(2_FIDELITY_LOGOS)FIDELITY
SELECT
PORTFOLIOS(REGISTERED TRADEMARK)
AIR TRANSPORTATION
AMERICAN GOLD
AUTOMOTIVE
BIOTECHNOLOGY
BROKERAGE AND INVESTMENT MANAGEMENT
CHEMICALS
COMPUTERS
CONSTRUCTION AND HOUSING
CONSUMER PRODUCTS
DEFENSE AND AEROSPACE
DEVELOPING COMMUNICATIONS
ELECTRONICS
ENERGY
ENERGY SERVICE
ENVIRONMENTAL SERVICES
FINANCIAL SERVICES
FOOD AND AGRICULTURE
HEALTH CARE
HOME FINANCE
INDUSTRIAL EQUIPMENT
INDUSTRIAL MATERIALS
INSURANCE
LEISURE
MEDICAL DELIVERY
MONEY MARKET
MULTIMEDIA
NATURAL GAS
PAPER AND FOREST PRODUCTS
PRECIOUS METALS AND MINERALS
REGIONAL BANKS
RETAILING
SOFTWARE AND COMPUTER SERVICES
TECHNOLOGY
TELECOMMUNICATIONS
TRANSPORTATION
UTILITIES GROWTH
SEMIANNUAL REPORT
AUGUST 31, 1994
CONTENTS
<TABLE>
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PERFORMANCE OVERVIEW 2
FUND UPDATES*
CONSUMER SECTOR CONSUMER PRODUCTS
FOOD AND AGRICULTURE
LEISURE
MULTIMEDIA
RETAILING
CYCLICALS SECTOR AIR TRANSPORTATION
AUTOMOTIVE
CHEMICALS
CONSTRUCTION AND HOUSING
ENVIRONMENTAL SERVICES
INDUSTRIAL EQUIPMENT
INDUSTRIAL MATERIALS
PAPER AND FOREST PRODUCTS
TRANSPORTATION
ENERGY, UTILITIES AND AMERICAN GOLD
NATURAL RESOURCES SECTOR ENERGY
ENERGY SERVICE
NATURAL GAS
PRECIOUS METALS AND MINERALS
UTILITIES GROWTH (FORMERLY UTILITIES)
FINANCIAL SERVICES SECTOR BROKERAGE AND INVESTMENT MANAGEMENT
FINANCIAL SERVICES
HOME FINANCE
INSURANCE
REGIONAL BANKS
HEALTH CARE SECTOR BIOTECHNOLOGY
HEALTH CARE
MEDICAL DELIVERY
TECHNOLOGY SECTOR COMPUTERS
DEFENSE AND AEROSPACE
DEVELOPING COMMUNICATIONS
ELECTRONICS
SOFTWARE AND COMPUTER SERVICES
TECHNOLOGY
TELECOMMUNICATIONS
MONEY MARKET
NOTES TO FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS
STATISTICAL ROUNDUP
* FUND UPDATES FOR EACH SELECT PORTFOLIO INCLUDE: PERFORMANCE AND INVESTMENT SUMMARY, MANAGER'S OVERVIEW,
INVESTMENTS, AND FINANCIAL STATEMENTS.
</TABLE>
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. MUTUAL FUND
SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED BY, ANY DEPOSITORY
INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC, THE FEDERAL RESERVE BOARD
OR ANY OTHER AGENCY, AND ARE SUBJECT TO INVESTMENT RISK, INCLUDING THE
POSSIBLE LOSS OF PRINCIPAL. NEITHER THE FUNDS NOR FIDELITY DISTRIBUTORS
CORPORATION IS A BANK.
PERFORMANCE OVERVIEW
DEAR SHAREHOLDER:
The six-month period ended August 31, 1994, was marked by several
crosscurrents which resulted in divergent returns for Select fund
investors. Between February 28 and August 31, the Standard & Poor's
Composite Index of 500 Stocks returned 3.26%, including reinvested
dividends. Overall, 16 out of 35 Select equity funds outperformed the S&P
500 during the period. Select fund returns varied considerably, however,
with Health Care generating a return of 16.64% during the six-month period
and Software and Computer Services producing a loss of 14.34%. For the 12
months ended August 31, the S&P 500 returned 5.47%, and 21 out of 35 Select
funds outperformed the index.
Mounting evidence of economic strength in the United States and rising
prices for certain commodities caused the Federal Reserve Board to raise
short-term interest rates five times from February through August 1994.
Rising rates negatively impacted certain funds more than others. For
example, Construction and Housing, and Brokerage and Investment Management
produced losses of 7.33% and 7.89%, respectively. Rising commodity prices
that resulted from the improving economy, however, benefited Chemicals, and
Paper and Forest Products, which generated returns of 13.71% and 10.94%,
respectively.
Over the trailing one-year period, Select funds that purchase CYCLICAL
stocks - those that tend to rise and fall in step with the economy -
generally performed well because of the improved business prospects of
companies within this sector. Industrial Materials, Industrial Equipment
and Transportation benefited from the continued U.S. economic expansion and
the recovery of overseas economies in Europe and Japan. However, other
cyclically oriented funds such as Automotive and Air Transportation have
suffered over the past six months as investors feared U.S. economic growth
might slow in the future as a result of higher interest rates.
On balance, Select funds that focus on some aspect of TECHNOLOGY -
Computers, Electronics and Technology, for example - benefited over the
past year from the upswing in capital spending geared toward enhancing
corporate productivity. Also, falling prices for certain technology
products resulted in high levels of shipments for items such as personal
computers and cellular telephones. The exception was Software and Computer
Services. After an extended period of excellent performance, the fund
suffered from investments in companies with slowing growth rates and/or
product cycle transitions.
Interestingly, market sectors that are directly linked to consumers, such
as HEALTH CARE and CONSUMER PRODUCTS, are finding it difficult to pass
along rising costs to consumers. Merger and acquisition activities in these
market sectors have been notable over the past six months. Companies have
attempted to reconcile oversupply conditions which exist for certain
consumer products and services, while at the same time capturing greater
operating efficiency as a result of consolidation. The lack of regulatory
activity under President Clinton's plan for health care reform lifted a
cloud hanging over certain medical delivery areas, especially nursing homes
and health maintenance organizations (HMOs). This factor, combined with
merger and acquisition activity, positively impacted Health Care and
Medical Delivery over the past six months.
Regulatory activity also continues to spur mergers and acquisitions in the
FINANCIAL SERVICES sector, as banks and financial services companies
position themselves for potential broadening of services and interstate
banking. Improving loan growth and good profit margins, combined with
merger activity, benefited Financial Services, Home Finance and Regional
Banks during the six- and 12-month periods.
Over the past six months, the ENERGY, UTILITIES AND NATURAL RESOURCES
sector turned in mixed results. Energy and Energy Services generated
positive returns, despite volatile energy prices. Higher shipments and
better utilization of existing capacity, reflecting an improving economy,
aided the energy group. American Gold suffered during the period due to the
rise in interest rates, which is expected to lower longer-term inflationary
pressures and, more importantly, expectations. Utilities Growth also was
negatively impacted by the rise in rates but more importantly, by the
specter of increasing competition in the years ahead.
Despite the rapid rise in interest rates over the past six months, the
stock market has performed remarkably well. Nevertheless, there is still
good reason for caution going forward. Fixed-income investments have become
more competitive due to higher yields and, broadly speaking, stocks remain
expensive relative to historical standards. Investors should continue to
maintain reasonable expectations in the months ahead for every Select fund.
What follows are detailed summaries of all the funds. We hope you find them
useful in evaluating your investments. As always, thank you for your
continued interest in Fidelity Select Portfolios.
Sincerely,
Bart A. Grenier
Select Group Leader
CUMULATIVE TOTAL RETURNS*
FOR THE SIX-MONTH PERIOD ENDED AUGUST 31, 1994
Row: 1, Col: 1, Value: 16.64
Row: 2, Col: 1, Value: 16.08
Row: 3, Col: 1, Value: 13.71
Row: 4, Col: 1, Value: 12.47
Row: 5, Col: 1, Value: 11.64
Row: 6, Col: 1, Value: 10.94
Row: 7, Col: 1, Value: 10.18
Row: 8, Col: 1, Value: 9.42
Row: 9, Col: 1, Value: 8.02
Row: 10, Col: 1, Value: 6.38
Row: 11, Col: 1, Value: 4.84
Row: 12, Col: 1, Value: 4.3
Row: 13, Col: 1, Value: 4.149999999999999
Row: 14, Col: 1, Value: 3.74
Row: 15, Col: 1, Value: 3.66
Row: 16, Col: 1, Value: 3.39
Row: 17, Col: 1, Value: 3.26
Row: 18, Col: 1, Value: 2.85
Row: 19, Col: 1, Value: 2.79
Row: 20, Col: 1, Value: 2.51
Row: 21, Col: 1, Value: 1.56
Row: 22, Col: 1, Value: 0.05
Row: 23, Col: 1, Value: -0.34
Row: 24, Col: 1, Value: -0.42
Row: 25, Col: 1, Value: -0.7200000000000001
Row: 26, Col: 1, Value: -2.66
Row: 27, Col: 1, Value: -3.65
Row: 28, Col: 1, Value: -4.02
Row: 29, Col: 1, Value: -4.18
Row: 30, Col: 1, Value: -5.04
Row: 31, Col: 1, Value: -7.33
Row: 32, Col: 1, Value: -7.89
Row: 33, Col: 1, Value: -8.380000000000001
Row: 34, Col: 1, Value: -8.619999999999999
Row: 35, Col: 1, Value: -10.27
Row: 36, Col: 1, Value: -14.34
Health Care 16.64%Home Finance 16.08%Chemicals 13.71%Precious Metals and
Minerals 12.47%Regional Banks 11.64%Paper and Forest Products
10.94%Industrial Materials 10.18%Medical Delivery 9.42%Financial Services
8.02%Telecommunications 6.38%Insurance 4.84%Electronics 4.30%Computers
4.18%Transportation 3.74%Food and Agriculture 3.66%Multimedia 3.39%S&P
500 3.26%Retailing 2.85%Energy 2.79%Energy Service 2.51%Developing
Communications 1.61%Defense and Aerospace 0.05%Technology -0.34%Natural
Gas -0.42%Utilities Growth (formerly Utilities) -0.72%Industrial
Equipment -2.66%Leisure -3.65%American Gold -4.02%Consumer Products
- -4.18%Air Transportation -5.04%Construction and Housing -7.33%Brokerage
and Investment Management -7.89%Environmental Services
- -8.38%Biotechnology -8.62%Automotive -10.27%Software and Computer
Services -14.34%Percentage of Cumulative Returns
CONSUMER PRODUCTS PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance: total
percentage change in value, the average annual percentage change, or the
growth of a hypothetical $10,000 investment. Each performance figure
includes changes in a fund's share price, plus reinvestment of any
dividends (income) and capital gains (the profits the fund earns when it
sells stocks that have grown in value). If Fidelity had not reimbursed
certain fund expenses during the period, the fund's total return would have
been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 6 PAST 1 LIFE OF
AUGUST 31, 1994 MONTHS YEAR FUND
CONSUMER PRODUCTS -4.18% 0.77% 75.73%
CONSUMER PRODUCTS
(INCL. 3% SALES CHARGE) -7.05% -2.25% 70.46%
S&P 500 3.26% 5.47% 51.13%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one year or since the fund
started on June 29, 1990. You can compare these figures to the performance
of the S&P 500 - a common proxy for the U.S. stock market. This benchmark
includes reinvested dividends and capital gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 LIFE OF
AUGUST 31, 1994 YEAR FUND
CONSUMER PRODUCTS 0.77% 14.45%
CONSUMER PRODUCTS
(INCL. 3% SALES CHARGE) -2.25% 13.62%
S&P 500 5.47% 10.39%
AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and
show you what would have happened if the fund had performed at a constant
rate each year.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of growth in the long run
and volatility in the short run. Unlike the broader
market, however, some sectors may not have
a history of growth in the long run. And, as
with all stock funds, the share price and return
of a fund that invests in a sector will vary. That
means if you sell your shares during a sector
downturn, you might lose money. But if you
can identify a sector that is about to
experience rapid growth you may have the
potential for above-average gains.
(checkmark)
$10,000 OVER LIFE OF FUND
Consumer Products Standard & Poor's 500
06/29/90 9700.00 10000.00
06/30/90 9700.00 10012.31
07/31/90 9670.90 9980.27
08/31/90 8943.40 9078.05
09/30/90 8439.00 8635.95
10/31/90 8749.40 8598.82
11/30/90 9234.40 9154.30
12/31/90 9593.72 9409.71
01/31/91 9808.43 9819.97
02/28/91 10569.68 10522.10
03/31/91 11077.18 10776.73
04/30/91 10950.30 10802.60
05/31/91 11477.32 11269.27
06/30/91 10911.27 10753.14
07/31/91 11623.72 11254.23
08/31/91 12101.94 11520.96
09/30/91 11994.59 11328.56
10/31/91 12375.21 11480.36
11/30/91 11857.95 11017.70
12/31/91 13290.06 12278.13
01/31/92 13379.45 12049.75
02/29/92 13836.36 12206.40
03/31/92 13677.44 11968.38
04/30/92 13717.17 12320.25
05/31/92 13627.77 12380.62
06/30/92 13015.68 12196.14
07/31/92 13388.15 12694.97
08/31/92 13253.65 12434.72
09/30/92 13377.80 12581.45
10/31/92 13595.08 12625.48
11/30/92 14246.90 13056.01
12/31/92 14427.77 13216.60
01/31/93 14331.66 13327.62
02/28/93 13851.09 13508.88
03/31/93 14662.72 13793.92
04/30/93 14566.61 13460.10
05/31/93 15719.97 13820.83
06/30/93 15730.65 13860.91
07/31/93 15880.16 13805.47
08/31/93 16916.06 14328.70
09/30/93 17289.84 14218.37
10/31/93 17823.80 14512.69
11/30/93 17428.67 14374.82
12/31/93 17987.72 14548.75
01/31/94 17835.98 15043.41
02/28/94 17789.29 14635.73
03/31/94 16645.36 13997.61
04/30/94 16823.06 14176.78
05/31/94 16600.01 14409.28
06/30/94 15684.31 14056.26
07/31/94 16106.94 14517.30
08/31/94 17046.12 15112.51
Let's say you invested $10,000 in Fidelity Select Consumer Products
Portfolio on June 29, 1990, when the fund started, and paid a 3% sales
charge. By August 31, 1994, your investment would have grown to $17,046 - a
70.46% increase. That compares to $10,000 invested in the S&P 500, which
would have grown to $15,113 over the same period - a 51.13% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST 31, 1994
% OF FUND'S
INVESTMENTS
Dial Corp. (The) 6.0
Premark International, Inc. 4.3
Clear Channel Communications 3.8
Philip Morris Companies, Inc. 3.1
Scientific-Atlanta, Inc. 2.9
Interface, Inc. Class A 2.7
Burlington Coat Factory Warehouse Corp. 2.5
Cygne Designs, Inc. 2.2
Mirage Resorts, Inc. 2.1
Galey & Lord, Inc. 2.1
TOP INDUSTRIES AS OF AUGUST 31, 1994
Row: 1, Col: 1, Value: 74.7
Row: 1, Col: 2, Value: 3.7
Row: 1, Col: 3, Value: 3.8
Row: 1, Col: 4, Value: 4.3
Row: 1, Col: 5, Value: 4.5
Row: 1, Col: 6, Value: 9.0
Conglomerates 9.0%
Hotels, Motels &
Tourist Courts 4.5%
Fabricated Rubber Products 4.3%
Apparel 3.8%
Radio Broadcasting 3.7%
All Others 74.7%*
* INCLUDES SHORT-TERM INVESTMENTS
CONSUMER PRODUCTS PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Mary English,
Portfolio Manager of Fidelity Select Consumer Products Portfolio
Q. MARY, HOW DID THE FUND PERFORM?
A. The fund returned -4.18% for the six months and 0.77% for the 12 months
ended August 31, 1994. Those results trailed the S&P 500's 3.26% and 5.47%
returns during the same periods.
Q. WHY DID THE FUND'S PERFORMANCE LAG THE MARKET?
A. Several of the fund's larger investments declined. Telefonos de Mexico
fell along with the Mexican stock market following the assassination of a
presidential candidate and the devaluing of the peso earlier this year. I
eliminated the position in July. In addition, Ford Motor Company was down
about 6% over the past six months. This investment had done well for the
fund last year and into this year, however, I started reducing it in July
because I expected rising interest rates would cause auto sales to slow.
The fund's gaming investments also fell. Mirage Resorts, which operates
casinos and hotels in Nevada and Arizona, dropped about 7% and Station
Casinos is down 39% year-to-date through August 31. Station was targeting
Missouri as a new growth market, and its stock fell after the state voted
down a bill that would have allowed slot machines and other games of
chance. The vote created negative sentiment in the market, as investors
worried about the attitudes of other state legislatures toward legalized
gambling. Those concerns, in turn, hurt other gambling stocks such as
Mirage Resorts.
Q. DIAL CORPORATION, PREMARK INTERNATIONAL AND CLEAR CHANNEL COMMUNICATIONS
WERE THE FUND'S TOP THREE INVESTMENTS ON AUGUST 31. HOW DID THESE STOCKS
DO?
A. All three investments did well. Clear Channel led the way, moving up
about 18%, with Premark up 14% and Dial up about 6% from the end of
February through the end of August. Clear Channel owns radio stations
nationwide. Last year it sold many of its less-profitable properties to
focus more of its resources on its larger-market stations that have greater
revenue-generating potential. Premark manufactures fabricated rubber
products and is best known for its Tupperware line. Dial is a diversified
company with interests in soap and toiletries, airline catering, convention
services and travel services. Both Premark and Dial have cut costs,
developed significant overseas businesses, and continued to post good
results. However, rising raw materials costs could put pressure on both
companies' earnings and stock prices. So, I'll likely reduce these two
investments over the next six months.
Q. THE FUND'S PERFORMANCE BEGAN TO IMPROVE DURING THE PAST THREE MONTHS AND
IT ACTUALLY POSTED A 5.83% RETURN FOR THE MONTH OF AUGUST. WHAT HAVE YOU
BEEN DOING TO TURN THE PERFORMANCE AROUND?
A. I've begun to restructure the fund by selectively buying undervalued
consumer products stocks and by searching for opportunities in other market
sectors. It's been a challenge because many of the stocks of companies that
make household and personal care products are expensive relative to
earnings. Takeover speculation surrounding certain companies has elevated
the prices of many consumer products stocks, making them unattractive and
risky to hold.
Q. IN WHAT SPECIFIC AREAS HAVE YOU FOUND OPPORTUNITIES?
A. Certain consumer nondurable sectors, namely tobacco and pharmaceuticals,
have been out of favor for a long time. Therefore, many of these stocks are
at attractive prices relative to company earnings and future prospects.
Philip Morris is now the fund's fourth largest investment, and I'm looking
to add RJR Nabisco because of its tobacco business. I've also purchased
textile manufacturing companies, such as Cygne Designs, which supplies
clothing to AnnTaylor Stores and other apparel retailers. In May, I added
clothing manufacturer Galey & Lord. I think the stocks of clothing
suppliers offer better value than those of retailers.
Q. WHAT IS YOUR OUTLOOK FOR CONSUMER PRODUCTS COMPANIES AND HOW WILL THAT
AFFECT YOUR STOCK-PICKING STRATEGY GOING FORWARD?
A. Companies that make consumer products - household and personal care
products, food, beverages and tobacco - rely heavily on being able to raise
the prices of those products. With inflation seemingly under control, I
don't expect pricing power to return for most of these companies any time
soon. The combination of stagnant pricing and rising raw materials costs
makes the near-term outlook generally unfavorable. What this means in terms
of stock selection is avoiding companies where the earnings are susceptible
to the double-whammy of rising costs with no way to pass those costs on to
the consumer through higher prices. I'll continue to work on a
stock-by-stock basis, looking for undervalued opportunities in the consumer
products groups.
FUND FACTS
START DATE: June 29, 1990
SIZE: as of August 31, 1994, more than
$7 million
MANAGER: Mary English, since February 1994;
manager, Fidelity Select Retailing Portfolio,
June 1993-January 1994; equity analyst,
specialty retail and advertising industries,
1991-1993; joined Fidelity in 1991
(checkmark)
CONSUMER PRODUCTS PORTFOLIO
INVESTMENTS AUGUST 31, 1994 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 91.3%
SHARES VALUE (NOTE 1)
AIR TRANSPORTATION - 1.1%
AIR TRANSPORTATION, REGIONAL - 1.1%
Atlantic Southeast Airlines, Inc. 3,000 $ 87,745
APPAREL STORES - 4.2%
GENERAL APPAREL STORES - 2.8%
Burlington Coat Factory Warehouse
Corp. (a) 8,000 193,000
Claire's Stores, Inc. 2,000 25,750
218,750
WOMEN'S CLOTHING STORES - 1.4%
AnnTaylor Stores Corp. (a) 1,000 41,375
Talbots, Inc. 2,000 71,250
112,625
TOTAL APPAREL STORES 331,375
AUTOS, TIRES, & ACCESSORIES - 1.6%
MOTOR VEHICLES & CAR BODIES - 1.6%
Ford Motor Co. 4,200 122,850
BEVERAGES - 0.7%
DISTILLED BEVERAGES - 0.4%
Canadaigua Wine Co. Class A (a) 1,000 30,500
SOFT DRINKS - 0.3%
COTT Corp. 2,000 21,762
TOTAL BEVERAGES 52,262
BROADCASTING - 3.7%
RADIO BROADCASTING - 3.7%
Clear Channel Communications, Inc. (a) 6,375 293,250
CELLULAR - 1.2%
CELLULAR & COMMUNICATION SERVICES - 1.2%
Rogers Cantel Mobile Communications,
Inc. Class B (non-vtg.) (a) 3,300 96,860
CHEMICALS & PLASTICS - 0.4%
INDUSTRIAL & ORGANIC CHEMICALS - 0.4%
Bush Boake Allen, Inc. (a) 1,400 30,100
COMMUNICATIONS EQUIPMENT - 1.6%
TELEPHONE INTERCONNECT SYSTEMS - 1.6%
General Instrument Corp. (a) 4,000 122,000
CONGLOMERATES - 9.0%
Dial Corp. (The) 19,800 465,300
Lancaster Colony Corp. 666 24,143
Mark IV Industries, Inc. 3,648 75,240
Standex International Corp. 5,000 138,125
702,808
CONSUMER DURABLES - 2.4%
CUTLERY, HAND TOOLS, HARDWARE - 1.1%
Syratech Corp. (a) 4,900 87,588
GLASS, PRESSED OR BLOWN - 1.1%
Libbey, Inc. 5,100 85,425
MANUFACTURING INDUSTRIES, NEC - 0.2%
Media Arts Group, Inc. (a) 2,000 17,000
TOTAL CONSUMER DURABLES 190,013
CONSUMER ELECTRONICS - 5.4%
APPLIANCES - 3.4%
Fedders Corp. (a) 18,100 138,013
Newell Co. 2,700 128,588
266,601
SHARES VALUE (NOTE 1)
ELECTRIC HOUSEWARES & FANS - 0.5%
Duracraft Corp. (a) 1,000 $ 35,750
RADIOS, TELEVISIONS, STEREOS - 0.4%
Harman International Industries, Inc. 1,000 30,500
WATCHES & CLOCKS - 1.1%
Fossil, Inc. (a) 3,800 88,350
TOTAL CONSUMER ELECTRONICS 421,201
ELECTRICAL EQUIPMENT - 4.7%
ALARMS & SIGNAL DEVICES - 0.9%
Sensormatic Electronics Corp. 2,000 69,250
ELECTRICAL EQUIPMENT - WHOLESALE - 1.0%
Duracell International, Inc. 1,700 78,200
TV & RADIO COMMUNICATION EQUIPMENT - 2.8%
Scientific-Atlanta, Inc. 5,000 223,750
TOTAL ELECTRICAL EQUIPMENT 371,200
ELECTRONICS - 1.0%
SEMICONDUCTORS - 1.0%
Motorola, Inc. 1,400 75,600
ENTERTAINMENT - 1.2%
AMUSEMENT - 0.9%
Scientific Games Holdings Corp. (a) 2,000 70,500
CRUISES - 0.3%
Royal Carribean Cruises Ltd. 900 26,438
TOTAL ENTERTAINMENT 96,938
FOODS - 0.8%
MEAT & FISH - 0.8%
IBP, Inc. 2,000 63,000
GENERAL MERCHANDISE STORES - 3.3%
CONVENIENCE STORES - 0.3%
Casey's General Stores, Inc. 2,000 22,375
DEPARTMENT STORES - 2.6%
Federated Department Stores, Inc. (a) 5,100 107,738
Penney (J.C.) Co., Inc. 1,000 52,125
Sears, Roebuck & Co. 1,000 47,288
207,151
GENERAL MERCHANDISE STORES - 0.4%
Lechters, Inc. (a) 2,000 31,750
TOTAL GENERAL MERCHANDISE STORES 261,276
HOUSEHOLD PRODUCTS - 10.7%
COSMETICS - 1.8%
Avon Products, Inc. 500 29,563
CCA Industries, Inc. (a) 21,800 109,000
138,563
FABRICATED RUBBER PRODUCTS - 4.3%
Premark International, Inc. 7,400 334,850
MANUFACTURED PRODUCTS - 2.3%
Paragon Trade Brands, Inc. (a) 5,000 127,500
Windmere Corp. 5,000 55,625
183,125
SOAPS & DETERGENTS - 2.3%
Colgate-Palmolive Co. 1,000 57,250
Stanhome, Inc. 3,500 122,938
180,188
TOTAL HOUSEHOLD PRODUCTS 836,726
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
INDUSTRIAL MACHINERY & EQUIPMENT - 1.2%
SPECIAL INDUSTRIAL MACHINERY - 1.2%
Nokia Corp. sponsored ADR (a) 1,700 $ 93,075
LEASING & RENTAL - 1.4%
EQUIPMENT RENTAL AND LEASING, NEC - 0.9%
Aaron Rents, Inc. Class B 5,000 66,875
VIDEO TAPE RENTAL - 0.5%
Movie Gallery, Inc. (a) 2,000 39,500
TOTAL LEASING & RENTAL 106,375
LEISURE DURABLES & TOYS - 3.2%
LEISURE DURABLES - 0.8%
ARCTCO, Inc. 2,000 60,500
SPORTING & ATHLETIC GOODS - 2.0%
Aldila, Inc. (a) 1,000 12,500
Callaway Golf Co. 4,000 145,500
158,000
TOYS & GAMES - 0.4%
SLM International, Inc. (a) 3,000 28,125
TOTAL LEISURE DURABLES & TOYS 246,625
LODGING & GAMING - 5.6%
HOTELS, MOTELS, & TOURIST COURTS - 4.5%
La Quinta Motor Inns, Inc. 3,000 96,750
Mirage Resorts, Inc. (a) 7,750 163,719
Showboat, Inc. 2,200 31,900
Station Casinos, Inc. (a) 5,000 59,375
351,744
RACING & GAMING - 1.1%
WMS Industries, Inc. (a) 4,400 84,700
TOTAL LODGING & GAMING 436,444
PRINTING - 1.4%
COMMERCIAL PRINTING, NEC - 1.4%
Devon Group, Inc. (a) 5,000 106,250
PUBLISHING - 2.5%
BOOK PUBLISHING & PRINTING - 1.7%
Harcourt General, Inc. 2,700 91,125
Houghton Mifflin Co. 1,000 43,250
134,375
GENERAL PUBLISHING - 0.4%
Score Board, Inc. (a) 6,000 29,250
NEWSPAPERS - 0.4%
Scripps (E.W.) Co. Class A 1,000 29,125
TOTAL PUBLISHING 192,750
RAILROADS - 1.4%
Santa Fe Pacific Corp. 5,000 107,500
RESTAURANTS - 0.7%
Quantum Restaurant Group, Inc. (a) 6,100 51,850
RETAIL & WHOLESALE, MISCELLANEOUS - 2.7%
LUMBER & BUILDING MATERIALS - RETAIL - 0.6%
Hechinger Co. Class A 1,000 14,563
Lowe's Companies, Inc. 1,000 36,125
50,688
MAIL ORDER - 1.7%
Lillian Vernon Corp. 6,500 129,188
SHARES VALUE (NOTE 1)
RETAIL, GENERAL - 0.4%
Petco Animal Supplies, Inc. (a) 2,000 $ 28,750
TOTAL RETAIL & WHOLESALE, MISCELLANEOUS 208,626
SERVICES - 3.3%
BUSINESS SERVICES - 1.8%
Catalina Marketing Corp. (a) 2,700 139,050
PERSONNEL SUPPLY SERVICES - 1.5%
Accustaff, Inc. (a) 1,000 14,000
Career Horizons, Inc. 1,000 17,500
Manpower, Inc. 2,000 53,000
Norrell Corp. (GA) (a) 2,000 35,500
120,000
TOTAL SERVICES 259,050
TEXTILES & APPAREL - 10.6%
APPAREL - 3.8%
Cygne Designs, Inc. (a) 6,300 168,525
Warnaco Group, Inc. Class A (a) 3,500 127,750
296,275
CARPETS & RUGS - 2.7%
Interface, Inc. Class A 16,000 212,000
COTTON MILLS - 2.1%
Galey & Lord, Inc. (a) 8,500 163,625
FOOTWEAR - 1.1%
Nine West Group, Inc. (a) 3,000 84,750
MEN'S AND BOYS' CLOTHING - 0.5%
Haggar Corp. 1,600 42,800
TEXTILE MILL PRODUCTS - 0.4%
Westpoint Stevens, Inc. Class A (a) 2,000 29,000
TOTAL TEXTILES & APPAREL 828,450
TOBACCO - 3.1%
TOBACCO MANUFACTURERS - 3.1%
Philip Morris Companies, Inc. 4,000 244,000
TRUCKING & FREIGHT - 1.2%
AIR COURIER SERVICES - 1.2%
Airborne Freight Corp. 3,000 91,500
TOTAL COMMON STOCKS
(Cost $6,399,024) 7,127,699
REPURCHASE AGREEMENTS - 8.7%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account, at 4.83% dated
8/31/94 due 9/1/94 $ 683,092 683,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $7,082,024) $ 7,810,699
LEGEND
1. Non-income producing
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $3,506,766 and $3,383,039, respectively (see Note 4 of Notes to
Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $2,349 for the period (see
Note 5 of Notes to Financial Statements).
INCOME TAX INFORMATION
At August 31, 1994, the aggregate cost of investment securities for income
tax purposes was $7,082,024. Net unrealized appreciation aggregated
$728,675, of which $1,001,746 related to appreciated investment securities
and $273,071 related to depreciated investment securities.
CONSUMER PRODUCTS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
AUGUST 31, 1994 (UNAUDITED)
ASSETS
Investment in securities, at value (including repurchase agreements of $683,000) (cost $7,082,024) - See $ 7,810,699
accompanying schedule
Cash 424
Receivable for investments sold 106,839
Receivable for fund shares sold 451,170
Dividends receivable 8,186
Redemption fees receivable 23
Prepaid expenses 6,460
Receivable from investment adviser for expense reductions 33
TOTAL ASSETS 8,383,834
LIABILITIES
Payable for investments purchased $ 269,098
Payable for fund shares redeemed 149,255
Accrued management fee 3,610
Other payables and accrued expenses 21,720
TOTAL LIABILITIES 443,683
NET ASSETS $ 7,940,151
Net Assets consist of:
Paid in capital $ 7,372,283
Accumulated net investment (loss) (43,440
)
Accumulated undistributed net realized gain (loss) on investments (117,367
)
Net unrealized appreciation (depreciation) on investments 728,675
NET ASSETS, for 546,904 shares outstanding $ 7,940,151
NET ASSET VALUE and redemption price per share ($7,940,151 (divided by) shares) $14.52
Maximum offering price per share (100/97 of $14.52) $14.97
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED AUGUST 31, 1994 (UNAUDITED)
INVESTMENT INCOME $ 41,523
Dividends
Interest 7,652
TOTAL INCOME 49,175
EXPENSES
Management fee $ 22,751
Transfer agent 41,673
Fees
Redemption fees (2,875
)
Accounting fees and expenses 22,516
Non-interested trustees' compensation 22
Custodian fees and expenses 5,772
Registration fees 6,460
Audit 9,339
Legal 106
Reports to shareholders 796
Miscellaneous 16
Total expenses before reductions 106,576
Expense reductions (13,891 92,685
)
NET INVESTMENT INCOME (LOSS) (43,510
)
REALIZED AND UNREALIZED GAIN (LOSS) (112,684
Net realized gain (loss) on investment securities )
Change in net unrealized appreciation (depreciation) on investment securities (215,277
)
NET GAIN (LOSS) (327,961
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ (371,471
)
OTHER INFORMATION $18,814
Sales Charges Paid to FDC
Deferred sales charges withheld $1,477
by FDC
Exchange fees withheld by FSC $2,453
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS YEAR ENDED
ENDED FEBRUARY 28,
AUGUST 31, 1994 1994
(UNAUDITED)
Operations $ (43,510 $ (120,101
Net investment income (loss) ) )
Net realized gain (loss) (112,684 1,327,222
)
Change in net unrealized appreciation (depreciation) (215,277 607,019
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (371,471 1,814,140
)
Distributions to shareholders from net realized gain (41,078 (829,580
) )
Share transactions 2,796,384 15,679,102
Net proceeds from sales of shares
Reinvestment of distributions 40,260 814,217
Cost of shares redeemed (2,862,092 (16,130,050
) )
Paid in capital portion of redemption fees 4,176 20,663
Net increase (decrease) in net assets resulting from share transactions (21,272 383,932
)
TOTAL INCREASE (DECREASE) IN NET ASSETS (433,821 1,368,492
)
NET ASSETS
Beginning of period 8,373,972 7,005,480
End of period (including undistributed net investment income (loss) of $(43,440) and $70, respectively)$ 7,940,151 $ 8,373,972
OTHER INFORMATION
Shares
Sold 195,497 1,044,542
Issued in reinvestment of distributions 2,888 54,101
Redeemed (201,093 (1,089,262
) )
Net increase (decrease) (2,708 9,381
)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
SIX MONTHS YEAR ENDED TEN MONTHS YEAR ENDED JUNE 29, 1990
ENDED FEBRUARY 28, ENDED APRIL 30, (COMMENCEMEN
AUGUST 31, 1994 FEBRUARY 28, T OF OPERATIONS)
TO APRIL 30,
SELECTED PER-SHARE DATAC (UNAUDITED) 1994 1993 1992 1991
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 15.24 $ 12.97 $ 13.81 $ 11.22 $ 10.00
Income from Investment Operations
Net investment income (loss) (.08) (.20) (.09) (.07) .05F
Net realized and unrealized gain (loss) (.57) 3.84 .20 2.86 1.18
Total from investment operations (.65) 3.64 .11 2.79 1.23
Less Distributions
From net investment income - - - - (.06)
From net realized gain (.08) (1.40) (.97) (.22) -
Total distributions (.08) (1.40) (.97) (.22) (.06)
Redemption fees added to paid in capital .01 .03 .02 .02 .05
Net asset value, end of period $ 14.52 $ 15.24 $ 12.97 $ 13.81 $ 11.22
TOTAL RETURND, E (4.18)% 28.43% .98% 25.27% 12.89%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 7,940 $ 8,374 $ 7,005 $ 7,553 $ 1,877
Ratio of expenses to average net assetsB 2.49%A 2.48% 2.47%A 2.48% 2.43%A
Ratio of expenses to average net assets before 2.86%A 2.62% 3.17%A 2.83% 3.11%A
expense reductionsB
Ratio of net investment income (loss) to average net assets (1.17)% (1.34)% (.80)% (.56)% .62%A
A A
Portfolio turnover rate 96%A 169% 215%A 140% 108%A
</TABLE>
A ANNUALIZED
B SEE NOTE 9 OF NOTES TO FINANCIAL STATEMENTS.
C NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
D TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
E THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
F INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND WHICH AMOUNTED TO
$.02 PER SHARE.
FOOD AND AGRICULTURE PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance: total
percentage change in value, the average annual percentage change, or the
growth of a hypothetical $10,000 investment. Each performance figure
includes changes in a fund's share price, plus reinvestment of any
dividends (income) and capital gains (the profits the fund earns when it
sells stocks that have grown in value).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 6 PAST 1 PAST 5 LIFE OF
AUGUST 31, 1994 MONTH YEAR YEARS FUND
S
FOOD AND AGRICULTURE 3.66% 10.96% 89.49% 379.17%
FOOD AND AGRICULTURE
(INCL. 3% SALES CHARGE) 0.55% 7.63% 83.80% 364.79%
S&P 500 3.26% 5.47% 58.16% 233.54%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one year, five years, or
since the fund started on July 29, 1985. You can compare these figures to
the performance of the S&P 500 - a common proxy for the U.S. stock market.
This benchmark includes reinvested dividends and capital gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
AUGUST 31, 1994 YEAR YEARS FUND
FOOD AND AGRICULTURE 10.96% 13.64% 18.79%
FOOD AND AGRICULTURE
(INCL. 3% SALES CHARGE) 7.63% 12.95% 18.39%
S&P 500 5.47% 9.60% 14.16%
AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and
show you what would have happened if the fund had performed at a constant
rate each year.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of growth in the long run
and volatility in the short run. Unlike the broader
market, however, some sectors may not have
a history of growth in the long run. And, as
with all stock funds, the share price and return
of a fund that invests in a sector will vary. That
means if you sell your shares during a sector
downturn, you might lose money. But if you
can identify a sector that is about to
experience rapid growth you may have the
potential for above-average gains.
(checkmark)
$10,000 OVER LIFE OF FUND
Select Food & Agr. (009)Standard & Poor
07/29/85 9700.00 10000.00
07/31/85 9583.60 9926.31
08/31/85 9651.50 9841.93
09/30/85 9467.20 9533.88
10/31/85 10194.70 9974.35
11/30/85 10864.00 10658.59
12/31/85 11164.70 11174.46
01/31/86 11116.20 11237.04
02/28/86 12328.70 12077.57
03/31/86 13143.50 12751.50
04/30/86 13628.50 12607.41
05/31/86 14152.30 13278.12
06/30/86 14947.70 13502.52
07/31/86 14103.80 12747.73
08/31/86 14782.80 13693.61
09/30/86 13589.70 12561.15
10/31/86 13890.40 13285.93
11/30/86 14055.30 13608.78
12/31/86 13677.00 13261.75
01/31/87 15345.40 15048.11
02/28/87 16538.50 15642.51
03/31/87 17042.90 16094.58
04/30/87 16984.70 15951.34
05/31/87 16878.00 16090.11
06/30/87 17857.70 16902.66
07/31/87 18507.60 17759.63
08/31/87 19157.50 18422.06
09/30/87 18963.50 18018.62
10/31/87 14685.80 14137.41
11/30/87 14035.90 12972.49
12/31/87 14704.52 13959.69
01/31/88 15279.79 14547.40
02/29/88 16036.71 15225.31
03/31/88 16147.73 14754.84
04/30/88 16198.19 14918.62
05/31/88 16319.30 15048.41
06/30/88 16985.39 15739.14
07/31/88 17106.50 15679.33
08/31/88 17096.41 15146.23
09/30/88 17782.69 15791.46
10/31/88 18610.26 16230.46
11/30/88 18176.29 15998.37
12/31/88 18641.57 16278.34
01/31/89 19603.00 17469.91
02/28/89 19248.79 17034.91
03/31/89 19977.45 17431.83
04/30/89 21009.72 18336.54
05/31/89 22305.12 19079.17
06/30/89 22743.39 18970.42
07/31/89 24912.89 20683.44
08/31/89 24528.81 21088.84
09/30/89 24632.62 21002.38
10/31/89 24383.49 20515.12
11/30/89 25307.34 20933.63
12/31/89 25887.07 21436.04
01/31/90 24086.42 19997.68
02/28/90 24430.99 20255.65
03/31/90 25486.92 20792.42
04/30/90 25386.89 20272.61
05/31/90 27598.79 22249.19
06/30/90 28494.04 22097.90
07/31/90 28482.81 22027.18
08/31/90 26405.00 20035.93
09/30/90 25562.64 19060.18
10/31/90 26169.14 18978.22
11/30/90 27247.35 20204.21
12/31/90 28301.55 20767.91
01/31/91 29113.81 21673.39
02/28/91 31306.92 23223.04
03/31/91 32838.61 23785.03
04/30/91 32339.65 23842.12
05/31/91 33523.23 24872.10
06/30/91 32142.06 23732.96
07/31/91 33487.21 24838.91
08/31/91 34820.56 25427.59
09/30/91 34206.98 25002.95
10/31/91 34218.78 25337.99
11/30/91 33982.79 24316.87
12/31/91 37949.47 27098.72
01/31/92 37383.79 26594.68
02/29/92 37174.74 26940.42
03/31/92 36350.82 26415.08
04/30/92 35932.71 27191.68
05/31/92 36252.44 27324.92
06/30/92 35856.08 26917.78
07/31/92 37241.02 28018.72
08/31/92 37075.85 27444.33
09/30/92 37698.43 27768.18
10/31/92 38105.02 27865.36
11/30/92 39566.20 28815.57
12/31/92 40236.31 29170.00
01/31/93 40249.32 29415.03
02/28/93 40145.25 29815.08
03/31/93 41237.99 30444.17
04/30/93 39636.78 29707.43
05/31/93 40884.76 30503.58
06/30/93 40477.81 30592.05
07/31/93 39975.91 30469.68
08/31/93 41888.57 31624.48
09/30/93 41752.92 31380.97
10/31/93 43326.45 32030.56
11/30/93 42824.55 31726.27
12/31/93 43784.13 32110.15
01/31/94 45108.33 33201.90
02/28/94 44837.79 32302.13
03/31/94 42744.70 30893.75
04/30/94 42267.09 31289.19
05/31/94 41959.96 31802.34
06/30/94 42281.71 31023.18
07/31/94 43700.37 32040.74
08/31/94 46479.17 33354.41
Let's say you invested $10,000 in Fidelity Select Food and Agriculture
Portfolio on July 29, 1985, when the fund started, and paid a 3% sales
charge. By August 31, 1994, your investment would have grown to $46,479 - a
364.79% increase. That compares to $10,000 invested in the S&P 500, which
would have grown to $33,354 over the same period - a 233.54% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST 31, 1994
% OF FUND'S
INVESTMENTS
Philip Morris Companies, Inc 9.6
RJR Nabisco Holdings Corp. 7.9
RalCorp Holdings, Inc. 6.4
Dean Foods Co. 6.1
Tyson Foods, Inc. 4.8
Dr. Pepper/Seven-Up Companies, Inc. 4.5
GoodMark Foods, Inc. 4.3
IBP, Inc. 4.1
Pioneer Hi-Bred International, Inc. 3.9
Ralston Purina Co. 3.0
TOP INDUSTRIES AS OF AUGUST 31, 1994
Row: 1, Col: 1, Value: 49.5
Row: 1, Col: 2, Value: 7.9
Row: 1, Col: 3, Value: 8.300000000000001
Row: 1, Col: 4, Value: 8.4
Row: 1, Col: 5, Value: 10.9
Row: 1, Col: 6, Value: 15.0
Meat & Fish 15.0%
Tobacco Manufacturers 10.9%
Soft Drinks 8.4%
Food 8.3%
Cigarettes 7.9%
All Others 49.5%*
* INCLUDES SHORT-TERM INVESTMENTS
FOOD AND AGRICULTURE PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
William Mankivsky,
Portfolio Manager of Fidelity Select Food and Agriculture Portfolio
Q. BILL, HOW DID THE FUND DO?
A. Pretty well. For the six months ended August 31, 1994, the fund had a
total return of 3.66%, and for the year ended August 31, the fund returned
10.96%. The S&P 500 returned 3. 26% and 5. 47% for six months and one year,
respectively.
Q. WHAT HAS YOUR STRATEGY BEEN?
A. I've stayed away from major brand packaged food companies. They had a
tremendous run in the '80s and early '90s, and I think the number of areas
in which things can get worse is significant. Instead, I've kept an eye on
companies that are benefiting from favorable commodity trends.
Q. WHAT ARE SOME EXAMPLES?
A. Dean Foods, a vegetable and dairy company, is one. This company bought
Bird's Eye, and with last year's floods greatly reducing the amount of
vegetables available, Dean has taken advantage of a better pricing
situation. Another is Tyson Foods, which had been hurt by higher feed costs
earlier in the year, but now is benefiting from lower feed costs. The
company is also one of the few in the industry that has grown sales volumes
close to 10%. IBP, a meat processing company, has increased its profit
margin per head slaughtered because cattle prices have dropped due to a
substantial growth in the size of the national herd.
Q. IS THIS YOUR ONLY STRATEGY?
A. No, I also engage in what I call niche plays, special situations where
something is compelling that is overlooked by others. One example is
RalCorp. This is a human foods spin-off from Ralston Purina, with
businesses in cereals (Chex is one example), cookies, crackers and Beech
Nut baby food. In addition, the company owns two ski resorts in Colorado -
Breckenridge and Keystone. If it sells these operations at some point -
which I anticipate, because the resorts don't fit the other businesses -
the company's value would be increased greatly. GoodMark Foods, the maker
of Slim Jims and a major meat snack manufacturer, is another example. It's
generating a lot of cash because competition is weak and beef prices are
low.
Q. WHAT ABOUT DISAPPOINTMENTS?
A. McDonald's is moving to be even more aggressive in value pricing,
offering its meals for even less. It has such a large market share of the
U. S. fast food market that it has the power to govern price. I am
disappointed that the company has not used its dominance of the U.S. fast
food market to manage prices slowly upward so that its earnings could
increase. Another disappointment was Chiquita, whose stock went up earlier
in the year in anticipation of big profits due to a recovery in banana
prices, but has corrected recently. Pioneer Hi-Bred is a seed company with
a great deal of potential that hasn't been reflected in an increase in the
stock price. And RJR Nabisco has not increased in price as much as I
expected.
Q. RJR IS ONE OF THE TOBACCO COMPANIES. YOU'VE INCREASED THE FUND'S STAKE
IN THESE COMPANIES . . .
A. Yes, I have. Tobacco companies have gotten a lot of attention from
Congress and the media. I tend to be a contrarian in my stock picking. That
is, I think it's a good time to buy a stock when bad news about it has
reached a peak. I don't believe the most negative potential situation for
the major tobacco companies - an increased excise tax - will occur, because
it looks like there will be no significant health care legislation this
year. Therefore, investments such as RJR Nabisco and Philip Morris could do
better than expected.
Q. WHAT'S YOUR OUTLOOK FOR THE NEXT SIX MONTHS?
A. I see a mixed bag. On the one hand, the industry has been affected by
attempts on the part of wholesalers and grocery stores to lower inventories
of packaged foods. In situations where this has already occurred, there is
a better outlook for an increase in sales volumes. Pricing is going to be
tough for all major packaged food companies because the U. S. consumer is
conditioned to expect value in some form, such as larger packages at
reduced prices. The corn crop is expected to be very good, leading to
stable prices, which should benefit meat and poultry companies. I'll
continue to be wary of larger packaged food companies, because, in general,
they haven't been aggressive enough trimming costs and growing profits.
FUND FACTS
START DATE: December 16, 1985
SIZE: as of August 31, 1994, more than
$101 million
MANAGER: William Mankivsky, since April
1993; manager, Fidelity Select Energy
Services Portfolio, since August 1991; equity
analyst, energy service, since 1991, and food
and agriculture since 1993; joined Fidelity in
1991
(checkmark)
FOOD AND AGRICULTURE PORTFOLIO
INVESTMENTS AUGUST 31, 1994 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 83.7%
SHARES VALUE (NOTE 1)
AGRICULTURE - 6.1%
CROPS - 6.1%
DEKALB Genetics Corp. Class B 70,500 $ 2,317,688
Pioneer Hi-Bred International, Inc. 128,100 4,003,125
6,320,813
BEVERAGES - 12.2%
DISTILLED BEVERAGES - 0.7%
Seagram Co. Ltd. 11,600 376,541
Universal Foods Corp. 9,894 319,082
695,623
MALT BEVERAGE - 3.1%
Coors (Adolph) Co. Class B 20,000 407,500
Fomento Economico Mexicano SA
de CV Class B 56,000 308,384
Greenalls Group PLC 50,000 352,947
Guinness PLC Ord. 90,000 687,095
Quilmes Industries SA 39,000 887,250
Whitbread Class A 65,000 579,523
3,222,699
SOFT DRINKS - 8.4%
Celestial Seasonings, Inc. (a) 31,000 558,000
Coca-Cola Company (The) 12,000 552,000
Dr. Pepper/Seven-Up Companies, Inc. (a) 200,000 4,625,000
Panamerican Beverages, Inc. Class A 48,000 1,578,000
PepsiCo, Inc. 30,000 993,750
Serm Suk Co. Ltd. 40,000 325,878
8,632,628
TOTAL BEVERAGES 12,550,950
CHEMICALS & PLASTICS - 0.3%
AGRICULTURAL CHEMICALS - 0.3%
Potash Corp. of Saskatchewan 10,000 340,149
FOODS - 46.2%
BAKERY PRODUCTS - 0.7%
Grupo Industries Bimbo SA de CV,
Series A Ord. 82,200 696,219
CANDY - 0.7%
Hershey Foods Corp. 15,000 720,000
CEREAL BREAKFAST FOODS - 6.4%
RalCorp Holdings, Inc. (a) 382,466 6,645,347
DAIRY - 6.1%
Dean Foods Co. 196,700 6,294,400
FOOD - 8.3%
Campbell Soup Co. 4,000 155,000
Chiquita Brands International, Inc. 122,000 1,997,750
Dole Food, Inc. 62,500 1,914,063
General Mills, Inc. 5,000 270,000
Hazlewood Foods Ord. 195,000 406,963
Heinz (H.J.) Co. 5,000 183,125
Hillsdown Holdings PLC 96,734 270,166
Kellogg Co. 5,000 283,125
Michael Foods, Inc. 38,300 483,538
Nestle SA (Reg.) 1,780 1,640,300
Perkins Foods PLC 400,000 487,988
Pet, Inc. 5,000 101,250
Sara Lee Corp. 5,000 115,625
Sylvan Foods Holdings, Inc. (a) 20,900 209,000
8,517,893
SHARES VALUE (NOTE 1)
GENERAL FOOD PREPARATIONS - 3.3%
CPC International, Inc. 35,500 $ 1,899,250
Herdez SA de CV Class B 848,846 871,765
McCormick & Co., Inc. (non-vtg) 32,000 632,000
3,403,015
GRAIN MILL PRODUCTS - 5.0%
Archer-Daniels-Midland Co. 65,591 1,688,968
Quaker Oats Co. 5,000 401,875
Ralston Purina Co. 76,800 3,110,400
5,201,243
MEAT & FISH - 15.0%
ConAgra, Inc. 20,900 684,475
GoodMark Foods, Inc. 321,800 4,424,750
Hormel (George A) & Co. 53,700 1,235,100
IBP, Inc. 134,100 4,224,150
Tyson Foods, Inc. 204,000 4,947,000
15,515,475
SUGAR AND CANDIES - 0.7%
Tate & Lyle PLC 27,574 189,777
Tootsie Roll Industries, Inc. 8,452 532,476
722,253
TOTAL FOODS 47,715,845
RESTAURANTS - 0.1%
RESTAURANTS - 0.1%
ARK Restaurants Corp. (a) 11,700 81,900
TOBACCO - 18.8%
CIGARETTES - 7.9%
RJR Nabisco Holdings Corp. (a) 1,167,200 8,170,400
TOBACCO MANUFACTURERS - 10.9%
Philip Morris Companies, Inc. 162,000 9,882,000
UST, Inc. 44,600 1,393,750
11,275,750
TOTAL TOBACCO 19,446,150
TOTAL COMMON STOCKS
(Cost $76,629,353) 86,455,807
REPURCHASE AGREEMENTS - 16.3%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account, at 4.83% dated
8/31/94 due 9/1/94 $ 16,839,259 16,837,000
TOTAL INVESTMENTS IN SECURITIES - 100%
(Cost $93,466,353) $ 103,292,807
LEGEND
1. Non-income producing
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $50,107,113 and $56,258,529, respectively (see Note 4 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $61,790 for the period (see
Note 5 of Notes to Financial Statements).
The maximum loan and average daily loan balances during the periods for
which loans were outstanding amounted to $3,357,000 and $3,207,500,
respectively. The weighted average interest rate paid was 4.2% (see Note 8
of Notes to Financial Statements).
INCOME TAX INFORMATION
At August 31, 1994, the aggregate cost of investment securities for income
tax purposes was $93,520,652. Net unrealized appreciation aggregated
$9,772,155, of which $10,905,127 related to appreciated investment
securities and $1,132,972 related to depreciated investment securities.
FOOD AND AGRICULTURE PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
AUGUST 31, 1994 (UNAUDITED)
ASSETS
Investment in securities, at value (including repurchase agreements of $16,837,000) (cost $93,466,353) - See $ 103,292,807
accompanying schedule
Cash 823
Receivable for investments sold 1,089,695
Receivable for fund shares sold 4,901,249
Dividends receivable 136,805
Redemption fees receivable 630
Other receivables 2,706
Prepaid expenses 7,936
TOTAL ASSETS 109,432,651
LIABILITIES
Payable for investments purchased $ 7,706,722
Payable for fund shares redeemed 522,499
Accrued management fee 46,719
Other payables and accrued expenses 101,628
TOTAL LIABILITIES 8,377,568
NET ASSETS $ 101,055,083
Net Assets consist of:
Paid in capital $ 89,787,038
Undistributed net investment income 74,139
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 1,367,485
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies 9,826,421
NET ASSETS, for 3,180,007 shares outstanding $ 101,055,083
NET ASSET VALUE and redemption price per share ($101,055,083 (divided by) shares) $31.78
Maximum offering price per share (100/97 of $31.78) $32.76
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED AUGUST 31, 1994 (UNAUDITED)
INVESTMENT INCOME $ 656,232
Dividends
Interest 112,644
TOTAL INCOME 768,876
EXPENSES
Management fee $ 248,186
Transfer agent 394,912
Fees
Redemption fees (18,549
)
Accounting fees and expenses 40,074
Non-interested trustees' compensation 238
Custodian fees and expenses 7,804
Registration fees 7,936
Audit 15,596
Legal 1,871
Interest 1,505
Reports to shareholders 7,546
Miscellaneous 246
Total expenses before reductions 707,365
Expense reductions (11,682 695,683
)
NET INVESTMENT INCOME 73,193
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 1,701,289
Foreign currency transactions 1,035 1,702,324
Change in net unrealized appreciation (depreciation) on:
Investment securities 1,233,567
Assets and liabilities in foreign currencies (33 1,233,534
)
NET GAIN (LOSS) 2,935,858
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 3,009,051
OTHER INFORMATION $77,927
Sales Charges Paid to FDC
Deferred sales charges withheld $4,285
by FDC
Exchange fees withheld by FSC $13,695
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETSZZ SIX MONTHS YEAR ENDED
ENDED FEBRUARY 28,
AUGUST 31, 1994 1994
(UNAUDITED)
Operations $ 73,193 $ 314,450
Net investment income
Net realized gain (loss) 1,702,324 12,506,767
Change in net unrealized appreciation (depreciation) 1,233,534 (1,004,065
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 3,009,051 11,817,152
Distributions to shareholders - (310,254
From net investment income )
From net realized gain (2,188,288 (12,323,186
) )
TOTAL DISTRIBUTIONS (2,188,288 (12,633,440
) )
Share transactions 33,072,676 124,680,275
Net proceeds from sales of shares
Reinvestment of distributions 2,143,645 12,440,857
Cost of shares redeemed (30,003,904 (149,706,361
) )
Paid in capital portion of redemption fees 11,563 34,844
Net increase (decrease) in net assets resulting from share transactions 5,223,980 (12,550,385
)
TOTAL INCREASE (DECREASE) IN NET ASSETS 6,044,743 (13,366,673
)
NET ASSETS
Beginning of period 95,010,340 108,377,013
End of period (including undistributed net investment income of $74,139 and $946, respectively) $ 101,055,083 $ 95,010,340
OTHER INFORMATION
Shares
Sold 1,098,695 3,975,362
Issued in reinvestment of distributions 73,665 414,802
Redeemed (1,009,929 (4,884,544
) )
Net increase (decrease) 162,431 (494,380
)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS YEAR ENDED TEN MONTHS YEARS ENDED APRIL 30,
ENDED FEBRUARY 28, ENDED
AUGUST 31, 1994 FEBRUARY 28,
SELECTED PER-SHARE DATAC (UNAUDITED) 1994 1993 1992 1991 1990
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 31.49 $ 30.86 $ 29.22 $ 27.87 $ 22.84 $ 20.76
Income from Investment Operations
Net investment income .03 .09 .05 .13 .21 .19
Net realized and unrealized gain (loss) 1.05 3.29 3.26 2.89 5.78 4.07
Total from investment operations 1.08 3.38 3.31 3.02 5.99 4.26
Less Distributions
From net investment income - (.06) (.10) (.11) (.27) (.04)
From net realized gain (.79) (2.70) (1.57) (1.59) (.79) (2.17)
Total distributions (.79) (2.76) (1.67) (1.70) (1.06) (2.21)
Redemption fees added to paid in capital - .01 - .03 .10 .03
Net asset value, end of period $ 31.78 $ 31.49 $ 30.86 $ 29.22 $ 27.87 $ 22.84
TOTAL RETURND, E 3.66% 11.69% 11.72% 11.11% 27.39% 20.83%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 101,055 $ 95,010 $ 108,377 $ 108,922 $ 64,490 $ 25,965
Ratio of expenses to average net assetsB 1.71%A 1.64% 1.67%A 1.83% 2.22% 2.53%
Ratio of expenses to average net assets before 1.74%A 1.65% 1.67%A 1.83% 2.22% 2.58%
expense reductionsB
Ratio of net investment income to average net .18%A .29% .21%A .46% .85% .82%
assets
Portfolio turnover rate 129%A 96% 515%A 63% 124% 267%
</TABLE>
A ANNUALIZED
B SEE NOTE 9 OF NOTES TO FINANCIAL STATEMENTS.
C NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
D TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
E THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
LEISURE PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance: total
percentage change in value, the average annual percentage change, or the
growth of a hypothetical $10,000 investment. Each performance figure
includes changes in a fund's share price, plus reinvestment of any
dividends (income) and capital gains (the profits the fund earns when it
sells stocks that have grown in value).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 6 PAST 1 PAST 5 PAST 10
AUGUST 31, 1994 MONTH YEAR YEARS YEARS
S
LEISURE -3.65% 6.39% 55.13% 431.93%
LEISURE
(INCL. 3% SALES CHARGE) -6.54% 3.20% 50.47% 415.98%
S&P 500 3.26% 5.47% 58.16% 300.76%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one year, five years, or 10
years. You can compare these figures to the performance of the S&P 500 - a
common proxy for the U.S. stock market. This benchmark includes reinvested
dividends and capital gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
AUGUST 31, 1994 YEAR YEARS YEARS
LEISURE 6.39% 9.18% 18.19%
LEISURE
(INCL. 3% SALES CHARGE) 3.20% 8.52% 17.83%
S&P 500 5.47% 9.60% 14.89%
AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and
show you what would have happened if the fund had performed at a constant
rate each year.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of growth in the long run
and volatility in the short run. Unlike the broader
market, however, some sectors may not have
a history of growth in the long run. And, as
with all stock funds, the share price and return
of a fund that invests in a sector will vary. That
means if you sell your shares during a sector
downturn, you might lose money. But if you
can identify a sector that is about to
experience rapid growth you may have the
potential for above-average gains.
(checkmark)
$10,000 OVER TEN YEARS
Select Leisure (062)Standard & Poor's
08/31/84 9699.99 10000.00
09/30/84 9584.73 10002.00
10/31/84 9726.59 10041.01
11/30/84 9575.86 9928.55
12/31/84 10081.26 10190.66
01/31/85 11473.30 10984.51
02/28/85 12067.36 11119.62
03/31/85 12510.69 11127.41
04/30/85 12368.82 11117.39
05/31/85 13095.88 11759.98
06/30/85 13863.32 11944.61
07/31/85 13792.27 11926.69
08/31/85 14103.11 11825.32
09/30/85 13135.07 11455.18
10/31/85 13836.68 11984.41
11/30/85 15000.09 12806.54
12/31/85 15772.74 13426.38
01/31/86 16314.49 13501.57
02/28/86 18010.77 14511.49
03/31/86 19431.74 15321.23
04/30/86 20017.89 15148.10
05/31/86 21323.40 15953.98
06/30/86 21820.74 16223.60
07/31/86 19732.21 15316.70
08/31/86 20381.94 16453.20
09/30/86 18397.15 15092.52
10/31/86 19340.59 15963.36
11/30/86 19100.28 16351.27
12/31/86 18254.74 15934.31
01/31/87 20177.23 18080.66
02/28/87 22348.93 18794.85
03/31/87 22615.94 19338.02
04/30/87 22099.72 19165.91
05/31/87 23007.56 19332.65
06/30/87 23995.51 20308.95
07/31/87 25766.69 21338.62
08/31/87 26300.71 22134.55
09/30/87 25731.09 21649.80
10/31/87 18388.25 16986.43
11/30/87 17106.59 15586.75
12/31/87 19294.59 16772.90
01/31/88 19591.59 17479.04
02/29/88 21304.24 18293.57
03/31/88 22017.02 17728.29
04/30/88 22155.62 17925.08
05/31/88 21581.43 18081.03
06/30/88 23022.88 18910.95
07/31/88 23214.32 18839.08
08/31/88 22307.51 18198.55
09/30/88 23859.16 18973.81
10/31/88 23859.16 19501.29
11/30/88 22942.28 19222.42
12/31/88 24312.57 19558.81
01/31/89 26388.15 20990.51
02/28/89 25964.98 20467.85
03/31/89 27184.13 20944.75
04/30/89 28725.71 22031.78
05/31/89 30156.45 22924.07
06/30/89 30442.40 22793.40
07/31/89 32997.08 24851.65
08/31/89 33261.70 25338.74
09/30/89 33475.44 25234.85
10/31/89 31063.26 24649.40
11/30/89 31429.66 25152.25
12/31/89 31899.99 25755.90
01/31/90 28031.36 24027.68
02/28/90 27782.82 24337.64
03/31/90 27998.94 24982.59
04/30/90 26907.51 24358.02
05/31/90 29133.60 26732.93
06/30/90 28798.60 26551.15
07/31/90 27804.43 26466.18
08/31/90 24594.98 24073.64
09/30/90 22260.83 22901.25
10/31/90 22001.48 22802.78
11/30/90 23752.09 24275.84
12/31/90 24790.92 24953.13
01/31/91 26177.29 26041.09
02/28/91 28185.89 27903.03
03/31/91 28655.29 28578.28
04/30/91 28731.70 28646.87
05/31/91 29725.08 29884.41
06/30/91 28054.89 28515.71
07/31/91 29397.60 29844.54
08/31/91 29703.25 30551.86
09/30/91 30467.39 30041.64
10/31/91 31384.36 30444.20
11/30/91 29877.91 29217.30
12/31/91 32956.31 32559.76
01/31/92 33698.62 31954.14
02/29/92 34877.58 32369.55
03/31/92 34168.02 31738.34
04/30/92 34550.09 32671.45
05/31/92 34757.50 32831.54
06/30/92 34222.60 32342.35
07/31/92 34386.35 33665.15
08/31/92 33895.11 32975.02
09/30/92 34561.01 33364.12
10/31/92 34823.00 33480.90
11/30/92 37191.83 34622.59
12/31/92 38305.30 35048.45
01/31/93 39255.01 35342.86
02/28/93 39047.61 35823.52
03/31/93 41078.04 36579.40
04/30/93 40152.31 35694.18
05/31/93 43036.55 36650.78
06/30/93 44194.79 36757.07
07/31/93 45375.74 36610.04
08/31/93 48498.44 37997.56
09/30/93 50917.12 37704.98
10/31/93 53733.23 38485.47
11/30/93 51734.70 38119.86
12/31/93 53456.46 38581.11
01/31/94 54012.07 39892.87
02/28/94 53551.03 38811.77
03/31/94 50311.96 37119.58
04/30/94 50413.41 37594.71
05/31/94 49879.86 38211.26
06/30/94 47771.71 37275.09
07/31/94 49619.60 38497.71
08/31/94 51597.62 40076.11
Let's say you invested $10,000 in Fidelity Select Leisure Portfolio on
August 31, 1984 and paid a 3% sales charge. By August 31, 1994, your
investment would have grown to $51,598 - a 415.98% increase. That compares
to $10,000 invested in the S&P 500, which would have grown to $40,076 over
the same period - a 300.76% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST 31, 1994
% OF FUND'S
INVESTMENTS
Capital Cities/ABC, Inc. 5.9
La Quinta Motor Inns, Inc. 4.1
Brunswick Corp. 3.0
Blockbuster Entertainment Corp. 2.6
Cedar Fair LP (depositary units) 2.2
Carmike Cinemas, Inc. Class A 2.2
Infinity Broadcasting Corp. 2.0
Tele-Communications, Inc. Class A 1.8
Time Warner, Inc. 1.6
International Game Technology Corp. 1.5
TOP INDUSTRIES AS OF AUGUST 31, 1994
Row: 1, Col: 1, Value: 58.0
Row: 1, Col: 2, Value: 4.5
Row: 1, Col: 3, Value: 5.5
Row: 1, Col: 4, Value: 7.7
Row: 1, Col: 5, Value: 11.0
Row: 1, Col: 6, Value: 13.3
Television Broadcasting 13.3%
Hotels, Motels, & Tourist
Courts 11.0%
Cable TV Operators 7.7%
Radio Broadcasting 5.5%
Movie Theaters 4.5%
All Others 58.0%*
* INCLUDES SHORT-TERM INVESTMENTS
LEISURE PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Deborah Wheeler,
Portfolio Manager of
Fidelity Select Leisure
Portfolio
Q. DEBORAH, HOW DID THE FUND PERFORM?
A. The fund posted a loss of 3.65% for the six months ended August 31,
1994. That lagged the S&P 500's 3.26% gain during the same period.
Q. WHAT FACTORS HURT THE FUND'S PERFORMANCE?
A. The fund invests in some very volatile sectors of the market. Many of
the stocks in sub-groups such as hotels, broadcasters, cable, airlines, and
gaming were up 50% to 100% or even more during 1993. But several of the
stocks in groups fell sharply during the past six months. For example,
cable stocks declined 20% to 40%; gaming stocks declined 30% to 70%; and
airline stocks fell 30% to 40%. Even so, the fund managed to post a 6.39%
gain for the 12 months through August, slightly ahead of the S&P 500's
5.47% gain.
Q. DID ANY SECTORS HELP THE FUND DURING THE MOST RECENT
SIX MONTHS?
A. A large portion of the fund's investments was in sectors that matched or
slightly outperformed the S&P 500. For example, roughly 25% of the fund's
investments was in broadcasters. Entertainment stocks, which amounted to
11% of the fund's investments, generally matched the market or lagged it by
a small margin. The fund's holdings in that sector included movie theatre
chains such as Carmike Cinemas and AMC Entertainment, and Cedar Fair, which
owns amusement parks in the midwest.
Q. HOW DID YOU ALTER THE FUND'S STRATEGY DURING THE PERIOD?
A. For one thing, I dropped a lot of airline investments, which have
declined from 15% of the fund's investments in mid-1993 to around 3%
recently. I had expected that major airlines such as United and American
would be able to lower their labor costs and other expenses significantly,
but that hasn't occurred. At the same time, shares of many regional
airlines climbed to levels that were less attractive so I sold them. In
addition, oil prices have moved higher, which will boost costs for the
airlines. I also increased the fund's investment in companies that
manufacture durable goods in the leisure industry such as boats, golf
clubs, camping equipment, toys and motorcycles. I found a number of
attractive companies in that group.
Q. WHAT COMPANIES DID YOU LIKE?
A. Among leisure durable companies, I like Brunswick, which manufactures
boats, among other things. Boat orders, which usually lag auto sales, are
beginning to improve. Brunswick stock did well in the last boat cycle, in
the mid-'80s. I also continued to hold Harley Davidson, which benefits from
strong demand for its motorcycles. I purchased shares of Coleman, the
camping equipment manufacturer, for the fund. The company's business has
improved significantly in the U.S. and Japan, and the stock was at an
attractive level. I also instituted positions in Cobra and Callaway, two
leading golf club manufacturers. And I increased the fund's investment in
Toys "R" Us when that stock temporarily declined. Among cable stocks, I
increased the fund's holdings in Tele-Communications Inc. and Time Warner
as their shares declined to attractive levels. And I invested 4% of the
fund's assets in La Quinta Motor Inns, which is primarily a chain of budget
motels. The company is renovating all of its lobbies; revenues at the
renovated motels should increase sharply in 1994 and 1995.
Q. WHAT ABOUT BROADCASTERS?
A. Broadcasters remained the fund's biggest stake. Capital Cities/ABC
accounted for about 6% of the fund's investments. The fund also held shares
of Infinity, which owns radio stations. Such companies are likely to
benefit from increased advertising as the economy grows, as well as
structural changes in television and radio. Federal regulations have been
changed to let companies own more radio stations, and I expect that during
the next two years similar changes will occur in the television industry.
Cap Cities and Infinity, as well as other broadcasters, could take
advantage of those changes to make acquisitions that will give them
economies of scale and access to wider markets.
Q. WHAT IS YOUR STRATEGY GOING FORWARD?
A. If the economy slows down as interest rates move higher, many of the
economically sensitive companies that this fund generally holds will
suffer. But some of those firms' stocks already have fallen. I will
increase the fund's investments in areas that have suffered the sharpest
declines, such as gaming and cable. And I will continue to look for sectors
such as the boat industry, where prospects for growth don't depend on the
economy as a whole.
FUND FACTS
START DATE: May 8, 1984
SIZE: As of August 31, 1994, more than
$70 million
MANAGER: Deborah Wheeler, since August
1992; manager, Fidelity Select Food and
Agriculture Portfolio, September 1991-April
1993; Fidelity Select Housing Portfolio,
September 1986-December 1988; Fidelity
Select Retailing Portfolio, January
1989-August 1991; joined Fidelity in 1986
(checkmark)
LEISURE PORTFOLIO
INVESTMENTS AUGUST 31, 1994 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 86.9%
SHARES VALUE (NOTE 1)
ADVERTISING - 2.9%
ADVERTISING AGENCIES - 2.9%
Foote Cone & Belding
Communications, Inc. 18,700 $ 804,100
Interpublic Group of Companies, Inc. 7,500 258,750
Omnicom Group, Inc. 19,100 957,388
2,020,238
AIR TRANSPORTATION - 2.6%
AIR TRANSPORTATION, MAJOR NATIONAL - 1.6%
AMR Corp. (a) 6,000 361,500
KLM Royal Dutch Airlines (a) 20,000 587,500
Southwest Airlines Co. 7,800 206,700
1,155,700
AIR TRANSPORTATION, REGIONAL - 1.0%
Comair Holdings, Inc. 26,000 689,000
TOTAL AIR TRANSPORTATION 1,844,700
BEVERAGES - 4.2%
DISTILLED BEVERAGES - 0.4%
Canadaigua Wine Co. Class A (a) 10,200 311,100
Seagram Co. Ltd. 100 3,246
314,346
MALT BEVERAGE - 0.5%
Anheuser-Busch Companies, Inc. 3,000 163,500
Coors (Adolph) Co. Class B 1,000 20,375
Grupo Modelo SA de CV Class C
Ord. 6,800 143,485
327,360
SOFT DRINKS - 3.3%
Buenos Aires Embotelladora
sponsored ADR 1,000 38,250
COTT Corp. 39,000 424,363
Celestial Seasonings, Inc. (a) 17,000 306,000
Coca-Cola Company (The) 1,000 46,000
Coca-Cola Enterprises, Inc. 400 7,200
Dr. Pepper/Seven-Up Companies,
Inc. (a) 43,900 1,015,188
Emvasa Del Valle de Enah Ord. (a) 56,600 295,653
PepsiCo, Inc. 3,441 113,983
Snapple Beverage Corp. (a) 7,700 103,950
2,350,587
TOTAL BEVERAGES 2,992,293
BROADCASTING - 25.7%
CABLE TV OPERATORS - 6.9%
BET Holdings, Inc. Class A (a) 16,600 273,900
CAI Wireless Systems, Inc. (a) 8,500 93,500
Cablemaxx, Inc. (a) 10,200 73,950
Gaylord Entertainment Co. Class A 11,900 270,725
Interactive Network, Inc. (a) 100 725
International Family Entertainment
Class B (a) 8,500 134,938
NTN Communications, Inc. (a) 6,000 45,000
Peoples Choice TV Corp. (a) 19,100 439,300
QVC Network, Inc. (a) 6,500 292,500
Spectravision, Inc. Class B (a) 1,000 2,375
Tele-Communications, Inc. Class A (a) 56,500 1,274,781
Time Warner, Inc. 29,068 1,108,218
Turner Broadcasting System, Inc. Class B 1,100 19,938
SHARES VALUE (NOTE 1)
Valuevision International, Inc. (a) 36,000 $ 216,000
Viacom, Inc. (non-vtg.) (a) 18,000 594,000
Video Jukebox Network, Inc. (a) 500 875
4,840,725
RADIO BROADCASTING - 5.5%
Broadcasting Partners, Inc. Class A (a) 300 4,125
Clear Channel Communications, Inc. (a) 16,125 741,750
EZ Communications, Inc. (a) 38,500 519,750
Emmis Broadcasting Corp. Class A (a) 30,000 442,500
Evergreen Media Corp. Class A (a) 12,500 196,875
Grupo Radio Centro SA de CV
sponsored ADR 15,600 313,950
Infinity Broadcasting Corp. (a) 43,900 1,382,850
SFX Broadcasting, Inc. (a) 600 9,000
Saga Communications, Inc. Class A (a) 15,400 231,000
3,841,800
TELEVISION BROADCASTING - 13.3%
CBS, Inc. 1,401 450,246
Capital Cities/ABC, Inc. 49,100 4,118,263
Carlton Communications Ord. 20,000 263,943
Chris-Craft Industries, Inc. 1,030 37,724
Groupo Televisa GDS (b) 14,000 820,750
Home Shopping Network, Inc. (a) 66,300 779,025
Jacor Communications, Inc. Class A (a) 400 5,800
Multimedia, Inc. (a) 19,800 618,750
New World Communications Group, Inc.
Class A (a) 62,500 804,688
Renaissance Communications Corp. (a) 18,500 504,125
Scandinavian Broadcasting Corp. (a) 18,100 479,650
Silver King Communications, Inc. (a) 20,700 248,400
Westwood One, Inc. (a) 22,700 227,000
9,358,364
TOTAL BROADCASTING 18,040,889
CELLULAR - 3.4%
CELLULAR & COMMUNICATION SERVICES - 3.4%
Cellular Communications, Inc.
(redeemable) (a):
Class A 9,600 511,200
Class P 19,000 1,032,270
Rogers Communications, Inc. Class B (a) 52,000 874,877
2,418,347
COMPUTER SERVICES & SOFTWARE - 0.9%
PREPACKAGED COMPUTER SOFTWARE - 0.9%
Sierra On-Line, Inc. (a) 30,500 663,375
CONGLOMERATES - 0.4%
Whitman Corp. 16,300 281,175
CONSUMER ELECTRONICS - 1.1%
RADIOS, TELEVISIONS, STEREOS - 1.1%
Cambridge Soundworks, Inc. (a) 25,000 187,500
Harman International Industries, Inc. 20,200 616,100
803,600
DRUGS & PHARMACEUTICALS - 0.5%
BIOTECHNOLOGY - 0.5%
IDEXX Laboratories (a) 10,000 322,500
ELECTRICAL EQUIPMENT - 1.3%
ELECTRICAL MACHINERY - 0.8%
Philips NV 17,900 583,988
TV & RADIO COMMUNICATION EQUIPMENT - 0.5%
California Amplifier, Inc. (a) 78,300 352,350
TOTAL ELECTRICAL EQUIPMENT 936,338
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
ENTERTAINMENT - 10.9%
AMUSEMENT - 0.3%
Iwerks Entertainment, Inc. (a) 7,700 $ 39,463
Mountasia Entertainment International (a) 21,000 199,500
238,963
CRUISES - 0.3%
Carnival Cruise Lines, Inc. Class A 1,500 66,563
Royal Carribean Cruises Ltd. 5,000 146,875
213,438
MOTION PICTURE PRODUCTION - 2.3%
Cinergi Pictures Entertainment, Inc. (a) 63,100 441,700
Disney (Walt) Co. 16,000 658,000
Goldwyn (Samuel) Company (a) 500 3,500
King World Productions, Inc. (a) 7,000 264,250
Spelling Entertainment Group, Inc. 30,000 281,250
1,648,700
MOVIE THEATERS - 4.5%
AMC Entertainment Inc. 53,900 646,800
Carmike Cinemas, Inc. Class A (a) 78,100 1,562,000
Cineplex Odeon Corp. (a) 166,100 601,438
GC Cos., Inc. (a) 500 16,000
Regal Cinemas, Inc. (a) 10,400 364,000
3,190,238
RECORDS & CD'S - 0.4%
PolyGram NV ADR 6,200 279,000
RECREATIONAL SERVICES - 2.5%
Cedar Fair LP (depositary units) 49,600 1,574,800
Discovery Zone, Inc. (a) 7,600 174,800
1,749,600
THEATRICAL PRODUCERS & SERVICES - 0.6%
Live Entertainment of Canada, Inc. (a) 40,000 373,066
TOTAL ENTERTAINMENT 7,693,005
HOUSEHOLD PRODUCTS - 0.0%
MANUFACTURED PRODUCTS - 0.0%
Windmere Corp. (warrants ) (a) 845 739
LEASING & RENTAL - 2.6%
VIDEO TAPE RENTAL - 2.6%
Blockbuster Entertainment Corp. 70,500 1,824,188
LEISURE DURABLES & TOYS - 8.9%
LEISURE DURABLES - 3.0%
Brunswick Corp. 91,700 2,109,100
MOTORCYCLES - 0.8%
Harley Davidson, Inc. 9,800 553,700
SPORTING & ATHLETIC GOODS - 3.4%
Callaway Golf Co. 17,400 632,925
Cobra Golf, Inc. 15,000 731,250
Coleman, Inc. (a) 30,000 993,750
2,357,925
TOYS & GAMES - 1.7%
Hasbro, Inc. 8,000 251,000
Mattel, Inc. 32,500 934,375
1,185,375
TOTAL LEISURE DURABLES & TOYS 6,206,100
SHARES VALUE (NOTE 1)
LODGING & GAMING - 14.6%
HOTELS, MOTELS, & TOURIST COURTS - 11.0%
Accor Asia Pacific Ltd. (AAPC) 204,190 $ 154,966
Caesars World, Inc. (a) 15,467 717,282
Club Med, Inc. 1,700 41,013
Four Seasons Hotels, Inc. 33,600 341,026
Hilton Hotels Corp. 4,000 235,500
Hospitality Franchise Systems, Inc. (a) 12,600 370,125
Host Marriott Corp. 70,000 778,750
La Quinta Motor Inns, Inc. 88,725 2,861,381
Marriott International, Inc. 27,600 814,200
Mirage Resorts, Inc. (a) 31,400 663,325
Promus Companies, Inc. (a) 20,950 769,913
7,747,481
LODGING PLACES, OTHER THAN HOTEL, MOTEL - 0.6%
Sholodge, Inc. (a) 23,333 431,661
RACING & GAMING - 3.0%
Boyd Gaming Corp. (a) 18,600 234,825
International Game Technology Corp. 45,400 1,061,217
President Riverboat Casinos, Inc. (a) 42,000 388,500
WMS Industries, Inc. (a) 20,000 385,000
2,069,542
TOTAL LODGING & GAMING 10,248,684
PUBLISHING - 1.2%
BOOK PUBLISHING & PRINTING - 0.4%
Houghton Mifflin Co. 6,800 294,100
NEWSPAPERS - 0.8%
Central Newspapers, Inc. Class A 4,000 109,000
News Corp. Ltd. ADR 3,500 189,875
Scripps (E.W.) Co. Class A 9,700 282,513
581,388
TOTAL PUBLISHING 875,488
REAL ESTATE INVESTMENT TRUSTS - 0.3%
RFS Hotel Investors, Inc. 12,300 209,100
RESTAURANTS - 1.1%
El Chico Restaurants, Inc. (a) 27,500 309,375
IHOP Corp. (a) 14,100 423,000
732,375
RETAIL & WHOLESALE, MISCELLANEOUS - 2.2%
DURABLE GOODS, NEC - WHOLESALE - 1.0%
Sodak Gaming, Inc. (a) 40,000 700,000
HOBBY, TOY, & GAME SHOPS - 1.2%
Toys "R" Us, Inc. (a) 23,200 855,500
TOTAL RETAIL & WHOLESALE, MISCELLANEOUS 1,555,500
SERVICES - 1.4%
GENERAL SERVICES - 1.4%
Children's Discovery Center `A' (a) 76,500 1,013,625
TELEPHONE SERVICES - 0.7%
Southwestern Bell Corp. 12,300 508,913
TOTAL COMMON STOCKS
(Cost $57,896,010) 61,191,172
CORPORATE BONDS - 1.2%
PRINCIPAL VALUE (NOTE 1)
AMOUNT
CONVERTIBLE BONDS - 0.4%
LODGING & GAMING - 0.4%
LODGING PLACES, OTHER THAN HOTEL, MOTEL - 0.4%
Sholodge, Inc. 7 1/2%,
5/1/04 $ 250,000 $ 251,250
NONCONVERTIBLE BONDS - 0.8%
BROADCASTING - 0.8%
CABLE TV OPERATORS - 0.8%
Time Warner, Inc. reset note
0%, 8/15/02 (c) 577,000 542,380
TOTAL CORPORATE BONDS
(Cost $792,960) 793,630
REPURCHASE AGREEMENTS - 11.9%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account, at 4.83% dated
8/31/94 due 9/1/94 $8,376,123 8,375,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $67,063,970) $ 70,359,802
LEGEND
1. Non-income producing
2. 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 period
end, the value of this security amounted to $820,750 or 1.2% of net
assets.
