2010 Weekly Trades

All distributions and dividends are assumed to be reinvested, which has no meaningful effect on the rates and percentages shown. For comparison, the same period returns of the Vanguard Index 500 Fund (symbol VFINX), whose performance is close to the S&P 500 index, are also shown.

It should not be assumed that trades in the future following the Fidelity Select Switching System will be profitable or will equal the performance of the trades shown below.

Note: Buy prices marked by a * have been adjusted for a distribution by the
      fund between the purchase and sale dates.  This distribution is assumed
      to be reinvested in the fund, which has no meaningful effect on the
      percent changes or overall rates of return shown. Fidelity normally
      makes any distributions for the Selects on the first two Fridays in
      April and on the first three Fridays in December.
                                                            Sell or          Index
Buy       Fund              Sale/Exchange              Buy   Recent  Percent  500
Date      Purchased         Date     Exchange to:      Price Price   Change   Change

1/4/10    Natural Gas       2/16/10  Constr & Housing  33.09  31.79  -3.9%   -3.1%
1/11/10   Energy Service    2/16/10  Constr & Housing  63.71  58.85  -7.6%   -4.4%
1/19/10   Energy Service    2/22/10  Comm Equipment    63.37  59.37  -6.3%   -3.5%
1/25/10   Banking           3/8/10   Defense & Aero    16.47  17.12   3.9%    4.1%
2/1/10    Money Market      3/8/10   Defense & Aero     1.00   1.00   0.0%    4.8%
2/8/10    Money Market      3/15/10  Transportation     1.00   1.00   0.0%    8.0%
2/16/10   Constr & Housing  3/29/10  Transportation    29.66  32.19   8.5%    7.4%
2/22/10   Comm Equipment    4/5/10   Home Finance      20.93  22.66   8.3%    7.4%
3/1/10    Transportation    6/14/10  Wireless         42.82*  47.63  11.2%   -1.8%
3/8/10    Defense & Aero    4/12/10  Home Finance     64.80*  68.60   5.9%    5.3%
3/15/10   Transportation    6/14/10  Wireless         46.61*  47.63   2.2%   -4.9%
3/22/10   Transportation    6/14/10  Wireless         46.90*  47.63   1.6%   -6.1%
3/29/10   Transportation    6/14/10  Wireless         47.68*  47.63  -0.1%   -6.7%
4/5/10    Home Finance      5/10/10  Money Market     12.72*  12.34  -3.0%   -2.2%
4/12/10   Home Finance      5/17/10  Money Market      13.05  12.25  -6.1%   -4.8%
4/19/10   Electronics       5/24/10  Money Market      45.58  39.30 -13.8%  -10.2%
4/26/10   Constr & Housing  6/7/10   Money Market      36.42  29.72 -18.4%  -13.1%
5/3/10    Constr & Housing  6/7/10   Money Market      36.36  29.72 -18.3%  -12.4%
5/10/10   Money Market      7/19/10  Consumer Staples   1.00   1.00   0.0%   -7.6%
5/17/10   Money Market      7/19/10  Consumer Staples   1.00   1.00   0.0%   -5.8%
5/24/10   Money Market      7/19/10  Consumer Staples   1.00   1.00   0.0%   -0.3%
6/1/10    Wireless          8/2/10   Automotive         6.46   7.04   9.0%    4.9%
6/7/10    Money Market      7/19/10  Consumer Staples   1.00   1.00   0.0%    1.9%
6/14/10   Wireless          8/2/10   Automotive         6.65   7.04   5.9%    3.0%
6/21/10   Energy Service    8/16/10  Pharmaceuticals   54.43  53.26  -2.1%   -3.3%
6/28/10   Insurance         8/9/10   Automotive        42.30  43.47   2.8%    5.1%
7/6/10    Money Market      8/9/10   Automotive         1.00   1.00   0.0%    9.9%
7/12/10   Pharmaceuticals   8/30/10  Utilities         10.72  10.76   0.4%   -2.5%
7/19/10   Consumer Staples  8/30/10  Utilities         60.56  60.55  -0.0%   -2.0%
7/26/10   Chemicals         10/4/10  Electronics       74.55  79.48   6.6%    2.4%
8/2/10    Automotive        9/20/10  Computers         35.04  34.78  -0.7%    1.8%
8/9/10    Automotive        9/20/10  Computers         35.22  34.78  -1.2%    1.6%
8/16/10   Pharmaceuticals   10/11/10 Automotive        10.90  12.07  10.7%    8.3%
8/23/10   Pharmaceuticals   10/11/10 Automotive        10.86  12.07  11.1%    9.5%
8/30/10   Utilities         10/4/10  Electronics       45.91  47.76   4.0%    8.6%
9/7/10    Constr & Housing  10/11/10 Automotive        29.67  31.17   5.1%    6.9%
9/13/10   Energy Service    1/10/11  Consumer Finance  56.61  72.03  27.2%   13.8%
9/20/10   Computers         11/22/10 Energy Service    48.79  54.51  11.7%    4.3%
9/27/10   Technology        11/15/10 Automotive        84.29  89.50   6.2%    5.1%
10/4/10   Electronics       12/27/10 Banking          39.21*  48.22  23.0%   11.1%
10/11/10  Automotive        1/24/11  Medical Delivery  37.51  47.10  25.6%   11.3%
10/18/10  Automotive        1/24/11  Medical Delivery  38.46  47.10  22.5%    9.5%
10/25/10  Chemicals         12/6/10  Energy Service    87.86  92.47   5.2%    3.4%
11/1/10   Electronics       12/27/10 Banking          43.09*  48.22  11.9%    6.5%
11/8/10   Electronics       12/27/10 Banking          45.25*  48.22   6.6%    3.1%
11/15/10  Automotive        1/24/11  Medical Delivery  41.49  47.10  13.5%    8.1%
11/22/10  Energy Service    1/10/11  Consumer Finance  68.30  72.03   5.5%    6.3%
11/29/10  Retailing         1/3/11   Natural Gas       52.11  53.91   3.5%    7.2%
12/6/10   Energy Service    1/10/11  Consumer Finance  72.46  72.03  -0.6%    4.0%
12/13/10  Banking           2/7/11   Energy Service    17.93  19.38   8.1%    6.5%
12/20/10  Financial Serv.   2/7/11   Energy Service    59.39  64.33   8.3%    6.0%
12/27/10  Banking           2/7/11   Energy Service    18.57  19.38   4.4%    5.0%   

