolio
Investments February 29, 2012
Showing Percentage of Net Assets
Common Stocks - 98.5% | |||
Shares | Value | ||
FOOD PRODUCTS - 0.2% | |||
Packaged Foods & Meats - 0.2% | |||
TreeHouse Foods, Inc. (a) | 12,000 | $ 691,200 | |
INTERNET & CATALOG RETAIL - 16.2% | |||
Internet Retail - 16.2% | |||
Amazon.com, Inc. (a) | 214,700 | 38,579,443 | |
Netflix, Inc. (a)(d) | 37,300 | 4,130,229 | |
Priceline.com, Inc. (a) | 19,860 | 12,452,617 | |
TripAdvisor, Inc. (a)(d) | 17,600 | 567,248 | |
| 55,729,537 | ||
LEISURE EQUIPMENT & PRODUCTS - 1.4% | |||
Leisure Products - 1.4% | |||
Hasbro, Inc. | 131,718 | 4,652,280 | |
MULTILINE RETAIL - 11.8% | |||
Department Stores - 3.2% | |||
Macy's, Inc. | 288,254 | 10,945,004 | |
General Merchandise Stores - 8.6% | |||
Dollar Tree, Inc. (a) | 88,800 | 7,859,688 | |
Target Corp. | 386,021 | 21,883,530 | |
| 29,743,218 | ||
TOTAL MULTILINE RETAIL | 40,688,222 | ||
SOFTWARE - 1.0% | |||
Home Entertainment Software - 1.0% | |||
Take-Two Interactive Software, Inc. (a) | 226,500 | 3,499,425 | |
SPECIALTY RETAIL - 60.9% | |||
Apparel Retail - 22.3% | |||
Charming Shoppes, Inc. (a) | 216,000 | 1,220,400 | |
Cia.Hering SA | 65,400 | 1,758,902 | |
Citi Trends, Inc. (a) | 126,633 | 1,372,702 | |
Express, Inc. (a) | 465,847 | 11,087,159 | |
Foot Locker, Inc. | 137,100 | 3,999,207 | |
Inditex SA | 29,400 | 2,714,643 | |
Limited Brands, Inc. | 410,298 | 19,091,166 | |
Ross Stores, Inc. | 250,300 | 13,348,499 | |
rue21, Inc. (a)(d) | 98,423 | 2,625,926 | |
TJX Companies, Inc. | 536,400 | 19,637,604 | |
| 76,856,208 | ||
Automotive Retail - 7.4% | |||
Advance Auto Parts, Inc. | 61,189 | 5,223,705 | |
AutoZone, Inc. (a) | 32,140 | 12,035,787 | |
O'Reilly Automotive, Inc. (a) | 97,200 | 8,407,800 | |
| 25,667,292 | ||
Computer & Electronics Retail - 2.3% | |||
Best Buy Co., Inc. | 326,527 | 8,065,217 | |
Home Improvement Retail - 18.0% | |||
Home Depot, Inc. | 492,800 | 23,442,496 | |
Lowe's Companies, Inc. | 1,361,000 | 38,625,179 | |
| 62,067,675 | ||
| |||
Shares | Value | ||
Homefurnishing Retail - 4.4% | |||
Bed Bath & Beyond, Inc. (a) | 253,700 | $ 15,156,038 | |
Specialty Stores - 6.5% | |||
Sally Beauty Holdings, Inc. (a) | 299,814 | 7,135,573 | |
Signet Jewelers Ltd. | 108,500 | 5,088,650 | |
Tiffany & Co., Inc. | 28,960 | 1,882,690 | |
Tractor Supply Co. | 52,288 | 4,469,055 | |
Ulta Salon, Cosmetics & Fragrance, Inc. (a) | 44,300 | 3,687,532 | |
| 22,263,500 | ||
TOTAL SPECIALTY RETAIL | 210,075,930 | ||
TEXTILES, APPAREL & LUXURY GOODS - 7.0% | |||
Apparel, Accessories & Luxury Goods - 5.9% | |||
G-III Apparel Group Ltd. (a) | 72,000 | 1,794,240 | |
lululemon athletica, Inc. (a) | 13,400 | 898,068 | |
PVH Corp. | 109,976 | 9,349,060 | |
Samsonite International SA | 741,900 | 1,329,587 | |
VF Corp. | 47,100 | 6,878,955 | |
| 20,249,910 | ||
Footwear - 1.1% | |||
NIKE, Inc. Class B | 19,328 | 2,085,878 | |
Steven Madden Ltd. (a) | 39,600 | 1,709,928 | |
| 3,795,806 | ||
TOTAL TEXTILES, APPAREL & LUXURY GOODS | 24,045,716 | ||
TOTAL COMMON STOCKS (Cost $271,553,353) |
| ||
Convertible Bonds - 0.3% | ||||
| Principal Amount |
| ||
SOFTWARE - 0.3% | ||||
Home Entertainment Software - 0.3% | ||||
Take-Two Interactive Software, Inc. 1.75% 12/1/16 (e) | $ 1,000,000 |
| ||
Money Market Funds - 2.5% | |||
Shares | Value | ||
Fidelity Cash Central Fund, 0.12% (b) | 3,560,395 | $ 3,560,395 | |
Fidelity Securities Lending Cash Central Fund, 0.12% (b)(c) | 5,058,325 | 5,058,325 | |
TOTAL MONEY MARKET FUNDS (Cost $8,618,720) |
| ||
TOTAL INVESTMENT PORTFOLIO - 101.3% (Cost $281,172,073) | 349,069,155 | ||
NET OTHER ASSETS (LIABILITIES) - (1.3)% | (4,325,869) | ||
NET ASSETS - 100% | $ 344,743,286 | ||
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
(e) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the end of the period, the value of these securities amounted to $1,068,125 or 0.3% of net assets. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 6,702 |
Fidelity Securities Lending Cash Central Fund | 39,151 |
Total | $ 45,853 |
Other Information |
The following is a summary of the inputs used, as of February 29, 2012, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities: | ||||
Common Stocks | $ 339,382,310 | $ 339,382,310 | $ - | $ - |
Convertible Bonds | 1,068,125 | - | 1,068,125 | - |
Money Market Funds | 8,618,720 | 8,618,720 | - | - |
Total Investments in Securities: | $ 349,069,155 | $ 348,001,030 | $ 1,068,125 | $ - |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Retailing Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2012 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $4,832,126) - See accompanying schedule: Unaffiliated issuers (cost $272,553,353) | $ 340,450,435 |
|
Fidelity Central Funds (cost $8,618,720) | 8,618,720 |
|
Total Investments (cost $281,172,073) |
| $ 349,069,155 |
Cash |
| 263,462 |
Receivable for investments sold | 5,766,106 | |
Receivable for fund shares sold | 2,503,101 | |
Dividends receivable | 304,102 | |
Interest receivable | 5,056 | |
Distributions receivable from Fidelity Central Funds | 1,452 | |
Prepaid expenses | 401 | |
Other receivables | 10,588 | |
Total assets | 357,923,423 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 6,273,175 | |
Payable for fund shares redeemed | 1,583,931 | |
Accrued management fee | 154,979 | |
Other affiliated payables | 79,004 | |
Other payables and accrued expenses | 30,723 | |
Collateral on securities loaned, at value | 5,058,325 | |
Total liabilities | 13,180,137 | |
|
|
|
Net Assets | $ 344,743,286 | |
Net Assets consist of: |
| |
Paid in capital | $ 281,074,108 | |
Undistributed net investment income | 59,634 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (4,287,538) | |
Net unrealized appreciation (depreciation) on investments | 67,897,082 | |
Net Assets, for 5,991,854 shares outstanding | $ 344,743,286 | |
Net Asset Value, offering price and redemption price per share ($344,743,286 ÷ 5,991,854 shares) | $ 57.54 | |
Statement of Operations
| Year ended February 29, 2012 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 3,116,774 |
Special dividends |
| 1,315,396 |
Interest |
| 5,064 |
Income from Fidelity Central Funds (including $39,151 from security lending) |
| 45,853 |
Total income |
| 4,483,087 |
|
|
|
Expenses | ||
Management fee | $ 1,390,012 | |
Transfer agent fees | 630,506 | |
Accounting and security lending fees | 98,749 | |
Custodian fees and expenses | 12,479 | |
Independent trustees' compensation | 1,448 | |
Registration fees | 47,755 | |
Audit | 37,285 | |
Legal | 774 | |
Interest | 299 | |
Miscellaneous | 1,802 | |
Total expenses before reductions | 2,221,109 | |
Expense reductions | (32,749) | 2,188,360 |
Net investment income (loss) | 2,294,727 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 4,550,528 | |
Foreign currency transactions | (41,547) | |
Total net realized gain (loss) |
| 4,508,981 |
Change in net unrealized appreciation (depreciation) on investment securities | 31,163,378 | |
Net gain (loss) | 35,672,359 | |
Net increase (decrease) in net assets resulting from operations | $ 37,967,086 | |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 2,294,727 | $ 324,323 |
Net realized gain (loss) | 4,508,981 | 12,484,030 |
Change in net unrealized appreciation (depreciation) | 31,163,378 | 14,023,572 |
Net increase (decrease) in net assets resulting from operations | 37,967,086 | 26,831,925 |
Distributions to shareholders from net investment income | (1,998,613) | (39,463) |
Distributions to shareholders from net realized gain | (14,569,913) | (5,248,627) |
Total distributions | (16,568,526) | (5,288,090) |
Share transactions | 358,193,782 | 207,559,950 |
Reinvestment of distributions | 16,017,682 | 5,100,239 |
Cost of shares redeemed | (218,000,118) | (204,551,707) |
Net increase (decrease) in net assets resulting from share transactions | 156,211,346 | 8,108,482 |
Redemption fees | 38,912 | 33,591 |
Total increase (decrease) in net assets | 177,648,818 | 29,685,908 |
|
|
|
Net Assets | ||
Beginning of period | 167,094,468 | 137,408,560 |
End of period (including undistributed net investment income of $59,634 and undistributed net investment income of $206,595, respectively) | $ 344,743,286 | $ 167,094,468 |
Other Information Shares | ||
Sold | 6,700,769 | 4,185,398 |
Issued in reinvestment of distributions | 307,489 | 103,790 |
Redeemed | (4,129,046) | (4,222,320) |
Net increase (decrease) | 2,879,212 | 66,868 |
Financial Highlights
Years ended February 28, | 2012 G | 2011 | 2010 | 2009 | 2008 G |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 53.68 | $ 45.11 | $ 26.48 | $ 36.57 | $ 54.98 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss)B | .49 E | .09 | .11 | .21 | (.01) |
Net realized and unrealized gain (loss) | 7.46 | 9.81 | 20.74 | (10.11) | (10.59) |
Total from investment operations | 7.95 | 9.90 | 20.85 | (9.90) | (10.60) |
Distributions from net investment income | (.34) | (.01) | (.11) | (.20) | (.22) |
Distributions from net realized gain | (3.76) | (1.33) | (2.11) | - | (7.60) |
Total distributions | (4.10) | (1.34) | (2.22) | (.20) | (7.82) |
Redemption fees added to paid in capital B | .01 | .01 | - H | .01 | .01 |
Net asset value, end of period | $ 57.54 | $ 53.68 | $ 45.11 | $ 26.48 | $ 36.57 |
Total Return A | 15.70% | 22.24% | 79.26% | (27.09)% | (21.43)% |
Ratios to Average Net Assets C,F |
|
|
|
|
|
Expenses before reductions | .90% | .93% | .96% | 1.07% | 1.02% |
Expenses net of fee waivers, if any | .90% | .93% | .96% | 1.07% | 1.02% |
Expenses net of all reductions | .88% | .93% | .94% | 1.06% | 1.02% |
Net investment income (loss) | .93% E | .18% | .27% | .63% | (.02)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 344,743 | $ 167,094 | $ 137,409 | $ 40,335 | $ 48,038 |
Portfolio turnover rate D | 217% | 191% | 281% | 504% | 260% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown. B Calculated based on average shares outstanding during the period. C Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. D Amount does not include the portfolio activity of any underlying Fidelity Central Funds. E Investment income per share reflects a large, non-recurring dividend which amounted to $.28 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been ..40%. F Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. G For the year ended February 29. H Amount represents less than $.01 per share. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended February 29, 2012 (Unaudited)
1. Organization.
Automotive Portfolio, Construction and Housing Portfolio, Consumer Discretionary Portfolio, Leisure Portfolio, Multimedia Portfolio, and Retailing Portfolio (the Funds) are non-diversified funds of Fidelity Select Portfolios (the Trust). The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Funds invest primarily in securities of companies whose principal business activities fall within specific industries. Each Fund is authorized to issue an unlimited number of shares. Certain Funds' investments in emerging markets can be subject to social, economic, regulatory, and political uncertainties and can be extremely volatile.
2. Investments in Fidelity Central Funds.
The Funds invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Funds' Schedules of Investments list each of the Fidelity Central Funds held as of period end, if any, as an investment of each Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, each Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Funds' Report of Independent Registered Public Accounting Firm, are available on the SEC web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Funds:
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. Each Fund uses independent pricing services approved by the Board of Trustees to value their investments. When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include market or security specific events, changes in interest rates and credit quality. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The value used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
Each Fund categorizes the inputs to valuation techniques used to value their investments into a disclosure hierarchy consisting of three levels as shown below:
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the Fund's own assumptions based on the best information available)
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level, as of February 29, 2012, as well as a roll forward of Level 3 securities, is included at the end of each Fund's Schedule of Investments. Valuation techniques used to value each Fund's investments by major category are as follows:
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when significant market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-traded funds (ETFs) and certain indexes as well as quoted prices for similar securities are used and are categorized as Level 2 in the hierarchy in these circumstances. Utilizing these techniques may result in transfers between Level 1 and Level 2. For restricted equity securities and private placements where observable inputs are limited, assumptions about market activity and risk are used and are categorized as Level 3 in the hierarchy.
Debt securities, including restricted securities, are valued based on evaluated prices received from independent pricing services or from dealers who make markets in such securities. For corporate bonds, pricing services utilize matrix pricing which considers yield or price of bonds of comparable
Annual Report
3. Significant Accounting Policies - continued
Security Valuation - continued
quality, coupon, maturity and type as well as dealer supplied prices and are generally categorized as Level 2 in the hierarchy. When independent prices are unavailable or unreliable, debt securities may be valued utilizing pricing matrices which consider similar factors that would be used by independent pricing services. These are generally categorized as Level 2 in the hierarchy but may be Level 3 depending on the circumstances.
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 in the hierarchy.
New Accounting Pronouncements. In May 2011, the Financial Accounting Standards Board issued Accounting Standard Update No. 2011-04, Fair Value Measurement (Topic 820) - Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. The update is effective during interim and annual periods beginning after December 15, 2011 and will result in additional disclosure for transfers between levels as well as expanded disclosure for securities categorized as Level 3 under the fair value hierarchy.
In December 2011, the Financial Accounting Standards Board issued Accounting Standard Update No. 2011-11, Disclosures about Offsetting Assets and Liabilities. The update creates new disclosure requirements requiring entities to disclose both gross and net information for derivatives and other financial instruments that are either offset in the Statement of Assets and Liabilities or subject to an enforceable master netting arrangement or similar agreement. The disclosure requirements are effective for interim and annual reporting periods beginning on or after January 1, 2013. Management is currently evaluating the impact of the update's adoption on the Fund's financial statement disclosures.
Foreign Currency. The Funds may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Funds' investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Funds are informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Funds estimate the components of distributions received that may be considered return of capital distributions or capital gain distributions. Large, non-recurring dividends recognized by the Funds are presented separately on the Statement of Operations as "Special Dividends" and the impact of these dividends is presented in the Financial Highlights. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain. Debt obligations may be placed on non-accrual status and related interest income may be reduced by ceasing current accruals and writing off interest receivables when the collection of all or a portion of interest has become doubtful based on consistently applied procedures. A debt obligation is removed from non-accrual status when the issuer resumes interest payments or when collectability of interest is reasonably assured.
Expenses. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, each Fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for income taxes is required. As of February 29, 2012, each Fund did not have any unrecognized tax benefits in the financial statements; nor is each Fund aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. Each Fund files a U.S. federal tax return, in addition to state and local tax returns as required. A fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction. Foreign taxes are provided for based on each Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Annual Report
Notes to Financial Statements (Unaudited) - continued
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
Distributions are declared and recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. In addition, certain Funds claimed a portion of the payment made to redeeming shareholders as a distribution for income tax purposes.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, partnerships, 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 investment securities and unrealized appreciation (depreciation) as of period end were as follows for each Fund:
| Tax cost | Gross unrealized | Gross unrealized | Net unrealized |
Automotive Portfolio | $ 175,597,703 | $ 35,373,510 | $ (5,076,594) | $ 30,296,916 |
Construction and Housing Portfolio | 166,170,534 | 16,731,141 | (6,211,550) | 10,519,591 |
Consumer Discretionary Portfolio | 243,401,614 | 52,974,167 | (2,351,907) | 50,622,260 |
Leisure Portfolio | 305,525,042 | 155,723,798 | (5,028,980) | 150,694,818 |
Multimedia Portfolio | 152,072,873 | 49,413,227 | (2,465,787) | 46,947,440 |
Retailing Portfolio | 285,740,310 | 70,117,796 | (6,788,951) | 63,328,845 |
The tax-based components of distributable earnings as of period end were as follows for each Fund:
| Undistributed | Undistributed | Capital loss | Net unrealized |
Automotive Portfolio | $ - | $ 93,926 | $ - | $ 30,296,428 |
Construction and Housing Portfolio | - | - | (2,002,826) | 10,519,591 |
Consumer Discretionary Portfolio | 208,930 | - | (1,277,741) | 50,622,260 |
Leisure Portfolio | 598,802 | - | - | 150,694,906 |
Multimedia Portfolio | - | - | (2,894,857) | 46,947,452 |
Retailing Portfolio | 59,776 | 280,700 | - | 63,328,845 |
Capital loss carryforwards are only available to offset future capital gains of the Funds to the extent provided by regulations and may be limited. Under the Regulated Investment Company Modernization Act of 2010 (the Act), the Funds are permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period and such capital losses are required to be used prior to any losses that expire. Capital loss carryforwards were as follows:
| Fiscal year of |
| 2018 |
Construction and Housing Portfolio | $ (2,002,826) |
| No expiration | Total capital loss |
Construction and Housing Portfolio | $ - | $ (2,002,826) |
Consumer Discretionary Portfolio | (1,277,741) | (1,277,741) |
Multimedia Portfolio | (2,894,857) | (2,894,857) |
Certain Funds intend to elect to defer to the fiscal year ending February 28, 2013 capital and ordinary losses recognized during the period November 1, 2011 to February 29, 2012. Loss deferrals were as follows:
| Capital losses | Ordinary losses |
Automotive Portfolio | $ (4,202,276) | $ - |
Construction and Housing Portfolio | - | (52,522) |
Leisure Portfolio | (812,452) | - |
Annual Report
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The tax character of distributions paid was as follows:
February 29, 2012 | Ordinary Income | Long-term | Total |
Automotive Portfolio | $ 102,737 | $ 9,181,063 | $ 9,283,800 |
Construction and Housing Portfolio | 636,876 | - | 636,876 |
Consumer Discretionary Portfolio | 5,656,448 | 3,001,413 | 8,657,861 |
Leisure Portfolio | 378,570 | - | 378,570 |
Multimedia Portfolio | 1,167,605 | 1,177,808 | 2,345,413 |
Retailing Portfolio | 1,998,613 | 14,569,913 | 16,568,526 |
February 28, 2011 | Ordinary Income | Long-term | Total |
Automotive Portfolio | $ 3,086,154 | $ - | $ 3,086,154 |
Construction and Housing Portfolio | 783,306 | - | 783,306 |
Consumer Discretionary Portfolio | 660,864 | 619,426 | 1,280,290 |
Leisure Portfolio | 2,395,694 | - | 2,395,694 |
Multimedia Portfolio | 507,699 | - | 507,699 |
Retailing Portfolio | 4,143,652 | 1,144,438 | 5,288,090 |
Trading (Redemption) Fees. Shares held by investors in the Funds less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Funds and accounted for as an addition to paid in capital.
4. Operating Policies.
Restricted Securities. Certain Funds may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities is included at the end of each applicable Fund's Schedule of Investments.
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, are noted in the table below.
| Purchases ($) | Sales ($) |
Automotive Portfolio | 82,476,654 | 255,815,354 |
Construction and Housing Portfolio | 130,526,939 | 83,594,156 |
Consumer Discretionary Portfolio | 440,764,996 | 383,269,753 |
Leisure Portfolio | 292,794,586 | 320,018,284 |
Multimedia Portfolio | 156,676,928 | 175,839,412 |
Retailing Portfolio | 673,788,577 | 537,344,059 |
6. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the Funds with investment management related services for which the Funds pay a monthly management fee. The management fee is the sum of an individual fund fee rate and an annualized group fee rate. The individual fund fee rate is applied to each Fund's average net assets. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, each Fund's annual management fee rate expressed as a percentage of each Fund's average net assets was as follows:
| Individual Rate | Group Rate | Total |
Automotive Portfolio | .30% | .26% | .55% |
Construction and Housing Portfolio | .30% | .26% | .56% |
Consumer Discretionary Portfolio | .30% | .26% | .56% |
Leisure Portfolio | .30% | .26% | .56% |
Multimedia Portfolio | .30% | .26% | .56% |
Retailing Portfolio | .30% | .26% | .56% |
Annual Report
Notes to Financial Statements (Unaudited) - continued
6. Fees and Other Transactions with Affiliates - continued
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the Funds' transfer, dividend disbursing and shareholder servicing agent. FIIOC receives account fees and asset-based fees that vary according to account size and type of account. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, transfer agent fees were equivalent to the following annual rates expressed as a percentage of average net assets:
Automotive Portfolio | .25% |
Construction and Housing Portfolio | .28% |
Consumer Discretionary Portfolio | .24% |
Leisure Portfolio | .23% |
Multimedia Portfolio | .25% |
Retailing Portfolio | .25% |
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains each Fund's accounting records. The accounting fee is based on the level of average net assets for each month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. Certain Funds placed a portion of their portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were as follows:
| Amount |
Automotive Portfolio | $ 7,047 |
Construction and Housing Portfolio | 8,175 |
Consumer Discretionary Portfolio | 19,977 |
Leisure Portfolio | 20,327 |
Multimedia Portfolio | 8,467 |
Retailing Portfolio | 19,970 |
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 |
Automotive Portfolio | Borrower | $ 6,577,188 | .37% | $ 1,080 |
Leisure Portfolio | Borrower | 6,756,583 | .39% | 879 |
Multimedia Portfolio | Borrower | 4,208,000 | .36% | 751 |
Retailing Portfolio | Borrower | 5,453,833 | .33% | 299 |
7. Committed Line of Credit.
Certain Funds participate with other funds managed by FMR or an affiliate in a $4.0 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The participating funds have agreed to pay commitment fees on their pro-rata portion of the line of credit, which are reflected in Miscellaneous expenses on the Statement of Operations, and are as follows:
Automotive Portfolio | $ 632 |
Construction and Housing Portfolio | 276 |
Consumer Discretionary Portfolio | 629 |
Leisure Portfolio | 1,163 |
Multimedia Portfolio | 544 |
Retailing Portfolio | 664 |
During the period, there were no borrowings on this line of credit.
Annual Report
8. Security Lending.
Certain Funds lend portfolio securities through a lending agent from time to time in order to earn additional income. For equity securities, a lending agent is used and may loan securities to certain qualified borrowers, including Fidelity Capital Markets (FCM), a broker-dealer affiliated with the Funds. On the settlement date of the loan, each applicable Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Funds and any additional required collateral is delivered to the Funds on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on each applicable Fund's Statement of Assets and Liabilities. At period end, there were no security loans outstanding with FCM. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented on each applicable Fund's Statement of Operations as a component of income from Fidelity Central Funds. FCM security lending activity as of and during the period was as follows:
| Security Lending |
Automotive Portfolio | $ - |
Construction and Housing Portfolio | - |
Consumer Discretionary Portfolio | 1,482 |
Leisure Portfolio | 4,285 |
Multimedia Portfolio | 2,040 |
Retailing Portfolio | - |
9. Bank Borrowings.
Each Fund is permitted to have bank borrowings for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity requirements. Each Fund has established borrowing arrangements with certain banks. The interest rate on the borrowings is the bank's base rate, as revised from time to time. At period end, there were no bank borrowings outstanding. Each applicable Fund's activity in this program during the period for which loans were outstanding was as follows:
| Average Loan | Weighted Average Interest Rate | Interest |
Multimedia Portfolio | $ 635,400 | .59% | $ 52 |
10. Expense Reductions.
Many of the brokers with whom FMR places trades on behalf of certain Funds provided services to these Funds in addition to trade execution. These services included payments of expenses on behalf of each applicable Fund. All of the applicable expense reductions are noted in the table below.
| Brokerage Service |
Automotive Portfolio | $ 3,746 |
Construction and Housing Portfolio | 4,052 |
Consumer Discretionary Portfolio | 26,524 |
Leisure Portfolio | 7,755 |
Multimedia Portfolio | 5,659 |
Retailing Portfolio | 32,749 |
Annual Report
Notes to Financial Statements (Unaudited) - continued
11. Other.
The Funds' organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Funds. In the normal course of business, the Funds may also enter into contracts that provide general indemnifications. The Funds' maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Funds. The risk of material loss from such claims is considered remote.
At the end of the period, Fidelity VIP FundsManager 60% Portfolio was the owner of record of approximately 38% and 15% of the total outstanding shares of Consumer Discretionary Portfolio and Multimedia Portfolio, respectively. In addition, at the end of the period, Strategic Advisers U.S. Opportunity Fund was the owner of record of approximately 13%, 20%, 10% and 11% of the total outstanding shares of Construction and Housing Portfolio, Consumer Discretionary Portfolio, Leisure Portfolio and Multimedia Portfolio, respectively. Mutual Funds managed by FMR or its affiliates, were the owners of record, in the aggregate, of approximately 27%, 75%, 38% and 25% of the total outstanding shares of Construction and Housing Portfolio, Consumer Discretionary Portfolio, Multimedia Portfolio and Retailing Portfolio, respectively.
Annual Report
Report of Independent Registered Public Accounting Firm
To the Trustees of Fidelity Select Portfolios and the Shareholders of Automotive Portfolio, Construction and Housing Portfolio, Consumer Discretionary Portfolio, Leisure Portfolio, Multimedia Portfolio, and Retailing Portfolio:
In our opinion, the accompanying statements of assets and liabilities, including the schedules of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Automotive Portfolio, Construction and Housing Portfolio, Consumer Discretionary Portfolio, Leisure Portfolio, Multimedia Portfolio, and Retailing Portfolio (funds of Fidelity Select Portfolios) at February 29, 2012, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fidelity Select Portfolios' management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at February 29, 2012 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 13, 2012
Annual Report
Trustees and Officers
The Trustees, Members of the Advisory Board, and executive officers of the trust and funds, as applicable, are listed below. The Board of Trustees governs each fund and is responsible for protecting the interests of shareholders. The Trustees are experienced executives who meet periodically throughout the year to oversee each fund's activities, review contractual arrangements with companies that provide services to each fund, oversee management of the risks associated with such activities and contractual arrangements, and review each fund's performance. Except for James C. Curvey, each of the Trustees oversees 226 funds advised by FMR or an affiliate. Mr. Curvey oversees 430 funds advised by FMR or an affiliate.
The Trustees hold office without limit in time except that (a) any Trustee may resign; (b) any Trustee may be removed by written instrument, signed by at least two-thirds of the number of Trustees prior to such removal; (c) any Trustee who requests to be retired or who has become incapacitated by illness or injury may be retired by written instrument signed by a majority of the other Trustees; and (d) any Trustee may be removed at any special meeting of shareholders by a two-thirds vote of the outstanding voting securities of the trust. Each Trustee who is not an interested person (as defined in the 1940 Act) (Independent Trustee), shall retire not later than the last day of the calendar year in which his or her 75th birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. The executive officers and Advisory Board Members hold office without limit in time, except that any officer and Advisory Board Member may resign or may be removed by a vote of a majority of the Trustees at any regular meeting or any special meeting of the Trustees. Except as indicated, each individual has held the office shown or other offices in the same company for the past five years.
Experience, Skills, Attributes, and Qualifications of the Funds' Trustees. The Governance and Nominating Committee has adopted a statement of policy that describes the experience, qualifications, attributes, and skills that are necessary and desirable for potential Independent Trustee candidates (Statement of Policy). The Board believes that each Trustee satisfied at the time he or she was initially elected or appointed a Trustee, and continues to satisfy, the standards contemplated by the Statement of Policy. The Governance and Nominating Committee also engages professional search firms to help identify potential Independent Trustee candidates who have the experience, qualifications, attributes, and skills consistent with the Statement of Policy. From time to time, additional criteria based on the composition and skills of the current Independent Trustees, as well as experience or skills that may be appropriate in light of future changes to board composition, business conditions, and regulatory or other developments, have also been considered by the professional search firms and the Governance and Nominating Committee. In addition, the Board takes into account the Trustees' commitment and participation in Board and committee meetings, as well as their leadership of standing and ad hoc committees throughout their tenure.
In determining that a particular Trustee was and continues to be qualified to serve as a Trustee, the Board has considered a variety of criteria, none of which, in isolation, was controlling. The Board believes that, collectively, the Trustees have balanced and diverse experience, qualifications, attributes, and skills, which allow the Board to operate effectively in governing each fund and protecting the interests of shareholders. Information about the specific experience, skills, attributes, and qualifications of each Trustee, which in each case led to the Board's conclusion that the Trustee should serve (or continue to serve) as a trustee of the funds, is provided below.
Board Structure and Oversight Function. James C. Curvey is an interested person (as defined in the 1940 Act) and currently serves as Acting Chairman. The Trustees have determined that an interested Chairman is appropriate and benefits shareholders because an interested Chairman has a personal and professional stake in the quality and continuity of services provided to the funds. Independent Trustees exercise their informed business judgment to appoint an individual of their choosing to serve as Chairman, regardless of whether the Trustee happens to be independent or a member of management. The Independent Trustees have determined that they can act independently and effectively without having an Independent Trustee serve as Chairman and that a key structural component for assuring that they are in a position to do so is for the Independent Trustees to constitute a substantial majority for the Board. The Independent Trustees also regularly meet in executive session. Ned C. Lautenbach serves as Chairman of the Independent Trustees and as such (i) acts as a liaison between the Independent Trustees and management with respect to matters important to the Independent Trustees and (ii) with management prepares agendas for Board meetings.
Fidelity funds are overseen by different Boards of Trustees. The funds' Board oversees Fidelity's equity and high income funds and another Board oversees Fidelity's investment-grade bond, money market, and asset allocation funds. The asset allocation funds may invest in Fidelity funds overseen by the funds' Board. The use of separate Boards, each with its own committee structure, allows the Trustees of each group of Fidelity funds to focus on the unique issues of the funds they oversee, including common research, investment, and operational issues. On occasion, the separate Boards establish joint committees to address issues of overlapping consequences for the Fidelity funds overseen by each Board.
The Trustees operate using a system of committees to facilitate the timely and efficient consideration of all matters of importance to the Trustees, each fund, and fund shareholders and to facilitate compliance with legal and regulatory requirements and oversight of the funds' activities and associated risks. The Board, acting through its committees, has charged FMR and its affiliates with (i) identifying events or circumstances the occurrence of which could have demonstrably adverse effects on the funds' business and/or reputation; (ii) implementing processes and controls to lessen the possibility that such events or circumstances occur or to mitigate the effects of such events or circumstances if they do occur; and (iii) creating and maintaining a system designed to evaluate continuously business and market conditions in order to facilitate the identification and implementation processes described in (i) and (ii) above. Because the day-to-day operations and activities of the funds are carried out by or through FMR, its affiliates and other service providers, the funds' exposure to risks is mitigated but not eliminated by the processes overseen by the Trustees. While each of the Board's committees has responsibility for overseeing different aspects of the funds' activities, oversight is exercised primarily through the Operations, Audit, and Compliance Committees. In addition, the Independent Trustees have worked with FMR to enhance the Board's oversight of investment and financial risks, legal and regulatory risks, technology risks, and operational risks, including the development of additional risk reporting to the Board. For example, a working group comprised of Independent Trustees and FMR has worked and continues to work to review the Fidelity funds' valuation-related activities, reporting and risk management. Appropriate personnel, including but not limited to the funds' Chief Compliance Officer (CCO), FMR's internal auditor, the independent accountants, the funds' Treasurer and portfolio management personnel, make periodic reports to the Board's committees, as appropriate, including an annual review of FMR's risk management program for the Fidelity funds. The responsibilities of each standing committee, including their oversight responsibilities, are described further under "Standing Committees of the Funds' Trustees."
Annual Report
The funds' Statement of Additional Information (SAI) includes more information about the Trustees. To request a free copy, call Fidelity at 1-800-544-8544.
Interested Trustees*:
Correspondence intended for each Trustee who is an interested person may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupations and Other Relevant Experience+ | |
James C. Curvey (76) | |
| Year of Election or Appointment: 2007 Mr. Curvey is Trustee and Acting Chairman of the Board of Trustees of certain Trusts. Mr. Curvey also serves as Trustee (2007-present) of other investment companies advised by FMR. Mr. Curvey is a Director of Fidelity Investments Money Management, Inc. (2009-present), Director of Fidelity Research & Analysis Co. (2009-present) and Director of FMR and FMR Co., Inc. (2007-present). Mr. Curvey is also Vice Chairman (2007-present) and Director of FMR LLC. In addition, Mr. Curvey serves as an Overseer for the Boston Symphony Orchestra and a member of the Trustees of Villanova University. Previously, Mr. Curvey was the Vice Chairman (2006-2007) and Director (2000-2007) of FMR Corp. |
Ronald P. O'Hanley (55) | |
| Year of Election or Appointment: 2011 |
* Trustees have been determined to be "Interested Trustees" by virtue of, among other things, their affiliation with the trust or various entities under common control with FMR.
+ The information above includes each Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to each Trustee's qualifications to serve as a Trustee, which led to the conclusion that each Trustee should serve as a Trustee for each fund.
Independent Trustees:
Correspondence intended for each Independent Trustee (that is, the Trustees other than the Interested Trustees) may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235.
Name, Age; Principal Occupations and Other Relevant Experience+ | |
Dennis J. Dirks (63) | |
| Year of Election or Appointment: 2005 Prior to his retirement in May 2003, Mr. Dirks was Chief Operating Officer and a member of the Board of The Depository Trust & Clearing Corporation (DTCC). He also served as President, Chief Operating Officer, and Board member of The Depository Trust Company (DTC) and President and Board member of the National Securities Clearing Corporation (NSCC). In addition, Mr. Dirks served as Chief Executive Officer and Board member of the Government Securities Clearing Corporation, Chief Executive Officer and Board member of the Mortgage-Backed Securities Clearing Corporation, as a Trustee and a member of the Finance Committee of Manhattan College (2005-2008), and as a Trustee and a member of the Finance Committee of AHRC of Nassau County (2006-2008). Mr. Dirks is a member of the Independent Directors Council (IDC) Governing Council (2010-present) and Board of Directors for The Brookville Center for Children's Services, Inc. (2009-present). |
Alan J. Lacy (58) | |
| Year of Election or Appointment: 2008 Mr. Lacy serves as Senior Adviser (2007-present) of Oak Hill Capital Partners, L.P. (private equity). Mr. Lacy also served as Chief Executive Officer (2000-2005) and Vice Chairman (2005-2006) of Sears Holdings Corporation and Sears, Roebuck and Co. (retail). In addition, Mr. Lacy serves as a member of the Board of Directors of Dave & Buster's, Inc. (restaurant and entertainment complexes, 2010-present), The Hillman Companies, Inc. (hardware wholesalers, 2010-present), and Bristol-Myers Squibb Company (global pharmaceuticals, 2007-present). Mr. Lacy is a member of the Board of Trustees of The National Parks Conservation Association (2006-present). Previously, Mr. Lacy served as Chairman of the Board of Trustees of the National Parks Conservation Association (2008-2011) and as a member of the Board of Directors for the Western Union Company (global money transfer, 2006-2011). |
Ned C. Lautenbach (68) | |
| Year of Election or Appointment: 2000 Mr. Lautenbach is Chairman of the Independent Trustees of the Equity and High Income Funds (2006-present). Mr. Lautenbach currently serves as the Lead Director of the Eaton Corporation Board of Directors (diversified industrial, 1997-present). Mr. Lautenbach is also a member of the Board of Directors of the Philharmonic Center for the Arts in Naples, Florida (1999-present); a member of the Board of Trustees of Fairfield University (2005-present); and a member of the Council on Foreign Relations (1994-present). Previously, Mr. Lautenbach was a Partner/Advisory Partner at Clayton, Dubilier & Rice, LLC (private equity investment, 1998-2010), as well as a Director of Sony Corporation (2006-2007). |
Joseph Mauriello (67) | |
| Year of Election or Appointment: 2008 Prior to his retirement in January 2006, Mr. Mauriello served in numerous senior management positions including Deputy Chairman and Chief Operating Officer (2004-2005), and Vice Chairman of Financial Services (2002-2004) of KPMG LLP US (professional services, 1965-2005). Mr. Mauriello currently serves as a member of the Board of Directors of XL Group plc. (global insurance and re-insurance, 2006-present) and of Arcadia Resources Inc. (health care services and products, 2007-present). Previously, Mr. Mauriello served as a Director of the Hamilton Funds of the Bank of New York (2006-2007). |
Robert W. Selander (61) | |
| Year of Election or Appointment: 2011 Previously, Mr. Selander served as a Member of the Advisory Board of Fidelity's Equity and High Income Funds (2011), Executive Vice Chairman (2010), Chief Executive Officer (2009-2010), and President and Chief Executive Officer (1997-2009) of Mastercard, Inc. |
Cornelia M. Small (67) | |
| Year of Election or Appointment: 2005 Ms. Small is a member of the Board of Directors of the Teagle Foundation (2009-present). Ms. Small is also a member of the Investment Committee, and Chair (2008-present) and a member of the Board of Trustees of Smith College. In addition, Ms. Small serves on the Investment Committee of the Berkshire Taconic Community Foundation (2008-present). Previously, Ms. Small served as Chairperson of the Investment Committee (2002-2008) of Smith College. In addition, Ms. Small served as Chief Investment Officer, Director of Global Equity Investments, and a member of the Board of Directors of Scudder, Stevens & Clark and Scudder Kemper Investments. |
William S. Stavropoulos (72) | |
| Year of Election or Appointment: 2001 Mr. Stavropoulos is Vice Chairman of the Independent Trustees of the Equity and High Income Funds (2006-present). Mr. Stavropoulos serves as President and Founder of the Michigan Baseball Foundation, the Great Lakes Loons (2007-present). Mr. Stavropoulos is Chairman Emeritus of the Board of Directors of The Dow Chemical Company, where he previously served in numerous senior management positions, including President, CEO (1995-2000; 2002-2004), Chairman of the Executive Committee (2000-2006), and as a member of the Board of Directors (1990-2006). Currently, Mr. Stavropoulos is Chairman of Univar (global distributor of commodity and specialty chemicals, 2010-present), a Director of Teradata Corporation (data warehousing and technology solutions, 2008-present), Chemical Financial Corporation, Maersk Inc. (industrial conglomerate), Tyco International, Inc. (multinational manufacturing and services, 2007-present), and a member of the Advisory Board for Metalmark Capital (private equity investment, 2005-present). Mr. Stavropoulos is a special advisor to Clayton, Dubilier & Rice, LLC (private equity investment). In addition, Mr. Stavropoulos is a member of the University of Notre Dame Advisory Council for the College of Science. |
David M. Thomas (62) | |
| Year of Election or Appointment: 2008 Previously, Mr. Thomas served as Executive Chairman (2005-2006) and Chairman and Chief Executive Officer (2000-2005) of IMS Health, Inc. (pharmaceutical and healthcare information solutions). In addition, Mr. Thomas serves as a member of the Board of Directors of Fortune Brands, Inc. (consumer products), and Interpublic Group of Companies, Inc. (marketing communication, 2004-present). |
Michael E. Wiley (61) | |
| Year of Election or Appointment: 2008 Mr. Wiley also serves as a Director of Asia Pacific Exploration Consolidated (international oil and gas exploration and production, 2008-present). Mr. Wiley serves as a Director of Tesoro Corporation (independent oil refiner and marketer, 2005-present), and a Director of Bill Barrett Corporation (exploration and production, 2005-present). In addition, Mr. Wiley also serves as a Director of Post Oak Bank (privately-held bank, 2004-present). Previously, Mr. Wiley served as a member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-2010), as a Senior Energy Advisor of Katzenbach Partners, LLC (consulting, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production, 2001-2005). |
+ The information above includes each Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to each Trustee's qualifications to serve as a Trustee, which led to the conclusion that each Trustee should serve as a Trustee for each fund.
Advisory Board Members and Executive Officers:
Correspondence intended for each executive officer, Edward C. Johnson 3d, and Peter S. Lynch may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
Edward C. Johnson 3d (81) | |
| Year of Election or Appointment: 2011 Member of the Advisory Board of Fidelity's Equity and High Income Funds. Mr. Johnson serves as Chief Executive Officer, Chairman, and a Director of FMR LLC, and also serves as Chairman and Director of FIL Limited. Previously, Mr. Johnson served as a Trustee and Chairman of the Board of certain Fidelity Trusts, Chairman and a Director of FMR, Chairman and a Director of FMR Co., Inc., and President of FMR LLC (2006-2007). |
Peter S. Lynch (68) | |
| Year of Election or Appointment: 2003 Member of the Advisory Board of Fidelity's Equity and High Income Funds. Mr. Lynch is Vice Chairman and a Director of FMR and FMR Co., Inc. In addition, Mr. Lynch serves as a Trustee of Boston College and as the Chairman of the Inner-City Scholarship Fund. Previously, Mr. Lynch served on the Special Olympics International Board of Directors (1997-2006). |
Kenneth B. Robins (42) | |
| Year of Election or Appointment: 2008 President and Treasurer of Fidelity's Equity and High Income Funds. Mr. Robins also serves as President and Treasurer (2010-present) and Assistant Treasurer (2009-present) of other Fidelity funds and is an employee of Fidelity Investments (2004-present). Previously, Mr. Robins served as Deputy Treasurer of the Fidelity funds (2005-2008) and Treasurer and Chief Financial Officer of The North Carolina Capital Management Trust: Cash and Term Portfolios (2006-2008). |
Brian B. Hogan (47) | |
| Year of Election or Appointment: 2009 Vice President of Equity and High Income Funds. Mr. Hogan also serves as President of FMR's Equity Division (2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager. |
Christopher S. Bartel (40) | |
| Year of Election or Appointment: 2009 Vice President of Fidelity's Sector and Real Estate Equity Funds. Mr. Bartel also serves as a Director, President, and Chief Executive Officer of Fidelity Management & Research (Japan) Inc. (2012-present) and Senior Vice President of Global Equity Research (2010-present). Previously, Mr. Bartel served as Senior Vice President of Equity Research (2009-2010), Managing Director of Research (2006-2009), and an analyst and portfolio manager (2000-2006). |
Scott C. Goebel (44) | |
| Year of Election or Appointment: 2008 Secretary and Chief Legal Officer (CLO) of the Fidelity funds. Mr. Goebel also serves as Secretary of Fidelity Investments Money Management, Inc. (FIMM) (2010-present) and Fidelity Research and Analysis Company (FRAC) (2010-present); Secretary and CLO of The North Carolina Capital Management Trust: Cash and Term Portfolios (2008-present); General Counsel, Secretary, and Senior Vice President of FMR (2008-present) and FMR Co., Inc. (2008-present); employed by FMR LLC or an affiliate (2001-present); Chief Legal Officer of Fidelity Management & Research (Hong Kong) Limited (2008-present) and Assistant Secretary of Fidelity Management & Research (Japan) Inc. (2008-present), and Fidelity Management & Research (U.K.) Inc. (2008-present). Previously, Mr. Goebel served as Assistant Secretary of FIMM (2008-2010), FRAC (2008-2010), and the Funds (2007-2008) and as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (2005-2007). |
William C. Coffey (43) | |
| Year of Election or Appointment: 2009 Assistant Secretary of Fidelity's Equity and High Income Funds. Mr. Coffey also serves as Senior Vice President and Deputy General Counsel of FMR LLC (2010-present), and is an employee of Fidelity Investments. Previously, Mr. Coffey served as Vice President and Associate General Counsel of FMR LLC (2005-2009). |
Holly C. Laurent (57) | |
| Year of Election or Appointment: 2008 Anti-Money Laundering (AML) Officer of the Fidelity funds. Ms. Laurent also serves as AML Officer of The North Carolina Capital Management Trust: Cash and Term Portfolios (2008-present) and is an employee of Fidelity Investments. Previously, Ms. Laurent was Senior Vice President and Head of Legal for Fidelity Business Services India Pvt. Ltd. (2006-2008), and Senior Vice President, Deputy General Counsel and Group Head for FMR LLC (2005-2006). |
Christine Reynolds (53) | |
| Year of Election or Appointment: 2008 Chief Financial Officer of the Fidelity funds. Ms. Reynolds became President of Fidelity Pricing and Cash Management Services (FPCMS) in August 2008. Ms. Reynolds served as Chief Operating Officer of FPCMS (2007-2008). Previously, Ms. Reynolds served as President, Treasurer, and Anti-Money Laundering officer of the Fidelity funds (2004-2007). |
Joseph A. Hanlon (43) | |
| Year of Election or Appointment: 2012 Chief Compliance Officer of Fidelity's Equity and High Income Funds. Mr. Hanlon serves as Senior Vice President of the Fidelity Asset Management Division (2009-present) and is an employee of Fidelity Investments. |
Joseph F. Zambello (54) | |
| Year of Election or Appointment: 2011 Deputy Treasurer of the Fidelity funds. Mr. Zambello is an employee of Fidelity Investments. Previously, Mr. Zambello served as Vice President of FMR's Program Management Group (2009-2011) and Vice President of the Transfer Agent Oversight Group (2005-2009). |
Adrien E. Deberghes (44) | |
| Year of Election or Appointment: 2008 Deputy Treasurer of Fidelity's Equity and High Income Funds. Mr. Deberghes also serves as Vice President (2011-present) and Assistant Treasurer (2010-present) of other Fidelity funds, and is an employee of Fidelity Investments (2008-present). Previously, Mr. Deberghes served as Senior Vice President of Mutual Fund Administration at State Street Corporation (2007-2008), Senior Director of Mutual Fund Administration at Investors Bank & Trust (2005-2007), and Director of Finance for Dunkin' Brands (2000-2005). |
Stephanie J. Dorsey (42) | |
| Year of Election or Appointment: 2010 Assistant Treasurer of Fidelity's Equity and High Income Funds. Ms. Dorsey also serves as Deputy Treasurer of other Fidelity funds (2008-present) and is an employee of Fidelity Investments (2008-present). Previously, Ms. Dorsey served as Treasurer (2004-2008) of the JPMorgan Mutual Funds and Vice President (2004-2008) of JPMorgan Chase Bank. |
John R. Hebble (53) | |
| Year of Election or Appointment: 2009 Assistant Treasurer of Fidelity's Equity and High Income Funds. Mr. Hebble also serves as President (2011-present), Treasurer, and Chief Financial Officer of The North Carolina Capital Management Trust: Cash and Term Portfolios (2008-present), President and Treasurer of other Fidelity funds (2008-present) and is an employee of Fidelity Investments. |
Gary W. Ryan (53) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of the Fidelity funds. Mr. Ryan is an employee of Fidelity Investments. Previously, Mr. Ryan served as Vice President of Fund Reporting in Fidelity Pricing and Cash Management Services (FPCMS) (1999-2005). |
Jonathan Davis (43) | |
| Year of Election or Appointment: 2010 Assistant Treasurer of the Fidelity funds. Mr. Davis is also Assistant Treasurer of Fidelity Rutland Square Trust II and Fidelity Commonwealth Trust II. Mr. Davis is an employee of Fidelity Investments. Previously, Mr. Davis served as Vice President and Associate General Counsel of FMR LLC (2003-2010). |
Annual Report
Distributions (Unaudited)
The Board of Trustees of each fund voted to pay to shareholders of record at the opening of business on record date, the following distributions per share derived from capital gains realized from sales of portfolio securities, and dividends derived from net investment income:
| Pay Date | Record Date | Dividends | Capital Gains |
Automotive Portfolio | 04/16/12 | 04/13/12 | $0.00 | $0.024 |
Construction and Housing Portfolio | 04/16/12 | 04/13/12 | $0.00 | $0.000 |
Consumer Discretionary Portfolio | 04/16/12 | 04/13/12 | $0.02 | $0.000 |
Leisure Portfolio | 04/16/12 | 04/13/12 | $0.138 | $0.000 |
Multimedia Portfolio | 04/16/12 | 04/13/12 | $0.00 | $0.000 |
Retailing Portfolio | 04/16/12 | 04/13/12 | $0.008 | $0.036 |
The funds hereby designate as capital gain dividend the amounts noted below for the taxable year ended February 29, 2012, or, if subsequently determined to be different, the net capital gain of such year.
Automotive Portfolio | $8,567,035 |
Retailing Portfolio | $8,426,036 |
A percentage of the dividends distributed during the fiscal year for the following funds qualifies for the dividends-received deduction for corporate shareholders:
| April 2011 | December 2011 |
Automotive Portfolio | 100% | 100% |
Construction and Housing Portfolio | 0% | 100% |
Consumer Discretionary Portfolio | 19% | 100% |
Leisure Portfolio | 100% | 0% |
Multimedia Portfolio | 100% | 100% |
Retailing Portfolio | 100% | 100% |
A percentage of the dividends distributed during the fiscal year for the following funds may be taken into account as a dividend for purposes of the maximum rate under section 1(h)(11) of the Internal Revenue Code.
| April 2011 | December 2011 |
Automotive Portfolio | 100% | 100% |
Construction and Housing Portfolio | 0% | 100% |
Consumer Discretionary Portfolio | 20% | 100% |
Leisure Portfolio | 100% | 0% |
Multimedia Portfolio | 100% | 100% |
Retailing Portfolio | 100% | 100% |
The funds will notify shareholders in January 2013 of amounts for use in preparing 2012 income tax returns.
Annual Report
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
FMR Co., Inc.
Fidelity Management & Research
(U.K.) Inc.
Fidelity Management & Research
(Hong Kong) Limited
Fidelity Management & Research
(Japan) Inc.
General Distributor
Fidelity Distributors Corporation
Boston, MA
Transfer and Service Agents
Fidelity Investments Institutional Operations Company, Inc.
Boston, MA
Fidelity Service Company, Inc.
Boston, MA
Custodian
Brown Brothers Harriman & Co.
Boston, MA
Corporate Headquarters
82 Devonshire Street
Boston, MA 02109
1-800-544-8888
The Fidelity Telephone Connection
Mutual Fund 24-Hour Service
Exchanges/Redemptions
and Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774
(8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
Fidelity Automated Service
Telephone (FAST®)
1-800-544-5555
Automated line for quickest service
SELCON-ANN-0412
1.813633.107
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
FMR Co., Inc.
Fidelity Management & Research
(U.K.) Inc.
Fidelity Management & Research
(Hong Kong) Limited
Fidelity Management & Research
(Japan) Inc.
General Distributor
Fidelity Distributors Corporation
Boston, MA
Transfer and Service Agents
Fidelity Investments Institutional Operations Company, Inc.
Boston, MA
Fidelity Service Company, Inc.
Boston, MA
Custodian
Brown Brothers Harriman & Co.
Boston, MA
Corporate Headquarters
82 Devonshire Street
Boston, MA 02109
1-800-544-8888
The Fidelity Telephone Connection
Mutual Fund 24-Hour Service
Exchanges/Redemptions
and Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774
(8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
Fidelity Automated Service
Telephone (FAST®)
1-800-544-5555
Automated line for quickest service
SELCON-UANNPRO-0412
1.910417.102
Fidelity®
Select Portfolios®
Consumer Staples Sector
Consumer Staples Portfolio
Annual Report
February 29, 2012
(Fidelity Cover Art)
Contents
Performance | How the fund has done over time. | |
Management's Discussion of Fund Performance | The Portfolio Manager's review of fund performance and strategy. | |
Shareholder Expense Example |
| |
Investment Changes |
| |
Investments |
| |
Financial Statements |
| |
Notes to Financial Statements |
| |
Report of Independent Registered Public Accounting Firm |
| |
Trustees and Officers |
| |
Distributions |
|
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com/proxyvotingresults or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov. You may also call 1-800-544-8544 to request a free copy of the proxy voting guidelines.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company.
This report and the financial statements contained herein are submitted for the general information of the shareholders of the fund. This report is not authorized for distribution to prospective investors in the fund unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com, http://www.advisor.fidelity.com, or http://www.401k.com, as applicable.
NOT FDIC INSURED • MAY LOSE VALUE • NO BANK GUARANTEE
Neither the fund nor Fidelity Distributors Corporation is a bank.
Annual Report
Consumer Staples Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 29, 2012 | Past 1 | Past 5 | Past 10 |
Consumer Staples Portfolio A | 15.30% | 8.23% | 8.51% |
A Prior to October 1, 2006, Consumer Staples Portfolio operated under certain different investment policies. The historical performance for the fund may not represent its current investment policies.
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Consumer Staples Portfolio, a class of the fund, on February 28, 2002. The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period.
Annual Report
Consumer Staples Portfolio
Management's Discussion of Fund Performance
Market Recap: U.S. stocks rose for the 12 months ending February 29, 2012, as encouraging economic news sparked a strong late-period rally that lifted major equity benchmarks past a number of significant milestones. Stocks recovered from early-period uncertainty that followed the March 2011 earthquake, tsunami and nuclear meltdown in Japan, but plummeted during the summer amid Europe's debt woes and a historic U.S. credit-rating downgrade. Despite continued volatility and mixed economic news, markets began to recover in early October. Investors gravitated toward defensive sectors and the perceived safety of larger, more-established and dividend-paying names, helping the Dow Jones® Industrial Average advance 8.83%, and close above the psychologically important 13,000 mark in late February - for the first time since May 2008. The rally accelerated late in the period and the market broadened, as investor confidence improved amid encouraging manufacturing, housing and employment data, and signs of progress in Europe. For the year, the S&P 500® Index added 5.12%, closing near a four-year high on the period's second-to-last day. Of the 10 major market sectors in the S&P 500®, three defensive areas led the way - consumer staples, health care and utilities - while financials, materials and energy finished in negative territory. The technology-laden Nasdaq Composite® Index added 7.73%, flirting with the 3,000 mark, its highest level in 12 years. Foreign developed-markets stocks reeled over Europe's turmoil, and the MSCI® EAFE® (Europe, Australasia, Far East) Index fell 7.35%.
Comments from Robert Lee, Portfolio Manager of Consumer Staples Portfolio: For the 12 months ending February 29, 2012, the fund's Retail Class shares returned 15.30%, modestly underperforming the 15.44% advance of the MSCI® U.S. IM Consumer Staples 25/50 Index, but decisively outperforming the S&P 500®. Relative to the sector benchmark, the biggest drag on performance was weak stock picking in the personal products area, including stakes in cosmetics manufacturers L'Oreal, an out-of-index holding based in France, and Avon Products. L'Oreal hurt because I was paring the fund's weighting in the stock while its price was rising, while Avon struggled with problems at a new distribution center. In the same space, not owning index component Herbalife, a global direct seller of nutritional supplements, also hurt. Poor positioning in agricultural products detracted, including a large overweighting in agricultural processor Bunge. However, the negative impact was made up for by an underweighting in Archer Daniels Midland in the same category. We also had weak stock picking in tobacco, where a substantial underweighting in Philip Morris International was the fund's biggest individual detractor. Philip Morris, which sells its tobacco products overseas, benefited from its earnings stability and a temporary market-share boost in Japan following that nation's natural disaster in March. Underweighting cigarette maker Lorillard also proved costly. However, a large non-index stake in British American Tobacco, the fund's top individual contributor, more than offset the damage. Within packaged foods/meats, significantly underweighting and then selling major index constituent Kraft Foods was detrimental. An industry overweighting in brewers hurt, including a sizable stake in Molson Coors Brewing. Unfavorable positioning in hypermarkets/super center also was costly. In addition, many companies in the consumer staples sector do business globally and, as such, generate income in currencies around the world. The relative strength of the U.S. dollar during the past year had a negative impact on the dollar value of those earnings. On the positive side, strong stock picking in distillers/vintners and drug retail, along with good positioning in soft drinks, buoyed the fund's return. In the first category, out-of-index positions in premium spirits distributors Diageo and Remy Cointreau, based in Britain and France, respectively, outperformed. In drug retail, CVS Caremark shares surged during the second half of the period, while in soft drinks an underweighting in PepsiCo, a major index component, paid off because the stock lagged.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Consumer Staples Portfolio
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments or redemption proceeds, redemption fees, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (September 1, 2011 to February 29, 2012).
Actual Expenses
The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Annualized | Beginning | Ending | Expenses Paid |
Class A | 1.10% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,086.00 | $ 5.71 |
Hypothetical A |
| $ 1,000.00 | $ 1,019.39 | $ 5.52 |
Class T | 1.38% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,084.50 | $ 7.15 |
Hypothetical A |
| $ 1,000.00 | $ 1,018.00 | $ 6.92 |
Class B | 1.91% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,081.60 | $ 9.89 |
Hypothetical A |
| $ 1,000.00 | $ 1,015.37 | $ 9.57 |
Class C | 1.84% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,082.00 | $ 9.52 |
Hypothetical A |
| $ 1,000.00 | $ 1,015.71 | $ 9.22 |
Consumer Staples | .82% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,087.50 | $ 4.26 |
Hypothetical A |
| $ 1,000.00 | $ 1,020.79 | $ 4.12 |
Institutional Class | .87% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,087.30 | $ 4.52 |
Hypothetical A |
| $ 1,000.00 | $ 1,020.54 | $ 4.37 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
Annual Report
Consumer Staples Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 29, 2012 | ||
| % of fund's | % of fund's net assets |
Procter & Gamble Co. | 16.2 | 15.8 |
British American Tobacco PLC sponsored ADR | 11.9 | 8.5 |
The Coca-Cola Co. | 10.8 | 11.4 |
CVS Caremark Corp. | 6.7 | 6.8 |
Altria Group, Inc. | 4.8 | 5.2 |
Walgreen Co. | 3.3 | 2.4 |
Anheuser-Busch InBev SA NV | 3.1 | 2.4 |
PepsiCo, Inc. | 3.0 | 4.7 |
Diageo PLC sponsored ADR | 2.8 | 2.8 |
Constellation Brands, Inc. Class A (sub. vtg.) | 2.6 | 2.8 |
| 65.2 | |
Top Industries (% of fund's net assets) | |||
As of February 29, 2012 | |||
 | Beverages | 31.3% |
|
 | Tobacco | 20.4% |
|
 | Household Products | 19.0% |
|
 | Food & Staples Retailing | 11.1% |
|
 | Food Products | 10.0% |
|
 | All Others* | 8.2% |
|
As of August 31, 2011 | |||
| Beverages | 32.6% |
|
| Household Products | 18.9% |
|
| Tobacco | 17.2% |
|
| Food & Staples Retailing | 11.3% |
|
| Food Products | 9.3% |
|
| All Others* | 10.7% |
|
* Includes short-term investments and net other assets. |
Annual Report
Consumer Staples Portfolio
Investments February 29, 2012
Showing Percentage of Net Assets
Common Stocks - 97.2% | |||
Shares | Value | ||
BEVERAGES - 31.3% | |||
Brewers - 6.1% | |||
Anheuser-Busch InBev SA NV | 798,628 | $ 53,648,774 | |
Companhia de Bebidas das Americas (AmBev) (PN) sponsored ADR | 218,085 | 8,725,581 | |
Molson Coors Brewing Co. Class B | 1,001,712 | 44,015,225 | |
| 106,389,580 | ||
Distillers & Vintners - 9.4% | |||
Constellation Brands, Inc. Class A (sub. vtg.) (a) | 2,071,870 | 45,249,641 | |
Diageo PLC sponsored ADR | 510,827 | 48,814,628 | |
Pernod Ricard SA | 326,101 | 33,737,970 | |
Remy Cointreau SA | 346,208 | 33,913,382 | |
Treasury Wine Estates Ltd. | 351,937 | 1,468,016 | |
| 163,183,637 | ||
Soft Drinks - 15.8% | |||
Coca-Cola Bottling Co. CONSOLIDATED | 81,713 | 5,265,586 | |
Coca-Cola FEMSA SAB de CV sponsored ADR | 84,229 | 8,334,460 | |
Coca-Cola Hellenic Bottling Co. SA sponsored ADR | 200,200 | 3,775,772 | |
Coca-Cola Icecek A/S | 383,842 | 4,936,381 | |
Embotelladora Andina SA sponsored ADR (d) | 271,900 | 8,581,164 | |
Fomento Economico Mexicano SAB de CV sponsored ADR | 10,187 | 749,763 | |
Monster Beverage Corp. (a) | 41,100 | 2,350,509 | |
PepsiCo, Inc. | 817,727 | 51,467,737 | |
The Coca-Cola Co. | 2,683,792 | 187,489,709 | |
| 272,951,081 | ||
TOTAL BEVERAGES | 542,524,298 | ||
FOOD & STAPLES RETAILING - 11.1% | |||
Drug Retail - 10.4% | |||
CVS Caremark Corp. | 2,589,663 | 116,793,801 | |
Drogasil SA | 623,400 | 6,069,026 | |
Walgreen Co. | 1,744,986 | 57,863,736 | |
| 180,726,563 | ||
Food Distributors - 0.2% | |||
Chefs' Warehouse Holdings (a) | 20,300 | 426,300 | |
Sysco Corp. | 72,340 | 2,128,243 | |
| 2,554,543 | ||
Food Retail - 0.3% | |||
Fresh Market, Inc. (a) | 11,800 | 531,236 | |
The Pantry, Inc. (a) | 392,025 | 4,872,871 | |
| 5,404,107 | ||
Hypermarkets & Super Centers - 0.2% | |||
Carrefour SA | 122,670 | 3,075,583 | |
TOTAL FOOD & STAPLES RETAILING | 191,760,796 | ||
| |||
Shares | Value | ||
FOOD PRODUCTS - 10.0% | |||
Agricultural Products - 3.3% | |||
Archer Daniels Midland Co. | 300,861 | $ 9,386,863 | |
Bunge Ltd. | 592,087 | 39,859,297 | |
Cosan Ltd. Class A | 60,400 | 898,148 | |
Origin Agritech Ltd. (a) | 95,200 | 230,384 | |
SLC Agricola SA | 313,300 | 2,900,504 | |
Viterra, Inc. | 393,700 | 4,256,646 | |
| 57,531,842 | ||
Packaged Foods & Meats - 6.7% | |||
Brasil Foods SA | 2,000 | 41,806 | |
Calavo Growers, Inc. | 103,973 | 2,859,258 | |
Cermaq ASA | 21,670 | 304,485 | |
Danone | 5,020 | 339,599 | |
Dean Foods Co. (a) | 294,016 | 3,604,636 | |
Green Mountain Coffee Roasters, Inc. (a) | 222,530 | 14,457,774 | |
Lindt & Spruengli AG | 121 | 4,401,094 | |
Mead Johnson Nutrition Co. Class A | 336,032 | 26,126,488 | |
Nestle SA | 383,063 | 23,412,228 | |
Unilever NV (NY Reg.) | 1,099,871 | 36,636,703 | |
Want Want China Holdings Ltd. | 4,014,000 | 3,995,317 | |
| 116,179,388 | ||
TOTAL FOOD PRODUCTS | 173,711,230 | ||
HOUSEHOLD PRODUCTS - 19.0% | |||
Household Products - 19.0% | |||
Colgate-Palmolive Co. | 421,175 | 39,245,087 | |
Procter & Gamble Co. | 4,159,458 | 280,846,601 | |
Spectrum Brands Holdings, Inc. (a) | 276,947 | 7,870,834 | |
| 327,962,522 | ||
PERSONAL PRODUCTS - 2.9% | |||
Personal Products - 2.9% | |||
Avon Products, Inc. | 616,877 | 11,529,431 | |
Hypermarcas SA | 333,000 | 2,167,714 | |
L'Oreal SA | 216,800 | 24,725,962 | |
Natura Cosmeticos SA | 135,900 | 3,203,931 | |
Nu Skin Enterprises, Inc. Class A | 157,308 | 9,086,110 | |
| 50,713,148 | ||
PHARMACEUTICALS - 2.5% | |||
Pharmaceuticals - 2.5% | |||
Johnson & Johnson | 669,860 | 43,594,489 | |
TOBACCO - 20.4% | |||
Tobacco - 20.4% | |||
Altria Group, Inc. | 2,788,226 | 83,925,603 | |
British American Tobacco PLC sponsored ADR (d) | 2,039,297 | 206,540,000 | |
KT&G Corp. | 45,825 | 2,997,775 | |
Lorillard, Inc. | 64,000 | 8,389,120 | |
Common Stocks - continued | |||
Shares | Value | ||
TOBACCO - CONTINUED | |||
Tobacco - continued | |||
Philip Morris International, Inc. | 538,983 | $ 45,015,860 | |
Souza Cruz Industria e Comerico | 455,200 | 6,814,284 | |
| 353,682,642 | ||
TOTAL COMMON STOCKS (Cost $1,328,266,206) | 1,683,949,125 | ||
Money Market Funds - 3.0% | |||
| Shares |
| Value |
Fidelity Cash Central Fund, 0.12% (b) | 50,704,618 | $ 50,704,618 | |
Fidelity Securities Lending Cash Central Fund, 0.12% (b)(c) | 603,675 | 603,675 | |
TOTAL MONEY MARKET FUNDS (Cost $51,308,293) | 51,308,293 | ||
TOTAL INVESTMENT PORTFOLIO - 100.2% (Cost $1,379,574,499) | 1,735,257,418 | |
NET OTHER ASSETS (LIABILITIES) - (0.2)% | (2,724,126) | ||
NET ASSETS - 100% | $ 1,732,533,292 |
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 46,534 |
Fidelity Securities Lending Cash Central Fund | 314,492 |
Total | $ 361,026 |
Other Information |
The following is a summary of the inputs used, as of February 29, 2012, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities: | ||||
Common Stocks | $ 1,683,949,125 | $ 1,630,300,351 | $ 53,648,774 | $ - |
Money Market Funds | 51,308,293 | 51,308,293 | - | - |
Total Investments in Securities: | $ 1,735,257,418 | $ 1,681,608,644 | $ 53,648,774 | $ - |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 66.4% |
United Kingdom | 14.7% |
France | 5.5% |
Belgium | 3.1% |
Bermuda | 2.4% |
Netherlands | 2.1% |
Brazil | 1.8% |
Switzerland | 1.7% |
Others (Individually Less Than 1%) | 2.3% |
| 100.0% |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Consumer Staples Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2012 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $586,592) - See accompanying schedule: Unaffiliated issuers (cost $1,328,266,206) | $ 1,683,949,125 |
|
Fidelity Central Funds (cost $51,308,293) | 51,308,293 |
|
Total Investments (cost $1,379,574,499) |
| $ 1,735,257,418 |
Receivable for investments sold | 7,190,915 | |
Receivable for fund shares sold | 5,669,349 | |
Dividends receivable | 2,739,557 | |
Distributions receivable from Fidelity Central Funds | 16,151 | |
Prepaid expenses | 2,716 | |
Other receivables | 2,335 | |
Total assets | 1,750,878,441 | |
|
|
|
Liabilities | ||
Payable to custodian bank | $ 174,268 | |
Payable for investments purchased | 12,155,768 | |
Payable for fund shares redeemed | 4,079,917 | |
Accrued management fee | 774,786 | |
Distribution and service plan fees payable | 161,260 | |
Other affiliated payables | 347,873 | |
Other payables and accrued expenses | 47,602 | |
Collateral on securities loaned, at value | 603,675 | |
Total liabilities | 18,345,149 | |
|
|
|
Net Assets | $ 1,732,533,292 | |
Net Assets consist of: |
| |
Paid in capital | $ 1,375,239,499 | |
Undistributed net investment income | 3,220,648 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (1,618,097) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 355,691,242 | |
Net Assets | $ 1,732,533,292 | |
Statement of Assets and Liabilities - continued
| February 29, 2012 | |
|
|
|
Calculation of Maximum Offering Price Class A: | $ 74.90 | |
|
|
|
Maximum offering price per share (100/94.25 of $74.90) | $ 79.47 | |
Class T: | $ 74.49 | |
|
|
|
Maximum offering price per share (100/96.50 of $74.49) | $ 77.19 | |
Class B: | $ 74.01 | |
|
|
|
Class C: | $ 73.75 | |
|
|
|
Consumer Staples: | $ 75.29 | |
|
|
|
Institutional Class: | $ 75.14 | |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Consumer Staples Portfolio
Financial Statements - continued
Statement of Operations
| Year ended February 29, 2012 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 43,496,113 |
Interest |
| 5 |
Income from Fidelity Central Funds |
| 361,026 |
Total income |
| 43,857,144 |
|
|
|
Expenses | ||
Management fee | $ 8,658,032 | |
Transfer agent fees | 3,543,114 | |
Distribution and service plan fees | 1,711,288 | |
Accounting fees and expenses | 489,033 | |
Custodian fees and expenses | 71,834 | |
Independent trustees' compensation | 9,095 | |
Registration fees | 133,468 | |
Audit | 54,288 | |
Legal | 5,144 | |
Interest | 1,862 | |
Miscellaneous | 14,961 | |
Total expenses before reductions | 14,692,119 | |
Expense reductions | (30,595) | 14,661,524 |
Net investment income (loss) | 29,195,620 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 36,472,115 | |
Foreign currency transactions | (124,896) | |
Total net realized gain (loss) |
| 36,347,219 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 157,948,507 | |
Assets and liabilities in foreign currencies | 6,297 | |
Total change in net unrealized appreciation (depreciation) |
| 157,954,804 |
Net gain (loss) | 194,302,023 | |
Net increase (decrease) in net assets resulting from operations | $ 223,497,643 | |
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 29,195,620 | $ 21,971,692 |
Net realized gain (loss) | 36,347,219 | 37,190,740 |
Change in net unrealized appreciation (depreciation) | 157,954,804 | 108,092,854 |
Net increase (decrease) in net assets resulting from operations | 223,497,643 | 167,255,286 |
Distributions to shareholders from net investment income | (25,900,882) | (18,562,633) |
Distributions to shareholders from net realized gain | (36,216,657) | (13,301,800) |
Total distributions | (62,117,539) | (31,864,433) |
Share transactions - net increase (decrease) | 162,381,495 | 3,732,087 |
Redemption fees | 45,851 | 35,627 |
Total increase (decrease) in net assets | 323,807,450 | 139,158,567 |
|
|
|
Net Assets | ||
Beginning of period | 1,408,725,842 | 1,269,567,275 |
End of period (including undistributed net investment income of $3,220,648 and undistributed net investment income of $3,223,201, respectively) | $ 1,732,533,292 | $ 1,408,725,842 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
Years ended February 28, | 2012 G | 2011 | 2010 | 2009 | 2008 G |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 67.65 | $ 61.06 | $ 43.94 | $ 63.13 | $ 58.16 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | 1.22 | .98 | .84 | .67 | .53 |
Net realized and unrealized gain (loss) | 8.73 | 7.10 | 17.02 | (19.19) | 7.29 |
Total from investment operations | 9.95 | 8.08 | 17.86 | (18.52) | 7.82 |
Distributions from net investment income | (1.06) | (.83) | (.74) | (.66) | (.42) |
Distributions from net realized gain | (1.64) | (.66) | - | (.02) | (2.44) |
Total distributions | (2.70) | (1.49) | (.74) | (.68) I | (2.86) |
Redemption fees added to paid in capital C | - H | - H | - H | .01 | .01 |
Net asset value, end of period | $ 74.90 | $ 67.65 | $ 61.06 | $ 43.94 | $ 63.13 |
Total Return A,B | 15.00% | 13.27% | 40.66% | (29.43)% | 13.38% |
Ratios to Average Net Assets D,F |
|
|
|
|
|
Expenses before reductions | 1.10% | 1.11% | 1.13% | 1.19% | 1.19% |
Expenses net of fee waivers, if any | 1.10% | 1.11% | 1.13% | 1.19% | 1.19% |
Expenses net of all reductions | 1.09% | 1.11% | 1.13% | 1.18% | 1.19% |
Net investment income (loss) | 1.74% | 1.53% | 1.51% | 1.27% | .83% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 205,851 | $ 160,526 | $ 162,370 | $ 121,193 | $ 23,796 |
Portfolio turnover rate E | 35% | 57% | 69% | 70% | 71% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown. B Total returns do not include the effect of the sales charges. C Calculated based on average shares outstanding during the period. D Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. G For the year ended February 29. H Amount represents less than $.01 per share. I Total distributions of $.68 per share is comprised of distributions from net investment income of $.655 and distributions from net realized gain of $.024 per share. |
Financial Highlights - Class T
Years ended February 28, | 2012 G | 2011 | 2010 | 2009 | 2008 G |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 67.30 | $ 60.77 | $ 43.75 | $ 62.93 | $ 58.06 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | 1.01 | .79 | .66 | .53 | .36 |
Net realized and unrealized gain (loss) | 8.68 | 7.05 | 16.95 | (19.12) | 7.29 |
Total from investment operations | 9.69 | 7.84 | 17.61 | (18.59) | 7.65 |
Distributions from net investment income | (.86) | (.65) | (.59) | (.60) | (.35) |
Distributions from net realized gain | (1.64) | (.66) | - | - | (2.44) |
Total distributions | (2.50) | (1.31) | (.59) | (.60) I | (2.79) |
Redemption fees added to paid in capital C | - H | - H | - H | .01 | .01 |
Net asset value, end of period | $ 74.49 | $ 67.30 | $ 60.77 | $ 43.75 | $ 62.93 |
Total Return A,B | 14.67% | 12.93% | 40.24% | (29.61)% | 13.11% |
Ratios to Average Net Assets D,F |
|
|
|
|
|
Expenses before reductions | 1.38% | 1.40% | 1.44% | 1.46% | 1.46% |
Expenses net of fee waivers, if any | 1.38% | 1.40% | 1.44% | 1.46% | 1.46% |
Expenses net of all reductions | 1.38% | 1.40% | 1.44% | 1.46% | 1.46% |
Net investment income (loss) | 1.45% | 1.24% | 1.21% | .99% | .56% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 39,047 | $ 31,496 | $ 29,662 | $ 22,624 | $ 6,298 |
Portfolio turnover rate E | 35% | 57% | 69% | 70% | 71% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown. BTotal returns do not include the effect of the sales charges. C Calculated based on average shares outstanding during the period. D Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. G For the year ended February 29. H Amount represents less than $.01 per share. I Total distributions of $.60 per share is comprised of distributions from net investment income of $.599 and distributions from net realized gain of $.000 per share. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class B
Years ended February 28, | 2012 G | 2011 | 2010 | 2009 | 2008 G |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 66.83 | $ 60.37 | $ 43.53 | $ 62.69 | $ 58.00 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .64 | .46 | .37 | .26 | .04 |
Net realized and unrealized gain (loss) | 8.61 | 6.98 | 16.82 | (19.01) | 7.27 |
Total from investment operations | 9.25 | 7.44 | 17.19 | (18.75) | 7.31 |
Distributions from net investment income | (.43) | (.32) | (.35) | (.42) | (.19) |
Distributions from net realized gain | (1.64) | (.66) | - | - | (2.44) |
Total distributions | (2.07) | (.98) | (.35) | (.42) I | (2.63) |
Redemption fees added to paid in capital C | - H | - H | - H | .01 | .01 |
Net asset value, end of period | $ 74.01 | $ 66.83 | $ 60.37 | $ 43.53 | $ 62.69 |
Total Return A,B | 14.06% | 12.35% | 39.48% | (29.96)% | 12.53% |
Ratios to Average Net Assets D,F |
|
|
|
|
|
Expenses before reductions | 1.91% | 1.91% | 1.97% | 1.96% | 1.96% |
Expenses net of fee waivers, if any | 1.91% | 1.91% | 1.97% | 1.96% | 1.96% |
Expenses net of all reductions | 1.90% | 1.91% | 1.97% | 1.96% | 1.96% |
Net investment income (loss) | .93% | .73% | .68% | .50% | .06% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 19,330 | $ 20,033 | $ 21,099 | $ 14,929 | $ 4,884 |
Portfolio turnover rate E | 35% | 57% | 69% | 70% | 71% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown. B Total returns do not include the effect of the contingent deferred sales charge. C Calculated based on average shares outstanding during the period. D Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. G For the year ended February 29. H Amount represents less than $.01 per share. I Total distributions of $.42 per share is comprised of distributions from net investment income of $.418 and distributions from net realized gain of $.000 per share. |
Financial Highlights - Class C
Years ended February 28, | 2012 G | 2011 | 2010 | 2009 | 2008 G |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 66.71 | $ 60.29 | $ 43.46 | $ 62.61 | $ 57.99 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .68 | .49 | .41 | .28 | .06 |
Net realized and unrealized gain (loss) | 8.59 | 7.00 | 16.80 | (19.00) | 7.28 |
Total from investment operations | 9.27 | 7.49 | 17.21 | (18.72) | 7.34 |
Distributions from net investment income | (.59) | (.41) | (.38) | (.44) | (.29) |
Distributions from net realized gain | (1.64) | (.66) | - | - | (2.44) |
Total distributions | (2.23) | (1.07) | (.38) | (.44) I | (2.73) |
Redemption fees added to paid in capital C | - H | - H | - H | .01 | .01 |
Net asset value, end of period | $ 73.75 | $ 66.71 | $ 60.29 | $ 43.46 | $ 62.61 |
Total Return A,B | 14.14% | 12.44% | 39.59% | (29.94)% | 12.58% |
Ratios to Average Net Assets D,F |
|
|
|
|
|
Expenses before reductions | 1.85% | 1.86% | 1.90% | 1.93% | 1.93% |
Expenses net of fee waivers, if any | 1.85% | 1.86% | 1.90% | 1.93% | 1.93% |
Expenses net of all reductions | 1.84% | 1.85% | 1.89% | 1.93% | 1.92% |
Net investment income (loss) | .99% | .79% | .75% | .52% | .09% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 102,321 | $ 81,239 | $ 73,829 | $ 54,902 | $ 19,791 |
Portfolio turnover rate E | 35% | 57% | 69% | 70% | 71% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown. B Total returns do not include the effect of the contingent deferred sales charge. C Calculated based on average shares outstanding during the period. D Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. G For the year ended February 29. H Amount represents less than $.01 per share. I Total distributions of $.44 per share is comprised of distributions from net investment income of $.443 and distributions from net realized gain of $.000 per share. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Consumer Staples
Years ended February 28, | 2012 G | 2011 | 2010 | 2009 | 2008 G |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 67.98 | $ 61.34 | $ 44.14 | $ 63.25 | $ 58.13 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | 1.42 | 1.14 | .96 | .88 | .71 |
Net realized and unrealized gain (loss) | 8.76 | 7.14 | 17.11 | (19.31) | 7.30 |
Total from investment operations | 10.18 | 8.28 | 18.07 | (18.43) | 8.01 |
Distributions from net investment income | (1.24) | (.98) | (.87) | (.67) | (.46) |
Distributions from net realized gain | (1.64) | (.66) | - | (.03) | (2.44) |
Total distributions | (2.87) J | (1.64) | (.87) | (.69) I | (2.90) |
Redemption fees added to paid in capital C | - H | - H | - H | .01 | .01 |
Net asset value, end of period | $ 75.29 | $ 67.98 | $ 61.34 | $ 44.14 | $ 63.25 |
Total Return A,B | 15.30% | 13.55% | 40.96% | (29.23)% | 13.72% |
Ratios to Average Net Assets D,F |
|
|
|
|
|
Expenses before reductions | .83% | .86% | .92% | .91% | .91% |
Expenses net of fee waivers, if any | .83% | .86% | .92% | .91% | .90% |
Expenses net of all reductions | .82% | .86% | .91% | .90% | .90% |
Net investment income (loss) | 2.01% | 1.78% | 1.73% | 1.55% | 1.12% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 1,202,440 | $ 877,548 | $ 946,455 | $ 657,263 | $ 655,224 |
Portfolio turnover rate E | 35% | 57% | 69% | 70% | 71% |
ATotal returns would have been lower if certain expenses had not been reduced during the applicable periods shown. B Total returns do not include the effect of the sales charges. CCalculated based on average shares outstanding during the period. .DFees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. EAmount does not include the portfolio activity of any underlying Fidelity Central Funds. F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. GFor the year ended February 29. HAmount represents less than $.01 per share. I Total distributions of $.69 per share is comprised of distributions from net investment income of $.668 and distributions from net realized gain of $.025 per share. J Total distributions of $2.87 per share is comprised of distributions from net investment income of $1.236 and distributions from net realized gain of $1.637 per share. |
Financial Highlights - Institutional Class
Years ended February 28, | 2012 F | 2011 | 2010 | 2009 | 2008 F |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 67.84 | $ 61.26 | $ 44.07 | $ 63.22 | $ 58.12 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | 1.39 | 1.15 | .98 | .82 | .74 |
Net realized and unrealized gain (loss) | 8.73 | 7.13 | 17.09 | (19.23) | 7.30 |
Total from investment operations | 10.12 | 8.28 | 18.07 | (18.41) | 8.04 |
Distributions from net investment income | (1.19) | (1.04) | (.88) | (.73) | (.51) |
Distributions from net realized gain | (1.64) | (.66) | - | (.03) | (2.44) |
Total distributions | (2.82) I | (1.70) | (.88) | (.75) H | (2.95) |
Redemption fees added to paid in capital B | - G | - G | - G | .01 | .01 |
Net asset value, end of period | $ 75.14 | $ 67.84 | $ 61.26 | $ 44.07 | $ 63.22 |
Total Return A | 15.24% | 13.57% | 41.03% | (29.22)% | 13.77% |
Ratios to Average Net Assets C,E |
|
|
|
|
|
Expenses before reductions | .87% | .87% | .86% | .91% | .85% |
Expenses net of fee waivers, if any | .87% | .87% | .86% | .91% | .85% |
Expenses net of all reductions | .87% | .87% | .86% | .91% | .84% |
Net investment income (loss) | 1.96% | 1.77% | 1.78% | 1.54% | 1.17% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 163,544 | $ 237,883 | $ 36,152 | $ 30,922 | $ 10,384 |
Portfolio turnover rate D | 35% | 57% | 69% | 70% | 71% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown. BCalculated based on average shares outstanding during the period. C Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. D Amount does not include the portfolio activity of any underlying Fidelity Central Funds. EExpense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. FFor the year ended February 29. GAmount represents less than $.01 per share. HTotal distributions of $.75 per share is comprised of distributions from net investment income of $.726 and distributions from net realized gain of $.025 per share. ITotal distributions of $2.82 per share is comprised of distributions from net investment income of $1.186 and distributions from net realized gain of $1.637 per share. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended February 29, 2012
1. Organization.
Consumer Staples Portfolio (the Fund) is a non-diversified fund of Fidelity Select Portfolios (the Trust) and is authorized to issue an unlimited number of shares. The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund invests primarily in securities of companies whose principal business activities fall within specific industries. The Fund offers Class A, Class T, Class C, Consumer Staples and Institutional Class shares, each of which, along with Class B shares, has equal rights as to assets and voting privileges. Effective after the close of business on September 1, 2010, Class B shares were closed to new accounts and additional purchases, except for exchanges and reinvestments. Each class has exclusive voting rights with respect to matters that affect that class. Class B shares will automatically convert to Class A shares after a holding period of seven years from the initial date of purchase. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions may also differ by class.
2. Investments in Fidelity Central Funds.
The Fund invests in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by FMR and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds held as of period end, if any, as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Fund:
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Fund uses independent pricing services approved by the Board of Trustees to value its investments. When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include market or security specific events. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The value used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the Fund's own assumptions based on the best information available)
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level, as of February 29, 2012, is included at the end of the Fund's Schedule of Investments. Valuation techniques used to value the Fund's investments by major category are as follows:
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when significant market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-traded funds (ETFs) and certain indexes as well as quoted prices for similar securities are used and are categorized as Level 2 in the hierarchy in these
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Security Valuation - continued
circumstances. Utilizing these techniques may result in transfers between Level 1 and Level 2. For restricted equity securities and private placements where observable inputs are limited, assumptions about market activity and risk are used and are categorized as Level 3 in the hierarchy.
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 in the hierarchy.
New Accounting Pronouncements. In May 2011, the Financial Accounting Standards Board issued Accounting Standard Update No. 2011-04, Fair Value Measurement (Topic 820) - Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. The update is effective during interim and annual periods beginning after December 15, 2011 and will result in additional disclosure for transfers between levels as well as expanded disclosure for securities categorized as Level 3 under the fair value hierarchy.
In December 2011, the Financial Accounting Standards Board issued Accounting Standard Update No. 2011-11, Disclosures about Offsetting Assets and Liabilities. The update creates new disclosure requirements requiring entities to disclose both gross and net information for derivatives and other financial instruments that are either offset in the Statement of Assets and Liabilities or subject to an enforceable master netting arrangement or similar agreement. The disclosure requirements are effective for interim and annual reporting periods beginning on or after January 1, 2013. Management is currently evaluating the impact of the update's adoption on the Fund's financial statement disclosures.
Foreign Currency. The Fund may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for income taxes is required. As of February 29, 2012, the Fund did not have any unrecognized tax benefits in the financial statements; nor is the Fund aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. The Fund files a U.S. federal tax return, in addition to state and local tax returns as required. A fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are declared and recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. In addition, the Fund claimed a portion of the payment made to redeeming shareholders as a distribution for income tax purposes.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Annual Report
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
Book-tax differences are primarily due to foreign currency, deferred trustees compensation and losses deferred due to wash sales and excise tax regulations.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation | $ 361,646,527 |
Gross unrealized depreciation | (10,293,004) |
Net unrealized appreciation (depreciation) on securities and other investments | $ 351,353,523 |
|
|
Tax Cost | $ 1,383,903,895 |
The tax-based components of distributable earnings as of period end were as follows:
Undistributed ordinary income | $ 3,220,861 |
Undistributed long-term capital gain | $ 5,437,375 |
Net unrealized appreciation (depreciation) | $ 351,361,846 |
The tax character of distributions paid was as follows:
| February 29, 2012 | February 28, 2011 |
Ordinary Income | $ 31,774,273 | $ 20,981,143 |
Long-term Capital Gains | 30,343,266 | 10,883,290 |
Total | $ 62,117,539 | $ 31,864,433 |
Trading (Redemption) Fees. Shares held by investors in the Fund less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Fund and accounted for as an addition to paid in capital.
4. Purchases and Sales of Investments.
Purchases and sales of securities other than short-term securities, aggregated $621,558,884 and $527,918,913, respectively.
5. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the Fund's average net assets and an annualized group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annual management fee rate was .56% of the Fund's average net assets.
Distribution and Service Plan Fees. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of FMR, separate Distribution and Service Fees, each of which is based on an annual percentage of each class' average net assets. In addition, FDC may pay financial intermediaries for selling shares of the Fund and providing shareholder support services. For the period, the Distribution and Service Fee rates, total fees and amounts retained by FDC were as follows:
| Distribution | Service | Total Fees | Retained |
Class A | -% | .25% | $ 436,234 | $ 7,197 |
Class T | .25% | .25% | 169,388 | 19 |
Class B | .75% | .25% | 191,915 | 143,998 |
Class C | .75% | .25% | 913,751 | 172,728 |
|
|
| $ 1,711,288 | $ 323,942 |
Annual Report
Notes to Financial Statements - continued
5. Fees and Other Transactions with Affiliates - continued
Sales Load. FDC may receive a front-end sales charge of up to 5.75% for selling Class A shares and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the Fund. Depending on the holding period, FDC may receive contingent deferred sales charges levied on Class A, Class T, Class B and Class C redemptions. The deferred sales charges range from 5.00% to 1.00% for Class B, 1.00% for Class C, 1.00% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained |
Class A | $ 147,187 |
Class T | 17,481 |
Class B* | 45,165 |
Class C* | 15,571 |
| $ 225,404 |
* When Class B and Class C shares are initially sold, FDC pays commissions from its own resources to financial intermediaries through which the sales are made.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the Fund. FIIOC receives no fees for providing transfer agency services to Class F. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, transfer agent fees for each class were as follows:
| Amount | % of |
Class A | $ 413,155 | .24 |
Class T | 92,693 | .27 |
Class B | 57,130 | .30 |
Class C | 212,861 | .23 |
Consumer Staples | 2,171,265 | .22 |
Institutional Class | 596,010 | .26 |
| $ 3,543,114 |
|
Accounting and Security Lending Fees. Fidelity Service Company, Inc.(FSC), an affiliate of FMR, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for each month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $11,729 for the period.
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Fund, along with other registered investment companies having management contracts with FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. The Fund's activity in this program during the period for which loans were outstanding was as follows:
Borrower or Lender | Average Loan | Weighted Average Interest Rate | Interest |
Borrower | $ 8,403,500 | .36% | $ 1,862 |
6. Committed Line of Credit.
The Fund participates with other funds managed by FMR or an affiliate in a $4.0 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $4,433 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, there were no borrowings on this line of credit.
Annual Report
7. Security Lending.
The Fund lends portfolio securities through a lending agent from time to time in order to earn additional income. For equity securities, a lending agent is used and may loan securities to certain qualified borrowers, including Fidelity Capital Markets (FCM), a broker-dealer affiliated with the Fund. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Total security lending income during the period amounted to $314,492. During the period, there were no securities loaned to FCM.
8. Expense Reductions.
Many of the brokers with whom FMR places trades on behalf of the Fund provided services to the Fund in addition to trade execution. These services included payments of certain expenses on behalf of the Fund totaling $30,515 for the period. In addition, through arrangements with the Fund's custodian, credits realized as a result of uninvested cash balances were used to reduce the Fund's expenses. During the period, these credits reduced the Fund's custody expenses by $80.
9. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
| Year ended | Year ended |
From net investment income |
|
|
Class A | $ 2,690,167 | $ 2,005,855 |
Class T | 422,197 | 304,100 |
Class B | 114,208 | 100,155 |
Class C | 829,469 | 513,058 |
Consumer Staples | 18,061,907 | 13,026,528 |
Institutional Class | 3,782,934 | 2,612,937 |
Total | $ 25,900,882 | $ 18,562,633 |
From net realized gain |
|
|
Class A | $ 4,102,363 | $ 1,585,279 |
Class T | 795,051 | 307,782 |
Class B | 441,952 | 204,642 |
Class C | 2,213,680 | 836,095 |
Consumer Staples | 23,446,773 | 8,597,123 |
Institutional Class | 5,216,838 | 1,770,879 |
Total | $ 36,216,657 | $ 13,301,800 |
Annual Report
Notes to Financial Statements - continued
10. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
| Year ended | Year ended | Year ended | Year ended |
Class A |
|
|
|
|
Shares sold | 1,107,874 | 610,485 | $ 77,974,428 | $ 39,028,355 |
Reinvestment of distributions | 84,526 | 47,297 | 5,924,948 | 3,150,891 |
Shares redeemed | (816,686) | (944,038) | (57,527,748) | (60,078,639) |
Net increase (decrease) | 375,714 | (286,256) | $ 26,371,628 | $ (17,899,393) |
Class T |
|
|
|
|
Shares sold | 130,126 | 91,776 | $ 9,133,799 | $ 5,882,190 |
Reinvestment of distributions | 16,351 | 8,541 | 1,140,509 | 566,923 |
Shares redeemed | (90,239) | (120,454) | (6,276,410) | (7,689,132) |
Net increase (decrease) | 56,238 | (20,137) | $ 3,997,898 | $ (1,240,019) |
Class B |
|
|
|
|
Shares sold | 22,727 | 35,654 | $ 1,569,035 | $ 2,191,455 |
Reinvestment of distributions | 6,332 | 3,610 | 439,355 | 238,429 |
Shares redeemed | (67,638) | (89,029) | (4,695,265) | (5,598,851) |
Net increase (decrease) | (38,579) | (49,765) | $ (2,686,875) | $ (3,168,967) |
Class C |
|
|
|
|
Shares sold | 536,557 | 340,893 | $ 37,168,209 | $ 21,482,594 |
Reinvestment of distributions | 33,216 | 14,479 | 2,295,907 | 954,487 |
Shares redeemed | (400,115) | (362,057) | (28,068,157) | (23,068,564) |
Net increase (decrease) | 169,658 | (6,685) | $ 11,395,959 | $ (631,483) |
Consumer Staples |
|
|
|
|
Shares sold | 7,156,716 | 4,055,609 | $ 509,488,908 | $ 260,108,965 |
Reinvestment of distributions | 566,253 | 309,170 | 39,874,596 | 20,671,323 |
Shares redeemed | (4,661,196) | (6,885,851) | (330,401,040) | (436,510,553) |
Net increase (decrease) | 3,061,773 | (2,521,072) | $ 218,962,464 | $ (155,730,265) |
Institutional Class |
|
|
|
|
Shares sold | 2,454,993 | 3,382,703 | $ 173,115,499 | $ 212,714,327 |
Reinvestment of distributions | 115,398 | 58,392 | 8,111,953 | 3,904,787 |
Shares redeemed | (3,900,689) | (524,454) | (276,887,031) | (34,216,900) |
Net increase (decrease) | (1,330,298) | 2,916,641 | $ (95,659,579) | $ 182,402,214 |
11. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
Annual Report
Report of Independent Registered Public Accounting Firm
To the Trustees of Fidelity Select Portfolios and the Shareholders of Consumer Staples Portfolio:
In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Consumer Staples Portfolio (a fund of Fidelity Select Portfolios) at February 29, 2012, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Consumer Staples Portfolio's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at February 29, 2012 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 18, 2012
Annual Report
Trustees and Officers
The Trustees, Members of the Advisory Board, and executive officers of the trust and fund, as applicable, are listed below. The Board of Trustees governs the fund and is responsible for protecting the interests of shareholders. The Trustees are experienced executives who meet periodically throughout the year to oversee the fund's activities, review contractual arrangements with companies that provide services to the fund, oversee management of the risks associated with such activities and contractual arrangements, and review the fund's performance. Except for James C. Curvey, each of the Trustees oversees 226 funds advised by FMR or an affiliate. Mr. Curvey oversees 430 funds advised by FMR or an affiliate.
The Trustees hold office without limit in time except that (a) any Trustee may resign; (b) any Trustee may be removed by written instrument, signed by at least two-thirds of the number of Trustees prior to such removal; (c) any Trustee who requests to be retired or who has become incapacitated by illness or injury may be retired by written instrument signed by a majority of the other Trustees; and (d) any Trustee may be removed at any special meeting of shareholders by a two-thirds vote of the outstanding voting securities of the trust. Each Trustee who is not an interested person (as defined in the 1940 Act) (Independent Trustee), shall retire not later than the last day of the calendar year in which his or her 75th birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. The executive officers and Advisory Board Members hold office without limit in time, except that any officer and Advisory Board Member may resign or may be removed by a vote of a majority of the Trustees at any regular meeting or any special meeting of the Trustees. Except as indicated, each individual has held the office shown or other offices in the same company for the past five years.
Experience, Skills, Attributes, and Qualifications of the Fund's Trustees. The Governance and Nominating Committee has adopted a statement of policy that describes the experience, qualifications, attributes, and skills that are necessary and desirable for potential Independent Trustee candidates (Statement of Policy). The Board believes that each Trustee satisfied at the time he or she was initially elected or appointed a Trustee, and continues to satisfy, the standards contemplated by the Statement of Policy. The Governance and Nominating Committee also engages professional search firms to help identify potential Independent Trustee candidates who have the experience, qualifications, attributes, and skills consistent with the Statement of Policy. From time to time, additional criteria based on the composition and skills of the current Independent Trustees, as well as experience or skills that may be appropriate in light of future changes to board composition, business conditions, and regulatory or other developments, have also been considered by the professional search firms and the Governance and Nominating Committee. In addition, the Board takes into account the Trustees' commitment and participation in Board and committee meetings, as well as their leadership of standing and ad hoc committees throughout their tenure.
In determining that a particular Trustee was and continues to be qualified to serve as a Trustee, the Board has considered a variety of criteria, none of which, in isolation, was controlling. The Board believes that, collectively, the Trustees have balanced and diverse experience, qualifications, attributes, and skills, which allow the Board to operate effectively in governing the fund and protecting the interests of shareholders. Information about the specific experience, skills, attributes, and qualifications of each Trustee, which in each case led to the Board's conclusion that the Trustee should serve (or continue to serve) as a trustee of the fund, is provided below.
Board Structure and Oversight Function. James C. Curvey is an interested person (as defined in the 1940 Act) and currently serves as Acting Chairman. The Trustees have determined that an interested Chairman is appropriate and benefits shareholders because an interested Chairman has a personal and professional stake in the quality and continuity of services provided to the fund. Independent Trustees exercise their informed business judgment to appoint an individual of their choosing to serve as Chairman, regardless of whether the Trustee happens to be independent or a member of management. The Independent Trustees have determined that they can act independently and effectively without having an Independent Trustee serve as Chairman and that a key structural component for assuring that they are in a position to do so is for the Independent Trustees to constitute a substantial majority for the Board. The Independent Trustees also regularly meet in executive session. Ned C. Lautenbach serves as Chairman of the Independent Trustees and as such (i) acts as a liaison between the Independent Trustees and management with respect to matters important to the Independent Trustees and (ii) with management prepares agendas for Board meetings.
Fidelity funds are overseen by different Boards of Trustees. The fund's Board oversees Fidelity's equity and high income funds and another Board oversees Fidelity's investment-grade bond, money market, and asset allocation funds. The asset allocation funds may invest in Fidelity funds overseen by the fund's Board. The use of separate Boards, each with its own committee structure, allows the Trustees of each group of Fidelity funds to focus on the unique issues of the funds they oversee, including common research, investment, and operational issues. On occasion, the separate Boards establish joint committees to address issues of overlapping consequences for the Fidelity funds overseen by each Board.
The Trustees operate using a system of committees to facilitate the timely and efficient consideration of all matters of importance to the Trustees, the fund, and fund shareholders and to facilitate compliance with legal and regulatory requirements and oversight of the fund's activities and associated risks. The Board, acting through its committees, has charged FMR and its affiliates with (i) identifying events or circumstances the occurrence of which could have demonstrably adverse effects on the fund's business and/or reputation; (ii) implementing processes and controls to lessen the possibility that such events or circumstances occur or to mitigate the effects of such events or circumstances if they do occur; and (iii) creating and maintaining a system designed to evaluate continuously business and market conditions in order to facilitate the identification and implementation processes described in (i) and (ii) above. Because the day-to-day operations and activities of the fund are carried out by or through FMR, its affiliates and other service providers, the fund's exposure to risks is mitigated but not eliminated by the processes overseen by the Trustees. While each of the Board's committees has responsibility for overseeing different aspects of the fund's activities, oversight is exercised primarily through the Operations, Audit, and Compliance Committees. In addition, the Independent Trustees have worked with FMR to enhance the Board's oversight of investment and financial risks, legal and regulatory risks, technology risks, and operational risks, including the development of additional risk reporting to the Board. For example, a working group comprised of Independent Trustees and FMR has worked and continues to work to review the Fidelity funds' valuation-related activities, reporting and risk management. Appropriate personnel, including but not limited to the fund's Chief Compliance Officer (CCO), FMR's internal auditor, the independent accountants, the fund's Treasurer and portfolio management personnel, make periodic reports to the Board's committees, as appropriate, including an annual review of FMR's risk management program for the Fidelity funds. The responsibilities of each standing committee, including their oversight responsibilities, are described further under "Standing Committees of the Fund's Trustees."
Annual Report
Trustees and Officers - continued
The fund's Statement of Additional Information (SAI) includes more information about the Trustees. To request a free copy, call Fidelity at 1-800-544-8544.
Interested Trustees*:
Correspondence intended for the Trustee who is an interested person may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupations and Other Relevant Experience+ | |
James C. Curvey (76) | |
| Year of Election or Appointment: 2007 Mr. Curvey is Trustee and Acting Chairman of the Board of Trustees of certain Trusts. Mr. Curvey also serves as Trustee (2007-present) of other investment companies advised by FMR. Mr. Curvey is a Director of Fidelity Investments Money Management, Inc. (2009-present), Director of Fidelity Research & Analysis Co. (2009-present) and Director of FMR and FMR Co., Inc. (2007-present). Mr. Curvey is also Vice Chairman (2007-present) and Director of FMR LLC. In addition, Mr. Curvey serves as an Overseer for the Boston Symphony Orchestra and a member of the Trustees of Villanova University. Previously, Mr. Curvey was the Vice Chairman (2006-2007) and Director (2000-2007) of FMR Corp. |
Ronald P. O'Hanley (55) | |
| Year of Election or Appointment: 2011 |
* Trustees have been determined to be "Interested Trustees" by virtue of, among other things, their affiliation with the trust or various entities under common control with FMR.
+ The information above includes each Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to each Trustee's qualifications to serve as a Trustee, which led to the conclusion that each Trustee should serve as a Trustee for the fund.
Independent Trustees:
Correspondence intended for each Independent Trustee (that is, the Trustees other than the Interested Trustees) may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235.
Name, Age; Principal Occupations and Other Relevant Experience+ | |
Dennis J. Dirks (63) | |
| Year of Election or Appointment: 2005 Prior to his retirement in May 2003, Mr. Dirks was Chief Operating Officer and a member of the Board of The Depository Trust & Clearing Corporation (DTCC). He also served as President, Chief Operating Officer, and Board member of The Depository Trust Company (DTC) and President and Board member of the National Securities Clearing Corporation (NSCC). In addition, Mr. Dirks served as Chief Executive Officer and Board member of the Government Securities Clearing Corporation, Chief Executive Officer and Board member of the Mortgage-Backed Securities Clearing Corporation, as a Trustee and a member of the Finance Committee of Manhattan College (2005-2008), and as a Trustee and a member of the Finance Committee of AHRC of Nassau County (2006-2008). Mr. Dirks is a member of the Independent Directors Council (IDC) Governing Council (2010-present) and Board of Directors for The Brookville Center for Children's Services, Inc. (2009-present). |
Alan J. Lacy (58) | |
| Year of Election or Appointment: 2008 Mr. Lacy serves as Senior Adviser (2007-present) of Oak Hill Capital Partners, L.P. (private equity). Mr. Lacy also served as Chief Executive Officer (2000-2005) and Vice Chairman (2005-2006) of Sears Holdings Corporation and Sears, Roebuck and Co. (retail). In addition, Mr. Lacy serves as a member of the Board of Directors of Dave & Buster's, Inc. (restaurant and entertainment complexes, 2010-present), The Hillman Companies, Inc. (hardware wholesalers, 2010-present), and Bristol-Myers Squibb Company (global pharmaceuticals, 2007-present). Mr. Lacy is a member of the Board of Trustees of The National Parks Conservation Association (2006-present). Previously, Mr. Lacy served as Chairman of the Board of Trustees of the National Parks Conservation Association (2008-2011) and as a member of the Board of Directors for the Western Union Company (global money transfer, 2006-2011). |
Ned C. Lautenbach (68) | |
| Year of Election or Appointment: 2000 Mr. Lautenbach is Chairman of the Independent Trustees of the Equity and High Income Funds (2006-present). Mr. Lautenbach currently serves as the Lead Director of the Eaton Corporation Board of Directors (diversified industrial, 1997-present). Mr. Lautenbach is also a member of the Board of Directors of the Philharmonic Center for the Arts in Naples, Florida (1999-present); a member of the Board of Trustees of Fairfield University (2005-present); and a member of the Council on Foreign Relations (1994-present). Previously, Mr. Lautenbach was a Partner/Advisory Partner at Clayton, Dubilier & Rice, LLC (private equity investment, 1998-2010), as well as a Director of Sony Corporation (2006-2007). |
Joseph Mauriello (67) | |
| Year of Election or Appointment: 2008 Prior to his retirement in January 2006, Mr. Mauriello served in numerous senior management positions including Deputy Chairman and Chief Operating Officer (2004-2005), and Vice Chairman of Financial Services (2002-2004) of KPMG LLP US (professional services, 1965-2005). Mr. Mauriello currently serves as a member of the Board of Directors of XL Group plc. (global insurance and re-insurance, 2006-present) and of Arcadia Resources Inc. (health care services and products, 2007-present). Previously, Mr. Mauriello served as a Director of the Hamilton Funds of the Bank of New York (2006-2007). |
Robert W. Selander (61) | |
| Year of Election or Appointment: 2011 Previously, Mr. Selander served as a Member of the Advisory Board of Fidelity's Equity and High Income Funds (2011), Executive Vice Chairman (2010), Chief Executive Officer (2009-2010), and President and Chief Executive Officer (1997-2009) of Mastercard, Inc. |
Cornelia M. Small (67) | |
| Year of Election or Appointment: 2005 Ms. Small is a member of the Board of Directors of the Teagle Foundation (2009-present). Ms. Small is also a member of the Investment Committee, and Chair (2008-present) and a member of the Board of Trustees of Smith College. In addition, Ms. Small serves on the Investment Committee of the Berkshire Taconic Community Foundation (2008-present). Previously, Ms. Small served as Chairperson of the Investment Committee (2002-2008) of Smith College. In addition, Ms. Small served as Chief Investment Officer, Director of Global Equity Investments, and a member of the Board of Directors of Scudder, Stevens & Clark and Scudder Kemper Investments. |
William S. Stavropoulos (72) | |
| Year of Election or Appointment: 2001 Mr. Stavropoulos is Vice Chairman of the Independent Trustees of the Equity and High Income Funds (2006-present). Mr. Stavropoulos serves as President and Founder of the Michigan Baseball Foundation, the Great Lakes Loons (2007-present). Mr. Stavropoulos is Chairman Emeritus of the Board of Directors of The Dow Chemical Company, where he previously served in numerous senior management positions, including President, CEO (1995-2000; 2002-2004), Chairman of the Executive Committee (2000-2006), and as a member of the Board of Directors (1990-2006). Currently, Mr. Stavropoulos is Chairman of Univar (global distributor of commodity and specialty chemicals, 2010-present), a Director of Teradata Corporation (data warehousing and technology solutions, 2008-present), Chemical Financial Corporation, Maersk Inc. (industrial conglomerate), Tyco International, Inc. (multinational manufacturing and services, 2007-present), and a member of the Advisory Board for Metalmark Capital (private equity investment, 2005-present). Mr. Stavropoulos is a special advisor to Clayton, Dubilier & Rice, LLC (private equity investment). In addition, Mr. Stavropoulos is a member of the University of Notre Dame Advisory Council for the College of Science. |
David M. Thomas (62) | |
| Year of Election or Appointment: 2008 Previously, Mr. Thomas served as Executive Chairman (2005-2006) and Chairman and Chief Executive Officer (2000-2005) of IMS Health, Inc. (pharmaceutical and healthcare information solutions). In addition, Mr. Thomas serves as a member of the Board of Directors of Fortune Brands, Inc. (consumer products), and Interpublic Group of Companies, Inc. (marketing communication, 2004-present). |
Michael E. Wiley (61) | |
| Year of Election or Appointment: 2008 Mr. Wiley also serves as a Director of Asia Pacific Exploration Consolidated (international oil and gas exploration and production, 2008-present). Mr. Wiley serves as a Director of Tesoro Corporation (independent oil refiner and marketer, 2005-present), and a Director of Bill Barrett Corporation (exploration and production, 2005-present). In addition, Mr. Wiley also serves as a Director of Post Oak Bank (privately-held bank, 2004-present). Previously, Mr. Wiley served as a member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-2010), as a Senior Energy Advisor of Katzenbach Partners, LLC (consulting, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production, 2001-2005). |
+ The information above includes each Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to each Trustee's qualifications to serve as a Trustee, which led to the conclusion that each Trustee should serve as a Trustee for the fund.
Advisory Board Members and Executive Officers:
Correspondence intended for each executive officer, Edward C. Johnson 3d, and Peter S. Lynch may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
Edward C. Johnson 3d (81) | |
| Year of Election or Appointment: 2011 Member of the Advisory Board of Fidelity's Equity and High Income Funds. Mr. Johnson serves as Chief Executive Officer, Chairman, and a Director of FMR LLC, and also serves as Chairman and Director of FIL Limited. Previously, Mr. Johnson served as a Trustee and Chairman of the Board of certain Fidelity Trusts, Chairman and a Director of FMR, Chairman and a Director of FMR Co., Inc., and President of FMR LLC (2006-2007). |
Peter S. Lynch (68) | |
| Year of Election or Appointment: 2003 Member of the Advisory Board of Fidelity's Equity and High Income Funds. Mr. Lynch is Vice Chairman and a Director of FMR and FMR Co., Inc. In addition, Mr. Lynch serves as a Trustee of Boston College and as the Chairman of the Inner-City Scholarship Fund. Previously, Mr. Lynch served on the Special Olympics International Board of Directors (1997-2006). |
Kenneth B. Robins (42) | |
| Year of Election or Appointment: 2008 President and Treasurer of Fidelity's Equity and High Income Funds. Mr. Robins also serves as President and Treasurer (2010-present) and Assistant Treasurer (2009-present) of other Fidelity funds and is an employee of Fidelity Investments (2004-present). Previously, Mr. Robins served as Deputy Treasurer of the Fidelity funds (2005-2008) and Treasurer and Chief Financial Officer of The North Carolina Capital Management Trust: Cash and Term Portfolios (2006-2008). |
Brian B. Hogan (47) | |
| Year of Election or Appointment: 2009 Vice President of Equity and High Income Funds. Mr. Hogan also serves as President of FMR's Equity Division (2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager. |
Christopher S. Bartel (40) | |
| Year of Election or Appointment: 2009 Vice President of Fidelity's Sector and Real Estate Equity Funds. Mr. Bartel also serves as a Director, President, and Chief Executive Officer of Fidelity Management & Research (Japan) Inc. (2012-present) and Senior Vice President of Global Equity Research (2010-present). Previously, Mr. Bartel served as Senior Vice President of Equity Research (2009-2010), Managing Director of Research (2006-2009), and an analyst and portfolio manager (2000-2006). |
Scott C. Goebel (44) | |
| Year of Election or Appointment: 2008 Secretary and Chief Legal Officer (CLO) of the Fidelity funds. Mr. Goebel also serves as Secretary of Fidelity Investments Money Management, Inc. (FIMM) (2010-present) and Fidelity Research and Analysis Company (FRAC) (2010-present); Secretary and CLO of The North Carolina Capital Management Trust: Cash and Term Portfolios (2008-present); General Counsel, Secretary, and Senior Vice President of FMR (2008-present) and FMR Co., Inc. (2008-present); employed by FMR LLC or an affiliate (2001-present); Chief Legal Officer of Fidelity Management & Research (Hong Kong) Limited (2008-present) and Assistant Secretary of Fidelity Management & Research (Japan) Inc. (2008-present), and Fidelity Management & Research (U.K.) Inc. (2008-present). Previously, Mr. Goebel served as Assistant Secretary of FIMM (2008-2010), FRAC (2008-2010), and the Funds (2007-2008) and as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (2005-2007). |
William C. Coffey (43) | |
| Year of Election or Appointment: 2009 Assistant Secretary of Fidelity's Equity and High Income Funds. Mr. Coffey also serves as Senior Vice President and Deputy General Counsel of FMR LLC (2010-present), and is an employee of Fidelity Investments. Previously, Mr. Coffey served as Vice President and Associate General Counsel of FMR LLC (2005-2009). |
Holly C. Laurent (57) | |
| Year of Election or Appointment: 2008 Anti-Money Laundering (AML) Officer of the Fidelity funds. Ms. Laurent also serves as AML Officer of The North Carolina Capital Management Trust: Cash and Term Portfolios (2008-present) and is an employee of Fidelity Investments. Previously, Ms. Laurent was Senior Vice President and Head of Legal for Fidelity Business Services India Pvt. Ltd. (2006-2008), and Senior Vice President, Deputy General Counsel and Group Head for FMR LLC (2005-2006). |
Christine Reynolds (53) | |
| Year of Election or Appointment: 2008 Chief Financial Officer of the Fidelity funds. Ms. Reynolds became President of Fidelity Pricing and Cash Management Services (FPCMS) in August 2008. Ms. Reynolds served as Chief Operating Officer of FPCMS (2007-2008). Previously, Ms. Reynolds served as President, Treasurer, and Anti-Money Laundering officer of the Fidelity funds (2004-2007). |
Joseph A. Hanlon (43) | |
| Year of Election or Appointment: 2012 Chief Compliance Officer of Fidelity's Equity and High Income Funds. Mr. Hanlon serves as Senior Vice President of the Fidelity Asset Management Division (2009-present) and is an employee of Fidelity Investments. |
Joseph F. Zambello (54) | |
| Year of Election or Appointment: 2011 Deputy Treasurer of the Fidelity funds. Mr. Zambello is an employee of Fidelity Investments. Previously, Mr. Zambello served as Vice President of FMR's Program Management Group (2009-2011) and Vice President of the Transfer Agent Oversight Group (2005-2009). |
Adrien E. Deberghes (44) | |
| Year of Election or Appointment: 2008 Deputy Treasurer of Fidelity's Equity and High Income Funds. Mr. Deberghes also serves as Vice President (2011-present) and Assistant Treasurer (2010-present) of other Fidelity funds, and is an employee of Fidelity Investments (2008-present). Previously, Mr. Deberghes served as Senior Vice President of Mutual Fund Administration at State Street Corporation (2007-2008), Senior Director of Mutual Fund Administration at Investors Bank & Trust (2005-2007), and Director of Finance for Dunkin' Brands (2000-2005). |
Stephanie J. Dorsey (42) | |
| Year of Election or Appointment: 2010 Assistant Treasurer of Fidelity's Equity and High Income Funds. Ms. Dorsey also serves as Deputy Treasurer of other Fidelity funds (2008-present) and is an employee of Fidelity Investments (2008-present). Previously, Ms. Dorsey served as Treasurer (2004-2008) of the JPMorgan Mutual Funds and Vice President (2004-2008) of JPMorgan Chase Bank. |
John R. Hebble (53) | |
| Year of Election or Appointment: 2009 Assistant Treasurer of Fidelity's Equity and High Income Funds. Mr. Hebble also serves as President (2011-present), Treasurer, and Chief Financial Officer of The North Carolina Capital Management Trust: Cash and Term Portfolios (2008-present), President and Treasurer of other Fidelity funds (2008-present) and is an employee of Fidelity Investments. |
Gary W. Ryan (53) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of the Fidelity funds. Mr. Ryan is an employee of Fidelity Investments. Previously, Mr. Ryan served as Vice President of Fund Reporting in Fidelity Pricing and Cash Management Services (FPCMS) (1999-2005). |
Jonathan Davis (43) | |
| Year of Election or Appointment: 2010 Assistant Treasurer of the Fidelity funds. Mr. Davis is also Assistant Treasurer of Fidelity Rutland Square Trust II and Fidelity Commonwealth Trust II. Mr. Davis is an employee of Fidelity Investments. Previously, Mr. Davis served as Vice President and Associate General Counsel of FMR LLC (2003-2010). |
Annual Report
Distributions (Unaudited)
The Board of Trustees of Consumer Staples Portfolio voted to pay on April 16, 2012 to shareholders of record at the opening of business on April 13, 2012, a distribution of $0.230 per share derived from capital gains realized from sales of portfolio securities and a dividend of $0.152 per share from net investment income.
Consumer Staples hereby designates as a capital gain dividend with respect to the taxable year ended February 29, 2012, $27,521,817 or, if subsequently determined to be different, the net capital gain of such year.
Consumer Staples designates 100% and 89% of the dividends distributed in April and December, respectively during the fiscal year as qualifying for the dividends-received deduction for corporate shareholders.
Consumer Staples designates 100% of the dividends distributed during the fiscal year as amounts which may be taken into account as a dividend for the purposes of the maximum rate under section 1(h)(11) of the Internal Revenue Code.
The fund will notify shareholders in January 2013 of amounts for use in preparing 2012 income tax returns.
Annual Report
Managing Your Investments
Fidelity offers several ways to conveniently manage your personal investments via your telephone or PC. You can access your account information, conduct trades and research your investments 24 hours a day.
By Phone
Fidelity Automated Service Telephone provides a single toll-free number to access account balances, positions, quotes and trading. It's easy to navigate the service, and on your first call, the system will help you create a personal identification number (PIN) for security.
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Press
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2 For quotes.*
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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 distributions, and the effects of any sales charges.
Annual Report
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Fidelity®
Select Portfolios®
Energy Sector
Energy Portfolio
Energy Service Portfolio
Natural Gas Portfolio
Natural Resources Portfolio
Annual Report
February 29, 2012
(Fidelity Cover Art)
Contents
Shareholder Expense Example |
| |
Energy Portfolio | Performance | |
| Management's Discussion | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
Energy Service Portfolio | Performance | |
| Management's Discussion | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
Natural Gas Portfolio | Performance | |
| Management's Discussion | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
Natural Resources Portfolio | Performance | |
| Management's Discussion | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
Notes to Financial Statements |
| |
Report of Independent Registered Public Accounting Firm |
| |
Trustees and Officers |
| |
Distributions |
|
Annual Report
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com/proxyvotingresults or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov. You may also call 1-800-544-8544 to request a free copy of the proxy voting guidelines.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company.
This report and the financial statements contained herein are submitted for the general information of the shareholders of the funds. This report is not authorized for distribution to prospective investors in the funds unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com, http://www.advisor.fidelity.com, or http://www.401k.com, as applicable.
NOT FDIC INSURED • MAY LOSE VALUE • NO BANK GUARANTEE
Neither the funds nor Fidelity Distributors Corporation is a bank.
Annual Report
Shareholder Expense Example
As a shareholder of a Fund, you incur two types of costs: (1) transaction costs, including redemption fees, and (2) ongoing costs, including management fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Funds and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (September 1, 2011 to February 29, 2012).
Actual Expenses
The first line of the accompanying table for each fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, each Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each fund provides information about hypothetical account values and hypothetical expenses based on a fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, each Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Annualized Expense Ratio | Beginning | Ending | Expenses Paid |
Energy Portfolio | .83% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,076.60 | $ 4.29 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.74 | $ 4.17 |
Energy Service Portfolio | .82% |
|
|
|
Actual |
| $ 1,000.00 | $ 995.60 | $ 4.07 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.79 | $ 4.12 |
Natural Gas Portfolio | .87% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,043.70 | $ 4.42 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.54 | $ 4.37 |
Natural Resources Portfolio | .85% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,047.50 | $ 4.33 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.64 | $ 4.27 |
A 5% return per year before expenses
* Expenses are equal to each Fund's annualized expense ratio, multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
Annual Report
Energy Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 29, 2012 | Past 1 | Past 5 | Past 10 |
Energy Portfolio | -7.68% | 4.49% | 11.91% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Energy Portfolio on February 28, 2002. The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period.
Annual Report
Energy Portfolio
Management's Discussion of Fund Performance
Market Recap: U.S. stocks rose for the 12 months ending February 29, 2012, as encouraging economic news sparked a strong late-period rally that lifted major equity benchmarks past a number of significant milestones. Stocks recovered from early-period uncertainty that followed the March 2011 earthquake, tsunami and nuclear meltdown in Japan, but plummeted during the summer amid Europe's debt woes and a historic U.S. credit-rating downgrade. Despite continued volatility and mixed economic news, markets began to recover in early October. Investors gravitated toward defensive sectors and the perceived safety of larger, more-established and dividend-paying names, helping the Dow Jones® Industrial Average advance 8.83%, and close above the psychologically important 13,000 mark in late February - for the first time since May 2008. The rally accelerated late in the period and the market broadened, as investor confidence improved amid encouraging manufacturing, housing and employment data, and signs of progress in Europe. For the year, the S&P 500® Index added 5.12%, closing near a four-year high on the period's second-to-last day. Of the 10 major market sectors in the S&P 500®, three defensive areas led the way - consumer staples, health care and utilities - while financials, materials and energy finished in negative territory. The technology-laden Nasdaq Composite® Index added 7.73%, flirting with the 3,000 mark, its highest level in 12 years. Foreign developed-markets stocks reeled over Europe's turmoil, and the MSCI® EAFE® (Europe, Australasia, Far East) Index fell 7.35%.
Comments from John Dowd, Portfolio Manager of Energy Portfolio: For the year, the fund returned -7.68%, significantly underperforming the S&P 500® and the -3.15% return of the MSCI® U.S. IM Energy 25/50 Index. Relative to the MSCI sector benchmark, the fund was hurt by a heavy underweighting in the integrated oil/gas segment and pipeline companies within the oil/gas storage and transport area, both of which were favored by investors seeking the perceived safety of more-stable, high-dividend-paying stocks. Stock selection among integrated oil/gas firms also detracted, as did picks in oil/gas exploration and production (E&P) and positioning in the underperforming drilling group. The good news centered on the oil/gas refining and marketing area/segment, where security selection and a substantial overweighting aided the fund's result. Among individual securities, the fund was hurt the most by an overweighting in coal firm Alpha Natural Resources, as the stock lost about two-thirds of its value during the period. Additionally, in June, Alpha bought troubled coal firm Massey Energy, which operated a mine in which 29 workers were killed two years ago. Alpha has since been adding safety-conscious processes at the former Massey properties, and that has been expensive. An out-of-benchmark stake in deepwater drilling company Transocean also detracted, as its stock fell due to added costs and lengthy drill-rig downtime amid a strict regulatory environment that followed the 2010 explosion of its Deepwater Horizon rig in the Gulf of Mexico. I sold Transocean in November. An underweighting in benchmark heavyweight Exxon Mobil hurt, as its stock outperformed because of the combination of investors' flight to safety, improved refining margins and higher prices for international crude oil. Integrated oil firm Hess detracted, hurt by operational difficulties. The fund's top contributor was refiner Holly, whose stock surged on a merger deal with Frontier Oil that created a new company called HollyFrontier, in which I still held a stake at period end. We also did well with integrated oil firm Marathon Oil, which benefited from its mid-continent refining capabilities, and an out-of-index position in chemicals firm LyondellBassell Industries, which operates a crude oil refinery in Houston. Not owning benchmark component Devon Energy added value, as the E&P firm was hurt by lower natural gas prices.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Energy Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 29, 2012 | ||
| % of fund's | % of fund's net assets |
Chevron Corp. | 15.0 | 11.8 |
Occidental Petroleum Corp. | 7.5 | 5.3 |
Exxon Mobil Corp. | 7.1 | 11.2 |
Schlumberger Ltd. | 5.5 | 6.6 |
Hess Corp. | 5.2 | 4.1 |
National Oilwell Varco, Inc. | 4.9 | 2.8 |
Marathon Oil Corp. | 4.4 | 3.1 |
EOG Resources, Inc. | 3.9 | 0.0 |
Marathon Petroleum Corp. | 2.8 | 2.5 |
Ensco International Ltd. ADR | 2.8 | 4.2 |
| 59.1 | |
Top Industries (% of fund's net assets) | |||
As of February 29, 2012 | |||
 | Oil, Gas & Consumable Fuels | 74.0% |
|
 | Energy Equipment & Services | 23.0% |
|
 | Chemicals | 1.4% |
|
 | Construction & Engineering | 0.5% |
|
 | All Others* | 1.1% |
|
As of August 31, 2011 | |||
| Oil, Gas & Consumable Fuels | 65.1% |
|
 | Energy Equipment & Services | 31.8% |
|
 | Chemicals | 1.2% |
|
 | Construction & Engineering | 0.6% |
|
| Metals & Mining | 0.1% |
|
| All Others* | 1.2% |
|
* Includes short-term investments and net other assets. |
Annual Report
Energy Portfolio
Investments February 29, 2012
Showing Percentage of Net Assets
Common Stocks - 98.9% | |||
Shares | Value | ||
CHEMICALS - 1.4% | |||
Specialty Chemicals - 1.4% | |||
LyondellBasell Industries NV Class A | 825,541 | $ 35,646,860 | |
CONSTRUCTION & ENGINEERING - 0.5% | |||
Construction & Engineering - 0.5% | |||
Foster Wheeler AG (a) | 532,100 | 13,105,623 | |
ENERGY EQUIPMENT & SERVICES - 23.0% | |||
Oil & Gas Drilling - 6.6% | |||
Discovery Offshore S.A. (a)(e) | 2,394,308 | 4,175,857 | |
Ensco International Ltd. ADR | 1,210,461 | 70,569,876 | |
Helmerich & Payne, Inc. | 345,218 | 21,161,863 | |
Noble Corp. | 1,083,696 | 43,542,905 | |
Northern Offshore Ltd. | 1,000,575 | 2,443,112 | |
Ocean Rig UDW, Inc. (United States) | 553,900 | 9,637,860 | |
Parker Drilling Co. (a) | 1,349,249 | 8,540,746 | |
Tuscany International Drilling, Inc. (a) | 361,600 | 310,574 | |
Vantage Drilling Co. (a) | 3,350,700 | 4,389,417 | |
| 164,772,210 | ||
Oil & Gas Equipment & Services - 16.4% | |||
Cal Dive International, Inc. (a) | 536,955 | 1,557,170 | |
Compagnie Generale de Geophysique SA (a) | 445,281 | 13,620,453 | |
Halliburton Co. | 1,378,517 | 50,439,937 | |
Key Energy Services, Inc. (a) | 327,621 | 5,589,214 | |
McDermott International, Inc. (a) | 941,500 | 12,295,990 | |
National Oilwell Varco, Inc. | 1,494,808 | 123,366,504 | |
Oil States International, Inc. (a) | 400,021 | 32,489,706 | |
RPC, Inc. (d) | 109,807 | 1,758,010 | |
Schlumberger Ltd. | 1,771,711 | 137,502,491 | |
Schoeller-Bleckmann Oilfield Equipment AG | 39,737 | 3,589,171 | |
Superior Energy Services, Inc. (a) | 152,976 | 4,488,316 | |
Total Energy Services, Inc. | 173,000 | 3,295,155 | |
Weatherford International Ltd. (a) | 1,160,196 | 18,539,932 | |
Willbros Group, Inc. (a) | 494,507 | 2,076,929 | |
| 410,608,978 | ||
TOTAL ENERGY EQUIPMENT & SERVICES | 575,381,188 | ||
OIL, GAS & CONSUMABLE FUELS - 74.0% | |||
Coal & Consumable Fuels - 2.3% | |||
Alpha Natural Resources, Inc. (a) | 2,030,431 | 37,684,799 | |
Peabody Energy Corp. | 607,075 | 21,174,776 | |
| 58,859,575 | ||
Integrated Oil & Gas - 37.9% | |||
Chevron Corp. | 3,446,897 | 376,125,402 | |
Exxon Mobil Corp. | 2,059,102 | 178,112,323 | |
Hess Corp. | 1,979,555 | 128,512,711 | |
| |||
Shares | Value | ||
InterOil Corp. (a)(d) | 53,300 | $ 3,203,330 | |
Murphy Oil Corp. | 159,018 | 10,167,611 | |
Occidental Petroleum Corp. | 1,793,562 | 187,194,066 | |
Suncor Energy, Inc. | 1,820,800 | 65,535,185 | |
| 948,850,628 | ||
Oil & Gas Exploration & Production - 24.8% | |||
Anadarko Petroleum Corp. | 324,432 | 27,291,220 | |
Apache Corp. | 536,107 | 57,862,029 | |
Bankers Petroleum Ltd. (a) | 2,462,800 | 12,144,156 | |
Cabot Oil & Gas Corp. | 631,187 | 22,015,803 | |
Cobalt International Energy, Inc. (a) | 571,000 | 17,164,260 | |
Concho Resources, Inc. (a) | 22,200 | 2,371,848 | |
EOG Resources, Inc. | 856,760 | 97,550,694 | |
EQT Corp. | 364,910 | 19,347,528 | |
EV Energy Partners LP | 215,000 | 15,295,100 | |
EXCO Resources, Inc. (d) | 200,700 | 1,430,991 | |
Gran Tierra Energy, Inc. (Canada) (a) | 2,730,700 | 15,865,735 | |
Magnum Hunter Resources Corp. (d) | 417,900 | 2,891,868 | |
Marathon Oil Corp. | 3,250,461 | 110,158,123 | |
Niko Resources Ltd. | 39,700 | 1,875,385 | |
Noble Energy, Inc. | 384,944 | 37,589,782 | |
OGX Petroleo e Gas Participacoes SA (a) | 246,200 | 2,436,985 | |
Pacific Rubiales Energy Corp. | 201,900 | 5,861,251 | |
Painted Pony Petroleum Ltd. (a)(e) | 15,500 | 139,863 | |
Painted Pony Petroleum Ltd. Class A (a) | 270,300 | 2,439,023 | |
Pioneer Natural Resources Co. | 564,378 | 61,878,404 | |
Plains Exploration & Production Co. (a) | 362,034 | 15,954,838 | |
QEP Resources, Inc. | 174,300 | 5,950,602 | |
Rosetta Resources, Inc. (a) | 93,900 | 4,792,656 | |
SM Energy Co. | 652,265 | 51,346,301 | |
Stone Energy Corp. (a) | 102,004 | 3,259,028 | |
Swift Energy Co. (a) | 175,100 | 5,258,253 | |
WPX Energy, Inc. | 1,144,852 | 20,790,512 | |
| 620,962,238 | ||
Oil & Gas Refining & Marketing - 8.2% | |||
CVR Energy, Inc. (a) | 680,902 | 18,527,343 | |
HollyFrontier Corp. | 1,382,696 | 45,117,370 | |
Marathon Petroleum Corp. | 1,699,115 | 70,598,228 | |
Tesoro Corp. (a) | 851,973 | 22,602,844 | |
Valero Energy Corp. | 1,963,518 | 48,086,556 | |
| 204,932,341 | ||
Oil & Gas Storage & Transport - 0.8% | |||
Atlas Energy LP | 43,812 | 1,212,278 | |
Atlas Pipeline Partners, LP | 306,258 | 11,316,233 | |
Cheniere Energy, Inc. (a) | 428,900 | 6,450,656 | |
| 18,979,167 | ||
TOTAL OIL, GAS & CONSUMABLE FUELS | 1,852,583,949 | ||
TOTAL COMMON STOCKS (Cost $1,949,154,858) |
| ||
Money Market Funds - 1.2% | |||
Shares | Value | ||
Fidelity Cash Central Fund, 0.12% (b) | 22,822,488 | $ 22,822,488 | |
Fidelity Securities Lending Cash Central Fund, 0.12% (b)(c) | 6,984,100 | 6,984,100 | |
TOTAL MONEY MARKET FUNDS (Cost $29,806,588) |
| ||
TOTAL INVESTMENT PORTFOLIO - 100.1% (Cost $1,978,961,446) | 2,506,524,208 | |
NET OTHER ASSETS (LIABILITIES) - (0.1)% | (2,076,211) | |
NET ASSETS - 100% | $ 2,504,447,997 | |
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
(e) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the end of the period, the value of these securities amounted to $4,315,720 or 0.2% of net assets. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 16,110 |
Fidelity Securities Lending Cash Central Fund | 277,715 |
Total | $ 293,825 |
Other Information |
The following is a summary of the inputs used, as of February 29, 2012, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities: | ||||
Common Stocks | $ 2,476,717,620 | $ 2,463,097,167 | $ 13,620,453 | $ - |
Money Market Funds | 29,806,588 | 29,806,588 | - | - |
Total Investments in Securities: | $ 2,506,524,208 | $ 2,492,903,755 | $ 13,620,453 | $ - |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 81.5% |
Curacao | 5.5% |
Canada | 3.7% |
Switzerland | 2.9% |
United Kingdom | 2.8% |
Netherlands | 1.4% |
Others (Individually Less Than 1%) | 2.2% |
| 100.0% |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Energy Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2012 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $6,557,667) - See accompanying schedule: Unaffiliated issuers (cost $1,949,154,858) | $ 2,476,717,620 |
|
Fidelity Central Funds (cost $29,806,588) | 29,806,588 |
|
Total Investments (cost $1,978,961,446) |
| $ 2,506,524,208 |
Receivable for investments sold | 19,177,488 | |
Receivable for fund shares sold | 3,749,520 | |
Dividends receivable | 5,657,009 | |
Distributions receivable from Fidelity Central Funds | 5,905 | |
Prepaid expenses | 5,448 | |
Other receivables | 9,439 | |
Total assets | 2,535,129,017 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 18,284,043 | |
Payable for fund shares redeemed | 3,712,226 | |
Accrued management fee | 1,154,603 | |
Other affiliated payables | 508,080 | |
Other payables and accrued expenses | 37,968 | |
Collateral on securities loaned, at value | 6,984,100 | |
Total liabilities | 30,681,020 | |
|
|
|
Net Assets | $ 2,504,447,997 | |
Net Assets consist of: |
| |
Paid in capital | $ 1,980,425,436 | |
Distributions in excess of net investment income | (284) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (3,546,599) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 527,569,444 | |
Net Assets, for 45,415,750 shares outstanding | $ 2,504,447,997 | |
Net Asset Value, offering price and redemption price per share ($2,504,447,997 ÷ 45,415,750 shares) | $ 55.14 | |
Statement of Operations
| Year ended February 29, 2012 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 40,209,432 |
Interest |
| 39,897 |
Income from Fidelity Central Funds |
| 293,825 |
Total income |
| 40,543,154 |
|
|
|
Expenses | ||
Management fee | $ 14,238,682 | |
Transfer agent fees | 5,813,069 | |
Accounting and security lending fees | 768,476 | |
Custodian fees and expenses | 43,394 | |
Independent trustees' compensation | 15,044 | |
Registration fees | 93,828 | |
Audit | 59,275 | |
Legal | 9,128 | |
Interest | 5,592 | |
Miscellaneous | 24,971 | |
Total expenses before reductions | 21,071,459 | |
Expense reductions | (78,737) | 20,992,722 |
Net investment income (loss) | 19,550,432 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 168,503,384 | |
Foreign currency transactions | 6,803 | |
Total net realized gain (loss) |
| 168,510,187 |
Change in net unrealized appreciation (depreciation) on: Investment securities | (444,444,092) | |
Assets and liabilities in foreign currencies | 6,546 | |
Total change in net unrealized appreciation (depreciation) |
| (444,437,546) |
Net gain (loss) | (275,927,359) | |
Net increase (decrease) in net assets resulting from operations | $ (256,376,927) | |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fund Name
Financial Statements - continued
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 19,550,432 | $ 13,459,022 |
Net realized gain (loss) | 168,510,187 | 115,312,286 |
Change in net unrealized appreciation (depreciation) | (444,437,546) | 640,670,278 |
Net increase (decrease) in net assets resulting from operations | (256,376,927) | 769,441,586 |
Distributions to shareholders from net investment income | (18,440,144) | (10,965,367) |
Distributions to shareholders from net realized gain | (1,534,468) | - |
Total distributions | (19,974,612) | (10,965,367) |
Share transactions | 831,405,883 | 807,561,965 |
Reinvestment of distributions | 19,134,753 | 10,430,100 |
Cost of shares redeemed | (1,102,939,381) | (677,541,254) |
Net increase (decrease) in net assets resulting from share transactions | (252,398,745) | 140,450,811 |
Redemption fees | 175,722 | 77,677 |
Total increase (decrease) in net assets | (528,574,562) | 899,004,707 |
|
|
|
Net Assets | ||
Beginning of period | 3,033,022,559 | 2,134,017,852 |
End of period (including distributions in excess of net investment income of $284 and undistributed net investment income of $2,501,192, respectively) | $ 2,504,447,997 | $ 3,033,022,559 |
Other Information Shares | ||
Sold | 15,055,782 | 16,320,732 |
Issued in reinvestment of distributions | 366,408 | 206,804 |
Redeemed | (20,368,627) | (15,161,606) |
Net increase (decrease) | (4,946,437) | 1,365,930 |
Financial Highlights
Years ended February 28, | 2012 G | 2011 | 2010 | 2009 | 2008 G |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 60.22 | $ 43.55 | $ 27.43 | $ 64.48 | $ 48.80 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .41 | .29 | .07 | .02 | .01 |
Net realized and unrealized gain (loss) | (5.06) | 16.63 | 16.14 | (35.81) | 19.61 |
Total from investment operations | (4.65) | 16.92 | 16.21 | (35.79) | 19.62 |
Distributions from net investment income | (.40) | (.25) | (.09) | (.01) | (.05) |
Distributions from net realized gain | (.03) | - | - | (1.26) | (3.90) |
Total distributions | (.43) | (.25) | (.09) | (1.27) | (3.95) |
Redemption fees added to paid in capital C | - B | - B | - B | .01 | .01 |
Net asset value, end of period | $ 55.14 | $ 60.22 | $ 43.55 | $ 27.43 | $ 64.48 |
Total Return A | (7.68)% | 38.95% | 59.11% | (56.63)% | 40.72% |
Ratios to Average Net Assets D,F |
|
|
|
|
|
Expenses before reductions | .83% | .85% | .90% | .83% | .84% |
Expenses net of fee waivers, if any | .83% | .85% | .90% | .83% | .84% |
Expenses net of all reductions | .82% | .85% | .90% | .83% | .84% |
Net investment income (loss) | .77% | .64% | .18% | .03% | .02% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 2,504,448 | $ 3,033,023 | $ 2,134,018 | $ 1,337,382 | $ 3,155,852 |
Portfolio turnover rate E | 90% | 107% | 97% | 148% | 55% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown. B Amount represents less than $.01 per share. C Calculated based on average shares outstanding during the period. D Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. G For the year ended February 29. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Energy Service Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 29, 2012 | Past 1 | Past 5 | Past 10 |
Energy Service Portfolio | -14.99% | 3.27% | 10.45% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Energy Service Portfolio on February 28, 2002. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index performed over the same period.
Annual Report
Energy Service Portfolio
Management's Discussion of Fund Performance
Market Recap: U.S. stocks rose for the 12 months ending February 29, 2012, as encouraging economic news sparked a strong late-period rally that lifted major equity benchmarks past a number of significant milestones. Stocks recovered from early-period uncertainty that followed the March 2011 earthquake, tsunami and nuclear meltdown in Japan, but plummeted during the summer amid Europe's debt woes and a historic U.S. credit-rating downgrade. Despite continued volatility and mixed economic news, markets began to recover in early October. Investors gravitated toward defensive sectors and the perceived safety of larger, more-established and dividend-paying names, helping the Dow Jones® Industrial Average advance 8.83%, and close above the psychologically important 13,000 mark in late February - for the first time since May 2008. The rally accelerated late in the period and the market broadened, as investor confidence improved amid encouraging manufacturing, housing and employment data, and signs of progress in Europe. For the year, the S&P 500® Index added 5.12%, closing near a four-year high on the period's second-to-last day. Of the 10 major market sectors in the S&P 500®, three defensive areas led the way - consumer staples, health care and utilities - while financials, materials and energy finished in negative territory. The technology-laden Nasdaq Composite® Index added 7.73%, flirting with the 3,000 mark, its highest level in 12 years. Foreign developed-markets stocks reeled over Europe's turmoil, and the MSCI® EAFE® (Europe, Australasia, Far East) Index fell 7.35%.
Comments from Jonathan Kasen, Portfolio Manager of Energy Service Portfolio: For the year, the fund returned -14.99%, underperforming the S&P 500® and the -11.63% return of the MSCI® U.S. IM Energy Equipment & Services 25/50 Index. The fund underperformed its industry benchmark primarily due to weak security selection in oil and gas drilling, where about 17% of the fund's assets were concentrated. Stock picks in equipment/services, which constitute the bulk of the benchmark and the fund, also hurt performance. The fund lost ground due to untimely ownership of land-rig contractor Nabors Industries and an out-of-benchmark investment in offshore driller Transocean. I began adding to Nabors in April, because I thought it was cheap, and the stock later plummeted on declining international business, investor pessimism and weak margins in its pressure pumping business. I sold Nabors in January. I also had a meaningful position in Transocean, which I sold before period end, as the company continued to execute poorly. The fund had a sizable underweighting - and I ultimately sold - reservoir analysis company Core Laboratories, which solidly outperformed. Within oil/gas drilling, I didn't own some of the smaller firms in the index that did well, such as Houston-based offshore driller Atwood Oceanics, which saw revenue gains on increasing day rates for its drill rigs. Conversely, the fund was helped by investments in firms that supply equipment to deepwater drillers, which require unique products and technology to pull oil from the ocean floor. Top relative contributor Oceaneering International makes deepwater remote operational vehicles. The company enjoyed strong sales and earnings growth during the period, and its stock rose about 30%, easily topping the industry benchmark. Another contributor was an out-of-index state in Schoeller-Bleckmann Oilfield Equipment, the dominant supplier of directional drilling equipment, which saw an uptick in orders. We successfully avoided benchmark component Willbros Group, whose stock fell sharply on negative earnings revisions.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Energy Service Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 29, 2012 | ||
| % of fund's | % of fund's net assets |
Schlumberger Ltd. | 18.2 | 20.2 |
Halliburton Co. | 12.1 | 12.7 |
National Oilwell Varco, Inc. | 10.7 | 4.7 |
Cameron International Corp. | 8.4 | 5.9 |
Noble Corp. | 4.9 | 0.2 |
Baker Hughes, Inc. | 3.9 | 8.5 |
Weatherford International Ltd. | 3.7 | 4.4 |
Helmerich & Payne, Inc. | 3.5 | 3.0 |
FMC Technologies, Inc. | 3.5 | 4.9 |
Oceaneering International, Inc. | 3.3 | 3.4 |
| 72.2 | |
Top Industries (% of fund's net assets) | |||
As of February 29, 2012 | |||
| Energy Equipment & Services | 93.6% |
|
| Machinery | 0.8% |
|
| All Others* | 5.6% |
|
As of August 31, 2011 | |||
| Energy Equipment & Services | 99.3% |
|
| Electrical Equipment | 0.3% |
|
| All Others* | 0.4% |
|
* Includes short-term investments and net other assets. |
Annual Report
Energy Service Portfolio
Investments February 29, 2012
Showing Percentage of Net Assets
Common Stocks - 94.4% | |||
Shares | Value | ||
ENERGY EQUIPMENT & SERVICES - 93.6% | |||
Oil & Gas Drilling - 17.0% | |||
Cathedral Energy Services Ltd. | 914,900 | $ 7,164,629 | |
Discovery Offshore S.A. (a)(e) | 578,100 | 1,008,251 | |
Ensco International Ltd. ADR | 530,300 | 30,916,490 | |
Eurasia Drilling Co. Ltd. GDR (Reg. S) | 260,200 | 7,662,890 | |
Helmerich & Payne, Inc. | 782,972 | 47,996,184 | |
Noble Corp. | 1,688,235 | 67,833,282 | |
Ocean Rig UDW, Inc. (United States) | 613,700 | 10,678,380 | |
PHX Energy Services Corp. (d) | 118,800 | 1,373,286 | |
Rowan Companies, Inc. (a) | 592,100 | 21,830,727 | |
Trinidad Drilling Ltd. | 1,282,200 | 10,040,974 | |
Tuscany International Drilling, Inc. (a)(d) | 10,050,000 | 8,631,840 | |
Vantage Drilling Co. (a) | 7,639,900 | 10,008,269 | |
Western Energy Services Corp. (a) | 515,400 | 5,010,002 | |
Xtreme Coil Drilling Corp. (a) | 1,588,200 | 4,734,189 | |
| 234,889,393 | ||
Oil & Gas Equipment & Services - 76.6% | |||
Anton Oilfield Services Group | 10,186,000 | 1,536,548 | |
Baker Hughes, Inc. | 1,081,522 | 54,378,926 | |
Cameron International Corp. (a) | 2,088,788 | 116,366,379 | |
Dresser-Rand Group, Inc. (a) | 358,600 | 18,833,672 | |
Exterran Holdings, Inc. (a)(d) | 437,000 | 6,292,800 | |
FMC Technologies, Inc. (a) | 949,262 | 47,871,283 | |
Global Geophysical Services, Inc. (a) | 812,972 | 8,763,838 | |
Halliburton Co. | 4,582,799 | 167,684,615 | |
Helix Energy Solutions Group, Inc. (a) | 1,010,300 | 19,438,172 | |
Hornbeck Offshore Services, Inc. (a)(d) | 371,000 | 15,118,250 | |
ION Geophysical Corp. (a) | 859,055 | 6,150,834 | |
McDermott International, Inc. (a) | 2,718,400 | 35,502,304 | |
National Oilwell Varco, Inc. | 1,787,262 | 147,502,733 | |
Oceaneering International, Inc. | 835,000 | 45,315,450 | |
Oil States International, Inc. (a) | 460,200 | 37,377,444 | |
RigNet, Inc. (a) | 44,666 | 759,322 | |
Schlumberger Ltd. | 3,238,611 | 251,348,597 | |
Schoeller-Bleckmann Oilfield Equipment AG | 136,479 | 12,327,215 | |
Tesco Corp. (a) | 971,385 | 14,881,618 | |
Weatherford International Ltd. (a) | 3,243,271 | 51,827,471 | |
| 1,059,277,471 | ||
TOTAL ENERGY EQUIPMENT & SERVICES | 1,294,166,864 | ||
| |||
Shares | Value | ||
MACHINERY - 0.8% | |||
Industrial Machinery - 0.8% | |||
Rotork PLC | 337,000 | $ 11,102,623 | |
TOTAL COMMON STOCKS (Cost $1,018,411,696) |
| ||
Money Market Funds - 6.3% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.12% (b) | 79,142,805 | 79,142,805 | |
Fidelity Securities Lending Cash Central Fund, 0.12% (b)(c) | 7,828,688 | 7,828,688 | |
TOTAL MONEY MARKET FUNDS (Cost $86,971,493) |
| ||
TOTAL INVESTMENT PORTFOLIO - 100.7% (Cost $1,105,383,189) | 1,392,240,980 | |
NET OTHER ASSETS (LIABILITIES) - (0.7)% | (9,952,508) | |
NET ASSETS - 100% | $ 1,382,288,472 | |
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
(e) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the end of the period, the value of these securities amounted to $1,008,251 or 0.1% of net assets. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 26,573 |
Fidelity Securities Lending Cash Central Fund | 113,438 |
Total | $ 140,011 |
Other Information |
All investments are categorized as Level 1 under the Fair Value Hierarchy. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 60.7% |
Curacao | 18.2% |
Switzerland | 8.6% |
Canada | 3.7% |
United Kingdom | 3.0% |
Panama | 2.6% |
Cayman Islands | 1.4% |
Others (Individually Less Than 1%) | 1.8% |
| 100.0% |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Energy Service Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2012 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $7,613,103) - See accompanying schedule: Unaffiliated issuers (cost $1,018,411,696) | $ 1,305,269,487 |
|
Fidelity Central Funds (cost $86,971,493) | 86,971,493 |
|
Total Investments (cost $1,105,383,189) |
| $ 1,392,240,980 |
Receivable for investments sold | 14,092,071 | |
Receivable for fund shares sold | 1,462,815 | |
Dividends receivable | 1,079,997 | |
Distributions receivable from Fidelity Central Funds | 8,463 | |
Prepaid expenses | 3,737 | |
Other receivables | 8,437 | |
Total assets | 1,408,896,500 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 14,215,889 | |
Payable for fund shares redeemed | 3,605,857 | |
Accrued management fee | 641,053 | |
Other affiliated payables | 274,526 | |
Other payables and accrued expenses | 42,015 | |
Collateral on securities loaned, at value | 7,828,688 | |
Total liabilities | 26,608,028 | |
|
|
|
Net Assets | $ 1,382,288,472 | |
Net Assets consist of: |
| |
Paid in capital | $ 1,141,003,338 | |
Accumulated net investment loss | (453,783) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (45,118,874) | |
Net unrealized appreciation (depreciation) on investments | 286,857,791 | |
Net Assets, for 18,933,190 shares outstanding | $ 1,382,288,472 | |
Net Asset Value, offering price and redemption price per share ($1,382,288,472 ÷ 18,933,190 shares) | $ 73.01 | |
Statement of Operations
| Year ended February 29, 2012 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 10,667,765 |
Interest |
| 91 |
Income from Fidelity Central Funds |
| 140,011 |
Total income |
| 10,807,867 |
|
|
|
Expenses | ||
Management fee | $ 8,725,176 | |
Transfer agent fees | 3,329,656 | |
Accounting and security lending fees | 492,959 | |
Custodian fees and expenses | 39,769 | |
Independent trustees' compensation | 9,321 | |
Registration fees | 101,077 | |
Audit | 53,345 | |
Legal | 5,790 | |
Interest | 6,669 | |
Miscellaneous | 15,760 | |
Total expenses before reductions | 12,779,522 | |
Expense reductions | (67,777) | 12,711,745 |
Net investment income (loss) | (1,903,878) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 154,329,939 | |
Foreign currency transactions | (52,008) | |
Total net realized gain (loss) |
| 154,277,931 |
Change in net unrealized appreciation (depreciation) on: Investment securities | (472,064,038) | |
Assets and liabilities in foreign currencies | (363) | |
Total change in net unrealized appreciation (depreciation) |
| (472,064,401) |
Net gain (loss) | (317,786,470) | |
Net increase (decrease) in net assets resulting from operations | $ (319,690,348) | |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ (1,903,878) | $ (814,991) |
Net realized gain (loss) | 154,277,931 | 55,606,864 |
Change in net unrealized appreciation (depreciation) | (472,064,401) | 540,147,218 |
Net increase (decrease) in net assets resulting from operations | (319,690,348) | 594,939,091 |
Share transactions | 683,109,205 | 737,771,272 |
Cost of shares redeemed | (1,022,036,053) | (574,519,729) |
Net increase (decrease) in net assets resulting from share transactions | (338,926,848) | 163,251,543 |
Redemption fees | 214,497 | 72,873 |
Total increase (decrease) in net assets | (658,402,699) | 758,263,507 |
|
|
|
Net Assets | ||
Beginning of period | 2,040,691,171 | 1,282,427,664 |
End of period (including accumulated net investment loss of $453,783 and accumulated net investment loss of $61,947, respectively) | $ 1,382,288,472 | $ 2,040,691,171 |
Other Information Shares | ||
Sold | 8,913,160 | 10,987,135 |
Redeemed | (13,741,994) | (9,234,606) |
Net increase (decrease) | (4,828,834) | 1,752,529 |
Financial Highlights
Years ended February 28, | 2012I | 2011 | 2010 | 2009 | 2008I |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 85.88 | $ 58.27 | $ 33.87 | $ 92.62 | $ 66.82 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss)C | (.09) | (.04) | .02F | (.02)G | (.21) |
Net realized and unrealized gain (loss) | (12.79) | 27.65 | 24.41 | (54.75) | 28.45 |
Total from investment operations | (12.88) | 27.61 | 24.43 | (54.77) | 28.24 |
Distributions from net investment income | - | - | (.04) | - | - |
Distributions from net realized gain | - | - | - | (4.00) | (2.46) |
Total distributions | - | - | (.04) | (4.00) | (2.46) |
Redemption fees added to paid in capitalC | .01 | -B | .01 | .02 | .02 |
Net asset value, end of period | $ 73.01 | $ 85.88 | $ 58.27 | $ 33.87 | $ 92.62 |
Total ReturnA | (14.99)% | 47.38% | 72.15% | (61.89)% | 42.91% |
Ratios to Average Net AssetsD,H |
|
|
|
|
|
Expenses before reductions | .82% | .85% | .91% | .82% | .83% |
Expenses net of fee waivers, if any | .82% | .85% | .91% | .82% | .83% |
Expenses net of all reductions | .81% | .85% | .91% | .82% | .83% |
Net investment income (loss) | (.12)% | (.06)% | .04%F | (.03)%G | (.23)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 1,382,288 | $ 2,040,691 | $ 1,282,428 | $ 740,946 | $ 2,256,105 |
Portfolio turnover rateE | 74% | 85% | 84% | 82% | 64% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown. B Amount represents less than $.01 per share. C Calculated based on average shares outstanding during the period. D Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Investment income per share reflects a large, non-recurring dividend which amounted to $.10 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been (.15)%. G Investment income per share reflects a large, non-recurring dividend which amounted to $.07 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been (.11)%. 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 reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. I For the year ended February 29. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Natural Gas Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 29, 2012 | Past 1 | Past 5 | Past 10 |
Natural Gas Portfolio | -9.03% | -0.68% | 10.22% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Natural Gas Portfolio on February 28, 2002. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index performed over the same period.
Annual Report
Natural Gas Portfolio
Management's Discussion of Fund Performance
Market Recap: U.S. stocks rose for the 12 months ending February 29, 2012, as encouraging economic news sparked a strong late-period rally that lifted major equity benchmarks past a number of significant milestones. Stocks recovered from early-period uncertainty that followed the March 2011 earthquake, tsunami and nuclear meltdown in Japan, but plummeted during the summer amid Europe's debt woes and a historic U.S. credit-rating downgrade. Despite continued volatility and mixed economic news, markets began to recover in early October. Investors gravitated toward defensive sectors and the perceived safety of larger, more-established and dividend-paying names, helping the Dow Jones® Industrial Average advance 8.83%, and close above the psychologically important 13,000 mark in late February - for the first time since May 2008. The rally accelerated late in the period and the market broadened, as investor confidence improved amid encouraging manufacturing, housing and employment data, and signs of progress in Europe. For the year, the S&P 500® Index added 5.12%, closing near a four-year high on the period's second-to-last day. Of the 10 major market sectors in the S&P 500®, three defensive areas led the way - consumer staples, health care and utilities - while financials, materials and energy finished in negative territory. The technology-laden Nasdaq Composite® Index added 7.73%, flirting with the 3,000 mark, its highest level in 12 years. Foreign developed-markets stocks reeled over Europe's turmoil, and the MSCI® EAFE® (Europe, Australasia, Far East) Index fell 7.35%.
Comments from Ryan Oldham, Portfolio Manager of Natural Gas Portfolio: For the year, the fund returned -9.03%, underperforming both the S&P 500® and the -0.37% result of the S&P® Custom Natural Gas Index. Relative to the industry benchmark, stock selection in oil/gas exploration and production (E&P) - a group that constitutes roughly half of the natural gas index - accounted for most of the underperformance. An underweighting and weak picks in oil/gas storage and transport - the benchmark's best-performing segment - meaningfully detracted, while positioning in gas utilities and oil/gas drilling also hurt. On the plus side, security selection among integrated oil/gas stocks was beneficial, as was an overweighting in the oil/gas equipment and services group. At the stock level, four of the five biggest individual detractors were poor-performing E&P companies, with my out-of-index stake in Canada-based Talisman Energy taking the biggest toll on relative results. Several executional missteps led investors to question Talisman's long-term outlook, which sent earnings estimates - and Talisman's stock - steadily lower. An overweighting in Newfield Exploration also didn't help, and non-benchmark E&P firms EXCO Resources and Canada's Niko Resources weighed on performance. Elsewhere, a scant stake in strong-performing index constituent El Paso was unproductive. All of the detractors I've mentioned, except for Niko, were no longer held at period end. Conversely, the fund's top individual contributor was an underweighting in major index component Devon Energy, a natural-gas-focused E&P that struggled during the period due to low commodity prices. Shares of pipeline operator Williams Companies bounced higher in mid-December following the firm's announced plan to spin off its E&P business, WPX Energy. The deal completed at the end of 2011, and the fund continued to own both stocks. A timely overweighting in Cameron International, which makes valves and blowout protectors used in the drilling process, also was additive.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Natural Gas Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 29, 2012 | ||
| % of fund's | % of fund's net assets |
Apache Corp. | 11.4 | 11.5 |
Anadarko Petroleum Corp. | 11.0 | 10.3 |
Duke Energy Corp. | 8.7 | 6.7 |
Williams Companies, Inc. | 6.5 | 5.9 |
Sempra Energy | 6.2 | 4.1 |
Noble Energy, Inc. | 5.6 | 5.4 |
Cameron International Corp. | 4.7 | 4.3 |
Chesapeake Energy Corp. | 3.4 | 4.1 |
Devon Energy Corp. | 3.0 | 3.3 |
Helmerich & Payne, Inc. | 2.9 | 2.9 |
| 63.4 | |
Top Industries (% of fund's net assets) | |||
As of February 29, 2012 | |||
| Oil, Gas & Consumable Fuels | 60.2% |
|
| Energy Equipment & Services | 14.7% |
|
| Multi-Utilities | 10.2% |
|
| Electric Utilities | 8.7% |
|
| Gas Utilities | 2.4% |
|
| All Others* | 3.8% |
|
As of August 31, 2011 | |||
| Oil, Gas & Consumable Fuels | 63.2% |
|
| Energy Equipment & Services | 15.9% |
|
| Multi-Utilities | 10.8% |
|
| Electric Utilities | 6.7% |
|
| Gas Utilities | 1.4% |
|
| All Others* | 2.0% |
|
* Includes short-term investments and net other assets. |
Annual Report
Natural Gas Portfolio
Investments February 29, 2012
Showing Percentage of Net Assets
Common Stocks - 96.2% | |||
Shares | Value | ||
ELECTRIC UTILITIES - 8.7% | |||
Electric Utilities - 8.7% | |||
Duke Energy Corp. | 3,110,769 | $ 65,077,287 | |
ENERGY EQUIPMENT & SERVICES - 14.7% | |||
Oil & Gas Drilling - 8.9% | |||
Ensco International Ltd. ADR | 135,300 | 7,887,990 | |
Helmerich & Payne, Inc. | 355,500 | 21,792,150 | |
Rowan Companies, Inc. (a) | 371,500 | 13,697,205 | |
Transocean Ltd. (United States) | 212,500 | 11,334,750 | |
Trinidad Drilling Ltd. (d) | 1,109,800 | 8,690,901 | |
Tuscany International Drilling, Inc. (a) | 2,881,200 | 2,474,632 | |
| 65,877,628 | ||
Oil & Gas Equipment & Services - 5.8% | |||
Cameron International Corp. (a) | 627,400 | 34,952,454 | |
Halliburton Co. | 226,600 | 8,291,294 | |
| 43,243,748 | ||
TOTAL ENERGY EQUIPMENT & SERVICES | 109,121,376 | ||
GAS UTILITIES - 2.4% | |||
Gas Utilities - 2.4% | |||
Chesapeake Utilities Corp. | 44,100 | 1,811,187 | |
National Fuel Gas Co. | 325,300 | 16,372,349 | |
| 18,183,536 | ||
MULTI-UTILITIES - 10.2% | |||
Multi-Utilities - 10.2% | |||
Dominion Resources, Inc. | 382,800 | 19,319,916 | |
NiSource, Inc. | 421,300 | 10,111,200 | |
Sempra Energy | 779,677 | 46,188,065 | |
| 75,619,181 | ||
OIL, GAS & CONSUMABLE FUELS - 60.2% | |||
Integrated Oil & Gas - 3.4% | |||
InterOil Corp. (a)(d) | 118,000 | 7,091,800 | |
Murphy Oil Corp. | 58,000 | 3,708,520 | |
Suncor Energy, Inc. | 395,700 | 14,242,241 | |
| 25,042,561 | ||
Oil & Gas Exploration & Production - 48.8% | |||
Americas Petrogas, Inc. (a) | 1,052,400 | 4,604,549 | |
Americas Petrogas, Inc. (e) | 232,000 | 1,015,066 | |
Anadarko Petroleum Corp. | 970,200 | 81,613,224 | |
Apache Corp. | 782,133 | 84,415,618 | |
Cabot Oil & Gas Corp. | 101,900 | 3,554,272 | |
Chesapeake Energy Corp. | 994,200 | 24,855,000 | |
Cobalt International Energy, Inc. (a) | 24,300 | 730,458 | |
Crown Point Ventures Ltd. (e) | 747,316 | 959,017 | |
Denbury Resources, Inc. (a) | 403,975 | 8,043,142 | |
Devon Energy Corp. | 306,946 | 22,502,211 | |
Double Eagle Petroleum Co. (a) | 301,699 | 2,048,536 | |
| |||
Shares | Value | ||
EOG Resources, Inc. | 182,485 | $ 20,777,742 | |
Epsilon Energy Ltd. (a) | 699,400 | 2,289,755 | |
Kosmos Energy Ltd. | 168,200 | 2,356,482 | |
Madalena Ventures, Inc. (a) | 3,344,000 | 4,325,085 | |
Nexen, Inc. | 889,100 | 18,120,696 | |
Niko Resources Ltd. | 222,100 | 10,491,765 | |
Noble Energy, Inc. | 427,607 | 41,755,824 | |
Painted Pony Petroleum Ltd. (a)(e) | 5,500 | 49,629 | |
Painted Pony Petroleum Ltd. Class A (a) | 540,000 | 4,872,632 | |
Petrobank Energy & Resources Ltd. (a) | 231,800 | 3,689,031 | |
Pinecrest Energy, Inc. (a)(e)(f) | 950,000 | 3,186,985 | |
Southwestern Energy Co. (a) | 142,300 | 4,704,438 | |
Voyager Oil & Gas, Inc. warrants 2/4/16 (a) | 105,016 | 118,082 | |
WPX Energy, Inc. | 648,733 | 11,780,991 | |
| 362,860,230 | ||
Oil & Gas Refining & Marketing - 0.2% | |||
HollyFrontier Corp. | 59,000 | 1,925,170 | |
Oil & Gas Storage & Transport - 7.8% | |||
Southern Union Co. | 217,900 | 9,574,526 | |
Williams Companies, Inc. | 1,612,299 | 48,175,494 | |
| 57,750,020 | ||
TOTAL OIL, GAS & CONSUMABLE FUELS | 447,577,981 | ||
TOTAL COMMON STOCKS (Cost $668,613,531) |
| ||
Money Market Funds - 4.4% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.12% (b) | 25,136,935 | 25,136,935 | |
Fidelity Securities Lending Cash Central Fund, 0.12% (b)(c) | 7,796,500 | 7,796,500 | |
TOTAL MONEY MARKET FUNDS (Cost $32,933,435) |
| ||
TOTAL INVESTMENT PORTFOLIO - 100.6% (Cost $701,546,966) | 748,512,796 | |
NET OTHER ASSETS (LIABILITIES) - (0.6)% | (4,832,404) | |
NET ASSETS - 100% | $ 743,680,392 | |
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
(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 $5,210,697 or 0.7% of net assets. |
(f) Security or a portion of the security purchased on a delayed delivery or when-issued basis. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 15,902 |
Fidelity Securities Lending Cash Central Fund | 561,266 |
Total | $ 577,168 |
Other Information |
The following is a summary of the inputs used, as of February 29, 2012, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities: | ||||
Common Stocks | $ 715,579,361 | $ 715,461,279 | $ 118,082 | $ - |
Money Market Funds | 32,933,435 | 32,933,435 | - | - |
Total Investments in Securities: | $ 748,512,796 | $ 748,394,714 | $ 118,082 | $ - |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 85.6% |
Canada | 11.5% |
Switzerland | 1.5% |
United Kingdom | 1.1% |
Others (Individually Less Than 1%) | 0.3% |
| 100.0% |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Natural Gas Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2012 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $7,220,781) - See accompanying schedule: Unaffiliated issuers (cost $668,613,531) | $ 715,579,361 |
|
Fidelity Central Funds (cost $32,933,435) | 32,933,435 |
|
Total Investments (cost $701,546,966) |
| $ 748,512,796 |
Receivable for investments sold | 18,129,061 | |
Receivable for fund shares sold | 1,853,970 | |
Dividends receivable | 1,282,822 | |
Distributions receivable from Fidelity Central Funds | 6,807 | |
Prepaid expenses | 1,719 | |
Other receivables | 1,250 | |
Total assets | 769,788,425 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 12,153,349 | |
Delayed delivery | 3,119,790 | |
Payable for fund shares redeemed | 2,478,812 | |
Accrued management fee | 342,906 | |
Other affiliated payables | 185,214 | |
Other payables and accrued expenses | 31,462 | |
Collateral on securities loaned, at value | 7,796,500 | |
Total liabilities | 26,108,033 | |
|
|
|
Net Assets | $ 743,680,392 | |
Net Assets consist of: |
| |
Paid in capital | $ 1,153,586,777 | |
Undistributed net investment income | 1,198,017 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (458,039,358) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 46,934,956 | |
Net Assets, for 22,597,974 shares outstanding | $ 743,680,392 | |
Net Asset Value, offering price and redemption price per share ($743,680,392 ÷ 22,597,974 shares) | $ 32.91 | |
Statement of Operations
| Year ended February 29, 2012 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 14,139,817 |
Interest |
| 16 |
Income from Fidelity Central Funds |
| 577,168 |
Total income |
| 14,717,001 |
|
|
|
Expenses | ||
Management fee | $ 4,920,636 | |
Transfer agent fees | 2,275,331 | |
Accounting and security lending fees | 306,323 | |
Custodian fees and expenses | 20,982 | |
Independent trustees' compensation | 5,276 | |
Registration fees | 44,755 | |
Audit | 38,220 | |
Legal | 3,337 | |
Interest | 948 | |
Miscellaneous | 10,230 | |
Total expenses before reductions | 7,626,038 | |
Expense reductions | (20,187) | 7,605,851 |
Net investment income (loss) | 7,111,150 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 5,649,926 | |
Foreign currency transactions | (225,994) | |
Total net realized gain (loss) |
| 5,423,932 |
Change in net unrealized appreciation (depreciation) on: Investment securities | (127,167,312) | |
Assets and liabilities in foreign currencies | (16,677) | |
Total change in net unrealized appreciation (depreciation) |
| (127,183,989) |
Net gain (loss) | (121,760,057) | |
Net increase (decrease) in net assets resulting from operations | $ (114,648,907) | |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fund Name
Financial Statements - continued
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 7,111,150 | $ 9,013,348 |
Net realized gain (loss) | 5,423,932 | (138,355,471) |
Change in net unrealized appreciation (depreciation) | (127,183,989) | 267,851,166 |
Net increase (decrease) in net assets resulting from operations | (114,648,907) | 138,509,043 |
Distributions to shareholders from net investment income | (7,350,892) | (7,289,485) |
Distributions to shareholders from net realized gain | - | (1,911,402) |
Total distributions | (7,350,892) | (9,200,887) |
Share transactions | 317,625,822 | 227,063,598 |
Reinvestment of distributions | 6,793,558 | 8,477,652 |
Cost of shares redeemed | (448,864,133) | (516,555,771) |
Net increase (decrease) in net assets resulting from share transactions | (124,444,753) | (281,014,521) |
Redemption fees | 42,090 | 41,849 |
Total increase (decrease) in net assets | (246,402,462) | (151,664,516) |
|
|
|
Net Assets | ||
Beginning of period | 990,082,854 | 1,141,747,370 |
End of period (including undistributed net investment income of $1,198,017 and undistributed net investment income of $1,437,759, respectively) | $ 743,680,392 | $ 990,082,854 |
Other Information Shares | ||
Sold | 9,161,528 | 7,374,987 |
Issued in reinvestment of distributions | 211,560 | 257,265 |
Redeemed | (13,898,138) | (16,934,801) |
Net increase (decrease) | (4,525,050) | (9,302,549) |
Financial Highlights
Years ended February 28, | 2012 H | 2011 | 2010 | 2009 | 2008 H |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 36.50 | $ 31.34 | $ 19.16 | $ 49.91 | $ 39.61 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .26 | .29 F | (.04) | (.05) | (.05) |
Net realized and unrealized gain (loss) | (3.56) | 5.19 | 12.22 | (28.62) | 14.53 |
Total from investment operations | (3.30) | 5.48 | 12.18 | (28.67) | 14.48 |
Distributions from net investment income | (.29) | (.26) | - | - | - |
Distributions from net realized gain | - | (.06) | - | (2.09) | (4.19) |
Total distributions | (.29) | (.32) | - | (2.09) | (4.19) |
Redemption fees added to paid in capital C | - B | - B | - B | .01 | .01 |
Net asset value, end of period | $ 32.91 | $ 36.50 | $ 31.34 | $ 19.16 | $ 49.91 |
Total Return A | (9.03)% | 17.58% | 63.57% | (59.99)% | 38.08% |
Ratios to Average Net Assets D,G |
|
|
|
|
|
Expenses before reductions | .86% | .89% | .93% | .85% | .85% |
Expenses net of fee waivers, if any | .86% | .89% | .93% | .85% | .85% |
Expenses net of all reductions | .86% | .88% | .93% | .85% | .85% |
Net investment income (loss) | .81% | .95% F | (.13)% | (.13)% | (.10)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 743,680 | $ 990,083 | $ 1,141,747 | $ 705,002 | $ 1,603,270 |
Portfolio turnover rate E | 63% | 167% | 110% | 81% | 68% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown. B Amount represents less than $.01 per share. C Calculated based on average shares outstanding during the period. D Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Investment income per share reflects a large, non-recurring dividend which amounted to $.15 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .47%. G Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. H For the year ended February 29. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Natural Resources Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 29, 2012 | Past 1 | Past 5 | Past 10 |
Natural Resources Portfolio | -8.63% | 5.81% | 12.68% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Natural Resources Portfolio on February 28, 2002. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index performed over the same period.
Annual Report
Natural Resources Portfolio
Management's Discussion of Fund Performance
Market Recap: U.S. stocks rose for the 12 months ending February 29, 2012, as encouraging economic news sparked a strong late-period rally that lifted major equity benchmarks past a number of significant milestones. Stocks recovered from early-period uncertainty that followed the March 2011 earthquake, tsunami and nuclear meltdown in Japan, but plummeted during the summer amid Europe's debt woes and a historic U.S. credit-rating downgrade. Despite continued volatility and mixed economic news, markets began to recover in early October. Investors gravitated toward defensive sectors and the perceived safety of larger, more-established and dividend-paying names, helping the Dow Jones® Industrial Average advance 8.83%, and close above the psychologically important 13,000 mark in late February - for the first time since May 2008. The rally accelerated late in the period and the market broadened, as investor confidence improved amid encouraging manufacturing, housing and employment data, and signs of progress in Europe. For the year, the S&P 500® Index added 5.12%, closing near a four-year high on the period's second-to-last day. Of the 10 major market sectors in the S&P 500®, three defensive areas led the way - consumer staples, health care and utilities - while financials, materials and energy finished in negative territory. The technology-laden Nasdaq Composite® Index added 7.73%, flirting with the 3,000 mark, its highest level in 12 years. Foreign developed-markets stocks reeled over Europe's turmoil, and the MSCI® EAFE® (Europe, Australasia, Far East) Index fell 7.35%.
Comments from John Dowd, Portfolio Manager of Natural Resources Portfolio: For the year, the fund returned -8.63%, slightly underperforming the -8.20% return of the S&P® North American Natural Resources Sector Index, but significantly trailing the S&P 500®. Relative to the industry benchmark, the fund was hurt by an overweighting in oil/gas drilling, as natural gas production gluts caused a pullback in drilling activity. Investors' flight to safety helped companies in high-dividend-paying industries such as integrated oil/gas and pipelines, but hurt the fund, as we were heavily underweighted there. Picks in oil/gas exploration and production (E&P) and coal also hurt. The good news centered on the oil/gas refining and marketing segment, where security selection and a substantial overweighting aided the fund's result. Solid performance from our gold holdings and a good out-of-benchmark investment in specialty chemicals also meaningfully contributed. On an individual security basis, cost pressures deflated the share price of coal firm Alpha Natural Resources and deepwater drilling company Transocean. An overweighting in Alpha was particularly detrimental, as the stock lost about two-thirds of its value during the period. In June, Alpha bought troubled coal firm Massey Energy, which operated a mine in which 29 workers were killed two years ago. Alpha has since been adding safety-conscious processes at the former Massey properties, and that has been expensive. Transocean faced added costs and lengthy drill-rig downtime amid a strict regulatory environment that followed the 2010 explosion of its Deepwater Horizon rig in the Gulf of Mexico. I sold Transocean in November. The fund also was hurt by not owning enough of integrated oil firms Exxon Mobil - a benchmark heavyweight that I sold in June - and ConocoPhillips, which I did not own at all. Both stocks outperformed due to the combination of investors' flight to safety, improved refining margins and higher prices for international crude oil. On the flipside, we had a timely investment in Suncor Energy, one of the largest oil producers in Canada. I underweighted the stock because early in the period I thought it was expensive relative to the group, and its share price fell, which helped performance. The fund also benefited from our stake in refiner Holly, whose share price surged on a merger deal with Frontier Oil that created a new company called HollyFrontier, in which I still held a stake at period end. An out-of-index position in chemicals firm LyondellBassell Industries helped. The company, which also operates a major crude oil refining plant in Houston, has done well since exiting from bankruptcy in April 2010. Another contributor was Marathon Oil, an integrated oil firm that benefited from its mid-continent refining capabilities, which play a key role in domestic oil and gas production.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Natural Resources Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 29, 2012 | ||
| % of fund's | % of fund's net assets |
Chevron Corp. | 8.6 | 8.9 |
Occidental Petroleum Corp. | 7.4 | 5.5 |
Hess Corp. | 5.0 | 4.1 |
Schlumberger Ltd. | 4.6 | 5.6 |
Marathon Oil Corp. | 4.4 | 3.1 |
EOG Resources, Inc. | 3.9 | 0.0 |
National Oilwell Varco, Inc. | 3.8 | 1.9 |
Suncor Energy, Inc. | 3.1 | 0.4 |
Ensco International Ltd. ADR | 2.9 | 3.8 |
Marathon Petroleum Corp. | 2.7 | 2.4 |
| 46.4 | |
Top Industries (% of fund's net assets) | |||
As of February 29, 2012 | |||
| Oil, Gas & Consumable Fuels | 60.4% |
|
| Energy Equipment & Services | 21.2% |
|
| Metals & Mining | 13.8% |
|
| Chemicals | 2.1% |
|
| Containers & Packaging | 1.4% |
|
| All Others* | 1.1% |
|
As of August 31, 2011 | |||
| Oil, Gas & Consumable Fuels | 50.1% |
|
| Energy Equipment & Services | 27.1% |
|
| Metals & Mining | 17.9% |
|
| Chemicals | 1.6% |
|
| Containers & Packaging | 1.2% |
|
| All Others* | 2.1% |
|
* Includes short-term investments and net other assets. |
Annual Report
Natural Resources Portfolio
Investments February 29, 2012
Showing Percentage of Net Assets
Common Stocks - 99.5% | |||
Shares | Value | ||
CHEMICALS - 2.1% | |||
Specialty Chemicals - 2.1% | |||
LyondellBasell Industries NV Class A | 679,600 | $ 29,345,128 | |
CONSTRUCTION & ENGINEERING - 0.6% | |||
Construction & Engineering - 0.6% | |||
Foster Wheeler AG (a) | 328,800 | 8,098,344 | |
CONTAINERS & PACKAGING - 1.4% | |||
Metal & Glass Containers - 1.4% | |||
Ball Corp. | 232,300 | 9,310,584 | |
Crown Holdings, Inc. (a) | 289,100 | 10,688,027 | |
| 19,998,611 | ||
ENERGY EQUIPMENT & SERVICES - 21.2% | |||
Oil & Gas Drilling - 6.8% | |||
Discovery Offshore S.A. (a)(e) | 1,522,800 | 2,655,880 | |
Ensco International Ltd. ADR | 715,900 | 41,736,970 | |
Helmerich & Payne, Inc. | 192,600 | 11,806,380 | |
Noble Corp. | 555,800 | 22,332,044 | |
Northern Offshore Ltd. | 945,000 | 2,307,414 | |
Ocean Rig UDW, Inc. (United States) | 426,700 | 7,424,580 | |
Parker Drilling Co. (a) | 989,400 | 6,262,902 | |
Vantage Drilling Co. (a) | 1,977,700 | 2,590,787 | |
| 97,116,957 | ||
Oil & Gas Equipment & Services - 14.4% | |||
Compagnie Generale de Geophysique SA (a) | 261,600 | 8,001,937 | |
Halliburton Co. | 973,300 | 35,613,047 | |
Key Energy Services, Inc. (a) | 281,100 | 4,795,566 | |
McDermott International, Inc. (a) | 574,500 | 7,502,970 | |
National Oilwell Varco, Inc. | 662,158 | 54,647,900 | |
Oil States International, Inc. (a) | 197,000 | 16,000,340 | |
Schlumberger Ltd. | 850,292 | 65,991,162 | |
Schoeller-Bleckmann Oilfield Equipment AG | 30,600 | 2,763,889 | |
Total Energy Services, Inc. | 100,000 | 1,904,714 | |
Weatherford International Ltd. (a) | 519,300 | 8,298,414 | |
Willbros Group, Inc. (a) | 289,600 | 1,216,320 | |
| 206,736,259 | ||
TOTAL ENERGY EQUIPMENT & SERVICES | 303,853,216 | ||
METALS & MINING - 13.8% | |||
Diversified Metals & Mining - 3.2% | |||
Anglo American PLC (United Kingdom) | 158,000 | 6,659,423 | |
Freeport-McMoRan Copper & Gold, Inc. | 557,434 | 23,724,391 | |
Kenmare Resources PLC (a) | 5,361,500 | 4,818,927 | |
Teck Resources Ltd. Class B (sub. vtg.) | 279,400 | 11,185,599 | |
| 46,388,340 | ||
Gold - 9.6% | |||
AngloGold Ashanti Ltd. sponsored ADR | 239,100 | 10,149,795 | |
Barrick Gold Corp. (d) | 408,700 | 19,550,203 | |
| |||
Shares | Value | ||
Gold Fields Ltd. sponsored ADR | 818,300 | $ 12,577,271 | |
Goldcorp, Inc. | 345,500 | 16,746,966 | |
Harmony Gold Mining Co. Ltd. sponsored ADR | 591,600 | 7,525,152 | |
IAMGOLD Corp. | 597,700 | 9,035,105 | |
Kinross Gold Corp. | 309,467 | 3,424,103 | |
Newcrest Mining Ltd. | 568,842 | 20,427,871 | |
Newmont Mining Corp. | 379,900 | 22,566,060 | |
Randgold Resources Ltd. sponsored ADR | 55,600 | 6,378,988 | |
Yamana Gold, Inc. | 533,300 | 9,257,913 | |
| 137,639,427 | ||
Precious Metals & Minerals - 1.0% | |||
Pan American Silver Corp. (d) | 134,500 | 3,369,225 | |
Silver Wheaton Corp. | 276,200 | 10,571,875 | |
| 13,941,100 | ||
TOTAL METALS & MINING | 197,968,867 | ||
OIL, GAS & CONSUMABLE FUELS - 60.4% | |||
Coal & Consumable Fuels - 2.0% | |||
Alpha Natural Resources, Inc. (a) | 1,084,322 | 20,125,016 | |
Peabody Energy Corp. | 254,700 | 8,883,936 | |
| 29,008,952 | ||
Integrated Oil & Gas - 24.6% | |||
Chevron Corp. | 1,123,500 | 122,596,319 | |
Hess Corp. | 1,095,900 | 71,145,828 | |
InterOil Corp. (a) | 25,000 | 1,502,500 | |
Murphy Oil Corp. | 91,200 | 5,831,328 | |
Occidental Petroleum Corp. | 1,010,300 | 105,445,011 | |
Suncor Energy, Inc. | 1,253,000 | 45,098,631 | |
| 351,619,617 | ||
Oil & Gas Exploration & Production - 25.1% | |||
Anadarko Petroleum Corp. | 31,100 | 2,616,132 | |
Apache Corp. | 319,200 | 34,451,256 | |
Bankers Petroleum Ltd. (a) | 1,449,300 | 7,146,551 | |
Cabot Oil & Gas Corp. | 398,400 | 13,896,192 | |
Canadian Natural Resources Ltd. (d) | 178,100 | 6,610,027 | |
Cobalt International Energy, Inc. (a) | 329,900 | 9,916,794 | |
Concho Resources, Inc. (a) | 13,000 | 1,388,920 | |
EOG Resources, Inc. | 485,100 | 55,233,486 | |
EQT Corp. | 221,900 | 11,765,138 | |
EV Energy Partners LP | 143,700 | 10,222,818 | |
EXCO Resources, Inc. (d) | 132,800 | 946,864 | |
Gran Tierra Energy, Inc. (Canada) (a) | 2,394,300 | 13,911,206 | |
Magnum Hunter Resources Corp. (d) | 245,600 | 1,699,552 | |
Marathon Oil Corp. | 1,844,900 | 62,523,661 | |
Noble Energy, Inc. | 235,000 | 22,947,750 | |
OGX Petroleo e Gas Participacoes SA (a) | 142,500 | 1,410,521 | |
Pacific Rubiales Energy Corp. | 147,300 | 4,276,188 | |
Painted Pony Petroleum Ltd. (a)(e) | 9,500 | 85,722 | |
Pioneer Natural Resources Co. | 308,700 | 33,845,868 | |
Plains Exploration & Production Co. (a) | 173,800 | 7,659,366 | |
QEP Resources, Inc. | 131,500 | 4,489,410 | |
Common Stocks - continued | |||
Shares | Value | ||
OIL, GAS & CONSUMABLE FUELS - CONTINUED | |||
Oil & Gas Exploration & Production - continued | |||
Rosetta Resources, Inc. (a) | 70,700 | $ 3,608,528 | |
SM Energy Co. | 346,800 | 27,300,096 | |
Stone Energy Corp. (a) | 101,000 | 3,226,950 | |
Swift Energy Co. (a) | 131,500 | 3,948,945 | |
WPX Energy, Inc. | 727,100 | 13,204,136 | |
| 358,332,077 | ||
Oil & Gas Refining & Marketing - 7.8% | |||
CVR Energy, Inc. (a) | 440,300 | 11,980,563 | |
HollyFrontier Corp. | 803,204 | 26,208,547 | |
Marathon Petroleum Corp. | 929,100 | 38,604,105 | |
Tesoro Corp. (a) | 502,700 | 13,336,631 | |
Valero Energy Corp. | 889,800 | 21,791,202 | |
| 111,921,048 | ||
Oil & Gas Storage & Transport - 0.9% | |||
Atlas Energy LP | 41,700 | 1,153,839 | |
Atlas Pipeline Partners, LP | 211,900 | 7,829,705 | |
Cheniere Energy, Inc. (a) | 247,900 | 3,728,416 | |
| 12,711,960 | ||
TOTAL OIL, GAS & CONSUMABLE FUELS | 863,593,654 | ||
TOTAL COMMON STOCKS (Cost $1,237,535,738) |
| ||
Money Market Funds - 2.6% | |||
Shares | Value | ||
Fidelity Cash Central Fund, 0.12% (b) | 6,945,214 | $ 6,945,214 | |
Fidelity Securities Lending Cash Central Fund, 0.12% (b)(c) | 30,160,630 | 30,160,630 | |
TOTAL MONEY MARKET FUNDS (Cost $37,105,844) |
| ||
TOTAL INVESTMENT PORTFOLIO - 102.1% (Cost $1,274,641,582) | 1,459,963,664 | |
NET OTHER ASSETS (LIABILITIES) - (2.1)% | (29,383,154) | |
NET ASSETS - 100% | $ 1,430,580,510 | |
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
(e) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the end of the period, the value of these securities amounted to $2,741,602 or 0.2% of net assets. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 8,559 |
Fidelity Securities Lending Cash Central Fund | 216,544 |
Total | $ 225,103 |
Other Information |
The following is a summary of the inputs used, as of February 29, 2012, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities: | ||||
Common Stocks | $ 1,422,857,820 | $ 1,414,855,883 | $ 8,001,937 | $ - |
Money Market Funds | 37,105,844 | 37,105,844 | - | - |
Total Investments in Securities: | $ 1,459,963,664 | $ 1,451,961,727 | $ 8,001,937 | $ - |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 69.9% |
Canada | 10.5% |
Curacao | 4.6% |
United Kingdom | 3.4% |
Switzerland | 2.8% |
South Africa | 2.1% |
Netherlands | 2.1% |
Australia | 1.4% |
Others (Individually Less Than 1%) | 3.2% |
| 100.0% |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Natural Resources Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2012 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $28,299,841) - See accompanying schedule: Unaffiliated issuers (cost $1,237,535,738) | $ 1,422,857,820 |
|
Fidelity Central Funds (cost $37,105,844) | 37,105,844 |
|
Total Investments (cost $1,274,641,582) |
| $ 1,459,963,664 |
Receivable for investments sold | 10,547,090 | |
Receivable for fund shares sold | 2,367,896 | |
Dividends receivable | 2,047,906 | |
Distributions receivable from Fidelity Central Funds | 6,158 | |
Prepaid expenses | 3,557 | |
Other receivables | 6,095 | |
Total assets | 1,474,942,366 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 10,643,089 | |
Payable for fund shares redeemed | 2,528,470 | |
Accrued management fee | 668,974 | |
Other affiliated payables | 323,908 | |
Other payables and accrued expenses | 36,785 | |
Collateral on securities loaned, at value | 30,160,630 | |
Total liabilities | 44,361,856 | |
|
|
|
Net Assets | $ 1,430,580,510 | |
Net Assets consist of: |
| |
Paid in capital | $ 1,341,890,823 | |
Distributions in excess of net investment income | (7,311,274) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (89,325,902) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 185,326,863 | |
Net Assets, for 40,462,718 shares outstanding | $ 1,430,580,510 | |
Net Asset Value, offering price and redemption price per share ($1,430,580,510 ÷ 40,462,718 shares) | $ 35.36 | |
Statement of Operations
| Year ended February 29, 2012 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 23,007,194 |
Interest |
| 27,168 |
Income from Fidelity Central Funds |
| 225,103 |
Total income |
| 23,259,465 |
|
|
|
Expenses | ||
Management fee | $ 9,101,723 | |
Transfer agent fees | 3,957,288 | |
Accounting and security lending fees | 511,915 | |
Custodian fees and expenses | 44,464 | |
Independent trustees' compensation | 9,690 | |
Registration fees | 80,044 | |
Audit | 52,862 | |
Legal | 5,973 | |
Interest | 4,879 | |
Miscellaneous | 16,660 | |
Total expenses before reductions | 13,785,498 | |
Expense reductions | (51,491) | 13,734,007 |
Net investment income (loss) | 9,525,458 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 94,917,650 | |
Foreign currency transactions | 208,563 | |
Total net realized gain (loss) |
| 95,126,213 |
Change in net unrealized appreciation (depreciation) on: Investment securities | (309,451,525) | |
Assets and liabilities in foreign currencies | 3,703 | |
Total change in net unrealized appreciation (depreciation) |
| (309,447,822) |
Net gain (loss) | (214,321,609) | |
Net increase (decrease) in net assets resulting from operations | $ (204,796,151) | |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fund Name
Financial Statements - continued
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 9,525,458 | $ 5,705,581 |
Net realized gain (loss) | 95,126,213 | 213,675,865 |
Change in net unrealized appreciation (depreciation) | (309,447,822) | 324,576,047 |
Net increase (decrease) in net assets resulting from operations | (204,796,151) | 543,957,493 |
Distributions to shareholders from net investment income | (11,394,017) | (5,328,489) |
Distributions to shareholders from net realized gain | (3,192,087) | (4,021,778) |
Total distributions | (14,586,104) | (9,350,267) |
Share transactions | 534,526,277 | 511,028,949 |
Reinvestment of distributions | 13,954,763 | 8,986,769 |
Cost of shares redeemed | (870,401,869) | (567,758,885) |
Net increase (decrease) in net assets resulting from share transactions | (321,920,829) | (47,743,167) |
Redemption fees | 119,543 | 42,708 |
Total increase (decrease) in net assets | (541,183,541) | 486,906,767 |
|
|
|
Net Assets | ||
Beginning of period | 1,971,764,051 | 1,484,857,284 |
End of period (including distributions in excess of net investment income of $7,311,274 and undistributed net investment income of $458,791, respectively) | $ 1,430,580,510 | $ 1,971,764,051 |
Other Information Shares | ||
Sold | 14,620,404 | 16,035,557 |
Issued in reinvestment of distributions | 409,738 | 269,618 |
Redeemed | (25,039,254) | (19,511,353) |
Net increase (decrease) | (10,009,112) | (3,206,178) |
Financial Highlights
Years ended February 28, | 2012 G | 2011 | 2010 | 2009 | 2008 G |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 39.07 | $ 27.66 | $ 17.24 | $ 39.00 | $ 28.75 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .20 | .12 | - B | .01 | .03 |
Net realized and unrealized gain (loss) | (3.59) | 11.49 | 10.54 | (21.29) | 11.74 |
Total from investment operations | (3.39) | 11.61 | 10.54 | (21.28) | 11.77 |
Distributions from net investment income | (.26) | (.11) | (.02) | (.01) | (.03) |
Distributions from net realized gain | (.06) | (.09) | (.10) | (.48) | (1.50) |
Total distributions | (.32) | (.20) | (.12) | (.49) | (1.53) |
Redemption fees added to paid in capital C | - B | - B | - B | .01 | .01 |
Net asset value, end of period | $ 35.36 | $ 39.07 | $ 27.66 | $ 17.24 | $ 39.00 |
Total Return A | (8.63)% | 42.09% | 61.13% | (55.24)% | 41.62% |
Ratios to Average Net Assets D,F |
|
|
|
|
|
Expenses before reductions | .84% | .88% | .93% | .85% | .85% |
Expenses net of fee waivers, if any | .84% | .88% | .93% | .85% | .85% |
Expenses net of all reductions | .84% | .87% | .92% | .84% | .85% |
Net investment income (loss) | .58% | .39% | (.01)% | .03% | .09% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 1,430,581 | $ 1,971,764 | $ 1,484,857 | $ 923,110 | $ 2,428,375 |
Portfolio turnover rate E | 88% | 113% | 85% | 136% | 44% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown. B Amount represents less than $.01 per share. C Calculated based on average shares outstanding during the period. D Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. G For the year ended February 29. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended February 29, 2012
1. Organization.
Energy Portfolio, Energy Service Portfolio, Natural Gas Portfolio, and Natural Resources Portfolio (the Funds) are funds of Fidelity Select Portfolios (the Trust). Energy Portfolio, Energy Service Portfolio and Natural Gas Portfolio are non-diversified funds. The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Funds invest primarily in securities of companies whose principal business activities fall within specific industries. Each Fund is authorized to issue an unlimited number of shares. The Natural Resources Portfolio may also invest in certain precious metals. Certain Funds' investments in emerging markets can be subject to social, economic, regulatory, and political uncertainties and can be extremely volatile.
2. Investments in Fidelity Central Funds.
The Funds invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Funds' Schedules of Investments list each of the Fidelity Central Funds held as of period end, if any, as an investment of each Fund, but do not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, each Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Funds' Report of Independent Registered Public Accounting Firm, are available on the SEC web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Funds:
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. Each Fund uses independent pricing services approved by the Board of Trustees to value their investments. When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include market or security specific events. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The value used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
Each Fund categorizes the inputs to valuation techniques used to value their investments into a disclosure hierarchy consisting of three levels as shown below:
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the Fund's own assumptions based on the best information available)
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level, as of February 29, 2012, is included at the end of each Fund's Schedule of Investments. Valuation techniques used to value each Fund's investments by major category are as follows:
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when significant market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-traded funds (ETFs) and certain indexes as well as quoted prices for similar securities are used and are categorized as Level 2 in the hierarchy in these circumstances. Utilizing these techniques may result in transfers between Level 1 and Level 2. For restricted equity securities and private placements where observable inputs are limited, assumptions about market activity and risk are used and are categorized as Level 3 in the hierarchy.
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 in the hierarchy.
Annual Report
3. Significant Accounting Policies - continued
New Accounting Pronouncements. In May 2011, the Financial Accounting Standards Board issued Accounting Standard Update No. 2011-04, Fair Value Measurement (Topic 820) - Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. The update is effective during interim and annual periods beginning after December 15, 2011 and will result in additional disclosure for transfers between levels as well as expanded disclosure for securities categorized as Level 3 under the fair value hierarchy.
In December 2011, the Financial Accounting Standards Board issued Accounting Standard Update No. 2011-11, Disclosures about Offsetting Assets and Liabilities. The update creates new disclosure requirements requiring entities to disclose both gross and net information for derivatives and other financial instruments that are either offset in the Statement of Assets and Liabilities or subject to an enforceable master netting arrangement or similar agreement. The disclosure requirements are effective for interim and annual reporting periods beginning on or after January 1, 2013. Management is currently evaluating the impact of the update's adoption on the Fund's financial statement disclosures.
Foreign Currency. The Funds may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Funds' investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Funds are informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Funds estimate the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, each Fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for income taxes is required. As of February 29, 2012, each Fund did not have any unrecognized tax benefits in the financial statements; nor is each Fund aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. Each Fund files a U.S. federal tax return, in addition to state and local tax returns as required. A fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction. Foreign taxes are provided for based on each Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are declared and recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. In addition, the Energy Portfolio and the Natural Resources Portfolio claimed a portion of the payment made to redeeming shareholders as a distribution for income tax purposes.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, passive foreign investment companies (PFIC), partnerships, deferred trustees compensation, net operating losses, capital loss carry forwards and losses deferred due to wash sales and excise tax regulations.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows for each Fund:
| Tax cost | Gross unrealized | Gross unrealized | Net unrealized |
Energy Portfolio | $ 1,985,850,163 | $ 592,867,943 | $ (72,193,898) | $ 520,674,045 |
Energy Service Portfolio | 1,125,573,026 | 301,002,625 | (34,334,671) | 266,667,954 |
Natural Gas Portfolio | 705,787,761 | 88,957,610 | (46,232,575) | 42,725,035 |
Natural Resources Portfolio | 1,283,821,954 | 235,241,917 | (59,100,207) | 176,141,710 |
The tax-based components of distributable earnings as of period end were as follows for each Fund:
| Undistributed | Undistributed | Capital loss | Net unrealized |
Energy Portfolio | $ - | $ 3,342,121 | - | $ 520,680,727 |
Energy Service Portfolio | - | - | - | 266,667,954 |
Natural Gas Portfolio | 2,260,927 | - | (428,371,682) | 42,694,161 |
Natural Resources Portfolio | - | - | (47,558,563) | 176,146,491 |
Capital loss carryforwards are only available to offset future capital gains of the Funds to the extent provided by regulations and may be limited. Under the Regulated Investment Company Modernization Act of 2010 (the Act), the Funds are permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period and such capital losses are required to be used prior to any losses that expire. Capital loss carryforwards were as follows:
| Fiscal year of expiration | |||
| 2017 | 2018 | 2019 | Total with expiration |
Natural Gas Portfolio | $ (25,933,522) | $ (193,661,853) | $ (208,776,307) | $ (428,371,682) |
Natural Resources Portfolio | - | (47,558,563) | - | (47,558,563) |
In addition, certain of the Funds intend to elect to defer to the fiscal year ending February 28, 2013 capital losses recognized during the period November 1, 2011 to February 29, 2012. Loss deferrals were as follows:
| Capital losses |
Energy Service Portfolio | $ (24,929,036) |
Natural Gas Portfolio | (26,489,786) |
Natural Resources Portfolio | (32,586,967) |
The tax character of distributions paid was as follows:
February 29, 2012 | Ordinary Income |
Energy Portfolio | $ 19,974,612 |
Natural Gas Portfolio | 7,350,892 |
Natural Resources Portfolio | 14,586,104 |
February 28, 2011 | Ordinary Income |
Energy Portfolio | $ 10,965,367 |
Natural Gas Portfolio | 9,200,887 |
Natural Resources Portfolio | 9,350,267 |
Annual Report
3. Significant Accounting Policies - continued
Trading (Redemption) Fees. Shares held by investors in the Funds less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Funds and accounted for as an addition to paid in capital.
4. Operating Policies.
Delayed Delivery Transactions and When-Issued Securities. During the period, the Funds transacted in securities on a delayed delivery or when-issued basis. Payment and delivery may take place after the customary settlement period for that security. The price of the underlying securities and the date when the securities will be delivered and paid for are fixed at the time the transaction is negotiated. During the time a delayed delivery sell is outstanding, the contract is marked-to-market daily and equivalent deliverable securities are held for the transaction. The securities purchased on a delayed delivery or when-issued basis are identified as such in each applicable Fund's Schedule of Investments. The Funds may receive compensation for interest forgone in the purchase of a delayed delivery or when-issued security. With respect to purchase commitments, each applicable Fund identifies securities as segregated in its records with a value at least equal to the amount of the commitment. Losses may arise due to changes in the value of the underlying securities or if the counterparty does not perform under the contract's terms, or if the issuer does not issue the securities due to political, economic, or other factors.
Restricted Securities. The Funds may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities is included at the end of each applicable Fund's Schedule of Investments.
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, are noted in the table below.
| Purchases ($) | Sales ($) |
Energy Portfolio | 2,327,120,591 | 2,545,801,724 |
Energy Service Portfolio | 1,164,368,431 | 1,557,221,645 |
Natural Gas Portfolio | 560,811,214 | 704,598,406 |
Natural Resources Portfolio | 1,456,093,505 | 1,756,207,479 |
6. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the Funds with investment management related services for which the Funds pay a monthly management fee. The management fee is the sum of an individual fund fee rate and an annualized group fee rate. The individual fund fee rate is applied to each Fund's average net assets. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, each Fund's annual management fee rate expressed as a percentage of each Fund's average net assets was as follows:
| Individual Rate | Group Rate | Total |
Energy Portfolio | .30% | .26% | .56% |
Energy Service Portfolio | .30% | .26% | .56% |
Natural Gas Portfolio | .30% | .26% | .56% |
Natural Resources Portfolio | .30% | .26% | .56% |
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the Funds' transfer, dividend disbursing and shareholder servicing agent. FIIOC receives account fees and asset-based fees that vary according to account size and type of account. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, transfer agent fees were equivalent to the following annual rates expressed as a percentage of average net assets:
Energy Portfolio | .23% |
Energy Service Portfolio | .21% |
Natural Gas Portfolio | .26% |
Natural Resources Portfolio | .24% |
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains each Fund's accounting records. The accounting fee is based on the level of average net assets for each month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Annual Report
Notes to Financial Statements - continued
6. 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 |
Energy Portfolio | $ 19,306 |
Energy Service Portfolio | 16,689 |
Natural Gas Portfolio | 9,343 |
Natural Resources Portfolio | 12,225 |
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 Loan | Weighted Average | Interest |
Energy Portfolio | Borrower | $ 9,134,047 | .34% | $ 5,555 |
Energy Service Portfolio | Borrower | 15,077,955 | .36% | 6,669 |
Natural Gas Portfolio | Borrower | 6,050,375 | .35% | 948 |
Natural Resources Portfolio | Borrower | 8,380,459 | .34% | 4,879 |
7. Committed Line of Credit.
Certain Funds participate with other funds managed by FMR or an affiliate in a $4.0 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The participating funds have agreed to pay commitment fees on their pro-rata portion of the line of credit, which are reflected in Miscellaneous expenses on the Statement of Operations, and are as follows:
Energy Portfolio | $ 7,647 |
Energy Service Portfolio | 4,855 |
Natural Gas Portfolio | 2,702 |
Natural Resources Portfolio | 4,994 |
During the period, there were no borrowings on this line of credit.
