UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-3114
Fidelity Select Portfolios
(Exact name of registrant as specified in charter)
245 Summer St., Boston, Massachusetts 02210
(Address of principal executive offices) (Zip code)
Marc Bryant, Secretary
245 Summer St.
Boston, Massachusetts 02210
(Name and address of agent for service)
Registrant's telephone number, including area code: 617-563-7000
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Date of fiscal year end: |
February 28 |
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Date of reporting period: |
February 28, 2015 |
This report on Form N-CSR relates solely to the Registrant's Air Transportation Portfolio, Automotive Portfolio, Banking Portfolio, Biotechnology Portfolio, Brokerage and Investment Management Portfolio, Construction and Housing Portfolio, Consumer Discretionary Portfolio, Consumer Finance Portfolio, Defense and Aerospace Portfolio, Environment and Alternative Energy Portfolio, Financial Services Portfolio, Health Care Portfolio, Industrial Equipment Portfolio, Industrials Portfolio, Insurance Portfolio, Leisure Portfolio, Medical Delivery Portfolio, Medical Equipment and Systems Portfolio, Multimedia Portfolio, Pharmaceuticals Portfolio, Retailing Portfolio and Transportation Portfolio series (each, a "Fund" and collectively, the "Funds").
Item 1. Reports to Stockholders
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 28, 2015
(Fidelity Cover Art)
Contents
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Shareholder Expense Example |
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Air Transportation Portfolio |
Performance |
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Management's Discussion |
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Investment Changes |
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Investments |
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Financial Statements |
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Defense and Aerospace Portfolio |
Performance |
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Management's Discussion |
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Investment Changes |
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Investments |
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Financial Statements |
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Environment and Alternative Energy Portfolio |
Performance |
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Management's Discussion |
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Investment Changes |
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Investments |
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Financial Statements |
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Industrial Equipment Portfolio |
Performance |
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Management's Discussion |
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Investment Changes |
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Investments |
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Financial Statements |
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Industrials Portfolio |
Performance |
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Management's Discussion |
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Investment Changes |
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Investments |
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Financial Statements |
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Transportation Portfolio |
Performance |
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Management's Discussion |
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Investment Changes |
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Investments |
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Financial Statements |
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Notes to Financial Statements |
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Report of Independent Registered Public Accounting Firm |
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Trustees and Officers |
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Distributions |
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Board Approval of Investment Advisory Contracts and Management Fees |
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To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com/proxyvotingresults or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov. You may also call 1-800-544-8544 to request a free copy of the proxy voting guidelines.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third-party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company. © 2015 FMR LLC. All rights reserved.
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, 2014 to February 28, 2015).
Actual Expenses
The first line of the accompanying table for each fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, each Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each fund provides information about hypothetical account values and hypothetical expenses based on a fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, each Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
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Annualized |
Beginning |
Ending |
Expenses Paid |
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Air Transportation Portfolio |
.83% |
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Actual |
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$ 1,000.00 |
$ 1,123.90 |
$ 4.37 |
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HypotheticalA |
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$ 1,000.00 |
$ 1,020.68 |
$ 4.16 |
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Defense and Aerospace Portfolio |
.79% |
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Actual |
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$ 1,000.00 |
$ 1,145.80 |
$ 4.20 |
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HypotheticalA |
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$ 1,000.00 |
$ 1,020.88 |
$ 3.96 |
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Environment and Alternative Energy Portfolio |
.93% |
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Actual |
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$ 1,000.00 |
$ 1,015.80 |
$ 4.65 |
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HypotheticalA |
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$ 1,000.00 |
$ 1,020.18 |
$ 4.66 |
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Industrial Equipment Portfolio |
.78% |
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Actual |
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$ 1,000.00 |
$ 1,026.70 |
$ 3.92 |
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HypotheticalA |
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$ 1,000.00 |
$ 1,020.93 |
$ 3.91 |
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Industrials Portfolio |
.77% |
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Actual |
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$ 1,000.00 |
$ 1,068.60 |
$ 3.95 |
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HypotheticalA |
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$ 1,000.00 |
$ 1,020.98 |
$ 3.86 |
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Transportation Portfolio |
.81% |
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Actual |
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$ 1,000.00 |
$ 1,125.60 |
$ 4.27 |
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HypotheticalA |
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$ 1,000.00 |
$ 1,020.78 |
$ 4.06 |
A 5% return per year before expenses
B Annualized expense ratio reflects expenses net of applicable fee waivers.
* Expenses are equal to each Fund's annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
Annual Report
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
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Periods ended February 28, 2015 |
Past 1 |
Past 5 |
Past 10 |
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Air Transportation Portfolio |
21.93% |
20.54% |
13.13% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Air Transportation Portfolio on February 28, 2005. The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period.
Annual Report
Air Transportation Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. stock market closed near its all-time high for the 12 months ending February 28, 2015, supported by low interest rates and the relative strength of the U.S. economy and dollar. The large-cap S&P 500® Index returned 15.51%. Growth stocks in the index outperformed value-oriented names. The tech-heavy Nasdaq Composite Index® rose 16.58%, while the small-cap Russell 2000® Index advanced 5.63%, rallying from early-period weakness amid growth and valuation worries. Among the 10 major market sectors tracked by MSCI U.S. IMI 25-50 classifications, most notched a double-digit gain, led by health care (+24%), consumer staples (+21%), information technology (+20%) and utilities (+15%). Conversely, energy (-9%) was the only sector to lose ground, reflecting a sharp drop in crude prices beginning midyear and attributed to weaker global demand and a U.S. supply boom. Volatility spiked to a three-year high in October amid concerns about economic growth and Ebola, as well as unrest in Syria, Iraq and Ukraine. Nevertheless, the S&P 500® finished the period well above its mid-October nadir, bolstered by the relative economic strength of the U.S., which marked a six-year low in its unemployment rate, and consumer confidence that declined only slightly from its 11-year high reached in January.
Comments from Matthew Moulis, Portfolio Manager of Air Transportation Portfolio: For the year, the fund returned 21.93%, trailing the 25.99% of the S&P® Custom Air Transportation Index but well ahead of the broadly based S&P 500®. Aided by an ongoing U.S. economic recovery and sharply declining oil prices, airlines were standout performers in the industry index. Compared with that index, the fund's performance was hurt by stock selection, especially in the airlines and air freight & logistics groups. The fund had a modest overweighting in airlines, which partially offset unrewarding stock picking here. Not owning Allegiant Travel for much of the period and carrying an underweighting in Southwest Airlines, two strong-performing airline stocks in the industry index, were the two biggest relative detractors. I was cautious about both stocks because they were more expensive than many other U.S. carriers. In January, I established an underweighted position in Allegiant because I thought its older, less-fuel-efficient fleet stood to benefit disproportionately from lower fuel costs. Around the same time, I added to our position in Southwest, although it remained an underweighting at period end. Not having a stake in XPO Logistics also hurt, as this index name bolted to a gain of about 40%. I'll also mention overweighted exposure to the lagging shares of Hub Group, an intermodal freight and logistics company focused on providing road and rail connections. I thought the stock was excessively penalized by the market and added to the fund's share count here. Additionally, a modest cash position dampened relative performance, and the stronger U.S. dollar was another challenging factor, as it hampered the fund's foreign holdings. Conversely, our top relative contributor was an underweighting in lagging index component Textron, which has aircraft, defense, industrial and finance businesses. Although the stock did poorly in the first half of the period, I thought I saw a buying opportunity and increased this position to an overweighting by period end. Spirit AeroSystems Holdings, a maker of fuselages and other aircraft components, was a contributor I overweighted for the entire 12-month period. Overweightings in Delta Air Lines and American Airlines Group also worked to our benefit.
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)
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Top Ten Stocks as of February 28, 2015 |
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% of fund's |
% of fund's net assets |
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The Boeing Co. |
10.5 |
12.0 |
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American Airlines Group, Inc. |
9.1 |
4.6 |
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United Parcel Service, Inc. Class B |
8.7 |
8.2 |
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Delta Air Lines, Inc. |
8.2 |
8.1 |
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FedEx Corp. |
7.6 |
6.1 |
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Precision Castparts Corp. |
5.9 |
6.5 |
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United Continental Holdings, Inc. |
4.5 |
5.0 |
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Textron, Inc. |
4.4 |
1.7 |
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Southwest Airlines Co. |
4.2 |
4.9 |
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Spirit AeroSystems Holdings, Inc. Class A |
3.6 |
2.4 |
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66.7 |
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Top Industries (% of fund's net assets) |
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As of February 28, 2015 |
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Aerospace & Defense |
36.6% |
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Airlines |
35.3% |
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Air Freight & Logistics |
25.7% |
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Road & Rail |
0.8% |
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Machinery |
0.0%† |
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All Others* |
1.6% |
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As of August 31, 2014 |
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Aerospace & Defense |
36.9% |
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Airlines |
35.4% |
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Air Freight & Logistics |
24.6% |
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Transportation Infrastructure |
0.4% |
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Road & Rail |
0.1% |
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All Others* |
2.6% |
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* Includes short-term investments and net other assets (liabilities). |
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† Amount represents less than 0.1% |
Annual Report
Air Transportation Portfolio
Investments February 28, 2015
Showing Percentage of Net Assets
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Common Stocks - 96.3% |
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Shares |
Value |
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AEROSPACE & DEFENSE - 34.5% |
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Aerospace & Defense - 34.5% |
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BE Aerospace, Inc. |
327,700 |
$ 20,822,058 |
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Bombardier, Inc. Class B (sub. vtg.) |
4,026,900 |
8,375,282 |
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Honeywell International, Inc. |
28,600 |
2,939,508 |
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Precision Castparts Corp. |
197,159 |
42,645,492 |
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Rockwell Collins, Inc. |
168,800 |
15,036,704 |
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Spirit AeroSystems Holdings, Inc. Class A (a) |
527,500 |
25,958,275 |
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Textron, Inc. |
708,800 |
31,406,928 |
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The Boeing Co. |
496,600 |
74,912,110 |
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TransDigm Group, Inc. |
19,300 |
4,185,398 |
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Triumph Group, Inc. |
298,900 |
17,871,231 |
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United Technologies Corp. |
25,200 |
3,072,132 |
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247,225,118 |
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AIR FREIGHT & LOGISTICS - 25.7% |
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Air Freight & Logistics - 25.7% |
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Atlas Air Worldwide Holdings, Inc. (a) |
92,500 |
4,194,875 |
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C.H. Robinson Worldwide, Inc. (d) |
269,100 |
19,994,130 |
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Expeditors International of Washington, Inc. |
182,607 |
8,819,918 |
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FedEx Corp. |
308,300 |
54,562,934 |
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Forward Air Corp. |
187,800 |
10,047,300 |
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Hub Group, Inc. Class A (a) |
270,378 |
10,915,160 |
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Park-Ohio Holdings Corp. |
133,590 |
7,714,823 |
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United Parcel Service, Inc. Class B |
612,300 |
62,289,279 |
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UTi Worldwide, Inc. (a) |
403,400 |
5,276,472 |
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183,814,891 |
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AIRLINES - 35.3% |
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Airlines - 35.3% |
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Air Canada (a) |
1,073,800 |
10,599,706 |
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Alaska Air Group, Inc. |
310,800 |
19,782,420 |
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Allegiant Travel Co. |
21,100 |
3,874,382 |
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American Airlines Group, Inc. |
1,353,900 |
64,851,810 |
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Dart Group PLC |
5,286 |
23,850 |
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Delta Air Lines, Inc. |
1,320,802 |
58,802,105 |
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Hawaiian Holdings, Inc. (a)(d) |
183,600 |
3,398,436 |
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Ryanair Holdings PLC sponsored ADR |
137,500 |
8,710,625 |
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Southwest Airlines Co. |
697,400 |
30,155,576 |
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Spirit Airlines, Inc. (a) |
139,500 |
10,850,310 |
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United Continental Holdings, Inc. (a) |
498,985 |
32,523,842 |
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Virgin America, Inc. |
8,800 |
308,352 |
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WestJet Airlines Ltd. |
314,500 |
7,371,290 |
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Wizz Air Holdings PLC |
84,306 |
1,705,041 |
|
|
|
252,957,745 |
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Shares |
Value |
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MACHINERY - 0.0% |
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Construction Machinery & Heavy Trucks - 0.0% |
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ASL Marine Holdings Ltd. |
235,000 |
$ 72,422 |
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ROAD & RAIL - 0.8% |
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Trucking - 0.8% |
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Roadrunner Transportation Systems, Inc. (a) |
47,100 |
1,209,057 |
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Swift Transporation Co. (a) |
145,200 |
4,106,256 |
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|
|
5,315,313 |
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TOTAL COMMON STOCKS (Cost $571,932,318) |
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Nonconvertible Preferred Stocks - 2.1% |
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AEROSPACE & DEFENSE - 2.1% |
|||
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Aerospace & Defense - 2.1% |
|||
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Embraer SA sponsored ADR (d) |
432,600 |
|
|
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Money Market Funds - 5.3% |
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Fidelity Cash Central Fund, 0.13% (b) |
9,256,174 |
9,256,174 |
|
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Fidelity Securities Lending Cash Central Fund, 0.13% (b)(c) |
28,731,300 |
28,731,300 |
|
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TOTAL MONEY MARKET FUNDS (Cost $37,987,474) |
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TOTAL INVESTMENT PORTFOLIO - 103.7% (Cost $625,547,542) |
742,509,637 |
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NET OTHER ASSETS (LIABILITIES) - (3.7)% |
(26,584,206) |
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NET ASSETS - 100% |
$ 715,925,431 |
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Legend |
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(a) Non-income producing |
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(b) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
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(c) Investment made with cash collateral received from securities on loan. |
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(d) Security or a portion of the security is on loan at period end. |
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Affiliated Central Funds |
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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 |
$ 14,756 |
|
Fidelity Securities Lending Cash Central Fund |
73,505 |
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Total |
$ 88,261 |
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Other Information |
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All investments are categorized as Level 1 under the Fair Value Hierarchy. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Air Transportation Portfolio
Financial Statements
Statement of Assets and Liabilities
|
|
February 28, 2015 |
|
|
|
|
|
|
Assets |
|
|
|
Investment in securities, at value (including securities loaned of $27,934,523) - See accompanying schedule: Unaffiliated issuers (cost $587,560,068) |
$ 704,522,163 |
|
|
Fidelity Central Funds (cost $37,987,474) |
37,987,474 |
|
|
Total Investments (cost $625,547,542) |
|
$ 742,509,637 |
|
Receivable for investments sold |
|
5,417,208 |
|
Receivable for fund shares sold |
|
1,535,198 |
|
Dividends receivable |
|
1,245,485 |
|
Distributions receivable from Fidelity Central Funds |
|
3,738 |
|
Prepaid expenses |
|
1,582 |
|
Other receivables |
|
454 |
|
Total assets |
|
750,713,302 |
|
|
|
|
|
Liabilities |
|
|
|
Payable to custodian bank |
$ 3,598 |
|
|
Payable for investments purchased |
278,915 |
|
|
Payable for fund shares redeemed |
5,247,888 |
|
|
Accrued management fee |
339,992 |
|
|
Other affiliated payables |
137,234 |
|
|
Other payables and accrued expenses |
48,944 |
|
|
Collateral on securities loaned, at value |
28,731,300 |
|
|
Total liabilities |
|
34,787,871 |
|
|
|
|
|
Net Assets |
|
$ 715,925,431 |
|
Net Assets consist of: |
|
|
|
Paid in capital |
|
$ 598,579,118 |
|
Undistributed net investment income |
|
404,199 |
|
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions |
|
(20,119) |
|
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies |
|
116,962,233 |
|
Net Assets, for 9,794,637 shares outstanding |
|
$ 715,925,431 |
|
Net Asset Value, offering price and redemption price per share ($715,925,431 ÷ 9,794,637 shares) |
|
$ 73.09 |
Statement of Operations
|
|
Year ended February 28, 2015 |
|
|
|
|
|
|
Investment Income |
|
|
|
Dividends |
|
$ 3,640,579 |
|
Special dividends |
|
1,570,000 |
|
Interest |
|
32,395 |
|
Income from Fidelity Central Funds (including $73,505 from security lending) |
|
88,261 |
|
Total income |
|
5,331,235 |
|
|
|
|
|
Expenses |
|
|
|
Management fee |
$ 2,613,627 |
|
|
Transfer agent fees |
928,187 |
|
|
Accounting and security lending fees |
182,269 |
|
|
Custodian fees and expenses |
29,626 |
|
|
Independent trustees' compensation |
8,527 |
|
|
Registration fees |
108,344 |
|
|
Audit |
41,379 |
|
|
Legal |
3,329 |
|
|
Miscellaneous |
14,096 |
|
|
Total expenses before reductions |
3,929,384 |
|
|
Expense reductions |
(687) |
3,928,697 |
|
Net investment income (loss) |
|
1,402,538 |
|
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: |
|
|
|
Investment securities: |
|
|
|
Unaffiliated issuers |
13,784,115 |
|
|
Foreign currency transactions |
9,757 |
|
|
Redemption in-kind with affiliated entities |
34,333,787 |
|
|
Total net realized gain (loss) |
|
48,127,659 |
|
Change in net unrealized appreciation (depreciation) on: Investment securities |
37,708,875 |
|
|
Assets and liabilities in foreign currencies |
138 |
|
|
Total change in net unrealized appreciation (depreciation) |
|
37,709,013 |
|
Net gain (loss) |
|
85,836,672 |
|
Net increase (decrease) in net assets resulting from operations |
|
$ 87,239,210 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Air Transportation Portfolio
Financial Statements - continued
Statement of Changes in Net Assets
|
|
Year ended |
Year ended |
|
Increase (Decrease) in Net Assets |
|
|
|
Operations |
|
|
|
Net investment income (loss) |
$ 1,402,538 |
$ 481,935 |
|
Net realized gain (loss) |
48,127,659 |
7,546,940 |
|
Change in net unrealized appreciation (depreciation) |
37,709,013 |
58,042,588 |
|
Net increase (decrease) in net assets resulting from operations |
87,239,210 |
66,071,463 |
|
Distributions to shareholders from net investment income |
(630,886) |
(283,510) |
|
Distributions to shareholders from net realized gain |
(8,759,130) |
(6,866,621) |
|
Total distributions |
(9,390,016) |
(7,150,131) |
|
Share transactions |
756,163,010 |
455,387,601 |
|
Reinvestment of distributions |
9,070,010 |
6,829,818 |
|
Cost of shares redeemed |
(478,208,807) |
(261,051,115) |
|
Net increase (decrease) in net assets resulting from share transactions |
287,024,213 |
201,166,304 |
|
Redemption fees |
92,355 |
35,151 |
|
Total increase (decrease) in net assets |
364,965,762 |
260,122,787 |
|
|
|
|
|
Net Assets |
|
|
|
Beginning of period |
350,959,669 |
90,836,882 |
|
End of period (including undistributed net investment income of $404,199 and undistributed net investment income of $146,694, respectively) |
$ 715,925,431 |
$ 350,959,669 |
|
Other Information Shares |
|
|
|
Sold |
11,025,387 |
8,314,236 |
|
Issued in reinvestment of distributions |
130,079 |
121,717 |
|
Redeemed |
(7,112,132) |
(4,750,627) |
|
Net increase (decrease) |
4,043,334 |
3,685,326 |
Financial Highlights
|
Years ended February 28, |
2015 |
2014 |
2013 |
2012 I |
2011 |
|
Selected Per-Share Data |
|
|
|
|
|
|
Net asset value, beginning of period |
$ 61.02 |
$ 43.97 |
$ 38.12 |
$ 43.05 |
$ 35.32 |
|
Income from Investment Operations |
|
|
|
|
|
|
Net investment income (loss) B |
.20 L |
.12 |
.21E |
.05 |
.17 F |
|
Net realized and unrealized gain (loss) |
13.09 |
18.28 |
6.44 |
.46 |
7.68 |
|
Total from investment operations |
13.29 |
18.40 |
6.65 |
.51 |
7.85 |
|
Distributions from net investment income |
(.08) |
(.06) |
(.15) |
(.05) |
(.13) |
|
Distributions from net realized gain |
(1.14) |
(1.30) |
(.66) |
(5.39) |
- |
|
Total distributions |
(1.23) M |
(1.36) |
(.80) K |
(5.44) |
(.13) |
|
Redemption fees added to paid in capital B |
.01 |
.01 |
- J |
- J |
.01 |
|
Net asset value, end of period |
$ 73.09 |
$ 61.02 |
$ 43.97 |
$ 38.12 |
$ 43.05 |
|
Total ReturnA |
21.93% |
42.26% |
17.62% |
2.01% |
22.26% |
|
Ratios to Average Net AssetsC, G |
|
|
|
|
|
|
Expenses before reductions |
.83% |
.87% |
.94% |
.96% |
.92% |
|
Expenses net of fee waivers, if any |
.83% |
.87% |
.94% |
.96% |
.92% |
|
Expenses net of all reductions |
.83% |
.86% |
.92% |
.95% |
.91% |
|
Net investment income (loss) |
.30% L |
.22% |
.54% E |
.12% |
.43% F |
|
Supplemental Data |
|
|
|
|
|
|
Net assets, end of period (000 omitted) |
$ 715,925 |
$ 350,960 |
$ 90,837 |
$ 72,652 |
$ 113,471 |
|
Portfolio turnover rateD |
65% H |
125% |
74% |
102% |
161% |
|
ATotal returns would have been lower if certain expenses had not been reduced during the applicable periods shown. BCalculated based on average shares outstanding during the period. CFees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. DAmount does not include the portfolio activity of any underlying Fidelity Central Funds. EInvestment income per share reflects a large, non-recurring dividend which amounted to $.07 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .35%. FInvestment 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%. GExpense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. HPortfolio turnover rate excludes securities received or delivered in-kind. IFor the year ended February 29. JAmount represents less than $.01 per share. KTotal distributions of $.80 per share is comprised of distributions from net investment income of $.147 and distributions from net realized gain of $.655 per share. LInvestment income per share reflects a large, non-recurring dividend which amounted to $.22 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been (.04)%. MTotal distributions of $1.23 per share is comprised of distributions from net investment income of $.084 and distributions from net realized gain of $1.144 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 28, 2015 |
Past 1 |
Past 5 |
Past 10 |
|
Defense and Aerospace Portfolio |
12.53% |
19.28% |
11.63% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Defense and Aerospace Portfolio on February 28, 2005. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index performed over the same period.
Annual Report
Defense and Aerospace Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. stock market closed near its all-time high for the 12 months ending February 28, 2015, supported by low interest rates and the relative strength of the U.S. economy and dollar. The large-cap S&P 500® Index returned 15.51%. Growth stocks in the index outperformed value-oriented names. The tech-heavy Nasdaq Composite Index® rose 16.58%, while the small-cap Russell 2000® Index advanced 5.63%, rallying from early-period weakness amid growth and valuation worries. Among the 10 major market sectors tracked by MSCI U.S. IMI 25-50 classifications, most notched a double-digit gain, led by health care (+24%), consumer staples (+21%), information technology (+20%) and utilities (+15%). Conversely, energy (-9%) was the only sector to lose ground, reflecting a sharp drop in crude prices beginning midyear and attributed to weaker global demand and a U.S. supply boom. Volatility spiked to a three-year high in October amid concerns about economic growth and Ebola, as well as unrest in Syria, Iraq and Ukraine. Nevertheless, the S&P 500® finished the period well above its mid-October nadir, bolstered by the relative economic strength of the U.S., which marked a six-year low in its unemployment rate, and consumer confidence that declined only slightly from its 11-year high reached in January.
Comments from Douglas Scott, Portfolio Manager of Defense and Aerospace Portfolio: For the year, the fund returned 12.53%, trailing the 13.19% return of the MSCI U.S. IMI Aerospace & Defense 25-50 Index and also lagging the S&P 500® Index. Aerospace & defense stocks lagged the broader market but still managed a solid gain, with especially strong performance by the major defense contractors. Commercial aerospace stocks turned in a relatively weak result despite the solid fundamentals of companies in that group. Compared with the MSCI index, not owning the strong-performing shares of major defense contractors Northrop Grumman and Lockheed Martin, and substantially underweighting General Dynamics, hurt the fund's results. Additionally, performance suffered due to Spirit AeroSystems Holdings, a strong-performing index component I decided against owning, and an out-of-benchmark position in Paris-based Safran, a manufacturer of aircraft and rocket engines and propulsion systems. This was mostly a case of unrewarding timing on my part, as the fund carried its largest stake earlier in the period, when the stock was relatively flat. Overall, the fund's foreign investments dampened performance because of a stronger U.S. dollar, although European aerospace names were somewhat helped because their costs are denominated in euros and much of their revenues are in dollars. Conversely, a sizable overweighting in shipbuilder Huntington Ingalls Industries was among the fund's biggest holdings and the top relative contributor. Aerospace and defense information solutions provider Exelis also outperformed. I liked this stock's inexpensive valuation, and apparently so did Harris, which submitted an offer to buy the company in February. Soon after this announcement, I sold the stock to lock in profits. Lastly, overweighting aircraft components maker TransDigm Group was a timely decision. Earnings growth continued to be strong, and this stock posted a 40% gain 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
Defense and Aerospace Portfolio
Investment Changes (Unaudited)
|
Top Ten Stocks as of February 28, 2015 |
||
|
|
% of fund's |
% of fund's net assets |
|
United Technologies Corp. |
18.6 |
20.5 |
|
The Boeing Co. |
16.0 |
17.2 |
|
Raytheon Co. |
5.7 |
1.8 |
|
Huntington Ingalls Industries, Inc. |
5.2 |
6.3 |
|
Rockwell Collins, Inc. |
4.7 |
1.0 |
|
Textron, Inc. |
4.4 |
5.3 |
|
L-3 Communications Holdings, Inc. |
4.3 |
4.4 |
|
Honeywell International, Inc. |
4.0 |
4.5 |
|
TransDigm Group, Inc. |
3.9 |
4.1 |
|
Orbital ATK, Inc. |
3.6 |
0.0 |
|
|
70.4 |
|
|
Top Industries (% of fund's net assets) |
|||
|
As of February 28, 2015 |
|||
 |
Aerospace & Defense |
92.5% |
|
 |
Leisure Products |
2.0% |
|
 |
Chemicals |
1.3% |
|
 |
Electrical Equipment |
0.0%† |
|
 |
Metals & Mining |
0.0%† |
|
 |
All Others* |
4.2% |
|
|
As of August 31, 2014 |
|||
 |
Aerospace & Defense |
97.7% |
|
 |
Chemicals |
1.5% |
|
 |
Electrical Equipment |
0.0%† |
|
 |
Metals & Mining |
0.0%† |
|
 |
All Others* |
0.8% |
|
|
* Includes short-term investments and net other assets (liabilities). |
|
† Amount represents less than 0.1% |
Annual Report
Defense and Aerospace Portfolio
Investments February 28, 2015
Showing Percentage of Net Assets
|
Common Stocks - 95.8% |
|||
|
Shares |
Value |
||
|
AEROSPACE & DEFENSE - 92.5% |
|||
|
Aerospace & Defense - 92.5% |
|||
|
BAE Systems PLC |
3,037,797 |
$ 24,950,283 |
|
|
BE Aerospace, Inc. |
285,000 |
18,108,900 |
|
|
Esterline Technologies Corp. (a) |
271,634 |
32,012,067 |
|
|
GenCorp, Inc. (non-vtg.) (a) |
686,431 |
13,248,118 |
|
|
General Dynamics Corp. |
81,200 |
11,268,936 |
|
|
HEICO Corp. (d) |
221,625 |
13,133,498 |
|
|
Honeywell International, Inc. |
367,876 |
37,810,295 |
|
|
Huntington Ingalls Industries, Inc. |
346,676 |
48,995,719 |
|
|
L-3 Communications Holdings, Inc. |
315,818 |
40,876,324 |
|
|
Meggitt PLC |
3,352,187 |
28,205,243 |
|
|
Orbital ATK, Inc. |
511,543 |
33,905,070 |
|
|
Precision Castparts Corp. |
33,694 |
7,288,012 |
|
|
Raytheon Co. |
495,356 |
53,879,872 |
|
|
Rockwell Collins, Inc. |
501,772 |
44,697,850 |
|
|
Safran SA |
258,300 |
18,181,284 |
|
|
Teledyne Technologies, Inc. (a) |
208,626 |
21,035,760 |
|
|
Textron, Inc. |
935,400 |
41,447,574 |
|
|
The Boeing Co. |
1,006,031 |
151,759,776 |
|
|
TransDigm Group, Inc. |
172,733 |
37,458,878 |
|
|
Triumph Group, Inc. |
362,335 |
21,664,010 |
|
|
United Technologies Corp. |
1,450,201 |
176,794,004 |
|
|
|
876,721,473 |
||
|
CHEMICALS - 1.3% |
|||
|
Specialty Chemicals - 1.3% |
|||
|
Cytec Industries, Inc. |
234,432 |
12,314,713 |
|
|
ELECTRICAL EQUIPMENT - 0.0% |
|||
|
Electrical Components & Equipment - 0.0% |
|||
|
AMETEK, Inc. |
599 |
31,831 |
|
|
LEISURE PRODUCTS - 2.0% |
|||
|
Leisure Products - 2.0% |
|||
|
Vista Outdoor, Inc. (a) |
442,886 |
19,336,403 |
|
|
|
|||
|
Shares |
Value |
||
|
METALS & MINING - 0.0% |
|||
|
Steel - 0.0% |
|||
|
Carpenter Technology Corp. |
200 |
$ 8,472 |
|
|
TOTAL COMMON STOCKS (Cost $576,486,498) |
|
||
|
Money Market Funds - 5.0% |
|||
|
|
|
|
|
|
Fidelity Cash Central Fund, 0.13% (b) |
44,887,762 |
44,887,762 |
|
|
Fidelity Securities Lending Cash Central Fund, 0.13% (b)(c) |
2,108,750 |
2,108,750 |
|
|
TOTAL MONEY MARKET FUNDS (Cost $46,996,512) |
|
||
|
TOTAL INVESTMENT PORTFOLIO - 100.8% (Cost $623,483,010) |
955,409,404 |
|
NET OTHER ASSETS (LIABILITIES) - (0.8)% |
(7,253,646) |
||
|
NET ASSETS - 100% |
$ 948,155,758 |
||
|
Legend |
|
(a) Non-income producing |
|
(b) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
|
(c) Investment made with cash collateral received from securities on loan. |
|
(d) Security or a portion of the security is on loan at period end. |
|
Affiliated Central Funds |
|
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
|
Fund |
Income earned |
|
Fidelity Cash Central Fund |
$ 7,780 |
|
Fidelity Securities Lending Cash Central Fund |
36,837 |
|
Total |
$ 44,617 |
|
Other Information |
|
All investments are categorized as Level 1 under the Fair Value Hierarchy. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Defense and Aerospace Portfolio
Financial Statements
Statement of Assets and Liabilities
|
|
February 28, 2015 |
|
|
|
|
|
|
Assets |
|
|
|
Investment in securities, at value (including securities loaned of $2,074,100) - See accompanying schedule: Unaffiliated issuers (cost $576,486,498) |
$ 908,412,892 |
|
|
Fidelity Central Funds (cost $46,996,512) |
46,996,512 |
|
|
Total Investments (cost $623,483,010) |
|
$ 955,409,404 |
|
Receivable for fund shares sold |
|
4,180,756 |
|
Dividends receivable |
|
2,396,151 |
|
Distributions receivable from Fidelity Central Funds |
|
3,684 |
|
Prepaid expenses |
|
3,226 |
|
Other receivables |
|
17,130 |
|
Total assets |
|
962,010,351 |
|
|
|
|
|
Liabilities |
|
|
|
Payable for investments purchased |
$ 10,082,692 |
|
|
Payable for fund shares redeemed |
1,050,173 |
|
|
Accrued management fee |
407,801 |
|
|
Other affiliated payables |
156,158 |
|
|
Other payables and accrued expenses |
49,019 |
|
|
Collateral on securities loaned, at value |
2,108,750 |
|
|
Total liabilities |
|
13,854,593 |
|
|
|
|
|
Net Assets |
|
$ 948,155,758 |
|
Net Assets consist of: |
|
|
|
Paid in capital |
|
$ 582,894,054 |
|
Undistributed net investment income |
|
2,197,778 |
|
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions |
|
31,137,532 |
|
Net unrealized appreciation (depreciation) on investments |
|
331,926,394 |
|
Net Assets, for 7,351,932 shares outstanding |
|
$ 948,155,758 |
|
Net Asset Value, offering price and redemption price per share ($948,155,758 ÷ 7,351,932 shares) |
|
$ 128.97 |
Statement of Operations
|
|
Year ended February 28, 2015 |
|
|
|
|
|
|
Investment Income |
|
|
|
Dividends |
|
$ 9,670,003 |
|
Special dividends |
|
4,780,825 |
|
Interest |
|
11 |
|
Income from Fidelity Central Funds (including $36,837 from security lending) |
|
44,617 |
|
Total income |
|
14,495,456 |
|
|
|
|
|
Expenses |
|
|
|
Management fee |
$ 4,713,020 |
|
|
Transfer agent fees |
1,664,290 |
|
|
Accounting and security lending fees |
292,963 |
|
|
Custodian fees and expenses |
15,841 |
|
|
Independent trustees' compensation |
17,126 |
|
|
Registration fees |
38,764 |
|
|
Audit |
39,342 |
|
|
Legal |
6,278 |
|
|
Interest |
2,056 |
|
|
Miscellaneous |
11,562 |
|
|
Total expenses before reductions |
6,801,242 |
|
|
Expense reductions |
(1,618) |
6,799,624 |
|
Net investment income (loss) |
|
7,695,832 |
|
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: |
|
|
|
Investment securities: |
|
|
|
Unaffiliated issuers |
50,298,719 |
|
|
Foreign currency transactions |
(5,045) |
|
|
Total net realized gain (loss) |
|
50,293,674 |
|
Change in net unrealized appreciation (depreciation) on investment securities |
|
37,285,780 |
|
Net gain (loss) |
|
87,579,454 |
|
Net increase (decrease) in net assets resulting from operations |
|
$ 95,275,286 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Changes in Net Assets
|
|
Year ended |
Year ended |
|
Increase (Decrease) in Net Assets |
|
|
|
Operations |
|
|
|
Net investment income (loss) |
$ 7,695,832 |
$ 5,553,635 |
|
Net realized gain (loss) |
50,293,674 |
82,268,583 |
|
Change in net unrealized appreciation (depreciation) |
37,285,780 |
174,135,772 |
|
Net increase (decrease) in net assets resulting from operations |
95,275,286 |
261,957,990 |
|
Distributions to shareholders from net investment income |
(6,773,084) |
(4,764,402) |
|
Distributions to shareholders from net realized gain |
(49,828,078) |
(42,855,160) |
|
Total distributions |
(56,601,162) |
(47,619,562) |
|
Share transactions |
202,060,866 |
401,810,559 |
|
Reinvestment of distributions |
54,381,038 |
45,690,950 |
|
Cost of shares redeemed |
(370,380,329) |
(245,341,421) |
|
Net increase (decrease) in net assets resulting from share transactions |
(113,938,425) |
202,160,088 |
|
Redemption fees |
26,928 |
35,338 |
|
Total increase (decrease) in net assets |
(75,237,373) |
416,533,854 |
|
|
|
|
|
Net Assets |
|
|
|
Beginning of period |
1,023,393,131 |
606,859,277 |
|
End of period (including undistributed net investment income of $2,197,778 and undistributed net investment income of $1,569,587, respectively) |
$ 948,155,758 |
$ 1,023,393,131 |
|
Other Information Shares |
|
|
|
Sold |
1,668,989 |
3,564,948 |
|
Issued in reinvestment of distributions |
477,347 |
390,076 |
|
Redeemed |
(3,145,035) |
(2,219,786) |
|
Net increase (decrease) |
(998,699) |
1,735,238 |
Financial Highlights
|
Years ended February 28, |
2015 |
2014 |
2013 |
2012 G |
2011 |
|
Selected Per-Share Data |
|
|
|
|
|
|
Net asset value, beginning of period |
$ 122.55 |
$ 91.73 |
$ 86.02 |
$ 78.21 |
$ 62.05 |
|
Income from Investment Operations |
|
|
|
|
|
|
Net investment income (loss) B |
1.06 J |
.77 |
1.17 E |
.56 |
.42 |
|
Net realized and unrealized gain (loss) |
13.14 |
36.34 |
5.94 |
7.87 |
16.17 |
|
Total from investment operations |
14.20 |
37.11 |
7.11 |
8.43 |
16.59 |
|
Distributions from net investment income |
(.97) |
(.64) |
(1.21) |
(.51) |
(.43) |
|
Distributions from net realized gain |
(6.81) |
(5.65) |
(.19) |
(.12) |
- |
|
Total distributions |
(7.78) |
(6.29) |
(1.40) |
(.62) I |
(.43) |
|
Redemption fees added to paid in capital B, H |
- |
- |
- |
- |
- |
|
Net asset value, end of period |
$ 128.97 |
$ 122.55 |
$ 91.73 |
$ 86.02 |
$ 78.21 |
|
Total ReturnA |
12.53% |
40.85% |
8.37% |
10.87% |
26.79% |
|
Ratios to Average Net AssetsC, F |
|
|
|
|
|
|
Expenses before reductions |
.79% |
.81% |
.84% |
.86% |
.88% |
|
Expenses net of fee waivers, if any |
.79% |
.81% |
.84% |
.86% |
.88% |
|
Expenses net of all reductions |
.79% |
.81% |
.83% |
.86% |
.88% |
|
Net investment income (loss) |
.90% J |
.70% |
1.39% E |
.72% |
.62% |
|
Supplemental Data |
|
|
|
|
|
|
Net assets, end of period (000 omitted) |
$ 948,156 |
$ 1,023,393 |
$ 606,859 |
$ 681,154 |
$ 677,961 |
|
Portfolio turnover rateD |
20% |
48% |
56% |
56% |
43% |
|
ATotal returns would have been lower if certain expenses had not been reduced during the applicable periods shown. BCalculated based on average shares outstanding during the period. CFees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. DAmount does not include the portfolio activity of any underlying Fidelity Central Funds. EInvestment income per share reflects a large, non-recurring dividend which amounted to $.34 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .99%. FExpense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. GFor the year ended February 29. HAmount represents less than $.01 per share. ITotal distributions of $.62 per share is comprised of distributions from net investment income of $.508 and distributions from net realized gain of $.115 per share. JInvestment income per share reflects a large, non-recurring dividend which amounted to $.66 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .34%. |
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 28, 2015 |
Past 1 |
Past 5 |
Past 10 |
|
Environment and Alternative Energy Portfolio A |
2.19% |
10.56% |
6.17% |
A Prior to July 1, 2010, Environment and Alternative Energy Portfolio was named Environmental Portfolio, and the fund operated under certain different investment policies and compared its performance to a different additional index. The fund's historical performance may not represent its current investment policies.
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Environment and Alternative Energy Portfolio on February 28, 2005. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index performed over the same period.
Annual Report
Environment and Alternative Energy Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. stock market closed near its all-time high for the 12 months ending February 28, 2015, supported by low interest rates and the relative strength of the U.S. economy and dollar. The large-cap S&P 500® Index returned 15.51%. Growth stocks in the index outperformed value-oriented names. The tech-heavy Nasdaq Composite Index® rose 16.58%, while the small-cap Russell 2000® Index advanced 5.63%, rallying from early-period weakness amid growth and valuation worries. Among the 10 major market sectors tracked by MSCI U.S. IMI 25-50 classifications, most notched a double-digit gain, led by health care (+24%), consumer staples (+21%), information technology (+20%) and utilities (+15%). Conversely, energy (-9%) was the only sector to lose ground, reflecting a sharp drop in crude prices beginning midyear and attributed to weaker global demand and a U.S. supply boom. Volatility spiked to a three-year high in October amid concerns about economic growth and Ebola, as well as unrest in Syria, Iraq and Ukraine. Nevertheless, the S&P 500® finished the period well above its mid-October nadir, bolstered by the relative economic strength of the U.S., which marked a six-year low in its unemployment rate, and consumer confidence that declined only slightly from its 11-year high reached in January.
Comments from Kevin Walenta, who became Portfolio Manager of Environment and Alternative Energy Portfolio on November 1, 2014: For the year, the fund returned 2.19%, lagging the 7.10% gain of its benchmark, the FTSE® Environmental Opportunities & Alternative Energy Index, and the broad-based S&P 500®. The steep decline in oil prices this past year hurt demand for alternative energy and energy-efficient products. However, some segments, such as environmental & facility services, benefited as lower energy costs reduced their operational or input costs. An average overweighting in several companies adversely affected by falling energy prices hurt performance versus the benchmark. The chief disappointment here was Denmark-based wind turbine supplier Vestas Wind Systems. Elsewhere, an out-of-index stake in Austria-based LED and lighting component maker Zumtobel Group detracted, as weak economic growth in Europe pressured demand for its products. The surging U.S. dollar further hindered these and other foreign holdings, hampering the fund's relative performance. By contrast, the fund benefited from owning U.S.-based Covanta Holding, an environmental & facility services company with highly predictable and recurring revenues that attracted investors. All of the stocks mentioned were eliminated from the portfolio before 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
Environment and Alternative Energy Portfolio
Investment Changes (Unaudited)
|
Top Ten Stocks as of February 28, 2015 |
||
|
|
% of fund's |
% of fund's net assets |
|
Honeywell International, Inc. |
10.9 |
0.0 |
|
Praxair, Inc. |
7.4 |
0.0 |
|
Deere & Co. |
6.4 |
0.0 |
|
Delphi Automotive PLC |
6.3 |
0.0 |
|
Cummins, Inc. |
5.0 |
0.0 |
|
3M Co. |
4.8 |
0.0 |
|
Tenneco, Inc. |
4.6 |
0.0 |
|
Parker Hannifin Corp. |
4.3 |
0.0 |
|
Rockwell Automation, Inc. |
4.1 |
0.0 |
|
A.O. Smith Corp. |
4.0 |
0.0 |
|
|
57.8 |
|
|
Top Industries (% of fund's net assets) |
|||
|
As of February 28, 2015 |
|||
 |
Energy Efficiency |
49.5% |
|
 |
Pollution Control |
10.6% |
|
 |
Water Infrastructure & Technologies |
10.5% |
|
 |
Environmental Support Services |
9.1% |
|
 |
Food Agriculture & Forestry |
7.8% |
|
 |
All Others* |
12.5% |
|
|
As of August 31, 2014 |
|||
 |
Renewable & Alternative Energy |
84.5% |
|
 |
Energy Efficiency |
5.2% |
|
 |
Environmental Support Services |
4.7% |
|
 |
All Others* |
5.6% |
|
|
* Includes short-term investments and net other assets (liabilities). |
Annual Report
Environment and Alternative Energy Portfolio
Investments February 28, 2015
Showing Percentage of Net Assets
|
Common Stocks - 95.9% |
|||
|
Shares |
Value |
||
|
Energy Efficiency - 49.5% |
|||
|
Buildings Energy Efficiency - 7.1% |
|||
|
A.O. Smith Corp. |
55,800 |
$ 3,517,074 |
|
|
Johnson Controls, Inc. |
2,800 |
142,268 |
|
|
Lennox International, Inc. |
24,900 |
2,596,074 |
|
|
TOTAL BUILDINGS ENERGY EFFICIENCY |
6,255,416 |
||
|
Diversified Energy Efficiency - 13.8% |
|||
|
Honeywell International, Inc. |
94,600 |
9,722,988 |
|
|
Linear Technology Corp. |
52,900 |
2,548,987 |
|
|
TOTAL DIVERSIFIED ENERGY EFFICIENCY |
12,271,975 |
||
|
Industrial Energy Efficiency - 17.1% |
|||
|
Emerson Electric Co. |
10,900 |
631,328 |
|
|
EnerSys |
49,300 |
3,219,290 |
|
|
Praxair, Inc. |
51,400 |
6,574,060 |
|
|
Rockwell Automation, Inc. |
31,100 |
3,639,944 |
|
|
Rogers Corp. (a) |
13,400 |
1,048,952 |
|
|
TOTAL INDUSTRIAL ENERGY EFFICIENCY |
15,113,574 |
||
|
Transport Energy Efficiency - 11.5% |
|||
|
BorgWarner, Inc. |
36,500 |
2,243,290 |
|
|
Delphi Automotive PLC |
70,900 |
5,589,756 |
|
|
Innospec, Inc. |
53,800 |
2,376,346 |
|
|
TOTAL TRANSPORT ENERGY EFFICIENCY |
10,209,392 |
||
|
TOTAL ENERGY EFFICIENCY |
43,850,357 |
||
|
Environmental Support Services - 9.1% |
|||
|
Diversified Environmental - 9.1% |
|||
|
3M Co. |
25,100 |
4,233,115 |
|
|
Parker Hannifin Corp. |
31,200 |
3,827,928 |
|
|
TOTAL DIVERSIFIED ENVIRONMENTAL |
8,061,043 |
||
|
Food Agriculture & Forestry - 7.8% |
|||
|
Logistics, Food Safety and Packaging - 0.2% |
|||
|
Bunge Ltd. |
2,400 |
196,272 |
|
|
Sustainable and Efficient Agriculture - 6.4% |
|||
|
Deere & Co. |
62,500 |
5,662,500 |
|
|
|
|||
|
Shares |
Value |
||
|
Sustainable Forestry and Plantations - 1.2% |
|||
|
Potlatch Corp. |
27,100 |
$ 1,082,103 |
|
|
TOTAL FOOD AGRICULTURE & FORESTRY |
6,940,875 |
||
|
Pollution Control - 10.6% |
|||
|
Environmental Testing and Gas Sensing - 1.0% |
|||
|
Thermo Fisher Scientific, Inc. |
6,700 |
871,000 |
|
|
Pollution Control Solutions - 9.6% |
|||
|
Cummins, Inc. |
31,200 |
4,437,576 |
|
|
Tenneco, Inc. (a) |
70,000 |
4,076,800 |
|
|
TOTAL POLLUTION CONTROL SOLUTIONS |
8,514,376 |
||
|
TOTAL POLLUTION CONTROL |
9,385,376 |
||
|
Renewable & Alternative Energy - 6.9% |
|||
|
Renewable Energy Developers and Independent Power Producers - 6.7% |
|||
|
Enel SpA |
140,071 |
645,482 |
|
|
Energias de Portugal SA |
116,423 |
459,378 |
|
|
Fortum Corp. |
18,500 |
421,501 |
|
|
Iberdrola SA (d) |
487,318 |
3,330,350 |
|
|
IDACORP, Inc. |
8,500 |
532,270 |
|
|
Portland General Electric Co. |
15,800 |
589,182 |
|
|
TOTAL RENEWABLE ENERGY DEVELOPERS AND INDEPENDENT POWER PRODUCERS |
5,978,163 |
||
|
Solar Energy Generation Equipment - 0.2% |
|||
|
Canadian Solar, Inc. (a) |
6,000 |
177,750 |
|
|
TOTAL RENEWABLE & ALTERNATIVE ENERGY |
6,155,913 |
||
|
Waste Management & Technologies - 1.5% |
|||
|
Recycling and Value Added Waste Processing - 1.5% |
|||
|
Copart, Inc. (a) |
34,800 |
1,302,216 |
|
|
Water Infrastructure & Technologies - 10.5% |
|||
|
Diversified Water Infrastructure and Technology - 2.3% |
|||
|
Danaher Corp. |
22,900 |
1,998,712 |
|
|
Water Infrastructure - 7.7% |
|||
|
Roper Industries, Inc. |
19,700 |
3,301,129 |
|
|
Valmont Industries, Inc. (d) |
28,100 |
3,502,665 |
|
|
TOTAL WATER INFRASTRUCTURE |
6,803,794 |
||
|
Water Treatment Equipment - 0.5% |
|||
|
Ecolab, Inc. |
4,000 |
462,160 |
|
|
TOTAL WATER INFRASTRUCTURE & TECHNOLOGIES |
9,264,666 |
||
|
TOTAL COMMON STOCKS (Cost $79,454,288) |
|
||
|
Cash Equivalents - 10.4% |
|||
|
Shares |
Value |
||
|
Fidelity Cash Central Fund, 0.13% (b) |
3,435,080 |
$ 3,435,080 |
|
|
Fidelity Securities Lending Cash Central Fund, 0.13% (b)(c) |
5,745,275 |
5,745,275 |
|
|
TOTAL CASH EQUIVALENTS (Cost $9,180,355) |
|
||
|
TOTAL INVESTMENT PORTFOLIO - 106.3% (Cost $88,634,643) |
94,140,801 |
|
NET OTHER ASSETS (LIABILITIES) - (6.3)% |
(5,568,126) |
||
|
NET ASSETS - 100% |
$ 88,572,675 |
||
|
Legend |
|
(a) Non-income producing |
|
(b) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements 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 |
$ 2,803 |
|
Fidelity Securities Lending Cash Central Fund |
93,243 |
|
Total |
$ 96,046 |
|
Other Information |
|
All investments are categorized as Level 1 under the Fair Value Hierarchy. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements. |
|
Distribution of investments by country or territory of incorporation, as a percentage of total net assets, is as follows (Unaudited): |
|
United States of America |
87.9% |
|
Bailiwick of Jersey |
6.3% |
|
Spain |
3.7% |
|
Others (Individually Less Than 1%) |
2.1% |
|
|
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 28, 2015 |
|
|
|
|
|
|
Assets |
|
|
|
Investment in securities, at value (including securities loaned of $5,563,147) - See accompanying schedule: Unaffiliated issuers (cost $79,454,288) |
$ 84,960,446 |
|
|
Fidelity Central Funds (cost $9,180,355) |
9,180,355 |
|
|
Total Investments (cost $88,634,643) |
|
$ 94,140,801 |
|
Cash |
|
90 |
|
Receivable for investments sold |
|
179,671 |
|
Receivable for fund shares sold |
|
205,016 |
|
Dividends receivable |
|
161,258 |
|
Distributions receivable from Fidelity Central Funds |
|
2,635 |
|
Prepaid expenses |
|
390 |
|
Other receivables |
|
63 |
|
Total assets |
|
94,689,924 |
|
|
|
|
|
Liabilities |
|
|
|
Payable for investments purchased |
$ 177,318 |
|
|
Payable for fund shares redeemed |
100,573 |
|
|
Accrued management fee |
39,922 |
|
|
Other affiliated payables |
22,165 |
|
|
Other payables and accrued expenses |
31,996 |
|
|
Collateral on securities loaned, at value |
5,745,275 |
|
|
Total liabilities |
|
6,117,249 |
|
|
|
|
|
Net Assets |
|
$ 88,572,675 |
|
Net Assets consist of: |
|
|
|
Paid in capital |
|
$ 81,291,694 |
|
Undistributed net investment income |
|
43,112 |
|
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions |
|
1,733,007 |
|
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies |
|
5,504,862 |
|
Net Assets, for 4,229,970 shares outstanding |
|
$ 88,572,675 |
|
Net Asset Value, offering price and redemption price per share ($88,572,675 ÷ 4,229,970 shares) |
|
$ 20.94 |
Statement of Operations
|
|
Year ended February 28, 2015 |
|
|
|
|
|
|
Investment Income |
|
|
|
Dividends |
|
$ 1,476,011 |
|
Interest |
|
8,148 |
|
Income from Fidelity Central Funds (including $93,243 from security lending) |
|
96,046 |
|
Total income |
|
1,580,205 |
|
|
|
|
|
Expenses |
|
|
|
Management fee |
$ 531,982 |
|
|
Transfer agent fees |
251,347 |
|
|
Accounting and security lending fees |
38,675 |
|
|
Custodian fees and expenses |
6,134 |
|
|
Independent trustees' compensation |
1,935 |
|
|
Registration fees |
21,046 |
|
|
Audit |
38,811 |
|
|
Legal |
662 |
|
|
Miscellaneous |
1,250 |
|
|
Total expenses before reductions |
891,842 |
|
|
Expense reductions |
(88) |
891,754 |
|
Net investment income (loss) |
|
688,451 |
|
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: |
|
|
|
Investment securities: |
|
|
|
Unaffiliated issuers |
21,122,529 |
|
|
Foreign currency transactions |
(5,958) |
|
|
Total net realized gain (loss) |
|
21,116,571 |
|
Change in net unrealized appreciation (depreciation) on: Investment securities |
(20,168,561) |
|
|
Assets and liabilities in foreign currencies |
(1,350) |
|
|
Total change in net unrealized appreciation (depreciation) |
|
(20,169,911) |
|
Net gain (loss) |
|
946,660 |
|
Net increase (decrease) in net assets resulting from operations |
|
$ 1,635,111 |
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) |
$ 688,451 |
$ 589,401 |
|
Net realized gain (loss) |
21,116,571 |
5,379,320 |
|
Change in net unrealized appreciation (depreciation) |
(20,169,911) |
15,625,963 |
|
Net increase (decrease) in net assets resulting from operations |
1,635,111 |
21,594,684 |
|
Distributions to shareholders from net investment income |
(560,254) |
(701,353) |
|
Distributions to shareholders from net realized gain |
(10,675,033) |
- |
|
Total distributions |
(11,235,287) |
(701,353) |
|
Share transactions |
24,999,440 |
41,113,758 |
|
Reinvestment of distributions |
10,697,844 |
672,436 |
|
Cost of shares redeemed |
(40,397,558) |
(41,831,872) |
|
Net increase (decrease) in net assets resulting from share transactions |
(4,700,274) |
(45,678) |
|
Redemption fees |
4,105 |
3,514 |
|
Total increase (decrease) in net assets |
(14,296,345) |
20,851,167 |
|
|
|
|
|
Net Assets |
|
|
|
Beginning of period |
102,869,020 |
82,017,853 |
|
End of period (including undistributed net investment income of $43,112 and distributions in excess of net investment income of $105,356, respectively) |
$ 88,572,675 |
$ 102,869,020 |
|
Other Information Shares |
|
|
|
Sold |
1,107,316 |
1,933,973 |
|
Issued in reinvestment of distributions |
516,769 |
31,610 |
|
Redeemed |
(1,798,133) |
(2,087,703) |
|
Net increase (decrease) |
(174,048) |
(122,120) |
Financial Highlights
|
Years ended February 28, |
2015 |
2014 |
2013 |
2012 F |
2011 |
|
Selected Per-Share Data |
|
|
|
|
|
|
Net asset value, beginning of period |
$ 23.36 |
$ 18.12 |
$ 16.32 |
$ 19.19 |
$ 14.94 |
|
Income from Investment Operations |
|
|
|
|
|
|
Net investment income (loss) B |
.16 |
.14 |
.18 |
.20 |
.10 |
|
Net realized and unrealized gain (loss) |
.31 |
5.27 |
1.77 |
(2.88) |
4.22 |
|
Total from investment operations |
.47 |
5.41 |
1.95 |
(2.68) |
4.32 |
|
Distributions from net investment income |
(.14) |
(.17) |
(.15) |
(.19) |
(.07) |
|
Distributions from net realized gain |
(2.75) |
- |
- |
- |
- |
|
Total distributions |
(2.89) |
(.17) |
(.15) |
(.19) |
(.07) |
|
Redemption fees added to paid in capital B, G |
- |
- |
- |
- |
- |
|
Net asset value, end of period |
$ 20.94 |
$ 23.36 |
$ 18.12 |
$ 16.32 |
$ 19.19 |
|
Total ReturnA |
2.19% |
29.97% |
12.02% |
(13.92)% |
28.96% |
|
Ratios to Average Net AssetsC, E |
|
|
|
|
|
|
Expenses before reductions |
.92% |
.97% |
.99% |
1.01% |
1.08% |
|
Expenses net of fee waivers, if any |
.92% |
.97% |
.99% |
1.01% |
1.08% |
|
Expenses net of all reductions |
.92% |
.97% |
.97% |
1.00% |
1.07% |
|
Net investment income (loss) |
.71% |
.70% |
1.10% |
1.15% |
.59% |
|
Supplemental Data |
|
|
|
|
|
|
Net assets, end of period (000 omitted) |
$ 88,573 |
$ 102,869 |
$ 82,018 |
$ 77,943 |
$ 96,864 |
|
Portfolio turnover rateD |
160% |
28% |
54% |
183% |
190% |
|
ATotal returns would have been lower if certain expenses had not been reduced during the applicable periods shown. BCalculated based on average shares outstanding during the period. CFees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. DAmount does not include the portfolio activity of any underlying Fidelity Central Funds. EExpense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. FFor the year ended February 29. GAmount represents less than $.01 per share. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
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 28, 2015 |
Past 1 |
Past 5 |
Past 10 |
|
Industrial Equipment Portfolio |
3.36% |
14.87% |
8.88% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Industrial Equipment Portfolio on February 28, 2005. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index performed over the same period.
Annual Report
Industrial Equipment Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. stock market closed near its all-time high for the 12 months ending February 28, 2015, supported by low interest rates and the relative strength of the U.S. economy and dollar. The large-cap S&P 500® Index returned 15.51%. Growth stocks in the index outperformed value-oriented names. The tech-heavy Nasdaq Composite Index® rose 16.58%, while the small-cap Russell 2000® Index advanced 5.63%, rallying from early-period weakness amid growth and valuation worries. Among the 10 major market sectors tracked by MSCI U.S. IMI 25-50 classifications, most notched a double-digit gain, led by health care (+24%), consumer staples (+21%), information technology (+20%) and utilities (+15%). Conversely, energy (-9%) was the only sector to lose ground, reflecting a sharp drop in crude prices beginning midyear and attributed to weaker global demand and a U.S. supply boom. Volatility spiked to a three-year high in October amid concerns about economic growth and Ebola, as well as unrest in Syria, Iraq and Ukraine. Nevertheless, the S&P 500® finished the period well above its mid-October nadir, bolstered by the relative economic strength of the U.S., which marked a six-year low in its unemployment rate, and consumer confidence that declined only slightly from its 11-year high reached in January.
Comments from Boris Shepov, Portfolio Manager of Industrial Equipment Portfolio: For the year, the fund returned 3.36%, trailing the 5.80% gain of the MSCI U.S. IMI Capital Goods 25-50 Index and also lagging the S&P 500®. Our MSCI benchmark muddled through most of the reporting period, as improvement in U.S. industrial end markets was offset by weakness in Europe, China and Brazil, and geopolitical risks in Iraq, Syria and Ukraine. Additionally, a significant decline in the commodities complex - crude oil, in particular - had a negative effect on the outlook for industrial end markets tied to oil and gas, as well as mining. Versus the MSCI index, construction machinery & heavy trucks was the group that had by far the most negative impact on performance. This was largely due to a sizable overweighting in Manitowoc, a crane and food-service equipment company and the fund's largest individual detractor. I more than doubled the fund's share count in this stock during the period. In industrial conglomerates, underweighting and ultimately selling strong-performing index name 3M detracted. Two other detractors were from construction & engineering, where an overweighting partially offset favorable stock picking. One of these was MasTec, which I sold in December. AECOM also detracted. Here, though, I thought the stock's decline was overdone. Consequently, I built AECOM into the fund's second-largest overweighting by period end. Conversely, a sizable overweighting in URS was a noteworthy contributor in the construction & engineering segment and the fund's top relative contributor. I liked the company's double-digit free-cash-flow yield and capital allocation possibilities, and in July URS announced plans to be acquired by AECOM, which lifted URS's stock. The deal closed in October. A non-index stake in business information provider Dun & Bradstreet also contributed, as did overweighting aircraft maker Boeing.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Industrial Equipment Portfolio
Investment Changes (Unaudited)
|
Top Ten Stocks as of February 28, 2015 |
||
|
|
% of fund's |
% of fund's net assets |
|
United Technologies Corp. |
9.6 |
9.7 |
|
Manitowoc Co., Inc. |
9.3 |
3.8 |
|
The Boeing Co. |
7.7 |
8.3 |
|
General Electric Co. |
6.1 |
5.9 |
|
Danaher Corp. |
5.3 |
5.0 |
|
AECOM Technology Corp. |
5.2 |
1.4 |
|
Honeywell International, Inc. |
4.8 |
5.5 |
|
Caterpillar, Inc. |
3.8 |
5.8 |
|
Global Brass & Copper Holdings, Inc. |
3.1 |
2.4 |
|
Cummins, Inc. |
3.0 |
2.5 |
|
|
57.9 |
|
|
Top Industries (% of fund's net assets) |
|||
|
As of February 28, 2015 |
|||
 |
Machinery |
32.9% |
|
 |
Aerospace & Defense |
31.5% |
|
 |
Industrial Conglomerates |
11.4% |
|
 |
Construction & Engineering |
5.2% |
|
 |
Electrical Equipment |
4.1% |
|
 |
All Others* |
14.9% |
|
|
As of August 31, 2014 |
|||
 |
Aerospace & Defense |
33.4% |
|
 |
Machinery |
26.7% |
|
 |
Industrial Conglomerates |
12.0% |
|
 |
Construction & Engineering |
6.0% |
|
 |
Electrical Equipment |
6.0% |
|
 |
All Others* |
15.9% |
|
|
* Includes short-term investments and net other assets (liabilities). |
Annual Report
Industrial Equipment Portfolio
Investments February 28, 2015
Showing Percentage of Net Assets
|
Common Stocks - 99.4% |
|||
|
Shares |
Value |
||
|
AEROSPACE & DEFENSE - 31.5% |
|||
|
Aerospace & Defense - 31.5% |
|||
|
Honeywell International, Inc. |
106,200 |
$ 10,915,236 |
|
|
Huntington Ingalls Industries, Inc. |
21,500 |
3,038,595 |
|
|
L-3 Communications Holdings, Inc. |
46,000 |
5,953,780 |
|
|
Northrop Grumman Corp. |
40,800 |
6,760,968 |
|
|
Teledyne Technologies, Inc. (a) |
26,300 |
2,651,829 |
|
|
Textron, Inc. |
10,000 |
443,100 |
|
|
The Boeing Co. |
117,200 |
17,679,620 |
|
|
Triumph Group, Inc. |
40,800 |
2,439,432 |
|
|
United Technologies Corp. |
180,100 |
21,955,992 |
|
|
|
71,838,552 |
||
|
AUTO COMPONENTS - 1.4% |
|||
|
Auto Parts & Equipment - 1.4% |
|||
|
Johnson Controls, Inc. |
63,700 |
3,236,597 |
|
|
BUILDING PRODUCTS - 1.5% |
|||
|
Building Products - 1.5% |
|||
|
Lennox International, Inc. |
33,500 |
3,492,710 |
|
|
CONSTRUCTION & ENGINEERING - 5.2% |
|||
|
Construction & Engineering - 5.2% |
|||
|
AECOM Technology Corp. (a) |
396,717 |
11,925,309 |
|
|
DIVERSIFIED CONSUMER SERVICES - 2.1% |
|||
|
Specialized Consumer Services - 2.1% |
|||
|
H&R Block, Inc. |
104,500 |
3,568,675 |
|
|
ServiceMaster Global Holdings, Inc. |
35,900 |
1,241,781 |
|
|
|
4,810,456 |
||
|
ELECTRICAL EQUIPMENT - 4.1% |
|||
|
Electrical Components & Equipment - 2.4% |
|||
|
AMETEK, Inc. |
55,600 |
2,954,584 |
|
|
Regal-Beloit Corp. |
32,028 |
2,496,262 |
|
|
|
5,450,846 |
||
|
Heavy Electrical Equipment - 1.7% |
|||
|
Babcock & Wilcox Co. |
127,200 |
3,948,288 |
|
|
TOTAL ELECTRICAL EQUIPMENT |
9,399,134 |
||
|
INDUSTRIAL CONGLOMERATES - 11.4% |
|||
|
Industrial Conglomerates - 11.4% |
|||
|
Danaher Corp. |
138,300 |
12,070,824 |
|
|
General Electric Co. |
537,555 |
13,971,054 |
|
|
|
26,041,878 |
||
|
LEISURE PRODUCTS - 2.0% |
|||
|
Leisure Products - 2.0% |
|||
|
Vista Outdoor, Inc. (a) |
107,100 |
4,675,986 |
|
|
MACHINERY - 32.9% |
|||
|
Agricultural & Farm Machinery - 2.4% |
|||
|
Deere & Co. |
59,700 |
5,408,820 |
|
|
|
|||
|
Shares |
Value |
||
|
Construction Machinery & Heavy Trucks - 19.7% |
|||
|
Allison Transmission Holdings, Inc. |
190,633 |
$ 6,065,942 |
|
|
Caterpillar, Inc. |
103,900 |
8,613,310 |
|
|
Cummins, Inc. |
48,800 |
6,940,824 |
|
|
Manitowoc Co., Inc. (d) |
962,600 |
21,302,338 |
|
|
Navistar International Corp. (a)(d) |
72,500 |
2,110,475 |
|
|
|
45,032,889 |
||
|
Industrial Machinery - 10.8% |
|||
|
Global Brass & Copper Holdings, Inc. |
506,800 |
7,115,472 |
|
|
Hy-Lok Corp. |
23,602 |
607,675 |
|
|
Ingersoll-Rand PLC |
100,900 |
6,779,471 |
|
|
Metka SA |
59,699 |
611,276 |
|
|
Parker Hannifin Corp. |
31,700 |
3,889,273 |
|
|
TriMas Corp. (a) |
62,000 |
1,857,520 |
|
|
Valmont Industries, Inc. (d) |
30,300 |
3,776,895 |
|
|
|
24,637,582 |
||
|
TOTAL MACHINERY |
75,079,291 |
||
|
PROFESSIONAL SERVICES - 3.3% |
|||
|
Human Resource & Employment Services - 0.6% |
|||
|
Towers Watson & Co. |
10,400 |
1,367,600 |
|
|
Research & Consulting Services - 2.7% |
|||
|
CBIZ, Inc. (a) |
248,800 |
2,199,392 |
|
|
Dun & Bradstreet Corp. |
29,800 |
3,947,904 |
|
|
|
6,147,296 |
||
|
TOTAL PROFESSIONAL SERVICES |
7,514,896 |
||
|
ROAD & RAIL - 1.0% |
|||
|
Trucking - 1.0% |
|||
|
J.B. Hunt Transport Services, Inc. |
25,900 |
2,214,450 |
|
|
TRADING COMPANIES & DISTRIBUTORS - 3.0% |
|||
|
Trading Companies & Distributors - 3.0% |
|||
|
HD Supply Holdings, Inc. (a) |
60,600 |
1,788,003 |
|
|
United Rentals, Inc. (a) |
37,000 |
3,443,220 |
|
|
WESCO International, Inc. (a) |
22,000 |
1,527,460 |
|
|
|
6,758,683 |
||
|
TOTAL COMMON STOCKS (Cost $181,865,875) |
|
||
|
Money Market Funds - 12.7% |
|||
|
Shares |
Value |
||
|
Fidelity Cash Central Fund, 0.13% (b) |
2,320,290 |
$ 2,320,290 |
|
|
Fidelity Securities Lending Cash Central Fund, 0.13% (b)(c) |
26,704,075 |
26,704,075 |
|
|
TOTAL MONEY MARKET FUNDS (Cost $29,024,365) |
|
||
|
TOTAL INVESTMENT PORTFOLIO - 112.1% (Cost $210,890,240) |
256,012,307 |
|
NET OTHER ASSETS (LIABILITIES) - (12.1)% |
(27,701,397) |
||
|
NET ASSETS - 100% |
$ 228,310,910 |
||
|
Legend |
|
(a) Non-income producing |
|
(b) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
|
(c) Investment made with cash collateral received from securities on loan. |
|
(d) Security or a portion of the security is on loan at period end. |
|
Affiliated Central Funds |
|
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
|
Fund |
Income earned |
|
Fidelity Cash Central Fund |
$ 1,664 |
|
Fidelity Securities Lending Cash Central Fund |
58,650 |
|
Total |
$ 60,314 |
|
Other Information |
|
All investments are categorized as Level 1 under the Fair Value Hierarchy. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Industrial Equipment Portfolio
Financial Statements
Statement of Assets and Liabilities
|
|
February 28, 2015 |
|
|
|
|
|
|
Assets |
|
|
|
Investment in securities, at value (including securities loaned of $25,935,871) - See accompanying schedule: Unaffiliated issuers (cost $181,865,875) |
$ 226,987,942 |
|
|
Fidelity Central Funds (cost $29,024,365) |
29,024,365 |
|
|
Total Investments (cost $210,890,240) |
|
$ 256,012,307 |
|
Receivable for investments sold |
|
581,955 |
|
Receivable for fund shares sold |
|
205,825 |
|
Dividends receivable |
|
652,172 |
|
Distributions receivable from Fidelity Central Funds |
|
4,355 |
|
Prepaid expenses |
|
1,356 |
|
Other receivables |
|
13,621 |
|
Total assets |
|
257,471,591 |
|
|
|
|
|
Liabilities |
|
|
|
Payable for investments purchased |
$ 2,157,943 |
|
|
Payable for fund shares redeemed |
121,835 |
|
|
Accrued management fee |
102,761 |
|
|
Other affiliated payables |
35,730 |
|
|
Other payables and accrued expenses |
38,337 |
|
|
Collateral on securities loaned, at value |
26,704,075 |
|
|
Total liabilities |
|
29,160,681 |
|
|
|
|
|
Net Assets |
|
$ 228,310,910 |
|
Net Assets consist of: |
|
|
|
Paid in capital |
|
$ 174,061,293 |
|
Undistributed net investment income |
|
388,654 |
|
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions |
|
8,740,796 |
|
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies |
|
45,120,167 |
|
Net Assets, for 5,875,428 shares outstanding |
|
$ 228,310,910 |
|
Net Asset Value, offering price and redemption price per share ($228,310,910 ÷ 5,875,428 shares) |
|
$ 38.86 |
Statement of Operations
|
|
Year ended February 28, 2015 |
|
|
|
|
|
|
Investment Income |
|
|
|
Dividends |
|
$ 4,944,251 |
|
Income from Fidelity Central Funds (including $58,650 from security lending) |
|
60,314 |
|
Total income |
|
5,004,565 |
|
|
|
|
|
Expenses |
|
|
|
Management fee |
$ 1,787,275 |
|
|
Transfer agent fees |
500,622 |
|
|
Accounting and security lending fees |
128,467 |
|
|
Custodian fees and expenses |
16,115 |
|
|
Independent trustees' compensation |
6,881 |
|
|
Registration fees |
21,033 |
|
|
Audit |
46,526 |
|
|
Legal |
2,313 |
|
|
Interest |
3,755 |
|
|
Miscellaneous |
6,690 |
|
|
Total expenses before reductions |
2,519,677 |
|
|
Expense reductions |
(519) |
2,519,158 |
|
Net investment income (loss) |
|
2,485,407 |
|
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: |
|
|
|
Investment securities: |
|
|
|
Unaffiliated issuers (net of foreign taxes of $53,491) |
46,023,000 |
|
|
Foreign currency transactions |
7,365 |
|
|
Total net realized gain (loss) |
|
46,030,365 |
|
Change in net unrealized appreciation (depreciation) on: Investment securities (net of decrease in deferred foreign taxes of $947) |
(42,646,764) |
|
|
Assets and liabilities in foreign currencies |
(584) |
|
|
Total change in net unrealized appreciation (depreciation) |
|
(42,647,348) |
|
Net gain (loss) |
|
3,383,017 |
|
Net increase (decrease) in net assets resulting from operations |
|
$ 5,868,424 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Industrial Equipment Portfolio
Financial Statements - continued
Statement of Changes in Net Assets
|
|
Year ended |
Year ended |
|
Increase (Decrease) in Net Assets |
|
|
|
Operations |
|
|
|
Net investment income (loss) |
$ 2,485,407 |
$ 3,342,101 |
|
Net realized gain (loss) |
46,030,365 |
66,394,115 |
|
Change in net unrealized appreciation (depreciation) |
(42,647,348) |
15,203,691 |
|
Net increase (decrease) in net assets resulting from operations |
5,868,424 |
84,939,907 |
|
Distributions to shareholders from net investment income |
(2,406,422) |
(2,819,050) |
|
Distributions to shareholders from net realized gain |
(57,814,171) |
(24,347,487) |
|
Total distributions |
(60,220,593) |
(27,166,537) |
|
Share transactions |
24,679,677 |
99,971,134 |
|
Reinvestment of distributions |
58,548,337 |
26,665,074 |
|
Cost of shares redeemed |
(225,953,361) |
(128,975,271) |
|
Net increase (decrease) in net assets resulting from share transactions |
(142,725,347) |
(2,339,063) |
|
Redemption fees |
2,195 |
1,005 |
|
Total increase (decrease) in net assets |
(197,075,321) |
55,435,312 |
|
|
|
|
|
Net Assets |
|
|
|
Beginning of period |
425,386,231 |
369,950,919 |
|
End of period (including undistributed net investment income of $388,654 and undistributed net investment income of $940,238, respectively) |
$ 228,310,910 |
$ 425,386,231 |
|
Other Information Shares |
|
|
|
Sold |
583,434 |
2,339,925 |
|
Issued in reinvestment of distributions |
1,492,839 |
595,207 |
|
Redeemed |
(5,442,610) |
(3,038,979) |
|
Net increase (decrease) |
(3,366,337) |
(103,847) |
Financial Highlights
|
Years ended February 28, |
2015 |
2014 |
2013 |
2012 F |
2011 |
|
Selected Per-Share Data |
|
|
|
|
|
|
Net asset value, beginning of period |
$ 46.03 |
$ 39.59 |
$ 36.37 |
$ 36.16 |
$ 26.16 |
|
Income from Investment Operations |
|
|
|
|
|
|
Net investment income (loss) B |
.32 |
.37 |
.45 |
.28 |
.26 |
|
Net realized and unrealized gain (loss) |
.75 |
9.19 |
3.22 |
.29 |
9.89 |
|
Total from investment operations |
1.07 |
9.56 |
3.67 |
.57 |
10.15 |
|
Distributions from net investment income |
(.36) |
(.32) |
(.45) |
(.26) |
(.15) |
|
Distributions from net realized gain |
(7.88) |
(2.80) |
- |
(.10) |
- |
|
Total distributions |
(8.24) |
(3.12) |
(.45) |
(.36) |
(.15) |
|
Redemption fees added to paid in capital B, G |
- |
- |
- |
- |
- |
|
Net asset value, end of period |
$ 38.86 |
$ 46.03 |
$ 39.59 |
$ 36.37 |
$ 36.16 |
|
Total ReturnA |
3.36% |
24.37% |
10.19% |
1.66% |
38.87% |
|
Ratios to Average Net AssetsC, E |
|
|
|
|
|
|
Expenses before reductions |
.77% |
.79% |
.82% |
.84% |
.89% |
|
Expenses net of fee waivers, if any |
.77% |
.78% |
.82% |
.84% |
.89% |
|
Expenses net of all reductions |
.77% |
.78% |
.81% |
.84% |
.88% |
|
Net investment income (loss) |
.76% |
.87% |
1.25% |
.85% |
.85% |
|
Supplemental Data |
|
|
|
|
|
|
Net assets, end of period (000 omitted) |
$ 228,311 |
$ 425,386 |
$ 369,951 |
$ 351,674 |
$ 362,671 |
|
Portfolio turnover rateD |
53% |
100% |
69% |
101% |
82% |
|
ATotal returns would have been lower if certain expenses had not been reduced during the applicable periods shown. BCalculated based on average shares outstanding during the period. CFees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. DAmount does not include the portfolio activity of any underlying Fidelity Central Funds. EExpense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. FFor the year ended February 29. GAmount represents less than $.01 per share. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
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 28, 2015 |
Past 1 |
Past 5 |
Past 10 |
|
Industrials Portfolio A |
8.74% |
17.48% |
10.81% |
A Prior to October 1, 2006, Industrials Portfolio was named Cyclical Industries Portfolio, and the fund operated under certain different investment policies and compared its performance to a different additional index. The fund's historical performance may not represent its current investment policies.
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Industrials Portfolio on February 28, 2005. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index performed over the same period.
Annual Report
Industrials Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. stock market closed near its all-time high for the 12 months ending February 28, 2015, supported by low interest rates and the relative strength of the U.S. economy and dollar. The large-cap S&P 500® Index returned 15.51%. Growth stocks in the index outperformed value-oriented names. The tech-heavy Nasdaq Composite Index® rose 16.58%, while the small-cap Russell 2000® Index advanced 5.63%, rallying from early-period weakness amid growth and valuation worries. Among the 10 major market sectors tracked by MSCI U.S. IMI 25-50 classifications, most notched a double-digit gain, led by health care (+24%), consumer staples (+21%), information technology (+20%) and utilities (+15%). Conversely, energy (-9%) was the only sector to lose ground, reflecting a sharp drop in crude prices beginning midyear and attributed to weaker global demand and a U.S. supply boom. Volatility spiked to a three-year high in October amid concerns about economic growth and Ebola, as well as unrest in Syria, Iraq and Ukraine. Nevertheless, the S&P 500® finished the period well above its mid-October nadir, bolstered by the relative economic strength of the U.S., which marked a six-year low in its unemployment rate, and consumer confidence that declined only slightly from its 11-year high reached in January.
Comments from Tobias Welo, Portfolio Manager of Industrials Portfolio: For the year, the fund returned 8.74%, trailing the 10.91% gain of the MSCI U.S. IMI Industrials 25-50 Index and also lagging the S&P 500®. Although some areas of this diverse sector, such as airlines and railroads, posted market-beating returns, others were more challenged. In particular, construction & engineering and construction machinery & heavy trucks were two lagging groups that were hurt by weakness in emerging markets and sharply declining crude oil prices. Compared with the MSCI index, a sizable overweighting in crane maker Manitowoc was by far the fund's largest detractor, as the recovery in U.S. nonresidential construction remained muted and an activist investor lobbied to break up the company. Not owning strong-performing conglomerate and index component 3M also weighed on relative performance, as did a large overweighting in Valmont Industries, a producer of fabricated metal products. I reduced the latter position but maintained overweighted exposure here. We didn't own index name Southwest Airlines mostly for valuation reasons. However, the drop in oil and an improving regulatory environment boosted this stock's return to 94%. Not owning another strong-performing airline stock for most of the period, index component United Continental Holdings, hurt as well. In this case, I saw some value and built an overweighted position by period end. Conversely, a big overweighting in business information provider Dun & Bradstreet paid off nicely, given the stock's roughly 36% return. I used the opportunity provided by this stock's strength in the period's final month to lighten up on the position and lock in some profits, although it remained an overweighting. A meaningful overweighting in package-delivery firm FedEx also aided relative performance, along with not having an allocation to weak-performing index name Precision Castparts.