No money market interest assumed because rates are a small fraction of 1%.
In order to keep this complicated page from becoming even more so, the trade results shown do NOT include the use of "stop-loss" tactics, which is my recommended strategy. These are discussed in several other pages on this site, and there are some examples that illustrate the potential beneficial effects of using stop-losses. The more volatile sector funds such as those in high technology, Biotechnology, and Energy Service are more likely to get stopped out. In many such cases, the fund likely would have been held less than 30 days. If so, it would have been hit with Fidelity's 0.75% short-term selling penalty for Select funds.

Since it is unlikely that any investor would act on all of the weekly signals shown above and on the linked pages for prior years, here is an illustration of one use of the weekly trade list tables.

Starting on 1/4/10, the closest Monday to the start of 2010, if one had invested
into a single Select fund and followed the system, these would be the trades:

Buy       Fund              Sale/Exchange            Percent  Index 500
Date      Purchased         Date     Exchange to:    Change   Change
--------------------------------------------------------------------
1/4/10    Natural Gas       2/16/10  Constr & Housing  -3.9%   -3.1%
2/16/10   Constr & Housing  3/29/10  Transportation     8.5%    7.4%
3/29/10   Transportation    6/14/10  Wireless          -0.1%   -6.7%
6/14/10   Wireless          8/2/10   Automotive         5.9%    3.0%
8/2/10    Automotive        9/20/10  Computers         -0.7%    1.8%
9/20/10   Computers         11/22/10 Energy Service    11.7%    4.3%
11/22/10  Energy Service    Still held as of 1/3/11     9.1%    6.4%
--------------------------------------------------------------------
Total return as of 1/3/11                              33.4%   12.9%
    accounting for maximum 2% annual management fee    31.4%