3. Debt obligation initially issued in zero coupon form which converts to
coupon form at a specified rate and date.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $31,104,370 and $64,285,909, respectively (see Note 4
of Notes to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company.
The commissions paid to these affiliated firms were $26,291 for the period
(see Note 5 of Notes to Financial Statements).
The maximum loan and average daily loan balances during the periods for
which loans were outstanding amounted to $2,127,000 and $2,043,200,
respectively. The weighted average interest rate paid was 4.7% (see Note 8
of Notes to Financial Statements).
INCOME TAX INFORMATION
At August 31, 1994, the aggregate cost of investment securities for income
tax purposes was $67,118,590. Net unrealized appreciation aggregated
$3,241,212 of which $7,627,079 related to appreciated investment securities
and $4,385,867 related to depreciated investment securities.
LEISURE PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
AUGUST 31, 1994 (UNAUDITED)
ASSETS
Investment in securities, at value (including repurchase agreements of $8,375,000) (cost $67,063,970) - See $ 70,359,802
accompanying schedule
Cash 211
Receivable for investments sold 44,525
Receivable for fund shares sold 333,125
Dividends receivable 29,527
Interest receivable 4,375
Redemption fees receivable 61
Other receivables 31,470
Prepaid expenses 10,987
TOTAL ASSETS 70,814,083
LIABILITIES
Payable for fund shares redeemed $ 367,334
Accrued management fee 35,373
Other payables and accrued expenses 72,345
TOTAL LIABILITIES 475,052
NET ASSETS $ 70,339,031
Net Assets consist of:
Paid in capital $ 66,253,126
Accumulated net investment (loss) (116,775
)
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 905,948
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies 3,296,732
NET ASSETS, for 1,774,011 shares outstanding $ 70,339,031
NET ASSET VALUE and redemption price per share ($70,339,031 (divided by) shares) $39.65
Maximum offering price per share (100/97 of $39.65) $40.88
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED AUGUST 31, 1994 (UNAUDITED)
INVESTMENT INCOME $ 293,566
Dividends
Interest 152,871
TOTAL INCOME 446,437
EXPENSES
Management fee $ 250,524
Transfer agent 317,410
Fees
Redemption fees (18,496
)
Accounting fees and expenses 40,449
Non-interested trustees' compensation 256
Custodian fees and expenses 7,010
Registration fees 10,987
Audit 13,097
Legal 1,307
Interest 1,333
Reports to shareholders 4,861
Miscellaneous 197
Total expenses before reductions 628,935
Expense reductions (10,568 618,367
)
NET INVESTMENT INCOME (LOSS) (171,930
)
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 1,119,967
Foreign currency transactions (8,466 1,111,501
)
Change in net unrealized appreciation (depreciation) on:
Investment securities (5,987,252
)
Assets and liabilities in foreign 900 (5,986,352
currencies )
NET GAIN (LOSS) (4,874,851
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ (5,046,781
)
OTHER INFORMATION $160,758
Sales Charges Paid to FDC
Deferred sales charges withheld $16,951
by FDC
Exchange fees withheld by FSC $12,758
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS YEAR ENDED
ENDED FEBRUARY 28,
AUGUST 31, 1994 1994
(UNAUDITED)
Operations $ (171,930 $ (603,590
Net investment income (loss) ) )
Net realized gain (loss) 1,111,501 19,779,082
Change in net unrealized appreciation (depreciation) (5,986,352 3,359,954
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (5,046,781 22,535,446
)
Distributions to shareholders from net realized gain (8,699,446 (6,700,464
) )
Share transactions 17,720,636 171,635,469
Net proceeds from sales of shares
Reinvestment of distributions 8,558,337 6,615,913
Cost of shares redeemed (48,065,234 (133,273,761
) )
Paid in capital portion of redemption fees 38,449 196,293
Net increase (decrease) in net assets resulting from share transactions (21,747,812 45,173,914
)
TOTAL INCREASE (DECREASE) IN NET ASSETS (35,494,039 61,008,896
)
NET ASSETS
Beginning of period 105,833,070 44,824,174
End of period (including undistributed net investment income (loss) of $(116,775) and $167,185,
respectively) $ 70,339,031 $ 105,833,070
OTHER INFORMATION
Shares
Sold 442,907 3,957,420
Issued in reinvestment of distributions 219,557 158,780
Redeemed (1,224,480 (3,033,266
) )
Net increase (decrease) (562,016 1,082,934
)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS YEAR ENDED TEN MONTHS YEARS ENDED APRIL 30,
ENDED FEBRUARY 28, ENDED
AUGUST 31, 1994 FEBRUARY 28,
SELECTED PER-SHARE DATAC (UNAUDITED) 1994 1993 1992 1991 1990
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 45.30 $ 35.77 $ 31.65 $ 26.32 $ 24.90 $ 28.51
Income from Investment Operations
Net investment income (loss) (.08) (.29) (.11) (.08) .08 .26F
Net realized and unrealized gain (loss) (1.66) 12.98 4.21 5.40 1.55 (1.81)
Total from investment operations (1.74) 12.69 4.10 5.32 1.63 (1.55)
Less Distributions
From net investment income - - - - (.23) (.07)
From net realized gain (3.93) (3.26) - - - (2.03)
Total distributions (3.93) (3.26) - - (.23) (2.10)
Redemption fees added to paid in capital .02 .10 .02 .01 .02 .04
Net asset value, end of period $ 39.65 $ 45.30 $ 35.77 $ 31.65 $ 26.32 $ 24.90
TOTAL RETURN D, E (3.65)% 37.14% 13.02% 20.25% 6.78% (6.33)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 70,339 $ 105,833 $ 44,824 $ 40,051 $ 40,727 $ 49,609
Ratio of expenses to average net assets B 1.51%A 1.53% 1.90%A 2.21% 2.27% 1.96%
Ratio of expenses to average net assets before 1.54%A 1.55% 1.90%A 2.21% 2.27% 1.96%
expense reductions B
Ratio of net investment income (loss) to average net (.42)% (.69)% (.39)% (.28)% .34% .86%
assets A A
Portfolio turnover rate 82%A 170% 109%A 45% 75% 124%
</TABLE>
A ANNUALIZED
B SEE NOTE 9 OF NOTES TO FINANCIAL STATEMENTS.
C NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
D TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
E THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
F INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND WHICH AMOUNTED TO
$.16 PER SHARE.
MULTIMEDIA PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance: total
percentage change in value, the average annual percentage change, or the
growth of a hypothetical $10,000 investment. Each performance figure
includes changes in a fund's share price, plus reinvestment of any
dividends (income) and capital gains (the profits the fund earns when it
sells stocks that have grown in value).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 6 PAST 1 PAST 5 LIFE OF
AUGUST 31, 1994 MONTH YEAR YEARS FUND
S
MULTIMEDIA 3.39% 11.04% 63.09% 248.21%
MULTIMEDIA
(INCL. 3% SALES CHARGE) 0.29% 7.71% 58.20% 237.76%
S&P 500 3.26% 5.47% 58.16% 148.27%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one year, five years, or
since the fund started on June 30, 1986. You can compare these figures to
the performance of the S&P 500 - a common proxy for the U.S. stock market.
This benchmark includes reinvested dividends and capital gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
AUGUST 31, 1994 YEAR YEARS FUND
MULTIMEDIA 11.04% 10.28% 16.48%
MULTIMEDIA
(INCL. 3% SALES CHARGE) 7.71% 9.61% 16.05%
S&P 500 5.47% 9.60% 11.76%
AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and
show you what would have happened if the fund had performed at a constant
rate each year.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of growth in the long run
and volatility in the short run. Unlike the broader
market, however, some sectors may not have
a history of growth in the long run. And, as
with all stock funds, the share price and return
of a fund that invests in a sector will vary. That
means if you sell your shares during a sector
downturn, you might lose money. But if you
can identify a sector that is about to
experience rapid growth you may have the
potential for above-average gains.
(checkmark)
$10,000 OVER LIFE OF FUND
Select Multimedia (503) Standard & Poor's
06/30/86 9700.00 10000.00
07/31/86 9253.80 9488.77
08/31/86 9777.60 10192.84
09/30/86 9263.50 9349.89
10/31/86 9700.00 9889.38
11/30/86 9777.60 10129.69
12/31/86 9486.60 9871.39
01/31/87 10621.50 11201.06
02/28/87 11911.60 11643.50
03/31/87 11872.80 11980.00
04/30/87 11688.50 11873.38
05/31/87 12231.70 11976.68
06/30/87 12745.80 12581.50
07/31/87 13725.50 13219.38
08/31/87 13715.80 13712.46
09/30/87 13386.00 13412.16
10/31/87 10660.30 10523.18
11/30/87 9923.10 9656.07
12/31/87 11377.71 10390.90
01/31/88 11566.11 10828.35
02/29/88 12340.68 11332.96
03/31/88 12874.50 10982.77
04/30/88 13031.50 11104.68
05/31/88 12811.69 11201.29
06/30/88 13254.21 11715.43
07/31/88 13232.55 11670.91
08/31/88 12734.43 11274.10
09/30/88 13535.75 11754.37
10/31/88 13687.35 12081.14
11/30/88 13579.06 11908.38
12/31/88 14432.32 12116.78
01/31/89 16155.75 13003.73
02/28/89 16122.39 12679.94
03/31/89 16878.48 12975.38
04/30/89 18012.60 13648.80
05/31/89 18879.88 14201.58
06/30/89 19266.46 14120.63
07/31/89 20732.14 15395.72
08/31/89 20709.77 15697.48
09/30/89 20385.30 15633.12
10/31/89 19009.13 15270.43
11/30/89 19121.01 15581.95
12/31/89 19129.11 15955.91
01/31/90 16589.03 14885.27
02/28/90 16170.05 15077.29
03/31/90 16012.93 15476.84
04/30/90 15253.53 15089.92
05/31/90 16706.87 16561.19
06/30/90 16562.85 16448.57
07/31/90 15646.33 16395.93
08/31/90 13616.89 14913.74
09/30/90 12451.60 14187.44
10/31/90 11914.78 14126.44
11/30/90 13145.53 15039.00
12/31/90 14114.43 15458.59
01/31/91 14873.83 16132.59
02/28/91 15973.66 17286.07
03/31/91 16405.73 17704.39
04/30/91 16968.74 17746.88
05/31/91 17060.39 18513.55
06/30/91 15711.79 17665.63
07/31/91 16300.98 18488.84
08/31/91 16811.62 18927.03
09/30/91 17832.88 18610.95
10/31/91 18736.31 18860.33
11/30/91 17453.18 18100.26
12/31/91 19456.44 20170.93
01/31/92 19967.07 19795.75
02/29/92 21079.99 20053.10
03/31/92 20543.17 19662.06
04/30/92 20857.40 20240.13
05/31/92 21171.64 20339.30
06/30/92 21250.20 20036.25
07/31/92 21302.57 20855.73
08/31/92 21014.52 20428.19
09/30/92 20883.59 20669.24
10/31/92 21224.01 20741.58
11/30/92 22769.01 21448.87
12/31/92 23639.19 21712.69
01/31/93 24116.75 21895.08
02/28/93 24222.88 22192.85
03/31/93 25177.99 22661.12
04/30/93 24526.89 22112.72
05/31/93 26198.87 22705.34
06/30/93 27021.37 22771.19
07/31/93 28032.65 22680.10
08/31/93 30419.27 23539.68
09/30/93 31147.39 23358.43
10/31/93 33480.08 23841.94
11/30/93 31295.15 23615.45
12/31/93 32626.92 23901.19
01/31/94 33092.24 24713.83
02/28/94 32667.98 24044.09
03/31/94 30669.86 22995.77
04/30/94 30684.73 23290.11
05/31/94 31813.18 23672.07
06/30/94 31102.10 23092.10
07/31/94 31859.56 23849.53
08/31/94 33776.39 24827.36
Let's say you invested $10,000 in Fidelity Select Multimedia Portfolio on
June 30, 1986, when the fund started, and paid a 3% sales charge. By August
31, 1994, your investment would have grown to $33,776 - a 237.76% increase.
That compares to $10,000 invested in the S&P 500, which would have grown to
$24,827 over the same period - a 148.27% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST 31, 1994
% OF FUND'S
INVESTMENTS
Scientific-Atlanta, Inc. 7.6
General Instrument Corp. 6.4
Capital Cities/ABC, Inc. 4.8
Houghton Mifflin Co. 4.5
Pulitzer Publishing Co. 4.2
Meredith Corp. 3.9
Viacom, Inc. (non-vtg.) 3.4
Time Warner, Inc. 3.3
People's Choice TV Corp. 3.2
Scripps (E.W.) Co. Class A 3.2
TOP INDUSTRIES AS OF AUGUST 31, 1994
Row: 1, Col: 1, Value: 39.4
Row: 1, Col: 2, Value: 8.199999999999999
Row: 1, Col: 3, Value: 10.5
Row: 1, Col: 4, Value: 12.4
Row: 1, Col: 5, Value: 14.4
Row: 1, Col: 6, Value: 15.1
Newspapers 15.1%
Cable TV Operators 14.4%
Television Broadcasting 12.4%
TV & Radio Communication
Equipment 10.5%
Book Publishing & Printing 8.2%
All Others 39.4%*
* INCLUDES SHORT-TERM INVESTMENTS
MULTIMEDIA PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Steve DuFour,
Portfolio Manager of
Fidelity Select Multimedia Portfolio
Q. STEVE, HOW HAS THE FUND PERFORMED?
A. Pretty well. For the six months ended August 31, 1994, the fund had a
total return of 3.39%, and for the year ended August 31, the fund returned
11.04%. The six month number edged the S&P 500's six-month return of 3.26%,
while the one-year performance topped the S&P 500, which finished the
period up 5.47%.
Q. WHAT HAS YOUR STRATEGY BEEN THE PAST SIX MONTHS?
A. I've been concentrating on companies that supply cable and other types
of distribution equipment, such as Scientific-Atlanta, General Instrument
and Itel. The multimedia industry is undergoing major changes, as seen
through the large number of successful and attempted joint ventures or
mergers. Cable and telephone companies are racing to be the primary
supplier of entertainment and information to U.S. households and
businesses. The one product all of the competitors need is distribution
equipment. It's like a war, and I view equipment companies as the weapons
suppliers. For now, I want to win by owning the weapons dealers, and later
I'll make a bet on who will win the war.
Q. WHO ARE THE COMPETING SIDES IN THE WAR?
A. Cable companies, satellite companies, wireless cable companies and -
probably within the next year - Regional Bell (telephone) Operating
Companies (RBOCs). Cable company stocks are down this year for two reasons.
First, the FCC rolled back rates 7% in February. Second, there was the
influence of the failure of the Bell Atlantic/TCI merger.
Q. WHAT WILL HAPPEN IF THE RBOCS ARE ALLOWED TO PROVIDE CABLE AS WELL AS
TELEPHONE SERVICES?
A. There will be serious competition between the RBOCs and existing cable
providers. On the one hand, the telephone system is the best in the world,
and customers may gravitate toward phone companies because they
historically have provided good service. On the other hand, cable operators
have a larger piece of pie to go after since telephone service is a $100
billion business while cable is only a $30 billion business. Again, some
investors are betting on who will win this battle, but I'm focusing the
fund's holdings on the few companies that should benefit from supplying the
equipment.
Q. WHAT IS WIRELESS CABLE?
A. Wireless cable companies can control 33 channels in every market. They
put up towers, broadcast a signal in microwave, and install home antennas
that receive and convert the signal. Unlike conventional cable, homes don't
have to be wired. The largest wireless cable operator is People's Choice
TV, one of the fund's top 10 investments.
Q. WHAT OTHER CHANGES HAVE YOU MADE IN THE PORTFOLIO?
A. I've reduced the fund's investments in newspaper companies and added to
its investments in broadcasting stocks. While advertising lineage is still
strong, newsprint prices are rising and are expected to rise more. Viacom
is a diversified broadcasting and entertainment stock new to the top 10.
The company borrowed a lot to buy Paramount, but has done a good job
selling non-strategic assets - such as Madison Square Garden - to help pay
off the debt.
Q. WHAT STOCKS HAVE DISAPPOINTED?
A. Well, I removed Gannett from the top 10 and Times Mirror from the fund
because of mediocre advertising revenue performance and the newsprint
situation. Houghton Mifflin, the textbook publisher, was another
disappointment. The company had a big opportunity in California, but its
proposal for new textbooks was rejected there. The problem with textbook
stocks is that one has to place a bet that a book design will get adopted
and that states will have the money to buy the new book.
Q. WHAT'S YOUR OUTLOOK FOR THE NEXT SIX MONTHS?
A. There are three ways to play the multimedia game. First is content, for
instance developing a hit movie and then profiting from its distribution.
These stocks are expensive at the moment. The second way is providing the
distribution. Here is where cable fits in, but as I've said, these stocks
have been hurt by new regulation. Finally, there is equipment. For now, I
will continue my focus on equipment, because everyone needs it.
FUND FACTS
START DATE: June 30, 1986
SIZE: as of August 31, 1994, more than
$28 million
MANAGER: Stephen DuFour, since July 1993;
equity analyst, media, 1992-1993; joined
Fidelity in 1992
(checkmark)
MULTIMEDIA PORTFOLIO
INVESTMENTS AUGUST 31, 1994 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 91.2%
SHARES VALUE (NOTE 1)
ADVERTISING - 1.0%
ADVERTISING AGENCIES - 1.0%
ADVO-Systems, Inc. 16,400 $ 295,197
BROADCASTING - 26.8%
CABLE TV OPERATORS - 14.4%
ACS Enterprises, Inc. (a) 52,000 630,500
American Telecasting, Inc. (a) 5,800 85,550
CAI Wireless Systems, Inc. (a) 500 5,500
Cablemaxx, Inc. (a) 14,000 101,500
Comcast Corp. Class A (Special) 19,600 313,600
People's Choice TV Corp. (a) 40,000 920,000
Preferred Entertainment, Inc. (a) 2,000 33,500
Tele Communications, Inc. Class A (a) 4,700 106,044
Time Warner, Inc. 25,126 957,929
Viacom, Inc. (non-vtg.) (a) 29,100 960,300
4,114,423
TELEVISION BROADCASTING - 12.4%
CBS, Inc. 1,200 385,650
Capital Cities/ABC, Inc. 16,500 1,383,938
Groupo Televisa GDS (b) 10,000 586,250
Heritage Media Corp. Class A (a) 23,900 519,825
Multimedia, Inc. (a) 10,000 312,500
Scandinavian Broadcasting Corp. (a) 14,000 371,000
3,559,163
TOTAL BROADCASTING 7,673,586
CELLULAR - 4.6%
CELLULAR & COMMUNICATION SERVICES - 4.6%
Airtouch Communications (a) 5,000 141,250
Nextel Communications, Inc. Class A (a) 10,000 261,250
Rogers Communications, Inc. Class B (a) 14,700 247,321
Vodafone Group PLC sponsored ADR 20,400 652,800
1,302,621
COMMUNICATIONS EQUIPMENT - 6.4%
TELEPHONE INTERCONNECT SYSTEMS - 6.4%
General Instrument Corp. (a) 60,000 1,830,000
COMPUTER SERVICES & SOFTWARE - 1.6%
PREPACKAGED COMPUTER SOFTWARE - 1.6%
Electronic Arts, Inc. (a) 25,000 443,750
COMPUTERS & OFFICE EQUIPMENT - 0.9%
GRAPHICS WORKSTATIONS - 0.9%
Silicon Graphics, Inc. (a) 10,000 262,500
ELECTRICAL EQUIPMENT - 12.9%
ELECTRICAL EQUIPMENT - WHOLESALE - 2.4%
Itel Corp. (a) 20,200 696,900
TV & RADIO COMMUNICATION EQUIPMENT - 10.5%
California Amplifier, Inc. (a) 189,200 851,400
Scientific-Atlanta, Inc. 48,300 2,161,425
3,012,825
TOTAL ELECTRICAL EQUIPMENT 3,709,725
ENGINEERING - 2.0%
WATER & SEWER PIPES - 2.0%
Glenayre Technologies, Inc. (a) 10,000 567,500
SHARES VALUE (NOTE 1)
ENTERTAINMENT - 2.1%
MOTION PICTURE PRODUCTION - 2.1%
Alliance Communications Corp. (a) 25,000 $ 253,740
Disney (Walt) Co. 8,300 341,338
595,078
MEDICAL FACILITIES MANAGEMENT - 0.0%
HEALTH SERVICES - 0.0%
Lambert Communications, Inc. (a) 150,000 4,688
PUBLISHING - 29.8%
BOOK PUBLISHING & PRINTING - 8.2%
Houghton Mifflin Co. 30,100 1,301,825
McGraw-Hill, Inc. 10,000 696,250
Nelson Thomas, Inc. 18,500 342,250
2,340,325
GREETING CARDS - 1.1%
American Greetings Corp. Class A 10,200 306,000
NEWSPAPERS - 15.1%
American Publishing Co. Class A 30,000 412,500
Dow Jones & Co Inc. 10,000 317,500
Gannett Co., Inc. 6,900 345,000
McClatchy Newspapers, Inc. Class A 25,000 650,000
Pulitzer Publishing Co. 32,200 1,211,525
Scripps (E.W.) Co. Class A 31,000 902,875
Washington Post Co. Class B 2,000 468,000
4,307,400
PERIODICALS - 5.4%
Enquirer/Star Group, Inc. Class A 26,700 443,888
Meredith Corp. 23,000 1,109,750
1,553,638
TOTAL PUBLISHING 8,507,363
SERVICES - 1.8%
BUSINESS SERVICES - 0.9%
Catalina Marketing Corp. (a) 5,000 257,500
GENERAL SERVICES - 0.9%
Flextech PLC 40,000 263,943
TOTAL SERVICES 521,443
TELEPHONE SERVICES - 1.3%
NYNEX Corp. 10,000 386,250
TOTAL COMMON STOCKS
(Cost $24,455,587) 26,099,701
CONVERTIBLE PREFERRED STOCKS - 0.1%
CREDIT & OTHER FINANCE - 0.1%
FINANCIAL SERVICES - 0.1%
Benpress Holdings Corp.
4.20% (b) (Cost $13,544) 9 33,793
REPURCHASE AGREEMENTS - 8.7%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account, at 4.83% dated
8/31/94 due 9/1/94 $ 2,494,334 $ 2,494,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $26,963,131) $ 28,627,494
LEGEND
1. Non-income producing
2. 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 period
end, the value of these securities amounted to $620,043 or 2.1% of net
assets.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $13,386,892 and $33,611,058, respectively (see Note 4 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $6,411 for the period
(see Note 5 of Notes to Financial Statements).
The maximum loan and average daily loan balances during the periods for
which loans were outstanding amounted to $3,305,000 and $2,996,000,
respectively. The weighted average interest rate paid was 4.3% (see Note 8
of Notes to Financial Statements).
INCOME TAX INFORMATION
At August 31, 1994, the aggregate cost of investment securities for income
tax purposes was $27,134,582. Net unrealized appreciation aggregated
$1,492,912, of which $3,453,720 related to appreciated investment
securities and $1,960,808 related to depreciated investment securities.
MULTIMEDIA PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
AUGUST 31, 1994 (UNAUDITED)
ASSETS
Investment in securities, at value (including repurchase agreements of $2,494,000) (cost $26,963,131) - See $ 28,627,494
accompanying schedule
Cash 998
Receivable for investments sold 844,513
Receivable for fund shares sold 560,241
Dividends receivable 20,449
Redemption fees receivable 87
Other receivables 456
Prepaid expenses 12,655
TOTAL ASSETS 30,066,893
LIABILITIES
Payable for investments purchased $ 673,815
Payable for fund shares redeemed 388,921
Accrued management fee 14,225
Other payables and accrued expenses 46,938
TOTAL LIABILITIES 1,123,899
NET ASSETS $ 28,942,994
Net Assets consist of:
Paid in capital $ 27,879,209
Accumulated net investment (loss) (136,144
)
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions (464,434
)
Net unrealized appreciation (depreciation) on investments 1,664,363
NET ASSETS, for 1,324,520 shares outstanding $ 28,942,994
NET ASSET VALUE and redemption price per share ($28,942,994 (divided by) shares) $21.85
Maximum offering price per share (100/97 of $21.85) $22.53
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED AUGUST 31, 1994 (UNAUDITED)
INVESTMENT INCOME $ 142,439
Dividends
Interest 48,658
TOTAL INCOME 191,097
EXPENSES
Management fee $ 107,156
Transfer agent 184,821
Fees
Redemption fees (15,220
)
Accounting fees and expenses 23,037
Non-interested trustees' compensation 114
Custodian fees and expenses 7,027
Registration fees 12,655
Audit 11,298
Legal 754
Interest 1,418
Reports to shareholders 1,339
Miscellaneous 105
Total expenses before reductions 334,504
Expense reductions (4,253 330,251
)
NET INVESTMENT INCOME (LOSS) (139,154
)
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities (64,195
)
Foreign currency transactions (18 (64,213
) )
Change in net unrealized appreciation (depreciation) on investment securities (587,318
)
NET GAIN (LOSS) (651,531
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ (790,685
)
OTHER INFORMATION $103,417
Sales Charges Paid to FDC
Deferred sales charges withheld $2,257
by FDC
Exchange fees withheld by FSC $11,250
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS YEAR ENDED
ENDED FEBRUARY 28,
AUGUST 31, 1994 1994
(UNAUDITED)
Operations $ (139,154 $ (263,237
Net investment income (loss) ) )
Net realized gain (loss) (64,213 10,978,209
)
Change in net unrealized appreciation (depreciation) (587,318 135,110
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (790,685 10,850,082
)
Distributions to shareholders from net realized gain (4,930,202 (1,336,869
) )
Share transactions 15,846,786 242,015,079
Net proceeds from sales of shares
Reinvestment of distributions 4,888,285 1,323,568
Cost of shares redeemed (35,279,740 (220,542,573
) )
Paid in capital portion of redemption fees 31,948 219,824
Net increase (decrease) in net assets resulting from share transactions (14,512,721 23,015,898
)
TOTAL INCREASE (DECREASE) IN NET ASSETS (20,233,608 32,529,111
)
NET ASSETS
Beginning of period 49,176,602 16,647,491
End of period (including undistributed net investment income (loss) of $(136,144) and $3,010,
respectively) $ 28,942,994 $ 49,176,602
OTHER INFORMATION
Shares
Sold 733,743 10,652,395
Issued in reinvestment of distributions 252,214 60,047
Redeemed (1,721,700 (9,563,667
) )
Net increase (decrease) (735,743 1,148,775
)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS YEAR ENDED TEN MONTHS YEARS ENDED APRIL 30,
ENDED FEBRUARY 28, ENDED
AUGUST 31, 1994 FEBRUARY 28,
SELECTED PER-SHARE DATAC (UNAUDITED) 1994 1993 1992 1991 1990
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 23.87 $ 18.26 $ 15.93 $ 12.96 $ 11.65 $ 16.20
Income from Investment Operations
Net investment income (loss) (.09) (.10) (.07) (.17) (.05) (.02)G
Net realized and unrealized gain (loss) .56F 6.28 2.61 3.08 1.29 (1.96)
Total from investment operations .47 6.18 2.54 2.91 1.24 (1.98)
Less Distributions
From net realized gain (2.51) (.65) (.23) - - (2.57)
Redemption fees added to paid in capital .02 .08 .02 .06 .07 -
Net asset value, end of period $ 21.85 $ 23.87 $ 18.26 $ 15.93 $ 12.96 $ 11.65
TOTAL RETURND, E 3.39% 34.86% 16.14% 22.92% 11.24% (15.32)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 28,943 $ 49,177 $ 16,647 $ 8,393 $ 5,177 $ 7,400
Ratio of expenses to average net assetsB 1.88%A 1.63% 2.49%A 2.49% 2.53% 2.51%
Ratio of expenses to average net assets before 1.91%A 1.66% 2.54%A 2.78% 2.77% 2.51%
expense reductionsB
Ratio of net investment income (loss) to average net (.79)% (.42)% (.52)% (1.22)% (.43)% (.14)%
assets A A
Portfolio turnover rate 84%A 340% 70%A 111% 150% 75%
</TABLE>
A ANNUALIZED
B SEE NOTE 9 OF NOTES TO FINANCIAL STATEMENTS.
C NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
D TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
E THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
F THE AMOUNT SHOWN FOR A SHARE OUTSTANDING DOES NOT CORRESPOND WITH THE
AGGREGATE NET LOSS ON INVESTMENTS FOR THE PERIOD ENDED DUE TO THE TIMING OF
SALES AND REPURCHASES OF FUND SHARES IN RELATION TO FLUCTUATING MARKET
VALUES OF THE INVESTMENTS OF THE FUND.
G INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND WHICH AMOUNTED TO
$.05 PER SHARE.
RETAILING PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance: total
percentage change in value, the average annual percentage change, or the
growth of a hypothetical $10,000 investment. Each performance figure
includes changes in a fund's share price, plus reinvestment of any
dividends (income) and capital gains (the profits the fund earns when it
sells stocks that have grown in value).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 6 PAST 1 PAST 5 LIFE OF
AUGUST 31, 1994 MONTH YEAR YEARS FUND
S
RETAILING 2.85% 8.20% 113.29% 318.19%
RETAILING
(INCL. 3% SALES CHARGE) -0.24% 4.95% 106.89% 305.64%
S&P 500 3.26% 5.47% 58.16% 200.89%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one year, five years, or
since the fund started on December 16, 1985. You can compare these figures
to the performance of the S&P 500 - a common proxy for the U.S. stock
market. This benchmark includes reinvested dividends and capital gains, if
any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
AUGUST 31, 1994 YEAR YEARS FUND
RETAILING 8.20% 16.36% 17.84%
RETAILING
(INCL. 3% SALES CHARGE) 4.95% 15.65% 17.43%
S&P 500 5.47% 9.60% 13.47%
AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and
show you what would have happened if the fund had performed at a constant
rate each year.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of growth in the long run
and volatility in the short run. Unlike the broader
market, however, some sectors may not have
a history of growth in the long run. And, as
with all stock funds, the share price and return
of a fund that invests in a sector will vary. That
means if you sell your shares during a sector
downturn, you might lose money. But if you
can identify a sector that is about to
experience rapid growth you may have the
potential for above-average gains.
(checkmark)
$10,000 OVER LIFE OF FUND
Select Retail (046) Standard & Poo
12/16/85 9700.00 10000.00
12/31/85 9506.00 10080.42
01/31/86 9583.60 10136.87
02/28/86 10252.90 10895.11
03/31/86 11174.40 11503.06
04/30/86 11378.10 11373.07
05/31/86 12668.20 11978.12
06/30/86 12978.60 12180.55
07/31/86 11271.40 11499.66
08/31/86 11271.40 12352.93
09/30/86 10446.90 11331.35
10/31/86 11368.40 11985.16
11/30/86 11678.80 12276.40
12/31/86 10854.30 11963.36
01/31/87 11756.40 13574.82
02/28/87 13124.10 14111.03
03/31/87 13521.80 14518.83
04/30/87 13104.70 14389.62
05/31/87 13337.50 14514.81
06/30/87 14065.00 15247.80
07/31/87 14773.10 16020.87
08/31/87 15102.90 16618.45
09/30/87 14026.20 16254.50
10/31/87 9835.80 12753.28
11/30/87 9156.80 11702.41
12/31/87 10055.28 12592.97
01/31/88 10690.46 13123.13
02/29/88 11928.53 13734.67
03/31/88 12079.25 13310.27
04/30/88 12456.05 13458.01
05/31/88 12100.78 13575.09
06/30/88 13166.60 14198.19
07/31/88 13048.17 14144.24
08/31/88 13015.88 13663.33
09/30/88 13780.25 14245.39
10/31/88 14070.93 14641.41
11/30/88 13877.14 14432.04
12/31/88 13947.19 14684.60
01/31/89 14636.89 15759.52
02/28/89 14439.83 15367.10
03/31/89 15129.53 15725.16
04/30/89 15983.44 16541.29
05/31/89 17089.14 17211.21
06/30/89 16784.91 17113.11
07/31/89 18138.53 18658.42
08/31/89 19018.38 19024.13
09/30/89 18973.26 18946.13
10/31/89 18059.57 18506.58
11/30/89 18172.37 18884.12
12/31/89 18065.93 19337.33
01/31/90 16654.94 18039.80
02/28/90 17235.16 18272.51
03/31/90 18646.15 18756.73
04/30/90 18382.41 18287.82
05/31/90 20835.16 20070.88
06/30/90 20571.42 19934.40
07/31/90 19727.47 19870.61
08/31/90 16892.30 18074.30
09/30/90 15006.59 17194.08
10/31/90 14307.69 17120.15
11/30/90 16259.34 18226.11
12/31/90 17157.07 18734.62
01/31/91 18822.55 19551.45
02/28/91 20567.33 20949.38
03/31/91 22708.66 21456.35
04/30/91 23025.90 21507.85
05/31/91 24942.52 22436.99
06/30/91 24149.43 21409.37
07/31/91 25695.95 22407.05
08/31/91 27057.41 22938.10
09/30/91 26766.61 22555.03
10/31/91 26264.32 22857.27
11/30/91 25762.04 21936.12
12/31/91 28846.72 24445.61
01/31/92 30446.30 23990.92
02/29/92 31910.33 24302.81
03/31/92 31273.21 23828.90
04/30/92 29998.96 24529.47
05/31/92 30622.53 24649.67
06/30/92 29193.11 24282.39
07/31/92 30491.83 25275.53
08/31/92 29800.12 24757.39
09/30/92 30689.47 25049.52
10/31/92 32792.84 25137.20
11/30/92 35277.36 25994.38
12/31/92 35215.02 26314.11
01/31/93 35457.98 26535.14
02/28/93 34114.55 26896.02
03/31/93 36744.24 27463.53
04/30/93 34635.21 26798.91
05/31/93 36553.70 27517.12
06/30/93 35675.00 27596.92
07/31/93 35850.74 27486.53
08/31/93 37490.97 28528.27
09/30/93 38633.27 28308.61
10/31/93 39233.71 28894.59
11/30/93 39614.48 28620.10
12/31/93 39804.09 28966.40
01/31/94 38030.79 29951.26
02/28/94 39439.93 29139.58
03/31/94 38616.61 27869.09
04/30/94 39788.25 28225.82
05/31/94 37824.97 28688.72
06/30/94 37508.31 27985.85
07/31/94 38141.62 28903.78
08/31/94 40564.07 30088.84
Let's say you invested $10,000 in Fidelity Select Retailing Portfolio on
December 16, 1985, when the fund started, and paid a 3% sales charge. By
August 31, 1994, your investment would have grown to $40,564 - a 305.64%
increase. That compares to $10,000 invested in the S&P 500, which would
have grown to $30,089 over the same period - a 200.89% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST 31, 1994
% OF FUND'S
INVESTMENTS
AnnTaylor Stores Corp. 6.7
Sears, Roebuck & Co. 6.1
Gap, Inc. 4.5
Burlington Coat Factory Warehouse Corp. 3.3
Lowe's Companies, Inc. 3.2
Filene's Basement Corp. 3.0
Carson Pirie Scott & Co. 2.9
Circuit City Stores, Inc. 2.7
Cygne Designs, Inc. 2.2
Sunglass Hut International, Inc. 1.7
TOP INDUSTRIES AS OF AUGUST 31, 1994
Row: 1, Col: 1, Value: 52.1
Row: 1, Col: 2, Value: 4.4
Row: 1, Col: 3, Value: 6.0
Row: 1, Col: 4, Value: 10.2
Row: 1, Col: 5, Value: 13.3
Row: 1, Col: 6, Value: 14.0
General Apparel Stores 14.0%
Department Stores 13.3%
Women's Clothing
Stores 10.2%
Music, TV, & Electronic
Stores 6.0%
Drug Stores 4.4%
All Others 52.1%*
* INCLUDES SHORT-TERM INVESTMENTS
RETAILING PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Jeff Feinberg,
Portfolio Manager of Fidelity Select Retailing Portfolio
Q. JEFF, HOW HAS THE FUND PERFORMED?
A. For the six months ended August 31, 1994, the fund had a total return of
2. 85%, and for the year ended August 31, the fund returned 8. 20%. The S&P
500 returned 3. 26% and 5. 47% for six months and one year, respectively.
Q. WHAT FACTORS HAVE AFFECTED THE RETAILING ENVIRONMENT?
A. Because there was a big boom in the construction of malls and strip
malls in the 1980s, there is now an over-supply of retail stores. As a
result of such heightened competition, retailers are now unable to increase
their prices the way they could in the 1980s. Therefore, retail companies
must differentiate themselves from their competition on the basis of
breadth of assortment, value and superior service offered to their
customers in order to survive and thrive. In addition, I expect the recent
rise in interest rates will shift the consumer's focus away from big ticket
items like major appliances, and toward soft goods, especially apparel.
Q. WHAT HAS BEEN YOUR STRATEGY SINCE YOU TOOK OVER IN FEBRUARY?
A. I tended to focus on specialty retailers, but it's still a stock
picker's market. I gravitated toward retailers who put themselves in the
place of the customer and focused on three aspects: the price/value
relationship, or selling a product at a price the customer feels is fair
given its quality; customer service; and store appearance.
Q. WHAT ARE SOME EXAMPLES?
A. AnnTaylor, Lowe's and The Gap - all members of the fund's top 10 - are
companies well aware of the price/value relationship. AnnTaylor has
attracted customers by cutting prices while increasing the quality of its
goods. It is growing square footage at a healthy 30% per year and sales in
its existing stores are also increasing rapidly. Lowe's also reduced all of
its prices a few years ago and simultaneously has upgraded its product
quality. Its new stores are as physically attractive as those of Home
Depot's.
Q. WHAT COMPANIES ARE FOCUSING ON CUSTOMER SERVICE AND STORE APPEARANCE?
A. Best Buy, a consumer appliance retailer, offers low prices and
no-pressure sales. Customers serve themselves, but can get help at answer
centers, because research shows customers want to be left alone. Target, a
part of the Dayton/Hudson group, also has very attractive stores. Sears has
been working very hard at improving store appearance dramatically, and is
attractive because its stock price is incredibly cheap in relationship to
its potential earning power. I believe Sears' strategies - remodeling its
stores, expanding its apparel assortment, advertising more heavily and
acquiring new brands- are correct and that management can execute them
successfully.
Q. WERE THERE ANY DISAPPOINTMENTS?
A. Sure. Hechinger's, a lumber and building materials company, is a stock
the fund owned for a while, but not as of August 31. Its sales didn't
materialize as I had thought they would. I also invested in Chico's, a
specialty apparel company, whose stock was cheap because the company had
surplus inventory. Unfortunately, the company tried to rectify the
situation by not purchasing new merchandise, instead of selling the
overstock at a fair price and liquidating it. Sales dropped when customers
weren't satisfied by the same, recycled products. The fund was out of the
stock at the end of the period.
Q. THE FUND'S ASSETS GREW SUBSTANTIALLY, THEN DROPPED DURING THE PERIOD.
WHAT HAPPENED AND HOW DID IT AFFECT THE FUND?
A. A small group of investors made a substantial purchase of fund shares
and then redeemed them, hoping to time the market. This move made it harder
to manage the fund, but it had virtually no impact on its performance.
Q. WHAT DO YOU SEE HAPPENING IN THE RETAILING INDUSTRY OVER THE NEXT SIX
MONTHS?
A. I believe the industry will continue to contend with an over-supply of
store locations. At the same time, demand doesn't seem to be improving,
because interest rates and taxes are going up, and consumer confidence
seems to be flagging because there has only been a modest growth in
disposable income. There will be a big disparity between those companies
that will win by doing things right and continuing to improve- with the
correct price/value relationship, customer service and physical appearance
- - and those who lose out by failing to respond to the needs and desires of
the consumer.
FUND FACTS
START DATE: December 16, 1985
SIZE: as of August 31, 1994, more than
$58 million
FUND MANAGER: Jeff Feinberg, since February
1994; equity analyst, footwear and specialty retail
industries, 1992-1994; joined Fidelity in 1992
(checkmark)
RETAILING PORTFOLIO
INVESTMENTS AUGUST 31, 1994 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 85.1%
SHARES VALUE (NOTE 1)
APPAREL STORES - 24.8%
GENERAL APPAREL STORES - 14.0%
BON-TON Stores, Inc. (a) 40,700 $ 412,088
Burlington Coat Factory Warehouse
Corp. (a) 78,000 1,881,750
Filene's Basement Corp. (a) 151,900 1,737,356
Gap, Inc. 60,000 2,580,000
Gymboree Corp. (a) 24,800 632,400
Ross Stores, Inc. 51,300 833,625
8,077,219
MEN'S & BOYS' CLOTHING STORES - RETAIL - 1.1%
Todays Man, Inc. (a) 50,000 650,000
SHOE STORES - 0.7%
Baker (J.), Inc. 20,000 407,500
WOMEN'S CLOTHING STORES - 9.0%
AnnTaylor Stores Corp. (a) 93,700 3,876,838
Cato Corp. Class A 34,000 365,500
One Price Clothing Stores, Inc. (a) 24,250 372,844
Talbots, Inc. 17,000 605,625
5,220,807
TOTAL APPAREL STORES 14,355,526
AUTOS, TIRES, & ACCESSORIES - 1.3%
AUTO PARTS - RETAIL - 1.0%
Pep Boys-Manny, Moe & Jack 16,000 558,000
GAS & AUTO SERVICE - RETAIL - 0.3%
Uni Marts, Inc. 39,600 202,950
TOTAL AUTOS, TIRES, & ACCESSORIES 760,950
CONSUMER ELECTRONICS - 0.8%
WATCHES & CLOCKS - 0.8%
Fossil, Inc. (a) 20,000 465,000
DRUG STORES - 4.4%
General Nutrition Companies, Inc. (a) 22,000 496,375
Genovese Drug Stores, Inc. Class A 30,300 344,663
Perry Drug Stores, Inc. (a) 83,800 471,375
Revco (D.S.), Inc. (a) 36,400 696,150
Rite Aid Corporation 25,000 515,625
2,524,188
ELECTRICAL EQUIPMENT - 0.9%
WIRING & LIGHTING - 0.9%
Catalina Lighting, Inc. (a) 45,500 517,563
GENERAL MERCHANDISE STORES - 18.8%
CONVENIENCE STORES - 0.4%
Dairy Mart Convenience Stores, Inc. (a):
Class A 40,000 160,000
Class B 35,000 91,875
251,875
DEPARTMENT STORES - 13.3%
Aoyama Trading Co. Ord. 2,900 112,874
Broadway Stores, Inc. (a) 40,000 480,000
Carson Pirie Scott & Co. (a) 81,900 1,668,713
Dillard Department Stores, Inc. Class A 19,000 532,000
Federated Department Stores, Inc. (a) 25,000 528,125
Mercantile Stores Co., Inc. 9,700 363,750
Sears, Roebuck & Co. 74,800 3,543,646
Younkers, Inc. (a) 25,300 455,400
7,684,508
SHARES VALUE (NOTE 1)
GENERAL MERCHANDISE STORES - 2.6%
Cifra SA, Class C 180,000 $ 485,525
Dayton Hudson Corp. 6,000 508,500
Hornbach Baumarket AG (Bearer) 850 483,718
1,477,743
VARIETY STORES - 2.5%
Consolidated Stores Corp. (a) 21,500 354,750
Freds, Inc. Class A 25,000 293,750
Mac Frugals Bargains C/O, Inc. 42,000 792,750
1,441,250
TOTAL GENERAL MERCHANDISE STORES 10,855,376
GROCERY STORES - 0.9%
GROCERY - RETAIL - 0.9%
Kroger Co. (The) (a) 20,000 507,500
HOME FURNISHINGS - 2.0%
FURNITURE STORES - 2.0%
Levitz Furniture, Inc. (a) 66,600 624,375
Rhodes, Inc. (a) 55,000 550,000
1,174,375
TOTAL HOME FURNISHINGS 1,174,375
HOUSEHOLD PRODUCTS - 0.8%
COSMETICS - 0.8%
Alberto-Culver Co. Class A 22,000 481,250
LEISURE DURABLES & TOYS - 2.8%
BOAT DEALERS - RETAIL - 1.0%
West Marine, Inc. (a) 29,500 575,250
LEISURE DURABLES - 0.8%
National R V Holdings, Inc. 50,000 450,000
SPORTING & ATHLETIC GOODS - 1.0%
Leslie's Poolmart 43,670 562,251
TOTAL LEISURE DURABLES & TOYS 1,587,501
REAL ESTATE INVESTMENT TRUSTS - 0.9%
Chelsea GCA Realty, Inc. 19,000 534,375
RETAIL & WHOLESALE, MISCELLANEOUS - 19.9%
DURABLE GOODS - WHOLESALE - 0.9%
Waban, Inc. (a) 28,000 518,000
GIFT, NOVELTY & SOUVENIR SHOPS - 1.1%
Cole National Corp. Class A (a) 53,000 655,875
JEWELRY STORES - 1.1%
Friedmans, Inc. Class A (a) 42,100 626,238
LUMBER & BUILDING MATERIALS - RETA - 4.0%
Lowe's Companies, Inc. 51,300 1,853,213
Payless Cashways, Inc. (a) 35,000 437,500
2,290,713
MAIL ORDER - 1.8%
Damark International, Inc. Class A (a) 25,000 246,875
Lillian Vernon Corp. 14,500 288,188
Spiegel, Inc. Class A 27,700 536,688
1,071,751
MUSIC, TV, & ELECTRONIC STORES - 6.0%
Best Buy Co., Inc. (a) 22,800 812,250
Circuit City Stores, Inc. 64,600 1,534,250
Futures Shops Ltd. (a) 26,700 454,098
Rex Stores Corp. (a) 39,600 663,300
3,463,898
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
RETAIL, GENERAL - 4.1%
Office Depot, Inc. (a) 13,650 $ 324,188
Pier 1 Imports, Inc. 65,000 528,125
Staples, Inc. 17,500 538,125
Sunglass Hut International, Inc. (a) 26,000 975,000
2,365,438
SEWING STORES - 0.9%
Fabri-Centers of America, Inc. 36,000 540,000
TOTAL RETAIL & WHOLESALE, MISCELLANEOUS 11,531,913
SERVICES - 0.7%
GENERAL SERVICES - 0.7%
Regis Corporation (a) 31,400 416,050
TEXTILES & APPAREL - 6.1%
APPAREL - 2.9%
Cygne Designs, Inc. (a) 47,300 1,265,275
Fila Holding Spa sponsored ADR 23,100 395,588
1,660,863
FOOTWEAR - 2.4%
K-Swiss, Inc. Class A 2,400 52,800
NIKE, Inc. Class B 8,500 547,188
Nine West Group, Inc. (a) 9,100 257,075
Reebok International Ltd. 15,000 545,625
1,402,688
MEN'S AND BOYS' CLOTHING - 0.8%
Salant Corp. (a) 84,000 441,000
TOTAL TEXTILES & APPAREL 3,504,551
TOTAL COMMON STOCKS
(Cost $45,373,645) 49,216,118
NONCONVERTIBLE PREFERRED STOCKS - 1.2%
APPAREL STORES - 1.2%
WOMEN'S CLOTHING STORES - 1.2%
Dylex Limited Partnership Class A
(Cost $640,761) 1,150,000 723,454
REPURCHASE AGREEMENTS - 13.7%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account, at 4.83% dated
8/31/94 due 9/1/94 $ 7,900,060 7,899,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $53,913,406) $ 57,838,572
LEGEND
1. Non-income producing
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $188,488,473 and $169,691,683, respectively (see Note 4 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $119,724 for the period
(see Note 5 of Notes to Financial Statements).
At the period end, the value of securities loaned and the value of
collateral amounted to $525,000 and $546,000, respectively (see Note 7 of
Notes to Financial Statements).
The maximum loan and average daily loan balances during the periods for
which loans were outstanding amounted to $23,218,000 and $4,482,786,
respectively. The weighted average interest rate paid was 4.6% (see Note 8
of Notes to Financial Statements).
INCOME TAX INFORMATION
At August 31, 1994, the aggregate cost of investment securities for income
tax purposes was $53,949,499. Net unrealized appreciation aggregated
$3,889,073, of which $5,135,192 related to appreciated investment
securities and $1,246,119 related to depreciated investment securities.
RETAILING PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
AUGUST 31, 1994 (UNAUDITED)
ASSETS
Investment in securities, at value (including repurchase agreements of $7,899,000) (cost $53,913,406)
- - See $ 57,838,572
accompanying schedule
Cash 667
Receivable for investments sold 3,042,900
Receivable for fund shares sold 1,062,964
Dividends receivable 51,235
Redemption fees receivable 113
Other receivables 6,029
Prepaid expenses 28,472
TOTAL ASSETS 62,030,952
LIABILITIES
Payable for investments purchased $ 2,400,517
Payable for fund shares redeemed 663,468
Accrued management fee 26,977
Other payables and accrued expenses 63,531
Collateral on securities loaned, 546,000
at value
TOTAL LIABILITIES 3,700,493
NET ASSETS $ 58,330,459
Net Assets consist of:
Paid in capital $ 59,845,457
Accumulated net investment (loss) (181,135
)
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions (5,258,186
)
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies 3,924,323
NET ASSETS, for 2,276,962 shares outstanding $ 58,330,459
NET ASSET VALUE and redemption price per share ($58,330,459 (divided by) shares) $25.62
Maximum offering price per share (100/97 of $25.62) $26.41
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED AUGUST 31, 1994 (UNAUDITED)
INVESTMENT INCOME $ 351,394
Dividends
Interest (including security lending fees of $12,958) 173,527
TOTAL INCOME 524,921
EXPENSES
Management fee $ 243,501
Transfer agent 473,837
Fees
Redemption fees (76,389
)
Accounting and security 40,748
lending fees
Non-interested trustees' compensation 226
Custodian fees and expenses 7,557
Registration fees 28,472
Audit 11,140
Legal 821
Interest 10,243
Reports to shareholders 3,881
Miscellaneous 81
Total expenses before reductions 744,118
Expense reductions (38,062 706,056
)
NET INVESTMENT INCOME (LOSS) (181,135
)
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities (5,119,550
)
Foreign currency transactions 214 (5,119,336
)
Change in net unrealized appreciation (depreciation) on:
Investment securities 600,814
Assets and liabilities in foreign currencies (843 599,971
)
NET GAIN (LOSS) (4,519,365
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ (4,700,500
)
OTHER INFORMATION $261,045
Sales Charges Paid to FDC
Deferred sales charges withheld $1,512
by FDC
Exchange fees withheld by FSC $56,033
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS YEAR ENDED
ENDED FEBRUARY 28,
AUGUST 31, 1994 1994
(UNAUDITED)
Operations $ (181,135 $ (499,992
Net investment income (loss) ) )
Net realized gain (loss) (5,119,336 8,382,130
)
Change in net unrealized appreciation (depreciation) 599,971 (727,175
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (4,700,500 7,154,963
)
Distributions to shareholders from net realized gain - (7,142,724
)
Share transactions 151,917,304 83,392,727
Net proceeds from sales of shares
Reinvestment of distributions - 7,020,042
Cost of shares redeemed (142,010,448 (112,598,899
) )
Paid in capital portion of redemption fees 333,971 86,108
Net increase (decrease) in net assets resulting from share transactions 10,240,827 (22,100,022
)
TOTAL INCREASE (DECREASE) IN NET ASSETS 5,540,327 (22,087,783
)
NET ASSETS
Beginning of period 52,790,132 74,877,915
End of period (including undistributed net investment income (loss) of $(181,135) and $0,
respectively) $ 58,330,459 $ 52,790,132
OTHER INFORMATION
Shares
Sold 6,006,759 3,246,217
Issued in reinvestment of distributions - 282,598
Redeemed (5,848,836 (4,546,561
) )
Net increase (decrease) 157,923 (1,017,746
)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS YEAR ENDED TEN MONTHS YEARS ENDED APRIL 30,
ENDED FEBRUARY 28, ENDED
AUGUST 31, 1994 FEBRUARY 28,
SELECTED PER-SHARE DATAC (UNAUDITED) 1994 1993 1992 1991 1990
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 24.91 $ 23.87 $ 22.13 $ 17.42 $ 13.94 $ 14.60
Income from Investment Operations
Net investment income (loss) (.06) (.22) (.08) (.03) (.05) .32F
Net realized and unrealized gain (loss) .66G 3.85 2.93 5.09 3.43 1.72
Total from investment operations .60 3.63 2.85 5.06 3.38 2.04
Less Distributions
From net investment income - - - - - (.16)
From net realized gain - (2.63) (1.17) (.50) (.03) (2.57)
Total distributions - (2.63) (1.17) (.50) (.03) (2.73)
Redemption fees added to paid in capital .11 .04 .06 .15 .13 .03
Net asset value, end of period $ 25.62 $ 24.91 $ 23.87 $ 22.13 $ 17.42 $ 13.94
TOTAL RETURND, E 2.85% 15.61% 13.72% 30.28% 25.26% 15.01%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 58,330 $ 52,790 $ 74,878 $ 48,441 $ 18,069 $ 8,451
Ratio of expenses to average net assetsB 1.79%A 1.83% 1.77%A 1.87% 2.54% 2.50%
Ratio of expenses to average net assets before 1.89%A 1.86% 1.77%A 1.87% 2.87% 3.18%
expense reductionsB
Ratio of net investment income (loss) to average net (.46)% (.87) (.44)% (.13)% (.34)% 2.13%
assets A % A
Portfolio turnover rate 513%A 154% 171%A 205% 115% 212%
</TABLE>
A ANNUALIZED
B SEE NOTE 9 OF NOTES TO FINANCIAL STATEMENTS.
C NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
D TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
E THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
F INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND WHICH AMOUNTED TO
$.29 PER SHARE.
G THE AMOUNT SHOWN FOR A SHARE OUTSTANDING DOES NOT CORRESPOND WITH THE
AGGREGATE NET LOSS ON INVESTMENTS FOR THE PERIOD ENDED DUE TO THE TIMING OF
SALES AND
REPURCHASES OF FUND SHARES IN RELATION TO FLUCTUATING MARKET VALUES OF THE
INVESTMENTS OF THE FUND.
AIR TRANSPORTATION PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance: total
percentage change in value, the average annual percentage change, or the
growth of a hypothetical $10,000 investment. Each performance figure
includes changes in a fund's share price, plus reinvestment of any
dividends (income) and capital gains (the profits the fund earns when it
sells stocks that have grown in value). If Fidelity had not reimbursed
certain fund expenses during the period, the fund's total returns would
have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 6 PAST 1 PAST 5 LIFE OF
AUGUST 31, 1994 MONTH YEAR YEARS FUND
S
AIR TRANSPORTATION -5.04% 0.91% 31.56% 108.10%
AIR TRANSPORTATION
(INCL. 3% SALES CHARGE) -7.88% -2.12% 27.61% 101.86%
S&P 500 3.26% 5.47% 58.16% 200.89%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one year, five years, or
since the fund started on December 16, 1985. You can compare these figures
to the performance of the S&P 500 - a common proxy for the U.S. stock
market. This benchmark includes reinvested dividends and capital gains, if
any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
AUGUST 31, 1994 YEAR YEARS FUND
AIR TRANSPORTATION 0.91% 5.64% 8.77%
AIR TRANSPORTATION
(INCL. 3% SALES CHARGE) -2.12% 5.00% 8.39%
S&P 500 5.47% 9.60% 13.47%
AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and
show you what would have happened if the fund had performed at a constant
rate each year.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of growth in the long run
and volatility in the short run. Unlike the broader
market, however, some sectors may not have
a history of growth in the long run. And, as
with all stock funds, the share price and return
of a fund that invests in a sector will vary. That
means if you sell your shares during a sector
downturn, you might lose money. But if you
can identify a sector that is about to
experience rapid growth you may have the
potential for above-average gains.
(checkmark)
$10,000 OVER LIFE OF FUND
Select Air Transportation (034) Standard & Poor's
12/16/85 9700.00 10000.00
12/31/85 9215.00 10080.42
01/31/86 9961.90 10136.87
02/28/86 10553.60 10895.11
03/31/86 10573.00 11503.06
04/30/86 10388.70 11373.07
05/31/86 10408.10 11978.12
06/30/86 9826.10 12180.55
07/31/86 9234.40 11499.66
08/31/86 9486.60 12352.93
09/30/86 9680.60 11331.35
10/31/86 10194.70 11985.16
11/30/86 10320.80 12276.40
12/31/86 10485.70 11963.36
01/31/87 11426.60 13574.82
02/28/87 11911.60 14111.03
03/31/87 11504.20 14518.83
04/30/87 11513.90 14389.62
05/31/87 12202.60 14514.81
06/30/87 12357.80 15247.80
07/31/87 12629.40 16020.87
08/31/87 12736.10 16618.45
09/30/87 12270.50 16254.50
10/31/87 8565.10 12753.28
11/30/87 7983.10 11702.41
12/31/87 8319.92 12592.97
01/31/88 8552.87 13123.13
02/29/88 9262.84 13734.67
03/31/88 9662.19 13310.27
04/30/88 9551.26 13458.01
05/31/88 9407.05 13575.09
06/30/88 10616.21 14198.19
07/31/88 10305.60 14144.24
08/31/88 9728.75 13663.33
09/30/88 10372.16 14245.39
10/31/88 10571.84 14641.41
11/30/88 10327.79 14432.04
12/31/88 10738.24 14684.60
01/31/89 11736.63 15759.52
02/28/89 11958.49 15367.10
03/31/89 12557.53 15725.16
04/30/89 13056.72 16541.29
05/31/89 13389.52 17211.21
06/30/89 13322.59 17113.11
07/31/89 14260.64 18658.42
08/31/89 15343.87 19024.13
09/30/89 14740.84 18946.13
10/31/89 13579.44 18506.58
11/30/89 13445.43 18884.12
12/31/89 13565.93 19337.33
01/31/90 12169.78 18039.80
02/28/90 12681.70 18272.51
03/31/90 13344.87 18756.73
04/30/90 12856.22 18287.82
05/31/90 13752.09 20070.88
06/30/90 13786.99 19934.40
07/31/90 13368.14 19870.61
08/31/90 11250.65 18074.30
09/30/90 10122.09 17194.08
10/31/90 10657.28 17120.15
11/30/90 10494.40 18226.11
12/31/90 11099.40 18734.62
01/31/91 12414.11 19551.45
02/28/91 13810.26 20949.38
03/31/91 13752.09 21456.35
04/30/91 13414.68 21507.85
05/31/91 14205.83 22436.99
06/30/91 13906.29 21409.37
07/31/91 14333.81 22407.05
08/31/91 14155.68 22938.10
09/30/91 13680.66 22555.03
10/31/91 14345.69 22857.27
11/30/91 13704.41 21936.12
12/31/91 15212.61 24445.61
01/31/92 16091.40 23990.92
02/29/92 16815.81 24302.81
03/31/92 15830.13 23828.90
04/30/92 15010.72 24529.47
05/31/92 15212.61 24649.67
06/30/92 14718.62 24282.39
07/31/92 14634.03 25275.53
08/31/92 14017.73 24757.39
09/30/92 14476.93 25049.52
10/31/92 14996.55 25137.20
11/30/92 15359.08 25994.38
12/31/92 16211.75 26314.11
01/31/93 16358.35 26535.14
02/28/93 16614.90 26896.02
03/31/93 18447.43 27463.53
04/30/93 18655.96 26798.91
05/31/93 19721.66 27517.12
06/30/93 18251.73 27596.92
07/31/93 18876.45 27486.53
08/31/93 20003.40 28528.27
09/30/93 19599.17 28308.61
10/31/93 20726.12 28894.59
11/30/93 20775.12 28620.10
12/31/93 21219.10 28966.40
01/31/94 22038.56 29951.26
02/28/94 21256.35 29139.58
03/31/94 20027.15 27869.09
04/30/94 19895.44 28225.82
05/31/94 19063.72 28688.72
06/30/94 18482.83 27985.85
07/31/94 19446.58 28903.78
08/31/94 20185.89 30088.84
Let's say you invested $10,000 in Fidelity Select Air Transportation
Portfolio on December 16, 1985, when the fund started, and paid a 3% sales
charge. By August 31, 1994, your investment would have grown to $20,186 - a
101.86% increase. That compares to $10,000 invested in the S&P 500, which
would have grown to $30,089 over the same period - a 200.89% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST 31, 1994
% OF FUND'S
INVESTMENTS
KLM Royal Dutch Airlines 8.4
Northwest Airlines Corp. Class A 6.3
SkyWest, Inc. 5.6
Airborne Freight Corp. 5.6
Continental Airlines, Inc. 5.5
Comair Holdings, Inc. 5.4
Atlantic Southeast Airlines, Inc. 5.3
British Airways PLC ADR 4.6
Delta Airlines, Inc. 4.5
AMR Corp. 3.9
TOP INDUSTRIES AS OF AUGUST 31, 1994
Row: 1, Col: 1, Value: 20.1
Row: 1, Col: 2, Value: 2.4
Row: 1, Col: 3, Value: 4.5
Row: 1, Col: 4, Value: 6.6
Row: 1, Col: 5, Value: 17.3
Row: 1, Col: 6, Value: 49.1
Air Transportation,
Major National 49.1%
Air Transportation,
Regional 17.3%
Air Courier Services 6.6%
Conglomerates 4.5%
Aircraft 2.4%
All Others 20.1%*
* INCLUDES SHORT-TERM INVESTMENTS
AIR TRANSPORTATION PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Brenda Reed,
Portfolio Manager of Fidelity Select Air
Transportation Portfolio
Q. BRENDA, HOW DID THE FUND PERFORM?
A. The fund has experienced a setback in 1994, after performing well in
1993. The fund's total return for the six months ended August 31, 1994, was
- -5.04%. That trailed the S&P 500, which returned 3.26% during the same
period. For the 12 months ended August 31, the fund was up 0.91%, compared
to a rise of 5.47% for the S&P 500.
Q. WHAT CAUSED THE FUND'S FORTUNE TO CHANGE?
A. There were several reasons why performance dropped off. First, the air
transportation industry is very cyclically oriented, meaning these stocks
tend to rise and fall in step with the economy. When the Federal Reserve
Board began raising interest rates earlier this year, investors feared
higher rates would slow economic growth. That triggered a sharp sell-off in
cyclical stocks, including many of the fund's investments. In part,
investor fears were well founded. For example, earnings growth slowed at
air freight companies such as Federal Express and Airborne Freight, which
hurt their stock performance.
Q. WHAT OTHER FACTORS FIGURED IN?
A. One of my biggest fears six months ago was that we would see fare wars
break out among the major airlines, which limits their ability to raise
ticket prices. Sure enough, it happened. Continental and U. S. Air, for
example, slashed fares up and down the Atlantic Seaboard. The airlines have
made up some of these revenue losses through increased passenger volumes,
but the net result is that fare wars have been costly. I think this trend
may continue, which is the main reason I've lessened the fund's investments
in some of the major airlines such as American (AMR) and United (UAL). In
addition, oil prices have been rising lately, which means higher jet fuel
prices. That's resulted in the airlines' costs simply not falling as
investors had hoped.
Q. SIX MONTHS AGO, YOU MENTIONED THAT SEVERAL OF THE SMALLER, REGIONAL
AIRLINES WERE ATTRACTIVE INVESTMENTS. HOW DID THEY DO?
A. Most of the regional airlines have continued to show excellent earnings
growth, as they enter into more partnership agreements with the majors to
pick up secondary routes. In addition, they've been insulated from fare
wars to some extent because often they're the only airlines flying those
shorter routes. However, all of that didn't matter this past spring.
Investors weren't discriminating; they sold the stocks of regionals as
heavily as those of the majors. But I still believed strongly in the
regionals' story, and stocks such as Atlantic Southeast, Comair and SkyWest
have bounced back recently.
Q. CONSIDERING THE ECONOMIC FEARS HERE IN THE U.S., DID YOU HAVE ANY BETTER
LUCK OVERSEAS?
A. I did. Dutch airline KLM was the fund's largest investment at the end of
August. The company has benefited from the early stages of an economic
recovery in Europe. Ridership is up and ticket prices are stabilizing. In
addition, the airline's costs have fallen dramatically. KLM's stock has
risen accordingly and has been one of the fund's top performers. While
British Airways also has benefited from European economic growth, its stock
has remained pretty flat over the past six months. But held up against most
of the fund's U.S. stocks, that's not bad. Perhaps the fund's most
interesting story - and another airline benefiting from overseas exposure -
is Northwest Airlines.
Q. WHAT HAPPENED WITH NORTHWEST?
A. The company went public in March, and I bought its stock at around $14
per share. By August, its share price had risen to about $19. Northwest has
a strong international presence - roughly 35% of its revenues are derived
from the Far East, a region experiencing strong economic growth. In
addition, the company, in large part, was able to sidestep the fare wars
problem. It has U.S. hubs in places where many of the low-cost carriers,
such as Southwest Airlines, don't fly: Detroit and Minneapolis.
Q. WHAT'S YOUR VIEW ON THE NEXT SIX MONTHS?
A. Perhaps the biggest question mark is the economy. If it weakens more
than expected, airlines will be forced to slash prices to sell seats, which
doesn't bode well for the fund. However, Continental recently began pulling
back from a half-price sale in some of its markets, which may suggest that
the "pricing power" of airlines is strengthening a bit. Another wild card
is fuel prices. Worldwide demand for oil seems to be picking up, and new
oil supply is limited. That could mean more expensive fuel. As for my
strategy, I expect to lean toward those companies that have good exposure
to growing economies overseas. Also, I think many of the regional airlines
are poised for solid growth. We'll just have to see if the U. S. economy
cooperates.
FUND FACTS
START DATE: December 16, 1985
SIZE: as of August 31, 1994, more than
$12 million
MANAGER: Brenda Reed, since December
1992; manager, Fidelity Select Automotive
Portfolio, since May 1994; joined Fidelity in
1992
(checkmark)
AIR TRANSPORTATION PORTFOLIO
INVESTMENTS AUGUST 31, 1994 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 85.1%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 2.4%
AIRCRAFT - 2.4%
Boeing Co. 6,500 $ 295,747
AIR TRANSPORTATION - 66.4%
AIR TRANSPORTATION, MAJOR NATIONAL - 49.1%
AMR Corp. (a) 7,800 469,950
Aerovias De Mexico SA de CV sponsored
ADR representing B shares (a)(b) 15,400 59,675
Air Canada, Inc. (a) 49,200 274,423
Alaska Air Group, Inc. (a) 13,000 230,750
British Airways PLC ADR 8,800 563,200
Cathay Pacific Airways Ltd. 5,400 9,084
Continental Airlines, Inc. (a) 31,400 663,325
Delta Air Lines, Inc. 11,000 547,250
Great Lakes Aviation (a) 29,000 213,875
Japan Airlines Co. Ltd. 21,000 158,862
KLM Royal Dutch Airlines (a) 34,700 1,019,328
Mesa Airlines, Inc. (a) 39,100 298,138
Northwest Airlines Corp. Class A (a) 40,000 760,000
Singapore International Airlines 23,900 224,735
Southwest Airlines Co. 4,800 127,200
UAL Corp. 3,268 330,068
5,949,863
AIR TRANSPORTATION, REGIONAL - 17.3%
Amtran, Inc. (a) 13,500 118,125
Atlantic Southeast Airlines, Inc. 22,100 646,425
Comair Holdings, Inc. 24,550 650,575
SkyWest, Inc. 24,550 681,263
2,096,388
TOTAL AIR TRANSPORTATION 8,046,251
CONGLOMERATES - 4.5%
Allied-Signal, Inc. 7,500 280,313
Textron, Inc. 4,800 265,200
545,513
ENTERTAINMENT - 1.4%
RECREATIONAL SERVICES - 1.4%
Airtour PLC 25,000 174,555
OIL & GAS - 2.0%
OIL & GAS EXPLORATION - 2.0%
British Petroleum PLC ADR 3,140 238,640
TRUCKING & FREIGHT - 8.4%
AIR COURIER SERVICES - 6.6%
Airborne Freight Corp. 22,100 674,050
Federal Express Corp. (a) 1,700 120,488
794,538
FREIGHT FORWARDING - 1.8%
Expeditors International of
Washington, Inc. 4,000 81,000
Harper Group 9,000 136,125
217,125
TOTAL TRUCKING & FREIGHT 1,011,663
TOTAL COMMON STOCKS
(Cost $9,927,544) 10,312,369
REPURCHASE AGREEMENTS - 14.9%
MATURITY VALUE (NOTE 1)
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account, at 4.83% dated
8/31/94 due 9/1/94 $ 1,809,243 $ 1,809,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $11,736,544) $ 12,121,369
LEGEND
1. Non-income producing
2. 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 period
end, the value of this security amounted to $59,675 or 0.5% of net assets.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $5,954,001 and $7,202,327, respectively (see Note 4 of Notes to
Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $2,072 for the period (see
Note 5 of Notes to Financial Statements).
The maximum loan and average daily loan balances during the periods for
which loans were outstanding amounted to $1,349,000 and $1,207,000,
respectively. The weighted average interest rate paid was 3.8% (see Note 8
of Notes to Financial Statements).
Distribution of investments by country, as a percentage of total value of
investment in securities, is as follows:
United States 77.4%
Netherlands 8.4
United Kingdom 8.1
Canada 2.3
Singapore 1.9
Japan 1.3
Others (individually less than 1%) 0.6
TOTAL 100.0%
INCOME TAX INFORMATION
At August 31, 1994, the aggregate cost of investment securities for income
tax purposes was $11,774,407. Net unrealized appreciation aggregated
$346,962, of which $1,079,183 related to appreciated investment securities
and $732,221 related to depreciated investment securities.
AIR TRANSPORTATION PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
AUGUST 31, 1994 (UNAUDITED)
ASSETS
Investment in securities, $ 12,121,369
at value (including
repurchase
agreements of
$1,809,000) (cost
$11,736,544) - See
accompanying
schedule
Cash 116
Receivable for fund 371,499
shares sold
Dividends receivable 9,343
Redemption fees 15
receivable
Other receivables 225
Prepaid expenses 5,615
Receivable from 3,876
investment adviser for
expense reductions
TOTAL ASSETS 12,512,058
LIABILITIES
Payable for fund shares $ 184,542
redeemed
Accrued management 6,059
fee
Other payables and 30,433
accrued expenses
TOTAL LIABILITIES 221,034
NET ASSETS $ 12,291,024
Net Assets consist of:
Paid in capital $ 12,086,808
Accumulated net (65,117
investment (loss) )
Accumulated (115,492
undistributed net )
realized gain (loss) on
investments and
foreign currency
transactions
Net unrealized 384,825
appreciation
(depreciation) on
investments
NET ASSETS, for 803,963 $ 12,291,024
shares outstanding
NET ASSET VALUE and $15.29
redemption price per
share ($12,291,024 (divided by)
shares)
Maximum offering price $15.76
per share (100/97 of
$15.29)
</TABLE>
STATEMENT OF OPERATIONS
SIX MONTHS ENDED AUGUST 31, 1994 (UNAUDITED)
INVESTMENT INCOME $ 33,303
Dividends
Interest 19,038
TOTAL INCOME 52,341
EXPENSES
Management fee $ 28,568
Transfer agent 67,296
Fees
Redemption fees (6,569
)
Accounting fees and 22,519
expenses
Non-interested trustees' 28
compensation
Custodian fees and 3,433
expenses
Registration fees 5,615
Audit 10,382
Legal 186
Interest 251
Reports to shareholders 1,078
Miscellaneous 25
Total expenses before 132,812
reductions
Expense reductions (15,354 117,458
)
NET INVESTMENT INCOME (65,117
(LOSS) )
REALIZED AND UNREALIZED
GAIN (LOSS)
Net realized gain (loss)
on:
Investment securities (67,220
)
Foreign currency 73 (67,147
transactions )
Change in net unrealized (245,172
appreciation )
(depreciation) on
investment securities
NET GAIN (LOSS) (312,319
)
NET INCREASE $ (377,436
(DECREASE) IN NET )
ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION $22,408
Sales Charges Paid to
FDC
Deferred sales $740
charges withheld
by FDC
Exchange fees $8,243
withheld by FSC
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS YEAR ENDED
ENDED FEBRUARY 28,
AUGUST 31, 1994 1994
(UNAUDITED)
Operations $ (65,117 $ (198,334
Net investment income (loss) ) )
Net realized gain (loss) (67,147 2,844,048
)
Change in net unrealized appreciation (depreciation) (245,172 638,748
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (377,436 3,284,462
)
Distributions to shareholders (529,973 (252,463
From net realized gain ) )
In excess of net realized gain - (52,807
)
TOTAL DISTRIBUTIONS (529,973 (305,270
) )
Share transactions 10,415,868 74,183,528
Net proceeds from sales of shares
Reinvestment of distributions 502,275 292,761
Cost of shares redeemed (8,774,914 (78,501,131
) )
Paid in capital portion of redemption fees 20,462 212,184
Net increase (decrease) in net assets resulting from share transactions 2,163,691 (3,812,658
)
TOTAL INCREASE (DECREASE) IN NET ASSETS 1,256,282 (833,466
)
NET ASSETS
Beginning of period 11,034,742 11,868,208
End of period (including accumulated net investment (loss) of $(65,117) and $0, respectively) $ 12,291,024 $ 11,034,742
OTHER INFORMATION
Shares
Sold 705,711 4,831,385
Issued in reinvestment of distributions 33,823 17,788
Redeemed (580,209 (5,077,239
) )
Net increase (decrease) 159,325 (228,066
)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS YEAR ENDED TEN MONTHS YEARS ENDED APRIL 30,
ENDED FEBRUARY 28, ENDED
AUGUST 31, 1994 FEBRUARY 28,
SELECTED PER-SHARE DATAC (UNAUDITED) 1994 1993 1992 1991 1990
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 17.12 $ 13.60 $ 12.64 $ 11.53 $ 11.05 $ 11.77
Income from Investment Operations
Net investment income (loss) (.11) (.18) (.09)F (.13) (.04) -
Net realized and unrealized gain (loss) (.81) 3.78 1.33 1.40 .38 (.16)
Total from investment operations (.92) 3.60 1.24 1.27 .34 (.16)
Less Distributions
From net realized gain (.94) (.22) (.36) (.25) - (.57)
In excess of net realized gain - (.05) - - - -
Total distributions (.94) (.27) (.36) (.25) - (.57)
Redemption fees added to paid in capital .03 .19 .08 .09 .14 .01
Net asset value, end of period $ 15.29 $ 17.12 $ 13.60 $ 12.64 $ 11.53 $ 11.05
TOTAL RETURND, E (5.04)% 27.94% 10.69% 11.90% 4.34% (1.54)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 12,291 $ 11,035 $ 11,868 $ 6,971 $ 4,372 $ 4,688
Ratio of expenses to average net assetsB 2.50%A 2.31% 2.48%A 2.51% 2.48% 2.55%
Ratio of expenses to average net assets before 2.83%A 2.33% 2.64%A 3.06% 3.03% 3.61%
expense reductionsB
Ratio of net investment income (loss) to average net (1.39)% (1.11)% (.90)% (1.04)% (.34)% (.03)%
assets A A
Portfolio turnover rate 133%A 171% 96%A 261% 106% 143%
</TABLE>
A ANNUALIZED
B SEE NOTE 9 OF NOTES TO FINANCIAL STATEMENTS.
C NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
D TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
E THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
F INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND WHICH AMOUNTED TO
$.01 PER SHARE.
AUTOMOTIVE PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance: total
percentage change in value, the average annual percentage change, or the
growth of a hypothetical $10,000 investment. Each performance figure
includes changes in a fund's share price, plus reinvestment of any
dividends (income) and capital gains (the profits the fund earns when it
sells stocks that have grown in value).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 6 PAST 1 PAST 5 LIFE OF
AUGUST 31, 1994 MONTH YEAR YEARS FUND
S
AUTOMOTIVE -10.27% -1.10% 104.37% 189.07%
AUTOMOTIVE
(INCL. 3% SALES CHARGE) -12.96% -4.07% 98.24% 180.40%
S&P 500 3.26% 5.47% 58.16% 148.27%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one year, five years, or
since the fund started on June 30, 1986. You can compare these figures to
the performance of the S&P 500 - a common proxy for the U.S. stock market.
This benchmark includes reinvested dividends and capital gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
AUGUST 31, 1994 YEAR YEARS FUND
AUTOMOTIVE -1.10% 15.37% 13.86%
AUTOMOTIVE
(INCL. 3% SALES CHARGE) -4.07% 14.67% 13.44%
S&P 500 5.47% 9.60% 11.76%
AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and
show you what would have happened if the fund had performed at a constant
rate each year.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of growth in the long run
and volatility in the short run. Unlike the broader
market, however, some sectors may not have
a history of growth in the long run. And, as
with all stock funds, the share price and return
of a fund that invests in a sector will vary. That
means if you sell your shares during a sector
downturn, you might lose money. But if you
can identify a sector that is about to
experience rapid growth you may have the
potential for above-average gains.