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 28, 2015 |
||
|
|
% of fund's |
% of fund's net assets |
|
United Technologies Corp. |
8.2 |
6.3 |
|
Danaher Corp. |
6.8 |
5.9 |
|
Union Pacific Corp. |
5.4 |
4.9 |
|
The Boeing Co. |
5.3 |
5.4 |
|
FedEx Corp. |
5.2 |
4.2 |
|
Honeywell International, Inc. |
4.8 |
3.9 |
|
J.B. Hunt Transport Services, Inc. |
3.4 |
2.3 |
|
A.O. Smith Corp. |
2.3 |
1.7 |
|
General Dynamics Corp. |
2.3 |
2.5 |
|
Deere & Co. |
2.2 |
1.7 |
|
|
45.9 |
|
|
Top Industries (% of fund's net assets) |
|||
|
As of February 28, 2015 |
|||
 |
Aerospace & Defense |
29.3% |
|
 |
Machinery |
12.3% |
|
 |
Road & Rail |
11.8% |
|
 |
Professional Services |
8.7% |
|
 |
Industrial Conglomerates |
8.6% |
|
 |
All Others* |
29.3% |
|
|
As of August 31, 2014 |
|||
 |
Aerospace & Defense |
23.0% |
|
 |
Machinery |
17.4% |
|
 |
Industrial Conglomerates |
10.4% |
|
 |
Professional Services |
9.7% |
|
 |
Electrical Equipment |
8.1% |
|
 |
All Others* |
31.4% |
|
|
* Includes short-term investments and net other assets (liabilities). |
Annual Report
Industrials Portfolio
Investments February 28, 2015
Showing Percentage of Net Assets
|
Common Stocks - 99.5% |
|||
|
Shares |
Value |
||
|
AEROSPACE & DEFENSE - 29.3% |
|||
|
Aerospace & Defense - 29.3% |
|||
|
General Dynamics Corp. |
188,097 |
$ 26,104,102 |
|
|
Honeywell International, Inc. |
528,559 |
54,325,294 |
|
|
L-3 Communications Holdings, Inc. |
105,600 |
13,667,808 |
|
|
Northrop Grumman Corp. |
145,300 |
24,077,663 |
|
|
Orbital ATK, Inc. |
72,661 |
4,815,971 |
|
|
Raytheon Co. |
217,800 |
23,690,106 |
|
|
Teledyne Technologies, Inc. (a) |
126,821 |
12,787,361 |
|
|
Textron, Inc. |
460,419 |
20,401,166 |
|
|
The Boeing Co. |
405,498 |
61,169,373 |
|
|
United Technologies Corp. |
765,771 |
93,355,144 |
|
|
|
334,393,988 |
||
|
AIR FREIGHT & LOGISTICS - 5.2% |
|||
|
Air Freight & Logistics - 5.2% |
|||
|
FedEx Corp. |
336,717 |
59,592,175 |
|
|
AIRLINES - 5.8% |
|||
|
Airlines - 5.8% |
|||
|
American Airlines Group, Inc. |
502,359 |
24,062,996 |
|
|
Delta Air Lines, Inc. |
565,073 |
25,157,050 |
|
|
United Continental Holdings, Inc. (a) |
254,400 |
16,581,792 |
|
|
|
65,801,838 |
||
|
BUILDING PRODUCTS - 4.1% |
|||
|
Building Products - 4.1% |
|||
|
A.O. Smith Corp. |
425,939 |
26,846,935 |
|
|
Lennox International, Inc. |
196,572 |
20,494,597 |
|
|
|
47,341,532 |
||
|
COMMERCIAL SERVICES & SUPPLIES - 4.5% |
|||
|
Diversified Support Services - 1.5% |
|||
|
KAR Auction Services, Inc. |
465,600 |
16,980,432 |
|
|
Environmental & Facility Services - 0.7% |
|||
|
Waste Connections, Inc. |
174,997 |
8,219,609 |
|
|
Office Services & Supplies - 1.1% |
|||
|
West Corp. |
350,403 |
11,966,262 |
|
|
Security & Alarm Services - 1.2% |
|||
|
Tyco International Ltd. |
332,800 |
14,050,816 |
|
|
TOTAL COMMERCIAL SERVICES & SUPPLIES |
51,217,119 |
||
|
CONSTRUCTION & ENGINEERING - 2.8% |
|||
|
Construction & Engineering - 2.8% |
|||
|
AECOM Technology Corp. (a) |
329,300 |
9,898,758 |
|
|
EMCOR Group, Inc. |
283,145 |
12,466,874 |
|
|
Jacobs Engineering Group, Inc. (a) |
212,300 |
9,413,382 |
|
|
|
31,779,014 |
||
|
CONSTRUCTION MATERIALS - 0.4% |
|||
|
Construction Materials - 0.4% |
|||
|
Caesarstone Sdot-Yam Ltd. |
62,100 |
4,061,961 |
|
|
|
|||
|
Shares |
Value |
||
|
DIVERSIFIED CONSUMER SERVICES - 1.1% |
|||
|
Specialized Consumer Services - 1.1% |
|||
|
ServiceMaster Global Holdings, Inc. |
359,900 |
$ 12,448,941 |
|
|
ELECTRICAL EQUIPMENT - 3.1% |
|||
|
Electrical Components & Equipment - 1.6% |
|||
|
EnerSys |
142,300 |
9,292,190 |
|
|
Hubbell, Inc. Class B |
80,493 |
9,160,103 |
|
|
|
18,452,293 |
||
|
Heavy Electrical Equipment - 1.5% |
|||
|
Babcock & Wilcox Co. |
542,500 |
16,839,200 |
|
|
TOTAL ELECTRICAL EQUIPMENT |
35,291,493 |
||
|
ENERGY EQUIPMENT & SERVICES - 0.3% |
|||
|
Oil & Gas Equipment & Services - 0.3% |
|||
|
Aspen Aerogels, Inc. |
474,507 |
3,762,841 |
|
|
INDUSTRIAL CONGLOMERATES - 8.6% |
|||
|
Industrial Conglomerates - 8.6% |
|||
|
Danaher Corp. |
896,321 |
78,230,897 |
|
|
General Electric Co. |
781,984 |
20,323,764 |
|
|
|
98,554,661 |
||
|
MACHINERY - 12.3% |
|||
|
Agricultural & Farm Machinery - 2.2% |
|||
|
Deere & Co. |
278,350 |
25,218,510 |
|
|
Construction Machinery & Heavy Trucks - 4.0% |
|||
|
Caterpillar, Inc. |
286,796 |
23,775,388 |
|
|
Manitowoc Co., Inc. (d) |
1,003,343 |
22,203,981 |
|
|
|
45,979,369 |
||
|
Industrial Machinery - 6.1% |
|||
|
IDEX Corp. |
187,898 |
14,516,999 |
|
|
Ingersoll-Rand PLC |
297,400 |
19,982,306 |
|
|
Pall Corp. |
221,929 |
22,372,662 |
|
|
Valmont Industries, Inc. (d) |
104,438 |
13,018,197 |
|
|
|
69,890,164 |
||
|
TOTAL MACHINERY |
141,088,043 |
||
|
PROFESSIONAL SERVICES - 8.7% |
|||
|
Human Resource & Employment Services - 1.9% |
|||
|
Towers Watson & Co. |
162,728 |
21,398,732 |
|
|
Research & Consulting Services - 6.8% |
|||
|
Corporate Executive Board Co. |
160,500 |
12,552,705 |
|
|
Dun & Bradstreet Corp. |
124,917 |
16,549,004 |
|
|
Huron Consulting Group, Inc. (a) |
230,408 |
15,356,693 |
|
|
Nielsen Holdings B.V. (d) |
367,651 |
16,621,502 |
|
|
Verisk Analytics, Inc. (a) |
234,623 |
16,848,278 |
|
|
|
77,928,182 |
||
|
TOTAL PROFESSIONAL SERVICES |
99,326,914 |
||
|
Common Stocks - continued |
|||
|
Shares |
Value |
||
|
ROAD & RAIL - 11.8% |
|||
|
Railroads - 7.0% |
|||
|
CSX Corp. |
533,800 |
$ 18,314,678 |
|
|
Union Pacific Corp. |
514,866 |
61,917,785 |
|
|
|
80,232,463 |
||
|
Trucking - 4.8% |
|||
|
Hertz Global Holdings, Inc. (a) |
251,100 |
5,792,877 |
|
|
J.B. Hunt Transport Services, Inc. |
456,320 |
39,015,360 |
|
|
Swift Transporation Co. (a) |
356,300 |
10,076,164 |
|
|
|
54,884,401 |
||
|
TOTAL ROAD & RAIL |
135,116,864 |
||
|
TRADING COMPANIES & DISTRIBUTORS - 1.5% |
|||
|
Trading Companies & Distributors - 1.5% |
|||
|
HD Supply Holdings, Inc. (a) |
582,000 |
17,171,910 |
|
|
TOTAL COMMON STOCKS (Cost $877,243,532) |
|
||
|
Money Market Funds - 3.1% |
|||
|
Shares |
Value |
||
|
Fidelity Cash Central Fund, 0.13% (b) |
2,524,437 |
$ 2,524,437 |
|
|
Fidelity Securities Lending Cash Central Fund, 0.13% (b)(c) |
33,317,975 |
33,317,975 |
|
|
TOTAL MONEY MARKET FUNDS (Cost $35,842,412) |
|
||
|
TOTAL INVESTMENT PORTFOLIO - 102.6% (Cost $913,085,944) |
1,172,791,706 |
|
NET OTHER ASSETS (LIABILITIES) - (2.6)% |
(30,102,905) |
||
|
NET ASSETS - 100% |
$ 1,142,688,801 |
||
|
Legend |
|
(a) Non-income producing |
|
(b) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements 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 |
$ 12,427 |
|
Fidelity Securities Lending Cash Central Fund |
180,858 |
|
Total |
$ 193,285 |
|
Other Information |
|
All investments are categorized as Level 1 under the Fair Value Hierarchy. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Industrials Portfolio
Financial Statements
Statement of Assets and Liabilities
|
|
February 28, 2015 |
|
|
|
|
|
|
Assets |
|
|
|
Investment in securities, at value (including securities loaned of $32,406,695) - See accompanying schedule: Unaffiliated issuers (cost $877,243,532) |
$ 1,136,949,294 |
|
|
Fidelity Central Funds (cost $35,842,412) |
35,842,412 |
|
|
Total Investments (cost $913,085,944) |
|
$ 1,172,791,706 |
|
Receivable for investments sold |
|
3,296,279 |
|
Receivable for fund shares sold |
|
389,309 |
|
Dividends receivable |
|
2,110,284 |
|
Distributions receivable from Fidelity Central Funds |
|
6,266 |
|
Prepaid expenses |
|
4,913 |
|
Other receivables |
|
22,895 |
|
Total assets |
|
1,178,621,652 |
|
|
|
|
|
Liabilities |
|
|
|
Payable to custodian bank |
$ 2 |
|
|
Payable for investments purchased |
1,331,560 |
|
|
Payable for fund shares redeemed |
504,208 |
|
|
Accrued management fee |
524,780 |
|
|
Other affiliated payables |
195,792 |
|
|
Other payables and accrued expenses |
58,534 |
|
|
Collateral on securities loaned, at value |
33,317,975 |
|
|
Total liabilities |
|
35,932,851 |
|
|
|
|
|
Net Assets |
|
$ 1,142,688,801 |
|
Net Assets consist of: |
|
|
|
Paid in capital |
|
$ 873,126,335 |
|
Undistributed net investment income |
|
803,228 |
|
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions |
|
9,053,476 |
|
Net unrealized appreciation (depreciation) on investments |
|
259,705,762 |
|
Net Assets, for 34,951,639 shares outstanding |
|
$ 1,142,688,801 |
|
Net Asset Value, offering price and redemption price per share ($1,142,688,801 ÷ 34,951,639 shares) |
|
$ 32.69 |
Statement of Operations
|
|
Year ended February 28, 2015 |
|
|
|
|
|
|
Investment Income |
|
|
|
Dividends |
|
$ 17,351,172 |
|
Interest |
|
75,506 |
|
Income from Fidelity Central Funds (including $180,858 from security lending) |
|
193,285 |
|
Total income |
|
17,619,963 |
|
|
|
|
|
Expenses |
|
|
|
Management fee |
$ 6,643,101 |
|
|
Transfer agent fees |
2,258,478 |
|
|
Accounting and security lending fees |
393,759 |
|
|
Custodian fees and expenses |
29,247 |
|
|
Independent trustees' compensation |
23,997 |
|
|
Registration fees |
46,408 |
|
|
Audit |
41,555 |
|
|
Legal |
8,227 |
|
|
Interest |
3,029 |
|
|
Miscellaneous |
15,949 |
|
|
Total expenses before reductions |
9,463,750 |
|
|
Expense reductions |
(10,935) |
9,452,815 |
|
Net investment income (loss) |
|
8,167,148 |
|
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: |
|
|
|
Investment securities: |
|
|
|
Unaffiliated issuers |
82,933,098 |
|
|
Redemption in-kind with affiliated entities |
51,052,475 |
|
|
Foreign currency transactions |
(3,059) |
|
|
Total net realized gain (loss) |
|
133,982,514 |
|
Change in net unrealized appreciation (depreciation) on: Investment securities |
(43,473,789) |
|
|
Assets and liabilities in foreign currencies |
641 |
|
|
Total change in net unrealized appreciation (depreciation) |
|
(43,473,148) |
|
Net gain (loss) |
|
90,509,366 |
|
Net increase (decrease) in net assets resulting from operations |
|
$ 98,676,514 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Changes in Net Assets
|
|
Year ended |
Year ended |
|
Increase (Decrease) in Net Assets |
|
|
|
Operations |
|
|
|
Net investment income (loss) |
$ 8,167,148 |
$ 7,872,962 |
|
Net realized gain (loss) |
133,982,514 |
110,576,886 |
|
Change in net unrealized appreciation (depreciation) |
(43,473,148) |
138,236,065 |
|
Net increase (decrease) in net assets resulting from operations |
98,676,514 |
256,685,913 |
|
Distributions to shareholders from net investment income |
(7,771,302) |
(7,417,543) |
|
Distributions to shareholders from net realized gain |
(120,155,720) |
(61,874,525) |
|
Total distributions |
(127,927,022) |
(69,292,068) |
|
Share transactions |
664,803,726 |
483,173,850 |
|
Reinvestment of distributions |
124,783,311 |
67,875,440 |
|
Cost of shares redeemed |
(834,778,865) |
(394,620,245) |
|
Net increase (decrease) in net assets resulting from share transactions |
(45,191,828) |
156,429,045 |
|
Redemption fees |
13,871 |
28,132 |
|
Total increase (decrease) in net assets |
(74,428,465) |
343,851,022 |
|
|
|
|
|
Net Assets |
|
|
|
Beginning of period |
1,217,117,266 |
873,266,244 |
|
End of period (including undistributed net investment income of $803,228 and undistributed net investment income of $639,853, respectively) |
$ 1,142,688,801 |
$ 1,217,117,266 |
|
Other Information Shares |
|
|
|
Sold |
20,937,925 |
15,662,826 |
|
Issued in reinvestment of distributions |
4,000,298 |
2,184,292 |
|
Redeemed |
(26,111,243) |
(12,867,011) |
|
Net increase (decrease) |
(1,173,020) |
4,980,107 |
Financial Highlights
|
Years ended February 28, |
2015 |
2014 |
2013 |
2012 G |
2011 |
|
Selected Per-Share Data |
|
|
|
|
|
|
Net asset value, beginning of period |
$ 33.69 |
$ 28.04 |
$ 24.69 |
$ 25.24 |
$ 18.39 |
|
Income from Investment Operations |
|
|
|
|
|
|
Net investment income (loss) B |
.22 |
.23 |
.28 |
.19 |
.15 |
|
Net realized and unrealized gain (loss) |
2.44 |
7.36 |
3.54 |
.01 |
6.80 |
|
Total from investment operations |
2.66 |
7.59 |
3.82 |
.20 |
6.95 |
|
Distributions from net investment income |
(.23) |
(.20) |
(.26) |
(.13) |
(.10) |
|
Distributions from net realized gain |
(3.43) |
(1.74) |
(.21) |
(.62) |
- |
|
Total distributions |
(3.66) |
(1.94) |
(.47) |
(.75) |
(.10) |
|
Redemption fees added to paid in capital B, H |
- |
- |
- |
- |
- |
|
Net asset value, end of period |
$ 32.69 |
$ 33.69 |
$ 28.04 |
$ 24.69 |
$ 25.24 |
|
Total ReturnA |
8.74% |
27.80% |
15.71% |
.94% |
37.85% |
|
Ratios to Average Net AssetsC, E |
|
|
|
|
|
|
Expenses before reductions |
.78% |
.81% |
.85% |
.87% |
.90% |
|
Expenses net of fee waivers, if any |
.78% |
.81% |
.85% |
.87% |
.90% |
|
Expenses net of all reductions |
.78% |
.81% |
.84% |
.86% |
.90% |
|
Net investment income (loss) |
.68% |
.74% |
1.13% |
.83% |
.69% |
|
Supplemental Data |
|
|
|
|
|
|
Net assets, end of period (000 omitted) |
$ 1,142,689 |
$ 1,217,117 |
$ 873,266 |
$ 551,144 |
$ 572,451 |
|
Portfolio turnover rateD |
72% F |
58% |
75% |
102% |
80% |
|
ATotal returns would have been lower if certain expenses had not been reduced during the applicable periods shown. BCalculated based on average shares outstanding during the period. CFees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. DAmount does not include the portfolio activity of any underlying Fidelity Central Funds. EExpense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. FPortfolio turnover rate excludes securities received or delivered in-kind. GFor the year ended February 29. HAmount 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 28, 2015 |
Past 1 |
Past 5 |
Past 10 |
|
Transportation Portfolio |
26.80% |
22.02% |
12.39% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Transportation Portfolio on February 28, 2005. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index performed over the same period.
Annual Report
Transportation Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. stock market closed near its all-time high for the 12 months ending February 28, 2015, supported by low interest rates and the relative strength of the U.S. economy and dollar. The large-cap S&P 500® Index returned 15.51%. Growth stocks in the index outperformed value-oriented names. The tech-heavy Nasdaq Composite Index® rose 16.58%, while the small-cap Russell 2000® Index advanced 5.63%, rallying from early-period weakness amid growth and valuation worries. Among the 10 major market sectors tracked by MSCI U.S. IMI 25-50 classifications, most notched a double-digit gain, led by health care (+24%), consumer staples (+21%), information technology (+20%) and utilities (+15%). Conversely, energy (-9%) was the only sector to lose ground, reflecting a sharp drop in crude prices beginning midyear and attributed to weaker global demand and a U.S. supply boom. Volatility spiked to a three-year high in October amid concerns about economic growth and Ebola, as well as unrest in Syria, Iraq and Ukraine. Nevertheless, the S&P 500® finished the period well above its mid-October nadir, bolstered by the relative economic strength of the U.S., which marked a six-year low in its unemployment rate, and consumer confidence that declined only slightly from its 11-year high reached in January.
Comments from Matthew Moulis, Portfolio Manager of Transportation Portfolio: For the year, the fund returned 26.80%, trailing the 29.36% gain of the MSCI U.S. IMI Transportation 25-50 Index but topping the S&P 500®. Transportation companies were aided by an ongoing U.S. economic recovery, and many benefited from sharply declining oil prices, which resulted in lower fuel costs. Versus the MSCI index, stock selection had a negative impact on the fund's results, especially in the airlines and air freight & logistics groups. An out-of-benchmark stake in Scorpio Tankers was our largest relative detractor. The company provides shipping for refined petroleum products such as heating oil and unleaded gasoline. Although the shares were adversely affected by short-term weather factors, I considered Scorpio a good long-term play on the potential growth in global demand for refined petroleum products, especially in emerging markets. I roughly tripled the fund's share count here during the period. Underweighting Southwest Airlines and not owning Allegiant Travel, two strong-performing airline stocks in the MSCI index, also hurt. I underweighted Southwest because it was considerably more expensive than most other major U.S. carriers. However, the drop in oil and an improving regulatory environment boosted this stock to a 94% return, and I added to the fund's underweighted stake here. Likewise, I thought Allegiant was pricey. I'll also mention a non-index position in Universal Truckload Services, which operates truck brokerage and logistics businesses. Despite a fairly positive industry environment, this company did not execute well, and its stock posted a small loss. I substantially reduced the position by period end. Additionally, a modest cash position dampened relative performance. Conversely, I had success with stock selection in railroads, especially my decision to underweight Genesee & Wyoming - the fund's top relative contributor - and Kansas City Southern, two stocks that seemed expensive to me. With that said, I thought the prospects for both companies improved, so near period end I increased these positions to an overweighting and roughly a market weighting, respectively. The fund's positioning in Hertz Global Holdings also added value. I built an underweighted stake in Hertz in the first half of the period. As the stock later declined, I added to this position, making it an overweighting 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
Transportation Portfolio
Investment Changes (Unaudited)
|
Top Ten Stocks as of February 28, 2015 |
||
|
|
% of fund's |
% of fund's net assets |
|
Union Pacific Corp. |
16.9 |
18.1 |
|
United Parcel Service, Inc. Class B |
11.9 |
11.6 |
|
FedEx Corp. |
8.0 |
5.5 |
|
American Airlines Group, Inc. |
6.3 |
5.0 |
|
Delta Air Lines, Inc. |
6.2 |
6.0 |
|
United Continental Holdings, Inc. |
4.5 |
4.2 |
|
CSX Corp. |
4.1 |
5.3 |
|
Swift Transporation Co. |
3.8 |
1.6 |
|
Southwest Airlines Co. |
3.6 |
3.8 |
|
Hertz Global Holdings, Inc. |
3.3 |
2.0 |
|
|
68.6 |
|
|
Top Industries (% of fund's net assets) |
|||
|
As of February 28, 2015 |
|||
 |
Road & Rail |
45.7% |
|
 |
Air Freight & Logistics |
24.4% |
|
 |
Airlines |
24.0% |
|
 |
Machinery |
1.5% |
|
 |
Oil, Gas & Consumable Fuels |
1.5% |
|
 |
All Others* |
2.9% |
|
|
As of August 31, 2014 |
|||
 |
Road & Rail |
44.0% |
|
 |
Airlines |
24.2% |
|
 |
Air Freight & Logistics |
22.8% |
|
 |
Marine |
2.0% |
|
 |
Machinery |
1.2% |
|
 |
All Others* |
5.8% |
|
|
* Includes short-term investments and net other assets (liabilities). |
Annual Report
Transportation Portfolio
Investments February 28, 2015
Showing Percentage of Net Assets
|
Common Stocks - 98.7% |
|||
|
Shares |
Value |
||
|
AEROSPACE & DEFENSE - 0.3% |
|||
|
Aerospace & Defense - 0.3% |
|||
|
United Technologies Corp. |
26,100 |
$ 3,181,851 |
|
|
AIR FREIGHT & LOGISTICS - 24.4% |
|||
|
Air Freight & Logistics - 24.4% |
|||
|
Atlas Air Worldwide Holdings, Inc. (a) |
50,200 |
2,276,570 |
|
|
C.H. Robinson Worldwide, Inc. (d) |
232,396 |
17,267,023 |
|
|
Expeditors International of Washington, Inc. |
60,000 |
2,898,000 |
|
|
FedEx Corp. |
519,400 |
91,923,412 |
|
|
Forward Air Corp. |
241,400 |
12,914,900 |
|
|
Hub Group, Inc. Class A (a) |
270,500 |
10,920,085 |
|
|
Park-Ohio Holdings Corp. |
92,670 |
5,351,693 |
|
|
United Parcel Service, Inc. Class B |
1,341,500 |
136,470,795 |
|
|
|
280,022,478 |
||
|
AIRLINES - 24.0% |
|||
|
Airlines - 24.0% |
|||
|
Alaska Air Group, Inc. |
191,700 |
12,201,705 |
|
|
American Airlines Group, Inc. |
1,518,300 |
72,726,570 |
|
|
Delta Air Lines, Inc. |
1,599,302 |
71,200,925 |
|
|
Southwest Airlines Co. |
941,800 |
40,723,432 |
|
|
Spirit Airlines, Inc. (a) |
293,359 |
22,817,463 |
|
|
United Continental Holdings, Inc. (a) |
800,636 |
52,185,454 |
|
|
Virgin America, Inc. |
16,800 |
588,672 |
|
|
Wizz Air Holdings PLC |
135,442 |
2,739,238 |
|
|
|
275,183,459 |
||
|
FOOD PRODUCTS - 0.6% |
|||
|
Packaged Foods & Meats - 0.6% |
|||
|
Seaboard Corp. (a) |
1,800 |
7,218,000 |
|
|
MACHINERY - 1.5% |
|||
|
Construction Machinery & Heavy Trucks - 1.1% |
|||
|
ASL Marine Holdings Ltd. |
1,319,200 |
406,548 |
|
|
Conrad Industries, Inc. |
94,958 |
2,943,698 |
|
|
Supreme Industries, Inc. Class A |
1,034,017 |
8,985,608 |
|
|
|
12,335,854 |
||
|
Industrial Machinery - 0.4% |
|||
|
Columbus McKinnon Corp. (NY Shares) |
74,100 |
1,968,096 |
|
|
Global Brass & Copper Holdings, Inc. |
94,200 |
1,322,568 |
|
|
Hillenbrand, Inc. |
44,000 |
1,394,800 |
|
|
|
4,685,464 |
||
|
TOTAL MACHINERY |
17,021,318 |
||
|
MARINE - 0.0% |
|||
|
Marine - 0.0% |
|||
|
Diana Shipping, Inc. (a)(d) |
23,600 |
163,548 |
|
|
|
|||
|
Shares |
Value |
||
|
OIL, GAS & CONSUMABLE FUELS - 1.5% |
|||
|
Oil & Gas Storage & Transport - 1.5% |
|||
|
Ardmore Shipping Corp. |
191,100 |
$ 2,019,927 |
|
|
Scorpio Tankers, Inc. |
1,715,633 |
14,857,382 |
|
|
|
16,877,309 |
||
|
ROAD & RAIL - 45.7% |
|||
|
Railroads - 25.6% |
|||
|
CSX Corp. |
1,383,719 |
47,475,399 |
|
|
Genesee & Wyoming, Inc. Class A (a) |
220,800 |
22,764,480 |
|
|
Kansas City Southern |
258,600 |
29,956,224 |
|
|
Union Pacific Corp. |
1,607,495 |
193,317,348 |
|
|
|
293,513,451 |
||
|
Trucking - 20.1% |
|||
|
ArcBest Corp. |
242,400 |
10,151,712 |
|
|
Celadon Group, Inc. |
438,100 |
11,500,125 |
|
|
Con-way, Inc. |
287,800 |
12,712,126 |
|
|
Hertz Global Holdings, Inc. (a) |
1,641,500 |
37,869,405 |
|
|
J.B. Hunt Transport Services, Inc. |
334,700 |
28,616,850 |
|
|
Landstar System, Inc. |
246,800 |
17,330,296 |
|
|
Marten Transport Ltd. |
248,853 |
5,770,901 |
|
|
Quality Distribution, Inc. (a) |
46,126 |
506,925 |
|
|
Roadrunner Transportation Systems, Inc. (a) |
467,300 |
11,995,591 |
|
|
Saia, Inc. (a) |
564,700 |
25,993,141 |
|
|
Swift Transporation Co. (a) |
1,537,300 |
43,474,844 |
|
|
Universal Truckload Services, Inc. |
29,589 |
755,999 |
|
|
Werner Enterprises, Inc. |
514,300 |
16,493,601 |
|
|
YRC Worldwide, Inc. (a) |
392,900 |
7,744,059 |
|
|
|
230,915,575 |
||
|
TOTAL ROAD & RAIL |
524,429,026 |
||
|
TRANSPORTATION INFRASTRUCTURE - 0.7% |
|||
|
Airport Services - 0.7% |
|||
|
Macquarie Infrastructure Co. LLC |
15,500 |
1,218,455 |
|
|
Wesco Aircraft Holdings, Inc. (a) |
413,500 |
6,206,635 |
|
|
|
7,425,090 |
||
|
TOTAL COMMON STOCKS (Cost $896,618,943) |
|
||
|
Money Market Funds - 1.5% |
|||
|
Shares |
Value |
||
|
Fidelity Cash Central Fund, 0.13% (b) |
1,349,793 |
$ 1,349,793 |
|
|
Fidelity Securities Lending Cash Central Fund, 0.13% (b)(c) |
15,902,625 |
15,902,625 |
|
|
TOTAL MONEY MARKET FUNDS (Cost $17,252,418) |
|
||
|
TOTAL INVESTMENT PORTFOLIO - 100.2% (Cost $913,871,361) |
1,148,774,497 |
||
|
NET OTHER ASSETS (LIABILITIES) - (0.2)% |
(2,141,046) |
||
|
NET ASSETS - 100% |
$ 1,146,633,451 |
||
|
Legend |
|
(a) Non-income producing |
|
(b) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements 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 |
$ 27,542 |
|
Fidelity Securities Lending Cash Central Fund |
67,291 |
|
Total |
$ 94,833 |
|
Other Information |
|
All investments are categorized as Level 1 under the Fair Value Hierarchy. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Transportation Portfolio
Financial Statements
Statement of Assets and Liabilities
|
|
February 28, 2015 |
|
|
|
|
|
|
Assets |
|
|
|
Investment in securities, at value (including securities loaned of $15,595,500) - See accompanying schedule: Unaffiliated issuers (cost $896,618,943) |
$ 1,131,522,079 |
|
|
Fidelity Central Funds (cost $17,252,418) |
17,252,418 |
|
|
Total Investments (cost $913,871,361) |
|
$ 1,148,774,497 |
|
Cash |
|
770,271 |
|
Receivable for investments sold |
|
32,366,354 |
|
Receivable for fund shares sold |
|
1,834,338 |
|
Dividends receivable |
|
2,471,775 |
|
Distributions receivable from Fidelity Central Funds |
|
2,002 |
|
Prepaid expenses |
|
2,466 |
|
Other receivables |
|
1,533 |
|
Total assets |
|
1,186,223,236 |
|
|
|
|
|
Liabilities |
|
|
|
Payable for investments purchased |
$ 5,056,550 |
|
|
Payable for fund shares redeemed |
17,815,462 |
|
|
Accrued management fee |
545,132 |
|
|
Other affiliated payables |
218,245 |
|
|
Other payables and accrued expenses |
51,771 |
|
|
Collateral on securities loaned, at value |
15,902,625 |
|
|
Total liabilities |
|
39,589,785 |
|
|
|
|
|
Net Assets |
|
$ 1,146,633,451 |
|
Net Assets consist of: |
|
|
|
Paid in capital |
|
$ 910,021,501 |
|
Undistributed net investment income |
|
891,261 |
|
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions |
|
817,332 |
|
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies |
|
234,903,357 |
|
Net Assets, for 12,192,663 shares outstanding |
|
$ 1,146,633,451 |
|
Net Asset Value, offering price and redemption price per share ($1,146,633,451 ÷ 12,192,663 shares) |
|
$ 94.04 |
Statement of Operations
|
|
Year ended February 28, 2015 |
|
|
|
|
|
|
Investment Income |
|
|
|
Dividends |
|
$ 10,229,496 |
|
Interest |
|
27,861 |
|
Income from Fidelity Central Funds (includes $67,291 from security lending) |
|
94,833 |
|
Total income |
|
10,352,190 |
|
|
|
|
|
Expenses |
|
|
|
Management fee |
$ 4,266,129 |
|
|
Transfer agent fees |
1,476,501 |
|
|
Accounting and security lending fees |
272,509 |
|
|
Custodian fees and expenses |
15,949 |
|
|
Independent trustees' compensation |
13,432 |
|
|
Registration fees |
163,260 |
|
|
Audit |
41,270 |
|
|
Legal |
4,192 |
|
|
Interest |
201 |
|
|
Miscellaneous |
8,941 |
|
|
Total expenses before reductions |
6,262,384 |
|
|
Expense reductions |
(1,734) |
6,260,650 |
|
Net investment income (loss) |
|
4,091,540 |
|
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: |
|
|
|
Investment securities: |
|
|
|
Unaffiliated issuers |
17,850,395 |
|
|
Redemption in-kind with affiliated entities |
34,846,514 |
|
|
Foreign currency transactions |
3,516 |
|
|
Total net realized gain (loss) |
|
52,700,425 |
|
Change in net unrealized appreciation (depreciation) on: Investment securities |
100,902,380 |
|
|
Assets and liabilities in foreign currencies |
221 |
|
|
Total change in net unrealized appreciation (depreciation) |
|
100,902,601 |
|
Net gain (loss) |
|
153,603,026 |
|
Net increase (decrease) in net assets resulting from operations |
|
$ 157,694,566 |
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) |
$ 4,091,540 |
$ 2,466,069 |
|
Net realized gain (loss) |
52,700,425 |
18,931,993 |
|
Change in net unrealized appreciation (depreciation) |
100,902,601 |
85,963,354 |
|
Net increase (decrease) in net assets resulting from operations |
157,694,566 |
107,361,416 |
|
Distributions to shareholders from net investment income |
(3,343,267) |
(1,648,470) |
|
Distributions to shareholders from net realized gain |
(18,761,701) |
(13,096,986) |
|
Total distributions |
(22,104,968) |
(14,745,456) |
|
Share transactions |
1,069,242,761 |
409,730,442 |
|
Reinvestment of distributions |
21,308,776 |
14,261,816 |
|
Cost of shares redeemed |
(529,854,123) |
(279,348,974) |
|
Net increase (decrease) in net assets resulting from share transactions |
560,697,414 |
144,643,284 |
|
Redemption fees |
109,874 |
21,284 |
|
Total increase (decrease) in net assets |
696,396,886 |
237,280,528 |
|
|
|
|
|
Net Assets |
|
|
|
Beginning of period |
450,236,565 |
212,956,037 |
|
End of period (including undistributed net investment income of $891,261 and undistributed net investment income of $997,113, respectively) |
$ 1,146,633,451 |
$ 450,236,565 |
|
Other Information Shares |
|
|
|
Sold |
12,116,354 |
6,177,345 |
|
Issued in reinvestment of distributions |
244,789 |
204,327 |
|
Redeemed |
(6,070,754) |
(4,167,235) |
|
Net increase (decrease) |
6,290,389 |
2,214,437 |
Financial Highlights
|
Years ended February 28, |
2015 |
2014 |
2013 |
2012 G |
2011 |
|
Selected Per-Share Data |
|
|
|
|
|
|
Net asset value, beginning of period |
$ 76.28 |
$ 57.75 |
$ 53.02 |
$ 56.26 |
$ 42.01 |
|
Income from Investment Operations |
|
|
|
|
|
|
Net investment income (loss) B |
.46 |
.45 |
.51 |
.26 |
.27 |
|
Net realized and unrealized gain (loss) |
19.67 |
20.44 |
7.59 |
(.34) |
14.13 |
|
Total from investment operations |
20.13 |
20.89 |
8.10 |
(.08) |
14.40 |
|
Distributions from net investment income |
(.34) |
(.27) |
(.41) |
(.17) |
(.17) |
|
Distributions from net realized gain |
(2.04) |
(2.09) |
(2.96) |
(2.99) |
- |
|
Total distributions |
(2.38) |
(2.36) |
(3.37) |
(3.16) |
(.17) |
|
Redemption fees added to paid in capital B |
.01 |
- H |
- H |
- H |
.02 |
|
Net asset value, end of period |
$ 94.04 |
$ 76.28 |
$ 57.75 |
$ 53.02 |
$ 56.26 |
|
Total ReturnA |
26.80% |
36.60% |
16.10% |
.16% |
34.32% |
|
Ratios to Average Net AssetsC, E |
|
|
|
|
|
|
Expenses before reductions |
.81% |
.85% |
.89% |
.88% |
.90% |
|
Expenses net of fee waivers, if any |
.81% |
.85% |
.89% |
.88% |
.90% |
|
Expenses net of all reductions |
.81% |
.84% |
.86% |
.87% |
.90% |
|
Net investment income (loss) |
.53% |
.68% |
.98% |
.49% |
.53% |
|
Supplemental Data |
|
|
|
|
|
|
Net assets, end of period (000 omitted) |
$ 1,146,633 |
$ 450,237 |
$ 212,956 |
$ 212,647 |
$ 467,230 |
|
Portfolio turnover rate D |
72% F |
78% |
47% |
82% |
114% |
|
ATotal returns would have been lower if certain expenses had not been reduced during the applicable periods shown. BCalculated based on average shares outstanding during the period. CFees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. DAmount does not include the portfolio activity of any underlying Fidelity Central Funds. EExpense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. FPortfolio turnover rate excludes securities received or delivered in-kind. GFor the year ended February 29. HAmount represents less than $.01 per share. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended February 28, 2015
1. Organization.
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. Share transactions on the Statement of Changes in Net Assets may contain exchanges between funds.
2. Investments in Fidelity Central Funds.
The Funds invest in Fidelity Central Funds, which are open-end investment companies generally available only to other investment companies and accounts managed by the investment adviser and its affiliates. The Funds' Schedules of Investments list each of the Fidelity Central Funds held as of period end, if any, as an investment of each Fund, but 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 the investment adviser. Annualized expenses of the Money Market Central Funds as of their most recent shareholder report date are less than .01%.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) website at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Funds' Report of Independent Registered Public Accounting Firm, are available on the SEC website or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Funds:
Investment Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Board of Trustees (the Board) has delegated the day to day responsibility for the valuation of each Fund's investments to the Fidelity SelectCo, LLC (SelectCo) Fair Value Committee (the Committee). In accordance with valuation policies and procedures approved by the Board, each Fund attempts to obtain prices from one or more third party pricing vendors or brokers to value its investments. When current market prices, quotations or currency exchange rates are not readily available or reliable, investments will be fair valued in good faith by the Committee, in accordance with procedures adopted by the Board. Factors used in determining fair value vary by investment type and may include market or investment specific events. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The Committee oversees each Fund's valuation policies and procedures and reports to the Board on the Committee's activities and fair value determinations. The Board monitors the appropriateness of the procedures used in valuing each Fund's investments and ratifies the fair value determinations of the Committee.
Each Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the Fund's own assumptions based on the best information available)
Valuation techniques used to value each Fund's investments by major category are as follows:
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by a third party pricing vendor on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), Exchange-Traded Funds (ETFs) and certain indexes as well as quoted prices for similar securities may be used and would be categorized as Level 2 in the hierarchy. Utilizing these techniques may result in transfers between Level 1 and Level 2. For equity securities, including restricted securities, where observable inputs are limited, assumptions about market activity and risk are used and these securities may be categorized as Level 3 in the hierarchy.
Annual Report
3. Significant Accounting Policies - continued
Investment Valuation - continued
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value (NAV) each business day and are categorized as Level 1 in the hierarchy.
Foreign Currency. The Funds may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rates at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Funds' investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date. Income and capital gain distributions from Fidelity Central Funds, if any, are 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. Subsequent to ex-dividend date the Funds determine the components of these distributions, based upon receipt of tax filings or other correspondence relating to the underlying investment. Interest income is accrued as earned and includes coupon interest and amortization of premium and accretion of discount on debt securities as applicable. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Deferred Trustee Compensation. Under a Deferred Compensation Plan (the Plan) for Defense and Aerospace Portfolio, independent Trustees may elect to defer receipt of a portion of their annual compensation. Deferred amounts are invested in a cross-section of Fidelity funds, are marked-to-market and remain in the Fund until distributed in accordance with the Plan. The investment of deferred amounts and the offsetting payable to the Trustees are included in the accompanying Statement of Assets and Liabilities.
Income Tax Information and Distributions to Shareholders. Each year, each Fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for U.S. Federal income taxes is required. As of February 28, 2015, each Fund did not have any unrecognized tax benefits in the financial statements; nor is each Fund aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. Each Fund files a U.S. federal tax return, in addition to state and local tax returns as required. Each Fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction. Foreign taxes are provided for based on each Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are declared and recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. In addition, certain Funds claimed a portion of the payment made to redeeming shareholders as a distribution for income tax purposes.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Capital accounts are not adjusted for temporary book-tax differences which will reverse in a subsequent period.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
Book-tax differences are primarily due to foreign currency transactions, certain foreign taxes, market discount, redemptions in kind, passive foreign investment companies (PFIC), deferred trustees compensation, original issue discount, capital loss carryforwards and losses deferred due to wash sales.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows for each Fund:
|
|
Tax cost |
Gross unrealized |
Gross unrealized |
Net unrealized |
|
Air Transportation Portfolio |
$ 629,446,523 |
$ 132,743,957 |
$ (19,680,843) |
$ 113,063,114 |
|
Defense and Aerospace Portfolio |
623,867,710 |
336,124,650 |
(4,582,956) |
331,541,694 |
|
Environment and Alternative Energy Portfolio |
88,727,592 |
6,605,529 |
(1,192,320) |
5,413,209 |
|
Industrial Equipment Portfolio |
211,040,663 |
51,686,695 |
(6,715,051) |
44,971,644 |
|
Industrials Portfolio |
915,832,389 |
265,025,524 |
(8,066,207) |
256,959,317 |
|
Transportation Portfolio |
918,478,791 |
242,644,182 |
(12,348,476) |
230,295,706 |
The tax-based components of distributable earnings as of period end were as follows for each Fund:
|
|
Undistributed |
Undistributed |
Net unrealized |
|
Air Transportation Portfolio |
$ 3,677,984 |
$ 604,432 |
$ 113,063,899 |
|
Defense and Aerospace Portfolio |
2,212,036 |
31,522,232 |
331,541,694 |
|
Environment and Alternative Energy Portfolio |
43,198 |
1,825,955 |
5,411,913 |
|
Industrial Equipment Portfolio |
388,656 |
8,891,218 |
44,969,744 |
|
Industrials Portfolio |
822,705 |
11,799,921 |
256,959,317 |
|
Transportation Portfolio |
890,223 |
5,424,762 |
230,296,966 |
The tax character of distributions paid was as follows:
|
February 28, 2015 |
|
|
|
|
|
Ordinary Income |
Long-term Capital Gains |
Total |
|
Air Transportation Portfolio |
$ 2,942,928 |
$ 6,447,088 |
$ 9,390,016 |
|
Defense and Aerospace Portfolio |
6,773,084 |
49,828,078 |
56,601,162 |
|
Environment and Alternative Energy Portfolio |
677,983 |
10,557,304 |
11,235,287 |
|
Industrial Equipment Portfolio |
11,351,784 |
48,868,809 |
60,220,593 |
|
Industrials Portfolio |
14,000,612 |
113,926,410 |
127,927,022 |
|
Transportation Portfolio |
9,020,631 |
13,084,337 |
22,104,968 |
|
February 28, 2014 |
|
|
|
|
|
Ordinary Income |
Long-term Capital Gains |
Total |
|
Air Transportation Portfolio |
$ 2,624,982 |
$ 4,525,149 |
$ 7,150,131 |
|
Defense and Aerospace Portfolio |
18,368,747 |
29,250,815 |
47,619,562 |
|
Environment and Alternative Energy Portfolio |
701,353 |
- |
701,353 |
|
Industrial Equipment Portfolio |
5,151,118 |
22,015,419 |
27,166,537 |
|
Industrials Portfolio |
30,761,814 |
38,530,254 |
69,292,068 |
|
Transportation Portfolio |
8,618,771 |
6,126,685 |
14,745,456 |
Trading (Redemption) Fees. Shares held by investors in the Funds less than 30 days may be subject to a redemption fee equal to .75% of the NAV of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Funds and accounted for as an addition to paid in capital.
Annual Report
3. Significant Accounting Policies - continued
New Accounting Pronouncement. In June 2014, the Financial Accounting Standards Board issued Accounting Standard Update No. 2014-11, Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures (the Update). The Update amends the accounting for certain repurchase agreements and expands disclosure requirements for reverse repurchase agreements, securities lending and other similar transactions. The disclosure requirements are effective for annual and interim reporting periods beginning after December 15, 2014. Management is currently evaluating the impact of the Update on the Funds' financial statements and related disclosures.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities and in-kind transactions, are noted in the table below.
|
|
Purchases ($) |
Sales ($) |
|
Air Transportation Portfolio |
651,698,707 |
306,391,024 |
|
Defense and Aerospace Portfolio |
168,507,248 |
362,490,068 |
|
Environment and Alternative Energy Portfolio |
150,821,296 |
168,715,539 |
|
Industrial Equipment Portfolio |
170,440,474 |
365,708,003 |
|
Industrials Portfolio |
858,267,100 |
868,075,552 |
|
Transportation Portfolio |
1,149,043,792 |
544,533,312 |
5. Fees and Other Transactions with Affiliates.
Management Fee. Fidelity SelectCo, LLC (the investment adviser) and its affiliates provide the Funds with investment management related services for which the Funds pay a monthly management fee. The management fee is the sum of an individual fund fee rate and an annualized group fee rate. The individual fund fee rate is applied to each Fund's average net assets. The group fee rate is based upon the average net assets of all the mutual funds advised by Fidelity Management & Research Company (FMR) and the investment adviser. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the reporting period, each Fund's annual management fee rate expressed as a percentage of each Fund's average net assets was as follows.
|
|
Individual Rate |
Group Rate |
Total |
|
Air Transportation Portfolio |
.30% |
.25% |
.55% |
|
Defense and Aerospace Portfolio |
.30% |
.25% |
.55% |
|
Environment and Alternative Energy Portfolio |
.30% |
.25% |
.55% |
|
Industrial Equipment Portfolio |
.30% |
.25% |
.55% |
|
Industrials Portfolio |
.30% |
.25% |
.55% |
|
Transportation Portfolio |
.30% |
.25% |
.55% |
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of the investment adviser, is the Funds' transfer, dividend disbursing and shareholder servicing agent. FIIOC receives account fees and asset-based fees that vary according to account size and type of account. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, transfer agent fees were equivalent to the following annual rates expressed as a percentage of average net assets:
|
Air Transportation Portfolio |
.20% |
|
Defense and Aerospace Portfolio |
.19% |
|
Environment and Alternative Energy Portfolio |
.26% |
|
Industrial Equipment Portfolio |
.15% |
|
Industrials Portfolio |
.19% |
|
Transportation Portfolio |
.19% |
Annual Report
Notes to Financial Statements - continued
5. Fees and Other Transactions with Affiliates - continued
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of the investment adviser, maintains each Fund's accounting records. The accounting fee is based on the level of average net assets for each month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. Certain Funds placed a portion of their portfolio transactions with brokerage firms which are affiliates of the investment adviser. Brokerage commissions are included in net realized gain (loss) and change in net unrealized appreciation (depreciation) in the Statement of Operations. The commissions paid to these affiliated firms were as follows:
|
|
Amount |
|
Air Transportation Portfolio |
$ 9,968 |
|
Defense and Aerospace Portfolio |
2,556 |
|
Environment and Alternative Energy Portfolio |
654 |
|
Industrial Equipment Portfolio |
5,560 |
|
Industrials Portfolio |
14,439 |
|
Transportation Portfolio |
22,110 |
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Funds, along with other registered investment companies having management contracts with Fidelity Management & Research Company (FMR) or other affiliated entities of FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. Each applicable fund's activity in this program during the period for which loans were outstanding was as follows:
|
|
Borrower or Lender |
Average Loan |
Weighted Average Interest Rate |
Interest Expense |
|
Defense and Aerospace Portfolio |
Borrower |
$ 33,744,000 |
.31% |
$ 2,056 |
|
Industrial Equipment Portfolio |
Borrower |
6,814,225 |
.33% |
2,465 |
|
Industrials Portfolio |
Borrower |
7,301,667 |
.32% |
1,379 |
|
Transportation Portfolio |
Borrower |
10,789,500 |
.33% |
201 |
Redemptions In-Kind. During the period, shares of the Funds held by affiliated entities were redeemed in kind for cash and investments. The net realized gain on investments delivered through in-kind redemptions is included in the accompanying Statement of Operations. The amount of in-kind redemptions is included in share transactions in the accompanying Statement of Changes in Net Assets. The Funds recognized no gain or loss for federal income tax purposes.
Details of these transactions with the related gain (loss) for the Funds are presented in the accompanying table:
|
|
Value of cash |
Net Realized |
Shares |
|
Air Transportation Portfolio |
$ 74,479,318 |
$ 34,333,787 |
1,136,567 |
|
Industrials Portfolio |
149,731,550 |
51,052,475 |
4,654,817 |
|
Transportation Portfolio |
69,624,125 |
34,846,514 |
835,723 |
6. Committed Line of Credit.
Certain Funds participate with other funds managed by the investment adviser or an affiliate in a $4.25 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The participating funds have agreed to pay commitment fees on their pro-rata portion of the line of credit, which are reflected in Miscellaneous expenses on the Statement of Operations, and are as follows:
|
Air Transportation Portfolio |
$ 640 |
|
Defense and Aerospace Portfolio |
1,385 |
|
Environment and Alternative Energy Portfolio |
152 |
|
Industrial Equipment Portfolio |
561 |
|
Industrials Portfolio |
1,898 |
|
Transportation Portfolio |
974 |
During the period, the Funds did not borrow on this line of credit.
Annual Report
7. Security Lending.
Certain Funds lend portfolio securities through a lending agent from time to time in order to earn additional income. On the settlement date of the loan, each applicable Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Funds and any additional required collateral is delivered to the Funds on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, the Funds may apply collateral received from the borrower against the obligation. The Funds may experience delays and costs in recovering the securities loaned. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on each applicable Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented on each applicable Fund's Statement of Operations as a component of interest income from Fidelity Central Funds.
8. Bank Borrowings.
Each Fund is permitted to have bank borrowings for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity requirements. Each Fund has established borrowing arrangements with certain banks. The interest rate on the borrowings is the bank's base rate, as revised from time to time. 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 |
|
Industrial Equipment Portfolio |
$ 39,362,500 |
.59% |
$ 1,290 |
|
Industrials Portfolio |
5,288,474 |
.59% |
1,650 |
9. Expense Reductions.
Commissions paid to certain brokers with whom the investment adviser, or its affiliates, places trades on behalf of Certain Funds include an amount in addition to trade execution, which may be rebated back to the Funds to offset certain expenses. In addition, through arrangements with each applicable Fund's custodian and transfer agent, credits realized as a result of uninvested cash balances were used to reduce each applicable Fund's expenses. All of the applicable expense reductions are noted in the table below.
|
|
Custody |
Transfer Agent |
|
Environment and Alternative Energy Portfolio |
$ - |
$ 22 |
|
Industrials Portfolio |
- |
9,248 |
|
Transportation Portfolio |
11 |
- |
In addition, during the period the following Funds were reimbursed by the investment adviser for a portion of operating expenses:
|
Air Transportation Portfolio |
$ 687 |
|
Defense and Aerospace Portfolio |
1,618 |
|
Environment and Alternative Energy Portfolio |
66 |
|
Industrial Equipment Portfolio |
519 |
|
Industrials Portfolio |
1,687 |
|
Transportation Portfolio |
1,723 |
Annual Report
Notes to Financial Statements - continued
10. Other.
The Funds' organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Funds. In the normal course of business, the Funds may also enter into contracts that provide general indemnifications. The Funds' maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Funds. The risk of material loss from such claims is considered remote.
At the end of the period, the following mutual funds managed by the investment adviser or its affiliates were the owners of record of 10% or more of the total outstanding shares of the following Funds:
|
|
VIP Fund Manager 60% Portfolio |
Strategic Advisers Core Fund |
|
Industrial Equipment Portfolio |
17% |
- |
|
Industrial Portfolio |
13% |
26% |
Mutual funds managed by the investment adviser or its affiliates, in aggregate, were the owners of record of more than 20% of the total outstanding shares of the following Funds:
|
Fund |
% of shares held |
|
Industrial Equipment Portfolio |
26% |
|
Industrial Portfolio |
51% |
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 positions 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 28, 2015, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fidelity Select Portfolios' management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at February 28, 2015 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 20, 2015
Annual Report
Trustees and Officers
The Trustees and officers of the trust and funds, as applicable, are listed below. The Board of Trustees governs each fund and is responsible for protecting the interests of shareholders. The Trustees are experienced executives who meet periodically throughout the year to oversee each fund's activities, review contractual arrangements with companies that provide services to each fund, oversee management of the risks associated with such activities and contractual arrangements, and review each fund's performance. Each of the Trustees oversees 75 funds.
The Trustees hold office without limit in time except that (a) any Trustee may resign; (b) any Trustee may be removed by written instrument, signed by at least two-thirds of the number of Trustees prior to such removal; (c) any Trustee who requests to be retired or who has become incapacitated by illness or injury may be retired by written instrument signed by a majority of the other Trustees; and (d) any Trustee may be removed at any special meeting of shareholders by a two-thirds vote of the outstanding voting securities of the trust. The officers hold office without limit in time, except that any officer may resign or may be removed by a vote of a majority of the Trustees at any regular meeting or any special meeting of the Trustees. Except as indicated, each individual has held the office shown or other offices in the same company for the past five years.
Experience, Skills, Attributes, and Qualifications of the Funds' Trustees. The Governance and Nominating Committee has adopted a statement of policy that describes the experience, qualifications, attributes, and skills that are necessary and desirable for potential Independent Trustee candidates (Statement of Policy). The Board believes that each Trustee satisfied at the time he or she was initially elected or appointed a Trustee, and continues to satisfy, the standards contemplated by the Statement of Policy. The Governance and Nominating Committee also engages professional search firms to help identify potential Independent Trustee candidates who have the experience, qualifications, attributes, and skills consistent with the Statement of Policy. From time to time, additional criteria based on the composition and skills of the current Independent Trustees, as well as experience or skills that may be appropriate in light of future changes to board composition, business conditions, and regulatory or other developments, have also been considered by the professional search firms and the Governance and Nominating Committee. In addition, the Board takes into account the Trustees' commitment and participation in Board and committee meetings, as well as their leadership of standing and ad hoc committees throughout their tenure.
In determining that a particular Trustee was and continues to be qualified to serve as a Trustee, the Board has considered a variety of criteria, none of which, in isolation, was controlling. The Board believes that, collectively, the Trustees have balanced and diverse experience, qualifications, attributes, and skills, which allow the Board to operate effectively in governing each fund and protecting the interests of shareholders. Information about the specific experience, skills, attributes, and qualifications of each Trustee, which in each case led to the Board's conclusion that the Trustee should serve (or continue to serve) as a trustee of the funds, is provided below.
Board Structure and Oversight Function. Brian B. Hogan is an interested person (as defined in the 1940 Act) and currently serves as Chairman. The Trustees have determined that an interested Chairman is appropriate and benefits shareholders because an interested Chairman has a personal and professional stake in the quality and continuity of services provided to the funds. Independent Trustees exercise their informed business judgment to appoint an individual of their choosing to serve as Chairman, regardless of whether the Trustee happens to be independent or a member of management. The Independent Trustees have determined that they can act independently and effectively without having an Independent Trustee serve as Chairman and that a key structural component for assuring that they are in a position to do so is for the Independent Trustees to constitute a substantial majority for the Board. The Independent Trustees also regularly meet in executive session. Michael E. Wiley serves as Chairman of the Independent Trustees and as such (i) acts as a liaison between the Independent Trustees and management with respect to matters important to the Independent Trustees and (ii) with management prepares agendas for Board meetings.
Fidelity funds are overseen by different Boards of Trustees. The funds' Board oversees Fidelity's sector portfolios. Other Boards oversee Fidelity's equity and high income funds, and Fidelity's investment grade bond, money market, and asset allocation funds. The use of separate Boards, each with its own committee structure, allows the Trustees of each group of Fidelity funds to focus on the unique issues of the funds they oversee, including common research, investment, and operational issues. On occasion, the separate Boards establish joint committees to address issues of overlapping consequences for the Fidelity funds overseen by each Board.
The Trustees operate using a system of committees to facilitate the timely and efficient consideration of all matters of importance to the Trustees, each fund, and fund shareholders and to facilitate compliance with legal and regulatory requirements and oversight of the funds' activities and associated risks. The Board, acting through its committees, has charged SelectCo and its affiliates with (i) identifying events or circumstances the occurrence of which could have demonstrably adverse effects on the funds' business and/or reputation; (ii) implementing processes and controls to lessen the possibility that such events or circumstances occur or to mitigate the effects of such events or circumstances if they do occur; and (iii) creating and maintaining a system designed to evaluate continuously business and market conditions in order to facilitate the identification and implementation processes described in (i) and (ii) above. Because the day-to-day operations and activities of the funds are carried out by or through SelectCo, its affiliates, and other service providers, the funds' exposure to risks is mitigated but not eliminated by the processes overseen by the Trustees. While each of the Board's committees has responsibility for overseeing different aspects of the funds' activities, oversight is exercised primarily through the Operations and Audit Committees. Appropriate personnel, including but not limited to the funds' Chief Compliance Officer (CCO), SelectCo's internal auditor, the independent accountants, the funds' Treasurer and portfolio management personnel, make periodic reports to the Board's committees, as appropriate. The responsibilities of each standing committee, including their oversight responsibilities, are described further under "Standing Committees of the Funds' Trustees."
The funds' Statement of Additional Information (SAI) includes more information about the Trustees. To request a free copy, call Fidelity at 1-800-544-8544.
Annual Report
Trustees and Officers - continued
Interested Trustee*:
Correspondence intended for the Trustee who is an interested person may be sent to Fidelity Investments, 245 Summer Street, Boston, Massachusetts 02210.
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Name, Year of Birth; Principal Occupations and Other Relevant Experience+ |
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Brian B. Hogan (1964) |
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Year of Election or Appointment: 2014 Trustee Chairman of the Board of Trustees |
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Mr. Hogan also serves as Trustee or Vice President of other funds. Mr. Hogan serves as a Director of Fidelity SelectCo, LLC (2014-present) and President of FMR's Equity Division (2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager. |
* Trustee has been determined to be an "Interested Trustee" by virtue of, among other things, his affiliation with the trust or various entities under common control with SelectCo.
+ The information above includes the Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to the Trustee's qualifications to serve as a Trustee, which led to the conclusion that the Trustee should serve as a Trustee for each fund.
Independent Trustees:
Correspondence intended for each Independent Trustee (that is, the Trustees other than the Interested Trustee) may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235.
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Name, Year of Birth; Principal Occupations and Other Relevant Experience+ |
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David A. Rosow (1942) |
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Year of Election or Appointment: 2013 Trustee |
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Mr. Rosow also serves as Trustee of other Fidelity funds. Prior to his retirement in 2006, Mr. Rosow was the Chief Executive Officer, owner and operator of a number of private companies, which encompassed oil refining, drilling and marketing of petroleum products (including specialty petroleum products), the recreation industry, and real estate development. Previously, Mr. Rosow served as Lead Director and Chairman of the Audit Committee of Hudson United Bancorp (1996-2006), Chairman of the Board of Westport Bank and Trust (1992-1996), and as a Director of TD Banknorth (2006-2007). In addition, Mr. Rosow served as a member (2008-2014) and President (2009-2014) of the Town Council of Palm Beach, Florida. Mr. Rosow also served as a Member of the Advisory Board of other Fidelity funds (2012-2013). |
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Garnett A. Smith (1947) |
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Year of Election or Appointment: 2013 Trustee |
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Mr. Smith also serves as Trustee of other Fidelity funds. Prior to Mr. Smith's retirement, he served as Chairman and Chief Executive Officer of Inbrand Corp. (manufacturer of personal absorbent products, 1990-1997). He also served as President (1986-1990) of Inbrand Corp. Prior to his employment with Inbrand Corp., he was employed by a retail fabric chain and North Carolina National Bank. In addition, Mr. Smith served as a Member of the Advisory Board of other Fidelity funds (2012-2013) and as a board member of the Jackson Hole Land Trust (2009-2012). |
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Michael E. Wiley (1950) |
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Year of Election or Appointment: 2008 Trustee Chairman of the Independent Trustees |
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Mr. Wiley also serves as Trustee of other Fidelity funds. Mr. Wiley serves as a Director of Tesoro Corporation (independent oil refiner and marketer, 2005-present), and a Director of Bill Barrett Corporation (exploration and production, 2005-present). In addition, Mr. Wiley also serves as a Director of Post Oak Bank (privately-held bank, 2004-present). Previously, Mr. Wiley served as a Trustee of other Fidelity funds (2008-2013), as a Director of Asia Pacific Exploration Consolidated (international oil and gas exploration and production, 2008-2013), as a member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-2010), as a Senior Energy Advisor of Katzenbach Partners, LLC (consulting, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production, 2001-2005). |
Annual Report
+ The information above includes each Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to each Trustee's qualifications to serve as a Trustee, which led to the conclusion that each Trustee should serve as a Trustee for each fund.
Officers:
Except for Anthony R. Rochte, correspondence intended for each officer may be sent to Fidelity Investments, 245 Summer Street, Boston, Massachusetts 02210. Correspondence intended for Mr. Rochte may be sent to SelectCo, 1225 17th Street, Denver, Colorado 80202-5541. Officers appear below in alphabetical order.
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Name, Year of Birth; Principal Occupation |
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Christopher S. Bartel (1971) |
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Year of Election or Appointment: 2009 Vice President |
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Mr. Bartel also serves as Vice President of other funds. Mr. Bartel serves as a Director, President, and Chief Executive Officer of Fidelity Management & Research (Japan) Limited (2012-present), a Director of Fidelity Management & Research (Hong Kong) (2012-present), and Senior Vice President of Global Equity Research (2010-present). Previously, Mr. Bartel served as Senior Vice President of Equity Research (2009-2010), Managing Director of Research (2006-2009), and an analyst and portfolio manager (2000-2006). |
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Elizabeth Paige Baumann (1968) |
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Year of Election or Appointment: 2012 Anti-Money Laundering (AML) Officer |
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Ms. Baumann also serves as AML Officer of other funds. She is Chief AML Officer of FMR LLC (2012-present) and is an employee of Fidelity Investments. Previously, Ms. Baumann served as Vice President and Deputy Anti-Money Laundering Officer (2007-2012). |
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Marc Bryant (1966) |
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Year of Election or Appointment: 2013 Secretary |
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Mr. Bryant also serves as an officer of other funds. He is Senior Vice President and Deputy General Counsel of FMR LLC. Previously, Mr. Bryant served as Secretary and Chief Legal Officer of Fidelity Rutland Square Trust II (2010-2014). Prior to joining Fidelity Investments, Mr. Bryant served as a Senior Vice President and the Head of Global Retail Legal for AllianceBernstein L.P. (2006-2010), and as the General Counsel for ProFund Advisors LLC (2001-2006). |
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William C. Coffey (1969) |
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Year of Election or Appointment: 2009 Assistant Secretary |
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Mr. Coffey also serves as Assistant Secretary of other funds. He is Senior Vice President and Deputy General Counsel of FMR LLC (2010-present), and is an employee of Fidelity Investments. Previously, Mr. Coffey served as Vice President and Associate General Counsel of FMR LLC (2005-2009). |
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Jonathan Davis (1968) |
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Year of Election or Appointment: 2010 Assistant Treasurer |
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Mr. Davis also serves as Assistant Treasurer of other funds. Mr. Davis is an employee of Fidelity Investments. Previously, Mr. Davis served as Vice President and Associate General Counsel of FMR LLC (2003-2010). |
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Adrien E. Deberghes (1967) |
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Year of Election or Appointment: 2013 President and Treasurer |
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Mr. Deberghes also serves as an officer of other funds. He is an employee of Fidelity Investments (2008-present). Prior to joining Fidelity Investments, Mr. Deberghes was Senior Vice President of Mutual Fund Administration at State Street Corporation (2007-2008), Senior Director of Mutual Fund Administration at Investors Bank & Trust (2005-2007), and Director of Finance for Dunkin' Brands (2000-2005). |
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Stephanie J. Dorsey (1969) |
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Year of Election or Appointment: 2010 Assistant Treasurer |
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Ms. Dorsey also serves as an officer of other funds. She is an employee of Fidelity Investments (2008-present) and has served in other fund officer roles. Prior to joining Fidelity Investments, Ms. Dorsey served as Treasurer (2004-2008) of the JPMorgan Mutual Funds and Vice President (2004-2008) of JPMorgan Chase Bank. |
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Howard J. Galligan III (1966) |
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Year of Election or Appointment: 2014 Chief Financial Officer |
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Mr. Galligan also serves as Chief Financial Officer of other funds. Mr. Galligan serves as President of Fidelity Pricing and Cash Management Services (FPCMS) (2014-present) and as a Director of Strategic Advisers, Inc. (2008-present). Previously, Mr. Galligan served as Chief Administrative Officer of Asset Management (2011-2014) and Chief Operating Officer and Senior Vice President of Investment Support for Strategic Advisers, Inc. (2003-2011). |
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James D. Gryglewicz (1972) |
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Year of Election or Appointment: 2014 Chief Compliance Officer |
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Mr. Gryglewicz also serves as Chief Compliance Officer of other funds. Mr. Gryglewicz serves as Compliance Officer of Fidelity SelectCo, LLC (2014-present), Vice President of Asset Management Compliance (2009-present), and is an employee of Fidelity Investments (2004-present). |
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Brian B. Hogan (1964) |
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Year of Election or Appointment: 2009 Vice President |
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Mr. Hogan also serves as Trustee or Vice President of other funds. Mr. Hogan serves as a Director of Fidelity SelectCo, LLC (2014-present) and President of FMR's Equity Division (2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager. |
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Chris Maher (1972) |
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Year of Election or Appointment: 2013 Assistant Treasurer |
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Mr. Maher serves as Assistant Treasurer of other funds. Mr. Maher is Vice President of Valuation Oversight and is an employee of Fidelity Investments. Previously, Mr. Maher served as Vice President of Asset Management Compliance (2013), Vice President of FMR's Program Management Group (2010-2013), and Vice President of Valuation Oversight (2008-2010). |
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Kenneth B. Robins (1969) |
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Year of Election or Appointment: 2013 Deputy Treasurer |
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Mr. Robins also serves as an officer of other funds. Mr. Robins serves as Executive Vice President of Fidelity Investments Money Management, Inc. (FIMM) (2013-present) and is an employee of Fidelity Investments (2004-present). Previously, Mr. Robins served in other fund officer roles. |
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Anthony R. Rochte (1968) |
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Year of Election or Appointment: 2013 Vice President |
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Mr. Rochte also serves as Vice President of other funds. Mr. Rochte serves as President of Fidelity SelectCo, LLC (2012-present) and is an employee of Fidelity Investments (2012-present). Prior to joining Fidelity Investments, Mr. Rochte served as Senior Managing Director and head of State Street Global Advisors' North American Intermediary Business Group (2006-2012). |
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Stacie M. Smith (1974) |
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Year of Election or Appointment: 2013 Assistant Treasurer |
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Ms. Smith also serves as an officer of other funds. She is an employee of Fidelity Investments (2009-present) and has served in other fund officer roles. Prior to joining Fidelity Investments, Ms. Smith served as Senior Audit Manager of Ernst & Young LLP (1996-2009). |
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Renee Stagnone (1975) |
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Year of Election or Appointment: 2013 Deputy Treasurer |
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Ms. Stagnone also serves as Deputy Treasurer of other funds. Ms. Stagnone is an employee of Fidelity Investments. |
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Joseph F. Zambello (1957) |
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Year of Election or Appointment: 2011 Deputy Treasurer |
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Mr. Zambello also serves as Deputy Treasurer of other funds. Mr. Zambello is an employee of Fidelity Investments. Previously, Mr. Zambello served as Vice President of FMR's Program Management Group (2009-2011) and Vice President of the Transfer Agent Oversight Group (2005-2009). |
Annual Report
Distributions (Unaudited)
The Board of Trustees of each fund voted to pay to shareholders of record at the opening of business on record date the following distributions per share derived from capital gains realized from sales of portfolio securities and dividends derived from net investment income:
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|
Pay Date |
Record Date |
Dividends |
Capital Gains |
|
Air Transportation Portfolio |
04/13/15 |
04/10/15 |
$0.047 |
$0.452 |
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Defense and Aerospace Portfolio |
04/13/15 |
04/10/15 |
$0.283 |
$4.022 |
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Environment and Alternative Energy Portfolio |
04/13/15 |
04/10/15 |
$0.011 |
$0.439 |
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Industrial Equipment Portfolio |
04/13/15 |
04/10/15 |
$0.069 |
$1.561 |
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Industrials Portfolio |
04/13/15 |
04/10/15 |
$0.024 |
$0.339 |
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Transportation Portfolio |
04/13/15 |
04/10/15 |
$0.088 |
$0.536 |
The funds hereby designate as capital gain dividend the amounts noted below for the taxable year ended February 28, 2015, or, if subsequently determined to be different, the net capital gain of such year.
|
Air Transportation Portfolio |
$5,966,443 |
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Defense and Aerospace Portfolio |
$47,091,067 |
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Environment and Alternative Energy Portfolio |
$15,013,001 |
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Industrial Equipment Portfolio |
$39,336,876 |
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Industrials Portfolio |
$83,098,650 |
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Transportation Portfolio |
$17,661,693 |
A percentage of the dividends distributed during the fiscal year for the following funds qualifies for the dividends-received deduction for corporate shareholders:
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April 2014 |
December 2014 |
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Air Transportation Portfolio |
79% |
100% |
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Defense and Aerospace Portfolio |
100% |
100% |
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Environment and Alternative Energy Portfolio |
100% |
100% |
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Industrial Equipment Portfolio |
13% |
100% |
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Industrials Portfolio |
42% |
100% |
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Transportation Portfolio |
41% |
100% |
A percentage of the dividends distributed during the fiscal year for the following funds may be taken into account as a dividend for purposes of the maximum rate under section 1(h) (11) of the Internal Revenue Code:
|
|
April 2014 |
December 2014 |
|
Air Transportation Portfolio |
75% |
100% |
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Defense and Aerospace Portfolio |
100% |
100% |
|
Environment and Alternative Energy Portfolio |
100% |
100% |
|
Industrial Equipment Portfolio |
17% |
100% |
|
Industrials Portfolio |
38% |
100% |
|
Transportation Portfolio |
42% |
100% |
The funds will notify shareholders in January 2016 of amounts for use in preparing 2015 income tax returns.
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees
Air Transportation Portfolio
Defense and Aerospace Portfolio
Environment and Alternative Energy Portfolio
Industrial Equipment Portfolio
Industrials Portfolio
Transportation Portfolio
Each year, the Board of Trustees, including the Independent Trustees (together, the Board), votes on the renewal of the management contract with Fidelity SelectCo, LLC (SelectCo), an affiliate of Fidelity Management & Research Company (FMR), and the sub-advisory agreements with affiliates of FMR (together, the Advisory Contracts) for each fund. The Board, assisted by the advice of fund counsel and Independent Trustees' counsel, requests and considers a broad range of information relevant to the renewal of the Advisory Contracts throughout the year.
The Board meets regularly and, at each of its meetings, covers an extensive agenda of topics and materials and considers factors that are relevant to its annual consideration of the renewal of each fund's Advisory Contracts, including the services and support provided to each fund and its shareholders. The Board has established four standing committees (Committees) - Operations, Audit, Fair Valuation, and Governance and Nominating - each composed of and chaired by Independent Trustees with varying backgrounds, to which the Board has assigned specific subject matter responsibilities in order to enhance effective decision-making by the Board. The Operations Committee, of which all of the Independent Trustees are members, meets regularly throughout the year and considers, among other matters, information specifically related to the annual consideration of the renewal of each fund's Advisory Contracts. The Board, acting directly and through its Committees, requests and receives information concerning the annual consideration of the renewal of each fund's Advisory Contracts. The Board also meets as needed to consider matters specifically related to the Board's annual consideration of the renewal of the Advisory Contracts. Members of the Board may also meet with trustees of other Fidelity funds through ad hoc joint committees to discuss certain matters relevant to all of the Fidelity funds.
At its January 2015 meeting, the Board, including the Independent Trustees, unanimously determined to renew each fund's Advisory Contracts. In reaching its determination, the Board considered all factors it believed relevant, including (i) the nature, extent, and quality of the services to be provided to each fund and its shareholders (including the investment performance of each fund); (ii) the competitiveness of each fund's management fee and total expense ratio relative to peer funds; (iii) the total costs of the services to be provided by and the profits to be realized by Fidelity from its relationship with each fund; (iv) the extent to which economies of scale exist and would be realized as each fund grows; and (v) whether fee levels reflect these economies of scale, if any, for the benefit of fund shareholders.
In considering whether to renew the Advisory Contracts for each fund, the Board reached a determination, with the assistance of fund counsel and Independent Trustees' counsel and through the exercise of its business judgment, that the renewal of the Advisory Contracts was in the best interests of each fund and its shareholders and that the compensation payable under the Advisory Contracts was fair and reasonable. The Board's decision to renew the Advisory Contracts was not based on any single factor, but rather was based on a comprehensive consideration of all the information provided to the Board at its meetings throughout the year. The Board, in reaching its determination to renew the Advisory Contracts, was aware that shareholders of each fund have a broad range of investment choices available to them, including a wide choice among funds offered by Fidelity's competitors, and that each fund's shareholders, who have the opportunity to review and weigh the disclosure provided by the fund in its prospectus and other public disclosures, have chosen to invest in that fund, which is part of the Fidelity family of funds.
Nature, Extent, and Quality of Services Provided. The Board considered the staffing of SelectCo and the sub-advisers (together with SelectCo, the Investment Advisers) as it relates to the funds, including the backgrounds of investment personnel of SelectCo, and also considered the funds' investment objectives, strategies, and related investment philosophies. The Independent Trustees also had discussions with senior management of Fidelity's investment operations and investment groups. The Board considered the structure of the portfolio manager compensation program and whether this structure provides appropriate incentives to act in the best interests of each fund. Additionally, the Board considered the portfolio managers' investments, if any, in the funds that they manage.
Resources Dedicated to Investment Management and Support Services. The Board reviewed the general qualifications and capabilities of the investment staff of the Investment Advisers, including its size, education, experience, and resources, as well as the Fidelity's approach to recruiting, training, managing, and compensating investment personnel. The Board noted that Fidelity has continued to increase the resources devoted to non-U.S. offices, including expansion of Fidelity's global investment organization. The Board also noted that Fidelity's analysts have extensive resources, tools and capabilities that allow them to conduct sophisticated quantitative and fundamental analysis, as well as credit analysis of issuers, counterparties and guarantors. Further, the Board believes that Fidelity's investment professionals have sufficient access to global information and data so as to provide competitive investment results over time, and that those professionals also have access to sophisticated tools that permit them to assess portfolio construction and risk and performance attribution characteristics continuously, as well as to transmit new information and research conclusions rapidly around the world. Additionally, in its deliberations, the Board considered Fidelity's trading, risk management, and compliance capabilities and resources, which are integral parts of the investment management process.
Annual Report
Shareholder and Administrative Services. The Board considered (i) the nature, extent, quality, and cost of advisory, administrative, and shareholder services performed by the Investment Advisers and their affiliates under the Advisory Contracts and under separate agreements covering transfer agency, pricing and bookkeeping, and securities lending services for each fund; (ii) the nature and extent of the supervision of third party service providers, principally custodians and subcustodians; and (iii) the resources devoted to, and the record of compliance with, each fund's compliance policies and procedures. The Board also reviewed the allocation of fund brokerage, including allocations to brokers affiliated with the Investment Advisers, the use of brokerage commissions to pay fund expenses, and the use of "soft" commission dollars to pay for research services.
The Board noted that the growth of fund assets over time across the complex allows Fidelity to reinvest in the development of services designed to enhance the value or convenience of the Fidelity funds as investment vehicles. These services include 24-hour access to account information and market information through telephone representatives and over the Internet, investor education materials and asset allocation tools, and the expanded availability of Fidelity Investor Centers.
Investment in a Large Fund Family. The Board considered the benefits to shareholders of investing in a Fidelity fund, including the benefits of investing in a fund that is part of a large family of funds offering a variety of investment disciplines and providing a large variety of mutual fund investor services. The Board noted that Fidelity had taken, or had made recommendations that resulted in the Fidelity funds taking, a number of actions over the previous year that benefited particular funds, including (i) continuing to dedicate additional resources to investment research and to the support of the senior management team that oversees asset management; (ii) continuing efforts to enhance Fidelity's global research capabilities; (iii) launching new funds and making other enhancements to meet client needs for income-oriented solutions; (iv) reducing fund expenses for certain index funds; (v) continuing to launch dedicated lower cost underlying funds to meet portfolio construction needs related to expanding underlying fund options for Fidelity funds of funds, specifically for the Freedom Fund product lines; (vi) rationalizing product lines and gaining increased efficiencies through fund mergers; (vii) launching sector-based exchange-traded funds and establishing SelectCo to manage sector-based funds and products; (viii) continuing to develop, acquire, and implement systems and technology to improve security and services to the funds and to increase efficiency; (ix) modifying the eligibility criteria for certain share classes to increase their marketability to a portion of the defined contribution plan market; (x) waiving redemption fees for certain qualified fund-of-fund and wrap programs and certain retirement plan transactions; and (xi) launching new Institutional Class shares of certain money market funds to attract and retain assets and to fill a gap in money market fund offerings.
Investment Performance. The Board considered whether each fund has operated in accordance with its investment objective, as well as its record of compliance with its investment restrictions and its performance history. The Board noted that there was a portfolio management change for Environment and Alternative Energy Portfolio in November 2014.
The Board took into account discussions with representatives of the Investment Advisers about fund investment performance that occur at Board meetings throughout the year. In this regard the Board noted that as part of regularly scheduled fund reviews and other reports to the Board on fund performance, the Board considers annualized return information for each fund, for different time periods, measured against a securities market index ("benchmark index"). In its evaluation of fund investment performance at meetings throughout the year, the Board gave particular attention to information indicating underperformance of certain Fidelity funds for specific time periods and discussed with the Investment Advisers the reasons for such underperformance. Each of Defense and Aerospace Portfolio, Environment and Alternative Energy Portfolio, and Industrial Equipment Portfolio underperformed its benchmark for the one-, three-, and five-year periods ended May 31, 2014, and as a result, the Board will continue to discuss with SelectCo the steps it has taken and is taking to address the funds' performance.
In addition to reviewing absolute and relative fund performance, the Independent Trustees periodically consider the appropriateness of fund performance metrics in evaluating the results achieved. In general, the Independent Trustees believe that fund performance should be evaluated based on net performance (after fees and expenses) of both the highest performing and lowest performing classes, where applicable, compared to appropriate benchmark indices, over appropriate time periods that may include full market cycles, taking into account relevant factors including the following: general market conditions; issuer-specific information; tactical opportunities for investment; and fund cash flows and other factors. Depending on the circumstances, the Independent Trustees may be satisfied with a fund's performance notwithstanding that it lags its benchmark index for certain periods.
The Independent Trustees recognize that shareholders evaluate performance on a net basis over their own holding periods, for which one-, three-, and five-year periods are often used as a proxy. For this reason, the performance information reviewed by the Board also included net cumulative total return information for each fund and an appropriate benchmark index for the most recent one-, three-, and five-year periods ended June 30, 2014.
Based on its review, the Board concluded that the nature, extent, and quality of services provided to each fund under the Advisory Contracts should benefit the shareholders of each fund.
Competitiveness of Management Fee and Total Expense Ratio. The Board considered each fund's management fee and total expense ratio compared to "mapped groups" of competitive funds and classes created for the purpose of facilitating the Trustees' analysis of the competitiveness of management fees and total expenses. Fidelity creates "mapped groups" by combining similar Lipper investment objective categories that have comparable investment mandates. Combining Lipper investment objective categories aids the Board's management fee and total expense ratio comparisons by broadening the competitive group used for comparison and making the competitive group more inclusive.
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees - continued
Management Fee. The Board considered two proprietary management fee comparisons for the 12-month periods ended June 30 shown in the charts below. The group of Lipper funds used by the Board for management fee comparisons is referred to below as the "Total Mapped Group." The Total Mapped Group comparison focuses on a fund's standing in terms of gross management fees before expense reimbursements or caps relative to the total universe of funds with comparable investment mandates, regardless of whether their management fee structures also are comparable. Funds with comparable investment mandates offer exposure to similar types of securities. Funds with comparable management fee structures have similar management fee contractual arrangements (e.g., flat rate charged for advisory services, all-inclusive fee rate, etc.). "TMG %" represents the percentage of funds in the Total Mapped Group that had management fees that were lower than a fund's. For example, a hypothetical TMG % of 20% would mean that 80% of the funds in the Total Mapped Group had higher, and 20% had lower, management fees than a fund. The funds' actual TMG %s are in the charts below. The "Asset-Size Peer Group" (ASPG) comparison focuses on a fund's standing relative to a subset of non-Fidelity funds within the Total Mapped Group that are similar in size and management fee structure. For example, if a fund is in the first quartile of the ASPG, the fund's management fee ranks in the least expensive or lowest 25% of funds in the ASPG. The ASPG represents at least 15% of the funds in the Total Mapped Group with comparable asset size and management fee structures, subject to a minimum of 50 funds (or all funds in the Total Mapped Group if fewer than 50). Additional information, such as the ASPG quartile in which a fund's management fee rate ranked, is also included in the charts and considered by the Board.
Air Transportation Portfolio
Annual Report
Defense and Aerospace Portfolio
Environment and Alternative Energy Portfolio
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees - continued
Industrial Equipment Portfolio
Industrials Portfolio
Annual Report
Transportation Portfolio
The Board noted that each fund's management fee rate ranked below the median of its Total Mapped Group and below the median of its ASPG for the 12-month period ended June 30, 2014.
Based on its review, the Board concluded that each fund's management fee is fair and reasonable in light of the services that each fund receives and the other factors considered.
Total Expense Ratio. In its review of each fund's total expense ratio, the Board considered the fund's management fee as well as other fund expenses, such as transfer agent fees, pricing and bookkeeping fees, and custodial, legal, and audit fees. The Board also noted that Fidelity may agree to waive fees and expenses from time to time, and the extent to which, if any, it has done so for the funds. As part of its review, the Board also considered the current and historical total expense ratios of each fund compared to competitive fund median expenses. Each fund is compared to those funds and classes in the Total Mapped Group (used by the Board for management fee comparisons) that have a similar sales load structure.
The Board noted that each fund's total expense ratio ranked below its competitive median for the 12-month period ended June 30, 2014.
Fees Charged to Other Fidelity Clients. The Board also considered Fidelity fee structures and other information with respect to clients of Fidelity, such as other funds advised or subadvised by Fidelity, pension plan clients, and other institutional clients.
Based on its review of total expense ratios and fees charged to other Fidelity clients, the Board concluded that each fund's total expense ratio was reasonable in light of the services that each fund and its shareholders receive and the other factors considered.
Costs of the Services and Profitability. The Board considered the revenues earned and the expenses incurred by Fidelity in conducting the business of developing, marketing, distributing, managing, administering and servicing each fund and servicing each fund's shareholders. The Board also considered the level of Fidelity's profits in respect of all the Fidelity funds.
On an annual basis, Fidelity presents to the Board information about the profitability of its relationship with each fund. Fidelity calculates profitability information for each fund, as well as aggregate profitability information for groups of Fidelity funds and all Fidelity funds, using a series of detailed revenue and cost allocation methodologies which originate with the books and records of Fidelity on which Fidelity's audited financial statements are based. The Audit Committee of the Board reviews any significant changes from the prior year's methodologies.
PricewaterhouseCoopers LLP (PwC), independent registered public accounting firm and auditor to Fidelity and certain Fidelity funds, has been engaged annually by the Board as part of the Board's assessment of the profitability analysis used by Fidelity. PwC's engagement includes the review and assessment of Fidelity's methodologies used in determining the revenues and expenses attributable to Fidelity's mutual fund business, and completion of agreed-upon procedures in respect of the mathematical accuracy of fund profitability and its conformity to established allocation methodologies. After considering PwC's reports issued under the engagement and information provided by Fidelity, the Board concluded that while other allocation methods may also be reasonable, Fidelity's profitability methodologies are reasonable in all material respects.
The Board also reviewed Fidelity's non-fund businesses and fall-out benefits related to the mutual fund business as well as cases where Fidelity's affiliates may benefit from or be related to the funds' business.
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees - continued
The Board considered the costs of the services provided by and the profits realized by Fidelity in connection with the operation of each fund and was satisfied that the profitability was not excessive.
Economies of Scale. The Board considered whether there have been economies of scale in respect of the management of the Fidelity funds, whether the Fidelity funds (including each fund) have appropriately benefited from any such economies of scale, and whether there is potential for realization of any further economies of scale. The Board considered the extent to which each fund will benefit from economies of scale as assets grow through increased services to the fund, through waivers or reimbursements, or through fee or expense ratio reductions. The Board also noted that in 2013, it and the boards of other Fidelity funds created an ad hoc committee (the Economies of Scale Committee) to analyze whether Fidelity attains economies of scale in respect of the management and servicing of the Fidelity funds, whether the Fidelity funds have appropriately benefited from such economies of scale, and whether there is potential for realization of any further economies of scale.
The Board recognized that each fund's management contract incorporates a "group fee" structure, which provides for lower group fee rates as total group assets increase, and for higher group fee rates as total group assets decrease (with "group assets" defined to include fund assets under SelectCo's management plus assets under FMR's management). SelectCo calculates the group fee rates based on a tiered asset "breakpoint" schedule that varies based on asset class. The Board considered that the group fee is designed to deliver the benefits of economies of scale to fund shareholders when total group assets increase, even if assets of any particular fund are unchanged or have declined, because some portion of Fidelity's costs are attributable to services provided to all Fidelity funds, and all funds benefit if those costs can be allocated among more assets. The Board concluded that, given the group fee structure, fund shareholders will benefit from lower management fees as group assets increase at the fund complex level, regardless of whether Fidelity achieves any such economies of scale.
The Board concluded, taking into account the analysis of the Economies of Scale Committee, that economies of scale, if any, are being appropriately shared between fund shareholders and Fidelity.
Additional Information Requested by the Board. In order to develop fully the factual basis for consideration of the Fidelity funds' Advisory Contracts, the Board requested and received additional information on certain topics, including: (i) Fidelity's fund profitability methodology, profitability trends for certain funds, and the impact of certain factors on fund profitability results; (ii) portfolio manager changes that have occurred during the past year and the amount of the investment that each portfolio manager has made in the Fidelity fund(s) that he or she manages; (iii) Fidelity's compensation structure for portfolio managers, research analysts, and other key personnel, including its effects on fund profitability; (iv) the arrangements with and compensation paid to certain fund sub-advisers on behalf of the Fidelity funds; (v) Fidelity's fee structures, including the group fee structure and definition of group assets, and the rationale for recommending different fees among different categories of funds and classes; (vi) the methodology with respect to competitive fund data and peer group classifications; (vii) Fidelity's transfer agent fee, expense, and service structures for different funds and classes, and the impact of the increased use of omnibus accounts; and (viii) explanations regarding the relative total expense ratios of certain funds and classes, total expense competitive trends and methodologies for total expense competitive comparisons, and actions that might be taken by Fidelity to reduce total expense ratios for certain funds and classes or to achieve further economies of scale.
Based on its evaluation of all of the conclusions noted above, and after considering all factors it believed relevant, the Board concluded that the advisory fee structures are fair and reasonable, and that each fund's Advisory Contracts should be renewed.
Annual Report
Investment Adviser
Fidelity SelectCo, LLC
Denver, CO
Investment Sub-Advisers
FMR Co., Inc.
FMR Investment Management
(U.K.) Limited
Fidelity Management & Research
(Hong Kong) Limited
Fidelity Management & Research
(Japan) Limited
General Distributor
Fidelity Distributors Corporation
Smithfield, RI
Transfer and Service Agents
Fidelity Investments Institutional Operations Company, Inc.
Boston, MA
Fidelity Service Company, Inc.
Boston, MA
Custodian
Brown Brothers Harriman & Co.
Boston, MA
Corporate Headquarters
245 Summer Street
Boston, MA 02210
1-800-544-8888
The Fidelity Telephone Connection
Mutual Fund 24-Hour Service
Exchanges/Redemptions
and Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774
(8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
Fidelity Automated Service
Telephone (FAST®) 
1-800-544-5555
Automated line for quickest service
SELCI-UANNPRO-0415
1.910422.105
Fidelity®
Select Portfolios®
Consumer Discretionary Sector
Automotive Portfolio
Construction and Housing Portfolio
Consumer Discretionary Portfolio
Leisure Portfolio
Multimedia Portfolio
Retailing Portfolio
Annual Report
February 28, 2015
(Fidelity Cover Art)
Contents
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Shareholder Expense Example |
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Automotive Portfolio |
Performance |
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Management's Discussion |
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Investment Changes |
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Investments |
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Financial Statements |
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Construction and Housing Portfolio |
Performance |
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Management's Discussion |
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Investment Changes |
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Investments |
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Financial Statements |
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Consumer Discretionary Portfolio |
Performance |
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Management's Discussion |
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Investment Changes |
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Investments |
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Financial Statements |
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Leisure Portfolio |
Performance |
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Management's Discussion |
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Investment Changes |
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Investments |
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Financial Statements |
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Multimedia Portfolio |
Performance |
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Management's Discussion |
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Investment Changes |
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Investments |
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Financial Statements |
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Retailing Portfolio |
Performance |
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Management's Discussion |
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Investment Changes |
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Investments |
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Financial Statements |
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Notes to Financial Statements |
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Report of Independent Registered Public Accounting Firm |
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Trustees and Officers |
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Distributions |
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Board Approval of Investment Advisory Contracts and Management Fees |
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Annual Report
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com/proxyvotingresults or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov. You may also call 1-800-544-8544 to request a free copy of the proxy voting guidelines.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third-party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company. © 2015 FMR LLC. All rights reserved.
This report and the financial statements contained herein are submitted for the general information of the shareholders of the funds. This report is not authorized for distribution to prospective investors in the funds unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com, http://www.advisor.fidelity.com, or http://www.401k.com, as applicable.
NOT FDIC INSURED • MAY LOSE VALUE • NO BANK GUARANTEE
Neither the funds nor Fidelity Distributors Corporation is a bank.
Annual Report
Shareholder Expense Example
As a shareholder of a Fund, you incur two types of costs: (1) transaction costs, including redemption fees and (2) ongoing costs, including management fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Funds and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (September 1, 2014 to February 28, 2015).
Actual Expenses
The first line of the accompanying table for each fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, each Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each fund provides information about hypothetical account values and hypothetical expenses based on a fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, each Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
|
|
Annualized |
Beginning |
Ending |
Expenses Paid |
|
Automotive Portfolio |
.84% |
|
|
|
|
Actual |
|
$ 1,000.00 |
$ 1,040.70 |
$ 4.25 |
|
HypotheticalA |
|
$ 1,000.00 |
$ 1,020.63 |
$ 4.21 |
|
Construction and Housing Portfolio |
.81% |
|
|
|
|
Actual |
|
$ 1,000.00 |
$ 1,125.80 |
$ 4.27 |
|
HypotheticalA |
|
$ 1,000.00 |
$ 1,020.78 |
$ 4.06 |
|
Consumer Discretionary Portfolio |
.76% |
|
|
|
|
Actual |
|
$ 1,000.00 |
$ 1,127.30 |
$ 4.01 |
|
HypotheticalA |
|
$ 1,000.00 |
$ 1,021.03 |
$ 3.81 |
|
Leisure Portfolio |
.79% |
|
|
|
|
Actual |
|
$ 1,000.00 |
$ 1,126.40 |
$ 4.17 |
|
HypotheticalA |
|
$ 1,000.00 |
$ 1,020.88 |
$ 3.96 |
|
Multimedia Portfolio |
.80% |
|
|
|
|
Actual |
|
$ 1,000.00 |
$ 1,072.90 |
$ 4.11 |
|
HypotheticalA |
|
$ 1,000.00 |
$ 1,020.83 |
$ 4.01 |
|
Retailing Portfolio |
.80% |
|
|
|
|
Actual |
|
$ 1,000.00 |
$ 1,163.20 |
$ 4.29 |
|
HypotheticalA |
|
$ 1,000.00 |
$ 1,020.83 |
$ 4.01 |
A 5% return per year before expenses
B Annualized expense ratio reflects expenses net of applicable fee waivers.
* Expenses are equal to each Fund's annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
Annual Report
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 28, 2015 |
Past 1 |
Past 5 |
Past 10 |
|
Automotive Portfolio |
8.04% |
16.78% |
7.90% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Automotive Portfolio on February 28, 2005. The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period.
Annual Report
Automotive Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. stock market closed near its all-time high for the 12 months ending February 28, 2015, supported by low interest rates and the relative strength of the U.S. economy and dollar. The large-cap S&P 500® Index returned 15.51%. Growth stocks in the index outperformed value-oriented names. The tech-heavy Nasdaq Composite Index® rose 16.58%, while the small-cap Russell 2000® Index advanced 5.63%, rallying from early-period weakness amid growth and valuation worries. Among the 10 major market sectors tracked by MSCI U.S. IMI 25-50 classifications, most notched a double-digit gain, led by health care (+24%), consumer staples (+21%), information technology (+20%) and utilities (+15%). Conversely, energy (-9%) was the only sector to lose ground, reflecting a sharp drop in crude prices beginning midyear and attributed to weaker global demand and a U.S. supply boom. Volatility spiked to a three-year high in October amid concerns about economic growth and Ebola, as well as unrest in Syria, Iraq and Ukraine. Nevertheless, the S&P 500® finished the period well above its mid-October nadir, bolstered by the relative economic strength of the U.S., which marked a six-year low in its unemployment rate, and consumer confidence that declined only slightly from its 11-year high reached in January.
Comments from Annie Rosen, Portfolio Manager of Automotive Portfolio: For the year, the fund gained 8.04%, underperforming the 9.90% result of its industry benchmark, the S&P® Custom Automobiles & Components Index, and the S&P 500®. Automotive stocks lagged the broad market during the past year, as global geopolitical turmoil, a tough macroeconomic and consumer environment in Europe, and concern about pricing competition in the U.S. all weighed on the industry's performance. Additionally, foreign exchange devaluations from an appreciating U.S. dollar challenged U.S.-based auto suppliers, and hurt the fund's foreign holdings. Versus the industry benchmark, stock picking among automobile manufacturers and distributors was the main detractor. From the former category, the fund's largest detractor was an out-of-benchmark stake in South Korea-based Hyundai Motor, which we purchased shortly before the start of the period in anticipation of a strong product cycle. Unfortunately, the stock was hurt by a massive real estate transaction that caused investors to question the company's capital discipline. I sold the position from the fund before period end, but not before it hurt relative performance. A non-index stake in distributor LKQ was another detractor. Shares of the provider of replacement parts had a volatile run over the past year, including a plunge near period end after the firm issued weaker-than-expected fourth-quarter financial results. On the flip side, the top-three relative contributors were out-of-benchmark names from various industries: Harman International Industries, KAR Auction Services and Tata Motors. Audio and infotainment designer/manufacturer Harman's stock soared in late January after the firm released second-quarter sales that beat expectations and raised its earnings forecast. KAR benefited from a growing supply of newer used vehicles (three-to-five years old), which drove volumes and profits for the company. India-based Tata Motors owns luxury brands Jaguar and Land Rover, and the stock was lifted by the firm's significant exposure to China, which had a strong appetite for luxury and sport-utility vehicles.