8. Security Lending.
Certain Funds lend portfolio securities through a lending agent from time to time in order to earn additional income. For equity securities, a lending agent is used and may loan securities to certain qualified borrowers, including Fidelity Capital Markets (FCM), a broker-dealer affiliated with the Funds. On the settlement date of the loan, each applicable Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Funds and any additional required collateral is delivered to the Funds on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on each applicable Fund's Statement of Assets and Liabilities. At period end, there were no security loans outstanding with FCM. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented on each applicable Fund's Statement of Operations as a component of income from Fidelity Central Funds. Security lending activity as of and during the period was as follows:
| Total Security | Security Lending |
Energy Portfolio | $ 277,715 | $ - |
Energy Service Portfolio | 113,438 | - |
Natural Gas Portfolio | 561,266 | 6,286 |
Natural Resources Portfolio | 216,544 | - |
Annual Report
9. Bank Borrowings.
Each Fund is permitted to have bank borrowings for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity requirements. Each Fund has established borrowing arrangements with certain banks. The interest rate on the borrowings is the bank's base rate, as revised from time to time. At period end, there were no bank borrowings outstanding. Each applicable Fund's activity in this program during the period for which loans were outstanding was as follows:
| Average Loan | Weighted Average Interest Rate | Interest Expense |
Energy Portfolio | $ 788,000 | .57% | $ 37 |
10. Expense Reductions.
Many of the brokers with whom FMR places trades on behalf of certain Funds provided services to these Funds in addition to trade execution. These services included payments of expenses on behalf of each applicable Fund. All of the applicable expense reductions are noted in the table below.
| Brokerage Service | Custody |
Energy Portfolio | $ 78,737 | $ - |
Energy Service Portfolio | 67,767 | 10 |
Natural Gas Portfolio | 20,187 | - |
Natural Resources Portfolio | 51,491 | - |
11. Other.
The Funds' organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Funds. In the normal course of business, the Funds may also enter into contracts that provide general indemnifications. The Funds' maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Funds. The risk of material loss from such claims is considered remote.
Annual Report
Report of Independent Registered Public Accounting Firm
To the Trustees of Fidelity Select Portfolios and the Shareholders of Energy Portfolio, Energy Service Portfolio, Natural Gas Portfolio and Natural Resources Portfolio:
In our opinion, the accompanying statements of assets and liabilities, including the schedules of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Energy Portfolio, Energy Service Portfolio, Natural Gas Portfolio and Natural Resources Portfolio (funds of Fidelity Select Portfolios) at February 29, 2012, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fidelity Select Portfolios' management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at February 29, 2012 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 11, 2012
Annual Report
Trustees and Officers
The Trustees, Members of the Advisory Board, and executive officers of the trust and funds, as applicable, are listed below. The Board of Trustees governs each fund and is responsible for protecting the interests of shareholders. The Trustees are experienced executives who meet periodically throughout the year to oversee each fund's activities, review contractual arrangements with companies that provide services to each fund, oversee management of the risks associated with such activities and contractual arrangements, and review each fund's performance. Except for James C. Curvey, each of the Trustees oversees 226 funds advised by FMR or an affiliate. Mr. Curvey oversees 430 funds advised by FMR or an affiliate.
The Trustees hold office without limit in time except that (a) any Trustee may resign; (b) any Trustee may be removed by written instrument, signed by at least two-thirds of the number of Trustees prior to such removal; (c) any Trustee who requests to be retired or who has become incapacitated by illness or injury may be retired by written instrument signed by a majority of the other Trustees; and (d) any Trustee may be removed at any special meeting of shareholders by a two-thirds vote of the outstanding voting securities of the trust. Each Trustee who is not an interested person (as defined in the 1940 Act) (Independent Trustee), shall retire not later than the last day of the calendar year in which his or her 75th birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. The executive officers and Advisory Board Members hold office without limit in time, except that any officer and Advisory Board Member may resign or may be removed by a vote of a majority of the Trustees at any regular meeting or any special meeting of the Trustees. Except as indicated, each individual has held the office shown or other offices in the same company for the past five years.
Experience, Skills, Attributes, and Qualifications of the Funds' Trustees. The Governance and Nominating Committee has adopted a statement of policy that describes the experience, qualifications, attributes, and skills that are necessary and desirable for potential Independent Trustee candidates (Statement of Policy). The Board believes that each Trustee satisfied at the time he or she was initially elected or appointed a Trustee, and continues to satisfy, the standards contemplated by the Statement of Policy. The Governance and Nominating Committee also engages professional search firms to help identify potential Independent Trustee candidates who have the experience, qualifications, attributes, and skills consistent with the Statement of Policy. From time to time, additional criteria based on the composition and skills of the current Independent Trustees, as well as experience or skills that may be appropriate in light of future changes to board composition, business conditions, and regulatory or other developments, have also been considered by the professional search firms and the Governance and Nominating Committee. In addition, the Board takes into account the Trustees' commitment and participation in Board and committee meetings, as well as their leadership of standing and ad hoc committees throughout their tenure.
In determining that a particular Trustee was and continues to be qualified to serve as a Trustee, the Board has considered a variety of criteria, none of which, in isolation, was controlling. The Board believes that, collectively, the Trustees have balanced and diverse experience, qualifications, attributes, and skills, which allow the Board to operate effectively in governing each fund and protecting the interests of shareholders. Information about the specific experience, skills, attributes, and qualifications of each Trustee, which in each case led to the Board's conclusion that the Trustee should serve (or continue to serve) as a trustee of the funds, is provided below.
Board Structure and Oversight Function. James C. Curvey is an interested person (as defined in the 1940 Act) and currently serves as Acting Chairman. The Trustees have determined that an interested Chairman is appropriate and benefits shareholders because an interested Chairman has a personal and professional stake in the quality and continuity of services provided to the funds. Independent Trustees exercise their informed business judgment to appoint an individual of their choosing to serve as Chairman, regardless of whether the Trustee happens to be independent or a member of management. The Independent Trustees have determined that they can act independently and effectively without having an Independent Trustee serve as Chairman and that a key structural component for assuring that they are in a position to do so is for the Independent Trustees to constitute a substantial majority for the Board. The Independent Trustees also regularly meet in executive session. Ned C. Lautenbach serves as Chairman of the Independent Trustees and as such (i) acts as a liaison between the Independent Trustees and management with respect to matters important to the Independent Trustees and (ii) with management prepares agendas for Board meetings.
Fidelity funds are overseen by different Boards of Trustees. The funds' Board oversees Fidelity's equity and high income funds and another Board oversees Fidelity's investment-grade bond, money market, and asset allocation funds. The asset allocation funds may invest in Fidelity funds overseen by the funds' Board. The use of separate Boards, each with its own committee structure, allows the Trustees of each group of Fidelity funds to focus on the unique issues of the funds they oversee, including common research, investment, and operational issues. On occasion, the separate Boards establish joint committees to address issues of overlapping consequences for the Fidelity funds overseen by each Board.
The Trustees operate using a system of committees to facilitate the timely and efficient consideration of all matters of importance to the Trustees, each fund, and fund shareholders and to facilitate compliance with legal and regulatory requirements and oversight of the funds' activities and associated risks. The Board, acting through its committees, has charged FMR and its affiliates with (i) identifying events or circumstances the occurrence of which could have demonstrably adverse effects on the funds' business and/or reputation; (ii) implementing processes and controls to lessen the possibility that such events or circumstances occur or to mitigate the effects of such events or circumstances if they do occur; and (iii) creating and maintaining a system designed to evaluate continuously business and market conditions in order to facilitate the identification and implementation processes described in (i) and (ii) above. Because the day-to-day operations and activities of the funds are carried out by or through FMR, its affiliates and other service providers, the funds' exposure to risks is mitigated but not eliminated by the processes overseen by the Trustees. While each of the Board's committees has responsibility for overseeing different aspects of the funds' activities, oversight is exercised primarily through the Operations, Audit, and Compliance Committees. In addition, the Independent Trustees have worked with FMR to enhance the Board's oversight of investment and financial risks, legal and regulatory risks, technology risks, and operational risks, including the development of additional risk reporting to the Board. For example, a working group comprised of Independent Trustees and FMR has worked and continues to work to review the Fidelity funds' valuation-related activities, reporting and risk management. Appropriate personnel, including but not limited to the funds' Chief Compliance Officer (CCO), FMR's internal auditor, the independent accountants, the funds' Treasurer and portfolio management personnel, make periodic reports to the Board's committees, as appropriate, including an annual review of FMR's risk management program for the Fidelity funds. The responsibilities of each standing committee, including their oversight responsibilities, are described further under "Standing Committees of the Funds' Trustees."
Annual Report
Trustees and Officers - continued
The funds' Statement of Additional Information (SAI) includes more information about the Trustees. To request a free copy, call Fidelity at 1-800-544-8544.
Interested Trustees*:
Correspondence intended for each Trustee who is an interested person may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupations and Other Relevant Experience+ | |
James C. Curvey (76) | |
| Year of Election or Appointment: 2007 Mr. Curvey is Trustee and Acting Chairman of the Board of Trustees of certain Trusts. Mr. Curvey also serves as Trustee (2007-present) of other investment companies advised by FMR. Mr. Curvey is a Director of Fidelity Investments Money Management, Inc. (2009-present), Director of Fidelity Research & Analysis Co. (2009-present) and Director of FMR and FMR Co., Inc. (2007-present). Mr. Curvey is also Vice Chairman (2007-present) and Director of FMR LLC. In addition, Mr. Curvey serves as an Overseer for the Boston Symphony Orchestra and a member of the Trustees of Villanova University. Previously, Mr. Curvey was the Vice Chairman (2006-2007) and Director (2000-2007) of FMR Corp. |
Ronald P. O'Hanley (55) | |
| Year of Election or Appointment: 2011 |
* Trustees have been determined to be "Interested Trustees" by virtue of, among other things, their affiliation with the trust or various entities under common control with FMR.
+ The information above includes each Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to each Trustee's qualifications to serve as a Trustee, which led to the conclusion that each Trustee should serve as a Trustee for each fund.
Independent Trustees:
Correspondence intended for each Independent Trustee (that is, the Trustees other than the Interested Trustees) may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235.
Name, Age; Principal Occupations and Other Relevant Experience+ | |
Dennis J. Dirks (63) | |
| Year of Election or Appointment: 2005 Prior to his retirement in May 2003, Mr. Dirks was Chief Operating Officer and a member of the Board of The Depository Trust & Clearing Corporation (DTCC). He also served as President, Chief Operating Officer, and Board member of The Depository Trust Company (DTC) and President and Board member of the National Securities Clearing Corporation (NSCC). In addition, Mr. Dirks served as Chief Executive Officer and Board member of the Government Securities Clearing Corporation, Chief Executive Officer and Board member of the Mortgage-Backed Securities Clearing Corporation, as a Trustee and a member of the Finance Committee of Manhattan College (2005-2008), and as a Trustee and a member of the Finance Committee of AHRC of Nassau County (2006-2008). Mr. Dirks is a member of the Independent Directors Council (IDC) Governing Council (2010-present) and Board of Directors for The Brookville Center for Children's Services, Inc. (2009-present). |
Alan J. Lacy (58) | |
| Year of Election or Appointment: 2008 Mr. Lacy serves as Senior Adviser (2007-present) of Oak Hill Capital Partners, L.P. (private equity). Mr. Lacy also served as Chief Executive Officer (2000-2005) and Vice Chairman (2005-2006) of Sears Holdings Corporation and Sears, Roebuck and Co. (retail). In addition, Mr. Lacy serves as a member of the Board of Directors of Dave & Buster's, Inc. (restaurant and entertainment complexes, 2010-present), The Hillman Companies, Inc. (hardware wholesalers, 2010-present), and Bristol-Myers Squibb Company (global pharmaceuticals, 2007-present). Mr. Lacy is a member of the Board of Trustees of The National Parks Conservation Association (2006-present). Previously, Mr. Lacy served as Chairman of the Board of Trustees of the National Parks Conservation Association (2008-2011) and as a member of the Board of Directors for the Western Union Company (global money transfer, 2006-2011). |
Ned C. Lautenbach (68) | |
| Year of Election or Appointment: 2000 Mr. Lautenbach is Chairman of the Independent Trustees of the Equity and High Income Funds (2006-present). Mr. Lautenbach currently serves as the Lead Director of the Eaton Corporation Board of Directors (diversified industrial, 1997-present). Mr. Lautenbach is also a member of the Board of Directors of the Philharmonic Center for the Arts in Naples, Florida (1999-present); a member of the Board of Trustees of Fairfield University (2005-present); and a member of the Council on Foreign Relations (1994-present). Previously, Mr. Lautenbach was a Partner/Advisory Partner at Clayton, Dubilier & Rice, LLC (private equity investment, 1998-2010), as well as a Director of Sony Corporation (2006-2007). |
Joseph Mauriello (67) | |
| Year of Election or Appointment: 2008 Prior to his retirement in January 2006, Mr. Mauriello served in numerous senior management positions including Deputy Chairman and Chief Operating Officer (2004-2005), and Vice Chairman of Financial Services (2002-2004) of KPMG LLP US (professional services, 1965-2005). Mr. Mauriello currently serves as a member of the Board of Directors of XL Group plc. (global insurance and re-insurance, 2006-present) and of Arcadia Resources Inc. (health care services and products, 2007-present). Previously, Mr. Mauriello served as a Director of the Hamilton Funds of the Bank of New York (2006-2007). |
Robert W. Selander (61) | |
| Year of Election or Appointment: 2011 Previously, Mr. Selander served as a Member of the Advisory Board of Fidelity's Equity and High Income Funds (2011), Executive Vice Chairman (2010), Chief Executive Officer (2009-2010), and President and Chief Executive Officer (1997-2009) of Mastercard, Inc. |
Cornelia M. Small (67) | |
| Year of Election or Appointment: 2005 Ms. Small is a member of the Board of Directors of the Teagle Foundation (2009-present). Ms. Small is also a member of the Investment Committee, and Chair (2008-present) and a member of the Board of Trustees of Smith College. In addition, Ms. Small serves on the Investment Committee of the Berkshire Taconic Community Foundation (2008-present). Previously, Ms. Small served as Chairperson of the Investment Committee (2002-2008) of Smith College. In addition, Ms. Small served as Chief Investment Officer, Director of Global Equity Investments, and a member of the Board of Directors of Scudder, Stevens & Clark and Scudder Kemper Investments. |
William S. Stavropoulos (72) | |
| Year of Election or Appointment: 2001 Mr. Stavropoulos is Vice Chairman of the Independent Trustees of the Equity and High Income Funds (2006-present). Mr. Stavropoulos serves as President and Founder of the Michigan Baseball Foundation, the Great Lakes Loons (2007-present). Mr. Stavropoulos is Chairman Emeritus of the Board of Directors of The Dow Chemical Company, where he previously served in numerous senior management positions, including President, CEO (1995-2000; 2002-2004), Chairman of the Executive Committee (2000-2006), and as a member of the Board of Directors (1990-2006). Currently, Mr. Stavropoulos is Chairman of Univar (global distributor of commodity and specialty chemicals, 2010-present), a Director of Teradata Corporation (data warehousing and technology solutions, 2008-present), Chemical Financial Corporation, Maersk Inc. (industrial conglomerate), Tyco International, Inc. (multinational manufacturing and services, 2007-present), and a member of the Advisory Board for Metalmark Capital (private equity investment, 2005-present). Mr. Stavropoulos is a special advisor to Clayton, Dubilier & Rice, LLC (private equity investment). In addition, Mr. Stavropoulos is a member of the University of Notre Dame Advisory Council for the College of Science. |
David M. Thomas (62) | |
| Year of Election or Appointment: 2008 Previously, Mr. Thomas served as Executive Chairman (2005-2006) and Chairman and Chief Executive Officer (2000-2005) of IMS Health, Inc. (pharmaceutical and healthcare information solutions). In addition, Mr. Thomas serves as a member of the Board of Directors of Fortune Brands, Inc. (consumer products), and Interpublic Group of Companies, Inc. (marketing communication, 2004-present). |
Michael E. Wiley (61) | |
| Year of Election or Appointment: 2008 Mr. Wiley also serves as a Director of Asia Pacific Exploration Consolidated (international oil and gas exploration and production, 2008-present). Mr. Wiley serves as a Director of Tesoro Corporation (independent oil refiner and marketer, 2005-present), and a Director of Bill Barrett Corporation (exploration and production, 2005-present). In addition, Mr. Wiley also serves as a Director of Post Oak Bank (privately-held bank, 2004-present). Previously, Mr. Wiley served as a member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-2010), as a Senior Energy Advisor of Katzenbach Partners, LLC (consulting, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production, 2001-2005). |
+ The information above includes each Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to each Trustee's qualifications to serve as a Trustee, which led to the conclusion that each Trustee should serve as a Trustee for each fund.
Advisory Board Members and Executive Officers:
Correspondence intended for each executive officer, Edward C. Johnson 3d, and Peter S. Lynch may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
Edward C. Johnson 3d (81) | |
| Year of Election or Appointment: 2011 Member of the Advisory Board of Fidelity's Equity and High Income Funds. Mr. Johnson serves as Chief Executive Officer, Chairman, and a Director of FMR LLC, and also serves as Chairman and Director of FIL Limited. Previously, Mr. Johnson served as a Trustee and Chairman of the Board of certain Fidelity Trusts, Chairman and a Director of FMR, Chairman and a Director of FMR Co., Inc., and President of FMR LLC (2006-2007). |
Peter S. Lynch (68) | |
| Year of Election or Appointment: 2003 Member of the Advisory Board of Fidelity's Equity and High Income Funds. Mr. Lynch is Vice Chairman and a Director of FMR and FMR Co., Inc. In addition, Mr. Lynch serves as a Trustee of Boston College and as the Chairman of the Inner-City Scholarship Fund. Previously, Mr. Lynch served on the Special Olympics International Board of Directors (1997-2006). |
Kenneth B. Robins (42) | |
| Year of Election or Appointment: 2008 President and Treasurer of Fidelity's Equity and High Income Funds. Mr. Robins also serves as President and Treasurer (2010-present) and Assistant Treasurer (2009-present) of other Fidelity funds and is an employee of Fidelity Investments (2004-present). Previously, Mr. Robins served as Deputy Treasurer of the Fidelity funds (2005-2008) and Treasurer and Chief Financial Officer of The North Carolina Capital Management Trust: Cash and Term Portfolios (2006-2008). |
Brian B. Hogan (47) | |
| Year of Election or Appointment: 2009 Vice President of Equity and High Income Funds. Mr. Hogan also serves as President of FMR's Equity Division (2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager. |
Christopher S. Bartel (40) | |
| Year of Election or Appointment: 2009 Vice President of Fidelity's Sector and Real Estate Equity Funds. Mr. Bartel also serves as a Director, President, and Chief Executive Officer of Fidelity Management & Research (Japan) Inc. (2012-present) and Senior Vice President of Global Equity Research (2010-present). Previously, Mr. Bartel served as Senior Vice President of Equity Research (2009-2010), Managing Director of Research (2006-2009), and an analyst and portfolio manager (2000-2006). |
Scott C. Goebel (44) | |
| Year of Election or Appointment: 2008 Secretary and Chief Legal Officer (CLO) of the Fidelity funds. Mr. Goebel also serves as Secretary of Fidelity Investments Money Management, Inc. (FIMM) (2010-present) and Fidelity Research and Analysis Company (FRAC) (2010-present); Secretary and CLO of The North Carolina Capital Management Trust: Cash and Term Portfolios (2008-present); General Counsel, Secretary, and Senior Vice President of FMR (2008-present) and FMR Co., Inc. (2008-present); employed by FMR LLC or an affiliate (2001-present); Chief Legal Officer of Fidelity Management & Research (Hong Kong) Limited (2008-present) and Assistant Secretary of Fidelity Management & Research (Japan) Inc. (2008-present), and Fidelity Management & Research (U.K.) Inc. (2008-present). Previously, Mr. Goebel served as Assistant Secretary of FIMM (2008-2010), FRAC (2008-2010), and the Funds (2007-2008) and as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (2005-2007). |
William C. Coffey (43) | |
| Year of Election or Appointment: 2009 Assistant Secretary of Fidelity's Equity and High Income Funds. Mr. Coffey also serves as Senior Vice President and Deputy General Counsel of FMR LLC (2010-present), and is an employee of Fidelity Investments. Previously, Mr. Coffey served as Vice President and Associate General Counsel of FMR LLC (2005-2009). |
Holly C. Laurent (57) | |
| Year of Election or Appointment: 2008 Anti-Money Laundering (AML) Officer of the Fidelity funds. Ms. Laurent also serves as AML Officer of The North Carolina Capital Management Trust: Cash and Term Portfolios (2008-present) and is an employee of Fidelity Investments. Previously, Ms. Laurent was Senior Vice President and Head of Legal for Fidelity Business Services India Pvt. Ltd. (2006-2008), and Senior Vice President, Deputy General Counsel and Group Head for FMR LLC (2005-2006). |
Christine Reynolds (53) | |
| Year of Election or Appointment: 2008 Chief Financial Officer of the Fidelity funds. Ms. Reynolds became President of Fidelity Pricing and Cash Management Services (FPCMS) in August 2008. Ms. Reynolds served as Chief Operating Officer of FPCMS (2007-2008). Previously, Ms. Reynolds served as President, Treasurer, and Anti-Money Laundering officer of the Fidelity funds (2004-2007). |
Joseph A. Hanlon (43) | |
| Year of Election or Appointment: 2012 Chief Compliance Officer of Fidelity's Equity and High Income Funds. Mr. Hanlon serves as Senior Vice President of the Fidelity Asset Management Division (2009-present) and is an employee of Fidelity Investments. |
Joseph F. Zambello (54) | |
| Year of Election or Appointment: 2011 Deputy Treasurer of the Fidelity funds. Mr. Zambello is an employee of Fidelity Investments. Previously, Mr. Zambello served as Vice President of FMR's Program Management Group (2009-2011) and Vice President of the Transfer Agent Oversight Group (2005-2009). |
Adrien E. Deberghes (44) | |
| Year of Election or Appointment: 2008 Deputy Treasurer of Fidelity's Equity and High Income Funds. Mr. Deberghes also serves as Vice President (2011-present) and Assistant Treasurer (2010-present) of other Fidelity funds, and is an employee of Fidelity Investments (2008-present). Previously, Mr. Deberghes served as Senior Vice President of Mutual Fund Administration at State Street Corporation (2007-2008), Senior Director of Mutual Fund Administration at Investors Bank & Trust (2005-2007), and Director of Finance for Dunkin' Brands (2000-2005). |
Stephanie J. Dorsey (42) | |
| Year of Election or Appointment: 2010 Assistant Treasurer of Fidelity's Equity and High Income Funds. Ms. Dorsey also serves as Deputy Treasurer of other Fidelity funds (2008-present) and is an employee of Fidelity Investments (2008-present). Previously, Ms. Dorsey served as Treasurer (2004-2008) of the JPMorgan Mutual Funds and Vice President (2004-2008) of JPMorgan Chase Bank. |
John R. Hebble (53) | |
| Year of Election or Appointment: 2009 Assistant Treasurer of Fidelity's Equity and High Income Funds. Mr. Hebble also serves as President (2011-present), Treasurer, and Chief Financial Officer of The North Carolina Capital Management Trust: Cash and Term Portfolios (2008-present), President and Treasurer of other Fidelity funds (2008-present) and is an employee of Fidelity Investments. |
Gary W. Ryan (53) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of the Fidelity funds. Mr. Ryan is an employee of Fidelity Investments. Previously, Mr. Ryan served as Vice President of Fund Reporting in Fidelity Pricing and Cash Management Services (FPCMS) (1999-2005). |
Jonathan Davis (43) | |
| Year of Election or Appointment: 2010 Assistant Treasurer of the Fidelity funds. Mr. Davis is also Assistant Treasurer of Fidelity Rutland Square Trust II and Fidelity Commonwealth Trust II. Mr. Davis is an employee of Fidelity Investments. Previously, Mr. Davis served as Vice President and Associate General Counsel of FMR LLC (2003-2010). |
Annual Report
Distributions (Unaudited)
The Board of Trustees of each fund voted to pay to shareholders of record at the opening of business on record date the following distributions per share derived from capital gains realized from sales of portfolio securities and dividends derived from net investment income:
| Pay Date | Record Date | Dividends | Capital Gains |
Select Energy Portfolio | 4/5/2012 | 04/04/12 | $0.000 | $0.077 |
Select Energy Service Portfolio | 4/5/2012 | 04/04/12 | $0.000 | $0.000 |
Select Natural Gas Portfolio | 4/5/2012 | 04/04/12 | $0.055 | $0.049 |
Select Natural Resources Portfolio | 4/5/2012 | 04/04/12 | $0.000 | $0.000 |
The funds hereby designate as capital gain dividend the amounts noted below for the taxable year ended February 29, 2012, or, if subsequently determined to be different, the net capital gain of such year.
Select Energy Portfolio | $4,314,221 |
A percentage of the dividends distributed during the fiscal year for the following funds qualify for the dividends-received deduction for corporate shareholders:
| April 2011 | December 2011 |
Select Energy Portfolio | 100% | 100% |
Select Natural Gas Portfolio | 100% | 100% |
Select Natural Resources Portfolio | 100% | 100% |
A percentage of the dividends distributed during the fiscal year for the following funds may be taken into account as a dividend for purposes of the maximum rate under section 1(h) (11) of the Internal Revenue Code:
| April 2011 | December 2011 |
Select Energy Portfolio | 100% | 100% |
Select Natural Gas Portfolio | 100% | 100% |
Select Natural Resources Portfolio | 100% | 100% |
The funds will notify shareholders in January 2013 of amounts for use in preparing 2012 income tax returns.
Annual Report
Managing Your Investments
Fidelity offers several ways to conveniently manage your personal investments via your telephone or PC. You can access your account information, conduct trades and research your investments 24 hours a day.
By Phone
Fidelity Automated Service Telephone provides a single toll-free number to access account balances, positions, quotes and trading. It's easy to navigate the service, and on your first call, the system will help you create a personal identification number (PIN) for security.
(phone graphic)Fidelity Automated Service Telephone (FAST®)
1-800-544-5555
Press
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 distributions, and the effects of any sales charges.
Annual Report
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
FMR Co., Inc.
Fidelity Management & Research
(U.K.) Inc.
Fidelity Management & Research
(Hong Kong) Limited
Fidelity Management & Research
(Japan) Inc.
General Distributor
Fidelity Distributors Corporation
Boston, MA
Transfer and Service Agents
Fidelity Investments Institutional Operations Company, Inc.
Boston, MA
Fidelity Service Company, Inc.
Boston, MA
Custodian
Brown Brothers Harriman & Co.
Boston, MA
Corporate Headquarters
82 Devonshire Street
Boston, MA 02109
1-800-544-8888
The Fidelity Telephone Connection
Mutual Fund 24-Hour Service
Exchanges/Redemptions
and Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774
(8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
Fidelity Automated Service
Telephone (FAST®)
1-800-544-5555
Automated line for quickest service
SELNR-UANNPRO-0412
1.910419.102
Fidelity®
Select Portfolios®
Financials Sector
Banking Portfolio
Brokerage and Investment Management Portfolio
Consumer Finance Portfolio
Financial Services Portfolio
Insurance Portfolio
Annual Report
February 29, 2012
(Fidelity Cover Art)
Contents
Shareholder Expense Example |
| |
Banking Portfolio | Performance | |
| Management's Discussion | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
Brokerage and Investment | Performance | |
| Management's Discussion | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
Consumer Finance Portfolio | Performance | |
| Management's Discussion | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
Financial Services Portfolio | Performance | |
| Management's Discussion | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
Insurance Portfolio | Performance | |
| Management's Discussion | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
Notes to Financial Statements |
| |
Report of Independent Registered Public Accounting Firm |
| |
Trustees and Officers |
| |
Distributions |
|
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com/proxyvotingresults or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov. You may also call 1-800-544-8544 to request a free copy of the proxy voting guidelines.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company.
Annual Report
This report and the financial statements contained herein are submitted for the general information of the shareholders of the funds. This report is not authorized for distribution to prospective investors in the funds unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com, http://www.advisor.fidelity.com, or http://www.401k.com, as applicable.
NOT FDIC INSURED • MAY LOSE VALUE • NO BANK GUARANTEE
Neither the funds nor Fidelity Distributors Corporation is a bank.
Annual Report
Shareholder Expense Example
As a shareholder of a Fund, you incur two types of costs: (1) transaction costs, including redemption fees, and (2) ongoing costs, including management fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Funds and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (September 1, 2011 to February 29, 2012).
Actual Expenses
The first line of the accompanying table for each fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, each Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each fund provides information about hypothetical account values and hypothetical expenses based on a fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, each Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Annualized Expense Ratio | Beginning | Ending | Expenses Paid |
Banking Portfolio | .88% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,188.70 | $ 4.79 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.49 | $ 4.42 |
Brokerage and Investment Management Portfolio | .90% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,134.70 | $ 4.78 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.39 | $ 4.52 |
Consumer Finance Portfolio | .93% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,144.40 | $ 4.96 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.24 | $ 4.67 |
Financial Services Portfolio | .90% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,136.60 | $ 4.78 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.39 | $ 4.52 |
Insurance Portfolio | .89% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,137.50 | $ 4.73 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.44 | $ 4.47 |
A 5% return per year before expenses
* Expenses are equal to each Fund's annualized expense ratio, multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
Annual Report
Banking Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 29, 2012 | Past 1 | Past 5 | Past 10 |
Banking Portfolio | -5.31% | -9.19% | -0.66% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Banking Portfolio on February 28, 2002. The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period.
Annual Report
Banking Portfolio
Management's Discussion of Fund Performance
Market Recap: U.S. stocks rose for the 12 months ending February 29, 2012, as encouraging economic news sparked a strong late-period rally that lifted major equity benchmarks past a number of significant milestones. Stocks recovered from early-period uncertainty that followed the March 2011 earthquake, tsunami and nuclear meltdown in Japan, but plummeted during the summer amid Europe's debt woes and a historic U.S. credit-rating downgrade. Despite continued volatility and mixed economic news, markets began to recover in early October. Investors gravitated toward defensive sectors and the perceived safety of larger, more-established and dividend-paying names, helping the Dow Jones® Industrial Average advance 8.83%, and close above the psychologically important 13,000 mark in late February - for the first time since May 2008. The rally accelerated late in the period and the market broadened, as investor confidence improved amid encouraging manufacturing, housing and employment data, and signs of progress in Europe. For the year, the S&P 500® Index added 5.12%, closing near a four-year high on the period's second-to-last day. Of the 10 major market sectors in the S&P 500®, three defensive areas led the way - consumer staples, health care and utilities - while financials, materials and energy finished in negative territory. The technology-laden Nasdaq Composite® Index added 7.73%, flirting with the 3,000 mark, its highest level in 12 years. Foreign developed-markets stocks reeled over Europe's turmoil, and the MSCI® EAFE® (Europe, Australasia, Far East) Index fell 7.35%.
Comments from Vincent Montemaggiore, Co-Portfolio Manager of Banking Portfolio: For the year, the fund returned -5.31%, trailing the -4.40% return of the MSCI® U.S. IM Banks 25/50 Index, as well as the S&P 500®. Versus the MSCI index, out-of-benchmark exposure to the other diversified financial services group - primarily due to our stake in Citigroup, the fund's second-biggest relative detractor during the period - hampered performance. Large commercial banks such as Citigroup were particularly vulnerable to a variety of challenges, including mixed U.S. economic data for much of the period and a worsening sovereign debt crisis in Europe. Stock picking in regional banks, a segment comprising roughly two-thirds of the index, on average, also curbed the fund's performance. The largest and third-largest individual detractors were Regions Financial and SunTrust Banks, respectively, both regional banks based in the southeastern U.S., an area hit particularly hard by excess housing demand and falling home prices in the wake of the Great Recession. While on a fundamental basis both banks appeared to have the worst behind them at the beginning of the period, the market became concerned that loan losses could reverse their improving trend if the U.S. economy were to enter a double-dip recession. Later in the period, as U.S. economic data began to improve, these positions started to show stronger relative performance. Also curbing our results was Comerica, a large regional bank focused on commercial lending - typically, through variable-rate loans. The Federal Reserve's promise to keep short-term interest rates low until 2014 depressed Comerica's near-term earnings outlook and hurt its stock. Conversely, performance benefited from out-of-index exposure to data processing/outsourced services, a large underweighting in the thrifts/mortgage finance segment and a modest cash position. The dominant influence in the first group was card processor Visa, the fund's second-biggest relative contributor during the period. In my view, Visa had one of the best business models in the world and was positioned to benefit from the growth of global electronic payments and the shift away from cash payments. Regulatory reforms that ended up being less onerous than originally feared helped the stock rise more than 50% from late June through period end. In addition, the stability of Visa's revenue and cash flow was viewed positively by investors amid periodic bouts of anxiety about the global economy. The fund's top relative contributor was Bank of the Ozarks, a well-managed, high-quality community bank, in my opinion. Purchases of several failed banks at bargain prices during the past several years helped to bolster the bank's earnings at a time when most banks' earnings power was diminished. Overweighted exposure to major index component U.S. Bancorp also aided the fund's showing.
_____________________________________
Note to shareholders: John Sheehy became Co-Portfolio Manager of the fund on January 12, 2012.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Banking Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 29, 2012 | ||
| % of fund's | % of fund's net assets |
Wells Fargo & Co. | 11.0 | 13.5 |
U.S. Bancorp | 10.2 | 12.7 |
BB&T Corp. | 5.6 | 5.2 |
SunTrust Banks, Inc. | 4.1 | 5.2 |
PNC Financial Services Group, Inc. | 3.7 | 1.4 |
M&T Bank Corp. | 3.1 | 0.0 |
KeyCorp | 2.9 | 0.4 |
Regions Financial Corp. | 2.9 | 3.6 |
CIT Group, Inc. | 2.5 | 3.0 |
Comerica, Inc. | 2.5 | 3.0 |
| 48.5 | |
Top Industries (% of fund's net assets) | |||
As of February 29, 2012 | |||
 | Commercial Banks | 83.8% |
|
 | Thrifts & Mortgage Finance | 6.4% |
|
 | Consumer Finance | 2.3% |
|
 | Diversified Financial Services | 2.0% |
|
 | IT Services | 1.7% |
|
 | All Others* | 3.8% |
|
As of August 31, 2011 | |||
| Commercial Banks | 82.8% |
|
| Consumer Finance | 4.4% |
|
| Thrifts & Mortgage Finance | 3.0% |
|
| Diversified Financial Services | 2.9% |
|
| Capital Markets | 2.8% |
|
| All Others* | 4.1% |
|
* Includes short-term investments and net other assets. |
Annual Report
Banking Portfolio
Investments February 29, 2012
Showing Percentage of Net Assets
Common Stocks - 97.2% | |||
Shares | Value | ||
CAPITAL MARKETS - 1.0% | |||
Asset Management & Custody Banks - 1.0% | |||
State Street Corp. | 96,300 | $ 4,066,749 | |
COMMERCIAL BANKS - 83.8% | |||
Diversified Banks - 24.4% | |||
Banco ABC Brasil SA | 344,000 | 2,764,098 | |
Comerica, Inc. | 365,700 | 10,857,633 | |
U.S. Bancorp | 1,496,000 | 43,982,400 | |
Wells Fargo & Co. | 1,502,892 | 47,025,492 | |
| 104,629,623 | ||
Regional Banks - 59.4% | |||
American River Bankshares (a) | 128,500 | 866,090 | |
Bank of the Ozarks, Inc. (d) | 255,900 | 7,510,665 | |
BB&T Corp. | 827,600 | 24,207,300 | |
BBCN Bancorp, Inc. (a) | 703,212 | 7,207,923 | |
CapitalSource, Inc. | 89,200 | 602,100 | |
Cathay General Bancorp | 243,008 | 3,970,751 | |
Central Valley Community Bancorp (a) | 133,300 | 887,778 | |
Chemical Financial Corp. | 181,900 | 4,012,714 | |
CIT Group, Inc. (a) | 267,000 | 10,869,570 | |
City National Corp. | 152,900 | 7,186,300 | |
Commerce Bancshares, Inc. | 43,800 | 1,691,118 | |
CVB Financial Corp. (d) | 546,300 | 5,883,651 | |
Fifth Third Bancorp | 713,200 | 9,706,652 | |
First Commonwealth Financial Corp. | 697,600 | 4,178,624 | |
First Midwest Bancorp, Inc., Delaware | 378,100 | 4,370,836 | |
First Niagara Financial Group, Inc. | 1,059,700 | 10,130,732 | |
Hancock Holding Co. | 64,300 | 2,182,985 | |
Huntington Bancshares, Inc. | 1,675,251 | 9,791,842 | |
KeyCorp | 1,532,300 | 12,411,630 | |
M&T Bank Corp. | 162,000 | 13,222,440 | |
National Penn Bancshares, Inc. | 626,200 | 5,479,250 | |
Oriental Financial Group, Inc. | 213,180 | 2,504,865 | |
Pacific Continental Corp. | 315,015 | 2,646,126 | |
PacWest Bancorp | 269,046 | 5,857,131 | |
PNC Financial Services Group, Inc. | 265,841 | 15,822,856 | |
Regions Financial Corp. | 2,142,600 | 12,341,376 | |
Sandy Spring Bancorp, Inc. | 311,900 | 5,632,914 | |
Signature Bank (a) | 71,400 | 4,238,304 | |
SunTrust Banks, Inc. | 765,300 | 17,571,288 | |
Susquehanna Bancshares, Inc. | 531,200 | 4,924,224 | |
SVB Financial Group (a) | 134,165 | 7,953,301 | |
Texas Capital Bancshares, Inc. (a) | 219,700 | 7,445,633 | |
West Coast Bancorp (a) | 164,740 | 2,825,291 | |
Western Alliance Bancorp. (a) | 860,600 | 7,005,284 | |
Wilshire Bancorp, Inc. (a) | 1,261,700 | 5,475,778 | |
Wintrust Financial Corp. (d) | 198,300 | 6,684,693 | |
| 255,300,015 | ||
TOTAL COMMERCIAL BANKS | 359,929,638 | ||
| |||
Shares | Value | ||
CONSUMER FINANCE - 2.3% | |||
Consumer Finance - 2.3% | |||
Capital One Financial Corp. | 106,400 | $ 5,383,840 | |
SLM Corp. | 279,900 | 4,411,224 | |
| 9,795,064 | ||
DIVERSIFIED FINANCIAL SERVICES - 2.0% | |||
Other Diversified Financial Services - 2.0% | |||
Citigroup, Inc. | 146,720 | 4,888,710 | |
JPMorgan Chase & Co. | 89,600 | 3,515,904 | |
NBH Holdings Corp. Class A (a)(e) | 13,300 | 216,125 | |
| 8,620,739 | ||
IT SERVICES - 1.7% | |||
Data Processing & Outsourced Services - 1.7% | |||
Fiserv, Inc. (a) | 46,700 | 3,096,210 | |
Visa, Inc. Class A | 37,300 | 4,340,601 | |
| 7,436,811 | ||
THRIFTS & MORTGAGE FINANCE - 6.4% | |||
Thrifts & Mortgage Finance - 6.4% | |||
BankUnited, Inc. | 3,700 | 85,211 | |
Flushing Financial Corp. | 270,300 | 3,500,385 | |
New York Community Bancorp, Inc. (d) | 313,400 | 4,077,334 | |
Ocwen Financial Corp. (a) | 377,800 | 6,086,358 | |
People's United Financial, Inc. | 722,500 | 9,096,275 | |
WSFS Financial Corp. | 125,300 | 4,822,797 | |
| 27,668,360 | ||
TOTAL COMMON STOCKS (Cost $425,639,909) |
| ||
Money Market Funds - 5.1% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.12% (b) | 11,540,047 | 11,540,047 | |
Fidelity Securities Lending Cash Central Fund, 0.12% (b)(c) | 10,585,875 | 10,585,875 | |
TOTAL MONEY MARKET FUNDS (Cost $22,125,922) |
| ||
TOTAL INVESTMENT PORTFOLIO - 102.3% (Cost $447,765,831) | 439,643,283 |
NET OTHER ASSETS (LIABILITIES) - (2.3)% | (9,896,284) | ||
NET ASSETS - 100% | $ 429,746,999 | ||
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
(e) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the end of the period, the value of these securities amounted to $216,125 or 0.1% of net assets. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 12,119 |
Fidelity Securities Lending Cash Central Fund | 20,516 |
Total | $ 32,635 |
Other Information |
The following is a summary of the inputs used, as of February 29, 2012, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the tables below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities: | ||||
Common Stocks | $ 417,517,361 | $ 417,301,236 | $ - | $ 216,125 |
Money Market Funds | 22,125,922 | 22,125,922 | - | - |
Total Investments in Securities: | $ 439,643,283 | $ 439,427,158 | $ - | $ 216,125 |
The following is a reconciliation of Investments in Securities for which Level 3 inputs were used in determining value: |
Investments in Securities: | |
Beginning Balance | $ - |
Total Realized Gain (Loss) | - |
Total Unrealized Gain (Loss) | (13,300) |
Cost of Purchases | - |
Proceeds of Sales | - |
Amortization/Accretion | - |
Transfers in to Level 3 | 229,425 |
Transfers out of Level 3 | - |
Ending Balance | $ 216,125 |
The change in unrealized gain (loss) for the period attributable to Level 3 securities held at February 29, 2012 | $ (13,300) |
The information used in the above reconciliation represents fiscal year to date activity for any Investments in Securities identified as using Level 3 inputs at either the beginning or the end of the current fiscal period. Transfers in or out of Level 3 represent the beginning value of any Security or Instrument where a change in the pricing level occurred from the beginning to the end of the period. The cost of purchases and the proceeds of sales may include securities received or delivered through corporate actions or exchanges. Realized and unrealized gains (losses) disclosed in the reconciliation are included in Net Gain (Loss) on the Fund's Statement of Operations. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Banking Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2012 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $10,275,605) - See accompanying schedule: Unaffiliated issuers (cost $425,639,909) | $ 417,517,361 |
|
Fidelity Central Funds (cost $22,125,922) | 22,125,922 |
|
Total Investments (cost $447,765,831) |
| $ 439,643,283 |
Receivable for fund shares sold | 1,352,601 | |
Dividends receivable | 373,499 | |
Distributions receivable from Fidelity Central Funds | 2,866 | |
Prepaid expenses | 694 | |
Other receivables | 7,914 | |
Total assets | 441,380,857 | |
|
|
|
Liabilities | ||
Payable for fund shares redeemed | 714,973 | |
Accrued management fee | 201,094 | |
Other affiliated payables | 99,356 | |
Other payables and accrued expenses | 32,560 | |
Collateral on securities loaned, at value | 10,585,875 | |
Total liabilities | 11,633,858 | |
|
|
|
Net Assets | $ 429,746,999 | |
Net Assets consist of: |
| |
Paid in capital | $ 523,251,798 | |
Undistributed net investment income | 388,757 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (85,771,008) | |
Net unrealized appreciation (depreciation) on investments | (8,122,548) | |
Net Assets, for 24,101,438 shares outstanding | $ 429,746,999 | |
Net Asset Value, offering price and redemption price per share ($429,746,999 ÷ 24,101,438 shares) | $ 17.83 | |
Statement of Operations
| Year ended February 29, 2012 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 5,527,332 |
Interest |
| 471 |
Income from Fidelity Central Funds |
| 32,635 |
Total income |
| 5,560,438 |
|
|
|
Expenses | ||
Management fee | $ 2,186,844 | |
Transfer agent fees | 1,005,464 | |
Accounting and security lending fees | 156,651 | |
Custodian fees and expenses | 15,509 | |
Independent trustees' compensation | 2,367 | |
Registration fees | 32,752 | |
Audit | 41,047 | |
Legal | 1,477 | |
Interest | 3,023 | |
Miscellaneous | 4,755 | |
Total expenses before reductions | 3,449,889 | |
Expense reductions | (54,932) | 3,394,957 |
Net investment income (loss) | 2,165,481 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | (8,100,698) | |
Foreign currency transactions | (88,927) | |
Total net realized gain (loss) |
| (8,189,625) |
Change in net unrealized appreciation (depreciation) on: Investment securities | (30,402,442) | |
Assets and liabilities in foreign currencies | 266 | |
Total change in net unrealized appreciation (depreciation) |
| (30,402,176) |
Net gain (loss) | (38,591,801) | |
Net increase (decrease) in net assets resulting from operations | $ (36,426,320) | |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fund Name
Financial Statements - continued
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 2,165,481 | $ (199,708) |
Net realized gain (loss) | (8,189,625) | 36,974,333 |
Change in net unrealized appreciation (depreciation) | (30,402,176) | 6,458,897 |
Net increase (decrease) in net assets resulting from operations | (36,426,320) | 43,233,522 |
Distributions to shareholders from net investment income | (1,687,594) | (262,814) |
Share transactions | 263,836,043 | 506,892,321 |
Reinvestment of distributions | 1,634,419 | 253,072 |
Cost of shares redeemed | (315,949,436) | (391,329,054) |
Net increase (decrease) in net assets resulting from share transactions | (50,478,974) | 115,816,339 |
Redemption fees | 22,957 | 92,169 |
Total increase (decrease) in net assets | (88,569,931) | 158,879,216 |
|
|
|
Net Assets | ||
Beginning of period | 518,316,930 | 359,437,714 |
End of period (including undistributed net investment income of $388,757 and accumulated net investment loss of $131, respectively) | $ 429,746,999 | $ 518,316,930 |
Other Information Shares | ||
Sold | 15,627,481 | 28,430,489 |
Issued in reinvestment of distributions | 104,569 | 13,174 |
Redeemed | (19,030,038) | (22,657,917) |
Net increase (decrease) | (3,297,988) | 5,785,746 |
Financial Highlights
Years ended February 28, | 2012 G | 2011 | 2010 | 2009 | 2008 G |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 18.92 | $ 16.63 | $ 9.04 | $ 22.24 | $ 33.52 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .09 | (.01) | .06 | .67 | .81 |
Net realized and unrealized gain (loss) | (1.11) | 2.31 | 7.74 | (13.32) | (9.57) |
Total from investment operations | (1.02) | 2.30 | 7.80 | (12.65) | (8.76) |
Distributions from net investment income | (.07) | (.01) | (.21) | (.51) | (.64) |
Distributions from net realized gain | - | - | - | (.05) | (1.88) |
Total distributions | (.07) | (.01) | (.21) | (.56) | (2.52) |
Redemption fees added to paid in capital C | - B | - B | - B | .01 | - B |
Net asset value, end of period | $ 17.83 | $ 18.92 | $ 16.63 | $ 9.04 | $ 22.24 |
Total Return A | (5.31)% | 13.83% | 87.04% | (57.85)% | (27.30)% |
Ratios to Average Net Assets D, F |
|
|
|
|
|
Expenses before reductions | .88% | .89% | .95% | .93% | .91% |
Expenses net of fee waivers, if any | .88% | .89% | .95% | .93% | .91% |
Expenses net of all reductions | .87% | .88% | .94% | .93% | .90% |
Net investment income (loss) | .55% | (.04)% | .46% | 3.86% | 2.75% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 429,747 | $ 518,317 | $ 359,438 | $ 151,158 | $ 293,767 |
Portfolio turnover rate E | 91% | 73% | 105% | 199% | 86% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
B Amount represents less than $.01 per share.
C Calculated based on average shares outstanding during the period.
D Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund.
G For the year ended February 29.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Brokerage and Investment Management Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 29, 2012 | Past 1 | Past 5 | Past 10 |
Brokerage and Investment Management Portfolio | -11.51% | -4.92% | 5.01% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Brokerage and Investment Management Portfolio on February 28, 2002. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index performed over the same period.
Annual Report
Brokerage and Investment Management Portfolio
Management's Discussion of Fund Performance
Market Recap: U.S. stocks rose for the 12 months ending February 29, 2012, as encouraging economic news sparked a strong late-period rally that lifted major equity benchmarks past a number of significant milestones. Stocks recovered from early-period uncertainty that followed the March 2011 earthquake, tsunami and nuclear meltdown in Japan, but plummeted during the summer amid Europe's debt woes and a historic U.S. credit-rating downgrade. Despite continued volatility and mixed economic news, markets began to recover in early October. Investors gravitated toward defensive sectors and the perceived safety of larger, more-established and dividend-paying names, helping the Dow Jones® Industrial Average advance 8.83%, and close above the psychologically important 13,000 mark in late February - for the first time since May 2008. The rally accelerated late in the period and the market broadened, as investor confidence improved amid encouraging manufacturing, housing and employment data, and signs of progress in Europe. For the year, the S&P 500® Index added 5.12%, closing near a four-year high on the period's second-to-last day. Of the 10 major market sectors in the S&P 500®, three defensive areas led the way - consumer staples, health care and utilities - while financials, materials and energy finished in negative territory. The technology-laden Nasdaq Composite® Index added 7.73%, flirting with the 3,000 mark, its highest level in 12 years. Foreign developed-markets stocks reeled over Europe's turmoil, and the MSCI® EAFE® (Europe, Australasia, Far East) Index fell 7.35%.
Comments from Benjamin Hesse, Portfolio Manager of Brokerage and Investment Management Portfolio: For the year, the fund returned -11.51%, which was disappointing in absolute terms but ahead of the -16.06% return of the MSCI® U.S. IM Capital Markets 25/50 Index. The fund lagged the S&P 500®. Versus the industry benchmark, the fund was helped by stock selection, particularly in the out-of-benchmark data processing/outsourced services, specialized finance and diversified banks segments. Industry allocations, a small cash position and exposure to Europe last fall also contributed. Among individual stocks, standouts included card processor MasterCard, which benefited from an increase globally in electronic payments and new financial regulations that were less onerous than expected. Shares of commodities exchange IntercontinentalExchange and stock exchange Bursa Malaysia contributed, as strong trading volumes helped both stocks. Timely ownership of Barclays Bank in the U.K. and BNP Paribas in France last fall helped, as both stocks were soon buoyed by the European Central Bank's actions to address the region's debt problems. None of these top contributors were in the benchmark. Conversely, a sizable underweighting and stock picks within asset management/custody banks detracted, followed by security selection within investment banking/brokerage and diversified capital markets. Individual disappointments included online broker E*TRADE Financial, whose stock fell on news the company was not for sale, and commodities/derivatives broker MF Global Holdings, whose shares plunged after a significant investment in European government debt went south, forcing the company into bankruptcy. I sold my position in November. Lastly, an out-of-index stake in global banking giant Citigroup hurt, as concerns about counterparty risk and exposure to Europe pressured the stock's return.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Brokerage and Investment Management Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 29, 2012 | ||
| % of fund's | % of fund's net assets |
Citigroup, Inc. | 5.1 | 4.5 |
Goldman Sachs Group, Inc. | 4.9 | 0.5 |
Morgan Stanley | 4.8 | 5.1 |
Ares Capital Corp. | 4.6 | 3.7 |
eBay, Inc. | 4.1 | 0.0 |
Evercore Partners, Inc. Class A | 4.0 | 3.0 |
Janus Capital Group, Inc. | 3.8 | 1.1 |
The Blackstone Group LP | 3.7 | 1.6 |
CBOE Holdings, Inc. | 3.3 | 0.3 |
E*TRADE Financial Corp. | 3.0 | 5.4 |
| 41.3 | |
Top Industries (% of fund's net assets) | |||
As of February 29, 2012 | |||
| Capital Markets | 64.3% |
|
| Diversified Financial Services | 11.6% |
|
| Internet Software & Services | 4.1% |
|
| Commercial Banks | 4.0% |
|
| Insurance | 2.6% |
|
| All Others* | 13.4% |
|
As of August 31, 2011 | |||
| Capital Markets | 56.1% |
|
| Diversified Financial Services | 16.8% |
|
| IT Services | 3.0% |
|
| Real Estate Management & Development | 2.5% |
|
| Consumer Finance | 1.5% |
|
| All Others* | 20.1% |
|
* Includes short-term investments and net other assets. |
Annual Report
Brokerage and Investment Management Portfolio
Investments February 29, 2012
Showing Percentage of Net Assets
Common Stocks - 92.5% | |||
Shares | Value | ||
AEROSPACE & DEFENSE - 0.0% | |||
Aerospace & Defense - 0.0% | |||
BAE Systems PLC | 100 | $ 497 | |
CAPITAL MARKETS - 64.3% | |||
Asset Management & Custody Banks - 36.9% | |||
A.F.P. Provida SA sponsored ADR | 154,611 | 11,634,478 | |
Affiliated Managers Group, Inc. (a) | 58,512 | 6,225,092 | |
AllianceBernstein Holding LP | 198,800 | 2,783,200 | |
American Capital Ltd. (a) | 566,500 | 5,047,515 | |
Ameriprise Financial, Inc. | 130,100 | 7,254,376 | |
Apollo Global Management LLC Class A | 516,767 | 7,245,073 | |
Apollo Investment Corp. | 76,543 | 537,332 | |
Artio Global Investors, Inc. Class A (d) | 210,385 | 1,007,744 | |
Bank of New York Mellon Corp. | 36,400 | 804,804 | |
Bank Sarasin & Co. Ltd. Series B (Reg.) | 31,680 | 982,122 | |
BlackRock Kelso Capital Corp. | 524,100 | 5,109,975 | |
BlackRock, Inc. Class A | 31,800 | 6,328,200 | |
Calamos Asset Management, Inc. | 30,000 | 367,800 | |
Cetip SA | 483,100 | 9,001,252 | |
Cohen & Steers, Inc. | 100 | 3,294 | |
Eaton Vance Corp. (non-vtg.) | 51,200 | 1,475,072 | |
EFG International | 285,820 | 2,662,978 | |
Federated Investors, Inc. Class B (non-vtg.) (d) | 90,400 | 1,852,296 | |
Fifth Street Finance Corp. | 300 | 2,970 | |
Fortress Investment Group LLC | 1,932,300 | 7,439,355 | |
Franklin Resources, Inc. | 34,500 | 4,067,205 | |
Invesco Ltd. | 222,672 | 5,515,585 | |
Janus Capital Group, Inc. | 1,771,759 | 15,626,914 | |
Julius Baer Group Ltd. | 101,860 | 3,990,868 | |
KKR & Co. LP | 2,600 | 37,232 | |
Legg Mason, Inc. | 230,961 | 6,326,022 | |
Man Group PLC | 20,311 | 42,295 | |
MCG Capital Corp. | 95,707 | 459,394 | |
MVC Capital, Inc. | 17,300 | 216,423 | |
Northern Trust Corp. | 8,300 | 368,603 | |
Och-Ziff Capital Management Group LLC Class A | 543,149 | 5,121,895 | |
PennantPark Investment Corp. | 273,056 | 3,014,538 | |
Pzena Investment Management, Inc. | 36,849 | 189,404 | |
SEI Investments Co. | 1,100 | 21,725 | |
State Street Corp. | 247,700 | 10,460,371 | |
T. Rowe Price Group, Inc. | 1,300 | 80,067 | |
The Blackstone Group LP | 984,403 | 15,376,375 | |
U.S. Global Investments, Inc. Class A | 440,902 | 3,262,675 | |
Waddell & Reed Financial, Inc. Class A | 13,100 | 413,436 | |
| 152,355,955 | ||
Diversified Capital Markets - 1.1% | |||
Credit Suisse Group sponsored ADR | 100 | 2,682 | |
Deutsche Bank AG (NY Shares) | 900 | 42,066 | |
| |||
Shares | Value | ||
UBS AG (a) | 29,730 | $ 416,312 | |
UBS AG (NY Shares) (a) | 301,685 | 4,232,641 | |
| 4,693,701 | ||
Investment Banking & Brokerage - 26.3% | |||
BGC Partners, Inc. Class A | 500 | 3,515 | |
Charles Schwab Corp. | 3,000 | 41,640 | |
Cowen Group, Inc. Class A (a) | 14,900 | 41,720 | |
Duff & Phelps Corp. Class A | 100 | 1,376 | |
E*TRADE Financial Corp. (a) | 1,290,100 | 12,423,663 | |
Evercore Partners, Inc. Class A | 609,815 | 16,580,870 | |
GFI Group, Inc. | 2,984,320 | 11,459,789 | |
Gleacher & Co., Inc. (a) | 48,210 | 73,279 | |
Goldman Sachs Group, Inc. | 176,900 | 20,368,266 | |
Greenhill & Co., Inc. | 76,820 | 3,377,007 | |
ICAP PLC | 59,200 | 362,387 | |
Investment Technology Group, Inc. (a) | 394,882 | 4,541,143 | |
Jefferies Group, Inc. | 249 | 4,163 | |
KBW, Inc. | 47,300 | 781,869 | |
Knight Capital Group, Inc. Class A (a) | 400 | 5,300 | |
Lazard Ltd. Class A | 67,400 | 2,053,004 | |
LPL Investment Holdings, Inc. (a) | 23,500 | 801,350 | |
Morgan Stanley | 1,071,475 | 19,865,147 | |
Nomura Holdings, Inc. sponsored ADR (d) | 919,800 | 4,221,882 | |
Oppenheimer Holdings, Inc. Class A (non-vtg.) | 1,600 | 26,784 | |
Piper Jaffray Companies (a) | 38,643 | 949,845 | |
Raymond James Financial, Inc. | 234,467 | 8,293,098 | |
Stifel Financial Corp. (a) | 1,100 | 41,283 | |
SWS Group, Inc. | 195,883 | 1,094,986 | |
TD Ameritrade Holding Corp. | 56,349 | 1,052,036 | |
| 108,465,402 | ||
TOTAL CAPITAL MARKETS | 265,515,058 | ||
COMMERCIAL BANKS - 4.0% | |||
Diversified Banks - 3.4% | |||
Banco de Chile sponsored ADR | 400 | 38,200 | |
Banco Santander SA (Spain) sponsored ADR | 3,900 | 32,370 | |
Banco Santander SA (Brasil) ADR | 4,400 | 46,992 | |
BanColombia SA sponsored ADR | 193,400 | 12,358,260 | |
Barclays PLC sponsored ADR | 2,662 | 41,447 | |
BNP Paribas SA | 900 | 43,925 | |
BPI-SGPS SA (a) | 302,300 | 221,096 | |
Comerica, Inc. | 1,506 | 44,713 | |
ICICI Bank Ltd. sponsored ADR | 21,407 | 777,074 | |
Industrial & Commercial Bank of China Ltd. (H Shares) | 214,000 | 156,994 | |
The Toronto-Dominion Bank | 500 | 40,838 | |
UniCredit SpA | 630 | 3,278 | |
United Overseas Bank Ltd. | 3,000 | 43,297 | |
| 13,848,484 | ||
Common Stocks - continued | |||
Shares | Value | ||
COMMERCIAL BANKS - CONTINUED | |||
Regional Banks - 0.6% | |||
CIT Group, Inc. (a) | 1,200 | $ 48,852 | |
Fifth Third Bancorp | 2,800 | 38,108 | |
First Interstate Bancsystem, Inc. | 19,337 | 262,983 | |
Regions Financial Corp. | 360,884 | 2,078,692 | |
SunTrust Banks, Inc. | 2,000 | 45,920 | |
| 2,474,555 | ||
TOTAL COMMERCIAL BANKS | 16,323,039 | ||
CONSUMER FINANCE - 0.1% | |||
Consumer Finance - 0.1% | |||
Advance America Cash Advance Centers, Inc. | 48,000 | 497,760 | |
SLM Corp. | 2,600 | 40,976 | |
| 538,736 | ||
DIVERSIFIED CONSUMER SERVICES - 2.5% | |||
Specialized Consumer Services - 2.5% | |||
Sotheby's Class A (Ltd. vtg.) | 266,400 | 10,480,176 | |
DIVERSIFIED FINANCIAL SERVICES - 11.6% | |||
Other Diversified Financial Services - 7.4% | |||
Bank of America Corp. | 127,554 | 1,016,605 | |
Citigroup, Inc. | 630,010 | 20,991,932 | |
JPMorgan Chase & Co. | 212,400 | 8,334,576 | |
| 30,343,113 | ||
Specialized Finance - 4.2% | |||
BM&F Bovespa SA | 301,300 | 2,015,743 | |
Bursa Malaysia Bhd | 51,100 | 125,895 | |
CBOE Holdings, Inc. | 491,900 | 13,561,683 | |
CME Group, Inc. | 3,900 | 1,129,011 | |
Deutsche Boerse AG | 6,500 | 430,973 | |
Hellenic Exchanges Holding SA | 6,800 | 28,173 | |
IntercontinentalExchange, Inc. (a) | 265 | 36,559 | |
MSCI, Inc. Class A (a) | 2,200 | 77,836 | |
NYSE Euronext | 100 | 2,977 | |
The NASDAQ Stock Market, Inc. (a) | 1,700 | 44,778 | |
| 17,453,628 | ||
TOTAL DIVERSIFIED FINANCIAL SERVICES | 47,796,741 | ||
HOTELS, RESTAURANTS & LEISURE - 2.0% | |||
Casinos & Gaming - 1.0% | |||
Las Vegas Sands Corp. | 75,800 | 4,215,238 | |
Hotels, Resorts & Cruise Lines - 1.0% | |||
Starwood Hotels & Resorts Worldwide, Inc. | 76,500 | 4,123,350 | |
TOTAL HOTELS, RESTAURANTS & LEISURE | 8,338,588 | ||
| |||
Shares | Value | ||
INSURANCE - 2.6% | |||
Life & Health Insurance - 0.0% | |||
AFLAC, Inc. | 800 | $ 37,800 | |
Multi-Line Insurance - 2.6% | |||
American International Group, Inc. (a) | 75,500 | 2,206,110 | |
Genworth Financial, Inc. Class A (a) | 914,200 | 8,310,078 | |
| 10,516,188 | ||
Property & Casualty Insurance - 0.0% | |||
Fidelity National Financial, Inc. Class A | 2,487 | 42,926 | |
TOTAL INSURANCE | 10,596,914 | ||
INTERNET SOFTWARE & SERVICES - 4.1% | |||
Internet Software & Services - 4.1% | |||
eBay, Inc. (a) | 472,600 | 16,890,724 | |
IT SERVICES - 0.2% | |||
Data Processing & Outsourced Services - 0.2% | |||
Fidelity National Information Services, Inc. | 2,100 | 66,633 | |
Fiserv, Inc. (a) | 400 | 26,520 | |
Jack Henry & Associates, Inc. | 12,300 | 415,002 | |
MasterCard, Inc. Class A | 100 | 42,000 | |
Redecard SA | 9,900 | 205,788 | |
The Western Union Co. | 1,710 | 29,874 | |
| 785,817 | ||
MEDIA - 0.0% | |||
Publishing - 0.0% | |||
Morningstar, Inc. | 700 | 41,909 | |
PROFESSIONAL SERVICES - 0.0% | |||
Research & Consulting Services - 0.0% | |||
Equifax, Inc. | 900 | 37,836 | |
IHS, Inc. Class A (a) | 500 | 47,285 | |
| 85,121 | ||
REAL ESTATE INVESTMENT TRUSTS - 0.5% | |||
Mortgage REITs - 0.5% | |||
American Capital Agency Corp. | 1,400 | 42,994 | |
Two Harbors Investment Corp. | 185,200 | 1,903,856 | |
| 1,946,850 | ||
Specialized REITs - 0.0% | |||
Big Yellow Group PLC | 19,400 | 89,498 | |
Strategic Hotel & Resorts, Inc. (a) | 19,100 | 118,993 | |
| 208,491 | ||
TOTAL REAL ESTATE INVESTMENT TRUSTS | 2,155,341 | ||
REAL ESTATE MANAGEMENT & DEVELOPMENT - 0.1% | |||
Real Estate Services - 0.1% | |||
CBRE Group, Inc. (a) | 22,437 | 411,270 | |
Jones Lang LaSalle, Inc. | 900 | 73,269 | |
| 484,539 | ||
Common Stocks - continued | |||
Shares | Value | ||
ROAD & RAIL - 0.0% | |||
Railroads - 0.0% | |||
Canadian Pacific | 100 | $ 7,473 | |
SPECIALTY RETAIL - 0.5% | |||
Computer & Electronics Retail - 0.5% | |||
Rent-A-Center, Inc. | 57,500 | 2,036,650 | |
TRADING COMPANIES & DISTRIBUTORS - 0.0% | |||
Trading Companies & Distributors - 0.0% | |||
Noble Group Ltd. | 75,000 | 85,156 | |
TOTAL COMMON STOCKS (Cost $409,113,224) |
| ||
Investment Companies - 4.8% | |||
|
|
|
|
Ares Capital Corp. | 1,124,190 | 18,740,247 | |
Solar Capital Ltd. | 41,864 | 962,872 | |
TOTAL INVESTMENT COMPANIES (Cost $18,867,848) |
| ||
Money Market Funds - 2.2% | |||
Shares | Value | ||
Fidelity Cash Central Fund, 0.12% (b) | 6,924,298 | $ 6,924,298 | |
Fidelity Securities Lending Cash Central Fund, 0.12% (b)(c) | 2,219,300 | 2,219,300 | |
TOTAL MONEY MARKET FUNDS (Cost $9,143,598) |
| ||
TOTAL INVESTMENT PORTFOLIO - 99.5% (Cost $437,124,670) | 411,009,196 | ||
NET OTHER ASSETS (LIABILITIES) - 0.5% | 2,219,235 | ||
NET ASSETS - 100% | $ 413,228,431 | ||
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 18,639 |
Fidelity Securities Lending Cash Central Fund | 32,911 |
Total | $ 51,550 |
Other Information |
The following is a summary of the inputs used, as of February 29, 2012, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities: | ||||
Common Stocks | $ 382,162,479 | $ 381,746,167 | $ 416,312 | $ - |
Investment Companies | 19,703,119 | 19,703,119 | - | - |
Money Market Funds | 9,143,598 | 9,143,598 | - | - |
Total Investments in Securities: | $ 411,009,196 | $ 410,592,884 | $ 416,312 | $ - |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 85.0% |
Colombia | 3.0% |
Switzerland | 3.0% |
Chile | 2.8% |
Brazil | 2.8% |
Bermuda | 1.8% |
Japan | 1.0% |
Others (Individually Less Than 1%) | 0.6% |
| 100.0% |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Brokerage and Investment Management
Financial Statements
Statement of Assets and Liabilities
| February 29, 2012 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $2,144,664) - See accompanying schedule: Unaffiliated issuers (cost $427,981,072) | $ 401,865,598 |
|
Fidelity Central Funds (cost $9,143,598) | 9,143,598 |
|
Total Investments (cost $437,124,670) |
| $ 411,009,196 |
Receivable for investments sold | 23,218,515 | |
Receivable for fund shares sold | 696,576 | |
Dividends receivable | 327,376 | |
Distributions receivable from Fidelity Central Funds | 4,900 | |
Prepaid expenses | 566 | |
Other receivables | 36,571 | |
Total assets | 435,293,700 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 19,128,618 | |
Payable for fund shares redeemed | 396,189 | |
Accrued management fee | 188,423 | |
Other affiliated payables | 94,089 | |
Other payables and accrued expenses | 38,650 | |
Collateral on securities loaned, at value | 2,219,300 | |
Total liabilities | 22,065,269 | |
|
|
|
Net Assets | $ 413,228,431 | |
Net Assets consist of: |
| |
Paid in capital | $ 545,404,293 | |
Distributions in excess of net investment income | (1,450,399) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (104,610,475) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (26,114,988) | |
Net Assets, for 8,740,911 shares outstanding | $ 413,228,431 | |
Net Asset Value, offering price and redemption price per share ($413,228,431 ÷ 8,740,911 shares) | $ 47.28 | |
Statement of Operations
| Year ended February 29, 2012 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 5,746,515 |
Interest |
| 38 |
Income from Fidelity Central Funds |
| 51,550 |
Total income |
| 5,798,103 |
|
|
|
Expenses | ||
Management fee | $ 2,287,106 | |
Transfer agent fees | 1,076,729 | |
Accounting and security lending fees | 160,927 | |
Custodian fees and expenses | 38,365 | |
Independent trustees' compensation | 2,494 | |
Registration fees | 22,826 | |
Audit | 37,577 | |
Legal | 1,804 | |
Interest | 2,061 | |
Miscellaneous | 5,017 | |
Total expenses before reductions | 3,634,906 | |
Expense reductions | (159,380) | 3,475,526 |
Net investment income (loss) | 2,322,577 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 7,035,649 | |
Foreign currency transactions | (610,601) | |
Total net realized gain (loss) |
| 6,425,048 |
Change in net unrealized appreciation (depreciation) on: Investment securities | (74,639,496) | |
Assets and liabilities in foreign currencies | 9,762 | |
Total change in net unrealized appreciation (depreciation) |
| (74,629,734) |
Net gain (loss) | (68,204,686) | |
Net increase (decrease) in net assets resulting from operations | $ (65,882,109) | |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fund Name
Financial Statements - continued
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 2,322,577 | $ 4,243,190 |
Net realized gain (loss) | 6,425,048 | 28,991,581 |
Change in net unrealized appreciation (depreciation) | (74,629,734) | 39,792,560 |
Net increase (decrease) in net assets resulting from operations | (65,882,109) | 73,027,331 |
Distributions to shareholders from net investment income | (4,337,210) | (3,333,469) |
Share transactions | 128,724,945 | 125,870,174 |
Reinvestment of distributions | 4,112,513 | 3,164,070 |
Cost of shares redeemed | (201,372,099) | (202,248,374) |
Net increase (decrease) in net assets resulting from share transactions | (68,534,641) | (73,214,130) |
Redemption fees | 6,744 | 23,381 |
Total increase (decrease) in net assets | (138,747,216) | (3,496,887) |
|
|
|
Net Assets | ||
Beginning of period | 551,975,647 | 555,472,534 |
End of period (including distributions in excess of net investment income of $1,450,399 and undistributed net investment income of $0, respectively) | $ 413,228,431 | $ 551,975,647 |
Other Information Shares | ||
Sold | 2,865,057 | 2,494,145 |
Issued in reinvestment of distributions | 99,867 | 60,806 |
Redeemed | (4,424,392) | (4,094,270) |
Net increase (decrease) | (1,459,468) | (1,539,319) |
Financial Highlights
Years ended February 28, | 2012 H | 2011 | 2010 | 2009 | 2008 H |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 54.11 | $ 47.32 | $ 26.68 | $ 59.56 | $ 73.69 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .26 | .39 | .27 | .78 | 1.01 F |
Net realized and unrealized gain (loss) | (6.56) | 6.71 | 20.62 | (30.23) | (8.50) |
Total from investment operations | (6.30) | 7.10 | 20.89 | (29.45) | (7.49) |
Distributions from net investment income | (.53) | (.31) | (.25) | (.93) | (.87) |
Distributions from net realized gain | - | - | - | (2.51) | (5.78) |
Total distributions | (.53) | (.31) | (.25) | (3.44) | (6.65) |
Redemption fees added to paid in capital C | - B | - B | - B | .01 | .01 |
Net asset value, end of period | $ 47.28 | $ 54.11 | $ 47.32 | $ 26.68 | $ 59.56 |
Total Return A | (11.51)% | 15.03% | 78.44% | (51.86)% | (11.16)% |
Ratios to Average Net Assets D, G |
|
|
|
|
|
Expenses before reductions | .89% | .88% | .93% | .90% | .88% |
Expenses net of fee waivers, if any | .89% | .88% | .93% | .90% | .88% |
Expenses net of all reductions | .85% | .86% | .89% | .89% | .87% |
Net investment income (loss) | .57% | .79% | .64% | 1.74% | 1.41% F |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 413,228 | $ 551,976 | $ 555,473 | $ 294,618 | $ 699,205 |
Portfolio turnover rate E | 294% | 153% | 264% | 351% | 84% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
B Amount represents less than $.01 per share.
C Calculated based on average shares outstanding during the period.
D Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Investment income per share reflects a large, non-recurring dividend which amounted to $.18 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been 1.15%.
G Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund.
H For the year ended February 29.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Consumer Finance Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 29, 2012 | Past 1 | Past 5 | Past 10 |
Consumer Finance PortfolioA | 7.41% | -20.24% | -7.15% |
A Prior to December 1, 2010, Consumer Finance Portfolio operated under certain different investment policies. The historical performance for the fund may not represent its current investment policies.
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Consumer Finance Portfolio on February 28, 2002. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index performed over the same period.
Annual Report
Consumer Finance Portfolio
Management's Discussion of Fund Performance
Market Recap: U.S. stocks rose for the 12 months ending February 29, 2012, as encouraging economic news sparked a strong late-period rally that lifted major equity benchmarks past a number of significant milestones. Stocks recovered from early-period uncertainty that followed the March 2011 earthquake, tsunami and nuclear meltdown in Japan, but plummeted during the summer amid Europe's debt woes and a historic U.S. credit-rating downgrade. Despite continued volatility and mixed economic news, markets began to recover in early October. Investors gravitated toward defensive sectors and the perceived safety of larger, more-established and dividend-paying names, helping the Dow Jones® Industrial Average advance 8.83%, and close above the psychologically important 13,000 mark in late February - for the first time since May 2008. The rally accelerated late in the period and the market broadened, as investor confidence improved amid encouraging manufacturing, housing and employment data, and signs of progress in Europe. For the year, the S&P 500® Index added 5.12%, closing near a four-year high on the period's second-to-last day. Of the 10 major market sectors in the S&P 500®, three defensive areas led the way - consumer staples, health care and utilities - while financials, materials and energy finished in negative territory. The technology-laden Nasdaq Composite® Index added 7.73%, flirting with the 3,000 mark, its highest level in 12 years. Foreign developed-markets stocks reeled over Europe's turmoil, and the MSCI® EAFE® (Europe, Australasia, Far East) Index fell 7.35%.
Comments from Christopher Lee, Portfolio Manager of Consumer Finance Portfolio: For the year, the fund returned 7.41%, handily beating the 4.77% gain of its industry benchmark, the S&P® Consumer Finance Index, and the more broadly based S&P 500® Index. Relative to the industry benchmark, industry positioning helped the most, particularly underweightings in the beleaguered thrifts/mortgage finance and regional banks groups, and an overweighting in the top-performing data processing/outsourced services segment. Within thrifts/mortgage finance, the fund benefited from not owning New York-based Hudson City Bancorp, an index component whose profit margin was pressured early in the period, and underweighting multifamily home lender New York Community Bancorp, which suffered from a negative earnings revision, low interest rates and concerns about a potential dividend cut. The stocks of card processors MasterCard and Visa contributed nicely, buoyed by more people worldwide paying with plastic and new U.S. regulatory requirements that were less onerous than expected. By contrast, performance was hampered by security selection within the regional banks and consumer finance segments. In terms of individual detractors, an overweighting in global banking giant Citigroup hurt, as the stock became a popular target for "short sellers" because of a temporary selling ban on European bank stocks. Short sellers borrow shares and sell them with the hopes of buying back more shares at a lower price and profiting from the decline. I held on to the position because of my belief in Citigroup's earnings growth potential. Untimely ownership of payday and pawn lender EZCORP, an index component, also hurt. The stock was no longer in the portfolio at period end.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Consumer Finance Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 29, 2012 | ||
| % of fund's | % of fund's net assets |
Capital One Financial Corp. | 7.3 | 7.5 |
Visa, Inc. Class A | 7.0 | 6.9 |
SLM Corp. | 6.1 | 5.9 |
MasterCard, Inc. Class A | 5.3 | 10.3 |
U.S. Bancorp | 5.1 | 2.5 |
JPMorgan Chase & Co. | 4.8 | 0.0 |
Wells Fargo & Co. | 4.7 | 4.8 |
Citigroup, Inc. | 4.6 | 4.5 |
KeyCorp | 3.9 | 0.0 |
Discover Financial Services | 3.5 | 7.5 |
| 52.3 | |
Top Industries (% of fund's net assets) | |||
As of February 29, 2012 | |||
| Commercial Banks | 22.9% |
|
| Consumer Finance | 22.2% |
|
| IT Services | 13.4% |
|
| Real Estate Investment Trusts | 13.1% |
|
| Diversified Financial Services | 12.1% |
|
| All Others* | 16.3% |
|
As of August 31, 2011 | |||
| Consumer Finance | 28.0% |
|
| IT Services | 17.2% |
|
| Commercial Banks | 13.7% |
|
| Real Estate Investment Trusts | 12.9% |
|
| Thrifts & Mortgage Finance | 8.1% |
|
| All Others* | 20.1% |
|
* Includes short-term investments and net other assets. |
Annual Report
Consumer Finance Portfolio
Investments February 29, 2012
Showing Percentage of Net Assets
Common Stocks - 96.9% | |||
Shares | Value | ||
CAPITAL MARKETS - 3.1% | |||
Asset Management & Custody Banks - 0.9% | |||
State Street Corp. | 35,000 | $ 1,478,050 | |
Investment Banking & Brokerage - 2.2% | |||
E*TRADE Financial Corp. (a) | 75,000 | 722,250 | |
FXCM, Inc. Class A (d) | 210,000 | 1,986,600 | |
TD Ameritrade Holding Corp. | 55,000 | 1,026,850 | |
| 3,735,700 | ||
TOTAL CAPITAL MARKETS | 5,213,750 | ||
COMMERCIAL BANKS - 22.9% | |||
Diversified Banks - 9.8% | |||
U.S. Bancorp | 290,000 | 8,526,000 | |
Wells Fargo & Co. | 250,000 | 7,822,500 | |
| 16,348,500 | ||
Regional Banks - 13.1% | |||
BB&T Corp. | 5,000 | 146,250 | |
CIT Group, Inc. (a) | 15,000 | 610,650 | |
Fifth Third Bancorp | 200,000 | 2,722,000 | |
First Niagara Financial Group, Inc. | 525,000 | 5,019,000 | |
KeyCorp | 800,000 | 6,480,000 | |
Popular, Inc. (a) | 200,000 | 380,000 | |
Regions Financial Corp. | 500,000 | 2,880,000 | |
SunTrust Banks, Inc. | 150,000 | 3,444,000 | |
| 21,681,900 | ||
TOTAL COMMERCIAL BANKS | 38,030,400 | ||
COMMERCIAL SERVICES & SUPPLIES - 0.6% | |||
Diversified Support Services - 0.6% | |||
Intrum Justitia AB | 60,000 | 956,620 | |
CONSUMER FINANCE - 22.2% | |||
Consumer Finance - 22.2% | |||
American Express Co. | 100,000 | 5,289,000 | |
Capital One Financial Corp. | 240,000 | 12,144,000 | |
Cash America International, Inc. | 15,000 | 695,700 | |
DFC Global Corp. (a) | 65,000 | 1,164,150 | |
Discover Financial Services | 195,000 | 5,851,950 | |
First Cash Financial Services, Inc. (a) | 40,000 | 1,690,400 | |
SLM Corp. | 645,000 | 10,165,200 | |
| 37,000,400 | ||
DIVERSIFIED FINANCIAL SERVICES - 12.1% | |||
Other Diversified Financial Services - 10.9% | |||
Bank of America Corp. | 300,000 | 2,391,000 | |
| |||
Shares | Value | ||
Citigroup, Inc. | 230,000 | $ 7,663,600 | |
JPMorgan Chase & Co. | 205,000 | 8,044,200 | |
| 18,098,800 | ||
Specialized Finance - 1.2% | |||
PHH Corp. (a) | 150,000 | 2,043,000 | |
TOTAL DIVERSIFIED FINANCIAL SERVICES | 20,141,800 | ||
INTERNET SOFTWARE & SERVICES - 2.0% | |||
Internet Software & Services - 2.0% | |||
Bankrate, Inc. (d) | 15,000 | 357,600 | |
eBay, Inc. (a) | 85,000 | 3,037,900 | |
| 3,395,500 | ||
IT SERVICES - 13.4% | |||
Data Processing & Outsourced Services - 13.4% | |||
CoreLogic, Inc. (a) | 20,000 | 307,600 | |
Fidelity National Information Services, Inc. | 50,000 | 1,586,500 | |
MasterCard, Inc. Class A | 21,000 | 8,820,000 | |
Visa, Inc. Class A | 100,000 | 11,637,000 | |
| 22,351,100 | ||
REAL ESTATE INVESTMENT TRUSTS - 13.1% | |||
Mortgage REITs - 13.1% | |||
American Capital Agency Corp. | 90,000 | 2,763,900 | |
Capstead Mortgage Corp. | 210,000 | 2,793,000 | |
Dynex Capital, Inc. | 150,000 | 1,426,500 | |
Invesco Mortgage Capital, Inc. | 300,000 | 5,139,000 | |
MFA Financial, Inc. | 350,000 | 2,555,000 | |
Redwood Trust, Inc. | 300,000 | 3,471,000 | |
Two Harbors Investment Corp. | 350,000 | 3,598,000 | |
| 21,746,400 | ||
REAL ESTATE MANAGEMENT & DEVELOPMENT - 0.6% | |||
Real Estate Services - 0.6% | |||
Altisource Portfolio Solutions SA (a) | 15,000 | 966,600 | |
THRIFTS & MORTGAGE FINANCE - 6.9% | |||
Thrifts & Mortgage Finance - 6.9% | |||
BankUnited, Inc. | 20,000 | 460,600 | |
Flushing Financial Corp. | 200,000 | 2,590,000 | |
MGIC Investment Corp. (a)(d) | 180,000 | 811,800 | |
New York Community Bancorp, Inc. (d) | 170,000 | 2,211,700 | |
Ocwen Financial Corp. (a) | 236,578 | 3,811,272 | |
People's United Financial, Inc. | 90,000 | 1,133,100 | |
Radian Group, Inc. (d) | 100,000 | 379,000 | |
| 11,397,472 | ||
TOTAL COMMON STOCKS (Cost $151,813,681) |
| ||
Money Market Funds - 5.6% | |||
Shares | Value | ||
Fidelity Cash Central Fund, 0.12% (b) | 4,405,276 | $ 4,405,276 | |
Fidelity Securities Lending Cash Central Fund, 0.12% (b)(c) | 4,900,950 | 4,900,950 | |
TOTAL MONEY MARKET FUNDS (Cost $9,306,226) |
| ||
TOTAL INVESTMENT PORTFOLIO - 102.5% (Cost $161,119,907) | 170,506,268 |
NET OTHER ASSETS (LIABILITIES) - (2.5)% | (4,115,301) | ||
NET ASSETS - 100% | $ 166,390,967 | ||
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 5,995 |
Fidelity Securities Lending Cash Central Fund | 22,188 |
Total | $ 28,183 |
Other Information |
All investments are categorized as Level 1 under the Fair Value Hierarchy. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Consumer Finance Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2012 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $4,643,865) - See accompanying schedule: Unaffiliated issuers (cost $151,813,681) | $ 161,200,042 |
|
Fidelity Central Funds (cost $9,306,226) | 9,306,226 |
|
Total Investments (cost $161,119,907) |
| $ 170,506,268 |
Receivable for investments sold | 1,262,162 | |
Receivable for fund shares sold | 452,283 | |
Dividends receivable | 167,375 | |
Distributions receivable from Fidelity Central Funds | 2,515 | |
Prepaid expenses | 216 | |
Other receivables | 1,829 | |
Total assets | 172,392,648 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 817,942 | |
Payable for fund shares redeemed | 133,060 | |
Accrued management fee | 76,252 | |
Other affiliated payables | 43,824 | |
Other payables and accrued expenses | 29,653 | |
Collateral on securities loaned, at value | 4,900,950 | |
Total liabilities | 6,001,681 | |
|
|
|
Net Assets | $ 166,390,967 | |
Net Assets consist of: |
| |
Paid in capital | $ 194,098,708 | |
Undistributed net investment income | 20,275 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (37,114,377) | |
Net unrealized appreciation (depreciation) on investments | 9,386,361 | |
Net Assets, for 13,183,850 shares outstanding | $ 166,390,967 | |
Net Asset Value, offering price and redemption price per share ($166,390,967 ÷ 13,183,850 shares) | $ 12.62 | |
Statement of Operations
| Year ended February 29, 2012 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 3,686,339 |
Interest |
| 4 |
Income from Fidelity Central Funds |
| 28,183 |
Total income |
| 3,714,526 |
|
|
|
Expenses | ||
Management fee | $ 718,590 | |
Transfer agent fees | 386,828 | |
Accounting and security lending fees | 51,033 | |
Custodian fees and expenses | 5,283 | |
Independent trustees' compensation | 767 | |
Registration fees | 21,605 | |
Audit | 37,079 | |
Legal | 767 | |
Miscellaneous | (6,487) | |
Total expenses before reductions | 1,215,465 | |
Expense reductions | (9,475) | 1,205,990 |
Net investment income (loss) | 2,508,536 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 4,575,259 | |
Foreign currency transactions | 4,731 | |
Total net realized gain (loss) |
| 4,579,990 |
Change in net unrealized appreciation (depreciation) on investment securities | 6,126,184 | |
Net gain (loss) | 10,706,174 | |
Net increase (decrease) in net assets resulting from operations | $ 13,214,710 | |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Consumer Finance Portfolio
Financial Statements - continued
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 2,508,536 | $ 1,746,307 |
Net realized gain (loss) | 4,579,990 | (6,797,853) |
Change in net unrealized appreciation (depreciation) | 6,126,184 | 2,833,691 |
Net increase (decrease) in net assets resulting from operations | 13,214,710 | (2,217,855) |
Distributions to shareholders from net investment income | (2,460,438) | (2,038,026) |
Distributions to shareholders from net realized gain | (165,262) | - |
Total distributions | (2,625,700) | (2,038,026) |
Share transactions | 92,296,814 | 120,380,784 |
Reinvestment of distributions | 2,566,050 | 1,960,762 |
Cost of shares redeemed | (41,147,880) | (101,440,703) |
Net increase (decrease) in net assets resulting from share transactions | 53,714,984 | 20,900,843 |
Redemption fees | 5,807 | 27,586 |
Total increase (decrease) in net assets | 64,309,801 | 16,672,548 |
|
|
|
Net Assets | ||
Beginning of period | 102,081,166 | 85,408,618 |
End of period (including undistributed net investment income of $20,275 and undistributed net investment income of $22,936, respectively) | $ 166,390,967 | $ 102,081,166 |
Other Information Shares | ||
Sold | 7,998,753 | 9,886,922 |
Issued in reinvestment of distributions | 231,417 | 168,934 |
Redeemed | (3,576,270) | (8,902,219) |
Net increase (decrease) | 4,653,900 | 1,153,637 |
Financial Highlights
Years ended February 28, | 2012 H | 2011 | 2010 | 2009 | 2008 H |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 11.97 | $ 11.58 | $ 8.38 | $ 25.83 | $ 48.40 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .22 | .19 | .22 | .75 | .86 |
Net realized and unrealized gain (loss) | .64 | .48 F | 3.44 | (17.60) | (20.77) |
Total from investment operations | .86 | .67 | 3.66 | (16.85) | (19.91) |
Distributions from net investment income | (.20) | (.28) | (.46) | (.56) | (.80) |
Distributions from net realized gain | (.01) | - | - | (.05) | (1.86) |
Total distributions | (.21) | (.28) | (.46) | (.61) | (2.66) |
Redemption fees added to paid in capital C | - B | - B | - B | .01 | - B |
Net asset value, end of period | $ 12.62 | $ 11.97 | $ 11.58 | $ 8.38 | $ 25.83 |
Total Return A | 7.41% | 5.83% | 44.74% | (65.96)% | (42.37)% |
Ratios to Average Net Assets D, G |
|
|
|
|
|
Expenses before reductions | .95% | 1.01% | 1.05% | .99% | .93% |
Expenses net of fee waivers, if any | .95% | 1.01% | 1.05% | .99% | .93% |
Expenses net of all reductions | .94% | .98% | 1.02% | .99% | .92% |
Net investment income (loss) | 1.96% | 1.63% | 2.18% | 4.48% | 2.21% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 166,391 | $ 102,081 | $ 85,409 | $ 51,439 | $ 151,202 |
Portfolio turnover rate E | 113% | 161% | 153% | 79% | 36% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
B Amount represents less than $.01 per share.
C Calculated based on average shares outstanding during the period.
D Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F The amount shown for a share outstanding does not correspond with the aggregate net gain (loss) on investments for the period due to the timing of sales and repurchases of shares in relation to fluctuating market values of the investments of the Fund.
G Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund.
H For the year ended February 29.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Services Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 29, 2012 | Past 1 | Past 5 | Past 10 |
Financial Services Portfolio | -8.07% | -11.27% | -1.23% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Financial Services Portfolio on February 28, 2002. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index performed over the same period.
Annual Report
Financial Services Portfolio
Management's Discussion of Fund Performance
Market Recap: U.S. stocks rose for the 12 months ending February 29, 2012, as encouraging economic news sparked a strong late-period rally that lifted major equity benchmarks past a number of significant milestones. Stocks recovered from early-period uncertainty that followed the March 2011 earthquake, tsunami and nuclear meltdown in Japan, but plummeted during the summer amid Europe's debt woes and a historic U.S. credit-rating downgrade. Despite continued volatility and mixed economic news, markets began to recover in early October. Investors gravitated toward defensive sectors and the perceived safety of larger, more-established and dividend-paying names, helping the Dow Jones® Industrial Average advance 8.83%, and close above the psychologically important 13,000 mark in late February - for the first time since May 2008. The rally accelerated late in the period and the market broadened, as investor confidence improved amid encouraging manufacturing, housing and employment data, and signs of progress in Europe. For the year, the S&P 500® Index added 5.12%, closing near a four-year high on the period's second-to-last day. Of the 10 major market sectors in the S&P 500®, three defensive areas led the way - consumer staples, health care and utilities - while financials, materials and energy finished in negative territory. The technology-laden Nasdaq Composite® Index added 7.73%, flirting with the 3,000 mark, its highest level in 12 years. Foreign developed-markets stocks reeled over Europe's turmoil, and the MSCI® EAFE® (Europe, Australasia, Far East) Index fell 7.35%.
Comments from Benjamin Hesse, Portfolio Manager of Financial Services Portfolio: For the year, the fund returned -8.07%, compared with -8.67% for the MSCI® U.S. IM Financials 25/50 Index, and lagged the S&P 500 by a wide margin. Versus the MSCI index, the fund's performance benefited from investments in out-of-index data processing/outsourced services stocks MasterCard and Visa, which climbed amid less-onerous-than-expected changes to debit card swipe fees and favorable industry trends. The fund also gained ground in other diversified financial services. There, an underweighting in major index component Bank of America stood out, as slow loan growth, low interest rates, continued fallout from the mortgage crisis and capital adequacy concerns led to a steep downturn in the stock. Timely ownership of high-quality banks Deutsche Bank and BNP Paribas also aided performance. Conversely, positioning in the poor-performing investment banking/brokerage and property/casualty insurance segments significantly detracted, as did security selection in consumer finance. Among individual stocks, online broker E*TRADE Financial hurt, as its share price fell sharply amid news the company was not for sale. In addition, the stock of commodities/derivatives broker MF Global Holdings plunged after its sizable investment in European government debt pushed the company into bankruptcy in late October. An overweighting in industry leader Morgan Stanley and a stake in a much smaller investment bank, Lazard, also detracted. Both businesses were hindered by sluggish economic conditions, market volatility and mounting sovereign debt problems in Europe. Some of the names mentioned in this report were not in the sector benchmark.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Financial Services Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 29, 2012 | ||
| % of fund's | % of fund's net assets |
Citigroup, Inc. | 5.1 | 4.7 |
Morgan Stanley | 4.5 | 4.3 |
JPMorgan Chase & Co. | 4.3 | 2.5 |
eBay, Inc. | 4.0 | 0.0 |
Simon Property Group, Inc. | 3.6 | 0.5 |
BanColombia SA sponsored ADR | 3.5 | 0.2 |
ACE Ltd. | 3.2 | 1.5 |
Goldman Sachs Group, Inc. | 3.0 | 0.2 |
Big Yellow Group PLC | 2.9 | 0.0 |
Genworth Financial, Inc. Class A | 2.8 | 0.0 |
| 36.9 | |
Top Industries (% of fund's net assets) | |||
As of February 29, 2012 | |||
| Commercial Banks | 19.3% |
|
| Capital Markets | 17.8% |
|
| Real Estate Investment Trusts | 17.4% |
|
| Diversified Financial Services | 13.4% |
|
| Insurance | 10.9% |
|
| All Others* | 21.2% |
|
As of August 31, 2011 | |||
| Capital Markets | 25.2% |
|
| Diversified Financial Services | 14.4% |
|
| Real Estate Investment Trusts | 12.9% |
|
| Insurance | 12.5% |
|
| Commercial Banks | 8.6% |
|
| All Others* | 26.4% |
|
* Includes short-term investments and net other assets. |
Annual Report
Financial Services Portfolio
Investments February 29, 2012
Showing Percentage of Net Assets
Common Stocks - 99.3% | |||
Shares | Value | ||
CAPITAL MARKETS - 17.8% | |||
Asset Management & Custody Banks - 5.4% | |||
A.F.P. Provida SA sponsored ADR | 9,000 | $ 677,250 | |
Affiliated Managers Group, Inc. (a) | 398 | 42,343 | |
Ameriprise Financial, Inc. | 200 | 11,152 | |
Apollo Global Management LLC Class A | 428,673 | 6,009,995 | |
Bank of New York Mellon Corp. | 1,500 | 33,165 | |
BlackRock, Inc. Class A | 193 | 38,407 | |
Cetip SA | 120,400 | 2,243,326 | |
Franklin Resources, Inc. | 400 | 47,156 | |
Invesco Ltd. | 54,586 | 1,352,095 | |
Julius Baer Group Ltd. | 910 | 35,654 | |
Legg Mason, Inc. | 2,318 | 63,490 | |
Northern Trust Corp. | 26,393 | 1,172,113 | |
State Street Corp. | 131,310 | 5,545,221 | |
The Blackstone Group LP | 416,628 | 6,507,729 | |
| 23,779,096 | ||
Diversified Capital Markets - 0.3% | |||
Credit Suisse Group sponsored ADR | 1,300 | 34,866 | |
HFF, Inc. (a) | 23,200 | 334,312 | |
UBS AG (NY Shares) (a) | 73,537 | 1,031,724 | |
| 1,400,902 | ||
Investment Banking & Brokerage - 12.1% | |||
Charles Schwab Corp. | 2,400 | 33,312 | |
E*TRADE Financial Corp. (a) | 723,123 | 6,963,674 | |
Evercore Partners, Inc. Class A | 192,613 | 5,237,147 | |
GFI Group, Inc. | 1,037,136 | 3,982,602 | |
Goldman Sachs Group, Inc. | 114,229 | 13,152,327 | |
Investment Technology Group, Inc. (a) | 11,900 | 136,850 | |
Lazard Ltd. Class A | 72,597 | 2,211,305 | |
Macquarie Group Ltd. | 1,078 | 30,945 | |
Monex Beans Holdings, Inc. | 8,224 | 1,753,145 | |
Morgan Stanley | 1,061,601 | 19,682,083 | |
| 53,183,390 | ||
TOTAL CAPITAL MARKETS | 78,363,388 | ||
COMMERCIAL BANKS - 19.3% | |||
Diversified Banks - 9.4% | |||
Banco ABC Brasil SA | 8,600 | 69,102 | |
Banco Bradesco SA (PN) sponsored ADR | 1,900 | 34,466 | |
Banco de Chile sponsored ADR | 418 | 39,919 | |
Banco Macro SA sponsored ADR | 1,600 | 32,272 | |
Banco Pine SA | 570 | 4,232 | |
Banco Santander Chile sponsored ADR | 400 | 32,404 | |
Banco Santander SA (Spain) sponsored ADR | 100 | 830 | |
Banco Santander SA (Brasil) ADR | 474,400 | 5,066,592 | |
BanColombia SA sponsored ADR | 240,900 | 15,393,510 | |
Bank of Baroda | 23,878 | 408,972 | |
Barclays PLC sponsored ADR | 2,745 | 42,740 | |
BBVA Banco Frances SA sponsored ADR | 6,900 | 41,883 | |
BNP Paribas SA | 848 | 41,387 | |
| |||
Shares | Value | ||
China CITIC Bank Corp. Ltd. (H Shares) | 88,000 | $ 57,864 | |
Comerica, Inc. | 247,761 | 7,356,024 | |
CorpBanca SA sponsored ADR (d) | 1,600 | 33,904 | |
Credicorp Ltd. (NY Shares) | 7,100 | 872,519 | |
Credit Agricole SA | 600 | 3,842 | |
Grupo Financiero Galicia SA sponsored ADR (d) | 5,400 | 37,152 | |
Guaranty Trust Bank PLC GDR (Reg. S) | 14,800 | 79,772 | |
Hana Financial Group, Inc. | 11,260 | 396,982 | |
HSBC Holdings PLC sponsored ADR | 45,700 | 2,029,994 | |
ICICI Bank Ltd. sponsored ADR | 2,300 | 83,490 | |
Industrial & Commercial Bank of China Ltd. (H Shares) | 17,000 | 12,471 | |
Intesa Sanpaolo SpA | 22,595 | 43,978 | |
Itau Unibanco Banco Multiplo SA sponsored ADR | 1,875 | 39,469 | |
KB Financial Group, Inc. | 10,300 | 378,146 | |
National Australia Bank Ltd. | 697 | 17,691 | |
Nordea Bank AB | 3,400 | 32,782 | |
PT Bank Central Asia Tbk | 37,000 | 31,175 | |
Raiffeisen International Bank-Holding AG (d) | 3,700 | 133,999 | |
Sberbank (Savings Bank of the Russian Federation) sponsored ADR | 3,100 | 42,470 | |
Standard Chartered PLC (United Kingdom) | 6,945 | 178,703 | |
Sumitomo Mitsui Financial Group, Inc. | 5,900 | 200,238 | |
Swedbank AB (A Shares) | 2,600 | 44,479 | |
The Jammu & Kashmir Bank Ltd. | 20,167 | 355,150 | |
U.S. Bancorp | 42,273 | 1,242,826 | |
UniCredit SpA | 1,710 | 8,898 | |
United Overseas Bank Ltd. | 3,000 | 43,297 | |
Wells Fargo & Co. | 179,807 | 5,626,161 | |
Yes Bank Ltd. | 58,767 | 413,379 | |
| 41,005,164 | ||
Regional Banks - 9.9% | |||
Alerus Financial Corp. | 500 | 13,500 | |
Banco Daycoval SA (PN) | 55,000 | 341,698 | |
Bancorp New Jersey, Inc. | 300 | 2,955 | |
BancTrust Financial Group, Inc. (a) | 83,350 | 108,355 | |
Bank of Hawaii Corp. | 9,000 | 414,000 | |
Bank of the Ozarks, Inc. | 1,100 | 32,285 | |
BB&T Corp. | 2,629 | 76,898 | |
Boston Private Financial Holdings, Inc. | 6,000 | 57,180 | |
Bridge Capital Holdings (a) | 132,440 | 1,597,226 | |
BS Financial Group, Inc. (a) | 191,680 | 2,389,662 | |
Canadian Western Bank, Edmonton | 6,000 | 166,726 | |
Cascade Bancorp (a)(d) | 2,530 | 14,674 | |
CIT Group, Inc. (a) | 953 | 38,797 | |
Citizens & Northern Corp. | 1,500 | 29,850 | |
City Holding Co. | 1,200 | 41,124 | |
City National Corp. | 20,272 | 952,784 | |
CNB Financial Corp., Pennsylvania | 2,300 | 35,650 | |
CoBiz, Inc. | 540,293 | 3,149,908 | |
Common Stocks - continued | |||
Shares | Value | ||
COMMERCIAL BANKS - CONTINUED | |||
Regional Banks - continued | |||
Cullen/Frost Bankers, Inc. | 400 | $ 22,592 | |
Fifth Third Bancorp | 243,338 | 3,311,830 | |
First Business Finance Services, Inc. | 600 | 10,812 | |
First Commonwealth Financial Corp. | 71,700 | 429,483 | |
First Horizon National Corp. | 619,200 | 5,820,480 | |
First Interstate Bancsystem, Inc. | 279,031 | 3,794,822 | |
First Midwest Bancorp, Inc., Delaware | 3,900 | 45,084 | |
FirstMerit Corp. | 2,700 | 43,335 | |
FNB Corp., Pennsylvania | 30,900 | 364,311 | |
Glacier Bancorp, Inc. | 5,486 | 75,707 | |
Huntington Bancshares, Inc. | 6,737 | 39,378 | |
KeyCorp | 4,679 | 37,900 | |
NBT Bancorp, Inc. | 400 | 8,724 | |
Northrim Bancorp, Inc. | 6,100 | 122,000 | |
Pacific Continental Corp. | 87,852 | 737,957 | |
PNC Financial Services Group, Inc. | 696 | 41,426 | |
PrivateBancorp, Inc. | 3,000 | 43,500 | |
PT Bank Tabungan Negara Tbk | 4,918,000 | 665,186 | |
Regions Financial Corp. | 1,342,766 | 7,734,332 | |
Sandy Spring Bancorp, Inc. | 400 | 7,224 | |
Savannah Bancorp, Inc. (a) | 41,015 | 213,688 | |
SCBT Financial Corp. | 2,500 | 77,425 | |
SunTrust Banks, Inc. | 76,056 | 1,746,246 | |
Susquehanna Bancshares, Inc. | 206,375 | 1,913,096 | |
SVB Financial Group (a) | 698 | 41,377 | |
Synovus Financial Corp. (d) | 1,617,700 | 3,429,524 | |
TCF Financial Corp. | 2,873 | 30,971 | |
Texas Capital Bancshares, Inc. (a) | 8,007 | 271,357 | |
UMB Financial Corp. | 1,000 | 41,650 | |
Umpqua Holdings Corp. | 400 | 4,928 | |
Valley National Bancorp (d) | 13,800 | 172,638 | |
Virginia Commerce Bancorp, Inc. (a) | 9,600 | 80,640 | |
Washington Trust Bancorp, Inc. | 1,400 | 32,914 | |
Webster Financial Corp. | 61,100 | 1,336,868 | |
Westamerica Bancorp. | 100 | 4,736 | |
Western Alliance Bancorp. (a) | 164,010 | 1,335,041 | |
Zions Bancorporation | 2,200 | 41,800 | |
| 43,594,254 | ||
TOTAL COMMERCIAL BANKS | 84,599,418 | ||
COMMERCIAL SERVICES & SUPPLIES - 0.0% | |||
Diversified Support Services - 0.0% | |||
Intrum Justitia AB | 2,600 | 41,454 | |
CONSUMER FINANCE - 3.1% | |||
Consumer Finance - 3.1% | |||
Advance America Cash Advance Centers, Inc. | 4,206 | 43,616 | |
American Express Co. | 725 | 38,345 | |
| |||
Shares | Value | ||
Capital One Financial Corp. | 166,527 | $ 8,426,266 | |
Discover Financial Services | 1,400 | 42,014 | |
EZCORP, Inc. (non-vtg.) Class A (a) | 35,504 | 1,118,376 | |
First Cash Financial Services, Inc. (a) | 16,028 | 677,343 | |
Green Dot Corp. Class A (a) | 21,622 | 690,390 | |
International Personal Finance PLC | 284,818 | 1,122,300 | |
Nelnet, Inc. Class A | 1,800 | 47,556 | |
Netspend Holdings, Inc. (a) | 3,724 | 32,064 | |
PT Clipan Finance Indonesia Tbk | 928,000 | 55,557 | |
SLM Corp. | 91,659 | 1,444,546 | |
| 13,738,373 | ||
DIVERSIFIED CONSUMER SERVICES - 1.8% | |||
Specialized Consumer Services - 1.8% | |||
Sotheby's Class A (Ltd. vtg.) | 198,830 | 7,821,972 | |
DIVERSIFIED FINANCIAL SERVICES - 13.4% | |||
Other Diversified Financial Services - 10.4% | |||
Bank of America Corp. | 549,706 | 4,381,157 | |
Citigroup, Inc. | 672,198 | 22,397,633 | |
JPMorgan Chase & Co. | 485,344 | 19,044,899 | |
| 45,823,689 | ||
Specialized Finance - 3.0% | |||
BM&F Bovespa SA | 6,400 | 42,817 | |
CBOE Holdings, Inc. | 280,849 | 7,743,007 | |
CME Group, Inc. | 129 | 37,344 | |
IntercontinentalExchange, Inc. (a) | 247 | 34,076 | |
Moody's Corp. | 1,000 | 38,610 | |
NYSE Euronext | 1,300 | 38,701 | |
PHH Corp. (a)(d) | 381,637 | 5,197,896 | |
| 13,132,451 | ||
TOTAL DIVERSIFIED FINANCIAL SERVICES | 58,956,140 | ||
ENERGY EQUIPMENT & SERVICES - 0.0% | |||
Oil & Gas Equipment & Services - 0.0% | |||
SBM Offshore NV | 3,500 | 63,506 | |
HOTELS, RESTAURANTS & LEISURE - 2.6% | |||
Casinos & Gaming - 1.6% | |||
Las Vegas Sands Corp. | 120,600 | 6,706,566 | |
MGM Mirage, Inc. (a) | 3,000 | 41,310 | |
Wynn Resorts Ltd. | 1,900 | 225,226 | |
| 6,973,102 | ||
Hotels, Resorts & Cruise Lines - 1.0% | |||
Starwood Hotels & Resorts Worldwide, Inc. | 81,500 | 4,392,850 | |
TOTAL HOTELS, RESTAURANTS & LEISURE | 11,365,952 | ||
HOUSEHOLD DURABLES - 1.3% | |||
Homebuilding - 1.3% | |||
PulteGroup, Inc. (a) | 144,800 | 1,277,136 | |
Common Stocks - continued | |||
Shares | Value | ||
HOUSEHOLD DURABLES - CONTINUED | |||
Homebuilding - continued | |||
Ryland Group, Inc. | 54,100 | $ 980,833 | |
Standard Pacific Corp. (a) | 832,800 | 3,647,664 | |
| 5,905,633 | ||
INDUSTRIAL CONGLOMERATES - 0.0% | |||
Industrial Conglomerates - 0.0% | |||
General Electric Co. | 100 | 1,905 | |
Keppel Corp. Ltd. | 4,000 | 35,342 | |
| 37,247 | ||
INSURANCE - 10.9% | |||
Insurance Brokers - 0.4% | |||
Aon Corp. | 23,200 | 1,085,992 | |
Brasil Insurance Participacoes e Administracao SA | 52,600 | 624,787 | |
| 1,710,779 | ||
Life & Health Insurance - 1.1% | |||
AFLAC, Inc. | 4,634 | 218,957 | |
Citizens, Inc. Class A (a) | 5,800 | 61,944 | |
CNO Financial Group, Inc. (a) | 5,200 | 38,584 | |
FBL Financial Group, Inc. Class A | 1,300 | 44,161 | |
Lincoln National Corp. | 1,400 | 34,776 | |
MetLife, Inc. | 82,918 | 3,196,489 | |
Phoenix Companies, Inc. (a) | 15,700 | 32,499 | |
Ping An Insurance Group Co. China Ltd. (H Shares) | 10,500 | 91,854 | |
Prudential Financial, Inc. | 12,926 | 790,554 | |
Resolution Ltd. | 8,700 | 37,230 | |
StanCorp Financial Group, Inc. | 900 | 35,784 | |
Symetra Financial Corp. | 3,000 | 29,820 | |
Torchmark Corp. | 900 | 43,596 | |
Unum Group | 1,500 | 34,575 | |
| 4,690,823 | ||
Multi-Line Insurance - 3.3% | |||
American International Group, Inc. (a) | 39,400 | 1,151,268 | |
Fairfax Financial Holdings Ltd. (sub. vtg.) | 300 | 123,977 | |
Genworth Financial, Inc. Class A (a) | 1,367,000 | 12,426,030 | |
Hartford Financial Services Group, Inc. | 16,800 | 347,928 | |
Loews Corp. | 9,000 | 352,260 | |
Porto Seguro SA | 6,600 | 82,622 | |
| 14,484,085 | ||
Property & Casualty Insurance - 5.5% | |||
ACE Ltd. | 198,301 | 14,220,165 | |
Allied World Assurance Co. Holdings Ltd. | 5,900 | 389,223 | |
Allstate Corp. | 18,900 | 594,027 | |
Assured Guaranty Ltd. | 25,000 | 420,000 | |
Axis Capital Holdings Ltd. | 62,600 | 1,931,210 | |
Berkshire Hathaway, Inc. Class B (a) | 55,359 | 4,342,914 | |
Erie Indemnity Co. Class A | 437 | 33,260 | |
| |||
Shares | Value | ||
Fidelity National Financial, Inc. Class A | 15,238 | $ 263,008 | |
First American Financial Corp. | 58,400 | 899,360 | |
RLI Corp. | 100 | 7,006 | |
The Travelers Companies, Inc. | 200 | 11,594 | |
W.R. Berkley Corp. | 11,800 | 421,850 | |
XL Group PLC Class A | 22,251 | 462,821 | |
| 23,996,438 | ||
Reinsurance - 0.6% | |||
Arch Capital Group Ltd. (a) | 35,600 | 1,318,980 | |
Montpelier Re Holdings Ltd. | 2,100 | 36,225 | |
Platinum Underwriters Holdings Ltd. | 25,904 | 921,146 | |
Validus Holdings Ltd. | 18,420 | 561,626 | |
| 2,837,977 | ||
TOTAL INSURANCE | 47,720,102 | ||
INTERNET SOFTWARE & SERVICES - 4.0% | |||
Internet Software & Services - 4.0% | |||
eBay, Inc. (a) | 489,744 | 17,503,451 | |
IT SERVICES - 4.4% | |||
Data Processing & Outsourced Services - 4.2% | |||
Alliance Data Systems Corp. (a) | 3,600 | 436,896 | |
Cielo SA | 1,300 | 46,476 | |
Fidelity National Information Services, Inc. | 1,800 | 57,114 | |
Fiserv, Inc. (a) | 938 | 62,189 | |
Jack Henry & Associates, Inc. | 124,555 | 4,202,486 | |
MasterCard, Inc. Class A | 64 | 26,880 | |
MoneyGram International, Inc. (a) | 2,100 | 37,632 | |
Redecard SA | 554,600 | 11,528,266 | |
The Western Union Co. | 38,138 | 666,271 | |
Total System Services, Inc. | 61,170 | 1,338,400 | |
VeriFone Systems, Inc. (a) | 749 | 35,870 | |
Visa, Inc. Class A | 360 | 41,893 | |
| 18,480,373 | ||
IT Consulting & Other Services - 0.2% | |||
Accenture PLC Class A | 600 | 35,724 | |
Cognizant Technology Solutions Corp. Class A (a) | 9,328 | 661,822 | |
| 697,546 | ||
TOTAL IT SERVICES | 19,177,919 | ||
PROFESSIONAL SERVICES - 0.2% | |||
Research & Consulting Services - 0.2% | |||
Equifax, Inc. | 1,015 | 42,671 | |
IHS, Inc. Class A (a) | 8,610 | 814,248 | |
| 856,919 | ||
Common Stocks - continued | |||
Shares | Value | ||
REAL ESTATE INVESTMENT TRUSTS - 17.4% | |||
Diversified REITs - 0.1% | |||
American Assets Trust, Inc. | 16,900 | $ 363,688 | |
Vornado Realty Trust | 400 | 32,692 | |
| 396,380 | ||
Industrial REITs - 0.2% | |||
DCT Industrial Trust, Inc. | 140,500 | 795,230 | |
Prologis, Inc. | 1,200 | 40,392 | |
Stag Industrial, Inc. | 3,000 | 36,870 | |
| 872,492 | ||
Mortgage REITs - 0.9% | |||
American Capital Agency Corp. | 14,083 | 432,489 | |
American Capital Mortgage Investment Corp. | 4,800 | 103,488 | |
Invesco Mortgage Capital, Inc. | 133,400 | 2,285,142 | |
Pennymac Mortgage Investment Trust | 2,100 | 37,800 | |
Two Harbors Investment Corp. | 103,800 | 1,067,064 | |
| 3,925,983 | ||
Office REITs - 2.5% | |||
Boston Properties, Inc. | 19,500 | 1,980,225 | |
Corporate Office Properties Trust (SBI) | 1,200 | 29,424 | |
Douglas Emmett, Inc. | 136,200 | 2,869,734 | |
Highwoods Properties, Inc. (SBI) | 21,000 | 672,000 | |
Lexington Corporate Properties Trust (d) | 597,147 | 5,165,322 | |
MPG Office Trust, Inc. (a) | 14,400 | 32,256 | |
SL Green Realty Corp. | 500 | 38,025 | |
| 10,786,986 | ||
Residential REITs - 2.7% | |||
American Campus Communities, Inc. | 10,500 | 432,075 | |
Apartment Investment & Management Co. Class A | 1,513 | 37,583 | |
AvalonBay Communities, Inc. | 6,700 | 868,789 | |
BRE Properties, Inc. | 1,400 | 67,802 | |
Camden Property Trust (SBI) | 46,500 | 2,883,000 | |
Campus Crest Communities, Inc. | 3,100 | 32,829 | |
Colonial Properties Trust (SBI) | 124,000 | 2,544,480 | |
Equity Lifestyle Properties, Inc. | 16,900 | 1,124,019 | |
Equity Residential (SBI) | 3,338 | 189,899 | |
Essex Property Trust, Inc. | 800 | 111,992 | |
Home Properties, Inc. | 6,000 | 345,780 | |
Post Properties, Inc. | 46,546 | 2,032,664 | |
UDR, Inc. | 44,579 | 1,115,367 | |
| 11,786,279 | ||
Retail REITs - 3.6% | |||
Federal Realty Investment Trust (SBI) | 400 | 38,140 | |
Glimcher Realty Trust | 1,278 | 12,652 | |
Kimco Realty Corp. | 1,800 | 33,084 | |
Simon Property Group, Inc. | 116,633 | 15,801,439 | |
Urstadt Biddle Properties, Inc. Class A | 3,900 | 74,178 | |
| 15,959,493 | ||
| |||
Shares | Value | ||
Specialized REITs - 7.4% | |||
American Tower Corp. | 700 | $ 43,806 | |
Big Yellow Group PLC | 2,789,369 | 12,868,252 | |
CubeSmart | 3,100 | 34,968 | |
DiamondRock Hospitality Co. | 64,405 | 641,474 | |
HCP, Inc. | 79,200 | 3,128,400 | |
Health Care REIT, Inc. | 15,900 | 865,596 | |
Host Hotels & Resorts, Inc. | 61,700 | 973,626 | |
Plum Creek Timber Co., Inc. | 2,300 | 90,068 | |
Potlatch Corp. | 6,000 | 184,920 | |
Public Storage | 327 | 43,841 | |
Rayonier, Inc. | 50,100 | 2,230,452 | |
Strategic Hotel & Resorts, Inc. (a) | 1,230,860 | 7,668,258 | |
Sunstone Hotel Investors, Inc. (a) | 63,700 | 572,026 | |
Ventas, Inc. | 32,707 | 1,828,975 | |
Weyerhaeuser Co. | 71,800 | 1,499,902 | |
| 32,674,564 | ||
TOTAL REAL ESTATE INVESTMENT TRUSTS | 76,402,177 | ||
REAL ESTATE MANAGEMENT & DEVELOPMENT - 1.5% | |||
Diversified Real Estate Activities - 1.4% | |||
Tejon Ranch Co. (a) | 30,967 | 904,856 | |
The St. Joe Co. (a)(d) | 322,819 | 5,200,614 | |
| 6,105,470 | ||
Real Estate Development - 0.0% | |||
Bukit Sembawang Estates Ltd. | 23,000 | 83,676 | |
Real Estate Operating Companies - 0.0% | |||
BR Malls Participacoes SA | 1,900 | 24,349 | |
Castellum AB | 2,857 | 37,607 | |
Thomas Properties Group, Inc. | 6,200 | 26,660 | |
| 88,616 | ||
Real Estate Services - 0.1% | |||
CBRE Group, Inc. (a) | 2,060 | 37,760 | |
Jones Lang LaSalle, Inc. | 495 | 40,298 | |
Kennedy-Wilson Holdings, Inc. | 6,100 | 82,472 | |
| 160,530 | ||
TOTAL REAL ESTATE MANAGEMENT & DEVELOPMENT | 6,438,292 | ||
SOFTWARE - 0.0% | |||
Application Software - 0.0% | |||
EPIQ Systems, Inc. | 100 | 1,149 | |
Fair Isaac Corp. | 200 | 8,096 | |
| 9,245 | ||
SPECIALTY RETAIL - 1.5% | |||
Computer & Electronics Retail - 1.5% | |||
Rent-A-Center, Inc. | 182,280 | 6,456,358 | |
THRIFTS & MORTGAGE FINANCE - 0.1% | |||
Thrifts & Mortgage Finance - 0.1% | |||
BankUnited, Inc. | 1,500 | 34,545 | |
Common Stocks - continued | |||
Shares | Value | ||
THRIFTS & MORTGAGE FINANCE - CONTINUED | |||
Thrifts & Mortgage Finance - continued | |||
Brookline Bancorp, Inc., Delaware | 2,200 | $ 20,196 | |
Cape Bancorp, Inc. (a) | 3,700 | 29,822 | |
Cheviot Financial Corp. | 22,986 | 189,864 | |
Hudson City Bancorp, Inc. | 2,300 | 15,755 | |
People's United Financial, Inc. | 3,000 | 37,770 | |
| 327,952 | ||
TOTAL COMMON STOCKS (Cost $433,602,873) |
| ||
Money Market Funds - 4.2% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.12% (b) | 10,242,044 | 10,242,044 | |
Fidelity Securities Lending Cash Central Fund, 0.12% (b)(c) | 8,261,324 | 8,261,324 | |
TOTAL MONEY MARKET FUNDS (Cost $18,503,368) |
| ||
TOTAL INVESTMENT PORTFOLIO - 103.5% (Cost $452,106,241) | 454,288,866 |
NET OTHER ASSETS (LIABILITIES) - (3.5)% | (15,276,367) | ||
NET ASSETS - 100% | $ 439,012,499 | ||
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 13,230 |
Fidelity Securities Lending Cash Central Fund | 37,045 |
Total | $ 50,275 |
Other Information |
The following is a summary of the inputs used, as of February 29, 2012, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities: | ||||
Common Stocks | $ 435,785,498 | $ 434,798,142 | $ 987,356 | $ - |
Money Market Funds | 18,503,368 | 18,503,368 | - | - |
Total Investments in Securities: | $ 454,288,866 | $ 453,301,510 | $ 987,356 | $ - |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 80.5% |
Brazil | 4.5% |
United Kingdom | 3.8% |
Switzerland | 3.5% |
Colombia | 3.5% |
Bermuda | 2.2% |
Others (Individually Less Than 1%) | 2.0% |
| 100.0% |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Services Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2012 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $8,043,901) - See accompanying schedule: Unaffiliated issuers (cost $433,602,873) | $ 435,785,498 |
|
Fidelity Central Funds (cost $18,503,368) | 18,503,368 |
|
Total Investments (cost $452,106,241) |
| $ 454,288,866 |
Receivable for investments sold | 10,303,260 | |
Receivable for fund shares sold | 484,617 | |
Dividends receivable | 243,172 | |
Distributions receivable from Fidelity Central Funds | 4,907 | |
Prepaid expenses | 497 | |
Other receivables | 43,815 | |
Total assets | 465,369,134 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 16,991,530 | |
Payable for fund shares redeemed | 766,741 | |
Accrued management fee | 199,084 | |
Other affiliated payables | 96,435 | |
Other payables and accrued expenses | 41,521 | |
Collateral on securities loaned, at value | 8,261,324 | |
Total liabilities | 26,356,635 | |
|
|
|
Net Assets | $ 439,012,499 | |
Net Assets consist of: |
| |
Paid in capital | $ 549,997,707 | |
Distributions in excess of net investment income | (210,476) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (112,954,242) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 2,179,510 | |
Net Assets, for 7,626,180 shares outstanding | $ 439,012,499 | |
Net Asset Value, offering price and redemption price per share ($439,012,499 ÷ 7,626,180 shares) | $ 57.57 | |
Statement of Operations
| Year ended February 29, 2012 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 4,590,093 |
Interest |
| 30 |
Income from Fidelity Central Funds |
| 50,275 |
Total income |
| 4,640,398 |
|
|
|
Expenses | ||
Management fee | $ 2,111,948 | |
Transfer agent fees | 1,026,257 | |
Accounting and security lending fees | 149,621 | |
Custodian fees and expenses | 51,780 | |
Independent trustees' compensation | 2,283 | |
Registration fees | 29,281 | |
Audit | 44,012 | |
Legal | 1,813 | |
Interest | 2,735 | |
Miscellaneous | 4,569 | |
Total expenses before reductions | 3,424,299 | |
Expense reductions | (251,280) | 3,173,019 |
Net investment income (loss) | 1,467,379 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | (20,232,105) | |
Foreign currency transactions | (413,083) | |
Total net realized gain (loss) |
| (20,645,188) |
Change in net unrealized appreciation (depreciation) on: Investment securities (net of increase in deferred foreign taxes of $1,027) | (12,857,032) | |
Assets and liabilities in foreign currencies | 39,043 | |
Total change in net unrealized appreciation (depreciation) |
| (12,817,989) |
Net gain (loss) | (33,463,177) | |
Net increase (decrease) in net assets resulting from operations | $ (31,995,798) | |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Services Portfolio
Financial Statements - continued
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 1,467,379 | $ 1,331,263 |
Net realized gain (loss) | (20,645,188) | 12,037,873 |
Change in net unrealized appreciation (depreciation) | (12,817,989) | 3,872,292 |
Net increase (decrease) in net assets resulting from operations | (31,995,798) | 17,241,428 |
Distributions to shareholders from net investment income | (961,766) | (1,297,143) |
Share transactions | 182,517,774 | 261,286,558 |
Reinvestment of distributions | 932,153 | 1,251,537 |
Cost of shares redeemed | (223,738,234) | (248,816,600) |
Net increase (decrease) in net assets resulting from share transactions | (40,288,307) | 13,721,495 |
Redemption fees | 31,454 | 40,773 |
Total increase (decrease) in net assets | (73,214,417) | 29,706,553 |
|
|
|
Net Assets | ||
Beginning of period | 512,226,916 | 482,520,363 |
End of period (including distributions in excess of net investment income of $210,476 and distributions in excess of net investment income of $153,011, respectively) | $ 439,012,499 | $ 512,226,916 |
Other Information Shares | ||
Sold | 3,429,796 | 4,241,840 |
Issued in reinvestment of distributions | 19,762 | 21,169 |
Redeemed | (3,978,638) | (4,242,167) |
Net increase (decrease) | (529,080) | 20,842 |
Financial Highlights
Years ended February 28, | 2012 G | 2011 | 2010 | 2009 | 2008 G |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 62.81 | $ 59.32 | $ 33.45 | $ 84.31 | $ 117.33 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .21 | .17 | .37 | 1.58 | 1.73 |
Net realized and unrealized gain (loss) | (5.31) | 3.49 | 26.14 | (51.12) | (27.77) |
Total from investment operations | (5.10) | 3.66 | 26.51 | (49.54) | (26.04) |
Distributions from net investment income | (.14) | (.18) | (.62) | (1.22) | (1.45) |
Distributions from net realized gain | - | - | (.03) | (.13) | (5.54) |
Total distributions | (.14) | (.18) | (.65) | (1.35) | (6.99) |
Redemption fees added to paid in capital C | - B | .01 | .01 | .03 | .01 |
Net asset value, end of period | $ 57.57 | $ 62.81 | $ 59.32 | $ 33.45 | $ 84.31 |
Total Return A | (8.07)% | 6.21% | 79.56% | (59.22)% | (23.05)% |
Ratios to Average Net Assets D, F |
|
|
|
|
|
Expenses before reductions | .90% | .92% | .96% | .94% | .90% |
Expenses net of fee waivers, if any | .90% | .92% | .96% | .94% | .90% |
Expenses net of all reductions | .84% | .88% | .92% | .93% | .89% |
Net investment income (loss) | .39% | .28% | .70% | 2.57% | 1.57% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 439,012 | $ 512,227 | $ 482,520 | $ 227,344 | $ 382,468 |
Portfolio turnover rate E | 384% | 242% | 301% | 129% | 53% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
B Amount represents less than $.01 per share.
C Calculated based on average shares outstanding during the period.
D Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund.
G For the year ended February 29.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Insurance Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 29, 2012 | Past 1 | Past 5 | Past 10 |
Insurance Portfolio | -4.13% | -5.05% | 2.24% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Insurance Portfolio on February 28, 2002. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index performed over the same period.
Annual Report
Insurance Portfolio
Management's Discussion of Fund Performance
Market Recap: U.S. stocks rose for the 12 months ending February 29, 2012, as encouraging economic news sparked a strong late-period rally that lifted major equity benchmarks past a number of significant milestones. Stocks recovered from early-period uncertainty that followed the March 2011 earthquake, tsunami and nuclear meltdown in Japan, but plummeted during the summer amid Europe's debt woes and a historic U.S. credit-rating downgrade. Despite continued volatility and mixed economic news, markets began to recover in early October. Investors gravitated toward defensive sectors and the perceived safety of larger, more-established and dividend-paying names, helping the Dow Jones® Industrial Average advance 8.83%, and close above the psychologically important 13,000 mark in late February - for the first time since May 2008. The rally accelerated late in the period and the market broadened, as investor confidence improved amid encouraging manufacturing, housing and employment data, and signs of progress in Europe. For the year, the S&P 500® Index added 5.12%, closing near a four-year high on the period's second-to-last day. Of the 10 major market sectors in the S&P 500®, three defensive areas led the way - consumer staples, health care and utilities - while financials, materials and energy finished in negative territory. The technology-laden Nasdaq Composite® Index added 7.73%, flirting with the 3,000 mark, its highest level in 12 years. Foreign developed-markets stocks reeled over Europe's turmoil, and the MSCI® EAFE® (Europe, Australasia, Far East) Index fell 7.35%.
Comments from Court Dignan, Portfolio Manager of Insurance Portfolio: For the year, the fund returned -4.13%, slightly ahead of the -4.61% return of the MSCI® U.S. IM Insurance 25/50 Index, but behind the S&P 500®. Bottom-up stock picking - which favored companies with high and stable earnings yields that were somewhat insulated from macro factors - kept the fund ahead of its MSCI benchmark. Top individual contributors included Swiss-based global property/casualty insurer ACE, whose relatively high earnings yield and disparate growth opportunities attracted investors. Timely ownership and an average underweighting in life/health insurer Lincoln National contributed, as the stock was hit hard by the market downturn over the summer and continued low interest rates. An investment in Jardine Lloyd Thompson Group, a U.K. insurance broker with leading market share in Latin America and Asia, rallied nicely when investors began to recognize the company's discounted share price and relatively high revenue-growth outlook. Shares of Canadian multi-line insurer Fairfax Holdings climbed, buoyed by the company's differentiated investment portfolios and improved underwriting results. Conversely, the fund lost ground by underweighting reinsurance, where stocks held up relatively well. The biggest individual disappointments came from other segments, however, including multi-line insurer Hartford Financial Services Group, whose shares suffered because declining low interest rates and increased market volatility hurt its investment portfolio. The stock of U.K.-based property/casualty insurer Amlin declined, due to higher-than-expected loss estimates from earthquakes in New Zealand. An underweighting in insurance broker Marsh & McLennan hurt, as good execution drove earnings growth and the stock higher. Some of the stocks mentioned were not in the industry benchmark, and Genworth and Amlin were not in the portfolio at period end.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Insurance Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 29, 2012 | ||
| % of fund's | % of fund's net assets |
Berkshire Hathaway, Inc. Class B | 16.5 | 17.4 |
ACE Ltd. | 7.9 | 8.3 |
MetLife, Inc. | 7.7 | 5.3 |
Prudential Financial, Inc. | 6.1 | 7.6 |
AFLAC, Inc. | 5.6 | 4.8 |
Validus Holdings Ltd. | 5.0 | 4.3 |
Allied World Assurance Co. Holdings Ltd. | 5.0 | 0.2 |
Axis Capital Holdings Ltd. | 4.9 | 0.0 |
The Chubb Corp. | 4.9 | 7.1 |
Aon Corp. | 4.8 | 4.9 |
| 68.4 | |
Top Industries (% of fund's net assets) | |||
As of February 29, 2012 | |||
| Insurance | 96.5% |
|
 | Professional Services | 1.3% |
|
 | IT Services | 0.3% |
|
| Capital Markets | 0.2% |
|
| All Others* | 1.7% |
|
As of August 31, 2011 | |||
| Insurance | 97.3% |
|
| Capital Markets | 0.1% |
|
| All Others* | 2.6% |
|
* Includes short-term investments and net other assets. |
Annual Report
Insurance Portfolio
Investments February 29, 2012
Showing Percentage of Net Assets
Common Stocks - 98.3% | |||
Shares | Value | ||
CAPITAL MARKETS - 0.2% | |||
Asset Management & Custody Banks - 0.2% | |||
GP Investments Ltd. (depositary receipt) (a) | 122,040 | $ 373,059 | |
INSURANCE - 96.5% | |||
Insurance Brokers - 11.3% | |||
Aon Corp. | 278,247 | 13,024,742 | |
Brasil Insurance Participacoes e Administracao SA | 518,600 | 6,159,970 | |
Brown & Brown, Inc. | 151,900 | 3,589,397 | |
Charles Taylor Consulting PLC | 38,700 | 86,190 | |
Jardine Lloyd Thompson Group PLC | 137,193 | 1,532,091 | |
Marsh & McLennan Companies, Inc. | 164,000 | 5,116,800 | |
Willis Group Holdings PLC | 27,500 | 986,700 | |
| 30,495,890 | ||
Life & Health Insurance - 24.2% | |||
AFLAC, Inc. | 319,800 | 15,110,550 | |
American Equity Investment Life Holding Co. | 53,500 | 647,350 | |
CNO Financial Group, Inc. (a) | 45,900 | 340,578 | |
Lincoln National Corp. | 134,800 | 3,348,432 | |
MetLife, Inc. | 537,875 | 20,735,081 | |
Prudential Financial, Inc. | 269,089 | 16,457,483 | |
Symetra Financial Corp. | 44,800 | 445,312 | |
Torchmark Corp. | 140,500 | 6,805,820 | |
Unum Group | 76,500 | 1,763,325 | |
| 65,653,931 | ||
Multi-Line Insurance - 2.9% | |||
American International Group, Inc. warrants 1/19/21 (a) | 281,186 | 2,325,408 | |
Assurant, Inc. | 25,880 | 1,099,124 | |
Fairfax Financial Holdings Ltd. (sub. vtg.) | 7,329 | 3,028,762 | |
Hartford Financial Services Group, Inc. | 70,600 | 1,462,126 | |
| 7,915,420 | ||
Property & Casualty Insurance - 51.5% | |||
ACE Ltd. | 299,949 | 21,509,343 | |
Allied World Assurance Co. Holdings Ltd. | 203,600 | 13,431,492 | |
Allstate Corp. | 172,300 | 5,415,389 | |
American Safety Insurance Group Ltd. (a) | 6,800 | 131,308 | |
Assured Guaranty Ltd. | 58,600 | 984,480 | |
Axis Capital Holdings Ltd. | 430,900 | 13,293,265 | |
Berkshire Hathaway, Inc.: | |||
Class A (a) | 4 | 471,736 | |
Class B (a) | 568,569 | 44,604,238 | |
| |||
Shares | Value | ||
CNA Financial Corp. | 19,300 | $ 544,453 | |
Dongbu Insurance Co. Ltd. | 36,570 | 1,596,522 | |
Fidelity National Financial, Inc. Class A | 500 | 8,630 | |
Progressive Corp. | 568,300 | 12,172,986 | |
The Chubb Corp. | 194,858 | 13,242,550 | |
The Travelers Companies, Inc. | 192,400 | 11,153,428 | |
White Mountains Insurance Group Ltd. | 300 | 148,866 | |
XL Group PLC Class A | 34,355 | 714,584 | |
| 139,423,270 | ||
Reinsurance - 6.6% | |||
Arch Capital Group Ltd. (a) | 72,300 | 2,678,715 | |
RenaissanceRe Holdings Ltd. | 20,600 | 1,482,376 | |
Validus Holdings Ltd. | 447,400 | 13,641,226 | |
| 17,802,317 | ||
TOTAL INSURANCE | 261,290,828 | ||
IT SERVICES - 0.3% | |||
Data Processing & Outsourced Services - 0.3% | |||
CoreLogic, Inc. (a) | 59,400 | 913,572 | |
PROFESSIONAL SERVICES - 1.3% | |||
Human Resource & Employment Services - 1.3% | |||
Towers Watson & Co. | 55,500 | 3,548,670 | |
TOTAL COMMON STOCKS (Cost $244,086,033) |
| ||
Money Market Funds - 1.6% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.12% (b) | 4,371,112 |
| |
TOTAL INVESTMENT PORTFOLIO - 99.9% (Cost $248,457,145) | 270,497,241 | ||
NET OTHER ASSETS (LIABILITIES) - 0.1% | 278,934 | ||
NET ASSETS - 100% | $ 270,776,175 | ||
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 6,562 |
Fidelity Securities Lending Cash Central Fund | 15,478 |
Total | $ 22,040 |
Other Information |
All investments are categorized as Level 1 under the Fair Value Hierarchy. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 69.7% |
Switzerland | 12.9% |
Bermuda | 12.1% |
Brazil | 2.3% |
Canada | 1.1% |
Others (Individually Less Than 1%) | 1.9% |
| 100.0% |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Insurance Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2012 | |
|
|
|
Assets | ||
Investment in securities, at value - See accompanying schedule: Unaffiliated issuers (cost $244,086,033) | $ 266,126,129 |
|
Fidelity Central Funds (cost $4,371,112) | 4,371,112 |
|
Total Investments (cost $248,457,145) |
| $ 270,497,241 |
Receivable for investments sold | 2,809,668 | |
Receivable for fund shares sold | 51,324 | |
Dividends receivable | 109,977 | |
Distributions receivable from Fidelity Central Funds | 447 | |
Prepaid expenses | 445 | |
Other receivables | 1,590 | |
Total assets | 273,470,692 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 2,322,500 | |
Payable for fund shares redeemed | 146,705 | |
Accrued management fee | 126,071 | |
Other affiliated payables | 63,431 | |
Other payables and accrued expenses | 35,810 | |
Total liabilities | 2,694,517 | |
|
|
|
Net Assets | $ 270,776,175 | |
Net Assets consist of: |
| |
Paid in capital | $ 265,530,747 | |
Undistributed net investment income | 203,364 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (16,997,503) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 22,039,567 | |
Net Assets, for 5,693,226 shares outstanding | $ 270,776,175 | |
Net Asset Value, offering price and redemption price per share ($270,776,175 ÷ 5,693,226 shares) | $ 47.56 | |
Statement of Operations
| Year ended February 29, 2012 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 4,405,307 |
Interest |
| 1 |
Income from Fidelity Central Funds |
| 22,040 |
Total income |
| 4,427,348 |
|
|
|
Expenses | ||
Management fee | $ 1,357,690 | |
Transfer agent fees | 621,384 | |
Accounting and security lending fees | 94,993 | |
Custodian fees and expenses | 30,612 | |
Independent trustees' compensation | 1,426 | |
Registration fees | 17,348 | |
Audit | 37,278 | |
Legal | 840 | |
Interest | 120 | |
Miscellaneous | 1,964 | |
Total expenses before reductions | 2,163,655 | |
Expense reductions | (23,790) | 2,139,865 |
Net investment income (loss) | 2,287,483 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 5,351,934 | |
Foreign currency transactions | (46,464) | |
Total net realized gain (loss) |
| 5,305,470 |
Change in net unrealized appreciation (depreciation) on: Investment securities | (15,219,992) | |
Assets and liabilities in foreign currencies | (852) | |
Total change in net unrealized appreciation (depreciation) |
| (15,220,844) |
Net gain (loss) | (9,915,374) | |
Net increase (decrease) in net assets resulting from operations | $ (7,627,891) | |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 2,287,483 | $ 2,008,941 |
Net realized gain (loss) | 5,305,470 | 19,205,620 |
Change in net unrealized appreciation (depreciation) | (15,220,844) | 17,839,541 |
Net increase (decrease) in net assets resulting from operations | (7,627,891) | 39,054,102 |
Distributions to shareholders from net investment income | (2,221,509) | (1,716,081) |
Share transactions | 97,056,869 | 127,403,521 |
Reinvestment of distributions | 2,151,605 | 1,680,552 |
Cost of shares redeemed | (66,644,402) | (68,548,769) |
Net increase (decrease) in net assets resulting from share transactions | 32,564,072 | 60,535,304 |
Redemption fees | 6,573 | 5,979 |
Total increase (decrease) in net assets | 22,721,245 | 97,879,304 |
|
|
|
Net Assets | ||
Beginning of period | 248,054,930 | 150,175,626 |
End of period (including undistributed net investment income of $203,364 and undistributed net investment income of $141,242, respectively) | $ 270,776,175 | $ 248,054,930 |
Other Information Shares | ||
Sold | 2,136,907 | 2,844,414 |
Issued in reinvestment of distributions | 48,397 | 36,150 |
Redeemed | (1,449,326) | (1,537,684) |
Net increase (decrease) | 735,978 | 1,342,880 |
Financial Highlights
Years ended February 28, | 2012 G | 2011 | 2010 | 2009 | 2008 G |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 50.04 | $ 41.55 | $ 23.95 | $ 54.02 | $ 69.38 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .43 | .47 | .34 | .51 | .45 |
Net realized and unrealized gain (loss) | (2.52) | 8.36 | 17.60 | (30.02) | (10.95) |
Total from investment operations | (2.09) | 8.83 | 17.94 | (29.51) | (10.50) |
Distributions from net investment income | (.39) | (.34) | (.34) | (.54) | (.30) |
Distributions from net realized gain | - | - | - | (.02) | (4.56) |
Total distributions | (.39) | (.34) | (.34) | (.56) | (4.86) |
Redemption fees added to paid in capitalC, B | - | - | - | - | - |
Net asset value, end of period | $ 47.56 | $ 50.04 | $ 41.55 | $ 23.95 | $ 54.02 |
Total Return A | (4.13)% | 21.31% | 74.97% | (54.83)% | (16.04)% |
Ratios to Average Net Assets D, F |
|
|
|
|
|
Expenses before reductions | .89% | .93% | .99% | .97% | .93% |
Expenses net of fee waivers, if any | .89% | .93% | .99% | .97% | .93% |
Expenses net of all reductions | .88% | .91% | .97% | .97% | .93% |
Net investment income (loss) | .94% | 1.05% | .96% | 1.27% | .65% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 270,776 | $ 248,055 | $ 150,176 | $ 76,580 | $ 154,063 |
Portfolio turnover rate E | 153% | 193% | 215% | 426% | 60% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
B Amount represents less than $.01 per share.
C Calculated based on average shares outstanding during the period.
D Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund.
G For the year ended February 29.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended February 29, 2012
1. Organization.
Banking Portfolio, Brokerage and Investment Management Portfolio, Financial Services Portfolio, Consumer 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 Banking Portfolio and Financial Services Portfolio. The Funds invest primarily in securities of companies whose principal business activities fall within specific industries. Each Fund is authorized to issue an unlimited number of shares. Brokerage and Investment Management Portfolio's, Financial Services Portfolio's and Insurance Portfolio's investments in emerging markets can be subject to social, economic, regulatory, and political uncertainties and can be extremely volatile.
2. Investments in Fidelity Central Funds.
The Funds invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Funds' Schedules of Investments list each of the Fidelity Central Funds held as of period end, if any, as an investment of each Fund, but do not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, each Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Funds' Report of Independent Registered Public Accounting Firm, are available on the SEC web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Funds:
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. Each Fund uses independent pricing services approved by the Board of Trustees to value their investments. When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include market or security specific events. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The value used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
Each Fund categorizes the inputs to valuation techniques used to value their investments into a disclosure hierarchy consisting of three levels as shown below:
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the Fund's own assumptions based on the best information available)
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level, as of February 29, 2012, is included at the end of each Fund's Schedule of Investments. Valuation techniques used to value each Fund's investments by major category are as follows:
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when significant market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-traded funds (ETFs) and certain indexes as well as quoted prices for similar securities are used and are categorized as Level 2 in the hierarchy in these circumstances. Utilizing these techniques may result in transfers between Level 1 and Level 2. For restricted equity securities and private placements where observable inputs are limited, assumptions about market activity and risk are used and are categorized as Level 3 in the hierarchy.
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 in the hierarchy.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
New Accounting Pronouncements. In May 2011, the Financial Accounting Standards Board issued Accounting Standard Update No. 2011-04, Fair Value Measurement (Topic 820) - Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. The update is effective during interim and annual periods beginning after December 15, 2011 and will result in additional disclosure for transfers between levels as well as expanded disclosure for securities categorized as Level 3 under the fair value hierarchy.
In December 2011, the Financial Accounting Standards Board issued Accounting Standard Update No. 2011-11, Disclosures about Offsetting Assets and Liabilities. The update creates new disclosure requirements requiring entities to disclose both gross and net information for derivatives and other financial instruments that are either offset in the Statement of Assets and Liabilities or subject to an enforceable master netting arrangement or similar agreement. The disclosure requirements are effective for interim and annual reporting periods beginning on or after January 1, 2013. Management is currently evaluating the impact of the update's adoption on the Fund's financial statement disclosures.
Foreign Currency. The Funds may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Funds' investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Funds are informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Funds estimate the components of distributions received that may be considered return of capital distributions or capital gain distributions. As a result of a change in the estimate of the return of capital component of dividend income realized in the year ended February 28, 2011, dividend income has been reduced $619,681 for Financial Services Portfolio and reduced $1,451,861 for Brokerage and Investment Management Portfolio with a corresponding increase for each Fund to net unrealized appreciation (depreciation). The change in estimate has no impact on total net assets or total return of each applicable Fund. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, each Fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for income taxes is required. As of February 29, 2012, each Fund did not have any unrecognized tax benefits in the financial statements; nor is each Fund aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. Each Fund files a U.S. federal tax return, in addition to state and local tax returns as required. A fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction. Foreign taxes are provided for based on each Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are declared and recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, certain foreign taxes, passive foreign investment companies (PFIC), partnerships, deferred trustees compensation, capital loss carryforwards, losses deferred due to wash sales and excise tax regulations.
Annual Report
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows for each Fund:
| Tax cost | Gross unrealized | Gross unrealized | Net unrealized |
Banking Portfolio | $ 492,627,442 | $ 22,727,609 | $ (75,711,768) | $ (52,984,159) |
Brokerage and Investment Management Portfolio | 440,788,138 | 19,888,009 | (49,666,951) | (29,778,942) |
Consumer Finance Portfolio | 162,276,787 | 19,310,480 | (11,080,999) | 8,229,481 |
Financial Services Portfolio | 458,778,750 | 21,054,208 | (25,544,092) | (4,489,884) |
Insurance Portfolio | 251,885,660 | 22,468,409 | (3,856,828) | 18,611,581 |
The tax-based components of distributable earnings as of period end were as follows for each Fund:
| Undistributed | Capital loss | Net unrealized |
Banking Portfolio | $ 388,888 | $ (40,909,398) | $ (52,984,159) |
Brokerage and Investment Management Portfolio | - | (97,629,879) | (29,778,456) |
Consumer Finance Portfolio | 20,348 | (149,566,376) | 8,229,481 |
Financial Services Portfolio | - | (104,642,772) | (4,492,999) |
Insurance Portfolio | 203,367 | (13,568,988) | 18,611,052 |
Capital loss carryforwards are only available to offset future capital gains of the Funds to the extent provided by regulations and may be limited. Under the Regulated Investment Company Modernization Act of 2010 (the Act), the Funds are permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period and such capital losses are required to be used prior to any losses that expire. Capital loss carryforwards were as follows:
| Fiscal year of expiration |
| ||
| 2017 | 2018 | 2019 | Total |
Banking Portfolio | $ (16,134,125) | $ (9,935,539) | $ - | $ (26,069,664) |
Brokerage and Investment Management Portfolio | (56,798,891) | (39,892,889) | - | (96,691,780) |
Consumer Finance Portfolio | (97,174,837) | (48,865,995) | (1,011,664) | (147,052,496) |
Financial Services Portfolio | (72,220,809) | (672,925) | - | (72,893,734) |
Insurance Portfolio | - | (13,568,988) | - | (13,568,988) |
| No expiration |
|
| |
| Short-term | Long-term | Total | Total |
Banking Portfolio | $ (2,983,382) | $ (11,856,352) | $ (14,839,734) | $ (40,909,398) |
Brokerage and Investment Management Portfolio | - | (938,099) | (938,099) | (97,629,879) |
Consumer Finance Portfolio | - | (2,513,880) | (2,513,880) | (149,566,376) |
Financial Services Portfolio | (7,653,232) | (24,095,806) | (31,749,038) | (104,642,772) |
Insurance Portfolio | - | - | - | (13,568,988) |
As a result of large subscriptions during the period, Consumer Finance Portfolio had an "ownership change" under the Internal Revenue Code, which limits capital losses that will be available to offset future capital gains to approximately $5,418,625 per year plus certain gains in the fund existing at the time of the ownership change. As a result, at least $113,608,878 of Consumer Finance Portfolio's capital loss carryforward will expire unused. To properly reflect the amount of losses that will expire unused, an adjustment was made between Accumulated Undistributed Net Realized Loss and Paid in Capital in the current period.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The tax character of distributions paid was as follows:
February 29, 2012 |
|
| Ordinary |
Banking Portfolio | $ 1,687,594 |
Brokerage and Investment Management Portfolio | 4,337,210 |
Consumer Finance Portfolio | 2,625,700 |
Financial Services Portfolio | 961,766 |
Insurance Portfolio | 2,221,509 |
February 28, 2011 |
|
| Ordinary |
Banking Portfolio | $ 262,814 |
Brokerage and Investment Management Portfolio | 3,333,469 |
Consumer Finance Portfolio | 2,038,026 |
Financial Services Portfolio | 1,297,143 |
Insurance Portfolio | 1,716,081 |
Trading (Redemption) Fees. Shares held by investors in the Funds less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Funds and accounted for as an addition to paid in capital.
4. Operating Policies.
Restricted Securities. The Funds may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities is included at the end of each applicable Fund's Schedule of Investments.
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, are noted in the table below.
| Purchases ($) | Sales ($) |
Banking Portfolio | 358,232,012 | 419,845,526 |
Brokerage and Investment Management Portfolio | 1,197,414,937 | 1,275,299,307 |
Consumer Finance Portfolio | 194,620,859 | 140,996,969 |
Financial Services Portfolio | 1,462,729,287 | 1,503,099,243 |
Insurance Portfolio | 406,897,542 | 371,369,503 |
6. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the Funds with investment management related services for which the Funds pay a monthly management fee. The management fee is the sum of an individual fund fee rate and an annualized group fee rate. The individual fund fee rate is applied to each Fund's average net assets. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, each Fund's annual management fee rate expressed as a percentage of each Fund's average net assets was as follows:
| Individual Rate | Group Rate | Total |
Banking Portfolio | .30% | .26% | .56% |
Brokerage and Investment Management Portfolio | .30% | .26% | .56% |
Consumer Finance Portfolio | .30% | .26% | .56% |
Financial Services Portfolio | .30% | .26% | .56% |
Insurance Portfolio | .30% | .26% | .56% |
Annual Report
6. Fees and Other Transactions with Affiliates - continued
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the Funds' transfer, dividend disbursing and shareholder servicing agent. FIIOC receives account fees and asset-based fees that vary according to account size and type of account. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, transfer agent fees were equivalent to the following annual rates expressed as a percentage of average net assets:
Banking Portfolio | .26% |
Brokerage and Investment Management Portfolio | .26% |
Consumer Finance Portfolio | .30% |
Financial Services Portfolio | .27% |
Insurance Portfolio | .26% |
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains each Fund's accounting records. The accounting fee is based on the level of average net assets for each month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. Certain Funds placed a portion of their portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were as follows:
| Amount |
Banking Portfolio | $ 31,833 |
Brokerage and Investment Management Portfolio | 90,664 |
Consumer Finance Portfolio | 12,024 |
Financial Services Portfolio | 91,395 |
Insurance Portfolio | 14,655 |
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 Loan | Weighted Average | Interest |
Banking Portfolio | Borrower | $ 6,588,652 | .38% | $ 1,588 |
Brokerage and Investment Management Portfolio | Borrower | 8,483,421 | .34% | 1,524 |
Financial Services Portfolio | Borrower | 6,937,120 | .37% | 1,774 |
Insurance Portfolio | Borrower | 6,109,500 | .35% | 120 |
7. Committed Line of Credit.
Certain Funds participate with other funds managed by FMR or an affiliate in a $4.0 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The participating funds have agreed to pay commitment fees on their pro-rata portion of the line of credit, which are reflected in Miscellaneous expenses on the Statement of Operations, and are as follows:
Banking Portfolio | $ 1,250 |
Brokerage and Investment Management Portfolio | 1,326 |
Consumer Finance Portfolio | 343 |
Financial Services Portfolio | 1,194 |
Insurance Portfolio | 707 |
During the period, there were no borrowings on this line of credit.
8. Security Lending.
Certain Funds lend portfolio securities through a lending agent from time to time in order to earn additional income. For equity securities, a lending agent is used and may loan securities to certain qualified borrowers, including Fidelity Capital Markets (FCM), a broker-dealer affiliated with the Funds. On the settlement date of the loan, each applicable Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the
Annual Report
Notes to Financial Statements - continued
8. Security Lending - continued
period of the loan. The market value of the loaned securities is determined at the close of business of the Funds and any additional required collateral is delivered to the Funds on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on each applicable Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented on each applicable Fund's Statement of Operations as a component of income from Fidelity Central Funds. Security lending activity as of and during the period was as follows:
| Total Security | Security Lending | Value of Securities |
Banking Portfolio | $ 20,516 | $ - | $ - |
Brokerage and Investment Management Portfolio | 32,911 | 26 | - |
Consumer Finance Portfolio | 22,188 | 3,625 | 340,560 |
Financial Services Portfolio | 37,045 | - | - |
Insurance Portfolio | 15,478 | - | - |
9. Bank Borrowings.
Each Fund is permitted to have bank borrowings for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity requirements. Each Fund has established borrowing arrangements with certain banks. The interest rate on the borrowings is the bank's base rate, as revised from time to time. At period end, there were no bank borrowings outstanding. Each applicable Fund's activity in this program during the period for which loans were outstanding was as follows:
| Average Loan | Weighted Average | Interest |
Banking Portfolio | $ 4,734,941 | .64% | $ 1,435 |
Brokerage and Investment Management Portfolio | 5,357,000 | .60% | 537 |
Financial Services Portfolio | 9,710,667 | .59% | 961 |
10. Expense Reductions.
Many of the brokers with whom FMR places trades on behalf of certain Funds provided services to these Funds in addition to trade execution. These services included payments of expenses on behalf of each applicable Fund. In addition, through arrangements with each applicable Fund's custodian, credits realized as a result of uninvested cash balances were used to reduce each applicable Fund's expenses. All of the applicable expense reductions are noted in the table below.
| Brokerage | Custody |
Banking Portfolio | $ 54,920 | $ 12 |
Brokerage and Investment Management Portfolio | 159,380 | - |
Consumer Finance Portfolio | 9,424 | 51 |
Financial Services Portfolio | 251,280 | - |
Insurance Portfolio | 23,734 | 56 |
11. Other.
The Funds' organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Funds. In the normal course of business, the Funds may also enter into contracts that provide general indemnifications. The Funds' maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Funds. The risk of material loss from such claims is considered remote.
At the end of the period, Strategic Advisers U.S. Opportunity Fund was the owner of record of approximately 13%, 26% and 25% of the total outstanding shares of Banking Portfolio, Consumer Finance Portfolio and Insurance Portfolio, respectively. Fidelity VIP FundsManager 60% Portfolio was the owner of record of approximately 17%, 18%, 19% and 28% of the total outstanding shares of Banking Portfolio, Consumer Finance Portfolio, Financial Services Portfolio and Insurance Portfolio, respectively. Mutual funds managed by FMR or its affiliates, were the owners of record, in the aggregate, of approximately 39%, 54%, 30% and 73% of the total outstanding shares of Banking Portfolio, Consumer Finance Portfolio, Financial Services Portfolio and Insurance Portfolio, respectively.
Annual Report
Report of Independent Registered Public Accounting Firm
To the Trustees of Fidelity Select Portfolios and the Shareholders of Banking Portfolio, Brokerage and Investment Management Portfolio, Consumer Finance Portfolio, Financial Services Portfolio, and Insurance Portfolio:
In our opinion, the accompanying statements of assets and liabilities, including the schedules of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Banking Portfolio, Brokerage and Investment Management Portfolio, Consumer Finance Portfolio, Financial Services Portfolio, and Insurance Portfolio (funds of Fidelity Select Portfolios) at February 29, 2012, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fidelity Select Portfolios' management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at February 29, 2012 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 13, 2012
Annual Report
Trustees and Officers
The Trustees, Members of the Advisory Board, and executive officers of the trust and funds, as applicable, are listed below. The Board of Trustees governs each fund and is responsible for protecting the interests of shareholders. The Trustees are experienced executives who meet periodically throughout the year to oversee each fund's activities, review contractual arrangements with companies that provide services to each fund, oversee management of the risks associated with such activities and contractual arrangements, and review each fund's performance. Except for James C. Curvey, each of the Trustees oversees 226 funds advised by FMR or an affiliate. Mr. Curvey oversees 430 funds advised by FMR or an affiliate.
The Trustees hold office without limit in time except that (a) any Trustee may resign; (b) any Trustee may be removed by written instrument, signed by at least two-thirds of the number of Trustees prior to such removal; (c) any Trustee who requests to be retired or who has become incapacitated by illness or injury may be retired by written instrument signed by a majority of the other Trustees; and (d) any Trustee may be removed at any special meeting of shareholders by a two-thirds vote of the outstanding voting securities of the trust. Each Trustee who is not an interested person (as defined in the 1940 Act) (Independent Trustee), shall retire not later than the last day of the calendar year in which his or her 75th birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. The executive officers and Advisory Board Members hold office without limit in time, except that any officer and Advisory Board Member may resign or may be removed by a vote of a majority of the Trustees at any regular meeting or any special meeting of the Trustees. Except as indicated, each individual has held the office shown or other offices in the same company for the past five years.
Experience, Skills, Attributes, and Qualifications of the Funds' Trustees. The Governance and Nominating Committee has adopted a statement of policy that describes the experience, qualifications, attributes, and skills that are necessary and desirable for potential Independent Trustee candidates (Statement of Policy). The Board believes that each Trustee satisfied at the time he or she was initially elected or appointed a Trustee, and continues to satisfy, the standards contemplated by the Statement of Policy. The Governance and Nominating Committee also engages professional search firms to help identify potential Independent Trustee candidates who have the experience, qualifications, attributes, and skills consistent with the Statement of Policy. From time to time, additional criteria based on the composition and skills of the current Independent Trustees, as well as experience or skills that may be appropriate in light of future changes to board composition, business conditions, and regulatory or other developments, have also been considered by the professional search firms and the Governance and Nominating Committee. In addition, the Board takes into account the Trustees' commitment and participation in Board and committee meetings, as well as their leadership of standing and ad hoc committees throughout their tenure.
In determining that a particular Trustee was and continues to be qualified to serve as a Trustee, the Board has considered a variety of criteria, none of which, in isolation, was controlling. The Board believes that, collectively, the Trustees have balanced and diverse experience, qualifications, attributes, and skills, which allow the Board to operate effectively in governing each fund and protecting the interests of shareholders. Information about the specific experience, skills, attributes, and qualifications of each Trustee, which in each case led to the Board's conclusion that the Trustee should serve (or continue to serve) as a trustee of the funds, is provided below.
Board Structure and Oversight Function. James C. Curvey is an interested person (as defined in the 1940 Act) and currently serves as Acting Chairman. The Trustees have determined that an interested Chairman is appropriate and benefits shareholders because an interested Chairman has a personal and professional stake in the quality and continuity of services provided to the funds. Independent Trustees exercise their informed business judgment to appoint an individual of their choosing to serve as Chairman, regardless of whether the Trustee happens to be independent or a member of management. The Independent Trustees have determined that they can act independently and effectively without having an Independent Trustee serve as Chairman and that a key structural component for assuring that they are in a position to do so is for the Independent Trustees to constitute a substantial majority for the Board. The Independent Trustees also regularly meet in executive session. Ned C. Lautenbach serves as Chairman of the Independent Trustees and as such (i) acts as a liaison between the Independent Trustees and management with respect to matters important to the Independent Trustees and (ii) with management prepares agendas for Board meetings.
Fidelity funds are overseen by different Boards of Trustees. The funds' Board oversees Fidelity's equity and high income funds and another Board oversees Fidelity's investment-grade bond, money market, and asset allocation funds. The asset allocation funds may invest in Fidelity funds overseen by the funds' Board. The use of separate Boards, each with its own committee structure, allows the Trustees of each group of Fidelity funds to focus on the unique issues of the funds they oversee, including common research, investment, and operational issues. On occasion, the separate Boards establish joint committees to address issues of overlapping consequences for the Fidelity funds overseen by each Board.
The Trustees operate using a system of committees to facilitate the timely and efficient consideration of all matters of importance to the Trustees, each fund, and fund shareholders and to facilitate compliance with legal and regulatory requirements and oversight of the funds' activities and associated risks. The Board, acting through its committees, has charged FMR and its affiliates with (i) identifying events or circumstances the occurrence of which could have demonstrably adverse effects on the funds' business and/or reputation; (ii) implementing processes and controls to lessen the possibility that such events or circumstances occur or to mitigate the effects of such events or circumstances if they do occur; and (iii) creating and maintaining a system designed to evaluate continuously business and market conditions in order to facilitate the identification and implementation processes described in (i) and (ii) above. Because the day-to-day operations and activities of the funds are carried out by or through FMR, its affiliates and other service providers, the funds' exposure to risks is mitigated but not eliminated by the processes overseen by the Trustees. While each of the Board's committees has responsibility for overseeing different aspects of the funds' activities, oversight is exercised primarily through the Operations, Audit, and Compliance Committees. In addition, the Independent Trustees have worked with FMR to enhance the Board's oversight of investment and financial risks, legal and regulatory risks, technology risks, and operational risks, including the development of additional risk reporting to the Board. For example, a working group comprised of Independent Trustees and FMR has worked and continues to work to review the Fidelity funds' valuation-related activities, reporting and risk management. Appropriate personnel, including but not limited to the funds' Chief Compliance Officer (CCO), FMR's internal auditor, the independent accountants, the funds' Treasurer and portfolio management personnel, make periodic reports to the Board's committees, as appropriate, including an annual review of FMR's risk management program for the Fidelity funds. The responsibilities of each standing committee, including their oversight responsibilities, are described further under "Standing Committees of the Funds' Trustees."
Annual Report
The funds' Statement of Additional Information (SAI) includes more information about the Trustees. To request a free copy, call Fidelity at 1-800-544-8544.
Interested Trustees*:
Correspondence intended for each Trustee who is an interested person may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupations and Other Relevant Experience+ | |
James C. Curvey (76) | |
| Year of Election or Appointment: 2007 Mr. Curvey is Trustee and Acting Chairman of the Board of Trustees of certain Trusts. Mr. Curvey also serves as Trustee (2007-present) of other investment companies advised by FMR. Mr. Curvey is a Director of Fidelity Investments Money Management, Inc. (2009-present), Director of Fidelity Research & Analysis Co. (2009-present) and Director of FMR and FMR Co., Inc. (2007-present). Mr. Curvey is also Vice Chairman (2007-present) and Director of FMR LLC. In addition, Mr. Curvey serves as an Overseer for the Boston Symphony Orchestra and a member of the Trustees of Villanova University. Previously, Mr. Curvey was the Vice Chairman (2006-2007) and Director (2000-2007) of FMR Corp. |
Ronald P. O'Hanley (55) | |
| Year of Election or Appointment: 2011 Mr. O'Hanley is Director of FMR Co., Inc. (2010-present), Director of Fidelity Investments Money Management, Inc. (2010-present), Director of Fidelity Research & Analysis Company (2010-present), President of Fidelity Asset Management and Corporate Services and a member of Fidelity's Executive Committee (2010-present). Previously, Mr. O'Hanley served as President and Chief Executive Officer of BNY Mellon Asset Management (2007-2010). Mr. O'Hanley also served as Vice Chairman of Bank New York Mellon Corp. and a member of that firm's Executive Committee. Prior to the 2007 merger of The Bank of New York and Mellon Financial Corporation, he was Vice Chairman of Mellon Financial Corporation and President and Chief Executive Officer of Mellon Asset Management. He joined Mellon in February 1997. Mr. O'Hanley currently serves as Chairman of the Boston Public Library Foundation Board of Directors and sits on the Board of Directors of Beth Israel Deaconess Medical Center, the Board of Trustees of the Marine Biological Laboratory and the Advisory Board of the Maxwell School of Citizenship and Public Administration at Syracuse University. Mr. O'Hanley also chairs the Council on Asset Management for the Financial Services Roundtable and is a member of the Board of Directors of Institutional Investor's U.S. Institute. |
* Trustees have been determined to be "Interested Trustees" by virtue of, among other things, their affiliation with the trust or various entities under common control with FMR.
+ The information above includes each Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to each Trustee's qualifications to serve as a Trustee, which led to the conclusion that each Trustee should serve as a Trustee for each fund.
Independent Trustees:
Correspondence intended for each Independent Trustee (that is, the Trustees other than the Interested Trustees) may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235.
Name, Age; Principal Occupations and Other Relevant Experience+ | |
Dennis J. Dirks (63) | |
| Year of Election or Appointment: 2005 Prior to his retirement in May 2003, Mr. Dirks was Chief Operating Officer and a member of the Board of The Depository Trust & Clearing Corporation (DTCC). He also served as President, Chief Operating Officer, and Board member of The Depository Trust Company (DTC) and President and Board member of the National Securities Clearing Corporation (NSCC). In addition, Mr. Dirks served as Chief Executive Officer and Board member of the Government Securities Clearing Corporation, Chief Executive Officer and Board member of the Mortgage-Backed Securities Clearing Corporation, as a Trustee and a member of the Finance Committee of Manhattan College (2005-2008), and as a Trustee and a member of the Finance Committee of AHRC of Nassau County (2006-2008). Mr. Dirks is a member of the Independent Directors Council (IDC) Governing Council (2010-present) and Board of Directors for The Brookville Center for Children's Services, Inc. (2009-present). |
Alan J. Lacy (58) | |
| Year of Election or Appointment: 2008 Mr. Lacy serves as Senior Adviser (2007-present) of Oak Hill Capital Partners, L.P. (private equity). Mr. Lacy also served as Chief Executive Officer (2000-2005) and Vice Chairman (2005-2006) of Sears Holdings Corporation and Sears, Roebuck and Co. (retail). In addition, Mr. Lacy serves as a member of the Board of Directors of Dave & Buster's, Inc. (restaurant and entertainment complexes, 2010-present), The Hillman Companies, Inc. (hardware wholesalers, 2010-present), and Bristol-Myers Squibb Company (global pharmaceuticals, 2007-present). Mr. Lacy is a member of the Board of Trustees of The National Parks Conservation Association (2006-present). Previously, Mr. Lacy served as Chairman of the Board of Trustees of the National Parks Conservation Association (2008-2011) and as a member of the Board of Directors for the Western Union Company (global money transfer, 2006-2011). |
Ned C. Lautenbach (68) | |
| Year of Election or Appointment: 2000 Mr. Lautenbach is Chairman of the Independent Trustees of the Equity and High Income Funds (2006-present). Mr. Lautenbach currently serves as the Lead Director of the Eaton Corporation Board of Directors (diversified industrial, 1997-present). Mr. Lautenbach is also a member of the Board of Directors of the Philharmonic Center for the Arts in Naples, Florida (1999-present); a member of the Board of Trustees of Fairfield University (2005-present); and a member of the Council on Foreign Relations (1994-present). Previously, Mr. Lautenbach was a Partner/Advisory Partner at Clayton, Dubilier & Rice, LLC (private equity investment, 1998-2010), as well as a Director of Sony Corporation (2006-2007). |
Joseph Mauriello (67) | |
| Year of Election or Appointment: 2008 Prior to his retirement in January 2006, Mr. Mauriello served in numerous senior management positions including Deputy Chairman and Chief Operating Officer (2004-2005), and Vice Chairman of Financial Services (2002-2004) of KPMG LLP US (professional services, 1965-2005). Mr. Mauriello currently serves as a member of the Board of Directors of XL Group plc. (global insurance and re-insurance, 2006-present) and of Arcadia Resources Inc. (health care services and products, 2007-present). Previously, Mr. Mauriello served as a Director of the Hamilton Funds of the Bank of New York (2006-2007). |
Robert W. Selander (61) | |
| Year of Election or Appointment: 2011 Previously, Mr. Selander served as a Member of the Advisory Board of Fidelity's Equity and High Income Funds (2011), Executive Vice Chairman (2010), Chief Executive Officer (2009-2010), and President and Chief Executive Officer (1997-2009) of Mastercard, Inc. |
Cornelia M. Small (67) | |
| Year of Election or Appointment: 2005 Ms. Small is a member of the Board of Directors of the Teagle Foundation (2009-present). Ms. Small is also a member of the Investment Committee, and Chair (2008-present) and a member of the Board of Trustees of Smith College. In addition, Ms. Small serves on the Investment Committee of the Berkshire Taconic Community Foundation (2008-present). Previously, Ms. Small served as Chairperson of the Investment Committee (2002-2008) of Smith College. In addition, Ms. Small served as Chief Investment Officer, Director of Global Equity Investments, and a member of the Board of Directors of Scudder, Stevens & Clark and Scudder Kemper Investments. |
William S. Stavropoulos (72) | |
| Year of Election or Appointment: 2001 Mr. Stavropoulos is Vice Chairman of the Independent Trustees of the Equity and High Income Funds (2006-present). Mr. Stavropoulos serves as President and Founder of the Michigan Baseball Foundation, the Great Lakes Loons (2007-present). Mr. Stavropoulos is Chairman Emeritus of the Board of Directors of The Dow Chemical Company, where he previously served in numerous senior management positions, including President, CEO (1995-2000; 2002-2004), Chairman of the Executive Committee (2000-2006), and as a member of the Board of Directors (1990-2006). Currently, Mr. Stavropoulos is Chairman of Univar (global distributor of commodity and specialty chemicals, 2010-present), a Director of Teradata Corporation (data warehousing and technology solutions, 2008-present), Chemical Financial Corporation, Maersk Inc. (industrial conglomerate), Tyco International, Inc. (multinational manufacturing and services, 2007-present), and a member of the Advisory Board for Metalmark Capital (private equity investment, 2005-present). Mr. Stavropoulos is a special advisor to Clayton, Dubilier & Rice, LLC (private equity investment). In addition, Mr. Stavropoulos is a member of the University of Notre Dame Advisory Council for the College of Science. |
David M. Thomas (62) | |
| Year of Election or Appointment: 2008 Previously, Mr. Thomas served as Executive Chairman (2005-2006) and Chairman and Chief Executive Officer (2000-2005) of IMS Health, Inc. (pharmaceutical and healthcare information solutions). In addition, Mr. Thomas serves as a member of the Board of Directors of Fortune Brands, Inc. (consumer products), and Interpublic Group of Companies, Inc. (marketing communication, 2004-present). |
Michael E. Wiley (61) | |
| Year of Election or Appointment: 2008 Mr. Wiley also serves as a Director of Asia Pacific Exploration Consolidated (international oil and gas exploration and production, 2008-present). Mr. Wiley serves as a Director of Tesoro Corporation (independent oil refiner and marketer, 2005-present), and a Director of Bill Barrett Corporation (exploration and production, 2005-present). In addition, Mr. Wiley also serves as a Director of Post Oak Bank (privately-held bank, 2004-present). Previously, Mr. Wiley served as a member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-2010), as a Senior Energy Advisor of Katzenbach Partners, LLC (consulting, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production, 2001-2005). |
+ The information above includes each Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to each Trustee's qualifications to serve as a Trustee, which led to the conclusion that each Trustee should serve as a Trustee for each fund.
Advisory Board Members and Executive Officers:
Correspondence intended for each executive officer, Edward C. Johnson 3d, and Peter S. Lynch may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
Edward C. Johnson 3d (81) | |
| Year of Election or Appointment: 2011 Member of the Advisory Board of Fidelity's Equity and High Income Funds. Mr. Johnson serves as Chief Executive Officer, Chairman, and a Director of FMR LLC, and also serves as Chairman and Director of FIL Limited. Previously, Mr. Johnson served as a Trustee and Chairman of the Board of certain Fidelity Trusts, Chairman and a Director of FMR, Chairman and a Director of FMR Co., Inc., and President of FMR LLC (2006-2007). |
Peter S. Lynch (68) | |
| Year of Election or Appointment: 2003 Member of the Advisory Board of Fidelity's Equity and High Income Funds. Mr. Lynch is Vice Chairman and a Director of FMR and FMR Co., Inc. In addition, Mr. Lynch serves as a Trustee of Boston College and as the Chairman of the Inner-City Scholarship Fund. Previously, Mr. Lynch served on the Special Olympics International Board of Directors (1997-2006). |
Kenneth B. Robins (42) | |
| Year of Election or Appointment: 2008 President and Treasurer of Fidelity's Equity and High Income Funds. Mr. Robins also serves as President and Treasurer (2010-present) and Assistant Treasurer (2009-present) of other Fidelity funds and is an employee of Fidelity Investments (2004-present). Previously, Mr. Robins served as Deputy Treasurer of the Fidelity funds (2005-2008) and Treasurer and Chief Financial Officer of The North Carolina Capital Management Trust: Cash and Term Portfolios (2006-2008). |
Brian B. Hogan (47) | |
| Year of Election or Appointment: 2009 Vice President of Equity and High Income Funds. Mr. Hogan also serves as President of FMR's Equity Division (2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager. |
Christopher S. Bartel (40) | |
| Year of Election or Appointment: 2009 Vice President of Fidelity's Sector and Real Estate Equity Funds. Mr. Bartel also serves as a Director, President, and Chief Executive Officer of Fidelity Management & Research (Japan) Inc. (2012-present) and Senior Vice President of Global Equity Research (2010-present). Previously, Mr. Bartel served as Senior Vice President of Equity Research (2009-2010), Managing Director of Research (2006-2009), and an analyst and portfolio manager (2000-2006). |
Scott C. Goebel (44) | |
| Year of Election or Appointment: 2008 Secretary and Chief Legal Officer (CLO) of the Fidelity funds. Mr. Goebel also serves as Secretary of Fidelity Investments Money Management, Inc. (FIMM) (2010-present) and Fidelity Research and Analysis Company (FRAC) (2010-present); Secretary and CLO of The North Carolina Capital Management Trust: Cash and Term Portfolios (2008-present); General Counsel, Secretary, and Senior Vice President of FMR (2008-present) and FMR Co., Inc. (2008-present); employed by FMR LLC or an affiliate (2001-present); Chief Legal Officer of Fidelity Management & Research (Hong Kong) Limited (2008-present) and Assistant Secretary of Fidelity Management & Research (Japan) Inc. (2008-present), and Fidelity Management & Research (U.K.) Inc. (2008-present). Previously, Mr. Goebel served as Assistant Secretary of FIMM (2008-2010), FRAC (2008-2010), and the Funds (2007-2008) and as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (2005-2007). |
William C. Coffey (43) | |
| Year of Election or Appointment: 2009 Assistant Secretary of Fidelity's Equity and High Income Funds. Mr. Coffey also serves as Senior Vice President and Deputy General Counsel of FMR LLC (2010-present), and is an employee of Fidelity Investments. Previously, Mr. Coffey served as Vice President and Associate General Counsel of FMR LLC (2005-2009). |
Holly C. Laurent (57) | |
| Year of Election or Appointment: 2008 Anti-Money Laundering (AML) Officer of the Fidelity funds. Ms. Laurent also serves as AML Officer of The North Carolina Capital Management Trust: Cash and Term Portfolios (2008-present) and is an employee of Fidelity Investments. Previously, Ms. Laurent was Senior Vice President and Head of Legal for Fidelity Business Services India Pvt. Ltd. (2006-2008), and Senior Vice President, Deputy General Counsel and Group Head for FMR LLC (2005-2006). |
Christine Reynolds (53) | |
| Year of Election or Appointment: 2008 Chief Financial Officer of the Fidelity funds. Ms. Reynolds became President of Fidelity Pricing and Cash Management Services (FPCMS) in August 2008. Ms. Reynolds served as Chief Operating Officer of FPCMS (2007-2008). Previously, Ms. Reynolds served as President, Treasurer, and Anti-Money Laundering officer of the Fidelity funds (2004-2007). |
Joseph A. Hanlon (43) | |
| Year of Election or Appointment: 2012 Chief Compliance Officer of Fidelity's Equity and High Income Funds. Mr. Hanlon serves as Senior Vice President of the Fidelity Asset Management Division (2009-present) and is an employee of Fidelity Investments. |
Joseph F. Zambello (54) | |
| Year of Election or Appointment: 2011 Deputy Treasurer of the Fidelity funds. Mr. Zambello is an employee of Fidelity Investments. Previously, Mr. Zambello served as Vice President of FMR's Program Management Group (2009-2011) and Vice President of the Transfer Agent Oversight Group (2005-2009). |
Adrien E. Deberghes (44) | |
| Year of Election or Appointment: 2008 Deputy Treasurer of Fidelity's Equity and High Income Funds. Mr. Deberghes also serves as Vice President (2011-present) and Assistant Treasurer (2010-present) of other Fidelity funds, and is an employee of Fidelity Investments (2008-present). Previously, Mr. Deberghes served as Senior Vice President of Mutual Fund Administration at State Street Corporation (2007-2008), Senior Director of Mutual Fund Administration at Investors Bank & Trust (2005-2007), and Director of Finance for Dunkin' Brands (2000-2005). |
Stephanie J. Dorsey (42) | |
| Year of Election or Appointment: 2010 Assistant Treasurer of Fidelity's Equity and High Income Funds. Ms. Dorsey also serves as Deputy Treasurer of other Fidelity funds (2008-present) and is an employee of Fidelity Investments (2008-present). Previously, Ms. Dorsey served as Treasurer (2004-2008) of the JPMorgan Mutual Funds and Vice President (2004-2008) of JPMorgan Chase Bank. |
John R. Hebble (53) | |
| Year of Election or Appointment: 2009 Assistant Treasurer of Fidelity's Equity and High Income Funds. Mr. Hebble also serves as President (2011-present), Treasurer, and Chief Financial Officer of The North Carolina Capital Management Trust: Cash and Term Portfolios (2008-present), President and Treasurer of other Fidelity funds (2008-present) and is an employee of Fidelity Investments. |
Gary W. Ryan (53) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of the Fidelity funds. Mr. Ryan is an employee of Fidelity Investments. Previously, Mr. Ryan served as Vice President of Fund Reporting in Fidelity Pricing and Cash Management Services (FPCMS) (1999-2005). |
Jonathan Davis (43) | |
| Year of Election or Appointment: 2010 Assistant Treasurer of the Fidelity funds. Mr. Davis is also Assistant Treasurer of Fidelity Rutland Square Trust II and Fidelity Commonwealth Trust II. Mr. Davis is an employee of Fidelity Investments. Previously, Mr. Davis served as Vice President and Associate General Counsel of FMR LLC (2003-2010). |
Annual Report
Distributions (Unaudited)
A percentage of the dividends distributed during the fiscal year for the following funds qualify for the dividends-received deduction for corporate shareholders:
| April 2011 | December 2011 |
Banking Portfolio | - | 100% |
Brokerage and Investment Management Portfolio | - | 100% |
Consumer Finance Portfolio | 72% | 43% |
Financial Services Portfolio | - | 100% |
Insurance Portfolio | 100% | 100% |
A percentage of the dividends distributed during the fiscal year for the following funds may be taken into account as a dividend for purposes of the maximum rate under section 1(h) (11) of the Internal Revenue Code:
| April 2011 | December 2011 |
Banking Portfolio | - | 100% |
Brokerage and Investment Management Portfolio | - | 100% |
Consumer Finance Portfolio | 72% | 43% |
Financial Services Portfolio | - | 100% |
Insurance Portfolio | 100% | 100% |
The funds will notify shareholders in January 2013 of amounts for use in preparing 2012 income tax returns.
Annual Report
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
FMR Co., Inc.
Fidelity Management & Research (U.K.) Inc.
Fidelity Management & Research (Hong Kong) Limited
Fidelity Management & Research (Japan) Inc.
General Distributor
Fidelity Distributors Corporation
Boston, MA
Transfer and Service Agents
Fidelity Investments Institutional Operations Company, Inc.
Boston, MA
Fidelity Service Company, Inc.
Boston, MA
Custodian
Brown Brothers Harriman & Co.
Boston, MA
Corporate Headquarters
82 Devonshire Street
Boston, MA 02109
1-800-544-8888
The Fidelity Telephone Connection
Mutual Fund 24-Hour Service
Exchanges/Redemptions
and Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774
(8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
Fidelity Automated Service
Telephone (FAST®)
1-800-544-5555
Automated line for quickest service
SELFIN-UANNPRO-0412
1.910420.102
Fidelity®
Select Portfolios®
Health Care Sector
Biotechnology Portfolio
Health Care Portfolio
Medical Delivery Portfolio
Medical Equipment and Systems Portfolio
Pharmaceuticals Portfolio
Annual Report
February 29, 2012
(Fidelity Cover Art)
Contents
Shareholder Expense Example |
| |
Biotechnology Portfolio | Performance | |
| Management's Discussion | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
Health Care Portfolio | Performance | |
| Management's Discussion | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
Medical Delivery Portfolio | Performance | |
| Management's Discussion | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
Medical Equipment and Systems Portfolio | Performance | |
| Management's Discussion | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
Pharmaceuticals Portfolio | Performance | |
| Management's Discussion | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
Notes to Financial Statements |
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Report of Independent Registered Public Accounting Firm |
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Trustees and Officers |
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Distributions |
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Annual Report
This report and the financial statements contained herein are submitted for the general information of the shareholders of the funds. This report is not authorized for distribution to prospective investors in the funds unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com, http://www.advisor.fidelity.com, or http://www.401k.com, as applicable.
NOT FDIC INSURED • MAY LOSE VALUE • NO BANK GUARANTEE
Neither the fund nor Fidelity Distributors Corporation is a bank.
Annual Report
Shareholder Expense Example
As a shareholder of a Fund, you incur two types of costs: (1) transaction costs, including redemption fees, and (2) ongoing costs, including management fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Funds and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (September 1, 2011 to February 29, 2012).
Actual Expenses
The first line of the accompanying table for each fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, each Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each fund provides information about hypothetical account values and hypothetical expenses based on a fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, each Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Annualized | Beginning | Ending | Expenses Paid |
Biotechnology Portfolio | .82% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,250.60 | $ 4.59 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.79 | $ 4.12 |
Health Care Portfolio | .80% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,123.50 | $ 4.22 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.89 | $ 4.02 |
Medical Delivery Portfolio | .85% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,143.60 | $ 4.53 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.64 | $ 4.27 |
Medical Equipment and Systems Portfolio | .85% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,040.80 | $ 4.31 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.64 | $ 4.27 |
Pharmaceuticals Portfolio | .87% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,100.60 | $ 4.54 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.54 | $ 4.37 |
A 5% return per year before expenses
* Expenses are equal to each Fund's annualized expense ratio, multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
Annual Report
Biotechnology Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 29, 2012 | Past 1 | Past 5 | Past 10 |
Biotechnology Portfolio | 32.31% | 8.92% | 6.24% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Biotechnology Portfolio on February 28, 2002. The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period.
Annual Report
Biotechnology Portfolio
Management's Discussion of Fund Performance
Market Recap: U.S. stocks rose for the 12 months ending February 29, 2012, as encouraging economic news sparked a strong late-period rally that lifted major equity benchmarks past a number of significant milestones. Stocks recovered from early-period uncertainty that followed the March 2011 earthquake, tsunami and nuclear meltdown in Japan, but plummeted during the summer amid Europe's debt woes and a historic U.S. credit-rating downgrade. Despite continued volatility and mixed economic news, markets began to recover in early October. Investors gravitated toward defensive sectors and the perceived safety of larger, more-established and dividend-paying names, helping the Dow Jones® Industrial Average advance 8.83%, and close above the psychologically important 13,000 mark in late February - for the first time since May 2008. The rally accelerated late in the period and the market broadened, as investor confidence improved amid encouraging manufacturing, housing and employment data, and signs of progress in Europe. For the year, the S&P 500® Index added 5.12%, closing near a four-year high on the period's second-to-last day. Of the 10 major market sectors in the S&P 500®, three defensive areas led the way - consumer staples, health care and utilities - while financials, materials and energy finished in negative territory. The technology-laden Nasdaq Composite® Index added 7.73%, flirting with the 3,000 mark, its highest level in 12 years. Foreign developed-markets stocks reeled over Europe's turmoil, and the MSCI® EAFE® (Europe, Australasia, Far East) Index fell 7.35%.
Comments from Rajiv Kaul, Portfolio Manager of Biotechnology Portfolio: For the year, the fund returned 32.31%, handily outdistancing the 27.25% gain of the MSCI® U.S. IM Biotechnology 25/50 Index and also topping the S&P 500®. Versus the MSCI index, stock picking within the fund's investment universe of biotechnology added considerable value during the period. Additionally, out-of-benchmark exposure to the pharmaceuticals and life science tools/services groups contributed to fund performance. At the stock level, relative performance benefited from positioning in Gilead Sciences, the fund's largest relative contributor during the period. I boosted the fund's position near the announcement of a deal calling for Gilead to acquire Pharmasset, which coincided with a rally in Gilead's shares. The fund also owned Pharmasset, whose shares almost doubled in price after the deal - which closed in January - was announced. Another of the fund's notable contributors to relative performance, Inhibitex, benefited from being acquired during the period. Inhibitex was an out-of-index position. One contributor from the period's first half was an out-of-benchmark position in Questcor Pharmaceuticals. A sizable year-over-year sales spurt in the second quarter for H.P. Acthar Gel®, the company's injectable medication for treating inflammation associated with multiple sclerosis, helped our holdings in the stock more than triple in value during the period. I liquidated the position to nail down profits. Another out-of-benchmark stake - this one in Adolor, a maker of pain medications - paid off nicely, as the stock soared in October after the company received a buyout offer. This deal closed in December. Conversely, InterMune was the largest relative detractor from performance. The stock was hurt by concern that Esbriet®, the company's drug for a rare and fatal lung disease, might not qualify for reimbursement in Germany, where the drug was being launched. In the case of United Therapeutics, its stock declined in part due to disappointing test results for Tyvaso® in treating high blood pressure in the arteries of the lungs. Also weighing on the fund's showing was XenoPort. In April 2011, the stock spiked higher on news that the firm had received approval to market Horizant® for restless legs syndrome. However, subsequent sales of the medication were disappointing, which depressed the stock. Underweighting strong-performing benchmark heavyweight Amgen detracted in relative terms, although the stock was our second-best contributor on an absolute basis.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Biotechnology Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 29, 2012 | ||
| % of fund's | % of fund's net assets |
Gilead Sciences, Inc. | 9.2 | 10.6 |
Celgene Corp. | 6.8 | 4.0 |
Amgen, Inc. | 5.8 | 13.6 |
Biogen Idec, Inc. | 4.9 | 6.1 |
Alexion Pharmaceuticals, Inc. | 4.1 | 6.0 |
Regeneron Pharmaceuticals, Inc. | 3.8 | 2.0 |
Medivation, Inc. | 3.7 | 0.6 |
Vertex Pharmaceuticals, Inc. | 3.7 | 4.2 |
BioMarin Pharmaceutical, Inc. | 2.6 | 3.8 |
Idenix Pharmaceuticals, Inc. | 1.7 | 1.2 |
| 46.3 | |
Top Industries (% of fund's net assets) | |||
As of February 29, 2012 | |||
 | Biotechnology | 93.1% |
|
 | Pharmaceuticals | 5.9% |
|
 | Life Sciences Tools & Services | 0.6% |
|
 | Health Care Equipment & Supplies | 0.3% |
|
 | All Others* | 0.1% |
|
As of August 31, 2011 | |||
| Biotechnology | 92.5% |
|
| Pharmaceuticals | 6.8% |
|
 | Health Care Equipment & Supplies | 0.1% |
|
| All Others* | 0.6% |
|
* Includes short-term investments and net other assets. |
Annual Report
Biotechnology Portfolio
Investments February 29, 2012
Showing Percentage of Net Assets
Common Stocks - 99.6% | |||
Shares | Value | ||
BIOTECHNOLOGY - 92.9% | |||
Biotechnology - 92.9% | |||
Acadia Pharmaceuticals, Inc. (a)(e) | 3,124,126 | $ 5,217,290 | |
Achillion Pharmaceuticals, Inc. (a) | 685,658 | 7,199,409 | |
Acorda Therapeutics, Inc. (a) | 869,880 | 22,756,061 | |
ADVENTRX Pharmaceuticals, Inc. (a)(d) | 656,268 | 433,793 | |
Aegerion Pharmaceuticals, Inc. (a) | 750,359 | 12,553,506 | |
Affymax, Inc. (a) | 593,204 | 6,056,613 | |
Agenus, Inc. (a) | 370,662 | 1,182,412 | |
Agenus, Inc. warrants 1/9/18 (a)(f) | 1,548,000 | 210,780 | |
Alexion Pharmaceuticals, Inc. (a) | 852,276 | 71,361,069 | |
Alkermes PLC (a) | 908,048 | 15,990,725 | |
Allos Therapeutics, Inc. (a) | 2,972,102 | 4,428,432 | |
Alnylam Pharmaceuticals, Inc. (a) | 1,563,203 | 20,853,128 | |
AMAG Pharmaceuticals, Inc. (a) | 582,256 | 9,205,467 | |
Amarin Corp. PLC ADR (a)(d) | 1,051,845 | 8,151,799 | |
Amgen, Inc. | 1,481,001 | 100,634,018 | |
Amicus Therapeutics, Inc. (a)(d) | 1,000,378 | 5,982,260 | |
Amylin Pharmaceuticals, Inc. (a)(d) | 1,238,815 | 21,171,348 | |
Anacor Pharmaceuticals, Inc. (a)(d) | 385,390 | 2,289,217 | |
Ardea Biosciences, Inc. (a) | 405,800 | 8,651,656 | |
Arena Pharmaceuticals, Inc. (a)(d) | 3,926,200 | 6,988,636 | |
ARIAD Pharmaceuticals, Inc. (a) | 1,866,905 | 26,771,418 | |
ArQule, Inc. (a) | 951,994 | 6,759,157 | |
AVEO Pharmaceuticals, Inc. (a)(d) | 338,487 | 4,413,870 | |
AVI BioPharma, Inc. (a) | 33,800 | 35,152 | |
Biogen Idec, Inc. (a) | 738,410 | 86,002,613 | |
BioInvent International AB (a) | 529,200 | 1,279,603 | |
BioMarin Pharmaceutical, Inc. (a) | 1,246,402 | 44,558,872 | |
Bionovo, Inc. (a) | 1,270,000 | 88,900 | |
Bionovo, Inc. warrants 2/2/16 (a) | 1,043,150 | 38,161 | |
Biospecifics Technologies Corp. (a) | 21,004 | 363,789 | |
BioTime, Inc. (a)(d) | 571,483 | 2,851,700 | |
Catalyst Pharmaceutical Partners, Inc. (a)(d)(e) | 1,766,118 | 1,960,391 | |
Catalyst Pharmaceutical Partners, Inc. warrants 5/2/17 (a)(e) | 141,443 | 72,699 | |
Celgene Corp. (a) | 1,604,905 | 117,679,659 | |
Cell Therapeutics, Inc. (a)(d) | 10,607,568 | 13,577,687 | |
Cell Therapeutics, Inc. warrants 7/6/16 (a) | 835,596 | 620,755 | |
Celldex Therapeutics, Inc. (a)(d) | 1,153,000 | 4,369,870 | |
Cepheid, Inc. (a) | 537,200 | 21,697,508 | |
Chelsea Therapeutics International Ltd. (a)(d) | 218,240 | 805,306 | |
Clovis Oncology, Inc. (d) | 105,605 | 2,639,069 | |
Codexis, Inc. (a) | 831,558 | 3,276,339 | |
Cubist Pharmaceuticals, Inc. (a) | 517,408 | 22,176,107 | |
Dendreon Corp. (a)(d) | 1,574,352 | 17,727,204 | |
Dynavax Technologies Corp. (a) | 1,221,200 | 5,129,040 | |
Emergent BioSolutions, Inc. (a) | 287,700 | 4,393,179 | |
Enzon Pharmaceuticals, Inc. (a)(d) | 489,066 | 3,457,697 | |
Exact Sciences Corp. (a) | 797,100 | 7,484,769 | |
Exelixis, Inc. (a)(d) | 1,142,168 | 6,487,514 | |
| |||
Shares | Value | ||
Genomic Health, Inc. (a) | 291,485 | $ 8,505,532 | |
Geron Corp. (a) | 131,439 | 262,878 | |
Gilead Sciences, Inc. (a) | 3,513,189 | 159,850,103 | |
Halozyme Therapeutics, Inc. (a) | 1,448,742 | 16,675,020 | |
Horizon Pharma, Inc. (d) | 520,300 | 1,795,035 | |
Horizon Pharma, Inc. (f) | 1,278,157 | 3,968,677 | |
Horizon Pharma, Inc. warrants 2/28/17 (a)(f) | 319,539 | 42,595 | |
Human Genome Sciences, Inc. (a)(d) | 1,721,659 | 13,566,673 | |
Idenix Pharmaceuticals, Inc. (a)(d) | 2,480,622 | 29,196,921 | |
ImmunoGen, Inc. (a)(d) | 798,996 | 11,002,175 | |
Incyte Corp. (a)(d) | 939,180 | 15,928,493 | |
InterMune, Inc. (a) | 1,485,435 | 19,934,538 | |
Ironwood Pharmaceuticals, Inc. Class A (a) | 1,533,238 | 20,530,057 | |
Isis Pharmaceuticals, Inc. (a) | 890,300 | 8,110,633 | |
Keryx Biopharmaceuticals, Inc. (a)(d) | 827,400 | 2,746,968 | |
Lexicon Pharmaceuticals, Inc. (a) | 7,617,223 | 12,949,279 | |
Ligand Pharmaceuticals, Inc. Class B (a) | 563,526 | 8,272,562 | |
MannKind Corp. (a)(d) | 876,122 | 2,050,125 | |
Medivation, Inc. (a) | 988,912 | 64,783,625 | |
Metabolix, Inc. (a)(d) | 492,175 | 1,353,481 | |
Momenta Pharmaceuticals, Inc. (a) | 560,648 | 8,219,100 | |
Myrexis, Inc. (a) | 4,379 | 14,013 | |
Myriad Genetics, Inc. (a) | 807,618 | 19,544,356 | |
Neurocrine Biosciences, Inc. (a) | 662,435 | 5,213,363 | |
NeurogesX, Inc. (a) | 254,676 | 146,693 | |
NeurogesX, Inc. (f) | 2,550,000 | 1,321,920 | |
NewLink Genetics Corp. | 329,900 | 2,790,954 | |
Novavax, Inc. (a) | 2,437,105 | 3,095,123 | |
Novelos Therapeutics, Inc. (a)(e) | 2,362,400 | 1,181,200 | |
Novelos Therapeutics, Inc. warrants 12/6/16 (a)(e) | 2,362,400 | 46,546 | |
NPS Pharmaceuticals, Inc. (a) | 1,640,126 | 11,185,659 | |
OncoGenex Pharmaceuticals, Inc. (a) | 123,595 | 1,975,048 | |
Oncothyreon, Inc. (a)(d) | 80,526 | 660,313 | |
ONYX Pharmaceuticals, Inc. (a) | 658,361 | 25,228,394 | |
Opko Health, Inc. (a)(d) | 2,275,200 | 11,239,488 | |
OREXIGEN Therapeutics, Inc. (a)(e) | 3,248,692 | 12,734,873 | |
PDL BioPharma, Inc. (d) | 1,427,733 | 9,108,937 | |
Pharmacyclics, Inc. (a)(d) | 631,903 | 15,917,637 | |
PolyMedix, Inc. (a)(e) | 5,922,334 | 7,699,034 | |
PolyMedix, Inc. warrants 4/10/16 (a)(e) | 2,961,167 | 2,392,472 | |
Progenics Pharmaceuticals, Inc. (a)(e) | 2,176,885 | 21,224,629 | |
PROLOR Biotech, Inc. (a)(d) | 1,263,484 | 7,290,303 | |
Protalix BioTherapeutics, Inc. (a)(d) | 1,279,742 | 6,833,822 | |
Protox Therapeutics, Inc. (a) | 2,514,500 | 800,351 | |
Puma Biotechnology, Inc. (f) | 522,668 | 1,960,005 | |
Puma Biotechnology, Inc. warrants 10/17/21 (a)(f) | 522,668 | 5 | |
Raptor Pharmaceutical Corp. (a)(d) | 1,636,479 | 11,422,623 | |
Regeneron Pharmaceuticals, Inc. (a) | 631,387 | 66,163,044 | |
Rigel Pharmaceuticals, Inc. (a) | 1,190,258 | 11,902,580 | |
Sangamo Biosciences, Inc. (a)(d) | 1,257,572 | 6,627,404 | |
Common Stocks - continued | |||
Shares | Value | ||
BIOTECHNOLOGY - CONTINUED | |||
Biotechnology - continued | |||
Savient Pharmaceuticals, Inc. (a)(d) | 1,372,287 | $ 2,758,297 | |
Seattle Genetics, Inc. (a)(d) | 898,119 | 16,579,277 | |
SIGA Technologies, Inc. (a)(d) | 1,770,014 | 5,044,540 | |
Spectrum Pharmaceuticals, Inc. (a)(d) | 1,462,671 | 20,755,301 | |
Sunesis Pharmaceuticals, Inc. (a)(d) | 362,564 | 630,861 | |
Synageva BioPharma Corp. (a) | 197,000 | 7,352,040 | |
Synergy Pharmaceuticals, Inc. unit (a) | 354,400 | 3,437,680 | |
Synta Pharmaceuticals Corp. (a)(d) | 907,233 | 4,336,574 | |
Targacept, Inc. (a) | 22,000 | 150,040 | |
Theravance, Inc. (a)(d) | 825,853 | 15,443,451 | |
Threshold Pharmaceuticals, Inc. (a) | 1,558,600 | 8,089,134 | |
Threshold Pharmaceuticals, Inc. warrants 3/16/16 (a) | 631,520 | 3,096,901 | |
Trius Therapeutics, Inc. (a) | 1,014,106 | 5,131,376 | |
United Therapeutics Corp. (a) | 468,751 | 22,373,485 | |
Verastem, Inc. | 141,800 | 1,644,880 | |
Vertex Pharmaceuticals, Inc. (a) | 1,660,008 | 64,607,511 | |
Vical, Inc. (a)(d) | 4,213,830 | 13,484,256 | |
ZIOPHARM Oncology, Inc. (a)(d) | 2,149,292 | 10,553,024 | |
| 1,618,969,534 | ||
HEALTH CARE EQUIPMENT & SUPPLIES - 0.3% | |||
Health Care Equipment - 0.3% | |||
Alsius Corp. (a) | 314,300 | 3 | |
Aradigm Corp. (a) | 6,398,160 | 831,761 | |
InVivo Therapeutics Holdings Corp. (a) | 1,711,200 | 4,089,768 | |
| 4,921,532 | ||
LIFE SCIENCES TOOLS & SERVICES - 0.6% | |||
Life Sciences Tools & Services - 0.6% | |||
BG Medicine, Inc. (d) | 711,911 | 5,510,191 | |
ChromaDex, Inc. (a) | 2,522,800 | 1,665,048 | |
Transgenomic, Inc. (a) | 275,000 | 330,000 | |
Transgenomic, Inc. unit (f) | 2,838,000 | 3,210,956 | |
| 10,716,195 | ||
PHARMACEUTICALS - 5.8% | |||
Pharmaceuticals - 5.8% | |||
AcelRx Pharmaceuticals, Inc. (e) | 1,041,900 | 2,938,158 | |
Akorn, Inc. (a) | 283,227 | 3,548,834 | |
Alimera Sciences, Inc. (a) | 400 | 1,504 | |
Auxilium Pharmaceuticals, Inc. (a) | 400,951 | 7,922,792 | |
AVANIR Pharmaceuticals Class A (a)(d) | 4,577,459 | 12,633,787 | |
Cardiome Pharma Corp. (a) | 900 | 2,007 | |
Corcept Therapeutics, Inc. (a)(d) | 1,426,500 | 5,606,145 | |
Elan Corp. PLC sponsored ADR (a) | 695,230 | 8,690,375 | |
Jazz Pharmaceuticals PLC (a) | 240,817 | 12,635,668 | |
NuPathe, Inc. (a)(d) | 17,100 | 51,471 | |
| |||
Shares | Value | ||
Omeros Corp. (a) | 18,900 | $ 128,520 | |
Optimer Pharmaceuticals, Inc. (a)(d) | 369,161 | 4,721,569 | |
Pacira Pharmaceuticals, Inc. (d) | 123,694 | 1,323,526 | |
Santarus, Inc. (a) | 894,175 | 4,041,671 | |
Ventrus Biosciences, Inc. (a)(e) | 681,696 | 7,280,513 | |
ViroPharma, Inc. (a) | 430,299 | 13,795,386 | |
Vivus, Inc. (a)(d) | 316,450 | 7,120,125 | |
XenoPort, Inc. (a) | 862,004 | 3,448,016 | |
Zogenix, Inc. (a) | 2,105,408 | 4,800,330 | |
| 100,690,397 | ||
TOTAL COMMON STOCKS (Cost $1,505,510,722) |
| ||
Convertible Preferred Stocks - 0.3% | |||
|
|
|
|
BIOTECHNOLOGY - 0.2% | |||
Biotechnology - 0.2% | |||
Xenon Pharmaceuticals, Inc. Series E (a)(f) | 981,626 | 3,416,058 | |
PHARMACEUTICALS - 0.1% | |||
Pharmaceuticals - 0.1% | |||
Agios Pharmaceuticals, Inc. Series C (f) | 229,509 | 1,127,142 | |
TOTAL CONVERTIBLE PREFERRED STOCKS (Cost $7,851,280) |
| ||
Money Market Funds - 10.6% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.12% (b) | 3,873,379 | 3,873,379 | |
Fidelity Securities Lending Cash Central Fund, 0.12% (b)(c) | 181,646,494 | 181,646,494 | |
TOTAL MONEY MARKET FUNDS (Cost $185,519,873) |
| ||
TOTAL INVESTMENT PORTFOLIO - 110.5% (Cost $1,698,881,875) | 1,925,360,731 | ||
NET OTHER ASSETS (LIABILITIES) - (10.5)% | (183,530,647) | ||
NET ASSETS - 100% | $ 1,741,830,084 | ||
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
(e) Affiliated company |
(f) Restricted securities - Investment in securities not registered under the Securities Act of 1933 (excluding 144A issues). At the end of the period, the value of restricted securities (excluding 144A issues) amounted to $15,258,138 or 0.9% of net assets. |
Additional information on each restricted holding is as follows: |
Security | Acquisition Date | Acquisition Cost |
Agenus, Inc. warrants 1/9/18 | 1/9/08 | $ 1,930,622 |
Agios Pharmaceuticals, Inc. Series C | 11/16/11 | $ 1,127,142 |
Horizon Pharma, Inc. | 2/29/12 | $ 4,588,584 |
Horizon Pharma, Inc. warrants 2/28/17 | 2/29/12 | $ 39,942 |
NeurogesX, Inc. | 2/1/12 | $ 2,575,500 |
Puma Biotechnology, Inc. | 10/4/11 | $ 1,959,999 |
Puma Biotechnology, Inc. warrants 10/17/21 | 10/4/11 | $ 6 |
Transgenomic, Inc. unit | 2/3/12 | $ 2,838,000 |
Xenon Pharmaceuticals, Inc. Series E | 3/23/01 | $ 6,724,138 |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 15,539 |
Fidelity Securities Lending Cash Central Fund | 3,447,140 |
Total | $ 3,462,679 |
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, |
Acadia Pharmaceuticals, Inc. | $ 256,229 | $ 5,177,968 | $ - | $ - | $ 5,217,290 |
AcelRx Pharmaceuticals, Inc. | 3,771,678 | - | - | - | 2,938,158 |
Adolor Corp. | 4,989,306 | - | 15,855,744 | - | - |
Catalyst Pharmaceutical Partners, Inc. | 1,389,997 | 901,194 | 419,227 | - | 1,960,391 |
Catalyst Pharmaceutical Partners, Inc. warrants 5/2/17 | - | 1,414 | - | - | 72,699 |
Novelos Therapeutics, Inc. | - | 1,254,291 | - | - | 1,181,200 |
Novelos Therapeutics, Inc. warrants 12/6/16 | - | 163,149 | - | - | 46,546 |
OREXIGEN Therapeutics, Inc. | 1,935,136 | 6,404,524 | - | - | 12,734,873 |
PolyMedix, Inc. | - | 4,291,522 | - | - | 7,699,034 |
PolyMedix, Inc. warrants 4/10/16 | - | 446,345 | - | - | 2,392,472 |
Progenics Pharmaceuticals, Inc. | 3,610,881 | 13,016,077 | - | - | 21,224,629 |
Ventrus Biosciences, Inc. | - | 8,052,000 | 1,510,541 | - | 7,280,513 |
Total | $ 15,953,227 | $ 39,708,484 | $ 17,785,512 | $ - | $ 62,747,805 |
Other Information |
The following is a summary of the inputs used, as of February 29, 2012, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the tables below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities: | ||||
Common Stocks | $ 1,735,297,658 | $ 1,718,315,183 | $ 15,022,462 | $ 1,960,013 |
Convertible Preferred Stocks | 4,543,200 | - | - | 4,543,200 |
Money Market Funds | 185,519,873 | 185,519,873 | - | - |
Total Investments in Securities: | $ 1,925,360,731 | $ 1,903,835,056 | $ 15,022,462 | $ 6,503,213 |
The following is a reconciliation of Investments in Securities for which Level 3 inputs were used in determining value: |
Investments in Securities: | |
Beginning Balance | $ 3,416,061 |
Total Realized Gain (Loss) | - |
Total Unrealized Gain (Loss) | 5 |
Cost of Purchases | 3,087,147 |
Proceeds of Sales | - |
Amortization/Accretion | - |
Transfers in to Level 3 | - |
Transfers out of Level 3 | - |
Ending Balance | $ 6,503,213 |
The change in unrealized gain (loss) for the period attributable to Level 3 securities held at February 29, 2012 | $ 5 |
The information used in the above reconciliation represents fiscal year to date activity for any Investments in Securities identified as using Level 3 inputs at either the beginning or the end of the current fiscal period. Transfers in or out of Level 3 represent the beginning value of any Security or Instrument where a change in the pricing level occurred from the beginning to the end of the period. The cost of purchases and the proceeds of sales may include securities received or delivered through corporate actions or exchanges. Realized and unrealized gains (losses) disclosed in the reconciliations are included in Net Gain (Loss) on the Fund's Statement of Operations. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Biotechnology Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2012 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $171,223,101) - See accompanying schedule: Unaffiliated issuers (cost $1,458,482,701) | $ 1,677,093,053 |
|
Fidelity Central Funds (cost $185,519,873) | 185,519,873 |
|
Other affiliated issuers (cost $54,879,301) | 62,747,805 |
|
Total Investments (cost $1,698,881,875) |
| $ 1,925,360,731 |
Receivable for investments sold | 25,942,882 | |
Receivable for fund shares sold | 4,894,213 | |
Dividends receivable | 885,219 | |
Distributions receivable from Fidelity Central Funds | 242,133 | |
Prepaid expenses | 2,543 | |
Other receivables | 13,243 | |
Total assets | 1,957,340,964 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 24,503,215 | |
Payable for fund shares redeemed | 8,174,140 | |
Accrued management fee | 826,503 | |
Other affiliated payables | 322,245 | |
Other payables and accrued expenses | 38,283 | |
Collateral on securities loaned, at value | 181,646,494 | |
Total liabilities | 215,510,880 | |
|
|
|
Net Assets | $ 1,741,830,084 | |
Net Assets consist of: |
| |
Paid in capital | $ 1,445,367,129 | |
Accumulated net investment loss | (777,802) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 70,761,901 | |
Net unrealized appreciation (depreciation) on investments | 226,478,856 | |
Net Assets, for 17,813,340 shares outstanding | $ 1,741,830,084 | |
Net Asset Value, offering price and redemption price per share ($1,741,830,084 ÷ 17,813,340 shares) | $ 97.78 | |
Statement of Operations
| Year ended February 29, 2012 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 3,578,029 |
Interest |
| 225 |
Income from Fidelity Central Funds (including $3,447,140 from security lending) |
| 3,462,679 |
Total income |
| 7,040,933 |
|
|
|
Expenses | ||
Management fee | $ 7,057,699 | |
Transfer agent fees | 2,807,626 | |
Accounting and security lending fees | 434,575 | |
Custodian fees and expenses | 18,309 | |
Independent trustees' compensation | 7,564 | |
Registration fees | 75,897 | |
Audit | 44,031 | |
Legal | 6,742 | |
Interest | 1,825 | |
Miscellaneous | 11,872 | |
Total expenses before reductions | 10,466,140 | |
Expense reductions | (41,171) | 10,424,969 |
Net investment income (loss) | (3,384,036) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 140,672,077 | |
Other affiliated issuers | 11,711,151 |
|
Foreign currency transactions | (14,949) | |
Total net realized gain (loss) |
| 152,368,279 |
Change in net unrealized appreciation (depreciation) on investment securities | 201,752,872 | |
Net gain (loss) | 354,121,151 | |
Net increase (decrease) in net assets resulting from operations | $ 350,737,115 | |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Biotechnology Portfolio
Financial Statements - continued
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ (3,384,036) | $ (6,147,859) |
Net realized gain (loss) | 152,368,279 | 31,882,955 |
Change in net unrealized appreciation (depreciation) | 201,752,872 | 62,328,967 |
Net increase (decrease) in net assets resulting from operations | 350,737,115 | 88,064,063 |
Distributions to shareholders from net realized gain | (1,786,490) | - |
Share transactions | 771,494,800 | 182,973,057 |
Reinvestment of distributions | 1,665,527 | - |
Cost of shares redeemed | (393,289,579) | (326,801,243) |
Net increase (decrease) in net assets resulting from share transactions | 379,870,748 | (143,828,186) |
Redemption fees | 102,179 | 14,208 |
Total increase (decrease) in net assets | 728,923,552 | (55,749,915) |
|
|
|
Net Assets | ||
Beginning of period | 1,012,906,532 | 1,068,656,447 |
End of period (including accumulated net investment loss of $777,802 and accumulated net investment loss of $880, respectively) | $ 1,741,830,084 | $ 1,012,906,532 |
Other Information Shares | ||
Sold | 8,809,741 | 2,655,819 |
Issued in reinvestment of distributions | 19,987 | - |
Redeemed | (4,701,921) | (4,724,909) |
Net increase (decrease) | 4,127,807 | (2,069,090) |
Financial Highlights
Years ended February 28, | 2012 I | 2011 | 2010 | 2009 | 2008 I |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 74.01 | $ 67.83 | $ 54.62 | $ 62.59 | $ 63.89 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | (.23) | (.41) E | (.39) F | (.38) G | (.53) |
Net realized and unrealized gain (loss) | 24.11 | 6.59 | 13.60 | (7.60) | (.77) |
Total from investment operations | 23.88 | 6.18 | 13.21 | (7.98) | (1.30) |
Distributions from net realized gain | (.12) | - | - | - | - |
Redemption fees added to paid in capital B | .01 | - J | - J | .01 | - J |
Net asset value, end of period | $ 97.78 | $ 74.01 | $ 67.83 | $ 54.62 | $ 62.59 |
Total Return A | 32.31% | 9.11% | 24.19% | (12.73)% | (2.03)% |
Ratios to Average Net Assets C, H |
|
|
|
|
|
Expenses before reductions | .83% | .87% | .91% | .89% | .89% |
Expenses net of fee waivers, if any | .83% | .87% | .91% | .89% | .89% |
Expenses net of all reductions | .83% | .86% | .91% | .89% | .89% |
Net investment income (loss) | (.27)% | (.59)% E | (.64)% F | (.61)% G | (.79)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 1,741,830 | $ 1,012,907 | $ 1,068,656 | $ 1,152,137 | $ 1,088,003 |
Portfolio turnover rate D | 106% | 119% | 109% | 55% | 143% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown. B Calculated based on average shares outstanding during the period. C Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. D Amount does not include the portfolio activity of any underlying Fidelity Central Funds. E Investment income per share reflects a large, non-recurring dividend which amounted to $.11 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been (.75)%. F Investment income per share reflects large, non-recurring dividends which amounted to $.09 per share. Excluding these non-recurring dividends, the ratio of net investment income (loss) to average net assets would have been (.78)%. G Investment income per share reflects a large, non-recurring dividend which amounted to $.05 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been (.69)%. 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 reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. I For the year ended February 29. J Amount represents less than $.01 per share. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Health Care Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 29, 2012 | Past 1 | Past 5 | Past 10 |
Health Care Portfolio | 9.10% | 6.31% | 6.21% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Health Care Portfolio on February 28, 2002. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index performed over the same period.