(checkmark)
$10,000 OVER LIFE OF FUND
Select Automotive (502) Standard & Poor's
06/30/86 9700.00 10000.00
07/31/86 9176.20 9488.77
08/31/86 9603.00 10192.84
09/30/86 8943.40 9349.89
10/31/86 9399.30 9889.38
11/30/86 9506.00 10129.69
12/31/86 9341.10 9871.39
01/31/87 10747.60 11201.06
02/28/87 11707.90 11643.50
03/31/87 12028.00 11980.00
04/30/87 12202.60 11873.38
05/31/87 12183.20 11976.68
06/30/87 12367.50 12581.50
07/31/87 13230.80 13219.38
08/31/87 13744.90 13712.46
09/30/87 13541.20 13412.16
10/31/87 9476.90 10523.18
11/30/87 9098.60 9656.07
12/31/87 9952.20 10390.90
01/31/88 10402.71 10828.35
02/29/88 11068.24 11332.96
03/31/88 11866.87 10982.77
04/30/88 12071.65 11104.68
05/31/88 12030.70 11201.29
06/30/88 12726.94 11715.43
07/31/88 12583.60 11670.91
08/31/88 11999.98 11274.10
09/30/88 12051.17 11754.37
10/31/88 11959.02 12081.14
11/30/88 11703.05 11908.38
12/31/88 11948.78 12116.78
01/31/89 12501.68 13003.73
02/28/89 12368.58 12679.94
03/31/89 12604.07 12975.38
04/30/89 13167.21 13648.80
05/31/89 13361.75 14201.58
06/30/89 13126.26 14120.63
07/31/89 13587.01 15395.72
08/31/89 13720.11 15697.48
09/30/89 13402.71 15633.12
10/31/89 12286.67 15270.43
11/30/89 12399.30 15581.95
12/31/89 12438.82 15955.91
01/31/90 12110.37 14885.27
02/28/90 12470.61 15077.29
03/31/90 12936.80 15476.84
04/30/90 12894.42 15089.92
05/31/90 13625.49 16561.19
06/30/90 13869.48 16448.57
07/31/90 13912.46 16395.93
08/31/90 11914.22 14913.74
09/30/90 10775.44 14187.44
10/31/90 10560.58 14126.44
11/30/90 11183.68 15039.00
12/31/90 11602.67 15458.59
01/31/91 12258.00 16132.59
02/28/91 13257.12 17286.07
03/31/91 13364.55 17704.39
04/30/91 13514.96 17746.88
05/31/91 14600.02 18513.55
06/30/91 14567.79 17665.63
07/31/91 15169.41 18488.84
08/31/91 15663.60 18927.03
09/30/91 15201.64 18610.95
10/31/91 15599.14 18860.33
11/30/91 14825.63 18100.26
12/31/91 15933.39 20170.93
01/31/92 17654.69 19795.75
02/29/92 19432.62 20053.10
03/31/92 19851.62 19662.06
04/30/92 21119.95 20240.13
05/31/92 21108.63 20339.30
06/30/92 20983.03 20036.25
07/31/92 21175.85 20855.73
08/31/92 19860.16 20428.19
09/30/92 19531.23 20669.24
10/31/92 20347.87 20741.58
11/30/92 21334.64 21448.87
12/31/92 22564.00 21712.69
01/31/93 23605.95 21895.08
02/28/93 23953.27 22192.85
03/31/93 25238.34 22661.12
04/30/93 25092.52 22112.72
05/31/93 26620.51 22705.34
06/30/93 27086.07 22771.19
07/31/93 27396.45 22680.10
08/31/93 28351.44 23539.68
09/30/93 28649.88 23358.43
10/31/93 29258.69 23841.94
11/30/93 29258.69 23615.45
12/31/93 30548.18 23901.19
01/31/94 32289.58 24713.83
02/28/94 31247.19 24044.09
03/31/94 29052.04 22995.77
04/30/94 28461.30 23290.11
05/31/94 28039.66 23672.07
06/30/94 27680.01 23092.10
07/31/94 28510.91 23849.53
08/31/94 28039.66 24827.36
Let's say you invested $10,000 in Select Automotive Portfolio on June 30,
1986, when the fund started, and paid a 3% sales charge. By August 31,
1994, your investment would have grown to $28,040 - a 180.40% increase.
That compares to $10,000 invested in the S&P 500, which would have grown to
$24,827 over the same period - a 148.27% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST 31, 1994
% OF FUND'S
INVESTMENTS
Magna International, Inc. Class A 8.6
Echlin, Inc. 8.0
Smith (A.O.) Corp. Class B 7.9
Ford Motor Co. 6.4
Dana Corp. 5.8
General Motors Corp. 5.2
Genuine Parts Co. 4.7
Goodyear Tire & Rubber Co. 4.7
Chrysler Corp. 4.5
Bandag, Inc. 4.5
TOP INDUSTRIES AS OF AUGUST 31, 1994
Durables 80.8%
Industrial Machinery &
Equment 8.4%
Autos & Truck Parts 41.5%
Motor Vehicles &
Car Bodies 21.0%
Tire & Inner Tubes 13.2%
Autos & Other Motor
Vehicles 4.8%
Auto Parts - Retail 4.3%
All Others 15.2%*
Row: 1, Col: 1, Value: 15.2
Row: 1, Col: 2, Value: 4.3
Row: 1, Col: 3, Value: 4.8
Row: 1, Col: 4, Value: 13.2
Row: 1, Col: 5, Value: 21.0
Row: 1, Col: 6, Value: 41.5
* INCLUDES SHORT-TERM INVESTMENTS
AUTOMOTIVE PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Brenda Reed,
Portfolio Manager of Fidelity Select Automotive Portfolio
Q. HOW DID THE FUND DO, BRENDA?
A. After performing well in 1993, the fund has seen some rough going in
1994. The fund's total return for the six months ended August 31, 1994, was
- -10.27%. That trailed the S&P 500, which returned 3.26% during the same
period. For the 12 months ended August 31, the fund returned -1.10%,
compared to 5.47% for the index.
Q. WHAT CAUSED THE FUND TO TRAIL THE MARKET?
A. In two words: economic fears. I took over managing the fund in mid-May,
three months after the Federal Reserve Board began raising short-term
interest rates. The Fed was attempting to limit future inflation that could
be triggered by an improving economy. However, auto-related stocks are
cyclical in nature, meaning they tend to do well when the economy is
growing. In addition, when interest rates fall - as they did last year -
autos become more affordable. And low rates allow consumers to refinance
home mortgages, which frees up money for auto purchases. When rates began
to rise, investors worried that the strengthening auto cycle that had
lifted these stocks over the past couple of years was over. So in March and
April, auto-related stocks fell sharply. The sell-off negatively affected
not only auto makers such as Chrysler, Ford and General Motors, but also
parts suppliers such as Magna and A.O. Smith, and tire manufacturers such
as Goodyear.
Q. WERE INVESTOR FEARS ABOUT THE AUTO CYCLE JUSTIFIED?
A. Not to the extent that was factored into the selling of these stocks.
Certainly, rising interest rates make auto loans more expensive. However,
the demand for cars in the U.S. - while not as strong as it was several
months ago - has remained at a reasonably high level. In addition, I
believe that continued growth in employment coupled with pent-up demand
from the last U.S. recession should keep demand firm going forward. On
another positive note, many of the U.S. auto makers and parts suppliers do
some business in Europe, which is in the early stages of an economic
recovery. General Motors has the largest European presence of the Big Three
auto makers, followed by Ford and Chrysler. That's one of the reasons I've
invested larger stakes in G.M. and Ford than in Chrysler. European sales
may help shore up corporate earnings for the auto makers if U.S. sales
begin to flatten.
Q. HOW ELSE HAVE YOU POSITIONED THE FUND?
A. I've invested more heavily in Magna International and A.O. Smith - both
original equipment auto parts suppliers. Because the prices of these stocks
have fallen over the past six months, their valuations - prices relative to
earnings - have become more attractive. In addition, U.S. auto makers are
increasingly finding it cheaper to order their parts from these suppliers
rather than manufacturing them in-house. So even if auto demand in North
America drops off, I believe these companies will continue to see
increasing business volumes. Also, the parts industry is consolidating. I
believe the successful parts suppliers will simply continue to get bigger.
Meanwhile, a company such as Echlin - another of the fund's top 10
investments - has the best of two worlds. It supplies both original
equipment parts and after market parts - those it sells to retail stores.
The company is gaining market share, and I think it has excellent earnings
potential going forward.
Q. YOU MENTIONED THAT ECONOMIES IN EUROPE ARE BEGINNING TO PICK UP. HAVE
YOU FOUND ANY OPPORTUNITIES OVERSEAS?
A. Even though Europe's economic recovery is behind that of the U.S., its
auto-related stocks - like those in the U.S. - have performed very well
over the past year. Many of them appeared too expensive, so I've held off
investing in them. For now, the fund will get its European exposure through
U.S. companies that do business there. The fund did, however, have a 4.9%
stake in Japanese stocks on August 31. Japan's economic cycle is even
farther behind that of the U.S., but I see signs of improvement. That
should help the earnings of Japanese auto makers such as Honda, Nissan and
Suzuki.
Q. WHAT'S YOUR OUTLOOK FOR THE NEXT SIX MONTHS?
A. I think that if the U.S. economy can remain healthy, auto demand should
stay fairly strong. However, even if the auto makers and parts suppliers
continue to report solid earnings growth, investors may continue to ask,
"Is this the last quarter of growth like this?" Attitudes like that have a
tendency to keep stock prices flat, so that's a concern. In addition, I
think it will be a real stock picker's market going forward. A year ago,
you could invest in any auto-related stock and watch it rise. In the
future, I think it'll be critical to know which companies are most likely
to gain market share and control costs. Those are the types of companies on
which I'll focus the fund's investments.
FUND FACTS
START DATE: June 30, 1986
SIZE: as of August 31, 1994, more than
$90 million
MANAGER: Brenda Reed, since May 1994;
manager, Fidelity Select Air Transportation
Portfolio, since December 1992; joined
Fidelity in 1992
(checkmark)
AUTOMOTIVE PORTFOLIO
INVESTMENTS AUGUST 31, 1994 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 89.2%
SHARES VALUE (NOTE 1)
AUTOS, TIRES, & ACCESSORIES - 85.5%
AUTO & TRUCK PARTS - 41.5%
Automotive Industries Holding, Inc. (a) 54,000 $ 1,444,498
Dana Corp. 191,800 5,346,425
Donnelly Corp. Class A 63,500 1,079,500
Echlin, Inc. 236,000 7,286,500
Federal-Mogul Corp. 200 5,725
Johnson Controls, Inc. 22,700 1,205,938
Magna International, Inc. Class A 198,500 7,840,972
Mascotech, Inc. 119,100 1,756,725
Purolator Products Co. 100,000 1,700,000
Simpson Industries, Inc. 30,075 345,863
Smith (A.O.) Corp. Class B 264,700 7,279,250
Standard Products Co. 68,087 1,880,903
Superior Industries International, Inc. 30,040 889,935
38,062,234
AUTO PARTS - RETAIL - 4.3%
Monro Muffler Brake, Inc. (a) 214,410 3,886,181
AUTOMOTIVE STAMPINGS - 0.7%
Tower Automotive (a) 50,000 675,000
AUTOS & OTHER MOTOR VEHICLES - 4.8%
Genuine Parts Co. 118,200 4,343,850
MOTOR VEHICLES & CAR BODIES - 21.0%
Chrysler Corp. 86,500 4,162,813
Ford Motor Co. 200,000 5,850,000
General Motors Corp. 95,000 4,773,750
Honda Motor Co. Ltd. 106,000 1,756,088
Nissan Motor Co. Ltd. Ord. 104,000 800,239
Suzuki Motor Corp. 159,000 1,935,928
19,278,818
TIRES & INNER TUBES - 13.2%
Bandag, Inc. 75,100 4,092,950
Cooper Tire & Rubber Co. 142,700 3,692,363
Goodyear Tire & Rubber Co. 122,600 4,291,000
12,076,313
TOTAL AUTOS, TIRES, & ACCESSORIES 78,322,396
CHEMICALS & PLASTICS - 0.1%
PLASTICS, NEC - 0.1%
Bailey Corp. (a) 17,000 110,500
CONSUMER ELECTRONICS - 1.3%
RADIOS, TELEVISIONS, STEREOS - 1.3%
Harman International Industries, Inc. 40,000 1,220,000
ELECTRICAL EQUIPMENT - 0.2%
ELECTRICAL EQUIPMENT, NEC - 0.2%
Satcon Technology Corp. 15,000 213,750
ELECTRONICS - 0.2%
SEMICONDUCTORS - 0.2%
American Electronic Components, Inc. (a) 20,000 165,000
HOUSEHOLD PRODUCTS - 1.3%
MANUFACTURED PRODUCTS - 1.3%
First Brands Corp. 34,400 1,195,400
INDUSTRIAL MACHINERY & EQUIPMENT - 0.6%
METAL WORKING MACHINERY - 0.6%
Exco Technologies Ltd. 79,500 523,390
TOTAL COMMON STOCKS
(Cost $82,086,437) 81,750,436
REPURCHASE AGREEMENTS - 10.8%
MATURITY VALUE (NOTE 1)
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account, at 4.83% dated
8/31/94 due 9/1/94 $ 9,893,327 $ 9,892,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $91,978,437) $ 91,642,436
LEGEND
1. Non-income producing
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $26,480,083 and $141,383,523, respectively (see Note 4 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $29,451 for the period (see
Note 5 of Notes to Financial Statements).
The maximum loan and average daily loan balances during the periods for
which loans were outstanding amounted to $8,939,000 and $3,876,900,
respectively. The weighted average interest rate paid was 4.1% (see Note 8
of Notes to Financial Statements).
Distribution of investments by country, as a percentage of total value of
investment in securities, is as follows:
United States 86.0%
Canada 9.1
Japan 4.9
TOTAL 100.0%
INCOME TAX INFORMATION
At August 31, 1994, the aggregate cost of investment securities for income
tax purposes was $91,992,040. Net unrealized depreciation aggregated
$349,604, of which $6,260,094 related to appreciated investment securities
and $6,609,698 related to depreciated investment securities.
AUTOMOTIVE PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
AUGUST 31, 1994 (UNAUDITED)
ASSETS
Investment in securities, $ 91,642,436
at value (including
repurchase
agreements of
$9,892,000) (cost
$91,978,437) - See
accompanying
schedule
Cash 1,126
Receivable for fund 530,338
shares sold
Dividends receivable 196,392
Redemption fees 2,199
receivable
Prepaid expenses 20,936
TOTAL ASSETS 92,393,427
LIABILITIES
Payable for fund shares $ 2,098,100
redeemed
Accrued management 50,132
fee
Other payables and 137,881
accrued expenses
TOTAL LIABILITIES 2,286,113
NET ASSETS $ 90,107,314
Net Assets consist of:
Paid in capital $ 74,362,067
Undistributed net 270,697
investment income
Accumulated 15,810,551
undistributed net
realized gain (loss) on
investments and
foreign currency
transactions
Net unrealized (336,001
appreciation )
(depreciation) on
investments
NET ASSETS, for $ 90,107,314
3,985,433 shares
outstanding
NET ASSET VALUE and $22.61
redemption price per
share ($90,107,314 (divided by)
shares)
Maximum offering price $23.31
per share (100/97 of
$22.61)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED AUGUST 31, 1994 (UNAUDITED)
INVESTMENT INCOME $ 1,140,798
Dividends
Interest 322,404
TOTAL INCOME 1,463,202
EXPENSES
Management fee $ 396,374
Transfer agent 805,266
Fees
Redemption fees (125,426
)
Accounting fees and 64,026
expenses
Non-interested trustees' 447
compensation
Custodian fees and 8,700
expenses
Registration fees 20,936
Audit 15,870
Legal 2,092
Interest 4,407
Reports to shareholders 13,155
Miscellaneous 374
Total expenses before 1,206,221
reductions
Expense reductions (13,716 1,192,505
)
NET INVESTMENT INCOME 270,697
REALIZED AND UNREALIZED
GAIN (LOSS)
Net realized gain (loss)
on:
Investment securities 15,917,908
Foreign currency (25,152 15,892,756
transactions )
Change in net unrealized (31,646,083
appreciation )
(depreciation) on
investment securities
NET GAIN (LOSS) (15,753,327
)
NET INCREASE $ (15,482,630
(DECREASE) IN NET )
ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION $318,683
Sales Charges Paid to
FDC
Deferred sales $4,631
charges withheld
by FDC
Exchange fees $93,608
withheld by FSC
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS YEAR ENDED
ENDED FEBRUARY 28,
AUGUST 31, 1994 1994
(UNAUDITED)
Operations $ 270,697 $ 300,002
Net investment income
Net realized gain (loss) 15,892,756 9,992,964
Change in net unrealized appreciation (depreciation) (31,646,083 22,125,239
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (15,482,630 32,418,205
)
Distributions to shareholders - (277,866
From net investment income )
From net realized gain (1,498,744 (8,000,284
) )
TOTAL DISTRIBUTIONS (1,498,744 (8,278,150
) )
Share transactions 49,124,944 296,617,520
Net proceeds from sales of shares
Reinvestment of distributions 1,470,265 8,140,832
Cost of shares redeemed (172,306,342 (210,814,302
) )
Paid in capital portion of redemption fees 101,570 254,484
Net increase (decrease) in net assets resulting from share transactions (121,609,563 94,198,534
)
TOTAL INCREASE (DECREASE) IN NET ASSETS (138,590,937 118,338,589
)
NET ASSETS
Beginning of period 228,698,251 110,359,662
End of period (including undistributed net investment income of $270,697 and $230,333, $ 90,107,314 $ 228,698,251
respectively)
OTHER INFORMATION
Shares
Sold 2,036,423 12,377,664
Issued in reinvestment of distributions 61,287 357,869
Redeemed (7,087,666 (9,094,036
) )
Net increase (decrease) (4,989,956 3,641,497
)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS YEAR ENDED TEN MONTHS YEARS ENDED APRIL 30,
ENDED FEBRUARY 28, ENDED
AUGUST 31, 1994 FEBRUARY 28,
SELECTED PER-SHARE DATAC (UNAUDITED) 1994 1993 1992 1991 1990
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 25.48 $ 20.69 $ 18.65 $ 12.58 $ 12.17 $ 12.86
Income from Investment Operations
Net investment income .05 .05 .13 .06 .25 .23
Net realized and unrealized gain (loss) (2.67) 6.00 2.26 6.55 .29 (.52)
Total from investment operations (2.62) 6.05 2.39 6.61 .54 (.29)
Less Distributions
From net investment income - (.05) (.06) - (.18) (.41)
From net realized gain (.27) (1.26) (.36) (.70) - -
Total distributions (.27) (1.31) (.42) (.70) (.18) (.41)
Redemption fees added to paid in capital .02 .05 .07 .16 .05 .01
Net asset value, end of period $ 22.61 $ 25.48 $ 20.69 $ 18.65 $ 12.58 $ 12.17
TOTAL RETURND, E (10.27)% 30.45% 13.42% 56.27% 4.81% (2.07)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 90,107 $ 228,698 $ 110,360 $ 178,445 $ 974 $ 1,213
Ratio of expenses to average net assetsB 1.83%A 1.68% 1.57%A 2.48% 2.25% 2.42%
Ratio of expenses to average net assets before 1.85%A 1.69% 1.57%A 2.48% 2.85% 3.85%
expense reductionsB
Ratio of net investment income to average net .42%A .22% .72%A .36% 2.06% 1.84%
assets
Portfolio turnover rate 47%A 64% 140%A 29% 219% 121%
</TABLE>
A ANNUALIZED
B SEE NOTE 9 OF NOTES TO FINANCIAL STATEMENTS.
C NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
D TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
E THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
CHEMICALS PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance: total
percentage change in value, the average annual percentage change, or the
growth of a hypothetical $10,000 investment. Each performance figure
includes changes in a fund's share price, plus reinvestment of any
dividends (income) and capital gains (the profits the fund earns when it
sells stocks that have grown in value).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 6 PAST 1 PAST 5 LIFE OF
AUGUST 31, 1994 MONTH YEAR YEARS FUND
S
CHEMICALS 13.71% 27.91% 90.22% 411.68%
CHEMICALS
(INCL. 3% SALES CHARGE) 10.30% 24.07% 84.51% 396.33%
S&P 500 3.26% 5.47% 58.16% 233.54%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one year, five years, or
since the fund started on July 29, 1985. You can compare these figures to
the performance of the S&P 500 - a common proxy for the U.S. stock market.
This benchmark includes reinvested dividends and capital gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
AUGUST 31, 1994 YEAR YEARS FUND
CHEMICALS 27.91% 13.72% 19.65%
CHEMICALS (INCL. 3% SALES CHARGE) 24.07% 13.03% 19.25%
S&P 500 5.47% 9.60% 14.16%
AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and
show you what would have happened if the fund had performed at a constant
rate each year.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of growth in the long run
and volatility in the short run. Unlike the broader
market, however, some sectors may not have
a history of growth in the long run. And, as
with all stock funds, the share price and return
of a fund that invests in a sector will vary. That
means if you sell your shares during a sector
downturn, you might lose money. But if you
can identify a sector that is about to
experience rapid growth you may have the
potential for above-average gains.
(checkmark)
$10,000 OVER LIFE OF FUND
Select ChemicalS (069)Standard & Poor
07/29/85 9700.00 10000.00
07/31/85 9641.80 9926.31
08/31/85 9981.30 9841.93
09/30/85 9991.00 9533.88
10/31/85 10631.20 9974.35
11/30/85 11300.50 10658.59
12/31/85 12018.30 11174.46
01/31/86 12532.40 11237.04
02/28/86 13977.70 12077.57
03/31/86 14724.60 12751.50
04/30/86 14782.80 12607.41
05/31/86 15199.90 13278.12
06/30/86 15568.50 13502.52
07/31/86 14549.20 12747.73
08/31/86 15630.16 13693.61
09/30/86 14393.38 12561.15
10/31/86 15269.84 13285.93
11/30/86 15532.78 13608.78
12/31/86 15250.37 13261.75
01/31/87 17285.70 15048.11
02/28/87 18892.53 15642.51
03/31/87 19467.10 16094.58
04/30/87 19895.59 15951.34
05/31/87 19632.65 16090.11
06/30/87 20733.10 16902.66
07/31/87 22086.74 17759.63
08/31/87 22895.03 18422.06
09/30/87 23304.04 18018.62
10/31/87 16214.47 14137.41
11/30/87 15669.12 12972.49
12/31/87 17511.02 13959.69
01/31/88 17081.54 14547.40
02/29/88 18975.15 15225.31
03/31/88 19941.48 14754.84
04/30/88 20175.74 14918.62
05/31/88 19414.39 15048.41
06/30/88 21981.50 15739.14
07/31/88 21317.76 15679.33
08/31/88 20390.48 15146.23
09/30/88 20644.26 15791.46
10/31/88 20966.37 16230.46
11/30/88 20263.59 15998.37
12/31/88 21181.11 16278.34
01/31/89 22596.44 17469.91
02/28/89 22313.37 17034.91
03/31/89 22557.39 17431.83
04/30/89 23201.61 18336.54
05/31/89 23738.46 19079.17
06/30/89 23455.03 18970.42
07/31/89 24949.67 20683.44
08/31/89 26092.63 21088.84
09/30/89 25164.58 21002.38
10/31/89 23386.65 20515.12
11/30/89 23884.86 20933.63
12/31/89 24847.83 21436.04
01/31/90 23077.40 19997.68
02/28/90 23231.80 20255.65
03/31/90 23921.44 20792.42
04/30/90 23365.61 20272.61
05/31/90 25403.67 22249.19
06/30/90 25611.02 22097.90
07/31/90 25695.76 22027.18
08/31/90 22264.01 20035.93
09/30/90 21162.46 19060.18
10/31/90 21406.07 18978.22
11/30/90 22835.96 20204.21
12/31/90 23821.00 20767.91
01/31/91 25420.37 21673.39
02/28/91 27369.26 23223.04
03/31/91 28025.96 23785.03
04/30/91 27803.53 23842.12
05/31/91 29731.24 24872.10
06/30/91 28923.24 23732.96
07/31/91 30317.26 24838.91
08/31/91 30913.18 25427.59
09/30/91 30679.07 25002.95
10/31/91 31168.57 25337.99
11/30/91 29614.93 24316.87
12/31/91 33030.62 27098.72
01/31/92 33664.98 26594.68
02/29/92 34879.02 26940.42
03/31/92 34627.46 26415.08
04/30/92 35885.25 27191.68
05/31/92 35677.44 27324.92
06/30/92 34619.91 26917.78
07/31/92 35712.32 28018.72
08/31/92 34492.08 27444.33
09/30/92 34526.94 27768.18
10/31/92 34178.30 27865.36
11/30/92 35212.60 28815.57
12/31/92 35971.89 29170.00
01/31/93 35934.88 29415.03
02/28/93 35305.75 29815.08
03/31/93 36144.60 30444.17
04/30/93 36815.01 29707.43
05/31/93 37372.43 30503.58
06/30/93 36434.95 30592.05
07/31/93 36992.37 30469.68
08/31/93 38803.98 31624.48
09/30/93 37575.13 31380.97
10/31/93 38994.01 32030.56
11/30/93 39285.39 31726.27
12/31/93 40560.85 32110.15
01/31/94 43718.04 33201.90
02/28/94 43649.10 32302.13
03/31/94 42339.35 30893.75
04/30/94 44386.86 31289.19
05/31/94 45455.59 31802.34
06/30/94 44886.53 31023.18
07/31/94 46912.95 32040.74
08/31/94 49633.34 33354.41
Let's say you invested $10,000 in Fidelity Select Chemicals Portfolio on
July 29, 1985, when the fund started, and paid a 3% sales charge. By August
31, 1994, your investment would have grown to $49,633 - a 396.33% increase.
That compares to $10,000 invested in the S&P 500, which would have grown to
$33,354 over the same period - a 233.54% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST 31, 1994
% OF FUND'S
INVESTMENTS
Union Carbide Corp. 7.5
Grace (W.R.) & Co. 7.4
du Pont (E.I.) de Nemours & Co. 5.5
Hoechst AG Ord. 4.8
Eastman Chemical Co. 4.7
Olin Corp. 3.6
Nalco Chemical Co. 3.1
Raychem Corp. 3.1
Geon Co. 2.9
Lubrizol Corp. 2.9
TOP INDUSTRIES AS OF AUGUST 31, 1994
Row: 1, Col: 1, Value: 21.3
Row: 1, Col: 2, Value: 2.9
Row: 1, Col: 3, Value: 4.7
Row: 1, Col: 4, Value: 5.7
Row: 1, Col: 5, Value: 9.699999999999999
Row: 1, Col: 6, Value: 55.7
Chemicals 55.7%
Plastics, Resins &
Elastomers 9.7%
Specialty Chemicals 5.7%
Plastics & Synthetic Resins 4.7%
Organic Chemicals 2.9%
All Others 21.3%*
* INCLUDES SHORT-TERM INVESTMENTS
CHEMICALS PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Steve Wymer,
Portfolio Manager
of Fidelity Select
Chemicals Portfolio
Q. STEVE, HOW HAS THE FUND PERFORMED?
A. Very well. The fund returned 13.71% for the six months ended August 31,
1994, and 27.91% for the year. By comparison, the S&P gained 3.26% and
5.47% for the same time periods.
Q. WHAT FACTORS HELPED THE FUND OUTPERFORM THE MARKET?
A. Like the U.S. economy, chemicals have done very well. When the economy
accelerates, the demand for chemicals rises. Overall, it's been an
extremely favorable environment in which demand is strong and supply
additions are low. As a result, prices are up. For the companies in the
sector, higher prices typically drop to the bottom line and lead to greater
profits.
Q. IS STRATEGY IMPORTANT IN THIS MARKET, OR IS EVERYTHING STRONG?
A. Well, I divide chemical companies into three categories: commodity,
diversified and specialty. Commodities have been the best place to be
lately. Commodity chemicals - those companies that make chemical products
that are used throughout the economy in autos, housing and consumer
non-durables - have their own supply and demand cycle and don't necessarily
follow major economic trends the way diversified chemical companies do.
Commodities have been stronger in the past few months because of fires in
domestic manufacturing plants and other unpredictable glitches that have
slowed production and choked supply just as the demand for chemicals was
increasing. Currently, demand is so strong that chemical manufacturers are
having trouble keeping up with demand. This, combined with stable to lower
raw materials prices - due to low prices for natural gas and crude oil -
has been fantastic for both stock prices and the fund.
Q. WHAT SIGNIFICANT CHANGES HAVE YOU MADE TO THE FUND'S
TOP 10 HOLDINGS?
A. DuPont, a company that I think has potential for handsome returns over
time, is new to the top 10. DuPont owns a wide mix of businesses including
Conoco, an oil and gas concern. Through past and current restructurings and
divestitures, duPont has become more focused and is generating higher
returns. I've been very impressed with recent performance, which should get
a further boost in the future as prices begin to increase. I've also
increased my position in Union Carbide. A big producer of commodity
chemicals, it also has strong specialty chemical units. Since Union Carbide
spun off its industrial gas business two years ago, the company has
continued to cut costs dramatically while the supply/demand balance is
tightening.
Q. HOW IS THE INTERNATIONAL MARKET FOR CHEMICALS?
A. Global demand has begun to pick up, especially in Europe. Hoechst,
another new addition to the top 10, is a diversified German company that is
undergoing a major restructuring. Between the recovery in Europe and its
own cost-cutting measures, I think Hoechst has solid potential. I still
have a sizable position in Akzo, a diversified Dutch chemical company.
Diversified chemical companies have interests in businesses outside of
chemicals and generally move with the economy.
Q. SOUNDS GOOD. HAVE THERE BEEN ANY DISAPPOINTMENTS RECENTLY?
A. Well, yes. I invested in a couple of specialty chemical stocks, Nalco
and Lubrizol, that had under-performed the market and I thought were
relatively inexpensive. Unfortunately, they continued to under-perform and
became even less expensive after I bought them. They weren't disasters, but
compared to the group they were disappointing.
Q. DO YOU EXPECT TO CHANGE YOUR STRATEGY IN THE NEXT FEW MONTHS?
A. Not really. Commodity chemicals are a good place to be right now, and
should continue to be as long as the economy grows. I also expect prices to
remain strong since many of these companies have restructured and are
focusing their efforts on cutting costs rather than growing their supply
base. Eventually, however, capacity will increase and prices will drop. In
the meantime, I'll probably gradually shift more into specialty chemical
stocks. Overall, if the economy grows more slowly, chemical stocks should
maintain their strength.
FUND FACTS
START DATE: July 29, 1985
SIZE: as of August 31, 1994, more than
$205 million
MANAGER: Steven Wymer, since January
1993; assistant, Fidelity Magellan Fund, since
April 1992; manager, Fidelity Select
Automotive
Portfolio, 1990-1993; assistant, Fidelity
Growth & Income Portfolio, 1990-1992;
joined Fidelity in 1989
(checkmark)
CHEMICALS PORTFOLIO
INVESTMENTS AUGUST 31, 1994 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 93.7%
SHARES VALUE (NOTE 1)
BUILDING MATERIALS - 0.3%
PAINT & VARNISH - 0.2%
Dexter Corp. 5,200 $ 133,900
RPM, Inc. 10,000 176,250
Sherwin-Williams Co. 2,000 66,250
376,400
PAVING, ROOFING & SIDING - 0.1%
Carlisle Companies, Inc. 5,200 182,650
TOTAL BUILDING MATERIALS 559,050
CHEMICALS & PLASTICS - 86.2%
AGRICULTURAL CHEMICALS - 2.0%
FMC Corp. (a) 14,100 824,850
IMC Fertilizer Group, Inc. (a) 10,000 401,250
Indo Gulf Fertilizer and Chemicals
GDR (b) 1,000 3,900
Mississippi Chemical Corp. 37,600 601,600
OM Group, Inc. 87,500 1,750,000
Terra Industries, Inc. 10,000 105,000
Vigoro Corp. 12,000 349,500
4,036,100
CHEMICALS - 55.7%
Akzo NV sponsored ADR 80,000 4,940,000
Avery Dennison Corp. 18,300 631,350
BASF AG 10,000 2,094,214
Bayer AG 10,000 2,402,782
Crompton & Knowles Corp. 6,000 95,250
Cytec Industries, Inc. (a) 114,671 3,741,141
Dow Chemical Co. 60,000 4,507,500
du Pont (E.I.) de Nemours & Co. 180,400 10,914,200
Engelhard Corp. 7,600 204,250
Georgia Gulf Corp. (a) 43,000 1,623,250
Goodrich (B.F.) Company 89,800 4,287,950
Grace (W.R.) & Co. 362,100 14,574,525
Hercules, Inc. 15,800 1,702,450
Hoechst AG Ord. 41,000 9,527,348
Imperial Chemical Industries PLC ADR 66,700 3,401,700
Lawter International, Inc. 8,988 110,103
Lyondell Petrochemical Co. 121,700 3,818,338
Minnesota Mining & Manufacturing Co. 20,000 1,102,500
Monsanto Co. 11,200 925,400
Morton International, Inc. 48,900 1,448,663
NL Industries, Inc. (a) 20,000 195,000
Olin Corp. 122,100 7,020,750
PPG Industries, Inc. 62,000 2,580,750
Raychem Corp. 148,000 6,179,000
Reliance Industries Ltd. GDS (b) 17,000 488,750
Rohm & Haas Co. 15,000 933,750
Solvay 5,000 2,462,770
Sterling Chemical, Inc. (a) 259,700 2,824,238
Union Carbide Corp. 429,100 14,750,313
Witco Corp. 15,200 467,400
109,955,635
CHEMICALS, GENERAL - 2.4%
Albemarle Corp. 88,000 1,320,000
Great Lakes Chemical Corp. 53,100 3,199,275
Sybron Chemical Industry Corp. (a) 7,200 180,000
4,699,275
INDUSTRIAL GASES - 1.0%
Air Products & Chemicals, Inc. 40,000 1,990,000
NONCELLULOSIC MAN-MADE ORGANIC FIBERS - 0.0%
Yizheng Chemical Fibre Co. Class H (a) 110,000 36,724
SHARES VALUE (NOTE 1)
ORGANIC CHEMICALS - 2.9%
Lubrizol Corp. 181,000 $ 5,656,250
PLASTICS & SYNTHETIC RESINS - 4.7%
AEP Industries, Inc. 10,350 191,475
ARCO Chemical Co. 46,800 2,275,650
Geon Co. 202,500 5,670,000
Schulman (A.), Inc. 6,562 173,893
Wellman, Inc. 28,660 909,955
9,220,973
PLASTICS, NEC - 2.1%
Carlisle Plastics, Inc. Class A (a) 27,700 107,338
Hanna (M.A.) Co. 131,850 3,576,431
Sealed Air Corp. (a) 12,300 433,575
Triple S Plastics, Inc. (a) 4,000 50,000
4,167,344
PLASTICS, RESINS & ELASTOMERS - 9.7%
Borden Chemical & Plastics Ltd. 35,000 730,625
Eastman Chemical Co. 174,650 9,212,788
PT Tri Polyta Indonesia sponsored
ADR (a) 131,000 3,848,125
Praxair, Inc. 200,153 4,553,481
Rexene Corp. (a) 50,000 725,000
19,070,019
SPECIALTY CHEMICALS - 5.7%
Ferro Corp. 126,600 3,370,725
Fuller (H.B.) Co. 19,200 729,600
Furon Co. 2,000 35,500
Loctite Corp. 4,400 199,650
Methanex Corp. (a) 36,500 620,771
Nalco Chemical Co. 182,700 6,188,963
11,145,209
TOTAL CHEMICALS & PLASTICS 169,977,529
CONGLOMERATES - 0.2%
Hanson Trust PLC sponsored ADR 20,000 397,500
DRUGS & PHARMACEUTICALS - 0.4%
DRUGS - 0.2%
Rhone Poulenc SA Class A 10,000 253,625
Rhone Poulenc sponsored ADR 6,700 168,338
421,963
PHARMACEUTICAL PREPARATIONS - 0.2%
Zeneca Group PLC sponsored ADR 10,000 385,000
TOTAL DRUGS & PHARMACEUTICALS 806,963
FOODS - 0.2%
Montedison Spa ADR 40,000 350,000
GAS - 0.4%
GAS TRANSMISSION - 0.4%
Nova Corp. 80,000 811,967
HOUSEHOLD PRODUCTS - 0.1%
MANUFACTURED PRODUCTS - 0.1%
First Brands Corp. 2,800 97,300
INDUSTRIAL MACHINERY & EQUIPMENT - 0.4%
PUMPING EQUIPMENT - 0.4%
Duriron Company, Inc. 40,000 740,000
MEDICAL EQUIPMENT & SUPPLIES - 0.4%
MEDICAL TECHNOLOGY - 0.4%
Mallinckrodt Group, Inc. 26,800 864,300
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
METALS & MINING - 0.4%
NON-METALLIC MINERAL MINING - 0.4%
American Colloid Co. 55,000 $ 811,250
OIL & GAS - 2.8%
CRUDE PETROLEUM & GAS - 2.5%
Burlington Resources, Inc. 101,500 3,818,938
Occidental Petroleum Corp. 43,000 956,750
4,775,688
GENERAL PETROLEUM PRODUCTS - 0.3%
Shanghai Petrochemical Ltd.
Class H ADR 20,000 647,500
TOTAL OIL & GAS 5,423,188
POLLUTION CONTROL - 0.0%
POLLUTION EQUIPMENT & DESIGN - 0.0%
Harding Associates Inc. (a) 13,500 77,625
RAILROADS - 1.6%
CSX Corp. 40,000 3,090,000
Chicago & North Western
Holdings Corp. (a) 5,300 116,600
3,206,600
RETAIL & WHOLESALE, MISCELLANEOUS - 0.0%
MISCELLANEOUS NONDURABLE GOODS - WHOLESALE - 0.0%
Amway Asia Pacific Ltd. 2,000 65,500
TEXTILES & APPAREL - 0.3%
CARPETS & RUGS - 0.2%
Image Industries, Inc. (a) 45,000 472,500
SILK MILLS - 0.1%
Worldtex Corp. (a) 33,000 160,871
TEXTILE MILL PRODUCTS - 0.0%
Unifi, Inc. 2,100 50,400
TOTAL TEXTILES & APPAREL 683,771
TOTAL COMMON STOCKS
(Cost $165,492,599) 184,872,543
REPURCHASE AGREEMENTS - 6.3%
MATURITY VALUE (NOTE 1)
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account, at 4.83% dated
8/31/94 due 9/1/94 $12,386,662 12,385,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $177,877,599) $ 197,257,543
LEGEND
1. Non-income producing
2. 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 period
end, the value of these securities amounted to $492,650 or 0.2% of net
assets.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $130,691,631 and $21,459,092, respectively (see Note 4 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company.
The commissions paid to these affiliated firms were $46,321 for the period
(see Note 5 of Notes to Financial Statements).
The maximum loan and average daily loan balances during the periods for
which loans were outstanding amounted to $6,825,000 and $5,790,000,
respectively. The weighted average interest rate paid was 3.9% (see Note 8
of Notes to Financial Statements).
Distribution of investments by country, as a percentage of total value of
investment in securities, is as follows:
United States 83.6%
Germany 7.1
Netherlands 2.5
United Kingdom 2.1
Indonesia 2.0
Belgium 1.3
Others (individually less than 1%) 1.4
TOTAL 100.0%
INCOME TAX INFORMATION
At August 31, 1994, the aggregate cost of investment securities for income
tax purposes was $177,939,958. Net unrealized appreciation aggregated
$19,317,585, of which $21,629,930 related to appreciated investment
securities and $2,312,345 related to depreciated investment securities.
CHEMICALS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
AUGUST 31, 1994 (UNAUDITED)
ASSETS
Investment in securities, $ 197,257,543
at value (including
repurchase
agreements of
$12,385,000) (cost
$177,877,599) - See
accompanying
schedule
Cash 160
Receivable for 1,043,150
investments sold
Receivable for fund 7,955,114
shares sold
Dividends receivable 757,818
Redemption fees 349
receivable
Other receivables 11,945
Prepaid expenses 21,714
TOTAL ASSETS 207,047,793
LIABILITIES
Payable for investments $ 137,815
purchased
Payable for fund shares 1,596,191
redeemed
Accrued management 97,720
fee
Other payables and 130,229
accrued expenses
TOTAL LIABILITIES 1,961,955
NET ASSETS $ 205,085,838
Net Assets consist of:
Paid in capital $ 183,485,105
Undistributed net 820,017
investment income
Accumulated 1,400,772
undistributed net
realized gain (loss) on
investments and
foreign currency
transactions
Net unrealized 19,379,944
appreciation
(depreciation) on
investments
NET ASSETS, for $ 205,085,838
5,734,619 shares
outstanding
NET ASSET VALUE and $35.76
redemption price per
share ($205,085,838 (divided by)
(hollow bullet) shares)
Maximum offering price $36.87
per share (100/97 of
$35.76)
</TABLE>
STATEMENT OF OPERATIONS
SIX MONTHS ENDED AUGUST 31, 1994 (UNAUDITED)
INVESTMENT INCOME $ 1,394,672
Dividends
Interest (including 279,791
security lending fees of
$3,150)
TOTAL INCOME 1,674,463
EXPENSES
Management fee $ 361,505
Transfer agent 484,837
Fees
Redemption fees (38,962
)
Accounting and security 58,475
lending fees
Non-interested trustees' 254
compensation
Custodian fees and 9,395
expenses
Registration fees 24,542
Audit 9,917
Legal 350
Interest 2,538
Reports to shareholders 2,395
Miscellaneous 49
Total expenses before 915,295
reductions
Expense reductions (9,529 905,766
)
NET INVESTMENT INCOME 768,697
REALIZED AND UNREALIZED
GAIN (LOSS)
Net realized gain (loss)
on:
Investment securities 1,480,604
Foreign currency 36 1,480,640
transactions
Change in net unrealized 15,455,394
appreciation
(depreciation) on
investment securities
NET GAIN (LOSS) 16,936,034
NET INCREASE $ 17,704,731
(DECREASE) IN NET
ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION $521,122
Sales Charges Paid to
FDC
Deferred sales $4,560
charges withheld
by FDC
Exchange fees $31,643
withheld by FSC
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS YEAR ENDED
ENDED FEBRUARY 28,
AUGUST 31, 1994 1994
(UNAUDITED)
Operations $ 768,697 $ 265,602
Net investment income
Net realized gain (loss) 1,480,640 2,851,580
Change in net unrealized appreciation (depreciation) 15,455,394 2,343,419
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 17,704,731 5,460,601
Distributions to shareholders (16,878 (189,427
From net investment income ) )
From net realized gain (332,922 (2,552,992
) )
TOTAL DISTRIBUTIONS (349,800 (2,742,419
) )
Share transactions 213,022,625 59,344,504
Net proceeds from sales of shares
Reinvestment of distributions 339,142 2,653,509
Cost of shares redeemed (88,029,434 (31,346,756
) )
Paid in capital portion of redemption fees 181,414 51,531
Net increase (decrease) in net assets resulting from share transactions 125,513,747 30,702,788
TOTAL INCREASE (DECREASE) IN NET ASSETS 142,868,678 33,420,970
NET ASSETS
Beginning of period 62,217,160 28,796,190
End of period (including undistributed net investment income of $820,017 and $96,969, $ 205,085,838 $ 62,217,160
respectively)
OTHER INFORMATION
Shares
Sold 6,470,261 1,911,622
Issued in reinvestment of distributions 10,863 93,252
Redeemed (2,711,680 (1,045,994
) )
Net increase (decrease) 3,769,444 958,880
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS YEAR ENDED TEN MONTHS YEARS ENDED APRIL 30,
ENDED FEBRUARY 28, ENDED
AUGUST 31, 1994 FEBRUARY 28,
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SELECTED PER-SHARE DATAC (UNAUDITED) 1994 1993 1992 1991 1990
Net asset value, beginning of period $ 31.66 $ 28.62 $ 32.81 $ 26.25 $ 22.70 $ 23.77
Income from Investment Operations
Net investment income .21 .29 .30 .12 .28 .41
Net realized and unrealized gain (loss) 4.05 5.97 (.84) 7.27 3.94 (.21)
Total from investment operations 4.26 6.26 (.54) 7.39 4.22 .20
Less Distributions
From net investment income (.01) (.23) (.31) (.18) (.10) (.16)
From net realized gain (.20) (3.05) (3.36) (.71) (.60) (1.13)
Total distributions (.21) (3.28) (3.67) (.89) (.70) (1.29)
Redemption fees added to paid in capital .05 .06 .02 .06 .03 .02
Net asset value, end of period $ 35.76 $ 31.66 $ 28.62 $ 32.81 $ 26.25 $ 22.70
TOTAL RETURN D, E 13.71% 23.63% (1.61)% 29.07% 18.99% .71%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 205,086 $ 62,217 $ 28,796 $ 39,566 $ 20,396 $ 21,150
Ratio of expenses to average net assets B 1.52%A 1.93% 1.89%A 2.16% 2.50% 2.37%
Ratio of expenses to average net assets before 1.53%A 1.93% 1.89%A 2.16% 2.52% 2.37%
expense reductions B
Ratio of net investment income to average net 1.29%A .97% 1.21%A .40% 1.21% 1.65%
assets
Portfolio turnover rate 39%A 81% 214%A 87% 87% 99%
</TABLE>
A ANNUALIZED
B SEE NOTE 9 OF NOTES TO FINANCIAL STATEMENTS.
C NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
D TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
E THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
CONSTRUCTION AND HOUSING PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance: total
percentage change in value, the average annual percentage change, or the
growth of a hypothetical $10,000 investment. Each performance figure
includes changes in a fund's share price, plus reinvestment of any
dividends (income) and capital gains (the profits the fund earns when it
sells stocks that have grown in value).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 6 PAST 1 PAST 5 LIFE OF
AUGUST 31, 1994 MONTH YEAR YEARS FUND
S
CONSTRUCTION AND HOUSING -7.33% 7.26% 81.09% 169.55%
CONSTRUCTION AND HOUSING
(INCL. 3% SALES CHARGE) -10.11% 4.04% 75.66% 161.46%
S&P 500 3.26% 5.47% 58.16% 164.55%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one year, five years, or
since the fund started on September 29, 1986. You can compare these figures
to the performance of the S&P 500 - a common proxy for the U.S. stock
market. This benchmark includes reinvested dividends and capital gains, if
any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
AUGUST 31, 1994 YEAR YEARS FUND
CONSTRUCTION AND HOUSING 7.26% 12.61% 13.32%
CONSTRUCTION AND HOUSING
(INCL. 3% SALES CHARGE) 4.04% 11.93% 12.89%
S&P 500 5.47% 9.60% 13.05%
AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and
show you what would have happened if the fund had performed at a constant
rate each year.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of growth in the long run
and volatility in the short run. Unlike the broader
market, however, some sectors may not have
a history of growth in the long run. And, as
with all stock funds, the share price and return
of a fund that invests in a sector will vary. That
means if you sell your shares during a sector
downturn, you might lose money. But if you
can identify a sector that is about to
experience rapid growth you may have the
potential for above-average gains.
(checkmark)
$10,000 OVER LIFE OF FUND
Select Const.& Housing (511) Standard & Poor's
09/29/86 9700.00 10000.00
09/30/86 9709.70 9962.80
10/31/86 10262.60 10537.66
11/30/86 10369.30 10793.72
12/31/86 10437.20 10518.48
01/31/87 12192.90 11935.32
02/28/87 13483.00 12406.77
03/31/87 14307.50 12765.32
04/30/87 13327.80 12651.71
05/31/87 12949.50 12761.78
06/30/87 12804.00 13406.25
07/31/87 13599.40 14085.95
08/31/87 13890.40 14611.35
09/30/87 12823.40 14291.37
10/31/87 8749.40 11213.00
11/30/87 8109.20 10289.05
12/31/87 9141.25 11072.05
01/31/88 9466.31 11538.18
02/29/88 10352.85 12075.86
03/31/88 10766.57 11702.72
04/30/88 11081.79 11832.62
05/31/88 11012.84 11935.56
06/30/88 11662.97 12483.41
07/31/88 11544.76 12435.97
08/31/88 10953.73 12013.15
09/30/88 11288.65 12524.91
10/31/88 11367.45 12873.10
11/30/88 11229.55 12689.01
12/31/88 11809.47 12911.07
01/31/89 12529.18 13856.16
02/28/89 12377.13 13511.14
03/31/89 12691.37 13825.95
04/30/89 13188.08 14543.52
05/31/89 13654.38 15132.53
06/30/89 13645.75 15046.28
07/31/89 14199.40 16404.95
08/31/89 14438.23 16726.49
09/30/89 14698.77 16657.91
10/31/89 13873.73 16271.45
11/30/89 14079.99 16603.39
12/31/89 13769.50 17001.87
01/31/90 12900.94 15861.04
02/28/90 13167.30 16065.65
03/31/90 13908.47 16491.39
04/30/90 13503.14 16079.11
05/31/90 14753.86 17646.82
06/30/90 14487.50 17526.82
07/31/90 13731.86 17470.73
08/31/90 11986.06 15891.38
09/30/90 10748.37 15117.47
10/31/90 10370.55 15052.46
11/30/90 11373.73 16024.85
12/31/90 12442.06 16471.95
01/31/91 13536.43 17190.12
02/28/91 14722.01 18419.22
03/31/91 15086.81 18864.96
04/30/91 15321.32 18910.24
05/31/91 16845.63 19727.16
06/30/91 15985.76 18823.66
07/31/91 16402.67 19700.84
08/31/91 17080.14 20167.75
09/30/91 16702.32 19830.95
10/31/91 16415.70 20096.68
11/30/91 15594.91 19286.79
12/31/91 17582.47 21493.19
01/31/92 18889.56 21093.42
02/29/92 19198.76 21367.64
03/31/92 19184.71 20950.97
04/30/92 19451.75 21566.92
05/31/92 20070.15 21672.60
06/30/92 18636.06 21349.68
07/31/92 18973.62 22222.88
08/31/92 18326.63 21767.31
09/30/92 18565.73 22024.17
10/31/92 19212.72 22101.25
11/30/92 20323.85 22854.91
12/31/92 20872.39 23136.02
01/31/93 21744.41 23330.36
02/28/93 22138.23 23647.66
03/31/93 22658.63 24146.62
04/30/93 22123.97 23562.27
05/31/93 22363.22 24193.74
06/30/93 22630.62 24263.90
07/31/93 23404.68 24166.85
08/31/93 24375.77 25082.77
09/30/93 25163.90 24889.63
10/31/93 26078.70 25404.85
11/30/93 25670.56 25163.50
12/31/93 27887.76 25467.98
01/31/94 28798.84 26333.89
02/28/94 28215.18 25620.25
03/31/94 26563.83 24503.20
04/30/94 26503.73 24816.84
05/31/94 25101.27 25223.84
06/30/94 24485.90 24605.86
07/31/94 25187.13 25412.93
08/31/94 26145.96 26454.86
Let's say you invested $10,000 in Fidelity Select Construction and Housing
Portfolio on September 29, 1986, when the fund started, and paid a 3% sales
charge. By August 31, 1994, your investment would have grown to $26,146 - a
161.46% increase. That compares to $10,000 invested in the S&P 500, which
would have grown to $26,455 over the same period - a 164.55% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST 31, 1994
% OF FUND'S
INVESTMENTS
Medusa Corp. 8.2
General Electric Co. 6.8
Lowe's Companies, Inc. 6.6
Armstrong World Industries, Inc. 5.7
Lafarge Corp. 5.4
Pulte Corp. 5.4
Federal National Mortgage Association 5.1
Federal Home Loan Mortgage Corporation 4.5
Leggett & Platt, Inc. 4.0
Texas Industries, Inc. 4.0
TOP INDUSTRIES AS OF AUGUST 31, 1994
Row: 1, Col: 1, Value: 40.6
Row: 1, Col: 2, Value: 6.6
Row: 1, Col: 3, Value: 6.8
Row: 1, Col: 4, Value: 13.1
Row: 1, Col: 5, Value: 9.6
Row: 1, Col: 6, Value: 23.3
Cement 23.3%
Operative Builders 13.1%
Federal & Federally Sponsored
Credit Agencies 9.6%
Electrical Machinery 6.8%
Lumber & Building Materials -
Retail 6.6%
All Others 40.6%*
* INCLUDES SHORT-TERM INVESTMENTS
CONSTRUCTION AND HOUSING PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Katherine Collins,
Portfolio Manager of
Fidelity Select Construction and Housing Portfolio
Q. KATHERINE, HOW DID THE FUND PERFORM?
A. Rising interest rates created a difficult environment for construction
and home-building companies this year. The fund returned -7. 33% for the
six months ended August 31, 1994. That trailed the S&P 500's 3.26% return
during the same period. However, the fund posted better results for the 12
months ended August 31, returning 7.26% versus the S&P 500's 5.47% return.
Q. WITH HOUSING-RELATED STOCKS DOWN AS MUCH AS 40% YEAR-TO-DATE, HOW DID
THE FUND MANAGE TO LIMIT ITS LOSS TO 7.33%?
A. Going into 1994, as rising interest rates became more likely, I began
shifting the fund into stocks that tend to hold their value better than
residential construction stocks when rates rise. These include stocks such
as the Federal National Mortgage Association (Fannie Mae) and Federal Home
Loan Mortgage Corporation (Freddie Mac). Both companies purchase mortgages
from lenders and resell them to investors. Although their businesses are
related to the housing market, investors tend to hold onto these stocks
even when interest rates rise. I also increased the fund's investment in
companies that have a broader business base and do not depend primarily on
residential construction, which include building materials companies. Many
of these companies generate a significant amount of their business from
non-residential construction, which is just beginning to accelerate.
Q. THE IMPORTANCE OF DIVERSIFICATION ALWAYS BECOMES CLEAR
IN PERIODS OF VOLATILITY. AMONG THE FUND'S LARGEST INVESTMENTS, WHICH WERE
DOWN THE MOST AND WHICH HELPED THE FUND LIMIT ITS DOWNSIDE?
A. The pure home builders were down the most. Pulte, Centex and Lennar were
hit pretty hard, falling as much as 30% to 40% this year. Pulte is the only
one still among the fund's top 10 investments. Stocks that held up
relatively well compared to the housing companies included Armstrong World
Industries, a manufacturer of floor coverings and ceiling tiles; General
Electric; and, as mentioned, Fannie Mae and Freddie Mac. Lowe's, a building
products retailer and the fund's third largest investment, was actually up
about 20% year-to-date through August 31.
Q. G.E. WAS THE FUND'S SECOND LARGEST INVESTMENT. THE STOCK'S PRICE HAS
BEEN DOWN THIS YEAR. WILL YOU MAINTAIN THE FUND'S POSITION?
A. G.E. is down about 7% year-to-date due to a scandal at its wholly owned
brokerage company. This resulted in a charge to earnings and a lot of
negative publicity. However, nearly every other G.E. business is doing very
well, and the brokerage subsidiary is a small contributor to earnings. I
plan to maintain the fund's investment.
Q. CEMENT PRODUCERS MEDUSA AND LAFARGE WERE THE FUND'S LARGEST AND FIFTH
LARGEST INVESTMENTS, RESPECTIVELY, AT THE END OF AUGUST. HOW WERE THESE
STOCKS AFFECTED?
A. These stocks were down along with the rest of the industry, but business
for these companies is less interest rate sensitive. Residential
construction accounts for about a third of cement sales with more going to
public works projects. The industry's supply and demand balance is
extremely favorable. Cement plants are operating at about 95% capacity
domestically, which enables producers to continue raising their prices.
Even if residential construction were to decline significantly, the other
segments of cement producers' markets - public works projects and
commercial construction - are just beginning to pick up.
Q. WHAT IS YOUR OUTLOOK FOR THE INDUSTRY AND YOUR GAME PLAN FOR THE FUND
GOING FORWARD?
A. New home construction in the U. S. is still at healthy levels, although
I don't expect it to grow much from this point. I think the worst is
probably over as far as interest rate shocks. Consequently, I expect to see
some recovery in residential construction stocks. This group has been hit
very hard and the stocks are now trading at value prices when compared to
yardsticks such as earnings and book value - a company's assets minus its
liabilities. So, it makes sense for the fund to hold onto them. Commercial
and non-residential construction should continue to accelerate this year
and on into next year. Companies with significant exposure to those markets
have the best growth prospects, and their stocks likewise have the best
upside potential. Apartment construction is also increasing in many parts
of the country. All of this should keep the overall demand for building
materials pretty steady, which would help the stocks in that group. The
fund has investments in what I think are the best companies in each of
these sectors, and is therefore positioned well within the housing and
construction industries.
FUND FACTS
START DATE: September 29, 1986
SIZE: as of August 31, 1994, more than
$48 million
MANAGER: Katherine Collins, since June 1992;
equity analyst, home-building and construction
industries, 1990-1992; joined Fidelity in 1990
(checkmark)
CONSTRUCTION & HOUSING PORTFOLIO
INVESTMENTS AUGUST 31, 1994 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 95.7%
SHARES VALUE (NOTE 1)
BUILDING MATERIALS - 36.3%
CEMENT - 23.3%
Cemex SA, Series B 33,750 $ 304,283
Centex Construction Products (a) 30,000 341,250
Lafarge Corp. 119,100 2,426,663
Medusa Corp. 128,600 3,649,021
St. Lawrence Cement, Inc. Class A (a) 52,700 390,320
Southdown, Inc. (a) 7,000 146,125
Texas Industries, Inc. 48,300 1,768,988
Vulcan Materials Co. 26,300 1,390,613
10,417,263
CONCRETE, GYPSUM, PLASTER - 1.6%
National Gypsum Co. (a)(b) 10,000 400,000
USG Corp. (a) 13,600 306,000
706,000
FLOOR COVERINGS - 5.7%
Armstrong World Industries, Inc. 52,300 2,549,625
PAVING, ROOFING & SIDING - 4.1%
Bird Corp. 19,100 162,350
Carlisle Companies, Inc. 18,000 632,250
Owens-Corning Fiberglass Corp. (a) 30,000 1,068,750
1,863,350
PLUMBING SUPPLIES - WHOLESALE - 1.6%
Masco Corp. 25,700 713,175
TOTAL BUILDING MATERIALS 16,249,413
CONSTRUCTION - 14.1%
GENERAL BUILDING - 1.0%
Schuler Homes, Inc. (a) 18,600 441,750
OPERATIVE BUILDERS - 13.1%
Centex Corp. 66,500 1,762,250
Continental Homes Holding Corp. 29,900 414,863
Inco Homes (a) 20,000 65,000
Lennar Corp. 39,450 779,138
Pulte Corp. 97,300 2,408,175
Standard Pacific Corp. 49,000 434,875
5,864,301
TOTAL CONSTRUCTION 6,306,051
ELECTRICAL EQUIPMENT - 7.1%
CURRENT-CARRYING WIRING DEVICE - 0.3%
Cherry Corp. (a) 5,000 70,000
Cherry Corp. Class A (a) 5,000 71,250
141,250
ELECTRICAL MACHINERY - 6.8%
General Electric Co. 61,000 3,034,750
TOTAL ELECTRICAL EQUIPMENT 3,176,000
ENGINEERING - 1.6%
ARCHITECTS & ENGINEERS - 1.0%
Fluor Corp. 8,400 445,200
SPECIAL CONTRACTORS - 0.6%
Foster Wheeler Corp. 6,100 248,575
TOTAL ENGINEERING 693,775
FEDERAL SPONSORED CREDIT - 9.6%
FEDERAL & FEDERALLY SPONSORED CREDIT AGENCIES - 9.6%
Federal Home Loan Mortgage
Corporation 32,600 2,025,275
Federal National Mortgage Association 25,700 2,284,088
4,309,363
SHARES VALUE (NOTE 1)
HOME FURNISHINGS - 9.8%
FURNITURE - 4.9%
LADD Furniture, Inc. 55,000 $ 371,250
Leggett & Platt, Inc. 48,800 1,805,600
2,176,850
FURNITURE STORES - 3.1%
Ethan Allen Interiors, Inc. (a) 41,100 1,017,225
Haverty Furniture Companies, Inc. 31,550 388,459
1,405,684
NON-WOOD OFFICE FURNITURE - 1.8%
Miller (Herman), Inc. 31,900 797,500
TOTAL HOME FURNISHINGS 4,380,034
LEISURE DURABLES & TOYS - 2.1%
LEISURE DURABLES - 2.1%
Champion Enterprises, Inc. (a) 25,600 934,400
REAL ESTATE - 1.3%
SUBDIVIDED REAL ESTATE DEVELOP - 1.3%
Newhall Land & Farming Co. 41,400 600,300
RETAIL & WHOLESALE, MISCELLANEOUS - 10.0%
BUILDING MATERIALS - RETAIL - 3.4%
Home Depot, Inc. (The) 33,266 1,505,287
LUMBER & BUILDING MATERIALS - RETAIL - 6.6%
Lowe's Companies, Inc. 82,200 2,969,475
TOTAL RETAIL & WHOLESALE, MISCELLANEOUS 4,474,762
TEXTILES & APPAREL - 3.8%
CARPETS & RUGS - 3.5%
Interface, Inc. Class A 78,200 1,036,150
Mohawk Industries Inc. (a) 20,206 358,657
Shaw Industries, Inc. 10,500 182,438
1,577,245
FOOTWEAR - 0.3%
Justin Industries Inc. 9,900 118,800
TOTAL TEXTILES & APPAREL 1,696,045
TOTAL COMMON STOCKS
(Cost $39,932,744) 42,820,143
REPURCHASE AGREEMENTS - 4.3%
MATURITY VALUE (NOTE 1)
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account, at 4.83% dated
8/31/94 due 9/1/94 $ 1,928,259 1,928,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $41,860,744) $ 44,748,143
LEGEND
1. Non-income producing
2. Restricted securities - Investment in securities not registered under
the Securities Act of 1933 (see Note 2 of Notes to Financial Statements).
Additional information on each holding is as follows:
ACQUISITION ACQUISITION
SECURITY DATE COST
National Gypsum Co. 7/5/94 $ 323,750
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $7,781,012 and $29,697,501, respectively (see Note 4 of Notes to
Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $9,565 for the period
(see Note 5 of Notes to Financial Statements).
The maximum loan and average daily loan balances during the periods for
which loans were outstanding amounted to $2,951,000 and $1,993,222,
respectively. The weighted average interest rate paid was 4.1% (see Note 8
of Notes to Financial Statements).
INCOME TAX INFORMATION
At August 31, 1994, the aggregate cost of investment securities for income
tax purposes was $41,864,433. Net unrealized appreciation aggregated
$2,883,710, of which $6,152,443 related to appreciated investment
securities and $3,268,733 related to depreciated investment securities.
CONSTRUCTION AND HOUSING PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
AUGUST 31, 1994 (UNAUDITED)
ASSETS
Investment in securities, $ 44,748,143
at value (including
repurchase
agreements of
$1,928,000) (cost
$41,860,744) - See
accompanying
schedule
Cash 373
Receivable for fund 4,202,217
shares sold
Dividends receivable 75,431
Redemption fees 73
receivable
Other receivables 75
Prepaid expenses 16,965
TOTAL ASSETS 49,043,277
LIABILITIES
Payable for fund shares $ 385,049
redeemed
Accrued management 22,739
fee
Other payables and 50,512
accrued expenses
TOTAL LIABILITIES 458,300
NET ASSETS $ 48,584,977
Net Assets consist of:
Paid in capital $ 43,418,127
Undistributed net 27,519
investment income
Accumulated 2,251,932
undistributed net
realized gain (loss) on
investments and
foreign currency
transactions
Net unrealized 2,887,399
appreciation
(depreciation) on
investments
NET ASSETS, for $ 48,584,977
2,659,628 shares
outstanding
NET ASSET VALUE and $18.27
redemption price per
share ($48,584,977 (divided by)
shares)
Maximum offering price $18.84
per share (100/97 of
$18.27)
</TABLE>
STATEMENT OF OPERATIONS
SIX MONTHS ENDED AUGUST 31, 1994 (UNAUDITED)
INVESTMENT INCOME $ 406,517
Dividends
Interest 31,662
TOTAL INCOME 438,179
EXPENSES
Management fee $ 165,481
Transfer agent 220,365
Fees
Redemption fees (32,050
)
Accounting fees and 26,878
expenses
Non-interested trustees' 178
compensation
Custodian fees and 5,540
expenses
Registration fees 16,965
Audit 11,223
Legal 575
Interest 2,065
Reports to shareholders 4,013
Miscellaneous 133
Total expenses before 421,366
reductions
Expense reductions (4,329 417,037
)
NET INVESTMENT INCOME 21,142
REALIZED AND UNREALIZED
GAIN (LOSS)
Net realized gain (loss)
on:
Investment securities 2,278,069
Foreign currency (56 2,278,013
transactions )
Change in net unrealized (8,014,856
appreciation )
(depreciation) on
investment securities
NET GAIN (LOSS) (5,736,843
)
NET INCREASE $ (5,715,701
(DECREASE) IN NET )
ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION $97,350
Sales Charges Paid to
FDC
Deferred sales $2,837
charges withheld
by FDC
Exchange fees $25,553
withheld by FSC
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS YEAR ENDED
ENDED FEBRUARY 28,
AUGUST 31, 1994 1994
(UNAUDITED)
Operations $ 21,142 $ 11,881
Net investment income
Net realized gain (loss) 2,278,013 1,149,357
Change in net unrealized appreciation (depreciation) (8,014,856 7,883,107
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (5,715,701 9,044,345
)
Distributions to shareholders from net realized gain (330,062 (529,457
) )
Share transactions 18,580,801 103,244,564
Net proceeds from sales of shares
Reinvestment of distributions 327,212 523,498
Cost of shares redeemed (45,294,486 (62,476,673
) )
Paid in capital portion of redemption fees 18,070 81,997
Net increase (decrease) in net assets resulting from share transactions (26,368,403 41,373,386
)
TOTAL INCREASE (DECREASE) IN NET ASSETS (32,414,166 49,888,274
)
NET ASSETS
Beginning of period 80,999,143 31,110,869
End of period (including undistributed net investment income of $27,519 and $12,162, $ 48,584,977 $ 80,999,143
respectively)
OTHER INFORMATION
Shares
Sold 1,000,109 5,578,570
Issued in reinvestment of distributions 17,276 28,856
Redeemed (2,444,360 (3,497,427
) )
Net increase (decrease) (1,426,975 2,109,999
)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS YEAR ENDED TEN MONTHS YEARS ENDED APRIL 30,
ENDED FEBRUARY 28, ENDED
AUGUST 31, 1994 FEBRUARY 28,
SELECTED PER-SHARE DATAC (UNAUDITED) 1994 1993 1992 1991 1990
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 19.82 $ 15.74 $ 13.84 $ 11.76 $ 11.66 $ 13.01
Income from Investment Operations
Net investment income (loss) .01 .01 .02 (.06) .01 -
Net realized and unrealized gain (loss) (1.47) 4.26 1.87 2.93 1.45 .34
Total from investment operations (1.46) 4.27 1.89 2.87 1.46 .34
Less Distributions
From net investment income - - - - (.16) (.08)
From net realized gain (.10) (.22) (.01) (.88) (1.27) (1.62)
Total distributions (.10) (.22) (.01) (.88) (1.43) (1.70)
Redemption fees added to paid in capital .01 .03 .02 .09 .07 .01
Net asset value, end of period $ 18.27 $ 19.82 $ 15.74 $ 13.84 $ 11.76 $ 11.66
TOTAL RETURND, E (7.33)% 27.45% 13.81% 26.96% 13.46% 2.39%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 48,585 $ 80,999 $ 31,111 $ 26,687 $ 4,070 $ 1,217
Ratio of expenses to average net assetsB 1.54%A 1.66% 2.02%A 2.50% 2.48% 2.41%
Ratio of expenses to average net assets before 1.55%A 1.67% 2.02%A 3.10% 3.48% 3.30%
expense reductionsB
Ratio of net investment income (loss) to average net .08%A .03% .20%A (.49)% .08% (.03)%
assets
Portfolio turnover rate 29%A 35% 60%A 183% 137% 185%
</TABLE>
A ANNUALIZED
B SEE NOTE 9 OF NOTES TO FINANCIAL STATEMENTS.
C NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
D TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
E THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
ENVIRONMENTAL SERVICES PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance: total
percentage change in value, the average annual percentage change, or the
growth of a hypothetical $10,000 investment. Each performance figure
includes changes in a fund's share price, plus reinvestment of any
dividends (income) and capital gains (the profits the fund earns when it
sells stocks that have grown in value).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 6 PAST 1 PAST 5 LIFE OF
AUGUST 31, 1994 MONTH YEAR YEARS FUND
S
ENVIRONMENTAL SERVICES -8.38% -1.09% 7.49% 17.71%
ENVIRONMENTAL SERVICES
(INCL. 3% SALES CHARGE) -11.13% -4.05% 4.27% 14.17%
S&P 500 3.26% 5.47% 58.16% 71.62%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one year, five yearse, or
since the fund started on June 29, 1989. You can compare these figures to
the performance of the S&P 500 - a common proxy for the U.S. stock market.
This benchmark includes reinvested dividends and capital gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
AUGUST 31, 1994 YEAR YEARS FUND
ENVIRONMENTAL SERVICES -1.09% 1.46% 3.20%
ENVIRONMENTAL SERVICES
(INCL. 3% SALES CHARGE) -4.05% 0.84% 2.59%
S&P 500 5.47% 9.60% 10.99%
AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and
show you what would have happened if the fund had performed at a constant
rate each year.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of growth in the long run
and volatility in the short run. Unlike the broader
market, however, some sectors may not have
a history of growth in the long run. And, as
with all stock funds, the share price and return
of a fund that invests in a sector will vary. That
means if you sell your shares during a sector
downturn, you might lose money. But if you
can identify a sector that is about to
experience rapid growth you may have the
potential for above-average gains.
(checkmark)
$10,000 OVER LIFE OF FUND
Select Envir. Services (516) Standard & Poor's 5
06/29/89 9700.00 10000.00
06/30/89 9573.90 9761.13
07/31/89 10485.70 10642.57
08/31/89 10621.50 10851.16
09/30/89 11193.80 10806.67
10/31/89 10941.60 10555.96
11/30/89 11009.50 10771.30
12/31/89 11368.64 11029.81
01/31/90 10358.96 10289.71
02/28/90 10562.84 10422.44
03/31/90 11019.14 10698.64
04/30/90 11077.39 10431.17
05/31/90 12106.49 11448.21
06/30/90 12485.12 11370.37
07/31/90 12407.45 11333.98
08/31/90 10863.80 10309.39
09/30/90 10281.29 9807.32
10/31/90 10135.66 9765.15
11/30/90 10485.17 10395.98
12/31/90 11087.10 10686.03
01/31/91 12057.94 11151.94
02/28/91 12611.33 11949.30
03/31/91 12611.33 12238.47
04/30/91 12572.49 12267.85
05/31/91 12601.62 12797.82
06/30/91 11650.19 12211.68
07/31/91 12019.11 12780.74
08/31/91 12232.70 13083.64
09/30/91 11941.44 12865.15
10/31/91 11494.85 13037.54
11/30/91 10863.80 12512.13
12/31/91 11936.56 13943.51
01/31/92 13005.20 13684.17
02/29/92 13146.34 13862.06
03/31/92 11835.74 13591.75
04/30/92 11482.89 13991.35
05/31/92 11190.52 14059.90
06/30/92 10592.18 13850.41
07/31/92 10665.30 14416.89
08/31/92 10445.94 14121.35
09/30/92 10571.29 14287.98
10/31/92 11072.70 14337.99
11/30/92 11762.13 14826.91
12/31/92 11772.57 15009.28
01/31/93 12002.39 15135.36
02/28/93 11866.59 15341.20
03/31/93 11574.10 15664.90
04/30/93 11333.84 15285.81
05/31/93 11584.55 15695.47
06/30/93 11438.30 15740.99
07/31/93 10957.79 15678.02
08/31/93 11542.76 16272.22
09/30/93 11553.21 16146.93
10/31/93 11877.03 16481.17
11/30/93 11354.74 16324.60
12/31/93 11699.45 16522.12
01/31/94 12691.82 17083.88
02/28/94 12462.01 16620.90
03/31/94 11333.84 15896.23
04/30/94 11521.87 16099.70
05/31/94 11490.53 16363.74
06/30/94 10801.10 15962.83
07/31/94 11030.91 16486.41
08/31/94 11417.41 17162.35
Let's say you invested $10,000 in Fidelity Select Environmental Services
Portfolio on June 29, 1989, when the fund started, and paid a 3% sales
charge. By August 31, 1994, your investment would have grown to $11,417 - a
14.17% increase. That compares to $10,000 invested in the S&P 500, which
would have grown to $17,162 over the same period - a 71.62% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST 31, 1994
% OF FUND'S
INVESTMENTS
Thermedics, Inc. 7.6
Thermo Electron Corp. 6.2
TETRA Technologies, Inc. 5.7
United Waste Systems, Inc. 4.8
Attwoods PLC ADR 4.6
Heidemij NV 4.1
USA Waste Services, Inc. 3.0
EA Engineering Science & Technology, Inc. 2.6
OHM Corp. 2.4
TRC Companies, Inc. 2.3
TOP INDUSTRIES AS OF AUGUST 31, 1994
Row: 1, Col: 1, Value: 45.1
Row: 1, Col: 2, Value: 5.9
Row: 1, Col: 3, Value: 6.2
Row: 1, Col: 4, Value: 7.9
Row: 1, Col: 5, Value: 15.5
Row: 1, Col: 6, Value: 19.4
Refuse Systems 19.4%
Pollution Equipment &
Design 15.5%
Hazardous Waste
Management 7.9%
Steam Supply 6.2%
Business Consulting Services 5.9%
All Others 45.1%*
* INCLUDES SHORT-TERM INVESTMENTS
ENVIRONMENTAL SERVICES PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Philip Barton,
Portfolio Manager of Fidelity Select Environmental Services Portfolio
Q. PIP, HOW DID THE FUND PERFORM?
A. For the six months ended August 31, 1994, the fund had a total return of
- -8.38%, and for the year ended August 31, the fund returned -1.09%. Both
numbers lagged the S&P 500's return of 3.26% and 5.47% for six months and
one year, respectively.
Q. WHAT WAS BEHIND THE FUND'S SUB-PAR PERFORMANCE?
A. There were a number of factors. First, during the second quarter of
1994, the market contracted due to higher interest rates, affecting a
number of the fund's small company positions. Investors could find higher
returns in less risky investments, so they were less willing to take risk.
Second, the fund's assets decreased during the period because of
redemptions, and some of the investments were difficult to sell, so they
stayed in the portfolio and adversely affected performance. Finally, there
were specific holdings and subsectors within the fund that performed
poorly.
Q. WHICH INVESTMENTS DISAPPOINTED?
A. USA Waste and OHM, which at one point during the period accounted for
about 14% of the fund, dropped about 40% combined. USA Waste was the fund's
biggest holding among secondary market waste companies, those that offer
services in specific regions. The company overpaid for an acquisition in
January and waited until June to file documents with the Securities and
Exchange Commission for the purchase, and the stock dropped. OHM had a
great deal of success bidding for government clean-up contracts, but
suffered from poor press involving a dispute with a customer. There is
always an element of risk with clean-up companies, but I believe this is a
good company, and the stock price has started to bounce back.
Q. DID ANY GROUPS OF STOCKS PERFORM POORLY?
A. There were problems in the hazardous waste sector. I owned American
Ecology, a specialist in the area of low-level radioactive waste, which
went down because of concerns about permitting. In addition, the fund's
investments in consulting firms - such as Roy Weston, EMCON and Harding
Associates - performed below expectations, even though the fund bought many
of them below book value. Growth has been slow for consulting businesses
due to sluggish spending by private companies, which also look for price
breaks when they contract with consultants.
Q. WHAT WERE SOME OF THE POSITIVE STORIES FROM THE PERIOD?
A. Three come to mind. First, Thermedics, the fund's biggest investment at
the end of the period, an environmental and quality control instrumentation
business. The company's earnings and operating income have been growing,
driven by demand for new products including quality assurance products for
the beverage industry. Second, TETRA Technologies, a chemical recycler. The
company primarily handles industrial calcium chloride waste, which it
processes and sells as fluids to protect drilling equipment. Finally, IMCO
Recycling, the world's largest recycler of aluminum. This is a high-volume
business where only a small increase in gross profit per pound can
meaningfully help earnings.
Q. WHAT HAS THE STRUCTURE OF THE FUND LOOKED LIKE SINCE YOU
TOOK OVER?
A. I'd say it is a hybrid of growth and cyclical stocks. On the one hand,
I've focused on high growth, "new age" companies that are providing
advanced technology designed to help companies comply with environmental
regulations. On the other hand, there is a significant component of
traditional, late cyclical stocks in the portfolio. Cyclical stocks are
those that tend to increase in value as the economy improves, or decrease
in value when the economy performs poorly. Waste companies are benefiting
from the economic recovery because an increase in economic activity
inevitably results in greater generation of waste. Most of my investments
in this area are secondary market waste companies, because the business is
regional and determined by specific market conditions. Secondary market
waste investments include Sanifill, Western Waste and United Waste.
Q. WHAT'S YOUR OUTLOOK FOR THE NEXT SIX MONTHS?
A. I'm very positive about the sector. Solid waste companies are cyclicals
that perform best in the latter stages of a recovery. These fixed-cost
businesses are seeing better volumes from commercial and industrial
customers and their pricing is improving. And instrumentation companies are
starting new product cycles or making acquisitions that should lead to cost
savings. I also think there are some great opportunities out there in
stocks whose prices have bottomed.
FUND FACTS
START DATE: June 29, 1989
SIZE: as of August 31, 1994, more than
$52 million
MANAGER: Philip Barton, since August 1993;
manager, Fidelity Select Developing
Communications Portfolio, January 1993 to
August 1993; Senior European technology
analyst, Fidelity International, London,
1989-1993; joined Fidelity in 1986
(checkmark)
ENVIRONMENTAL SERVICES PORTFOLIO
INVESTMENTS AUGUST 31, 1994 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 95.5%
SHARES VALUE (NOTE 1)
AUTOS, TIRES, & ACCESSORIES - 0.4%
AUTO & TRUCK PARTS - 0.4%
Williams Controls, Inc. (a) 70,000 $ 188,125
BUILDING MATERIALS - 2.9%
AIRCONDITIONING EQUIPMENT - 0.6%
Thermo Power Corp. (a) 35,300 313,288
FURNACES - 2.3%
Thermo Process Systems, Inc. (a) 49,900 405,438
Thermo Remediation 52,600 795,575
1,201,013
TOTAL BUILDING MATERIALS 1,514,301
CHEMICALS & PLASTICS - 0.8%
PLASTICS, NEC - 0.8%
ESSEF Industries Inc. (a) 30,000 427,500
COMPUTER SERVICES & SOFTWARE - 0.7%
PREPACKAGED COMPUTER SOFTWARE - 0.7%
Micro Focus Group, PLC ADR (a) 15,000 196,875
Telepanel Systems, Inc. (a) 79,500 180,279
377,154
CREDIT & OTHER FINANCE - 1.8%
FINANCIAL SERVICES - 1.8%
Acmat Corp. Class A (a) 110,000 962,500
DRUGS & PHARMACEUTICALS - 1.7%
COMMERCIAL LABORATORY RESEARCH - 1.7%
Thermotrex Corp. (a) 47,000 646,250
Zenon Environmental, Inc. (a) 44,000 273,582
919,832
ELECTRICAL EQUIPMENT - 1.2%
TV & RADIO COMMUNICATION EQUIPMENT - 1.2%
California Amplifier, Inc. (a) 144,300 649,350
ELECTRONIC INSTRUMENTS - 5.0%
INDUSTRIAL MEASUREMENT INSTRUMENTS - 1.3%
TSI, Inc. 73,800 682,650
LABORATORY & RESEARCH EQUIPMENT - 1.8%
Microfluidics International Corp. (a) 203,300 940,263
MEASURING INSTRUMENTS - 1.9%
Andros, Inc. (a) 10,000 165,000
Liberty Technologies, Inc. (a) 171,900 859,500
1,024,500
TOTAL ELECTRONIC INSTRUMENTS 2,647,413
ELECTRONICS - 1.8%
SEMICONDUCTORS - 1.8%
Geotek Industries, Inc. (a) 80,800 919,100
Integrated Circuit Systems, Inc. (a) 3,500 36,750
955,850
ENERGY SERVICES - 2.0%
OIL & GAS SERVICES - 2.0%
Serv-Tech, Inc. 112,700 1,070,650
ENGINEERING - 3.2%
ARCHITECTS & ENGINEERS - 2.6%
EA Engineering Science &
Technology, Inc. (a) 136,800 1,368,000
SPECIAL CONTRACTORS - 0.1%
Matrix Service Co. (a) 7,000 47,250
WATER & SEWER PIPES - 0.5%
UTILX Corporation (a) 67,500 253,125
TOTAL ENGINEERING 1,668,375
SHARES VALUE (NOTE 1)
FOODS - 0.7%
CEREAL BREAKFAST FOODS - 0.7%
Ralcorp Holdings, Inc. (a) 20,000 $ 347,500
INDEPENDENT POWER - 6.2%
STEAM SUPPLY - 6.2%
Thermo Electron Corp. (a) 73,550 3,300,556
INDUSTRIAL MACHINERY & EQUIPMENT - 2.8%
MEASURING & DISPENSING PUMPS - 1.3%
Total Containment, Inc. (a) 55,000 715,000
SERVICE INDUSTRY MACHINERY, NEC - 1.5%
Trojan Technologies (a) 111,400 774,149
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 1,489,149
MEDICAL EQUIPMENT & SUPPLIES - 7.6%
MEDICAL TECHNOLOGY - 7.6%
Thermedics, Inc. (a) 269,400 4,041,000
MEDICAL FACILITIES MANAGEMENT - 1.3%
MEDICAL LABORATORIES - 1.3%
Huntingdon International Holdings
PLC ADR 130,300 700,363
METALS & MINING - 1.8%
SECONDARY NONFERROUS SMELTING - 1.8%
IMCO Recycling, Inc. (a) 59,300 941,388
PACKAGING & CONTAINERS - 0.1%
METAL CANS & SHIPPING CONTAINERS - 0.1%
Air Packaging Technologies, Inc. (a) 54,300 29,791
POLLUTION CONTROL - 46.0%
HAZARDOUS WASTE MANAGEMENT - 7.9%
American Ecology Corp. 125,500 1,004,000
GNI Group, Inc. (a) 187,500 656,250
OHM Corp. (a) 104,000 1,287,000
TRC Companies, Inc. (a) 122,600 1,226,000
4,173,250
POLLUTION EQUIPMENT & DESIGN - 15.5%
Davis Water & Waste Industries, Inc. (a) 27,900 240,638
EMCON Associates (a) 93,600 573,300
Envirosource, Inc. (a) 17,600 61,600
Envirotest Systems Corp. (a) 25,000 400,000
GZA Geo Environmental
Technologies, Inc. (a) 91,100 580,763
Harding Associates Inc. (a) 89,300 513,475
MFRI, Inc. (a) 100,000 700,000
Sevenson Environmental Services, Inc. 34,200 607,050
TETRA Technologies, Inc. (a) 314,600 3,028,025
Tetra Tech, Inc. (a) 40,000 930,000
Thermo Instrument Systems, Inc. (a) 3,150 96,469
Weston (Roy F.), Inc. Class A (a) 92,700 521,438
8,252,758
REFUSE SYSTEMS - 19.4%
Air & Water Technologies Corp.Class A (a) 64,500 564,375
Attwoods PLC ADR 281,400 2,462,250
Biomedical Waste Systems, Inc. 100,000 212,500
Browning-Ferris Industries, Inc. 20,000 632,500
International Recovery Corp. 8,200 121,975
Laidlaw, Inc. Class B (a) 25,000 203,449
Rollins Environmental Services, Inc. 100,000 612,500
Sanifill, Inc. (a) 44,500 1,068,000
United Waste Systems, Inc. (a) 110,500 2,569,125
WMX Technologies, Inc. 34,000 1,020,000
Western Waste Industries, Inc. (a) 45,600 872,100
10,338,774
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
POLLUTION CONTROL - CONTINUED
SANITARY SERVICES - 3.2%
Allwaste, Inc. (a) 15,000 $ 99,375
USA Waste Services, Inc. (a) 108,300 1,583,888
1,683,263
TOTAL POLLUTION CONTROL 24,448,045
SECURITIES INDUSTRY - 0.7%
SECURITY BROKERS & DEALERS - 0.7%
Lehman Brothers Holdings, Inc. 23,000 373,750
SERVICES - 6.8%
BUSINESS CONSULTING SERVICES - 5.9%
Earth Technology Corp. (USA) (a) 111,900 993,113
Heidemij NV (a) 211,800 2,170,943
3,164,056
BUSINESS SERVICES - 0.5%
Marcum Natural Gas Services, Inc. (a) 27,600 113,850
Vectra Technologies (a) 45,000 174,375
288,225
MISCELLANEOUS PERSONAL SERVICES - 0.2%
Thermolase Corp. (a) 12,618 116,717
SPECIAL WAREHOUSING & STORAGE, NEC - 0.2%
Astrotech International Corp. (a) 29,300 89,731
TOTAL SERVICES 3,658,729
TOTAL COMMON STOCKS
(Cost $53,750,694) 50,711,321
REPURCHASE AGREEMENTS - 4.5%
MATURITY VALUE (NOTE 1)
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account, at 4.83% dated
8/31/94 due 9/1/94 $ 2,424,325 2,424,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $56,174,694) $ 53,135,321
LEGEND
1. Non-income producing
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $24,022,200 and $33,716,885, respectively (see Note 4 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $18,775 for the period (see
Note 5 of Notes to Financial Statements).