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 28, 2015 |
||
|
|
% of fund's |
% of fund's net assets |
|
Toyota Motor Corp. sponsored ADR |
15.6 |
13.6 |
|
Ford Motor Co. |
11.0 |
6.9 |
|
General Motors Co. |
9.0 |
8.5 |
|
Honda Motor Co. Ltd. sponsored ADR |
5.8 |
7.7 |
|
Delphi Automotive PLC |
5.7 |
5.7 |
|
Tenneco, Inc. |
4.9 |
3.0 |
|
Visteon Corp. |
4.5 |
4.8 |
|
BorgWarner, Inc. |
4.3 |
4.5 |
|
Harley-Davidson, Inc. |
4.1 |
4.3 |
|
Johnson Controls, Inc. |
3.9 |
3.9 |
|
|
68.8 |
|
|
Top Industries (% of fund's net assets) |
|||
|
As of February 28, 2015 |
|||
 |
Automobiles |
58.6% |
|
 |
Auto Components |
32.8% |
|
 |
Distributors |
3.0% |
|
 |
Commercial Services & Supplies |
2.0% |
|
 |
Household Durables |
2.0% |
|
 |
All Others* |
1.6% |
|
|
As of August 31, 2014 |
|||
 |
Automobiles |
53.9% |
|
 |
Auto Components |
33.9% |
|
 |
Commercial Services & Supplies |
3.0% |
|
 |
Distributors |
3.0% |
|
 |
Electronic Equipment & Components |
1.1% |
|
 |
All Others* |
5.1% |
|
|
* Includes short-term investments and net other assets (liabilities). |
Annual Report
Automotive Portfolio
Investments February 28, 2015
Showing Percentage of Net Assets
|
Common Stocks - 97.3% |
|||
|
Shares |
Value |
||
|
AUTO COMPONENTS - 32.8% |
|||
|
Auto Parts & Equipment - 30.6% |
|||
|
BorgWarner, Inc. |
97,010 |
$ 5,962,235 |
|
|
Continental AG |
5,800 |
1,384,422 |
|
|
Delphi Automotive PLC |
100,458 |
7,920,109 |
|
|
Johnson Controls, Inc. |
104,560 |
5,312,694 |
|
|
Linamar Corp. |
25,500 |
1,597,804 |
|
|
Magna International, Inc. Class A (sub. vtg.) |
41,784 |
4,541,725 |
|
|
Martinrea International, Inc. |
73,600 |
683,542 |
|
|
Stoneridge, Inc. (a) |
149,603 |
1,727,915 |
|
|
Tenneco, Inc. (a) |
116,406 |
6,779,485 |
|
|
Visteon Corp. (a) |
62,440 |
6,277,093 |
|
|
|
42,187,024 |
||
|
Tires & Rubber - 2.2% |
|||
|
Cooper Tire & Rubber Co. |
37,900 |
1,442,474 |
|
|
The Goodyear Tire & Rubber Co. |
61,090 |
1,632,936 |
|
|
|
3,075,410 |
||
|
TOTAL AUTO COMPONENTS |
45,262,434 |
||
|
AUTOMOBILES - 56.5% |
|||
|
Automobile Manufacturers - 52.4% |
|||
|
Ford Motor Co. |
928,031 |
15,164,027 |
|
|
General Motors Co. |
332,514 |
12,406,097 |
|
|
Honda Motor Co. Ltd. sponsored ADR |
240,695 |
7,976,632 |
|
|
Renault SA |
29,100 |
2,795,650 |
|
|
Suzuki Motor Corp. |
90,100 |
2,847,047 |
|
|
Tata Motors Ltd. sponsored ADR |
83,740 |
4,121,683 |
|
|
Tesla Motors, Inc. (a)(d) |
26,100 |
5,307,174 |
|
|
Toyota Motor Corp. sponsored ADR (d) |
159,317 |
21,566,741 |
|
|
|
72,185,051 |
||
|
Motorcycle Manufacturers - 4.1% |
|||
|
Harley-Davidson, Inc. |
89,520 |
5,690,786 |
|
|
TOTAL AUTOMOBILES |
77,875,837 |
||
|
COMMERCIAL SERVICES & SUPPLIES - 2.0% |
|||
|
Diversified Support Services - 2.0% |
|||
|
KAR Auction Services, Inc. |
75,780 |
2,763,697 |
|
|
DISTRIBUTORS - 3.0% |
|||
|
Distributors - 3.0% |
|||
|
LKQ Corp. (a) |
168,030 |
4,129,337 |
|
|
|
|||
|
Shares |
Value |
||
|
ELECTRONIC EQUIPMENT & COMPONENTS - 1.0% |
|||
|
Electronic Equipment & Instruments - 1.0% |
|||
|
Research Frontiers, Inc. (a)(d) |
260,448 |
$ 1,411,628 |
|
|
HOUSEHOLD DURABLES - 2.0% |
|||
|
Consumer Electronics - 2.0% |
|||
|
Harman International Industries, Inc. |
19,800 |
2,732,202 |
|
|
TOTAL COMMON STOCKS (Cost $86,058,980) |
|
||
|
Nonconvertible Preferred Stocks - 2.1% |
|||
|
|
|
|
|
|
AUTOMOBILES - 2.1% |
|||
|
Automobile Manufacturers - 2.1% |
|||
|
Volkswagen AG |
11,200 |
|
|
|
Money Market Funds - 6.2% |
|||
|
|
|
|
|
|
Fidelity Cash Central Fund, 0.13% (b) |
2,987,760 |
2,987,760 |
|
|
Fidelity Securities Lending Cash Central Fund, 0.13% (b)(c) |
5,554,450 |
5,554,450 |
|
|
TOTAL MONEY MARKET FUNDS (Cost $8,542,210) |
|
||
|
TOTAL INVESTMENT PORTFOLIO - 105.6% (Cost $96,910,068) |
145,543,618 |
||
|
NET OTHER ASSETS (LIABILITIES) - (5.6)% |
(7,666,350) |
||
|
NET ASSETS - 100% |
$ 137,877,268 |
||
|
Legend |
|
(a) Non-income producing |
|
(b) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
|
(c) Investment made with cash collateral received from securities on loan. |
|
(d) Security or a portion of the security is on loan at period end. |
|
Affiliated Central Funds |
|
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
|
Fund |
Income earned |
|
Fidelity Cash Central Fund |
$ 1,795 |
|
Fidelity Securities Lending Cash Central Fund |
89,493 |
|
Total |
$ 91,288 |
|
Other Information |
|
All investments are categorized as Level 1 under the Fair Value Hierarchy. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements. |
|
Distribution of investments by country or territory of incorporation, as a percentage of total net assets, is as follows (Unaudited): |
|
United States of America |
57.7% |
|
Japan |
23.5% |
|
Bailiwick of Jersey |
5.7% |
|
Canada |
5.0% |
|
Germany |
3.1% |
|
India |
3.0% |
|
France |
2.0% |
|
|
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 28, 2015 |
|
|
|
|
|
|
Assets |
|
|
|
Investment in securities, at value (including securities loaned of $5,338,792) - See accompanying schedule: Unaffiliated issuers (cost $88,367,858) |
$ 137,001,408 |
|
|
Fidelity Central Funds (cost $8,542,210) |
8,542,210 |
|
|
Total Investments (cost $96,910,068) |
|
$ 145,543,618 |
|
Receivable for investments sold |
|
12,590 |
|
Receivable for fund shares sold |
|
456,871 |
|
Dividends receivable |
|
223,346 |
|
Distributions receivable from Fidelity Central Funds |
|
4,036 |
|
Prepaid expenses |
|
675 |
|
Other receivables |
|
3,045 |
|
Total assets |
|
146,244,181 |
|
|
|
|
|
Liabilities |
|
|
|
Payable for investments purchased |
$ 2,471,134 |
|
|
Payable for fund shares redeemed |
220,759 |
|
|
Accrued management fee |
60,507 |
|
|
Other affiliated payables |
26,461 |
|
|
Other payables and accrued expenses |
33,602 |
|
|
Collateral on securities loaned, at value |
5,554,450 |
|
|
Total liabilities |
|
8,366,913 |
|
|
|
|
|
Net Assets |
|
$ 137,877,268 |
|
Net Assets consist of: |
|
|
|
Paid in capital |
|
$ 83,156,379 |
|
Undistributed net investment income |
|
176,383 |
|
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions |
|
5,914,405 |
|
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies |
|
48,630,101 |
|
Net Assets, for 2,824,233 shares outstanding |
|
$ 137,877,268 |
|
Net Asset Value, offering price and redemption price per share ($137,877,268 ÷ 2,824,233 shares) |
|
$ 48.82 |
Statement of Operations
|
|
Year ended February 28, 2015 |
|
|
|
|
|
|
Investment Income |
|
|
|
Dividends |
|
$ 2,738,803 |
|
Income from Fidelity Central Funds |
|
91,288 |
|
Income before foreign taxes withheld |
|
2,830,091 |
|
Less foreign taxes withheld |
|
(185,469) |
|
Total income |
|
2,644,622 |
|
|
|
|
|
Expenses |
|
|
|
Management fee |
$ 869,223 |
|
|
Transfer agent fees |
318,098 |
|
|
Accounting and security lending fees |
65,882 |
|
|
Custodian fees and expenses |
17,637 |
|
|
Independent trustees' compensation |
3,298 |
|
|
Registration fees |
31,709 |
|
|
Audit |
37,487 |
|
|
Legal |
1,486 |
|
|
Interest |
82 |
|
|
Miscellaneous |
6,148 |
|
|
Total expenses before reductions |
1,351,050 |
|
|
Expense reductions |
(751) |
1,350,299 |
|
Net investment income (loss) |
|
1,294,323 |
|
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: |
|
|
|
Investment securities: |
|
|
|
Unaffiliated issuers |
31,519,078 |
|
|
Foreign currency transactions |
21,775 |
|
|
Total net realized gain (loss) |
|
31,540,853 |
|
Change in net unrealized appreciation (depreciation) on: Investment securities |
(24,165,211) |
|
|
Assets and liabilities in foreign currencies |
(2,679) |
|
|
Total change in net unrealized appreciation (depreciation) |
|
(24,167,890) |
|
Net gain (loss) |
|
7,372,963 |
|
Net increase (decrease) in net assets resulting from operations |
|
$ 8,667,286 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Automotive Portfolio
Financial Statements - continued
Statement of Changes in Net Assets
|
|
Year ended |
Year ended |
|
Increase (Decrease) in Net Assets |
|
|
|
Operations |
|
|
|
Net investment income (loss) |
$ 1,294,323 |
$ 1,082,432 |
|
Net realized gain (loss) |
31,540,853 |
31,510,175 |
|
Change in net unrealized appreciation (depreciation) |
(24,167,890) |
39,575,412 |
|
Net increase (decrease) in net assets resulting from operations |
8,667,286 |
72,168,019 |
|
Distributions to shareholders from net investment income |
(1,014,489) |
(885,596) |
|
Distributions to shareholders from net realized gain |
(32,500,600) |
(4,386,096) |
|
Total distributions |
(33,515,089) |
(5,271,692) |
|
Share transactions |
54,086,634 |
346,807,270 |
|
Reinvestment of distributions |
32,352,775 |
4,915,856 |
|
Cost of shares redeemed |
(137,945,557) |
(347,373,661) |
|
Net increase (decrease) in net assets resulting from share transactions |
(51,506,148) |
4,349,465 |
|
Redemption fees |
3,842 |
22,954 |
|
Total increase (decrease) in net assets |
(76,350,109) |
71,268,746 |
|
|
|
|
|
Net Assets |
|
|
|
Beginning of period |
214,227,377 |
142,958,631 |
|
End of period (including undistributed net investment income of $176,383 and undistributed net investment income of $140,380, respectively) |
$ 137,877,268 |
$ 214,227,377 |
|
Other Information Shares |
|
|
|
Sold |
1,045,483 |
6,778,630 |
|
Issued in reinvestment of distributions |
682,332 |
89,039 |
|
Redeemed |
(2,665,298) |
(6,622,397) |
|
Net increase (decrease) |
(937,483) |
245,272 |
Financial Highlights
|
Years ended February 28, |
2015 |
2014 |
2013 |
2012 F |
2011 |
|
Selected Per-Share Data |
|
|
|
|
|
|
Net asset value, beginning of period |
$ 56.95 |
$ 40.65 |
$ 38.05 |
$ 46.87 |
$ 31.63 |
|
Income from Investment Operations |
|
|
|
|
|
|
Net investment income (loss) B |
.42 |
.22 |
.24 |
.03 |
(.08) |
|
Net realized and unrealized gain (loss) |
3.05 |
16.96 |
2.65 |
(6.45) |
15.94 |
|
Total from investment operations |
3.47 |
17.18 |
2.89 |
(6.42) |
15.86 |
|
Distributions from net investment income |
(.38) |
(.15) |
(.26) |
(.02) |
- |
|
Distributions from net realized gain |
(11.22) |
(.73) |
(.02) |
(2.41) |
(.63) |
|
Total distributions |
(11.60) |
(.88) |
(.29)I |
(2.42)H |
(.63) |
|
Redemption fees added to paid in capitalB |
-G |
-G |
-G |
.02 |
.01 |
|
Net asset value, end of period |
$ 48.82 |
$ 56.95 |
$ 40.65 |
$ 38.05 |
$ 46.87 |
|
Total ReturnA |
8.04% |
42.33% |
7.64% |
(13.06)% |
50.90% |
|
Ratios to Average Net AssetsC, E |
|
|
|
|
|
|
Expenses before reductions |
.85% |
.84% |
.91% |
.90% |
.91% |
|
Expenses net of fee waivers, if any |
.85% |
.84% |
.91% |
.90% |
.91% |
|
Expenses net of all reductions |
.85% |
.83% |
.89% |
.90% |
.91% |
|
Net investment income (loss) |
.82% |
.43% |
.66% |
.08% |
(.19)% |
|
Supplemental Data |
|
|
|
|
|
|
Net assets, end of period (000 omitted) |
$ 137,877 |
$ 214,227 |
$ 142,959 |
$ 170,016 |
$ 373,632 |
|
Portfolio turnover rateD |
71% |
148% |
72% |
49% |
91% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
B Calculated based on average shares outstanding during the period.
C Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
D Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
E Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund.
F For the year ended February 29.
G Amount represents less than $.01 per share.
H Total distributions of $2.42 per share is comprised of distributions from net investment income of $.015 and distributions from net realized gain of $2.408 per share.
I Total distributions of $.29 per share is comprised of distributions from net investment income of $.261 and distributions from net realized gain of $.024 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 28, 2015 |
Past 1 |
Past 5 |
Past 10 |
|
Construction and Housing Portfolio |
16.99% |
20.22% |
8.34% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Construction and Housing Portfolio on February 28, 2005. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index performed over the same period.
Annual Report
Construction and Housing Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. stock market closed near its all-time high for the 12 months ending February 28, 2015, supported by low interest rates and the relative strength of the U.S. economy and dollar. The large-cap S&P 500® Index returned 15.51%. Growth stocks in the index outperformed value-oriented names. The tech-heavy Nasdaq Composite Index® rose 16.58%, while the small-cap Russell 2000® Index advanced 5.63%, rallying from early-period weakness amid growth and valuation worries. Among the 10 major market sectors tracked by MSCI U.S. IMI 25-50 classifications, most notched a double-digit gain, led by health care (+24%), consumer staples (+21%), information technology (+20%) and utilities (+15%). Conversely, energy (-9%) was the only sector to lose ground, reflecting a sharp drop in crude prices beginning midyear and attributed to weaker global demand and a U.S. supply boom. Volatility spiked to a three-year high in October amid concerns about economic growth and Ebola, as well as unrest in Syria, Iraq and Ukraine. Nevertheless, the S&P 500® finished the period well above its mid-October nadir, bolstered by the relative economic strength of the U.S., which marked a six-year low in its unemployment rate, and consumer confidence that declined only slightly from its 11-year high reached in January.
Comments from Holger Boerner, Portfolio Manager of Construction and Housing Portfolio: For the year, the fund returned 16.99%, lagging the 19.47% gain of its industry benchmark, the MSCI U.S. IMI Construction & Housing 25-50 Index, but beating the broad-based S&P 500®. Within the MSCI industry benchmark, home improvement retailers and residential real estate investment trusts (REITs) each had a very strong year, while construction & engineering and homebuilding stocks were laggards. Positioning in the residential REITs, homebuilding and construction materials segments hampered performance versus the industry benchmark. Individual detractors included California-based homebuilder KB Home, which saw its stock slide when management reported orders below expectations and then lowered its earnings outlook for 2015. An underweighting in home improvement retailer Lowes Companies - the fund's second-largest holding - also proved costly, as improved sales drove better-than-expected earnings that fueled a steep gain. Stock picks in the building products group and positioning in construction & engineering aided relative performance. In both segments, underexposure to weak-performing index components helped. Largely avoiding global construction & engineering company Fluor, for example, was a good move, as declining oil prices sank the stock. Fluor was 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
Construction and Housing Portfolio
Investment Changes (Unaudited)
|
Top Ten Stocks as of February 28, 2015 |
||
|
|
% of fund's |
% of fund's net assets |
|
Home Depot, Inc. |
23.7 |
24.9 |
|
Lowe's Companies, Inc. |
11.2 |
8.5 |
|
UDR, Inc. |
4.5 |
3.8 |
|
Essex Property Trust, Inc. |
3.8 |
4.2 |
|
Fortune Brands Home & Security, Inc. |
3.1 |
2.7 |
|
Camden Property Trust (SBI) |
3.0 |
0.0 |
|
AECOM Technology Corp. |
2.9 |
2.7 |
|
American Campus Communities, Inc. |
2.9 |
0.0 |
|
A.O. Smith Corp. |
2.7 |
2.2 |
|
PulteGroup, Inc. |
2.6 |
2.5 |
|
|
60.4 |
|
|
Top Industries (% of fund's net assets) |
|||
|
As of February 28, 2015 |
|||
 |
Specialty Retail |
36.6% |
|
 |
Real Estate Investment Trusts |
18.2% |
|
 |
Household Durables |
16.4% |
|
 |
Construction & Engineering |
8.1% |
|
 |
Building Products |
5.8% |
|
 |
All Others* |
14.9% |
|
|
As of August 31, 2014 |
|||
 |
Specialty Retail |
34.8% |
|
 |
Household Durables |
16.5% |
|
 |
Construction & Engineering |
14.6% |
|
 |
Real Estate Investment Trusts |
13.8% |
|
 |
Building Products |
7.9% |
|
 |
All Others* |
12.4% |
|
|
* Includes short-term investments and net other assets (liabilities). |
Annual Report
Construction and Housing Portfolio
Investments February 28, 2015
Showing Percentage of Net Assets
|
Common Stocks - 95.7% |
|||
|
Shares |
Value |
||
|
BUILDING PRODUCTS - 5.8% |
|||
|
Building Products - 5.8% |
|||
|
A.O. Smith Corp. |
181,100 |
$ 11,414,733 |
|
|
Fortune Brands Home & Security, Inc. |
279,200 |
12,932,544 |
|
|
|
24,347,277 |
||
|
CONSTRUCTION & ENGINEERING - 8.1% |
|||
|
Construction & Engineering - 8.1% |
|||
|
AECOM Technology Corp. (a) |
406,721 |
12,226,028 |
|
|
Furmanite Corp. (a) |
442,218 |
3,073,415 |
|
|
Jacobs Engineering Group, Inc. (a) |
113,255 |
5,021,727 |
|
|
Quanta Services, Inc. (a) |
317,300 |
9,131,894 |
|
|
Tutor Perini Corp. (a) |
194,447 |
4,524,782 |
|
|
|
33,977,846 |
||
|
CONSTRUCTION MATERIALS - 4.4% |
|||
|
Construction Materials - 4.4% |
|||
|
Eagle Materials, Inc. |
126,046 |
9,894,611 |
|
|
Vulcan Materials Co. |
100,765 |
8,363,495 |
|
|
|
18,258,106 |
||
|
ELECTRICAL EQUIPMENT - 0.9% |
|||
|
Heavy Electrical Equipment - 0.9% |
|||
|
Babcock & Wilcox Co. |
125,500 |
3,895,520 |
|
|
FOOD & STAPLES RETAILING - 0.3% |
|||
|
Food Retail - 0.3% |
|||
|
Sprouts Farmers Market LLC (a) |
39,800 |
1,465,038 |
|
|
HOUSEHOLD DURABLES - 14.7% |
|||
|
Homebuilding - 14.7% |
|||
|
Beazer Homes U.S.A., Inc. (a) |
160,365 |
2,732,620 |
|
|
D.R. Horton, Inc. |
306,400 |
8,367,784 |
|
|
KB Home (d) |
263,001 |
3,668,864 |
|
|
Lennar Corp. Class A (d) |
197,128 |
9,897,797 |
|
|
LGI Homes, Inc. (a)(d) |
338,127 |
4,787,878 |
|
|
PulteGroup, Inc. |
484,500 |
10,930,320 |
|
|
Taylor Morrison Home Corp. (a) |
394,965 |
7,614,925 |
|
|
Toll Brothers, Inc. (a) |
163,850 |
6,277,094 |
|
|
William Lyon Homes, Inc. (a) |
326,885 |
7,417,021 |
|
|
|
61,694,303 |
||
|
PAPER & FOREST PRODUCTS - 1.2% |
|||
|
Forest Products - 1.2% |
|||
|
Boise Cascade Co. (a) |
142,795 |
5,084,930 |
|
|
REAL ESTATE INVESTMENT TRUSTS - 18.2% |
|||
|
Residential REITs - 18.2% |
|||
|
American Campus Communities, Inc. |
290,854 |
12,003,545 |
|
|
American Homes 4 Rent Class A |
380,223 |
6,345,922 |
|
|
AvalonBay Communities, Inc. |
61,959 |
10,430,178 |
|
|
Camden Property Trust (SBI) |
172,316 |
12,542,882 |
|
|
|
|||
|
Shares |
Value |
||
|
Essex Property Trust, Inc. |
71,688 |
$ 15,945,562 |
|
|
UDR, Inc. |
596,300 |
19,045,822 |
|
|
|
76,313,911 |
||
|
REAL ESTATE MANAGEMENT & DEVELOPMENT - 5.5% |
|||
|
Diversified Real Estate Activities - 1.3% |
|||
|
Countrywide PLC |
323,027 |
2,633,164 |
|
|
The St. Joe Co. (a) |
165,100 |
2,805,049 |
|
|
|
5,438,213 |
||
|
Real Estate Operating Companies - 2.5% |
|||
|
Forest City Enterprises, Inc. Class A (a) |
420,700 |
10,622,675 |
|
|
Real Estate Services - 1.7% |
|||
|
Foxtons Group PLC |
660,089 |
2,058,538 |
|
|
Realogy Holdings Corp. (a) |
104,400 |
4,802,400 |
|
|
|
6,860,938 |
||
|
TOTAL REAL ESTATE MANAGEMENT & DEVELOPMENT |
22,921,826 |
||
|
SPECIALTY RETAIL - 36.6% |
|||
|
Home Improvement Retail - 36.2% |
|||
|
Home Depot, Inc. |
866,901 |
99,476,887 |
|
|
Lowe's Companies, Inc. |
633,734 |
46,953,352 |
|
|
Lumber Liquidators Holdings, Inc. (a)(d) |
107,366 |
5,568,001 |
|
|
|
151,998,240 |
||
|
Homefurnishing Retail - 0.4% |
|||
|
Restoration Hardware Holdings, Inc. (a)(d) |
19,433 |
1,712,047 |
|
|
TOTAL SPECIALTY RETAIL |
153,710,287 |
||
|
TOTAL COMMON STOCKS (Cost $275,393,864) |
|
||
|
Convertible Preferred Stocks - 1.7% |
|||
|
|
|
|
|
|
HOUSEHOLD DURABLES - 1.7% |
|||
|
Homebuilding - 1.7% |
|||
|
Blu Homes, Inc. Series A, 5.00% (a)(e) |
865,801 |
|
|
|
Money Market Funds - 7.5% |
|||
|
Shares |
Value |
||
|
Fidelity Cash Central Fund, 0.13% (b) |
12,257,881 |
$ 12,257,881 |
|
|
Fidelity Securities Lending Cash Central Fund, 0.13% (b)(c) |
19,241,450 |
19,241,450 |
|
|
TOTAL MONEY MARKET FUNDS (Cost $31,499,331) |
|
||
|
TOTAL INVESTMENT PORTFOLIO - 104.9% (Cost $310,893,196) |
440,129,415 |
||
|
NET OTHER ASSETS (LIABILITIES) - (4.9)% |
(20,650,405) |
||
|
NET ASSETS - 100% |
$ 419,479,010 |
||
|
Legend |
|
(a) Non-income producing |
|
(b) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
|
(c) Includes investment made with cash collateral received from securities on loan. |
|
(d) Security or a portion of the security is on loan at period end. |
|
(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 $6,961,040 or 1.7% of net assets. |
|
Additional information on each restricted holding is as follows: |
|
Security |
Acquisition Date |
Acquisition Cost |
|
Blu Homes, Inc. Series A, 5.00% |
6/10/13 |
$ 4,000,001 |
|
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 |
$ 3,321 |
|
Fidelity Securities Lending Cash Central Fund |
41,059 |
|
Total |
$ 44,380 |
|
Other Information |
|
The following is a summary of the inputs used, as of February 28, 2015, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the 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 |
$ 401,669,044 |
$ 401,669,044 |
$ - |
$ - |
|
Convertible Preferred Stocks |
6,961,040 |
- |
- |
6,961,040 |
|
Money Market Funds |
31,499,331 |
31,499,331 |
- |
- |
|
Total Investments in Securities: |
$ 440,129,415 |
$ 433,168,375 |
$ - |
$ 6,961,040 |
|
Valuation Inputs at Reporting Date: |
|
The following is a reconciliation of Investments in Securities for which Level 3 inputs were used in determining value: |
|
Investments in Securities: |
|
|
Convertible Preferred Stocks |
|
|
Beginning Balance |
$ 4,000,001 |
|
Total Realized Gain (Loss) |
- |
|
Total Unrealized Gain (Loss) |
2,961,039 |
|
Cost of Purchases |
- |
|
Proceeds of Sales |
- |
|
Amortization/Accretion |
- |
|
Transfers in to Level 3 |
- |
|
Transfers out of Level 3 |
- |
|
Ending Balance |
$ 6,961,040 |
|
The change in unrealized gain (loss) for the period attributable to Level 3 securities held at February 28, 2015 |
$ 2,961,039 |
|
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
Construction and Housing Portfolio
Financial Statements
Statement of Assets and Liabilities
|
|
February 28, 2015 |
|
|
|
|
|
|
Assets |
|
|
|
Investment in securities, at value (including securities loaned of $19,089,290) - See accompanying schedule: Unaffiliated issuers (cost $279,393,865) |
$ 408,630,084 |
|
|
Fidelity Central Funds (cost $31,499,331) |
31,499,331 |
|
|
Total Investments (cost $310,893,196) |
|
$ 440,129,415 |
|
Receivable for investments sold |
|
6,389,158 |
|
Receivable for fund shares sold |
|
1,581,686 |
|
Dividends receivable |
|
59,948 |
|
Distributions receivable from Fidelity Central Funds |
|
8,952 |
|
Prepaid expenses |
|
1,206 |
|
Other receivables |
|
4,069 |
|
Total assets |
|
448,174,434 |
|
|
|
|
|
Liabilities |
|
|
|
Payable for investments purchased |
$ 8,765,948 |
|
|
Payable for fund shares redeemed |
396,970 |
|
|
Accrued management fee |
183,852 |
|
|
Other affiliated payables |
74,140 |
|
|
Other payables and accrued expenses |
33,064 |
|
|
Collateral on securities loaned, at value |
19,241,450 |
|
|
Total liabilities |
|
28,695,424 |
|
|
|
|
|
Net Assets |
|
$ 419,479,010 |
|
Net Assets consist of: |
|
|
|
Paid in capital |
|
$ 283,426,638 |
|
Undistributed net investment income |
|
187,823 |
|
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions |
|
6,628,330 |
|
Net unrealized appreciation (depreciation) on investments |
|
129,236,219 |
|
Net Assets, for 7,021,603 shares outstanding |
|
$ 419,479,010 |
|
Net Asset Value, offering price and redemption price per share ($419,479,010 ÷ 7,021,603 shares) |
|
$ 59.74 |
Statement of Operations
|
|
Year ended February 28, 2015 |
|
|
|
|
|
|
Investment Income |
|
|
|
Dividends |
|
$ 4,550,512 |
|
Income from Fidelity Central Funds |
|
44,380 |
|
Total income |
|
4,594,892 |
|
|
|
|
|
Expenses |
|
|
|
Management fee |
$ 1,891,168 |
|
|
Transfer agent fees |
700,308 |
|
|
Accounting and security lending fees |
137,457 |
|
|
Custodian fees and expenses |
12,004 |
|
|
Independent trustees' compensation |
6,681 |
|
|
Registration fees |
32,496 |
|
|
Audit |
37,271 |
|
|
Legal |
39 |
|
|
Miscellaneous |
7,218 |
|
|
Total expenses before reductions |
2,824,642 |
|
|
Expense reductions |
(9,602) |
2,815,040 |
|
Net investment income (loss) |
|
1,779,852 |
|
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: |
|
|
|
Investment securities: |
|
|
|
Unaffiliated issuers |
36,554,589 |
|
|
Foreign currency transactions |
1,388 |
|
|
Total net realized gain (loss) |
|
36,555,977 |
|
Change in net unrealized appreciation (depreciation) on: Investment securities |
14,605,887 |
|
|
Assets and liabilities in foreign currencies |
(212) |
|
|
Total change in net unrealized appreciation (depreciation) |
|
14,605,675 |
|
Net gain (loss) |
|
51,161,652 |
|
Net increase (decrease) in net assets resulting from operations |
|
$ 52,941,504 |
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) |
$ 1,779,852 |
$ 2,755,943 |
|
Net realized gain (loss) |
36,555,977 |
67,757,331 |
|
Change in net unrealized appreciation (depreciation) |
14,605,675 |
21,803,540 |
|
Net increase (decrease) in net assets resulting from operations |
52,941,504 |
92,316,814 |
|
Distributions to shareholders from net investment income |
(1,765,360) |
(2,143,451) |
|
Distributions to shareholders from net realized gain |
(39,110,787) |
(30,955,679) |
|
Total distributions |
(40,876,147) |
(33,099,130) |
|
Share transactions |
126,467,385 |
257,018,640 |
|
Reinvestment of distributions |
39,619,226 |
31,832,059 |
|
Cost of shares redeemed |
(135,431,284) |
(752,370,411) |
|
Net increase (decrease) in net assets resulting from share transactions |
30,655,327 |
(463,519,712) |
|
Redemption fees |
8,087 |
45,240 |
|
Total increase (decrease) in net assets |
42,728,771 |
(404,256,788) |
|
|
|
|
|
Net Assets |
|
|
|
Beginning of period |
376,750,239 |
781,007,027 |
|
End of period (including undistributed net investment income of $187,823 and undistributed net investment income of $293,999, respectively) |
$ 419,479,010 |
$ 376,750,239 |
|
Other Information Shares |
|
|
|
Sold |
2,209,593 |
4,703,955 |
|
Issued in reinvestment of distributions |
737,432 |
601,082 |
|
Redeemed |
(2,480,004) |
(13,768,181) |
|
Net increase (decrease) |
467,021 |
(8,463,144) |
Financial Highlights
|
Years ended February 28, |
2015 |
2014 |
2013 |
2012 F |
2011 |
|
Selected Per-Share Data |
|
|
|
|
|
|
Net asset value, beginning of period |
$ 57.48 |
$ 52.01 |
$ 40.01 |
$ 37.43 |
$ 29.89 |
|
Income from Investment Operations |
|
|
|
|
|
|
Net investment income (loss) B |
.29 |
.26 |
.19 |
.21 |
.18 |
|
Net realized and unrealized gain (loss) |
8.53 |
9.65 |
12.47 |
2.62 |
7.63 |
|
Total from investment operations |
8.82 |
9.91 |
12.66 |
2.83 |
7.81 |
|
Distributions from net investment income |
(.29) |
(.30) |
(.14) |
(.25) |
(.28) |
|
Distributions from net realized gain |
(6.28) |
(4.14) |
(.53) |
- |
- |
|
Total distributions |
(6.56)H |
(4.44) |
(.67) |
(.25) |
(.28) |
|
Redemption fees added to paid in capitalB |
-G |
-G |
.01 |
-G |
.01 |
|
Net asset value, end of period |
$ 59.74 |
$ 57.48 |
$ 52.01 |
$ 40.01 |
$ 37.43 |
|
Total ReturnA |
16.99% |
19.84% |
31.79% |
7.65% |
26.24% |
|
Ratios to Average Net AssetsC, E |
|
|
|
|
|
|
Expenses before reductions |
.82% |
.81% |
.86% |
.96% |
.98% |
|
Expenses net of fee waivers, if any |
.82% |
.81% |
.86% |
.96% |
.98% |
|
Expenses net of all reductions |
.82% |
.81% |
.86% |
.96% |
.98% |
|
Net investment income (loss) |
.52% |
.47% |
.42% |
.59% |
.55% |
|
Supplemental Data |
|
|
|
|
|
|
Net assets, end of period (000 omitted) |
$ 419,479 |
$ 376,750 |
$ 781,007 |
$ 171,514 |
$ 112,200 |
|
Portfolio turnover rateD |
71% |
53% |
47% |
81% |
101% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
B Calculated based on average shares outstanding during the period.
C Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
D Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
E Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund.
F For the year ended February 29.
G Amount represents less than $.01 per share.
H Total distributions of $6.56 per share is comprised of distributions from net investment income of $.287 and distributions from net realized gain of $6.276 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 28, 2015 |
Past 1 |
Past 5 |
Past 10 |
|
Consumer Discretionary Portfolio A |
14.79% |
19.81% |
9.56% |
A Prior to October 1, 2006, Consumer Discretionary Portfolio was named Consumer Industries Portfolio, and the fund operated under certain different investment policies and compared its performance to a different additional index. The fund's historical performance may not represent its current investment policies.
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Consumer Discretionary Portfolio on February 28, 2005. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index performed over the same period.
Annual Report
Consumer Discretionary Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. stock market closed near its all-time high for the 12 months ending February 28, 2015, supported by low interest rates and the relative strength of the U.S. economy and dollar. The large-cap S&P 500® Index returned 15.51%. Growth stocks in the index outperformed value-oriented names. The tech-heavy Nasdaq Composite Index® rose 16.58%, while the small-cap Russell 2000® Index advanced 5.63%, rallying from early-period weakness amid growth and valuation worries. Among the 10 major market sectors tracked by MSCI U.S. IMI 25-50 classifications, most notched a double-digit gain, led by health care (+24%), consumer staples (+21%), information technology (+20%) and utilities (+15%). Conversely, energy (-9%) was the only sector to lose ground, reflecting a sharp drop in crude prices beginning midyear and attributed to weaker global demand and a U.S. supply boom. Volatility spiked to a three-year high in October amid concerns about economic growth and Ebola, as well as unrest in Syria, Iraq and Ukraine. Nevertheless, the S&P 500® finished the period well above its mid-October nadir, bolstered by the relative economic strength of the U.S., which marked a six-year low in its unemployment rate, and consumer confidence that declined only slightly from its 11-year high reached in January.
Comments from Peter Dixon, who became Portfolio Manager of Consumer Discretionary Portfolio on July 1, 2014: For the year, the fund's Retail Class shares advanced 14.79%, slightly outpacing 14.46% gain of the MSCI U.S. IMI Consumer Discretionary 25-50 Index, but lagging the S&P 500®. The consumer discretionary sector significantly lagged the S&P 500® during the first half of the past 12 months, as stocks in the sector tumbled after a long stretch of outperformance. Retailers continued to struggle after a harsh winter, and the group reported weak year-to-date sales across the board. Intense industry competition hurt margins, dampening performance for many stocks in the MSCI sector index. However, the picture brightened for the sector during the second half, when job-market and wage-growth improvement, along with lean inventories and accommodative monetary policy, helped boost consumer spending and fuel discretionary firms. Versus the MSCI index, my decision to establish an overweighting in L Brands, owner of Victoria's Secret and Bath & BodyWorks, was easily the top individual relative contributor this period and one of the fund's biggest holdings at period end. The stock produced a strong gain on the back of better-than-expected third-quarter earnings. Another winner was an out-of-benchmark stake in Monster Beverage, manufacturer of energy drinks. After establishing a position in July, Monster's shares soared in August after beverage giant Coca-Cola announced its intent to acquire a 17% stake in the firm. As part of this strategic partnership, Coca-Cola will transfer its energy-drink lineup to Monster in exchange for Monster's non-energy drink business, including natural soft drinks and juices. The exchange would give Monster an immediate sales boost and expanded international presence. On the flip side, not owning home-improvement retailer and index stock Lowe's Companies in the second half of the year was the biggest detractor. Lowes had a very strong year, due in part to solid third-quarter results announced in November, including better-than-expected earnings and increased growth in comparable-store sales. Additionally, the firm increased its full-year earnings forecast. PVH was another example of a firm focused on popular brands and I content that I liked. PVH's brand portfolio includes well-known names such as Calvin Klein and Michael Kors. With roughly 46% of its sales coming from outside North America, the firm's revenue was hurt this year by a volatile global microenvironment, which drove down its stock price.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Consumer Discretionary Portfolio
Investment Changes (Unaudited)
|
Top Ten Stocks as of February 28, 2015 |
||
|
|
% of fund's |
% of fund's net assets |
|
The Walt Disney Co. |
8.5 |
7.2 |
|
Comcast Corp. Class A |
6.3 |
4.0 |
|
Home Depot, Inc. |
5.4 |
5.7 |
|
Starbucks Corp. |
4.3 |
2.9 |
|
L Brands, Inc. |
3.9 |
3.2 |
|
NIKE, Inc. Class B |
3.5 |
3.2 |
|
Priceline Group, Inc. |
3.3 |
4.3 |
|
Wyndham Worldwide Corp. |
3.3 |
2.5 |
|
Delphi Automotive PLC |
2.4 |
2.6 |
|
Naspers Ltd. Class N |
2.3 |
2.0 |
|
|
43.2 |
|
|
Top Industries (% of fund's net assets) |
|||
|
As of February 28, 2015 |
|||
 |
Media |
24.1% |
|
 |
Hotels, Restaurants & Leisure |
20.9% |
|
 |
Specialty Retail |
18.6% |
|
 |
Textiles, Apparel & Luxury Goods |
11.3% |
|
 |
Internet & Catalog Retail |
5.1% |
|
 |
All Others* |
20.0% |
|
|
As of August 31, 2014 |
|||
 |
Media |
32.0% |
|
 |
Specialty Retail |
20.4% |
|
 |
Hotels, Restaurants & Leisure |
14.2% |
|
 |
Textiles, Apparel & Luxury Goods |
9.6% |
|
 |
Internet & Catalog Retail |
7.6% |
|
 |
All Others* |
16.2% |
|
|
* Includes short-term investments and net other assets (liabilities). |
Annual Report
Consumer Discretionary Portfolio
Investments February 28, 2015
Showing Percentage of Net Assets
|
Common Stocks - 99.1% |
|||
|
Shares |
Value |
||
|
AUTO COMPONENTS - 3.6% |
|||
|
Auto Parts & Equipment - 3.6% |
|||
|
Delphi Automotive PLC |
332,506 |
$ 26,214,773 |
|
|
Tenneco, Inc. (a) |
211,501 |
12,317,818 |
|
|
|
38,532,591 |
||
|
AUTOMOBILES - 2.1% |
|||
|
Automobile Manufacturers - 0.7% |
|||
|
Tata Motors Ltd. (a) |
677,941 |
6,335,866 |
|
|
Tesla Motors, Inc. (a) |
5,400 |
1,098,036 |
|
|
|
7,433,902 |
||
|
Motorcycle Manufacturers - 1.4% |
|||
|
Harley-Davidson, Inc. |
238,300 |
15,148,731 |
|
|
TOTAL AUTOMOBILES |
22,582,633 |
||
|
BEVERAGES - 2.2% |
|||
|
Distillers & Vintners - 1.0% |
|||
|
Constellation Brands, Inc. Class A (sub. vtg.) (a) |
96,900 |
11,116,368 |
|
|
Soft Drinks - 1.2% |
|||
|
Monster Beverage Corp. (a) |
89,100 |
12,573,792 |
|
|
TOTAL BEVERAGES |
23,690,160 |
||
|
FOOD & STAPLES RETAILING - 0.5% |
|||
|
Food Retail - 0.5% |
|||
|
Sprouts Farmers Market LLC (a) |
158,300 |
5,827,023 |
|
|
FOOD PRODUCTS - 1.8% |
|||
|
Packaged Foods & Meats - 1.8% |
|||
|
Associated British Foods PLC |
177,400 |
8,558,718 |
|
|
Keurig Green Mountain, Inc. |
86,300 |
11,010,154 |
|
|
|
19,568,872 |
||
|
HOTELS, RESTAURANTS & LEISURE - 20.9% |
|||
|
Casinos & Gaming - 2.9% |
|||
|
Las Vegas Sands Corp. |
315,500 |
17,951,950 |
|
|
Wynn Resorts Ltd. |
94,460 |
13,460,550 |
|
|
|
31,412,500 |
||
|
Hotels, Resorts & Cruise Lines - 6.8% |
|||
|
China Lodging Group Ltd. ADR (a) |
144,174 |
3,056,489 |
|
|
Hilton Worldwide Holdings, Inc. (a) |
592,600 |
16,752,802 |
|
|
Interval Leisure Group, Inc. |
2,400 |
64,800 |
|
|
Marriott International, Inc. Class A |
212,450 |
17,654,595 |
|
|
Wyndham Worldwide Corp. |
385,804 |
35,293,350 |
|
|
|
72,822,036 |
||
|
Leisure Facilities - 1.2% |
|||
|
Vail Resorts, Inc. |
149,151 |
13,096,949 |
|
|
Restaurants - 10.0% |
|||
|
Buffalo Wild Wings, Inc. (a) |
64,300 |
12,289,016 |
|
|
DineEquity, Inc. |
47,500 |
5,155,175 |
|
|
Domino's Pizza, Inc. |
71,800 |
7,289,854 |
|
|
Fiesta Restaurant Group, Inc. (a) |
226,700 |
14,737,767 |
|
|
|
|||
|
Shares |
Value |
||
|
Jubilant Foodworks Ltd. (a) |
248,986 |
$ 6,695,606 |
|
|
Ruth's Hospitality Group, Inc. |
970,987 |
14,817,262 |
|
|
Starbucks Corp. |
502,900 |
47,013,607 |
|
|
|
107,998,287 |
||
|
TOTAL HOTELS, RESTAURANTS & LEISURE |
225,329,772 |
||
|
HOUSEHOLD DURABLES - 2.3% |
|||
|
Homebuilding - 2.3% |
|||
|
D.R. Horton, Inc. |
322,500 |
8,807,475 |
|
|
Lennar Corp. Class A |
168,000 |
8,435,280 |
|
|
PulteGroup, Inc. |
348,800 |
7,868,928 |
|
|
|
25,111,683 |
||
|
INTERNET & CATALOG RETAIL - 5.1% |
|||
|
Internet Retail - 5.1% |
|||
|
Amazon.com, Inc. (a) |
36,200 |
13,761,792 |
|
|
Ocado Group PLC (a)(d) |
1,031,300 |
5,870,340 |
|
|
Priceline Group, Inc. (a) |
28,698 |
35,513,201 |
|
|
|
55,145,333 |
||
|
INTERNET SOFTWARE & SERVICES - 2.4% |
|||
|
Internet Software & Services - 2.4% |
|||
|
Alibaba Group Holding Ltd. sponsored ADR (d) |
111,900 |
9,524,928 |
|
|
HomeAway, Inc. (a) |
192,300 |
5,960,339 |
|
|
Yahoo!, Inc. (a) |
239,600 |
10,609,488 |
|
|
|
26,094,755 |
||
|
LEISURE PRODUCTS - 2.4% |
|||
|
Leisure Products - 2.4% |
|||
|
Brunswick Corp. |
221,000 |
11,987,040 |
|
|
Polaris Industries, Inc. (d) |
89,400 |
13,707,702 |
|
|
|
25,694,742 |
||
|
MEDIA - 24.1% |
|||
|
Advertising - 0.3% |
|||
|
MDC Partners, Inc. Class A (sub. vtg.) |
104,550 |
2,720,391 |
|
|
Broadcasting - 2.2% |
|||
|
ITV PLC |
6,936,100 |
24,125,795 |
|
|
Cable & Satellite - 10.7% |
|||
|
Comcast Corp. Class A |
1,141,000 |
67,752,580 |
|
|
DIRECTV (a) |
177,186 |
15,698,680 |
|
|
Naspers Ltd. Class N |
170,600 |
25,038,345 |
|
|
Time Warner Cable, Inc. |
41,200 |
6,346,860 |
|
|
|
114,836,465 |
||
|
Movies & Entertainment - 10.6% |
|||
|
CTS Eventim AG |
78,933 |
2,433,491 |
|
|
The Walt Disney Co. |
876,347 |
91,210,196 |
|
|
Time Warner, Inc. |
214,800 |
17,583,528 |
|
|
Twenty-First Century Fox, Inc. Class A |
97,989 |
3,429,615 |
|
|
|
114,656,830 |
||
|
Common Stocks - continued |
|||
|
Shares |
Value |
||
|
MEDIA - CONTINUED |
|||
|
Publishing - 0.3% |
|||
|
Rightmove PLC |
71,300 |
$ 3,334,217 |
|
|
TOTAL MEDIA |
259,673,698 |
||
|
MULTILINE RETAIL - 1.2% |
|||
|
Department Stores - 0.6% |
|||
|
Macy's, Inc. |
97,600 |
6,219,072 |
|
|
General Merchandise Stores - 0.6% |
|||
|
B&M European Value Retail S.A. |
1,310,699 |
6,475,272 |
|
|
TOTAL MULTILINE RETAIL |
12,694,344 |
||
|
PERSONAL PRODUCTS - 0.6% |
|||
|
Personal Products - 0.6% |
|||
|
Estee Lauder Companies, Inc. Class A |
75,600 |
6,249,852 |
|
|
SPECIALTY RETAIL - 18.6% |
|||
|
Apparel Retail - 7.1% |
|||
|
L Brands, Inc. |
462,200 |
42,457,692 |
|
|
Ross Stores, Inc. |
177,500 |
18,781,275 |
|
|
TJX Companies, Inc. |
196,195 |
13,466,825 |
|
|
United Arrows Ltd. |
77,800 |
2,403,101 |
|
|
|
77,108,893 |
||
|
Automotive Retail - 4.2% |
|||
|
AutoZone, Inc. (a) |
35,700 |
22,943,676 |
|
|
O'Reilly Automotive, Inc. (a) |
105,300 |
21,916,089 |
|
|
|
44,859,765 |
||
|
Home Improvement Retail - 5.4% |
|||
|
Home Depot, Inc. |
506,000 |
58,063,500 |
|
|
Specialty Stores - 1.9% |
|||
|
Tiffany & Co., Inc. |
163,029 |
14,382,418 |
|
|
World Duty Free SpA (a)(d) |
587,957 |
6,711,123 |
|
|
|
21,093,541 |
||
|
TOTAL SPECIALTY RETAIL |
201,125,699 |
||
|
TEXTILES, APPAREL & LUXURY GOODS - 11.3% |
|||
|
Apparel, Accessories & Luxury Goods - 7.8% |
|||
|
Compagnie Financiere Richemont SA Series A |
59,156 |
5,212,366 |
|
|
|
|||
|
Shares |
Value |
||
|
G-III Apparel Group Ltd. (a) |
111,268 |
$ 11,708,732 |
|
|
Kate Spade & Co. (a) |
346,300 |
11,930,035 |
|
|
lululemon athletica, Inc. (a) |
21,700 |
1,485,148 |
|
|
PVH Corp. |
231,652 |
24,677,888 |
|
|
Ralph Lauren Corp. |
65,630 |
9,018,218 |
|
|
VF Corp. |
265,238 |
20,333,145 |
|
|
|
84,365,532 |
||
|
Footwear - 3.5% |
|||
|
NIKE, Inc. Class B |
384,375 |
37,330,500 |
|
|
TOTAL TEXTILES, APPAREL & LUXURY GOODS |
121,696,032 |
||
|
TOTAL COMMON STOCKS (Cost $907,023,279) |
|
||
|
Money Market Funds - 4.5% |
|||
|
|
|
|
|
|
Fidelity Cash Central Fund, 0.13% (b) |
25,879,699 |
25,879,699 |
|
|
Fidelity Securities Lending Cash Central Fund, 0.13% (b)(c) |
22,848,545 |
22,848,545 |
|
|
TOTAL MONEY MARKET FUNDS (Cost $48,728,244) |
|
||
|
TOTAL INVESTMENT PORTFOLIO - 103.6% (Cost $955,751,523) |
1,117,745,433 |
||
|
NET OTHER ASSETS (LIABILITIES) - (3.6)% |
(38,757,219) |
||
|
NET ASSETS - 100% |
$ 1,078,988,214 |
||
|
Legend |
|
(a) Non-income producing |
|
(b) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
|
(c) Investment made with cash collateral received from securities on loan. |
|
(d) Security or a portion of the security is on loan at period end. |
|
Affiliated Central Funds |
|
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
|
Fund |
Income earned |
|
Fidelity Cash Central Fund |
$ 22,816 |
|
Fidelity Securities Lending Cash Central Fund |
85,080 |
|
Total |
$ 107,896 |
|
Other Information |
|
The following is a summary of the inputs used, as of February 28, 2015, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the 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 |
$ 1,069,017,189 |
$ 1,057,468,957 |
$ 11,548,232 |
$ - |
|
Money Market Funds |
48,728,244 |
48,728,244 |
- |
- |
|
Total Investments in Securities: |
$ 1,117,745,433 |
$ 1,106,197,201 |
$ 11,548,232 |
$ - |
|
Distribution of investments by country or territory of incorporation, as a percentage of total net assets, is as follows (Unaudited): |
|
United States of America |
86.7% |
|
United Kingdom |
4.4% |
|
Bailiwick of Jersey |
2.4% |
|
South Africa |
2.3% |
|
India |
1.2% |
|
Cayman Islands |
1.2% |
|
Others (Individually Less Than 1%) |
1.8% |
|
|
100.0% |
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 28, 2015 |
|
|
|
|
|
|
Assets |
|
|
|
Investment in securities, at value (including securities loaned of $21,902,082) - See accompanying schedule: Unaffiliated issuers (cost $907,023,279) |
$ 1,069,017,189 |
|
|
Fidelity Central Funds (cost $48,728,244) |
48,728,244 |
|
|
Total Investments (cost $955,751,523) |
|
$ 1,117,745,433 |
|
Receivable for investments sold |
|
4,460,279 |
|
Receivable for fund shares sold |
|
957,307 |
|
Dividends receivable |
|
1,713,678 |
|
Distributions receivable from Fidelity Central Funds |
|
3,655 |
|
Prepaid expenses |
|
3,169 |
|
Other receivables |
|
4,437 |
|
Total assets |
|
1,124,887,958 |
|
|
|
|
|
Liabilities |
|
|
|
Payable for investments purchased |
$ 21,716,924 |
|
|
Payable for fund shares redeemed |
279,738 |
|
|
Accrued management fee |
476,767 |
|
|
Other affiliated payables |
167,488 |
|
|
Other payables and accrued expenses |
410,282 |
|
|
Collateral on securities loaned, at value |
22,848,545 |
|
|
Total liabilities |
|
45,899,744 |
|
|
|
|
|
Net Assets |
|
$ 1,078,988,214 |
|
Net Assets consist of: |
|
|
|
Paid in capital |
|
$ 895,439,057 |
|
Undistributed net investment income |
|
893,669 |
|
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions |
|
21,020,212 |
|
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies |
|
161,635,276 |
|
Net Assets, for 30,629,759 shares outstanding |
|
$ 1,078,988,214 |
|
Net Asset Value, offering price and redemption price per share ($1,078,988,214 ÷ 30,629,759 shares) |
|
$ 35.23 |
Statement of Operations
|
|
Year ended February 28, 2015 |
|
|
|
|
|
|
Investment Income |
|
|
|
Dividends |
|
$ 10,505,670 |
|
Income from Fidelity Central Funds |
|
107,896 |
|
Total income |
|
10,613,566 |
|
|
|
|
|
Expenses |
|
|
|
Management fee |
$ 4,663,783 |
|
|
Transfer agent fees |
1,572,032 |
|
|
Accounting and security lending fees |
293,388 |
|
|
Custodian fees and expenses |
37,725 |
|
|
Independent trustees' compensation |
15,634 |
|
|
Registration fees |
57,027 |
|
|
Audit |
44,376 |
|
|
Legal |
5,048 |
|
|
Miscellaneous |
8,641 |
|
|
Total expenses before reductions |
6,697,654 |
|
|
Expense reductions |
(10,686) |
6,686,968 |
|
Net investment income (loss) |
|
3,926,598 |
|
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: |
|
|
|
Investment securities: |
|
|
|
Unaffiliated issuers |
56,589,076 |
|
|
Redemption in-kind with affiliated entities |
21,216,555 |
|
|
Foreign currency transactions |
(74,069) |
|
|
Total net realized gain (loss) |
|
77,731,562 |
|
Change in net unrealized appreciation (depreciation) on: Investment securities (net of increase in deferred foreign taxes of $355,571) |
50,668,438 |
|
|
Assets and liabilities in foreign currencies |
(3,063) |
|
|
Total change in net unrealized appreciation (depreciation) |
|
50,665,375 |
|
Net gain (loss) |
|
128,396,937 |
|
Net increase (decrease) in net assets resulting from operations |
|
$ 132,323,535 |
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) |
$ 3,926,598 |
$ 736,367 |
|
Net realized gain (loss) |
77,731,562 |
91,273,037 |
|
Change in net unrealized appreciation (depreciation) |
50,665,375 |
44,699,651 |
|
Net increase (decrease) in net assets resulting from operations |
132,323,535 |
136,709,055 |
|
Distributions to shareholders from net investment income |
(2,942,822) |
(578,657) |
|
Distributions to shareholders from net realized gain |
(64,572,472) |
(47,823,082) |
|
Total distributions |
(67,515,294) |
(48,401,739) |
|
Share transactions |
953,129,672 |
207,782,224 |
|
Reinvestment of distributions |
66,769,010 |
47,650,396 |
|
Cost of shares redeemed |
(563,595,486) |
(183,807,571) |
|
Net increase (decrease) in net assets resulting from share transactions |
456,303,196 |
71,625,049 |
|
Redemption fees |
8,470 |
10,981 |
|
Total increase (decrease) in net assets |
521,119,907 |
159,943,346 |
|
|
|
|
|
Net Assets |
|
|
|
Beginning of period |
557,868,307 |
397,924,961 |
|
End of period (including undistributed net investment income of $893,669 and undistributed net investment income of $210,307, respectively) |
$ 1,078,988,214 |
$ 557,868,307 |
|
Other Information Shares |
|
|
|
Sold |
29,777,744 |
6,567,558 |
|
Issued in reinvestment of distributions |
2,124,019 |
1,476,762 |
|
Redeemed |
(18,022,350) |
(5,817,316) |
|
Net increase (decrease) |
13,879,413 |
2,227,004 |
Financial Highlights
|
Years ended February 28, |
2015 |
2014 |
2013 |
2012 G |
2011 |
|
Selected Per-Share Data |
|
|
|
|
|
|
Net asset value, beginning of period |
$ 33.30 |
$ 27.40 |
$ 25.97 |
$ 24.98 |
$ 19.37 |
|
Income from Investment Operations |
|
|
|
|
|
|
Net investment income (loss) B |
.15 |
.04 |
.11 |
.17 |
.05 |
|
Net realized and unrealized gain (loss) |
4.39 |
8.67 |
3.70 |
1.91 |
5.71 |
|
Total from investment operations |
4.54 |
8.71 |
3.81 |
2.08 |
5.76 |
|
Distributions from net investment income |
(.11) |
(.03) |
(.11) |
(.12) |
(.05) |
|
Distributions from net realized gain |
(2.51) |
(2.77) |
(2.27) |
(.97) |
(.10) |
|
Total distributions |
(2.61)J |
(2.81)I |
(2.38) |
(1.09) |
(.15) |
|
Redemption fees added to paid in capitalB, H |
- |
- |
- |
- |
- |
|
Net asset value, end of period |
$ 35.23 |
$ 33.30 |
$ 27.40 |
$ 25.97 |
$ 24.98 |
|
Total ReturnA |
14.79% |
32.17% |
15.38% |
8.67% |
29.75% |
|
Ratios to Average Net AssetsC, F |
|
|
|
|
|
|
Expenses before reductions |
.79% |
.82% |
.86% |
.89% |
.96% |
|
Expenses net of fee waivers, if any |
.79% |
.82% |
.86% |
.89% |
.96% |
|
Expenses net of all reductions |
.79% |
.81% |
.84% |
.88% |
.95% |
|
Net investment income (loss) |
.46% |
.14% |
.43% |
.72% |
.23% |
|
Supplemental Data |
|
|
|
|
|
|
Net assets, end of period (000 omitted) |
$ 1,078,988 |
$ 557,868 |
$ 397,925 |
$ 278,524 |
$ 203,083 |
|
Portfolio turnover rateD |
109% E |
138% |
170% |
174% |
196% |
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 Portfolio turnover rate excludes securities received or delivered in-kind.
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 $2.81 per share is comprised of distributions from net investment income of $.034 and distributions from net realized gain of $2.772 per share.
J Total distributions of $2.61 per share is comprised of distributions from net investment income of $.105 and distributions from net realized gain of $2.508 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 28, 2015 |
Past 1 |
Past 5 |
Past 10 |
|
Leisure Portfolio |
12.91% |
20.18% |
11.83% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Leisure Portfolio on February 28, 2005. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index performed over the same period.
Annual Report
Leisure Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. stock market closed near its all-time high for the 12 months ending February 28, 2015, supported by low interest rates and the relative strength of the U.S. economy and dollar. The large-cap S&P 500® Index returned 15.51%. Growth stocks in the index outperformed value-oriented names. The tech-heavy Nasdaq Composite Index® rose 16.58%, while the small-cap Russell 2000® Index advanced 5.63%, rallying from early-period weakness amid growth and valuation worries. Among the 10 major market sectors tracked by MSCI U.S. IMI 25-50 classifications, most notched a double-digit gain, led by health care (+24%), consumer staples (+21%), information technology (+20%) and utilities (+15%). Conversely, energy (-9%) was the only sector to lose ground, reflecting a sharp drop in crude prices beginning midyear and attributed to weaker global demand and a U.S. supply boom. Volatility spiked to a three-year high in October amid concerns about economic growth and Ebola, as well as unrest in Syria, Iraq and Ukraine. Nevertheless, the S&P 500® finished the period well above its mid-October nadir, bolstered by the relative economic strength of the U.S., which marked a six-year low in its unemployment rate, and consumer confidence that declined only slightly from its 11-year high reached in January.
Comments from Katherine Shaw, Portfolio Manager of Leisure Portfolio: For the year, the fund advanced 12.91%, outpacing the 10.84% return of the MSCI U.S. IMI Consumer Services 25-50 Index, but lagging the broad-based S&P 500® Index. Versus the MSCI benchmark, the fund's positioning in restaurants provided much of the fund's relative advantage. Jack in the Box, one of the fund's core holdings, experienced improving business fundamentals and higher free cash flow. The company initiated a shareholder dividend and increased its share-repurchase program. I trimmed the position as the stock consistently rose to take profits. Underweighting index heavyweight McDonald's also proved additive. The gap in same-store sales - an important factor I consider when choosing restaurant stocks - between McDonald's and the rest of the industry expanded. The fast-food retailer has significant brand and menu innovation challenges not only in the U.S. but also internationally, especially after a food scandal in China. The stock performed poorly, and the fund benefited from its underweighting and my decision to reduce our stake. Stock selection in casinos & gaming was a positive. Namely, the fund's lower-than-index stake in Wynn Resorts, a casino operator with exposure to China's Macau region, was the fund's No. 1 relative contributor. Casinos with operations in Macau were hit especially hard, as gambling revenues peaked early in the period and declined to a level most investors did not anticipate. Additionally, the Chinese government's anti-corruption campaign intensified, stoking fear about gambling in general. I trimmed, but held onto this position, because I believe the longer-term opportunity outweighs the short-term political risk. On the down side, fund holdings Las Vegas Sands, which was one of the fund's largest positions and its most significant relative detractor, and Melco Crown Entertainment, which was not in the index, declined in line with other operators of casinos in the Macau region, as I already mentioned. Even though recent performance has been shaky, I still have long-term conviction in both of these companies. Each has a healthy balance sheet and is positioned well in the Macau market. Elsewhere, not owning index stock Royal Caribbean Cruises detracted. As oil prices dropped dramatically, business fundamentals for cruise lines - some of the largest consumers of oil - improved, buoying these stocks. In general, I felt valuations for cruise lines to be too high, and given my tepid outlook for them, I invested elsewhere.
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 28, 2015 |
||
|
|
% of fund's |
% of fund's net assets |
|
Starbucks Corp. |
16.9 |
15.9 |
|
Yum! Brands, Inc. |
9.5 |
9.6 |
|
Las Vegas Sands Corp. |
7.3 |
8.5 |
|
Chipotle Mexican Grill, Inc. |
6.0 |
5.9 |
|
Wyndham Worldwide Corp. |
5.7 |
5.7 |
|
Starwood Hotels & Resorts Worldwide, Inc. |
4.7 |
5.0 |
|
Marriott International, Inc. Class A |
4.7 |
4.2 |
|
McDonald's Corp. |
3.9 |
4.8 |
|
Jack in the Box, Inc. |
3.0 |
3.3 |
|
Panera Bread Co. Class A |
2.9 |
2.9 |
|
|
64.6 |
|
|
Top Industries (% of fund's net assets) |
|||
|
As of February 28, 2015 |
|||
 |
Hotels, Restaurants & Leisure |
90.1% |
|
 |
Diversified Consumer Services |
3.5% |
|
 |
Media |
1.6% |
|
 |
Specialty Retail |
0.8% |
|
 |
Commercial Services & Supplies |
0.8% |
|
 |
All Others* |
3.2% |
|
|
As of August 31, 2014 |
|||
 |
Hotels, Restaurants & Leisure |
92.4% |
|
 |
Diversified Consumer Services |
3.3% |
|
 |
Media |
1.8% |
|
 |
Commercial Services & Supplies |
0.7% |
|
 |
Real Estate Investment Trusts |
0.4% |
|
 |
All Others* |
1.4% |
|
|
* Includes short-term investments and net other assets (liabilities). |
Annual Report
Leisure Portfolio
Investments February 28, 2015
Showing Percentage of Net Assets
|
Common Stocks - 99.0% |
|||
|
Shares |
Value |
||
|
COMMERCIAL SERVICES & SUPPLIES - 0.8% |
|||
|
Diversified Support Services - 0.8% |
|||
|
KAR Auction Services, Inc. |
102,200 |
$ 3,727,234 |
|
|
DIVERSIFIED CONSUMER SERVICES - 3.5% |
|||
|
Specialized Consumer Services - 3.5% |
|||
|
H&R Block, Inc. |
177,800 |
6,071,870 |
|
|
Service Corp. International |
15,200 |
377,720 |
|
|
Steiner Leisure Ltd. (a) |
193,444 |
8,921,637 |
|
|
|
15,371,227 |
||
|
FOOD PRODUCTS - 0.4% |
|||
|
Packaged Foods & Meats - 0.4% |
|||
|
Greencore Group PLC |
329,000 |
1,719,840 |
|
|
HOTELS, RESTAURANTS & LEISURE - 90.1% |
|||
|
Casinos & Gaming - 11.2% |
|||
|
Las Vegas Sands Corp. |
569,676 |
32,414,564 |
|
|
Melco Crown Entertainment Ltd. sponsored ADR (d) |
156,435 |
3,757,569 |
|
|
MGM China Holdings Ltd. |
548,800 |
1,270,849 |
|
|
MGM Mirage, Inc. (a) |
216,900 |
4,713,237 |
|
|
Penn National Gaming, Inc. (a) |
39,972 |
651,144 |
|
|
Sands China Ltd. |
44,800 |
204,482 |
|
|
Scientific Games Corp. Class A (a)(d) |
151,900 |
2,052,169 |
|
|
Wynn Resorts Ltd. |
35,300 |
5,030,250 |
|
|
|
50,094,264 |
||
|
Hotels, Resorts & Cruise Lines - 18.2% |
|||
|
Extended Stay America, Inc. unit |
360,025 |
6,948,483 |
|
|
Hilton Worldwide Holdings, Inc. (a) |
228,600 |
6,462,522 |
|
|
Homeinns Hotel Group ADR (a) |
18,100 |
483,451 |
|
|
Interval Leisure Group, Inc. |
1,000 |
27,000 |
|
|
Marriott International, Inc. Class A |
249,796 |
20,758,048 |
|
|
Starwood Hotels & Resorts Worldwide, Inc. |
258,990 |
20,804,667 |
|
|
Wyndham Worldwide Corp. |
279,502 |
25,568,843 |
|
|
|
81,053,014 |
||
|
Leisure Facilities - 2.3% |
|||
|
Cedar Fair LP (depositary unit) |
62,888 |
3,517,326 |
|
|
Vail Resorts, Inc. |
78,150 |
6,862,352 |
|
|
|
10,379,678 |
||
|
Restaurants - 58.4% |
|||
|
Bloomin' Brands, Inc. |
52,252 |
1,346,012 |
|
|
Bravo Brio Restaurant Group, Inc. (a) |
74,143 |
966,083 |
|
|
Brinker International, Inc. |
117,500 |
6,986,550 |
|
|
Chipotle Mexican Grill, Inc. (a) |
40,110 |
26,671,947 |
|
|
DineEquity, Inc. |
18,749 |
2,034,829 |
|
|
Domino's Pizza, Inc. |
99,400 |
10,092,082 |
|
|
Dunkin' Brands Group, Inc. |
248,200 |
11,630,652 |
|
|
Fiesta Restaurant Group, Inc. (a) |
99,676 |
6,479,937 |
|
|
Jack in the Box, Inc. |
137,487 |
13,293,618 |
|
|
McDonald's Corp. |
176,244 |
17,430,532 |
|
|
|
|||
|
Shares |
Value |
||
|
Noodles & Co. (a)(d) |
40,700 |
$ 741,961 |
|
|
Panera Bread Co. Class A (a)(d) |
79,586 |
12,847,568 |
|
|
Papa John's International, Inc. |
95,776 |
5,922,788 |
|
|
Red Robin Gourmet Burgers, Inc. (a) |
45,218 |
3,774,346 |
|
|
Ruth's Hospitality Group, Inc. |
551,840 |
8,421,078 |
|
|
Sonic Corp. |
209,268 |
6,652,630 |
|
|
Starbucks Corp. |
804,500 |
75,208,680 |
|
|
Texas Roadhouse, Inc. Class A |
113,208 |
4,261,149 |
|
|
Whitbread PLC |
32,331 |
2,622,992 |
|
|
Yum! Brands, Inc. |
524,036 |
42,504,560 |
|
|
|
259,889,994 |
||
|
TOTAL HOTELS, RESTAURANTS & LEISURE |
401,416,950 |
||
|
INTERNET & CATALOG RETAIL - 0.2% |
|||
|
Internet Retail - 0.2% |
|||
|
zulily, Inc. Class A (a)(d) |
53,182 |
745,080 |
|
|
INTERNET SOFTWARE & SERVICES - 0.5% |
|||
|
Internet Software & Services - 0.5% |
|||
|
Alibaba Group Holding Ltd. sponsored ADR |
8,000 |
680,960 |
|
|
Facebook, Inc. Class A (a) |
11,000 |
868,670 |
|
|
Yahoo!, Inc. (a) |
18,500 |
819,180 |
|
|
|
2,368,810 |
||
|
IT SERVICES - 0.2% |
|||
|
Data Processing & Outsourced Services - 0.2% |
|||
|
Visa, Inc. Class A |
3,300 |
895,323 |
|
|
MEDIA - 1.6% |
|||
|
Broadcasting - 0.2% |
|||
|
CBS Corp. Class B |
16,700 |
986,970 |
|
|
Cable & Satellite - 0.8% |
|||
|
DIRECTV (a) |
37,725 |
3,342,435 |
|
|
Movies & Entertainment - 0.6% |
|||
|
Twenty-First Century Fox, Inc. Class A |
79,800 |
2,793,000 |
|
|
TOTAL MEDIA |
7,122,405 |
||
|
REAL ESTATE INVESTMENT TRUSTS - 0.4% |
|||
|
Specialized REITs - 0.4% |
|||
|
Gaming & Leisure Properties |
48,195 |
1,631,401 |
|
|
SOFTWARE - 0.5% |
|||
|
Application Software - 0.5% |
|||
|
Intuit, Inc. |
21,300 |
2,079,519 |
|
|
SPECIALTY RETAIL - 0.8% |
|||
|
Computer & Electronics Retail - 0.5% |
|||
|
GameStop Corp. Class A |
62,100 |
2,295,837 |
|
|
Common Stocks - continued |
|||
|
Shares |
Value |
||
|
SPECIALTY RETAIL - CONTINUED |
|||
|
Specialty Stores - 0.3% |
|||
|
Sally Beauty Holdings, Inc. (a) |
43,549 |
$ 1,459,762 |
|
|
TOTAL SPECIALTY RETAIL |
3,755,599 |
||
|
TOTAL COMMON STOCKS (Cost $271,056,470) |
|
||
|
Money Market Funds - 2.1% |
|||
|
|
|
|
|
|
Fidelity Cash Central Fund, 0.13% (b) |
3,717,106 |
3,717,106 |
|
|
Fidelity Securities Lending Cash Central Fund, 0.13% (b)(c) |
5,494,550 |
5,494,550 |
|
|
TOTAL MONEY MARKET FUNDS (Cost $9,211,656) |
|
||
|
TOTAL INVESTMENT PORTFOLIO - 101.1% (Cost $280,268,126) |
450,045,044 |
||
|
NET OTHER ASSETS (LIABILITIES) - (1.1)% |
(4,749,243) |
||
|
NET ASSETS - 100% |
$ 445,295,801 |
||
|
Legend |
|
(a) Non-income producing |
|
(b) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
|
(c) Investment made with cash collateral received from securities on loan. |
|
(d) Security or a portion of the security is on loan at period end. |
|
Affiliated Central Funds |
|
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
|
Fund |
Income earned |
|
Fidelity Cash Central Fund |
$ 2,550 |
|
Fidelity Securities Lending Cash Central Fund |
21,369 |
|
Total |
$ 23,919 |
|
Other Information |
|
All investments are categorized as Level 1 under the Fair Value Hierarchy. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Leisure Portfolio
Financial Statements
Statement of Assets and Liabilities
|
|
February 28, 2015 |
|
|
|
|
|
|
Assets |
|
|
|
Investment in securities, at value (including securities loaned of $5,280,995) - See accompanying schedule: Unaffiliated issuers (cost $271,056,470) |
$ 440,833,388 |
|
|
Fidelity Central Funds (cost $9,211,656) |
9,211,656 |
|
|
Total Investments (cost $280,268,126) |
|
$ 450,045,044 |
|
Receivable for investments sold |
|
1,942,939 |
|
Receivable for fund shares sold |
|
885,474 |
|
Dividends receivable |
|
250,971 |
|
Distributions receivable from Fidelity Central Funds |
|
3,506 |
|
Prepaid expenses |
|
1,782 |
|
Other receivables |
|
492 |
|
Total assets |
|
453,130,208 |
|
|
|
|
|
Liabilities |
|
|
|
Payable for investments purchased |
$ 1,679,109 |
|
|
Payable for fund shares redeemed |
351,916 |
|
|
Accrued management fee |
198,931 |
|
|
Other affiliated payables |
77,446 |
|
|
Other payables and accrued expenses |
32,455 |
|
|
Collateral on securities loaned, at value |
5,494,550 |
|
|
Total liabilities |
|
7,834,407 |
|
|
|
|
|
Net Assets |
|
$ 445,295,801 |
|
Net Assets consist of: |
|
|
|
Paid in capital |
|
$ 271,359,556 |
|
Undistributed net investment income |
|
305,530 |
|
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions |
|
3,854,051 |
|
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies |
|
169,776,664 |
|
Net Assets, for 3,177,820 shares outstanding |
|
$ 445,295,801 |
|
Net Asset Value, offering price and redemption price per share ($445,295,801 ÷ 3,177,820 shares) |
|
$ 140.13 |
Statement of Operations
|
|
Year ended February 28, 2015 |
|
|
|
|
|
|
Investment Income |
|
|
|
Dividends |
|
$ 8,333,688 |
|
Income from Fidelity Central Funds |
|
23,919 |
|
Total income |
|
8,357,607 |
|
|
|
|
|
Expenses |
|
|
|
Management fee |
$ 2,556,168 |
|
|
Transfer agent fees |
876,336 |
|
|
Accounting and security lending fees |
179,602 |
|
|
Custodian fees and expenses |
11,456 |
|
|
Independent trustees' compensation |
9,534 |
|
|
Registration fees |
27,694 |
|
|
Audit |
42,607 |
|
|
Legal |
3,512 |
|
|
Interest |
1,208 |
|
|
Miscellaneous |
10,259 |
|
|
Total expenses before reductions |
3,718,376 |
|
|
Expense reductions |
(1,318) |
3,717,058 |
|
Net investment income (loss) |
|
4,640,549 |
|
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: |
|
|
|
Investment securities: |
|
|
|
Unaffiliated issuers |
30,013,266 |
|
|
Redemption in-kind with affiliated entities |
60,205,269 |
|
|
Foreign currency transactions |
74 |
|
|
Total net realized gain (loss) |
|
90,218,609 |
|
Change in net unrealized appreciation (depreciation) on: Investment securities |
(44,238,569) |
|
|
Assets and liabilities in foreign currencies |
(330) |
|
|
Total change in net unrealized appreciation (depreciation) |
|
(44,238,899) |
|
Net gain (loss) |
|
45,979,710 |
|
Net increase (decrease) in net assets resulting from operations |
|
$ 50,620,259 |
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) |
$ 4,640,549 |
$ 5,003,191 |
|
Net realized gain (loss) |
90,218,609 |
40,487,024 |
|
Change in net unrealized appreciation (depreciation) |
(44,238,899) |
80,533,060 |
|
Net increase (decrease) in net assets resulting from operations |
50,620,259 |
126,023,275 |
|
Distributions to shareholders from net investment income |
(4,879,767) |
(3,941,566) |
|
Distributions to shareholders from net realized gain |
(33,240,879) |
(33,282,431) |
|
Total distributions |
(38,120,646) |
(37,223,997) |
|
Share transactions |
67,372,454 |
218,419,527 |
|
Reinvestment of distributions |
36,550,960 |
35,849,441 |
|
Cost of shares redeemed |
(239,280,764) |
(122,631,715) |
|
Net increase (decrease) in net assets resulting from share transactions |
(135,357,350) |
131,637,253 |
|
Redemption fees |
4,103 |
11,576 |
|
Total increase (decrease) in net assets |
(122,853,634) |
220,448,107 |
|
|
|
|
|
Net Assets |
|
|
|
Beginning of period |
568,149,435 |
347,701,328 |
|
End of period (including undistributed net investment income of $305,530 and undistributed net investment income of $1,312,554, respectively) |
$ 445,295,801 |
$ 568,149,435 |
|
Other Information Shares |
|
|
|
Sold |
512,008 |
1,710,491 |
|
Issued in reinvestment of distributions |
287,167 |
287,411 |
|
Redeemed |
(1,828,098) |
(1,001,721) |
|
Net increase (decrease) |
(1,028,923) |
996,181 |
Financial Highlights
|
Years ended February 28, |
2015 |
2014 |
2013 |
2012 H |
2011 |
|
Selected Per-Share Data |
|
|
|
|
|
|
Net asset value, beginning of period |
$ 135.06 |
$ 108.30 |
$ 106.53 |
$ 91.26 |
$ 69.99 |
|
Income from Investment Operations |
|
|
|
|
|
|
Net investment income (loss) B |
1.31 |
1.40E |
1.40F |
.64 |
.55 |
|
Net realized and unrealized gain (loss) |
14.80 |
35.09 |
6.22 |
14.73 |
21.22 |
|
Total from investment operations |
16.11 |
36.49 |
7.62 |
15.37 |
21.77 |
|
Distributions from net investment income |
(1.47) |
(1.01) |
(1.36) |
(.09) |
(.52) |
|
Distributions from net realized gain |
(9.57) |
(8.72) |
(4.50) |
(.01) |
- |
|
Total distributions |
(11.04) |
(9.73) |
(5.86) |
(.10) |
(.52) |
|
Redemption fees added to paid in capitalB |
-I |
-I |
.01 |
-I |
.02 |
|
Net asset value, end of period |
$ 140.13 |
$ 135.06 |
$ 108.30 |
$ 106.53 |
$ 91.26 |
|
Total ReturnA |
12.91% |
34.71% |
7.52% |
16.85% |
31.16% |
|
Ratios to Average Net AssetsC, G |
|
|
|
|
|
|
Expenses before reductions |
.80% |
.82% |
.85% |
.86% |
.90% |
|
Expenses net of fee waivers, if any |
.80% |
.82% |
.85% |
.86% |
.90% |
|
Expenses net of all reductions |
.80% |
.81% |
.83% |
.86% |
.89% |
|
Net investment income (loss) |
1.00% |
1.13%E |
1.33%F |
.68% |
.66% |
|
Supplemental Data |
|
|
|
|
|
|
Net assets, end of period (000 omitted) |
$ 445,296 |
$ 568,149 |
$ 347,701 |
$ 440,507 |
$ 411,239 |
|
Portfolio turnover rateD |
32%J |
65% |
90% |
77% |
112% |
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 $.43 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .79%.
F Investment income per share reflects a large, non-recurring dividend which amounted to $.53 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .82%.
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 Portfolio turnover rate excludes securities received or delivered in-kind.
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 28, 2015 |
Past 1 |
Past 5 |
Past 10 |
|
Multimedia Portfolio |
10.16% |
22.55% |
11.65% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Multimedia Portfolio on February 28, 2005. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index performed over the same period.
Annual Report
Multimedia Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. stock market closed near its all-time high for the 12 months ending February 28, 2015, supported by low interest rates and the relative strength of the U.S. economy and dollar. The large-cap S&P 500® Index returned 15.51%. Growth stocks in the index outperformed value-oriented names. The tech-heavy Nasdaq Composite Index® rose 16.58%, while the small-cap Russell 2000® Index advanced 5.63%, rallying from early-period weakness amid growth and valuation worries. Among the 10 major market sectors tracked by MSCI U.S. IMI 25-50 classifications, most notched a double-digit gain, led by health care (+24%), consumer staples (+21%), information technology (+20%) and utilities (+15%). Conversely, energy (-9%) was the only sector to lose ground, reflecting a sharp drop in crude prices beginning midyear and attributed to weaker global demand and a U.S. supply boom. Volatility spiked to a three-year high in October amid concerns about economic growth and Ebola, as well as unrest in Syria, Iraq and Ukraine. Nevertheless, the S&P 500® finished the period well above its mid-October nadir, bolstered by the relative economic strength of the U.S., which marked a six-year low in its unemployment rate, and consumer confidence that declined only slightly from its 11-year high reached in January.
Comments from Nidhi Gupta, Portfolio Manager of Multimedia Portfolio: For the year, the fund advanced 10.16%, trailing the 12.80% return of the MSCI U.S. IMI Media 25-50 Index, as well as the S&P 500® Index. Stock selection was the main relative detractor, including the movies & entertainment group, along with an out-of-index stake in Internet software & services. The fund's biggest individual detractor was Yahoo!. Due to the timing of my ownership, the fund's non-index investments here lost ground and hampered our relative result. Also detracting was television broadcaster CBS. At the beginning of the period, the fund was notably overweighted this stock, and I was excited about the possibilities of its content distribution and growth of retransmission fees and shareholder return. However, as my conviction in the shift away from traditional media to the Internet grew, CBS became less attractive. I sold much of the fund's position by mid-period, moving to an underweighting, but not in time to avoid the negative impact. On the positive side, our biggest relative contributor was my decision to largely avoid index name Discovery Communications, which owns several smaller, niche television network franchises. With advertising dollars moving away from traditional television, niche networks were among the hardest hit, and this trend weighed heavily on Discovery. I eliminated our stake in September.