Annual Report
Health Care Portfolio
Management's Discussion of Fund Performance
Market Recap: U.S. stocks rose for the 12 months ending February 29, 2012, as encouraging economic news sparked a strong late-period rally that lifted major equity benchmarks past a number of significant milestones. Stocks recovered from early-period uncertainty that followed the March 2011 earthquake, tsunami and nuclear meltdown in Japan, but plummeted during the summer amid Europe's debt woes and a historic U.S. credit-rating downgrade. Despite continued volatility and mixed economic news, markets began to recover in early October. Investors gravitated toward defensive sectors and the perceived safety of larger, more-established and dividend-paying names, helping the Dow Jones® Industrial Average advance 8.83%, and close above the psychologically important 13,000 mark in late February - for the first time since May 2008. The rally accelerated late in the period and the market broadened, as investor confidence improved amid encouraging manufacturing, housing and employment data, and signs of progress in Europe. For the year, the S&P 500® Index added 5.12%, closing near a four-year high on the period's second-to-last day. Of the 10 major market sectors in the S&P 500®, three defensive areas led the way - consumer staples, health care and utilities - while financials, materials and energy finished in negative territory. The technology-laden Nasdaq Composite® Index added 7.73%, flirting with the 3,000 mark, its highest level in 12 years. Foreign developed-markets stocks reeled over Europe's turmoil, and the MSCI® EAFE® (Europe, Australasia, Far East) Index fell 7.35%.
Comments from Edward Yoon, Portfolio Manager of Health Care Portfolio: For the year, the fund returned 9.10%, trailing the 12.59% gain of the MSCI® U.S. IM Health Care 25/50 Index but outpacing the S&P 500®. Versus its sector benchmark, a significant underweighting and weak stock picking in pharmaceuticals - the benchmark's primary industry - meaningfully detracted. Positioning in life science tools/services and health care facilities, and an overweighting in health care equipment, also hampered performance, as did the fund's modest cash position when the market advanced strongly later in the period. On the plus side, an overweighting and good individual picks in biotechnology contributed the most by far, while security selection in health care supplies also was additive. On an individual stock basis, an overweighting in Illumina, which develops genetic analysis technology, was the biggest relative detractor. Since the company receives a major share of its funding from the National Institutes of Health (NIH), concerns of budget restraints caused Illumina to issue disappointing financial guidance, sending the stock sharply lower in early October. The fund also was hurt by biopharmaceutical firm Targacept, an out-of-index position in online medical information provider WebMD Health, and an underweighting in large-cap pharmaceutical firm and major index component Abbott Laboratories. The fund did not own WebMD or Abbott at period end. On the plus side, the fund's top-four individual contributors were biotechnology stocks, with a non-index stake in Inhibitex adding the most value. Its shares jumped in January on an acquisition bid from Bristol-Myers Squibb, also a fund holding during the year. The deal was completed in mid-February, and the fund held neither stock at period end. Alexion Pharmaceuticals also provided a boost, as did ARIAD Pharmaceuticals and BioMarin Pharmaceutical.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Health Care Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 29, 2012 | ||
| % of fund's | % of fund's net assets |
Amgen, Inc. | 7.2 | 6.1 |
UnitedHealth Group, Inc. | 5.1 | 1.3 |
Covidien PLC | 4.3 | 6.5 |
Gilead Sciences, Inc. | 4.2 | 1.2 |
Merck & Co., Inc. | 3.8 | 2.3 |
WellPoint, Inc. | 3.6 | 1.9 |
Express Scripts, Inc. | 3.1 | 3.4 |
GlaxoSmithKline PLC sponsored ADR | 2.8 | 0.0 |
Biogen Idec, Inc. | 2.7 | 1.5 |
Valeant Pharmaceuticals International, Inc. (Canada) | 2.4 | 2.2 |
| 39.2 | |
Top Industries (% of fund's net assets) | |||
As of February 29, 2012 | |||
| Health Care Providers & Services | 31.0% |
|
 | Biotechnology | 26.8% |
|
 | Pharmaceuticals | 18.9% |
|
 | Health Care Equipment & Supplies | 13.2% |
|
| Food & Staples Retailing | 2.8% |
|
| All Others* | 7.3% |
|
As of August 31, 2011 | |||
| Health Care Equipment & Supplies | 24.1% |
|
| Biotechnology | 21.8% |
|
| Health Care Providers & Services | 18.9% |
|
| Pharmaceuticals | 17.1% |
|
| Life Sciences Tools & Services | 2.6% |
|
| All Others* | 15.5% |
|
* Includes short-term investments and net other assets. |
Annual Report
Health Care Portfolio
Investments February 29, 2012
Showing Percentage of Net Assets
Common Stocks - 98.8% | |||
Shares | Value | ||
BIOTECHNOLOGY - 26.6% | |||
Biotechnology - 26.6% | |||
Achillion Pharmaceuticals, Inc. (a) | 900,000 | $ 9,450,000 | |
Acorda Therapeutics, Inc. (a) | 450,000 | 11,772,000 | |
Alexion Pharmaceuticals, Inc. (a) | 560,000 | 46,888,800 | |
AMAG Pharmaceuticals, Inc. (a) | 151,707 | 2,398,488 | |
Amgen, Inc. | 2,300,000 | 156,284,998 | |
Anthera Pharmaceuticals, Inc. (a) | 700,000 | 4,634,000 | |
Ardea Biosciences, Inc. (a) | 650,000 | 13,858,000 | |
ARIAD Pharmaceuticals, Inc. (a) | 1,200,000 | 17,208,000 | |
AVEO Pharmaceuticals, Inc. (a) | 467,323 | 6,093,892 | |
Biogen Idec, Inc. (a) | 500,000 | 58,235,000 | |
BioMarin Pharmaceutical, Inc. (a) | 1,300,000 | 46,475,000 | |
Dynavax Technologies Corp. (a)(d) | 4,032,900 | 16,938,180 | |
Gilead Sciences, Inc. (a) | 2,000,000 | 91,000,000 | |
Medivation, Inc. (a) | 200,000 | 13,102,000 | |
Neurocrine Biosciences, Inc. (a) | 1,005,500 | 7,913,285 | |
NPS Pharmaceuticals, Inc. (a) | 1,000,000 | 6,820,000 | |
ONYX Pharmaceuticals, Inc. (a) | 174,100 | 6,671,512 | |
Puma Biotechnology, Inc. (f) | 555,556 | 2,083,335 | |
Puma Biotechnology, Inc. warrants 10/17/21 (a)(f) | 555,556 | 6 | |
Seattle Genetics, Inc. (a) | 500,000 | 9,230,000 | |
Synageva BioPharma Corp. (a)(d) | 300,000 | 11,196,000 | |
Targacept, Inc. (a) | 400,000 | 2,728,000 | |
Theravance, Inc. (a) | 650,000 | 12,155,000 | |
United Therapeutics Corp. (a) | 400,000 | 19,092,000 | |
Vical, Inc. (a) | 1,280,000 | 4,096,000 | |
ZIOPHARM Oncology, Inc. (a) | 473,320 | 2,324,001 | |
| 578,647,497 | ||
DIVERSIFIED CONSUMER SERVICES - 0.5% | |||
Specialized Consumer Services - 0.5% | |||
Carriage Services, Inc. (e) | 996,904 | 5,971,455 | |
Stewart Enterprises, Inc. Class A | 690,000 | 4,291,800 | |
| 10,263,255 | ||
FOOD & STAPLES RETAILING - 2.8% | |||
Drug Retail - 2.8% | |||
CVS Caremark Corp. | 850,000 | 38,335,000 | |
Drogasil SA | 2,300,000 | 22,391,336 | |
| 60,726,336 | ||
HEALTH CARE EQUIPMENT & SUPPLIES - 13.2% | |||
Health Care Equipment - 12.1% | |||
Boston Scientific Corp. (a) | 7,800,000 | 48,516,000 | |
C. R. Bard, Inc. | 200,000 | 18,724,000 | |
China Kanghui Holdings sponsored ADR (a) | 302,404 | 5,615,642 | |
Conceptus, Inc. (a) | 700,000 | 9,429,000 | |
CONMED Corp. | 250,000 | 7,460,000 | |
Covidien PLC | 1,800,000 | 94,050,000 | |
| |||
Shares | Value | ||
Cyberonics, Inc. (a) | 267,300 | $ 9,951,579 | |
Genmark Diagnostics, Inc. (a) | 943,260 | 3,923,962 | |
HeartWare International, Inc. (a)(d) | 140,000 | 10,256,400 | |
Insulet Corp. (a) | 260,734 | 5,141,674 | |
Opto Circuits India Ltd. | 1,000,000 | 5,546,732 | |
Orthofix International NV (a) | 200,000 | 7,842,000 | |
William Demant Holding A/S (a) | 115,000 | 10,673,906 | |
Wright Medical Group, Inc. (a) | 1,000,000 | 16,560,000 | |
Zeltiq Aesthetics, Inc. (d) | 400,000 | 4,432,000 | |
Zimmer Holdings, Inc. | 100,000 | 6,075,000 | |
| 264,197,895 | ||
Health Care Supplies - 1.1% | |||
The Cooper Companies, Inc. | 304,400 | 24,193,712 | |
TOTAL HEALTH CARE EQUIPMENT & SUPPLIES | 288,391,607 | ||
HEALTH CARE PROVIDERS & SERVICES - 31.0% | |||
Health Care Distributors & Services - 1.3% | |||
Amplifon SpA | 1,478,423 | 7,125,850 | |
McKesson Corp. | 250,000 | 20,877,500 | |
| 28,003,350 | ||
Health Care Facilities - 1.4% | |||
Emeritus Corp. (a) | 425,980 | 7,863,591 | |
Hanger Orthopedic Group, Inc. (a) | 300,000 | 6,207,000 | |
LCA-Vision, Inc. (a) | 900,000 | 7,758,000 | |
Sunrise Senior Living, Inc. (a)(d) | 1,280,000 | 9,907,200 | |
| 31,735,791 | ||
Health Care Services - 14.3% | |||
Accretive Health, Inc. (a)(d) | 650,000 | 16,893,500 | |
Catalyst Health Solutions, Inc. (a) | 480,000 | 29,769,600 | |
Express Scripts, Inc. (a) | 1,280,000 | 68,262,400 | |
Fresenius Medical Care AG & Co. KGaA | 280,000 | 19,641,454 | |
HMS Holdings Corp. (a) | 400,000 | 12,888,000 | |
Laboratory Corp. of America Holdings (a) | 400,000 | 35,956,000 | |
Medco Health Solutions, Inc. (a) | 650,000 | 43,933,500 | |
MEDNAX, Inc. (a) | 350,000 | 26,036,500 | |
Omnicare, Inc. | 800,000 | 28,144,000 | |
Quest Diagnostics, Inc. | 500,000 | 29,025,000 | |
| 310,549,954 | ||
Managed Health Care - 14.0% | |||
Aetna, Inc. | 600,000 | 28,056,000 | |
Health Net, Inc. (a) | 900,000 | 33,966,000 | |
Humana, Inc. | 600,000 | 52,260,000 | |
UnitedHealth Group, Inc. | 2,000,000 | 111,500,000 | |
WellPoint, Inc. | 1,200,000 | 78,756,000 | |
| 304,538,000 | ||
TOTAL HEALTH CARE PROVIDERS & SERVICES | 674,827,095 | ||
Common Stocks - continued | |||
Shares | Value | ||
HEALTH CARE TECHNOLOGY - 1.9% | |||
Health Care Technology - 1.9% | |||
Allscripts-Misys Healthcare Solutions, Inc. (a) | 280,000 | $ 5,409,600 | |
athenahealth, Inc. (a)(d) | 300,000 | 21,201,000 | |
Epocrates, Inc. (a) | 500,000 | 4,650,000 | |
SXC Health Solutions Corp. (a) | 150,000 | 10,723,488 | |
| 41,984,088 | ||
LIFE SCIENCES TOOLS & SERVICES - 1.8% | |||
Life Sciences Tools & Services - 1.8% | |||
Illumina, Inc. (a) | 750,000 | 38,437,500 | |
PERSONAL PRODUCTS - 0.6% | |||
Personal Products - 0.6% | |||
Prestige Brands Holdings, Inc. (a) | 770,000 | 12,705,000 | |
PHARMACEUTICALS - 18.8% | |||
Pharmaceuticals - 18.8% | |||
Cardiome Pharma Corp. (a) | 1,600,000 | 3,568,001 | |
Elan Corp. PLC sponsored ADR (a) | 1,500,000 | 18,750,000 | |
Eli Lilly & Co. | 675,000 | 26,487,000 | |
Endo Pharmaceuticals Holdings, Inc. (a) | 500,000 | 18,535,000 | |
Forest Laboratories, Inc. (a) | 250,000 | 8,130,000 | |
GlaxoSmithKline PLC sponsored ADR | 1,350,000 | 59,818,500 | |
Meda AB (A Shares) | 800,000 | 7,556,237 | |
Merck & Co., Inc. | 2,150,000 | 82,065,500 | |
Optimer Pharmaceuticals, Inc. (a)(d) | 800,000 | 10,232,000 | |
Pacira Pharmaceuticals, Inc. | 293,700 | 3,142,590 | |
Pfizer, Inc. | 400,000 | 8,440,000 | |
Sanofi sponsored ADR | 1,200,000 | 44,436,000 | |
Shire PLC sponsored ADR | 400,000 | 41,860,000 | |
Valeant Pharmaceuticals International, Inc. (Canada) (a) | 1,000,000 | 53,018,744 | |
Watson Pharmaceuticals, Inc. (a) | 350,000 | 20,412,000 | |
XenoPort, Inc. (a) | 500,000 | 2,000,000 | |
| 408,451,572 | ||
PROFESSIONAL SERVICES - 1.2% | |||
Research & Consulting Services - 1.2% | |||
Advisory Board Co. (a) | 170,000 | 13,759,800 | |
Qualicorp SA | 1,500,000 | 13,100,818 | |
| 26,860,618 | ||
SOFTWARE - 0.4% | |||
Application Software - 0.4% | |||
Nuance Communications, Inc. (a) | 350,000 | 9,072,000 | |
TOTAL COMMON STOCKS (Cost $1,767,625,983) |
| ||
Convertible Preferred Stocks - 0.3% | |||
Shares | Value | ||
BIOTECHNOLOGY - 0.2% | |||
Biotechnology - 0.2% | |||
Aria Diagnostics, Inc. (f) | 496,689 | $ 3,000,002 | |
PHARMACEUTICALS - 0.1% | |||
Pharmaceuticals - 0.1% | |||
Merrimack Pharmaceuticals, Inc. Series G (f) | 350,000 | 2,520,000 | |
TOTAL CONVERTIBLE PREFERRED STOCKS (Cost $5,450,002) |
| ||
Money Market Funds - 2.5% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.12% (b) | 11,529,280 | 11,529,280 | |
Fidelity Securities Lending Cash Central Fund, 0.12% (b)(c) | 43,019,367 | 43,019,367 | |
TOTAL MONEY MARKET FUNDS (Cost $54,548,647) |
| ||
TOTAL INVESTMENT PORTFOLIO - 101.6% (Cost $1,827,624,632) | 2,210,435,217 | ||
NET OTHER ASSETS (LIABILITIES) - (1.6)% | (34,211,164) | ||
NET ASSETS - 100% | $ 2,176,224,053 | ||
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. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
(e) Affiliated company |
(f) Restricted securities - Investment in securities not registered under the Securities Act of 1933 (excluding 144A issues). At the end of the period, the value of restricted securities (excluding 144A issues) amounted to $7,603,343 or 0.3% of net assets. |
Additional information on each restricted holding is as follows: |
Security | Acquisition Date | Acquisition Cost |
Aria Diagnostics, Inc. | 11/30/11 | $ 3,000,002 |
Merrimack Pharmaceuticals, Inc. Series G | 3/31/11 | $ 2,450,000 |
Puma Biotechnology, Inc. | 10/4/11 | $ 2,083,329 |
Puma Biotechnology, Inc. warrants 10/17/21 | 10/4/11 | $ 6 |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 88,076 |
Fidelity Securities Lending Cash Central Fund | 315,259 |
Total | $ 403,335 |
Other Affiliated Issuers |
An affiliated company is a company in which the Fund has ownership of at least 5% of the voting securities. Fiscal year to date transactions with companies which are or were affiliates are as follows: |
Affiliate | Value, | Purchases | Sales | Dividend | Value, |
Carriage Services, Inc. | $ 5,682,353 | $ - | $ - | $ 99,690 | $ 5,971,455 |
Total | $ 5,682,353 | $ - | $ - | $ 99,690 | $ 5,971,455 |
Other Information |
The following is a summary of the inputs used, as of February 29, 2012, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the tables below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities: | ||||
Common Stocks | $ 2,150,366,568 | $ 2,128,641,773 | $ 19,641,454 | $ 2,083,341 |
Convertible Preferred Stocks | 5,520,002 | - | - | 5,520,002 |
Money Market Funds | 54,548,647 | 54,548,647 | - | - |
Total Investments in Securities: | $ 2,210,435,217 | $ 2,183,190,420 | $ 19,641,454 | $ 7,603,343 |
The following is a reconciliation of Investments in Securities for which Level 3 inputs were used in determining value: |
Investments in Securities: | |
Beginning Balance | $ - |
Total Realized Gain (Loss) | - |
Total Unrealized Gain (Loss) | 70,006 |
Cost of Purchases | 7,533,337 |
Proceeds of Sales | - |
Amortization/Accretion | - |
Transfers in to Level 3 | - |
Transfers out of Level 3 | - |
Ending Balance | $ 7,603,343 |
The change in unrealized gain (loss) for the period attributable to Level 3 securities held at February 29, 2012 | $ 70,006 |
The information used in the above reconciliation represents fiscal year to date activity for any Investments in Securities identified as using Level 3 inputs at either the beginning or the end of the current fiscal period. Transfers in or out of Level 3 represent the beginning value of any Security or Instrument where a change in the pricing level occurred from the beginning to the end of the period. The cost of purchases and the proceeds of sales may include securities received or delivered through corporate actions or exchanges. Realized and unrealized gains (losses) disclosed in the reconciliation are included in Net Gain (Loss) on the Fund's Statement of Operations. |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 80.5% |
Ireland | 5.2% |
Canada | 3.1% |
United Kingdom | 2.8% |
France | 2.0% |
Bailiwick of Jersey | 1.9% |
Brazil | 1.6% |
Others (Individually Less Than 1%) | 2.9% |
| 100.0% |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Health Care Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2012 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $41,734,616) - See accompanying schedule: Unaffiliated issuers (cost $1,767,375,720) | $ 2,149,915,115 |
|
Fidelity Central Funds (cost $54,548,647) | 54,548,647 |
|
Other affiliated issuers (cost $5,700,265) | 5,971,455 |
|
Total Investments (cost $1,827,624,632) |
| $ 2,210,435,217 |
Receivable for investments sold | 31,906,514 | |
Receivable for fund shares sold | 1,839,723 | |
Dividends receivable | 2,424,673 | |
Distributions receivable from Fidelity Central Funds | 30,872 | |
Prepaid expenses | 4,425 | |
Other receivables | 75,521 | |
Total assets | 2,246,716,945 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 23,590,264 | |
Payable for fund shares redeemed | 2,382,710 | |
Accrued management fee | 1,016,444 | |
Other affiliated payables | 405,067 | |
Other payables and accrued expenses | 79,040 | |
Collateral on securities loaned, at value | 43,019,367 | |
Total liabilities | 70,492,892 | |
|
|
|
Net Assets | $ 2,176,224,053 | |
Net Assets consist of: |
| |
Paid in capital | $ 1,745,143,635 | |
Distributions in excess of net investment income | (37,650) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 48,309,616 | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 382,808,452 | |
Net Assets, for 16,353,381 shares outstanding | $ 2,176,224,053 | |
Net Asset Value, offering price and redemption price per share ($2,176,224,053 ÷ 16,353,381 shares) | $ 133.07 | |
Statement of Operations
| Year ended February 29, 2012 | |
|
|
|
Investment Income |
|
|
Dividends (including $99,690 earned from other affiliated issuers) |
| $ 16,227,149 |
Interest |
| 8,377 |
Income from Fidelity Central Funds (including $315,259 from security lending) |
| 403,335 |
Total income |
| 16,638,861 |
|
|
|
Expenses | ||
Management fee | $ 11,660,739 | |
Transfer agent fees | 4,267,790 | |
Accounting and security lending fees | 645,870 | |
Custodian fees and expenses | 55,940 | |
Independent trustees' compensation | 12,356 | |
Appreciation in deferred trustee compensation account | 138 | |
Registration fees | 66,064 | |
Audit | 46,995 | |
Legal | 7,625 | |
Interest | 798 | |
Miscellaneous | 20,223 | |
Total expenses before reductions | 16,784,538 | |
Expense reductions | (146,708) | 16,637,830 |
Net investment income (loss) | 1,031 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 269,776,017 | |
Foreign currency transactions | (564,017) | |
Total net realized gain (loss) |
| 269,212,000 |
Change in net unrealized appreciation (depreciation) on: Investment securities | (93,371,974) | |
Assets and liabilities in foreign currencies | 16,172 | |
Total change in net unrealized appreciation (depreciation) |
| (93,355,802) |
Net gain (loss) | 175,856,198 | |
Net increase (decrease) in net assets resulting from operations | $ 175,857,229 | |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 1,031 | $ 549,148 |
Net realized gain (loss) | 269,212,000 | 153,068,969 |
Change in net unrealized appreciation (depreciation) | (93,355,802) | 200,842,262 |
Net increase (decrease) in net assets resulting from operations | 175,857,229 | 354,460,379 |
Distributions to shareholders from net investment income | - | (2,405,048) |
Distributions to shareholders from net realized gain | (176,290,692) | (79,263) |
Total distributions | (176,290,692) | (2,484,311) |
Share transactions | 643,651,462 | 288,101,353 |
Reinvestment of distributions | 167,043,397 | 2,341,444 |
Cost of shares redeemed | (625,716,838) | (378,577,968) |
Net increase (decrease) in net assets resulting from share transactions | 184,978,021 | (88,135,171) |
Redemption fees | 75,308 | 20,826 |
Total increase (decrease) in net assets | 184,619,866 | 263,861,723 |
|
|
|
Net Assets | ||
Beginning of period | 1,991,604,187 | 1,727,742,464 |
End of period (including distributions in excess of net investment income of $37,650 and distributions in excess of net investment income of $58,693, respectively) | $ 2,176,224,053 | $ 1,991,604,187 |
Other Information Shares | ||
Sold | 4,810,845 | 2,400,177 |
Issued in reinvestment of distributions | 1,397,502 | 19,223 |
Redeemed | (4,725,720) | (3,375,250) |
Net increase (decrease) | 1,482,627 | (955,850) |
Financial Highlights
Years ended February 28, | 2012 H | 2011 | 2010 | 2009 | 2008 H |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 133.93 | $ 109.17 | $ 73.65 | $ 114.24 | $ 126.78 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | - I | .04 | .06 | .42 | .39 F |
Net realized and unrealized gain (loss) | 10.86 | 24.90 | 35.71 | (35.98) | 1.63 |
Total from investment operations | 10.86 | 24.94 | 35.77 | (35.56) | 2.02 |
Distributions from net investment income | - | (.17) | (.25) | (.37) | (.39) |
Distributions from net realized gain | (11.72) | (.01) | (.01) | (4.66) | (14.17) |
Total distributions | (11.72) | (.18) | (.25) J | (5.03) | (14.56) |
Redemption fees added to paid in capital B, I | - | - | - | - | - |
Net asset value, end of period | $ 133.07 | $ 133.93 | $ 109.17 | $ 73.65 | $ 114.24 |
Total Return A | 9.10% | 22.86% | 48.65% | (32.34)% | .72% |
Ratios to Average Net Assets C, G |
|
|
|
|
|
Expenses before reductions | .80% | .82% | .88% | .86% | .85% |
Expenses net of fee waivers, if any | .80% | .82% | .88% | .86% | .85% |
Expenses net of all reductions | .80% | .82% | .87% | .86% | .84% |
Net investment income (loss) | .00% E | .03% | .07% | .44% | .30% F |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 2,176,224 | $ 1,991,604 | $ 1,727,742 | $ 1,191,143 | $ 1,948,147 |
Portfolio turnover rate D | 130% | 99% | 116% | 173% | 120% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown. B Calculated based on average shares outstanding during the period. C Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. D Amount does not include the portfolio activity of any underlying Fidelity Central Funds. E Amount represents less than .01%. F Investment income per share reflects a large, non-recurring dividend which amounted to $.13 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .20%. G Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. H For the year ended February 29. I Amount represents less than $.01 per share. J Total distributions of $.25 per share is comprised of distributions from net investment income of $.245 and distributions from net realized gain of $.005 per share. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Medical Delivery Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 29, 2012 | Past 1 | Past 5 | Past 10 |
Medical Delivery Portfolio | 10.74% | 5.58% | 11.43% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Medical Delivery Portfolio on February 28, 2002. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index performed over the same period.
Annual Report
Medical Delivery Portfolio
Management's Discussion of Fund Performance
Market Recap: U.S. stocks rose for the 12 months ending February 29, 2012, as encouraging economic news sparked a strong late-period rally that lifted major equity benchmarks past a number of significant milestones. Stocks recovered from early-period uncertainty that followed the March 2011 earthquake, tsunami and nuclear meltdown in Japan, but plummeted during the summer amid Europe's debt woes and a historic U.S. credit-rating downgrade. Despite continued volatility and mixed economic news, markets began to recover in early October. Investors gravitated toward defensive sectors and the perceived safety of larger, more-established and dividend-paying names, helping the Dow Jones® Industrial Average advance 8.83%, and close above the psychologically important 13,000 mark in late February - for the first time since May 2008. The rally accelerated late in the period and the market broadened, as investor confidence improved amid encouraging manufacturing, housing and employment data, and signs of progress in Europe. For the year, the S&P 500® Index added 5.12%, closing near a four-year high on the period's second-to-last day. Of the 10 major market sectors in the S&P 500®, three defensive areas led the way - consumer staples, health care and utilities - while financials, materials and energy finished in negative territory. The technology-laden Nasdaq Composite® Index added 7.73%, flirting with the 3,000 mark, its highest level in 12 years. Foreign developed-markets stocks reeled over Europe's turmoil, and the MSCI® EAFE® (Europe, Australasia, Far East) Index fell 7.35%.
Comments from Andrew Hatem, Portfolio Manager of Medical Delivery Portfolio: For the year, the fund returned 10.74%, outperforming both its industry benchmark - the MSCI® U.S. IM Health Care Providers & Services 25/50 Index, which gained 8.34% - and the S&P 500®. Versus the MSCI index, the fund was helped the most by strong stock selection in health care services and and non-index holdings in health care technology. Top individual contributions came from information technology consulting firm Accretive Health, pharmacy benefit managers SXC Health Solutions and Catalyst Health Solutions, managed care providers HealthSpring - which was acquired by CIGNA during the period - and WellCare Health Plans, and ARIAD Pharmaceuticals. SXC and ARIAD were not part of the industry benchmark. Conversely, we were hurt by modestly underweighting managed health care - the best-performing group in the MSCI index - and by stock selection in health care facilities. At the stock level, detractors included an underweighting in managed care provider and index heavyweight UnitedHealth Group, WellPoint - another managed care stock - Sunrise Senior Living, hospital chain operator Community Health Systems and Kindred Healthcare, a provider of post-acute care services.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Medical Delivery Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 29, 2012 | ||
| % of fund's | % of fund's net assets |
UnitedHealth Group, Inc. | 16.6 | 16.7 |
Express Scripts, Inc. | 10.0 | 7.2 |
WellPoint, Inc. | 8.5 | 9.2 |
McKesson Corp. | 7.4 | 7.5 |
Medco Health Solutions, Inc. | 7.2 | 7.9 |
CIGNA Corp. | 4.7 | 3.2 |
Aetna, Inc. | 4.5 | 4.9 |
Humana, Inc. | 4.3 | 2.0 |
Accretive Health, Inc. | 3.5 | 4.0 |
SXC Health Solutions Corp. | 3.1 | 2.6 |
| 69.8 | |
Top Industries (% of fund's net assets) | |||
As of February 29, 2012 | |||
| Health Care Providers & Services | 87.6% |
|
| Health Care Technology | 4.2% |
|
| Food & Staples Retailing | 2.4% |
|
| Diversified Consumer Services | 1.4% |
|
| Biotechnology | 1.2% |
|
| All Others* | 3.2% |
|
As of August 31, 2011 | |||
| Health Care Providers & Services | 87.4% |
|
| Food & Staples Retailing | 2.9% |
|
| Health Care Technology | 2.6% |
|
| Pharmaceuticals | 1.5% |
|
| Biotechnology | 0.9% |
|
| All Others* | 4.7% |
|
* Includes short-term investments and net other assets. |
Annual Report
Medical Delivery Portfolio
Investments February 29, 2012
Showing Percentage of Net Assets
Common Stocks - 97.9% | |||
Shares | Value | ||
BIOTECHNOLOGY - 1.2% | |||
Biotechnology - 1.2% | |||
ARIAD Pharmaceuticals, Inc. (a) | 672,600 | $ 9,645,084 | |
ZIOPHARM Oncology, Inc. (a) | 137,500 | 675,125 | |
| 10,320,209 | ||
DIVERSIFIED CONSUMER SERVICES - 1.4% | |||
Specialized Consumer Services - 1.4% | |||
Weight Watchers International, Inc. | 151,800 | 11,837,364 | |
FOOD & STAPLES RETAILING - 2.4% | |||
Drug Retail - 2.4% | |||
Drogasil SA | 1,339,885 | 13,044,268 | |
Rite Aid Corp. (a) | 2,966,900 | 4,569,026 | |
Walgreen Co. | 99,000 | 3,282,840 | |
| 20,896,134 | ||
HEALTH CARE PROVIDERS & SERVICES - 87.6% | |||
Health Care Distributors & Services - 10.1% | |||
AmerisourceBergen Corp. | 514,352 | 19,211,047 | |
Cardinal Health, Inc. | 101,100 | 4,200,705 | |
McKesson Corp. | 773,000 | 64,553,230 | |
| 87,964,982 | ||
Health Care Facilities - 5.3% | |||
Brookdale Senior Living, Inc. (a) | 509,693 | 9,500,678 | |
Capital Senior Living Corp. (a) | 603,000 | 5,167,710 | |
Community Health Systems, Inc. (a) | 286,000 | 7,218,640 | |
HCA Holdings, Inc. | 23,700 | 632,079 | |
Kindred Healthcare, Inc. (a) | 330,900 | 3,404,961 | |
LifePoint Hospitals, Inc. (a) | 500 | 19,485 | |
Skilled Healthcare Group, Inc. (a) | 482,000 | 3,147,460 | |
Sunrise Senior Living, Inc. (a)(d) | 1,131,862 | 8,760,612 | |
Tenet Healthcare Corp. (a) | 31,000 | 175,150 | |
Universal Health Services, Inc. Class B | 169,400 | 7,556,934 | |
| 45,583,709 | ||
Health Care Services - 26.9% | |||
Accretive Health, Inc. (a)(d) | 1,169,404 | 30,392,810 | |
Amedisys, Inc. (a) | 78,829 | 1,012,953 | |
Catalyst Health Solutions, Inc. (a) | 310,800 | 19,275,816 | |
DaVita, Inc. (a) | 6,400 | 553,920 | |
Express Scripts, Inc. (a) | 1,637,500 | 87,327,875 | |
Gentiva Health Services, Inc. (a)(d) | 997,500 | 7,830,375 | |
Laboratory Corp. of America Holdings (a) | 2,000 | 179,780 | |
LHC Group, Inc. (a) | 160,800 | 2,736,816 | |
Lincare Holdings, Inc. | 14,450 | 388,127 | |
Medco Health Solutions, Inc. (a) | 925,546 | 62,557,654 | |
Metropolitan Health Networks, Inc. (a) | 662,000 | 5,534,320 | |
Omnicare, Inc. | 447,800 | 15,753,604 | |
Quest Diagnostics, Inc. | 7,500 | 435,375 | |
Sun Healthcare Group, Inc. (a) | 100,200 | 446,892 | |
| 234,426,317 | ||
| |||
Shares | Value | ||
Managed Health Care - 45.3% | |||
Aetna, Inc. | 829,756 | $ 38,799,391 | |
Amil Participacoes SA | 867,300 | 9,998,859 | |
Centene Corp. (a) | 169,300 | 8,261,840 | |
CIGNA Corp. | 920,700 | 40,612,077 | |
Health Net, Inc. (a) | 601,500 | 22,700,610 | |
Humana, Inc. | 426,772 | 37,171,841 | |
Odontoprev SA | 215,700 | 3,755,236 | |
UnitedHealth Group, Inc. | 2,595,997 | 144,726,831 | |
Wellcare Health Plans, Inc. (a) | 215,000 | 14,589,900 | |
WellPoint, Inc. | 1,121,200 | 73,584,356 | |
| 394,200,941 | ||
TOTAL HEALTH CARE PROVIDERS & SERVICES | 762,175,949 | ||
HEALTH CARE TECHNOLOGY - 4.2% | |||
Health Care Technology - 4.2% | |||
athenahealth, Inc. (a)(d) | 135,300 | 9,561,651 | |
SXC Health Solutions Corp. (a) | 377,000 | 26,951,700 | |
| 36,513,351 | ||
INTERNET SOFTWARE & SERVICES - 0.0% | |||
Internet Software & Services - 0.0% | |||
WebMD Health Corp. (a) | 8,400 | 208,740 | |
LIFE SCIENCES TOOLS & SERVICES - 0.4% | |||
Life Sciences Tools & Services - 0.4% | |||
Illumina, Inc. (a) | 77,700 | 3,982,125 | |
PHARMACEUTICALS - 0.6% | |||
Pharmaceuticals - 0.6% | |||
Endocyte, Inc. | 101,000 | 358,550 | |
Valeant Pharmaceuticals International, Inc. (Canada) (a)(d) | 92,100 | 4,883,026 | |
| 5,241,576 | ||
PROFESSIONAL SERVICES - 0.1% | |||
Research & Consulting Services - 0.1% | |||
Qualicorp SA | 68,000 | 593,904 | |
TOTAL COMMON STOCKS (Cost $654,371,520) |
| ||
Money Market Funds - 6.1% | |||
Shares | Value | ||
Fidelity Cash Central Fund, 0.12% (b) | 23,134,442 | $ 23,134,442 | |
Fidelity Securities Lending Cash Central Fund, 0.12% (b)(c) | 30,121,550 | 30,121,550 | |
TOTAL MONEY MARKET FUNDS (Cost $53,255,992) |
| ||
TOTAL INVESTMENT PORTFOLIO - 104.0% (Cost $707,627,512) | 905,025,344 | ||
NET OTHER ASSETS (LIABILITIES) - (4.0)% | (34,667,262) | ||
NET ASSETS - 100% | $ 870,358,082 | ||
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 21,901 |
Fidelity Securities Lending Cash Central Fund | 1,416,256 |
Total | $ 1,438,157 |
Other Information |
All investments are categorized as Level 1 under the Fair Value Hierarchy. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Medical Delivery Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2012 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $29,834,449) - See accompanying schedule: Unaffiliated issuers (cost $654,371,520) | $ 851,769,352 |
|
Fidelity Central Funds (cost $53,255,992) | 53,255,992 |
|
Total Investments (cost $707,627,512) |
| $ 905,025,344 |
Receivable for fund shares sold | 2,381,499 | |
Dividends receivable | 301,943 | |
Distributions receivable from Fidelity Central Funds | 125,033 | |
Prepaid expenses | 1,929 | |
Other receivables | 12,604 | |
Total assets | 907,848,352 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 3,971,274 | |
Payable for fund shares redeemed | 2,774,337 | |
Accrued management fee | 398,196 | |
Other affiliated payables | 190,141 | |
Other payables and accrued expenses | 34,772 | |
Collateral on securities loaned, at value | 30,121,550 | |
Total liabilities | 37,490,270 | |
|
|
|
Net Assets | $ 870,358,082 | |
Net Assets consist of: |
| |
Paid in capital | $ 702,251,989 | |
Accumulated net investment loss | (472,186) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (28,822,792) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 197,401,071 | |
Net Assets, for 14,206,453 shares outstanding | $ 870,358,082 | |
Net Asset Value, offering price and redemption price per share ($870,358,082 ÷ 14,206,453 shares) | $ 61.26 | |
Statement of Operations
| Year ended February 29, 2012 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 4,599,107 |
Income from Fidelity Central Funds (including $1,416,256 from security lending) |
| 1,438,157 |
Total income |
| 6,037,264 |
|
|
|
Expenses | ||
Management fee | $ 4,251,703 | |
Transfer agent fees | 1,811,020 | |
Accounting and security lending fees | 276,956 | |
Custodian fees and expenses | 28,195 | |
Independent trustees' compensation | 4,386 | |
Registration fees | 97,485 | |
Audit | 38,135 | |
Legal | 2,496 | |
Interest | 3,219 | |
Miscellaneous | 6,555 | |
Total expenses before reductions | 6,520,150 | |
Expense reductions | (124,622) | 6,395,528 |
Net investment income (loss) | (358,264) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 21,279,965 | |
Foreign currency transactions | (286,781) | |
Total net realized gain (loss) |
| 20,993,184 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 35,161,833 | |
Assets and liabilities in foreign currencies | 2,583 | |
Total change in net unrealized appreciation (depreciation) |
| 35,164,416 |
Net gain (loss) | 56,157,600 | |
Net increase (decrease) in net assets resulting from operations | $ 55,799,336 | |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ (358,264) | $ (2,391,115) |
Net realized gain (loss) | 20,993,184 | 36,117,378 |
Change in net unrealized appreciation (depreciation) | 35,164,416 | 67,043,584 |
Net increase (decrease) in net assets resulting from operations | 55,799,336 | 100,769,847 |
Share transactions | 856,410,093 | 180,142,990 |
Cost of shares redeemed | (608,437,132) | (180,637,820) |
Net increase (decrease) in net assets resulting from share transactions | 247,972,961 | (494,830) |
Redemption fees | 185,986 | 15,249 |
Total increase (decrease) in net assets | 303,958,283 | 100,290,266 |
|
|
|
Net Assets | ||
Beginning of period | 566,399,799 | 466,109,533 |
End of period (including accumulated net investment loss of $472,186 and accumulated net investment loss of $478,192, respectively) | $ 870,358,082 | $ 566,399,799 |
Other Information Shares | ||
Sold | 14,989,950 | 3,704,946 |
Redeemed | (11,022,680) | (3,969,096) |
Net increase (decrease) | 3,967,270 | (264,150) |
Financial Highlights
Years ended February 28, | 2012 G | 2011 | 2010 | 2009 | 2008 G |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 55.32 | $ 44.38 | $ 25.53 | $ 45.27 | $ 51.02 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | (.03) | (.25) | (.24) | (.18) | .11 E |
Net realized and unrealized gain (loss) | 5.96 | 11.19 | 19.09 | (19.18) | (1.69) |
Total from investment operations | 5.93 | 10.94 | 18.85 | (19.36) | (1.58) |
Distributions from net investment income | - | - | - | (.03) | - |
Distributions from net realized gain | - | - | - | (.35) | (4.17) |
Total distributions | - | - | - | (.38) | (4.17) |
Redemption fees added to paid in capital B | .01 | - H | - H | - H | - H |
Net asset value, end of period | $ 61.26 | $ 55.32 | $ 44.38 | $ 25.53 | $ 45.27 |
Total Return A | 10.74% | 24.65% | 73.83% | (43.05)% | (4.00)% |
Ratios to Average Net Assets C, F |
|
|
|
|
|
Expenses before reductions | .86% | .89% | .96% | .94% | .92% |
Expenses net of fee waivers, if any | .86% | .89% | .96% | .94% | .92% |
Expenses net of all reductions | .84% | .88% | .96% | .94% | .91% |
Net investment income (loss) | (.05)% | (.54)% | (.67)% | (.50)% | .22% E |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 870,358 | $ 566,400 | $ 466,110 | $ 263,503 | $ 540,497 |
Portfolio turnover rate D | 86% | 55% | 50% | 122% | 113% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown. B Calculated based on average shares outstanding during the period. C Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. D Amount does not include the portfolio activity of any underlying Fidelity Central Funds. E Investment income per share reflects a large, non-recurring dividend which amounted to $.38 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been (.52)%. F Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. G For the year ended February 29. H Amount represents less than $.01 per share. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Medical Equipment and Systems Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 29, 2012 | Past 1 | Past 5 | Past 10 |
Medical Equipment and Systems Portfolio | 0.23% | 7.12% | 9.42% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Medical Equipment and Systems Portfolio on February 28, 2002. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index performed over the same period.
Annual Report
Medical Equipment and Systems Portfolio
Management's Discussion of Fund Performance
Market Recap: U.S. stocks rose for the 12 months ending February 29, 2012, as encouraging economic news sparked a strong late-period rally that lifted major equity benchmarks past a number of significant milestones. Stocks recovered from early-period uncertainty that followed the March 2011 earthquake, tsunami and nuclear meltdown in Japan, but plummeted during the summer amid Europe's debt woes and a historic U.S. credit-rating downgrade. Despite continued volatility and mixed economic news, markets began to recover in early October. Investors gravitated toward defensive sectors and the perceived safety of larger, more-established and dividend-paying names, helping the Dow Jones® Industrial Average advance 8.83%, and close above the psychologically important 13,000 mark in late February - for the first time since May 2008. The rally accelerated late in the period and the market broadened, as investor confidence improved amid encouraging manufacturing, housing and employment data, and signs of progress in Europe. For the year, the S&P 500® Index added 5.12%, closing near a four-year high on the period's second-to-last day. Of the 10 major market sectors in the S&P 500®, three defensive areas led the way - consumer staples, health care and utilities - while financials, materials and energy finished in negative territory. The technology-laden Nasdaq Composite® Index added 7.73%, flirting with the 3,000 mark, its highest level in 12 years. Foreign developed-markets stocks reeled over Europe's turmoil, and the MSCI® EAFE® (Europe, Australasia, Far East) Index fell 7.35%.
Comments from Edward Yoon, Portfolio Manager of Medical Equipment and Systems Portfolio: For the year, the fund returned 0.23%, trailing the 1.79% gain of its industry benchmark, the MSCI® U.S. IM Health Care Equipment & Supplies 25/50 Index, and the S&P 500®. Versus the industry benchmark, security selection in two out-of-index groups, life science tools/services and health care facilities, weighed on performance the most. Stocks picks in health care equipment - the dominant component of the MSCI index - also detracted. Conversely, my choices among health care supplies companies helped buoy returns. Looking at individual stocks, an average underweighting in Intuitive Surgical was the fund's biggest individual detractor because its shares were a standout amid the slow-growth for equipment stocks. For most of the period, the fund didn't own Intuitive, the maker of the da Vinci® robotic system for minimally invasive surgery, because I believed its shares were expensive and fully valued. Despite adding it to the fund in October, our underweighting and the stock's 56% gain hurt relative performance. Two other health care equipment stocks hurt: Integra LifeSciences Holdings, which suffered from operational issues, and Boston Scientific, whose stock struggled as investors became wary of the firm's potentially deteriorating end markets. Elsewhere, out-of-index stakes in genetic analysis technology developer Illumina and pharmacy benefit manager Express Scripts also weighed on performance. On the plus side, the fund benefited from my decision to underweight two health care equipment companies and index components: Medtronic, which makes cardiac devices, and Stryker, which produces orthopedic equipment. As a result of the slow economic recovery, both companies faced pricing pressure and weak demand, and both stocks lost value. The fund was helped by owning shares of SonoSite, which surged in December on the announcement that the ultrasound technology company would be acquired by FUJIFILM Holdings. Health care supplies firms Endologix, which develops treatments for aortic disorders, and Cooper Companies, which makes contact lenses, were both boosted by solid earnings, increased market share and strong product launches. I sold Endologix from the fund by period end.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Medical Equipment and Systems Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 29, 2012 | ||
| % of fund's | % of fund's net assets |
Covidien PLC | 14.2 | 14.4 |
Baxter International, Inc. | 8.5 | 15.7 |
Boston Scientific Corp. | 6.6 | 6.3 |
Stryker Corp. | 6.1 | 1.4 |
The Cooper Companies, Inc. | 3.9 | 4.3 |
C. R. Bard, Inc. | 3.7 | 6.0 |
DENTSPLY International, Inc. | 3.6 | 3.1 |
UnitedHealth Group, Inc. | 3.1 | 0.0 |
Zimmer Holdings, Inc. | 2.7 | 1.1 |
Intuitive Surgical, Inc. | 2.1 | 0.0 |
| 54.5 | |
Top Industries (% of fund's net assets) | |||
As of February 29, 2012 | |||
| Health Care Equipment & Supplies | 83.3% |
|
| Health Care Providers & Services | 12.1% |
|
| Life Sciences Tools & Services | 1.1% |
|
| Health Care Technology | 0.9% |
|
| Biotechnology | 0.1% |
|
| All Others* | 2.5% |
|
As of August 31, 2011 | |||
| Health Care Equipment & Supplies | 83.2% |
|
| Health Care Providers & Services | 5.0% |
|
| Life Sciences Tools & Services | 2.0% |
|
| Health Care Technology | 1.4% |
|
| Pharmaceuticals | 0.6% |
|
| All Others* | 7.8% |
|
* Includes short-term investments and net other assets. |
Annual Report
Medical Equipment and Systems Portfolio
Investments February 29, 2012
Showing Percentage of Net Assets
Common Stocks - 97.4% | |||
Shares | Value | ||
HEALTH CARE EQUIPMENT & SUPPLIES - 83.3% | |||
Health Care Equipment - 73.5% | |||
ArthroCare Corp. (a) | 350,000 | $ 9,135,000 | |
Atricure, Inc. (a) | 400,000 | 4,080,000 | |
Baxter International, Inc. | 2,000,000 | 116,260,000 | |
Boston Scientific Corp. (a) | 14,500,000 | 90,190,000 | |
C. R. Bard, Inc. | 530,000 | 49,618,600 | |
CareFusion Corp. (a) | 800,000 | 20,648,000 | |
China Kanghui Holdings sponsored ADR (a)(d) | 460,000 | 8,542,200 | |
Conceptus, Inc. (a)(d) | 1,000,000 | 13,470,000 | |
CONMED Corp. | 300,000 | 8,952,000 | |
Covidien PLC | 3,700,000 | 193,324,998 | |
Cyberonics, Inc. (a) | 439,502 | 16,362,659 | |
Edwards Lifesciences Corp. (a) | 280,000 | 20,476,400 | |
Exactech, Inc. (a) | 354,776 | 5,637,391 | |
Fisher & Paykel Healthcare Corp. | 5,500,000 | 9,812,061 | |
Genmark Diagnostics, Inc. (a) | 1,000,061 | 4,160,254 | |
HeartWare International, Inc. CDI (a) | 5,500,000 | 11,205,535 | |
Hill-Rom Holdings, Inc. | 600,000 | 20,382,000 | |
Hologic, Inc. (a) | 600,000 | 12,438,000 | |
Insulet Corp. (a) | 1,050,000 | 20,706,000 | |
Integra LifeSciences Holdings Corp. (a) | 385,700 | 12,188,120 | |
Intuitive Surgical, Inc. (a) | 56,000 | 28,650,720 | |
Ion Beam Applications SA | 440,284 | 3,601,395 | |
Mako Surgical Corp. (a)(d) | 280,000 | 10,948,000 | |
Masimo Corp. (a) | 500,000 | 10,900,000 | |
Medtronic, Inc. | 500,000 | 19,060,000 | |
NxStage Medical, Inc. (a) | 700,000 | 14,000,000 | |
Opto Circuits India Ltd. | 1,000,000 | 5,546,732 | |
Orthofix International NV (a) | 355,000 | 13,919,550 | |
Sirona Dental Systems, Inc. (a) | 125,000 | 6,237,500 | |
Sonova Holding AG Class B | 100,000 | 11,162,688 | |
St. Jude Medical, Inc. | 500,000 | 21,060,000 | |
Stryker Corp. | 1,550,000 | 83,142,000 | |
Tornier BV | 800,000 | 18,800,000 | |
Varian Medical Systems, Inc. (a) | 400,000 | 26,100,000 | |
Volcano Corp. (a) | 800,000 | 22,424,000 | |
Wright Medical Group, Inc. (a) | 1,000,000 | 16,560,000 | |
Zeltiq Aesthetics, Inc. (d) | 371,600 | 4,117,328 | |
Zimmer Holdings, Inc. | 600,000 | 36,450,000 | |
| 1,000,269,131 | ||
Health Care Supplies - 9.8% | |||
DENTSPLY International, Inc. | 1,280,000 | 49,510,400 | |
OraSure Technologies, Inc. (a) | 1,000,000 | 10,030,000 | |
| |||
Shares | Value | ||
The Cooper Companies, Inc. | 660,000 | $ 52,456,800 | |
The Spectranetics Corp. (a) | 1,200,000 | 9,312,000 | |
Unilife Corp. (a)(d) | 2,000,000 | 7,420,000 | |
Vascular Solutions, Inc. (a) | 400,000 | 4,196,000 | |
| 132,925,200 | ||
TOTAL HEALTH CARE EQUIPMENT & SUPPLIES | 1,133,194,331 | ||
HEALTH CARE PROVIDERS & SERVICES - 12.1% | |||
Health Care Distributors & Services - 0.5% | |||
Amplifon SpA | 1,299,400 | 6,262,978 | |
Health Care Facilities - 0.8% | |||
Hanger Orthopedic Group, Inc. (a) | 300,000 | 6,207,000 | |
LCA-Vision, Inc. (a) | 600,000 | 5,172,000 | |
| 11,379,000 | ||
Health Care Services - 4.5% | |||
Accretive Health, Inc. (a) | 400,000 | 10,396,000 | |
Express Scripts, Inc. (a) | 350,000 | 18,665,500 | |
Laboratory Corp. of America Holdings (a) | 200,000 | 17,978,000 | |
Quest Diagnostics, Inc. | 250,000 | 14,512,500 | |
| 61,552,000 | ||
Managed Health Care - 6.3% | |||
Health Net, Inc. (a) | 500,000 | 18,870,000 | |
UnitedHealth Group, Inc. | 750,000 | 41,812,500 | |
WellPoint, Inc. | 378,417 | 24,835,508 | |
| 85,518,008 | ||
TOTAL HEALTH CARE PROVIDERS & SERVICES | 164,711,986 | ||
HEALTH CARE TECHNOLOGY - 0.9% | |||
Health Care Technology - 0.9% | |||
athenahealth, Inc. (a) | 150,000 | 10,600,500 | |
Omnicell, Inc. (a) | 152,867 | 2,280,776 | |
| 12,881,276 | ||
LIFE SCIENCES TOOLS & SERVICES - 1.1% | |||
Life Sciences Tools & Services - 1.1% | |||
Illumina, Inc. (a) | 300,000 | 15,375,000 | |
TOTAL COMMON STOCKS (Cost $1,160,738,374) |
| ||
Convertible Preferred Stocks - 0.1% | |||
|
|
|
|
BIOTECHNOLOGY - 0.1% | |||
Biotechnology - 0.1% | |||
Aria Diagnostics, Inc. (e) | 331,126 |
| |
Money Market Funds - 3.5% | |||
Shares | Value | ||
Fidelity Cash Central Fund, 0.12% (b) | 27,331,120 | $ 27,331,120 | |
Fidelity Securities Lending Cash Central Fund, 0.12% (b)(c) | 19,681,400 | 19,681,400 | |
TOTAL MONEY MARKET FUNDS (Cost $47,012,520) |
| ||
TOTAL INVESTMENT PORTFOLIO - 101.0% (Cost $1,209,750,895) | 1,375,175,114 | ||
NET OTHER ASSETS (LIABILITIES) - (1.0)% | (14,163,301) | ||
NET ASSETS - 100% | $ 1,361,011,813 | ||
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
(e) Restricted securities - Investment in securities not registered under the Securities Act of 1933 (excluding 144A issues). At the end of the period, the value of restricted securities (excluding 144A issues) amounted to $2,000,001 or 0.1% of net assets. |
Additional information on each restricted holding is as follows: |
Security | Acquisition Date | Acquisition Cost |
Aria Diagnostics, Inc. | 11/30/11 | $ 2,000,001 |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 53,909 |
Fidelity Securities Lending Cash Central Fund | 622,602 |
Total | $ 676,511 |
Other Affiliated Issuers |
An affiliated company is a company in which the Fund has ownership of at least 5% of the voting securities. Fiscal year to date transactions with companies which are or were affiliates are as follows: |
Affiliate | Value, | Purchases | Sales | Dividend | Value, |
RTI Biologics, Inc. | 8,644,046 | - | 12,105,313 | - | - |
Total | $ 8,644,046 | $ - | $ 12,105,313 | $ - | $ - |
Other Information |
The following is a summary of the inputs used, as of February 29, 2012, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the tables below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities: | ||||
Common Stocks | $ 1,326,162,593 | $ 1,326,162,593 | $ - | $ - |
Convertible Preferred Stocks | 2,000,001 | - | - | 2,000,001 |
Money Market Funds | 47,012,520 | 47,012,520 | - | - |
Total Investments in Securities: | $ 1,375,175,114 | $ 1,373,175,113 | $ - | $ 2,000,001 |
The following is a reconciliation of Investments in Securities for which Level 3 inputs were used in determining value: |
Investments in Securities: | |
Beginning Balance | $ - |
Total Realized Gain (Loss) | - |
Total Unrealized Gain (Loss) | - |
Cost of Purchases | 2,000,001 |
Proceeds of Sales | - |
Amortization/Accretion | - |
Transfers in to Level 3 | - |
Transfers out of Level 3 | - |
Ending Balance | $ 2,000,001 |
The change in unrealized gain (loss) for the period attributable to Level 3 securities held at February 29, 2012 | $ - |
The information used in the above reconciliation represents fiscal year to date activity for any Investments in Securities identified as using Level 3 inputs at either the beginning or the end of the current fiscal period. Transfers in or out of Level 3 represent the beginning value of any Security or Instrument where a change in the pricing level occurred from the beginning to the end of the period. The cost of purchases and the proceeds of sales may include securities received or delivered through corporate actions or exchanges. Realized and unrealized gains (losses) disclosed in the reconciliation are included in Net Gain (Loss) on the Fund's Statement of Operations. |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 80.1% |
Ireland | 14.2% |
Netherlands | 1.4% |
Curacao | 1.0% |
Others (Individually Less Than 1%) | 3.3% |
| 100.0% |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Medical Equipment and Systems Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2012 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $19,004,350) - See accompanying schedule: Unaffiliated issuers (cost $1,162,738,375) | $ 1,328,162,594 |
|
Fidelity Central Funds (cost $47,012,520) | 47,012,520 |
|
Total Investments (cost $1,209,750,895) |
| $ 1,375,175,114 |
Receivable for investments sold | 26,967,608 | |
Receivable for fund shares sold | 1,140,686 | |
Dividends receivable | 8,992 | |
Distributions receivable from Fidelity Central Funds | 81,673 | |
Prepaid expenses | 3,071 | |
Other receivables | 9,340 | |
Total assets | 1,403,386,484 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 19,999,379 | |
Payable for fund shares redeemed | 1,612,204 | |
Accrued management fee | 634,441 | |
Other affiliated payables | 301,418 | |
Other payables and accrued expenses | 145,829 | |
Collateral on securities loaned, at value | 19,681,400 | |
Total liabilities | 42,374,671 | |
|
|
|
Net Assets | $ 1,361,011,813 | |
Net Assets consist of: |
| |
Paid in capital | $ 1,179,475,192 | |
Distributions in excess of net investment income | (477,658) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 16,701,742 | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 165,312,537 | |
Net Assets, for 48,569,286 shares outstanding | $ 1,361,011,813 | |
Net Asset Value, offering price and redemption price per share ($1,361,011,813 ÷ 48,569,286 shares) | $ 28.02 | |
Statement of Operations
| Year ended February 29, 2012 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 11,574,188 |
Interest |
| 15 |
Income from Fidelity Central Funds (including $622,602 from security lending) |
| 676,511 |
Total income |
| 12,250,714 |
|
|
|
Expenses | ||
Management fee | $ 7,997,975 | |
Transfer agent fees | 3,454,559 | |
Accounting and security lending fees | 458,321 | |
Custodian fees and expenses | 36,150 | |
Independent trustees' compensation | 8,420 | |
Registration fees | 60,162 | |
Audit | 41,922 | |
Legal | 5,093 | |
Miscellaneous | 15,282 | |
Total expenses before reductions | 12,077,884 | |
Expense reductions | (102,356) | 11,975,528 |
Net investment income (loss) | 275,186 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 105,675,432 | |
Other affiliated issuers | (6,528,034) |
|
Foreign currency transactions | (31,950) | |
Total net realized gain (loss) |
| 99,115,448 |
Change in net unrealized appreciation (depreciation) on: Investment securities (net of increase in deferred foreign taxes of $110,782) | (120,777,703) | |
Assets and liabilities in foreign currencies | (900) | |
Total change in net unrealized appreciation (depreciation) |
| (120,778,603) |
Net gain (loss) | (21,663,155) | |
Net increase (decrease) in net assets resulting from operations | $ (21,387,969) | |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 275,186 | $ (593,777) |
Net realized gain (loss) | 99,115,448 | 77,949,187 |
Change in net unrealized appreciation (depreciation) | (120,778,603) | 112,602,764 |
Net increase (decrease) in net assets resulting from operations | (21,387,969) | 189,958,174 |
Distributions to shareholders from net investment income | (720,894) | - |
Distributions to shareholders from net realized gain | (68,879,454) | - |
Total distributions | (69,600,348) | - |
Share transactions | 442,706,650 | 361,006,401 |
Reinvestment of distributions | 66,786,926 | - |
Cost of shares redeemed | (465,899,006) | (520,647,143) |
Net increase (decrease) in net assets resulting from share transactions | 43,594,570 | (159,640,742) |
Redemption fees | 63,013 | 34,269 |
Total increase (decrease) in net assets | (47,330,734) | 30,351,701 |
|
|
|
Net Assets | ||
Beginning of period | 1,408,342,547 | 1,377,990,846 |
End of period (including distributions in excess of net investment income of $477,658 and undistributed net investment income of $0, respectively) | $ 1,361,011,813 | $ 1,408,342,547 |
Other Information Shares | ||
Sold | 15,011,136 | 13,732,140 |
Issued in reinvestment of distributions | 2,628,709 | - |
Redeemed | (16,731,272) | (20,685,442) |
Net increase (decrease) | 908,573 | (6,953,302) |
Financial Highlights
Years ended February 28, | 2012 G | 2011 | 2010 | 2009 | 2008 G |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 29.55 | $ 25.23 | $ 17.30 | $ 24.41 | $ 23.67 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | .01 | (.01) E | (.03) | .01 | (.05) |
Net realized and unrealized gain (loss) | (.10) | 4.33 | 7.96 | (6.35) | 2.97 |
Total from investment operations | (.09) | 4.32 | 7.93 | (6.34) | 2.92 |
Distributions from net investment income | (.02) | - | - | (.01) | - |
Distributions from net realized gain | (1.43) | - | - | (.77) | (2.18) |
Total distributions | (1.44) I | - | - | (.78) | (2.18) |
Redemption fees added to paid in capital B | - H | - H | - H | .01 | - H |
Net asset value, end of period | $ 28.02 | $ 29.55 | $ 25.23 | $ 17.30 | $ 24.41 |
Total Return A | .23% | 17.12% | 45.84% | (26.81)% | 12.57% |
Ratios to Average Net Assets C,F |
|
|
|
|
|
Expenses before reductions | .84% | .86% | .91% | .87% | .88% |
Expenses net of fee waivers, if any | .84% | .86% | .91% | .87% | .88% |
Expenses net of all reductions | .84% | .86% | .90% | .87% | .88% |
Net investment income (loss) | .02% | (.04)% E | (.13)% | .06% | (.20)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 1,361,012 | $ 1,408,343 | $ 1,377,991 | $ 1,012,464 | $ 1,169,861 |
Portfolio turnover rate D | 120% | 92% | 83% | 116% | 129% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown. B Calculated based on average shares outstanding during the period. C Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. D Amount does not include the portfolio activity of any underlying Fidelity Central Funds. E Investment income per share reflects a large, non-recurring dividend which amounted to $.04 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been (.18)%. F Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. G For the year ended February 29. H Amount represents less than $.01 per share. I Total distributions of $1.44 per share is comprised of distributions from net investment income of $.015 and distributions from net realized gain of $1.426 per share. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Pharmaceuticals Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 29, 2012 | Past 1 | Past 5 | Past 10 |
Pharmaceuticals Portfolio | 14.34% | 8.43% | 6.22% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Pharmaceuticals Portfolio on February 28, 2002. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index performed over the same period.
Annual Report
Pharmaceuticals Portfolio
Management's Discussion of Fund Performance
Market Recap: U.S. stocks rose for the 12 months ending February 29, 2012, as encouraging economic news sparked a strong late-period rally that lifted major equity benchmarks past a number of significant milestones. Stocks recovered from early-period uncertainty that followed the March 2011 earthquake, tsunami and nuclear meltdown in Japan, but plummeted during the summer amid Europe's debt woes and a historic U.S. credit-rating downgrade. Despite continued volatility and mixed economic news, markets began to recover in early October. Investors gravitated toward defensive sectors and the perceived safety of larger, more-established and dividend-paying names, helping the Dow Jones® Industrial Average advance 8.83%, and close above the psychologically important 13,000 mark in late February - for the first time since May 2008. The rally accelerated late in the period and the market broadened, as investor confidence improved amid encouraging manufacturing, housing and employment data, and signs of progress in Europe. For the year, the S&P 500® Index added 5.12%, closing near a four-year high on the period's second-to-last day. Of the 10 major market sectors in the S&P 500®, three defensive areas led the way - consumer staples, health care and utilities - while financials, materials and energy finished in negative territory. The technology-laden Nasdaq Composite® Index added 7.73%, flirting with the 3,000 mark, its highest level in 12 years. Foreign developed-markets stocks reeled over Europe's turmoil, and the MSCI® EAFE® (Europe, Australasia, Far East) Index fell 7.35%.
Comments from Andrew Oh, Portfolio Manager of Pharmaceuticals Portfolio: For the year ending February 29, 2012, the fund returned 14.34%, modestly outperforming the 14.18% gain of the S&P® Custom Pharmaceuticals Index, and decisively outperforming the broadly based S&P 500®. Versus the industry benchmark, the biggest contributors to relative performance were stock picking in pharmaceuticals and biotechnology, although much of the gain in the latter category was offset by the negative effect of a large overweighting in the group. The top individual contributor was Canada's Valeant Pharmaceuticals International, a global leader in the dermatology area that delivered strong earnings, solid organic (internal) growth and good execution on several acquisitions. Underweighting a number of underperforming benchmark components, including Britain's AstraZeneca, Switzerland's Novartis and Israel's Teva Pharmaceutical Industries helped. Each of these firms suffered from company-specific setbacks. Out-of-benchmark stakes in Biogen Idec and ARIAD Pharmaceuticals in the biotechnology industry also contributed. Biogen was buoyed by better-than-expected data for its new multiple sclerosis treatment, BG-12, while ARIAD got a boost from investor interest in the firm's next-generation drug for treating chronic myeloid leukemia. On the negative side, a non-benchmark investment in biotech firm InterMune was the biggest individual detractor, suffering from a surprise setback in Germany for its drug for treating idiopathic pulmonary fibrosis, Esbriet®. Underweighting large-cap pharma company and major index component Abbott Laboratories hurt when the firm's shares outperformed in the negative macro environment. In the same industry, overweighting France's Sanofi detracted, as the European debt crisis weighed heavily on the French market. Within the non-benchmark health care equipment, stakes in Boston Scientific and Covidien underperformed along with the entire industry. Stock picking in life science tools/services - another out-of-index group - and the fund's modest cash position also hurt. Some of the stocks I've discussed were sold prior to period end.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Pharmaceuticals Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 29, 2012 | ||
| % of fund's | % of fund's net assets |
Sanofi sponsored ADR | 7.3 | 7.3 |
Merck & Co., Inc. | 6.5 | 5.7 |
GlaxoSmithKline PLC sponsored ADR | 6.3 | 7.0 |
Pfizer, Inc. | 4.5 | 4.8 |
Valeant Pharmaceuticals International, Inc. (Canada) | 4.0 | 4.4 |
Novo Nordisk A/S Series B sponsored ADR | 3.9 | 2.1 |
Teva Pharmaceutical Industries Ltd. sponsored ADR | 3.4 | 2.6 |
Shire PLC sponsored ADR | 3.1 | 3.7 |
Eli Lilly & Co. | 2.9 | 4.0 |
Allergan, Inc. | 2.8 | 3.2 |
| 44.7 | |
Top Industries (% of fund's net assets) | |||
As of February 29, 2012 | |||
| Pharmaceuticals | 83.4% |
|
| Biotechnology | 7.3% |
|
| Health Care Providers & Services | 1.9% |
|
| Health Care Equipment & Supplies | 1.7% |
|
| Life Sciences Tools & Services | 0.8% |
|
| All Others* | 4.9% |
|
As of August 31, 2011 | |||
| Pharmaceuticals | 82.9% |
|
| Biotechnology | 4.4% |
|
| Health Care Equipment & Supplies | 3.0% |
|
| Health Care Providers & Services | 1.4% |
|
| Health Care Technology | 0.5% |
|
| All Others* | 7.8% |
|
* Includes short-term investments and net other assets. |
Annual Report
Pharmaceuticals Portfolio
Investments February 29, 2012
Showing Percentage of Net Assets
Common Stocks - 96.6% | |||
Shares | Value | ||
BIOTECHNOLOGY - 7.3% | |||
Biotechnology - 7.3% | |||
Acadia Pharmaceuticals, Inc. (a) | 100,000 | $ 167,000 | |
Acorda Therapeutics, Inc. (a) | 108,000 | 2,825,280 | |
Actelion Ltd. | 40,000 | 1,507,958 | |
Aegerion Pharmaceuticals, Inc. (a) | 10,000 | 167,300 | |
Alexion Pharmaceuticals, Inc. (a) | 43,072 | 3,606,419 | |
Alnylam Pharmaceuticals, Inc. (a) | 38,800 | 517,592 | |
AMAG Pharmaceuticals, Inc. (a) | 128,000 | 2,023,680 | |
Amarin Corp. PLC ADR (a)(d) | 80,000 | 620,000 | |
Amicus Therapeutics, Inc. (a) | 25,000 | 149,500 | |
Amylin Pharmaceuticals, Inc. (a) | 71,360 | 1,219,542 | |
Ardea Biosciences, Inc. (a) | 88,949 | 1,896,393 | |
ARIAD Pharmaceuticals, Inc. (a) | 232,500 | 3,334,050 | |
Astex Pharmaceuticals, Inc. (a) | 312,000 | 570,960 | |
BioMarin Pharmaceutical, Inc. (a) | 166,500 | 5,952,375 | |
BioMimetic Therapeutics, Inc. (a) | 221,500 | 460,720 | |
Biovitrum AB (a) | 10,000 | 29,016 | |
Chelsea Therapeutics International Ltd. (a)(d) | 125,000 | 461,250 | |
Cubist Pharmaceuticals, Inc. (a) | 69,000 | 2,957,340 | |
Dendreon Corp. (a) | 25,000 | 281,500 | |
DUSA Pharmaceuticals, Inc. (a) | 46,400 | 223,648 | |
Human Genome Sciences, Inc. (a) | 14,000 | 110,320 | |
ImmunoGen, Inc. (a) | 19,100 | 263,007 | |
InterMune, Inc. (a) | 109,390 | 1,468,014 | |
Medivation, Inc. (a) | 68,000 | 4,454,680 | |
Momenta Pharmaceuticals, Inc. (a) | 50,000 | 733,000 | |
Neurocrine Biosciences, Inc. (a) | 224,794 | 1,769,129 | |
NPS Pharmaceuticals, Inc. (a) | 120,000 | 818,400 | |
ONYX Pharmaceuticals, Inc. (a) | 78,800 | 3,019,616 | |
OREXIGEN Therapeutics, Inc. (a) | 16,896 | 66,232 | |
Puma Biotechnology, Inc. (e) | 133,333 | 499,999 | |
Puma Biotechnology, Inc. warrants 10/17/21 (a)(e) | 133,333 | 1 | |
QLT, Inc. (a) | 93,500 | 708,730 | |
Spectrum Pharmaceuticals, Inc. (a) | 40,000 | 567,600 | |
Synageva BioPharma Corp. (a) | 5,600 | 208,992 | |
Theravance, Inc. (a) | 119,900 | 2,242,130 | |
Threshold Pharmaceuticals, Inc. (a) | 70,000 | 363,300 | |
United Therapeutics Corp. (a) | 64,700 | 3,088,131 | |
Vanda Pharmaceuticals, Inc. (a) | 60,600 | 281,184 | |
Vertex Pharmaceuticals, Inc. (a) | 50,800 | 1,977,136 | |
Vical, Inc. (a) | 207,000 | 662,400 | |
ZIOPHARM Oncology, Inc. (a) | 55,000 | 270,050 | |
| 52,543,574 | ||
FOOD & STAPLES RETAILING - 0.1% | |||
Drug Retail - 0.1% | |||
Drogasil SA | 80,000 | 778,829 | |
HEALTH CARE EQUIPMENT & SUPPLIES - 1.7% | |||
Health Care Equipment - 1.4% | |||
Cochlear Ltd. | 16,000 | 1,048,795 | |
| |||
Shares | Value | ||
Conceptus, Inc. (a) | 185,000 | $ 2,491,950 | |
Covidien PLC | 55,000 | 2,873,750 | |
Genmark Diagnostics, Inc. (a) | 45,500 | 189,280 | |
Masimo Corp. (a) | 80,000 | 1,744,000 | |
Nakanishi, Inc. | 2,200 | 210,812 | |
Nobel Biocare Holding AG (Switzerland) | 25,000 | 295,369 | |
Wright Medical Group, Inc. (a) | 82,000 | 1,357,920 | |
| 10,211,876 | ||
Health Care Supplies - 0.3% | |||
The Cooper Companies, Inc. | 23,000 | 1,828,040 | |
TOTAL HEALTH CARE EQUIPMENT & SUPPLIES | 12,039,916 | ||
HEALTH CARE PROVIDERS & SERVICES - 1.9% | |||
Health Care Services - 1.8% | |||
Accretive Health, Inc. (a) | 115,378 | 2,998,674 | |
Catalyst Health Solutions, Inc. (a) | 76,500 | 4,744,530 | |
Gentiva Health Services, Inc. (a) | 78,000 | 612,300 | |
HMS Holdings Corp. (a) | 30,000 | 966,600 | |
Medco Health Solutions, Inc. (a) | 52,000 | 3,514,680 | |
| 12,836,784 | ||
Managed Health Care - 0.1% | |||
Molina Healthcare, Inc. (a) | 28,300 | 961,068 | |
TOTAL HEALTH CARE PROVIDERS & SERVICES | 13,797,852 | ||
HEALTH CARE TECHNOLOGY - 0.6% | |||
Health Care Technology - 0.6% | |||
Omnicell, Inc. (a) | 25,000 | 373,000 | |
SXC Health Solutions Corp. (a) | 51,000 | 3,645,986 | |
| 4,018,986 | ||
INTERNET SOFTWARE & SERVICES - 0.3% | |||
Internet Software & Services - 0.3% | |||
WebMD Health Corp. (a) | 89,000 | 2,211,650 | |
LIFE SCIENCES TOOLS & SERVICES - 0.8% | |||
Life Sciences Tools & Services - 0.8% | |||
Illumina, Inc. (a) | 113,400 | 5,811,750 | |
Patheon, Inc. (a) | 95,000 | 190,067 | |
| 6,001,817 | ||
PERSONAL PRODUCTS - 0.4% | |||
Personal Products - 0.4% | |||
Prestige Brands Holdings, Inc. (a) | 121,892 | 2,011,218 | |
Schiff Nutrition International, Inc. (a) | 41,900 | 467,604 | |
| 2,478,822 | ||
PHARMACEUTICALS - 83.4% | |||
Pharmaceuticals - 83.4% | |||
Abbott Laboratories | 344,590 | 19,507,240 | |
Akorn, Inc. (a) | 509,100 | 6,379,023 | |
Alexza Pharmaceuticals, Inc. (a) | 117,089 | 73,181 | |
Allergan, Inc. | 223,300 | 20,005,447 | |
Almirall SA | 45,000 | 384,273 | |
Common Stocks - continued | |||
Shares | Value | ||
PHARMACEUTICALS - CONTINUED | |||
Pharmaceuticals - continued | |||
Astellas Pharma, Inc. | 50,000 | $ 2,054,247 | |
AstraZeneca PLC sponsored ADR (d) | 320,000 | 14,364,800 | |
Auxilium Pharmaceuticals, Inc. (a) | 164,700 | 3,254,472 | |
Bristol-Myers Squibb Co. | 596,910 | 19,202,595 | |
Cadence Pharmaceuticals, Inc. (a)(d) | 331,300 | 1,242,375 | |
Cardiome Pharma Corp. (a) | 297,400 | 663,202 | |
Columbia Laboratories, Inc. (a) | 100,000 | 66,000 | |
DepoMed, Inc. (a) | 342,300 | 2,153,067 | |
Dr. Reddy's Laboratories Ltd. sponsored ADR (d) | 128,400 | 4,314,240 | |
Durect Corp. (a) | 719,500 | 532,430 | |
Elan Corp. PLC sponsored ADR (a) | 1,244,400 | 15,555,000 | |
Eli Lilly & Co. | 529,200 | 20,765,808 | |
Endo Pharmaceuticals Holdings, Inc. (a) | 256,400 | 9,504,748 | |
Endo Pharmaceuticals Holdings, Inc. rights (a) | 9,000 | 0 | |
Forest Laboratories, Inc. (a) | 297,520 | 9,675,350 | |
GlaxoSmithKline PLC sponsored ADR | 1,013,400 | 44,903,754 | |
Hi-Tech Pharmacal Co., Inc. (a) | 54,000 | 2,155,680 | |
Hospira, Inc. (a) | 36,000 | 1,282,320 | |
Impax Laboratories, Inc. (a) | 180,500 | 4,214,675 | |
Ista Pharmaceuticals, Inc. (a) | 85,000 | 703,800 | |
Jazz Pharmaceuticals PLC (a) | 196,000 | 10,284,120 | |
Johnson & Johnson | 254,900 | 16,588,892 | |
KV Pharmaceutical Co. Class A (a)(d) | 564,400 | 784,516 | |
MAP Pharmaceuticals, Inc. (a) | 27,112 | 435,148 | |
Meda AB (A Shares) | 140,000 | 1,322,342 | |
Medicis Pharmaceutical Corp. Class A | 209,200 | 7,309,448 | |
Merck & Co., Inc. | 1,219,036 | 46,530,604 | |
Mylan, Inc. (a) | 510,200 | 11,959,088 | |
Nektar Therapeutics (a)(d) | 385,500 | 2,764,035 | |
Novartis AG sponsored ADR | 356,598 | 19,438,157 | |
Novo Nordisk A/S Series B sponsored ADR | 196,500 | 27,574,845 | |
Obagi Medical Products, Inc. (a) | 109,360 | 1,241,236 | |
Ono Pharmaceutical Co. Ltd. | 5,000 | 273,080 | |
Optimer Pharmaceuticals, Inc. (a)(d) | 293,000 | 3,747,470 | |
Pain Therapeutics, Inc. (a) | 256,721 | 942,166 | |
Paladin Labs, Inc. (a) | 107,600 | 4,578,423 | |
Par Pharmaceutical Companies, Inc. (a) | 112,400 | 4,171,164 | |
Perrigo Co. | 126,400 | 13,026,784 | |
Pfizer, Inc. | 1,514,488 | 31,955,697 | |
Pozen, Inc. (a)(d) | 177,200 | 772,592 | |
Questcor Pharmaceuticals, Inc. (a)(d) | 174,800 | 6,799,720 | |
Roche Holding AG (participation certificate) | 39,004 | 6,789,489 | |
Sagent Pharmaceuticals, Inc. | 20,700 | 448,983 | |
Salix Pharmaceuticals Ltd. (a) | 205,500 | 10,135,260 | |
Sanofi sponsored ADR (d) | 1,408,022 | 52,139,053 | |
Santarus, Inc. (a) | 266,500 | 1,204,580 | |
Shire PLC sponsored ADR | 213,000 | 22,290,450 | |
| |||
Shares | Value | ||
Sucampo Pharmaceuticals, Inc. Class A (a) | 10,971 | $ 80,088 | |
Teva Pharmaceutical Industries Ltd. sponsored ADR | 548,289 | 24,568,830 | |
The Medicines Company (a) | 168,500 | 3,610,955 | |
UCB SA | 27,000 | 1,090,233 | |
Valeant Pharmaceuticals International, Inc. (Canada) (a)(d) | 539,927 | 28,626,251 | |
Vectura Group PLC (a) | 305,000 | 278,987 | |
Virbac SA | 11,467 | 1,701,020 | |
ViroPharma, Inc. (a) | 339,100 | 10,871,546 | |
Vivus, Inc. (a)(d) | 243,800 | 5,485,500 | |
Warner Chilcott PLC (a) | 100,000 | 1,673,000 | |
Watson Pharmaceuticals, Inc. (a) | 172,800 | 10,077,696 | |
XenoPort, Inc. (a) | 210,000 | 840,000 | |
| 597,369,175 | ||
PROFESSIONAL SERVICES - 0.1% | |||
Research & Consulting Services - 0.1% | |||
Qualicorp SA | 50,000 | 436,694 | |
TOTAL COMMON STOCKS (Cost $569,600,132) |
| ||
Convertible Preferred Stocks - 0.0% | |||
|
|
|
|
PHARMACEUTICALS - 0.0% | |||
Pharmaceuticals - 0.0% | |||
Agios Pharmaceuticals, Inc. Series C (e) | 50,916 |
| |
Money Market Funds - 6.4% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.12% (b) | 8,835,295 | 8,835,295 | |
Fidelity Securities Lending Cash Central Fund, 0.12% (b)(c) | 36,696,237 | 36,696,237 | |
TOTAL MONEY MARKET FUNDS (Cost $45,531,532) |
| ||
TOTAL INVESTMENT PORTFOLIO - 103.0% (Cost $615,381,718) | 737,458,901 | ||
NET OTHER ASSETS (LIABILITIES) - (3.0)% | (21,576,543) | ||
NET ASSETS - 100% | $ 715,882,358 | ||
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Includes investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
(e) Restricted securities - Investment in securities not registered under the Securities Act of 1933 (excluding 144A issues). At the end of the period, the value of restricted securities (excluding 144A issues) amounted to $750,054 or 0.1% of net assets. |
Additional information on each restricted holding is as follows: |
Security | Acquisition Date | Acquisition Cost |
Agios Pharmaceuticals, Inc. Series C | 11/16/11 | $ 250,054 |
Puma Biotechnology, Inc. | 10/4/11 | $ 499,997 |
Puma Biotechnology, Inc. warrants 10/17/21 | 10/4/11 | $ 1 |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 28,246 |
Fidelity Securities Lending Cash Central Fund | 358,038 |
Total | $ 386,284 |
Other Information |
The following is a summary of the inputs used, as of February 29, 2012, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the tables below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities: | ||||
Common Stocks | $ 691,677,315 | $ 691,177,315 | $ - | $ 500,000 |
Convertible Preferred Stocks | 250,054 | - | - | 250,054 |
Money Market Funds | 45,531,532 | 45,531,532 | - | - |
Total Investments in Securities: | $ 737,458,901 | $ 736,708,847 | $ - | $ 750,054 |
The following is a reconciliation of Investments in Securities for which Level 3 inputs were used in determining value: |
Investments in Securities: | |
Beginning Balance | $ - |
Total Realized Gain (Loss) | - |
Total Unrealized Gain (Loss) | 2 |
Cost of Purchases | 750,052 |
Proceeds of Sales | - |
Amortization/Accretion | - |
Transfers in to Level 3 | - |
Transfers out of Level 3 | - |
Ending Balance | $ 750,054 |
The change in unrealized gain (loss) for the period attributable to Level 3 securities held at February 29, 2012 | $ 2 |
The information used in the above reconciliation represents fiscal year to date activity for any Investments in Securities identified as using Level 3 inputs at either the beginning or the end of the current fiscal period. Transfers in or out of Level 3 represent the beginning value of any Security or Instrument where a change in the pricing level occurred from the beginning to the end of the period. The cost of purchases and the proceeds of sales may include securities received or delivered through corporate actions or exchanges. Realized and unrealized gains (losses) disclosed in the reconciliation are included in Net Gain (Loss) on the Fund's Statement of Operations. |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 58.6% |
United Kingdom | 8.4% |
France | 7.5% |
Canada | 5.3% |
Ireland | 4.2% |
Denmark | 3.9% |
Switzerland | 3.8% |
Israel | 3.4% |
Bailiwick of Jersey | 3.1% |
Others (Individually Less Than 1%) | 1.8% |
| 100.0% |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Pharmaceuticals Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2012 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $36,019,973) - See accompanying schedule: Unaffiliated issuers (cost $569,850,186) | $ 691,927,369 |
|
Fidelity Central Funds (cost $45,531,532) | 45,531,532 |
|
Total Investments (cost $615,381,718) |
| $ 737,458,901 |
Receivable for investments sold | 23,570,591 | |
Receivable for fund shares sold | 2,019,485 | |
Dividends receivable | 3,110,823 | |
Distributions receivable from Fidelity Central Funds | 16,700 | |
Prepaid expenses | 1,425 | |
Other receivables | 3,069 | |
Total assets | 766,180,994 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 10,077,373 | |
Payable for fund shares redeemed | 2,989,110 | |
Accrued management fee | 333,923 | |
Other affiliated payables | 169,496 | |
Other payables and accrued expenses | 32,497 | |
Collateral on securities loaned, at value | 36,696,237 | |
Total liabilities | 50,298,636 | |
|
|
|
Net Assets | $ 715,882,358 | |
Net Assets consist of: |
| |
Paid in capital | $ 594,753,891 | |
Undistributed net investment income | 2,289,300 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (3,234,969) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 122,074,136 | |
Net Assets, for 50,717,992 shares outstanding | $ 715,882,358 | |
Net Asset Value, offering price and redemption price per share ($715,882,358 ÷ 50,717,992 shares) | $ 14.11 | |
Statement of Operations
| Year ended February 29, 2012 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 11,114,782 |
Interest |
| 17 |
Income from Fidelity Central Funds (including $358,038 from security lending) |
| 386,284 |
Total income |
| 11,501,083 |
|
|
|
Expenses | ||
Management fee | $ 3,222,283 | |
Transfer agent fees | 1,499,636 | |
Accounting and security lending fees | 226,569 | |
Custodian fees and expenses | 27,066 | |
Independent trustees' compensation | 3,284 | |
Registration fees | 66,678 | |
Audit | 44,410 | |
Legal | 2,068 | |
Interest | 109 | |
Miscellaneous | 4,531 | |
Total expenses before reductions | 5,096,634 | |
Expense reductions | (20,054) | 5,076,580 |
Net investment income (loss) | 6,424,503 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 4,584,307 | |
Foreign currency transactions | 6,916 | |
Total net realized gain (loss) |
| 4,591,223 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 55,850,630 | |
Assets and liabilities in foreign currencies | (3,163) | |
Total change in net unrealized appreciation (depreciation) |
| 55,847,467 |
Net gain (loss) | 60,438,690 | |
Net increase (decrease) in net assets resulting from operations | $ 66,863,193 | |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 6,424,503 | $ 4,363,957 |
Net realized gain (loss) | 4,591,223 | 10,600,603 |
Change in net unrealized appreciation (depreciation) | 55,847,467 | 43,943,660 |
Net increase (decrease) in net assets resulting from operations | 66,863,193 | 58,908,220 |
Distributions to shareholders from net investment income | (4,623,019) | (3,701,597) |
Distributions to shareholders from net realized gain | (11,091,469) | (5,275,707) |
Total distributions | (15,714,488) | (8,977,304) |
Share transactions | 525,622,548 | 216,246,069 |
Reinvestment of distributions | 15,307,379 | 8,779,250 |
Cost of shares redeemed | (267,283,200) | (119,489,514) |
Net increase (decrease) in net assets resulting from share transactions | 273,646,727 | 105,535,805 |
Redemption fees | 66,684 | 18,860 |
Total increase (decrease) in net assets | 324,862,116 | 155,485,581 |
|
|
|
Net Assets | ||
Beginning of period | 391,020,242 | 235,534,661 |
End of period (including undistributed net investment income of $2,289,300 and undistributed net investment income of $1,076,615, respectively) | $ 715,882,358 | $ 391,020,242 |
Other Information Shares | ||
Sold | 39,011,957 | 18,524,027 |
Issued in reinvestment of distributions | 1,159,149 | 729,723 |
Redeemed | (20,142,513) | (10,110,998) |
Net increase (decrease) | 20,028,593 | 9,142,752 |
Financial Highlights
Years ended February 28, | 2012 F | 2011 | 2010 | 2009 | 2008 F |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 12.74 | $ 10.93 | $ 7.60 | $ 10.52 | $ 10.88 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | .15 | .17 | .14 | .18 | .10 |
Net realized and unrealized gain (loss) | 1.64 | 1.96 | 3.35 | (2.91) | .13 |
Total from investment operations | 1.79 | 2.13 | 3.49 | (2.73) | .23 |
Distributions from net investment income | (.11) | (.13) | (.16) | (.13) | (.11) |
Distributions from net realized gain | (.31) | (.19) | - | (.06) | (.48) |
Total distributions | (.42) | (.32) | (.16) | (.19) | (.59) |
Redemption fees added to paid in capital B, G | - | - | - | - | - |
Net asset value, end of period | $ 14.11 | $ 12.74 | $ 10.93 | $ 7.60 | $ 10.52 |
Total Return A | 14.34% | 19.68% | 46.05% | (26.23)% | 1.64% |
Ratios to Average Net Assets C, E |
|
|
|
|
|
Expenses before reductions | .89% | .94% | 1.01% | 1.00% | .95% |
Expenses net of fee waivers, if any | .89% | .94% | 1.01% | 1.00% | .95% |
Expenses net of all reductions | .88% | .94% | 1.00% | .99% | .95% |
Net investment income (loss) | 1.12% | 1.42% | 1.49% | 1.89% | .85% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 715,882 | $ 391,020 | $ 235,535 | $ 142,011 | $ 167,330 |
Portfolio turnover rate D | 73% | 102% | 221% | 240% | 119% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown. B Calculated based on average shares outstanding during the period. C Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. D Amount does not include the portfolio activity of any underlying Fidelity Central Funds. E Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. F For the year ended February 29. G Amount represents less than $.01 per share. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended February 29, 2012
1. Organization.
Biotechnology Portfolio, Health Care Portfolio, Medical Delivery Portfolio, Medical Equipment and Systems Portfolio and Pharmaceuticals Portfolio (the Funds) are non-diversified funds of Fidelity Select Portfolios (the Trust). The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Funds invest primarily in securities of companies whose principal business activities fall within specific industries. Each Fund is authorized to issue an unlimited number of shares.
2. Investments in Fidelity Central Funds.
The Funds invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Funds' Schedules of Investments list each of the Fidelity Central Funds held as of period end, if any, as an investment of each Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, each Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Funds' Report of Independent Registered Public Accounting Firm, are available on the SEC web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Funds:
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. Each Fund uses independent pricing services approved by the Board of Trustees to value their investments. When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include market or security specific events. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The value used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
Each Fund categorizes the inputs to valuation techniques used to value their investments into a disclosure hierarchy consisting of three levels as shown below:
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the Fund's own assumptions based on the best information available)
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level, as of February 29, 2012, as well as a roll forward of Level 3 securities, is included at the end of each Fund's Schedule of Investments. Valuation techniques used to value each Fund's investments by major category are as follows:
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when significant market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-traded funds (ETFs) and certain indexes as well as quoted prices for similar securities are used and are categorized as Level 2 in the hierarchy in these circumstances. Utilizing these techniques may result in transfers between Level 1 and Level 2. For restricted equity securities and private placements where observable inputs are limited, assumptions about market activity and risk are used and are categorized as Level 3 in the hierarchy.
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 in the hierarchy.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
New Accounting Pronouncements. In May 2011, the Financial Accounting Standards Board issued Accounting Standard Update No. 2011-04, Fair Value Measurement (Topic 820) - Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. The update is effective during interim and annual periods beginning after December 15, 2011 and will result in additional disclosure for transfers between levels as well as expanded disclosure for securities categorized as Level 3 under the fair value hierarchy.
In December 2011, the Financial Accounting Standards Board issued Accounting Standard Update No. 2011-11, Disclosures about Offsetting Assets and Liabilities. The update creates new disclosure requirements requiring entities to disclose both gross and net information for derivatives and other financial instruments that are either offset in the Statement of Assets and Liabilities or subject to an enforceable master netting arrangement or similar agreement. The disclosure requirements are effective for interim and annual reporting periods beginning on or after January 1, 2013. Management is currently evaluating the impact of the update's adoption on the Fund's financial statement disclosures.
Foreign Currency. The Funds may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Funds' investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Funds are informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Funds estimate the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Deferred Trustee Compensation. Under a Deferred Compensation Plan (the Plan) for Health Care Portfolio, independent Trustees may elect to defer receipt of a portion of their annual compensation. Deferred amounts are invested in a cross-section of Fidelity funds, are marked-to-market and remain in the Fund until distributed in accordance with the Plan. The investment of deferred amounts and the offsetting payable to the Trustees are included in the accompanying Statement of Assets and Liabilities.
Income Tax Information and Distributions to Shareholders. Each year, each Fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for income taxes is required. As of February 29, 2012, each Fund did not have any unrecognized tax benefits in the financial statements; nor is each Fund aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. Each Fund files a U.S. federal tax return, in addition to state and local tax returns as required. A fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction. Foreign taxes are provided for based on each Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests. Medical Equipment and Systems Portfolio is subject to a tax imposed on capital gains by certain countries in which it invests. An estimated deferred tax liability for net unrealized appreciation on the applicable securities is included in Other payables and accrued expenses on the Statement of Assets & Liabilities.
Distributions are declared and recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. In addition, certain Funds claimed a portion of the payment made to redeeming shareholders as a distribution for income tax purposes.
Annual Report
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, deferred trustees compensation, net operating losses, capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows for each Fund:
| Tax cost | Gross unrealized | Gross unrealized | Net unrealized |
Biotechnology Portfolio | $ 1,723,049,074 | $ 347,461,046 | $ (145,149,389) | $ 202,311,657 |
Health Care Portfolio | 1,836,910,209 | 420,917,258 | (47,392,250) | 373,525,008 |
Medical Delivery Portfolio | 712,901,983 | 207,971,664 | (15,848,303) | 192,123,361 |
Medical Equipment and Systems Portfolio | 1,219,068,433 | 195,324,274 | (39,217,593) | 156,106,681 |
Pharmaceuticals Portfolio | 620,343,115 | 137,297,675 | (20,181,889) | 117,115,786 |
The tax-based components of distributable earnings as of period end were as follows for each Fund:
| Undistributed | Undistributed | Undistributed | Capital loss | Net unrealized |
Biotechnology Portfolio | $ - | $ - | $ 94,929,100 | $ - | $ 202,311,657 |
Health Care Portfolio | - | - | 57,595,192 | - | 373,522,875 |
Medical Delivery Portfolio | - | - | - | (20,373,659) | 192,126,600 |
Medical Equipment and Systems Portfolio | - | - | 25,908,498 | - | 156,105,781 |
Pharmaceuticals Portfolio | - | 2,289,300 | 1,726,428 | - | 117,112,739 |
Capital loss carryforwards are only available to offset future capital gains of the Funds to the extent provided by regulations and may be limited. Under the Regulated Investment Company Modernization Act of 2010 (the Act), the Funds are permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period and such capital losses are required to be used prior to any losses that expire. Capital loss carryforwards were as follows:
| Fiscal year of |
|
| 2018 | Total capital loss |
Medical Delivery Portfolio | $ (20,373,659) | $ (20,373,659) |
The tax character of distributions paid was as follows:
February 29, 2012 |
|
|
|
| Ordinary Income | Long-term | Total |
Biotechnology Portfolio | $ - | $ 1,786,490 | $ 1,786,490 |
Health Care Portfolio | - | 176,290,692 | 176,290,692 |
Medical Equipment and Systems Portfolio | 720,894 | 68,879,454 | 69,600,348 |
Pharmaceuticals Portfolio | 8,103,586 | 7,610,902 | 15,714,488 |
February 28, 2011 |
|
|
|
| Ordinary Income | Long-term | Total |
Health Care Portfolio | $ 2,484,311 | $ - | $ 2,484,311 |
Pharmaceuticals Portfolio | 5,175,036 | 3,802,268 | 8,977,304 |
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Trading (Redemption) Fees. Shares held by investors in the Funds less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Funds and accounted for as an addition to paid in capital.
4. Operating Policies.
Restricted Securities. The Funds may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities is included at the end of each applicable Fund's Schedule of Investments.
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, are noted in the table below.
| Purchases ($) | Sales ($) |
Biotechnology Portfolio | 1,734,189,757 | 1,347,822,388 |
Health Care Portfolio | 2,682,838,974 | 2,647,871,780 |
Medical Delivery Portfolio | 883,980,676 | 646,012,136 |
Medical Equipment and Systems Portfolio | 1,675,231,017 | 1,692,987,636 |
Pharmaceuticals Portfolio | 654,764,823 | 410,131,887 |
6. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the Funds with investment management related services for which the Funds pay a monthly management fee. The management fee is the sum of an individual fund fee rate and an annualized group fee rate. The individual fund fee rate is applied to each Fund's average net assets. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, each Fund's annual management fee rate expressed as a percentage of each Fund's average net assets was as follows:
| Individual Rate | Group Rate | Total |
Biotechnology Portfolio | .30% | .26% | .56% |
Health Care Portfolio | .30% | .26% | .56% |
Medical Delivery Portfolio | .30% | .26% | .56% |
Medical Equipment and Systems Portfolio | .30% | .26% | .56% |
Pharmaceuticals Portfolio | .30% | .26% | .56% |
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the Funds' transfer, dividend disbursing and shareholder servicing agent. FIIOC receives account fees and asset-based fees that vary according to account size and type of account. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, transfer agent fees were equivalent to the following annual rates expressed as a percentage of average net assets:
Biotechnology Portfolio | .22% |
Health Care Portfolio | .20% |
Medical Delivery Portfolio | .24% |
Medical Equipment and Systems Portfolio | .24% |
Pharmaceuticals Portfolio | .26% |
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains each Fund's accounting records. The accounting fee is based on the level of average net assets for each month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Annual Report
6. 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 | $ 29,566 |
Health Care Portfolio | 33,066 |
Medical Delivery Portfolio | 20,180 |
Medical Equipment and Systems Portfolio | 25,011 |
Pharmaceuticals Portfolio | 15,717 |
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 Loan | Weighted Average | Interest |
Biotechnology Portfolio | Borrower | $ 8,001,913 | .36% | $ 1,825 |
Health Care Portfolio | Borrower | 12,485,857 | .33% | 798 |
Medical Delivery Portfolio | Borrower | 6,428,484 | .36% | 1,991 |
Pharmaceuticals Portfolio | Borrower | 5,435,000 | .36% | 109 |
7. Committed Line of Credit.
Certain Funds participate with other funds managed by FMR or an affiliate in a $4.0 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The participating funds have agreed to pay commitment fees on their pro-rata portion of the line of credit, which are reflected in Miscellaneous expenses on the Statement of Operations, and are as follows:
Biotechnology Portfolio | $ 3,405 |
Health Care Portfolio | 6,017 |
Medical Delivery Portfolio | 2,034 |
Medical Equipment and Systems Portfolio | 4,214 |
Pharmaceuticals Portfolio | 1,521 |
During the period, there were no borrowings on this line of credit.
8. Security Lending.
Certain Funds lend portfolio securities through a lending agent from time to time in order to earn additional income. For equity securities, a lending agent is used and may loan securities to certain qualified borrowers, including Fidelity Capital Markets (FCM), a broker-dealer affiliated with the Funds. On the settlement date of the loan, each applicable Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Funds and any additional required collateral is delivered to the Funds on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on each applicable Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented on each applicable Fund's Statement of Operations as a component of income from Fidelity Central Funds. FCM security lending activity as of and during the period was as follows:
Annual Report
Notes to Financial Statements - continued
8. Security Lending - continued
| Security Lending | Value of Securities |
Biotechnology Portfolio | $ 267,694 | $ 1,110,365 |
Health Care Portfolio | 3,903 | 777,724 |
Medical Delivery Portfolio | 250,780 | 3,033,033 |
Medical Equipment and Systems Portfolio | 46,202 | 926,288 |
Pharmaceuticals Portfolio | 1,336 | 695,490 |
9. Bank Borrowings.
Each Fund is permitted to have bank borrowings for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity requirements. Each Fund has established borrowing arrangements with certain banks. The interest rate on the borrowings is the bank's base rate, as revised from time to time. At period end, there were no bank borrowings outstanding. Each applicable Fund's activity in this program during the period for which loans were outstanding was as follows:
| Average Loan | Weighted Average | Interest |
Medical Delivery Portfolio | $18,364,750 | .60% | $ 1,228 |
10. Expense Reductions.
Many of the brokers with whom FMR places trades on behalf of certain Funds provided services to these Funds in addition to trade execution. These services included payments of expenses on behalf of each applicable Fund. In addition, through arrangements with each applicable Fund's custodian, credits realized as a result of uninvested cash balances were used to reduce each applicable Fund's expenses. All of the applicable expense reductions are noted in the table below.
| Brokerage | Custody |
Biotechnology Portfolio | $ 41,171 | $ - |
Health Care Portfolio | 146,514 | 194 |
Medical Delivery Portfolio | 124,622 | - |
Medical Equipment and Systems Portfolio | 102,235 | 121 |
Pharmaceuticals Portfolio | 20,019 | 35 |
11. Other.
The Funds' organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Funds. In the normal course of business, the Funds may also enter into contracts that provide general indemnifications. The Funds' maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Funds. The risk of material loss from such claims is considered remote.
At the end of the period, the Strategic Advisors U.S Opportunity Fund was the owner of record of approximately 12% of the total outstanding shares of Pharmaceutical Portfolio.
Annual Report
Report of Independent Registered Public Accounting Firm
To the Trustees of Fidelity Select Portfolios and the Shareholders of Biotechnology Portfolio, Health Care Portfolio, Medical Delivery Portfolio, Medical Equipment and Systems Portfolio and Pharmaceuticals Portfolio:
In our opinion, the accompanying statements of assets and liabilities, including the schedules of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Biotechnology Portfolio, Health Care Portfolio, Medical Delivery Portfolio, Medical Equipment and Systems Portfolio and Pharmaceuticals Portfolio (funds of Fidelity Select Portfolios) at February 29, 2012, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fidelity Select Portfolios' management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at February 29, 2012 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 13, 2012
Annual Report
Trustees and Officers
The Trustees, Members of the Advisory Board, and executive officers of the trust and funds, as applicable, are listed below. The Board of Trustees governs each fund and is responsible for protecting the interests of shareholders. The Trustees are experienced executives who meet periodically throughout the year to oversee each fund's activities, review contractual arrangements with companies that provide services to each fund, oversee management of the risks associated with such activities and contractual arrangements, and review each fund's performance. Except for James C. Curvey, each of the Trustees oversees 226 funds advised by FMR or an affiliate. Mr. Curvey oversees 430 funds advised by FMR or an affiliate.
The Trustees hold office without limit in time except that (a) any Trustee may resign; (b) any Trustee may be removed by written instrument, signed by at least two-thirds of the number of Trustees prior to such removal; (c) any Trustee who requests to be retired or who has become incapacitated by illness or injury may be retired by written instrument signed by a majority of the other Trustees; and (d) any Trustee may be removed at any special meeting of shareholders by a two-thirds vote of the outstanding voting securities of the trust. Each Trustee who is not an interested person (as defined in the 1940 Act) (Independent Trustee), shall retire not later than the last day of the calendar year in which his or her 75th birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. The executive officers and Advisory Board Members hold office without limit in time, except that any officer and Advisory Board Member may resign or may be removed by a vote of a majority of the Trustees at any regular meeting or any special meeting of the Trustees. Except as indicated, each individual has held the office shown or other offices in the same company for the past five years.
Experience, Skills, Attributes, and Qualifications of the Funds' Trustees. The Governance and Nominating Committee has adopted a statement of policy that describes the experience, qualifications, attributes, and skills that are necessary and desirable for potential Independent Trustee candidates (Statement of Policy). The Board believes that each Trustee satisfied at the time he or she was initially elected or appointed a Trustee, and continues to satisfy, the standards contemplated by the Statement of Policy. The Governance and Nominating Committee also engages professional search firms to help identify potential Independent Trustee candidates who have the experience, qualifications, attributes, and skills consistent with the Statement of Policy. From time to time, additional criteria based on the composition and skills of the current Independent Trustees, as well as experience or skills that may be appropriate in light of future changes to board composition, business conditions, and regulatory or other developments, have also been considered by the professional search firms and the Governance and Nominating Committee. In addition, the Board takes into account the Trustees' commitment and participation in Board and committee meetings, as well as their leadership of standing and ad hoc committees throughout their tenure.
In determining that a particular Trustee was and continues to be qualified to serve as a Trustee, the Board has considered a variety of criteria, none of which, in isolation, was controlling. The Board believes that, collectively, the Trustees have balanced and diverse experience, qualifications, attributes, and skills, which allow the Board to operate effectively in governing each fund and protecting the interests of shareholders. Information about the specific experience, skills, attributes, and qualifications of each Trustee, which in each case led to the Board's conclusion that the Trustee should serve (or continue to serve) as a trustee of the funds, is provided below.
Board Structure and Oversight Function. James C. Curvey is an interested person (as defined in the 1940 Act) and currently serves as Acting Chairman. The Trustees have determined that an interested Chairman is appropriate and benefits shareholders because an interested Chairman has a personal and professional stake in the quality and continuity of services provided to the funds. Independent Trustees exercise their informed business judgment to appoint an individual of their choosing to serve as Chairman, regardless of whether the Trustee happens to be independent or a member of management. The Independent Trustees have determined that they can act independently and effectively without having an Independent Trustee serve as Chairman and that a key structural component for assuring that they are in a position to do so is for the Independent Trustees to constitute a substantial majority for the Board. The Independent Trustees also regularly meet in executive session. Ned C. Lautenbach serves as Chairman of the Independent Trustees and as such (i) acts as a liaison between the Independent Trustees and management with respect to matters important to the Independent Trustees and (ii) with management prepares agendas for Board meetings.
Fidelity funds are overseen by different Boards of Trustees. The funds' Board oversees Fidelity's equity and high income funds and another Board oversees Fidelity's investment-grade bond, money market, and asset allocation funds. The asset allocation funds may invest in Fidelity funds overseen by the funds' Board. The use of separate Boards, each with its own committee structure, allows the Trustees of each group of Fidelity funds to focus on the unique issues of the funds they oversee, including common research, investment, and operational issues. On occasion, the separate Boards establish joint committees to address issues of overlapping consequences for the Fidelity funds overseen by each Board.
The Trustees operate using a system of committees to facilitate the timely and efficient consideration of all matters of importance to the Trustees, each fund, and fund shareholders and to facilitate compliance with legal and regulatory requirements and oversight of the funds' activities and associated risks. The Board, acting through its committees, has charged FMR and its affiliates with (i) identifying events or circumstances the occurrence of which could have demonstrably adverse effects on the funds' business and/or reputation; (ii) implementing processes and controls to lessen the possibility that such events or circumstances occur or to mitigate the effects of such events or circumstances if they do occur; and (iii) creating and maintaining a system designed to evaluate continuously business and market conditions in order to facilitate the identification and implementation processes described in (i) and (ii) above. Because the day-to-day operations and activities of the funds are carried out by or through FMR, its affiliates and other service providers, the funds' exposure to risks is mitigated but not eliminated by the processes overseen by the Trustees. While each of the Board's committees has responsibility for overseeing different aspects of the funds' activities, oversight is exercised primarily through the Operations, Audit, and Compliance Committees. In addition, the Independent Trustees have worked with FMR to enhance the Board's oversight of investment and financial risks, legal and regulatory risks, technology risks, and operational risks, including the development of additional risk reporting to the Board. For example, a working group comprised of Independent Trustees and FMR has worked and continues to work to review the Fidelity funds' valuation-related activities, reporting and risk management. Appropriate personnel, including but not limited to the funds' Chief Compliance Officer (CCO), FMR's internal auditor, the independent accountants, the funds' Treasurer and portfolio management personnel, make periodic reports to the Board's committees, as appropriate, including an annual review of FMR's risk management program for the Fidelity funds. The responsibilities of each standing committee, including their oversight responsibilities, are described further under "Standing Committees of the Funds' Trustees."
Annual Report
Trustees and Officers - continued
The funds' Statement of Additional Information (SAI) includes more information about the Trustees. To request a free copy, call Fidelity at 1-800-544-8544.
Interested Trustees*:
Correspondence intended for each Trustee who is an interested person may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupations and Other Relevant Experience+ | |
James C. Curvey (76) | |
| Year of Election or Appointment: 2007 Mr. Curvey is Trustee and Acting Chairman of the Board of Trustees of certain Trusts. Mr. Curvey also serves as Trustee (2007-present) of other investment companies advised by FMR. Mr. Curvey is a Director of Fidelity Investments Money Management, Inc. (2009-present), Director of Fidelity Research & Analysis Co. (2009-present) and Director of FMR and FMR Co., Inc. (2007-present). Mr. Curvey is also Vice Chairman (2007-present) and Director of FMR LLC. In addition, Mr. Curvey serves as an Overseer for the Boston Symphony Orchestra and a member of the Trustees of Villanova University. Previously, Mr. Curvey was the Vice Chairman (2006-2007) and Director (2000-2007) of FMR Corp. |
Ronald P. O'Hanley (55) | |
| Year of Election or Appointment: 2011 Mr. O'Hanley is Director of FMR Co., Inc. (2010-present), Director of Fidelity Investments Money Management, Inc. (2010-present), Director of Fidelity Research & Analysis Company (2010-present), President of Fidelity Asset Management and Corporate Services and a member of Fidelity's Executive Committee (2010-present). Previously, Mr. O'Hanley served as President and Chief Executive Officer of BNY Mellon Asset Management (2007-2010). Mr. O'Hanley also served as Vice Chairman of Bank New York Mellon Corp. and a member of that firm's Executive Committee. Prior to the 2007 merger of The Bank of New York and Mellon Financial Corporation, he was Vice Chairman of Mellon Financial Corporation and President and Chief Executive Officer of Mellon Asset Management. He joined Mellon in February 1997. Mr. O'Hanley currently serves as Chairman of the Boston Public Library Foundation Board of Directors and sits on the Board of Directors of Beth Israel Deaconess Medical Center, the Board of Trustees of the Marine Biological Laboratory and the Advisory Board of the Maxwell School of Citizenship and Public Administration at Syracuse University. Mr. O'Hanley also chairs the Council on Asset Management for the Financial Services Roundtable and is a member of the Board of Directors of Institutional Investor's U.S. Institute. |
* Trustees have been determined to be "Interested Trustees" by virtue of, among other things, their affiliation with the trust or various entities under common control with FMR.
+ The information above includes each Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to each Trustee's qualifications to serve as a Trustee, which led to the conclusion that each Trustee should serve as a Trustee for each fund.
Independent Trustees:
Correspondence intended for each Independent Trustee (that is, the Trustees other than the Interested Trustees) may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235.
Name, Age; Principal Occupations and Other Relevant Experience+ | |
Dennis J. Dirks (63) | |
| Year of Election or Appointment: 2005 Prior to his retirement in May 2003, Mr. Dirks was Chief Operating Officer and a member of the Board of The Depository Trust & Clearing Corporation (DTCC). He also served as President, Chief Operating Officer, and Board member of The Depository Trust Company (DTC) and President and Board member of the National Securities Clearing Corporation (NSCC). In addition, Mr. Dirks served as Chief Executive Officer and Board member of the Government Securities Clearing Corporation, Chief Executive Officer and Board member of the Mortgage-Backed Securities Clearing Corporation, as a Trustee and a member of the Finance Committee of Manhattan College (2005-2008), and as a Trustee and a member of the Finance Committee of AHRC of Nassau County (2006-2008). Mr. Dirks is a member of the Independent Directors Council (IDC) Governing Council (2010-present) and Board of Directors for The Brookville Center for Children's Services, Inc. (2009-present). |
Alan J. Lacy (58) | |
| Year of Election or Appointment: 2008 Mr. Lacy serves as Senior Adviser (2007-present) of Oak Hill Capital Partners, L.P. (private equity). Mr. Lacy also served as Chief Executive Officer (2000-2005) and Vice Chairman (2005-2006) of Sears Holdings Corporation and Sears, Roebuck and Co. (retail). In addition, Mr. Lacy serves as a member of the Board of Directors of Dave & Buster's, Inc. (restaurant and entertainment complexes, 2010-present), The Hillman Companies, Inc. (hardware wholesalers, 2010-present), and Bristol-Myers Squibb Company (global pharmaceuticals, 2007-present). Mr. Lacy is a member of the Board of Trustees of The National Parks Conservation Association (2006-present). Previously, Mr. Lacy served as Chairman of the Board of Trustees of the National Parks Conservation Association (2008-2011) and as a member of the Board of Directors for the Western Union Company (global money transfer, 2006-2011). |
Ned C. Lautenbach (68) | |
| Year of Election or Appointment: 2000 Mr. Lautenbach is Chairman of the Independent Trustees of the Equity and High Income Funds (2006-present). Mr. Lautenbach currently serves as the Lead Director of the Eaton Corporation Board of Directors (diversified industrial, 1997-present). Mr. Lautenbach is also a member of the Board of Directors of the Philharmonic Center for the Arts in Naples, Florida (1999-present); a member of the Board of Trustees of Fairfield University (2005-present); and a member of the Council on Foreign Relations (1994-present). Previously, Mr. Lautenbach was a Partner/Advisory Partner at Clayton, Dubilier & Rice, LLC (private equity investment, 1998-2010), as well as a Director of Sony Corporation (2006-2007). |
Joseph Mauriello (67) | |
| Year of Election or Appointment: 2008 Prior to his retirement in January 2006, Mr. Mauriello served in numerous senior management positions including Deputy Chairman and Chief Operating Officer (2004-2005), and Vice Chairman of Financial Services (2002-2004) of KPMG LLP US (professional services, 1965-2005). Mr. Mauriello currently serves as a member of the Board of Directors of XL Group plc. (global insurance and re-insurance, 2006-present) and of Arcadia Resources Inc. (health care services and products, 2007-present). Previously, Mr. Mauriello served as a Director of the Hamilton Funds of the Bank of New York (2006-2007). |
Robert W. Selander (61) | |
| Year of Election or Appointment: 2011 Previously, Mr. Selander served as a Member of the Advisory Board of Fidelity's Equity and High Income Funds (2011), Executive Vice Chairman (2010), Chief Executive Officer (2009-2010), and President and Chief Executive Officer (1997-2009) of Mastercard, Inc. |
Cornelia M. Small (67) | |
| Year of Election or Appointment: 2005 Ms. Small is a member of the Board of Directors of the Teagle Foundation (2009-present). Ms. Small is also a member of the Investment Committee, and Chair (2008-present) and a member of the Board of Trustees of Smith College. In addition, Ms. Small serves on the Investment Committee of the Berkshire Taconic Community Foundation (2008-present). Previously, Ms. Small served as Chairperson of the Investment Committee (2002-2008) of Smith College. In addition, Ms. Small served as Chief Investment Officer, Director of Global Equity Investments, and a member of the Board of Directors of Scudder, Stevens & Clark and Scudder Kemper Investments. |
William S. Stavropoulos (72) | |
| Year of Election or Appointment: 2001 Mr. Stavropoulos is Vice Chairman of the Independent Trustees of the Equity and High Income Funds (2006-present). Mr. Stavropoulos serves as President and Founder of the Michigan Baseball Foundation, the Great Lakes Loons (2007-present). Mr. Stavropoulos is Chairman Emeritus of the Board of Directors of The Dow Chemical Company, where he previously served in numerous senior management positions, including President, CEO (1995-2000; 2002-2004), Chairman of the Executive Committee (2000-2006), and as a member of the Board of Directors (1990-2006). Currently, Mr. Stavropoulos is Chairman of Univar (global distributor of commodity and specialty chemicals, 2010-present), a Director of Teradata Corporation (data warehousing and technology solutions, 2008-present), Chemical Financial Corporation, Maersk Inc. (industrial conglomerate), Tyco International, Inc. (multinational manufacturing and services, 2007-present), and a member of the Advisory Board for Metalmark Capital (private equity investment, 2005-present). Mr. Stavropoulos is a special advisor to Clayton, Dubilier & Rice, LLC (private equity investment). In addition, Mr. Stavropoulos is a member of the University of Notre Dame Advisory Council for the College of Science. |
David M. Thomas (62) | |
| Year of Election or Appointment: 2008 Previously, Mr. Thomas served as Executive Chairman (2005-2006) and Chairman and Chief Executive Officer (2000-2005) of IMS Health, Inc. (pharmaceutical and healthcare information solutions). In addition, Mr. Thomas serves as a member of the Board of Directors of Fortune Brands, Inc. (consumer products), and Interpublic Group of Companies, Inc. (marketing communication, 2004-present). |
Michael E. Wiley (61) | |
| Year of Election or Appointment: 2008 Mr. Wiley also serves as a Director of Asia Pacific Exploration Consolidated (international oil and gas exploration and production, 2008-present). Mr. Wiley serves as a Director of Tesoro Corporation (independent oil refiner and marketer, 2005-present), and a Director of Bill Barrett Corporation (exploration and production, 2005-present). In addition, Mr. Wiley also serves as a Director of Post Oak Bank (privately-held bank, 2004-present). Previously, Mr. Wiley served as a member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-2010), as a Senior Energy Advisor of Katzenbach Partners, LLC (consulting, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production, 2001-2005). |
+ The information above includes each Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to each Trustee's qualifications to serve as a Trustee, which led to the conclusion that each Trustee should serve as a Trustee for each fund.
Advisory Board Members and Executive Officers:
Correspondence intended for each executive officer, Edward C. Johnson 3d, and Peter S. Lynch may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
Edward C. Johnson 3d (81) | |
| Year of Election or Appointment: 2011 Member of the Advisory Board of Fidelity's Equity and High Income Funds. Mr. Johnson serves as Chief Executive Officer, Chairman, and a Director of FMR LLC, and also serves as Chairman and Director of FIL Limited. Previously, Mr. Johnson served as a Trustee and Chairman of the Board of certain Fidelity Trusts, Chairman and a Director of FMR, Chairman and a Director of FMR Co., Inc., and President of FMR LLC (2006-2007). |
Peter S. Lynch (68) | |
| Year of Election or Appointment: 2003 Member of the Advisory Board of Fidelity's Equity and High Income Funds. Mr. Lynch is Vice Chairman and a Director of FMR and FMR Co., Inc. In addition, Mr. Lynch serves as a Trustee of Boston College and as the Chairman of the Inner-City Scholarship Fund. Previously, Mr. Lynch served on the Special Olympics International Board of Directors (1997-2006). |
Kenneth B. Robins (42) | |
| Year of Election or Appointment: 2008 President and Treasurer of Fidelity's Equity and High Income Funds. Mr. Robins also serves as President and Treasurer (2010-present) and Assistant Treasurer (2009-present) of other Fidelity funds and is an employee of Fidelity Investments (2004-present). Previously, Mr. Robins served as Deputy Treasurer of the Fidelity funds (2005-2008) and Treasurer and Chief Financial Officer of The North Carolina Capital Management Trust: Cash and Term Portfolios (2006-2008). |
Brian B. Hogan (47) | |
| Year of Election or Appointment: 2009 Vice President of Equity and High Income Funds. Mr. Hogan also serves as President of FMR's Equity Division (2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager. |
Christopher S. Bartel (40) | |
| Year of Election or Appointment: 2009 Vice President of Fidelity's Sector and Real Estate Equity Funds. Mr. Bartel also serves as a Director, President, and Chief Executive Officer of Fidelity Management & Research (Japan) Inc. (2012-present) and Senior Vice President of Global Equity Research (2010-present). Previously, Mr. Bartel served as Senior Vice President of Equity Research (2009-2010), Managing Director of Research (2006-2009), and an analyst and portfolio manager (2000-2006). |
Scott C. Goebel (44) | |
| Year of Election or Appointment: 2008 Secretary and Chief Legal Officer (CLO) of the Fidelity funds. Mr. Goebel also serves as Secretary of Fidelity Investments Money Management, Inc. (FIMM) (2010-present) and Fidelity Research and Analysis Company (FRAC) (2010-present); Secretary and CLO of The North Carolina Capital Management Trust: Cash and Term Portfolios (2008-present); General Counsel, Secretary, and Senior Vice President of FMR (2008-present) and FMR Co., Inc. (2008-present); employed by FMR LLC or an affiliate (2001-present); Chief Legal Officer of Fidelity Management & Research (Hong Kong) Limited (2008-present) and Assistant Secretary of Fidelity Management & Research (Japan) Inc. (2008-present), and Fidelity Management & Research (U.K.) Inc. (2008-present). Previously, Mr. Goebel served as Assistant Secretary of FIMM (2008-2010), FRAC (2008-2010), and the Funds (2007-2008) and as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (2005-2007). |
William C. Coffey (43) | |
| Year of Election or Appointment: 2009 Assistant Secretary of Fidelity's Equity and High Income Funds. Mr. Coffey also serves as Senior Vice President and Deputy General Counsel of FMR LLC (2010-present), and is an employee of Fidelity Investments. Previously, Mr. Coffey served as Vice President and Associate General Counsel of FMR LLC (2005-2009). |
Holly C. Laurent (57) | |
| Year of Election or Appointment: 2008 Anti-Money Laundering (AML) Officer of the Fidelity funds. Ms. Laurent also serves as AML Officer of The North Carolina Capital Management Trust: Cash and Term Portfolios (2008-present) and is an employee of Fidelity Investments. Previously, Ms. Laurent was Senior Vice President and Head of Legal for Fidelity Business Services India Pvt. Ltd. (2006-2008), and Senior Vice President, Deputy General Counsel and Group Head for FMR LLC (2005-2006). |
Christine Reynolds (53) | |
| Year of Election or Appointment: 2008 Chief Financial Officer of the Fidelity funds. Ms. Reynolds became President of Fidelity Pricing and Cash Management Services (FPCMS) in August 2008. Ms. Reynolds served as Chief Operating Officer of FPCMS (2007-2008). Previously, Ms. Reynolds served as President, Treasurer, and Anti-Money Laundering officer of the Fidelity funds (2004-2007). |
Joseph A. Hanlon (43) | |
| Year of Election or Appointment: 2012 Chief Compliance Officer of Fidelity's Equity and High Income Funds. Mr. Hanlon serves as Senior Vice President of the Fidelity Asset Management Division (2009-present) and is an employee of Fidelity Investments. |
Joseph F. Zambello (54) | |
| Year of Election or Appointment: 2011 Deputy Treasurer of the Fidelity funds. Mr. Zambello is an employee of Fidelity Investments. Previously, Mr. Zambello served as Vice President of FMR's Program Management Group (2009-2011) and Vice President of the Transfer Agent Oversight Group (2005-2009). |
Adrien E. Deberghes (44) | |
| Year of Election or Appointment: 2008 Deputy Treasurer of Fidelity's Equity and High Income Funds. Mr. Deberghes also serves as Vice President (2011-present) and Assistant Treasurer (2010-present) of other Fidelity funds, and is an employee of Fidelity Investments (2008-present). Previously, Mr. Deberghes served as Senior Vice President of Mutual Fund Administration at State Street Corporation (2007-2008), Senior Director of Mutual Fund Administration at Investors Bank & Trust (2005-2007), and Director of Finance for Dunkin' Brands (2000-2005). |
Stephanie J. Dorsey (42) | |
| Year of Election or Appointment: 2010 Assistant Treasurer of Fidelity's Equity and High Income Funds. Ms. Dorsey also serves as Deputy Treasurer of other Fidelity funds (2008-present) and is an employee of Fidelity Investments (2008-present). Previously, Ms. Dorsey served as Treasurer (2004-2008) of the JPMorgan Mutual Funds and Vice President (2004-2008) of JPMorgan Chase Bank. |
John R. Hebble (53) | |
| Year of Election or Appointment: 2009 Assistant Treasurer of Fidelity's Equity and High Income Funds. Mr. Hebble also serves as President (2011-present), Treasurer, and Chief Financial Officer of The North Carolina Capital Management Trust: Cash and Term Portfolios (2008-present), President and Treasurer of other Fidelity funds (2008-present) and is an employee of Fidelity Investments. |
Gary W. Ryan (53) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of the Fidelity funds. Mr. Ryan is an employee of Fidelity Investments. Previously, Mr. Ryan served as Vice President of Fund Reporting in Fidelity Pricing and Cash Management Services (FPCMS) (1999-2005). |
Jonathan Davis (43) | |
| Year of Election or Appointment: 2010 Assistant Treasurer of the Fidelity funds. Mr. Davis is also Assistant Treasurer of Fidelity Rutland Square Trust II and Fidelity Commonwealth Trust II. Mr. Davis is an employee of Fidelity Investments. Previously, Mr. Davis served as Vice President and Associate General Counsel of FMR LLC (2003-2010). |
Annual Report
Distributions (Unaudited)
The Board of Trustees of each fund voted to pay to shareholders of record at the opening of business on record date the following distributions per share derived from capital gains realized from sales of portfolio securities and dividends derived from net investment income:
| Pay Date | Record Date | Dividends | Capital Gains |
Health Care Portfolio | 04/16/12 | 04/13/12 | $0.000 | $3.543 |
Biotechnology Portfolio | 04/16/12 | 04/13/12 | $0.000 | $5.350 |
Pharmaceuticals Portfolio | 04/16/12 | 04/13/12 | $0.045 | $0.035 |
Medical Equipment and Systems Portfolio | 04/16/12 | 04/13/12 | $0.000 | $0.544 |
Medical Delivery Portfolio | 04/16/12 | 04/13/12 | $0.000 | $0.000 |
The funds hereby designate as capital gain dividend the amounts noted below for the taxable year ended February 29, 2012, or, if subsequently determined to be different, the net capital gain of such year.
Health Care Portfolio | $267,906,630 |
Biotechnology Portfolio | $96,715,590 |
Pharmaceuticals Portfolio | $6,131,730 |
Medical Equipment and Systems Portfolio | $101,179,049 |
A percentage of the dividends distributed during the fiscal year for the following funds qualify for the dividends-received deduction for corporate shareholders:
| April 2011 | December 2011 |
Pharmaceuticals Portfolio | 6% | 100% |
Medical Equipment and Systems Portfolio | 0% | 100% |
A percentage of the dividends distributed during the fiscal year for the following funds may be taken into account as a dividend for purposes of the maximum rate under section 1(h) (11) of the Internal Revenue Code:
| April 2011 | December 2011 |
Pharmaceuticals Portfolio | 7% | 100% |
Medical Equipment and Systems Portfolio | 0% | 100% |
The funds will notify shareholders in January 2013 of amounts for use in preparing 2012 income tax returns.
Annual Report
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
FMR Co., Inc.
Fidelity Management & Research
(U.K.) Inc.
Fidelity Management & Research
(Hong Kong) Limited
Fidelity Management & Research
(Japan) Inc.
General Distributor
Fidelity Distributors Corporation
Boston, MA
Transfer and Service Agents
Fidelity Investments Institutional Operations Company, Inc.
Boston, MA
Fidelity Service Company, Inc.
Boston, MA
Custodian
Brown Brothers Harriman & Co.
Boston, MA
Corporate Headquarters
82 Devonshire Street
Boston, MA 02109
1-800-544-8888
The Fidelity Telephone Connection
Mutual Fund 24-Hour Service
Exchanges/Redemptions
and Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774
(8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
Fidelity Automated Service
Telephone (FAST®)
1-800-544-5555
Automated line for quickest service
SELHC-UANNPRO-0412
1.910421.102
Fidelity®
Select Portfolios®
Industrials Sector
Air Transportation Portfolio
Defense and Aerospace Portfolio
Environment and Alternative Energy Portfolio
Industrial Equipment Portfolio
Industrials Portfolio
Transportation Portfolio
Annual Report
February 29, 2012
(Fidelity Cover Art)
Contents
Shareholder Expense Example |
| |
Air Transportation Portfolio | Performance | |
| Management's Discussion | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
Defense and Aerospace Portfolio | Performance | |
| Management's Discussion | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
Environment and Alternative Energy Portfolio | Performance | |
| Management's Discussion | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
Industrial Equipment Portfolio | Performance | |
| Management's Discussion | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
Industrials Portfolio | Performance | |
| Management's Discussion | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
Transportation Portfolio | Performance | |
| Management's Discussion | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
Notes to Financial Statements |
| |
Report of Independent Registered Public Accounting Firm |
| |
Trustees and Officers |
| |
Distributions |
|
Annual Report
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com/proxyvotingresults or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov. You may also call 1-800-544-8544 to request a free copy of the proxy voting guidelines.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company.
This report and the financial statements contained herein are submitted for the general information of the shareholders of the funds. This report is not authorized for distribution to prospective investors in the funds unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com, http://www.advisor.fidelity.com, or http://www.401k.com, as applicable.
NOT FDIC INSURED • MAY LOSE VALUE • NO BANK GUARANTEE
Neither the funds nor Fidelity Distributors Corporation is a bank.
Annual Report
Select Portfolios
Shareholder Expense Example
As a shareholder of a Fund, you incur two types of costs: (1) transaction costs, including redemption fees, and (2) ongoing costs, including management fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Funds and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (September 1, 2011 to February 29, 2012).
Actual Expenses
The first line of the accompanying table for each fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, each Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each fund provides information about hypothetical account values and hypothetical expenses based on a fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, each Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Annualized | Beginning | Ending | Expenses Paid |
Air Transportation Portfolio | .96% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,164.90 | $ 5.17 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.09 | $ 4.82 |
Defense and Aerospace Portfolio | .85% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,174.60 | $ 4.60 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.64 | $ 4.27 |
Environment and Alternative Energy Portfolio | .98% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,024.50 | $ 4.93 |
HypotheticalA |
| $ 1,000.00 | $ 1,019.99 | $ 4.92 |
Industrial Equipment Portfolio | .83% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,201.90 | $ 4.54 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.74 | $ 4.17 |
Industrials Portfolio | .86% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,173.80 | $ 4.65 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.59 | $ 4.32 |
Transportation Portfolio | .89% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,122.30 | $ 4.70 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.44 | $ 4.47 |
A 5% return per year before expenses
* Expenses are equal to each Fund's annualized expense ratio, multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
Annual Report
Air Transportation Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 29, 2012 | Past 1 | Past 5 | Past 10 |
Air Transportation Portfolio | 2.01% | 1.35% | 5.72% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Air Transportation Portfolio on February 28, 2002. The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period.
Annual Report
Air Transportation Portfolio
Management's Discussion of Fund Performance
Market Recap: U.S. stocks rose for the 12 months ending February 29, 2012, as encouraging economic news sparked a strong late-period rally that lifted major equity benchmarks past a number of significant milestones. Stocks recovered from early-period uncertainty that followed the March 2011 earthquake, tsunami and nuclear meltdown in Japan, but plummeted during the summer amid Europe's debt woes and a historic U.S. credit-rating downgrade. Despite continued volatility and mixed economic news, markets began to recover in early October. Investors gravitated toward defensive sectors and the perceived safety of larger, more-established and dividend-paying names, helping the Dow Jones® Industrial Average advance 8.83%, and close above the psychologically important 13,000 mark in late February - for the first time since May 2008. The rally accelerated late in the period and the market broadened, as investor confidence improved amid encouraging manufacturing, housing and employment data, and signs of progress in Europe. For the year, the S&P 500® Index added 5.12%, closing near a four-year high on the period's second-to-last day. Of the 10 major market sectors in the S&P 500®, three defensive areas led the way - consumer staples, health care and utilities - while financials, materials and energy finished in negative territory. The technology-laden Nasdaq Composite® Index added 7.73%, flirting with the 3,000 mark, its highest level in 12 years. Foreign developed-markets stocks reeled over Europe's turmoil, and the MSCI® EAFE® (Europe, Australasia, Far East) Index fell 7.35%.
Comments from Sean Gavin, Co-Portfolio Manager of Air Transportation Portfolio: For the year, the fund returned 2.01%, handily beating the -3.07% return of the S&P® Custom Air Transportation Index but lagging the S&P 500®. Versus the air transportation index, stock selection in the aerospace and defense group provided the biggest boost. There, a number of pure-play aerospace positions benefited from robust orders for new planes from both developed and emerging nations. On the other hand, I generally underweighted companies with mixed aerospace and defense exposure, as I believed the winding down of the war in Afghanistan and uncertainty about defense spending made those stocks less attractive. Secondarily, stock picking in airlines was helpful. Within this group, I continued to pursue the strategy of underweighting the U.S. legacy carriers with higher costs and less-compelling growth prospects, and investing in higher-growth international airlines. At the stock level, not owning AMR for most of the period proved timely, as the parent company of American Airlines declared bankruptcy in November. Also providing a major performance boost was aerospace components supplier Goodrich, the fund's second-biggest contributor on a relative basis and by far its largest contributor in absolute terms. The stock surged in September after the company received a lucrative takeover bid from United Technologies, and soon thereafter I liquidated the position to lock in profits. Timely ownership of Canada's Bombardier, a manufacturer of regional jets and rail equipment, also aided our results, as did overweighting Precision Castparts, which enjoyed robust demand for its metal castings as a result of the favorable new-aircraft cycle. Lastly, the fund's relative performance was lifted by an out-of-benchmark position in Copa Holdings, a Panama-based airline with a near-monopoly on many of its routes and an active hub in Panama City. Conversely, the fund's foreign holdings detracted overall, due in part to a generally stronger U.S. dollar. Versus the air transportation index, the two largest detractors were overweighted positions in airlines: Delta Air Lines and United Continental Holdings. Although I thought these two companies had some of the best growth prospects among U.S. legacy carriers, the shares performed poorly during the period due to relatively high fuel costs and concerns about global economic growth. A non-index stake in Swiss air freight/logistics provider Panalpina Welttransport also weighed on fund performance. I sold the stock in November.
Note to shareholders: Matthew Moulis became Co-Portfolio Manager of the fund on January 12, 2012.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Air Transportation Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 29, 2012 | ||
| % of fund's | % of fund's net assets |
United Parcel Service, Inc. Class B | 14.6 | 9.8 |
Rockwell Collins, Inc. | 7.8 | 6.9 |
Textron, Inc. | 7.6 | 4.5 |
FedEx Corp. | 6.9 | 1.8 |
The Boeing Co. | 5.0 | 2.4 |
Ryanair Holdings PLC sponsored ADR | 4.9 | 4.3 |
Precision Castparts Corp. | 4.6 | 6.9 |
Southwest Airlines Co. | 4.4 | 4.0 |
Delta Air Lines, Inc. | 4.0 | 3.8 |
UTI Worldwide, Inc. | 3.8 | 3.4 |
| 63.6 | |
Top Industries (% of fund's net assets) | |||
As of February 29, 2012 | |||
 | Aerospace & Defense | 34.9% |
|
 | Air Freight & Logistics | 31.7% |
|
 | Airlines | 27.5% |
|
 | Transportation Infrastructure | 1.3% |
|
 | Road & Rail | 1.0% |
|
 | All Others* | 3.6% |
|
As of August 31, 2011 | |||
| Aerospace & Defense | 34.5% |
|
| Air Freight & Logistics | 31.0% |
|
| Airlines | 25.0% |
|
| Marine | 3.6% |
|
| Metals & Mining | 2.1% |
|
| All Others* | 3.8% |
|
* Includes short-term investments and net other assets. |
Annual Report
Air Transportation Portfolio
Investments February 29, 2012
Showing Percentage of Net Assets
Common Stocks - 97.0% | |||
Shares | Value | ||
AEROSPACE & DEFENSE - 34.9% | |||
Aerospace & Defense - 34.9% | |||
Bombardier, Inc. Class B (sub. vtg.) | 130,600 | $ 626,838 | |
Embraer SA sponsored ADR | 32,800 | 985,968 | |
Esterline Technologies Corp. (a) | 35,700 | 2,318,715 | |
Meggitt PLC | 59,845 | 367,858 | |
Precision Castparts Corp. | 19,900 | 3,331,857 | |
Rockwell Collins, Inc. | 96,000 | 5,691,840 | |
Textron, Inc. | 201,100 | 5,532,261 | |
The Boeing Co. | 48,800 | 3,657,560 | |
TransDigm Group, Inc. (a) | 4,000 | 475,160 | |
United Technologies Corp. | 28,200 | 2,365,134 | |
| 25,353,191 | ||
AIR FREIGHT & LOGISTICS - 31.7% | |||
Air Freight & Logistics - 31.7% | |||
Air Transport Services Group, Inc. (a) | 66,200 | 359,466 | |
C.H. Robinson Worldwide, Inc. | 37,500 | 2,481,375 | |
Expeditors International of Washington, Inc. | 34,700 | 1,513,961 | |
FedEx Corp. | 56,100 | 5,048,439 | |
Pacer International, Inc. (a) | 46,800 | 258,336 | |
United Parcel Service, Inc. Class B | 137,500 | 10,572,373 | |
UTI Worldwide, Inc. | 172,900 | 2,790,606 | |
| 23,024,556 | ||
AIRLINES - 27.5% | |||
Airlines - 27.5% | |||
Alaska Air Group, Inc. (a) | 27,700 | 1,899,389 | |
Allegiant Travel Co. (a) | 19,500 | 974,610 | |
Copa Holdings SA Class A | 18,900 | 1,352,673 | |
Dart Group PLC | 441,486 | 512,691 | |
Delta Air Lines, Inc. (a) | 295,102 | 2,894,951 | |
JetBlue Airways Corp. (a)(d) | 149,800 | 763,980 | |
Ryanair Holdings PLC sponsored ADR (a) | 106,500 | 3,569,880 | |
SkyWest, Inc. | 30,000 | 342,600 | |
Southwest Airlines Co. | 352,900 | 3,169,042 | |
United Continental Holdings, Inc. (a) | 128,985 | 2,663,540 | |
US Airways Group, Inc. (a)(d) | 128,000 | 948,480 | |
WestJet Airlines Ltd. | 64,000 | 900,844 | |
| 19,992,680 | ||
| |||
Shares | Value | ||
MACHINERY - 0.4% | |||
Construction & Farm Machinery & Heavy Trucks - 0.4% | |||
ASL Marine Holdings Ltd. | 562,000 | $ 256,139 | |
MEDIA - 0.2% | |||
Movies & Entertainment - 0.2% | |||
Advanced Inflight Alliance AG | 26,100 | 143,950 | |
ROAD & RAIL - 1.0% | |||
Trucking - 1.0% | |||
Tegma Gestao Logistica SA | 40,200 | 744,336 | |
TRANSPORTATION INFRASTRUCTURE - 1.3% | |||
Airport Services - 1.3% | |||
Wesco Aircraft Holdings, Inc. (a) | 65,100 | 957,621 | |
TOTAL COMMON STOCKS (Cost $57,963,157) |
| ||
Money Market Funds - 3.9% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.12% (b) | 2,352,459 | 2,352,459 | |
Fidelity Securities Lending Cash Central Fund, 0.12% (b)(c) | 457,200 | 457,200 | |
TOTAL MONEY MARKET FUNDS (Cost $2,809,659) |
| ||
TOTAL INVESTMENT PORTFOLIO - 100.9% (Cost $60,772,816) | 73,282,132 |
NET OTHER ASSETS (LIABILITIES) - (0.9)% | (629,729) | ||
NET ASSETS - 100% | $ 72,652,403 | ||
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 1,485 |
Fidelity Securities Lending Cash Central Fund | 3,209 |
Total | $ 4,694 |
Other Information |
All investments are categorized as Level 1 under the Fair Value Hierarchy. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 83.1% |
Ireland | 4.9% |
British Virgin Islands | 3.8% |
Brazil | 2.4% |
Canada | 2.1% |
Panama | 1.9% |
United Kingdom | 1.2% |
Others (Individually Less Than 1%) | 0.6% |
| 100.0% |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Air Transportation Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2012 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $434,460) - See accompanying schedule: Unaffiliated issuers (cost $57,963,157) | $ 70,472,473 |
|
Fidelity Central Funds (cost $2,809,659) | 2,809,659 |
|
Total Investments (cost $60,772,816) |
| $ 73,282,132 |
Receivable for fund shares sold | 88,659 | |
Dividends receivable | 150,386 | |
Distributions receivable from Fidelity Central Funds | 353 | |
Prepaid expenses | 68 | |
Other receivables | 200 | |
Total assets | 73,521,798 | |
|
|
|
Liabilities | ||
Payable for fund shares redeemed | $ 333,491 | |
Accrued management fee | 33,888 | |
Other affiliated payables | 15,859 | |
Other payables and accrued expenses | 28,957 | |
Collateral on securities loaned, at value | 457,200 | |
Total liabilities | 869,395 | |
|
|
|
Net Assets | $ 72,652,403 | |
Net Assets consist of: |
| |
Paid in capital | $ 60,877,030 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (733,943) | |
Net unrealized appreciation (depreciation) on investments | 12,509,316 | |
Net Assets, for 1,905,948 shares outstanding | $ 72,652,403 | |
Net Asset Value, offering price and redemption price per share ($72,652,403 ÷ 1,905,948 shares) | $ 38.12 | |
Statement of Operations
| Year ended February 29, 2012 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 783,334 |
Income from Fidelity Central Funds (including $3,209 from security lending) |
| 4,694 |
Total income |
| 788,028 |
|
|
|
Expenses | ||
Management fee | $ 409,912 | |
Transfer agent fees | 188,348 | |
Accounting and security lending fees | 29,088 | |
Custodian fees and expenses | 12,838 | |
Independent trustees' compensation | 454 | |
Registration fees | 24,320 | |
Audit | 37,937 | |
Legal | 318 | |
Miscellaneous | 935 | |
Total expenses before reductions | 704,150 | |
Expense reductions | (6,187) | 697,963 |
Net investment income (loss) | 90,065 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 5,312,541 | |
Foreign currency transactions | (34,117) | |
Total net realized gain (loss) |
| 5,278,424 |
Change in net unrealized appreciation (depreciation) on: Investment securities | (6,835,908) | |
Assets and liabilities in foreign currencies | (331) | |
Total change in net unrealized appreciation (depreciation) |
| (6,836,239) |
Net gain (loss) | (1,557,815) | |
Net increase (decrease) in net assets resulting from operations | $ (1,467,750) | |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fund Name
Financial Statements - continued
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 90,065 | $ 622,749 |
Net realized gain (loss) | 5,278,424 | 22,107,004 |
Change in net unrealized appreciation (depreciation) | (6,836,239) | 2,425,692 |
Net increase (decrease) in net assets resulting from operations | (1,467,750) | 25,155,445 |
Distributions to shareholders from net investment income | (110,454) | (504,999) |
Distributions to shareholders from net realized gain | (10,568,849) | - |
Total distributions | (10,679,303) | (504,999) |
Share transactions | 45,337,897 | 184,422,953 |
Reinvestment of distributions | 9,888,534 | 483,612 |
Cost of shares redeemed | (83,900,972) | (190,540,995) |
Net increase (decrease) in net assets resulting from share transactions | (28,674,541) | (5,634,430) |
Redemption fees | 3,029 | 29,822 |
Total increase (decrease) in net assets | (40,818,565) | 19,045,838 |
|
|
|
Net Assets | ||
Beginning of period | 113,470,968 | 94,425,130 |
End of period (including undistributed net investment income of $0 and undistributed net investment income of $103,843, respectively) | $ 72,652,403 | $ 113,470,968 |
Other Information Shares | ||
Sold | 1,190,480 | 4,744,519 |
Issued in reinvestment of distributions | 264,574 | 11,392 |
Redeemed | (2,184,942) | (4,793,224) |
Net increase (decrease) | (729,888) | (37,313) |
Financial Highlights
Years ended February 28, | 2012 I | 2011 | 2010 | 2009 | 2008 I |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 43.05 | $ 35.32 | $ 17.35 | $ 37.47 | $ 50.74 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | .05 | .17 E | (.07) | (.10) | (.04) F |
Net realized and unrealized gain (loss) | .46 G | 7.68 | 18.04 | (17.05) | (7.61) |
Total from investment operations | .51 | 7.85 | 17.97 | (17.15) | (7.65) |
Distributions from net investment income | (.05) | (.13) | - | - | - |
Distributions from net realized gain | (5.39) | - | - | (2.99) | (5.63) |
Total distributions | (5.44) | (.13) | - | (2.99) | (5.63) |
Redemption fees added to paid in capital B | - J | .01 | - J | .02 | .01 |
Net asset value, end of period | $ 38.12 | $ 43.05 | $ 35.32 | $ 17.35 | $ 37.47 |
Total Return A | 2.01% | 22.26% | 103.57% | (49.44)% | (16.72)% |
Ratios to Average Net Assets C, H |
|
|
|
|
|
Expenses before reductions | .96% | .92% | 1.05% | 1.08% | 1.01% |
Expenses net of fee waivers, if any | .96% | .92% | 1.05% | 1.08% | 1.01% |
Expenses net of all reductions | .95% | .91% | 1.01% | 1.07% | 1.01% |
Net investment income (loss) | .12% | .43% E | (.28)% | (.37)% | (.08)% F |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 72,652 | $ 113,471 | $ 94,425 | $ 34,911 | $ 46,943 |
Portfolio turnover rate D | 102% | 161% | 165% | 66% | 47% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown. B Calculated based on average shares outstanding during the period. C Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. D Amount does not include the portfolio activity of any underlying Fidelity Central Funds. E Investment income per share reflects a large, non-recurring dividend which amounted to $.12 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been ..14%. F Investment income per share reflects a large, non-recurring dividend which amounted to $.10 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been (.28)%. 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 reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. I For the year ended February 29. J Amount represents less than $.01 per share. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Defense and Aerospace Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 29, 2012 | Past 1 | Past 5 | Past 10 |
Defense and Aerospace Portfolio | 10.87% | 4.17% | 9.90% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Defense and Aerospace Portfolio on February 28, 2002. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index performed over the same period.
Annual Report
Defense and Aerospace Portfolio
Management's Discussion of Fund Performance
Market Recap: U.S. stocks rose for the 12 months ending February 29, 2012, as encouraging economic news sparked a strong late-period rally that lifted major equity benchmarks past a number of significant milestones. Stocks recovered from early-period uncertainty that followed the March 2011 earthquake, tsunami and nuclear meltdown in Japan, but plummeted during the summer amid Europe's debt woes and a historic U.S. credit-rating downgrade. Despite continued volatility and mixed economic news, markets began to recover in early October. Investors gravitated toward defensive sectors and the perceived safety of larger, more-established and dividend-paying names, helping the Dow Jones® Industrial Average advance 8.83%, and close above the psychologically important 13,000 mark in late February - for the first time since May 2008. The rally accelerated late in the period and the market broadened, as investor confidence improved amid encouraging manufacturing, housing and employment data, and signs of progress in Europe. For the year, the S&P 500® Index added 5.12%, closing near a four-year high on the period's second-to-last day. Of the 10 major market sectors in the S&P 500®, three defensive areas led the way - consumer staples, health care and utilities - while financials, materials and energy finished in negative territory. The technology-laden Nasdaq Composite® Index added 7.73%, flirting with the 3,000 mark, its highest level in 12 years. Foreign developed-markets stocks reeled over Europe's turmoil, and the MSCI® EAFE® (Europe, Australasia, Far East) Index fell 7.35%.
Comments from John Sheehy, Co-Portfolio Manager of Defense and Aerospace Portfolio: During the past year, the fund returned 10.87%, handily outperforming the 5.24% return of the MSCI® U.S. IM Aerospace & Defense 25/50 Index and also topping the broadly based S&P 500® Index. Versus the MSCI index, performance was bolstered by favorable stock picking in the fund's primary investment category of defense and aerospace. In particular, my continued heavy emphasis on commercial aerospace firms and lighter-than-benchmark weighting in defense companies was beneficial. One standout was aerospace components supplier Goodrich, the fund's top contributor in both relative and absolute terms. The stock surged in September after the company received a lucrative takeover bid from United Technologies, and I sold Goodrich soon thereafter to lock in profits. The shares of another aerospace components firm, TransDigm Group, were lifted by brisk aftermarket demand for its parts and synergies associated with a recent acquisition. Precision Castparts also bolstered our results, enjoying robust demand for its metal castings, mainly for new aircraft. Healthy aircraft orders also benefited our out-of-index position in Carpenter Technology, a maker of high-performance, nickel-based alloys. Not owning commercial satellite imagery provider and benchmark component GeoEye helped as well. Conversely, the fund's performance suffered because of its stake in DigitalGlobe, a competitor of GeoEye in the commercial satellite field. Concern about potential cuts in government spending hurt both stocks. Underweighting and ultimately selling Triumph Group, a supplier of components to the aerospace industry, worked against fund performance, as the stock posted a strong double-digit gain. I preferred other firms in this group based on product mix and relative valuation metrics. Overweighting Esterline Technologies, a producer of mission-critical, engineered products and systems for the aerospace and defense industries, also curbed our results. A delay on some international defense work caused the company to issue an outlook for fiscal 2011 and fiscal 2012 that disappointed investors. Underweighting defense contractor and large benchmark constituent Lockheed Martin also detracted.
Note to shareholders: Douglas Scott became Co-Portfolio Manager of the fund on January 12, 2012.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Defense and Aerospace Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 29, 2012 | ||
| % of fund's | % of fund's net assets |
United Technologies Corp. | 22.7 | 20.3 |
The Boeing Co. | 13.4 | 13.8 |
Precision Castparts Corp. | 6.5 | 7.4 |
Honeywell International, Inc. | 6.1 | 5.0 |
Raytheon Co. | 5.0 | 4.8 |
Rockwell Collins, Inc. | 5.0 | 4.9 |
Textron, Inc. | 4.6 | 3.7 |
TransDigm Group, Inc. | 3.9 | 3.3 |
Esterline Technologies Corp. | 3.6 | 4.4 |
HEICO Corp. | 2.2 | 1.4 |
| 73.0 | |
Top Industries (% of fund's net assets) | |||
As of February 29, 2012 | |||
| Aerospace & Defense | 89.4% |
|
| Metals & Mining | 2.4% |
|
| Trading Companies & Distributors | 2.1% |
|
| Electrical Equipment | 0.9% |
|
| Electronic Equipment & Components | 0.9% |
|
| All Others* | 4.3% |
|
As of August 31, 2011 | |||
| Aerospace & Defense | 91.3% |
|
| Metals & Mining | 2.2% |
|
| Household Durables | 1.3% |
|
| Trading Companies & Distributors | 1.1% |
|
| Electrical Equipment | 1.0% |
|
| All Others* | 3.1% |
|
* Includes short-term investments and net other assets. |
Annual Report
Defense and Aerospace Portfolio
Investments February 29, 2012
Showing Percentage of Net Assets
Common Stocks - 97.0% | |||
Shares | Value | ||
AEROSPACE & DEFENSE - 89.4% | |||
Aerospace & Defense - 89.4% | |||
Alliant Techsystems, Inc. | 162,469 | $ 9,748,140 | |
BE Aerospace, Inc. (a) | 156,269 | 7,163,371 | |
DigitalGlobe, Inc. (a) | 389,945 | 5,997,354 | |
Embraer SA sponsored ADR | 442,300 | 13,295,538 | |
Esterline Technologies Corp. (a) | 381,506 | 24,778,815 | |
General Dynamics Corp. | 64,230 | 4,703,563 | |
HEICO Corp. (d) | 277,472 | 15,172,169 | |
Honeywell International, Inc. | 703,308 | 41,896,058 | |
Lockheed Martin Corp. | 121,983 | 10,784,517 | |
Meggitt PLC | 1,146,400 | 7,046,750 | |
Moog, Inc. Class A (a) | 328,931 | 14,443,360 | |
MTU Aero Engines Holdings AG | 85,012 | 6,474,673 | |
Orbital Sciences Corp. (a) | 759,484 | 10,670,750 | |
Precision Castparts Corp. | 264,837 | 44,341,659 | |
Raytheon Co. | 670,410 | 33,869,113 | |
Rockwell Collins, Inc. | 570,605 | 33,831,170 | |
Rolls-Royce Group PLC | 565,800 | 7,326,608 | |
SIFCO Industries, Inc. | 82,763 | 1,604,775 | |
Teledyne Technologies, Inc. (a) | 207,031 | 12,339,048 | |
Textron, Inc. | 1,132,166 | 31,145,887 | |
The Boeing Co. | 1,216,217 | 91,155,464 | |
TransDigm Group, Inc. (a) | 223,933 | 26,601,001 | |
United Technologies Corp. | 1,844,578 | 154,704,756 | |
| 609,094,539 | ||
ELECTRICAL EQUIPMENT - 0.9% | |||
Electrical Components & Equipment - 0.9% | |||
AMETEK, Inc. | 129,343 | 6,156,727 | |
ELECTRONIC EQUIPMENT & COMPONENTS - 0.9% | |||
Electronic Equipment & Instruments - 0.6% | |||
FLIR Systems, Inc. | 167,000 | 4,370,390 | |
Electronic Manufacturing Services - 0.3% | |||
Mercury Computer Systems, Inc. (a) | 118,566 | 1,703,793 | |
TOTAL ELECTRONIC EQUIPMENT & COMPONENTS | 6,074,183 | ||
HOUSEHOLD DURABLES - 0.4% | |||
Household Appliances - 0.4% | |||
iRobot Corp. (a)(d) | 119,106 | 3,039,585 | |
METALS & MINING - 2.4% | |||
Diversified Metals & Mining - 0.6% | |||
RTI International Metals, Inc. (a) | 175,821 | 3,963,005 | |
| |||
Shares | Value | ||
Steel - 1.8% | |||
Allegheny Technologies, Inc. | 60,300 | $ 2,645,361 | |
Carpenter Technology Corp. | 53,600 | 2,749,680 | |
Haynes International, Inc. | 108,689 | 6,878,927 | |
| 12,273,968 | ||
TOTAL METALS & MINING | 16,236,973 | ||
TRADING COMPANIES & DISTRIBUTORS - 2.1% | |||
Trading Companies & Distributors - 2.1% | |||
AerCap Holdings NV (a) | 560,207 | 7,327,508 | |
Air Lease Corp. Class A (d) | 271,700 | 6,681,103 | |
| 14,008,611 | ||
TRANSPORTATION INFRASTRUCTURE - 0.9% | |||
Airport Services - 0.9% | |||
Wesco Aircraft Holdings, Inc. (a) | 408,816 | 6,013,683 | |
TOTAL COMMON STOCKS (Cost $572,904,470) |
| ||
Money Market Funds - 6.1% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.12% (b) | 20,938,755 | 20,938,755 | |
Fidelity Securities Lending Cash Central Fund, 0.12% (b)(c) | 20,894,186 | 20,894,186 | |
TOTAL MONEY MARKET FUNDS (Cost $41,832,941) |
| ||
TOTAL INVESTMENT PORTFOLIO - 103.1% (Cost $614,737,411) | 702,457,242 |
NET OTHER ASSETS (LIABILITIES) - (3.1)% | (21,302,894) | ||
NET ASSETS - 100% | $ 681,154,348 | ||
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 12,653 |
Fidelity Securities Lending Cash Central Fund | 51,268 |
Total | $ 63,921 |
Other Information |
All investments are categorized as Level 1 under the Fair Value Hierarchy. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Defense and Aerospace Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2012 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $20,136,430) - See accompanying schedule: Unaffiliated issuers (cost $572,904,470) | $ 660,624,301 |
|
Fidelity Central Funds (cost $41,832,941) | 41,832,941 |
|
Total Investments (cost $614,737,411) |
| $ 702,457,242 |
Receivable for fund shares sold | 552,614 | |
Dividends receivable | 1,975,749 | |
Distributions receivable from Fidelity Central Funds | 4,698 | |
Prepaid expenses | 1,263 | |
Other receivables | 3,205 | |
Total assets | 704,994,771 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 1,375,536 | |
Payable for fund shares redeemed | 1,070,665 | |
Accrued management fee | 315,906 | |
Other affiliated payables | 153,144 | |
Other payables and accrued expenses | 30,986 | |
Collateral on securities loaned, at value | 20,894,186 | |
Total liabilities | 23,840,423 | |
|
|
|
Net Assets | $ 681,154,348 | |
Net Assets consist of: |
| |
Paid in capital | $ 595,877,555 | |
Undistributed net investment income | 1,041,863 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (3,484,901) | |
Net unrealized appreciation (depreciation) on investments | 87,719,831 | |
Net Assets, for 7,918,408 shares outstanding | $ 681,154,348 | |
Net Asset Value, offering price and redemption price per share ($681,154,348 ÷ 7,918,408 shares) | $ 86.02 | |
Statement of Operations
| Year ended February 29, 2012 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 10,237,049 |
Income from Fidelity Central Funds (including $51,268 from security lending) |
| 63,921 |
Total income |
| 10,300,970 |
|
|
|
Expenses | ||
Management fee | $ 3,645,073 | |
Transfer agent fees | 1,617,476 | |
Accounting and security lending fees | 240,183 | |
Custodian fees and expenses | 14,292 | |
Independent trustees' compensation | 3,862 | |
Registration fees | 33,479 | |
Audit | 37,987 | |
Legal | 2,229 | |
Interest | 375 | |
Miscellaneous | 7,043 | |
Total expenses before reductions | 5,601,999 | |
Expense reductions | (17,052) | 5,584,947 |
Net investment income (loss) | 4,716,023 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 81,258,241 | |
Foreign currency transactions | 3,498 | |
Total net realized gain (loss) |
| 81,261,739 |
Change in net unrealized appreciation (depreciation) on: Investment securities | (23,579,228) | |
Assets and liabilities in foreign currencies | (3,824) | |
Total change in net unrealized appreciation (depreciation) |
| (23,583,052) |
Net gain (loss) | 57,678,687 | |
Net increase (decrease) in net assets resulting from operations | $ 62,394,710 | |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Defense and Aerospace Portfolio
Financial Statements - continued
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 4,716,023 | $ 3,977,281 |
Net realized gain (loss) | 81,261,739 | 64,421,344 |
Change in net unrealized appreciation (depreciation) | (23,583,052) | 79,604,577 |
Net increase (decrease) in net assets resulting from operations | 62,394,710 | 148,003,202 |
Distributions to shareholders from net investment income | (4,239,094) | (3,876,538) |
Distributions to shareholders from net realized gain | (953,357) | - |
Total distributions | (5,192,451) | (3,876,538) |
Share transactions | 165,263,521 | 145,067,549 |
Reinvestment of distributions | 5,004,209 | 3,705,662 |
Cost of shares redeemed | (224,292,010) | (224,052,034) |
Net increase (decrease) in net assets resulting from share transactions | (54,024,280) | (75,278,823) |
Redemption fees | 15,836 | 17,537 |
Total increase (decrease) in net assets | 3,193,815 | 68,865,378 |
|
|
|
Net Assets | ||
Beginning of period | 677,960,533 | 609,095,155 |
End of period (including undistributed net investment income of $1,041,863 and undistributed net investment income of $1,011,940, respectively) | $ 681,154,348 | $ 677,960,533 |
Other Information Shares | ||
Sold | 2,079,372 | 2,092,104 |
Issued in reinvestment of distributions | 64,501 | 51,626 |
Redeemed | (2,893,816) | (3,291,382) |
Net increase (decrease) | (749,943) | (1,147,652) |
Financial Highlights
Years ended February 28, | 2012 G | 2011 | 2010 | 2009 | 2008 G |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 78.21 | $ 62.05 | $ 38.96 | $ 79.93 | $ 84.46 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | .56 | .42 | .73 E | .58 | .24 |
Net realized and unrealized gain (loss) | 7.87 | 16.17 | 23.32 | (36.29) | 2.46 |
Total from investment operations | 8.43 | 16.59 | 24.05 | (35.71) | 2.70 |
Distributions from net investment income | (.51) | (.43) | (.96) | (.51) | (.14) |
Distributions from net realized gain | (.12) | - | - | (4.75) | (7.10) |
Total distributions | (.62) I | (.43) | (.96) | (5.26) | (7.24) |
Redemption fees added to paid in capital B | - H | - H | - H | - H | .01 |
Net asset value, end of period | $ 86.02 | $ 78.21 | $ 62.05 | $ 38.96 | $ 79.93 |
Total Return A | 10.87% | 26.79% | 62.05% | (47.61)% | 2.80% |
Ratios to Average Net Assets C, F |
|
|
|
|
|
Expenses before reductions | .86% | .88% | .95% | .88% | .87% |
Expenses net of fee waivers, if any | .86% | .88% | .95% | .88% | .87% |
Expenses net of all reductions | .86% | .88% | .94% | .88% | .87% |
Net investment income (loss) | .72% | .62% | 1.39% E | .91% | .27% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 681,154 | $ 677,961 | $ 609,095 | $ 436,291 | $ 1,207,867 |
Portfolio turnover rate D | 56% | 43% | 70% | 58% | 57% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown. B Calculated based on average shares outstanding during the period. C Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. D Amount does not include the portfolio activity of any underlying Fidelity Central Funds. E Investment income per share reflects a large, non-recurring dividend which amounted to $.20 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been 1.01%. F Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. G For the year ended February 29. H Amount represents less than $.01 per share. I Total distributions of $.623 per share is comprised of distributions from net investment income of $.508 and distributions from net realized gain of $.115 per share. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Environment and Alternative Energy Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 29, 2012 | Past 1 | Past 5 | Past 10 |
Environment and Alternative Energy Portfolio A | -13.92% | -0.38% | 3.84% |
A Prior to July 1, 2010, Environment and Alternative Energy Portfolio operated under certain different investment policies. The historical performance for the fund may not represent its current investment policies.
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Environment and Alternative Energy Portfolio on February 28, 2002. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index performed over the same period.
Annual Report
Environment and Alternative Energy Portfolio
Management's Discussion of Fund Performance
Market Recap: U.S. stocks rose for the 12 months ending February 29, 2012, as encouraging economic news sparked a strong late-period rally that lifted major equity benchmarks past a number of significant milestones. Stocks recovered from early-period uncertainty that followed the March 2011 earthquake, tsunami and nuclear meltdown in Japan, but plummeted during the summer amid Europe's debt woes and a historic U.S. credit-rating downgrade. Despite continued volatility and mixed economic news, markets began to recover in early October. Investors gravitated toward defensive sectors and the perceived safety of larger, more-established and dividend-paying names, helping the Dow Jones® Industrial Average advance 8.83%, and close above the psychologically important 13,000 mark in late February - for the first time since May 2008. The rally accelerated late in the period and the market broadened, as investor confidence improved amid encouraging manufacturing, housing and employment data, and signs of progress in Europe. For the year, the S&P 500® Index added 5.12%, closing near a four-year high on the period's second-to-last day. Of the 10 major market sectors in the S&P 500®, three defensive areas led the way - consumer staples, health care and utilities - while financials, materials and energy finished in negative territory. The technology-laden Nasdaq Composite® Index added 7.73%, flirting with the 3,000 mark, its highest level in 12 years. Foreign developed-markets stocks reeled over Europe's turmoil, and the MSCI® EAFE® (Europe, Australasia, Far East) Index fell 7.35%.
Comments from Anna Davydova, Portfolio Manager of Environment and Alternative Energy Portfolio: For the year, the fund returned -13.92%, significantly underperforming the -5.77% return of its industry benchmark, the FTSE® Environmental Opportunities & Alternative Energy Index, and the S&P 500®. Relative to the FTSE index, unfavorable security selection in oil/gas refining/marketing - which included investments in renewable fuels - hurt the most. Individual detractors included biochemical and biofuel company Amyris, specialty glass manufacturer Corning, Italian power producer Enel, heating, ventilation and air conditioning (HVAC) equipment provider Ingersoll-Rand, and French heavy equipment company Alstom. I sold Alstom by period end. Overall, the fund benefited from a slight underweighting in Europe during the period, but certain of the European stocks I did own hurt us. Conversely, we were helped by an underweighting in the hard hit semiconductor equipment segment and an overweighting in the environmental and facilities services group, which outperformed. In terms of individual stocks, the biggest boost came from not owning solar panel manufacturer and index component First Solar. The fund also benefited from timely ownership of industrial machinery manufacturer Parker Hannifin and an investment in specialty chemicals company Ashland. Some of the stocks I've mentioned in this report were not part of the FTSE benchmark.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Environment and Alternative Energy Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 29, 2012 | ||
| % of fund's | % of fund's net assets |
Emerson Electric Co. | 8.9 | 4.3 |
Danaher Corp. | 8.7 | 8.0 |
Republic Services, Inc. | 7.7 | 9.5 |
Stericycle, Inc. | 6.0 | 6.4 |
Enel SpA | 5.5 | 7.0 |
Ashland, Inc. | 5.4 | 4.3 |
Air Products & Chemicals, Inc. | 5.1 | 6.2 |
Eaton Corp. | 4.9 | 0.0 |
Parker Hannifin Corp. | 4.8 | 4.5 |
Ecolab, Inc. | 4.6 | 0.0 |
| 61.6 | |
Top Industries (% of fund's net assets) | |||
As of February 29, 2012 | |||
| Energy Efficiency | 26.7% |
|
 | Waste Management & Technologies | 19.8% |
|
 | Renewable & Alternative Energy | 17.2% |
|
| Water Infrastructure & Technologies | 16.2% |
|
 | Environmental Support Services | 15.5% |
|
| All Others* | 4.6% |
|
As of August 31, 2011 | |||
| Environmental Support Services | 23.4% |
|
| Energy Efficiency | 22.2% |
|
| Waste Management & Technologies | 19.4% |
|
| Water Infrastructure & Technologies | 17.4% |
|
| Renewable & Alternative Energy | 14.9% |
|
| All Others* | 2.7% |
|
* Includes short-term investments and net other assets |
Annual Report
Environment and Alternative Energy Portfolio
Investments February 29, 2012
Showing Percentage of Net Assets
Common Stocks - 99.7% | |||
Shares | Value | ||
Energy Efficiency - 26.4% | |||
Buildings Energy Efficiency - 6.0% | |||
Cree, Inc. (a)(d) | 47,900 | $ 1,450,891 | |
Hubbell, Inc. Class B | 30,800 | 2,316,776 | |
Lennox International, Inc. | 20,000 | 782,600 | |
Lighting Science Group Corp. (a) | 82,300 | 96,291 | |
TOTAL BUILDINGS ENERGY EFFICIENCY | 4,646,558 | ||
Diversified Energy Efficiency - 2.4% | |||
Corning, Inc. | 118,500 | 1,545,240 | |
Exide Technologies (a) | 107,700 | 319,869 | |
TOTAL DIVERSIFIED ENERGY EFFICIENCY | 1,865,109 | ||
Industrial Energy Efficiency - 7.5% | |||
Eaton Corp. | 73,500 | 3,835,965 | |
Fairchild Semiconductor International, Inc. (a) | 116,700 | 1,702,653 | |
Ingersoll-Rand PLC | 8,500 | 338,980 | |
TOTAL INDUSTRIAL ENERGY EFFICIENCY | 5,877,598 | ||
Power Network Efficiency - 10.5% | |||
Emerson Electric Co. | 137,800 | 6,932,718 | |
Sensata Technologies Holding BV (a) | 37,800 | 1,224,720 | |
TOTAL POWER NETWORK EFFICIENCY | 8,157,438 | ||
TOTAL ENERGY EFFICIENCY | 20,546,703 | ||
Environmental Support Services - 15.5% | |||
Environmental Consultancies - 15.5% | |||
Air Products & Chemicals, Inc. | 44,100 | 3,979,584 | |
Jacobs Engineering Group, Inc. (a) | 67,000 | 3,096,740 | |
Parker Hannifin Corp. | 41,300 | 3,709,153 | |
Praxair, Inc. | 11,600 | 1,264,400 | |
TOTAL ENVIRONMENTAL CONSULTANCIES | 12,049,877 | ||
Pollution Control - 4.6% | |||
Pollution Control Solutions - 4.6% | |||
Ecolab, Inc. | 60,100 | 3,606,000 | |
Renewable & Alternative Energy - 17.2% | |||
Biofuels - 3.5% | |||
Amyris, Inc. (a)(d) | 97,800 | 526,164 | |
Novozymes A/S Series B | 51,500 | 1,531,832 | |
Solazyme, Inc. (d) | 50,200 | 691,756 | |
TOTAL BIOFUELS | 2,749,752 | ||
| |||
Shares | Value | ||
Renewable Energy Developers and Independent Power Producers (IPPs) - 13.1% | |||
Empresa Nacional de Electricidad SA sponsored ADR (d) | 34,100 | $ 1,801,844 | |
Enel SpA | 1,073,385 | 4,307,050 | |
Iberdrola SA | 149,500 | 884,686 | |
Ormat Technologies, Inc. (d) | 52,600 | 1,064,624 | |
Tractebel Energia SA | 121,100 | 2,142,140 | |
TOTAL RENEWABLE ENERGY DEVELOPERS AND INDEPENDENT POWER PRODUCERS (IPPs) | 10,200,344 | ||
Solar Energy Generation Equipment - 0.6% | |||
GT Advanced Technologies, Inc. (a)(d) | 53,600 | 458,816 | |
TOTAL RENEWABLE & ALTERNATIVE ENERGY | 13,408,912 | ||
Waste Management & Technologies - 19.8% | |||
Hazardous Waste Management - 9.2% | |||
Progressive Waste Solution Ltd. | 56,100 | 1,155,275 | |
Republic Services, Inc. | 202,300 | 6,034,609 | |
TOTAL HAZARDOUS WASTE MANAGEMENT | 7,189,884 | ||
Recycling and Value Added Waste Processing - 8.3% | |||
Darling International, Inc. (a) | 54,700 | 874,653 | |
EnergySolutions, Inc. (a) | 214,000 | 900,940 | |
Stericycle, Inc. (a) | 53,600 | 4,650,872 | |
TOTAL RECYCLING AND VALUE ADDED WASTE PROCESSING | 6,426,465 | ||
Waste Technology Equipment - 2.3% | |||
Commercial Metals Co. | 65,200 | 866,508 | |
Schnitzer Steel Inds, Inc. Class A | 21,000 | 948,360 | |
TOTAL WASTE TECHNOLOGY EQUIPMENT | 1,814,868 | ||
TOTAL WASTE MANAGEMENT & TECHNOLOGIES | 15,431,217 | ||
Water Infrastructure & Technologies - 16.2% | |||
Water Infrastructure - 7.5% | |||
Aegion Corp. (a) | 49,400 | 869,934 | |
Ashland, Inc. | 65,800 | 4,182,248 | |
Calgon Carbon Corp. (a) | 52,700 | 796,297 | |
TOTAL WATER INFRASTRUCTURE | 5,848,479 | ||
Water Utilities - 8.7% | |||
Danaher Corp. | 128,400 | 6,783,372 | |
TOTAL WATER INFRASTRUCTURE & TECHNOLOGIES | 12,631,851 | ||
TOTAL COMMON STOCKS (Cost $74,973,423) |
| ||
Convertible Bonds - 0.3% | |||
Principal Amount | Value | ||
Energy Efficiency - 0.3% | |||
Buildings Energy Efficiency - 0.3% | |||
Aspen Aerogels, Inc. 8% 6/1/14 (e) | $ 275,800 | $ 275,800 | |
Cash Equivalents - 6.4% | |||
Shares |
| ||
Fidelity Cash Central Fund, 0.12% (b) | 290,668 | 290,668 | |
Fidelity Securities Lending Cash Central Fund, 0.12% (b)(c) | 4,727,925 | 4,727,925 | |
TOTAL CASH EQUIVALENTS (Cost $5,018,593) |
| ||
TOTAL INVESTMENT PORTFOLIO - 106.4% (Cost $80,267,816) | 82,968,953 |
NET OTHER ASSETS (LIABILITIES) - (6.4)% | (5,025,457) | ||
NET ASSETS - 100% | $ 77,943,496 | ||
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
(e) Restricted securities - Investment in securities not registered under the Securities Act of 1933 (excluding 144A issues). At the end of the period, the value of restricted securities (excluding 144A issues) amounted to $275,800 or 0.3% of net assets. |
Additional information on each restricted holding is as follows: |
Security | Acquisition Date | Acquisition Cost |
Aspen Aerogels, Inc. 8% 6/1/14 | 6/1/11 | $ 275,800 |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 1,134 |
Fidelity Securities Lending Cash Central Fund | 140,750 |
Total | $ 141,884 |
Other Information |
The following is a summary of the inputs used, as of February 29, 2012, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the tables below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities: | ||||
Common Stocks | $ 77,674,560 | $ 77,674,560 | $ - | $ - |
Convertible Bonds | 275,800 | - | - | 275,800 |
Money Market Funds | 5,018,593 | 5,018,593 | - | - |
Total Investments in Securities: | $ 82,968,953 | $ 82,693,153 | $ - | $ 275,800 |
The following is a reconciliation of Investments in Securities for which Level 3 inputs were used in determining value: |
Investments in Securities: | |
Beginning Balance | $ - |
Total Realized Gain (Loss) | - |
Total Unrealized Gain (Loss) | - |
Cost of Purchases | 275,800 |
Proceeds of Sales | - |
Amortization/Accretion | - |
Transfers in to Level 3 | - |
Transfers out of Level 3 | - |
Ending Balance | $ 275,800 |
The change in unrealized gain (loss) for the period attributable to Level 3 securities held at February 29, 2012 | $ - |
The information used in the above reconciliation represents fiscal year to date activity for any Investments in Securities identified as using Level 3 inputs at either the beginning or the end of the current fiscal period. Transfers in or out of Level 3 represent the beginning value of any Security or Instrument where a change in the pricing level occurred from the beginning to the end of the period. The cost of purchases and the proceeds of sales may include securities received or delivered through corporate actions or exchanges. Realized and unrealized gains (losses) disclosed in the reconciliation are included in Net Gain (Loss) on the Fund's Statement of Operations. |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 82.9% |
Italy | 5.5% |
Brazil | 2.8% |
Chile | 2.3% |
Denmark | 1.9% |
Netherlands | 1.6% |
Canada | 1.5% |
Spain | 1.1% |
Others (Individually Less Than 1%) | 0.4% |
| 100.0% |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Environment and Alternative Energy Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2012 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $4,530,093) - See accompanying schedule: Unaffiliated issuers (cost $75,249,223) | $ 77,950,360 |
|
Fidelity Central Funds (cost $5,018,593) | 5,018,593 |
|
Total Investments (cost $80,267,816) |
| $ 82,968,953 |
Receivable for investments sold | 160,349 | |
Receivable for fund shares sold | 131,771 | |
Dividends receivable | 93,833 | |
Interest receivable | 16,487 | |
Distributions receivable from Fidelity Central Funds | 3,912 | |
Prepaid expenses | 213 | |
Other receivables | 312 | |
Total assets | 83,375,830 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 359,082 | |
Payable for fund shares redeemed | 258,087 | |
Accrued management fee | 36,703 | |
Other affiliated payables | 21,336 | |
Other payables and accrued expenses | 29,201 | |
Collateral on securities loaned, at value | 4,727,925 | |
Total liabilities | 5,432,334 | |
|
|
|
Net Assets | $ 77,943,496 | |
Net Assets consist of: |
| |
Paid in capital | $ 86,832,644 | |
Undistributed net investment income | 2,013 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (11,592,247) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 2,701,086 | |
Net Assets, for 4,776,620 shares outstanding | $ 77,943,496 | |
Net Asset Value, offering price and redemption price per share ($77,943,496 ÷ 4,776,620 shares) | $ 16.32 | |
Statement of Operations
| Year ended February 29, 2012 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 1,720,316 |
Interest |
| 16,487 |
Income from Fidelity Central Funds (including $140,750 from security lending) |
| 141,884 |
Total income |
| 1,878,687 |
|
|
|
Expenses | ||
Management fee | $ 487,250 | |
Transfer agent fees | 265,223 | |
Accounting and security lending fees | 35,055 | |
Custodian fees and expenses | 12,506 | |
Independent trustees' compensation | 507 | |
Registration fees | 27,584 | |
Audit | 50,580 | |
Legal | 406 | |
Miscellaneous | 732 | |
Total expenses before reductions | 879,843 | |
Expense reductions | (6,355) | 873,488 |
Net investment income (loss) | 1,005,199 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | (5,039,624) | |
Foreign currency transactions | (101,533) | |
Total net realized gain (loss) |
| (5,141,157) |
Change in net unrealized appreciation (depreciation) on: Investment securities | (10,791,530) | |
Assets and liabilities in foreign currencies | (54) | |
Total change in net unrealized appreciation (depreciation) |
| (10,791,584) |
Net gain (loss) | (15,932,741) | |
Net increase (decrease) in net assets resulting from operations | $ (14,927,542) | |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Environment and Alternative Energy Portfolio
Financial Statements - continued
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 1,005,199 | $ 359,183 |
Net realized gain (loss) | (5,141,157) | 6,096,679 |
Change in net unrealized appreciation (depreciation) | (10,791,584) | 10,282,686 |
Net increase (decrease) in net assets resulting from operations | (14,927,542) | 16,738,548 |
Distributions to shareholders from net investment income | (910,843) | (275,920) |
Share transactions | 43,448,137 | 51,313,257 |
Reinvestment of distributions | 874,813 | 265,713 |
Cost of shares redeemed | (47,411,226) | (18,368,973) |
Net increase (decrease) in net assets resulting from share transactions | (3,088,276) | 33,209,997 |
Redemption fees | 5,933 | 5,605 |
Total increase (decrease) in net assets | (18,920,728) | 49,678,230 |
|
|
|
Net Assets | ||
Beginning of period | 96,864,224 | 47,185,994 |
End of period (including undistributed net investment income of $2,013 and undistributed net investment income of $9,189, respectively) | $ 77,943,496 | $ 96,864,224 |
Other Information Shares | ||
Sold | 2,426,768 | 2,989,485 |
Issued in reinvestment of distributions | 56,886 | 15,227 |
Redeemed | (2,755,970) | (1,114,764) |
Net increase (decrease) | (272,316) | 1,889,948 |
Financial Highlights
Years ended February 28, | 2012 F | 2011 | 2010 | 2009 | 2008 F |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 19.19 | $ 14.94 | $ 10.94 | $ 17.71 | $ 17.21 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | .20 | .10 | .11 | .06 | .04 |
Net realized and unrealized gain (loss) | (2.88) | 4.22 | 4.03 | (6.76) | .53 |
Total from investment operations | (2.68) | 4.32 | 4.14 | (6.70) | .57 |
Distributions from net investment income | (.19) | (.07) | (.14) | (.07) | (.07) |
Redemption fees added to paid in capital B, G | - | - | - | - | - |
Net asset value, end of period | $ 16.32 | $ 19.19 | $ 14.94 | $ 10.94 | $ 17.71 |
Total Return A | (13.92)% | 28.96% | 37.77% | (37.88)% | 3.27% |
Ratios to Average Net Assets C, E |
|
|
|
|
|
Expenses before reductions | 1.01% | 1.08% | 1.08% | 1.06% | 1.08% |
Expenses net of fee waivers, if any | 1.01% | 1.08% | 1.08% | 1.06% | 1.08% |
Expenses net of all reductions | 1.00% | 1.07% | 1.08% | 1.06% | 1.07% |
Net investment income (loss) | 1.15% | .59% | .82% | .37% | .22% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 77,943 | $ 96,864 | $ 47,186 | $ 39,004 | $ 38,510 |
Portfolio turnover rate D | 183% | 190% | 132% | 107% | 76% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown. B Calculated based on average shares outstanding during the period. C Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. D Amount does not include the portfolio activity of any underlying Fidelity Central Funds. E Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. F For the year ended February 29. G Amount represents less than $.01 per share. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Industrial Equipment Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 29, 2012 | Past 1 | Past 5 | Past 10 |
Industrial Equipment Portfolio | 1.66% | 5.37% | 7.42% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Industrial Equipment Portfolio on February 28, 2002. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index performed over the same period.
Annual Report
Industrial Equipment Portfolio
Management's Discussion of Fund Performance
Market Recap: U.S. stocks rose for the 12 months ending February 29, 2012, as encouraging economic news sparked a strong late-period rally that lifted major equity benchmarks past a number of significant milestones. Stocks recovered from early-period uncertainty that followed the March 2011 earthquake, tsunami and nuclear meltdown in Japan, but plummeted during the summer amid Europe's debt woes and a historic U.S. credit-rating downgrade. Despite continued volatility and mixed economic news, markets began to recover in early October. Investors gravitated toward defensive sectors and the perceived safety of larger, more-established and dividend-paying names, helping the Dow Jones® Industrial Average advance 8.83%, and close above the psychologically important 13,000 mark in late February - for the first time since May 2008. The rally accelerated late in the period and the market broadened, as investor confidence improved amid encouraging manufacturing, housing and employment data, and signs of progress in Europe. For the year, the S&P 500® Index added 5.12%, closing near a four-year high on the period's second-to-last day. Of the 10 major market sectors in the S&P 500®, three defensive areas led the way - consumer staples, health care and utilities - while financials, materials and energy finished in negative territory. The technology-laden Nasdaq Composite® Index added 7.73%, flirting with the 3,000 mark, its highest level in 12 years. Foreign developed-markets stocks reeled over Europe's turmoil, and the MSCI® EAFE® (Europe, Australasia, Far East) Index fell 7.35%.
Comments from Steven Bullock, Portfolio Manager of Industrial Equipment Portfolio: For the year, the fund returned 1.66%, consistent with the 1.70% result of its industry benchmark, the MSCI® U.S. IM Capital Goods 25/50 Index, but below the S&P 500®. Relative to the MSCI index, an underweighting in the construction and farm machinery/heavy trucks group earlier in the period contributed, as the group suffered during the market decline. As valuations here became more attractive, I purchased several stocks in machinery, a group boosted by more-encouraging U.S. economic data in the second half of the period, which also lifted performance. Stock picks and an underweighting in aerospace and defense helped, as federal budget constraints continued to weigh on the growth outlook for this industry. Conversely, the fund was hurt by an overweighting in construction/engineering, security selection in industrial machinery and poor positioning in trading companies/distributors. The fund's foreign holdings also detracted overall, hampered in part by currency fluctuations. Looking at individual stocks, Caterpillar, a leading maker of large equipment, contributed the most to relative performance. When Caterpillar's stock seemed expensive to me in late April, I sold it. As the debt crisis in Europe worsened and economic indicators slowed, shares in Caterpillar significantly declined, at which point I repurchased them because they again were trading below what I deemed to be fair value. Caterpillar's mining and construction businesses performed better than expected in the second half of the year, resulting in the stock's strong rebound. Cummins, one of the largest diesel engine manufacturers in the world, performed well, as the U.S. truck market continued to recover, the firm's businesses gained market share and management did a fantastic job increasing profitability. Commercial Vehicle Group, a manufacturer of seats for the truck and construction industries, was additive. On the other hand, Ingersoll-Rand, a provider of climate control and security solutions, lagged the MSCI index due to greater-than-expected weakness in its heating, ventilation and air conditioning (HVAC) business and some operational missteps. Key Technology, which makes automation equipment for the food processing industry, underperformed due to lower orders and some executional problems. Key Technology was not in the index. Lastly, not owning index component Fastenal, an industrial distribution company, hurt, as the company executed better than investor expectations, and the stock rose.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Industrial Equipment Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 29, 2012 | ||
| % of fund's | % of fund's net assets |
General Electric Co. | 13.0 | 15.0 |
United Technologies Corp. | 7.1 | 7.2 |
Caterpillar, Inc. | 6.9 | 0.0 |
Cummins, Inc. | 5.0 | 4.3 |
Honeywell International, Inc. | 4.9 | 0.0 |
Ingersoll-Rand PLC | 4.7 | 5.4 |
Emerson Electric Co. | 4.3 | 6.1 |
Regal-Beloit Corp. | 4.0 | 4.0 |
Quanex Building Products Corp. | 3.4 | 4.3 |
Danaher Corp. | 2.8 | 3.3 |
| 56.1 | |
Top Industries (% of fund's net assets) | |||
As of February 29, 2012 | |||
| Machinery | 29.5% |
|
| Aerospace & Defense | 18.5% |
|
| Industrial Conglomerates | 16.0% |
|
| Electrical Equipment | 12.7% |
|
| Building Products | 7.2% |
|
| All Others* | 16.1% |
|
As of August 31, 2011 | |||
| Machinery | 21.9% |
|
| Aerospace & Defense | 18.5% |
|
| Industrial Conglomerates | 18.3% |
|
| Electrical Equipment | 12.6% |
|
| Building Products | 10.3% |
|
| All Others* | 18.4% |
|
* Includes short-term investments and net other assets. |
Annual Report
Industrial Equipment Portfolio
Investments February 29, 2012
Showing Percentage of Net Assets
Common Stocks - 97.8% | |||
Shares | Value | ||
AEROSPACE & DEFENSE - 18.5% | |||
Aerospace & Defense - 18.5% | |||
Esterline Technologies Corp. (a) | 48,800 | $ 3,169,560 | |
GeoEye, Inc. (a) | 47,900 | 970,933 | |
Honeywell International, Inc. | 292,300 | 17,412,311 | |
Precision Castparts Corp. | 43,900 | 7,350,177 | |
Rockwell Collins, Inc. | 86,600 | 5,134,514 | |
Textron, Inc. | 123,800 | 3,405,738 | |
TransDigm Group, Inc. (a) | 20,200 | 2,399,558 | |
United Technologies Corp. | 299,900 | 25,152,613 | |
| 64,995,404 | ||
AUTO COMPONENTS - 1.5% | |||
Auto Parts & Equipment - 1.5% | |||
Autoliv, Inc. (d) | 25,400 | 1,691,640 | |
Stoneridge, Inc. (a) | 177,800 | 1,719,326 | |
TRW Automotive Holdings Corp. (a) | 36,600 | 1,674,084 | |
| 5,085,050 | ||
BUILDING PRODUCTS - 7.2% | |||
Building Products - 7.2% | |||
A.O. Smith Corp. | 44,850 | 2,025,426 | |
American Woodmark Corp. | 53,398 | 758,786 | |
Armstrong World Industries, Inc. (a) | 48,900 | 2,504,658 | |
Gibraltar Industries, Inc. (a) | 178,588 | 2,468,086 | |
Masco Corp. | 273,133 | 3,244,820 | |
Owens Corning (a) | 75,100 | 2,376,915 | |
Quanex Building Products Corp. | 696,178 | 11,841,988 | |
| 25,220,679 | ||
COMMERCIAL SERVICES & SUPPLIES - 0.8% | |||
Environmental & Facility Services - 0.8% | |||
Republic Services, Inc. | 89,700 | 2,675,751 | |
COMPUTERS & PERIPHERALS - 0.3% | |||
Computer Hardware - 0.3% | |||
NCR Corp. (a) | 54,500 | 1,183,740 | |
CONSTRUCTION & ENGINEERING - 6.0% | |||
Construction & Engineering - 6.0% | |||
EMCOR Group, Inc. | 103,200 | 2,868,960 | |
Fluor Corp. | 92,700 | 5,606,496 | |
Foster Wheeler AG (a) | 65,400 | 1,610,802 | |
Jacobs Engineering Group, Inc. (a) | 93,200 | 4,307,704 | |
KBR, Inc. | 112,000 | 4,067,840 | |
Larsen & Toubro Ltd. | 99,087 | 2,639,193 | |
| 21,100,995 | ||
CONSTRUCTION MATERIALS - 0.2% | |||
Construction Materials - 0.2% | |||
Eagle Materials, Inc. | 20,800 | 652,704 | |
ELECTRICAL EQUIPMENT - 12.7% | |||
Electrical Components & Equipment - 12.7% | |||
Acuity Brands, Inc. | 24,000 | 1,492,560 | |
| |||
Shares | Value | ||
Emerson Electric Co. | 301,400 | $ 15,163,434 | |
General Cable Corp. (a) | 64,000 | 1,982,080 | |
GrafTech International Ltd. (a) | 263,200 | 3,345,272 | |
Regal-Beloit Corp. | 209,032 | 14,109,660 | |
Rockwell Automation, Inc. | 63,400 | 5,070,732 | |
Roper Industries, Inc. | 36,900 | 3,377,088 | |
| 44,540,826 | ||
ELECTRONIC EQUIPMENT & COMPONENTS - 0.3% | |||
Electronic Equipment & Instruments - 0.3% | |||
FLIR Systems, Inc. | 41,200 | 1,078,204 | |
ENERGY EQUIPMENT & SERVICES - 0.2% | |||
Oil & Gas Equipment & Services - 0.2% | |||
McDermott International, Inc. (a) | 61,200 | 799,272 | |
HOUSEHOLD DURABLES - 0.2% | |||
Consumer Electronics - 0.2% | |||
Cobra Electronics Corp. (a) | 195,725 | 861,190 | |
INDUSTRIAL CONGLOMERATES - 16.0% | |||
Industrial Conglomerates - 16.0% | |||
Danaher Corp. | 189,100 | 9,990,153 | |
Enka Insaat ve Sanayi A/S | 182,000 | 519,093 | |
General Electric Co. | 2,406,755 | 45,848,682 | |
| 56,357,928 | ||
MACHINERY - 29.5% | |||
Construction & Farm Machinery & Heavy Trucks - 18.0% | |||
Ashok Leyland Ltd. | 4,095,513 | 2,360,070 | |
Caterpillar, Inc. | 212,700 | 24,292,467 | |
Commercial Vehicle Group, Inc. (a) | 134,542 | 1,626,613 | |
Cummins, Inc. | 145,500 | 17,542,935 | |
Joy Global, Inc. | 69,300 | 6,026,328 | |
Manitowoc Co., Inc. (d) | 213,600 | 3,362,064 | |
PACCAR, Inc. | 117,900 | 5,424,579 | |
WABCO Holdings, Inc. (a) | 41,300 | 2,456,937 | |
Westport Innovations, Inc. (a)(d) | 3,900 | 157,833 | |
| 63,249,826 | ||
Industrial Machinery - 11.5% | |||
Blount International, Inc. (a) | 70,000 | 1,200,500 | |
Flowserve Corp. | 52,500 | 6,224,925 | |
Gencor Industries, Inc. (a) | 49,400 | 337,402 | |
Graco, Inc. | 60,900 | 3,116,862 | |
Ingersoll-Rand PLC | 416,500 | 16,610,020 | |
Key Technology, Inc. (a)(e) | 285,660 | 3,964,961 | |
Nordson Corp. | 35,900 | 1,973,423 | |
Parker Hannifin Corp. | 58,400 | 5,244,904 | |
Weg SA | 151,100 | 1,680,404 | |
| 40,353,401 | ||
TOTAL MACHINERY | 103,603,227 | ||
Common Stocks - continued | |||
Shares | Value | ||
PROFESSIONAL SERVICES - 1.5% | |||
Human Resource & Employment Services - 1.5% | |||
Manpower, Inc. | 19,100 | $ 822,637 | |
Towers Watson & Co. | 69,400 | 4,437,436 | |
| 5,260,073 | ||
ROAD & RAIL - 0.1% | |||
Trucking - 0.1% | |||
Tegma Gestao Logistica SA | 24,100 | 446,231 | |
SOFTWARE - 0.1% | |||
Application Software - 0.1% | |||
Solera Holdings, Inc. | 10,300 | 494,400 | |
TRADING COMPANIES & DISTRIBUTORS - 1.7% | |||
Trading Companies & Distributors - 1.7% | |||
Houston Wire & Cable Co. | 15,900 | 225,780 | |
Interline Brands, Inc. (a) | 99,800 | 2,051,888 | |
WESCO International, Inc. (a) | 59,800 | 3,760,822 | |
| 6,038,490 | ||
TRANSPORTATION INFRASTRUCTURE - 1.0% | |||
Highways & Railtracks - 1.0% | |||
Companhia de Concessoes Rodoviarias | 443,400 | 3,542,140 | |
TOTAL COMMON STOCKS (Cost $293,183,209) |
| ||
Money Market Funds - 4.2% | |||
Shares | Value | ||
Fidelity Cash Central Fund, 0.12% (b) | 10,680,936 | $ 10,680,936 | |
Fidelity Securities Lending Cash Central Fund, 0.12% (b)(c) | 4,023,100 | 4,023,100 | |
TOTAL MONEY MARKET FUNDS (Cost $14,704,036) |
| ||
TOTAL INVESTMENT PORTFOLIO - 102.0% (Cost $307,887,245) | 358,640,340 |
NET OTHER ASSETS (LIABILITIES) - (2.0)% | (6,966,325) | ||
NET ASSETS - 100% | $ 351,674,015 | ||
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
(e) Affiliated company |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 7,005 |
Fidelity Securities Lending Cash Central Fund | 8,754 |
Total | $ 15,759 |
Other Affiliated Issuers |
An affiliated company is a company in which the Fund has ownership of at least 5% of the voting securities. Fiscal year to date transactions with companies which are or were affiliates are as follows: |
Affiliate | Value, beginning of period | Purchases | Sales Proceeds | Dividend Income | Value, |
Key Technology, Inc. | $ 1,729,346 | $ 3,399,807 | $ 2,510 | $ - | $ 3,964,961 |
Total | $ 1,729,346 | $ 3,399,807 | $ 2,510 | $ - | $ 3,964,961 |
Other Information |
All investments are categorized as Level 1 under the Fair Value Hierarchy. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Industrial Equipment Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2012 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $3,823,815) - See accompanying schedule: Unaffiliated issuers (cost $288,316,862) | $ 339,971,343 |
|
Fidelity Central Funds (cost $14,704,036) | 14,704,036 |
|
Other affiliated issuers (cost $4,866,347) | 3,964,961 |
|
Total Investments (cost $307,887,245) |
| $ 358,640,340 |
Receivable for fund shares sold | 727,281 | |
Dividends receivable | 1,011,702 | |
Distributions receivable from Fidelity Central Funds | 1,598 | |
Prepaid expenses | 691 | |
Other receivables | 518 | |
Total assets | 360,382,130 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 4,038,740 | |
Payable for fund shares redeemed | 351,532 | |
Accrued management fee | 160,944 | |
Other affiliated payables | 64,420 | |
Other payables and accrued expenses | 69,379 | |
Collateral on securities loaned, at value | 4,023,100 | |
Total liabilities | 8,708,115 | |
|
|
|
Net Assets | $ 351,674,015 | |
Net Assets consist of: |
| |
Paid in capital | $ 306,527,011 | |
Undistributed net investment income | 613,405 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (6,190,287) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 50,723,886 | |
Net Assets, for 9,669,661 shares outstanding | $ 351,674,015 | |
Net Asset Value, offering price and redemption price per share ($351,674,015 ÷ 9,669,661 shares) | $ 36.37 | |
Statement of Operations
| Year ended February 29, 2012 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 5,321,839 |
Income from Fidelity Central Funds (including $8,754 from security lending) |
| 15,759 |
Total income |
| 5,337,598 |
|
|
|
Expenses | ||
Management fee | $ 1,763,474 | |
Transfer agent fees | 665,187 | |
Accounting and security lending fees | 123,653 | |
Custodian fees and expenses | 26,084 | |
Independent trustees' compensation | 1,840 | |
Registration fees | 34,483 | |
Audit | 46,642 | |
Legal | 1,103 | |
Interest | 299 | |
Miscellaneous | 2,395 | |
Total expenses before reductions | 2,665,160 | |
Expense reductions | (10,774) | 2,654,386 |
Net investment income (loss) | 2,683,212 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers (net of foreign taxes of $2,281) | 6,374,432 | |
Other affiliated issuers | (1,383) |
|
Foreign currency transactions | (34,127) | |
Total net realized gain (loss) |
| 6,338,922 |
Change in net unrealized appreciation (depreciation) on: Investment securities (net of increase in deferred foreign taxes of $31,751) | (7,810,488) | |
Assets and liabilities in foreign currencies | 4,793 | |
Total change in net unrealized appreciation (depreciation) |
| (7,805,695) |
Net gain (loss) | (1,466,773) | |
Net increase (decrease) in net assets resulting from operations | $ 1,216,439 | |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 2,683,212 | $ 1,675,103 |
Net realized gain (loss) | 6,338,922 | 24,725,221 |
Change in net unrealized appreciation (depreciation) | (7,805,695) | 36,951,812 |
Net increase (decrease) in net assets resulting from operations | 1,216,439 | 63,352,136 |
Distributions to shareholders from net investment income | (2,550,520) | (976,933) |
Distributions to shareholders from net realized gain | (1,033,874) | - |
Total distributions | (3,584,394) | (976,933) |
Share transactions | 175,476,236 | 258,656,037 |
Reinvestment of distributions | 3,511,222 | 958,393 |
Cost of shares redeemed | (187,624,495) | (79,705,069) |
Net increase (decrease) in net assets resulting from share transactions | (8,637,037) | 179,909,361 |
Redemption fees | 8,044 | 17,967 |
Total increase (decrease) in net assets | (10,996,948) | 242,302,531 |
|
|
|
Net Assets | ||
Beginning of period | 362,670,963 | 120,368,432 |
End of period (including undistributed net investment income of $613,405 and undistributed net investment income of $691,224, respectively) | $ 351,674,015 | $ 362,670,963 |
Other Information Shares | ||
Sold | 5,105,217 | 8,102,622 |
Issued in reinvestment of distributions | 104,395 | 29,482 |
Redeemed | (5,569,458) | (2,703,586) |
Net increase (decrease) | (359,846) | 5,428,518 |
Financial Highlights
Years ended February 28, | 2012 G | 2011 | 2010 | 2009 | 2008 G |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 36.16 | $ 26.16 | $ 13.98 | $ 32.45 | $ 31.50 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | .28 | .26 | .19 | .33 | .28 |
Net realized and unrealized gain (loss) | .29 E | 9.89 | 12.22 | (17.96) | 2.73 |
Total from investment operations | .57 | 10.15 | 12.41 | (17.63) | 3.01 |
Distributions from net investment income | (.26) | (.15) | (.23) | (.34) | (.23) |
Distributions from net realized gain | (.10) | - | - | (.50) | (1.83) |
Total distributions | (.36) | (.15) | (.23) | (.84) | (2.06) |
Redemption fees added to paid in capital B, H | - | - | - | - | - |
Net asset value, end of period | $ 36.37 | $ 36.16 | $ 26.16 | $ 13.98 | $ 32.45 |
Total Return A | 1.66% | 38.87% | 89.06% | (55.46)% | 9.25% |
Ratios to Average Net Assets C, F |
|
|
|
|
|
Expenses before reductions | .84% | .89% | .95% | .90% | .88% |
Expenses net of fee waivers, if any | .84% | .89% | .95% | .90% | .88% |
Expenses net of all reductions | .84% | .88% | .94% | .90% | .88% |
Net investment income (loss) | .85% | .85% | .87% | 1.22% | .80% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 351,674 | $ 362,671 | $ 120,368 | $ 47,260 | $ 169,045 |
Portfolio turnover rate D | 101% | 82% | 74% | 136% | 92% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown. B Calculated based on average shares outstanding during the period. C Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. D Amount does not include the portfolio activity of any underlying Fidelity Central Funds. E The 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. F Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. G For the year ended February 29. H Amount represents less than $.01 per share. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Industrials Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 29, 2012 | Past 1 | Past 5 | Past 10 |
Industrials Portfolio A | 0.94% | 6.44% | 9.40% |
A Prior to October 1, 2006, Industrials Portfolio operated under certain different investment policies. The historical performance for the fund may not represent its current investment policies.