The maximum loan and average daily loan balances during the periods for
which loans were outstanding amounted to $1,368,000 and $1,248,000,
respectively. The weighted average interest rate paid was 4.3% (see Note 8
of Notes to Financial Statements).
Distribution of investments by country, as a percentage of total value of
investment in securities, is as follows:
United States 86.5%
United Kingdom 6.7
Netherlands 4.1
Canada 2.7
TOTAL 100.0%
INCOME TAX INFORMATION
At August 31, 1994, the aggregate cost of investment securities for income
tax purposes was $56,366,435. Net unrealized depreciation aggregated
$3,231,114, of which $3,446,538 related to appreciated investment
securities and $6,677,652 related to depreciated investment securities.
At February 28, 1994, the fund had a capital loss carryforward of
approximately $289,000 which will expire on February 28, 2001.
ENVIRONMENTAL SERVICES PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
AUGUST 31, 1994 (UNAUDITED)
ASSETS
Investment in securities, $ 53,135,321
at value (including
repurchase
agreements of
$2,424,000) (cost
$56,174,694) - See
accompanying
schedule
Cash 849
Receivable for 276,283
investments sold
Receivable for fund 164,562
shares sold
Dividends receivable 10,489
Redemption fees 81
receivable
Other receivables 62,040
Prepaid expenses 7,655
TOTAL ASSETS 53,657,280
LIABILITIES
Payable for investments $ 413,090
purchased
Payable for fund shares 363,235
redeemed
Accrued management 25,629
fee
Other payables and 59,351
accrued expenses
TOTAL LIABILITIES 861,305
NET ASSETS $ 52,795,975
Net Assets consist of:
Paid in capital $ 55,624,943
Accumulated net (335,433
investment (loss) )
Accumulated 545,838
undistributed net
realized gain (loss) on
investments and
foreign currency
transactions
Net unrealized (3,039,373
appreciation )
(depreciation) on
investments
NET ASSETS, for $ 52,795,975
4,828,744 shares
outstanding
NET ASSET VALUE and $10.93
redemption price per
share ($52,795,975 (divided by)
shares)
Maximum offering price $11.27
per share (100/97 of
$10.93)
</TABLE>
STATEMENT OF OPERATIONS
SIX MONTHS ENDED AUGUST 31, 1994 (UNAUDITED)
INVESTMENT INCOME $ 128,233
Dividends
Interest 16,555
TOTAL INCOME 144,788
EXPENSES
Management fee $ 155,382
Transfer agent 303,153
Fees
Redemption fees (31,062
)
Accounting fees and 25,485
expenses
Non-interested trustees' 154
compensation
Custodian fees and 6,638
expenses
Registration fees 7,655
Audit 10,726
Legal 558
Interest 1,478
Reports to shareholders 5,159
Miscellaneous 99
Total expenses before 485,425
reductions
Expense reductions (5,204 480,221
)
NET INVESTMENT INCOME (335,433
(LOSS) )
REALIZED AND UNREALIZED
GAIN (LOSS)
Net realized gain (loss)
on:
Investment securities 1,048,864
Foreign currency 35 1,048,899
transactions
Change in net unrealized (5,890,481
appreciation )
(depreciation) on
investment securities
NET GAIN (LOSS) (4,841,582
)
NET INCREASE $ (5,177,015
(DECREASE) IN NET )
ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION $56,455
Sales Charges Paid to
FDC
Deferred sales $13,278
charges withheld
by FDC
Exchange fees $24,803
withheld by FSC
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS YEAR ENDED
ENDED FEBRUARY 28,
AUGUST 31, 1994 1994
(UNAUDITED)
Operations $ (335,433 $ (575,756
Net investment income (loss) ) )
Net realized gain (loss) 1,048,899 1,694,174
Change in net unrealized appreciation (depreciation) (5,890,481 1,070,736
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (5,177,015 2,189,154
)
Share transactions 20,399,608 46,687,197
Net proceeds from sales of shares
Cost of shares redeemed (28,399,996 (48,886,268
) )
Paid in capital portion of redemption fees 17,595 53,169
Net increase (decrease) in net assets resulting from share transactions (7,982,793 (2,145,902
) )
TOTAL INCREASE (DECREASE) IN NET ASSETS (13,159,808 43,252
)
NET ASSETS
Beginning of period 65,955,783 65,912,531
End of period (including accumulated net investment (loss) of $(335,433) and $0, $ 52,795,975 $ 65,955,783
respectively)
OTHER INFORMATION
Shares
Sold 1,899,027 4,126,128
Redeemed (2,597,584 (4,401,687
) )
Net increase (decrease) (698,557 (275,559
) )
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS YEAR ENDED TEN MONTHS YEARS ENDED APRIL 30, JUNE 29, 1989
ENDED FEBRUARY 28, ENDED (COMMENCEMEN
AUGUST 31, 1994 FEBRUARY 28, T OF OPERATIONS)
TO APRIL 30,
SELECTED PER-SHARE DATAC (UNAUDITED) 1994 1993 1992 1991 1990
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 11.93 $ 11.36 $ 11.39 $ 12.95 $ 11.41 $ 10.00
Income from Investment Operations
Net investment income (loss) (.07) (.11) (.06) (.09) (.04) .02
Net realized and unrealized gain (loss) (.93) .67 .42 (1.06) 1.55 1.38
Total from investment operations (1.00) .56 .36 (1.15) 1.51 1.40
Less Distributions
From net investment income - - - - - (.01)
From net realized gain - - (.39) (.42) - -
Total distributions - - (.39) (.42) - (.01)
Redemption fees added to paid in capital - .01 - .01 .03 .02
Net asset value, end of period $ 10.93 $ 11.93 $ 11.36 $ 11.39 $ 12.95 $ 11.41
TOTAL RETURND, E (8.38)% 5.02% 3.34% (8.67)% 13.50% 14.20%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 52,796 $ 65,956 $ 65,913 $ 65,132 $ 100,263 $ 101,736
Ratio of expenses to average net assetsB 1.88%A 2.03% 1.99%A 2.03% 2.03% 2.25%A
Ratio of expenses to average net assets before 1.90%A 2.07% 1.99%A 2.03% 2.03% 2.25%A
expense reductionsB
Ratio of net investment income (loss) to average (1.32)% (1.02) (.70)% (.74)% (.30)% .16%A
net assets A % A
Portfolio turnover rate 95%A 191% 176%A 130% 122% 72%A
</TABLE>
A ANNUALIZED
B SEE NOTE 9 OF NOTES TO FINANCIAL STATEMENTS.
C NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
D TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
E THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
INDUSTRIAL EQUIPMENT PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance: total
percentage change in value, the average annual percentage change, or the
growth of a hypothetical $10,000 investment. Each performance figure
includes changes in a fund's share price, plus reinvestment of any
dividends (income) and capital gains (the profits the fund earns when it
sells stocks that have grown in value).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 6 PAST 1 PAST 5 LIFE OF
AUGUST 31, 1994 MONTH YEAR YEARS FUND
S
INDUSTRIAL EQUIPMENT -2.66% 11.13% 72.56% 113.93%
INDUSTRIAL EQUIPMENT
(INCL. 3% SALES CHARGE) -5.58% 7.80% 67.38% 107.51%
S&P 500 3.26% 5.47% 58.16% 164.55%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one year, five years, or
since the fund started on September 29, 1986. You can compare these figures
to the performance of the S&P 500 - a common proxy for the U.S. stock
market. This benchmark includes reinvested dividends and capital gains, if
any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
AUGUST 31, 1994 YEAR YEARS FUND
INDUSTRIAL EQUIPMENT 11.13% 11.53% 10.07%
INDUSTRIAL EQUIPMENT
(INCL. 3% SALES CHARGE) 7.80% 10.85% 9.64%
S&P 500 5.47% 9.60% 13.05%
AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and
show you what would have happened if the fund had performed at a constant
rate each year.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of growth in the long run
and volatility in the short run. Unlike the broader
market, however, some sectors may not have
a history of growth in the long run. And, as
with all stock funds, the share price and return
of a fund that invests in a sector will vary. That
means if you sell your shares during a sector
downturn, you might lose money. But if you
can identify a sector that is about to
experience rapid growth you may have the
potential for above-average gains.
(checkmark)
$10,000 OVER LIFE OF FUND
Select Ind.Equipment (510) Standard & Poor's
09/29/86 9700.00 10000.00
09/30/86 9729.10 9962.80
10/31/86 10039.50 10537.66
11/30/86 10291.70 10793.72
12/31/86 10311.10 10518.48
01/31/87 11804.90 11935.32
02/28/87 12804.00 12406.77
03/31/87 12580.90 12765.32
04/30/87 12367.50 12651.71
05/31/87 12357.80 12761.78
06/30/87 12707.00 13406.25
07/31/87 13483.00 14085.95
08/31/87 14084.40 14611.35
09/30/87 14414.20 14291.37
10/31/87 8759.10 11213.00
11/30/87 8361.40 10289.05
12/31/87 9357.40 11072.05
01/31/88 9188.17 11538.18
02/29/88 10024.36 12075.86
03/31/88 10173.68 11702.72
04/30/88 10472.32 11832.62
05/31/88 10412.60 11935.56
06/30/88 11149.24 12483.41
07/31/88 10561.92 12435.97
08/31/88 9606.27 12013.15
09/30/88 9785.45 12524.91
10/31/88 9626.18 12873.10
11/30/88 9317.58 12689.01
12/31/88 9815.31 12911.07
01/31/89 10532.05 13856.16
02/28/89 10113.95 13511.14
03/31/89 10263.28 13825.95
04/30/89 10999.92 14543.52
05/31/89 11597.20 15132.53
06/30/89 11099.47 15046.28
07/31/89 11806.25 16404.95
08/31/89 12025.25 16726.49
09/30/89 11856.02 16657.91
10/31/89 11069.60 16271.45
11/30/89 11378.20 16603.39
12/31/89 11577.29 17001.87
01/31/90 11189.06 15861.04
02/28/90 11756.48 16065.65
03/31/90 12453.30 16491.39
04/30/90 12353.76 16079.11
05/31/90 13498.55 17646.82
06/30/90 13258.63 17526.82
07/31/90 13008.09 17470.73
08/31/90 10863.46 15891.38
09/30/90 9390.28 15117.47
10/31/90 9139.74 15052.46
11/30/90 9440.38 16024.85
12/31/90 9781.12 16471.95
01/31/91 10823.37 17190.12
02/28/91 11845.58 18419.22
03/31/91 11745.36 18864.96
04/30/91 11625.10 18910.24
05/31/91 12116.16 19727.16
06/30/91 11725.01 18823.66
07/31/91 11825.31 19700.84
08/31/91 12005.85 20167.75
09/30/91 12286.69 19830.95
10/31/91 12216.48 20096.68
11/30/91 11634.74 19286.79
12/31/91 12406.41 21493.19
01/31/92 13519.55 21093.42
02/29/92 14480.89 21367.64
03/31/92 14055.87 20950.97
04/30/92 14055.87 21566.92
05/31/92 14167.19 21672.60
06/30/92 13296.92 21349.68
07/31/92 13418.35 22222.88
08/31/92 12720.11 21767.31
09/30/92 12983.22 22024.17
10/31/92 12932.62 22101.25
11/30/92 13549.90 22854.91
12/31/92 13813.01 23136.02
01/31/93 14460.65 23330.36
02/28/93 15219.61 23647.66
03/31/93 15492.83 24146.62
04/30/93 16201.66 23562.27
05/31/93 17011.75 24193.74
06/30/93 17234.52 24263.90
07/31/93 17477.55 24166.85
08/31/93 18672.42 25082.77
09/30/93 18459.77 24889.63
10/31/93 19077.46 25404.85
11/30/93 19057.21 25163.50
12/31/93 19798.03 25467.98
01/31/94 20728.98 26333.89
02/28/94 21318.57 25620.25
03/31/94 20087.66 24503.20
04/30/94 19905.86 24816.84
05/31/94 19498.98 25223.84
06/30/94 18497.43 24605.86
07/31/94 19373.78 25412.93
08/31/94 20750.92 26454.86
Let's say you invested $10,000 in Fidelity Select Industrial Equipment
Portfolio on September 29, 1986, when the fund started, and paid a 3% sales
charge. By August 31, 1994, your investment would have grown to $20,751 - a
107.51% increase. That compares to $10,000 invested in the S&P 500, which
would have grown to $26,455 over the same period - a 164.55% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST 31, 1994
% OF FUND'S
INVESTMENTS
Caterpillar, Inc. 10.3
Harnischfeger Industries, Inc. 6.6
Joy Technologies, Inc. Class A 6.4
Goulds Pumps, Inc. 6.0
Cooper Industries, Inc. 5.9
Trinity Industries, Inc. 5.4
International Business Machines Corp. 5.1
Finning Ltd. 4.2
NACCO Industries, Inc. Class A 4.0
TRINOVA Corp. 3.3
TOP INDUSTRIES AS OF AUGUST 31, 1994
Row: 1, Col: 1, Value: 33.2
Row: 1, Col: 2, Value: 5.4
Row: 1, Col: 3, Value: 6.4
Row: 1, Col: 4, Value: 10.1
Row: 1, Col: 5, Value: 16.0
Row: 1, Col: 6, Value: 28.9
General Industrial Machinery 28.9%
Construction Equipment 16.0%
Pumping Equipment 10.1%
Mining & Handling
Equipment 6.4%
Railroad Equipment 5.4%
All Others 33.2%*
* INCLUDES SHORT-TERM INVESTMENTS
INDUSTRIAL EQUIPMENT PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Albert Ruback,
Portfolio Manager of
Fidelity Select Industrial Equipment Portfolio
Q. ALBERT, HOW DID THE FUND PERFORM?
A. It turned in mixed results. Over the six months and year ended August
31, 1994, the fund had total returns of -2.66% and 11.13%, respectively.
This compares to the S&P 500, which returned 3.26% and 5.47% for the same
periods.
Q. WHY DID IT UNDER-PERFORM THE S&P 500 OVER THE PAST
SIX MONTHS?
A. I think the fund's under-performance was mostly due to larger economic
factors. During the period, the Federal Reserve Board raised short-term
interest rates five times, which pushed bond yields up and prices down.
Shortly after, the general stock market fell in response to the slowing
bond market. The drop in stocks strongly affected cyclical stocks - those
that tend to do well when the economy improves or poorly when the economy
is weak -which make up the bulk of this fund. The general economic picture
started turning around in August when fears about the bond market lessened
and stocks started looking more positive.
Q. HOW DID THE UPTURN IN AUGUST AFFECT THE FUND?
A. In the month of August alone, the fund was up 7.11%. Caterpillar, the
fund's single biggest holding, was up about 6% on news that John Deere,
another major cyclical stock, had a strong third fiscal quarter. The fund's
performance was also boosted in August when Harnischfeger, a paper
machinery and surface-mining machinery company, acquired Joy Technologies,
a large underground-mining machinery company. The fund profited because it
owned both stocks.
Q. WHAT OTHER STOCKS LOOKED LIKE GOOD INVESTMENTS?
A. The diversified manufacturing company Cooper Industries was attractive.
I bought this company at an inexpensive price because its petroleum
division had under-performed. However, I think Cooper, which has excellent
management and a history of great returns, will be a solid investment going
forward. Another company, Goulds Pumps - a late-cycle cyclical stock -
recently hired an enthusiastic new CEO, who I think could improve the
company's profitability.
Q. WHEN YOU REFER TO GOULDS PUMPS AS A LATE-CYCLE CYCLICAL STOCK, WHAT DO
YOU MEAN?
A. A late-cycle cyclical stock typically turns in its strongest performance
later in an economic upturn. Early-cycle cyclical stocks, like auto makers,
pick up right at the beginning of an economic upturn.
Q. CAN YOU PROVIDE AN EXAMPLE OF ANOTHER LATE-CYCLE CYCLICAL?
A. Sure. Let's look at paper machinery companies. When the economy
improves, paper use increases, but this demand can be satisfied with
inventories that have built up at paper manufacturers and throughout the
distribution channel. However, when inventories decline, paper
manufacturers often need to operate their machinery at higher rates to
satisfy the increased demand and rebuild their depleted inventories.
Because of high usage, the paper manufacturers' machinery may start
breaking down, and they may need to order spare parts, such as water pumps
made by Goulds Pumps, to repair their paper-making machinery. Paper
companies may also contact a paper machinery company, such as
Harnischfeger, to buy new equipment.
Q. DO YOU REGRET ANY OF THE INVESTMENT DECISIONS YOU MADE OVER THE PAST SIX
MONTHS?
A. Yes. I wish I'd taken profits out of the railroad equipment company
Trinity Industries sooner. My biggest regret, however, is one I had no
control over. The fund began the calendar year with about $85 million in
assets. In March it hit around $218 million, as investors flooded into the
market to take advantage of peaking cyclical stocks. By the end of the
period, the fund's assets had trickled back down to about $90 million. This
meant that I had to buy stocks when prices were elevated and sell them when
prices were depressed.
Q. WHAT'S YOUR OUTLOOK GOING FORWARD?
A. I'm not that optimistic because the gap between my own expectations for
earnings in this sector and Wall Street estimates has narrowed. This works
against the fund's strategy of buying companies that have earnings growth
far beyond what the general investing public expects.
FUND FACTS
START DATE: September 29, 1986
SIZE: as of August 31, 1994, more than
$89 million
MANAGER: Albert Ruback, since September
1991; joined Fidelity in 1991
(checkmark)
INDUSTRIAL EQUIPMENT PORTFOLIO
INVESTMENTS AUGUST 31, 1994 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 95.1%
SHARES VALUE (NOTE 1)
AUTOS, TIRES, & ACCESSORIES - 8.8%
AUTO & TRUCK PARTS - 3.2%
Titan Wheel International, Inc. 99,200 $ 2,802,396
INDUSTRIAL TRUCKS - 4.0%
NACCO Industries, Inc. Class A 57,600 3,592,800
MOTOR VEHICLES & CAR BODIES - 1.6%
Spartan Motors, Inc. 86,500 1,394,813
TOTAL AUTOS, TIRES, & ACCESSORIES 7,790,009
BUILDING MATERIALS - 1.6%
AIRCONDITIONING EQUIPMENT - 1.6%
Tecumseh Products Co. Class A 28,200 1,381,800
COMPUTERS & OFFICE EQUIPMENT - 5.1%
MAINFRAME COMPUTERS - 5.1%
International Business Machines Corp. 66,700 4,577,288
ENGINEERING - 0.9%
ARCHITECTS & ENGINEERS - 0.9%
Corrpro Companies, Inc. (a) 54,000 769,500
HOLDING COMPANIES - 0.1%
HOLDING COMPANY OFFICES, NEC - 0.1%
Brierley Investments Ltd. 137,382 108,550
INDUSTRIAL MACHINERY & EQUIPMENT - 73.2%
AIR & GAS COMPRESSORS - 0.1%
Gardner Denver Machinery, Inc. (a) 4,968 45,954
BALL & ROLLER BEARINGS - 2.3%
Bearings, Inc. 60,700 1,972,750
SKF AB sponsored ADR (a) 4,900 88,506
2,061,256
CONSTRUCTION & MINING EQUIPMENT - 0.2%
Champion Road Machinery Ltd. (b) 22,800 195,969
CONSTRUCTION EQUIPMENT - 16.0%
Astec Industries, Inc. (a) 90,600 1,211,775
Caterpillar, Inc. 79,200 9,147,600
Finning Ltd. 225,100 3,704,876
Indresco, Inc. (a) 14,000 185,500
14,249,751
ENGINES & TURBINES - 1.6%
Briggs & Stratton Corp. 18,400 1,419,100
FARM MACHINERY & EQUIPMENT - 0.3%
Valmont Industries, Inc. 14,000 227,500
GENERAL INDUSTRIAL MACHINERY - 28.9%
Cooper Industries, Inc. 132,900 5,266,163
Dover Corp. 25,000 1,446,875
Harnischfeger Industries, Inc. 253,800 5,869,125
Manitowoc Co., Inc. 30,400 801,800
Park-Ohio Industries, Inc. (a) 203,300 2,846,200
Parker-Hannifin Corp. 55,800 2,343,600
Regal-Beloit Corp. 152,800 2,120,100
TRINOVA Corp. 78,200 2,952,050
Watts Industries, Inc. Class A 85,400 2,092,300
25,738,213
MACHINE TOOLS, METAL CUTTING - 3.4%
Cincinnati Milacron, Inc. 113,400 2,664,900
Greenfield Industries, Inc. 16,800 365,400
3,030,300
METAL WORKING MACHINERY - 1.3%
Acme-Cleveland Corp. 92,800 1,160,000
SHARES VALUE (NOTE 1)
MINING & HANDLING EQUIPMENT - 6.4%
Joy Technologies, Inc. Class A (a) 458,099 $ 5,726,238
PUMPING EQUIPMENT - 10.1%
Amtrol, Inc. 30,200 528,500
BWIP Holdings, Inc. Class A 85,500 1,539,000
Duriron Company, Inc. 6,750 124,875
Goulds Pumps, Inc. 247,700 5,356,513
IDEX Corp. (a) 6,700 272,188
Keystone International, Inc. 58,000 1,160,000
8,981,076
SPECIAL INDUSTRIAL MACHINERY - 2.6%
CMI Corp. Oklahoma Class A 295,600 2,327,850
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 65,163,207
RAILROADS - 5.4%
RAILROAD EQUIPMENT - 5.4%
Trinity Industries, Inc. 140,450 4,775,300
TOTAL COMMON STOCKS
(Cost $85,871,434) 84,565,654
REPURCHASE AGREEMENTS - 4.9%
MATURITY VALUE (NOTE 1)
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account, at 4.83% dated
8/31/94 due 9/1/94 $ 4,353,584 4,353,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $90,224,434) $ 88,918,654
LEGEND
1. Non-income producing
2. 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 period
end, the value of this security amounted to $195,969 or 0.2% of net assets.
3. A company in which the fund has ownership of at least 5% of the voting
securities is an affiliated compay. A summary of the transactions during
the period in which the issuers were affiliates is as follows:
PURCHASES SALES DIVIDEND MARKET
AFFILIATE COST COST INCOME VALUE
Rexworks, Inc. (a) $ - $ 63,125 $ - $ -
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $97,408,555 and $153,283,769, respectively (see Note 4 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $41,143 for the period (see
Note 5 of Notes to Financial Statements).
The maximum loan and average daily loan balances during the periods for
which loans were outstanding amounted to $3,887,000 and $2,095,235,
respectively. The weighted average interest rate paid was 4.5% (see Note 8
of Notes to Financial Statements).
INCOME TAX INFORMATION
At August 31, 1994, the aggregate cost of investment securities for income
tax purposes was $90,242,202. Net unrealized depreciation aggregated
$1,323,548, of which $3,634,917 related to appreciated investment
securities and $4,958,465 related to depreciated investment securities.
On October 26, 1990, the fund acquired substantially all of the assets of
Automation and Machinery Portfolio in a tax-free exchange for shares of
Industrial Technology Portfolio. Automation and Machinery Portfolio had a
capital loss carryover of approximately $106,000 available to offset future
realized capital gains in Industrial Technology Portfolio, to the extent
provided by regulations.
INDUSTRIAL EQUIPMENT PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
AUGUST 31, 1994 (UNAUDITED)
ASSETS
Investment in securities, $ 88,918,654
at value (including
repurchase
agreements of
$4,353,000) (cost
$90,224,434) - See
accompanying
schedule
Cash 903
Receivable for 739,353
investments sold
Receivable for fund 1,509,545
shares sold
Dividends receivable 112,202
Redemption fees 304
receivable
Prepaid expenses 62,289
TOTAL ASSETS 91,343,250
LIABILITIES
Payable for fund shares $ 1,402,138
redeemed
Accrued management 45,195
fee
Other payables and 123,444
accrued expenses
TOTAL LIABILITIES 1,570,777
NET ASSETS $ 89,772,473
Net Assets consist of:
Paid in capital $ 92,228,066
Accumulated net (166,988
investment (loss) )
Accumulated (982,990
undistributed net )
realized gain (loss) on
investments and
foreign currency
transactions
Net unrealized (1,305,615
appreciation )
(depreciation) on
investments and
assets and liabilities in
foreign currencies
NET ASSETS, for $ 89,772,473
4,513,717 shares
outstanding
NET ASSET VALUE and $19.89
redemption price per
share ($89,772,473 (divided by)
shares)
Maximum offering price $20.51
per share (100/97 of
$19.89)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED AUGUST 31, 1994 (UNAUDITED)
INVESTMENT INCOME $ 844,909
Dividends
Interest 198,198
TOTAL INCOME 1,043,107
EXPENSES
Management fee $ 440,542
Transfer agent 762,240
Fees
Redemption fees (128,821
)
Accounting fees and 71,105
expenses
Non-interested trustees' 432
compensation
Custodian fees and 9,067
expenses
Registration fees 62,289
Audit 11,978
Legal 987
Interest 4,453
Reports to shareholders 6,148
Miscellaneous 166
Total expenses before 1,240,586
reductions
Expense reductions (26,563 1,214,023
)
NET INVESTMENT INCOME (170,916
(LOSS) )
REALIZED AND UNREALIZED
GAIN (LOSS)
Net realized gain (loss)
on:
Investment securities (939,957
(including )
realized gain of
$11,876 on
sales of investments
in affiliated
issuers)
Foreign currency (228 (940,185
transactions ) )
Change in net unrealized
appreciation
(depreciation) on:
Investment securities (15,221,003
)
Assets and liabilities in 165 (15,220,838
foreign )
currencies
NET GAIN (LOSS) (16,161,023
)
NET INCREASE $ (16,331,939
(DECREASE) IN NET )
ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION $651,922
Sales Charges Paid to
FDC
Deferred sales $4,525
charges withheld
by FDC
Exchange fees $108,008
withheld by FSC
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS YEAR ENDED
ENDED FEBRUARY 28,
AUGUST 31, 1994 1994
(UNAUDITED)
Operations $ (170,916 $ 5,878
Net investment income (loss) )
Net realized gain (loss) (940,185 6,549,137
)
Change in net unrealized appreciation (depreciation) (15,220,838 13,055,339
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (16,331,939 19,610,354
)
Distributions to shareholders - (9,388
From net investment income )
From net realized gain (1,803,689 (1,748,414
) )
TOTAL DISTRIBUTIONS (1,803,689 (1,757,802
) )
Share transactions 96,152,294 267,189,015
Net proceeds from sales of shares
Reinvestment of distributions 1,784,527 1,738,476
Cost of shares redeemed (196,238,863 (95,571,492
) )
Paid in capital portion of redemption fees 197,799 202,432
Net increase (decrease) in net assets resulting from share transactions (98,104,243 173,558,431
)
TOTAL INCREASE (DECREASE) IN NET ASSETS (116,239,871 191,410,983
)
NET ASSETS
Beginning of period 206,012,344 14,601,361
End of period (including undistributed net investment income (loss) of $(166,988) and $3,928, $ 89,772,473 $ 206,012,344
respectively)
OTHER INFORMATION
Shares
Sold 4,762,608 14,282,723
Issued in reinvestment of distributions 90,356 93,575
Redeemed (10,336,883 (5,349,531
) )
Net increase (decrease) (5,483,919 9,026,767
)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS YEAR ENDED TEN MONTHS YEARS ENDED APRIL 30,
ENDED FEBRUARY 28, ENDED
AUGUST 31, 1994 FEBRUARY 28,
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SELECTED PER-SHARE DATAC (UNAUDITED) 1994 1993 1992 1991 1990
Net asset value, beginning of period $ 20.61 $ 15.04 $ 13.89 $ 11.60 $ 12.41 $ 11.05
Income from Investment Operations
Net investment income (loss) (.02) - .02 (.07) .01 .13F
Net realized and unrealized gain (loss) (.56) 5.92 1.09 2.39 (.80) 1.19
Total from investment operations (.58) 5.92 1.11 2.32 (.79) 1.32
Less Distributions
From net investment income - (.01) - - - -
In excess of net investment income - - - (.11) (.09) -
From net realized gain (.17) (.40) - - - -
Total distributions (.17) (.41) - (.11) (.09) -
Redemption fees added to paid in capital .03 .06 .04 .08 .07 .04
Net asset value, end of period $ 19.89 $ 20.61 $ 15.04 $ 13.89 $ 11.60 $ 12.41
TOTAL RETURND, E (2.66)% 40.07% 8.28% 20.91% (5.90)% 12.31%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 89,772 $ 206,012 $ 14,601 $ 7,529 $ 1,949 $ 3,240
Ratio of expenses to average net assetsB 1.69%A 1.68% 2.49%A 2.49% 2.52% 2.59%
Ratio of expenses to average net assets before 1.72%A 1.69% 3.40%A 2.86% 2.99% 3.86%
expense reductionsB
Ratio of net investment income (loss) to average net (.24)% .01% .15%A (.57)% .09% 1.06%
assets A
Portfolio turnover rate 157%A 95% 407%A 167% 43% 132%
</TABLE>
A ANNUALIZED
B SEE NOTE 9 OF NOTES TO FINANCIAL STATEMENTS.
C NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
D TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
E THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
F INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND WHICH AMOUNTED TO
$.11 PER SHARE.
INDUSTRIAL MATERIALS PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance: total
percentage change in value, the average annual percentage change, or the
growth of a hypothetical $10,000 investment. Each performance figure
includes changes in a fund's share price, plus reinvestment of any
dividends (income) and capital gains (the profits the fund earns when it
sells stocks that have grown in value).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 6 PAST 1 PAST 5 LIFE OF
AUGUST 31, 1994 MONTH YEAR YEARS FUND
S
INDUSTRIAL MATERIALS 10.18% 26.26% 60.85% 152.77%
INDUSTRIAL MATERIALS
(INCL. 3% SALES CHARGE) 6.87% 22.47% 56.03% 145.18%
S&P 500 3.26% 5.47% 58.16% 164.55%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one year, five years, or
since the fund started on September 29, 1986. You can compare these figures
to the performance of the S&P 500 - a common proxy for the U.S. stock
market. This benchmark includes reinvested dividends and capital gains, if
any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
AUGUST 31, 1994 YEAR YEARS FUND
INDUSTRIAL MATERIALS 26.26% 9.97% 12.41%
INDUSTRIAL MATERIALS
(INCL. 3% SALES CHARGE) 22.47% 9.31% 11.98%
S&P 500 5.47% 9.60% 13.05%
AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and
show you what would have happened if the fund had performed at a constant
rate each year.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of growth in the long run
and volatility in the short run. Unlike the broader
market, however, some sectors may not have
a history of growth in the long run. And, as
with all stock funds, the share price and return
of a fund that invests in a sector will vary. That
means if you sell your shares during a sector
downturn, you might lose money. But if you
can identify a sector that is about to
experience rapid growth you may have the
potential for above-average gains.
(checkmark)
$10,000 OVER LIFE OF FUND
Select Ind. Materials (509) Standard & Poor's
09/29/86 9700.00 10000.00
09/30/86 9729.10 9962.80
10/31/86 10262.60 10537.66
11/30/86 10621.50 10793.72
12/31/86 10233.50 10518.48
01/31/87 12008.60 11935.32
02/28/87 13017.40 12406.77
03/31/87 13958.30 12765.32
04/30/87 14123.20 12651.71
05/31/87 13764.30 12761.78
06/30/87 14482.10 13406.25
07/31/87 15820.70 14085.95
08/31/87 16363.90 14611.35
09/30/87 16606.40 14291.37
10/31/87 10301.40 11213.00
11/30/87 10252.90 10289.05
12/31/87 11834.98 11072.05
01/31/88 11222.33 11538.18
02/29/88 12544.89 12075.86
03/31/88 12768.56 11702.72
04/30/88 12788.01 11832.62
05/31/88 12476.82 11935.56
06/30/88 13838.28 12483.41
07/31/88 13322.87 12435.97
08/31/88 12603.24 12013.15
09/30/88 12710.21 12524.91
10/31/88 12476.82 12873.10
11/30/88 12360.12 12689.01
12/31/88 13117.42 12911.07
01/31/89 13908.22 13856.16
02/28/89 13305.24 13511.14
03/31/89 13166.85 13825.95
04/30/89 13572.13 14543.52
05/31/89 13750.06 15132.53
06/30/89 12949.38 15046.28
07/31/89 14115.81 16404.95
08/31/89 15242.70 16726.49
09/30/89 14313.51 16657.91
10/31/89 13137.19 16271.45
11/30/89 13325.01 16603.39
12/31/89 13700.64 17001.87
01/31/90 12652.83 15861.04
02/28/90 12870.30 16065.65
03/31/90 13245.93 16491.39
04/30/90 12287.08 16079.11
05/31/90 13028.46 17646.82
06/30/90 12890.19 17526.82
07/31/90 12738.06 17470.73
08/31/90 11267.51 15891.38
09/30/90 10466.31 15117.47
10/31/90 10344.61 15052.46
11/30/90 10892.26 16024.85
12/31/90 11348.64 16471.95
01/31/91 11754.31 17190.12
02/28/91 12616.36 18419.22
03/31/91 12788.77 18864.96
04/30/91 12809.06 18910.24
05/31/91 13904.37 19727.16
06/30/91 13752.19 18823.66
07/31/91 14302.28 19700.84
08/31/91 14638.45 20167.75
09/30/91 14444.90 19830.95
10/31/91 15066.29 20096.68
11/30/91 13864.25 19286.79
12/31/91 15412.64 21493.19
01/31/92 16084.97 21093.42
02/29/92 16869.36 21367.64
03/31/92 16573.94 20950.97
04/30/92 17439.82 21566.92
05/31/92 17643.55 21672.60
06/30/92 17215.30 21349.68
07/31/92 17602.62 22222.88
08/31/92 16491.63 21767.31
09/30/92 16267.39 22024.17
10/31/92 16450.86 22101.25
11/30/92 17062.41 22854.91
12/31/92 17318.99 23136.02
01/31/93 17687.48 23330.36
02/28/93 17851.25 23647.66
03/31/93 18148.09 24146.62
04/30/93 17881.96 23562.27
05/31/93 18618.94 24193.74
06/30/93 18669.79 24263.90
07/31/93 18926.52 24166.85
08/31/93 19419.45 25082.77
09/30/93 18813.56 24889.63
10/31/93 19922.66 25404.85
11/30/93 20189.66 25163.50
12/31/93 21021.48 25467.98
01/31/94 22726.20 26333.89
02/28/94 22253.81 25620.25
03/31/94 21627.38 24503.20
04/30/94 22439.13 24816.84
05/31/94 22665.58 25223.84
06/30/94 22428.84 24605.86
07/31/94 23262.59 25412.93
08/31/94 24518.35 26454.86
Let's say you invested $10,000 in Fidelity Select Industrial Materials
Portfolio on September 29, 1986, when the fund started, and paid a 3% sales
charge. By August 31, 1994, your investment would have grown to $24,518 - a
145.18% increase. That compares to $10,000 invested in the S&P 500, which
would have grown to $26,455 over the same period - a 164.55% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST 31, 1994
% OF FUND'S
INVESTMENTS
Union Carbide Corp. 10.3
Georgia-Pacific Corp. 9.7
Temple-Inland, Inc. 9.6
Du Pont (E.I.) de Nemours & Co. 9.5
Caterpillar, Inc. 7.8
Great Lakes Chemical Corp. 6.1
Amerada Hess Corp. 5.1
British Petroleum PLC ADR 4.8
Imperial Chemical Industries PLC ADR 4.6
Reynolds Metals Co. 4.3
TOP INDUSTRIES AS OF AUGUST 31, 1994
Row: 1, Col: 1, Value: 22.7
Row: 1, Col: 2, Value: 6.1
Row: 1, Col: 3, Value: 7.8
Row: 1, Col: 4, Value: 9.800000000000001
Row: 1, Col: 5, Value: 21.5
Row: 1, Col: 6, Value: 32.1
Chemicals 32.1%
Paper 21.5%
Oil & Gas Exploration 9.8%
Construction Equipment 7.8%
Chemicals, General 6.1%
All Others 22.7%*
* INCLUDES SHORT-TERM INVESTMENTS
INDUSTRIAL MATERIALS PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Louis Salemy,
Portfolio Manager of Fidelity Select Industrial Materials Portfolio
Q. LOUIS, HOW DID THE FUND PERFORM?
A. Quite well. For the six months and year ended August 31, 1994, the fund
had total returns of 10.18% and 26.26%, respectively. This was
significantly above the S&P 500's returns of 3.26% and 5.47% for the same
periods.
Q. WHAT WAS BEHIND THE FUND'S STRONG PERFORMANCE,
ESPECIALLY OVER THE PAST SIX MONTHS?
A. With the economy picking up during the past six months, demand for
industrial materials - especially liner board and paper - rose. The fund
did well because it owned a number of attractive industrial material
companies, focusing on the ones with the best supply/demand
characteristics. By this I mean that I looked for companies with
high-demand products that weren't spending money to increase their supply.
In August, the sector's performance picked up even more because earnings
estimates for industrial material companies were raised.
Q. YOU MENTIONED LINER BOARD AND PAPER. WHY DID THEY
LOOK GOOD?
A. Stocks of companies that make liner board and paper are considered
cyclical stocks - those that tend to do well when the economy picks up or
poorly when the economy is down. Over this period when the economy was
strong, demand for both liner board and paper picked up. In addition, their
supply was limited, further driving up their prices. Demand for liner
board, which is used to make shipping boxes for products like
refrigerators, increased dramatically as consumers bought more big-ticket
items. During the period, Temple-Inland, the fund's largest liner board
company, turned in strong results because it increased the number of
products it shipped out and was able to sell them at a higher price. Paper
company Georgia-Pacific, another of the fund's top stocks, was tied to
liner board as well as paper.
Q. HOW DID PAPER DO?
A. As I indicated, its performance pretty much mirrored that of liner
board. That's mostly because market pulp, which is used to make white
paper, benefited from high demand and a tight supply.
Q. WHAT OTHER TYPES OF INDUSTRIAL MATERIALS LOOKED ATTRACTIVE?
A. The fund's number one stock, diversified chemical company Union Carbide,
did well during the period because chemicals were in high demand. In
addition, it looks strong going forward because of its cost-cutting
potential. Aluminum companies, such as Reynolds Metals, were also
attractive. The company's inventories dropped because of strong demand,
and, as a result, the price of its aluminum took off. Aluminum went from 50
cents a pound at the end of 1993 to 65 cents at the end of this period.
Q. ON ANOTHER NOTE, IT LOOKS LIKE THE FUND'S ASSETS HAVE INCREASED
SIGNIFICANTLY OVER THE PERIOD . . .
A. They have - from about $156 million to about $213 million over the past
six months - as investors tried to take advantage of the upturn in cyclical
stocks. This environment forced me to buy large capitalization companies,
such as Caterpillar, at higher prices than I would have normally. These
large cap companies were necessary investments because they were highly
liquid, meaning the fund could have sold them quickly if its assets had
dropped. Another result of the increase in the fund's assets was that the
fund had a higher cash position during the period than I would have liked.
Q. IN HINDSIGHT, DO YOU REGRET ANY OF YOUR INVESTMENT DECISIONS?
A. Yes. I wish I'd owned more paper companies to take advantage of the
tremendous growth in that industry. In retrospect, I was too selective.
Q. WHAT DO YOU THINK SHAREHOLDERS CAN EXPECT OVER THE NEXT YEAR?
A. I think the outlook for the fund is positive. Economic growth in the
United States may slow going forward, but many other economies worldwide,
such as Europe and Japan, are just starting to pick up. As a result, I
expect demand for industrial materials to stay strong.
FUND FACTS
START DATE: September 29, 1986
SIZE: as of August 31, 1994, more than
$212 million
MANAGER: Louis Salemy, since August 1992;
manager, Fidelity Select Medical Delivery
Portfolio, since April 1993; joined Fidelity in
1992
(checkmark)
INDUSTRIAL MATERIALS PORTFOLIO
INVESTMENTS AUGUST 31, 1994 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 99.5%
SHARES VALUE (NOTE 1)
CHEMICALS & PLASTICS - 39.1%
CHEMICALS - 32.1%
Akzo NV sponsored ADR 30,000 $ 1,852,499
du Pont (E.I.) de Nemours & Co. 300,000 18,150,000
Grace (W.R.) & Co. 56,600 2,278,150
Imperial Chemical Industries PLC ADR 172,800 8,812,800
Olin Corp. 10,400 598,000
PPG Industries, Inc. 175,000 7,284,375
Rohm & Haas Co. 25,000 1,556,250
Union Carbide Corp. 573,200 19,703,750
Witco Corp. 43,900 1,349,925
61,585,749
CHEMICALS, GENERAL - 6.1%
Great Lakes Chemical Corp. 192,700 11,610,175
PLASTICS & SYNTHETIC RESINS - 0.9%
ARCO Chemical Co. 1,100 53,488
Geon 58,600 1,640,800
1,694,288
TOTAL CHEMICALS & PLASTICS 74,890,212
CONGLOMERATES - 0.4%
Textron, Inc. 15,000 828,750
DEFENSE ELECTRONICS - 1.2%
Litton Industries, Inc. 60,000 2,332,500
INDUSTRIAL MACHINERY & EQUIPMENT - 8.0%
CONSTRUCTION EQUIPMENT - 7.8%
Caterpillar, Inc. 130,000 15,015,000
FARM MACHINERY & EQUIPMENT - 0.2%
Kverneland Gruppen AS 34,650 449,786
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 15,464,786
METALS & MINING - 7.7%
PRIMARY PRODUCTION OF ALUMINUM - 4.4%
Reynolds Metals Co. 151,800 8,330,025
PRIME NONFERROUS SMELTING - 3.3%
Alcan Aluminum Ltd. 238,975 6,249,483
TOTAL METALS & MINING 14,579,508
OIL & GAS - 10.2%
CRUDE PETROLEUM & GAS - 0.4%
Burlington Resources, Inc. 20,000 752,500
OIL & GAS EXPLORATION - 9.8%
Amerada Hess Corp. 193,300 9,689,163
British Petroleum PLC ADR 119,943 9,115,668
18,804,831
TOTAL OIL & GAS 19,557,331
PAPER & FOREST PRODUCTS - 24.9%
PAPER - 21.5%
Abitibi-Price, Inc. (a) 12,000 171,171
Georgia-Pacific Corp. 251,100 18,675,563
Stone Container Corp. (a) 190,000 3,752,500
Temple-Inland, Inc. 327,900 18,485,363
41,084,597
PAPER MILLS - 3.4%
Bowater, Inc. 232,500 6,510,000
TOTAL PAPER & FOREST PRODUCTS 47,594,597
PRECIOUS METALS - 1.9%
GOLD ORES - 1.9%
Hecla Mining Co. (a) 302,300 3,703,175
SHARES VALUE (NOTE 1)
RAILROADS - 4.7%
CSX Corp. 90,800 $ 7,014,300
Conrail, Inc. 37,200 2,046,000
9,060,300
SERVICES - 1.4%
SURVEYING SERVICES - 1.4%
Western Atlas, Inc. 60,000 2,662,500
TOTAL COMMON STOCKS
(Cost $177,382,382) 190,673,659
REPURCHASE AGREEMENTS - 0.5%
MATURITY VALUE (NOTE 1)
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account, at 4.83% dated
8/31/94 due 9/1/94 $ 990,133 990,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $178,372,382) $ 191,663,659
LEGEND
1. Non-income producing
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $132,990,096 and $67,639,201, respectively (see Note 4 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $37,092 for the period (see
Note 5 of Notes to Financial Statements).
The maximum loan and average daily loan balance during the period for which
the loan was outstanding amounted to $2,584,000. The weighted average
interest rate paid was 4.2% (see Note 8 of Notes to Financial Statements).
Distribution of investments by country, as a percentage of total value of
investment in securities, is as follows:
United States 86.0%
United Kingdom 9.4
Canada 3.4
Netherlands 1.0
Others (individually less than 1%) 0.2
TOTAL 100.0%
INCOME TAX INFORMATION
At August 31, 1994, the aggregate cost of investment securities for income
tax purposes was $178,372,382. Net unrealized appreciation aggregated
$13,291,277, of which $15,628,586 related to appreciated investment
securities and $2,337,309 related to depreciated investment securities.
At February 28, 1994, the fund had a capital loss carryforward of
approximately $11,257,000 of which $1,664,000, $8,694,000, $141,000 and
$758,000 will expire on February 28, 1996, 1997, 1998 and 1999,
respectively.
INDUSTRIAL MATERIALS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
AUGUST 31, 1994 (UNAUDITED)
ASSETS
Investment in securities, $ 191,663,659
at value (including
repurchase
agreements of
$990,000) (cost
$178,372,382) - See
accompanying
schedule
Cash 618
Receivable for 19,301,566
investments sold
Receivable for fund 5,642,828
shares sold
Dividends receivable 716,855
Redemption fees 1,543
receivable
Other receivables 631
Prepaid expenses 43,960
TOTAL ASSETS 217,371,660
LIABILITIES
Payable for investments $ 2,801,000
purchased
Payable for fund shares 1,338,437
redeemed
Accrued management 102,950
fee
Other payables and 215,477
accrued expenses
TOTAL LIABILITIES 4,457,864
NET ASSETS $ 212,913,796
Net Assets consist of:
Paid in capital $ 208,618,365
Undistributed net 868,243
investment income
Accumulated (9,864,258
undistributed net )
realized gain (loss) on
investments and
foreign currency
transactions
Net unrealized 13,291,446
appreciation
(depreciation) on
investments and
assets and liabilities in
foreign currencies
NET ASSETS, for $ 212,913,796
8,937,840 shares
outstanding
NET ASSET VALUE and $23.82
redemption price per
share ($212,913,796 (divided by)
shares)
Maximum offering price $24.56
per share (100/97 of
$23.82)
</TABLE>
STATEMENT OF OPERATIONS
SIX MONTHS ENDED AUGUST 31, 1994 (UNAUDITED)
INVESTMENT INCOME $ 1,520,688
Dividends
Interest (including 659,326
security lending fees of
$6,736)
TOTAL INCOME 2,180,014
EXPENSES
Management fee $ 475,596
Transfer agent 703,656
Fees
Redemption fees (57,119
)
Accounting and security 76,987
lending fees
Non-interested trustees' 407
compensation
Custodian fees and 7,041
expenses
Registration fees 49,240
Audit 10,285
Legal 467
Interest 902
Reports to shareholders 6,515
Miscellaneous 126
Total expenses before 1,274,103
reductions
Expense reductions (15,341 1,258,762
)
NET INVESTMENT INCOME 921,252
REALIZED AND 1,427,767
UNREALIZED GAIN (LOSS)
Net realized gain (loss)
on investment
securities
Change in net unrealized
appreciation
(depreciation) on:
Investment securities 13,170,603
Assets and liabilities in 169 13,170,772
foreign currencies
NET GAIN (LOSS) 14,598,539
NET INCREASE $ 15,519,791
(DECREASE) IN NET
ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION $831,254
Sales Charges Paid to
FDC
Deferred sales $2,262
charges withheld
by FDC
Exchange fees $45,383
withheld by FSC
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS YEAR ENDED
ENDED FEBRUARY 28,
AUGUST 31, 1994 1994
(UNAUDITED)
Operations $ 921,252 $ 252,679
Net investment income
Net realized gain (loss) 1,427,767 5,537,215
Change in net unrealized appreciation (depreciation) 13,170,772 584,391
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 15,519,791 6,374,285
Distributions to shareholders from net investment income (299,606 (63,962
) )
Share transactions 155,939,326 184,699,746
Net proceeds from sales of shares
Reinvestment of distributions 295,143 62,757
Cost of shares redeemed (114,472,206 (60,508,680
) )
Paid in capital portion of redemption fees 210,725 115,446
Net increase (decrease) in net assets resulting from share transactions 41,972,988 124,369,269
TOTAL INCREASE (DECREASE) IN NET ASSETS 57,193,173 130,679,592
NET ASSETS
Beginning of period 155,720,623 25,041,031
End of period (including undistributed net investment income of $868,243 and $246,597, $ 212,913,796 $ 155,720,623
respectively)
OTHER INFORMATION
Shares
Sold 6,992,243 8,798,809
Issued in reinvestment of distributions 13,664 3,433
Redeemed (5,252,871 (3,053,659
) )
Net increase (decrease) 1,753,036 5,748,583
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS YEAR ENDED TEN MONTHS YEARS ENDED APRIL 30,
ENDED FEBRUARY 28, ENDED
AUGUST 31, 1994 FEBRUARY 28,
SELECTED PER-SHARE DATAC (UNAUDITED) 1994 1993 1992 1991 1990
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 21.67 $ 17.44 $ 17.12 $ 12.63 $ 12.43 $ 13.73
Income from Investment Operations
Net investment income .13 .15 .12 .04 .15 .17
Net realized and unrealized gain (loss) 2.04 4.07 .19 4.32 .37 (1.50)
Total from investment operations 2.17 4.22 .31 4.36 .52 (1.33)
Less Distributions
From net investment income (.05) (.06) (.08) - - -
In excess of net investment income - - - (.06) (.34) -
Total distributions (.05) (.06) (.08) (.06) (.34) -
Redemption fees added to paid in capital .03 .07 .09 .19 .02 .03
Net asset value, end of period $ 23.82 $ 21.67 $ 17.44 $ 17.12 $ 12.63 $ 12.43
TOTAL RETURND, E 10.18% 24.66% 2.36% 36.15% 4.25% (9.47)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 212,914 $ 155,721 $ 25,041 $ 22,184 $ 2,689 $ 3,140
Ratio of expenses to average net assetsB 1.61%A 2.08% 2.02%A 2.47% 2.49% 2.59%
Ratio of expenses to average net assets before 1.63%A 2.10% 2.02%A 2.81% 2.67% 3.81%
expense reductionsB
Ratio of net investment income to average net 1.18%A .75% .86%A .25% 1.30% 1.22%
assets
Portfolio turnover rate 106%A 185% 273%A 222% 148% 250%
</TABLE>
A ANNUALIZED
B SEE NOTE 9 OF NOTES TO FINANCIAL STATEMENTS.
C NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
D TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
E THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
PAPER AND FOREST PRODUCTS PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance: total
percentage change in value, the average annual percentage change, or the
growth of a hypothetical $10,000 investment. Each performance figure
includes changes in a fund's share price, plus reinvestment of any
dividends (income) and capital gains (the profits the fund earns when it
sells stocks that have grown in value).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 6 PAST 1 PAST 5 LIFE OF
AUGUST 31, 1994 MONTH YEAR YEARS FUND
S
PAPER AND FOREST PRODUCTS 10.94% 29.96% 67.30% 153.89%
PAPER AND FOREST PRODUCTS
(INCL. 3% SALES CHARGE) 7.61% 26.06% 62.28% 146.28%
S&P 500 3.26% 5.47% 58.16% 148.27%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one year, five years, or
since the fund started on June 30, 1986. You can compare these figures to
the performance of the S&P 500 - a common proxy for the U.S. stock market.
This benchmark includes reinvested dividends and capital gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
AUGUST 31, 1994 YEAR YEARS FUND
PAPER AND FOREST PRODUCTS 29.96% 10.84% 12.07%
PAPER AND FOREST PRODUCTS
(INCL. 3% SALES CHARGE) 26.06% 10.17% 11.65%
S&P 500 5.47% 9.60% 11.76%
AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and
show you what would have happened if the fund had performed at a constant
rate each year.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of growth in the long run
and volatility in the short run. Unlike the broader
market, however, some sectors may not have
a history of growth in the long run. And, as
with all stock funds, the share price and return
of a fund that invests in a sector will vary. That
means if you sell your shares during a sector
downturn, you might lose money. But if you
can identify a sector that is about to
experience rapid growth you may have the
potential for above-average gains.
(checkmark)
$10,000 OVER LIFE OF FUND
Select Paper & Forest (506) Standard & Poor's
06/30/86 9700.00 10000.00
07/31/86 9515.70 9488.77
08/31/86 10689.40 10192.84
09/30/86 10573.00 9349.89
10/31/86 11358.70 9889.38
11/30/86 11834.00 10129.69
12/31/86 11659.40 9871.39
01/31/87 14714.90 11201.06
02/28/87 15190.20 11643.50
03/31/87 16354.20 11980.00
04/30/87 15384.20 11873.38
05/31/87 14501.50 11976.68
06/30/87 15141.70 12581.50
07/31/87 15326.00 13219.38
08/31/87 16441.50 13712.46
09/30/87 15946.80 13412.16
10/31/87 11213.20 10523.18
11/30/87 10825.20 9656.07
12/31/87 12118.45 10390.90
01/31/88 11629.03 10828.35
02/29/88 12724.90 11332.96
03/31/88 12320.60 10982.77
04/30/88 12458.91 11104.68
05/31/88 12320.60 11201.29
06/30/88 13597.34 11715.43
07/31/88 12990.89 11670.91
08/31/88 12352.52 11274.10
09/30/88 12597.23 11754.37
10/31/88 12320.60 12081.14
11/30/88 12054.61 11908.38
12/31/88 12938.95 12116.78
01/31/89 13066.95 13003.73
02/28/89 12682.94 12679.94
03/31/89 12693.61 12975.38
04/30/89 13152.29 13648.80
05/31/89 13386.96 14201.58
06/30/89 12533.61 14120.63
07/31/89 13738.97 15395.72
08/31/89 14720.32 15697.48
09/30/89 13909.64 15633.12
10/31/89 13280.29 15270.43
11/30/89 13184.29 15581.95
12/31/89 13466.65 15955.91
01/31/90 12235.54 14885.27
02/28/90 12354.33 15077.29
03/31/90 12699.91 15476.84
04/30/90 11879.16 15089.92
05/31/90 12667.51 16561.19
06/30/90 12365.13 16448.57
07/31/90 12548.72 16395.93
08/31/90 11047.62 14913.74
09/30/90 9978.50 14187.44
10/31/90 9665.32 14126.44
11/30/90 10637.25 15039.00
12/31/90 11432.17 15458.59
01/31/91 12376.61 16132.59
02/28/91 12969.64 17286.07
03/31/91 13233.20 17704.39
04/30/91 13881.13 17746.88
05/31/91 15473.51 18513.55
06/30/91 15078.16 17665.63
07/31/91 15089.14 18488.84
08/31/91 15166.02 18927.03
09/30/91 14583.98 18610.95
10/31/91 15133.07 18860.33
11/30/91 13979.97 18100.26
12/31/91 15406.60 20170.93
01/31/92 16823.55 19795.75
02/29/92 16902.27 20053.10
03/31/92 17014.73 19662.06
04/30/92 17284.63 20240.13
05/31/92 16801.06 20339.30
06/30/92 16689.45 20036.25
07/31/92 16565.49 20855.73
08/31/92 15900.62 20428.19
09/30/92 15731.58 20669.24
10/31/92 16497.87 20741.58
11/30/92 17106.40 21448.87
12/31/92 17263.87 21712.69
01/31/93 17795.58 21895.08
02/28/93 18191.55 22192.85
03/31/93 18168.92 22661.12
04/30/93 18995.41 22112.72
05/31/93 19052.01 22705.34
06/30/93 18644.48 22771.19
07/31/93 18452.04 22680.10
08/31/93 18950.13 23539.68
09/30/93 18044.51 23358.43
10/31/93 18746.37 23841.94
11/30/93 19912.35 23615.45
12/31/93 20467.05 23901.19
01/31/94 22844.30 24713.83
02/28/94 22199.05 24044.09
03/31/94 19844.43 22995.77
04/30/94 19822.25 23290.11
05/31/94 20630.85 23672.07
06/30/94 20422.93 23092.10
07/31/94 22155.64 23849.53
08/31/94 24627.65 24827.36
Let's say you invested $10,000 in Fidelity Select Paper and Forest Products
Portfolio on June 30, 1986, when the fund started, and paid a 3% sales
charge. By August 31, 1994, your investment would have grown to $24,628 - a
146.28% increase. That compares to $10,000 invested in the S&P 500, which
would have grown to $24,827 over the same period - a 148.27% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST 31, 1994
% OF FUND'S
INVESTMENTS
Stone Container Corp. 12.8
Scott Paper Co. 6.6
Temple-Inland, Inc. 5.7
Weyerhaeuser Co. 3.8
Jefferson Smurfit Corp. 3.8
International Paper Co. 3.7
Georgia-Pacific Corp. 3.6
Alco Standard Corp. 3.5
Champion International Corp. 3.4
Mead Corp. 3.3
TOP INDUSTRIES AS OF AUGUST 31, 1994
Row: 1, Col: 1, Value: 3.5
Row: 1, Col: 2, Value: 3.5
Row: 1, Col: 3, Value: 5.5
Row: 1, Col: 4, Value: 87.5
Paper & Allied Products 87.5%
Paper Containers 5.5%
Services for Print Industry 3.5%
All Others 3.5%*
* INCLUDES SHORT-TERM INVESTMENTS
PAPER AND FOREST PRODUCTS PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Scott Offen,
Portfolio Manager of Fidelity Select Paper and Forest Products Portfolio
Q. SCOTT, HOW HAS THE FUND PERFORMED?
A. Very well. For the six months ended August 31, 1994, the fund had a
total return of 10.94%, and for the year ended August 31, the fund returned
29.96%. Both numbers were well above the S&P 500, which returned 3. 26% and
5. 47% for six months and one year, respectively.
Q. WHAT FACTORS HAVE HELPED YOU DO SO WELL?
A. Paper is a cyclical commodity. That is, the price of paper rises or
falls with the health of the economy. Therefore, paper stocks tend to
increase in value as the economy improves or decrease in value when the
economy performs poorly. The current economic recovery has fueled demand
for all grades of paper, leading paper companies to announce price
increases on a regular basis. In addition, two factors have constrained
supply, which has also helped push prices higher. First, environmental
concerns have led to a worldwide reduction of tree cutting on government
lands. And second, recycled paper prices have increased markedly. What was
once a cheap source of raw material is now expensive, reducing the
incentive to add supply capacity.
Q. IS THERE ANYTHING ABOUT ENVIRONMENTAL PRESSURE THAT IS MAKING THIS CYCLE
DIFFERENT FROM PREVIOUS ONES?
A. Absolutely. Some say this will be a longer cycle because of increased
environmental pressure. Ordinarily, as prices get higher, companies build
new machines, adding to capacity. The U. S. Environmental Protection Agency
has imposed new regulations - called cluster rules - requiring all paper
companies to use processes that will bring them into compliance as an
industry. It has been estimated that paper companies will spend $3 billion
to $10 billion to meet these standards. Every dollar spent for
environmental compliance is another dollar that can't be spent adding to
capacity. The result is less supply and, hopefully, a longer cycle of
higher prices for paper, perhaps as long as the up-market of 1985-1988.
While this could happen, I'm not convinced that it will because prices have
increased in a much more compressed time period than before.
Q. WHAT HAS BEEN YOUR STOCK-PICKING STRATEGY?
A. In the short term, the direction of pricing for cyclical paper companies
is determined by inventories. As long as inventory is in short supply,
prices will go up, even if demand isn't great. Ideally, I look for
companies that have different product mixes, with production capacity for
grades that are in tight supply.
Q. WHAT ARE SOME INVESTMENTS THAT HAVE WORKED WELL FOR YOU?
A. Stone Container, a producer of the three best grades - liner board,
newsprint and pulp -is the fund's largest position as of August 31 and the
biggest winner because its stock price has doubled. Jefferson Smurfit, an
Irish-based company with a U. S. division, also has performed strongly.
This is one of the few companies that manages itself intelligently,
increasing capacity in down times to avoid hurting pricing by increasing
supply when prices are high. I've also added Scott Paper and Champion to
the fund's top 10 holdings. Scott, a tissue manufacturer, should benefit
from restructuring and cost cutting. Champion makes all grades of paper and
should benefit from price improvement.
Q. LET'S TOUCH UPON SOME DISAPPOINTMENTS.
A. Wausau was one. The company has had a hard time keeping its margins up
because it buys pulp to make paper, and pulp prices were increasing faster
than paper prices. In addition, Pope & Talbot's stock price dropped,
because earnings didn't come through in its diaper division, and its wood
profits declined. However, my main disappointment this period was that
price increases haven't translated into revenue increases for the companies
as quickly as I had expected.
Q. WHAT'S YOUR OUTLOOK FOR THE NEXT SIX MONTHS?
A. I don't think the environment or my strategy will change markedly.
Overall, I believe paper's "cyclical moment" could last for another year or
more, unless the Federal Reserve Board continues to raise interest rates
and the economy goes into a recession or near recession. If interest rates
go up far enough, paper stocks will suffer because paper is an economically
sensitive commodity.
FUND FACTS
START DATE: June 30, 1986
SIZE: as of August 31, 1994, more than
$66 million
MANAGER: Scott Offen, since October 1993;
manager, Fidelity Select Brokerage and
Investment Management Portfolio,
1990-1993; Fidelity Select Life Insurance
Portfolio; 1988-1990; joined Fidelity in 1985
(checkmark)
PAPER AND FOREST PRODUCTS PORTFOLIO
INVESTMENTS AUGUST 31, 1994 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 97.5%
SHARES VALUE (NOTE 1)
PACKAGING & CONTAINERS - 6.4%
FIBER CANS, TUBES & DRUMS - 0.9%
Sonoco Products Co. 25,100 $ 558,475
PAPER CONTAINERS - 5.5%
Gaylord Container Corp.:
Class A (a) 273,600 1,778,397
(warrants) (a) 153,900 827,213
Grupo Industrial Durango SA de
CV ADR (a) 20,000 440,000
Mayr Melnhof Karton AG 1,000 57,976
Shorewood Packaging Corp. (a) 10,000 207,500
3,311,086
TOTAL PACKAGING & CONTAINERS 3,869,561
PAPER & FOREST PRODUCTS - 87.5%
PAPER & ALLIED PRODUCTS - 87.5%
Abitibi-Price, Inc. installment receipts
(a)(c) 101,100 721,060
Alliance Forest Products, Inc. (a) 46,100 741,890
Aracruz Celulose SA ADR (a) 17,800 244,750
Assi Doman Ab Free shares 46,300 1,052,082
Avenor, Inc. (a) 7,900 147,361
Boise Cascade Corp. 30,000 858,750
Bowater, Inc. 40,200 1,125,600
Caraustar Industries, Inc. 35,200 668,800
Cascades, Inc. 16,700 94,675
Champion International Corp. 57,100 2,055,600
Chesapeake Corp. 15,000 498,750
Consolidated Papers, Inc. 33,300 1,631,700
Enso Gutzeit OY R Free shares 26,000 235,550
Federal Paper Board Co., Inc. 20,000 607,500
Georgia-Pacific Corp. 28,900 2,149,438
Glatfelter (P.H.) Co. 11,500 184,000
International Paper Co. 28,300 2,182,638
James River Corp. of Virginia 30,000 701,250
Jefferson Smurfit Corp. (a) 111,300 2,267,738
Kimberly-Clark Corp. 28,200 1,674,375
Leykam Muerstaler Pap Und. Zel Ord. 3,000 117,213
Louisiana-Pacific Corp. 28,700 1,018,850
Mead Corp. 38,900 1,964,450
Metsa Serla 'B' 4,700 228,075
Mo Och Domsjoe AB (Modo) (a) 89 3,999
Mosinee Paper Corp. 3,000 97,500
Pentair, Inc. 8,200 334,150
Potlatch Corp. 10,000 440,000
QUNO Corp. (a) 35,000 646,465
Rayonier, Inc. 10,000 332,500
Rengo Co. Ltd. 15,000 133,982
Repap Enterprises, Inc. 219,500 1,043,670
Repola OY 10,000 215,239
Riverwood International Corp. 5,000 87,500
Rock Tenn Co. Class A 20,000 330,000
Scott Paper Co. 60,000 3,930,000
Smith Holdings PLC 6,000 51,101
Smurfit (Jefferson) Group PLC 154,700 1,003,534
Specialty Paperboard, Inc. (a) 5,000 56,250
St Laurent Paperboard, Inc. (a) 27,000 311,071
St Laurent Paperboard, Inc. (b) 20,000 230,423
Stone Consolidated Corp. (a) 27,000 390,074
Stone Container Corp. (a) 386,600 7,635,350
Stora Kopparbergs B Free shares 4,500 255,636
Temple-Inland, Inc. 60,600 3,416,325
Union Camp Corp. 36,400 1,833,650
SHARES VALUE (NOTE 1)
Wausau Paper Mills Co. 25,000 $ 650,000
Westvaco Corp. 40,000 1,450,000
Weyerhaeuser Co. 50,100 2,298,338
Willamette Industries, Inc. 36,000 1,854,000
52,202,852
PRINTING - 3.5%
SERVICES FOR PRINT INDUSTRY - 3.5%
Alco Standard Corp. 32,000 2,088,000
TEXTILES & APPAREL - 0.1%
COATED FABRICS, NOT RUBBERIZED - 0.1%
Tufco Technologies, Inc. (a) 14,900 70,775
TOTAL COMMON STOCKS
(Cost $51,264,581) 58,231,188
REPURCHASE AGREEMENTS - 2.5%
MATURITY VALUE (NOTE 1)
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account, at 4.83% dated
8/31/94 due 9/1/94 $ 1,512,203 1,512,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $52,776,581) $ 59,743,188
CURRENCY ABBREVIATIONS
CAD - Canadian dollar
LEGEND
1. Non-income producing
2. 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 period
end, the value of this security amounted to $230,423 or .03% of net
assets.
3. Market value reflects the payment of the first installment. Additional
equal payments of CAD 505,500 are payable in January and October of 1995.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $35,427,822 and $48,802,834, respectively (see Note 4 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $20,761 for the period (see
Note 5 of Notes to Financial Statements).
The maximum loan and average daily loan balances during the periods for
which loans were outstanding amounted to $5,361,000 and $3,444,692,
respectively. The weighted average interest rate paid was 3.9% (see Note 8
of Notes to Financial Statements).
Distribution of investments by country, as a percentage of total value of
investment in securities, is as follows:
United States 86.1%
Canada 7.2
Sweden 2.2
Ireland 1.7
Finland 1.1
Others (individually less than 1%) 1.7
TOTAL 100.0%
INCOME TAX INFORMATION
At August 31, 1994, the aggregate cost of investment securities for income
tax purposes was $52,812,668. Net unrealized appreciation aggregated
$6,930,520, of which $7,309,529 related to appreciated investment
securities and $379,009 related to depreciated investment securities.
PAPER AND FOREST PRODUCTS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
AUGUST 31, 1994 (UNAUDITED)
ASSETS
Investment in securities, at value (including repurchase agreements of $1,512,000) (cost $52,776,581) - See $ 59,743,188
accompanying schedule
Cash 3,095
Receivable for investments sold 50,548
Receivable for fund shares sold 8,059,244
Dividends receivable 111,527
Redemption fees receivable 2,515
Other receivables 675
Prepaid expenses 11,692
TOTAL ASSETS 67,982,484
LIABILITIES
Payable for fund shares redeemed $ 1,459,400
Accrued management fee 29,298
Other payables and accrued expenses 63,804
TOTAL LIABILITIES 1,552,502
NET ASSETS $ 66,429,982
Net Assets consist of:
Paid in capital $ 59,176,431
Accumulated net investment (loss) (41,982
)
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 330,190
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies 6,965,343
NET ASSETS, for 3,115,129 shares outstanding $ 66,429,982
NET ASSET VALUE and redemption price per share ($66,429,982 (divided by) shares) $21.32
Maximum offering price per share (100/97 of $21.32) $21.98
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED AUGUST 31, 1994 (UNAUDITED)
INVESTMENT INCOME $ 281,691
Dividends
Interest 51,485
TOTAL INCOME 333,176
EXPENSES
Management fee $ 112,681
Transfer agent 230,745
Fees
Redemption fees (39,351
)
Accounting fees and expenses 23,578
Non-interested trustees' compensation 120
Custodian fees and expenses 11,578
Registration fees 11,692
Audit 10,717
Legal 539
Interest 9,627
Reports to shareholders 4,076
Miscellaneous 103
Total expenses before reductions 376,105
Expense reductions (2,236 373,869
)
NET INVESTMENT INCOME (LOSS) (40,693
)
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 498,087
Foreign currency transactions 6,630 504,717
Change in net unrealized appreciation (depreciation) on:
Investment securities 3,935,796
Assets and liabilities in foreign (1,264 3,934,532
currencies )
NET GAIN (LOSS) 4,439,249
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 4,398,556
OTHER INFORMATION $169,942
Sales Charges Paid to FDC
Deferred sales charges withheld $1,562
by FDC
Exchange fees withheld by FSC $33,645
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS YEAR ENDED
ENDED FEBRUARY 28,
AUGUST 31, 1994 1994
(UNAUDITED)
Operations $ (40,693 $ (20,302
Net investment income (loss) ) )
Net realized gain (loss) 504,717 2,597,166
Change in net unrealized appreciation (depreciation) 3,934,532 2,559,400
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 4,398,556 5,136,264
Distributions to shareholders - (10,601
From net investment income )
From net realized gain (516,287 -
)
TOTAL DISTRIBUTIONS (516,287 (10,601
) )
Share transactions 76,492,568 149,638,420
Net proceeds from sales of shares
Reinvestment of distributions 508,003 10,249
Cost of shares redeemed (81,555,759 (113,224,182
) )
Paid in capital portion of redemption fees 195,156 259,283
Net increase (decrease) in net assets resulting from share transactions (4,360,032 36,683,770
)
TOTAL INCREASE (DECREASE) IN NET ASSETS (477,763 41,809,433
)
NET ASSETS
Beginning of period 66,907,745 25,098,312
End of period (including accumulated net investment (loss) of $(41,982) and $(1,289),
respectively) $ 66,429,982 $ 66,907,745
OTHER INFORMATION
Shares
Sold 3,986,816 8,097,781
Issued in reinvestment of distributions 29,638 645
Redeemed (4,313,841 (6,246,980
) )
Net increase (decrease) (297,387 1,851,446
)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS YEAR ENDED TEN MONTHS YEARS ENDED APRIL 30,
ENDED FEBRUARY 28, ENDED
AUGUST 31, 1994 FEBRUARY 28,
SELECTED PER-SHARE DATAC (UNAUDITED) 1994 1993 1992 1991 1990
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 19.61 $ 16.08 $ 15.37 $ 12.64 $ 11.00 $ 12.33
Income from Investment Operations
Net investment income (loss) (.02) (.01) .06 .13 .19 .11
Net realized and unrealized gain (loss) 1.98 3.38 .65 2.64 1.56 (1.31)
Total from investment operations 1.96 3.37 .71 2.77 1.75 (1.20)
Less Distributions
From net investment income - (.01) (.09) (.30) (.17) (.15)
From net realized gain (.35) - - - - -
Total distributions (.35) (.01) (.09) (.30) (.17) (.15)
Redemption fees added to paid in capital .10 .17 .09 .26 .06 .02
Net asset value, end of period $ 21.32 $ 19.61 $ 16.08 $ 15.37 $ 12.64 $ 11.00
TOTAL RETURND, E 10.94% 22.03% 5.25% 24.52% 16.85% (9.68)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 66,430 $ 66,908 $ 25,098 $ 28,957 $ 12,579 $ 5,289
Ratio of expenses to average net assetsB 2.00%A 2.07% 2.21%A 2.05% 2.49% 2.57%
Ratio of expenses to average net assets before 2.01%A 2.08% 2.21%A 2.05% 2.72% 3.28%
expense reductionsB
Ratio of net investment income (loss) to average net (.22)% (.08) .49%A .92% 1.73% .92%
assets A %
Portfolio turnover rate 181%A 176% 222%A 421% 171% 221%
</TABLE>
A ANNUALIZED
B SEE NOTE 9 OF NOTES TO FINANCIAL STATEMENTS.
C NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
D TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
E THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
TRANSPORTATION PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance: total
percentage change in value, the average annual percentage change, or the
growth of a hypothetical $10,000 investment. Each performance figure
includes changes in a fund's share price, plus reinvestment of any
dividends (income) and capital gains (the profits the fund earns when it
sells stocks that have grown in value).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 6 PAST 1 PAST 5 LIFE OF
AUGUST 31, 1994 MONTH YEAR YEARS FUND
S
TRANSPORTATION 3.74% 17.26% 96.81% 218.31%
TRANSPORTATION
(INCL. 3% SALES CHARGE) 0.62% 13.75% 90.90% 208.76%
S&P 500 3.26% 5.47% 58.16% 164.55%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one year, five years, or
since the fund started on September 29, 1986. You can compare these figures
to the performance of the S&P 500 - a common proxy for the U.S. stock
market. This benchmark includes reinvested dividends and capital gains, if
any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
AUGUST 31, 1994 YEAR YEARS FUND
TRANSPORTATION 17.26% 14.50% 15.72%
TRANSPORTATION
(INCL. 3% SALES CHARGE) 13.75% 13.81% 15.28%
S&P 500 5.47% 9.60% 13.05%
AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and
show you what would have happened if the fund had performed at a constant
rate each year.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of growth in the long run
and volatility in the short run. Unlike the broader
market, however, some sectors may not have
a history of growth in the long run. And, as
with all stock funds, the share price and return
of a fund that invests in a sector will vary. That
means if you sell your shares during a sector
downturn, you might lose money. But if you
can identify a sector that is about to
experience rapid growth you may have the
potential for above-average gains.
(checkmark)
$10,000 OVER LIFE OF FUND
Select Transport.(512) Standard & Poor
09/29/86 9700.00 10000.00
09/30/86 9748.50 9962.80
10/31/86 10039.50 10537.66
11/30/86 10204.40 10793.72
12/31/86 10039.50 10518.48
01/31/87 10737.90 11935.32
02/28/87 11397.50 12406.77
03/31/87 11397.50 12765.32
04/30/87 11475.10 12651.71
05/31/87 11649.70 12761.78
06/30/87 11998.90 13406.25
07/31/87 12474.20 14085.95
08/31/87 12474.20 14611.35
09/30/87 11795.20 14291.37
10/31/87 7992.80 11213.00
11/30/87 7527.20 10289.05
12/31/87 8284.50 11072.05
01/31/88 8698.73 11538.18
02/29/88 9418.69 12075.86
03/31/88 9704.70 11702.72
04/30/88 9734.29 11832.62
05/31/88 9675.11 11935.56
06/30/88 10661.36 12483.41
07/31/88 10523.29 12435.97
08/31/88 10030.16 12013.15
09/30/88 10690.95 12524.91
10/31/88 11036.14 12873.10
11/30/88 11134.76 12689.01
12/31/88 11470.09 12911.07
01/31/89 12456.34 13856.16
02/28/89 12584.55 13511.14
03/31/89 12969.19 13825.95
04/30/89 13403.14 14543.52
05/31/89 13975.16 15132.53
06/30/89 13889.01 15046.28
07/31/89 14730.77 16404.95
08/31/89 15688.27 16726.49
09/30/89 15383.13 16657.91
10/31/89 14404.59 16271.45
11/30/89 14530.85 16603.39
12/31/89 14737.71 17001.87
01/31/90 13812.21 15861.04
02/28/90 14456.54 16065.65
03/31/90 14890.01 16491.39
04/30/90 14327.68 16079.11
05/31/90 14854.86 17646.82
06/30/90 14691.34 17526.82
07/31/90 14642.53 17470.73
08/31/90 12494.96 15891.38
09/30/90 10884.28 15117.47
10/31/90 10713.45 15052.46
11/30/90 11152.73 16024.85
12/31/90 11555.40 16471.95
01/31/91 12543.77 17190.12
02/28/91 13763.98 18419.22
03/31/91 13776.18 18864.96
04/30/91 13739.58 18910.24
05/31/91 14825.56 19727.16
06/30/91 14702.47 18823.66
07/31/91 15596.13 19700.84
08/31/91 15877.69 20167.75
09/30/91 15583.89 19830.95
10/31/91 16734.62 20096.68
11/30/91 15694.06 19286.79
12/31/91 17811.91 21493.19
01/31/92 17971.05 21093.42
02/29/92 18938.16 21367.64
03/31/92 18485.21 20950.97
04/30/92 18962.64 21566.92
05/31/92 19354.38 21672.60
06/30/92 18521.93 21349.68
07/31/92 18791.26 22222.88
08/31/92 18228.13 21767.31
09/30/92 18950.40 22024.17
10/31/92 19758.36 22101.25
11/30/92 21190.66 22854.91
12/31/92 22049.81 23136.02
01/31/93 23037.30 23330.36
02/28/93 23349.79 23647.66
03/31/93 24912.28 24146.62
04/30/93 24850.18 23562.27
05/31/93 25778.45 24193.74
06/30/93 25853.72 24263.90
07/31/93 25853.72 24166.85
08/31/93 26330.40 25082.77
09/30/93 26393.12 24889.63
10/31/93 26945.07 25404.85
11/30/93 27095.60 25163.50
12/31/93 28513.96 25467.98
01/31/94 29763.85 26333.89
02/28/94 29763.85 25620.25
03/31/94 28967.22 24503.20
04/30/94 29508.52 24816.84
05/31/94 29034.15 25223.84
06/30/94 29006.25 24605.86
07/31/94 29982.89 25412.93
08/31/94 30875.82 26454.86
Let's say you invested $10,000 in Fidelity Select Transportation Portfolio
on September 29, 1986 when the fund started and paid a 3% sales charge. By
August 31, 1994, your investment would have grown to $30,876 - a 208.76%
increase. That compares to $10,000 invested in the S&P 500, which would
have grown to $26,455 over the same period - a 164.55% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST 31, 1994
% OF FUND'S
INVESTMENTS
Landstar System, Inc. 5.0
TNT Freightways Corp. 3.8
Carolina Freight Corp. 3.1
U.S. Delivery Systems, Inc. 2.9
Consolidated Freightways, Inc. 2.7
Rollins Truck Leasing Corp. 2.7
Burlington Northern, Inc. 2.4
Arnold Industries, Inc. 2.3
Canadian Pacific Ltd. Ord. 2.0
Ryder Systems, Inc. 1.8
TOP INDUSTRIES AS OF AUGUST 31, 1994
Row: 1, Col: 1, Value: 50.3
Row: 1, Col: 2, Value: 4.7
Row: 1, Col: 3, Value: 6.2
Row: 1, Col: 4, Value: 8.0
Row: 1, Col: 5, Value: 11.1
Row: 1, Col: 6, Value: 19.7
Trucking, Local &
Long Distance 19.7%
Railroads 11.1%
Trucking, Long Distance 8.0%
Air Transport,
Major National 6.2%
Shipping 4.7%
All Others 50.3%*
* INCLUDES SHORT-TERM INVESTMENTS
TRANSPORTATION PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Beso Sikharulidze,
Portfolio Manager of
Select Transportation
Portfolio
Q. BESO, HOW DID THE FUND PERFORM?
A. Pretty well. The fund returned 3.74% for the six months ended August
31, 1994, and 17.26% for the past year. That beat the S&P 500 which was up
3.26% and 5.47% for the same time periods, respectively.