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 28, 2015 |
||
|
|
% of fund's |
% of fund's net assets |
|
The Walt Disney Co. |
23.0 |
20.4 |
|
Comcast Corp. Class A |
18.3 |
15.5 |
|
Time Warner, Inc. |
8.9 |
8.8 |
|
DIRECTV |
5.0 |
5.0 |
|
Time Warner Cable, Inc. |
4.7 |
5.0 |
|
Live Nation Entertainment, Inc. |
4.4 |
3.4 |
|
Liberty Global PLC Class C |
4.0 |
2.9 |
|
Twenty-First Century Fox, Inc. Class A |
3.9 |
5.1 |
|
Charter Communications, Inc. Class A |
3.4 |
2.7 |
|
The Madison Square Garden Co. Class A |
3.0 |
1.9 |
|
|
78.6 |
|
|
Top Industries (% of fund's net assets) |
|||
|
As of February 28, 2015 |
|||
 |
Media |
92.4% |
|
 |
Internet Software & Services |
5.7% |
|
 |
Communications Equipment |
1.7% |
|
 |
Internet & Catalog Retail |
0.0% |
|
 |
All Others* |
0.2% |
|
|
As of August 31, 2014 |
|||
 |
Media |
94.6% |
|
 |
Internet Software & Services |
4.1% |
|
 |
Internet & Catalog Retail |
1.0% |
|
 |
All Others* |
0.3% |
|
|
* Includes short-term investments and net other assets (liabilities). |
Annual Report
Multimedia Portfolio
Investments February 28, 2015
Showing Percentage of Net Assets
|
Common Stocks - 99.8% |
|||
|
Shares |
Value |
||
|
COMMUNICATIONS EQUIPMENT - 1.7% |
|||
|
Communications Equipment - 1.7% |
|||
|
Brocade Communications Systems, Inc. |
1,090,900 |
$ 13,516,251 |
|
|
INTERNET & CATALOG RETAIL - 0.0% |
|||
|
Internet Retail - 0.0% |
|||
|
Wayfair LLC Class A (d) |
2,100 |
49,035 |
|
|
INTERNET SOFTWARE & SERVICES - 5.7% |
|||
|
Internet Software & Services - 5.7% |
|||
|
Facebook, Inc. Class A (a) |
302,800 |
23,912,116 |
|
|
Google, Inc.: |
|
|
|
|
Class A (a) |
5,100 |
2,869,413 |
|
|
Class C (a) |
5,200 |
2,903,680 |
|
|
Yahoo!, Inc. (a) |
364,200 |
16,126,776 |
|
|
|
45,811,985 |
||
|
MEDIA - 92.4% |
|||
|
Advertising - 1.6% |
|||
|
Interpublic Group of Companies, Inc. |
319,000 |
7,113,700 |
|
|
Omnicom Group, Inc. |
71,300 |
5,671,202 |
|
|
|
12,784,902 |
||
|
Broadcasting - 3.7% |
|||
|
CBS Corp. Class B |
400,500 |
23,669,550 |
|
|
Cumulus Media, Inc. Class A (a) |
210 |
838 |
|
|
Discovery Communications, Inc. Class A (a) |
450 |
14,535 |
|
|
Entercom Communications Corp. Class A (a) |
3,053 |
34,743 |
|
|
Liberty Media Corp.: |
|
|
|
|
Class A (a) |
37,493 |
1,445,918 |
|
|
Class C (a) |
111,786 |
4,314,940 |
|
|
|
29,480,524 |
||
|
Cable & Satellite - 38.5% |
|||
|
Charter Communications, Inc. Class A (a) |
151,900 |
27,433,140 |
|
|
Comcast Corp. Class A |
2,470,350 |
146,689,383 |
|
|
DIRECTV (a) |
452,413 |
40,083,792 |
|
|
DISH Network Corp. Class A (a) |
147,600 |
11,075,904 |
|
|
Liberty Broadband Corp.: |
|
|
|
|
Class A (a) |
32,023 |
1,660,713 |
|
|
Class C (a) |
83,840 |
4,364,710 |
|
|
Liberty Global PLC: |
|
|
|
|
Class A (a) |
151,289 |
8,178,683 |
|
|
Class C |
613,847 |
32,024,398 |
|
|
Time Warner Cable, Inc. |
244,669 |
37,691,259 |
|
|
|
309,201,982 |
||
|
|
|||
|
Shares |
Value |
||
|
Movies & Entertainment - 47.2% |
|||
|
AMC Entertainment Holdings, Inc. Class A |
12,185 |
$ 418,920 |
|
|
Global Eagle Entertainment, Inc. (a)(d) |
434,600 |
5,780,180 |
|
|
Lions Gate Entertainment Corp. (d) |
440,677 |
14,361,663 |
|
|
Live Nation Entertainment, Inc. (a) |
1,377,800 |
35,257,902 |
|
|
The Madison Square Garden Co. Class A (a) |
309,400 |
24,241,490 |
|
|
The Walt Disney Co. |
1,772,404 |
184,471,809 |
|
|
Time Warner, Inc. |
875,422 |
71,662,045 |
|
|
Twenty-First Century Fox, Inc. Class A |
905,007 |
31,675,245 |
|
|
Viacom, Inc. Class B (non-vtg.) |
165,400 |
11,568,076 |
|
|
|
379,437,330 |
||
|
Publishing - 1.4% |
|||
|
Gannett Co., Inc. |
326,900 |
11,572,260 |
|
|
TOTAL MEDIA |
742,476,998 |
||
|
TOTAL COMMON STOCKS (Cost $472,075,074) |
|
||
|
Money Market Funds - 2.1% |
|||
|
|
|
|
|
|
Fidelity Securities Lending Cash Central Fund, 0.13% (b)(c) |
16,754,925 |
|
|
|
TOTAL INVESTMENT PORTFOLIO - 101.9% (Cost $488,829,999) |
818,609,194 |
||
|
NET OTHER ASSETS (LIABILITIES) - (1.9)% |
(15,621,153) |
||
|
NET ASSETS - 100% |
$ 802,988,041 |
||
|
Legend |
|
(a) Non-income producing |
|
(b) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
|
(c) Investment made with cash collateral received from securities on loan. |
|
(d) Security or a portion of the security is on loan at period end. |
|
Affiliated Central Funds |
|
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
|
Fund |
Income earned |
|
Fidelity Cash Central Fund |
$ 1,654 |
|
Fidelity Securities Lending Cash Central Fund |
411,448 |
|
Total |
$ 413,102 |
|
Other Information |
|
All investments are categorized as Level 1 under the Fair Value Hierarchy. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Multimedia Portfolio
Financial Statements
Statement of Assets and Liabilities
|
|
February 28, 2015 |
|
|
|
|
|
|
Assets |
|
|
|
Investment in securities, at value (including securities loaned of $16,223,041) - See accompanying schedule: Unaffiliated issuers (cost $472,075,074) |
$ 801,854,269 |
|
|
Fidelity Central Funds (cost $16,754,925) |
16,754,925 |
|
|
Total Investments (cost $488,829,999) |
|
$ 818,609,194 |
|
Receivable for investments sold |
|
2,457,202 |
|
Receivable for fund shares sold |
|
713,622 |
|
Dividends receivable |
|
536,894 |
|
Distributions receivable from Fidelity Central Funds |
|
2,854 |
|
Prepaid expenses |
|
3,342 |
|
Other receivables |
|
1,474 |
|
Total assets |
|
822,324,582 |
|
|
|
|
|
Liabilities |
|
|
|
Payable to custodian bank |
$ 550,912 |
|
|
Payable for fund shares redeemed |
1,472,828 |
|
|
Accrued management fee |
363,783 |
|
|
Other affiliated payables |
161,383 |
|
|
Other payables and accrued expenses |
32,710 |
|
|
Collateral on securities loaned, at value |
16,754,925 |
|
|
Total liabilities |
|
19,336,541 |
|
|
|
|
|
Net Assets |
|
$ 802,988,041 |
|
Net Assets consist of: |
|
|
|
Paid in capital |
|
$ 459,644,138 |
|
Undistributed net investment income |
|
171,842 |
|
Accumulated undistributed net realized gain (loss) on investments |
|
13,392,866 |
|
Net unrealized appreciation (depreciation) on investments |
|
329,779,195 |
|
Net Assets, for 9,736,119 shares outstanding |
|
$ 802,988,041 |
|
Net Asset Value, offering price and redemption price per share ($802,988,041 ÷ 9,736,119 shares) |
|
$ 82.48 |
Statement of Operations
|
|
Year ended February 28, 2015 |
|
|
|
|
|
|
Investment Income |
|
|
|
Dividends |
|
$ 8,839,488 |
|
Income from Fidelity Central Funds |
|
413,102 |
|
Total income |
|
9,252,590 |
|
|
|
|
|
Expenses |
|
|
|
Management fee |
$ 4,721,339 |
|
|
Transfer agent fees |
1,781,857 |
|
|
Accounting and security lending fees |
296,922 |
|
|
Custodian fees and expenses |
9,345 |
|
|
Independent trustees' compensation |
17,159 |
|
|
Registration fees |
54,308 |
|
|
Audit |
39,061 |
|
|
Legal |
5,351 |
|
|
Interest |
5,668 |
|
|
Miscellaneous |
16,103 |
|
|
Total expenses before reductions |
6,947,113 |
|
|
Expense reductions |
(1,888) |
6,945,225 |
|
Net investment income (loss) |
|
2,307,365 |
|
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: |
|
|
|
Investment securities: |
|
|
|
Unaffiliated issuers |
|
84,462,999 |
|
Change in net unrealized appreciation (depreciation) on investment securities |
|
(14,371,615) |
|
Net gain (loss) |
|
70,091,384 |
|
Net increase (decrease) in net assets resulting from operations |
|
$ 72,398,749 |
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) |
$ 2,307,365 |
$ 2,517,686 |
|
Net realized gain (loss) |
84,462,999 |
57,240,551 |
|
Change in net unrealized appreciation (depreciation) |
(14,371,615) |
209,848,900 |
|
Net increase (decrease) in net assets resulting from operations |
72,398,749 |
269,607,137 |
|
Distributions to shareholders from net investment income |
(2,039,294) |
(2,246,127) |
|
Distributions to shareholders from net realized gain |
(70,422,213) |
(27,566,069) |
|
Total distributions |
(72,461,507) |
(29,812,196) |
|
Share transactions |
212,392,932 |
908,932,040 |
|
Reinvestment of distributions |
69,926,090 |
28,916,204 |
|
Cost of shares redeemed |
(488,279,180) |
(826,095,931) |
|
Net increase (decrease) in net assets resulting from share transactions |
(205,960,158) |
111,752,313 |
|
Redemption fees |
23,333 |
73,997 |
|
Total increase (decrease) in net assets |
(205,999,583) |
351,621,251 |
|
|
|
|
|
Net Assets |
|
|
|
Beginning of period |
1,008,987,624 |
657,366,373 |
|
End of period (including undistributed net investment income of $171,842 and undistributed net investment income of $63,422, respectively) |
$ 802,988,041 |
$ 1,008,987,624 |
|
Other Information Shares |
|
|
|
Sold |
2,629,387 |
12,464,403 |
|
Issued in reinvestment of distributions |
892,056 |
368,735 |
|
Redeemed |
(6,128,688) |
(11,169,177) |
|
Net increase (decrease) |
(2,607,245) |
1,663,961 |
Financial Highlights
|
Years ended February 28, |
2015 |
2014 |
2013 |
2012G |
2011 |
|
Selected Per-Share Data |
|
|
|
|
|
|
Net asset value, beginning of period |
$ 81.74 |
$ 61.55 |
$ 48.48 |
$ 47.80 |
$ 34.39 |
|
Income from Investment Operations |
|
|
|
|
|
|
Net investment income (loss) B |
.22 |
.20 |
.53E |
.29 |
.14 |
|
Net realized and unrealized gain (loss) |
7.62 |
22.46 |
12.96 |
.96 |
13.39 |
|
Total from investment operations |
7.84 |
22.66 |
13.49 |
1.25 |
13.53 |
|
Distributions from net investment income |
(.20) |
(.19) |
(.43) |
(.32) |
(.12) |
|
Distributions from net realized gain |
(6.89) |
(2.30) |
- |
(.25) |
- |
|
Total distributions |
(7.10)J |
(2.48)I |
(.43) |
(.57) |
(.12) |
|
Redemption fees added to paid in capitalB |
-H |
.01 |
.01 |
-H |
-H |
|
Net asset value, end of period |
$ 82.48 |
$ 81.74 |
$ 61.55 |
$ 48.48 |
$ 47.80 |
|
Total ReturnA |
10.16% |
37.01% |
27.91% |
2.73% |
39.37% |
|
Ratios to Average Net AssetsC, F |
|
|
|
|
|
|
Expenses before reductions |
.81% |
.81% |
.88% |
.90% |
.94% |
|
Expenses net of fee waivers, if any |
.81% |
.81% |
.88% |
.90% |
.94% |
|
Expenses net of all reductions |
.81% |
.80% |
.88% |
.90% |
.94% |
|
Net investment income (loss) |
.27% |
.27% |
.97%E |
.64% |
.37% |
|
Supplemental Data |
|
|
|
|
|
|
Net assets, end of period (000 omitted) |
$ 802,988 |
$ 1,008,988 |
$ 657,366 |
$ 183,157 |
$ 205,920 |
|
Portfolio turnover rateD |
55% |
111% |
30% |
85% |
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 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 .76%.
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 $2.48 per share is comprised of distributions from net investment income of $.187 and distributions from net realized gain of $2.295 per share.
J Total distributions of $7.10 per share is comprised of distributions from net investment income of $.204 and distributions from net realized gain of $6.892 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 28, 2015 |
Past 1 |
Past 5 |
Past 10 |
|
Retailing Portfolio |
17.29% |
21.80% |
13.65% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Retailing Portfolio on February 28, 2005. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index performed over the same period.
Annual Report
Retailing Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. stock market closed near its all-time high for the 12 months ending February 28, 2015, supported by low interest rates and the relative strength of the U.S. economy and dollar. The large-cap S&P 500® Index returned 15.51%. Growth stocks in the index outperformed value-oriented names. The tech-heavy Nasdaq Composite Index® rose 16.58%, while the small-cap Russell 2000® Index advanced 5.63%, rallying from early-period weakness amid growth and valuation worries. Among the 10 major market sectors tracked by MSCI U.S. IMI 25-50 classifications, most notched a double-digit gain, led by health care (+24%), consumer staples (+21%), information technology (+20%) and utilities (+15%). Conversely, energy (-9%) was the only sector to lose ground, reflecting a sharp drop in crude prices beginning midyear and attributed to weaker global demand and a U.S. supply boom. Volatility spiked to a three-year high in October amid concerns about economic growth and Ebola, as well as unrest in Syria, Iraq and Ukraine. Nevertheless, the S&P 500® finished the period well above its mid-October nadir, bolstered by the relative economic strength of the U.S., which marked a six-year low in its unemployment rate, and consumer confidence that declined only slightly from its 11-year high reached in January.
Comments from Deena Friedman, who became sole Portfolio Manager of Retailing Portfolio on January 31, 2015, after serving as Co-Portfolio Manager since July 2014: For the year, the fund gained 17.29%, underperforming the 19.35% advance of the MSCI U.S. IMI Retailing 25-50 Index, as well as the broad-based S&P 500® Index. During the period, the decrease of gas prices, weather issues, a strengthening U.S. dollar and staffing issues on the West Coast of the U.S. all influenced investing in this year's retailing space. Versus the industry index, stock selection in apparel accessories & luxury goods was the most detrimental to performance. Under pressure from a stronger U.S. dollar and a softening Chinese marketplace, the fund lost ground through its non-index stake in PVH, which owns brands such as Calvin Klein and Tommy Hilfiger. I still believed in the international growth companies in this group can garner and subsequently held on to these positions. Online travel company Priceline Group was the fund's biggest individual detractor. The company struggled during the period after announcing earnings guidance that came in below analysts' expectations. I still had conviction in Priceline so I maintained the position. The fund's holdings in the home improvement area were also detrimental. The fund missed out by our underweighting in Lowe's Companies, which performed well during the period. Instead, I chose to overweight the fund's stake in competitor and large index component Home Depot. Home Depot has posted more-consistent results, displayed solid earning quality and is more focused on an e-commerce strategy. This positioning proved to be a positive, with Home Depot ranking among the fund's top individual contributors for the period and our largest holding by far. Stock selection was in apparel retail, which is the fund's largest overweighting, also provided the biggest boost to relative performance. L-Brands, owner of flagship brands Victoria's Secret and Bath & Body Works, was the fund's No. 1 individual contributor. The company posted strong earnings during the period, and the stock responded. An out-of-index position in G-III Apparel Group helped the fund's relative result as well. During the period, the company announced consistently strong earnings results, buoying the stock.
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 28, 2015 |
||
|
|
% of fund's |
% of fund's net assets |
|
Home Depot, Inc. |
17.9 |
18.4 |
|
Priceline Group, Inc. |
9.8 |
11.3 |
|
Amazon.com, Inc. |
9.0 |
9.5 |
|
L Brands, Inc. |
6.2 |
5.0 |
|
TJX Companies, Inc. |
6.2 |
8.9 |
|
AutoZone, Inc. |
4.8 |
4.9 |
|
G-III Apparel Group Ltd. |
4.8 |
4.3 |
|
O'Reilly Automotive, Inc. |
4.6 |
4.8 |
|
Lowe's Companies, Inc. |
3.3 |
1.3 |
|
Ross Stores, Inc. |
2.4 |
0.0 |
|
|
69.0 |
|
|
Top Industries (% of fund's net assets) |
|||
|
As of February 28, 2015 |
|||
 |
Specialty Retail |
52.6% |
|
 |
Internet & Catalog Retail |
19.4% |
|
 |
Textiles, Apparel & Luxury Goods |
14.8% |
|
 |
Food & Staples Retailing |
2.4% |
|
 |
Multiline Retail |
1.8% |
|
 |
All Others* |
9.0% |
|
|
As of August 31, 2014 |
|||
 |
Specialty Retail |
53.2% |
|
 |
Internet & Catalog Retail |
21.4% |
|
 |
Textiles, Apparel & Luxury Goods |
14.2% |
|
 |
Food & Staples Retailing |
2.2% |
|
 |
Food Products |
1.8% |
|
 |
All Others* |
7.2% |
|
|
* Includes short-term investments and net other assets (liabilities). |
Annual Report
Retailing Portfolio
Investments February 28, 2015
Showing Percentage of Net Assets
|
Common Stocks - 96.9% |
|||
|
Shares |
Value |
||
|
FOOD & STAPLES RETAILING - 2.4% |
|||
|
Drug Retail - 0.6% |
|||
|
CVS Health Corp. |
54,000 |
$ 5,608,980 |
|
|
Hypermarkets & Super Centers - 1.8% |
|||
|
Costco Wholesale Corp. |
109,043 |
16,024,959 |
|
|
TOTAL FOOD & STAPLES RETAILING |
21,633,939 |
||
|
FOOD PRODUCTS - 1.3% |
|||
|
Packaged Foods & Meats - 1.3% |
|||
|
Associated British Foods PLC |
244,000 |
11,771,856 |
|
|
HOTELS, RESTAURANTS & LEISURE - 1.8% |
|||
|
Restaurants - 1.8% |
|||
|
Chipotle Mexican Grill, Inc. (a) |
11,100 |
7,381,167 |
|
|
Ruth's Hospitality Group, Inc. |
153,400 |
2,340,884 |
|
|
Starbucks Corp. |
74,100 |
6,927,239 |
|
|
|
16,649,290 |
||
|
HOUSEHOLD DURABLES - 1.0% |
|||
|
Household Appliances - 1.0% |
|||
|
Techtronic Industries Co. Ltd. |
2,674,500 |
9,258,919 |
|
|
INTERNET & CATALOG RETAIL - 19.4% |
|||
|
Internet Retail - 19.4% |
|||
|
Amazon.com, Inc. (a) |
217,080 |
82,525,133 |
|
|
Ocado Group PLC (a)(d) |
1,012,700 |
5,764,466 |
|
|
Priceline Group, Inc. (a) |
72,120 |
89,247,058 |
|
|
Wayfair LLC Class A (d) |
1,900 |
44,365 |
|
|
|
177,581,022 |
||
|
INTERNET SOFTWARE & SERVICES - 1.1% |
|||
|
Internet Software & Services - 1.1% |
|||
|
Alibaba Group Holding Ltd. sponsored ADR (d) |
50,000 |
4,256,000 |
|
|
Facebook, Inc Class A (a) |
27,900 |
2,203,263 |
|
|
HomeAway, Inc. (a) |
110,200 |
3,415,649 |
|
|
|
9,874,912 |
||
|
MULTILINE RETAIL - 1.8% |
|||
|
Department Stores - 1.1% |
|||
|
Macy's, Inc. |
156,600 |
9,978,552 |
|
|
General Merchandise Stores - 0.7% |
|||
|
B&M European Value Retail S.A. |
1,370,997 |
6,773,164 |
|
|
TOTAL MULTILINE RETAIL |
16,751,716 |
||
|
SPECIALTY RETAIL - 52.6% |
|||
|
Apparel Retail - 16.0% |
|||
|
Inditex SA |
353,310 |
11,104,010 |
|
|
L Brands, Inc. |
616,683 |
56,648,500 |
|
|
Ross Stores, Inc. |
210,800 |
22,304,748 |
|
|
TJX Companies, Inc. |
823,100 |
56,497,584 |
|
|
|
146,554,842 |
||
|
|
|||
|
Shares |
Value |
||
|
Automotive Retail - 9.4% |
|||
|
AutoZone, Inc. (a) |
68,363 |
$ 43,935,533 |
|
|
O'Reilly Automotive, Inc. (a) |
203,686 |
42,393,167 |
|
|
|
86,328,700 |
||
|
Home Improvement Retail - 21.8% |
|||
|
Home Depot, Inc. |
1,424,400 |
163,449,900 |
|
|
Lowe's Companies, Inc. |
409,600 |
30,347,264 |
|
|
Lumber Liquidators Holdings, Inc. (a)(d) |
100,300 |
5,201,558 |
|
|
|
198,998,722 |
||
|
Homefurnishing Retail - 0.9% |
|||
|
Restoration Hardware Holdings, Inc. (a)(d) |
90,900 |
8,008,290 |
|
|
Specialty Stores - 4.5% |
|||
|
Signet Jewelers Ltd. |
115,600 |
13,858,128 |
|
|
Tiffany & Co., Inc. |
147,300 |
12,994,806 |
|
|
Tractor Supply Co. |
78,700 |
6,935,044 |
|
|
Ulta Salon, Cosmetics & Fragrance, Inc. (a) |
31,400 |
4,419,864 |
|
|
World Duty Free SpA (a) |
267,861 |
3,057,448 |
|
|
|
41,265,290 |
||
|
TOTAL SPECIALTY RETAIL |
481,155,844 |
||
|
TECHNOLOGY HARDWARE, STORAGE & PERIPHERALS - 0.7% |
|||
|
Technology Hardware, Storage & Peripherals - 0.7% |
|||
|
Apple, Inc. |
47,300 |
6,076,158 |
|
|
TEXTILES, APPAREL & LUXURY GOODS - 14.8% |
|||
|
Apparel, Accessories & Luxury Goods - 12.9% |
|||
|
Coach, Inc. |
52,600 |
2,290,730 |
|
|
Compagnie Financiere Richemont SA Series A |
85,500 |
7,533,594 |
|
|
G-III Apparel Group Ltd. (a) |
414,867 |
43,656,454 |
|
|
Kate Spade & Co. (a) |
121,400 |
4,182,230 |
|
|
lululemon athletica, Inc. (a)(d) |
261,257 |
17,880,429 |
|
|
Michael Kors Holdings Ltd. (a) |
149,900 |
10,104,759 |
|
|
Prada SpA (d) |
1,109,400 |
6,672,878 |
|
|
PVH Corp. |
126,000 |
13,422,780 |
|
|
Ralph Lauren Corp. |
24,900 |
3,421,509 |
|
|
Swatch Group AG (Bearer) (Reg.) |
73,447 |
6,467,589 |
|
|
VF Corp. |
29,500 |
2,261,470 |
|
|
|
117,894,422 |
||
|
Footwear - 1.9% |
|||
|
NIKE, Inc. Class B |
184,820 |
17,949,719 |
|
|
TOTAL TEXTILES, APPAREL & LUXURY GOODS |
135,844,141 |
||
|
TOTAL COMMON STOCKS (Cost $519,380,552) |
|
||
|
Convertible Bonds - 0.2% |
||||
|
|
Principal Amount |
Value |
||
|
SOFTWARE - 0.2% |
||||
|
Home Entertainment Software - 0.2% |
||||
|
Take-Two Interactive Software, Inc. 1.75% 12/1/16 |
|
$ 1,000,000 |
$ 1,451,250 |
|
|
Money Market Funds - 6.4% |
|||
|
Shares |
|
||
|
Fidelity Cash Central Fund, 0.13% (b) |
27,091,361 |
27,091,361 |
|
|
Fidelity Securities Lending Cash Central Fund, 0.13% (b)(c) |
31,898,065 |
31,898,065 |
|
|
TOTAL MONEY MARKET FUNDS (Cost $58,989,426) |
|
||
|
TOTAL INVESTMENT PORTFOLIO - 103.5% (Cost $579,369,978) |
947,038,473 |
||
|
NET OTHER ASSETS (LIABILITIES) - (3.5)% |
(31,861,252) |
||
|
NET ASSETS - 100% |
$ 915,177,221 |
||
|
Legend |
|
(a) Non-income producing |
|
(b) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
|
(c) Investment made with cash collateral received from securities on loan. |
|
(d) Security or a portion of the security is on loan at period end. |
|
Affiliated Central Funds |
|
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
|
Fund |
Income earned |
|
Fidelity Cash Central Fund |
$ 15,557 |
|
Fidelity Securities Lending Cash Central Fund |
256,656 |
|
Total |
$ 272,213 |
|
Other Information |
|
The following is a summary of the inputs used, as of February 28, 2015, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements. |
|
Valuation Inputs at Reporting Date: |
||||
|
Description |
Total |
Level 1 |
Level 2 |
Level 3 |
|
Investments in Securities: |
||||
|
Common Stocks |
$ 886,597,797 |
$ 879,064,203 |
$ 7,533,594 |
$ - |
|
Convertible Bonds |
1,451,250 |
- |
1,451,250 |
- |
|
Money Market Funds |
58,989,426 |
58,989,426 |
- |
- |
|
Total Investments in Securities: |
$ 947,038,473 |
$ 938,053,629 |
$ 8,984,844 |
$ - |
|
The following is a summary of transfers between Level 1 and Level 2 for the period ended February 28, 2015. Transfers are assumed to have occurred at the beginning of the period, and are primarily attributable to the valuation techniques used for foreign equity securities, as discussed in the accompanying Notes to Financial Statements: |
|
Transfers |
Total |
|
Level 1 to Level 2 |
$ 15,547,879 |
|
Level 2 to Level 1 |
$ 0 |
|
Distribution of investments by country or territory of incorporation, as a percentage of total net assets, is as follows (Unaudited): |
|
United States of America |
89.6% |
|
United Kingdom |
2.6% |
|
Switzerland |
1.5% |
|
Bermuda |
1.5% |
|
Spain |
1.2% |
|
British Virgin Islands |
1.1% |
|
Italy |
1.0% |
|
Hong Kong |
1.0% |
|
Others (Individually Less Than 1%) |
0.5% |
|
|
100.0% |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Retailing Portfolio
Financial Statements
Statement of Assets and Liabilities
|
|
February 28, 2015 |
|
|
|
|
|
|
Assets |
|
|
|
Investment in securities, at value (including securities loaned of $31,516,148) - See accompanying schedule: Unaffiliated issuers (cost $520,380,552) |
$ 888,049,047 |
|
|
Fidelity Central Funds (cost $58,989,426) |
58,989,426 |
|
|
Total Investments (cost $579,369,978) |
|
$ 947,038,473 |
|
Receivable for fund shares sold |
|
6,889,765 |
|
Dividends receivable |
|
1,870,932 |
|
Interest receivable |
|
4,375 |
|
Distributions receivable from Fidelity Central Funds |
|
12,455 |
|
Prepaid expenses |
|
2,978 |
|
Other receivables |
|
1,733 |
|
Total assets |
|
955,820,711 |
|
|
|
|
|
Liabilities |
|
|
|
Payable for investments purchased |
$ 7,527,058 |
|
|
Payable for fund shares redeemed |
623,141 |
|
|
Accrued management fee |
398,210 |
|
|
Other affiliated payables |
162,393 |
|
|
Other payables and accrued expenses |
34,623 |
|
|
Collateral on securities loaned, at value |
31,898,065 |
|
|
Total liabilities |
|
40,643,490 |
|
|
|
|
|
Net Assets |
|
$ 915,177,221 |
|
Net Assets consist of: |
|
|
|
Paid in capital |
|
$ 536,452,504 |
|
Undistributed net investment income |
|
1,012,540 |
|
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions |
|
10,047,433 |
|
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies |
|
367,664,744 |
|
Net Assets, for 9,606,791 shares outstanding |
|
$ 915,177,221 |
|
Net Asset Value, offering price and redemption price per share ($915,177,221 ÷ 9,606,791 shares) |
|
$ 95.26 |
Statement of Operations
|
|
Year ended February 28, 2015 |
|
|
|
|
|
|
Investment Income |
|
|
|
Dividends |
|
$ 8,234,594 |
|
Special dividends |
|
1,233,366 |
|
Interest |
|
17,500 |
|
Income from Fidelity Central Funds |
|
272,213 |
|
Total income |
|
9,757,673 |
|
|
|
|
|
Expenses |
|
|
|
Management fee |
$ 4,588,153 |
|
|
Transfer agent fees |
1,698,096 |
|
|
Accounting and security lending fees |
292,419 |
|
|
Custodian fees and expenses |
20,394 |
|
|
Independent trustees' compensation |
16,826 |
|
|
Registration fees |
41,842 |
|
|
Audit |
38,580 |
|
|
Legal |
6,446 |
|
|
Interest |
1,041 |
|
|
Miscellaneous |
17,040 |
|
|
Total expenses before reductions |
6,720,837 |
|
|
Expense reductions |
(2,439) |
6,718,398 |
|
Net investment income (loss) |
|
3,039,275 |
|
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: |
|
|
|
Investment securities: |
|
|
|
Unaffiliated issuers |
51,294,375 |
|
|
Foreign currency transactions |
(8,921) |
|
|
Total net realized gain (loss) |
|
51,285,454 |
|
Change in net unrealized appreciation (depreciation) on: Investment securities |
61,716,167 |
|
|
Assets and liabilities in foreign currencies |
(6,803) |
|
|
Total change in net unrealized appreciation (depreciation) |
|
61,709,364 |
|
Net gain (loss) |
|
112,994,818 |
|
Net increase (decrease) in net assets resulting from operations |
|
$ 116,034,093 |
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) |
$ 3,039,275 |
$ 1,610,940 |
|
Net realized gain (loss) |
51,285,454 |
76,307,677 |
|
Change in net unrealized appreciation (depreciation) |
61,709,364 |
169,830,493 |
|
Net increase (decrease) in net assets resulting from operations |
116,034,093 |
247,749,110 |
|
Distributions to shareholders from net investment income |
(1,546,416) |
(1,555,312) |
|
Distributions to shareholders from net realized gain |
(70,497,905) |
(24,769,437) |
|
Total distributions |
(72,044,321) |
(26,324,749) |
|
Share transactions |
203,801,729 |
684,002,303 |
|
Reinvestment of distributions |
69,797,839 |
25,621,938 |
|
Cost of shares redeemed |
(466,362,827) |
(510,290,185) |
|
Net increase (decrease) in net assets resulting from share transactions |
(192,763,259) |
199,334,056 |
|
Redemption fees |
30,612 |
79,273 |
|
Total increase (decrease) in net assets |
(148,742,875) |
420,837,690 |
|
Net Assets |
|
|
|
Beginning of period |
1,063,920,096 |
643,082,406 |
|
End of period (including undistributed net investment income of $1,012,540 and undistributed net investment income of $261,980, respectively) |
$ 915,177,221 |
$ 1,063,920,096 |
|
Other Information Shares |
|
|
|
Sold |
2,328,758 |
8,529,294 |
|
Issued in reinvestment of distributions |
847,929 |
297,691 |
|
Redeemed |
(5,604,901) |
(6,448,824) |
|
Net increase (decrease) |
(2,428,214) |
2,378,161 |
Financial Highlights
|
Years ended February 28, |
2015 |
2014 |
2013 |
2012J |
2011 |
|
Selected Per-Share Data |
|
|
|
|
|
|
Net asset value, beginning of period |
$ 88.40 |
$ 66.59 |
$ 57.54 |
$ 53.68 |
$ 45.11 |
|
Income from Investment Operations |
|
|
|
|
|
|
Net investment income (loss) B |
.31E |
.15F |
.52G |
.49H |
.09 |
|
Net realized and unrealized gain (loss) |
13.72 |
23.64 |
10.27 |
7.46 |
9.81 |
|
Total from investment operations |
14.03 |
23.79 |
10.79 |
7.95 |
9.90 |
|
Distributions from net investment income |
(.17) |
(.12) |
(.38) |
(.34) |
(.01) |
|
Distributions from net realized gain |
(7.01) |
(1.86) |
(1.36) |
(3.76) |
(1.33) |
|
Total distributions |
(7.17)L |
(1.99)M |
(1.75)N |
(4.10) |
(1.34) |
|
Redemption fees added to paid in capitalB |
-K |
.01 |
.01 |
.01 |
.01 |
|
Net asset value, end of period |
$ 95.26 |
$ 88.40 |
$ 66.59 |
$ 57.54 |
$ 53.68 |
|
Total ReturnA |
17.29% |
35.82% |
18.98% |
15.70% |
22.24% |
|
Ratios to Average Net AssetsC, I |
|
|
|
|
|
|
Expenses before reductions |
.81% |
.83% |
.86% |
.90% |
.93% |
|
Expenses net of fee waivers, if any |
.81% |
.83% |
.86% |
.90% |
.93% |
|
Expenses net of all reductions |
.81% |
.82% |
.84% |
.88% |
.93% |
|
Net investment income (loss) |
.36%E |
.18%F |
.83%G |
.93%H |
.18% |
|
Supplemental Data |
|
|
|
|
|
|
Net assets, end of period (000 omitted) |
$ 915,177 |
$ 1,063,920 |
$ 643,082 |
$ 344,743 |
$ 167,094 |
|
Portfolio turnover rateD |
31% |
72% |
119% |
217% |
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 $.13 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .22%.
F 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 .08%.
G Investment income per share reflects a large, non-recurring dividend which amounted to $.19 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .53%.
H 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%.
I Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or 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.
J For the year ended February 29.
K Amount represents less than $.01 per share.
L Total distributions of $7.17 per share is comprised of distributions from net investment income of $.166 and distributions from net realized gain of $7.006 per share.
M Total distributions of $1.99 per share is comprised of distributions from net investment income of $.124 and distributions from net realized gain of $1.861 per share.
N Total distributions of $1.75 per share is comprised of distributions from net investment income of $.383 and distributions from net realized gain of $1.364 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended February 28, 2015
1. Organization.
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. Share transactions on the Statement of Changes in Net Assets may contain exchanges between funds.
2. Investments in Fidelity Central Funds.
The Funds invest in Fidelity Central Funds, which are open-end investment companies generally available only to other investment companies and accounts managed by the investment adviser and its affiliates. The Funds' Schedules of Investments list each of the Fidelity Central Funds held as of period end, if any, as an investment of each Fund, but do not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, each Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of the investment adviser. Annualized expenses of the Money Market Central Funds as of their most recent shareholder report date are less than .01%.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) website at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Funds' Report of Independent Registered Public Accounting Firm, are available on the SEC website or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Funds:
Investment Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Board of Trustees (the Board) has delegated the day to day responsibility for the valuation of each Fund's investments to the Fidelity SelectCo, LLC (SelectCo) Fair Value Committee (the Committee). In accordance with valuation policies and procedures approved by the Board, each Fund attempts to obtain prices from one or more third party pricing vendors or brokers to value its investments. When current market prices, quotations or currency exchange rates are not readily available or reliable, investments will be fair valued in good faith by the Committee, in accordance with procedures adopted by the Board. Factors used in determining fair value vary by investment type and may include market or investment specific events, changes in interest rates and credit quality. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The Committee oversees each Fund's valuation policies and procedures and reports to the Board on the Committee's activities and fair value determinations. The Board monitors the appropriateness of the procedures used in valuing each Fund's investments and ratifies the fair value determinations of the Committee.
Each Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the Fund's own assumptions based on the best information available)
Valuation techniques used to value each Fund's investments by major category are as follows:
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by a third party pricing vendor on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-Traded Funds (ETFs) and certain indexes as well as quoted prices for similar securities may be used and would be categorized as Level 2 in the hierarchy. Utilizing these techniques may result in transfers between Level 1 and Level 2. For equity securities, including restricted securities, where observable inputs are limited, assumptions about market activity and risk are used and these securities may be categorized as Level 3 in the hierarchy. Equity securities, including restricted securities, for which observable inputs are not available are valued using alternate valuation approaches, including the market
Annual Report
3. Significant Accounting Policies - continued
Investment Valuation - continued
approach and the income approach and are categorized as Level 3 in the hierarchy. The market approach generally consists of using comparable market transactions while the income approach generally consists of using the net present value of estimated future cash flows, adjusted as appropriate for liquidity, credit, market and/or other risk factors.
Debt securities, including restricted securities, are valued based on evaluated prices received from third party pricing vendors or from brokers who make markets in such securities. Corporate bonds are valued by pricing vendors who utilize matrix pricing which considers yield or price of bonds of comparable quality, coupon, maturity and type or by broker-supplied prices. When independent prices are unavailable or unreliable, debt securities may be valued utilizing pricing methodologies which consider similar factors that would be used by third party pricing vendors. Debt securities are generally categorized as Level 2 in the hierarchy but may be Level 3 depending on the circumstances.
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value (NAV) each business day and are categorized as Level 1 in the hierarchy.
The following provides information on Level 3 securities held by the Construction and Housing Portfolio that were valued at period end based on unobservable inputs. These amounts exclude valuations provided by a broker.
|
Asset Type |
Fair Value at 02/28/15 |
Valuation Technique(s) |
Unobservable Input |
Amount or Range / |
Impact to Valuation |
|
Equities |
$ 6,961,040 |
Market comparable |
P/E multiple |
15.4 |
Increase |
|
|
|
|
Discount for lack of marketability |
15.0% |
Decrease |
* Represents the expected directional change in the fair value of the Level 3 investments that would result from an increase in the corresponding input. A decrease to the unobservable input would have the opposite effect. Significant changes in these inputs could result in significantly higher or lower fair value measurements.
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level, as of February 28, 2015, including information on transfers between Levels 1 and 2, as well as a roll forward of Level 3 investments, is included at the end of each applicable Fund's Schedule of Investments.
Foreign Currency. The Funds may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rates at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Funds' investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Funds are informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Income and capital gain distributions from Fidelity Central Funds, if any, are recorded on the ex-dividend date. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. Subsequent to ex-dividend date the Funds determine the components of these distributions, based upon receipt of tax filings or other correspondence relating to the underlying investment. Large, non-recurring dividends recognized by the Funds are presented separately on the Statement of Operations as "Special Dividends" and the impact of these dividends is presented in the Financial Highlights. Interest income is accrued as earned and includes coupon interest and amortization of premium and accretion of discount on debt securities as applicable. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders. Each year, each Fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for U.S. Federal income taxes is required. As of February 28, 2015, each Fund did not have any unrecognized tax benefits in the financial statements; nor is each Fund aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. Each Fund files a U.S. federal tax return, in addition to state and local tax returns as required. Each Fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction. Foreign taxes are provided for based on each Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests. Consumer Discretionary 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, the Funds claimed a portion of the payment to redeeming shareholders as a distribution for income tax purposes.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Capital accounts are not adjusted for temporary book-tax differences which will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, partnerships, deferred trustees compensation, redemption in-kind, 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 |
$ 97,307,131 |
$ 49,200,246 |
$ (963,759) |
$ 48,236,487 |
|
Construction and Housing Portfolio |
311,801,663 |
131,665,038 |
(3,337,286) |
128,327,752 |
|
Consumer Discretionary Portfolio |
957,293,913 |
180,530,068 |
(20,078,548) |
160,451,520 |
|
Leisure Portfolio |
283,685,292 |
173,087,041 |
(6,727,289) |
166,359,752 |
|
Multimedia Portfolio |
490,472,611 |
332,826,803 |
(4,690,220) |
328,136,583 |
|
Retailing Portfolio |
580,474,615 |
380,295,842 |
(13,731,984) |
366,563,858 |
The tax-based components of distributable earnings as of period end were as follows for each Fund:
|
|
Undistributed |
Undistributed |
Net unrealized |
|
Automotive Portfolio |
$ 176,508 |
$ 6,311,469 |
$ 48,233,038 |
|
Construction and Housing Portfolio |
187,825 |
7,536,797 |
128,327,752 |
|
Consumer Discretionary Portfolio |
893,672 |
22,207,031 |
160,448,457 |
|
Leisure Portfolio |
1,066,254 |
6,764,171 |
166,359,498 |
|
Multimedia Portfolio |
171,846 |
15,035,478 |
328,136,583 |
|
Retailing Portfolio |
1,012,801 |
11,152,070 |
366,560,107 |
The tax character of distributions paid was as follows:
|
February 28, 2015 |
|
|
|
|
|
Ordinary Income |
Long-term |
Total |
|
Automotive Portfolio |
$ 4,645,027 |
$ 28,870,062 |
$ 33,515,089 |
|
Construction and Housing Portfolio |
1,765,360 |
39,110,787 |
40,876,147 |
|
Consumer Discretionary Portfolio |
13,853,843 |
53,661,451 |
67,515,294 |
|
Leisure Portfolio |
10,541,206 |
27,579,440 |
38,120,646 |
|
Multimedia Portfolio |
5,165,039 |
67,296,468 |
72,461,507 |
|
Retailing Portfolio |
23,417,783 |
48,626,538 |
72,044,321 |
Annual Report
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
|
February 28, 2014 |
|
|
|
|
|
Ordinary Income |
Long-term |
Total |
|
Automotive Portfolio |
$ 885,596 |
$ 4,386,096 |
$ 5,271,692 |
|
Construction and Housing Portfolio |
6,268,026 |
26,831,104 |
33,099,130 |
|
Consumer Discretionary Portfolio |
21,825,438 |
26,576,301 |
48,401,739 |
|
Leisure Portfolio |
15,699,008 |
21,524,989 |
37,223,997 |
|
Multimedia Portfolio |
12,876,180 |
16,936,016 |
29,812,196 |
|
Retailing Portfolio |
11,057,234 |
15,267,515 |
26,324,749 |
Trading (Redemption) Fees. Shares held by investors in the Funds less than 30 days may be subject to a redemption fee equal to .75% of the NAV of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Funds and accounted for as an addition to paid in capital.
Restricted Securities. The Funds may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities is included at the end of each applicable Fund's Schedule of Investments.
New Accounting Pronouncement. In June 2014, the Financial Accounting Standards Board issued Accounting Standard Update No. 2014-11, Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures (the Update). The Update amends the accounting for certain repurchase agreements and expands disclosure requirements for reverse repurchase agreements, securities lending and other similar transactions. The disclosure requirements are effective for annual and interim reporting periods beginning after December 15, 2014. Management is currently evaluating the impact of the Update on the Funds' financial statements and related disclosures.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities and in-kind transactions, are noted in the table below.
|
|
Purchases ($) |
Sales ($) |
|
Automotive Portfolio |
112,495,370 |
191,771,966 |
|
Construction and Housing Portfolio |
244,018,275 |
260,901,891 |
|
Consumer Discretionary Portfolio |
1,403,883,551 |
915,071,937 |
|
Leisure Portfolio |
148,654,683 |
207,742,847 |
|
Multimedia Portfolio |
475,867,042 |
750,829,759 |
|
Retailing Portfolio |
261,557,978 |
542,679,653 |
5. Fees and Other Transactions with Affiliates.
Management Fee. Fidelity SelectCo, LLC (the investment adviser) and its affiliates provide the Funds with investment management related services for which the Funds pay a monthly management fee. The management fee is the sum of an individual fund fee rate and an annualized group fee rate. The individual fund fee rate is applied to each Fund's average net assets. The group fee rate is based upon the average net assets of all the mutual funds advised by Fidelity Management & Research Company (FMR) and the investment adviser. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the reporting period, each Fund's annual management fee rate expressed as a percentage of each Fund's average net assets was as follows.
|
|
Individual Rate |
Group Rate |
Total |
|
Automotive Portfolio |
.30% |
.25% |
.55% |
|
Construction and Housing Portfolio |
.30% |
.25% |
.55% |
|
Consumer Discretionary Portfolio |
.30% |
.25% |
.55% |
|
Leisure Portfolio |
.30% |
.25% |
.55% |
|
Multimedia Portfolio |
.30% |
.25% |
.55% |
|
Retailing Portfolio |
.30% |
.25% |
.55% |
Annual Report
Notes to Financial Statements - continued
5. Fees and Other Transactions with Affiliates - continued
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of the investment adviser, is the 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 |
.20% |
|
Construction and Housing Portfolio |
.20% |
|
Consumer Discretionary Portfolio |
.19% |
|
Leisure Portfolio |
.19% |
|
Multimedia Portfolio |
.21% |
|
Retailing Portfolio |
.20% |
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of the investment adviser, maintains each Fund's accounting records. The accounting fee is based on the level of average net assets for each month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. Certain Funds placed a portion of their portfolio transactions with brokerage firms which are affiliates of the investment adviser. Brokerage commissions are included in net realized gain (loss) and change in net unrealized appreciation (depreciation) in the Statement of Operations. The commissions paid to these affiliated firms were as follows:
|
|
Amount |
|
Automotive Portfolio |
$ 3,839 |
|
Construction and Housing Portfolio |
18,855 |
|
Consumer Discretionary Portfolio |
21,563 |
|
Leisure Portfolio |
5,499 |
|
Multimedia Portfolio |
10,101 |
|
Retailing Portfolio |
4,258 |
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Funds, along with other registered investment companies having management contracts with FMR or other affiliated entities of FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. Each applicable fund's activity in this program during the period for which loans were outstanding was as follows:
|
|
Borrower |
Average |
Weighted Average |
Interest |
|
Automotive Portfolio |
Borrower |
$ 4,282,000 |
.34% |
$ 82 |
|
Leisure Portfolio |
Borrower |
11,319,917 |
.32% |
1,208 |
|
Multimedia Portfolio |
Borrower |
9,835,500 |
.33% |
4,281 |
|
Retailing Portfolio |
Borrower |
4,725,500 |
.32% |
914 |
Redemptions In-Kind. During the period, shares of the Funds held by affiliated entities were redeemed in-kind for cash and investments. The net realized gain on investments delivered through in-kind redemptions is included in the accompanying Statement of Operations. The amount of in-kind redemptions is included in share transactions in the accompanying Statement of Changes in Net Assets. The Funds recognized no gain or loss for federal income tax purposes.
Details of these transactions with the related gain (loss) for the Funds are presented in the accompanying table:
|
|
Value of cash |
Net Realized |
Shares |
|
Consumer Discretionary Portfolio |
$ 108,914,186 |
$ 21,216,555 |
3,481,325 |
|
Leisure Portfolio |
105,518,036 |
60,205,269 |
800,653 |
Other. During the period, the investment adviser reimbursed the Construction and Housing Portfolio for certain losses in the amount of $1,217.
Annual Report
6. Committed Line of Credit.
Certain Funds participate with other funds managed by the investment adviser or an affiliate in a $4.25 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The participating funds have agreed to pay commitment fees on their pro-rata portion of the line of credit, which are reflected in Miscellaneous expenses on the Statement of Operations, and are as follows:
|
Automotive Portfolio |
$ 291 |
|
Construction and Housing Portfolio |
533 |
|
Consumer Discretionary Portfolio |
1,157 |
|
Leisure Portfolio |
761 |
|
Multimedia Portfolio |
1,378 |
|
Retailing Portfolio |
1,388 |
During the period, the Funds did not borrow on this line of credit.
7. Security Lending.
Certain Funds lend portfolio securities through a lending agent from time to time in order to earn additional income. On the settlement date of the loan, each applicable Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Funds and any additional required collateral is delivered to the Funds on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, the Funds may apply collateral received from the borrower against the obligation. The Funds may experience delays and costs in recovering the securities loaned. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on each applicable Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented on each applicable Fund's Statement of Operations as a component of income from Fidelity Central Funds.
|
|
Total Security |
|
Automotive Portfolio |
$ 89,493 |
|
Construction and Housing Portfolio |
41,059 |
|
Consumer Discretionary Portfolio |
85,080 |
|
Leisure Portfolio |
21,369 |
|
Multimedia Portfolio |
411,448 |
|
Retailing Portfolio |
256,656 |
8. Bank Borrowings.
Each Fund is permitted to have bank borrowings for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity requirements. Each Fund has established borrowing arrangements with certain banks. The interest rate on the borrowings is the bank's base rate, as revised from time to time. At period end, there were no bank borrowings outstanding. Each applicable Fund's activity in this program during the period for which loans were outstanding was as follows:
|
|
Average |
Weighted Average |
Interest |
|
Multimedia Portfolio |
$ 4,628,389 |
.60% |
$ 1,387 |
|
Retailing Portfolio |
7,649,000 |
.60% |
127 |
Annual Report
Notes to Financial Statements - continued
9. Expense Reductions.
Commissions paid to certain brokers with whom the investment adviser, or its affiliates, places trades on behalf of Certain Funds include an amount in addition to trade execution, which may be rebated back to the Funds to offset certain expenses. All of the applicable expense reductions are noted in the table below.
|
|
Brokerage Service |
|
|
|
|
Construction and Housing Portfolio |
$ 8,603 |
|
Consumer Discretionary Portfolio |
10,045 |
In addition, during the period the following Funds were reimbursed by the investment adviser for a portion of operating expenses:
|
|
Amount |
|
Automotive Portfolio |
$ 751 |
|
Construction and Housing Portfolio |
999 |
|
Consumer Discretionary Portfolio |
641 |
|
Leisure Portfolio |
1,318 |
|
Multimedia Portfolio |
1,888 |
|
Retailing Portfolio |
2,439 |
10. Other.
The Funds' organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Funds. In the normal course of business, the Funds may also enter into contracts that provide general indemnifications. The Funds' maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Funds. The risk of material loss from such claims is considered remote.
At the end of the period, the following mutual funds managed by the investment adviser or its affiliates were the owners of record of 10% or more of the total outstanding shares of the following Funds.
|
|
VIP |
VIP |
Strategic Advisers |
|
Automotive Portfolio |
- |
10% |
- |
|
Construction and Housing Portfolio |
- |
14% |
- |
|
Consumer Discretionary Portfolio |
15% |
25% |
33% |
Mutual funds managed by the investment adviser or its affiliates, in aggregate, were the owners of record of more than 20% of the total outstanding shares of the following Funds.
|
|
% of shares held |
|
Automotive Portfolio |
20% |
|
Construction and Housing Portfolio |
27% |
|
Consumer Discretionary Portfolio |
82% |
Annual Report
Report of Independent Registered Public Accounting Firm
To the Trustees of Fidelity Select Portfolios and the Shareholders of Automotive Portfolio, Construction and Housing Portfolio, Consumer Discretionary Portfolio, Leisure Portfolio, Multimedia Portfolio and Retailing Portfolio:
In our opinion, the accompanying statements of assets and liabilities, including the schedules of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial positions of Automotive Portfolio, Construction and Housing Portfolio, Consumer Discretionary Portfolio, Leisure Portfolio, Multimedia Portfolio and Retailing Portfolio (funds of Fidelity Select Portfolios) at February 28, 2015, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fidelity Select Portfolios' management Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at February 28, 2015 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 24, 2015
Annual Report
Trustees and Officers
The Trustees and officers of the trust and funds, as applicable, are listed below. The Board of Trustees governs each fund and is responsible for protecting the interests of shareholders. The Trustees are experienced executives who meet periodically throughout the year to oversee each fund's activities, review contractual arrangements with companies that provide services to each fund, oversee management of the risks associated with such activities and contractual arrangements, and review each fund's performance. Each of the Trustees oversees 75 funds.
The Trustees hold office without limit in time except that (a) any Trustee may resign; (b) any Trustee may be removed by written instrument, signed by at least two-thirds of the number of Trustees prior to such removal; (c) any Trustee who requests to be retired or who has become incapacitated by illness or injury may be retired by written instrument signed by a majority of the other Trustees; and (d) any Trustee may be removed at any special meeting of shareholders by a two-thirds vote of the outstanding voting securities of the trust. The officers hold office without limit in time, except that any officer may resign or may be removed by a vote of a majority of the Trustees at any regular meeting or any special meeting of the Trustees. Except as indicated, each individual has held the office shown or other offices in the same company for the past five years.
Experience, Skills, Attributes, and Qualifications of the Funds' Trustees. The Governance and Nominating Committee has adopted a statement of policy that describes the experience, qualifications, attributes, and skills that are necessary and desirable for potential Independent Trustee candidates (Statement of Policy). The Board believes that each Trustee satisfied at the time he or she was initially elected or appointed a Trustee, and continues to satisfy, the standards contemplated by the Statement of Policy. The Governance and Nominating Committee also engages professional search firms to help identify potential Independent Trustee candidates who have the experience, qualifications, attributes, and skills consistent with the Statement of Policy. From time to time, additional criteria based on the composition and skills of the current Independent Trustees, as well as experience or skills that may be appropriate in light of future changes to board composition, business conditions, and regulatory or other developments, have also been considered by the professional search firms and the Governance and Nominating Committee. In addition, the Board takes into account the Trustees' commitment and participation in Board and committee meetings, as well as their leadership of standing and ad hoc committees throughout their tenure.
In determining that a particular Trustee was and continues to be qualified to serve as a Trustee, the Board has considered a variety of criteria, none of which, in isolation, was controlling. The Board believes that, collectively, the Trustees have balanced and diverse experience, qualifications, attributes, and skills, which allow the Board to operate effectively in governing each fund and protecting the interests of shareholders. Information about the specific experience, skills, attributes, and qualifications of each Trustee, which in each case led to the Board's conclusion that the Trustee should serve (or continue to serve) as a trustee of the funds, is provided below.
Board Structure and Oversight Function. Brian B. Hogan is an interested person (as defined in the 1940 Act) and currently serves as Chairman. The Trustees have determined that an interested Chairman is appropriate and benefits shareholders because an interested Chairman has a personal and professional stake in the quality and continuity of services provided to the funds. Independent Trustees exercise their informed business judgment to appoint an individual of their choosing to serve as Chairman, regardless of whether the Trustee happens to be independent or a member of management. The Independent Trustees have determined that they can act independently and effectively without having an Independent Trustee serve as Chairman and that a key structural component for assuring that they are in a position to do so is for the Independent Trustees to constitute a substantial majority for the Board. The Independent Trustees also regularly meet in executive session. Michael E. Wiley serves as Chairman of the Independent Trustees and as such (i) acts as a liaison between the Independent Trustees and management with respect to matters important to the Independent Trustees and (ii) with management prepares agendas for Board meetings.
Fidelity funds are overseen by different Boards of Trustees. The funds' Board oversees Fidelity's sector portfolios. Other Boards oversee Fidelity's equity and high income funds, and Fidelity's investment grade bond, money market, and asset allocation funds. The use of separate Boards, each with its own committee structure, allows the Trustees of each group of Fidelity funds to focus on the unique issues of the funds they oversee, including common research, investment, and operational issues. On occasion, the separate Boards establish joint committees to address issues of overlapping consequences for the Fidelity funds overseen by each Board.
The Trustees operate using a system of committees to facilitate the timely and efficient consideration of all matters of importance to the Trustees, each fund, and fund shareholders and to facilitate compliance with legal and regulatory requirements and oversight of the funds' activities and associated risks. The Board, acting through its committees, has charged SelectCo and its affiliates with (i) identifying events or circumstances the occurrence of which could have demonstrably adverse effects on the funds' business and/or reputation; (ii) implementing processes and controls to lessen the possibility that such events or circumstances occur or to mitigate the effects of such events or circumstances if they do occur; and (iii) creating and maintaining a system designed to evaluate continuously business and market conditions in order to facilitate the identification and implementation processes described in (i) and (ii) above. Because the day-to-day operations and activities of the funds are carried out by or through SelectCo, its affiliates, and other service providers, the funds' exposure to risks is mitigated but not eliminated by the processes overseen by the Trustees. While each of the Board's committees has responsibility for overseeing different aspects of the funds' activities, oversight is exercised primarily through the Operations and Audit Committees. Appropriate personnel, including but not limited to the funds' Chief Compliance Officer (CCO), SelectCo's internal auditor, the independent accountants, the funds' Treasurer and portfolio management personnel, make periodic reports to the Board's committees, as appropriate. The responsibilities of each standing committee, including their oversight responsibilities, are described further under "Standing Committees of the Funds' Trustees."
The funds' Statement of Additional Information (SAI) includes more information about the Trustees. To request a free copy, call Fidelity at 1-800-544-8544.
Annual Report
Interested Trustee*:
Correspondence intended for the Trustee who is an interested person may be sent to Fidelity Investments, 245 Summer Street, Boston, Massachusetts 02210.
|
Name, Year of Birth; Principal Occupations and Other Relevant Experience+ |
|
|
Brian B. Hogan (1964) |
|
|
Year of Election or Appointment: 2014 Trustee Chairman of the Board of Trustees |
|
|
|
Mr. Hogan also serves as Trustee or Vice President of other funds. Mr. Hogan serves as a Director of Fidelity SelectCo, LLC (2014-present) and President of FMR's Equity Division (2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager. |
* Trustee has been determined to be an "Interested Trustee" by virtue of, among other things, his affiliation with the trust or various entities under common control with SelectCo.
+ The information above includes the Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to the Trustee's qualifications to serve as a Trustee, which led to the conclusion that the Trustee should serve as a Trustee for each fund.
Independent Trustees:
Correspondence intended for each Independent Trustee (that is, the Trustees other than the Interested Trustee) may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235.
|
Name, Year of Birth; Principal Occupations and Other Relevant Experience+ |
|
|
David A. Rosow (1942) |
|
|
Year of Election or Appointment: 2013 Trustee |
|
|
|
Mr. Rosow also serves as Trustee of other Fidelity funds. Prior to his retirement in 2006, Mr. Rosow was the Chief Executive Officer, owner and operator of a number of private companies, which encompassed oil refining, drilling and marketing of petroleum products (including specialty petroleum products), the recreation industry, and real estate development. Previously, Mr. Rosow served as Lead Director and Chairman of the Audit Committee of Hudson United Bancorp (1996-2006), Chairman of the Board of Westport Bank and Trust (1992-1996), and as a Director of TD Banknorth (2006-2007). In addition, Mr. Rosow served as a member (2008-2014) and President (2009-2014) of the Town Council of Palm Beach, Florida. Mr. Rosow also served as a Member of the Advisory Board of other Fidelity funds (2012-2013). |
|
Garnett A. Smith (1947) |
|
|
Year of Election or Appointment: 2013 Trustee |
|
|
|
Mr. Smith also serves as Trustee of other Fidelity funds. Prior to Mr. Smith's retirement, he served as Chairman and Chief Executive Officer of Inbrand Corp. (manufacturer of personal absorbent products, 1990-1997). He also served as President (1986-1990) of Inbrand Corp. Prior to his employment with Inbrand Corp., he was employed by a retail fabric chain and North Carolina National Bank. In addition, Mr. Smith served as a Member of the Advisory Board of other Fidelity funds (2012-2013) and as a board member of the Jackson Hole Land Trust (2009-2012). |
|
Michael E. Wiley (1950) |
|
|
Year of Election or Appointment: 2008 Trustee Chairman of the Independent Trustees |
|
|
|
Mr. Wiley also serves as Trustee of other Fidelity funds. Mr. Wiley serves as a Director of Tesoro Corporation (independent oil refiner and marketer, 2005-present), and a Director of Bill Barrett Corporation (exploration and production, 2005-present). In addition, Mr. Wiley also serves as a Director of Post Oak Bank (privately-held bank, 2004-present). Previously, Mr. Wiley served as a Trustee of other Fidelity funds (2008-2013), as a Director of Asia Pacific Exploration Consolidated (international oil and gas exploration and production, 2008-2013), as a member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-2010), as a Senior Energy Advisor of Katzenbach Partners, LLC (consulting, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production, 2001-2005). |
Annual Report
Trustees and Officers - continued
+ The information above includes each Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to each Trustee's qualifications to serve as a Trustee, which led to the conclusion that each Trustee should serve as a Trustee for each fund.
Officers:
Except for Anthony R. Rochte, correspondence intended for each officer may be sent to Fidelity Investments, 245 Summer Street, Boston, Massachusetts 02210. Correspondence intended for Mr. Rochte may be sent to SelectCo, 1225 17th Street, Denver, Colorado 80202-5541. Officers appear below in alphabetical order.
|
Name, Year of Birth; Principal Occupation |
|
|
Christopher S. Bartel (1971) |
|
|
Year of Election or Appointment: 2009 Vice President |
|
|
|
Mr. Bartel also serves as Vice President of other funds. Mr. Bartel serves as a Director, President, and Chief Executive Officer of Fidelity Management & Research (Japan) Limited (2012-present), a Director of Fidelity Management & Research (Hong Kong) (2012-present), and Senior Vice President of Global Equity Research (2010-present). Previously, Mr. Bartel served as Senior Vice President of Equity Research (2009-2010), Managing Director of Research (2006-2009), and an analyst and portfolio manager (2000-2006). |
|
Elizabeth Paige Baumann (1968) |
|
|
Year of Election or Appointment: 2012 Anti-Money Laundering (AML) Officer |
|
|
|
Ms. Baumann also serves as AML Officer of other funds. She is Chief AML Officer of FMR LLC (2012-present) and is an employee of Fidelity Investments. Previously, Ms. Baumann served as Vice President and Deputy Anti-Money Laundering Officer (2007-2012). |
|
Marc Bryant (1966) |
|
|
Year of Election or Appointment: 2013 Secretary |
|
|
|
Mr. Bryant also serves as an officer of other funds. He is Senior Vice President and Deputy General Counsel of FMR LLC. Previously, Mr. Bryant served as Secretary and Chief Legal Officer of Fidelity Rutland Square Trust II (2010-2014). Prior to joining Fidelity Investments, Mr. Bryant served as a Senior Vice President and the Head of Global Retail Legal for AllianceBernstein L.P. (2006-2010), and as the General Counsel for ProFund Advisors LLC (2001-2006). |
|
William C. Coffey (1969) |
|
|
Year of Election or Appointment: 2009 Assistant Secretary |
|
|
|
Mr. Coffey also serves as Assistant Secretary of other funds. He is Senior Vice President and Deputy General Counsel of FMR LLC (2010-present), and is an employee of Fidelity Investments. Previously, Mr. Coffey served as Vice President and Associate General Counsel of FMR LLC (2005-2009). |
|
Jonathan Davis (1968) |
|
|
Year of Election or Appointment: 2010 Assistant Treasurer |
|
|
|
Mr. Davis also serves as Assistant Treasurer of other funds. Mr. Davis is an employee of Fidelity Investments. Previously, Mr. Davis served as Vice President and Associate General Counsel of FMR LLC (2003-2010). |
|
Adrien E. Deberghes (1967) |
|
|
Year of Election or Appointment: 2013 President and Treasurer |
|
|
|
Mr. Deberghes also serves as an officer of other funds. He is an employee of Fidelity Investments (2008-present). Prior to joining Fidelity Investments, Mr. Deberghes was Senior Vice President of Mutual Fund Administration at State Street Corporation (2007-2008), Senior Director of Mutual Fund Administration at Investors Bank & Trust (2005-2007), and Director of Finance for Dunkin' Brands (2000-2005). |
|
Stephanie J. Dorsey (1969) |
|
|
Year of Election or Appointment: 2010 Assistant Treasurer |
|
|
|
Ms. Dorsey also serves as an officer of other funds. She is an employee of Fidelity Investments (2008-present) and has served in other fund officer roles. Prior to joining Fidelity Investments, Ms. Dorsey served as Treasurer (2004-2008) of the JPMorgan Mutual Funds and Vice President (2004-2008) of JPMorgan Chase Bank. |
|
Howard J. Galligan III (1966) |
|
|
Year of Election or Appointment: 2014 Chief Financial Officer |
|
|
|
Mr. Galligan also serves as Chief Financial Officer of other funds. Mr. Galligan serves as President of Fidelity Pricing and Cash Management Services (FPCMS) (2014-present) and as a Director of Strategic Advisers, Inc. (2008-present). Previously, Mr. Galligan served as Chief Administrative Officer of Asset Management (2011-2014) and Chief Operating Officer and Senior Vice President of Investment Support for Strategic Advisers, Inc. (2003-2011). |
|
James D. Gryglewicz (1972) |
|
|
Year of Election or Appointment: 2014 Chief Compliance Officer |
|
|
|
Mr. Gryglewicz also serves as Chief Compliance Officer of other funds. Mr. Gryglewicz serves as Compliance Officer of Fidelity SelectCo, LLC (2014-present), Vice President of Asset Management Compliance (2009-present), and is an employee of Fidelity Investments (2004-present). |
|
Brian B. Hogan (1964) |
|
|
Year of Election or Appointment: 2009 Vice President |
|
|
|
Mr. Hogan also serves as Trustee or Vice President of other funds. Mr. Hogan serves as a Director of Fidelity SelectCo, LLC (2014-present) and President of FMR's Equity Division (2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager. |
|
Chris Maher (1972) |
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Year of Election or Appointment: 2013 Assistant Treasurer |
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|
Mr. Maher serves as Assistant Treasurer of other funds. Mr. Maher is Vice President of Valuation Oversight and is an employee of Fidelity Investments. Previously, Mr. Maher served as Vice President of Asset Management Compliance (2013), Vice President of FMR's Program Management Group (2010-2013), and Vice President of Valuation Oversight (2008-2010). |
|
Kenneth B. Robins (1969) |
|
|
Year of Election or Appointment: 2013 Deputy Treasurer |
|
|
|
Mr. Robins also serves as an officer of other funds. Mr. Robins serves as Executive Vice President of Fidelity Investments Money Management, Inc. (FIMM) (2013-present) and is an employee of Fidelity Investments (2004-present). Previously, Mr. Robins served in other fund officer roles. |
|
Anthony R. Rochte (1968) |
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|
Year of Election or Appointment: 2013 Vice President |
|
|
|
Mr. Rochte also serves as Vice President of other funds. Mr. Rochte serves as President of Fidelity SelectCo, LLC (2012-present) and is an employee of Fidelity Investments (2012-present). Prior to joining Fidelity Investments, Mr. Rochte served as Senior Managing Director and head of State Street Global Advisors' North American Intermediary Business Group (2006-2012). |
|
Stacie M. Smith (1974) |
|
|
Year of Election or Appointment: 2013 Assistant Treasurer |
|
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Ms. Smith also serves as an officer of other funds. She is an employee of Fidelity Investments (2009-present) and has served in other fund officer roles. Prior to joining Fidelity Investments, Ms. Smith served as Senior Audit Manager of Ernst & Young LLP (1996-2009). |
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Renee Stagnone (1975) |
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Year of Election or Appointment: 2013 Deputy Treasurer |
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Ms. Stagnone also serves as Deputy Treasurer of other funds. Ms. Stagnone is an employee of Fidelity Investments. |
|
Joseph F. Zambello (1957) |
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Year of Election or Appointment: 2011 Deputy Treasurer |
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Mr. Zambello also serves as Deputy Treasurer of other funds. Mr. Zambello is an employee of Fidelity Investments. Previously, Mr. Zambello served as Vice President of FMR's Program Management Group (2009-2011) and Vice President of the Transfer Agent Oversight Group (2005-2009). |
Annual Report
Distributions (Unaudited)
The Board of Trustees of each fund voted to pay to shareholders of record at the opening of business on record date, the following distributions per share derived from capital gains realized from sales of portfolio securities, and dividends derived from net investment income:
|
|
Pay Date |
Record Date |
Dividends |
Capital Gains |
|
Automotive Portfolio |
04/13/15 |
04/10/15 |
$0.065 |
$2.305 |
|
Construction and Housing Portfolio |
04/13/15 |
04/10/15 |
$0.024 |
$0.952 |
|
Consumer Discretionary Portfolio |
04/13/15 |
04/10/15 |
$0.029 |
$0.717 |
|
Leisure Portfolio |
04/13/15 |
04/10/15 |
$0.175 |
$2.273 |
|
Multimedia Portfolio |
04/13/15 |
04/10/15 |
$0.018 |
$1.559 |
|
Retailing Portfolio |
04/13/15 |
04/10/15 |
$0.101 |
$1.103 |
The funds hereby designate as capital gain dividend the amounts noted below for the taxable year ended February 28, 2015, or, if subsequently determined to be different, the net capital gain of such year.
|
Automotive Portfolio |
$23,629,751 |
|
Construction and Housing Portfolio |
$34,762,701 |
|
Consumer Discretionary Portfolio |
$54,224,887 |
|
Leisure Portfolio |
$24,349,974 |
|
Multimedia Portfolio |
$82,508,519 |
|
Retailing Portfolio |
$38,697,524 |
A percentage of the dividends distributed during the fiscal year for the following funds qualifies for the dividends-received deduction for corporate shareholders:
|
|
April 2014 |
December 2014 |
|
Automotive Portfolio |
10% |
100% |
|
Construction and Housing Portfolio |
100% |
100% |
|
Consumer Discretionary Portfolio |
8% |
100% |
|
Leisure Portfolio |
32% |
100% |
|
Multimedia Portfolio |
27% |
100% |
|
Retailing Portfolio |
10% |
70% |
A percentage of the dividends distributed during the fiscal year for the following funds may be taken into account as a dividend for purposes of the maximum rate under section 1(h)(11) of the Internal Revenue Code.
|
|
April 2014 |
December 2014 |
|
Automotive Portfolio |
36% |
100% |
|
Construction and Housing Portfolio |
100% |
100% |
|
Consumer Discretionary Portfolio |
9% |
100% |
|
Leisure Portfolio |
32% |
100% |
|
Multimedia Portfolio |
16% |
100% |
|
Retailing Portfolio |
11% |
80% |
The funds will notify shareholders in January 2016 of amounts for use in preparing 2015 income tax returns.
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees
Automotive Portfolio
Construction and Housing Portfolio
Consumer Discretionary Portfolio
Leisure Portfolio
Multimedia Portfolio
Retailing Portfolio
Each year, the Board of Trustees, including the Independent Trustees (together, the Board), votes on the renewal of the management contract with Fidelity SelectCo, LLC (SelectCo), an affiliate of Fidelity Management & Research Company (FMR), and the sub-advisory agreements with affiliates of FMR (together, the Advisory Contracts) for each fund. The Board, assisted by the advice of fund counsel and Independent Trustees' counsel, requests and considers a broad range of information relevant to the renewal of the Advisory Contracts throughout the year.
The Board meets regularly and, at each of its meetings, covers an extensive agenda of topics and materials and considers factors that are relevant to its annual consideration of the renewal of each fund's Advisory Contracts, including the services and support provided to each fund and its shareholders. The Board has established four standing committees (Committees) - Operations, Audit, Fair Valuation, and Governance and Nominating - each composed of and chaired by Independent Trustees with varying backgrounds, to which the Board has assigned specific subject matter responsibilities in order to enhance effective decision-making by the Board. The Operations Committee, of which all of the Independent Trustees are members, meets regularly throughout the year and considers, among other matters, information specifically related to the annual consideration of the renewal of each fund's Advisory Contracts. The Board, acting directly and through its Committees, requests and receives information concerning the annual consideration of the renewal of each fund's Advisory Contracts. The Board also meets as needed to consider matters specifically related to the Board's annual consideration of the renewal of the Advisory Contracts. Members of the Board may also meet with trustees of other Fidelity funds through ad hoc joint committees to discuss certain matters relevant to all of the Fidelity funds.
At its January 2015 meeting, the Board, including the Independent Trustees, unanimously determined to renew each fund's Advisory Contracts. In reaching its determination, the Board considered all factors it believed relevant, including (i) the nature, extent, and quality of the services to be provided to each fund and its shareholders (including the investment performance of each fund); (ii) the competitiveness of each fund's management fee and total expense ratio relative to peer funds; (iii) the total costs of the services to be provided by and the profits to be realized by Fidelity from its relationship with each fund; (iv) the extent to which economies of scale exist and would be realized as each fund grows; and (v) whether fee levels reflect these economies of scale, if any, for the benefit of fund shareholders.
In considering whether to renew the Advisory Contracts for each fund, the Board reached a determination, with the assistance of fund counsel and Independent Trustees' counsel and through the exercise of its business judgment, that the renewal of the Advisory Contracts was in the best interests of each fund and its shareholders and that the compensation payable under the Advisory Contracts was fair and reasonable. The Board's decision to renew the Advisory Contracts was not based on any single factor, but rather was based on a comprehensive consideration of all the information provided to the Board at its meetings throughout the year. The Board, in reaching its determination to renew the Advisory Contracts, was aware that shareholders of each fund have a broad range of investment choices available to them, including a wide choice among funds offered by Fidelity's competitors, and that each fund's shareholders, who have the opportunity to review and weigh the disclosure provided by the fund in its prospectus and other public disclosures, have chosen to invest in that fund, which is part of the Fidelity family of funds.
Nature, Extent, and Quality of Services Provided. The Board considered the staffing of SelectCo and the sub-advisers (together with SelectCo, the Investment Advisers) as it relates to the funds, including the backgrounds of investment personnel of SelectCo, and also considered the funds' investment objectives, strategies, and related investment philosophies. The Independent Trustees also had discussions with senior management of Fidelity's investment operations and investment groups. The Board considered the structure of the portfolio manager compensation program and whether this structure provides appropriate incentives to act in the best interests of each fund. Additionally, the Board considered the portfolio managers' investments, if any, in the funds that they manage.
Resources Dedicated to Investment Management and Support Services. The Board reviewed the general qualifications and capabilities of the investment staff of the Investment Advisers, including its size, education, experience, and resources, as well as the Fidelity's approach to recruiting, training, managing, and compensating investment personnel. The Board noted that Fidelity has continued to increase the resources devoted to non-U.S. offices, including expansion of Fidelity's global investment organization. The Board also noted that Fidelity's analysts have extensive resources, tools and capabilities that allow them to conduct sophisticated quantitative and fundamental analysis, as well as credit analysis of issuers, counterparties and guarantors. Further, the Board believes that Fidelity's investment professionals have sufficient access to global information and data so as to provide competitive investment results over time, and that those professionals also have access to sophisticated tools that permit them to assess portfolio construction and risk and performance attribution characteristics continuously, as well as to transmit new information and research conclusions rapidly around the world. Additionally, in its deliberations, the Board considered Fidelity's trading, risk management, and compliance capabilities and resources, which are integral parts of the investment management process.
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees - continued
Shareholder and Administrative Services. The Board considered (i) the nature, extent, quality, and cost of advisory, administrative, and shareholder services performed by the Investment Advisers and their affiliates under the Advisory Contracts and under separate agreements covering transfer agency, pricing and bookkeeping, and securities lending services for each fund; (ii) the nature and extent of the supervision of third party service providers, principally custodians and subcustodians; and (iii) the resources devoted to, and the record of compliance with, each fund's compliance policies and procedures. The Board also reviewed the allocation of fund brokerage, including allocations to brokers affiliated with the Investment Advisers, the use of brokerage commissions to pay fund expenses, and the use of "soft" commission dollars to pay for research services.
The Board noted that the growth of fund assets over time across the complex allows Fidelity to reinvest in the development of services designed to enhance the value or convenience of the Fidelity funds as investment vehicles. These services include 24-hour access to account information and market information through telephone representatives and over the Internet, investor education materials and asset allocation tools, and the expanded availability of Fidelity Investor Centers.
Investment in a Large Fund Family. The Board considered the benefits to shareholders of investing in a Fidelity fund, including the benefits of investing in a fund that is part of a large family of funds offering a variety of investment disciplines and providing a large variety of mutual fund investor services. The Board noted that Fidelity had taken, or had made recommendations that resulted in the Fidelity funds taking, a number of actions over the previous year that benefited particular funds, including (i) continuing to dedicate additional resources to investment research and to the support of the senior management team that oversees asset management; (ii) continuing efforts to enhance Fidelity's global research capabilities; (iii) launching new funds and making other enhancements to meet client needs for income-oriented solutions; (iv) reducing fund expenses for certain index funds; (v) continuing to launch dedicated lower cost underlying funds to meet portfolio construction needs related to expanding underlying fund options for Fidelity funds of funds, specifically for the Freedom Fund product lines; (vi) rationalizing product lines and gaining increased efficiencies through fund mergers; (vii) launching sector-based exchange-traded funds and establishing SelectCo to manage sector-based funds and products; (viii) continuing to develop, acquire, and implement systems and technology to improve security and services to the funds and to increase efficiency; (ix) modifying the eligibility criteria for certain share classes to increase their marketability to a portion of the defined contribution plan market; (x) waiving redemption fees for certain qualified fund-of-fund and wrap programs and certain retirement plan transactions; and (xi) launching new Institutional Class shares of certain money market funds to attract and retain assets and to fill a gap in money market fund offerings.
Investment Performance. The Board considered whether each fund has operated in accordance with its investment objective, as well as its record of compliance with its investment restrictions and its performance history. The Board noted that there was a portfolio management change for Consumer Discretionary Portfolio, Leisure Portfolio, and Retailing Portfolio in June 2014, February 2014 and June 2014, respectively.
The Board took into account discussions with representatives of the Investment Advisers about fund investment performance that occur at Board meetings throughout the year. In this regard the Board noted that as part of regularly scheduled fund reviews and other reports to the Board on fund performance, the Board considers annualized return information for each fund, for different time periods, measured against a securities market index ("benchmark index"). In its evaluation of fund investment performance at meetings throughout the year, the Board gave particular attention to information indicating underperformance of certain Fidelity funds for specific time periods and discussed with the Investment Advisers the reasons for such underperformance. Multimedia Portfolio underperformed its benchmark for the one-, three-, and five-year periods ended May 31, 2014, and as a result, the Board will continue to discuss with SelectCo the steps it is taking to address the fund's performance.
In addition to reviewing absolute and relative fund performance, the Independent Trustees periodically consider the appropriateness of fund performance metrics in evaluating the results achieved. In general, the Independent Trustees believe that fund performance should be evaluated based on net performance (after fees and expenses) of both the highest performing and lowest performing classes, where applicable, compared to appropriate benchmark indices, over appropriate time periods that may include full market cycles, taking into account relevant factors including the following: general market conditions; issuer-specific information; tactical opportunities for investment; and fund cash flows and other factors. Depending on the circumstances, the Independent Trustees may be satisfied with a fund's performance notwithstanding that it lags its benchmark index for certain periods.
The Independent Trustees recognize that shareholders evaluate performance on a net basis over their own holding periods, for which one-, three-, and five-year periods are often used as a proxy. For this reason, the performance information reviewed by the Board also included net cumulative total return information for each fund and an appropriate benchmark index for the most recent one-, three-, and five-year periods ended June 30, 2014.
Based on its review, the Board concluded that the nature, extent, and quality of services provided to each fund under the Advisory Contracts should benefit the shareholders of each fund.
Competitiveness of Management Fee and Total Expense Ratio. The Board considered each fund's management fee and total expense ratio compared to "mapped groups" of competitive funds and classes created for the purpose of facilitating the Trustees' analysis of the competitiveness of management fees and total expenses. Fidelity creates "mapped groups" by combining similar Lipper investment objective categories that have comparable investment mandates. Combining Lipper investment objective categories aids the Board's management fee and total expense ratio comparisons by broadening the competitive group used for comparison and making the competitive group more inclusive.
Annual Report
Management Fee. The Board considered two proprietary management fee comparisons for the 12-month periods ended June 30 shown in the charts below. The group of Lipper funds used by the Board for management fee comparisons is referred to below as the "Total Mapped Group." The Total Mapped Group comparison focuses on a fund's standing in terms of gross management fees before expense reimbursements or caps relative to the total universe of funds with comparable investment mandates, regardless of whether their management fee structures also are comparable. Funds with comparable investment mandates offer exposure to similar types of securities. Funds with comparable management fee structures have similar management fee contractual arrangements (e.g., flat rate charged for advisory services, all-inclusive fee rate, etc.). "TMG %" represents the percentage of funds in the Total Mapped Group that had management fees that were lower than a fund's. For example, a hypothetical TMG % of 20% would mean that 80% of the funds in the Total Mapped Group had higher, and 20% had lower, management fees than a fund. The funds' actual TMG %s are in the charts below. The "Asset-Size Peer Group" (ASPG) comparison focuses on a fund's standing relative to a subset of non-Fidelity funds within the Total Mapped Group that are similar in size and management fee structure. For example, if a fund is in the first quartile of the ASPG, the fund's management fee ranks in the least expensive or lowest 25% of funds in the ASPG. The ASPG represents at least 15% of the funds in the Total Mapped Group with comparable asset size and management fee structures, subject to a minimum of 50 funds (or all funds in the Total Mapped Group if fewer than 50). Additional information, such as the ASPG quartile in which a fund's management fee rate ranked, is also included in the charts and considered by the Board.
Automotive Portfolio
Construction and Housing Portfolio
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees - continued
Consumer Discretionary Portfolio
Leisure Portfolio
Annual Report
Multimedia Portfolio
Retailing Portfolio
The Board noted that each fund's management fee rate ranked below the median of its Total Mapped Group and below the median of its ASPG for the 12-month period ended June 30, 2014.
Based on its review, the Board concluded that each fund's management fee is fair and reasonable in light of the services that each fund receives and the other factors considered.
Total Expense Ratio. In its review of each fund's total expense ratio, the Board considered the fund's management fee as well as other fund expenses, such as transfer agent fees, pricing and bookkeeping fees, and custodial, legal, and audit fees. The Board also noted that Fidelity may agree to waive fees and expenses from time to time, and the extent to which, if any, it has done so for the funds. As part of its review, the Board also considered the current and historical total expense ratios of each fund compared to competitive fund median expenses. Each fund is compared to those funds and classes in the Total Mapped Group (used by the Board for management fee comparisons) that have a similar sales load structure.
The Board noted that each fund's total expense ratio ranked below its competitive median for the 12-month period ended June 30, 2014.
Fees Charged to Other Fidelity Clients. The Board also considered Fidelity fee structures and other information with respect to clients of Fidelity, such as other funds advised or subadvised by Fidelity, pension plan clients, and other institutional clients.
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees - continued
Based on its review of total expense ratios and fees charged to other Fidelity clients, the Board concluded that each fund's total expense ratio was reasonable in light of the services that each fund and its shareholders receive and the other factors considered.
Costs of the Services and Profitability. The Board considered the revenues earned and the expenses incurred by Fidelity in conducting the business of developing, marketing, distributing, managing, administering and servicing each fund and servicing each fund's shareholders. The Board also considered the level of Fidelity's profits in respect of all the Fidelity funds.
On an annual basis, Fidelity presents to the Board information about the profitability of its relationship with each fund. Fidelity calculates profitability information for each fund, as well as aggregate profitability information for groups of Fidelity funds and all Fidelity funds, using a series of detailed revenue and cost allocation methodologies which originate with the books and records of Fidelity on which Fidelity's audited financial statements are based. The Audit Committee of the Board reviews any significant changes from the prior year's methodologies.
PricewaterhouseCoopers LLP (PwC), independent registered public accounting firm and auditor to Fidelity and certain Fidelity funds, has been engaged annually by the Board as part of the Board's assessment of the profitability analysis used by Fidelity. PwC's engagement includes the review and assessment of Fidelity's methodologies used in determining the revenues and expenses attributable to Fidelity's mutual fund business, and completion of agreed-upon procedures in respect of the mathematical accuracy of fund profitability and its conformity to established allocation methodologies. After considering PwC's reports issued under the engagement and information provided by Fidelity, the Board concluded that while other allocation methods may also be reasonable, Fidelity's profitability methodologies are reasonable in all material respects.
The Board also reviewed Fidelity's non-fund businesses and fall-out benefits related to the mutual fund business as well as cases where Fidelity's affiliates may benefit from or be related to the funds' business.
The Board considered the costs of the services provided by and the profits realized by Fidelity in connection with the operation of each fund and was satisfied that the profitability was not excessive.
Economies of Scale. The Board considered whether there have been economies of scale in respect of the management of the Fidelity funds, whether the Fidelity funds (including each fund) have appropriately benefited from any such economies of scale, and whether there is potential for realization of any further economies of scale. The Board considered the extent to which each fund will benefit from economies of scale as assets grow through increased services to the fund, through waivers or reimbursements, or through fee or expense ratio reductions. The Board also noted that in 2013, it and the boards of other Fidelity funds created an ad hoc committee (the Economies of Scale Committee) to analyze whether Fidelity attains economies of scale in respect of the management and servicing of the Fidelity funds, whether the Fidelity funds have appropriately benefited from such economies of scale, and whether there is potential for realization of any further economies of scale.
The Board recognized that each fund's management contract incorporates a "group fee" structure, which provides for lower group fee rates as total group assets increase, and for higher group fee rates as total group assets decrease (with "group assets" defined to include fund assets under SelectCo's management plus assets under FMR's management). SelectCo calculates the group fee rates based on a tiered asset "breakpoint" schedule that varies based on asset class. The Board considered that the group fee is designed to deliver the benefits of economies of scale to fund shareholders when total group assets increase, even if assets of any particular fund are unchanged or have declined, because some portion of Fidelity's costs are attributable to services provided to all Fidelity funds, and all funds benefit if those costs can be allocated among more assets. The Board concluded that, given the group fee structure, fund shareholders will benefit from lower management fees as group assets increase at the fund complex level, regardless of whether Fidelity achieves any such economies of scale.
The Board concluded, taking into account the analysis of the Economies of Scale Committee, that economies of scale, if any, are being appropriately shared between fund shareholders and Fidelity.
Additional Information Requested by the Board. In order to develop fully the factual basis for consideration of the Fidelity funds' Advisory Contracts, the Board requested and received additional information on certain topics, including: (i) Fidelity's fund profitability methodology, profitability trends for certain funds, and the impact of certain factors on fund profitability results; (ii) portfolio manager changes that have occurred during the past year and the amount of the investment that each portfolio manager has made in the Fidelity fund(s) that he or she manages; (iii) Fidelity's compensation structure for portfolio managers, research analysts, and other key personnel, including its effects on fund profitability; (iv) the arrangements with and compensation paid to certain fund sub-advisers on behalf of the Fidelity funds; (v) Fidelity's fee structures, including the group fee structure and definition of group assets, and the rationale for recommending different fees among different categories of funds and classes; (vi) the methodology with respect to competitive fund data and peer group classifications; (vii) Fidelity's transfer agent fee, expense, and service structures for different funds and classes, and the impact of the increased use of omnibus accounts; and (viii) explanations regarding the relative total expense ratios of certain funds and classes, total expense competitive trends and methodologies for total expense competitive comparisons, and actions that might be taken by Fidelity to reduce total expense ratios for certain funds and classes or to achieve further economies of scale.
Based on its evaluation of all of the conclusions noted above, and after considering all factors it believed relevant, the Board concluded that the advisory fee structures are fair and reasonable, and that each fund's Advisory Contracts should be renewed.
Annual Report
Investment Adviser
Fidelity SelectCo, LLC
Denver, CO
Investment Sub-Advisers
FMR Co., Inc.
FMR Investment Management
(U.K.) Limited
Fidelity Management & Research
(Hong Kong) Limited
Fidelity Management & Research
(Japan) Limited
General Distributor
Fidelity Distributors Corporation
Smithfield, RI
Transfer and Service Agents
Fidelity Investments Institutional Operations Company, Inc.
Boston, MA
Fidelity Service Company, Inc.
Boston, MA
Custodian
Brown Brothers Harriman & Co.
Boston, MA
Corporate Headquarters
245 Summer Street
Boston, MA 02210
1-800-544-8888
The Fidelity Telephone Connection
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-0415
1.910417.105
Fidelity®
Select Portfolios®
Financials Sector
Banking Portfolio
Brokerage and Investment Management Portfolio
Consumer Finance Portfolio
Financial Services Portfolio
Insurance Portfolio
Annual Report
February 28, 2015
(Fidelity Cover Art)
Contents
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Shareholder Expense Example |
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Banking Portfolio |
Performance |
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Management's Discussion |
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Investment Changes |
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Investments |
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Financial Statements |
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Brokerage and Investment |
Performance |
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Management's Discussion |
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Investment Changes |
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Investments |
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Financial Statements |
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Consumer Finance Portfolio |
Performance |
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Management's Discussion |
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Investment Changes |
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Investments |
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Financial Statements |
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Financial Services Portfolio |
Performance |
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Management's Discussion |
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Investment Changes |
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Investments |
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Financial Statements |
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Insurance Portfolio |
Performance |
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Management's Discussion |
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Investment Changes |
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Investments |
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Financial Statements |
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Notes to Financial Statements |
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Report of Independent Registered Public Accounting Firm |
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Trustees and Officers |
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Distributions |
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Board Approval of Investment Advisory Contracts and Management Fees |
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To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com/proxyvotingresults or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov. You may also call 1-800-544-8544 to request a free copy of the proxy voting guidelines.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third-party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company. © 2015 FMR LLC. All rights reserved.
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, 2014 to February 28, 2015).
Actual Expenses
The first line of the accompanying table for each fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, each Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each fund provides information about hypothetical account values and hypothetical expenses based on a fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, each Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
|
|
Annualized |
Beginning |
Ending |
Expenses Paid |
|
Banking Portfolio |
.79% |
|
|
|
|
Actual |
|
$ 1,000.00 |
$ 1,026.20 |
$ 3.97 |
|
HypotheticalA |
|
$ 1,000.00 |
$ 1,020.88 |
$ 3.96 |
|
Brokerage and Investment Management Portfolio |
.79% |
|
|
|
|
Actual |
|
$ 1,000.00 |
$ 1,021.40 |
$ 3.96 |
|
HypotheticalA |
|
$ 1,000.00 |
$ 1,020.88 |
$ 3.96 |
|
Consumer Finance Portfolio |
.88% |
|
|
|
|
Actual |
|
$ 1,000.00 |
$ 1,045.00 |
$ 4.46 |
|
HypotheticalA |
|
$ 1,000.00 |
$ 1,020.43 |
$ 4.41 |
|
Financial Services Portfolio |
.76% |
|
|
|
|
Actual |
|
$ 1,000.00 |
$ 1,044.30 |
$ 3.85 |
|
HypotheticalA |
|
$ 1,000.00 |
$ 1,021.03 |
$ 3.81 |
|
Insurance Portfolio |
.80% |
|
|
|
|
Actual |
|
$ 1,000.00 |
$ 1,039.90 |
$ 4.05 |
|
HypotheticalA |
|
$ 1,000.00 |
$ 1,020.83 |
$ 4.01 |
A 5% return per year before expenses
B Annualized expense ratio reflects expenses net of applicable fee waivers.
* Expenses are equal to each Fund's annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
Annual Report
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 28, 2015 |
Past 1 |
Past 5 |
Past 10 |
|
Banking Portfolio |
5.30% |
11.59% |
1.41% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Banking Portfolio on February 28, 2005. The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period.
Annual Report
Banking Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. stock market closed near its all-time high for the 12 months ending February 28, 2015, supported by low interest rates and the relative strength of the U.S. economy and dollar. The large-cap S&P 500® Index returned 15.51%. Growth stocks in the index outperformed value-oriented names. The tech-heavy Nasdaq Composite Index® rose 16.58%, while the small-cap Russell 2000® Index advanced 5.63%, rallying from early-period weakness amid growth and valuation worries. Among the 10 major market sectors tracked by MSCI U.S. IMI 25-50 classifications, most notched a double-digit gain, led by health care (+24%), consumer staples (+21%), information technology (+20%) and utilities (+15%). Conversely, energy (-9%) was the only sector to lose ground, reflecting a sharp drop in crude prices beginning midyear and attributed to weaker global demand and a U.S. supply boom. Volatility spiked to a three-year high in October amid concerns about economic growth and Ebola, as well as unrest in Syria, Iraq and Ukraine. Nevertheless, the S&P 500® finished the period well above its mid-October nadir, bolstered by the relative economic strength of the U.S., which marked a six-year low in its unemployment rate, and consumer confidence that declined only slightly from its 11-year high reached in January.