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Industrials Portfolio on February 28, 2002. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index performed over the same period.
Annual Report
Industrials Portfolio
Management's Discussion of Fund Performance
Market Recap: U.S. stocks rose for the 12 months ending February 29, 2012, as encouraging economic news sparked a strong late-period rally that lifted major equity benchmarks past a number of significant milestones. Stocks recovered from early-period uncertainty that followed the March 2011 earthquake, tsunami and nuclear meltdown in Japan, but plummeted during the summer amid Europe's debt woes and a historic U.S. credit-rating downgrade. Despite continued volatility and mixed economic news, markets began to recover in early October. Investors gravitated toward defensive sectors and the perceived safety of larger, more-established and dividend-paying names, helping the Dow Jones® Industrial Average advance 8.83%, and close above the psychologically important 13,000 mark in late February - for the first time since May 2008. The rally accelerated late in the period and the market broadened, as investor confidence improved amid encouraging manufacturing, housing and employment data, and signs of progress in Europe. For the year, the S&P 500® Index added 5.12%, closing near a four-year high on the period's second-to-last day. Of the 10 major market sectors in the S&P 500®, three defensive areas led the way - consumer staples, health care and utilities - while financials, materials and energy finished in negative territory. The technology-laden Nasdaq Composite® Index added 7.73%, flirting with the 3,000 mark, its highest level in 12 years. Foreign developed-markets stocks reeled over Europe's turmoil, and the MSCI® EAFE® (Europe, Australasia, Far East) Index fell 7.35%.
Comments from Tobias Welo, Portfolio Manager of Industrials Portfolio: During the year, the fund returned 0.94%, trailing the 1.73% gain of the MSCI® U.S. IM Industrials 25/50 Index and also lagging the S&P 500®. Versus the MSCI sector benchmark, an overweighting in the weak-performing construction and engineering group dampened the fund's performance, as did an overweighting and unrewarding stock selection in electrical components/equipment. Additionally, a modest cash position weighed on performance as the market advanced strongly late in the period. At the stock level, the fund's biggest relative detractor was an overweighted position in Foster Wheeler, a construction/engineering firm specializing in large projects for companies in the energy and power industries. Cost overruns on several jobs forced the company to repeatedly take charges against earnings, sending the stock sharply lower. Other detractors included GrafTech International - which sells graphite electrodes, a component in the arc furnaces used for forging steel - and diversified industrial and commercial products firm Ingersoll-Rand. Not owning high-flying benchmark component Fastenal also hurt, as I avoided the distributor of fastener products because I thought it was overpriced. I'll also mention an out-of-index position in India-based Jain Irrigation Systems, which lost almost half of its value during the period. On the positive side, the fund benefited from solid stock picking in aerospace and defense, construction and farm machinery/heavy trucks, and human resources/employment services. Positioning in airlines bolstered our results as well. The fund's largest contributor was aerospace components supplier Goodrich. The stock surged in September after the company received a lucrative takeover bid from United Technologies, and I sold Goodrich soon thereafter to lock in profits. Another holding that lifted performance was the fund's overweighting in Cummins, a manufacturer of diesel truck engines. The stock enjoyed a solid rally during the period's final two months, aided in part by favorable revenue and earnings guidance for fiscal 2012 and beyond issued early in February. Other contributors were crane maker Manitowoc and rail carrier Union Pacific.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Industrials Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 29, 2012 | ||
| % of fund's | % of fund's net assets |
General Electric Co. | 11.0 | 13.6 |
United Technologies Corp. | 6.2 | 6.0 |
United Parcel Service, Inc. Class B | 3.7 | 0.0 |
Danaher Corp. | 3.6 | 3.8 |
3M Co. | 3.6 | 1.5 |
Cummins, Inc. | 3.4 | 3.2 |
Union Pacific Corp. | 3.4 | 5.0 |
Emerson Electric Co. | 3.2 | 3.9 |
Honeywell International, Inc. | 3.1 | 3.1 |
Caterpillar, Inc. | 2.2 | 0.0 |
| 43.4 | |
Top Industries (% of fund's net assets) | |||
As of February 29, 2012 | |||
| Machinery | 22.4% |
|
| Industrial Conglomerates | 21.0% |
|
| Aerospace & Defense | 13.0% |
|
| Electrical Equipment | 11.2% |
|
| Road & Rail | 6.2% |
|
| All Others* | 26.2% |
|
As of August 31, 2011 | |||
| Industrial Conglomerates | 22.3% |
|
| Aerospace & Defense | 20.8% |
|
| Machinery | 15.0% |
|
| Electrical Equipment | 13.1% |
|
| Construction & Engineering | 6.8% |
|
| All Others* | 22.0% |
|
* Includes short-term investments and net other assets. |
Annual Report
Industrials Portfolio
Investments February 29, 2012
Showing Percentage of Net Assets
Common Stocks - 97.4% | |||
Shares | Value | ||
AEROSPACE & DEFENSE - 13.0% | |||
Aerospace & Defense - 13.0% | |||
Esterline Technologies Corp. (a) | 51,560 | $ 3,348,822 | |
Honeywell International, Inc. | 284,963 | 16,975,246 | |
Rockwell Collins, Inc. | 90,012 | 5,336,811 | |
Textron, Inc. | 427,380 | 11,757,224 | |
United Technologies Corp. | 405,500 | 34,009,285 | |
| 71,427,388 | ||
AIR FREIGHT & LOGISTICS - 4.3% | |||
Air Freight & Logistics - 4.3% | |||
United Parcel Service, Inc. Class B | 261,243 | 20,086,974 | |
UTI Worldwide, Inc. | 207,261 | 3,345,193 | |
| 23,432,167 | ||
AUTO COMPONENTS - 1.0% | |||
Auto Parts & Equipment - 1.0% | |||
Autoliv, Inc. (d) | 80,700 | 5,374,620 | |
BUILDING PRODUCTS - 2.4% | |||
Building Products - 2.4% | |||
Armstrong World Industries, Inc. (a) | 95,792 | 4,906,466 | |
Fortune Brands Home & Security, Inc. (a) | 102,150 | 1,975,581 | |
Owens Corning (a) | 205,354 | 6,499,454 | |
| 13,381,501 | ||
COMMERCIAL SERVICES & SUPPLIES - 2.3% | |||
Environmental & Facility Services - 1.6% | |||
Republic Services, Inc. | 294,105 | 8,773,152 | |
Office Services & Supplies - 0.7% | |||
Mine Safety Appliances Co. | 75,700 | 2,790,302 | |
Pitney Bowes, Inc. (d) | 64,000 | 1,160,320 | |
| 3,950,622 | ||
TOTAL COMMERCIAL SERVICES & SUPPLIES | 12,723,774 | ||
CONSTRUCTION & ENGINEERING - 4.8% | |||
Construction & Engineering - 4.8% | |||
AECOM Technology Corp. (a) | 183,202 | 4,277,767 | |
EMCOR Group, Inc. | 160,768 | 4,469,350 | |
Fluor Corp. | 97,725 | 5,910,408 | |
Foster Wheeler AG (a) | 143,928 | 3,544,947 | |
Jacobs Engineering Group, Inc. (a) | 93,685 | 4,330,121 | |
Quanta Services, Inc. (a) | 131,580 | 2,750,022 | |
SNC-Lavalin Group, Inc. | 35,600 | 1,345,365 | |
| 26,627,980 | ||
ELECTRICAL EQUIPMENT - 11.2% | |||
Electrical Components & Equipment - 11.2% | |||
AMETEK, Inc. | 154,175 | 7,338,730 | |
Cooper Industries PLC Class A | 107,091 | 6,556,111 | |
Emerson Electric Co. | 348,682 | 17,542,191 | |
GrafTech International Ltd. (a) | 338,894 | 4,307,343 | |
Hubbell, Inc. Class B | 79,526 | 5,981,946 | |
| |||
Shares | Value | ||
Polypore International, Inc. (a)(d) | 61,200 | $ 2,516,544 | |
Prysmian SpA | 331,337 | 5,720,637 | |
Regal-Beloit Corp. | 137,460 | 9,278,550 | |
Roper Industries, Inc. | 28,558 | 2,613,628 | |
| 61,855,680 | ||
ENERGY EQUIPMENT & SERVICES - 0.2% | |||
Oil & Gas Equipment & Services - 0.2% | |||
McDermott International, Inc. (a) | 97,300 | 1,270,738 | |
INDUSTRIAL CONGLOMERATES - 21.0% | |||
Industrial Conglomerates - 21.0% | |||
3M Co. | 224,948 | 19,705,445 | |
Carlisle Companies, Inc. | 70,746 | 3,452,405 | |
Danaher Corp. | 374,898 | 19,805,861 | |
General Electric Co. | 3,193,903 | 60,843,850 | |
Tyco International Ltd. | 228,594 | 11,845,741 | |
| 115,653,302 | ||
LIFE SCIENCES TOOLS & SERVICES - 0.5% | |||
Life Sciences Tools & Services - 0.5% | |||
Agilent Technologies, Inc. | 63,500 | 2,769,870 | |
MACHINERY - 22.4% | |||
Construction & Farm Machinery & Heavy Trucks - 9.2% | |||
Caterpillar, Inc. | 105,800 | 12,083,418 | |
Cummins, Inc. | 157,023 | 18,932,263 | |
Fiat Industrial SpA (a) | 511,796 | 5,454,517 | |
Jain Irrigation Systems Ltd. | 617,562 | 1,350,563 | |
Manitowoc Co., Inc. | 342,561 | 5,391,910 | |
WABCO Holdings, Inc. (a) | 123,300 | 7,335,117 | |
| 50,547,788 | ||
Industrial Machinery - 13.2% | |||
Actuant Corp. Class A | 120,716 | 3,400,570 | |
Dover Corp. | 114,200 | 7,311,084 | |
EnPro Industries, Inc. (a) | 27,000 | 1,020,870 | |
Flowserve Corp. | 62,000 | 7,351,340 | |
Graco, Inc. | 135,300 | 6,924,654 | |
Harsco Corp. | 62,900 | 1,398,267 | |
Illinois Tool Works, Inc. | 186,469 | 10,384,459 | |
Ingersoll-Rand PLC | 246,568 | 9,833,132 | |
Pall Corp. (d) | 117,539 | 7,457,850 | |
Parker Hannifin Corp. | 109,564 | 9,839,943 | |
SPX Corp. | 42,200 | 3,086,508 | |
TriMas Corp. (a) | 200,957 | 4,869,188 | |
| 72,877,865 | ||
TOTAL MACHINERY | 123,425,653 | ||
PROFESSIONAL SERVICES - 4.7% | |||
Human Resource & Employment Services - 2.3% | |||
Kforce, Inc. (a) | 70,406 | 992,725 | |
Manpower, Inc. | 66,500 | 2,864,155 | |
Randstad Holding NV | 39,400 | 1,490,679 | |
Common Stocks - continued | |||
Shares | Value | ||
PROFESSIONAL SERVICES - CONTINUED | |||
Human Resource & Employment Services - continued | |||
Robert Half International, Inc. | 127,400 | $ 3,621,982 | |
Towers Watson & Co. | 61,055 | 3,903,857 | |
| 12,873,398 | ||
Research & Consulting Services - 2.4% | |||
Bureau Veritas SA | 30,333 | 2,505,801 | |
Dun & Bradstreet Corp. | 49,140 | 4,061,421 | |
IHS, Inc. Class A (a) | 67,888 | 6,420,168 | |
| 12,987,390 | ||
TOTAL PROFESSIONAL SERVICES | 25,860,788 | ||
ROAD & RAIL - 6.2% | |||
Railroads - 5.9% | |||
CSX Corp. | 472,637 | 9,930,103 | |
Genesee & Wyoming, Inc. Class A (a) | 65,099 | 3,868,183 | |
Union Pacific Corp. | 168,575 | 18,585,394 | |
| 32,383,680 | ||
Trucking - 0.3% | |||
Con-way, Inc. | 61,600 | 1,820,280 | |
TOTAL ROAD & RAIL | 34,203,960 | ||
SOFTWARE - 0.5% | |||
Application Software - 0.5% | |||
Solera Holdings, Inc. | 53,048 | 2,546,304 | |
TRADING COMPANIES & DISTRIBUTORS - 2.7% | |||
Trading Companies & Distributors - 2.7% | |||
Mills Estruturas e Servicos de Engenharia SA | 68,100 | 888,201 | |
W.W. Grainger, Inc. | 21,491 | 4,464,325 | |
Watsco, Inc. | 53,100 | 3,790,809 | |
WESCO International, Inc. (a) | 92,807 | 5,836,632 | |
| 14,979,967 | ||
TRANSPORTATION INFRASTRUCTURE - 0.2% | |||
Airport Services - 0.2% | |||
Wesco Aircraft Holdings, Inc. (a) | 93,220 | 1,371,266 | |
TOTAL COMMON STOCKS (Cost $441,608,515) |
| ||
Convertible Bonds - 0.4% | ||||
| Principal Amount | Value | ||
BUILDING PRODUCTS - 0.4% | ||||
Building Products - 0.4% | ||||
Aspen Aerogels, Inc.: | ||||
8% 6/1/14 (f) | $ 1,179,681 | $ 1,179,681 | ||
8% 12/6/14 (f) | 1,108,200 | 1,108,200 | ||
TOTAL CONVERTIBLE BONDS (Cost $2,287,881) |
| |||
U.S. Treasury Obligations - 0.2% | ||||
| ||||
U.S. Treasury Bills, yield at date of purchase 0.01% to 0.08% 3/1/12 to 5/24/12 (e) | 1,060,000 |
| ||
Money Market Funds - 4.0% | |||
Shares |
| ||
Fidelity Cash Central Fund, 0.12% (b) | 15,136,008 | 15,136,008 | |
Fidelity Securities Lending Cash Central Fund, 0.12% (b)(c) | 6,938,025 | 6,938,025 | |
TOTAL MONEY MARKET FUNDS (Cost $22,074,033) |
| ||
TOTAL INVESTMENT PORTFOLIO - 102.0% (Cost $467,030,370) | 562,326,814 |
NET OTHER ASSETS (LIABILITIES) - (2.0)% | (11,182,785) | ||
NET ASSETS - 100% | $ 551,144,029 | ||
Futures Contracts | |||||
Expiration Date | Underlying Face Amount at Value | Unrealized Appreciation/(Depreciation) | |||
Purchased | |||||
Equity Index Contracts | |||||
140 CME E-mini S&P Select Sector Industrial Index Contracts | March 2012 | $ 5,195,400 | $ 484,379 | ||
|
The face value of futures purchased as a percentage of net assets is 0.9% |
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
(e) Security or a portion of the security was pledged to cover margin requirements for futures contracts. At the period end, the value of securities pledged amounted to $750,000. |
(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 $2,287,881 or 0.4% of net assets. |
Additional information on each restricted holding is as follows: |
Security | Acquisition Date | Acquisition Cost |
Aspen Aerogels, Inc.: |
|
|
8% 6/1/14 | 6/14/11 | $ 1,179,681 |
8% 12/6/14 | 12/6/11 | $ 1,108,200 |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 16,522 |
Fidelity Securities Lending Cash Central Fund | 45,127 |
Total | $ 61,649 |
Other Information |
The following is a summary of the inputs used, as of February 29, 2012, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the tables below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities: | ||||
Common Stocks | $ 536,904,958 | $ 536,904,958 | $ - | $ - |
Convertible Bonds | 2,287,881 | - | - | 2,287,881 |
U.S. Treasury Obligations | 1,059,942 | - | 1,059,942 | - |
Money Market Funds | 22,074,033 | 22,074,033 | - | - |
Total Investments in Securities: | $ 562,326,814 | $ 558,978,991 | $ 1,059,942 | $ 2,287,881 |
Derivative Instruments: | ||||
Assets | ||||
Futures Contracts | $ 484,379 | $ 484,379 | $ - | $ - |
The following is a reconciliation of Investments in Securities for which Level 3 inputs were used in determining value: |
Investments in Securities: | |
Beginning Balance | $ - |
Total Realized Gain (Loss) | - |
Total Unrealized Gain (Loss) | - |
Cost of Purchases | 2,287,881 |
Proceeds of Sales | - |
Amortization/Accretion | - |
Transfers in to Level 3 | - |
Transfers out of Level 3 | - |
Ending Balance | $ 2,287,881 |
The change in unrealized gain (loss) for the period attributable to Level 3 securities held at February 29, 2012 | $ - |
The information used in the above reconciliation represents fiscal year to date activity for any Investments in Securities identified as using Level 3 inputs at either the beginning or the end of the current fiscal period. Transfers in or out of Level 3 represent the beginning value of any Security or Instrument where a change in the pricing level occurred from the beginning to the end of the period. The cost of purchases and the proceeds of sales may include securities received or delivered through corporate actions or exchanges. Realized and unrealized gains (losses) disclosed in the reconciliation are included in Net Gain (Loss) on the Fund's Statement of Operations. |
Value of Derivative Instruments |
The following table is a summary of the Fund's value of derivative instruments by risk exposure as of February 29, 2012. For additional information on derivative instruments, please refer to the Derivative Instruments section in the accompanying Notes to Financial Statements. |
Risk Exposure / | Value | |
| Asset | Liability |
Equity Risk | ||
Futures Contracts (a) | $ 484,379 | $ - |
Total Value of Derivatives | $ 484,379 | $ - |
(a) Reflects cumulative appreciation/(depreciation) on futures contracts as disclosed on the Schedule of Investments. Only the period end variation margin is separately disclosed on the Statement of Assets and Liabilities. |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 89.9% |
Ireland | 3.0% |
Switzerland | 2.8% |
Italy | 2.0% |
Others (Individually Less Than 1%) | 2.3% |
| 100.0% |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Industrials Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2012 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $6,756,502) - See accompanying schedule: Unaffiliated issuers (cost $444,956,337) | $ 540,252,781 |
|
Fidelity Central Funds (cost $22,074,033) | 22,074,033 |
|
Total Investments (cost $467,030,370) |
| $ 562,326,814 |
Cash |
| 24,089 |
Receivable for investments sold | 420,063 | |
Receivable for fund shares sold | 999,703 | |
Dividends receivable | 1,788,557 | |
Interest receivable | 87,797 | |
Distributions receivable from Fidelity Central Funds | 3,357 | |
Prepaid expenses | 1,220 | |
Other receivables | 2,174 | |
Total assets | 565,653,774 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 6,445,491 | |
Payable for fund shares redeemed | 688,938 | |
Accrued management fee | 254,686 | |
Payable for daily variation margin on futures contracts | 32,200 | |
Other affiliated payables | 116,869 | |
Other payables and accrued expenses | 33,536 | |
Collateral on securities loaned, at value | 6,938,025 | |
Total liabilities | 14,509,745 | |
|
|
|
Net Assets | $ 551,144,029 | |
Net Assets consist of: |
| |
Paid in capital | $ 454,151,734 | |
Undistributed net investment income | 1,189,055 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 28,645 | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 95,774,595 | |
Net Assets, for 22,319,110 shares outstanding | $ 551,144,029 | |
Net Asset Value, offering price and redemption price per share ($551,144,029 ÷ 22,319,110 shares) | $ 24.69 | |
Statement of Operations
| Year ended February 29, 2012 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 8,621,346 |
Interest |
| 87,851 |
Income from Fidelity Central Funds (including $45,127 from security lending) |
| 61,649 |
Total income |
| 8,770,846 |
|
|
|
Expenses | ||
Management fee | $ 2,892,685 | |
Transfer agent fees | 1,268,867 | |
Accounting and security lending fees | 197,622 | |
Custodian fees and expenses | 38,710 | |
Independent trustees' compensation | 3,018 | |
Registration fees | 43,157 | |
Audit | 38,504 | |
Legal | 1,799 | |
Interest | 1,833 | |
Miscellaneous | 4,685 | |
Total expenses before reductions | 4,490,880 | |
Expense reductions | (30,541) | 4,460,339 |
Net investment income (loss) | 4,310,507 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 8,517,291 | |
Foreign currency transactions | (59,335) | |
Futures contracts | 1,066,541 | |
Total net realized gain (loss) |
| 9,524,497 |
Change in net unrealized appreciation (depreciation) on: Investment securities | (22,053,539) | |
Assets and liabilities in foreign currencies | (6,396) | |
Futures contracts | 484,379 | |
Total change in net unrealized appreciation (depreciation) |
| (21,575,556) |
Net gain (loss) | (12,051,059) | |
Net increase (decrease) in net assets resulting from operations | $ (7,740,552) | |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 4,310,507 | $ 2,475,737 |
Net realized gain (loss) | 9,524,497 | 26,603,271 |
Change in net unrealized appreciation (depreciation) | (21,575,556) | 85,409,282 |
Net increase (decrease) in net assets resulting from operations | (7,740,552) | 114,488,290 |
Distributions to shareholders from net investment income | (2,779,155) | (1,731,948) |
Distributions to shareholders from net realized gain | (14,525,491) | - |
Total distributions | (17,304,646) | (1,731,948) |
Share transactions | 270,843,106 | 324,950,432 |
Reinvestment of distributions | 16,826,943 | 1,677,754 |
Cost of shares redeemed | (283,961,470) | (120,246,657) |
Net increase (decrease) in net assets resulting from share transactions | 3,708,579 | 206,381,529 |
Redemption fees | 29,536 | 26,323 |
Total increase (decrease) in net assets | (21,307,083) | 319,164,194 |
|
|
|
Net Assets | ||
Beginning of period | 572,451,112 | 253,286,918 |
End of period (including undistributed net investment income of $1,189,055 and undistributed net investment income of $843,529, respectively) | $ 551,144,029 | $ 572,451,112 |
Other Information Shares | ||
Sold | 11,294,394 | 14,626,207 |
Issued in reinvestment of distributions | 710,628 | 73,682 |
Redeemed | (12,365,187) | (5,796,400) |
Net increase (decrease) | (360,165) | 8,903,489 |
Financial Highlights
Years ended February 28, | 2012 G | 2011 | 2010 | 2009 | 2008 G |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 25.24 | $ 18.39 | $ 10.12 | $ 20.50 | $ 20.70 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | .19 | .15 | .11 | .18 | .11 |
Net realized and unrealized gain (loss) | .01 E | 6.80 | 8.27 | (10.35) | 1.40 |
Total from investment operations | .20 | 6.95 | 8.38 | (10.17) | 1.51 |
Distributions from net investment income | (.13) | (.10) | (.11) | (.15) | (.09) |
Distributions from net realized gain | (.62) | - | - | (.06) | (1.62) |
Total distributions | (.75) | (.10) | (.11) | (.21) | (1.71) |
Redemption fees added to paid in capital B, H | - | - | - | - | - |
Net asset value, end of period | $ 24.69 | $ 25.24 | $ 18.39 | $ 10.12 | $ 20.50 |
Total Return A | .94% | 37.85% | 82.95% | (49.92)% | 7.14% |
Ratios to Average Net Assets C, F |
|
|
|
|
|
Expenses before reductions | .87% | .90% | .97% | 1.00% | 1.00% |
Expenses net of fee waivers, if any | .87% | .90% | .97% | 1.00% | 1.00% |
Expenses net of all reductions | .86% | .90% | .97% | .99% | .99% |
Net investment income (loss) | .83% | .69% | .71% | 1.08% | .49% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 551,144 | $ 572,451 | $ 253,287 | $ 83,542 | $ 124,443 |
Portfolio turnover rate D | 102% | 80% | 106% | 132% | 108% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown. B Calculated based on average shares outstanding during the period. C Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. D Amount does not include the portfolio activity of any underlying Fidelity Central Funds. E The 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. F Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. G For the year ended February 29. H Amount represents less than $.01 per share. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Transportation Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 29, 2012 | Past 1 | Past 5 | Past 10 |
Transportation Portfolio | 0.16% | 3.97% | 8.13% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Transportation Portfolio on February 28, 2002. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index performed over the same period.
Annual Report
Transportation Portfolio
Management's Discussion of Fund Performance
Market Recap: U.S. stocks rose for the 12 months ending February 29, 2012, as encouraging economic news sparked a strong late-period rally that lifted major equity benchmarks past a number of significant milestones. Stocks recovered from early-period uncertainty that followed the March 2011 earthquake, tsunami and nuclear meltdown in Japan, but plummeted during the summer amid Europe's debt woes and a historic U.S. credit-rating downgrade. Despite continued volatility and mixed economic news, markets began to recover in early October. Investors gravitated toward defensive sectors and the perceived safety of larger, more-established and dividend-paying names, helping the Dow Jones® Industrial Average advance 8.83%, and close above the psychologically important 13,000 mark in late February - for the first time since May 2008. The rally accelerated late in the period and the market broadened, as investor confidence improved amid encouraging manufacturing, housing and employment data, and signs of progress in Europe. For the year, the S&P 500® Index added 5.12%, closing near a four-year high on the period's second-to-last day. Of the 10 major market sectors in the S&P 500®, three defensive areas led the way - consumer staples, health care and utilities - while financials, materials and energy finished in negative territory. The technology-laden Nasdaq Composite® Index added 7.73%, flirting with the 3,000 mark, its highest level in 12 years. Foreign developed-markets stocks reeled over Europe's turmoil, and the MSCI® EAFE® (Europe, Australasia, Far East) Index fell 7.35%.
Comments from Sean Gavin, Co-Portfolio Manager of Transportation Portfolio: For the year, the fund returned 0.16%, modestly trailing the 0.94% gain of the MSCI® U.S. IM Transportation 25/50 Index and falling considerably short of the S&P 500®. Versus the MSCI index, an underweighting and unrewarding stock selection in the strong-performing trucking group weighed on the fund's performance. In airlines, the weakest of the benchmark's major categories, the negative impact of overweighting the group outweighed the positive effects of security selection. Moreover, the fund's foreign holdings detracted overall, due in part to a generally stronger U.S. dollar. At the stock level, two of the three largest relative detractors were airlines: United Continental Holdings and Delta Air Lines. While I thought these were two of the better-managed legacy air carriers in the United States, they were less effective at passing on rising fuel costs to customers than I anticipated. Frozen Food Express Industries, a provider of refrigerated trucking services, was an illiquid micro-cap position that I inherited from a prior manager. I reduced this non-index holding when opportunities permitted during the period, as the company struggled to regain profitability following the Great Recession. In the case of another out-of-index position, Swiss air freight/logistics provider Panalpina Welttransport, the stock had looked undervalued to me, but the company repeatedly issued disappointing financial results, and I sold it in December. Not owning automobile rental firm and index component Dollar Thrifty Automotive Group also detracted, as its stock jumped early in the period in response to rumors that a competitor might buy the company. Conversely, stock picking and an overweighting in railroads was beneficial. Specifically, our holdings in Kansas City Southern and Union Pacific bolstered performance in relative and absolute terms. Both stocks were helped by healthy shipping volumes and firm pricing, and I sold Kansas City Southern during the period to nail down profits. Out-of-index exposure to construction and farm machinery/heavy trucks also helped. The top relative contributor was a stock the fund didn't own: index component AMR, parent company of American Airlines, which declared bankruptcy in November. I'll also mention an out-of-benchmark position in Copa Holdings, a Panamanian airline with a near-monopoly on many of its routes and an active hub in Panama City.
Note to shareholders: Matthew Moulis became Co-Portfolio Manager of the fund on January 12, 2012.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Transportation Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 29, 2012 | ||
| % of fund's | % of fund's net assets |
United Parcel Service, Inc. Class B | 18.5 | 12.0 |
Union Pacific Corp. | 16.4 | 18.3 |
CSX Corp. | 6.8 | 3.5 |
Norfolk Southern Corp. | 4.3 | 4.6 |
FedEx Corp. | 3.9 | 0.0 |
Kirby Corp. | 3.6 | 3.5 |
Delta Air Lines, Inc. | 3.5 | 1.8 |
C.H. Robinson Worldwide, Inc. | 3.5 | 5.7 |
Southwest Airlines Co. | 3.3 | 3.7 |
UTI Worldwide, Inc. | 3.0 | 3.3 |
| 66.8 | |
Top Industries (% of fund's net assets) | |||
As of February 29, 2012 | |||
| Road & Rail | 39.5% |
|
| Air Freight & Logistics | 33.9% |
|
| Airlines | 15.8% |
|
| Marine | 5.3% |
|
| Oil, Gas & Consumable Fuels | 2.9% |
|
| All Others* | 2.6% |
|
As of August 31, 2011 | |||
| Road & Rail | 43.7% |
|
| Air Freight & Logistics | 32.0% |
|
| Airlines | 14.2% |
|
| Marine | 8.4% |
|
| Trading Companies & Distributors | 0.4% |
|
| All Others* | 1.3% |
|
* Includes short-term investments and net other assets. |
Annual Report
Transportation Portfolio
Investments February 29, 2012
Showing Percentage of Net Assets
Common Stocks - 98.6% | |||
Shares | Value | ||
AIR FREIGHT & LOGISTICS - 33.9% | |||
Air Freight & Logistics - 33.9% | |||
Air Transport Services Group, Inc. (a) | 475,708 | $ 2,583,094 | |
C.H. Robinson Worldwide, Inc. | 112,696 | 7,457,094 | |
Expeditors International of Washington, Inc. | 113,500 | 4,952,005 | |
FedEx Corp. | 92,600 | 8,333,074 | |
Hub Group, Inc. Class A (a) | 84,700 | 3,017,861 | |
United Parcel Service, Inc. Class B | 510,900 | 39,283,102 | |
UTI Worldwide, Inc. | 395,400 | 6,381,756 | |
| 72,007,986 | ||
AIRLINES - 15.8% | |||
Airlines - 15.8% | |||
Alaska Air Group, Inc. (a) | 60,600 | 4,155,342 | |
Allegiant Travel Co. (a) | 14,300 | 714,714 | |
Copa Holdings SA Class A | 33,700 | 2,411,909 | |
Dart Group PLC | 638,217 | 741,151 | |
Delta Air Lines, Inc. (a) | 760,402 | 7,459,544 | |
Republic Airways Holdings, Inc. (a) | 226,200 | 1,201,122 | |
SkyWest, Inc. | 119,000 | 1,358,980 | |
Southwest Airlines Co. | 791,700 | 7,109,466 | |
Spirit Airlines, Inc. (a) | 77,900 | 1,521,387 | |
United Continental Holdings, Inc. (a)(d) | 276,636 | 5,712,533 | |
US Airways Group, Inc. (a) | 172,100 | 1,275,261 | |
| 33,661,409 | ||
AUTO COMPONENTS - 0.5% | |||
Auto Parts & Equipment - 0.5% | |||
Stoneridge, Inc. (a) | 122,500 | 1,184,575 | |
CONSTRUCTION & ENGINEERING - 0.0% | |||
Construction & Engineering - 0.0% | |||
Cosco International Holdings Ltd. | 24,000 | 11,387 | |
MACHINERY - 1.1% | |||
Construction & Farm Machinery & Heavy Trucks - 1.1% | |||
ASL Marine Holdings Ltd. | 1,250,200 | 569,795 | |
FreightCar America, Inc. | 34,000 | 940,100 | |
Trinity Industries, Inc. | 24,000 | 834,240 | |
| 2,344,135 | ||
MARINE - 4.7% | |||
Marine - 4.7% | |||
Diana Shipping, Inc. (a) | 25,100 | 229,414 | |
Eagle Bulk Shipping, Inc. (a)(d) | 329,400 | 527,040 | |
Kirby Corp. (a) | 110,620 | 7,590,744 | |
Navios Maritime Holdings, Inc. | 393,200 | 1,600,324 | |
| 9,947,522 | ||
MEDIA - 0.2% | |||
Movies & Entertainment - 0.2% | |||
Advanced Inflight Alliance AG | 87,100 | 480,383 | |
| |||
Shares | Value | ||
OIL, GAS & CONSUMABLE FUELS - 2.9% | |||
Oil & Gas Storage & Transport - 2.9% | |||
Navios Maritime Acquisition Corp. | 1,016,232 | $ 3,658,435 | |
Scorpio Tankers, Inc. (a) | 357,700 | 2,278,549 | |
Teekay Corp. | 8,100 | 233,280 | |
| 6,170,264 | ||
ROAD & RAIL - 39.5% | |||
Railroads - 27.5% | |||
CSX Corp. | 685,819 | 14,409,057 | |
Norfolk Southern Corp. | 134,300 | 9,253,270 | |
Union Pacific Corp. | 315,668 | 34,802,397 | |
| 58,464,724 | ||
Trucking - 12.0% | |||
Con-way, Inc. | 155,000 | 4,580,250 | |
Contrans Group, Inc.: | |||
(sub. vtg.) (a)(e) | 12,800 | 116,405 | |
Class A | 74,100 | 673,875 | |
Frozen Food Express Industries, Inc. (a) | 350,539 | 424,152 | |
J.B. Hunt Transport Services, Inc. | 26,300 | 1,346,823 | |
Landstar System, Inc. | 30,600 | 1,654,236 | |
Marten Transport Ltd. | 56,600 | 1,181,242 | |
Old Dominion Freight Lines, Inc. (a) | 116,700 | 5,077,617 | |
Quality Distribution, Inc. (a) | 57,100 | 742,871 | |
Saia, Inc. (a) | 194,800 | 3,177,188 | |
Swift Transporation Co. (a) | 400,300 | 4,691,516 | |
Tegma Gestao Logistica SA | 70,500 | 1,305,366 | |
Vitran Corp., Inc. (a) | 64,600 | 509,694 | |
| 25,481,235 | ||
TOTAL ROAD & RAIL | 83,945,959 | ||
TOTAL COMMON STOCKS (Cost $175,143,338) |
| ||
Convertible Bonds - 0.6% | ||||
| Principal Amount |
| ||
MARINE - 0.6% | ||||
Marine - 0.6% | ||||
DryShips, Inc. 5% 12/1/14 | $ 1,500,000 |
| ||
Money Market Funds - 1.8% | |||
Shares | Value | ||
Fidelity Cash Central Fund, 0.12% (b) | 1,776,807 | $ 1,776,807 | |
Fidelity Securities Lending Cash Central Fund, 0.12% (b)(c) | 2,023,200 | 2,023,200 | |
TOTAL MONEY MARKET FUNDS (Cost $3,800,007) |
| ||
TOTAL INVESTMENT PORTFOLIO - 101.0% (Cost $179,996,217) | 214,821,127 |
NET OTHER ASSETS (LIABILITIES) - (1.0)% | (2,173,829) | ||
NET ASSETS - 100% | $ 212,647,298 | ||
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
(e) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the end of the period, the value of these securities amounted to $116,405 or 0.1% of net assets. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 4,539 |
Fidelity Securities Lending Cash Central Fund | 15,653 |
Total | $ 20,192 |
Other Affiliated Issuers |
An affiliated company is a company in which the Fund has ownership of at least 5% of the voting securities. Fiscal year to date transactions with companies which are or were affiliates are as follows: |
Affiliate | Value, beginning of period | Purchases | Sales Proceeds | Dividend Income | Value, |
Frozen Food Express Industries, Inc. | $ 3,757,900 | $ - | $ 939,034 | $ - | $ - |
Total | $ 3,757,900 | $ - | $ 939,034 | $ - | $ - |
Other Information |
The following is a summary of the inputs used, as of February 29, 2012, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities: | ||||
Common Stocks | $ 209,753,620 | $ 209,753,620 | $ - | $ - |
Convertible Bonds | 1,267,500 | - | 1,267,500 | - |
Money Market Funds | 3,800,007 | 3,800,007 | - | - |
Total Investments in Securities: | $ 214,821,127 | $ 213,553,627 | $ 1,267,500 | $ - |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 89.2% |
Marshall Islands | 4.6% |
British Virgin Islands | 3.0% |
Panama | 1.1% |
Others (Individually Less Than 1%) | 2.1% |
| 100.0% |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Transportation Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2012 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $1,884,210) - See accompanying schedule: Unaffiliated issuers (cost $176,196,210) | $ 211,021,120 |
|
Fidelity Central Funds (cost $3,800,007) | 3,800,007 |
|
Total Investments (cost $179,996,217) |
| $ 214,821,127 |
Receivable for investments sold | 1,078,452 | |
Receivable for fund shares sold | 214,275 | |
Dividends receivable | 691,972 | |
Interest receivable | 18,542 | |
Distributions receivable from Fidelity Central Funds | 3,119 | |
Prepaid expenses | 444 | |
Other receivables | 1,823 | |
Total assets | 216,829,754 | |
|
|
|
Liabilities | ||
Payable for fund shares redeemed | $ 1,972,893 | |
Accrued management fee | 104,380 | |
Other affiliated payables | 52,590 | |
Other payables and accrued expenses | 29,393 | |
Collateral on securities loaned, at value | 2,023,200 | |
Total liabilities | 4,182,456 | |
|
|
|
Net Assets | $ 212,647,298 | |
Net Assets consist of: |
| |
Paid in capital | $ 174,187,752 | |
Undistributed net investment income | 320,332 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 3,314,304 | |
Net unrealized appreciation (depreciation) on investments | 34,824,910 | |
Net Assets, for 4,010,644 shares outstanding | $ 212,647,298 | |
Net Asset Value, offering price and redemption price per share ($212,647,298 ÷ 4,010,644 shares) | $ 53.02 | |
Statement of Operations
| Year ended February 29, 2012 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 3,551,534 |
Interest |
| 70,997 |
Income from Fidelity Central Funds (including $15,653 from security lending) |
| 20,192 |
Total income |
| 3,642,723 |
|
|
|
Expenses | ||
Management fee | $ 1,485,427 | |
Transfer agent fees | 645,437 | |
Accounting and security lending fees | 105,530 | |
Custodian fees and expenses | 17,709 | |
Independent trustees' compensation | 1,661 | |
Registration fees | 35,662 | |
Audit | 52,049 | |
Legal | 1,122 | |
Interest | 1,810 | |
Miscellaneous | 3,230 | |
Total expenses before reductions | 2,349,637 | |
Expense reductions | (23,124) | 2,326,513 |
Net investment income (loss) | 1,316,210 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 27,253,816 | |
Other affiliated issuers | (871,722) |
|
Foreign currency transactions | (98,184) | |
Total net realized gain (loss) |
| 26,283,910 |
Change in net unrealized appreciation (depreciation) on: Investment securities | (33,149,032) | |
Assets and liabilities in foreign currencies | (345) | |
Total change in net unrealized appreciation (depreciation) |
| (33,149,377) |
Net gain (loss) | (6,865,467) | |
Net increase (decrease) in net assets resulting from operations | $ (5,549,257) | |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Transportation Portfolio
Financial Statements - continued
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 1,316,210 | $ 1,910,321 |
Net realized gain (loss) | 26,283,910 | 23,557,389 |
Change in net unrealized appreciation (depreciation) | (33,149,377) | 51,121,418 |
Net increase (decrease) in net assets resulting from operations | (5,549,257) | 76,589,128 |
Distributions to shareholders from net investment income | (833,762) | (1,416,143) |
Distributions to shareholders from net realized gain | (13,901,565) | - |
Total distributions | (14,735,327) | (1,416,143) |
Share transactions | 76,064,406 | 686,181,998 |
Reinvestment of distributions | 14,262,117 | 1,369,495 |
Cost of shares redeemed | (324,641,792) | (403,479,761) |
Net increase (decrease) in net assets resulting from share transactions | (234,315,269) | 284,071,732 |
Redemption fees | 17,488 | 143,082 |
Total increase (decrease) in net assets | (254,582,365) | 359,387,799 |
|
|
|
Net Assets | ||
Beginning of period | 467,229,663 | 107,841,864 |
End of period (including undistributed net investment income of $320,332 and undistributed net investment income of $399,764, respectively) | $ 212,647,298 | $ 467,229,663 |
Other Information Shares | ||
Sold | 1,419,391 | 13,602,544 |
Issued in reinvestment of distributions | 277,875 | 24,894 |
Redeemed | (5,990,879) | (7,890,440) |
Net increase (decrease) | (4,293,613) | 5,736,998 |
Financial Highlights
Years ended February 28, | 2012 G | 2011 | 2010 | 2009 | 2008 G |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 56.26 | $ 42.01 | $ 23.89 | $ 44.34 | $ 53.00 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | .26 | .27 | .29 | .29 | .19 E |
Net realized and unrealized gain (loss) | (.34) | 14.13 | 18.21 | (19.29) | (4.66) |
Total from investment operations | (.08) | 14.40 | 18.50 | (19.00) | (4.47) |
Distributions from net investment income | (.17) | (.17) | (.36) | (.25) | (.07) |
Distributions from net realized gain | (2.99) | - | (.02) | (1.21) | (4.13) |
Total distributions | (3.16) | (.17) | (.38) | (1.46) | (4.20) |
Redemption fees added to paid in capital B | - H | .02 | - H | .01 | .01 |
Net asset value, end of period | $ 53.02 | $ 56.26 | $ 42.01 | $ 23.89 | $ 44.34 |
Total Return A | .16% | 34.32% | 77.62% | (44.20)% | (8.89)% |
Ratios to Average Net Assets C, F |
|
|
|
|
|
Expenses before reductions | .88% | .90% | 1.03% | 1.03% | .99% |
Expenses net of fee waivers, if any | .88% | .90% | 1.03% | 1.03% | .99% |
Expenses net of all reductions | .87% | .90% | 1.00% | 1.03% | .99% |
Net investment income (loss) | .49% | .53% | .90% | .79% | .36% E |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 212,647 | $ 467,230 | $ 107,842 | $ 79,705 | $ 92,432 |
Portfolio turnover rate D | 82% | 114% | 265% | 81% | 84% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown. B Calculated based on average shares outstanding during the period. C Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. D Amount does not include the portfolio activity of any underlying Fidelity Central Funds. E Investment income per share reflects a large, non-recurring dividend which amounted to $.08 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been ..21%. F Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. G For the year ended February 29. H Amount represents less than $.01 per share. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended February 29, 2012
1. Organization.
Air Transportation Portfolio, Defense and Aerospace Portfolio, Environment and Alternative Energy Portfolio, Industrial Equipment Portfolio, Industrials Portfolio, and Transportation Portfolio (the Funds) are non-diversified funds of Fidelity Select Portfolios (the Trust). The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Funds invest primarily in securities of companies whose principal business activities fall within specific industries. Each Fund is authorized to issue an unlimited number of shares.
2. Investments in Fidelity Central Funds.
The Funds invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Funds' Schedules of Investments list each of the Fidelity Central Funds held as of period end, if any, as an investment of each Fund, but do not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, each Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Funds' Report of Independent Registered Public Accounting Firm, are available on the SEC web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Funds:
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. Each Fund uses independent pricing services approved by the Board of Trustees to value their investments. When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include market or security specific events, changes in interest rates and credit quality. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The value used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
Each Fund categorizes the inputs to valuation techniques used to value their investments into a disclosure hierarchy consisting of three levels as shown below:
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the Fund's own assumptions based on the best information available)
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level, as of February 29, 2012, as well as a roll forward of Level 3 securities, is included at the end of each Fund's Schedule of Investments. Valuation techniques used to value each Fund's investments by major category are as follows:
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when significant market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-traded funds (ETFs) and certain indexes as well as quoted prices for similar securities are used and are categorized as Level 2 in the hierarchy in these circumstances. Utilizing these techniques may result in transfers between Level 1 and Level 2. For restricted equity securities and private placements where observable inputs are limited, assumptions about market activity and risk are used and are categorized as Level 3 in the hierarchy.
Debt securities, including restricted securities, are valued based on evaluated prices received from independent pricing services or from dealers who make markets in such securities. For corporate bonds and U.S. government and government agency obligations, pricing services utilize matrix pricing which considers yield or price of bonds of comparable quality, coupon, maturity and type as well as dealer supplied prices and are generally categorized
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Security Valuation - continued
as Level 2 in the hierarchy. When independent prices are unavailable or unreliable, debt securities may be valued utilizing pricing matrices which consider similar factors that would be used by independent pricing services. These are generally categorized as Level 2 in the hierarchy but may be Level 3 depending on the circumstances.
Futures contracts are valued at the settlement price established each day by the board of trade or exchange on which they are traded and are categorized as Level 1 in the hierarchy. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 in the hierarchy.
New Accounting Pronouncements. In May 2011, the Financial Accounting Standards Board issued Accounting Standard Update No. 2011-04, Fair Value Measurement (Topic 820) - Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. The update is effective during interim and annual periods beginning after December 15, 2011 and will result in additional disclosure for transfers between levels as well as expanded disclosure for securities categorized as Level 3 under the fair value hierarchy.
In December 2011, the Financial Accounting Standards Board issued Accounting Standard Update No. 2011-11, Disclosures about Offsetting Assets and Liabilities. The update creates new disclosure requirements requiring entities to disclose both gross and net information for derivatives and other financial instruments that are either offset in the Statement of Assets and Liabilities or subject to an enforceable master netting arrangement or similar agreement. The disclosure requirements are effective for interim and annual reporting periods beginning on or after January 1, 2013. Management is currently evaluating the impact of the update's adoption on the Funds' financial statement disclosures.
Foreign Currency. The Funds may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Funds' investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Funds are informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Funds estimate the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, each Fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for income taxes is required. As of February 29, 2012, each Fund did not have any unrecognized tax benefits in the financial statements; nor is each Fund aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. Each Fund files a U.S. federal tax return, in addition to state and local tax returns as required. A fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction. Foreign taxes are provided for based on each Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests. Industrial Equipment Portfolio is subject to a tax imposed on capital gains by certain countries in which it invests. An estimated deferred tax liability for net unrealized appreciation on the applicable securities is included in Other payables and accrued expenses on the Statement of Assets & Liabilities.
Annual Report
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
Distributions are declared and recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. In addition, certain funds claimed a portion of the payment made to redeeming shareholders as a distribution for income tax purposes.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, certain foreign taxes, market discount, partnerships, deferred trustees compensation, capital loss carryforwards and losses deferred due to wash sales, futures transactions and excise tax regulations.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows for each Fund:
| Tax cost | Gross unrealized | Gross unrealized | Net unrealized |
Air Transportation Portfolio | $ 60,944,279 | $ 13,321,637 | $ (983,784) | $ 12,337,853 |
Defense and Aerospace Portfolio | 619,622,229 | 101,021,880 | (18,186,867) | 82,835,013 |
Environment and Alternative Energy Portfolio | 81,069,165 | 7,520,250 | (5,620,462) | 1,899,788 |
Industrial Equipment Portfolio | 310,719,311 | 55,310,109 | (7,389,080) | 47,921,029 |
Industrials Portfolio | 469,681,909 | 99,808,723 | (7,163,818) | 92,644,905 |
Transportation Portfolio | 180,433,852 | 40,416,297 | (6,029,022) | 34,387,275 |
The tax-based components of distributable earnings as of period end were as follows for each Fund:
| Undistributed | Undistributed long-term | Capital loss | Net unrealized appreciation |
Air Transportation Portfolio | $ - | $ - | $ - | $ 12,337,853 |
Defense and Aerospace Portfolio | 1,041,869 | 1,399,918 | - | 82,835,013 |
Environment and Alternative Energy Portfolio | 2,073 | - | (10,368,614) | 1,899,737 |
Industrial Equipment Portfolio | 613,406 | - | (3,358,221) | 47,923,571 |
Industrials Portfolio | 1,189,054 | 3,164,563 | - | 92,638,677 |
Transportation Portfolio | 276,212 | 3,796,061 | - | 34,387,275 |
Capital loss carryforwards are only available to offset future capital gains of the Funds to the extent provided by regulations and may be limited. Under the Regulated Investment Company Modernization Act of 2010 (the Act), the Funds are permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period and such capital losses are required to be used prior to any losses that expire. Capital loss carryforwards were as follows:
| Fiscal year of expiration |
| 2018 |
Environment and Alternative Energy Portfolio | $ (6,465,946) |
|
|
|
| No expiration | Total capital loss |
Environment and Alternative Energy Portfolio | $ (3,902,668) | $ (10,368,614) |
Industrial Equipment Portfolio | (3,358,221) | (3,358,221) |
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The tax character of distributions paid was as follows:
February 29, 2012 |
|
|
|
| Ordinary | Long-term | Total |
Air Transportation Portfolio | $ 110,454 | $ 10,568,849 | $ 10,679,303 |
Defense and Aerospace Portfolio | 4,239,094 | 953,357 | 5,192,451 |
Environment and Alternative Energy Portfolio | 910,843 | - | 910,843 |
Industrial Equipment Portfolio | 2,550,520 | 1,033,874 | 3,584,394 |
Industrials Portfolio | 2,779,155 | 14,525,491 | 17,304,646 |
Transportation Portfolio | 2,358,640 | 12,376,687 | 14,735,327 |
February 28, 2011 |
|
|
|
| Ordinary | Long-term | Total |
Air Transportation Portfolio | $ 504,999 | $ - | $ 504,999 |
Defense and Aerospace Portfolio | 3,876,538 | - | 3,876,538 |
Environment and Alternative Energy Portfolio | 275,920 | - | 275,920 |
Industrial Equipment Portfolio | 976,933 | - | 976,933 |
Industrials Portfolio | 1,731,948 | - | 1,731,948 |
Transportation Portfolio | 1,416,143 | - | 1,416,143 |
Trading (Redemption) Fees. Shares held by investors in the Funds less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Funds and accounted for as an addition to paid in capital.
4. Operating Policies.
Restricted Securities. The Funds may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities is included at the end of each applicable Fund's Schedule of Investments.
5. Derivative Instruments.
Risk Exposures and the Use of Derivative Instruments. Industrials Portfolio (the Fund) used derivative instruments (derivatives), including futures contracts, in order to meet its investment objectives. The strategy is to use derivatives to increase returns, to gain exposure to certain types of assets and to manage exposure to certain risks as defined below. The success of any strategy involving derivatives depends on analysis of numerous economic factors, and if the strategies for investment do not work as intended, the Fund may not achieve its objectives.
The Fund's use of derivatives increased or decreased its exposure to the following risk:
Equity Risk | Equity risk relates to the fluctuations in the value of financial instruments as a result of changes in market prices (other than those arising from interest rate risk or foreign exchange risk), whether caused by factors specific to an individual investment, its issuer, or all factors affecting all instruments traded in a market or market segment. |
The Fund is also exposed to additional risks from investing in derivatives, such as liquidity risk and counterparty credit risk. Liquidity risk is the risk that the Fund will be unable to close out the derivative in the open market in a timely manner. Counterparty credit risk is the risk that the counterparty will not be able to fulfill its obligation to the Fund. Counterparty credit risk related to exchange-traded futures contracts is minimal because of the protection provided by the exchange on which they trade. Derivatives involve, to varying degrees, risk of loss in excess of the amounts recognized in the Statement of Assets and Liabilities.
Futures Contracts. A futures contract is an agreement between two parties to buy or sell a specified underlying instrument for a fixed price at a specified future date. The Fund used futures contracts to manage its exposure to the stock market.
Upon entering into a futures contract, a fund is required to deposit either cash or securities (initial margin) with a clearing broker in an amount equal to a certain percentage of the face value of the contract. Futures contracts are marked-to-market daily and subsequent payments (variation margin) are made or received by a fund depending on the daily fluctuations in the value of the futures contracts and are recorded as unrealized appreciation or
Annual Report
5. Derivative Instruments - continued
Futures Contracts - continued
(depreciation). This receivable and/or payable is included in daily variation margin on futures contracts in the Statement of Assets and Liabilities. Realized gain or (loss) is recorded upon the expiration or closing of a futures contract. The net realized gain (loss) and change in net unrealized appreciation (depreciation) on futures contracts during the period is included in the Statement of Operations.
The underlying face amount at value of open futures contracts at period end is shown in the Schedule of Investments under the caption "Futures Contracts." This amount reflects each contract's exposure to the underlying instrument at period end and is representative of activity for the period. Securities deposited to meet initial margin requirements are identified in the Schedule of Investments.
During the period the Fund recognized net realized gain (loss) of $1,066,541 and a change in net unrealized appreciation (depreciation) of $484,379 related to its investment in futures contracts. These amounts are included in the Statement of Operations.
6. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, are noted in the table below.
| Purchases ($) | Sales ($) |
Air Transportation Portfolio | 75,944,304 | 117,668,832 |
Defense and Aerospace Portfolio | 366,541,837 | 435,723,376 |
Environment and Alternative Energy Portfolio | 159,959,484 | 162,565,342 |
Industrial Equipment Portfolio | 320,534,142 | 335,194,531 |
Industrials Portfolio | 526,809,201 | 526,373,581 |
Transportation Portfolio | 221,850,289 | 466,726,683 |
7. 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 an annualized group fee rate. The individual fund fee rate is applied to each Fund's average net assets. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, each Fund's annual management fee rate expressed as a percentage of each Fund's average net assets was as follows:
| Individual Rate | Group Rate | Total |
Air Transportation Portfolio | .30% | .26% | .56% |
Defense and Aerospace Portfolio | .30% | .26% | .56% |
Environment and Alternative Energy Portfolio | .30% | .26% | .56% |
Industrial Equipment Portfolio | .30% | .26% | .56% |
Industrials Portfolio | .30% | .26% | .56% |
Transportation Portfolio | .30% | .26% | .56% |
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the Funds' transfer, dividend disbursing and shareholder servicing agent. FIIOC receives account fees and asset-based fees that vary according to account size and type of account. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, transfer agent fees were equivalent to the following annual rates expressed as a percentage of average net assets:
Air Transportation Portfolio | .26% |
Defense and Aerospace Portfolio | .25% |
Environment and Alternative Energy Portfolio | .30% |
Industrial Equipment Portfolio | .21% |
Industrials Portfolio | .25% |
Transportation Portfolio | .24% |
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains each Fund's accounting records. The accounting fee is based on the level of average net assets for each month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Annual Report
Notes to Financial Statements - continued
7. 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 |
Air Transportation Portfolio | $ 5,816 |
Defense and Aerospace Portfolio | 8,446 |
Environment and Alternative Energy Portfolio | 3,815 |
Industrial Equipment Portfolio | 13,822 |
Industrials Portfolio | 9,998 |
Transportation Portfolio | 15,181 |
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 Loan Balance | Weighted | Interest |
Defense and Aerospace Portfolio | Borrower | $ 5,492,429 | .35% | $ 375 |
Industrial Equipment Portfolio | Borrower | 5,135,167 | .35% | 299 |
Industrials Portfolio | Borrower | 7,916,174 | .36% | 1,833 |
Transportation Portfolio | Borrower | 8,799,250 | .37% | 1,810 |
8. Committed Line of Credit.
Certain Funds participate with other funds managed by FMR or an affiliate in a $4.0 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The participating funds have agreed to pay commitment fees on their pro-rata portion of the line of credit, which are reflected in Miscellaneous expenses on the Statement of Operations, and are as follows:
Air Transportation Portfolio | $ 262 |
Defense and Aerospace Portfolio | 1,932 |
Environment and Alternative Energy Portfolio | 258 |
Industrial Equipment Portfolio | 917 |
Industrials Portfolio | 1,510 |
Transportation Portfolio | 982 |
During the period, there were no borrowings on this line of credit.
9. Security Lending.
Certain Funds lend portfolio securities through a lending agent from time to time in order to earn additional income. For equity securities, a lending agent is used and may loan securities to certain qualified borrowers, including Fidelity Capital Markets (FCM), a broker-dealer affiliated with the Funds. On the settlement date of the loan, each applicable Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Funds and any additional required collateral is delivered to the Funds on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on each applicable Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of
Annual Report
9. Security Lending - continued
securities. Security lending income is presented on each applicable Fund's Statement of Operations as a component of income from Fidelity Central Funds. FCM security lending activity as of and during the period was as follows:
| Security Lending | Value of Securities Loaned to FCM at |
Defense and Aerospace Portfolio | $ 1,450 | $ - |
Environment and Alternative Energy Portfolio | 7,240 | 921,476 |
Transportation Portfolio | 442 | - |
10. Expense Reductions.
Many of the brokers with whom FMR places trades on behalf of certain Funds provided services to these Funds in addition to trade execution. These services included payments of expenses on behalf of each applicable Fund. In addition, through arrangements with each applicable Fund's custodian, credits realized as a result of uninvested cash balances were used to reduce each applicable Fund's expenses. All of the applicable expense reductions are noted in the table below.
| Brokerage | Custody |
Air Transportation Portfolio | $ 6,187 | $ - |
Defense and Aerospace Portfolio | 17,036 | 16 |
Environment and Alternative Energy Portfolio | 6,355 | - |
Industrial Equipment Portfolio | 10,774 | - |
Industrials Portfolio | 30,541 | - |
Transportation Portfolio | 23,124 | - |
11. Other.
The Funds' organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Funds. In the normal course of business, the Funds may also enter into contracts that provide general indemnifications. The Funds' maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Funds. The risk of material loss from such claims is considered remote.
At the end of the period, Fidelity VIP FundsManager 60% Portfolio was the owner of record of approximately 22% and 18% of the total outstanding shares of Industrial Equipment Portfolio and Industrials Portfolio, respectively. Strategic Advisers U.S. Opportunities Fund was the owner of record of approximately 16% and 14% of the total outstanding shares of Industrial Equipment Portfolio and Industrials Portfolio, respectively. Mutual funds managed by FMR or its affiliates were the owners of record, in the aggregate, of approximately 47% and 44% of the total outstanding shares of Industrial Equipment Portfolio and Industrials Portfolio, respectively.
Annual Report
Report of Independent Registered Public Accounting Firm
To the Trustees of Fidelity Select Portfolios and the Shareholders of Air Transportation Portfolio, Defense and Aerospace Portfolio, Environment and Alternative Energy Portfolio, Industrial Equipment Portfolio, Industrials Portfolio, and Transportation Portfolio:
In our opinion, the accompanying statements of assets and liabilities, including the schedules of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Air Transportation Portfolio, Defense and Aerospace Portfolio, Environment and Alternative Energy Portfolio, Industrial Equipment Portfolio, Industrials Portfolio, and Transportation Portfolio (funds of Fidelity Select Portfolios) at February 29, 2012, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fidelity Select Portfolios' management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at February 29, 2012 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 16, 2012
Annual Report
Trustees and Officers
The Trustees, Members of the Advisory Board, and executive officers of the trust and funds, as applicable, are listed below. The Board of Trustees governs each fund and is responsible for protecting the interests of shareholders. The Trustees are experienced executives who meet periodically throughout the year to oversee each fund's activities, review contractual arrangements with companies that provide services to each fund, oversee management of the risks associated with such activities and contractual arrangements, and review each fund's performance. Except for James C. Curvey, each of the Trustees oversees 226 funds advised by FMR or an affiliate. Mr. Curvey oversees 430 funds advised by FMR or an affiliate.
The Trustees hold office without limit in time except that (a) any Trustee may resign; (b) any Trustee may be removed by written instrument, signed by at least two-thirds of the number of Trustees prior to such removal; (c) any Trustee who requests to be retired or who has become incapacitated by illness or injury may be retired by written instrument signed by a majority of the other Trustees; and (d) any Trustee may be removed at any special meeting of shareholders by a two-thirds vote of the outstanding voting securities of the trust. Each Trustee who is not an interested person (as defined in the 1940 Act) (Independent Trustee), shall retire not later than the last day of the calendar year in which his or her 75th birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. The executive officers and Advisory Board Members hold office without limit in time, except that any officer and Advisory Board Member may resign or may be removed by a vote of a majority of the Trustees at any regular meeting or any special meeting of the Trustees. Except as indicated, each individual has held the office shown or other offices in the same company for the past five years.
Experience, Skills, Attributes, and Qualifications of the Funds' Trustees. The Governance and Nominating Committee has adopted a statement of policy that describes the experience, qualifications, attributes, and skills that are necessary and desirable for potential Independent Trustee candidates (Statement of Policy). The Board believes that each Trustee satisfied at the time he or she was initially elected or appointed a Trustee, and continues to satisfy, the standards contemplated by the Statement of Policy. The Governance and Nominating Committee also engages professional search firms to help identify potential Independent Trustee candidates who have the experience, qualifications, attributes, and skills consistent with the Statement of Policy. From time to time, additional criteria based on the composition and skills of the current Independent Trustees, as well as experience or skills that may be appropriate in light of future changes to board composition, business conditions, and regulatory or other developments, have also been considered by the professional search firms and the Governance and Nominating Committee. In addition, the Board takes into account the Trustees' commitment and participation in Board and committee meetings, as well as their leadership of standing and ad hoc committees throughout their tenure.
In determining that a particular Trustee was and continues to be qualified to serve as a Trustee, the Board has considered a variety of criteria, none of which, in isolation, was controlling. The Board believes that, collectively, the Trustees have balanced and diverse experience, qualifications, attributes, and skills, which allow the Board to operate effectively in governing each fund and protecting the interests of shareholders. Information about the specific experience, skills, attributes, and qualifications of each Trustee, which in each case led to the Board's conclusion that the Trustee should serve (or continue to serve) as a trustee of the funds, is provided below.
Board Structure and Oversight Function. James C. Curvey is an interested person (as defined in the 1940 Act) and currently serves as Acting Chairman. The Trustees have determined that an interested Chairman is appropriate and benefits shareholders because an interested Chairman has a personal and professional stake in the quality and continuity of services provided to the funds. Independent Trustees exercise their informed business judgment to appoint an individual of their choosing to serve as Chairman, regardless of whether the Trustee happens to be independent or a member of management. The Independent Trustees have determined that they can act independently and effectively without having an Independent Trustee serve as Chairman and that a key structural component for assuring that they are in a position to do so is for the Independent Trustees to constitute a substantial majority for the Board. The Independent Trustees also regularly meet in executive session. Ned C. Lautenbach serves as Chairman of the Independent Trustees and as such (i) acts as a liaison between the Independent Trustees and management with respect to matters important to the Independent Trustees and (ii) with management prepares agendas for Board meetings.
Fidelity funds are overseen by different Boards of Trustees. The funds' Board oversees Fidelity's equity and high income funds and another Board oversees Fidelity's investment-grade bond, money market, and asset allocation funds. The asset allocation funds may invest in Fidelity funds overseen by the funds' Board. The use of separate Boards, each with its own committee structure, allows the Trustees of each group of Fidelity funds to focus on the unique issues of the funds they oversee, including common research, investment, and operational issues. On occasion, the separate Boards establish joint committees to address issues of overlapping consequences for the Fidelity funds overseen by each Board.
The Trustees operate using a system of committees to facilitate the timely and efficient consideration of all matters of importance to the Trustees, each fund, and fund shareholders and to facilitate compliance with legal and regulatory requirements and oversight of the funds' activities and associated risks. The Board, acting through its committees, has charged FMR and its affiliates with (i) identifying events or circumstances the occurrence of which could have demonstrably adverse effects on the funds' business and/or reputation; (ii) implementing processes and controls to lessen the possibility that such events or circumstances occur or to mitigate the effects of such events or circumstances if they do occur; and (iii) creating and maintaining a system designed to evaluate continuously business and market conditions in order to facilitate the identification and implementation processes described in (i) and (ii) above. Because the day-to-day operations and activities of the funds are carried out by or through FMR, its affiliates and other service providers, the funds' exposure to risks is mitigated but not eliminated by the processes overseen by the Trustees. While each of the Board's committees has responsibility for overseeing different aspects of the funds' activities, oversight is exercised primarily through the Operations, Audit, and Compliance Committees. In addition, the Independent Trustees have worked with FMR to enhance the Board's oversight of investment and financial risks, legal and regulatory risks, technology risks, and operational risks, including the development of additional risk reporting to the Board. For example, a working group comprised of Independent Trustees and FMR has worked and continues to work to review the Fidelity funds' valuation-related activities, reporting and risk management. Appropriate personnel, including but not limited to the funds' Chief Compliance Officer (CCO), FMR's internal auditor, the independent accountants, the funds' Treasurer and portfolio management personnel, make periodic reports to the Board's committees, as appropriate, including an annual review of FMR's risk management program for the Fidelity funds. The responsibilities of each standing committee, including their oversight responsibilities, are described further under "Standing Committees of the Funds' Trustees."
Annual Report
Trustees and Officers - continued
The fund's Statement of Additional Information (SAI) includes more information about the Trustees. To request a free copy, call Fidelity at 1-800-544-8544.
Interested Trustees*:
Correspondence intended for each Trustee who is an interested person may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupations and Other Relevant Experience+ | |
James C. Curvey (76) | |
| Year of Election or Appointment: 2007 Mr. Curvey is Trustee and Acting Chairman of the Board of Trustees of certain Trusts. Mr. Curvey also serves as Trustee (2007-present) of other investment companies advised by FMR. Mr. Curvey is a Director of Fidelity Investments Money Management, Inc. (2009-present), Director of Fidelity Research & Analysis Co. (2009-present) and Director of FMR and FMR Co., Inc. (2007-present). Mr. Curvey is also Vice Chairman (2007-present) and Director of FMR LLC. In addition, Mr. Curvey serves as an Overseer for the Boston Symphony Orchestra and a member of the Trustees of Villanova University. Previously, Mr. Curvey was the Vice Chairman (2006-2007) and Director (2000-2007) of FMR Corp. |
Ronald P. O'Hanley (55) | |
| Year of Election or Appointment: 2011 Mr. O'Hanley is Director of FMR Co., Inc. (2010-present), Director of Fidelity Investments Money Management, Inc. (2010-present), Director of Fidelity Research & Analysis Company (2010-present), President of Fidelity Asset Management and Corporate Services and a member of Fidelity's Executive Committee (2010-present). Previously, Mr. O'Hanley served as President and Chief Executive Officer of BNY Mellon Asset Management (2007-2010). Mr. O'Hanley also served as Vice Chairman of Bank New York Mellon Corp. and a member of that firm's Executive Committee. Prior to the 2007 merger of The Bank of New York and Mellon Financial Corporation, he was Vice Chairman of Mellon Financial Corporation and President and Chief Executive Officer of Mellon Asset Management. He joined Mellon in February 1997. Mr. O'Hanley currently serves as Chairman of the Boston Public Library Foundation Board of Directors and sits on the Board of Directors of Beth Israel Deaconess Medical Center, the Board of Trustees of the Marine Biological Laboratory and the Advisory Board of the Maxwell School of Citizenship and Public Administration at Syracuse University. Mr. O'Hanley also chairs the Council on Asset Management for the Financial Services Roundtable and is a member of the Board of Directors of Institutional Investor's U.S. Institute. |
* Trustees have been determined to be "Interested Trustees" by virtue of, among other things, their affiliation with the trust or various entities under common control with FMR.
+ The information above includes each Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to each Trustee's qualifications to serve as a Trustee, which led to the conclusion that each Trustee should serve as a Trustee for each fund.
Independent Trustees:
Correspondence intended for each Independent Trustee (that is, the Trustees other than the Interested Trustees) may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235.
Name, Age; Principal Occupations and Other Relevant Experience+ | |
Dennis J. Dirks (63) | |
| Year of Election or Appointment: 2005 Prior to his retirement in May 2003, Mr. Dirks was Chief Operating Officer and a member of the Board of The Depository Trust & Clearing Corporation (DTCC). He also served as President, Chief Operating Officer, and Board member of The Depository Trust Company (DTC) and President and Board member of the National Securities Clearing Corporation (NSCC). In addition, Mr. Dirks served as Chief Executive Officer and Board member of the Government Securities Clearing Corporation, Chief Executive Officer and Board member of the Mortgage-Backed Securities Clearing Corporation, as a Trustee and a member of the Finance Committee of Manhattan College (2005-2008), and as a Trustee and a member of the Finance Committee of AHRC of Nassau County (2006-2008). Mr. Dirks is a member of the Independent Directors Council (IDC) Governing Council (2010-present) and Board of Directors for The Brookville Center for Children's Services, Inc. (2009-present). |
Alan J. Lacy (58) | |
| Year of Election or Appointment: 2008 Mr. Lacy serves as Senior Adviser (2007-present) of Oak Hill Capital Partners, L.P. (private equity). Mr. Lacy also served as Chief Executive Officer (2000-2005) and Vice Chairman (2005-2006) of Sears Holdings Corporation and Sears, Roebuck and Co. (retail). In addition, Mr. Lacy serves as a member of the Board of Directors of Dave & Buster's, Inc. (restaurant and entertainment complexes, 2010-present), The Hillman Companies, Inc. (hardware wholesalers, 2010-present), and Bristol-Myers Squibb Company (global pharmaceuticals, 2007-present). Mr. Lacy is a member of the Board of Trustees of The National Parks Conservation Association (2006-present). Previously, Mr. Lacy served as Chairman of the Board of Trustees of the National Parks Conservation Association (2008-2011) and as a member of the Board of Directors for the Western Union Company (global money transfer, 2006-2011). |
Ned C. Lautenbach (68) | |
| Year of Election or Appointment: 2000 Mr. Lautenbach is Chairman of the Independent Trustees of the Equity and High Income Funds (2006-present). Mr. Lautenbach currently serves as the Lead Director of the Eaton Corporation Board of Directors (diversified industrial, 1997-present). Mr. Lautenbach is also a member of the Board of Directors of the Philharmonic Center for the Arts in Naples, Florida (1999-present); a member of the Board of Trustees of Fairfield University (2005-present); and a member of the Council on Foreign Relations (1994-present). Previously, Mr. Lautenbach was a Partner/Advisory Partner at Clayton, Dubilier & Rice, LLC (private equity investment, 1998-2010), as well as a Director of Sony Corporation (2006-2007). |
Joseph Mauriello (67) | |
| Year of Election or Appointment: 2008 Prior to his retirement in January 2006, Mr. Mauriello served in numerous senior management positions including Deputy Chairman and Chief Operating Officer (2004-2005), and Vice Chairman of Financial Services (2002-2004) of KPMG LLP US (professional services, 1965-2005). Mr. Mauriello currently serves as a member of the Board of Directors of XL Group plc. (global insurance and re-insurance, 2006-present) and of Arcadia Resources Inc. (health care services and products, 2007-present). Previously, Mr. Mauriello served as a Director of the Hamilton Funds of the Bank of New York (2006-2007). |
Robert W. Selander (61) | |
| Year of Election or Appointment: 2011 Previously, Mr. Selander served as a Member of the Advisory Board of Fidelity's Equity and High Income Funds (2011), Executive Vice Chairman (2010), Chief Executive Officer (2009-2010), and President and Chief Executive Officer (1997-2009) of Mastercard, Inc. |
Cornelia M. Small (67) | |
| Year of Election or Appointment: 2005 Ms. Small is a member of the Board of Directors of the Teagle Foundation (2009-present). Ms. Small is also a member of the Investment Committee, and Chair (2008-present) and a member of the Board of Trustees of Smith College. In addition, Ms. Small serves on the Investment Committee of the Berkshire Taconic Community Foundation (2008-present). Previously, Ms. Small served as Chairperson of the Investment Committee (2002-2008) of Smith College. In addition, Ms. Small served as Chief Investment Officer, Director of Global Equity Investments, and a member of the Board of Directors of Scudder, Stevens & Clark and Scudder Kemper Investments. |
William S. Stavropoulos (72) | |
| Year of Election or Appointment: 2001 Mr. Stavropoulos is Vice Chairman of the Independent Trustees of the Equity and High Income Funds (2006-present). Mr. Stavropoulos serves as President and Founder of the Michigan Baseball Foundation, the Great Lakes Loons (2007-present). Mr. Stavropoulos is Chairman Emeritus of the Board of Directors of The Dow Chemical Company, where he previously served in numerous senior management positions, including President, CEO (1995-2000; 2002-2004), Chairman of the Executive Committee (2000-2006), and as a member of the Board of Directors (1990-2006). Currently, Mr. Stavropoulos is Chairman of Univar (global distributor of commodity and specialty chemicals, 2010-present), a Director of Teradata Corporation (data warehousing and technology solutions, 2008-present), Chemical Financial Corporation, Maersk Inc. (industrial conglomerate), Tyco International, Inc. (multinational manufacturing and services, 2007-present), and a member of the Advisory Board for Metalmark Capital (private equity investment, 2005-present). Mr. Stavropoulos is a special advisor to Clayton, Dubilier & Rice, LLC (private equity investment). In addition, Mr. Stavropoulos is a member of the University of Notre Dame Advisory Council for the College of Science. |
David M. Thomas (62) | |
| Year of Election or Appointment: 2008 Previously, Mr. Thomas served as Executive Chairman (2005-2006) and Chairman and Chief Executive Officer (2000-2005) of IMS Health, Inc. (pharmaceutical and healthcare information solutions). In addition, Mr. Thomas serves as a member of the Board of Directors of Fortune Brands, Inc. (consumer products), and Interpublic Group of Companies, Inc. (marketing communication, 2004-present). |
Michael E. Wiley (61) | |
| Year of Election or Appointment: 2008 Mr. Wiley also serves as a Director of Asia Pacific Exploration Consolidated (international oil and gas exploration and production, 2008-present). Mr. Wiley serves as a Director of Tesoro Corporation (independent oil refiner and marketer, 2005-present), and a Director of Bill Barrett Corporation (exploration and production, 2005-present). In addition, Mr. Wiley also serves as a Director of Post Oak Bank (privately-held bank, 2004-present). Previously, Mr. Wiley served as a member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-2010), as a Senior Energy Advisor of Katzenbach Partners, LLC (consulting, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production, 2001-2005). |
+ The information above includes each Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to each Trustee's qualifications to serve as a Trustee, which led to the conclusion that each Trustee should serve as a Trustee for each fund.
Advisory Board Members and Executive Officers:
Correspondence intended for each executive officer, Edward C. Johnson 3d, and Peter S. Lynch may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
Edward C. Johnson 3d (81) | |
| Year of Election or Appointment: 2011 Member of the Advisory Board of Fidelity's Equity and High Income Funds. Mr. Johnson serves as Chief Executive Officer, Chairman, and a Director of FMR LLC, and also serves as Chairman and Director of FIL Limited. Previously, Mr. Johnson served as a Trustee and Chairman of the Board of certain Fidelity Trusts, Chairman and a Director of FMR, Chairman and a Director of FMR Co., Inc., and President of FMR LLC (2006-2007). |
Peter S. Lynch (68) | |
| Year of Election or Appointment: 2003 Member of the Advisory Board of Fidelity's Equity and High Income Funds. Mr. Lynch is Vice Chairman and a Director of FMR and FMR Co., Inc. In addition, Mr. Lynch serves as a Trustee of Boston College and as the Chairman of the Inner-City Scholarship Fund. Previously, Mr. Lynch served on the Special Olympics International Board of Directors (1997-2006). |
Kenneth B. Robins (42) | |
| Year of Election or Appointment: 2008 President and Treasurer of Fidelity's Equity and High Income Funds. Mr. Robins also serves as President and Treasurer (2010-present) and Assistant Treasurer (2009-present) of other Fidelity funds and is an employee of Fidelity Investments (2004-present). Previously, Mr. Robins served as Deputy Treasurer of the Fidelity funds (2005-2008) and Treasurer and Chief Financial Officer of The North Carolina Capital Management Trust: Cash and Term Portfolios (2006-2008). |
Brian B. Hogan (47) | |
| Year of Election or Appointment: 2009 Vice President of Equity and High Income Funds. Mr. Hogan also serves as President of FMR's Equity Division (2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager. |
Christopher S. Bartel (40) | |
| Year of Election or Appointment: 2009 Vice President of Fidelity's Sector and Real Estate Equity Funds. Mr. Bartel also serves as a Director, President, and Chief Executive Officer of Fidelity Management & Research (Japan) Inc. (2012-present), and Senior Vice President of Global Equity Research (2010-present). Previously, Mr. Bartel served as Senior Vice President of Equity Research (2009-2010), Managing Director of Research (2006-2009), and an analyst and portfolio manager (2000-2006). |
Scott C. Goebel (44) | |
| Year of Election or Appointment: 2008 Secretary and Chief Legal Officer (CLO) of the Fidelity funds. Mr. Goebel also serves as Secretary of Fidelity Investments Money Management, Inc. (FIMM) (2010-present) and Fidelity Research and Analysis Company (FRAC) (2010-present); Secretary and CLO of The North Carolina Capital Management Trust: Cash and Term Portfolios (2008-present); General Counsel, Secretary, and Senior Vice President of FMR (2008-present) and FMR Co., Inc. (2008-present); employed by FMR LLC or an affiliate (2001-present); Chief Legal Officer of Fidelity Management & Research (Hong Kong) Limited (2008-present) and Assistant Secretary of Fidelity Management & Research (Japan) Inc. (2008-present), and Fidelity Management & Research (U.K.) Inc. (2008-present). Previously, Mr. Goebel served as Assistant Secretary of FIMM (2008-2010), FRAC (2008-2010), and the Funds (2007-2008) and as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (2005-2007). |
William C. Coffey (43) | |
| Year of Election or Appointment: 2009 Assistant Secretary of Fidelity's Equity and High Income Funds. Mr. Coffey also serves as Senior Vice President and Deputy General Counsel of FMR LLC (2010-present), and is an employee of Fidelity Investments. Previously, Mr. Coffey served as Vice President and Associate General Counsel of FMR LLC (2005-2009). |
Holly C. Laurent (57) | |
| Year of Election or Appointment: 2008 Anti-Money Laundering (AML) Officer of the Fidelity funds. Ms. Laurent also serves as AML Officer of The North Carolina Capital Management Trust: Cash and Term Portfolios (2008-present) and is an employee of Fidelity Investments. Previously, Ms. Laurent was Senior Vice President and Head of Legal for Fidelity Business Services India Pvt. Ltd. (2006-2008), and Senior Vice President, Deputy General Counsel and Group Head for FMR LLC (2005-2006). |
Christine Reynolds (53) | |
| Year of Election or Appointment: 2008 Chief Financial Officer of the Fidelity funds. Ms. Reynolds became President of Fidelity Pricing and Cash Management Services (FPCMS) in August 2008. Ms. Reynolds served as Chief Operating Officer of FPCMS (2007-2008). Previously, Ms. Reynolds served as President, Treasurer, and Anti-Money Laundering officer of the Fidelity funds (2004-2007). |
Joseph A. Hanlon (43) | |
| Year of Election or Appointment: 2012 Chief Compliance Officer of Fidelity's Equity and High Income Funds. Mr. Hanlon serves as Senior Vice President of the Fidelity Asset Management Division (2009-present) and is an employee of Fidelity Investments. |
Joseph F. Zambello (54) | |
| Year of Election or Appointment: 2011 Deputy Treasurer of the Fidelity funds. Mr. Zambello is an employee of Fidelity Investments. Previously, Mr. Zambello served as Vice President of FMR's Program Management Group (2009-2011) and Vice President of the Transfer Agent Oversight Group (2005-2009). |
Adrien E. Deberghes (44) | |
| Year of Election or Appointment: 2008 Deputy Treasurer of Fidelity's Equity and High Income Funds. Mr. Deberghes also serves as Vice President (2011-present) and Assistant Treasurer (2010-present) of other Fidelity funds, and is an employee of Fidelity Investments (2008-present). Previously, Mr. Deberghes served as Senior Vice President of Mutual Fund Administration at State Street Corporation (2007-2008), Senior Director of Mutual Fund Administration at Investors Bank & Trust (2005-2007), and Director of Finance for Dunkin' Brands (2000-2005). |
Stephanie J. Dorsey (42) | |
| Year of Election or Appointment: 2010 Assistant Treasurer of Fidelity's Equity and High Income Funds. Ms. Dorsey also serves as Deputy Treasurer of other Fidelity funds (2008-present) and is an employee of Fidelity Investments (2008-present). Previously, Ms. Dorsey served as Treasurer (2004-2008) of the JPMorgan Mutual Funds and Vice President (2004-2008) of JPMorgan Chase Bank. |
John R. Hebble (53) | |
| Year of Election or Appointment: 2009 Assistant Treasurer of Fidelity's Equity and High Income Funds. Mr. Hebble also serves as President (2011-present), Treasurer, and Chief Financial Officer of The North Carolina Capital Management Trust: Cash and Term Portfolios (2008-present), President and Treasurer of other Fidelity funds (2008-present) and is an employee of Fidelity Investments. |
Gary W. Ryan (53) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of the Fidelity funds. Mr. Ryan is an employee of Fidelity Investments. Previously, Mr. Ryan served as Vice President of Fund Reporting in Fidelity Pricing and Cash Management Services (FPCMS) (1999-2005). |
Jonathan Davis (43) | |
| Year of Election or Appointment: 2010 Assistant Treasurer of the Fidelity funds. Mr. Davis is also Assistant Treasurer of Fidelity Rutland Square Trust II and Fidelity Commonwealth Trust II. Mr. Davis is an employee of Fidelity Investments. Previously, Mr. Davis served as Vice President and Associate General Counsel of FMR LLC (2003-2010). |
Annual Report
Distributions (Unaudited)
The Board of Trustees of each fund voted to pay to shareholders of record at the opening of business on record date the following distributions per share derived from capital gains realized from sales of portfolio securities and dividends derived from net investment income:
| Pay Date | Record Date | Dividends | Capital Gains |
Air Transportation Portfolio | 04/16/12 | 04/13/12 | $0.000 | $0.000 |
Defense and Aerospace Portfolio | 04/16/12 | 04/13/12 | $0.140 | $0.188 |
Environment and Alternative Energy Portfolio | 04/16/12 | 04/13/12 | $0.002 | $0.000 |
Industrial Equipment Portfolio | 04/16/12 | 04/13/12 | $0.067 | $0.000 |
Industrials Portfolio | 04/16/12 | 04/13/12 | $0.053 | $0.142 |
Transportation Portfolio | 04/16/12 | 04/13/12 | $0.076 | $1.043 |
The funds hereby designate as capital gain dividend the amounts noted below for the taxable year ended February 29, 2012, or, if subsequently determined to be different, the net capital gain of such year.
Air Transportation Portfolio | $5,990,152 |
Defense and Aerospace Portfolio | $2,958,597 |
Industrials Portfolio | $11,082,421 |
Transportation Portfolio | $20,856,867 |
A percentage of the dividends distributed during the fiscal year for the following funds qualify for the dividends-received deduction for corporate shareholders:
| April 2011 | December 2011 |
Air Transportation Portfolio | 100% | 0% |
Defense and Aerospace Portfolio | 100% | 100% |
Environment and Alternative Energy Portfolio | 89% | 84% |
Industrial Equipment Portfolio | 100% | 100% |
Industrials Portfolio | 100% | 100% |
Transportation Portfolio | 100% | 100% |
A percentage of the dividends distributed during the fiscal year for the following funds may be taken into account as a dividend for purposes of the maximum rate under section 1(h) (11) of the Internal Revenue Code:
| April 2011 | December 2011 |
Air Transportation Portfolio | 100% | 0% |
Defense and Aerospace Portfolio | 100% | 100% |
Environment and Alternative Energy Portfolio | 100% | 100% |
Industrial Equipment Portfolio | 100% | 100% |
Industrials Portfolio | 100% | 100% |
Transportation Portfolio | 100% | 100% |
The funds will notify shareholders in January 2013 of amounts for use in preparing 2012 income tax returns.
Annual Report
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
FMR Co., Inc.
Fidelity Management & Research
(U.K.) Inc.
Fidelity Management & Research
(Hong Kong) Limited
Fidelity Management & Research
(Japan) Inc.
General Distributor
Fidelity Distributors Corporation
Boston, MA
Transfer and Service Agents
Fidelity Investments Institutional Operations Company, Inc.
Boston, MA
Fidelity Service Company, Inc.
Boston, MA
Custodian
Brown Brothers Harriman & Co.
Boston, MA
Corporate Headquarters
82 Devonshire Street
Boston, MA 02109
1-800-544-8888
The Fidelity Telephone Connection
Mutual Fund 24-Hour Service
Exchanges/Redemptions
and Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
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Fidelity®
Select Portfolios®
Materials Sector
Chemicals Portfolio
Gold Portfolio
Materials Portfolio
Annual Report
February 29, 2012
(Fidelity Cover Art)
Contents
Chemicals | Performance | |
| Management's Discussion | |
| Shareholder Expense Example | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
| Notes to the Financial Statements | |
Gold | Performance | |
| Management's Discussion | |
| Shareholder Expense Example | |
| Investment Changes | |
| Consolidated Investments | |
| Consolidated Financial Statements | |
| Notes to the Consolidated Financial Statements | |
Materials | Performance | |
| Management's Discussion | |
| Shareholder Expense Example | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
| Notes to the Financial Statements | |
Report of Independent Registered Public Accounting Firm |
| |
Trustees and Officers |
| |
Distributions |
|
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Other third party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company.
This report and the financial statements contained herein are submitted for the general information of the shareholders of the funds. This report is not authorized for distribution to prospective investors in the funds unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com, http://www.advisor.fidelity.com, or http://www.401k.com, as applicable.
NOT FDIC INSURED • MAY LOSE VALUE • NO BANK GUARANTEE
Neither the funds nor Fidelity Distributors Corporation is a bank.
Annual Report
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity a fund's total returns will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 29, 2012 | Past 1 | Past 5 | Past 10 |
Chemicals Portfolio | 10.31% | 11.62% | 13.44% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Chemicals Portfolio on February 28, 2002. The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period.
Annual Report
Chemicals Portfolio
Management's Discussion of Fund Performance
Market Recap: U.S. stocks rose for the 12 months ending February 29, 2012, as encouraging economic news sparked a strong late-period rally that lifted major equity benchmarks past a number of significant milestones. Stocks recovered from early-period uncertainty that followed the March 2011 earthquake, tsunami and nuclear meltdown in Japan, but plummeted during the summer amid Europe's debt woes and a historic U.S. credit-rating downgrade. Despite continued volatility and mixed economic news, markets began to recover in early October. Investors gravitated toward defensive sectors and the perceived safety of larger, more-established and dividend-paying names, helping the Dow Jones® Industrial Average advance 8.83%, and close above the psychologically important 13,000 mark in late February - for the first time since May 2008. The rally accelerated late in the period and the market broadened, as investor confidence improved amid encouraging manufacturing, housing and employment data, and signs of progress in Europe. For the year, the S&P 500® Index added 5.12%, closing near a four-year high on the period's second-to-last day. Of the 10 major market sectors in the S&P 500®, three defensive areas led the way - consumer staples, health care and utilities - while financials, materials and energy finished in negative territory. The technology-laden Nasdaq Composite® Index added 7.73%, flirting with the 3,000 mark, its highest level in 12 years. Foreign developed-markets stocks reeled over Europe's turmoil, and the MSCI® EAFE® (Europe, Australasia, Far East) Index fell 7.35%.
Comments from Mahmoud Sharaf, Portfolio Manager of Chemicals Portfolio: For the one-year period ending February 29, 2012, the fund returned 10.31%, easily outpacing both the 7.00% gain of its industry benchmark, the MSCI® U.S. IM Chemicals 25/50 Index, and the broad-based S&P 500®. Versus the MSCI index, positioning in fertilizers/agricultural chemicals, stock picking in specialty chemicals and commodity chemicals, and an out-of-benchmark holding in oil/gas refining and marketing helped most. As part of my strategy, I tend to hold an average cash stake of 4% to 5% in order to offset my investments in more-aggressive, higher-beta names. During the volatile period, this modest cash position was a plus. Conversely, a small out-of-index investment in environmental and facility services curbed results, as did security selection in industrial gases. An overweighting in Solutia, which makes chemicals for the auto, construction and solar markets, was the fund's top relative contributor. The stock was a big detractor until late January, when Eastman Chemical announced it would acquire Solutia for a premium. My belief that U.S. chemicals are at an advantage due to low domestic natural gas prices relative to high international oil led me to overweight CF Industries Holdings, a provider of nitrogen fertilizer, and LyondellBasell Industries, which sells polypropylene and polypropylene compounds. Both companies are suppliers to international markets and benefited from higher product costs overseas. Underweighting Mosaic, a supplier of phosphate and potash, used in agriculture, was the right call. I believed the potash industry was moving into oversupply and investors were pricing peak fundamentals into stocks here. Kraton Performance Polymers manufactures and markets butadiene, and its stock benefited from pricing power due to structural short supply in that market. An underweighting in chemicals giant E.I. du Pont de Nemours - the largest index component - also lifted results. Of final note, several out-of-benchmark investments contributed, including CVR Energy, an independent petroleum refiner, and Arkema, a French chemical manufacturing firm. I underestimated the pricing power of Cabot, which produces rubber blacks used in tires. Tire sales increased during the period, and I sold the stock prematurely. I made an out-of-benchmark investment in Swisher Hygiene, a provider of cleaning and sanitation chemicals, because I believed the company could successfully execute its strategy of buying smaller companies and achieving economies of scale. However, the stock slipped as investors questioned whether this strategy could be executed in the midst of financial market uncertainty and lagging gross domestic product (GDP) growth. Underweighting Lubrizol, which makes automotive additives and advanced materials, and Nalco Holding, which specializes in water treatment, detracted, because both companies saw their stocks soar after announcing they would be acquired - Lubrizol by insurance-focused conglomerate Berkshire Hathaway, and Nalco by disinfectant producer Ecolab. I sold Lubrizol after the announcement in March.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Chemicals Portfolio
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including redemption fees, and (2) ongoing costs, including management fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (September 1, 2011 to February 29, 2012).
Actual Expenses
The first line of the accompanying table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Annualized Expense Ratio | Beginning | Ending | Expenses Paid |
Actual | .84% | $ 1,000.00 | $ 1,142.40 | $ 4.47 |
Hypothetical (5% return per year before expenses) |
| $ 1,000.00 | $ 1,020.69 | $ 4.22 |
* Expenses are equal to the Fund's annualized expense ratio, multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
Annual Report
Chemicals Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 29, 2012 | ||
| % of fund's | % of fund's net assets |
E.I. du Pont de Nemours & Co. | 8.4 | 7.8 |
Praxair, Inc. | 8.3 | 10.4 |
Monsanto Co. | 7.6 | 8.0 |
Dow Chemical Co. | 6.2 | 8.1 |
Ecolab, Inc. | 5.7 | 5.0 |
LyondellBasell Industries NV Class A | 5.2 | 4.3 |
CF Industries Holdings, Inc. | 5.1 | 5.5 |
Eastman Chemical Co. | 4.5 | 0.8 |
Air Products & Chemicals, Inc. | 4.4 | 4.2 |
The Mosaic Co. | 4.2 | 7.0 |
| 59.6 | |
Top Industries (% of fund's net assets) | |||
As of February 29, 2012 | |||
 | Chemicals | 89.7% |
|
 | Oil, Gas & Consumable Fuels | 3.9% |
|
 | Marine | 1.4% |
|
 | Energy Equipment & Services | 1.1% |
|
 | Commercial Services & Supplies | 0.4% |
|
 | All Others* | 3.5% |
|
As of August 31, 2011 | |||
| Chemicals | 94.1% |
|
 | Commercial Services & Supplies | 0.7% |
|
 | Energy Equipment & Services | 0.3% |
|
 | Oil, Gas & Consumable Fuels | 0.0% |
|
| All Others* | 4.9% |
|
* Includes short-term investments and net other assets. |
Annual Report
Chemicals Portfolio
Investments February 29, 2012
Showing Percentage of Net Assets
Common Stocks - 96.2% | |||
Shares | Value | ||
CHEMICALS - 89.7% | |||
Commodity Chemicals - 2.0% | |||
Arkema SA | 138,800 | $ 12,718,066 | |
TPC Group, Inc. (a) | 131,099 | 4,554,379 | |
| 17,272,445 | ||
Diversified Chemicals - 23.9% | |||
Akzo Nobel NV | 110,190 | 6,249,802 | |
BASF AG | 120,519 | 10,580,602 | |
Dow Chemical Co. | 1,576,738 | 52,836,490 | |
E.I. du Pont de Nemours & Co. | 1,425,100 | 72,466,335 | |
Eastman Chemical Co. | 708,100 | 38,329,453 | |
Lanxess AG | 17,215 | 1,286,587 | |
PPG Industries, Inc. | 172,100 | 15,704,125 | |
Solutia, Inc. | 284,495 | 7,997,154 | |
| 205,450,548 | ||
Fertilizers & Agricultural Chemicals - 18.4% | |||
CF Industries Holdings, Inc. | 237,953 | 44,259,258 | |
Monsanto Co. | 847,840 | 65,605,859 | |
Rentech Nitrogen Partners LP | 525,055 | 12,989,861 | |
The Mosaic Co. | 624,442 | 36,061,526 | |
| 158,916,504 | ||
Industrial Gases - 12.7% | |||
Air Products & Chemicals, Inc. | 418,100 | 37,729,344 | |
Praxair, Inc. | 657,407 | 71,657,363 | |
| 109,386,707 | ||
Specialty Chemicals - 32.7% | |||
Ashland, Inc. | 413,400 | 26,275,704 | |
Celanese Corp. Class A | 101,961 | 4,850,285 | |
Cytec Industries, Inc. | 256,843 | 15,271,885 | |
Ecolab, Inc. | 820,699 | 49,241,940 | |
Ferro Corp. (a) | 207,330 | 1,150,682 | |
Innophos Holdings, Inc. | 321,805 | 16,212,536 | |
Kraton Performance Polymers, Inc. (a) | 395,800 | 10,999,282 | |
LyondellBasell Industries NV Class A | 1,047,478 | 45,230,100 | |
Rockwood Holdings, Inc. (a) | 384,988 | 20,500,611 | |
Sherwin-Williams Co. | 216,200 | 22,301,030 | |
Sigma Aldrich Corp. (d) | 434,000 | 31,156,860 | |
Valspar Corp. | 220,200 | 10,206,270 | |
W.R. Grace & Co. (a) | 491,984 | 28,023,409 | |
| 281,420,594 | ||
TOTAL CHEMICALS | 772,446,798 | ||
COMMERCIAL SERVICES & SUPPLIES - 0.4% | |||
Environmental & Facility Services - 0.4% | |||
Swisher Hygiene, Inc. | 549,240 | 1,620,258 | |
Swisher Hygiene, Inc. (Canada) (a) | 559,700 | 1,651,116 | |
| 3,271,374 | ||
| |||
Shares | Value | ||
ENERGY EQUIPMENT & SERVICES - 1.1% | |||
Oil & Gas Drilling - 1.1% | |||
Ocean Rig UDW, Inc. (United States) | 296,524 | $ 5,159,518 | |
Seadrill Ltd. | 104,700 | 4,404,729 | |
| 9,564,247 | ||
MARINE - 1.1% | |||
Marine - 1.1% | |||
DryShips, Inc. (a)(d) | 2,749,363 | 9,567,783 | |
OIL, GAS & CONSUMABLE FUELS - 3.9% | |||
Oil & Gas Exploration & Production - 1.0% | |||
WPX Energy, Inc. | 466,500 | 8,471,640 | |
Oil & Gas Refining & Marketing - 0.3% | |||
Rentech, Inc. (a) | 1,586,805 | 2,824,513 | |
Oil & Gas Storage & Transport - 2.6% | |||
Atlas Pipeline Partners, LP | 241,145 | 8,910,308 | |
Cheniere Energy, Inc. (a) | 620,700 | 9,335,328 | |
Markwest Energy Partners LP | 70,900 | 4,240,529 | |
| 22,486,165 | ||
TOTAL OIL, GAS & CONSUMABLE FUELS | 33,782,318 | ||
TOTAL COMMON STOCKS (Cost $676,694,378) |
| ||
Convertible Bonds - 0.3% | ||||
| Principal Amount |
| ||
MARINE - 0.3% | ||||
Marine - 0.3% | ||||
DryShips, Inc. 5% 12/1/14 | $ 2,790,000 |
| ||
Money Market Funds - 4.7% | |||
Shares |
| ||
Fidelity Cash Central Fund, 0.12% (b) | 38,887,491 | 38,887,491 | |
Fidelity Securities Lending Cash Central Fund, 0.12% (b)(c) | 2,112,525 | 2,112,525 | |
TOTAL MONEY MARKET FUNDS (Cost $41,000,016) |
| ||
TOTAL INVESTMENT PORTFOLIO - 101.2% (Cost $720,062,784) | 871,990,086 | |
NET OTHER ASSETS (LIABILITIES) - (1.2)% | (10,450,942) | |
NET ASSETS - 100% | $ 861,539,144 | |
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 38,301 |
Fidelity Securities Lending Cash Central Fund | 434,303 |
Total | $ 472,604 |
Other Information |
The following is a summary of the inputs used, as of February 29, 2012, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities: | ||||
Common Stocks | $ 828,632,520 | $ 828,632,520 | $ - | $ - |
Convertible Bonds | 2,357,550 | - | 2,357,550 | - |
Money Market Funds | 41,000,016 | 41,000,016 | - | - |
Total Investments in Securities: | $ 871,990,086 | $ 869,632,536 | $ 2,357,550 | $ - |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 88.7% |
Netherlands | 5.9% |
Marshall Islands | 2.0% |
France | 1.5% |
Germany | 1.4% |
Others (Individually Less Than 1%) | 0.5% |
| 100.0% |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Chemicals Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2012 | |
Assets | ||
Investment in securities, at value (including securities loaned of $1,971,390) - See accompanying schedule: Unaffiliated issuers (cost $679,062,768) | $ 830,990,070 |
|
Fidelity Central Funds (cost $41,000,016) | 41,000,016 |
|
Total Investments (cost $720,062,784) |
| $ 871,990,086 |
Receivable for investments sold | 27,805,147 | |
Receivable for fund shares sold | 4,252,923 | |
Dividends receivable | 905,376 | |
Interest receivable | 34,487 | |
Distributions receivable from Fidelity Central Funds | 4,005 | |
Prepaid expenses | 1,803 | |
Other receivables | 8,659 | |
Total assets | 905,002,486 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 39,032,242 | |
Payable for fund shares redeemed | 1,720,644 | |
Accrued management fee | 398,029 | |
Other affiliated payables | 169,002 | |
Other payables and accrued expenses | 30,900 | |
Collateral on securities loaned, at value | 2,112,525 | |
Total liabilities | 43,463,342 | |
|
|
|
Net Assets | $ 861,539,144 | |
Net Assets consist of: |
| |
Paid in capital | $ 717,326,855 | |
Undistributed net investment income | 623,552 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (8,349,092) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 151,937,829 | |
Net Assets, for 7,795,048 shares outstanding | $ 861,539,144 | |
Net Asset Value, offering price and redemption price per share ($861,539,144 ÷ 7,795,048 shares) | $ 110.52 | |
Statement of Operations
| Year ended February 29, 2012 | |
Investment Income |
|
|
Dividends |
| $ 11,486,765 |
Interest |
| 5,928 |
Income from Fidelity Central Funds |
| 472,604 |
Total income |
| 11,965,297 |
|
|
|
Expenses | ||
Management fee | $ 4,175,466 | |
Transfer agent fees | 1,735,564 | |
Accounting and security lending fees | 267,958 | |
Custodian fees and expenses | 18,215 | |
Independent trustees' compensation | 4,325 | |
Registration fees | 64,788 | |
Audit | 48,145 | |
Legal | 2,998 | |
Interest | 645 | |
Miscellaneous | 6,363 | |
Total expenses before reductions | 6,324,467 | |
Expense reductions | (81,766) | 6,242,701 |
Net investment income (loss) | 5,722,596 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 15,397,647 | |
Foreign currency transactions | (155,830) | |
Total net realized gain (loss) |
| 15,241,817 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 35,941,730 | |
Assets and liabilities in foreign currencies | 10,527 | |
Total change in net unrealized appreciation (depreciation) |
| 35,952,257 |
Net gain (loss) | 51,194,074 | |
Net increase (decrease) in net assets resulting from operations | $ 56,916,670 | |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Chemical Portfolio
Financial Statements - continued
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 5,722,596 | $ 3,940,718 |
Net realized gain (loss) | 15,241,817 | 17,783,542 |
Change in net unrealized appreciation (depreciation) | 35,952,257 | 138,994,021 |
Net increase (decrease) in net assets resulting from operations | 56,916,670 | 160,718,281 |
Distributions to shareholders from net investment income | (4,429,446) | (3,360,209) |
Distributions to shareholders from net realized gain | - | (10,408,869) |
Total distributions | (4,429,446) | (13,769,078) |
Share transactions | 571,810,704 | 331,258,688 |
Reinvestment of distributions | 4,296,838 | 13,366,343 |
Cost of shares redeemed | (459,470,250) | (217,023,388) |
Net increase (decrease) in net assets resulting from share transactions | 116,637,292 | 127,601,643 |
Redemption fees | 82,316 | 19,986 |
Total increase (decrease) in net assets | 169,206,832 | 274,570,832 |
|
|
|
Net Assets | ||
Beginning of period | 692,332,312 | 417,761,480 |
End of period (including undistributed net investment income of $623,552 and undistributed net investment | $ 861,539,144 | $ 692,332,312 |
Other Information Shares | ||
Sold | 5,550,618 | 3,814,779 |
Issued in reinvestment of distributions | 45,627 | 162,366 |
Redeemed | (4,666,200) | (2,650,727) |
Net increase (decrease) | 930,045 | 1,326,418 |
Financial Highlights
Years ended February 28, | 2012 H | 2011 | 2010 | 2009 | 2008 H |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 100.85 | $ 75.43 | $ 42.74 | $ 81.31 | $ 70.60 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .76 | .69 | 1.00 F | .73 | .85 |
Net realized and unrealized gain (loss) | 9.52 | 27.20 | 32.77 | (38.63) | 12.80 |
Total from investment operations | 10.28 | 27.89 | 33.77 | (37.90) | 13.65 |
Distributions from net investment income | (.62) | (.57) | (1.08) | (.68) | (.49) |
Distributions from net realized gain | - | (1.91) | - | (.02) | (2.46) |
Total distributions | (.62) | (2.47) J | (1.08) | (.70) | (2.95) |
Redemption fees added to paid in capital C | .01 | - I | - I | .03 | .01 |
Net asset value, end of period | $ 110.52 | $ 100.85 | $ 75.43 | $ 42.74 | $ 81.31 |
Total Return A,B | 10.31% | 37.74% | 79.15% | (46.68) % | 19.40% |
Ratios to Average Net Assets D,G |
|
|
|
|
|
Expenses before reductions | .85% | .90% | .96% | .91% | .93% |
Expenses net of fee waivers, if any | .85% | .90% | .96% | .91% | .93% |
Expenses net of all reductions | .84% | .89% | .95% | .90% | .93% |
Net investment income (loss) | .77% | .84% | 1.53% F | 1.05% | 1.08% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 861,539 | $ 692,332 | $ 417,761 | $ 243,144 | $ 320,835 |
Portfolio turnover rate E | 119% | 108% | 228% | 201% | 65% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown. B Total returns do not include the effect of the former sales charges. C Calculated based on average shares outstanding during the period. D Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Investment income per share reflects a large, non-recurring dividend which amounted to $.18 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been 1.25%. G Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. H For the year ended February 29. I Amount represents less than $.01 per share. J Total distributions of $2.47 per share is comprised of distributions from net investment income of $.565 and distributions from net realized gain of $1.905 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended February 29, 2012
1. Organization.
Chemicals Portfolio (the Fund) is a non-diversified fund of Fidelity Select Portfolios (the Trust) and is authorized to issue an unlimited number of shares. The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund invests primarily in securities of companies whose principal business activities fall within specific industries.
2. Investments in Fidelity Central Funds.
The Fund invests in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds held as of period end, if any, as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Fund:
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Fund uses independent pricing services approved by the Board of Trustees to value its investments. When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include market or security specific events, changes in interest rates and credit quality. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The value used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the Fund's own assumptions based on the best information available)
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level, as of February 29, 2012, is included at the end of the Fund's Schedule of Investments. Valuation techniques used to value the Fund's investments by major category are as follows:
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when significant market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-traded funds (ETFs) and certain indexes as well as quoted prices for similar securities are used and are categorized as Level 2 in the hierarchy in these circumstances. Utilizing these techniques may result in transfers between Level 1 and Level 2. For restricted equity securities and private placements where observable inputs are limited, assumptions about market activity and risk are used and are categorized as Level 3 in the hierarchy.
Debt securities, including restricted securities, are valued based on evaluated prices received from independent pricing services or from dealers who make markets in such securities. For corporate bonds, pricing services utilize matrix pricing which considers yield or price of bonds of comparable quality, coupon, maturity and type as well as dealer supplied prices and are generally categorized as Level 2 in the hierarchy. When independent prices are unavailable or unreliable, debt securities may be valued utilizing pricing matrices which consider similar factors that would be used by independent pricing services. These are generally categorized as Level 2 in the hierarchy but may be Level 3 depending on the circumstances.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Security Valuation - continued
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 in the hierarchy.
New Accounting Pronouncements. In May 2011, the Financial Accounting Standards Board issued Accounting Standard Update No. 2011-04, Fair Value Measurement (Topic 820) - Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. The update is effective during interim and annual periods beginning after December 15, 2011 and will result in additional disclosure for transfers between levels as well as expanded disclosure for securities categorized as Level 3 under the fair value hierarchy.
In December 2011, the Financial Accounting Standards Board issued Accounting Standard Update No. 2011-11, Disclosures about Offsetting Assets and Liabilities. The update creates new disclosure requirements requiring entities to disclose both gross and net information for derivatives and other financial instruments that are either offset in the Statement of Assets and Liabilities or subject to an enforceable master netting arrangement or similar agreement. The disclosure requirements are effective for interim and annual reporting periods beginning on or after January 1, 2013. Management is currently evaluating the impact of the update's adoption on the Fund's financial statement disclosures.
Foreign Currency. The Fund may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for income taxes is required. As of February 29, 2012, the Fund did not have any unrecognized tax benefits in the financial statements; nor is the Fund aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. The Fund files a U.S. federal tax return, in addition to state and local tax returns as required. A fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are declared and recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. In addition, the Fund claimed a portion of the payment made to redeeming shareholders as a distribution for income tax purposes.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Annual Report
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
Book-tax differences are primarily due to foreign currency transactions, market discount, passive foreign investment companies (PFIC), partnerships, deferred trustees compensation, capital loss carryforwards and losses deferred due to wash sales and excise regulations.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation | $ 150,127,354 |
Gross unrealized depreciation | (12,383,445) |
Net unrealized appreciation (depreciation) on securities and other investments | $ 137,743,909 |
|
|
Tax Cost | $ 734,246,177 |
The tax-based components of distributable earnings as of period end were as follows:
Undistributed ordinary income | $ 621,027 |
Undistributed long-term capital gain | $ 5,836,971 |
Net unrealized appreciation (depreciation) | $ 137,754,436 |
The tax character of distributions paid was as follows:
| February 29, 2012 | February 28, 2011 |
Ordinary Income | $ 4,429,446 | $ 3,556,186 |
Long-term Capital Gains | - | 10,212,892 |
Total | $ 4,429,446 | $ 13,769,078 |
Trading (Redemption) Fees. Shares held by investors in the Fund less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Fund and accounted for as an addition to paid in capital.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short short-term securities, aggregated $1,003,908,534 and $871,194,120, respectively.
5. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the Fund's average net assets and an annualized group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annual management fee rate was .56% of the Fund's average net assets.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the Fund's transfer, dividend disbursing and shareholder servicing agent. FIIOC receives account fees and asset-based fees that vary according to account size and type of account. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, the transfer agent fees were equivalent to an annual rate of .23% of average net assets.
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for each month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $12,868 for the period.
Annual Report
Notes to Financial Statements - continued
5. Fees and Other Transactions with Affiliates - continued
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Fund, along with other registered investment companies having management contracts with FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. The Fund's activity in this program during the period for which loans were outstanding was as follows:
Borrower or Lender | Average Loan Balance | Weighted Average Interest Rate | Interest |
Borrower | $ 8,426,250 | .34% | $ 645 |
6. Committed Line of Credit.
The Fund participates with other funds managed by FMR or an affiliate in a $4.0 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $2,098 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, there were no borrowings on this line of credit.
7. Security Lending.
The Fund lends portfolio securities through a lending agent from time to time in order to earn additional income. For equity securities, a lending agent is used and may loan securities to certain qualified borrowers, including Fidelity Capital Markets (FCM), a broker-dealer affiliated with the Fund. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. At period end, there were no security loans outstanding with FCM. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Total security lending income during the period amounted to $434,303. During the period, there were no securities loaned to FCM.
8. Expense Reductions.
Many of the brokers with whom FMR places trades on behalf of the Fund provided services to the Fund in addition to trade execution. These services included payments of certain expenses on behalf of the Fund totaling $81,731 for the period. In addition, through arrangements with the Fund's custodian, credits realized as a result of uninvested cash balances were used to reduce the Fund's expenses. During the period, these credits reduced the Fund's custody expenses by $35, respectively.
9. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
Annual Report
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total returns will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 29, 2012 | Past 1 | Past 5 | Past 10 |
Gold Portfolio | -6.00% | 11.01% | 16.80% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Gold Portfolio, a class of the fund, on February 28, 2002. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 performed over the same period.
Annual Report
Gold Portfolio
Management's Discussion of Fund Performance
Market Recap: U.S. stocks rose for the 12 months ending February 29, 2012, as encouraging economic news sparked a strong late-period rally that lifted major equity benchmarks past a number of significant milestones. Stocks recovered from early-period uncertainty that followed the March 2011 earthquake, tsunami and nuclear meltdown in Japan, but plummeted during the summer amid Europe's debt woes and a historic U.S. credit-rating downgrade. Despite continued volatility and mixed economic news, markets began to recover in early October. Investors gravitated toward defensive sectors and the perceived safety of larger, more-established and dividend-paying names, helping the Dow Jones® Industrial Average advance 8.83%, and close above the psychologically important 13,000 mark in late February - for the first time since May 2008. The rally accelerated late in the period and the market broadened, as investor confidence improved amid encouraging manufacturing, housing and employment data, and signs of progress in Europe. For the year, the S&P 500® Index added 5.12%, closing near a four-year high on the period's second-to-last day. Of the 10 major market sectors in the S&P 500®, three defensive areas led the way - consumer staples, health care and utilities - while financials, materials and energy finished in negative territory. The technology-laden Nasdaq Composite® Index added 7.73%, flirting with the 3,000 mark, its highest level in 12 years. Foreign developed-markets stocks reeled over Europe's turmoil, and the MSCI® EAFE® (Europe, Australasia, Far East) Index fell 7.35%.
Comments from S. Joseph Wickwire II, Portfolio Manager of Gold Portfolio: For the year, the fund's Retail Class shares returned -6.00%, trailing the -4.75% return of the S&P® Global BMI Gold Capped Index, as well as the S&P 500® Index. Relative to the industry benchmark, the fund underperformed because several larger companies I owned did not execute well during the reporting period. The largest detractors were overweighted positions in gold names that failed to execute during the period. Among them were senior gold producers AngloGold Ashanti, Agnico-Eagle Mines and Kinross Gold. While AngloGold did improve several key financial and operating metrics, the market remained concerned about perceived risks in South Africa and the company's ability to execute on its growth plans. Both Agnico and Kinross suffered significant setbacks at key assets during the period that caused the stocks to disappoint. In the exploration and development space, overweightings in Canaco Resources (Tanzania asset), Kingsgate Consolidated (Thailand) and Romarco Minerals (South Carolina) detracted because each incurred challenges with their projects that caused the market concern. The fund also was hurt by underweighting several outperforming junior and development stocks that I didn't feel warranted larger positions based on their risk/reward profiles. In addition, I overweighted several silver stocks that underperformed. Currency fluctuations also hurt, given the fund's significant foreign exposure as a global gold fund. The largest contribution came from companies that executed on their growth plans. These stocks covered the gold equity spectrum and were highlighted by such names as Randgold Resources, Pretium Resources, Troy Resources, Argonaut Gold and Goldcorp. The second-largest contributor was correctly underweighting poor-performing names that disappointed the market in terms of execution. These were typically junior and development companies, such as Gabriel Resources, Golden Star Resources, Tanzanian Royalty Exploration and Nevsun Resources. Lastly, our gold bullion position helped performance. Golden Star and Tanzanian Royalty Exploration were not held at period end.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Gold Portfolio
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments or redemption proceeds, redemption fees, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (September 1, 2011 to February 29, 2012).
Actual Expenses
The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Annualized Expense Ratio | Beginning | Ending | Expenses Paid |
Class A | 1.15% |
|
|
|
Actual |
| $ 1,000.00 | $ 880.80 | $ 5.38 |
HypotheticalA |
| $ 1,000.00 | $ 1,019.14 | $ 5.77 |
Class T | 1.43% |
|
|
|
Actual |
| $ 1,000.00 | $ 879.70 | $ 6.68 |
HypotheticalA |
| $ 1,000.00 | $ 1,017.75 | $ 7.17 |
Class B | 1.91% |
|
|
|
Actual |
| $ 1,000.00 | $ 877.70 | $ 8.92 |
HypotheticalA |
| $ 1,000.00 | $ 1,015.37 | $ 9.57 |
Class C | 1.88% |
|
|
|
Actual |
| $ 1,000.00 | $ 877.70 | $ 8.78 |
HypotheticalA |
| $ 1,000.00 | $ 1,015.51 | $ 9.42 |
Gold | .90% |
|
|
|
Actual |
| $ 1,000.00 | $ 882.20 | $ 4.21 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.39 | $ 4.52 |
Institutional Class | .82% |
|
|
|
Actual |
| $ 1,000.00 | $ 882.30 | $ 3.84 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.79 | $ 4.12 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
Annual Report
Gold Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 29, 2012 | ||
| % of fund's | % of fund's net assets |
Goldcorp, Inc. | 12.2 | 11.0 |
Barrick Gold Corp. | 11.9 | 11.9 |
Newmont Mining Corp. | 9.0 | 7.9 |
Newcrest Mining Ltd. | 8.4 | 9.0 |
AngloGold Ashanti Ltd. sponsored ADR | 5.1 | 4.7 |
Kinross Gold Corp. | 4.0 | 5.6 |
Yamana Gold, Inc. | 3.9 | 3.3 |
Randgold Resources Ltd. sponsored ADR | 3.6 | 3.0 |
Gold Fields Ltd. | 3.4 | 3.2 |
Eldorado Gold Corp. | 2.7 | 3.1 |
| 64.2 | |
Top Industries (% of fund's net assets) | |||
As of February 29, 2012 | |||
| Gold | 98.5% |
|
| Precious Metals & Minerals | 0.9% |
|
| Diversified Metals & Mining | 0.2% |
|
| Coal & Consumable Fuels | 0.1% |
|
| Specialty Stores | 0.0% |
|
| All Others* | 0.3% |
|
As of August 31, 2011 | |||
| Gold | 97.9% |
|
| Precious Metals & Minerals | 1.2% |
|
 | Coal & Consumable Fuels | 0.3% |
|
| Diversified Metals & Mining | 0.2% |
|
| Construction & Engineering | 0.2% |
|
| All Others* | 0.2% |
|
* Includes short-term investments and net other assets. |
Annual Report
Gold Portfolio
Consolidated Investments February 29, 2012
Showing Percentage of Net Assets
Common Stocks - 98.7% | |||
Shares | Value | ||
Australia - 11.5% | |||
METALS & MINING - 11.5% | |||
Gold - 11.5% | |||
Ampella Mining Ltd. (a) | 150,000 | $ 229,204 | |
CGA Mining Ltd.: | |||
(Australia) (a) | 18,920 | 40,474 | |
(Canada) (a) | 270,000 | 564,745 | |
Evolution Mining Ltd. (a) | 853,235 | 1,838,997 | |
Gryphon Minerals Ltd. (a) | 317,692 | 395,167 | |
Intrepid Mines Ltd.: | |||
(Australia) (a) | 8,709,798 | 12,328,162 | |
(Canada) (a) | 320,000 | 433,284 | |
Kingsgate Consolidated NL (d) | 3,705,767 | 27,259,540 | |
Kula Gold Ltd. (a) | 31,245 | 36,854 | |
Medusa Mining Ltd. | 2,572,885 | 17,739,756 | |
Newcrest Mining Ltd. | 10,268,992 | 368,773,129 | |
Papillon Resources Ltd. (a) | 100,000 | 120,098 | |
Perseus Mining Ltd.: | |||
(Australia) (a) | 4,599,308 | 14,154,375 | |
(Canada) (a) | 1,300,000 | 3,783,156 | |
Regis Resources Ltd. (a) | 4,898,292 | 22,743,059 | |
Resolute Mining Ltd. (a) | 4,911,661 | 10,954,890 | |
St Barbara Ltd. (a) | 4,644,676 | 11,504,923 | |
Troy Resources NL (a)(e) | 1,900,000 | 10,060,122 | |
| 502,959,935 | ||
Bailiwick of Jersey - 4.5% | |||
METALS & MINING - 4.5% | |||
Gold - 4.5% | |||
Centamin PLC (a) | 12,611,900 | 18,217,214 | |
Polyus Gold International Ltd. sponsored GDR (a) | 7,033,190 | 23,490,855 | |
Randgold Resources Ltd. sponsored ADR | 1,351,867 | 155,099,701 | |
| 196,807,770 | ||
Bermuda - 0.0% | |||
METALS & MINING - 0.0% | |||
Gold - 0.0% | |||
Continental Gold Ltd. (a) | 130,100 | 1,035,910 | |
Canada - 55.8% | |||
METALS & MINING - 55.8% | |||
Diversified Metals & Mining - 0.2% | |||
Barisan Gold Corp. (e) | 2,500 | 1,112 | |
Barisan Gold Corp. warrants 9/26/13 (a) | 625 | 0 | |
Clifton Star Resources, Inc. (a) | 25,000 | 73,258 | |
Copper Mountain Mining Corp. (a) | 137,000 | 707,392 | |
East Asia Minerals Corp. (a) | 5,000 | 3,284 | |
Eastmain Resources, Inc. (a) | 10,000 | 12,126 | |
Kimber Resources, Inc. (a) | 16,100 | 16,919 | |
Kimber Resources, Inc. (a)(e) | 5,832,000 | 6,128,712 | |
Rio Alto Mining Ltd. (a) | 10,000 | 45,167 | |
| |||
Shares | Value | ||
Sabina Gold & Silver Corp. (a) | 465,000 | $ 1,508,261 | |
Southern Arc Minerals, Inc. (a) | 30,000 | 20,007 | |
Trelawney Mining and Exploration, Inc. (a) | 250,000 | 593,644 | |
| 9,109,882 | ||
Gold - 54.8% | |||
Agnico-Eagle Mines Ltd. (Canada) | 2,642,200 | 96,033,885 | |
Alacer Gold Corp. (a) | 3,169,063 | 30,581,066 | |
Alamos Gold, Inc. | 1,968,800 | 36,684,355 | |
Argonaut Gold, Inc. (a) | 629,800 | 6,204,769 | |
ATAC Resources Ltd. (a) | 67,200 | 207,104 | |
AuRico Gold, Inc. (a) | 4,366,763 | 42,800,587 | |
Aurizon Mines Ltd. (a) | 2,366,900 | 12,556,181 | |
Avion Gold Corp. (a) | 4,835,000 | 8,207,750 | |
B2Gold Corp. (a) | 4,542,400 | 18,726,814 | |
Banro Corp. (a) | 1,380,786 | 7,478,415 | |
Barrick Gold Corp. (d) | 10,914,019 | 522,073,116 | |
Bearing Resources Ltd. (a) | 29,687 | 13,799 | |
Belo Sun Mining Corp. (a) | 65,000 | 67,650 | |
Canaco Resources, Inc. (a) | 1,295,100 | 1,897,534 | |
Canaco Resources, Inc. (e) | 561,600 | 822,836 | |
Centerra Gold, Inc. | 2,301,200 | 46,272,804 | |
China Gold International Resources Corp. Ltd. (a) | 90,000 | 393,776 | |
Colossus Minerals, Inc. (a) | 1,436,100 | 10,172,345 | |
Corvus Gold, Inc. (a) | 138,350 | 131,409 | |
Detour Gold Corp. (a) | 618,000 | 16,954,176 | |
Detour Gold Corp. (a)(e) | 785,900 | 21,560,334 | |
Eldorado Gold Corp. | 7,576,013 | 115,747,299 | |
European Goldfields Ltd. | 1,906,700 | 25,200,461 | |
Exeter Resource Corp. (a) | 238,000 | 791,209 | |
Extorre Gold Mines Ltd. (a) | 423,000 | 3,205,679 | |
Extorre Gold Mines Ltd. (e) | 61,300 | 464,558 | |
Franco-Nevada Corp. | 1,834,900 | 81,060,807 | |
Gabriel Resources Ltd. (a) | 595,000 | 3,637,397 | |
Goldcorp, Inc. | 11,004,100 | 533,387,239 | |
Gran Colombia Gold Corp. (a)(d) | 1,665,000 | 874,855 | |
Great Basin Gold Ltd. (a)(d) | 5,972,900 | 5,190,415 | |
Guyana Goldfields, Inc. (a) | 1,093,000 | 6,206,901 | |
Guyana Goldfields, Inc. (a)(e) | 155,000 | 880,210 | |
IAMGOLD Corp. | 5,133,200 | 77,595,788 | |
International Minerals Corp.: | |||
(Canada) (a) | 157,100 | 893,723 | |
(Switzerland) (a) | 15,000 | 84,549 | |
International Tower Hill Mines Ltd. (a) | 546,700 | 2,773,136 | |
Keegan Resources, Inc. (a) | 30,000 | 146,112 | |
Kinross Gold Corp. | 15,857,091 | 175,451,065 | |
Kinross Gold Corp. warrants 9/17/14 (a) | 375,441 | 371,780 | |
Kirkland Lake Gold, Inc. (a) | 859,500 | 14,434,285 | |
Lake Shore Gold Corp. (a) | 3,196,600 | 4,974,247 | |
Nevsun Resources Ltd. | 50,000 | 206,639 | |
New Gold, Inc. (a) | 6,312,455 | 73,735,139 | |
New Gold, Inc. warrants 4/3/12 (a)(e) | 2,928,500 | 14,796 | |
Common Stocks - continued | |||
Shares | Value | ||
Canada - continued | |||
METALS & MINING - CONTINUED | |||
Gold - continued | |||
Novagold Resources, Inc. (a)(d) | 2,955,000 | $ 24,454,555 | |
OceanaGold Corp. (a) | 1,455,000 | 3,690,244 | |
Orezone Gold Corp. (a) | 80,000 | 227,959 | |
Osisko Mining Corp. (a) | 2,477,000 | 31,386,429 | |
Osisko Mining Corp. (a)(e) | 3,000,000 | 38,013,439 | |
Pilot Gold, Inc. (a) | 91,250 | 165,968 | |
Premier Gold Mines Ltd. (a) | 2,026,800 | 11,448,302 | |
Primero Mining Corp. (a) | 534,300 | 1,511,686 | |
Queenston Mining, Inc. (a) | 215,000 | 1,031,930 | |
Rainy River Resources Ltd. (a) | 690,000 | 5,319,759 | |
Richmont Mines, Inc. (a) | 20,000 | 204,517 | |
Riva Gold Corp. (a) | 10,000 | 3,132 | |
Romarco Minerals, Inc. (a) | 7,795,500 | 8,507,189 | |
Romarco Minerals, Inc. (a)(e) | 5,900,000 | 6,438,640 | |
Rubicon Minerals Corp. (a) | 2,581,352 | 9,416,138 | |
San Gold Corp. (a) | 4,674,400 | 7,982,353 | |
Seabridge Gold, Inc. (a) | 601,905 | 14,241,073 | |
SEMAFO, Inc. | 4,590,000 | 30,796,342 | |
Sulliden Gold Corp. Ltd. (a) | 10,000 | 15,561 | |
Teranga Gold Corp. CDI unit (a) | 3,410,974 | 8,851,362 | |
Torex Gold Resources, Inc. (a) | 5,356,000 | 12,555,873 | |
Yamana Gold, Inc. | 9,938,100 | 172,522,162 | |
| 2,395,953,607 | ||
Precious Metals & Minerals - 0.8% | |||
Chesapeake Gold Corp. (a) | 6,000 | 58,748 | |
Dalradian Resources, Inc. (a) | 41,000 | 72,500 | |
Fortuna Mines, Inc. (a) | 20,000 | 139,847 | |
Orko Silver Corp. (a) | 416,000 | 882,736 | |
Pan American Silver Corp. | 224,487 | 5,623,399 | |
Pan American Silver Corp. warrants 12/7/14 (a) | 232,460 | 1,140,953 | |
Pretium Resources, Inc. (a) | 10,000 | 179,356 | |
Pretium Resources, Inc. (f) | 450,000 | 8,071,035 | |
Pretium Resources, Inc. warrants 4/8/12 (a)(f) | 225,000 | 1,175,416 | |
Silver Wheaton Corp. | 347,100 | 13,285,654 | |
Silvercorp Metals, Inc. | 75,000 | 550,952 | |
Tahoe Resources, Inc. (a) | 185,500 | 3,958,733 | |
Wildcat Silver Corp. (a) | 30,000 | 63,053 | |
| 35,202,382 | ||
TOTAL METALS & MINING | 2,440,265,871 | ||
| |||
Shares | Value | ||
China - 2.3% | |||
METALS & MINING - 2.3% | |||
Gold - 2.3% | |||
Zhaojin Mining Industry Co. Ltd. (H Shares) | 9,084,150 | $ 18,739,624 | |
Zijin Mining Group Co. Ltd. (H Shares) | 173,566,000 | 83,246,157 | |
| 101,985,781 | ||
Japan - 0.0% | |||
SPECIALTY RETAIL - 0.0% | |||
Specialty Stores - 0.0% | |||
Tsutsumi Jewelry Co. Ltd. | 5,100 | 133,374 | |
Peru - 2.1% | |||
METALS & MINING - 2.1% | |||
Gold - 2.1% | |||
Compania de Minas Buenaventura SA sponsored ADR | 2,327,500 | 93,402,575 | |
South Africa - 10.3% | |||
METALS & MINING - 10.3% | |||
Gold - 10.3% | |||
AngloGold Ashanti Ltd. sponsored ADR | 5,262,952 | 223,412,312 | |
Gold Fields Ltd. | 55,000 | 853,025 | |
Gold Fields Ltd. sponsored ADR | 9,726,026 | 149,489,020 | |
Harmony Gold Mining Co. Ltd. | 1,484,000 | 19,106,926 | |
Harmony Gold Mining Co. Ltd. sponsored ADR (d) | 4,381,800 | 55,736,496 | |
| 448,597,779 | ||
United Kingdom - 0.8% | |||
METALS & MINING - 0.8% | |||
Gold - 0.8% | |||
African Barrick Gold Ltd. | 1,445,600 | 10,808,404 | |
Avocet Mining PLC | 10,000 | 35,753 | |
Patagonia Gold PLC (a) | 160,000 | 97,993 | |
Petropavlovsk PLC | 2,195,929 | 25,099,245 | |
| 36,041,395 | ||
United States of America - 11.4% | |||
METALS & MINING - 11.3% | |||
Gold - 11.2% | |||
Allied Nevada Gold Corp. (a) | 1,245,100 | 42,843,891 | |
Allied Nevada Gold Corp. (Canada) (a) | 20,000 | 690,547 | |
Newmont Mining Corp. | 6,572,150 | 390,385,710 | |
Royal Gold, Inc. (d) | 768,113 | 53,345,448 | |
| 487,265,596 | ||
Precious Metals & Minerals - 0.1% | |||
Coeur d'Alene Mines Corp. (a) | 10,000 | 284,400 | |
Common Stocks - continued | |||
Shares | Value | ||
United States of America - continued | |||
METALS & MINING - CONTINUED | |||
Precious Metals & Minerals - continued | |||
Gold Resource Corp. (d) | 30,000 | $ 733,500 | |
McEwen Mining, Inc. (a)(d) | 730,100 | 3,818,423 | |
| 4,836,323 | ||
TOTAL METALS & MINING | 492,101,919 | ||
OIL, GAS & CONSUMABLE FUELS - 0.1% | |||
Coal & Consumable Fuels - 0.1% | |||
Alpha Natural Resources, Inc. (a) | 228,300 | 4,237,248 | |
TOTAL UNITED STATES OF AMERICA | 496,339,167 | ||
TOTAL COMMON STOCKS (Cost $3,324,595,054) |
| ||
Commodities - 1.0% | |||
Troy |
| ||
Gold Bullion (a) | 25,500 |
| |
Money Market Funds - 13.7% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.12% (b) | 22,033,943 | 22,033,943 | |
Fidelity Securities Lending Cash Central Fund, 0.12% (b)(c) | 577,742,949 | 577,742,949 | |
TOTAL MONEY MARKET FUNDS (Cost $599,776,892) |
| ||
TOTAL INVESTMENT PORTFOLIO - 113.4% (Cost $3,950,697,796) | 4,960,477,914 | |
NET OTHER ASSETS (LIABILITIES) - (13.4)% | (584,968,362) | |
NET ASSETS - 100% | $ 4,375,509,552 | |
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
(e) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the end of the period, the value of these securities amounted to $84,384,759 or 1.9% 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 $9,246,451 or 0.2% of net assets. |
Additional information on each restricted holding is as follows: |
Security | Acquisition Date | Acquisition Cost |
Pretium Resources, Inc. | 3/31/11 | $ 4,344,586 |
Pretium Resources, Inc. warrants 4/8/12 | 3/31/11 | $ 296,025 |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 22,481 |
Fidelity Securities Lending Cash Central Fund | 717,855 |
Total | $ 740,336 |
Consolidated Subsidiary |
| Value, | Purchases | Sales | Dividend | Value, |
Fidelity Select Gold Cayman Ltd. | $ 26,107,166 | $ 55,875,145 | $ 40,620,000 | $ - | $ 43,125,922 |
Other Information |
The following is a summary of the inputs used, as of February 29, 2012, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the tables below, please refer to the Security Valuation section in the accompanying Notes to Consolidated Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities: | ||||
Common Stocks | $ 4,317,569,557 | $ 4,296,395,395 | $ 21,100,904 | $ 73,258 |
Commodities | 43,131,465 | 43,131,465 | - | - |
Money Market Funds | 599,776,892 | 599,776,892 | - | - |
Total Investments in Securities: | $ 4,960,477,914 | $ 4,939,303,752 | $ 21,100,904 | $ 73,258 |
The following is a reconciliation of Investments in Securities for which Level 3 inputs were used in determining value: |
Investments in Securities: | |
Beginning Balance | $ - |
Total Realized Gain (Loss) | - |
Total Unrealized Gain (Loss) | (44,374) |
Cost of Purchases | - |
Proceeds of Sales | - |
Amortization/Accretion | - |
Transfers in to Level 3 | 117,632 |
Transfers out of Level 3 | - |
Ending Balance | $ 73,258 |
The change in unrealized gain (loss) for the period attributable to Level 3 securities held at February 29, 2012 | $ (44,374) |
The information used in the above reconciliation represents fiscal year to date activity for any Investments in Securities identified as using Level 3 inputs at either the beginning or the end of the current fiscal period. Transfers in or out of Level 3 represent the beginning value of any Security or Instrument where a change in the pricing level occurred from the beginning to the end of the period. The cost of purchases and the proceeds of sales may include securities received or delivered through corporate actions or exchanges. Realized and unrealized gains (losses) disclosed in the reconciliation are included in Net Gain (Loss) on the Fund's Consolidated Statement of Operations. |
See accompanying notes which are an integral part of the consolidated financial statements.
Annual Report
Gold Portfolio
Consolidated Financial Statements
Consolidated Statement of Assets and Liabilities
| February 29, 2012 | |
Assets | ||
Investment in securities, at value (including securities loaned of $535,479,046) - See accompanying schedule: Unaffiliated issuers (cost $3,324,595,054) | $ 4,317,569,557 |
|
Fidelity Central Funds (cost $599,776,892) | 599,776,892 |
|
Commodities (cost $26,325,850) | 43,131,465 |
|
Total Investments (cost $3,950,697,796) |
| $ 4,960,477,914 |
Cash |
| 6,070 |
Receivable for investments sold |
| 1,753,475 |
Delayed delivery |
| 1,979,437 |
Receivable for fund shares sold | 6,465,997 | |
Dividends receivable | 2,191,884 | |
Distributions receivable from Fidelity Central Funds | 44,216 | |
Prepaid expenses | 8,389 | |
Other receivables | 10,597 | |
Total assets | 4,972,937,979 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 9,398,938 | |
Payable for fund shares redeemed | 6,853,717 | |
Accrued management fee | 2,063,356 | |
Distribution and service plan fees payable | 125,405 | |
Other affiliated payables | 1,156,454 | |
Other payables and accrued expenses | 87,608 | |
Collateral on securities loaned, at value | 577,742,949 | |
Total liabilities | 597,428,427 | |
|
|
|
Net Assets | $ 4,375,509,552 | |
Net Assets consist of: |
| |
Paid in capital | $ 3,692,368,794 | |
Accumulated net investment loss | (30,304,890) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (296,343,810) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 1,009,789,458 | |
Net Assets | $ 4,375,509,552 | |
Consolidated Statement of Assets and Liabilities -
continued
| February 29, 2012 | |
Calculation of Maximum Offering Price Class A: | $ 45.37 | |
|
|
|
Maximum offering price per share (100/94.25 of $45.37) | $ 48.14 | |
Class T: | $ 45.04 | |
|
|
|
Maximum offering price per share (100/96.50 of $45.04) | $ 46.67 | |
Class B: | $ 44.24 | |
|
|
|
Class C: | $ 44.05 | |
|
|
|
Gold: | $ 45.96 | |
|
|
|
Institutional Class: | $ 45.87 | |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
See accompanying notes which are an integral part of the consolidated financial statements.
Annual Report
Gold Portfolio
Consolidated Financial Statements - continued
Consolidated Statement of Operations
| Year ended February 29, 2012 | |
Investment Income |
|
|
Dividends |
| $ 38,009,925 |
Interest |
| 6 |
Income from Fidelity Central Funds |
| 740,336 |
Total income |
| 38,750,267 |
|
|
|
Expenses | ||
Management fee | $ 25,411,280 | |
Transfer agent fees | 12,523,829 | |
Distribution and service plan fees | 1,573,273 | |
Accounting and security lending fees | 1,580,157 | |
Custodian fees and expenses | 426,402 | |
Independent trustees' compensation | 26,914 | |
Registration fees | 210,059 | |
Audit | 35,272 | |
Legal | 15,466 | |
Interest | 2,740 | |
Miscellaneous | 44,874 | |
Total expenses before reductions | 41,850,266 | |
Expense reductions | (188,884) | 41,661,382 |
Net investment income (loss) | (2,911,115) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investments: |
|
|
Unaffiliated issuers | 73,143,949 | |
Commodities | (3,419,750) |
|
Foreign currency transactions | (249,291) | |
Total net realized gain (loss) |
| 69,474,908 |
Change in net unrealized appreciation (depreciation) on: Investments | (369,226,287) | |
Assets and liabilities in foreign currencies | 25,359 | |
Commodities | 5,290,565 | |
Total change in net unrealized appreciation (depreciation) |
| (363,910,363) |
Net gain (loss) | (294,435,455) | |
Net increase (decrease) in net assets resulting from operations | $ (297,346,570) | |
Consolidated Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ (2,911,115) | $ (16,366,924) |
Net realized gain (loss) | 69,474,908 | 401,575,169 |
Change in net unrealized appreciation (depreciation) | (363,910,363) | 806,517,405 |
Net increase (decrease) in net assets resulting | (297,346,570) | 1,191,725,650 |
Distributions to shareholders from net realized gain | (238,750,097) | (403,524,767) |
Share transactions - net increase (decrease) | 229,358,064 | 849,828,502 |
Redemption fees | 461,104 | 423,645 |
Total increase (decrease) in net assets | (306,277,499) | 1,638,453,030 |
|
|
|
Net Assets | ||
Beginning of period | 4,681,787,051 | 3,043,334,021 |
End of period (including accumulated net investment loss of $30,304,890 and accumulated net investment loss of $1,236, respectively) | $ 4,375,509,552 | $ 4,681,787,051 |
See accompanying notes which are an integral part of the consolidated financial statements.
Annual Report
Consolidated Financial Highlights - Class A
Years ended February 28, | 2012 G | 2011 | 2010 | 2009 | 2008 G |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 50.92 | $ 40.50 | $ 30.45 | $ 46.19 | $ 36.53 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.13) | (.30) | (.25) | (.15) | (.15) |
Net realized and unrealized gain (loss) | (2.83) | 15.28 | 11.00 | (15.44) | 15.00 |
Total from investment operations | (2.96) | 14.98 | 10.75 | (15.59) | 14.85 |
Distributions from net investment income | - | - | - | - | (.19) |
Distributions from net realized gain | (2.59) | (4.57) | (.71) | (.17) | (5.01) |
Total distributions | (2.59) | (4.57) | (.71) | (.17) | (5.20) |
Redemption fees added to paid in capital C | - H | .01 | .01 | .02 | .01 |
Net asset value, end of period | $ 45.37 | $ 50.92 | $ 40.50 | $ 30.45 | $ 46.19 |
Total Return A,B | (6.24)% | 36.99% | 35.19% | (33.81) % | 44.59% |
Ratios to Average Net Assets D,F |
|
|
|
|
|
Expenses before reductions | 1.14% | 1.16% | 1.21% | 1.21% | 1.17% |
Expenses net of fee waivers, if any | 1.14% | 1.15% | 1.19% | 1.19% | 1.17% |
Expenses net of all reductions | 1.14% | 1.14% | 1.17% | 1.15% | 1.13% |
Net investment income (loss) | (.28)% | (.63)% | (.63)% | (.45)% | (.37)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 152,969 | $ 149,178 | $ 82,413 | $ 39,144 | $ 26,620 |
Portfolio turnover rate E | 22% | 35% | 46% | 42% | 55% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown. B Total returns do not include the effect of the sales charges. C Calculated based on average shares outstanding during the period. D Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. G For the year ended February 29. H Amount represents less than $.01 per share.
Consolidated Financial Highlights - Class T
Years ended February 28, | 2012 G | 2011 | 2010 | 2009 | 2008 G |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 50.68 | $ 40.34 | $ 30.36 | $ 46.17 | $ 36.49 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.27) | (.43) | (.36) | (.24) | (.25) |
Net realized and unrealized gain (loss) | (2.80) | 15.21 | 10.96 | (15.42) | 15.05 |
Total from investment operations | (3.07) | 14.78 | 10.60 | (15.66) | 14.80 |
Distributions from net investment income | - | - | - | - | (.16) |
Distributions from net realized gain | (2.57) | (4.45) | (.63) | (.17) | (4.97) |
Total distributions | (2.57) | (4.45) | (.63) | (.17) | (5.13) |
Redemption fees added to paid in capital C | - H | .01 | .01 | .02 | .01 |
Net asset value, end of period | $ 45.04 | $ 50.68 | $ 40.34 | $ 30.36 | $ 46.17 |
Total Return A,B | (6.49)% | 36.62% | 34.79% | (33.98) % | 44.45% |
Ratios to Average Net Assets D,F |
|
|
|
|
|
Expenses before reductions | 1.43% | 1.44% | 1.51% | 1.47% | 1.43% |
Expenses net of fee waivers, if any | 1.42% | 1.42% | 1.49% | 1.45% | 1.43% |
Expenses net of all reductions | 1.42% | 1.42% | 1.47% | 1.41% | 1.39% |
Net investment income (loss) | (.57)% | (.90)% | (.93)% | (.71)% | (.63)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 40,664 | $ 45,846 | $ 26,256 | $ 15,284 | $ 11,334 |
Portfolio turnover rate E | 22% | 35% | 46% | 42% | 55% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown. B Total returns do not include the effect of the sales charges. C Calculated based on average shares outstanding during the period. D Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. G For the year ended February 29. H Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the consolidated financial statements.
Annual Report
Consolidated Financial Highlights - Class B
Years ended February 28, | 2012 G | 2011 | 2010 | 2009 | 2008 G |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 50.02 | $ 39.87 | $ 30.08 | $ 45.97 | $ 36.46 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.49) | (.66) | (.55) | (.40) | (.45) |
Net realized and unrealized gain (loss) | (2.76) | 15.02 | 10.84 | (15.34) | 14.95 |
Total from investment operations | (3.25) | 14.36 | 10.29 | (15.74) | 14.50 |
Distributions from net investment income | - | - | - | - | (.16) |
Distributions from net realized gain | (2.53) | (4.21) | (.51) | (.17) | (4.84) |
Total distributions | (2.53) | (4.21) | (.51) | (.17) | (5.00) |
Redemption fees added to paid in capital C | - H | - H | .01 | .02 | .01 |
Net asset value, end of period | $ 44.24 | $ 50.02 | $ 39.87 | $ 30.08 | $ 45.97 |
Total Return A,B | (6.95)% | 35.97% | 34.12% | (34.30)% | 43.53% |
Ratios to Average Net Assets D,F |
|
|
|
|
|
Expenses before reductions | 1.90% | 1.93% | 2.00% | 1.97% | 1.93% |
Expenses net of fee waivers, if any | 1.90% | 1.92% | 1.98% | 1.95% | 1.93% |
Expenses net of all reductions | 1.90% | 1.91% | 1.96% | 1.89% | 1.90% |
Net investment income (loss) | (1.04)% | (1.39)% | (1.42)% | (1.20)% | (1.14)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 20,894 | $ 26,837 | $ 18,340 | $ 8,421 | $ 6,869 |
Portfolio turnover rate E | 22% | 35% | 46% | 42% | 55% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown. B Total returns do not include the effect of the contingent deferred sales charge. C Calculated based on average shares outstanding during the period. D Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. G For the year ended February 29. H Amount represents less than $.01 per share.
Consolidated Financial Highlights - Class C
Years ended February 28, | 2012 G | 2011 | 2010 | 2009 | 2008 G |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 49.81 | $ 39.75 | $ 30.00 | $ 45.85 | $ 36.44 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.47) | (.64) | (.53) | (.39) | (.45) |
Net realized and unrealized gain (loss) | (2.76) | 14.98 | 10.80 | (15.30) | 14.91 |
Total from investment operations | (3.23) | 14.34 | 10.27 | (15.69) | 14.46 |
Distributions from net investment income | - | - | - | - | (.17) |
Distributions from net realized gain | (2.53) | (4.28) | (.53) | (.17) | (4.89) |
Total distributions | (2.53) | (4.28) | (.53) | (.17) | (5.06) |
Redemption fees added to paid in capital C | - H | - H | .01 | .01 | .01 |
Net asset value, end of period | $ 44.05 | $ 49.81 | $ 39.75 | $ 30.00 | $ 45.85 |
Total Return A,B | (6.93)% | 36.01% | 34.15% | (34.30)% | 43.49% |
Ratios to Average Net Assets D,F |
|
|
|
|
|
Expenses before reductions | 1.87% | 1.89% | 1.97% | 1.97% | 1.92% |
Expenses net of fee waivers, if any | 1.87% | 1.88% | 1.95% | 1.95% | 1.92% |
Expenses net of all reductions | 1.87% | 1.87% | 1.93% | 1.89% | 1.89% |
Net investment income (loss) | (1.01)% | (1.35)% | (1.39)% | (1.20)% | (1.12)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 67,996 | $ 72,431 | $ 38,624 | $ 17,544 | $ 10,835 |
Portfolio turnover rate E | 22% | 35% | 46% | 42% | 55% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown. B Total returns do not include the effect of the contingent deferred sales charge. C Calculated based on average shares outstanding during the period. D Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. G For the year ended February 29. H Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the consolidated financial statements.
Annual Report
Consolidated Financial Highlights - Gold
Years ended February 28, | 2012 F | 2011 | 2010 | 2009 | 2008 F |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 51.44 | $ 40.85 | $ 30.67 | $ 46.37 | $ 36.54 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | (.02) | (.18) | (.16) | (.04) | (.02) |
Net realized and unrealized gain (loss) | (2.85) | 15.43 | 11.10 | (15.51) | 15.05 |
Total from investment operations | (2.87) | 15.25 | 10.94 | (15.55) | 15.03 |
Distributions from net investment income | - | - | - | - | (.18) |
Distributions from net realized gain | (2.61) | (4.67) | (.77) | (.17) | (5.03) |
Total distributions | (2.61) | (4.67) | (.77) | (.17) | (5.21) |
Redemption fees added to paid in capital B | - G | .01 | .01 | .02 | .01 |
Net asset value, end of period | $ 45.96 | $ 51.44 | $ 40.85 | $ 30.67 | $ 46.37 |
Total Return A | (6.00)% | 37.35% | 35.52% | (33.59) % | 45.10% |
Ratios to Average Net Assets C,E |
|
|
|
|
|
Expenses before reductions | .89% | .91% | .98% | .89% | .85% |
Expenses net of fee waivers, if any | .89% | .90% | .96% | .87% | .85% |
Expenses net of all reductions | .89% | .89% | .94% | .86% | .81% |
Net investment income (loss) | (.03)% | (.37)% | (.40)% | (.13)% | (.05)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 3,924,439 | $ 4,250,249 | $ 2,839,664 | $ 1,881,600 | $ 2,381,114 |
Portfolio turnover rate D | 22% | 35% | 46% | 42% | 55% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown. B Calculated based on average shares outstanding during the period. C Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. D Amount does not include the portfolio activity of any underlying Fidelity Central Funds. E Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. F For the year ended February 29. G Amount represents less than $.01 per share.
Consolidated Financial Highlights - Institutional Class
Years ended February 28, | 2012 F | 2011 | 2010 | 2009 | 2008 F |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 51.32 | $ 40.77 | $ 30.65 | $ 46.34 | $ 36.54 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | .02 | (.15) | (.15) | (.05) | (.01) |
Net realized and unrealized gain (loss) | (2.85) | 15.41 | 11.08 | (15.49) | 15.03 |
Total from investment operations | (2.83) | 15.26 | 10.93 | (15.54) | 15.02 |
Distributions from net investment income | - | - | - | - | (.19) |
Distributions from net realized gain | (2.62) | (4.72) | (.82) | (.17) | (5.04) |
Total distributions | (2.62) | (4.72) | (.82) | (.17) | (5.23) |
Redemption fees added to paid in capital B | - G | .01 | .01 | .02 | .01 |
Net asset value, end of period | $ 45.87 | $ 51.32 | $ 40.77 | $ 30.65 | $ 46.34 |
Total Return A | (5.94)% | 37.45% | 35.50% | (33.59)% | 45.10% |
Ratios to Average Net Assets C,E |
|
|
|
|
|
Expenses before reductions | .82% | .85% | .95% | .91% | .83% |
Expenses net of fee waivers, if any | .81% | .84% | .93% | .89% | .83% |
Expenses net of all reductions | .81% | .83% | .91% | .86% | .79% |
Net investment income (loss) | .04% | (.31)% | (.37)% | (.14)% | (.03)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 168,548 | $ 137,246 | $ 38,037 | $ 6,070 | $ 3,174 |
Portfolio turnover rate D | 22% | 35% | 46% | 42% | 55% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown. B Calculated based on average shares outstanding during the period. C Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. D Amount does not include the portfolio activity of any underlying Fidelity Central Funds. E Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. F For the year ended February 29. G Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the consolidated financial statements.
Annual Report
Notes to Consolidated Financial Statements
For the period ended February 29, 2012
1. Organization.
Gold Portfolio (the Fund) is a non-diversified fund of Fidelity Select Portfolios (the Trust) and is authorized to issue an unlimited number of shares. The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund invests primarily in securities of companies whose principal business activities fall within specific industries. The Fund offers Class A, Class T, Class C, Gold, and Institutional Class shares, each of which, along with Class B shares, has equal rights as to assets and voting privileges. Effective after the close of business on September 1, 2010, Class B shares were closed to new accounts and additional purchases, except for exchanges and reinvestments. Each class has exclusive voting rights with respect to matters that affect that class. Class B shares will automatically convert to Class A shares after a holding period of seven years from the initial date of purchase. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions may also differ by class.
2. Consolidated Subsidiary
The Fund invests in certain precious metals through Fidelity Select Gold Cayman Ltd., a wholly owned subsidiary (the "Subsidiary"). As of February 29, 2012, the Fund held $43,125,922 in the Subsidiary, representing 1.0% of the Fund's net assets.
The financial statements have been consolidated and include accounts of the Fund and the Subsidiary. Accordingly, all inter-company transactions and balances have been eliminated.
3. Investments in Fidelity Central Funds.
The Fund invests in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Consolidated Schedule of Investments lists each of the Fidelity Central Funds held as of period end, if any, as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC web site or upon request.
4. Significant Accounting Policies.
The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), which require management to make certain estimates and assumptions at the date of the consolidated financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the consolidated financial statements were issued have been evaluated in the preparation of the consolidated financial statements. The following summarizes the significant accounting policies of the Fund:
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Fund uses independent pricing services approved by the Board of Trustees to value its investments. When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include market or security specific events. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The value used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the Fund's own assumptions based on the best information available)
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level, as of February 29, 2012, as well as a roll forward of Level 3 securities, is included at the end of the Fund's Consolidated Schedule of Investments. Valuation techniques used to value the Fund's investments by major category are as follows:
Annual Report
Notes to Consolidated Financial Statements - continued
4. Significant Accounting Policies - continued
Security Valuation - continued
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when significant market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-traded funds (ETFs) and certain indexes as well as quoted prices for similar securities are used and are categorized as Level 2 in the hierarchy in these circumstances. Utilizing these techniques may result in transfers between Level 1 and Level 2. For restricted equity securities and private placements where observable inputs are limited, assumptions about market activity and risk are used and are categorized as Level 3 in the hierarchy.
Investments in commodities are valued at their last traded price at 4:00 p.m. Eastern time each business day and are categorized as Level 1 in the hierarchy. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 in the hierarchy.
New Accounting Pronouncements. In May 2011, the Financial Accounting Standards Board issued Accounting Standard Update No. 2011-04, Fair Value Measurement (Topic 820) - Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. The update is effective during interim and annual periods beginning after December 15, 2011 and will result in additional disclosure for transfers between levels as well as expanded disclosure for securities categorized as Level 3 under the fair value hierarchy.
In December 2011, the Financial Accounting Standards Board issued Accounting Standard Update No. 2011-11, Disclosures about Offsetting Assets and Liabilities. The update creates new disclosure requirements requiring entities to disclose both gross and net information for derivatives and other financial instruments that are either offset in the Consolidated Statement of Assets and Liabilities or subject to an enforceable master netting arrangement or similar agreement. The disclosure requirements are effective for interim and annual reporting periods beginning on or after January 1, 2013. Management is currently evaluating the impact of the update's adoption on the Fund's consolidated financial statement disclosures.
Foreign Currency. The Fund may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for income taxes is required. As of February 29, 2012, the Fund did not have any unrecognized tax benefits in the consolidated financial statements; nor is the Fund aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. The Fund files a U.S. federal tax return, in addition to state and local tax returns as required. A fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax
Annual Report
4. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
returns may be subject to examination for an additional fiscal year depending on the jurisdiction. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
The Subsidiary is classified as a controlled foreign corporation under Subchapter N of the Internal Revenue Code. Therefore, the Fund is required to increase its taxable income by its share of the Subsidiary's income. Net investment losses of the Subsidiary cannot be deducted by the Fund in the current period nor carried forward to offset taxable income in future periods.
Distributions are declared and recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. In addition, the Fund claimed a portion of the payment made to redeeming shareholders as a distribution for income tax purposes.
Capital accounts within the consolidated financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, passive foreign investment companies (PFIC), controlled foreign corporation, deferred trustees compensation and losses deferred due to wash sales and excise tax regulations.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end on an unconsolidated basis were as follows:
Gross unrealized appreciation | $ 978,179,807 |
Gross unrealized depreciation | (267,966,112) |
Net unrealized appreciation (depreciation) on securities and other investments | $ 710,213,695 |
|
|
Tax Cost | $ 4,250,258,676 |
The tax-based components of distributable earnings as of period end were as follows:
Net unrealized appreciation (depreciation) | $ 710,223,035 |
The tax character of distributions paid was as follows:
| February 29, 2012 | February 28, 2011 |
Ordinary Income | $ 158,364,329 | $ 183,285,077 |
Long-term Capital Gains | 80,385,768 | 220,239,690 |
Total | $ 238,750,097 | $ 403,524,767 |
Trading (Redemption) Fees. Shares held by investors in the Fund less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Fund and accounted for as an addition to paid in capital.
5. Operating Policies.
Delayed Delivery Transactions and When-Issued Securities. During the period, the Fund transacted in securities on a delayed delivery or when-issued basis. Payment and delivery may take place after the customary settlement period for that security. The price of the underlying securities and the date when the securities will be delivered and paid for are fixed at the time the transaction is negotiated. 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 Fund may receive compensation for interest forgone in the purchase of a delayed delivery or when-issued security. With respect to purchase commitments, the Fund identifies securities as segregated in its records with a value at least equal to the amount of the commitment. Losses may arise due to changes in the value of the underlying securities or if the counterparty does not perform under the contract's terms, or if the issuer does not issue the securities due to political, economic, or other factors.
Restricted Securities. The Fund may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities is included at the end of the Fund's Consolidated Schedule of Investments.
Annual Report
Notes to Consolidated Financial Statements - continued
6. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $1,031,786,123 and $1,013,560,327, respectively.
7. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the Fund's average net assets and an annualized group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annual management fee rate was .56% of the Fund's average net assets.
FMR and its affiliates also provide investment management related services to the Subsidiary. The Subsidiary pays FMR a monthly management fee at the annual rate of .30% of its net assets. Under the management contract, FMR pays all other expenses of the Subsidiary, except custodian fees.
During the period, FMR waived a portion of its management fee as described in the Expense Reductions note.
Distribution and Service Plan Fees. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of FMR, separate Distribution and Service Fees, each of which is based on an annual percentage of each class' average net assets. In addition, FDC may pay financial intermediaries for selling shares of the Fund and providing shareholder support services. For the period, the Distribution and Service Fee rates, total fees and amounts retained by FDC were as follows:
| Distribution | Service | Total Fees | Retained |
Class A | -% | .25% | $ 392,212 | $ 18,344 |
Class T | .25% | .25% | 220,956 | 449 |
Class B | .75% | .25% | 241,049 | 180,787 |
Class C | .75% | .25% | 719,056 | 161,254 |
|
|
| $ 1,573,273 | $ 360,834 |
Sales Load. FDC may receive a front-end sales charge of up to 5.75% for selling Class A shares and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the Fund. Depending on the holding period, FDC may receive contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. The deferred sales charges range from 5.00% to 1.00% for Class B, 1.00% for Class C, 1.00% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained |
Class A | $ 116,881 |
Class T | 23,072 |
Class B* | 51,658 |
Class C* | 20,316 |
| $ 211,927 |
* When Class B and Class C shares are initially sold, FDC pays commissions from its own resources to financial intermediaries through which the sales are made.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the Fund. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, transfer agent fees for each class were as follows:
| Amount | % of |
Class A | $ 435,931 | .28 |
Class T | 138,519 | .31 |
Class B | 70,547 | .29 |
Class C | 187,586 | .26 |
Gold | 11,373,521 | .28 |
Institutional Class | 317,725 | .20 |
| $ 12,523,829 |
|
Annual Report
7. Fees and Other Transactions with Affiliates - continued
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for each month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $6,078 for the period.
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Fund, along with other registered investment companies having management contracts with FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. The Fund's activity in this program during the period for which loans were outstanding was as follows:
Borrower or Lender | Average Loan Balance | Weighted Average Interest Rate | Interest |
Borrower | $ 9,492,839 | .34% | $ 2,740 |
8. Committed Line of Credit.
The Fund participates with other funds managed by FMR or an affiliate in a $4.0 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $13,449 and is reflected in Miscellaneous expenses on the Consolidated Statement of Operations. During the period, there were no borrowings on this line of credit.
9. Security Lending.
The Fund lends portfolio securities through a lending agent from time to time in order to earn additional income. For equity securities, a lending agent is used and may loan securities to certain qualified borrowers, including Fidelity Capital Markets (FCM), a broker-dealer affiliated with the Fund. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Consolidated Statement of Assets and Liabilities. The value of securities loaned to FCM at period end was $550,125. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Consolidated Statement of Operations as a component of income from Fidelity Central Funds. Total security lending income during the period amounted to $717,855, including $30,644 from securities loaned to FCM.
10. Expense Reductions.
FMR has contractually agreed to waive the Fund's management fee in an amount equal to the management fee of the Subsidiary. During the period, this waiver reduced the Fund's management fee by $103,814. Many of the brokers with whom FMR places trades on behalf of the Fund provided services to the Fund in addition to trade execution. These services included payments of certain expenses on behalf of the Fund totaling $83,909 for the period. In addition, through arrangements with the Fund's custodian, credits realized as a result of uninvested cash balances were used to reduce the Fund's expenses. During the period, these credits reduced the Fund's custody expenses by $1,161.
Annual Report
Notes to Consolidated Financial Statements - continued
11. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
| Year ended | Year ended |
From net realized gain |
|
|
Class A | $ 7,834,928 | $ 11,944,959 |
Class T | 2,382,367 | 3,497,337 |
Class B | 1,303,107 | 2,159,100 |
Class C | 3,798,844 | 5,735,528 |
Gold | 215,607,839 | 369,777,197 |
Institutional Class | 7,823,012 | 10,410,646 |
Total | $ 238,750,097 | $ 403,524,767 |
12. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
| Year ended | Year ended | Year ended | Year ended |
Class A |
|
|
|
|
Shares sold | 1,589,102 | 1,813,814 | $ 76,690,664 | $ 88,297,648 |
Reinvestment of distributions | 145,713 | 211,919 | 7,265,756 | 10,924,421 |
Shares redeemed | (1,293,053) | (1,131,112) | (61,867,749) | (54,494,300) |
Net increase (decrease) | 441,762 | 894,621 | $ 22,088,671 | $ 44,727,769 |
Class T |
|
|
|
|
Shares sold | 326,122 | 503,427 | $ 15,663,258 | $ 24,561,424 |
Reinvestment of distributions | 46,446 | 65,695 | 2,308,310 | 3,372,922 |
Shares redeemed | (374,234) | (315,455) | (17,626,829) | (15,070,272) |
Net increase (decrease) | (1,666) | 253,667 | $ 344,739 | $ 12,864,074 |
Class B |
|
|
|
|
Shares sold | 55,740 | 147,555 | $ 2,638,278 | $ 6,862,473 |
Reinvestment of distributions | 22,881 | 37,199 | 1,122,370 | 1,885,064 |
Shares redeemed | (142,844) | (108,197) | (6,672,300) | (5,152,463) |
Net increase (decrease) | (64,223) | 76,557 | $ (2,911,652) | $ 3,595,074 |
Class C |
|
|
|
|
Shares sold | 510,073 | 736,040 | $ 24,191,165 | $ 34,773,958 |
Reinvestment of distributions | 63,636 | 91,950 | 3,100,723 | 4,652,354 |
Shares redeemed | (484,293) | (345,478) | (22,585,009) | (16,458,498) |
Net increase (decrease) | 89,416 | 482,512 | $ 4,706,879 | $ 22,967,814 |
Gold |
|
|
|
|
Shares sold | 30,555,727 | 38,551,839 | $ 1,483,101,053 | $ 1,893,619,015 |
Reinvestment of distributions | 4,125,294 | 6,874,054 | 208,463,091 | 357,359,018 |
Shares redeemed | (31,912,749) | (32,315,161) | (1,536,990,789) | (1,572,262,287) |
Net increase (decrease) | 2,768,272 | 13,110,732 | $ 154,573,355 | $ 678,715,746 |
Institutional Class |
|
|
|
|
Shares sold | 1,664,357 | 2,014,694 | $ 81,430,250 | $ 99,860,479 |
Reinvestment of distributions | 146,226 | 184,813 | 7,344,695 | 9,641,424 |
Shares redeemed | (810,698) | (457,947) | (38,218,873) | (22,543,878) |
Net increase (decrease) | 999,885 | 1,741,560 | $ 50,556,072 | $ 86,958,025 |
13. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
Annual Report
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity a fund's total returns will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 29, 2012 | Past 1 | Past 5 | Past 10 |
Materials Portfolio A | 0.49% | 8.39% | 13.47% |
A Prior to October 1, 2006, Materials Portfolio operated under certain different investment policies. The historical performance for the fund may not represent its current investment policies.
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Materials Portfolio, a class of the fund, on February 28, 2002. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 performed over the same period.
Annual Report
Materials Portfolio
Management's Discussion of Fund Performance
Market Recap: U.S. stocks rose for the 12 months ending February 29, 2012, as encouraging economic news sparked a strong late-period rally that lifted major equity benchmarks past a number of significant milestones. Stocks recovered from early-period uncertainty that followed the March 2011 earthquake, tsunami and nuclear meltdown in Japan, but plummeted during the summer amid Europe's debt woes and a historic U.S. credit-rating downgrade. Despite continued volatility and mixed economic news, markets began to recover in early October. Investors gravitated toward defensive sectors and the perceived safety of larger, more-established and dividend-paying names, helping the Dow Jones® Industrial Average advance 8.83%, and close above the psychologically important 13,000 mark in late February - for the first time since May 2008. The rally accelerated late in the period and the market broadened, as investor confidence improved amid encouraging manufacturing, housing and employment data, and signs of progress in Europe. For the year, the S&P 500® Index added 5.12%, closing near a four-year high on the period's second-to-last day. Of the 10 major market sectors in the S&P 500®, three defensive areas led the way - consumer staples, health care and utilities - while financials, materials and energy finished in negative territory. The technology-laden Nasdaq Composite® Index added 7.73%, flirting with the 3,000 mark, its highest level in 12 years. Foreign developed-markets stocks reeled over Europe's turmoil, and the MSCI® EAFE® (Europe, Australasia, Far East) Index fell 7.35%.
Comments from Tobias Welo, Portfolio Manager of Materials Portfolio: For the year, the fund's Retail Class shares returned 0.49%, outpacing the -1.82% return of the MSCI® U.S. IM Materials 25/50 Index but trailing the S&P 500®. Versus the MSCI index, the fund's performance particularly benefited from an overweighting and security selection in specialty chemicals. Another factor that helped was underweighting and eventually eliminating our stake in aluminum companies. An underweighting and solid picks in the steel industry also lifted the fund's result. At the individual stock level, minimizing exposure to weak-performing index component and aluminum producer Alcoa, which I sold in April, was beneficial. Other index components that bolstered relative performance because I underweighted them included Freeport-McMoRan Copper & Gold and Cliffs Natural Resources, a producer of iron ore and metallurgical coal. Additionally, overweighting specialty chemical supplier W.R. Grace was rewarding in view of the stock's gain of almost 50% during the period. Another contributor from the specialty chemical group was Netherlands-based LyondellBasell Industries, the world's largest maker of polypropylene plastic. Conversely, not owning stocks from the strong-performing paper products group curbed the fund's performance, given its gain of more than 16% in the MSCI index, and positioning in diversified chemicals also hurt. Among individual holdings, underweighting agricultural chemicals provider and major benchmark component Monsanto for much of the year hampered the fund, in view of the stock's high single-digit gain. In the second half of the year, I added to the fund's holdings here, increasing our position to an overweighting and making Monsanto the fund's second-largest holding by period end. Despite being a relative detractor, Monsanto was the fund's largest contributor in absolute terms. Avoiding two other strong-performing index components, International Paper and engine-oil additives maker Lubrizol, worked against us as well. Also weighing on performance was an out-of-benchmark stake in Ivanhoe Mines, a Canadian junior mining company that was hurt by lackluster copper demand from China.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Materials Portfolio
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments or redemption proceeds, redemption fees, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (September 1, 2011 to February 29, 2012).
Actual Expenses
The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Annualized Expense Ratio | Beginning | Ending | Expenses Paid |
Class A | 1.13% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,090.50 | $ 5.87 |
HypotheticalA |
| $ 1,000.00 | $ 1,019.24 | $ 5.67 |
Class T | 1.41% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,088.90 | $ 7.32 |
HypotheticalA |
| $ 1,000.00 | $ 1,017.85 | $ 7.07 |
Class B | 1.90% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,086.40 | $ 9.86 |
HypotheticalA |
| $ 1,000.00 | $ 1,015.42 | $ 9.52 |
Class C | 1.89% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,086.50 | $ 9.80 |
HypotheticalA |
| $ 1,000.00 | $ 1,015.47 | $ 9.47 |
Materials | .85% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,092.10 | $ 4.42 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.64 | $ 4.27 |
Institutional Class | .83% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,092.10 | $ 4.32 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.74 | $ 4.17 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
Annual Report
Materials Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 29, 2012 | ||
| % of fund's | % of fund's net assets |
E.I. du Pont de Nemours & Co. | 8.1 | 8.5 |
Monsanto Co. | 6.6 | 3.3 |
Air Products & Chemicals, Inc. | 5.2 | 3.4 |
Dow Chemical Co. | 5.1 | 6.6 |
Newmont Mining Corp. | 4.6 | 6.1 |
The Mosaic Co. | 3.9 | 4.2 |
Ecolab, Inc. | 3.8 | 2.6 |
LyondellBasell Industries NV | 3.5 | 2.8 |
Freeport-McMoRan Copper & Gold, Inc. | 2.7 | 4.1 |
Ball Corp. | 2.6 | 2.6 |
| 46.1 | |
Top Industries (% of fund's net assets) | |||
As of February 29, 2012 | |||
| Chemicals | 65.0% |
|
| Metals & Mining | 20.1% |
|
| Containers & Packaging | 8.0% |
|
| Food Products | 1.0% |
|
| Electrical Equipment | 0.6% |
|
| All Others* | 5.3% |
|
As of August 31, 2011 | |||
| Chemicals | 61.2% |
|
| Metals & Mining | 24.5% |
|
| Containers & Packaging | 6.7% |
|
| Food Products | 1.3% |
|
| Electrical Equipment | 0.7% |
|
| All Others* | 5.6% |
|
* Includes short-term investments and net other assets. |
Annual Report
Materials Portfolio
Investments February 29, 2012
Showing Percentage of Net Assets
Common Stocks - 95.0% | |||
Shares | Value | ||
CHEMICALS - 65.0% | |||
Commodity Chemicals - 2.0% | |||
Arkema SA | 136,801 | $ 12,534,900 | |
Georgia Gulf Corp. (a) | 78,518 | 2,532,991 | |
Westlake Chemical Corp. (d) | 215,670 | 12,989,804 | |
| 28,057,695 | ||
Diversified Chemicals - 20.5% | |||
Akzo Nobel NV | 125,082 | 7,094,453 | |
BASF AG | 131,323 | 11,529,106 | |
Cabot Corp. | 175,964 | 7,128,302 | |
Dow Chemical Co. | 2,181,179 | 73,091,308 | |
E.I. du Pont de Nemours & Co. | 2,281,017 | 115,989,715 | |
Eastman Chemical Co. | 582,700 | 31,541,551 | |
Lanxess AG | 96,293 | 7,196,594 | |
Olin Corp. | 390,600 | 8,214,318 | |
PPG Industries, Inc. | 356,576 | 32,537,560 | |
| 294,322,907 | ||
Fertilizers & Agricultural Chemicals - 14.2% | |||
CF Industries Holdings, Inc. | 184,424 | 34,302,864 | |
Israel Chemicals Ltd. | 659,400 | 6,990,414 | |
Monsanto Co. | 1,226,996 | 94,944,950 | |
Rentech Nitrogen Partners LP | 473,455 | 11,713,277 | |
The Mosaic Co. | 964,895 | 55,722,686 | |
| 203,674,191 | ||
Industrial Gases - 5.2% | |||
Air Products & Chemicals, Inc. | 829,276 | 74,833,866 | |
Specialty Chemicals - 23.1% | |||
Albemarle Corp. | 304,323 | 20,243,566 | |
Ashland, Inc. | 373,983 | 23,770,359 | |
Celanese Corp. Class A | 496,966 | 23,640,673 | |
Cytec Industries, Inc. | 170,146 | 10,116,881 | |
Ecolab, Inc. | 917,474 | 55,048,440 | |
H.B. Fuller Co. | 225,759 | 6,802,119 | |
Innophos Holdings, Inc. | 235,013 | 11,839,955 | |
Kraton Performance Polymers, Inc. (a) | 358,939 | 9,974,915 | |
LyondellBasell Industries NV Class A | 1,164,006 | 50,261,779 | |
OMNOVA Solutions, Inc. (a) | 833,132 | 4,248,973 | |
Rockwood Holdings, Inc. (a) | 350,432 | 18,660,504 | |
Sherwin-Williams Co. | 327,147 | 33,745,213 | |
Sigma Aldrich Corp. | 365,082 | 26,209,237 | |
W.R. Grace & Co. (a) | 633,696 | 36,095,324 | |
| 330,657,938 | ||
TOTAL CHEMICALS | 931,546,597 | ||
COMMERCIAL SERVICES & SUPPLIES - 0.3% | |||
Environmental & Facility Services - 0.3% | |||
Swisher Hygiene, Inc. | 262,171 | 773,404 | |
| |||
Shares | Value | ||
Swisher Hygiene, Inc. (Canada) (a)(d) | 1,197,867 | $ 3,533,711 | |
| 4,307,115 | ||
CONTAINERS & PACKAGING - 8.0% | |||
Metal & Glass Containers - 4.6% | |||
Aptargroup, Inc. | 395,300 | 20,863,934 | |
Ball Corp. | 935,292 | 37,486,503 | |
Silgan Holdings, Inc. | 190,100 | 8,083,052 | |
| 66,433,489 | ||
Paper Packaging - 3.4% | |||
Rock-Tenn Co. Class A | 510,625 | 35,993,956 | |
Sealed Air Corp. | 636,608 | 12,496,615 | |
| 48,490,571 | ||
TOTAL CONTAINERS & PACKAGING | 114,924,060 | ||
ELECTRICAL EQUIPMENT - 0.6% | |||
Electrical Components & Equipment - 0.6% | |||
GrafTech International Ltd. (a) | 707,387 | 8,990,889 | |
FOOD PRODUCTS - 1.0% | |||
Agricultural Products - 1.0% | |||
Archer Daniels Midland Co. | 477,228 | 14,889,514 | |
METALS & MINING - 20.1% | |||
Diversified Metals & Mining - 7.5% | |||
Copper Mountain Mining Corp. (a) | 1,760,700 | 9,091,272 | |
First Quantum Minerals Ltd. | 1,145,100 | 26,196,195 | |
Freeport-McMoRan Copper & Gold, Inc. | 916,848 | 39,021,051 | |
Horsehead Holding Corp. (a) | 225,200 | 2,567,280 | |
HudBay Minerals, Inc. | 357,700 | 4,311,990 | |
Ivanhoe Mines Ltd. (a) | 1,201,100 | 20,838,566 | |
Walter Energy, Inc. | 89,208 | 5,783,355 | |
| 107,809,709 | ||
Gold - 6.1% | |||
Goldcorp, Inc. | 297,400 | 14,415,478 | |
Newcrest Mining Ltd. | 184,109 | 6,611,599 | |
Newmont Mining Corp. | 1,106,386 | 65,719,328 | |
| 86,746,405 | ||
Precious Metals & Minerals - 0.3% | |||
African Minerals Ltd. (a) | 529,923 | 4,843,044 | |
Steel - 6.2% | |||
ArcelorMittal SA Class A unit | 334,684 | 7,061,832 | |
Carpenter Technology Corp. | 296,655 | 15,218,402 | |
Fortescue Metals Group Ltd. | 1,267,931 | 7,572,985 | |
Haynes International, Inc. | 189,684 | 12,005,100 | |
Common Stocks - continued | |||
Shares | Value | ||
METALS & MINING - CONTINUED | |||
Steel - continued | |||
Nucor Corp. | 788,165 | $ 34,308,822 | |
Reliance Steel & Aluminum Co. | 228,082 | 12,252,565 | |
| 88,419,706 | ||
TOTAL METALS & MINING | 287,818,864 | ||
TOTAL COMMON STOCKS (Cost $1,130,562,901) |
| ||
Convertible Bonds - 0.6% | ||||
| Principal Amount |
| ||
BUILDING PRODUCTS - 0.6% | ||||
Building Products - 0.6% | ||||
Aspen Aerogels, Inc. 8% 6/1/14 (f) | $ 7,861,200 |
| ||
U.S. Treasury Obligations - 0.2% | ||||
| ||||
U.S. Treasury Bills, yield at date of purchase 0.01% to 0.08% 3/1/12 to 5/24/12 (e) | 2,850,000 |
| ||
Money Market Funds - 4.9% | |||
Shares |
| ||
Fidelity Cash Central Fund, 0.12% (b) | 61,106,071 | 61,106,071 | |
Fidelity Securities Lending Cash Central Fund, 0.12% (b)(c) | 9,733,681 | 9,733,681 | |
TOTAL MONEY MARKET FUNDS (Cost $70,839,752) |
| ||
TOTAL INVESTMENT PORTFOLIO - 100.7% (Cost $1,212,113,671) | 1,444,027,813 | |
NET OTHER ASSETS (LIABILITIES) - (0.7)% | (9,702,050) | |
NET ASSETS - 100% | $ 1,434,325,763 | |
Futures Contracts | |||||
Expiration Date | Underlying Face Amount at Value | Unrealized Appreciation/(Depreciation) | |||
Purchased | |||||
Equity Index Contracts | |||||
350 CME E-mini S&P Select Sector Materials Index Contracts | March 2012 | $ 13,629,000 | 1,161,335 | ||
|
The face value of futures purchased as a percentage of net assets is 1% |
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
(e) Security or a portion of the security was pledged to cover margin requirements for futures contracts. At the period end, the value of securities pledged amounted to $1,900,000. |
(f) Restricted securities - Investment in securities not registered under the Securities Act of 1933 (excluding 144A issues). At the end of the period, the value of restricted securities (excluding 144A issues) amounted to $7,861,200 or 0.6% of net assets. |
Additional information on each restricted holding is as follows: |
Security | Acquisition Date | Acquisition Cost |
Aspen Aerogels, Inc. 8% 6/1/14 | 6/1/11 | $ 7,861,200 |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 48,237 |
Fidelity Securities Lending Cash Central Fund | 444,343 |
Total | $ 492,580 |
Other Information |
The following is a summary of the inputs used, as of February 29, 2012, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the tables below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities: | ||||
Common Stocks | $ 1,362,477,039 | $ 1,362,477,039 | $ - | $ - |
Convertible Bonds | 7,861,200 | - | - | 7,861,200 |
U.S. Treasury Obligations | 2,849,822 | - | 2,849,822 | - |
Money Market Funds | 70,839,752 | 70,839,752 | - | - |
Total Investments in Securities: | $ 1,444,027,813 | $ 1,433,316,791 | $ 2,849,822 | $ 7,861,200 |
Derivative Instruments: | ||||
Assets | ||||
Futures Contracts | $ 1,161,335 | $ 1,161,335 | $ - | $ - |
The following is a reconciliation of Investments in Securities and Derivative Instruments for which Level 3 inputs were used in determining value: |
Investments in Securities: | |
Beginning Balance | $ - |
Total Realized Gain (Loss) | - |
Total Unrealized Gain (Loss) | - |
Cost of Purchases | 7,861,200 |
Proceeds of Sales | - |
Amortization/Accretion | - |
Transfers in to Level 3 | - |
Transfers out of Level 3 | - |
Ending Balance | $ 7,861,200 |
The change in unrealized gain (loss) for the period attributable to Level 3 securities held at February 29, 2012 | $ - |
The information used in the above reconciliation represents fiscal year to date activity for any Investments in Securities and Derivative Instruments identified as using Level 3 inputs at either the beginning or the end of the current fiscal period. Transfers in or out of Level 3 represent the beginning value of any Security or Instrument where a change in the pricing level occurred from the beginning to the end of the period. The cost of purchases and the proceeds of sales may include securities received or delivered through corporate actions or exchanges. Realized and unrealized gains (losses) disclosed in the reconciliation are included in Net Gain (Loss) on the Fund's Statement of Operations. |
Value of Derivative Instruments |
The following table is a summary of the Fund's value of derivative instruments by risk exposure as of February 29, 2012. For additional information on derivative instruments, please refer to the Derivative Instruments section in the accompanying Notes to Financial Statements. |
Risk Exposure / | Value | |
| Asset | Liability |
Equity Risk | ||
Futures Contracts (a) | $ 1,161,335 | $ - |
Total Value of Derivatives | $ 1,161,335 | $ - |
(a) Reflects cumulative appreciation/(depreciation) on futures contracts as disclosed on the Schedule of Investments. Only the period end variation margin is separately disclosed on the Statement of Assets and Liabilities. |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 86.3% |
Canada | 5.2% |
Netherlands | 4.0% |
Germany | 1.3% |
Australia | 1.0% |
Others (Individually Less Than 1%) | 2.2% |
| 100.0% |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Materials Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2012 | |
Assets | ||
Investment in securities, at value (including securities loaned of $9,256,655) - See accompanying schedule: Unaffiliated issuers (cost $1,141,273,919) | $ 1,373,188,061 |
|
Fidelity Central Funds (cost $70,839,752) | 70,839,752 |
|
Total Investments (cost $1,212,113,671) |
| $ 1,444,027,813 |
Receivable for investments sold | 8,155,733 | |
Receivable for fund shares sold | 5,455,175 | |
Dividends receivable | 1,944,276 | |
Interest receivable | 469,925 | |
Distributions receivable from Fidelity Central Funds | 10,695 | |
Prepaid expenses | 3,388 | |
Other receivables | 8,326 | |
Total assets | 1,460,075,331 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 11,605,280 | |
Payable for fund shares redeemed | 3,052,464 | |
Accrued management fee | 661,897 | |
Distribution and service plan fees payable | 102,186 | |
Payable for daily variation margin on futures contracts | 245,000 | |
Other affiliated payables | 306,770 | |
Other payables and accrued expenses | 42,290 | |
Collateral on securities loaned, at value | 9,733,681 | |
Total liabilities | 25,749,568 | |
|
|
|
Net Assets | $ 1,434,325,763 | |
Net Assets consist of: |
| |
Paid in capital | $ 1,204,629,224 | |
Undistributed net investment income | 797,816 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (4,176,754) | |
Net unrealized appreciation (depreciation) on investments | 233,075,477 | |
Net Assets | $ 1,434,325,763 | |
Statement of Assets and Liabilities - continued
| February 29, 2012 | |
Calculation of Maximum Offering Price Class A: | $ 69.23 | |
|
|
|
Maximum offering price per share (100/94.25 of $69.23) | $ 73.45 | |
Class T: | $ 68.91 | |
|
|
|
Maximum offering price per share (100/96.50 of $68.91) | $ 71.41 | |
Class B: | $ 68.13 | |
|
|
|
Class C: | $ 67.98 | |
|
|
|
Materials: | $ 69.41 | |
|
|
|
Institutional Class: | $ 69.35 | |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Materials Portfolio
Financial Statements - continued
Statement of Operations
| Year ended February 29, 2012 | |
Investment Income |
|
|
Dividends |
| $ 23,048,131 |
Interest |
| 470,114 |
Income from Fidelity Central Funds |
| 492,580 |
Total income |
| 24,010,825 |
|
|
|
Expenses | ||
Management fee | $ 7,696,020 | |
Transfer agent fees | 3,346,774 | |
Distribution and service plan fees | 1,147,958 | |
Accounting and security lending fees | 446,822 | |
Custodian fees and expenses | 50,223 | |
Independent trustees' compensation | 8,074 | |
Registration fees | 161,444 | |
Audit | 50,671 | |
Legal | 6,429 | |
Interest | 103 | |
Miscellaneous | 11,907 | |
Total expenses before reductions | 12,926,425 | |
Expense reductions | (83,853) | 12,842,572 |
Net investment income (loss) | 11,168,253 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 34,413,700 | |
Foreign currency transactions | (254,748) | |
Futures contracts | 721,846 | |
Total net realized gain (loss) |
| 34,880,798 |
Change in net unrealized appreciation (depreciation) on: Investment securities | (67,003,496) | |
Assets and liabilities in foreign currencies | 278 | |
Futures contracts | 1,161,335 | |
Total change in net unrealized appreciation (depreciation) |
| (65,841,883) |
Net gain (loss) | (30,961,085) | |
Net increase (decrease) in net assets resulting from operations | $ (19,792,832) | |
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 11,168,253 | $ 18,226,863 |
Net realized gain (loss) | 34,880,798 | 5,250,878 |
Change in net unrealized appreciation (depreciation) | (65,841,883) | 249,900,447 |
Net increase (decrease) in net assets resulting | (19,792,832) | 273,378,188 |
Distributions to shareholders from net investment income | (9,840,737) | (18,392,042) |
Distributions to shareholders from net realized gain | (7,461,289) | (379,797) |
Total distributions | (17,302,026) | (18,771,839) |
Share transactions - net increase (decrease) | (18,941,790) | 520,343,234 |
Redemption fees | 99,276 | 97,765 |
Total increase (decrease) in net assets | (55,937,372) | 775,047,348 |
|
|
|
Net Assets | ||
Beginning of period | 1,490,263,135 | 715,215,787 |
End of period (including undistributed net investment income of $797,816 and distributions in excess of net investment income of $22,442, respectively) | $ 1,434,325,763 | $ 1,490,263,135 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
Years ended February 28, | 2012 J | 2011 | 2010 | 2009 | 2008 J |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 69.96 | $ 52.54 | $ 27.65 | $ 57.00 | $ 51.01 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .40 | 1.08 F | .30 G | .22 | .46 |
Net realized and unrealized gain (loss) | (.35) | 17.40 | 24.90 | (29.46) | 8.05 |
Total from investment operations | .05 | 18.48 | 25.20 | (29.24) | 8.51 |
Distributions from net investment income | (.40) | (1.06) | (.32) | (.12) | (.32) |
Distributions from net realized gain | (.38) | (.01) | - | - | (2.21) |
Total distributions | (.78) | (1.07) | (.32) | (.12) | (2.53) L |
Redemption fees added to paid in capital C | - K | .01 | .01 | .01 | .01 |
Net asset value, end of period | $ 69.23 | $ 69.96 | $ 52.54 | $ 27.65 | $ 57.00 |
Total Return A,B | .21% | 35.33% | 91.25% | (51.30)% | 16.79% |
Ratios to Average Net Assets D,H |
|
|
|
|
|
Expenses before reductions | 1.13% | 1.16% | 1.23% | 1.21% | 1.21% |
Expenses net of fee waivers, if any | 1.13% | 1.16% | 1.23% | 1.21% | 1.21% |
Expenses net of all reductions | 1.13% | 1.15% | 1.22% | 1.20% | 1.21% |
Net investment income (loss) | .61% | 1.81% F | .65% G | .47% | .83% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 157,781 | $ 124,160 | $ 52,352 | $ 10,796 | $ 12,522 |
Portfolio turnover rate E | 94% | 87% | 104% I | 117% | 77% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown. B Total returns do not include the effect of the sales charges. C Calculated based on average shares outstanding during the period. D Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Investment income per share reflects a large, non-recurring dividend which amounted to $.83 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been ..41%. G Investment income per share reflects a large, non-recurring dividend which amounted to $.10 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .43%. H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. I The portfolio turnover rate does not include the assets acquired in the merger. J For the year ended February 29. K Amount represents less than $.01 per share. L Total distributions of $2.53 per share is comprised of distributions from net investment income of $.322 and distributions from net realized gain of $2.210 per share.
Financial Highlights - Class T
Years ended February 28, | 2012 J | 2011 | 2010 | 2009 | 2008 J |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 69.68 | $ 52.35 | $ 27.56 | $ 56.80 | $ 50.89 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .21 | .90 F | .16 G | .10 | .32 |
Net realized and unrealized gain (loss) | (.35) | 17.34 | 24.81 | (29.32) | 8.00 |
Total from investment operations | (.14) | 18.24 | 24.97 | (29.22) | 8.32 |
Distributions from net investment income | (.25) | (.92) | (.19) | (.03) | (.21) |
Distributions from net realized gain | (.38) | - | - | - | (2.21) |
Total distributions | (.63) | (.92) | (.19) | (.03) | (2.42) L |
Redemption fees added to paid in capital C | - K | .01 | .01 | .01 | .01 |
Net asset value, end of period | $ 68.91 | $ 69.68 | $ 52.35 | $ 27.56 | $ 56.80 |
Total Return A,B | (.09)% | 34.98% | 90.70% | (51.43)% | 16.45% |
Ratios to Average Net Assets D,H |
|
|
|
|
|
Expenses before reductions | 1.42% | 1.44% | 1.52% | 1.46% | 1.46% |
Expenses net of fee waivers, if any | 1.42% | 1.44% | 1.52% | 1.46% | 1.46% |
Expenses net of all reductions | 1.41% | 1.43% | 1.51% | 1.46% | 1.46% |
Net investment income (loss) | .33% | 1.54% F | .35% G | .22% | .57% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 28,290 | $ 25,570 | $ 14,712 | $ 4,944 | $ 6,850 |
Portfolio turnover rate E | 94% | 87% | 104% I | 117% | 77% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown. B Total returns do not include the effect of the sales charges. C Calculated based on average shares outstanding during the period. D Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Investment income per share reflects a large, non-recurring dividend which amounted to $.83 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been ..14%. G Investment income per share reflects a large, non-recurring dividend which amounted to $.10 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .14%. H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. I The portfolio turnover rate does not include the assets acquired in the merger. J For the year ended February 29. K Amount represents less than $.01 per share. L Total distributions of $2.42 per share is comprised of distributions from net investment income of $.207 and distributions from net realized gain of $2.210 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class B
Years ended February 28, | 2012 J | 2011 | 2010 | 2009 | 2008 J |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 68.95 | $ 51.86 | $ 27.35 | $ 56.59 | $ 50.81 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.11) | .60 F | (.07) G | (.12) | .04 |
Net realized and unrealized gain (loss) | (.33) | 17.13 | 24.61 | (29.13) | 7.98 |
Total from investment operations | (.44) | 17.73 | 24.54 | (29.25) | 8.02 |
Distributions from net investment income | - | (.65) | (.04) | - | (.04) |
Distributions from net realized gain | (.38) | - | - | - | (2.21) |
Total distributions | (.38) | (.65) | (.04) | - | (2.25) L |
Redemption fees added to paid in capital C | - K | .01 | .01 | .01 | .01 |
Net asset value, end of period | $ 68.13 | $ 68.95 | $ 51.86 | $ 27.35 | $ 56.59 |
Total Return A,B | (.57)% | 34.29% | 89.79% | (51.67)% | 15.89% |
Ratios to Average Net Assets D,H |
|
|
|
|
|
Expenses before reductions | 1.91% | 1.93% | 2.02% | 1.95% | 1.97% |
Expenses net of fee waivers, if any | 1.91% | 1.93% | 2.02% | 1.95% | 1.97% |
Expenses net of all reductions | 1.91% | 1.92% | 2.01% | 1.95% | 1.96% |
Net investment income (loss) | (.17)% | 1.04% F | (.15)% G | (.27)% | .07% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 11,040 | $ 13,507 | $ 9,538 | $ 2,601 | $ 4,173 |
Portfolio turnover rate E | 94% | 87% | 104% I | 117% | 77% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown. B Total returns do not include the effect of the contingent deferred sales charge. C Calculated based on average shares outstanding during the period. D Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Investment income per share reflects a large, non-recurring dividend which amounted to $.83 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been (.35) %. G Investment income per share reflects a large, non-recurring dividend which amounted to $.10 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been (.36) %. H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. I The portfolio turnover rate does not include the assets acquired in the merger. J For the year ended February 29. K Amount represents less than $.01 per share. L Total distributions of $2.25 per share is comprised of distributions from net investment income of $.043 and distributions from net realized gain of $2.210 per share.
Financial Highlights - Class C
Years ended February 28, | 2012 J | 2011 | 2010 | 2009 | 2008 J |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 68.78 | $ 51.79 | $ 27.31 | $ 56.50 | $ 50.81 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.10) | .61 F | (.06) G | (.13) | .04 |
Net realized and unrealized gain (loss) | (.32) | 17.09 | 24.57 | (29.07) | 7.97 |
Total from investment operations | (.42) | 17.70 | 24.51 | (29.20) | 8.01 |
Distributions from net investment income | - | (.72) | (.04) | - | (.12) |
Distributions from net realized gain | (.38) | - | - | - | (2.21) |
Total distributions | (.38) | (.72) | (.04) | - | (2.33) L |
Redemption fees added to paid in capital C | - K | .01 | .01 | .01 | .01 |
Net asset value, end of period | $ 67.98 | $ 68.78 | $ 51.79 | $ 27.31 | $ 56.50 |
Total Return A,B | (.55)% | 34.29% | 89.82% | (51.66)% | 15.87% |
Ratios to Average Net Assets D,H |
|
|
|
|
|
Expenses before reductions | 1.89% | 1.93% | 2.01% | 1.95% | 1.96% |
Expenses net of fee waivers, if any | 1.89% | 1.93% | 2.01% | 1.95% | 1.96% |
Expenses net of all reductions | 1.89% | 1.92% | 2.00% | 1.95% | 1.96% |
Net investment income (loss) | (.15)% | 1.04% F | (.13)% G | (.27)% | .07% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 58,296 | $ 46,525 | $ 20,469 | $ 5,509 | $ 8,743 |
Portfolio turnover rate E | 94% | 87% | 104% I | 117% | 77% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown. B Total returns do not include the effect of the contingent deferred sales charge. C Calculated based on average shares outstanding during the period. D Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Investment income per share reflects a large, non-recurring dividend which amounted to $.83 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been (.35) %. G Investment income per share reflects a large, non-recurring dividend which amounted to $.10 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been (.35) %. H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. I The portfolio turnover rate does not include the assets acquired in the merger. J For the year ended February 29. K Amount represents less than $.01 per share. L Total distributions of $2.33 per share is comprised of distributions from net investment income of $.124 and distributions from net realized gain of $2.210 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Materials
Years ended February 28, | 2012 I | 2011 | 2010 | 2009 | 2008 I |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 70.11 | $ 52.61 | $ 27.66 | $ 57.01 | $ 50.92 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | .60 | 1.25 E | .43 F | .38 | .64 |
Net realized and unrealized gain (loss) | (.37) | 17.43 | 24.91 | (29.54) | 8.01 |
Total from investment operations | .23 | 18.68 | 25.34 | (29.16) | 8.65 |
Distributions from net investment income | (.55) | (1.16) | (.40) | (.20) | (.36) |
Distributions from net realized gain | (.38) | (.03) | - | - | (2.21) |
Total distributions | (.93) | (1.19) | (.40) | (.20) | (2.57) K |
Redemption fees added to paid in capital B | - J | .01 | .01 | .01 | .01 |
Net asset value, end of period | $ 69.41 | $ 70.11 | $ 52.61 | $ 27.66 | $ 57.01 |
Total Return A | .49% | 35.70% | 91.77% | (51.15)% | 17.10% |
Ratios to Average Net Assets C,G |
|
|
|
|
|
Expenses before reductions | .85% | .88% | .96% | .90% | .91% |
Expenses net of fee waivers, if any | .85% | .88% | .96% | .90% | .90% |
Expenses net of all reductions | .84% | .87% | .94% | .90% | .89% |
Net investment income (loss) | .90% | 2.10% E | .92% F | .78% | 1.14% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 1,089,619 | $ 1,195,371 | $ 604,475 | $ 127,551 | $ 353,185 |
Portfolio turnover rate D | 94% | 87% | 104% H | 117% | 77% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown. B Calculated based on average shares outstanding during the period. C Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. D Amount does not include the portfolio activity of any underlying Fidelity Central Funds. E Investment income per share reflects a large, non-recurring dividend which amounted to $.83 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .70%. F nvestment income per share reflects a large, non-recurring dividend which amounted to $.10 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .70%. G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. H The portfolio turnover rate does not include the assets acquired in the merger. I For the year ended February 29. J Amount represents less than $.01 per share. K Total distributions of $2.57 per share is comprised of distributions from net investment income of $.363 and distributions from net realized gain of $2.210 per share.
Financial Highlights - Institutional Class
Years ended February 28, | 2012 I | 2011 | 2010 | 2009 | 2008 I |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 70.05 | $ 52.58 | $ 27.66 | $ 57.00 | $ 50.91 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | .60 | 1.28 E | .46 F | .38 | .64 |
Net realized and unrealized gain (loss) | (.36) | 17.40 | 24.89 | (29.53) | 8.00 |
Total from investment operations | .24 | 18.68 | 25.35 | (29.15) | 8.64 |
Distributions from net investment income | (.56) | (1.19) | (.44) | (.20) | (.36) |
Distributions from net realized gain | (.38) | (.03) | - | - | (2.21) |
Total distributions | (.94) | (1.22) | (.44) | (.20) | (2.56) K |
Redemption fees added to paid in capital B | - J | .01 | .01 | .01 | .01 |
Net asset value, end of period | $ 69.35 | $ 70.05 | $ 52.58 | $ 27.66 | $ 57.00 |
Total Return A | .50% | 35.73% | 91.79% | (51.15)% | 17.08% |
Ratios to Average Net Assets C,G |
|
|
|
|
|
Expenses before reductions | .84% | .86% | .94% | .90% | .89% |
Expenses net of fee waivers, if any | .84% | .86% | .94% | .90% | .89% |
Expenses net of all reductions | .83% | .85% | .93% | .90% | .89% |
Net investment income (loss) | .91% | 2.11% E | .94% F | .78% | 1.14% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 89,299 | $ 85,130 | $ 13,670 | $ 719 | $ 1,820 |
Portfolio turnover rate D | 94% | 87% | 104% H | 117% | 77% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown. B Calculated based on average shares outstanding during the period. C Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. D Amount does not include the portfolio activity of any underlying Fidelity Central Funds. E Investment income per share reflects a large, non-recurring dividend which amounted to $.83 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .72%. F Investment income per share reflects a large, non-recurring dividend which amounted to $.10 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .72%. G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. H The portfolio turnover rate does not include the assets acquired in the merger. I For the year ended February 29. J Amount represents less than $.01 per share. K Total distributions of $2.56 per share is comprised of distributions from net investment income of $.355 and distributions from net realized gain of $2.210 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended February 29, 2012
1. Organization.
Materials Portfolio (the Fund) is a non-diversified fund of Fidelity Select Portfolios (the Trust) and is authorized to issue an unlimited number of shares. The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund invests primarily in securities of companies whose principal business activities fall within specific industries. The Fund offers Class A, Class T, Class C, Materials and Institutional Class shares, each of which, along with Class B shares, has equal rights as to assets and voting privileges. Effective after the close of business on September 1, 2010, Class B shares were closed to new accounts and additional purchases, except for exchanges and reinvestments. Each class has exclusive voting rights with respect to matters that affect that class. Class B shares will automatically convert to Class A shares after a holding period of seven years from the initial date of purchase. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions may also differ by class.