Q. THE DOW JONES TRANSPORTATION AVERAGE (DJTA) IS DOWN 3.55% FOR THE PAST
SIX MONTHS AND 0.23% FOR THE YEAR. WHY DID YOUR FUND DO SO MUCH BETTER?
A. First of all, the DJTA is not a fair index against which to compare this
fund. Because it's only made up of 20 stocks, it's much more narrow than
my fund. A better index would be the S&P Transportation Index. I can be
more broadly invested in many segments of the transportation industry. I
think the fund did well because I picked individual stocks rather than
betting on particular groups in the industry. Take Landstar, one of the
fund's big winners. It's a truck load stock, which means that it's in the
segment of the trucking industry that carries over 10,000 pounds.
Landstar's special program attracts more owner-operators than the
competition, thus avoiding a major constraint in the truck load industry, a
shortage of drivers. Although it's been a good performer, I still see a lot
of growth prospects for the company and upside potential for the stock.
Q. HOW IS THE INVESTING ENVIRONMENT FOR TRANSPORTATION STOCKS?
A. At the end of August, the transportation industry had fundamentals that
were just about as strong as they can be. In every segment - air freight,
trucking, railroads - the news gets better as the economy strengthens. The
trick is to maintain the momentum.
Q. ANY DISAPPOINTING STOCK PICKS IN THE LAST SIX MONTHS?
A. Oh, sure. Nissan France, a distributor of Nissan cars and trucks in
France, was a letdown. The economy was picking up in France when I invested
and I thought the company would prosper in a stronger economy. The
strengthening yen put pressure on margins and hurt profitability. It wasn't
a good buy, but luckily, the fund didn't own too much of the stock.
Q. CSX, WHICH WAS YOUR LARGEST HOLDING SIX MONTHS AGO, IS GONE FROM THE
FUND'S TOP 10. HAVE YOU SOURED ON RAILROADS?
A. Not at all, I've just become more picky. As I mentioned, railroad
fundamentals are very strong today. I did get out of CSX a few months ago.
It's a great company, but I don't see much upside in the stock price in the
short-term. The fund still has rail holdings, although I have tried to trim
back my positions. Most of the cost-cutting in the railroad industry is
over and I don't see the dramatic growth in revenue to sustain itself. I'm
interested in the relatively small railroads that are experiencing high
growth or that are growing by acquisition and have strong balance sheets.
There are also a few potential turnaround stories out there - like Southern
Pacific - that have my attention.
Q. WHAT ABOUT THE AIRLINES?
A. I've begun to back off on the airlines. A few months ago I was strong
on the regionals, but that group has become too volatile. Although I don't
own a lot of airline stock right now, I'm looking for opportunities to
invest in an airline that will be able to position itself for long-term
success in this very competitive industry.
Q. HOW DO YOU SEE THE TRANSPORTATION INDUSTRY SHAPING UP IN THE NEXT SIX
MONTHS?
A. I think the pace will slow down. The degree of the decline will depend
on how painful interest rate increases are to the economy. I'm concerned
about where we're heading and am preparing for a downturn. I'm choosing
companies that have some kind of a niche, companies that will weather a
tougher market most successfully. The trucking sector, which I'm heavily
invested in, should fare well. With the increase in competition and
consolidation, the top companies will not only survive, they should do
well. I also think there will be opportunities internationally, especially
in the fast growth countries; transportation benefits from growth.
Basically, I'm an opportunist; I'm always looking for the best places to
invest.
FUND FACTS
START DATE: September 29, 1986
SIZE: As of August 31, 1994, more than
$13 million
MANAGER: Beso Sikharulidze, since November
1993; equity analyst, equipment
manufacturing and shipping industries, since
1993; appliances and trucking, since 1992;
joined Fidelity in 1992
(checkmark)
TRANSPORTATION PORTFOLIO
INVESTMENTS AUGUST 31, 1994 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 87.4%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 0.9%
AIRCRAFT - 0.9%
McDonnell Douglas Corp. 1,000 $ 118,250
AIR TRANSPORTATION - 10.7%
AIR TRANSPORTATION, MAJOR NATIONAL - 6.2%
AMR Corp. 2,000 120,500
Finnair OY 15,000 130,379
Great Lakes Aviation (a) 14,400 106,200
KLM Royal Dutch Airlines (a) 2,400 70,500
KLM Royal Dutch Airlines Ord. (a) 2,000 58,270
Mesa Airlines, Inc. (a) 13,600 103,700
Northwest Airlines Corp. Class A (a) 11,000 209,000
USAir Group, Inc. (a) 1,800 12,150
810,699
AIR TRANSPORTATION, REGIONAL - 3.4%
Atlantic Southeast Airlines, Inc. 5,000 146,250
Comair Holdings, Inc. 6,300 166,950
SkyWest, Inc. 5,000 138,750
451,950
TRANSPORTATION SERVICES - 1.1%
Helikopter Services 9,500 143,186
TOTAL AIR TRANSPORTATION 1,405,835
AUTOS, TIRES, & ACCESSORIES - 10.8%
AUTO & TRUCK PARTS - 4.5%
Cummins Engine Co., Inc. 5,000 201,250
Federal-Mogul Corp. 2,600 74,425
Masland Corp. 10,000 168,750
Smith (A.O.) Corp. Class B 3,000 82,500
Wabash National Corp. 1,550 66,069
592,994
AUTO DEALERS, NEC - RETAIL - 0.3%
Qingling Motors Ltd. Class H (b) 124,000 43,644
MOTOR VEHICLES & CAR BODIES - 4.0%
Appleyard Group 56,000 107,419
Ford Motor Co. 5,000 146,250
Nissan France SA Class A (a) 900 105,902
Sime Darby Hong Kong Ltd. 100,000 157,867
517,438
TRUCK & BUS BODIES - 2.0%
Grupo Dina:
ADS 8,000 114,000
Series L, sponsored ADR 12,977 154,102
268,102
TOTAL AUTOS, TIRES, & ACCESSORIES 1,422,178
CONSUMER ELECTRONICS - 4.2%
APPLIANCES - 4.2%
Black & Decker Corp. 6,000 138,750
Fedders Corp. (a) 30,000 228,750
Stanley Works 3,000 130,125
Whirlpool Corp. 1,000 54,875
552,500
ENGINEERING - 0.9%
ELECTRICAL WORK - 0.9%
Nippondenso Co. Ltd. 6,000 121,557
INDUSTRIAL MACHINERY & EQUIPMENT - 0.8%
CONSTRUCTION EQUIPMENT - 0.8%
Astec Industries, Inc. (a) 8,000 107,000
SHARES VALUE (NOTE 1)
LEASING & RENTAL - 3.6%
AUTO REPAIR SERVICES & GARAGES - 1.4%
PHH Corp. 5,000 $ 184,375
EQUIP RENTAL AND LEASING, NEC - 2.2%
GATX Corp. 1,400 54,425
Ryder Systems, Inc. 8,600 236,500
290,925
TOTAL LEASING & RENTAL 475,300
LEISURE DURABLES & TOYS - 1.3%
LEISURE DURABLES - 1.3%
Champion Enterprises, Inc. 4,700 171,550
RAILROADS - 12.2%
RAILROAD EQUIPMENT - 1.1%
Trinity Industries, Inc. 4,000 136,000
RAILROADS - 11.1%
Burlington Northern, Inc. 5,900 309,750
Canadian Pacific Ltd. Ord. 14,900 264,310
Chicago & North Western Holdings
Corp. (a) 9,700 213,400
East Japan Railway Ord. 23 120,279
Illinois Central Corp., Series A 4,300 135,450
Santa Fe Pacific Corp. 4,934 106,081
Southern Pacific Rail Corp. (a) 7,000 141,750
Wisconsin Central Transportation Corp. (a) 4,300 172,000
1,463,020
TOTAL RAILROADS 1,599,020
SERVICES - 2.9%
COURIER SERVICES, NOT BY AIR - 2.9%
U.S. Delivery Systems, Inc. (a) 25,000 387,500
SHIPPING - 7.4%
DEEP SEA TRANSPORTATION - 2.7%
Finnlines Oy (b) 3,400 68,524
London & Overseas Freighters PLC 75,000 103,583
Transportacion Maritima Mexicana SA de
CV ADR representing L share (a) 20,000 182,500
354,607
SHIPPING - 4.7%
American President Companies, Ltd. 3,000 79,125
Anangel-American Shipholdings Ltd. ADR 10,000 137,500
ICB Shipping Class B 15,000 132,291
Kirby Corp. (a) 5,000 87,500
MC Shipping, Inc. (a) 20,000 68,750
Storli Skibs Series `A' AS (a) 7,000 108,029
613,195
TOTAL SHIPPING 967,802
TRUCKING & FREIGHT - 31.7%
AIR COURIER SERVICES - 0.7%
Airborne Freight Corp. 3,000 91,500
FREIGHT FORWARDING - 2.6%
Air Express International Corp. 6,800 182,750
Fritz Companies, Inc. (a) 3,000 100,875
Harper Group 4,000 60,500
344,125
TRANSPORTATION SERVICES, NEC - 0.7%
Landair Services, Inc. (a) 5,000 90,000
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
TRUCKING & FREIGHT - CONTINUED
TRUCKING, LOCAL & LONG DISTANCE - 19.7%
Carolina Freight Corp. 45,000 $ 410,625
Consolidated Freightways, Inc. (a) 15,000 360,000
Hitachi Transport System Co. 6,000 70,060
Landstar System, Inc. (a) 21,000 661,500
Mark VII, Inc. (a) 1,000 9,500
Matlack Systems, Inc. (a) 5,000 80,625
Old Dominion Freight Lines, Inc. (a) 10,000 200,000
Roadway Services, Inc. 2,700 172,800
Rollins Truck Leasing Corp. 20,000 350,000
Seino Transpotation Co. Ltd. 7,000 129,940
XTRA Corp. 3,000 150,375
2,595,425
TRUCKING, LONG DISTANCE - 8.0%
Arkansas Best Corp. 10,600 145,750
Arnold Industries, Inc. 15,100 305,775
TNT Freightways Corp. 20,400 494,700
Yellow Corp. 5,000 101,250
1,047,475
TOTAL TRUCKING & FREIGHT 4,168,525
TOTAL COMMON STOCKS
(Cost $10,590,683) 11,497,017
NONCONVERTIBLE BONDS - 0.4%
PRINCIPAL
AMOUNT
AUTOS, TIRES, & ACCESSORIES - 0.4%
TRUCK & BUS BODIES - 0.4%
Grupo Dina yankee 8%,
8/8/04 (Cost $45,144) $ 50,160 46,147
REPURCHASE AGREEMENTS - 12.2%
MATURITY VALUE (NOTE 1)
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account, at 4.83% dated
8/31/94 due 9/1/94 $ 1,604,215 1,604,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $12,239,827) $ 13,147,164
LEGEND
1. Non-income producing
2. 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 period
end, the value of these securities amounted to $112,168 or 0.8% of net
assets.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $14,021,098 and $15,046,311, respectively (see Note 4 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $8,145 for the period (see
Note 5 of Notes to Financial Statements).
The maximum loan and average daily loan balances during the periods for
which loans were outstanding amounted to $1,946,000 and $1,744,000,
respectively. The weighted average interest rate paid was 4.8% (see Note 8
of Notes to Financial Statements).
Distribution of investments by country, as a percentage of total value of
investment in securities, is as follows:
United States 80.7%
Mexico 3.8
Japan 3.4
United Kingdom 2.7
Canada 2.0
Norway 1.9
Finland 1.5
Hong Kong 1.2
Sweden 1.0
Netherlands 1.0
Others (individually less than 1%) 0.8
TOTAL 100.0%
INCOME TAX INFORMATION
At August 31, 1994, the aggregate cost of investment securities for income
tax purposes was $12,239,827. Net unrealized appreciation aggregated
$907,337, of which $1,275,020 related to appreciated investment securities
and $367,683 related to depreciated investment securities.
TRANSPORTATION PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
AUGUST 31, 1994 (UNAUDITED)
ASSETS
Investment in securities, at value (including repurchase agreements of $1,604,000) (cost $12,239,827) - See $ 13,147,164
accompanying schedule
Cash 260
Receivable for investments sold 627,858
Receivable for fund shares sold 612,725
Dividends receivable 18,230
Interest receivable 245
Redemption fees receivable 128
Prepaid expenses 5,061
TOTAL ASSETS 14,411,671
LIABILITIES
Payable for investments purchased $ 642,741
Payable for fund shares redeemed 369,295
Accrued management fee 6,811
Other payables and accrued expenses 29,831
TOTAL LIABILITIES 1,048,678
NET ASSETS $ 13,362,993
Net Assets consist of:
Paid in capital $ 11,103,932
Accumulated net investment (loss) (49,856
)
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 1,401,609
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies 907,308
NET ASSETS, for 603,734 shares outstanding $ 13,362,993
NET ASSET VALUE and redemption price per share ($13,362,993 (divided by) shares) $22.13
Maximum offering price per share (100/97 of $22.13) $22.81
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED AUGUST 31, 1994 (UNAUDITED)
INVESTMENT INCOME $ 68,749
Dividends
Interest 33,848
TOTAL INCOME 102,597
EXPENSES
Management fee $ 42,296
Transfer agent 68,840
Fees
Redemption fees (8,399
)
Accounting fees and expenses 22,525
Non-interested trustees' compensation 40
Custodian fees and expenses 10,944
Registration fees 5,061
Audit 8,426
Legal 112
Interest 2,074
Reports to shareholders 992
Miscellaneous 95
Total expenses before reductions 153,006
Expense reductions (553 152,453
)
NET INVESTMENT INCOME (LOSS) (49,856
)
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 1,404,267
Foreign currency transactions 570 1,404,837
Change in net unrealized appreciation (depreciation) on:
Investment securities (1,199,382
)
Assets and liabilities in foreign (29 (1,199,411
currencies ) )
NET GAIN (LOSS) 205,426
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 155,570
OTHER INFORMATION $55,771
Sales Charges Paid to FDC
Deferred sales charges withheld $677
by FDC
Exchange fees withheld by FSC $6,480
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS YEAR ENDED
ENDED FEBRUARY 28,
AUGUST 31, 1994 1994
(UNAUDITED)
Operations $ (49,856 $ (100,747
Net investment income (loss) ) )
Net realized gain (loss) 1,404,837 1,441,309
Change in net unrealized appreciation (depreciation) (1,199,411 1,066,611
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 155,570 2,407,173
Distributions to shareholders from net realized gain (247,905 (827,694
) )
Share transactions 13,762,439 25,059,536
Net proceeds from sales of shares
Reinvestment of distributions 242,350 796,335
Cost of shares redeemed (13,642,815 (25,177,172
) )
Paid in capital portion of redemption fees 16,561 39,052
Net increase (decrease) in net assets resulting from share transactions 378,535 717,751
TOTAL INCREASE (DECREASE) IN NET ASSETS 286,200 2,297,230
NET ASSETS
Beginning of period 13,076,793 10,779,563
End of period (including accumulated net investment loss of $49,856 and $0, respectively) $ 13,362,993 $ 13,076,793
OTHER INFORMATION
Shares
Sold 635,309 1,225,390
Issued in reinvestment of distributions 11,601 40,016
Redeemed (646,543 (1,239,184
) )
Net increase (decrease) 367 26,222
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS YEAR ENDED TEN MONTHS YEARS ENDED APRIL 30,
ENDED FEBRUARY 28, ENDED
AUGUST 31, 1994 FEBRUARY 28,
SELECTED PER-SHARE DATAC (UNAUDITED) 1994 1993 1992 1991 1990
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 21.67 $ 18.68 $ 15.49 $ 11.26 $ 12.23 $ 13.59
Income from Investment Operations
Net investment income (loss) (.08) (.20) (.07) (.05) .06 (.03)
Net realized and unrealized gain (loss) .84 5.07 3.55 4.18 (.57) .96
Total from investment operations .76 4.87 3.48 4.13 (.51) .93
Less Distributions
In excess of net investment income - - - (.04) - -
From net realized gain (.33) (1.96) (.36) - (.50) (2.32)
Total distributions (.33) (1.96) (.36) (.04) (.50) (2.32)
Redemption fees added to paid in capital .03 .08 .07 .14 .04 .03
Net asset value, end of period $ 22.13 $ 21.67 $ 18.68 $ 15.49 $ 11.26 $ 12.23
TOTAL RETURND, E 3.74% 27.47% 23.14% 38.01% (4.10)% 6.90%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 13,363 $ 13,077 $ 10,780 $ 2,998 $ 770 $ 1,630
Ratio of expenses to average net assetsB 2.21%A 2.39% 2.48%A 2.43% 2.39% 2.50%
Ratio of expenses to average net assets before 2.22%A 2.40% 4.20%A 3.13% 2.89% 3.92%
expense reductionsB
Ratio of net investment income (loss) to average net (.72)% (.96) (.53)% (.34)% .52% (.20)%
assets A % A
Portfolio turnover rate 224%A 115% 116%A 423% 187% 156%
</TABLE>
A ANNUALIZED
B SEE NOTE 9 OF NOTES TO FINANCIAL STATEMENTS.
C NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
D TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
E THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
AMERICAN GOLD PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance: total
percentage change in value, the average annual percentage change, or the
growth of a hypothetical $10,000 investment. Each performance figure
includes changes in a fund's share price, plus reinvestment of any
dividends (income) and capital gains (the profits the fund earns when it
sells stocks that have grown in value).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 6 PAST 1 PAST 5 LIFE OF
AUGUST 31, 1994 MONTH YEAR YEARS FUND
S
AMERICAN GOLD -4.02% 1.97% 40.14% 120.71%
AMERICAN GOLD
(INCL. 3% SALES CHARGE) -6.90% -1.09% 35.94% 114.09%
S&P 500 3.26% 5.47% 58.16% 200.89%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one year, five years, or
since the fund started on December 16, 1985. You can compare these figures
to the performance of the S&P 500 - a common proxy for the U.S. stock
market. This benchmark includes reinvested dividends and capital gains, if
any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
AUGUST 31, 1994 YEAR YEARS FUND
AMERICAN GOLD 1.97% 6.98% 9.51%
AMERICAN GOLD (INCL. 3% SALES CHARGE) -1.09% 6.33% 9.13%
S&P 500 5.47% 9.60% 13.47%
AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and
show you what would have happened if the fund had performed at a constant
rate each year.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of growth in the long run
and volatility in the short run. Unlike the broader
market, however, some sectors may not have
a history of growth in the long run. And, as
with all stock funds, the share price and return
of a fund that invests in a sector will vary. That
means if you sell your shares during a sector
downturn, you might lose money. But if you
can identify a sector that is about to
experience rapid growth you may have the
potential for above-average gains.
(checkmark)
$10,000 OVER LIFE OF FUND
Select American Gold (041) Standard & Poor's
12/16/85 9700.00 10000.00
12/31/85 9719.40 10080.42
01/31/86 10097.70 10136.87
02/28/86 9622.40 10895.11
03/31/86 10010.40 11503.06
04/30/86 9806.70 11373.07
05/31/86 9855.20 11978.12
06/30/86 9874.60 12180.55
07/31/86 9826.10 11499.66
08/31/86 10941.60 12352.93
09/30/86 11475.10 11331.35
10/31/86 11310.20 11985.16
11/30/86 11494.50 12276.40
12/31/86 11475.10 11963.36
01/31/87 13221.10 13574.82
02/28/87 14588.80 14111.03
03/31/87 16975.00 14518.83
04/30/87 18032.30 14389.62
05/31/87 17072.00 14514.81
06/30/87 16538.50 15247.80
07/31/87 19739.50 16020.87
08/31/87 19409.70 16618.45
09/30/87 20234.20 16254.50
10/31/87 14326.90 12753.28
11/30/87 16616.10 11702.41
12/31/87 16122.98 12592.97
01/31/88 13701.58 13123.13
02/29/88 14065.78 13734.67
03/31/88 15473.34 13310.27
04/30/88 15571.77 13458.01
05/31/88 15473.34 13575.09
06/30/88 15778.47 14198.19
07/31/88 15739.10 14144.24
08/31/88 14813.85 13663.33
09/30/88 14174.05 14245.39
10/31/88 14321.70 14641.41
11/30/88 14518.56 14432.04
12/31/88 14114.99 14684.60
01/31/89 14626.83 15759.52
02/28/89 15394.59 15367.10
03/31/89 14853.22 15725.16
04/30/89 14134.68 16541.29
05/31/89 13622.84 17211.21
06/30/89 14390.60 17113.11
07/31/89 14538.24 18658.42
08/31/89 15276.48 19024.13
09/30/89 15365.06 18946.13
10/31/89 15522.55 18506.58
11/30/89 17501.01 18884.12
12/31/89 17225.41 19337.33
01/31/90 17983.33 18039.80
02/28/90 17481.33 18272.51
03/31/90 16802.15 18756.73
04/30/90 14981.18 18287.82
05/31/90 16300.16 20070.88
06/30/90 15256.79 19934.40
07/31/90 16319.84 19870.61
08/31/90 16024.55 18074.30
09/30/90 16014.71 17194.08
10/31/90 13386.60 17120.15
11/30/90 13219.27 18226.11
12/31/90 14262.64 18734.62
01/31/91 12284.18 19551.45
02/28/91 13396.45 20949.38
03/31/91 13347.23 21456.35
04/30/91 12874.76 21507.85
05/31/91 13317.70 22436.99
06/30/91 14213.42 21409.37
07/31/91 14055.93 22407.05
08/31/91 12914.13 22938.10
09/30/91 12697.59 22555.03
10/31/91 13672.05 22857.27
11/30/91 13642.52 21936.12
12/31/91 13386.60 24445.61
01/31/92 13711.42 23990.92
02/29/92 13288.17 24302.81
03/31/92 12382.61 23828.90
04/30/92 11752.65 24529.47
05/31/92 12589.31 24649.67
06/30/92 13406.29 24282.39
07/31/92 14252.79 25275.53
08/31/92 13987.03 24757.39
09/30/92 13908.29 25049.52
10/31/92 13494.88 25137.20
11/30/92 12353.08 25994.38
12/31/92 12973.19 26314.11
01/31/93 12727.12 26535.14
02/28/93 13927.97 26896.02
03/31/93 15493.02 27463.53
04/30/93 17451.80 26798.91
05/31/93 19390.89 27517.12
06/30/93 20522.84 27596.92
07/31/93 22156.80 27486.53
08/31/93 20995.31 28528.27
09/30/93 18770.77 28308.61
10/31/93 21576.05 28894.59
11/30/93 21595.74 28620.10
12/31/93 23180.48 28966.40
01/31/94 23190.32 29951.26
02/28/94 22304.44 29139.58
03/31/94 22845.81 27869.09
04/30/94 20916.57 28225.82
05/31/94 21822.13 28688.72
06/30/94 20749.23 27985.85
07/31/94 20444.10 28903.78
08/31/94 21408.72 30088.84
Let's say you invested $10,000 in Fidelity Select American Gold Portfolio
on December 16, 1985, when the fund started, and paid a 3% sales charge. By
August 31, 1994, your investment would have grown to $21,409 - a 114.09%
increase. That compares to $10,000 invested in the S&P 500, which would
have grown to $30,089 over the same period - a 200.89% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST 31, 1994
% OF FUND'S
INVESTMENTS
American Barrick Resources Corp. 10.6
Placer Dome, Inc. 6.2
Newmont Mining Corp. 6.1
Homestake Mining Co. 5.7
Santa Fe Pacific Corp. 5.5
Euro-Nevada Mining Corp. 4.5
Cambior, Inc. 4.3
Franco Nevada Mining Corp. 4.0
Agnico Eagle Mines Ltd. 3.8
Prime Resources Group, Inc. 3.1
TOP INDUSTRIES AS OF AUGUST 31, 1994
Gold Ores 56.5%
Gold & Silver Ores 19.5%
Railroads 5.5%
Copper Ores 1.4%
Petroleum Refiners
1.1%
All Others 16.0%*
Row: 1, Col: 1, Value: 16.0
Row: 1, Col: 2, Value: 1.1
Row: 1, Col: 3, Value: 1.4
Row: 1, Col: 4, Value: 5.5
Row: 1, Col: 5, Value: 19.5
Row: 1, Col: 6, Value: 56.5
* INCLUDES SHORT-TERM INVESTMENTS
AMERICAN GOLD PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Malcolm MacNaught, Portfolio Manager of
Fidelity Select American Gold Portfolio
Q. MALCOLM, HOW DID THE FUND PERFORM?
A. Not as well as I would have liked. For the six months and the year ended
August 31, 1994, the fund had total returns of -4.02% and 1.97%,
respectively. Over the same periods, the S&P 500 returned 3.26% and 5.47%,
respectively.
Q. WHY WAS THE FUND'S PERFORMANCE DOWN OVER THE PAST
SIX MONTHS?
A. The fund invests only in North and South American gold stocks. During
the period, the North American gold market - like many markets worldwide -
fell due to investors' disinterest in gold. In addition, I believe the
North American market was negatively influenced during the period by
stringent U.S. and Canadian environmental policies, which discourage
companies from exploring in North America. Also, one should not lose sight
of the Federal Reserve's actions to control inflation, which negatively
affected gold shares.
Q. WHAT WAS YOUR STRATEGY IN THIS ENVIRONMENT?
A. My strategy remained much the same as it was six months ago. I invested
in established companies that continued to grow - like Canadian mining
company American Barrick, still my biggest holding. Well-known companies
like this made up most of the fund's top 10 stocks. I also liked young
exploration companies that may have found new ore bodies, such as the
Canadian mining exploration company Sudbury Contact, which looks like it's
discovered a major new gold mine in Kirkland, Ontario. Canadian exploration
companies Orvana and Kinross Gold also looked like good exploration plays
in North and South America.
Q. YOU MENTIONED AMERICAN BARRICK. HASN'T THAT COMPANY BEEN IN THE NEWS
OVER THE PAST SIX MONTHS?
A. Yes. American Barrick made news recently when it bought Lac Minerals, a
Canadian gold mining company, becoming the largest gold mining company in
North America. With this acquisition, I think it can double its production
over the next few years. In addition, the purchase provided the company
with a number of interesting exploration properties in South America -
where there is a tremendous opportunity to find undiscovered ore bodies.
However, while American Barrick looked great from a corporate standpoint,
it was weak from a stock standpoint. As I noted, North American gold stocks
fell due to the general disinterest in gold. In addition, American
Barrick's stock was overowned and extremely susceptible to selling by
disenchanted gold share owners.
Q. LET'S SWITCH DIRECTION A BIT. THERE'S BEEN A LOT OF TALK LATELY ABOUT
DERIVATIVES. DOES THE FUND OWN THEM?
A. Yes. The fund does own some derivatives - or financial arrangements
whose prices are derived from other securities, currencies or indices. The
fund has a small investment in indexed securities, or structured notes,
which were linked to gold and silver on August 31, 1994. These indexed
securities let the fund earn the small, but meaningful, return that it
would earn if it could lend its gold to other buyers. I should note that
these securities carry the same risk as the underlying metal. That means
that if gold dropped 1%, an indexed security linked to gold would fall 1%.
Q. IN HINDSIGHT, DO YOU REGRET ANY OF YOUR INVESTMENT DECISIONS?
A. Sure. I invested a small amount of money in North American diamond
companies, and I wish I hadn't. These exploration companies, located mostly
in the Northwest Territories of Canada, didn't find enough diamonds to be
successful.
Q. WHAT DO YOU SEE HAPPENING IN THE NEAR FUTURE?
A. Right now, we're entering the season when jewelry manufacturers will be
buying more bullion to meet demand for Christmas and the first quarter. So
the picture should improve short term and continue to improve as economies
in Europe, Japan, and many developing countries pick up. Long term, I think
gold prices may increase because world gold supply is virtually flat and
consumption is growing. That said, I think it's important to remind
shareholders that gold stocks are extremely volatile. They can produce very
high returns. On the other hand, they can drop dramatically.
FUND FACTS
START DATE: December 16, 1985
SIZE: as of August 31, 1994, more than
$366 million
MANAGER: Malcolm MacNaught, since
December 1985; manager, Precious Metals and
Minerals Portfolio, since July 1981; Advisor Global
Resources, since November 1988; joined
Fidelity in 1968
(checkmark)
AMERICAN GOLD PORTFOLIO
INVESTMENTS AUGUST 31, 1994 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 83.8%
SHARES VALUE (NOTE 1)
CANADA - 57.1%
HOLDING COMPANIES - 0.5%
HOLDING COMPANY OFFICES, NEC - 0.5%
Bolivar Goldfields Ltd. (a) 892,800 $ 1,632,717
METALS & MINING - 1.1%
METAL MINING - 0.5%
Cominco Resources International Ltd. (a) 662,900 1,624,456
Southernera Resources Ltd. (a) 253,900 375,170
1,999,626
METAL MINING SERVICES - 0.1%
Tombstone Exploration Co. (a) 200,000 197,506
MISCELLANEOUS NONMETAL MINERALS - 0.5%
DIA Metal Minerals Ltd.:
Class A (a) 31,250 342,892
Class B (a) 125,000 1,554,443
1,897,335
TOTAL METALS & MINING 4,094,467
OIL & GAS - 1.1%
PETROLEUM REFINERS - 1.1%
Horsham Corp. 275,700 4,033,502
PRECIOUS METALS - 54.4%
GOLD & SILVER ORES - 0.1%
Greenstone Resources Ltd. 115,500 215,446
GOLD ORES - 54.3%
Aber Resources Ltd. (a) 50,000 274,314
Agnico Eagle Mines Ltd. 1,090,000 13,853,737
American Barrick Resources Corp. 1,670,000 38,022,555
Aurizon Mines Ltd. (a) 188,000 99,016
Baja Gold, Inc. (a) 100,000 153,615
Bema Gold Corp. (a) 350,000 601,661
Breakwater Resources Ltd. (a) 429,500 50,269
Cambior, Inc. 1,163,600 15,427,567
Campbell Resources, Inc. (a) 1,320,000 579,348
Canarc Resources Corp. (a) 550,000 1,206,981
Cathedral Gold Corp. (a) 81,000 103,691
Echo Bay Mines Ltd. 530,000 6,736,221
Euro-Nevada Mining Corp. 560,000 16,129,624
Exall Resource Ltd. (a) 100,000 89,975
Franco Nevada Mining Corp. 240,000 14,395,963
Golden Knight Resources, Inc. 386,200 2,542,555
Golden Star Resources, Ltd. (a) 720,000 7,900,222
Hemlo Gold Mines Inc. 800,000 8,119,672
Kinross Gold Corp. (a) 1,164,100 5,641,461
Orvana Minerals Corp. (a)(c) 1,310,000 5,749,603
Pegasus Gold, Inc. 480,000 7,768,550
Placer Dome, Inc. 990,000 22,449,804
Prime Equities, Inc. (a) 55,883 65,405
Prime Resources Group, Inc. (a) 1,394,800 11,095,760
Rayrock Yellowknife Resources Inc. (a) 289,500 3,547,145
Royal Oaks Mines, Inc. (warrants) (a) 100,000 98,753
Sudbury Contact Mines, Ltd. (a) 382,900 3,676,211
Viceroy Resources Corp. (a) 659,600 4,161,555
Wharf Resources Ltd. 570,000 5,107,713
195,648,946
TOTAL PRECIOUS METALS 195,864,392
TOTAL CANADA 205,625,078
SHARES VALUE (NOTE 1)
PERU - 0.2%
PRECIOUS METALS - 0.2%
GOLD ORES - 0.2%
Buenaventura (CIA DE MIN) Class T 164,467 $ 583,828
UNITED KINGDOM - 0.1%
RETAIL & WHOLESALE, MISCELLANEOUS - 0.1%
RETAIL, GENERAL - 0.1%
Signet Group PLC (a) 1,000,000 452,690
UNITED STATES - 26.4%
METALS & MINING - 1.4%
COPPER ORES - 1.4%
Freeport-McMoran Copper
Co. Class A 220,000 5,087,500
PRECIOUS METALS - 19.4%
GOLD & SILVER ORES - 19.4%
Amax Gold, Inc. 862,500 5,929,688
Battle Mountain Gold Co. 1,000,000 10,875,000
Canyon Resources Corp. (a) 820,100 1,896,481
Coeur d'Alene Mines Corp. 181,700 3,861,125
FMC Gold Co. 117,200 586,000
Hecla Mining Co. (a) 330,000 4,042,500
Homestake Mining Co. 1,087,300 20,522,788
Newmont Mining Corp. 513,105 21,999,377
69,712,959
RAILROADS - 5.5%
Santa Fe Pacific Corp. 926,900 19,928,350
SERVICES - 0.1%
JEWELRY, PRECIOUS METAL - 0.1%
Oroamerica, Inc. (a) 50,000 337,500
TOTAL UNITED STATES 95,066,309
TOTAL COMMON STOCKS
(Cost $241,682,291) 301,727,905
CONVERTIBLE PREFERRED STOCKS - 2.0%
UNITED STATES - 2.0%
PRECIOUS METALS - 2.0%
GOLD ORES - 2.0%
Battle Gold Co. medium term notes 33,500 2,139,813
Newmont Mining Corp. depository shares
representing 1/2 share, $1.375 (b) 83,800 5,153,700
TOTAL CONVERTIBLE PREFERRED STOCKS
(Cost $7,368,215) 7,293,513
BULLION - 3.0%
TROY OUNCES
Gold Bullion (a) (Cost $10,593,389) 27,867 10,759,427
INDEXED SECURITIES - 4.2%
PRINCIPAL VALUE (NOTE 1)
AMOUNT
Goldman Sachs Group, L.P. notes:
4.72%, 11/10/94 (indexed to
silver price) $ 5,000,000 $ 5,192,000
5.04%, 1/13/95 (indexed to
gold price) 9,856,248 9,812,881
TOTAL INDEXED SECURITIES
(Cost $14,856,248) 15,004,881
REPURCHASE AGREEMENTS - 7.0%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a
joint trading account, at 4.83%
dated 8/31/94 due 9/1/94 $ 25,370,403 25,367,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $299,867,143) $ 360,152,726
LEGEND
1. Non-income producing
2. 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 period
end, the value of this security amounted to $5,153,700 or 1.4% of net
assets.
3. A company in which the fund has ownership of at least 5% of the voting
securities is an affiliated company. A summary of the transactions during
the period in which the issuers were affiliates is as follows:
PURCHASES SALES DIVIDEND MARKET
AFFILIATE COST COST INCOME VALUE
Orvana Minerals Corp. (a) $ 50,738 $ - $ - $ 5,749,603
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $65,584,352 and $27,420,633, respectively (see Note 4 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $23,924 for the period (see
Note 5 of Notes to Financial Statements).
The maximum loan and average daily loan balance during the period for which
the loan was outstanding amounted to $3,380,000. The weighted average
interest rate paid was 4.2% (see Note 8 of Notes to Financial Statements).
INCOME TAX INFORMATION
At August 31, 1994, the aggregate cost of investment securities for income
tax purposes was $301,635,660. Net unrealized appreciation aggregated
$58,517,066, of which $84,972,426 related to appreciated investment
securities and $26,455,360 related to depreciated investment securities.
At February 28, 1994, the fund had a capital loss carryforward of
approximately $38,864,000 of which $13,677,000, $2,503,000, $1,152,000,
$13,193,000 and $8,339,000 will expire on February 28, 1997, 1998, 1999,
2000 and 2001, respectively.
AMERICAN GOLD PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
AUGUST 31, 1994 (UNAUDITED)
ASSETS
Investment in securities, $ 360,152,726
at value (including
repurchase
agreements of
$25,367,000) (cost
$299,867,143) - See
accompanying
schedule
Cash 933
Receivable for 3,580,853
investments sold
Receivable for fund 7,352,342
shares sold
Dividends receivable 171,662
Interest receivable 129,342
Redemption fees 2,361
receivable
Other receivables 10,156
Prepaid expenses 56,951
TOTAL ASSETS 371,457,326
LIABILITIES
Payable for investments $ 300,108
purchased
Payable for fund shares 4,444,664
redeemed
Accrued management 176,012
fee
Other payables and 244,524
accrued expenses
TOTAL LIABILITIES 5,165,308
NET ASSETS $ 366,292,018
Net Assets consist of:
Paid in capital $ 347,663,533
Accumulated net (459,426
investment (loss) )
Accumulated (41,198,070
undistributed net )
realized gain (loss) on
investments and
foreign currency
transactions
Net unrealized 60,285,981
appreciation
(depreciation) on
investments and
assets and liabilities in
foreign currencies
NET ASSETS, for $ 366,292,018
16,837,380 shares
outstanding
NET ASSET VALUE and $21.75
redemption price per
share ($366,292,018 (divided by)
shares)
Maximum offering price $22.42
per share (100/97 of
$21.75)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED AUGUST 31, 1994 (UNAUDITED)
INVESTMENT INCOME $ 1,092,885
Dividends
Interest 1,043,872
TOTAL INCOME 2,136,757
EXPENSES
Management fee $ 1,112,510
Transfer agent fees 1,183,400
Redemption fees (109,190
)
Accounting fees and 179,546
expenses
Non-interested trustees' 1,037
compensation
Custodian fees and 28,708
expenses
Registration fees 56,951
Audit 21,718
Legal 4,121
Interest 1,179
Reports to shareholders 13,229
Miscellaneous 658
Total expenses before 2,493,867
reductions
Expense reductions (299 2,493,568
)
NET INVESTMENT INCOME (356,811
(LOSS) )
REALIZED AND UNREALIZED
GAIN (LOSS)
Net realized gain (loss)
on:
Investment securities (571,473
(including realized loss )
of $346,022 on sales
of investments in
precious metals)
Foreign currency (8,791 (580,264
transactions ) )
Change in net unrealized
appreciation
(depreciation) on:
Investment securities (19,281,426
)
Assets and liabilities in 398 (19,281,028
foreign )
currencies
NET GAIN (LOSS) (19,861,292
)
NET INCREASE $ (20,218,103
(DECREASE) IN NET )
ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION $916,855
Sales Charges Paid to
FDC
Deferred sales $25,847
charges withheld
by FDC
Exchange fees $89,850
withheld by FSC
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS YEAR ENDED
ENDED FEBRUARY 28,
AUGUST 31, 1994 1994
(UNAUDITED)
Operations $ (356,811 $ (1,607,332
Net investment income (loss) ) )
Net realized gain (loss) (580,264 5,091,181
)
Change in net unrealized appreciation (depreciation) (19,281,028 102,337,003
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (20,218,103 105,820,852
)
Share transactions 308,350,583 927,864,527
Net proceeds from sales of shares
Cost of shares redeemed (270,075,912 (857,107,198
) )
Paid in capital portion of redemption fees 829,006 2,794,982
Net increase (decrease) in net assets resulting from share transactions 39,103,677 73,552,311
TOTAL INCREASE (DECREASE) IN NET ASSETS 18,885,574 179,373,163
NET ASSETS
Beginning of period 347,406,444 168,033,281
End of period (including accumulated net investment (loss) of $(459,426) and $(102,615), $ 366,292,018 $ 347,406,444
respectively)
OTHER INFORMATION
Shares
Sold 14,022,775 46,202,228
Redeemed (12,518,197 (42,741,926
) )
Net increase (decrease) 1,504,578 3,460,302
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS YEAR ENDED TEN MONTHS YEARS ENDED APRIL 30,
ENDED FEBRUARY 28, ENDED
AUGUST 31, 1994 FEBRUARY 28,
SELECTED PER-SHARE DATAC (UNAUDITED) 1994 1993 1992 1991 1990
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 22.66 $ 14.15 $ 11.94 $ 13.08 $ 15.22 $ 14.36
Income from Investment Operations
Net investment income (loss) (.02) (.11) (.05) (.06) (.04) (.06)
Net realized and unrealized gain (loss) (.94) 8.44 2.16 (1.17) (2.23) .85
Total from investment operations (.96) 8.33 2.11 (1.23) (2.27) .79
Redemption fees added to paid in capital .05 .18 .10 .09 .13 .07
Net asset value, end of period $ 21.75 $ 22.66 $ 14.15 $ 11.94 $ 13.08 $ 15.22
TOTAL RETURND, E (4.02)% 60.14% 18.51% (8.72)% (14.06)% 5.99%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 366,292 $ 347,406 $ 168,033 $ 130,407 $ 164,137 $ 195,322
Ratio of expenses to average net assetsB 1.37%A 1.49% 1.59%A 1.75% 1.75% 1.85%
Ratio of expenses to average net assets before 1.37%A 1.50% 1.59%A 1.75% 1.75% 1.85%
expense reductionsB
Ratio of net investment income (loss) to average net (.20)% (.51) (.44)% (.47)% (.29)% (.38)%
assets A % A
Portfolio turnover rate 17%A 39% 30%A 40% 38% 68%
</TABLE>
A ANNUALIZED
B SEE NOTE 9 OF NOTES TO FINANCIAL STATEMENTS.
C NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
D TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
E THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
ENERGY PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance: total
percentage change in value, the average annual percentage change, or the
growth of a hypothetical $10,000 investment. Each performance figure
includes changes in a fund's share price, plus reinvestment of any
dividends (income) and capital gains (the profits the fund earns when it
sells stocks that have grown in value).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 6 PAST 1 PAST 5 PAST 10
AUGUST 31, 1994 MONTH YEAR YEARS YEARS
S
ENERGY 2.79% -5.86% 30.54% 120.62%
ENERGY
(INCL. 3% SALES CHARGE) -0.30% -8.69% 26.63% 114.00%
S&P 500 3.26% 5.47% 58.16% 300.76%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one year, five years, or ten
years. You can compare these figures to the performance of the S&P 500 - a
common proxy for the U.S. stock market. This benchmark includes reinvested
dividends and capital gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
AUGUST 31, 1994 YEAR YEARS YEARS
ENERGY -5.86% 5.48% 8.23%
ENERGY
(INCL. 3% SALES CHARGE) -8.69% 4.83% 7.91%
S&P 500 5.47% 9.60% 14.89%
AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and
show you what would have happened if the fund had performed at a constant
rate each year.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of growth in the long run
and volatility in the short run. Unlike the broader
market, however, some sectors may not have
a history of growth in the long run. And, as
with all stock funds, the share price and return
of a fund that invests in a sector will vary. That
means if you sell your shares during a sector
downturn, you might lose money. But if you
can identify a sector that is about to
experience rapid growth you may have the
potential for above-average gains.
(checkmark)
$10,000 OVER TEN YEARS
Select Energy (060) Standard & Poor
08/31/84 9700.00 10000.00
09/30/84 9838.70 10002.00
10/31/84 9209.91 10041.01
11/30/84 9098.95 9928.55
12/31/84 9089.70 10190.66
01/31/85 9672.26 10984.51
02/28/85 10217.82 11119.62
03/31/85 10615.44 11127.41
04/30/85 10763.39 11117.39
05/31/85 10615.44 11759.98
06/30/85 10196.32 11944.61
07/31/85 10304.27 11926.69
08/31/85 10677.19 11825.32
09/30/85 10343.52 11455.18
10/31/85 10961.78 11984.41
11/30/85 11138.42 12806.54
12/31/85 10726.25 13426.38
01/31/86 9990.23 13501.57
02/28/86 9764.52 14511.49
03/31/86 9715.45 15321.23
04/30/86 9735.08 15148.10
05/31/86 10186.51 15953.98
06/30/86 10215.95 16223.60
07/31/86 9578.06 15316.70
08/31/86 10844.02 16453.20
09/30/86 10726.25 15092.52
10/31/86 11010.85 15963.36
11/30/86 11236.56 16351.27
12/31/86 11315.07 15934.31
01/31/87 12512.33 18080.66
02/28/87 12757.67 18794.85
03/31/87 13817.53 19338.02
04/30/87 13424.99 19165.91
05/31/87 13896.04 19332.65
06/30/87 14376.91 20308.95
07/31/87 15122.74 21338.62
08/31/87 15034.42 22134.55
09/30/87 14710.57 21649.80
10/31/87 10824.39 16986.43
11/30/87 10372.96 15586.75
12/31/87 11111.42 16772.90
01/31/88 11525.20 17479.04
02/29/88 11938.98 18293.57
03/31/88 12786.72 17728.29
04/30/88 13271.14 17925.08
05/31/88 12786.72 18081.03
06/30/88 12928.01 18910.95
07/31/88 13008.74 18839.08
08/31/88 12514.23 18198.55
09/30/88 12372.94 18973.81
10/31/88 12483.95 19501.29
11/30/88 12514.23 19222.42
12/31/88 12882.83 19558.81
01/31/89 13856.29 20990.51
02/28/89 13638.81 20467.85
03/31/89 14425.87 20944.75
04/30/89 14912.60 22031.78
05/31/89 15088.65 22924.07
06/30/89 15399.33 22793.40
07/31/89 16041.40 24851.65
08/31/89 16393.50 25338.74
09/30/89 16652.40 25234.85
10/31/89 16538.48 24649.40
11/30/89 17159.84 25152.25
12/31/89 18399.96 25755.90
01/31/90 17578.44 24027.68
02/28/90 18126.12 24337.64
03/31/90 18136.66 24982.59
04/30/90 17525.78 24358.02
05/31/90 18589.54 26732.93
06/30/90 18151.42 26551.15
07/31/90 19387.74 26466.18
08/31/90 19736.16 24073.64
09/30/90 19679.96 22901.25
10/31/90 18668.43 22802.78
11/30/90 18466.12 24275.84
12/31/90 17573.36 24953.13
01/31/91 16435.10 26041.09
02/28/91 17968.27 27903.03
03/31/91 17724.35 28578.28
04/30/91 17921.81 28646.87
05/31/91 18026.34 29884.41
06/30/91 17223.25 28515.71
07/31/91 18107.69 29844.54
08/31/91 18456.81 30551.86
09/30/91 18270.61 30041.64
10/31/91 18817.56 30444.20
11/30/91 17421.08 29217.30
12/31/91 17579.54 32559.76
01/31/92 16638.83 31954.14
02/29/92 16662.35 32369.55
03/31/92 16180.23 31738.34
04/30/92 17285.57 32671.45
05/31/92 18108.69 32831.54
06/30/92 17212.60 32342.35
07/31/92 17672.39 33665.15
08/31/92 17990.70 32975.02
09/30/92 18096.81 33364.12
10/31/92 17318.70 33480.90
11/30/92 16917.86 34622.59
12/31/92 17159.66 35048.45
01/31/93 17806.74 35342.86
02/28/93 18981.07 35823.52
03/31/93 19951.69 36579.40
04/30/93 20335.48 35694.18
05/31/93 20946.98 36650.78
06/30/93 21222.76 36757.07
07/31/93 21066.89 36610.04
08/31/93 22733.53 37997.56
09/30/93 22601.64 37704.98
10/31/93 22277.90 38485.47
11/30/93 19580.09 38119.86
12/31/93 20446.49 38581.11
01/31/94 21541.62 39892.87
02/28/94 20819.83 38811.77
03/31/94 19811.82 37119.58
04/30/94 21325.18 37594.71
05/31/94 21550.85 38211.26
06/30/94 21438.01 37275.09
07/31/94 21763.97 38497.71
08/31/94 21400.40 40076.11
Let's say you invested $10,000 in Fidelity Select Energy Portfolio on
August 31, 1984 and paid a 3% sales charge. By August 31, 1994, your
investment would have grown to $21,400 - a 114.00% increase. That compares
to $10,000 invested in the S&P 500, which would have grown to $40,076 over
the same period - a 300.76% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST 31, 1994
% OF FUND'S
INVESTMENTS
British Petroleum PLC ADR 9.0
Amerada Hess Corp. 7.8
Total SA sponsored ADR 6.3
Amoco Corp. 5.9
Canadian Natural Resources Ltd. 5.4
Unocal Corp. 5.2
Halliburton Co. 4.0
Shell Transport & Trading PLC 3.6
Apache Corp. 3.5
Schlumberger Ltd. 2.9
TOP INDUSTRIES AS OF AUGUST 31, 1994
Row: 1, Col: 1, Value: 16.1
Row: 1, Col: 2, Value: 3.2
Row: 1, Col: 3, Value: 3.6
Row: 1, Col: 4, Value: 8.6
Row: 1, Col: 5, Value: 30.7
Row: 1, Col: 6, Value: 37.8
Crude Petroleum & Gas 37.8%
Oil & Gas Exploration 30.7%
Oil & Gas Services 8.6%
Holding Company Offices 3.6%
Petroleum Refiners 3.2%
All Others 16.1%
ENERGY PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Robert Bertelson,
Portfolio Manager
of Fidelity Select
Energy Portfolio
Q. BOB, HOW HAS THE FUND PERFORMED?
A. For the six months ended August 31, 1994, the fund had a total return of
2.79%, and for the year ended August 31, the fund returned -5.86%. Both
numbers lagged the S&P 500's return of 3.26% and 5.47% for six months and
one year, respectively.
Q. WHAT ACCOUNTED FOR THE FUND'S PERFORMANCE OVER THE LAST SIX MONTHS?
A. The fund's performance more or less matched the market's performance, as
improved oil prices were offset by weakening natural gas prices and
declining refining margins. The price of oil is determined largely by
psychology, by what buyers and sellers think it's worth. At the beginning
of the year, the perception was that there was plenty of oil, so prices
suffered. However, over the past few months that perception has changed for
a number of reasons. Last winter's extremely cold weather almost
single-handedly wiped out oil inventories. There has been political strife
in three oil-
producing countries: Nigeria, Yemen and Colombia. And demand has picked up
due to the global economic recovery. These factors have catalyzed the
commodity markets to be somewhat concerned about the supply of oil, leading
to higher oil prices. As a result, oil stocks have bounced back from their
lows of early 1994.
Q. WHAT ABOUT NATURAL GAS?
A. The fund presently is tilted toward oil stocks. It is a big industry, so
it's hard to avoid an "oily bias" in investing. At the same time, the fund
has meaningful positions - about 25% as of August 31 - in independent
producer companies in the U.S. and Canada which are heavily weighted to
natural gas production, such as Canadian Natural Resources, Apache and Rio
Alto; and energy service companies Enerflex and Precision Drilling. Complex
interrelationships of products and fuels on a global basis drive the energy
industry. That web is always slightly out of balance. One of the more
successful ways to invest in this sector is to anticipate how the
disequilibrium is going to be resolved. Natural gas prices have been very
low because of a cool summer and excess supply. At the same time, supply
and demand relationships in the commodity are strong, so I believe natural
gas investors could be rewarded over the next six to 12 months and beyond.
Q. WHICH OIL STOCKS DO YOU FIND APPEALING?
A. I'll highlight three of the fund's top five investments at the end of
the period. British Petroleum has cut costs and turned around its earnings
performance. The company has major positions in two of the most exciting
major oil discoveries outside of the Middle East: the large Cuisiana field
in Colombia and a new oil province in the North Sea called the West of
Shetlands area. Amerada Hess is the second largest holder of rights in West
of Shetlands. The company has also upgraded its refinery in the Virgin
Islands. Total, a refiner and marketer that holds about a 20% share of the
French market, is involved in the Cuisiana field, as well as in natural gas
production in the Far East, where there is explosive growth potential.
Q. WHAT ABOUT DISAPPOINTMENTS?
A. Louis Dreyfus Natural Gas, a company that came public last year, hasn't
done well. It's trying to sell one of its producing properties and it's a
good deal in terms of the price, but the company's cash flow will suffer
until Dreyfus can transfer the profits into investments that can generate
earnings. The reduction in estimated cash flow per share has resulted in a
decline of the stock price. Energy service companies also have disappointed
over the last six months, reflecting the fact that drilling activity has
slowed worldwide. Halliburton and Schlumberger are two service companies
whose stock prices haven't moved substantially.
Q. WHAT IS YOUR OUTLOOK FOR THE NEXT SIX MONTHS?
A. I believe prospects for the energy industry are improving. Margins - the
difference between the revenue received by a company for its products and
services and the cost of producing them - seem to be rocketing off the
bottom in petrochemicals as economies around the world recover. Inventory
levels are tighter than last year heading into the winter, which is
historically the strongest season for crude oil consumption. There is a
possibility that crude prices will get to robust levels, particularly if
OPEC (the Organization of Petroleum Exporting Countries) continues to
demonstrate good production discipline and doesn't accommodate demand
increases as they occur. I'm looking for those companies that are cutting
costs and growing production levels, those with earnings surprises and
those performing better than the market. I have reserved optimism about the
group over the next six months.
FUND FACTS
START DATE: July 14, 1981
SIZE: as of August 31, 1994, more than
$100 million
MANAGER: Robert Bertelson, since January
1992; equity analyst, integrated oils, since
December 1991; refiners, since 1992; joined
Fidelity in 1991
(checkmark)
ENERGY PORTFOLIO
INVESTMENTS AUGUST 31, 1994 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 93.9%
SHARES VALUE (NOTE 1)
CHEMICALS & PLASTICS - 2.3%
PLASTICS & SYNTHETIC RESINS - 2.3%
ARCO Chemical Co. 46,600 $ 2,265,925
ENERGY SERVICES - 10.4%
DRILLING - 1.8%
Dual Drilling Co. (a) 23,000 255,875
Global Marine, Inc. (a) 160,000 640,000
Precision Drilling Class A (a) 73,500 914,012
1,809,887
OIL & GAS SERVICES - 8.6%
BJ Services Co. (a) 14,400 277,200
Enserv Corp. 70,000 640,065
Halliburton Co. 130,000 3,932,500
Nowsco Well Service Ltd. 11,100 167,468
Schlumberger Ltd. 50,000 2,850,000
Veritas Energy Service, Inc. (a)(b) 44,500 354,002
Weatherford International, Inc. (a) 14,900 180,663
8,401,898
TOTAL ENERGY SERVICES 10,211,785
GAS - 3.1%
GAS TRANSMISSION - 1.9%
Associated Nature Gas Corp. 16,000 500,000
Enron Corp. 30,000 915,000
Trident NGL Holding, Inc. 38,300 402,150
1,817,150
GAS TRANSMISSION & DISTRIBUTION - 1.2%
Gas Natural SDG SA, Series E 15,000 1,195,192
TOTAL GAS 3,012,342
HOLDING COMPANIES - 3.6%
HOLDING COMPANY OFFICES - 3.6%
Shell Transport & Trading PLC 50,700 3,491,963
INDUSTRIAL MACHINERY & EQUIPMENT - 0.0%
AIR & GAS COMPRESSORS - 0.0%
Enerflex Systems Ltd. 1,200 15,362
OIL & GAS - 74.3%
CRUDE PETROLEUM & GAS - 37.8%
Anadarko Petroleum Corp. 5,800 271,875
Apache Corp. 135,800 3,428,950
Basin Exploration, Inc. (a) 30,000 300,000
Bellwether Exploration Co. 50,000 275,000
British Borneo Petroleum 245,900 849,029
Burlington Resources, Inc. 59,600 2,242,450
Canadian Natural Resources Ltd. (a) 385,200 5,248,053
Coho Resources, Inc. (a) 50,000 231,250
DEKALB Energy Corp. Class B (a) 29,000 464,000
Encal Energy Ltd. (a) 50,000 137,157
Excel Energy, Inc. (a) 30,000 59,252
Global Natural Resources, Inc. (a) 50,000 375,000
Intensity Resources Ltd. (a) 146,100 336,648
Louis Dreyfus Natural Gas Corp. (a) 93,300 1,282,875
Morrison Petroleums Ltd. 100,800 691,269
Newfield Exploration Co. (a) 56,300 1,407,500
SHARES VALUE (NOTE 1)
Norsk Hydro A.S. ADR 30,000 $ 1,128,750
Nuevo Energy Corp. (a) 26,200 589,500
Paramount Resources Ltd. 31,000 357,156
Parker & Parsley Petroleum Co. 24,500 640,063
Petromet Resources Ltd. Ord. (a) 25,000 148,586
Renaissance Energy Ltd. (a) 102,908 2,079,539
Renaissance Energy Ltd. (a)(c) 11,000 222,285
Rio Alto Exploration Ltd. (a) 317,500 1,916,078
Sceptre Resources Ltd. (a) 57,500 483,706
Total SA sponsored ADR 205,607 6,142,509
Triton Energy Corp. (a) 40,000 1,275,000
Ulster Petroleums Ltd. (a) 168,900 531,268
United Meridian Corp. (a) 40,000 600,000
Vastar Resources, Inc. 30,000 821,250
Vintage Petroleum, Inc. 96,400 2,012,350
YPF Sociedad Anonima sponsored ADR
representing Class D shares 20,000 517,500
37,065,848
NATURAL GAS LIQUIDS - 1.2%
Western Gas Resources, Inc. 52,100 1,152,713
OIL & GAS EXPLORATION - 30.7%
Amerada Hess Corp. 152,400 7,639,045
Amoco Corp. 100,000 5,787,500
British Petroleum PLC ADR 115,401 8,770,476
Louisiana Land & Exploration Co. 18,400 793,500
Phillips Petroleum Co. 58,900 1,951,063
Unocal Corp. 178,400 5,106,700
30,048,284
OIL FIELD EQUIPMENT - 1.4%
Camco International, Inc. 66,400 1,311,400
Taro, Inc. 50,000 44,256
1,355,656
PETROLEUM REFINERS - 3.2%
Crown Central Petroleum Corp.
Class B (a) 18,100 321,275
Diamond Shamrock R&M, Inc. 22,800 612,750
Sun Company, Inc. 20,000 557,500
Tesoro Petroleum Corp. (a) 30,000 307,500
Tosco Corp. 44,900 1,347,000
3,146,025
TOTAL OIL & GAS 72,768,526
TRUCKING & FREIGHT - 0.2%
TRUCKING, LONG DISTANCE - 0.2%
Trimac Ltd. 15,500 179,995
TOTAL COMMON STOCKS
(Cost $85,669,097) 91,945,898
NONCONVERTIBLE PREFERRED STOCKS - 0.0%
OIL & GAS - 0.0%
CRUDE PETROLEUM & GAS - 0.0%
Gulf Canada Resources Ltd. sr.,
Series 1, adj. rate (Cost $27,710) 11,000 30,250
REPURCHASE AGREEMENTS - 6.1%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account, at 4.83% dated
8/31/94 due 9/1/94 $ 6,006,806 $ 6,006,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $91,702,807) $ 97,982,148
LEGEND
1. Non-income producing
2. Restricted securities - Investment in securities not registered under
the Securities Act of 1933 (see Note 2 of Notes to Financial Statements).
Additional information on each holding is as follows:
ACQUISITION ACQUISITION
SECURITY DATE COST
Veritas Energy Service, Inc. 4/13/94 to 5/17/94 $ 357,275
3. 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 period
end, the value of this security amounted to $222,285 or 0.2% of net assets.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $49,371,112 and $90,888,282, respectively (see Note 4 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $42,224 for the period
(see Note 5 of Notes to Financial Statements).
Distribution of investments by country, as a percentage of total value of
investment in securities, is as follows:
United States 62.5%
Canada 14.9
United Kingdom 13.4
France 6.3
Spain 1.2
Norway 1.2
Others (individually less than 1%) 0.5
TOTAL 100.0%
INCOME TAX INFORMATION
At August 31, 1994, the aggregate cost of investment securities for income
tax purposes was $91,959,931. Net unrealized appreciation aggregated
$6,022,217, of which $9,067,287 related to appreciated investment
securities and $3,045,070 related to depreciated investment securities.
ENERGY PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
AUGUST 31, 1994 (UNAUDITED)
ASSETS
Investment in securities, $ 97,982,148
at value (including
repurchase
agreements of
$6,006,000) (cost
$91,702,807) - See
accompanying
schedule
Cash 678
Receivable for 2,788,092
investments sold
Receivable for fund 1,110,748
shares sold
Dividends receivable 383,971
Redemption fees 257
receivable
Other receivables 1,542
Prepaid expenses 21,147
TOTAL ASSETS 102,288,583
LIABILITIES
Payable for fund shares $ 1,642,632
redeemed
Accrued management 53,550
fee
Other payables and 117,129
accrued expenses
TOTAL LIABILITIES 1,813,311
NET ASSETS $ 100,475,272
Net Assets consist of:
Paid in capital $ 92,549,653
Undistributed net 263,940
investment income
Accumulated 1,382,338
undistributed net
realized gain (loss) on
investments and
foreign currency
transactions
Net unrealized 6,279,341
appreciation
(depreciation) on
investments
NET ASSETS, for $ 100,475,272
5,887,656 shares
outstanding
NET ASSET VALUE and $17.07
redemption price per
share ($100,475,272 (divided by)
shares)
Maximum offering price $17.60
per share (100/97 of
$17.07)
</TABLE>
STATEMENT OF OPERATIONS
SIX MONTHS ENDED AUGUST 31, 1994 (UNAUDITED)
INVESTMENT INCOME $ 1,056,322
Dividends
Interest (including 206,008
security lending fees of
$2,294)
TOTAL INCOME 1,262,330
EXPENSES
Management fee $ 330,989
Transfer agent 621,137
Fees
Redemption fees (82,073
)
Accounting and security 65,381
lending fees
Non-interested trustees' 325
compensation
Custodian fees and 5,709
expenses
Registration fees 21,147
Audit 11,818
Legal 851
Reports to shareholders 6,493
Miscellaneous 175
Total expenses before 981,952
reductions
Expense reductions (7,907 974,045
)
NET INVESTMENT INCOME 288,285
REALIZED AND UNREALIZED
GAIN (LOSS)
Net realized gain (loss)
on:
Investment securities 1,679,546
Foreign currency (123 1,679,423
transactions )
Change in net unrealized (170,188
appreciation )
(depreciation) on
investment securities
NET GAIN (LOSS) 1,509,235
NET INCREASE $ 1,797,520
(DECREASE) IN NET
ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION $320,398
Sales Charges Paid to
FDC
Deferred sales $10,385
charges withheld
by FDC
Exchange fees $70,418
withheld by FSC
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS YEAR ENDED
ENDED FEBRUARY 28,
AUGUST 31, 1994 1994
(UNAUDITED)
Operations $ 288,285 $ 467,695
Net investment income
Net realized gain (loss) 1,679,423 11,660,936
Change in net unrealized appreciation (depreciation) (170,188 35,273
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 1,797,520 12,163,904
Distributions to shareholders (51,167 (210,175
From net investment income ) )
From net realized gain (562,840 (2,444,037
) )
TOTAL DISTRIBUTIONS (614,007 (2,654,212
) )
Share transactions 91,729,353 307,692,300
Net proceeds from sales of shares
Reinvestment of distributions 599,230 2,596,445
Cost of shares redeemed (138,675,352 (353,996,623
) )
Paid in capital portion of redemption fees 148,552 555,239
Net increase (decrease) in net assets resulting from share transactions (46,198,217 (43,152,639
) )
TOTAL INCREASE (DECREASE) IN NET ASSETS (45,014,704 (33,642,947
) )
NET ASSETS
Beginning of period 145,489,976 179,132,923
End of period (including undistributed net investment income of $263,940 and $354,166, $ 100,475,272 $ 145,489,976
respectively)
OTHER INFORMATION
Shares
Sold 5,388,164 17,743,944
Issued in reinvestment of distributions 37,012 166,316
Redeemed (8,231,669 (20,523,434
) )
Net increase (decrease) (2,806,493 (2,613,174
) )
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS YEAR ENDED TEN MONTHS YEARS ENDED APRIL 30,
ENDED FEBRUARY 28, ENDED
AUGUST 31, 1994 FEBRUARY 28,
SELECTED PER-SHARE DATAC (UNAUDITED) 1994 1993 1992 1991 1990
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 16.73 $ 15.84 $ 14.70 $ 15.43 $ 16.64 $ 14.40
Income from Investment Operations
Net investment income .05 .06 .23 .17 .16 .27
Net realized and unrealized gain (loss) .39 1.35 1.16 (.75) .15 2.23
Total from investment operations .44 1.41 1.39 (.58) .31 2.50
Less Distributions
From net investment income (.01) (.03) (.27) (.16) (.15) (.07)
From net realized gain (.11) (.57) - (.02) (1.43) (.22)
Total distributions (.12) (.60) (.27) (.18) (1.58) (.29)
Redemption fees added to paid in capital .02 .08 .02 .03 .06 .03
Net asset value, end of period $ 17.07 $ 16.73 $ 15.84 $ 14.70 $ 15.43 $ 16.64
TOTAL RETURN D, E 2.79% 9.69 9.81% (3.55)% 2.26% 17.52%
%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 100,475 $ 145,490 $ 179,133 $ 77,334 $ 92,611 $ 83,912
Ratio of expenses to average net assets B 1.79%A 1.66 1.71%A 1.78% 1.79% 1.94%
%
Ratio of expenses to average net assets before 1.81%A 1.67 1.71%A 1.78% 1.79% 1.94%
expense reductions B %
Ratio of net investment income to average net .53%A .37 1.88%A 1.16% .99% 1.69%
assets %
Portfolio turnover rate 98%A 157 72%A 81% 61% 74%
%
</TABLE>
A ANNUALIZED
B SEE NOTE 9 OF NOTES TO FINANCIAL STATEMENTS.
C NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
D TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
E THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
ENERGY SERVICE PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance: total
percentage change in value, the average annual percentage change, or the
growth of a hypothetical $10,000 investment. Each performance figure
includes changes in a fund's share price, plus reinvestment of any
dividends (income) and capital gains (the profits the fund earns when it
sells stocks that have grown in value).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 6 PAST 1 PAST 5 LIFE OF
AUGUST 31, 1994 MONTH YEAR YEARS FUND
S
ENERGY SERVICE 2.51% -12.19% 15.07% 20.25%
ENERGY SERVICE
(INCL. 3% SALES CHARGE) -0.56% -14.83% 11.62% 16.64%
S&P 500 3.26% 5.47% 58.16% 200.89%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one year, five years, or
since the fund started on December 16, 1985. You can compare these figures
to the performance of the S&P 500 - a common proxy for the U.S. stock
market. This benchmark includes reinvested dividends and capital gains, if
any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
AUGUST 31, 1994 YEAR YEARS FUND
ENERGY SERVICE -12.19% 2.85% 2.14%
ENERGY SERVICE (INCL. 3% SALES CHARGE) -14.83% 2.22% 1.78%
S&P 500 5.47% 9.60% 13.47%
AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and
show you what would have happened if the fund had performed at a constant
rate each year.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of growth in the long run
and volatility in the short run. Unlike the broader
market, however, some sectors may not have
a history of growth in the long run. And, as
with all stock funds, the share price and return
of a fund that invests in a sector will vary. That
means if you sell your shares during a sector
downturn, you might lose money. But if you
can identify a sector that is about to
experience rapid growth you may have the
potential for above average gains.
(checkmark)
$10,000 OVER LIFE OF FUND
Select Energy Service (043)Standard & Poor's
12/16/85 9700.00 10000.00
12/31/85 9855.20 10080.42
01/31/86 9118.00 10136.87
02/28/86 8739.70 10895.11
03/31/86 8671.80 11503.06
04/30/86 8555.40 11373.07
05/31/86 9050.10 11978.12
06/30/86 8885.20 12180.55
07/31/86 7614.50 11499.66
08/31/86 8371.10 12352.93
09/30/86 8235.30 11331.35
10/31/86 7944.30 11985.16
11/30/86 8215.90 12276.40
12/31/86 8303.20 11963.36
01/31/87 9234.40 13574.82
02/28/87 9622.40 14111.03
03/31/87 10534.20 14518.83
04/30/87 10534.20 14389.62
05/31/87 11349.00 14514.81
06/30/87 12464.50 15247.80
07/31/87 13279.30 16020.87
08/31/87 12270.50 16618.45
09/30/87 11872.80 16254.50
10/31/87 7633.90 12753.28
11/30/87 6799.70 11702.41
12/31/87 7323.50 12592.97
01/31/88 7614.50 13123.13
02/29/88 8283.80 13734.67
03/31/88 8768.80 13310.27
04/30/88 8943.40 13458.01
05/31/88 8332.30 13575.09
06/30/88 7857.00 14198.19
07/31/88 7730.90 14144.24
08/31/88 7876.40 13663.33
09/30/88 7536.90 14245.39
10/31/88 7284.70 14641.41
11/30/88 6974.30 14432.04
12/31/88 7294.40 14684.60
01/31/89 7740.60 15759.52
02/28/89 7827.90 15367.10
03/31/89 8322.60 15725.16
04/30/89 8720.30 16541.29
05/31/89 8875.50 17211.21
06/30/89 9166.50 17113.11
07/31/89 9680.60 18658.42
08/31/89 10136.50 19024.13
09/30/89 9991.00 18946.13
10/31/89 9496.30 18506.58
11/30/89 10311.10 18884.12
12/31/89 11630.30 19337.33
01/31/90 10883.40 18039.80
02/28/90 11911.60 18272.51
03/31/90 12483.90 18756.73
04/30/90 11824.30 18287.82
05/31/90 13812.80 20070.88
06/30/90 13104.70 19934.40
07/31/90 14336.60 19870.61
08/31/90 14084.40 18074.30
09/30/90 13812.80 17194.08
10/31/90 12076.50 17120.15
11/30/90 12260.80 18226.11
12/31/90 11834.40 18734.62
01/31/91 11300.01 19551.45
02/28/91 13116.95 20949.38
03/31/91 12096.74 21456.35
04/30/91 12155.04 21507.85
05/31/91 12475.68 22436.99
06/30/91 10843.35 21409.37
07/31/91 11659.51 22407.05
08/31/91 11533.20 22938.10
09/30/91 10474.13 22555.03
10/31/91 10629.59 22857.27
11/30/91 9356.76 21936.12
12/31/91 9055.55 24445.61
01/31/92 8929.24 23990.92
02/29/92 9113.85 24302.81
03/31/92 8462.86 23828.90
04/30/92 9162.43 24529.47
05/31/92 9891.15 24649.67
06/30/92 9317.89 24282.39
07/31/92 9706.54 25275.53
08/31/92 10202.07 24757.39
09/30/92 10512.99 25049.52
10/31/92 9968.88 25137.20
11/30/92 9764.84 25994.38
12/31/92 9366.47 26314.11
01/31/93 9735.69 26535.14
02/28/93 10697.60 26896.02
03/31/93 11542.92 27463.53
04/30/93 12165.15 26798.91
05/31/93 12729.16 27517.12
06/30/93 12661.09 27596.92
07/31/93 12836.13 27486.53
08/31/93 13283.45 28528.27
09/30/93 12894.47 28308.61
10/31/93 12709.71 28894.59
11/30/93 11367.75 28620.10
12/31/93 11329.36 28966.40
01/31/94 11436.70 29951.26
02/28/94 11378.15 29139.58
03/31/94 10529.18 27869.09
04/30/94 11079.70 28225.82
05/31/94 11573.25 28688.72
06/30/94 11925.78 27985.85
07/31/94 12147.37 28903.78
08/31/94 11663.90 30088.84
Let's say you invested $10,000 in Fidelity Select Energy Service Portfolio
on December 16, 1985, when the fund started, and paid a 3% sales charge. By
August 31, 1994, your investment would have grown to $11,664 - a 16.64%
increase. That compares to $10,000 invested in the S&P 500, which would
have grown to $30,089 over the same period - a 200.89% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST 31, 1994
% OF FUND'S
INVESTMENTS
Schlumberger Ltd. 9.9
Western Atlas, Inc. 9.5
Halliburton Co. 9.5
Western Co. of North America 7.8
Camco International, Inc. 6.8
Enterra Corp. 4.1
Tuboscope Vetco Corp. 4.1
BJ Services Co. 4.0
Coflexip sponsored ADR 3.7
Atwood Oceanics, Inc. 3.7
TOP INDUSTRIES AS OF AUGUST 31, 1994
Row: 1, Col: 1, Value: 5.3
Row: 1, Col: 2, Value: 3.7
Row: 1, Col: 3, Value: 6.8
Row: 1, Col: 4, Value: 9.5
Row: 1, Col: 5, Value: 15.4
Row: 1, Col: 6, Value: 59.3
Oil & Gas Services 59.3%
Drilling 15.4%
Surveying Services 9.5%
Oil Field Equipment 6.8%
Fabricated Pipe & Fittings 3.7%
All others 5.3%
ENERGY SERVICE PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
William Mankivsky,
Portfolio Manager of
Fidelity Select Energy
Service Portfolio
Q. BILL, HOW HAS THE FUND PERFORMED?
A. For the six months ended August 31, 1994, the fund had a total return of
2.51%, and for the year ended August 31, the fund returned -12.19%. Both
numbers lagged the S&P 500's return of 3.26% and 5.47% for six months and
one year, respectively.
Q. WHAT HAS AFFECTED THE FUND'S PERFORMANCE OVER THE PAST SIX MONTHS?
A. The performance of energy services companies is driven by energy prices.
While oil prices rebounded somewhat over the period, natural gas prices
have been low because of oversupply and a relatively cool summer. With less
cash flow, energy supply companies have reined in their drilling programs,
hoping to decrease the supply and raise prices, resulting in reduced demand
for energy services.
Q. WHAT FACTORS HELPED CAUSE THE INCREASE IN OIL PRICES?
A. Production in Nigeria - normally the supplier of about 2% of the world's
oil - was down substantially because of ongoing political unrest. In
addition, the economic recovery in the U.S. has helped increase oil
consumption. Despite a modest recovery in oil and gas prices, however,
energy service companies need a sustained period of higher oil and gas
prices in order to enjoy a sustained period of earnings growth.
Q. WHAT KIND OF STOCKS HAVE YOU LOOKED FOR IN THIS KIND OF ENVIRONMENT?
A. I have favored service companies that may have a technological edge,
that can provide a better product or service. These are companies that may
have an opportunity to grow profitability because they have better
technology, even in a sluggish drilling environment.
Q. WHAT ARE SOME EXAMPLES?
A. I'm very high on Schlumberger, one of the fund's top 10 investments.
Along with many interests in drilling, seismic and metering services, the
company is the industry leader in wire line systems, the technology that
helps drillers measure the quality of rock strata within the production
zone of a well. Schlumberger is optimally positioned to benefit from an
international increase in drilling, a scenario that is quite possible given
the present minimal excess capacity to produce more oil on a sustained
basis. Smith International, another top investment, is a company with a
technological advantage in the production of drill bits. The company has
benefited from cost cutting and from its purchase from Dresser of an
interest in MI Drilling Fluids, a drilling muds company that has performed
better as part of a smaller company. Smith was out of the fund as of August
31, because I took profits when its stock reached what I thought was full
valuation.
Q. WHAT STOCKS HAVE DISAPPOINTED?
A. BJ Services, a pumping services company, has been hurt by weak pressure
pumping prices as well as sluggish international activity. I remain
invested because the company has a strong management team and substantial
growth opportunities in new international arenas. Halliburton has not
performed as well as I would have liked. The company has a high cost
structure that has kept it from generating high profits in the past few
years. However, the company is taking steps to reduce costs and become more
profitable.
Q. THE FUND'S ASSETS ESSENTIALLY TRIPLED BY EARLY AUGUST, THEN DROPPED
ABOUT THE SAME AMOUNT DURING THE LAST MONTH. WHY DID THIS HAPPEN AND HOW
DID THE FLUCTUATION AFFECT YOUR STRATEGY?
A. The fluctuation was a result of investors trying to time the market.
When I received the influx of funds, I first gained exposure to the
commodity by investing in companies such as Chevron and Exxon. Once the
fund flow started to stabilize, I worked off those more stable, liquid
names and invested gradually in energy service companies. I believe the
fund's net asset value would have been lower if one-third hadn't been in
the big oil companies.
Q. WHAT DO YOU SEE HAPPENING IN THE INDUSTRY IN THE NEAR FUTURE?
A. During the next six months, the overall operating environment could
remain fairly sluggish. Sometime within six to 12 months, however, U.S.
natural gas prices could recover. Absent a warm winter, gas capacity
utilization should be relatively high compared to supply, keeping upward
pressure on gas prices. Upward pressure on oil or gas prices would lead to
more spending on production, which should lead to better times for my
favorite investments.
FUND FACTS
START DATE: December 16, 1985
SIZE: as of August 31, 1994, more than
$46 million
MANAGER: William Mankivsky, since August 1991;
manager, Fidelity Select Food and Agriculture
Portfolio, since April 1993; equity analyst, energy
service, since 1991, and food and agriculture
since 1993; joined Fidelity in 1991
(checkmark)
ENERGY SERVICE PORTFOLIO
INVESTMENTS AUGUST 31, 1994 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 95.3%
SHARES VALUE (NOTE 1)
AIR TRANSPORTATION - 1.3%
TRANSPORTATION SERVICES - 1.3%
Helikopter Services 38,450 $ 579,526
BUILDING MATERIALS - 3.7%
FABRICATED PIPE & FITTINGS - 3.7%
Coflexip sponsored ADR 74,200 1,613,850
ENERGY SERVICES - 70.0%
DRILLING - 15.4%
Arethusa Offshore Ltd. (a) 40,600 436,450
Atwood Oceanics, Inc. (a) 113,700 1,606,013
Chiles Offshore Corp. (a) 114,200 571,000
Cliffs Drilling Co. (a) 58,100 740,775
Dual Drilling Co. (a) 133,400 1,484,075
Marine Drilling Companiess, Inc. (a) 101,500 482,125
Noble Drilling Corp. (a) 94,400 649,000
Rowan Companies, Inc. (a) 84,900 626,138
Tucker Drilling Co., Inc. (a) 20,700 119,025
6,714,601
OIL & GAS SERVICES - 54.6%
BJ Services Co. (a) 90,931 1,750,422
Baker Hughes, Inc. 31,700 594,375
Dreco Energy Services Ltd. Class A (a) 70,000 612,500
Enterra Corp. (a) 81,200 1,786,400
Geophysique (a) 7,200 791,355
Gulfmark International, Inc. (a) 19,100 281,725
Halliburton Co. 136,300 4,123,075
McDermott International, Inc. 26,700 697,538
Nowsco Well Service Ltd. 13,800 208,204
Offshore Logistics, Inc. (a) 16,200 226,800
Offshore Pipelines, Inc. 15,900 302,100
Petroleum Helicopters, Inc. (a) 28,000 287,000
Petroleum Helicopters, Inc. (non vtg.) (a) 8,600 88,150
Schlumberger Ltd. 75,600 4,309,200
Service Fracturing Co. (a)(b) 318,500 1,393,438
Tidewater, Inc. 15,200 343,900
Tuboscope Vetco Corp. (a) 253,220 1,772,540
Weatherford International, Inc. (a) 68,700 832,988
Western Co. of North America (a) 307,000 3,415,375
23,817,085
TOTAL ENERGY SERVICES 30,531,686
IRON & STEEL - 3.0%
FABRICATED METAL PRODUCTS - 3.0%
ICO, Inc. 287,700 1,294,650
OIL & GAS - 7.8%
CRUDE PETROLEUM & GAS - 1.0%
Unit Corp. (3 common & 1 warrant) (a) 50,700 430,950
OIL FIELD EQUIPMENT - 6.8%
Camco International, Inc. 150,200 2,966,450
TOTAL OIL & GAS 3,397,400
SERVICES - 9.5%
SURVEYING SERVICES - 9.5%
Western Atlas, Inc. 93,000 4,126,872
TOTAL COMMON STOCKS
(Cost $44,964,923) 41,543,984
CONVERTIBLE PREFERRED STOCKS - 2.0%
SHARES VALUE (NOTE 1)
ENERGY SERVICES - 2.0%
OIL & GAS SERVICES - 2.0%
Offshore Pipeline, Inc. (Cost $722,849) 20,000 $ 865,000
NONCONVERTIBLE BONDS - 2.7%
TROY OUNCES
ENERGY SERVICES - 2.7%
OIL & GAS SERVICES - 2.7%
Tuboscope Vetco International,
Inc. gtd. 10 3/4%,
4/15/03 (Cost $1,200,000) $1,200,000 1,188,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $46,887,772) $ 43,596,984
LEGEND
1. Non-income producing
2. A company in which the fund has ownership of at least 5% of the voting
securities is an affiliated compay. A summary of the transactions during
the period in which the issuers were affiliates is as follows:
PURCHASES SALES DIVIDEND MARKET
AFFILIATE COST COST INCOME VALUE
Service Fracturing Co. (a) $ - $ 111,300 $ - $ 1,393,438
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $95,902,383 and $92,230,868, respectively (see Note 4 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $74,518 for the period (see
Note 5 of Notes to Financial Statements).