Comments from John Sheehy, Portfolio Manager of Banking Portfolio: For the year, the fund returned 5.30%, slightly trailing the 5.85% gain of the MSCI U.S. IMI Banks 25-50 Index and lagging the broadly based S&P 500® Index. Versus the broader market, persistently low interest rates and relatively tepid loan demand resulted in underperformance by the two primary groups in the MSCI industry index, regional banks and diversified banks. Prosperity Bancshares was by far the fund's biggest relative detractor, as this stock was our largest overweighting, and the shares returned -17% for the period. Although this Houston-based bank had limited exposure to energy loans, investors were concerned about potential weakening in the economies of Houston-area communities tied to the energy sector. However, I thought the market's assessment of this stock was overly pessimistic and added considerably to our stake here. U.K.-based Standard Chartered and Bancolombia also detracted, neither of which was in the MSCI index. I significantly reduced our stake in the former, but given continued strength in the latter's fundamentals, I added to the position after establishing it in October. Conversely, City National was our top relative contributor. A large overweighting in this high-quality, Los Angeles-based regional bank paid off in January after Royal Bank of Canada announced plans to acquire the company. I liquidated the position soon after to nail down profits. A non-index position in title insurance provider First American Financial also was timely, along with underweighting and ultimately selling weak-performing index name Fifth Third Bancorp.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Banking Portfolio
Investment Changes (Unaudited)
|
Top Ten Stocks as of February 28, 2015 |
||
|
|
% of fund's |
% of fund's net assets |
|
Wells Fargo & Co. |
11.0 |
10.4 |
|
U.S. Bancorp |
7.6 |
7.6 |
|
Bank of America Corp. |
6.5 |
6.5 |
|
JPMorgan Chase & Co. |
5.5 |
5.5 |
|
Citigroup, Inc. |
5.4 |
5.7 |
|
Prosperity Bancshares, Inc. |
5.2 |
4.5 |
|
SunTrust Banks, Inc. |
4.8 |
5.0 |
|
Regions Financial Corp. |
3.9 |
0.0 |
|
Capital One Financial Corp. |
3.8 |
3.5 |
|
CIT Group, Inc. |
3.5 |
2.8 |
|
|
57.2 |
|
|
Top Industries (% of fund's net assets) |
|||
|
As of February 28, 2015 |
|||
 |
Banks |
87.7% |
|
 |
Consumer Finance |
4.3% |
|
 |
Thrifts & Mortgage Finance |
3.9% |
|
 |
IT Services |
1.3% |
|
 |
Insurance |
1.2% |
|
 |
All Others* |
1.6% |
|
|
As of August 31, 2014 |
|||
 |
Banks |
84.5% |
|
 |
Consumer Finance |
5.4% |
|
 |
Thrifts & Mortgage Finance |
3.7% |
|
 |
Capital Markets |
1.9% |
|
 |
IT Services |
1.8% |
|
 |
All Others* |
2.7% |
|
|
* Includes short-term investments and net other assets (liabilities). |
Annual Report
Banking Portfolio
Investments February 28, 2015
Showing Percentage of Net Assets
|
Common Stocks - 98.9% |
|||
|
Shares |
Value |
||
|
BANKS - 87.1% |
|||
|
Diversified Banks - 41.7% |
|||
|
Banco ABC Brasil SA (a) |
21,123 |
$ 87,431 |
|
|
Bancolombia SA sponsored ADR (d) |
85,300 |
3,505,830 |
|
|
Bank of America Corp. |
2,395,100 |
37,866,531 |
|
|
Barclays PLC |
1,151,028 |
4,557,877 |
|
|
Citigroup, Inc. |
596,900 |
31,289,498 |
|
|
Comerica, Inc. |
432,400 |
19,795,272 |
|
|
JPMorgan Chase & Co. |
521,200 |
31,939,136 |
|
|
Lloyds Banking Group PLC |
3,050,800 |
3,716,275 |
|
|
Standard Chartered PLC (United Kingdom) |
128,990 |
1,973,489 |
|
|
U.S. Bancorp |
1,000,000 |
44,610,000 |
|
|
Wells Fargo & Co. |
1,178,992 |
64,596,972 |
|
|
|
243,938,311 |
||
|
Regional Banks - 45.4% |
|||
|
1st Source Corp. |
282,900 |
8,733,123 |
|
|
Bank of the Ozarks, Inc. |
294,400 |
10,775,040 |
|
|
Camden National Corp. |
85,400 |
3,253,740 |
|
|
CIT Group, Inc. |
442,000 |
20,442,500 |
|
|
Commerce Bancshares, Inc. (d) |
359,757 |
14,937,111 |
|
|
Community Trust Bancorp, Inc. |
244,900 |
7,993,536 |
|
|
CVB Financial Corp. |
718,100 |
11,238,265 |
|
|
East West Bancorp, Inc. |
181,100 |
7,234,945 |
|
|
First Citizen Bancshares, Inc. |
37,000 |
9,333,250 |
|
|
First Republic Bank |
198,200 |
11,297,400 |
|
|
Hanmi Financial Corp. |
321,800 |
6,349,114 |
|
|
Hilltop Holdings, Inc. (a) |
559,200 |
10,401,120 |
|
|
M&T Bank Corp. |
153,100 |
18,525,100 |
|
|
PacWest Bancorp |
249,836 |
11,451,233 |
|
|
PNC Financial Services Group, Inc. |
124,941 |
11,489,574 |
|
|
Prosperity Bancshares, Inc. |
592,300 |
30,639,679 |
|
|
Regions Financial Corp. |
2,388,000 |
22,948,680 |
|
|
Shinsei Bank Ltd. |
2,293,000 |
4,408,694 |
|
|
SunTrust Banks, Inc. |
690,700 |
28,318,700 |
|
|
UMB Financial Corp. |
208,600 |
10,751,244 |
|
|
Wilshire Bancorp, Inc. |
497,200 |
4,728,372 |
|
|
|
265,250,420 |
||
|
TOTAL BANKS |
509,188,731 |
||
|
CAPITAL MARKETS - 0.7% |
|||
|
Asset Management & Custody Banks - 0.7% |
|||
|
The Blackstone Group LP |
114,400 |
4,285,424 |
|
|
CONSUMER FINANCE - 4.3% |
|||
|
Consumer Finance - 4.3% |
|||
|
Capital One Financial Corp. |
278,600 |
21,928,606 |
|
|
Discover Financial Services |
50,400 |
3,073,392 |
|
|
|
25,001,998 |
||
|
INSURANCE - 1.2% |
|||
|
Property & Casualty Insurance - 1.2% |
|||
|
First American Financial Corp. |
205,600 |
7,202,168 |
|
|
|
|||
|
Shares |
Value |
||
|
IT SERVICES - 1.3% |
|||
|
Data Processing & Outsourced Services - 1.3% |
|||
|
EVERTEC, Inc. |
374,500 |
$ 7,808,325 |
|
|
REAL ESTATE INVESTMENT TRUSTS - 0.4% |
|||
|
Mortgage REITs - 0.4% |
|||
|
Altisource Residential Corp. Class B |
105,055 |
2,169,386 |
|
|
THRIFTS & MORTGAGE FINANCE - 3.9% |
|||
|
Thrifts & Mortgage Finance - 3.9% |
|||
|
BofI Holding, Inc. (a) |
35,300 |
3,120,520 |
|
|
Farmer Mac Class C (non-vtg.) |
42,100 |
1,344,674 |
|
|
Meridian Bancorp, Inc. (a) |
571,165 |
7,076,734 |
|
|
Ocwen Financial Corp. (a)(d) |
154,100 |
1,254,374 |
|
|
TFS Financial Corp. |
705,600 |
9,948,960 |
|
|
|
22,745,262 |
||
|
TOTAL COMMON STOCKS (Cost $494,581,964) |
|
||
|
Nonconvertible Preferred Stocks - 0.6% |
|||
|
|
|
|
|
|
BANKS - 0.6% |
|||
|
Diversified Banks - 0.6% |
|||
|
Banco ABC Brasil SA |
756,700 |
|
|
|
Money Market Funds - 1.4% |
|||
|
|
|
|
|
|
Fidelity Cash Central Fund, 0.13% (b) |
1,335,598 |
1,335,598 |
|
|
Fidelity Securities Lending Cash Central Fund, 0.13% (b)(c) |
7,023,075 |
7,023,075 |
|
|
TOTAL MONEY MARKET FUNDS (Cost $8,358,673) |
|
||
|
TOTAL INVESTMENT PORTFOLIO - 100.9% (Cost $506,809,217) |
589,945,371 |
|
|
NET OTHER ASSETS (LIABILITIES) - (0.9)% |
(5,310,007) |
|
|
NET ASSETS - 100% |
$ 584,635,364 |
|
|
Legend |
|
(a) Non-income producing |
|
(b) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
|
(c) Investment made with cash collateral received from securities on loan. |
|
(d) Security or a portion of the security is on loan at period end. |
|
Affiliated Central Funds |
|
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
|
Fund |
Income earned |
|
Fidelity Cash Central Fund |
$ 10,234 |
|
Fidelity Securities Lending Cash Central Fund |
66,632 |
|
Total |
$ 76,866 |
|
Other Information |
|
The following is a summary of the inputs used, as of February 28, 2015, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements. |
|
Valuation Inputs at Reporting Date: |
||||
|
Description |
Total |
Level 1 |
Level 2 |
Level 3 |
|
Investments in Securities: |
||||
|
Common Stocks |
$ 578,401,294 |
$ 570,127,142 |
$ 8,274,152 |
$ - |
|
Nonconvertible Preferred Stocks |
3,185,404 |
3,185,404 |
- |
- |
|
Money Market Funds |
8,358,673 |
8,358,673 |
- |
- |
|
Total Investments in Securities: |
$ 589,945,371 |
$ 581,671,219 |
$ 8,274,152 |
$ - |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Banking Portfolio
Financial Statements
Statement of Assets and Liabilities
|
|
February 28, 2015 |
|
|
|
|
|
|
Assets |
|
|
|
Investment in securities, at value (including securities loaned of $6,574,606) - See accompanying schedule: Unaffiliated issuers (cost $498,450,544) |
$ 581,586,698 |
|
|
Fidelity Central Funds (cost $8,358,673) |
8,358,673 |
|
|
Total Investments (cost $506,809,217) |
|
$ 589,945,371 |
|
Receivable for investments sold |
|
2,953,111 |
|
Receivable for fund shares sold |
|
242,041 |
|
Dividends receivable |
|
820,323 |
|
Distributions receivable from Fidelity Central Funds |
|
2,261 |
|
Prepaid expenses |
|
2,333 |
|
Other receivables |
|
3,682 |
|
Total assets |
|
593,969,122 |
|
|
|
|
|
Liabilities |
|
|
|
Payable for investments purchased |
$ 1,226,997 |
|
|
Payable for fund shares redeemed |
671,329 |
|
|
Accrued management fee |
267,806 |
|
|
Other affiliated payables |
110,030 |
|
|
Other payables and accrued expenses |
34,521 |
|
|
Collateral on securities loaned, at value |
7,023,075 |
|
|
Total liabilities |
|
9,333,758 |
|
|
|
|
|
Net Assets |
|
$ 584,635,364 |
|
Net Assets consist of: |
|
|
|
Paid in capital |
|
$ 488,477,261 |
|
Undistributed net investment income |
|
955,180 |
|
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions |
|
12,067,532 |
|
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies |
|
83,135,391 |
|
Net Assets, for 22,282,681 shares outstanding |
|
$ 584,635,364 |
|
Net Asset Value, offering price and redemption price per share ($584,635,364 ÷ 22,282,681 shares) |
|
$ 26.24 |
Statement of Operations
|
|
Year ended February 28, 2015 |
|
|
|
|
|
|
Investment Income |
|
|
|
Dividends |
|
$ 12,808,420 |
|
Income from Fidelity Central Funds |
|
76,866 |
|
Total income |
|
12,885,286 |
|
|
|
|
|
Expenses |
|
|
|
Management fee |
$ 3,660,205 |
|
|
Transfer agent fees |
1,275,795 |
|
|
Accounting and security lending fees |
245,977 |
|
|
Custodian fees and expenses |
17,141 |
|
|
Independent trustees' compensation |
13,671 |
|
|
Registration fees |
36,397 |
|
|
Audit |
40,426 |
|
|
Legal |
7,053 |
|
|
Interest |
5,202 |
|
|
Miscellaneous |
9,041 |
|
|
Total expenses before reductions |
5,310,908 |
|
|
Expense reductions |
(30,792) |
5,280,116 |
|
Net investment income (loss) |
|
7,605,170 |
|
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: |
|
|
|
Investment securities: |
|
|
|
Unaffiliated issuers |
43,488,368 |
|
|
Foreign currency transactions |
(76,026) |
|
|
Total net realized gain (loss) |
|
43,412,342 |
|
Change in net unrealized appreciation (depreciation) on: Investment securities |
(23,727,853) |
|
|
Assets and liabilities in foreign currencies |
(2,429) |
|
|
Total change in net unrealized appreciation (depreciation) |
|
(23,730,282) |
|
Net gain (loss) |
|
19,682,060 |
|
Net increase (decrease) in net assets resulting from operations |
|
$ 27,287,230 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements - continued
Statement of Changes in Net Assets
|
|
Year ended |
Year ended |
|
Increase (Decrease) in Net Assets |
|
|
|
Operations |
|
|
|
Net investment income (loss) |
$ 7,605,170 |
$ 8,142,210 |
|
Net realized gain (loss) |
43,412,342 |
79,664,982 |
|
Change in net unrealized appreciation (depreciation) |
(23,730,282) |
79,045,980 |
|
Net increase (decrease) in net assets resulting from operations |
27,287,230 |
166,853,172 |
|
Distributions to shareholders from net investment income |
(8,667,459) |
(5,835,222) |
|
Distributions to shareholders from net realized gain |
(28,732,272) |
(15,904,464) |
|
Total distributions |
(37,399,731) |
(21,739,686) |
|
Share transactions |
218,322,401 |
391,060,219 |
|
Reinvestment of distributions |
36,509,291 |
21,186,604 |
|
Cost of shares redeemed |
(470,086,598) |
(277,968,854) |
|
Net increase (decrease) in net assets resulting from share transactions |
(215,254,906) |
134,277,969 |
|
Redemption fees |
22,561 |
26,791 |
|
Total increase (decrease) in net assets |
(225,344,846) |
279,418,246 |
|
|
|
|
|
Net Assets |
|
|
|
Beginning of period |
809,980,210 |
530,561,964 |
|
End of period (including undistributed net investment income of $955,180 and undistributed net investment income of $2,398,723, respectively) |
$ 584,635,364 |
$ 809,980,210 |
|
Other Information Shares |
|
|
|
Sold |
8,234,396 |
16,023,012 |
|
Issued in reinvestment of distributions |
1,431,983 |
828,397 |
|
Redeemed |
(18,407,235) |
(11,613,739) |
|
Net increase (decrease) |
(8,740,856) |
5,237,670 |
Financial Highlights
|
Years ended February 28, |
2015 |
2014 |
2013 |
2012 F |
2011 |
|
Selected Per-Share Data |
|
|
|
|
|
|
Net asset value, beginning of period |
$ 26.11 |
$ 20.58 |
$ 17.83 |
$ 18.92 |
$ 16.63 |
|
Income from Investment Operations |
|
|
|
|
|
|
Net investment income (loss) B |
.30 |
.29 |
.26 |
.09 |
(.01) |
|
Net realized and unrealized gain (loss) |
1.04 |
5.97 |
2.73 |
(1.11) |
2.31 |
|
Total from investment operations |
1.34 |
6.26 |
2.99 |
(1.02) |
2.30 |
|
Distributions from net investment income |
(.34) |
(.20) |
(.24) |
(.07) |
(.01) |
|
Distributions from net realized gain |
(.87) |
(.53) |
- |
- |
- |
|
Total distributions |
(1.21) |
(.73) |
(.24) |
(.07) |
(.01) |
|
Redemption fees added to paid in capital B, G |
- |
- |
- |
- |
- |
|
Net asset value, end of period |
$ 26.24 |
$ 26.11 |
$ 20.58 |
$ 17.83 |
$ 18.92 |
|
Total ReturnA |
5.30% |
30.48% |
16.86% |
(5.31)% |
13.83% |
|
Ratios to Average Net AssetsC,E |
|
|
|
|
|
|
Expenses before reductions |
.80% |
.81% |
.85% |
.88% |
.89% |
|
Expenses net of fee waivers, if any |
.80% |
.81% |
.85% |
.88% |
.89% |
|
Expenses net of all reductions |
.79% |
.80% |
.83% |
.87% |
.88% |
|
Net investment income (loss) |
1.14% |
1.22% |
1.37% |
.55% |
(.04)% |
|
Supplemental Data |
|
|
|
|
|
|
Net assets, end of period (000 omitted) |
$ 584,635 |
$ 809,980 |
$ 530,562 |
$ 429,747 |
$ 518,317 |
|
Portfolio turnover rateD |
65% |
91% |
69% |
91% |
73% |
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
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 28, 2015 |
Past 1 |
Past 5 |
Past 10 |
|
Brokerage and Investment Management Portfolio |
7.43% |
11.35% |
7.60% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Brokerage and Investment Management Portfolio on February 28, 2005. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index performed over the same period.
Annual Report
Brokerage and Investment Management Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. stock market closed near its all-time high for the 12 months ending February 28, 2015, supported by low interest rates and the relative strength of the U.S. economy and dollar. The large-cap S&P 500® Index returned 15.51%. Growth stocks in the index outperformed value-oriented names. The tech-heavy Nasdaq Composite Index® rose 16.58%, while the small-cap Russell 2000® Index advanced 5.63%, rallying from early-period weakness amid growth and valuation worries. Among the 10 major market sectors tracked by MSCI U.S. IMI 25-50 classifications, most notched a double-digit gain, led by health care (+24%), consumer staples (+21%), information technology (+20%) and utilities (+15%). Conversely, energy (-9%) was the only sector to lose ground, reflecting a sharp drop in crude prices beginning midyear and attributed to weaker global demand and a U.S. supply boom. Volatility spiked to a three-year high in October amid concerns about economic growth and Ebola, as well as unrest in Syria, Iraq and Ukraine. Nevertheless, the S&P 500® finished the period well above its mid-October nadir, bolstered by the relative economic strength of the U.S., which marked a six-year low in its unemployment rate, and consumer confidence that declined only slightly from its 11-year high reached in January.
Comments from Christopher Lee, Portfolio Manager of Brokerage and Investment Management Portfolio: For the year, the fund returned 7.43%, lagging the 12.09% gain of the MSCI U.S. IMI Capital Markets 25-50 Index as well as the broad-based S&P 500 Index. Rising equity markets helped the industry, while interest-rate expectations and a slowdown in fixed-income trading weighed on the group. Security selection detracted from the fund's performance versus the MSCI industry index. In particular, overweightings in specialized boutique asset managers Virtus Investment Partners and Artisan Partners Asset Management hurt. Virtus got caught up in a regulatory dispute affecting one of its partners, and Artisan - which was added to the portfolio last April - had a couple of weak-performing products that hampered its asset inflows. On the investment banking & brokerage side, a stake in small-cap broker FXCM caused the most damage. The stock plunged when the Swiss National Bank unexpectedly announced in January that it would no longer peg the Swiss franc to the euro. By contrast, not owning some poor-performing asset managers and index components helped relative performance. I sold FXCM soon thereafter. In particular, I avoided Waddell & Reed Financial and Walter Investment Management. The former's shares fell as weak performance in one of its biggest offerings led to asset outflows, while the latter was pressured by regulatory scrutiny of the mortgage servicing business.
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 28, 2015 |
||
|
|
% of fund's |
% of fund's net assets |
|
Ameriprise Financial, Inc. |
7.9 |
7.0 |
|
Invesco Ltd. |
7.0 |
7.2 |
|
BlackRock, Inc. Class A |
6.4 |
5.8 |
|
Affiliated Managers Group, Inc. |
6.2 |
5.6 |
|
State Street Corp. |
6.1 |
5.5 |
|
E*TRADE Financial Corp. |
5.9 |
4.4 |
|
Northern Trust Corp. |
5.1 |
2.9 |
|
Franklin Resources, Inc. |
5.1 |
6.5 |
|
Raymond James Financial, Inc. |
4.7 |
4.4 |
|
Goldman Sachs Group, Inc. |
4.3 |
2.9 |
|
|
58.7 |
|
|
Top Industries (% of fund's net assets) |
|||
|
As of February 28, 2015 |
|||
 |
Capital Markets |
85.4% |
|
 |
Banks |
5.5% |
|
 |
Diversified Financial Services |
4.7% |
|
 |
Insurance |
1.1% |
|
 |
All Others* |
3.3% |
|
|
As of August 31, 2014 |
|||
 |
Capital Markets |
85.9% |
|
 |
Banks |
6.0% |
|
 |
Diversified Financial Services |
4.6% |
|
 |
Insurance |
0.8% |
|
 |
All Others* |
2.7% |
|
|
* Includes short-term investments and net other assets (liabilities). |
Annual Report
Brokerage and Investment Management Portfolio
Investments February 28, 2015
Showing Percentage of Net Assets
|
Common Stocks - 96.7% |
|||
|
Shares |
Value |
||
|
BANKS - 5.5% |
|||
|
Diversified Banks - 5.5% |
|||
|
Barclays PLC |
1,500,000 |
$ 5,939,748 |
|
|
Citigroup, Inc. |
200,000 |
10,484,000 |
|
|
JPMorgan Chase & Co. |
250,000 |
15,320,000 |
|
|
|
31,743,748 |
||
|
CAPITAL MARKETS - 85.4% |
|||
|
Asset Management & Custody Banks - 58.6% |
|||
|
Affiliated Managers Group, Inc. (a) |
165,000 |
35,709,300 |
|
|
Ameriprise Financial, Inc. |
340,000 |
45,434,200 |
|
|
Artisan Partners Asset Management, Inc. |
475,000 |
23,037,500 |
|
|
BlackRock, Inc. Class A |
100,000 |
37,142,000 |
|
|
Franklin Resources, Inc. |
550,000 |
29,606,500 |
|
|
Invesco Ltd. |
1,000,000 |
40,270,000 |
|
|
KKR & Co. LP |
450,000 |
10,282,500 |
|
|
Northern Trust Corp. |
425,000 |
29,677,750 |
|
|
Oaktree Capital Group LLC Class A |
225,000 |
12,105,000 |
|
|
SEI Investments Co. |
200,000 |
8,608,000 |
|
|
State Street Corp. |
475,000 |
35,363,750 |
|
|
The Blackstone Group LP |
400,000 |
14,984,000 |
|
|
Virtus Investment Partners, Inc. |
125,000 |
16,496,250 |
|
|
|
338,716,750 |
||
|
Diversified Capital Markets - 1.2% |
|||
|
UBS Group AG |
400,000 |
6,996,000 |
|
|
Investment Banking & Brokerage - 25.6% |
|||
|
Charles Schwab Corp. |
600,000 |
17,604,000 |
|
|
E*TRADE Financial Corp. (a) |
1,300,000 |
33,845,500 |
|
|
Goldman Sachs Group, Inc. |
130,000 |
24,672,700 |
|
|
Greenhill & Co., Inc. |
150,000 |
5,806,500 |
|
|
Lazard Ltd. Class A |
40,000 |
2,035,200 |
|
|
Moelis & Co. Class A |
200,000 |
6,436,000 |
|
|
Morgan Stanley |
50,000 |
1,789,500 |
|
|
Raymond James Financial, Inc. |
475,000 |
27,136,750 |
|
|
Stifel Financial Corp. (a) |
350,000 |
19,169,500 |
|
|
TD Ameritrade Holding Corp. |
250,000 |
9,067,500 |
|
|
|
147,563,150 |
||
|
TOTAL CAPITAL MARKETS |
493,275,900 |
||
|
|
|||
|
Shares |
Value |
||
|
DIVERSIFIED FINANCIAL SERVICES - 4.7% |
|||
|
Specialized Finance - 4.7% |
|||
|
IntercontinentalExchange Group, Inc. |
50,000 |
$ 11,768,000 |
|
|
McGraw Hill Financial, Inc. |
150,000 |
15,465,000 |
|
|
|
27,233,000 |
||
|
INSURANCE - 1.1% |
|||
|
Life & Health Insurance - 1.1% |
|||
|
St. James's Place Capital PLC |
450,000 |
6,586,064 |
|
|
TOTAL COMMON STOCKS (Cost $449,380,916) |
|
||
|
Money Market Funds - 2.7% |
|||
|
|
|
|
|
|
Fidelity Cash Central Fund, 0.13% (b) |
15,666,475 |
|
|
|
TOTAL INVESTMENT PORTFOLIO - 99.4% (Cost $465,047,391) |
574,505,187 |
|
|
NET OTHER ASSETS (LIABILITIES) - 0.6% |
3,447,944 |
|
|
NET ASSETS - 100% |
$ 577,953,131 |
|
|
Legend |
|
(a) Non-income producing |
|
(b) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
|
Affiliated Central Funds |
|
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
|
Fund |
Income earned |
|
Fidelity Cash Central Fund |
$ 17,028 |
|
Fidelity Securities Lending Cash Central Fund |
10,517 |
|
Total |
$ 27,545 |
|
Other Information |
|
The following is a summary of the inputs used, as of February 28, 2015, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements. |
|
Valuation Inputs at Reporting Date: |
||||
|
Description |
Total |
Level 1 |
Level 2 |
Level 3 |
|
Investments in Securities: |
||||
|
Common Stocks |
$ 558,838,712 |
$ 552,898,964 |
$ 5,939,748 |
$ - |
|
Money Market Funds |
15,666,475 |
15,666,475 |
- |
- |
|
Total Investments in Securities: |
$ 574,505,187 |
$ 568,565,439 |
$ 5,939,748 |
$ - |
|
Distribution of investments by country or territory of incorporation, as a percentage of total net assets, is as follows (Unaudited): |
|
United States of America |
89.3% |
|
Bermuda |
7.4% |
|
United Kingdom |
2.1% |
|
Switzerland |
1.2% |
|
|
100.0% |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Brokerage and Investment Management Portfolio
Financial Statements
Statement of Assets and Liabilities
|
|
February 28, 2015 |
|
|
|
|
|
|
Assets |
|
|
|
Investment in securities, at value - See accompanying schedule: Unaffiliated issuers (cost $449,380,916) |
$ 558,838,712 |
|
|
Fidelity Central Funds (cost $15,666,475) |
15,666,475 |
|
|
Total Investments (cost $465,047,391) |
|
$ 574,505,187 |
|
Receivable for investments sold |
|
4,060,893 |
|
Receivable for fund shares sold |
|
106,846 |
|
Dividends receivable |
|
603,164 |
|
Distributions receivable from Fidelity Central Funds |
|
1,592 |
|
Prepaid expenses |
|
2,361 |
|
Other receivables |
|
12,628 |
|
Total assets |
|
579,292,671 |
|
|
|
|
|
Liabilities |
|
|
|
Payable for fund shares redeemed |
$ 921,651 |
|
|
Accrued management fee |
264,303 |
|
|
Transfer agent fee payable |
89,666 |
|
|
Other affiliated payables |
17,988 |
|
|
Other payables and accrued expenses |
45,932 |
|
|
Total liabilities |
|
1,339,540 |
|
|
|
|
|
Net Assets |
|
$ 577,953,131 |
|
Net Assets consist of: |
|
|
|
Paid in capital |
|
$ 464,168,275 |
|
Undistributed net investment income |
|
684,052 |
|
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions |
|
3,643,008 |
|
Net unrealized appreciation (depreciation) on investments |
|
109,457,796 |
|
Net Assets, for 7,728,784 shares outstanding |
|
$ 577,953,131 |
|
Net Asset Value, offering price and redemption price per share ($577,953,131 ÷ 7,728,784 shares) |
|
$ 74.78 |
Statement of Operations
|
|
Year ended February 28, 2015 |
|
|
|
|
|
|
Investment Income |
|
|
|
Dividends |
|
$ 13,213,371 |
|
Income from Fidelity Central Funds |
|
27,545 |
|
Total income |
|
13,240,916 |
|
|
|
|
|
Expenses |
|
|
|
Management fee |
$ 3,450,843 |
|
|
Transfer agent fees |
1,165,661 |
|
|
Accounting and security lending fees |
230,560 |
|
|
Custodian fees and expenses |
18,018 |
|
|
Independent trustees' compensation |
12,994 |
|
|
Registration fees |
28,751 |
|
|
Audit |
39,185 |
|
|
Legal |
4,985 |
|
|
Interest |
520 |
|
|
Miscellaneous |
9,362 |
|
|
Total expenses before reductions |
4,960,879 |
|
|
Expense reductions |
(10,892) |
4,949,987 |
|
Net investment income (loss) |
|
8,290,929 |
|
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: |
|
|
|
Investment securities: |
|
|
|
Unaffiliated issuers |
17,205,063 |
|
|
Foreign currency transactions |
(3,322) |
|
|
Total net realized gain (loss) |
|
17,201,741 |
|
Change in net unrealized appreciation (depreciation) on: Investment securities |
15,365,166 |
|
|
Assets and liabilities in foreign currencies |
3,645 |
|
|
Total change in net unrealized appreciation (depreciation) |
|
15,368,811 |
|
Net gain (loss) |
|
32,570,552 |
|
Net increase (decrease) in net assets resulting from operations |
|
$ 40,861,481 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Brokerage and Investment Management Portfolio
Financial Statements - continued
Statement of Changes in Net Assets
|
|
Year ended |
Year ended |
|
Increase (Decrease) in Net Assets |
|
|
|
Operations |
|
|
|
Net investment income (loss) |
$ 8,290,929 |
$ 11,110,682 |
|
Net realized gain (loss) |
17,201,741 |
82,890,650 |
|
Change in net unrealized appreciation (depreciation) |
15,368,811 |
72,437,416 |
|
Net increase (decrease) in net assets resulting from operations |
40,861,481 |
166,438,748 |
|
Distributions to shareholders from net investment income |
(6,687,809) |
(4,659,584) |
|
Distributions to shareholders from net realized gain |
(13,758,502) |
(192,147) |
|
Total distributions |
(20,446,311) |
(4,851,731) |
|
Share transactions |
44,436,800 |
554,727,078 |
|
Reinvestment of distributions |
19,563,162 |
4,673,424 |
|
Cost of shares redeemed |
(340,693,447) |
(491,582,846) |
|
Net increase (decrease) in net assets resulting from share transactions |
(276,693,485) |
67,817,656 |
|
Redemption fees |
9,496 |
44,045 |
|
Total increase (decrease) in net assets |
(256,268,819) |
229,448,718 |
|
|
|
|
|
Net Assets |
|
|
|
Beginning of period |
834,221,950 |
604,773,232 |
|
End of period (including undistributed net investment income of $684,052 and undistributed net investment income of $956,539, respectively) |
$ 577,953,131 |
$ 834,221,950 |
|
Other Information Shares |
|
|
|
Sold |
606,214 |
8,304,983 |
|
Issued in reinvestment of distributions |
261,782 |
63,949 |
|
Redeemed |
(4,726,727) |
(7,582,311) |
|
Net increase (decrease) |
(3,858,731) |
786,621 |
Financial Highlights
|
Years ended February 28, |
2015 |
2014 |
2013 |
2012 F |
2011 |
|
Selected Per-Share Data |
|
|
|
|
|
|
Net asset value, beginning of period |
$ 71.99 |
$ 55.99 |
$ 47.28 |
$ 54.11 |
$ 47.32 |
|
Income from Investment Operations |
|
|
|
|
|
|
Net investment income (loss) B |
.96 |
.99 |
1.31 |
.26 |
.39 |
|
Net realized and unrealized gain (loss) |
4.39 |
15.41 |
8.52 |
(6.56) |
6.71 |
|
Total from investment operations |
5.35 |
16.40 |
9.83 |
(6.30) |
7.10 |
|
Distributions from net investment income |
(.83) |
(.39) |
(1.12) |
(.53) |
(.31) |
|
Distributions from net realized gain |
(1.73) |
(.02) |
- |
- |
- |
|
Total distributions |
(2.56) |
(.40) H |
(1.12) |
(.53) |
(.31) |
|
Redemption fees added to paid in capital B, G |
- |
- |
- |
- |
- |
|
Net asset value, end of period |
$ 74.78 |
$ 71.99 |
$ 55.99 |
$ 47.28 |
$ 54.11 |
|
Total ReturnA |
7.43% |
29.29% |
21.08% |
(11.51)% |
15.03% |
|
Ratios to Average Net AssetsC,E |
|
|
|
|
|
|
Expenses before reductions |
.79% |
.82% |
.87% |
.89% |
.88% |
|
Expenses net of fee waivers, if any |
.79% |
.82% |
.87% |
.89% |
.88% |
|
Expenses net of all reductions |
.79% |
.80% |
.78% |
.85% |
.86% |
|
Net investment income (loss) |
1.32% |
1.52% |
2.72% |
.57% |
.79% |
|
Supplemental Data |
|
|
|
|
|
|
Net assets, end of period (000 omitted) |
$ 577,953 |
$ 834,222 |
$ 604,773 |
$ 413,228 |
$ 551,976 |
|
Portfolio turnover rateD |
31% |
182% |
308% |
294% |
153% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
B Calculated based on average shares outstanding during the period.
C Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
D Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
E Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund.
F For the year ended February 29.
G Amount represents less than $.01 per share.
H Total distributions of $.40 per share is comprised of distributions from net investment income of $.388 and distributions from net realized gain of $.016 per share.
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 28, 2015 |
Past 1 |
Past 5 |
Past 10 |
|
Consumer Finance PortfolioA |
7.69% |
13.53% |
-5.32% |
A Prior to December 1, 2010, Consumer Finance Portfolio was named Home Finance Portfolio, and the fund operated under certain different investment policies and compared its performance to a different additional index. The fund's historical performance may not represent its current investment policies.
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Consumer Finance Portfolio on February 28, 2005. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index performed over the same period.
Annual Report
Consumer Finance Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. stock market closed near its all-time high for the 12 months ending February 28, 2015, supported by low interest rates and the relative strength of the U.S. economy and dollar. The large-cap S&P 500® Index returned 15.51%. Growth stocks in the index outperformed value-oriented names. The tech-heavy Nasdaq Composite Index® rose 16.58%, while the small-cap Russell 2000® Index advanced 5.63%, rallying from early-period weakness amid growth and valuation worries. Among the 10 major market sectors tracked by MSCI U.S. IMI 25-50 classifications, most notched a double-digit gain, led by health care (+24%), consumer staples (+21%), information technology (+20%) and utilities (+15%). Conversely, energy (-9%) was the only sector to lose ground, reflecting a sharp drop in crude prices beginning midyear and attributed to weaker global demand and a U.S. supply boom. Volatility spiked to a three-year high in October amid concerns about economic growth and Ebola, as well as unrest in Syria, Iraq and Ukraine. Nevertheless, the S&P 500® finished the period well above its mid-October nadir, bolstered by the relative economic strength of the U.S., which marked a six-year low in its unemployment rate, and consumer confidence that declined only slightly from its 11-year high reached in January.
Comments from Shilpa Mehra, Portfolio Manager of Consumer Finance Portfolio: For the year, the fund returned 7.69%, outpacing the 6.70% advance of the S&P® Consumer Finance Index but lagging the broad-based S&P 500®. Higher consumer spending helped parts of the industry, while declining interest rates hampered other segments. An overweighting in the data processing & outsourced services group gave the biggest boost to performance versus the industry index. Top contributors here included an out-of-index stake in Total System Services, a credit card processor for banks. It benefited from improved pricing, new business wins and a more shareholder-friendly management team. Security selection in the consumer finance group also aided performance. Winners included subprime installment lender Springleaf Holdings, which saw its stock benefit from the sale of legacy real estate assets and speculation that the company would acquire a competitor. An underweighting and disappointing stock picks among mortgage real estate investment trusts (REITs) hampered performance versus the index. The biggest individual disappointment, however, was TFS Financial within the thrifts & mortgage finance segment. The fund was underexposed, as the company's capital allocation policies and declining interest rates helped boost its 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
Consumer Finance Portfolio
Investment Changes (Unaudited)
|
Top Ten Stocks as of February 28, 2015 |
||
|
|
% of fund's |
% of fund's net assets |
|
Visa, Inc. Class A |
8.6 |
6.5 |
|
Capital One Financial Corp. |
6.2 |
8.6 |
|
MasterCard, Inc. Class A |
6.2 |
6.2 |
|
Navient Corp. |
5.7 |
0.6 |
|
Springleaf Holdings, Inc. |
5.5 |
2.1 |
|
Alliance Data Systems Corp. |
4.5 |
1.2 |
|
American Capital Agency Corp. |
4.4 |
2.4 |
|
Santander Consumer U.S.A. Holdings, Inc. |
4.3 |
0.0 |
|
American Express Co. |
4.2 |
5.8 |
|
Ally Financial, Inc. |
3.6 |
0.0 |
|
|
53.2 |
|
|
Top Industries (% of fund's net assets) |
|||
|
As of February 28, 2015 |
|||
 |
Consumer Finance |
40.0% |
|
 |
IT Services |
27.5% |
|
 |
Thrifts & Mortgage Finance |
19.3% |
|
 |
Real Estate Investment Trusts |
12.5% |
|
 |
Capital Markets |
1.0% |
|
 |
All Others* |
(0.3)% |
|
|
As of August 31, 2014 |
|||
 |
Consumer Finance |
31.8% |
|
 |
IT Services |
21.6% |
|
 |
Thrifts & Mortgage Finance |
16.9% |
|
 |
Banks |
16.6% |
|
 |
Real Estate Investment Trusts |
8.8% |
|
 |
All Others* |
4.3% |
|
|
* Includes short-term investments and net other assets (liabilities). |
Annual Report
Consumer Finance Portfolio
Investments February 28, 2015
Showing Percentage of Net Assets
|
Common Stocks - 100.6% |
|||
|
Shares |
Value |
||
|
CAPITAL MARKETS - 1.0% |
|||
|
Investment Banking & Brokerage - 1.0% |
|||
|
E*TRADE Financial Corp. (a) |
49,900 |
$ 1,299,147 |
|
|
CONSUMER FINANCE - 40.0% |
|||
|
Consumer Finance - 40.0% |
|||
|
Ally Financial, Inc. (a) |
236,200 |
4,908,236 |
|
|
American Express Co. |
69,600 |
5,678,664 |
|
|
Capital One Financial Corp. |
106,500 |
8,382,615 |
|
|
Cash America International, Inc. |
26,419 |
570,122 |
|
|
Credit Acceptance Corp. (a) |
14,875 |
2,726,588 |
|
|
Discover Financial Services |
54,300 |
3,311,214 |
|
|
Enova International, Inc. (a) |
23,373 |
539,683 |
|
|
First Cash Financial Services, Inc. (a) |
23,900 |
1,150,546 |
|
|
Navient Corp. |
357,700 |
7,654,780 |
|
|
Nelnet, Inc. Class A |
31,400 |
1,463,868 |
|
|
Santander Consumer U.S.A. Holdings, Inc. |
258,700 |
5,828,511 |
|
|
SLM Corp. |
447,700 |
4,239,719 |
|
|
Springleaf Holdings, Inc. (a)(d) |
193,000 |
7,420,850 |
|
|
|
53,875,396 |
||
|
DIVERSIFIED FINANCIAL SERVICES - 0.3% |
|||
|
Specialized Finance - 0.3% |
|||
|
PHH Corp. (a) |
18,000 |
437,040 |
|
|
IT SERVICES - 27.5% |
|||
|
Data Processing & Outsourced Services - 27.5% |
|||
|
Alliance Data Systems Corp. (a) |
21,600 |
6,015,816 |
|
|
EVERTEC, Inc. |
8,008 |
166,967 |
|
|
Fidelity National Information Services, Inc. |
21,600 |
1,459,944 |
|
|
Fiserv, Inc. (a) |
17,600 |
1,374,032 |
|
|
Global Payments, Inc. |
30,200 |
2,774,172 |
|
|
MasterCard, Inc. Class A |
92,400 |
8,328,012 |
|
|
Total System Services, Inc. |
110,100 |
4,205,820 |
|
|
Vantiv, Inc. (a) |
31,300 |
1,157,787 |
|
|
Visa, Inc. Class A |
42,584 |
11,553,462 |
|
|
|
37,036,012 |
||
|
REAL ESTATE INVESTMENT TRUSTS - 12.5% |
|||
|
Mortgage REITs - 12.5% |
|||
|
Altisource Residential Corp. Class B |
33,500 |
691,775 |
|
|
American Capital Agency Corp. |
274,700 |
5,888,195 |
|
|
Annaly Capital Management, Inc. |
130,500 |
1,385,910 |
|
|
Capstead Mortgage Corp. |
38,700 |
463,239 |
|
|
Chimera Investment Corp. |
858,400 |
2,755,464 |
|
|
Hatteras Financial Corp. |
83,700 |
1,535,895 |
|
|
Invesco Mortgage Capital, Inc. |
62,457 |
997,438 |
|
|
MFA Financial, Inc. |
135,000 |
1,074,600 |
|
|
New Residential Investment Corp. |
39,150 |
591,557 |
|
|
Redwood Trust, Inc. (d) |
77,200 |
1,476,064 |
|
|
|
16,860,137 |
||
|
|
|||
|
Shares |
Value |
||
|
THRIFTS & MORTGAGE FINANCE - 19.3% |
|||
|
Thrifts & Mortgage Finance - 19.3% |
|||
|
BofI Holding, Inc. (a) |
4,200 |
$ 371,280 |
|
|
Capitol Federal Financial, Inc. |
52,600 |
652,766 |
|
|
EverBank Financial Corp. |
57,200 |
1,028,456 |
|
|
Flagstar Bancorp, Inc. (a) |
300 |
4,437 |
|
|
Hudson City Bancorp, Inc. |
299,685 |
2,924,926 |
|
|
Meridian Bancorp, Inc. (a) |
45,400 |
562,506 |
|
|
MGIC Investment Corp. (a) |
396,528 |
3,620,301 |
|
|
Nationstar Mortgage Holdings, Inc. (a)(d) |
78,100 |
2,081,365 |
|
|
New York Community Bancorp, Inc. (d) |
252,400 |
4,192,364 |
|
|
Northfield Bancorp, Inc. |
200 |
2,894 |
|
|
Ocwen Financial Corp. (a)(d) |
111,100 |
904,354 |
|
|
People's United Financial, Inc. |
31,300 |
473,569 |
|
|
Provident Financial Services, Inc. |
8,000 |
145,600 |
|
|
Radian Group, Inc. |
192,765 |
3,047,615 |
|
|
TFS Financial Corp. |
271,400 |
3,826,740 |
|
|
United Financial Bancorp, Inc. New |
44,700 |
553,833 |
|
|
Washington Federal, Inc. |
43,800 |
925,056 |
|
|
WSFS Financial Corp. |
7,800 |
606,372 |
|
|
|
25,924,434 |
||
|
TOTAL COMMON STOCKS (Cost $107,532,739) |
|
||
|
Money Market Funds - 5.4% |
|||
|
|
|
|
|
|
Fidelity Securities Lending Cash Central Fund, 0.13% (b)(c) |
7,226,675 |
|
|
|
TOTAL INVESTMENT PORTFOLIO - 106.0% (Cost $114,759,414) |
142,658,841 |
|
|
NET OTHER ASSETS (LIABILITIES) - (6.0)% |
(8,090,151) |
|
|
NET ASSETS - 100% |
$ 134,568,690 |
|
|
Legend |
|
(a) Non-income producing |
|
(b) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
|
(c) Investment made with cash collateral received from securities on loan. |
|
(d) Security or a portion of the security is on loan at period end. |
|
Affiliated Central Funds |
|
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
|
Fund |
Income earned |
|
Fidelity Cash Central Fund |
$ 943 |
|
Fidelity Securities Lending Cash Central Fund |
145,593 |
|
Total |
$ 146,536 |
|
Other Information |
|
All investments are categorized as Level 1 under the Fair Value Hierarchy. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Consumer Finance Portfolio
Financial Statements
Statement of Assets and Liabilities
|
|
February 28, 2015 |
|
|
|
|
|
|
Assets |
|
|
|
Investment in securities, at value (including securities loaned of $6,853,381) - See accompanying schedule: Unaffiliated issuers (cost $107,532,739) |
$ 135,432,166 |
|
|
Fidelity Central Funds (cost $7,226,675) |
7,226,675 |
|
|
Total Investments (cost $114,759,414) |
|
$ 142,658,841 |
|
Receivable for investments sold |
|
1,702,760 |
|
Receivable for fund shares sold |
|
125,889 |
|
Dividends receivable |
|
98,788 |
|
Distributions receivable from Fidelity Central Funds |
|
4,536 |
|
Prepaid expenses |
|
592 |
|
Other receivables |
|
916 |
|
Total assets |
|
144,592,322 |
|
|
|
|
|
Liabilities |
|
|
|
Payable to custodian bank |
$ 1,556,964 |
|
|
Payable for investments purchased |
504,604 |
|
|
Payable for fund shares redeemed |
607,250 |
|
|
Distributions payable |
113 |
|
|
Accrued management fee |
62,770 |
|
|
Other affiliated payables |
32,833 |
|
|
Other payables and accrued expenses |
32,423 |
|
|
Collateral on securities loaned, at value |
7,226,675 |
|
|
Total liabilities |
|
10,023,632 |
|
|
|
|
|
Net Assets |
|
$ 134,568,690 |
|
Net Assets consist of: |
|
|
|
Paid in capital |
|
$ 117,281,677 |
|
Undistributed net investment income |
|
39,403 |
|
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions |
|
(10,651,817) |
|
Net unrealized appreciation (depreciation) on investments |
|
27,899,427 |
|
Net Assets, for 9,604,736 shares outstanding |
|
$ 134,568,690 |
|
Net Asset Value, offering price and redemption price per share ($134,568,690 ÷ 9,604,736 shares) |
|
$ 14.01 |
Statement of Operations
|
|
Year ended February 28, 2015 |
|
|
|
|
|
|
Investment Income |
|
|
|
Dividends |
|
$ 3,708,960 |
|
Income from Fidelity Central Funds |
|
146,536 |
|
Total income |
|
3,855,496 |
|
|
|
|
|
Expenses |
|
|
|
Management fee |
$ 910,808 |
|
|
Transfer agent fees |
395,429 |
|
|
Accounting and security lending fees |
66,610 |
|
|
Custodian fees and expenses |
9,870 |
|
|
Independent trustees' compensation |
3,556 |
|
|
Registration fees |
24,706 |
|
|
Audit |
40,294 |
|
|
Legal |
1,211 |
|
|
Interest |
143 |
|
|
Miscellaneous |
5,359 |
|
|
Total expenses before reductions |
1,457,986 |
|
|
Expense reductions |
(321) |
1,457,665 |
|
Net investment income (loss) |
|
2,397,831 |
|
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: |
|
|
|
Investment securities: |
|
|
|
Unaffiliated issuers |
33,581,049 |
|
|
Foreign currency transactions |
(14) |
|
|
Total net realized gain (loss) |
|
33,581,035 |
|
Change in net unrealized appreciation (depreciation) on investment securities |
|
(24,753,049) |
|
Net gain (loss) |
|
8,827,986 |
|
Net increase (decrease) in net assets resulting from operations |
|
$ 11,225,817 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements - continued
Statement of Changes in Net Assets
|
|
Year ended |
Year ended |
|
Increase (Decrease) in Net Assets |
|
|
|
Operations |
|
|
|
Net investment income (loss) |
$ 2,397,831 |
$ 5,927,353 |
|
Net realized gain (loss) |
33,581,035 |
34,649,129 |
|
Change in net unrealized appreciation (depreciation) |
(24,753,049) |
20,933,018 |
|
Net increase (decrease) in net assets resulting from operations |
11,225,817 |
61,509,500 |
|
Distributions to shareholders from net investment income |
(2,831,537) |
(5,610,392) |
|
Distributions to shareholders from net realized gain |
(32,268,529) |
(37,860,128) |
|
Total distributions |
(35,100,066) |
(43,470,520) |
|
Share transactions |
25,556,687 |
129,379,846 |
|
Reinvestment of distributions |
34,016,855 |
42,335,822 |
|
Cost of shares redeemed |
(151,354,434) |
(243,098,406) |
|
Net increase (decrease) in net assets resulting from share transactions |
(91,780,892) |
(71,382,738) |
|
Redemption fees |
2,139 |
9,208 |
|
Total increase (decrease) in net assets |
(115,653,002) |
(53,334,550) |
|
|
|
|
|
Net Assets |
|
|
|
Beginning of period |
250,221,692 |
303,556,242 |
|
End of period (including undistributed net investment income of $39,403 and undistributed net investment income of $459,666, respectively) |
$ 134,568,690 |
$ 250,221,692 |
|
Other Information Shares |
|
|
|
Sold |
1,651,346 |
7,887,236 |
|
Issued in reinvestment of distributions |
2,357,659 |
2,727,248 |
|
Redeemed |
(9,885,257) |
(14,882,954) |
|
Net increase (decrease) |
(5,876,252) |
(4,268,470) |
Financial Highlights
|
Years ended February 28, |
2015 |
2014 |
2013 |
2012F |
2011 |
|
Selected Per-Share Data |
|
|
|
|
|
|
Net asset value, beginning of period |
$ 16.16 |
$ 15.37 |
$ 12.62 |
$ 11.97 |
$ 11.58 |
|
Income from Investment Operations |
|
|
|
|
|
|
Net investment income (loss) B |
.22 |
.34 |
.28 |
.22 |
.19 |
|
Net realized and unrealized gain (loss) |
.95 |
3.18 |
2.72 |
.64 |
.48 |
|
Total from investment operations |
1.17 |
3.52 |
3.00 |
.86 |
.67 |
|
Distributions from net investment income |
(.30) |
(.40) |
(.24) |
(.20) |
(.28) |
|
Distributions from net realized gain |
(3.03) |
(2.33) |
(.01) |
(.01) |
- |
|
Total distributions |
(3.32)H |
(2.73) |
(.25) |
(.21) |
(.28) |
|
Redemption fees added to paid in capital B, G |
- |
- |
- |
- |
- |
|
Net asset value, end of period |
$ 14.01 |
$ 16.16 |
$ 15.37 |
$ 12.62 |
$ 11.97 |
|
Total ReturnA |
7.69% |
24.31% |
23.92% |
7.41% |
5.83% |
|
Ratios to Average Net AssetsC,E |
|
|
|
|
|
|
Expenses before reductions |
.88% |
.85% |
.89% |
.95% |
1.01% |
|
Expenses net of fee waivers, if any |
.88% |
.85% |
.89% |
.95% |
1.01% |
|
Expenses net of all reductions |
.88% |
.83% |
.86% |
.94% |
.98% |
|
Net investment income (loss) |
1.45% |
2.07% |
1.98% |
1.96% |
1.63% |
|
Supplemental Data |
|
|
|
|
|
|
Net assets, end of period (000 omitted) |
$ 134,569 |
$ 250,222 |
$ 303,556 |
$ 166,391 |
$ 102,081 |
|
Portfolio turnover rateD |
71% |
89% |
79% |
113% |
161% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
B Calculated based on average shares outstanding during the period.
C Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
D Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
E Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund.
F For the year ended February 29.
G Amount represents less than $.01 per share.
H Total distributions of $3.32 per share is comprised of distributions from net investment income of $.296 and distributions from net realized gain of $3.026 per share.
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 28, 2015 |
Past 1 |
Past 5 |
Past 10 |
|
Financial Services Portfolio |
11.87% |
9.42% |
1.09% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Financial Services Portfolio on February 28, 2005. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index performed over the same period.
Annual Report
Financial Services Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. stock market closed near its all-time high for the 12 months ending February 28, 2015, supported by low interest rates and the relative strength of the U.S. economy and dollar. The large-cap S&P 500® Index returned 15.51%. Growth stocks in the index outperformed value-oriented names. The tech-heavy Nasdaq Composite Index® rose 16.58%, while the small-cap Russell 2000® Index advanced 5.63%, rallying from early-period weakness amid growth and valuation worries. Among the 10 major market sectors tracked by MSCI U.S. IMI 25-50 classifications, most notched a double-digit gain, led by health care (+24%), consumer staples (+21%), information technology (+20%) and utilities (+15%). Conversely, energy (-9%) was the only sector to lose ground, reflecting a sharp drop in crude prices beginning midyear and attributed to weaker global demand and a U.S. supply boom. Volatility spiked to a three-year high in October amid concerns about economic growth and Ebola, as well as unrest in Syria, Iraq and Ukraine. Nevertheless, the S&P 500® finished the period well above its mid-October nadir, bolstered by the relative economic strength of the U.S., which marked a six-year low in its unemployment rate, and consumer confidence that declined only slightly from its 11-year high reached in January.
Comments from Christopher Lee, Portfolio Manager of Financial Services Portfolio: For the year, the fund returned 11.87%, lagging the 13.16% advance of the MSCI U.S. IMI Financials 25-50 Index, as well as the broad-based S&P 500® Index. An improved economic backdrop generally helped the sector, but low interest rates kept a lid on returns in the bank and insurance segments. Security selection within thrifts & mortgage finance and underexposure to the strong-performing real estate investment trusts (REITs) group hindered the fund's performance versus the sector benchmark. Individual detractors included subprime mortgage servicer Ocwen Financial, which saw a steep share price decline as regulators investigated the company's fast growth and reached a settlement that included years of oversight and the CEO/founder's resignation. An investment in small-cap foreign exchange broker FXCM also hurt, as the company suffered near-fatal losses from unexpected news that the Swiss franc would no longer be pegged to the euro. FXCM was sold from the portfolio by period end. By contrast, stock picks in consumer finance helped versus the index. In particular, largely avoiding sizable index component American Express was the right call, as slowing volume growth, a strong U.S. dollar and uncertainty around pending litigation pressured the stock.
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 28, 2015 |
||
|
|
% of fund's |
% of fund's net assets |
|
Citigroup, Inc. |
5.2 |
4.9 |
|
JPMorgan Chase & Co. |
5.1 |
5.2 |
|
Berkshire Hathaway, Inc. Class B |
4.7 |
4.6 |
|
Bank of America Corp. |
4.4 |
5.1 |
|
U.S. Bancorp |
4.2 |
4.5 |
|
Capital One Financial Corp. |
3.7 |
4.1 |
|
American Tower Corp. |
3.5 |
3.8 |
|
Wells Fargo & Co. |
3.3 |
3.8 |
|
McGraw Hill Financial, Inc. |
2.9 |
1.9 |
|
Invesco Ltd. |
2.4 |
2.5 |
|
|
39.4 |
|
|
Top Industries (% of fund's net assets) |
|||
|
As of February 28, 2015 |
|||
 |
Banks |
28.0% |
|
 |
Real Estate Investment Trusts |
13.1% |
|
 |
Capital Markets |
12.2% |
|
 |
Insurance |
11.5% |
|
 |
Diversified Financial Services |
9.9% |
|
 |
All Others* |
25.3% |
|
|
As of August 31, 2014 |
|||
 |
Banks |
28.9% |
|
 |
Capital Markets |
14.4% |
|
 |
Insurance |
13.2% |
|
 |
Real Estate Investment Trusts |
10.5% |
|
 |
Diversified Financial Services |
8.9% |
|
 |
All Others* |
24.1% |
|
|
* Includes short-term investments and net other assets (liabilities). |
Annual Report
Financial Services Portfolio
Investments February 28, 2015
Showing Percentage of Net Assets
|
Common Stocks - 95.2% |
|||
|
Shares |
Value |
||
|
BANKS - 28.0% |
|||
|
Diversified Banks - 23.1% |
|||
|
Bank of America Corp. |
3,894,217 |
$ 61,567,571 |
|
|
Citigroup, Inc. |
1,364,480 |
71,526,038 |
|
|
Comerica, Inc. |
274,400 |
12,562,032 |
|
|
JPMorgan Chase & Co. |
1,156,710 |
70,883,189 |
|
|
U.S. Bancorp |
1,316,184 |
58,714,968 |
|
|
Wells Fargo & Co. |
826,601 |
45,289,469 |
|
|
|
320,543,267 |
||
|
Regional Banks - 4.9% |
|||
|
CoBiz, Inc. |
438,065 |
4,945,754 |
|
|
Fifth Third Bancorp |
1,096,828 |
21,234,590 |
|
|
Popular, Inc. (a) |
176,169 |
6,079,592 |
|
|
Prosperity Bancshares, Inc. |
259,300 |
13,413,589 |
|
|
SunTrust Banks, Inc. |
548,400 |
22,484,400 |
|
|
|
68,157,925 |
||
|
TOTAL BANKS |
388,701,192 |
||
|
CAPITAL MARKETS - 12.2% |
|||
|
Asset Management & Custody Banks - 9.2% |
|||
|
Affiliated Managers Group, Inc. (a) |
60,683 |
13,133,015 |
|
|
Ameriprise Financial, Inc. |
178,240 |
23,818,211 |
|
|
Artisan Partners Asset Management, Inc. |
322,900 |
15,660,650 |
|
|
Invesco Ltd. |
822,510 |
33,122,478 |
|
|
Oaktree Capital Group LLC Class A |
258,500 |
13,907,300 |
|
|
The Blackstone Group LP |
740,304 |
27,731,788 |
|
|
|
127,373,442 |
||
|
Diversified Capital Markets - 0.6% |
|||
|
Close Brothers Group PLC |
302,200 |
7,656,110 |
|
|
Investment Banking & Brokerage - 2.4% |
|||
|
E*TRADE Financial Corp. (a) |
680,544 |
17,717,963 |
|
|
Raymond James Financial, Inc. |
276,961 |
15,822,782 |
|
|
|
33,540,745 |
||
|
TOTAL CAPITAL MARKETS |
168,570,297 |
||
|
CONSUMER FINANCE - 6.6% |
|||
|
Consumer Finance - 6.6% |
|||
|
American Express Co. |
54,900 |
4,479,291 |
|
|
Capital One Financial Corp. |
654,516 |
51,516,954 |
|
|
Navient Corp. |
959,659 |
20,536,703 |
|
|
Springleaf Holdings, Inc. (a) |
403,813 |
15,526,610 |
|
|
|
92,059,558 |
||
|
DIVERSIFIED CONSUMER SERVICES - 1.1% |
|||
|
Specialized Consumer Services - 1.1% |
|||
|
H&R Block, Inc. |
442,672 |
15,117,249 |
|
|
|
|||
|
Shares |
Value |
||
|
DIVERSIFIED FINANCIAL SERVICES - 9.9% |
|||
|
Multi-Sector Holdings - 4.7% |
|||
|
Berkshire Hathaway, Inc. Class B (a) |
438,990 |
$ 64,711,516 |
|
|
Specialized Finance - 5.2% |
|||
|
IntercontinentalExchange Group, Inc. |
137,147 |
32,278,918 |
|
|
McGraw Hill Financial, Inc. |
383,876 |
39,577,616 |
|
|
|
71,856,534 |
||
|
TOTAL DIVERSIFIED FINANCIAL SERVICES |
136,568,050 |
||
|
HEALTH CARE PROVIDERS & SERVICES - 1.3% |
|||
|
Health Care Facilities - 1.3% |
|||
|
Brookdale Senior Living, Inc. (a) |
464,800 |
17,434,648 |
|
|
INSURANCE - 11.5% |
|||
|
Insurance Brokers - 2.9% |
|||
|
Arthur J. Gallagher & Co. |
219,900 |
10,333,101 |
|
|
Brown & Brown, Inc. |
331,100 |
10,641,554 |
|
|
Marsh & McLennan Companies, Inc. |
329,164 |
18,726,140 |
|
|
|
39,700,795 |
||
|
Life & Health Insurance - 2.8% |
|||
|
MetLife, Inc. |
109,750 |
5,578,593 |
|
|
Prudential PLC |
419,950 |
10,539,172 |
|
|
Torchmark Corp. |
427,200 |
22,748,400 |
|
|
|
38,866,165 |
||
|
Property & Casualty Insurance - 5.8% |
|||
|
Allstate Corp. |
464,300 |
32,779,580 |
|
|
FNF Group |
493,600 |
18,124,992 |
|
|
The Travelers Companies, Inc. |
274,212 |
29,461,337 |
|
|
|
80,365,909 |
||
|
TOTAL INSURANCE |
158,932,869 |
||
|
INTERNET SOFTWARE & SERVICES - 1.1% |
|||
|
Internet Software & Services - 1.1% |
|||
|
eBay, Inc. (a) |
276,000 |
15,983,160 |
|
|
IT SERVICES - 5.0% |
|||
|
Data Processing & Outsourced Services - 5.0% |
|||
|
EVERTEC, Inc. |
630,270 |
13,141,130 |
|
|
Fiserv, Inc. (a) |
274,210 |
21,407,575 |
|
|
The Western Union Co. |
717,440 |
14,004,429 |
|
|
Visa, Inc. Class A |
77,000 |
20,890,870 |
|
|
|
69,444,004 |
||
|
REAL ESTATE INVESTMENT TRUSTS - 13.1% |
|||
|
Mortgage REITs - 4.2% |
|||
|
Altisource Residential Corp. Class B |
712,900 |
14,721,385 |
|
|
Blackstone Mortgage Trust, Inc. |
413,900 |
11,965,849 |
|
|
NorthStar Realty Finance Corp. |
963,700 |
18,522,314 |
|
|
Redwood Trust, Inc. (d) |
686,386 |
13,123,700 |
|
|
|
58,333,248 |
||
|
Common Stocks - continued |
|||
|
Shares |
Value |
||
|
REAL ESTATE INVESTMENT TRUSTS - CONTINUED |
|||
|
Office REITs - 1.4% |
|||
|
Boston Properties, Inc. |
137,100 |
$ 18,838,911 |
|
|
Residential REITs - 1.3% |
|||
|
Essex Property Trust, Inc. |
82,300 |
18,305,989 |
|
|
Retail REITs - 1.4% |
|||
|
WP Glimcher, Inc. |
1,091,189 |
18,910,305 |
|
|
Specialized REITs - 4.8% |
|||
|
American Tower Corp. |
490,672 |
48,645,222 |
|
|
Outfront Media, Inc. |
601,329 |
18,009,804 |
|
|
|
66,655,026 |
||
|
TOTAL REAL ESTATE INVESTMENT TRUSTS |
181,043,479 |
||
|
REAL ESTATE MANAGEMENT & DEVELOPMENT - 3.8% |
|||
|
Real Estate Services - 3.8% |
|||
|
CBRE Group, Inc. (a) |
956,231 |
32,760,474 |
|
|
Realogy Holdings Corp. (a) |
439,300 |
20,207,800 |
|
|
|
52,968,274 |
||
|
THRIFTS & MORTGAGE FINANCE - 0.7% |
|||
|
Thrifts & Mortgage Finance - 0.7% |
|||
|
MGIC Investment Corp. (a) |
234,700 |
2,142,811 |
|
|
Ocwen Financial Corp. (a)(d) |
774,480 |
6,304,267 |
|
|
Radian Group, Inc. |
99,900 |
1,579,419 |
|
|
|
10,026,497 |
||
|
TRADING COMPANIES & DISTRIBUTORS - 0.9% |
|||
|
Trading Companies & Distributors - 0.9% |
|||
|
AerCap Holdings NV (a) |
274,200 |
12,201,900 |
|
|
TOTAL COMMON STOCKS (Cost $1,131,950,182) |
|
||
|
Money Market Funds - 5.9% |
|||
|
Shares |
Value |
||
|
Fidelity Cash Central Fund, 0.13% (b) |
68,137,767 |
$ 68,137,767 |
|
|
Fidelity Securities Lending Cash Central Fund, 0.13% (b)(c) |
13,085,600 |
13,085,600 |
|
|
TOTAL MONEY MARKET FUNDS (Cost $81,223,367) |
|
||
|
TOTAL INVESTMENT PORTFOLIO - 101.1% (Cost $1,213,173,549) |
1,400,274,544 |
|
|
NET OTHER ASSETS (LIABILITIES) - (1.1)% |
(14,784,987) |
|
|
NET ASSETS - 100% |
$ 1,385,489,557 |
|
|
Legend |
|
(a) Non-income producing |
|
(b) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
|
(c) Investment made with cash collateral received from securities on loan. |
|
(d) Security or a portion of the security is on loan at period end. |
|
Affiliated Central Funds |
|
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
|
Fund |
Income earned |
|
Fidelity Cash Central Fund |
$ 51,404 |
|
Fidelity Securities Lending Cash Central Fund |
261,001 |
|
Total |
$ 312,405 |
|
Other Information |
|
The following is a summary of the inputs used, as of February 28, 2015, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements. |
|
Valuation Inputs at Reporting Date: |
||||
|
Description |
Total |
Level 1 |
Level 2 |
Level 3 |
|
Investments in Securities: |
||||
|
Common Stocks |
$ 1,319,051,177 |
$ 1,308,512,005 |
$ 10,539,172 |
$ - |
|
Money Market Funds |
81,223,367 |
81,223,367 |
- |
- |
|
Total Investments in Securities: |
$ 1,400,274,544 |
$ 1,389,735,372 |
$ 10,539,172 |
$ - |
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 28, 2015 |
|
|
|
|
|
|
Assets |
|
|
|
Investment in securities, at value (including securities loaned of $11,563,436) - See accompanying schedule: Unaffiliated issuers (cost $1,131,950,182) |
$ 1,319,051,177 |
|
|
Fidelity Central Funds (cost $81,223,367) |
81,223,367 |
|
|
Total Investments (cost $1,213,173,549) |
|
$ 1,400,274,544 |
|
Receivable for investments sold |
|
558,535 |
|
Receivable for fund shares sold |
|
539,672 |
|
Dividends receivable |
|
1,069,363 |
|
Distributions receivable from Fidelity Central Funds |
|
13,064 |
|
Prepaid expenses |
|
4,663 |
|
Other receivables |
|
5,105 |
|
Total assets |
|
1,402,464,946 |
|
|
|
|
|
Liabilities |
|
|
|
Payable for investments purchased |
$ 2,364,316 |
|
|
Payable for fund shares redeemed |
619,185 |
|
|
Accrued management fee |
627,441 |
|
|
Other affiliated payables |
224,757 |
|
|
Other payables and accrued expenses |
54,090 |
|
|
Collateral on securities loaned, at value |
13,085,600 |
|
|
Total liabilities |
|
16,975,389 |
|
|
|
|
|
Net Assets |
|
$ 1,385,489,557 |
|
Net Assets consist of: |
|
|
|
Paid in capital |
|
$1,205,519,658 |
|
Distributions in excess of net investment income |
|
(1,448,929) |
|
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions |
|
(5,681,459) |
|
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies |
|
187,100,287 |
|
Net Assets, for 15,595,891 shares outstanding |
|
$ 1,385,489,557 |
|
Net Asset Value, offering price and redemption price per share ($1,385,489,557 ÷ 15,595,891 shares) |
|
$ 88.84 |
Statement of Operations
|
|
Year ended February 28, 2015 |
|
|
|
|
|
|
Investment Income |
|
|
|
Dividends |
|
$ 20,565,286 |
|
Income from Fidelity Central Funds |
|
312,405 |
|
Total income |
|
20,877,691 |
|
|
|
|
|
Expenses |
|
|
|
Management fee |
$ 6,483,725 |
|
|
Transfer agent fees |
2,174,113 |
|
|
Accounting and security lending fees |
384,927 |
|
|
Custodian fees and expenses |
33,648 |
|
|
Independent trustees' compensation |
21,736 |
|
|
Registration fees |
47,815 |
|
|
Audit |
48,006 |
|
|
Legal |
8,072 |
|
|
Miscellaneous |
13,024 |
|
|
Total expenses before reductions |
9,215,066 |
|
|
Expense reductions |
(21,212) |
9,193,854 |
|
Net investment income (loss) |
|
11,683,837 |
|
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: |
|
|
|
Investment securities: |
|
|
|
Unaffiliated issuers |
9,888,816 |
|
|
Redemptions in-kind with affiliated entities |
13,438,259 |
|
|
Foreign currency transactions |
10,328 |
|
|
Total net realized gain (loss) |
|
23,337,403 |
|
Change in net unrealized appreciation (depreciation) on: Investment securities |
97,279,358 |
|
|
Assets and liabilities in foreign currencies |
(1,935) |
|
|
Total change in net unrealized appreciation (depreciation) |
|
97,277,423 |
|
Net gain (loss) |
|
120,614,826 |
|
Net increase (decrease) in net assets resulting from operations |
|
$ 132,298,663 |
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) |
$ 11,683,837 |
$ 9,858,463 |
|
Net realized gain (loss) |
23,337,403 |
90,918,076 |
|
Change in net unrealized appreciation (depreciation) |
97,277,423 |
44,695,581 |
|
Net increase (decrease) in net assets resulting from operations |
132,298,663 |
145,472,120 |
|
Distributions to shareholders from net investment income |
(13,087,799) |
(6,729,366) |
|
Distributions to shareholders from net realized gain |
(11,512,848) |
- |
|
Total distributions |
(24,600,647) |
(6,729,366) |
|
Share transactions |
1,131,831,200 |
225,300,994 |
|
Reinvestment of distributions |
24,263,067 |
6,569,326 |
|
Cost of shares redeemed |
(657,834,771) |
(207,165,684) |
|
Net increase (decrease) in net assets resulting from share transactions |
498,259,496 |
24,704,636 |
|
Redemption fees |
7,756 |
17,661 |
|
Total increase (decrease) in net assets |
605,965,268 |
163,465,051 |
|
|
|
|
|
Net Assets |
|
|
|
Beginning of period |
779,524,289 |
616,059,238 |
|
End of period (including distributions in excess of net investment income of $1,448,929 and undistributed net investment income of $1,137,853, respectively) |
$ 1,385,489,557 |
$ 779,524,289 |
|
Other Information Shares |
|
|
|
Sold |
13,593,841 |
2,986,460 |
|
Issued in reinvestment of distributions |
273,356 |
83,052 |
|
Redeemed |
(7,906,401) |
(2,831,630) |
|
Net increase (decrease) |
5,960,796 |
237,882 |
Financial Highlights
|
Years ended February 28, |
2015 |
2014 |
2013 |
2012F |
2011 |
|
Selected Per-Share Data |
|
|
|
|
|
|
Net asset value, beginning of period |
$ 80.90 |
$ 65.56 |
$ 57.57 |
$ 62.81 |
$ 59.32 |
|
Income from Investment Operations |
|
|
|
|
|
|
Net investment income (loss) B |
.84 |
1.06 |
.99 |
.21 |
.17 |
|
Net realized and unrealized gain (loss) |
8.75 |
15.03 |
7.75 |
(5.31) |
3.49 |
|
Total from investment operations |
9.59 |
16.09 |
8.74 |
(5.10) |
3.66 |
|
Distributions from net investment income |
(.89) |
(.75) |
(.75) |
(.14) |
(.18) |
|
Distributions from net realized gain |
(.76) |
- |
- |
- |
- |
|
Total distributions |
(1.65) |
(.75) |
(.75) |
(.14) |
(.18) |
|
Redemption fees added to paid in capitalB |
-G |
-G |
-G |
-G |
.01 |
|
Net asset value, end of period |
$ 88.84 |
$ 80.90 |
$ 65.56 |
$ 57.57 |
$ 62.81 |
|
Total ReturnA |
11.87% |
24.56% |
15.26% |
(8.07)% |
6.21% |
|
Ratios to Average Net AssetsC, E |
|
|
|
|
|
|
Expenses before reductions |
.78% |
.83% |
.87% |
.90% |
.92% |
|
Expenses net of fee waivers, if any |
.78% |
.83% |
.87% |
.90% |
.92% |
|
Expenses net of all reductions |
.78% |
.81% |
.78% |
.84% |
.88% |
|
Net investment income (loss) |
.99% |
1.43% |
1.66% |
.39% |
.28% |
|
Supplemental Data |
|
|
|
|
|
|
Net assets, end of period (000 omitted) |
$ 1,385,490 |
$ 779,524 |
$ 616,059 |
$ 439,012 |
$ 512,227 |
|
Portfolio turnover rateD |
42%H |
197% |
271% |
384% |
242% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
B Calculated based on average shares outstanding during the period.
C Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
D Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
E Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund.
F For the year ended February 29.
G Amount represents less than $.01 per share.
H Portfolio turnover rate excludes securities received or delivered in-kind.
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 28, 2015 |
Past 1 |
Past 5 |
Past 10 |
|
Insurance Portfolio |
13.01% |
15.24% |
5.21% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Insurance Portfolio on February 28, 2005. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index performed over the same period.
Annual Report
Insurance Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. stock market closed near its all-time high for the 12 months ending February 28, 2015, supported by low interest rates and the relative strength of the U.S. economy and dollar. The large-cap S&P 500® Index returned 15.51%. Growth stocks in the index outperformed value-oriented names. The tech-heavy Nasdaq Composite Index® rose 16.58%, while the small-cap Russell 2000® Index advanced 5.63%, rallying from early-period weakness amid growth and valuation worries. Among the 10 major market sectors tracked by MSCI U.S. IMI 25-50 classifications, most notched a double-digit gain, led by health care (+24%), consumer staples (+21%), information technology (+20%) and utilities (+15%). Conversely, energy (-9%) was the only sector to lose ground, reflecting a sharp drop in crude prices beginning midyear and attributed to weaker global demand and a U.S. supply boom. Volatility spiked to a three-year high in October amid concerns about economic growth and Ebola, as well as unrest in Syria, Iraq and Ukraine. Nevertheless, the S&P 500® finished the period well above its mid-October nadir, bolstered by the relative economic strength of the U.S., which marked a six-year low in its unemployment rate, and consumer confidence that declined only slightly from its 11-year high reached in January.
Comments from Peter Deutsch, Portfolio Manager of Insurance Portfolio: For the year, the fund returned 13.01%, versus 12.86% for the MSCI U.S. IMI Insurance 25-50 Index and 15.51% for the broad-based S&P 500® Index. Within the MSCI industry benchmark, property and casualty (P&C) insurance and reinsurance stocks benefited from one of the lightest catastrophe years in two decades, while the life & health and multi-line insurance segments were hit hard by declining interest rates. Versus the MSCI index, the fund gained from not owning multi-line insurer Genworth Financial when news broke that the company had overstated the profitability of its long-term care business, causing the stock to fall sharply. I later initiated a small position. An out-of-index stake in insurance-focused conglomerate Berkshire Hathaway also boosted our result, as its underlying businesses, including auto insurer Geico, helped drive a gain. By contrast, security selection in life & health insurance modestly detracted from relative performance. A bias toward higher-quality insurers with international exposure also hurt as the U.S. dollar strengthened. Among individual stocks, a modest underweighting in mortgage title insurer Fidelity National Financial nicked relative performance, as a restructuring helped drive the stock higher. This position was 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
Insurance Portfolio
Investment Changes (Unaudited)
|
Top Ten Stocks as of February 28, 2015 |
||
|
|
% of fund's |
% of fund's net assets |
|
American International Group, Inc. |
11.4 |
10.8 |
|
MetLife, Inc. |
8.2 |
9.1 |
|
ACE Ltd. |
7.3 |
7.1 |
|
The Chubb Corp. |
5.6 |
6.4 |
|
Marsh & McLennan Companies, Inc. |
5.4 |
5.6 |
|
The Travelers Companies, Inc. |
5.3 |
4.7 |
|
Allstate Corp. |
5.1 |
4.9 |
|
Prudential Financial, Inc. |
4.8 |
5.7 |
|
AFLAC, Inc. |
4.7 |
5.3 |
|
Principal Financial Group, Inc. |
3.1 |
3.6 |
|
|
60.9 |
|
|
Top Industries (% of fund's net assets) |
|||
|
As of February 28, 2015 |
|||
 |
Insurance |
96.2% |
|
 |
Diversified Financial Services |
1.5% |
|
 |
Capital Markets |
0.6% |
|
 |
Banks |
0.0% |
|
 |
All Others* |
1.7% |
|
|
As of August 31, 2014 |
|||
 |
Insurance |
97.5% |
|
 |
Diversified Financial Services |
2.0% |
|
 |
Auto Components |
0.0% |
|
 |
All Others* |
0.5% |
|
|
* Includes short-term investments and net other assets (liabilities). |
Annual Report
Insurance Portfolio
Investments February 28, 2015
Showing Percentage of Net Assets
|
Common Stocks - 98.3% |
|||
|
Shares |
Value |
||
|
BANKS - 0.0% |
|||
|
Regional Banks - 0.0% |
|||
|
Hilltop Holdings, Inc. (a) |
500 |
$ 9,300 |
|
|
CAPITAL MARKETS - 0.6% |
|||
|
Asset Management & Custody Banks - 0.6% |
|||
|
Ares Management LP |
118,200 |
2,399,460 |
|
|
DIVERSIFIED FINANCIAL SERVICES - 1.5% |
|||
|
Multi-Sector Holdings - 1.5% |
|||
|
Berkshire Hathaway, Inc. Class B (a) |
41,700 |
6,146,997 |
|
|
INSURANCE - 96.2% |
|||
|
Insurance Brokers - 11.8% |
|||
|
Aon PLC |
85,200 |
8,550,672 |
|
|
Arthur J. Gallagher & Co. |
161,700 |
7,598,283 |
|
|
Brown & Brown, Inc. |
180,200 |
5,791,628 |
|
|
Marsh & McLennan Companies, Inc. |
379,300 |
21,578,377 |
|
|
Willis Group Holdings PLC |
79,900 |
3,812,828 |
|
|
|
47,331,788 |
||
|
Life & Health Insurance - 26.3% |
|||
|
AFLAC, Inc. |
306,600 |
19,085,850 |
|
|
American Equity Investment Life Holding Co. |
600 |
17,094 |
|
|
CNO Financial Group, Inc. |
325,900 |
5,299,134 |
|
|
FBL Financial Group, Inc. Class A |
300 |
17,352 |
|
|
Lincoln National Corp. |
3,600 |
207,504 |
|
|
MetLife, Inc. |
651,075 |
33,094,142 |
|
|
Primerica, Inc. |
59,500 |
3,138,030 |
|
|
Principal Financial Group, Inc. |
244,700 |
12,521,299 |
|
|
Prudential Financial, Inc. |
236,989 |
19,160,561 |
|
|
StanCorp Financial Group, Inc. |
31,600 |
2,090,656 |
|
|
Torchmark Corp. |
81,400 |
4,334,550 |
|
|
Unum Group |
198,564 |
6,663,808 |
|
|
|
105,629,980 |
||
|
Multi-Line Insurance - 16.9% |
|||
|
American International Group, Inc. |
828,100 |
45,818,773 |
|
|
Assurant, Inc. |
63,200 |
3,872,264 |
|
|
Genworth Financial, Inc. Class A (a) |
325,900 |
2,525,725 |
|
|
Hartford Financial Services Group, Inc. |
268,200 |
10,985,472 |
|
|
Loews Corp. |
91,300 |
3,744,213 |
|
|
Zurich Insurance Group AG |
3,737 |
1,194,774 |
|
|
|
68,141,221 |
||
|
Property & Casualty Insurance - 36.4% |
|||
|
ACE Ltd. |
256,149 |
29,203,547 |
|
|
Allied World Assurance Co. |
170,400 |
6,892,680 |
|
|
Allstate Corp. |
290,500 |
20,509,300 |
|
|
AmTrust Financial Services, Inc. (d) |
31,600 |
1,703,240 |
|
|
Arch Capital Group Ltd. (a) |
10,300 |
609,348 |
|
|
Argo Group International Holdings, Ltd. |
19,910 |
953,888 |
|
|
Assured Guaranty Ltd. |
110,200 |
2,922,504 |
|
|
|
|||
|
Shares |
Value |
||
|
Axis Capital Holdings Ltd. |
17,000 |
$ 881,110 |
|
|
Beazley PLC |
280,296 |
1,251,902 |
|
|
Employers Holdings, Inc. |
800 |
18,872 |
|
|
esure Group PLC |
253,200 |
937,385 |
|
|
First American Financial Corp. |
67,600 |
2,368,028 |
|
|
FNF Group |
63,900 |
2,346,408 |
|
|
FNFV Group (a) |
21,299 |
317,142 |
|
|
Hanover Insurance Group, Inc. |
48,100 |
3,378,544 |
|
|
Hiscox Ltd. |
278,728 |
3,403,786 |
|
|
Markel Corp. (a) |
7,600 |
5,665,344 |
|
|
MBIA, Inc. (a) |
900 |
8,100 |
|
|
Meadowbrook Insurance Group, Inc. |
700 |
5,852 |
|
|
Mercury General Corp. |
200 |
10,906 |
|
|
ProAssurance Corp. |
105,100 |
4,728,449 |
|
|
Progressive Corp. |
173,400 |
4,621,110 |
|
|
Selective Insurance Group, Inc. |
87,200 |
2,374,456 |
|
|
The Chubb Corp. |
224,958 |
22,597,031 |
|
|
The Travelers Companies, Inc. |
196,900 |
21,154,936 |
|
|
W.R. Berkley Corp. |
25,000 |
1,247,750 |
|
|
XL Group PLC Class A |
172,900 |
6,258,980 |
|
|
|
146,370,598 |
||
|
Reinsurance - 4.8% |
|||
|
Alleghany Corp. (a) |
25 |
11,814 |
|
|
Everest Re Group Ltd. |
3,200 |
567,776 |
|
|
Maiden Holdings Ltd. |
700 |
10,017 |
|
|
Muenchener Rueckversicherungs AG |
16,700 |
3,466,649 |
|
|
PartnerRe Ltd. |
15,500 |
1,774,750 |
|
|
Reinsurance Group of America, Inc. |
97,833 |
8,737,465 |
|
|
Validus Holdings Ltd. |
109,900 |
4,576,236 |
|
|
|
19,144,707 |
||
|
TOTAL INSURANCE |
386,618,294 |
||
|
TOTAL COMMON STOCKS (Cost $294,478,707) |
|
||
|
Money Market Funds - 1.8% |
|||
|
|
|
|
|
|
Fidelity Cash Central Fund, 0.13% (b) |
5,385,440 |
5,385,440 |
|
|
Fidelity Securities Lending Cash Central Fund, 0.13% (b)(c) |
1,764,000 |
1,764,000 |
|
|
TOTAL MONEY MARKET FUNDS (Cost $7,149,440) |
|
||
|
TOTAL INVESTMENT PORTFOLIO - 100.1% (Cost $301,628,147) |
402,323,491 |
|
|
NET OTHER ASSETS (LIABILITIES) - (0.1)% |
(505,290) |
|
|
NET ASSETS - 100% |
$ 401,818,201 |
|
|
Legend |
|
(a) Non-income producing |
|
(b) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
|
(c) Investment made with cash collateral received from securities on loan. |
|
(d) Security or a portion of the security is on loan at period end. |
|
Affiliated Central Funds |
|
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
|
Fund |
Income earned |
|
Fidelity Cash Central Fund |
$ 3,498 |
|
Fidelity Securities Lending Cash Central Fund |
81,406 |
|
Total |
$ 84,904 |
|
Other Information |
|
All investments are categorized as Level 1 under the Fair Value Hierarchy. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements. |
|
Distribution of investments by country or territory of incorporation, as a percentage of total net assets, is as follows (Unaudited): |
|
United States of America |
80.8% |
|
Switzerland |
9.3% |
|
Bermuda |
3.8% |
|
Ireland |
2.6% |
|
United Kingdom |
2.3% |
|
Others (Individually Less Than 1%) |
1.2% |
|
|
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 28, 2015 |
|
|
|
|
|
|
Assets |
|
|
|
Investment in securities, at value (including securities loaned of $1,697,850) - See accompanying schedule: Unaffiliated issuers (cost $294,478,707) |
$ 395,174,051 |
|
|
Fidelity Central Funds (cost $7,149,440) |
7,149,440 |
|
|
Total Investments (cost $301,628,147) |
|
$ 402,323,491 |
|
Receivable for investments sold |
|
1,004,682 |
|
Receivable for fund shares sold |
|
321,703 |
|
Dividends receivable |
|
759,942 |
|
Distributions receivable from Fidelity Central Funds |
|
2,338 |
|
Prepaid expenses |
|
1,527 |
|
Other receivables |
|
817 |
|
Total assets |
|
404,414,500 |
|
|
|
|
|
Liabilities |
|
|
|
Payable for fund shares redeemed |
$ 541,074 |
|
|
Accrued management fee |
182,995 |
|
|
Other affiliated payables |
75,329 |
|
|
Other payables and accrued expenses |
32,901 |
|
|
Collateral on securities loaned, at value |
1,764,000 |
|
|
Total liabilities |
|
2,596,299 |
|
|
|
|
|
Net Assets |
|
$ 401,818,201 |
|
Net Assets consist of: |
|
|
|
Paid in capital |
|
$ 299,083,599 |
|
Undistributed net investment income |
|
646,580 |
|
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions |
|
1,393,126 |
|
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies |
|
100,694,896 |
|
Net Assets, for 6,008,942 shares outstanding |
|
$ 401,818,201 |
|
Net Asset Value, offering price and redemption price per share ($401,818,201 ÷ 6,008,942 shares) |
|
$ 66.87 |
Statement of Operations
|
|
Year ended February 28, 2015 |
|
|
|
|
|
|
Investment Income |
|
|
|
Dividends |
|
$ 8,887,752 |
|
Income from Fidelity Central Funds |
|
84,904 |
|
Total income |
|
8,972,656 |
|
|
|
|
|
Expenses |
|
|
|
Management fee |
$ 2,192,510 |
|
|
Transfer agent fees |
753,971 |
|
|
Accounting and security lending fees |
155,383 |
|
|
Custodian fees and expenses |
14,078 |
|
|
Independent trustees' compensation |
7,908 |
|
|
Registration fees |
33,130 |
|
|
Audit |
38,129 |
|
|
Legal |
3,116 |
|
|
Interest |
688 |
|
|
Miscellaneous |
14,808 |
|
|
Total expenses before reductions |
3,213,721 |
|
|
Expense reductions |
(561) |
3,213,160 |
|
Net investment income (loss) |
|
5,759,496 |
|
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: |
|
|
|
Investment securities: |
|
|
|
Unaffiliated issuers |
22,117,532 |
|
|
Foreign currency transactions |
(9,682) |
|
|
Total net realized gain (loss) |
|
22,107,850 |
|
Change in net unrealized appreciation (depreciation) on: Investment securities |
21,062,711 |
|
|
Assets and liabilities in foreign currencies |
(1,874) |
|
|
Total change in net unrealized appreciation (depreciation) |
|
21,060,837 |
|
Net gain (loss) |
|
43,168,687 |
|
Net increase (decrease) in net assets resulting from operations |
|
$ 48,928,183 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Changes in Net Assets
|
|
Year ended |
Year ended |
|
Increase (Decrease) in Net Assets |
|
|
|
Operations |
|
|
|
Net investment income (loss) |
$ 5,759,496 |
$ 5,716,251 |
|
Net realized gain (loss) |
22,107,850 |
61,583,125 |
|
Change in net unrealized appreciation (depreciation) |
21,060,837 |
35,523,060 |
|
Net increase (decrease) in net assets resulting from operations |
48,928,183 |
102,822,436 |
|
Distributions to shareholders from net investment income |
(5,518,736) |
(5,025,333) |
|
Distributions to shareholders from net realized gain |
(37,396,850) |
(38,049,834) |
|
Total distributions |
(42,915,586) |
(43,075,167) |
|
Share transactions |
86,312,878 |
369,681,359 |
|
Reinvestment of distributions |
41,742,628 |
42,144,995 |
|
Cost of shares redeemed |
(162,737,537) |
(348,195,310) |
|
Net increase (decrease) in net assets resulting from share transactions |
(34,682,031) |
63,631,044 |
|
Redemption fees |
5,876 |
32,542 |
|
Total increase (decrease) in net assets |
(28,663,558) |
123,410,855 |
|
|
|
|
|
Net Assets |
|
|
|
Beginning of period |
430,481,759 |
307,070,904 |
|
End of period (including undistributed net investment income of $646,580 and undistributed net investment income of $1,110,409, respectively) |
$ 401,818,201 |
$ 430,481,759 |
|
Other Information Shares |
|
|
|
Sold |
1,299,698 |
5,802,380 |
|
Issued in reinvestment of distributions |
650,226 |
641,929 |
|
Redeemed |
(2,455,227) |
(5,335,482) |
|
Net increase (decrease) |
(505,303) |
1,108,827 |
Financial Highlights
|
Years ended February 28, |
2015 |
2014 |
2013 |
2012 F |
2011 |
|
Selected Per-Share Data |
|
|
|
|
|
|
Net asset value, beginning of period |
$ 66.08 |
$ 56.81 |
$ 47.56 |
$ 50.04 |
$ 41.55 |
|
Income from Investment Operations |
|
|
|
|
|
|
Net investment income (loss) B |
.96 |
.75 |
.68 |
.43 |
.47 |
|
Net realized and unrealized gain (loss) |
7.13 |
13.75 |
10.06 |
(2.52) |
8.36 |
|
Total from investment operations |
8.09 |
14.50 |
10.74 |
(2.09) |
8.83 |
|
Distributions from net investment income |
(.96) |
(.61) |
(.52) |
(.39) |
(.34) |
|
Distributions from net realized gain |
(6.34) |
(4.62) |
(.97) |
- |
- |
|
Total distributions |
(7.30) |
(5.23) |
(1.49) |
(.39) |
(.34) |
|
Redemption fees added to paid in capital B, G |
- |
- |
- |
- |
- |
|
Net asset value, end of period |
$ 66.87 |
$ 66.08 |
$ 56.81 |
$ 47.56 |
$ 50.04 |
|
Total ReturnA |
13.01% |
25.82% |
22.91% |
(4.13)% |
21.31% |
|
Ratios to Average Net AssetsC,E |
|
|
|
|
|
|
Expenses before reductions |
.81% |
.83% |
.87% |
.89% |
.93% |
|
Expenses net of fee waivers, if any |
.81% |
.83% |
.87% |
.89% |
.93% |
|
Expenses net of all reductions |
.81% |
.82% |
.85% |
.88% |
.91% |
|
Net investment income (loss) |
1.44% |
1.17% |
1.35% |
.94% |
1.05% |
|
Supplemental Data |
|
|
|
|
|
|
Net assets, end of period (000 omitted) |
$ 401,818 |
$ 430,482 |
$ 307,071 |
$ 270,776 |
$ 248,055 |
|
Portfolio turnover rateD |
26% |
126% |
157% |
153% |
193% |
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 28, 2015
1. Organization.
Banking Portfolio, Brokerage and Investment Management Portfolio, Consumer Finance Portfolio, Financial Services 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 Financial Services Portfolio and Banking 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. Share transactions on the Statement of Changes in Net Assets may contain exchanges between funds.