2. Investments in Fidelity Central Funds.
The Fund invests in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds held as of period end, if any, as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Fund:
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Fund uses independent pricing services approved by the Board of Trustees to value its investments. When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include market or security specific events. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The value used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the Fund's own assumptions based on the best information available)
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level, as of February 29, 2012, as well as a roll forward of Level 3 securities, is included at the end of the Fund's Schedule of Investments. Valuation techniques used to value the Fund's investments by major category are as follows:
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when significant market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-traded funds (ETFs) and certain indexes as well as quoted prices for similar securities are used and are categorized as Level 2 in the hierarchy in these circumstances. Utilizing these techniques may result in transfers between Level 1 and Level 2. For restricted equity securities and private placements where observable inputs are limited, assumptions about market activity and risk are used and are categorized as Level 3 in the hierarchy.
Annual Report
3. Significant Accounting Policies - continued
Security Valuation - continued
Debt securities, including restricted securities, are valued based on evaluated prices received from independent pricing services or from dealers who make markets in such securities. For corporate bonds and U.S. government and government agency obligations, pricing services utilize matrix pricing which considers yield or price of bonds of comparable quality, coupon, maturity and type as well as dealer supplied prices and are generally categorized as Level 2 in the hierarchy. When independent prices are unavailable or unreliable, debt securities may be valued utilizing pricing matrices which consider similar factors that would be used by independent pricing services. These are generally categorized as Level 2 in the hierarchy but may be Level 3 depending on the circumstances.
Futures contracts are valued at the settlement price established each day by the board of trade or exchange on which they are traded and are categorized as Level 1 in the hierarchy. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 in the hierarchy.
New Accounting Pronouncements. In May 2011, the Financial Accounting Standards Board issued Accounting Standard Update No. 2011-04, Fair Value Measurement (Topic 820) - Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. The update is effective during interim and annual periods beginning after December 15, 2011 and will result in additional disclosure for transfers between levels as well as expanded disclosure for securities categorized as Level 3 under the fair value hierarchy.
In December 2011, the Financial Accounting Standards Board issued Accounting Standard Update No. 2011-11, Disclosures about Offsetting Assets and Liabilities. The update creates new disclosure requirements requiring entities to disclose both gross and net information for derivatives and other financial instruments that are either offset in the Statement of Assets and Liabilities or subject to an enforceable master netting arrangement or similar agreement. The disclosure requirements are effective for interim and annual reporting periods beginning on or after January 1, 2013. Management is currently evaluating the impact of the update's adoption on the Fund's financial statement disclosures.
Foreign Currency. The Fund may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for income taxes is required. As of February 29, 2012, the Fund did not have any unrecognized tax benefits in the financial statements; nor is the Fund aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. The Fund files a U.S. federal tax return, in addition to state and local tax returns as required. A fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
Distributions are declared and recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. In addition, the Fund claimed a portion of the payment made to redeeming shareholders as a distribution for income tax purposes.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, partnerships, passive foreign investment companies (PFIC), deferred trustees compensation, futures transactions, capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation | $ 256,439,881 |
Gross unrealized depreciation | (31,121,651) |
Net unrealized appreciation (depreciation) on securities and other investments | $ 225,318,230 |
|
|
Tax cost | $ 1,218,709,583 |
The tax-based components of distributable earnings as of period end were as follows:
Undistributed ordinary income | $ 797,818 |
Undistributed long-term capital gain | $ 7,329,133 |
Net unrealized appreciation (depreciation) | $ 225,318,230 |
The tax character of distributions paid was as follows:
| February 29, 2012 | February 28, 2011 |
Ordinary Income | $ 9,840,737 | $ 18,771,839 |
Long-term Capital Gains | 7,461,289 | - |
Total | $ 17,302,026 | $ 18,771,839 |
Capital loss carryforwards are only available to offset future capital gains of the Fund to the extent provided by regulations and may be limited. Under the Regulated Investment Company Modernization Act of 2010 (the Act), the Fund is permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period and such capital losses are required to be used prior to any losses that expire. At February 29, 2012 capital loss carryforwards were as follows:
Fiscal year of expiration |
|
2016 | $ (5,392,414) |
2017 | (6,058,499) |
2018 | (1,022,988) |
2019 | (80,787) |
Total with expiration | $ (12,554,688) |
Included in the $12,554,688 of the Fund's capital loss carryforwards are $12,554,688 of capital loss carryforwards that were acquired from Paper and Forest Products Portfolio when it merged into the fund on June 19, 2009 of which $5,392,414, $6,058,499, $1,022,988 and $80,787 will expire in fiscal 2016, 2017, 2018 and 2019, respectively. Under the Internal Revenue Code, the losses acquired from Paper and Forest Products Portfolio that will be available to offset future capital gains of the Fund will be limited. As a result, at least $8,806,047 of the losses acquired from Paper and Forest Products Portfolio will expire unused.
Trading (Redemption) Fees. Shares held by investors in the Fund less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Fund and accounted for as an addition to paid in capital.
4. Operating Policies.
Restricted Securities. The Fund may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities is included at the end of the Fund's Schedule of Investments.
Annual Report
5. Derivative Instruments.
Risk Exposures and the Use of Derivative Instruments. The Fund used derivative instruments (derivatives), including futures contracts in order to meet its investment objectives. The strategy is to use derivatives to increase returns and to manage exposure to certain risks as defined below. The success of any strategy involving derivatives depends on analysis of numerous economic factors, and if the strategies for investment do not work as intended, the Fund may not achieve its objectives.
The Fund's use of derivatives increased or decreased its exposure to the following risk:
Equity Risk | Equity risk relates to the fluctuations in the value of financial instruments as a result of changes in market prices (other than those arising from interest rate risk or foreign exchange risk), whether caused by factors specific to an individual investment, its issuer, or all factors affecting all instruments traded in a market or market segment. |
The Fund is also exposed to additional risks from investing in derivatives, such as liquidity risk and counterparty credit risk. Liquidity risk is the risk that the Fund will be unable to close out the derivative in the open market in a timely manner. Counterparty credit risk is the risk that the counterparty will not be able to fulfill its obligation to the Fund. Counterparty credit risk related to exchange-traded futures contracts is minimal because of the protection provided by the exchange on which they trade. Derivatives involve, to varying degrees, risk of loss in excess of the amounts recognized in the Statement of Assets and Liabilities.
Futures Contracts. A futures contract is an agreement between two parties to buy or sell a specified underlying instrument for a fixed price at a specified future date. The Fund used futures contracts to manage its exposure to the stock market.
Upon entering into a futures contract, a fund is required to deposit either cash or securities (initial margin) with a clearing broker in an amount equal to a certain percentage of the face value of the contract. Futures contracts are marked-to-market daily and subsequent payments are made or received by a fund depending on the daily fluctuations in the value of the futures contracts and are recorded as unrealized appreciation or (depreciation). This receivable and/or payable is included in daily variation margin on futures contracts in the Statement of Assets and Liabilities. Realized gain or (loss) is recorded upon the expiration or closing of a futures contract.
The underlying face amount at value of open futures contracts at period end, if any, is shown in the Schedule of Investments under the caption "Futures Contracts." This amount reflects each contract's exposure to the underlying instrument at period end and is representative of activity for the period.
During the period the Fund recognized net realized gain (loss) of $721,846 and a change in net unrealized appreciation (depreciation) of $1,161,335 related to its investment in futures contracts. These amounts are included in the Statement of Operations.
6. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $1,278,026,047 and $1,301,355,608, respectively.
7. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the Fund's average net assets and an annualized group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annual management fee rate was .56% of the Fund's average net assets.
Distribution and Service Plan Fees. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of FMR, separate Distribution and Service Fees, each of which is based on an annual percentage of each class' average net assets. In addition, FDC may pay financial intermediaries for selling shares of the Fund and providing shareholder support services. For the period, the Distribution and Service Fee rates, total fees and amounts retained by FDC were as follows:
| Distribution | Service | Total Fees | Retained |
Class A | -% | .25% | $ 358,959 | $ 20,435 |
Class T | .25% | .25% | 131,852 | 263 |
Class B | .75% | .25% | 120,464 | 90,349 |
Class C | .75% | .25% | 536,683 | 264,612 |
|
|
| $ 1,147,958 | $ 375,659 |
Annual Report
Notes to Financial Statements - continued
7. Fees and Other Transactions with Affiliates - continued
Sales Load. FDC may receive a front-end sales charge of up to 5.75% for selling Class A shares and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the Fund. Depending on the holding period, FDC may receive contingent deferred sales charges levied on Class A, Class T, Class B and Class C redemptions. The deferred sales charges range from 5.00% to 1.00% for Class B, 1.00% for Class C, 1.00% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained |
Class A | $ 172,504 |
Class T | 15,873 |
Class B* | 19,656 |
Class C* | 21,433 |
| $ 229,466 |
* When Class B and Class C shares are initially sold, FDC pays commissions from its own resources to financial intermediaries through which the sales are made.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the Fund. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, transfer agent fees for each class were as follows:
| Amount | % of |
Class A | $ 388,700 | .27 |
Class T | 81,194 | .31 |
Class B | 36,351 | .30 |
Class C | 150,536 | .28 |
Materials | 2,513,812 | .24 |
Institutional Class | 176,181 | .23 |
| $ 3,346,774 |
|
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for each month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $15,641 for the period.
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Fund, along with other registered investment companies having management contracts with FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. The Fund's activity in this program during the period for which loans were outstanding was as follows:
Borrower or Lender | Average Loan Balance | Weighted Average Interest Rate | Interest |
Borrower | $ 5,119,500 | .36% | $ 103 |
8. Committed Line of Credit.
The Fund participates with other funds managed by FMR or an affiliate in a $4.0 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $4,040 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, there were no borrowings on this line of credit.
Annual Report
9. Security Lending.
The Fund lends portfolio securities through a lending agent from time to time in order to earn additional income. For equity securities, a lending agent is used and may loan securities to certain qualified borrowers, including Fidelity Capital Markets (FCM), a broker-dealer affiliated with the Fund. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. At period end, there were no security loans outstanding with FCM. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Total security lending income during the period amounted to $444,343. During the period, there were no securities loaned to FCM.
10. Expense Reductions.
Many of the brokers with whom FMR places trades on behalf of the Fund provided services to the Fund in addition to trade execution. These services included payments of certain expenses on behalf of the Fund totaling $82,394 for the period. In addition, through arrangements with the Fund's custodian and each class' transfer agent, credits realized as a result of uninvested cash balances were used to reduce the Fund's expenses. During the period, these credits reduced the Fund's custody expenses by $1,459.
11. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
| Year Ended | Year Ended |
From net investment income |
|
|
Class A | $ 868,107 | $ 1,422,379 |
Class T | 100,314 | 289,521 |
Class B | - | 122,322 |
Class C | - | 341,974 |
Materials | 8,266,851 | 15,509,343 |
Institutional Class | 605,465 | 706,503 |
Total | $ 9,840,737 | $ 18,392,042 |
From net realized gain |
|
|
Class A | $ 816,536 | $ 10,674 |
Class T | 151,869 | - |
Class B | 66,321 | - |
Class C | 312,224 | - |
Materials | 5,701,275 | 358,147 |
Institutional Class | 413,064 | 10,976 |
Total | $ 7,461,289 | $ 379,797 |
Annual Report
Notes to Financial Statements - continued
12. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
| Year Ended | Year Ended | Year Ended | Year Ended |
Class A |
|
|
|
|
Shares sold | 1,406,389 | 1,281,666 | $ 95,285,956 | $ 79,405,808 |
Reinvestment of distributions | 23,605 | 18,751 | 1,462,799 | 1,225,248 |
Shares redeemed | (925,476) | (522,145) | (60,145,567) | (29,567,388) |
Net increase (decrease) | 504,518 | 778,272 | $ 36,603,188 | $ 51,063,668 |
Class T |
|
|
|
|
Shares sold | 150,265 | 162,727 | $ 10,197,019 | $ 9,996,553 |
Reinvestment of distributions | 3,964 | 4,298 | 244,682 | 280,166 |
Shares redeemed | (110,682) | (81,055) | (7,174,563) | (4,620,393) |
Net increase (decrease) | 43,547 | 85,970 | $ 3,267,138 | $ 5,656,326 |
Class B |
|
|
|
|
Shares sold | 35,651 | 78,978 | $ 2,318,398 | $ 4,548,346 |
Reinvestment of distributions | 909 | 1,536 | 55,554 | 99,242 |
Shares redeemed | (70,403) | (68,559) | (4,524,937) | (3,840,777) |
Net increase (decrease) | (33,843) | 11,955 | $ (2,150,985) | $ 806,811 |
Class C |
|
|
|
|
Shares sold | 456,374 | 420,386 | $ 30,369,453 | $ 26,286,596 |
Reinvestment of distributions | 4,184 | 4,421 | 254,995 | 284,977 |
Shares redeemed | (279,339) | (143,652) | (17,740,501) | (7,964,201) |
Net increase (decrease) | 181,219 | 281,155 | $ 12,883,947 | $ 18,607,372 |
Materials |
|
|
|
|
Shares sold | 6,950,456 | 11,993,105 | $ 471,314,225 | $ 750,476,205 |
Reinvestment of distributions | 214,200 | 229,147 | 13,299,700 | 14,963,249 |
Shares redeemed | (8,516,169) | (6,662,930) | (562,008,908) | (384,640,831) |
Net increase (decrease) | (1,351,513) | 5,559,322 | $ (77,394,983) | $ 380,798,623 |
Institutional Class |
|
|
|
|
Shares sold | 1,444,894 | 1,219,205 | $ 97,144,756 | $ 77,607,131 |
Reinvestment of distributions | 13,291 | 8,764 | 824,595 | 572,066 |
Shares redeemed | (1,385,770) | (272,695) | (90,119,446) | (14,768,763) |
Net increase (decrease) | 72,415 | 955,274 | $ 7,849,905 | $ 63,410,434 |
13. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
Annual Report
Report of Independent Registered Public Accounting Firm
To the Trustees of Fidelity Select Portfolios and the Shareholders of Chemicals Portfolio, Gold Portfolio and Materials Portfolio:
In our opinion, the accompanying statements of assets and liabilities (consolidated statement of assets and liabilities for Gold Portfolio), including the schedules of investments (consolidated schedule of investments for Gold Portfolio), and the related statements of operations (consolidated statement of operations for Gold Portfolio) and of changes in net assets (consolidated changes in net assets for Gold Portfolio) and the financial highlights present fairly, in all material respects, the financial position of Chemical Portfolio, Gold Portfolio and Materials Portfolio (funds of Fidelity Select Portfolios) at February 29, 2012, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fidelity Select Portfolios' management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at February 29, 2012 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 18, 2012
Annual Report
Trustees and Officers
The Trustees, Members of the Advisory Board, and executive officers of the trust and funds, as applicable, are listed below. The Board of Trustees governs each fund and is responsible for protecting the interests of shareholders. The Trustees are experienced executives who meet periodically throughout the year to oversee each fund's activities, review contractual arrangements with companies that provide services to each fund, oversee management of the risks associated with such activities and contractual arrangements, and review each fund's performance. Except for James C. Curvey, each of the Trustees oversees 226 funds advised by FMR or an affiliate. Mr. Curvey oversees 430 funds advised by FMR or an affiliate.
The Trustees hold office without limit in time except that (a) any Trustee may resign; (b) any Trustee may be removed by written instrument, signed by at least two-thirds of the number of Trustees prior to such removal; (c) any Trustee who requests to be retired or who has become incapacitated by illness or injury may be retired by written instrument signed by a majority of the other Trustees; and (d) any Trustee may be removed at any special meeting of shareholders by a two-thirds vote of the outstanding voting securities of the trust. Each Trustee who is not an interested person (as defined in the 1940 Act) (Independent Trustee), shall retire not later than the last day of the calendar year in which his or her 75th birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. The executive officers and Advisory Board Members hold office without limit in time, except that any officer and Advisory Board Member may resign or may be removed by a vote of a majority of the Trustees at any regular meeting or any special meeting of the Trustees. Except as indicated, each individual has held the office shown or other offices in the same company for the past five years.
Experience, Skills, Attributes, and Qualifications of the Funds' Trustees. The Governance and Nominating Committee has adopted a statement of policy that describes the experience, qualifications, attributes, and skills that are necessary and desirable for potential Independent Trustee candidates (Statement of Policy). The Board believes that each Trustee satisfied at the time he or she was initially elected or appointed a Trustee, and continues to satisfy, the standards contemplated by the Statement of Policy. The Governance and Nominating Committee also engages professional search firms to help identify potential Independent Trustee candidates who have the experience, qualifications, attributes, and skills consistent with the Statement of Policy. From time to time, additional criteria based on the composition and skills of the current Independent Trustees, as well as experience or skills that may be appropriate in light of future changes to board composition, business conditions, and regulatory or other developments, have also been considered by the professional search firms and the Governance and Nominating Committee. In addition, the Board takes into account the Trustees' commitment and participation in Board and committee meetings, as well as their leadership of standing and ad hoc committees throughout their tenure.
In determining that a particular Trustee was and continues to be qualified to serve as a Trustee, the Board has considered a variety of criteria, none of which, in isolation, was controlling. The Board believes that, collectively, the Trustees have balanced and diverse experience, qualifications, attributes, and skills, which allow the Board to operate effectively in governing each fund and protecting the interests of shareholders. Information about the specific experience, skills, attributes, and qualifications of each Trustee, which in each case led to the Board's conclusion that the Trustee should serve (or continue to serve) as a trustee of the funds, is provided below.
Board Structure and Oversight Function. James C. Curvey is an interested person (as defined in the 1940 Act) and currently serves as Acting Chairman. The Trustees have determined that an interested Chairman is appropriate and benefits shareholders because an interested Chairman has a personal and professional stake in the quality and continuity of services provided to the funds. Independent Trustees exercise their informed business judgment to appoint an individual of their choosing to serve as Chairman, regardless of whether the Trustee happens to be independent or a member of management. The Independent Trustees have determined that they can act independently and effectively without having an Independent Trustee serve as Chairman and that a key structural component for assuring that they are in a position to do so is for the Independent Trustees to constitute a substantial majority for the Board. The Independent Trustees also regularly meet in executive session. Ned C. Lautenbach serves as Chairman of the Independent Trustees and as such (i) acts as a liaison between the Independent Trustees and management with respect to matters important to the Independent Trustees and (ii) with management prepares agendas for Board meetings.
Fidelity funds are overseen by different Boards of Trustees. The funds' Board oversees Fidelity's equity and high income funds and another Board oversees Fidelity's investment-grade bond, money market, and asset allocation funds. The asset allocation funds may invest in Fidelity funds overseen by the funds' Board. The use of separate Boards, each with its own committee structure, allows the Trustees of each group of Fidelity funds to focus on the unique issues of the funds they oversee, including common research, investment, and operational issues. On occasion, the separate Boards establish joint committees to address issues of overlapping consequences for the Fidelity funds overseen by each Board.
The Trustees operate using a system of committees to facilitate the timely and efficient consideration of all matters of importance to the Trustees, each fund, and fund shareholders and to facilitate compliance with legal and regulatory requirements and oversight of the funds' activities and associated risks. The Board, acting through its committees, has charged FMR and its affiliates with (i) identifying events or circumstances the occurrence of which could have demonstrably adverse effects on the funds' business and/or reputation; (ii) implementing processes and controls to lessen the possibility that such events or circumstances occur or to mitigate the effects of such events or circumstances if they do occur; and (iii) creating and maintaining a system designed to evaluate continuously business and market conditions in order to facilitate the identification and implementation processes described in (i) and (ii) above. Because the day-to-day operations and activities of the funds are carried out by or through FMR, its affiliates and other service providers, the funds' exposure to risks is mitigated but not eliminated by the processes overseen by the Trustees. While each of the Board's committees has responsibility for overseeing different aspects of the funds' activities, oversight is exercised primarily through the Operations, Audit, and Compliance Committees. In addition, the Independent Trustees have worked with FMR to enhance the Board's oversight of investment and financial risks, legal and regulatory risks, technology risks, and operational risks, including the development of additional risk reporting to the Board. For example, a working group comprised of Independent Trustees and FMR has worked and continues to work to review the Fidelity funds' valuation-related activities, reporting and risk management. Appropriate personnel, including but not limited to the funds' Chief Compliance Officer (CCO), FMR's internal auditor, the independent accountants, the funds' Treasurer and portfolio management personnel, make periodic reports to the Board's committees, as appropriate, including an annual review of FMR's risk management program for the Fidelity funds. The responsibilities of each standing committee, including their oversight responsibilities, are described further under "Standing Committees of the Funds' Trustees."
Annual Report
The funds' Statement of Additional Information (SAI) includes more information about the Trustees. To request a free copy, call Fidelity at 1-800-544-8544.
Interested Trustees*:
Correspondence intended for each Trustee who is an interested person may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupations and Other Relevant Experience+ | |
James C. Curvey (76) | |
| Year of Election or Appointment: 2007 Mr. Curvey is Trustee and Acting Chairman of the Board of Trustees of certain Trusts. Mr. Curvey also serves as Trustee (2007-present) of other investment companies advised by FMR. Mr. Curvey is a Director of Fidelity Investments Money Management, Inc. (2009-present), Director of Fidelity Research & Analysis Co. (2009-present) and Director of FMR and FMR Co., Inc. (2007-present). Mr. Curvey is also Vice Chairman (2007-present) and Director of FMR LLC. In addition, Mr. Curvey serves as an Overseer for the Boston Symphony Orchestra and a member of the Trustees of Villanova University. Previously, Mr. Curvey was the Vice Chairman (2006-2007) and Director (2000-2007) of FMR Corp. |
Ronald P. O'Hanley (55) | |
| Year of Election or Appointment: 2011 Mr. O'Hanley is Director of FMR Co., Inc. (2010-present), Director of Fidelity Investments Money Management, Inc. (2010-present), Director of Fidelity Research & Analysis Company (2010-present), President of Fidelity Asset Management and Corporate Services and a member of Fidelity's Executive Committee (2010-present). Previously, Mr. O'Hanley served as President and Chief Executive Officer of BNY Mellon Asset Management (2007-2010). Mr. O'Hanley also served as Vice Chairman of Bank New York Mellon Corp. and a member of that firm's Executive Committee. Prior to the 2007 merger of The Bank of New York and Mellon Financial Corporation, he was Vice Chairman of Mellon Financial Corporation and President and Chief Executive Officer of Mellon Asset Management. He joined Mellon in February 1997. Mr. O'Hanley currently serves as Chairman of the Boston Public Library Foundation Board of Directors and sits on the Board of Directors of Beth Israel Deaconess Medical Center, the Board of Trustees of the Marine Biological Laboratory and the Advisory Board of the Maxwell School of Citizenship and Public Administration at Syracuse University. Mr. O'Hanley also chairs the Council on Asset Management for the Financial Services Roundtable and is a member of the Board of Directors of Institutional Investor's U.S. Institute. |
* Trustees have been determined to be "Interested Trustees" by virtue of, among other things, their affiliation with the trust or various entities under common control with FMR.
+ The information above includes each Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to each Trustee's qualifications to serve as a Trustee, which led to the conclusion that each Trustee should serve as a Trustee for each fund.
Independent Trustees:
Correspondence intended for each Independent Trustee (that is, the Trustees other than the Interested Trustees) may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235.
Name, Age; Principal Occupations and Other Relevant Experience+ | |
Dennis J. Dirks (63) | |
| Year of Election or Appointment: 2005 Prior to his retirement in May 2003, Mr. Dirks was Chief Operating Officer and a member of the Board of The Depository Trust & Clearing Corporation (DTCC). He also served as President, Chief Operating Officer, and Board member of The Depository Trust Company (DTC) and President and Board member of the National Securities Clearing Corporation (NSCC). In addition, Mr. Dirks served as Chief Executive Officer and Board member of the Government Securities Clearing Corporation, Chief Executive Officer and Board member of the Mortgage-Backed Securities Clearing Corporation, as a Trustee and a member of the Finance Committee of Manhattan College (2005-2008), and as a Trustee and a member of the Finance Committee of AHRC of Nassau County (2006-2008). Mr. Dirks is a member of the Independent Directors Council (IDC) Governing Council (2010-present) and Board of Directors for The Brookville Center for Children's Services, Inc. (2009-present). |
Alan J. Lacy (58) | |
| Year of Election or Appointment: 2008 Mr. Lacy serves as Senior Adviser (2007-present) of Oak Hill Capital Partners, L.P. (private equity). Mr. Lacy also served as Chief Executive Officer (2000-2005) and Vice Chairman (2005-2006) of Sears Holdings Corporation and Sears, Roebuck and Co. (retail). In addition, Mr. Lacy serves as a member of the Board of Directors of Dave & Buster's, Inc. (restaurant and entertainment complexes, 2010-present), The Hillman Companies, Inc. (hardware wholesalers, 2010-present), and Bristol-Myers Squibb Company (global pharmaceuticals, 2007-present). Mr. Lacy is a member of the Board of Trustees of The National Parks Conservation Association (2006-present). Previously, Mr. Lacy served as Chairman of the Board of Trustees of the National Parks Conservation Association (2008-2011) and as a member of the Board of Directors for the Western Union Company (global money transfer, 2006-2011). |
Ned C. Lautenbach (68) | |
| Year of Election or Appointment: 2000 Mr. Lautenbach is Chairman of the Independent Trustees of the Equity and High Income Funds (2006-present). Mr. Lautenbach currently serves as the Lead Director of the Eaton Corporation Board of Directors (diversified industrial, 1997-present). Mr. Lautenbach is also a member of the Board of Directors of the Philharmonic Center for the Arts in Naples, Florida (1999-present); a member of the Board of Trustees of Fairfield University (2005-present); and a member of the Council on Foreign Relations (1994-present). Previously, Mr. Lautenbach was a Partner/Advisory Partner at Clayton, Dubilier & Rice, LLC (private equity investment, 1998-2010), as well as a Director of Sony Corporation (2006-2007). |
Joseph Mauriello (67) | |
| Year of Election or Appointment: 2008 Prior to his retirement in January 2006, Mr. Mauriello served in numerous senior management positions including Deputy Chairman and Chief Operating Officer (2004-2005), and Vice Chairman of Financial Services (2002-2004) of KPMG LLP US (professional services, 1965-2005). Mr. Mauriello currently serves as a member of the Board of Directors of XL Group plc. (global insurance and re-insurance, 2006-present) and of Arcadia Resources Inc. (health care services and products, 2007-present). Previously, Mr. Mauriello served as a Director of the Hamilton Funds of the Bank of New York (2006-2007). |
Robert W. Selander (61) | |
| Year of Election or Appointment: 2011 Previously, Mr. Selander served as a Member of the Advisory Board of Fidelity's Equity and High Income Funds (2011), Executive Vice Chairman (2010), Chief Executive Officer (2009-2010), and President and Chief Executive Officer (1997-2009) of Mastercard, Inc. |
Cornelia M. Small (67) | |
| Year of Election or Appointment: 2005 Ms. Small is a member of the Board of Directors of the Teagle Foundation (2009-present). Ms. Small is also a member of the Investment Committee, and Chair (2008-present) and a member of the Board of Trustees of Smith College. In addition, Ms. Small serves on the Investment Committee of the Berkshire Taconic Community Foundation (2008-present). Previously, Ms. Small served as Chairperson of the Investment Committee (2002-2008) of Smith College. In addition, Ms. Small served as Chief Investment Officer, Director of Global Equity Investments, and a member of the Board of Directors of Scudder, Stevens & Clark and Scudder Kemper Investments. |
William S. Stavropoulos (72) | |
| Year of Election or Appointment: 2001 Mr. Stavropoulos is Vice Chairman of the Independent Trustees of the Equity and High Income Funds (2006-present). Mr. Stavropoulos serves as President and Founder of the Michigan Baseball Foundation, the Great Lakes Loons (2007-present). Mr. Stavropoulos is Chairman Emeritus of the Board of Directors of The Dow Chemical Company, where he previously served in numerous senior management positions, including President, CEO (1995-2000; 2002-2004), Chairman of the Executive Committee (2000-2006), and as a member of the Board of Directors (1990-2006). Currently, Mr. Stavropoulos is Chairman of Univar (global distributor of commodity and specialty chemicals, 2010-present), a Director of Teradata Corporation (data warehousing and technology solutions, 2008-present), Chemical Financial Corporation, Maersk Inc. (industrial conglomerate), Tyco International, Inc. (multinational manufacturing and services, 2007-present), and a member of the Advisory Board for Metalmark Capital (private equity investment, 2005-present). Mr. Stavropoulos is a special advisor to Clayton, Dubilier & Rice, LLC (private equity investment). In addition, Mr. Stavropoulos is a member of the University of Notre Dame Advisory Council for the College of Science. |
David M. Thomas (62) | |
| Year of Election or Appointment: 2008 Previously, Mr. Thomas served as Executive Chairman (2005-2006) and Chairman and Chief Executive Officer (2000-2005) of IMS Health, Inc. (pharmaceutical and healthcare information solutions). In addition, Mr. Thomas serves as a member of the Board of Directors of Fortune Brands, Inc. (consumer products), and Interpublic Group of Companies, Inc. (marketing communication, 2004-present). |
Michael E. Wiley (61) | |
| Year of Election or Appointment: 2008 Mr. Wiley also serves as a Director of Asia Pacific Exploration Consolidated (international oil and gas exploration and production, 2008-present). Mr. Wiley serves as a Director of Tesoro Corporation (independent oil refiner and marketer, 2005-present), and a Director of Bill Barrett Corporation (exploration and production, 2005-present). In addition, Mr. Wiley also serves as a Director of Post Oak Bank (privately-held bank, 2004-present). Previously, Mr. Wiley served as a member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-2010), as a Senior Energy Advisor of Katzenbach Partners, LLC (consulting, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production, 2001-2005). |
+ The information above includes each Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to each Trustee's qualifications to serve as a Trustee, which led to the conclusion that each Trustee should serve as a Trustee for each fund.
Advisory Board Members and Executive Officers:
Correspondence intended for each executive officer, Edward C. Johnson 3d, and Peter S. Lynch may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
Edward C. Johnson 3d (81) | |
| Year of Election or Appointment: 2011 Member of the Advisory Board of Fidelity's Equity and High Income Funds. Mr. Johnson serves as Chief Executive Officer, Chairman, and a Director of FMR LLC, and also serves as Chairman and Director of FIL Limited. Previously, Mr. Johnson served as a Trustee and Chairman of the Board of certain Fidelity Trusts, Chairman and a Director of FMR, Chairman and a Director of FMR Co., Inc., and President of FMR LLC (2006-2007). |
Peter S. Lynch (68) | |
| Year of Election or Appointment: 2003 Member of the Advisory Board of Fidelity's Equity and High Income Funds. Mr. Lynch is Vice Chairman and a Director of FMR and FMR Co., Inc. In addition, Mr. Lynch serves as a Trustee of Boston College and as the Chairman of the Inner-City Scholarship Fund. Previously, Mr. Lynch served on the Special Olympics International Board of Directors (1997-2006). |
Kenneth B. Robins (42) | |
| Year of Election or Appointment: 2008 President and Treasurer of Fidelity's Equity and High Income Funds. Mr. Robins also serves as President and Treasurer (2010-present) and Assistant Treasurer (2009-present) of other Fidelity funds and is an employee of Fidelity Investments (2004-present). Previously, Mr. Robins served as Deputy Treasurer of the Fidelity funds (2005-2008) and Treasurer and Chief Financial Officer of The North Carolina Capital Management Trust: Cash and Term Portfolios (2006-2008). |
Brian B. Hogan (47) | |
| Year of Election or Appointment: 2009 Vice President of Equity and High Income Funds. Mr. Hogan also serves as President of FMR's Equity Division (2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager. |
Christopher S. Bartel (40) | |
| Year of Election or Appointment: 2009 Vice President of Fidelity's Sector and Real Estate Equity Funds. Mr. Bartel also serves as a Director, President, and Chief Executive Officer of Fidelity Management & Research (Japan) Inc. (2012-present) and Senior Vice President of Global Equity Research (2010-present). Previously, Mr. Bartel served as Senior Vice President of Equity Research (2009-2010), Managing Director of Research (2006-2009), and an analyst and portfolio manager (2000-2006). |
Scott C. Goebel (44) | |
| Year of Election or Appointment: 2008 Secretary and Chief Legal Officer (CLO) of the Fidelity funds. Mr. Goebel also serves as Secretary of Fidelity Investments Money Management, Inc. (FIMM) (2010-present) and Fidelity Research and Analysis Company (FRAC) (2010-present); Secretary and CLO of The North Carolina Capital Management Trust: Cash and Term Portfolios (2008-present); General Counsel, Secretary, and Senior Vice President of FMR (2008-present) and FMR Co., Inc. (2008-present); employed by FMR LLC or an affiliate (2001-present); Chief Legal Officer of Fidelity Management & Research (Hong Kong) Limited (2008-present) and Assistant Secretary of Fidelity Management & Research (Japan) Inc. (2008-present), and Fidelity Management & Research (U.K.) Inc. (2008-present). Previously, Mr. Goebel served as Assistant Secretary of FIMM (2008-2010), FRAC (2008-2010), and the Funds (2007-2008) and as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (2005-2007). |
William C. Coffey (43) | |
| Year of Election or Appointment: 2009 Assistant Secretary of Fidelity's Equity and High Income Funds. Mr. Coffey also serves as Senior Vice President and Deputy General Counsel of FMR LLC (2010-present), and is an employee of Fidelity Investments. Previously, Mr. Coffey served as Vice President and Associate General Counsel of FMR LLC (2005-2009). |
Holly C. Laurent (57) | |
| Year of Election or Appointment: 2008 Anti-Money Laundering (AML) Officer of the Fidelity funds. Ms. Laurent also serves as AML Officer of The North Carolina Capital Management Trust: Cash and Term Portfolios (2008-present) and is an employee of Fidelity Investments. Previously, Ms. Laurent was Senior Vice President and Head of Legal for Fidelity Business Services India Pvt. Ltd. (2006-2008), and Senior Vice President, Deputy General Counsel and Group Head for FMR LLC (2005-2006). |
Christine Reynolds (53) | |
| Year of Election or Appointment: 2008 Chief Financial Officer of the Fidelity funds. Ms. Reynolds became President of Fidelity Pricing and Cash Management Services (FPCMS) in August 2008. Ms. Reynolds served as Chief Operating Officer of FPCMS (2007-2008). Previously, Ms. Reynolds served as President, Treasurer, and Anti-Money Laundering officer of the Fidelity funds (2004-2007). |
Joseph A. Hanlon (43) | |
| Year of Election or Appointment: 2012 Chief Compliance Officer of Fidelity's Equity and High Income Funds. Mr. Hanlon serves as Senior Vice President of the Fidelity Asset Management Division (2009-present) and is an employee of Fidelity Investments. |
Joseph F. Zambello (54) | |
| Year of Election or Appointment: 2011 Deputy Treasurer of the Fidelity funds. Mr. Zambello is an employee of Fidelity Investments. Previously, Mr. Zambello served as Vice President of FMR's Program Management Group (2009-2011) and Vice President of the Transfer Agent Oversight Group (2005-2009). |
Adrien E. Deberghes (44) | |
| Year of Election or Appointment: 2008 Deputy Treasurer of Fidelity's Equity and High Income Funds. Mr. Deberghes also serves as Vice President (2011-present) and Assistant Treasurer (2010-present) of other Fidelity funds, and is an employee of Fidelity Investments (2008-present). Previously, Mr. Deberghes served as Senior Vice President of Mutual Fund Administration at State Street Corporation (2007-2008), Senior Director of Mutual Fund Administration at Investors Bank & Trust (2005-2007), and Director of Finance for Dunkin' Brands (2000-2005). |
Stephanie J. Dorsey (42) | |
| Year of Election or Appointment: 2010 Assistant Treasurer of Fidelity's Equity and High Income Funds. Ms. Dorsey also serves as Deputy Treasurer of other Fidelity funds (2008-present) and is an employee of Fidelity Investments (2008-present). Previously, Ms. Dorsey served as Treasurer (2004-2008) of the JPMorgan Mutual Funds and Vice President (2004-2008) of JPMorgan Chase Bank. |
John R. Hebble (53) | |
| Year of Election or Appointment: 2009 Assistant Treasurer of Fidelity's Equity and High Income Funds. Mr. Hebble also serves as President (2011-present), Treasurer, and Chief Financial Officer of The North Carolina Capital Management Trust: Cash and Term Portfolios (2008-present), President and Treasurer of other Fidelity funds (2008-present) and is an employee of Fidelity Investments. |
Gary W. Ryan (53) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of the Fidelity funds. Mr. Ryan is an employee of Fidelity Investments. Previously, Mr. Ryan served as Vice President of Fund Reporting in Fidelity Pricing and Cash Management Services (FPCMS) (1999-2005). |
Jonathan Davis (43) | |
| Year of Election or Appointment: 2010 Assistant Treasurer of the Fidelity funds. Mr. Davis is also Assistant Treasurer of Fidelity Rutland Square Trust II and Fidelity Commonwealth Trust II. Mr. Davis is an employee of Fidelity Investments. Previously, Mr. Davis served as Vice President and Associate General Counsel of FMR LLC (2003-2010). |
Annual Report
Distributions (Unaudited)
The Board of Trustees of each fund voted to pay to shareholders of record at the opening of business on record date the following distributions per share derived from capital gains realized from sales of portfolio securities and dividends derived from net investment income:
| Pay Date | Record Date | Dividends | Capital Gains |
Chemicals Portfolio | 04/16/12 | 04/13/12 | $0.083 | $0.774 |
Gold Portfolio | 04/16/12 | 04/13/12 | $0.000 | $0.000 |
Materials Portfolio | 04/16/12 | 04/13/12 | $0.047 | $0.362 |
The funds hereby designate as capital gain dividend the amounts noted below for the taxable year ended February 29, 2012, or, if subsequently determined to be different, the net capital gain of such year.
Chemicals Portfolio | $11,269,897 |
Gold Portfolio | $57,371,714 |
Materials Portfolio | $23,857,232 |
A percentage of the dividends distributed during the fiscal year for the following funds qualify for the dividends-received deduction for corporate shareholders:
| April 2011 | December 2011 |
Chemicals Portfolio | 100% | 100% |
Gold Portfolio | 0% | 0% |
Materials Portfolio | 0% | 100% |
A percentage of the dividends distributed during the fiscal year for the following funds may be taken into account as a dividend for purposes of the maximum rate under section 1(h) (11) of the Internal Revenue Code:
| April 2011 | December 2011 |
Chemicals Portfolio | 100% | 100% |
Gold Portfolio | 0% | 0% |
Materials Portfolio | 0% | 100% |
The amounts per share which represent income derived from sources within, and taxes paid to, foreign countries or possessions of the United States are as follows:
| Pay Date | Income | Taxes |
Gold Portfolio | 04/18/11 | $0.010 | $0.0043 |
The funds will notify shareholders in January 2013 of amounts for use in preparing 2012 income tax returns.
Annual Report
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
FMR Co., Inc.
Fidelity Management & Research
(U.K.) Inc.
Fidelity Management & Research
(Japan) Inc.
Fidelity Management & Research
(Hong Kong) Limited
General Distributor
Fidelity Distributors Corporation
Boston, MA
Transfer and Service Agents
Fidelity Investments Institutional Operations Company, Inc.
Boston, MA
Fidelity Service Company, Inc.
Boston, MA
Custodian
Brown Brothers Harriman & Co.
Boston, MA
The Fidelity Telephone Connection
Mutual Fund 24-Hour Service
Exchanges/Redemptions
and Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774
(8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
Fidelity Automated Service
Telephone (FAST®)
1-800-544-5555
Automated line for quickest service
SELMT-UANNPRO-0412
1.910424.102
Fidelity®
Select Portfolios®
Information Technology Sector
Communications Equipment Portfolio
Computers Portfolio
Electronics Portfolio
IT Services Portfolio
Software and Computer Services Portfolio
Technology Portfolio
Annual Report
February 29, 2012
(Fidelity Cover Art)
Contents
Shareholder Expense Example |
| |
Communications Equipment Portfolio | Performance | |
| Management's Discussion | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
Computers Portfolio | Performance | |
| Management's Discussion | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
Electronics Portfolio | Performance | |
| Management's Discussion | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
IT Services Portfolio | Performance | |
| Management's Discussion | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
Software and Computer Services Portfolio | Performance | |
| Management's Discussion | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
Technology Portfolio | Performance | |
| Management's Discussion | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
Notes to Financial Statements |
| |
Report of Independent Registered Public Accounting Firm |
| |
Trustees and Officers |
| |
Distributions |
| |
|
|
|
Annual Report
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com/proxyvotingresults or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov. You may also call 1-800-544-8544 to request a free copy of the proxy voting guidelines.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company.
This report and the financial statements contained herein are submitted for the general information of the shareholders of the funds. This report is not authorized for distribution to prospective investors in the funds unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com, http://www.advisor.fidelity.com, or http://www.401k.com, as applicable.
NOT FDIC INSURED • MAY LOSE VALUE • NO BANK GUARANTEE
Neither the funds nor Fidelity Distributors Corporation is a bank.
Annual Report
Shareholder Expense Example
As a shareholder of a Fund, you incur two types of costs: (1) transaction costs, including redemption fees, and (2) ongoing costs, including management fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Funds and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (September 1, 2011 to February 29, 2012).
Actual Expenses
The first line of the accompanying table for each fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, each Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each fund provides information about hypothetical account values and hypothetical expenses based on a fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, each Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Annualized | Beginning | Ending | Expenses Paid |
Communications Equipment Portfolio | .92% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,084.50 | $ 4.77 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.29 | $ 4.62 |
Computers Portfolio | .86% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,251.50 | $ 4.81 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.59 | $ 4.32 |
Electronics Portfolio | .84% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,224.00 | $ 4.64 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.69 | $ 4.22 |
IT Services Portfolio | .90% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,162.90 | $ 4.84 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.39 | $ 4.52 |
Software and Computer Services Portfolio | .82% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,209.40 | $ 4.50 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.79 | $ 4.12 |
Technology Portfolio | .83% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,143.50 | $ 4.42 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.74 | $ 4.17 |
A 5% return per year before expenses
* Expenses are equal to each Fund's annualized expense ratio, multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
Annual Report
Communications Equipment Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 29, 2012 | Past 1 | Past 5 | Past 10 |
Communications Equipment Portfolio A | -17.13% | 3.66% | 5.13% |
A Prior to October 1, 2006, Communications Equipment Portfolio operated under certain different investment policies. The historical performance for the fund may not represent its current investment policies.
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Communications Equipment Portfolio on February 28, 2002. The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period.
Annual Report
Communications Equipment Portfolio
Management's Discussion of Fund Performance
Market Recap: U.S. stocks rose for the 12 months ending February 29, 2012, as encouraging economic news sparked a strong late-period rally that lifted major equity benchmarks past a number of significant milestones. Stocks recovered from early-period uncertainty that followed the March 2011 earthquake, tsunami and nuclear meltdown in Japan, but plummeted during the summer amid Europe's debt woes and a historic U.S. credit-rating downgrade. Despite continued volatility and mixed economic news, markets began to recover in early October. Investors gravitated toward defensive sectors and the perceived safety of larger, more-established and dividend-paying names, helping the Dow Jones® Industrial Average advance 8.83%, and close above the psychologically important 13,000 mark in late February - for the first time since May 2008. The rally accelerated late in the period and the market broadened, as investor confidence improved amid encouraging manufacturing, housing and employment data, and signs of progress in Europe. For the year, the S&P 500® Index added 5.12%, closing near a four-year high on the period's second-to-last day. Of the 10 major market sectors in the S&P 500®, three defensive areas led the way - consumer staples, health care and utilities - while financials, materials and energy finished in negative territory. The technology-laden Nasdaq Composite® Index added 7.73%, flirting with the 3,000 mark, its highest level in 12 years. Foreign developed-markets stocks reeled over Europe's turmoil, and the MSCI® EAFE® (Europe, Australasia, Far East) Index fell 7.35%.
Comments from Charlie Chai, Co-Portfolio Manager of Communications Equipment Portfolio: For the year, the fund returned -17.13%, trailing the -15.66% return of the S&P® Custom Communications Equipment Index and also lagging the broadly based S&P 500®. Versus its industry index, the fund was particularly hurt by stock picking in communications equipment, a group that accounts for nearly all of the benchmark. Several out-of-benchmark positions in application software also hampered our results. Noteworthy individual detractors included a sizable underweighting in index component Motorola Solutions. The company, which specializes in making equipment such as police-band radios for public-safety and government customers, bucked the weakness in communications equipment stocks and posted a strong gain, in part because investors seeking safety in high-quality companies were attracted to its reliable cash flow and strong balance sheet. Lighter-than-benchmark exposure to mobile chipset provider QUALCOMM also worked against us, given the stock's single-digit gain during the period. That said, QUALCOMM was the fund's second-largest holding at period end, and we significantly added to the position in December and January. Underweighting networking equipment maker Cisco Systems, the benchmark's largest component and the fund's biggest holding during the period, also was a drag on performance. Here, too, we added to the position in the final two months of the period. Relative performance was further hampered by a large out-of-index position in AsiaInfo-Linkage, a Chinese provider of telecommunications software and technology security products, and overweighted positions in networking equipment manufacturer Ciena and French telecom equipment provider Alcatel-Lucent. I sold AsiaInfo-Linkage and Ciena from the fund by period end. Conversely, out-of-benchmark exposure to wireless telecommunication services and specialized real estate investment trusts (REITs) bolstered relative performance, as the fund's holdings in both groups posted a gain. The latter group reflected a position in cellular tower owner American Tower, which converted to a REIT and was sold from the fund to lock in profits. However, the largest relative contributor by far was Canadian smartphone maker and benchmark constituent Research In Motion, where the fund had sizable underexposure. The company continued to lose market share to Apple's iPhone® smartphone and a raft of competitors running Google's AndroidTM open-source mobile operating system. Likewise, a minimal stake in benchmark heavyweight Nokia was the right call, as this former market leader in the handset space also struggled to stay competitive. Further benefiting the fund's results was an out-of-benchmark stake in Taiwan-based HTC, a leading maker of AndroidTM-based cellular handsets. I sold the stock during the period to lock in profits.
Note to shareholders: Ali Khan became Co-Portfolio Manager of the fund on January 12, 2012.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Communications Equipment Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 29, 2012 | ||
| % of fund's | % of fund's net assets |
Cisco Systems, Inc. | 19.7 | 15.3 |
QUALCOMM, Inc. | 17.4 | 10.7 |
Telefonaktiebolaget LM Ericsson (B Shares) sponsored ADR | 5.1 | 11.8 |
Juniper Networks, Inc. | 4.2 | 0.0 |
Polycom, Inc. | 4.2 | 4.1 |
Motorola Solutions, Inc. | 3.5 | 0.0 |
Brocade Communications Systems, Inc. | 2.9 | 1.6 |
Harris Corp. | 2.6 | 1.2 |
Riverbed Technology, Inc. | 2.3 | 2.1 |
Nokia Corp. sponsored ADR | 2.3 | 0.0 |
| 64.2 | |
Top Industries (% of fund's net assets) | |||
As of February 29, 2012 | |||
 | Communications Equipment | 81.2% |
|
 | Semiconductors & Semiconductor Equipment | 5.7% |
|
 | Electronic Equipment & Components | 3.2% |
|
 | Software | 2.5% |
|
 | Internet Software & Services | 1.1% |
|
 | All Others* | 6.3% |
|
As of August 31, 2011 | |||
| Communications Equipment | 75.3% |
|
| Wireless Telecommunication Services | 9.5% |
|
| Software | 8.6% |
|
| Semiconductors & Semiconductor Equipment | 2.3% |
|
| Computers & Peripherals | 1.0% |
|
| All Others* | 3.3% |
|
* Includes short-term investments and net other assets. |
Annual Report
Communications Equipment Portfolio
Investments February 29, 2012
Showing Percentage of Net Assets
Common Stocks - 95.1% | |||
Shares | Value | ||
COMMUNICATIONS EQUIPMENT - 81.2% | |||
Communications Equipment - 81.2% | |||
Acme Packet, Inc. (a) | 167,291 | $ 5,099,030 | |
Alcatel-Lucent SA sponsored ADR (a) | 1,066,643 | 2,634,608 | |
Anaren, Inc. (a) | 100,700 | 1,766,278 | |
Aruba Networks, Inc. (a)(d) | 256,923 | 5,546,968 | |
Brocade Communications Systems, Inc. (a) | 1,656,741 | 9,575,963 | |
Calix Networks, Inc. (a) | 62,400 | 564,096 | |
Cisco Systems, Inc. | 3,304,876 | 65,700,934 | |
Comtech Telecommunications Corp. | 139,800 | 4,511,346 | |
F5 Networks, Inc. (a) | 59,035 | 7,377,014 | |
Finisar Corp. (a) | 207,952 | 4,219,346 | |
Harris Corp. | 197,700 | 8,625,651 | |
Infinera Corp. (a)(d) | 357,800 | 2,848,088 | |
InterDigital, Inc. (d) | 76,300 | 2,887,955 | |
JDS Uniphase Corp. (a) | 49,436 | 644,645 | |
Juniper Networks, Inc. (a) | 618,212 | 14,070,505 | |
Motorola Solutions, Inc. | 236,181 | 11,761,814 | |
NETGEAR, Inc. (a) | 114,150 | 4,288,616 | |
Nokia Corp. sponsored ADR (d) | 1,437,230 | 7,602,947 | |
Oclaro, Inc. (a)(d) | 175,363 | 757,568 | |
PC-Tel, Inc. | 69,800 | 513,030 | |
Plantronics, Inc. | 36,000 | 1,342,800 | |
Polycom, Inc. (a) | 671,363 | 13,863,646 | |
QUALCOMM, Inc. | 932,919 | 58,008,903 | |
Research In Motion Ltd. (a) | 128,700 | 1,823,679 | |
Riverbed Technology, Inc. (a) | 270,442 | 7,699,484 | |
Sycamore Networks, Inc. (a) | 87,000 | 1,606,890 | |
Telefonaktiebolaget LM Ericsson (B Shares) sponsored ADR (d) | 1,687,680 | 16,843,046 | |
ViaSat, Inc. (a) | 136,600 | 6,301,358 | |
Wi-Lan, Inc. | 284,000 | 1,506,593 | |
| 269,992,801 | ||
COMPUTERS & PERIPHERALS - 0.6% | |||
Computer Hardware - 0.6% | |||
Apple, Inc. (a) | 3,500 | 1,898,540 | |
ELECTRICAL EQUIPMENT - 0.6% | |||
Electrical Components & Equipment - 0.6% | |||
Prysmian SpA | 112,300 | 1,938,895 | |
ELECTRONIC EQUIPMENT & COMPONENTS - 3.2% | |||
Electronic Components - 0.5% | |||
Vishay Intertechnology, Inc. (a) | 129,600 | 1,588,896 | |
Electronic Manufacturing Services - 2.7% | |||
Fabrinet (a) | 127,700 | 2,281,999 | |
Flextronics International Ltd. (a) | 562,400 | 3,964,920 | |
TE Connectivity Ltd. | 76,900 | 2,810,695 | |
| 9,057,614 | ||
TOTAL ELECTRONIC EQUIPMENT & COMPONENTS | 10,646,510 | ||
| |||
Shares | Value | ||
INTERNET SOFTWARE & SERVICES - 1.1% | |||
Internet Software & Services - 1.1% | |||
Akamai Technologies, Inc. (a) | 104,200 | $ 3,751,200 | |
MEDIA - 0.2% | |||
Advertising - 0.2% | |||
Digital Generation, Inc. (a) | 75,700 | 757,000 | |
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 5.7% | |||
Semiconductor Equipment - 0.8% | |||
ASML Holding NV | 56,600 | 2,578,130 | |
Semiconductors - 4.9% | |||
Altera Corp. | 115,800 | 4,452,510 | |
Analog Devices, Inc. | 125,400 | 4,916,934 | |
Marvell Technology Group Ltd. (a) | 54,200 | 813,000 | |
ON Semiconductor Corp. (a) | 101,144 | 917,376 | |
Skyworks Solutions, Inc. (a) | 37,800 | 1,019,466 | |
Texas Instruments, Inc. | 96,900 | 3,231,615 | |
Xilinx, Inc. | 24,600 | 908,478 | |
| 16,259,379 | ||
TOTAL SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT | 18,837,509 | ||
SOFTWARE - 2.5% | |||
Application Software - 0.5% | |||
BroadSoft, Inc. (a)(d) | 25,000 | 909,250 | |
Citrix Systems, Inc. (a) | 12,200 | 911,828 | |
| 1,821,078 | ||
Systems Software - 2.0% | |||
Allot Communications Ltd. (a) | 56,600 | 1,010,310 | |
Microsoft Corp. | 90,900 | 2,885,166 | |
Oracle Corp. | 93,600 | 2,739,672 | |
| 6,635,148 | ||
TOTAL SOFTWARE | 8,456,226 | ||
TOTAL COMMON STOCKS (Cost $297,480,477) |
| ||
Money Market Funds - 10.1% | |||
Shares | Value | ||
Fidelity Cash Central Fund, 0.12% (b) | 15,067,302 | $ 15,067,302 | |
Fidelity Securities Lending Cash Central Fund, 0.12% (b)(c) | 18,688,900 | 18,688,900 | |
TOTAL MONEY MARKET FUNDS (Cost $33,756,202) |
| ||
TOTAL INVESTMENT PORTFOLIO - 105.2% (Cost $331,236,679) | 350,034,883 | ||
NET OTHER ASSETS (LIABILITIES) - (5.2)% | (17,436,715) | ||
NET ASSETS - 100% | $ 332,598,168 | ||
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 13,829 |
Fidelity Securities Lending Cash Central Fund | 870,521 |
Total | $ 884,350 |
Other Information |
All investments are categorized as Level 1 under the Fair Value Hierarchy. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 86.3% |
Sweden | 5.1% |
Finland | 2.3% |
Singapore | 1.2% |
Others (Individually Less Than 1%) | 5.1% |
| 100.0% |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Communications Equipment Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2012 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $17,794,328) - See accompanying schedule: Unaffiliated issuers (cost $297,480,477) | $ 316,278,681 |
|
Fidelity Central Funds (cost $33,756,202) | 33,756,202 |
|
Total Investments (cost $331,236,679) |
| $ 350,034,883 |
Receivable for investments sold | 2,218,467 | |
Receivable for fund shares sold | 1,588,331 | |
Dividends receivable | 247,943 | |
Distributions receivable from Fidelity Central Funds | 10,021 | |
Prepaid expenses | 824 | |
Other receivables | 4,651 | |
Total assets | 354,105,120 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 1,935,661 | |
Payable for fund shares redeemed | 603,873 | |
Accrued management fee | 153,858 | |
Other affiliated payables | 85,627 | |
Other payables and accrued expenses | 39,033 | |
Collateral on securities loaned, at value | 18,688,900 | |
Total liabilities | 21,506,952 | |
|
|
|
Net Assets | $ 332,598,168 | |
Net Assets consist of: |
| |
Paid in capital | $ 376,768,117 | |
Undistributed net investment income | 49,118 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (63,017,271) | |
Net unrealized appreciation (depreciation) on investments | 18,798,204 | |
Net Assets, for 13,573,140 shares outstanding | $ 332,598,168 | |
Net Asset Value, offering price and redemption price per share ($332,598,168 ÷ 13,573,140 shares) | $ 24.50 | |
Statement of Operations
| Year ended February 29, 2012 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 3,190,081 |
Interest |
| 1,976 |
Income from Fidelity Central Funds (including $870,521 from security lending) |
| 884,350 |
Total income |
| 4,076,407 |
|
|
|
Expenses | ||
Management fee | $ 2,257,315 | |
Transfer agent fees | 1,109,486 | |
Accounting and security lending fees | 167,843 | |
Custodian fees and expenses | 43,195 | |
Independent trustees' compensation | 2,478 | |
Registration fees | 28,345 | |
Audit | 40,026 | |
Legal | 5,099 | |
Interest | 1,981 | |
Miscellaneous | 4,397 | |
Total expenses before reductions | 3,660,165 | |
Expense reductions | (55,757) | 3,604,408 |
Net investment income (loss) | 471,999 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | (28,079,746) | |
Foreign currency transactions | (32,044) | |
Total net realized gain (loss) |
| (28,111,790) |
Change in net unrealized appreciation (depreciation) on investment securities | (70,792,607) | |
Net gain (loss) | (98,904,397) | |
Net increase (decrease) in net assets resulting from operations | $ (98,432,398) | |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Communications Equipment Portfolio
Financial Statements - continued
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 471,999 | $ (1,773,841) |
Net realized gain (loss) | (28,111,790) | 56,077,863 |
Change in net unrealized appreciation (depreciation) | (70,792,607) | 96,827,694 |
Net increase (decrease) in net assets resulting from operations | (98,432,398) | 151,131,716 |
Distributions to shareholders from net investment income | (390,659) | - |
Share transactions | 125,804,694 | 259,307,651 |
Reinvestment of distributions | 376,474 | - |
Cost of shares redeemed | (281,569,831) | (160,569,712) |
Net increase (decrease) in net assets resulting from share transactions | (155,388,663) | 98,737,939 |
Redemption fees | 15,056 | 15,161 |
Total increase (decrease) in net assets | (254,196,664) | 249,884,816 |
|
|
|
Net Assets | ||
Beginning of period | 586,794,832 | 336,910,016 |
End of period (including undistributed net investment income of $49,118 and accumulated net investment loss of $176, respectively) | $ 332,598,168 | $ 586,794,832 |
Other Information Shares | ||
Sold | 4,687,831 | 10,453,658 |
Issued in reinvestment of distributions | 16,777 | - |
Redeemed | (10,954,733) | (6,839,533) |
Net increase (decrease) | (6,250,125) | 3,614,125 |
Financial Highlights
Years ended February 28, | 2012 H | 2011 | 2010 | 2009 | 2008 H |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 29.60 | $ 20.79 | $ 10.72 | $ 19.50 | $ 20.64 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | .03 | (.10) | (.07) E | .04 | (.12) |
Net realized and unrealized gain (loss) | (5.10) | 8.91 | 10.20 | (8.77) | (1.02) |
Total from investment operations | (5.07) | 8.81 | 10.13 | (8.73) | (1.14) |
Distributions from net investment income | (.03) | - | (.06) | (.05) | - |
Redemption fees added to paid in capital B, I | - | - | - | - | - |
Net asset value, end of period | $ 24.50 | $ 29.60 | $ 20.79 | $ 10.72 | $ 19.50 |
Total Return A | (17.13)% | 42.38% | 94.47% | (44.79)% | (5.52)% |
Ratios to Average Net Assets C, F |
|
|
|
|
|
Expenses before reductions | .90% | .91% | .97% | .95% | .93% |
Expenses net of fee waivers, if any | .90% | .91% | .97% | .95% | .93% |
Expenses net of all reductions | .89% | .90% | .95% | .94% | .93% |
Net investment income (loss) | .12% | (.43)% | (.41)% E | .25% | (.55)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 332,598 | $ 586,795 | $ 336,910 | $ 125,918 | $ 241,213 |
Portfolio turnover rate D | 91% | 85% | 143% G | 120% | 39% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
B Calculated based on average shares outstanding during the period.
C Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
D Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
E Investment income per share reflects a large, non-recurring dividend which amounted to $.04 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been (.63)%.
F Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund.
G The portfolio turnover rate does not include the assets acquired in the merger.
H For the year ended February 29.
I Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Computers Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 29, 2012 | Past 1 | Past 5 | Past 10 |
Computers Portfolio | 8.51% | 10.56% | 7.08% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Computers Portfolio on February 28, 2002. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index performed over the same period.
Annual Report
Computers Portfolio
Management's Discussion of Fund Performance
Market Recap: U.S. stocks rose for the 12 months ending February 29, 2012, as encouraging economic news sparked a strong late-period rally that lifted major equity benchmarks past a number of significant milestones. Stocks recovered from early-period uncertainty that followed the March 2011 earthquake, tsunami and nuclear meltdown in Japan, but plummeted during the summer amid Europe's debt woes and a historic U.S. credit-rating downgrade. Despite continued volatility and mixed economic news, markets began to recover in early October. Investors gravitated toward defensive sectors and the perceived safety of larger, more-established and dividend-paying names, helping the Dow Jones® Industrial Average advance 8.83%, and close above the psychologically important 13,000 mark in late February - for the first time since May 2008. The rally accelerated late in the period and the market broadened, as investor confidence improved amid encouraging manufacturing, housing and employment data, and signs of progress in Europe. For the year, the S&P 500® Index added 5.12%, closing near a four-year high on the period's second-to-last day. Of the 10 major market sectors in the S&P 500®, three defensive areas led the way - consumer staples, health care and utilities - while financials, materials and energy finished in negative territory. The technology-laden Nasdaq Composite® Index added 7.73%, flirting with the 3,000 mark, its highest level in 12 years. Foreign developed-markets stocks reeled over Europe's turmoil, and the MSCI® EAFE® (Europe, Australasia, Far East) Index fell 7.35%.
Comments from Matthew Schuldt, Portfolio Manager of Computers Portfolio: For the year, the fund returned 8.51%, edging the 8.45% gain of the S&P® Custom Computers & Peripherals Index and also outpacing the broadly based S&P 500®. Versus its industry index, the fund was particularly aided by stock selection in computer hardware, with smaller but still-meaningful contributions from my picks in computer storage/peripherals and out-of-benchmark exposure to application software. Apple was the fund's biggest contributor and also by far its largest holding at period end. The company continued to deliver huge positive surprises in revenue and earnings on the back of robust sales of its iPhone® smartphone and iPad® tablet device. An out-of-benchmark position in U.K.-based Autonomy also contributed meaningfully, as did underweightings in two weak-performing benchmark components, NAND flash memory manufacturer SanDisk and digital storage firm NetApp. Conversely, an underweighting in information technology consulting/other services worked against us. Out-of-benchmark representation in the semiconductors and communications equipment groups were counterproductive as well. The fund's largest relative detractor was an underweighted position in hard-disk drive maker Seagate Technology. Extensive flooding in Thailand during the fourth quarter of 2011 and the first quarter of 2012 drove up prices for hard-disk drives, which bolstered Seagate's revenue and earnings, and lifted its stock. A lighter-than-benchmark stake in technology services provider and strong-performing benchmark component International Business Machines also hampered relative performance, as investors were attracted to Big Blue's mix of a healthy dividend yield and stable growth prospects. A small out-of-benchmark stake in RF Micro Devices, which I established in November, also worked against the fund.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Computers Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 29, 2012 | ||
| % of fund's | % of fund's net assets |
Apple, Inc. | 22.0 | 19.4 |
IBM Corp. | 9.6 | 11.5 |
EMC Corp. | 8.4 | 6.1 |
Hewlett-Packard Co. | 6.5 | 4.3 |
SanDisk Corp. | 4.8 | 4.8 |
NCR Corp. | 4.7 | 4.0 |
NetApp, Inc. | 3.8 | 3.7 |
Western Digital Corp. | 3.7 | 4.3 |
Seagate Technology | 3.5 | 4.0 |
Teradata Corp. | 3.5 | 4.2 |
| 70.5 | |
Top Industries (% of fund's net assets) | |||
As of February 29, 2012 | |||
| Computers & Peripherals | 73.4% |
|
| IT Services | 13.6% |
|
| Communications Equipment | 3.6% |
|
| Electronic Equipment & Components | 1.0% |
|
| Semiconductors & Semiconductor Equipment | 1.0% |
|
| All Others* | 7.4% |
|
As of August 31, 2011 | |||
| Computers & Peripherals | 72.9% |
|
| IT Services | 16.8% |
|
| Communications Equipment | 3.0% |
|
| Software | 1.9% |
|
| Electronic Equipment & Components | 1.3% |
|
| All Others* | 4.1% |
|
* Includes short-term investments and net other assets. |
Annual Report
Computers Portfolio
Investments February 29, 2012
Showing Percentage of Net Assets
Common Stocks - 93.9% | |||
Shares | Value | ||
COMMUNICATIONS EQUIPMENT - 3.6% | |||
Communications Equipment - 3.6% | |||
Motorola Solutions, Inc. | 370,000 | $ 18,426,000 | |
Polycom, Inc. (a) | 429,300 | 8,865,045 | |
| 27,291,045 | ||
COMPUTERS & PERIPHERALS - 73.4% | |||
Computer Hardware - 40.4% | |||
Apple, Inc. (a) | 307,300 | 166,691,813 | |
Avid Technology, Inc. (a) | 411,500 | 4,382,475 | |
Cray, Inc. (a) | 397,500 | 3,168,075 | |
Dell, Inc. (a) | 1,316,907 | 22,782,491 | |
Diebold, Inc. | 174,300 | 6,820,359 | |
Hewlett-Packard Co. | 1,934,655 | 48,966,118 | |
NCR Corp. (a) | 1,655,100 | 35,948,772 | |
Silicon Graphics International Corp. (a)(d) | 393,800 | 3,815,922 | |
Stratasys, Inc. (a)(d) | 187,981 | 6,925,220 | |
Super Micro Computer, Inc. (a) | 408,200 | 6,751,628 | |
| 306,252,873 | ||
Computer Storage & Peripherals - 33.0% | |||
Electronics for Imaging, Inc. (a) | 905,115 | 14,445,635 | |
EMC Corp. (a) | 2,316,178 | 64,134,969 | |
Imation Corp. (a) | 450,000 | 2,812,500 | |
Immersion Corp. (a) | 475,390 | 3,085,281 | |
Intermec, Inc. (a) | 696,500 | 5,209,820 | |
Intevac, Inc. (a) | 308,790 | 2,439,441 | |
Lexmark International, Inc. Class A | 75,800 | 2,795,504 | |
NetApp, Inc. (a) | 679,460 | 29,216,780 | |
Novatel Wireless, Inc. (a) | 956,424 | 3,280,534 | |
OCZ Technology Group, Inc. (a) | 225,400 | 1,936,186 | |
QLogic Corp. (a) | 202,208 | 3,475,956 | |
Quantum Corp. (a) | 2,263,200 | 5,952,216 | |
Rimage Corp. | 205,000 | 2,244,750 | |
SanDisk Corp. (a) | 739,000 | 36,550,940 | |
Seagate Technology | 1,006,430 | 26,428,852 | |
SIMPLO Technology Co. Ltd. | 350,000 | 2,512,503 | |
STEC, Inc. (a)(d) | 232,880 | 2,256,607 | |
Synaptics, Inc. (a) | 272,200 | 10,003,350 | |
Western Digital Corp. (a) | 714,084 | 28,027,797 | |
Xyratex Ltd. | 220,800 | 3,780,096 | |
| 250,589,717 | ||
TOTAL COMPUTERS & PERIPHERALS | 556,842,590 | ||
ELECTRICAL EQUIPMENT - 0.4% | |||
Electrical Components & Equipment - 0.4% | |||
Dynapack International Technology Corp. | 503,000 | 2,951,978 | |
ELECTRONIC EQUIPMENT & COMPONENTS - 1.0% | |||
Electronic Equipment & Instruments - 0.0% | |||
Domino Printing Sciences PLC | 7,500 | 78,208 | |
| |||
Shares | Value | ||
Technology Distributors - 1.0% | |||
Arrow Electronics, Inc. (a) | 174,900 | $ 7,022,235 | |
TOTAL ELECTRONIC EQUIPMENT & COMPONENTS | 7,100,443 | ||
INTERNET SOFTWARE & SERVICES - 0.4% | |||
Internet Software & Services - 0.4% | |||
Velti PLC (a) | 298,600 | 2,959,126 | |
IT SERVICES - 13.6% | |||
IT Consulting & Other Services - 13.6% | |||
EPAM Systems, Inc. | 257,600 | 3,634,736 | |
IBM Corp. | 372,448 | 73,271,695 | |
Teradata Corp. (a) | 396,357 | 26,377,558 | |
| 103,283,989 | ||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 1.0% | |||
Semiconductors - 1.0% | |||
NXP Semiconductors NV (a) | 137,700 | 3,414,960 | |
RF Micro Devices, Inc. (a) | 900,000 | 4,293,000 | |
| 7,707,960 | ||
SOFTWARE - 0.5% | |||
Application Software - 0.5% | |||
BroadSoft, Inc. (a)(d) | 104,600 | 3,804,302 | |
TOTAL COMMON STOCKS (Cost $594,918,662) |
| ||
Money Market Funds - 5.8% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.12% (b) | 36,833,923 | 36,833,923 | |
Fidelity Securities Lending Cash Central Fund, 0.12% (b)(c) | 7,413,750 | 7,413,750 | |
TOTAL MONEY MARKET FUNDS (Cost $44,247,673) |
| ||
TOTAL INVESTMENT PORTFOLIO - 99.7% (Cost $639,166,335) | 756,189,106 | ||
NET OTHER ASSETS (LIABILITIES) - 0.3% | 2,523,892 | ||
NET ASSETS - 100% | $ 758,712,998 | ||
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 16,075 |
Fidelity Securities Lending Cash Central Fund | 127,933 |
Total | $ 144,008 |
Other Information |
All investments are categorized as Level 1 under the Fair Value Hierarchy. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Computers Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2012 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $7,261,831) - See accompanying schedule: Unaffiliated issuers (cost $594,918,662) | $ 711,941,433 |
|
Fidelity Central Funds (cost $44,247,673) | 44,247,673 |
|
Total Investments (cost $639,166,335) |
| $ 756,189,106 |
Receivable for investments sold | 17,865,878 | |
Receivable for fund shares sold | 4,326,331 | |
Dividends receivable | 555,462 | |
Distributions receivable from Fidelity Central Funds | 5,769 | |
Prepaid expenses | 957 | |
Other receivables | 193,671 | |
Total assets | 779,137,174 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 12,242,529 | |
Payable for fund shares redeemed | 258,815 | |
Accrued management fee | 331,085 | |
Other affiliated payables | 143,610 | |
Other payables and accrued expenses | 34,387 | |
Collateral on securities loaned, at value | 7,413,750 | |
Total liabilities | 20,424,176 | |
|
|
|
Net Assets | $ 758,712,998 | |
Net Assets consist of: |
| |
Paid in capital | $ 701,743,445 | |
Accumulated net investment loss | (361,226) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (59,647,786) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 116,978,565 | |
Net Assets, for 11,691,820 shares outstanding | $ 758,712,998 | |
Net Asset Value, offering price and redemption price per share ($758,712,998 ÷ 11,691,820 shares) | $ 64.89 | |
Statement of Operations
| Year ended February 29, 2012 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 2,816,874 |
Income from Fidelity Central Funds (including $127,933 from security lending) |
| 144,008 |
Total income |
| 2,960,882 |
|
|
|
Expenses | ||
Management fee | $ 3,135,601 | |
Transfer agent fees | 1,368,657 | |
Accounting and security lending fees | 217,580 | |
Custodian fees and expenses | 25,457 | |
Independent trustees' compensation | 3,356 | |
Registration fees | 29,726 | |
Audit | 40,052 | |
Legal | 2,945 | |
Interest | 712 | |
Miscellaneous | 5,537 | |
Total expenses before reductions | 4,829,623 | |
Expense reductions | (60,122) | 4,769,501 |
Net investment income (loss) | (1,808,619) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | (13,220,287) | |
Foreign currency transactions | (51,336) | |
Total net realized gain (loss) |
| (13,271,623) |
Change in net unrealized appreciation (depreciation) on: Investment securities | 67,727,580 | |
Assets and liabilities in foreign currencies | (16,116) | |
Total change in net unrealized appreciation (depreciation) |
| 67,711,464 |
Net gain (loss) | 54,439,841 | |
Net increase (decrease) in net assets resulting from operations | $ 52,631,222 | |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ (1,808,619) | $ (2,599,379) |
Net realized gain (loss) | (13,271,623) | 122,945,071 |
Change in net unrealized appreciation (depreciation) | 67,711,464 | 44,955,510 |
Net increase (decrease) in net assets resulting from operations | 52,631,222 | 165,301,202 |
Share transactions | 303,359,134 | 149,562,570 |
Cost of shares redeemed | (206,780,928) | (208,100,154) |
Net increase (decrease) in net assets resulting from share transactions | 96,578,206 | (58,537,584) |
Redemption fees | 16,407 | 15,450 |
Total increase (decrease) in net assets | 149,225,835 | 106,779,068 |
|
|
|
Net Assets | ||
Beginning of period | 609,487,163 | 502,708,095 |
End of period (including accumulated net investment loss of $361,226 and accumulated net investment loss of $179, respectively) | $ 758,712,998 | $ 609,487,163 |
Other Information Shares | ||
Sold | 5,122,159 | 2,870,190 |
Redeemed | (3,621,731) | (4,211,085) |
Net increase (decrease) | 1,500,428 | (1,340,895) |
Financial Highlights
Years ended February 28, | 2012 F | 2011 | 2010 | 2009 | 2008 F |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 59.80 | $ 43.59 | $ 23.44 | $ 40.26 | $ 39.29 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | (.18) | (.25) | (.07) | (.02) | (.12) |
Net realized and unrealized gain (loss) | 5.27 | 16.46 | 20.22 | (16.80) | 1.09 |
Total from investment operations | 5.09 | 16.21 | 20.15 | (16.82) | .97 |
Redemption fees added to paid in capital B, G | - | - | - | - | - |
Net asset value, end of period | $ 64.89 | $ 59.80 | $ 43.59 | $ 23.44 | $ 40.26 |
Total Return A | 8.51% | 37.19% | 85.96% | (41.78)% | 2.47% |
Ratios to Average Net Assets C, E |
|
|
|
|
|
Expenses before reductions | .86% | .89% | .95% | .92% | .92% |
Expenses net of fee waivers, if any | .86% | .89% | .95% | .92% | .92% |
Expenses net of all reductions | .85% | .88% | .92% | .91% | .91% |
Net investment income (loss) | (.32)% | (.50)% | (.18)% | (.05)% | (.26)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 758,713 | $ 609,487 | $ 502,708 | $ 207,163 | $ 437,251 |
Portfolio turnover rate D | 193% | 141% | 269% | 183% | 234% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
B Calculated based on average shares outstanding during the period.
C Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
D Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
E Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund.
F For the year ended February 29.
G Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Electronics Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 29, 2012 | Past 1 | Past 5 | Past 10 |
Electronics Portfolio | -0.01% | 3.51% | 2.17% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Electronics Portfolio on February 28, 2002. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index performed over the same period.
Annual Report
Electronics Portfolio
Management's Discussion of Fund Performance
Market Recap: U.S. stocks rose for the 12 months ending February 29, 2012, as encouraging economic news sparked a strong late-period rally that lifted major equity benchmarks past a number of significant milestones. Stocks recovered from early-period uncertainty that followed the March 2011 earthquake, tsunami and nuclear meltdown in Japan, but plummeted during the summer amid Europe's debt woes and a historic U.S. credit-rating downgrade. Despite continued volatility and mixed economic news, markets began to recover in early October. Investors gravitated toward defensive sectors and the perceived safety of larger, more-established and dividend-paying names, helping the Dow Jones® Industrial Average advance 8.83%, and close above the psychologically important 13,000 mark in late February - for the first time since May 2008. The rally accelerated late in the period and the market broadened, as investor confidence improved amid encouraging manufacturing, housing and employment data, and signs of progress in Europe. For the year, the S&P 500® Index added 5.12%, closing near a four-year high on the period's second-to-last day. Of the 10 major market sectors in the S&P 500®, three defensive areas led the way - consumer staples, health care and utilities - while financials, materials and energy finished in negative territory. The technology-laden Nasdaq Composite® Index added 7.73%, flirting with the 3,000 mark, its highest level in 12 years. Foreign developed-markets stocks reeled over Europe's turmoil, and the MSCI® EAFE® (Europe, Australasia, Far East) Index fell 7.35%.
Comments from Stephen Barwikowski and Christopher Lin, Co-Portfolio Managers of Electronics Portfolio: For the year, the fund returned -0.01%, well ahead of the -4.00% return of its industry benchmark, the MSCI® U.S. IM Semiconductors & Semiconductor Equipment 25/50 Index, but lagging the broadly based S&P 500®. Versus the MSCI index, stock selection in the fund's primary investment universe of semiconductors added considerable value. In the weak-performing semiconductor equipment group, the fund's relative performance benefited from a sizable underweighting and favorable stock picking. Out-of-index allocations to the computer storage/peripherals and electronic manufacturing services areas also bolstered performance. At the stock level, the largest contributor was National Semiconductor. In April, the analog chip maker received a takeover bid of $25 per share from Texas Instruments, almost doubling the price at which the stock had been trading right before the announcement. After the takeover bid was announced, we sold the National Semi position to lock in profits. Having virtually no exposure to weak-performing index component First Solar also bolstered the fund's relative performance. Skyworks Solutions, a provider of radio frequency components in handsets - notably for iPhone®-maker Apple - aided performance as well, as did a lighter-than-benchmark stake in weak-performing semiconductor maker Cree. Conversely, a large underweighting in personal computer chip provider and index heavyweight Intel shaved more than four percentage points off the fund's relative performance, as the stock gained roughly 29%. We were put off by what we thought were near-peak profit margins at Intel, and also by the prospect of greater competition for the company. Interestingly, although Intel was by far the biggest detractor from the fund's relative performance, it was our second-largest absolute contributor. Micron Technology was hampered by weak PC demand, despite the company's market-share gains in DRAM computer memory and NAND flash memory. A substantial overweighting in Intel competitor Advanced Micro Devices also proved ill-timed, as did a large overweighting in Marvell Technology Group, the fund's second-biggest holding at period end. While the provider of semiconductors for applications such as wireless communications, data storage and networking saw its businesses negatively impacted by global economic uncertainty and flooding in Thailand, we continued to like Marvell's longer-term prospects.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Electronics Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 29, 2012 | ||
| % of fund's | % of fund's net assets |
Texas Instruments, Inc. | 9.5 | 3.8 |
Marvell Technology Group Ltd. | 8.4 | 10.7 |
Broadcom Corp. Class A | 7.9 | 9.6 |
Intersil Corp. Class A | 4.2 | 3.6 |
NXP Semiconductors NV | 3.6 | 3.8 |
Intel Corp. | 3.6 | 7.5 |
Freescale Semiconductor Holdings I Ltd. | 3.5 | 2.5 |
Skyworks Solutions, Inc. | 3.4 | 1.2 |
ON Semiconductor Corp. | 3.3 | 4.1 |
Altera Corp. | 3.2 | 0.0 |
| 50.6 | |
Top Industries (% of fund's net assets) | |||
As of February 29, 2012 | |||
| Semiconductors & Semiconductor Equipment | 83.2% |
|
| Electronic Equipment & Components | 6.0% |
|
| Computers & Peripherals | 3.8% |
|
| Communications Equipment | 3.7% |
|
| Internet Software & Services | 0.7% |
|
| All Others* | 2.6% |
|
As of August 31, 2011 | |||
| Semiconductors & Semiconductor Equipment | 86.6% |
|
| Electronic Equipment & Components | 6.2% |
|
| Communications Equipment | 3.4% |
|
| Computers & Peripherals | 2.7% |
|
| Internet Software & Services | 0.0% |
|
| All Others* | 1.1% |
|
* Includes short-term investments and net other assets. |
Annual Report
Electronics Portfolio
Investments February 29, 2012
Showing Percentage of Net Assets
Common Stocks - 97.3% | |||
Shares | Value | ||
BIOTECHNOLOGY - 0.0% | |||
Biotechnology - 0.0% | |||
Arrowhead Research Corp. warrants 5/21/17 (a)(e) | 285,468 | $ 3 | |
COMMUNICATIONS EQUIPMENT - 3.7% | |||
Communications Equipment - 3.7% | |||
Acme Packet, Inc. (a) | 83,600 | 2,548,128 | |
Brocade Communications Systems, Inc. (a) | 501,500 | 2,898,670 | |
Cisco Systems, Inc. | 331,187 | 6,583,998 | |
Juniper Networks, Inc. (a) | 434,500 | 9,889,220 | |
QUALCOMM, Inc. | 379,336 | 23,587,112 | |
Telefonaktiebolaget LM Ericsson (B Shares) sponsored ADR | 234,800 | 2,343,304 | |
| 47,850,432 | ||
COMPUTERS & PERIPHERALS - 3.8% | |||
Computer Hardware - 0.4% | |||
Apple, Inc. (a) | 9,100 | 4,936,204 | |
Computer Storage & Peripherals - 3.4% | |||
NetApp, Inc. (a) | 89,837 | 3,862,991 | |
SanDisk Corp. (a) | 810,353 | 40,080,059 | |
Synaptics, Inc. (a) | 9,600 | 352,800 | |
| 44,295,850 | ||
TOTAL COMPUTERS & PERIPHERALS | 49,232,054 | ||
ELECTRONIC EQUIPMENT & COMPONENTS - 6.0% | |||
Electronic Components - 1.8% | |||
Aeroflex Holding Corp. (a) | 1,345,542 | 14,760,596 | |
Amphenol Corp. Class A | 7,700 | 430,892 | |
Corning, Inc. | 651,329 | 8,493,330 | |
| 23,684,818 | ||
Electronic Manufacturing Services - 4.0% | |||
Benchmark Electronics, Inc. (a) | 305,679 | 5,019,249 | |
Fabrinet (a) | 89,612 | 1,601,366 | |
Flextronics International Ltd. (a) | 3,558,448 | 25,087,058 | |
Jabil Circuit, Inc. | 224,266 | 5,792,791 | |
Plexus Corp. (a) | 18 | 625 | |
TE Connectivity Ltd. | 150,400 | 5,497,120 | |
TTM Technologies, Inc. (a) | 727,832 | 8,522,913 | |
| 51,521,122 | ||
Technology Distributors - 0.2% | |||
Avnet, Inc. (a) | 10,200 | 364,548 | |
Brightpoint, Inc. (a) | 166,100 | 1,461,680 | |
| 1,826,228 | ||
TOTAL ELECTRONIC EQUIPMENT & COMPONENTS | 77,032,168 | ||
INTERNET SOFTWARE & SERVICES - 0.7% | |||
Internet Software & Services - 0.7% | |||
Google, Inc. Class A (a) | 13,700 | 8,470,025 | |
| |||
Shares | Value | ||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 83.1% | |||
Semiconductor Equipment - 7.8% | |||
Advanced Energy Industries, Inc. (a) | 795 | $ 9,540 | |
Amkor Technology, Inc. (a)(d) | 2,894,400 | 18,495,216 | |
Applied Materials, Inc. | 236,616 | 2,896,180 | |
ASML Holding NV | 319,560 | 14,555,958 | |
Cabot Microelectronics Corp. | 3,300 | 165,825 | |
Cohu, Inc. | 1,100 | 12,342 | |
Cymer, Inc. (a) | 458,148 | 21,065,645 | |
Entegris, Inc. (a) | 656,609 | 5,935,745 | |
KLA-Tencor Corp. | 81,200 | 3,930,080 | |
Lam Research Corp. (a)(d) | 577,392 | 24,077,246 | |
MEMC Electronic Materials, Inc. (a) | 650,958 | 2,558,265 | |
Nanometrics, Inc. (a) | 24,900 | 436,995 | |
Nova Measuring Instruments Ltd. (a) | 15,800 | 116,604 | |
Teradyne, Inc. (a) | 1,730 | 28,407 | |
Tessera Technologies, Inc. (a) | 354,276 | 5,951,837 | |
Ultratech, Inc. (a) | 14,900 | 405,429 | |
| 100,641,314 | ||
Semiconductors - 75.3% | |||
Advanced Micro Devices, Inc. (a) | 4,976,741 | 36,579,046 | |
Advanced Semiconductor Engineering, Inc. sponsored ADR | 727,700 | 3,551,176 | |
Alpha & Omega Semiconductor Ltd. (a) | 451,100 | 4,470,401 | |
Altera Corp. | 1,067,979 | 41,063,793 | |
Analog Devices, Inc. | 200,900 | 7,877,289 | |
Applied Micro Circuits Corp. (a) | 432,292 | 2,930,940 | |
ARM Holdings PLC sponsored ADR | 17 | 462 | |
Atmel Corp. (a) | 1,551,193 | 15,682,561 | |
Avago Technologies Ltd. | 679,917 | 25,571,678 | |
BCD Semiconductor Manufacturing Ltd. ADR (a) | 1,445,401 | 7,544,993 | |
Broadcom Corp. Class A | 2,737,121 | 101,684,045 | |
Cirrus Logic, Inc. (a)(d) | 357,156 | 8,421,738 | |
Cree, Inc. (a) | 159,600 | 4,834,284 | |
CSR PLC | 631,576 | 2,560,004 | |
Cypress Semiconductor Corp. | 530,865 | 9,157,421 | |
Entropic Communications, Inc. (a) | 518,400 | 3,195,936 | |
Exar Corp. (a) | 15,000 | 105,000 | |
Fairchild Semiconductor International, Inc. (a) | 1,207,460 | 17,616,841 | |
First Solar, Inc. (a)(d) | 5,542 | 179,007 | |
Freescale Semiconductor Holdings I Ltd. (d) | 2,780,152 | 44,843,852 | |
Himax Technologies, Inc. sponsored ADR | 146,567 | 234,507 | |
Inphi Corp. (a) | 1,400 | 20,104 | |
Intel Corp. | 1,713,963 | 46,071,325 | |
Intermolecular, Inc. | 608,483 | 3,821,273 | |
International Rectifier Corp. (a) | 483,547 | 10,855,630 | |
Intersil Corp. Class A | 4,837,433 | 54,759,742 | |
JA Solar Holdings Co. Ltd. ADR (a)(d) | 1,380,750 | 2,568,195 | |
Linear Technology Corp. | 2,100 | 70,308 | |
LSI Corp. (a) | 242,333 | 2,084,064 | |
Common Stocks - continued | |||
Shares | Value | ||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - CONTINUED | |||
Semiconductors - continued | |||
MagnaChip Semiconductor Corp. | 368,799 | $ 4,270,692 | |
Marvell Technology Group Ltd. (a) | 7,234,432 | 108,516,480 | |
Maxim Integrated Products, Inc. | 166,600 | 4,646,474 | |
Micron Technology, Inc. (a) | 4,479,938 | 38,303,470 | |
Monolithic Power Systems, Inc. (a) | 350,183 | 6,509,902 | |
Motech Industries, Inc. | 1 | 2 | |
NVIDIA Corp. (a) | 1,873,004 | 28,376,011 | |
NXP Semiconductors NV (a) | 1,881,007 | 46,648,974 | |
O2Micro International Ltd. sponsored ADR (a) | 428,400 | 2,231,964 | |
Omnivision Technologies, Inc. (a) | 146,100 | 2,391,657 | |
ON Semiconductor Corp. (a) | 4,727,095 | 42,874,752 | |
PMC-Sierra, Inc. (a) | 3,184,762 | 21,879,315 | |
RDA Microelectronics, Inc. sponsored ADR (a) | 57,882 | 713,685 | |
Renesas Electronics Corp. (a)(d) | 246,500 | 1,694,981 | |
RF Micro Devices, Inc. (a) | 782,779 | 3,733,856 | |
Skyworks Solutions, Inc. (a) | 1,641,661 | 44,275,597 | |
Spansion, Inc. Class A (a) | 1,513,570 | 19,373,696 | |
Standard Microsystems Corp. (a) | 143,401 | 3,669,632 | |
STATS ChipPAC Ltd. (a) | 7,205,000 | 3,110,942 | |
Supertex, Inc. (a) | 42,960 | 793,042 | |
Texas Instruments, Inc. | 3,688,475 | 123,010,642 | |
Trina Solar Ltd. (a)(d) | 134,000 | 1,031,800 | |
TriQuint Semiconductor, Inc. (a) | 681,277 | 4,387,424 | |
Volterra Semiconductor Corp. (a) | 55,000 | 1,690,150 | |
Xilinx, Inc. | 5,000 | 184,650 | |
| 972,675,405 | ||
TOTAL SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT | 1,073,316,719 | ||
SOFTWARE - 0.0% | |||
Systems Software - 0.0% | |||
Symantec Corp. (a) | 9,800 | 174,832 | |
TOTAL COMMON STOCKS (Cost $1,328,482,856) |
| ||
Convertible Bonds - 0.1% | ||||
| Principal | Value | ||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 0.1% | ||||
Semiconductor Equipment - 0.1% | ||||
Amkor Technology, Inc. 6% 4/15/14 | $ 610,000 | $ 1,392,813 | ||
Money Market Funds - 9.3% | |||
Shares |
| ||
Fidelity Cash Central Fund, 0.12% (b) | 40,686,305 | 40,686,305 | |
Fidelity Securities Lending Cash Central Fund, 0.12% (b)(c) | 79,527,952 | 79,527,952 | |
TOTAL MONEY MARKET FUNDS (Cost $120,214,257) |
| ||
TOTAL INVESTMENT PORTFOLIO - 106.7% (Cost $1,449,307,113) | 1,377,683,303 | ||
NET OTHER ASSETS (LIABILITIES) - (6.7)% | (85,942,223) | ||
NET ASSETS - 100% | $ 1,291,741,080 | ||
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
(e) Restricted securities - Investment in securities not registered under the Securities Act of 1933 (excluding 144A issues). At the end of the period, the value of restricted securities (excluding 144A issues) amounted to $3 or 0.0% of net assets. |
Additional information on each restricted holding is as follows: |
Security | Acquisition Date | Acquisition Cost |
Arrowhead Research Corp. warrants 5/21/17 | 5/18/07 | $ 1,033,745 |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 25,186 |
Fidelity Securities Lending Cash Central Fund | 210,684 |
Total | $ 235,870 |
Other Information |
The following is a summary of the inputs used, as of February 29, 2012, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities: | ||||
Common Stocks | $ 1,256,076,233 | $ 1,256,076,230 | $ - | $ 3 |
Convertible Bonds | 1,392,813 | - | 1,392,813 | - |
Money Market Funds | 120,214,257 | 120,214,257 | - | - |
Total Investments in Securities: | $ 1,377,683,303 | $ 1,376,290,487 | $ 1,392,813 | $ 3 |
The following is a reconciliation of Investments in Securities for which Level 3 inputs were used in determining value: |
Investments in Securities: | |
Beginning Balance | $ - |
Total Realized Gain (Loss) | - |
Total Unrealized Gain (Loss) | 3 |
Cost of Purchases | - |
Proceeds of Sales | - |
Amortization/Accretion | - |
Transfers in to Level 3 | - |
Transfers out of Level 3 | - |
Ending Balance | $ 3 |
The change in unrealized gain (loss) for the period attributable to Level 3 securities held at February 29, 2012 | $ 3 |
The information used in the above reconciliation represents fiscal year to date activity for any Investments in Securities identified as using Level 3 inputs at either the beginning or the end of the current fiscal period. Transfers in or out of Level 3 represent the beginning value of any Security or Instrument where a change in the pricing level occurred from the beginning to the end of the period. The cost of purchases and the proceeds of sales may include securities received or delivered through corporate actions or exchanges. Realized and unrealized gains (losses) disclosed in the reconciliation are included in Net Gain (Loss) on the Fund's Statement of Operations. |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 76.5% |
Bermuda | 12.2% |
Netherlands | 4.7% |
Singapore | 4.1% |
Cayman Islands | 1.3% |
Others (Individually Less Than 1%) | 1.2% |
| 100.0% |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Electronics Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2012 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $74,816,880) - See accompanying schedule: Unaffiliated issuers (cost $1,329,092,856) | $ 1,257,469,046 |
|
Fidelity Central Funds (cost $120,214,257) | 120,214,257 |
|
Total Investments (cost $1,449,307,113) |
| $ 1,377,683,303 |
Cash |
| 4,590 |
Receivable for investments sold | 5,427,820 | |
Receivable for fund shares sold | 3,196,176 | |
Dividends receivable | 987,627 | |
Interest receivable | 13,725 | |
Distributions receivable from Fidelity Central Funds | 20,574 | |
Prepaid expenses | 1,926 | |
Other receivables | 37,909 | |
Total assets | 1,387,373,650 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 8,408,366 | |
Payable for fund shares redeemed | 6,763,788 | |
Accrued management fee | 602,540 | |
Other affiliated payables | 255,300 | |
Other payables and accrued expenses | 74,624 | |
Collateral on securities loaned, at value | 79,527,952 | |
Total liabilities | 95,632,570 | |
|
|
|
Net Assets | $ 1,291,741,080 | |
Net Assets consist of: |
| |
Paid in capital | $ 1,622,295,183 | |
Distributions in excess of net investment income | (659,783) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (258,270,510) | |
Net unrealized appreciation (depreciation) on investments | (71,623,810) | |
Net Assets, for 24,240,335 shares outstanding | $ 1,291,741,080 | |
Net Asset Value, offering price and redemption price per share ($1,291,741,080 ÷ 24,240,335 shares) | $ 53.29 | |
Statement of Operations
| Year ended February 29, 2012 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 9,071,714 |
Interest |
| 370,986 |
Income from Fidelity Central Funds (including $210,684 from security lending) |
| 235,870 |
Total income |
| 9,678,570 |
|
|
|
Expenses | ||
Management fee | $ 6,254,989 | |
Transfer agent fees | 2,618,092 | |
Accounting and security lending fees | 380,764 | |
Custodian fees and expenses | 60,637 | |
Independent trustees' compensation | 6,918 | |
Depreciation in deferred trustee compensation account | (6) | |
Registration fees | 40,501 | |
Audit | 41,018 | |
Legal | 7,840 | |
Interest | 1,081 | |
Miscellaneous | 11,711 | |
Total expenses before reductions | 9,423,545 | |
Expense reductions | (90,574) | 9,332,971 |
Net investment income (loss) | 345,599 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 164,082,406 | |
Foreign currency transactions | 23,525 | |
Total net realized gain (loss) |
| 164,105,931 |
Change in net unrealized appreciation (depreciation) on investment securities | (175,704,422) | |
Net gain (loss) | (11,598,491) | |
Net increase (decrease) in net assets resulting from operations | $ (11,252,892) | |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Electronics Portfolio
Financial Statements - continued
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 345,599 | $ 1,479,476 |
Net realized gain (loss) | 164,105,931 | 133,127,468 |
Change in net unrealized appreciation (depreciation) | (175,704,422) | 195,573,035 |
Net increase (decrease) in net assets resulting from operations | (11,252,892) | 330,179,979 |
Distributions to shareholders from net investment income | (1,262,911) | (2,841,742) |
Share transactions | 318,638,191 | 301,891,145 |
Reinvestment of distributions | 1,197,593 | 2,700,459 |
Cost of shares redeemed | (402,899,738) | (349,256,599) |
Net increase (decrease) in net assets resulting from share transactions | (83,063,954) | (44,664,995) |
Redemption fees | 56,684 | 49,756 |
Total increase (decrease) in net assets | (95,523,073) | 282,722,998 |
|
|
|
Net Assets | ||
Beginning of period | 1,387,264,153 | 1,104,541,155 |
End of period (including distributions in excess of net investment income of $659,783 and undistributed net investment income of $166,854, respectively) | $ 1,291,741,080 | $ 1,387,264,153 |
Other Information Shares | ||
Sold | 6,469,469 | 6,256,503 |
Issued in reinvestment of distributions | 25,727 | 59,948 |
Redeemed | (8,254,694) | (8,165,876) |
Net increase (decrease) | (1,759,498) | (1,849,425) |
Financial Highlights
Years ended February 28, | 2012 F | 2011 | 2010 | 2009 | 2008 F |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 53.36 | $ 39.66 | $ 21.13 | $ 37.17 | $ 46.14 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | .01 | .06 | .31 | .34 | .17 |
Net realized and unrealized gain (loss) | (.02) | 13.75 | 18.57 | (16.19) | (8.85) |
Total from investment operations | (.01) | 13.81 | 18.88 | (15.85) | (8.68) |
Distributions from net investment income | (.06) | (.11) | (.34) | (.19) | (.17) |
Distributions from net realized gain | - | - | (.01) | - | (.12) |
Redemption fees added to paid in capital B, G | - | - | - | - | - |
Total distributions | (.06) | (.11) | (.35) | (.19) | (.29) |
Net asset value, end of period | $ 53.29 | $ 53.36 | $ 39.66 | $ 21.13 | $ 37.17 |
Total Return A | (.01)% | 34.87% | 89.51% | (42.63)% | (18.95)% |
Ratios to Average Net Assets C, E |
|
|
|
|
|
Expenses before reductions | .84% | .86% | .92% | .89% | .87% |
Expenses net of fee waivers, if any | .84% | .86% | .92% | .89% | .87% |
Expenses net of all reductions | .83% | .86% | .91% | .88% | .86% |
Net investment income (loss) | .03% | .13% | .92% | 1.05% | .36% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 1,291,741 | $ 1,387,264 | $ 1,104,541 | $ 563,453 | $ 1,201,825 |
Portfolio turnover rate D | 137% | 101% | 71% | 91% | 87% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
B Calculated based on average shares outstanding during the period.
C Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
D Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
E Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund.
F For the year ended February 29.
G Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
IT Services Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 29, 2012 | Past 1 | Past 5 | Past 10 |
IT Services Portfolio A | 8.18% | 9.66% | 7.78% |
A Prior to October 1, 2006, IT Services Portfolio operated under certain different investment policies. The historical performance for the fund may not represent its current investment policies.
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in IT Services Portfolio on February 28, 2002. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index performed over the same period.
Annual Report
IT Services Portfolio
Management's Discussion of Fund Performance
Market Recap: U.S. stocks rose for the 12 months ending February 29, 2012, as encouraging economic news sparked a strong late-period rally that lifted major equity benchmarks past a number of significant milestones. Stocks recovered from early-period uncertainty that followed the March 2011 earthquake, tsunami and nuclear meltdown in Japan, but plummeted during the summer amid Europe's debt woes and a historic U.S. credit-rating downgrade. Despite continued volatility and mixed economic news, markets began to recover in early October. Investors gravitated toward defensive sectors and the perceived safety of larger, more-established and dividend-paying names, helping the Dow Jones® Industrial Average advance 8.83%, and close above the psychologically important 13,000 mark in late February - for the first time since May 2008. The rally accelerated late in the period and the market broadened, as investor confidence improved amid encouraging manufacturing, housing and employment data, and signs of progress in Europe. For the year, the S&P 500® Index added 5.12%, closing near a four-year high on the period's second-to-last day. Of the 10 major market sectors in the S&P 500®, three defensive areas led the way - consumer staples, health care and utilities - while financials, materials and energy finished in negative territory. The technology-laden Nasdaq Composite® Index added 7.73%, flirting with the 3,000 mark, its highest level in 12 years. Foreign developed-markets stocks reeled over Europe's turmoil, and the MSCI® EAFE® (Europe, Australasia, Far East) Index fell 7.35%.
Comments from Kyle Weaver, Portfolio Manager of IT Services Portfolio: For the year, the fund returned 8.18%, considerably behind the 16.56% gain of the MSCI® U.S. IM IT Services 25/50 Index but topping the broadly based S&P 500®. Versus the MSCI index, out-of-benchmark exposure to four China-based IT services companies was responsible for the vast majority of the fund's underperformance. Beginning in May, share prices in the group were hurt after one of the companies, Longtop Financial Technologies, reportedly misrepresented its financial condition. The company's shares subsequently lost nearly all of their value. While the other three companies - Camelot Information Systems, VanceInfo Technologies and HiSoft Technology International - were not accused of any wrongdoing, their stocks swooned in sympathy with Longtop. Additionally, during the remainder of the period, Chinese economic growth slowed more noticeably, and the sovereign debt situation in Europe worsened, creating a risk-averse global investment environment in which smaller Chinese IT services companies struggled. The fund did not own Longtop or VanceInfo at period end. Elsewhere, not owning enough of two large, strong-performing benchmark components, payment card processor Visa and information technology services giant International Business Machines, also worked against us. Lastly, the fund was hurt by a significant overweighting in business process outsourcing provider Cognizant Technology Solutions, by far the fund's largest holding at period end. Conversely, overweighting Visa competitor MasterCard was timely. Underweighting four poorly performing index components - Western Union, Computer Sciences, SAIC and Paychex - helped as well. Computer Sciences and SAIC were not held by the fund at period end.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
IT Services Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 29, 2012 | ||
| % of fund's | % of fund's net assets |
Cognizant Technology Solutions Corp. Class A | 14.2 | 15.9 |
MasterCard, Inc. Class A | 9.7 | 11.7 |
Accenture PLC Class A | 9.3 | 10.7 |
IBM Corp. | 8.3 | 7.8 |
Visa, Inc. Class A | 7.7 | 3.1 |
Fiserv, Inc. | 3.9 | 2.6 |
VeriFone Systems, Inc. | 3.3 | 0.7 |
Virtusa Corp. | 3.2 | 3.9 |
Fidelity National Information Services, Inc. | 2.5 | 3.2 |
EPAM Systems, Inc. | 1.9 | 0.0 |
| 64.0 | |
Top Industries (% of fund's net assets) | |||
As of February 29, 2012 | |||
| IT Services | 91.0% |
|
| Software | 2.4% |
|
| Internet Software & Services | 1.8% |
|
| Consumer Finance | 1.5% |
|
| Office Electronics | 0.9% |
|
| All Others* | 2.4% |
|
As of August 31, 2011 | |||
| IT Services | 81.4% |
|
| Software | 11.3% |
|
| Consumer Finance | 2.2% |
|
| Internet Software & Services | 1.6% |
|
| Office Electronics | 1.5% |
|
| All Others* | 2.0% |
|
* Includes short-term investments and net other assets. |
Annual Report
IT Services Portfolio
Investments February 29, 2012
Showing Percentage of Net Assets
Common Stocks - 98.2% | |||
Shares | Value | ||
CAPITAL MARKETS - 0.6% | |||
Investment Banking & Brokerage - 0.6% | |||
Knight Capital Group, Inc. Class A (a) | 102,700 | $ 1,360,775 | |
COMPUTERS & PERIPHERALS - 0.0% | |||
Computer Hardware - 0.0% | |||
Hewlett-Packard Co. | 400 | 10,124 | |
CONSUMER FINANCE - 1.5% | |||
Consumer Finance - 1.5% | |||
Green Dot Corp. Class A (a)(d) | 114,400 | 3,652,792 | |
INTERNET SOFTWARE & SERVICES - 1.8% | |||
Internet Software & Services - 1.8% | |||
Constant Contact, Inc. (a) | 5 | 151 | |
IntraLinks Holdings, Inc. (a) | 45,100 | 265,188 | |
Responsys, Inc. | 19,400 | 234,158 | |
SciQuest, Inc. (a) | 35,000 | 526,750 | |
VeriSign, Inc. | 93,800 | 3,465,910 | |
| 4,492,157 | ||
IT SERVICES - 91.0% | |||
Data Processing & Outsourced Services - 41.6% | |||
Alliance Data Systems Corp. (a)(d) | 15,348 | 1,862,633 | |
Automatic Data Processing, Inc. | 4,000 | 217,280 | |
Broadridge Financial Solutions, Inc. | 7,800 | 189,852 | |
Cardtronics, Inc. (a) | 58,900 | 1,566,151 | |
Cass Information Systems, Inc. | 12,320 | 474,197 | |
Convergys Corp. (a) | 1,100 | 14,168 | |
CoreLogic, Inc. (a) | 1,600 | 24,608 | |
CSG Systems International, Inc. (a) | 18,100 | 289,781 | |
DST Systems, Inc. | 37,300 | 1,976,900 | |
Euronet Worldwide, Inc. (a) | 37,500 | 723,375 | |
ExlService Holdings, Inc. (a) | 800 | 22,256 | |
Fidelity National Information Services, Inc. | 194,500 | 6,171,485 | |
Fiserv, Inc. (a) | 147,800 | 9,799,140 | |
FleetCor Technologies, Inc. (a) | 115,000 | 4,258,450 | |
Genpact Ltd. (a) | 156,300 | 2,503,926 | |
Global Cash Access Holdings, Inc. (a) | 612,800 | 3,407,168 | |
Global Payments, Inc. | 65,900 | 3,401,758 | |
Heartland Payment Systems, Inc. | 40,200 | 1,138,464 | |
Higher One Holdings, Inc. (a)(d) | 31,500 | 463,050 | |
Jack Henry & Associates, Inc. | 6,600 | 222,684 | |
Lender Processing Services, Inc. | 74,700 | 1,646,388 | |
MasterCard, Inc. Class A | 57,440 | 24,124,800 | |
ModusLink Global Solutions, Inc. | 4,400 | 24,464 | |
NeuStar, Inc. Class A (a) | 108,300 | 3,795,915 | |
Paychex, Inc. | 800 | 25,040 | |
Syntel, Inc. | 27,700 | 1,418,240 | |
Teletech Holdings, Inc. (a) | 50,800 | 775,716 | |
The Western Union Co. | 138,200 | 2,414,354 | |
TNS, Inc. (a) | 48,700 | 892,671 | |
| |||
Shares | Value | ||
VeriFone Systems, Inc. (a) | 172,400 | $ 8,256,236 | |
Visa, Inc. Class A | 164,112 | 19,097,713 | |
WNS Holdings Ltd. sponsored ADR (a) | 221,329 | 2,436,832 | |
Wright Express Corp. (a) | 400 | 24,752 | |
| 103,660,447 | ||
IT Consulting & Other Services - 49.4% | |||
Accenture PLC Class A | 388,200 | 23,113,428 | |
Acxiom Corp. (a) | 68,100 | 956,124 | |
Atos Origin SA | 5,327 | 303,168 | |
Booz Allen Hamilton Holding Corp. Class A | 67,300 | 1,238,993 | |
CACI International, Inc. Class A (a) | 63,000 | 3,725,820 | |
Camelot Information Systems, Inc. ADR (a) | 1,324,564 | 2,940,532 | |
CGI Group, Inc. Class A (sub. vtg.) (a) | 23,200 | 496,515 | |
China Information Technology, Inc. (a)(d) | 148,900 | 120,609 | |
Ciber, Inc. (a) | 358,500 | 1,570,230 | |
Cognizant Technology Solutions Corp. Class A (a) | 496,916 | 35,256,192 | |
EPAM Systems, Inc. | 327,400 | 4,619,614 | |
Forrester Research, Inc. | 7,600 | 244,948 | |
Gartner, Inc. Class A (a) | 7,500 | 301,950 | |
HCL Technologies Ltd. | 193,296 | 1,908,754 | |
HiSoft Technology International Ltd. ADR (a)(d) | 183,700 | 2,241,140 | |
IBM Corp. | 104,900 | 20,636,977 | |
iGate Corp. (a) | 92,607 | 1,614,140 | |
Infosys Ltd. sponsored ADR | 200 | 11,536 | |
ManTech International Corp. Class A | 91,500 | 3,068,910 | |
Maximus, Inc. | 67,900 | 2,832,109 | |
NCI, Inc. Class A (a) | 2,200 | 15,840 | |
Rolta India Ltd. | 369,952 | 791,732 | |
Sapient Corp. | 167,100 | 2,087,079 | |
ServiceSource International, Inc. | 67,500 | 1,134,000 | |
Teradata Corp. (a) | 32,300 | 2,149,565 | |
Unisys Corp. (a) | 98,040 | 1,831,387 | |
Virtusa Corp. (a) | 504,963 | 7,892,572 | |
| 123,103,864 | ||
TOTAL IT SERVICES | 226,764,311 | ||
OFFICE ELECTRONICS - 0.9% | |||
Office Electronics - 0.9% | |||
Xerox Corp. | 263,300 | 2,166,959 | |
PROFESSIONAL SERVICES - 0.0% | |||
Research & Consulting Services - 0.0% | |||
eClerx | 6,959 | 107,325 | |
SOFTWARE - 2.4% | |||
Application Software - 1.3% | |||
Autodesk, Inc. (a) | 65,400 | 2,475,390 | |
Descartes Systems Group, Inc. (a) | 68,400 | 559,834 | |
Common Stocks - continued | |||
Shares | Value | ||
SOFTWARE - CONTINUED | |||
Application Software - continued | |||
Jive Software, Inc. | 600 | $ 13,086 | |
Zensar Technologies Ltd. | 65,071 | 238,103 | |
| 3,286,413 | ||
Systems Software - 1.1% | |||
Ariba, Inc. (a) | 85,500 | 2,690,685 | |
NetSuite, Inc. (a) | 600 | 28,620 | |
| 2,719,305 | ||
TOTAL SOFTWARE | 6,005,718 | ||
TOTAL COMMON STOCKS (Cost $205,468,646) |
| ||
Money Market Funds - 4.3% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.12% (b) | 4,774,600 | 4,774,600 | |
Fidelity Securities Lending Cash Central Fund, 0.12% (b)(c) | 6,019,472 | 6,019,472 | |
TOTAL MONEY MARKET FUNDS (Cost $10,794,072) |
| ||
TOTAL INVESTMENT PORTFOLIO - 102.5% (Cost $216,262,718) | 255,354,233 | ||
NET OTHER ASSETS (LIABILITIES) - (2.5)% | (6,230,568) | ||
NET ASSETS - 100% | $ 249,123,665 | ||
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 4,659 |
Fidelity Securities Lending Cash Central Fund | 68,544 |
Total | $ 73,203 |
Other Information |
All investments are categorized as Level 1 under the Fair Value Hierarchy. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 84.9% |
Ireland | 9.3% |
India | 1.2% |
British Virgin Islands | 1.2% |
Bermuda | 1.0% |
Bailiwick of Jersey | 1.0% |
Others (Individually Less Than 1%) | 1.4% |
| 100.0% |
See accompanying notes which are an integral part of the financial statements.
Annual Report
IT Services Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2012 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $5,901,611) - See accompanying schedule: Unaffiliated issuers (cost $205,468,646) | $ 244,560,161 |
|
Fidelity Central Funds (cost $10,794,072) | 10,794,072 |
|
Total Investments (cost $216,262,718) |
| $ 255,354,233 |
Receivable for fund shares sold | 352,934 | |
Dividends receivable | 138,320 | |
Distributions receivable from Fidelity Central Funds | 3,614 | |
Prepaid expenses | 458 | |
Other receivables | 26,183 | |
Total assets | 255,875,742 | |
|
|
|
Liabilities | ||
Payable for fund shares redeemed | $ 535,845 | |
Accrued management fee | 112,401 | |
Other affiliated payables | 51,986 | |
Other payables and accrued expenses | 32,373 | |
Collateral on securities loaned, at value | 6,019,472 | |
Total liabilities | 6,752,077 | |
|
|
|
Net Assets | $ 249,123,665 | |
Net Assets consist of: |
| |
Paid in capital | $ 208,377,036 | |
Accumulated net investment loss | (147,169) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 1,787,395 | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 39,106,403 | |
Net Assets, for 10,481,881 shares outstanding | $ 249,123,665 | |
Net Asset Value, offering price and redemption price per share ($249,123,665 ÷ 10,481,881 shares) | $ 23.77 | |
Statement of Operations
| Year ended February 29, 2012 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 1,209,471 |
Income from Fidelity Central Funds (including $68,544 from security lending) |
| 73,203 |
Total income |
| 1,282,674 |
|
|
|
Expenses | ||
Management fee | $ 1,069,891 | |
Transfer agent fees | 468,469 | |
Accounting and security lending fees | 77,719 | |
Custodian fees and expenses | 27,582 | |
Independent trustees' compensation | 1,097 | |
Registration fees | 29,662 | |
Audit | 61,410 | |
Legal | 554 | |
Interest | 531 | |
Miscellaneous | 1,395 | |
Total expenses before reductions | 1,738,310 | |
Expense reductions | (6,031) | 1,732,279 |
Net investment income (loss) | (449,605) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers (net of foreign taxes of $17,976) | 2,849,553 | |
Foreign currency transactions | (13,479) | |
Total net realized gain (loss) |
| 2,836,074 |
Change in net unrealized appreciation (depreciation) on: Investment securities (net of decrease in deferred foreign taxes of $16,492) | 11,970,082 | |
Assets and liabilities in foreign currencies | (1,073) | |
Total change in net unrealized appreciation (depreciation) |
| 11,969,009 |
Net gain (loss) | 14,805,083 | |
Net increase (decrease) in net assets resulting from operations | $ 14,355,478 | |
See accompanying notes which are an integral part of the financial statements.
Annual Report
IT Services Portfolio
Financial Statements - continued
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ (449,605) | $ (162,406) |
Net realized gain (loss) | 2,836,074 | 11,165,087 |
Change in net unrealized appreciation (depreciation) | 11,969,009 | 16,679,613 |
Net increase (decrease) in net assets resulting from operations | 14,355,478 | 27,682,294 |
Distributions to shareholders from net realized gain | (1,972,671) | - |
Share transactions | 205,367,309 | 71,359,841 |
Reinvestment of distributions | 1,911,677 | - |
Cost of shares redeemed | (102,517,642) | (63,705,976) |
Net increase (decrease) in net assets resulting from share transactions | 104,761,344 | 7,653,865 |
Redemption fees | 7,354 | 4,955 |
Total increase (decrease) in net assets | 117,151,505 | 35,341,114 |
|
|
|
Net Assets | ||
Beginning of period | 131,972,160 | 96,631,046 |
End of period (including accumulated net investment loss of $147,169 and $0 respectively) | $ 249,123,665 | $ 131,972,160 |
Other Information Shares | ||
Sold | 9,259,270 | 3,524,419 |
Issued in reinvestment of distributions | 83,735 | - |
Redeemed | (4,775,238) | (3,267,048) |
Net increase (decrease) | 4,567,767 | 257,371 |
Financial Highlights
Years ended February 28, | 2012 F | 2011 | 2010 | 2009 | 2008 F |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 22.31 | $ 17.08 | $ 10.62 | $ 14.77 | $ 17.40 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | (.05) | (.03) | (.05) | (.02) | (.06) |
Net realized and unrealized gain (loss) | 1.86 | 5.26 | 6.51 | (4.14) | (.25) |
Total from investment operations | 1.81 | 5.23 | 6.46 | (4.16) | (.31) |
Distributions from net realized gain | (.35) | - | - | - | (2.32) |
Redemption fees added to paid in capital B | - G | - G | - G | .01 | - G |
Net asset value, end of period | $ 23.77 | $ 22.31 | $ 17.08 | $ 10.62 | $ 14.77 |
Total Return A | 8.18% | 30.62% | 60.83% | (28.10)% | (2.94)% |
Ratios to Average Net Assets C, E |
|
|
|
|
|
Expenses before reductions | .91% | .94% | .99% | 1.00% | 1.06% |
Expenses net of fee waivers, if any | .91% | .94% | .99% | 1.00% | 1.06% |
Expenses net of all reductions | .91% | .94% | .99% | 1.00% | 1.06% |
Net investment income (loss) | (.24)% | (.16)% | (.31)% | (.14)% | (.32)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 249,124 | $ 131,972 | $ 96,631 | $ 48,039 | $ 38,842 |
Portfolio turnover rate D | 143% | 156% | 131% | 140% | 212% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
B Calculated based on average shares outstanding during the period.
C Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
D Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
E Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund.
F For the year ended February 29.
G Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Software and Computer Services Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 29, 2012 | Past 1 | Past 5 | Past 10 |
Software and Computer Services Portfolio | 13.08% | 10.32% | 9.95% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Software and Computer Services Portfolio on February 28, 2002. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index performed over the same period.
Annual Report
Software and Computer Services Portfolio
Management's Discussion of Fund Performance
Market Recap: U.S. stocks rose for the 12 months ending February 29, 2012, as encouraging economic news sparked a strong late-period rally that lifted major equity benchmarks past a number of significant milestones. Stocks recovered from early-period uncertainty that followed the March 2011 earthquake, tsunami and nuclear meltdown in Japan, but plummeted during the summer amid Europe's debt woes and a historic U.S. credit-rating downgrade. Despite continued volatility and mixed economic news, markets began to recover in early October. Investors gravitated toward defensive sectors and the perceived safety of larger, more-established and dividend-paying names, helping the Dow Jones® Industrial Average advance 8.83%, and close above the psychologically important 13,000 mark in late February - for the first time since May 2008. The rally accelerated late in the period and the market broadened, as investor confidence improved amid encouraging manufacturing, housing and employment data, and signs of progress in Europe. For the year, the S&P 500® Index added 5.12%, closing near a four-year high on the period's second-to-last day. Of the 10 major market sectors in the S&P 500®, three defensive areas led the way - consumer staples, health care and utilities - while financials, materials and energy finished in negative territory. The technology-laden Nasdaq Composite® Index added 7.73%, flirting with the 3,000 mark, its highest level in 12 years. Foreign developed-markets stocks reeled over Europe's turmoil, and the MSCI® EAFE® (Europe, Australasia, Far East) Index fell 7.35%.
Comments from Brian Lempel, Portfolio Manager of Software and Computer Services Portfolio: For the year, the fund gained 13.08%, ahead of the 10.80% increase of its industry benchmark, the MSCI® U.S. IM Software & Services 25/50 Index, and the broad-based S&P 500®. Relative to the MSCI index, stock selection, particularly in application software, computer hardware and Internet software/services, provided the biggest boost. Personal device powerhouse Apple was the fund's top individual contributor. With the unprecedented adoption of Apple's technology, the stock rose. Also contributing were stakes in U.K.-based cloud-computing software company Autonomy, which saw its stock price rise sharply in August, when the firm announced it would be acquired by Hewlett-Packard, and business software developer Convio, whose share price soared in January on an acquisition bid from rival Blackbaud. I sold Convio by period end. In the movies/entertainment segment, Lions Gate Entertainment was another contributor. As media has shifted toward using online avenues as its primary form of distribution, I believed certain entertainment companies with strong content libraries could stand to benefit from this trend. Lions Gate, which owns the upcoming film series The Hunger Games, proved beneficial, especially in the last four months of the period. I sold the stock in February. Picks in information technology consulting/other services and office electronics were the primary areas that hurt. An underweighting in data processing/outsourced services proved detrimental, though my stock selection in this segment countered much of that detraction. On an individual basis, an underweighting in credit card processor Visa was most harmful. The company benefited from its large circulation of debit and credit cards and stood to gain from new rules on transaction fees. In application software, a position in Camelot Information Systems, a Chinese company that develops software for the financial services industry, was caught up in an accounting scandal that affected several Chinese firms. Based on Fidelity's internal research on the company, I believed it could recover, so in September, I began adding to the stock, but the stock struggled. In office electronics, a stake in copier and printer manufacturer Xerox detracted, and I sold the position. Underweighting International Business Machines, which performed solidly, also detracted. Many of the stocks I've mentioned in this update were not included in the MSCI index.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Software and Computer Services Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 29, 2012 | ||
| % of fund's | % of fund's net assets |
Microsoft Corp. | 16.7 | 17.8 |
Oracle Corp. | 7.7 | 13.3 |
Apple, Inc. | 6.4 | 2.7 |
IBM Corp. | 4.4 | 2.5 |
Visa, Inc. Class A | 4.2 | 0.0 |
Accenture PLC Class A | 4.2 | 1.1 |
Google, Inc. Class A | 3.6 | 9.3 |
Citrix Systems, Inc. | 3.0 | 2.8 |
MasterCard, Inc. Class A | 2.8 | 3.7 |
salesforce.com, Inc. | 2.7 | 2.1 |
| 55.7 | |
Top Industries (% of fund's net assets) | |||
As of February 29, 2012 | |||
| Software | 46.2% |
|
| IT Services | 21.7% |
|
| Internet Software & Services | 14.2% |
|
| Computers & Peripherals | 7.5% |
|
| Communications Equipment | 3.3% |
|
| All Others* | 7.1% |
|
As of August 31, 2011 | |||
| Software | 59.1% |
|
| Internet Software & Services | 16.5% |
|
| IT Services | 15.1% |
|
| Computers & Peripherals | 3.0% |
|
| Office Electronics | 1.6% |
|
| All Others* | 4.7% |
|
* Includes short-term investments and net other assets. |
Annual Report
Software and Computer Services Portfolio
Investments February 29, 2012
Showing Percentage of Net Assets
Common Stocks - 98.8% | |||
Shares | Value | ||
CAPITAL MARKETS - 0.2% | |||
Asset Management & Custody Banks - 0.2% | |||
ICG Group, Inc. (a) | 356,171 | $ 3,088,003 | |
COMMUNICATIONS EQUIPMENT - 3.3% | |||
Communications Equipment - 3.3% | |||
Acme Packet, Inc. (a) | 214,700 | 6,544,056 | |
Comverse Technology, Inc. (a) | 1,343,600 | 8,625,912 | |
Infinera Corp. (a) | 400,000 | 3,184,000 | |
Polycom, Inc. (a) | 1,713,775 | 35,389,454 | |
Riverbed Technology, Inc. (a) | 16,800 | 478,296 | |
| 54,221,718 | ||
COMPUTERS & PERIPHERALS - 7.5% | |||
Computer Hardware - 6.5% | |||
Apple, Inc. (a) | 190,300 | 103,226,332 | |
Cray, Inc. (a) | 188,393 | 1,501,492 | |
| 104,727,824 | ||
Computer Storage & Peripherals - 1.0% | |||
Gemalto NV | 12,790 | 730,711 | |
SanDisk Corp. (a) | 332,000 | 16,420,720 | |
| 17,151,431 | ||
TOTAL COMPUTERS & PERIPHERALS | 121,879,255 | ||
DIVERSIFIED TELECOMMUNICATION SERVICES - 0.9% | |||
Alternative Carriers - 0.9% | |||
inContact, Inc. (a)(e) | 2,765,178 | 14,738,399 | |
ELECTRONIC EQUIPMENT & COMPONENTS - 2.3% | |||
Electronic Components - 0.6% | |||
Corning, Inc. | 744,500 | 9,708,280 | |
Electronic Manufacturing Services - 0.5% | |||
Fabrinet (a) | 97,494 | 1,742,218 | |
Flextronics International Ltd. (a) | 460,700 | 3,247,935 | |
TE Connectivity Ltd. | 86,700 | 3,168,885 | |
| 8,159,038 | ||
Technology Distributors - 1.2% | |||
Arrow Electronics, Inc. (a) | 469,157 | 18,836,654 | |
TOTAL ELECTRONIC EQUIPMENT & COMPONENTS | 36,703,972 | ||
HEALTH CARE TECHNOLOGY - 0.0% | |||
Health Care Technology - 0.0% | |||
Epocrates, Inc. (a) | 31,544 | 293,359 | |
INTERNET & CATALOG RETAIL - 0.8% | |||
Internet Retail - 0.8% | |||
Groupon, Inc. Class A (a)(d) | 662,081 | 13,052,927 | |
INTERNET SOFTWARE & SERVICES - 14.2% | |||
Internet Software & Services - 14.2% | |||
Active Network, Inc. | 1,957,891 | 31,326,256 | |
Akamai Technologies, Inc. (a) | 79,800 | 2,872,800 | |
AOL, Inc. (a) | 131,400 | 2,359,944 | |
| |||
Shares | Value | ||
Constant Contact, Inc. (a)(d) | 75,814 | $ 2,292,615 | |
Cornerstone OnDemand, Inc. | 255,000 | 5,288,700 | |
Demand Media, Inc. (a)(d) | 383,500 | 2,630,810 | |
Digital River, Inc. (a) | 82,300 | 1,452,595 | |
eBay, Inc. (a) | 1,135,300 | 40,575,622 | |
Google, Inc. Class A (a) | 93,800 | 57,991,850 | |
IAC/InterActiveCorp | 76,400 | 3,483,840 | |
IntraLinks Holdings, Inc. (a) | 764,509 | 4,495,313 | |
KIT Digital, Inc. (a) | 141,900 | 1,434,609 | |
LivePerson, Inc. (a) | 108,600 | 1,637,688 | |
LogMeIn, Inc. (a) | 9,926 | 365,872 | |
MercadoLibre, Inc. | 40,800 | 3,970,248 | |
Rackspace Hosting, Inc. (a) | 132,877 | 6,941,494 | |
Responsys, Inc. | 628,355 | 7,584,245 | |
Saba Software, Inc. (a) | 283,805 | 3,326,195 | |
SciQuest, Inc. (a) | 35,000 | 526,750 | |
SPS Commerce, Inc. (a) | 84,736 | 2,105,690 | |
Travelzoo, Inc. (a) | 25,000 | 635,000 | |
Velti PLC (a) | 700,800 | 6,944,928 | |
VeriSign, Inc. | 83,400 | 3,081,630 | |
Vocus, Inc. (a) | 25,000 | 338,250 | |
Web.com, Inc. (a) | 1,147,557 | 15,193,655 | |
WebMD Health Corp. (a) | 22,200 | 551,670 | |
Yahoo!, Inc. (a) | 1,368,000 | 20,287,440 | |
| 229,695,709 | ||
IT SERVICES - 21.7% | |||
Data Processing & Outsourced Services - 9.2% | |||
DST Systems, Inc. | 25,700 | 1,362,100 | |
Fiserv, Inc. (a) | 112,700 | 7,472,010 | |
FleetCor Technologies, Inc. (a) | 43,200 | 1,599,696 | |
Genpact Ltd. (a) | 40,300 | 645,606 | |
MasterCard, Inc. Class A | 109,700 | 46,074,000 | |
NeuStar, Inc. Class A (a) | 130,800 | 4,584,540 | |
Syntel, Inc. | 24,900 | 1,274,880 | |
The Western Union Co. | 624,800 | 10,915,256 | |
VeriFone Systems, Inc. (a) | 78,900 | 3,778,521 | |
Visa, Inc. Class A | 581,200 | 67,634,244 | |
WNS Holdings Ltd. sponsored ADR (a) | 101,791 | 1,120,719 | |
Wright Express Corp. (a) | 38,600 | 2,388,568 | |
| 148,850,140 | ||
IT Consulting & Other Services - 12.5% | |||
Accenture PLC Class A | 1,132,500 | 67,429,050 | |
CACI International, Inc. Class A (a) | 15,000 | 887,100 | |
Camelot Information Systems, Inc. ADR (a) | 1,881,150 | 4,176,153 | |
Cognizant Technology Solutions Corp. Class A (a) | 302,000 | 21,426,900 | |
EPAM Systems, Inc. | 145,250 | 2,049,478 | |
HCL Technologies Ltd. | 1 | 10 | |
HiSoft Technology International Ltd. ADR (a) | 446,700 | 5,449,740 | |
IBM Corp. | 360,089 | 70,840,309 | |
iGate Corp. (a) | 27,000 | 470,610 | |
Common Stocks - continued | |||
Shares | Value | ||
IT SERVICES - CONTINUED | |||
IT Consulting & Other Services - continued | |||
InterXion Holding N.V. (a) | 336,697 | $ 5,313,079 | |
Lionbridge Technologies, Inc. (a)(e) | 5,025,600 | 13,016,304 | |
Sapient Corp. | 107,300 | 1,340,177 | |
ServiceSource International, Inc. | 256,900 | 4,315,920 | |
Unisys Corp. (a) | 73,100 | 1,365,508 | |
Virtusa Corp. (a) | 267,037 | 4,173,788 | |
| 202,254,126 | ||
TOTAL IT SERVICES | 351,104,266 | ||
MEDIA - 1.6% | |||
Advertising - 1.1% | |||
MDC Partners, Inc. Class A (sub. vtg.) | 1,259,600 | 16,274,035 | |
ReachLocal, Inc. (a) | 163,818 | 1,277,780 | |
| 17,551,815 | ||
Broadcasting - 0.5% | |||
Discovery Communications, Inc. (a) | 97,500 | 4,548,375 | |
Pandora Media, Inc. (d) | 296,800 | 3,876,208 | |
| 8,424,583 | ||
TOTAL MEDIA | 25,976,398 | ||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 0.1% | |||
Semiconductors - 0.1% | |||
RF Micro Devices, Inc. (a) | 417,400 | 1,990,998 | |
SOFTWARE - 46.2% | |||
Application Software - 16.9% | |||
Actuate Corp. (a) | 245,000 | 1,479,800 | |
AsiaInfo-Linkage, Inc. (a) | 807,037 | 10,313,933 | |
Aspen Technology, Inc. (a) | 256,616 | 5,276,025 | |
Autodesk, Inc. (a) | 362,000 | 13,701,700 | |
BroadSoft, Inc. (a)(d) | 206,500 | 7,510,405 | |
Callidus Software, Inc. (a)(d)(e) | 2,280,397 | 16,897,742 | |
Citrix Systems, Inc. (a) | 649,000 | 48,506,260 | |
ClickSoftware Technologies Ltd. | 20,000 | 219,400 | |
Compuware Corp. (a) | 245,200 | 2,209,252 | |
Concur Technologies, Inc. (a) | 69,900 | 4,120,605 | |
Descartes Systems Group, Inc. (a) | 1,533,600 | 12,552,074 | |
Ebix, Inc. (d) | 364,025 | 8,481,783 | |
Informatica Corp. (a) | 162,900 | 8,008,164 | |
Jive Software, Inc. | 30,400 | 663,024 | |
Kenexa Corp. (a) | 56,200 | 1,561,798 | |
Kingdee International Software Group Co. Ltd. | 6,654,000 | 1,793,022 | |
Mentor Graphics Corp. (a) | 1,126,800 | 17,082,288 | |
Nuance Communications, Inc. (a) | 256,600 | 6,651,072 | |
Parametric Technology Corp. (a) | 187,000 | 4,992,900 | |
Pegasystems, Inc. | 50,400 | 1,415,232 | |
PROS Holdings, Inc. (a) | 47,200 | 827,416 | |
QLIK Technologies, Inc. (a) | 48,500 | 1,468,095 | |
| |||
Shares | Value | ||
Quest Software, Inc. (a) | 60,000 | $ 1,201,200 | |
RealPage, Inc. (a) | 378,100 | 7,497,723 | |
salesforce.com, Inc. (a) | 305,678 | 43,760,862 | |
Solera Holdings, Inc. | 120,000 | 5,760,000 | |
Synchronoss Technologies, Inc. (a) | 62,332 | 2,085,629 | |
Synopsys, Inc. (a) | 325,900 | 9,930,173 | |
Taleo Corp. Class A (a) | 413,862 | 18,963,157 | |
TIBCO Software, Inc. (a) | 169,000 | 4,895,930 | |
TiVo, Inc. (a) | 267,100 | 3,004,875 | |
Verint Systems, Inc. (a) | 63,864 | 1,755,621 | |
| 274,587,160 | ||
Home Entertainment Software - 0.3% | |||
Electronic Arts, Inc. (a) | 142,100 | 2,320,493 | |
Rosetta Stone, Inc. (a) | 60,000 | 541,800 | |
Take-Two Interactive Software, Inc. (a) | 131,500 | 2,031,675 | |
| 4,893,968 | ||
Systems Software - 29.0% | |||
Ariba, Inc. (a) | 284,500 | 8,953,215 | |
BMC Software, Inc. (a) | 274,100 | 10,262,304 | |
CA, Inc. | 455,200 | 12,304,056 | |
Check Point Software Technologies Ltd. (a) | 69,800 | 4,059,568 | |
Fortinet, Inc. (a) | 68,600 | 1,855,630 | |
Imperva, Inc. | 21,233 | 786,683 | |
Microsoft Corp. | 8,507,800 | 270,037,568 | |
Opnet Technologies, Inc. | 35,200 | 1,004,960 | |
Oracle Corp. | 4,278,300 | 125,225,841 | |
Pervasive Software, Inc. (a) | 613,384 | 3,686,438 | |
Red Hat, Inc. (a) | 267,700 | 13,240,442 | |
Rovi Corp. (a) | 137,077 | 4,863,492 | |
Sourcefire, Inc. (a) | 12,600 | 567,252 | |
VMware, Inc. Class A (a) | 115,000 | 11,372,350 | |
Websense, Inc. (a) | 81,700 | 1,471,417 | |
| 469,691,216 | ||
TOTAL SOFTWARE | 749,172,344 | ||
TOTAL COMMON STOCKS (Cost $1,347,619,414) |
| ||
Money Market Funds - 4.4% | |||
Shares | Value | ||
Fidelity Cash Central Fund, 0.12% (b) | 46,542,148 | $ 46,542,148 | |
Fidelity Securities Lending Cash Central Fund, 0.12% (b)(c) | 25,359,469 | 25,359,469 | |
TOTAL MONEY MARKET FUNDS (Cost $71,901,617) |
| ||
TOTAL INVESTMENT PORTFOLIO - 103.2% (Cost $1,419,521,031) | 1,673,818,965 | ||
NET OTHER ASSETS (LIABILITIES) - (3.2)% | (52,203,447) | ||
NET ASSETS - 100% | $ 1,621,615,518 | ||
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
(e) Affiliated company |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 31,289 |
Fidelity Securities Lending Cash Central Fund | 571,720 |
Total | $ 603,009 |
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, |
Callidus Software, Inc. | $ 6,496,297 | $ 6,806,126 | $ - | $ - | $ 16,897,742 |
Convio, Inc. | 5,517,786 | 10,233,459 | 22,963,626 | - | - |
inContact, Inc. | 4,689,032 | 4,842,791 | - | - | 14,738,399 |
Lionbridge Technologies, Inc. | 9,156,245 | 7,430,804 | 187,845 | - | 13,016,304 |
Total | $ 25,859,360 | $ 29,313,180 | $ 23,151,471 | $ - | $ 44,652,445 |
Other Information |
All investments are categorized as Level 1 under the Fair Value Hierarchy. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Software and Computer Services Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2012 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $24,437,833) - See accompanying schedule: Unaffiliated issuers (cost $1,311,422,144) | $ 1,557,264,903 |
|
Fidelity Central Funds (cost $71,901,617) | 71,901,617 |
|
Other affiliated issuers (cost $36,197,270) | 44,652,445 |
|
Total Investments (cost $1,419,521,031) |
| $ 1,673,818,965 |
Receivable for investments sold | 8,978,079 | |
Receivable for fund shares sold | 7,312,102 | |
Dividends receivable | 2,236,002 | |
Distributions receivable from Fidelity Central Funds | 105,219 | |
Prepaid expenses | 2,381 | |
Other receivables | 184,764 | |
Total assets | 1,692,637,512 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 43,030,977 | |
Payable for fund shares redeemed | 1,561,781 | |
Accrued management fee | 724,002 | |
Other affiliated payables | 295,033 | |
Other payables and accrued expenses | 50,732 | |
Collateral on securities loaned, at value | 25,359,469 | |
Total liabilities | 71,021,994 | |
|
|
|
Net Assets | $ 1,621,615,518 | |
Net Assets consist of: |
| |
Paid in capital | $ 1,284,282,424 | |
Accumulated net investment loss | (421) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 83,119,074 | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 254,214,441 | |
Net Assets, for 18,026,868 shares outstanding | $ 1,621,615,518 | |
Net Asset Value, offering price and redemption price per share ($1,621,615,518 ÷ 18,026,868 shares) | $ 89.96 | |
Statement of Operations
| Year ended February 29, 2012 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 8,890,261 |
Interest |
| 142 |
Income from Fidelity Central Funds (including $571,720 from security lending) |
| 603,009 |
Total income |
| 9,493,412 |
|
|
|
Expenses | ||
Management fee | $ 7,162,459 | |
Transfer agent fees | 2,749,717 | |
Accounting and security lending fees | 416,037 | |
Custodian fees and expenses | 68,185 | |
Independent trustees' compensation | 7,532 | |
Registration fees | 59,450 | |
Audit | 53,357 | |
Legal | 7,262 | |
Interest | 4,238 | |
Miscellaneous | 12,149 | |
Total expenses before reductions | 10,540,386 | |
Expense reductions | (111,196) | 10,429,190 |
Net investment income (loss) | (935,778) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 197,280,091 | |
Other affiliated issuers | 8,330,634 |
|
Foreign currency transactions | 24,801 | |
Total net realized gain (loss) |
| 205,635,526 |
Change in net unrealized appreciation (depreciation) on: Investment securities | (18,818,263) | |
Assets and liabilities in foreign currencies | (63,427) | |
Total change in net unrealized appreciation (depreciation) |
| (18,881,690) |
Net gain (loss) | 186,753,836 | |
Net increase (decrease) in net assets resulting from operations | $ 185,818,058 | |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Software and Computer Services Portfolio
Financial Statements - continued
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ (935,778) | $ (1,443,206) |
Net realized gain (loss) | 205,635,526 | 203,890,639 |
Change in net unrealized appreciation (depreciation) | (18,881,690) | 86,844,734 |
Net increase (decrease) in net assets resulting from operations | 185,818,058 | 289,292,167 |
Distributions to shareholders from net realized gain | (181,184,664) | (37,331,222) |
Share transactions | 585,190,987 | 346,693,434 |
Reinvestment of distributions | 174,047,914 | 35,792,951 |
Cost of shares redeemed | (441,554,331) | (320,024,033) |
Net increase (decrease) in net assets resulting from share transactions | 317,684,570 | 62,462,352 |
Redemption fees | 44,203 | 27,318 |
Total increase (decrease) in net assets | 322,362,167 | 314,450,615 |
|
|
|
Net Assets | ||
Beginning of period | 1,299,253,351 | 984,802,736 |
End of period (including accumulated net investment loss of $421 and accumulated net investment loss of $85,526, respectively) | $ 1,621,615,518 | $ 1,299,253,351 |
Other Information Shares | ||
Sold | 6,956,029 | 4,173,870 |
Issued in reinvestment of distributions | 2,132,816 | 408,782 |
Redeemed | (5,241,268) | (4,027,117) |
Net increase (decrease) | 3,847,577 | 555,535 |
Financial Highlights
Years ended February 28, | 2012 F | 2011 | 2010 | 2009 | 2008 F |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 91.63 | $ 72.29 | $ 44.38 | $ 66.77 | $ 65.47 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | (.06) | (.11) | (.04) | (.07) | (.20) |
Net realized and unrealized gain (loss) | 10.39 | 22.28 | 27.95 | (22.32) | 1.49 |
Total from investment operations | 10.33 | 22.17 | 27.91 | (22.39) | 1.29 |
Distributions from net realized gain | (12.00) | (2.83) | - | - | - |
Redemption fees added to paid in capital B | - G | - G | - G | - G | .01 |
Net asset value, end of period | $ 89.96 | $ 91.63 | $ 72.29 | $ 44.38 | $ 66.77 |
Total Return A | 13.08% | 30.85% | 62.89% | (33.53)% | 1.99% |
Ratios to Average Net Assets C, E |
|
|
|
|
|
Expenses before reductions | .82% | .84% | .90% | .87% | .86% |
Expenses net of fee waivers, if any | .82% | .84% | .90% | .87% | .86% |
Expenses net of all reductions | .81% | .83% | .89% | .87% | .86% |
Net investment income (loss) | (.07)% | (.13)% | (.07)% | (.12)% | (.27)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 1,621,616 | $ 1,299,253 | $ 984,803 | $ 488,980 | $ 767,777 |
Portfolio turnover rate D | 238% | 189% | 56% | 49% | 38% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
B Calculated based on average shares outstanding during the period.
C Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
D Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
E Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund.
F For the year ended February 29.
G Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Technology Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 29, 2012 | Past 1 | Past 5 | Past 10 |
Technology Portfolio | -0.78% | 7.84% | 6.97% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Technology Portfolio on February 28, 2002. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index performed over the same period.
Annual Report
Technology Portfolio
Management's Discussion of Fund Performance
Market Recap: U.S. stocks rose for the 12 months ending February 29, 2012, as encouraging economic news sparked a strong late-period rally that lifted major equity benchmarks past a number of significant milestones. Stocks recovered from early-period uncertainty that followed the March 2011 earthquake, tsunami and nuclear meltdown in Japan, but plummeted during the summer amid Europe's debt woes and a historic U.S. credit-rating downgrade. Despite continued volatility and mixed economic news, markets began to recover in early October. Investors gravitated toward defensive sectors and the perceived safety of larger, more-established and dividend-paying names, helping the Dow Jones® Industrial Average advance 8.83%, and close above the psychologically important 13,000 mark in late February - for the first time since May 2008. The rally accelerated late in the period and the market broadened, as investor confidence improved amid encouraging manufacturing, housing and employment data, and signs of progress in Europe. For the year, the S&P 500® Index added 5.12%, closing near a four-year high on the period's second-to-last day. Of the 10 major market sectors in the S&P 500®, three defensive areas led the way - consumer staples, health care and utilities - while financials, materials and energy finished in negative territory. The technology-laden Nasdaq Composite® Index added 7.73%, flirting with the 3,000 mark, its highest level in 12 years. Foreign developed-markets stocks reeled over Europe's turmoil, and the MSCI® EAFE® (Europe, Australasia, Far East) Index fell 7.35%.
Comments from Charlie Chai, Portfolio Manager of Technology Portfolio: For the year, the fund returned -0.78%, well behind the 9.17% gain of the MSCI® U.S. IM Information Technology 25/50 Index and also trailing the broad-based S&P 500®. Versus its industry index, the fund's performance was hurt by investing too lightly in large, defensive index components that performed well, including technology services provider International Business Machines, personal computer semiconductor maker Intel and PC software firm Microsoft. I increased the fund's stakes in Microsoft and IBM but sold Intel during the period. Several out-of-benchmark positions in the solar power industry - Trina Solar Limited; JinkoSolar Holding, which I sold in September; and JA Solar Holdings - also detracted from fund performance. Stress on the European financial system led to reductions in government subsidies for purchasers of solar equipment. At the same time, the industry failed to rein in production enough to compensate for ebbing demand. The weak performance of these solar stocks, which are classified as semiconductor holdings, coupled with the fund's negligible weighting in Intel, resulted in this industry being a significant relative detractor. Unrewarding security selection and a sizable overweighting in application software also hurt our results, as did weak picks in Internet software/services, communications equipment and IT consulting/other services. Lastly, holding a small cash position worked against the fund as the market advanced late in the period. Conversely, stock picking in computer hardware stood out as a positive influence, while positioning in semiconductor equipment and solid picks in computer storage/peripherals helped as well. At the stock level, limiting exposure to computer/printer maker and index component Hewlett-Packard was the right call, given the stock's significant decline. Another weak-performing index component I was rewarded for underweighting was networking equipment maker Juniper Networks. Among beneficial overweightings, I'll mention timely ownership of SanDisk, a manufacturer of the NAND flash memory used in mobile devices such as smartphones and tablets. Supply-chain problems with hard-disk drives - a competing product - fueled demand for the company's wares in the second half of the period.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Technology Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 29, 2012 | ||
| % of fund's | % of fund's net assets |
Apple, Inc. | 16.9 | 11.5 |
Microsoft Corp. | 6.5 | 3.8 |
QUALCOMM, Inc. | 3.0 | 0.3 |
salesforce.com, Inc. | 2.6 | 3.0 |
Altera Corp. | 1.9 | 0.1 |
Citrix Systems, Inc. | 1.8 | 1.5 |
NXP Semiconductors NV | 1.7 | 0.8 |
Cisco Systems, Inc. | 1.6 | 0.7 |
IBM Corp. | 1.6 | 0.0 |
eBay, Inc. | 1.5 | 1.8 |
| 39.1 | |
Top Industries (% of fund's net assets) | |||
As of February 29, 2012 | |||
| Software | 23.2% |
|
| Semiconductors & Semiconductor Equipment | 21.7% |
|
| Computers & Peripherals | 19.6% |
|
| Communications Equipment | 9.0% |
|
| Internet Software & Services | 7.9% |
|
| All Others* | 18.6% |
|
As of August 31, 2011 | |||
| Software | 28.6% |
|
| Computers & Peripherals | 15.3% |
|
| Semiconductors & Semiconductor Equipment | 13.8% |
|
| Internet Software & Services | 11.1% |
|
| IT Services | 6.3% |
|
| All Others* | 24.9% |
|
* Includes short-term investments and net other assets. |
Annual Report
Technology Portfolio
Investments February 29, 2012
Showing Percentage of Net Assets
Common Stocks - 96.1% | |||
Shares | Value | ||
AUTOMOBILES - 0.1% | |||
Automobile Manufacturers - 0.1% | |||
Tesla Motors, Inc. (a) | 40,095 | $ 1,339,574 | |
CHEMICALS - 0.5% | |||
Specialty Chemicals - 0.5% | |||
JSR Corp. | 574,900 | 12,071,522 | |
COMMUNICATIONS EQUIPMENT - 9.0% | |||
Communications Equipment - 9.0% | |||
Acme Packet, Inc. (a) | 279,624 | 8,522,940 | |
ADTRAN, Inc. | 36,830 | 1,298,258 | |
ADVA AG Optical Networking (a) | 48,666 | 313,078 | |
Aruba Networks, Inc. (a)(d) | 117,000 | 2,526,030 | |
Brocade Communications Systems, Inc. (a) | 198,210 | 1,145,654 | |
Ciena Corp. (a)(d) | 339,237 | 5,061,416 | |
Cisco Systems, Inc. | 1,926,638 | 38,301,563 | |
Comba Telecom Systems Holdings Ltd. | 571,500 | 429,577 | |
F5 Networks, Inc. (a) | 243,825 | 30,468,372 | |
Finisar Corp. (a) | 104,677 | 2,123,896 | |
Infinera Corp. (a) | 268,623 | 2,138,239 | |
JDS Uniphase Corp. (a) | 16,663 | 217,286 | |
Juniper Networks, Inc. (a) | 33,666 | 766,238 | |
Motorola Solutions, Inc. | 44,800 | 2,231,040 | |
NETGEAR, Inc. (a) | 60,200 | 2,261,714 | |
Oclaro, Inc. (a) | 76,038 | 328,484 | |
Polycom, Inc. (a) | 922,499 | 19,049,604 | |
QUALCOMM, Inc. | 1,136,901 | 70,692,504 | |
Riverbed Technology, Inc. (a) | 166,087 | 4,728,497 | |
Sandvine Corp. (a) | 1,941,200 | 3,118,942 | |
Sandvine Corp. (U.K.) (a) | 2,302,512 | 3,769,079 | |
Spirent Communications PLC | 590,700 | 1,324,017 | |
Telefonaktiebolaget LM Ericsson (B Shares) sponsored ADR | 21,709 | 216,656 | |
ZTE Corp. (H Shares) | 3,171,800 | 9,487,469 | |
| 210,520,553 | ||
COMPUTERS & PERIPHERALS - 19.6% | |||
Computer Hardware - 17.5% | |||
Advantech Co. Ltd. | 373,000 | 1,256,320 | |
Apple, Inc. (a) | 732,967 | 397,590,615 | |
Hewlett-Packard Co. | 7,763 | 196,482 | |
Pegatron Corp. | 2,471,000 | 3,362,705 | |
Stratasys, Inc. (a) | 185,792 | 6,844,577 | |
Wistron Corp. | 752,000 | 1,252,353 | |
| 410,503,052 | ||
Computer Storage & Peripherals - 2.1% | |||
ADLINK Technology, Inc. | 196,000 | 296,737 | |
EMC Corp. (a) | 847,586 | 23,469,656 | |
Fusion-io, Inc. | 132,500 | 3,617,250 | |
Gemalto NV | 42,522 | 2,429,341 | |
| |||
Shares | Value | ||
NetApp, Inc. (a) | 5,460 | $ 234,780 | |
Quantum Corp. (a) | 214,500 | 564,135 | |
SanDisk Corp. (a) | 237,215 | 11,732,654 | |
Smart Technologies, Inc. Class A (a) | 85,600 | 289,328 | |
Synaptics, Inc. (a) | 218,643 | 8,035,130 | |
| 50,669,011 | ||
TOTAL COMPUTERS & PERIPHERALS | 461,172,063 | ||
DIVERSIFIED CONSUMER SERVICES - 0.1% | |||
Education Services - 0.1% | |||
Educomp Solutions Ltd. | 53,012 | 228,844 | |
New Oriental Education & Technology Group, Inc. sponsored ADR (a) | 43,231 | 1,146,054 | |
| 1,374,898 | ||
ELECTRICAL EQUIPMENT - 0.1% | |||
Electrical Components & Equipment - 0.1% | |||
Furukawa Electric Co. Ltd. | 786,000 | 2,291,433 | |
ELECTRONIC EQUIPMENT & COMPONENTS - 4.3% | |||
Electronic Components - 1.9% | |||
Aeroflex Holding Corp. (a) | 123,538 | 1,355,212 | |
Amphenol Corp. Class A | 19,879 | 1,112,429 | |
Cheng Uei Precision Industries Co. Ltd. | 347,703 | 833,976 | |
Chimei Innolux Corp. (a) | 51,000 | 27,501 | |
Invensense, Inc. (d) | 217,088 | 3,406,111 | |
J Touch Corp. | 109,903 | 189,946 | |
Omron Corp. | 31,600 | 699,674 | |
Taiyo Yuden Co. Ltd. | 224,900 | 2,334,899 | |
TDK Corp. | 22,400 | 1,168,288 | |
Tong Hsing Electronics Industries Ltd. | 416,000 | 1,386,997 | |
Universal Display Corp. (a)(d) | 627,569 | 25,924,875 | |
Vishay Intertechnology, Inc. (a) | 527,722 | 6,469,872 | |
Yageo Corp. | 2,131,000 | 716,303 | |
| 45,626,083 | ||
Electronic Equipment & Instruments - 0.4% | |||
Chroma ATE, Inc. | 1,038,644 | 2,381,676 | |
Itron, Inc. (a) | 5,774 | 256,481 | |
Keyence Corp. | 4,500 | 1,180,146 | |
National Instruments Corp. | 106,761 | 2,839,843 | |
SFA Engineering Corp. | 17,301 | 946,255 | |
SNU Precision Co. Ltd. | 45,962 | 482,639 | |
Test Research, Inc. | 57,298 | 78,950 | |
| 8,165,990 | ||
Electronic Manufacturing Services - 1.7% | |||
Jabil Circuit, Inc. | 516,568 | 13,342,951 | |
KEMET Corp. (a) | 349,743 | 3,151,184 | |
TE Connectivity Ltd. | 170,309 | 6,224,794 | |
Trimble Navigation Ltd. (a) | 335,058 | 16,850,067 | |
| 39,568,996 | ||
Technology Distributors - 0.3% | |||
Arrow Electronics, Inc. (a) | 5,247 | 210,667 | |
Common Stocks - continued | |||
Shares | Value | ||
ELECTRONIC EQUIPMENT & COMPONENTS - CONTINUED | |||
Technology Distributors - continued | |||
Avnet, Inc. (a) | 8,600 | $ 307,364 | |
Digital China Holdings Ltd. (H Shares) | 2,340,000 | 4,700,455 | |
VST Holdings Ltd. (a) | 7,366,000 | 1,548,018 | |
WPG Holding Co. Ltd. | 754,200 | 1,075,119 | |
WT Microelectronics Co. Ltd. | 148,000 | 219,787 | |
| 8,061,410 | ||
TOTAL ELECTRONIC EQUIPMENT & COMPONENTS | 101,422,479 | ||
HEALTH CARE EQUIPMENT & SUPPLIES - 0.2% | |||
Health Care Equipment - 0.2% | |||
Biosensors International Group Ltd. (a) | 4,561,000 | 5,324,479 | |
China Kanghui Holdings sponsored ADR (a) | 29,200 | 542,244 | |
| 5,866,723 | ||
HEALTH CARE PROVIDERS & SERVICES - 0.0% | |||
Health Care Distributors & Services - 0.0% | |||
Sinopharm Group Co. Ltd. (H Shares) | 424,400 | 1,154,554 | |
HEALTH CARE TECHNOLOGY - 0.1% | |||
Health Care Technology - 0.1% | |||
athenahealth, Inc. (a) | 1,500 | 106,005 | |
So-net M3, Inc. | 756 | 2,813,088 | |
| 2,919,093 | ||
HOUSEHOLD DURABLES - 0.1% | |||
Household Appliances - 0.1% | |||
Haier Electronics Group Co. Ltd. (a) | 53,000 | 66,283 | |
Techtronic Industries Co. Ltd. | 1,115,000 | 1,348,448 | |
| 1,414,731 | ||
HOUSEHOLD PRODUCTS - 0.1% | |||
Household Products - 0.1% | |||
NVC Lighting Holdings Ltd. | 4,071,000 | 1,795,080 | |
INTERNET & CATALOG RETAIL - 0.4% | |||
Internet Retail - 0.4% | |||
Amazon.com, Inc. (a) | 12,437 | 2,234,805 | |
E-Commerce China Dangdang, Inc. ADR (a) | 990 | 6,623 | |
Groupon, Inc. Class A (a) | 8,800 | 173,492 | |
Priceline.com, Inc. (a) | 425 | 266,484 | |
Rakuten, Inc. | 3,894 | 3,870,290 | |
Start Today Co. Ltd. | 154,300 | 2,814,772 | |
| 9,366,466 | ||
INTERNET SOFTWARE & SERVICES - 7.9% | |||
Internet Software & Services - 7.9% | |||
Akamai Technologies, Inc. (a) | 306,753 | 11,043,108 | |
Baidu.com, Inc. sponsored ADR (a) | 16,405 | 2,242,564 | |
Bankrate, Inc. (d) | 96,219 | 2,293,861 | |
Bazaarvoice, Inc. | 8,500 | 141,100 | |
| |||
Shares | Value | ||
Blinkx PLC (a) | 500,000 | $ 632,343 | |
Cornerstone OnDemand, Inc. | 114,615 | 2,377,115 | |
DealerTrack Holdings, Inc. (a) | 7,000 | 194,950 | |
DeNA Co. Ltd. | 100 | 3,254 | |
eBay, Inc. (a) | 1,004,379 | 35,896,505 | |
Facebook, Inc. Class B (f) | 122,522 | 3,770,069 | |
Google, Inc. Class A (a) | 51,576 | 31,886,862 | |
INFO Edge India Ltd. | 57,194 | 757,113 | |
Kakaku.com, Inc. | 163,900 | 4,784,239 | |
LogMeIn, Inc. (a) | 139,506 | 5,142,191 | |
LoopNet, Inc. (a) | 150,000 | 2,760,000 | |
Mail.ru Group Ltd. GDR (a)(e) | 5,600 | 221,480 | |
MercadoLibre, Inc. | 141,336 | 13,753,406 | |
NHN Corp. (a) | 23,040 | 4,807,893 | |
Open Text Corp. (a) | 132,200 | 8,063,045 | |
OpenTable, Inc. (a) | 3,553 | 172,321 | |
Opera Software ASA | 359,143 | 2,280,640 | |
PChome Online, Inc. | 444,000 | 2,643,487 | |
Qihoo 360 Technology Co. Ltd. ADR (d) | 107,500 | 2,272,550 | |
Rackspace Hosting, Inc. (a) | 344,899 | 18,017,524 | |
Renren, Inc. ADR (d) | 18,800 | 102,460 | |
Responsys, Inc. | 295,463 | 3,566,238 | |
Saba Software, Inc. (a) | 10,000 | 117,200 | |
SciQuest, Inc. (a) | 97,463 | 1,466,818 | |
SINA Corp. (a)(d) | 129,384 | 8,805,875 | |
SouFun Holdings Ltd. ADR | 75,900 | 1,266,771 | |
Velti PLC (a) | 162,300 | 1,608,393 | |
VeriSign, Inc. | 7,100 | 262,345 | |
Vocus, Inc. (a) | 45,600 | 616,968 | |
XO Group, Inc. (a) | 16,300 | 147,352 | |
Yahoo!, Inc. (a) | 549,057 | 8,142,515 | |
Yandex NV | 105,049 | 2,237,544 | |
YouKu.com, Inc. ADR (a)(d) | 54,250 | 1,363,845 | |
| 185,861,944 | ||
IT SERVICES - 7.2% | |||
Data Processing & Outsourced Services - 3.1% | |||
Fidelity National Information Services, Inc. | 157,334 | 4,992,208 | |
Jack Henry & Associates, Inc. | 34,500 | 1,164,030 | |
MasterCard, Inc. Class A | 74,502 | 31,290,840 | |
Syntel, Inc. | 25,001 | 1,280,051 | |
VeriFone Systems, Inc. (a) | 195,500 | 9,362,495 | |
Visa, Inc. Class A | 219,964 | 25,597,211 | |
WNS Holdings Ltd. sponsored ADR (a) | 26,900 | 296,169 | |
| 73,983,004 | ||
IT Consulting & Other Services - 4.1% | |||
Accenture PLC Class A | 215,652 | 12,839,920 | |
Bit-isle, Inc. | 4,900 | 55,030 | |
Camelot Information Systems, Inc. ADR (a) | 555 | 1,232 | |
ChinaSoft International Ltd. (a) | 50,000 | 15,149 | |
Cognizant Technology Solutions Corp. Class A (a) | 395,942 | 28,092,085 | |
Common Stocks - continued | |||
Shares | Value | ||
IT SERVICES - CONTINUED | |||
IT Consulting & Other Services - continued | |||
Hi Sun Technology (China) Ltd. (a) | 24,000 | $ 5,415 | |
HiSoft Technology International Ltd. ADR (a) | 36,166 | 441,225 | |
IBM Corp. | 188,615 | 37,106,229 | |
ServiceSource International, Inc. | 867,034 | 14,566,171 | |
Teradata Corp. (a) | 36,676 | 2,440,788 | |
| 95,563,244 | ||
TOTAL IT SERVICES | 169,546,248 | ||
LIFE SCIENCES TOOLS & SERVICES - 0.3% | |||
Life Sciences Tools & Services - 0.3% | |||
Illumina, Inc. (a) | 129,300 | 6,626,625 | |
WuXi PharmaTech Cayman, Inc. sponsored ADR (a) | 87,200 | 1,127,496 | |
| 7,754,121 | ||
MACHINERY - 0.4% | |||
Industrial Machinery - 0.4% | |||
Airtac International Group | 306,000 | 1,759,399 | |
Fanuc Corp. | 6,600 | 1,195,867 | |
HIWIN Technologies Corp. | 175,290 | 1,962,046 | |
Mirle Automation Corp. | 293,100 | 251,288 | |
Nippon Thompson Co. Ltd. | 476,000 | 3,079,845 | |
THK Co. Ltd. | 103,400 | 2,188,959 | |
| 10,437,404 | ||
MEDIA - 0.4% | |||
Advertising - 0.2% | |||
Dentsu, Inc. | 3,400 | 105,603 | |
Focus Media Holding Ltd. ADR (a)(d) | 145,100 | 3,520,126 | |
ReachLocal, Inc. (a) | 128,178 | 999,788 | |
| 4,625,517 | ||
Cable & Satellite - 0.1% | |||
DISH Network Corp. Class A | 78,300 | 2,284,011 | |
Movies & Entertainment - 0.1% | |||
IMAX Corp. (a) | 59,570 | 1,520,227 | |
TOTAL MEDIA | 8,429,755 | ||
OFFICE ELECTRONICS - 0.0% | |||
Office Electronics - 0.0% | |||
Xerox Corp. | 27,023 | 222,399 | |
PHARMACEUTICALS - 0.1% | |||
Pharmaceuticals - 0.1% | |||
China Medical System Holding Ltd. | 2,663,000 | 2,036,022 | |
PROFESSIONAL SERVICES - 0.1% | |||
Human Resource & Employment Services - 0.1% | |||
51job, Inc. sponsored ADR (a)(d) | 37,029 | 1,891,441 | |
| |||
Shares | Value | ||
Research & Consulting Services - 0.0% | |||
Acacia Research Corp. - Acacia Technologies (a) | 27,700 | $ 1,094,150 | |
TOTAL PROFESSIONAL SERVICES | 2,985,591 | ||
REAL ESTATE MANAGEMENT & DEVELOPMENT - 0.1% | |||
Real Estate Services - 0.1% | |||
China Real Estate Information Corp. ADR (a) | 157,398 | 857,819 | |
E-House China Holdings Ltd. ADR | 104,400 | 689,040 | |
| 1,546,859 | ||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 21.4% | |||
Semiconductor Equipment - 2.8% | |||
Amkor Technology, Inc. (a)(d) | 482,881 | 3,085,610 | |
Asia Pacific Systems, Inc. (a) | 76,422 | 969,822 | |
ASM International NV unit | 213,500 | 8,012,655 | |
ASM Pacific Technology Ltd. | 90,700 | 1,278,157 | |
ASML Holding NV | 248,553 | 11,321,589 | |
Axcelis Technologies, Inc. (a) | 169,191 | 280,857 | |
centrotherm photovoltaics AG | 4,737 | 90,242 | |
Cymer, Inc. (a) | 173,100 | 7,959,138 | |
Dainippon Screen Manufacturing Co. Ltd. | 141,000 | 1,188,080 | |
Entegris, Inc. (a) | 414,343 | 3,745,661 | |
GCL-Poly Energy Holdings Ltd. | 2,354,000 | 810,353 | |
Genesis Photonics, Inc. | 47,000 | 74,354 | |
ICD Co. Ltd. | 78,588 | 2,198,295 | |
KLA-Tencor Corp. | 4,217 | 204,103 | |
Micronics Japan Co. Ltd. | 51,600 | 319,902 | |
Novellus Systems, Inc. (a) | 137,778 | 6,403,921 | |
Rubicon Technology, Inc. (a)(d) | 196,540 | 1,762,964 | |
Sumco Corp. (a) | 201,800 | 2,169,546 | |
Teradyne, Inc. (a) | 159,385 | 2,617,102 | |
Ultratech, Inc. (a) | 410,860 | 11,179,501 | |
Visual Photonics Epitaxy Co. Ltd. | 434,000 | 735,318 | |
| 66,407,170 | ||
Semiconductors - 18.6% | |||
Advanced Micro Devices, Inc. (a) | 63,902 | 469,680 | |
Advanced Semiconductor Engineering, Inc. sponsored ADR | 274,777 | 1,340,912 | |
Alpha & Omega Semiconductor Ltd. (a) | 108,406 | 1,074,303 | |
Altera Corp. | 1,179,697 | 45,359,350 | |
Analog Devices, Inc. | 28,726 | 1,126,346 | |
Applied Micro Circuits Corp. (a) | 453,625 | 3,075,578 | |
ARM Holdings PLC sponsored ADR | 66,975 | 1,820,381 | |
Atmel Corp. (a) | 618,896 | 6,257,039 | |
Avago Technologies Ltd. | 250,566 | 9,423,787 | |
Broadcom Corp. Class A | 573,806 | 21,316,893 | |
Cavium, Inc. (a)(d) | 563,035 | 20,117,241 | |
Cirrus Logic, Inc. (a) | 359,903 | 8,486,513 | |
Cree, Inc. (a)(d) | 922,330 | 27,937,376 | |
Cypress Semiconductor Corp. | 294,510 | 5,080,298 | |
Common Stocks - continued | |||
Shares | Value | ||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - CONTINUED | |||
Semiconductors - continued | |||
Diodes, Inc. (a) | 124,538 | $ 3,093,524 | |
Duksan Hi-Metal Co. Ltd. (a) | 317,678 | 7,466,694 | |
Epistar Corp. | 2,312,000 | 6,056,680 | |
Fairchild Semiconductor International, Inc. (a) | 620,349 | 9,050,892 | |
First Solar, Inc. (a) | 8 | 258 | |
Freescale Semiconductor Holdings I Ltd. | 784,572 | 12,655,146 | |
Global Unichip Corp. | 571,000 | 2,253,462 | |
Hittite Microwave Corp. (a) | 53,050 | 3,033,399 | |
Hynix Semiconductor, Inc. | 19,550 | 527,642 | |
Imagination Technologies Group PLC (a) | 433,341 | 4,243,004 | |
Infineon Technologies AG | 1,530,631 | 15,478,858 | |
Inphi Corp. (a) | 295,093 | 4,237,535 | |
International Rectifier Corp. (a) | 156,385 | 3,510,843 | |
JA Solar Holdings Co. Ltd. ADR (a)(d) | 302,802 | 563,212 | |
LSI Corp. (a) | 808,269 | 6,951,113 | |
MagnaChip Semiconductor Corp. | 242,086 | 2,803,356 | |
Marvell Technology Group Ltd. (a) | 127,327 | 1,909,905 | |
Maxim Integrated Products, Inc. | 7,871 | 219,522 | |
Mellanox Technologies Ltd. (a) | 52,100 | 1,988,657 | |
Micrel, Inc. | 88,411 | 943,345 | |
Micron Technology, Inc. (a) | 2,943,962 | 25,170,875 | |
Monolithic Power Systems, Inc. (a) | 309,421 | 5,752,136 | |
MStar Semiconductor, Inc. | 329,000 | 2,093,117 | |
NVIDIA Corp. (a) | 14,532 | 220,160 | |
NXP Semiconductors NV (a) | 1,612,612 | 39,992,778 | |
O2Micro International Ltd. sponsored ADR (a) | 126,600 | 659,586 | |
Omnivision Technologies, Inc. (a) | 19,300 | 315,941 | |
ON Semiconductor Corp. (a) | 1,966,345 | 17,834,749 | |
Phison Electronics Corp. | 1,000 | 7,944 | |
PMC-Sierra, Inc. (a) | 1,124,639 | 7,726,270 | |
Power Integrations, Inc. | 36,500 | 1,361,450 | |
Rambus, Inc. (a) | 632,761 | 4,479,948 | |
RDA Microelectronics, Inc. sponsored ADR (a) | 23,900 | 294,687 | |
RF Micro Devices, Inc. (a) | 1,719,905 | 8,203,947 | |
Samsung Electronics Co. Ltd. | 1,092 | 1,176,943 | |
Seoul Semiconductor Co. Ltd. | 157,193 | 3,715,731 | |
Silicon Laboratories, Inc. (a) | 5,500 | 246,400 | |
Silicon Motion Technology Corp. sponsored ADR (a) | 59,400 | 1,057,320 | |
Siliconware Precision Industries Co. Ltd. | 1,609,000 | 1,882,371 | |
Siliconware Precision Industries Co. Ltd. sponsored ADR | 1,074,600 | 6,200,442 | |
Skyworks Solutions, Inc. (a) | 692,915 | 18,687,918 | |
Spansion, Inc. Class A (a) | 181,127 | 2,318,426 | |
Spreadtrum Communications, Inc. ADR (d) | 403,736 | 5,603,856 | |
Standard Microsystems Corp. (a) | 195,870 | 5,012,313 | |
STMicroelectronics NV (NY Shares) unit | 48,600 | 360,612 | |
Texas Instruments, Inc. | 442,733 | 14,765,146 | |
| |||
Shares | Value | ||
Trina Solar Ltd. (a)(d) | 30,406 | $ 234,126 | |
United Microelectronics Corp. | 9,098,000 | 4,790,322 | |
United Microelectronics Corp. sponsored ADR | 647,337 | 1,760,757 | |
Vanguard International Semiconductor Corp. | 7,290,000 | 3,224,237 | |
Win Semiconductors Corp. | 354,604 | 563,400 | |
Xilinx, Inc. | 297,291 | 10,978,957 | |
YoungTek Electronics Corp. | 2,513 | 6,968 | |
| 436,572,577 | ||
TOTAL SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT | 502,979,747 | ||
SOFTWARE - 23.2% | |||
Application Software - 11.3% | |||
Adobe Systems, Inc. (a) | 280,573 | 9,228,046 | |
ANSYS, Inc. (a) | 87,516 | 5,529,261 | |
AsiaInfo-Linkage, Inc. (a) | 89,344 | 1,141,816 | |
Aspen Technology, Inc. (a) | 667,665 | 13,727,192 | |
Autodesk, Inc. (a) | 560,795 | 21,226,091 | |
AutoNavi Holdings Ltd. ADR (a) | 164,711 | 1,976,532 | |
BroadSoft, Inc. (a)(d) | 253,852 | 9,232,597 | |
Cadence Design Systems, Inc. (a) | 23,900 | 281,303 | |
Citrix Systems, Inc. (a) | 568,217 | 42,468,539 | |
Concur Technologies, Inc. (a) | 187,875 | 11,075,231 | |
Convio, Inc. (a) | 118,315 | 1,852,813 | |
Descartes Systems Group, Inc. (a) | 591,700 | 4,842,894 | |
Informatica Corp. (a) | 144,785 | 7,117,631 | |
Intuit, Inc. | 37,397 | 2,163,042 | |
JDA Software Group, Inc. (a) | 58,937 | 1,476,961 | |
Jive Software, Inc. | 5,500 | 119,955 | |
Kingdee International Software Group Co. Ltd. | 28,103,600 | 7,572,946 | |
Manhattan Associates, Inc. (a) | 14,555 | 674,770 | |
MicroStrategy, Inc. Class A (a) | 67,697 | 9,179,036 | |
Nuance Communications, Inc. (a) | 115,601 | 2,996,378 | |
Parametric Technology Corp. (a) | 531,358 | 14,187,259 | |
Pegasystems, Inc. (d) | 197,604 | 5,548,720 | |
PROS Holdings, Inc. (a) | 26,200 | 459,286 | |
QLIK Technologies, Inc. (a) | 235,554 | 7,130,220 | |
RealPage, Inc. (a) | 109,900 | 2,179,317 | |
salesforce.com, Inc. (a) | 419,142 | 60,004,369 | |
SolarWinds, Inc. (a) | 319,677 | 11,911,165 | |
Synchronoss Technologies, Inc. (a) | 59,137 | 1,978,724 | |
Synopsys, Inc. (a) | 7,993 | 243,547 | |
TIBCO Software, Inc. (a) | 129,883 | 3,762,711 | |
TiVo, Inc. (a) | 26,100 | 293,625 | |
VanceInfo Technologies, Inc. ADR (a)(d) | 287,800 | 3,214,726 | |
| 264,796,703 | ||
Home Entertainment Software - 0.1% | |||
NCsoft Corp. | 8,218 | 2,034,377 | |
Systems Software - 11.8% | |||
Ariba, Inc. (a) | 501,292 | 15,775,659 | |
Common Stocks - continued | |||
Shares | Value | ||
SOFTWARE - CONTINUED | |||
Systems Software - continued | |||
BMC Software, Inc. (a) | 230,800 | $ 8,641,152 | |
Check Point Software Technologies Ltd. (a) | 76,372 | 4,441,796 | |
CommVault Systems, Inc. (a) | 198,517 | 10,237,522 | |
Fortinet, Inc. (a) | 465,837 | 12,600,891 | |
Microsoft Corp. | 4,826,171 | 153,182,668 | |
NetSuite, Inc. (a) | 102,600 | 4,894,020 | |
Oracle Corp. | 805,430 | 23,574,936 | |
Progress Software Corp. (a) | 60,622 | 1,405,824 | |
Red Hat, Inc. (a) | 359,614 | 17,786,508 | |
Sourcefire, Inc. (a) | 234,906 | 10,575,468 | |
TeleCommunication Systems, Inc. Class A (a) | 105,200 | 281,936 | |
Totvs SA | 182,000 | 3,378,357 | |
VMware, Inc. Class A (a) | 110,963 | 10,973,131 | |
| 277,749,868 | ||
TOTAL SOFTWARE | 544,580,948 | ||
WIRELESS TELECOMMUNICATION SERVICES - 0.4% | |||
Wireless Telecommunication Services - 0.4% | |||
SBA Communications Corp. Class A (a) | 218,253 | 10,242,613 | |
TOTAL COMMON STOCKS (Cost $1,880,687,470) |
| ||
Convertible Bonds - 0.3% | ||||
| Principal |
| ||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 0.3% | ||||
Semiconductors - 0.3% | ||||
JA Solar Holdings Co. Ltd. 4.5% 5/15/13 | $ 6,990,000 |
| ||
Money Market Funds - 6.2% | |||
Shares | Value | ||
Fidelity Cash Central Fund, 0.12% (b) | 89,031,902 | $ 89,031,902 | |
Fidelity Securities Lending Cash Central Fund, 0.12% (b)(c) | 55,694,375 | 55,694,375 | |
TOTAL MONEY MARKET FUNDS (Cost $144,726,277) |
| ||
TOTAL INVESTMENT PORTFOLIO - 102.6% (Cost $2,030,965,318) | 2,410,061,760 | ||
NET OTHER ASSETS (LIABILITIES) - (2.6)% | (60,136,225) | ||
NET ASSETS - 100% | $ 2,349,925,535 | ||
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
(e) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the end of the period, the value of these securities amounted to $221,480 or 0.0% of net assets. |
(f) Restricted securities - Investment in securities not registered under the Securities Act of 1933 (excluding 144A issues). At the end of the period, the value of restricted securities (excluding 144A issues) amounted to $3,770,069 or 0.2% of net assets. |
Additional information on each restricted holding is as follows: |
Security | Acquisition Date | Acquisition Cost |
Facebook, Inc. Class B | 3/31/11 - 5/19/11 | $ 3,063,881 |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 111,314 |
Fidelity Securities Lending Cash Central Fund | 2,203,089 |
Total | $ 2,314,403 |
Other Information |
The following is a summary of the inputs used, as of February 29, 2012, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the tables below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities: | ||||
Common Stocks | $ 2,259,332,820 | $ 2,248,890,058 | $ 6,672,693 | $ 3,770,069 |
Convertible Bonds | 6,002,663 | - | 6,002,663 | - |
Money Market Funds | 144,726,277 | 144,726,277 | - | - |
Total Investments in Securities: | $ 2,410,061,760 | $ 2,393,616,335 | $ 12,675,356 | $ 3,770,069 |
The following is a reconciliation of Investments in Securities for which Level 3 inputs were used in determining value: |
Investments in Securities: | |
Beginning Balance | $ - |
Total Realized Gain (Loss) | - |
Total Unrealized Gain (Loss) | 706,188 |
Cost of Purchases | 3,063,881 |
Proceeds of Sales | - |
Amortization/Accretion | - |
Transfers in to Level 3 | - |
Transfers out of Level 3 | - |
Ending Balance | $ 3,770,069 |
The change in unrealized gain (loss) for the period attributable to Level 3 securities held at February 29, 2012 | $ 706,188 |
The information used in the above reconciliation represents fiscal year to date activity for any Investments in Securities identified as using Level 3 inputs at either the beginning or the end of the current fiscal period. Transfers in or out of Level 3 represent the beginning value of any Security or Instrument where a change in the pricing level occurred from the beginning to the end of the period. The cost of purchases and the proceeds of sales may include securities received or delivered through corporate actions or exchanges. Realized and unrealized gains (losses) disclosed in the reconciliation are included in Net Gain (Loss) on the Fund's Statement of Operations. |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 84.0% |
Cayman Islands | 2.9% |
Netherlands | 2.7% |
Taiwan | 2.0% |
Japan | 1.9% |
Korea (South) | 1.1% |
Bermuda | 1.0% |
Others (Individually Less Than 1%) | 4.4% |
| 100.0% |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Technology Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2012 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $51,696,840) - See accompanying schedule: Unaffiliated issuers (cost $1,886,239,041) | $ 2,265,335,483 |
|
Fidelity Central Funds (cost $144,726,277) | 144,726,277 |
|
Total Investments (cost $2,030,965,318) |
| $ 2,410,061,760 |
Receivable for investments sold | 15,832,078 | |
Receivable for fund shares sold | 5,079,202 | |
Dividends receivable | 1,478,253 | |
Interest receivable | 91,744 | |
Distributions receivable from Fidelity Central Funds | 59,286 | |
Prepaid expenses | 4,756 | |
Other receivables | 44,167 | |
Total assets | 2,432,651,246 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 22,834,478 | |
Payable for fund shares redeemed | 2,588,743 | |
Accrued management fee | 1,065,514 | |
Other affiliated payables | 448,695 | |
Other payables and accrued expenses | 93,906 | |
Collateral on securities loaned, at value | 55,694,375 | |
Total liabilities | 82,725,711 | |
|
|
|
Net Assets | $ 2,349,925,535 | |
Net Assets consist of: |
| |
Paid in capital | $ 2,191,998,416 | |
Accumulated net investment loss | (761,212) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (220,365,540) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 379,053,871 | |
Net Assets, for 23,137,089 shares outstanding | $ 2,349,925,535 | |
Net Asset Value, offering price and redemption price per share ($2,349,925,535 ÷ 23,137,089 shares) | $ 101.57 | |
Statement of Operations
| Year ended February 29, 2012 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 9,541,609 |
Interest |
| 562,492 |
Income from Fidelity Central Funds (including $2,203,089 from security lending) |
| 2,314,403 |
Total income |
| 12,418,504 |
|
|
|
Expenses | ||
Management fee | $ 13,347,625 | |
Transfer agent fees | 5,281,287 | |
Accounting and security lending fees | 736,869 | |
Custodian fees and expenses | 220,063 | |
Independent trustees' compensation | 14,450 | |
Registration fees | 62,860 | |
Audit | 46,072 | |
Legal | 10,226 | |
Interest | 411 | |
Miscellaneous | 24,587 | |
Total expenses before reductions | 19,744,450 | |
Expense reductions | (462,212) | 19,282,238 |
Net investment income (loss) | (6,863,734) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 107,526,047 | |
Foreign currency transactions | 87,933 | |
Total net realized gain (loss) |
| 107,613,980 |
Change in net unrealized appreciation (depreciation) on: Investment securities | (171,579,686) | |
Assets and liabilities in foreign currencies | (43,037) | |
Total change in net unrealized appreciation (depreciation) |
| (171,622,723) |
Net gain (loss) | (64,008,743) | |
Net increase (decrease) in net assets resulting from operations | $ (70,872,477) | |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ (6,863,734) | $ (9,767,534) |
Net realized gain (loss) | 107,613,980 | 473,544,016 |
Change in net unrealized appreciation (depreciation) | (171,622,723) | 318,650,059 |
Net increase (decrease) in net assets resulting from operations | (70,872,477) | 782,426,541 |
Share transactions | 465,453,767 | 927,195,806 |
Cost of shares redeemed | (930,572,293) | (818,800,764) |
Net increase (decrease) in net assets resulting from share transactions | (465,118,526) | 108,395,042 |
Redemption fees | 96,786 | 104,594 |
Total increase (decrease) in net assets | (535,894,217) | 890,926,177 |
|
|
|
Net Assets | ||
Beginning of period | 2,885,819,752 | 1,994,893,575 |
End of period (including accumulated net investment loss of $761,212 and accumulated net investment loss of $204,763, respectively) | $ 2,349,925,535 | $ 2,885,819,752 |
Other Information Shares | ||
Sold | 4,881,110 | 10,535,743 |
Redeemed | (9,932,865) | (9,962,012) |
Net increase (decrease) | (5,051,755) | 573,731 |
Financial Highlights
Years ended February 28, | 2012 G | 2011 | 2010 | 2009 | 2008 G |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 102.37 | $ 72.24 | $ 37.12 | $ 66.65 | $ 69.84 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | (.27) | (.37) | (.13) | .15 | (.36) E |
Net realized and unrealized gain (loss) | (.53) | 30.50 | 35.25 | (29.57) | (2.84) |
Total from investment operations | (.80) | 30.13 | 35.12 | (29.42) | (3.20) |
Distributions from net investment income | - | - | - | (.11) | - |
Redemption fees added to paid in capital B | - H | - H | - H | - H | .01 |
Net asset value, end of period | $ 101.57 | $ 102.37 | $ 72.24 | $ 37.12 | $ 66.65 |
Total Return A | (.78)% | 41.71% | 94.61% | (44.15)% | (4.57)% |
Ratios to Average Net Assets C, F |
|
|
|
|
|
Expenses before reductions | .82% | .85% | .92% | .90% | .89% |
Expenses net of fee waivers, if any | .82% | .85% | .92% | .90% | .89% |
Expenses net of all reductions | .81% | .83% | .89% | .89% | .88% E |
Net investment income (loss) | (.29)% | (.44)% | (.21)% | .26% | (.47)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 2,349,926 | $ 2,885,820 | $ 1,994,894 | $ 773,373 | $ 1,549,499 |
Portfolio turnover rate D | 196% | 136% | 127% | 235% | 204% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
B Calculated based on average shares outstanding during the period.
C Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
D Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
E Investment income per share reflects a large, non-recurring dividend which amounted to $.05 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been (.53)%.
F Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund.
G For the year ended February 29.
H Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended February 29, 2012
1. Organization.
Communications Equipment Portfolio, Computers Portfolio, Electronics Portfolio, IT Services Portfolio, Software and Computer Services Portfolio and Technology Portfolio (the Funds) are non-diversified funds of Fidelity Select Portfolios (the Trust). The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Funds invest primarily in securities of companies whose principal business activities fall within specific industries. Each Fund is authorized to issue an unlimited number of shares. Certain Funds' investments in emerging markets can be subject to social, economic, regulatory and political uncertainties and can be extremely volatile.
2. Investments in Fidelity Central Funds.
The Funds invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Funds' Schedules of Investments list each of the Fidelity Central Funds held as of period end, if any, as an investment of each Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, each Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Funds' Report of Independent Registered Public Accounting Firm, are available on the SEC web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Funds:
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. Each Fund uses independent pricing services approved by the Board of Trustees to value their investments. When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include market or security specific events, changes in interest rates and credit quality. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The value used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
Each Fund categorizes the inputs to valuation techniques used to value their investments into a disclosure hierarchy consisting of three levels as shown below:
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the Fund's own assumptions based on the best information available)
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level, as of February 29, 2012, as well as a roll forward of Level 3 securities, is included at the end of each Fund's Schedule of Investments. Valuation techniques used to value each Fund's investments by major category are as follows:
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when significant market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-traded funds (ETFs) and certain indexes as well as quoted prices for similar securities are used and are categorized as Level 2 in the hierarchy in these circumstances. Utilizing these techniques may result in transfers between Level 1 and Level 2. For restricted equity securities and private placements where observable inputs are limited, assumptions about market activity and risk are used and are categorized as Level 3 in the hierarchy.
Debt securities, including restricted securities, are valued based on evaluated prices received from independent pricing services or from dealers who make markets in such securities. For corporate bonds, pricing services utilize matrix pricing which considers yield or price of bonds of comparable
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Security Valuation - continued
quality, coupon, maturity and type as well as dealer supplied prices and are generally categorized as Level 2 in the hierarchy. When independent prices are unavailable or unreliable, debt securities may be valued utilizing pricing matrices which consider similar factors that would be used by independent pricing services. These are generally categorized as Level 2 in the hierarchy but may be Level 3 depending on the circumstances.
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 in the hierarchy.
New Accounting Pronouncements. In May 2011, the Financial Accounting Standards Board issued Accounting Standard Update No. 2011-04, Fair Value Measurement (Topic 820) - Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. The update is effective during interim and annual periods beginning after December 15, 2011 and will result in additional disclosure for transfers between levels as well as expanded disclosure for securities categorized as Level 3 under the fair value hierarchy.
In December 2011, the Financial Accounting Standards Board issued Accounting Standard Update No. 2011-11, Disclosures about Offsetting Assets and Liabilities. The update creates new disclosure requirements requiring entities to disclose both gross and net information for derivatives and other financial instruments that are either offset in the Statement of Assets and Liabilities or subject to an enforceable master netting arrangement or similar agreement. The disclosure requirements are effective for interim and annual reporting periods beginning on or after January 1, 2013. Management is currently evaluating the impact of the update's adoption on the Funds' financial statement disclosures.
Foreign Currency. The Funds may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Funds' investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Funds are informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Funds estimate the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Deferred Trustee Compensation. Under a Deferred Compensation Plan (the Plan) for Electronics Portfolio, independent Trustees may elect to defer receipt of a portion of their annual compensation. Deferred amounts are invested in a cross-section of Fidelity funds, are marked-to-market and remain in the Fund until distributed in accordance with the Plan. The investment of deferred amounts and the offsetting payable to the Trustees are included in the accompanying Statement of Assets and Liabilities.
Income Tax Information and Distributions to Shareholders. Each year, each Fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for income taxes is required. As of February 29, 2012, each Fund did not have any unrecognized tax benefits in the financial statements; nor is each Fund aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. Each Fund files a U.S. federal tax return, in addition to state and local tax returns as required. A fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be
Annual Report
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
subject to examination for an additional fiscal year depending on the jurisdiction. Foreign taxes are provided for based on each Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are declared and recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. IT Services Portfolio and Software and Computer Services Portfolio claimed a portion of the payment made to redeeming shareholders as a distribution for income tax purposes.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, deferred trustees compensation, net operating losses, certain foreign taxes, market discount, capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows for each Fund:
| Tax cost | Gross unrealized | Gross unrealized | Net unrealized |
Communications Equipment Portfolio | $ 336,003,292 | $ 32,943,531 | $ (18,911,940) | $ 14,031,591 |
Computers Portfolio | 665,429,654 | 136,432,687 | (45,673,235) | 90,759,452 |
Electronics Portfolio | 1,462,481,448 | 72,936,089 | (157,734,234) | (84,798,145) |
IT Services Portfolio | 218,620,290 | 46,730,748 | (9,996,805) | 36,733,943 |
Software and Computer Services Portfolio | 1,427,051,565 | 281,254,282 | (34,486,882) | 246,767,400 |
Technology Portfolio | 2,057,392,633 | 419,962,677 | (67,293,550) | 352,669,127 |
The tax-based components of distributable earnings as of period end were as follows for each Fund:
| Undistributed | Undistributed | Capital loss | Net unrealized |
Communications Equipment Portfolio | $ 49,286 | $ - | $ (14,598,570) | $ 14,031,591 |
Computers Portfolio | - | - | (6,925,599) | 90,715,246 |
Electronics Portfolio | - | - | (238,200,290) | (84,798,145) |
IT Services Portfolio | - | 4,144,967 | - | 36,732,339 |
Software and Computer Services Portfolio | 30,377,143 | 60,272,465 | - | 246,683,907 |
Technology Portfolio | - | - | (112,893,934) | 352,626,556 |
Capital loss carryforwards are only available to offset future capital gains of the Funds to the extent provided by regulations and may be limited. Under the Regulated Investment Company Modernization Act of 2010 (the Act), the Funds are permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period and such capital losses are required to be used prior to any losses that expire. Capital loss carryforwards were as follows:
| Fiscal Year of Expiration | Total with | ||
| 2016 | 2017 | 2018 | expiration |
Communications Equipment Portfolio | $ (5,227,176) | $ (9,371,394) | $ - | $ (14,598,570) |
Computers Portfolio | - | (6,925,599) | - | (6,925,599) |
Electronics Portfolio | - | (167,121,160) | (71,079,130) | (238,200,290) |
Technology Portfolio | - | (57,701,411) | (55,192,523) | (112,893,934) |
In addition, certain of the Funds intend to elect to defer to the fiscal year ending February 28, 2013 capital losses recognized during the period November 1, 2011 to February 29, 2012. Loss deferrals were as follows:
| Capital losses |
Communications Equipment Portfolio | $ (43,652,088) |
Computers Portfolio | (26,458,867) |
Technology Portfolio | (80,616,595) |
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The tax character of distributions paid was as follows:
February 29, 2012 | Ordinary | Long-term | Total |
Communications Equipment Portfolio | $ 390,659 | $ - | $ 390,659 |
Electronics Portfolio | 1,262,911 | - | 1,262,911 |
IT Services Portfolio | - | 1,972,671 | 1,972,671 |
Software and Computer Services Portfolio | 73,659,823 | 107,524,841 | 181,184,664 |
February 28, 2011 |
|
|
|
Electronics Portfolio | 2,841,742 | - | 2,841,742 |
Software and Computer Services Portfolio | - | 37,331,222 | 37,331,222 |
Trading (Redemption) Fees. Shares held by investors in the Funds less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Funds and accounted for as an addition to paid in capital.
4. Operating Policies.
Restricted Securities. The Funds may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities is included at the end of each applicable Fund's Schedule of Investments.
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, are noted in the table below.
| Purchases ($) | Sales ($) |
Communications Equipment Portfolio | 368,481,186 | 520,958,363 |
Computers Portfolio | 1,135,536,828 | 1,083,029,912 |
Electronics Portfolio | 1,547,118,358 | 1,652,066,016 |
IT Services Portfolio | 369,593,666 | 271,444,478 |
Software and Computer Services Portfolio | 3,206,966,260 | 3,071,989,630 |
Technology Portfolio | 4,590,430,179 | 5,086,509,879 |
6. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the Funds with investment management related services for which the Funds pay a monthly management fee. The management fee is the sum of an individual fund fee rate and an annualized group fee rate. The individual fund fee rate is applied to each Fund's average net assets. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, each Fund's annual management fee rate expressed as a percentage of each Fund's average net assets was as follows:
| Individual Rate | Group Rate | Total |
Communications Equipment Portfolio | .30% | .26% | .56% |
Computers Portfolio | .30% | .26% | .56% |
Electronics Portfolio | .30% | .26% | .56% |
IT Services Portfolio | .30% | .26% | .56% |
Software and Computer Services Portfolio | .30% | .26% | .56% |
Technology Portfolio | .30% | .26% | .56% |
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the Funds' transfer, dividend disbursing and shareholder servicing agent. FIIOC receives account fees and asset-based fees that vary according to account size and type of account.
Annual Report
6. Fees and Other Transactions with Affiliates - continued
Transfer Agent Fees - continued
FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, transfer agent fees were equivalent to the following annual rates expressed as a percentage of average net assets:
Communications Equipment Portfolio | .27% |
Computers Portfolio | .24% |
Electronics Portfolio | .23% |
IT Services Portfolio | .25% |
Software and Computer Services Portfolio | .21% |
Technology Portfolio | .22% |
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains each Fund's accounting records. The accounting fee is based on the level of average net assets for each month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. Certain Funds placed a portion of their portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were as follows:
| Amount |
Communications Equipment Portfolio | $ 25,919 |
Computers Portfolio | 81,044 |
Electronics Portfolio | 174,324 |
IT Services Portfolio | 15,105 |
Software and Computer Services Portfolio | 148,545 |
Technology Portfolio | 150,249 |
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 Loan | Weighted | Interest |
Communications Equipment Portfolio | Borrower | $ 10,046,944 | .39% | $ 1,981 |
Computers Portfolio | Borrower | 6,755,400 | .38% | 712 |
Electronics Portfolio | Borrower | 7,794,769 | .38% | 1,081 |
IT Services Portfolio | Borrower | 8,852,000 | .36% | 531 |
Software and Computer Services Portfolio | Borrower | 10,696,211 | .38% | 4,238 |
Technology Portfolio | Borrower | 12,259,000 | .40% | 411 |
7. Committed Line of Credit.
Certain Funds participate with other funds managed by FMR or an affiliate in a $4.0 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The participating funds have agreed to pay commitment fees on their pro-rata portion of the line of credit, which are reflected in Miscellaneous expenses on the Statement of Operations, and are as follows:
Communications Equipment Portfolio | $ 1,310 |
Computers Portfolio | 1,650 |
Electronics Portfolio | 3,398 |
IT Services Portfolio | 506 |
Software and Computer Services Portfolio | 3,693 |
Technology Portfolio | 7,403 |
During the period, there were no borrowings on this line of credit.
Annual Report
Notes to Financial Statements - continued
8. Security Lending.
Certain Funds lend portfolio securities through a lending agent from time to time in order to earn additional income. For equity securities, a lending agent is used and may loan securities to certain qualified borrowers, including Fidelity Capital Markets (FCM), a broker-dealer affiliated with the Funds. On the settlement date of the loan, each applicable Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Funds and any additional required collateral is delivered to the Funds on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on each applicable Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented on each applicable Fund's Statement of Operations as a component of income from Fidelity Central Funds. FCM security lending activity as of and during the period was as follows:
| Security Lending | Value of Securities |
Communications Equipment Portfolio | $ 12,412 | $ - |
Computers Portfolio | 907 | - |
IT Services Portfolio | 3,381 | - |
Software and Computer Services Portfolio | 34,470 | 1,721,963 |
Technology Portfolio | 157,558 | 67,648 |
9. Expense Reductions.
Many of the brokers with whom FMR places trades on behalf of certain Funds provided services to these Funds in addition to trade execution. These services included payments of expenses on behalf of each applicable Fund. In addition, through arrangements with each applicable Fund's custodian, credits realized as a result of uninvested cash balances were used to reduce each applicable Fund's expenses. All of the applicable expense reductions are noted in the table below.
| Brokerage | Custody |
Communications Equipment Portfolio | $ 55,718 | $ 39 |
Computers Portfolio | 60,122 | - |
Electronics Portfolio | 90,574 | - |
IT Services Portfolio | 6,031 | - |
Software and Computer Services Portfolio | 111,196 | - |
Technology Portfolio | 462,059 | 153 |
10. Other.
The Funds' organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Funds. In the normal course of business, the Funds may also enter into contracts that provide general indemnifications. The Funds' maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Funds. The risk of material loss from such claims is considered remote.
At the end of the period, Strategic Advisers U.S. Opportunity Fund was the owner of record of approximately 16% and 13% of the total outstanding shares of IT Services Portfolio and Computers Portfolio, respectively. VIP FundsManager 60% Portfolio was the owner of record of approximately 17% and 11% of the total outstanding shares of IT Services and Computers Portfolio, respectively. Mutual funds managed by FMR or its affiliates, were the owners or record, in aggregate, of approximately 44% and 30% of total outstanding shares of IT Services Portfolio and Computer Services Portfolio, respectively.
Annual Report
Report of Independent Registered Public Accounting Firm
To the Trustees of Fidelity Select Portfolios and the Shareholders of Communications Equipment Portfolio, Computers Portfolio, Electronics Portfolio, IT Services Portfolio, Software and Computer Services Portfolio and Technology Portfolio.
In our opinion, the accompanying statements of assets and liabilities, including the schedules of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Communications Equipment Portfolio, Computers Portfolio, Electronics Portfolio, IT Services Portfolio, Software and Computer Services Portfolio and Technology Portfolio (funds of Fidelity Select Portfolios) at February 29, 2012, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fidelity Select Portfolios' management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at February 29, 2012 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
April 16, 2012
Annual Report
Trustees and Officers
The Trustees, Members of the Advisory Board, and executive officers of the trust and funds, as applicable, are listed below. The Board of Trustees governs each fund and is responsible for protecting the interests of shareholders. The Trustees are experienced executives who meet periodically throughout the year to oversee each fund's activities, review contractual arrangements with companies that provide services to each fund, oversee management of the risks associated with such activities and contractual arrangements, and review each fund's performance. Except for James C. Curvey, each of the Trustees oversees 226 funds advised by FMR or an affiliate. Mr. Curvey oversees 430 funds advised by FMR or an affiliate.
The Trustees hold office without limit in time except that (a) any Trustee may resign; (b) any Trustee may be removed by written instrument, signed by at least two-thirds of the number of Trustees prior to such removal; (c) any Trustee who requests to be retired or who has become incapacitated by illness or injury may be retired by written instrument signed by a majority of the other Trustees; and (d) any Trustee may be removed at any special meeting of shareholders by a two-thirds vote of the outstanding voting securities of the trust. Each Trustee who is not an interested person (as defined in the 1940 Act) (Independent Trustee), shall retire not later than the last day of the calendar year in which his or her 75th birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. The executive officers and Advisory Board Members hold office without limit in time, except that any officer and Advisory Board Member may resign or may be removed by a vote of a majority of the Trustees at any regular meeting or any special meeting of the Trustees. Except as indicated, each individual has held the office shown or other offices in the same company for the past five years.
Experience, Skills, Attributes, and Qualifications of the Funds' Trustees. The Governance and Nominating Committee has adopted a statement of policy that describes the experience, qualifications, attributes, and skills that are necessary and desirable for potential Independent Trustee candidates (Statement of Policy). The Board believes that each Trustee satisfied at the time he or she was initially elected or appointed a Trustee, and continues to satisfy, the standards contemplated by the Statement of Policy. The Governance and Nominating Committee also engages professional search firms to help identify potential Independent Trustee candidates who have the experience, qualifications, attributes, and skills consistent with the Statement of Policy. From time to time, additional criteria based on the composition and skills of the current Independent Trustees, as well as experience or skills that may be appropriate in light of future changes to board composition, business conditions, and regulatory or other developments, have also been considered by the professional search firms and the Governance and Nominating Committee. In addition, the Board takes into account the Trustees' commitment and participation in Board and committee meetings, as well as their leadership of standing and ad hoc committees throughout their tenure.
In determining that a particular Trustee was and continues to be qualified to serve as a Trustee, the Board has considered a variety of criteria, none of which, in isolation, was controlling. The Board believes that, collectively, the Trustees have balanced and diverse experience, qualifications, attributes, and skills, which allow the Board to operate effectively in governing each fund and protecting the interests of shareholders. Information about the specific experience, skills, attributes, and qualifications of each Trustee, which in each case led to the Board's conclusion that the Trustee should serve (or continue to serve) as a trustee of the funds, is provided below.
Board Structure and Oversight Function. James C. Curvey is an interested person (as defined in the 1940 Act) and currently serves as Acting Chairman. The Trustees have determined that an interested Chairman is appropriate and benefits shareholders because an interested Chairman has a personal and professional stake in the quality and continuity of services provided to the funds. Independent Trustees exercise their informed business judgment to appoint an individual of their choosing to serve as Chairman, regardless of whether the Trustee happens to be independent or a member of management. The Independent Trustees have determined that they can act independently and effectively without having an Independent Trustee serve as Chairman and that a key structural component for assuring that they are in a position to do so is for the Independent Trustees to constitute a substantial majority for the Board. The Independent Trustees also regularly meet in executive session. Ned C. Lautenbach serves as Chairman of the Independent Trustees and as such (i) acts as a liaison between the Independent Trustees and management with respect to matters important to the Independent Trustees and (ii) with management prepares agendas for Board meetings.
Fidelity funds are overseen by different Boards of Trustees. The funds' Board oversees Fidelity's equity and high income funds and another Board oversees Fidelity's investment-grade bond, money market, and asset allocation funds. The asset allocation funds may invest in Fidelity funds overseen by the funds' Board. The use of separate Boards, each with its own committee structure, allows the Trustees of each group of Fidelity funds to focus on the unique issues of the funds they oversee, including common research, investment, and operational issues. On occasion, the separate Boards establish joint committees to address issues of overlapping consequences for the Fidelity funds overseen by each Board.