The maximum loan and the average daily loan balances during the periods for
which loans were outstanding amounted to $14,032,000 and $4,719,385,
respectively. The weighted average interest rate was 5.0%
(see Note 8 of Notes to Financial Statements).
INCOME TAX INFORMATION
At August 31, 1994, the aggregate cost of investment securities for income
tax purposes was $47,399,413. Net unrealized depreciation aggregated
$3,802,429, of which $1,190,137 related to appreciated investment
securities and $4,992,566 related to depreciated investment securities.
ENERGY SERVICE PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
AUGUST 31, 1994 (UNAUDITED)
ASSETS
Investment in securities, $ 43,596,984
at value (cost
$46,887,772) - See
accompanying
schedule
Receivable for 4,640,036
investments sold
Receivable for fund 1,102,602
shares sold
Dividends receivable 288,161
Interest receivable 48,375
Redemption fees 487
receivable
Prepaid expenses 13,874
TOTAL ASSETS 49,690,519
LIABILITIES
Payable to custodian $ 650,457
bank
Payable for fund shares 2,174,822
redeemed
Accrued management 40,328
fee
Other payables and 99,302
accrued expenses
TOTAL LIABILITIES 2,964,909
NET ASSETS $ 46,725,610
Net Assets consist of:
Paid in capital $ 49,800,863
Undistributed net 127,056
investment income
Accumulated 88,479
undistributed net
realized gain (loss) on
investments and
foreign currency
transactions
Net unrealized (3,290,788
appreciation )
(depreciation) on
investments
NET ASSETS, for $ 46,725,610
4,033,780 shares
outstanding
NET ASSET VALUE and $11.58
redemption price per
share ($46,725,610 (divided by)
shares)
Maximum offering price $11.94
per share (100/97 of
$11.58)
</TABLE>
STATEMENT OF OPERATIONS
SIX MONTHS ENDED AUGUST 31, 1994 (UNAUDITED)
INVESTMENT INCOME $ 423,966
Dividends
Interest (including 243,742
security lending fees of
$1,250)
TOTAL INCOME 667,708
EXPENSES
Management fee $ 195,448
Transfer agent 327,360
Fees
Redemption fees (53,431
)
Accounting and security 33,354
lending fees
Non-interested trustees' 154
compensation
Custodian fees and 3,445
expenses
Registration fees 13,874
Audit 10,389
Legal 472
Interest 21,161
Reports to shareholders 3,475
Miscellaneous 76
Total expenses before 555,777
reductions
Expense reductions (3,276 552,501
)
NET INVESTMENT INCOME 115,207
REALIZED AND UNREALIZED
GAIN (LOSS)
Net realized gain (loss)
on:
Investment securities 1,197,643
(including
realized gain of
$49,025 on
sales of investments
in affiliated
issuers)
Foreign currency (15 1,197,628
transactions )
Change in net unrealized (1,934,613
appreciation )
(depreciation) on
investment securities
NET GAIN (LOSS) (736,985
)
NET INCREASE $ (621,778
(DECREASE) IN NET )
ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION $211,869
Sales Charges Paid to
FDC
Deferred sales $4,375
charges withheld
by FDC
Exchange fees $44,820
withheld by FSC
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS YEAR ENDED
ENDED FEBRUARY 28,
AUGUST 31, 1994 1994
(UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C>
Operations $ 115,207 $ 214,893
Net investment income
Net realized gain (loss) 1,197,628 17,604,019
Change in net unrealized appreciation (depreciation) (1,934,613 (4,993,642
) )
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (621,778 12,825,270
)
Distributions to shareholders (32,876 (269,046
From net investment income ) )
From net realized gain (1,052,014 -
)
TOTAL DISTRIBUTIONS (1,084,890 (269,046
) )
Share transactions 164,480,926 359,408,419
Net proceeds from sales of shares
Reinvestment of distributions 1,069,279 265,568
Cost of shares redeemed (158,327,592 (417,772,180
) )
Paid in capital portion of redemption fees 352,837 1,164,835
Net increase (decrease) in net assets resulting from share transactions 7,575,450 (56,933,358
)
TOTAL INCREASE (DECREASE) IN NET ASSETS 5,868,782 (44,377,134
)
NET ASSETS
Beginning of period 40,856,828 85,233,962
End of period (including undistributed net investment income of $127,056 and $44,725, $ 46,725,610 $ 40,856,828
respectively)
OTHER INFORMATION
Shares
Sold 14,102,553 29,627,725
Issued in reinvestment of distributions 104,320 22,698
Redeemed (13,678,265 (33,889,248
) )
Net increase (decrease) 528,608 (4,238,825
)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS YEAR ENDED TEN MONTHS YEARS ENDED APRIL 30,
ENDED FEBRUARY 28, ENDED
AUGUST 31, 1994 FEBRUARY 28,
SELECTED PER-SHARE DATAC (UNAUDITED) 1994 1993 1992 1991 1990
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 11.66 $ 11.01 $ 9.43 $ 12.51 $ 12.19 $ 8.99
Income from Investment Operations
Net investment income (loss) .02 .03 .01 (.12) - (.05)
Net realized and unrealized gain (loss) .16 .51 1.47 (3.11) .15 3.17
Total from investment operations .18 .54 1.48 (3.23) .15 3.12
Less Distributions
From net investment income (.01) (.05) - - (.02) -
From net realized gain (.32) - - - - -
Total distributions (.33) (.05) - - (.02) -
Redemption fees added to paid in capital .07 .16 .10 .15 .19 .08
Net asset value, end of period $ 11.58 $ 11.66 $ 11.01 $ 9.43 $ 12.51 $ 12.19
TOTAL RETURN D, E 2.51% 6.36 16.76% (24.62)% 2.80% 35.60%
%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 46,726 $ 40,857 $ 85,234 $ 41,322 $ 73,398 $ 61,821
Ratio of expenses to average net assets B 1.74%A 1.65 1.76%A 2.07% 1.82% 2.29%
%
Ratio of expenses to average net assets before 1.75%A 1.66 1.76%A 2.07% 1.82% 2.29%
expense reductions B %
Ratio of net investment income (loss) to average net .36%A .23 .13%A (1.13)% (.02)% (.42)%
assets %
Portfolio turnover rate 330%A 137 236%A 89% 62% 128%
%
</TABLE>
A ANNUALIZED
B SEE NOTE 9 OF NOTES TO FINANCIAL STATEMENTS.
C NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
D TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
E THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
NATURAL GAS PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance: total
percentage change in value, the average annual percentage change, or the
growth of a hypothetical $10,000 investment. Each performance figure
includes changes in a fund's share price, plus reinvestment of any
dividends (income) and capital gains (the profits the fund earns when it
sells stocks that have grown in value).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 6 PAST 1 LIFE OF
AUGUST 31, 1994 MONTHS YEAR FUND
NATURAL GAS -0.42% -13.73% -4.24%
NATURAL GAS
(INCL. 3% SALES CHARGE) -3.41% -16.32% -7.11%
S&P 500 3.26% 5.47% 11.08%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one year, or since the fund
started on April 21, 1993. You can compare these figures to the performance
of the S&P 500 - a common proxy for the U.S. stock market. This benchmark
includes reinvested dividends and capital gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED AUGUST 31, 1994 PAST 1 LIFE OF
YEAR FUND
NATURAL GAS PORT. -13.73% -3.13%
NATURAL GAS (INCL. 3% SALES CHARGE) -16.32% -5.27%
S&P 500 5.47% 8.01%
AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and
show you what would have happened if the fund had performed at a constant
rate each year.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of growth in the long run
and volatility in the short run. Unlike the broader
market, however, some sectors may not have
a history of growth in the long run. And, as
with all stock funds, the share price and return
of a fund that invests in a sector will vary. That
means if you sell your shares during a sector
downturn, you might lose money. But if you
can identify a sector that is about to
experience rapid growth you may have the
potential for above average gains.
(checkmark)
$10,000 OVER LIFE OF FUND
Select Nat. Gas (513Standard & Poor's
04/21/93 9700.00 10000.00
04/30/93 9515.70 9893.80
05/31/93 9670.90 10158.96
06/30/93 9952.20 10188.42
07/31/93 9913.40 10147.66
08/31/93 10767.00 10532.26
09/30/93 10582.70 10451.16
10/31/93 10010.40 10667.50
11/30/93 9156.80 10566.16
12/31/93 9209.91 10694.01
01/31/94 9672.38 11057.61
02/28/94 9327.99 10757.95
03/31/94 8993.44 10288.90
04/30/94 9692.06 10420.60
05/31/94 9613.34 10591.50
06/30/94 9662.54 10332.00
07/31/94 9603.50 10670.89
08/31/94 9288.63 11108.40
Let's say you invested $10,000 in Fidelity Select Natural Gas Portfolio on
April 21, 1993, when the fund started, and paid a 3% sales charge. By
August 31, 1994, your investment would be valued at $9,289 - a -7.11%
decrease. That compares to $10,000 invested in the S&P 500, which would
have grown to $11,108 over the same period - a 11.08% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST 31, 1994
% OF FUND'S
INVESTMENTS
Burlington Resources, Inc. 5.2
Williams Companies, Inc. 5.0
Anadarko Petroleum Corp. 4.8
Enron Oil & Gas Co. 4.5
Apache Corp. 3.4
Amerada Hess Corp. 3.3
Enron Corp. 3.1
Halliburton Co. 3.1
Oryx Energy Co. 2.8
Cabot Oil & Gas Corp. Class A 2.8
TOP INDUSTRIES AS OF AUGUST 31, 1994
Row: 1, Col: 1, Value: 23.5
Row: 1, Col: 2, Value: 7.4
Row: 1, Col: 3, Value: 8.199999999999999
Row: 1, Col: 4, Value: 8.5
Row: 1, Col: 5, Value: 14.1
Row: 1, Col: 6, Value: 38.3
Crude Petroleum & Gas 38.3%
Gas Transmission 14.1%
Gas Transmission &
Distribution 8.5%
Gas Distribution 8.2%
Oil & Gas Services 7.4%
All Others 23.5%*
* INCLUDES SHORT-TERM INVESTMENTS
NATURAL GAS PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Michael Tempero,
Portfolio Manager of
Fidelity Select Natural Gas Portfolio
Q. MIKE, HOW HAS THE FUND PERFORMED?
A. For the six months ended August 31, 1994, the fund had a total return of
- -0.42%, and for the year ended August 31, the fund returned -13.73%. Both
numbers lagged the S&P 500's return of 3.26% and 5.47% for the same six
months and one year, respectively.
Q. WHAT WERE THE REASONS BEHIND THE FUND'S SUB-PAR
PERFORMANCE?
A. The overriding factor was a disappointment in natural gas prices
relative to expectations. Prices dropped because winter storage filled up
more quickly than people anticipated. We had a cooler summer than normal
and there is more deliverability than last year, so surplus supply drove
the price down. Some of the stocks did well, but these investments couldn't
make up for the negative effect of lower prices in the commodity itself.
Q. WHAT INVESTMENTS HELPED THE FUND?
A. Amerada Hess is an exploration and production (E&P) and refining
company benefiting from growing oil and gas production and debt reduction,
and whose stock is cheap on a cash flow basis. Anadarko Petroleum has been
a volatile stock, but its inclusion in the portfolio has helped. The
company has been successful exploring in Algeria and the Gulf of Mexico.
The fund took some profits by selling shares at one point, but it is still
a large position in the fund because it has real potential for added value
from its exploration programs.
Q. WHAT ABOUT DISAPPOINTMENTS?
A. Western Gas Resources, a gas gathering and marketing company, had a
disappointing second quarter earnings report that caused its stock to come
down hard. In addition, many E&P companies have had a tough six months as a
result of the drop in natural gas prices. Companies like Burlington
Resources, Apache and Enron Oil & Gas have seen their stock prices fall
because the commodity price has gone down. All three have a good record of
growing production and cash flow over a long period of time, but no company
can control the commodity price, so it's been difficult for anyone to do as
well as they would have liked.
Q. YOU'VE STRESSED E&P COMPANIES. HOW DID PIPELINE
COMPANIES FARE?
A. Pipeline stocks were hurt when the bond market faltered. Many investors
purchase these stocks for their dividends, so when interest rates rose
these stocks tumbled as investors went elsewhere to get higher returns. A
heavier weighting in E&P stocks helped the fund during the period, but I'm
now shifting back into pipelines. Williams is one of those companies. I
purchased the stock because it included a wireless communication business
which was not adequately reflected in the share price. The unit has since
been sold, and the company should benefit from the cash.
Q. WHAT OTHER FACTORS AFFECT STOCKS IN THIS INDUSTRY?
A. Oil prices have a strong influence. The rise in oil prices has helped a
great deal over the past six months, because residual fuel oil, when cheap,
can be a substitute for natural gas in some uses. In addition, there have
been some massive changes in the natural gas industry, most notably the
deregulation of pricing and the placement of responsibility for natural gas
storage in the hands of local distribution companies instead of pipeline
companies. The market is now more fragmented, but more efficient. One
company that has done a good job getting out in front of these changes and
anticipating their effects is one of the fund's top holdings, Enron Corp.,
a diversified company handling pipelines, power generation, E&P and gas
services.
Q. WHAT'S YOUR OUTLOOK FOR THE NEXT SIX MONTHS?
A. Although the outlook is not as good as it was six months ago because of
an increase in supply and inventories, I don't believe it is as negative as
current futures market prices reflect. Colder weather and a continued
increase in the price of oil would help natural gas stocks, which tend to
rally in the winter. The key will be to find the companies doing the best
job in each segment.
FUND FACTS
START DATE: April 21, 1993
SIZE: as of August 31, 1994, more than
$76 million
MANAGER: Michael Tempero, since February
1994; joined Fidelity in 1993
(checkmark)
NATURAL GAS PORTFOLIO
INVESTMENTS AUGUST 31, 1994 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 89.5%
SHARES VALUE (NOTE 1)
BUILDING MATERIALS - 0.7%
FABRICATED PIPE & FITTINGS - 0.7%
Coflexip sponsored ADR 25,000 $ 543,746
COAL - 0.2%
Eastern Enterprises Co. 6,300 163,013
ELECTRIC UTILITY - 0.7%
ELECTRIC & OTHER SERVICES - 0.7%
LG&E Energy Corp. 13,125 500,391
ENERGY SERVICES - 8.1%
DRILLING - 0.7%
Akita Drilling Ltd. Class A (non-voting) (a) 10,000 37,490
Atwood Oceanics, Inc. (a) 5,000 70,625
Global Marine, Inc. (a) 100,000 400,000
508,115
OIL & GAS SERVICES - 7.4%
BJ Services Co. (a) 5,986 115,231
Baker Hughes, Inc. 100 1,875
Computalog Ltd. (a) 1,250 9,487
Halliburton Co. 77,375 2,340,594
Nowsco Well Service Ltd. 100 1,509
Schlumberger Ltd. 8,000 456,000
Service Fracturing Co. 27,900 122,063
Smith International, Inc. (a) 67,100 1,006,500
Tuboscope Vetco Corp. (a) 20,000 140,000
Weatherford International, Inc. (a) 34,580 419,283
Western Co. of North America (a) 95,000 1,056,875
5,669,417
TOTAL ENERGY SERVICES 6,177,532
GAS - 30.8%
GAS & OTHER SERVICES - 0.0%
UGI Corporation 355 6,878
GAS DISTRIBUTION - 8.2%
Aquila Gas Pipeline Corp. 48,200 445,850
Atlanta Gas Light Co. 25,000 818,750
Brooklyn Union Gas Co. (The) 30,000 746,250
K N Energy, Inc. 9,400 242,050
MCN Corp. 42,910 1,668,126
National Fuel Gas Co. 10,200 317,475
New Jersey Resources Corp. 10,000 223,750
Pacific Enterprises 80,000 1,710,000
Peoples Energy Corp. 5,200 139,100
6,311,351
GAS TRANSMISSION - 14.1%
Associated Nature Gas Corp. 15,920 497,500
Enron Corp. 78,110 2,382,355
ONEOK, Inc. 4,700 84,600
Panhandle Eastern Corp. 68,000 1,487,500
Sonat, Inc. 50,026 1,525,793
Tejas Power Corp. (a) 41,000 404,875
TransCanada PipeLines Ltd. 6,732 91,103
Transco Energy Co. 20,000 305,000
Trident NGL Holding, Inc. 25,900 271,950
Williams Companies, Inc. 122,252 3,805,094
10,855,770
GAS TRANSMISSION & DISTRIBUTION - 8.5%
Bay State Gas Co. 5,000 118,125
Columbia Gas System, Inc. (The) (a) 60,195 1,617,741
Consolidated Natural Gas Co. 40,000 1,595,000
ENSERCH Corp. 20,000 317,500
El Paso Natural Gas Co. 2,400 78,900
SHARES VALUE (NOTE 1)
Equitable Resources, Inc. 2,700 $ 87,075
Questar Corp. 39,540 1,220,798
Seagull Energy Corp. (a) 32,100 770,400
Tejas Gas Corp. (Del.) (a) 15,200 714,400
6,519,939
TOTAL GAS 23,693,938
INDEPENDENT POWER - 0.0%
STEAM SUPPLY - 0.0%
Magma Power Co. (a) 100 2,900
OIL & GAS - 47.3%
CRUDE PETROLEUM & GAS - 38.3%
American Exploration Co. (a) 40,000 55,000
Anadarko Petroleum Corp. 78,075 3,659,766
Apache Corp. 102,225 2,581,181
Ballistic Energy Corp. (a) 1,000 7,498
Barrett Resources Corp. (a) 15,000 270,000
Beau Canada Exploration 20,000 35,112
Benton Oil & Gas Co. (a) 20,000 140,000
Berry Petroleum Co. Class A 3,700 36,538
Burlington Resources, Inc. 105,957 3,986,632
Cabot Oil & Gas Corp. Class A 108,367 2,126,702
Canadian Natural Resources Ltd. (a) 17,800 242,511
Enron Oil & Gas Co. 177,600 3,418,800
Global Natural Resources, Inc. (a) 100 750
Hugoton Energy Corp. (a) 17,000 208,250
Inverness Petroleum Ltd. (a) 72,000 546,432
Louis Dreyfus Natural Gas Corp. (a) 49,000 673,750
Maxus Energy Corp. (a) 119,500 627,375
Newfield Exploration Co. (a) 24,000 600,000
Noble Affiliates, Inc. 22,550 580,663
Norsk Hydro AS ADR 10,000 376,250
Northstar Energy Corp. (a) 52,800 550,382
Nuevo Energy Corporation (a) 4,015 90,338
Oryx Energy Co. 151,900 2,183,563
Petromet Resources Ltd. Ord. (a) 72,000 427,928
Pinnacle Resources Ltd. (a) 48,900 773,536
Renaissance Energy Ltd. (a) 14,500 293,012
Tarragon Oil & Gas Ltd. (a) 75,500 980,304
Tide West Oil Co. (a) 9,800 120,050
Total SA sponsored ADR 55,770 1,666,129
Triton Energy Corp. (a) 25,000 796,875
Vastar Resources, Inc. 50,000 1,368,750
Vintage Petroleum, Inc. 100 2,088
29,426,165
NATURAL GAS LIQUIDS - 1.0%
Western Gas Resources, Inc. 35,235 779,574
OIL & GAS EXPLORATION - 6.3%
Amerada Hess Corp. 51,000 2,556,375
Ampolex Ltd. Ord. 200,000 632,442
Anderson Exploration Ltd. (a) 800 8,924
British Petroleum PLC ADR 16,470 1,251,720
Forcenergy AB 'B' Free shares 2,600 11,749
Unocal Corp. 43 1,231
Woodside Petroleum Ltd. 100,000 362,352
4,824,793
OIL FIELD EQUIPMENT - 1.0%
Ensign Resource Service Group Ord. (a) 166,500 745,995
PETROLEUM REFINERS - 0.7%
Coastal Corp. (The) 15,600 477,750
Tesoro Petroleum Corp. (a) 2,200 22,550
500,300
TOTAL OIL & GAS 36,276,827
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
SERVICES - 1.7%
SURVEYING SERVICES - 1.7%
Western Atlas, Inc. 29,800 $ 1,322,375
TOTAL COMMON STOCKS
(Cost $71,907,602) 68,680,722
REPURCHASE AGREEMENTS - 10.5%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account, at 4.83% dated
8/31/94 due 9/1/94 $ 8,054,080 8,053,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $79,960,602) $ 76,733,722
LEGEND
1.Non-income producing
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $67,830,529 and $55,439,455, respectively (see Note 4 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company.
The commissions paid to these affiliated firms were $63,151for the period
(see Note 5 of Notes to Financial Statements).
The maximum loan and average daily loan balance during the period for which
the loan was outstanding amounted to $1,061,000. The weighted average
interest rate paid was 4.7% (see Note 8 of Notes to Financial Statements).
Distribution of investments by country, as a percentage of total value
of investment in securities, is as follows:
United States 87.5%
Canada 6.2
France 2.9
United Kingdom 1.6
Australia 1.3
Others (individually less than 1%) 0.5
TOTAL 100.0%
INCOME TAX INFORMATION
At August 31, 1994, the aggregate cost of investment securities for income
tax purposes was $79,980,399. Net unrealized depreciation aggregated
$3,246,677, of which $2,043,598 related to appreciated investment
securities and $5,290,275 related to depreciated investment securities.
The fund has elected to defer to its fiscal year ending February 28, 1995
$356,000 of losses recognized during the period November 1, 1993 to
February 28, 1994.
NATURAL GAS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
AUGUST 31, 1994 (UNAUDITED)
ASSETS
Investment in securities, $ 76,733,722
at value (including
repurchase
agreements of
$8,053,000) (cost
$79,960,602) - See
accompanying
schedule
Cash 556,555
Receivable for 57,495
investments sold
Receivable for fund 804,441
shares sold
Dividends receivable 141,324
Redemption fees 182
receivable
Prepaid expenses 27,555
TOTAL ASSETS 78,321,274
LIABILITIES
Payable for investments $ 22,121
purchased
Payable for fund shares 1,567,705
redeemed
Accrued management 40,883
fee
Other payables and 84,931
accrued expenses
TOTAL LIABILITIES 1,715,640
NET ASSETS $ 76,605,634
Net Assets consist of:
Paid in capital $ 83,071,381
Accumulated net (28,121
investment (loss) )
Accumulated (3,210,746
undistributed net )
realized gain (loss) on
investments and
foreign currency
transactions
Net unrealized (3,226,880
appreciation )
(depreciation) on
investments
NET ASSETS, for $ 76,605,634
8,117,534 shares
outstanding
NET ASSET VALUE and $9.44
redemption price per
share ($76,605,634 (divided by)
shares)
Maximum offering price $9.73
per share (100/97 of
$9.44)
</TABLE>
STATEMENT OF OPERATIONS
SIX MONTHS ENDED AUGUST 31, 1994 (UNAUDITED)
INVESTMENT INCOME $ 473,103
Dividends
Interest 175,175
TOTAL INCOME 648,278
EXPENSES
Management fee $ 236,815
Transfer agent 398,458
Fees
Redemption fees (29,725
)
Accounting fees and 38,209
expenses
Non-interested trustees' 212
compensation
Custodian fees and 4,768
expenses
Registration fees 29,644
Audit 13,113
Legal 588
Interest 140
Reports to shareholders 4,396
Miscellaneous 104
Total expenses before 696,722
reductions
Expense reductions (20,323 676,399
)
NET INVESTMENT INCOME (28,121
(LOSS) )
REALIZED AND UNREALIZED
GAIN (LOSS)
Net realized gain (loss)
on:
Investment securities (2,702,107
)
Foreign currency (208 (2,702,315
transactions ) )
Change in net unrealized 1,684,246
appreciation
(depreciation) on
investment securities
NET GAIN (LOSS) (1,018,069
)
NET INCREASE $ (1,046,190
(DECREASE) IN NET )
ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION $214,931
Sales Charges Paid to
FDC
Deferred sales $929
charges withheld
by FDC
Exchange fees $22,133
withheld by FSC
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS APRIL 21, 1993
ENDED (COMMENCEMENT
AUGUST 31, 1994 OF
(UNAUDITED) OPERATIONS) TO
FEBRUARY 28, 1994
Operations $ (28,121 $ 66,941
Net investment income (loss) )
Net realized gain (loss) (2,702,315 390,296
)
Change in net unrealized appreciation (depreciation) 1,684,246 (4,911,126)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (1,046,190 (4,453,889)
)
Distributions to shareholders - (390,296)
From net realized gain
In excess of net realized gain - (296,172)
TOTAL DISTRIBUTIONS - (686,468)
Share transactions 53,773,105 154,654,614
Net proceeds from sales of shares
Reinvestment of distributions - 673,872
Cost of shares redeemed (39,243,183 (87,329,043)
)
Paid in capital portion of redemption fees 49,007 213,809
Net increase (decrease) in net assets resulting from share transactions 14,578,929 68,213,252
TOTAL INCREASE (DECREASE) IN NET ASSETS 13,532,739 63,072,895
NET ASSETS
Beginning of period 63,072,895 -
End of period (including undistributed net investment income (loss) of $(28,121) and $66,827,$ 76,605,634 $ 63,072,895
respectively)
OTHER INFORMATION
Shares
Sold 5,536,205 15,170,940
Issued in reinvestment of distributions - 74,626
Redeemed (4,072,520 (8,591,717)
)
Net increase (decrease) 1,463,685 6,653,849
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
SELECTED PER-SHARE DATAC SIX MONTHS APRIL 21, 1993
ENDED (COMMENCEMENT
AUGUST 31, 1994 OF
(UNAUDITED) OPERATIONS) TO
FEBRUARY 28, 1994
<TABLE>
<CAPTION>
<S> <C> <C>
Net asset value, beginning of period $ 9.48 $ 10.00
Income from Investment Operations
Net investment income (loss) - .02
Net realized and unrealized gain (loss) (.05) (.46)
Total from investment operations (.05) (.44)
Less Distributions
From net realized gain - (.07)
In excess of net realized gain - (.06)
Total distributions - (.13)
Redemption fees added to paid in capital .01 .05
Net asset value, end of period $ 9.44 $ 9.48
TOTAL RETURN D, E (.42)% (3.84)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 76,606 $ 63,073
Ratio of expenses to average net assets B 1.75%A 1.93%A
Ratio of expenses to average net assets before expense reductions B 1.80%A 1.94%A
Ratio of net investment income (loss) to average net assets (.07)%A .17%A
Portfolio turnover rate 162%A 44%A
</TABLE>
A ANNUALIZED
B SEE NOTE 9 OF NOTES TO FINANCIAL STATEMENTS.
C NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
D TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
E THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
PRECIOUS METALS AND MINERALS PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance: total
percentage change in value, the average annual percentage change, or the
growth of a hypothetical $10,000 investment. Each performance figure
includes changes in a fund's share price, plus reinvestment of any
dividends (income) and capital gains (the profits the fund earns when it
sells stocks that have grown in value).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 6 PAST 1 PAST 5 PAST 10
AUGUST 31, 1994 MONTH YEAR YEARS YEARS
S
PRECIOUS METALS AND
MINERALS 12.47% 24.29% 63.42% 79.48%
PRECIOUS METALS AND MINERALS
(INCL. 3% SALES CHARGE) 9.09% 20.56% 58.52% 74.09%
S&P 500 3.26% 5.47% 58.16% 300.76%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one year, five years, or ten
years. You can compare these figures to the performance of the S&P 500 - a
common proxy for the U.S. stock market. This benchmark includes reinvested
dividends and capital gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
AUGUST 31, 1994 YEAR YEARS YEARS
PRECIOUS METALS AND MINERALS 24.29% 10.32% 6.02%
PRECIOUS METALS AND MINERALS
(INCL. 3% SALES CHARGE) 20.56% 9.65% 5.70%
S&P 500 5.47% 9.60% 14.89%
AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and
show you what would have happened if the fund had performed at a constant
rate each year.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of growth in the long run
and volatility in the short run. Unlike the broader
market, however, some sectors may not have a
history of growth in the long run. And, as with all
stock funds, the share price and return of a fund
that invests in a sector will vary. That means if
you sell your shares during a sector downturn,
you might lose money. But if you
can identify a sector that is about to experience
rapid growth you may have the potential for
above-average gains.
(checkmark)
$10,000 OVER TEN YEARS
Select Prec. Metals (061)Standard & Poor's
08/31/84 9700.00 10000.00
09/30/84 9275.18 10002.00
10/31/84 8449.15 10041.01
11/30/84 8866.10 9928.55
12/31/84 7748.99 10190.66
01/31/85 7874.86 10984.51
02/28/85 7497.24 11119.62
03/31/85 9054.91 11127.41
04/30/85 8787.43 11117.39
05/31/85 8677.29 11759.98
06/30/85 8373.64 11944.61
07/31/85 7704.40 11926.69
08/31/85 7533.01 11825.32
09/30/85 7280.00 11455.18
10/31/85 6627.09 11984.41
11/30/85 7394.26 12806.54
12/31/85 6929.06 13426.38
01/31/86 8398.12 13501.57
02/28/86 8504.22 14511.49
03/31/86 7981.89 15321.23
04/30/86 7565.65 15148.10
05/31/86 6798.48 15953.98
06/30/86 6937.22 16223.60
07/31/86 6846.89 15316.70
08/31/86 8151.84 16453.20
09/30/86 9217.28 15092.52
10/31/86 8407.88 15963.36
11/30/86 9275.09 16351.27
12/31/86 9209.02 15934.31
01/31/87 10315.75 18080.66
02/28/87 11042.56 18794.85
03/31/87 14197.58 19338.02
04/30/87 15180.43 19165.91
05/31/87 13825.92 19332.65
06/30/87 13627.70 20308.95
07/31/87 16402.79 21338.62
08/31/87 15973.31 22134.55
09/30/87 16468.86 21649.80
10/31/87 11926.30 16986.43
11/30/87 13429.48 15586.75
12/31/87 12663.16 16772.90
01/31/88 10438.32 17479.04
02/29/88 10455.05 18293.57
03/31/88 11324.91 17728.29
04/30/88 10948.53 17925.08
05/31/88 11007.08 18081.03
06/30/88 10605.60 18910.95
07/31/88 10672.52 18839.08
08/31/88 10036.85 18198.55
09/30/88 9359.36 18973.81
10/31/88 9702.29 19501.29
11/30/88 10061.94 19222.42
12/31/88 9641.74 19558.81
01/31/89 10042.76 20990.51
02/28/89 10365.31 20467.85
03/31/89 10365.31 20944.75
04/30/89 9894.56 22031.78
05/31/89 9423.80 22924.07
06/30/89 10164.80 22793.40
07/31/89 10443.77 24851.65
08/31/89 10652.99 25338.74
09/30/89 11027.85 25234.85
10/31/89 11019.13 24649.40
11/30/89 12422.68 25152.25
12/31/89 12742.78 25755.90
01/31/90 13757.61 24027.68
02/28/90 12575.11 24337.64
03/31/90 12027.98 24982.59
04/30/90 10792.53 24358.02
05/31/90 11410.26 26732.93
06/30/90 10580.74 26551.15
07/31/90 11224.94 26466.18
08/31/90 11339.66 24073.64
09/30/90 11083.75 22901.25
10/31/90 9839.47 22802.78
11/30/90 9662.98 24275.84
12/31/90 10057.43 24953.13
01/31/91 8965.79 26041.09
02/28/91 9771.10 27903.03
03/31/91 9583.19 28578.28
04/30/91 9556.35 28646.87
05/31/91 10093.22 29884.41
06/30/91 10755.36 28515.71
07/31/91 10755.36 29844.54
08/31/91 9627.93 30551.86
09/30/91 9824.78 30041.64
10/31/91 10486.93 30444.20
11/30/91 10818.00 29217.30
12/31/91 10212.06 32559.76
01/31/92 10428.76 31954.14
02/29/92 9887.01 32369.55
03/31/92 9498.75 31738.34
04/30/92 8938.94 32671.45
05/31/92 9525.84 32831.54
06/30/92 9579.58 32342.35
07/31/92 9706.22 33665.15
08/31/92 9272.02 32975.02
09/30/92 8892.09 33364.12
10/31/92 8322.20 33480.90
11/30/92 7833.72 34622.59
12/31/92 7979.09 35048.45
01/31/93 8172.35 35342.86
02/28/93 9074.26 35823.52
03/31/93 10307.47 36579.40
04/30/93 11973.23 35694.18
05/31/93 13556.17 36650.78
06/30/93 13777.04 36757.07
07/31/93 15571.65 36610.04
08/31/93 14007.12 37997.56
09/30/93 12902.75 37704.98
10/31/93 14734.16 38485.47
11/30/93 14706.55 38119.86
12/31/93 16885.67 38581.11
01/31/94 16187.14 39892.87
02/28/94 15479.30 38811.77
03/31/94 15320.97 37119.58
04/30/94 15321.59 37594.71
05/31/94 15349.55 38211.26
06/30/94 15657.10 37275.09
07/31/94 16253.56 38497.71
08/31/94 17409.20 40076.11
Let's say you invested $10,000 in Fidelity Select Precious Metals and
Minerals Portfolio ten years ago on August 31, 1984 and paid a 3% sales
charge. By August 31, 1994, your investment would have grown to $17,409 - a
74.09% increase. That compares to $10,000 invested in the S&P 500, which
would have grown to $40,076 over the same period - a 300.76% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST 31, 1994
% OF FUND'S
INVESTMENTS
American Barrick Resources Corp. 7.8
Free State Consolidated Gold Mines Ltd. ADR 5.5
Anglo American Corp. of South Africa Ltd. ADR 4.7
Vaal Reefs Exploration & Mining Co. Ltd. ADR 4.2
Western Deep Levels Ltd. ADR 4.1
Kloof Gold Mining Ltd. ADR 3.5
Rustenberg Platinum Holding Ltd. ADR 2.8
Driefontein Consolidated Ltd. ADR 2.7
Poseidon Gold Ltd. 2.4
Gold Fields Property Co. Ltd. ADR 2.4
TOP INDUSTRIES AS OF AUGUST 31, 1994
Row: 1, Col: 1, Value: 33.8
Row: 1, Col: 2, Value: 6.1
Row: 1, Col: 3, Value: 5.7
Row: 1, Col: 4, Value: 19.9
Row: 1, Col: 5, Value: 34.5
Gold Ores
(South Africa) 34.5%
Gold Ores (Canada) 19.9%
Gold Ores (U.S.) 6.1%
Gold Ores (Australia) 5.7%
All Others 33.8%*
* INCLUDES SHORT-TERM INVESTMENTS
PRECIOUS METALS AND MINERALS PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Malcolm MacNaught, Portfolio Manager of Fidelity Select Precious Metals and
Minerals
Portfolio
Q. HOW DID THE FUND DO, MALCOLM?
A. Quite well. For the six months and the year ended August 31, 1994, the
fund had total returns of 12.47% and 24.29%, respectively. Over the same
periods, the S&P 500 returned 3.26% and 5.47%, respectively.
Q. WHY DID THE FUND DO SO WELL?
A. The fund's high returns were due mostly to a strong gold share market in
South Africa, where nearly half of the fund was invested. Over the past six
months, South Africa went through a turbulent pre-election period. However,
the election of Nelson Mandela in April of 1994 was relatively peaceful.
Since then, South Africa has looked increasingly stable both politically
and economically. As a result, foreign investors have begun reinvesting in
the country's gold stocks. In addition, gold companies looked more
attractive to South African investors as the country's currency depreciated
and inflation increased. Outside of South Africa, the fund's gold stocks in
Australia have pretty much held their own. But, in general, the worldwide
gold market has been down during the period, due to investors' disinterest
in gold.
Q. WHAT WAS YOUR STRATEGY IN THIS ENVIRONMENT?
A. Pretty much the same as it was six months ago. I invested in established
companies that continue to grow - like Canadian mining company American
Barrick, which is still the fund's biggest holding. Well-known companies,
such as South Africa's Vaal Reefs Exploration and Mining, made up most of
my top 10 stocks. I also liked young companies that found new ore bodies,
such as St. Barbara Mines and Great Central Mines, which are strong
Australian exploration plays.
Q. SINCE SOUTH AFRICAN COMPANIES HAVE TURNED IN THE STRONGEST PERFORMANCE
DURING THIS PERIOD, WHY IS YOUR TOP STOCK THE CANADIAN COMPANY AMERICAN
BARRICK?
A. Because I still expect the company to have outstanding production growth
over the next three years. I should point out that American Barrick made
news recently when it bought Lac Minerals, a Canadian gold mining company,
and became the largest gold mining company in North America. With this
acquisition, I think American Barrick can double its production over the
next few years. In addition, the purchase provided the company with a
number of interesting exploration properties in South America where there
is a tremendous opportunity to find undiscovered ore bodies. However,
American Barrick was weak from a stock standpoint during the period, mostly
because its stock was overowned and was extremely susceptible to selling by
disenchanted gold stock owners.
Q. LET'S SWITCH DIRECTION A BIT. THERE'S BEEN A LOT OF TALK LATELY ABOUT
DERIVATIVES. DOES THE FUND OWN THEM?
A. Yes. The fund does own some derivatives - or financial arrangements
whose prices are derived from other securities, currencies or indices. The
fund has a small investment in indexed securities, or structured notes,
which were linked to the precious metal palladium on August 31, 1994. These
indexed securities let the fund earn the small, but meaningful, return that
it would earn if it could lend its palladium to other buyers. I should note
that these securities carry the same risk as the underlying metal. That
means that if palladium dropped 1%, an indexed security linked to palladium
would fall 1%.
Q. DO YOU REGRET SOME OF YOUR INVESTMENT DECISIONS OVER THE PAST SIX
MONTHS?
A. Sure. I wish I'd had much more of the fund in cash instruments, like
government Treasury bills, instead of poor-performing North American gold
shares.
Q. WHAT'S YOUR OUTLOOK GOING FORWARD?
A. Right now, we're starting to enter the season when jewelry manufacturers
will be buying more bullion to meet demand for Christmas and the first
quarter. So the picture should improve short term and continue to improve
as economies in Europe, Japan, and many developing countries pick up. Long
term, I think gold prices may increase because world gold supply is
virtually flat and consumption continues to grow. That said, I think it's
important to remind shareholders that gold stocks are extremely volatile.
They can produce very high returns. On the other hand, they can drop
dramatically.
FUND FACTS
START DATE: July 14, 1981
SIZE: as of August 31, 1994, more than
$467 million
MANAGER: Malcolm MacNaught, since July
1981; manager, American Gold Portfolio,
since December 1985; Advisor Global
Resources, since November 1988; joined
Fidelity in 1968
(checkmark)
PRECIOUS METALS AND MINERALS PORTFOLIO
INVESTMENTS AUGUST 31, 1994 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 85.1%
SHARES VALUE (NOTE 1)
AUSTRALIA - 9.7%
PRECIOUS METALS - 9.7%
GOLD & SILVER ORES - 4.0%
Macraes Mining Co. Ltd. 800,000 $ 1,398,817
North Flindes 700,000 4,375,014
Plutonic Resources Ltd. 1,307,600 5,934,817
Zapopan N.L. 3,400,000 7,235,093
18,943,741
GOLD ORES - 5.7%
Delta Gold (a) 540,000 1,237,502
Poseidon Gold Ltd. 4,363,487 11,525,627
Gold Mines Kalgoorlie 4,475,000 4,461,709
Great Central Mines N.L. (a) 605,500 4,640,382
Great Central Mines N.L. ADR (a) 125,000 937,500
Newcrest Mining Ltd. 300,000 1,417,416
Placer Pacific Ltd. Ord. 200,000 565,478
St. Barbara Mines Ltd. (a) 1,600,000 2,285,728
27,071,342
TOTAL AUSTRALIA 46,015,083
CANADA - 20.2%
HOLDING COMPANIES - 0.3%
HOLDING COMPANY OFFICES, NEC - 0.3%
Bolivar Goldfields Ltd. (a) 707,200 1,293,299
PRECIOUS METALS - 19.9%
GOLD ORES - 19.9%
Agnico Eagle Mines Ltd. 800,000 10,167,880
American Barrick Resources Corp. 1,630,000 37,111,840
Cambior Inc. 361,000 4,786,311
Euro-Nevada Mining Corp. 290,000 8,352,841
Franco Nevada Mining Corp. 150,000 8,997,477
Golden Star Resources, Ltd. Canada (a) 116,500 1,278,300
Hemlo Gold Mines Inc. 291,400 2,957,591
Kinross Gold Corp. (a) 819,000 3,969,038
Orvana Minerals Corp. (a) 809,900 3,554,659
Pegasus Gold, Inc. 60,500 979,161
Placer Dome, Inc. 270,000 6,122,674
Prime Resources Group, Inc. (a) 866,956 6,896,713
95,174,485
TOTAL CANADA 96,467,784
SOUTH AFRICA - 47.6%
CREDIT & OTHER FINANCE - 0.7%
FINANCIAL SERVICES - 0.7%
Genbel Investments Ltd. Ord. 1,592,500 3,333,962
HOLDING COMPANIES - 2.8%
HOLDING COMPANY OFFICES, NEC - 2.8%
Anglovaal Ltd. Class N 56,100 1,599,288
Anglovaal Ltd. Class N (b) 30,000 855,000
Anglovaal Ltd. Class N sponsored
ADR (b) 56,500 1,593,300
Beatrix Mines Ltd. ADR 401,300 2,357,638
Johannesburg Consolodated
Investment Co. Ltd. 282,200 6,945,013
13,350,239
IRON & STEEL - 0.2%
BLAST FURNACES - 0.2%
Iscor Ltd. 1,000,000 922,050
SHARES VALUE (NOTE 1)
METALS & MINING - 7.1%
MISC NONMETAL MINERALS - 1.8%
De Beers Consolidated Mines Ltd. ADR 390,000 $ 8,896,875
MISCELLANEOUS METAL ORES, NEC - 5.3%
Impala Platinum Holdings Ltd.:
ADR (a) 439,900 9,457,850
Ord. 114,700 2,541,793
Rustenberg Platinum Holding Ltd. ADR 510,000 13,196,250
25,195,893
TOTAL METALS & MINING 34,092,768
PRECIOUS METALS - 36.8%
GOLD & SILVER ORES - 2.3%
Eastvaal Gold Holdings Ltd. (a) 1,300,000 2,707,133
Southvaal Holdings Ltd. ADR 296,000 8,436,000
11,143,133
GOLD ORES - 34.5%
Anglo American Corp. of South Africa
Ltd. ADR 393,000 22,548,375
Buffelsfontein Gold Mining Co. Ltd. ADR 100,000 1,025,000
Driefontein Consolidated Ltd. ADR 865,000 12,758,750
Free State Consolidated Gold
Mines Ltd. ADR 1,621,600 26,351,000
Gold Fields Property Co. Ltd. ADR 400,200 11,411,955
Harmony Gold Mining Co. Ltd. ADR (a) 170,000 1,083,750
Hartebeestfontein Gold
Mining Co. Ltd. ADR 1,290,000 7,095,000
Kloof Gold Mining Ltd. ADR 1,120,100 16,521,475
Middle Witwatersrand West Area 300,000 1,002,228
Randfontein Estates Gold
Mining Co. Ltd.:
ADR 900,000 10,575,000
Ord. 31,900 379,887
Unisel Gold Mines Ltd. 485,000 1,515,625
Vaal Reefs Exploration & Mining Co. Ltd.:
ADR 2,097,900 20,061,169
Reg. 1,000 92,888
Western Areas Gold Mining Ltd.:
ADR 566,500 8,639,125
Ord. 48,200 743,396
Western Deep Levels Ltd. ADR 444,000 19,647,000
Winkelhaak Mines Ltd. ADR 270,700 2,910,025
164,361,648
TOTAL PRECIOUS METALS 175,504,781
TOTAL SOUTH AFRICA 227,203,800
UNITED KINGDOM - 0.1%
RETAIL & WHOLESALE, MISCELLANEOUS - 0.1%
RETAIL, GENERAL - 0.1%
Signet Group PLC (a) 1,000,000 452,690
UNITED STATES - 7.5%
PRECIOUS METALS - 5.6%
GOLD ORES - 5.6%
Amax Gold, Inc. 500,000 3,437,500
Hecla Mining Co. (a) 300,000 3,675,000
Homestake Mining Co. 542,500 10,239,688
Newmont Mining Corp. 214,810 9,209,979
26,562,167
RAILROADS - 1.4%
Santa Fe Pacific Corp. 310,000 6,665,000
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
UNITED STATES - CONTINUED
SECURITIES INDUSTRY - 0.5%
INVESTMENT MANAGERS - 0.5%
Pioneer Group, Inc. 56,700 $ 2,579,850
TOTAL UNITED STATES 35,807,017
TOTAL COMMON STOCKS
(Cost $303,759,715) 405,946,374
NONCONVERTIBLE PREFERRED STOCKS - 0.5%
UNITED STATES - 0.5%
PRECIOUS METALS - 0.5%
GOLD ORES - 0.5%
Newmont Mining Corp. depository
shares representing 1/2 $1.375 (b)
(Cost $2,577,297) 39,200 2,410,800
INDEXED SECURITIES - 2.1%
TROY OUNCES
UNITED STATES - 2.1%
Goldman Sachs Group, L.P. note
4.6875%, 12/7/94 (indexed to
palladium price) (Cost $10,000,000) $ 10,000,000 9,928,000
BULLION - 0.8%
TROY OUNCES
Gold Bullion (a) (Cost $3,882,799) 10,047 3,879,267
REPURCHASE AGREEMENTS - 11.5%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account, at 4.83% dated
8/31/94 due 9/1/94 $ 54,684,336 54,677,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $374,896,811) $ 476,841,441
LEGEND
1. Non-income producing
2. 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 period
end, the value of these securities amounted to $4,859,100 or 1.0% of net
assets.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $66,336,659 and $57,531,117, respectively (see Note 4 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $12,198 for the period (see
Note 5 of Notes to Financial Statements).
The maximum loan and average daily loan balances during the periods for
which loans were outstanding amounted to $6,355,000 and $3,942,364,
respectively. The weighted average interest rate paid was 4.2% (see Note 8
of Notes to Financial Statements).
INCOME TAX INFORMATION
At August 31, 1994, the aggregate cost of investment securities for income
tax purposes was $375,711,636. Net unrealized appreciation aggregated
$101,129,805, of which $119,802,331 related to appreciated investment
securities and $18,672,526 related to depreciated investment securities.
At February 28, 1994, the fund had a capital loss carryforward of
approximately $70,093,000 of which $42,141,000, $6,357,000, $2,070,000,
$8,843,000 and $10,682,000 will expire on February 28, 1997, 1998, 1999,
2000, and 2001, respectively.
PRECIOUS METALS AND MINERALS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
AUGUST 31, 1994 (UNAUDITED)
ASSETS
Investment in securities, $ 476,841,441
at value (including
repurchase
agreements of
$54,677,000) (cost
$374,896,811) - See
accompanying
schedule
Cash 24
Receivable for 2,071,783
investments sold
Receivable for fund 13,522,874
shares sold
Dividends receivable 1,494,322
Redemption fees 9,725
receivable
Prepaid expenses 47,145
TOTAL ASSETS 493,987,314
LIABILITIES
Payable for investments $ 11,593,882
purchased
Payable for fund shares 14,699,253
redeemed
Accrued management 220,031
fee
Other payables and 390,479
accrued expenses
TOTAL LIABILITIES 26,903,645
NET ASSETS $ 467,083,669
Net Assets consist of:
Paid in capital $ 426,899,765
Undistributed net 2,042,464
investment income
Accumulated (63,803,746
undistributed net )
realized gain (loss) on
investments and
foreign currency
transactions
Net unrealized 101,945,186
appreciation
(depreciation) on
investments and
assets and liabilities in
foreign currencies
NET ASSETS, for $ 467,083,669
25,010,475 shares
outstanding
NET ASSET VALUE and $18.68
redemption price per
share ($467,083,669 (divided by)
shares)
Maximum offering price $19.26
per share (100/97 of
$18.68)
</TABLE>
STATEMENT OF OPERATIONS
SIX MONTHS ENDED AUGUST 31, 1994 (UNAUDITED)
INVESTMENT INCOME $ 5,025,565
Dividends
Interest (including 728,957
security lending fees of
$81)
TOTAL INCOME 5,754,522
EXPENSES
Management fee $ 1,246,961
Transfer agent 1,576,032
Fees
Redemption fees (159,747
)
Accounting and security 201,321
lending fees
Non-interested trustees' 1,156
compensation
Custodian fees and 60,888
expenses
Registration fees 47,145
Audit 26,237
Legal 5,013
Interest 5,055
Reports to shareholders 19,816
Miscellaneous 896
Total expenses before 3,030,773
reductions
Expense reductions (375 3,030,398
)
NET INVESTMENT INCOME 2,724,124
REALIZED AND UNREALIZED
GAIN (LOSS)
Net realized gain (loss)
on
Investment securities 7,133,548
(including
realized loss of
$151,900 on
sales of investments
in precious
metals)
Foreign currency (19,733 7,113,815
transactions )
Change in net unrealized
appreciation
(depreciation) on:
Investment securities 30,251,151
Assets and liabilities in 556 30,251,707
foreign currencies
NET GAIN (LOSS) 37,365,522
NET INCREASE $ 40,089,646
(DECREASE) IN NET
ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION $884,582
Sales Charges Paid to
FDC
Deferred sales $26,953
charges withheld
by FDC
Exchange fees $120,600
withheld by FSC
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS YEAR ENDED
ENDED FEBRUARY 28,
AUGUST 31, 1994 1994
(UNAUDITED)
Operations $ 2,724,124 $ 5,207,951
Net investment income
Net realized gain (loss) 7,113,815 18,030,231
Change in net unrealized appreciation (depreciation) 30,251,707 112,846,238
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 40,089,646 136,084,420
Distributions to shareholders (232,432 (5,127,603)
From net investment income )
In excess of net investment income - (551,255)
TOTAL DISTRIBUTIONS (232,432 (5,678,858)
)
Share transactions 474,999,995 1,777,546,533
Net proceeds from sales of shares
Reinvestment of distributions 227,969 5,586,071
Cost of shares redeemed (459,077,481 (1,649,222,991)
)
Paid in capital portion of redemption fees 1,863,499 6,974,855
Net increase (decrease) in net assets resulting from share transactions 18,013,982 140,884,468
TOTAL INCREASE (DECREASE) IN NET ASSETS 57,871,196 271,290,030
NET ASSETS
Beginning of period 409,212,473 137,922,443
End of period (including under (over) distribution of net investment income of $2,042,464 and $ 467,083,669 $ 409,212,473
$(449,228), respectively)
OTHER INFORMATION
Shares
Sold 28,072,799 119,380,060
Issued in reinvestment of distributions 14,784 319,586
Redeemed (27,700,985 (109,070,745)
)
Net increase (decrease) 386,598 10,628,901
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS YEAR ENDED TEN MONTHS YEARS ENDED APRIL 30,
ENDED FEBRUARY 28, ENDED
AUGUST 31, 1993 FEBRUARY 28,
SELECTED PER-SHARE DATAC (UNAUDITED) 1994 1993 1992 1991 1990
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 16.62 $ 9.86 $ 9.90 $ 10.68 $ 12.23 $ 11.35
Income from Investment Operations
Net investment income .11 .21 .09 .10 .18 .13
Net realized and unrealized gain (loss) 1.88 6.48 (.05) (.91) (1.71) .84
Total from investment operations 1.99 6.69 .04 (.81) (1.53) .97
Less Distributions
From net investment income (.01) (.19) (.17) (.10) (.15) (.18)
In excess of net investment income - (.02) - - - -
Total distributions (.01) (.21) (.17) (.10) (.15) (.18)
Redemption fees added to paid in capital .08 .28 .09 .13 .13 .09
Net asset value, end of period $ 18.68 $ 16.62 $ 9.86 $ 9.90 $ 10.68 $ 12.23
TOTAL RETURND, E 12.47% 70.58% 1.51% (6.46)% (11.45)% 9.08%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 467,084 $ 409,212 $ 137,922 $ 130,002 $ 155,367 $ 192,551
Ratio of expenses to average net assetsB 1.48%A 1.55% 1.73%A 1.81% 1.79% 1.93%
Ratio of expenses to average net assets before 1.48%A 1.55% 1.73%A 1.81% 1.79% 1.93%
expense reductionsB
Ratio of net investment income to average net 1.33%A 1.38% 1.12%A .92% 1.52% 1.01%
assets
Portfolio turnover rate 30%A 73% 36%A 44% 41% 98%
</TABLE>
A ANNUALIZED
B SEE NOTE 9 OF NOTES TO FINANCIAL STATEMENTS.
C NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
D TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
E THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
UTILITIES GROWTH PORTFOLIO (FORMERLY UTILITIES PORTFOLIO)
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance: total
percentage change in value, the average annual percentage change, or the
growth of a hypothetical $10,000 investment. Each performance figure
includes changes in a fund's share price, plus reinvestment of any
dividends (income) and capital gains (the profits the fund earns when it
sells stocks that have grown in value).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 6 PAST 1 PAST 5 PAST 10
AUGUST 31, 1994 MONTH YEAR YEARS YEARS
S
UTILITIES GROWTH -0.72% -9.25% 60.87% 299.10%
UTILITIES GROWTH
(INCL. 3% SALES CHARGE) -3.70% -11.97% 56.04% 287.12%
S&P 500 3.26% 5.47% 58.16% 300.76%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one year, five years, or ten
years. You can compare these figures to the performance of the S&P 500 - a
common proxy for the U.S. stock market. This benchmark includes reinvested
dividends and capital gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
AUGUST 31, 1994 YEAR YEARS YEARS
UTILITIES GROWTH -9.25% 9.97% 14.84%
UTILITIES GROWTH
(INCL. 3% SALES CHARGE) -11.97% 9.31% 14.49%
S&P 500 5.47% 9.60% 14.89%
AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and
show you what would have happened if the fund had performed at a constant
rate each year.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of growth in the long run
and volatility in the short run. Unlike the broader
market, however, some sectors may not have
a history of growth in the long run. And, as
with all stock funds, the share price and return
of a fund that invests in a sector will vary. That
means if you sell your shares during a sector
downturn, you might lose money. But if you
can identify a sector that is about to
experience rapid growth you may have the
potential for above-average gains.
(checkmark)
$10,000 OVER TEN YEARS
Select Util. (065) Standard & Poor's
08/31/84 9700.00 10000.00
09/30/84 10100.19 10002.00
10/31/84 10424.16 10041.01
11/30/84 10633.78 9928.55
12/31/84 11008.57 10190.66
01/31/85 11230.90 10984.51
02/28/85 11338.89 11119.62
03/31/85 11980.48 11127.41
04/30/85 12240.92 11117.39
05/31/85 12920.62 11759.98
06/30/85 13264.83 11944.61
07/31/85 12504.06 11926.69
08/31/85 12861.69 11825.32
09/30/85 12282.98 11455.18
10/31/85 13128.29 11984.41
11/30/85 13674.48 12806.54
12/31/85 14500.29 13426.38
01/31/86 14903.43 13501.57
02/28/86 15956.82 14511.49
03/31/86 16490.01 15321.23
04/30/86 16164.89 15148.10
05/31/86 16834.64 15953.98
06/30/86 17809.99 16223.60
07/31/86 18605.48 15316.70
08/31/86 19837.06 16453.20
09/30/86 17643.92 15092.52
10/31/86 18467.17 15963.36
11/30/86 18631.82 16351.27
12/31/86 17986.39 15934.31
01/31/87 19441.90 18080.66
02/28/87 18756.96 18794.85
03/31/87 18381.55 19338.02
04/30/87 17327.79 19165.91
05/31/87 17051.18 19332.65
06/30/87 17657.09 20308.95
07/31/87 17413.41 21338.62
08/31/87 17960.05 22134.55
09/30/87 17815.16 21649.80
10/31/87 16741.64 16986.43
11/30/87 16181.83 15586.75
12/31/87 16321.58 16772.90
01/31/88 17732.09 17479.04
02/29/88 17593.12 18293.57
03/31/88 17092.84 17728.29
04/30/88 17141.48 17925.08
05/31/88 17676.50 18081.03
06/30/88 18142.04 18910.95
07/31/88 18084.47 18839.08
08/31/88 18055.87 18198.55
09/30/88 18684.90 18973.81
10/31/88 19078.04 19501.29
11/30/88 19042.30 19222.42
12/31/88 19007.52 19558.81
01/31/89 19902.85 20990.51
02/28/89 19778.09 20467.85
03/31/89 20115.68 20944.75
04/30/89 21150.45 22031.78
05/31/89 22155.87 22924.07
06/30/89 22715.49 22793.40
07/31/89 23959.45 24851.65
08/31/89 24065.00 25338.74
09/30/89 24411.80 25234.85
10/31/89 24298.71 24649.40
11/30/89 25097.86 25152.25
12/31/89 26424.76 25755.90
01/31/90 25120.48 24027.68
02/28/90 25075.25 24337.64
03/31/90 24939.54 24982.59
04/30/90 23899.14 24358.02
05/31/90 25143.10 26732.93
06/30/90 25441.04 26551.15
07/31/90 25649.89 26466.18
08/31/90 24242.09 24073.64
09/30/90 24303.97 22901.25
10/31/90 25549.33 22802.78
11/30/90 26222.29 24275.84
12/31/90 26571.29 24953.13
01/31/91 26454.13 26041.09
02/28/91 27594.46 27903.03
03/31/91 27906.88 28578.28
04/30/91 27781.91 28646.87
05/31/91 27789.72 29884.41
06/30/91 27452.63 28515.71
07/31/91 28346.06 29844.54
08/31/91 28995.83 30551.86
09/30/91 29889.25 30041.64
10/31/91 30303.48 30444.20
11/30/91 30652.73 29217.30
12/31/91 32158.70 32559.76
01/31/92 31168.81 31954.14
02/29/92 30940.38 32369.55
03/31/92 30618.88 31738.34
04/30/92 31456.47 32671.45
05/31/92 32065.64 32831.54
06/30/92 32436.57 32342.35
07/31/92 34161.27 33665.15
08/31/92 34143.76 32975.02
09/30/92 34327.61 33364.12
10/31/92 34318.86 33480.90
11/30/92 34555.24 34622.59
12/31/92 35565.05 35048.45
01/31/93 36170.02 35342.86
02/28/93 38030.77 35823.52
03/31/93 39057.39 36579.40
04/30/93 38843.92 35694.18
05/31/93 38927.24 36650.78
06/30/93 40417.68 36757.07
07/31/93 40880.55 36610.04
08/31/93 42657.96 37997.56
09/30/93 42657.96 37704.98
10/31/93 42222.86 38485.47
11/30/93 40158.47 38119.86
12/31/93 40026.57 38581.11
01/31/94 40846.70 39892.87
02/28/94 38993.42 38811.77
03/31/94 37587.48 37119.58
04/30/94 38668.73 37594.71
05/31/94 37896.66 38211.26
06/30/94 37777.04 37275.09
07/31/94 38864.46 38497.71
08/31/94 38712.22 40076.11
Let's say you invested $10,000 in Fidelity Select Utilities Growth
Portfolio on August 31, 1984 and paid a 3% sales charge. By August 31,
1994, your investment would have grown to $38,712 - a 287.12% increase.
That compares to $10,000 invested in the S&P 500, which would have grown to
$40,076 over the same period - a 300.76% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST 31, 1994
% OF FUND'S
INVESTMENTS
Ameritech Corp. 6.4
Southwestern Bell Corp. 6.0
BellSouth Corp. 5.7
U.S. West, Inc. 5.3
NYNEX Corp. 4.9
Bell Atlantic Corp. 3.8
Enron Corp. 3.1
Williams Companies, Inc. 3.1
GTE Corp. 2.9
MCN Corp. 2.6
TOP INDUSTRIES AS OF AUGUST 31, 1994
Row: 1, Col: 1, Value: 15.9
Row: 1, Col: 2, Value: 7.6
Row: 1, Col: 3, Value: 10.3
Row: 1, Col: 4, Value: 11.0
Row: 1, Col: 5, Value: 16.0
Row: 1, Col: 6, Value: 39.2
Telephone Services 39.2%
Electric Power 16.0%
Electric & Other Services 11.0%
Gas Transmission 10.3%
Gas Transmission &
Distribution 7.6%
All Others 15.9%*
* INCLUDES SHORT-TERM INVESTMENTS
UTILITIES GROWTH PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
John Muresianu,
Portfolio Manager of
Fidelity Select Utilities
Growth (formerly Utilities) Portfolio
Q. JOHN, HOW HAS THE FUND PERFORMED?
A. For the six months ended August 31, 1994, the fund had a total return of
- -0.72%, and for the year ended August 31, the fund returned -9.25%. Both
numbers lagged the S&P 500's return of 3.26% and 5.47% for six months and
one year, respectively.
Q. WHAT WERE THE REASONS FOR THE FUND'S SUB-PAR PERFORMANCE?
A. Most utility stocks saw a sharp correction in the first half of this
year. The fall in utilities prices coincided with a fall in bond prices,
which was driven by higher interest rates, as the Federal Reserve Board
tried to head off possible inflation.
Q. WHAT HAS THE ENVIRONMENT BEEN LIKE FOR UTILITIES, SPECIFICALLY?
A. In the fourth quarter of 1993, the economy began to accelerate,
commodity prices started to pick up, and interest rates started to rise. As
interest rates continued to rise through the second quarter of 1994,
utility stocks fell, because investors were attracted by the higher yields
offered in the bond market and elsewhere. Another factor impacting
utilities is deregulation, which means two things for utilities, one
positive and one negative. On the plus side, deregulation means the removal
of a ceiling on earnings set by regulators. On the minus side, deregulation
means price competition and the removal of a floor on earnings. The pace of
deregulation is a function of political decisions at the federal and state
levels, and is extremely difficult to predict.
Q. HOW HAVE YOU STRUCTURED THE FUND?
A. I have a balanced portfolio of telephone, electric and gas utilities.
However, my clear favorite is telephone utilities. While the yield of the
sector is lower than the others, the growth prospects seem to be higher. By
contrast, electric utilities have the highest current yields, but probably
the lowest growth potential. Gas is in between phones and electrics in
yields and growth.
Q. WHAT MAKES PHONE UTILITIES SO ATTRACTIVE?
A. Superior earnings growth driven by cellular and other new services. As
the business is deregulated, the number of new services which the Regional
Bell Operating companies will be able to offer should increase. The list of
services could ultimately include cable and long distance. The fund's
performance was helped by this group, notably Southwestern Bell and
Ameritech.
Q. WHAT STOCKS DISAPPOINTED DURING THE PERIOD?
A. One was ENSERCH, a natural gas utility. It has an exploration and
production operation that is sensitive to the price of oil. The stock was
hurt by a collapse in the price of oil, but looking forward, the company
should benefit from tightening supply and increased demand. NYNEX was
another company that didn't do as well as expected, because of
disappointing earnings due to a costly union agreement and a difficult
regulatory environment.
Q. HOW HAVE GAS COMPANIES FARED?
A. Gas utilities have benefited from a tightening gas supply and demand
balance. Enron is one company that did particularly well. Its management
consistently has shown the ability to seize opportunities domestically and
internationally. The company's earnings have grown even in difficult
commodity environments. Another gas utility, Sonat, has benefited from the
rapid growth of earnings in its exploration and production division.
Q. WHAT'S YOUR OUTLOOK FOR THE NEXT SIX MONTHS?
A. On the one hand, there seems to be a potential for a tremendous bond
market rally, because bond yields are high and inflation is moderately low.
There is usually a correlation between the bond market and electrical
utility stocks. On the other hand, we are late in an economic cycle and the
potential for an acceleration of inflation is significant. High inflation
is bad for bonds and utilities. The combination of these facts makes the
current environment very difficult to call. My investment stance is
cautious. I'm comfortable with where the fund is now, but I plan to respond
quickly to changing circumstances.
FUND FACTS
START DATE: December 10, 1981
SIZE: as of August 31, 1994, more than
$233 million
MANAGER: John Muresianu, since December
1992; manager, Fidelity Utilities (formerly
Utilities Income) Fund, January 1993 to
present; Fidelity Select Natural Gas Portfolio,
April 1993 to January 1994; U.S. Pension
Accounts and Canadian Mutual Funds,
1990-1992; analyst, natural gas, life insurance,
1989-1992; joined Fidelity in 1986
(checkmark)
UTILITIES GROWTH PORTFOLIO
INVESTMENTS AUGUST 31, 1994 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 95.2%
SHARES VALUE (NOTE 1)
CELLULAR - 1.7%
CELLULAR & COMMUNICATION SERVICES - 1.7%
Airtouch Communications (a) 143,600 $ 4,056,700
COMPUTERS & OFFICE EQUIPMENT - 0.0%
ELECTRONIC COMPUTERS - 0.0%
Itron, Inc. (a) 1,100 21,450
ELECTRIC UTILITY - 26.0%
ELECTRIC & OTHER SERVICES - 10.4%
CIPSCO, Inc. 4,500 122,625
CMS Energy Corp. 107,900 2,427,750
Cincinnati Gas & Electric Co. 39,600 891,000
DPL, Inc. 139,200 2,818,800
Hidro Cantabrico 33,050 998,878
IES Industries, Inc. 21,900 607,725
Illinova Corp. 163,100 3,404,700
LG&E Energy Corp. 9,900 377,438
Long Island Lighting Co. 18,000 324,000
Montana Power Co. 73,300 1,731,713
NIPSCO Industries, Inc. 117,100 3,381,263
New York State Electric & Gas Corp. 300 6,225
Niagara Mohawk Power Corp. 147,300 2,191,088
Peco Energy Co. 92,600 2,523,350
Public Service Co. of Colorado 307 8,327
Public Service Co. of New Mexico (a) 125,500 1,568,750
Rochester Gas & Electric Corp. 21,200 484,950
Sierra Pacific Resources 12,400 248,000
Utilicorp United, Inc. 7,840 225,400
24,341,982
ELECTRIC POWER - 15.6%
AES Corp. 252,249 4,351,295
Boston Edison Co. 56,700 1,516,725
Centerior Energy Corp. 48,700 487,000
Central & South West Corp. 19,200 432,000
Central Louisiana Electric Co., Inc. 66,106 1,536,965
Cesc Ltd. GDR (c) 45,000 472,500
Cesc Ltd. GDR (warrants) (a) (c) 18,000 31,500
Commonwealth Edison Co. 29,100 698,400
DQE, Inc. 100,300 3,071,688
Detroit Edison Company 34,500 940,125
EUA Power Corp. (interest
certificates) (a) 800 800
Eastern Utilities Associates 116,082 2,873,030
El Paso Electric Co. (a) 76,900 163,413
Empresa Nacional de Electricidad SA
sponsored ADR 24,300 1,090,463
Entergy Corp. 105,014 2,612,223
General Public Utilities Corp. 54,600 1,426,425
Hawaiian Electric Industries, Inc. 4,200 133,350
IPALCO Enterprises, Inc. 800 24,800
Kansas City Power & Light Co. 1,300 28,113
Maine Public Service Co. 44,200 1,099,475
National Power PLC (c) 198,500 1,577,871
New England Electric Systems 27,800 920,875
Northeast Utilities 33,000 767,250
Nova Scotia Power, Inc. 49,700 418,090
Ohio Edison Co. 26,500 513,438
PSI Resources, Inc. 91,600 2,049,550
Pinnacle West Capital Corp. 170,200 3,148,700
Portland General Corp. 47,100 841,913
Sithe Energies, Inc. (a) 27,200 312,800
Southern Co. 108,200 2,042,275
SHARES VALUE (NOTE 1)
TECO Energy, Inc. 16,900 $ 333,775
United Illuminating Co. 22,500 739,688
36,656,515
TOTAL ELECTRIC UTILITY 60,998,497
GAS - 26.8%
GAS & OTHER SERVICES - 1.4%
MDU Resources Group, Inc. 66,600 1,881,450
UGI Corporation 54,177 1,049,679
Western Resources, Inc. 15,000 431,250
3,362,379
GAS DISTRIBUTION - 7.5%
Energen Corp. 43,500 973,313
MCN Corp. 157,700 6,130,588
NICOR, Inc. 37,100 904,313
NUI Corp. 27,100 542,000
National Fuel Gas Co. 46,800 1,456,650
New Jersey Resources Corp. 18,400 411,700
Pacific Enterprises 277,800 5,937,975
Peoples Energy Corp. 21,300 569,775
WICOR, Inc. 24,700 753,350
17,679,664
GAS TRANSMISSION - 10.3%
Enron Corp. 241,600 7,368,800
ONEOK, Inc. 58,600 1,054,800
Panhandle Eastern Corp. 49,000 1,071,875
Sonat, Inc. 200,800 6,124,400
Tejas Power Corp. (a) 4,500 44,438
TransCanada PipeLines Ltd. 66,300 897,224
Transco Energy Co. 13,400 204,350
Williams Companies, Inc. 236,000 7,345,500
24,111,387
GAS TRANSMISSION & DISTRIBUTION - 7.6%
Columbia Gas System, Inc. (The)(a) 129,900 3,491,063
Consolidated Natural Gas Co. 29,400 1,172,325
ENSERCH Corp. 87,400 1,387,475
El Paso Natural Gas Co. 23,600 775,850
Equitable Resources, Inc. 28,150 907,838
Noram Energy Corp. 88,900 644,525
Questar Corp. (a) 142,300 4,393,513
Tejas Gas Corp. (Del.) 10,300 484,100
Westcoat Energy, Inc. 218,700 3,679,529
Yankee Energy System, Inc. 36,600 814,350
17,750,568
TOTAL GAS 62,903,998
INDEPENDENT POWER - 0.4%
STEAM SUPPLY - 0.4%
Bonneville Pacific Corp. 11,300 57
Magma Power Co. (a) 28,700 832,300
832,357
TOTAL INDEPENDENT POWER 832,357
METALS & MINING - 0.3%
METAL ORES - 0.3%
Cameco, Inc. 32,500 641,893
OIL & GAS - 0.8%
CRUDE PETROLEUM & GAS - 0.3%
Nuevo Energy Corporation (a) 1,400 31,500
Occidental Petroleum Corp. 26,500 589,625
621,125
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
OIL & GAS - CONTINUED
PETROLEUM REFINERS - 0.5%
Coastal Corp. (The) 39,700 $ 1,215,813
TOTAL OIL & GAS 1,836,938
TELEPHONE SERVICES - 39.2%
ALLTEL Corp. 15,600 434,850
AT & T Corporation 3,500 191,625
Ameritech Corp. 363,600 15,043,950
BCE, Inc. 18,682 652,548
Bell Atlantic Corp. 162,000 8,869,500
BellSouth Corp. 224,200 13,311,875
British Telecommunications PLC ADR 23,200 1,380,400
Cincinnati Bell, Inc. 23,200 437,900
GTE Corp. 214,500 6,810,375
NYNEX Corp. 294,900 11,390,513
Pacific Telesis Group 183,600 6,058,800
Southwestern Bell Corp. 340,600 14,092,325
Sprint Corporation 5,100 202,088
Telephone & Data Systems, Inc. 18,331 797,400
U.S. West, Inc. 305,659 12,340,982
92,015,131
TOTAL COMMON STOCKS
(Cost $221,611,176) 223,306,964
NONCONVERTIBLE PREFERRED STOCKS - 0.6%
ELECTRIC UTILITY - 0.6%
ELECTRIC & OTHER SERVICES - 0.6%
Long Island Lighting Co. $7.95
(Cost $1,595,000) 63,800 1,499,300
NONCONVERTIBLE BONDS - 0.4%
TROY OUNCES
ELECTRIC UTILITY - 0.4%
ELECTRIC POWER - 0.4%
EUA Power Corp. secured
pay-in-kind (b):
17 1/2%,11/15/92 (c) $ 442,800 35,424
17 1/2%, 5/15/93 800,000 64,000
Northern Indiana Public Service
Co. 1st mtg. 8 1/4%, 7/15/03 845,000 845,000
TOTAL NONCONVERTIBLE BONDS
(Cost $1,718,036) 944,424
REPURCHASE AGREEMENTS - 3.8%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account, at 4.83% dated
8/31/94 due 9/1/94 $ 8,874,190 8,873,000
TOTAL INVESTMENTS IN SECURITIES - 100%
(Cost $233,797,212) $ 234,623,688
LEGEND
1.Non-income producing
2.Non-income producing - issuer filed for protection under the Federal
Bankruptcy Code or is in default of interest payment.
3.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 period
end, the value of these securities amounted to $2,117,295 or 0.9% of net
assets.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $26,028,014 and $39,700,653, respectively (see Note 4
of Notes to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $20,971 for the period
(see Note 5 of Notes to Financial Statements).
The maximum loan and average daily loan balance during the period for which
the loan was outstanding amounted to $2,759,000. The weighted average
interest rate paid was 4.0% (see Note 8 of Notes to Financial Statements).
INCOME TAX INFORMATION
At August 31, 1994, the aggregate cost of investment securities for income
tax purposes was $233,472,095. Net unrealized appreciation aggregated
$1,151,593, of which $15,012,764 related to appreciated investment
securities and $13,861,171 related to depreciated investment securities.
On February 25, 1994, the fund acquired all of the assets of Electric
Utilities Portfolio in a tax-free exchange for shares of Utilities Growth
Portfolio (formerly Utilities Portfolio). Electric Utilities Portfolio had
net unrealized appreciation of $1,838,111 (see Note 10 of Notes to
Financial Statements).
UTILITIES GROWTH PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
AUGUST 31, 1994 (UNAUDITED)
ASSETS
Investment in securities, $ 234,623,688
at value (including
repurchase
agreements of
$8,873,000) (cost
$233,797,212) - See
accompanying
schedule
Cash 30
Receivable for fund 1,824,044
shares sold
Dividends receivable 790,766
Interest receivable 8,582
Redemption fees 295
receivable
Other receivables 647
Prepaid expenses 21,935
TOTAL ASSETS 237,269,987
LIABILITIES
Payable for fund shares $ 3,745,535
redeemed
Accrued management 121,255
fee
Other payables and 160,015
accrued expenses
TOTAL LIABILITIES 4,026,805
NET ASSETS $ 233,243,182
Net Assets consist of:
Paid in capital $ 228,592,778
Undistributed net 3,901,220
investment income
Accumulated (77,292
undistributed net )
realized gain (loss) on
investments and
foreign currency
transactions
Net unrealized 826,476
appreciation
(depreciation) on
investments
NET ASSETS, for $ 233,243,182
6,552,135 shares
outstanding
NET ASSET VALUE and $35.60
redemption price per
share ($233,243,182 (divided by)
shares)
Maximum offering price $36.70
per share (100/97 of
$35.60)
</TABLE>
STATEMENT OF OPERATIONS
SIX MONTHS ENDED AUGUST 31, 1994 (UNAUDITED)
INVESTMENT INCOME $ 5,161,365
Dividends
Interest (including 201,006
security lending fees of
$1,155)
TOTAL INCOME 5,362,371
EXPENSES
Management fee $ 724,285
Transfer agent 786,583
Fees
Redemption fees (57,527
)
Accounting and security 113,737
lending fees
Non-interested trustees' 679
compensation
Custodian fees and 11,249
expenses
Registration fees 21,935
Audit 18,648
Legal 3,129
Interest 307
Reports to shareholders 9,568
Miscellaneous 459
Total expenses before 1,633,052
reductions
Expense reductions (9,595 1,623,457
)
NET INVESTMENT INCOME 3,738,914
REALIZED AND
UNREALIZED GAIN (LOSS)
Net realized gain (loss)
on:
Investment securities (15,210
)
Foreign currency (1,197 (16,407
transactions ) )
Change in net unrealized (6,372,185
appreciation )
(depreciation) on
investment securities
NET GAIN (LOSS) (6,388,592
)
NET INCREASE $ (2,649,678
(DECREASE) IN NET )
ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION $273,771
Sales Charges Paid to
FDC
Deferred sales $33,369
charges withheld
by FDC
Exchange fees $38,843
withheld by FSC
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS YEAR ENDED
ENDED FEBRUARY 28,
AUGUST 31, 1994 1994
(UNAUDITED)
Operations $ 3,738,914 $ 9,675,531
Net investment income
Net realized gain (loss) (16,407 46,918,583
)
Change in net unrealized appreciation (depreciation) (6,372,185 (44,694,870
) )
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (2,649,678 11,899,244
)
Distributions to shareholders (778,007 (7,450,649
From net investment income ) )
From net realized gain (3,890,120 (32,195,614
) )
TOTAL DISTRIBUTIONS (4,668,127 (39,646,263
) )
Share transactions 87,287,932 263,259,087
Net proceeds from sales of shares
Reinvestment of distributions 4,513,358 38,572,943
Cost of shares redeemed (101,934,359 (314,447,184
) )
Paid in capital portion of redemption fees 171,781 166,488
Net increase (decrease) in net assets resulting from share transactions (9,961,288 (12,448,666
) )
TOTAL INCREASE (DECREASE) IN NET ASSETS (17,279,093 (40,195,685
) )
NET ASSETS
Beginning of period 250,522,275 290,717,960
End of period (including undistributed net investment income of $3,901,220 and $3,613,887, $ 233,243,182 $ 250,522,275
respectively)
OTHER INFORMATION
Shares
Sold 2,456,269 6,222,531
Issued in reinvestment of distributions 131,353 1,019,080
Redeemed (2,878,141 (7,406,487
) )
Net increase (decrease) (290,519 (164,876
) )
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS YEAR ENDED TEN MONTHS YEARS ENDED APRIL 30,
ENDED FEBRUARY 28, ENDED
AUGUST 31, 1994 FEBRUARY 28,
SELECTED PER-SHARE DATAC (UNAUDITED) 1994 1993 1992 1991 1990
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 36.61 $ 41.49 $ 37.18 $ 35.57 $ 31.70 $ 28.82
Income from Investment Operations
Net investment income .57 1.33 1.19 1.66 1.59 1.27
Net realized and unrealized gain (loss) (.89) (.16)F 6.14 2.82 3.41 2.40
Total from investment operations (.32) 1.17 7.33 4.48 5.00 3.67
Less Distributions
From net investment income (.12) (1.13) (1.33) (1.69) (.60) (.81)
From net realized gain (.60) (4.94) (1.70) (1.19) (.58) -
Total distributions (.72) (6.07) (3.03) (2.88) (1.18) (.81)
Redemption fees added to paid in capital .03 .02 .01 .01 .05 .02
Net asset value, end of period $ 35.60 $ 36.61 $ 41.49 $ 37.18 $ 35.57 $ 31.70
TOTAL RETURN D, E (.72)% 2.53% 20.90% 13.23% 16.25% 13.00%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 233,243 $ 250,522 $ 290,718 $ 206,872 $ 197,409 $ 124,931
Ratio of expenses to average net assets B 1.37%A 1.35% 1.42% 1.51% 1.65% 1.67%
A
Ratio of expenses to average net assets before 1.38%A 1.36% 1.42% 1.51% 1.65% 1.67%
expense reductions B A
Ratio of net investment income to average net 3.15%A 3.11% 3.71% 4.58% 4.75% 3.93%
assets A
Portfolio turnover rate 23%A 61% 34% 45% 45% 75%
A
</TABLE>
A ANNUALIZED B SEE NOTE 9 OF NOTES TO FINANCIAL STATEMENTS. C NET
INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES
OUTSTANDING DURING THE PERIOD. D TOTAL RETURNS DO NOT INCLUDE THE ONE TIME
SALES CHARGE AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. E
THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN. F THE AMOUNT SHOWN FOR A SHARE
OUTSTANDING DOES NOT CORRESPOND WITH THE AGGREGATE NET GAIN ON INVESTMENTS
FOR THE PERIOD ENDED DUE TO THE TIMING OF SALES AND REPURCHASES OF FUND
SHARES IN RELATION TO FLUCTUATING MARKET VALUES OF THE INVESTMENTS OF THE
FUND.