2. Investments in Fidelity Central Funds.
The Funds invest in Fidelity Central Funds, which are open-end investment companies generally available only to other investment companies and accounts managed by the investment adviser and its affiliates. The Funds' Schedules of Investments list each of the Fidelity Central Funds held as of period end, if any, as an investment of each Fund, but do not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, each Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of the investment adviser. Annualized expenses of the Money Market Central Funds as of their most recent shareholder report date are less than .01%.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) website at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Funds' Report of Independent Registered Public Accounting Firm, are available on the SEC website or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Funds:
Investment Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Board of Trustees (the Board) has delegated the day to day responsibility for the valuation of each Fund's investments to the Fidelity SelectCo, LLC (SelectCo) Fair Value Committee (the Committee). In accordance with valuation policies and procedures approved by the Board, each Fund attempts to obtain prices from one or more third party pricing vendors or brokers to value its investments. When current market prices, quotations or currency exchange rates are not readily available or reliable, investments will be fair valued in good faith by the Committee, in accordance with procedures adopted by the Board. Factors used in determining fair value vary by investment type and may include market or investment specific events. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The Committee oversees each Fund's valuation policies and procedures and reports to the Board on the Committee's activities and fair value determinations. The Board monitors the appropriateness of the procedures used in valuing each Fund's investments and ratifies the fair value determinations of the Committee.
Each Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the Fund's own assumptions based on the best information available)
Valuation techniques used to value each Fund's investments by major category are as follows:
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by a third party pricing vendor on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-Traded Funds (ETFs) and certain indexes as well as quoted prices for similar securities may be used and would be categorized as Level 2 in the hierarchy. Utilizing these techniques may result in transfers between Level 1 and Level 2. For equity securities, including restricted securities, where observable inputs are limited, assumptions about market activity and risk are used and these securities may be categorized as Level 3 in the hierarchy.
Annual Report
3. Significant Accounting Policies - continued
Investment Valuation - continued
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value (NAV) each business day and are categorized as Level 1 in the hierarchy.
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level, as of February 28, 2015, is included at the end of each applicable Fund's Schedule of Investments.
Foreign Currency. The Funds may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rates at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Funds' investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Funds are informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Income and capital gain distributions from Fidelity Central Funds, if any, are recorded on the ex-dividend date. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. Subsequent to ex-dividend date the Funds determine the components of these distributions, based upon receipt of tax filings or other correspondence relating to the underlying investment. Interest income is accrued as earned and includes coupon interest and amortization of premium and accretion of discount on debt securities as applicable. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Deferred Trustee Compensation. Under a Deferred Compensation Plan (the Plan) for Brokerage and Investment Management Portfolio, independent Trustees may elect to defer receipt of a portion of their annual compensation. Deferred amounts are invested in a cross-section of Fidelity funds, are marked-to-market and remain in the Fund until distributed in accordance with the Plan. The investment of deferred amounts and the offsetting payable to the Trustees are included in the accompanying Statement of Assets and Liabilities.
Income Tax Information and Distributions to Shareholders. Each year, each Fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for U.S. Federal income taxes is required. As of February 28, 2015, each Fund did not have any unrecognized tax benefits in the financial statements; nor is each Fund aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. Each Fund files a U.S. federal tax return, in addition to state and local tax returns as required. Each Fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction. Foreign taxes are provided for based on each Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
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 to redeeming shareholders as a distribution for income tax purposes.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Capital accounts are not adjusted for temporary book-tax differences which will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, passive foreign investment companies (PFIC), Redemption in Kind, partnership, deferred trustees compensation, capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows for each Fund:
|
|
Tax cost |
Gross unrealized |
Gross unrealized |
Net unrealized |
|
Banking Portfolio |
$ 508,349,988 |
$ 96,187,720 |
$ (14,592,337) |
$ 81,595,383 |
|
Brokerage and Investment Management Portfolio |
465,692,433 |
118,116,844 |
(9,304,090) |
108,812,754 |
|
Consumer Finance Portfolio |
115,244,244 |
30,640,302 |
(3,225,705) |
27,414,597 |
|
Financial Services Portfolio |
1,218,666,456 |
207,033,698 |
(25,425,610) |
181,608,088 |
|
Insurance Portfolio |
303,136,336 |
101,457,273 |
(2,270,118) |
99,187,155 |
The tax-based components of distributable earnings as of period end were as follows for each Fund:
|
|
Undistributed |
Undistributed |
Capital loss |
Net unrealized |
|
Banking Portfolio |
$ 1,666,949 |
$ 12,896,727 |
$ - |
$ 81,594,620 |
|
Brokerage and Investment Management Portfolio |
695,454 |
4,288,050 |
- |
108,812,754 |
|
Consumer Finance Portfolio |
39,521 |
7,100,552 |
(17,267,539) |
27,414,597 |
|
Financial Services Portfolio |
- |
- |
- |
181,607,380 |
|
Insurance Portfolio |
782,028 |
2,765,868 |
- |
99,186,707 |
Due to large subscriptions in a prior period, $17,267,539 of capital losses that will be available to offset future capital gains of the Consumer Finance Portfolio will be limited to approximately $5,418,625 per year.
Certain of the Funds intend to elect to defer to the next fiscal year capital losses and ordinary losses recognized during the period November 1, 2014 to February 28, 2015. Loss deferrals were as follows:
|
|
Capital losses |
Ordinary losses |
|
Financial Services Portfolio |
$ 188,552 |
$ 1,448,764 |
The tax character of distributions paid was as follows:
|
February 28, 2015 |
|
|
|
|
|
Ordinary Income |
Long-term |
Total |
|
Banking Portfolio |
$ 17,722,180 |
$ 19,677,551 |
$ 37,399,731 |
|
Brokerage and Investment Management Portfolio |
12,494,854 |
7,951,457 |
20,446,311 |
|
Consumer Finance Portfolio |
2,831,537 |
32,268,529 |
35,100,066 |
|
Financial Services Portfolio |
17,091,611 |
7,509,036 |
24,600,647 |
|
Insurance Portfolio |
20,370,490 |
22,545,096 |
42,915,586 |
|
February 28, 2014 |
|
|
|
|
|
Ordinary Income |
Long-term |
Total |
|
Banking Portfolio |
$ 5,835,222 |
$ 15,904,464 |
$ 21,739,686 |
|
Brokerage and Investment Management Portfolio |
4,851,731 |
- |
4,851,731 |
|
Consumer Finance Portfolio |
16,102,735 |
27,367,785 |
43,470,520 |
|
Financial Services Portfolio |
6,729,366 |
- |
6,729,366 |
|
Insurance Portfolio |
12,192,698 |
30,882,469 |
43,075,167 |
Trading (Redemption) Fees. Shares held by investors in the Funds less than 30 days may be subject to a redemption fee equal to .75% of the NAV of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Funds and accounted for as an addition to paid in capital.
Annual Report
3. Significant Accounting Policies - continued
New Accounting Pronouncement. In June 2014, the Financial Accounting Standards Board issued Accounting Standard Update No. 2014-11, Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures (the Update). The Update amends the accounting for certain repurchase agreements and expands disclosure requirements for reverse repurchase agreements, securities lending and other similar transactions. The disclosure requirements are effective for annual and interim reporting periods beginning after December 15, 2014. Management is currently evaluating the impact of the Update on the Funds' financial statements and related disclosures.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities and in-kind transactions, are noted in the table below.
|
|
Purchases ($) |
Sales ($) |
|
Banking Portfolio |
430,308,768 |
663,163,489 |
|
Brokerage and Investment Management Portfolio |
189,537,417 |
478,246,425 |
|
Consumer Finance Portfolio |
119,227,367 |
241,114,361 |
|
Financial Services Portfolio |
994,886,000 |
473,756,597 |
|
Insurance Portfolio |
101,204,934 |
177,225,365 |
5. Fees and Other Transactions with Affiliates.
Management Fee. Fidelity SelectCo, LLC (the investment adviser) and its affiliates provide the Funds with investment management related services for which the Funds pay a monthly management fee. The management fee is the sum of an individual fund fee rate and an annualized group fee rate. The individual fund fee rate is applied to each Fund's average net assets. The group fee rate is based upon the average net assets of all the mutual funds advised by Fidelity Management & Research Company (FMR) and the investment adviser. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the reporting period, each Fund's annual management fee rate expressed as a percentage of each Fund's average net assets was as follows.
|
|
Individual Rate |
Group Rate |
Total |
|
Banking Portfolio |
.30% |
.25% |
.55% |
|
Brokerage and Investment Management Portfolio |
.30% |
.25% |
.55% |
|
Consumer Finance Portfolio |
.30% |
.25% |
.55% |
|
Financial Services Portfolio |
.30% |
.25% |
.55% |
|
Insurance Portfolio |
.30% |
.25% |
.55% |
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of the investment adviser, is the Funds' transfer, dividend disbursing and shareholder servicing agent. FIIOC receives account fees and asset-based fees that vary according to account size and type of account. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, transfer agent fees were equivalent to the following annual rates expressed as a percentage of average net assets:
|
Banking Portfolio |
.19% |
|
Brokerage and Investment Management Portfolio |
.19% |
|
Consumer Finance Portfolio |
.24% |
|
Financial Services Portfolio |
.18% |
|
Insurance Portfolio |
.19% |
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of the investment adviser, maintains each Fund's accounting records. The accounting fee is based on the level of average net assets for each month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. Certain Funds placed a portion of their portfolio transactions with brokerage firms which are affiliates of the investment adviser. Brokerage commissions are included in net realized gain (loss) and change in net unrealized appreciation (depreciation) in the Statement of Operations. The commissions paid to these affiliated firms were as follows:
|
|
Amount |
|
Banking Portfolio |
$ 14,662 |
|
Brokerage and Investment Management Portfolio |
7,624 |
|
Consumer Finance Portfolio |
4,964 |
|
Financial Services Portfolio |
10,136 |
|
Insurance Portfolio |
2,586 |
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 Funds, along with other registered investment companies having management contracts with FMR or other affiliated entities of FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. Each applicable fund's activity in this program during the period for which loans were outstanding was as follows:
|
|
Borrower or |
Average Loan |
Weighted |
Interest Expense |
|
Banking Portfolio |
Borrower |
$ 18,075,632 |
.31% |
$ 3,004 |
|
Brokerage and Investment Management Portfolio |
Borrower |
$ 8,391,286 |
.32% |
$ 520 |
|
Consumer Finance Portfolio |
Borrower |
$ 2,370,143 |
.31% |
$ 143 |
|
Insurance Portfolio |
Borrower |
$ 4,355,889 |
.32% |
$ 688 |
Redemptions In-Kind. During the period, 955,387 shares of Financial Services Portfolio held by an affiliated entity were redeemed in kind for investments with a value of $78,905,413. The net realized gain of $13,438,259 on investments delivered through in-kind redemptions is included in the accompanying Statement of Operations. The amount of in-kind redemptions is included in share transactions in the accompanying Statement of Changes in Net Assets. Financial Services Portfolio recognized no gain or loss for federal income tax purposes.
Other. During the period, the investment adviser reimbursed Consumer Finance Portfolio for certain losses in the amount of $5,451.
6. Committed Line of Credit.
Certain Funds participate with other funds managed by the investment adviser or an affiliate in a $4.25 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The participating funds have agreed to pay commitment fees on their pro-rata portion of the line of credit, which are reflected in Miscellaneous expenses on the Statement of Operations, and are as follows:
|
Banking Portfolio |
$ 1,096 |
|
Brokerage and Investment Management Portfolio |
1,101 |
|
Consumer Finance Portfolio |
296 |
|
Financial Services Portfolio |
1,603 |
|
Insurance Portfolio |
662 |
During the period, the Funds did not borrow on this line of credit.
7. Security Lending.
Certain Funds lend portfolio securities through a lending agent from time to time in order to earn additional income. On the settlement date of the loan, each applicable Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Funds and any additional required collateral is delivered to the Funds on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, the Funds may apply collateral received from the borrower against the obligation. The Funds may experience delays and costs in recovering the securities loaned. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on each applicable Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented on each applicable Fund's Statement of Operations as a component of income from Fidelity Central Funds. Security lending activity was as follows:
|
|
Total Security |
|
Banking Portfolio |
$ 66,632 |
|
Brokerage and Investment Management Portfolio |
10,517 |
|
Consumer Finance Portfolio |
145,593 |
|
Financial Services Portfolio |
261,001 |
|
Insurance Portfolio |
81,406 |
Annual Report
8. Bank Borrowings.
Each Fund is permitted to have bank borrowings for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity requirements. Each Fund has established borrowing arrangements with certain banks. The interest rate on the borrowings is the bank's base rate, as revised from time to time. At period end, there were no bank borrowings outstanding. Each applicable Fund's activity in this program during the period for which loans were outstanding was as follows:
|
|
Average Loan |
Weighted |
Interest Expense |
|
Banking Portfolio |
$ 14,927,444 |
.59% |
$ 2,198 |
9. Expense Reductions.
Commissions paid to certain brokers with whom the investment adviser, or its affiliates, places trades on behalf of Certain Funds include an amount in addition to trade execution, which may be rebated back to the Funds to offset certain expenses. In addition, through arrangements with each applicable Fund's custodian, credits realized as a result of uninvested cash balances were used to reduce each applicable Fund's expenses. All of the applicable expense reductions are noted in the table below.
|
|
Brokerage Service reduction |
Custody |
|
Banking Portfolio |
$ 29,335 |
$ 70 |
|
Brokerage and Investment Management Portfolio |
9,470 |
48 |
|
Financial Services Portfolio |
19,740 |
29 |
In addition, during the period the following Funds were reimbursed by the investment adviser for a portion of operating expenses:
|
|
Amount |
|
Banking Portfolio |
$ 1,387 |
|
Brokerage and Investment Management Portfolio |
1,374 |
|
Consumer Finance Portfolio |
321 |
|
Financial Services Portfolio |
1,443 |
|
Insurance Portfolio |
561 |
10. Other.
The Funds' organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Funds. In the normal course of business, the Funds may also enter into contracts that provide general indemnifications. The Funds' maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Funds. The risk of material loss from such claims is considered remote.
At the end of the period, the following mutual funds managed by the investment adviser or its affiliates were the owners of record of 10% or more of the total outstanding shares of the following Funds.
|
|
VIP |
VIP |
Strategic Advisers |
|
Banking Portfolio |
- |
25% |
- |
|
Brokerage and Investment Management Portfolio |
11% |
- |
- |
|
Financial Services Portfolio |
12% |
21% |
33% |
|
Insurance Portfolio |
- |
16% |
- |
Mutual funds managed by the investment adviser or its affiliates, in aggregate, were the owners of record of more than 20% of the total outstanding shares of the following Funds.
|
|
% of shares held |
|
Banking Portfolio |
41% |
|
Brokerage and Investment Management Portfolio |
23% |
|
Financial Services Portfolio |
72% |
|
Insurance Portfolio |
29% |
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 positions of Banking Portfolio, Brokerage and Investment Management Portfolio, Consumer Finance Portfolio, Financial Services Portfolio and Insurance Portfolio (funds of Fidelity Select Portfolios) at February 28, 2015, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fidelity Select Portfolios' management Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at February 28, 2015 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 15, 2015
Annual Report
Trustees and Officers
The Trustees and officers of the trust and funds, as applicable, are listed below. The Board of Trustees governs each fund and is responsible for protecting the interests of shareholders. The Trustees are experienced executives who meet periodically throughout the year to oversee each fund's activities, review contractual arrangements with companies that provide services to each fund, oversee management of the risks associated with such activities and contractual arrangements, and review each fund's performance. Each of the Trustees oversees 75 funds.
The Trustees hold office without limit in time except that (a) any Trustee may resign; (b) any Trustee may be removed by written instrument, signed by at least two-thirds of the number of Trustees prior to such removal; (c) any Trustee who requests to be retired or who has become incapacitated by illness or injury may be retired by written instrument signed by a majority of the other Trustees; and (d) any Trustee may be removed at any special meeting of shareholders by a two-thirds vote of the outstanding voting securities of the trust. The officers hold office without limit in time, except that any officer may resign or may be removed by a vote of a majority of the Trustees at any regular meeting or any special meeting of the Trustees. Except as indicated, each individual has held the office shown or other offices in the same company for the past five years.
Experience, Skills, Attributes, and Qualifications of the Funds' Trustees. The Governance and Nominating Committee has adopted a statement of policy that describes the experience, qualifications, attributes, and skills that are necessary and desirable for potential Independent Trustee candidates (Statement of Policy). The Board believes that each Trustee satisfied at the time he or she was initially elected or appointed a Trustee, and continues to satisfy, the standards contemplated by the Statement of Policy. The Governance and Nominating Committee also engages professional search firms to help identify potential Independent Trustee candidates who have the experience, qualifications, attributes, and skills consistent with the Statement of Policy. From time to time, additional criteria based on the composition and skills of the current Independent Trustees, as well as experience or skills that may be appropriate in light of future changes to board composition, business conditions, and regulatory or other developments, have also been considered by the professional search firms and the Governance and Nominating Committee. In addition, the Board takes into account the Trustees' commitment and participation in Board and committee meetings, as well as their leadership of standing and ad hoc committees throughout their tenure.
In determining that a particular Trustee was and continues to be qualified to serve as a Trustee, the Board has considered a variety of criteria, none of which, in isolation, was controlling. The Board believes that, collectively, the Trustees have balanced and diverse experience, qualifications, attributes, and skills, which allow the Board to operate effectively in governing each fund and protecting the interests of shareholders. Information about the specific experience, skills, attributes, and qualifications of each Trustee, which in each case led to the Board's conclusion that the Trustee should serve (or continue to serve) as a trustee of the funds, is provided below.
Board Structure and Oversight Function. Brian B. Hogan is an interested person (as defined in the 1940 Act) and currently serves as Chairman. The Trustees have determined that an interested Chairman is appropriate and benefits shareholders because an interested Chairman has a personal and professional stake in the quality and continuity of services provided to the funds. Independent Trustees exercise their informed business judgment to appoint an individual of their choosing to serve as Chairman, regardless of whether the Trustee happens to be independent or a member of management. The Independent Trustees have determined that they can act independently and effectively without having an Independent Trustee serve as Chairman and that a key structural component for assuring that they are in a position to do so is for the Independent Trustees to constitute a substantial majority for the Board. The Independent Trustees also regularly meet in executive session. Michael E. Wiley serves as Chairman of the Independent Trustees and as such (i) acts as a liaison between the Independent Trustees and management with respect to matters important to the Independent Trustees and (ii) with management prepares agendas for Board meetings.
Fidelity funds are overseen by different Boards of Trustees. The funds' Board oversees Fidelity's sector portfolios. Other Boards oversee Fidelity's equity and high income funds, and Fidelity's investment grade bond, money market, and asset allocation funds. The use of separate Boards, each with its own committee structure, allows the Trustees of each group of Fidelity funds to focus on the unique issues of the funds they oversee, including common research, investment, and operational issues. On occasion, the separate Boards establish joint committees to address issues of overlapping consequences for the Fidelity funds overseen by each Board.
The Trustees operate using a system of committees to facilitate the timely and efficient consideration of all matters of importance to the Trustees, each fund, and fund shareholders and to facilitate compliance with legal and regulatory requirements and oversight of the funds' activities and associated risks. The Board, acting through its committees, has charged SelectCo and its affiliates with (i) identifying events or circumstances the occurrence of which could have demonstrably adverse effects on the funds' business and/or reputation; (ii) implementing processes and controls to lessen the possibility that such events or circumstances occur or to mitigate the effects of such events or circumstances if they do occur; and (iii) creating and maintaining a system designed to evaluate continuously business and market conditions in order to facilitate the identification and implementation processes described in (i) and (ii) above. Because the day-to-day operations and activities of the funds are carried out by or through SelectCo, its affiliates, and other service providers, the funds' exposure to risks is mitigated but not eliminated by the processes overseen by the Trustees. While each of the Board's committees has responsibility for overseeing different aspects of the funds' activities, oversight is exercised primarily through the Operations and Audit Committees. Appropriate personnel, including but not limited to the funds' Chief Compliance Officer (CCO), SelectCo's internal auditor, the independent accountants, the funds' Treasurer and portfolio management personnel, make periodic reports to the Board's committees, as appropriate. The responsibilities of each standing committee, including their oversight responsibilities, are described further under "Standing Committees of the Funds' Trustees."
The funds' Statement of Additional Information (SAI) includes more information about the Trustees. To request a free copy, call Fidelity at 1-800-544-8544.
Annual Report
Interested Trustee*:
Correspondence intended for the Trustee who is an interested person may be sent to Fidelity Investments, 245 Summer Street, Boston, Massachusetts 02210.
|
Name, Year of Birth; Principal Occupations and Other Relevant Experience+ |
|
|
Brian B. Hogan (1964) |
|
|
Year of Election or Appointment: 2014 Trustee Chairman of the Board of Trustees |
|
|
|
Mr. Hogan also serves as Trustee or Vice President of other funds. Mr. Hogan serves as a Director of Fidelity SelectCo, LLC (2014-present) and President of FMR's Equity Division (2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager. |
* Trustee has been determined to be an "Interested Trustee" by virtue of, among other things, his affiliation with the trust or various entities under common control with SelectCo.
+ The information above includes the Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to the Trustee's qualifications to serve as a Trustee, which led to the conclusion that the Trustee should serve as a Trustee for each fund.
Independent Trustees:
Correspondence intended for each Independent Trustee (that is, the Trustees other than the Interested Trustee) may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235.
|
Name, Year of Birth; Principal Occupations and Other Relevant Experience+ |
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David A. Rosow (1942) |
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Year of Election or Appointment: 2013 Trustee |
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|
Mr. Rosow also serves as Trustee of other Fidelity funds. Prior to his retirement in 2006, Mr. Rosow was the Chief Executive Officer, owner and operator of a number of private companies, which encompassed oil refining, drilling and marketing of petroleum products (including specialty petroleum products), the recreation industry, and real estate development. Previously, Mr. Rosow served as Lead Director and Chairman of the Audit Committee of Hudson United Bancorp (1996-2006), Chairman of the Board of Westport Bank and Trust (1992-1996), and as a Director of TD Banknorth (2006-2007). In addition, Mr. Rosow served as a member (2008-2014) and President (2009-2014) of the Town Council of Palm Beach, Florida. Mr. Rosow also served as a Member of the Advisory Board of other Fidelity funds (2012-2013). |
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Garnett A. Smith (1947) |
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Year of Election or Appointment: 2013 Trustee |
|
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|
Mr. Smith also serves as Trustee of other Fidelity funds. Prior to Mr. Smith's retirement, he served as Chairman and Chief Executive Officer of Inbrand Corp. (manufacturer of personal absorbent products, 1990-1997). He also served as President (1986-1990) of Inbrand Corp. Prior to his employment with Inbrand Corp., he was employed by a retail fabric chain and North Carolina National Bank. In addition, Mr. Smith served as a Member of the Advisory Board of other Fidelity funds (2012-2013) and as a board member of the Jackson Hole Land Trust (2009-2012). |
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Michael E. Wiley (1950) |
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Year of Election or Appointment: 2008 Trustee Chairman of the Independent Trustees |
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|
Mr. Wiley also serves as Trustee of other Fidelity funds. Mr. Wiley serves as a Director of Tesoro Corporation (independent oil refiner and marketer, 2005-present), and a Director of Bill Barrett Corporation (exploration and production, 2005-present). In addition, Mr. Wiley also serves as a Director of Post Oak Bank (privately-held bank, 2004-present). Previously, Mr. Wiley served as a Trustee of other Fidelity funds (2008-2013), as a Director of Asia Pacific Exploration Consolidated (international oil and gas exploration and production, 2008-2013), as a member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-2010), as a Senior Energy Advisor of Katzenbach Partners, LLC (consulting, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production, 2001-2005). |
Annual Report
Trustees and Officers - continued
+ The information above includes each Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to each Trustee's qualifications to serve as a Trustee, which led to the conclusion that each Trustee should serve as a Trustee for each fund.
Officers:
Except for Anthony R. Rochte, correspondence intended for each officer may be sent to Fidelity Investments, 245 Summer Street, Boston, Massachusetts 02210. Correspondence intended for Mr. Rochte may be sent to SelectCo, 1225 17th Street, Denver, Colorado 80202-5541. Officers appear below in alphabetical order.
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Name, Year of Birth; Principal Occupation |
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Christopher S. Bartel (1971) |
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Year of Election or Appointment: 2009 Vice President |
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|
Mr. Bartel also serves as Vice President of other funds. Mr. Bartel serves as a Director, President, and Chief Executive Officer of Fidelity Management & Research (Japan) Limited (2012-present), a Director of Fidelity Management & Research (Hong Kong) (2012-present), and Senior Vice President of Global Equity Research (2010-present). Previously, Mr. Bartel served as Senior Vice President of Equity Research (2009-2010), Managing Director of Research (2006-2009), and an analyst and portfolio manager (2000-2006). |
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Elizabeth Paige Baumann (1968) |
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Year of Election or Appointment: 2012 Anti-Money Laundering (AML) Officer |
|
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|
Ms. Baumann also serves as AML Officer of other funds. She is Chief AML Officer of FMR LLC (2012-present) and is an employee of Fidelity Investments. Previously, Ms. Baumann served as Vice President and Deputy Anti-Money Laundering Officer (2007-2012). |
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Marc Bryant (1966) |
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Year of Election or Appointment: 2013 Secretary |
|
|
|
Mr. Bryant also serves as an officer of other funds. He is Senior Vice President and Deputy General Counsel of FMR LLC. Previously, Mr. Bryant served as Secretary and Chief Legal Officer of Fidelity Rutland Square Trust II (2010-2014). Prior to joining Fidelity Investments, Mr. Bryant served as a Senior Vice President and the Head of Global Retail Legal for AllianceBernstein L.P. (2006-2010), and as the General Counsel for ProFund Advisors LLC (2001-2006). |
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William C. Coffey (1969) |
|
|
Year of Election or Appointment: 2009 Assistant Secretary |
|
|
|
Mr. Coffey also serves as Assistant Secretary of other funds. He is Senior Vice President and Deputy General Counsel of FMR LLC (2010-present), and is an employee of Fidelity Investments. Previously, Mr. Coffey served as Vice President and Associate General Counsel of FMR LLC (2005-2009). |
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Jonathan Davis (1968) |
|
|
Year of Election or Appointment: 2010 Assistant Treasurer |
|
|
|
Mr. Davis also serves as Assistant Treasurer of other funds. Mr. Davis is an employee of Fidelity Investments. Previously, Mr. Davis served as Vice President and Associate General Counsel of FMR LLC (2003-2010). |
|
Adrien E. Deberghes (1967) |
|
|
Year of Election or Appointment: 2013 President and Treasurer |
|
|
|
Mr. Deberghes also serves as an officer of other funds. He is an employee of Fidelity Investments (2008-present). Prior to joining Fidelity Investments, Mr. Deberghes was Senior Vice President of Mutual Fund Administration at State Street Corporation (2007-2008), Senior Director of Mutual Fund Administration at Investors Bank & Trust (2005-2007), and Director of Finance for Dunkin' Brands (2000-2005). |
|
Stephanie J. Dorsey (1969) |
|
|
Year of Election or Appointment: 2010 Assistant Treasurer |
|
|
|
Ms. Dorsey also serves as an officer of other funds. She is an employee of Fidelity Investments (2008-present) and has served in other fund officer roles. Prior to joining Fidelity Investments, Ms. Dorsey served as Treasurer (2004-2008) of the JPMorgan Mutual Funds and Vice President (2004-2008) of JPMorgan Chase Bank. |
|
Howard J. Galligan III (1966) |
|
|
Year of Election or Appointment: 2014 Chief Financial Officer |
|
|
|
Mr. Galligan also serves as Chief Financial Officer of other funds. Mr. Galligan serves as President of Fidelity Pricing and Cash Management Services (FPCMS) (2014-present) and as a Director of Strategic Advisers, Inc. (2008-present). Previously, Mr. Galligan served as Chief Administrative Officer of Asset Management (2011-2014) and Chief Operating Officer and Senior Vice President of Investment Support for Strategic Advisers, Inc. (2003-2011). |
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James D. Gryglewicz (1972) |
|
|
Year of Election or Appointment: 2014 Chief Compliance Officer |
|
|
|
Mr. Gryglewicz also serves as Chief Compliance Officer of other funds. Mr. Gryglewicz serves as Compliance Officer of Fidelity SelectCo, LLC (2014-present), Vice President of Asset Management Compliance (2009-present), and is an employee of Fidelity Investments (2004-present). |
|
Brian B. Hogan (1964) |
|
|
Year of Election or Appointment: 2009 Vice President |
|
|
|
Mr. Hogan also serves as Trustee or Vice President of other funds. Mr. Hogan serves as a Director of Fidelity SelectCo, LLC (2014-present) and President of FMR's Equity Division (2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager. |
|
Chris Maher (1972) |
|
|
Year of Election or Appointment: 2013 Assistant Treasurer |
|
|
|
Mr. Maher serves as Assistant Treasurer of other funds. Mr. Maher is Vice President of Valuation Oversight and is an employee of Fidelity Investments. Previously, Mr. Maher served as Vice President of Asset Management Compliance (2013), Vice President of FMR's Program Management Group (2010-2013), and Vice President of Valuation Oversight (2008-2010). |
|
Kenneth B. Robins (1969) |
|
|
Year of Election or Appointment: 2013 Deputy Treasurer |
|
|
|
Mr. Robins also serves as an officer of other funds. Mr. Robins serves as Executive Vice President of Fidelity Investments Money Management, Inc. (FIMM) (2013-present) and is an employee of Fidelity Investments (2004-present). Previously, Mr. Robins served in other fund officer roles. |
|
Anthony R. Rochte (1968) |
|
|
Year of Election or Appointment: 2013 Vice President |
|
|
|
Mr. Rochte also serves as Vice President of other funds. Mr. Rochte serves as President of Fidelity SelectCo, LLC (2012-present) and is an employee of Fidelity Investments (2012-present). Prior to joining Fidelity Investments, Mr. Rochte served as Senior Managing Director and head of State Street Global Advisors' North American Intermediary Business Group (2006-2012). |
|
Stacie M. Smith (1974) |
|
|
Year of Election or Appointment: 2013 Assistant Treasurer |
|
|
|
Ms. Smith also serves as an officer of other funds. She is an employee of Fidelity Investments (2009-present) and has served in other fund officer roles. Prior to joining Fidelity Investments, Ms. Smith served as Senior Audit Manager of Ernst & Young LLP (1996-2009). |
|
Renee Stagnone (1975) |
|
|
Year of Election or Appointment: 2013 Deputy Treasurer |
|
|
|
Ms. Stagnone also serves as Deputy Treasurer of other funds. Ms. Stagnone is an employee of Fidelity Investments. |
|
Joseph F. Zambello (1957) |
|
|
Year of Election or Appointment: 2011 Deputy Treasurer |
|
|
|
Mr. Zambello also serves as Deputy Treasurer of other funds. Mr. Zambello is an employee of Fidelity Investments. Previously, Mr. Zambello served as Vice President of FMR's Program Management Group (2009-2011) and Vice President of the Transfer Agent Oversight Group (2005-2009). |
Annual Report
Distributions (Unaudited)
The Board of Trustees of each fund voted to pay to shareholders of record at the opening of business on record date the following distributions per share derived from capital gains realized from sales of portfolio securities and dividends derived from net investment income:
|
|
Pay Date |
Record Date |
Dividends |
Capital Gains |
|
Brokerage and Investment Management Portfolio |
04/13/15 |
04/10/15 |
$0.092 |
$0.562 |
|
Insurance Portfolio |
04/13/15 |
04/10/15 |
$0.109 |
$0.488 |
|
Consumer Finance Portfolio |
04/13/15 |
04/10/15 |
$0.005 |
$0.774 |
|
Banking Portfolio |
04/13/15 |
04/10/15 |
$0.044 |
$0.617 |
The funds hereby designate as capital gain dividend the amounts noted below for the taxable year ended February 28, 2015, or, if subsequently determined to be different, the net capital gain of such year.
|
Financial Services Portfolio |
$7,498,327 |
|
Brokerage and Investment Management Portfolio |
$12,222,411 |
|
Insurance Portfolio |
$15,889,651 |
|
Consumer Finance Portfolio |
$25,437,796 |
|
Banking Portfolio |
$15,166,750 |
A percentage of the dividends distributed during the fiscal year for the following funds qualify for the dividends-received deduction for corporate shareholders:
|
|
April 2014 |
December 2014 |
|
Financial Services Portfolio |
93% |
77% |
|
Brokerage and Investment Management Portfolio |
100% |
69% |
|
Insurance Portfolio |
9% |
74% |
|
Consumer Finance Portfolio |
94% |
56% |
|
Banking Portfolio |
60% |
100% |
A percentage of the dividends distributed during the fiscal year for the following funds may be taken into account as a dividend for purposes of the maximum rate under section 1(h) (11) of the Internal Revenue Code:
|
|
April 2014 |
December 2014 |
|
Financial Services Portfolio |
100% |
73% |
|
Brokerage and Investment Management Portfolio |
100% |
78% |
|
Insurance Portfolio |
12% |
100% |
|
Consumer Finance Portfolio |
81% |
56% |
|
Banking Portfolio |
66% |
100% |
The funds will notify shareholders in January 2016 of amounts for use in preparing 2015 income tax returns.
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees
Banking Portfolio
Brokerage and Investment Management Portfolio
Consumer Finance Portfolio
Financial Services Portfolio
Insurance Portfolio
Each year, the Board of Trustees, including the Independent Trustees (together, the Board), votes on the renewal of the management contract with Fidelity SelectCo, LLC (SelectCo), an affiliate of Fidelity Management & Research Company (FMR), and the sub-advisory agreements with affiliates of FMR (together, the Advisory Contracts) for each fund. The Board, assisted by the advice of fund counsel and Independent Trustees' counsel, requests and considers a broad range of information relevant to the renewal of the Advisory Contracts throughout the year.
The Board meets regularly and, at each of its meetings, covers an extensive agenda of topics and materials and considers factors that are relevant to its annual consideration of the renewal of each fund's Advisory Contracts, including the services and support provided to each fund and its shareholders. The Board has established four standing committees (Committees) - Operations, Audit, Fair Valuation, and Governance and Nominating - each composed of and chaired by Independent Trustees with varying backgrounds, to which the Board has assigned specific subject matter responsibilities in order to enhance effective decision-making by the Board. The Operations Committee, of which all of the Independent Trustees are members, meets regularly throughout the year and considers, among other matters, information specifically related to the annual consideration of the renewal of each fund's Advisory Contracts. The Board, acting directly and through its Committees, requests and receives information concerning the annual consideration of the renewal of each fund's Advisory Contracts. The Board also meets as needed to consider matters specifically related to the Board's annual consideration of the renewal of the Advisory Contracts. Members of the Board may also meet with trustees of other Fidelity funds through ad hoc joint committees to discuss certain matters relevant to all of the Fidelity funds.
At its January 2015 meeting, the Board, including the Independent Trustees, unanimously determined to renew each fund's Advisory Contracts. In reaching its determination, the Board considered all factors it believed relevant, including (i) the nature, extent, and quality of the services to be provided to each fund and its shareholders (including the investment performance of each fund); (ii) the competitiveness of each fund's management fee and total expense ratio relative to peer funds; (iii) the total costs of the services to be provided by and the profits to be realized by Fidelity from its relationship with each fund; (iv) the extent to which economies of scale exist and would be realized as each fund grows; and (v) whether fee levels reflect these economies of scale, if any, for the benefit of fund shareholders.
In considering whether to renew the Advisory Contracts for each fund, the Board reached a determination, with the assistance of fund counsel and Independent Trustees' counsel and through the exercise of its business judgment, that the renewal of the Advisory Contracts was in the best interests of each fund and its shareholders and that the compensation payable under the Advisory Contracts was fair and reasonable. The Board's decision to renew the Advisory Contracts was not based on any single factor, but rather was based on a comprehensive consideration of all the information provided to the Board at its meetings throughout the year. The Board, in reaching its determination to renew the Advisory Contracts, was aware that shareholders of each fund have a broad range of investment choices available to them, including a wide choice among funds offered by Fidelity's competitors, and that each fund's shareholders, who have the opportunity to review and weigh the disclosure provided by the fund in its prospectus and other public disclosures, have chosen to invest in that fund, which is part of the Fidelity family of funds.
Nature, Extent, and Quality of Services Provided. The Board considered the staffing of SelectCo and the sub-advisers (together with SelectCo, the Investment Advisers) as it relates to the funds, including the backgrounds of investment personnel of SelectCo, and also considered the funds' investment objectives, strategies, and related investment philosophies. The Independent Trustees also had discussions with senior management of Fidelity's investment operations and investment groups. The Board considered the structure of the portfolio manager compensation program and whether this structure provides appropriate incentives to act in the best interests of each fund. Additionally, the Board considered the portfolio managers' investments, if any, in the funds that they manage.
Resources Dedicated to Investment Management and Support Services. The Board reviewed the general qualifications and capabilities of the investment staff of the Investment Advisers, including its size, education, experience, and resources, as well as the Fidelity's approach to recruiting, training, managing, and compensating investment personnel. The Board noted that Fidelity has continued to increase the resources devoted to non-U.S. offices, including expansion of Fidelity's global investment organization. The Board also noted that Fidelity's analysts have extensive resources, tools and capabilities that allow them to conduct sophisticated quantitative and fundamental analysis, as well as credit analysis of issuers, counterparties and guarantors. Further, the Board believes that Fidelity's investment professionals have sufficient access to global information and data so as to provide competitive investment results over time, and that those professionals also have access to sophisticated tools that permit them to assess portfolio construction and risk and performance attribution characteristics continuously, as well as to transmit new information and research conclusions rapidly around the world. Additionally, in its deliberations, the Board considered Fidelity's trading, risk management, and compliance capabilities and resources, which are integral parts of the investment management process.
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees - continued
Shareholder and Administrative Services. The Board considered (i) the nature, extent, quality, and cost of advisory, administrative, and shareholder services performed by the Investment Advisers and their affiliates under the Advisory Contracts and under separate agreements covering transfer agency, pricing and bookkeeping, and securities lending services for each fund; (ii) the nature and extent of the supervision of third party service providers, principally custodians and subcustodians; and (iii) the resources devoted to, and the record of compliance with, each fund's compliance policies and procedures. The Board also reviewed the allocation of fund brokerage, including allocations to brokers affiliated with the Investment Advisers, the use of brokerage commissions to pay fund expenses, and the use of "soft" commission dollars to pay for research services.
The Board noted that the growth of fund assets over time across the complex allows Fidelity to reinvest in the development of services designed to enhance the value or convenience of the Fidelity funds as investment vehicles. These services include 24-hour access to account information and market information through telephone representatives and over the Internet, investor education materials and asset allocation tools, and the expanded availability of Fidelity Investor Centers.
Investment in a Large Fund Family. The Board considered the benefits to shareholders of investing in a Fidelity fund, including the benefits of investing in a fund that is part of a large family of funds offering a variety of investment disciplines and providing a large variety of mutual fund investor services. The Board noted that Fidelity had taken, or had made recommendations that resulted in the Fidelity funds taking, a number of actions over the previous year that benefited particular funds, including (i) continuing to dedicate additional resources to investment research and to the support of the senior management team that oversees asset management; (ii) continuing efforts to enhance Fidelity's global research capabilities; (iii) launching new funds and making other enhancements to meet client needs for income-oriented solutions; (iv) reducing fund expenses for certain index funds; (v) continuing to launch dedicated lower cost underlying funds to meet portfolio construction needs related to expanding underlying fund options for Fidelity funds of funds, specifically for the Freedom Fund product lines; (vi) rationalizing product lines and gaining increased efficiencies through fund mergers; (vii) launching sector-based exchange-traded funds and establishing SelectCo to manage sector-based funds and products; (viii) continuing to develop, acquire, and implement systems and technology to improve security and services to the funds and to increase efficiency; (ix) modifying the eligibility criteria for certain share classes to increase their marketability to a portion of the defined contribution plan market; (x) waiving redemption fees for certain qualified fund-of-fund and wrap programs and certain retirement plan transactions; and (xi) launching new Institutional Class shares of certain money market funds to attract and retain assets and to fill a gap in money market fund offerings.
Investment Performance. The Board considered whether each fund has operated in accordance with its investment objective, as well as its record of compliance with its investment restrictions and its performance history. The Board noted that there was a portfolio management change for Insurance Portfolio in January 2014.
The Board took into account discussions with representatives of the Investment Advisers about fund investment performance that occur at Board meetings throughout the year. In this regard the Board noted that as part of regularly scheduled fund reviews and other reports to the Board on fund performance, the Board considers annualized return information for each fund, for different time periods, measured against a securities market index ("benchmark index"). In its evaluation of fund investment performance at meetings throughout the year, the Board gave particular attention to information indicating underperformance of certain Fidelity funds for specific time periods and discussed with the Investment Advisers the reasons for such underperformance.
In addition to reviewing absolute and relative fund performance, the Independent Trustees periodically consider the appropriateness of fund performance metrics in evaluating the results achieved. In general, the Independent Trustees believe that fund performance should be evaluated based on net performance (after fees and expenses) of both the highest performing and lowest performing classes, where applicable, compared to appropriate benchmark indices, over appropriate time periods that may include full market cycles, taking into account relevant factors including the following: general market conditions; issuer-specific information; tactical opportunities for investment; and fund cash flows and other factors. Depending on the circumstances, the Independent Trustees may be satisfied with a fund's performance notwithstanding that it lags its benchmark index for certain periods.
The Independent Trustees recognize that shareholders evaluate performance on a net basis over their own holding periods, for which one-, three-, and five-year periods are often used as a proxy. For this reason, the performance information reviewed by the Board also included net cumulative total return information for each fund and an appropriate benchmark index for the most recent one-, three-, and five-year periods ended June 30, 2014.
Based on its review, the Board concluded that the nature, extent, and quality of services provided to each fund under the Advisory Contracts should benefit the shareholders of each fund.
Competitiveness of Management Fee and Total Expense Ratio. The Board considered each fund's management fee and total expense ratio compared to "mapped groups" of competitive funds and classes created for the purpose of facilitating the Trustees' analysis of the competitiveness of management fees and total expenses. Fidelity creates "mapped groups" by combining similar Lipper investment objective categories that have comparable investment mandates. Combining Lipper investment objective categories aids the Board's management fee and total expense ratio comparisons by broadening the competitive group used for comparison and making the competitive group more inclusive.
Annual Report
Management Fee. The Board considered two proprietary management fee comparisons for the 12-month periods ended June 30 shown in the charts below. The group of Lipper funds used by the Board for management fee comparisons is referred to below as the "Total Mapped Group." The Total Mapped Group comparison focuses on a fund's standing in terms of gross management fees before expense reimbursements or caps relative to the total universe of funds with comparable investment mandates, regardless of whether their management fee structures also are comparable. Funds with comparable investment mandates offer exposure to similar types of securities. Funds with comparable management fee structures have similar management fee contractual arrangements (e.g., flat rate charged for advisory services, all-inclusive fee rate, etc.). "TMG %" represents the percentage of funds in the Total Mapped Group that had management fees that were lower than a fund's. For example, a hypothetical TMG % of 20% would mean that 80% of the funds in the Total Mapped Group had higher, and 20% had lower, management fees than a fund. The funds' actual TMG %s are in the charts below. The "Asset-Size Peer Group" (ASPG) comparison focuses on a fund's standing relative to a subset of non-Fidelity funds within the Total Mapped Group that are similar in size and management fee structure. For example, if a fund is in the first quartile of the ASPG, the fund's management fee ranks in the least expensive or lowest 25% of funds in the ASPG. The ASPG represents at least 15% of the funds in the Total Mapped Group with comparable asset size and management fee structures, subject to a minimum of 50 funds (or all funds in the Total Mapped Group if fewer than 50). Additional information, such as the ASPG quartile in which a fund's management fee rate ranked, is also included in the charts and considered by the Board.
Banking Portfolio
Brokerage and Investment Management Portfolio
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees - continued
Consumer Finance Portfolio
Financial Services Portfolio
Annual Report
Insurance Portfolio
The Board noted that each fund's management fee rate ranked below the median of its Total Mapped Group and below the median of its ASPG for the 12-month period ended June 30, 2014.
Based on its review, the Board concluded that each fund's management fee is fair and reasonable in light of the services that each fund receives and the other factors considered.
Total Expense Ratio. In its review of each fund's total expense ratio, the Board considered the fund's management fee as well as other fund expenses, such as transfer agent fees, pricing and bookkeeping fees, and custodial, legal, and audit fees. The Board also noted that Fidelity may agree to waive fees and expenses from time to time, and the extent to which, if any, it has done so for the funds. As part of its review, the Board also considered the current and historical total expense ratios of each fund compared to competitive fund median expenses. Each fund is compared to those funds and classes in the Total Mapped Group (used by the Board for management fee comparisons) that have a similar sales load structure.
The Board noted that each fund's total expense ratio ranked below its competitive median for the 12-month period ended June 30, 2014.
Fees Charged to Other Fidelity Clients. The Board also considered Fidelity fee structures and other information with respect to clients of Fidelity, such as other funds advised or subadvised by Fidelity, pension plan clients, and other institutional clients.
Based on its review of total expense ratios and fees charged to other Fidelity clients, the Board concluded that each fund's total expense ratio was reasonable in light of the services that each fund and its shareholders receive and the other factors considered.
Costs of the Services and Profitability. The Board considered the revenues earned and the expenses incurred by Fidelity in conducting the business of developing, marketing, distributing, managing, administering and servicing each fund and servicing each fund's shareholders. The Board also considered the level of Fidelity's profits in respect of all the Fidelity funds.
On an annual basis, Fidelity presents to the Board information about the profitability of its relationship with each fund. Fidelity calculates profitability information for each fund, as well as aggregate profitability information for groups of Fidelity funds and all Fidelity funds, using a series of detailed revenue and cost allocation methodologies which originate with the books and records of Fidelity on which Fidelity's audited financial statements are based. The Audit Committee of the Board reviews any significant changes from the prior year's methodologies.
PricewaterhouseCoopers LLP (PwC), independent registered public accounting firm and auditor to Fidelity and certain Fidelity funds, has been engaged annually by the Board as part of the Board's assessment of the profitability analysis used by Fidelity. PwC's engagement includes the review and assessment of Fidelity's methodologies used in determining the revenues and expenses attributable to Fidelity's mutual fund business, and completion of agreed-upon procedures in respect of the mathematical accuracy of fund profitability and its conformity to established allocation methodologies. After considering PwC's reports issued under the engagement and information provided by Fidelity, the Board concluded that while other allocation methods may also be reasonable, Fidelity's profitability methodologies are reasonable in all material respects.
The Board also reviewed Fidelity's non-fund businesses and fall-out benefits related to the mutual fund business as well as cases where Fidelity's affiliates may benefit from or be related to the funds' business.
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees - continued
The Board considered the costs of the services provided by and the profits realized by Fidelity in connection with the operation of each fund and was satisfied that the profitability was not excessive.
Economies of Scale. The Board considered whether there have been economies of scale in respect of the management of the Fidelity funds, whether the Fidelity funds (including each fund) have appropriately benefited from any such economies of scale, and whether there is potential for realization of any further economies of scale. The Board considered the extent to which each fund will benefit from economies of scale as assets grow through increased services to the fund, through waivers or reimbursements, or through fee or expense ratio reductions. The Board also noted that in 2013, it and the boards of other Fidelity funds created an ad hoc committee (the Economies of Scale Committee) to analyze whether Fidelity attains economies of scale in respect of the management and servicing of the Fidelity funds, whether the Fidelity funds have appropriately benefited from such economies of scale, and whether there is potential for realization of any further economies of scale.
The Board recognized that each fund's management contract incorporates a "group fee" structure, which provides for lower group fee rates as total group assets increase, and for higher group fee rates as total group assets decrease (with "group assets" defined to include fund assets under SelectCo's management plus assets under FMR's management). SelectCo calculates the group fee rates based on a tiered asset "breakpoint" schedule that varies based on asset class. The Board considered that the group fee is designed to deliver the benefits of economies of scale to fund shareholders when total group assets increase, even if assets of any particular fund are unchanged or have declined, because some portion of Fidelity's costs are attributable to services provided to all Fidelity funds, and all funds benefit if those costs can be allocated among more assets. The Board concluded that, given the group fee structure, fund shareholders will benefit from lower management fees as group assets increase at the fund complex level, regardless of whether Fidelity achieves any such economies of scale.
The Board concluded, taking into account the analysis of the Economies of Scale Committee, that economies of scale, if any, are being appropriately shared between fund shareholders and Fidelity.
Additional Information Requested by the Board. In order to develop fully the factual basis for consideration of the Fidelity funds' Advisory Contracts, the Board requested and received additional information on certain topics, including: (i) Fidelity's fund profitability methodology, profitability trends for certain funds, and the impact of certain factors on fund profitability results; (ii) portfolio manager changes that have occurred during the past year and the amount of the investment that each portfolio manager has made in the Fidelity fund(s) that he or she manages; (iii) Fidelity's compensation structure for portfolio managers, research analysts, and other key personnel, including its effects on fund profitability; (iv) the arrangements with and compensation paid to certain fund sub-advisers on behalf of the Fidelity funds; (v) Fidelity's fee structures, including the group fee structure and definition of group assets, and the rationale for recommending different fees among different categories of funds and classes; (vi) the methodology with respect to competitive fund data and peer group classifications; (vii) Fidelity's transfer agent fee, expense, and service structures for different funds and classes, and the impact of the increased use of omnibus accounts; and (viii) explanations regarding the relative total expense ratios of certain funds and classes, total expense competitive trends and methodologies for total expense competitive comparisons, and actions that might be taken by Fidelity to reduce total expense ratios for certain funds and classes or to achieve further economies of scale.
Based on its evaluation of all of the conclusions noted above, and after considering all factors it believed relevant, the Board concluded that the advisory fee structures are fair and reasonable, and that each fund's Advisory Contracts should be renewed.
Annual Report
Investment Adviser
Fidelity SelectCo, LLC
Denver, CO
Investment Sub-Advisers
FMR Co., Inc.
FMR Investment Management (U.K.) Limited
Fidelity Management & Research (Hong Kong) Limited
Fidelity Management & Research (Japan) Limited
General Distributor
Fidelity Distributors Corporation
Smithfield, RI
Transfer and Service Agents
Fidelity Investments Institutional Operations Company, Inc.
Boston, MA
Fidelity Service Company, Inc.
Boston, MA
Custodian
Brown Brothers Harriman & Co.
Boston, MA
Corporate Headquarters
245 Summer Street
Boston, MA 02210
1-800-544-8888
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Fidelity®
Select Portfolios®
Health Care Sector
Biotechnology Portfolio
Health Care Portfolio
Medical Delivery Portfolio
Medical Equipment and Systems Portfolio
Pharmaceuticals Portfolio
Annual Report
February 28, 2015
(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 |
|
|
|
Report of Independent Registered Public Accounting Firm |
|
|
|
Trustees and Officers |
|
|
|
Distributions |
|
|
|
Board Approval of Investment Advisory Contracts and Management Fees |
|
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com/proxyvotingresults or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov. You may also call 1-800-544-8544 to request a free copy of the proxy voting guidelines.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third-party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company. © 2015 FMR LLC. All rights reserved.
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, 2014 to February 28, 2015).
Actual Expenses
The first line of the accompanying table for each fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, each Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each fund provides information about hypothetical account values and hypothetical expenses based on a fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, each Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
|
|
Annualized |
Beginning |
Ending |
Expenses Paid |
|
Biotechnology Portfolio |
.74% |
|
|
|
|
Actual |
|
$ 1,000.00 |
$ 1,256.00 |
$ 4.14 |
|
HypotheticalA |
|
$ 1,000.00 |
$ 1,021.12 |
$ 3.71 |
|
Health Care Portfolio |
.73% |
|
|
|
|
Actual |
|
$ 1,000.00 |
$ 1,176.40 |
$ 3.94 |
|
HypotheticalA |
|
$ 1,000.00 |
$ 1,021.17 |
$ 3.66 |
|
Medical Delivery Portfolio |
.79% |
|
|
|
|
Actual |
|
$ 1,000.00 |
$ 1,141.30 |
$ 4.19 |
|
HypotheticalA |
|
$ 1,000.00 |
$ 1,020.88 |
$ 3.96 |
|
Medical Equipment and Systems Portfolio |
.76% |
|
|
|
|
Actual |
|
$ 1,000.00 |
$ 1,207.80 |
$ 4.16 |
|
HypotheticalA |
|
$ 1,000.00 |
$ 1,021.03 |
$ 3.81 |
|
Pharmaceuticals Portfolio |
.78% |
|
|
|
|
Actual |
|
$ 1,000.00 |
$ 1,145.60 |
$ 4.15 |
|
HypotheticalA |
|
$ 1,000.00 |
$ 1,020.93 |
$ 3.91 |
A 5% return per year before expenses
B Annualized expense ratio reflects expenses net of applicable fee waivers.
* Expenses are equal to each Fund's annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
Annual Report
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 28, 2015 |
Past 1 |
Past 5 |
Past 10 |
|
Biotechnology Portfolio |
24.21% |
34.21% |
19.67% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Biotechnology Portfolio on February 28, 2005. The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period.
Annual Report
Biotechnology Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. stock market closed near its all-time high for the 12 months ending February 28, 2015, supported by low interest rates and the relative strength of the U.S. economy and dollar. The large-cap S&P 500® Index returned 15.51%. Growth stocks in the index outperformed value-oriented names. The tech-heavy Nasdaq Composite Index® rose 16.58%, while the small-cap Russell 2000® Index advanced 5.63%, rallying from early-period weakness amid growth and valuation worries. Among the 10 major market sectors tracked by MSCI U.S. IMI 25-50 classifications, most notched a double-digit gain, led by health care (+24%), consumer staples (+21%), information technology (+20%) and utilities (+15%). Conversely, energy (-9%) was the only sector to lose ground, reflecting a sharp drop in crude prices beginning midyear and attributed to weaker global demand and a U.S. supply boom. Volatility spiked to a three-year high in October amid concerns about economic growth and Ebola, as well as unrest in Syria, Iraq and Ukraine. Nevertheless, the S&P 500® finished the period well above its mid-October nadir, bolstered by the relative economic strength of the U.S., which marked a six-year low in its unemployment rate, and consumer confidence that declined only slightly from its 11-year high reached in January.
Comments from Rajiv Kaul, Portfolio Manager of Biotechnology Portfolio: For the year, the fund returned 24.21%, trailing the 27.69% gain of its industry benchmark, the MSCI U.S. IMI Biotechnology 25-50 Index, but outpacing the broadly based S&P 500®. Following a difficult stretch that lasted from late February through mid-April 2014 - overlapping the beginning of the reporting period - biotechnology stocks regained their mantle as one of the market's best-performing industry groups, lifted by favorable product stories and investors' preference for companies with earnings growth that was less dependent on the broader U.S. economy. Biotech stocks underperformed the S&P 500® during the first half of the reporting period, and smaller-cap biotech shares - where a lot of the fund's holdings were concentrated - were hit particularly hard. For the 12-month period overall, a significantly overweighted stake in Intercept Pharmaceuticals was by far the fund's largest detractor. After peaking in March, Intercept's share price trended lower for the rest of 2014 before recovering a bit near period end. Likewise, our sizable overweighting in weak-performing Aegerion Pharmaceuticals made this stock a detractor. Celgene, a major index name that returned about 51% during the period, detracted because of the fund's underweighting. Conversely, an out-of-index position in Avanir Pharmaceuticals was the fund's top relative contributor. The stock benefited from an announcement in December that the company would be acquired by Japan-based Otsuka Holdings, which has a pharmaceutical subsidiary, and I sold Avanir to lock in profits. InterMune, which received a buyout bid from Switzerland-based Roche Holding, also added considerable value. I liquidated the fund's holdings in InterMune by period end. Additionally, several of the fund's top relative contributors were large-cap index names I underweighted: Biogen Idec, Gilead Sciences - by far the fund's largest position during the period - and Amgen. As the correction in smaller-cap biotech shares unfolded last spring and valuations there became more compelling, I significantly reduced our positions in Gilead Sciences and especially Amgen to free up capital to add to my favorite mid- and small-cap positions.
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 28, 2015 |
||
|
|
% of fund's |
% of fund's net assets |
|
Gilead Sciences, Inc. |
7.9 |
13.2 |
|
Biogen Idec, Inc. |
7.0 |
1.8 |
|
Celgene Corp. |
6.1 |
4.7 |
|
Vertex Pharmaceuticals, Inc. |
4.3 |
5.4 |
|
Alexion Pharmaceuticals, Inc. |
3.7 |
3.8 |
|
Regeneron Pharmaceuticals, Inc. |
3.5 |
4.0 |
|
BioMarin Pharmaceutical, Inc. |
2.4 |
1.8 |
|
Medivation, Inc. |
2.3 |
2.4 |
|
Receptos, Inc. |
2.2 |
0.9 |
|
Pharmacyclics, Inc. |
2.2 |
1.5 |
|
|
41.6 |
|
|
Top Industries (% of fund's net assets) |
|||
|
As of February 28, 2015 |
|||
 |
Biotechnology |
93.0% |
|
 |
Pharmaceuticals |
6.3% |
|
 |
Health Care Equipment & Supplies |
0.3% |
|
 |
Life Sciences Tools & Services |
0.1% |
|
 |
Personal Products |
0.0%† |
|
 |
All Others* |
0.3% |
|
|
As of August 31, 2014 |
|||
 |
Biotechnology |
93.0% |
|
 |
Pharmaceuticals |
6.5% |
|
 |
Health Care Equipment & Supplies |
0.1% |
|
 |
Life Sciences Tools & Services |
0.1% |
|
 |
Personal Products |
0.0%† |
|
 |
All Others* |
0.3% |
|
|
* Includes short-term investments and net other assets (liabilities). |
|
† Amount represents less than 0.1% |
Annual Report
Biotechnology Portfolio
Investments February 28, 2015
Showing Percentage of Net Assets
|
Common Stocks - 98.7% |
|||
|
Shares |
Value |
||
|
BIOTECHNOLOGY - 92.5% |
|||
|
Biotechnology - 92.5% |
|||
|
ACADIA Pharmaceuticals, Inc. (a)(d) |
4,456,364 |
$ 169,208,141 |
|
|
Acceleron Pharma, Inc. (a)(d)(e) |
3,068,473 |
124,672,058 |
|
|
Achillion Pharmaceuticals, Inc. (a)(d)(e) |
7,229,800 |
87,769,772 |
|
|
Acorda Therapeutics, Inc. (a)(e) |
3,750,553 |
126,918,714 |
|
|
Actelion Ltd. |
318,166 |
38,079,132 |
|
|
Adamas Pharmaceuticals, Inc. (e) |
1,712,569 |
29,593,192 |
|
|
ADMA Biologics, Inc. (a)(d) |
372,800 |
3,556,512 |
|
|
Aegerion Pharmaceuticals, Inc. (a)(d)(e) |
2,843,518 |
77,343,690 |
|
|
Agenus, Inc. (a)(d) |
150,089 |
735,436 |
|
|
Agenus, Inc. warrants 1/9/18 (a) |
1,548,000 |
55,883 |
|
|
Agios Pharmaceuticals, Inc. (a) |
186,990 |
20,060,287 |
|
|
Akebia Therapeutics, Inc. (a)(d) |
625,323 |
5,790,491 |
|
|
Alder Biopharmaceuticals, Inc. |
307,469 |
8,264,767 |
|
|
Aldeyra Therapeutics, Inc. (e) |
556,516 |
5,676,463 |
|
|
Alexion Pharmaceuticals, Inc. (a) |
2,688,470 |
484,919,334 |
|
|
Alkermes PLC (a) |
2,251,411 |
158,161,623 |
|
|
Alnylam Pharmaceuticals, Inc. (a) |
1,744,378 |
177,106,698 |
|
|
AMAG Pharmaceuticals, Inc. (a)(d) |
1,359,709 |
66,938,474 |
|
|
Amgen, Inc. |
34,486 |
5,439,132 |
|
|
Anacor Pharmaceuticals, Inc. (a)(d) |
1,147,558 |
49,918,773 |
|
|
Applied Genetic Technologies Corp. (e) |
1,124,768 |
22,821,543 |
|
|
Ardelyx, Inc. (d)(e) |
1,853,932 |
29,190,159 |
|
|
ARIAD Pharmaceuticals, Inc. (a)(d) |
5,543,251 |
45,066,631 |
|
|
Array BioPharma, Inc. (a)(d) |
2,704,296 |
21,526,196 |
|
|
Arrowhead Research Corp. (a)(d) |
1,044,290 |
7,863,504 |
|
|
Asterias Biotherapeutics, Inc. (a)(d) |
653,913 |
2,602,574 |
|
|
Atara Biotherapeutics, Inc. (e) |
1,349,533 |
26,396,865 |
|
|
Auspex Pharmaceuticals, Inc. (d) |
1,459,773 |
98,155,137 |
|
|
Avalanche Biotechnologies, Inc. (a) |
183,589 |
6,642,250 |
|
|
Avalanche Biotechnologies, Inc. (f) |
537,368 |
19,441,974 |
|
|
BioCryst Pharmaceuticals, Inc. (a) |
965,000 |
9,843,000 |
|
|
Biogen Idec, Inc. (a) |
2,284,539 |
935,724,329 |
|
|
BioMarin Pharmaceutical, Inc. (a) |
3,027,106 |
324,112,239 |
|
|
Bionovo, Inc. warrants 2/2/16 (a) |
1,043,150 |
10 |
|
|
BioTime, Inc. warrants 10/1/18 (a)(d) |
30,113 |
35,533 |
|
|
bluebird bio, Inc. (a) |
212,419 |
20,247,779 |
|
|
Calithera Biosciences, Inc. (e) |
1,378,700 |
20,983,814 |
|
|
Cara Therapeutics, Inc. |
676,853 |
6,937,743 |
|
|
Catalyst Pharmaceutical Partners, Inc.: |
|
|
|
|
warrants 5/2/17 (a) |
141,443 |
358,479 |
|
|
warrants 5/30/17 (a) |
282,100 |
780,119 |
|
|
Celgene Corp. (a) |
6,670,752 |
810,696,491 |
|
|
Cell Therapeutics, Inc. warrants 7/6/16 (a) |
835,596 |
435 |
|
|
Celladon Corp. (a) |
18,800 |
341,220 |
|
|
Celldex Therapeutics, Inc. (a)(d) |
3,074,556 |
78,524,160 |
|
|
Cepheid, Inc. (a) |
589,900 |
33,529,916 |
|
|
Cerulean Pharma, Inc. (e) |
1,901,000 |
15,645,230 |
|
|
Chiasma, Inc. unit (h) |
13,978,670 |
13,978,670 |
|
|
Chimerix, Inc. (a) |
1,296,467 |
52,480,984 |
|
|
|
|||
|
Shares |
Value |
||
|
Clovis Oncology, Inc. (a)(d) |
728,269 |
$ 55,683,448 |
|
|
CTI BioPharma Corp. (a)(d) |
3,148,484 |
7,367,453 |
|
|
Cytokinetics, Inc. (a) |
1,063,466 |
8,199,323 |
|
|
Cytokinetics, Inc. warrants 6/25/17 (a) |
3,828,480 |
2,187,976 |
|
|
Dicerna Pharmaceuticals, Inc. (d) |
293,221 |
7,163,389 |
|
|
Dyax Corp. (a)(e) |
7,117,501 |
107,545,440 |
|
|
Eleven Biotherapeutics, Inc. |
752,060 |
7,949,274 |
|
|
Emergent BioSolutions, Inc. (a) |
336,186 |
10,075,494 |
|
|
Enanta Pharmaceuticals, Inc. (a)(d) |
727,166 |
26,047,086 |
|
|
Epirus Biopharmaceuticals, Inc. (a)(e) |
1,220,700 |
12,853,971 |
|
|
Epizyme, Inc. (a)(d)(e) |
3,416,275 |
80,350,788 |
|
|
Esperion Therapeutics, Inc. (a)(d)(e) |
1,087,896 |
67,939,105 |
|
|
Exact Sciences Corp. (a)(d) |
2,258,602 |
50,750,787 |
|
|
Exelixis, Inc. (a)(d) |
1,849,687 |
5,419,583 |
|
|
Fate Therapeutics, Inc. (a)(e) |
1,381,284 |
6,878,794 |
|
|
Fibrocell Science, Inc. (a)(d)(e) |
3,326,640 |
16,200,737 |
|
|
FibroGen, Inc. (d) |
300,700 |
9,568,274 |
|
|
Forward Pharma A/S sponsored ADR |
119,800 |
2,788,944 |
|
|
Foundation Medicine, Inc. (a)(d) |
901,500 |
43,055,640 |
|
|
Genmab A/S (a) |
2,122,739 |
156,935,746 |
|
|
Genocea Biosciences, Inc. |
609,781 |
5,262,410 |
|
|
Genomic Health, Inc. (a)(d) |
516,228 |
15,693,331 |
|
|
Geron Corp. (a)(d)(e) |
15,693,826 |
47,395,355 |
|
|
Gilead Sciences, Inc. (a) |
10,119,193 |
1,047,640,048 |
|
|
Halozyme Therapeutics, Inc. (a)(d) |
2,927,583 |
44,118,676 |
|
|
Histogenics Corp. (e) |
1,240,986 |
13,241,321 |
|
|
Hyperion Therapeutics, Inc. (a)(d)(e) |
1,999,059 |
59,072,193 |
|
|
Ignyta, Inc. (a)(e) |
1,191,909 |
10,178,903 |
|
|
Immune Design Corp. (a) |
685,741 |
15,113,732 |
|
|
ImmunoGen, Inc. (a)(d) |
1,586,457 |
12,057,073 |
|
|
Immunomedics, Inc. (a)(d) |
4,378,682 |
17,865,023 |
|
|
Incyte Corp. (a) |
2,756,518 |
236,647,070 |
|
|
Infinity Pharmaceuticals, Inc. (a) |
1,808,933 |
27,495,782 |
|
|
Insys Therapeutics, Inc. (a)(d) |
931,295 |
55,933,578 |
|
|
Intercept Pharmaceuticals, Inc. (a)(d)(e) |
1,171,668 |
259,372,145 |
|
|
Intrexon Corp. (a)(d) |
1,079,553 |
44,326,446 |
|
|
Ironwood Pharmaceuticals, Inc. Class A (a) |
4,692,810 |
72,503,915 |
|
|
Isis Pharmaceuticals, Inc. (a)(d) |
2,384,987 |
163,514,709 |
|
|
Juno Therapeutics, Inc. |
1,158,952 |
48,940,225 |
|
|
Juno Therapeutics, Inc. (d) |
328,200 |
15,399,144 |
|
|
Karyopharm Therapeutics, Inc. (a)(d)(e) |
3,007,528 |
81,985,213 |
|
|
Keryx Biopharmaceuticals, Inc. (a)(d) |
3,383,568 |
41,144,187 |
|
|
Kite Pharma, Inc. (d) |
1,115,757 |
73,015,138 |
|
|
KYTHERA Biopharmaceuticals, Inc. (a)(d)(e) |
1,304,079 |
54,184,482 |
|
|
La Jolla Pharmaceutical Co. (a)(e) |
958,062 |
19,477,400 |
|
|
Lexicon Pharmaceuticals, Inc. (a)(d) |
30,744,023 |
28,899,382 |
|
|
Ligand Pharmaceuticals, Inc. Class B (a)(d) |
853,643 |
47,010,120 |
|
|
Lion Biotechnologies, Inc. (a)(d) |
1,954,882 |
17,554,840 |
|
|
Macrogenics, Inc. (a)(e) |
2,523,785 |
87,247,247 |
|
|
Common Stocks - continued |
|||
|
Shares |
Value |
||
|
BIOTECHNOLOGY - CONTINUED |
|||
|
Biotechnology - continued |
|||
|
MannKind Corp. (a)(d) |
8,063,306 |
$ 52,572,755 |
|
|
Medivation, Inc. (a) |
2,549,127 |
299,598,896 |
|
|
MEI Pharma, Inc. (a) |
594,631 |
3,502,377 |
|
|
Merrimack Pharmaceuticals, Inc. (a) |
422,049 |
4,524,365 |
|
|
MiMedx Group, Inc. (a)(d) |
1,006,364 |
10,415,867 |
|
|
Minerva Neurosciences, Inc. (d)(e) |
1,271,400 |
6,560,424 |
|
|
Momenta Pharmaceuticals, Inc. (a) |
1,062,677 |
14,505,541 |
|
|
Myriad Genetics, Inc. (a)(d) |
1,189,343 |
40,520,916 |
|
|
Neurocrine Biosciences, Inc. (a) |
3,582,851 |
139,910,332 |
|
|
NewLink Genetics Corp. (a)(d)(e) |
1,656,147 |
71,346,813 |
|
|
Novavax, Inc. (a)(d)(e) |
14,411,821 |
131,868,162 |
|
|
Novelos Therapeutics, Inc. warrants 12/6/16 (a) |
2,362,400 |
2,386 |
|
|
OncoMed Pharmaceuticals, Inc. (a)(d) |
731,932 |
18,283,661 |
|
|
Ophthotech Corp. (a)(d)(e) |
2,952,235 |
158,638,348 |
|
|
Opko Health, Inc. (a)(d) |
2,721,309 |
39,622,259 |
|
|
Oragenics, Inc. (a)(e) |
2,545,258 |
2,876,142 |
|
|
Orexigen Therapeutics, Inc. (a)(d)(e) |
9,172,767 |
51,734,406 |
|
|
Organovo Holdings, Inc. (a)(d) |
1,111,017 |
6,577,221 |
|
|
Osiris Therapeutics, Inc. (a)(d)(e) |
1,866,995 |
32,243,004 |
|
|
OvaScience, Inc. (a) |
1,061,925 |
48,328,207 |
|
|
Paratek Pharmaceuticals, Inc. (a)(e) |
1,370,149 |
40,049,455 |
|
|
Pharmacyclics, Inc. (a)(d) |
1,333,913 |
288,031,834 |
|
|
PolyMedix, Inc. warrants 4/10/16 (a) |
2,961,167 |
30 |
|
|
Portola Pharmaceuticals, Inc. (a) |
2,467,141 |
93,948,729 |
|
|
Progenics Pharmaceuticals, Inc. (a)(d)(e) |
4,448,736 |
28,961,271 |
|
|
ProQR Therapeutics BV (a)(e) |
61,100 |
1,150,513 |
|
|
ProQR Therapeutics BV (e) |
1,449,285 |
24,561,033 |
|
|
Proteon Therapeutics, Inc. |
712,500 |
7,702,125 |
|
|
Prothena Corp. PLC (a) |
600,335 |
15,956,904 |
|
|
PTC Therapeutics, Inc. (a)(e) |
2,060,810 |
146,997,577 |
|
|
Puma Biotechnology, Inc. (a) |
1,156,225 |
246,287,487 |
|
|
Radius Health, Inc. (a)(d)(e) |
2,917,993 |
124,452,401 |
|
|
Raptor Pharmaceutical Corp. (a)(d) |
2,983,357 |
27,655,719 |
|
|
Receptos, Inc. (a)(e) |
2,292,011 |
290,260,273 |
|
|
Regeneron Pharmaceuticals, Inc. (a) |
1,132,070 |
468,495,849 |
|
|
Regulus Therapeutics, Inc. (a)(d) |
1,898,341 |
35,157,275 |
|
|
Repligen Corp. (a)(e) |
1,861,315 |
47,854,409 |
|
|
Rigel Pharmaceuticals, Inc. (a) |
3,913,851 |
11,702,414 |
|
|
Sage Therapeutics, Inc. (e) |
1,243,683 |
54,038,026 |
|
|
Sage Therapeutics, Inc. (e)(f) |
172,110 |
7,478,180 |
|
|
Sangamo Biosciences, Inc. (a)(d) |
3,442,107 |
57,896,240 |
|
|
Sarepta Therapeutics, Inc. (a)(d) |
1,096,532 |
15,241,795 |
|
|
Seattle Genetics, Inc. (a)(d) |
1,983,060 |
71,885,925 |
|
|
Sophiris Bio, Inc. (a)(e) |
1,277,815 |
1,024,808 |
|
|
Spark Therapeutics, Inc. |
963,952 |
55,513,996 |
|
|
Spectrum Pharmaceuticals, Inc. (a)(d)(e) |
3,903,900 |
24,321,297 |
|
|
Stemline Therapeutics, Inc. (a)(d)(e) |
1,513,299 |
22,987,012 |
|
|
Sunesis Pharmaceuticals, Inc. (a)(e) |
4,253,594 |
9,442,979 |
|
|
Synageva BioPharma Corp. (a)(d) |
1,153,247 |
113,860,076 |
|
|
|
|||
|
Shares |
Value |
||
|
Synta Pharmaceuticals Corp. (a)(d) |
3,254,017 |
$ 7,809,641 |
|
|
TESARO, Inc. (a)(d) |
1,072,115 |
57,175,893 |
|
|
TG Therapeutics, Inc. (a) |
1,383,556 |
20,075,398 |
|
|
Threshold Pharmaceuticals, Inc. (a) |
366,950 |
1,603,572 |
|
|
Threshold Pharmaceuticals, Inc. warrants 3/16/16 (a) |
631,520 |
1,280,603 |
|
|
Tokai Pharmaceuticals, Inc. (d) |
484,000 |
7,322,920 |
|
|
Ultragenyx Pharmaceutical, Inc. (e) |
1,900,778 |
103,155,222 |
|
|
uniQure B.V. |
644,496 |
14,978,087 |
|
|
United Therapeutics Corp. (a) |
995,809 |
154,400,185 |
|
|
Verastem, Inc. (a)(d)(e) |
1,965,033 |
14,619,846 |
|
|
Versartis, Inc. (a)(e) |
2,057,928 |
40,767,554 |
|
|
Vertex Pharmaceuticals, Inc. (a) |
4,835,194 |
577,467,219 |
|
|
Vical, Inc. (a)(e) |
5,921,845 |
6,040,282 |
|
|
Vitae Pharmaceuticals, Inc. (e) |
2,141,471 |
24,883,893 |
|
|
Vital Therapies, Inc. (d)(e) |
1,489,600 |
32,994,640 |
|
|
Xencor, Inc. (a) |
1,252,746 |
19,542,838 |
|
|
Xenon Pharmaceuticals, Inc. (e) |
522,785 |
10,142,029 |
|
|
Xenon Pharmaceuticals, Inc. (e) |
285,920 |
4,992,163 |
|
|
XOMA Corp. (a)(d) |
4,838,232 |
17,853,076 |
|
|
Zafgen, Inc. (e) |
2,613,501 |
101,011,814 |
|
|
|
12,276,050,485 |
||
|
HEALTH CARE EQUIPMENT & SUPPLIES - 0.3% |
|||
|
Health Care Equipment - 0.3% |
|||
|
Alsius Corp. (a) |
314,300 |
3 |
|
|
Bellerophon Therapeutics, Inc. (e) |
1,066,882 |
12,802,584 |
|
|
Ocular Therapeutix, Inc. (d) |
456,570 |
16,331,509 |
|
|
Zosano Pharma Corp. (e) |
827,900 |
8,593,602 |
|
|
|
37,727,698 |
||
|
LIFE SCIENCES TOOLS & SERVICES - 0.1% |
|||
|
Life Sciences Tools & Services - 0.1% |
|||
|
Genfit (a)(d) |
195,869 |
13,151,232 |
|
|
Transgenomic, Inc. (a) |
236,500 |
411,510 |
|
|
Transgenomic, Inc. warrants 2/3/17 (a) |
1,419,000 |
355 |
|
|
|
13,563,097 |
||
|
PERSONAL PRODUCTS - 0.0% |
|||
|
Personal Products - 0.0% |
|||
|
MYOS Corp. (a) |
33,334 |
199,004 |
|
|
PHARMACEUTICALS - 5.8% |
|||
|
Pharmaceuticals - 5.8% |
|||
|
AcelRx Pharmaceuticals, Inc. (a)(d) |
610,629 |
5,410,173 |
|
|
Achaogen, Inc. (a) |
901,382 |
10,068,437 |
|
|
Adimab LLC unit (g)(h) |
1,181,435 |
16,895,234 |
|
|
Aradigm Corp. (a) |
159,954 |
1,188,458 |
|
|
Auris Medical Holding AG (a) |
1,405,000 |
7,727,500 |
|
|
Cempra, Inc. (a) |
5,000 |
165,600 |
|
|
Dermira, Inc. (e) |
1,177,800 |
19,704,594 |
|
|
Dermira, Inc. (e) |
875,705 |
13,185,490 |
|
|
Egalet Corp. (d)(e) |
1,163,326 |
17,461,523 |
|
|
Common Stocks - continued |
|||
|
Shares |
Value |
||
|
PHARMACEUTICALS - CONTINUED |
|||
|
Pharmaceuticals - continued |
|||
|
Flex Pharma, Inc. |
108,600 |
$ 1,888,011 |
|
|
GW Pharmaceuticals PLC ADR (a)(d) |
132,700 |
10,738,084 |
|
|
Horizon Pharma PLC (a)(d) |
6,102,296 |
125,280,137 |
|
|
Intra-Cellular Therapies, Inc. (a) |
1,536,950 |
38,193,208 |
|
|
Jazz Pharmaceuticals PLC (a) |
1,036,908 |
176,367,682 |
|
|
Nektar Therapeutics (a) |
1,432,471 |
18,722,396 |
|
|
NeurogesX, Inc. (a)(e) |
2,550,000 |
15,300 |
|
|
Pacira Pharmaceuticals, Inc. (a) |
957,533 |
109,896,062 |
|
|
Parnell Pharmaceuticals Holdings Ltd. (e) |
692,482 |
2,936,124 |
|
|
Repros Therapeutics, Inc. (a)(d)(e) |
2,320,610 |
21,372,818 |
|
|
Tetraphase Pharmaceuticals, Inc. (a) |
1,386,703 |
54,719,300 |
|
|
TherapeuticsMD, Inc. (a) |
4,433,062 |
22,475,624 |
|
|
Theravance, Inc. (d) |
1,336,806 |
24,142,716 |
|
|
Zogenix, Inc. (a)(d)(e) |
9,804,706 |
16,471,906 |
|
|
Zogenix, Inc. warrants 7/27/17 (a)(e) |
498,465 |
69,302 |
|
|
ZS Pharma, Inc. (d)(e) |
1,202,575 |
59,491,385 |
|
|
|
774,587,064 |
||
|
TOTAL COMMON STOCKS (Cost $7,639,117,810) |
|
||
|
Preferred Stocks - 1.0% |
|||
|
|
|
|
|
|
Convertible Preferred Stocks - 0.9% |
|||
|
BIOTECHNOLOGY - 0.4% |
|||
|
Biotechnology - 0.4% |
|||
|
Aduro Biotech, Inc. Series D (h) |
2,376,915 |
6,424,564 |
|
|
Moderna LLC Series E (h) |
269,897 |
16,644,548 |
|
|
Pronutria Biosciences, Inc. Series C (h) |
1,642,272 |
16,554,102 |
|
|
Seres Health, Inc. Series C, 8.00% (h) |
1,292,035 |
15,715,280 |
|
|
|
55,338,494 |
||
|
PHARMACEUTICALS - 0.5% |
|||
|
Pharmaceuticals - 0.5% |
|||
|
Allergen Research Corp. Series B (h) |
1,650,640 |
12,379,800 |
|
|
aTyr Pharma, Inc. Series D 8.00% (a)(h) |
3,455,296 |
8,738,444 |
|
|
Cidara Therapeutics, Inc. Series B (h) |
27,096,385 |
12,044,316 |
|
|
Global Blood Therapeutics, Inc. Series B (h) |
8,985,915 |
22,464,788 |
|
|
Kolltan Pharmaceuticals, Inc. Series D (h) |
10,639,609 |
10,639,609 |
|
|
Syros Pharmaceuticals, Inc. Series B, 6.00% (h) |
860,442 |
2,707,037 |
|
|
|
68,973,994 |
||
|
TOTAL CONVERTIBLE PREFERRED STOCKS |
124,312,488 |
||
|
|
|||
|
Shares |
Value |
||
|
Nonconvertible Preferred Stocks - 0.1% |
|||
|
BIOTECHNOLOGY - 0.1% |
|||
|
Biotechnology - 0.1% |
|||
|
Moderna LLC Series D, 8.00% (a)(h) |
207,494 |
$ 12,796,155 |
|
|
TOTAL PREFERRED STOCKS (Cost $128,738,362) |
|
||
|
Money Market Funds - 11.6% |
|||
|
|
|
|
|
|
Fidelity Cash Central Fund, 0.13% (b) |
61,042,965 |
61,042,965 |
|
|
Fidelity Securities Lending Cash Central Fund, 0.13% (b)(c) |
1,475,385,543 |
1,475,385,543 |
|
|
TOTAL MONEY MARKET FUNDS (Cost $1,536,428,508) |
|
||
|
TOTAL INVESTMENTPORTFOLIO - 111.3% (Cost $9,304,284,680) |
14,775,664,499 |
|
NET OTHER ASSETS (LIABILITIES) - (11.3)% |
(1,498,612,207) |
||
|
NET ASSETS - 100% |
$ 13,277,052,292 |
||
|
Legend |
|
(a) Non-income producing |
|
(b) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
|
(c) Investment made with cash collateral received from securities on loan. |
|
(d) Security or a portion of the security is on loan at period end. |
|
(e) Affiliated company |
|
(f) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the end of the period, the value of these securities amounted to $26,920,154 or 0.2% of net assets. |
|
(g) Investment is owned by an entity that is treated as a corporation for U.S. tax purposes and is owned by the Fund. |
|
(h) Restricted securities - Investment in securities not registered under the Securities Act of 1933 (excluding 144A issues). At the end of the period, the value of restricted securities (excluding 144A issues) amounted to $167,982,547 or 1.3% of net assets. |
|
Security |
Acquisition Date |
Acquisition Cost |
|
Adimab LLC unit |
9/17/14 |
$ 16,800,006 |
|
Aduro Biotech, Inc. Series D |
12/19/14 |
$ 6,424,564 |
|
Allergen Research Corp. Series B |
2/26/15 |
$ 12,379,800 |
|
aTyr Pharma, Inc. Series D 8.00% |
4/8/13 - 5/17/13 |
$ 8,738,444 |
|
Chiasma, Inc. unit |
2/26/15 |
$ 13,978,670 |
|
Cidara Therapeutics, Inc. Series B |
2/10/15 |
$ 12,044,343 |
|
Global Blood Therapeutics, Inc. Series B |
12/22/14 |
$ 22,464,788 |
|
Kolltan Pharmaceuticals, Inc. Series D |
3/13/14 |
$ 10,639,609 |
|
Moderna LLC Series D, 8.00% |
11/6/13 |
$ 4,425,847 |
|
Moderna LLC Series E |
12/18/14 |
$ 16,644,548 |
|
Pronutria Biosciences, Inc. Series C |
1/30/15 |
$ 16,554,102 |
|
Seres Health, Inc. Series C, 8.00% |
11/24/14 |
$ 15,715,280 |
|
Syros Pharmaceuticals, Inc. Series B, 6.00% |
10/9/14 |
$ 2,707,037 |
|
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 |
$ 31,253 |
|
Fidelity Securities Lending Cash Central Fund |
26,111,112 |
|
Total |
$ 26,142,365 |
|
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, |
|
Acceleron Pharma, Inc. |
$ 101,569,144 |
$ 31,579,605 |
$ - |
$ - |
$ 124,672,058 |
|
Achaogen, Inc. |
- |
13,240,330 |
- |
- |
- |
|
Achillion Pharmaceuticals, Inc. |
- |
64,701,762 |
4,281,716 |
- |
87,769,772 |
|
Acorda Therapeutics, Inc. |
84,899,094 |
55,559,153 |
6,391,224 |
- |
126,918,714 |
|
Adamas Pharmaceuticals, Inc. |
- |
27,375,473 |
- |
- |
29,593,192 |
|
Aegerion Pharmaceuticals, Inc. |
119,020,586 |
20,460,585 |
- |
- |
77,343,690 |
|
Aldeyra Therapeutics, Inc. |
- |
4,434,130 |
- |
- |
5,676,463 |
|
Applied Genetic Technologies Corp. |
- |
19,322,511 |
480,459 |
- |
22,821,543 |
|
Ardelyx, Inc. |
- |
31,273,998 |
- |
- |
29,190,159 |
|
Arrowhead Research Corp. |
60,456,164 |
8,029,578 |
17,703,133 |
- |
- |
|
Asterias Biotherapeutics, Inc. |
- |
2,354,072 |
- |
- |
- |
|
Atara Biotherapeutics, Inc. |
- |
19,455,099 |
5,327,316 |
- |
26,396,865 |
|
Avanir Pharmaceuticals, Inc. Class A |
43,921,334 |
9,253,698 |
181,730,762 |
- |
- |
|
Bellerophon Therapeutics, Inc. |
- |
12,679,788 |
- |
- |
12,802,584 |
|
Calithera Biosciences, Inc. |
- |
13,747,673 |
- |
- |
20,983,814 |
|
Cara Therapeutics, Inc. |
11,534,736 |
12,547,839 |
5,980,927 |
- |
- |
|
Cerulean Pharma, Inc. |
- |
13,309,800 |
3,178 |
- |
15,645,230 |
|
Dermira, Inc. |
- |
18,690,648 |
- |
- |
19,704,594 |
|
Dermira, Inc. |
- |
8,431,291 |
- |
- |
13,185,490 |
|
Dyax Corp. |
98,099,858 |
6,414,841 |
29,779,408 |
- |
107,545,440 |
|
Affiliate |
Value, |
Purchases |
Sales |
Dividend |
Value, |
|
Egalet Corp. |
$ 8,980,686 |
$ 3,570,054 |
$ - |
$ - |
$ 17,461,523 |
|
Enanta Pharmaceuticals, Inc. |
36,812,959 |
- |
9,647,839 |
- |
- |
|
Epirus Biopharmaceuticals, Inc. |
- |
6,103,500 |
- |
- |
12,853,971 |
|
Epizyme, Inc. |
91,633,035 |
9,417,367 |
- |
- |
80,350,788 |
|
Esperion Therapeutics, Inc. |
1,218,996 |
32,402,857 |
7,685,687 |
- |
67,939,105 |
|
Fate Therapeutics, Inc. |
- |
- |
- |
- |
6,878,794 |
|
Fibrocell Science, Inc. |
18,928,582 |
- |
- |
- |
16,200,737 |
|
Geron Corp. |
73,457,551 |
509,309 |
- |
- |
47,395,355 |
|
Histogenics Corp. |
- |
13,650,846 |
- |
- |
13,241,321 |
|
Horizon Pharma PLC |
41,923,973 |
17,357,747 |
3,188,559 |
- |
- |
|
Horizon Pharma PLC warrants 2/28/17 |
2,561,134 |
- |
960,105 |
- |
- |
|
Horizon Pharma PLC warrants 9/25/17 |
5,935,680 |
- |
49,659 |
- |
- |
|
Hyperion Therapeutics, Inc. |
61,970,829 |
- |
- |
- |
59,072,193 |
|
Ignyta, Inc. |
388,430 |
11,417,596 |
625,202 |
- |
10,178,903 |
|
Immune Design Corp. |
- |
11,343,216 |
6,380,941 |
- |
- |
|
Intercept Pharmaceuticals, Inc. |
540,040,254 |
1,609,041 |
70,454,324 |
- |
259,372,145 |
|
InterMune, Inc. |
136,623,843 |
24,540,674 |
385,864,998 |
- |
- |
|
Intra-Cellular Therapies, Inc. |
24,944,699 |
- |
- |
- |
- |
|
Karyopharm Therapeutics, Inc. |
82,515,075 |
36,736,178 |
- |
- |
81,985,213 |
|
KYTHERA Biopharmaceuticals, Inc. |
65,164,828 |
- |
- |
- |
54,184,482 |
|
La Jolla Pharmaceutical Co. |
- |
10,524,401 |
- |
- |
19,477,400 |
|
Ligand Pharmaceuticals, Inc. Class B |
104,415,820 |
- |
31,597,867 |
- |
- |
|
Macrogenics, Inc. |
41,015,800 |
33,267,941 |
2,040,259 |
- |
87,247,247 |
|
Minerva Neurosciences, Inc. |
- |
7,628,400 |
- |
- |
6,560,424 |
|
NeurogesX, Inc. |
5,818 |
- |
2,792 |
- |
- |
|
NeurogesX, Inc. |
25,500 |
- |
- |
- |
15,300 |
|
NewLink Genetics Corp. |
79,204,057 |
- |
2,733,987 |
- |
71,346,813 |
|
Novavax, Inc. |
99,795,974 |
- |
4,444,107 |
- |
131,868,162 |
|
Ophthotech Corp. |
63,936,838 |
48,944,875 |
4,087,185 |
- |
158,638,348 |
|
Oragenics, Inc. |
9,785,179 |
- |
163,396 |
- |
2,876,142 |
|
Orexigen Therapeutics, Inc. |
41,880,880 |
19,969,698 |
2,366,478 |
- |
51,734,406 |
|
Osiris Therapeutics, Inc. |
30,846,851 |
- |
1,954,322 |
- |
32,243,004 |
|
Paratek Pharmaceuticals, Inc. |
- |
- |
- |
- |
- |
|
Paratek Pharmaceuticals, Inc. |
- |
897,098 |
- |
- |
40,049,455 |
|
Parnell Pharmaceuticals Holdings Ltd. |
- |
6,851,583 |
- |
- |
2,936,124 |
|
PolyMedix, Inc. |
3,003 |
- |
2,021 |
- |
- |
|
PolyMedix, Inc. warrants 4/10/16 |
30 |
- |
- |
- |
- |
|
Portola Pharmaceuticals, Inc. |
36,635,902 |
28,673,560 |
2,413,256 |
- |
- |
|
Progenics Pharmaceuticals, Inc. |
17,989,120 |
4,186,127 |
1,023,011 |
- |
28,961,271 |
|
ProQR Therapeutics BV |
- |
794,300 |
- |
- |
1,150,513 |
|
ProQR Therapeutics BV |
- |
10,327,611 |
- |
- |
24,561,033 |
|
PTC Therapeutics, Inc. |
48,825,764 |
34,977,859 |
2,207,891 |
- |
146,997,577 |
|
Radius Health, Inc. |
- |
85,104,839 |
- |
- |
124,452,401 |
|
Raptor Pharmaceutical Corp. |
48,866,529 |
1,209,054 |
1,843,301 |
- |
- |
|
Receptos, Inc. |
61,607,768 |
101,406,517 |
15,895,203 |
- |
290,260,273 |
|
Repligen Corp. |
- |
38,953,463 |
- |
- |
47,854,409 |
|
Repros Therapeutics, Inc. |
15,172,755 |
23,027,553 |
884,223 |
- |
21,372,818 |
|
Sage Therapeutics, Inc. |
- |
35,068,247 |
- |
- |
54,038,026 |
|
Sage Therapeutics, Inc. (144A) |
- |
2,295,726 |
- |
- |
7,478,180 |
|
Sangamo Biosciences, Inc. |
83,390,908 |
44,465,905 |
42,742,248 |
- |
- |
|
Sophiris Bio, Inc. |
5,264,210 |
- |
- |
- |
- |
|
Sophiris Bio, Inc. |
- |
- |
38,074 |
- |
1,024,808 |
|
Spectrum Pharmaceuticals, Inc. |
35,269,565 |
- |
2,179,746 |
- |
24,321,297 |
|
Stemline Therapeutics, Inc. |
32,154,298 |
4,250,925 |
- |
- |
22,987,012 |
|
Sunesis Pharmaceuticals, Inc. |
18,502,204 |
6,370,409 |
1,359,282 |
- |
9,442,979 |
|
Ultragenyx Pharmaceutical, Inc. |
- |
101,553,947 |
- |
- |
103,155,222 |
|
Verastem, Inc. |
19,439,084 |
4,037,800 |
1,007,250 |
- |
14,619,846 |
|
Versartis, Inc. |
- |
38,661,232 |
- |
- |
40,767,554 |
|
Affiliate |
Value, |
Purchases |
Sales |
Dividend |
Value, |
|
Vical, Inc. |
$ 9,739,012 |
$ - |
$ 560,601 |
$ - |
$ 6,040,282 |
|
Vitae Pharmaceuticals, Inc. |
- |
19,915,963 |
- |
- |
24,883,893 |
|
Vital Therapies, Inc. |
- |
20,185,750 |
- |
- |
32,994,640 |
|
Xenon Pharmaceuticals, Inc. |
- |
4,705,065 |
- |
- |
10,142,029 |
|
Xenon Pharmaceuticals, Inc. |
- |
- |
- |
- |
4,992,163 |
|
Zafgen, Inc. |
- |
37,949,671 |
- |
- |
101,011,814 |
|
Zogenix, Inc. |
42,650,471 |
- |
- |
- |
16,471,906 |
|
Zogenix, Inc. warrants 7/27/17 |
433,839 |
- |
- |
- |
69,302 |
|
Zosano Pharma Corp. |
- |
9,106,900 |
- |
- |
8,593,602 |
|
ZS Pharma, Inc. |
- |
30,704,402 |
- |
- |
59,491,385 |
|
Total |
$ 2,659,458,649 |
$ 1,377,537,080 |
$ 858,081,937 |
$ - |
$ 3,280,493,198 |
|
Other Information |
|
The following is a summary of the inputs used, as of February 28, 2015, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the tables below, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements. |
|
Valuation Inputs at Reporting Date: |
||||
|
Description |
Total |
Level 1 |
Level 2 |
Level 3 |
|
Investments in Securities: |
||||
|
Common Stocks |
$ 13,102,127,348 |
$ 12,974,838,952 |
$ 96,414,489 |
$ 30,873,907 |
|
Preferred Stocks |
137,108,643 |
- |
- |
137,108,643 |
|
Money Market Funds |
1,536,428,508 |
1,536,428,508 |
- |
- |
|
Total Investments in Securities: |
$ 14,775,664,499 |
$ 14,511,267,460 |
$ 96,414,489 |
$ 167,982,550 |
|
Investments in Securities: |
|
|
Beginning Balance |
$ 43,340,743 |
|
Total Realized Gain (Loss) |
(459,542) |
|
Total Unrealized Gain (Loss) |
12,589,533 |
|
Cost of Purchases |
146,352,746 |
|
Proceeds of Sales |
(33,840,930) |
|
Amortization/Accretion |
- |
|
Transfers in to Level 3 |
- |
|
Transfers out of Level 3 |
- |
|
Ending Balance |
$ 167,982,550 |
|
The change in unrealized gain (loss) for the period attributable to Level 3 securities held at February 28, 2015 |
$ 8,465,509 |
|
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
Biotechnology Portfolio
Financial Statements
Statement of Assets and Liabilities
|
|
February 28, 2015 |
|
|
|
|
|
|
Assets |
|
|
|
Investment in securities, at value (including securities loaned of $1,422,501,659) - See accompanying schedule: Unaffiliated issuers (cost $5,533,005,893) |
$ 9,958,812,095 |
|
|
Fidelity Central Funds (cost $1,536,428,508) |
1,536,428,508 |
|
|
Other affiliated issuers (cost $2,234,850,279) |
3,280,423,896 |
|
|
Total Investments (cost $9,304,284,680) |
|
$ 14,775,664,499 |
|
Receivable for investments sold |
|
1,924,226 |
|
Receivable for fund shares sold |
|
48,764,585 |
|
Dividends receivable |
|
27,244 |
|
Distributions receivable from Fidelity Central Funds |
|
2,365,510 |
|
Prepaid expenses |
|
31,803 |
|
Other receivables |
|
207,716 |
|
Total assets |
|
14,828,985,583 |
|
|
|
|
|
Liabilities |
|
|
|
Payable for investments purchased |
$ 53,899,782 |
|
|
Payable for fund shares redeemed |
15,013,518 |
|
|
Accrued management fee |
5,717,365 |
|
|
Other affiliated payables |
1,656,035 |
|
|
Other payables and accrued expenses |
261,048 |
|
|
Collateral on securities loaned, at value |
1,475,385,543 |
|
|
Total liabilities |
|
1,551,933,291 |
|
|
|
|
|
Net Assets |
|
$ 13,277,052,292 |
|
Net Assets consist of: |
|
|
|
Paid in capital |
|
$ 7,481,246,013 |
|
Accumulated net investment loss |
|
(144,426) |
|
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions |
|
324,570,886 |
|
Net unrealized appreciation (depreciation) on investments |
|
5,471,379,819 |
|
Net Assets, for 53,536,600 shares outstanding |
|
$ 13,277,052,292 |
|
Net Asset Value, offering price and redemption price per share ($13,277,052,292 ÷ 53,536,600 shares) |
|
$ 248.00 |
Statement of Operations
|
|
Year ended February 28, 2015 |
|
|
|
|
|
|
Investment Income |
|
|
|
Dividends |
|
$ 5,307,255 |
|
Income from Fidelity Central Funds (including $26,111,112 from security lending) |
|
26,142,365 |
|
Total income |
|
31,449,620 |
|
|
|
|
|
Expenses |
|
|
|
Management fee |
$ 53,046,377 |
|
|
Transfer agent fees |
15,862,772 |
|
|
Accounting and security lending fees |
1,490,134 |
|
|
Custodian fees and expenses |
127,604 |
|
|
Independent trustees' compensation |
184,494 |
|
|
Registration fees |
416,614 |
|
|
Audit |
53,631 |
|
|
Legal |
65,436 |
|
|
Interest |
23,835 |
|
|
Miscellaneous |
103,713 |
|
|
Total expenses before reductions |
71,374,610 |
|
|
Expense reductions |
(123,001) |
71,251,609 |
|
Net investment income (loss) |
|
(39,801,989) |
|
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: |
|
|
|
Investment securities: |
|
|
|
Unaffiliated issuers |
1,137,792,597 |
|
|
Other affiliated issuers |
429,533,437 |
|
|
Foreign currency transactions |
(7,200) |
|
|
Total net realized gain (loss) |
|
1,567,318,834 |
|
Change in net unrealized appreciation (depreciation) on investment securities |
|
591,127,348 |
|
Net gain (loss) |
|
2,158,446,182 |
|
Net increase (decrease) in net assets resulting from operations |
|
$ 2,118,644,193 |
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) |
$ (39,801,989) |
$ (21,356,636) |
|
Net realized gain (loss) |
1,567,318,834 |
6,074,305 |
|
Change in net unrealized appreciation (depreciation) |
591,127,348 |
4,047,853,105 |
|
Net increase (decrease) in net assets resulting from operations |
2,118,644,193 |
4,032,570,774 |
|
Distributions to shareholders from net realized gain |
(1,044,601,828) |
(19,359,860) |
|
Share transactions |
4,289,879,665 |
6,286,734,102 |
|
Reinvestment of distributions |
999,582,805 |
18,562,365 |
|
Cost of shares redeemed |
(4,120,805,109) |
(2,736,980,053) |
|
Net increase (decrease) in net assets resulting from share transactions |
1,168,657,361 |
3,568,316,414 |
|
Redemption fees |
1,039,850 |
1,059,947 |
|
Total increase (decrease) in net assets |
2,243,739,576 |
7,582,587,275 |
|
|
|
|
|
Net Assets |
|
|
|
Beginning of period |
11,033,312,716 |
3,450,725,441 |
|
End of period (including accumulated net investment loss of $144,426 and accumulated net investment loss of $2,984,590, respectively) |
$ 13,277,052,292 |
$ 11,033,312,716 |
|
Other Information Shares |
|
|
|
Sold |
19,696,850 |
37,746,580 |
|
Issued in reinvestment of distributions |
4,576,425 |
106,764 |
|
Redeemed |
(20,560,338) |
(16,664,868) |
|
Net increase (decrease) |
3,712,937 |
21,188,476 |
Financial Highlights
|
Years ended February 28, |
2015 |
2014 |
2013 |
2012 G |
2011 |
|
Selected Per-Share Data |
|
|
|
|
|
|
Net asset value, beginning of period |
$ 221.45 |
$ 120.51 |
$ 97.78 |
$ 74.01 |
$ 67.83 |
|
Income from Investment Operations |
|
|
|
|
|
|
Net investment income (loss) B |
(.87) |
(.54) |
(.16) |
(.23) |
(.41) E |
|
Net realized and unrealized gain (loss) |
51.24 |
101.91 |
29.36 |
24.11 |
6.59 |
|
Total from investment operations |
50.37 |
101.37 |
29.20 |
23.88 |
6.18 |
|
Distributions from net realized gain |
(23.84) |
(.46) |
(6.48) |
(.12) |
- |
|
Redemption fees added to paid in capital B |
.02 |
.03 |
.01 |
.01 |
- H |
|
Net asset value, end of period |
$ 248.00 |
$ 221.45 |
$ 120.51 |
$ 97.78 |
$ 74.01 |
|
Total ReturnA |
24.21% |
84.25% |
31.78% |
32.31% |
9.11% |
|
Ratios to Average Net AssetsC, F |
|
|
|
|
|
|
Expenses before reductions |
.74% |
.76% |
.81% |
.83% |
.87% |
|
Expenses net of fee waivers, if any |
.74% |
.76% |
.80% |
.83% |
.87% |
|
Expenses net of all reductions |
.74% |
.75% |
.79% |
.83% |
.86% |
|
Net investment income (loss) |
(.41)% |
(.32)% |
(.15)% |
(.27)% |
(.59)% E |
|
Supplemental Data |
|
|
|
|
|
|
Net assets, end of period (000 omitted) |
$ 13,277,052 |
$ 11,033,313 |
$ 3,450,725 |
$ 1,741,830 |
$ 1,012,907 |
|
Portfolio turnover rateD |
61% |
35% |
42% |
106% |
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 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 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
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 28, 2015 |
Past 1 |
Past 5 |
Past 10 |
|
Health Care Portfolio |
25.44% |
27.53% |
15.67% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Health Care Portfolio on February 28, 2005. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index performed over the same period.