The calculation for the total return for the track is:
 (0.961)(1.085)(0.999)(1.059)(0.993)(1.117)(1.091) - 1  expressed as a percent.
Here is a table showing what have happened if one had followed the method illustrated above starting on the closest "Monday" to the beginning of each year since 1996. The returns shown are those for the following year (52 weeks). "Selects System" shows the results of trading the Select funds, which have been reduced by the maximum 2% annual management fee. Those returns do not reflect Fidelity's load (removed in September 2003) applied to initial purchases of Select funds, which ranged from 0% to 3% depending on the amount of the purchase. The links in the right column show the weekly trades for each year and the computations of the values in the table. Returns for the Vanguard Index 500 fund are included to provide a market condition context.
Year      Selects System    Index 500      Weekly Trade Lists & Computations

1996           31.2%           21.9%       1996 Weekly Trade List
1997           33.1%           28.6%       1997 Weekly Trade List
1998           17.1%           27.7%       1998 Weekly Trade List
1999           56.4%           19.6%       1999 Weekly Trade List
2000           32.0%          -10.8%       2000 Weekly Trade List
2001          -20.5%          - 9.5%       2001 Weekly Trade List
2002          -23.8%          -21.3%       2002 Weekly Trade List
2003           18.4%           28.2%       2003 Weekly Trade List
2004           14.7%            8.8%       2004 Weekly Trade List
2005           12.5%            7.4%       2005 Weekly Trade List
2006           12.8%           13.6%       2006 Weekly Trade List
2007           11.2%            6.9%       2007 Weekly Trade List
2008          -42.4%          -38.4%       2008 Weekly Trade List
2009           90.5%           32.9%       2009 Weekly Trade List
              ------          ------
Average(96-09) 17.5%            8.3%

No claim is made that the system will perform in the future as it has in the past or as illustrated above. Also, there can be no assurances that the system will produce a profit in the future; it is possible that the system will produce losses.

Comments and Implementation Issues

(Past comments may be deleted when they are no longer relevant)

January 3, 2011:

We have now completed the 52 week period from 1/4/2010 to 1/3/2011, which is what is used for "year" 2010 data. It was a good year for the broad stock market as can be seen from the 12.9% gain for the Vanguard Index 500 fund. Smaller capitalization and high technology issues did even better. In strong markets like 2010, sector rotation typically does very well. That was certainly the case this past year as we see gains over 30% for the track shown above.

The major indices were down at the end of August, so all of the market's gains and then some were realized in the last four months of the year. Some of Select funds purchased according to the system during this period are showing exceptional gains so far.

There are normally five to seven trades during a 52 week period, and 2010 saw the high end. The last trade, in Energy Service, is still open. Since it was bought in November, we can count it as a full trade alhtough it likely will last at least a few more weeks. Four of the seven trades were profitable, and two of the losers fell by less than a percent. Five of the seven did better than the index fund. All in all, it was another great year for the Selects Switching System as is evident in the table of annual returns shown above.

August 9, 2010:

This week two funds were signaled for selling, which happens every so often. If an investor owned both of those funds because of wanting to have some diversification by not having the whole account in a single fund, then switching both funds into the top-ranked fund this week, Automotive, would defeat that objective. There are at least two ways to deal with this situation. The simplest would be to exchange Insurance into Automotive and continue to hold Money Market. When another fund is top-ranked, Money Market would be exchanged into it. The other method, which I sometimes use when quite bullish about the market (not how I feel now), is to also buy the second ranked fund if it is not highly correlated with the top-ranked one. This week, that would be Biotechnology.

July 6, 2010:

The second quarter moved almost in a mirror image of the first. Stocks gained in April and then fell sharply for the rest of the quarter with the major indices ending at their lowest levels of 2010 at that point. The trading system had losses during the quarter, but on the whole they were less than the broad market's. Also, since May 10 five of the nine weeks have seen the money market fund as the top-ranked one. While that sometimes indicates the decline has about run its course, as was the case in early February, it provides an effective risk control measure that prevents major losses in very bad stock market conditions.

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