BROKERAGE AND INVESTMENT MANAGEMENT PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance: total
percentage change in value, the average annual percentage change, or the
growth of a hypothetical $10,000 investment. Each performance figure
includes changes in a fund's share price, plus reinvestment of any
dividends (income) and capital gains (the profits the fund earns when it
sells stocks that have grown in value). If Fidelity had not reimbursed
certain fund expenses during the period, the fund's total returns would
have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 6 PAST 1 PAST 5 LIFE OF
AUGUST 31, 1994 MONTH YEAR YEARS FUND
S
BROKERAGE AND INVESTMENT MANAGEMENT
-7.89% -3.60% 84.22% 122.34%
BROKERAGE AND INVESTMENT MANAGEMENT
(INCL. 3% SALES CHARGE)
-10.65% -6.49% 78.69% 115.67%
S&P 500 3.26% 5.47% 58.16% 233.54%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one year, five years, or
since the fund started on July 29, 1985. You can compare these figures to
the performance of the S&P 500 - a common proxy for the U.S. stock market.
This benchmark includes reinvested dividends and capital gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
AUGUST 31, 1994 YEAR YEARS FUND
BROKERAGE AND INVESTMENT
MANAGEMENT -3.60% 13.00% 9.18%
BROKERAGE AND INVESTMENT
MANAGEMENT (INCL. 3% SALES CHARGE) -6.49% 12.31% 8.81%
S&P 500 5.47% 9.60% 14.16%
AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and
show you what would have happened if the fund had performed at a constant
rate each year.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of growth in the long run
and volatility in the short run. Unlike the broader
market, however, some sectors may not have
a history of growth in the long run. And, as
with all stock funds, the share price and return
of a fund that invests in a sector will vary. That
means if you sell your shares during a sector
downturn, you might lose money. But if you
can identify a sector that is about to
experience rapid growth you may have the
potential for above-average gains.
(checkmark)
$10,000 OVER LIFE OF FUND
Select Brokerage (068) Standard & Poor's
07/29/85 9700.00 10000.00
07/31/85 9564.20 9926.31
08/31/85 9263.50 9841.93
09/30/85 8671.80 9533.88
10/31/85 9418.70 9974.35
11/30/85 10340.20 10658.59
12/31/85 10757.30 11174.46
01/31/86 11989.20 11237.04
02/28/86 12852.50 12077.57
03/31/86 13192.00 12751.50
04/30/86 13075.60 12607.41
05/31/86 13211.40 13278.12
06/30/86 13201.70 13502.52
07/31/86 12002.55 12747.73
08/31/86 13072.47 13693.61
09/30/86 11545.40 12561.15
10/31/86 12809.85 13285.93
11/30/86 12177.63 13608.78
12/31/86 11788.57 13261.75
01/31/87 13996.49 15048.11
02/28/87 14317.47 15642.51
03/31/87 14259.11 16094.58
04/30/87 12702.86 15951.34
05/31/87 12138.72 16090.11
06/30/87 12119.27 16902.66
07/31/87 12148.45 17759.63
08/31/87 12537.51 18422.06
09/30/87 12109.54 18018.62
10/31/87 7654.79 14137.41
11/30/87 7080.92 12972.49
12/31/87 7444.51 13959.69
01/31/88 7977.92 14547.40
02/29/88 8360.58 15225.31
03/31/88 8140.26 14754.84
04/30/88 8279.41 14918.62
05/31/88 7966.32 15048.41
06/30/88 8812.88 15739.14
07/31/88 8743.21 15679.33
08/31/88 8685.16 15146.23
09/30/88 8905.77 15791.46
10/31/88 8940.60 16230.46
11/30/88 8743.21 15998.37
12/31/88 8825.36 16278.34
01/31/89 9975.47 17469.91
02/28/89 9740.76 17034.91
03/31/89 9752.49 17431.83
04/30/89 9846.38 18336.54
05/31/89 10491.85 19079.17
06/30/89 10196.87 18970.42
07/31/89 11424.27 20683.44
08/31/89 11707.51 21088.84
09/30/89 11341.65 21002.38
10/31/89 10421.10 20515.12
11/30/89 10314.89 20933.63
12/31/89 10066.13 21436.04
01/31/90 9623.79 19997.68
02/28/90 9946.58 20255.65
03/31/90 10221.54 20792.42
04/30/90 9528.15 20272.61
05/31/90 10436.73 22249.19
06/30/90 10424.49 22097.90
07/31/90 10053.46 22027.18
08/31/90 8689.07 20035.93
09/30/90 7947.02 19060.18
10/31/90 7456.32 18978.22
11/30/90 7947.02 20204.21
12/31/90 8437.73 20767.91
01/31/91 9139.86 21673.39
02/28/91 10047.80 23223.04
03/31/91 11076.79 23785.03
04/30/91 11234.16 23842.12
05/31/91 11827.35 24872.10
06/30/91 11039.82 23732.96
07/31/91 11888.10 24838.91
08/31/91 12154.71 25427.59
09/30/91 12784.86 25002.95
10/31/91 13633.14 25337.99
11/30/91 12881.81 24316.87
12/31/91 15378.19 27098.72
01/31/92 15596.32 26594.68
02/29/92 15499.37 26940.42
03/31/92 15087.35 26415.08
04/30/92 13911.87 27191.68
05/31/92 13875.51 27324.92
06/30/92 13548.32 26917.78
07/31/92 14311.77 28018.72
08/31/92 13899.75 27444.33
09/30/92 13802.80 27768.18
10/31/92 14420.84 27865.36
11/30/92 15717.50 28815.57
12/31/92 16165.88 29170.00
01/31/93 17123.23 29415.03
02/28/93 17232.29 29815.08
03/31/93 18613.79 30444.17
04/30/93 18553.16 29707.43
05/31/93 19159.48 30503.58
06/30/93 20068.94 30592.05
07/31/93 20735.89 30469.68
08/31/93 22372.93 31624.48
09/30/93 22785.22 31380.97
10/31/93 22045.52 32030.56
11/30/93 21439.21 31726.27
12/31/93 24139.71 32110.15
01/31/94 24654.17 33201.90
02/28/94 23414.20 32302.13
03/31/94 20789.17 30893.75
04/30/94 20617.69 31289.19
05/31/94 21118.95 31802.34
06/30/94 21923.61 31023.18
07/31/94 21409.16 32040.74
08/31/94 21567.45 33354.41
Let's say you invested $10,000 in Fidelity Select Brokerage and Investment
Management Portfolio on July 29, 1985, when the fund started, and paid a 3%
sales charge. By August 31, 1994, your investment would have grown to
$21,567 - a 115.67% increase. That compares to $10,000 invested in the S&P
500, which would have grown to $33,354 over the same period - a 233.54%
increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST 31, 1994
% OF FUND'S
INVESTMENTS
Invesco Mim PLC 8.8
United Asset Management Corp. 5.8
Nomura Securities Ltd. 4.7
McIntosh Securities Ltd. 4.3
Yamaichi Securities 4.0
Warburg (SG) Group PLC Ord. 3.8
Daiwa Securities 3.5
New Japan Securities 3.5
Merrill Lynch & Co., Inc. 3.4
Wako Securities 3.1
TOP INDUSTRIES AS OF AUGUST 31, 1994
Row: 1, Col: 1, Value: 19.7
Row: 1, Col: 2, Value: 2.5
Row: 1, Col: 3, Value: 7.5
Row: 1, Col: 4, Value: 10.7
Row: 1, Col: 5, Value: 14.5
Row: 1, Col: 6, Value: 45.1
Security & Commodity Brokers 45.1%
Investment Advice 14.5%
Financial Services 10.7%
Investment Managers 7.5%
Management & Investment
Offices 2.5%
All Others 19.7%*
* INCLUDES SHORT-TERM INVESTMENTS
BROKERAGE AND INVESTMENT MANAGEMENT PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Arieh Coll,
Portfolio Manager of Fidelity Select Brokerage and Investment
Management Portfolio
Q. ARIEH, HOW WAS THE FUND'S PERFORMANCE?
A. It's been a difficult year. During the six months ended August 31, 1994,
the fund had a total return of -7.89%. That lagged the S&P 500, which
returned 3.26% during the same period. The fund returned -3.60% for the 12
months ended August 31, compared to a 5.47% return for the S&P 500.
Q. THAT'S DOWN FROM THE FUND'S TOTAL RETURN DURING 1993. WHAT HAPPENED?
A. Brokerage stocks did perform extremely well through most of 1993. Low
interest rates and low inflation fueled a strong stock market, and high
volumes on the stock exchanges resulted in excellent earnings growth for
brokerage companies. However, in October of 1993, I began to expect that
the good times may be ending. I expected trading volumes in the United
States to decline in 1994, mainly because I didn't feel that interest rates
could fall any further - which would hurt stocks. In addition, expenses at
brokerage companies were rising because most had been hiring aggressively,
expecting the prosperity to continue. Those factors led me to concentrate
the fund's investments in brokerage stocks outside the United States. In
hindsight, I was correct in getting out of U. S. brokerage stocks - they
performed poorly. But as it turned out, some of the fund's foreign
investments did worse.
Q. WHERE DID YOU FOCUS YOUR ENERGIES?
A. Mainly in three countries: Canada, the United Kingdom and Japan. When
interest rates rose in the U. S. , they also shot up dramatically in many
overseas countries, including Canada and the U. K. The extent to which the
behavior of these markets was tied to that of the U. S. market surprised
many investors, including myself. The net result was lackluster performance
in the Canadian and British stock markets, and in the brokerage stocks of
these countries. Midland Walwyn and Mackenzie Financial of Canada, and SG
Warburg and Invesco of the U. K. were among the fund's top 10 investments
six months ago. The prices of all four have fallen since then. However, I
think the earnings prospects of these companies have improved to varying
degrees. In addition, after prices fell, their stock valuations - prices
relative to earnings - became much more attractive. Invesco and SG Warburg
remained among the fund's top 10 investments at the end of August.
Q. WHAT ABOUT JAPAN?
A. Japan was the fund's bright spot over the past six months. Near the end
of 1993, the environment for brokerage stocks in Japan was the opposite of
that in the United States. Company profits and Japanese market trading
volumes had fallen sharply, and the valuations of brokerage stocks were
very attractive. When the Japanese stock market rebounded in January, the
brokerage stocks rose quickly. Since I began investing the fund in Japan in
January, stocks such as Daiwa, Nomura and Yamaichi are all up at least 20%
through the end of August. Because the prices of these stocks have risen so
strongly over the past six months, I've cut back on the fund's Japanese
investment lately. But I do believe there is still upside potential.
Q. HAS YOUR OUTLOOK IMPROVED AT ALL FOR THE U. S. BROKERAGE AND INVESTMENT
MANAGEMENT FIRMS?
A. It has. Now that stock prices in this sector have fallen roughly 30%
since October 1993, many brokerage stocks are more attractively valued. In
addition, I think the short-term downside potential for these stocks is
limited; I believe the U. S. stock market is poised for better performance
in 1995, which would lead to increased trading volumes. That's the main
reason why I've recently moved Merrill Lynch and United Asset Management
into the fund's top 10 investments.
Q. DO YOU SEE THE FUND'S PERFORMANCE IMPROVING OVER THE NEXT SIX MONTHS?
A. I think the potential is there. As I've discussed, the performance of
brokerage stocks tends to mimic, and often magnify, the performance of the
entire stock market. I believe that the Federal Reserve Board has achieved
its goal of slow and steady economic growth that won't trigger sharp
increases in inflation. Therefore, it's my belief that interest rates may
at least remain stable, and possibly move lower in 1995. That would be good
news for U. S. stocks. Also, I think the Japanese market shows a lot of
potential. Japan's economy is where the U. S. economy was two years ago -
in the early stages of recovery. That's often when investors anticipate
prosperity and push stock prices higher. For these reasons, I am optimistic
that the worst may be over for this year in terms of the fund's
performance.
FUND FACTS
START DATE: July 29, 1985
SIZE: as of August 31, 1994, more than
$28 million
MANAGER: Arieh Coll, since October 1993;
manager, Fidelity Select Software and
Computer Services Portfolio, October
1991-August 1994; Fidelity Select Technology
Portfolio, July 1992- September 1993; joined
Fidelity in 1989
(checkmark)
BROKERAGE AND INVESTMENT MANAGEMENT PORTFOLIO
INVESTMENTS AUGUST 31, 1994 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 82.4%
SHARES VALUE (NOTE 1)
BANKS - 0.1%
INTERNATIONAL BANKS - 0.1%
National Bank of Greece 200 $ 8,793
Union Financiere de France BQ 100 13,485
22,278
COMPUTER SERVICES & SOFTWARE - 1.4%
DATA PROCESSING - 1.4%
Investment Technology Group, Inc. (a) 31,000 406,881
CREDIT & OTHER FINANCE - 13.2%
FINANCIAL SERVICES - 10.7%
Finansbank (a) 28,000 3,061
Marleau Lemire, Inc. 349,800 716,464
McIntosh Securities Ltd. 1,208,900 1,286,258
Perpetual PLC 50,000 913,058
Rashid Hussain BHD 51,000 157,444
TA Enterprise BHD 25,000 169,988
3,246,273
MANAGEMENT & INVESTMENT OFFICES - 2.5%
Trimark Financial Corp. 31,300 755,569
TOTAL CREDIT & OTHER FINANCE 4,001,842
MEDICAL EQUIPMENT & SUPPLIES - 0.3%
MEDICAL TECHNOLOGY - 0.3%
Mentor Corp. 6,140 100,543
SECURITIES INDUSTRY - 67.4%
INVESTMENT ADVICE - 14.5%
CI Fund Management, Inc. (c) 10,000 77,722
Govett & Co. Ltd. 137,500 814,462
Invesco Mim PLC 971,900 2,669,654
Mutual Fund Co., Ltd. 28,600 831,502
4,393,340
INVESTMENT MANAGERS - 7.5%
Mackenzie Financial Corporation 60,100 368,192
Pioneer Group, Inc. 3,200 145,600
United Asset Management Corp. 45,100 1,758,900
2,272,692
SECURITY & COMMODITY BROKERS - 43.0%
Daiwa Securities 67,000 1,049,800
First Marathon, Inc. Class A (non-vtg.) 29,400 290,333
Jefferies Group, Inc. 15,100 551,150
Kim Eng Holdings Ltd. (warrants) (a) 303,800 307,953
Kokusai Securities 47,000 759,880
McDonald & Co. Investments, Inc. 31,600 406,850
Merrill Lynch & Co., Inc. 25,000 1,015,625
Midland Walwyn Inc. 87,500 568,057
New Japan Securities 127,000 1,045,658
Nikko Securities 75,000 890,719
Nomura Securities Ltd. 65,000 1,433,633
Okasan Securities Co. Ltd. ORD 74,000 524,351
Phatra Thanakit 700 30,136
Ichiyoshi Securities 89,000 810,060
Warburg (SG) Group PLC Ord. 97,100 1,160,747
Wako Securities 90,000 952,096
Yamaichi Securities 140,000 1,202,993
13,000,041
SHARES VALUE (NOTE 1)
SECURITY BROKERS & DEALERS - 2.4%
Finanza & Futuro Holdings Spa 2,600 $ 9,722
20/20 Financial Corp. 16,500 125,224
Tokyo Securities Co. Ltd. 67,000 601,797
736,743
TOTAL SECURITIES INDUSTRY 20,402,816
TOTAL COMMON STOCKS
(Cost $23,900,800) 24,934,360
NONCONVERTIBLE PREFERRED STOCKS - 1.5%
SECURITIES INDUSTRY - 1.5%
SECURITY & COMMODITY BROKERS - 1.5%
A G F Management Ltd. Class A
(Cost $584,043) 37,800 456,238
NONCONVERTIBLE BONDS - 0.6%
PRINCIPAL
AMOUNT (B)
SECURITIES INDUSTRY - 0.6%
SECURITY & COMMODITY BROKERS - 0.6%
Kim Eng Holdings Ltd. 3 1/2%,
12/27/97 (Cost $188,860) SGD 303,800 185,380
REPURCHASE AGREEMENTS - 15.5%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account, at 4.83% dated
8/31/94 due 9/1/94 $ 4,681,628 4,681,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $29,354,703) $ 30,256,978
CURRENCY ABBREVIATIONS
SGD - Singapore dollar
LEGEND
1. Non-income producing
2. Principal amount is stated in United States dollars unless otherwise
noted.
3. 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 period
end, the value of this security amounted to $77,722 or 0.3% of net assets.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $10,318,341 and $38,515,317, respectively (see Note 4 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $850 for the period (see
Note 5 of Notes to Financial Statements).
The maximum loan and average daily loan balances during the periods for
which loans were outstanding amounted to $11,186,000 and $5,978,500,
respectively. The weighted average interest rate paid was 4.0% (see Note 8
of Notes to Financial Statements).
Distribution of investments by country, as a percentage of total value of
investment in securities, is as follows:
Japan 30.6%
United States 29.9
United Kingdom 18.4
Canada 11.1
Australia 4.3
Thailand 2.9
Singapore 1.6
Malaysia 1.1
Others (individually less than 1%) 0.1
TOTAL 100.0%
INCOME TAX INFORMATION
At August 31, 1994, the aggregate cost of investment securities for income
tax purposes was $29,374,039. Net unrealized appreciation aggregated
$882,939, of which $2,783,580 related to appreciated investment securities
and $1,900,641 related to depreciated investment securities.
The fund has elected to defer to its fiscal year ending February 28, 1995
$462,000 of losses recognized during the period November 1, 1993 to
February 28, 1994.
BROKERAGE AND INVESTMENT MANAGEMENT PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
AUGUST 31, 1994 (UNAUDITED)
ASSETS
Investment in securities, at value (including repurchase agreements of $4,681,000) (cost $29,354,703) - See $ 30,256,978
accompanying schedule
Cash 6,095
Receivable for fund shares sold 230,822
Dividends receivable 24,722
Interest receivable 4,058
Redemption fees receivable 112
Other receivables 6,481
Prepaid expenses 14,668
Receivable from investment adviser for expense reductions 6,144
TOTAL ASSETS 30,550,080
LIABILITIES
Payable for investments purchased
$ 1,089,136
Payable for fund shares redeemed 921,201
Accrued management fee 16,462
Other payables and accrued expenses 80,492
TOTAL LIABILITIES 2,107,291
NET ASSETS $ 28,442,789
Net Assets consist of:
Paid in capital $ 26,867,397
Accumulated net investment (loss) (181,546
)
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 854,610
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies 902,328
NET ASSETS, for 1,739,955 shares outstanding $ 28,442,789
NET ASSET VALUE and redemption price per share ($28,442,789 (divided by) shares) $16.35
Maximum offering price per share (100/97 of $16.35) $16.86
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED AUGUST 31, 1994 (UNAUDITED)
INVESTMENT INCOME $ 296,580
Dividends
Interest 74,929
TOTAL INCOME 371,509
EXPENSES
Management fee $ 112,009
Transfer agent 334,845
Fees
Redemption fees (35,384
)
Accounting fees and expenses 23,062
Non-interested trustees' compensation 123
Custodian fees and expenses 45,989
Registration fees 14,668
Audit 12,246
Legal 808
Interest 13,385
Reports to shareholders 5,165
Miscellaneous 150
Total expenses before reductions 527,066
Expense reductions (69,208 457,858
)
NET INVESTMENT INCOME (LOSS) (86,349
)
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 1,299,453
Foreign currency transactions 6,420 1,305,873
Change in net unrealized appreciation (depreciation) on:
Investment securities (6,132,891
)
Assets and liabilities in foreign currencies 53 (6,132,838
)
NET GAIN (LOSS) (4,826,965
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ (4,913,314
)
OTHER INFORMATION $88,170
Sales Charges Paid to FDC
Deferred sales charges withheld $1,408
by FDC
Exchange fees withheld by FSC $27,773
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS YEAR ENDED
ENDED FEBRUARY 28,
AUGUST 31, 1994 1994
(UNAUDITED)
Operations $ (86,349 $ (95,196
Net investment income (loss) ) )
Net realized gain (loss) 1,305,873 9,170,168
Change in net unrealized appreciation (depreciation) (6,132,838 5,304,530
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (4,913,314 14,379,502
)
Distributions to shareholders - (3,536
From net investment income )
From net realized gain - (5,264,467
)
TOTAL DISTRIBUTIONS - (5,268,003
)
Share transactions 25,777,617 254,155,679
Net proceeds from sales of shares
Reinvestment of distributions - 5,046,669
Cost of shares redeemed (52,298,934 (233,513,002
) )
Paid in capital portion of redemption fees 67,582 322,223
Net increase (decrease) in net assets resulting from share transactions (26,453,735 26,011,569
)
TOTAL INCREASE (DECREASE) IN NET ASSETS (31,367,049 35,123,068
)
NET ASSETS
Beginning of period 59,809,838 24,686,770
End of period (including accumulated net investment (loss) of $(181,546) and $(95,197),
respectively) $ 28,442,789 $ 59,809,838
OTHER INFORMATION
Shares
Sold 1,564,745 14,759,782
Issued in reinvestment of distributions - 301,596
Redeemed (3,194,262 (13,428,141
) )
Net increase (decrease) (1,629,517 1,633,237
)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS YEAR ENDED TEN MONTHS YEARS ENDED APRIL 30,
ENDED FEBRUARY 28, ENDED
AUGUST 31, 1994 FEBRUARY 28,
SELECTED PER-SHARE DATAC (UNAUDITED) 1994 1993 1992 1991 1990
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 17.75 $ 14.22 $ 11.48 $ 9.28 $ 7.97 $ 8.39
Income from Investment Operations
Net investment income (loss) (.04)F (.02) - .02 .08 .08
Net realized and unrealized gain (loss) (1.39) 4.95 2.65 1.96 1.15 (.35)
Total from investment operations (1.43) 4.93 2.65 1.98 1.23 (.27)
Less Distributions
From net investment income - (.01) - (.01) (.09) (.16)
From net realized gain - (1.47) - - - -
Total distributions - (1.48) - (.01) (.09) (.16)
Redemption fees added to paid in capital .03 .08 .09 .23 .17 .01
Net asset value, end of period $ 16.35 $ 17.75 $ 14.22 $ 11.48 $ 9.28 $ 7.97
TOTAL RETURND, E (7.89)% 35.87% 23.87% 23.84% 17.90% (3.23)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 28,443 $ 59,810 $ 24,687 $ 17,915 $ 11,285 $ 2,298
Ratio of expenses to average net assetsB 2.49%A 1.77% 2.21%A 2.17% 2.50% 2.50%
Ratio of expenses to average net assets before 2.86%A 1.79% 2.21%A 2.17% 2.91% 3.16%
expense reductionsB
Ratio of net investment income (loss) to average net (.47)% (.14) .02%A .16% .94% .91%
assets A %
Portfolio turnover rate 60%A 295% 111%A 254% 62% 142%
</TABLE>
A ANNUALIZED
B SEE NOTE 9 OF NOTES TO FINANCIAL STATEMENTS.
C NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
D TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
E THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
F INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND FROM FIRST
MARATHON, INC. CLASS A WHICH AMOUNTED TO $.02 PER SHARE.
FINANCIAL SERVICES PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance: total
percentage change in value, the average annual percentage change, or the
growth of a hypothetical $10,000 investment. Each performance figure
includes changes in a fund's share price, plus reinvestment of any
dividends (income) and capital gains (the profits the fund earns when it
sells stocks that have grown in value).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 6 PAST 1 PAST 5 PAST 10
AUGUST 31, 1994 MONTH YEAR YEARS YEARS
S
FINANCIAL SERVICES 8.02% 8.77% 102.80% 375.16%
FINANCIAL SERVICES
(INCL. 3% SALES CHARGE) 4.78% 5.51% 96.71% 360.90%
S&P 500 3.26% 5.47% 58.16% 300.76%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one year, five years, or ten
years. You can compare these figures to the performance of the S&P 500 - a
common proxy for the U.S. stock market. This benchmark includes reinvested
dividends and capital gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
AUGUST 31, 1994 YEAR YEARS YEARS
FINANCIAL SERVICES 8.77% 15.19% 16.86%
FINANCIAL SERVICES
(INCL. 3% SALES CHARGE) 5.51% 14.49% 16.51%
S&P 500 5.47% 9.60% 14.89%
AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and
show you what would have happened if the fund had performed at a constant
rate each year.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of growth in the long run
and volatility in the short run. Unlike the broader
market, however, some sectors may not have
a history of growth in the long run. And, as
with all stock funds, the share price and return
of a fund that invests in a sector will vary. That
means if you sell your shares during a sector
downturn, you might lose money. But if you
can identify a sector that is about to
experience rapid growth you may have the
potential for above-average gains.
(checkmark)
$10,000 OVER TEN YEARS
Select Fin. Svcs. (066)Standard & Poor
08/31/84 9700.00 10000.00
09/30/84 10062.78 10002.00
10/31/84 10397.65 10041.01
11/30/84 10749.26 9928.55
12/31/84 11139.94 10190.66
01/31/85 12071.98 10984.51
02/28/85 12205.93 11119.62
03/31/85 12122.21 11127.41
04/30/85 12706.56 11117.39
05/31/85 13411.46 11759.98
06/30/85 13955.02 11944.61
07/31/85 13932.43 11926.69
08/31/85 14034.09 11825.32
09/30/85 13429.80 11455.18
10/31/85 14310.82 11984.41
11/30/85 15157.94 12806.54
12/31/85 15733.99 13426.38
01/31/86 16665.83 13501.57
02/28/86 18393.97 14511.49
03/31/86 19585.60 15321.23
04/30/86 19404.88 15148.10
05/31/86 20201.18 15953.98
06/30/86 20794.17 16223.60
07/31/86 19306.45 15316.70
08/31/86 20527.79 16453.20
09/30/86 18331.66 15092.52
10/31/86 18738.78 15963.36
11/30/86 18555.29 16351.27
12/31/86 18096.57 15934.31
01/31/87 19369.52 18080.66
02/28/87 20653.94 18794.85
03/31/87 19868.38 19338.02
04/30/87 18618.36 19165.91
05/31/87 18486.48 19332.65
06/30/87 19168.83 20308.95
07/31/87 19392.46 21338.62
08/31/87 20516.32 22134.55
09/30/87 19788.10 21649.80
10/31/87 15309.83 16986.43
11/30/87 14375.19 15586.75
12/31/87 15103.55 16772.90
01/31/88 16240.77 17479.04
02/29/88 16781.72 18293.57
03/31/88 16492.80 17728.29
04/30/88 16203.89 17925.08
05/31/88 16363.71 18081.03
06/30/88 17371.85 18910.95
07/31/88 17255.05 18839.08
08/31/88 17205.87 18198.55
09/30/88 17918.94 18973.81
10/31/88 17968.12 19501.29
11/30/88 17224.31 19222.42
12/31/88 16918.14 19558.81
01/31/89 17785.25 20990.51
02/28/89 17747.27 20467.85
03/31/89 19044.77 20944.75
04/30/89 19392.88 22031.78
05/31/89 20608.10 22924.07
06/30/89 20464.51 22793.40
07/31/89 22102.43 24851.65
08/31/89 22727.01 25338.74
09/30/89 23198.63 25234.85
10/31/89 20987.11 24649.40
11/30/89 20700.32 25152.25
12/31/89 20190.52 25755.90
01/31/90 18486.00 24027.68
02/28/90 19154.94 24337.64
03/31/90 18859.06 24982.59
04/30/90 18190.12 24358.02
05/31/90 19791.73 26732.93
06/30/90 19238.56 26551.15
07/31/90 18003.59 26466.18
08/31/90 15848.82 24073.64
09/30/90 13488.22 22901.25
10/31/90 12311.14 22802.78
11/30/90 14047.82 24275.84
12/31/90 15278.18 24953.13
01/31/91 16666.51 26041.09
02/28/91 18581.21 27903.03
03/31/91 19469.48 28578.28
04/30/91 20101.14 28646.87
05/31/91 21640.80 29884.41
06/30/91 19884.00 28515.71
07/31/91 21456.56 29844.54
08/31/91 22877.79 30551.86
09/30/91 22739.62 30041.64
10/31/91 23239.68 30444.20
11/30/91 21515.78 29217.30
12/31/91 24693.90 32559.76
01/31/92 25923.94 31954.14
02/29/92 27785.63 32369.55
03/31/92 27160.63 31738.34
04/30/92 28204.51 32671.45
05/31/92 29414.60 32831.54
06/30/92 30091.42 32342.35
07/31/92 30951.95 33665.15
08/31/92 29176.68 32975.02
09/30/92 30084.64 33364.12
10/31/92 31277.19 33480.90
11/30/92 33628.39 34622.59
12/31/92 35267.86 35048.45
01/31/93 37492.41 35342.86
02/28/93 38489.13 35823.52
03/31/93 40504.23 36579.40
04/30/93 38565.16 35694.18
05/31/93 38579.78 36650.78
06/30/93 40020.03 36757.07
07/31/93 41094.74 36610.04
08/31/93 42374.15 37997.56
09/30/93 43353.81 37704.98
10/31/93 42191.38 38485.47
11/30/93 40312.47 38119.86
12/31/93 41458.89 38581.11
01/31/94 44273.33 39892.87
02/28/94 42666.27 38811.77
03/31/94 40717.81 37119.58
04/30/94 42264.01 37594.71
05/31/94 44068.01 38211.26
06/30/94 43027.56 37275.09
07/31/94 44529.50 38497.71
08/31/94 46090.17 40076.11
Let's say you invested $10,000 in Fidelity Select Financial Services
Portfolio on August 31, 1984 and paid a 3% sales charge. By August 31,
1994, your investment would have grown to $46,090 - a 360.90% increase.
That compares to $10,000 invested in the S&P 500, which would have grown to
$40,076 over the same period - a 300.76% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST 31, 1994
% OF FUND'S
INVESTMENTS
Bank of New York Co., Inc. 6.8
Citicorp 5.9
Federal National Mortage Association 4.9
NationsBank Corp. 4.8
Federal Home Loan Mortage Corporation 4.4
First Chicago Corp. 3.7
State Street Boston Corp. 3.6
Household International, Inc. 3.2
Dean Witter Discover & Co. 3.1
BankAmerica Corp. 2.9
TOP INDUSTRIES AS OF AUGUST 31, 1994
Row: 1, Col: 1, Value: 13.5
Row: 1, Col: 2, Value: 5.4
Row: 1, Col: 3, Value: 9.300000000000001
Row: 1, Col: 4, Value: 9.6
Row: 1, Col: 5, Value: 13.4
Row: 1, Col: 6, Value: 48.8
Banks 48.8%
Savings & Loans 13.4%
Credit & Other Finance 9.6%
Federal Sponsored
Credit 9.3%
Insurance 5.4%
All Others 13.5%
* INCLUDES SHORT-TERM INVESTMENTS
FINANCIAL SERVICES PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Stephen Binder,
Portfolio Manager of
Fidelity Select Financial Services Portfolio
Q. STEVE, HOW DID THE FUND PERFORM?
A. Pretty well. The fund returned 8.02% for the six months and 8.77% for
the 12 months ended August 31, 1994. Those results beat the S&P 500's 3.26%
and 5.47% returns during the same periods.
Q. WHICH GROUPS WERE THE MAIN CONTRIBUTORS TO THE FUND'S SOLID PERFORMANCE?
A. Banks, thrifts and investments in the Federal National Mortgage
Association (Fannie Mae) and Federal Home Loan Mortgage Corporation
(Freddie Mac) were the principal drivers behind the fund's performance. At
the end of August, about 13% of the fund was invested in thrifts. The
reason for this significant investment is the relative attractiveness of
thrifts versus banks and other financial services sectors. This
attractiveness is evident in several ways. First, thrift stocks are cheap
relative to their earnings and book values - assets minus liabilities.
Second, the industry is undergoing massive consolidation. This often
provides an additional boost to many thrift stock prices. Third, many
thrifts are improving the credit quality of their loan portfolios. Finally,
many thrifts are overcapitalized. This means that they have the ability to
acquire other companies as a way to grow their earnings. The fund has
smaller positions in numerous thrifts, as opposed to making large
commitments to any one of them. Many of these are in the New York/New
Jersey area, such as Astoria Financial, GP Financial, Reliance Bancorp,
Haven Bancorp and Lakeview Savings Bank.
Q. BANKS ACCOUNTED FOR ABOUT 50% OF THE FUND'S INVESTMENTS. HOW DID RISING
INTEREST RATES AFFECT BANKS?
A. Contrary to the view held by many investors last year and into this
year, higher interest rates turned out to be good for banks' earnings. The
rates banks pay on deposits - a major component of banks' cost of funds -
increased only modestly. Thus banks were able to raise the rates they
charge for loans faster than their cost of funds increased. The stronger
economy led to increasing loan demand. So, banks made more loans at higher
rates and maintained a favorable spread between what they were charging for
money and what that money cost them. All of this combined to increase
banks' earnings and propel their stock prices.
Q. BANK OF NEW YORK, CITICORP AND NATIONSBANK WERE AMONG THE FUND'S TOP
INVESTMENTS. HOW DID THEY DO?
A. Bank of New York - up over 19% over the past six months - continues to
have strong fee income from its trust and securities processing services.
It also benefited from offering low-rate credit cards, which boosted the
bank's loan volume. Meanwhile, Citicorp - up over 6% during the same period
- - has a significant presence in emerging overseas markets which enhanced
the overall growth in its loan volume. NationsBank - up 14% - continued to
increase its revenues through solid loan growth and relatively strong
growth in fee income.
Q. FANNIE MAE AND FREDDIE MAC TOGETHER MADE UP ABOUT 10% OF THE FUND AT THE
END OF AUGUST. HOW DID THESE STOCKS HELP THE FUND?
A. Fannie Mae and Freddie Mac have consistently delivered double-digit
earnings while trading at prices that don't fully reflect those earnings,
making the stocks excellent values. Both are high-quality companies with
great business franchises. They have been and will continue to be long-term
investments for the fund. Freddie Mac is up about 11% and Fannie Mae is up
nearly 7% for the six-month period.
Q. THE PERCENTAGE OF THE FUND'S ASSETS INVESTED IN SECURITIES
BROKERS REMAINED RELATIVELY LOW. WHAT'S THE STORY IN THAT INDUSTRY?
A. Brokerage stocks have been adversely affected by rising interest rates.
The pace of corporate refinancing has slowed, resulting in fewer bond
underwriting deals. Initial public stock offerings also have dropped from
the pace of the past couple of years.
Q. WHAT IS YOUR OUTLOOK FOR THE INDUSTRY AND YOUR GAME PLAN FOR THE FUND
THROUGH THE END OF 1994?
A. I expect the consolidation of thrifts and banks to continue, as many
small and medium-size institutions conclude that it will become
increasingly difficult for them to compete. So, I'll continue to look for
value-priced thrift stocks to add to the fund. I also expect the favorable
spread relationship between banks' deposit costs and lending rates to
remain intact even if interest rates continue to rise - as long as they
rise gradually. I will probably sell some of the fund's bank investments
that have appreciated substantially and are no longer undervalued. As for
other industry sectors, consumer finance companies have done well and their
outlook is similar to that for banks. The near-term environment will likely
remain difficult for securities brokers and insurance companies.
FUND FACTS
START DATE: December 10, 1981
SIZE: as of August 31, 1994, more than
$120 million
MANAGER: Stephen Binder, since November
1993; manager, Fidelity Select Defense and
Aerospace Portfolio, since October 1992;
Fidelity Select Regional Banks Portfolio, since
May 1990; joined Fidelity in 1989
(checkmark)
FINANCIAL SERVICES PORTFOLIO
INVESTMENTS AUGUST 31, 1994 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 93.8%
SHARES VALUE (NOTE 1)
BANKS - 48.8%
COMMERCIAL BANKS, NEC - 0.1%
Norwalk Savings Society (Conn.) 10,000 $ 147,497
NATIONAL COMMERCIAL BANKS - 31.6%
Bank Atlantic Bancorp, Inc. 25,000 406,250
BankAmerica Corp. 70,000 3,456,250
BanPonce Corp. 54,700 1,818,775
Citicorp 160,413 7,098,275
Comerica, Inc. 108,745 3,303,129
First Chicago Corp. 84,803 4,409,756
Fleet Financial Group, Inc. 194 7,687
Huntington Bancshares, Inc. 136 2,907
Keycorp. 78,064 2,566,354
Mercantile Bancorporation, Inc. 22,050 843,413
Midlantic Corp. 51,900 1,563,488
NBD Bancorp, Inc. 24,100 750,113
NationsBank Corp. 103,285 5,758,139
Shawmut National Corp. 70,000 1,575,000
West One Bancorp 62,700 1,943,700
Zions Bancorporation 62,400 2,527,200
38,030,436
STATE BANKS FEDERAL RESERVE - 17.1%
Bank of New York Co., Inc. 250,934 8,155,355
Bank of New York Co., Inc. (warrants) (a) 72,700 908,750
Chemical Banking Corp. 68,500 2,654,375
Compass Bancshares, Inc. 21,200 530,000
Crestar Financial Corp. 53,149 2,564,439
First Empire State Corp. 3,800 598,500
Northern Trust Corp. 10,000 382,500
State Street Boston Corp. 109,600 4,384,000
T R Financial Corp. (a) 24,700 401,375
20,579,294
TOTAL BANKS 58,757,227
CREDIT & OTHER FINANCE - 9.5%
FINANCIAL SERVICES - 5.7%
Argentaria Corp. Bancaria de Esp 58,100 2,434,413
Corporacion Bancaria de Espana SA
sponsored ADR 4,000 84,000
Dean Witter Discover & Co. 86,600 3,691,325
GFC Financial Corp. 17,200 651,450
6,861,188
PERSONAL CREDIT INSTITUTIONS - 3.8%
Beneficial Corp. 17,300 743,900
Household International, Inc. 97,022 3,832,369
4,576,269
TOTAL CREDIT & OTHER FINANCE 11,437,457
FEDERAL SPONSORED CREDIT - 9.3%
FEDERAL & FEDERALLY SPONSORED CREDIT AGENCIES - 9.3%
Federal Home Loan Mortgage
Corporation 85,300 5,299,263
Federal National Mortgage Association 66,200 5,883,525
11,182,788
INSURANCE - 5.4%
LIFE INSURANCE - 2.6%
Providian Corp. 36,800 1,237,400
UNUM Corp. 38,500 1,891,313
3,128,713
SHARES VALUE (NOTE 1)
PROPERTY-CASUALTY & REINSURANCE - 2.8%
Allstate Corp. 82,900 $ 2,155,400
Travelers, Inc. (The) 34,633 1,281,421
3,436,821
TOTAL INSURANCE 6,565,534
REAL ESTATE INVESTMENT TRUSTS - 2.7%
Developers Diversified Realty 60,000 1,800,000
Lend Lease Corp. Ltd. 109,500 1,411,121
3,211,121
SAVINGS & LOANS - 13.4%
SAVINGS BANKS & SAVINGS & LOANS - 6.8%
Astoria Financial Corp. (a) 54,200 1,781,825
Boston Bancorp 8,500 318,750
Charter One Financial Corp. 28,000 665,000
Coast Savings Financial, Inc. (a) 20,000 370,000
Collective Bancorp, Inc. 26,000 533,000
Commercial Federal Corp. (a) 25,600 678,400
DS Bancor Inc. (a) 12,000 348,750
First Federal Savings Bank of
Puerto Rico (a) 31,700 578,525
FirstFed Michigan Corp. 5,100 127,500
FirstFed Financial Corp. (a) 3,500 56,438
Golden West Financial Corp. 38,200 1,656,925
Lakeview Financial Corp. 29,300 545,713
Standard Federal Bank 19,300 533,163
8,193,989
SAVINGS BANKS, FEDERAL CHARTER - 5.2%
Ahmanson (H.F.) & Co. 110,600 2,474,675
Anchor Bancorp Inc. (a) 30,000 476,250
Bay Ridge Bancorp, Inc. (a) 30,000 435,000
CSF Holdings, Inc. Class B (a) 7,700 184,800
CenFed Financial Corp. 5,300 106,000
Haven Bancorp, Inc. (a) 32,600 537,900
Quaker City Bancorp (a) 64,000 696,000
Reliance BanCorp, Inc. (a) 60,300 753,750
Washington Mutual Savings Bank 28,000 591,500
6,255,875
SAVINGS BANKS, NO FEDERAL CHARTER - 1.4%
GP Financial Corp. 70,500 1,709,625
TOTAL SAVINGS & LOANS 16,159,489
SECURITIES INDUSTRY - 4.7%
INVESTMENT ADVICE - 0.7%
Invesco Mim PLC 318,100 873,770
INVESTMENT MANAGERS - 0.3%
Mackenzie Financial Corporation 53,300 326,533
SECURITY & COMMODITY BROKERS - 0.9%
Salomon, Inc. 24,300 1,054,013
SECURITY BROKERS & DEALERS - 2.8%
Lehman Brothers Holdings, Inc. 129,300 2,101,125
Paine Webber Group, Inc. 76,350 1,240,688
3,341,813
TOTAL SECURITIES INDUSTRY 5,596,129
TOTAL COMMON STOCKS
(Cost $102,014,096) 112,909,745
CONVERTIBLE BONDS - 0.1%
PRINCIPAL
AMOUNT (B)
CREDIT & OTHER FINANCE - 0.1%
FINANCIAL SERVICES - 0.1%
Lend Lease Finance International
Ltd. gtd. 4 3/4%, 6/1/03 (b)
(Cost $100,000) $ 100,000 $ 112,000
REPURCHASE AGREEMENTS - 6.1%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account, at 4.83% dated
8/31/94 due 9/1/94 $ 7,336,984 7,336,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $109,450,096) $ 120,357,745
LEGEND
1. Non-income producing
2. 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 period
end, the value of this security amounted to $112,000 or 0.1% of net assets.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $40,545,918 and $50,678,755, respectively (see Note 4 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $21,527 for the period
(see Note 5 of Notes to Financial Statements).
The maximum loan and average daily loan balances during the periods for
which loans were outstanding amounted to $4,058,00 and $2,293,632,
respectively. The weighted average interest rate paid was 3.8% (see Note 8
of Notes to Financial Statements).
INCOME TAX INFORMATION
At August 31, 1994, the aggregate cost of investment securities for income
tax purposes was $109,450,096. Net unrealized appreciation aggregated
$10,907,649, of which $12,664,996 related to appreciated investment
securities and $1,757,347 related to depreciated investment securities.
FINANCIAL SERVICES PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
AUGUST 31, 1994 (UNAUDITED)
ASSETS
Investment in securities, at value (including repurchase agreements of $7,336,000) (cost $109,450,096) - See $ 120,357,745
accompanying schedule
Cash 644
Receivable for fund shares sold 1,826,827
Dividends receivable 243,666
Interest receivable 1,174
Redemption fees receivable 280
Other receivables 27,032
Prepaid expenses 11,317
TOTAL ASSETS 122,468,685
LIABILITIES
Payable for investments purchased $ 141,250
Payable for fund shares redeemed 1,195,456
Accrued management fee 60,955
Other payables and accrued expenses 113,812
TOTAL LIABILITIES 1,511,473
NET ASSETS $ 120,957,212
Net Assets consist of:
Paid in capital $ 101,336,726
Undistributed net investment income 646,543
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 8,066,294
Net unrealized appreciation (depreciation) on investments 10,907,649
NET ASSETS, for 2,201,962 shares outstanding $ 120,957,212
NET ASSET VALUE and redemption price per share ($120,957,212 (divided by) shares) $54.93
Maximum offering price per share (100/97 of $54.93) $56.63
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED AUGUST 31, 1994 (UNAUDITED)
INVESTMENT INCOME $ 1,544,911
Dividends
Interest 134,356
TOTAL INCOME 1,679,267
EXPENSES
Management fee $ 357,117
Transfer agent 530,589
Fees
Redemption fees (34,381
)
Accounting fees and expenses 57,644
Non-interested trustees' compensation 335
Custodian fees and expenses 13,169
Registration fees 11,317
Audit 13,380
Legal 1,413
Interest 4,619
Reports to shareholders 7,213
Miscellaneous 223
Total expenses before reductions 962,638
Expense reductions (8,960 953,678
)
NET INVESTMENT INCOME 725,589
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 8,057,533
Foreign currency transactions 1,809 8,059,342
Change in net unrealized appreciation (depreciation) on investment securities (1,093,129
)
NET GAIN (LOSS) 6,966,213
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 7,691,802
OTHER INFORMATION $170,616
Sales Charges Paid to FDC
Deferred sales charges withheld $5,502
by FDC
Exchange fees withheld by FSC $23,543
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS YEAR ENDED
ENDED FEBRUARY 28,
AUGUST 31, 1994 1994
(UNAUDITED)
Operations $ 725,589 $ 899,157
Net investment income
Net realized gain (loss) 8,059,342 30,258,224
Change in net unrealized appreciation (depreciation) (1,093,129 (19,675,121
) )
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 7,691,802 11,482,260
Distributions to shareholders (42,640 (452,372
From net investment income ) )
From net realized gain (788,912 (18,241,269
) )
TOTAL DISTRIBUTIONS (831,552 (18,693,641
) )
Share transactions 54,434,149 237,223,869
Net proceeds from sales of shares
Reinvestment of distributions 803,698 18,154,544
Cost of shares redeemed (57,455,059 (347,083,133
) )
Paid in capital portion of redemption fees 118,802 499,434
Net increase (decrease) in net assets resulting from share transactions (2,098,410 (91,205,286
) )
TOTAL INCREASE (DECREASE) IN NET ASSETS 4,761,840 (98,416,667
)
NET ASSETS
Beginning of period 116,195,372 214,612,039
End of period (including undistributed net investment income of $646,543 and $450,603,
respectively) $ 120,957,212 $ 116,195,372
OTHER INFORMATION
Shares
Sold 1,036,889 4,310,339
Issued in reinvestment of distributions 15,830 361,878
Redeemed (1,118,329 (6,431,527
) )
Net increase (decrease) (65,610 (1,759,310
) )
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS YEAR ENDED TEN MONTHS YEARS ENDED APRIL 30,
ENDED FEBRUARY 28, ENDED
AUGUST 31, 1994 FEBRUARY 28,
SELECTED PER-SHARE DATAC (UNAUDITED) 1994 1993 1992 1991 1990
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 51.24 $ 53.29 $ 42.42 $ 30.55 $ 28.28 $ 30.64
Income from Investment Operations
Net investment income .33 .29 .33 .54 .58 .66
Net realized and unrealized gain (loss) 3.70 5.02 14.30 11.35 1.67 (2.53)
Total from investment operations 4.03 5.31 14.63 11.89 2.25 (1.87)
Less Distributions
From net investment income (.02) (.20) (.51) (.35) (.52) (.33)
From net realized gain (.37) (7.32) (3.38) - - (.19)
Total distributions (.39) (7.52) (3.89) (.35) (.52) (.52)
Redemption fees added to paid in capital .05 .16 .13 .33 .54 .03
Net asset value, end of period $ 54.93 $ 51.24 $ 53.29 $ 42.42 $ 30.55 $ 28.28
TOTAL RETURN D, E 8.02% 10.85% 36.46% 40.31% 10.51% (6.20)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 120,957 $ 116,195 $ 214,612 $ 91,700 $ 35,962 $ 21,087
Ratio of expenses to average net assets B 1.63%A 1.63% 1.54%A 1.85% 2.49% 2.22%
Ratio of expenses to average net assets before 1.65%A 1.64% 1.54%A 1.85% 2.49% 2.22%
expense reductions B
Ratio of net investment income to average net assets 1.24%A .53% .86%A 1.49% 2.22% 2.03%
Portfolio turnover rate 74%A 93% 100%A 164% 237% 308%
</TABLE>
1 ANNUALIZED
2 SEE NOTE 9 OF NOTES TO FINANCIAL STATEMENTS.
3 NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING EACH PERIOD.
4 TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
5 THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
HOME FINANCE PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance: total
percentage change in value, the average annual percentage change, or the
growth of a hypothetical $10,000 investment. Each performance figure
includes changes in a fund's share price, plus reinvestment of any
dividends (income) and capital gains (the profits the fund earns when it
sells stocks that have grown in value).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 6 PAST 1 PAST 5 LIFE OF
AUGUST 31, 1994 MONTH YEAR YEARS FUND
S
HOME FINANCE 16.08% 25.60% 166.93% 412.87%
HOME FINANCE
(INCL. 3% SALES CHARGE) 12.60% 21.83% 158.93% 397.48%
S&P 500 3.26% 5.47% 58.16% 200.89%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one year, five years, or
since the fund started on December 16, 1985. You can compare these figures
to the performance of the S&P 500 - a common proxy for the U.S. stock
market. This benchmark includes reinvested dividends and capital gains, if
any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
AUGUST 31, 1994 YEAR YEARS FUND
HOME FINANCE 25.60% 21.70% 20.63%
HOME FINANCE (INCL. 3% SALES CHARGE) 21.83% 20.96% 20.21%
S&P 500 5.47% 9.60% 13.47%
AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and
show you what would have happened if the fund had performed at a constant
rate each year.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of growth in the long run
and volatility in the short run. Unlike the broader
market, however, some sectors may not have
a history of growth in the long run. And, as
with all stock funds, the share price and return
of a fund that invests in a sector will vary. That
means if you sell your shares during a sector
downturn, you might lose money. But if you
can identify a sector that is about to
experience rapid growth you may have the
potential for above-average gains.
(checkmark)
$10,000 OVER LIFE OF FUND
Select Home Finance (098)Standard & Poor's
12/16/85 9700.00 10000.00
12/31/85 9797.00 10080.42
01/31/86 11378.10 10136.87
02/28/86 12794.30 10895.11
03/31/86 13065.90 11503.06
04/30/86 12920.40 11373.07
05/31/86 13065.90 11978.12
06/30/86 14132.90 12180.55
07/31/86 13259.90 11499.66
08/31/86 13405.40 12352.93
09/30/86 11804.90 11331.35
10/31/86 12241.40 11985.16
11/30/86 12464.50 12276.40
12/31/86 12493.60 11963.36
01/31/87 14423.90 13574.82
02/28/87 15781.90 14111.03
03/31/87 14841.00 14518.83
04/30/87 14006.80 14389.62
05/31/87 13521.80 14514.81
06/30/87 13774.00 15247.80
07/31/87 13725.50 16020.87
08/31/87 14967.10 16618.45
09/30/87 14006.80 16254.50
10/31/87 11281.10 12753.28
11/30/87 10359.60 11702.41
12/31/87 11500.81 12592.97
01/31/88 12887.84 13123.13
02/29/88 12526.63 13734.67
03/31/88 12179.87 13310.27
04/30/88 12382.15 13458.01
05/31/88 12367.70 13575.09
06/30/88 13147.91 14198.19
07/31/88 13379.08 14144.24
08/31/88 13046.77 13663.33
09/30/88 13711.39 14245.39
10/31/88 14101.49 14641.41
11/30/88 13393.53 14432.04
12/31/88 13627.99 14684.60
01/31/89 14770.98 15759.52
02/28/89 15093.36 15367.10
03/31/89 15166.63 15725.16
04/30/89 15943.28 16541.29
05/31/89 16632.01 17211.21
06/30/89 16966.79 17113.11
07/31/89 17557.96 18658.42
08/31/89 18636.86 19024.13
09/30/89 19331.49 18946.13
10/31/89 16922.45 18506.58
11/30/89 16375.61 18884.12
12/31/89 14898.98 19337.33
01/31/90 13663.83 18039.80
02/28/90 14173.33 18272.51
03/31/90 14204.21 18756.73
04/30/90 13864.55 18287.82
05/31/90 15176.89 20070.88
06/30/90 15022.50 19934.40
07/31/90 13725.59 19870.61
08/31/90 12336.05 18074.30
09/30/90 11270.73 17194.08
10/31/90 10421.57 17120.15
11/30/90 11548.64 18226.11
12/31/90 12651.77 18734.62
01/31/91 13861.94 19551.45
02/28/91 15747.91 20949.38
03/31/91 16470.87 21456.35
04/30/91 17036.66 21507.85
05/31/91 17743.91 22436.99
06/30/91 16753.77 21409.37
07/31/91 18545.45 22407.05
08/31/91 19252.69 22938.10
09/30/91 19095.52 22555.03
10/31/91 18765.48 22857.27
11/30/91 17901.07 21936.12
12/31/91 20825.52 24445.61
01/31/92 22877.85 23990.92
02/29/92 24373.34 24302.81
03/31/92 23959.69 23828.90
04/30/92 24468.80 24529.47
05/31/92 26887.04 24649.67
06/30/92 26920.71 24282.39
07/31/92 28244.42 25275.53
08/31/92 26713.39 24757.39
09/30/92 27143.99 25049.52
10/31/92 27654.33 25137.20
11/30/92 30493.13 25994.38
12/31/92 32873.65 26314.11
01/31/93 35232.16 26535.14
02/28/93 35829.86 26896.02
03/31/93 37106.04 27463.53
04/30/93 35096.20 26798.91
05/31/93 34495.57 27517.12
06/30/93 35355.93 27596.92
07/31/93 37628.58 27486.53
08/31/93 39609.03 28528.27
09/30/93 42141.41 28308.61
10/31/93 42466.08 28894.59
11/30/93 40566.79 28620.10
12/31/93 41846.51 28966.40
01/31/94 43678.58 29951.26
02/28/94 42856.72 29139.58
03/31/94 42051.98 27869.09
04/30/94 43677.84 28225.82
05/31/94 46371.79 28688.72
06/30/94 47144.06 27985.85
07/31/94 48185.71 28903.78
08/31/94 49748.20 30088.84
Let's say you invested $10,000 in Fidelity Select Home Finance Portfolio on
December 16, 1985, when the fund started, and paid a 3% sales charge. By
August 31, 1994, your investment would have grown to $49,748 - a 397.48%
increase. That compares to $10,000 invested in the S&P 500, which would
have grown to $30,089 over the same period - a 200.89% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST 31, 1994
% OF FUND'S
INVESTMENTS
Standard Federal Bank 3.7
Astoria Financial Corp. 3.4
Brooklyn Bancorp, Inc. 3.3
Citicorp 3.1
North Side Savings Bank (Bronx, NY) 3.0
FirstFed Michigan Corp. 2.8
Washington Mutual Savings Bank 2.6
GP Financial Corp. 2.6
Charter One Financial Corp. 2.4
Commercial Federal Corp. 2.4
TOP INDUSTRIES AS OF AUGUST 31, 1994
Row: 1, Col: 1, Value: 30.6
Row: 1, Col: 2, Value: 3.7
Row: 1, Col: 3, Value: 6.4
Row: 1, Col: 4, Value: 6.5
Row: 1, Col: 5, Value: 23.0
Row: 1, Col: 6, Value: 29.8
Savings Banks and
Savings & Loans 29.8%
Savings Banks,
Federal Charter 23.0%
National Commercial
Banks 6.5%
State Banks Federal Reserve 6.4%
Savings Banks,
No Federal Charter 3.7%
All Others 30.6%*
* INCLUDES SHORT-TERM INVESTMENTS
HOME FINANCE PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
David Ellison,
Portfolio Manager of
Fidelity Select Home
Finance Portfolio
Q. DAVID, HOW DID THE FUND PERFORM?
A. Extremely well. The fund returned 16.08% for the six months and 25.60%
for the 12 months ended August 31, 1994. Those results beat the S&P 500's
3.26% and 5.47% returns during the same periods.
Q. WHAT'S THE STORY BEHIND THE FUND'S STRONG RESULTS?
A. Thrifts - or savings and loans - make up the largest portion of the
fund's investments. The view of many investors at the beginning of the year
was that rising interest rates would cause earnings to fall throughout the
entire financial sector. That turned out to be wrong. Mortgage refinancing
was a big negative for thrifts. And when rates started to rise, refinancing
activity dropped off. The benefit of less refinancing activity more than
offset the effect of rising rates on thrifts' lending spreads - the
difference between what thrifts charge for loans and what they pay
depositors. A second positive aspect was higher than normal takeover
activity, which generally provides an additional boost to many thrift stock
prices. Third, valuations for thrifts - stocks' prices relative to certain
measures such as earnings - were at attractive levels. Many investors sold
their thrift holdings due to interest rate fears. That enabled me to load
up on stocks with the best growth potential at very cheap prices.
Q. HOW WAS THE RISE IN INTEREST RATES AND THE RESULTING DECLINE IN
REFINANCING ACTIVITY BENEFICIAL TO THE FUND'S INVESTMENTS IN THRIFTS?
A. The high level of refinancing that existed before this year's rise in
interest rates hurt thrifts in three ways. First, it reduced the average
yield on thrifts' loan portfolios, given that higher interest rate loans
were refinanced into ones carrying lower rates. This, in turn, caused the
spread between what thrift's charge for loans and what they pay depositors
to widen more slowly than thrifts would have liked. Deposit rates, which
are a thrift's cost of funds, were falling, but so were mortgage loan
rates. Second, thrifts were losing a lot of loans to mortgage bankers and
other lenders, making it difficult to grow their assets. Finally, many
borrowers were refinancing out of adjustable rate mortgages (ARMs) into
fixed rate loans. Banks and thrifts typically don't keep fixed rate loans
on the books, so this resulted in shrinking loan portfolios. These factors
combined to place a major drag on thrifts' earnings. When rates went up and
refinancing declined, ARMs became more attractive relative to rising fixed
rate mortgages. Thrifts' asset bases began to grow again since they were
able to originate more of the type of loan they keep in their portfolios.
Moreover, with ARM rates also rising, thrifts' average portfolio yields
began to grow. By keeping deposit rates low, thrifts' lending spreads, and
thus their earnings, increased. This propelled the stocks and drove the
fund's performance.
Q. DERIVATIVES HAVE BEEN GETTING A LOT OF ATTENTION LATELY. DO YOU USE THEM
IN THE FUND?
A. The fund has owned small amounts of interest-only (IO) and
principal-only (PO) securities in the past, but there are no derivatives in
the portfolio now and I do not have current plans to purchase any in the
near future. IOs and POs are created by splitting mortgage securities into
their two component parts: interest and principal repayment. IOs receive
their cash flow from interest payments and POs receive their cash flow from
principal payments.
Q. WHAT IS YOUR GAME PLAN FOR THE FUND AND YOUR OUTLOOK FOR THE INDUSTRY
THROUGH THE END OF 1994?
A. My approach has always been to follow a lot of institutions - especially
smaller, lesser-known ones - and stay on top of what each is doing. The
more I know, the more I'll be able to capitalize on attractive investment
opportunities as they're developing. The fund has almost 90 names in the
portfolio. I expect this to continue. The fund will continue to focus on
stocks that are selling cheaply based on the company's earnings and book
value. I tend to buy stocks for the long term, so the fund's larger
investments usually remain in place for several years. As for the industry,
the rise in rates has been beneficial thus far. If there's a dramatic rise
from the current levels, leading to rising deposit rates, that would
probably be detrimental because it would raise the companies' cost of
funds, squeezing their lending spreads. However, even if rates continue to
go up, there should be little problem if they go up gradually. Banks and
thrifts could continue to raise their deposit rates slowly.
FUND FACTS
START DATE: December 16, 1985
SIZE: as of August 31, 1994, more than
$312 million
MANAGER: David Ellison, since December
1985; manager, Fidelity Select Financial
Services Portfolio, 1985-1987; Fidelity Select
Brokerage and Investment Management
Portfolio, 1987-1990; joined Fidelity in 1985
(checkmark)
HOME FINANCE PORTFOLIO
INVESTMENTS AUGUST 31, 1994 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 72.6%
SHARES VALUE (NOTE 1)
BANKS - 13.3%
COMERCIAL BANKS, NEC - 0.4%
MLF Bancorp, Inc. (a) 45,000 $ 742,500
Norwalk Savings Society (Conn.)(a) 50,000 737,500
1,480,000
NATIONAL COMMERCIAL BANKS - 6.5%
Bank of Boston Corp. 35,000 918,750
Bank Atlantic Bancorp, Inc. 158,900 2,582,125
Citicorp 230,615 10,204,714
Fidelity FSB (Garden City, NY)(a)(b) 162,800 4,415,950
PNC Financial Corp. 35,000 980,000
Peoples Heritage Financial Group, Inc. 89,125 1,281,172
Union Planters Corp. 45,000 1,158,750
21,541,461
STATE BANKS FEDERAL RESERVE - 6.4%
BB & T Financial Corp. 39,000 1,160,250
Bank of New York Co., Inc. 190,000 6,175,000
Chemical Banking Corp. 150,000 5,812,500
Letchworth Independent Bancshares 20,000 435,000
North Fork Bancorporation, Inc. 49,800 759,450
ONBANCorp, Inc. 190,900 5,822,450
T R Financial Corp. (a) 56,200 913,250
21,077,900
TOTAL BANKS 44,099,361
CONSTRUCTION - 1.0%
OPERATIVE BUILDERS - 1.0%
Centex Corp. 20,000 530,000
Inco Homes (a) 32,500 105,625
Standard Pacific Corp. 307,100 2,725,513
3,361,138
TOTAL CONSTRUCTION 3,361,138
CREDIT & OTHER FINANCE - 0.6%
MORTGAGE BANKERS - 0.6%
Equicredit Corp. (a) 86,400 1,922,400
FEDERAL SPONSORED CREDIT - 0.8%
FEDERAL & FEDERALLY SPONSORED CREDIT AGENCIES - 0.8%
Federal Home Loan Mortgage
Corporation 38,300 2,379,388
Federal National Mortgage
Association 5,000 444,375
2,823,763
TOTAL FEDERAL SPONSORED CREDIT 2,823,763
REAL ESTATE INVESTMENT TRUSTS - 0.7%
Prime Multifamily, Inc. 140,000 2,310,000
SAVINGS & LOANS - 56.2%
SAVINGS BANKS AND SAVINGS & LOANS - 29.8%
Andover Bancorp, Inc. (Del.) (a)(b) 99,100 1,932,450
Astoria Financial Corp. (a) 345,400 11,355,025
Bankers Corp. 5,000 75,625
Boston Bancorp 84,700 3,176,250
Calumet Bancorp, Inc. 25,000 906,250
Charter One Financial Corp. 335,400 7,965,750
Coast Savings Financial, Inc. (a) 356,700 6,598,950
Collective Bancorp, Inc. 239,100 4,901,550
Commercial Federal Corp. (a) 300,200 7,955,300
Eagle Financial Corp. 600 13,150
Eastern Bancorp (b) 74,700 1,755,450
First Essex Bancorp Inc. 66,000 627,000
SHARES VALUE (NOTE 1)
First Federal Savings Bank of
Puerto Rico (a) 144,000 $ 2,628,000
FirstFed Financial Corp. (a) 96,300 1,552,838
FirstFed Michigan Corp. 374,150 9,353,750
Glendale Federal Bank Federal Savings
Bank, California (a) 218,000 2,861,250
Golden West Financial Corp. 40,000 1,735,000
Great Western Financial Corp. 31,432 648,285
Lakeview Financial Corp. 88,800 1,653,895
NFS Financial Corp. 45,300 951,300
New Horizons Savings & Loan
Association California 7,000 84,000
New York Bancorp, Inc. 25,000 496,875
North Side Savings Bank (Bronx, NY)(b) 403,393 10,084,825
Pamrapo Bancorp, Inc. (b) 180,600 3,431,400
Peoples Savings Financial Corp. 30,000 562,500
Sovereign Bancorp, Inc. 65,200 660,150
Standard Federal Bank 448,400 12,387,050
TCF Financial Corporation 12,500 520,313
Webster Financial Corp. (Waterbury, CT) 76,450 1,873,025
98,747,206
SAVINGS BANKS, NO FEDERAL CHARTER - 3.7%
Farmers & Mechanics Bank (a) 20,700 346,725
GP Financial Corp. 353,900 8,582,075
Queens County Bancorp, Inc. (a) 10,000 472,500
Somerset Savings Bank (a) 470,000 705,000
Sterling Financial Corp. (a) 157,200 2,259,750
12,366,050
SAVINGS BANKS, FEDERAL CHARTER - 22.7%
Ahmanson (H.F.) & Co. 240,800 5,387,900
Ameribanc Investors Group (SBI)(a) 515,000 1,174,844
Amfed Financial, Inc. 15,000 360,000
Anchor Bancorp Inc. (a) 394,400 6,261,100
Bay Ridge Bancorp, Inc. (a) 245,800 3,564,100
Brooklyn Bancorp, Inc. (a) 305,000 10,903,750
CSF Holdings, Inc. Class B (a) 44,800 1,075,200
California Federal Bank Class A (a) 35,000 481,250
CenFed Financial Corp. (b) 267,550 5,351,000
Conestoga Bancorp, Inc. (a) 110,000 1,485,000
D & N Financial Corp. (a)(b) 30,000 270,000
Dime Bancorp, Inc. (a) 674,540 6,323,813
FFY Financial Corp. 15,000 262,500
Fidelity Bancorp, Inc. (Del.)(a) 127,600 1,595,000
Hamilton Bancorp, Inc. (a) 33,600 991,200
Haven Bancorp, Inc. (a) 193,800 3,197,700
Landmark Bancshares, Inc. 72,000 864,000
Long Island Bancorp, Inc. (a) 325,000 5,565,625
Main Street Community Bancorp 13,500 216,000
Metropolitan Financial Corp. 30,000 708,750
Permanent Bancorp, Inc. (a) 60,000 795,000
Quaker City Bancorp (a)(b) 210,500 2,289,188
RedFed Bancorp, Inc. (a) 120,000 1,620,000
Reliance BanCorp, Inc. (a) 396,600 4,957,500
Telebanc Financial Corp. (a)(b) 55,000 350,625
WFS BanCorp, Inc. (a) 40,700 574,888
Washington Mutual Savings Bank 408,700 8,633,788
Westerfed Financial Corp. 10,000 138,750
75,398,471
TOTAL SAVINGS & LOANS 186,511,727
TOTAL COMMON STOCKS
(Cost $202,724,307) 241,028,389
PREFERRED STOCKS - 0.4%
SHARES VALUE (NOTE 1)
CONVERTIBLE PREFERRED STOCKS - 0.3%
SAVINGS & LOANS - 0.3%
SAVINGS BANKS, FEDERAL CHARTER - 0.3%
Roosevelt Financial Group,
Inc. 3 1/4% 15,000 956,250
NONCONVERTIBLE PREFERRED STOCKS - 0.1%
BANKS - 0.1%
COMMERCIAL BANKS, NEC - 0.1%
Community Bank Pasadena California,
Series B, 13% 15,000 363,750
TOTAL PREFERRED STOCKS
(Cost $1,380,000) 1,320,000
REPURCHASE AGREEMENTS - 27.0%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account, at 4.83% dated
8/31/94 due 9/1/94 (Note 3) $ 89,531,010 89,519,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $293,623,307) $ 331,867,389
LEGEND
1. Non-income producing
2. A company in which the fund has ownership of at least 5% of the voting
securities is an affiliated company. A summary of the transactions during
the period in which the issuers were affiliates is as follows:
PURCHASES SALES DIVIDEND MARKET
AFFILIATE COST COST INCOME VALUE
Andover Bancorp, Inc. (Del.)(a) $ - $ 30,625 $ - $ -
CenFed Financial Corp. 1,062,038 463,333 17,456 5,351,000
D & N Financial Corp. (a) - 1,532,617 - -
Eastern Bancorp - 68,025 5,268 -
Fidelity FSB (Garden City, NY)(a) - 1,432,275 - -
North Side Savings Bank (Bronx, NY) 247,075 - 49,799 10,084,825
Pamrapo Bancorp, Inc. 258,575 517,075 48,163 3,431,400
Peterborough Saving Bank (a) - 298,342 - -
Quaker City Bancorp (a) 33,750 - - 2,289,188
Telebanc Financial Corp. (a) - - - 350,625
$ 1,601,438 $ 4,342,292 $ 120,686 $ 21,507,038
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $134,379,856 and $84,013,988, respectively (see Note 4 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $32,186 for the period
(see Note 5 of Notes to Financial Statements).
The maximum loan and average daily loan balances during the periods for
which loans were outstanding amounted to $11,470,000 and $10,872,000,
respectively. The weighted average interest rate paid was 3.8% (see Note 8
of Notes to Financial Statements).
INCOME TAX INFORMATION
At August 31, 1994, the aggregate cost of investment securities for income
tax purposes was $293,684,758. Net unrealized appreciation aggregated
$38,182,631, of which $39,217,912 related to appreciated investment
securities and $1,035,281 related to depreciated investment securities.
HOME FINANCE PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
AUGUST 31, 1994 (UNAUDITED)
ASSETS
Investment in securities, at value (including repurchase agreements of $89,519,000) (cost $293,623,307) - See $ 331,867,389
accompanying schedule
Cash 814
Receivable for investments sold 2,078,914
Receivable for fund shares sold 5,237,379
Dividends receivable 334,680
Redemption fees receivable 3,654
Other receivables 127,696
Prepaid expenses 15,430
TOTAL ASSETS 339,665,956
LIABILITIES
Payable for investments purchased $ 14,029,697
Payable for fund shares redeemed 12,412,402
Accrued management fee 161,531
Other payables and accrued expenses 205,996
TOTAL LIABILITIES 26,809,626
NET ASSETS $ 312,856,330
Net Assets consist of:
Paid in capital $ 263,487,532
Undistributed net investment income 793,655
Accumulated undistributed net realized gain (loss) on investments 10,331,061
Net unrealized appreciation (depreciation) on investments 38,244,082
NET ASSETS, for 11,295,695 shares outstanding $ 312,856,330
NET ASSET VALUE and redemption price per share ($312,856,330 (divided by) shares) $27.70
Maximum offering price per share (100/97 of $27.70) $28.56
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED AUGUST 31, 1994 (UNAUDITED)
INVESTMENT INCOME $ 1,303,179
Dividends (including $120,686 received from affiliated issuers)
Interest 1,063,878
TOTAL INCOME 2,367,057
EXPENSES
Management fee $ 681,478
Transfer agent 802,310
Fees
Redemption fees (73,701
)
Accounting fees and expenses 109,990
Non-interested trustees' compensation 573
Custodian fees and expenses 7,719
Registration fees 15,430
Audit 14,577
Legal 1,823
Interest 2,303
Reports to shareholders 11,203
Miscellaneous 337
Total expenses before reductions 1,574,042
Expense reductions (13,107 1,560,935
)
NET INVESTMENT INCOME 806,122
REALIZED AND UNREALIZED GAIN (LOSS) 10,388,914
Net realized gain (loss) on investment securities (including realized gain of $1,604,733 on sales of investments in
affiliated issuers)
Change in net unrealized appreciation (depreciation) on investment securities 19,625,270
NET GAIN (LOSS) 30,014,184
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 30,820,306
OTHER INFORMATION $982,915
Sales Charges Paid to FDC
Deferred sales charges withheld $2,864
by FDC
Exchange fees withheld by FSC $54,728
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS YEAR ENDED
ENDED FEBRUARY 28,
AUGUST 31, 1994 1994
(UNAUDITED)
Operations $ 806,122 $ 246,419
Net investment income
Net realized gain (loss) 10,388,914 47,403,270
Change in net unrealized appreciation (depreciation) 19,625,270 (23,478,057
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 30,820,306 24,171,632
Distributions to shareholders - (144,027
From net investment income )
From net realized gain (6,341,292 (9,550,960
) )
TOTAL DISTRIBUTIONS (6,341,292 (9,694,987
) )
Share transactions 291,618,992 480,076,731
Net proceeds from sales of shares
Reinvestment of distributions 6,204,745 9,482,227
Cost of shares redeemed (165,490,521 (687,125,356
) )
Paid in capital portion of redemption fees 480,823 750,443
Net increase (decrease) in net assets resulting from share transactions 132,814,039 (196,815,955
)
TOTAL INCREASE (DECREASE) IN NET ASSETS 157,293,053 (182,339,310
)
NET ASSETS
Beginning of period 155,563,277 337,902,587
End of period (including undistributed net investment income of $793,655 and $213,666,
respectively) $ 312,856,330 $ 155,563,277
OTHER INFORMATION
Shares
Sold 11,172,837 19,770,402
Issued in reinvestment of distributions 259,396 403,141
Redeemed (6,351,116 (29,193,857
) )
Net increase (decrease) 5,081,117 (9,020,314
)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS YEAR ENDED TEN MONTHS YEARS ENDED APRIL 30,
ENDED FEBRUARY 28, ENDED
AUGUST 31, 1994 FEBRUARY 28,
SELECTED PER-SHARE DATAC (UNAUDITED) 1994 1993 1992 1991 1990
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 25.03 $ 22.18 $ 15.38 $ 10.84 $ 8.98 $ 10.88
Income from Investment Operations
Net investment income .09 .03 .09 .05 .16 .09
Net realized and unrealized gain (loss) 3.69 4.15 6.80 4.40 1.69 (1.47)
Total from investment operations 3.78 4.18 6.89 4.45 1.85 (1.38)
Less Distributions
From net investment income - (.01) (.01) (.14) (.14) (.04)
From net realized gain (1.17) (1.40) (.28) - - (.49)
Total distributions (1.17) (1.41) (.29) (.14) (.14) (.53)
Redemption fees added to paid in capital .06 .08 .20 .23 .15 .01
Net asset value, end of period $ 27.70 $ 25.03 $ 22.18 $ 15.38 $ 10.84 $ 8.98
TOTAL RETURN D, E 16.08% 19.61% 46.43% 43.62% 22.88% (13.04)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 312,856 $ 155,563 $ 337,903 $ 49,405 $ 8,782 $ 5,432
Ratio of expenses to average net assets B 1.39%A 1.58% 1.55% 2.08% 2.50% 2.53%
A
Ratio of expenses to average net assets before 1.40%A 1.58% 1.55% 2.08% 2.82% 2.92%
expense reductions B A
Ratio of net investment income to average net .72%A .11% .61% .40% 1.78% .83%
assets A
Portfolio turnover rate 94%A 95% 61% 134% 159% 282%
A
</TABLE>
A ANNUALIZED
B SEE NOTE 9 OF NOTES TO FINANCIAL STATEMENTS.
C NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
D TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
E THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
INSURANCE PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance: total
percentage change in value, the average annual percentage change, or the
growth of a hypothetical $10,000 investment. Each performance figure
includes changes in a fund's share price, plus reinvestment of any
dividends (income) and capital gains (the profits the fund earns when it
sells stocks that have grown in value).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 6 PAST 1 PAST 5 LIFE OF
AUGUST 31, 1994 MONTH YEAR YEARS FUND
S
INSURANCE 4.84% -5.93% 74.05% 158.78%
INSURANCE
(INCL. 3% SALES CHARGE) 1.70% -8.75% 68.83% 151.01%
S&P 500 3.26% 5.47% 58.16% 200.89%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one year, five years, or
since the fund started on December 16, 1985. You can compare these figures
to the performance of the S&P 500 - a common proxy for the U.S. stock
market. This benchmark includes reinvested dividends and capital gains, if
any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
AUGUST 31, 1994 YEAR YEARS FUND
INSURANCE -5.93% 11.72% 11.53%
INSURANCE
(INCL. 3% SALES CHARGE) -8.75% 11.04% 11.14%
S&P 500 5.47% 9.60% 13.47%
AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and
show you what would have happened if the fund had performed at a constant
rate each year.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of growth in the long run
and volatility in the short run. Unlike the broader
market, however, some sectors may not have
a history of growth in the long run. And, as
with all stock funds, the share price and return
of a fund that invests in a sector will vary. That
means if you sell your shares during a sector
downturn, you might lose money. But if you
can identify a sector that is about to
experience rapid growth you may have the
potential for above-average gains.
(checkmark)
$10,000 OVER LIFE OF FUND
Select Insurance (045) Standard & Poor's
12/16/85 9700.00 10000.00
12/31/85 9884.30 10080.42
01/31/86 10660.30 10136.87
02/28/86 11475.10 10895.11
03/31/86 12018.30 11503.06
04/30/86 11649.70 11373.07
05/31/86 12299.60 11978.12
06/30/86 12241.40 12180.55
07/31/86 11824.30 11499.66
08/31/86 12901.00 12352.93
09/30/86 11222.90 11331.35
10/31/86 11106.50 11985.16
11/30/86 10737.90 12276.40
12/31/86 10640.90 11963.36
01/31/87 11387.80 13574.82
02/28/87 12590.60 14111.03
03/31/87 11950.40 14518.83
04/30/87 10961.00 14389.62
05/31/87 10815.50 14514.81
06/30/87 11164.70 15247.80
07/31/87 11271.40 16020.87
08/31/87 12086.20 16618.45
09/30/87 12086.20 16254.50
10/31/87 9816.40 12753.28
11/30/87 9127.70 11702.41
12/31/87 9347.07 12592.97
01/31/88 10066.08 13123.13
02/29/88 10056.23 13734.67
03/31/88 9819.84 13310.27
04/30/88 9750.90 13458.01
05/31/88 10016.83 13575.09
06/30/88 10469.90 14198.19
07/31/88 10519.15 14144.24
08/31/88 10627.49 13663.33
09/30/88 10991.92 14245.39
10/31/88 10942.67 14641.41
11/30/88 10706.29 14432.04
12/31/88 10973.60 14684.60
01/31/89 11807.79 15759.52
02/28/89 11887.24 15367.10
03/31/89 12165.30 15725.16
04/30/89 12562.54 16541.29
05/31/89 12632.05 17211.21
06/30/89 12910.00 17113.11
07/31/89 13994.12 18658.42
08/31/89 14421.80 19024.13
09/30/89 14620.72 18946.13
10/31/89 15098.13 18506.58
11/30/89 15505.92 18884.12
12/31/89 15125.04 19337.33
01/31/90 13841.22 18039.80
02/28/90 14232.39 18272.51
03/31/90 14162.18 18756.73
04/30/90 13670.71 18287.82
05/31/90 14924.45 20070.88
06/30/90 14964.57 19934.40
07/31/90 14743.91 19870.61
08/31/90 13209.34 18074.30
09/30/90 12065.93 17194.08
10/31/90 11584.50 17120.15
11/30/90 13119.07 18226.11
12/31/90 13640.62 18734.62
01/31/91 14372.80 19551.45
02/28/91 15827.13 20949.38
03/31/91 16870.24 21456.35
04/30/91 16779.97 21507.85
05/31/91 17201.23 22436.99
06/30/91 16131.94 21409.37
07/31/91 16730.92 22407.05
08/31/91 16629.40 22938.10
09/30/91 16791.84 22555.03
10/31/91 17299.45 22857.27
11/30/91 17147.17 21936.12
12/31/91 18644.06 24445.61
01/31/92 18623.68 23990.92
02/29/92 19122.89 24302.81
03/31/92 18847.82 23828.90
04/30/92 18368.98 24529.47
05/31/92 18613.49 24649.67
06/30/92 19002.89 24282.39
07/31/92 20079.57 25275.53
08/31/92 19491.28 24757.39
09/30/92 20523.57 25049.52
10/31/92 21400.45 25137.20
11/30/92 22133.04 25994.38
12/31/92 22839.19 26314.11
01/31/93 23794.10 26535.14
02/28/93 24243.47 26896.02
03/31/93 25524.17 27463.53
04/30/93 24916.83 26798.91
05/31/93 24275.05 27517.12
06/30/93 24534.01 27596.92
07/31/93 25389.72 27486.53
08/31/93 26684.54 28528.27
09/30/93 26774.62 28308.61
10/31/93 25997.72 28894.59
11/30/93 24410.16 28620.10
12/31/93 24706.64 28966.40
01/31/94 25039.68 29951.26
02/28/94 23941.89 29139.58
03/31/94 22819.42 27869.09
04/30/94 23066.11 28225.82
05/31/94 24126.91 28688.72
06/30/94 23991.22 27985.85
07/31/94 24435.28 28903.78
08/31/94 25101.36 30088.84
Let's say you invested $10,000 in Fidelity Select Insurance Portfolio on
December 16, 1985, when the fund started, and paid a 3% sales charge. By
August 31, 1994, your investment would have grown to $25,101 - a 151.01%
increase. That compares to $10,000 invested in the S&P 500, which would
have grown to $30,089 over the same period - a 200.89% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST 31, 1994
% OF FUND'S
INVESTMENTS
Allied Group, Inc. 11.2
Allstate Corp. 8.9
Gryphon Holdings, Inc. 8.7
Harleysville Group, Inc. 8.5
Travelers, Inc. (The) 6.9
NAC Re Corp. 5.4
Providian Corp. 5.3
USF&G Corp. 4.9
MBIA, Inc. 4.8
SAFECO Corp 4.3
TOP INDUSTRIES AS OF AUGUST 31, 1994
Row: 1, Col: 1, Value: 11.6
Row: 1, Col: 2, Value: 4.2
Row: 1, Col: 3, Value: 5.3
Row: 1, Col: 4, Value: 7.2
Row: 1, Col: 5, Value: 71.7
Property-Casualty &
Reinsurance 71.7%
Insurance Carriers 7.2%
Life Insurance 5.3%
Financial Services 4.2%
All Others 11.6%*
* INCLUDES SHORT-TERM INVESTMENTS
INSURANCE PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Robert Chow,
Portfolio Manager of Fidelity Select Insurance Portfolio
Q. BOB, HOW DID THE FUND PERFORM?
A. Relatively well. The fund returned 4. 84% for the six months ended
August 31, 1994. That beat the S&P 500's 3.26% return during the same
period. However, for the 12 months ended August 31, the fund's -5.93%
return trailed the S&P's 5.47% result.