Annual Report
Health Care Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. stock market closed near its all-time high for the 12 months ending February 28, 2015, supported by low interest rates and the relative strength of the U.S. economy and dollar. The large-cap S&P 500® Index returned 15.51%. Growth stocks in the index outperformed value-oriented names. The tech-heavy Nasdaq Composite Index® rose 16.58%, while the small-cap Russell 2000® Index advanced 5.63%, rallying from early-period weakness amid growth and valuation worries. Among the 10 major market sectors tracked by MSCI U.S. IMI 25-50 classifications, most notched a double-digit gain, led by health care (+24%), consumer staples (+21%), information technology (+20%) and utilities (+15%). Conversely, energy (-9%) was the only sector to lose ground, reflecting a sharp drop in crude prices beginning midyear and attributed to weaker global demand and a U.S. supply boom. Volatility spiked to a three-year high in October amid concerns about economic growth and Ebola, as well as unrest in Syria, Iraq and Ukraine. Nevertheless, the S&P 500® finished the period well above its mid-October nadir, bolstered by the relative economic strength of the U.S., which marked a six-year low in its unemployment rate, and consumer confidence that declined only slightly from its 11-year high reached in January.
Comments from Eddie Yoon, Portfolio Manager of Health Care Portfolio: For the year, the fund advanced 25.44%, outperforming the 23.66% advance of the MSCI U.S. IMI Health Care 25-50 Index and the return of the S&P 500®. Strong fundamentals and increased merger-and-acquisition activity fueled outsized gains in many stocks. Despite some volatility in higher- growth areas such as biotechnology, the sector's diversified composition, attractive valuation and defensive qualities helped it maintain its recent pattern of strong performance. Versus the MSCI index, it helped to not own pharmaceuticals firm and index giant Pfizer, which lagged the sector index the past year. Dublin-based Shire was another big contributor from pharma, benefiting from multiple takeout bids by drugmaker AbbVie. The deal was called off in October, but I held on to the non-index position, as I liked the firm's product pipeline and growth potential. Within biotechnology, the fund's biggest contributor the past year was InterMune. The stock soared after a late-August announcement the firm had received an $8 billion merger proposal from Roche Holding. I sold the position after this announcement in an effort to manage risk and lock in profits. On the flip side, health care technology firm Castlight Health was our largest individual detractor. The fund's heavier-than-benchmark stake in life science tools & services firm Agilent Technologies also hurt our relative result. Agilent's stock had a rough go, including a dive in October when the firm announced it would close one of its businesses and reaffirmed worse-than-expected fiscal fourth-quarter earnings.
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 28, 2015 |
||
|
|
% of fund's |
% of fund's net assets |
|
Actavis PLC |
8.3 |
7.0 |
|
Medtronic PLC |
6.1 |
4.6 |
|
Amgen, Inc. |
4.6 |
2.5 |
|
McKesson Corp. |
4.2 |
5.1 |
|
Boston Scientific Corp. |
4.0 |
3.1 |
|
Celgene Corp. |
3.4 |
1.3 |
|
Mallinckrodt PLC |
3.2 |
0.0 |
|
Shire PLC sponsored ADR |
3.0 |
4.4 |
|
Teva Pharmaceutical Industries Ltd. sponsored ADR |
2.8 |
2.2 |
|
Vertex Pharmaceuticals, Inc. |
2.6 |
2.0 |
|
|
42.2 |
|
|
Top Industries (% of fund's net assets) |
|||
|
As of February 28, 2015 |
|||
 |
Pharmaceuticals |
31.0% |
|
 |
Biotechnology |
27.0% |
|
 |
Health Care Equipment & Supplies |
19.3% |
|
 |
Health Care Providers & Services |
12.2% |
|
 |
Health Care Technology |
3.9% |
|
 |
All Others* |
6.6% |
|
|
As of August 31, 2014 |
|||
 |
Pharmaceuticals |
31.3% |
|
 |
Biotechnology |
25.1% |
|
 |
Health Care Equipment & Supplies |
14.8% |
|
 |
Health Care Providers & Services |
14.6% |
|
 |
Life Sciences Tools & Services |
5.8% |
|
 |
All Others* |
8.4% |
|
|
* Includes short-term investments and net other assets (liabilities). |
Annual Report
Health Care Portfolio
Investments February 28, 2015
Showing Percentage of Net Assets
|
Common Stocks - 98.4% |
|||
|
Shares |
Value |
||
|
BIOTECHNOLOGY - 27.0% |
|||
|
Biotechnology - 27.0% |
|||
|
Acceleron Pharma, Inc. (a) |
318,241 |
$ 12,930,132 |
|
|
Acorda Therapeutics, Inc. (a) |
657,373 |
22,245,502 |
|
|
Actelion Ltd. |
280,000 |
33,511,302 |
|
|
Advaxis, Inc. (a)(d) |
1,357,800 |
12,220,200 |
|
|
Alexion Pharmaceuticals, Inc. (a) |
1,260,000 |
227,266,200 |
|
|
Alnylam Pharmaceuticals, Inc. (a) |
433,754 |
44,039,044 |
|
|
AMAG Pharmaceuticals, Inc. (a) |
301,000 |
14,818,230 |
|
|
Amgen, Inc. |
2,860,000 |
451,079,200 |
|
|
Array BioPharma, Inc. (a)(d) |
3,200,000 |
25,472,000 |
|
|
Ascendis Pharma A/S |
438,400 |
7,772,832 |
|
|
Avalanche Biotechnologies, Inc. (a) |
179,910 |
6,509,144 |
|
|
BioCryst Pharmaceuticals, Inc. (a) |
1,400,000 |
14,280,000 |
|
|
Biogen Idec, Inc. (a) |
280,000 |
114,685,200 |
|
|
BioMarin Pharmaceutical, Inc. (a) |
900,000 |
96,363,000 |
|
|
Celgene Corp. (a) |
2,780,000 |
337,853,400 |
|
|
Celldex Therapeutics, Inc. (a) |
485,600 |
12,402,224 |
|
|
Clovis Oncology, Inc. (a) |
400,000 |
30,584,000 |
|
|
Curis, Inc. (a)(e) |
6,824,653 |
21,019,931 |
|
|
Discovery Laboratories, Inc. (a)(d)(e) |
5,500,000 |
8,855,000 |
|
|
Dyax Corp. (a) |
1,500,000 |
22,665,000 |
|
|
Flexion Therapeutics, Inc. |
18,068 |
412,131 |
|
|
Gilead Sciences, Inc. (a) |
1,700,000 |
176,001,000 |
|
|
Innate Pharma SA (a)(d) |
1,280,000 |
14,037,363 |
|
|
Insmed, Inc. (a) |
1,489,298 |
27,611,585 |
|
|
Intercept Pharmaceuticals, Inc. (a) |
236,900 |
52,442,553 |
|
|
Mirati Therapeutics, Inc. (a) |
700,000 |
16,639,000 |
|
|
Neurocrine Biosciences, Inc. (a) |
2,280,000 |
89,034,000 |
|
|
Pharmacyclics, Inc. (a) |
600,000 |
129,558,000 |
|
|
ProQR Therapeutics BV (a) |
461,514 |
8,690,309 |
|
|
Prothena Corp. PLC (a) |
292,790 |
7,782,358 |
|
|
PTC Therapeutics, Inc. (a) |
400,000 |
28,532,000 |
|
|
Puma Biotechnology, Inc. (a) |
1,000,000 |
213,010,000 |
|
|
Synageva BioPharma Corp. (a) |
120,700 |
11,916,711 |
|
|
Tekmira Pharmaceuticals Corp. (a) |
29,762 |
540,776 |
|
|
Ultragenyx Pharmaceutical, Inc. |
800,000 |
43,416,000 |
|
|
United Therapeutics Corp. (a) |
280,000 |
43,414,000 |
|
|
Vanda Pharmaceuticals, Inc. (a)(d)(e) |
2,200,000 |
23,672,000 |
|
|
Vertex Pharmaceuticals, Inc. (a) |
2,100,000 |
250,803,000 |
|
|
|
2,654,084,327 |
||
|
DIVERSIFIED CONSUMER SERVICES - 0.2% |
|||
|
Specialized Consumer Services - 0.2% |
|||
|
Carriage Services, Inc. |
850,000 |
19,541,500 |
|
|
ELECTRONIC EQUIPMENT & COMPONENTS - 0.5% |
|||
|
Electronic Equipment & Instruments - 0.5% |
|||
|
Keysight Technologies, Inc. (a) |
1,400,034 |
52,557,276 |
|
|
HEALTH CARE EQUIPMENT & SUPPLIES - 19.1% |
|||
|
Health Care Equipment - 17.1% |
|||
|
Atricure, Inc. (a) |
53,865 |
952,333 |
|
|
|
|||
|
Shares |
Value |
||
|
Boston Scientific Corp. (a) |
23,000,000 |
$ 388,700,000 |
|
|
CONMED Corp. |
1,000,000 |
51,300,000 |
|
|
Edwards Lifesciences Corp. (a) |
650,000 |
86,463,000 |
|
|
Genmark Diagnostics, Inc. (a)(e) |
2,163,686 |
27,500,449 |
|
|
HeartWare International, Inc. (a) |
758,680 |
64,662,296 |
|
|
Integra LifeSciences Holdings Corp. (a) |
44,750 |
2,685,448 |
|
|
Lumenis Ltd. Class B |
1,389,413 |
16,131,085 |
|
|
Medtronic PLC |
7,673,374 |
595,377,089 |
|
|
Neovasc, Inc. (a)(e) |
4,000,000 |
39,600,000 |
|
|
Nevro Corp. |
350,000 |
14,640,500 |
|
|
NxStage Medical, Inc. (a) |
2,187,700 |
37,584,686 |
|
|
ResMed, Inc. (d) |
1,100,000 |
70,796,000 |
|
|
Steris Corp. |
550,000 |
35,486,000 |
|
|
Tornier NV (a) |
2,128,517 |
52,020,955 |
|
|
TriVascular Technologies, Inc. (e) |
1,304,221 |
13,381,307 |
|
|
Zeltiq Aesthetics, Inc. (a) |
1,000,000 |
33,370,000 |
|
|
Zimmer Holdings, Inc. |
1,268,302 |
152,690,878 |
|
|
|
1,683,342,026 |
||
|
Health Care Supplies - 2.0% |
|||
|
Derma Sciences, Inc. (a) |
1,000,000 |
7,920,000 |
|
|
Endologix, Inc. (a) |
2,200,000 |
34,694,000 |
|
|
The Cooper Companies, Inc. |
920,000 |
150,852,400 |
|
|
|
193,466,400 |
||
|
TOTAL HEALTH CARE EQUIPMENT & SUPPLIES |
1,876,808,426 |
||
|
HEALTH CARE PROVIDERS & SERVICES - 12.1% |
|||
|
Health Care Distributors & Services - 5.3% |
|||
|
Amplifon SpA |
3,000,000 |
19,135,755 |
|
|
Cardinal Health, Inc. |
500,000 |
43,995,000 |
|
|
EBOS Group Ltd. (d) |
3,280,000 |
25,603,838 |
|
|
McKesson Corp. |
1,800,000 |
411,660,000 |
|
|
United Drug PLC (United Kingdom) |
2,800,000 |
20,187,383 |
|
|
|
520,581,976 |
||
|
Health Care Facilities - 2.6% |
|||
|
Brookdale Senior Living, Inc. (a) |
1,600,000 |
60,016,000 |
|
|
HCA Holdings, Inc. (a) |
1,000,000 |
71,540,000 |
|
|
Surgical Care Affiliates, Inc. (a) |
1,200,000 |
38,976,000 |
|
|
Universal Health Services, Inc. Class B |
700,000 |
79,345,000 |
|
|
|
249,877,000 |
||
|
Health Care Services - 0.6% |
|||
|
Air Methods Corp. (a) |
1,147,641 |
60,813,497 |
|
|
Managed Health Care - 3.6% |
|||
|
Cigna Corp. |
900,000 |
109,467,000 |
|
|
Humana, Inc. |
600,000 |
98,628,000 |
|
|
Common Stocks - continued |
|||
|
Shares |
Value |
||
|
HEALTH CARE PROVIDERS & SERVICES - CONTINUED |
|||
|
Managed Health Care - continued |
|||
|
UnitedHealth Group, Inc. |
900,000 |
$ 102,267,000 |
|
|
Wellcare Health Plans, Inc. (a) |
500,000 |
45,405,000 |
|
|
|
355,767,000 |
||
|
TOTAL HEALTH CARE PROVIDERS & SERVICES |
1,187,039,473 |
||
|
HEALTH CARE TECHNOLOGY - 3.9% |
|||
|
Health Care Technology - 3.9% |
|||
|
athenahealth, Inc. (a)(d) |
695,212 |
88,340,589 |
|
|
Castlight Health, Inc. |
1,875,650 |
13,673,489 |
|
|
Castlight Health, Inc. Class B (a) |
68,429 |
498,847 |
|
|
Cerner Corp. (a) |
2,280,000 |
164,296,800 |
|
|
Connecture, Inc. (d)(e) |
2,000,000 |
17,280,000 |
|
|
HealthStream, Inc. (a)(e) |
1,500,000 |
38,820,000 |
|
|
Medidata Solutions, Inc. (a) |
1,280,000 |
61,580,800 |
|
|
|
384,490,525 |
||
|
INDUSTRIAL CONGLOMERATES - 1.0% |
|||
|
Industrial Conglomerates - 1.0% |
|||
|
Danaher Corp. |
1,100,000 |
96,008,000 |
|
|
LIFE SCIENCES TOOLS & SERVICES - 3.1% |
|||
|
Life Sciences Tools & Services - 3.1% |
|||
|
Agilent Technologies, Inc. |
3,100,000 |
130,851,000 |
|
|
Bruker Corp. (a) |
1,600,000 |
30,448,000 |
|
|
Illumina, Inc. (a) |
150,000 |
29,319,000 |
|
|
PRA Health Sciences, Inc. |
1,280,000 |
40,345,600 |
|
|
Thermo Fisher Scientific, Inc. |
600,000 |
78,000,000 |
|
|
|
308,963,600 |
||
|
PHARMACEUTICALS - 31.0% |
|||
|
Pharmaceuticals - 31.0% |
|||
|
AbbVie, Inc. |
1,520,000 |
91,960,000 |
|
|
Actavis PLC (a) |
2,800,000 |
815,808,000 |
|
|
Bristol-Myers Squibb Co. |
1,100,000 |
67,012,000 |
|
|
Dechra Pharmaceuticals PLC |
2,000,000 |
28,792,803 |
|
|
Eisai Co. Ltd. (d) |
1,000,000 |
52,179,728 |
|
|
Endo Health Solutions, Inc. (a) |
1,280,000 |
109,568,000 |
|
|
Jazz Pharmaceuticals PLC (a) |
694,900 |
118,195,541 |
|
|
Jiangsu Hengrui Medicine Co. Ltd. |
3,000,144 |
19,313,164 |
|
|
Mallinckrodt PLC (a) |
2,700,000 |
315,144,000 |
|
|
Merck & Co., Inc. |
1,000,000 |
58,540,000 |
|
|
Mylan N.V. (a) |
2,550,000 |
146,178,750 |
|
|
Novartis AG sponsored ADR |
1,000,000 |
102,400,000 |
|
|
Omeros Corp. (a)(d) |
1,280,561 |
26,725,308 |
|
|
Pacira Pharmaceuticals, Inc. (a) |
440,000 |
50,498,800 |
|
|
Perrigo Co. PLC |
1,100,000 |
169,917,000 |
|
|
Prestige Brands Holdings, Inc. (a) |
2,000,000 |
77,080,000 |
|
|
Sanofi SA sponsored ADR |
2,000,000 |
97,720,000 |
|
|
|
|||
|
Shares |
Value |
||
|
Shire PLC sponsored ADR |
1,200,000 |
$ 290,292,000 |
|
|
Teva Pharmaceutical Industries Ltd. sponsored ADR |
4,800,000 |
273,696,000 |
|
|
TherapeuticsMD, Inc. (a)(d) |
5,700,000 |
28,899,000 |
|
|
Valeant Pharmaceuticals International (Canada) (a) |
350,000 |
68,950,084 |
|
|
ZS Pharma, Inc. |
750,000 |
37,102,500 |
|
|
|
3,045,972,678 |
||
|
PROFESSIONAL SERVICES - 0.5% |
|||
|
Human Resource & Employment Services - 0.5% |
|||
|
WageWorks, Inc. (a) |
800,000 |
45,960,000 |
|
|
TOTAL COMMON STOCKS (Cost $7,126,793,393) |
|
||
|
Convertible Preferred Stocks - 0.3% |
|||
|
|
|
|
|
|
HEALTH CARE EQUIPMENT & SUPPLIES - 0.2% |
|||
|
Health Care Equipment - 0.2% |
|||
|
Penumbra, Inc. Series F (f) |
1,250,000 |
21,837,500 |
|
|
HEALTH CARE PROVIDERS & SERVICES - 0.1% |
|||
|
Health Care Services - 0.1% |
|||
|
1Life Healthcare, Inc. Series G (f) |
1,639,892 |
11,807,222 |
|
|
TOTAL CONVERTIBLE PREFERRED STOCKS (Cost $27,300,001) |
|
||
|
Money Market Funds - 3.2% |
|||
|
|
|
|
|
|
Fidelity Cash Central Fund, 0.13% (b) |
160,213,230 |
160,213,230 |
|
|
Fidelity Securities Lending Cash Central Fund, 0.13% (b)(c) |
154,271,705 |
154,271,705 |
|
|
TOTAL MONEY MARKET FUNDS (Cost $314,484,935) |
|
||
|
TOTAL INVESTMENT PORTFOLIO - 101.9% (Cost $7,468,578,329) |
10,019,555,462 |
||
|
NET OTHER ASSETS (LIABILITIES) - (1.9)% |
(187,747,501) |
||
|
NET ASSETS - 100% |
$ 9,831,807,961 |
||
|
Legend |
|
(a) Non-income producing |
|
(b) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
|
(c) Investment made with cash collateral received from securities on loan. |
|
(d) Security or a portion of the security is on loan at period end. |
|
(e) Affiliated company |
|
(f) Restricted securities - Investment in securities not registered under the Securities Act of 1933 (excluding 144A issues). At the end of the period, the value of restricted securities (excluding 144A issues) amounted to $33,644,722 or 0.3% of net assets. |
|
Additional information on each restricted holding is as follows: |
|
Security |
Acquisition Date |
Acquisition Cost |
|
1Life Healthcare, Inc. Series G |
4/10/14 |
$ 10,800,001 |
|
Penumbra, Inc. Series F |
5/16/14 |
$ 16,500,000 |
|
Affiliated Central Funds |
|
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
|
Fund |
Income earned |
|
Fidelity Cash Central Fund |
$ 150,635 |
|
Fidelity Securities Lending Cash Central Fund |
749,220 |
|
Total |
$ 899,855 |
|
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, |
|
Connecture, Inc. |
$ - |
$ 16,405,143 |
$ - |
$ - |
$ 17,280,000 |
|
Curis, Inc. |
- |
19,108,686 |
- |
- |
21,019,931 |
|
Discovery Laboratories, Inc. |
9,504,000 |
2,586,205 |
- |
- |
8,855,000 |
|
Genmark Diagnostics, Inc. |
25,254,925 |
1,590,518 |
96,624 |
- |
27,500,449 |
|
HealthStream, Inc. |
13,257,200 |
29,793,482 |
- |
- |
38,820,000 |
|
Neovasc, Inc. |
- |
29,836,964 |
- |
- |
39,600,000 |
|
TriVascular Technologies, Inc. |
- |
15,692,537 |
- |
- |
13,381,307 |
|
Vanda Pharmaceuticals, Inc. |
24,208,000 |
10,832,455 |
3,523,705 |
- |
23,672,000 |
|
Total |
$ 72,224,125 |
$ 125,845,990 |
$ 3,620,329 |
$ - |
$ 190,128,687 |
|
Other Information |
|
The following is a summary of the inputs used, as of February 28, 2015, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements. |
|
Valuation Inputs at Reporting Date: |
||||
|
Description |
Total |
Level 1 |
Level 2 |
Level 3 |
|
Investments in Securities: |
||||
|
Common Stocks |
$ 9,671,425,805 |
$ 9,525,247,055 |
$ 146,178,750 |
$ - |
|
Convertible Preferred Stocks |
33,644,722 |
- |
- |
33,644,722 |
|
Money Market Funds |
314,484,935 |
314,484,935 |
- |
- |
|
Total Investments in Securities: |
$ 10,019,555,462 |
$ 9,839,731,990 |
$ 146,178,750 |
$ 33,644,722 |
|
Distribution of investments by country or territory of incorporation, as a percentage of total net assets, is as follows (Unaudited): |
|
United States of America |
66.4% |
|
Ireland |
21.9% |
|
Bailiwick of Jersey |
3.0% |
|
Israel |
3.0% |
|
Switzerland |
1.3% |
|
France |
1.1% |
|
Canada |
1.1% |
|
Others (Individually Less Than 1%) |
2.2% |
|
|
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 28, 2015 |
|
|
|
|
|
|
Assets |
|
|
|
Investment in securities, at value (including securities loaned of $147,191,106) - See accompanying schedule: Unaffiliated issuers (cost $6,983,283,536) |
$ 9,514,941,840 |
|
|
Fidelity Central Funds (cost $314,484,935) |
314,484,935 |
|
|
Other affiliated issuers (cost $170,809,858) |
190,128,687 |
|
|
Total Investments (cost $7,468,578,329) |
|
$ 10,019,555,462 |
|
Cash |
|
251,965 |
|
Receivable for investments sold |
|
58,036,679 |
|
Receivable for fund shares sold |
|
26,764,208 |
|
Dividends receivable |
|
4,729,100 |
|
Distributions receivable from Fidelity Central Funds |
|
83,693 |
|
Prepaid expenses |
|
24,827 |
|
Other receivables |
|
182,333 |
|
Total assets |
|
10,109,628,267 |
|
|
|
|
|
Liabilities |
|
|
|
Payable for investments purchased |
$ 108,264,892 |
|
|
Payable for fund shares redeemed |
9,437,286 |
|
|
Accrued management fee |
4,315,759 |
|
|
Other affiliated payables |
1,266,760 |
|
|
Other payables and accrued expenses |
263,904 |
|
|
Collateral on securities loaned, at value |
154,271,705 |
|
|
Total liabilities |
|
277,820,306 |
|
|
|
|
|
Net Assets |
|
$ 9,831,807,961 |
|
Net Assets consist of: |
|
|
|
Paid in capital |
|
$ 6,866,946,685 |
|
Accumulated net investment loss |
|
(217,204) |
|
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions |
|
414,101,355 |
|
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies |
|
2,550,977,125 |
|
Net Assets, for 41,583,850 shares outstanding |
|
$ 9,831,807,961 |
|
Net Asset Value, offering price and redemption price per share ($9,831,807,961 ÷ 41,583,850 shares) |
|
$ 236.43 |
Statement of Operations
|
|
Year ended February 28, 2015 |
|
|
|
|
|
|
Investment Income |
|
|
|
Dividends |
|
$ 39,294,733 |
|
Income from Fidelity Central Funds (including $749,220 from security lending) |
|
899,855 |
|
Total income |
|
40,194,588 |
|
|
|
|
|
Expenses |
|
|
|
Management fee |
$ 39,589,875 |
|
|
Transfer agent fees |
11,510,737 |
|
|
Accounting and security lending fees |
1,193,256 |
|
|
Custodian fees and expenses |
123,960 |
|
|
Independent trustees' compensation |
132,096 |
|
|
Appreciation in deferred trustee compensation account |
733 |
|
|
Registration fees |
384,219 |
|
|
Audit |
50,393 |
|
|
Legal |
46,741 |
|
|
Miscellaneous |
70,989 |
|
|
Total expenses before reductions |
53,102,999 |
|
|
Expense reductions |
(172,193) |
52,930,806 |
|
Net investment income (loss) |
|
(12,736,218) |
|
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: |
|
|
|
Investment securities: |
|
|
|
Unaffiliated issuers |
1,234,445,284 |
|
|
Other affiliated issuers |
(651,876) |
|
|
Foreign currency transactions |
(32,430) |
|
|
Total net realized gain (loss) |
|
1,233,760,978 |
|
Change in net unrealized appreciation (depreciation) on: Investment securities |
588,762,270 |
|
|
Assets and liabilities in foreign currencies |
(24,643) |
|
|
Total change in net unrealized appreciation (depreciation) |
|
588,737,627 |
|
Net gain (loss) |
|
1,822,498,605 |
|
Net increase (decrease) in net assets resulting from operations |
|
$ 1,809,762,387 |
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) |
$ (12,736,218) |
$ (4,474,719) |
|
Net realized gain (loss) |
1,233,760,978 |
710,389,142 |
|
Change in net unrealized appreciation (depreciation) |
588,737,627 |
1,417,684,933 |
|
Net increase (decrease) in net assets resulting from operations |
1,809,762,387 |
2,123,599,356 |
|
Distributions to shareholders from net investment income |
- |
(673,800) |
|
Distributions to shareholders from net realized gain |
(1,009,840,103) |
(449,807,909) |
|
Total distributions |
(1,009,840,103) |
(450,481,709) |
|
Share transactions |
4,120,654,780 |
2,072,747,792 |
|
Reinvestment of distributions |
964,770,473 |
430,582,894 |
|
Cost of shares redeemed |
(2,234,166,562) |
(720,645,554) |
|
Net increase (decrease) in net assets resulting from share transactions |
2,851,258,691 |
1,782,685,132 |
|
Redemption fees |
346,983 |
136,125 |
|
Total increase (decrease) in net assets |
3,651,527,958 |
3,455,938,904 |
|
|
|
|
|
Net Assets |
|
|
|
Beginning of period |
6,180,280,003 |
2,724,341,099 |
|
End of period (including accumulated net investment loss of $217,204 and accumulated net investment loss of $65,597, respectively) |
$ 9,831,807,961 |
$ 6,180,280,003 |
|
Other Information Shares |
|
|
|
Sold |
19,148,481 |
11,268,250 |
|
Issued in reinvestment of distributions |
4,618,668 |
2,393,364 |
|
Redeemed |
(10,679,375) |
(4,057,826) |
|
Net increase (decrease) |
13,087,774 |
9,603,788 |
Financial Highlights
|
Years ended February 28, |
2015 |
2014 |
2013 |
2012 H |
2011 |
|
Selected Per-Share Data |
|
|
|
|
|
|
Net asset value, beginning of period |
$ 216.88 |
$ 144.20 |
$ 133.07 |
$ 133.93 |
$ 109.17 |
|
Income from Investment Operations |
|
|
|
|
|
|
Net investment income (loss) B |
(.38) |
(.20) |
.50 |
- I |
.04 |
|
Net realized and unrealized gain (loss) |
50.00 |
92.44 |
24.74 |
10.86 |
24.90 |
|
Total from investment operations |
49.62 |
92.24 |
25.24 |
10.86 |
24.94 |
|
Distributions from net investment income |
- |
(.03) |
(.44) |
- |
(.17) |
|
Distributions from net realized gain |
(30.08) |
(19.53) |
(13.67) |
(11.72) |
(.01) |
|
Total distributions |
(30.08) |
(19.57) J |
(14.11) |
(11.72) |
(.18) |
|
Redemption fees added to paid in capital B |
.01 |
.01 |
- I |
- I |
- I |
|
Net asset value, end of period |
$ 236.43 |
$ 216.88 |
$ 144.20 |
$ 133.07 |
$ 133.93 |
|
Total ReturnA |
25.44% |
67.13% |
20.07% |
9.10% |
22.86% |
|
Ratios to Average Net AssetsC, F |
|
|
|
|
|
|
Expenses before reductions |
.74% |
.77% |
.79% |
.80% |
.82% |
|
Expenses net of fee waivers, if any |
.74% |
.77% |
.79% |
.80% |
.82% |
|
Expenses net of all reductions |
.74% |
.76% |
.78% |
.80% |
.82% |
|
Net investment income (loss) |
(.18)% |
(.11)% |
.36% |
.00% E |
.03% |
|
Supplemental Data |
|
|
|
|
|
|
Net assets, end of period (000 omitted) |
$ 9,831,808 |
$ 6,180,280 |
$ 2,724,341 |
$ 2,176,224 |
$ 1,991,604 |
|
Portfolio turnover rateD |
98% G |
99% |
95% |
130% |
99% |
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 Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund.
G Portfolio turnover rate excludes securities received or delivered in-kind.
H For the year ended February 29.
I Amount represents less than $.01 per share.
J Total distributions of $19.57 per share is comprised of distributions from net investment income of $.034 and distributions from net realized gain of $19.532 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 28, 2015 |
Past 1 |
Past 5 |
Past 10 |
|
Medical Delivery Portfolio |
26.88% |
19.38% |
11.37% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Medical Delivery Portfolio on February 28, 2005. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index performed over the same period.
Annual Report
Medical Delivery Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. stock market closed near its all-time high for the 12 months ending February 28, 2015, supported by low interest rates and the relative strength of the U.S. economy and dollar. The large-cap S&P 500® Index returned 15.51%. Growth stocks in the index outperformed value-oriented names. The tech-heavy Nasdaq Composite Index® rose 16.58%, while the small-cap Russell 2000® Index advanced 5.63%, rallying from early-period weakness amid growth and valuation worries. Among the 10 major market sectors tracked by MSCI U.S. IMI 25-50 classifications, most notched a double-digit gain, led by health care (+24%), consumer staples (+21%), information technology (+20%) and utilities (+15%). Conversely, energy (-9%) was the only sector to lose ground, reflecting a sharp drop in crude prices beginning midyear and attributed to weaker global demand and a U.S. supply boom. Volatility spiked to a three-year high in October amid concerns about economic growth and Ebola, as well as unrest in Syria, Iraq and Ukraine. Nevertheless, the S&P 500® finished the period well above its mid-October nadir, bolstered by the relative economic strength of the U.S., which marked a six-year low in its unemployment rate, and consumer confidence that declined only slightly from its 11-year high reached in January.
Comments from Steven Bullock, Portfolio Manager of Medical Delivery Portfolio: For the year, the fund gained 26.88%, trailing the 34.45% rise of its industry benchmark, the MSCI U.S. IMI Health Care Providers & Services 25-50 Index, but topping the S&P 500®. Medical delivery stocks were strong the past 12 months, primarily due to accelerating demand for health care services and growth in the pharmaceuticals supply chain. Versus the MSCI index, the fund was hurt by an underweighting in managed health care, positioning in health care services, a segment that lagged, as well as a small out-of-benchmark stake in the health care technology group. Individual detractors included an underweighting in managed care firm Anthem (formerly WellPoint). Shares of the insurance company performed well this period, as health care utilization was depressed, a result of the especially cold and snowy winter which made it hard for people to get to the doctor. Additionally, management has done a good job executing in the core business and in improving operating costs. Another detractor was Accretive Health, which I viewed as a turnaround story in one of the fastest growing parts of health care - revenue cycle management, a service that helps health care providers more-efficiently collect revenue and reduce inefficiencies. Accretive was going through an accounting restatement when a new management team was brought in to improve operations. When the restatement was completed, cash on the firm's balance sheet was lower than expected, due to working capital and other needs. While I continued to believe in the turnaround story, this setback hurt performance in the near term. On the flip side, the fund's relative performance was helped the most by my decision to not own hospital company and index stock Tenet Healthcare because its returns on capital and history of execution were worse than the industry. While demand for hospital utilization rebounded over the past year, margins didn't expand as much as investors anticipated, and free-cash-flow generation was weak due to poor execution and worse-than-expected pricing power. Conversely, the fund benefited from investments in hospital owner/operator HCA Holdings and nurse staffing firm AMN Healthcare, the latter of which I added to the fund during the period. In both cases, management teams were able to capitalize on the improving utilization environment and lower rates of uninsured patients due to the Affordable Care Act.
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 28, 2015 |
||
|
|
% of fund's |
% of fund's net assets |
|
UnitedHealth Group, Inc. |
17.2 |
15.5 |
|
Express Scripts Holding Co. |
11.7 |
12.3 |
|
McKesson Corp. |
8.4 |
9.0 |
|
Cardinal Health, Inc. |
6.6 |
7.4 |
|
Cigna Corp. |
5.5 |
4.6 |
|
HCA Holdings, Inc. |
4.9 |
5.8 |
|
Aetna, Inc. |
4.5 |
0.0 |
|
Anthem, Inc. |
4.2 |
0.0 |
|
DaVita HealthCare Partners, Inc. |
4.2 |
3.9 |
|
Henry Schein, Inc. |
2.9 |
0.2 |
|
|
70.1 |
|
|
Top Industries (% of fund's net assets) |
|||
|
As of February 28, 2015 |
|||
 |
Health Care Providers & Services |
97.2% |
|
 |
Professional Services |
0.3% |
|
 |
Diversified Consumer Services |
0.2% |
|
 |
Industrial Conglomerates |
0.1% |
|
 |
Health Care Equipment & Supplies |
0.1% |
|
 |
All Others* |
2.1% |
|
|
As of August 31, 2014 |
|||
 |
Health Care Providers & Services |
93.2% |
|
 |
Specialty Retail |
1.7% |
|
 |
Food & Staples Retailing |
0.8% |
|
 |
Health Care |
0.8% |
|
 |
Diversified Consumer Services |
0.5% |
|
 |
All Others* |
3.0% |
|
|
* Includes short-term investments and net other assets (liabilities). |
Annual Report
Medical Delivery Portfolio
Investments February 28, 2015
Showing Percentage of Net Assets
|
Common Stocks - 98.1% |
|||
|
Shares |
Value |
||
|
COMMERCIAL SERVICES & SUPPLIES - 0.1% |
|||
|
Environmental & Facility Services - 0.1% |
|||
|
Stericycle, Inc. (a) |
6,500 |
$ 877,305 |
|
|
DIVERSIFIED CONSUMER SERVICES - 0.2% |
|||
|
Specialized Consumer Services - 0.2% |
|||
|
H&R Block, Inc. |
36,600 |
1,249,890 |
|
|
FOOD & STAPLES RETAILING - 0.1% |
|||
|
Drug Retail - 0.1% |
|||
|
Jean Coutu Group, Inc. Class A (sub. vtg.) |
33,000 |
712,743 |
|
|
HEALTH CARE EQUIPMENT & SUPPLIES - 0.1% |
|||
|
Health Care Equipment - 0.1% |
|||
|
IDEXX Laboratories, Inc. (a) |
5,600 |
878,248 |
|
|
HEALTH CARE PROVIDERS & SERVICES - 97.2% |
|||
|
Health Care Distributors & Services - 20.0% |
|||
|
AmerisourceBergen Corp. |
182,400 |
18,743,424 |
|
|
Cardinal Health, Inc. |
652,900 |
57,448,671 |
|
|
Henry Schein, Inc. (a) |
184,100 |
25,783,205 |
|
|
McKesson Corp. |
321,800 |
73,595,660 |
|
|
|
175,570,960 |
||
|
Health Care Facilities - 11.6% |
|||
|
AmSurg Corp. (a) |
320,016 |
19,232,962 |
|
|
Community Health Systems, Inc. (a) |
365,900 |
17,753,468 |
|
|
HCA Holdings, Inc. (a) |
597,600 |
42,752,304 |
|
|
HealthSouth Corp. |
56,500 |
2,455,490 |
|
|
LifePoint Hospitals, Inc. (a) |
153,800 |
11,067,448 |
|
|
U.S. Physical Therapy, Inc. |
155,600 |
6,595,884 |
|
|
Universal Health Services, Inc. Class B |
20,500 |
2,323,675 |
|
|
|
102,181,231 |
||
|
Health Care Services - 33.7% |
|||
|
Accretive Health, Inc. (a)(d) |
1,140,700 |
6,958,270 |
|
|
Adeptus Health, Inc. Class A (d) |
58,100 |
2,576,735 |
|
|
Air Methods Corp. (a)(d) |
313,600 |
16,617,664 |
|
|
AMN Healthcare Services, Inc. (a) |
197,976 |
4,466,339 |
|
|
BioScrip, Inc. (a)(d) |
619,202 |
3,783,324 |
|
|
Catamaran Corp. (a) |
165,812 |
8,277,999 |
|
|
Corvel Corp. (a) |
84,200 |
2,983,206 |
|
|
DaVita HealthCare Partners, Inc. (a) |
490,900 |
36,621,140 |
|
|
Express Scripts Holding Co. (a) |
1,213,550 |
102,896,905 |
|
|
Fresenius SE & Co. KGaA |
293,800 |
16,826,801 |
|
|
IPC The Hospitalist Co., Inc. (a) |
148,300 |
6,412,492 |
|
|
Laboratory Corp. of America Holdings (a) |
121,000 |
14,886,630 |
|
|
Landauer, Inc. |
63,100 |
2,406,634 |
|
|
MEDNAX, Inc. (a) |
277,400 |
19,825,778 |
|
|
Omnicare, Inc. |
214,500 |
16,460,730 |
|
|
Providence Service Corp. (a) |
60,500 |
2,783,000 |
|
|
Quest Diagnostics, Inc. |
287,400 |
20,158,236 |
|
|
Team Health Holdings, Inc. (a) |
192,200 |
11,391,694 |
|
|
|
296,333,577 |
||
|
|
|||
|
Shares |
Value |
||
|
Managed Health Care - 31.9% |
|||
|
Aetna, Inc. |
396,900 |
$ 39,511,395 |
|
|
Anthem, Inc. |
250,100 |
36,627,145 |
|
|
Cigna Corp. |
397,300 |
48,323,599 |
|
|
Molina Healthcare, Inc. (a) |
61,900 |
3,942,411 |
|
|
UnitedHealth Group, Inc. |
1,332,597 |
151,422,997 |
|
|
|
279,827,547 |
||
|
TOTAL HEALTH CARE PROVIDERS & SERVICES |
853,913,315 |
||
|
HEALTH CARE TECHNOLOGY - 0.0% |
|||
|
Health Care Technology - 0.0% |
|||
|
Castlight Health, Inc. Class B (a) |
4,500 |
32,805 |
|
|
INDUSTRIAL CONGLOMERATES - 0.1% |
|||
|
Industrial Conglomerates - 0.1% |
|||
|
Danaher Corp. |
13,800 |
1,204,464 |
|
|
PROFESSIONAL SERVICES - 0.3% |
|||
|
Research & Consulting Services - 0.3% |
|||
|
Huron Consulting Group, Inc. (a) |
22,000 |
1,466,300 |
|
|
Verisk Analytics, Inc. (a) |
19,100 |
1,371,571 |
|
|
|
2,837,871 |
||
|
TOTAL COMMON STOCKS (Cost $498,101,154) |
|
||
|
Money Market Funds - 1.9% |
|||
|
|
|
|
|
|
Fidelity Cash Central Fund, 0.13% (b) |
7,477,531 |
7,477,531 |
|
|
Fidelity Securities Lending Cash Central Fund, 0.13% (b)(c) |
8,901,450 |
8,901,450 |
|
|
TOTAL MONEY MARKET FUNDS (Cost $16,378,981) |
|
||
|
TOTAL INVESTMENT PORTFOLIO - 100.0% (Cost $514,480,135) |
878,085,622 |
||
|
NET OTHER ASSETS (LIABILITIES) - 0.0% |
330,479 |
||
|
NET ASSETS - 100% |
$ 878,416,101 |
||
|
Legend |
|
(a) Non-income producing |
|
(b) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
|
(c) Investment made with cash collateral received from securities on loan. |
|
(d) Security or a portion of the security is on loan at period end. |
|
Affiliated Central Funds |
|
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
|
Fund |
Income earned |
|
Fidelity Cash Central Fund |
$ 11,501 |
|
Fidelity Securities Lending Cash Central Fund |
61,749 |
|
Total |
$ 73,250 |
|
Other Information |
|
All investments are categorized as Level 1 under the Fair Value Hierarchy. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Medical Delivery Portfolio
Financial Statements
Statement of Assets and Liabilities
|
|
February 28, 2015 |
|
|
|
|
|
|
Assets |
|
|
|
Investment in securities, at value (including securities loaned of $9,130,363) - See accompanying schedule: Unaffiliated issuers (cost $498,101,154) |
$ 861,706,641 |
|
|
Fidelity Central Funds (cost $16,378,981) |
16,378,981 |
|
|
Total Investments (cost $514,480,135) |
|
$ 878,085,622 |
|
Receivable for investments sold |
|
13,956,594 |
|
Receivable for fund shares sold |
|
527,463 |
|
Dividends receivable |
|
131,839 |
|
Distributions receivable from Fidelity Central Funds |
|
3,341 |
|
Prepaid expenses |
|
2,587 |
|
Other receivables |
|
16,854 |
|
Total assets |
|
892,724,300 |
|
|
|
|
|
Liabilities |
|
|
|
Payable for investments purchased |
$ 4,049,227 |
|
|
Payable for fund shares redeemed |
767,512 |
|
|
Accrued management fee |
392,792 |
|
|
Other affiliated payables |
151,637 |
|
|
Other payables and accrued expenses |
45,581 |
|
|
Collateral on securities loaned, at value |
8,901,450 |
|
|
Total liabilities |
|
14,308,199 |
|
|
|
|
|
Net Assets |
|
$ 878,416,101 |
|
Net Assets consist of: |
|
|
|
Paid in capital |
|
$ 500,283,159 |
|
Accumulated net investment loss |
|
(5,747) |
|
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions |
|
14,533,077 |
|
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies |
|
363,605,612 |
|
Net Assets, for 10,066,388 shares outstanding |
|
$ 878,416,101 |
|
Net Asset Value, offering price and redemption price per share ($878,416,101 ÷ 10,066,388 shares) |
|
$ 87.26 |
Statement of Operations
|
|
Year ended February 28, 2015 |
|
|
|
|
|
|
Investment Income |
|
|
|
Dividends |
|
$ 4,891,147 |
|
Income from Fidelity Central Funds (including $61,749 from security lending) |
|
73,250 |
|
Total income |
|
4,964,397 |
|
|
|
|
|
Expenses |
|
|
|
Management fee |
$ 4,037,641 |
|
|
Transfer agent fees |
1,392,790 |
|
|
Accounting and security lending fees |
263,773 |
|
|
Custodian fees and expenses |
14,667 |
|
|
Independent trustees' compensation |
14,043 |
|
|
Registration fees |
44,875 |
|
|
Audit |
38,803 |
|
|
Legal |
5,700 |
|
|
Interest |
149 |
|
|
Miscellaneous |
10,662 |
|
|
Total expenses before reductions |
5,823,103 |
|
|
Expense reductions |
(2,018) |
5,821,085 |
|
Net investment income (loss) |
|
(856,688) |
|
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: |
|
|
|
Investment securities: |
|
|
|
Unaffiliated issuers |
67,116,361 |
|
|
Foreign currency transactions |
36,187 |
|
|
Total net realized gain (loss) |
|
67,152,548 |
|
Change in net unrealized appreciation (depreciation) on: Investment securities |
113,457,985 |
|
|
Assets and liabilities in foreign currencies |
1,251 |
|
|
Total change in net unrealized appreciation (depreciation) |
|
113,459,236 |
|
Net gain (loss) |
|
180,611,784 |
|
Net increase (decrease) in net assets resulting from operations |
|
$ 179,755,096 |
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) |
$ (856,688) |
$ (649,182) |
|
Net realized gain (loss) |
67,152,548 |
65,911,002 |
|
Change in net unrealized appreciation (depreciation) |
113,459,236 |
128,109,218 |
|
Net increase (decrease) in net assets resulting from operations |
179,755,096 |
193,371,038 |
|
Distributions to shareholders from net realized gain |
(68,132,265) |
(41,435,622) |
|
Share transactions |
205,039,822 |
261,222,310 |
|
Reinvestment of distributions |
65,616,728 |
40,055,096 |
|
Cost of shares redeemed |
(196,364,541) |
(323,684,837) |
|
Net increase (decrease) in net assets resulting from share transactions |
74,292,009 |
(22,407,431) |
|
Redemption fees |
15,203 |
9,206 |
|
Total increase (decrease) in net assets |
185,930,043 |
129,537,191 |
|
|
|
|
|
Net Assets |
|
|
|
Beginning of period |
692,486,058 |
562,948,867 |
|
End of period (including accumulated net investment loss of $5,747 and accumulated net investment loss of $4,626, respectively) |
$ 878,416,101 |
$ 692,486,058 |
|
Other Information Shares |
|
|
|
Sold |
2,561,684 |
3,857,742 |
|
Issued in reinvestment of distributions |
847,811 |
580,095 |
|
Redeemed |
(2,508,957) |
(4,670,775) |
|
Net increase (decrease) |
900,538 |
(232,938) |
Financial Highlights
|
Years ended February 28, |
2015 |
2014 |
2013 |
2012 F |
2011 |
|
Selected Per-Share Data |
|
|
|
|
|
|
Net asset value, beginning of period |
$ 75.55 |
$ 59.90 |
$ 61.26 |
$ 55.32 |
$ 44.38 |
|
Income from Investment Operations |
|
|
|
|
|
|
Net investment income (loss) B |
(.09) |
(.07) |
.06 |
(.03) |
(.25) |
|
Net realized and unrealized gain (loss) |
19.25 |
20.08 |
1.77 |
5.96 |
11.19 |
|
Total from investment operations |
19.16 |
20.01 |
1.83 |
5.93 |
10.94 |
|
Distributions from net investment income |
- |
- |
(.03) |
- |
- |
|
Distributions from net realized gain |
(7.45) |
(4.36) |
(3.16) |
- |
- |
|
Total distributions |
(7.45) |
(4.36) |
(3.19) |
- |
- |
|
Redemption fees added to paid in capital B |
- G |
- G |
- G |
.01 |
- G |
|
Net asset value, end of period |
$ 87.26 |
$ 75.55 |
$ 59.90 |
$ 61.26 |
$ 55.32 |
|
Total ReturnA |
26.88% |
34.22% |
3.17% |
10.74% |
24.65% |
|
Ratios to Average Net AssetsC, E |
|
|
|
|
|
|
Expenses before reductions |
.79% |
.82% |
.84% |
.86% |
.89% |
|
Expenses net of fee waivers, if any |
.79% |
.82% |
.84% |
.86% |
.89% |
|
Expenses net of all reductions |
.79% |
.82% |
.83% |
.84% |
.88% |
|
Net investment income (loss) |
(.12)% |
(.10)% |
.10% |
(.05)% |
(.54)% |
|
Supplemental Data |
|
|
|
|
|
|
Net assets, end of period (000 omitted) |
$ 878,416 |
$ 692,486 |
$ 562,949 |
$ 870,358 |
$ 566,400 |
|
Portfolio turnover rateD |
44% |
65% |
96% |
86% |
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 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
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 28, 2015 |
Past 1 |
Past 5 |
Past 10 |
|
Medical Equipment and Systems Portfolio |
28.52% |
18.72% |
12.39% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Medical Equipment and Systems Portfolio on February 28, 2005. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index performed over the same period.
Annual Report
Medical Equipment and Systems Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. stock market closed near its all-time high for the 12 months ending February 28, 2015, supported by low interest rates and the relative strength of the U.S. economy and dollar. The large-cap S&P 500® Index returned 15.51%. Growth stocks in the index outperformed value-oriented names. The tech-heavy Nasdaq Composite Index® rose 16.58%, while the small-cap Russell 2000® Index advanced 5.63%, rallying from early-period weakness amid growth and valuation worries. Among the 10 major market sectors tracked by MSCI U.S. IMI 25-50 classifications, most notched a double-digit gain, led by health care (+24%), consumer staples (+21%), information technology (+20%) and utilities (+15%). Conversely, energy (-9%) was the only sector to lose ground, reflecting a sharp drop in crude prices beginning midyear and attributed to weaker global demand and a U.S. supply boom. Volatility spiked to a three-year high in October amid concerns about economic growth and Ebola, as well as unrest in Syria, Iraq and Ukraine. Nevertheless, the S&P 500® finished the period well above its mid-October nadir, bolstered by the relative economic strength of the U.S., which marked a six-year low in its unemployment rate, and consumer confidence that declined only slightly from its 11-year high reached in January.
Comments from Eddie Yoon, Portfolio Manager of Medical Equipment and Systems Portfolio: For the year, the fund gained 28.52%, outpacing the 24.72% advance of the MSCI U.S. IMI Health Care Equipment & Supplies 25-50 Index and the S&P 500®. Attractive valuations, signs of strength in the U.S. economy and a growing middle class in many emerging markets fueled the industry's revenue growth, which propelled medical equipment stocks in the period's second half. Because companies in the group typically do not rely on government spending, fundamentals have been somewhat buffered from changes in health care policy required by the Affordable Care Act (ACA). All of these positives led to a stable demand backdrop and a relatively inexpensive valuation for the industry. On the plus side, part of my investment strategy is to identify potential merger-and-acquisition targets, and we were able to capitalize on a flurry of activity this period. Versus the MSCI index, it helped to overweight Covidien, as shares of the Ireland-headquartered equipment maker gained on news it would be acquired by Medtronic. We also were able to take advantage of rapid consolidation in the non-index pharmaceuticals industry. For example, Dublin-based Shire benefited from multiple takeover bids by drugmaker AbbVie. Elsewhere, an average underweighting in Baxter International was the fund's biggest contributor, as the stock was weighed down this period by its international exposure. I sold Baxter and Covidien by period end. On the flip side, untimely ownership of Medtronic was a big detractor, as the fund was underweighted the stock early in the year when it outperformed, then overweighted in the period's second half when it couldn't keep pace with the market. We also missed with the fund's non-benchmark stake in life science tools & services firm Agilent Technologies. Agilent's stock had a rough go, including a dive in October when the firm announced it would close one of its businesses and reaffirmed worse-than-expected fiscal fourth-quarter earnings.
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 28, 2015 |
||
|
|
% of fund's |
% of fund's net assets |
|
Medtronic PLC |
22.8 |
21.1 |
|
Boston Scientific Corp. |
10.8 |
9.9 |
|
Abbott Laboratories |
6.5 |
6.1 |
|
Zimmer Holdings, Inc. |
6.5 |
3.5 |
|
The Cooper Companies, Inc. |
4.3 |
4.2 |
|
Actavis PLC |
3.9 |
2.3 |
|
Edwards Lifesciences Corp. |
3.2 |
4.0 |
|
ResMed, Inc. |
2.7 |
2.8 |
|
Smith & Nephew PLC sponsored ADR |
2.4 |
2.2 |
|
Stryker Corp. |
2.2 |
5.0 |
|
|
65.3 |
|
|
Top Industries (% of fund's net assets) |
|||
|
As of February 28, 2015 |
|||
 |
Health Care Equipment & Supplies |
87.4% |
|
 |
Pharmaceuticals |
5.7% |
|
 |
Life Sciences Tools & Services |
2.4% |
|
 |
Biotechnology |
1.4% |
|
 |
Health Care Providers & Services |
1.1% |
|
 |
All Others* |
2.0% |
|
|
As of August 31, 2014 |
|||
 |
Health Care Equipment & Supplies |
84.8% |
|
 |
Pharmaceuticals |
4.9% |
|
 |
Life Sciences Tools & Services |
4.7% |
|
 |
Industrial Conglomerates |
2.0% |
|
 |
Health Care Providers & Services |
1.3% |
|
 |
All Others* |
2.3% |
|
|
* Includes short-term investments and net other assets (liabilities). |
Annual Report
Medical Equipment and Systems Portfolio
Investments February 28, 2015
Showing Percentage of Net Assets
|
Common Stocks - 98.5% |
|||
|
Shares |
Value |
||
|
BIOTECHNOLOGY - 1.4% |
|||
|
Biotechnology - 1.4% |
|||
|
AMAG Pharmaceuticals, Inc. (a) |
29,400 |
$ 1,447,362 |
|
|
Puma Biotechnology, Inc. (a) |
133,000 |
28,330,330 |
|
|
|
29,777,692 |
||
|
HEALTH CARE EQUIPMENT & SUPPLIES - 86.6% |
|||
|
Health Care Equipment - 78.6% |
|||
|
Abbott Laboratories |
2,900,000 |
137,373,000 |
|
|
Atricure, Inc. (a) |
1,182,904 |
20,913,743 |
|
|
Boston Scientific Corp. (a) |
13,500,000 |
228,150,000 |
|
|
Cardiovascular Systems, Inc. (a) |
400,000 |
15,084,000 |
|
|
CONMED Corp. |
600,000 |
30,780,000 |
|
|
Cyberonics, Inc. (a) |
200,000 |
13,700,000 |
|
|
DexCom, Inc. (a) |
180,000 |
10,933,200 |
|
|
Edwards Lifesciences Corp. (a) |
500,000 |
66,510,000 |
|
|
Entellus Medical, Inc. |
230,000 |
5,002,500 |
|
|
Fukuda Denshi Co. Ltd. |
4,100 |
210,441 |
|
|
Genmark Diagnostics, Inc. (a)(d) |
1,270,858 |
16,152,605 |
|
|
HeartWare International, Inc. (a)(d) |
275,761 |
23,503,110 |
|
|
Inogen, Inc. |
400,000 |
13,300,000 |
|
|
Integra LifeSciences Holdings Corp. (a) |
576,666 |
34,605,727 |
|
|
Intuitive Surgical, Inc. (a) |
65,000 |
32,500,000 |
|
|
K2M Group Holdings, Inc. |
550,000 |
11,269,500 |
|
|
Lumenis Ltd. Class B |
638,988 |
7,418,651 |
|
|
Masimo Corp. (a) |
330,000 |
9,725,100 |
|
|
Medtronic PLC |
6,200,000 |
481,057,999 |
|
|
Natus Medical, Inc. (a) |
650,000 |
23,263,500 |
|
|
Neovasc, Inc. (a) |
2,280,000 |
22,572,000 |
|
|
Nevro Corp. (d) |
330,000 |
13,803,900 |
|
|
NxStage Medical, Inc. (a) |
1,272,900 |
21,868,422 |
|
|
PW Medtech Group Ltd. (a) |
12,000,000 |
4,610,743 |
|
|
ResMed, Inc. (d) |
900,000 |
57,924,000 |
|
|
Roka Bioscience, Inc. (e) |
284,115 |
1,184,760 |
|
|
Smith & Nephew PLC sponsored ADR |
1,400,000 |
51,590,000 |
|
|
St. Jude Medical, Inc. |
340,000 |
22,671,200 |
|
|
Steris Corp. (d) |
380,000 |
24,517,600 |
|
|
Stryker Corp. |
480,000 |
45,480,000 |
|
|
Tandem Diabetes Care, Inc. (a)(d) |
650,000 |
7,605,000 |
|
|
Teleflex, Inc. |
50,000 |
6,084,500 |
|
|
Tornier NV (a) |
1,641,500 |
40,118,260 |
|
|
TriVascular Technologies, Inc. (d) |
532,900 |
5,467,554 |
|
|
Zeltiq Aesthetics, Inc. (a)(d) |
400,000 |
13,348,000 |
|
|
Zimmer Holdings, Inc. |
1,139,700 |
137,208,483 |
|
|
|
1,657,507,498 |
||
|
Health Care Supplies - 8.0% |
|||
|
ASAHI INTECC Co. Ltd. |
160,000 |
9,589,969 |
|
|
DENTSPLY International, Inc. |
300,000 |
15,903,000 |
|
|
Derma Sciences, Inc. (a)(d) |
400,000 |
3,168,000 |
|
|
|
|||
|
Shares |
Value |
||
|
Endologix, Inc. (a)(d) |
1,400,000 |
$ 22,078,000 |
|
|
Sientra, Inc. |
520,000 |
9,557,600 |
|
|
The Cooper Companies, Inc. |
550,000 |
90,183,500 |
|
|
The Spectranetics Corp. (a)(d) |
280,000 |
9,466,800 |
|
|
Vascular Solutions, Inc. (a) |
280,000 |
8,170,400 |
|
|
|
168,117,269 |
||
|
TOTAL HEALTH CARE EQUIPMENT & SUPPLIES |
1,825,624,767 |
||
|
HEALTH CARE PROVIDERS & SERVICES - 0.9% |
|||
|
Health Care Distributors & Services - 0.5% |
|||
|
Amplifon SpA (d) |
1,600,000 |
10,205,736 |
|
|
Health Care Services - 0.4% |
|||
|
Miraca Holdings, Inc. |
200,000 |
9,596,656 |
|
|
TOTAL HEALTH CARE PROVIDERS & SERVICES |
19,802,392 |
||
|
HEALTH CARE TECHNOLOGY - 0.4% |
|||
|
Health Care Technology - 0.4% |
|||
|
Castlight Health, Inc. |
999,300 |
7,284,897 |
|
|
Castlight Health, Inc. Class B (a)(d) |
17,400 |
126,846 |
|
|
|
7,411,743 |
||
|
INDUSTRIAL CONGLOMERATES - 1.1% |
|||
|
Industrial Conglomerates - 1.1% |
|||
|
Danaher Corp. |
260,000 |
22,692,800 |
|
|
LIFE SCIENCES TOOLS & SERVICES - 2.4% |
|||
|
Life Sciences Tools & Services - 2.4% |
|||
|
Agilent Technologies, Inc. |
460,000 |
19,416,600 |
|
|
Bruker Corp. (a) |
360,000 |
6,850,800 |
|
|
Thermo Fisher Scientific, Inc. |
180,000 |
23,400,000 |
|
|
|
49,667,400 |
||
|
PHARMACEUTICALS - 5.7% |
|||
|
Pharmaceuticals - 5.7% |
|||
|
Actavis PLC (a) |
280,000 |
81,580,800 |
|
|
Mallinckrodt PLC (a) |
330,000 |
38,517,600 |
|
|
|
120,098,400 |
||
|
TOTAL COMMON STOCKS (Cost $1,530,954,662) |
|
||
|
Preferred Stocks - 1.0% |
|||
|
|
|
|
|
|
Convertible Preferred Stocks - 0.4% |
|||
|
HEALTH CARE EQUIPMENT & SUPPLIES - 0.2% |
|||
|
Health Care Equipment - 0.2% |
|||
|
Penumbra, Inc. Series F (f) |
265,152 |
4,632,205 |
|
|
Preferred Stocks - continued |
|||
|
Shares |
Value |
||
|
Convertible Preferred Stocks - continued |
|||
|
HEALTH CARE PROVIDERS & SERVICES - 0.2% |
|||
|
Health Care Services - 0.2% |
|||
|
1Life Healthcare, Inc. Series G (f) |
455,526 |
$ 3,279,787 |
|
|
TOTAL CONVERTIBLE PREFERRED STOCKS |
7,911,992 |
||
|
Nonconvertible Preferred Stocks - 0.6% |
|||
|
HEALTH CARE EQUIPMENT & SUPPLIES - 0.6% |
|||
|
Health Care Equipment - 0.6% |
|||
|
Sartorius AG (non-vtg.) |
100,000 |
13,932,173 |
|
|
TOTAL PREFERRED STOCKS (Cost $15,892,959) |
|
||
|
Money Market Funds - 4.0% |
|||
|
|
|
|
|
|
Fidelity Cash Central Fund, 0.13% (b) |
8,204,076 |
8,204,076 |
|
|
Fidelity Securities Lending Cash Central Fund, 0.13% (b)(c) |
77,000,127 |
77,000,127 |
|
|
TOTAL MONEY MARKET FUNDS (Cost $85,204,203) |
|
||
|
TOTAL INVESTMENT PORTFOLIO - 103.5% (Cost $1,632,051,824) |
2,182,123,562 |
||
|
NET OTHER ASSETS (LIABILITIES) - (3.5)% |
(74,608,625) |
||
|
NET ASSETS - 100% |
$ 2,107,514,937 |
||
|
Legend |
|
(a) Non-income producing |
|
(b) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
|
(c) Investment made with cash collateral received from securities on loan. |
|
(d) Security or a portion of the security is on loan at period end. |
|
(e) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the end of the period, the value of these securities amounted to $1,184,760 or 0.1% of net assets. |
|
(f) Restricted securities - Investment in securities not registered under the Securities Act of 1933 (excluding 144A issues). At the end of the period, the value of restricted securities (excluding 144A issues) amounted to $7,911,992 or 0.4% of net assets. |
|
Additional information on each restricted holding is as follows: |
|
Security |
Acquisition Date |
Acquisition Cost |
|
1Life Healthcare, Inc. Series G |
4/10/14 |
$ 3,000,003 |
|
Penumbra, Inc. Series F |
5/16/14 |
$ 3,500,006 |
|
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 |
$ 16,290 |
|
Fidelity Securities Lending Cash Central Fund |
911,897 |
|
Total |
$ 928,187 |
|
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, |
|
Exactech, Inc. |
$ 18,640,000 |
$ - |
$ 18,028,257 |
$ - |
$ - |
|
Other Information |
|
The following is a summary of the inputs used, as of February 28, 2015, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the tables below, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements. |
|
Valuation Inputs at Reporting Date: |
||||
|
Description |
Total |
Level 1 |
Level 2 |
Level 3 |
|
Investments in Securities: |
||||
|
Common Stocks |
$ 2,075,075,194 |
$ 2,075,075,194 |
$ - |
$ - |
|
Preferred Stocks |
21,844,165 |
13,932,173 |
- |
7,911,992 |
|
Money Market Funds |
85,204,203 |
85,204,203 |
- |
- |
|
Total Investments in Securities: |
$ 2,182,123,562 |
$ 2,174,211,570 |
$ - |
$ 7,911,992 |
|
Distribution of investments by country or territory of incorporation, as a percentage of total net assets, is as follows (Unaudited): |
|
United States of America |
63.5% |
|
Ireland |
28.5% |
|
United Kingdom |
2.4% |
|
Netherlands |
1.9% |
|
Canada |
1.1% |
|
Others (Individually Less Than 1%) |
2.6% |
|
|
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 28, 2015 |
|
|
|
|
|
|
Assets |
|
|
|
Investment in securities, at value (including securities loaned of $75,227,853) - See accompanying schedule: Unaffiliated issuers (cost $1,546,847,621) |
$ 2,096,919,359 |
|
|
Fidelity Central Funds (cost $85,204,203) |
85,204,203 |
|
|
Total Investments (cost $1,632,051,824) |
|
$ 2,182,123,562 |
|
Receivable for investments sold |
|
17,433,126 |
|
Receivable for fund shares sold |
|
3,365,891 |
|
Dividends receivable |
|
401,505 |
|
Distributions receivable from Fidelity Central Funds |
|
36,302 |
|
Prepaid expenses |
|
6,439 |
|
Other receivables |
|
38,367 |
|
Total assets |
|
2,203,405,192 |
|
|
|
|
|
Liabilities |
|
|
|
Payable for investments purchased |
$ 15,961,128 |
|
|
Payable for fund shares redeemed |
1,587,767 |
|
|
Accrued management fee |
940,235 |
|
|
Other affiliated payables |
330,158 |
|
|
Other payables and accrued expenses |
70,840 |
|
|
Collateral on securities loaned, at value |
77,000,127 |
|
|
Total liabilities |
|
95,890,255 |
|
|
|
|
|
Net Assets |
|
$ 2,107,514,937 |
|
Net Assets consist of: |
|
|
|
Paid in capital |
|
$ 1,344,259,882 |
|
Distributions in excess of net investment income |
|
(730,211) |
|
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions |
|
213,917,050 |
|
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies |
|
550,068,216 |
|
Net Assets, for 50,302,821 shares outstanding |
|
$ 2,107,514,937 |
|
Net Asset Value, offering price and redemption price per share ($2,107,514,937 ÷ 50,302,821 shares) |
|
$ 41.90 |
Statement of Operations
|
|
Year ended February 28, 2015 |
|
|
|
|
|
|
Investment Income |
|
|
|
Dividends |
|
$ 14,405,129 |
|
Income from Fidelity Central Funds (including $911,897 from security lending) |
|
928,187 |
|
Total income |
|
15,333,316 |
|
|
|
|
|
Expenses |
|
|
|
Management fee |
$ 9,670,737 |
|
|
Transfer agent fees |
3,106,071 |
|
|
Accounting and security lending fees |
555,513 |
|
|
Custodian fees and expenses |
31,189 |
|
|
Independent trustees' compensation |
33,614 |
|
|
Registration fees |
52,572 |
|
|
Audit |
42,606 |
|
|
Legal |
10,703 |
|
|
Interest |
581 |
|
|
Miscellaneous |
22,353 |
|
|
Total expenses before reductions |
13,525,939 |
|
|
Expense reductions |
(43,424) |
13,482,515 |
|
Net investment income (loss) |
|
1,850,801 |
|
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: |
|
|
|
Investment securities: |
|
|
|
Unaffiliated issuers |
409,966,431 |
|
|
Other affiliated issuers |
4,901,371 |
|
|
Foreign currency transactions |
(10,358) |
|
|
Total net realized gain (loss) |
|
414,857,444 |
|
Change in net unrealized appreciation (depreciation) on: Investment securities |
36,861,830 |
|
|
Assets and liabilities in foreign currencies |
(4,096) |
|
|
Total change in net unrealized appreciation (depreciation) |
|
36,857,734 |
|
Net gain (loss) |
|
451,715,178 |
|
Net increase (decrease) in net assets resulting from operations |
|
$ 453,565,979 |
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) |
$ 1,850,801 |
$ 542,219 |
|
Net realized gain (loss) |
414,857,444 |
241,949,611 |
|
Change in net unrealized appreciation (depreciation) |
36,857,734 |
235,346,992 |
|
Net increase (decrease) in net assets resulting from operations |
453,565,979 |
477,838,822 |
|
Distributions to shareholders from net investment income |
(2,127,455) |
- |
|
Distributions to shareholders from net realized gain |
(266,626,490) |
(151,100,524) |
|
Total distributions |
(268,753,945) |
(151,100,524) |
|
Share transactions |
311,116,720 |
331,322,104 |
|
Reinvestment of distributions |
255,506,585 |
144,921,726 |
|
Cost of shares redeemed |
(364,261,170) |
(487,114,820) |
|
Net increase (decrease) in net assets resulting from share transactions |
202,362,135 |
(10,870,990) |
|
Redemption fees |
24,200 |
12,218 |
|
Total increase (decrease) in net assets |
387,198,369 |
315,879,526 |
|
|
|
|
|
Net Assets |
|
|
|
Beginning of period |
1,720,316,568 |
1,404,437,042 |
|
End of period (including distributions in excess of net investment income of $730,211 and distributions in excess of net investment income of $445,755, respectively) |
$ 2,107,514,937 |
$ 1,720,316,568 |
|
Other Information Shares |
|
|
|
Sold |
7,939,627 |
9,478,330 |
|
Issued in reinvestment of distributions |
6,807,619 |
4,182,266 |
|
Redeemed |
(9,675,095) |
(14,326,567) |
|
Net increase (decrease) |
5,072,151 |
(665,971) |
Financial Highlights
|
Years ended February 28, |
2015 |
2014 |
2013 |
2012 G |
2011 |
|
Selected Per-Share Data |
|
|
|
|
|
|
Net asset value, beginning of period |
$ 38.03 |
$ 30.60 |
$ 28.02 |
$ 29.55 |
$ 25.23 |
|
Income from Investment Operations |
|
|
|
|
|
|
Net investment income (loss) B |
.04 |
.01 |
.04 |
.01 |
(.01) E |
|
Net realized and unrealized gain (loss) |
9.86 |
10.94 |
3.77 |
(.10) |
4.33 |
|
Total from investment operations |
9.90 |
10.95 |
3.81 |
(.09) |
4.32 |
|
Distributions from net investment income |
(.05) |
- |
(.05) |
(.02) |
- |
|
Distributions from net realized gain |
(5.98) |
(3.52) |
(1.18) |
(1.43) |
- |
|
Total distributions |
(6.03) |
(3.52) |
(1.23) |
(1.44) I |
- |
|
Redemption fees added to paid in capital B, H |
- |
- |
- |
- |
- |
|
Net asset value, end of period |
$ 41.90 |
$ 38.03 |
$ 30.60 |
$ 28.02 |
$ 29.55 |
|
Total ReturnA |
28.52% |
37.03% |
14.09% |
.23% |
17.12% |
|
Ratios to Average Net AssetsC, F |
|
|
|
|
|
|
Expenses before reductions |
.77% |
.80% |
.83% |
.84% |
.86% |
|
Expenses net of fee waivers, if any |
.77% |
.80% |
.83% |
.84% |
.86% |
|
Expenses net of all reductions |
.77% |
.79% |
.82% |
.84% |
.86% |
|
Net investment income (loss) |
.11% |
.04% |
.13% |
.02% |
(.04)% E |
|
Supplemental Data |
|
|
|
|
|
|
Net assets, end of period (000 omitted) |
$ 2,107,515 |
$ 1,720,317 |
$ 1,404,437 |
$ 1,361,012 |
$ 1,408,343 |
|
Portfolio turnover rateD |
106% |
75% |
69% |
120% |
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 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 28, 2015 |
Past 1 |
Past 5 |
Past 10 |
|
Pharmaceuticals Portfolio |
20.04% |
23.24% |
15.04% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Pharmaceuticals Portfolio on February 28, 2005. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index performed over the same period.