The Trustees operate using a system of committees to facilitate the timely and efficient consideration of all matters of importance to the Trustees, each fund, and fund shareholders and to facilitate compliance with legal and regulatory requirements and oversight of the funds' activities and associated risks. The Board, acting through its committees, has charged FMR and its affiliates with (i) identifying events or circumstances the occurrence of which could have demonstrably adverse effects on the funds' business and/or reputation; (ii) implementing processes and controls to lessen the possibility that such events or circumstances occur or to mitigate the effects of such events or circumstances if they do occur; and (iii) creating and maintaining a system designed to evaluate continuously business and market conditions in order to facilitate the identification and implementation processes described in (i) and (ii) above. Because the day-to-day operations and activities of the funds are carried out by or through FMR, its affiliates and other service providers, the funds' exposure to risks is mitigated but not eliminated by the processes overseen by the Trustees. While each of the Board's committees has responsibility for overseeing different aspects of the funds' activities, oversight is exercised primarily through the Operations, Audit, and Compliance Committees. In addition, the Independent Trustees have worked with FMR to enhance the Board's oversight of investment and financial risks, legal and regulatory risks, technology risks, and operational risks, including the development of additional risk reporting to the Board. For example, a working group comprised of Independent Trustees and FMR has worked and continues to work to review the Fidelity funds' valuation-related activities, reporting and risk management. Appropriate personnel, including but not limited to the funds' Chief Compliance Officer (CCO), FMR's internal auditor, the independent accountants, the funds' Treasurer and portfolio management personnel, make periodic reports to the Board's committees, as appropriate, including an annual review of FMR's risk management program for the Fidelity funds. The responsibilities of each standing committee, including their oversight responsibilities, are described further under "Standing Committees of the Funds' Trustees."
Annual Report
Trustees and Officers - continued
The fund's Statement of Additional Information (SAI) includes more information about the Trustees. To request a free copy, call Fidelity at 1-800-544-8544.
Interested Trustees*:
Correspondence intended for each Trustee who is an interested person may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupations and Other Relevant Experience+ | |
James C. Curvey (76) | |
| Year of Election or Appointment: 2007 Mr. Curvey is Trustee and Acting Chairman of the Board of Trustees of certain Trusts. Mr. Curvey also serves as Trustee (2007-present) of other investment companies advised by FMR. Mr. Curvey is a Director of Fidelity Investments Money Management, Inc. (2009-present), Director of Fidelity Research & Analysis Co. (2009-present) and Director of FMR and FMR Co., Inc. (2007-present). Mr. Curvey is also Vice Chairman (2007-present) and Director of FMR LLC. In addition, Mr. Curvey serves as an Overseer for the Boston Symphony Orchestra and a member of the Trustees of Villanova University. Previously, Mr. Curvey was the Vice Chairman (2006-2007) and Director (2000-2007) of FMR Corp. |
Ronald P. O'Hanley (55) | |
| Year of Election or Appointment: 2011 Mr. O'Hanley is Director of FMR Co., Inc. (2010-present), Director of Fidelity Investments Money Management, Inc. (2010-present), Director of Fidelity Research & Analysis Company (2010-present), President of Fidelity Asset Management and Corporate Services and a member of Fidelity's Executive Committee (2010-present). Previously, Mr. O'Hanley served as President and Chief Executive Officer of BNY Mellon Asset Management (2007-2010). Mr. O'Hanley also served as Vice Chairman of Bank New York Mellon Corp. and a member of that firm's Executive Committee. Prior to the 2007 merger of The Bank of New York and Mellon Financial Corporation, he was Vice Chairman of Mellon Financial Corporation and President and Chief Executive Officer of Mellon Asset Management. He joined Mellon in February 1997. Mr. O'Hanley currently serves as Chairman of the Boston Public Library Foundation Board of Directors and sits on the Board of Directors of Beth Israel Deaconess Medical Center, the Board of Trustees of the Marine Biological Laboratory and the Advisory Board of the Maxwell School of Citizenship and Public Administration at Syracuse University. Mr. O'Hanley also chairs the Council on Asset Management for the Financial Services Roundtable and is a member of the Board of Directors of Institutional Investor's U.S. Institute. |
* Trustees have been determined to be "Interested Trustees" by virtue of, among other things, their affiliation with the trust or various entities under common control with FMR.
+ The information above includes each Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to each Trustee's qualifications to serve as a Trustee, which led to the conclusion that each Trustee should serve as a Trustee for each fund.
Independent Trustees:
Correspondence intended for each Independent Trustee (that is, the Trustees other than the Interested Trustees) may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235.
Name, Age; Principal Occupations and Other Relevant Experience+ | |
Dennis J. Dirks (63) | |
| Year of Election or Appointment: 2005 Prior to his retirement in May 2003, Mr. Dirks was Chief Operating Officer and a member of the Board of The Depository Trust & Clearing Corporation (DTCC). He also served as President, Chief Operating Officer, and Board member of The Depository Trust Company (DTC) and President and Board member of the National Securities Clearing Corporation (NSCC). In addition, Mr. Dirks served as Chief Executive Officer and Board member of the Government Securities Clearing Corporation, Chief Executive Officer and Board member of the Mortgage-Backed Securities Clearing Corporation, as a Trustee and a member of the Finance Committee of Manhattan College (2005-2008), and as a Trustee and a member of the Finance Committee of AHRC of Nassau County (2006-2008). Mr. Dirks is a member of the Independent Directors Council (IDC) Governing Council (2010-present) and Board of Directors for The Brookville Center for Children's Services, Inc. (2009-present). |
Alan J. Lacy (58) | |
| Year of Election or Appointment: 2008 Mr. Lacy serves as Senior Adviser (2007-present) of Oak Hill Capital Partners, L.P. (private equity). Mr. Lacy also served as Chief Executive Officer (2000-2005) and Vice Chairman (2005-2006) of Sears Holdings Corporation and Sears, Roebuck and Co. (retail). In addition, Mr. Lacy serves as a member of the Board of Directors of Dave & Buster's, Inc. (restaurant and entertainment complexes, 2010-present), The Hillman Companies, Inc. (hardware wholesalers, 2010-present), and Bristol-Myers Squibb Company (global pharmaceuticals, 2007-present). Mr. Lacy is a member of the Board of Trustees of The National Parks Conservation Association (2006-present). Previously, Mr. Lacy served as Chairman of the Board of Trustees of the National Parks Conservation Association (2008-2011) and as a member of the Board of Directors for the Western Union Company (global money transfer, 2006-2011). |
Ned C. Lautenbach (68) | |
| Year of Election or Appointment: 2000 Mr. Lautenbach is Chairman of the Independent Trustees of the Equity and High Income Funds (2006-present). Mr. Lautenbach currently serves as the Lead Director of the Eaton Corporation Board of Directors (diversified industrial, 1997-present). Mr. Lautenbach is also a member of the Board of Directors of the Philharmonic Center for the Arts in Naples, Florida (1999-present); a member of the Board of Trustees of Fairfield University (2005-present); and a member of the Council on Foreign Relations (1994-present). Previously, Mr. Lautenbach was a Partner/Advisory Partner at Clayton, Dubilier & Rice, LLC (private equity investment, 1998-2010), as well as a Director of Sony Corporation (2006-2007). |
Joseph Mauriello (67) | |
| Year of Election or Appointment: 2008 Prior to his retirement in January 2006, Mr. Mauriello served in numerous senior management positions including Deputy Chairman and Chief Operating Officer (2004-2005), and Vice Chairman of Financial Services (2002-2004) of KPMG LLP US (professional services, 1965-2005). Mr. Mauriello currently serves as a member of the Board of Directors of XL Group plc. (global insurance and re-insurance, 2006-present) and of Arcadia Resources Inc. (health care services and products, 2007-present). Previously, Mr. Mauriello served as a Director of the Hamilton Funds of the Bank of New York (2006-2007). |
Robert W. Selander (61) | |
| Year of Election or Appointment: 2011 Previously, Mr. Selander served as a Member of the Advisory Board of Fidelity's Equity and High Income Funds (2011), Executive Vice Chairman (2010), Chief Executive Officer (2009-2010), and President and Chief Executive Officer (1997-2009) of Mastercard, Inc. |
Cornelia M. Small (67) | |
| Year of Election or Appointment: 2005 Ms. Small is a member of the Board of Directors of the Teagle Foundation (2009-present). Ms. Small is also a member of the Investment Committee, and Chair (2008-present) and a member of the Board of Trustees of Smith College. In addition, Ms. Small serves on the Investment Committee of the Berkshire Taconic Community Foundation (2008-present). Previously, Ms. Small served as Chairperson of the Investment Committee (2002-2008) of Smith College. In addition, Ms. Small served as Chief Investment Officer, Director of Global Equity Investments, and a member of the Board of Directors of Scudder, Stevens & Clark and Scudder Kemper Investments. |
William S. Stavropoulos (72) | |
| Year of Election or Appointment: 2001 Mr. Stavropoulos is Vice Chairman of the Independent Trustees of the Equity and High Income Funds (2006-present). Mr. Stavropoulos serves as President and Founder of the Michigan Baseball Foundation, the Great Lakes Loons (2007-present). Mr. Stavropoulos is Chairman Emeritus of the Board of Directors of The Dow Chemical Company, where he previously served in numerous senior management positions, including President, CEO (1995-2000; 2002-2004), Chairman of the Executive Committee (2000-2006), and as a member of the Board of Directors (1990-2006). Currently, Mr. Stavropoulos is Chairman of Univar (global distributor of commodity and specialty chemicals, 2010-present), a Director of Teradata Corporation (data warehousing and technology solutions, 2008-present), Chemical Financial Corporation, Maersk Inc. (industrial conglomerate), Tyco International, Inc. (multinational manufacturing and services, 2007-present), and a member of the Advisory Board for Metalmark Capital (private equity investment, 2005-present). Mr. Stavropoulos is a special advisor to Clayton, Dubilier & Rice, LLC (private equity investment). In addition, Mr. Stavropoulos is a member of the University of Notre Dame Advisory Council for the College of Science. |
David M. Thomas (62) | |
| Year of Election or Appointment: 2008 Previously, Mr. Thomas served as Executive Chairman (2005-2006) and Chairman and Chief Executive Officer (2000-2005) of IMS Health, Inc. (pharmaceutical and healthcare information solutions). In addition, Mr. Thomas serves as a member of the Board of Directors of Fortune Brands, Inc. (consumer products), and Interpublic Group of Companies, Inc. (marketing communication, 2004-present). |
Michael E. Wiley (61) | |
| Year of Election or Appointment: 2008 Mr. Wiley also serves as a Director of Asia Pacific Exploration Consolidated (international oil and gas exploration and production, 2008-present). Mr. Wiley serves as a Director of Tesoro Corporation (independent oil refiner and marketer, 2005-present), and a Director of Bill Barrett Corporation (exploration and production, 2005-present). In addition, Mr. Wiley also serves as a Director of Post Oak Bank (privately-held bank, 2004-present). Previously, Mr. Wiley served as a member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-2010), as a Senior Energy Advisor of Katzenbach Partners, LLC (consulting, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production, 2001-2005). |
+ The information above includes each Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to each Trustee's qualifications to serve as a Trustee, which led to the conclusion that each Trustee should serve as a Trustee for each fund.
Advisory Board Members and Executive Officers:
Correspondence intended for each executive officer, Edward C. Johnson 3d, and Peter S. Lynch may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
Edward C. Johnson 3d (81) | |
| Year of Election or Appointment: 2011 Member of the Advisory Board of Fidelity's Equity and High Income Funds. Mr. Johnson serves as Chief Executive Officer, Chairman, and a Director of FMR LLC, and also serves as Chairman and Director of FIL Limited. Previously, Mr. Johnson served as a Trustee and Chairman of the Board of certain Fidelity Trusts, Chairman and a Director of FMR, Chairman and a Director of FMR Co., Inc., and President of FMR LLC (2006-2007). |
Peter S. Lynch (68) | |
| Year of Election or Appointment: 2003 Member of the Advisory Board of Fidelity's Equity and High Income Funds. Mr. Lynch is Vice Chairman and a Director of FMR and FMR Co., Inc. In addition, Mr. Lynch serves as a Trustee of Boston College and as the Chairman of the Inner-City Scholarship Fund. Previously, Mr. Lynch served on the Special Olympics International Board of Directors (1997-2006). |
Kenneth B. Robins (42) | |
| Year of Election or Appointment: 2008 President and Treasurer of Fidelity's Equity and High Income Funds. Mr. Robins also serves as President and Treasurer (2010-present) and Assistant Treasurer (2009-present) of other Fidelity funds and is an employee of Fidelity Investments (2004-present). Previously, Mr. Robins served as Deputy Treasurer of the Fidelity funds (2005-2008) and Treasurer and Chief Financial Officer of The North Carolina Capital Management Trust: Cash and Term Portfolios (2006-2008). |
Brian B. Hogan (47) | |
| Year of Election or Appointment: 2009 Vice President of Equity and High Income Funds. Mr. Hogan also serves as President of FMR's Equity Division (2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager. |
Christopher S. Bartel (40) | |
| Year of Election or Appointment: 2009 Vice President of Fidelity's Sector and Real Estate Equity Funds. Mr. Bartel also serves as a Director, President, and Chief Executive Officer of Fidelity Management & Research (Japan) Inc. (2012-present), and Senior Vice President of Global Equity Research (2010-present). Previously, Mr. Bartel served as Senior Vice President of Equity Research (2009-2010), Managing Director of Research (2006-2009), and an analyst and portfolio manager (2000-2006). |
Scott C. Goebel (44) | |
| Year of Election or Appointment: 2008 Secretary and Chief Legal Officer (CLO) of the Fidelity funds. Mr. Goebel also serves as Secretary of Fidelity Investments Money Management, Inc. (FIMM) (2010-present) and Fidelity Research and Analysis Company (FRAC) (2010-present); Secretary and CLO of The North Carolina Capital Management Trust: Cash and Term Portfolios (2008-present); General Counsel, Secretary, and Senior Vice President of FMR (2008-present) and FMR Co., Inc. (2008-present); employed by FMR LLC or an affiliate (2001-present); Chief Legal Officer of Fidelity Management & Research (Hong Kong) Limited (2008-present) and Assistant Secretary of Fidelity Management & Research (Japan) Inc. (2008-present), and Fidelity Management & Research (U.K.) Inc. (2008-present). Previously, Mr. Goebel served as Assistant Secretary of FIMM (2008-2010), FRAC (2008-2010), and the Funds (2007-2008) and as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (2005-2007). |
William C. Coffey (43) | |
| Year of Election or Appointment: 2009 Assistant Secretary of Fidelity's Equity and High Income Funds. Mr. Coffey also serves as Senior Vice President and Deputy General Counsel of FMR LLC (2010-present), and is an employee of Fidelity Investments. Previously, Mr. Coffey served as Vice President and Associate General Counsel of FMR LLC (2005-2009). |
Holly C. Laurent (57) | |
| Year of Election or Appointment: 2008 Anti-Money Laundering (AML) Officer of the Fidelity funds. Ms. Laurent also serves as AML Officer of The North Carolina Capital Management Trust: Cash and Term Portfolios (2008-present) and is an employee of Fidelity Investments. Previously, Ms. Laurent was Senior Vice President and Head of Legal for Fidelity Business Services India Pvt. Ltd. (2006-2008), and Senior Vice President, Deputy General Counsel and Group Head for FMR LLC (2005-2006). |
Christine Reynolds (53) | |
| Year of Election or Appointment: 2008 Chief Financial Officer of the Fidelity funds. Ms. Reynolds became President of Fidelity Pricing and Cash Management Services (FPCMS) in August 2008. Ms. Reynolds served as Chief Operating Officer of FPCMS (2007-2008). Previously, Ms. Reynolds served as President, Treasurer, and Anti-Money Laundering officer of the Fidelity funds (2004-2007). |
Joseph A. Hanlon (43) | |
| Year of Election or Appointment: 2012 Chief Compliance Officer of Fidelity's Equity and High Income Funds. Mr. Hanlon serves as Senior Vice President of the Fidelity Asset Management Division (2009-present) and is an employee of Fidelity Investments. |
Joseph F. Zambello (54) | |
| Year of Election or Appointment: 2011 Deputy Treasurer of the Fidelity funds. Mr. Zambello is an employee of Fidelity Investments. Previously, Mr. Zambello served as Vice President of FMR's Program Management Group (2009-2011) and Vice President of the Transfer Agent Oversight Group (2005-2009). |
Adrien E. Deberghes (44) | |
| Year of Election or Appointment: 2008 Deputy Treasurer of Fidelity's Equity and High Income Funds. Mr. Deberghes also serves as Vice President (2011-present) and Assistant Treasurer (2010-present) of other Fidelity funds, and is an employee of Fidelity Investments (2008-present). Previously, Mr. Deberghes served as Senior Vice President of Mutual Fund Administration at State Street Corporation (2007-2008), Senior Director of Mutual Fund Administration at Investors Bank & Trust (2005-2007), and Director of Finance for Dunkin' Brands (2000-2005). |
Stephanie J. Dorsey (42) | |
| Year of Election or Appointment: 2010 Assistant Treasurer of Fidelity's Equity and High Income Funds. Ms. Dorsey also serves as Deputy Treasurer of other Fidelity funds (2008-present) and is an employee of Fidelity Investments (2008-present). Previously, Ms. Dorsey served as Treasurer (2004-2008) of the JPMorgan Mutual Funds and Vice President (2004-2008) of JPMorgan Chase Bank. |
John R. Hebble (53) | |
| Year of Election or Appointment: 2009 Assistant Treasurer of Fidelity's Equity and High Income Funds. Mr. Hebble also serves as President (2011-present), Treasurer, and Chief Financial Officer of The North Carolina Capital Management Trust: Cash and Term Portfolios (2008-present), President and Treasurer of other Fidelity funds (2008-present) and is an employee of Fidelity Investments. |
Gary W. Ryan (53) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of the Fidelity funds. Mr. Ryan is an employee of Fidelity Investments. Previously, Mr. Ryan served as Vice President of Fund Reporting in Fidelity Pricing and Cash Management Services (FPCMS) (1999-2005). |
Jonathan Davis (43) | |
| Year of Election or Appointment: 2010 Assistant Treasurer of the Fidelity funds. Mr. Davis is also Assistant Treasurer of Fidelity Rutland Square Trust II and Fidelity Commonwealth Trust II. Mr. Davis is an employee of Fidelity Investments. Previously, Mr. Davis served as Vice President and Associate General Counsel of FMR LLC (2003-2010). |
Annual Report
Distributions (Unaudited)
The Board of Trustees of each fund voted to pay to shareholders of record at the opening of business on record date the following distributions per share derived from capital gains realized from sales of portfolio securities and dividends derived from net investment income:
| Pay Date | Record Date | Dividends | Capital Gains |
Communications Equipment Portfolio | 04/16/12 | 04/13/12 | $0.005 | $0.000 |
Computers Portfolio | 04/16/12 | 04/13/12 | $0.000 | $0.000 |
Electronics Portfolio | 04/16/12 | 04/13/12 | $0.000 | $0.000 |
IT Services Portfolio | 04/16/12 | 04/13/12 | $0.000 | $0.299 |
Software and Computer Services Portfolio | 04/16/12 | 04/13/12 | $0.000 | $4.630 |
Technology Portfolio | 04/16/12 | 04/13/12 | $0.000 | $0.000 |
The funds hereby designate as capital gain dividend the amounts noted below for the taxable year ended February 29, 2012, or, if subsequently determined to be different, the net capital gain of such year.
IT Services Portfolio | $4,577,600 |
Software and Computer Services Portfolio | $141,332,575 |
A percentage of the dividends distributed during the fiscal year for the following funds qualify for the dividends-received deduction for corporate shareholders:
| April 2011 | December 2011 |
Communications Equipment Portfolio | 0% | 100% |
Electronics Portfolio | 100% | 100% |
Software and Computer Services Portfolio | 11% | 31% |
A percentage of the dividends distributed during the fiscal year for the following funds may be taken into account as a dividend for purposes of the maximum rate under section 1(h) (11) of the Internal Revenue Code:
| April 2011 | December 2011 |
Communications Equipment Portfolio | 0% | 100% |
Electronics Portfolio | 100% | 100% |
Software and Computer Services Portfolio | 12% | 35% |
The funds will notify shareholders in January 2013 of amounts for use in preparing 2012 income tax returns.
Annual Report
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
FMR Co., Inc.
Fidelity Management & Research (U.K.) Inc.
Fidelity Management & Research (Hong Kong) Limited
Fidelity Management & Research (Japan) Inc.
General Distributor
Fidelity Distributors Corporation
Boston, MA
Transfer and Service Agents
Fidelity Investments Institutional Operations Company, Inc.
Boston, MA
Fidelity Service Company, Inc.
Boston, MA
Custodian
Brown Brothers Harriman & Co.
Boston, MA
Corporate Headquarters
82 Devonshire Street
Boston, MA 02109
1-800-544-8888
The Fidelity Telephone Connection
Mutual Fund 24-Hour Service
Exchanges/Redemptions
and Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774
(8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
Fidelity Automated Service
Telephone (FAST®)
1-800-544-5555
Automated line for quickest service
SELTEC-UANNPRO-0412
1.910423.102
Fidelity®
Select Portfolios®
Telecommunications Services Sector
Telecommunications Portfolio
Wireless Portfolio
Annual Report
February 29, 2012
(Fidelity Cover Art)
Contents
Telecommunications Portfolio | Performance | |
| Management's Discussion | |
| Shareholder Expense Example | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
| Notes to the Financial Statements | |
Wireless Portfolio | Performance | |
| Management's Discussion | |
| Shareholder Expense Example | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
| Notes to the Financial Statements | |
Report of Independent Registered Public Accounting Firm |
| |
Trustees and Officers |
| |
Distributions |
|
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com/proxyvotingresults or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov. You may also call 1-800-544-8544 to request a free copy of the proxy voting guidelines.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company.
This report and the financial statements contained herein are submitted for the general information of the shareholders of the funds. This report is not authorized for distribution to prospective investors in the funds unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com, http://www.advisor.fidelity.com, or http://www.401k.com, as applicable.
NOT FDIC INSURED • MAY LOSE VALUE • NO BANK GUARANTEE
Neither the funds nor Fidelity Distributors Corporation is a bank.
Annual Report
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total returns will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 29, 2012 | Past 1 | Past 5 | Past 10 |
Telecommunications Portfolio | -0.23% | -0.40% | 5.41% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Telecommunications Portfolio on February 28, 2002. The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period.
Annual Report
Telecommunications Portfolio
Management's Discussion of Fund Performance
Market Recap: U.S. stocks rose for the 12 months ending February 29, 2012, as encouraging economic news sparked a strong late-period rally that lifted major equity benchmarks past a number of significant milestones. Stocks recovered from early-period uncertainty that followed the March 2011 earthquake, tsunami and nuclear meltdown in Japan, but plummeted during the summer amid Europe's debt woes and a historic U.S. credit-rating downgrade. Despite continued volatility and mixed economic news, markets began to recover in early October. Investors gravitated toward defensive sectors and the perceived safety of larger, more-established and dividend-paying names, helping the Dow Jones® Industrial Average advance 8.83%, and close above the psychologically important 13,000 mark in late February - for the first time since May 2008. The rally accelerated late in the period and the market broadened, as investor confidence improved amid encouraging manufacturing, housing and employment data, and signs of progress in Europe. For the year, the S&P 500® Index added 5.12%, closing near a four-year high on the period's second-to-last day. Of the 10 major market sectors in the S&P 500®, three defensive areas led the way - consumer staples, health care and utilities - while financials, materials and energy finished in negative territory. The technology-laden Nasdaq Composite® Index added 7.73%, flirting with the 3,000 mark, its highest level in 12 years. Foreign developed-markets stocks reeled over Europe's turmoil, and the MSCI® EAFE® (Europe, Australasia, Far East) Index fell 7.35%.
Comments from Kristina Salen, Portfolio Manager of Telecommunications Portfolio: For the one-year period ending February 29, 2012, the fund's Retail Class shares returned -0.23%, trailing the 0.12% result of the MSCI® U.S. IM Telecommunications Services 25/50 Index and the broad-based S&P 500®. Versus the MSCI index, the fund was hurt the most by large underweightings in telecom giants Verizon Communications and AT&T, which together comprised about 46% of the sector benchmark, on average. Generally speaking, when the market experiences volatility such as we saw in the middle third of the period, large integrated telecom stocks tend to outperform, bolstered by their more-defensive characteristics. Elsewhere, general concern about the broader Chinese stock market, alleged fraud at Chinese information technology services company Longtop Financial Technologies and rising wage costs hurt many stocks in that country, including AsiaInfo-Linkage, an out-of-benchmark holding I ultimately sold from the fund. The firm provides telecom software solutions and tech products and services. Cable provider NII Holdings faced a number of challenges in the third quarter, along with adverse currency exposure to emerging markets. Despite the drop, I remained optimistic about the stock and continued to hold it at period end. An overweighted position in Cbeyond, an integrated telecom services provider, hampered relative results. I owned the stock because I thought the company likely would be a takeout target, which didn't pan out during the period. A modest cash position also curbed relative results. On the flip side, avoiding Alaska Communications Systems Group, a regional integrated telecom firm in the index, was the biggest relative contributor, as the company missed earnings estimates for much of the year. Additionally, stocks of companies with exposure to the state are often influenced by oil prices, which were volatile during the period. Instead of holding a position in Alaska Communications, the fund owned shares of its primary competitor, General Communications, which I bought in July because of its exposure to the faster-growing cable industry. Favorable positioning in prepaid wireless provider Leap Wireless International helped given the stock's volatility. The company's services predominately appeal to more-price-sensitive consumers, and its stock is often among the first to be affected by macroeconomic concerns. A scant stake in Frontier Communications was another good call. Shares of the integrated telecom firm declined steadily, as the company struggled to integrate an acquisition and missed earnings and revenue estimates during the period.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Telecommunications Portfolio
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments or redemption proceeds, redemption fees, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (September 1, 2011 to February 29, 2012).
Actual Expenses
The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Annualized Expense Ratio | Beginning | Ending | Expenses Paid |
Class A | 1.19% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,019.90 | $ 5.98 |
HypotheticalA |
| $ 1,000.00 | $ 1,018.95 | $ 5.97 |
Class T | 1.49% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,018.60 | $ 7.48 |
HypotheticalA |
| $ 1,000.00 | $ 1,017.45 | $ 7.47 |
Class B | 1.94% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,016.10 | $ 9.72 |
HypotheticalA |
| $ 1,000.00 | $ 1,015.22 | $ 9.72 |
Class C | 1.93% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,016.20 | $ 9.68 |
HypotheticalA |
| $ 1,000.00 | $ 1,015.27 | $ 9.67 |
Telecommunications | .90% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,021.70 | $ 4.52 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.39 | $ 4.52 |
Institutional Class | .94% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,021.00 | $ 4.72 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.19 | $ 4.72 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
Annual Report
Telecommunications Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 29, 2012 | ||
| % of fund's | % of fund's net assets |
AT&T, Inc. | 20.4 | 17.9 |
Verizon Communications, Inc. | 13.4 | 6.7 |
CenturyLink, Inc. | 9.0 | 8.8 |
Crown Castle International Corp. | 6.7 | 6.0 |
SBA Communications Corp. Class A | 4.9 | 3.5 |
tw telecom, inc. | 4.4 | 3.7 |
AboveNet, Inc. | 3.0 | 2.2 |
Level 3 Communications, Inc. | 2.9 | 0.0 |
Sprint Nextel Corp. | 2.8 | 5.2 |
MetroPCS Communications, Inc. | 2.7 | 1.9 |
| 70.2 | |
Top Industries (% of fund's net assets) | |||
As of February 29, 2012 | |||
 | Diversified Telecommunication Services | 64.9% |
|
 | Wireless Telecommunication Services | 28.6% |
|
 | Media | 2.1% |
|
 | Software | 0.0%** |
|
 | Communications Equipment | 0.0% |
|
 | All Others* | 4.4% |
|
As of August 31, 2011 | |||
| Diversified Telecommunication Services | 58.3% |
|
| Wireless Telecommunication Services | 31.8% |
|
| Media | 2.1% |
|
 | Software | 1.6% |
|
| Construction & Engineering | 1.0% |
|
| All Others* | 5.2% |
|
* Includes short-term investments and net other assets. |
**Amount represents less than 0.1%. |
Annual Report
Telecommunications Portfolio
Investments February 29, 2012
Showing Percentage of Net Assets
Common Stocks - 95.6% | |||
Shares | Value | ||
COMMUNICATIONS EQUIPMENT - 0.0% | |||
Communications Equipment - 0.0% | |||
Nortel Networks Corp. (a) | 8,071 | $ 0 | |
DIVERSIFIED TELECOMMUNICATION SERVICES - 64.9% | |||
Alternative Carriers - 12.8% | |||
AboveNet, Inc. (a) | 153,200 | 10,656,592 | |
Cogent Communications Group, Inc. (a) | 291,602 | 5,371,309 | |
Level 3 Communications, Inc. (a) | 421,391 | 10,244,015 | |
tw telecom, inc. (a) | 728,757 | 15,741,151 | |
Vonage Holdings Corp. (a) | 1,419,000 | 3,391,410 | |
| 45,404,477 | ||
Integrated Telecommunication Services - 52.1% | |||
AT&T, Inc. | 2,359,919 | 72,189,921 | |
Cbeyond, Inc. (a) | 354,898 | 2,725,617 | |
CenturyLink, Inc. | 794,984 | 31,998,106 | |
China Telecom Corp. Ltd. sponsored ADR | 36,300 | 2,205,225 | |
China Unicom Ltd. sponsored ADR | 144,200 | 2,573,970 | |
Frontier Communications Corp. (d) | 744,900 | 3,419,091 | |
General Communications, Inc. Class A (a) | 896,300 | 9,491,817 | |
Telefonica Brasil SA sponsored ADR | 134,463 | 3,957,246 | |
Telenor ASA sponsored ADR | 71,600 | 3,957,332 | |
Verizon Communications, Inc. | 1,250,141 | 47,642,874 | |
Windstream Corp. | 382,682 | 4,622,799 | |
| 184,783,998 | ||
TOTAL DIVERSIFIED TELECOMMUNICATION SERVICES | 230,188,475 | ||
MEDIA - 2.1% | |||
Cable & Satellite - 2.1% | |||
Cablevision Systems Corp. - NY Group Class A | 121,000 | 1,721,830 | |
Time Warner Cable, Inc. | 27,600 | 2,189,784 | |
Virgin Media, Inc. | 150,700 | 3,797,640 | |
| 7,709,254 | ||
SOFTWARE - 0.0% | |||
Application Software - 0.0% | |||
Synchronoss Technologies, Inc. (a) | 3 | 100 | |
WIRELESS TELECOMMUNICATION SERVICES - 28.6% | |||
Wireless Telecommunication Services - 28.6% | |||
Clearwire Corp. Class A (a) | 3,658,136 | 8,413,713 | |
| |||
Shares | Value | ||
Crown Castle International Corp. (a) | 461,683 | $ 23,919,796 | |
Leap Wireless International, Inc. (a)(d) | 590,700 | 6,166,908 | |
MetroPCS Communications, Inc. (a) | 926,606 | 9,544,042 | |
Mobile TeleSystems OJSC sponsored ADR | 50,200 | 916,150 | |
NII Holdings, Inc. (a) | 324,800 | 5,807,424 | |
NTELOS Holdings Corp. | 155,106 | 3,606,215 | |
PT Tower Bersama Infrastructure Tbk | 7,824,500 | 2,255,404 | |
SBA Communications Corp. Class A (a) | 367,182 | 17,231,851 | |
Sprint Nextel Corp. (a) | 4,030,650 | 9,955,706 | |
TIM Participacoes SA sponsored ADR | 95,700 | 2,875,785 | |
Turkcell Iletisim Hizmet A/S (a) | 222,000 | 1,215,047 | |
VimpelCom Ltd. sponsored ADR | 349,500 | 4,253,415 | |
Vodafone Group PLC sponsored ADR | 196,100 | 5,312,349 | |
| 101,473,805 | ||
TOTAL COMMON STOCKS (Cost $355,860,852) |
| ||
Money Market Funds - 6.3% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.12% (b) | 12,700,251 | 12,700,251 | |
Fidelity Securities Lending Cash Central Fund, 0.12% (b)(c) | 9,541,675 | 9,541,675 | |
TOTAL MONEY MARKET FUNDS (Cost $22,241,926) |
| ||
TOTAL INVESTMENT PORTFOLIO - 101.9% (Cost $378,102,778) | 361,613,560 | ||
NET OTHER ASSETS (LIABILITIES) - (1.9)% | (6,841,457) | ||
NET ASSETS - 100% | $ 354,772,103 | ||
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 9,375 |
Fidelity Securities Lending Cash Central Fund | 221,785 |
Total | $ 231,160 |
Other Information |
The following is a summary of the inputs used, as of February 29, 2012, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the tables below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities: | ||||
Common Stocks | $ 339,371,634 | $ 338,156,587 | $ 1,215,047 | $ - |
Money Market Funds | 22,241,926 | 22,241,926 | - | - |
Total Investments in Securities: | $ 361,613,560 | $ 360,398,513 | $ 1,215,047 | $ - |
The following is a reconciliation of Investments in Securities for which Level 3 inputs were used in determining value: |
Investments in Securities: | |
Beginning Balance | $ - |
Total Realized Gain (Loss) | (580,722) |
Total Unrealized Gain (Loss) | 580,722 |
Cost of Purchases | - |
Proceeds of Sales | - |
Amortization/Accretion | - |
Transfers in to Level 3 | - |
Transfers out of Level 3 | - |
Ending Balance | $ - |
The change in unrealized gain (loss) for the period attributable to Level 3 securities held at February 29, 2012 | $ - |
The information used in the above reconciliation represents fiscal year to date activity for any Investments in Securities identified as using Level 3 inputs at either the beginning or the end of the current fiscal period. Transfers in or out of Level 3 represent the beginning value of any Security or Instrument where a change in the pricing level occurred from the beginning to the end of the period. The cost of purchases and the proceeds of sales may include securities received or delivered through corporate actions or exchanges. Realized and unrealized gains (losses) disclosed in the reconciliation are included in Net Gain (Loss) on the Fund's Statement of Operations. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Telecommunications Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2012 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $9,238,200) - See accompanying schedule: Unaffiliated issuers (cost $355,860,852) | $ 339,371,634 |
|
Fidelity Central Funds (cost $22,241,926) | 22,241,926 |
|
Total Investments (cost $378,102,778) |
| $ 361,613,560 |
Foreign currency held at value (cost $168,698) | 168,851 | |
Receivable for investments sold | 2,612,162 | |
Receivable for fund shares sold | 2,785,690 | |
Dividends receivable | 48,565 | |
Distributions receivable from Fidelity Central Funds | 3,673 | |
Prepaid expenses | 798 | |
Other receivables | 16,210 | |
Total assets | 367,249,509 | |
|
|
|
Liabilities | ||
Payable for fund shares redeemed | $ 2,651,512 | |
Accrued management fee | 159,954 | |
Distribution and service plan fees payable | 5,460 | |
Other affiliated payables | 82,497 | |
Other payables and accrued expenses | 36,308 | |
Collateral on securities loaned, at value | 9,541,675 | |
Total liabilities | 12,477,406 | |
|
|
|
Net Assets | $ 354,772,103 | |
Net Assets consist of: |
| |
Paid in capital | $ 428,594,875 | |
Undistributed net investment income | 730,417 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (58,062,554) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (16,490,635) | |
Net Assets | $ 354,772,103 | |
Statement of Assets and Liabilities - continued
| February 29, 2012 | |
|
|
|
Calculation of Maximum Offering Price Class A: | $ 46.12 | |
|
|
|
Maximum offering price per share (100/94.25 of $46.12) | $ 48.93 | |
Class T: | $ 46.01 | |
|
|
|
Maximum offering price per share (100/96.50 of $46.01) | $ 47.68 | |
Class B: | $ 46.14 | |
|
|
|
Class C: | $ 46.02 | |
|
|
|
|
|
|
Telecommunications: | $ 46.26 | |
|
|
|
Institutional Class: | $ 46.20 | |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Operations
| Year ended February 29, 2012 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 8,635,002 |
Interest |
| 58 |
Income from Fidelity Central Funds |
| 231,160 |
Total income |
| 8,866,220 |
|
|
|
Expenses | ||
Management fee | $ 2,062,779 | |
Transfer agent fees | 925,458 | |
Distribution and service plan fees | 65,575 | |
Accounting and security lending fees | 148,637 | |
Custodian fees and expenses | 21,421 | |
Independent trustees' compensation | 2,216 | |
Registration fees | 89,139 | |
Audit | 63,168 | |
Legal | 5,454 | |
Interest | 700 | |
Miscellaneous | 3,988 | |
Total expenses before reductions | 3,388,535 | |
Expense reductions | (63,865) | 3,324,670 |
Net investment income (loss) | 5,541,550 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 24,806,335 | |
Foreign currency transactions | (80,492) | |
Total net realized gain (loss) |
| 24,725,843 |
Change in net unrealized appreciation (depreciation) on: Investment securities | (35,725,628) | |
Assets and liabilities in foreign currencies | 383 | |
Total change in net unrealized appreciation (depreciation) |
| (35,725,245) |
Net gain (loss) | (10,999,402) | |
Net increase (decrease) in net assets resulting from operations | $ (5,457,852) | |
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 5,541,550 | $ 5,690,743 |
Net realized gain (loss) | 24,725,843 | 23,994,180 |
Change in net unrealized appreciation (depreciation) | (35,725,245) | 56,972,793 |
Net increase (decrease) in net assets resulting from operations | (5,457,852) | 86,657,716 |
Distributions to shareholders from net investment income | (4,955,219) | (7,366,695) |
Share transactions - net increase (decrease) | (2,457,615) | (685,685) |
Redemption fees | 35,055 | 11,018 |
Total increase (decrease) in net assets | (12,835,631) | 78,616,354 |
|
|
|
Net Assets | ||
Beginning of period | 367,607,734 | 288,991,380 |
End of period (including undistributed net investment income of $730,417 and undistributed net investment income of $260,753, respectively) | $ 354,772,103 | $ 367,607,734 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
Years ended February 28, | 2012 G | 2011 | 2010 | 2009 | 2008 G |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 46.93 | $ 37.64 | $ 26.66 | $ 42.56 | $ 50.89 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .56 | .57 | .67 | .22 | .26 |
Net realized and unrealized gain (loss) | (.86) | 9.49 | 10.55 | (15.60) | (8.08) |
Total from investment operations | (.30) | 10.06 | 11.22 | (15.38) | (7.82) |
Distributions from net investment income | (.51) | (.77) | (.19) | (.35) K | (.51) |
Distributions from net realized gain | - | - | (.05) | (.18) K | - |
Total distributions | (.51) | (.77) | (.24) I | (.52) J | (.51) |
Redemption fees added to paid in capital C,H | - | - | - | - | - |
Net asset value, end of period | $ 46.12 | $ 46.93 | $ 37.64 | $ 26.66 | $ 42.56 |
Total Return A,B | (.54)% | 26.87% | 42.07% | (36.16)% | (15.55)% |
Ratios to Average Net Assets D,F |
|
|
|
|
|
Expenses before reductions | 1.20% | 1.20% | 1.26% | 1.21% | 1.20% |
Expenses net of fee waivers, if any | 1.20% | 1.20% | 1.26% | 1.21% | 1.20% |
Expenses net of all reductions | 1.18% | 1.18% | 1.24% | 1.21% | 1.19% |
Net investment income (loss) | 1.21% | 1.35% | 1.89% | .61% | .49% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 4,677 | $ 4,305 | $ 3,343 | $ 2,112 | $ 2,791 |
Portfolio turnover rate E | 72% | 72% | 90% | 168% | 134% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown. B Total returns do not include the effect of the sales charges. C Calculated based on average shares outstanding during the period. D Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. G For the year ended February 29. H Amount represents less than $.01 per share. I Total distributions of $.24 per share is comprised of distributions from net investment income of $.187 and distributions from net realized gain of $.048 per share. J Total distributions of $.52 per share is comprised of distributions from net investment income of $.347 and distributions from net realized gain of $.175 per share. K The amount shown reflects certain reclassifications related to book to tax differences. |
Financial Highlights - Class T
Years ended February 28, | 2012 G | 2011 | 2010 | 2009 | 2008 G |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 46.81 | $ 37.55 | $ 26.68 | $ 42.49 | $ 50.86 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .42 | .45 | .57 | .12 | .12 |
Net realized and unrealized gain (loss) | (.84) | 9.47 | 10.54 | (15.56) | (8.07) |
Total from investment operations | (.42) | 9.92 | 11.11 | (15.44) | (7.95) |
Distributions from net investment income | (.38) | (.66) | (.22) | (.24) K | (.42) |
Distributions from net realized gain | - | - | (.03) | (.13) K | - |
Total distributions | (.38) | (.66) | (.24) I | (.37) J | (.42) |
Redemption fees added to paid in capital C,H | - | - | - | - | - |
Net asset value, end of period | $ 46.01 | $ 46.81 | $ 37.55 | $ 26.68 | $ 42.49 |
Total Return A,B | (.82)% | 26.54% | 41.64% | (36.34)% | (15.78)% |
Ratios to Average Net Assets D,F |
|
|
|
|
|
Expenses before reductions | 1.49% | 1.48% | 1.55% | 1.49% | 1.46% |
Expenses net of fee waivers, if any | 1.49% | 1.48% | 1.55% | 1.49% | 1.46% |
Expenses net of all reductions | 1.47% | 1.46% | 1.53% | 1.48% | 1.45% |
Net investment income (loss) | .92% | 1.06% | 1.60% | .33% | .23% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 2,702 | $ 2,882 | $ 2,051 | $ 620 | $ 1,270 |
Portfolio turnover rate E | 72% | 72% | 90% | 168% | 134% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown. B Total returns do not include the effect of the sales charges. C Calculated based on average shares outstanding during the period. D Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. G For the year ended February 29. H Amount represents less than $.01 per share. I Total distributions of $.24 per share is comprised of distributions from net investment income of $.216 and distributions from net realized gain of $.028 per share. J Total distributions of $.37 per share is comprised of distributions from net investment income of $.244 and distributions from net realized gain of $.127 per share. K The amount shown reflects certain reclassifications related to book to tax differences. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class B
Years ended February 28, | 2012 G | 2011 | 2010 | 2009 | 2008 G |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 46.93 | $ 37.60 | $ 26.71 | $ 42.42 | $ 50.80 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .21 | .25 | .40 | (.05) | (.14) |
Net realized and unrealized gain (loss) | (.83) | 9.48 | 10.54 | (15.49) | (8.04) |
Total from investment operations | (.62) | 9.73 | 10.94 | (15.54) | (8.18) |
Distributions from net investment income | (.17) | (.40) | (.04) | (.11) K | (.20) |
Distributions from net realized gain | - | - | (.01) | (.06) K | - |
Total distributions | (.17) | (.40) | (.05) I | (.17) J | (.20) |
Redemption fees added to paid in capital C,H | - | - | - | - | - |
Net asset value, end of period | $ 46.14 | $ 46.93 | $ 37.60 | $ 26.71 | $ 42.42 |
Total Return A,B | (1.29)% | 25.96% | 40.97% | (36.64)% | (16.18)% |
Ratios to Average Net Assets D,F |
|
|
|
|
|
Expenses before reductions | 1.95% | 1.95% | 2.01% | 1.97% | 1.95% |
Expenses net of fee waivers, if any | 1.95% | 1.95% | 2.01% | 1.97% | 1.95% |
Expenses net of all reductions | 1.93% | 1.93% | 2.00% | 1.96% | 1.94% |
Net investment income (loss) | .47% | .60% | 1.13% | (.15)% | (.26)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 596 | $ 706 | $ 641 | $ 363 | $ 741 |
Portfolio turnover rate E | 72% | 72% | 90% | 168% | 134% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown. B Total returns do not include the effect of the contingent deferred sales charge. C Calculated based on average shares outstanding during the period. D Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. G For the year ended February 29. H Amount represents less than $.01 per share. I Total distributions of $.05 per share is comprised of distributions from net investment income of $.044 and distributions from net realized gain of $.009 per share. J Total distributions of $.17 per share is comprised of distributions from net investment income of $.105 and distributions from net realized gain of $.063 per share. K The amount shown reflects certain reclassifications related to book to tax differences. |
Financial Highlights - Class C
Years ended February 28, | 2012 G | 2011 | 2010 | 2009 | 2008 G |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 46.89 | $ 37.61 | $ 26.76 | $ 42.42 | $ 50.81 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .22 | .26 | .41 | (.05) | (.14) |
Net realized and unrealized gain (loss) | (.84) | 9.46 | 10.56 | (15.50) | (8.03) |
Total from investment operations | (.62) | 9.72 | 10.97 | (15.55) | (8.17) |
Distributions from net investment income | (.25) | (.44) | (.10) | (.07) K | (.22) |
Distributions from net realized gain | - | - | (.02) | (.05) K | - |
Total distributions | (.25) | (.44) | (.12) I | (.11) J | (.22) |
Redemption fees added to paid in capital C,H | - | - | - | - | - |
Net asset value, end of period | $ 46.02 | $ 46.89 | $ 37.61 | $ 26.76 | $ 42.42 |
Total Return A,B | (1.27)% | 25.95% | 41.00% | (36.64)% | (16.17)% |
Ratios to Average Net Assets D,F |
|
|
|
|
|
Expenses before reductions | 1.93% | 1.94% | 2.01% | 1.97% | 1.95% |
Expenses net of fee waivers, if any | 1.93% | 1.94% | 2.01% | 1.97% | 1.95% |
Expenses net of all reductions | 1.91% | 1.92% | 2.00% | 1.96% | 1.94% |
Net investment income (loss) | .48% | .61% | 1.13% | (.14)% | (.26)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 3,514 | $ 3,035 | $ 2,151 | $ 371 | $ 902 |
Portfolio turnover rate E | 72% | 72% | 90% | 168% | 134% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown. B Total returns do not include the effect of the contingent deferred sales charge. C Calculated based on average shares outstanding during the period. D Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. G For the year ended February 29. H Amount represents less than $.01 per share. I Total distributions of $.12 per share is comprised of distributions from net investment income of $.098 and distributions from net realized gain of $.023 per share. J Total distributions of $.11 per share is comprised of distributions from net investment income of $.068 and distributions from net realized gain of $.046 per share. K The amount shown reflects certain reclassifications related to book to tax differences. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Telecommunications
Years ended February 28, | 2012 F | 2011 | 2010 | 2009 | 2008 F |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 47.07 | $ 37.73 | $ 26.74 | $ 42.70 | $ 50.91 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | .70 | .69 | .76 | .30 | .43 |
Net realized and unrealized gain (loss) | (.86) | 9.52 | 10.59 | (15.65) | (8.12) |
Total from investment operations | (.16) | 10.21 | 11.35 | (15.35) | (7.69) |
Distributions from net investment income | (.65) | (.87) | (.31) | (.41) J | (.52) |
Distributions from net realized gain | - | - | (.05) | (.20) J | - |
Total distributions | (.65) | (.87) | (.36) H | (.61) I | (.52) |
Redemption fees added to paid in capital B,G | - | - | - | - | - |
Net asset value, end of period | $ 46.26 | $ 47.07 | $ 37.73 | $ 26.74 | $ 42.70 |
Total Return A | (.23)% | 27.24% | 42.43% | (36.00)% | (15.30)% |
Ratios to Average Net Assets C,E |
|
|
|
|
|
Expenses before reductions | .90% | .92% | .99% | .97% | .91% |
Expenses net of fee waivers, if any | .90% | .92% | .99% | .97% | .90% |
Expenses net of all reductions | .88% | .91% | .98% | .96% | .90% |
Net investment income (loss) | 1.52% | 1.62% | 2.15% | .85% | .79% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 342,262 | $ 354,938 | $ 279,704 | $ 196,231 | $ 334,565 |
Portfolio turnover rate D | 72% | 72% | 90% | 168% | 134% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown. B Calculated based on average shares outstanding during the period. C Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. D Amount does not include the portfolio activity of any underlying Fidelity Central Funds. E Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. F For the year ended February 29. G Amount represents less than $.01 per share. H Total distributions of $.36 per share is comprised of distributions from net investment income of $.310 and distributions from net realized gain of $.048 per share. I Total distributions of $.61 per share is comprised of distributions from net investment income of $.408 and distributions from net realized gain of $.202 per share. J The amount shown reflects certain reclassifications related to book to tax differences. |
Financial Highlights - Institutional Class
Years ended February 28, | 2012 F | 2011 | 2010 | 2009 | 2008 F |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 47.02 | $ 37.69 | $ 26.73 | $ 42.65 | $ 50.91 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | .70 | .71 | .84 | .34 | .45 |
Net realized and unrealized gain (loss) | (.88) | 9.50 | 10.55 | (15.67) | (8.09) |
Total from investment operations | (.18) | 10.21 | 11.39 | (15.33) | (7.64) |
Distributions from net investment income | (.64) | (.88) | (.38) | (.40) J | (.62) |
Distributions from net realized gain | - | - | (.05) | (.20) J | - |
Total distributions | (.64) | (.88) | (.43) H | (.59) I | (.62) |
Redemption fees added to paid in capital B,G | - | - | - | - | - |
Net asset value, end of period | $ 46.20 | $ 47.02 | $ 37.69 | $ 26.73 | $ 42.65 |
Total Return A | (.26)% | 27.27% | 42.59% | (35.99)% | (15.23)% |
Ratios to Average Net Assets C,E |
|
|
|
|
|
Expenses before reductions | .89% | .91% | .86% | .91% | .83% |
Expenses net of fee waivers, if any | .89% | .91% | .86% | .91% | .83% |
Expenses net of all reductions | .87% | .89% | .84% | .90% | .83% |
Net investment income (loss) | 1.52% | 1.64% | 2.29% | .91% | .86% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 1,022 | $ 1,743 | $ 1,101 | $ 68 | $ 256 |
Portfolio turnover rate D | 72% | 72% | 90% | 168% | 134% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown. B Calculated based on average shares outstanding during the period. C Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. D Amount does not include the portfolio activity of any underlying Fidelity Central Funds. E Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. F For the year ended February 29. G Amount represents less than $.01 per share. H Total distributions of $.43 per share is comprised of distributions from net investment income of $.379 and distributions from net realized gain of $.057 per share. I Total distributions of $.59 per share is comprised of distributions from net investment income of $.395 and distributions from net realized gain of $.197 per share. J The amount shown reflects certain reclassifications related to book to tax differences. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended February 29, 2012 (Unaudited)
1. Organization.
Telecommunications Portfolio (the Fund) is a non-diversified fund of Fidelity Select Portfolios (the Trust) and is authorized to issue an unlimited number of shares. The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund invests primarily in securities of companies whose principal business activities fall within specific industries. The Fund offers Class A, Class T, Class C, Telecommunications and Institutional Class shares, each of which, along with Class B shares, has equal rights as to assets and voting privileges. Effective after the close of business on September 1, 2010, Class B shares were closed to new accounts and additional purchases, except for exchanges and reinvestments. Each class has exclusive voting rights with respect to matters that affect that class. Class B shares will automatically convert to Class A shares after a holding period of seven years from the initial date of purchase. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions may also differ by class. The Fund's investments in emerging markets can be subject to social, economic, regulatory, and political uncertainties and can be extremely volatile.
2. Investments in Fidelity Central Funds.
The Fund invests in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by FMR and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds held as of period end, if any, as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Fund:
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Fund uses independent pricing services approved by the Board of Trustees to value its investments. When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include market or security specific events. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The value used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the Fund's own assumptions based on the best information available)
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level, as of February 29, 2012, as well as a roll forward of Level 3 securities, is included at the end of the Fund's Schedule of Investments. Valuation techniques used to value the Fund's investments by major category are as follows:
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when significant market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-traded funds (ETFs)and certain indexes as well as quoted prices for similar securities are used and are categorized as Level 2 in the hierarchy in these
Annual Report
3. Significant Accounting Policies - continued
Security Valuation - continued
circumstances. Utilizing these techniques may result in transfers between Level 1 and Level 2. For restricted equity securities and private placements where observable inputs are limited, assumptions about market activity and risk are used and are categorized as Level 3 in the hierarchy.
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 in the hierarchy.
New Accounting Pronouncements. In May 2011, the Financial Accounting Standards Board issued Accounting Standard Update No. 2011-04, Fair Value Measurement (Topic 820) - Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. The update is effective during interim and annual periods beginning after December 15, 2011 and will result in additional disclosure for transfers between levels as well as expanded disclosure for securities categorized as Level 3 under the fair value hierarchy.
In December 2011, the Financial Accounting Standards Board issued Accounting Standard Update No. 2011-11, Disclosures about Offsetting Assets and Liabilities. The update creates new disclosure requirements requiring entities to disclose both gross and net information for derivatives and other financial instruments that are either offset in the Statement of Assets and Liabilities or subject to an enforceable master netting arrangement or similar agreement. The disclosure requirements are effective for interim and annual reporting periods beginning on or after January 1, 2013. Management is currently evaluating the impact of the update's adoption on the Fund's financial statement disclosures.
Foreign Currency. The Fund may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for income taxes is required. As of February 29, 2012, the Fund did not have any unrecognized tax benefits in the financial statements; nor is the Fund aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. The Fund files a U.S. federal tax return, in addition to state and local tax returns as required. A fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are declared and recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Annual Report
Notes to Financial Statements (Unaudited) - continued
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
Book-tax differences are primarily due to foreign currency transactions, deferred trustees compensation, capital loss carryforwards, expiring capital loss carryforwards, and losses deferred due to wash sales and excise tax regulations.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation | $ 29,182,921 |
Gross unrealized depreciation | (55,138,742) |
Net unrealized appreciation (depreciation) on securities and other investments | $ (25,955,821) |
|
|
Tax Cost | $ 387,569,381 |
The tax-based components of distributable earnings as of period end were as follows:
Undistributed ordinary income | $ 730,658 |
Capital loss carryforward | $ (44,224,120) |
Net unrealized appreciation (depreciation) | $ (25,957,238) |
Capital loss carryforwards are only available to offset future capital gains of the Fund to the extent provided by regulations and may be limited. Under the Regulated Investment Company Modernization Act of 2010 (the Act), the Fund is permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period and such capital losses are required to be used prior to any losses that expire. Capital loss carryforwards were as follows:
Fiscal year of expiration |
|
2017 | $ (31,682,432) |
2018 | (12,541,688) |
Total with expiration | $ (44,224,120) |
The Fund intends to elect to defer to its fiscal year ending February 28, 2013 approximately $4,371,830 of capital losses recognized during the period November 1, 2011 to February 29, 2012.
The tax character of distributions paid was as follows:
| February 29, 2012 | February 28, 2011 |
Ordinary Income | $ 4,955,219 | $ 7,366,695 |
Trading (Redemption) Fees. Shares held by investors in the Fund less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Fund and accounted for as an addition to paid in capital.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $262,185,946 and $276,332,232, respectively.
5. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the Fund's average net assets and an annualized group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annual management fee rate was .56% of the Fund's average net assets.
Annual Report
5. Fees and Other Transactions with Affiliates - continued
Distribution and Service Plan Fees. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of FMR, separate Distribution and Service Fees, each of which is based on an annual percentage of each class' average net assets. In addition, FDC may pay financial intermediaries for selling shares of the Fund and providing shareholder support services. For the period, the Distribution and Service Fee rates, total fees and amounts retained by FDC were as follows:
| Distribution | Service | Total | Retained |
Class A | -% | .25% | $ 12,169 | $ 763 |
Class T | .25% | .25% | 14,474 | - |
Class B | .75% | .25% | 6,364 | 4,772 |
Class C | .75% | .25% | 32,568 | 9,590 |
|
|
| $ 65,575 | $ 15,125 |
Sales Load. FDC may receive a front-end sales charge of up to 5.75% for selling Class A shares and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the Fund. Depending on the holding period, FDC may receive contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. The deferred sales charges range from 5.00% to 1.00% for Class B, 1.00% for Class C, 1.00% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained |
Class A | $ 5,940 |
Class T | 2,745 |
Class B* | 725 |
Class C* | 1,809 |
| $ 11,219 |
* When Class B and Class C shares are initially sold, FDC pays commissions from its own resources to financial intermediaries through which the sales are made.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the Fund. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, transfer agent fees for each class were as follows:
| Amount | % of |
Class A | $ 14,691 | .30 |
Class T | 9,931 | .34 |
Class B | 1,906 | .30 |
Class C | 9,131 | .28 |
Telecommunications | 885,774 | .25 |
Institutional Class | 4,025 | .24 |
| $ 925,458 |
|
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for each month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $32,682 for the period.
Annual Report
Notes to Financial Statements (Unaudited) - continued
5. Fees and Other Transactions with Affiliates - continued
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Fund, along with other registered investment companies having management contracts with FMR, 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 | Weighted Average Interest Rate | Interest |
Borrower | $ 11,288,143 | .32% | $ 700 |
6. Committed Line of Credit.
The Fund participates with other funds managed by FMR or an affiliate in a $4.0 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $1,117 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, there were no borrowings on this line of credit.
7. Security Lending.
The Fund lends portfolio securities through a lending agent from time to time in order to earn additional income. For equity securities, a lending agent is used and may loan securities to certain qualified borrowers, including Fidelity Capital Markets (FCM), a broker-dealer affiliated with the Fund. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Total security lending income during the period amounted to $221,785. During the period, there were no securities loaned to FCM.
8. Expense Reductions.
Many of the brokers with whom FMR places trades on behalf of the Fund provided services to the Fund in addition to trade execution. These services included payments of certain expenses on behalf of the Fund totaling $63,865 for the period.
9. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
| Year ended | Year ended |
From net investment income |
|
|
Class A | $ 54,285 | $ 67,506 |
Class T | 24,009 | 39,660 |
Class B | 2,206 | 6,185 |
Class C | 19,099 | 26,169 |
Telecommunications | 4,833,836 | 7,180,244 |
Institutional Class | 21,784 | 46,931 |
Total | $ 4,955,219 | $ 7,366,695 |
Annual Report
10. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
| Year ended | Year ended | Year ended | Year ended |
| 2012 | 2011 | 2012 | 2011 |
Class A |
|
|
|
|
Shares sold | 70,128 | 40,645 | $ 3,321,351 | $ 1,741,332 |
Reinvestment of distributions | 1,116 | 1,359 | 47,447 | 59,381 |
Shares redeemed | (61,569) | (39,099) | (2,787,444) | (1,642,347) |
Net increase (decrease) | 9,675 | 2,905 | $ 581,354 | $ 158,366 |
Class T |
|
|
|
|
Shares sold | 24,101 | 23,206 | $ 1,100,865 | $ 981,887 |
Reinvestment of distributions | 557 | 894 | 23,555 | 39,051 |
Shares redeemed | (27,493) | (17,166) | (1,235,915) | (731,684) |
Net increase (decrease) | (2,835) | 6,934 | $ (111,495) | $ 289,254 |
Class B |
|
|
|
|
Shares sold | 1,659 | 3,985 | $ 77,673 | $ 164,934 |
Reinvestment of distributions | 46 | 125 | 1,965 | 5,371 |
Shares redeemed | (3,832) | (6,122) | (176,016) | (254,241) |
Net increase (decrease) | (2,127) | (2,012) | $ (96,378) | $ (83,936) |
Class C |
|
|
|
|
Shares sold | 30,950 | 29,965 | $ 1,412,876 | $ 1,283,190 |
Reinvestment of distributions | 313 | 433 | 13,236 | 18,769 |
Shares redeemed | (19,633) | (22,865) | (879,199) | (981,215) |
Net increase (decrease) | 11,630 | 7,533 | $ 546,913 | $ 320,744 |
Telecommunications |
|
|
|
|
Shares sold | 3,856,487 | 3,169,647 | $ 180,498,933 | $ 131,656,721 |
Reinvestment of distributions | 108,713 | 156,783 | 4,652,114 | 6,893,743 |
Shares redeemed | (4,106,690) | (3,199,430) | (188,141,891) | (139,972,066) |
Net increase (decrease) | (141,490) | 127,000 | $ (2,990,844) | $ (1,421,602) |
Institutional Class |
|
|
|
|
Shares sold | 107,857 | 131,873 | $ 5,158,491 | $ 5,646,597 |
Reinvestment of distributions | 401 | 800 | 17,134 | 36,161 |
Shares redeemed | (123,190) | (124,838) | (5,562,790) | (5,631,269) |
Net increase (decrease) | (14,932) | 7,835 | $ (387,165) | $ 51,489 |
11. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
At the end of the period, Fidelity VIP FundsManager 60% Portfolio was the owner of record of approximately 15% of the total outstanding shares of the fund. Mutual funds managed by FMR or its affiliates were the owners of record, in the aggregate, of approximately 27% of the total outstanding shares of Telecommunications.
Annual Report
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total returns will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 29, 2012 | Past 1 | Past 5 | Past 10 |
Wireless Portfolio | -2.55% | 3.91% | 9.56% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Wireless Portfolio on February 28, 2002. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index performed over the same period.
Annual Report
Wireless Portfolio
Management's Discussion of Fund Performance
Market Recap: U.S. stocks rose for the 12 months ending February 29, 2012, as encouraging economic news sparked a strong late-period rally that lifted major equity benchmarks past a number of significant milestones. Stocks recovered from early-period uncertainty that followed the March 2011 earthquake, tsunami and nuclear meltdown in Japan, but plummeted during the summer amid Europe's debt woes and a historic U.S. credit-rating downgrade. Despite continued volatility and mixed economic news, markets began to recover in early October. Investors gravitated toward defensive sectors and the perceived safety of larger, more-established and dividend-paying names, helping the Dow Jones® Industrial Average advance 8.83%, and close above the psychologically important 13,000 mark in late February - for the first time since May 2008. The rally accelerated late in the period and the market broadened, as investor confidence improved amid encouraging manufacturing, housing and employment data, and signs of progress in Europe. For the year, the S&P 500® Index added 5.12%, closing near a four-year high on the period's second-to-last day. Of the 10 major market sectors in the S&P 500®, three defensive areas led the way - consumer staples, health care and utilities - while financials, materials and energy finished in negative territory. The technology-laden Nasdaq Composite® Index added 7.73%, flirting with the 3,000 mark, its highest level in 12 years. Foreign developed-markets stocks reeled over Europe's turmoil, and the MSCI® EAFE® (Europe, Australasia, Far East) Index fell 7.35%.
Comments from Kyle Weaver, Lead Portfolio Manager of Wireless Portfolio: For the year, the fund returned -2.55%, considerably better than the -8.08% return of the S&P® Custom Wireless Index but trailing the S&P 500®. Versus the wireless index, a sizable out-of-index stake in Apple significantly aided the fund's performance both in relative and absolute terms. Our holdings in this stock rose more than 50%, as sales of the company's iPhone® smartphone and iPad® tablet device blew past expectations. Large underweightings in two major index components, Spain's Telefonica and Finland's Nokia, also contributed meaningfully to relative performance. The former is a legacy telecom carrier incorporating wireline and wireless operations in Spain and South America. Like most legacy firms in the industry, Telefonica had to cope with eroding earnings and cash flow. In December, the company cut its dividend, further pressuring its stock. Meanwhile, handset maker Nokia continued to lose market share to competitors at a variety of price points. Another holding that lifted the fund's performance was Sprint Nextel, a volatile stock we were able to trade successfully. I'll also mention Synchronoss Technologies, which provides software enabling automated subscriber activation and other services. This out-of-benchmark position posted a gain during the period and contributed to performance. Overweighting the largest benchmark component - and the fund's largest holding - U.K.-based Vodafone, proved rewarding as well. Conversely, sizable underweightings in three key benchmark constituents worked against the fund: wireline/wireless carrier Verizon Communications, wireless operator China Mobile and Canadian wireless, cable and media provider Rogers Communications. Among stocks we overweighted, one detractor was NII Holdings, a fast-growing wireless carrier operating in a number of Latin American countries. Despite rapid subscriber growth, the stock sold off, in part because of the company's disappointing fiscal 2012 guidance in October and the prospect of large capital expenditures by NII to upgrade its outdated 2G network.
____________________________________
Note to shareholders: Matthew Drukker became Co-Portfolio Manager of the fund on December 1, 2011.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Wireless Portfolio
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including redemption fees, and (2) ongoing costs, including management fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (September 1, 2011 to February 29, 2012).
Actual Expenses
The first line of the accompanying table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Annualized Expense Ratio | Beginning | Ending | Expenses Paid |
Actual | .90% | $ 1,000.00 | $ 1,035.70 | $ 4.56 |
Hypothetical (5% return per year before expenses) |
| $ 1,000.00 | $ 1,020.39 | $ 4.52 |
* Expenses are equal to the Fund's annualized expense ratio, multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
Annual Report
Wireless Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 29, 2012 | ||
| % of fund's | % of fund's net assets |
Vodafone Group PLC sponsored ADR | 14.9 | 15.1 |
QUALCOMM, Inc. | 11.4 | 9.8 |
Motorola Solutions, Inc. | 5.1 | 3.8 |
China Mobile Ltd. sponsored ADR | 5.0 | 2.4 |
Crown Castle International Corp. | 5.0 | 4.6 |
American Tower Corp. | 4.8 | 0.0 |
SBA Communications Corp. Class A | 3.9 | 3.6 |
Verizon Communications, Inc. | 3.7 | 2.4 |
Telefonica SA sponsored ADR | 3.7 | 2.0 |
Apple, Inc. | 3.5 | 3.8 |
| 61.0 | |
Top Industries (% of fund's net assets) | |||
As of February 29, 2012 | |||
| Wireless Telecommunication Services | 41.3% |
|
| Communications Equipment | 27.4% |
|
| Diversified Telecommunication Services | 10.4% |
|
| Real Estate Investment Trusts | 4.8% |
|
| Computers & Peripherals | 3.6% |
|
| All Others* | 12.5% |
|
As of August 31, 2011 | |||
| Wireless Telecommunication Services | 44.8% |
|
| Communications Equipment | 27.7% |
|
| Diversified Telecommunication Services | 7.4% |
|
| Media | 4.6% |
|
| Computers & Peripherals | 3.8% |
|
| All Others* | 11.7% |
|
* Includes short-term investments and net other assets. |
Annual Report
Wireless Portfolio
Investments February 29, 2012
Showing Percentage of Net Assets
Common Stocks - 97.2% | |||
Shares | Value | ||
AEROSPACE & DEFENSE - 0.8% | |||
Aerospace & Defense - 0.8% | |||
Kratos Defense & Security Solutions, Inc. (a) | 334,100 | $ 2,128,217 | |
COMMUNICATIONS EQUIPMENT - 27.4% | |||
Communications Equipment - 27.4% | |||
Acme Packet, Inc. (a) | 9,600 | 292,608 | |
Aruba Networks, Inc. (a)(d) | 223,784 | 4,831,497 | |
Globecomm Systems, Inc. (a) | 8,700 | 126,063 | |
Harris Corp. | 121,600 | 5,305,408 | |
InterDigital, Inc. (d) | 61,000 | 2,308,850 | |
Motorola Mobility Holdings, Inc. (a) | 30 | 1,191 | |
Motorola Solutions, Inc. | 269,268 | 13,409,546 | |
Nokia Corp. sponsored ADR (d) | 735,500 | 3,890,795 | |
Polycom, Inc. (a) | 27,700 | 572,005 | |
QUALCOMM, Inc. | 483,350 | 30,054,703 | |
Research In Motion Ltd. (a) | 194,100 | 2,750,397 | |
Telefonaktiebolaget LM Ericsson (B Shares) sponsored ADR | 658,800 | 6,574,824 | |
Ubiquiti Networks, Inc. | 200 | 5,256 | |
ViaSat, Inc. (a) | 37,700 | 1,739,101 | |
| 71,862,244 | ||
COMPUTERS & PERIPHERALS - 3.6% | |||
Computer Hardware - 3.5% | |||
Apple, Inc. (a) | 16,900 | 9,167,236 | |
Computer Storage & Peripherals - 0.1% | |||
Gemalto NV | 5,833 | 333,247 | |
TOTAL COMPUTERS & PERIPHERALS | 9,500,483 | ||
DIVERSIFIED TELECOMMUNICATION SERVICES - 10.4% | |||
Alternative Carriers - 0.0% | |||
Boingo Wireless, Inc. | 250 | 2,390 | |
Integrated Telecommunication Services - 10.4% | |||
China Unicom Ltd. sponsored ADR (d) | 418,200 | 7,464,870 | |
Nippon Telegraph & Telephone Corp. | 8,800 | 414,212 | |
Telefonica SA sponsored ADR (d) | 569,600 | 9,734,464 | |
Verizon Communications, Inc. | 257,600 | 9,817,136 | |
| 27,430,682 | ||
TOTAL DIVERSIFIED TELECOMMUNICATION SERVICES | 27,433,072 | ||
INTERNET SOFTWARE & SERVICES - 0.8% | |||
Internet Software & Services - 0.8% | |||
Google, Inc. Class A (a) | 3,300 | 2,040,225 | |
| |||
Shares | Value | ||
IT SERVICES - 0.5% | |||
Data Processing & Outsourced Services - 0.5% | |||
NeuStar, Inc. Class A (a) | 35,800 | $ 1,254,790 | |
IT Consulting & Other Services - 0.0% | |||
Amdocs Ltd. (a) | 450 | 13,802 | |
TOTAL IT SERVICES | 1,268,592 | ||
MEDIA - 2.0% | |||
Cable & Satellite - 2.0% | |||
Virgin Media, Inc. (d) | 208,850 | 5,263,020 | |
REAL ESTATE INVESTMENT TRUSTS - 4.8% | |||
Specialized REITs - 4.8% | |||
American Tower Corp. | 202,392 | 12,665,691 | |
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 3.3% | |||
Semiconductors - 3.3% | |||
NVIDIA Corp. (a) | 172,800 | 2,617,920 | |
NXP Semiconductors NV (a) | 108,800 | 2,698,240 | |
RF Micro Devices, Inc. (a) | 614,100 | 2,929,257 | |
Skyworks Solutions, Inc. (a) | 10,800 | 291,276 | |
| 8,536,693 | ||
SOFTWARE - 2.3% | |||
Application Software - 2.3% | |||
AsiaInfo-Linkage, Inc. (a) | 43,850 | 560,403 | |
BroadSoft, Inc. (a)(d) | 49,300 | 1,793,041 | |
Gameloft (a)(d) | 362,062 | 2,363,461 | |
Nuance Communications, Inc. (a) | 4,300 | 111,456 | |
Synchronoss Technologies, Inc. (a) | 19,050 | 637,413 | |
Tangoe, Inc. (a) | 34,150 | 639,971 | |
| 6,105,745 | ||
WIRELESS TELECOMMUNICATION SERVICES - 41.3% | |||
Wireless Telecommunication Services - 41.3% | |||
China Mobile Ltd. sponsored ADR | 248,300 | 13,162,383 | |
Clearwire Corp. Class A (a) | 1,291,300 | 2,969,990 | |
Crown Castle International Corp. (a) | 250,900 | 12,999,129 | |
Leap Wireless International, Inc. (a) | 202,750 | 2,116,710 | |
MetroPCS Communications, Inc. (a) | 754,900 | 7,775,470 | |
NII Holdings, Inc. (a) | 197,600 | 3,533,088 | |
NTELOS Holdings Corp. | 53,250 | 1,238,063 | |
NTT DoCoMo, Inc. sponsored ADR (d) | 116,300 | 1,987,567 | |
Rogers Communications, Inc. Class B (non-vtg.) | 157,300 | 6,028,787 | |
SBA Communications Corp. Class A (a) | 219,500 | 10,301,135 | |
Sprint Nextel Corp. (a) | 2,051,331 | 5,066,788 | |
Telephone & Data Systems, Inc. | 23,014 | 581,564 | |
U.S. Cellular Corp. (a) | 26,500 | 1,143,210 | |
Common Stocks - continued | |||
Shares | Value | ||
WIRELESS TELECOMMUNICATION SERVICES - CONTINUED | |||
Wireless Telecommunication Services - continued | |||
USA Mobility, Inc. | 36,400 | $ 499,408 | |
Vodafone Group PLC sponsored ADR | 1,443,000 | 39,090,868 | |
| 108,494,160 | ||
TOTAL COMMON STOCKS (Cost $240,828,628) |
| ||
Money Market Funds - 12.2% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.12% (b) | 7,820,618 | 7,820,618 | |
Fidelity Securities Lending Cash Central Fund, 0.12% (b)(c) | 24,152,375 | 24,152,375 | |
TOTAL MONEY MARKET FUNDS (Cost $31,972,993) |
| ||
TOTAL INVESTMENT PORTFOLIO - 109.4% (Cost $272,801,621) | 287,271,135 | ||
NET OTHER ASSETS (LIABILITIES) - (9.4)% | (24,575,630) | ||
NET ASSETS - 100% | $ 262,695,505 | ||
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 2,598 |
Fidelity Securities Lending Cash Central Fund | 246,621 |
Total | $ 249,219 |
Other Information |
The following is a summary of the inputs used, as of February 29, 2012, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities: | ||||
Common Stocks | $ 255,298,142 | $ 254,883,930 | $ 414,212 | $ - |
Money Market Funds | 31,972,993 | 31,972,993 | - | - |
Total Investments in Securities: | $ 287,271,135 | $ 286,856,923 | $ 414,212 | $ - |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 63.1% |
United Kingdom | 14.9% |
Hong Kong | 7.8% |
Spain | 3.7% |
Canada | 3.4% |
Sweden | 2.5% |
Finland | 1.5% |
Netherlands | 1.2% |
Japan | 1.0% |
Others (Individually Less Than 1%) | 0.9% |
| 100.0% |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Wireless Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2012 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $23,166,284) - See accompanying schedule: Unaffiliated issuers (cost $240,828,628) | $ 255,298,142 |
|
Fidelity Central Funds (cost $31,972,993) | 31,972,993 |
|
Total Investments (cost $272,801,621) |
| $ 287,271,135 |
Cash |
| 2 |
Receivable for investments sold | 480,943 | |
Receivable for fund shares sold | 160,709 | |
Dividends receivable | 119,919 | |
Distributions receivable from Fidelity Central Funds | 3,468 | |
Prepaid expenses | 509 | |
Other receivables | 27,955 | |
Total assets | 288,064,640 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 302,048 | |
Payable for fund shares redeemed | 693,639 | |
Accrued management fee | 123,044 | |
Other affiliated payables | 67,171 | |
Other payables and accrued expenses | 30,858 | |
Collateral on securities loaned, at value | 24,152,375 | |
Total liabilities | 25,369,135 | |
|
|
|
Net Assets | $ 262,695,505 | |
Net Assets consist of: |
| |
Paid in capital | $ 266,459,693 | |
Distributions in excess of net investment income | (216,760) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (18,012,889) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 14,465,461 | |
Net Assets, for 34,206,830 shares outstanding | $ 262,695,505 | |
Net Asset Value, offering price and redemption price per share ($262,695,505 ÷ 34,206,830 shares) | $ 7.68 | |
Statement of Operations
| Year ended February 29, 2012 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 4,978,972 |
Special dividends |
| 958,202 |
Income from Fidelity Central Funds |
| 249,219 |
Total income |
| 6,186,393 |
|
|
|
Expenses | ||
Management fee | $ 1,627,637 | |
Transfer agent fees | 780,476 | |
Accounting and security lending fees | 120,801 | |
Custodian fees and expenses | 14,235 | |
Independent trustees' compensation | 1,747 | |
Registration fees | 26,437 | |
Audit | 53,929 | |
Legal | 1,147 | |
Interest | 168 | |
Miscellaneous | 3,213 | |
Total expenses before reductions | 2,629,790 | |
Expense reductions | (36,783) | 2,593,007 |
Net investment income (loss) | 3,593,386 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 7,878,450 | |
Foreign currency transactions | 4,360 | |
Total net realized gain (loss) |
| 7,882,810 |
Change in net unrealized appreciation (depreciation) on: Investment securities | (21,248,894) | |
Assets and liabilities in foreign currencies | (2,250) | |
Total change in net unrealized appreciation (depreciation) |
| (21,251,144) |
Net gain (loss) | (13,368,334) | |
Net increase (decrease) in net assets resulting from operations | $ (9,774,948) | |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 3,593,386 | $ 3,330,405 |
Net realized gain (loss) | 7,882,810 | 22,950,724 |
Change in net unrealized appreciation (depreciation) | (21,251,144) | 56,266,631 |
Net increase (decrease) in net assets resulting from operations | (9,774,948) | 82,547,760 |
Distributions to shareholders from net investment income | (2,771,729) | (3,588,883) |
Distributions to shareholders from net realized gain | (10,255,385) | - |
Total distributions | (13,027,114) | (3,588,883) |
Share transactions | 59,170,659 | 100,945,127 |
Reinvestment of distributions | 12,540,423 | 3,455,935 |
Cost of shares redeemed | (147,309,703) | (127,181,095) |
Net increase (decrease) in net assets resulting from share transactions | (75,598,621) | (22,780,033) |
Redemption fees | 14,005 | 7,728 |
Total increase (decrease) in net assets | (98,386,678) | 56,186,572 |
|
|
|
Net Assets | ||
Beginning of period | 361,082,183 | 304,895,611 |
End of period (including distributions in excess of net investment income of $216,760, and $0, respectively.) | $ 262,695,505 | $ 361,082,183 |
Other Information Shares | ||
Sold | 7,641,356 | 13,788,692 |
Issued in reinvestment of distributions | 1,729,713 | 460,791 |
Redeemed | (18,743,667) | (17,824,633) |
Net increase (decrease) | (9,372,598) | (3,575,150) |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights
Years ended February 28, | 2012 H | 2011 | 2010 | 2009 | 2008 H |
Selected Per-Share Data |
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|
|
|
|
Net asset value, beginning of period | $ 8.29 | $ 6.47 | $ 4.44 | $ 7.23 | $ 7.13 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | .10 E | .08 | .06 | .05 | .03 F |
Net realized and unrealized gain (loss) | (.33) | 1.82 | 2.03 | (2.78) | .36 |
Total from investment operations | (.23) | 1.90 | 2.09 | (2.73) | .39 |
Distributions from net investment income | (.08) | (.08) | (.06) | (.06) | (.03) |
Distributions from net realized gain | (.30) | - | - | - | (.26) |
Total distributions | (.38) | (.08) | (.06) | (.06) | (.29) |
Redemption fees added to paid in capital B, I | - | - | - | - | - |
Net asset value, end of period | $ 7.68 | $ 8.29 | $ 6.47 | $ 4.44 | $ 7.23 |
Total Return A | (2.55)% | 29.55% | 47.06% | (37.68)% | 4.71% |
Ratios to Average Net Assets C,G |
|
|
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|
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Expenses before reductions | .90% | .92% | .96% | .95% | .91% |
Expenses net of fee waivers, if any | .90% | .92% | .96% | .95% | .91% |
Expenses net of all reductions | .89% | .91% | .94% | .94% | .91% |
Net investment income (loss) | 1.23% E | 1.08% | .90% | .85% | .32% F |
Supplemental Data |
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|
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Net assets, end of period (000 omitted) | $ 262,696 | $ 361,082 | $ 304,896 | $ 181,114 | $ 434,916 |
Portfolio turnover rate D | 114% | 111% | 154% | 191% | 191% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
B Calculated based on average shares outstanding during the period.
C Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
D Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
E Investment income per share reflects a large, non-recurring dividend which amounted to $.03 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .90%.
F Investment income per share reflects a large, non-recurring dividend which amounted to $.01 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .19%.
G Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund.
H For the year ended February 29.
I Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended February 29, 2012
1. Organization.
Wireless Portfolio (the Fund) is a non-diversified fund of Fidelity Select Portfolios (the Trust) and is authorized to issue an unlimited number of shares. The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund invests primarily in securities of companies whose principal business activities fall within specific industries. The Fund's investments in emerging markets can be subject to social, economic, regulatory, and political uncertainties and can be extremely volatile.
2. Investments in Fidelity Central Funds.
The Fund invests in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds held as of period end, if any, as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Fund:
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Fund uses independent pricing services approved by the Board of Trustees to value its investments. When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include market or security specific events. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The value used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the Fund's own assumptions based on the best information available)
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level, as of February 29, 2012, is included at the end of the Fund's Schedule of Investments. Valuation techniques used to value the Fund's investments by major category are as follows:
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when significant market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-traded funds (ETFs)and certain indexes as well as quoted prices for similar securities are used and are categorized as Level 2 in the hierarchy in these circumstances. Utilizing these techniques may result in transfers between Level 1 and Level 2. For restricted equity securities and private placements where observable inputs are limited, assumptions about market activity and risk are used and are categorized as Level 3 in the hierarchy.
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 in the hierarchy.
Annual Report
3. Significant Accounting Policies - continued
New Accounting Pronouncements. In May 2011, the Financial Accounting Standards Board issued Accounting Standard Update No. 2011-04, Fair Value Measurement (Topic 820) - Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. The update is effective during interim and annual periods beginning after December 15, 2011 and will result in additional disclosure for transfers between levels as well as expanded disclosure for securities categorized as Level 3 under the fair value hierarchy.
In December 2011, the Financial Accounting Standards Board issued Accounting Standard Update No. 2011-11, Disclosures about Offsetting Assets and Liabilities. The update creates new disclosure requirements requiring entities to disclose both gross and net information for derivatives and other financial instruments that are either offset in the Statement of Assets and Liabilities or subject to an enforceable master netting arrangement or similar agreement. The disclosure requirements are effective for interim and annual reporting periods beginning on or after January 1, 2013. Management is currently evaluating the impact of the update's adoption on the Fund's financial statement disclosures.
Foreign Currency. The Fund may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Large, non-recurring dividends recognized by the Fund are presented separately on the Statement of Operations as "Special Dividends" and the impact of these dividends is presented in the Financial Highlights. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for income taxes is required. As of February 29, 2012, the Fund did not have any unrecognized tax benefits in the financial statements; nor is the Fund aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. The Fund files a U.S. federal tax return, in addition to state and local tax returns as required. A fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are declared and recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. In addition, the Fund claimed a portion of the payment made to redeeming shareholders as a distribution for income tax purposes.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation | $ 31,296,194 |
Gross unrealized depreciation | (27,058,533) |
Net unrealized appreciation (depreciation) on securities and other investments | $ 4,237,661 |
|
|
Tax Cost | $ 283,033,474 |
The tax-based components of distributable earnings as of period end were as follows:
Net unrealized appreciation (depreciation) | $ 4,233,608 |
The Fund intends to elect to defer to its fiscal year ending February 28, 2013 approximately $7,781,036 of capital losses recognized during the period November 1, 2011 to February 29, 2012.
The tax character of distributions paid was as follows:
| February 29, 2012 | February 28, 2011 |
Ordinary Income | $ 9,804,983 | $ 3,588,883 |
Long-term Capital Gains | 3,222,131 | - |
Total | $ 13,027,114 | $ 3,588,883 |
Trading (Redemption) Fees. Shares held by investors in the Fund less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Fund and accounted for as an addition to paid in capital.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $336,117,537 and $427,270,514, respectively.
5. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the Fund's average net assets and an annualized group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annual management fee rate was .56% of the Fund's average net assets.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the Fund's transfer, dividend disbursing and shareholder servicing agent. FIIOC receives account fees and asset-based fees that vary according to account size and type of account. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, the transfer agent fees were equivalent to an annual rate of .27% of average net assets.
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for each month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $27,815 for the period.
Annual Report
5. Fees and Other Transactions with Affiliates - continued
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Fund, along with other registered investment companies having management contracts with FMR, 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 | Weighted Average | Interest |
Borrower | $ 4,387,750 | .35% | $ 168 |
6. Committed Line of Credit.
The Fund participates with other funds managed by FMR or an affiliate in a $4.0 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $914 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, there were no borrowings on this line of credit.
7. Security Lending.
The Fund lends portfolio securities through a lending agent from time to time in order to earn additional income. For equity securities, a lending agent is used and may loan securities to certain qualified borrowers, including Fidelity Capital Markets (FCM), a broker-dealer affiliated with the Fund. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Total security lending income during the period amounted to $246,621, including $486 from securities loaned to FCM.
8. Expense Reductions.
Many of the brokers with whom FMR places trades on behalf of the Fund provided services to the Fund in addition to trade execution. These services included payments of certain expenses on behalf of the Fund totaling $36,783 for the period.
9. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
Annual Report
Report of Independent Registered Public Accounting Firm
To the Trustees of Fidelity Select Portfolios and the Shareholders of Telecommunications Portfolio and Wireless Portfolio:
In our opinion, the accompanying statements of assets and liabilities, including the schedules of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Telecommunications Portfolio and Wireless Portfolio (funds of Fidelity Select Portfolios) at February 29, 2012, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period then ended and their financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Telecommunications and Wireless Portfolios' management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at February 29, 2012 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 18, 2012
Annual Report
Trustees and Officers
The Trustees, Members of the Advisory Board, and executive officers of the trust and funds, as applicable, are listed below. The Board of Trustees governs each fund and is responsible for protecting the interests of shareholders. The Trustees are experienced executives who meet periodically throughout the year to oversee each fund's activities, review contractual arrangements with companies that provide services to each fund, oversee management of the risks associated with such activities and contractual arrangements, and review each fund's performance. Except for James C. Curvey, each of the Trustees oversees 226 funds advised by FMR or an affiliate. Mr. Curvey oversees 430 funds advised by FMR or an affiliate.
The Trustees hold office without limit in time except that (a) any Trustee may resign; (b) any Trustee may be removed by written instrument, signed by at least two-thirds of the number of Trustees prior to such removal; (c) any Trustee who requests to be retired or who has become incapacitated by illness or injury may be retired by written instrument signed by a majority of the other Trustees; and (d) any Trustee may be removed at any special meeting of shareholders by a two-thirds vote of the outstanding voting securities of the trust. Each Trustee who is not an interested person (as defined in the 1940 Act) (Independent Trustee), shall retire not later than the last day of the calendar year in which his or her 75th birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. The executive officers and Advisory Board Members hold office without limit in time, except that any officer and Advisory Board Member may resign or may be removed by a vote of a majority of the Trustees at any regular meeting or any special meeting of the Trustees. Except as indicated, each individual has held the office shown or other offices in the same company for the past five years.
Experience, Skills, Attributes, and Qualifications of the Funds' Trustees. The Governance and Nominating Committee has adopted a statement of policy that describes the experience, qualifications, attributes, and skills that are necessary and desirable for potential Independent Trustee candidates (Statement of Policy). The Board believes that each Trustee satisfied at the time he or she was initially elected or appointed a Trustee, and continues to satisfy, the standards contemplated by the Statement of Policy. The Governance and Nominating Committee also engages professional search firms to help identify potential Independent Trustee candidates who have the experience, qualifications, attributes, and skills consistent with the Statement of Policy. From time to time, additional criteria based on the composition and skills of the current Independent Trustees, as well as experience or skills that may be appropriate in light of future changes to board composition, business conditions, and regulatory or other developments, have also been considered by the professional search firms and the Governance and Nominating Committee. In addition, the Board takes into account the Trustees' commitment and participation in Board and committee meetings, as well as their leadership of standing and ad hoc committees throughout their tenure.
In determining that a particular Trustee was and continues to be qualified to serve as a Trustee, the Board has considered a variety of criteria, none of which, in isolation, was controlling. The Board believes that, collectively, the Trustees have balanced and diverse experience, qualifications, attributes, and skills, which allow the Board to operate effectively in governing each fund and protecting the interests of shareholders. Information about the specific experience, skills, attributes, and qualifications of each Trustee, which in each case led to the Board's conclusion that the Trustee should serve (or continue to serve) as a trustee of the funds, is provided below.
Board Structure and Oversight Function. James C. Curvey is an interested person (as defined in the 1940 Act) and currently serves as Acting Chairman. The Trustees have determined that an interested Chairman is appropriate and benefits shareholders because an interested Chairman has a personal and professional stake in the quality and continuity of services provided to the funds. Independent Trustees exercise their informed business judgment to appoint an individual of their choosing to serve as Chairman, regardless of whether the Trustee happens to be independent or a member of management. The Independent Trustees have determined that they can act independently and effectively without having an Independent Trustee serve as Chairman and that a key structural component for assuring that they are in a position to do so is for the Independent Trustees to constitute a substantial majority for the Board. The Independent Trustees also regularly meet in executive session. Ned C. Lautenbach serves as Chairman of the Independent Trustees and as such (i) acts as a liaison between the Independent Trustees and management with respect to matters important to the Independent Trustees and (ii) with management prepares agendas for Board meetings.
Fidelity funds are overseen by different Boards of Trustees. The funds' Board oversees Fidelity's equity and high income funds and another Board oversees Fidelity's investment-grade bond, money market, and asset allocation funds. The asset allocation funds may invest in Fidelity funds overseen by the funds' Board. The use of separate Boards, each with its own committee structure, allows the Trustees of each group of Fidelity funds to focus on the unique issues of the funds they oversee, including common research, investment, and operational issues. On occasion, the separate Boards establish joint committees to address issues of overlapping consequences for the Fidelity funds overseen by each Board.
The Trustees operate using a system of committees to facilitate the timely and efficient consideration of all matters of importance to the Trustees, each fund, and fund shareholders and to facilitate compliance with legal and regulatory requirements and oversight of the funds' activities and associated risks. The Board, acting through its committees, has charged FMR and its affiliates with (i) identifying events or circumstances the occurrence of which could have demonstrably adverse effects on the funds' business and/or reputation; (ii) implementing processes and controls to lessen the possibility that such events or circumstances occur or to mitigate the effects of such events or circumstances if they do occur; and (iii) creating and maintaining a system designed to evaluate continuously business and market conditions in order to facilitate the identification and implementation processes described in (i) and (ii) above. Because the day-to-day operations and activities of the funds are carried out by or through FMR, its affiliates and other service providers, the funds' exposure to risks is mitigated but not eliminated by the processes overseen by the Trustees. While each of the Board's committees has responsibility for overseeing different aspects of the funds' activities, oversight is exercised primarily through the Operations, Audit, and Compliance Committees. In addition, the Independent Trustees have worked with FMR to enhance the Board's oversight of investment and financial risks, legal and regulatory risks, technology risks, and operational risks, including the development of additional risk reporting to the Board. For example, a working group comprised of Independent Trustees and FMR has worked and continues to work to review the Fidelity funds' valuation-related activities, reporting and risk management. Appropriate personnel, including but not limited to the funds' Chief Compliance Officer (CCO), FMR's internal auditor, the independent accountants, the funds' Treasurer and portfolio management personnel, make periodic reports to the Board's committees, as appropriate, including an annual review of FMR's risk management program for the Fidelity funds. The responsibilities of each standing committee, including their oversight responsibilities, are described further under "Standing Committees of the Funds' Trustees."
Annual Report
The funds' Statement of Additional Information (SAI) includes more information about the Trustees. To request a free copy, call Fidelity at 1-800-544-8544.
Interested Trustees*:
Correspondence intended for each Trustee who is an interested person may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupations and Other Relevant Experience+ | |
James C. Curvey (76) | |
| Year of Election or Appointment: 2007 Mr. Curvey is Trustee and Acting Chairman of the Board of Trustees of certain Trusts. Mr. Curvey also serves as Trustee (2007-present) of other investment companies advised by FMR. Mr. Curvey is a Director of Fidelity Investments Money Management, Inc. (2009-present), Director of Fidelity Research & Analysis Co. (2009-present) and Director of FMR and FMR Co., Inc. (2007-present). Mr. Curvey is also Vice Chairman (2007-present) and Director of FMR LLC. In addition, Mr. Curvey serves as an Overseer for the Boston Symphony Orchestra and a member of the Trustees of Villanova University. Previously, Mr. Curvey was the Vice Chairman (2006-2007) and Director (2000-2007) of FMR Corp. |
Ronald P. O'Hanley (55) | |
| Year of Election or Appointment: 2011 Mr. O'Hanley is Director of FMR Co., Inc. (2010-present), Director of Fidelity Investments Money Management, Inc. (2010-present), Director of Fidelity Research & Analysis Company (2010-present), President of Fidelity Asset Management and Corporate Services and a member of Fidelity's Executive Committee (2010-present). Previously, Mr. O'Hanley served as President and Chief Executive Officer of BNY Mellon Asset Management (2007-2010). Mr. O'Hanley also served as Vice Chairman of Bank New York Mellon Corp. and a member of that firm's Executive Committee. Prior to the 2007 merger of The Bank of New York and Mellon Financial Corporation, he was Vice Chairman of Mellon Financial Corporation and President and Chief Executive Officer of Mellon Asset Management. He joined Mellon in February 1997. Mr. O'Hanley currently serves as Chairman of the Boston Public Library Foundation Board of Directors and sits on the Board of Directors of Beth Israel Deaconess Medical Center, the Board of Trustees of the Marine Biological Laboratory and the Advisory Board of the Maxwell School of Citizenship and Public Administration at Syracuse University. Mr. O'Hanley also chairs the Council on Asset Management for the Financial Services Roundtable and is a member of the Board of Directors of Institutional Investor's U.S. Institute. |
* Trustees have been determined to be "Interested Trustees" by virtue of, among other things, their affiliation with the trust or various entities under common control with FMR.
+ The information above includes each Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to each Trustee's qualifications to serve as a Trustee, which led to the conclusion that each Trustee should serve as a Trustee for each fund.
Independent Trustees:
Correspondence intended for each Independent Trustee (that is, the Trustees other than the Interested Trustees) may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235.
Name, Age; Principal Occupations and Other Relevant Experience+ | |
Dennis J. Dirks (63) | |
| Year of Election or Appointment: 2005 Prior to his retirement in May 2003, Mr. Dirks was Chief Operating Officer and a member of the Board of The Depository Trust & Clearing Corporation (DTCC). He also served as President, Chief Operating Officer, and Board member of The Depository Trust Company (DTC) and President and Board member of the National Securities Clearing Corporation (NSCC). In addition, Mr. Dirks served as Chief Executive Officer and Board member of the Government Securities Clearing Corporation, Chief Executive Officer and Board member of the Mortgage-Backed Securities Clearing Corporation, as a Trustee and a member of the Finance Committee of Manhattan College (2005-2008), and as a Trustee and a member of the Finance Committee of AHRC of Nassau County (2006-2008). Mr. Dirks is a member of the Independent Directors Council (IDC) Governing Council (2010-present) and Board of Directors for The Brookville Center for Children's Services, Inc. (2009-present). |
Alan J. Lacy (58) | |
| Year of Election or Appointment: 2008 Mr. Lacy serves as Senior Adviser (2007-present) of Oak Hill Capital Partners, L.P. (private equity). Mr. Lacy also served as Chief Executive Officer (2000-2005) and Vice Chairman (2005-2006) of Sears Holdings Corporation and Sears, Roebuck and Co. (retail). In addition, Mr. Lacy serves as a member of the Board of Directors of Dave & Buster's, Inc. (restaurant and entertainment complexes, 2010-present), The Hillman Companies, Inc. (hardware wholesalers, 2010-present), and Bristol-Myers Squibb Company (global pharmaceuticals, 2007-present). Mr. Lacy is a member of the Board of Trustees of The National Parks Conservation Association (2006-present). Previously, Mr. Lacy served as Chairman of the Board of Trustees of the National Parks Conservation Association (2008-2011) and as a member of the Board of Directors for the Western Union Company (global money transfer, 2006-2011). |
Ned C. Lautenbach (68) | |
| Year of Election or Appointment: 2000 Mr. Lautenbach is Chairman of the Independent Trustees of the Equity and High Income Funds (2006-present). Mr. Lautenbach currently serves as the Lead Director of the Eaton Corporation Board of Directors (diversified industrial, 1997-present). Mr. Lautenbach is also a member of the Board of Directors of the Philharmonic Center for the Arts in Naples, Florida (1999-present); a member of the Board of Trustees of Fairfield University (2005-present); and a member of the Council on Foreign Relations (1994-present). Previously, Mr. Lautenbach was a Partner/Advisory Partner at Clayton, Dubilier & Rice, LLC (private equity investment, 1998-2010), as well as a Director of Sony Corporation (2006-2007). |
Joseph Mauriello (67) | |
| Year of Election or Appointment: 2008 Prior to his retirement in January 2006, Mr. Mauriello served in numerous senior management positions including Deputy Chairman and Chief Operating Officer (2004-2005), and Vice Chairman of Financial Services (2002-2004) of KPMG LLP US (professional services, 1965-2005). Mr. Mauriello currently serves as a member of the Board of Directors of XL Group plc. (global insurance and re-insurance, 2006-present) and of Arcadia Resources Inc. (health care services and products, 2007-present). Previously, Mr. Mauriello served as a Director of the Hamilton Funds of the Bank of New York (2006-2007). |
Robert W. Selander (61) | |
| Year of Election or Appointment: 2011 Previously, Mr. Selander served as a Member of the Advisory Board of Fidelity's Equity and High Income Funds (2011), Executive Vice Chairman (2010), Chief Executive Officer (2009-2010), and President and Chief Executive Officer (1997-2009) of Mastercard, Inc. |
Cornelia M. Small (67) | |
| Year of Election or Appointment: 2005 Ms. Small is a member of the Board of Directors of the Teagle Foundation (2009-present). Ms. Small is also a member of the Investment Committee, and Chair (2008-present) and a member of the Board of Trustees of Smith College. In addition, Ms. Small serves on the Investment Committee of the Berkshire Taconic Community Foundation (2008-present). Previously, Ms. Small served as Chairperson of the Investment Committee (2002-2008) of Smith College. In addition, Ms. Small served as Chief Investment Officer, Director of Global Equity Investments, and a member of the Board of Directors of Scudder, Stevens & Clark and Scudder Kemper Investments. |
William S. Stavropoulos (72) | |
| Year of Election or Appointment: 2001 Mr. Stavropoulos is Vice Chairman of the Independent Trustees of the Equity and High Income Funds (2006-present). Mr. Stavropoulos serves as President and Founder of the Michigan Baseball Foundation, the Great Lakes Loons (2007-present). Mr. Stavropoulos is Chairman Emeritus of the Board of Directors of The Dow Chemical Company, where he previously served in numerous senior management positions, including President, CEO (1995-2000; 2002-2004), Chairman of the Executive Committee (2000-2006), and as a member of the Board of Directors (1990-2006). Currently, Mr. Stavropoulos is Chairman of Univar (global distributor of commodity and specialty chemicals, 2010-present), a Director of Teradata Corporation (data warehousing and technology solutions, 2008-present), Chemical Financial Corporation, Maersk Inc. (industrial conglomerate), Tyco International, Inc. (multinational manufacturing and services, 2007-present), and a member of the Advisory Board for Metalmark Capital (private equity investment, 2005-present). Mr. Stavropoulos is a special advisor to Clayton, Dubilier & Rice, LLC (private equity investment). In addition, Mr. Stavropoulos is a member of the University of Notre Dame Advisory Council for the College of Science. |
David M. Thomas (62) | |
| Year of Election or Appointment: 2008 Previously, Mr. Thomas served as Executive Chairman (2005-2006) and Chairman and Chief Executive Officer (2000-2005) of IMS Health, Inc. (pharmaceutical and healthcare information solutions). In addition, Mr. Thomas serves as a member of the Board of Directors of Fortune Brands, Inc. (consumer products), and Interpublic Group of Companies, Inc. (marketing communication, 2004-present). |
Michael E. Wiley (61) | |
| Year of Election or Appointment: 2008 Mr. Wiley also serves as a Director of Asia Pacific Exploration Consolidated (international oil and gas exploration and production, 2008-present). Mr. Wiley serves as a Director of Tesoro Corporation (independent oil refiner and marketer, 2005-present), and a Director of Bill Barrett Corporation (exploration and production, 2005-present). In addition, Mr. Wiley also serves as a Director of Post Oak Bank (privately-held bank, 2004-present). Previously, Mr. Wiley served as a member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-2010), as a Senior Energy Advisor of Katzenbach Partners, LLC (consulting, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production, 2001-2005). |
+ The information above includes each Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to each Trustee's qualifications to serve as a Trustee, which led to the conclusion that each Trustee should serve as a Trustee for each fund.
Advisory Board Members and Executive Officers:
Correspondence intended for each executive officer, Edward C. Johnson 3d, and Peter S. Lynch may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
Edward C. Johnson 3d (81) | |
| Year of Election or Appointment: 2011 Member of the Advisory Board of Fidelity's Equity and High Income Funds. Mr. Johnson serves as Chief Executive Officer, Chairman, and a Director of FMR LLC, and also serves as Chairman and Director of FIL Limited. Previously, Mr. Johnson served as a Trustee and Chairman of the Board of certain Fidelity Trusts, Chairman and a Director of FMR, Chairman and a Director of FMR Co., Inc., and President of FMR LLC (2006-2007). |
Peter S. Lynch (68) | |
| Year of Election or Appointment: 2003 Member of the Advisory Board of Fidelity's Equity and High Income Funds. Mr. Lynch is Vice Chairman and a Director of FMR and FMR Co., Inc. In addition, Mr. Lynch serves as a Trustee of Boston College and as the Chairman of the Inner-City Scholarship Fund. Previously, Mr. Lynch served on the Special Olympics International Board of Directors (1997-2006). |
Kenneth B. Robins (42) | |
| Year of Election or Appointment: 2008 President and Treasurer of Fidelity's Equity and High Income Funds. Mr. Robins also serves as President and Treasurer (2010-present) and Assistant Treasurer (2009-present) of other Fidelity funds and is an employee of Fidelity Investments (2004-present). Previously, Mr. Robins served as Deputy Treasurer of the Fidelity funds (2005-2008) and Treasurer and Chief Financial Officer of The North Carolina Capital Management Trust: Cash and Term Portfolios (2006-2008). |
Brian B. Hogan (47) | |
| Year of Election or Appointment: 2009 Vice President of Equity and High Income Funds. Mr. Hogan also serves as President of FMR's Equity Division (2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager. |
Christopher S. Bartel (40) | |
| Year of Election or Appointment: 2009 Vice President of Fidelity's Sector and Real Estate Equity Funds. Mr. Bartel also serves as a Director, President, and Chief Executive Officer of Fidelity Management & Research (Japan) Inc. (2012-present) and Senior Vice President of Global Equity Research (2010-present). Previously, Mr. Bartel served as Senior Vice President of Equity Research (2009-2010), Managing Director of Research (2006-2009), and an analyst and portfolio manager (2000-2006). |
Scott C. Goebel (44) | |
| Year of Election or Appointment: 2008 Secretary and Chief Legal Officer (CLO) of the Fidelity funds. Mr. Goebel also serves as Secretary of Fidelity Investments Money Management, Inc. (FIMM) (2010-present) and Fidelity Research and Analysis Company (FRAC) (2010-present); Secretary and CLO of The North Carolina Capital Management Trust: Cash and Term Portfolios (2008-present); General Counsel, Secretary, and Senior Vice President of FMR (2008-present) and FMR Co., Inc. (2008-present); employed by FMR LLC or an affiliate (2001-present); Chief Legal Officer of Fidelity Management & Research (Hong Kong) Limited (2008-present) and Assistant Secretary of Fidelity Management & Research (Japan) Inc. (2008-present), and Fidelity Management & Research (U.K.) Inc. (2008-present). Previously, Mr. Goebel served as Assistant Secretary of FIMM (2008-2010), FRAC (2008-2010), and the Funds (2007-2008) and as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (2005-2007). |
William C. Coffey (43) | |
| Year of Election or Appointment: 2009 Assistant Secretary of Fidelity's Equity and High Income Funds. Mr. Coffey also serves as Senior Vice President and Deputy General Counsel of FMR LLC (2010-present), and is an employee of Fidelity Investments. Previously, Mr. Coffey served as Vice President and Associate General Counsel of FMR LLC (2005-2009). |
Holly C. Laurent (57) | |
| Year of Election or Appointment: 2008 Anti-Money Laundering (AML) Officer of the Fidelity funds. Ms. Laurent also serves as AML Officer of The North Carolina Capital Management Trust: Cash and Term Portfolios (2008-present) and is an employee of Fidelity Investments. Previously, Ms. Laurent was Senior Vice President and Head of Legal for Fidelity Business Services India Pvt. Ltd. (2006-2008), and Senior Vice President, Deputy General Counsel and Group Head for FMR LLC (2005-2006). |
Christine Reynolds (53) | |
| Year of Election or Appointment: 2008 Chief Financial Officer of the Fidelity funds. Ms. Reynolds became President of Fidelity Pricing and Cash Management Services (FPCMS) in August 2008. Ms. Reynolds served as Chief Operating Officer of FPCMS (2007-2008). Previously, Ms. Reynolds served as President, Treasurer, and Anti-Money Laundering officer of the Fidelity funds (2004-2007). |
Joseph A. Hanlon (43) | |
| Year of Election or Appointment: 2012 Chief Compliance Officer of Fidelity's Equity and High Income Funds. Mr. Hanlon serves as Senior Vice President of the Fidelity Asset Management Division (2009-present) and is an employee of Fidelity Investments. |
Joseph F. Zambello (54) | |
| Year of Election or Appointment: 2011 Deputy Treasurer of the Fidelity funds. Mr. Zambello is an employee of Fidelity Investments. Previously, Mr. Zambello served as Vice President of FMR's Program Management Group (2009-2011) and Vice President of the Transfer Agent Oversight Group (2005-2009). |
Adrien E. Deberghes (44) | |
| Year of Election or Appointment: 2008 Deputy Treasurer of Fidelity's Equity and High Income Funds. Mr. Deberghes also serves as Vice President (2011-present) and Assistant Treasurer (2010-present) of other Fidelity funds, and is an employee of Fidelity Investments (2008-present). Previously, Mr. Deberghes served as Senior Vice President of Mutual Fund Administration at State Street Corporation (2007-2008), Senior Director of Mutual Fund Administration at Investors Bank & Trust (2005-2007), and Director of Finance for Dunkin' Brands (2000-2005). |
Stephanie J. Dorsey (42) | |
| Year of Election or Appointment: 2010 Assistant Treasurer of Fidelity's Equity and High Income Funds. Ms. Dorsey also serves as Deputy Treasurer of other Fidelity funds (2008-present) and is an employee of Fidelity Investments (2008-present). Previously, Ms. Dorsey served as Treasurer (2004-2008) of the JPMorgan Mutual Funds and Vice President (2004-2008) of JPMorgan Chase Bank. |
John R. Hebble (53) | |
| Year of Election or Appointment: 2009 Assistant Treasurer of Fidelity's Equity and High Income Funds. Mr. Hebble also serves as President (2011-present), Treasurer, and Chief Financial Officer of The North Carolina Capital Management Trust: Cash and Term Portfolios (2008-present), President and Treasurer of other Fidelity funds (2008-present) and is an employee of Fidelity Investments. |
Gary W. Ryan (53) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of the Fidelity funds. Mr. Ryan is an employee of Fidelity Investments. Previously, Mr. Ryan served as Vice President of Fund Reporting in Fidelity Pricing and Cash Management Services (FPCMS) (1999-2005). |
Jonathan Davis (43) | |
| Year of Election or Appointment: 2010 Assistant Treasurer of the Fidelity funds. Mr. Davis is also Assistant Treasurer of Fidelity Rutland Square Trust II and Fidelity Commonwealth Trust II. Mr. Davis is an employee of Fidelity Investments. Previously, Mr. Davis served as Vice President and Associate General Counsel of FMR LLC (2003-2010). |
Annual Report
Distributions (Unaudited)
The fund designates 100% and 100% of the dividends distributed in April and December, respectively during the fiscal year as qualifying for the dividends-received deduction for corporate shareholders.
The fund designates 100% and 100% of the dividends distributed in April and December, during the fiscal year as amounts which may be taken into account as a dividend for the purposes of the maximum rate under section 1(h)(11) of the Internal Revenue Code.
The fund will notify shareholders in January 2013 of amounts for use in preparing 2012 income tax returns.
Annual Report
Distributions (Unaudited)
Wireless Portfolio hereby designates as a capital gain dividend with respect to the taxable year ended February 29, 2012, $3,219,975, or, if subsequently determined to be different, the net capital gain of such year.
Wireless Portfolio designates 11% of the dividends distributed during the fiscal year as qualifying for the dividends-received deduction for corporate shareholders.
Wireless Portfolio designates 48% of the dividends distributed during the fiscal year as amounts which may be taken into account as a dividend for the purposes of the maximum rate under section 1(h)(11) of the Internal Revenue Code.
The fund will notify shareholders in January 2013 of amounts for use in preparing 2012 income tax returns.
Annual Report
Managing Your Investments
Fidelity offers several ways to conveniently manage your personal investments via your telephone or PC. You can access your account information, conduct trades and research your investments 24 hours a day.
By Phone
Fidelity Automated Service Telephone provides a single toll-free number to access account balances, positions, quotes and trading. It's easy to navigate the service, and on your first call, the system will help you create a personal identification number (PIN) for security.
(phone graphic)Fidelity Automated Service Telephone (FAST®)
1-800-544-5555
Press
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 distributions, and the effects of any sales charges.
Annual Report
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
FMR Co., Inc.
Fidelity Management & Research
(U.K.) Inc.
Fidelity Management & Research
(Hong Kong) Limited
Fidelity Management & Research
(Japan) Inc.
General Distributor
Fidelity Distributors Corporation
Boston, MA
Transfer and Service Agents
Fidelity Investments Institutional Operations Company, Inc.
Boston, MA
Fidelity Service Company, Inc.
Boston, MA
Custodian
Brown Brothers Harriman & Co.
Boston, MA
Corporate Headquarters
82 Devonshire Street
Boston, MA 02109
1-800-544-8888
The Fidelity Telephone Connection
Mutual Fund 24-Hour Service
Exchanges/Redemptions
and Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
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(8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
Fidelity Automated Service
Telephone (FAST®)
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Automated line for quickest service
SELTS-UANNPRO-0412
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Fidelity®
Select Portfolios®
Utilities Sector
Utilities Portfolio
Annual Report
February 29, 2012
(Fidelity Cover Art)
Contents
Performance | How the fund has done over time. | |
Management's Discussion of Fund Performance | The Portfolio Manager's review of fund performance and strategy. | |
Shareholder Expense Example |
| |
Investment Changes |
| |
Investments |
| |
Financial Statements |
| |
Notes to Financial Statements |
| |
Report of Independent Registered Public Accounting Firm |
| |
Trustees and Officers |
| |
Distributions |
|
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com/proxyvotingresults or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov. You may also call 1-800-544-8544 to request a free copy of the proxy voting guidelines.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company.
This report and the financial statements contained herein are submitted for the general information of the shareholders of the fund. This report is not authorized for distribution to prospective investors in the fund unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com, http://www.advisor.fidelity.com, or http://www.401k.com, as applicable.
NOT FDIC INSURED • MAY LOSE VALUE • NO BANK GUARANTEE
Neither the fund nor Fidelity Distributors Corporation is a bank.
Annual Report
Utilities Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 29, 2012 | Past 1 | Past 5 | Past 10 |
Utilities Portfolio A | 6.85% | 0.26% | 6.42% |
A Prior to October 1, 2006, Utilities Portfolio operated under certain different investment policies. The historical performance for the fund may not represent its current investment policies.
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Utilities Portfolio on February 28, 2002. The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period.
Annual Report
Utilities Portfolio
Management's Discussion of Fund Performance
Market Recap: U.S. stocks rose for the 12 months ending February 29, 2012, as encouraging economic news sparked a strong late-period rally that lifted major equity benchmarks past a number of significant milestones. Stocks recovered from early-period uncertainty that followed the March 2011 earthquake, tsunami and nuclear meltdown in Japan, but plummeted during the summer amid Europe's debt woes and a historic U.S. credit-rating downgrade. Despite continued volatility and mixed economic news, markets began to recover in early October. Investors gravitated toward defensive sectors and the perceived safety of larger, more-established and dividend-paying names, helping the Dow Jones® Industrial Average advance 8.83%, and close above the psychologically important 13,000 mark in late February - for the first time since May 2008. The rally accelerated late in the period and the market broadened, as investor confidence improved amid encouraging manufacturing, housing and employment data, and signs of progress in Europe. For the year, the S&P 500® Index added 5.12%, closing near a four-year high on the period's second-to-last day. Of the 10 major market sectors in the S&P 500®, three defensive areas led the way - consumer staples, health care and utilities - while financials, materials and energy finished in negative territory. The technology-laden Nasdaq Composite® Index added 7.73%, flirting with the 3,000 mark, its highest level in 12 years. Foreign developed-markets stocks reeled over Europe's turmoil, and the MSCI® EAFE® (Europe, Australasia, Far East) Index fell 7.35%.
Comments from Douglas Simmons, Portfolio Manager of Utilities Portfolio: For the year, the fund returned 6.85%, underperforming the 12.07% gain of its sector benchmark, the MSCI® U.S. IM Utilities 25/50 Index, but outperforming the S&P 500®. Versus the MSCI index, the fund was hurt the most by unfavorable stock selection in electric utilities, an overweighting in independent power/energy trade - although security selection somewhat offset the negative here - and positioning in multi-utilities. Detractors included a small, short-lived, out-of-benchmark investment in Tokyo Electric Power, an underweighting in Virginia-based utility Dominion Resources - sold before period end - New York gas utility National Fuel Gas, untimely trading in Florida utility NextEra Energy and overweighting struggling Houston-based independent power producer Calpine. Conversely, contributions included an underweighting in index component and New Orleans-based electric utility Entergy, and investments in Edison International and Sempra Energy, utilities both located in California. I sold Entergy from the fund by period end.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including redemption fees, and (2) ongoing costs, including management fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (September 1, 2011 to February 29, 2012).
Actual Expenses
The first line of the accompanying table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Annualized Expense Ratio | Beginning | Ending | Expenses Paid |
Actual | .86% | $ 1,000.00 | $ 1,042.80 | $ 4.37 |
Hypothetical (5% return per year before expenses) |
| $ 1,000.00 | $ 1,020.59 | $ 4.32 |
* Expenses are equal to the Fund's annualized expense ratio, multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
Annual Report
Utilities Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 29, 2012 | ||
| % of fund's | % of fund's net assets |
FirstEnergy Corp. | 9.7 | 9.6 |
Sempra Energy | 8.7 | 4.8 |
NextEra Energy, Inc. | 8.6 | 7.3 |
Duke Energy Corp. | 8.4 | 0.0 |
Edison International | 7.3 | 7.2 |
PG&E Corp. | 6.8 | 3.2 |
The AES Corp. | 4.9 | 3.3 |
Progress Energy, Inc. | 4.6 | 0.0 |
NiSource, Inc. | 4.2 | 0.0 |
ONEOK, Inc. | 3.7 | 1.4 |
| 66.9 | |
Top Industries (% of fund's net assets) | |||
As of February 29, 2012 | |||
 | Electric Utilities | 44.8% |
|
 | Multi-Utilities | 22.4% |
|
 | Independent Power Producers & Energy Traders | 10.8% |
|
 | Oil, Gas & Consumable Fuels | 8.2% |
|
 | Gas Utilities | 5.1% |
|
 | All Others* | 8.7% |
|
As of August 31, 2011 | |||
| Electric Utilities | 47.6% |
|
| Multi-Utilities | 29.0% |
|
| Independent Power Producers & Energy Traders | 13.2% |
|
| Gas Utilities | 3.2% |
|
| Oil, Gas & Consumable Fuels | 1.5% |
|
| All Others* | 5.5% |
|
* Includes short-term investments and net other assets. |
Annual Report
Utilities Portfolio
Investments February 29, 2012
Showing Percentage of Net Assets
Common Stocks - 94.8% | |||
Shares | Value | ||
ELECTRIC UTILITIES - 44.8% | |||
Electric Utilities - 44.8% | |||
American Electric Power Co., Inc. | 479,325 | $ 18,027,413 | |
Duke Energy Corp. | 2,084,382 | 43,605,271 | |
Edison International | 903,941 | 37,848,010 | |
FirstEnergy Corp. | 1,138,705 | 50,433,244 | |
ITC Holdings Corp. | 188,355 | 14,217,035 | |
NextEra Energy, Inc. | 746,750 | 44,439,093 | |
Progress Energy, Inc. | 449,335 | 23,850,702 | |
| 232,420,768 | ||
GAS UTILITIES - 5.1% | |||
Gas Utilities - 5.1% | |||
National Fuel Gas Co. | 147,576 | 7,427,500 | |
ONEOK, Inc. | 230,225 | 19,025,794 | |
| 26,453,294 | ||
INDEPENDENT POWER PRODUCERS & ENERGY TRADERS - 10.8% | |||
Independent Power Producers & Energy Traders - 10.8% | |||
Calpine Corp. (a) | 1,120,624 | 17,156,753 | |
Constellation Energy Group, Inc. | 315,434 | 11,437,637 | |
GenOn Energy, Inc. (a) | 840,200 | 2,066,892 | |
The AES Corp. (a) | 1,879,607 | 25,487,471 | |
| 56,148,753 | ||
MULTI-UTILITIES - 22.4% | |||
Multi-Utilities - 22.4% | |||
NiSource, Inc. | 907,223 | 21,773,352 | |
OGE Energy Corp. | 268,904 | 14,112,082 | |
PG&E Corp. | 848,500 | 35,365,480 | |
Sempra Energy | 765,033 | 45,320,555 | |
| 116,571,469 | ||
OIL, GAS & CONSUMABLE FUELS - 8.2% | |||
Oil & Gas Refining & Marketing - 1.5% | |||
Sunoco, Inc. | 204,000 | 7,880,520 | |
Oil & Gas Storage & Transport - 6.7% | |||
Cheniere Energy, Inc. (a) | 871,996 | 13,114,820 | |
El Paso Corp. | 318,532 | 8,858,375 | |
Kinder Morgan Holding Co. LLC (d) | 51,300 | 1,807,812 | |
Williams Companies, Inc. | 361,000 | 10,786,680 | |
| 34,567,687 | ||
TOTAL OIL, GAS & CONSUMABLE FUELS | 42,448,207 | ||
| |||
Shares | Value | ||
WATER UTILITIES - 3.5% | |||
Water Utilities - 3.5% | |||
American Water Works Co., Inc. | 525,100 | $ 18,000,428 | |
TOTAL COMMON STOCKS (Cost $475,490,433) |
| ||
U.S. Treasury Obligations - 0.1% | ||||
| Principal Amount |
| ||
U.S. Treasury Bills, yield at date of purchase 0.09% 5/24/12 | $ 350,000 |
| ||
Money Market Funds - 5.8% | |||
Shares |
| ||
Fidelity Cash Central Fund, 0.12% (b) | 28,342,968 | 28,342,968 | |
Fidelity Securities Lending Cash Central Fund, 0.12% (b)(c) | 1,620,000 | 1,620,000 | |
TOTAL MONEY MARKET FUNDS (Cost $29,962,968) |
| ||
TOTAL INVESTMENT PORTFOLIO - 100.7% (Cost $505,803,331) | 522,355,822 | |
NET OTHER ASSETS (LIABILITIES) - (0.7)% | (3,386,498) | |
NET ASSETS - 100% | $ 518,969,324 | |
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 10,318 |
Fidelity Securities Lending Cash Central Fund | 56,337 |
Total | $ 66,655 |
Other Information |
The following is a summary of the inputs used, as of February 29, 2012, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities: | ||||
Common Stocks | $ 492,042,919 | $ 492,042,919 | $ - | $ - |
U.S. Treasury Obligations | 349,935 | - | 349,935 | - |
Money Market Funds | 29,962,968 | 29,962,968 | - | - |
Total Investments in Securities: | $ 522,355,822 | $ 522,005,887 | $ 349,935 | $ - |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Utilities Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2012 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $1,585,800) - See accompanying schedule: Unaffiliated issuers (cost $475,840,363) | $ 492,392,854 |
|
Fidelity Central Funds (cost $29,962,968) | 29,962,968 |
|
Total Investments (cost $505,803,331) |
| $ 522,355,822 |
Receivable for fund shares sold | 464,683 | |
Dividends receivable | 2,543,857 | |
Distributions receivable from Fidelity Central Funds | 12,967 | |
Prepaid expenses | 796 | |
Other receivables | 4,512 | |
Total assets | 525,382,637 | |
|
|
|
Liabilities | ||
Payable for fund shares redeemed | $ 4,388,130 | |
Accrued management fee | 248,243 | |
Other affiliated payables | 125,961 | |
Other payables and accrued expenses | 30,979 | |
Collateral on securities loaned, at value | 1,620,000 | |
Total liabilities | 6,413,313 | |
|
|
|
Net Assets | $ 518,969,324 | |
Net Assets consist of: |
| |
Paid in capital | $ 552,421,380 | |
Undistributed net investment income | 2,477,032 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (52,481,579) | |
Net unrealized appreciation (depreciation) on investments | 16,552,491 | |
Net Assets, for 9,874,538 shares outstanding | $ 518,969,324 | |
Net Asset Value, offering price and redemption price per share ($518,969,324 ÷ 9,874,538 shares) | $ 52.56 | |
Statement of Operations
| Year ended February 29, 2012 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 18,072,989 |
Interest |
| 14 |
Income from Fidelity Central Funds |
| 66,655 |
Total income |
| 18,139,658 |
|
|
|
Expenses | ||
Management fee | $ 2,799,781 | |
Transfer agent fees | 1,201,736 | |
Accounting and security lending fees | 192,974 | |
Custodian fees and expenses | 11,759 | |
Independent trustees' compensation | 2,981 | |
Registration fees | 54,229 | |
Audit | 42,284 | |
Legal | 3,824 | |
Interest | 1,740 | |
Miscellaneous | 4,691 | |
Total expenses before reductions | 4,315,999 | |
Expense reductions | (90,912) | 4,225,087 |
Net investment income (loss) | 13,914,571 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 37,574,533 | |
Foreign currency transactions | (5,596) | |
Futures contracts | 49,987 | |
Total net realized gain (loss) |
| 37,618,924 |
Change in net unrealized appreciation (depreciation) on: Investment securities | (16,724,003) | |
Assets and liabilities in foreign currencies | (16) | |
Total change in net unrealized appreciation (depreciation) |
| (16,724,019) |
Net gain (loss) | 20,894,905 | |
Net increase (decrease) in net assets resulting from operations | $ 34,809,476 | |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Utilities Portfolio
Financial Statements - continued
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 13,914,571 | $ 9,879,312 |
Net realized gain (loss) | 37,618,924 | 46,438,931 |
Change in net unrealized appreciation (depreciation) | (16,724,019) | 25,449,115 |
Net increase (decrease) in net assets resulting from operations | 34,809,476 | 81,767,358 |
Distributions to shareholders from net investment income | (12,398,149) | (10,194,963) |
Share transactions | 378,621,055 | 219,227,003 |
Reinvestment of distributions | 11,907,757 | 9,735,945 |
Cost of shares redeemed | (348,108,330) | (182,439,130) |
Net increase (decrease) in net assets resulting from share transactions | 42,420,482 | 46,523,818 |
Redemption fees | 40,172 | 9,278 |
Total increase (decrease) in net assets | 64,871,981 | 118,105,491 |
|
|
|
Net Assets | ||
Beginning of period | 454,097,343 | 335,991,852 |
End of period (including undistributed net investment income of $2,477,032 and undistributed net investment income of $966,206, respectively) | $ 518,969,324 | $ 454,097,343 |
Other Information Shares | ||
Sold | 7,340,663 | 4,768,833 |
Issued in reinvestment of distributions | 231,406 | 207,555 |
Redeemed | (6,728,327) | (3,899,333) |
Net increase (decrease) | 843,742 | 1,077,055 |
Financial Highlights
Years ended February 28, | 2012 F | 2011 | 2010 | 2009 | 2008 F |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 50.28 | $ 42.24 | $ 34.94 | $ 57.09 | $ 58.27 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | 1.43 | 1.14 | 1.21 | .99 | .84 |
Net realized and unrealized gain (loss) | 1.99 | 8.09 | 7.34 | (22.29) | (.82) |
Total from investment operations | 3.42 | 9.23 | 8.55 | (21.30) | .02 |
Distributions from net investment income | (1.14) | (1.19) | (1.25) | (.85) | (1.21) |
Redemption fees added to paid in capital B | - G | - G | - G | - G | .01 |
Net asset value, end of period | $ 52.56 | $ 50.28 | $ 42.24 | $ 34.94 | $ 57.09 |
Total Return A | 6.85% | 22.07% | 24.50% | (37.47)% | (.22)% |
Ratios to Average Net Assets C,E |
|
|
|
|
|
Expenses before reductions | .86% | .90% | .95% | .89% | .88% |
Expenses net of fee waivers, if any | .86% | .90% | .95% | .89% | .88% |
Expenses net of all reductions | .84% | .87% | .93% | .89% | .87% |
Net investment income (loss) | 2.78% | 2.46% | 2.98% | 1.95% | 1.35% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 518,969 | $ 454,097 | $ 335,992 | $ 301,529 | $ 606,083 |
Portfolio turnover rate D | 202% | 238% | 226% | 167% | 121% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
B Calculated based on average shares outstanding during the period.
C Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
D Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
E Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund.
F For the year ended February 29.
G Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended February 29, 2012
1. Organization.
Utilities Portfolio (the Fund) is a non-diversified fund of Fidelity Select Portfolios (the Trust) and is authorized to issue an unlimited number of shares. The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund invests primarily in securities of companies whose principal business activities fall within specific industries.
2. Investments in Fidelity Central Funds.
The Fund invests in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds held as of period end, if any, as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Fund:
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Fund uses independent pricing services approved by the Board of Trustees to value its investments. When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include market or security specific events, changes in interest rates and credit quality. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The value used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the Fund's own assumptions based on the best information available)
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level, as of February 29, 2012, is included at the end of the funds Schedule of Investments. Valuation techniques used to value the Fund's investments by major category are as follows:
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when significant market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-traded funds (ETFs) and certain indexes as well as quoted prices for similar securities are used and are categorized as Level 2 in the hierarchy in these circumstances. Utilizing these techniques may result in transfers between Level 1 and Level 2. For restricted equity securities and private placements where observable inputs are limited, assumptions about market activity and risk are used and are categorized as Level 3 in the hierarchy.
Debt securities, including restricted securities, are valued based on evaluated prices received from independent pricing services or from dealers who make markets in such securities. For U.S. government and government agency obligations, pricing services utilize matrix pricing which considers yield or price of bonds of comparable quality, coupon, maturity and type as well as dealer supplied prices and are generally categorized as Level 2 in the hierarchy. When independent prices are unavailable or unreliable, debt securities may be valued utilizing pricing matrices which consider similar factors that would be used by independent pricing services. These are generally categorized as Level 2 in the hierarchy but may be Level 3 depending on the circumstances.
Annual Report
3. Significant Accounting Policies - continued
Security Valuation - continued
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 in the hierarchy.
New Accounting Pronouncements. In May 2011, the Financial Accounting Standards Board issued Accounting Standard Update No. 2011-04, Fair Value Measurement (Topic 820) - Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. The update is effective during interim and annual periods beginning after December 15, 2011 and will result in additional disclosure for transfers between levels as well as expanded disclosure for securities categorized as Level 3 under the fair value hierarchy.
In December 2011, the Financial Accounting Standards Board issued Accounting Standard Update No. 2011-11, Disclosures about Offsetting Assets and Liabilities. The update creates new disclosure requirements requiring entities to disclose both gross and net information for derivatives and other financial instruments that are either offset in the Statement of Assets and Liabilities or subject to an enforceable master netting arrangement or similar agreement. The disclosure requirements are effective for interim and annual reporting periods beginning on or after January 1, 2013. Management is currently evaluating the impact of the update's adoption on the Fund's financial statement disclosures.
Foreign Currency. The Fund may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for income taxes is required. As of February 29, 2012, the Fund did not have any unrecognized tax benefits in the financial statements; nor is the Fund aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. The Fund files a U.S. federal tax return, in addition to state and local tax returns as required. A fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are declared and recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, deferred trustees compensation, capital loss carryforwards, and losses deferred due to wash sales.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation | $ 21,779,727 |
Gross unrealized depreciation | (6,118,143) |
Net unrealized appreciation (depreciation) on securities and other investments | $ 15,661,584 |
|
|
Tax Cost | $ 506,694,238 |
The tax-based components of distributable earnings as of period end were as follows:
Undistributed ordinary income | $ 2,477,435 |
Capital loss carryforward | $ (51,590,672) |
Net unrealized appreciation (depreciation) | $ 15,661,584 |
Capital loss carryforwards are only available to offset future capital gains of the Fund to the extent provided by regulations and may be limited. Under the Regulated Investment Company Modernization Act of 2010 (the Act), the Fund is permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period and such capital losses are required to be used prior to any losses that expire. Capital loss carryforwards were as follows:
Fiscal year of expiration |
|
2017 | $ (6,906,616) |
2018 | (44,684,056) |
Total capital loss carryforward | $ (51,590,672) |
|
|
The tax character of distributions paid was as follows:
| February 29, 2012 | February 28, 2011 |
Ordinary Income | $ 12,398,149 | $ 10,194,963 |
Trading (Redemption) Fees. Shares held by investors in the Fund less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Fund and accounted for as an addition to paid in capital.
4. Derivative Instruments.
Risk Exposures and the Use of Derivative Instruments. The Fund used derivative instruments (derivatives), including futures contracts, in order to meet its investment objectives. The strategy is to use derivatives to increase returns and manage exposure to certain risks as defined below. The success of any strategy involving derivatives depends on analysis of numerous economic factors, and if the strategies for investment do not work as intended, the Fund may not achieve its objectives.
The Fund's use of derivatives increased or decreased its exposure to the following risk:
Equity Risk | Equity risk relates to the fluctuations in the value of financial instruments as a result of changes in market prices (other than those arising from interest rate risk or foreign exchange risk), whether caused by factors specific to an individual investment, its issuer, or all factors affecting all instruments traded in a market or market segment. |
Annual Report
4. Derivative Instruments - continued
Risk Exposures and the Use of Derivative Instruments - continued
The Fund is also exposed to additional risks from investing in derivatives, such as liquidity risk and counterparty credit risk. Liquidity risk is the risk that the Fund will be unable to close out the derivative in the open market in a timely manner. Counterparty credit risk is the risk that the counterparty will not be able to fulfill its obligation to the Fund. Derivative counterparty credit risk is managed through formal evaluation of the creditworthiness of all potential counterparties. Counterparty credit risk related to exchange-traded futures contracts is minimal because of the protection provided by the exchange on which they trade. Derivatives involve, to varying degrees, risk of loss in excess of the amounts recognized in the Statement of Assets and Liabilities.
Futures Contracts. A futures contract is an agreement between two parties to buy or sell a specified underlying instrument for a fixed price at a specified future date. The Fund used futures contracts to manage its exposure to the stock market.
Upon entering into a futures contract, a fund is required to deposit either cash or securities (initial margin) with a clearing broker in an amount equal to a certain percentage of the face value of the contract. Futures contracts are marked-to-market daily and subsequent payments (variation margin) are made or received by a fund depending on the daily fluctuations in the value of the futures contracts and are recorded as unrealized appreciation or (depreciation). This receivable and/or payable is included in daily variation margin on futures contracts in the Statement of Assets and Liabilities. Realized gain or (loss) is recorded upon the expiration or closing of a futures contract.
The underlying face amount at value of open futures contracts at period end, if any, is shown in the Schedule of Investments under the caption "Futures Contracts." This amount reflects each contract's exposure to the underlying instrument at period end.
During the period the fund recognized net realized gain (loss) of $49,987 related to its investment in futures contracts. This amount is included on the Statement of Operations.
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $1,024,937,248 and $1,002,180,840, respectively.
6. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the Fund's average net assets and an annualized group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annual management fee rate was .56% of the Fund's average net assets.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the Fund's transfer, dividend disbursing and shareholder servicing agent. FIIOC receives account fees and asset-based fees that vary according to account size and type of account. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, the transfer agent fees were equivalent to an annual rate of .24% of average net assets.
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for each month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $29,994 for the period.
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Fund, along with other registered investment companies having management contracts with FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. The Fund's activity in this program during the period for which loans were outstanding was as follows:
Borrower or Lender | Average Loan | Weighted Average Interest Rate | Interest |
Borrower | $ 4,006,422 | .35% | $ 1,740 |
Annual Report
Notes to Financial Statements - continued
7. Committed Line of Credit.
The Fund participates with other funds managed by FMR or an affiliate in a $4.0 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $1,423 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, there were no borrowings on this line of credit.
8. Security Lending.
The Fund lends portfolio securities through a lending agent from time to time in order to earn additional income. For equity securities, a lending agent is used and may loan securities to certain qualified borrowers, including Fidelity Capital Markets (FCM), a broker-dealer affiliated with the Fund. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Total security lending income during the period amounted to $56,337. During the period, there were no securities loaned to FCM.
9. Expense Reductions.
Many of the brokers with whom FMR places trades on behalf of the Fund provided services to the Fund in addition to trade execution. These services included payments of certain expenses on behalf of the Fund totaling $90,912 for the period.
10. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
At the end of the period, Fidelity VIP FundsManager 60% Portfolio was the owner of record of approximately 11% of the total outstanding shares of Utilities Portfolio.
Annual Report
Report of Independent Registered Public Accounting Firm
To the Trustees of Fidelity Select Portfolios and the Shareholders of Utilities Portfolio:
In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Utilities Portfolio (a fund of Fidelity Select Portfolios) at February 29, 2012, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Utilities Portfolio's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at February 29, 2012 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 11, 2012
Annual Report
Trustees and Officers
The Trustees, Members of the Advisory Board, and executive officers of the trust and fund, as applicable, are listed below. The Board of Trustees governs the fund and is responsible for protecting the interests of shareholders. The Trustees are experienced executives who meet periodically throughout the year to oversee the fund's activities, review contractual arrangements with companies that provide services to the fund, oversee management of the risks associated with such activities and contractual arrangements, and review the fund's performance. Except for James C. Curvey, each of the Trustees oversees 226 funds advised by FMR or an affiliate. Mr. Curvey oversees 430 funds advised by FMR or an affiliate.
The Trustees hold office without limit in time except that (a) any Trustee may resign; (b) any Trustee may be removed by written instrument, signed by at least two-thirds of the number of Trustees prior to such removal; (c) any Trustee who requests to be retired or who has become incapacitated by illness or injury may be retired by written instrument signed by a majority of the other Trustees; and (d) any Trustee may be removed at any special meeting of shareholders by a two-thirds vote of the outstanding voting securities of the trust. Each Trustee who is not an interested person (as defined in the 1940 Act) (Independent Trustee), shall retire not later than the last day of the calendar year in which his or her 75th birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. The executive officers and Advisory Board Members hold office without limit in time, except that any officer and Advisory Board Member may resign or may be removed by a vote of a majority of the Trustees at any regular meeting or any special meeting of the Trustees. Except as indicated, each individual has held the office shown or other offices in the same company for the past five years.
Experience, Skills, Attributes, and Qualifications of the Fund's Trustees. The Governance and Nominating Committee has adopted a statement of policy that describes the experience, qualifications, attributes, and skills that are necessary and desirable for potential Independent Trustee candidates (Statement of Policy). The Board believes that each Trustee satisfied at the time he or she was initially elected or appointed a Trustee, and continues to satisfy, the standards contemplated by the Statement of Policy. The Governance and Nominating Committee also engages professional search firms to help identify potential Independent Trustee candidates who have the experience, qualifications, attributes, and skills consistent with the Statement of Policy. From time to time, additional criteria based on the composition and skills of the current Independent Trustees, as well as experience or skills that may be appropriate in light of future changes to board composition, business conditions, and regulatory or other developments, have also been considered by the professional search firms and the Governance and Nominating Committee. In addition, the Board takes into account the Trustees' commitment and participation in Board and committee meetings, as well as their leadership of standing and ad hoc committees throughout their tenure.
In determining that a particular Trustee was and continues to be qualified to serve as a Trustee, the Board has considered a variety of criteria, none of which, in isolation, was controlling. The Board believes that, collectively, the Trustees have balanced and diverse experience, qualifications, attributes, and skills, which allow the Board to operate effectively in governing the fund and protecting the interests of shareholders. Information about the specific experience, skills, attributes, and qualifications of each Trustee, which in each case led to the Board's conclusion that the Trustee should serve (or continue to serve) as a trustee of the fund, is provided below.
Board Structure and Oversight Function. James C. Curvey is an interested person (as defined in the 1940 Act) and currently serves as Acting Chairman. The Trustees have determined that an interested Chairman is appropriate and benefits shareholders because an interested Chairman has a personal and professional stake in the quality and continuity of services provided to the fund. Independent Trustees exercise their informed business judgment to appoint an individual of their choosing to serve as Chairman, regardless of whether the Trustee happens to be independent or a member of management. The Independent Trustees have determined that they can act independently and effectively without having an Independent Trustee serve as Chairman and that a key structural component for assuring that they are in a position to do so is for the Independent Trustees to constitute a substantial majority for the Board. The Independent Trustees also regularly meet in executive session. Ned C. Lautenbach serves as Chairman of the Independent Trustees and as such (i) acts as a liaison between the Independent Trustees and management with respect to matters important to the Independent Trustees and (ii) with management prepares agendas for Board meetings.
Fidelity funds are overseen by different Boards of Trustees. The fund's Board oversees Fidelity's equity and high income funds and another Board oversees Fidelity's investment-grade bond, money market, and asset allocation funds. The asset allocation funds may invest in Fidelity funds overseen by the fund's Board. The use of separate Boards, each with its own committee structure, allows the Trustees of each group of Fidelity funds to focus on the unique issues of the funds they oversee, including common research, investment, and operational issues. On occasion, the separate Boards establish joint committees to address issues of overlapping consequences for the Fidelity funds overseen by each Board.
The Trustees operate using a system of committees to facilitate the timely and efficient consideration of all matters of importance to the Trustees, the fund, and fund shareholders and to facilitate compliance with legal and regulatory requirements and oversight of the fund's activities and associated risks. The Board, acting through its committees, has charged FMR and its affiliates with (i) identifying events or circumstances the occurrence of which could have demonstrably adverse effects on the fund's business and/or reputation; (ii) implementing processes and controls to lessen the possibility that such events or circumstances occur or to mitigate the effects of such events or circumstances if they do occur; and (iii) creating and maintaining a system designed to evaluate continuously business and market conditions in order to facilitate the identification and implementation processes described in (i) and (ii) above. Because the day-to-day operations and activities of the fund are carried out by or through FMR, its affiliates and other service providers, the fund's exposure to risks is mitigated but not eliminated by the processes overseen by the Trustees. While each of the Board's committees has responsibility for overseeing different aspects of the fund's activities, oversight is exercised primarily through the Operations, Audit, and Compliance Committees. In addition, the Independent Trustees have worked with FMR to enhance the Board's oversight of investment and financial risks, legal and regulatory risks, technology risks, and operational risks, including the development of additional risk reporting to the Board. For example, a working group comprised of Independent Trustees and FMR has worked and continues to work to review the Fidelity funds' valuation-related activities, reporting and risk management. Appropriate personnel, including but not limited to the fund's Chief Compliance Officer (CCO), FMR's internal auditor, the independent accountants, the fund's Treasurer and portfolio management personnel, make periodic reports to the Board's committees, as appropriate, including an annual review of FMR's risk management program for the Fidelity funds. The responsibilities of each standing committee, including their oversight responsibilities, are described further under "Standing Committees of the Fund's Trustees."
Annual Report
Trustees and Officers - continued
The fund's Statement of Additional Information (SAI) includes more information about the Trustees. To request a free copy, call Fidelity at 1-800-544-8544.
Interested Trustees*:
Correspondence intended for each Trustee who is an interested person may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupations and Other Relevant Experience+ | |
James C. Curvey (76) | |
| Year of Election or Appointment: 2007 Mr. Curvey is Trustee and Acting Chairman of the Board of Trustees of certain Trusts. Mr. Curvey also serves as Trustee (2007-present) of other investment companies advised by FMR. Mr. Curvey is a Director of Fidelity Investments Money Management, Inc. (2009-present), Director of Fidelity Research & Analysis Co. (2009-present) and Director of FMR and FMR Co., Inc. (2007-present). Mr. Curvey is also Vice Chairman (2007-present) and Director of FMR LLC. In addition, Mr. Curvey serves as an Overseer for the Boston Symphony Orchestra and a member of the Trustees of Villanova University. Previously, Mr. Curvey was the Vice Chairman (2006-2007) and Director (2000-2007) of FMR Corp. |
Ronald P. O'Hanley (55) | |
| Year of Election or Appointment: 2011 Mr. O'Hanley is Director of FMR Co., Inc. (2010-present), Director of Fidelity Investments Money Management, Inc. (2010-present), Director of Fidelity Research & Analysis Company (2010-present), President of Fidelity Asset Management and Corporate Services and a member of Fidelity's Executive Committee (2010-present). Previously, Mr. O'Hanley served as President and Chief Executive Officer of BNY Mellon Asset Management (2007-2010). Mr. O'Hanley also served as Vice Chairman of Bank New York Mellon Corp. and a member of that firm's Executive Committee. Prior to the 2007 merger of The Bank of New York and Mellon Financial Corporation, he was Vice Chairman of Mellon Financial Corporation and President and Chief Executive Officer of Mellon Asset Management. He joined Mellon in February 1997. Mr. O'Hanley currently serves as Chairman of the Boston Public Library Foundation Board of Directors and sits on the Board of Directors of Beth Israel Deaconess Medical Center, the Board of Trustees of the Marine Biological Laboratory and the Advisory Board of the Maxwell School of Citizenship and Public Administration at Syracuse University. Mr. O'Hanley also chairs the Council on Asset Management for the Financial Services Roundtable and is a member of the Board of Directors of Institutional Investor's U.S. Institute. |
* Trustees have been determined to be "Interested Trustees" by virtue of, among other things, their affiliation with the trust or various entities under common control with FMR.
+ The information above includes each Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to each Trustee's qualifications to serve as a Trustee, which led to the conclusion that each Trustee should serve as a Trustee for the fund.
Independent Trustees:
Correspondence intended for each Independent Trustee (that is, the Trustees other than the Interested Trustees) may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235.
Name, Age; Principal Occupations and Other Relevant Experience+ | |
Dennis J. Dirks (63) | |
| Year of Election or Appointment: 2005 Prior to his retirement in May 2003, Mr. Dirks was Chief Operating Officer and a member of the Board of The Depository Trust & Clearing Corporation (DTCC). He also served as President, Chief Operating Officer, and Board member of The Depository Trust Company (DTC) and President and Board member of the National Securities Clearing Corporation (NSCC). In addition, Mr. Dirks served as Chief Executive Officer and Board member of the Government Securities Clearing Corporation, Chief Executive Officer and Board member of the Mortgage-Backed Securities Clearing Corporation, as a Trustee and a member of the Finance Committee of Manhattan College (2005-2008), and as a Trustee and a member of the Finance Committee of AHRC of Nassau County (2006-2008). Mr. Dirks is a member of the Independent Directors Council (IDC) Governing Council (2010-present) and Board of Directors for The Brookville Center for Children's Services, Inc. (2009-present). |
Alan J. Lacy (58) | |
| Year of Election or Appointment: 2008 Mr. Lacy serves as Senior Adviser (2007-present) of Oak Hill Capital Partners, L.P. (private equity). Mr. Lacy also served as Chief Executive Officer (2000-2005) and Vice Chairman (2005-2006) of Sears Holdings Corporation and Sears, Roebuck and Co. (retail). In addition, Mr. Lacy serves as a member of the Board of Directors of Dave & Buster's, Inc. (restaurant and entertainment complexes, 2010-present), The Hillman Companies, Inc. (hardware wholesalers, 2010-present), and Bristol-Myers Squibb Company (global pharmaceuticals, 2007-present). Mr. Lacy is a member of the Board of Trustees of The National Parks Conservation Association (2006-present). Previously, Mr. Lacy served as Chairman of the Board of Trustees of the National Parks Conservation Association (2008-2011) and as a member of the Board of Directors for the Western Union Company (global money transfer, 2006-2011). |
Ned C. Lautenbach (68) | |
| Year of Election or Appointment: 2000 Mr. Lautenbach is Chairman of the Independent Trustees of the Equity and High Income Funds (2006-present). Mr. Lautenbach currently serves as the Lead Director of the Eaton Corporation Board of Directors (diversified industrial, 1997-present). Mr. Lautenbach is also a member of the Board of Directors of the Philharmonic Center for the Arts in Naples, Florida (1999-present); a member of the Board of Trustees of Fairfield University (2005-present); and a member of the Council on Foreign Relations (1994-present). Previously, Mr. Lautenbach was a Partner/Advisory Partner at Clayton, Dubilier & Rice, LLC (private equity investment, 1998-2010), as well as a Director of Sony Corporation (2006-2007). |
Joseph Mauriello (67) | |
| Year of Election or Appointment: 2008 Prior to his retirement in January 2006, Mr. Mauriello served in numerous senior management positions including Deputy Chairman and Chief Operating Officer (2004-2005), and Vice Chairman of Financial Services (2002-2004) of KPMG LLP US (professional services, 1965-2005). Mr. Mauriello currently serves as a member of the Board of Directors of XL Group plc. (global insurance and re-insurance, 2006-present) and of Arcadia Resources Inc. (health care services and products, 2007-present). Previously, Mr. Mauriello served as a Director of the Hamilton Funds of the Bank of New York (2006-2007). |
Robert W. Selander (61) | |
| Year of Election or Appointment: 2011 Previously, Mr. Selander served as a Member of the Advisory Board of Fidelity's Equity and High Income Funds (2011), Executive Vice Chairman (2010), Chief Executive Officer (2009-2010), and President and Chief Executive Officer (1997-2009) of Mastercard, Inc. |
Cornelia M. Small (67) | |
| Year of Election or Appointment: 2005 Ms. Small is a member of the Board of Directors of the Teagle Foundation (2009-present). Ms. Small is also a member of the Investment Committee, and Chair (2008-present) and a member of the Board of Trustees of Smith College. In addition, Ms. Small serves on the Investment Committee of the Berkshire Taconic Community Foundation (2008-present). Previously, Ms. Small served as Chairperson of the Investment Committee (2002-2008) of Smith College. In addition, Ms. Small served as Chief Investment Officer, Director of Global Equity Investments, and a member of the Board of Directors of Scudder, Stevens & Clark and Scudder Kemper Investments. |
William S. Stavropoulos (72) | |
| Year of Election or Appointment: 2001 Mr. Stavropoulos is Vice Chairman of the Independent Trustees of the Equity and High Income Funds (2006-present). Mr. Stavropoulos serves as President and Founder of the Michigan Baseball Foundation, the Great Lakes Loons (2007-present). Mr. Stavropoulos is Chairman Emeritus of the Board of Directors of The Dow Chemical Company, where he previously served in numerous senior management positions, including President, CEO (1995-2000; 2002-2004), Chairman of the Executive Committee (2000-2006), and as a member of the Board of Directors (1990-2006). Currently, Mr. Stavropoulos is Chairman of Univar (global distributor of commodity and specialty chemicals, 2010-present), a Director of Teradata Corporation (data warehousing and technology solutions, 2008-present), Chemical Financial Corporation, Maersk Inc. (industrial conglomerate), Tyco International, Inc. (multinational manufacturing and services, 2007-present), and a member of the Advisory Board for Metalmark Capital (private equity investment, 2005-present). Mr. Stavropoulos is a special advisor to Clayton, Dubilier & Rice, LLC (private equity investment). In addition, Mr. Stavropoulos is a member of the University of Notre Dame Advisory Council for the College of Science. |
David M. Thomas (62) | |
| Year of Election or Appointment: 2008 Previously, Mr. Thomas served as Executive Chairman (2005-2006) and Chairman and Chief Executive Officer (2000-2005) of IMS Health, Inc. (pharmaceutical and healthcare information solutions). In addition, Mr. Thomas serves as a member of the Board of Directors of Fortune Brands, Inc. (consumer products), and Interpublic Group of Companies, Inc. (marketing communication, 2004-present). |
Michael E. Wiley (61) | |
| Year of Election or Appointment: 2008 Mr. Wiley also serves as a Director of Asia Pacific Exploration Consolidated (international oil and gas exploration and production, 2008-present). Mr. Wiley serves as a Director of Tesoro Corporation (independent oil refiner and marketer, 2005-present), and a Director of Bill Barrett Corporation (exploration and production, 2005-present). In addition, Mr. Wiley also serves as a Director of Post Oak Bank (privately-held bank, 2004-present). Previously, Mr. Wiley served as a member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-2010), as a Senior Energy Advisor of Katzenbach Partners, LLC (consulting, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production, 2001-2005). |
+ The information above includes each Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to each Trustee's qualifications to serve as a Trustee, which led to the conclusion that each Trustee should serve as a Trustee for the fund.
Advisory Board Members and Executive Officers:
Correspondence intended for each executive officer, Edward C. Johnson 3d, and Peter S. Lynch may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
Edward C. Johnson 3d (81) | |
| Year of Election or Appointment: 2011 Member of the Advisory Board of Fidelity's Equity and High Income Funds. Mr. Johnson serves as Chief Executive Officer, Chairman, and a Director of FMR LLC, and also serves as Chairman and Director of FIL Limited. Previously, Mr. Johnson served as a Trustee and Chairman of the Board of certain Fidelity Trusts, Chairman and a Director of FMR, Chairman and a Director of FMR Co., Inc., and President of FMR LLC (2006-2007). |
Peter S. Lynch (68) | |
| Year of Election or Appointment: 2003 Member of the Advisory Board of Fidelity's Equity and High Income Funds. Mr. Lynch is Vice Chairman and a Director of FMR and FMR Co., Inc. In addition, Mr. Lynch serves as a Trustee of Boston College and as the Chairman of the Inner-City Scholarship Fund. Previously, Mr. Lynch served on the Special Olympics International Board of Directors (1997-2006). |
Kenneth B. Robins (42) | |
| Year of Election or Appointment: 2008 President and Treasurer of Fidelity's Equity and High Income Funds. Mr. Robins also serves as President and Treasurer (2010-present) and Assistant Treasurer (2009-present) of other Fidelity funds and is an employee of Fidelity Investments (2004-present). Previously, Mr. Robins served as Deputy Treasurer of the Fidelity funds (2005-2008) and Treasurer and Chief Financial Officer of The North Carolina Capital Management Trust: Cash and Term Portfolios (2006-2008). |
Brian B. Hogan (47) | |
| Year of Election or Appointment: 2009 Vice President of Equity and High Income Funds. Mr. Hogan also serves as President of FMR's Equity Division (2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager. |
Christopher S. Bartel (40) | |
| Year of Election or Appointment: 2009 Vice President of Fidelity's Sector and Real Estate Equity Funds. Mr. Bartel also serves as a Director, President, and Chief Executive Officer of Fidelity Management & Research (Japan) Inc. (2012-present) and Senior Vice President of Global Equity Research (2010-present). Previously, Mr. Bartel served as Senior Vice President of Equity Research (2009-2010), Managing Director of Research (2006-2009), and an analyst and portfolio manager (2000-2006). |
Scott C. Goebel (44) | |
| Year of Election or Appointment: 2008 Secretary and Chief Legal Officer (CLO) of the Fidelity funds. Mr. Goebel also serves as Secretary of Fidelity Investments Money Management, Inc. (FIMM) (2010-present) and Fidelity Research and Analysis Company (FRAC) (2010-present); Secretary and CLO of The North Carolina Capital Management Trust: Cash and Term Portfolios (2008-present); General Counsel, Secretary, and Senior Vice President of FMR (2008-present) and FMR Co., Inc. (2008-present); employed by FMR LLC or an affiliate (2001-present); Chief Legal Officer of Fidelity Management & Research (Hong Kong) Limited (2008-present) and Assistant Secretary of Fidelity Management & Research (Japan) Inc. (2008-present), and Fidelity Management & Research (U.K.) Inc. (2008-present). Previously, Mr. Goebel served as Assistant Secretary of FIMM (2008-2010), FRAC (2008-2010), and the Funds (2007-2008) and as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (2005-2007). |
William C. Coffey (43) | |
| Year of Election or Appointment: 2009 Assistant Secretary of Fidelity's Equity and High Income Funds. Mr. Coffey also serves as Senior Vice President and Deputy General Counsel of FMR LLC (2010-present), and is an employee of Fidelity Investments. Previously, Mr. Coffey served as Vice President and Associate General Counsel of FMR LLC (2005-2009). |
Holly C. Laurent (57) | |
| Year of Election or Appointment: 2008 Anti-Money Laundering (AML) Officer of the Fidelity funds. Ms. Laurent also serves as AML Officer of The North Carolina Capital Management Trust: Cash and Term Portfolios (2008-present) and is an employee of Fidelity Investments. Previously, Ms. Laurent was Senior Vice President and Head of Legal for Fidelity Business Services India Pvt. Ltd. (2006-2008), and Senior Vice President, Deputy General Counsel and Group Head for FMR LLC (2005-2006). |
Christine Reynolds (53) | |
| Year of Election or Appointment: 2008 Chief Financial Officer of the Fidelity funds. Ms. Reynolds became President of Fidelity Pricing and Cash Management Services (FPCMS) in August 2008. Ms. Reynolds served as Chief Operating Officer of FPCMS (2007-2008). Previously, Ms. Reynolds served as President, Treasurer, and Anti-Money Laundering officer of the Fidelity funds (2004-2007). |
Joseph A. Hanlon (43) | |
| Year of Election or Appointment: 2012 Chief Compliance Officer of Fidelity's Equity and High Income Funds. Mr. Hanlon serves as Senior Vice President of the Fidelity Asset Management Division (2009-present) and is an employee of Fidelity Investments. |
Joseph F. Zambello (54) | |
| Year of Election or Appointment: 2011 Deputy Treasurer of the Fidelity funds. Mr. Zambello is an employee of Fidelity Investments. Previously, Mr. Zambello served as Vice President of FMR's Program Management Group (2009-2011) and Vice President of the Transfer Agent Oversight Group (2005-2009). |
Adrien E. Deberghes (44) | |
| Year of Election or Appointment: 2008 Deputy Treasurer of Fidelity's Equity and High Income Funds. Mr. Deberghes also serves as Vice President (2011-present) and Assistant Treasurer (2010-present) of other Fidelity funds, and is an employee of Fidelity Investments (2008-present). Previously, Mr. Deberghes served as Senior Vice President of Mutual Fund Administration at State Street Corporation (2007-2008), Senior Director of Mutual Fund Administration at Investors Bank & Trust (2005-2007), and Director of Finance for Dunkin' Brands (2000-2005). |
Stephanie J. Dorsey (42) | |
| Year of Election or Appointment: 2010 Assistant Treasurer of Fidelity's Equity and High Income Funds. Ms. Dorsey also serves as Deputy Treasurer of other Fidelity funds (2008-present) and is an employee of Fidelity Investments (2008-present). Previously, Ms. Dorsey served as Treasurer (2004-2008) of the JPMorgan Mutual Funds and Vice President (2004-2008) of JPMorgan Chase Bank. |
John R. Hebble (53) | |
| Year of Election or Appointment: 2009 Assistant Treasurer of Fidelity's Equity and High Income Funds. Mr. Hebble also serves as President (2011-present), Treasurer, and Chief Financial Officer of The North Carolina Capital Management Trust: Cash and Term Portfolios (2008-present), President and Treasurer of other Fidelity funds (2008-present) and is an employee of Fidelity Investments. |
Gary W. Ryan (53) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of the Fidelity funds. Mr. Ryan is an employee of Fidelity Investments. Previously, Mr. Ryan served as Vice President of Fund Reporting in Fidelity Pricing and Cash Management Services (FPCMS) (1999-2005). |
Jonathan Davis (43) | |
| Year of Election or Appointment: 2010 Assistant Treasurer of the Fidelity funds. Mr. Davis is also Assistant Treasurer of Fidelity Rutland Square Trust II and Fidelity Commonwealth Trust II. Mr. Davis is an employee of Fidelity Investments. Previously, Mr. Davis served as Vice President and Associate General Counsel of FMR LLC (2003-2010). |
Annual Report
Distributions (Unaudited)
The fund designates 100% and 100% of the dividends distributed in April and December, respectively, during the fiscal year as qualifying for the dividends-received deduction for corporate shareholders.
The fund designates 100% of the dividends distributed during the fiscal year as amounts which may be taken into account as a dividends distributed in April and December, respectively, during the fiscal year as amounts which may be taken into account as a dividend for the purposes of the maximum rate under section 1(h)(11) of the Internal Revenue Code.
The fund will notify shareholders in January 2013 of amounts for use in preparing 2012 income tax returns.
Annual Report
Managing Your Investments
Fidelity offers several ways to conveniently manage your personal investments via your telephone or PC. You can access your account information, conduct trades and research your investments 24 hours a day.
By Phone
Fidelity Automated Service Telephone provides a single toll-free number to access account balances, positions, quotes and trading. It's easy to navigate the service, and on your first call, the system will help you create a personal identification number (PIN) for security.
(phone graphic)Fidelity Automated Service Telephone (FAST®)
1-800-544-5555
Press
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 distributions, and the effects of any sales charges.
Annual Report
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
FMR Co., Inc.
Fidelity Management & Research
(U.K.) Inc.
Fidelity Management & Research
(Hong Kong) Limited
Fidelity Management & Research
(Japan) Inc.
General Distributor
Fidelity Distributors Corporation
Boston, MA
Transfer and Service Agents
Fidelity Investments Institutional
Operations Company, Inc.
Boston, MA
Fidelity Service Company, Inc.
Boston, MA
Custodian
Brown Brothers Harriman & Co.
Boston, MA
Corporate Headquarters
82 Devonshire Street
Boston, MA 02109
1-800-544-8888
The Fidelity Telephone Connection
Mutual Fund 24-Hour Service
Exchanges/Redemptions
and Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774
(8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
Fidelity Automated Service
Telephone (FAST®)
1-800-544-5555
Automated line for quickest service
SELUTL-UANNPRO-0412
1.910427.102
Fidelity Advisor
Focus Funds®
Class A, Class T, Class B and Class C
Fidelity Advisor® Consumer Staples Fund
Fidelity Advisor Gold Fund
Fidelity Advisor Materials Fund
Fidelity Advisor Telecommunications Fund
Each Advisor fund listed above is a class
of the Fidelity® Select Portfolios®.
Annual Report
February 29, 2012
(Fidelity Cover Art)
Contents
Fidelity Advisor® Consumer Staples Fund | Performance | |
| Management's Discussion | |
| Shareholder Expense Example | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
| Notes to the Financial Statements | |
Fidelity Advisor Gold Fund | Performance | |
| Management's Discussion | |
| Shareholder Expense Example | |
| Investment Changes | |
| Consolidated Investments | |
| Consolidated Financial Statements | |
| Notes to the Consolidated Financial Statements | |
Fidelity Advisor Materials Fund | Performance | |
| Management's Discussion | |
| Shareholder Expense Example | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
| Notes to the Financial Statements | |
Fidelity Advisor Telecommunications Fund | Performance | |
| Management's Discussion | |
| Shareholder Expense Example | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
| Notes to the Financial Statements | |
Report of Independent Registered Public Accounting Firm |
| |
Trustees and Officers |
| |
Distributions |
|
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com/proxyvotingresults or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov. You may also call 1-877-208-0098 to request a free copy of the proxy voting guidelines.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company.
This report and the financial statements contained herein are submitted for the general information of the shareholders of the funds. This report is not authorized for distribution to prospective investors in the funds unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com, http://www.advisor.fidelity.com, or http://www.401k.com, as applicable.
NOT FDIC INSURED • MAY LOSE VALUE • NO BANK GUARANTEE
Neither the funds nor Fidelity Distributors Corporation is a bank.
Annual Report
Fidelity Advisor® Consumer Staples Fund - Class A, T, B and C
Performance
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 29, 2012 | Past 1 | Past 5 years | Past 10 |
Class A (incl. 5.75% sales charge) A | 8.39% | 6.68% | 7.73% |
Class T (incl. 3.50% sales charge) B | 10.66% | 6.89% | 7.82% |
Class B (incl. contingent deferred | 9.06% | 6.79% | 7.91% |
Class C (incl. contingent deferred sales charge) D | 13.14% | 7.16% | 7.94% |
A Class A shares bear a 0.25% 12b-1 fee. The initial offering of Class A shares took place on December 12, 2006. Returns prior to December 12, 2006 are those of Consumer Staples Portfolio, the original class of the fund, which has no 12b-1 fee. Had Class A shares' 12b-1 fee been reflected, returns prior to December 12, 2006 would have been lower.
B Class T shares bear a 0.50% 12b-1 fee. The initial offering of Class T shares took place on December 12, 2006. Returns prior to December 12, 2006 are those of Consumer Staples Portfolio, the original class of the fund, which has no 12b-1 fee. Had Class T shares' 12b-1 fee been reflected, returns prior to December 12, 2006 would have been lower.
C Class B shares bear a 1.00% 12b-1 fee. The initial offering of Class B shares took place on December 12, 2006. Returns prior to December 12, 2006 are those of Consumer Staples Portfolio, the original class of the fund, which has no 12b-1 fee. Had Class B shares' 12b-1 fee been reflected, returns prior to December 12, 2006 would have been lower. Class B shares' contingent deferred sales charge included in the past one year, past five years, and past ten years total return figures are 5%, 2%, and 0%, respectively.
D Class C shares bear a 1.00% 12b-1 fee. The initial offering of Class C shares took place on December 12, 2006. Returns prior to December 12, 2006 are those of Consumer Staples Portfolio, the original class of the fund, which has no 12b-1 fee. Had Class C shares' 12b-1 fee been reflected, returns prior to December 12, 2006 would have been lower. Class C shares' contingent deferred sales charge included in the past one year, past five years, and past ten years total return figures are 1%, 0%, and 0%, respectively.
Prior to October 1, 2006, the fund operated under certain different investment policies. The historical performance of the fund may not represent its current investment policies.
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Fidelity Advisor Consumer Staples Fund - Class A on February 28, 2002, and the current 5.75% sales charge was paid. The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period. The initial offering of Class A took place on December 12, 2006. See the Average Annual Total Returns table for additional information regarding the performance of Class A.
Annual Report
Fidelity Advisor Consumer Staples Fund
Management's Discussion of Fund Performance
Market Recap: U.S. stocks rose for the 12 months ending February 29, 2012, as encouraging economic news sparked a strong late-period rally that lifted major equity benchmarks past a number of significant milestones. Stocks recovered from early-period uncertainty that followed the March 2011 earthquake, tsunami and nuclear meltdown in Japan, but plummeted during the summer amid Europe's debt woes and a historic U.S. credit-rating downgrade. Despite continued volatility and mixed economic news, markets began to recover in early October. Investors gravitated toward defensive sectors and the perceived safety of larger, more-established and dividend-paying names, helping the Dow Jones® Industrial Average advance 8.83%, and close above the psychologically important 13,000 mark in late February - for the first time since May 2008. The rally accelerated late in the period and the market broadened, as investor confidence improved amid encouraging manufacturing, housing and employment data, and signs of progress in Europe. For the year, the S&P 500® Index added 5.12%, closing near a four-year high on the period's second-to-last day. Of the 10 major market sectors in the S&P 500®, three defensive areas led the way - consumer staples, health care and utilities - while financials, materials and energy finished in negative territory. The technology-laden Nasdaq Composite® Index added 7.73%, flirting with the 3,000 mark, its highest level in 12 years. Foreign developed-markets stocks reeled over Europe's turmoil, and the MSCI® EAFE® (Europe, Australasia, Far East) Index fell 7.35%.
Comments from Robert Lee, Portfolio Manager of Fidelity Advisor® Consumer Staples Fund: For the 12 months ending February 29, 2012, the fund's Class A, Class T, Class B and Class C shares returned 15.00%, 14.67%, 14.06% and 14.14%, respectively (excluding sales charges), modestly underperforming the 15.44% advance of the MSCI® U.S. IM Consumer Staples 25/50 Index, but decisively outperforming the S&P 500®. Relative to the sector benchmark, the biggest drag on performance was weak stock picking in the personal products area, including stakes in cosmetics manufacturers L'Oreal, an out-of-index holding based in France, and Avon Products. L'Oreal hurt because I was paring the fund's weighting in the stock while its price was rising, while Avon struggled with problems at a new distribution center. In the same space, not owning index component Herbalife, a global direct seller of nutritional supplements, also hurt. Poor positioning in agricultural products detracted, including a large overweighting in agricultural processor Bunge. However, the negative impact was made up for by an underweighting in Archer Daniels Midland in the same category. We also had weak stock picking in tobacco, where a substantial underweighting in Philip Morris International was the fund's biggest individual detractor. Philip Morris, which sells its tobacco products overseas, benefited from its earnings stability and a temporary market-share boost in Japan following that nation's natural disaster in March. Underweighting cigarette maker Lorillard also proved costly. However, a large non-index stake in British American Tobacco, the fund's top individual contributor, more than offset the damage. Within packaged foods/meats, significantly underweighting and then selling major index constituent Kraft Foods was detrimental. An industry overweighting in brewers hurt, including a sizable stake in Molson Coors Brewing. Unfavorable positioning in hypermarkets/super center also was costly. In addition, many companies in the consumer staples sector do business globally and, as such, generate income in currencies around the world. The relative strength of the U.S. dollar during the past year had a negative impact on the dollar value of those earnings. On the positive side, strong stock picking in distillers/vintners and drug retail, along with good positioning in soft drinks, buoyed the fund's return. In the first category, out-of-index positions in premium spirits distributors Diageo and Remy Cointreau, based in Britain and France, respectively, outperformed. In drug retail, CVS Caremark shares surged during the second half of the period, while in soft drinks an underweighting in PepsiCo, a major index component, paid off because the stock lagged.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Consumer Staples Portfolio
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments or redemption proceeds, redemption fees, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (September 1, 2011 to February 29, 2012).
Actual Expenses
The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Annualized | Beginning | Ending | Expenses Paid |
Class A | 1.10% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,086.00 | $ 5.71 |
Hypothetical A |
| $ 1,000.00 | $ 1,019.39 | $ 5.52 |
Class T | 1.38% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,084.50 | $ 7.15 |
Hypothetical A |
| $ 1,000.00 | $ 1,018.00 | $ 6.92 |
Class B | 1.91% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,081.60 | $ 9.89 |
Hypothetical A |
| $ 1,000.00 | $ 1,015.37 | $ 9.57 |
Class C | 1.84% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,082.00 | $ 9.52 |
Hypothetical A |
| $ 1,000.00 | $ 1,015.71 | $ 9.22 |
Consumer Staples | .82% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,087.50 | $ 4.26 |
Hypothetical A |
| $ 1,000.00 | $ 1,020.79 | $ 4.12 |
Institutional Class | .87% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,087.30 | $ 4.52 |
Hypothetical A |
| $ 1,000.00 | $ 1,020.54 | $ 4.37 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
Annual Report
Consumer Staples Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 29, 2012 | ||
| % of fund's | % of fund's net assets |
Procter & Gamble Co. | 16.2 | 15.8 |
British American Tobacco PLC sponsored ADR | 11.9 | 8.5 |
The Coca-Cola Co. | 10.8 | 11.4 |
CVS Caremark Corp. | 6.7 | 6.8 |
Altria Group, Inc. | 4.8 | 5.2 |
Walgreen Co. | 3.3 | 2.4 |
Anheuser-Busch InBev SA NV | 3.1 | 2.4 |
PepsiCo, Inc. | 3.0 | 4.7 |
Diageo PLC sponsored ADR | 2.8 | 2.8 |
Constellation Brands, Inc. Class A (sub. vtg.) | 2.6 | 2.8 |
| 65.2 | |
Top Industries (% of fund's net assets) | |||
As of February 29, 2012 | |||
 | Beverages | 31.3% |
|
 | Tobacco | 20.4% |
|
 | Household Products | 19.0% |
|
 | Food & Staples Retailing | 11.1% |
|
 | Food Products | 10.0% |
|
 | All Others* | 8.2% |
|
As of August 31, 2011 | |||
| Beverages | 32.6% |
|
| Household Products | 18.9% |
|
| Tobacco | 17.2% |
|
| Food & Staples Retailing | 11.3% |
|
| Food Products | 9.3% |
|
| All Others* | 10.7% |
|
* Includes short-term investments and net other assets. |
Annual Report
Consumer Staples Portfolio
Investments February 29, 2012
Showing Percentage of Net Assets
Common Stocks - 97.2% | |||
Shares | Value | ||
BEVERAGES - 31.3% | |||
Brewers - 6.1% | |||
Anheuser-Busch InBev SA NV | 798,628 | $ 53,648,774 | |
Companhia de Bebidas das Americas (AmBev) (PN) sponsored ADR | 218,085 | 8,725,581 | |
Molson Coors Brewing Co. Class B | 1,001,712 | 44,015,225 | |
| 106,389,580 | ||
Distillers & Vintners - 9.4% | |||
Constellation Brands, Inc. Class A (sub. vtg.) (a) | 2,071,870 | 45,249,641 | |
Diageo PLC sponsored ADR | 510,827 | 48,814,628 | |
Pernod Ricard SA | 326,101 | 33,737,970 | |
Remy Cointreau SA | 346,208 | 33,913,382 | |
Treasury Wine Estates Ltd. | 351,937 | 1,468,016 | |
| 163,183,637 | ||
Soft Drinks - 15.8% | |||
Coca-Cola Bottling Co. CONSOLIDATED | 81,713 | 5,265,586 | |
Coca-Cola FEMSA SAB de CV sponsored ADR | 84,229 | 8,334,460 | |
Coca-Cola Hellenic Bottling Co. SA sponsored ADR | 200,200 | 3,775,772 | |
Coca-Cola Icecek A/S | 383,842 | 4,936,381 | |
Embotelladora Andina SA sponsored ADR (d) | 271,900 | 8,581,164 | |
Fomento Economico Mexicano SAB de CV sponsored ADR | 10,187 | 749,763 | |
Monster Beverage Corp. (a) | 41,100 | 2,350,509 | |
PepsiCo, Inc. | 817,727 | 51,467,737 | |
The Coca-Cola Co. | 2,683,792 | 187,489,709 | |
| 272,951,081 | ||
TOTAL BEVERAGES | 542,524,298 | ||
FOOD & STAPLES RETAILING - 11.1% | |||
Drug Retail - 10.4% | |||
CVS Caremark Corp. | 2,589,663 | 116,793,801 | |
Drogasil SA | 623,400 | 6,069,026 | |
Walgreen Co. | 1,744,986 | 57,863,736 | |
| 180,726,563 | ||
Food Distributors - 0.2% | |||
Chefs' Warehouse Holdings (a) | 20,300 | 426,300 | |
Sysco Corp. | 72,340 | 2,128,243 | |
| 2,554,543 | ||
Food Retail - 0.3% | |||
Fresh Market, Inc. (a) | 11,800 | 531,236 | |
The Pantry, Inc. (a) | 392,025 | 4,872,871 | |
| 5,404,107 | ||
Hypermarkets & Super Centers - 0.2% | |||
Carrefour SA | 122,670 | 3,075,583 | |
TOTAL FOOD & STAPLES RETAILING | 191,760,796 | ||
| |||
Shares | Value | ||
FOOD PRODUCTS - 10.0% | |||
Agricultural Products - 3.3% | |||
Archer Daniels Midland Co. | 300,861 | $ 9,386,863 | |
Bunge Ltd. | 592,087 | 39,859,297 | |
Cosan Ltd. Class A | 60,400 | 898,148 | |
Origin Agritech Ltd. (a) | 95,200 | 230,384 | |
SLC Agricola SA | 313,300 | 2,900,504 | |
Viterra, Inc. | 393,700 | 4,256,646 | |
| 57,531,842 | ||
Packaged Foods & Meats - 6.7% | |||
Brasil Foods SA | 2,000 | 41,806 | |
Calavo Growers, Inc. | 103,973 | 2,859,258 | |
Cermaq ASA | 21,670 | 304,485 | |
Danone | 5,020 | 339,599 | |
Dean Foods Co. (a) | 294,016 | 3,604,636 | |
Green Mountain Coffee Roasters, Inc. (a) | 222,530 | 14,457,774 | |
Lindt & Spruengli AG | 121 | 4,401,094 | |
Mead Johnson Nutrition Co. Class A | 336,032 | 26,126,488 | |
Nestle SA | 383,063 | 23,412,228 | |
Unilever NV (NY Reg.) | 1,099,871 | 36,636,703 | |
Want Want China Holdings Ltd. | 4,014,000 | 3,995,317 | |
| 116,179,388 | ||
TOTAL FOOD PRODUCTS | 173,711,230 | ||
HOUSEHOLD PRODUCTS - 19.0% | |||
Household Products - 19.0% | |||
Colgate-Palmolive Co. | 421,175 | 39,245,087 | |
Procter & Gamble Co. | 4,159,458 | 280,846,601 | |
Spectrum Brands Holdings, Inc. (a) | 276,947 | 7,870,834 | |
| 327,962,522 | ||
PERSONAL PRODUCTS - 2.9% | |||
Personal Products - 2.9% | |||
Avon Products, Inc. | 616,877 | 11,529,431 | |
Hypermarcas SA | 333,000 | 2,167,714 | |
L'Oreal SA | 216,800 | 24,725,962 | |
Natura Cosmeticos SA | 135,900 | 3,203,931 | |
Nu Skin Enterprises, Inc. Class A | 157,308 | 9,086,110 | |
| 50,713,148 | ||
PHARMACEUTICALS - 2.5% | |||
Pharmaceuticals - 2.5% | |||
Johnson & Johnson | 669,860 | 43,594,489 | |
TOBACCO - 20.4% | |||
Tobacco - 20.4% | |||
Altria Group, Inc. | 2,788,226 | 83,925,603 | |
British American Tobacco PLC sponsored ADR (d) | 2,039,297 | 206,540,000 | |
KT&G Corp. | 45,825 | 2,997,775 | |
Lorillard, Inc. | 64,000 | 8,389,120 | |
Common Stocks - continued | |||
Shares | Value | ||
TOBACCO - CONTINUED | |||
Tobacco - continued | |||
Philip Morris International, Inc. | 538,983 | $ 45,015,860 | |
Souza Cruz Industria e Comerico | 455,200 | 6,814,284 | |
| 353,682,642 | ||
TOTAL COMMON STOCKS (Cost $1,328,266,206) | 1,683,949,125 | ||
Money Market Funds - 3.0% | |||
| Shares |
| Value |
Fidelity Cash Central Fund, 0.12% (b) | 50,704,618 | $ 50,704,618 | |
Fidelity Securities Lending Cash Central Fund, 0.12% (b)(c) | 603,675 | 603,675 | |
TOTAL MONEY MARKET FUNDS (Cost $51,308,293) | 51,308,293 | ||
TOTAL INVESTMENT PORTFOLIO - 100.2% (Cost $1,379,574,499) | 1,735,257,418 | |
NET OTHER ASSETS (LIABILITIES) - (0.2)% | (2,724,126) | ||
NET ASSETS - 100% | $ 1,732,533,292 |
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 46,534 |
Fidelity Securities Lending Cash Central Fund | 314,492 |
Total | $ 361,026 |
Other Information |
The following is a summary of the inputs used, as of February 29, 2012, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities: | ||||
Common Stocks | $ 1,683,949,125 | $ 1,630,300,351 | $ 53,648,774 | $ - |
Money Market Funds | 51,308,293 | 51,308,293 | - | - |
Total Investments in Securities: | $ 1,735,257,418 | $ 1,681,608,644 | $ 53,648,774 | $ - |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 66.4% |
United Kingdom | 14.7% |
France | 5.5% |
Belgium | 3.1% |
Bermuda | 2.4% |
Netherlands | 2.1% |
Brazil | 1.8% |
Switzerland | 1.7% |
Others (Individually Less Than 1%) | 2.3% |
| 100.0% |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Consumer Staples Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2012 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $586,592) - See accompanying schedule: Unaffiliated issuers (cost $1,328,266,206) | $ 1,683,949,125 |
|
Fidelity Central Funds (cost $51,308,293) | 51,308,293 |
|
Total Investments (cost $1,379,574,499) |
| $ 1,735,257,418 |
Receivable for investments sold | 7,190,915 | |
Receivable for fund shares sold | 5,669,349 | |
Dividends receivable | 2,739,557 | |
Distributions receivable from Fidelity Central Funds | 16,151 | |
Prepaid expenses | 2,716 | |
Other receivables | 2,335 | |
Total assets | 1,750,878,441 | |
|
|
|
Liabilities | ||
Payable to custodian bank | $ 174,268 | |
Payable for investments purchased | 12,155,768 | |
Payable for fund shares redeemed | 4,079,917 | |
Accrued management fee | 774,786 | |
Distribution and service plan fees payable | 161,260 | |
Other affiliated payables | 347,873 | |
Other payables and accrued expenses | 47,602 | |
Collateral on securities loaned, at value | 603,675 | |
Total liabilities | 18,345,149 | |
|
|
|
Net Assets | $ 1,732,533,292 | |
Net Assets consist of: |
| |
Paid in capital | $ 1,375,239,499 | |
Undistributed net investment income | 3,220,648 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (1,618,097) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 355,691,242 | |
Net Assets | $ 1,732,533,292 | |
Statement of Assets and Liabilities - continued
| February 29, 2012 | |
|
|
|
Calculation of Maximum Offering Price Class A: | $ 74.90 | |
|
|
|
Maximum offering price per share (100/94.25 of $74.90) | $ 79.47 | |
Class T: | $ 74.49 | |
|
|
|
Maximum offering price per share (100/96.50 of $74.49) | $ 77.19 | |
Class B: | $ 74.01 | |
|
|
|
Class C: | $ 73.75 | |
|
|
|
Consumer Staples: | $ 75.29 | |
|
|
|
Institutional Class: | $ 75.14 | |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Consumer Staples Portfolio
Financial Statements - continued
Statement of Operations
| Year ended February 29, 2012 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 43,496,113 |
Interest |
| 5 |
Income from Fidelity Central Funds |
| 361,026 |
Total income |
| 43,857,144 |
|
|
|
Expenses | ||
Management fee | $ 8,658,032 | |
Transfer agent fees | 3,543,114 | |
Distribution and service plan fees | 1,711,288 | |
Accounting fees and expenses | 489,033 | |
Custodian fees and expenses | 71,834 | |
Independent trustees' compensation | 9,095 | |
Registration fees | 133,468 | |
Audit | 54,288 | |
Legal | 5,144 | |
Interest | 1,862 | |
Miscellaneous | 14,961 | |
Total expenses before reductions | 14,692,119 | |
Expense reductions | (30,595) | 14,661,524 |
Net investment income (loss) | 29,195,620 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 36,472,115 | |
Foreign currency transactions | (124,896) | |
Total net realized gain (loss) |
| 36,347,219 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 157,948,507 | |
Assets and liabilities in foreign currencies | 6,297 | |
Total change in net unrealized appreciation (depreciation) |
| 157,954,804 |
Net gain (loss) | 194,302,023 | |
Net increase (decrease) in net assets resulting from operations | $ 223,497,643 | |
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 29,195,620 | $ 21,971,692 |
Net realized gain (loss) | 36,347,219 | 37,190,740 |
Change in net unrealized appreciation (depreciation) | 157,954,804 | 108,092,854 |
Net increase (decrease) in net assets resulting from operations | 223,497,643 | 167,255,286 |
Distributions to shareholders from net investment income | (25,900,882) | (18,562,633) |
Distributions to shareholders from net realized gain | (36,216,657) | (13,301,800) |
Total distributions | (62,117,539) | (31,864,433) |
Share transactions - net increase (decrease) | 162,381,495 | 3,732,087 |
Redemption fees | 45,851 | 35,627 |
Total increase (decrease) in net assets | 323,807,450 | 139,158,567 |
|
|
|
Net Assets | ||
Beginning of period | 1,408,725,842 | 1,269,567,275 |
End of period (including undistributed net investment income of $3,220,648 and undistributed net investment income of $3,223,201, respectively) | $ 1,732,533,292 | $ 1,408,725,842 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
Years ended February 28, | 2012 G | 2011 | 2010 | 2009 | 2008 G |
Selected Per-Share Data |
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|
|
|
|
Net asset value, beginning of period | $ 67.65 | $ 61.06 | $ 43.94 | $ 63.13 | $ 58.16 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | 1.22 | .98 | .84 | .67 | .53 |
Net realized and unrealized gain (loss) | 8.73 | 7.10 | 17.02 | (19.19) | 7.29 |
Total from investment operations | 9.95 | 8.08 | 17.86 | (18.52) | 7.82 |
Distributions from net investment income | (1.06) | (.83) | (.74) | (.66) | (.42) |
Distributions from net realized gain | (1.64) | (.66) | - | (.02) | (2.44) |
Total distributions | (2.70) | (1.49) | (.74) | (.68) I | (2.86) |
Redemption fees added to paid in capital C | - H | - H | - H | .01 | .01 |
Net asset value, end of period | $ 74.90 | $ 67.65 | $ 61.06 | $ 43.94 | $ 63.13 |
Total Return A,B | 15.00% | 13.27% | 40.66% | (29.43)% | 13.38% |
Ratios to Average Net Assets D,F |
|
|
|
|
|
Expenses before reductions | 1.10% | 1.11% | 1.13% | 1.19% | 1.19% |
Expenses net of fee waivers, if any | 1.10% | 1.11% | 1.13% | 1.19% | 1.19% |
Expenses net of all reductions | 1.09% | 1.11% | 1.13% | 1.18% | 1.19% |
Net investment income (loss) | 1.74% | 1.53% | 1.51% | 1.27% | .83% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 205,851 | $ 160,526 | $ 162,370 | $ 121,193 | $ 23,796 |
Portfolio turnover rate E | 35% | 57% | 69% | 70% | 71% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown. B Total returns do not include the effect of the sales charges. C Calculated based on average shares outstanding during the period. D Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. G For the year ended February 29. H Amount represents less than $.01 per share. I Total distributions of $.68 per share is comprised of distributions from net investment income of $.655 and distributions from net realized gain of $.024 per share. |
Financial Highlights - Class T
Years ended February 28, | 2012 G | 2011 | 2010 | 2009 | 2008 G |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 67.30 | $ 60.77 | $ 43.75 | $ 62.93 | $ 58.06 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | 1.01 | .79 | .66 | .53 | .36 |
Net realized and unrealized gain (loss) | 8.68 | 7.05 | 16.95 | (19.12) | 7.29 |
Total from investment operations | 9.69 | 7.84 | 17.61 | (18.59) | 7.65 |
Distributions from net investment income | (.86) | (.65) | (.59) | (.60) | (.35) |
Distributions from net realized gain | (1.64) | (.66) | - | - | (2.44) |
Total distributions | (2.50) | (1.31) | (.59) | (.60) I | (2.79) |
Redemption fees added to paid in capital C | - H | - H | - H | .01 | .01 |
Net asset value, end of period | $ 74.49 | $ 67.30 | $ 60.77 | $ 43.75 | $ 62.93 |
Total Return A,B | 14.67% | 12.93% | 40.24% | (29.61)% | 13.11% |
Ratios to Average Net Assets D,F |
|
|
|
|
|
Expenses before reductions | 1.38% | 1.40% | 1.44% | 1.46% | 1.46% |
Expenses net of fee waivers, if any | 1.38% | 1.40% | 1.44% | 1.46% | 1.46% |
Expenses net of all reductions | 1.38% | 1.40% | 1.44% | 1.46% | 1.46% |
Net investment income (loss) | 1.45% | 1.24% | 1.21% | .99% | .56% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 39,047 | $ 31,496 | $ 29,662 | $ 22,624 | $ 6,298 |
Portfolio turnover rate E | 35% | 57% | 69% | 70% | 71% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown. BTotal returns do not include the effect of the sales charges. C Calculated based on average shares outstanding during the period. D Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. G For the year ended February 29. H Amount represents less than $.01 per share. I Total distributions of $.60 per share is comprised of distributions from net investment income of $.599 and distributions from net realized gain of $.000 per share. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class B
Years ended February 28, | 2012 G | 2011 | 2010 | 2009 | 2008 G |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 66.83 | $ 60.37 | $ 43.53 | $ 62.69 | $ 58.00 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .64 | .46 | .37 | .26 | .04 |
Net realized and unrealized gain (loss) | 8.61 | 6.98 | 16.82 | (19.01) | 7.27 |
Total from investment operations | 9.25 | 7.44 | 17.19 | (18.75) | 7.31 |
Distributions from net investment income | (.43) | (.32) | (.35) | (.42) | (.19) |
Distributions from net realized gain | (1.64) | (.66) | - | - | (2.44) |
Total distributions | (2.07) | (.98) | (.35) | (.42) I | (2.63) |
Redemption fees added to paid in capital C | - H | - H | - H | .01 | .01 |
Net asset value, end of period | $ 74.01 | $ 66.83 | $ 60.37 | $ 43.53 | $ 62.69 |
Total Return A,B | 14.06% | 12.35% | 39.48% | (29.96)% | 12.53% |
Ratios to Average Net Assets D,F |
|
|
|
|
|
Expenses before reductions | 1.91% | 1.91% | 1.97% | 1.96% | 1.96% |
Expenses net of fee waivers, if any | 1.91% | 1.91% | 1.97% | 1.96% | 1.96% |
Expenses net of all reductions | 1.90% | 1.91% | 1.97% | 1.96% | 1.96% |
Net investment income (loss) | .93% | .73% | .68% | .50% | .06% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 19,330 | $ 20,033 | $ 21,099 | $ 14,929 | $ 4,884 |
Portfolio turnover rate E | 35% | 57% | 69% | 70% | 71% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown. B Total returns do not include the effect of the contingent deferred sales charge. C Calculated based on average shares outstanding during the period. D Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. G For the year ended February 29. H Amount represents less than $.01 per share. I Total distributions of $.42 per share is comprised of distributions from net investment income of $.418 and distributions from net realized gain of $.000 per share. |
Financial Highlights - Class C
Years ended February 28, | 2012 G | 2011 | 2010 | 2009 | 2008 G |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 66.71 | $ 60.29 | $ 43.46 | $ 62.61 | $ 57.99 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .68 | .49 | .41 | .28 | .06 |
Net realized and unrealized gain (loss) | 8.59 | 7.00 | 16.80 | (19.00) | 7.28 |
Total from investment operations | 9.27 | 7.49 | 17.21 | (18.72) | 7.34 |
Distributions from net investment income | (.59) | (.41) | (.38) | (.44) | (.29) |
Distributions from net realized gain | (1.64) | (.66) | - | - | (2.44) |
Total distributions | (2.23) | (1.07) | (.38) | (.44) I | (2.73) |
Redemption fees added to paid in capital C | - H | - H | - H | .01 | .01 |
Net asset value, end of period | $ 73.75 | $ 66.71 | $ 60.29 | $ 43.46 | $ 62.61 |
Total Return A,B | 14.14% | 12.44% | 39.59% | (29.94)% | 12.58% |
Ratios to Average Net Assets D,F |
|
|
|
|
|
Expenses before reductions | 1.85% | 1.86% | 1.90% | 1.93% | 1.93% |
Expenses net of fee waivers, if any | 1.85% | 1.86% | 1.90% | 1.93% | 1.93% |
Expenses net of all reductions | 1.84% | 1.85% | 1.89% | 1.93% | 1.92% |
Net investment income (loss) | .99% | .79% | .75% | .52% | .09% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 102,321 | $ 81,239 | $ 73,829 | $ 54,902 | $ 19,791 |
Portfolio turnover rate E | 35% | 57% | 69% | 70% | 71% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown. B Total returns do not include the effect of the contingent deferred sales charge. C Calculated based on average shares outstanding during the period. D Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. G For the year ended February 29. H Amount represents less than $.01 per share. I Total distributions of $.44 per share is comprised of distributions from net investment income of $.443 and distributions from net realized gain of $.000 per share. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Consumer Staples
Years ended February 28, | 2012 G | 2011 | 2010 | 2009 | 2008 G |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 67.98 | $ 61.34 | $ 44.14 | $ 63.25 | $ 58.13 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | 1.42 | 1.14 | .96 | .88 | .71 |
Net realized and unrealized gain (loss) | 8.76 | 7.14 | 17.11 | (19.31) | 7.30 |
Total from investment operations | 10.18 | 8.28 | 18.07 | (18.43) | 8.01 |
Distributions from net investment income | (1.24) | (.98) | (.87) | (.67) | (.46) |
Distributions from net realized gain | (1.64) | (.66) | - | (.03) | (2.44) |
Total distributions | (2.87) J | (1.64) | (.87) | (.69) I | (2.90) |
Redemption fees added to paid in capital C | - H | - H | - H | .01 | .01 |
Net asset value, end of period | $ 75.29 | $ 67.98 | $ 61.34 | $ 44.14 | $ 63.25 |
Total Return A,B | 15.30% | 13.55% | 40.96% | (29.23)% | 13.72% |
Ratios to Average Net Assets D,F |
|
|
|
|
|
Expenses before reductions | .83% | .86% | .92% | .91% | .91% |
Expenses net of fee waivers, if any | .83% | .86% | .92% | .91% | .90% |
Expenses net of all reductions | .82% | .86% | .91% | .90% | .90% |
Net investment income (loss) | 2.01% | 1.78% | 1.73% | 1.55% | 1.12% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 1,202,440 | $ 877,548 | $ 946,455 | $ 657,263 | $ 655,224 |
Portfolio turnover rate E | 35% | 57% | 69% | 70% | 71% |
ATotal returns would have been lower if certain expenses had not been reduced during the applicable periods shown. B Total returns do not include the effect of the sales charges. CCalculated based on average shares outstanding during the period. .DFees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. EAmount does not include the portfolio activity of any underlying Fidelity Central Funds. F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. GFor the year ended February 29. HAmount represents less than $.01 per share. I Total distributions of $.69 per share is comprised of distributions from net investment income of $.668 and distributions from net realized gain of $.025 per share. J Total distributions of $2.87 per share is comprised of distributions from net investment income of $1.236 and distributions from net realized gain of $1.637 per share. |
Financial Highlights - Institutional Class
Years ended February 28, | 2012 F | 2011 | 2010 | 2009 | 2008 F |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 67.84 | $ 61.26 | $ 44.07 | $ 63.22 | $ 58.12 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | 1.39 | 1.15 | .98 | .82 | .74 |
Net realized and unrealized gain (loss) | 8.73 | 7.13 | 17.09 | (19.23) | 7.30 |
Total from investment operations | 10.12 | 8.28 | 18.07 | (18.41) | 8.04 |
Distributions from net investment income | (1.19) | (1.04) | (.88) | (.73) | (.51) |
Distributions from net realized gain | (1.64) | (.66) | - | (.03) | (2.44) |
Total distributions | (2.82) I | (1.70) | (.88) | (.75) H | (2.95) |
Redemption fees added to paid in capital B | - G | - G | - G | .01 | .01 |
Net asset value, end of period | $ 75.14 | $ 67.84 | $ 61.26 | $ 44.07 | $ 63.22 |
Total Return A | 15.24% | 13.57% | 41.03% | (29.22)% | 13.77% |
Ratios to Average Net Assets C,E |
|
|
|
|
|
Expenses before reductions | .87% | .87% | .86% | .91% | .85% |
Expenses net of fee waivers, if any | .87% | .87% | .86% | .91% | .85% |
Expenses net of all reductions | .87% | .87% | .86% | .91% | .84% |
Net investment income (loss) | 1.96% | 1.77% | 1.78% | 1.54% | 1.17% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 163,544 | $ 237,883 | $ 36,152 | $ 30,922 | $ 10,384 |
Portfolio turnover rate D | 35% | 57% | 69% | 70% | 71% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown. BCalculated based on average shares outstanding during the period. C Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. D Amount does not include the portfolio activity of any underlying Fidelity Central Funds. EExpense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. FFor the year ended February 29. GAmount represents less than $.01 per share. HTotal distributions of $.75 per share is comprised of distributions from net investment income of $.726 and distributions from net realized gain of $.025 per share. ITotal distributions of $2.82 per share is comprised of distributions from net investment income of $1.186 and distributions from net realized gain of $1.637 per share. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended February 29, 2012
1. Organization.
Consumer Staples Portfolio (the Fund) is a non-diversified fund of Fidelity Select Portfolios (the Trust) and is authorized to issue an unlimited number of shares. The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund invests primarily in securities of companies whose principal business activities fall within specific industries. The Fund offers Class A, Class T, Class C, Consumer Staples and Institutional Class shares, each of which, along with Class B shares, has equal rights as to assets and voting privileges. Effective after the close of business on September 1, 2010, Class B shares were closed to new accounts and additional purchases, except for exchanges and reinvestments. Each class has exclusive voting rights with respect to matters that affect that class. Class B shares will automatically convert to Class A shares after a holding period of seven years from the initial date of purchase. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions may also differ by class.
2. Investments in Fidelity Central Funds.
The Fund invests in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by FMR and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds held as of period end, if any, as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Fund:
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Fund uses independent pricing services approved by the Board of Trustees to value its investments. When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include market or security specific events. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The value used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the Fund's own assumptions based on the best information available)
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level, as of February 29, 2012, is included at the end of the Fund's Schedule of Investments. Valuation techniques used to value the Fund's investments by major category are as follows:
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when significant market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-traded funds (ETFs) and certain indexes as well as quoted prices for similar securities are used and are categorized as Level 2 in the hierarchy in these
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Security Valuation - continued
circumstances. Utilizing these techniques may result in transfers between Level 1 and Level 2. For restricted equity securities and private placements where observable inputs are limited, assumptions about market activity and risk are used and are categorized as Level 3 in the hierarchy.
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 in the hierarchy.
New Accounting Pronouncements. In May 2011, the Financial Accounting Standards Board issued Accounting Standard Update No. 2011-04, Fair Value Measurement (Topic 820) - Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. The update is effective during interim and annual periods beginning after December 15, 2011 and will result in additional disclosure for transfers between levels as well as expanded disclosure for securities categorized as Level 3 under the fair value hierarchy.
In December 2011, the Financial Accounting Standards Board issued Accounting Standard Update No. 2011-11, Disclosures about Offsetting Assets and Liabilities. The update creates new disclosure requirements requiring entities to disclose both gross and net information for derivatives and other financial instruments that are either offset in the Statement of Assets and Liabilities or subject to an enforceable master netting arrangement or similar agreement. The disclosure requirements are effective for interim and annual reporting periods beginning on or after January 1, 2013. Management is currently evaluating the impact of the update's adoption on the Fund's financial statement disclosures.
Foreign Currency. The Fund may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for income taxes is required. As of February 29, 2012, the Fund did not have any unrecognized tax benefits in the financial statements; nor is the Fund aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. The Fund files a U.S. federal tax return, in addition to state and local tax returns as required. A fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are declared and recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. In addition, the Fund claimed a portion of the payment made to redeeming shareholders as a distribution for income tax purposes.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Annual Report
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
Book-tax differences are primarily due to foreign currency, deferred trustees compensation and losses deferred due to wash sales and excise tax regulations.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation | $ 361,646,527 |
Gross unrealized depreciation | (10,293,004) |
Net unrealized appreciation (depreciation) on securities and other investments | $ 351,353,523 |
|
|
Tax Cost | $ 1,383,903,895 |
The tax-based components of distributable earnings as of period end were as follows:
Undistributed ordinary income | $ 3,220,861 |
Undistributed long-term capital gain | $ 5,437,375 |
Net unrealized appreciation (depreciation) | $ 351,361,846 |
The tax character of distributions paid was as follows:
| February 29, 2012 | February 28, 2011 |
Ordinary Income | $ 31,774,273 | $ 20,981,143 |
Long-term Capital Gains | 30,343,266 | 10,883,290 |
Total | $ 62,117,539 | $ 31,864,433 |
Trading (Redemption) Fees. Shares held by investors in the Fund less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Fund and accounted for as an addition to paid in capital.
4. Purchases and Sales of Investments.
Purchases and sales of securities other than short-term securities, aggregated $621,558,884 and $527,918,913, respectively.
5. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the Fund's average net assets and an annualized group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annual management fee rate was .56% of the Fund's average net assets.
Distribution and Service Plan Fees. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of FMR, separate Distribution and Service Fees, each of which is based on an annual percentage of each class' average net assets. In addition, FDC may pay financial intermediaries for selling shares of the Fund and providing shareholder support services. For the period, the Distribution and Service Fee rates, total fees and amounts retained by FDC were as follows:
| Distribution | Service | Total Fees | Retained |
Class A | -% | .25% | $ 436,234 | $ 7,197 |
Class T | .25% | .25% | 169,388 | 19 |
Class B | .75% | .25% | 191,915 | 143,998 |
Class C | .75% | .25% | 913,751 | 172,728 |
|
|
| $ 1,711,288 | $ 323,942 |
Annual Report
Notes to Financial Statements - continued
5. Fees and Other Transactions with Affiliates - continued
Sales Load. FDC may receive a front-end sales charge of up to 5.75% for selling Class A shares and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the Fund. Depending on the holding period, FDC may receive contingent deferred sales charges levied on Class A, Class T, Class B and Class C redemptions. The deferred sales charges range from 5.00% to 1.00% for Class B, 1.00% for Class C, 1.00% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained |
Class A | $ 147,187 |
Class T | 17,481 |
Class B* | 45,165 |
Class C* | 15,571 |
| $ 225,404 |
* When Class B and Class C shares are initially sold, FDC pays commissions from its own resources to financial intermediaries through which the sales are made.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the Fund. FIIOC receives no fees for providing transfer agency services to Class F. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, transfer agent fees for each class were as follows:
| Amount | % of |
Class A | $ 413,155 | .24 |
Class T | 92,693 | .27 |
Class B | 57,130 | .30 |
Class C | 212,861 | .23 |
Consumer Staples | 2,171,265 | .22 |
Institutional Class | 596,010 | .26 |
| $ 3,543,114 |
|
Accounting and Security Lending Fees. Fidelity Service Company, Inc.(FSC), an affiliate of FMR, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for each month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $11,729 for the period.
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Fund, along with other registered investment companies having management contracts with FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. The Fund's activity in this program during the period for which loans were outstanding was as follows:
Borrower or Lender | Average Loan | Weighted Average Interest Rate | Interest |
Borrower | $ 8,403,500 | .36% | $ 1,862 |
6. Committed Line of Credit.
The Fund participates with other funds managed by FMR or an affiliate in a $4.0 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $4,433 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, there were no borrowings on this line of credit.
Annual Report
7. Security Lending.
The Fund lends portfolio securities through a lending agent from time to time in order to earn additional income. For equity securities, a lending agent is used and may loan securities to certain qualified borrowers, including Fidelity Capital Markets (FCM), a broker-dealer affiliated with the Fund. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Total security lending income during the period amounted to $314,492. During the period, there were no securities loaned to FCM.
8. Expense Reductions.
Many of the brokers with whom FMR places trades on behalf of the Fund provided services to the Fund in addition to trade execution. These services included payments of certain expenses on behalf of the Fund totaling $30,515 for the period. In addition, through arrangements with the Fund's custodian, credits realized as a result of uninvested cash balances were used to reduce the Fund's expenses. During the period, these credits reduced the Fund's custody expenses by $80.
9. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
| Year ended | Year ended |
From net investment income |
|
|
Class A | $ 2,690,167 | $ 2,005,855 |
Class T | 422,197 | 304,100 |
Class B | 114,208 | 100,155 |
Class C | 829,469 | 513,058 |
Consumer Staples | 18,061,907 | 13,026,528 |
Institutional Class | 3,782,934 | 2,612,937 |
Total | $ 25,900,882 | $ 18,562,633 |
From net realized gain |
|
|
Class A | $ 4,102,363 | $ 1,585,279 |
Class T | 795,051 | 307,782 |
Class B | 441,952 | 204,642 |
Class C | 2,213,680 | 836,095 |
Consumer Staples | 23,446,773 | 8,597,123 |
Institutional Class | 5,216,838 | 1,770,879 |
Total | $ 36,216,657 | $ 13,301,800 |
Annual Report
Notes to Financial Statements - continued
10. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
| Year ended | Year ended | Year ended | Year ended |
Class A |
|
|
|
|
Shares sold | 1,107,874 | 610,485 | $ 77,974,428 | $ 39,028,355 |
Reinvestment of distributions | 84,526 | 47,297 | 5,924,948 | 3,150,891 |
Shares redeemed | (816,686) | (944,038) | (57,527,748) | (60,078,639) |
Net increase (decrease) | 375,714 | (286,256) | $ 26,371,628 | $ (17,899,393) |
Class T |
|
|
|
|
Shares sold | 130,126 | 91,776 | $ 9,133,799 | $ 5,882,190 |
Reinvestment of distributions | 16,351 | 8,541 | 1,140,509 | 566,923 |
Shares redeemed | (90,239) | (120,454) | (6,276,410) | (7,689,132) |
Net increase (decrease) | 56,238 | (20,137) | $ 3,997,898 | $ (1,240,019) |
Class B |
|
|
|
|
Shares sold | 22,727 | 35,654 | $ 1,569,035 | $ 2,191,455 |
Reinvestment of distributions | 6,332 | 3,610 | 439,355 | 238,429 |
Shares redeemed | (67,638) | (89,029) | (4,695,265) | (5,598,851) |
Net increase (decrease) | (38,579) | (49,765) | $ (2,686,875) | $ (3,168,967) |
Class C |
|
|
|
|
Shares sold | 536,557 | 340,893 | $ 37,168,209 | $ 21,482,594 |
Reinvestment of distributions | 33,216 | 14,479 | 2,295,907 | 954,487 |
Shares redeemed | (400,115) | (362,057) | (28,068,157) | (23,068,564) |
Net increase (decrease) | 169,658 | (6,685) | $ 11,395,959 | $ (631,483) |
Consumer Staples |
|
|
|
|
Shares sold | 7,156,716 | 4,055,609 | $ 509,488,908 | $ 260,108,965 |
Reinvestment of distributions | 566,253 | 309,170 | 39,874,596 | 20,671,323 |
Shares redeemed | (4,661,196) | (6,885,851) | (330,401,040) | (436,510,553) |
Net increase (decrease) | 3,061,773 | (2,521,072) | $ 218,962,464 | $ (155,730,265) |
Institutional Class |
|
|
|
|
Shares sold | 2,454,993 | 3,382,703 | $ 173,115,499 | $ 212,714,327 |
Reinvestment of distributions | 115,398 | 58,392 | 8,111,953 | 3,904,787 |
Shares redeemed | (3,900,689) | (524,454) | (276,887,031) | (34,216,900) |
Net increase (decrease) | (1,330,298) | 2,916,641 | $ (95,659,579) | $ 182,402,214 |
11. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
Annual Report
Fidelity Advisor Gold Fund - Class A, T, B and C
Performance
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 29, 2012 | Past 1 | Past 5 | Past 10 |
Class A (incl. 5.75% sales charge) A | -11.63% | 9.39% | 15.94% |
Class T (incl. 3.50% sales charge) B | -9.76% | 9.65% | 16.07% |
Class B (incl. contingent deferred sales charge) C | -11.37% | 9.58% | 16.17% |
Class C (incl. contingent deferred sales charge) D | -7.81% | 9.87% | 16.17% |
A Class A shares bear a 0.25% 12b-1 fee. The initial offering of Class A shares took place on December 12, 2006. Returns prior to December 12, 2006 are those of Gold Portfolio, the original class of the fund, which has no 12b-1 fee. Had Class A shares' 12b-1 fee been reflected, returns prior to December 12, 2006 would have been lower.
B Class T shares bear a 0.50% 12b-1 fee. The initial offering of Class T shares took place on December 12, 2006. Returns prior to December 12, 2006 are those of Gold Portfolio, the original class of the fund, which has no 12b-1 fee. Had Class T shares' 12b-1 fee been reflected, returns prior to December 12, 2006 would have been lower.
C Class B shares bear a 1.00% 12b-1 fee. The initial offering of Class B shares took place on December 12, 2006. Returns prior to December 12, 2006 are those of Gold Portfolio, the original class of the fund, which has no 12b-1 fee. Had Class B shares' 12b-1 fee been reflected, returns prior to December 12, 2006 would have been lower. Class B shares' contingent deferred sales charge included in the past one year, past five years, and past ten years total return figures are 5%, 2%, and 0%, respectively.
D Class C shares bear a 1.00% 12b-1 fee. The initial offering of Class C shares took place on December 12, 2006. Returns prior to December 12, 2006 are those of Gold Portfolio, the original class of the fund, which has no 12b-1 fee. Had Class C shares' 12b-1 fee been reflected, returns prior to December 12, 2006 would have been lower. Class C shares' contingent deferred sales charge included in the past one year, past five years, and past ten years total return figures are 1%, 0%, and 0%, respectively.
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Fidelity Advisor Gold Fund - Class A on February 28, 2002, and the current 5.75% sales charge was paid. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index performed over the same period. The initial offering of Class A took place on December 12, 2006. See the Average Annual Total Returns table for additional information regarding the performance of Class A.
Annual Report
Fidelity Advisor Gold Fund
Management's Discussion of Fund Performance
Market Recap: U.S. stocks rose for the 12 months ending February 29, 2012, as encouraging economic news sparked a strong late-period rally that lifted major equity benchmarks past a number of significant milestones. Stocks recovered from early-period uncertainty that followed the March 2011 earthquake, tsunami and nuclear meltdown in Japan, but plummeted during the summer amid Europe's debt woes and a historic U.S. credit-rating downgrade. Despite continued volatility and mixed economic news, markets began to recover in early October. Investors gravitated toward defensive sectors and the perceived safety of larger, more-established and dividend-paying names, helping the Dow Jones® Industrial Average advance 8.83%, and close above the psychologically important 13,000 mark in late February - for the first time since May 2008. The rally accelerated late in the period and the market broadened, as investor confidence improved amid encouraging manufacturing, housing and employment data, and signs of progress in Europe. For the year, the S&P 500® Index added 5.12%, closing near a four-year high on the period's second-to-last day. Of the 10 major market sectors in the S&P 500®, three defensive areas led the way - consumer staples, health care and utilities - while financials, materials and energy finished in negative territory. The technology-laden Nasdaq Composite® Index added 7.73%, flirting with the 3,000 mark, its highest level in 12 years. Foreign developed-markets stocks reeled over Europe's turmoil, and the MSCI® EAFE® (Europe, Australasia, Far East) Index fell 7.35%.
Comments from S. Joseph Wickwire II, Portfolio Manager of Fidelity Advisor® Gold Fund: For the year, the fund's Class A, Class T, Class B and Class C shares returned -6.24%, -6.49%, -6.95% and -6.93%, respectively (excluding sales charges), trailing the -4.75% return of the S&P® Global BMI Gold Capped Index and the S&P 500®. Relative to the industry benchmark, the fund underperformed because several larger companies I owned did not execute well during the reporting period. The largest detractors were overweighted positions in gold names that failed to execute during the period. Among them were senior gold producers AngloGold Ashanti, Agnico-Eagle Mines and Kinross Gold. While AngloGold did improve several key financial and operating metrics, the market remained concerned about perceived risks in South Africa and the company's ability to execute on its growth plans. Both Agnico and Kinross suffered significant setbacks at key assets during the period that caused the stocks to disappoint. In the exploration and development space, overweightings in Canaco Resources (Tanzania asset), Kingsgate Consolidated (Thailand) and Romarco Minerals (South Carolina) detracted because each incurred challenges with their projects that caused the market concern. The fund also was hurt by underweighting several outperforming junior and development stocks that I didn't feel warranted larger positions based on their risk/reward profiles. In addition, I overweighted several silver stocks that underperformed. Currency fluctuations also hurt, given the fund's significant foreign exposure as a global gold fund. The largest contribution came from companies that executed on their growth plans. These stocks covered the gold equity spectrum and were highlighted by such names as Randgold Resources, Pretium Resources, Troy Resources, Argonaut Gold and Goldcorp. The second-largest contributor was correctly underweighting poor-performing names that disappointed the market in terms of execution. These were typically junior and development companies, such as Gabriel Resources, Golden Star Resources, Tanzanian Royalty Exploration and Nevsun Resources. Lastly, our gold bullion position helped performance. Golden Star and Tanzanian Royalty Exploration were not held at period end.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Gold Portfolio
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments or redemption proceeds, redemption fees, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (September 1, 2011 to February 29, 2012).
Actual Expenses
The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Annualized Expense Ratio | Beginning | Ending | Expenses Paid |
Class A | 1.15% |
|
|
|
Actual |
| $ 1,000.00 | $ 880.80 | $ 5.38 |
HypotheticalA |
| $ 1,000.00 | $ 1,019.14 | $ 5.77 |
Class T | 1.43% |
|
|
|
Actual |
| $ 1,000.00 | $ 879.70 | $ 6.68 |
HypotheticalA |
| $ 1,000.00 | $ 1,017.75 | $ 7.17 |
Class B | 1.91% |
|
|
|
Actual |
| $ 1,000.00 | $ 877.70 | $ 8.92 |
HypotheticalA |
| $ 1,000.00 | $ 1,015.37 | $ 9.57 |
Class C | 1.88% |
|
|
|
Actual |
| $ 1,000.00 | $ 877.70 | $ 8.78 |
HypotheticalA |
| $ 1,000.00 | $ 1,015.51 | $ 9.42 |
Gold | .90% |
|
|
|
Actual |
| $ 1,000.00 | $ 882.20 | $ 4.21 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.39 | $ 4.52 |
Institutional Class | .82% |
|
|
|
Actual |
| $ 1,000.00 | $ 882.30 | $ 3.84 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.79 | $ 4.12 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
Annual Report
Gold Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 29, 2012 | ||
| % of fund's | % of fund's net assets |
Goldcorp, Inc. | 12.2 | 11.0 |
Barrick Gold Corp. | 11.9 | 11.9 |
Newmont Mining Corp. | 9.0 | 7.9 |
Newcrest Mining Ltd. | 8.4 | 9.0 |
AngloGold Ashanti Ltd. sponsored ADR | 5.1 | 4.7 |
Kinross Gold Corp. | 4.0 | 5.6 |
Yamana Gold, Inc. | 3.9 | 3.3 |
Randgold Resources Ltd. sponsored ADR | 3.6 | 3.0 |
Gold Fields Ltd. | 3.4 | 3.2 |
Eldorado Gold Corp. | 2.7 | 3.1 |
| 64.2 | |
Top Industries (% of fund's net assets) | |||
As of February 29, 2012 | |||
| Gold | 98.5% |
|
| Precious Metals & Minerals | 0.9% |
|
| Diversified Metals & Mining | 0.2% |
|
| Coal & Consumable Fuels | 0.1% |
|
 | Specialty Stores | 0.0% |
|
| All Others* | 0.3% |
|
As of August 31, 2011 | |||
| Gold | 97.9% |
|
| Precious Metals & Minerals | 1.2% |
|
 | Coal & Consumable Fuels | 0.3% |
|
| Diversified Metals & Mining | 0.2% |
|
| Construction & Engineering | 0.2% |
|
| All Others* | 0.2% |
|
* Includes short-term investments and net other assets. |
Annual Report
Gold Portfolio
Consolidated Investments February 29, 2012
Showing Percentage of Net Assets
Common Stocks - 98.7% | |||
Shares | Value | ||
Australia - 11.5% | |||
METALS & MINING - 11.5% | |||
Gold - 11.5% | |||
Ampella Mining Ltd. (a) | 150,000 | $ 229,204 | |
CGA Mining Ltd.: | |||
(Australia) (a) | 18,920 | 40,474 | |
(Canada) (a) | 270,000 | 564,745 | |
Evolution Mining Ltd. (a) | 853,235 | 1,838,997 | |
Gryphon Minerals Ltd. (a) | 317,692 | 395,167 | |
Intrepid Mines Ltd.: | |||
(Australia) (a) | 8,709,798 | 12,328,162 | |
(Canada) (a) | 320,000 | 433,284 | |
Kingsgate Consolidated NL (d) | 3,705,767 | 27,259,540 | |
Kula Gold Ltd. (a) | 31,245 | 36,854 | |
Medusa Mining Ltd. | 2,572,885 | 17,739,756 | |
Newcrest Mining Ltd. | 10,268,992 | 368,773,129 | |
Papillon Resources Ltd. (a) | 100,000 | 120,098 | |
Perseus Mining Ltd.: | |||
(Australia) (a) | 4,599,308 | 14,154,375 | |
(Canada) (a) | 1,300,000 | 3,783,156 | |
Regis Resources Ltd. (a) | 4,898,292 | 22,743,059 | |
Resolute Mining Ltd. (a) | 4,911,661 | 10,954,890 | |
St Barbara Ltd. (a) | 4,644,676 | 11,504,923 | |
Troy Resources NL (a)(e) | 1,900,000 | 10,060,122 | |
| 502,959,935 | ||
Bailiwick of Jersey - 4.5% | |||
METALS & MINING - 4.5% | |||
Gold - 4.5% | |||
Centamin PLC (a) | 12,611,900 | 18,217,214 | |
Polyus Gold International Ltd. sponsored GDR (a) | 7,033,190 | 23,490,855 | |
Randgold Resources Ltd. sponsored ADR | 1,351,867 | 155,099,701 | |
| 196,807,770 | ||
Bermuda - 0.0% | |||
METALS & MINING - 0.0% | |||
Gold - 0.0% | |||
Continental Gold Ltd. (a) | 130,100 | 1,035,910 | |
Canada - 55.8% | |||
METALS & MINING - 55.8% | |||
Diversified Metals & Mining - 0.2% | |||
Barisan Gold Corp. (e) | 2,500 | 1,112 | |
Barisan Gold Corp. warrants 9/26/13 (a) | 625 | 0 | |
Clifton Star Resources, Inc. (a) | 25,000 | 73,258 | |
Copper Mountain Mining Corp. (a) | 137,000 | 707,392 | |
East Asia Minerals Corp. (a) | 5,000 | 3,284 | |
Eastmain Resources, Inc. (a) | 10,000 | 12,126 | |
Kimber Resources, Inc. (a) | 16,100 | 16,919 | |
Kimber Resources, Inc. (a)(e) | 5,832,000 | 6,128,712 | |
Rio Alto Mining Ltd. (a) | 10,000 | 45,167 | |
| |||
Shares | Value | ||
Sabina Gold & Silver Corp. (a) | 465,000 | $ 1,508,261 | |
Southern Arc Minerals, Inc. (a) | 30,000 | 20,007 | |
Trelawney Mining and Exploration, Inc. (a) | 250,000 | 593,644 | |
| 9,109,882 | ||
Gold - 54.8% | |||
Agnico-Eagle Mines Ltd. (Canada) | 2,642,200 | 96,033,885 | |
Alacer Gold Corp. (a) | 3,169,063 | 30,581,066 | |
Alamos Gold, Inc. | 1,968,800 | 36,684,355 | |
Argonaut Gold, Inc. (a) | 629,800 | 6,204,769 | |
ATAC Resources Ltd. (a) | 67,200 | 207,104 | |
AuRico Gold, Inc. (a) | 4,366,763 | 42,800,587 | |
Aurizon Mines Ltd. (a) | 2,366,900 | 12,556,181 | |
Avion Gold Corp. (a) | 4,835,000 | 8,207,750 | |
B2Gold Corp. (a) | 4,542,400 | 18,726,814 | |
Banro Corp. (a) | 1,380,786 | 7,478,415 | |
Barrick Gold Corp. (d) | 10,914,019 | 522,073,116 | |
Bearing Resources Ltd. (a) | 29,687 | 13,799 | |
Belo Sun Mining Corp. (a) | 65,000 | 67,650 | |
Canaco Resources, Inc. (a) | 1,295,100 | 1,897,534 | |
Canaco Resources, Inc. (e) | 561,600 | 822,836 | |
Centerra Gold, Inc. | 2,301,200 | 46,272,804 | |
China Gold International Resources Corp. Ltd. (a) | 90,000 | 393,776 | |
Colossus Minerals, Inc. (a) | 1,436,100 | 10,172,345 | |
Corvus Gold, Inc. (a) | 138,350 | 131,409 | |
Detour Gold Corp. (a) | 618,000 | 16,954,176 | |
Detour Gold Corp. (a)(e) | 785,900 | 21,560,334 | |
Eldorado Gold Corp. | 7,576,013 | 115,747,299 | |
European Goldfields Ltd. | 1,906,700 | 25,200,461 | |
Exeter Resource Corp. (a) | 238,000 | 791,209 | |
Extorre Gold Mines Ltd. (a) | 423,000 | 3,205,679 | |
Extorre Gold Mines Ltd. (e) | 61,300 | 464,558 | |
Franco-Nevada Corp. | 1,834,900 | 81,060,807 | |
Gabriel Resources Ltd. (a) | 595,000 | 3,637,397 | |
Goldcorp, Inc. | 11,004,100 | 533,387,239 | |
Gran Colombia Gold Corp. (a)(d) | 1,665,000 | 874,855 | |
Great Basin Gold Ltd. (a)(d) | 5,972,900 | 5,190,415 | |
Guyana Goldfields, Inc. (a) | 1,093,000 | 6,206,901 | |
Guyana Goldfields, Inc. (a)(e) | 155,000 | 880,210 | |
IAMGOLD Corp. | 5,133,200 | 77,595,788 | |
International Minerals Corp.: | |||
(Canada) (a) | 157,100 | 893,723 | |
(Switzerland) (a) | 15,000 | 84,549 | |
International Tower Hill Mines Ltd. (a) | 546,700 | 2,773,136 | |
Keegan Resources, Inc. (a) | 30,000 | 146,112 | |
Kinross Gold Corp. | 15,857,091 | 175,451,065 | |
Kinross Gold Corp. warrants 9/17/14 (a) | 375,441 | 371,780 | |
Kirkland Lake Gold, Inc. (a) | 859,500 | 14,434,285 | |
Lake Shore Gold Corp. (a) | 3,196,600 | 4,974,247 | |
Nevsun Resources Ltd. | 50,000 | 206,639 | |
New Gold, Inc. (a) | 6,312,455 | 73,735,139 | |
New Gold, Inc. warrants 4/3/12 (a)(e) | 2,928,500 | 14,796 | |
Common Stocks - continued | |||
Shares | Value | ||
Canada - continued | |||
METALS & MINING - CONTINUED | |||
Gold - continued | |||
Novagold Resources, Inc. (a)(d) | 2,955,000 | $ 24,454,555 | |
OceanaGold Corp. (a) | 1,455,000 | 3,690,244 | |
Orezone Gold Corp. (a) | 80,000 | 227,959 | |
Osisko Mining Corp. (a) | 2,477,000 | 31,386,429 | |
Osisko Mining Corp. (a)(e) | 3,000,000 | 38,013,439 | |
Pilot Gold, Inc. (a) | 91,250 | 165,968 | |
Premier Gold Mines Ltd. (a) | 2,026,800 | 11,448,302 | |
Primero Mining Corp. (a) | 534,300 | 1,511,686 | |
Queenston Mining, Inc. (a) | 215,000 | 1,031,930 | |
Rainy River Resources Ltd. (a) | 690,000 | 5,319,759 | |
Richmont Mines, Inc. (a) | 20,000 | 204,517 | |
Riva Gold Corp. (a) | 10,000 | 3,132 | |
Romarco Minerals, Inc. (a) | 7,795,500 | 8,507,189 | |
Romarco Minerals, Inc. (a)(e) | 5,900,000 | 6,438,640 | |
Rubicon Minerals Corp. (a) | 2,581,352 | 9,416,138 | |
San Gold Corp. (a) | 4,674,400 | 7,982,353 | |
Seabridge Gold, Inc. (a) | 601,905 | 14,241,073 | |
SEMAFO, Inc. | 4,590,000 | 30,796,342 | |
Sulliden Gold Corp. Ltd. (a) | 10,000 | 15,561 | |
Teranga Gold Corp. CDI unit (a) | 3,410,974 | 8,851,362 | |
Torex Gold Resources, Inc. (a) | 5,356,000 | 12,555,873 | |
Yamana Gold, Inc. | 9,938,100 | 172,522,162 | |
| 2,395,953,607 | ||
Precious Metals & Minerals - 0.8% | |||
Chesapeake Gold Corp. (a) | 6,000 | 58,748 | |
Dalradian Resources, Inc. (a) | 41,000 | 72,500 | |
Fortuna Mines, Inc. (a) | 20,000 | 139,847 | |
Orko Silver Corp. (a) | 416,000 | 882,736 | |
Pan American Silver Corp. | 224,487 | 5,623,399 | |
Pan American Silver Corp. warrants 12/7/14 (a) | 232,460 | 1,140,953 | |
Pretium Resources, Inc. (a) | 10,000 | 179,356 | |
Pretium Resources, Inc. (f) | 450,000 | 8,071,035 | |
Pretium Resources, Inc. warrants 4/8/12 (a)(f) | 225,000 | 1,175,416 | |
Silver Wheaton Corp. | 347,100 | 13,285,654 | |
Silvercorp Metals, Inc. | 75,000 | 550,952 | |
Tahoe Resources, Inc. (a) | 185,500 | 3,958,733 | |
Wildcat Silver Corp. (a) | 30,000 | 63,053 | |
| 35,202,382 | ||
TOTAL METALS & MINING | 2,440,265,871 | ||
| |||
Shares | Value | ||
China - 2.3% | |||
METALS & MINING - 2.3% | |||
Gold - 2.3% | |||
Zhaojin Mining Industry Co. Ltd. (H Shares) | 9,084,150 | $ 18,739,624 | |
Zijin Mining Group Co. Ltd. (H Shares) | 173,566,000 | 83,246,157 | |
| 101,985,781 | ||
Japan - 0.0% | |||
SPECIALTY RETAIL - 0.0% | |||
Specialty Stores - 0.0% | |||
Tsutsumi Jewelry Co. Ltd. | 5,100 | 133,374 | |
Peru - 2.1% | |||
METALS & MINING - 2.1% | |||
Gold - 2.1% | |||
Compania de Minas Buenaventura SA sponsored ADR | 2,327,500 | 93,402,575 | |
South Africa - 10.3% | |||
METALS & MINING - 10.3% | |||
Gold - 10.3% | |||
AngloGold Ashanti Ltd. sponsored ADR | 5,262,952 | 223,412,312 | |
Gold Fields Ltd. | 55,000 | 853,025 | |
Gold Fields Ltd. sponsored ADR | 9,726,026 | 149,489,020 | |
Harmony Gold Mining Co. Ltd. | 1,484,000 | 19,106,926 | |
Harmony Gold Mining Co. Ltd. sponsored ADR (d) | 4,381,800 | 55,736,496 | |
| 448,597,779 | ||
United Kingdom - 0.8% | |||
METALS & MINING - 0.8% | |||
Gold - 0.8% | |||
African Barrick Gold Ltd. | 1,445,600 | 10,808,404 | |
Avocet Mining PLC | 10,000 | 35,753 | |
Patagonia Gold PLC (a) | 160,000 | 97,993 | |
Petropavlovsk PLC | 2,195,929 | 25,099,245 | |
| 36,041,395 | ||
United States of America - 11.4% | |||
METALS & MINING - 11.3% | |||
Gold - 11.2% | |||
Allied Nevada Gold Corp. (a) | 1,245,100 | 42,843,891 | |
Allied Nevada Gold Corp. (Canada) (a) | 20,000 | 690,547 | |
Newmont Mining Corp. | 6,572,150 | 390,385,710 | |
Royal Gold, Inc. (d) | 768,113 | 53,345,448 | |
| 487,265,596 | ||
Precious Metals & Minerals - 0.1% | |||
Coeur d'Alene Mines Corp. (a) | 10,000 | 284,400 | |
Common Stocks - continued | |||
Shares | Value | ||
United States of America - continued | |||
METALS & MINING - CONTINUED | |||
Precious Metals & Minerals - continued | |||
Gold Resource Corp. (d) | 30,000 | $ 733,500 | |
McEwen Mining, Inc. (a)(d) | 730,100 | 3,818,423 | |
| 4,836,323 | ||
TOTAL METALS & MINING | 492,101,919 | ||
OIL, GAS & CONSUMABLE FUELS - 0.1% | |||
Coal & Consumable Fuels - 0.1% | |||
Alpha Natural Resources, Inc. (a) | 228,300 | 4,237,248 | |
TOTAL UNITED STATES OF AMERICA | 496,339,167 | ||
TOTAL COMMON STOCKS (Cost $3,324,595,054) |
| ||
Commodities - 1.0% | |||
Troy |
| ||
Gold Bullion (a) | 25,500 |
| |
Money Market Funds - 13.7% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.12% (b) | 22,033,943 | 22,033,943 | |
Fidelity Securities Lending Cash Central Fund, 0.12% (b)(c) | 577,742,949 | 577,742,949 | |
TOTAL MONEY MARKET FUNDS (Cost $599,776,892) |
| ||
TOTAL INVESTMENT PORTFOLIO - 113.4% (Cost $3,950,697,796) | 4,960,477,914 | |
NET OTHER ASSETS (LIABILITIES) - (13.4)% | (584,968,362) | |
NET ASSETS - 100% | $ 4,375,509,552 | |
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
(e) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the end of the period, the value of these securities amounted to $84,384,759 or 1.9% 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 $9,246,451 or 0.2% of net assets. |
Additional information on each restricted holding is as follows: |
Security | Acquisition Date | Acquisition Cost |
Pretium Resources, Inc. | 3/31/11 | $ 4,344,586 |
Pretium Resources, Inc. warrants 4/8/12 | 3/31/11 | $ 296,025 |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 22,481 |
Fidelity Securities Lending Cash Central Fund | 717,855 |
Total | $ 740,336 |
Consolidated Subsidiary |
| Value, | Purchases | Sales | Dividend | Value, |
Fidelity Select Gold Cayman Ltd. | $ 26,107,166 | $ 55,875,145 | $ 40,620,000 | $ - | $ 43,125,922 |
Other Information |
The following is a summary of the inputs used, as of February 29, 2012, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the tables below, please refer to the Security Valuation section in the accompanying Notes to Consolidated Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities: | ||||
Common Stocks | $ 4,317,569,557 | $ 4,296,395,395 | $ 21,100,904 | $ 73,258 |
Commodities | 43,131,465 | 43,131,465 | - | - |
Money Market Funds | 599,776,892 | 599,776,892 | - | - |
Total Investments in Securities: | $ 4,960,477,914 | $ 4,939,303,752 | $ 21,100,904 | $ 73,258 |
The following is a reconciliation of Investments in Securities for which Level 3 inputs were used in determining value: |
Investments in Securities: | |
Beginning Balance | $ - |
Total Realized Gain (Loss) | - |
Total Unrealized Gain (Loss) | (44,374) |
Cost of Purchases | - |
Proceeds of Sales | - |
Amortization/Accretion | - |
Transfers in to Level 3 | 117,632 |
Transfers out of Level 3 | - |
Ending Balance | $ 73,258 |
The change in unrealized gain (loss) for the period attributable to Level 3 securities held at February 29, 2012 | $ (44,374) |
The information used in the above reconciliation represents fiscal year to date activity for any Investments in Securities identified as using Level 3 inputs at either the beginning or the end of the current fiscal period. Transfers in or out of Level 3 represent the beginning value of any Security or Instrument where a change in the pricing level occurred from the beginning to the end of the period. The cost of purchases and the proceeds of sales may include securities received or delivered through corporate actions or exchanges. Realized and unrealized gains (losses) disclosed in the reconciliation are included in Net Gain (Loss) on the Fund's Consolidated Statement of Operations. |
See accompanying notes which are an integral part of the consolidated financial statements.
Annual Report
Gold Portfolio
Consolidated Financial Statements
Consolidated Statement of Assets and Liabilities
| February 29, 2012 | |
Assets | ||
Investment in securities, at value (including securities loaned of $535,479,046) - See accompanying schedule: Unaffiliated issuers (cost $3,324,595,054) | $ 4,317,569,557 |
|
Fidelity Central Funds (cost $599,776,892) | 599,776,892 |
|
Commodities (cost $26,325,850) | 43,131,465 |
|
Total Investments (cost $3,950,697,796) |
| $ 4,960,477,914 |
Cash |
| 6,070 |
Receivable for investments sold |
| 1,753,475 |
Delayed delivery |
| 1,979,437 |
Receivable for fund shares sold | 6,465,997 | |
Dividends receivable | 2,191,884 | |
Distributions receivable from Fidelity Central Funds | 44,216 | |
Prepaid expenses | 8,389 | |
Other receivables | 10,597 | |
Total assets | 4,972,937,979 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 9,398,938 | |
Payable for fund shares redeemed | 6,853,717 | |
Accrued management fee | 2,063,356 | |
Distribution and service plan fees payable | 125,405 | |
Other affiliated payables | 1,156,454 | |
Other payables and accrued expenses | 87,608 | |
Collateral on securities loaned, at value | 577,742,949 | |
Total liabilities | 597,428,427 | |
|
|
|
Net Assets | $ 4,375,509,552 | |
Net Assets consist of: |
| |
Paid in capital | $ 3,692,368,794 | |
Accumulated net investment loss | (30,304,890) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (296,343,810) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 1,009,789,458 | |
Net Assets | $ 4,375,509,552 | |
Consolidated Statement of Assets and Liabilities -
continued
| February 29, 2012 | |
Calculation of Maximum Offering Price Class A: | $ 45.37 | |
|
|
|
Maximum offering price per share (100/94.25 of $45.37) | $ 48.14 | |
Class T: | $ 45.04 | |
|
|
|
Maximum offering price per share (100/96.50 of $45.04) | $ 46.67 | |
Class B: | $ 44.24 | |
|
|
|
Class C: | $ 44.05 | |
|
|
|
Gold: | $ 45.96 | |
|
|
|
Institutional Class: | $ 45.87 | |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
See accompanying notes which are an integral part of the consolidated financial statements.
Annual Report
Gold Portfolio
Consolidated Financial Statements - continued
Consolidated Statement of Operations
| Year ended February 29, 2012 | |
Investment Income |
|
|
Dividends |
| $ 38,009,925 |
Interest |
| 6 |
Income from Fidelity Central Funds |
| 740,336 |
Total income |
| 38,750,267 |
|
|
|
Expenses | ||
Management fee | $ 25,411,280 | |
Transfer agent fees | 12,523,829 | |
Distribution and service plan fees | 1,573,273 | |
Accounting and security lending fees | 1,580,157 | |
Custodian fees and expenses | 426,402 | |
Independent trustees' compensation | 26,914 | |
Registration fees | 210,059 | |
Audit | 35,272 | |
Legal | 15,466 | |
Interest | 2,740 | |
Miscellaneous | 44,874 | |
Total expenses before reductions | 41,850,266 | |
Expense reductions | (188,884) | 41,661,382 |
Net investment income (loss) | (2,911,115) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investments: |
|
|
Unaffiliated issuers | 73,143,949 | |
Commodities | (3,419,750) |
|
Foreign currency transactions | (249,291) | |
Total net realized gain (loss) |
| 69,474,908 |
Change in net unrealized appreciation (depreciation) on: Investments | (369,226,287) | |
Assets and liabilities in foreign currencies | 25,359 | |
Commodities | 5,290,565 | |
Total change in net unrealized appreciation (depreciation) |
| (363,910,363) |
Net gain (loss) | (294,435,455) | |
Net increase (decrease) in net assets resulting from operations | $ (297,346,570) | |
Consolidated Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ (2,911,115) | $ (16,366,924) |
Net realized gain (loss) | 69,474,908 | 401,575,169 |
Change in net unrealized appreciation (depreciation) | (363,910,363) | 806,517,405 |
Net increase (decrease) in net assets resulting | (297,346,570) | 1,191,725,650 |
Distributions to shareholders from net realized gain | (238,750,097) | (403,524,767) |
Share transactions - net increase (decrease) | 229,358,064 | 849,828,502 |
Redemption fees | 461,104 | 423,645 |
Total increase (decrease) in net assets | (306,277,499) | 1,638,453,030 |
|
|
|
Net Assets | ||
Beginning of period | 4,681,787,051 | 3,043,334,021 |
End of period (including accumulated net investment loss of $30,304,890 and accumulated net investment loss of $1,236, respectively) | $ 4,375,509,552 | $ 4,681,787,051 |
See accompanying notes which are an integral part of the consolidated financial statements.
Annual Report
Consolidated Financial Highlights - Class A
Years ended February 28, | 2012 G | 2011 | 2010 | 2009 | 2008 G |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 50.92 | $ 40.50 | $ 30.45 | $ 46.19 | $ 36.53 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.13) | (.30) | (.25) | (.15) | (.15) |
Net realized and unrealized gain (loss) | (2.83) | 15.28 | 11.00 | (15.44) | 15.00 |
Total from investment operations | (2.96) | 14.98 | 10.75 | (15.59) | 14.85 |
Distributions from net investment income | - | - | - | - | (.19) |
Distributions from net realized gain | (2.59) | (4.57) | (.71) | (.17) | (5.01) |
Total distributions | (2.59) | (4.57) | (.71) | (.17) | (5.20) |
Redemption fees added to paid in capital C | - H | .01 | .01 | .02 | .01 |
Net asset value, end of period | $ 45.37 | $ 50.92 | $ 40.50 | $ 30.45 | $ 46.19 |
Total Return A,B | (6.24)% | 36.99% | 35.19% | (33.81) % | 44.59% |
Ratios to Average Net Assets D,F |
|
|
|
|
|
Expenses before reductions | 1.14% | 1.16% | 1.21% | 1.21% | 1.17% |
Expenses net of fee waivers, if any | 1.14% | 1.15% | 1.19% | 1.19% | 1.17% |
Expenses net of all reductions | 1.14% | 1.14% | 1.17% | 1.15% | 1.13% |
Net investment income (loss) | (.28)% | (.63)% | (.63)% | (.45)% | (.37)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 152,969 | $ 149,178 | $ 82,413 | $ 39,144 | $ 26,620 |
Portfolio turnover rate E | 22% | 35% | 46% | 42% | 55% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown. B Total returns do not include the effect of the sales charges. C Calculated based on average shares outstanding during the period. D Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. G For the year ended February 29. H Amount represents less than $.01 per share.
Consolidated Financial Highlights - Class T
Years ended February 28, | 2012 G | 2011 | 2010 | 2009 | 2008 G |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 50.68 | $ 40.34 | $ 30.36 | $ 46.17 | $ 36.49 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.27) | (.43) | (.36) | (.24) | (.25) |
Net realized and unrealized gain (loss) | (2.80) | 15.21 | 10.96 | (15.42) | 15.05 |
Total from investment operations | (3.07) | 14.78 | 10.60 | (15.66) | 14.80 |
Distributions from net investment income | - | - | - | - | (.16) |
Distributions from net realized gain | (2.57) | (4.45) | (.63) | (.17) | (4.97) |
Total distributions | (2.57) | (4.45) | (.63) | (.17) | (5.13) |
Redemption fees added to paid in capital C | - H | .01 | .01 | .02 | .01 |
Net asset value, end of period | $ 45.04 | $ 50.68 | $ 40.34 | $ 30.36 | $ 46.17 |
Total Return A,B | (6.49)% | 36.62% | 34.79% | (33.98) % | 44.45% |
Ratios to Average Net Assets D,F |
|
|
|
|
|
Expenses before reductions | 1.43% | 1.44% | 1.51% | 1.47% | 1.43% |
Expenses net of fee waivers, if any | 1.42% | 1.42% | 1.49% | 1.45% | 1.43% |
Expenses net of all reductions | 1.42% | 1.42% | 1.47% | 1.41% | 1.39% |
Net investment income (loss) | (.57)% | (.90)% | (.93)% | (.71)% | (.63)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 40,664 | $ 45,846 | $ 26,256 | $ 15,284 | $ 11,334 |
Portfolio turnover rate E | 22% | 35% | 46% | 42% | 55% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown. B Total returns do not include the effect of the sales charges. C Calculated based on average shares outstanding during the period. D Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. G For the year ended February 29. H Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the consolidated financial statements.
Annual Report
Consolidated Financial Highlights - Class B
Years ended February 28, | 2012 G | 2011 | 2010 | 2009 | 2008 G |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 50.02 | $ 39.87 | $ 30.08 | $ 45.97 | $ 36.46 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.49) | (.66) | (.55) | (.40) | (.45) |
Net realized and unrealized gain (loss) | (2.76) | 15.02 | 10.84 | (15.34) | 14.95 |
Total from investment operations | (3.25) | 14.36 | 10.29 | (15.74) | 14.50 |
Distributions from net investment income | - | - | - | - | (.16) |
Distributions from net realized gain | (2.53) | (4.21) | (.51) | (.17) | (4.84) |
Total distributions | (2.53) | (4.21) | (.51) | (.17) | (5.00) |
Redemption fees added to paid in capital C | - H | - H | .01 | .02 | .01 |
Net asset value, end of period | $ 44.24 | $ 50.02 | $ 39.87 | $ 30.08 | $ 45.97 |
Total Return A,B | (6.95)% | 35.97% | 34.12% | (34.30)% | 43.53% |
Ratios to Average Net Assets D,F |
|
|
|
|
|
Expenses before reductions | 1.90% | 1.93% | 2.00% | 1.97% | 1.93% |
Expenses net of fee waivers, if any | 1.90% | 1.92% | 1.98% | 1.95% | 1.93% |
Expenses net of all reductions | 1.90% | 1.91% | 1.96% | 1.89% | 1.90% |
Net investment income (loss) | (1.04)% | (1.39)% | (1.42)% | (1.20)% | (1.14)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 20,894 | $ 26,837 | $ 18,340 | $ 8,421 | $ 6,869 |
Portfolio turnover rate E | 22% | 35% | 46% | 42% | 55% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown. B Total returns do not include the effect of the contingent deferred sales charge. C Calculated based on average shares outstanding during the period. D Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. G For the year ended February 29. H Amount represents less than $.01 per share.
Consolidated Financial Highlights - Class C
Years ended February 28, | 2012 G | 2011 | 2010 | 2009 | 2008 G |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 49.81 | $ 39.75 | $ 30.00 | $ 45.85 | $ 36.44 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.47) | (.64) | (.53) | (.39) | (.45) |
Net realized and unrealized gain (loss) | (2.76) | 14.98 | 10.80 | (15.30) | 14.91 |
Total from investment operations | (3.23) | 14.34 | 10.27 | (15.69) | 14.46 |
Distributions from net investment income | - | - | - | - | (.17) |
Distributions from net realized gain | (2.53) | (4.28) | (.53) | (.17) | (4.89) |
Total distributions | (2.53) | (4.28) | (.53) | (.17) | (5.06) |
Redemption fees added to paid in capital C | - H | - H | .01 | .01 | .01 |
Net asset value, end of period | $ 44.05 | $ 49.81 | $ 39.75 | $ 30.00 | $ 45.85 |
Total Return A,B | (6.93)% | 36.01% | 34.15% | (34.30)% | 43.49% |
Ratios to Average Net Assets D,F |
|
|
|
|
|
Expenses before reductions | 1.87% | 1.89% | 1.97% | 1.97% | 1.92% |
Expenses net of fee waivers, if any | 1.87% | 1.88% | 1.95% | 1.95% | 1.92% |
Expenses net of all reductions | 1.87% | 1.87% | 1.93% | 1.89% | 1.89% |
Net investment income (loss) | (1.01)% | (1.35)% | (1.39)% | (1.20)% | (1.12)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 67,996 | $ 72,431 | $ 38,624 | $ 17,544 | $ 10,835 |
Portfolio turnover rate E | 22% | 35% | 46% | 42% | 55% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown. B Total returns do not include the effect of the contingent deferred sales charge. C Calculated based on average shares outstanding during the period. D Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. G For the year ended February 29. H Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the consolidated financial statements.
Annual Report
Consolidated Financial Highlights - Gold
Years ended February 28, | 2012 F | 2011 | 2010 | 2009 | 2008 F |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 51.44 | $ 40.85 | $ 30.67 | $ 46.37 | $ 36.54 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | (.02) | (.18) | (.16) | (.04) | (.02) |
Net realized and unrealized gain (loss) | (2.85) | 15.43 | 11.10 | (15.51) | 15.05 |
Total from investment operations | (2.87) | 15.25 | 10.94 | (15.55) | 15.03 |
Distributions from net investment income | - | - | - | - | (.18) |
Distributions from net realized gain | (2.61) | (4.67) | (.77) | (.17) | (5.03) |
Total distributions | (2.61) | (4.67) | (.77) | (.17) | (5.21) |
Redemption fees added to paid in capital B | - G | .01 | .01 | .02 | .01 |
Net asset value, end of period | $ 45.96 | $ 51.44 | $ 40.85 | $ 30.67 | $ 46.37 |
Total Return A | (6.00)% | 37.35% | 35.52% | (33.59) % | 45.10% |
Ratios to Average Net Assets C,E |
|
|
|
|
|
Expenses before reductions | .89% | .91% | .98% | .89% | .85% |
Expenses net of fee waivers, if any | .89% | .90% | .96% | .87% | .85% |
Expenses net of all reductions | .89% | .89% | .94% | .86% | .81% |
Net investment income (loss) | (.03)% | (.37)% | (.40)% | (.13)% | (.05)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 3,924,439 | $ 4,250,249 | $ 2,839,664 | $ 1,881,600 | $ 2,381,114 |
Portfolio turnover rate D | 22% | 35% | 46% | 42% | 55% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown. B Calculated based on average shares outstanding during the period. C Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. D Amount does not include the portfolio activity of any underlying Fidelity Central Funds. E Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. F For the year ended February 29. G Amount represents less than $.01 per share.
Consolidated Financial Highlights - Institutional Class
Years ended February 28, | 2012 F | 2011 | 2010 | 2009 | 2008 F |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 51.32 | $ 40.77 | $ 30.65 | $ 46.34 | $ 36.54 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | .02 | (.15) | (.15) | (.05) | (.01) |
Net realized and unrealized gain (loss) | (2.85) | 15.41 | 11.08 | (15.49) | 15.03 |
Total from investment operations | (2.83) | 15.26 | 10.93 | (15.54) | 15.02 |
Distributions from net investment income | - | - | - | - | (.19) |
Distributions from net realized gain | (2.62) | (4.72) | (.82) | (.17) | (5.04) |
Total distributions | (2.62) | (4.72) | (.82) | (.17) | (5.23) |
Redemption fees added to paid in capital B | - G | .01 | .01 | .02 | .01 |
Net asset value, end of period | $ 45.87 | $ 51.32 | $ 40.77 | $ 30.65 | $ 46.34 |
Total Return A | (5.94)% | 37.45% | 35.50% | (33.59)% | 45.10% |
Ratios to Average Net Assets C,E |
|
|
|
|
|
Expenses before reductions | .82% | .85% | .95% | .91% | .83% |
Expenses net of fee waivers, if any | .81% | .84% | .93% | .89% | .83% |
Expenses net of all reductions | .81% | .83% | .91% | .86% | .79% |
Net investment income (loss) | .04% | (.31)% | (.37)% | (.14)% | (.03)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 168,548 | $ 137,246 | $ 38,037 | $ 6,070 | $ 3,174 |
Portfolio turnover rate D | 22% | 35% | 46% | 42% | 55% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown. B Calculated based on average shares outstanding during the period. C Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. D Amount does not include the portfolio activity of any underlying Fidelity Central Funds. E Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. F For the year ended February 29. G Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the consolidated financial statements.
Annual Report
Notes to Consolidated Financial Statements
For the period ended February 29, 2012
1. Organization.
Gold Portfolio (the Fund) is a non-diversified fund of Fidelity Select Portfolios (the Trust) and is authorized to issue an unlimited number of shares. The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund invests primarily in securities of companies whose principal business activities fall within specific industries. The Fund offers Class A, Class T, Class C, Gold, and Institutional Class shares, each of which, along with Class B shares, has equal rights as to assets and voting privileges. Effective after the close of business on September 1, 2010, Class B shares were closed to new accounts and additional purchases, except for exchanges and reinvestments. Each class has exclusive voting rights with respect to matters that affect that class. Class B shares will automatically convert to Class A shares after a holding period of seven years from the initial date of purchase. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions may also differ by class.
2. Consolidated Subsidiary
The Fund invests in certain precious metals through Fidelity Select Gold Cayman Ltd., a wholly owned subsidiary (the "Subsidiary"). As of February 29, 2012, the Fund held $43,125,922 in the Subsidiary, representing 1.0% of the Fund's net assets.
The financial statements have been consolidated and include accounts of the Fund and the Subsidiary. Accordingly, all inter-company transactions and balances have been eliminated.
3. Investments in Fidelity Central Funds.
The Fund invests in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Consolidated Schedule of Investments lists each of the Fidelity Central Funds held as of period end, if any, as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC web site or upon request.
4. Significant Accounting Policies.
The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), which require management to make certain estimates and assumptions at the date of the consolidated financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the consolidated financial statements were issued have been evaluated in the preparation of the consolidated financial statements. The following summarizes the significant accounting policies of the Fund:
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Fund uses independent pricing services approved by the Board of Trustees to value its investments. When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include market or security specific events. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The value used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the Fund's own assumptions based on the best information available)
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level, as of February 29, 2012, as well as a roll forward of Level 3 securities, is included at the end of the Fund's Consolidated Schedule of Investments. Valuation techniques used to value the Fund's investments by major category are as follows:
Annual Report
Notes to Consolidated Financial Statements - continued
4. Significant Accounting Policies - continued
Security Valuation - continued
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when significant market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-traded funds (ETFs) and certain indexes as well as quoted prices for similar securities are used and are categorized as Level 2 in the hierarchy in these circumstances. Utilizing these techniques may result in transfers between Level 1 and Level 2. For restricted equity securities and private placements where observable inputs are limited, assumptions about market activity and risk are used and are categorized as Level 3 in the hierarchy.
Investments in commodities are valued at their last traded price at 4:00 p.m. Eastern time each business day and are categorized as Level 1 in the hierarchy. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 in the hierarchy.
New Accounting Pronouncements. In May 2011, the Financial Accounting Standards Board issued Accounting Standard Update No. 2011-04, Fair Value Measurement (Topic 820) - Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. The update is effective during interim and annual periods beginning after December 15, 2011 and will result in additional disclosure for transfers between levels as well as expanded disclosure for securities categorized as Level 3 under the fair value hierarchy.
In December 2011, the Financial Accounting Standards Board issued Accounting Standard Update No. 2011-11, Disclosures about Offsetting Assets and Liabilities. The update creates new disclosure requirements requiring entities to disclose both gross and net information for derivatives and other financial instruments that are either offset in the Consolidated Statement of Assets and Liabilities or subject to an enforceable master netting arrangement or similar agreement. The disclosure requirements are effective for interim and annual reporting periods beginning on or after January 1, 2013. Management is currently evaluating the impact of the update's adoption on the Fund's consolidated financial statement disclosures.
Foreign Currency. The Fund may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for income taxes is required. As of February 29, 2012, the Fund did not have any unrecognized tax benefits in the consolidated financial statements; nor is the Fund aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. The Fund files a U.S. federal tax return, in addition to state and local tax returns as required. A fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax
Annual Report
4. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
returns may be subject to examination for an additional fiscal year depending on the jurisdiction. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
The Subsidiary is classified as a controlled foreign corporation under Subchapter N of the Internal Revenue Code. Therefore, the Fund is required to increase its taxable income by its share of the Subsidiary's income. Net investment losses of the Subsidiary cannot be deducted by the Fund in the current period nor carried forward to offset taxable income in future periods.
Distributions are declared and recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. In addition, the Fund claimed a portion of the payment made to redeeming shareholders as a distribution for income tax purposes.
Capital accounts within the consolidated financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, passive foreign investment companies (PFIC), controlled foreign corporation, deferred trustees compensation and losses deferred due to wash sales and excise tax regulations.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end on an unconsolidated basis were as follows:
Gross unrealized appreciation | $ 978,179,807 |
Gross unrealized depreciation | (267,966,112) |
Net unrealized appreciation (depreciation) on securities and other investments | $ 710,213,695 |
|
|
Tax Cost | $ 4,250,258,676 |
The tax-based components of distributable earnings as of period end were as follows:
Net unrealized appreciation (depreciation) | $ 710,223,035 |
The tax character of distributions paid was as follows:
| February 29, 2012 | February 28, 2011 |
Ordinary Income | $ 158,364,329 | $ 183,285,077 |
Long-term Capital Gains | 80,385,768 | 220,239,690 |
Total | $ 238,750,097 | $ 403,524,767 |
Trading (Redemption) Fees. Shares held by investors in the Fund less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Fund and accounted for as an addition to paid in capital.
5. Operating Policies.
Delayed Delivery Transactions and When-Issued Securities. During the period, the Fund transacted in securities on a delayed delivery or when-issued basis. Payment and delivery may take place after the customary settlement period for that security. The price of the underlying securities and the date when the securities will be delivered and paid for are fixed at the time the transaction is negotiated. 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 Fund may receive compensation for interest forgone in the purchase of a delayed delivery or when-issued security. With respect to purchase commitments, the Fund identifies securities as segregated in its records with a value at least equal to the amount of the commitment. Losses may arise due to changes in the value of the underlying securities or if the counterparty does not perform under the contract's terms, or if the issuer does not issue the securities due to political, economic, or other factors.
Restricted Securities. The Fund may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities is included at the end of the Fund's Consolidated Schedule of Investments.
Annual Report
Notes to Consolidated Financial Statements - continued
6. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $1,031,786,123 and $1,013,560,327, respectively.
7. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the Fund's average net assets and an annualized group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annual management fee rate was .56% of the Fund's average net assets.
FMR and its affiliates also provide investment management related services to the Subsidiary. The Subsidiary pays FMR a monthly management fee at the annual rate of .30% of its net assets. Under the management contract, FMR pays all other expenses of the Subsidiary, except custodian fees.
During the period, FMR waived a portion of its management fee as described in the Expense Reductions note.
Distribution and Service Plan Fees. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of FMR, separate Distribution and Service Fees, each of which is based on an annual percentage of each class' average net assets. In addition, FDC may pay financial intermediaries for selling shares of the Fund and providing shareholder support services. For the period, the Distribution and Service Fee rates, total fees and amounts retained by FDC were as follows:
| Distribution | Service | Total Fees | Retained |
Class A | -% | .25% | $ 392,212 | $ 18,344 |
Class T | .25% | .25% | 220,956 | 449 |
Class B | .75% | .25% | 241,049 | 180,787 |
Class C | .75% | .25% | 719,056 | 161,254 |
|
|
| $ 1,573,273 | $ 360,834 |
Sales Load. FDC may receive a front-end sales charge of up to 5.75% for selling Class A shares and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the Fund. Depending on the holding period, FDC may receive contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. The deferred sales charges range from 5.00% to 1.00% for Class B, 1.00% for Class C, 1.00% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained |
Class A | $ 116,881 |
Class T | 23,072 |
Class B* | 51,658 |
Class C* | 20,316 |
| $ 211,927 |
* When Class B and Class C shares are initially sold, FDC pays commissions from its own resources to financial intermediaries through which the sales are made.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the Fund. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, transfer agent fees for each class were as follows:
| Amount | % of |
Class A | $ 435,931 | .28 |
Class T | 138,519 | .31 |
Class B | 70,547 | .29 |
Class C | 187,586 | .26 |
Gold | 11,373,521 | .28 |
Institutional Class | 317,725 | .20 |
| $ 12,523,829 |
|
Annual Report
7. Fees and Other Transactions with Affiliates - continued
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for each month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $6,078 for the period.
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Fund, along with other registered investment companies having management contracts with FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. The Fund's activity in this program during the period for which loans were outstanding was as follows:
Borrower or Lender | Average Loan Balance | Weighted Average Interest Rate | Interest |
Borrower | $ 9,492,839 | .34% | $ 2,740 |
8. Committed Line of Credit.
The Fund participates with other funds managed by FMR or an affiliate in a $4.0 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $13,449 and is reflected in Miscellaneous expenses on the Consolidated Statement of Operations. During the period, there were no borrowings on this line of credit.
9. Security Lending.
The Fund lends portfolio securities through a lending agent from time to time in order to earn additional income. For equity securities, a lending agent is used and may loan securities to certain qualified borrowers, including Fidelity Capital Markets (FCM), a broker-dealer affiliated with the Fund. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Consolidated Statement of Assets and Liabilities. The value of securities loaned to FCM at period end was $550,125. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Consolidated Statement of Operations as a component of income from Fidelity Central Funds. Total security lending income during the period amounted to $717,855, including $30,644 from securities loaned to FCM.
10. Expense Reductions.
FMR has contractually agreed to waive the Fund's management fee in an amount equal to the management fee of the Subsidiary. During the period, this waiver reduced the Fund's management fee by $103,814. Many of the brokers with whom FMR places trades on behalf of the Fund provided services to the Fund in addition to trade execution. These services included payments of certain expenses on behalf of the Fund totaling $83,909 for the period. In addition, through arrangements with the Fund's custodian, credits realized as a result of uninvested cash balances were used to reduce the Fund's expenses. During the period, these credits reduced the Fund's custody expenses by $1,161.
Annual Report
Notes to Consolidated Financial Statements - continued
11. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
| Year ended | Year ended |
From net realized gain |
|
|
Class A | $ 7,834,928 | $ 11,944,959 |
Class T | 2,382,367 | 3,497,337 |
Class B | 1,303,107 | 2,159,100 |
Class C | 3,798,844 | 5,735,528 |
Gold | 215,607,839 | 369,777,197 |
Institutional Class | 7,823,012 | 10,410,646 |
Total | $ 238,750,097 | $ 403,524,767 |
12. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
| Year ended | Year ended | Year ended | Year ended |
Class A |
|
|
|
|
Shares sold | 1,589,102 | 1,813,814 | $ 76,690,664 | $ 88,297,648 |
Reinvestment of distributions | 145,713 | 211,919 | 7,265,756 | 10,924,421 |
Shares redeemed | (1,293,053) | (1,131,112) | (61,867,749) | (54,494,300) |
Net increase (decrease) | 441,762 | 894,621 | $ 22,088,671 | $ 44,727,769 |
Class T |
|
|
|
|
Shares sold | 326,122 | 503,427 | $ 15,663,258 | $ 24,561,424 |
Reinvestment of distributions | 46,446 | 65,695 | 2,308,310 | 3,372,922 |
Shares redeemed | (374,234) | (315,455) | (17,626,829) | (15,070,272) |
Net increase (decrease) | (1,666) | 253,667 | $ 344,739 | $ 12,864,074 |
Class B |
|
|
|
|
Shares sold | 55,740 | 147,555 | $ 2,638,278 | $ 6,862,473 |
Reinvestment of distributions | 22,881 | 37,199 | 1,122,370 | 1,885,064 |
Shares redeemed | (142,844) | (108,197) | (6,672,300) | (5,152,463) |
Net increase (decrease) | (64,223) | 76,557 | $ (2,911,652) | $ 3,595,074 |
Class C |
|
|
|
|
Shares sold | 510,073 | 736,040 | $ 24,191,165 | $ 34,773,958 |
Reinvestment of distributions | 63,636 | 91,950 | 3,100,723 | 4,652,354 |
Shares redeemed | (484,293) | (345,478) | (22,585,009) | (16,458,498) |
Net increase (decrease) | 89,416 | 482,512 | $ 4,706,879 | $ 22,967,814 |
Gold |
|
|
|
|
Shares sold | 30,555,727 | 38,551,839 | $ 1,483,101,053 | $ 1,893,619,015 |
Reinvestment of distributions | 4,125,294 | 6,874,054 | 208,463,091 | 357,359,018 |
Shares redeemed | (31,912,749) | (32,315,161) | (1,536,990,789) | (1,572,262,287) |
Net increase (decrease) | 2,768,272 | 13,110,732 | $ 154,573,355 | $ 678,715,746 |
Institutional Class |
|
|
|
|
Shares sold | 1,664,357 | 2,014,694 | $ 81,430,250 | $ 99,860,479 |
Reinvestment of distributions | 146,226 | 184,813 | 7,344,695 | 9,641,424 |
Shares redeemed | (810,698) | (457,947) | (38,218,873) | (22,543,878) |
Net increase (decrease) | 999,885 | 1,741,560 | $ 50,556,072 | $ 86,958,025 |
13. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
Annual Report
Fidelity Advisor Materials Fund - Class A, T, B and C
Performance
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 29, 2012 | Past 1 | Past 5 | Past 10 |
Class A (incl. 5.75% sales charge) A | -5.55% | 6.81% | 12.66% |
Class T (incl. 3.50% sales charge) B | -3.59% | 7.01% | 12.74% |
Class B (incl. contingent deferred sales charge) C | -5.52% | 6.95% | 12.85% |
Class C (incl. contingent deferred sales charge) D | -1.54% | 7.26% | 12.85% |
A Class A shares bear a 0.25% 12b-1 fee. The initial offering of Class A shares took place on December 12, 2006. Returns prior to December 12, 2006 are those of Materials Portfolio, the original class of the fund, which has no 12b-1 fee. Had Class A shares' 12b-1 fee been reflected, returns prior to December 12, 2006 would have been lower.
B Class T shares bear a 0.50% 12b-1 fee. The initial offering of Class T shares took place on December 12, 2006. Returns prior to December 12, 2006 are those of Materials Portfolio, the original class of the fund, which has no 12b-1 fee. Had Class T shares' 12b-1 fee been reflected, returns prior to December 12, 2006 would have been lower.
C Class B shares bear a 1.00% 12b-1 fee. The initial offering of Class B shares took place on December 12, 2006. Returns prior to December 12, 2006 are those of Materials Portfolio, the original class of the fund, which has no 12b-1 fee. Had Class B shares' 12b-1 fee been reflected, returns prior to December 12, 2006 would have been lower. Class B shares' contingent deferred sales charge included in the past one year, past five years, and past ten years total return figures are 5%, 2%, and 0%, respectively.
D Class C shares bear a 1.00% 12b-1 fee. The initial offering of Class C shares took place on December 12, 2006. Returns prior to December 12, 2006 are those of Materials Portfolio, the original class of the fund, which has no 12b-1 fee. Had Class C shares' 12b-1 fee been reflected, returns prior to December 12, 2006 would have been lower. Class C shares' contingent deferred sales charge included in the past one year, past five years, and past ten years total return figures are 1%, 0%, and 0%, respectively.
Prior to October 1, 2006, the fund operated under certain different investment policies. The historical performance for the fund may not represent its current investment policies.
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Fidelity Advisor Materials Fund - Class A on February 28, 2002, and the current 5.75% sales charge was paid. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index performed over the same period. The initial offering of Class A took place on December 12, 2006. See the Average Annual Total Returns table for additional information regarding the performance of Class A.
Annual Report
Fidelity Advisor Materials Fund
Management's Discussion of Fund Performance
Market Recap: U.S. stocks rose for the 12 months ending February 29, 2012, as encouraging economic news sparked a strong late-period rally that lifted major equity benchmarks past a number of significant milestones. Stocks recovered from early-period uncertainty that followed the March 2011 earthquake, tsunami and nuclear meltdown in Japan, but plummeted during the summer amid Europe's debt woes and a historic U.S. credit-rating downgrade. Despite continued volatility and mixed economic news, markets began to recover in early October. Investors gravitated toward defensive sectors and the perceived safety of larger, more-established and dividend-paying names, helping the Dow Jones® Industrial Average advance 8.83%, and close above the psychologically important 13,000 mark in late February - for the first time since May 2008. The rally accelerated late in the period and the market broadened, as investor confidence improved amid encouraging manufacturing, housing and employment data, and signs of progress in Europe. For the year, the S&P 500® Index added 5.12%, closing near a four-year high on the period's second-to-last day. Of the 10 major market sectors in the S&P 500®, three defensive areas led the way - consumer staples, health care and utilities - while financials, materials and energy finished in negative territory. The technology-laden Nasdaq Composite® Index added 7.73%, flirting with the 3,000 mark, its highest level in 12 years. Foreign developed-markets stocks reeled over Europe's turmoil, and the MSCI® EAFE® (Europe, Australasia, Far East) Index fell 7.35%.
Comments from Tobias Welo, Portfolio Manager of Fidelity Advisor® Materials Fund: For the year, the fund's Class A, Class T, Class B and Class C shares returned 0.21%, -0.09%, -0.57% and -0.55%, respectively (excluding sales charges), outpacing the -1.82% return of the MSCI® U.S. IM Materials 25/50 Index but trailing the S&P 500®. Versus the MSCI index, the fund's performance particularly benefited from an overweighting and security selection in specialty chemicals. Another factor that helped was underweighting and eventually eliminating our stake in aluminum companies. An underweighting and solid picks in the steel industry also lifted the fund's result. At the individual stock level, minimizing exposure to weak-performing index component and aluminum producer Alcoa, which I sold in April, was beneficial. Other index components that bolstered relative performance because I underweighted them included Freeport-McMoRan Copper & Gold and Cliffs Natural Resources, a producer of iron ore and metallurgical coal. Additionally, overweighting specialty chemical supplier W.R. Grace was rewarding in view of the stock's gain of almost 50% during the period. Another contributor from the specialty chemical group was Netherlands-based LyondellBasell Industries, the world's largest maker of polypropylene plastic. Conversely, not owning stocks from the strong-performing paper products group curbed the fund's performance, given its gain of more than 16% in the MSCI index, and positioning in diversified chemicals also hurt. Among individual holdings, underweighting agricultural chemicals provider and major benchmark component Monsanto for much of the year hampered the fund, in view of the stock's high single-digit gain. In the second half of the year, I added to the fund's holdings here, increasing our position to an overweighting and making Monsanto the fund's second-largest holding by period end. Despite being a relative detractor, Monsanto was the fund's largest contributor in absolute terms. Avoiding two other strong-performing index components, International Paper and engine-oil additives maker Lubrizol, worked against us as well. Also weighing on performance was an out-of-benchmark stake in Ivanhoe Mines, a Canadian junior mining company that was hurt by lackluster copper demand from China.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Materials Portfolio
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments or redemption proceeds, redemption fees, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (September 1, 2011 to February 29, 2012).
Actual Expenses
The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Annualized Expense Ratio | Beginning | Ending | Expenses Paid |
Class A | 1.13% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,090.50 | $ 5.87 |
HypotheticalA |
| $ 1,000.00 | $ 1,019.24 | $ 5.67 |
Class T | 1.41% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,088.90 | $ 7.32 |
HypotheticalA |
| $ 1,000.00 | $ 1,017.85 | $ 7.07 |
Class B | 1.90% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,086.40 | $ 9.86 |
HypotheticalA |
| $ 1,000.00 | $ 1,015.42 | $ 9.52 |
Class C | 1.89% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,086.50 | $ 9.80 |
HypotheticalA |
| $ 1,000.00 | $ 1,015.47 | $ 9.47 |
Materials | .85% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,092.10 | $ 4.42 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.64 | $ 4.27 |
Institutional Class | .83% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,092.10 | $ 4.32 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.74 | $ 4.17 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
Annual Report
Materials Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 29, 2012 | ||
| % of fund's | % of fund's net assets |
E.I. du Pont de Nemours & Co. | 8.1 | 8.5 |
Monsanto Co. | 6.6 | 3.3 |
Air Products & Chemicals, Inc. | 5.2 | 3.4 |
Dow Chemical Co. | 5.1 | 6.6 |
Newmont Mining Corp. | 4.6 | 6.1 |
The Mosaic Co. | 3.9 | 4.2 |
Ecolab, Inc. | 3.8 | 2.6 |
LyondellBasell Industries NV | 3.5 | 2.8 |
Freeport-McMoRan Copper & Gold, Inc. | 2.7 | 4.1 |
Ball Corp. | 2.6 | 2.6 |
| 46.1 | |
Top Industries (% of fund's net assets) | |||
As of February 29, 2012 | |||
| Chemicals | 65.0% |
|
| Metals & Mining | 20.1% |
|
| Containers & Packaging | 8.0% |
|
| Food Products | 1.0% |
|
| Electrical Equipment | 0.6% |
|
 | All Others* | 5.3% |
|
As of August 31, 2011 | |||
| Chemicals | 61.2% |
|
| Metals & Mining | 24.5% |
|
| Containers & Packaging | 6.7% |
|
| Food Products | 1.3% |
|
| Electrical Equipment | 0.7% |
|
| All Others* | 5.6% |
|
* Includes short-term investments and net other assets. |
Annual Report
Materials Portfolio
Investments February 29, 2012
Showing Percentage of Net Assets
Common Stocks - 95.0% | |||
Shares | Value | ||
CHEMICALS - 65.0% | |||
Commodity Chemicals - 2.0% | |||
Arkema SA | 136,801 | $ 12,534,900 | |
Georgia Gulf Corp. (a) | 78,518 | 2,532,991 | |
Westlake Chemical Corp. (d) | 215,670 | 12,989,804 | |
| 28,057,695 | ||
Diversified Chemicals - 20.5% | |||
Akzo Nobel NV | 125,082 | 7,094,453 | |
BASF AG | 131,323 | 11,529,106 | |
Cabot Corp. | 175,964 | 7,128,302 | |
Dow Chemical Co. | 2,181,179 | 73,091,308 | |
E.I. du Pont de Nemours & Co. | 2,281,017 | 115,989,715 | |
Eastman Chemical Co. | 582,700 | 31,541,551 | |
Lanxess AG | 96,293 | 7,196,594 | |
Olin Corp. | 390,600 | 8,214,318 | |
PPG Industries, Inc. | 356,576 | 32,537,560 | |
| 294,322,907 | ||
Fertilizers & Agricultural Chemicals - 14.2% | |||
CF Industries Holdings, Inc. | 184,424 | 34,302,864 | |
Israel Chemicals Ltd. | 659,400 | 6,990,414 | |
Monsanto Co. | 1,226,996 | 94,944,950 | |
Rentech Nitrogen Partners LP | 473,455 | 11,713,277 | |
The Mosaic Co. | 964,895 | 55,722,686 | |
| 203,674,191 | ||
Industrial Gases - 5.2% | |||
Air Products & Chemicals, Inc. | 829,276 | 74,833,866 | |
Specialty Chemicals - 23.1% | |||
Albemarle Corp. | 304,323 | 20,243,566 | |
Ashland, Inc. | 373,983 | 23,770,359 | |
Celanese Corp. Class A | 496,966 | 23,640,673 | |
Cytec Industries, Inc. | 170,146 | 10,116,881 | |
Ecolab, Inc. | 917,474 | 55,048,440 | |
H.B. Fuller Co. | 225,759 | 6,802,119 | |
Innophos Holdings, Inc. | 235,013 | 11,839,955 | |
Kraton Performance Polymers, Inc. (a) | 358,939 | 9,974,915 | |
LyondellBasell Industries NV Class A | 1,164,006 | 50,261,779 | |
OMNOVA Solutions, Inc. (a) | 833,132 | 4,248,973 | |
Rockwood Holdings, Inc. (a) | 350,432 | 18,660,504 | |
Sherwin-Williams Co. | 327,147 | 33,745,213 | |
Sigma Aldrich Corp. | 365,082 | 26,209,237 | |
W.R. Grace & Co. (a) | 633,696 | 36,095,324 | |
| 330,657,938 | ||
TOTAL CHEMICALS | 931,546,597 | ||
COMMERCIAL SERVICES & SUPPLIES - 0.3% | |||
Environmental & Facility Services - 0.3% | |||
Swisher Hygiene, Inc. | 262,171 | 773,404 | |
| |||
Shares | Value | ||
Swisher Hygiene, Inc. (Canada) (a)(d) | 1,197,867 | $ 3,533,711 | |
| 4,307,115 | ||
CONTAINERS & PACKAGING - 8.0% | |||
Metal & Glass Containers - 4.6% | |||
Aptargroup, Inc. | 395,300 | 20,863,934 | |
Ball Corp. | 935,292 | 37,486,503 | |
Silgan Holdings, Inc. | 190,100 | 8,083,052 | |
| 66,433,489 | ||
Paper Packaging - 3.4% | |||
Rock-Tenn Co. Class A | 510,625 | 35,993,956 | |
Sealed Air Corp. | 636,608 | 12,496,615 | |
| 48,490,571 | ||
TOTAL CONTAINERS & PACKAGING | 114,924,060 | ||
ELECTRICAL EQUIPMENT - 0.6% | |||
Electrical Components & Equipment - 0.6% | |||
GrafTech International Ltd. (a) | 707,387 | 8,990,889 | |
FOOD PRODUCTS - 1.0% | |||
Agricultural Products - 1.0% | |||
Archer Daniels Midland Co. | 477,228 | 14,889,514 | |
METALS & MINING - 20.1% | |||
Diversified Metals & Mining - 7.5% | |||
Copper Mountain Mining Corp. (a) | 1,760,700 | 9,091,272 | |
First Quantum Minerals Ltd. | 1,145,100 | 26,196,195 | |
Freeport-McMoRan Copper & Gold, Inc. | 916,848 | 39,021,051 | |
Horsehead Holding Corp. (a) | 225,200 | 2,567,280 | |
HudBay Minerals, Inc. | 357,700 | 4,311,990 | |
Ivanhoe Mines Ltd. (a) | 1,201,100 | 20,838,566 | |
Walter Energy, Inc. | 89,208 | 5,783,355 | |
| 107,809,709 | ||
Gold - 6.1% | |||
Goldcorp, Inc. | 297,400 | 14,415,478 | |
Newcrest Mining Ltd. | 184,109 | 6,611,599 | |
Newmont Mining Corp. | 1,106,386 | 65,719,328 | |
| 86,746,405 | ||
Precious Metals & Minerals - 0.3% | |||
African Minerals Ltd. (a) | 529,923 | 4,843,044 | |
Steel - 6.2% | |||
ArcelorMittal SA Class A unit | 334,684 | 7,061,832 | |
Carpenter Technology Corp. | 296,655 | 15,218,402 | |
Fortescue Metals Group Ltd. | 1,267,931 | 7,572,985 | |
Haynes International, Inc. | 189,684 | 12,005,100 | |
Common Stocks - continued | |||
Shares | Value | ||
METALS & MINING - CONTINUED | |||
Steel - continued | |||
Nucor Corp. | 788,165 | $ 34,308,822 | |
Reliance Steel & Aluminum Co. | 228,082 | 12,252,565 | |
| 88,419,706 | ||
TOTAL METALS & MINING | 287,818,864 | ||
TOTAL COMMON STOCKS (Cost $1,130,562,901) |
| ||
Convertible Bonds - 0.6% | ||||
| Principal Amount |
| ||
BUILDING PRODUCTS - 0.6% | ||||
Building Products - 0.6% | ||||
Aspen Aerogels, Inc. 8% 6/1/14 (f) | $ 7,861,200 |
| ||
U.S. Treasury Obligations - 0.2% | ||||
| ||||
U.S. Treasury Bills, yield at date of purchase 0.01% to 0.08% 3/1/12 to 5/24/12 (e) | 2,850,000 |
| ||
Money Market Funds - 4.9% | |||
Shares |
| ||
Fidelity Cash Central Fund, 0.12% (b) | 61,106,071 | 61,106,071 | |
Fidelity Securities Lending Cash Central Fund, 0.12% (b)(c) | 9,733,681 | 9,733,681 | |
TOTAL MONEY MARKET FUNDS (Cost $70,839,752) |
| ||
TOTAL INVESTMENT PORTFOLIO - 100.7% (Cost $1,212,113,671) | 1,444,027,813 | |
NET OTHER ASSETS (LIABILITIES) - (0.7)% | (9,702,050) | |
NET ASSETS - 100% | $ 1,434,325,763 | |
Futures Contracts | |||||
Expiration Date | Underlying Face Amount at Value | Unrealized Appreciation/(Depreciation) | |||
Purchased | |||||
Equity Index Contracts | |||||
350 CME E-mini S&P Select Sector Materials Index Contracts | March 2012 | $ 13,629,000 | 1,161,335 | ||
|
The face value of futures purchased as a percentage of net assets is 1% |
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
(e) Security or a portion of the security was pledged to cover margin requirements for futures contracts. At the period end, the value of securities pledged amounted to $1,900,000. |
(f) Restricted securities - Investment in securities not registered under the Securities Act of 1933 (excluding 144A issues). At the end of the period, the value of restricted securities (excluding 144A issues) amounted to $7,861,200 or 0.6% of net assets. |
Additional information on each restricted holding is as follows: |
Security | Acquisition Date | Acquisition Cost |
Aspen Aerogels, Inc. 8% 6/1/14 | 6/1/11 | $ 7,861,200 |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 48,237 |
Fidelity Securities Lending Cash Central Fund | 444,343 |
Total | $ 492,580 |
Other Information |
The following is a summary of the inputs used, as of February 29, 2012, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the tables below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities: | ||||
Common Stocks | $ 1,362,477,039 | $ 1,362,477,039 | $ - | $ - |
Convertible Bonds | 7,861,200 | - | - | 7,861,200 |
U.S. Treasury Obligations | 2,849,822 | - | 2,849,822 | - |
Money Market Funds | 70,839,752 | 70,839,752 | - | - |
Total Investments in Securities: | $ 1,444,027,813 | $ 1,433,316,791 | $ 2,849,822 | $ 7,861,200 |
Derivative Instruments: | ||||
Assets | ||||
Futures Contracts | $ 1,161,335 | $ 1,161,335 | $ - | $ - |
The following is a reconciliation of Investments in Securities and Derivative Instruments for which Level 3 inputs were used in determining value: |
Investments in Securities: | |
Beginning Balance | $ - |
Total Realized Gain (Loss) | - |
Total Unrealized Gain (Loss) | - |
Cost of Purchases | 7,861,200 |
Proceeds of Sales | - |
Amortization/Accretion | - |
Transfers in to Level 3 | - |
Transfers out of Level 3 | - |
Ending Balance | $ 7,861,200 |
The change in unrealized gain (loss) for the period attributable to Level 3 securities held at February 29, 2012 | $ - |
The information used in the above reconciliation represents fiscal year to date activity for any Investments in Securities and Derivative Instruments identified as using Level 3 inputs at either the beginning or the end of the current fiscal period. Transfers in or out of Level 3 represent the beginning value of any Security or Instrument where a change in the pricing level occurred from the beginning to the end of the period. The cost of purchases and the proceeds of sales may include securities received or delivered through corporate actions or exchanges. Realized and unrealized gains (losses) disclosed in the reconciliation are included in Net Gain (Loss) on the Fund's Statement of Operations. |
Value of Derivative Instruments |
The following table is a summary of the Fund's value of derivative instruments by risk exposure as of February 29, 2012. For additional information on derivative instruments, please refer to the Derivative Instruments section in the accompanying Notes to Financial Statements. |
Risk Exposure / | Value | |
| Asset | Liability |
Equity Risk | ||
Futures Contracts (a) | $ 1,161,335 | $ - |
Total Value of Derivatives | $ 1,161,335 | $ - |
(a) Reflects cumulative appreciation/(depreciation) on futures contracts as disclosed on the Schedule of Investments. Only the period end variation margin is separately disclosed on the Statement of Assets and Liabilities. |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 86.3% |
Canada | 5.2% |
Netherlands | 4.0% |
Germany | 1.3% |
Australia | 1.0% |
Others (Individually Less Than 1%) | 2.2% |
| 100.0% |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Materials Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2012 | |
Assets | ||
Investment in securities, at value (including securities loaned of $9,256,655) - See accompanying schedule: Unaffiliated issuers (cost $1,141,273,919) | $ 1,373,188,061 |
|
Fidelity Central Funds (cost $70,839,752) | 70,839,752 |
|
Total Investments (cost $1,212,113,671) |
| $ 1,444,027,813 |
Receivable for investments sold | 8,155,733 | |
Receivable for fund shares sold | 5,455,175 | |
Dividends receivable | 1,944,276 | |
Interest receivable | 469,925 | |
Distributions receivable from Fidelity Central Funds | 10,695 | |
Prepaid expenses | 3,388 | |
Other receivables | 8,326 | |
Total assets | 1,460,075,331 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 11,605,280 | |
Payable for fund shares redeemed | 3,052,464 | |
Accrued management fee | 661,897 | |
Distribution and service plan fees payable | 102,186 | |
Payable for daily variation margin on futures contracts | 245,000 | |
Other affiliated payables | 306,770 | |
Other payables and accrued expenses | 42,290 | |
Collateral on securities loaned, at value | 9,733,681 | |
Total liabilities | 25,749,568 | |
|
|
|
Net Assets | $ 1,434,325,763 | |
Net Assets consist of: |
| |
Paid in capital | $ 1,204,629,224 | |
Undistributed net investment income | 797,816 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (4,176,754) | |
Net unrealized appreciation (depreciation) on investments | 233,075,477 | |
Net Assets | $ 1,434,325,763 | |
Statement of Assets and Liabilities - continued
| February 29, 2012 | |
Calculation of Maximum Offering Price Class A: | $ 69.23 | |
|
|
|
Maximum offering price per share (100/94.25 of $69.23) | $ 73.45 | |
Class T: | $ 68.91 | |
|
|
|
Maximum offering price per share (100/96.50 of $68.91) | $ 71.41 | |
Class B: | $ 68.13 | |
|
|
|
Class C: | $ 67.98 | |
|
|
|
Materials: | $ 69.41 | |
|
|
|
Institutional Class: | $ 69.35 | |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Materials Portfolio
Financial Statements - continued
Statement of Operations
| Year ended February 29, 2012 | |
Investment Income |
|
|
Dividends |
| $ 23,048,131 |
Interest |
| 470,114 |
Income from Fidelity Central Funds |
| 492,580 |
Total income |
| 24,010,825 |
|
|
|
Expenses | ||
Management fee | $ 7,696,020 | |
Transfer agent fees | 3,346,774 | |
Distribution and service plan fees | 1,147,958 | |
Accounting and security lending fees | 446,822 | |
Custodian fees and expenses | 50,223 | |
Independent trustees' compensation | 8,074 | |
Registration fees | 161,444 | |
Audit | 50,671 | |
Legal | 6,429 | |
Interest | 103 | |
Miscellaneous | 11,907 | |
Total expenses before reductions | 12,926,425 | |
Expense reductions | (83,853) | 12,842,572 |
Net investment income (loss) | 11,168,253 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 34,413,700 | |
Foreign currency transactions | (254,748) | |
Futures contracts | 721,846 | |
Total net realized gain (loss) |
| 34,880,798 |
Change in net unrealized appreciation (depreciation) on: Investment securities | (67,003,496) | |
Assets and liabilities in foreign currencies | 278 | |
Futures contracts | 1,161,335 | |
Total change in net unrealized appreciation (depreciation) |
| (65,841,883) |
Net gain (loss) | (30,961,085) | |
Net increase (decrease) in net assets resulting from operations | $ (19,792,832) | |
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 11,168,253 | $ 18,226,863 |
Net realized gain (loss) | 34,880,798 | 5,250,878 |
Change in net unrealized appreciation (depreciation) | (65,841,883) | 249,900,447 |
Net increase (decrease) in net assets resulting | (19,792,832) | 273,378,188 |
Distributions to shareholders from net investment income | (9,840,737) | (18,392,042) |
Distributions to shareholders from net realized gain | (7,461,289) | (379,797) |
Total distributions | (17,302,026) | (18,771,839) |
Share transactions - net increase (decrease) | (18,941,790) | 520,343,234 |
Redemption fees | 99,276 | 97,765 |
Total increase (decrease) in net assets | (55,937,372) | 775,047,348 |
|
|
|
Net Assets | ||
Beginning of period | 1,490,263,135 | 715,215,787 |
End of period (including undistributed net investment income of $797,816 and distributions in excess of net investment income of $22,442, respectively) | $ 1,434,325,763 | $ 1,490,263,135 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
Years ended February 28, | 2012 J | 2011 | 2010 | 2009 | 2008 J |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 69.96 | $ 52.54 | $ 27.65 | $ 57.00 | $ 51.01 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .40 | 1.08 F | .30 G | .22 | .46 |
Net realized and unrealized gain (loss) | (.35) | 17.40 | 24.90 | (29.46) | 8.05 |
Total from investment operations | .05 | 18.48 | 25.20 | (29.24) | 8.51 |
Distributions from net investment income | (.40) | (1.06) | (.32) | (.12) | (.32) |
Distributions from net realized gain | (.38) | (.01) | - | - | (2.21) |
Total distributions | (.78) | (1.07) | (.32) | (.12) | (2.53) L |
Redemption fees added to paid in capital C | - K | .01 | .01 | .01 | .01 |
Net asset value, end of period | $ 69.23 | $ 69.96 | $ 52.54 | $ 27.65 | $ 57.00 |
Total Return A,B | .21% | 35.33% | 91.25% | (51.30)% | 16.79% |
Ratios to Average Net Assets D,H |
|
|
|
|
|
Expenses before reductions | 1.13% | 1.16% | 1.23% | 1.21% | 1.21% |
Expenses net of fee waivers, if any | 1.13% | 1.16% | 1.23% | 1.21% | 1.21% |
Expenses net of all reductions | 1.13% | 1.15% | 1.22% | 1.20% | 1.21% |
Net investment income (loss) | .61% | 1.81% F | .65% G | .47% | .83% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 157,781 | $ 124,160 | $ 52,352 | $ 10,796 | $ 12,522 |
Portfolio turnover rate E | 94% | 87% | 104% I | 117% | 77% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown. B Total returns do not include the effect of the sales charges. C Calculated based on average shares outstanding during the period. D Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Investment income per share reflects a large, non-recurring dividend which amounted to $.83 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been ..41%. G Investment income per share reflects a large, non-recurring dividend which amounted to $.10 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .43%. H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. I The portfolio turnover rate does not include the assets acquired in the merger. J For the year ended February 29. K Amount represents less than $.01 per share. L Total distributions of $2.53 per share is comprised of distributions from net investment income of $.322 and distributions from net realized gain of $2.210 per share.
Financial Highlights - Class T
Years ended February 28, | 2012 J | 2011 | 2010 | 2009 | 2008 J |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 69.68 | $ 52.35 | $ 27.56 | $ 56.80 | $ 50.89 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .21 | .90 F | .16 G | .10 | .32 |
Net realized and unrealized gain (loss) | (.35) | 17.34 | 24.81 | (29.32) | 8.00 |
Total from investment operations | (.14) | 18.24 | 24.97 | (29.22) | 8.32 |
Distributions from net investment income | (.25) | (.92) | (.19) | (.03) | (.21) |
Distributions from net realized gain | (.38) | - | - | - | (2.21) |
Total distributions | (.63) | (.92) | (.19) | (.03) | (2.42) L |
Redemption fees added to paid in capital C | - K | .01 | .01 | .01 | .01 |
Net asset value, end of period | $ 68.91 | $ 69.68 | $ 52.35 | $ 27.56 | $ 56.80 |
Total Return A,B | (.09)% | 34.98% | 90.70% | (51.43)% | 16.45% |
Ratios to Average Net Assets D,H |
|
|
|
|
|
Expenses before reductions | 1.42% | 1.44% | 1.52% | 1.46% | 1.46% |
Expenses net of fee waivers, if any | 1.42% | 1.44% | 1.52% | 1.46% | 1.46% |
Expenses net of all reductions | 1.41% | 1.43% | 1.51% | 1.46% | 1.46% |
Net investment income (loss) | .33% | 1.54% F | .35% G | .22% | .57% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 28,290 | $ 25,570 | $ 14,712 | $ 4,944 | $ 6,850 |
Portfolio turnover rate E | 94% | 87% | 104% I | 117% | 77% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown. B Total returns do not include the effect of the sales charges. C Calculated based on average shares outstanding during the period. D Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Investment income per share reflects a large, non-recurring dividend which amounted to $.83 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been ..14%. G Investment income per share reflects a large, non-recurring dividend which amounted to $.10 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .14%. H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. I The portfolio turnover rate does not include the assets acquired in the merger. J For the year ended February 29. K Amount represents less than $.01 per share. L Total distributions of $2.42 per share is comprised of distributions from net investment income of $.207 and distributions from net realized gain of $2.210 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class B
Years ended February 28, | 2012 J | 2011 | 2010 | 2009 | 2008 J |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 68.95 | $ 51.86 | $ 27.35 | $ 56.59 | $ 50.81 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.11) | .60 F | (.07) G | (.12) | .04 |
Net realized and unrealized gain (loss) | (.33) | 17.13 | 24.61 | (29.13) | 7.98 |
Total from investment operations | (.44) | 17.73 | 24.54 | (29.25) | 8.02 |
Distributions from net investment income | - | (.65) | (.04) | - | (.04) |
Distributions from net realized gain | (.38) | - | - | - | (2.21) |
Total distributions | (.38) | (.65) | (.04) | - | (2.25) L |
Redemption fees added to paid in capital C | - K | .01 | .01 | .01 | .01 |
Net asset value, end of period | $ 68.13 | $ 68.95 | $ 51.86 | $ 27.35 | $ 56.59 |
Total Return A,B | (.57)% | 34.29% | 89.79% | (51.67)% | 15.89% |
Ratios to Average Net Assets D,H |
|
|
|
|
|
Expenses before reductions | 1.91% | 1.93% | 2.02% | 1.95% | 1.97% |
Expenses net of fee waivers, if any | 1.91% | 1.93% | 2.02% | 1.95% | 1.97% |
Expenses net of all reductions | 1.91% | 1.92% | 2.01% | 1.95% | 1.96% |
Net investment income (loss) | (.17)% | 1.04% F | (.15)% G | (.27)% | .07% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 11,040 | $ 13,507 | $ 9,538 | $ 2,601 | $ 4,173 |
Portfolio turnover rate E | 94% | 87% | 104% I | 117% | 77% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown. B Total returns do not include the effect of the contingent deferred sales charge. C Calculated based on average shares outstanding during the period. D Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Investment income per share reflects a large, non-recurring dividend which amounted to $.83 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been (.35) %. G Investment income per share reflects a large, non-recurring dividend which amounted to $.10 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been (.36) %. H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. I The portfolio turnover rate does not include the assets acquired in the merger. J For the year ended February 29. K Amount represents less than $.01 per share. L Total distributions of $2.25 per share is comprised of distributions from net investment income of $.043 and distributions from net realized gain of $2.210 per share.
Financial Highlights - Class C
Years ended February 28, | 2012 J | 2011 | 2010 | 2009 | 2008 J |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 68.78 | $ 51.79 | $ 27.31 | $ 56.50 | $ 50.81 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.10) | .61 F | (.06) G | (.13) | .04 |
Net realized and unrealized gain (loss) | (.32) | 17.09 | 24.57 | (29.07) | 7.97 |
Total from investment operations | (.42) | 17.70 | 24.51 | (29.20) | 8.01 |
Distributions from net investment income | - | (.72) | (.04) | - | (.12) |
Distributions from net realized gain | (.38) | - | - | - | (2.21) |
Total distributions | (.38) | (.72) | (.04) | - | (2.33) L |
Redemption fees added to paid in capital C | - K | .01 | .01 | .01 | .01 |
Net asset value, end of period | $ 67.98 | $ 68.78 | $ 51.79 | $ 27.31 | $ 56.50 |
Total Return A,B | (.55)% | 34.29% | 89.82% | (51.66)% | 15.87% |
Ratios to Average Net Assets D,H |
|
|
|
|
|
Expenses before reductions | 1.89% | 1.93% | 2.01% | 1.95% | 1.96% |
Expenses net of fee waivers, if any | 1.89% | 1.93% | 2.01% | 1.95% | 1.96% |
Expenses net of all reductions | 1.89% | 1.92% | 2.00% | 1.95% | 1.96% |
Net investment income (loss) | (.15)% | 1.04% F | (.13)% G | (.27)% | .07% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 58,296 | $ 46,525 | $ 20,469 | $ 5,509 | $ 8,743 |
Portfolio turnover rate E | 94% | 87% | 104% I | 117% | 77% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown. B Total returns do not include the effect of the contingent deferred sales charge. C Calculated based on average shares outstanding during the period. D Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Investment income per share reflects a large, non-recurring dividend which amounted to $.83 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been (.35) %. G Investment income per share reflects a large, non-recurring dividend which amounted to $.10 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been (.35) %. H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. I The portfolio turnover rate does not include the assets acquired in the merger. J For the year ended February 29. K Amount represents less than $.01 per share. L Total distributions of $2.33 per share is comprised of distributions from net investment income of $.124 and distributions from net realized gain of $2.210 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Materials
Years ended February 28, | 2012 I | 2011 | 2010 | 2009 | 2008 I |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 70.11 | $ 52.61 | $ 27.66 | $ 57.01 | $ 50.92 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | .60 | 1.25 E | .43 F | .38 | .64 |
Net realized and unrealized gain (loss) | (.37) | 17.43 | 24.91 | (29.54) | 8.01 |
Total from investment operations | .23 | 18.68 | 25.34 | (29.16) | 8.65 |
Distributions from net investment income | (.55) | (1.16) | (.40) | (.20) | (.36) |
Distributions from net realized gain | (.38) | (.03) | - | - | (2.21) |
Total distributions | (.93) | (1.19) | (.40) | (.20) | (2.57) K |
Redemption fees added to paid in capital B | - J | .01 | .01 | .01 | .01 |
Net asset value, end of period | $ 69.41 | $ 70.11 | $ 52.61 | $ 27.66 | $ 57.01 |
Total Return A | .49% | 35.70% | 91.77% | (51.15)% | 17.10% |
Ratios to Average Net Assets C,G |
|
|
|
|
|
Expenses before reductions | .85% | .88% | .96% | .90% | .91% |
Expenses net of fee waivers, if any | .85% | .88% | .96% | .90% | .90% |
Expenses net of all reductions | .84% | .87% | .94% | .90% | .89% |
Net investment income (loss) | .90% | 2.10% E | .92% F | .78% | 1.14% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 1,089,619 | $ 1,195,371 | $ 604,475 | $ 127,551 | $ 353,185 |
Portfolio turnover rate D | 94% | 87% | 104% H | 117% | 77% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown. B Calculated based on average shares outstanding during the period. C Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. D Amount does not include the portfolio activity of any underlying Fidelity Central Funds. E Investment income per share reflects a large, non-recurring dividend which amounted to $.83 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .70%. F nvestment income per share reflects a large, non-recurring dividend which amounted to $.10 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .70%. G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. H The portfolio turnover rate does not include the assets acquired in the merger. I For the year ended February 29. J Amount represents less than $.01 per share. K Total distributions of $2.57 per share is comprised of distributions from net investment income of $.363 and distributions from net realized gain of $2.210 per share.
Financial Highlights - Institutional Class
Years ended February 28, | 2012 I | 2011 | 2010 | 2009 | 2008 I |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 70.05 | $ 52.58 | $ 27.66 | $ 57.00 | $ 50.91 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | .60 | 1.28 E | .46 F | .38 | .64 |
Net realized and unrealized gain (loss) | (.36) | 17.40 | 24.89 | (29.53) | 8.00 |
Total from investment operations | .24 | 18.68 | 25.35 | (29.15) | 8.64 |
Distributions from net investment income | (.56) | (1.19) | (.44) | (.20) | (.36) |
Distributions from net realized gain | (.38) | (.03) | - | - | (2.21) |
Total distributions | (.94) | (1.22) | (.44) | (.20) | (2.56) K |
Redemption fees added to paid in capital B | - J | .01 | .01 | .01 | .01 |
Net asset value, end of period | $ 69.35 | $ 70.05 | $ 52.58 | $ 27.66 | $ 57.00 |
Total Return A | .50% | 35.73% | 91.79% | (51.15)% | 17.08% |
Ratios to Average Net Assets C,G |
|
|
|
|
|
Expenses before reductions | .84% | .86% | .94% | .90% | .89% |
Expenses net of fee waivers, if any | .84% | .86% | .94% | .90% | .89% |
Expenses net of all reductions | .83% | .85% | .93% | .90% | .89% |
Net investment income (loss) | .91% | 2.11% E | .94% F | .78% | 1.14% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 89,299 | $ 85,130 | $ 13,670 | $ 719 | $ 1,820 |
Portfolio turnover rate D | 94% | 87% | 104% H | 117% | 77% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown. B Calculated based on average shares outstanding during the period. C Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. D Amount does not include the portfolio activity of any underlying Fidelity Central Funds. E Investment income per share reflects a large, non-recurring dividend which amounted to $.83 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .72%. F Investment income per share reflects a large, non-recurring dividend which amounted to $.10 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .72%. G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. H The portfolio turnover rate does not include the assets acquired in the merger. I For the year ended February 29. J Amount represents less than $.01 per share. K Total distributions of $2.56 per share is comprised of distributions from net investment income of $.355 and distributions from net realized gain of $2.210 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended February 29, 2012
1. Organization.
Materials Portfolio (the Fund) is a non-diversified fund of Fidelity Select Portfolios (the Trust) and is authorized to issue an unlimited number of shares. The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund invests primarily in securities of companies whose principal business activities fall within specific industries. The Fund offers Class A, Class T, Class C, Materials and Institutional Class shares, each of which, along with Class B shares, has equal rights as to assets and voting privileges. Effective after the close of business on September 1, 2010, Class B shares were closed to new accounts and additional purchases, except for exchanges and reinvestments. Each class has exclusive voting rights with respect to matters that affect that class. Class B shares will automatically convert to Class A shares after a holding period of seven years from the initial date of purchase. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions may also differ by class.
2. Investments in Fidelity Central Funds.
The Fund invests in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds held as of period end, if any, as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Fund:
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Fund uses independent pricing services approved by the Board of Trustees to value its investments. When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include market or security specific events. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The value used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the Fund's own assumptions based on the best information available)
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level, as of February 29, 2012, as well as a roll forward of Level 3 securities, is included at the end of the Fund's Schedule of Investments. Valuation techniques used to value the Fund's investments by major category are as follows:
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when significant market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-traded funds (ETFs) and certain indexes as well as quoted prices for similar securities are used and are categorized as Level 2 in the hierarchy in these circumstances. Utilizing these techniques may result in transfers between Level 1 and Level 2. For restricted equity securities and private placements where observable inputs are limited, assumptions about market activity and risk are used and are categorized as Level 3 in the hierarchy.
Annual Report
3. Significant Accounting Policies - continued
Security Valuation - continued
Debt securities, including restricted securities, are valued based on evaluated prices received from independent pricing services or from dealers who make markets in such securities. For corporate bonds and U.S. government and government agency obligations, pricing services utilize matrix pricing which considers yield or price of bonds of comparable quality, coupon, maturity and type as well as dealer supplied prices and are generally categorized as Level 2 in the hierarchy. When independent prices are unavailable or unreliable, debt securities may be valued utilizing pricing matrices which consider similar factors that would be used by independent pricing services. These are generally categorized as Level 2 in the hierarchy but may be Level 3 depending on the circumstances.
Futures contracts are valued at the settlement price established each day by the board of trade or exchange on which they are traded and are categorized as Level 1 in the hierarchy. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 in the hierarchy.
New Accounting Pronouncements. In May 2011, the Financial Accounting Standards Board issued Accounting Standard Update No. 2011-04, Fair Value Measurement (Topic 820) - Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. The update is effective during interim and annual periods beginning after December 15, 2011 and will result in additional disclosure for transfers between levels as well as expanded disclosure for securities categorized as Level 3 under the fair value hierarchy.
In December 2011, the Financial Accounting Standards Board issued Accounting Standard Update No. 2011-11, Disclosures about Offsetting Assets and Liabilities. The update creates new disclosure requirements requiring entities to disclose both gross and net information for derivatives and other financial instruments that are either offset in the Statement of Assets and Liabilities or subject to an enforceable master netting arrangement or similar agreement. The disclosure requirements are effective for interim and annual reporting periods beginning on or after January 1, 2013. Management is currently evaluating the impact of the update's adoption on the Fund's financial statement disclosures.
Foreign Currency. The Fund may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for income taxes is required. As of February 29, 2012, the Fund did not have any unrecognized tax benefits in the financial statements; nor is the Fund aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. The Fund files a U.S. federal tax return, in addition to state and local tax returns as required. A fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
Distributions are declared and recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. In addition, the Fund claimed a portion of the payment made to redeeming shareholders as a distribution for income tax purposes.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, partnerships, passive foreign investment companies (PFIC), deferred trustees compensation, futures transactions, capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation | $ 256,439,881 |
Gross unrealized depreciation | (31,121,651) |
Net unrealized appreciation (depreciation) on securities and other investments | $ 225,318,230 |
|
|
Tax cost | $ 1,218,709,583 |
The tax-based components of distributable earnings as of period end were as follows:
Undistributed ordinary income | $ 797,818 |
Undistributed long-term capital gain | $ 7,329,133 |
Net unrealized appreciation (depreciation) | $ 225,318,230 |
The tax character of distributions paid was as follows:
| February 29, 2012 | February 28, 2011 |
Ordinary Income | $ 9,840,737 | $ 18,771,839 |
Long-term Capital Gains | 7,461,289 | - |
Total | $ 17,302,026 | $ 18,771,839 |
Capital loss carryforwards are only available to offset future capital gains of the Fund to the extent provided by regulations and may be limited. Under the Regulated Investment Company Modernization Act of 2010 (the Act), the Fund is permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period and such capital losses are required to be used prior to any losses that expire. At February 29, 2012 capital loss carryforwards were as follows:
Fiscal year of expiration |
|
2016 | $ (5,392,414) |
2017 | (6,058,499) |
2018 | (1,022,988) |
2019 | (80,787) |
Total with expiration | $ (12,554,688) |
Included in the $12,554,688 of the Fund's capital loss carryforwards are $12,554,688 of capital loss carryforwards that were acquired from Paper and Forest Products Portfolio when it merged into the fund on June 19, 2009 of which $5,392,414, $6,058,499, $1,022,988 and $80,787 will expire in fiscal 2016, 2017, 2018 and 2019, respectively. Under the Internal Revenue Code, the losses acquired from Paper and Forest Products Portfolio that will be available to offset future capital gains of the Fund will be limited. As a result, at least $8,806,047 of the losses acquired from Paper and Forest Products Portfolio will expire unused.
Trading (Redemption) Fees. Shares held by investors in the Fund less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Fund and accounted for as an addition to paid in capital.
4. Operating Policies.
Restricted Securities. The Fund may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities is included at the end of the Fund's Schedule of Investments.
Annual Report
5. Derivative Instruments.
Risk Exposures and the Use of Derivative Instruments. The Fund used derivative instruments (derivatives), including futures contracts in order to meet its investment objectives. The strategy is to use derivatives to increase returns and to manage exposure to certain risks as defined below. The success of any strategy involving derivatives depends on analysis of numerous economic factors, and if the strategies for investment do not work as intended, the Fund may not achieve its objectives.
The Fund's use of derivatives increased or decreased its exposure to the following risk:
Equity Risk | Equity risk relates to the fluctuations in the value of financial instruments as a result of changes in market prices (other than those arising from interest rate risk or foreign exchange risk), whether caused by factors specific to an individual investment, its issuer, or all factors affecting all instruments traded in a market or market segment. |
The Fund is also exposed to additional risks from investing in derivatives, such as liquidity risk and counterparty credit risk. Liquidity risk is the risk that the Fund will be unable to close out the derivative in the open market in a timely manner. Counterparty credit risk is the risk that the counterparty will not be able to fulfill its obligation to the Fund. Counterparty credit risk related to exchange-traded futures contracts is minimal because of the protection provided by the exchange on which they trade. Derivatives involve, to varying degrees, risk of loss in excess of the amounts recognized in the Statement of Assets and Liabilities.
Futures Contracts. A futures contract is an agreement between two parties to buy or sell a specified underlying instrument for a fixed price at a specified future date. The Fund used futures contracts to manage its exposure to the stock market.
Upon entering into a futures contract, a fund is required to deposit either cash or securities (initial margin) with a clearing broker in an amount equal to a certain percentage of the face value of the contract. Futures contracts are marked-to-market daily and subsequent payments are made or received by a fund depending on the daily fluctuations in the value of the futures contracts and are recorded as unrealized appreciation or (depreciation). This receivable and/or payable is included in daily variation margin on futures contracts in the Statement of Assets and Liabilities. Realized gain or (loss) is recorded upon the expiration or closing of a futures contract.
The underlying face amount at value of open futures contracts at period end, if any, is shown in the Schedule of Investments under the caption "Futures Contracts." This amount reflects each contract's exposure to the underlying instrument at period end and is representative of activity for the period.
During the period the Fund recognized net realized gain (loss) of $721,846 and a change in net unrealized appreciation (depreciation) of $1,161,335 related to its investment in futures contracts. These amounts are included in the Statement of Operations.
6. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $1,278,026,047 and $1,301,355,608, respectively.
7. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the Fund's average net assets and an annualized group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annual management fee rate was .56% of the Fund's average net assets.
Distribution and Service Plan Fees. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of FMR, separate Distribution and Service Fees, each of which is based on an annual percentage of each class' average net assets. In addition, FDC may pay financial intermediaries for selling shares of the Fund and providing shareholder support services. For the period, the Distribution and Service Fee rates, total fees and amounts retained by FDC were as follows:
| Distribution | Service | Total Fees | Retained |
Class A | -% | .25% | $ 358,959 | $ 20,435 |
Class T | .25% | .25% | 131,852 | 263 |
Class B | .75% | .25% | 120,464 | 90,349 |
Class C | .75% | .25% | 536,683 | 264,612 |
|
|
| $ 1,147,958 | $ 375,659 |
Annual Report
Notes to Financial Statements - continued
7. Fees and Other Transactions with Affiliates - continued
Sales Load. FDC may receive a front-end sales charge of up to 5.75% for selling Class A shares and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the Fund. Depending on the holding period, FDC may receive contingent deferred sales charges levied on Class A, Class T, Class B and Class C redemptions. The deferred sales charges range from 5.00% to 1.00% for Class B, 1.00% for Class C, 1.00% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained |
Class A | $ 172,504 |
Class T | 15,873 |
Class B* | 19,656 |
Class C* | 21,433 |
| $ 229,466 |
* When Class B and Class C shares are initially sold, FDC pays commissions from its own resources to financial intermediaries through which the sales are made.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the Fund. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, transfer agent fees for each class were as follows:
| Amount | % of |
Class A | $ 388,700 | .27 |
Class T | 81,194 | .31 |
Class B | 36,351 | .30 |
Class C | 150,536 | .28 |
Materials | 2,513,812 | .24 |
Institutional Class | 176,181 | .23 |
| $ 3,346,774 |
|
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for each month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $15,641 for the period.
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Fund, along with other registered investment companies having management contracts with FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. The Fund's activity in this program during the period for which loans were outstanding was as follows:
Borrower or Lender | Average Loan Balance | Weighted Average Interest Rate | Interest |
Borrower | $ 5,119,500 | .36% | $ 103 |
8. Committed Line of Credit.
The Fund participates with other funds managed by FMR or an affiliate in a $4.0 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $4,040 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, there were no borrowings on this line of credit.
Annual Report
9. Security Lending.
The Fund lends portfolio securities through a lending agent from time to time in order to earn additional income. For equity securities, a lending agent is used and may loan securities to certain qualified borrowers, including Fidelity Capital Markets (FCM), a broker-dealer affiliated with the Fund. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. At period end, there were no security loans outstanding with FCM. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Total security lending income during the period amounted to $444,343. During the period, there were no securities loaned to FCM.
10. Expense Reductions.
Many of the brokers with whom FMR places trades on behalf of the Fund provided services to the Fund in addition to trade execution. These services included payments of certain expenses on behalf of the Fund totaling $82,394 for the period. In addition, through arrangements with the Fund's custodian and each class' transfer agent, credits realized as a result of uninvested cash balances were used to reduce the Fund's expenses. During the period, these credits reduced the Fund's custody expenses by $1,459.
11. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
| Year Ended | Year Ended |
From net investment income |
|
|
Class A | $ 868,107 | $ 1,422,379 |
Class T | 100,314 | 289,521 |
Class B | - | 122,322 |
Class C | - | 341,974 |
Materials | 8,266,851 | 15,509,343 |
Institutional Class | 605,465 | 706,503 |
Total | $ 9,840,737 | $ 18,392,042 |
From net realized gain |
|
|
Class A | $ 816,536 | $ 10,674 |
Class T | 151,869 | - |
Class B | 66,321 | - |
Class C | 312,224 | - |
Materials | 5,701,275 | 358,147 |
Institutional Class | 413,064 | 10,976 |
Total | $ 7,461,289 | $ 379,797 |
Annual Report
Notes to Financial Statements - continued
12. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
| Year Ended | Year Ended | Year Ended | Year Ended |
Class A |
|
|
|
|
Shares sold | 1,406,389 | 1,281,666 | $ 95,285,956 | $ 79,405,808 |
Reinvestment of distributions | 23,605 | 18,751 | 1,462,799 | 1,225,248 |
Shares redeemed | (925,476) | (522,145) | (60,145,567) | (29,567,388) |
Net increase (decrease) | 504,518 | 778,272 | $ 36,603,188 | $ 51,063,668 |
Class T |
|
|
|
|
Shares sold | 150,265 | 162,727 | $ 10,197,019 | $ 9,996,553 |
Reinvestment of distributions | 3,964 | 4,298 | 244,682 | 280,166 |
Shares redeemed | (110,682) | (81,055) | (7,174,563) | (4,620,393) |
Net increase (decrease) | 43,547 | 85,970 | $ 3,267,138 | $ 5,656,326 |
Class B |
|
|
|
|
Shares sold | 35,651 | 78,978 | $ 2,318,398 | $ 4,548,346 |
Reinvestment of distributions | 909 | 1,536 | 55,554 | 99,242 |
Shares redeemed | (70,403) | (68,559) | (4,524,937) | (3,840,777) |
Net increase (decrease) | (33,843) | 11,955 | $ (2,150,985) | $ 806,811 |
Class C |
|
|
|
|
Shares sold | 456,374 | 420,386 | $ 30,369,453 | $ 26,286,596 |
Reinvestment of distributions | 4,184 | 4,421 | 254,995 | 284,977 |
Shares redeemed | (279,339) | (143,652) | (17,740,501) | (7,964,201) |
Net increase (decrease) | 181,219 | 281,155 | $ 12,883,947 | $ 18,607,372 |
Materials |
|
|
|
|
Shares sold | 6,950,456 | 11,993,105 | $ 471,314,225 | $ 750,476,205 |
Reinvestment of distributions | 214,200 | 229,147 | 13,299,700 | 14,963,249 |
Shares redeemed | (8,516,169) | (6,662,930) | (562,008,908) | (384,640,831) |
Net increase (decrease) | (1,351,513) | 5,559,322 | $ (77,394,983) | $ 380,798,623 |
Institutional Class |
|
|
|
|
Shares sold | 1,444,894 | 1,219,205 | $ 97,144,756 | $ 77,607,131 |
Reinvestment of distributions | 13,291 | 8,764 | 824,595 | 572,066 |
Shares redeemed | (1,385,770) | (272,695) | (90,119,446) | (14,768,763) |
Net increase (decrease) | 72,415 | 955,274 | $ 7,849,905 | $ 63,410,434 |
13. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
Annual Report
Fidelity Advisor Telecommunications Fund - Class A, T, B and C
Performance
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 29, 2012 | Past 1 | Past 5 | Past 10 |
Class A (incl. 5.75% sales charge) A | -6.26% | -1.85% | 4.63% |
Class T (incl. 3.50% sales charge) B | -4.29% | -1.66% | 4.73% |
Class B (incl. contingent deferred sales charge) C | -6.21% | -1.81% | 4.84% |
Class C (incl. contingent deferred sales charge) D | -2.25% | -1.41% | 4.85% |
A Class A shares bear a 0.25% 12b-1 fee. The initial offering of Class A shares took place on December 12, 2006. Returns prior to December 12, 2006 are those of Telecommunications Portfolio, the original class of the fund, which has no 12b-1 fee. Had Class A shares' 12b-1 fee been reflected, returns prior to December 12, 2006 would have been lower.
B Class T shares bear a 0.50% 12b-1 fee. The initial offering of Class T shares took place on December 12, 2006. Returns prior to December 12, 2006 are those of Telecommunications Portfolio, the original class of the fund, which has no 12b-1 fee. Had Class T shares' 12b-1 fee been reflected, returns prior to December 12, 2006 would have been lower.
C Class B shares bear a 1.00% 12b-1 fee. The initial offering of Class B shares took place on December 12, 2006. Returns prior to December 12, 2006 are those of Telecommunications Portfolio, the original class of the fund, which has no 12b-1 fee. Had Class B shares' 12b-1 fee been reflected, returns prior to December 12, 2006 would have been lower. Class B shares' contingent deferred sales charge included in the past one year, past five years, and past ten years total return figures are 5%, 2%, and 0%, respectively.
D Class C shares bear a 1.00% 12b-1 fee. The initial offering of Class C shares took place on December 12, 2006. Returns prior to December 12, 2006 are those of Telecommunications Portfolio, the original class of the fund, which has no 12b-1 fee. Had Class C shares' 12b-1 fee been reflected, returns prior to December 12, 2006 would have been lower. Class C shares' contingent deferred sales charge included in the past one year, past five years, and past ten years total return figures are 1%, 0%, and 0%, respectively.
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Fidelity Advisor Telecommunications Fund - Class A on February 28, 2002, and the current 5.75% sales charge was paid. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index performed over the same period. The initial offering of Class A took place on December 12, 2006. See the Average Annual Total Returns table for additional information regarding the performance of Class A.
Annual Report
Fidelity Advisor Telecommunications Fund
Management's Discussion of Fund Performance
Market Recap: U.S. stocks rose for the 12 months ending February 29, 2012, as encouraging economic news sparked a strong late-period rally that lifted major equity benchmarks past a number of significant milestones. Stocks recovered from early-period uncertainty that followed the March 2011 earthquake, tsunami and nuclear meltdown in Japan, but plummeted during the summer amid Europe's debt woes and a historic U.S. credit-rating downgrade. Despite continued volatility and mixed economic news, markets began to recover in early October. Investors gravitated toward defensive sectors and the perceived safety of larger, more-established and dividend-paying names, helping the Dow Jones® Industrial Average advance 8.83%, and close above the psychologically important 13,000 mark in late February - for the first time since May 2008. The rally accelerated late in the period and the market broadened, as investor confidence improved amid encouraging manufacturing, housing and employment data, and signs of progress in Europe. For the year, the S&P 500® Index added 5.12%, closing near a four-year high on the period's second-to-last day. Of the 10 major market sectors in the S&P 500®, three defensive areas led the way - consumer staples, health care and utilities - while financials, materials and energy finished in negative territory. The technology-laden Nasdaq Composite® Index added 7.73%, flirting with the 3,000 mark, its highest level in 12 years. Foreign developed-markets stocks reeled over Europe's turmoil, and the MSCI® EAFE® (Europe, Australasia, Far East) Index fell 7.35%.
Comments from Kristina Salen, Portfolio Manager of Fidelity Advisor® Telecommunications Fund: For the one-year period ending February 29, 2012, the fund's Class A, Class T, Class B and Class C shares returned -0.54%, -0.82%, -1.29% and -1.27%, respectively (excluding sales charges), trailing the 0.12% result of the MSCI® U.S. IM Telecommunications Services 25/50 Index and the broad-based S&P 500®. Versus the MSCI index, the fund was hurt the most by large underweightings in telecom giants Verizon Communications and AT&T, which together comprised about 46% of the sector benchmark, on average. Generally speaking, when the market experiences volatility such as we saw in the middle third of the period, large integrated telecom stocks tend to outperform, bolstered by their more-defensive characteristics. Elsewhere, general concern about the broader Chinese stock market, alleged fraud at Chinese information technology services company Longtop Financial Technologies and rising wage costs hurt many stocks in that country, including AsiaInfo-Linkage, an out-of- benchmark holding I ultimately sold from the fund. The firm provides telecom software solutions and tech products and services. Cable provider NII Holdings faced a number of challenges in the third quarter, along with adverse currency exposure to emerging markets. Despite the drop, I remained optimistic about the stock and continued to hold it at period end. An overweighted position in Cbeyond, an integrated telecom services provider, hampered relative results. I owned the stock because I thought the company likely would be a takeout target, which didn't pan out during the period. A modest cash position also curbed relative results. On the flip side, avoiding Alaska Communications Systems Group, a regional integrated telecom firm in the index, was the biggest relative contributor, as the company missed earnings estimates for much of the year. Additionally, stocks of companies with exposure to the state are often influenced by oil prices, which were volatile during the period. Instead of holding a position in Alaska Communications, the fund owned shares of its primary competitor, General Communications, which I bought in July because of its exposure to the faster-growing cable industry. Favorable positioning in prepaid wireless provider Leap Wireless International helped given the stock's volatility. The company's services predominately appeal to more-price-sensitive consumers, and its stock is often among the first to be affected by macroeconomic concerns. A scant stake in Frontier Communications was another good call. Shares of the integrated telecom firm declined steadily, as the company struggled to integrate an acquisition and missed earnings and revenue estimates during the period.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Telecommunications Portfolio
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments or redemption proceeds, redemption fees, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (September 1, 2011 to February 29, 2012).
Actual Expenses
The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Annualized Expense Ratio | Beginning | Ending | Expenses Paid |
Class A | 1.19% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,019.90 | $ 5.98 |
HypotheticalA |
| $ 1,000.00 | $ 1,018.95 | $ 5.97 |
Class T | 1.49% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,018.60 | $ 7.48 |
HypotheticalA |
| $ 1,000.00 | $ 1,017.45 | $ 7.47 |
Class B | 1.94% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,016.10 | $ 9.72 |
HypotheticalA |
| $ 1,000.00 | $ 1,015.22 | $ 9.72 |
Class C | 1.93% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,016.20 | $ 9.68 |
HypotheticalA |
| $ 1,000.00 | $ 1,015.27 | $ 9.67 |
Telecommunications | .90% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,021.70 | $ 4.52 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.39 | $ 4.52 |
Institutional Class | .94% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,021.00 | $ 4.72 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.19 | $ 4.72 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
Annual Report
Telecommunications Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 29, 2012 | ||
| % of fund's | % of fund's net assets |
AT&T, Inc. | 20.4 | 17.9 |
Verizon Communications, Inc. | 13.4 | 6.7 |
CenturyLink, Inc. | 9.0 | 8.8 |
Crown Castle International Corp. | 6.7 | 6.0 |
SBA Communications Corp. Class A | 4.9 | 3.5 |
tw telecom, inc. | 4.4 | 3.7 |
AboveNet, Inc. | 3.0 | 2.2 |
Level 3 Communications, Inc. | 2.9 | 0.0 |
Sprint Nextel Corp. | 2.8 | 5.2 |
MetroPCS Communications, Inc. | 2.7 | 1.9 |
| 70.2 | |
Top Industries (% of fund's net assets) | |||
As of February 29, 2012 | |||
| Diversified Telecommunication Services | 64.9% |
|
| Wireless Telecommunication Services | 28.6% |
|
| Media | 2.1% |
|
| Software | 0.0%** |
|
 | Communications Equipment | 0.0% |
|
| All Others* | 4.4% |
|
As of August 31, 2011 | |||
| Diversified Telecommunication Services | 58.3% |
|
| Wireless Telecommunication Services | 31.8% |
|
| Media | 2.1% |
|
| Software | 1.6% |
|
| Construction & Engineering | 1.0% |
|
| All Others* | 5.2% |
|
* Includes short-term investments and net other assets. |
**Amount represents less than 0.1%. |
Annual Report
Telecommunications Portfolio
Investments February 29, 2012
Showing Percentage of Net Assets
Common Stocks - 95.6% | |||
Shares | Value | ||
COMMUNICATIONS EQUIPMENT - 0.0% | |||
Communications Equipment - 0.0% | |||
Nortel Networks Corp. (a) | 8,071 | $ 0 | |
DIVERSIFIED TELECOMMUNICATION SERVICES - 64.9% | |||
Alternative Carriers - 12.8% | |||
AboveNet, Inc. (a) | 153,200 | 10,656,592 | |
Cogent Communications Group, Inc. (a) | 291,602 | 5,371,309 | |
Level 3 Communications, Inc. (a) | 421,391 | 10,244,015 | |
tw telecom, inc. (a) | 728,757 | 15,741,151 | |
Vonage Holdings Corp. (a) | 1,419,000 | 3,391,410 | |
| 45,404,477 | ||
Integrated Telecommunication Services - 52.1% | |||
AT&T, Inc. | 2,359,919 | 72,189,921 | |
Cbeyond, Inc. (a) | 354,898 | 2,725,617 | |
CenturyLink, Inc. | 794,984 | 31,998,106 | |
China Telecom Corp. Ltd. sponsored ADR | 36,300 | 2,205,225 | |
China Unicom Ltd. sponsored ADR | 144,200 | 2,573,970 | |
Frontier Communications Corp. (d) | 744,900 | 3,419,091 | |
General Communications, Inc. Class A (a) | 896,300 | 9,491,817 | |
Telefonica Brasil SA sponsored ADR | 134,463 | 3,957,246 | |
Telenor ASA sponsored ADR | 71,600 | 3,957,332 | |
Verizon Communications, Inc. | 1,250,141 | 47,642,874 | |
Windstream Corp. | 382,682 | 4,622,799 | |
| 184,783,998 | ||
TOTAL DIVERSIFIED TELECOMMUNICATION SERVICES | 230,188,475 | ||
MEDIA - 2.1% | |||
Cable & Satellite - 2.1% | |||
Cablevision Systems Corp. - NY Group Class A | 121,000 | 1,721,830 | |
Time Warner Cable, Inc. | 27,600 | 2,189,784 | |
Virgin Media, Inc. | 150,700 | 3,797,640 | |
| 7,709,254 | ||
SOFTWARE - 0.0% | |||
Application Software - 0.0% | |||
Synchronoss Technologies, Inc. (a) | 3 | 100 | |
WIRELESS TELECOMMUNICATION SERVICES - 28.6% | |||
Wireless Telecommunication Services - 28.6% | |||
Clearwire Corp. Class A (a) | 3,658,136 | 8,413,713 | |
| |||
Shares | Value | ||
Crown Castle International Corp. (a) | 461,683 | $ 23,919,796 | |
Leap Wireless International, Inc. (a)(d) | 590,700 | 6,166,908 | |
MetroPCS Communications, Inc. (a) | 926,606 | 9,544,042 | |
Mobile TeleSystems OJSC sponsored ADR | 50,200 | 916,150 | |
NII Holdings, Inc. (a) | 324,800 | 5,807,424 | |
NTELOS Holdings Corp. | 155,106 | 3,606,215 | |
PT Tower Bersama Infrastructure Tbk | 7,824,500 | 2,255,404 | |
SBA Communications Corp. Class A (a) | 367,182 | 17,231,851 | |
Sprint Nextel Corp. (a) | 4,030,650 | 9,955,706 | |
TIM Participacoes SA sponsored ADR | 95,700 | 2,875,785 | |
Turkcell Iletisim Hizmet A/S (a) | 222,000 | 1,215,047 | |
VimpelCom Ltd. sponsored ADR | 349,500 | 4,253,415 | |
Vodafone Group PLC sponsored ADR | 196,100 | 5,312,349 | |
| 101,473,805 | ||
TOTAL COMMON STOCKS (Cost $355,860,852) |
| ||
Money Market Funds - 6.3% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.12% (b) | 12,700,251 | 12,700,251 | |
Fidelity Securities Lending Cash Central Fund, 0.12% (b)(c) | 9,541,675 | 9,541,675 | |
TOTAL MONEY MARKET FUNDS (Cost $22,241,926) |
| ||
TOTAL INVESTMENT PORTFOLIO - 101.9% (Cost $378,102,778) | 361,613,560 | ||
NET OTHER ASSETS (LIABILITIES) - (1.9)% | (6,841,457) | ||
NET ASSETS - 100% | $ 354,772,103 | ||
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 9,375 |
Fidelity Securities Lending Cash Central Fund | 221,785 |
Total | $ 231,160 |
Other Information |
The following is a summary of the inputs used, as of February 29, 2012, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the tables below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities: | ||||
Common Stocks | $ 339,371,634 | $ 338,156,587 | $ 1,215,047 | $ - |
Money Market Funds | 22,241,926 | 22,241,926 | - | - |
Total Investments in Securities: | $ 361,613,560 | $ 360,398,513 | $ 1,215,047 | $ - |
The following is a reconciliation of Investments in Securities for which Level 3 inputs were used in determining value: |
Investments in Securities: | |
Beginning Balance | $ - |
Total Realized Gain (Loss) | (580,722) |
Total Unrealized Gain (Loss) | 580,722 |
Cost of Purchases | - |
Proceeds of Sales | - |
Amortization/Accretion | - |
Transfers in to Level 3 | - |
Transfers out of Level 3 | - |
Ending Balance | $ - |
The change in unrealized gain (loss) for the period attributable to Level 3 securities held at February 29, 2012 | $ - |
The information used in the above reconciliation represents fiscal year to date activity for any Investments in Securities identified as using Level 3 inputs at either the beginning or the end of the current fiscal period. Transfers in or out of Level 3 represent the beginning value of any Security or Instrument where a change in the pricing level occurred from the beginning to the end of the period. The cost of purchases and the proceeds of sales may include securities received or delivered through corporate actions or exchanges. Realized and unrealized gains (losses) disclosed in the reconciliation are included in Net Gain (Loss) on the Fund's Statement of Operations. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Telecommunications Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2012 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $9,238,200) - See accompanying schedule: Unaffiliated issuers (cost $355,860,852) | $ 339,371,634 |
|
Fidelity Central Funds (cost $22,241,926) | 22,241,926 |
|
Total Investments (cost $378,102,778) |
| $ 361,613,560 |
Foreign currency held at value (cost $168,698) | 168,851 | |
Receivable for investments sold | 2,612,162 | |
Receivable for fund shares sold | 2,785,690 | |
Dividends receivable | 48,565 | |
Distributions receivable from Fidelity Central Funds | 3,673 | |
Prepaid expenses | 798 | |
Other receivables | 16,210 | |
Total assets | 367,249,509 | |
|
|
|
Liabilities | ||
Payable for fund shares redeemed | $ 2,651,512 | |
Accrued management fee | 159,954 | |
Distribution and service plan fees payable | 5,460 | |
Other affiliated payables | 82,497 | |
Other payables and accrued expenses | 36,308 | |
Collateral on securities loaned, at value | 9,541,675 | |
Total liabilities | 12,477,406 | |
|
|
|
Net Assets | $ 354,772,103 | |
Net Assets consist of: |
| |
Paid in capital | $ 428,594,875 | |
Undistributed net investment income | 730,417 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (58,062,554) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (16,490,635) | |
Net Assets | $ 354,772,103 | |
Statement of Assets and Liabilities - continued
| February 29, 2012 | |
|
|
|
Calculation of Maximum Offering Price Class A: | $ 46.12 | |
|
|
|
Maximum offering price per share (100/94.25 of $46.12) | $ 48.93 | |
Class T: | $ 46.01 | |
|
|
|
Maximum offering price per share (100/96.50 of $46.01) | $ 47.68 | |
Class B: | $ 46.14 | |
|
|
|
Class C: | $ 46.02 | |
|
|
|
|
|
|
Telecommunications: | $ 46.26 | |
|
|
|
Institutional Class: | $ 46.20 | |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Telecommunications Portfolio
Financial Statements - continued
Statement of Operations
| Year ended February 29, 2012 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 8,635,002 |
Interest |
| 58 |
Income from Fidelity Central Funds |
| 231,160 |
Total income |
| 8,866,220 |
|
|
|
Expenses | ||
Management fee | $ 2,062,779 | |
Transfer agent fees | 925,458 | |
Distribution and service plan fees | 65,575 | |
Accounting and security lending fees | 148,637 | |
Custodian fees and expenses | 21,421 | |
Independent trustees' compensation | 2,216 | |
Registration fees | 89,139 | |
Audit | 63,168 | |
Legal | 5,454 | |
Interest | 700 | |
Miscellaneous | 3,988 | |
Total expenses before reductions | 3,388,535 | |
Expense reductions | (63,865) | 3,324,670 |
Net investment income (loss) | 5,541,550 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 24,806,335 | |
Foreign currency transactions | (80,492) | |
Total net realized gain (loss) |
| 24,725,843 |
Change in net unrealized appreciation (depreciation) on: Investment securities | (35,725,628) | |
Assets and liabilities in foreign currencies | 383 | |
Total change in net unrealized appreciation (depreciation) |
| (35,725,245) |
Net gain (loss) | (10,999,402) | |
Net increase (decrease) in net assets resulting from operations | $ (5,457,852) | |
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 5,541,550 | $ 5,690,743 |
Net realized gain (loss) | 24,725,843 | 23,994,180 |
Change in net unrealized appreciation (depreciation) | (35,725,245) | 56,972,793 |
Net increase (decrease) in net assets resulting from operations | (5,457,852) | 86,657,716 |
Distributions to shareholders from net investment income | (4,955,219) | (7,366,695) |
Share transactions - net increase (decrease) | (2,457,615) | (685,685) |
Redemption fees | 35,055 | 11,018 |
Total increase (decrease) in net assets | (12,835,631) | 78,616,354 |
|
|
|
Net Assets | ||
Beginning of period | 367,607,734 | 288,991,380 |
End of period (including undistributed net investment income of $730,417 and undistributed net investment income of $260,753, respectively) | $ 354,772,103 | $ 367,607,734 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
Years ended February 28, | 2012 G | 2011 | 2010 | 2009 | 2008 G |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 46.93 | $ 37.64 | $ 26.66 | $ 42.56 | $ 50.89 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .56 | .57 | .67 | .22 | .26 |
Net realized and unrealized gain (loss) | (.86) | 9.49 | 10.55 | (15.60) | (8.08) |
Total from investment operations | (.30) | 10.06 | 11.22 | (15.38) | (7.82) |
Distributions from net investment income | (.51) | (.77) | (.19) | (.35) K | (.51) |
Distributions from net realized gain | - | - | (.05) | (.18) K | - |
Total distributions | (.51) | (.77) | (.24) I | (.52) J | (.51) |
Redemption fees added to paid in capital C,H | - | - | - | - | - |
Net asset value, end of period | $ 46.12 | $ 46.93 | $ 37.64 | $ 26.66 | $ 42.56 |
Total Return A,B | (.54)% | 26.87% | 42.07% | (36.16)% | (15.55)% |
Ratios to Average Net Assets D,F |
|
|
|
|
|
Expenses before reductions | 1.20% | 1.20% | 1.26% | 1.21% | 1.20% |
Expenses net of fee waivers, if any | 1.20% | 1.20% | 1.26% | 1.21% | 1.20% |
Expenses net of all reductions | 1.18% | 1.18% | 1.24% | 1.21% | 1.19% |
Net investment income (loss) | 1.21% | 1.35% | 1.89% | .61% | .49% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 4,677 | $ 4,305 | $ 3,343 | $ 2,112 | $ 2,791 |
Portfolio turnover rate E | 72% | 72% | 90% | 168% | 134% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown. B Total returns do not include the effect of the sales charges. C Calculated based on average shares outstanding during the period. D Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. G For the year ended February 29. H Amount represents less than $.01 per share. I Total distributions of $.24 per share is comprised of distributions from net investment income of $.187 and distributions from net realized gain of $.048 per share. J Total distributions of $.52 per share is comprised of distributions from net investment income of $.347 and distributions from net realized gain of $.175 per share. K The amount shown reflects certain reclassifications related to book to tax differences. |
Financial Highlights - Class T
Years ended February 28, | 2012 G | 2011 | 2010 | 2009 | 2008 G |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 46.81 | $ 37.55 | $ 26.68 | $ 42.49 | $ 50.86 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .42 | .45 | .57 | .12 | .12 |
Net realized and unrealized gain (loss) | (.84) | 9.47 | 10.54 | (15.56) | (8.07) |
Total from investment operations | (.42) | 9.92 | 11.11 | (15.44) | (7.95) |
Distributions from net investment income | (.38) | (.66) | (.22) | (.24) K | (.42) |
Distributions from net realized gain | - | - | (.03) | (.13) K | - |
Total distributions | (.38) | (.66) | (.24) I | (.37) J | (.42) |
Redemption fees added to paid in capital C,H | - | - | - | - | - |
Net asset value, end of period | $ 46.01 | $ 46.81 | $ 37.55 | $ 26.68 | $ 42.49 |
Total Return A,B | (.82)% | 26.54% | 41.64% | (36.34)% | (15.78)% |
Ratios to Average Net Assets D,F |
|
|
|
|
|
Expenses before reductions | 1.49% | 1.48% | 1.55% | 1.49% | 1.46% |
Expenses net of fee waivers, if any | 1.49% | 1.48% | 1.55% | 1.49% | 1.46% |
Expenses net of all reductions | 1.47% | 1.46% | 1.53% | 1.48% | 1.45% |
Net investment income (loss) | .92% | 1.06% | 1.60% | .33% | .23% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 2,702 | $ 2,882 | $ 2,051 | $ 620 | $ 1,270 |
Portfolio turnover rate E | 72% | 72% | 90% | 168% | 134% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown. B Total returns do not include the effect of the sales charges. C Calculated based on average shares outstanding during the period. D Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. G For the year ended February 29. H Amount represents less than $.01 per share. I Total distributions of $.24 per share is comprised of distributions from net investment income of $.216 and distributions from net realized gain of $.028 per share. J Total distributions of $.37 per share is comprised of distributions from net investment income of $.244 and distributions from net realized gain of $.127 per share. K The amount shown reflects certain reclassifications related to book to tax differences. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class B
Years ended February 28, | 2012 G | 2011 | 2010 | 2009 | 2008 G |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 46.93 | $ 37.60 | $ 26.71 | $ 42.42 | $ 50.80 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .21 | .25 | .40 | (.05) | (.14) |
Net realized and unrealized gain (loss) | (.83) | 9.48 | 10.54 | (15.49) | (8.04) |
Total from investment operations | (.62) | 9.73 | 10.94 | (15.54) | (8.18) |
Distributions from net investment income | (.17) | (.40) | (.04) | (.11) K | (.20) |
Distributions from net realized gain | - | - | (.01) | (.06) K | - |
Total distributions | (.17) | (.40) | (.05) I | (.17) J | (.20) |
Redemption fees added to paid in capital C,H | - | - | - | - | - |
Net asset value, end of period | $ 46.14 | $ 46.93 | $ 37.60 | $ 26.71 | $ 42.42 |
Total Return A,B | (1.29)% | 25.96% | 40.97% | (36.64)% | (16.18)% |
Ratios to Average Net Assets D,F |
|
|
|
|
|
Expenses before reductions | 1.95% | 1.95% | 2.01% | 1.97% | 1.95% |
Expenses net of fee waivers, if any | 1.95% | 1.95% | 2.01% | 1.97% | 1.95% |
Expenses net of all reductions | 1.93% | 1.93% | 2.00% | 1.96% | 1.94% |
Net investment income (loss) | .47% | .60% | 1.13% | (.15)% | (.26)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 596 | $ 706 | $ 641 | $ 363 | $ 741 |
Portfolio turnover rate E | 72% | 72% | 90% | 168% | 134% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown. B Total returns do not include the effect of the contingent deferred sales charge. C Calculated based on average shares outstanding during the period. D Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. G For the year ended February 29. H Amount represents less than $.01 per share. I Total distributions of $.05 per share is comprised of distributions from net investment income of $.044 and distributions from net realized gain of $.009 per share. J Total distributions of $.17 per share is comprised of distributions from net investment income of $.105 and distributions from net realized gain of $.063 per share. K The amount shown reflects certain reclassifications related to book to tax differences. |
Financial Highlights - Class C
Years ended February 28, | 2012 G | 2011 | 2010 | 2009 | 2008 G |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 46.89 | $ 37.61 | $ 26.76 | $ 42.42 | $ 50.81 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .22 | .26 | .41 | (.05) | (.14) |
Net realized and unrealized gain (loss) | (.84) | 9.46 | 10.56 | (15.50) | (8.03) |
Total from investment operations | (.62) | 9.72 | 10.97 | (15.55) | (8.17) |
Distributions from net investment income | (.25) | (.44) | (.10) | (.07) K | (.22) |
Distributions from net realized gain | - | - | (.02) | (.05) K | - |
Total distributions | (.25) | (.44) | (.12) I | (.11) J | (.22) |
Redemption fees added to paid in capital C,H | - | - | - | - | - |
Net asset value, end of period | $ 46.02 | $ 46.89 | $ 37.61 | $ 26.76 | $ 42.42 |
Total Return A,B | (1.27)% | 25.95% | 41.00% | (36.64)% | (16.17)% |
Ratios to Average Net Assets D,F |
|
|
|
|
|
Expenses before reductions | 1.93% | 1.94% | 2.01% | 1.97% | 1.95% |
Expenses net of fee waivers, if any | 1.93% | 1.94% | 2.01% | 1.97% | 1.95% |
Expenses net of all reductions | 1.91% | 1.92% | 2.00% | 1.96% | 1.94% |
Net investment income (loss) | .48% | .61% | 1.13% | (.14)% | (.26)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 3,514 | $ 3,035 | $ 2,151 | $ 371 | $ 902 |
Portfolio turnover rate E | 72% | 72% | 90% | 168% | 134% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown. B Total returns do not include the effect of the contingent deferred sales charge. C Calculated based on average shares outstanding during the period. D Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. G For the year ended February 29. H Amount represents less than $.01 per share. I Total distributions of $.12 per share is comprised of distributions from net investment income of $.098 and distributions from net realized gain of $.023 per share. J Total distributions of $.11 per share is comprised of distributions from net investment income of $.068 and distributions from net realized gain of $.046 per share. K The amount shown reflects certain reclassifications related to book to tax differences. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Telecommunications
Years ended February 28, | 2012 F | 2011 | 2010 | 2009 | 2008 F |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 47.07 | $ 37.73 | $ 26.74 | $ 42.70 | $ 50.91 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | .70 | .69 | .76 | .30 | .43 |
Net realized and unrealized gain (loss) | (.86) | 9.52 | 10.59 | (15.65) | (8.12) |
Total from investment operations | (.16) | 10.21 | 11.35 | (15.35) | (7.69) |
Distributions from net investment income | (.65) | (.87) | (.31) | (.41) J | (.52) |
Distributions from net realized gain | - | - | (.05) | (.20) J | - |
Total distributions | (.65) | (.87) | (.36) H | (.61) I | (.52) |
Redemption fees added to paid in capital B,G | - | - | - | - | - |
Net asset value, end of period | $ 46.26 | $ 47.07 | $ 37.73 | $ 26.74 | $ 42.70 |
Total Return A | (.23)% | 27.24% | 42.43% | (36.00)% | (15.30)% |
Ratios to Average Net Assets C,E |
|
|
|
|
|
Expenses before reductions | .90% | .92% | .99% | .97% | .91% |
Expenses net of fee waivers, if any | .90% | .92% | .99% | .97% | .90% |
Expenses net of all reductions | .88% | .91% | .98% | .96% | .90% |
Net investment income (loss) | 1.52% | 1.62% | 2.15% | .85% | .79% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 342,262 | $ 354,938 | $ 279,704 | $ 196,231 | $ 334,565 |
Portfolio turnover rate D | 72% | 72% | 90% | 168% | 134% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown. B Calculated based on average shares outstanding during the period. C Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. D Amount does not include the portfolio activity of any underlying Fidelity Central Funds. E Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. F For the year ended February 29. G Amount represents less than $.01 per share. H Total distributions of $.36 per share is comprised of distributions from net investment income of $.310 and distributions from net realized gain of $.048 per share. I Total distributions of $.61 per share is comprised of distributions from net investment income of $.408 and distributions from net realized gain of $.202 per share. J The amount shown reflects certain reclassifications related to book to tax differences. |
Financial Highlights - Institutional Class
Years ended February 28, | 2012 F | 2011 | 2010 | 2009 | 2008 F |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 47.02 | $ 37.69 | $ 26.73 | $ 42.65 | $ 50.91 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | .70 | .71 | .84 | .34 | .45 |
Net realized and unrealized gain (loss) | (.88) | 9.50 | 10.55 | (15.67) | (8.09) |
Total from investment operations | (.18) | 10.21 | 11.39 | (15.33) | (7.64) |
Distributions from net investment income | (.64) | (.88) | (.38) | (.40) J | (.62) |
Distributions from net realized gain | - | - | (.05) | (.20) J | - |
Total distributions | (.64) | (.88) | (.43) H | (.59) I | (.62) |
Redemption fees added to paid in capital B,G | - | - | - | - | - |
Net asset value, end of period | $ 46.20 | $ 47.02 | $ 37.69 | $ 26.73 | $ 42.65 |
Total Return A | (.26)% | 27.27% | 42.59% | (35.99)% | (15.23)% |
Ratios to Average Net Assets C,E |
|
|
|
|
|
Expenses before reductions | .89% | .91% | .86% | .91% | .83% |
Expenses net of fee waivers, if any | .89% | .91% | .86% | .91% | .83% |
Expenses net of all reductions | .87% | .89% | .84% | .90% | .83% |
Net investment income (loss) | 1.52% | 1.64% | 2.29% | .91% | .86% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 1,022 | $ 1,743 | $ 1,101 | $ 68 | $ 256 |
Portfolio turnover rate D | 72% | 72% | 90% | 168% | 134% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown. B Calculated based on average shares outstanding during the period. C Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. D Amount does not include the portfolio activity of any underlying Fidelity Central Funds. E Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. F For the year ended February 29. G Amount represents less than $.01 per share. H Total distributions of $.43 per share is comprised of distributions from net investment income of $.379 and distributions from net realized gain of $.057 per share. I Total distributions of $.59 per share is comprised of distributions from net investment income of $.395 and distributions from net realized gain of $.197 per share. J The amount shown reflects certain reclassifications related to book to tax differences. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended February 29, 2012 (Unaudited)
1. Organization.
Telecommunications Portfolio (the Fund) is a non-diversified fund of Fidelity Select Portfolios (the Trust) and is authorized to issue an unlimited number of shares. The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund invests primarily in securities of companies whose principal business activities fall within specific industries. The Fund offers Class A, Class T, Class C, Telecommunications and Institutional Class shares, each of which, along with Class B shares, has equal rights as to assets and voting privileges. Effective after the close of business on September 1, 2010, Class B shares were closed to new accounts and additional purchases, except for exchanges and reinvestments. Each class has exclusive voting rights with respect to matters that affect that class. Class B shares will automatically convert to Class A shares after a holding period of seven years from the initial date of purchase. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions may also differ by class. The Fund's investments in emerging markets can be subject to social, economic, regulatory, and political uncertainties and can be extremely volatile.
2. Investments in Fidelity Central Funds.
The Fund invests in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by FMR and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds held as of period end, if any, as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Fund:
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Fund uses independent pricing services approved by the Board of Trustees to value its investments. When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include market or security specific events. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The value used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the Fund's own assumptions based on the best information available)
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level, as of February 29, 2012, as well as a roll forward of Level 3 securities, is included at the end of the Fund's Schedule of Investments. Valuation techniques used to value the Fund's investments by major category are as follows:
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when significant market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-traded funds (ETFs)and certain indexes as well as quoted prices for similar securities are used and are categorized as Level 2 in the hierarchy in these
Annual Report
Notes to Financial Statements (Unaudited) - continued
3. Significant Accounting Policies - continued
Security Valuation - continued
circumstances. Utilizing these techniques may result in transfers between Level 1 and Level 2. For restricted equity securities and private placements where observable inputs are limited, assumptions about market activity and risk are used and are categorized as Level 3 in the hierarchy.
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 in the hierarchy.
New Accounting Pronouncements. In May 2011, the Financial Accounting Standards Board issued Accounting Standard Update No. 2011-04, Fair Value Measurement (Topic 820) - Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. The update is effective during interim and annual periods beginning after December 15, 2011 and will result in additional disclosure for transfers between levels as well as expanded disclosure for securities categorized as Level 3 under the fair value hierarchy.
In December 2011, the Financial Accounting Standards Board issued Accounting Standard Update No. 2011-11, Disclosures about Offsetting Assets and Liabilities. The update creates new disclosure requirements requiring entities to disclose both gross and net information for derivatives and other financial instruments that are either offset in the Statement of Assets and Liabilities or subject to an enforceable master netting arrangement or similar agreement. The disclosure requirements are effective for interim and annual reporting periods beginning on or after January 1, 2013. Management is currently evaluating the impact of the update's adoption on the Fund's financial statement disclosures.
Foreign Currency. The Fund may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for income taxes is required. As of February 29, 2012, the Fund did not have any unrecognized tax benefits in the financial statements; nor is the Fund aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. The Fund files a U.S. federal tax return, in addition to state and local tax returns as required. A fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are declared and recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Annual Report
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
Book-tax differences are primarily due to foreign currency transactions, deferred trustees compensation, capital loss carryforwards, expiring capital loss carryforwards, and losses deferred due to wash sales and excise tax regulations.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation | $ 29,182,921 |
Gross unrealized depreciation | (55,138,742) |
Net unrealized appreciation (depreciation) on securities and other investments | $ (25,955,821) |
|
|
Tax Cost | $ 387,569,381 |
The tax-based components of distributable earnings as of period end were as follows:
Undistributed ordinary income | $ 730,658 |
Capital loss carryforward | $ (44,224,120) |
Net unrealized appreciation (depreciation) | $ (25,957,238) |
Capital loss carryforwards are only available to offset future capital gains of the Fund to the extent provided by regulations and may be limited. Under the Regulated Investment Company Modernization Act of 2010 (the Act), the Fund is permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period and such capital losses are required to be used prior to any losses that expire. Capital loss carryforwards were as follows:
Fiscal year of expiration |
|
2017 | $ (31,682,432) |
2018 | (12,541,688) |
Total with expiration | $ (44,224,120) |
The Fund intends to elect to defer to its fiscal year ending February 28, 2013 approximately $4,371,830 of capital losses recognized during the period November 1, 2011 to February 29, 2012.
The tax character of distributions paid was as follows:
| February 29, 2012 | February 28, 2011 |
Ordinary Income | $ 4,955,219 | $ 7,366,695 |
Trading (Redemption) Fees. Shares held by investors in the Fund less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Fund and accounted for as an addition to paid in capital.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $262,185,946 and $276,332,232, respectively.
5. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the Fund's average net assets and an annualized group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annual management fee rate was .56% of the Fund's average net assets.
Annual Report
Notes to Financial Statements (Unaudited) - continued
5. Fees and Other Transactions with Affiliates - continued
Distribution and Service Plan Fees. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of FMR, separate Distribution and Service Fees, each of which is based on an annual percentage of each class' average net assets. In addition, FDC may pay financial intermediaries for selling shares of the Fund and providing shareholder support services. For the period, the Distribution and Service Fee rates, total fees and amounts retained by FDC were as follows:
| Distribution | Service | Total | Retained |
Class A | -% | .25% | $ 12,169 | $ 763 |
Class T | .25% | .25% | 14,474 | - |
Class B | .75% | .25% | 6,364 | 4,772 |
Class C | .75% | .25% | 32,568 | 9,590 |
|
|
| $ 65,575 | $ 15,125 |
Sales Load. FDC may receive a front-end sales charge of up to 5.75% for selling Class A shares and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the Fund. Depending on the holding period, FDC may receive contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. The deferred sales charges range from 5.00% to 1.00% for Class B, 1.00% for Class C, 1.00% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained |
Class A | $ 5,940 |
Class T | 2,745 |
Class B* | 725 |
Class C* | 1,809 |
| $ 11,219 |
* When Class B and Class C shares are initially sold, FDC pays commissions from its own resources to financial intermediaries through which the sales are made.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the Fund. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, transfer agent fees for each class were as follows:
| Amount | % of |
Class A | $ 14,691 | .30 |
Class T | 9,931 | .34 |
Class B | 1,906 | .30 |
Class C | 9,131 | .28 |
Telecommunications | 885,774 | .25 |
Institutional Class | 4,025 | .24 |
| $ 925,458 |
|
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for each month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $32,682 for the period.
Annual Report
5. Fees and Other Transactions with Affiliates - continued
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Fund, along with other registered investment companies having management contracts with FMR, 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 | Weighted Average Interest Rate | Interest |
Borrower | $ 11,288,143 | .32% | $ 700 |
6. Committed Line of Credit.
The Fund participates with other funds managed by FMR or an affiliate in a $4.0 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $1,117 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, there were no borrowings on this line of credit.
7. Security Lending.
The Fund lends portfolio securities through a lending agent from time to time in order to earn additional income. For equity securities, a lending agent is used and may loan securities to certain qualified borrowers, including Fidelity Capital Markets (FCM), a broker-dealer affiliated with the Fund. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Total security lending income during the period amounted to $221,785. During the period, there were no securities loaned to FCM.
8. Expense Reductions.
Many of the brokers with whom FMR places trades on behalf of the Fund provided services to the Fund in addition to trade execution. These services included payments of certain expenses on behalf of the Fund totaling $63,865 for the period.
9. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
| Year ended | Year ended |
From net investment income |
|
|
Class A | $ 54,285 | $ 67,506 |
Class T | 24,009 | 39,660 |
Class B | 2,206 | 6,185 |
Class C | 19,099 | 26,169 |
Telecommunications | 4,833,836 | 7,180,244 |
Institutional Class | 21,784 | 46,931 |
Total | $ 4,955,219 | $ 7,366,695 |
Annual Report
Notes to Financial Statements (Unaudited) - continued
10. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
| Year ended | Year ended | Year ended | Year ended |
| 2012 | 2011 | 2012 | 2011 |
Class A |
|
|
|
|
Shares sold | 70,128 | 40,645 | $ 3,321,351 | $ 1,741,332 |
Reinvestment of distributions | 1,116 | 1,359 | 47,447 | 59,381 |
Shares redeemed | (61,569) | (39,099) | (2,787,444) | (1,642,347) |
Net increase (decrease) | 9,675 | 2,905 | $ 581,354 | $ 158,366 |
Class T |
|
|
|
|
Shares sold | 24,101 | 23,206 | $ 1,100,865 | $ 981,887 |
Reinvestment of distributions | 557 | 894 | 23,555 | 39,051 |
Shares redeemed | (27,493) | (17,166) | (1,235,915) | (731,684) |
Net increase (decrease) | (2,835) | 6,934 | $ (111,495) | $ 289,254 |
Class B |
|
|
|
|
Shares sold | 1,659 | 3,985 | $ 77,673 | $ 164,934 |
Reinvestment of distributions | 46 | 125 | 1,965 | 5,371 |
Shares redeemed | (3,832) | (6,122) | (176,016) | (254,241) |
Net increase (decrease) | (2,127) | (2,012) | $ (96,378) | $ (83,936) |
Class C |
|
|
|
|
Shares sold | 30,950 | 29,965 | $ 1,412,876 | $ 1,283,190 |
Reinvestment of distributions | 313 | 433 | 13,236 | 18,769 |
Shares redeemed | (19,633) | (22,865) | (879,199) | (981,215) |
Net increase (decrease) | 11,630 | 7,533 | $ 546,913 | $ 320,744 |
Telecommunications |
|
|
|
|
Shares sold | 3,856,487 | 3,169,647 | $ 180,498,933 | $ 131,656,721 |
Reinvestment of distributions | 108,713 | 156,783 | 4,652,114 | 6,893,743 |
Shares redeemed | (4,106,690) | (3,199,430) | (188,141,891) | (139,972,066) |
Net increase (decrease) | (141,490) | 127,000 | $ (2,990,844) | $ (1,421,602) |
Institutional Class |
|
|
|
|
Shares sold | 107,857 | 131,873 | $ 5,158,491 | $ 5,646,597 |
Reinvestment of distributions | 401 | 800 | 17,134 | 36,161 |
Shares redeemed | (123,190) | (124,838) | (5,562,790) | (5,631,269) |
Net increase (decrease) | (14,932) | 7,835 | $ (387,165) | $ 51,489 |
11. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
At the end of the period, Fidelity VIP FundsManager 60% Portfolio was the owner of record of approximately 15% of the total outstanding shares of the fund. Mutual funds managed by FMR or its affiliates were the owners of record, in the aggregate, of approximately 27% of the total outstanding shares of Telecommunications.
Annual Report
Report of Independent Registered Public Accounting Firm
To the Trustees of Fidelity Select Portfolios and the Shareholders of Consumer Staples Portfolio, Gold Portfolio, Materials Portfolio, and Telecommunications Portfolio:
In our opinion, the accompanying statements of assets and liabilities (consolidated statement of assets and liabilities for Gold Portfolio), including the schedules of investments (consolidated schedule of investments for Gold Portfolio), and the related statements of operations (consolidated statement of operations for Gold Portfolio) and of changes in net assets (consolidated changes in net assets for Gold Portfolio) and the financial highlights present fairly, in all material respects, the financial positions of Consumer Staples Portfolio, Gold Portfolio, Materials Portfolio, and Telecommunications Portfolio (funds of Fidelity Select Portfolios) at February 29, 2012, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fidelity Select Portfolios' management Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at February 29, 2012 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 18, 2012
Annual Report
Trustees and Officers
The Trustees, Members of the Advisory Board, and executive officers of the trust and funds, as applicable, are listed below. The Board of Trustees governs each fund and is responsible for protecting the interests of shareholders. The Trustees are experienced executives who meet periodically throughout the year to oversee each fund's activities, review contractual arrangements with companies that provide services to each fund, oversee management of the risks associated with such activities and contractual arrangements, and review each fund's performance. Except for James C. Curvey, each of the Trustees oversees 226 funds advised by FMR or an affiliate. Mr. Curvey oversees 430 funds advised by FMR or an affiliate.
The Trustees hold office without limit in time except that (a) any Trustee may resign; (b) any Trustee may be removed by written instrument, signed by at least two-thirds of the number of Trustees prior to such removal; (c) any Trustee who requests to be retired or who has become incapacitated by illness or injury may be retired by written instrument signed by a majority of the other Trustees; and (d) any Trustee may be removed at any special meeting of shareholders by a two-thirds vote of the outstanding voting securities of the trust. Each Trustee who is not an interested person (as defined in the 1940 Act) (Independent Trustee), shall retire not later than the last day of the calendar year in which his or her 75th birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. The executive officers and Advisory Board Members hold office without limit in time, except that any officer and Advisory Board Member may resign or may be removed by a vote of a majority of the Trustees at any regular meeting or any special meeting of the Trustees. Except as indicated, each individual has held the office shown or other offices in the same company for the past five years.
Experience, Skills, Attributes, and Qualifications of the Funds' Trustees. The Governance and Nominating Committee has adopted a statement of policy that describes the experience, qualifications, attributes, and skills that are necessary and desirable for potential Independent Trustee candidates (Statement of Policy). The Board believes that each Trustee satisfied at the time he or she was initially elected or appointed a Trustee, and continues to satisfy, the standards contemplated by the Statement of Policy. The Governance and Nominating Committee also engages professional search firms to help identify potential Independent Trustee candidates who have the experience, qualifications, attributes, and skills consistent with the Statement of Policy. From time to time, additional criteria based on the composition and skills of the current Independent Trustees, as well as experience or skills that may be appropriate in light of future changes to board composition, business conditions, and regulatory or other developments, have also been considered by the professional search firms and the Governance and Nominating Committee. In addition, the Board takes into account the Trustees' commitment and participation in Board and committee meetings, as well as their leadership of standing and ad hoc committees throughout their tenure.
In determining that a particular Trustee was and continues to be qualified to serve as a Trustee, the Board has considered a variety of criteria, none of which, in isolation, was controlling. The Board believes that, collectively, the Trustees have balanced and diverse experience, qualifications, attributes, and skills, which allow the Board to operate effectively in governing each fund and protecting the interests of shareholders. Information about the specific experience, skills, attributes, and qualifications of each Trustee, which in each case led to the Board's conclusion that the Trustee should serve (or continue to serve) as a trustee of the funds, is provided below.
Board Structure and Oversight Function. James C. Curvey is an interested person (as defined in the 1940 Act) and currently serves as Acting Chairman. The Trustees have determined that an interested Chairman is appropriate and benefits shareholders because an interested Chairman has a personal and professional stake in the quality and continuity of services provided to the funds. Independent Trustees exercise their informed business judgment to appoint an individual of their choosing to serve as Chairman, regardless of whether the Trustee happens to be independent or a member of management. The Independent Trustees have determined that they can act independently and effectively without having an Independent Trustee serve as Chairman and that a key structural component for assuring that they are in a position to do so is for the Independent Trustees to constitute a substantial majority for the Board. The Independent Trustees also regularly meet in executive session. Ned C. Lautenbach serves as Chairman of the Independent Trustees and as such (i) acts as a liaison between the Independent Trustees and management with respect to matters important to the Independent Trustees and (ii) with management prepares agendas for Board meetings.
Fidelity funds are overseen by different Boards of Trustees. The funds' Board oversees Fidelity's equity and high income funds and another Board oversees Fidelity's investment-grade bond, money market, and asset allocation funds. The asset allocation funds may invest in Fidelity funds overseen by the funds' Board. The use of separate Boards, each with its own committee structure, allows the Trustees of each group of Fidelity funds to focus on the unique issues of the funds they oversee, including common research, investment, and operational issues. On occasion, the separate Boards establish joint committees to address issues of overlapping consequences for the Fidelity funds overseen by each Board.
The Trustees operate using a system of committees to facilitate the timely and efficient consideration of all matters of importance to the Trustees, each fund, and fund shareholders and to facilitate compliance with legal and regulatory requirements and oversight of the funds' activities and associated risks. The Board, acting through its committees, has charged FMR and its affiliates with (i) identifying events or circumstances the occurrence of which could have demonstrably adverse effects on the funds' business and/or reputation; (ii) implementing processes and controls to lessen the possibility that such events or circumstances occur or to mitigate the effects of such events or circumstances if they do occur; and (iii) creating and maintaining a system designed to evaluate continuously business and market conditions in order to facilitate the identification and implementation processes described in (i) and (ii) above. Because the day-to-day operations and activities of the funds are carried out by or through FMR, its affiliates and other service providers, the funds' exposure to risks is mitigated but not eliminated by the processes overseen by the Trustees. While each of the Board's committees has responsibility for overseeing different aspects of the funds' activities, oversight is exercised primarily through the Operations, Audit, and Compliance Committees. In addition, the Independent Trustees have worked with FMR to enhance the Board's oversight of investment and financial risks, legal and regulatory risks, technology risks, and operational risks, including the development of additional risk reporting to the Board. For example, a working group comprised of Independent Trustees and FMR has worked and continues to work to review the Fidelity funds' valuation-related activities, reporting and risk management. Appropriate personnel, including but not limited to the funds' Chief Compliance Officer (CCO), FMR's internal auditor, the independent accountants, the funds' Treasurer and portfolio management personnel, make periodic reports to the Board's committees, as appropriate, including an annual review of FMR's risk management program for the Fidelity funds. The responsibilities of each standing committee, including their oversight responsibilities, are described further under "Standing Committees of the Funds' Trustees."
Annual Report
Trustees and Officers - continued
The funds' Statement of Additional Information (SAI) includes more information about the Trustees. To request a free copy, call Fidelity at 1-800-544-8544.
Interested Trustees*:
Correspondence intended for each Trustee who is an interested person may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupations and Other Relevant Experience+ | |
James C. Curvey (76) | |
| Year of Election or Appointment: 2007 Mr. Curvey is Trustee and Acting Chairman of the Board of Trustees of certain Trusts. Mr. Curvey also serves as Trustee (2007-present) of other investment companies advised by FMR. Mr. Curvey is a Director of Fidelity Investments Money Management, Inc. (2009-present), Director of Fidelity Research & Analysis Co. (2009-present) and Director of FMR and FMR Co., Inc. (2007-present). Mr. Curvey is also Vice Chairman (2007-present) and Director of FMR LLC. In addition, Mr. Curvey serves as an Overseer for the Boston Symphony Orchestra and a member of the Trustees of Villanova University. Previously, Mr. Curvey was the Vice Chairman (2006-2007) and Director (2000-2007) of FMR Corp. |
Ronald P. O'Hanley (55) | |
| Year of Election or Appointment: 2011 Mr. O'Hanley is Director of FMR Co., Inc. (2010-present), Director of Fidelity Investments Money Management, Inc. (2010-present), Director of Fidelity Research & Analysis Company (2010-present), President of Fidelity Asset Management and Corporate Services and a member of Fidelity's Executive Committee (2010-present). Previously, Mr. O'Hanley served as President and Chief Executive Officer of BNY Mellon Asset Management (2007-2010). Mr. O'Hanley also served as Vice Chairman of Bank New York Mellon Corp. and a member of that firm's Executive Committee. Prior to the 2007 merger of The Bank of New York and Mellon Financial Corporation, he was Vice Chairman of Mellon Financial Corporation and President and Chief Executive Officer of Mellon Asset Management. He joined Mellon in February 1997. Mr. O'Hanley currently serves as Chairman of the Boston Public Library Foundation Board of Directors and sits on the Board of Directors of Beth Israel Deaconess Medical Center, the Board of Trustees of the Marine Biological Laboratory and the Advisory Board of the Maxwell School of Citizenship and Public Administration at Syracuse University. Mr. O'Hanley also chairs the Council on Asset Management for the Financial Services Roundtable and is a member of the Board of Directors of Institutional Investor's U.S. Institute. |
* Trustees have been determined to be "Interested Trustees" by virtue of, among other things, their affiliation with the trust or various entities under common control with FMR.
+ The information above includes each Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to each Trustee's qualifications to serve as a Trustee, which led to the conclusion that each Trustee should serve as a Trustee for each fund.
Independent Trustees:
Correspondence intended for each Independent Trustee (that is, the Trustees other than the Interested Trustees) may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235.
Name, Age; Principal Occupations and Other Relevant Experience+ | |
Dennis J. Dirks (63) | |
| Year of Election or Appointment: 2005 Prior to his retirement in May 2003, Mr. Dirks was Chief Operating Officer and a member of the Board of The Depository Trust & Clearing Corporation (DTCC). He also served as President, Chief Operating Officer, and Board member of The Depository Trust Company (DTC) and President and Board member of the National Securities Clearing Corporation (NSCC). In addition, Mr. Dirks served as Chief Executive Officer and Board member of the Government Securities Clearing Corporation, Chief Executive Officer and Board member of the Mortgage-Backed Securities Clearing Corporation, as a Trustee and a member of the Finance Committee of Manhattan College (2005-2008), and as a Trustee and a member of the Finance Committee of AHRC of Nassau County (2006-2008). Mr. Dirks is a member of the Independent Directors Council (IDC) Governing Council (2010-present) and Board of Directors for The Brookville Center for Children's Services, Inc. (2009-present). |
Alan J. Lacy (58) | |
| Year of Election or Appointment: 2008 Mr. Lacy serves as Senior Adviser (2007-present) of Oak Hill Capital Partners, L.P. (private equity). Mr. Lacy also served as Chief Executive Officer (2000-2005) and Vice Chairman (2005-2006) of Sears Holdings Corporation and Sears, Roebuck and Co. (retail). In addition, Mr. Lacy serves as a member of the Board of Directors of Dave & Buster's, Inc. (restaurant and entertainment complexes, 2010-present), The Hillman Companies, Inc. (hardware wholesalers, 2010-present), and Bristol-Myers Squibb Company (global pharmaceuticals, 2007-present). Mr. Lacy is a member of the Board of Trustees of The National Parks Conservation Association (2006-present). Previously, Mr. Lacy served as Chairman of the Board of Trustees of the National Parks Conservation Association (2008-2011) and as a member of the Board of Directors for the Western Union Company (global money transfer, 2006-2011). |
Ned C. Lautenbach (68) | |
| Year of Election or Appointment: 2000 Mr. Lautenbach is Chairman of the Independent Trustees of the Equity and High Income Funds (2006-present). Mr. Lautenbach currently serves as the Lead Director of the Eaton Corporation Board of Directors (diversified industrial, 1997-present). Mr. Lautenbach is also a member of the Board of Directors of the Philharmonic Center for the Arts in Naples, Florida (1999-present); a member of the Board of Trustees of Fairfield University (2005-present); and a member of the Council on Foreign Relations (1994-present). Previously, Mr. Lautenbach was a Partner/Advisory Partner at Clayton, Dubilier & Rice, LLC (private equity investment, 1998-2010), as well as a Director of Sony Corporation (2006-2007). |
Joseph Mauriello (67) | |
| Year of Election or Appointment: 2008 Prior to his retirement in January 2006, Mr. Mauriello served in numerous senior management positions including Deputy Chairman and Chief Operating Officer (2004-2005), and Vice Chairman of Financial Services (2002-2004) of KPMG LLP US (professional services, 1965-2005). Mr. Mauriello currently serves as a member of the Board of Directors of XL Group plc. (global insurance and re-insurance, 2006-present) and of Arcadia Resources Inc. (health care services and products, 2007-present). Previously, Mr. Mauriello served as a Director of the Hamilton Funds of the Bank of New York (2006-2007). |
Robert W. Selander (61) | |
| Year of Election or Appointment: 2011 Previously, Mr. Selander served as a Member of the Advisory Board of Fidelity's Equity and High Income Funds (2011), Executive Vice Chairman (2010), Chief Executive Officer (2009-2010), and President and Chief Executive Officer (1997-2009) of Mastercard, Inc. |
Cornelia M. Small (67) | |
| Year of Election or Appointment: 2005 Ms. Small is a member of the Board of Directors of the Teagle Foundation (2009-present). Ms. Small is also a member of the Investment Committee, and Chair (2008-present) and a member of the Board of Trustees of Smith College. In addition, Ms. Small serves on the Investment Committee of the Berkshire Taconic Community Foundation (2008-present). Previously, Ms. Small served as Chairperson of the Investment Committee (2002-2008) of Smith College. In addition, Ms. Small served as Chief Investment Officer, Director of Global Equity Investments, and a member of the Board of Directors of Scudder, Stevens & Clark and Scudder Kemper Investments. |
William S. Stavropoulos (72) | |
| Year of Election or Appointment: 2001 Mr. Stavropoulos is Vice Chairman of the Independent Trustees of the Equity and High Income Funds (2006-present). Mr. Stavropoulos serves as President and Founder of the Michigan Baseball Foundation, the Great Lakes Loons (2007-present). Mr. Stavropoulos is Chairman Emeritus of the Board of Directors of The Dow Chemical Company, where he previously served in numerous senior management positions, including President, CEO (1995-2000; 2002-2004), Chairman of the Executive Committee (2000-2006), and as a member of the Board of Directors (1990-2006). Currently, Mr. Stavropoulos is Chairman of Univar (global distributor of commodity and specialty chemicals, 2010-present), a Director of Teradata Corporation (data warehousing and technology solutions, 2008-present), Chemical Financial Corporation, Maersk Inc. (industrial conglomerate), Tyco International, Inc. (multinational manufacturing and services, 2007-present), and a member of the Advisory Board for Metalmark Capital (private equity investment, 2005-present). Mr. Stavropoulos is a special advisor to Clayton, Dubilier & Rice, LLC (private equity investment). In addition, Mr. Stavropoulos is a member of the University of Notre Dame Advisory Council for the College of Science. |
David M. Thomas (62) | |
| Year of Election or Appointment: 2008 Previously, Mr. Thomas served as Executive Chairman (2005-2006) and Chairman and Chief Executive Officer (2000-2005) of IMS Health, Inc. (pharmaceutical and healthcare information solutions). In addition, Mr. Thomas serves as a member of the Board of Directors of Fortune Brands, Inc. (consumer products), and Interpublic Group of Companies, Inc. (marketing communication, 2004-present). |
Michael E. Wiley (61) | |
| Year of Election or Appointment: 2008 Mr. Wiley also serves as a Director of Asia Pacific Exploration Consolidated (international oil and gas exploration and production, 2008-present). Mr. Wiley serves as a Director of Tesoro Corporation (independent oil refiner and marketer, 2005-present), and a Director of Bill Barrett Corporation (exploration and production, 2005-present). In addition, Mr. Wiley also serves as a Director of Post Oak Bank (privately-held bank, 2004-present). Previously, Mr. Wiley served as a member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-2010), as a Senior Energy Advisor of Katzenbach Partners, LLC (consulting, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production, 2001-2005). |
+ The information above includes each Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to each Trustee's qualifications to serve as a Trustee, which led to the conclusion that each Trustee should serve as a Trustee for each fund.
Advisory Board Members and Executive Officers:
Correspondence intended for each executive officer, Edward C. Johnson 3d, and Peter S. Lynch may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
Edward C. Johnson 3d (81) | |
| Year of Election or Appointment: 2011 Member of the Advisory Board of Fidelity's Equity and High Income Funds. Mr. Johnson serves as Chief Executive Officer, Chairman, and a Director of FMR LLC, and also serves as Chairman and Director of FIL Limited. Previously, Mr. Johnson served as a Trustee and Chairman of the Board of certain Fidelity Trusts, Chairman and a Director of FMR, Chairman and a Director of FMR Co., Inc., and President of FMR LLC (2006-2007). |
Peter S. Lynch (68) | |
| Year of Election or Appointment: 2003 Member of the Advisory Board of Fidelity's Equity and High Income Funds. Mr. Lynch is Vice Chairman and a Director of FMR and FMR Co., Inc. In addition, Mr. Lynch serves as a Trustee of Boston College and as the Chairman of the Inner-City Scholarship Fund. Previously, Mr. Lynch served on the Special Olympics International Board of Directors (1997-2006). |
Kenneth B. Robins (42) | |
| Year of Election or Appointment: 2008 President and Treasurer of Fidelity's Equity and High Income Funds. Mr. Robins also serves as President and Treasurer (2010-present) and Assistant Treasurer (2009-present) of other Fidelity funds and is an employee of Fidelity Investments (2004-present). Previously, Mr. Robins served as Deputy Treasurer of the Fidelity funds (2005-2008) and Treasurer and Chief Financial Officer of The North Carolina Capital Management Trust: Cash and Term Portfolios (2006-2008). |
Brian B. Hogan (47) | |
| Year of Election or Appointment: 2009 Vice President of Equity and High Income Funds. Mr. Hogan also serves as President of FMR's Equity Division (2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager. |
Christopher S. Bartel (40) | |
| Year of Election or Appointment: 2009 Vice President of Fidelity's Sector and Real Estate Equity Funds. Mr. Bartel also serves as a Director, President, and Chief Executive Officer of Fidelity Management & Research (Japan) Inc. (2012-present) and Senior Vice President of Global Equity Research (2010-present). Previously, Mr. Bartel served as Senior Vice President of Equity Research (2009-2010), Managing Director of Research (2006-2009), and an analyst and portfolio manager (2000-2006). |
Scott C. Goebel (44) | |
| Year of Election or Appointment: 2008 Secretary and Chief Legal Officer (CLO) of the Fidelity funds. Mr. Goebel also serves as Secretary of Fidelity Investments Money Management, Inc. (FIMM) (2010-present) and Fidelity Research and Analysis Company (FRAC) (2010-present); Secretary and CLO of The North Carolina Capital Management Trust: Cash and Term Portfolios (2008-present); General Counsel, Secretary, and Senior Vice President of FMR (2008-present) and FMR Co., Inc. (2008-present); employed by FMR LLC or an affiliate (2001-present); Chief Legal Officer of Fidelity Management & Research (Hong Kong) Limited (2008-present) and Assistant Secretary of Fidelity Management & Research (Japan) Inc. (2008-present), and Fidelity Management & Research (U.K.) Inc. (2008-present). Previously, Mr. Goebel served as Assistant Secretary of FIMM (2008-2010), FRAC (2008-2010), and the Funds (2007-2008) and as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (2005-2007). |
William C. Coffey (43) | |
| Year of Election or Appointment: 2009 Assistant Secretary of Fidelity's Equity and High Income Funds. Mr. Coffey also serves as Senior Vice President and Deputy General Counsel of FMR LLC (2010-present), and is an employee of Fidelity Investments. Previously, Mr. Coffey served as Vice President and Associate General Counsel of FMR LLC (2005-2009). |
Holly C. Laurent (57) | |
| Year of Election or Appointment: 2008 Anti-Money Laundering (AML) Officer of the Fidelity funds. Ms. Laurent also serves as AML Officer of The North Carolina Capital Management Trust: Cash and Term Portfolios (2008-present) and is an employee of Fidelity Investments. Previously, Ms. Laurent was Senior Vice President and Head of Legal for Fidelity Business Services India Pvt. Ltd. (2006-2008), and Senior Vice President, Deputy General Counsel and Group Head for FMR LLC (2005-2006). |
Christine Reynolds (53) | |
| Year of Election or Appointment: 2008 Chief Financial Officer of the Fidelity funds. Ms. Reynolds became President of Fidelity Pricing and Cash Management Services (FPCMS) in August 2008. Ms. Reynolds served as Chief Operating Officer of FPCMS (2007-2008). Previously, Ms. Reynolds served as President, Treasurer, and Anti-Money Laundering officer of the Fidelity funds (2004-2007). |
Joseph A. Hanlon (43) | |
| Year of Election or Appointment: 2012 Chief Compliance Officer of Fidelity's Equity and High Income Funds. Mr. Hanlon serves as Senior Vice President of the Fidelity Asset Management Division (2009-present) and is an employee of Fidelity Investments. |
Joseph F. Zambello (54) | |
| Year of Election or Appointment: 2011 Deputy Treasurer of the Fidelity funds. Mr. Zambello is an employee of Fidelity Investments. Previously, Mr. Zambello served as Vice President of FMR's Program Management Group (2009-2011) and Vice President of the Transfer Agent Oversight Group (2005-2009). |
Adrien E. Deberghes (44) | |
| Year of Election or Appointment: 2008 Deputy Treasurer of Fidelity's Equity and High Income Funds. Mr. Deberghes also serves as Vice President (2011-present) and Assistant Treasurer (2010-present) of other Fidelity funds, and is an employee of Fidelity Investments (2008-present). Previously, Mr. Deberghes served as Senior Vice President of Mutual Fund Administration at State Street Corporation (2007-2008), Senior Director of Mutual Fund Administration at Investors Bank & Trust (2005-2007), and Director of Finance for Dunkin' Brands (2000-2005). |
Stephanie J. Dorsey (42) | |
| Year of Election or Appointment: 2010 Assistant Treasurer of Fidelity's Equity and High Income Funds. Ms. Dorsey also serves as Deputy Treasurer of other Fidelity funds (2008-present) and is an employee of Fidelity Investments (2008-present). Previously, Ms. Dorsey served as Treasurer (2004-2008) of the JPMorgan Mutual Funds and Vice President (2004-2008) of JPMorgan Chase Bank. |
John R. Hebble (53) | |
| Year of Election or Appointment: 2009 Assistant Treasurer of Fidelity's Equity and High Income Funds. Mr. Hebble also serves as President (2011-present), Treasurer, and Chief Financial Officer of The North Carolina Capital Management Trust: Cash and Term Portfolios (2008-present), President and Treasurer of other Fidelity funds (2008-present) and is an employee of Fidelity Investments. |
Gary W. Ryan (53) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of the Fidelity funds. Mr. Ryan is an employee of Fidelity Investments. Previously, Mr. Ryan served as Vice President of Fund Reporting in Fidelity Pricing and Cash Management Services (FPCMS) (1999-2005). |
Jonathan Davis (43) | |
| Year of Election or Appointment: 2010 Assistant Treasurer of the Fidelity funds. Mr. Davis is also Assistant Treasurer of Fidelity Rutland Square Trust II and Fidelity Commonwealth Trust II. Mr. Davis is an employee of Fidelity Investments. Previously, Mr. Davis served as Vice President and Associate General Counsel of FMR LLC (2003-2010). |
Annual Report
Distributions (Unaudited)
The Board of Trustees of each voted to pay to shareholders of record at the opening of business on record date, the following distributions per share derived from capital gains realized from sales of portfolio securities and dividends derived from net investment income:
Consumer Staples Portfolio | Pay Date | Record Date | Dividends | Capital Gains |
Class A | 04/16/12 | 04/13/12 | $0.118 | $0.230 |
Class T | 04/16/12 | 04/13/12 | $0.086 | $0.230 |
Class B | 04/16/12 | 04/13/12 | $0.017 | $0.230 |
Class C | 04/16/12 | 04/13/12 | $0.021 | $0.230 |
Gold Portfolio | Pay Date | Record Date | Dividends | Capital Gains |
Class A | 04/16/12 | 04/13/12 | $0.000 | $0.000 |
Class T | 04/16/12 | 04/13/12 | $0.000 | $0.000 |
Class B | 04/16/12 | 04/13/12 | $0.000 | $0.000 |
Class C | 04/16/12 | 04/13/12 | $0.000 | $0.000 |
Materials Portfolio | Pay Date | Record Date | Dividends | Capital Gains |
Class A | 04/16/12 | 04/13/12 | $0.019 | $0.362 |
Class T | 04/16/12 | 04/13/12 | $0.000 | $0.362 |
Class B | 04/16/12 | 04/13/12 | $0.000 | $0.362 |
Class C | 04/16/12 | 04/13/12 | $0.000 | $0.362 |
Telecommunications Portfolio | Pay Date | Record Date | Dividends | Capital Gains |
Class A | 04/16/12 | 04/13/12 | $0.078 | $0.000 |
Class T | 04/16/12 | 04/13/12 | $0.052 | $0.000 |
Class B | 04/16/12 | 04/13/12 | $0.020 | $0.000 |
Class C | 04/16/12 | 04/13/12 | $0.022 | $0.000 |
The funds hereby designate as capital gain dividend the amounts noted below for the taxable year ended February 29, 2012, or, if subsequently determined to be different, the net capital gain of such year.
Fund |
|
Consumer Staples Portfolio | $27,521,817 |
Gold Portfolio | $57,371,714 |
Materials Portfolio | $23,857,232 |
A percentage of the dividends distributed during the fiscal year for the following funds qualifies for the dividends-received deduction for corporate shareholders:
| April | December 2011 |
Consumer Staples Portfolio |
|
|
Class A | 100% | 100% |
Class T | 100% | 100% |
Class B | 100% | 100% |
Class C | 100% | 100% |
Gold Portfolio |
|
|
Class A | 0% | 0% |
Class T | 0% | 0% |
Class B | 0% | 0% |
Class C | 0% | 0% |
Materials Portfolio |
|
|
Class A | 0% | 100% |
Class T | 0% | 100% |
Class B | 0% | 0% |
Class C | 0% | 0% |
| April | December 2011 |
Telecommunications Portfolio |
|
|
Class A | 100% | 100% |
Class T | 0% | 100% |
Class B | 0% | 100% |
Class C | 0% | 100% |
A percentage of the dividends distributed during the fiscal year for the following funds may be taken into account as a dividend for purposes of the maximum rate under section 1(h)(11) of the Internal Revenue Code.
| April | December 2011 |
Consumer Staples Portfolio |
|
|
Class A | 100% | 100% |
Class T | 100% | 100% |
Class B | 100% | 100% |
Class C | 100% | 100% |
Gold Portfolio |
|
|
Class A | 0% | 0% |
Class T | 0% | 0% |
Class B | 0% | 0% |
Class C | 0% | 0% |
Materials Portfolio |
|
|
Class A | 0% | 100% |
Class T | 0% | 100% |
Class B | 0% | 0% |
Class C | 0% | 0% |
Telecommunications Portfolio |
|
|
Class A | 100% | 100% |
Class T | 0% | 100% |
Class B | 0% | 100% |
Class C | 0% | 100% |
The amounts per share which represent income derived from sources within, and taxes paid to, foreign countries or possessions of the United States are as follows:
| Pay Date | Income | Taxes |
Gold Portfolio |
|
|
|
Class A | 4/18/2011 | $0.010 | $0.0043 |
Class T | 4/18/2011 | $0.010 | $0.0043 |
Class B | 4/18/2011 | $0.010 | $0.0043 |
Class C | 4/18/2011 | $0.010 | $0.0043 |
The fund will notify shareholders in January 2013 of amounts for use in preparing 2012 income tax returns.
Annual Report
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
FMR Co., Inc.
Fidelity Management & Research
(U.K.) Inc.
Fidelity Management & Research
(Hong Kong) Limited
Fidelity Management & Research
(Japan) Inc.
General Distributor
Fidelity Distributors Corporation
Boston, MA
Transfer and Service Agents
Fidelity Investments Institutional
Operations Company, Inc.
Boston, MA
Fidelity Service Company, Inc.
Boston, MA
Custodian
Brown Brothers Harriman & Co.
Boston, MA
(Fidelity Investment logo)(registered trademark)
Corporate Headquarters
82 Devonshire St., Boston, MA 02109
www.fidelity.com
ASGMT-UANN-0412
1.845779.105
Fidelity Advisor
Focus Funds®
Institutional Class
Fidelity Advisor® Consumer Staples Fund
Fidelity Advisor Gold Fund
Fidelity Advisor Materials Fund
Fidelity Advisor Telecommunications Fund
Each Advisor fund listed above is a class
of the Fidelity® Select Portfolios®.
Annual Report
February 29, 2012
(Fidelity Cover Art)
Contents
Fidelity Advisor® Consumer Staples Fund | Performance | |
| Management's Discussion | |
| Shareholder Expense Example | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
| Notes to the Financial Statements | |
Fidelity Advisor Gold Fund | Performance | |
| Management's Discussion | |
| Shareholder Expense Example | |
| Investment Changes | |
| Consolidated Investments | |
| Consolidated Financial Statements | |
| Notes to the Consolidated Financial Statements | |
Fidelity Advisor Materials Fund | Performance | |
| Management's Discussion | |
| Shareholder Expense Example | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
| Notes to the Financial Statements | |
Fidelity Advisor Telecommunications Fund | Performance | |
| Management's Discussion | |
| Shareholder Expense Example | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
| Notes to the Financial Statements | |
Report of Independent Registered Public Accounting Firm |
| |
Trustees and Officers |
| |
Distributions |
|
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com/proxyvotingresults or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov. You may also call 1-877-208-0098 to request a free copy of the proxy voting guidelines.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company.
This report and the financial statements contained herein are submitted for the general information of the shareholders of the funds. This report is not authorized for distribution to prospective investors in the funds unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com, http://www.advisor.fidelity.com, or http://www.401k.com, as applicable.
NOT FDIC INSURED • MAY LOSE VALUE • NO BANK GUARANTEE
Neither the funds nor Fidelity Distributors Corporation is a bank.
Annual Report
Fidelity Advisor® Consumer Staples Fund - Institutional Class
Performance
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 29, 2012 | Past 1 | Past 5 | Past 10 |
Institutional Class A | 15.24% | 8.25% | 8.51% |
A The initial offering of Institutional Class shares took place on December 12, 2006. Returns prior to December 12, 2006 are those of Consumer Staples Portfolio, the original class of the fund.
Prior to October 1, 2006, the fund operated under certain different investment policies. The historical performance of the fund may not represent its current investment policies.
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Fidelity Advisor Consumer Staples Fund - Institutional Class on February 28, 2002. The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period. The initial offering of Institutional Class took place on December 12, 2006. See the Average Annual Total Returns table for additional information regarding the performance of Institutional Class.
Annual Report
Fidelity Advisor Consumer Staples Fund
Management's Discussion of Fund Performance
Market Recap: U.S. stocks rose for the 12 months ending February 29, 2012, as encouraging economic news sparked a strong late-period rally that lifted major equity benchmarks past a number of significant milestones. Stocks recovered from early-period uncertainty that followed the March 2011 earthquake, tsunami and nuclear meltdown in Japan, but plummeted during the summer amid Europe's debt woes and a historic U.S. credit-rating downgrade. Despite continued volatility and mixed economic news, markets began to recover in early October. Investors gravitated toward defensive sectors and the perceived safety of larger, more-established and dividend-paying names, helping the Dow Jones® Industrial Average advance 8.83%, and close above the psychologically important 13,000 mark in late February - for the first time since May 2008. The rally accelerated late in the period and the market broadened, as investor confidence improved amid encouraging manufacturing, housing and employment data, and signs of progress in Europe. For the year, the S&P 500® Index added 5.12%, closing near a four-year high on the period's second-to-last day. Of the 10 major market sectors in the S&P 500®, three defensive areas led the way - consumer staples, health care and utilities - while financials, materials and energy finished in negative territory. The technology-laden Nasdaq Composite® Index added 7.73%, flirting with the 3,000 mark, its highest level in 12 years. Foreign developed-markets stocks reeled over Europe's turmoil, and the MSCI® EAFE® (Europe, Australasia, Far East) Index fell 7.35%.
Comments from Robert Lee, Portfolio Manager of Fidelity Advisor® Consumer Staples Fund: For the 12 months ending February 29, 2012, the fund's Institutional Class shares returned 15.24%, modestly underperforming the 15.44% advance of the MSCI® U.S. IM Consumer Staples 25/50 Index, but decisively outperforming the S&P 500®. Relative to the sector benchmark, the biggest drag on performance was weak stock picking in the personal products area, including stakes in cosmetics manufacturers L'Oreal, an out-of-index holding based in France, and Avon Products. L'Oreal hurt because I was paring the fund's weighting in the stock while its price was rising, while Avon struggled with problems at a new distribution center. In the same space, not owning index component Herbalife, a global direct seller of nutritional supplements, also hurt. Poor positioning in agricultural products detracted, including a large overweighting in agricultural processor Bunge. However, the negative impact was made up for by an underweighting in Archer Daniels Midland in the same category. We also had weak stock picking in tobacco, where a substantial underweighting in Philip Morris International was the fund's biggest individual detractor. Philip Morris, which sells its tobacco products overseas, benefited from its earnings stability and a temporary market-share boost in Japan following that nation's natural disaster in March. Underweighting cigarette maker Lorillard also proved costly. However, a large non-index stake in British American Tobacco, the fund's top individual contributor, more than offset the damage. Within packaged foods/meats, significantly underweighting and then selling major index constituent Kraft Foods was detrimental. An industry overweighting in brewers hurt, including a sizable stake in Molson Coors Brewing. Unfavorable positioning in hypermarkets/super center also was costly. In addition, many companies in the consumer staples sector do business globally and, as such, generate income in currencies around the world. The relative strength of the U.S. dollar during the past year had a negative impact on the dollar value of those earnings. On the positive side, strong stock picking in distillers/vintners and drug retail, along with good positioning in soft drinks, buoyed the fund's return. In the first category, out-of-index positions in premium spirits distributors Diageo and Remy Cointreau, based in Britain and France, respectively, outperformed. In drug retail, CVS Caremark shares surged during the second half of the period, while in soft drinks an underweighting in PepsiCo, a major index component, paid off because the stock lagged.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Consumer Staples Portfolio
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments or redemption proceeds, redemption fees, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (September 1, 2011 to February 29, 2012).
Actual Expenses
The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Annualized | Beginning | Ending | Expenses Paid |
Class A | 1.10% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,086.00 | $ 5.71 |
Hypothetical A |
| $ 1,000.00 | $ 1,019.39 | $ 5.52 |
Class T | 1.38% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,084.50 | $ 7.15 |
Hypothetical A |
| $ 1,000.00 | $ 1,018.00 | $ 6.92 |
Class B | 1.91% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,081.60 | $ 9.89 |
Hypothetical A |
| $ 1,000.00 | $ 1,015.37 | $ 9.57 |
Class C | 1.84% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,082.00 | $ 9.52 |
Hypothetical A |
| $ 1,000.00 | $ 1,015.71 | $ 9.22 |
Consumer Staples | .82% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,087.50 | $ 4.26 |
Hypothetical A |
| $ 1,000.00 | $ 1,020.79 | $ 4.12 |
Institutional Class | .87% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,087.30 | $ 4.52 |
Hypothetical A |
| $ 1,000.00 | $ 1,020.54 | $ 4.37 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
Annual Report
Consumer Staples Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 29, 2012 | ||
| % of fund's | % of fund's net assets |
Procter & Gamble Co. | 16.2 | 15.8 |
British American Tobacco PLC sponsored ADR | 11.9 | 8.5 |
The Coca-Cola Co. | 10.8 | 11.4 |
CVS Caremark Corp. | 6.7 | 6.8 |
Altria Group, Inc. | 4.8 | 5.2 |
Walgreen Co. | 3.3 | 2.4 |
Anheuser-Busch InBev SA NV | 3.1 | 2.4 |
PepsiCo, Inc. | 3.0 | 4.7 |
Diageo PLC sponsored ADR | 2.8 | 2.8 |
Constellation Brands, Inc. Class A (sub. vtg.) | 2.6 | 2.8 |
| 65.2 | |
Top Industries (% of fund's net assets) | |||
As of February 29, 2012 | |||
 | Beverages | 31.3% |
|
 | Tobacco | 20.4% |
|
 | Household Products | 19.0% |
|
 | Food & Staples Retailing | 11.1% |
|
 | Food Products | 10.0% |
|
 | All Others* | 8.2% |
|
As of August 31, 2011 | |||
| Beverages | 32.6% |
|
| Household Products | 18.9% |
|
| Tobacco | 17.2% |
|
| Food & Staples Retailing | 11.3% |
|
| Food Products | 9.3% |
|
| All Others* | 10.7% |
|
* Includes short-term investments and net other assets. |
Annual Report
Consumer Staples Portfolio
Investments February 29, 2012
Showing Percentage of Net Assets
Common Stocks - 97.2% | |||
Shares | Value | ||
BEVERAGES - 31.3% | |||
Brewers - 6.1% | |||
Anheuser-Busch InBev SA NV | 798,628 | $ 53,648,774 | |
Companhia de Bebidas das Americas (AmBev) (PN) sponsored ADR | 218,085 | 8,725,581 | |
Molson Coors Brewing Co. Class B | 1,001,712 | 44,015,225 | |
| 106,389,580 | ||
Distillers & Vintners - 9.4% | |||
Constellation Brands, Inc. Class A (sub. vtg.) (a) | 2,071,870 | 45,249,641 | |
Diageo PLC sponsored ADR | 510,827 | 48,814,628 | |
Pernod Ricard SA | 326,101 | 33,737,970 | |
Remy Cointreau SA | 346,208 | 33,913,382 | |
Treasury Wine Estates Ltd. | 351,937 | 1,468,016 | |
| 163,183,637 | ||
Soft Drinks - 15.8% | |||
Coca-Cola Bottling Co. CONSOLIDATED | 81,713 | 5,265,586 | |
Coca-Cola FEMSA SAB de CV sponsored ADR | 84,229 | 8,334,460 | |
Coca-Cola Hellenic Bottling Co. SA sponsored ADR | 200,200 | 3,775,772 | |
Coca-Cola Icecek A/S | 383,842 | 4,936,381 | |
Embotelladora Andina SA sponsored ADR (d) | 271,900 | 8,581,164 | |
Fomento Economico Mexicano SAB de CV sponsored ADR | 10,187 | 749,763 | |
Monster Beverage Corp. (a) | 41,100 | 2,350,509 | |
PepsiCo, Inc. | 817,727 | 51,467,737 | |
The Coca-Cola Co. | 2,683,792 | 187,489,709 | |
| 272,951,081 | ||
TOTAL BEVERAGES | 542,524,298 | ||
FOOD & STAPLES RETAILING - 11.1% | |||
Drug Retail - 10.4% | |||
CVS Caremark Corp. | 2,589,663 | 116,793,801 | |
Drogasil SA | 623,400 | 6,069,026 | |
Walgreen Co. | 1,744,986 | 57,863,736 | |
| 180,726,563 | ||
Food Distributors - 0.2% | |||
Chefs' Warehouse Holdings (a) | 20,300 | 426,300 | |
Sysco Corp. | 72,340 | 2,128,243 | |
| 2,554,543 | ||
Food Retail - 0.3% | |||
Fresh Market, Inc. (a) | 11,800 | 531,236 | |
The Pantry, Inc. (a) | 392,025 | 4,872,871 | |
| 5,404,107 | ||
Hypermarkets & Super Centers - 0.2% | |||
Carrefour SA | 122,670 | 3,075,583 | |
TOTAL FOOD & STAPLES RETAILING | 191,760,796 | ||
| |||
Shares | Value | ||
FOOD PRODUCTS - 10.0% | |||
Agricultural Products - 3.3% | |||
Archer Daniels Midland Co. | 300,861 | $ 9,386,863 | |
Bunge Ltd. | 592,087 | 39,859,297 | |
Cosan Ltd. Class A | 60,400 | 898,148 | |
Origin Agritech Ltd. (a) | 95,200 | 230,384 | |
SLC Agricola SA | 313,300 | 2,900,504 | |
Viterra, Inc. | 393,700 | 4,256,646 | |
| 57,531,842 | ||
Packaged Foods & Meats - 6.7% | |||
Brasil Foods SA | 2,000 | 41,806 | |
Calavo Growers, Inc. | 103,973 | 2,859,258 | |
Cermaq ASA | 21,670 | 304,485 | |
Danone | 5,020 | 339,599 | |
Dean Foods Co. (a) | 294,016 | 3,604,636 | |
Green Mountain Coffee Roasters, Inc. (a) | 222,530 | 14,457,774 | |
Lindt & Spruengli AG | 121 | 4,401,094 | |
Mead Johnson Nutrition Co. Class A | 336,032 | 26,126,488 | |
Nestle SA | 383,063 | 23,412,228 | |
Unilever NV (NY Reg.) | 1,099,871 | 36,636,703 | |
Want Want China Holdings Ltd. | 4,014,000 | 3,995,317 | |
| 116,179,388 | ||
TOTAL FOOD PRODUCTS | 173,711,230 | ||
HOUSEHOLD PRODUCTS - 19.0% | |||
Household Products - 19.0% | |||
Colgate-Palmolive Co. | 421,175 | 39,245,087 | |
Procter & Gamble Co. | 4,159,458 | 280,846,601 | |
Spectrum Brands Holdings, Inc. (a) | 276,947 | 7,870,834 | |
| 327,962,522 | ||
PERSONAL PRODUCTS - 2.9% | |||
Personal Products - 2.9% | |||
Avon Products, Inc. | 616,877 | 11,529,431 | |
Hypermarcas SA | 333,000 | 2,167,714 | |
L'Oreal SA | 216,800 | 24,725,962 | |
Natura Cosmeticos SA | 135,900 | 3,203,931 | |
Nu Skin Enterprises, Inc. Class A | 157,308 | 9,086,110 | |
| 50,713,148 | ||
PHARMACEUTICALS - 2.5% | |||
Pharmaceuticals - 2.5% | |||
Johnson & Johnson | 669,860 | 43,594,489 | |
TOBACCO - 20.4% | |||
Tobacco - 20.4% | |||
Altria Group, Inc. | 2,788,226 | 83,925,603 | |
British American Tobacco PLC sponsored ADR (d) | 2,039,297 | 206,540,000 | |
KT&G Corp. | 45,825 | 2,997,775 | |
Lorillard, Inc. | 64,000 | 8,389,120 | |
Common Stocks - continued | |||
Shares | Value | ||
TOBACCO - CONTINUED | |||
Tobacco - continued | |||
Philip Morris International, Inc. | 538,983 | $ 45,015,860 | |
Souza Cruz Industria e Comerico | 455,200 | 6,814,284 | |
| 353,682,642 | ||
TOTAL COMMON STOCKS (Cost $1,328,266,206) | 1,683,949,125 | ||
Money Market Funds - 3.0% | |||
| Shares |
| Value |
Fidelity Cash Central Fund, 0.12% (b) | 50,704,618 | $ 50,704,618 | |
Fidelity Securities Lending Cash Central Fund, 0.12% (b)(c) | 603,675 | 603,675 | |
TOTAL MONEY MARKET FUNDS (Cost $51,308,293) | 51,308,293 | ||
TOTAL INVESTMENT PORTFOLIO - 100.2% (Cost $1,379,574,499) | 1,735,257,418 | |
NET OTHER ASSETS (LIABILITIES) - (0.2)% | (2,724,126) | ||
NET ASSETS - 100% | $ 1,732,533,292 |
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 46,534 |
Fidelity Securities Lending Cash Central Fund | 314,492 |
Total | $ 361,026 |
Other Information |
The following is a summary of the inputs used, as of February 29, 2012, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities: | ||||
Common Stocks | $ 1,683,949,125 | $ 1,630,300,351 | $ 53,648,774 | $ - |
Money Market Funds | 51,308,293 | 51,308,293 | - | - |
Total Investments in Securities: | $ 1,735,257,418 | $ 1,681,608,644 | $ 53,648,774 | $ - |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 66.4% |
United Kingdom | 14.7% |
France | 5.5% |
Belgium | 3.1% |
Bermuda | 2.4% |
Netherlands | 2.1% |
Brazil | 1.8% |
Switzerland | 1.7% |
Others (Individually Less Than 1%) | 2.3% |
| 100.0% |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Consumer Staples Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2012 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $586,592) - See accompanying schedule: Unaffiliated issuers (cost $1,328,266,206) | $ 1,683,949,125 |
|
Fidelity Central Funds (cost $51,308,293) | 51,308,293 |
|
Total Investments (cost $1,379,574,499) |
| $ 1,735,257,418 |
Receivable for investments sold | 7,190,915 | |
Receivable for fund shares sold | 5,669,349 | |
Dividends receivable | 2,739,557 | |
Distributions receivable from Fidelity Central Funds | 16,151 | |
Prepaid expenses | 2,716 | |
Other receivables | 2,335 | |
Total assets | 1,750,878,441 | |
|
|
|
Liabilities | ||
Payable to custodian bank | $ 174,268 | |
Payable for investments purchased | 12,155,768 | |
Payable for fund shares redeemed | 4,079,917 | |
Accrued management fee | 774,786 | |
Distribution and service plan fees payable | 161,260 | |
Other affiliated payables | 347,873 | |
Other payables and accrued expenses | 47,602 | |
Collateral on securities loaned, at value | 603,675 | |
Total liabilities | 18,345,149 | |
|
|
|
Net Assets | $ 1,732,533,292 | |
Net Assets consist of: |
| |
Paid in capital | $ 1,375,239,499 | |
Undistributed net investment income | 3,220,648 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (1,618,097) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 355,691,242 | |
Net Assets | $ 1,732,533,292 | |
Statement of Assets and Liabilities - continued
| February 29, 2012 | |
|
|
|
Calculation of Maximum Offering Price Class A: | $ 74.90 | |
|
|
|
Maximum offering price per share (100/94.25 of $74.90) | $ 79.47 | |
Class T: | $ 74.49 | |
|
|
|
Maximum offering price per share (100/96.50 of $74.49) | $ 77.19 | |
Class B: | $ 74.01 | |
|
|
|
Class C: | $ 73.75 | |
|
|
|
Consumer Staples: | $ 75.29 | |
|
|
|
Institutional Class: | $ 75.14 | |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Consumer Staples Portfolio
Financial Statements - continued
Statement of Operations
| Year ended February 29, 2012 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 43,496,113 |
Interest |
| 5 |
Income from Fidelity Central Funds |
| 361,026 |
Total income |
| 43,857,144 |
|
|
|
Expenses | ||
Management fee | $ 8,658,032 | |
Transfer agent fees | 3,543,114 | |
Distribution and service plan fees | 1,711,288 | |
Accounting fees and expenses | 489,033 | |
Custodian fees and expenses | 71,834 | |
Independent trustees' compensation | 9,095 | |
Registration fees | 133,468 | |
Audit | 54,288 | |
Legal | 5,144 | |
Interest | 1,862 | |
Miscellaneous | 14,961 | |
Total expenses before reductions | 14,692,119 | |
Expense reductions | (30,595) | 14,661,524 |
Net investment income (loss) | 29,195,620 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 36,472,115 | |
Foreign currency transactions | (124,896) | |
Total net realized gain (loss) |
| 36,347,219 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 157,948,507 | |
Assets and liabilities in foreign currencies | 6,297 | |
Total change in net unrealized appreciation (depreciation) |
| 157,954,804 |
Net gain (loss) | 194,302,023 | |
Net increase (decrease) in net assets resulting from operations | $ 223,497,643 | |
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 29,195,620 | $ 21,971,692 |
Net realized gain (loss) | 36,347,219 | 37,190,740 |
Change in net unrealized appreciation (depreciation) | 157,954,804 | 108,092,854 |
Net increase (decrease) in net assets resulting from operations | 223,497,643 | 167,255,286 |
Distributions to shareholders from net investment income | (25,900,882) | (18,562,633) |
Distributions to shareholders from net realized gain | (36,216,657) | (13,301,800) |
Total distributions | (62,117,539) | (31,864,433) |
Share transactions - net increase (decrease) | 162,381,495 | 3,732,087 |
Redemption fees | 45,851 | 35,627 |
Total increase (decrease) in net assets | 323,807,450 | 139,158,567 |
|
|
|
Net Assets | ||
Beginning of period | 1,408,725,842 | 1,269,567,275 |
End of period (including undistributed net investment income of $3,220,648 and undistributed net investment income of $3,223,201, respectively) | $ 1,732,533,292 | $ 1,408,725,842 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
Years ended February 28, | 2012 G | 2011 | 2010 | 2009 | 2008 G |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 67.65 | $ 61.06 | $ 43.94 | $ 63.13 | $ 58.16 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | 1.22 | .98 | .84 | .67 | .53 |
Net realized and unrealized gain (loss) | 8.73 | 7.10 | 17.02 | (19.19) | 7.29 |
Total from investment operations | 9.95 | 8.08 | 17.86 | (18.52) | 7.82 |
Distributions from net investment income | (1.06) | (.83) | (.74) | (.66) | (.42) |
Distributions from net realized gain | (1.64) | (.66) | - | (.02) | (2.44) |
Total distributions | (2.70) | (1.49) | (.74) | (.68) I | (2.86) |
Redemption fees added to paid in capital C | - H | - H | - H | .01 | .01 |
Net asset value, end of period | $ 74.90 | $ 67.65 | $ 61.06 | $ 43.94 | $ 63.13 |
Total Return A,B | 15.00% | 13.27% | 40.66% | (29.43)% | 13.38% |
Ratios to Average Net Assets D,F |
|
|
|
|
|
Expenses before reductions | 1.10% | 1.11% | 1.13% | 1.19% | 1.19% |
Expenses net of fee waivers, if any | 1.10% | 1.11% | 1.13% | 1.19% | 1.19% |
Expenses net of all reductions | 1.09% | 1.11% | 1.13% | 1.18% | 1.19% |
Net investment income (loss) | 1.74% | 1.53% | 1.51% | 1.27% | .83% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 205,851 | $ 160,526 | $ 162,370 | $ 121,193 | $ 23,796 |
Portfolio turnover rate E | 35% | 57% | 69% | 70% | 71% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown. B Total returns do not include the effect of the sales charges. C Calculated based on average shares outstanding during the period. D Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. G For the year ended February 29. H Amount represents less than $.01 per share. I Total distributions of $.68 per share is comprised of distributions from net investment income of $.655 and distributions from net realized gain of $.024 per share. |
Financial Highlights - Class T
Years ended February 28, | 2012 G | 2011 | 2010 | 2009 | 2008 G |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 67.30 | $ 60.77 | $ 43.75 | $ 62.93 | $ 58.06 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | 1.01 | .79 | .66 | .53 | .36 |
Net realized and unrealized gain (loss) | 8.68 | 7.05 | 16.95 | (19.12) | 7.29 |
Total from investment operations | 9.69 | 7.84 | 17.61 | (18.59) | 7.65 |
Distributions from net investment income | (.86) | (.65) | (.59) | (.60) | (.35) |
Distributions from net realized gain | (1.64) | (.66) | - | - | (2.44) |
Total distributions | (2.50) | (1.31) | (.59) | (.60) I | (2.79) |
Redemption fees added to paid in capital C | - H | - H | - H | .01 | .01 |
Net asset value, end of period | $ 74.49 | $ 67.30 | $ 60.77 | $ 43.75 | $ 62.93 |
Total Return A,B | 14.67% | 12.93% | 40.24% | (29.61)% | 13.11% |
Ratios to Average Net Assets D,F |
|
|
|
|
|
Expenses before reductions | 1.38% | 1.40% | 1.44% | 1.46% | 1.46% |
Expenses net of fee waivers, if any | 1.38% | 1.40% | 1.44% | 1.46% | 1.46% |
Expenses net of all reductions | 1.38% | 1.40% | 1.44% | 1.46% | 1.46% |
Net investment income (loss) | 1.45% | 1.24% | 1.21% | .99% | .56% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 39,047 | $ 31,496 | $ 29,662 | $ 22,624 | $ 6,298 |
Portfolio turnover rate E | 35% | 57% | 69% | 70% | 71% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown. BTotal returns do not include the effect of the sales charges. C Calculated based on average shares outstanding during the period. D Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. G For the year ended February 29. H Amount represents less than $.01 per share. I Total distributions of $.60 per share is comprised of distributions from net investment income of $.599 and distributions from net realized gain of $.000 per share. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class B
Years ended February 28, | 2012 G | 2011 | 2010 | 2009 | 2008 G |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 66.83 | $ 60.37 | $ 43.53 | $ 62.69 | $ 58.00 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .64 | .46 | .37 | .26 | .04 |
Net realized and unrealized gain (loss) | 8.61 | 6.98 | 16.82 | (19.01) | 7.27 |
Total from investment operations | 9.25 | 7.44 | 17.19 | (18.75) | 7.31 |
Distributions from net investment income | (.43) | (.32) | (.35) | (.42) | (.19) |
Distributions from net realized gain | (1.64) | (.66) | - | - | (2.44) |
Total distributions | (2.07) | (.98) | (.35) | (.42) I | (2.63) |
Redemption fees added to paid in capital C | - H | - H | - H | .01 | .01 |
Net asset value, end of period | $ 74.01 | $ 66.83 | $ 60.37 | $ 43.53 | $ 62.69 |
Total Return A,B | 14.06% | 12.35% | 39.48% | (29.96)% | 12.53% |
Ratios to Average Net Assets D,F |
|
|
|
|
|
Expenses before reductions | 1.91% | 1.91% | 1.97% | 1.96% | 1.96% |
Expenses net of fee waivers, if any | 1.91% | 1.91% | 1.97% | 1.96% | 1.96% |
Expenses net of all reductions | 1.90% | 1.91% | 1.97% | 1.96% | 1.96% |
Net investment income (loss) | .93% | .73% | .68% | .50% | .06% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 19,330 | $ 20,033 | $ 21,099 | $ 14,929 | $ 4,884 |
Portfolio turnover rate E | 35% | 57% | 69% | 70% | 71% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown. B Total returns do not include the effect of the contingent deferred sales charge. C Calculated based on average shares outstanding during the period. D Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. G For the year ended February 29. H Amount represents less than $.01 per share. I Total distributions of $.42 per share is comprised of distributions from net investment income of $.418 and distributions from net realized gain of $.000 per share. |
Financial Highlights - Class C
Years ended February 28, | 2012 G | 2011 | 2010 | 2009 | 2008 G |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 66.71 | $ 60.29 | $ 43.46 | $ 62.61 | $ 57.99 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .68 | .49 | .41 | .28 | .06 |
Net realized and unrealized gain (loss) | 8.59 | 7.00 | 16.80 | (19.00) | 7.28 |
Total from investment operations | 9.27 | 7.49 | 17.21 | (18.72) | 7.34 |
Distributions from net investment income | (.59) | (.41) | (.38) | (.44) | (.29) |
Distributions from net realized gain | (1.64) | (.66) | - | - | (2.44) |
Total distributions | (2.23) | (1.07) | (.38) | (.44) I | (2.73) |
Redemption fees added to paid in capital C | - H | - H | - H | .01 | .01 |
Net asset value, end of period | $ 73.75 | $ 66.71 | $ 60.29 | $ 43.46 | $ 62.61 |
Total Return A,B | 14.14% | 12.44% | 39.59% | (29.94)% | 12.58% |
Ratios to Average Net Assets D,F |
|
|
|
|
|
Expenses before reductions | 1.85% | 1.86% | 1.90% | 1.93% | 1.93% |
Expenses net of fee waivers, if any | 1.85% | 1.86% | 1.90% | 1.93% | 1.93% |
Expenses net of all reductions | 1.84% | 1.85% | 1.89% | 1.93% | 1.92% |
Net investment income (loss) | .99% | .79% | .75% | .52% | .09% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 102,321 | $ 81,239 | $ 73,829 | $ 54,902 | $ 19,791 |
Portfolio turnover rate E | 35% | 57% | 69% | 70% | 71% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown. B Total returns do not include the effect of the contingent deferred sales charge. C Calculated based on average shares outstanding during the period. D Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. G For the year ended February 29. H Amount represents less than $.01 per share. I Total distributions of $.44 per share is comprised of distributions from net investment income of $.443 and distributions from net realized gain of $.000 per share. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Consumer Staples
Years ended February 28, | 2012 G | 2011 | 2010 | 2009 | 2008 G |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 67.98 | $ 61.34 | $ 44.14 | $ 63.25 | $ 58.13 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | 1.42 | 1.14 | .96 | .88 | .71 |
Net realized and unrealized gain (loss) | 8.76 | 7.14 | 17.11 | (19.31) | 7.30 |
Total from investment operations | 10.18 | 8.28 | 18.07 | (18.43) | 8.01 |
Distributions from net investment income | (1.24) | (.98) | (.87) | (.67) | (.46) |
Distributions from net realized gain | (1.64) | (.66) | - | (.03) | (2.44) |
Total distributions | (2.87) J | (1.64) | (.87) | (.69) I | (2.90) |
Redemption fees added to paid in capital C | - H | - H | - H | .01 | .01 |
Net asset value, end of period | $ 75.29 | $ 67.98 | $ 61.34 | $ 44.14 | $ 63.25 |
Total Return A,B | 15.30% | 13.55% | 40.96% | (29.23)% | 13.72% |
Ratios to Average Net Assets D,F |
|
|
|
|
|
Expenses before reductions | .83% | .86% | .92% | .91% | .91% |
Expenses net of fee waivers, if any | .83% | .86% | .92% | .91% | .90% |
Expenses net of all reductions | .82% | .86% | .91% | .90% | .90% |
Net investment income (loss) | 2.01% | 1.78% | 1.73% | 1.55% | 1.12% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 1,202,440 | $ 877,548 | $ 946,455 | $ 657,263 | $ 655,224 |
Portfolio turnover rate E | 35% | 57% | 69% | 70% | 71% |
ATotal returns would have been lower if certain expenses had not been reduced during the applicable periods shown. B Total returns do not include the effect of the sales charges. CCalculated based on average shares outstanding during the period. .DFees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. EAmount does not include the portfolio activity of any underlying Fidelity Central Funds. F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. GFor the year ended February 29. HAmount represents less than $.01 per share. I Total distributions of $.69 per share is comprised of distributions from net investment income of $.668 and distributions from net realized gain of $.025 per share. J Total distributions of $2.87 per share is comprised of distributions from net investment income of $1.236 and distributions from net realized gain of $1.637 per share. |
Financial Highlights - Institutional Class
Years ended February 28, | 2012 F | 2011 | 2010 | 2009 | 2008 F |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 67.84 | $ 61.26 | $ 44.07 | $ 63.22 | $ 58.12 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | 1.39 | 1.15 | .98 | .82 | .74 |
Net realized and unrealized gain (loss) | 8.73 | 7.13 | 17.09 | (19.23) | 7.30 |
Total from investment operations | 10.12 | 8.28 | 18.07 | (18.41) | 8.04 |
Distributions from net investment income | (1.19) | (1.04) | (.88) | (.73) | (.51) |
Distributions from net realized gain | (1.64) | (.66) | - | (.03) | (2.44) |
Total distributions | (2.82) I | (1.70) | (.88) | (.75) H | (2.95) |
Redemption fees added to paid in capital B | - G | - G | - G | .01 | .01 |
Net asset value, end of period | $ 75.14 | $ 67.84 | $ 61.26 | $ 44.07 | $ 63.22 |
Total Return A | 15.24% | 13.57% | 41.03% | (29.22)% | 13.77% |
Ratios to Average Net Assets C,E |
|
|
|
|
|
Expenses before reductions | .87% | .87% | .86% | .91% | .85% |
Expenses net of fee waivers, if any | .87% | .87% | .86% | .91% | .85% |
Expenses net of all reductions | .87% | .87% | .86% | .91% | .84% |
Net investment income (loss) | 1.96% | 1.77% | 1.78% | 1.54% | 1.17% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 163,544 | $ 237,883 | $ 36,152 | $ 30,922 | $ 10,384 |
Portfolio turnover rate D | 35% | 57% | 69% | 70% | 71% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown. BCalculated based on average shares outstanding during the period. C Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. D Amount does not include the portfolio activity of any underlying Fidelity Central Funds. EExpense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. FFor the year ended February 29. GAmount represents less than $.01 per share. HTotal distributions of $.75 per share is comprised of distributions from net investment income of $.726 and distributions from net realized gain of $.025 per share. ITotal distributions of $2.82 per share is comprised of distributions from net investment income of $1.186 and distributions from net realized gain of $1.637 per share. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended February 29, 2012
1. Organization.
Consumer Staples Portfolio (the Fund) is a non-diversified fund of Fidelity Select Portfolios (the Trust) and is authorized to issue an unlimited number of shares. The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund invests primarily in securities of companies whose principal business activities fall within specific industries. The Fund offers Class A, Class T, Class C, Consumer Staples and Institutional Class shares, each of which, along with Class B shares, has equal rights as to assets and voting privileges. Effective after the close of business on September 1, 2010, Class B shares were closed to new accounts and additional purchases, except for exchanges and reinvestments. Each class has exclusive voting rights with respect to matters that affect that class. Class B shares will automatically convert to Class A shares after a holding period of seven years from the initial date of purchase. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions may also differ by class.