Annual Report
Pharmaceuticals Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. stock market closed near its all-time high for the 12 months ending February 28, 2015, supported by low interest rates and the relative strength of the U.S. economy and dollar. The large-cap S&P 500® Index returned 15.51%. Growth stocks in the index outperformed value-oriented names. The tech-heavy Nasdaq Composite Index® rose 16.58%, while the small-cap Russell 2000® Index advanced 5.63%, rallying from early-period weakness amid growth and valuation worries. Among the 10 major market sectors tracked by MSCI U.S. IMI 25-50 classifications, most notched a double-digit gain, led by health care (+24%), consumer staples (+21%), information technology (+20%) and utilities (+15%). Conversely, energy (-9%) was the only sector to lose ground, reflecting a sharp drop in crude prices beginning midyear and attributed to weaker global demand and a U.S. supply boom. Volatility spiked to a three-year high in October amid concerns about economic growth and Ebola, as well as unrest in Syria, Iraq and Ukraine. Nevertheless, the S&P 500® finished the period well above its mid-October nadir, bolstered by the relative economic strength of the U.S., which marked a six-year low in its unemployment rate, and consumer confidence that declined only slightly from its 11-year high reached in January.
Comments from Asher Anolic, Portfolio Manager of Pharmaceuticals Portfolio: For the year, the fund returned 20.04%, modestly outpacing the 19.29% gain of the S&P® Custom Pharmaceuticals Index and surpassing the S&P 500®. Pharmaceuticals stocks topped the broad market the past year despite sluggishness early in the period, when investors became skittish about specialty pharmaceuticals, biotechnology and buyout names involved in merger-and-acquisition activity - all of which had been the main drivers of companies in the benchmark. Around the beginning of May, the industry began to find its footing and some interesting opportunities emerged as stocks generally trended upward through period end. Versus the industry benchmark, the fund benefited from sizable underweightings in two large-cap pharma names: GlaxoSmithKline and Merck. Glaxo's Advair® respiratory treatment faced competitive pressure, which hurt the firm's earnings and margins earlier in the period, and the stock suffered. The fund's underweighting in Merck was beneficial in the second half of the period, when the stock was hurt by disappointing third-quarter results due to sharply lower sales of its Gardasil vaccine against cervical cancer. The fund's biggest relative detractor the past year was an underweighting in Allergan, best known for its BOTOX® cosmetic treatment. In April, Allergan's stock popped when Canada-based Valeant Pharmaceuticals International offered to buy out Allergan in a hostile takeover in conjunction with Allergan's largest shareholder, Pershing Square Capital Management. Elsewhere, our non-index stake in Switzerland-based Roche Holding hurt as investors looked for more growth in smaller-capitalization names. Perrigo, an Ireland-based manufacturer of private-label over-the-counter pharmaceuticals, hindered our result amid the broader sell-off in pharma stocks earlier in 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
Pharmaceuticals Portfolio
Investment Changes (Unaudited)
|
Top Ten Stocks as of February 28, 2015 |
||
|
|
% of fund's |
% of fund's net assets |
|
Actavis PLC |
8.8 |
8.8 |
|
Sanofi SA sponsored ADR |
7.7 |
3.4 |
|
Johnson & Johnson |
7.3 |
4.9 |
|
Bristol-Myers Squibb Co. |
5.6 |
5.0 |
|
AbbVie, Inc. |
5.4 |
7.3 |
|
Novartis AG sponsored ADR |
4.9 |
5.1 |
|
Valeant Pharmaceuticals International (Canada) |
4.6 |
3.5 |
|
Novo Nordisk A/S Series B sponsored ADR |
4.1 |
3.4 |
|
Teva Pharmaceutical Industries Ltd. sponsored ADR |
3.9 |
3.1 |
|
Allergan, Inc. |
3.3 |
2.3 |
|
|
55.6 |
|
|
Top Industries (% of fund's net assets) |
|||
|
As of February 28, 2015 |
|||
 |
Pharmaceuticals |
84.6% |
|
 |
Biotechnology |
7.9% |
|
 |
Health Care Providers & Services |
4.1% |
|
 |
Household Products |
1.0% |
|
 |
Health Care Equipment & Supplies |
0.9% |
|
 |
All Others* |
1.5% |
|
|
As of August 31, 2014 |
|||
 |
Pharmaceuticals |
86.4% |
|
 |
Biotechnology |
6.7% |
|
 |
Health Care Equipment & Supplies |
2.1% |
|
 |
Health Care Providers & Services |
1.6% |
|
 |
Household Products |
1.1% |
|
 |
All Others* |
2.1% |
|
|
* Includes short-term investments and net other assets (liabilities). |
Annual Report
Pharmaceuticals Portfolio
Investments February 28, 2015
Showing Percentage of Net Assets
|
Common Stocks - 99.0% |
|||
|
Shares |
Value |
||
|
BIOTECHNOLOGY - 7.9% |
|||
|
Biotechnology - 7.9% |
|||
|
Agios Pharmaceuticals, Inc. (a) |
35,353 |
$ 3,792,670 |
|
|
Alexion Pharmaceuticals, Inc. (a) |
76,700 |
13,834,379 |
|
|
Alnylam Pharmaceuticals, Inc. (a) |
34,500 |
3,502,785 |
|
|
AMAG Pharmaceuticals, Inc. (a)(d) |
255,200 |
12,563,496 |
|
|
Biogen Idec, Inc. (a) |
42,900 |
17,571,411 |
|
|
Cara Therapeutics, Inc. |
376,300 |
3,857,075 |
|
|
Celgene Corp. (a) |
170,000 |
20,660,100 |
|
|
Dynavax Technologies Corp. (a)(d) |
168,000 |
2,956,800 |
|
|
Genmab A/S (a) |
83,300 |
6,158,434 |
|
|
Innate Pharma SA (a)(d) |
302,300 |
3,315,230 |
|
|
Intercept Pharmaceuticals, Inc. (a) |
10,598 |
2,346,079 |
|
|
Knight Therapeutics, Inc. (a) |
586,500 |
4,297,528 |
|
|
MEI Pharma, Inc. (a)(d) |
678,067 |
3,993,815 |
|
|
Novavax, Inc. (a) |
370,400 |
3,389,160 |
|
|
Pfenex, Inc. (a) |
333,500 |
4,902,450 |
|
|
Regeneron Pharmaceuticals, Inc. (a) |
36,100 |
14,939,624 |
|
|
Repligen Corp. (a)(d) |
308,700 |
7,936,677 |
|
|
Synageva BioPharma Corp. (a) |
78,700 |
7,770,051 |
|
|
United Therapeutics Corp. (a) |
75,000 |
11,628,750 |
|
|
|
149,416,514 |
||
|
FOOD & STAPLES RETAILING - 0.5% |
|||
|
Drug Retail - 0.5% |
|||
|
Tsuruha Holdings, Inc. |
142,400 |
9,618,324 |
|
|
HEALTH CARE EQUIPMENT & SUPPLIES - 0.9% |
|||
|
Health Care Equipment - 0.2% |
|||
|
DBV Technologies SA (a) |
76,200 |
3,352,027 |
|
|
Health Care Supplies - 0.7% |
|||
|
West Pharmaceutical Services, Inc. |
248,500 |
13,597,920 |
|
|
TOTAL HEALTH CARE EQUIPMENT & SUPPLIES |
16,949,947 |
||
|
HEALTH CARE PROVIDERS & SERVICES - 4.1% |
|||
|
Health Care Distributors & Services - 1.7% |
|||
|
Arseus NV (d) |
261,000 |
9,650,061 |
|
|
McKesson Corp. |
100,200 |
22,915,740 |
|
|
|
32,565,801 |
||
|
Health Care Services - 2.4% |
|||
|
DaVita HealthCare Partners, Inc. (a) |
332,300 |
24,789,580 |
|
|
Express Scripts Holding Co. (a) |
244,100 |
20,697,239 |
|
|
|
45,486,819 |
||
|
TOTAL HEALTH CARE PROVIDERS & SERVICES |
78,052,620 |
||
|
HOUSEHOLD PRODUCTS - 1.0% |
|||
|
Household Products - 1.0% |
|||
|
Reckitt Benckiser Group PLC |
200,267 |
18,076,469 |
|
|
|
|||
|
Shares |
Value |
||
|
PERSONAL PRODUCTS - 0.0% |
|||
|
Personal Products - 0.0% |
|||
|
MYOS Corp. (a) |
40,000 |
$ 238,800 |
|
|
PHARMACEUTICALS - 84.6% |
|||
|
Pharmaceuticals - 84.6% |
|||
|
AbbVie, Inc. |
1,679,590 |
101,615,195 |
|
|
Actavis PLC (a) |
568,907 |
165,756,743 |
|
|
Aerie Pharmaceuticals, Inc. (a) |
99,600 |
2,800,752 |
|
|
Akorn, Inc. (a)(d) |
182,000 |
9,793,420 |
|
|
Allergan, Inc. |
268,900 |
62,583,786 |
|
|
AstraZeneca PLC sponsored ADR |
553,500 |
38,136,150 |
|
|
Bristol-Myers Squibb Co. |
1,744,210 |
106,257,273 |
|
|
Catalent, Inc. (a) |
372,500 |
10,418,825 |
|
|
Eli Lilly & Co. |
94,900 |
6,659,133 |
|
|
Endo Health Solutions, Inc. (a) |
143,600 |
12,292,160 |
|
|
GlaxoSmithKline PLC sponsored ADR |
974,000 |
46,187,080 |
|
|
Impax Laboratories, Inc. (a) |
580,100 |
23,372,229 |
|
|
Indivior PLC (a) |
1,440,700 |
3,887,945 |
|
|
Jazz Pharmaceuticals PLC (a) |
94,300 |
16,039,487 |
|
|
Johnson & Johnson |
1,338,600 |
137,219,886 |
|
|
Mallinckrodt PLC (a) |
532,600 |
62,165,072 |
|
|
Merck & Co., Inc. |
313,636 |
18,360,251 |
|
|
Mylan N.V. (a) |
873,900 |
50,096,318 |
|
|
Novartis AG sponsored ADR |
900,298 |
92,190,515 |
|
|
Novo Nordisk A/S Series B sponsored ADR |
1,635,400 |
78,090,350 |
|
|
Pacira Pharmaceuticals, Inc. (a) |
33,400 |
3,833,318 |
|
|
Perrigo Co. PLC |
362,852 |
56,049,748 |
|
|
Pfizer, Inc. |
1,343,488 |
46,108,508 |
|
|
Prestige Brands Holdings, Inc. (a) |
564,200 |
21,744,268 |
|
|
Recordati SpA |
840,400 |
15,131,834 |
|
|
Roche Holding AG (participation certificate) |
103,049 |
28,079,772 |
|
|
Sagent Pharmaceuticals, Inc. (a) |
98,600 |
2,679,948 |
|
|
Salix Pharmaceuticals Ltd. (a) |
118,800 |
18,675,360 |
|
|
Sanofi SA sponsored ADR |
2,984,222 |
145,809,087 |
|
|
Shire PLC sponsored ADR |
158,500 |
38,342,735 |
|
|
Tetraphase Pharmaceuticals, Inc. (a) |
90,600 |
3,575,076 |
|
|
Teva Pharmaceutical Industries Ltd. sponsored ADR |
1,306,989 |
74,524,513 |
|
|
The Medicines Company (a) |
85,200 |
2,450,778 |
|
|
Valeant Pharmaceuticals International (Canada) (a) |
445,927 |
87,847,726 |
|
|
XenoPort, Inc. (a) |
699,700 |
4,792,945 |
|
|
Zoetis, Inc. Class A |
167,000 |
7,697,030 |
|
|
|
1,601,265,216 |
||
|
TOTAL COMMON STOCKS (Cost $1,364,632,355) |
|
||
|
Convertible Preferred Stocks - 0.0% |
|||
|
Shares |
Value |
||
|
LIFE SCIENCES TOOLS & SERVICES - 0.0% |
|||
|
Life Sciences Tools & Services - 0.0% |
|||
|
Living Proof, Inc. 8.00% (a)(e) |
112,714 |
$ 520,739 |
|
|
Money Market Funds - 2.7% |
|||
|
|
|
|
|
|
Fidelity Cash Central Fund, 0.13% (b) |
22,688,488 |
22,688,488 |
|
|
Fidelity Securities Lending Cash Central Fund, 0.13% (b)(c) |
27,962,513 |
27,962,513 |
|
|
TOTAL MONEY MARKET FUNDS (Cost $50,651,001) |
|
||
|
TOTAL INVESTMENT PORTFOLIO - 101.7% (Cost $1,415,483,356) |
1,924,789,630 |
||
|
NET OTHER ASSETS (LIABILITIES) - (1.7)% |
(31,925,022) |
||
|
NET ASSETS - 100% |
$ 1,892,864,608 |
||
|
Legend |
|
(a) Non-income producing |
|
(b) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
|
(c) Investment made with cash collateral received from securities on loan. |
|
(d) Security or a portion of the security is on loan at period end. |
|
(e) Restricted securities - Investment in securities not registered under the Securities Act of 1933 (excluding 144A issues). At the end of the period, the value of restricted securities (excluding 144A issues) amounted to $520,739 or 0.0% of net assets. |
|
Additional information on each restricted holding is as follows: |
|
Security |
Acquisition Date |
Acquisition Cost |
|
Living Proof, Inc. 8.00% |
2/13/13 |
$ 200,000 |
|
Affiliated Central Funds |
|
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
|
Fund |
Income earned |
|
Fidelity Cash Central Fund |
$ 15,979 |
|
Fidelity Securities Lending Cash Central Fund |
299,954 |
|
Total |
$ 315,933 |
|
Other Information |
|
The following is a summary of the inputs used, as of February 28, 2015, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements. |
|
Valuation Inputs at Reporting Date: |
||||
|
Description |
Total |
Level 1 |
Level 2 |
Level 3 |
|
Investments in Securities: |
||||
|
Common Stocks |
$ 1,873,617,890 |
$ 1,777,365,331 |
$ 96,252,559 |
$ - |
|
Convertible Preferred Stocks |
520,739 |
- |
- |
520,739 |
|
Money Market Funds |
50,651,001 |
50,651,001 |
- |
- |
|
Total Investments in Securities: |
$ 1,924,789,630 |
$ 1,828,016,332 |
$ 96,252,559 |
$ 520,739 |
|
Distribution of investments by country or territory of incorporation, as a percentage of total net assets, is as follows (Unaudited): |
|
United States of America |
46.4% |
|
Ireland |
16.6% |
|
France |
8.1% |
|
Switzerland |
6.4% |
|
United Kingdom |
5.6% |
|
Canada |
4.8% |
|
Denmark |
4.4% |
|
Israel |
3.9% |
|
Bailiwick of Jersey |
2.0% |
|
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 28, 2015 |
|
|
|
|
|
|
Assets |
|
|
|
Investment in securities, at value (including securities loaned of $27,186,693) - See accompanying schedule: Unaffiliated issuers (cost $1,364,832,355) |
$ 1,874,138,629 |
|
|
Fidelity Central Funds (cost $50,651,001) |
50,651,001 |
|
|
Total Investments (cost $1,415,483,356) |
|
$ 1,924,789,630 |
|
Receivable for investments sold |
|
8,338,811 |
|
Receivable for fund shares sold |
|
3,919,612 |
|
Dividends receivable |
|
4,408,733 |
|
Distributions receivable from Fidelity Central Funds |
|
7,437 |
|
Prepaid expenses |
|
6,082 |
|
Other receivables |
|
29,657 |
|
Total assets |
|
1,941,499,962 |
|
|
|
|
|
Liabilities |
|
|
|
Payable for investments purchased |
$ 16,035,372 |
|
|
Payable for fund shares redeemed |
3,401,028 |
|
|
Accrued management fee |
837,106 |
|
|
Other affiliated payables |
320,750 |
|
|
Other payables and accrued expenses |
78,585 |
|
|
Collateral on securities loaned, at value |
27,962,513 |
|
|
Total liabilities |
|
48,635,354 |
|
|
|
|
|
Net Assets |
|
$ 1,892,864,608 |
|
Net Assets consist of: |
|
|
|
Paid in capital |
|
$ 1,286,348,902 |
|
Undistributed net investment income |
|
3,033,161 |
|
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions |
|
94,203,168 |
|
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies |
|
509,279,377 |
|
Net Assets, for 82,009,356 shares outstanding |
|
$ 1,892,864,608 |
|
Net Asset Value, offering price and redemption price per share ($1,892,864,608 ÷ 82,009,356 shares) |
|
$ 23.08 |
Statement of Operations
|
|
Year ended February 28, 2015 |
|
|
|
|
|
|
Investment Income |
|
|
|
Dividends |
|
$ 23,497,213 |
|
Income from Fidelity Central Funds (including $299,954 from security lending) |
|
315,933 |
|
Total income |
|
23,813,146 |
|
|
|
|
|
Expenses |
|
|
|
Management fee |
$ 9,059,952 |
|
|
Transfer agent fees |
3,144,500 |
|
|
Accounting and security lending fees |
518,741 |
|
|
Custodian fees and expenses |
49,995 |
|
|
Independent trustees' compensation |
31,668 |
|
|
Registration fees |
119,629 |
|
|
Audit |
41,986 |
|
|
Legal |
10,231 |
|
|
Interest |
811 |
|
|
Miscellaneous |
19,238 |
|
|
Total expenses before reductions |
12,996,751 |
|
|
Expense reductions |
(2,992) |
12,993,759 |
|
Net investment income (loss) |
|
10,819,387 |
|
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: |
|
|
|
Investment securities: |
|
|
|
Unaffiliated issuers |
203,917,931 |
|
|
Redemption in-kind with affiliated entities |
44,138,441 |
|
|
Foreign currency transactions |
(16,186) |
|
|
Total net realized gain (loss) |
|
248,040,186 |
|
Change in net unrealized appreciation (depreciation) on: Investment securities |
46,770,610 |
|
|
Assets and liabilities in foreign currencies |
(27,708) |
|
|
Total change in net unrealized appreciation (depreciation) |
|
46,742,902 |
|
Net gain (loss) |
|
294,783,088 |
|
Net increase (decrease) in net assets resulting from operations |
|
$ 305,602,475 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Pharmaceuticals Portfolio
Financial Statements - continued
Statement of Changes in Net Assets
|
|
Year ended |
Year ended |
|
Increase (Decrease) in Net Assets |
|
|
|
Operations |
|
|
|
Net investment income (loss) |
$ 10,819,387 |
$ 16,496,114 |
|
Net realized gain (loss) |
248,040,186 |
201,706,580 |
|
Change in net unrealized appreciation (depreciation) |
46,742,902 |
250,055,119 |
|
Net increase (decrease) in net assets resulting from operations |
305,602,475 |
468,257,813 |
|
Distributions to shareholders from net investment income |
(13,480,605) |
(11,589,044) |
|
Distributions to shareholders from net realized gain |
(156,387,668) |
(115,013,141) |
|
Total distributions |
(169,868,273) |
(126,602,185) |
|
Share transactions |
891,442,186 |
687,383,334 |
|
Reinvestment of distributions |
163,418,607 |
122,417,330 |
|
Cost of shares redeemed |
(932,575,497) |
(427,820,714) |
|
Net increase (decrease) in net assets resulting from share transactions |
122,285,296 |
381,979,950 |
|
Redemption fees |
101,684 |
43,637 |
|
Total increase (decrease) in net assets |
258,121,182 |
723,679,215 |
|
|
|
|
|
Net Assets |
|
|
|
Beginning of period |
1,634,743,426 |
911,064,211 |
|
End of period (including undistributed net investment income of $3,033,161 and undistributed net investment income of $6,519,745, respectively) |
$ 1,892,864,608 |
$ 1,634,743,426 |
|
Other Information Shares |
|
|
|
Sold |
42,226,714 |
36,408,752 |
|
Issued in reinvestment of distributions |
8,114,920 |
6,585,841 |
|
Redeemed |
(44,744,142) |
(23,077,006) |
|
Net increase (decrease) |
5,597,492 |
19,917,587 |
Financial Highlights
|
Years ended February 28, |
2015 |
2014 |
2013 |
2012 G |
2011 |
|
Selected Per-Share Data |
|
|
|
|
|
|
Net asset value, beginning of period |
$ 21.39 |
$ 16.13 |
$ 14.11 |
$ 12.74 |
$ 10.93 |
|
Income from Investment Operations |
|
|
|
|
|
|
Net investment income (loss) B |
.14 |
.26 |
.23 |
.15 |
.17 |
|
Net realized and unrealized gain (loss) |
3.76 |
6.96 |
2.26 |
1.64 |
1.96 |
|
Total from investment operations |
3.90 |
7.22 |
2.49 |
1.79 |
2.13 |
|
Distributions from net investment income |
(.18) |
(.18) |
(.20) |
(.11) |
(.13) |
|
Distributions from net realized gain |
(2.03) |
(1.77) |
(.27) |
(.31) |
(.19) |
|
Total distributions |
(2.21) |
(1.96) I |
(.47) |
(.42) |
(.32) |
|
Redemption fees added to paid in capital B, H |
- |
- |
- |
- |
- |
|
Net asset value, end of period |
$ 23.08 |
$ 21.39 |
$ 16.13 |
$ 14.11 |
$ 12.74 |
|
Total ReturnA |
20.04% |
46.77% |
17.93% |
14.34% |
19.68% |
|
Ratios to Average Net AssetsC, E |
|
|
|
|
|
|
Expenses before reductions |
.79% |
.82% |
.85% |
.89% |
.94% |
|
Expenses net of fee waivers, if any |
.79% |
.81% |
.85% |
.89% |
.94% |
|
Expenses net of all reductions |
.79% |
.81% |
.84% |
.88% |
.94% |
|
Net investment income (loss) |
.66% |
1.39% |
1.54% |
1.12% |
1.42% |
|
Supplemental Data |
|
|
|
|
|
|
Net assets, end of period (000 omitted) |
$ 1,892,865 |
$ 1,634,743 |
$ 911,064 |
$ 715,882 |
$ 391,020 |
|
Portfolio turnover rateD |
72% F |
95% |
54% |
73% |
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 Portfolio turnover rate excludes securities received or delivered in-kind.
G For the year ended February 29.
H Amount represents less than $.01 per share.
I Total distributions of $1.96 per share is comprised of distributions from net investment income of $.182 and distributions from net realized gain of $1.773 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended February 28, 2015
1. Organization.
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. Share transactions on the Statement of Changes in Net Assets may contain exchanges between funds.
2. Investments in Fidelity Central Funds.
The Funds invest in Fidelity Central Funds, which are open-end investment companies generally available only to other investment companies and accounts managed by the investment adviser and its affiliates. The Funds' Schedules of Investments list each of the Fidelity Central Funds held as of period end, if any, as an investment of each Fund, but do not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, each Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of the investment adviser. Annualized expenses of the Money Market Central Funds as of their most recent shareholder report date are less than .01%.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) website at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Funds' Report of Independent Registered Public Accounting Firm, are available on the SEC website or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Funds:
Investment Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Board of Trustees (the Board) has delegated the day to day responsibility for the valuation of each Fund's investments to the Fidelity SelectCo, LLC (SelectCo) Fair Value Committee (the Committee). In accordance with valuation policies and procedures approved by the Board, each Fund attempts to obtain prices from one or more third party pricing vendors or brokers to value its investments. When current market prices, quotations or currency exchange rates are not readily available or reliable, investments will be fair valued in good faith by the Committee, in accordance with procedures adopted by the Board. Factors used in determining fair value vary by investment type and may include market or investment specific events. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The Committee oversees each Fund's valuation policies and procedures and reports to the Board on the Committee's activities and fair value determinations. The Board monitors the appropriateness of the procedures used in valuing each Fund's investments and ratifies the fair value determinations of the Committee.
Each Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the Fund's own assumptions based on the best information available)
Valuation techniques used to value each Fund's investments by major category are as follows:
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by a third party pricing vendor on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-Traded Funds (ETFs) and certain indexes as well as quoted prices for similar securities may be used and would be categorized as Level 2 in the hierarchy. Utilizing these techniques may result in transfers between Level 1 and Level 2. For equity securities, including restricted securities, where observable inputs are limited, assumptions about market activity and risk are used and these securities may be categorized as Level 3 in the hierarchy. Equity securities, including restricted securities, for which observable inputs are not available are valued using alternate valuation approaches, including the market
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Investment Valuation - continued
approach and the income approach and are categorized as Level 3 in the hierarchy. The market approach generally consists of using comparable market transactions while the income approach generally consists of using the net present value of estimated future cash flows, adjusted as appropriate for liquidity, credit, market and/or other risk factors.
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value (NAV) each business day and are categorized as Level 1 in the hierarchy.
The following provides information on Level 3 securities held by the Biotechnology Portfolio that were valued at period end based on unobservable inputs. These amounts exclude valuations provided by a broker.
|
Asset Type |
Fair Value at 02/28/15 |
Valuation |
Unobservable |
Amount or |
Impact to |
|
Equities |
$ 167,982,550 |
Expected distribution |
Recovery rate |
0.0% |
Increase |
|
|
|
Last transaction price |
Transaction price |
$0.44 - $61.67 / $15.72 |
Increase |
* Represents the expected directional change in the fair value of the Level 3 investments that would result from an increase in the corresponding input. A decrease to the unobservable input would have the opposite effect. Significant changes in these inputs could result in significantly higher or lower fair value measurements.
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level, as of February 28, 2015, as well as a roll forward of Level 3 investments, is included at the end of each applicable Fund's Schedule of Investments.
Foreign Currency. The Funds may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rates at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Funds' investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Funds are informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Income and capital gain distributions from Fidelity Central Funds, if any, are recorded on the ex-dividend date. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. Subsequent to ex-dividend date the Funds determine the components of these distributions, based upon receipt of tax filings or other correspondence relating to the underlying investment. 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.
Annual Report
3. Significant Accounting Policies - continued
Deferred Trustee Compensation. Under a Deferred Compensation Plan (the Plan) for the Funds, independent Trustees may elect to defer receipt of a portion of their annual compensation. Deferred amounts are invested in a cross-section of Fidelity funds, are marked-to-market and remain in the Fund until distributed in accordance with the Plan. The investment of deferred amounts and the offsetting payable to the Trustees are included in the accompanying Statement of Assets and Liabilities.
Income Tax Information and Distributions to Shareholders. Each year, each Fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for U.S. Federal income taxes is required. As of February 28, 2015, each Fund did not have any unrecognized tax benefits in the financial statements; nor is each Fund aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. Each Fund files a U.S. federal tax return, in addition to state and local tax returns as required. Each Fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction. Foreign taxes are provided for based on each Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
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 Funds claimed a portion of the payment made to redeeming shareholders as a distribution for income tax purposes.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Capital accounts are not adjusted for temporary book-tax differences which will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, passive foreign investment companies (PFIC), redemptions in kind, partnerships, deferred trustees compensation, net operating losses 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 |
$ 9,331,649,396 |
$ 5,794,962,555 |
$ (350,947,452) |
$ 5,444,015,103 |
|
Health Care Portfolio |
7,474,367,811 |
2,598,686,504 |
(53,498,853) |
2,545,187,651 |
|
Medical Delivery Portfolio |
516,448,398 |
367,672,936 |
(6,035,712) |
361,637,224 |
|
Medical Equipment and Systems Portfolio |
1,632,981,013 |
559,025,470 |
(9,882,921) |
549,142,549 |
|
Pharmaceuticals Portfolio |
1,418,332,060 |
516,435,476 |
(9,977,906) |
506,457,570 |
The tax-based components of distributable earnings as of period end were as follows for each Fund:
|
|
Undistributed |
Undistributed |
Net unrealized |
|
Biotechnology Portfolio |
$ - |
$ 351,935,602 |
$ 5,444,015,103 |
|
Health Care Portfolio |
285,700,070 |
134,190,767 |
2,545,187,643 |
|
Medical Delivery Portfolio |
5,151,616 |
11,349,723 |
361,643,902 |
|
Medical Equipment and Systems Portfolio |
50,164,663 |
164,681,577 |
549,139,027 |
|
Pharmaceuticals Portfolio |
22,267,378 |
77,841,539 |
506,430,673 |
Certain of the Funds intend to elect to defer to the next fiscal year ordinary losses recognized during the period January 1, 2015 to February 28, 2015. Loss deferrals were as follows:
|
|
Ordinary |
|
Medical Equipment and Systems Portfolio |
$ (703,139) |
The tax character of distributions paid was as follows:
|
February 28, 2015 |
Ordinary |
Long-term |
Total |
|
Biotechnology Portfolio |
$ - |
$ 1,044,601,828 |
$ 1,044,601,828 |
|
Health Care Portfolio |
220,468,699 |
789,371,404 |
1,009,840,103 |
|
Medical Delivery Portfolio |
6,970,783 |
61,161,482 |
68,132,265 |
|
Medical Equipment and Systems Portfolio |
73,059,262 |
195,694,683 |
268,753,945 |
|
Pharmaceuticals Portfolio |
52,685,263 |
117,183,010 |
169,868,273 |
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
|
February 28, 2014 |
Ordinary Income |
Long-term Capital Gains |
Total |
|
Biotechnology Portfolio |
$ 1,818,993 |
$ 17,540,867 |
$ 19,359,860 |
|
Health Care Portfolio |
144,841,581 |
305,640,128 |
450,481,709 |
|
Medical Delivery Portfolio |
23,223,879 |
18,211,743 |
41,435,622 |
|
Medical Equipment and Systems Portfolio |
23,860,944 |
127,239,580 |
151,100,524 |
|
Pharmaceuticals Portfolio |
13,738,981 |
112,863,204 |
126,602,185 |
Trading (Redemption) Fees. Shares held by investors in the Funds less than 30 days may be subject to a redemption fee equal to .75% of the NAV of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Funds and accounted for as an addition to paid in capital.
Restricted Securities. The Funds may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities is included at the end of each applicable Fund's Schedule of Investments.
New Accounting Pronouncement. In June 2014, the Financial Accounting Standards Board issued Accounting Standard Update No. 2014-11, Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures (the Update). The Update amends the accounting for certain repurchase agreements and expands disclosure requirements for reverse repurchase agreements, securities lending and other similar transactions. The disclosure requirements are effective for annual and interim reporting periods beginning after December 15, 2014. Management is currently evaluating the impact of the Update on the Funds' financial statements and related disclosures.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities and in-kind transactions, are noted in the table below.
|
|
Purchases ($) |
Sales ($) |
|
Biotechnology Portfolio |
6,153,411,773 |
6,065,901,329 |
|
Health Care Portfolio |
8,805,156,025 |
6,996,118,463 |
|
Medical Delivery Portfolio |
318,281,477 |
320,548,251 |
|
Medical Equipment and Systems Portfolio |
1,856,553,172 |
1,924,648,555 |
|
Pharmaceuticals Portfolio |
1,265,118,938 |
1,189,533,438 |
5. Fees and Other Transactions with Affiliates.
Management Fee. Fidelity SelectCo, LLC (the investment adviser) and its affiliates provide the Funds with investment management related services for which the Funds pay a monthly management fee. The management fee is the sum of an individual fund fee rate and an annualized group fee rate. The individual fund fee rate is applied to each Fund's average net assets. The group fee rate is based upon the average net assets of all the mutual funds advised by Fidelity Management & Research Company (FMR) and the investment adviser. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the reporting period, each Fund's annual management fee rate expressed as a percentage of each Fund's average net assets was as follows.
|
|
Individual Rate |
Group Rate |
Total |
|
Biotechnology Portfolio |
.30% |
.25% |
.55% |
|
Health Care Portfolio |
.30% |
.25% |
.55% |
|
Medical Delivery Portfolio |
.30% |
.25% |
.55% |
|
Medical Equipment and Systems Portfolio |
.30% |
.25% |
.55% |
|
Pharmaceuticals Portfolio |
.30% |
.25% |
.55% |
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of the investment adviser, is the Funds' transfer, dividend disbursing and shareholder servicing agent. FIIOC receives account fees and asset-based fees that vary according to account size and type of account. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, transfer agent fees were equivalent to the following annual rates expressed as a percentage of average net assets:
Annual Report
5. Fees and Other Transactions with Affiliates - continued
Transfer Agent Fees - continued
|
Biotechnology Portfolio |
.17% |
|
Health Care Portfolio |
.16% |
|
Medical Delivery Portfolio |
.19% |
|
Medical Equipment and Systems Portfolio |
.18% |
|
Pharmaceuticals Portfolio |
.19% |
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of the investment adviser, maintains each Fund's accounting records. The accounting fee is based on the level of average net assets for each month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. Certain Funds placed a portion of their portfolio transactions with brokerage firms which are affiliates of the investment adviser. Brokerage commissions are included in net realized gain (loss) and change in net unrealized appreciation (depreciation) in the Statement of Operations. The commissions paid to these affiliated firms were as follows:
|
|
Amount |
|
Biotechnology Portfolio |
$ 198,229 |
|
Health Care Portfolio |
132,523 |
|
Medical Delivery Portfolio |
8,174 |
|
Medical Equipment and Systems Portfolio |
30,155 |
|
Pharmaceuticals Portfolio |
28,524 |
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Funds, along with other registered investment companies having management contracts with FMR or other affiliated entities of FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. Each applicable fund's activity in this program during the period for which loans were outstanding was as follows:
|
|
Borrower or |
Average Loan |
Weighted |
Interest |
|
Biotechnology Portfolio |
Borrower |
$ 39,444,048 |
.32% |
$ 21,458 |
|
Medical Delivery Portfolio |
Borrower |
4,340,500 |
.31% |
149 |
|
Medical Equipment and Systems Portfolio |
Borrower |
9,516,714 |
.31% |
581 |
|
Pharmaceuticals Portfolio |
Borrower |
6,150,846 |
.32% |
714 |
Redemptions In-Kind. During the period, shares of the Funds held by affiliated entities were redeemed in kind for cash and investments. The net realized gain on investments delivered through in-kind redemptions is included in the accompanying Statement of Operations. The amount of in-kind redemptions is included in share transactions in the accompanying Statement of Changes in Net Assets. The Funds recognized no gain or loss for federal income tax purposes.
Details of these transactions with the related gain (loss) for the Funds are presented in the accompanying table:
|
|
Value of cash |
Net Realized |
Shares |
|
Health Care Portfolio |
$ 69,516,337 |
$ -* |
336,412 |
|
Pharmaceuticals Portfolio |
91,947,244 |
44,138,441 |
4,405,714 |
* There was no gain /(loss) recognized on shares of the Fidelity Cash Central Fund delivered in-kind.
Other. During the period, the investment adviser reimbursed the Biotechnology Portfolio for certain losses in the amount of $78,446.
Annual Report
Notes to Financial Statements - continued
6. Committed Line of Credit.
Certain Funds participate with other funds managed by the investment adviser or an affiliate in a $4.25 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The participating funds have agreed to pay commitment fees on their pro-rata portion of the line of credit, which are reflected in Miscellaneous expenses on the Statement of Operations, and are as follows:
|
Biotechnology Portfolio |
$ 14,144 |
|
Health Care Portfolio |
9,883 |
|
Medical Delivery Portfolio |
1,098 |
|
Medical Equipment and Systems Portfolio |
2,622 |
|
Pharmaceuticals Portfolio |
2,418 |
During the period, the Funds did not borrow on this line of credit.
7. Security Lending.
Certain Funds lend portfolio securities through a lending agent from time to time in order to earn additional income. On the settlement date of the loan, each applicable Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Funds and any additional required collateral is delivered to the Funds on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, the Funds may apply collateral received from the borrower against the obligation. The Funds may experience delays and costs in recovering the securities loaned. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on each applicable Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented on each applicable Fund's Statement of Operations as a component of income from Fidelity Central Funds.
8. Bank Borrowings.
Each Fund is permitted to have bank borrowings for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity requirements. Each Fund has established borrowing arrangements with certain banks. The interest rate on the borrowings is the bank's base rate, as revised from time to time. At period end, there were no bank borrowings outstanding. Each applicable Fund's activity in this program during the period for which loans were outstanding was as follows:
|
|
Average Loan |
Weighted Average |
Interest |
|
Biotechnology Portfolio |
$ 16,323,444 |
.58% |
$ 2,377 |
|
Pharmaceuticals Portfolio |
2,898,000 |
.60% |
97 |
9. Expense Reductions.
Commissions paid to certain brokers with whom the investment adviser, or its affiliates, places trades on behalf of Certain Funds include an amount in addition to trade execution, which may be rebated back to the Funds to offset certain expenses. In addition, through arrangements with each applicable Fund's custodian, credits realized as a result of uninvested cash balances were used to reduce each applicable Fund's expenses. All of the applicable expense reductions are noted in the table below.
|
|
Brokerage Service |
Custody |
|
Biotechnology Portfolio |
$ 114,803 |
$ 226 |
|
Health Care Portfolio |
168,191 |
412 |
|
Medical Equipment and Systems Portfolio |
38,084 |
- |
|
Pharmaceuticals Portfolio |
288 |
101 |
Annual Report
9. Expense Reductions - continued
In addition, during the period the following Funds were reimbursed by the investment adviser for a portion of operating expenses:
|
|
Amount |
|
Biotechnology Portfolio |
$ 7,972 |
|
Health Care Portfolio |
3,590 |
|
Medical Delivery Portfolio |
2,018 |
|
Medical Equipment and Systems Portfolio |
5,340 |
|
Pharmaceuticals Portfolio |
2,603 |
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.
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 28, 2015, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fidelity Select Portfolios' management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at February 28, 2015 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 24, 2015
Annual Report
Trustees and Officers
The Trustees and officers of the trust and funds, as applicable, are listed below. The Board of Trustees governs each fund and is responsible for protecting the interests of shareholders. The Trustees are experienced executives who meet periodically throughout the year to oversee each fund's activities, review contractual arrangements with companies that provide services to each fund, oversee management of the risks associated with such activities and contractual arrangements, and review each fund's performance. Each of the Trustees oversees 75 funds.
The Trustees hold office without limit in time except that (a) any Trustee may resign; (b) any Trustee may be removed by written instrument, signed by at least two-thirds of the number of Trustees prior to such removal; (c) any Trustee who requests to be retired or who has become incapacitated by illness or injury may be retired by written instrument signed by a majority of the other Trustees; and (d) any Trustee may be removed at any special meeting of shareholders by a two-thirds vote of the outstanding voting securities of the trust. The officers hold office without limit in time, except that any officer may resign or may be removed by a vote of a majority of the Trustees at any regular meeting or any special meeting of the Trustees. Except as indicated, each individual has held the office shown or other offices in the same company for the past five years.
Experience, Skills, Attributes, and Qualifications of the Funds' Trustees. The Governance and Nominating Committee has adopted a statement of policy that describes the experience, qualifications, attributes, and skills that are necessary and desirable for potential Independent Trustee candidates (Statement of Policy). The Board believes that each Trustee satisfied at the time he or she was initially elected or appointed a Trustee, and continues to satisfy, the standards contemplated by the Statement of Policy. The Governance and Nominating Committee also engages professional search firms to help identify potential Independent Trustee candidates who have the experience, qualifications, attributes, and skills consistent with the Statement of Policy. From time to time, additional criteria based on the composition and skills of the current Independent Trustees, as well as experience or skills that may be appropriate in light of future changes to board composition, business conditions, and regulatory or other developments, have also been considered by the professional search firms and the Governance and Nominating Committee. In addition, the Board takes into account the Trustees' commitment and participation in Board and committee meetings, as well as their leadership of standing and ad hoc committees throughout their tenure.
In determining that a particular Trustee was and continues to be qualified to serve as a Trustee, the Board has considered a variety of criteria, none of which, in isolation, was controlling. The Board believes that, collectively, the Trustees have balanced and diverse experience, qualifications, attributes, and skills, which allow the Board to operate effectively in governing each fund and protecting the interests of shareholders. Information about the specific experience, skills, attributes, and qualifications of each Trustee, which in each case led to the Board's conclusion that the Trustee should serve (or continue to serve) as a trustee of the funds, is provided below.
Board Structure and Oversight Function. Brian B. Hogan is an interested person (as defined in the 1940 Act) and currently serves as Chairman. The Trustees have determined that an interested Chairman is appropriate and benefits shareholders because an interested Chairman has a personal and professional stake in the quality and continuity of services provided to the funds. Independent Trustees exercise their informed business judgment to appoint an individual of their choosing to serve as Chairman, regardless of whether the Trustee happens to be independent or a member of management. The Independent Trustees have determined that they can act independently and effectively without having an Independent Trustee serve as Chairman and that a key structural component for assuring that they are in a position to do so is for the Independent Trustees to constitute a substantial majority for the Board. The Independent Trustees also regularly meet in executive session. Michael E. Wiley serves as Chairman of the Independent Trustees and as such (i) acts as a liaison between the Independent Trustees and management with respect to matters important to the Independent Trustees and (ii) with management prepares agendas for Board meetings.
Fidelity funds are overseen by different Boards of Trustees. The funds' Board oversees Fidelity's sector portfolios. Other Boards oversee Fidelity's equity and high income funds, and Fidelity's investment grade bond, money market, and asset allocation funds. The use of separate Boards, each with its own committee structure, allows the Trustees of each group of Fidelity funds to focus on the unique issues of the funds they oversee, including common research, investment, and operational issues. On occasion, the separate Boards establish joint committees to address issues of overlapping consequences for the Fidelity funds overseen by each Board.
The Trustees operate using a system of committees to facilitate the timely and efficient consideration of all matters of importance to the Trustees, each fund, and fund shareholders and to facilitate compliance with legal and regulatory requirements and oversight of the funds' activities and associated risks. The Board, acting through its committees, has charged SelectCo and its affiliates with (i) identifying events or circumstances the occurrence of which could have demonstrably adverse effects on the funds' business and/or reputation; (ii) implementing processes and controls to lessen the possibility that such events or circumstances occur or to mitigate the effects of such events or circumstances if they do occur; and (iii) creating and maintaining a system designed to evaluate continuously business and market conditions in order to facilitate the identification and implementation processes described in (i) and (ii) above. Because the day-to-day operations and activities of the funds are carried out by or through SelectCo, its affiliates, and other service providers, the funds' exposure to risks is mitigated but not eliminated by the processes overseen by the Trustees. While each of the Board's committees has responsibility for overseeing different aspects of the funds' activities, oversight is exercised primarily through the Operations and Audit Committees. Appropriate personnel, including but not limited to the funds' Chief Compliance Officer (CCO), SelectCo's internal auditor, the independent accountants, the funds' Treasurer and portfolio management personnel, make periodic reports to the Board's committees, as appropriate. The responsibilities of each standing committee, including their oversight responsibilities, are described further under "Standing Committees of the Funds' Trustees."
The funds' Statement of Additional Information (SAI) includes more information about the Trustees. To request a free copy, call Fidelity at 1-800-544-8544.
Annual Report
Trustees and Officers - continued
Interested Trustee*:
Correspondence intended for the Trustee who is an interested person may be sent to Fidelity Investments, 245 Summer Street, Boston, Massachusetts 02210.
|
Name, Year of Birth; Principal Occupations and Other Relevant Experience+ |
|
|
Brian B. Hogan (1964) |
|
|
Year of Election or Appointment: 2014 Trustee Chairman of the Board of Trustees |
|
|
|
Mr. Hogan also serves as Trustee or Vice President of other funds. Mr. Hogan serves as a Director of Fidelity SelectCo, LLC (2014-present) and President of FMR's Equity Division (2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager. |
* Trustee has been determined to be an "Interested Trustee" by virtue of, among other things, his affiliation with the trust or various entities under common control with SelectCo.
+ The information above includes the Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to the Trustee's qualifications to serve as a Trustee, which led to the conclusion that the Trustee should serve as a Trustee for each fund.
Independent Trustees:
Correspondence intended for each Independent Trustee (that is, the Trustees other than the Interested Trustee) may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235.
|
Name, Year of Birth; Principal Occupations and Other Relevant Experience+ |
|
|
David A. Rosow (1942) |
|
|
Year of Election or Appointment: 2013 Trustee |
|
|
|
Mr. Rosow also serves as Trustee of other Fidelity funds. Prior to his retirement in 2006, Mr. Rosow was the Chief Executive Officer, owner and operator of a number of private companies, which encompassed oil refining, drilling and marketing of petroleum products (including specialty petroleum products), the recreation industry, and real estate development. Previously, Mr. Rosow served as Lead Director and Chairman of the Audit Committee of Hudson United Bancorp (1996-2006), Chairman of the Board of Westport Bank and Trust (1992-1996), and as a Director of TD Banknorth (2006-2007). In addition, Mr. Rosow served as a member (2008-2014) and President (2009-2014) of the Town Council of Palm Beach, Florida. Mr. Rosow also served as a Member of the Advisory Board of other Fidelity funds (2012-2013). |
|
Garnett A. Smith (1947) |
|
|
Year of Election or Appointment: 2013 Trustee |
|
|
|
Mr. Smith also serves as Trustee of other Fidelity funds. Prior to Mr. Smith's retirement, he served as Chairman and Chief Executive Officer of Inbrand Corp. (manufacturer of personal absorbent products, 1990-1997). He also served as President (1986-1990) of Inbrand Corp. Prior to his employment with Inbrand Corp., he was employed by a retail fabric chain and North Carolina National Bank. In addition, Mr. Smith served as a Member of the Advisory Board of other Fidelity funds (2012-2013) and as a board member of the Jackson Hole Land Trust (2009-2012). |
|
Michael E. Wiley (1950) |
|
|
Year of Election or Appointment: 2008 Trustee Chairman of the Independent Trustees |
|
|
|
Mr. Wiley also serves as Trustee of other Fidelity funds. Mr. Wiley serves as a Director of Tesoro Corporation (independent oil refiner and marketer, 2005-present), and a Director of Bill Barrett Corporation (exploration and production, 2005-present). In addition, Mr. Wiley also serves as a Director of Post Oak Bank (privately-held bank, 2004-present). Previously, Mr. Wiley served as a Trustee of other Fidelity funds (2008-2013), as a Director of Asia Pacific Exploration Consolidated (international oil and gas exploration and production, 2008-2013), as a member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-2010), as a Senior Energy Advisor of Katzenbach Partners, LLC (consulting, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production, 2001-2005). |
Annual Report
+ The information above includes each Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to each Trustee's qualifications to serve as a Trustee, which led to the conclusion that each Trustee should serve as a Trustee for each fund.
Officers:
Except for Anthony R. Rochte, correspondence intended for each officer may be sent to Fidelity Investments, 245 Summer Street, Boston, Massachusetts 02210. Correspondence intended for Mr. Rochte may be sent to SelectCo, 1225 17th Street, Denver, Colorado 80202-5541. Officers appear below in alphabetical order.
|
Name, Year of Birth; Principal Occupation |
|
|
Christopher S. Bartel (1971) |
|
|
Year of Election or Appointment: 2009 Vice President |
|
|
|
Mr. Bartel also serves as Vice President of other funds. Mr. Bartel serves as a Director, President, and Chief Executive Officer of Fidelity Management & Research (Japan) Limited (2012-present), a Director of Fidelity Management & Research (Hong Kong) (2012-present), and Senior Vice President of Global Equity Research (2010-present). Previously, Mr. Bartel served as Senior Vice President of Equity Research (2009-2010), Managing Director of Research (2006-2009), and an analyst and portfolio manager (2000-2006). |
|
Elizabeth Paige Baumann (1968) |
|
|
Year of Election or Appointment: 2012 Anti-Money Laundering (AML) Officer |
|
|
|
Ms. Baumann also serves as AML Officer of other funds. She is Chief AML Officer of FMR LLC (2012-present) and is an employee of Fidelity Investments. Previously, Ms. Baumann served as Vice President and Deputy Anti-Money Laundering Officer (2007-2012). |
|
Marc Bryant (1966) |
|
|
Year of Election or Appointment: 2013 Secretary |
|
|
|
Mr. Bryant also serves as an officer of other funds. He is Senior Vice President and Deputy General Counsel of FMR LLC. Previously, Mr. Bryant served as Secretary and Chief Legal Officer of Fidelity Rutland Square Trust II (2010-2014). Prior to joining Fidelity Investments, Mr. Bryant served as a Senior Vice President and the Head of Global Retail Legal for AllianceBernstein L.P. (2006-2010), and as the General Counsel for ProFund Advisors LLC (2001-2006). |
|
William C. Coffey (1969) |
|
|
Year of Election or Appointment: 2009 Assistant Secretary |
|
|
|
Mr. Coffey also serves as Assistant Secretary of other funds. He is Senior Vice President and Deputy General Counsel of FMR LLC (2010-present), and is an employee of Fidelity Investments. Previously, Mr. Coffey served as Vice President and Associate General Counsel of FMR LLC (2005-2009). |
|
Jonathan Davis (1968) |
|
|
Year of Election or Appointment: 2010 Assistant Treasurer |
|
|
|
Mr. Davis also serves as Assistant Treasurer of other funds. Mr. Davis is an employee of Fidelity Investments. Previously, Mr. Davis served as Vice President and Associate General Counsel of FMR LLC (2003-2010). |
|
Adrien E. Deberghes (1967) |
|
|
Year of Election or Appointment: 2013 President and Treasurer |
|
|
|
Mr. Deberghes also serves as an officer of other funds. He is an employee of Fidelity Investments (2008-present). Prior to joining Fidelity Investments, Mr. Deberghes was Senior Vice President of Mutual Fund Administration at State Street Corporation (2007-2008), Senior Director of Mutual Fund Administration at Investors Bank & Trust (2005-2007), and Director of Finance for Dunkin' Brands (2000-2005). |
|
Stephanie J. Dorsey (1969) |
|
|
Year of Election or Appointment: 2010 Assistant Treasurer |
|
|
|
Ms. Dorsey also serves as an officer of other funds. She is an employee of Fidelity Investments (2008-present) and has served in other fund officer roles. Prior to joining Fidelity Investments, Ms. Dorsey served as Treasurer (2004-2008) of the JPMorgan Mutual Funds and Vice President (2004-2008) of JPMorgan Chase Bank. |
|
Howard J. Galligan III (1966) |
|
|
Year of Election or Appointment: 2014 Chief Financial Officer |
|
|
|
Mr. Galligan also serves as Chief Financial Officer of other funds. Mr. Galligan serves as President of Fidelity Pricing and Cash Management Services (FPCMS) (2014-present) and as a Director of Strategic Advisers, Inc. (2008-present). Previously, Mr. Galligan served as Chief Administrative Officer of Asset Management (2011-2014) and Chief Operating Officer and Senior Vice President of Investment Support for Strategic Advisers, Inc. (2003-2011). |
|
James D. Gryglewicz (1972) |
|
|
Year of Election or Appointment: 2014 Chief Compliance Officer |
|
|
|
Mr. Gryglewicz also serves as Chief Compliance Officer of other funds. Mr. Gryglewicz serves as Compliance Officer of Fidelity SelectCo, LLC (2014-present), Vice President of Asset Management Compliance (2009-present), and is an employee of Fidelity Investments (2004-present). |
|
Brian B. Hogan (1964) |
|
|
Year of Election or Appointment: 2009 Vice President |
|
|
|
Mr. Hogan also serves as Trustee or Vice President of other funds. Mr. Hogan serves as a Director of Fidelity SelectCo, LLC (2014-present) and President of FMR's Equity Division (2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager. |
|
Chris Maher (1972) |
|
|
Year of Election or Appointment: 2013 Assistant Treasurer |
|
|
|
Mr. Maher serves as Assistant Treasurer of other funds. Mr. Maher is Vice President of Valuation Oversight and is an employee of Fidelity Investments. Previously, Mr. Maher served as Vice President of Asset Management Compliance (2013), Vice President of FMR's Program Management Group (2010-2013), and Vice President of Valuation Oversight (2008-2010). |
|
Kenneth B. Robins (1969) |
|
|
Year of Election or Appointment: 2013 Deputy Treasurer |
|
|
|
Mr. Robins also serves as an officer of other funds. Mr. Robins serves as Executive Vice President of Fidelity Investments Money Management, Inc. (FIMM) (2013-present) and is an employee of Fidelity Investments (2004-present). Previously, Mr. Robins served in other fund officer roles. |
|
Anthony R. Rochte (1968) |
|
|
Year of Election or Appointment: 2013 Vice President |
|
|
|
Mr. Rochte also serves as Vice President of other funds. Mr. Rochte serves as President of Fidelity SelectCo, LLC (2012-present) and is an employee of Fidelity Investments (2012-present). Prior to joining Fidelity Investments, Mr. Rochte served as Senior Managing Director and head of State Street Global Advisors' North American Intermediary Business Group (2006-2012). |
|
Stacie M. Smith (1974) |
|
|
Year of Election or Appointment: 2013 Assistant Treasurer |
|
|
|
Ms. Smith also serves as an officer of other funds. She is an employee of Fidelity Investments (2009-present) and has served in other fund officer roles. Prior to joining Fidelity Investments, Ms. Smith served as Senior Audit Manager of Ernst & Young LLP (1996-2009). |
|
Renee Stagnone (1975) |
|
|
Year of Election or Appointment: 2013 Deputy Treasurer |
|
|
|
Ms. Stagnone also serves as Deputy Treasurer of other funds. Ms. Stagnone is an employee of Fidelity Investments. |
|
Joseph F. Zambello (1957) |
|
|
Year of Election or Appointment: 2011 Deputy Treasurer |
|
|
|
Mr. Zambello also serves as Deputy Treasurer of other funds. Mr. Zambello is an employee of Fidelity Investments. Previously, Mr. Zambello served as Vice President of FMR's Program Management Group (2009-2011) and Vice President of the Transfer Agent Oversight Group (2005-2009). |
Annual Report
Distributions (Unaudited)
The Board of Trustees of each fund voted to pay to shareholders of record at the opening of business on record date the following distributions per share derived from capital gains realized from sales of portfolio securities and dividends derived from net investment income:
|
|
Pay Date |
Record Date |
Dividends |
Capital Gains |
|
Health Care Portfolio |
04/13/15 |
04/10/15 |
$0.000 |
$9.578 |
|
Biotechnology Portfolio |
04/13/15 |
04/10/15 |
$0.000 |
$6.278 |
|
Pharmaceuticals Portfolio |
04/13/15 |
04/10/15 |
$0.035 |
$0.943 |
|
Medical Equipment and Systems Portfolio |
04/13/15 |
04/10/15 |
$0.000 |
$4.196 |
|
Medical Delivery Portfolio |
04/13/15 |
04/10/15 |
$0.000 |
$1.591 |
The funds hereby designate as capital gain dividend the amounts noted below for the taxable year ended February 28, 2015, or, if subsequently determined to be different, the net capital gain of such year.
|
Health Care Portfolio |
$ 740,640,978 |
|
Biotechnology Portfolio |
$ 1,473,725,285 |
|
Pharmaceuticals Portfolio |
$ 146,696,928 |
|
Medical Equipment and Systems Portfolio |
$ 306,679,491 |
|
Medical Delivery Portfolio |
$ 53,353,820 |
A percentage of the dividends distributed during the fiscal year for the following funds qualify for the dividends-received deduction for corporate shareholders:
|
|
April 2014 |
December 2014 |
|
Health Care Portfolio |
3% |
22% |
|
Biotechnology Portfolio |
0% |
0% |
|
Pharmaceuticals Portfolio |
12% |
59% |
|
Medical Equipment and Systems Portfolio |
2% |
23% |
|
Medical Delivery Portfolio |
4% |
0% |
A percentage of the dividends distributed during the fiscal year for the following funds may be taken into account as a dividend for purposes of the maximum rate under section 1(h) (11) of the Internal Revenue Code:
|
|
April 2014 |
December 2014 |
|
Health Care Portfolio |
4% |
30% |
|
Biotechnology Portfolio |
0% |
0% |
|
Pharmaceuticals Portfolio |
34% |
82% |
|
Medical Equipment and Systems Portfolio |
5% |
31% |
|
Medical Delivery Portfolio |
4% |
0% |
The funds will notify shareholders in January 2016 of amounts for use in preparing 2015 income tax returns.
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees
Biotechnology Portfolio
Health Care Portfolio
Medical Delivery Portfolio
Medical Equipment and Systems Portfolio
Pharmaceuticals Portfolio
Each year, the Board of Trustees, including the Independent Trustees (together, the Board), votes on the renewal of the management contract with Fidelity SelectCo, LLC (SelectCo), an affiliate of Fidelity Management & Research Company (FMR), and the sub-advisory agreements with affiliates of FMR (together, the Advisory Contracts) for each fund. The Board, assisted by the advice of fund counsel and Independent Trustees' counsel, requests and considers a broad range of information relevant to the renewal of the Advisory Contracts throughout the year.
The Board meets regularly and, at each of its meetings, covers an extensive agenda of topics and materials and considers factors that are relevant to its annual consideration of the renewal of each fund's Advisory Contracts, including the services and support provided to each fund and its shareholders. The Board has established four standing committees (Committees) - Operations, Audit, Fair Valuation, and Governance and Nominating - each composed of and chaired by Independent Trustees with varying backgrounds, to which the Board has assigned specific subject matter responsibilities in order to enhance effective decision-making by the Board. The Operations Committee, of which all of the Independent Trustees are members, meets regularly throughout the year and considers, among other matters, information specifically related to the annual consideration of the renewal of each fund's Advisory Contracts. The Board, acting directly and through its Committees, requests and receives information concerning the annual consideration of the renewal of each fund's Advisory Contracts. The Board also meets as needed to consider matters specifically related to the Board's annual consideration of the renewal of the Advisory Contracts. Members of the Board may also meet with trustees of other Fidelity funds through ad hoc joint committees to discuss certain matters relevant to all of the Fidelity funds.
At its January 2015 meeting, the Board, including the Independent Trustees, unanimously determined to renew each fund's Advisory Contracts. In reaching its determination, the Board considered all factors it believed relevant, including (i) the nature, extent, and quality of the services to be provided to each fund and its shareholders (including the investment performance of each fund); (ii) the competitiveness of each fund's management fee and total expense ratio relative to peer funds; (iii) the total costs of the services to be provided by and the profits to be realized by Fidelity from its relationship with each fund; (iv) the extent to which economies of scale exist and would be realized as each fund grows; and (v) whether fee levels reflect these economies of scale, if any, for the benefit of fund shareholders.
In considering whether to renew the Advisory Contracts for each fund, the Board reached a determination, with the assistance of fund counsel and Independent Trustees' counsel and through the exercise of its business judgment, that the renewal of the Advisory Contracts was in the best interests of each fund and its shareholders and that the compensation payable under the Advisory Contracts was fair and reasonable. The Board's decision to renew the Advisory Contracts was not based on any single factor, but rather was based on a comprehensive consideration of all the information provided to the Board at its meetings throughout the year. The Board, in reaching its determination to renew the Advisory Contracts, was aware that shareholders of each fund have a broad range of investment choices available to them, including a wide choice among funds offered by Fidelity's competitors, and that each fund's shareholders, who have the opportunity to review and weigh the disclosure provided by the fund in its prospectus and other public disclosures, have chosen to invest in that fund, which is part of the Fidelity family of funds.
Nature, Extent, and Quality of Services Provided. The Board considered the staffing of SelectCo and the sub-advisers (together with SelectCo, the Investment Advisers) as it relates to the funds, including the backgrounds of investment personnel of SelectCo, and also considered the funds' investment objectives, strategies, and related investment philosophies. The Independent Trustees also had discussions with senior management of Fidelity's investment operations and investment groups. The Board considered the structure of the portfolio manager compensation program and whether this structure provides appropriate incentives to act in the best interests of each fund. Additionally, the Board considered the portfolio managers' investments, if any, in the funds that they manage.
Resources Dedicated to Investment Management and Support Services. The Board reviewed the general qualifications and capabilities of the investment staff of the Investment Advisers, including its size, education, experience, and resources, as well as the Fidelity's approach to recruiting, training, managing, and compensating investment personnel. The Board noted that Fidelity has continued to increase the resources devoted to non-U.S. offices, including expansion of Fidelity's global investment organization. The Board also noted that Fidelity's analysts have extensive resources, tools and capabilities that allow them to conduct sophisticated quantitative and fundamental analysis, as well as credit analysis of issuers, counterparties and guarantors. Further, the Board believes that Fidelity's investment professionals have sufficient access to global information and data so as to provide competitive investment results over time, and that those professionals also have access to sophisticated tools that permit them to assess portfolio construction and risk and performance attribution characteristics continuously, as well as to transmit new information and research conclusions rapidly around the world. Additionally, in its deliberations, the Board considered Fidelity's trading, risk management, and compliance capabilities and resources, which are integral parts of the investment management process.
Shareholder and Administrative Services. The Board considered (i) the nature, extent, quality, and cost of advisory, administrative, and shareholder services performed by the Investment Advisers and their affiliates under the Advisory Contracts and under separate agreements covering transfer agency, pricing and bookkeeping, and securities lending services for each fund; (ii) the nature and extent of the supervision of third party service providers, principally custodians and subcustodians; and (iii) the resources devoted to, and the record of compliance with, each fund's compliance policies and procedures. The Board also reviewed the allocation of fund brokerage, including allocations to brokers affiliated with the Investment Advisers, the use of brokerage commissions to pay fund expenses, and the use of "soft" commission dollars to pay for research services.
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees - continued
The Board noted that the growth of fund assets over time across the complex allows Fidelity to reinvest in the development of services designed to enhance the value or convenience of the Fidelity funds as investment vehicles. These services include 24-hour access to account information and market information through telephone representatives and over the Internet, investor education materials and asset allocation tools, and the expanded availability of Fidelity Investor Centers.
Investment in a Large Fund Family. The Board considered the benefits to shareholders of investing in a Fidelity fund, including the benefits of investing in a fund that is part of a large family of funds offering a variety of investment disciplines and providing a large variety of mutual fund investor services. The Board noted that Fidelity had taken, or had made recommendations that resulted in the Fidelity funds taking, a number of actions over the previous year that benefited particular funds, including (i) continuing to dedicate additional resources to investment research and to the support of the senior management team that oversees asset management; (ii) continuing efforts to enhance Fidelity's global research capabilities; (iii) launching new funds and making other enhancements to meet client needs for income-oriented solutions; (iv) reducing fund expenses for certain index funds; (v) continuing to launch dedicated lower cost underlying funds to meet portfolio construction needs related to expanding underlying fund options for Fidelity funds of funds, specifically for the Freedom Fund product lines; (vi) rationalizing product lines and gaining increased efficiencies through fund mergers; (vii) launching sector-based exchange-traded funds and establishing SelectCo to manage sector-based funds and products; (viii) continuing to develop, acquire, and implement systems and technology to improve security and services to the funds and to increase efficiency; (ix) modifying the eligibility criteria for certain share classes to increase their marketability to a portion of the defined contribution plan market; (x) waiving redemption fees for certain qualified fund-of-fund and wrap programs and certain retirement plan transactions; and (xi) launching new Institutional Class shares of certain money market funds to attract and retain assets and to fill a gap in money market fund offerings.
Investment Performance. The Board considered whether each fund has operated in accordance with its investment objective, as well as its record of compliance with its investment restrictions and its performance history.
The Board took into account discussions with representatives of the Investment Advisers about fund investment performance that occur at Board meetings throughout the year. In this regard the Board noted that as part of regularly scheduled fund reviews and other reports to the Board on fund performance, the Board considers annualized return information for each fund, for different time periods, measured against a securities market index ("benchmark index"). In its evaluation of fund investment performance at meetings throughout the year, the Board gave particular attention to information indicating underperformance of certain Fidelity funds for specific time periods and discussed with the Investment Advisers the reasons for such underperformance. Medical Delivery Portfolio underperformed its benchmark for the one-, three-, and five-year periods ended May 31, 2014, and as a result, the Board will continue to discuss with SelectCo the steps it is taking to address the fund's performance.
In addition to reviewing absolute and relative fund performance, the Independent Trustees periodically consider the appropriateness of fund performance metrics in evaluating the results achieved. In general, the Independent Trustees believe that fund performance should be evaluated based on net performance (after fees and expenses) of both the highest performing and lowest performing classes, where applicable, compared to appropriate benchmark indices, over appropriate time periods that may include full market cycles, taking into account relevant factors including the following: general market conditions; issuer-specific information; tactical opportunities for investment; and fund cash flows and other factors. Depending on the circumstances, the Independent Trustees may be satisfied with a fund's performance notwithstanding that it lags its benchmark index for certain periods.
The Independent Trustees recognize that shareholders evaluate performance on a net basis over their own holding periods, for which one-, three-, and five-year periods are often used as a proxy. For this reason, the performance information reviewed by the Board also included net cumulative total return information for each fund and an appropriate benchmark index for the most recent one-, three-, and five-year periods ended June 30, 2014.
Based on its review, the Board concluded that the nature, extent, and quality of services provided to each fund under the Advisory Contracts should benefit the shareholders of each fund.
Competitiveness of Management Fee and Total Expense Ratio. The Board considered each fund's management fee and total expense ratio compared to "mapped groups" of competitive funds and classes created for the purpose of facilitating the Trustees' analysis of the competitiveness of management fees and total expenses. Fidelity creates "mapped groups" by combining similar Lipper investment objective categories that have comparable investment mandates. Combining Lipper investment objective categories aids the Board's management fee and total expense ratio comparisons by broadening the competitive group used for comparison and making the competitive group more inclusive.
Management Fee. The Board considered two proprietary management fee comparisons for the 12-month periods ended June 30 shown in the charts below. The group of Lipper funds used by the Board for management fee comparisons is referred to below as the "Total Mapped Group." The Total Mapped Group comparison focuses on a fund's standing in terms of gross management fees before expense reimbursements or caps relative to the total universe of funds with comparable investment mandates, regardless of whether their management fee structures also are comparable. Funds with comparable investment mandates offer exposure to similar types of securities. Funds with comparable management fee structures have similar management fee contractual arrangements (e.g., flat rate charged for advisory services, all-inclusive fee rate, etc.). "TMG %" represents the percentage of funds in the Total Mapped Group that had management fees that were lower than a fund's. For example, a hypothetical TMG % of 20% would mean that 80% of the funds in the Total Mapped Group had higher, and 20% had lower, management fees than a fund. The funds' actual TMG %s are in the charts below. The "Asset-Size Peer Group" (ASPG) comparison focuses on a fund's standing relative to a subset of non-Fidelity funds within the Total Mapped Group that are similar in size and management fee structure. For example, if a fund is in the first quartile of the ASPG, the fund's management fee ranks in the least expensive or lowest 25% of funds in the ASPG. The ASPG represents at least 15% of the funds in the Total Mapped Group with comparable asset size and management fee structures, subject to a minimum of 50 funds (or all funds in the Total Mapped Group if fewer than 50). Additional information, such as the ASPG quartile in which a fund's management fee rate ranked, is also included in the charts and considered by the Board.
Annual Report
Biotechnology Portfolio
Health Care Portfolio
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees - continued
Medical Delivery Portfolio
Medical Equipment and Systems Portfolio
Annual Report
Pharmaceuticals Portfolio
The Board noted that each fund's management fee rate ranked below the median of its Total Mapped Group and below the median of its ASPG for the 12-month period ended June 30, 2014.
Based on its review, the Board concluded that each fund's management fee is fair and reasonable in light of the services that each fund receives and the other factors considered.
Total Expense Ratio. In its review of each fund's total expense ratio, the Board considered the fund's management fee as well as other fund expenses, such as transfer agent fees, pricing and bookkeeping fees, and custodial, legal, and audit fees. The Board also noted that Fidelity may agree to waive fees and expenses from time to time, and the extent to which, if any, it has done so for the funds. As part of its review, the Board also considered the current and historical total expense ratios of each fund compared to competitive fund median expenses. Each fund is compared to those funds and classes in the Total Mapped Group (used by the Board for management fee comparisons) that have a similar sales load structure.
The Board noted that each fund's total expense ratio ranked below its competitive median for the 12-month period ended June 30, 2014.
Fees Charged to Other Fidelity Clients. The Board also considered Fidelity fee structures and other information with respect to clients of Fidelity, such as other funds advised or subadvised by Fidelity, pension plan clients, and other institutional clients.
Based on its review of total expense ratios and fees charged to other Fidelity clients, the Board concluded that each fund's total expense ratio was reasonable in light of the services that each fund and its shareholders receive and the other factors considered.
Costs of the Services and Profitability. The Board considered the revenues earned and the expenses incurred by Fidelity in conducting the business of developing, marketing, distributing, managing, administering and servicing each fund and servicing each fund's shareholders. The Board also considered the level of Fidelity's profits in respect of all the Fidelity funds.
On an annual basis, Fidelity presents to the Board information about the profitability of its relationship with each fund. Fidelity calculates profitability information for each fund, as well as aggregate profitability information for groups of Fidelity funds and all Fidelity funds, using a series of detailed revenue and cost allocation methodologies which originate with the books and records of Fidelity on which Fidelity's audited financial statements are based. The Audit Committee of the Board reviews any significant changes from the prior year's methodologies.
PricewaterhouseCoopers LLP (PwC), independent registered public accounting firm and auditor to Fidelity and certain Fidelity funds, has been engaged annually by the Board as part of the Board's assessment of the profitability analysis used by Fidelity. PwC's engagement includes the review and assessment of Fidelity's methodologies used in determining the revenues and expenses attributable to Fidelity's mutual fund business, and completion of agreed-upon procedures in respect of the mathematical accuracy of fund profitability and its conformity to established allocation methodologies. After considering PwC's reports issued under the engagement and information provided by Fidelity, the Board concluded that while other allocation methods may also be reasonable, Fidelity's profitability methodologies are reasonable in all material respects.
The Board also reviewed Fidelity's non-fund businesses and fall-out benefits related to the mutual fund business as well as cases where Fidelity's affiliates may benefit from or be related to the funds' business.
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees - continued
The Board considered the costs of the services provided by and the profits realized by Fidelity in connection with the operation of each fund and was satisfied that the profitability was not excessive.
Economies of Scale. The Board considered whether there have been economies of scale in respect of the management of the Fidelity funds, whether the Fidelity funds (including each fund) have appropriately benefited from any such economies of scale, and whether there is potential for realization of any further economies of scale. The Board considered the extent to which each fund will benefit from economies of scale as assets grow through increased services to the fund, through waivers or reimbursements, or through fee or expense ratio reductions. The Board also noted that in 2013, it and the boards of other Fidelity funds created an ad hoc committee (the Economies of Scale Committee) to analyze whether Fidelity attains economies of scale in respect of the management and servicing of the Fidelity funds, whether the Fidelity funds have appropriately benefited from such economies of scale, and whether there is potential for realization of any further economies of scale.
The Board recognized that each fund's management contract incorporates a "group fee" structure, which provides for lower group fee rates as total group assets increase, and for higher group fee rates as total group assets decrease (with "group assets" defined to include fund assets under SelectCo's management plus assets under FMR's management). SelectCo calculates the group fee rates based on a tiered asset "breakpoint" schedule that varies based on asset class. The Board considered that the group fee is designed to deliver the benefits of economies of scale to fund shareholders when total group assets increase, even if assets of any particular fund are unchanged or have declined, because some portion of Fidelity's costs are attributable to services provided to all Fidelity funds, and all funds benefit if those costs can be allocated among more assets. The Board concluded that, given the group fee structure, fund shareholders will benefit from lower management fees as group assets increase at the fund complex level, regardless of whether Fidelity achieves any such economies of scale.
The Board concluded, taking into account the analysis of the Economies of Scale Committee, that economies of scale, if any, are being appropriately shared between fund shareholders and Fidelity.
Additional Information Requested by the Board. In order to develop fully the factual basis for consideration of the Fidelity funds' Advisory Contracts, the Board requested and received additional information on certain topics, including: (i) Fidelity's fund profitability methodology, profitability trends for certain funds, and the impact of certain factors on fund profitability results; (ii) portfolio manager changes that have occurred during the past year and the amount of the investment that each portfolio manager has made in the Fidelity fund(s) that he or she manages; (iii) Fidelity's compensation structure for portfolio managers, research analysts, and other key personnel, including its effects on fund profitability; (iv) the arrangements with and compensation paid to certain fund sub-advisers on behalf of the Fidelity funds; (v) Fidelity's fee structures, including the group fee structure and definition of group assets, and the rationale for recommending different fees among different categories of funds and classes; (vi) the methodology with respect to competitive fund data and peer group classifications; (vii) Fidelity's transfer agent fee, expense, and service structures for different funds and classes, and the impact of the increased use of omnibus accounts; and (viii) explanations regarding the relative total expense ratios of certain funds and classes, total expense competitive trends and methodologies for total expense competitive comparisons, and actions that might be taken by Fidelity to reduce total expense ratios for certain funds and classes or to achieve further economies of scale.
Based on its evaluation of all of the conclusions noted above, and after considering all factors it believed relevant, the Board concluded that the advisory fee structures are fair and reasonable, and that each fund's Advisory Contracts should be renewed.
Annual Report
Annual Report
Investment Adviser
Fidelity SelectCo, LLC
Denver, CO
Investment Sub-Advisers
FMR Co., Inc.
FMR Investment Management
(U.K.) Limited
Fidelity Management & Research
(Hong Kong) Limited
Fidelity Management & Research
(Japan) Limited
General Distributor
Fidelity Distributors Corporation
Smithfield, RI
Transfer and Service Agents
Fidelity Investments Institutional Operations Company, Inc.
Boston, MA
Fidelity Service Company, Inc.
Boston, MA
Custodian
Brown Brothers Harriman & Co.
Boston, MA
Corporate Headquarters
245 Summer Street
Boston, MA 02210
1-800-544-8888
The Fidelity Telephone Connection
Mutual Fund 24-Hour Service
Exchanges/Redemptions
and Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774
(8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
Fidelity Automated Service
Telephone (FAST®)
1-800-544-5555
Automated line for quickest service
SELHC-UANNPRO-0415
1.910421.105
Item 2. Code of Ethics
As of the end of the period, February 28, 2015, Fidelity Select Portfolios (the trust) has adopted a code of ethics, as defined in Item 2 of Form N-CSR, that applies to its President and Treasurer and its Chief Financial Officer. A copy of the code of ethics is filed as an exhibit to this Form N-CSR.
Item 3. Audit Committee Financial Expert
The Board of Trustees of the trust has determined that David A. Rosow is an audit committee financial expert, as defined in Item 3 of Form N-CSR. Mr. Rosow is independent for purposes of Item 3 of Form N-CSR.
Item 4. Principal Accountant Fees and Services
Fees and Services
The following table presents fees billed by PricewaterhouseCoopers LLP ("PwC") in each of the last two fiscal years for services rendered to Air Transportation Portfolio, Automotive Portfolio, Banking Portfolio, Biotechnology Portfolio, Brokerage and Investment Management Portfolio, Construction and Housing Portfolio, Consumer Discretionary Portfolio, Consumer Finance Portfolio, Defense and Aerospace Portfolio, Environment and Alternative Energy Portfolio, Financial Services Portfolio, Health Care Portfolio, Industrial Equipment Portfolio, Industrials Portfolio, Insurance Portfolio, Leisure Portfolio, Medical Delivery Portfolio, Medical Equipment and Systems Portfolio, Multimedia Portfolio, Pharmaceuticals Portfolio, Retailing Portfolio and Transportation Portfolio (the "Funds"):
Services Billed by PwC
February 28, 2015 FeesA
|
|
Audit Fees |
Audit-Related Fees |
Tax Fees |
All Other Fees |
|
Air Transportation Portfolio |
$35,000 |
$- |
$5,300 |
$- |
|
Automotive Portfolio |
$34,000 |
$- |
$2,800 |
$- |
|
Banking Portfolio |
$34,000 |
$- |
$2,800 |
$- |
|
Biotechnology Portfolio |
$48,000 |
$- |
$3,200 |
$- |
|
Brokerage and Investment Management Portfolio |
$35,000 |
$- |
$3,600 |
$- |
|
Construction and Housing Portfolio |
$34,000 |
$- |
$2,800 |
$- |
|
Consumer Discretionary Portfolio |
$34,000 |
$- |
$7,700 |
$- |
|
Consumer Finance Portfolio |
$35,000 |
$- |
$3,900 |
$- |
|
Defense and Aerospace Portfolio |
$36,000 |
$- |
$2,800 |
$- |
|
Environment and Alternative Energy Portfolio |
$35,000 |
$- |
$2,800 |
$- |
|
Financial Services Portfolio |
$36,000 |
$- |
$6,700 |
$- |
|
Health Care Portfolio |
$41,000 |
$- |
$2,800 |
$- |
|
Industrial Equipment Portfolio |
$39,000 |
$- |
$2,800 |
$- |
|
Industrials Portfolio |
$35,000 |
$- |
$5,300 |
$- |
|
Insurance Portfolio |
$35,000 |
$- |
$2,800 |
$- |
|
Leisure Portfolio |
$35,000 |
$- |
$6,400 |
$- |
|
Medical Delivery Portfolio |
$35,000 |
$- |
$2,800 |
$- |
|
Medical Equipment and Systems Portfolio |
$36,000 |
$- |
$2,800 |
$- |
|
Multimedia Portfolio |
$35,000 |
$- |
$2,800 |
$- |
|
Pharmaceuticals Portfolio |
$36,000 |
$- |
$5,300 |
$- |
|
Retailing Portfolio |
$35,000 |
$- |
$2,800 |
$- |
|
Transportation Portfolio |
$35,000 |
$- |
$5,300 |
$- |
February 28, 2014 FeesA
|
|
Audit Fees |
Audit-Related Fees |
Tax Fees |
All Other Fees |
|
Air Transportation Portfolio |
$34,000 |
$- |
$2,700 |
$1,500 |
|
Automotive Portfolio |
$34,000 |
$- |
$2,700 |
$1,600 |
|
Banking Portfolio |
$35,000 |
$- |
$2,700 |
$1,700 |
|
Biotechnology Portfolio |
$45,000 |
$- |
$2,700 |
$3,700 |
|
Brokerage and Investment Management Portfolio |
$35,000 |
$- |
$2,700 |
$1,700 |
|
Construction and Housing Portfolio |
$34,000 |
$- |
$2,700 |
$1,700 |
|
Consumer Discretionary Portfolio |
$35,000 |
$- |
$2,700 |
$1,700 |
|
Consumer Finance Portfolio |
$35,000 |
$- |
$2,700 |
$1,600 |
|
Defense and Aerospace Portfolio |
$35,000 |
$- |
$2,700 |
$1,700 |
|
Environment and Alternative Energy Portfolio |
$34,000 |
$- |
$2,700 |
$1,500 |
|
Financial Services Portfolio |
$35,000 |
$- |
$2,700 |
$1,700 |
|
Health Care Portfolio |
$38,000 |
$- |
$2,700 |
$2,800 |
|
Industrial Equipment Portfolio |
$39,000 |
$- |
$2,700 |
$1,600 |
|
Industrials Portfolio |
$35,000 |
$- |
$2,700 |
$1,800 |
|
Insurance Portfolio |
$35,000 |
$- |
$2,700 |
$1,600 |
|
Leisure Portfolio |
$36,000 |
$- |
$2,700 |
$1,600 |
|
Medical Delivery Portfolio |
$35,000 |
$- |
$2,700 |
$1,700 |
|
Medical Equipment and Systems Portfolio |
$36,000 |
$- |
$2,700 |
$2,000 |
|
Multimedia Portfolio |
$35,000 |
$- |
$2,700 |
$1,800 |
|
Pharmaceuticals Portfolio |
$36,000 |
$- |
$2,700 |
$1,900 |
|
Retailing Portfolio |
$35,000 |
$- |
$2,700 |
$1,800 |
|
Transportation Portfolio |
$34,000 |
$- |
$2,700 |
$1,600 |
|
|
|
|
|
|
A Amounts may reflect rounding.
The following table presents fees billed by PwC that were required to be approved by the Audit Committee for services that relate directly to the operations and financial reporting of the Funds and that are rendered on behalf of Fidelity Management & Research Company ("FMR") and entities controlling, controlled by, or under common control with FMR (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser) that provide ongoing services to the Funds ("Fund Service Providers"):
Services Billed by PwC
|
|
February 28, 2015A |
February 28, 2014A |
|
Audit-Related Fees |
$5,900,000 |
$4,970,000 |
|
Tax Fees |
$- |
$- |
|
All Other Fees |
$- |
$50,000 |
A Amounts may reflect rounding.
"Audit-Related Fees" represent fees billed for assurance and related services that are reasonably related to the performance of the fund audit or the review of the fund's financial statements and that are not reported under Audit Fees.
"Tax Fees" represent fees billed for tax compliance, tax advice or tax planning that relate directly to the operations and financial reporting of the fund.
"All Other Fees" represent fees billed for services provided to the fund or Fund Service Provider, a significant portion of which are assurance related, that relate directly to the operations and financial reporting of the fund, excluding those services that are reported under Audit Fees, Audit-Related Fees or Tax Fees.
Assurance services must be performed by an independent public accountant.
* * *
The aggregate non-audit fees billed by PwC for services rendered to the Funds, FMR (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any Fund Service Provider for each of the last two fiscal years of the Funds are as follows:
|
Billed By |
February 28, 2015 A |
February 28, 2014 A,B |
|
PwC |
$8,185,000 |
$5,585,000 |
A Amounts may reflect rounding.
B Reflects current period presentation.
The trust's Audit Committee has considered non-audit services that were not pre-approved that were provided by PwC to Fund Service Providers to be compatible with maintaining the independence of PwC in its audit of the Funds, taking into account representations from PwC, in accordance with Public Company Accounting Oversight Board rules, regarding its independence from the Funds and their related entities and FMR's review of the appropriateness and permissibility under applicable law of such non-audit services prior to their provision to the Fund Service Providers.
Audit Committee Pre-Approval Policies and Procedures
The trust's Audit Committee must pre-approve all audit and non-audit services provided by a fund's independent registered public accounting firm relating to the operations or financial reporting of the fund. Prior to the commencement of any audit or non-audit services to a fund, the Audit Committee reviews the services to determine whether they are appropriate and permissible under applicable law.
The Audit Committee has adopted policies and procedures to, among other purposes, provide a framework for the Committee's consideration of non-audit services by the audit firms that audit the Fidelity funds. The policies and procedures require that any non-audit service provided by a fund audit firm to a Fidelity fund and any non-audit service provided by a fund auditor to a Fund Service Provider that relates directly to the operations and financial reporting of a Fidelity fund ("Covered Service") are subject to approval by the Audit Committee before such service is provided.
All Covered Services must be approved in advance of provision of the service either: (i) by formal resolution of the Audit Committee, or (ii) by oral or written approval of the service by the Chair of the Audit Committee (or if the Chair is unavailable, such other member of the Audit Committee as may be designated by the Chair to act in the Chair's absence). The approval contemplated by (ii) above is permitted where the Treasurer determines that action on such an engagement is necessary before the next meeting of the Audit Committee.
Non-audit services provided by a fund audit firm to a Fund Service Provider that do not relate directly to the operations and financial reporting of a Fidelity fund are reported to the Audit Committee on a periodic basis.
Non-Audit Services Approved Pursuant to Rule 2-01(c)(7)(i)(C) and (ii) of Regulation S-X ("De Minimis Exception")
There were no non-audit services approved or required to be approved by the Audit Committee pursuant to the De Minimis Exception during the Funds' last two fiscal years relating to services provided to (i) the Funds or (ii) any Fund Service Provider that relate directly to the operations and financial reporting of the Funds.
Item 5. Audit Committee of Listed Registrants
Not applicable.
Item 6. Investments
(a) Not applicable.
(b) Not applicable
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies
Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies
Not applicable.
Item 9. Purchase of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders
There were no material changes to the procedures by which shareholders may recommend nominees to the trust's Board of Trustees.
Item 11. Controls and Procedures
(a)(i) The President and Treasurer and the Chief Financial Officer have concluded that the trust's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act) provide reasonable assurances that material information relating to the trust is made known to them by the appropriate persons, based on their evaluation of these controls and procedures as of a date within 90 days of the filing date of this report.
(a)(ii) There was no change in the trust's internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act) that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the trust's internal control over financial reporting.
Item 12. Exhibits
|
(a) |
(1) |
Code of Ethics pursuant to Item 2 of Form N-CSR is filed and attached hereto as EX-99.CODE ETH. |
|
(a) |
(2) |
Certification pursuant to Rule 30a-2(a) under the Investment Company Act of 1940 (17 CFR 270.30a-2(a)) is filed and attached hereto as Exhibit 99.CERT. |
|
(a) |
(3) |
Not applicable. |
|
(b) |
|
Certification pursuant to Rule 30a-2(b) under the Investment Company Act of 1940 (17 CFR 270.30a-2(b)) is furnished and attached hereto as Exhibit 99.906CERT. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Fidelity Select Portfolios
|
By: |
/s/Adrien E. Deberghes |
|
|
Adrien E. Deberghes |
|
|
President and Treasurer |
|
|
|
|
Date: |
April 29, 2015 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
|
By: |
/s/Adrien E. Deberghes |
|
|
Adrien E. Deberghes |
|
|
President and Treasurer |
|
|
|
|
Date: |
April 29, 2015 |
|
By: |
/s/Howard J. Galligan III |
|
|
Howard J. Galligan III |
|
|
Chief Financial Officer |
|
|
|
|
Date: |
April 29, 2015 |