2. Investments in Fidelity Central Funds.
The Fund invests in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by FMR and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds held as of period end, if any, as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Fund:
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Fund uses independent pricing services approved by the Board of Trustees to value its investments. When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include market or security specific events. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The value used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the Fund's own assumptions based on the best information available)
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level, as of February 29, 2012, is included at the end of the Fund's Schedule of Investments. Valuation techniques used to value the Fund's investments by major category are as follows:
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when significant market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-traded funds (ETFs) and certain indexes as well as quoted prices for similar securities are used and are categorized as Level 2 in the hierarchy in these
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Security Valuation - continued
circumstances. Utilizing these techniques may result in transfers between Level 1 and Level 2. For restricted equity securities and private placements where observable inputs are limited, assumptions about market activity and risk are used and are categorized as Level 3 in the hierarchy.
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 in the hierarchy.
New Accounting Pronouncements. In May 2011, the Financial Accounting Standards Board issued Accounting Standard Update No. 2011-04, Fair Value Measurement (Topic 820) - Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. The update is effective during interim and annual periods beginning after December 15, 2011 and will result in additional disclosure for transfers between levels as well as expanded disclosure for securities categorized as Level 3 under the fair value hierarchy.
In December 2011, the Financial Accounting Standards Board issued Accounting Standard Update No. 2011-11, Disclosures about Offsetting Assets and Liabilities. The update creates new disclosure requirements requiring entities to disclose both gross and net information for derivatives and other financial instruments that are either offset in the Statement of Assets and Liabilities or subject to an enforceable master netting arrangement or similar agreement. The disclosure requirements are effective for interim and annual reporting periods beginning on or after January 1, 2013. Management is currently evaluating the impact of the update's adoption on the Fund's financial statement disclosures.
Foreign Currency. The Fund may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for income taxes is required. As of February 29, 2012, the Fund did not have any unrecognized tax benefits in the financial statements; nor is the Fund aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. The Fund files a U.S. federal tax return, in addition to state and local tax returns as required. A fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are declared and recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. In addition, the Fund claimed a portion of the payment made to redeeming shareholders as a distribution for income tax purposes.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Annual Report
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
Book-tax differences are primarily due to foreign currency, deferred trustees compensation and losses deferred due to wash sales and excise tax regulations.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation | $ 361,646,527 |
Gross unrealized depreciation | (10,293,004) |
Net unrealized appreciation (depreciation) on securities and other investments | $ 351,353,523 |
|
|
Tax Cost | $ 1,383,903,895 |
The tax-based components of distributable earnings as of period end were as follows:
Undistributed ordinary income | $ 3,220,861 |
Undistributed long-term capital gain | $ 5,437,375 |
Net unrealized appreciation (depreciation) | $ 351,361,846 |
The tax character of distributions paid was as follows:
| February 29, 2012 | February 28, 2011 |
Ordinary Income | $ 31,774,273 | $ 20,981,143 |
Long-term Capital Gains | 30,343,266 | 10,883,290 |
Total | $ 62,117,539 | $ 31,864,433 |
Trading (Redemption) Fees. Shares held by investors in the Fund less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Fund and accounted for as an addition to paid in capital.
4. Purchases and Sales of Investments.
Purchases and sales of securities other than short-term securities, aggregated $621,558,884 and $527,918,913, respectively.
5. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the Fund's average net assets and an annualized group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annual management fee rate was .56% of the Fund's average net assets.
Distribution and Service Plan Fees. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of FMR, separate Distribution and Service Fees, each of which is based on an annual percentage of each class' average net assets. In addition, FDC may pay financial intermediaries for selling shares of the Fund and providing shareholder support services. For the period, the Distribution and Service Fee rates, total fees and amounts retained by FDC were as follows:
| Distribution | Service | Total Fees | Retained |
Class A | -% | .25% | $ 436,234 | $ 7,197 |
Class T | .25% | .25% | 169,388 | 19 |
Class B | .75% | .25% | 191,915 | 143,998 |
Class C | .75% | .25% | 913,751 | 172,728 |
|
|
| $ 1,711,288 | $ 323,942 |
Annual Report
Notes to Financial Statements - continued
5. Fees and Other Transactions with Affiliates - continued
Sales Load. FDC may receive a front-end sales charge of up to 5.75% for selling Class A shares and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the Fund. Depending on the holding period, FDC may receive contingent deferred sales charges levied on Class A, Class T, Class B and Class C redemptions. The deferred sales charges range from 5.00% to 1.00% for Class B, 1.00% for Class C, 1.00% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained |
Class A | $ 147,187 |
Class T | 17,481 |
Class B* | 45,165 |
Class C* | 15,571 |
| $ 225,404 |
* When Class B and Class C shares are initially sold, FDC pays commissions from its own resources to financial intermediaries through which the sales are made.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the Fund. FIIOC receives no fees for providing transfer agency services to Class F. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, transfer agent fees for each class were as follows:
| Amount | % of |
Class A | $ 413,155 | .24 |
Class T | 92,693 | .27 |
Class B | 57,130 | .30 |
Class C | 212,861 | .23 |
Consumer Staples | 2,171,265 | .22 |
Institutional Class | 596,010 | .26 |
| $ 3,543,114 |
|
Accounting and Security Lending Fees. Fidelity Service Company, Inc.(FSC), an affiliate of FMR, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for each month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $11,729 for the period.
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Fund, along with other registered investment companies having management contracts with FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. The Fund's activity in this program during the period for which loans were outstanding was as follows:
Borrower or Lender | Average Loan | Weighted Average Interest Rate | Interest |
Borrower | $ 8,403,500 | .36% | $ 1,862 |
6. Committed Line of Credit.
The Fund participates with other funds managed by FMR or an affiliate in a $4.0 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $4,433 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, there were no borrowings on this line of credit.
Annual Report
7. Security Lending.
The Fund lends portfolio securities through a lending agent from time to time in order to earn additional income. For equity securities, a lending agent is used and may loan securities to certain qualified borrowers, including Fidelity Capital Markets (FCM), a broker-dealer affiliated with the Fund. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Total security lending income during the period amounted to $314,492. During the period, there were no securities loaned to FCM.
8. Expense Reductions.
Many of the brokers with whom FMR places trades on behalf of the Fund provided services to the Fund in addition to trade execution. These services included payments of certain expenses on behalf of the Fund totaling $30,515 for the period. In addition, through arrangements with the Fund's custodian, credits realized as a result of uninvested cash balances were used to reduce the Fund's expenses. During the period, these credits reduced the Fund's custody expenses by $80.
9. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
| Year ended | Year ended |
From net investment income |
|
|
Class A | $ 2,690,167 | $ 2,005,855 |
Class T | 422,197 | 304,100 |
Class B | 114,208 | 100,155 |
Class C | 829,469 | 513,058 |
Consumer Staples | 18,061,907 | 13,026,528 |
Institutional Class | 3,782,934 | 2,612,937 |
Total | $ 25,900,882 | $ 18,562,633 |
From net realized gain |
|
|
Class A | $ 4,102,363 | $ 1,585,279 |
Class T | 795,051 | 307,782 |
Class B | 441,952 | 204,642 |
Class C | 2,213,680 | 836,095 |
Consumer Staples | 23,446,773 | 8,597,123 |
Institutional Class | 5,216,838 | 1,770,879 |
Total | $ 36,216,657 | $ 13,301,800 |
Annual Report
Notes to Financial Statements - continued
10. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
| Year ended | Year ended | Year ended | Year ended |
Class A |
|
|
|
|
Shares sold | 1,107,874 | 610,485 | $ 77,974,428 | $ 39,028,355 |
Reinvestment of distributions | 84,526 | 47,297 | 5,924,948 | 3,150,891 |
Shares redeemed | (816,686) | (944,038) | (57,527,748) | (60,078,639) |
Net increase (decrease) | 375,714 | (286,256) | $ 26,371,628 | $ (17,899,393) |
Class T |
|
|
|
|
Shares sold | 130,126 | 91,776 | $ 9,133,799 | $ 5,882,190 |
Reinvestment of distributions | 16,351 | 8,541 | 1,140,509 | 566,923 |
Shares redeemed | (90,239) | (120,454) | (6,276,410) | (7,689,132) |
Net increase (decrease) | 56,238 | (20,137) | $ 3,997,898 | $ (1,240,019) |
Class B |
|
|
|
|
Shares sold | 22,727 | 35,654 | $ 1,569,035 | $ 2,191,455 |
Reinvestment of distributions | 6,332 | 3,610 | 439,355 | 238,429 |
Shares redeemed | (67,638) | (89,029) | (4,695,265) | (5,598,851) |
Net increase (decrease) | (38,579) | (49,765) | $ (2,686,875) | $ (3,168,967) |
Class C |
|
|
|
|
Shares sold | 536,557 | 340,893 | $ 37,168,209 | $ 21,482,594 |
Reinvestment of distributions | 33,216 | 14,479 | 2,295,907 | 954,487 |
Shares redeemed | (400,115) | (362,057) | (28,068,157) | (23,068,564) |
Net increase (decrease) | 169,658 | (6,685) | $ 11,395,959 | $ (631,483) |
Consumer Staples |
|
|
|
|
Shares sold | 7,156,716 | 4,055,609 | $ 509,488,908 | $ 260,108,965 |
Reinvestment of distributions | 566,253 | 309,170 | 39,874,596 | 20,671,323 |
Shares redeemed | (4,661,196) | (6,885,851) | (330,401,040) | (436,510,553) |
Net increase (decrease) | 3,061,773 | (2,521,072) | $ 218,962,464 | $ (155,730,265) |
Institutional Class |
|
|
|
|
Shares sold | 2,454,993 | 3,382,703 | $ 173,115,499 | $ 212,714,327 |
Reinvestment of distributions | 115,398 | 58,392 | 8,111,953 | 3,904,787 |
Shares redeemed | (3,900,689) | (524,454) | (276,887,031) | (34,216,900) |
Net increase (decrease) | (1,330,298) | 2,916,641 | $ (95,659,579) | $ 182,402,214 |
11. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
Annual Report
Fidelity Advisor Gold Fund - Institutional Class
Performance
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 29, 2012 | Past 1 | Past 5 | Past 10 |
Institutional Class A | -5.94% | 11.04% | 16.82% |
A The initial offering of Institutional Class shares took place on December 12, 2006. Returns prior to December 12, 2006 are those of Gold Portfolio, the original class of the fund.
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Fidelity Advisor Gold Fund - Institutional Class on February 28, 2002. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index performed over the same period. The initial offering of Institutional Class shares took place on December 12, 2006. See the Average Annual Total Returns table for additional information regarding the performance of Institutional Class.
Annual Report
Fidelity Advisor Gold Fund
Management's Discussion of Fund Performance
Market Recap: U.S. stocks rose for the 12 months ending February 29, 2012, as encouraging economic news sparked a strong late-period rally that lifted major equity benchmarks past a number of significant milestones. Stocks recovered from early-period uncertainty that followed the March 2011 earthquake, tsunami and nuclear meltdown in Japan, but plummeted during the summer amid Europe's debt woes and a historic U.S. credit-rating downgrade. Despite continued volatility and mixed economic news, markets began to recover in early October. Investors gravitated toward defensive sectors and the perceived safety of larger, more-established and dividend-paying names, helping the Dow Jones® Industrial Average advance 8.83%, and close above the psychologically important 13,000 mark in late February - for the first time since May 2008. The rally accelerated late in the period and the market broadened, as investor confidence improved amid encouraging manufacturing, housing and employment data, and signs of progress in Europe. For the year, the S&P 500® Index added 5.12%, closing near a four-year high on the period's second-to-last day. Of the 10 major market sectors in the S&P 500®, three defensive areas led the way - consumer staples, health care and utilities - while financials, materials and energy finished in negative territory. The technology-laden Nasdaq Composite® Index added 7.73%, flirting with the 3,000 mark, its highest level in 12 years. Foreign developed-markets stocks reeled over Europe's turmoil, and the MSCI® EAFE® (Europe, Australasia, Far East) Index fell 7.35%.
Comments from S. Joseph Wickwire II, Portfolio Manager of Fidelity Advisor® Gold Fund: For the year, the fund's Institutional Class shares returned -5.94, trailing the -4.75% return of the S&P® Global BMI Gold Capped Index and the S&P 500®. Relative to the industry benchmark, the fund underperformed because several larger companies I owned did not execute well during the reporting period. The largest detractors were overweighted positions in gold names that failed to execute during the period. Among them were senior gold producers AngloGold Ashanti, Agnico-Eagle Mines and Kinross Gold. While AngloGold did improve several key financial and operating metrics, the market remained concerned about perceived risks in South Africa and the company's ability to execute on its growth plans. Both Agnico and Kinross suffered significant setbacks at key assets during the period that caused the stocks to disappoint. In the exploration and development space, overweightings in Canaco Resources (Tanzania asset), Kingsgate Consolidated (Thailand) and Romarco Minerals (South Carolina) detracted because each incurred challenges with their projects that caused the market concern. The fund also was hurt by underweighting several outperforming junior and development stocks that I didn't feel warranted larger positions based on their risk/reward profiles. In addition, I overweighted several silver stocks that underperformed. Currency fluctuations also hurt, given the fund's significant foreign exposure as a global gold fund. The largest contribution came from companies that executed on their growth plans. These stocks covered the gold equity spectrum and were highlighted by such names as Randgold Resources, Pretium Resources, Troy Resources, Argonaut Gold and Goldcorp. The second-largest contributor was correctly underweighting poor-performing names that disappointed the market in terms of execution. These were typically junior and development companies, such as Gabriel Resources, Golden Star Resources, Tanzanian Royalty Exploration and Nevsun Resources. Lastly, our gold bullion position helped performance. Golden Star and Tanzanian Royalty Exploration were not held at period end.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Gold Portfolio
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments or redemption proceeds, redemption fees, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (September 1, 2011 to February 29, 2012).
Actual Expenses
The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Annualized Expense Ratio | Beginning | Ending | Expenses Paid |
Class A | 1.15% |
|
|
|
Actual |
| $ 1,000.00 | $ 880.80 | $ 5.38 |
HypotheticalA |
| $ 1,000.00 | $ 1,019.14 | $ 5.77 |
Class T | 1.43% |
|
|
|
Actual |
| $ 1,000.00 | $ 879.70 | $ 6.68 |
HypotheticalA |
| $ 1,000.00 | $ 1,017.75 | $ 7.17 |
Class B | 1.91% |
|
|
|
Actual |
| $ 1,000.00 | $ 877.70 | $ 8.92 |
HypotheticalA |
| $ 1,000.00 | $ 1,015.37 | $ 9.57 |
Class C | 1.88% |
|
|
|
Actual |
| $ 1,000.00 | $ 877.70 | $ 8.78 |
HypotheticalA |
| $ 1,000.00 | $ 1,015.51 | $ 9.42 |
Gold | .90% |
|
|
|
Actual |
| $ 1,000.00 | $ 882.20 | $ 4.21 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.39 | $ 4.52 |
Institutional Class | .82% |
|
|
|
Actual |
| $ 1,000.00 | $ 882.30 | $ 3.84 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.79 | $ 4.12 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
Annual Report
Gold Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 29, 2012 | ||
| % of fund's | % of fund's net assets |
Goldcorp, Inc. | 12.2 | 11.0 |
Barrick Gold Corp. | 11.9 | 11.9 |
Newmont Mining Corp. | 9.0 | 7.9 |
Newcrest Mining Ltd. | 8.4 | 9.0 |
AngloGold Ashanti Ltd. sponsored ADR | 5.1 | 4.7 |
Kinross Gold Corp. | 4.0 | 5.6 |
Yamana Gold, Inc. | 3.9 | 3.3 |
Randgold Resources Ltd. sponsored ADR | 3.6 | 3.0 |
Gold Fields Ltd. | 3.4 | 3.2 |
Eldorado Gold Corp. | 2.7 | 3.1 |
| 64.2 | |
Top Industries (% of fund's net assets) | |||
As of February 29, 2012 | |||
| Gold | 98.5% |
|
| Precious Metals & Minerals | 0.9% |
|
| Diversified Metals & Mining | 0.2% |
|
| Coal & Consumable Fuels | 0.1% |
|
 | Specialty Stores | 0.0% |
|
| All Others* | 0.3% |
|
As of August 31, 2011 | |||
| Gold | 97.9% |
|
| Precious Metals & Minerals | 1.2% |
|
 | Coal & Consumable Fuels | 0.3% |
|
| Diversified Metals & Mining | 0.2% |
|
| Construction & Engineering | 0.2% |
|
| All Others* | 0.2% |
|
* Includes short-term investments and net other assets. |
Annual Report
Gold Portfolio
Consolidated Investments February 29, 2012
Showing Percentage of Net Assets
Common Stocks - 98.7% | |||
Shares | Value | ||
Australia - 11.5% | |||
METALS & MINING - 11.5% | |||
Gold - 11.5% | |||
Ampella Mining Ltd. (a) | 150,000 | $ 229,204 | |
CGA Mining Ltd.: | |||
(Australia) (a) | 18,920 | 40,474 | |
(Canada) (a) | 270,000 | 564,745 | |
Evolution Mining Ltd. (a) | 853,235 | 1,838,997 | |
Gryphon Minerals Ltd. (a) | 317,692 | 395,167 | |
Intrepid Mines Ltd.: | |||
(Australia) (a) | 8,709,798 | 12,328,162 | |
(Canada) (a) | 320,000 | 433,284 | |
Kingsgate Consolidated NL (d) | 3,705,767 | 27,259,540 | |
Kula Gold Ltd. (a) | 31,245 | 36,854 | |
Medusa Mining Ltd. | 2,572,885 | 17,739,756 | |
Newcrest Mining Ltd. | 10,268,992 | 368,773,129 | |
Papillon Resources Ltd. (a) | 100,000 | 120,098 | |
Perseus Mining Ltd.: | |||
(Australia) (a) | 4,599,308 | 14,154,375 | |
(Canada) (a) | 1,300,000 | 3,783,156 | |
Regis Resources Ltd. (a) | 4,898,292 | 22,743,059 | |
Resolute Mining Ltd. (a) | 4,911,661 | 10,954,890 | |
St Barbara Ltd. (a) | 4,644,676 | 11,504,923 | |
Troy Resources NL (a)(e) | 1,900,000 | 10,060,122 | |
| 502,959,935 | ||
Bailiwick of Jersey - 4.5% | |||
METALS & MINING - 4.5% | |||
Gold - 4.5% | |||
Centamin PLC (a) | 12,611,900 | 18,217,214 | |
Polyus Gold International Ltd. sponsored GDR (a) | 7,033,190 | 23,490,855 | |
Randgold Resources Ltd. sponsored ADR | 1,351,867 | 155,099,701 | |
| 196,807,770 | ||
Bermuda - 0.0% | |||
METALS & MINING - 0.0% | |||
Gold - 0.0% | |||
Continental Gold Ltd. (a) | 130,100 | 1,035,910 | |
Canada - 55.8% | |||
METALS & MINING - 55.8% | |||
Diversified Metals & Mining - 0.2% | |||
Barisan Gold Corp. (e) | 2,500 | 1,112 | |
Barisan Gold Corp. warrants 9/26/13 (a) | 625 | 0 | |
Clifton Star Resources, Inc. (a) | 25,000 | 73,258 | |
Copper Mountain Mining Corp. (a) | 137,000 | 707,392 | |
East Asia Minerals Corp. (a) | 5,000 | 3,284 | |
Eastmain Resources, Inc. (a) | 10,000 | 12,126 | |
Kimber Resources, Inc. (a) | 16,100 | 16,919 | |
Kimber Resources, Inc. (a)(e) | 5,832,000 | 6,128,712 | |
Rio Alto Mining Ltd. (a) | 10,000 | 45,167 | |
| |||
Shares | Value | ||
Sabina Gold & Silver Corp. (a) | 465,000 | $ 1,508,261 | |
Southern Arc Minerals, Inc. (a) | 30,000 | 20,007 | |
Trelawney Mining and Exploration, Inc. (a) | 250,000 | 593,644 | |
| 9,109,882 | ||
Gold - 54.8% | |||
Agnico-Eagle Mines Ltd. (Canada) | 2,642,200 | 96,033,885 | |
Alacer Gold Corp. (a) | 3,169,063 | 30,581,066 | |
Alamos Gold, Inc. | 1,968,800 | 36,684,355 | |
Argonaut Gold, Inc. (a) | 629,800 | 6,204,769 | |
ATAC Resources Ltd. (a) | 67,200 | 207,104 | |
AuRico Gold, Inc. (a) | 4,366,763 | 42,800,587 | |
Aurizon Mines Ltd. (a) | 2,366,900 | 12,556,181 | |
Avion Gold Corp. (a) | 4,835,000 | 8,207,750 | |
B2Gold Corp. (a) | 4,542,400 | 18,726,814 | |
Banro Corp. (a) | 1,380,786 | 7,478,415 | |
Barrick Gold Corp. (d) | 10,914,019 | 522,073,116 | |
Bearing Resources Ltd. (a) | 29,687 | 13,799 | |
Belo Sun Mining Corp. (a) | 65,000 | 67,650 | |
Canaco Resources, Inc. (a) | 1,295,100 | 1,897,534 | |
Canaco Resources, Inc. (e) | 561,600 | 822,836 | |
Centerra Gold, Inc. | 2,301,200 | 46,272,804 | |
China Gold International Resources Corp. Ltd. (a) | 90,000 | 393,776 | |
Colossus Minerals, Inc. (a) | 1,436,100 | 10,172,345 | |
Corvus Gold, Inc. (a) | 138,350 | 131,409 | |
Detour Gold Corp. (a) | 618,000 | 16,954,176 | |
Detour Gold Corp. (a)(e) | 785,900 | 21,560,334 | |
Eldorado Gold Corp. | 7,576,013 | 115,747,299 | |
European Goldfields Ltd. | 1,906,700 | 25,200,461 | |
Exeter Resource Corp. (a) | 238,000 | 791,209 | |
Extorre Gold Mines Ltd. (a) | 423,000 | 3,205,679 | |
Extorre Gold Mines Ltd. (e) | 61,300 | 464,558 | |
Franco-Nevada Corp. | 1,834,900 | 81,060,807 | |
Gabriel Resources Ltd. (a) | 595,000 | 3,637,397 | |
Goldcorp, Inc. | 11,004,100 | 533,387,239 | |
Gran Colombia Gold Corp. (a)(d) | 1,665,000 | 874,855 | |
Great Basin Gold Ltd. (a)(d) | 5,972,900 | 5,190,415 | |
Guyana Goldfields, Inc. (a) | 1,093,000 | 6,206,901 | |
Guyana Goldfields, Inc. (a)(e) | 155,000 | 880,210 | |
IAMGOLD Corp. | 5,133,200 | 77,595,788 | |
International Minerals Corp.: | |||
(Canada) (a) | 157,100 | 893,723 | |
(Switzerland) (a) | 15,000 | 84,549 | |
International Tower Hill Mines Ltd. (a) | 546,700 | 2,773,136 | |
Keegan Resources, Inc. (a) | 30,000 | 146,112 | |
Kinross Gold Corp. | 15,857,091 | 175,451,065 | |
Kinross Gold Corp. warrants 9/17/14 (a) | 375,441 | 371,780 | |
Kirkland Lake Gold, Inc. (a) | 859,500 | 14,434,285 | |
Lake Shore Gold Corp. (a) | 3,196,600 | 4,974,247 | |
Nevsun Resources Ltd. | 50,000 | 206,639 | |
New Gold, Inc. (a) | 6,312,455 | 73,735,139 | |
New Gold, Inc. warrants 4/3/12 (a)(e) | 2,928,500 | 14,796 | |
Common Stocks - continued | |||
Shares | Value | ||
Canada - continued | |||
METALS & MINING - CONTINUED | |||
Gold - continued | |||
Novagold Resources, Inc. (a)(d) | 2,955,000 | $ 24,454,555 | |
OceanaGold Corp. (a) | 1,455,000 | 3,690,244 | |
Orezone Gold Corp. (a) | 80,000 | 227,959 | |
Osisko Mining Corp. (a) | 2,477,000 | 31,386,429 | |
Osisko Mining Corp. (a)(e) | 3,000,000 | 38,013,439 | |
Pilot Gold, Inc. (a) | 91,250 | 165,968 | |
Premier Gold Mines Ltd. (a) | 2,026,800 | 11,448,302 | |
Primero Mining Corp. (a) | 534,300 | 1,511,686 | |
Queenston Mining, Inc. (a) | 215,000 | 1,031,930 | |
Rainy River Resources Ltd. (a) | 690,000 | 5,319,759 | |
Richmont Mines, Inc. (a) | 20,000 | 204,517 | |
Riva Gold Corp. (a) | 10,000 | 3,132 | |
Romarco Minerals, Inc. (a) | 7,795,500 | 8,507,189 | |
Romarco Minerals, Inc. (a)(e) | 5,900,000 | 6,438,640 | |
Rubicon Minerals Corp. (a) | 2,581,352 | 9,416,138 | |
San Gold Corp. (a) | 4,674,400 | 7,982,353 | |
Seabridge Gold, Inc. (a) | 601,905 | 14,241,073 | |
SEMAFO, Inc. | 4,590,000 | 30,796,342 | |
Sulliden Gold Corp. Ltd. (a) | 10,000 | 15,561 | |
Teranga Gold Corp. CDI unit (a) | 3,410,974 | 8,851,362 | |
Torex Gold Resources, Inc. (a) | 5,356,000 | 12,555,873 | |
Yamana Gold, Inc. | 9,938,100 | 172,522,162 | |
| 2,395,953,607 | ||
Precious Metals & Minerals - 0.8% | |||
Chesapeake Gold Corp. (a) | 6,000 | 58,748 | |
Dalradian Resources, Inc. (a) | 41,000 | 72,500 | |
Fortuna Mines, Inc. (a) | 20,000 | 139,847 | |
Orko Silver Corp. (a) | 416,000 | 882,736 | |
Pan American Silver Corp. | 224,487 | 5,623,399 | |
Pan American Silver Corp. warrants 12/7/14 (a) | 232,460 | 1,140,953 | |
Pretium Resources, Inc. (a) | 10,000 | 179,356 | |
Pretium Resources, Inc. (f) | 450,000 | 8,071,035 | |
Pretium Resources, Inc. warrants 4/8/12 (a)(f) | 225,000 | 1,175,416 | |
Silver Wheaton Corp. | 347,100 | 13,285,654 | |
Silvercorp Metals, Inc. | 75,000 | 550,952 | |
Tahoe Resources, Inc. (a) | 185,500 | 3,958,733 | |
Wildcat Silver Corp. (a) | 30,000 | 63,053 | |
| 35,202,382 | ||
TOTAL METALS & MINING | 2,440,265,871 | ||
| |||
Shares | Value | ||
China - 2.3% | |||
METALS & MINING - 2.3% | |||
Gold - 2.3% | |||
Zhaojin Mining Industry Co. Ltd. (H Shares) | 9,084,150 | $ 18,739,624 | |
Zijin Mining Group Co. Ltd. (H Shares) | 173,566,000 | 83,246,157 | |
| 101,985,781 | ||
Japan - 0.0% | |||
SPECIALTY RETAIL - 0.0% | |||
Specialty Stores - 0.0% | |||
Tsutsumi Jewelry Co. Ltd. | 5,100 | 133,374 | |
Peru - 2.1% | |||
METALS & MINING - 2.1% | |||
Gold - 2.1% | |||
Compania de Minas Buenaventura SA sponsored ADR | 2,327,500 | 93,402,575 | |
South Africa - 10.3% | |||
METALS & MINING - 10.3% | |||
Gold - 10.3% | |||
AngloGold Ashanti Ltd. sponsored ADR | 5,262,952 | 223,412,312 | |
Gold Fields Ltd. | 55,000 | 853,025 | |
Gold Fields Ltd. sponsored ADR | 9,726,026 | 149,489,020 | |
Harmony Gold Mining Co. Ltd. | 1,484,000 | 19,106,926 | |
Harmony Gold Mining Co. Ltd. sponsored ADR (d) | 4,381,800 | 55,736,496 | |
| 448,597,779 | ||
United Kingdom - 0.8% | |||
METALS & MINING - 0.8% | |||
Gold - 0.8% | |||
African Barrick Gold Ltd. | 1,445,600 | 10,808,404 | |
Avocet Mining PLC | 10,000 | 35,753 | |
Patagonia Gold PLC (a) | 160,000 | 97,993 | |
Petropavlovsk PLC | 2,195,929 | 25,099,245 | |
| 36,041,395 | ||
United States of America - 11.4% | |||
METALS & MINING - 11.3% | |||
Gold - 11.2% | |||
Allied Nevada Gold Corp. (a) | 1,245,100 | 42,843,891 | |
Allied Nevada Gold Corp. (Canada) (a) | 20,000 | 690,547 | |
Newmont Mining Corp. | 6,572,150 | 390,385,710 | |
Royal Gold, Inc. (d) | 768,113 | 53,345,448 | |
| 487,265,596 | ||
Precious Metals & Minerals - 0.1% | |||
Coeur d'Alene Mines Corp. (a) | 10,000 | 284,400 | |
Common Stocks - continued | |||
Shares | Value | ||
United States of America - continued | |||
METALS & MINING - CONTINUED | |||
Precious Metals & Minerals - continued | |||
Gold Resource Corp. (d) | 30,000 | $ 733,500 | |
McEwen Mining, Inc. (a)(d) | 730,100 | 3,818,423 | |
| 4,836,323 | ||
TOTAL METALS & MINING | 492,101,919 | ||
OIL, GAS & CONSUMABLE FUELS - 0.1% | |||
Coal & Consumable Fuels - 0.1% | |||
Alpha Natural Resources, Inc. (a) | 228,300 | 4,237,248 | |
TOTAL UNITED STATES OF AMERICA | 496,339,167 | ||
TOTAL COMMON STOCKS (Cost $3,324,595,054) |
| ||
Commodities - 1.0% | |||
Troy |
| ||
Gold Bullion (a) | 25,500 |
| |
Money Market Funds - 13.7% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.12% (b) | 22,033,943 | 22,033,943 | |
Fidelity Securities Lending Cash Central Fund, 0.12% (b)(c) | 577,742,949 | 577,742,949 | |
TOTAL MONEY MARKET FUNDS (Cost $599,776,892) |
| ||
TOTAL INVESTMENT PORTFOLIO - 113.4% (Cost $3,950,697,796) | 4,960,477,914 | |
NET OTHER ASSETS (LIABILITIES) - (13.4)% | (584,968,362) | |
NET ASSETS - 100% | $ 4,375,509,552 | |
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
(e) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the end of the period, the value of these securities amounted to $84,384,759 or 1.9% 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 $9,246,451 or 0.2% of net assets. |
Additional information on each restricted holding is as follows: |
Security | Acquisition Date | Acquisition Cost |
Pretium Resources, Inc. | 3/31/11 | $ 4,344,586 |
Pretium Resources, Inc. warrants 4/8/12 | 3/31/11 | $ 296,025 |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 22,481 |
Fidelity Securities Lending Cash Central Fund | 717,855 |
Total | $ 740,336 |
Consolidated Subsidiary |
| Value, | Purchases | Sales | Dividend | Value, |
Fidelity Select Gold Cayman Ltd. | $ 26,107,166 | $ 55,875,145 | $ 40,620,000 | $ - | $ 43,125,922 |
Other Information |
The following is a summary of the inputs used, as of February 29, 2012, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the tables below, please refer to the Security Valuation section in the accompanying Notes to Consolidated Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities: | ||||
Common Stocks | $ 4,317,569,557 | $ 4,296,395,395 | $ 21,100,904 | $ 73,258 |
Commodities | 43,131,465 | 43,131,465 | - | - |
Money Market Funds | 599,776,892 | 599,776,892 | - | - |
Total Investments in Securities: | $ 4,960,477,914 | $ 4,939,303,752 | $ 21,100,904 | $ 73,258 |
The following is a reconciliation of Investments in Securities for which Level 3 inputs were used in determining value: |
Investments in Securities: | |
Beginning Balance | $ - |
Total Realized Gain (Loss) | - |
Total Unrealized Gain (Loss) | (44,374) |
Cost of Purchases | - |
Proceeds of Sales | - |
Amortization/Accretion | - |
Transfers in to Level 3 | 117,632 |
Transfers out of Level 3 | - |
Ending Balance | $ 73,258 |
The change in unrealized gain (loss) for the period attributable to Level 3 securities held at February 29, 2012 | $ (44,374) |
The information used in the above reconciliation represents fiscal year to date activity for any Investments in Securities identified as using Level 3 inputs at either the beginning or the end of the current fiscal period. Transfers in or out of Level 3 represent the beginning value of any Security or Instrument where a change in the pricing level occurred from the beginning to the end of the period. The cost of purchases and the proceeds of sales may include securities received or delivered through corporate actions or exchanges. Realized and unrealized gains (losses) disclosed in the reconciliation are included in Net Gain (Loss) on the Fund's Consolidated Statement of Operations. |
See accompanying notes which are an integral part of the consolidated financial statements.
Annual Report
Gold Portfolio
Consolidated Financial Statements
Consolidated Statement of Assets and Liabilities
| February 29, 2012 | |
Assets | ||
Investment in securities, at value (including securities loaned of $535,479,046) - See accompanying schedule: Unaffiliated issuers (cost $3,324,595,054) | $ 4,317,569,557 |
|
Fidelity Central Funds (cost $599,776,892) | 599,776,892 |
|
Commodities (cost $26,325,850) | 43,131,465 |
|
Total Investments (cost $3,950,697,796) |
| $ 4,960,477,914 |
Cash |
| 6,070 |
Receivable for investments sold |
| 1,753,475 |
Delayed delivery |
| 1,979,437 |
Receivable for fund shares sold | 6,465,997 | |
Dividends receivable | 2,191,884 | |
Distributions receivable from Fidelity Central Funds | 44,216 | |
Prepaid expenses | 8,389 | |
Other receivables | 10,597 | |
Total assets | 4,972,937,979 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 9,398,938 | |
Payable for fund shares redeemed | 6,853,717 | |
Accrued management fee | 2,063,356 | |
Distribution and service plan fees payable | 125,405 | |
Other affiliated payables | 1,156,454 | |
Other payables and accrued expenses | 87,608 | |
Collateral on securities loaned, at value | 577,742,949 | |
Total liabilities | 597,428,427 | |
|
|
|
Net Assets | $ 4,375,509,552 | |
Net Assets consist of: |
| |
Paid in capital | $ 3,692,368,794 | |
Accumulated net investment loss | (30,304,890) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (296,343,810) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 1,009,789,458 | |
Net Assets | $ 4,375,509,552 | |
Consolidated Statement of Assets and Liabilities -
continued
| February 29, 2012 | |
Calculation of Maximum Offering Price Class A: | $ 45.37 | |
|
|
|
Maximum offering price per share (100/94.25 of $45.37) | $ 48.14 | |
Class T: | $ 45.04 | |
|
|
|
Maximum offering price per share (100/96.50 of $45.04) | $ 46.67 | |
Class B: | $ 44.24 | |
|
|
|
Class C: | $ 44.05 | |
|
|
|
Gold: | $ 45.96 | |
|
|
|
Institutional Class: | $ 45.87 | |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
See accompanying notes which are an integral part of the consolidated financial statements.
Annual Report
Gold Portfolio
Consolidated Financial Statements - continued
Consolidated Statement of Operations
| Year ended February 29, 2012 | |
Investment Income |
|
|
Dividends |
| $ 38,009,925 |
Interest |
| 6 |
Income from Fidelity Central Funds |
| 740,336 |
Total income |
| 38,750,267 |
|
|
|
Expenses | ||
Management fee | $ 25,411,280 | |
Transfer agent fees | 12,523,829 | |
Distribution and service plan fees | 1,573,273 | |
Accounting and security lending fees | 1,580,157 | |
Custodian fees and expenses | 426,402 | |
Independent trustees' compensation | 26,914 | |
Registration fees | 210,059 | |
Audit | 35,272 | |
Legal | 15,466 | |
Interest | 2,740 | |
Miscellaneous | 44,874 | |
Total expenses before reductions | 41,850,266 | |
Expense reductions | (188,884) | 41,661,382 |
Net investment income (loss) | (2,911,115) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investments: |
|
|
Unaffiliated issuers | 73,143,949 | |
Commodities | (3,419,750) |
|
Foreign currency transactions | (249,291) | |
Total net realized gain (loss) |
| 69,474,908 |
Change in net unrealized appreciation (depreciation) on: Investments | (369,226,287) | |
Assets and liabilities in foreign currencies | 25,359 | |
Commodities | 5,290,565 | |
Total change in net unrealized appreciation (depreciation) |
| (363,910,363) |
Net gain (loss) | (294,435,455) | |
Net increase (decrease) in net assets resulting from operations | $ (297,346,570) | |
Consolidated Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ (2,911,115) | $ (16,366,924) |
Net realized gain (loss) | 69,474,908 | 401,575,169 |
Change in net unrealized appreciation (depreciation) | (363,910,363) | 806,517,405 |
Net increase (decrease) in net assets resulting | (297,346,570) | 1,191,725,650 |
Distributions to shareholders from net realized gain | (238,750,097) | (403,524,767) |
Share transactions - net increase (decrease) | 229,358,064 | 849,828,502 |
Redemption fees | 461,104 | 423,645 |
Total increase (decrease) in net assets | (306,277,499) | 1,638,453,030 |
|
|
|
Net Assets | ||
Beginning of period | 4,681,787,051 | 3,043,334,021 |
End of period (including accumulated net investment loss of $30,304,890 and accumulated net investment loss of $1,236, respectively) | $ 4,375,509,552 | $ 4,681,787,051 |
See accompanying notes which are an integral part of the consolidated financial statements.
Annual Report
Consolidated Financial Highlights - Class A
Years ended February 28, | 2012 G | 2011 | 2010 | 2009 | 2008 G |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 50.92 | $ 40.50 | $ 30.45 | $ 46.19 | $ 36.53 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.13) | (.30) | (.25) | (.15) | (.15) |
Net realized and unrealized gain (loss) | (2.83) | 15.28 | 11.00 | (15.44) | 15.00 |
Total from investment operations | (2.96) | 14.98 | 10.75 | (15.59) | 14.85 |
Distributions from net investment income | - | - | - | - | (.19) |
Distributions from net realized gain | (2.59) | (4.57) | (.71) | (.17) | (5.01) |
Total distributions | (2.59) | (4.57) | (.71) | (.17) | (5.20) |
Redemption fees added to paid in capital C | - H | .01 | .01 | .02 | .01 |
Net asset value, end of period | $ 45.37 | $ 50.92 | $ 40.50 | $ 30.45 | $ 46.19 |
Total Return A,B | (6.24)% | 36.99% | 35.19% | (33.81) % | 44.59% |
Ratios to Average Net Assets D,F |
|
|
|
|
|
Expenses before reductions | 1.14% | 1.16% | 1.21% | 1.21% | 1.17% |
Expenses net of fee waivers, if any | 1.14% | 1.15% | 1.19% | 1.19% | 1.17% |
Expenses net of all reductions | 1.14% | 1.14% | 1.17% | 1.15% | 1.13% |
Net investment income (loss) | (.28)% | (.63)% | (.63)% | (.45)% | (.37)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 152,969 | $ 149,178 | $ 82,413 | $ 39,144 | $ 26,620 |
Portfolio turnover rate E | 22% | 35% | 46% | 42% | 55% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown. B Total returns do not include the effect of the sales charges. C Calculated based on average shares outstanding during the period. D Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. G For the year ended February 29. H Amount represents less than $.01 per share.
Consolidated Financial Highlights - Class T
Years ended February 28, | 2012 G | 2011 | 2010 | 2009 | 2008 G |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 50.68 | $ 40.34 | $ 30.36 | $ 46.17 | $ 36.49 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.27) | (.43) | (.36) | (.24) | (.25) |
Net realized and unrealized gain (loss) | (2.80) | 15.21 | 10.96 | (15.42) | 15.05 |
Total from investment operations | (3.07) | 14.78 | 10.60 | (15.66) | 14.80 |
Distributions from net investment income | - | - | - | - | (.16) |
Distributions from net realized gain | (2.57) | (4.45) | (.63) | (.17) | (4.97) |
Total distributions | (2.57) | (4.45) | (.63) | (.17) | (5.13) |
Redemption fees added to paid in capital C | - H | .01 | .01 | .02 | .01 |
Net asset value, end of period | $ 45.04 | $ 50.68 | $ 40.34 | $ 30.36 | $ 46.17 |
Total Return A,B | (6.49)% | 36.62% | 34.79% | (33.98) % | 44.45% |
Ratios to Average Net Assets D,F |
|
|
|
|
|
Expenses before reductions | 1.43% | 1.44% | 1.51% | 1.47% | 1.43% |
Expenses net of fee waivers, if any | 1.42% | 1.42% | 1.49% | 1.45% | 1.43% |
Expenses net of all reductions | 1.42% | 1.42% | 1.47% | 1.41% | 1.39% |
Net investment income (loss) | (.57)% | (.90)% | (.93)% | (.71)% | (.63)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 40,664 | $ 45,846 | $ 26,256 | $ 15,284 | $ 11,334 |
Portfolio turnover rate E | 22% | 35% | 46% | 42% | 55% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown. B Total returns do not include the effect of the sales charges. C Calculated based on average shares outstanding during the period. D Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. G For the year ended February 29. H Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the consolidated financial statements.
Annual Report
Consolidated Financial Highlights - Class B
Years ended February 28, | 2012 G | 2011 | 2010 | 2009 | 2008 G |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 50.02 | $ 39.87 | $ 30.08 | $ 45.97 | $ 36.46 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.49) | (.66) | (.55) | (.40) | (.45) |
Net realized and unrealized gain (loss) | (2.76) | 15.02 | 10.84 | (15.34) | 14.95 |
Total from investment operations | (3.25) | 14.36 | 10.29 | (15.74) | 14.50 |
Distributions from net investment income | - | - | - | - | (.16) |
Distributions from net realized gain | (2.53) | (4.21) | (.51) | (.17) | (4.84) |
Total distributions | (2.53) | (4.21) | (.51) | (.17) | (5.00) |
Redemption fees added to paid in capital C | - H | - H | .01 | .02 | .01 |
Net asset value, end of period | $ 44.24 | $ 50.02 | $ 39.87 | $ 30.08 | $ 45.97 |
Total Return A,B | (6.95)% | 35.97% | 34.12% | (34.30)% | 43.53% |
Ratios to Average Net Assets D,F |
|
|
|
|
|
Expenses before reductions | 1.90% | 1.93% | 2.00% | 1.97% | 1.93% |
Expenses net of fee waivers, if any | 1.90% | 1.92% | 1.98% | 1.95% | 1.93% |
Expenses net of all reductions | 1.90% | 1.91% | 1.96% | 1.89% | 1.90% |
Net investment income (loss) | (1.04)% | (1.39)% | (1.42)% | (1.20)% | (1.14)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 20,894 | $ 26,837 | $ 18,340 | $ 8,421 | $ 6,869 |
Portfolio turnover rate E | 22% | 35% | 46% | 42% | 55% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown. B Total returns do not include the effect of the contingent deferred sales charge. C Calculated based on average shares outstanding during the period. D Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. G For the year ended February 29. H Amount represents less than $.01 per share.
Consolidated Financial Highlights - Class C
Years ended February 28, | 2012 G | 2011 | 2010 | 2009 | 2008 G |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 49.81 | $ 39.75 | $ 30.00 | $ 45.85 | $ 36.44 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.47) | (.64) | (.53) | (.39) | (.45) |
Net realized and unrealized gain (loss) | (2.76) | 14.98 | 10.80 | (15.30) | 14.91 |
Total from investment operations | (3.23) | 14.34 | 10.27 | (15.69) | 14.46 |
Distributions from net investment income | - | - | - | - | (.17) |
Distributions from net realized gain | (2.53) | (4.28) | (.53) | (.17) | (4.89) |
Total distributions | (2.53) | (4.28) | (.53) | (.17) | (5.06) |
Redemption fees added to paid in capital C | - H | - H | .01 | .01 | .01 |
Net asset value, end of period | $ 44.05 | $ 49.81 | $ 39.75 | $ 30.00 | $ 45.85 |
Total Return A,B | (6.93)% | 36.01% | 34.15% | (34.30)% | 43.49% |
Ratios to Average Net Assets D,F |
|
|
|
|
|
Expenses before reductions | 1.87% | 1.89% | 1.97% | 1.97% | 1.92% |
Expenses net of fee waivers, if any | 1.87% | 1.88% | 1.95% | 1.95% | 1.92% |
Expenses net of all reductions | 1.87% | 1.87% | 1.93% | 1.89% | 1.89% |
Net investment income (loss) | (1.01)% | (1.35)% | (1.39)% | (1.20)% | (1.12)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 67,996 | $ 72,431 | $ 38,624 | $ 17,544 | $ 10,835 |
Portfolio turnover rate E | 22% | 35% | 46% | 42% | 55% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown. B Total returns do not include the effect of the contingent deferred sales charge. C Calculated based on average shares outstanding during the period. D Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. G For the year ended February 29. H Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the consolidated financial statements.
Annual Report
Consolidated Financial Highlights - Gold
Years ended February 28, | 2012 F | 2011 | 2010 | 2009 | 2008 F |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 51.44 | $ 40.85 | $ 30.67 | $ 46.37 | $ 36.54 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | (.02) | (.18) | (.16) | (.04) | (.02) |
Net realized and unrealized gain (loss) | (2.85) | 15.43 | 11.10 | (15.51) | 15.05 |
Total from investment operations | (2.87) | 15.25 | 10.94 | (15.55) | 15.03 |
Distributions from net investment income | - | - | - | - | (.18) |
Distributions from net realized gain | (2.61) | (4.67) | (.77) | (.17) | (5.03) |
Total distributions | (2.61) | (4.67) | (.77) | (.17) | (5.21) |
Redemption fees added to paid in capital B | - G | .01 | .01 | .02 | .01 |
Net asset value, end of period | $ 45.96 | $ 51.44 | $ 40.85 | $ 30.67 | $ 46.37 |
Total Return A | (6.00)% | 37.35% | 35.52% | (33.59) % | 45.10% |
Ratios to Average Net Assets C,E |
|
|
|
|
|
Expenses before reductions | .89% | .91% | .98% | .89% | .85% |
Expenses net of fee waivers, if any | .89% | .90% | .96% | .87% | .85% |
Expenses net of all reductions | .89% | .89% | .94% | .86% | .81% |
Net investment income (loss) | (.03)% | (.37)% | (.40)% | (.13)% | (.05)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 3,924,439 | $ 4,250,249 | $ 2,839,664 | $ 1,881,600 | $ 2,381,114 |
Portfolio turnover rate D | 22% | 35% | 46% | 42% | 55% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown. B Calculated based on average shares outstanding during the period. C Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. D Amount does not include the portfolio activity of any underlying Fidelity Central Funds. E Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. F For the year ended February 29. G Amount represents less than $.01 per share.
Consolidated Financial Highlights - Institutional Class
Years ended February 28, | 2012 F | 2011 | 2010 | 2009 | 2008 F |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 51.32 | $ 40.77 | $ 30.65 | $ 46.34 | $ 36.54 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | .02 | (.15) | (.15) | (.05) | (.01) |
Net realized and unrealized gain (loss) | (2.85) | 15.41 | 11.08 | (15.49) | 15.03 |
Total from investment operations | (2.83) | 15.26 | 10.93 | (15.54) | 15.02 |
Distributions from net investment income | - | - | - | - | (.19) |
Distributions from net realized gain | (2.62) | (4.72) | (.82) | (.17) | (5.04) |
Total distributions | (2.62) | (4.72) | (.82) | (.17) | (5.23) |
Redemption fees added to paid in capital B | - G | .01 | .01 | .02 | .01 |
Net asset value, end of period | $ 45.87 | $ 51.32 | $ 40.77 | $ 30.65 | $ 46.34 |
Total Return A | (5.94)% | 37.45% | 35.50% | (33.59)% | 45.10% |
Ratios to Average Net Assets C,E |
|
|
|
|
|
Expenses before reductions | .82% | .85% | .95% | .91% | .83% |
Expenses net of fee waivers, if any | .81% | .84% | .93% | .89% | .83% |
Expenses net of all reductions | .81% | .83% | .91% | .86% | .79% |
Net investment income (loss) | .04% | (.31)% | (.37)% | (.14)% | (.03)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 168,548 | $ 137,246 | $ 38,037 | $ 6,070 | $ 3,174 |
Portfolio turnover rate D | 22% | 35% | 46% | 42% | 55% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown. B Calculated based on average shares outstanding during the period. C Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. D Amount does not include the portfolio activity of any underlying Fidelity Central Funds. E Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. F For the year ended February 29. G Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the consolidated financial statements.
Annual Report
Notes to Consolidated Financial Statements
For the period ended February 29, 2012
1. Organization.
Gold Portfolio (the Fund) is a non-diversified fund of Fidelity Select Portfolios (the Trust) and is authorized to issue an unlimited number of shares. The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund invests primarily in securities of companies whose principal business activities fall within specific industries. The Fund offers Class A, Class T, Class C, Gold, and Institutional Class shares, each of which, along with Class B shares, has equal rights as to assets and voting privileges. Effective after the close of business on September 1, 2010, Class B shares were closed to new accounts and additional purchases, except for exchanges and reinvestments. Each class has exclusive voting rights with respect to matters that affect that class. Class B shares will automatically convert to Class A shares after a holding period of seven years from the initial date of purchase. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions may also differ by class.
2. Consolidated Subsidiary
The Fund invests in certain precious metals through Fidelity Select Gold Cayman Ltd., a wholly owned subsidiary (the "Subsidiary"). As of February 29, 2012, the Fund held $43,125,922 in the Subsidiary, representing 1.0% of the Fund's net assets.
The financial statements have been consolidated and include accounts of the Fund and the Subsidiary. Accordingly, all inter-company transactions and balances have been eliminated.
3. Investments in Fidelity Central Funds.
The Fund invests in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Consolidated Schedule of Investments lists each of the Fidelity Central Funds held as of period end, if any, as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC web site or upon request.
4. Significant Accounting Policies.
The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), which require management to make certain estimates and assumptions at the date of the consolidated financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the consolidated financial statements were issued have been evaluated in the preparation of the consolidated financial statements. The following summarizes the significant accounting policies of the Fund:
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Fund uses independent pricing services approved by the Board of Trustees to value its investments. When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include market or security specific events. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The value used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the Fund's own assumptions based on the best information available)
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level, as of February 29, 2012, as well as a roll forward of Level 3 securities, is included at the end of the Fund's Consolidated Schedule of Investments. Valuation techniques used to value the Fund's investments by major category are as follows:
Annual Report
Notes to Consolidated Financial Statements - continued
4. Significant Accounting Policies - continued
Security Valuation - continued
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when significant market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-traded funds (ETFs) and certain indexes as well as quoted prices for similar securities are used and are categorized as Level 2 in the hierarchy in these circumstances. Utilizing these techniques may result in transfers between Level 1 and Level 2. For restricted equity securities and private placements where observable inputs are limited, assumptions about market activity and risk are used and are categorized as Level 3 in the hierarchy.
Investments in commodities are valued at their last traded price at 4:00 p.m. Eastern time each business day and are categorized as Level 1 in the hierarchy. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 in the hierarchy.
New Accounting Pronouncements. In May 2011, the Financial Accounting Standards Board issued Accounting Standard Update No. 2011-04, Fair Value Measurement (Topic 820) - Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. The update is effective during interim and annual periods beginning after December 15, 2011 and will result in additional disclosure for transfers between levels as well as expanded disclosure for securities categorized as Level 3 under the fair value hierarchy.
In December 2011, the Financial Accounting Standards Board issued Accounting Standard Update No. 2011-11, Disclosures about Offsetting Assets and Liabilities. The update creates new disclosure requirements requiring entities to disclose both gross and net information for derivatives and other financial instruments that are either offset in the Consolidated Statement of Assets and Liabilities or subject to an enforceable master netting arrangement or similar agreement. The disclosure requirements are effective for interim and annual reporting periods beginning on or after January 1, 2013. Management is currently evaluating the impact of the update's adoption on the Fund's consolidated financial statement disclosures.
Foreign Currency. The Fund may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for income taxes is required. As of February 29, 2012, the Fund did not have any unrecognized tax benefits in the consolidated financial statements; nor is the Fund aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. The Fund files a U.S. federal tax return, in addition to state and local tax returns as required. A fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax
Annual Report
4. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
returns may be subject to examination for an additional fiscal year depending on the jurisdiction. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
The Subsidiary is classified as a controlled foreign corporation under Subchapter N of the Internal Revenue Code. Therefore, the Fund is required to increase its taxable income by its share of the Subsidiary's income. Net investment losses of the Subsidiary cannot be deducted by the Fund in the current period nor carried forward to offset taxable income in future periods.
Distributions are declared and recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. In addition, the Fund claimed a portion of the payment made to redeeming shareholders as a distribution for income tax purposes.
Capital accounts within the consolidated financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, passive foreign investment companies (PFIC), controlled foreign corporation, deferred trustees compensation and losses deferred due to wash sales and excise tax regulations.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end on an unconsolidated basis were as follows:
Gross unrealized appreciation | $ 978,179,807 |
Gross unrealized depreciation | (267,966,112) |
Net unrealized appreciation (depreciation) on securities and other investments | $ 710,213,695 |
|
|
Tax Cost | $ 4,250,258,676 |
The tax-based components of distributable earnings as of period end were as follows:
Net unrealized appreciation (depreciation) | $ 710,223,035 |
The tax character of distributions paid was as follows:
| February 29, 2012 | February 28, 2011 |
Ordinary Income | $ 158,364,329 | $ 183,285,077 |
Long-term Capital Gains | 80,385,768 | 220,239,690 |
Total | $ 238,750,097 | $ 403,524,767 |
Trading (Redemption) Fees. Shares held by investors in the Fund less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Fund and accounted for as an addition to paid in capital.
5. Operating Policies.
Delayed Delivery Transactions and When-Issued Securities. During the period, the Fund transacted in securities on a delayed delivery or when-issued basis. Payment and delivery may take place after the customary settlement period for that security. The price of the underlying securities and the date when the securities will be delivered and paid for are fixed at the time the transaction is negotiated. 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 Fund may receive compensation for interest forgone in the purchase of a delayed delivery or when-issued security. With respect to purchase commitments, the Fund identifies securities as segregated in its records with a value at least equal to the amount of the commitment. Losses may arise due to changes in the value of the underlying securities or if the counterparty does not perform under the contract's terms, or if the issuer does not issue the securities due to political, economic, or other factors.
Restricted Securities. The Fund may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities is included at the end of the Fund's Consolidated Schedule of Investments.
Annual Report
Notes to Consolidated Financial Statements - continued
6. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $1,031,786,123 and $1,013,560,327, respectively.
7. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the Fund's average net assets and an annualized group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annual management fee rate was .56% of the Fund's average net assets.
FMR and its affiliates also provide investment management related services to the Subsidiary. The Subsidiary pays FMR a monthly management fee at the annual rate of .30% of its net assets. Under the management contract, FMR pays all other expenses of the Subsidiary, except custodian fees.
During the period, FMR waived a portion of its management fee as described in the Expense Reductions note.
Distribution and Service Plan Fees. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of FMR, separate Distribution and Service Fees, each of which is based on an annual percentage of each class' average net assets. In addition, FDC may pay financial intermediaries for selling shares of the Fund and providing shareholder support services. For the period, the Distribution and Service Fee rates, total fees and amounts retained by FDC were as follows:
| Distribution | Service | Total Fees | Retained |
Class A | -% | .25% | $ 392,212 | $ 18,344 |
Class T | .25% | .25% | 220,956 | 449 |
Class B | .75% | .25% | 241,049 | 180,787 |
Class C | .75% | .25% | 719,056 | 161,254 |
|
|
| $ 1,573,273 | $ 360,834 |
Sales Load. FDC may receive a front-end sales charge of up to 5.75% for selling Class A shares and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the Fund. Depending on the holding period, FDC may receive contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. The deferred sales charges range from 5.00% to 1.00% for Class B, 1.00% for Class C, 1.00% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained |
Class A | $ 116,881 |
Class T | 23,072 |
Class B* | 51,658 |
Class C* | 20,316 |
| $ 211,927 |
* When Class B and Class C shares are initially sold, FDC pays commissions from its own resources to financial intermediaries through which the sales are made.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the Fund. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, transfer agent fees for each class were as follows:
| Amount | % of |
Class A | $ 435,931 | .28 |
Class T | 138,519 | .31 |
Class B | 70,547 | .29 |
Class C | 187,586 | .26 |
Gold | 11,373,521 | .28 |
Institutional Class | 317,725 | .20 |
| $ 12,523,829 |
|
Annual Report
7. Fees and Other Transactions with Affiliates - continued
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for each month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $6,078 for the period.
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Fund, along with other registered investment companies having management contracts with FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. The Fund's activity in this program during the period for which loans were outstanding was as follows:
Borrower or Lender | Average Loan Balance | Weighted Average Interest Rate | Interest |
Borrower | $ 9,492,839 | .34% | $ 2,740 |
8. Committed Line of Credit.
The Fund participates with other funds managed by FMR or an affiliate in a $4.0 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $13,449 and is reflected in Miscellaneous expenses on the Consolidated Statement of Operations. During the period, there were no borrowings on this line of credit.
9. Security Lending.
The Fund lends portfolio securities through a lending agent from time to time in order to earn additional income. For equity securities, a lending agent is used and may loan securities to certain qualified borrowers, including Fidelity Capital Markets (FCM), a broker-dealer affiliated with the Fund. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Consolidated Statement of Assets and Liabilities. The value of securities loaned to FCM at period end was $550,125. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Consolidated Statement of Operations as a component of income from Fidelity Central Funds. Total security lending income during the period amounted to $717,855, including $30,644 from securities loaned to FCM.
10. Expense Reductions.
FMR has contractually agreed to waive the Fund's management fee in an amount equal to the management fee of the Subsidiary. During the period, this waiver reduced the Fund's management fee by $103,814. Many of the brokers with whom FMR places trades on behalf of the Fund provided services to the Fund in addition to trade execution. These services included payments of certain expenses on behalf of the Fund totaling $83,909 for the period. In addition, through arrangements with the Fund's custodian, credits realized as a result of uninvested cash balances were used to reduce the Fund's expenses. During the period, these credits reduced the Fund's custody expenses by $1,161.
Annual Report
Notes to Consolidated Financial Statements - continued
11. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
| Year ended | Year ended |
From net realized gain |
|
|
Class A | $ 7,834,928 | $ 11,944,959 |
Class T | 2,382,367 | 3,497,337 |
Class B | 1,303,107 | 2,159,100 |
Class C | 3,798,844 | 5,735,528 |
Gold | 215,607,839 | 369,777,197 |
Institutional Class | 7,823,012 | 10,410,646 |
Total | $ 238,750,097 | $ 403,524,767 |
12. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
| Year ended | Year ended | Year ended | Year ended |
Class A |
|
|
|
|
Shares sold | 1,589,102 | 1,813,814 | $ 76,690,664 | $ 88,297,648 |
Reinvestment of distributions | 145,713 | 211,919 | 7,265,756 | 10,924,421 |
Shares redeemed | (1,293,053) | (1,131,112) | (61,867,749) | (54,494,300) |
Net increase (decrease) | 441,762 | 894,621 | $ 22,088,671 | $ 44,727,769 |
Class T |
|
|
|
|
Shares sold | 326,122 | 503,427 | $ 15,663,258 | $ 24,561,424 |
Reinvestment of distributions | 46,446 | 65,695 | 2,308,310 | 3,372,922 |
Shares redeemed | (374,234) | (315,455) | (17,626,829) | (15,070,272) |
Net increase (decrease) | (1,666) | 253,667 | $ 344,739 | $ 12,864,074 |
Class B |
|
|
|
|
Shares sold | 55,740 | 147,555 | $ 2,638,278 | $ 6,862,473 |
Reinvestment of distributions | 22,881 | 37,199 | 1,122,370 | 1,885,064 |
Shares redeemed | (142,844) | (108,197) | (6,672,300) | (5,152,463) |
Net increase (decrease) | (64,223) | 76,557 | $ (2,911,652) | $ 3,595,074 |
Class C |
|
|
|
|
Shares sold | 510,073 | 736,040 | $ 24,191,165 | $ 34,773,958 |
Reinvestment of distributions | 63,636 | 91,950 | 3,100,723 | 4,652,354 |
Shares redeemed | (484,293) | (345,478) | (22,585,009) | (16,458,498) |
Net increase (decrease) | 89,416 | 482,512 | $ 4,706,879 | $ 22,967,814 |
Gold |
|
|
|
|
Shares sold | 30,555,727 | 38,551,839 | $ 1,483,101,053 | $ 1,893,619,015 |
Reinvestment of distributions | 4,125,294 | 6,874,054 | 208,463,091 | 357,359,018 |
Shares redeemed | (31,912,749) | (32,315,161) | (1,536,990,789) | (1,572,262,287) |
Net increase (decrease) | 2,768,272 | 13,110,732 | $ 154,573,355 | $ 678,715,746 |
Institutional Class |
|
|
|
|
Shares sold | 1,664,357 | 2,014,694 | $ 81,430,250 | $ 99,860,479 |
Reinvestment of distributions | 146,226 | 184,813 | 7,344,695 | 9,641,424 |
Shares redeemed | (810,698) | (457,947) | (38,218,873) | (22,543,878) |
Net increase (decrease) | 999,885 | 1,741,560 | $ 50,556,072 | $ 86,958,025 |
13. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
Annual Report
Fidelity Advisor Materials Fund - Institutional Class
Performance
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 29, 2012 | Past 1 | Past 5 | Past 10 |
Institutional Class A | 0.50% | 8.39% | 13.47% |
A The initial offering of Institutional Class shares took place on December 12, 2006. Returns prior to December 12, 2006 are those of Materials Portfolio, the original class of the fund.
Prior to October 1, 2006, the fund operated under certain different investment policies. The historical performance for the fund may not represent its current investment policies.
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Fidelity Advisor Materials Fund - Institutional Class on February 28, 2002. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index performed over the same period. The initial offering of Institutional Class shares took place on December 12, 2006. See the Average Annual Total Returns table for additional information regarding the performance of Institutional Class.
Annual Report
Fidelity Advisor Materials Fund
Management's Discussion of Fund Performance
Market Recap: U.S. stocks rose for the 12 months ending February 29, 2012, as encouraging economic news sparked a strong late-period rally that lifted major equity benchmarks past a number of significant milestones. Stocks recovered from early-period uncertainty that followed the March 2011 earthquake, tsunami and nuclear meltdown in Japan, but plummeted during the summer amid Europe's debt woes and a historic U.S. credit-rating downgrade. Despite continued volatility and mixed economic news, markets began to recover in early October. Investors gravitated toward defensive sectors and the perceived safety of larger, more-established and dividend-paying names, helping the Dow Jones® Industrial Average advance 8.83%, and close above the psychologically important 13,000 mark in late February - for the first time since May 2008. The rally accelerated late in the period and the market broadened, as investor confidence improved amid encouraging manufacturing, housing and employment data, and signs of progress in Europe. For the year, the S&P 500® Index added 5.12%, closing near a four-year high on the period's second-to-last day. Of the 10 major market sectors in the S&P 500®, three defensive areas led the way - consumer staples, health care and utilities - while financials, materials and energy finished in negative territory. The technology-laden Nasdaq Composite® Index added 7.73%, flirting with the 3,000 mark, its highest level in 12 years. Foreign developed-markets stocks reeled over Europe's turmoil, and the MSCI® EAFE® (Europe, Australasia, Far East) Index fell 7.35%.
Comments from Tobias Welo, Portfolio Manager of Fidelity Advisor® Materials Fund: For the year, the fund's Institutional Class shares returned 0.50%, outpacing the -1.82% return of the MSCI® U.S. IM Materials 25/50 Index but trailing the S&P 500®. Versus the MSCI index, the fund's performance particularly benefited from an overweighting and security selection in specialty chemicals. Another factor that helped was underweighting and eventually eliminating our stake in aluminum companies. An underweighting and solid picks in the steel industry also lifted the fund's result. At the individual stock level, minimizing exposure to weak-performing index component and aluminum producer Alcoa, which I sold in April, was beneficial. Other index components that bolstered relative performance because I underweighted them included Freeport-McMoRan Copper & Gold and Cliffs Natural Resources, a producer of iron ore and metallurgical coal. Additionally, overweighting specialty chemical supplier W.R. Grace was rewarding in view of the stock's gain of almost 50% during the period. Another contributor from the specialty chemical group was Netherlands-based LyondellBasell Industries, the world's largest maker of polypropylene plastic. Conversely, not owning stocks from the strong-performing paper products group curbed the fund's performance, given its gain of more than 16% in the MSCI index, and positioning in diversified chemicals also hurt. Among individual holdings, underweighting agricultural chemicals provider and major benchmark component Monsanto for much of the year hampered the fund, in view of the stock's high single-digit gain. In the second half of the year, I added to the fund's holdings here, increasing our position to an overweighting and making Monsanto the fund's second-largest holding by period end. Despite being a relative detractor, Monsanto was the fund's largest contributor in absolute terms. Avoiding two other strong-performing index components, International Paper and engine-oil additives maker Lubrizol, worked against us as well. Also weighing on performance was an out-of-benchmark stake in Ivanhoe Mines, a Canadian junior mining company that was hurt by lackluster copper demand from China.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Materials Portfolio
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments or redemption proceeds, redemption fees, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (September 1, 2011 to February 29, 2012).
Actual Expenses
The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Annualized Expense Ratio | Beginning | Ending | Expenses Paid |
Class A | 1.13% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,090.50 | $ 5.87 |
HypotheticalA |
| $ 1,000.00 | $ 1,019.24 | $ 5.67 |
Class T | 1.41% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,088.90 | $ 7.32 |
HypotheticalA |
| $ 1,000.00 | $ 1,017.85 | $ 7.07 |
Class B | 1.90% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,086.40 | $ 9.86 |
HypotheticalA |
| $ 1,000.00 | $ 1,015.42 | $ 9.52 |
Class C | 1.89% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,086.50 | $ 9.80 |
HypotheticalA |
| $ 1,000.00 | $ 1,015.47 | $ 9.47 |
Materials | .85% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,092.10 | $ 4.42 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.64 | $ 4.27 |
Institutional Class | .83% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,092.10 | $ 4.32 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.74 | $ 4.17 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
Annual Report
Materials Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 29, 2012 | ||
| % of fund's | % of fund's net assets |
E.I. du Pont de Nemours & Co. | 8.1 | 8.5 |
Monsanto Co. | 6.6 | 3.3 |
Air Products & Chemicals, Inc. | 5.2 | 3.4 |
Dow Chemical Co. | 5.1 | 6.6 |
Newmont Mining Corp. | 4.6 | 6.1 |
The Mosaic Co. | 3.9 | 4.2 |
Ecolab, Inc. | 3.8 | 2.6 |
LyondellBasell Industries NV | 3.5 | 2.8 |
Freeport-McMoRan Copper & Gold, Inc. | 2.7 | 4.1 |
Ball Corp. | 2.6 | 2.6 |
| 46.1 | |
Top Industries (% of fund's net assets) | |||
As of February 29, 2012 | |||
| Chemicals | 65.0% |
|
| Metals & Mining | 20.1% |
|
| Containers & Packaging | 8.0% |
|
| Food Products | 1.0% |
|
| Electrical Equipment | 0.6% |
|
| All Others* | 5.3% |
|
As of August 31, 2011 | |||
| Chemicals | 61.2% |
|
| Metals & Mining | 24.5% |
|
| Containers & Packaging | 6.7% |
|
| Food Products | 1.3% |
|
| Electrical Equipment | 0.7% |
|
| All Others* | 5.6% |
|
* Includes short-term investments and net other assets. |
Annual Report
Materials Portfolio
Investments February 29, 2012
Showing Percentage of Net Assets
Common Stocks - 95.0% | |||
Shares | Value | ||
CHEMICALS - 65.0% | |||
Commodity Chemicals - 2.0% | |||
Arkema SA | 136,801 | $ 12,534,900 | |
Georgia Gulf Corp. (a) | 78,518 | 2,532,991 | |
Westlake Chemical Corp. (d) | 215,670 | 12,989,804 | |
| 28,057,695 | ||
Diversified Chemicals - 20.5% | |||
Akzo Nobel NV | 125,082 | 7,094,453 | |
BASF AG | 131,323 | 11,529,106 | |
Cabot Corp. | 175,964 | 7,128,302 | |
Dow Chemical Co. | 2,181,179 | 73,091,308 | |
E.I. du Pont de Nemours & Co. | 2,281,017 | 115,989,715 | |
Eastman Chemical Co. | 582,700 | 31,541,551 | |
Lanxess AG | 96,293 | 7,196,594 | |
Olin Corp. | 390,600 | 8,214,318 | |
PPG Industries, Inc. | 356,576 | 32,537,560 | |
| 294,322,907 | ||
Fertilizers & Agricultural Chemicals - 14.2% | |||
CF Industries Holdings, Inc. | 184,424 | 34,302,864 | |
Israel Chemicals Ltd. | 659,400 | 6,990,414 | |
Monsanto Co. | 1,226,996 | 94,944,950 | |
Rentech Nitrogen Partners LP | 473,455 | 11,713,277 | |
The Mosaic Co. | 964,895 | 55,722,686 | |
| 203,674,191 | ||
Industrial Gases - 5.2% | |||
Air Products & Chemicals, Inc. | 829,276 | 74,833,866 | |
Specialty Chemicals - 23.1% | |||
Albemarle Corp. | 304,323 | 20,243,566 | |
Ashland, Inc. | 373,983 | 23,770,359 | |
Celanese Corp. Class A | 496,966 | 23,640,673 | |
Cytec Industries, Inc. | 170,146 | 10,116,881 | |
Ecolab, Inc. | 917,474 | 55,048,440 | |
H.B. Fuller Co. | 225,759 | 6,802,119 | |
Innophos Holdings, Inc. | 235,013 | 11,839,955 | |
Kraton Performance Polymers, Inc. (a) | 358,939 | 9,974,915 | |
LyondellBasell Industries NV Class A | 1,164,006 | 50,261,779 | |
OMNOVA Solutions, Inc. (a) | 833,132 | 4,248,973 | |
Rockwood Holdings, Inc. (a) | 350,432 | 18,660,504 | |
Sherwin-Williams Co. | 327,147 | 33,745,213 | |
Sigma Aldrich Corp. | 365,082 | 26,209,237 | |
W.R. Grace & Co. (a) | 633,696 | 36,095,324 | |
| 330,657,938 | ||
TOTAL CHEMICALS | 931,546,597 | ||
COMMERCIAL SERVICES & SUPPLIES - 0.3% | |||
Environmental & Facility Services - 0.3% | |||
Swisher Hygiene, Inc. | 262,171 | 773,404 | |
| |||
Shares | Value | ||
Swisher Hygiene, Inc. (Canada) (a)(d) | 1,197,867 | $ 3,533,711 | |
| 4,307,115 | ||
CONTAINERS & PACKAGING - 8.0% | |||
Metal & Glass Containers - 4.6% | |||
Aptargroup, Inc. | 395,300 | 20,863,934 | |
Ball Corp. | 935,292 | 37,486,503 | |
Silgan Holdings, Inc. | 190,100 | 8,083,052 | |
| 66,433,489 | ||
Paper Packaging - 3.4% | |||
Rock-Tenn Co. Class A | 510,625 | 35,993,956 | |
Sealed Air Corp. | 636,608 | 12,496,615 | |
| 48,490,571 | ||
TOTAL CONTAINERS & PACKAGING | 114,924,060 | ||
ELECTRICAL EQUIPMENT - 0.6% | |||
Electrical Components & Equipment - 0.6% | |||
GrafTech International Ltd. (a) | 707,387 | 8,990,889 | |
FOOD PRODUCTS - 1.0% | |||
Agricultural Products - 1.0% | |||
Archer Daniels Midland Co. | 477,228 | 14,889,514 | |
METALS & MINING - 20.1% | |||
Diversified Metals & Mining - 7.5% | |||
Copper Mountain Mining Corp. (a) | 1,760,700 | 9,091,272 | |
First Quantum Minerals Ltd. | 1,145,100 | 26,196,195 | |
Freeport-McMoRan Copper & Gold, Inc. | 916,848 | 39,021,051 | |
Horsehead Holding Corp. (a) | 225,200 | 2,567,280 | |
HudBay Minerals, Inc. | 357,700 | 4,311,990 | |
Ivanhoe Mines Ltd. (a) | 1,201,100 | 20,838,566 | |
Walter Energy, Inc. | 89,208 | 5,783,355 | |
| 107,809,709 | ||
Gold - 6.1% | |||
Goldcorp, Inc. | 297,400 | 14,415,478 | |
Newcrest Mining Ltd. | 184,109 | 6,611,599 | |
Newmont Mining Corp. | 1,106,386 | 65,719,328 | |
| 86,746,405 | ||
Precious Metals & Minerals - 0.3% | |||
African Minerals Ltd. (a) | 529,923 | 4,843,044 | |
Steel - 6.2% | |||
ArcelorMittal SA Class A unit | 334,684 | 7,061,832 | |
Carpenter Technology Corp. | 296,655 | 15,218,402 | |
Fortescue Metals Group Ltd. | 1,267,931 | 7,572,985 | |
Haynes International, Inc. | 189,684 | 12,005,100 | |
Common Stocks - continued | |||
Shares | Value | ||
METALS & MINING - CONTINUED | |||
Steel - continued | |||
Nucor Corp. | 788,165 | $ 34,308,822 | |
Reliance Steel & Aluminum Co. | 228,082 | 12,252,565 | |
| 88,419,706 | ||
TOTAL METALS & MINING | 287,818,864 | ||
TOTAL COMMON STOCKS (Cost $1,130,562,901) |
| ||
Convertible Bonds - 0.6% | ||||
| Principal Amount |
| ||
BUILDING PRODUCTS - 0.6% | ||||
Building Products - 0.6% | ||||
Aspen Aerogels, Inc. 8% 6/1/14 (f) | $ 7,861,200 |
| ||
U.S. Treasury Obligations - 0.2% | ||||
| ||||
U.S. Treasury Bills, yield at date of purchase 0.01% to 0.08% 3/1/12 to 5/24/12 (e) | 2,850,000 |
| ||
Money Market Funds - 4.9% | |||
Shares |
| ||
Fidelity Cash Central Fund, 0.12% (b) | 61,106,071 | 61,106,071 | |
Fidelity Securities Lending Cash Central Fund, 0.12% (b)(c) | 9,733,681 | 9,733,681 | |
TOTAL MONEY MARKET FUNDS (Cost $70,839,752) |
| ||
TOTAL INVESTMENT PORTFOLIO - 100.7% (Cost $1,212,113,671) | 1,444,027,813 | |
NET OTHER ASSETS (LIABILITIES) - (0.7)% | (9,702,050) | |
NET ASSETS - 100% | $ 1,434,325,763 | |
Futures Contracts | |||||
Expiration Date | Underlying Face Amount at Value | Unrealized Appreciation/(Depreciation) | |||
Purchased | |||||
Equity Index Contracts | |||||
350 CME E-mini S&P Select Sector Materials Index Contracts | March 2012 | $ 13,629,000 | 1,161,335 | ||
|
The face value of futures purchased as a percentage of net assets is 1% |
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
(e) Security or a portion of the security was pledged to cover margin requirements for futures contracts. At the period end, the value of securities pledged amounted to $1,900,000. |
(f) Restricted securities - Investment in securities not registered under the Securities Act of 1933 (excluding 144A issues). At the end of the period, the value of restricted securities (excluding 144A issues) amounted to $7,861,200 or 0.6% of net assets. |
Additional information on each restricted holding is as follows: |
Security | Acquisition Date | Acquisition Cost |
Aspen Aerogels, Inc. 8% 6/1/14 | 6/1/11 | $ 7,861,200 |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 48,237 |
Fidelity Securities Lending Cash Central Fund | 444,343 |
Total | $ 492,580 |
Other Information |
The following is a summary of the inputs used, as of February 29, 2012, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the tables below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities: | ||||
Common Stocks | $ 1,362,477,039 | $ 1,362,477,039 | $ - | $ - |
Convertible Bonds | 7,861,200 | - | - | 7,861,200 |
U.S. Treasury Obligations | 2,849,822 | - | 2,849,822 | - |
Money Market Funds | 70,839,752 | 70,839,752 | - | - |
Total Investments in Securities: | $ 1,444,027,813 | $ 1,433,316,791 | $ 2,849,822 | $ 7,861,200 |
Derivative Instruments: | ||||
Assets | ||||
Futures Contracts | $ 1,161,335 | $ 1,161,335 | $ - | $ - |
The following is a reconciliation of Investments in Securities and Derivative Instruments for which Level 3 inputs were used in determining value: |
Investments in Securities: | |
Beginning Balance | $ - |
Total Realized Gain (Loss) | - |
Total Unrealized Gain (Loss) | - |
Cost of Purchases | 7,861,200 |
Proceeds of Sales | - |
Amortization/Accretion | - |
Transfers in to Level 3 | - |
Transfers out of Level 3 | - |
Ending Balance | $ 7,861,200 |
The change in unrealized gain (loss) for the period attributable to Level 3 securities held at February 29, 2012 | $ - |
The information used in the above reconciliation represents fiscal year to date activity for any Investments in Securities and Derivative Instruments identified as using Level 3 inputs at either the beginning or the end of the current fiscal period. Transfers in or out of Level 3 represent the beginning value of any Security or Instrument where a change in the pricing level occurred from the beginning to the end of the period. The cost of purchases and the proceeds of sales may include securities received or delivered through corporate actions or exchanges. Realized and unrealized gains (losses) disclosed in the reconciliation are included in Net Gain (Loss) on the Fund's Statement of Operations. |
Value of Derivative Instruments |
The following table is a summary of the Fund's value of derivative instruments by risk exposure as of February 29, 2012. For additional information on derivative instruments, please refer to the Derivative Instruments section in the accompanying Notes to Financial Statements. |
Risk Exposure / | Value | |
| Asset | Liability |
Equity Risk | ||
Futures Contracts (a) | $ 1,161,335 | $ - |
Total Value of Derivatives | $ 1,161,335 | $ - |
(a) Reflects cumulative appreciation/(depreciation) on futures contracts as disclosed on the Schedule of Investments. Only the period end variation margin is separately disclosed on the Statement of Assets and Liabilities. |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 86.3% |
Canada | 5.2% |
Netherlands | 4.0% |
Germany | 1.3% |
Australia | 1.0% |
Others (Individually Less Than 1%) | 2.2% |
| 100.0% |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Materials Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2012 | |
Assets | ||
Investment in securities, at value (including securities loaned of $9,256,655) - See accompanying schedule: Unaffiliated issuers (cost $1,141,273,919) | $ 1,373,188,061 |
|
Fidelity Central Funds (cost $70,839,752) | 70,839,752 |
|
Total Investments (cost $1,212,113,671) |
| $ 1,444,027,813 |
Receivable for investments sold | 8,155,733 | |
Receivable for fund shares sold | 5,455,175 | |
Dividends receivable | 1,944,276 | |
Interest receivable | 469,925 | |
Distributions receivable from Fidelity Central Funds | 10,695 | |
Prepaid expenses | 3,388 | |
Other receivables | 8,326 | |
Total assets | 1,460,075,331 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 11,605,280 | |
Payable for fund shares redeemed | 3,052,464 | |
Accrued management fee | 661,897 | |
Distribution and service plan fees payable | 102,186 | |
Payable for daily variation margin on futures contracts | 245,000 | |
Other affiliated payables | 306,770 | |
Other payables and accrued expenses | 42,290 | |
Collateral on securities loaned, at value | 9,733,681 | |
Total liabilities | 25,749,568 | |
|
|
|
Net Assets | $ 1,434,325,763 | |
Net Assets consist of: |
| |
Paid in capital | $ 1,204,629,224 | |
Undistributed net investment income | 797,816 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (4,176,754) | |
Net unrealized appreciation (depreciation) on investments | 233,075,477 | |
Net Assets | $ 1,434,325,763 | |
Statement of Assets and Liabilities - continued
| February 29, 2012 | |
Calculation of Maximum Offering Price Class A: | $ 69.23 | |
|
|
|
Maximum offering price per share (100/94.25 of $69.23) | $ 73.45 | |
Class T: | $ 68.91 | |
|
|
|
Maximum offering price per share (100/96.50 of $68.91) | $ 71.41 | |
Class B: | $ 68.13 | |
|
|
|
Class C: | $ 67.98 | |
|
|
|
Materials: | $ 69.41 | |
|
|
|
Institutional Class: | $ 69.35 | |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Materials Portfolio
Financial Statements - continued
Statement of Operations
| Year ended February 29, 2012 | |
Investment Income |
|
|
Dividends |
| $ 23,048,131 |
Interest |
| 470,114 |
Income from Fidelity Central Funds |
| 492,580 |
Total income |
| 24,010,825 |
|
|
|
Expenses | ||
Management fee | $ 7,696,020 | |
Transfer agent fees | 3,346,774 | |
Distribution and service plan fees | 1,147,958 | |
Accounting and security lending fees | 446,822 | |
Custodian fees and expenses | 50,223 | |
Independent trustees' compensation | 8,074 | |
Registration fees | 161,444 | |
Audit | 50,671 | |
Legal | 6,429 | |
Interest | 103 | |
Miscellaneous | 11,907 | |
Total expenses before reductions | 12,926,425 | |
Expense reductions | (83,853) | 12,842,572 |
Net investment income (loss) | 11,168,253 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 34,413,700 | |
Foreign currency transactions | (254,748) | |
Futures contracts | 721,846 | |
Total net realized gain (loss) |
| 34,880,798 |
Change in net unrealized appreciation (depreciation) on: Investment securities | (67,003,496) | |
Assets and liabilities in foreign currencies | 278 | |
Futures contracts | 1,161,335 | |
Total change in net unrealized appreciation (depreciation) |
| (65,841,883) |
Net gain (loss) | (30,961,085) | |
Net increase (decrease) in net assets resulting from operations | $ (19,792,832) | |
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 11,168,253 | $ 18,226,863 |
Net realized gain (loss) | 34,880,798 | 5,250,878 |
Change in net unrealized appreciation (depreciation) | (65,841,883) | 249,900,447 |
Net increase (decrease) in net assets resulting | (19,792,832) | 273,378,188 |
Distributions to shareholders from net investment income | (9,840,737) | (18,392,042) |
Distributions to shareholders from net realized gain | (7,461,289) | (379,797) |
Total distributions | (17,302,026) | (18,771,839) |
Share transactions - net increase (decrease) | (18,941,790) | 520,343,234 |
Redemption fees | 99,276 | 97,765 |
Total increase (decrease) in net assets | (55,937,372) | 775,047,348 |
|
|
|
Net Assets | ||
Beginning of period | 1,490,263,135 | 715,215,787 |
End of period (including undistributed net investment income of $797,816 and distributions in excess of net investment income of $22,442, respectively) | $ 1,434,325,763 | $ 1,490,263,135 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
Years ended February 28, | 2012 J | 2011 | 2010 | 2009 | 2008 J |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 69.96 | $ 52.54 | $ 27.65 | $ 57.00 | $ 51.01 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .40 | 1.08 F | .30 G | .22 | .46 |
Net realized and unrealized gain (loss) | (.35) | 17.40 | 24.90 | (29.46) | 8.05 |
Total from investment operations | .05 | 18.48 | 25.20 | (29.24) | 8.51 |
Distributions from net investment income | (.40) | (1.06) | (.32) | (.12) | (.32) |
Distributions from net realized gain | (.38) | (.01) | - | - | (2.21) |
Total distributions | (.78) | (1.07) | (.32) | (.12) | (2.53) L |
Redemption fees added to paid in capital C | - K | .01 | .01 | .01 | .01 |
Net asset value, end of period | $ 69.23 | $ 69.96 | $ 52.54 | $ 27.65 | $ 57.00 |
Total Return A,B | .21% | 35.33% | 91.25% | (51.30)% | 16.79% |
Ratios to Average Net Assets D,H |
|
|
|
|
|
Expenses before reductions | 1.13% | 1.16% | 1.23% | 1.21% | 1.21% |
Expenses net of fee waivers, if any | 1.13% | 1.16% | 1.23% | 1.21% | 1.21% |
Expenses net of all reductions | 1.13% | 1.15% | 1.22% | 1.20% | 1.21% |
Net investment income (loss) | .61% | 1.81% F | .65% G | .47% | .83% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 157,781 | $ 124,160 | $ 52,352 | $ 10,796 | $ 12,522 |
Portfolio turnover rate E | 94% | 87% | 104% I | 117% | 77% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown. B Total returns do not include the effect of the sales charges. C Calculated based on average shares outstanding during the period. D Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Investment income per share reflects a large, non-recurring dividend which amounted to $.83 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been ..41%. G Investment income per share reflects a large, non-recurring dividend which amounted to $.10 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .43%. H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. I The portfolio turnover rate does not include the assets acquired in the merger. J For the year ended February 29. K Amount represents less than $.01 per share. L Total distributions of $2.53 per share is comprised of distributions from net investment income of $.322 and distributions from net realized gain of $2.210 per share.
Financial Highlights - Class T
Years ended February 28, | 2012 J | 2011 | 2010 | 2009 | 2008 J |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 69.68 | $ 52.35 | $ 27.56 | $ 56.80 | $ 50.89 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .21 | .90 F | .16 G | .10 | .32 |
Net realized and unrealized gain (loss) | (.35) | 17.34 | 24.81 | (29.32) | 8.00 |
Total from investment operations | (.14) | 18.24 | 24.97 | (29.22) | 8.32 |
Distributions from net investment income | (.25) | (.92) | (.19) | (.03) | (.21) |
Distributions from net realized gain | (.38) | - | - | - | (2.21) |
Total distributions | (.63) | (.92) | (.19) | (.03) | (2.42) L |
Redemption fees added to paid in capital C | - K | .01 | .01 | .01 | .01 |
Net asset value, end of period | $ 68.91 | $ 69.68 | $ 52.35 | $ 27.56 | $ 56.80 |
Total Return A,B | (.09)% | 34.98% | 90.70% | (51.43)% | 16.45% |
Ratios to Average Net Assets D,H |
|
|
|
|
|
Expenses before reductions | 1.42% | 1.44% | 1.52% | 1.46% | 1.46% |
Expenses net of fee waivers, if any | 1.42% | 1.44% | 1.52% | 1.46% | 1.46% |
Expenses net of all reductions | 1.41% | 1.43% | 1.51% | 1.46% | 1.46% |
Net investment income (loss) | .33% | 1.54% F | .35% G | .22% | .57% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 28,290 | $ 25,570 | $ 14,712 | $ 4,944 | $ 6,850 |
Portfolio turnover rate E | 94% | 87% | 104% I | 117% | 77% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown. B Total returns do not include the effect of the sales charges. C Calculated based on average shares outstanding during the period. D Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Investment income per share reflects a large, non-recurring dividend which amounted to $.83 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been ..14%. G Investment income per share reflects a large, non-recurring dividend which amounted to $.10 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .14%. H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. I The portfolio turnover rate does not include the assets acquired in the merger. J For the year ended February 29. K Amount represents less than $.01 per share. L Total distributions of $2.42 per share is comprised of distributions from net investment income of $.207 and distributions from net realized gain of $2.210 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class B
Years ended February 28, | 2012 J | 2011 | 2010 | 2009 | 2008 J |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 68.95 | $ 51.86 | $ 27.35 | $ 56.59 | $ 50.81 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.11) | .60 F | (.07) G | (.12) | .04 |
Net realized and unrealized gain (loss) | (.33) | 17.13 | 24.61 | (29.13) | 7.98 |
Total from investment operations | (.44) | 17.73 | 24.54 | (29.25) | 8.02 |
Distributions from net investment income | - | (.65) | (.04) | - | (.04) |
Distributions from net realized gain | (.38) | - | - | - | (2.21) |
Total distributions | (.38) | (.65) | (.04) | - | (2.25) L |
Redemption fees added to paid in capital C | - K | .01 | .01 | .01 | .01 |
Net asset value, end of period | $ 68.13 | $ 68.95 | $ 51.86 | $ 27.35 | $ 56.59 |
Total Return A,B | (.57)% | 34.29% | 89.79% | (51.67)% | 15.89% |
Ratios to Average Net Assets D,H |
|
|
|
|
|
Expenses before reductions | 1.91% | 1.93% | 2.02% | 1.95% | 1.97% |
Expenses net of fee waivers, if any | 1.91% | 1.93% | 2.02% | 1.95% | 1.97% |
Expenses net of all reductions | 1.91% | 1.92% | 2.01% | 1.95% | 1.96% |
Net investment income (loss) | (.17)% | 1.04% F | (.15)% G | (.27)% | .07% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 11,040 | $ 13,507 | $ 9,538 | $ 2,601 | $ 4,173 |
Portfolio turnover rate E | 94% | 87% | 104% I | 117% | 77% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown. B Total returns do not include the effect of the contingent deferred sales charge. C Calculated based on average shares outstanding during the period. D Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Investment income per share reflects a large, non-recurring dividend which amounted to $.83 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been (.35) %. G Investment income per share reflects a large, non-recurring dividend which amounted to $.10 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been (.36) %. H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. I The portfolio turnover rate does not include the assets acquired in the merger. J For the year ended February 29. K Amount represents less than $.01 per share. L Total distributions of $2.25 per share is comprised of distributions from net investment income of $.043 and distributions from net realized gain of $2.210 per share.
Financial Highlights - Class C
Years ended February 28, | 2012 J | 2011 | 2010 | 2009 | 2008 J |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 68.78 | $ 51.79 | $ 27.31 | $ 56.50 | $ 50.81 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.10) | .61 F | (.06) G | (.13) | .04 |
Net realized and unrealized gain (loss) | (.32) | 17.09 | 24.57 | (29.07) | 7.97 |
Total from investment operations | (.42) | 17.70 | 24.51 | (29.20) | 8.01 |
Distributions from net investment income | - | (.72) | (.04) | - | (.12) |
Distributions from net realized gain | (.38) | - | - | - | (2.21) |
Total distributions | (.38) | (.72) | (.04) | - | (2.33) L |
Redemption fees added to paid in capital C | - K | .01 | .01 | .01 | .01 |
Net asset value, end of period | $ 67.98 | $ 68.78 | $ 51.79 | $ 27.31 | $ 56.50 |
Total Return A,B | (.55)% | 34.29% | 89.82% | (51.66)% | 15.87% |
Ratios to Average Net Assets D,H |
|
|
|
|
|
Expenses before reductions | 1.89% | 1.93% | 2.01% | 1.95% | 1.96% |
Expenses net of fee waivers, if any | 1.89% | 1.93% | 2.01% | 1.95% | 1.96% |
Expenses net of all reductions | 1.89% | 1.92% | 2.00% | 1.95% | 1.96% |
Net investment income (loss) | (.15)% | 1.04% F | (.13)% G | (.27)% | .07% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 58,296 | $ 46,525 | $ 20,469 | $ 5,509 | $ 8,743 |
Portfolio turnover rate E | 94% | 87% | 104% I | 117% | 77% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown. B Total returns do not include the effect of the contingent deferred sales charge. C Calculated based on average shares outstanding during the period. D Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Investment income per share reflects a large, non-recurring dividend which amounted to $.83 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been (.35) %. G Investment income per share reflects a large, non-recurring dividend which amounted to $.10 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been (.35) %. H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. I The portfolio turnover rate does not include the assets acquired in the merger. J For the year ended February 29. K Amount represents less than $.01 per share. L Total distributions of $2.33 per share is comprised of distributions from net investment income of $.124 and distributions from net realized gain of $2.210 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Materials
Years ended February 28, | 2012 I | 2011 | 2010 | 2009 | 2008 I |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 70.11 | $ 52.61 | $ 27.66 | $ 57.01 | $ 50.92 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | .60 | 1.25 E | .43 F | .38 | .64 |
Net realized and unrealized gain (loss) | (.37) | 17.43 | 24.91 | (29.54) | 8.01 |
Total from investment operations | .23 | 18.68 | 25.34 | (29.16) | 8.65 |
Distributions from net investment income | (.55) | (1.16) | (.40) | (.20) | (.36) |
Distributions from net realized gain | (.38) | (.03) | - | - | (2.21) |
Total distributions | (.93) | (1.19) | (.40) | (.20) | (2.57) K |
Redemption fees added to paid in capital B | - J | .01 | .01 | .01 | .01 |
Net asset value, end of period | $ 69.41 | $ 70.11 | $ 52.61 | $ 27.66 | $ 57.01 |
Total Return A | .49% | 35.70% | 91.77% | (51.15)% | 17.10% |
Ratios to Average Net Assets C,G |
|
|
|
|
|
Expenses before reductions | .85% | .88% | .96% | .90% | .91% |
Expenses net of fee waivers, if any | .85% | .88% | .96% | .90% | .90% |
Expenses net of all reductions | .84% | .87% | .94% | .90% | .89% |
Net investment income (loss) | .90% | 2.10% E | .92% F | .78% | 1.14% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 1,089,619 | $ 1,195,371 | $ 604,475 | $ 127,551 | $ 353,185 |
Portfolio turnover rate D | 94% | 87% | 104% H | 117% | 77% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown. B Calculated based on average shares outstanding during the period. C Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. D Amount does not include the portfolio activity of any underlying Fidelity Central Funds. E Investment income per share reflects a large, non-recurring dividend which amounted to $.83 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .70%. F nvestment income per share reflects a large, non-recurring dividend which amounted to $.10 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .70%. G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. H The portfolio turnover rate does not include the assets acquired in the merger. I For the year ended February 29. J Amount represents less than $.01 per share. K Total distributions of $2.57 per share is comprised of distributions from net investment income of $.363 and distributions from net realized gain of $2.210 per share.
Financial Highlights - Institutional Class
Years ended February 28, | 2012 I | 2011 | 2010 | 2009 | 2008 I |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 70.05 | $ 52.58 | $ 27.66 | $ 57.00 | $ 50.91 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | .60 | 1.28 E | .46 F | .38 | .64 |
Net realized and unrealized gain (loss) | (.36) | 17.40 | 24.89 | (29.53) | 8.00 |
Total from investment operations | .24 | 18.68 | 25.35 | (29.15) | 8.64 |
Distributions from net investment income | (.56) | (1.19) | (.44) | (.20) | (.36) |
Distributions from net realized gain | (.38) | (.03) | - | - | (2.21) |
Total distributions | (.94) | (1.22) | (.44) | (.20) | (2.56) K |
Redemption fees added to paid in capital B | - J | .01 | .01 | .01 | .01 |
Net asset value, end of period | $ 69.35 | $ 70.05 | $ 52.58 | $ 27.66 | $ 57.00 |
Total Return A | .50% | 35.73% | 91.79% | (51.15)% | 17.08% |
Ratios to Average Net Assets C,G |
|
|
|
|
|
Expenses before reductions | .84% | .86% | .94% | .90% | .89% |
Expenses net of fee waivers, if any | .84% | .86% | .94% | .90% | .89% |
Expenses net of all reductions | .83% | .85% | .93% | .90% | .89% |
Net investment income (loss) | .91% | 2.11% E | .94% F | .78% | 1.14% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 89,299 | $ 85,130 | $ 13,670 | $ 719 | $ 1,820 |
Portfolio turnover rate D | 94% | 87% | 104% H | 117% | 77% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown. B Calculated based on average shares outstanding during the period. C Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. D Amount does not include the portfolio activity of any underlying Fidelity Central Funds. E Investment income per share reflects a large, non-recurring dividend which amounted to $.83 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .72%. F Investment income per share reflects a large, non-recurring dividend which amounted to $.10 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .72%. G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. H The portfolio turnover rate does not include the assets acquired in the merger. I For the year ended February 29. J Amount represents less than $.01 per share. K Total distributions of $2.56 per share is comprised of distributions from net investment income of $.355 and distributions from net realized gain of $2.210 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended February 29, 2012
1. Organization.
Materials Portfolio (the Fund) is a non-diversified fund of Fidelity Select Portfolios (the Trust) and is authorized to issue an unlimited number of shares. The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund invests primarily in securities of companies whose principal business activities fall within specific industries. The Fund offers Class A, Class T, Class C, Materials and Institutional Class shares, each of which, along with Class B shares, has equal rights as to assets and voting privileges. Effective after the close of business on September 1, 2010, Class B shares were closed to new accounts and additional purchases, except for exchanges and reinvestments. Each class has exclusive voting rights with respect to matters that affect that class. Class B shares will automatically convert to Class A shares after a holding period of seven years from the initial date of purchase. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions may also differ by class.
2. Investments in Fidelity Central Funds.
The Fund invests in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds held as of period end, if any, as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Fund:
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Fund uses independent pricing services approved by the Board of Trustees to value its investments. When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include market or security specific events. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The value used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the Fund's own assumptions based on the best information available)
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level, as of February 29, 2012, as well as a roll forward of Level 3 securities, is included at the end of the Fund's Schedule of Investments. Valuation techniques used to value the Fund's investments by major category are as follows:
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when significant market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-traded funds (ETFs) and certain indexes as well as quoted prices for similar securities are used and are categorized as Level 2 in the hierarchy in these circumstances. Utilizing these techniques may result in transfers between Level 1 and Level 2. For restricted equity securities and private placements where observable inputs are limited, assumptions about market activity and risk are used and are categorized as Level 3 in the hierarchy.
Annual Report
3. Significant Accounting Policies - continued
Security Valuation - continued
Debt securities, including restricted securities, are valued based on evaluated prices received from independent pricing services or from dealers who make markets in such securities. For corporate bonds and U.S. government and government agency obligations, pricing services utilize matrix pricing which considers yield or price of bonds of comparable quality, coupon, maturity and type as well as dealer supplied prices and are generally categorized as Level 2 in the hierarchy. When independent prices are unavailable or unreliable, debt securities may be valued utilizing pricing matrices which consider similar factors that would be used by independent pricing services. These are generally categorized as Level 2 in the hierarchy but may be Level 3 depending on the circumstances.
Futures contracts are valued at the settlement price established each day by the board of trade or exchange on which they are traded and are categorized as Level 1 in the hierarchy. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 in the hierarchy.
New Accounting Pronouncements. In May 2011, the Financial Accounting Standards Board issued Accounting Standard Update No. 2011-04, Fair Value Measurement (Topic 820) - Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. The update is effective during interim and annual periods beginning after December 15, 2011 and will result in additional disclosure for transfers between levels as well as expanded disclosure for securities categorized as Level 3 under the fair value hierarchy.
In December 2011, the Financial Accounting Standards Board issued Accounting Standard Update No. 2011-11, Disclosures about Offsetting Assets and Liabilities. The update creates new disclosure requirements requiring entities to disclose both gross and net information for derivatives and other financial instruments that are either offset in the Statement of Assets and Liabilities or subject to an enforceable master netting arrangement or similar agreement. The disclosure requirements are effective for interim and annual reporting periods beginning on or after January 1, 2013. Management is currently evaluating the impact of the update's adoption on the Fund's financial statement disclosures.
Foreign Currency. The Fund may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for income taxes is required. As of February 29, 2012, the Fund did not have any unrecognized tax benefits in the financial statements; nor is the Fund aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. The Fund files a U.S. federal tax return, in addition to state and local tax returns as required. A fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
Distributions are declared and recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. In addition, the Fund claimed a portion of the payment made to redeeming shareholders as a distribution for income tax purposes.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, partnerships, passive foreign investment companies (PFIC), deferred trustees compensation, futures transactions, capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation | $ 256,439,881 |
Gross unrealized depreciation | (31,121,651) |
Net unrealized appreciation (depreciation) on securities and other investments | $ 225,318,230 |
|
|
Tax cost | $ 1,218,709,583 |
The tax-based components of distributable earnings as of period end were as follows:
Undistributed ordinary income | $ 797,818 |
Undistributed long-term capital gain | $ 7,329,133 |
Net unrealized appreciation (depreciation) | $ 225,318,230 |
The tax character of distributions paid was as follows:
| February 29, 2012 | February 28, 2011 |
Ordinary Income | $ 9,840,737 | $ 18,771,839 |
Long-term Capital Gains | 7,461,289 | - |
Total | $ 17,302,026 | $ 18,771,839 |
Capital loss carryforwards are only available to offset future capital gains of the Fund to the extent provided by regulations and may be limited. Under the Regulated Investment Company Modernization Act of 2010 (the Act), the Fund is permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period and such capital losses are required to be used prior to any losses that expire. At February 29, 2012 capital loss carryforwards were as follows:
Fiscal year of expiration |
|
2016 | $ (5,392,414) |
2017 | (6,058,499) |
2018 | (1,022,988) |
2019 | (80,787) |
Total with expiration | $ (12,554,688) |
Included in the $12,554,688 of the Fund's capital loss carryforwards are $12,554,688 of capital loss carryforwards that were acquired from Paper and Forest Products Portfolio when it merged into the fund on June 19, 2009 of which $5,392,414, $6,058,499, $1,022,988 and $80,787 will expire in fiscal 2016, 2017, 2018 and 2019, respectively. Under the Internal Revenue Code, the losses acquired from Paper and Forest Products Portfolio that will be available to offset future capital gains of the Fund will be limited. As a result, at least $8,806,047 of the losses acquired from Paper and Forest Products Portfolio will expire unused.
Trading (Redemption) Fees. Shares held by investors in the Fund less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Fund and accounted for as an addition to paid in capital.
4. Operating Policies.
Restricted Securities. The Fund may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities is included at the end of the Fund's Schedule of Investments.
Annual Report
5. Derivative Instruments.
Risk Exposures and the Use of Derivative Instruments. The Fund used derivative instruments (derivatives), including futures contracts in order to meet its investment objectives. The strategy is to use derivatives to increase returns and to manage exposure to certain risks as defined below. The success of any strategy involving derivatives depends on analysis of numerous economic factors, and if the strategies for investment do not work as intended, the Fund may not achieve its objectives.
The Fund's use of derivatives increased or decreased its exposure to the following risk:
Equity Risk | Equity risk relates to the fluctuations in the value of financial instruments as a result of changes in market prices (other than those arising from interest rate risk or foreign exchange risk), whether caused by factors specific to an individual investment, its issuer, or all factors affecting all instruments traded in a market or market segment. |
The Fund is also exposed to additional risks from investing in derivatives, such as liquidity risk and counterparty credit risk. Liquidity risk is the risk that the Fund will be unable to close out the derivative in the open market in a timely manner. Counterparty credit risk is the risk that the counterparty will not be able to fulfill its obligation to the Fund. Counterparty credit risk related to exchange-traded futures contracts is minimal because of the protection provided by the exchange on which they trade. Derivatives involve, to varying degrees, risk of loss in excess of the amounts recognized in the Statement of Assets and Liabilities.
Futures Contracts. A futures contract is an agreement between two parties to buy or sell a specified underlying instrument for a fixed price at a specified future date. The Fund used futures contracts to manage its exposure to the stock market.
Upon entering into a futures contract, a fund is required to deposit either cash or securities (initial margin) with a clearing broker in an amount equal to a certain percentage of the face value of the contract. Futures contracts are marked-to-market daily and subsequent payments are made or received by a fund depending on the daily fluctuations in the value of the futures contracts and are recorded as unrealized appreciation or (depreciation). This receivable and/or payable is included in daily variation margin on futures contracts in the Statement of Assets and Liabilities. Realized gain or (loss) is recorded upon the expiration or closing of a futures contract.
The underlying face amount at value of open futures contracts at period end, if any, is shown in the Schedule of Investments under the caption "Futures Contracts." This amount reflects each contract's exposure to the underlying instrument at period end and is representative of activity for the period.
During the period the Fund recognized net realized gain (loss) of $721,846 and a change in net unrealized appreciation (depreciation) of $1,161,335 related to its investment in futures contracts. These amounts are included in the Statement of Operations.
6. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $1,278,026,047 and $1,301,355,608, respectively.
7. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the Fund's average net assets and an annualized group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annual management fee rate was .56% of the Fund's average net assets.
Distribution and Service Plan Fees. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of FMR, separate Distribution and Service Fees, each of which is based on an annual percentage of each class' average net assets. In addition, FDC may pay financial intermediaries for selling shares of the Fund and providing shareholder support services. For the period, the Distribution and Service Fee rates, total fees and amounts retained by FDC were as follows:
| Distribution | Service | Total Fees | Retained |
Class A | -% | .25% | $ 358,959 | $ 20,435 |
Class T | .25% | .25% | 131,852 | 263 |
Class B | .75% | .25% | 120,464 | 90,349 |
Class C | .75% | .25% | 536,683 | 264,612 |
|
|
| $ 1,147,958 | $ 375,659 |
Annual Report
Notes to Financial Statements - continued
7. Fees and Other Transactions with Affiliates - continued
Sales Load. FDC may receive a front-end sales charge of up to 5.75% for selling Class A shares and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the Fund. Depending on the holding period, FDC may receive contingent deferred sales charges levied on Class A, Class T, Class B and Class C redemptions. The deferred sales charges range from 5.00% to 1.00% for Class B, 1.00% for Class C, 1.00% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained |
Class A | $ 172,504 |
Class T | 15,873 |
Class B* | 19,656 |
Class C* | 21,433 |
| $ 229,466 |
* When Class B and Class C shares are initially sold, FDC pays commissions from its own resources to financial intermediaries through which the sales are made.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the Fund. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, transfer agent fees for each class were as follows:
| Amount | % of |
Class A | $ 388,700 | .27 |
Class T | 81,194 | .31 |
Class B | 36,351 | .30 |
Class C | 150,536 | .28 |
Materials | 2,513,812 | .24 |
Institutional Class | 176,181 | .23 |
| $ 3,346,774 |
|
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for each month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $15,641 for the period.
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Fund, along with other registered investment companies having management contracts with FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. The Fund's activity in this program during the period for which loans were outstanding was as follows:
Borrower or Lender | Average Loan Balance | Weighted Average Interest Rate | Interest |
Borrower | $ 5,119,500 | .36% | $ 103 |
8. Committed Line of Credit.
The Fund participates with other funds managed by FMR or an affiliate in a $4.0 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $4,040 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, there were no borrowings on this line of credit.
Annual Report
9. Security Lending.
The Fund lends portfolio securities through a lending agent from time to time in order to earn additional income. For equity securities, a lending agent is used and may loan securities to certain qualified borrowers, including Fidelity Capital Markets (FCM), a broker-dealer affiliated with the Fund. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. At period end, there were no security loans outstanding with FCM. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Total security lending income during the period amounted to $444,343. During the period, there were no securities loaned to FCM.
10. Expense Reductions.
Many of the brokers with whom FMR places trades on behalf of the Fund provided services to the Fund in addition to trade execution. These services included payments of certain expenses on behalf of the Fund totaling $82,394 for the period. In addition, through arrangements with the Fund's custodian and each class' transfer agent, credits realized as a result of uninvested cash balances were used to reduce the Fund's expenses. During the period, these credits reduced the Fund's custody expenses by $1,459.
11. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
| Year Ended | Year Ended |
From net investment income |
|
|
Class A | $ 868,107 | $ 1,422,379 |
Class T | 100,314 | 289,521 |
Class B | - | 122,322 |
Class C | - | 341,974 |
Materials | 8,266,851 | 15,509,343 |
Institutional Class | 605,465 | 706,503 |
Total | $ 9,840,737 | $ 18,392,042 |
From net realized gain |
|
|
Class A | $ 816,536 | $ 10,674 |
Class T | 151,869 | - |
Class B | 66,321 | - |
Class C | 312,224 | - |
Materials | 5,701,275 | 358,147 |
Institutional Class | 413,064 | 10,976 |
Total | $ 7,461,289 | $ 379,797 |
Annual Report
Notes to Financial Statements - continued
12. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
| Year Ended | Year Ended | Year Ended | Year Ended |
Class A |
|
|
|
|
Shares sold | 1,406,389 | 1,281,666 | $ 95,285,956 | $ 79,405,808 |
Reinvestment of distributions | 23,605 | 18,751 | 1,462,799 | 1,225,248 |
Shares redeemed | (925,476) | (522,145) | (60,145,567) | (29,567,388) |
Net increase (decrease) | 504,518 | 778,272 | $ 36,603,188 | $ 51,063,668 |
Class T |
|
|
|
|
Shares sold | 150,265 | 162,727 | $ 10,197,019 | $ 9,996,553 |
Reinvestment of distributions | 3,964 | 4,298 | 244,682 | 280,166 |
Shares redeemed | (110,682) | (81,055) | (7,174,563) | (4,620,393) |
Net increase (decrease) | 43,547 | 85,970 | $ 3,267,138 | $ 5,656,326 |
Class B |
|
|
|
|
Shares sold | 35,651 | 78,978 | $ 2,318,398 | $ 4,548,346 |
Reinvestment of distributions | 909 | 1,536 | 55,554 | 99,242 |
Shares redeemed | (70,403) | (68,559) | (4,524,937) | (3,840,777) |
Net increase (decrease) | (33,843) | 11,955 | $ (2,150,985) | $ 806,811 |
Class C |
|
|
|
|
Shares sold | 456,374 | 420,386 | $ 30,369,453 | $ 26,286,596 |
Reinvestment of distributions | 4,184 | 4,421 | 254,995 | 284,977 |
Shares redeemed | (279,339) | (143,652) | (17,740,501) | (7,964,201) |
Net increase (decrease) | 181,219 | 281,155 | $ 12,883,947 | $ 18,607,372 |
Materials |
|
|
|
|
Shares sold | 6,950,456 | 11,993,105 | $ 471,314,225 | $ 750,476,205 |
Reinvestment of distributions | 214,200 | 229,147 | 13,299,700 | 14,963,249 |
Shares redeemed | (8,516,169) | (6,662,930) | (562,008,908) | (384,640,831) |
Net increase (decrease) | (1,351,513) | 5,559,322 | $ (77,394,983) | $ 380,798,623 |
Institutional Class |
|
|
|
|
Shares sold | 1,444,894 | 1,219,205 | $ 97,144,756 | $ 77,607,131 |
Reinvestment of distributions | 13,291 | 8,764 | 824,595 | 572,066 |
Shares redeemed | (1,385,770) | (272,695) | (90,119,446) | (14,768,763) |
Net increase (decrease) | 72,415 | 955,274 | $ 7,849,905 | $ 63,410,434 |
13. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
Annual Report
Fidelity Advisor Telecommunications Fund - Institutional Class
Performance
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 29, 2012 | Past 1 | Past 5 | Past 10 |
Institutional Class A | -0.26% | -0.36% | 5.43% |
A The initial offering of Institutional Class shares took place on December 12, 2006. Returns prior to December 12, 2006 are those of Telecommunications Portfolio, the original class of the fund.
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Fidelity Advisor Telecommunications Fund - Institutional Class on February 28, 2002. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index performed over the same period. The initial offering of Institutional Class shares took place on December 12, 2006. See the Average Annual Total Returns table for additional information regarding the performance of Institutional Class.
Annual Report
Fidelity Advisor Telecommunications Fund
Management's Discussion of Fund Performance
Market Recap: U.S. stocks rose for the 12 months ending February 29, 2012, as encouraging economic news sparked a strong late-period rally that lifted major equity benchmarks past a number of significant milestones. Stocks recovered from early-period uncertainty that followed the March 2011 earthquake, tsunami and nuclear meltdown in Japan, but plummeted during the summer amid Europe's debt woes and a historic U.S. credit-rating downgrade. Despite continued volatility and mixed economic news, markets began to recover in early October. Investors gravitated toward defensive sectors and the perceived safety of larger, more-established and dividend-paying names, helping the Dow Jones® Industrial Average advance 8.83%, and close above the psychologically important 13,000 mark in late February - for the first time since May 2008. The rally accelerated late in the period and the market broadened, as investor confidence improved amid encouraging manufacturing, housing and employment data, and signs of progress in Europe. For the year, the S&P 500® Index added 5.12%, closing near a four-year high on the period's second-to-last day. Of the 10 major market sectors in the S&P 500®, three defensive areas led the way - consumer staples, health care and utilities - while financials, materials and energy finished in negative territory. The technology-laden Nasdaq Composite® Index added 7.73%, flirting with the 3,000 mark, its highest level in 12 years. Foreign developed-markets stocks reeled over Europe's turmoil, and the MSCI® EAFE® (Europe, Australasia, Far East) Index fell 7.35%.
Comments from Kristina Salen, Portfolio Manager of Fidelity Advisor® Telecommunications Fund: For the one-year period ending February 29, 2012, the fund's Institutional Class shares returned -0.26%, trailing the 0.12% result of the MSCI® U.S. IM Telecommunications Services 25/50 Index and the broad-based S&P 500®. Versus the MSCI index, the fund was hurt the most by large underweightings in telecom giants Verizon Communications and AT&T, which together comprised about 46% of the sector benchmark, on average. Generally speaking, when the market experiences volatility such as we saw in the middle third of the period, large integrated telecom stocks tend to outperform, bolstered by their more-defensive characteristics. Elsewhere, general concern about the broader Chinese stock market, alleged fraud at Chinese information technology services company Longtop Financial Technologies and rising wage costs hurt many stocks in that country, including AsiaInfo-Linkage, an out-of-benchmark holding I ultimately sold from the fund. The firm provides telecom software solutions and tech products and services. Cable provider NII Holdings faced a number of challenges in the third quarter, along with adverse currency exposure to emerging markets. Despite the drop, I remained optimistic about the stock and continued to hold it at period end. An overweighted position in Cbeyond, an integrated telecom services provider, hampered relative results. I owned the stock because I thought the company likely would be a takeout target, which didn't pan out during the period. A modest cash position also curbed relative results. On the flip side, avoiding Alaska Communications Systems Group, a regional integrated telecom firm in the index, was the biggest relative contributor, as the company missed earnings estimates for much of the year. Additionally, stocks of companies with exposure to the state are often influenced by oil prices, which were volatile during the period. Instead of holding a position in Alaska Communications, the fund owned shares of its primary competitor, General Communications, which I bought in July because of its exposure to the faster-growing cable industry. Favorable positioning in prepaid wireless provider Leap Wireless International helped given the stock's volatility. The company's services predominately appeal to more-price-sensitive consumers, and its stock is often among the first to be affected by macroeconomic concerns. A scant stake in Frontier Communications was another good call. Shares of the integrated telecom firm declined steadily, as the company struggled to integrate an acquisition and missed earnings and revenue estimates during the period.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Telecommunications Portfolio
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments or redemption proceeds, redemption fees, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (September 1, 2011 to February 29, 2012).
Actual Expenses
The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Annualized Expense Ratio | Beginning | Ending | Expenses Paid |
Class A | 1.19% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,019.90 | $ 5.98 |
HypotheticalA |
| $ 1,000.00 | $ 1,018.95 | $ 5.97 |
Class T | 1.49% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,018.60 | $ 7.48 |
HypotheticalA |
| $ 1,000.00 | $ 1,017.45 | $ 7.47 |
Class B | 1.94% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,016.10 | $ 9.72 |
HypotheticalA |
| $ 1,000.00 | $ 1,015.22 | $ 9.72 |
Class C | 1.93% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,016.20 | $ 9.68 |
HypotheticalA |
| $ 1,000.00 | $ 1,015.27 | $ 9.67 |
Telecommunications | .90% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,021.70 | $ 4.52 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.39 | $ 4.52 |
Institutional Class | .94% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,021.00 | $ 4.72 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.19 | $ 4.72 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
Annual Report
Telecommunications Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 29, 2012 | ||
| % of fund's | % of fund's net assets |
AT&T, Inc. | 20.4 | 17.9 |
Verizon Communications, Inc. | 13.4 | 6.7 |
CenturyLink, Inc. | 9.0 | 8.8 |
Crown Castle International Corp. | 6.7 | 6.0 |
SBA Communications Corp. Class A | 4.9 | 3.5 |
tw telecom, inc. | 4.4 | 3.7 |
AboveNet, Inc. | 3.0 | 2.2 |
Level 3 Communications, Inc. | 2.9 | 0.0 |
Sprint Nextel Corp. | 2.8 | 5.2 |
MetroPCS Communications, Inc. | 2.7 | 1.9 |
| 70.2 | |
Top Industries (% of fund's net assets) | |||
As of February 29, 2012 | |||
| Diversified Telecommunication Services | 64.9% |
|
| Wireless Telecommunication Services | 28.6% |
|
 | Media | 2.1% |
|
| Software | 0.0%** |
|
 | Communications Equipment | 0.0% |
|
| All Others* | 4.4% |
|
As of August 31, 2011 | |||
| Diversified Telecommunication Services | 58.3% |
|
| Wireless Telecommunication Services | 31.8% |
|
| Media | 2.1% |
|
| Software | 1.6% |
|
| Construction & Engineering | 1.0% |
|
| All Others* | 5.2% |
|
* Includes short-term investments and net other assets. |
**Amount represents less than 0.1%. |
Annual Report
Telecommunications Portfolio
Investments February 29, 2012
Showing Percentage of Net Assets
Common Stocks - 95.6% | |||
Shares | Value | ||
COMMUNICATIONS EQUIPMENT - 0.0% | |||
Communications Equipment - 0.0% | |||
Nortel Networks Corp. (a) | 8,071 | $ 0 | |
DIVERSIFIED TELECOMMUNICATION SERVICES - 64.9% | |||
Alternative Carriers - 12.8% | |||
AboveNet, Inc. (a) | 153,200 | 10,656,592 | |
Cogent Communications Group, Inc. (a) | 291,602 | 5,371,309 | |
Level 3 Communications, Inc. (a) | 421,391 | 10,244,015 | |
tw telecom, inc. (a) | 728,757 | 15,741,151 | |
Vonage Holdings Corp. (a) | 1,419,000 | 3,391,410 | |
| 45,404,477 | ||
Integrated Telecommunication Services - 52.1% | |||
AT&T, Inc. | 2,359,919 | 72,189,921 | |
Cbeyond, Inc. (a) | 354,898 | 2,725,617 | |
CenturyLink, Inc. | 794,984 | 31,998,106 | |
China Telecom Corp. Ltd. sponsored ADR | 36,300 | 2,205,225 | |
China Unicom Ltd. sponsored ADR | 144,200 | 2,573,970 | |
Frontier Communications Corp. (d) | 744,900 | 3,419,091 | |
General Communications, Inc. Class A (a) | 896,300 | 9,491,817 | |
Telefonica Brasil SA sponsored ADR | 134,463 | 3,957,246 | |
Telenor ASA sponsored ADR | 71,600 | 3,957,332 | |
Verizon Communications, Inc. | 1,250,141 | 47,642,874 | |
Windstream Corp. | 382,682 | 4,622,799 | |
| 184,783,998 | ||
TOTAL DIVERSIFIED TELECOMMUNICATION SERVICES | 230,188,475 | ||
MEDIA - 2.1% | |||
Cable & Satellite - 2.1% | |||
Cablevision Systems Corp. - NY Group Class A | 121,000 | 1,721,830 | |
Time Warner Cable, Inc. | 27,600 | 2,189,784 | |
Virgin Media, Inc. | 150,700 | 3,797,640 | |
| 7,709,254 | ||
SOFTWARE - 0.0% | |||
Application Software - 0.0% | |||
Synchronoss Technologies, Inc. (a) | 3 | 100 | |
WIRELESS TELECOMMUNICATION SERVICES - 28.6% | |||
Wireless Telecommunication Services - 28.6% | |||
Clearwire Corp. Class A (a) | 3,658,136 | 8,413,713 | |
| |||
Shares | Value | ||
Crown Castle International Corp. (a) | 461,683 | $ 23,919,796 | |
Leap Wireless International, Inc. (a)(d) | 590,700 | 6,166,908 | |
MetroPCS Communications, Inc. (a) | 926,606 | 9,544,042 | |
Mobile TeleSystems OJSC sponsored ADR | 50,200 | 916,150 | |
NII Holdings, Inc. (a) | 324,800 | 5,807,424 | |
NTELOS Holdings Corp. | 155,106 | 3,606,215 | |
PT Tower Bersama Infrastructure Tbk | 7,824,500 | 2,255,404 | |
SBA Communications Corp. Class A (a) | 367,182 | 17,231,851 | |
Sprint Nextel Corp. (a) | 4,030,650 | 9,955,706 | |
TIM Participacoes SA sponsored ADR | 95,700 | 2,875,785 | |
Turkcell Iletisim Hizmet A/S (a) | 222,000 | 1,215,047 | |
VimpelCom Ltd. sponsored ADR | 349,500 | 4,253,415 | |
Vodafone Group PLC sponsored ADR | 196,100 | 5,312,349 | |
| 101,473,805 | ||
TOTAL COMMON STOCKS (Cost $355,860,852) |
| ||
Money Market Funds - 6.3% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.12% (b) | 12,700,251 | 12,700,251 | |
Fidelity Securities Lending Cash Central Fund, 0.12% (b)(c) | 9,541,675 | 9,541,675 | |
TOTAL MONEY MARKET FUNDS (Cost $22,241,926) |
| ||
TOTAL INVESTMENT PORTFOLIO - 101.9% (Cost $378,102,778) | 361,613,560 | ||
NET OTHER ASSETS (LIABILITIES) - (1.9)% | (6,841,457) | ||
NET ASSETS - 100% | $ 354,772,103 | ||
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 9,375 |
Fidelity Securities Lending Cash Central Fund | 221,785 |
Total | $ 231,160 |
Other Information |
The following is a summary of the inputs used, as of February 29, 2012, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the tables below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities: | ||||
Common Stocks | $ 339,371,634 | $ 338,156,587 | $ 1,215,047 | $ - |
Money Market Funds | 22,241,926 | 22,241,926 | - | - |
Total Investments in Securities: | $ 361,613,560 | $ 360,398,513 | $ 1,215,047 | $ - |
The following is a reconciliation of Investments in Securities for which Level 3 inputs were used in determining value: |
Investments in Securities: | |
Beginning Balance | $ - |
Total Realized Gain (Loss) | (580,722) |
Total Unrealized Gain (Loss) | 580,722 |
Cost of Purchases | - |
Proceeds of Sales | - |
Amortization/Accretion | - |
Transfers in to Level 3 | - |
Transfers out of Level 3 | - |
Ending Balance | $ - |
The change in unrealized gain (loss) for the period attributable to Level 3 securities held at February 29, 2012 | $ - |
The information used in the above reconciliation represents fiscal year to date activity for any Investments in Securities identified as using Level 3 inputs at either the beginning or the end of the current fiscal period. Transfers in or out of Level 3 represent the beginning value of any Security or Instrument where a change in the pricing level occurred from the beginning to the end of the period. The cost of purchases and the proceeds of sales may include securities received or delivered through corporate actions or exchanges. Realized and unrealized gains (losses) disclosed in the reconciliation are included in Net Gain (Loss) on the Fund's Statement of Operations. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Telecommunications Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2012 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $9,238,200) - See accompanying schedule: Unaffiliated issuers (cost $355,860,852) | $ 339,371,634 |
|
Fidelity Central Funds (cost $22,241,926) | 22,241,926 |
|
Total Investments (cost $378,102,778) |
| $ 361,613,560 |
Foreign currency held at value (cost $168,698) | 168,851 | |
Receivable for investments sold | 2,612,162 | |
Receivable for fund shares sold | 2,785,690 | |
Dividends receivable | 48,565 | |
Distributions receivable from Fidelity Central Funds | 3,673 | |
Prepaid expenses | 798 | |
Other receivables | 16,210 | |
Total assets | 367,249,509 | |
|
|
|
Liabilities | ||
Payable for fund shares redeemed | $ 2,651,512 | |
Accrued management fee | 159,954 | |
Distribution and service plan fees payable | 5,460 | |
Other affiliated payables | 82,497 | |
Other payables and accrued expenses | 36,308 | |
Collateral on securities loaned, at value | 9,541,675 | |
Total liabilities | 12,477,406 | |
|
|
|
Net Assets | $ 354,772,103 | |
Net Assets consist of: |
| |
Paid in capital | $ 428,594,875 | |
Undistributed net investment income | 730,417 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (58,062,554) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (16,490,635) | |
Net Assets | $ 354,772,103 | |
Statement of Assets and Liabilities - continued
| February 29, 2012 | |
|
|
|
Calculation of Maximum Offering Price Class A: | $ 46.12 | |
|
|
|
Maximum offering price per share (100/94.25 of $46.12) | $ 48.93 | |
Class T: | $ 46.01 | |
|
|
|
Maximum offering price per share (100/96.50 of $46.01) | $ 47.68 | |
Class B: | $ 46.14 | |
|
|
|
Class C: | $ 46.02 | |
|
|
|
|
|
|
Telecommunications: | $ 46.26 | |
|
|
|
Institutional Class: | $ 46.20 | |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Telecommunications Portfolio
Financial Statements - continued
Statement of Operations
| Year ended February 29, 2012 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 8,635,002 |
Interest |
| 58 |
Income from Fidelity Central Funds |
| 231,160 |
Total income |
| 8,866,220 |
|
|
|
Expenses | ||
Management fee | $ 2,062,779 | |
Transfer agent fees | 925,458 | |
Distribution and service plan fees | 65,575 | |
Accounting and security lending fees | 148,637 | |
Custodian fees and expenses | 21,421 | |
Independent trustees' compensation | 2,216 | |
Registration fees | 89,139 | |
Audit | 63,168 | |
Legal | 5,454 | |
Interest | 700 | |
Miscellaneous | 3,988 | |
Total expenses before reductions | 3,388,535 | |
Expense reductions | (63,865) | 3,324,670 |
Net investment income (loss) | 5,541,550 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 24,806,335 | |
Foreign currency transactions | (80,492) | |
Total net realized gain (loss) |
| 24,725,843 |
Change in net unrealized appreciation (depreciation) on: Investment securities | (35,725,628) | |
Assets and liabilities in foreign currencies | 383 | |
Total change in net unrealized appreciation (depreciation) |
| (35,725,245) |
Net gain (loss) | (10,999,402) | |
Net increase (decrease) in net assets resulting from operations | $ (5,457,852) | |
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 5,541,550 | $ 5,690,743 |
Net realized gain (loss) | 24,725,843 | 23,994,180 |
Change in net unrealized appreciation (depreciation) | (35,725,245) | 56,972,793 |
Net increase (decrease) in net assets resulting from operations | (5,457,852) | 86,657,716 |
Distributions to shareholders from net investment income | (4,955,219) | (7,366,695) |
Share transactions - net increase (decrease) | (2,457,615) | (685,685) |
Redemption fees | 35,055 | 11,018 |
Total increase (decrease) in net assets | (12,835,631) | 78,616,354 |
|
|
|
Net Assets | ||
Beginning of period | 367,607,734 | 288,991,380 |
End of period (including undistributed net investment income of $730,417 and undistributed net investment income of $260,753, respectively) | $ 354,772,103 | $ 367,607,734 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
Years ended February 28, | 2012 G | 2011 | 2010 | 2009 | 2008 G |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 46.93 | $ 37.64 | $ 26.66 | $ 42.56 | $ 50.89 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .56 | .57 | .67 | .22 | .26 |
Net realized and unrealized gain (loss) | (.86) | 9.49 | 10.55 | (15.60) | (8.08) |
Total from investment operations | (.30) | 10.06 | 11.22 | (15.38) | (7.82) |
Distributions from net investment income | (.51) | (.77) | (.19) | (.35) K | (.51) |
Distributions from net realized gain | - | - | (.05) | (.18) K | - |
Total distributions | (.51) | (.77) | (.24) I | (.52) J | (.51) |
Redemption fees added to paid in capital C,H | - | - | - | - | - |
Net asset value, end of period | $ 46.12 | $ 46.93 | $ 37.64 | $ 26.66 | $ 42.56 |
Total Return A,B | (.54)% | 26.87% | 42.07% | (36.16)% | (15.55)% |
Ratios to Average Net Assets D,F |
|
|
|
|
|
Expenses before reductions | 1.20% | 1.20% | 1.26% | 1.21% | 1.20% |
Expenses net of fee waivers, if any | 1.20% | 1.20% | 1.26% | 1.21% | 1.20% |
Expenses net of all reductions | 1.18% | 1.18% | 1.24% | 1.21% | 1.19% |
Net investment income (loss) | 1.21% | 1.35% | 1.89% | .61% | .49% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 4,677 | $ 4,305 | $ 3,343 | $ 2,112 | $ 2,791 |
Portfolio turnover rate E | 72% | 72% | 90% | 168% | 134% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown. B Total returns do not include the effect of the sales charges. C Calculated based on average shares outstanding during the period. D Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. G For the year ended February 29. H Amount represents less than $.01 per share. I Total distributions of $.24 per share is comprised of distributions from net investment income of $.187 and distributions from net realized gain of $.048 per share. J Total distributions of $.52 per share is comprised of distributions from net investment income of $.347 and distributions from net realized gain of $.175 per share. K The amount shown reflects certain reclassifications related to book to tax differences. |
Financial Highlights - Class T
Years ended February 28, | 2012 G | 2011 | 2010 | 2009 | 2008 G |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 46.81 | $ 37.55 | $ 26.68 | $ 42.49 | $ 50.86 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .42 | .45 | .57 | .12 | .12 |
Net realized and unrealized gain (loss) | (.84) | 9.47 | 10.54 | (15.56) | (8.07) |
Total from investment operations | (.42) | 9.92 | 11.11 | (15.44) | (7.95) |
Distributions from net investment income | (.38) | (.66) | (.22) | (.24) K | (.42) |
Distributions from net realized gain | - | - | (.03) | (.13) K | - |
Total distributions | (.38) | (.66) | (.24) I | (.37) J | (.42) |
Redemption fees added to paid in capital C,H | - | - | - | - | - |
Net asset value, end of period | $ 46.01 | $ 46.81 | $ 37.55 | $ 26.68 | $ 42.49 |
Total Return A,B | (.82)% | 26.54% | 41.64% | (36.34)% | (15.78)% |
Ratios to Average Net Assets D,F |
|
|
|
|
|
Expenses before reductions | 1.49% | 1.48% | 1.55% | 1.49% | 1.46% |
Expenses net of fee waivers, if any | 1.49% | 1.48% | 1.55% | 1.49% | 1.46% |
Expenses net of all reductions | 1.47% | 1.46% | 1.53% | 1.48% | 1.45% |
Net investment income (loss) | .92% | 1.06% | 1.60% | .33% | .23% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 2,702 | $ 2,882 | $ 2,051 | $ 620 | $ 1,270 |
Portfolio turnover rate E | 72% | 72% | 90% | 168% | 134% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown. B Total returns do not include the effect of the sales charges. C Calculated based on average shares outstanding during the period. D Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. G For the year ended February 29. H Amount represents less than $.01 per share. I Total distributions of $.24 per share is comprised of distributions from net investment income of $.216 and distributions from net realized gain of $.028 per share. J Total distributions of $.37 per share is comprised of distributions from net investment income of $.244 and distributions from net realized gain of $.127 per share. K The amount shown reflects certain reclassifications related to book to tax differences. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class B
Years ended February 28, | 2012 G | 2011 | 2010 | 2009 | 2008 G |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 46.93 | $ 37.60 | $ 26.71 | $ 42.42 | $ 50.80 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .21 | .25 | .40 | (.05) | (.14) |
Net realized and unrealized gain (loss) | (.83) | 9.48 | 10.54 | (15.49) | (8.04) |
Total from investment operations | (.62) | 9.73 | 10.94 | (15.54) | (8.18) |
Distributions from net investment income | (.17) | (.40) | (.04) | (.11) K | (.20) |
Distributions from net realized gain | - | - | (.01) | (.06) K | - |
Total distributions | (.17) | (.40) | (.05) I | (.17) J | (.20) |
Redemption fees added to paid in capital C,H | - | - | - | - | - |
Net asset value, end of period | $ 46.14 | $ 46.93 | $ 37.60 | $ 26.71 | $ 42.42 |
Total Return A,B | (1.29)% | 25.96% | 40.97% | (36.64)% | (16.18)% |
Ratios to Average Net Assets D,F |
|
|
|
|
|
Expenses before reductions | 1.95% | 1.95% | 2.01% | 1.97% | 1.95% |
Expenses net of fee waivers, if any | 1.95% | 1.95% | 2.01% | 1.97% | 1.95% |
Expenses net of all reductions | 1.93% | 1.93% | 2.00% | 1.96% | 1.94% |
Net investment income (loss) | .47% | .60% | 1.13% | (.15)% | (.26)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 596 | $ 706 | $ 641 | $ 363 | $ 741 |
Portfolio turnover rate E | 72% | 72% | 90% | 168% | 134% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown. B Total returns do not include the effect of the contingent deferred sales charge. C Calculated based on average shares outstanding during the period. D Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. G For the year ended February 29. H Amount represents less than $.01 per share. I Total distributions of $.05 per share is comprised of distributions from net investment income of $.044 and distributions from net realized gain of $.009 per share. J Total distributions of $.17 per share is comprised of distributions from net investment income of $.105 and distributions from net realized gain of $.063 per share. K The amount shown reflects certain reclassifications related to book to tax differences. |
Financial Highlights - Class C
Years ended February 28, | 2012 G | 2011 | 2010 | 2009 | 2008 G |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 46.89 | $ 37.61 | $ 26.76 | $ 42.42 | $ 50.81 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .22 | .26 | .41 | (.05) | (.14) |
Net realized and unrealized gain (loss) | (.84) | 9.46 | 10.56 | (15.50) | (8.03) |
Total from investment operations | (.62) | 9.72 | 10.97 | (15.55) | (8.17) |
Distributions from net investment income | (.25) | (.44) | (.10) | (.07) K | (.22) |
Distributions from net realized gain | - | - | (.02) | (.05) K | - |
Total distributions | (.25) | (.44) | (.12) I | (.11) J | (.22) |
Redemption fees added to paid in capital C,H | - | - | - | - | - |
Net asset value, end of period | $ 46.02 | $ 46.89 | $ 37.61 | $ 26.76 | $ 42.42 |
Total Return A,B | (1.27)% | 25.95% | 41.00% | (36.64)% | (16.17)% |
Ratios to Average Net Assets D,F |
|
|
|
|
|
Expenses before reductions | 1.93% | 1.94% | 2.01% | 1.97% | 1.95% |
Expenses net of fee waivers, if any | 1.93% | 1.94% | 2.01% | 1.97% | 1.95% |
Expenses net of all reductions | 1.91% | 1.92% | 2.00% | 1.96% | 1.94% |
Net investment income (loss) | .48% | .61% | 1.13% | (.14)% | (.26)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 3,514 | $ 3,035 | $ 2,151 | $ 371 | $ 902 |
Portfolio turnover rate E | 72% | 72% | 90% | 168% | 134% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown. B Total returns do not include the effect of the contingent deferred sales charge. C Calculated based on average shares outstanding during the period. D Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. G For the year ended February 29. H Amount represents less than $.01 per share. I Total distributions of $.12 per share is comprised of distributions from net investment income of $.098 and distributions from net realized gain of $.023 per share. J Total distributions of $.11 per share is comprised of distributions from net investment income of $.068 and distributions from net realized gain of $.046 per share. K The amount shown reflects certain reclassifications related to book to tax differences. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Telecommunications
Years ended February 28, | 2012 F | 2011 | 2010 | 2009 | 2008 F |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 47.07 | $ 37.73 | $ 26.74 | $ 42.70 | $ 50.91 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | .70 | .69 | .76 | .30 | .43 |
Net realized and unrealized gain (loss) | (.86) | 9.52 | 10.59 | (15.65) | (8.12) |
Total from investment operations | (.16) | 10.21 | 11.35 | (15.35) | (7.69) |
Distributions from net investment income | (.65) | (.87) | (.31) | (.41) J | (.52) |
Distributions from net realized gain | - | - | (.05) | (.20) J | - |
Total distributions | (.65) | (.87) | (.36) H | (.61) I | (.52) |
Redemption fees added to paid in capital B,G | - | - | - | - | - |
Net asset value, end of period | $ 46.26 | $ 47.07 | $ 37.73 | $ 26.74 | $ 42.70 |
Total Return A | (.23)% | 27.24% | 42.43% | (36.00)% | (15.30)% |
Ratios to Average Net Assets C,E |
|
|
|
|
|
Expenses before reductions | .90% | .92% | .99% | .97% | .91% |
Expenses net of fee waivers, if any | .90% | .92% | .99% | .97% | .90% |
Expenses net of all reductions | .88% | .91% | .98% | .96% | .90% |
Net investment income (loss) | 1.52% | 1.62% | 2.15% | .85% | .79% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 342,262 | $ 354,938 | $ 279,704 | $ 196,231 | $ 334,565 |
Portfolio turnover rate D | 72% | 72% | 90% | 168% | 134% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown. B Calculated based on average shares outstanding during the period. C Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. D Amount does not include the portfolio activity of any underlying Fidelity Central Funds. E Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. F For the year ended February 29. G Amount represents less than $.01 per share. H Total distributions of $.36 per share is comprised of distributions from net investment income of $.310 and distributions from net realized gain of $.048 per share. I Total distributions of $.61 per share is comprised of distributions from net investment income of $.408 and distributions from net realized gain of $.202 per share. J The amount shown reflects certain reclassifications related to book to tax differences. |
Financial Highlights - Institutional Class
Years ended February 28, | 2012 F | 2011 | 2010 | 2009 | 2008 F |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 47.02 | $ 37.69 | $ 26.73 | $ 42.65 | $ 50.91 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | .70 | .71 | .84 | .34 | .45 |
Net realized and unrealized gain (loss) | (.88) | 9.50 | 10.55 | (15.67) | (8.09) |
Total from investment operations | (.18) | 10.21 | 11.39 | (15.33) | (7.64) |
Distributions from net investment income | (.64) | (.88) | (.38) | (.40) J | (.62) |
Distributions from net realized gain | - | - | (.05) | (.20) J | - |
Total distributions | (.64) | (.88) | (.43) H | (.59) I | (.62) |
Redemption fees added to paid in capital B,G | - | - | - | - | - |
Net asset value, end of period | $ 46.20 | $ 47.02 | $ 37.69 | $ 26.73 | $ 42.65 |
Total Return A | (.26)% | 27.27% | 42.59% | (35.99)% | (15.23)% |
Ratios to Average Net Assets C,E |
|
|
|
|
|
Expenses before reductions | .89% | .91% | .86% | .91% | .83% |
Expenses net of fee waivers, if any | .89% | .91% | .86% | .91% | .83% |
Expenses net of all reductions | .87% | .89% | .84% | .90% | .83% |
Net investment income (loss) | 1.52% | 1.64% | 2.29% | .91% | .86% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 1,022 | $ 1,743 | $ 1,101 | $ 68 | $ 256 |
Portfolio turnover rate D | 72% | 72% | 90% | 168% | 134% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown. B Calculated based on average shares outstanding during the period. C Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. D Amount does not include the portfolio activity of any underlying Fidelity Central Funds. E Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. F For the year ended February 29. G Amount represents less than $.01 per share. H Total distributions of $.43 per share is comprised of distributions from net investment income of $.379 and distributions from net realized gain of $.057 per share. I Total distributions of $.59 per share is comprised of distributions from net investment income of $.395 and distributions from net realized gain of $.197 per share. J The amount shown reflects certain reclassifications related to book to tax differences. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended February 29, 2012 (Unaudited)
1. Organization.
Telecommunications Portfolio (the Fund) is a non-diversified fund of Fidelity Select Portfolios (the Trust) and is authorized to issue an unlimited number of shares. The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund invests primarily in securities of companies whose principal business activities fall within specific industries. The Fund offers Class A, Class T, Class C, Telecommunications and Institutional Class shares, each of which, along with Class B shares, has equal rights as to assets and voting privileges. Effective after the close of business on September 1, 2010, Class B shares were closed to new accounts and additional purchases, except for exchanges and reinvestments. Each class has exclusive voting rights with respect to matters that affect that class. Class B shares will automatically convert to Class A shares after a holding period of seven years from the initial date of purchase. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions may also differ by class. The Fund's investments in emerging markets can be subject to social, economic, regulatory, and political uncertainties and can be extremely volatile.
2. Investments in Fidelity Central Funds.
The Fund invests in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by FMR and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds held as of period end, if any, as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Fund:
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Fund uses independent pricing services approved by the Board of Trustees to value its investments. When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include market or security specific events. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The value used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the Fund's own assumptions based on the best information available)
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level, as of February 29, 2012, as well as a roll forward of Level 3 securities, is included at the end of the Fund's Schedule of Investments. Valuation techniques used to value the Fund's investments by major category are as follows:
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when significant market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-traded funds (ETFs)and certain indexes as well as quoted prices for similar securities are used and are categorized as Level 2 in the hierarchy in these
Annual Report
Notes to Financial Statements (Unaudited) - continued
3. Significant Accounting Policies - continued
Security Valuation - continued
circumstances. Utilizing these techniques may result in transfers between Level 1 and Level 2. For restricted equity securities and private placements where observable inputs are limited, assumptions about market activity and risk are used and are categorized as Level 3 in the hierarchy.
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 in the hierarchy.
New Accounting Pronouncements. In May 2011, the Financial Accounting Standards Board issued Accounting Standard Update No. 2011-04, Fair Value Measurement (Topic 820) - Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. The update is effective during interim and annual periods beginning after December 15, 2011 and will result in additional disclosure for transfers between levels as well as expanded disclosure for securities categorized as Level 3 under the fair value hierarchy.
In December 2011, the Financial Accounting Standards Board issued Accounting Standard Update No. 2011-11, Disclosures about Offsetting Assets and Liabilities. The update creates new disclosure requirements requiring entities to disclose both gross and net information for derivatives and other financial instruments that are either offset in the Statement of Assets and Liabilities or subject to an enforceable master netting arrangement or similar agreement. The disclosure requirements are effective for interim and annual reporting periods beginning on or after January 1, 2013. Management is currently evaluating the impact of the update's adoption on the Fund's financial statement disclosures.
Foreign Currency. The Fund may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for income taxes is required. As of February 29, 2012, the Fund did not have any unrecognized tax benefits in the financial statements; nor is the Fund aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. The Fund files a U.S. federal tax return, in addition to state and local tax returns as required. A fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are declared and recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Annual Report
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
Book-tax differences are primarily due to foreign currency transactions, deferred trustees compensation, capital loss carryforwards, expiring capital loss carryforwards, and losses deferred due to wash sales and excise tax regulations.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation | $ 29,182,921 |
Gross unrealized depreciation | (55,138,742) |
Net unrealized appreciation (depreciation) on securities and other investments | $ (25,955,821) |
|
|
Tax Cost | $ 387,569,381 |
The tax-based components of distributable earnings as of period end were as follows:
Undistributed ordinary income | $ 730,658 |
Capital loss carryforward | $ (44,224,120) |
Net unrealized appreciation (depreciation) | $ (25,957,238) |
Capital loss carryforwards are only available to offset future capital gains of the Fund to the extent provided by regulations and may be limited. Under the Regulated Investment Company Modernization Act of 2010 (the Act), the Fund is permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period and such capital losses are required to be used prior to any losses that expire. Capital loss carryforwards were as follows:
Fiscal year of expiration |
|
2017 | $ (31,682,432) |
2018 | (12,541,688) |
Total with expiration | $ (44,224,120) |
The Fund intends to elect to defer to its fiscal year ending February 28, 2013 approximately $4,371,830 of capital losses recognized during the period November 1, 2011 to February 29, 2012.
The tax character of distributions paid was as follows:
| February 29, 2012 | February 28, 2011 |
Ordinary Income | $ 4,955,219 | $ 7,366,695 |
Trading (Redemption) Fees. Shares held by investors in the Fund less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Fund and accounted for as an addition to paid in capital.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $262,185,946 and $276,332,232, respectively.
5. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the Fund's average net assets and an annualized group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annual management fee rate was .56% of the Fund's average net assets.
Annual Report
Notes to Financial Statements (Unaudited) - continued
5. Fees and Other Transactions with Affiliates - continued
Distribution and Service Plan Fees. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of FMR, separate Distribution and Service Fees, each of which is based on an annual percentage of each class' average net assets. In addition, FDC may pay financial intermediaries for selling shares of the Fund and providing shareholder support services. For the period, the Distribution and Service Fee rates, total fees and amounts retained by FDC were as follows:
| Distribution | Service | Total | Retained |
Class A | -% | .25% | $ 12,169 | $ 763 |
Class T | .25% | .25% | 14,474 | - |
Class B | .75% | .25% | 6,364 | 4,772 |
Class C | .75% | .25% | 32,568 | 9,590 |
|
|
| $ 65,575 | $ 15,125 |
Sales Load. FDC may receive a front-end sales charge of up to 5.75% for selling Class A shares and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the Fund. Depending on the holding period, FDC may receive contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. The deferred sales charges range from 5.00% to 1.00% for Class B, 1.00% for Class C, 1.00% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained |
Class A | $ 5,940 |
Class T | 2,745 |
Class B* | 725 |
Class C* | 1,809 |
| $ 11,219 |
* When Class B and Class C shares are initially sold, FDC pays commissions from its own resources to financial intermediaries through which the sales are made.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the Fund. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, transfer agent fees for each class were as follows:
| Amount | % of |
Class A | $ 14,691 | .30 |
Class T | 9,931 | .34 |
Class B | 1,906 | .30 |
Class C | 9,131 | .28 |
Telecommunications | 885,774 | .25 |
Institutional Class | 4,025 | .24 |
| $ 925,458 |
|
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for each month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $32,682 for the period.
Annual Report
5. Fees and Other Transactions with Affiliates - continued
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Fund, along with other registered investment companies having management contracts with FMR, 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 | Weighted Average Interest Rate | Interest |
Borrower | $ 11,288,143 | .32% | $ 700 |
6. Committed Line of Credit.
The Fund participates with other funds managed by FMR or an affiliate in a $4.0 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $1,117 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, there were no borrowings on this line of credit.
7. Security Lending.
The Fund lends portfolio securities through a lending agent from time to time in order to earn additional income. For equity securities, a lending agent is used and may loan securities to certain qualified borrowers, including Fidelity Capital Markets (FCM), a broker-dealer affiliated with the Fund. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Total security lending income during the period amounted to $221,785. During the period, there were no securities loaned to FCM.
8. Expense Reductions.
Many of the brokers with whom FMR places trades on behalf of the Fund provided services to the Fund in addition to trade execution. These services included payments of certain expenses on behalf of the Fund totaling $63,865 for the period.
9. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
| Year ended | Year ended |
From net investment income |
|
|
Class A | $ 54,285 | $ 67,506 |
Class T | 24,009 | 39,660 |
Class B | 2,206 | 6,185 |
Class C | 19,099 | 26,169 |
Telecommunications | 4,833,836 | 7,180,244 |
Institutional Class | 21,784 | 46,931 |
Total | $ 4,955,219 | $ 7,366,695 |
Annual Report
Notes to Financial Statements (Unaudited) - continued
10. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
| Year ended | Year ended | Year ended | Year ended |
| 2012 | 2011 | 2012 | 2011 |
Class A |
|
|
|
|
Shares sold | 70,128 | 40,645 | $ 3,321,351 | $ 1,741,332 |
Reinvestment of distributions | 1,116 | 1,359 | 47,447 | 59,381 |
Shares redeemed | (61,569) | (39,099) | (2,787,444) | (1,642,347) |
Net increase (decrease) | 9,675 | 2,905 | $ 581,354 | $ 158,366 |
Class T |
|
|
|
|
Shares sold | 24,101 | 23,206 | $ 1,100,865 | $ 981,887 |
Reinvestment of distributions | 557 | 894 | 23,555 | 39,051 |
Shares redeemed | (27,493) | (17,166) | (1,235,915) | (731,684) |
Net increase (decrease) | (2,835) | 6,934 | $ (111,495) | $ 289,254 |
Class B |
|
|
|
|
Shares sold | 1,659 | 3,985 | $ 77,673 | $ 164,934 |
Reinvestment of distributions | 46 | 125 | 1,965 | 5,371 |
Shares redeemed | (3,832) | (6,122) | (176,016) | (254,241) |
Net increase (decrease) | (2,127) | (2,012) | $ (96,378) | $ (83,936) |
Class C |
|
|
|
|
Shares sold | 30,950 | 29,965 | $ 1,412,876 | $ 1,283,190 |
Reinvestment of distributions | 313 | 433 | 13,236 | 18,769 |
Shares redeemed | (19,633) | (22,865) | (879,199) | (981,215) |
Net increase (decrease) | 11,630 | 7,533 | $ 546,913 | $ 320,744 |
Telecommunications |
|
|
|
|
Shares sold | 3,856,487 | 3,169,647 | $ 180,498,933 | $ 131,656,721 |
Reinvestment of distributions | 108,713 | 156,783 | 4,652,114 | 6,893,743 |
Shares redeemed | (4,106,690) | (3,199,430) | (188,141,891) | (139,972,066) |
Net increase (decrease) | (141,490) | 127,000 | $ (2,990,844) | $ (1,421,602) |
Institutional Class |
|
|
|
|
Shares sold | 107,857 | 131,873 | $ 5,158,491 | $ 5,646,597 |
Reinvestment of distributions | 401 | 800 | 17,134 | 36,161 |
Shares redeemed | (123,190) | (124,838) | (5,562,790) | (5,631,269) |
Net increase (decrease) | (14,932) | 7,835 | $ (387,165) | $ 51,489 |
11. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
At the end of the period, Fidelity VIP FundsManager 60% Portfolio was the owner of record of approximately 15% of the total outstanding shares of the fund. Mutual funds managed by FMR or its affiliates were the owners of record, in the aggregate, of approximately 27% of the total outstanding shares of Telecommunications.
Annual Report
Report of Independent Registered Public Accounting Firm
To the Trustees of Fidelity Select Portfolios and the Shareholders of Consumer Staples Portfolio, Gold Portfolio, Materials Portfolio, and Telecommunications Portfolio:
In our opinion, the accompanying statements of assets and liabilities (consolidated statement of assets and liabilities for Gold Portfolio), including the schedules of investments (consolidated schedule of investments for Gold Portfolio), and the related statements of operations (consolidated statement of operations for Gold Portfolio) and of changes in net assets (consolidated changes in net assets for Gold Portfolio) and the financial highlights present fairly, in all material respects, the financial positions of Consumer Staples Portfolio, Gold Portfolio, Materials Portfolio, and Telecommunications Portfolio (funds of Fidelity Select Portfolios) at February 29, 2012, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fidelity Select Portfolios' management Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at February 29, 2012 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 18, 2012
Annual Report
Trustees and Officers
The Trustees, Members of the Advisory Board, and executive officers of the trust and funds, as applicable, are listed below. The Board of Trustees governs each fund and is responsible for protecting the interests of shareholders. The Trustees are experienced executives who meet periodically throughout the year to oversee each fund's activities, review contractual arrangements with companies that provide services to each fund, oversee management of the risks associated with such activities and contractual arrangements, and review each fund's performance. Except for James C. Curvey, each of the Trustees oversees 226 funds advised by FMR or an affiliate. Mr. Curvey oversees 430 funds advised by FMR or an affiliate.
The Trustees hold office without limit in time except that (a) any Trustee may resign; (b) any Trustee may be removed by written instrument, signed by at least two-thirds of the number of Trustees prior to such removal; (c) any Trustee who requests to be retired or who has become incapacitated by illness or injury may be retired by written instrument signed by a majority of the other Trustees; and (d) any Trustee may be removed at any special meeting of shareholders by a two-thirds vote of the outstanding voting securities of the trust. Each Trustee who is not an interested person (as defined in the 1940 Act) (Independent Trustee), shall retire not later than the last day of the calendar year in which his or her 75th birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. The executive officers and Advisory Board Members hold office without limit in time, except that any officer and Advisory Board Member may resign or may be removed by a vote of a majority of the Trustees at any regular meeting or any special meeting of the Trustees. Except as indicated, each individual has held the office shown or other offices in the same company for the past five years.
Experience, Skills, Attributes, and Qualifications of the Funds' Trustees. The Governance and Nominating Committee has adopted a statement of policy that describes the experience, qualifications, attributes, and skills that are necessary and desirable for potential Independent Trustee candidates (Statement of Policy). The Board believes that each Trustee satisfied at the time he or she was initially elected or appointed a Trustee, and continues to satisfy, the standards contemplated by the Statement of Policy. The Governance and Nominating Committee also engages professional search firms to help identify potential Independent Trustee candidates who have the experience, qualifications, attributes, and skills consistent with the Statement of Policy. From time to time, additional criteria based on the composition and skills of the current Independent Trustees, as well as experience or skills that may be appropriate in light of future changes to board composition, business conditions, and regulatory or other developments, have also been considered by the professional search firms and the Governance and Nominating Committee. In addition, the Board takes into account the Trustees' commitment and participation in Board and committee meetings, as well as their leadership of standing and ad hoc committees throughout their tenure.
In determining that a particular Trustee was and continues to be qualified to serve as a Trustee, the Board has considered a variety of criteria, none of which, in isolation, was controlling. The Board believes that, collectively, the Trustees have balanced and diverse experience, qualifications, attributes, and skills, which allow the Board to operate effectively in governing each fund and protecting the interests of shareholders. Information about the specific experience, skills, attributes, and qualifications of each Trustee, which in each case led to the Board's conclusion that the Trustee should serve (or continue to serve) as a trustee of the funds, is provided below.
Board Structure and Oversight Function. James C. Curvey is an interested person (as defined in the 1940 Act) and currently serves as Acting Chairman. The Trustees have determined that an interested Chairman is appropriate and benefits shareholders because an interested Chairman has a personal and professional stake in the quality and continuity of services provided to the funds. Independent Trustees exercise their informed business judgment to appoint an individual of their choosing to serve as Chairman, regardless of whether the Trustee happens to be independent or a member of management. The Independent Trustees have determined that they can act independently and effectively without having an Independent Trustee serve as Chairman and that a key structural component for assuring that they are in a position to do so is for the Independent Trustees to constitute a substantial majority for the Board. The Independent Trustees also regularly meet in executive session. Ned C. Lautenbach serves as Chairman of the Independent Trustees and as such (i) acts as a liaison between the Independent Trustees and management with respect to matters important to the Independent Trustees and (ii) with management prepares agendas for Board meetings.
Fidelity funds are overseen by different Boards of Trustees. The funds' Board oversees Fidelity's equity and high income funds and another Board oversees Fidelity's investment-grade bond, money market, and asset allocation funds. The asset allocation funds may invest in Fidelity funds overseen by the funds' Board. The use of separate Boards, each with its own committee structure, allows the Trustees of each group of Fidelity funds to focus on the unique issues of the funds they oversee, including common research, investment, and operational issues. On occasion, the separate Boards establish joint committees to address issues of overlapping consequences for the Fidelity funds overseen by each Board.
The Trustees operate using a system of committees to facilitate the timely and efficient consideration of all matters of importance to the Trustees, each fund, and fund shareholders and to facilitate compliance with legal and regulatory requirements and oversight of the funds' activities and associated risks. The Board, acting through its committees, has charged FMR and its affiliates with (i) identifying events or circumstances the occurrence of which could have demonstrably adverse effects on the funds' business and/or reputation; (ii) implementing processes and controls to lessen the possibility that such events or circumstances occur or to mitigate the effects of such events or circumstances if they do occur; and (iii) creating and maintaining a system designed to evaluate continuously business and market conditions in order to facilitate the identification and implementation processes described in (i) and (ii) above. Because the day-to-day operations and activities of the funds are carried out by or through FMR, its affiliates and other service providers, the funds' exposure to risks is mitigated but not eliminated by the processes overseen by the Trustees. While each of the Board's committees has responsibility for overseeing different aspects of the funds' activities, oversight is exercised primarily through the Operations, Audit, and Compliance Committees. In addition, the Independent Trustees have worked with FMR to enhance the Board's oversight of investment and financial risks, legal and regulatory risks, technology risks, and operational risks, including the development of additional risk reporting to the Board. For example, a working group comprised of Independent Trustees and FMR has worked and continues to work to review the Fidelity funds' valuation-related activities, reporting and risk management. Appropriate personnel, including but not limited to the funds' Chief Compliance Officer (CCO), FMR's internal auditor, the independent accountants, the funds' Treasurer and portfolio management personnel, make periodic reports to the Board's committees, as appropriate, including an annual review of FMR's risk management program for the Fidelity funds. The responsibilities of each standing committee, including their oversight responsibilities, are described further under "Standing Committees of the Funds' Trustees."
Annual Report
Trustees and Officers - continued
The funds' Statement of Additional Information (SAI) includes more information about the Trustees. To request a free copy, call Fidelity at 1-800-544-8544.
Interested Trustees*:
Correspondence intended for each Trustee who is an interested person may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupations and Other Relevant Experience+ | |
James C. Curvey (76) | |
| Year of Election or Appointment: 2007 Mr. Curvey is Trustee and Acting Chairman of the Board of Trustees of certain Trusts. Mr. Curvey also serves as Trustee (2007-present) of other investment companies advised by FMR. Mr. Curvey is a Director of Fidelity Investments Money Management, Inc. (2009-present), Director of Fidelity Research & Analysis Co. (2009-present) and Director of FMR and FMR Co., Inc. (2007-present). Mr. Curvey is also Vice Chairman (2007-present) and Director of FMR LLC. In addition, Mr. Curvey serves as an Overseer for the Boston Symphony Orchestra and a member of the Trustees of Villanova University. Previously, Mr. Curvey was the Vice Chairman (2006-2007) and Director (2000-2007) of FMR Corp. |
Ronald P. O'Hanley (55) | |
| Year of Election or Appointment: 2011 Mr. O'Hanley is Director of FMR Co., Inc. (2010-present), Director of Fidelity Investments Money Management, Inc. (2010-present), Director of Fidelity Research & Analysis Company (2010-present), President of Fidelity Asset Management and Corporate Services and a member of Fidelity's Executive Committee (2010-present). Previously, Mr. O'Hanley served as President and Chief Executive Officer of BNY Mellon Asset Management (2007-2010). Mr. O'Hanley also served as Vice Chairman of Bank New York Mellon Corp. and a member of that firm's Executive Committee. Prior to the 2007 merger of The Bank of New York and Mellon Financial Corporation, he was Vice Chairman of Mellon Financial Corporation and President and Chief Executive Officer of Mellon Asset Management. He joined Mellon in February 1997. Mr. O'Hanley currently serves as Chairman of the Boston Public Library Foundation Board of Directors and sits on the Board of Directors of Beth Israel Deaconess Medical Center, the Board of Trustees of the Marine Biological Laboratory and the Advisory Board of the Maxwell School of Citizenship and Public Administration at Syracuse University. Mr. O'Hanley also chairs the Council on Asset Management for the Financial Services Roundtable and is a member of the Board of Directors of Institutional Investor's U.S. Institute. |
* Trustees have been determined to be "Interested Trustees" by virtue of, among other things, their affiliation with the trust or various entities under common control with FMR.
+ The information above includes each Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to each Trustee's qualifications to serve as a Trustee, which led to the conclusion that each Trustee should serve as a Trustee for each fund.
Independent Trustees:
Correspondence intended for each Independent Trustee (that is, the Trustees other than the Interested Trustees) may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235.
Name, Age; Principal Occupations and Other Relevant Experience+ | |
Dennis J. Dirks (63) | |
| Year of Election or Appointment: 2005 Prior to his retirement in May 2003, Mr. Dirks was Chief Operating Officer and a member of the Board of The Depository Trust & Clearing Corporation (DTCC). He also served as President, Chief Operating Officer, and Board member of The Depository Trust Company (DTC) and President and Board member of the National Securities Clearing Corporation (NSCC). In addition, Mr. Dirks served as Chief Executive Officer and Board member of the Government Securities Clearing Corporation, Chief Executive Officer and Board member of the Mortgage-Backed Securities Clearing Corporation, as a Trustee and a member of the Finance Committee of Manhattan College (2005-2008), and as a Trustee and a member of the Finance Committee of AHRC of Nassau County (2006-2008). Mr. Dirks is a member of the Independent Directors Council (IDC) Governing Council (2010-present) and Board of Directors for The Brookville Center for Children's Services, Inc. (2009-present). |
Alan J. Lacy (58) | |
| Year of Election or Appointment: 2008 Mr. Lacy serves as Senior Adviser (2007-present) of Oak Hill Capital Partners, L.P. (private equity). Mr. Lacy also served as Chief Executive Officer (2000-2005) and Vice Chairman (2005-2006) of Sears Holdings Corporation and Sears, Roebuck and Co. (retail). In addition, Mr. Lacy serves as a member of the Board of Directors of Dave & Buster's, Inc. (restaurant and entertainment complexes, 2010-present), The Hillman Companies, Inc. (hardware wholesalers, 2010-present), and Bristol-Myers Squibb Company (global pharmaceuticals, 2007-present). Mr. Lacy is a member of the Board of Trustees of The National Parks Conservation Association (2006-present). Previously, Mr. Lacy served as Chairman of the Board of Trustees of the National Parks Conservation Association (2008-2011) and as a member of the Board of Directors for the Western Union Company (global money transfer, 2006-2011). |
Ned C. Lautenbach (68) | |
| Year of Election or Appointment: 2000 Mr. Lautenbach is Chairman of the Independent Trustees of the Equity and High Income Funds (2006-present). Mr. Lautenbach currently serves as the Lead Director of the Eaton Corporation Board of Directors (diversified industrial, 1997-present). Mr. Lautenbach is also a member of the Board of Directors of the Philharmonic Center for the Arts in Naples, Florida (1999-present); a member of the Board of Trustees of Fairfield University (2005-present); and a member of the Council on Foreign Relations (1994-present). Previously, Mr. Lautenbach was a Partner/Advisory Partner at Clayton, Dubilier & Rice, LLC (private equity investment, 1998-2010), as well as a Director of Sony Corporation (2006-2007). |
Joseph Mauriello (67) | |
| Year of Election or Appointment: 2008 Prior to his retirement in January 2006, Mr. Mauriello served in numerous senior management positions including Deputy Chairman and Chief Operating Officer (2004-2005), and Vice Chairman of Financial Services (2002-2004) of KPMG LLP US (professional services, 1965-2005). Mr. Mauriello currently serves as a member of the Board of Directors of XL Group plc. (global insurance and re-insurance, 2006-present) and of Arcadia Resources Inc. (health care services and products, 2007-present). Previously, Mr. Mauriello served as a Director of the Hamilton Funds of the Bank of New York (2006-2007). |
Robert W. Selander (61) | |
| Year of Election or Appointment: 2011 Previously, Mr. Selander served as a Member of the Advisory Board of Fidelity's Equity and High Income Funds (2011), Executive Vice Chairman (2010), Chief Executive Officer (2009-2010), and President and Chief Executive Officer (1997-2009) of Mastercard, Inc. |
Cornelia M. Small (67) | |
| Year of Election or Appointment: 2005 Ms. Small is a member of the Board of Directors of the Teagle Foundation (2009-present). Ms. Small is also a member of the Investment Committee, and Chair (2008-present) and a member of the Board of Trustees of Smith College. In addition, Ms. Small serves on the Investment Committee of the Berkshire Taconic Community Foundation (2008-present). Previously, Ms. Small served as Chairperson of the Investment Committee (2002-2008) of Smith College. In addition, Ms. Small served as Chief Investment Officer, Director of Global Equity Investments, and a member of the Board of Directors of Scudder, Stevens & Clark and Scudder Kemper Investments. |
William S. Stavropoulos (72) | |
| Year of Election or Appointment: 2001 Mr. Stavropoulos is Vice Chairman of the Independent Trustees of the Equity and High Income Funds (2006-present). Mr. Stavropoulos serves as President and Founder of the Michigan Baseball Foundation, the Great Lakes Loons (2007-present). Mr. Stavropoulos is Chairman Emeritus of the Board of Directors of The Dow Chemical Company, where he previously served in numerous senior management positions, including President, CEO (1995-2000; 2002-2004), Chairman of the Executive Committee (2000-2006), and as a member of the Board of Directors (1990-2006). Currently, Mr. Stavropoulos is Chairman of Univar (global distributor of commodity and specialty chemicals, 2010-present), a Director of Teradata Corporation (data warehousing and technology solutions, 2008-present), Chemical Financial Corporation, Maersk Inc. (industrial conglomerate), Tyco International, Inc. (multinational manufacturing and services, 2007-present), and a member of the Advisory Board for Metalmark Capital (private equity investment, 2005-present). Mr. Stavropoulos is a special advisor to Clayton, Dubilier & Rice, LLC (private equity investment). In addition, Mr. Stavropoulos is a member of the University of Notre Dame Advisory Council for the College of Science. |
David M. Thomas (62) | |
| Year of Election or Appointment: 2008 Previously, Mr. Thomas served as Executive Chairman (2005-2006) and Chairman and Chief Executive Officer (2000-2005) of IMS Health, Inc. (pharmaceutical and healthcare information solutions). In addition, Mr. Thomas serves as a member of the Board of Directors of Fortune Brands, Inc. (consumer products), and Interpublic Group of Companies, Inc. (marketing communication, 2004-present). |
Michael E. Wiley (61) | |
| Year of Election or Appointment: 2008 Mr. Wiley also serves as a Director of Asia Pacific Exploration Consolidated (international oil and gas exploration and production, 2008-present). Mr. Wiley serves as a Director of Tesoro Corporation (independent oil refiner and marketer, 2005-present), and a Director of Bill Barrett Corporation (exploration and production, 2005-present). In addition, Mr. Wiley also serves as a Director of Post Oak Bank (privately-held bank, 2004-present). Previously, Mr. Wiley served as a member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-2010), as a Senior Energy Advisor of Katzenbach Partners, LLC (consulting, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production, 2001-2005). |
+ The information above includes each Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to each Trustee's qualifications to serve as a Trustee, which led to the conclusion that each Trustee should serve as a Trustee for each fund.
Advisory Board Members and Executive Officers:
Correspondence intended for each executive officer, Edward C. Johnson 3d, and Peter S. Lynch may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
Edward C. Johnson 3d (81) | |
| Year of Election or Appointment: 2011 Member of the Advisory Board of Fidelity's Equity and High Income Funds. Mr. Johnson serves as Chief Executive Officer, Chairman, and a Director of FMR LLC, and also serves as Chairman and Director of FIL Limited. Previously, Mr. Johnson served as a Trustee and Chairman of the Board of certain Fidelity Trusts, Chairman and a Director of FMR, Chairman and a Director of FMR Co., Inc., and President of FMR LLC (2006-2007). |
Peter S. Lynch (68) | |
| Year of Election or Appointment: 2003 Member of the Advisory Board of Fidelity's Equity and High Income Funds. Mr. Lynch is Vice Chairman and a Director of FMR and FMR Co., Inc. In addition, Mr. Lynch serves as a Trustee of Boston College and as the Chairman of the Inner-City Scholarship Fund. Previously, Mr. Lynch served on the Special Olympics International Board of Directors (1997-2006). |
Kenneth B. Robins (42) | |
| Year of Election or Appointment: 2008 President and Treasurer of Fidelity's Equity and High Income Funds. Mr. Robins also serves as President and Treasurer (2010-present) and Assistant Treasurer (2009-present) of other Fidelity funds and is an employee of Fidelity Investments (2004-present). Previously, Mr. Robins served as Deputy Treasurer of the Fidelity funds (2005-2008) and Treasurer and Chief Financial Officer of The North Carolina Capital Management Trust: Cash and Term Portfolios (2006-2008). |
Brian B. Hogan (47) | |
| Year of Election or Appointment: 2009 Vice President of Equity and High Income Funds. Mr. Hogan also serves as President of FMR's Equity Division (2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager. |
Christopher S. Bartel (40) | |
| Year of Election or Appointment: 2009 Vice President of Fidelity's Sector and Real Estate Equity Funds. Mr. Bartel also serves as a Director, President, and Chief Executive Officer of Fidelity Management & Research (Japan) Inc. (2012-present) and Senior Vice President of Global Equity Research (2010-present). Previously, Mr. Bartel served as Senior Vice President of Equity Research (2009-2010), Managing Director of Research (2006-2009), and an analyst and portfolio manager (2000-2006). |
Scott C. Goebel (44) | |
| Year of Election or Appointment: 2008 Secretary and Chief Legal Officer (CLO) of the Fidelity funds. Mr. Goebel also serves as Secretary of Fidelity Investments Money Management, Inc. (FIMM) (2010-present) and Fidelity Research and Analysis Company (FRAC) (2010-present); Secretary and CLO of The North Carolina Capital Management Trust: Cash and Term Portfolios (2008-present); General Counsel, Secretary, and Senior Vice President of FMR (2008-present) and FMR Co., Inc. (2008-present); employed by FMR LLC or an affiliate (2001-present); Chief Legal Officer of Fidelity Management & Research (Hong Kong) Limited (2008-present) and Assistant Secretary of Fidelity Management & Research (Japan) Inc. (2008-present), and Fidelity Management & Research (U.K.) Inc. (2008-present). Previously, Mr. Goebel served as Assistant Secretary of FIMM (2008-2010), FRAC (2008-2010), and the Funds (2007-2008) and as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (2005-2007). |
William C. Coffey (43) | |
| Year of Election or Appointment: 2009 Assistant Secretary of Fidelity's Equity and High Income Funds. Mr. Coffey also serves as Senior Vice President and Deputy General Counsel of FMR LLC (2010-present), and is an employee of Fidelity Investments. Previously, Mr. Coffey served as Vice President and Associate General Counsel of FMR LLC (2005-2009). |
Holly C. Laurent (57) | |
| Year of Election or Appointment: 2008 Anti-Money Laundering (AML) Officer of the Fidelity funds. Ms. Laurent also serves as AML Officer of The North Carolina Capital Management Trust: Cash and Term Portfolios (2008-present) and is an employee of Fidelity Investments. Previously, Ms. Laurent was Senior Vice President and Head of Legal for Fidelity Business Services India Pvt. Ltd. (2006-2008), and Senior Vice President, Deputy General Counsel and Group Head for FMR LLC (2005-2006). |
Christine Reynolds (53) | |
| Year of Election or Appointment: 2008 Chief Financial Officer of the Fidelity funds. Ms. Reynolds became President of Fidelity Pricing and Cash Management Services (FPCMS) in August 2008. Ms. Reynolds served as Chief Operating Officer of FPCMS (2007-2008). Previously, Ms. Reynolds served as President, Treasurer, and Anti-Money Laundering officer of the Fidelity funds (2004-2007). |
Joseph A. Hanlon (43) | |
| Year of Election or Appointment: 2012 Chief Compliance Officer of Fidelity's Equity and High Income Funds. Mr. Hanlon serves as Senior Vice President of the Fidelity Asset Management Division (2009-present) and is an employee of Fidelity Investments. |
Joseph F. Zambello (54) | |
| Year of Election or Appointment: 2011 Deputy Treasurer of the Fidelity funds. Mr. Zambello is an employee of Fidelity Investments. Previously, Mr. Zambello served as Vice President of FMR's Program Management Group (2009-2011) and Vice President of the Transfer Agent Oversight Group (2005-2009). |
Adrien E. Deberghes (44) | |
| Year of Election or Appointment: 2008 Deputy Treasurer of Fidelity's Equity and High Income Funds. Mr. Deberghes also serves as Vice President (2011-present) and Assistant Treasurer (2010-present) of other Fidelity funds, and is an employee of Fidelity Investments (2008-present). Previously, Mr. Deberghes served as Senior Vice President of Mutual Fund Administration at State Street Corporation (2007-2008), Senior Director of Mutual Fund Administration at Investors Bank & Trust (2005-2007), and Director of Finance for Dunkin' Brands (2000-2005). |
Stephanie J. Dorsey (42) | |
| Year of Election or Appointment: 2010 Assistant Treasurer of Fidelity's Equity and High Income Funds. Ms. Dorsey also serves as Deputy Treasurer of other Fidelity funds (2008-present) and is an employee of Fidelity Investments (2008-present). Previously, Ms. Dorsey served as Treasurer (2004-2008) of the JPMorgan Mutual Funds and Vice President (2004-2008) of JPMorgan Chase Bank. |
John R. Hebble (53) | |
| Year of Election or Appointment: 2009 Assistant Treasurer of Fidelity's Equity and High Income Funds. Mr. Hebble also serves as President (2011-present), Treasurer, and Chief Financial Officer of The North Carolina Capital Management Trust: Cash and Term Portfolios (2008-present), President and Treasurer of other Fidelity funds (2008-present) and is an employee of Fidelity Investments. |
Gary W. Ryan (53) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of the Fidelity funds. Mr. Ryan is an employee of Fidelity Investments. Previously, Mr. Ryan served as Vice President of Fund Reporting in Fidelity Pricing and Cash Management Services (FPCMS) (1999-2005). |
Jonathan Davis (43) | |
| Year of Election or Appointment: 2010 Assistant Treasurer of the Fidelity funds. Mr. Davis is also Assistant Treasurer of Fidelity Rutland Square Trust II and Fidelity Commonwealth Trust II. Mr. Davis is an employee of Fidelity Investments. Previously, Mr. Davis served as Vice President and Associate General Counsel of FMR LLC (2003-2010). |
Annual Report
Distributions (Unaudited)
The Board of Trustees of each voted to pay to shareholders of record at the opening of business on record date, the following distributions per share derived from capital gains realized from sales of portfolio securities and dividends derived from net investment income:
Consumer Staples Portfolio | Pay Date | Record Date | Dividends | Capital Gains |
Institutional Class | 04/16/12 | 04/13/12 | $0.153 | $0.230 |
|
|
|
|
|
Gold Portfolio | Pay Date | Record Date | Dividends | Capital Gains |
Institutional Class | 04/16/12 | 04/13/12 | $0.000 | $0.000 |
|
|
|
|
|
Materials Portfolio | Pay Date | Record Date | Dividends | Capital Gains |
Institutional Class | 04/16/12 | 04/13/12 | $0.049 | $0.362 |
|
|
|
|
|
Telecommunications Portfolio | Pay Date | Record Date | Dividends | Capital Gains |
Institutional Class | 04/16/12 | 04/13/12 | $0.088 | $0.000 |
The funds hereby designate as capital gain dividend the amounts noted below for the taxable year ended February 29, 2012, or, if subsequently determined to be different, the net capital gain of such year.
Fund |
|
Consumer Staples Portfolio | $27,521,817 |
Gold Portfolio | $57,371,714 |
Materials Portfolio | $23,857,232 |
A percentage of the dividends distributed during the fiscal year for the following funds qualifies for the dividends-received deduction for corporate shareholders:
Fund | April | December |
Consumer Staples Portfolio |
|
|
Institutional Class | 100% | 93% |
Gold Portfolio |
|
|
Institutional Class | 0% | 0% |
Materials Portfolio |
|
|
Institutional Class | 0% | 100% |
Telecommunications Portfolio |
|
|
Institutional Class | 100% | 100% |
A percentage of the dividends distributed during the fiscal year for the following funds may be taken into account as a dividend for purposes of the maximum rate under section 1(h)(11) of the Internal Revenue Code.
| April | December |
Consumers Staples Portfolio |
|
|
Institutional Class | 100% | 100% |
Gold Portfolio |
|
|
Institutional Class | 0% | 0% |
Materials Portfolio |
|
|
Institutional Class | 0% | 100% |
Telecommunications Portfolio |
|
|
Institutional Class | 100% | 100% |
Annual Report
Distributions - continued
The amounts per share which represent income derived from sources within, and taxes paid to, foreign countries or possessions of the United States are as follows:
| Pay Date | Income | Taxes |
Gold Portfolio |
|
|
|
Institutional Class | 4/18/2011 | $0.010 | $0.0043 |
The fund will notify shareholders in January 2013 of amounts for use in preparing 2012 income tax returns.
Annual Report
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
FMR Co., Inc.
Fidelity Management & Research
(U.K.) Inc.
Fidelity Management & Research
(Hong Kong) Limited
Fidelity Management & Research
(Japan) Inc.
General Distributor
Fidelity Distributors Corporation
Boston, MA
Transfer and Service Agents
Fidelity Investments Institutional
Operations Company, Inc.
Boston, MA
Fidelity Service Company, Inc.
Boston, MA
Custodian
Brown Brothers Harriman & Co.
Boston, MA
(Fidelity Investment logo)(registered trademark)
Corporate Headquarters
82 Devonshire St., Boston, MA 02109
www.fidelity.com
ASGMTI-UANN-0412
1.845768.105
Item 2. Code of Ethics
As of the end of the period, February 29, 2012, Fidelity Select Portfolios (the trust) has adopted a code of ethics, as defined in Item 2 of Form N-CSR, that applies to its President and Treasurer and its Chief Financial Officer. A copy of the code of ethics is filed as an exhibit to this Form N-CSR.
Item 3. Audit Committee Financial Expert
The Board of Trustees of the trust has determined that Joseph Mauriello is an audit committee financial expert, as defined in Item 3 of Form N-CSR. Mr. Mauriello is independent for purposes of Item 3 of Form N-CSR.
Item 4. Principal Accountant Fees and Services
Fees and Services
The following table presents fees billed by PricewaterhouseCoopers LLP ("PwC") in each of the last two fiscal years for services rendered to Air Transportation Portfolio, Automotive Portfolio, Banking Portfolio, Biotechnology Portfolio, Brokerage and Investment Management Portfolio, Chemicals Portfolio, Communications Equipment Portfolio, Computers Portfolio, Construction and Housing Portfolio, Consumer Discretionary Portfolio, Consumer Finance Portfolio, Consumer Staples Portfolio, Defense and Aerospace Portfolio, Electronics Portfolio, Energy Portfolio, Energy Service Portfolio, Environment and Alternative Energy Portfolio, Financial Services Portfolio, Gold Portfolio, Health Care Portfolio, Industrial Equipment Portfolio, Industrials Portfolio, Insurance Portfolio, IT Services Portfolio, Leisure Portfolio, Materials Portfolio, Medical Delivery Portfolio, Medical Equipment and Systems Portfolio, Multimedia Portfolio, Natural Gas Portfolio, Natural Resources Portfolio, Pharmaceuticals Portfolio, Retailing Portfolio, Software and Computer Services Portfolio, Technology Portfolio, Telecommunications Portfolio, Transportation Portfolio, Utilities Portfolio and Wireless Portfolio (the "Funds"):
Services Billed by PwC
February 29, 2012 FeesA
| Audit Fees | Audit-Related Fees | Tax Fees | All Other Fees |
Air Transportation Portfolio | $33,000 | $- | $2,700 | $1,600 |
Automotive Portfolio | $33,000 | $- | $2,700 | $1,600 |
Banking Portfolio | $33,000 | $- | $2,700 | $1,700 |
Biotechnology Portfolio | $38,000 | $- | $2,700 | $2,100 |
Brokerage and Investment Management Portfolio | $33,000 | $- | $2,700 | $1,700 |
Chemicals Portfolio | $33,000 | $- | $2,700 | $1,900 |
Communications Equipment Portfolio | $33,000 | $- | $2,700 | $1,700 |
Computers Portfolio | $33,000 | $- | $2,700 | $1,800 |
Construction and Housing Portfolio | $32,000 | $- | $2,700 | $1,600 |
Consumer Discretionary Portfolio | $32,000 | $- | $2,700 | $1,600 |
Consumer Finance Portfolio | $32,000 | $- | $2,700 | $1,600 |
Consumer Staples Portfolio | $38,000 | $- | $2,700 | $2,200 |
Defense and Aerospace Portfolio | $33,000 | $- | $2,700 | $1,800 |
Electronics Portfolio | $34,000 | $- | $2,700 | $2,000 |
Energy Portfolio | $35,000 | $- | $2,900 | $2,600 |
Energy Service Portfolio | $34,000 | $- | $2,700 | $2,200 |
Environment and Alternative Energy Portfolio | $32,000 | $- | $2,700 | $1,600 |
Financial Services Portfolio | $33,000 | $- | $2,700 | $1,700 |
Gold Portfolio | $57,000 | $- | $6,400 | $3,500 |
Health Care Portfolio | $35,000 | $- | $2,700 | $2,400 |
Industrial Equipment Portfolio | $37,000 | $- | $2,700 | $1,700 |
Industrials Portfolio | $33,000 | $- | $2,700 | $1,800 |
Insurance Portfolio | $33,000 | $- | $2,700 | $1,600 |
IT Services Portfolio | $32,000 | $- | $2,700 | $1,600 |
Leisure Portfolio | $33,000 | $- | $2,700 | $1,700 |
Materials Portfolio | $38,000 | $- | $2,700 | $2,100 |
Medical Delivery Portfolio | $33,000 | $- | $2,700 | $1,900 |
Medical Equipment and Systems Portfolio | $35,000 | $- | $2,700 | $2,100 |
Multimedia Portfolio | $32,000 | $- | $2,700 | $1,600 |
Natural Gas Portfolio | $33,000 | $- | $2,700 | $1,900 |
Natural Resources Portfolio | $34,000 | $- | $2,700 | $2,200 |
Pharmaceuticals Portfolio | $33,000 | $- | $2,700 | $1,800 |
Retailing Portfolio | $33,000 | $- | $2,700 | $1,700 |
Software and Computer Services Portfolio | $34,000 | $- | $2,700 | $2,100 |
Technology Portfolio | $35,000 | $- | $2,700 | $2,600 |
Telecommunications Portfolio | $36,000 | $- | $2,700 | $1,700 |
Transportation Portfolio | $34,000 | $- | $2,700 | $1,700 |
Utilities Portfolio | $32,000 | $- | $2,700 | $1,800 |
Wireless Portfolio | $32,000 | $- | $2,700 | $1,700 |
February 28, 2011 FeesA
| Audit Fees | Audit-Related Fees | Tax Fees | All Other Fees |
Air Transportation Portfolio | $32,000 | $- | $2,700 | $2,100 |
Automotive Portfolio | $32,000 | $- | $2,700 | $2,100 |
Banking Portfolio | $33,000 | $- | $2,700 | $2,300 |
Biotechnology Portfolio | $34,000 | $- | $2,700 | $2,600 |
Brokerage and Investment Management Portfolio | $33,000 | $- | $2,700 | $2,300 |
Chemicals Portfolio | $32,000 | $- | $2,700 | $2,300 |
Communications Equipment Portfolio | $33,000 | $- | $2,700 | $2,200 |
Computers Portfolio | $33,000 | $- | $2,700 | $2,300 |
Construction and Housing Portfolio | $32,000 | $- | $2,700 | $2,100 |
Consumer Discretionary Portfolio | $32,000 | $- | $2,700 | $2,100 |
Consumer Finance Portfolio | $32,000 | $- | $2,700 | $2,100 |
Consumer Staples Portfolio | $39,000 | $- | $2,700 | $2,800 |
Defense and Aerospace Portfolio | $33,000 | $- | $2,700 | $2,400 |
Electronics Portfolio | $34,000 | $- | $2,700 | $2,600 |
Energy Portfolio | $35,000 | $- | $2,900 | $3,200 |
Energy Service Portfolio | $34,000 | $- | $2,700 | $2,800 |
Environment and Alternative Energy Portfolio | $32,000 | $- | $2,700 | $2,000 |
Financial Services Portfolio | $33,000 | $- | $2,700 | $2,300 |
Gold Portfolio | $59,000 | $- | $6,400 | $4,400 |
Health Care Portfolio | $34,000 | $- | $2,700 | $3,000 |
Industrial Equipment Portfolio | $36,000 | $- | $2,700 | $2,100 |
Industrials Portfolio | $33,000 | $- | $2,700 | $2,200 |
Insurance Portfolio | $32,000 | $- | $2,700 | $2,100 |
IT Services Portfolio | $32,000 | $- | $2,700 | $2,100 |
Leisure Portfolio | $33,000 | $- | $2,700 | $2,200 |
Materials Portfolio | $38,000 | $- | $2,700 | $2,500 |
Medical Delivery Portfolio | $33,000 | $- | $2,700 | $2,300 |
Medical Equipment and Systems Portfolio | $34,000 | $- | $2,700 | $2,800 |
Multimedia Portfolio | $32,000 | $- | $2,700 | $2,100 |
Natural Gas Portfolio | $33,000 | $- | $2,700 | $2,600 |
Natural Resources Portfolio | $34,000 | $- | $2,700 | $2,800 |
Pharmaceuticals Portfolio | $32,000 | $- | $2,700 | $2,200 |
Retailing Portfolio | $32,000 | $- | $2,700 | $2,100 |
Software and Computer Services Portfolio | $34,000 | $- | $2,700 | $2,600 |
Technology Portfolio | $35,000 | $- | $2,700 | $3,300 |
Telecommunications Portfolio | $37,000 | $- | $2,700 | $2,200 |
Transportation Portfolio | $33,000 | $- | $2,700 | $2,200 |
Utilities Portfolio | $32,000 | $- | $2,700 | $2,200 |
Wireless Portfolio | $32,000 | $- | $2,700 | $2,200 |
|
|
|
|
|
A Amounts may reflect rounding.
The following table presents fees billed by PwC that were required to be approved by the Audit Committee for services that relate directly to the operations and financial reporting of the Funds and that are rendered on behalf of Fidelity Management & Research Company ("FMR") and entities controlling, controlled by, or under common control with FMR (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser) that provide ongoing services to the Funds ("Fund Service Providers"):
Services Billed by PwC
| February 29, 2012A | February 28, 2011A |
Audit-Related Fees | $3,795,000 | $2,550,000 |
Tax Fees | $- | $- |
All Other Fees | $- | $510,000 |
A Amounts may reflect rounding.
"Audit-Related Fees" represent fees billed for assurance and related services that are reasonably related to the performance of the fund audit or the review of the fund's financial statements and that are not reported under Audit Fees.
"Tax Fees" represent fees billed for tax compliance, tax advice or tax planning that relate directly to the operations and financial reporting of the fund.
"All Other Fees" represent fees billed for services provided to the fund or Fund Service Provider, a significant portion of which are assurance related, that relate directly to the operations and financial reporting of the fund, excluding those services that are reported under Audit Fees, Audit-Related Fees or Tax Fees.
Assurance services must be performed by an independent public accountant.
* * *
The aggregate non-audit fees billed by PwC for services rendered to the Funds, FMR (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any Fund Service Provider for each of the last two fiscal years of the Funds are as follows:
Billed By | February 29, 2012 A | February 28, 2011 A |
PwC | $5,305,000 | $5,155,000 |
A Amounts may reflect rounding.
The trust's Audit Committee has considered non-audit services that were not pre-approved that were provided by PwC to Fund Service Providers to be compatible with maintaining the independence of PwC in its audit of the Funds, taking into account representations from PwC, in accordance with Public Company Accounting Oversight Board rules, regarding its independence from the Funds and their related entities and FMR's review of the appropriateness and permissibility under applicable law of such non-audit services prior to their provision to the Fund Service Providers.
Audit Committee Pre-Approval Policies and Procedures
The trust's Audit Committee must pre-approve all audit and non-audit services provided by a fund's independent registered public accounting firm relating to the operations or financial reporting of the fund. Prior to the commencement of any audit or non-audit services to a fund, the Audit Committee reviews the services to determine whether they are appropriate and permissible under applicable law.
The Audit Committee has adopted policies and procedures to, among other purposes, provide a framework for the Committee's consideration of non-audit services by the audit firms that audit the Fidelity funds. The policies and procedures require that any non-audit service provided by a fund audit firm to a Fidelity fund and any non-audit service provided by a fund auditor to a Fund Service Provider that relates directly to the operations and financial reporting of a Fidelity fund ("Covered Service") are subject to approval by the Audit Committee before such service is provided.
All Covered Services must be approved in advance of provision of the service either: (i) by formal resolution of the Audit Committee, or (ii) by oral or written approval of the service by the Chair of the Audit Committee (or if the Chair is unavailable, such other member of the Audit Committee as may be designated by the Chair to act in the Chair's absence). The approval contemplated by (ii) above is permitted where the Treasurer determines that action on such an engagement is necessary before the next meeting of the Audit Committee.
Non-audit services provided by a fund audit firm to a Fund Service Provider that do not relate directly to the operations and financial reporting of a Fidelity fund are reported to the Audit Committee on a periodic basis.
Non-Audit Services Approved Pursuant to Rule 2-01(c)(7)(i)(C) and (ii) of Regulation S-X ("De Minimis Exception")
There were no non-audit services approved or required to be approved by the Audit Committee pursuant to the De Minimis Exception during the Funds' last two fiscal years relating to services provided to (i) the Funds or (ii) any Fund Service Provider that relate directly to the operations and financial reporting of the Funds.
Item 5. Audit Committee of Listed Registrants
Not applicable.
Item 6. Investments
(a) Not applicable.
(b) Not applicable
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies
Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies
Not applicable.
Item 9. Purchase of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders
There were no material changes to the procedures by which shareholders may recommend nominees to the trust's Board of Trustees.
Item 11. Controls and Procedures
(a)(i) The President and Treasurer and the Chief Financial Officer have concluded that the trust's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act) provide reasonable assurances that material information relating to the trust is made known to them by the appropriate persons, based on their evaluation of these controls and procedures as of a date within 90 days of the filing date of this report.
(a)(ii) There was no change in the trust's internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act) that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the trust's internal control over financial reporting.
Item 12. Exhibits
(a) | (1) | Code of Ethics pursuant to Item 2 of Form N-CSR is filed and attached hereto as EX-99.CODE ETH. |
(a) | (2) | Certification pursuant to Rule 30a-2(a) under the Investment Company Act of 1940 (17 CFR 270.30a-2(a)) is filed and attached hereto as Exhibit 99.CERT. |
(a) | (3) | Not applicable. |
(b) |
| Certification pursuant to Rule 30a-2(b) under the Investment Company Act of 1940 (17 CFR 270.30a-2(b)) is furnished and attached hereto as Exhibit 99.906CERT. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Fidelity Select Portfolios
By: | /s/Kenneth B. Robins |
| Kenneth B. Robins |
| President and Treasurer |
|
|
Date: | April 25, 2012 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By: | /s/Kenneth B. Robins |
| Kenneth B. Robins |
| President and Treasurer |
|
|
Date: | April 25, 2012 |
By: | /s/Christine Reynolds |
| Christine Reynolds |
| Chief Financial Officer |
|
|
Date: | April 25, 2012 |