Q. WOULD YOU BEGIN BY SUMMARIZING THE CURRENT STATE OF THE INSURANCE
INDUSTRY?
A. Three factors drive the insurance industry: supply and demand
fundamentals, which is known as the "insurance cycle;" company valuations,
such as earnings growth potential; and interest rates. The insurance cycle
is the most important of the three. The cycle can be understood in terms of
the industry's surplus, which is the total insurance capacity of all
insurers. For example, for every $1 of surplus, insurers can issue $3 worth
of coverage, according to industry regulations. The industry currently has
around $180 billion in surplus, which is more than at any time since 1962
relative to total premiums received. The more surplus or capacity the
industry has, the harder it is for insurers to grow their earnings. That's
because every insurer can write more business, which prevents companies
from raising their prices. So, a big surplus eliminates insurers' pricing
power, thus limiting the industry's earnings potential. That's where we are
today.
Q. WHAT ABOUT THE OTHER TWO FACTORS: COMPANY VALUATIONS AND INTEREST RATES?
A. Interest rates impact the value of insurers' extensive bond portfolios.
If rates fall, as they did prior to this year, the value of the bonds
rises. This, along with the market's perception that falling rates are good
for all financial stocks, tends to boost insurance stocks. When interest
rates are rising as they have this year, the value of insurers' bond
portfolios declines. If that decline is big enough, it can begin to reduce
the industry's surplus, which could lead to some improvement in pricing
power. However, the industry's surplus is so large that even the major
sell-off in bonds this year wasn't enough to help pricing. As for company
valuations, since the industry's fundamentals are sluggish, looking for and
buying stocks that are cheap relative to the overall group is really my
only card to play.
Q. HOW DOES THAT AFFECT YOUR INVESTMENT APPROACH?
A. It forces me to focus more heavily on the short-term prospects of the
fund's stocks. Insurance stock prices have tended to stay in a trading
range. In the absence of positive fundamental developments like price
increases, there's nothing to provide the stocks with momentum to push
through the upper end of this trading range. So, when a stock's price gets
close to the top of the range, I tend to sell it in favor of another that's
cheaper. Likewise, if a stock is trading at or near the bottom of the
range, and the company doesn't have any potentially adverse claims
exposure, I'll tend to buy it.
Q. WHICH OF THE FUND'S INVESTMENTS HAS POSTED THE BEST PERFORMANCE THIS
YEAR?
A. Allied Group - the fund's largest investment at the end of August - rose
about 25%. So, it was a major contributor to the fund's positive
performance. Allied Group is a small, midwestern property and casualty
company that focuses on rural markets. Even though the stock has had a nice
upward move, I plan to hold onto it because I don't think the price fully
reflects the company's earnings potential. General Re also did extremely
well before I reduced the fund's investment in June from about 7.5% to just
under 2% on August 31. I reduced it because I felt the stock's price fully
reflected the company's earnings and further upside was limited. I did the
same thing with investments in Aetna Life & Casualty, CIGNA and St. Paul
Companies.
Q. WHAT IS YOUR OUTLOOK FOR THE INDUSTRY AND HOW WILL THIS AFFECT YOUR
APPROACH GOING FORWARD?
A. I don't expect the industry's over-capacity problem to improve right
away. There would have to be a series of major catastrophes in quick
succession to cut the huge surplus, and that is very unlikely. However,
things do change, so I constantly track the surplus. If things continue as
they are, I'll keep looking for cheaper stocks and sell them when I think
they reach full value in the market. But if industry fundamentals were to
improve, I would shift to a strategy of investing heavily in the highest
quality companies, such as American International Group (AIG) or Chubb.
FUND FACTS
START DATE: December 16, 1985
SIZE: as of August 31, 1994, more than
$6 million
MANAGER: Robert Chow, since June 1993;
manager, Fidelity Select Paper and Forest
Products, 1990-1993; Fidelity Select
Computers, May 1991-June 1992; Fidelity
Select Technology Portfolio, June 1991-June
1992; assistant, Fidelity Equity Income, since
December 1993; Fidelity Growth & Income,
June 1992-January 1993; equity analyst,
financial services industry, February 1994 to
present; joined Fidelity in 1989
(checkmark)
INSURANCE PORTFOLIO
INVESTMENTS AUGUST 31, 1994 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 88.4%
SHARES VALUE (NOTE 1)
CREDIT & OTHER FINANCE - 4.2%
FINANCIAL SERVICES - 4.2%
Transamerica Corporation 5,000 $ 266,875
INSURANCE - 84.2%
INSURANCE CARRIERS - 7.2%
Blanch E.W. Holdings, Inc. 7,000 157,500
MBIA, Inc. 5,000 306,250
463,750
LIFE INSURANCE - 5.3%
Providian Corp. 10,000 336,250
PROPERTY-CASUALTY & REINSURANCE - 71.7%
Allied Group, Inc. 24,000 717,000
Allmerica Property & Casualty
Companies 10,000 166,250
Allstate Corp. 22,000 572,000
American Reinsurance Corp. (a) 5,000 146,250
Berkley (W.R.) Corp. 7,000 256,375
Chubb Corp. (The) 2,000 146,500
General Re Corp. 1,000 111,625
Gryphon Holdings, Inc. (a) 38,000 555,750
Harleysville Group, Inc. 25,000 543,750
NAC Re Corp. 13,000 344,500
SAFECO Corp. 5,000 273,125
Travelers, Inc. (The) 12,000 444,000
USF&G Corp. 23,000 310,500
4,587,625
TOTAL INSURANCE 5,387,625
TOTAL COMMON STOCKS
(Cost $5,293,553) 5,654,500
REPURCHASE AGREEMENTS - 11.6%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account, at 4.83% dated
8/31/94 due 9/1/94 $ 744,100 744,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $6,037,553) $ 6,398,500
LEGEND
1. Non-income producing
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $7,361,406 and $19,215,422, respectively (see Note 4 of Notes to
Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $10,198 for the period (see
Note 5 of Notes to Financial Statements).
INCOME TAX INFORMATION
At August 31, 1994, the aggregate cost of investment securities for income
tax purposes was $6,037,553. Net unrealized appreciation aggregated
$360,947, of which $433,949 related to appreciated investment securities
and $73,002 related to depreciated investment securities.
On October 26, 1990, the fund acquired all of the assets of Life Insurance
Portfolio in a tax-free exchange for shares of Insurance Portfolio. Life
Insurance Portfolio had a capital loss carryover of approximately $101,000
available to offset future realized capital gains in Insurance Portfolio,
to the extent provided by regulations.
INSURANCE PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
AUGUST 31, 1994 (UNAUDITED)
ASSETS
Investment in securities, at value (including repurchase agreements of $744,000) (cost $6,037,553) - See $ 6,398,500
accompanying schedule
Cash 587
Receivable for investments sold 204,433
Receivable for fund shares sold 43,266
Dividends receivable 2,560
Redemption fees receivable 23
Other receivables 2,749
Prepaid expenses 4,990
TOTAL ASSETS 6,657,108
LIABILITIES
Payable for fund shares redeemed
$ 160,997
Accrued management fee 3,520
Other payables and accrued expenses 23,557
TOTAL LIABILITIES 188,074
NET ASSETS $ 6,469,034
Net Assets consist of:
Paid in capital $ 7,073,770
Undistributed net investment income 18,644
Accumulated undistributed net realized gain (loss) on investments (984,327
)
Net unrealized appreciation (depreciation) on investments 360,947
NET ASSETS, for 317,820 shares outstanding $ 6,469,034
NET ASSET VALUE and redemption price per share ($6,469,034 (divided by) shares) $20.35
Maximum offering price per share (100/97 of $20.35) $20.98
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED AUGUST 31, 1994 (UNAUDITED)
INVESTMENT INCOME $ 121,669
Dividends
Interest 16,994
TOTAL INCOME 138,663
EXPENSES
Management fee $ 34,572
Transfer agent 46,615
Fees
Redemption fees (6,377
)
Accounting fees and expenses 22,526
Non-interested trustees' compensation 39
Custodian fees and expenses 5,687
Registration fees 4,990
Audit 9,662
Legal 201
Reports to shareholders 3,623
Miscellaneous 32
Total expenses before reductions 121,570
Expense reductions (1,551 120,019
)
NET INVESTMENT INCOME 18,644
REALIZED AND UNREALIZED GAIN (LOSS) (970,854
Net realized gain (loss) on investment securities )
Change in net unrealized appreciation (depreciation) on investment securities 743,798
NET GAIN (LOSS) (227,056
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ (208,412
)
OTHER INFORMATION $41,761
Sales Charges Paid to FDC
Deferred sales charges withheld $555
by FDC
Exchange fees withheld by FSC $4,808
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS YEAR ENDED
ENDED FEBRUARY 28,
AUGUST 31, 1994 1994
(UNAUDITED)
Operations $ 18,644 $ (4,905
Net investment income (loss) )
Net realized gain (loss) (970,854 2,620,140
)
Change in net unrealized appreciation (depreciation) 743,798 (2,713,783
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (208,412 (98,548
) )
Distributions to shareholders - (8,586
From net investment income )
From net realized gain - (1,719,115
)
TOTAL DISTRIBUTIONS - (1,727,701
)
Share transactions 8,779,151 31,795,113
Net proceeds from sales of shares
Reinvestment of distributions - 1,707,519
Cost of shares redeemed (20,536,609 (39,665,244
) )
Paid in capital portion of redemption fees 16,177 40,196
Net increase (decrease) in net assets resulting from share transactions (11,741,281 (6,122,416
) )
TOTAL INCREASE (DECREASE) IN NET ASSETS (11,949,693 (7,948,665
) )
NET ASSETS
Beginning of period 18,418,727 26,367,392
End of period (including undistributed net investment income of $18,644 and $0, respectively) $ 6,469,034 $ 18,418,727
OTHER INFORMATION
Shares
Sold 451,610 1,431,358
Issued in reinvestment of distributions - 84,550
Redeemed (1,082,935 (1,788,708
) )
Net increase (decrease) (631,325 (272,800
) )
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS YEAR ENDED TEN MONTHS YEARS ENDED APRIL 30,
ENDED FEBRUARY 28, ENDED
AUGUST 31, 1994 FEBRUARY 28,
SELECTED PER-SHARE DATAC (UNAUDITED) 1994 1993 1992 1991 1990
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 19.41 $ 21.58 $ 18.03 $ 16.73 $ 13.63 $ 12.65
Income from Investment Operations
Net investment income (loss) .03 - (.04) .04 .23 .17
Net realized and unrealized gain (loss) .88F (.24) 5.12 1.48 2.83 .93
Total from investment operations .91 (.24) 5.08 1.52 3.06 1.10
Less Distributions
From net investment income - (.01) - (.26) - (.15)
In excess of net investment income - - (.03) - - -
From net realized gain - (1.96) (1.71) - - -
Total distributions - (1.97) (1.74) (.26) - (.15)
Redemption fees added to paid in capital .03 .04 .21 .04 .04 .03
Net asset value, end of period $ 20.35 $ 19.41 $ 21.58 $ 18.03 $ 16.73 $ 13.63
TOTAL RETURND, E 4.84% (1.24) 31.98% 9.47% 22.74% 8.82%
%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 6,469 $ 18,419 $ 26,367 $ 2,573 $ 2,176 $ 2,240
Ratio of expenses to average net assetsB 2.13%A 1.93% 2.49%A 2.47% 2.49% 2.50%
Ratio of expenses to average net assets before 2.16%A 1.93% 2.52%A 2.71% 2.73% 2.97%
expense reductionsB
Ratio of net investment income (loss) to average net .33%A (.02) (.26)% .22% 1.58% 1.15%
assets % A
Portfolio turnover rate 148%A 101% 81%A 112% 98% 158%
</TABLE>
A ANNUALIZED B SEE NOTE 9 OF NOTES TO FINANCIAL STATEMENTS. C NET
INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD. D TOTAL RETURNS DO NOT INCLUDE THE
ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT
ANNUALIZED. E THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES
NOT BEEN REDUCED DURING THE PERIODS SHOWN. F THE AMOUNT SHOWN FOR A SHARE
OUTSTANDING DOES NOT CORRESPOND WITH THE AGGREGATE NET LOSS ON INVESTMENTS
FOR THE PERIOD ENDED DUE TO THE TIMING OF SALES AND REPURCHASES OF FUND
SHARES IN RELATION TO FLUCTUATING MARKET VALUES OF THE INVESTMENTS OF THE
FUND.
REGIONAL BANKS PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance: total
percentage change in value, the average annual percentage change, or the
growth of a hypothetical $10,000 investment. Each performance figure
includes changes in a fund's share price, plus reinvestment of any
dividends (income) and capital gains (the profits the fund earns when it
sells stocks that have grown in value).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 6 PAST 1 PAST 5 LIFE OF
AUGUST 31, 1994 MONTH YEAR YEARS FUND
S
REGIONAL BANKS 11.64% 13.06% 122.95% 228.72%
REGIONAL BANKS
(INCL. 3% SALES CHARGE) 8.29% 9.67% 116.26% 218.86%
S&P 500 3.26% 5.47% 58.16% 148.27%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one year, five years, or
since the fund started on June 30, 1986. You can compare these figures to
the performance of the S&P 500 - a common proxy for the U.S. stock market.
This benchmark includes reinvested dividends and capital gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
AUGUST 31, 1994 YEAR YEARS FUND
REGIONAL BANKS 13.06% 17.39% 15.66%
REGIONAL BANKS (INCL. 3% SALES CHARGE) 9.67% 16.68% 15.23%
S&P 500 5.47% 9.60% 11.76%
AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and
show you what would have happened if the fund had performed at a constant
rate each year.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of growth in the long run
and volatility in the short run. Unlike the broader
market, however, some sectors may not have
a history of growth in the long run. And, as
with all stock funds, the share price and return
of a fund that invests in a sector will vary. That
means if you sell your shares during a sector
downturn, you might lose money. But if you
can identify a sector that is about to
experience rapid growth you may have the
potential for above-average gains.
(checkmark)
$10,000 OVER LIFE OF FUND
Select Reg. Banks (507Standard & Poor's
06/30/86 9700.00 10000.00
07/31/86 9040.40 9488.77
08/31/86 9379.90 10192.84
09/30/86 8361.40 9349.89
10/31/86 8574.80 9889.38
11/30/86 8545.70 10129.69
12/31/86 8283.80 9871.39
01/31/87 8894.90 11201.06
02/28/87 9486.60 11643.50
03/31/87 9506.00 11980.00
04/30/87 8933.70 11873.38
05/31/87 8982.20 11976.68
06/30/87 9302.30 12581.50
07/31/87 9302.30 13219.38
08/31/87 9729.10 13712.46
09/30/87 9476.90 13412.16
10/31/87 7924.90 10523.18
11/30/87 7672.70 9656.07
12/31/87 8031.30 10390.90
01/31/88 8599.98 10828.35
02/29/88 8819.46 11332.96
03/31/88 9019.00 10982.77
04/30/88 8919.23 11104.68
05/31/88 9078.86 11201.29
06/30/88 9717.37 11715.43
07/31/88 9767.26 11670.91
08/31/88 9637.56 11274.10
09/30/88 10006.70 11754.37
10/31/88 10126.42 12081.14
11/30/88 9877.00 11908.38
12/31/88 10095.78 12116.78
01/31/89 10736.79 13003.73
02/28/89 10897.04 12679.94
03/31/89 11794.44 12975.38
04/30/89 12104.26 13648.80
05/31/89 13033.71 14201.58
06/30/89 12816.92 14120.63
07/31/89 13957.64 15395.72
08/31/89 14302.01 15697.48
09/30/89 14420.38 15633.12
10/31/89 13085.96 15270.43
11/30/89 13064.44 15581.95
12/31/89 12785.92 15955.91
01/31/90 11633.94 14885.27
02/28/90 12112.98 15077.29
03/31/90 11816.43 15476.84
04/30/90 11143.49 15089.92
05/31/90 11919.08 16561.19
06/30/90 11451.44 16448.57
07/31/90 10755.69 16395.93
08/31/90 9751.98 14913.74
09/30/90 8565.77 14187.44
10/31/90 8314.84 14126.44
11/30/90 9421.21 15039.00
12/31/90 10143.17 15458.59
01/31/91 10816.29 16132.59
02/28/91 11733.12 17286.07
03/31/91 12394.63 17704.39
04/30/91 13230.22 17746.88
05/31/91 14089.03 18513.55
06/30/91 13253.44 17665.63
07/31/91 14355.95 18488.84
08/31/91 15388.84 18927.03
09/30/91 15087.10 18610.95
10/31/91 15713.79 18860.33
11/30/91 14994.25 18100.26
12/31/91 16816.66 20170.93
01/31/92 17868.47 19795.75
02/29/92 19311.64 20053.10
03/31/92 19042.58 19662.06
04/30/92 20155.53 20240.13
05/31/92 21011.66 20339.30
06/30/92 21221.30 20036.25
07/31/92 21245.92 20855.73
08/31/92 20113.46 20428.19
09/30/92 21048.97 20669.24
10/31/92 21947.55 20741.58
11/30/92 23744.72 21448.87
12/31/92 24976.51 21712.69
01/31/93 26017.20 21895.08
02/28/93 26826.62 22192.85
03/31/93 27970.10 22661.12
04/30/93 26530.18 22112.72
05/31/93 26270.84 22705.34
06/30/93 27736.09 22771.19
07/31/93 27813.89 22680.10
08/31/93 28202.90 23539.68
09/30/93 29175.41 23358.43
10/31/93 27606.42 23841.94
11/30/93 26737.64 23615.45
12/31/93 27767.00 23901.19
01/31/94 29386.35 24713.83
02/28/94 28560.80 24044.09
03/31/94 28084.52 22995.77
04/30/94 29572.74 23290.11
05/31/94 31050.57 23672.07
06/30/94 30279.53 23092.10
07/31/94 31082.70 23849.53
08/31/94 31885.87 24827.36
Let's say you invested $10,000 in Fidelity Select Regional Banks Portfolio
on June 30, 1986, when the fund started, and paid a 3% sales charge. By
August 31, 1994, your investment would have grown to $31,886 - a 218.86%
increase. That compares to $10,000 invested in the S&P 500, which would
have grown to $24,827 over the same period - a 148.27% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST 31, 1994
% OF FUND'S
INVESTMENTS
NationsBank Corp. 6.8
Bank of New York Co., Inc. 6.3
Citicorp. 5.9
Comerica, Inc. 4.7
State Street Boston Corp. 4.7
BankAmerica Corp. 4.5
BanPonce Corp. 4.2
Bank of Boston Corp. 4.1
Keycorp. 4.0
Chemical Banking Corp. 3.6
TOP REGIONS AS OF AUGUST 31, 1994
Row: 1, Col: 1, Value: 23.2
Row: 1, Col: 2, Value: 10.8
Row: 1, Col: 3, Value: 11.5
Row: 1, Col: 4, Value: 11.9
Row: 1, Col: 5, Value: 20.3
Row: 1, Col: 6, Value: 22.3
Northeast 22.3%
Midwest 20.3%
West 11.9%
Southeast 11.5%
Multi-Regional 10.8%
All Others 23.2%*
* INCLUDES SHORT-TERM INVESTMENTS
REGIONAL BANKS PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Stephen Binder,
Portfolio Manager of
Fidelity Select Regional Banks Portfolio
Q. STEVE, HOW DID THE FUND PERFORM?
A. Very well. The fund returned 11.64% for the six months and 13.06% for
the 12 months ended August 31, 1994. Those results beat the S&P 500's 3.26%
and 5.47% returns during the same periods.
Q. WOULD YOU DESCRIBE THE DYNAMICS IN THE INDUSTRY DURING THE PAST SIX
MONTHS AND HOW THE FUND CAPITALIZED ON THEM TO POST SUCH STRONG RESULTS?
A. Toward the end of last year, bank stocks performed poorly as investors
sold them, fearing rising interest rates would decimate banks' earnings.
That view turned out to be wrong, but the selling depressed the stocks'
prices, making them cheap relative to the overall market and to banks'
earnings. Higher interest rates turned out to be good for earnings. The
rates banks pay on deposits - a major component of banks' cost of funds -
increased only modestly. Thus, banks were able to raise the rates they
charge for loans faster than their cost of funds increased. The stronger
economy led to increasing loan demand. So, banks made more loans at higher
rates and maintained a favorable spread between what they were charging for
money and what that money cost them. All of this combined to increase
banks' earnings, propel their stock prices, and drive the fund's return.
Q. WHAT OTHER FACTORS HELPED THE FUND'S PERFORMANCE?
A. Accelerating consolidation in the industry provided an additional boost
to many stocks' prices. The catalyst for this is the liberalization of
interstate banking regulations. This should open up new markets for many
banks. In the meantime, there are plenty of acquisitions occurring, with
small and medium-size institutions being purchased by larger banks. Many
banks are also buying thrifts, because a thrift can usually be acquired
more cheaply than another bank. For example, Shawmut National, a large New
England bank and one of the fund's larger investments, purchased several
thrifts in the past six months.
Q. AMONG THE FUND'S LARGER INVESTMENTS, WHICH WERE THE STANDOUTS DURING THE
PERIOD AND WHY?
A. NationsBank, the fund's largest position, continued to increase its
revenues through solid loan growth and relatively strong growth in fee
income. Bank of New York, the fund's second largest investment, was up more
than 19% over the past six months. It continues to have strong fee income
from its trust and securities processing services. It also benefited from
offering low-rate credit cards, which boosted the bank's loan volume. Bank
of Boston, up about 12% from the end of February through the end of August,
experienced good domestic loan growth with continued cost cutting.
Internationally, its branch system in Argentina is thriving, contributing
further to revenues.
Q. SIGNET BANKING WAS THE FUND'S THIRD LARGEST INVESTMENT
AT THE END OF FEBRUARY. YOU SOLD OUT OF IT IN JULY. WHAT'S THE STORY THERE?
A. It was a terrific performer throughout 1993 and the first half of 1994.
I sold it before a disappointing earnings report caused the stock to drop
about 10% in one day. Signet became a credit card powerhouse by
aggressively pursuing a strategy of offering low-rate cards with the rate
guaranteed for a year. It attracted a lot of new customers who transferred
balances from higher rate cards. This year's rise in interest rates made it
more difficult for the bank to do this profitably. Competition from other
banks intensified. Both factors led investors to conclude that Signet's
credit card business had peaked. Since that had been the driver behind
earnings, investors sold out of the stock. I managed to get out ahead of
the pack.
Q. WHAT IS YOUR OUTLOOK FOR THE INDUSTRY AND YOUR GAME PLAN FOR THE FUND
GOING FORWARD?
A. I expect the favorable spread relationship between bank deposit costs
and lending rates to remain intact even if interest rates continue to rise
- - as long as they rise gradually. This would continue to support banks'
earnings and stock prices. I also expect industry consolidation to
continue, as many small and medium-size banks and thrifts conclude that it
will become increasingly difficult for them to compete. One of the
negatives in the past six months was the difficulty banks had in growing
fee revenue. This is revenue generated from areas such as trust services,
mutual fund sales, service charges on deposits and mortgage banking
activities. This could be a problem if rising interest rates do squeeze
banks' lending margins, which would further pressure overall loan revenues.
So, I'll continue to focus on finding those companies that can deliver
consistent revenue growth.
FUND FACTS
START DATE: June 30, 1986
SIZE: as of August 31, 1994, more than
$163 million
MANAGER: Stephen Binder, since May 1990;
manager, Fidelity Select Defense and
Aerospace Portfolio, since October 1992;
Fidelity Select Financial Services Portfolio,
since November 1993; joined Fidelity in 1989
(checkmark)
REGIONAL BANKS PORTFOLIO
INVESTMENTS AUGUST 31, 1994 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 97.3%
SHARES VALUE (NOTE 1)
BANKS - 96.4%
MID-ATLANTIC - 9.4%
BB & T Financial Corp. 15,000 $ 446,250
Commerce Bank, Virginia Beach 12,962 466,632
Crestar Financial Corp. 76,583 3,695,130
First Fidelity Bancorporation 41,200 1,890,050
HUBCO, Inc. 55,020 1,237,950
Integra Financial Corp. 28,280 1,382,185
Midlantic Corp. 143,500 4,322,938
Pamrapo Bancorp, Inc. 14,000 266,000
Southern National Corp. 20,000 417,500
Wachovia Corp. 40,000 1,400,000
15,524,635
MIDWEST - 20.3%
Boatmen's Bancshares, Inc. 140,000 4,707,500
Comerica, Inc. 256,500 7,791,188
Fifth Third Bancorp 46,500 2,394,750
First Bank System, Inc. 100,701 3,725,937
First Chicago Corp. 86,100 4,477,200
Huntington Bancshares, Inc. 50,386 1,077,001
Mercantile Bancorporation, Inc. 51,700 1,977,525
National City Corp. 74,109 1,991,679
Northern Trust Corp. 38,200 1,461,150
Norwest Corp. 100,296 2,670,381
Standard Federal Bank 36,100 997,263
33,271,574
NORTHEAST - 22.3%
Bank of Boston Corp. 255,639 6,710,524
Bank of New York Co., Inc. 319,224 10,374,780
Banknorth Group, Inc. (DE) 26,500 669,125
DS Bancor, Inc. (a) 15,000 435,938
First Empire State Corp. 4,600 724,500
NBD Bancorp, Inc. 100,600 3,131,175
North Fork Bancorporation, Inc. 72,000 1,098,000
North Side Savings Bank (Bronx, NY) 5,733 143,325
Reliance BanCorp, Inc. (a) 38,000 475,000
Shawmut National Corp. 209,800 4,720,500
State Street Boston Corp. 194,000 7,760,000
Webster Financial Corp. (Waterbury, CT) 17,350 425,075
36,667,942
SOUTHEAST - 11.5%
BanPonce Corp. 208,501 6,932,658
Barnett Banks, Inc. 100,000 4,725,000
Colonial BancGroup, Inc. Class A 5,300 129,850
Compass Bancshares, Inc. 14,000 350,000
Deposit Guaranty Corp. 8,600 281,650
First Commerce Corp. 32,000 904,000
First Union Corp. 20,700 954,788
Regions Financial Corp. 51,800 1,871,275
SunTrust Banks, Inc. 45,000 2,300,625
Whitney Holding Corp. 16,800 453,600
18,903,446
SOUTHWEST - 0.7%
Liberty Bancorporation, Inc. 35,500 1,144,875
WEST - 11.9%
Bancorp Hawaii, Inc. 60,000 1,942,500
BankAmerica Corp. 150,000 7,406,250
CenFed Financial Corp. 23,950 479,000
First Security Corp. 97,805 3,178,663
Silicon Valley Bancshares (a) 37,200 465,000
West One Bancorp 83,800 2,597,800
Westamerica Bancorp 24,900 787,463
Zions Bancorporation 68,000 2,754,000
19,610,676
SHARES VALUE (NOTE 1)
MONEY CENTER - 9.5%
Chemical Banking Corp. 152,000 $ 5,890,000
Citicorp 219,000 9,690,750
15,580,750
MULTI-REGIONAL - 10.8%
Keycorp. 199,723 6,565,894
NationsBank Corp. 199,353 11,113,930
17,679,824
TOTAL BANKS 158,383,722
CREDIT & OTHER FINANCE - 0.9%
MORTGAGE BANKERS - 0.2%
Green Tree Acceptance, Inc. 10,000 335,000
PERSONAL CREDIT INSTITUTIONS - 0.7%
Household International, Inc. 27,512 1,086,720
TOTAL CREDIT & OTHER FINANCE 1,421,720
TOTAL COMMON STOCKS
(Cost $146,292,335) 159,805,442
REPURCHASE AGREEMENTS - 2.7%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account, at 4.83% dated
8/31/94 due 9/1/94 $4,486,602 4,486,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $150,778,335) $ 164,291,442
LEGEND
1. Non-income producing
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $122,664,605 and $70,348,481, respectively (see Note 4 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $67,771 for the period (see
Note 5 of Notes to Financial Statements).
The maximum loan and average daily loan balances during the periods for
which loans were outstanding amounted to $8,555,000 and $2,665,111,
respectively. The weighted average interest rate paid was 4.3% (see Note 8
of Notes to Financial Statements).
INCOME TAX INFORMATION
At August 31, 1994, the aggregate cost of investment securities for income
tax purposes was $150,790,792. Net unrealized appreciation aggregated
$13,500,650, of which $14,645,498 related to appreciated investment
securities and $1,144,848 related to depreciated investment securities.
REGIONAL BANKS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
AUGUST 31, 1994 (UNAUDITED)
ASSETS
Investment in securities, at value (including repurchase agreements of $4,486,000) (cost $150,778,335) - See $ 164,291,442
accompanying schedule
Cash 473
Receivable for fund shares sold 1,698,798
Dividends receivable 463,738
Redemption fees receivable 558
Other receivables 1,677
Prepaid expenses 20,358
TOTAL ASSETS 166,477,044
LIABILITIES
Payable for fund shares redeemed $ 3,024,877
Accrued management fee 85,190
Other payables and accrued expenses 141,086
TOTAL LIABILITIES 3,251,153
NET ASSETS $ 163,225,891
Net Assets consist of:
Paid in capital $ 143,012,046
Undistributed net investment income 1,403,329
Accumulated undistributed net realized gain (loss) on investments 5,297,409
Net unrealized appreciation (depreciation) on investments 13,513,107
NET ASSETS, for 8,221,498 shares outstanding $ 163,225,891
NET ASSET VALUE and redemption price per share ($163,225,891 (divided by) (verticle 8) shares) $19.85
Maximum offering price per share (100/97 of $19.85) $20.46
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED AUGUST 31, 1994 (UNAUDITED)
INVESTMENT INCOME $ 2,237,870
Dividends
Interest 372,575
TOTAL INCOME 2,610,445
EXPENSES
Management fee $ 488,109
Transfer agent 661,054
Fees
Redemption fees (74,399
)
Accounting fees and expenses 78,757
Non-interested trustees' compensation 415
Custodian fees and expenses 5,598
Registration fees 20,358
Audit 12,961
Legal 1,371
Interest 2,858
Reports to shareholders 7,174
Miscellaneous 193
Total expenses before reductions 1,204,449
Expense reductions (10,716 1,193,733
)
NET INVESTMENT INCOME 1,416,712
REALIZED AND UNREALIZED GAIN (LOSS) 5,394,814
Net realized gain (loss) on investment securities
Change in net unrealized appreciation (depreciation) on investment securities 5,904,205
NET GAIN (LOSS) 11,299,019
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 12,715,731
OTHER INFORMATION $747,628
Sales Charges Paid to FDC
Deferred sales charges withheld $2,162
by FDC
Exchange fees withheld by FSC $61,230
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS YEAR ENDED
ENDED FEBRUARY 28,
AUGUST 31, 1994 1994
(UNAUDITED)
Operations $ 1,416,712 $ 1,775,482
Net investment income
Net realized gain (loss) 5,394,814 47,667,500
Change in net unrealized appreciation (depreciation) 5,904,205 (45,382,083
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 12,715,731 4,060,899
Distributions to shareholders (66,752 (1,037,780
From net investment income ) )
From net realized gain (1,401,894 (23,400,595
) )
TOTAL DISTRIBUTIONS (1,468,646 (24,438,375
) )
Share transactions 221,259,396 278,064,736
Net proceeds from sales of shares
Reinvestment of distributions 1,435,330 23,731,357
Cost of shares redeemed (168,490,514 (500,062,192
) )
Paid in capital portion of redemption fees 345,729 552,081
Net increase (decrease) in net assets resulting from share transactions 54,549,941 (197,714,018
)
TOTAL INCREASE (DECREASE) IN NET ASSETS 65,797,026 (218,091,494
)
NET ASSETS
Beginning of period 97,428,865 315,520,359
End of period (including undistributed net investment income of $1,403,329 and $1,064,151,
respectively) $ 163,225,891 $ 97,428,865
OTHER INFORMATION
Shares
Sold 11,661,794 13,266,789
Issued in reinvestment of distributions 77,036 1,338,190
Redeemed (8,932,275 (24,299,694
) )
Net increase (decrease) 2,806,555 (9,694,715
)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS YEAR ENDED TEN MONTHS YEARS ENDED APRIL 30,
ENDED FEBRUARY 28, ENDED
AUGUST 31, 1994 FEBRUARY 28,
SELECTED PER-SHARE DATAC (UNAUDITED) 1994 1993 1992 1991 1990
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 17.99 $ 20.88 $ 16.48 $ 11.40 $ 9.77 $ 11.33
Income from Investment Operations
Net investment income .17 .19 .16 .25 .22 .21
Net realized and unrealized gain (loss) 1.87 .93 5.09 5.37 1.41 (1.03)
Total from investment operations 2.04 1.12 5.25 5.62 1.63 (.82)
Less Distributions
From net investment income (.01) (.15) (.11) (.15) (.15) (.11)
From net realized gain (.21) (3.92) (.81) (.53) - (.65)
Total distributions (.22) (4.07) (.92) (.68) (.15) (.76)
Redemption fees added to paid in capital .04 .06 .07 .14 .15 .02
Net asset value, end of period $ 19.85 $ 17.99 $ 20.88 $ 16.48 $ 11.40 $ 9.77
TOTAL RETURND, E 11.64% 6.46% 33.10% 52.34% 18.73% (7.94)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 163,226 $ 97,429 $ 315,520 $ 156,570 $ 24,212 $ 5,410
Ratio of expenses to average net assetsB 1.50%A 1.60% 1.49%A 1.77% 2.51% 2.55%
Ratio of expenses to average net assets before 1.51%A 1.62% 1.49%A 1.77% 2.94% 2.72%
expense reductionsB
Ratio of net investment income to average net 1.78%A .88% 1.06%A 1.80% 2.34% 1.74%
asset
Portfolio turnover rate 101% 74% 63% 89% 110% 411%
</TABLE>
A ANNUALIZED
B SEE NOTE 9 OF NOTES TO FINANCIAL STATEMENTS.
C NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
D TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
E THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
BIOTECHNOLOGY PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance: total
percentage change in value, the average annual percentage change, or the
growth of a hypothetical $10,000 investment. Each performance figure
includes changes in a fund's share price, plus reinvestment of any
dividends (income) and capital gains (the profits the fund earns when it
sells stocks that have grown in value).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 6 PAST 1 PAST 5 LIFE OF
AUGUST 31, 1994 MONTH YEAR YEARS FUND
S
BIOTECHNOLOGY -8.62% -0.24% 142.04% 242.88%
BIOTECHNOLOGY
(INCL. 3% SALES CHARGE) -11.36% -3.23% 134.78% 232.60%
S&P 500 3.26% 5.47% 58.16% 200.89%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one year, five years, or
since the fund started on December 16, 1985. You can compare these figures
to the performance of the S&P 500 - a common proxy for the U.S. stock
market. This benchmark includes reinvested dividends and capital gains, if
any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
AUGUST 31, 1994 YEAR YEARS FUND
BIOTECHNOLOGY -0.24% 19.34% 15.19%
BIOTECHNOLOGY (INCL. 3% SALES CHARGE) -3.23% 18.61% 14.79%
S&P 500 5.47% 9.60% 13.47%
AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and
show you what would have happened if the fund had performed at a constant
rate each year.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of growth in the long run
and volatility in the short run. Unlike the broader
market, however, some sectors may not have
a history of growth in the long run. And, as
with all stock funds, the share price and return
of a fund that invests in a sector will vary. That
means if you sell your shares during a sector
downturn, you might lose money. But if you
can identify a sector that is about to
experience rapid growth you may have the
potential for above-average gains.
(checkmark)
$10,000 OVER LIFE OF FUND
Select Biotechnology (042)Standard & Poor's
12/16/85 9700.00 10000.00
12/31/85 9700.00 10080.42
01/31/86 10175.30 10136.87
02/28/86 10417.80 10895.11
03/31/86 12192.90 11503.06
04/30/86 12377.20 11373.07
05/31/86 12988.30 11978.12
06/30/86 13715.80 12180.55
07/31/86 11863.10 11499.66
08/31/86 12328.70 12352.93
09/30/86 10214.10 11331.35
10/31/86 10970.70 11985.16
11/30/86 10728.20 12276.40
12/31/86 10039.50 11963.36
01/31/87 11378.10 13574.82
02/28/87 13715.80 14111.03
03/31/87 13657.60 14518.83
04/30/87 13483.00 14389.62
05/31/87 13424.80 14514.81
06/30/87 13327.80 15247.80
07/31/87 13347.20 16020.87
08/31/87 13890.40 16618.45
09/30/87 13686.70 16254.50
10/31/87 9476.90 12753.28
11/30/87 8555.40 11702.41
12/31/87 9701.08 12592.97
01/31/88 10191.13 13123.13
02/29/88 10571.17 13734.67
03/31/88 10501.17 13310.27
04/30/88 10311.14 13458.01
05/31/88 10111.12 13575.09
06/30/88 10451.16 14198.19
07/31/88 10441.16 14144.24
08/31/88 10151.13 13663.33
09/30/88 10361.15 14245.39
10/31/88 10251.14 14641.41
11/30/88 9771.08 14432.04
12/31/88 10101.12 14684.60
01/31/89 10801.20 15759.52
02/28/89 10721.19 15367.10
03/31/89 11511.28 15725.16
04/30/89 11901.32 16541.29
05/31/89 12441.38 17211.21
06/30/89 12121.35 17113.11
07/31/89 13241.47 18658.42
08/31/89 13741.53 19024.13
09/30/89 14321.59 18946.13
10/31/89 14371.60 18506.58
11/30/89 14821.65 18884.12
12/31/89 14538.80 19337.33
01/31/90 13450.93 18039.80
02/28/90 14721.80 18272.51
03/31/90 15341.99 18756.73
04/30/90 15535.16 18287.82
05/31/90 17721.06 20070.88
06/30/90 18958.59 19934.40
07/31/90 19009.99 19870.61
08/31/90 18423.96 18074.30
09/30/90 18012.71 17194.08
10/31/90 18166.93 17120.15
11/30/90 20367.12 18226.11
12/31/90 20986.43 18734.62
01/31/91 23396.61 19551.45
02/28/91 26711.92 20949.38
03/31/91 29469.41 21456.35
04/30/91 28185.39 21507.85
05/31/91 29974.60 22436.99
06/30/91 28383.14 21409.37
07/31/91 30938.29 22407.05
08/31/91 33106.29 22938.10
09/30/91 34820.78 22555.03
10/31/91 38249.77 22857.27
11/30/91 35694.62 21936.12
12/31/91 41772.50 24445.61
01/31/92 40935.22 23990.92
02/29/92 37792.53 24302.81
03/31/92 34925.11 23828.90
04/30/92 31667.73 24529.47
05/31/92 33938.72 24649.67
06/30/92 33343.04 24282.39
07/31/92 35086.05 25275.53
08/31/92 32891.61 24757.39
09/30/92 32778.75 25049.52
10/31/92 34383.83 25137.20
11/30/92 37769.55 25994.38
12/31/92 37451.88 26314.11
01/31/93 35527.21 26535.14
02/28/93 29792.77 26896.02
03/31/93 30240.98 27463.53
04/30/93 31018.75 26798.91
05/31/93 33022.51 27517.12
06/30/93 33220.25 27596.92
07/31/93 32126.09 27486.53
08/31/93 33338.90 28528.27
09/30/93 34709.89 28308.61
10/31/93 37293.69 28894.59
11/30/93 37003.67 28620.10
12/31/93 37715.53 28966.40
01/31/94 39007.43 29951.26
02/28/94 36397.27 29139.58
03/31/94 32719.31 27869.09
04/30/94 32126.09 28225.82
05/31/94 31585.61 28688.72
06/30/94 30333.25 27985.85
07/31/94 30412.35 28903.78
08/31/94 33259.80 30088.84
Let's say you invested $10,000 in Fidelity Select Biotechnology Portfolio
on December 16, 1985, when the fund started, and paid a 3% sales charge. By
August 31, 1994, your investment would have grown to $33,260 - a 232.60%
increase. That compares to $10,000 invested in the S&P 500, which would
have grown to $30,089 over the same period - a 200.89% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST 31, 1994
% OF FUND'S
INVESTMENTS
Genentech, Inc. 8.2
Amgen, Inc. 7.8
Roche Holdings Ltd. (participation certificates) 3.3
Cellpro, Inc. 3.1
COR Therapeutics, Inc. 2.9
Protein Design Labs, Inc. 2.8
Schering-Plough Corp. 2.3
Teva Pharmaceutical Industries Ltd. ADR 2.3
Biogen, Inc. 2.2
Elan PLC ADR 1.9
TOP INDUSTRIES AS OF AUGUST 31, 1994
Row: 1, Col: 1, Value: 30.6
Row: 1, Col: 2, Value: 1.0
Row: 1, Col: 3, Value: 1.3
Row: 1, Col: 4, Value: 3.7
Row: 1, Col: 5, Value: 20.6
Row: 1, Col: 6, Value: 43.4
Biotechnology 43.4%
Drugs 20.6%
Pharmaceutical
Preparations 3.7%
Commercial Laboratory
Research 1.0%
Computer Services 0.7%
All Others 30.6%*
* INCLUDES SHORT-TERM INVESTMENTS
BIOTECHNOLOGY PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Karen Firestone,
Portfolio Manager of Fidelity Select
Biotechnology Portfolio
Q. KAREN, HOW DID THE FUND PERFORM?
A. It's been disappointing. The fund returned -8.62% for the six months
ended August 31, 1994, and -0.24% for the year. The S&P returned 3.26% and
5.47% for the same periods, respectively.
Q. WHAT FACTORS CONTRIBUTED TO THE POOR RESULTS?
A. Well, for some time now, biotech companies have been unable to show
marketable results of drugs undergoing testing. Accordingly, the market
became very discouraged. Investors' growing impatience with the lack of
positive news caused the market to erode over the past six months. For
example, stocks such as Cellpro and COR Therapeutics are down despite good
earnings. However, by August, the biotech giants such as Biogen, Amgen and
Genentech began producing the type of results that investors were anxious
to see, leading the group to a terrific finish. The fund was up 9.3% in
August alone.
Q. YOURS IS ONE OF THE FEW PURE BIOTECH FUNDS. HOW HAS THAT AFFECTED
PERFORMANCE?
A. It's hurt over the past few years. I diversify outside pure biotech as
much as my charter allows, but basically it's a very challenging
environment with little flexibility for me. Also, because a large amount of
money flows in and out of my fund, I sometimes have to sell a lot of stock
in a down market, which doesn't help.
Q. WHAT STRATEGIES DO YOU EMPLOY IN SUCH A TOUGH MARKET?
A. I've tried to position the fund defensively. I don't think that being
really aggressive right now is wise. I'm holding larger companies that have
real sales and profits rather than smaller companies that are losing money
or are without any product on the market. My top 10 holdings haven't
changed much in the past six months and I think that reflects my
philosophy. Even with the stocks moving higher, I focus the fund on those
companies I think have the more solid income statements and balance sheets.
I own a lot of Biogen and it's up nearly 20% since it announced positive
data on a drug to treat multiple sclerosis.
Q. UNDER THESE MARKET CONDITIONS, DO YOU HAVE ANY ROOM FOR SMALLER STOCKS?
A. Sure I do. In this sector you must take risks to get returns. I try not
to stretch risk so much that the returns are minimal. Instead, I strive for
balance. For example, I do own some companies that may not have a product
on the market now, but which I believe - based upon ongoing scientific
analysis - will have a valuable product in the future. I have great
confidence in the ultimate benefit of the drugs these companies are working
on. Conversely, I stay away from companies that are developing one product
that only has a 10 percent chance of working. There are an awful lot of
companies out there working on cures for AIDS, cancer and other auto immune
disorders that I think have absolutely no chance for success. It doesn't
mean that what they're doing isn't a noble effort, but this fund isn't
philanthropic.
Q. HOW HAS THE HEALTH CARE DEBATE INFLUENCED THE STOCKS IN YOUR SECTOR?
A. Certainly it's been a factor, but I don't think it's the primary reason
that the sector performed poorly. Health care reform may change the way
companies get paid for their product but not whether the drugs will work.
This industry is much more concerned with companies raising money to
produce successful drugs, than who will ultimately pay for them. Plus, I
believe that any effect that health care may have on stocks is already
built into current prices.
Q. WHAT'S THE OUTLOOK FOR THE NEXT SIX MONTHS?
A. My emphasis will continue to be on the top 20 holdings in the fund -
those I really think will succeed. There is a fair amount of data coming
from these companies about their products in the next few months. If the
data is good, the stocks should rally. I'm optimistic about the stronger
stocks, the real survivors, coming out on top. I think the group has a
better than average chance of outperforming the market.
FUND FACTS
START DATE: December 16, 1985
SIZE: as of August 31, 1994, more than
$462 million
MANAGER: Karen Firestone, since August
1992; manager, Fidelity Select Air
Transportation
Portfolio, September 1987- November 1992;
Fidelity Select Leisure Portfolio, April 1989-
August 1992; joined Fidelity in 1983
(checkmark)
BIOTECHNOLOGY PORTFOLIO
INVESTMENTS AUGUST 31, 1994 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 73.3%
SHARES VALUE (NOTE 1)
AGRICULTURE - 0.2%
CROPS - 0.2%
DEKALB Genetics Corp. Class B 23,700 $ 779,138
CELLULAR - 0.1%
CELLULAR & COMMUNICATION SERVICES - 0.1%
Millicom International Cellular SA (a) 26,942 646,608
COMPUTER SERVICES & SOFTWARE - 0.7%
COMPUTER SERVICES - 0.7%
Cerner Corp. (a) 84,400 3,523,700
DRUGS & PHARMACEUTICALS - 69.2%
BIOTECHNOLOGY - 43.4%
Advanced Tissue Sciences Corp.
Class A (a) 341,000 1,960,750
Alkermes, Inc. (a)(c) 678,500 2,544,375
Amgen, Inc. (a) 735,800 38,813,450
Athena Neurosciences, Inc. (a) 332,700 2,204,138
Bio-Rad Laboratories, Inc. Class A (a) 76,000 1,862,000
Biogen, Inc. (a) 216,200 10,891,075
COR Therapeutics, Inc. (a)(c) 997,300 14,710,175
Cambridge Neuroscience, Inc. (a) 93,900 446,025
Cell Genesys, Inc. (a) 139,000 1,251,000
Cellcor, Inc. (a) 150,000 459,375
Cellpro, Inc. (a) 618,700 15,312,825
Celtrix Laboratories, Inc. (a) 601,400 4,736,025
Centocor, Inc. (a) 627,300 8,860,613
Cephalon, Inc. (a) 340,800 4,260,000
Chiron Corp. (a) 10,000 701,250
Collagen Corp. 90,300 1,918,875
Creative Biomolecules, Inc. (a) 317,400 952,200
Cytotheraputics, Inc. (a) 455,100 3,697,688
Dynagen, Inc. (warrants) (a) 40,000 11,250
Genentech, Inc. (a) 795,800 40,884,225
Genetics Institute, Inc. (warrants) (a) 40,000 585,000
Genetics Institute, Inc. (depositary
shares) (a) 133,280 5,497,800
Genzyme Corp. (a) 156,400 5,317,600
Idexx Laboratories (a) 56,000 1,806,000
Imclone Systems, Inc. (a) 320,000 560,000
Insite Vision, Inc. (a)(c) 689,700 4,138,200
Liposome Co., Inc. (a)(c) 1,036,500 7,708,969
Magainin Pharmaceuticals, Inc. (a) 315,700 1,085,219
Neurogen (a) 301,900 1,509,500
North American Vaccine, Inc. (a) 26,000 331,500
Perspective Biosystems, Inc. (a) 421,000 5,578,250
Protein Design Labs, Inc. (a) 539,400 13,754,700
Quidel Corp. (a) 570,800 2,069,150
SciGenics, Inc. (a)(c) 122,000 1,372,500
Sepracor, Inc. (a) 171,400 814,150
Somatix Therapy Corp. (a) 449,600 2,978,600
Telios Pharmaceuticals, Inc. (a) 355,000 1,020,625
Univax Biologics, Inc. (a) 285,800 1,643,350
Viagene, Inc. (a) 22,500 81,563
Vical, Inc. (a) 278,900 2,579,825
216,909,815
COMMERCIAL LABORATORY RESEARCH - 1.0%
Cantab Pharmaceutical
sponsored ADR (a) 5,000 27,500
Medarex, Inc. (a) 30,000 146,250
Medarex, Inc. (a)(b) 175,000 853,125
Medarex, Inc. (warrants) (a) 175,000 262,500
Scios, Inc. (a) 480,203 3,661,548
4,950,923
SHARES VALUE (NOTE 1)
DRUGS - 20.6%
A.L. Laboratories, Inc. Class A 81,700 $ 1,266,350
Allergan, Inc. 169,100 4,629,113
Argus Pharmaceuticals, Inc. (a) 80,000 260,000
Astra AB free shares 145,000 3,276,139
Elan PLC ADR (a) 256,815 9,245,340
Elan PLC (warrants) (a) 76,575 1,617,647
Elan PLC unit (Therapeutic Systems, Inc.
1 common & 1 ADR warrant) (a) 35,539 928,456
Glaxo Holdings PLC sponsored ADR 160,000 3,140,000
IVAX Corp. 100,000 1,987,500
Lilly (Eli) & Co. 140,000 7,962,500
Lynx Therapeutics, Inc. 79,035 15,807
Matrix Pharmaceutical, Inc. (a) 178,600 2,143,200
Mylan Laboratories, Inc. 173,400 4,465,050
Novo Industri AS ADR 16,000 368,000
Pfizer, Inc. 42,800 2,921,100
Roche Holdings Ltd. (participation
certificates) 3,650 16,721,742
Schering-Plough Corp. 164,900 11,522,388
Schering Plough Corp. equity unit (a)(d) 6,300 145,278
Teva Pharmaceutical Industries Ltd. ADR 391,600 11,258,500
Upjohn Co. (a) 160,000 5,780,000
Vertex Pharmaceuticals, Inc. (a) 100,500 1,444,688
Warner-Lambert Co. 22,000 1,839,750
Watson Pharmaceuticals, Inc. (a) 221,100 5,057,663
Zenith Laboratories, Inc. (a) 201,900 4,921,313
102,917,524
IN VITRO, IN VIVO DIAGNOSTIC SUBSTANCES - 0.1%
Igen, Inc. (a) 73,900 471,113
MEDICINAL CHEMICALS - 0.4%
Martek Biosciences (a) 200,000 2,050,000
PHARMACEUTICAL PREPARATIONS - 3.7%
Affymax (a) 135,000 2,227,500
Circa Pharmaceuticals, Inc. (a) 237,900 3,152,175
Cocensys, Inc. (a) 206,000 1,133,000
Copley Pharmaceutical, Inc. (a) 102,500 3,113,438
Inhale Therapeutic Systems (a) 72,000 612,000
Ligand Pharmaceuticals, Inc. (a) 77,500 891,250
Neurobiological Technologies, Inc. (a) 58,900 265,050
Noven Pharmaceuticals, Inc. (a) 36,000 546,750
T Cell Sciences, Inc. (a) 394,100 1,379,350
Theratech, Inc. (a) 130,000 1,787,500
Zeneca Group PLC sponsored ADR 25,000 962,500
Zeneca Group PLC Ord. (a) 190,000 2,444,768
18,515,281
TOTAL DRUGS & PHARMACEUTICALS 345,814,656
INDUSTRIAL MACHINERY & EQUIPMENT - 0.3%
SPECIAL INDUSTRIAL MACHINERY, NEC - 0.3%
Perspective Technologies Corp. unit
(1 common & 1 warrant) (a) 100,000 1,375,000
MEDICAL EQUIPMENT & SUPPLIES - 1.4%
MEDICAL SUPPLIES & APPLIANCES - 0.7%
Abaxis, Inc. (a) 118,000 708,000
Boston Scientific Corp. (a) 166,400 2,766,400
3,474,400
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
MEDICAL EQUIPMENT & SUPPLIES - CONTINUED
MEDICAL TECHNOLOGY - 0.7%
SciMed Life Systems, Inc. (a) 40,900 $ 1,503,075
Target Therapeutics, Inc. (a) 78,100 1,932,975
3,436,050
TOTAL MEDICAL EQUIPMENT & SUPPLIES 6,910,450
MEDICAL FACILITIES MANAGEMENT - 1.4%
HEALTH SERVICES - 0.1%
Healthwise America, Inc. (a) 22,950 556,538
HMO'S & OUTPATIENT CARE - 0.4%
U.S. Healthcare, Inc. 51,200 2,214,400
MEDICAL LABS - 0.2%
Health Images, Inc. 96,600 676,200
Spectral Diagnostics, Inc. (a) 24,600 449,874
1,126,074
MEDICAL SERVICES - 0.7%
Surgical Care Affiliates, Inc. 188,000 3,242,993
TOTAL MEDICAL FACILITIES MANAGEMENT 7,140,005
TOTAL COMMON STOCKS
(Cost $353,567,544) 366,189,557
NONCONVERTIBLE PREFERRED STOCKS - 0.0%
DRUGS & PHARMACEUTICALS - 0.0%
DRUGS - 0.0%
Lynx Therapeutics, Inc.
(Cost $114,960) 114,960 114,960
REPURCHASE AGREEMENTS - 26.7%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account, at 4.83% dated
8/31/94 due 9/1/94 (Note 3) $ 133,428,899 133,411,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $487,093,504) $ 499,715,517
LEGEND
1. Non-income producing
2. Restricted securities - Investment in securities not registered under
the Securities Act of 1933 (see Note 2 of Notes to Financial Statements).
Additional information on each holding is as follows:
ACQUISITION ACQUISITION
SECURITY DATE COST
Mederax, Inc. 12/18/92 $ 853,125
3. A company in which the fund has ownership of at least 5% of the voting
securities is an affiliated company. A summary of the transactions during
the period in which the issuers were affiliates is as follows:
PURCHASES SALES DIVIDEND MARKET
AFFILIATE COST COST INCOME VALUE
Alkermes, Inc. (a) $ 206,250 $ 453,863 $ - $ 2,544,375
COR Therapeutics, Inc. (a) 502,925 - - 14,710,175
Insite Vision, Inc. (a) 432,068 - - 4,138,200
Liposome Co., Inc. (a) - 362,635 - 7,708,969
Neurogen Corp. (a) - 123,750 - -
SciGenics, Inc. (a) 151,250 - - 1,372,500
Totals $ 1,292,493 $ 940,248 $ - $ 30,474,219
4. 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 period
end, the value of this security amounted to $145,278 or 0.0% of net assets.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $117,832,322 and $147,939,257, respectively (see Note 4 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $33,547 for the period (see
Note 5 of Notes to Financial Statements).
At the period end, the value of securities loaned and the value of
collateral amounted to $20,650,625 and $21,377,600, respectively (see Note
7 of Notes to Financial Statements).
The maximum loan and average daily loan balances during the periods for
which loans were outstanding amounted to $1,448,000 and $1,390,500,
respectively. The weighted average interest rate paid was 4.1% (see Note 8
of Notes to Financial Statements).
Distribution of investments by country, as a percentage of total value of
investment in securities, is as follows:
United States 89.1%
Switzerland 3.4
Ireland 2.4
Israel 2.3
United Kingdom 1.3
Others (individually less than 1%) 1.5
TOTAL 100.0%
INCOME TAX INFORMATION
At August 31, 1994, the aggregate cost of investment securities for income
tax purposes was $489,107,524. Net unrealized appreciation aggregated
$10,607,993, of which $58,698,517 related to appreciated investment
securities and $48,090,524 related to depreciated investment securities.
At February 28, 1994, the fund had a capital loss carryforward of
approximately $10,904,000 which will expire on February 28, 2002.
BIOTECHNOLOGY PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
AUGUST 31, 1994 (UNAUDITED)
ASSETS
Investment in securities, at value (including repurchase agreements of $133,411,000) (cost $487,093,504) - $ 499,715,517
See accompanying schedule
Cash 918
Receivable for investments sold 2,996,680
Receivable for fund shares sold 5,703,258
Dividends receivable 179,781
Redemption fees receivable 1,123
Other receivables 369,445
Prepaid expenses 12,555
TOTAL ASSETS 508,979,277
LIABILITIES
Payable for investments purchased $ 19,616,224
Payable for fund shares redeemed 2,553,532
Accrued management fee 214,097
Other payables and accrued expenses 2,317,443
Collateral on securities loaned, 21,377,600
at value
TOTAL LIABILITIES 46,078,896
NET ASSETS $ 462,900,381
Net Assets consist of:
Paid in capital $ 489,652,218
Accumulated net investment (loss) (844,693
)
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions (38,529,157
)
Net unrealized appreciation (depreciation) on investments 12,622,013
NET ASSETS, for 18,345,580 shares outstanding $ 462,900,381
NET ASSET VALUE and redemption price per share ($462,900,381 (divided by) shares) $25.23
Maximum offering price per share (100/97 of $25.23) $26.01
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED AUGUST 31, 1994 (UNAUDITED)
INVESTMENT INCOME $ 796,554
Dividends
Interest (including security lending fees of $47,445) 1,562,722
TOTAL INCOME 2,359,276
EXPENSES
Management fee $ 1,268,049
Transfer agent 1,711,035
Fees
Redemption fees (84,998
)
Accounting and security lending fees 208,134
Non-interested trustees' compensation 1,235
Custodian fees and expenses 25,489
Registration fees 12,555
Audit 28,154
Legal 6,728
Interest 636
Reports to shareholders 28,739
Miscellaneous 971
Total expenses before reductions 3,206,727
Expense reductions (2,758 3,203,969
)
NET INVESTMENT INCOME (LOSS) (844,693
)
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities (including realized loss of $226,245 on sales of investments in affiliated
issuers) (24,816,125
)
Foreign currency transactions 4,146 (24,811,979
)
Change in net unrealized appreciation (depreciation) on investment securities (13,676,672
)
NET GAIN (LOSS) (38,488,651
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ (39,333,344
)
OTHER INFORMATION $552,503
Sales Charges Paid to FDC
Deferred sales charges withheld $21,209
by FDC
Exchange fees withheld by FSC $57,750
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS YEAR ENDED
ENDED FEBRUARY 28,
AUGUST 31, 1994 1994
(UNAUDITED)
Operations $ (844,693 $ (3,787,601
Net investment income (loss) ) )
Net realized gain (loss) (24,811,979 (8,338,254
) )
Change in net unrealized appreciation (depreciation) (13,676,672 118,233,161
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (39,333,344 106,107,306
)
Share transactions 102,230,762 439,265,841
Net proceeds from sales of shares
Cost of shares redeemed (81,225,330 (573,106,933
) )
Paid in capital portion of redemption fees 82,075 886,916
Net increase (decrease) in net assets resulting from share transactions 21,087,507 (132,954,176
)
TOTAL INCREASE (DECREASE) IN NET ASSETS (18,245,837 (26,846,870
) )
NET ASSETS
Beginning of period 481,146,218 507,993,088
End of period (including accumulated net investment (loss) of $(844,693) and $(3,787,602),
respectively) $ 462,900,381 $ 481,146,218
OTHER INFORMATION
Shares
Sold 4,200,178 16,958,709
Redeemed (3,279,917 (22,006,765
) )
Net increase (decrease) 920,261 (5,048,056
)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS YEAR ENDED TEN MONTHS YEARS ENDED APRIL 30,
ENDED FEBRUARY 28, ENDED
AUGUST 31, 1994 FEBRUARY 28,
SELECTED PER-SHARE DATAC (UNAUDITED) 1994 1993 1992 1991 1990
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 27.61 $ 22.60 $ 27.61 $ 26.78 $ 15.28 $ 11.90
Income from Investment Operations
Net investment income (loss) (.05) (.18) (.08) (.11) .05F (.04)G
Net realized and unrealized gain (loss) (2.33) 5.15 (1.09) 3.36 11.80 3.60
Total from investment operations (2.38) 4.97 (1.17) 3.25 11.85 3.56
Less Distributions
In excess of net investment income - - - (.02) - -
From net realized gain - - (3.89) (2.52) (.67) (.24)
Total distributions - - (3.89) (2.54) (.67) (.24)
Redemption fees added to paid in capital - .04 .05 .12 .32 .06
Net asset value, end of period $ 25.23 $ 27.61 $ 22.60 $ 27.61 $ 26.78 $ 15.28
TOTAL RETURN D, E (8.62)% 22.17% (5.92)% 12.36% 81.43% 30.53%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 462,900 $ 481,146 $ 507,993 $ 679,877 $ 482,271 $ 70,994
Ratio of expenses to average net assets B 1.54%A 1.61% 1.50%A 1.50% 1.63% 2.07%
Ratio of expenses to average net assets before 1.54%A 1.62% 1.50%A 1.50% 1.63% 2.07%
expense reductions B
Ratio of net investment income (loss) to average net (.41)%A (.69) (.37)%A (.34)% .24% (.31)%
assets %
Portfolio turnover rate 68%A 51% 79%A 160% 166% 290%
</TABLE>
A ANNUALIZED
B SEE NOTE 9 OF NOTES TO FINANCIAL STATEMENTS.
C NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
D TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
E THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
F INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND WHICH AMOUNTED TO
$.02 PER SHARE.
G INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND WHICH AMOUNTED TO
$.05 PER SHARE.
HEALTH CARE PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance: total
percentage change in value, the average annual percentage change, or the
growth of a hypothetical $10,000 investment. Each performance figure
includes changes in a fund's share price, plus reinvestment of any
dividends (income) and capital gains (the profits the fund earns when it
sells stocks that have grown in value).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 6 PAST 1 PAST 5 PAST 10
AUGUST 31, 1994 MONTH YEAR YEARS YEARS
S
HEALTH CARE 16.64% 31.86% 136.13% 553.64%
HEALTH CARE
(INCL. 3% SALES CHARGE) 13.14% 27.90% 129.04% 534.03%
S&P 500 3.26% 5.47% 58.16% 300.76%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one year, five years, or ten
years. You can compare these figures to the performance of the S&P 500 - a
common proxy for the U.S. stock market. This benchmark includes reinvested
dividends and capital gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
AUGUST 31, 1994 YEAR YEARS YEARS
HEALTH CARE 31.86% 18.75% 20.65%
HEALTH CARE
(INCL. 3% SALES CHARGE) 27.90% 18.03% 20.28%
S&P 500 5.47% 9.60% 14.89%
AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and
show you what would have happened if the fund had performed at a constant
rate each year.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of growth in the long run
and volatility in the short run. Unlike the broader
market, however, some sectors may not have
a history of growth in the long run. And, as
with all stock funds, the share price and return
of a fund that invests in a sector will vary. That
means if you sell your shares during a sector
downturn, you might lose money. But if you
can identify a sector that is about to
experience rapid growth you may have the
potential for above-average gains.
(checkmark)
$10,000 OVER TEN YEARS
Select Health (063) Standard & Poor's
08/31/84 9700.00 10000.00
09/30/84 9556.13 10002.00
10/31/84 9528.46 10041.01
11/30/84 9179.86 9928.55
12/31/84 9439.93 10190.66
01/31/85 10607.47 10984.51
02/28/85 11343.41 11119.62
03/31/85 11603.48 11127.41
04/30/85 12079.35 11117.39
05/31/85 13567.82 11759.98
06/30/85 13869.76 11944.61
07/31/85 13997.26 11926.69
08/31/85 13675.74 11825.32
09/30/85 12572.59 11455.18
10/31/85 13398.57 11984.41
11/30/85 14656.93 12806.54
12/31/85 15050.52 13426.38
01/31/86 15150.30 13501.57
02/28/86 16220.19 14511.49
03/31/86 18387.69 15321.23
04/30/86 18609.43 15148.10
05/31/86 19762.47 15953.98
06/30/86 21087.36 16223.60
07/31/86 19579.49 15316.70
08/31/86 20301.96 16453.20
09/30/86 17529.69 15092.52
10/31/86 19058.64 15963.36
11/30/86 18778.61 16351.27
12/31/86 18358.57 15934.31
01/31/87 21097.23 18080.66
02/28/87 24227.94 18794.85
03/31/87 24082.32 19338.02
04/30/87 23511.07 19165.91
05/31/87 23740.69 19332.65
06/30/87 24306.34 20308.95
07/31/87 25236.03 21338.62
08/31/87 25980.91 22134.55
09/30/87 25493.66 21649.80
10/31/87 18767.41 16986.43
11/30/87 16947.23 15586.75
12/31/87 18241.33 16772.90
01/31/88 19597.02 17479.04
02/29/88 20185.45 18293.57
03/31/88 19683.56 17728.29
04/30/88 19377.80 17925.08
05/31/88 19325.88 18081.03
06/30/88 19833.55 18910.95
07/31/88 19804.70 18839.08
08/31/88 19268.19 18198.55
09/30/88 19914.31 18973.81
10/31/88 20162.38 19501.29
11/30/88 19573.95 19222.42
12/31/88 19851.82 19558.81
01/31/89 21253.60 20990.51
02/28/89 20846.44 20467.85
03/31/89 21945.77 20944.75
04/30/89 23143.97 22031.78
05/31/89 23865.22 22924.07
06/30/89 23327.28 22793.40
07/31/89 26216.76 24851.65
08/31/89 26851.04 25338.74
09/30/89 27044.84 25234.85
10/31/89 26845.16 24649.40
11/30/89 28002.13 25152.25
12/31/89 28286.55 25755.90
01/31/90 26663.55 24027.68
02/28/90 26384.13 24337.64
03/31/90 27436.41 24982.59
04/30/90 27436.41 24358.02
05/31/90 31211.51 26732.93
06/30/90 32274.96 26551.15
07/31/90 32720.56 26466.18
08/31/90 31253.79 24073.64
09/30/90 30313.09 22901.25
10/31/90 31006.24 22802.78
11/30/90 34304.91 24275.84
12/31/90 35164.79 24953.13
01/31/91 38636.13 26041.09
02/28/91 43408.40 27903.03
03/31/91 47277.99 28578.28
04/30/91 46454.95 28646.87
05/31/91 48977.15 29884.41
06/30/91 46768.66 28515.71
07/31/91 50906.97 29844.54
08/31/91 53450.90 30551.86
09/30/91 54528.00 30041.64
10/31/91 58120.68 30444.20
11/30/91 54946.08 29217.30
12/31/91 64595.12 32559.76
01/31/92 62475.77 31954.14
02/29/92 59747.67 32369.55
03/31/92 56102.68 31738.34
04/30/92 52923.66 32671.45
05/31/92 54013.40 32831.54
06/30/92 51931.52 32342.35
07/31/92 55055.53 33665.15
08/31/92 53570.61 32975.02
09/30/92 49862.37 33364.12
10/31/92 51395.98 33480.90
11/30/92 54211.64 34622.59
12/31/92 53333.46 35048.45
01/31/93 50469.11 35342.86
02/28/93 45083.45 35823.52
03/31/93 46326.96 36579.40
04/30/93 46309.81 35694.18
05/31/93 48162.20 36650.78
06/30/93 47990.68 36757.07
07/31/93 46429.87 36610.04
08/31/93 48085.02 37997.56
09/30/93 49585.80 37704.98
10/31/93 53273.43 38485.47
11/30/93 53093.33 38119.86
12/31/93 54622.35 38581.11
01/31/94 55704.15 39892.87
02/28/94 54356.19 38811.77
03/31/94 50810.29 37119.58
04/30/94 52848.66 37594.71
05/31/94 55833.44 38211.26
06/30/94 54947.47 37275.09
07/31/94 56048.48 38497.71
08/31/94 63402.91 40076.11
Let's say you invested $10,000 in Fidelity Select Health Care Portfolio on
August 31, 1984 and paid a 3% sales charge. By August 31, 1994, your
investment would have grown to $63,403 - a 534.03% increase. That compares
to $10,000 invested in the
S&P 500, which would have grown to $40,076 over the same period - a 300.76%
increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST 31, 1994
% OF FUND'S
INVESTMENTS
Pfizer, Inc. 9.2
Warner-Lambert Co. 8.5
Schering-Plough Corp. 7.0
American Home Products Corp. 5.2
Bristol-Myers Squibb Co. 4.8
Johnson & Johnson 4.8
American Cyanamid Co. 3.6
Allergan, Inc. 3.6
St. Jude Medical, Inc. 3.4
McKesson Corp. 3.0
TOP INDUSTRIES AS OF AUGUST 31, 1994
Row: 1, Col: 1, Value: 18.2
Row: 1, Col: 2, Value: 5.1
Row: 1, Col: 3, Value: 6.6
Row: 1, Col: 4, Value: 9.5
Row: 1, Col: 5, Value: 11.2
Row: 1, Col: 6, Value: 49.4
Drugs 49.4%
Medical Supplies &
Appliances 11.2%
Medical Technology 9.5%
Biotechnology 6.6%
Drug Distributors - Wholesale 5.1%
All Others 18.2%*
* INCLUDES SHORT-TERM INVESTMENTS
HEALTH CARE PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Charles Mangum,
Portfolio Manager of
Fidelity Select Health
Care Portfolio
Q. CHARLES, HOW DID THE FUND PERFORM?
A. Very well. For the six months and year ended August 31, 1994, the fund
had total returns of 16.64% and 31.86%, respectively. This soundly beat the
S&P 500, which returned 3.26% and 5.47% during the same periods.
Q. WHY DID THE FUND OUTPERFORM THE S&P 500 OVER THE PAST SIX MONTHS?
A. Mostly because of a strong performance by pharmaceutical stocks in
August. During that month, there were several high-profile takeovers in the
industry. When one of the fund's largest positions, American Cyanamid, was
taken over by American Home Products, its stock soared. In fact, it was up
about 50% in August alone. In addition, nearly all of the fund's
pharmaceutical stocks rallied on consolidation rumors. I should note that I
wasn't surprised by the rising prices of pharmaceutical stocks. I felt
strongly that their valuations - prices relative to earnings - were
unfairly low and that ultimately investors would push prices back up.
Q. WERE THERE OTHER REASONS THE FUND DID WELL?
A. Yes. It owned some biotechnology stocks that were strong performers,
such as the California-based company Amgen, which produces a number of
high-demand products. This stock was extremely cheap in the spring, despite
its outlook for 20% revenues and earnings growth.
Q. YOU HAD 57% OF THE FUND INVESTED IN PHARMACEUTICAL STOCKS AT THE END OF
THE PERIOD. CLEARLY, THEY LOOKED GOOD IN AUGUST, BUT HOW WAS THEIR
PERFORMANCE OVER THE PAST SIX MONTHS?
A. There weren't many buyers for pharmaceutical stocks for much of the
period, even though they cut costs, divested themselves of weak business
units, and focused on improving margins. But, as we discussed,
pharmaceuticals dramatically picked up in August, and, as a result, turned
in a strong six-month performance. Warner-Lambert, which was up 20 points
in August alone, was clearly the fund's standout over the period. Concerns
about hostile takeovers affected the company dramatically since
Warner-Lambert is the most asset-rich company in the industry. Another
reason it looked good was that a large part of its profits come from its
over-the-counter (OTC) medications business. Worldwide, OTC drugs are going
through a major growth phase. That's because many foreign governments are
pushing for more medications to be sold over the counter. This cuts their
costs since most of these governments pick up the tab for prescription
medications, but not OTC drugs. Other pharmaceutical companies that were up
in August included Pfizer, Schering-Plough and Johnson & Johnson.
Q. DID ANY OTHER TYPES OF STOCKS LOOK INTERESTING TO YOU?
A. Yes. Over the past three or four months, I added a number of small
medical technology names. These stocks were incredibly cheap and cash rich
- - they had between 10% to 40% of their market value in cash. One company
worth noting is Protocol Systems, which has a great new technology for
making portable monitors to measure vital signs.
Q. LET'S SWITCH THE FOCUS TO HEALTH CARE REFORM. HOW MUCH DID NEWS OF
POSSIBLE REFORM AFFECT THE FUND?
A. Frankly, it didn't seem to have any major effect on the fund's
performance or my investment decisions over the past six months. If
legislation were passed at this juncture, there could be an impact, but I
don't believe there will be any legislation. I should note that the fund,
which owns mostly medical product companies, was less affected by reform
than funds that focused on medical services, such as health maintenance
organizations, or HMOs.
Q. IN HINDSIGHT, DO YOU REGRET ANY OF YOUR INVESTMENT DECISIONS?
A. Sure. While I didn't invest in HMOs because I thought they'd be hurt by
reform and that their stocks were too expensive, I wish I'd owned some of
the California-based HMOs, which had excellent earnings over the period.
One reason these companies looked good is that the federal government
increased Medicare rates and this extra income gave some HMOs, such as
Pacific Care, a boost.
Q. HOW DO YOU PLAN TO INVEST THE FUND GOING FORWARD?
A. I plan to continue to invest in pharmaceutical and medical technology
companies that I think have growth potential. I'm optimistic about these
companies because they have a good chance to improve their profit margins.
I also think they'll benefit from the enormous amount of consolidation
underway in the industry.
FUND FACTS
START DATE: July 14, 1981
SIZE: as of August 31, 1994, more than
$655 million
MANAGER: Charles Mangum, since March
1992; manager, Fidelity Select Medical
Delivery Portfolio, 1991-1993; joined
Fidelity in 1990
(checkmark)
HEALTH CARE PORTFOLIO
INVESTMENTS AUGUST 31, 1994 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 86.5%
SHARES VALUE (NOTE 1)
DRUGS & PHARMACEUTICALS - 57.0%
BIOTECHNOLOGY - 6.6%
Alkermes, Inc. (a) 2,700 $ 10,119
Amgen, Inc. (a) 362,800 19,137,700
Bio-Rad Laboratories, Inc. Class A (a) 500 12,250
COR Therapeutics, Inc. (a) 164,600 2,427,850
Cellpro, Inc. (a) 85,500 2,116,125
Cephalon, Inc. (a) 89,900 1,123,750
Chiron Corp. (a) 247,600 17,270,100
Liposome Co, Inc. (a) 5,000 37,188
North American Vaccine, Inc. (a) 5,000 63,750
Protein Design Labs, Inc. (a) 127,400 3,248,700
Somatix Therapy Corp. (a) 20,000 132,500
45,580,032
DRUGS - 49.4%
ALZA Corp. Class A 415,200 9,757,200
Allergan, Inc. 912,700 24,985,163
American Cyanamid Co. 259,300 25,022,450
American Home Products Corp. 600,000 35,625,000
Astra AB A Free shares 5,000 113,616
Bristol-Myers Squibb Co. 581,100 33,413,250
Elan PLC (a):
ADR 553,150 19,913,400
unit (Therapeutic Systems, Inc. common &
1 ADR warrant) 56,806 1,484,057
Forest Laboratories, Inc. (a) 224,200 10,537,400
IVAX Corp. 171,500 3,408,563
Pfizer, Inc. 927,500 63,301,875
Pharmacia AB A Free shares 321,000 5,346,271
Schering-Plough Corp. 692,600 48,395,425
Vertex Pharmaceuticals, Inc. (a) 23,900 343,563
Warner-Lambert Co. 701,000 58,621,125
340,268,358
IN VITRO, IN VIVO DIAGNOSTIC SUBSTANCE - 0.2%
Igen, Inc. (a) 174,000 1,109,250
PHARMACEUTICAL PREPARATIONS - 0.8%
Immunex Corp. (a) 20,000 305,000
Ligand Pharmaceuticals, Inc. (a) 102,500 1,178,750
Noven Pharmaceuticals, Inc. (a) 148,000 2,247,750
Shaman Pharmaceuticals (a) 124,000 976,500
Vivus, Inc. (a) 52,500 721,875
Zeneca Group PLC sponsored ADR 3,000 115,500
5,545,375
TOTAL DRUGS & PHARMACEUTICALS 392,503,015
HOME FURNISHINGS - 0.0%
FURNITURE - 0.0%
Kinetic Concepts, Inc. 45,000 202,500
HOUSEHOLD PRODUCTS - 0.1%
FABRICATED RUBBER PRODUCTS - 0.1%
Safeskin Corp. (a) 41,200 690,100
MEDICAL EQUIPMENT & SUPPLIES - 25.2%
DRUG DISTRIBUTORS - WHOLESALE - 5.1%
Bergen Brunswig Corp. Class A 770,500 11,557,500
Cardinal Health, Inc. 69,867 2,707,346
McKesson Corp. 200,000 20,500,000
34,764,846
SHARES VALUE (NOTE 1)
MEDICAL SUPPLIES & APPLIANCES - 11.2%
Baxter International, Inc. 553,800 $ 15,714,075
Becton, Dickinson & Co. 449,500 19,272,313
Boston Scientific Corp. (a) 405,500 6,741,438
Healthdyne, Inc. (a) 223,200 1,534,500
Johnson & Johnson 663,100 33,237,888
Molecular Dynamics, Inc. (a) 25,000 168,750
Orthofix International (a) 50,000 637,500
77,306,464
MEDICAL TECHNOLOGY - 8.2%
AMSCO International, Inc. (a) 65,000 503,750
Acuson Corp. (a) 231,100 3,235,400
Advanced Technology Laboratories,
Inc. (a) 182,900 2,754,931
Ballard Medical Products 40,000 415,000
Beckman Instruments, Inc. 113,100 3,279,900
Conmed Corp. (a) 45,600 820,800
Datascope Corp. (a) 218,300 3,383,650
Mallinckrodt Group, Inc. 47,000 1,515,750
Medrad, Inc. (a) 5,000 61,250
Medtronic, Inc. 90,100 8,897,375
Mentor Corp. (a) 176,900 2,896,738
Nellcor, Inc. (a) 10,000 302,500
St. Jude Medical, Inc. 680,400 23,473,800
Spacelabs Medical, Inc. (a) 163,400 4,003,300
Utah Medical Products, Inc. 37,200 348,750
Vital Signs, Inc. 77,500 813,750
56,706,644
X-RAY ELECTRO-MEDICAL APPARATUS - 0.7%
American Medical Electronics, Inc. 55,000 501,875
Circon Corp. (a) 58,000 659,750
Fischer Imaging Corp. (a) 91,000 364,000
Protocol Systems, Inc. (a)(c) 411,200 3,392,400
4,918,025
TOTAL MEDICAL EQUIPMENT & SUPPLIES 173,695,979
MEDICAL FACILITIES MANAGEMENT - 3.9%
HEALTH SERVICES - 0.0%
Healthwise America, Inc. (a) 3,960 96,030
HOME HEALTH CARE AGENCIES - 1.6%
Abbey Healthcare Group, Inc. (a) 289,600 5,285,200
Coram Healthcare Corp. (a) 149,334 2,314,677
Homedco Group, Inc. (a) 127,900 3,549,225
11,149,102
HOSPITALS - 0.9%
Columbia/HCA Healthcare Corp. 1,705 72,463
Health Management Associates, Inc.
Class A (a) 6,050 144,444
Humana, Inc. (a) 200,000 4,250,000
Quorum Health Group, Inc. (a) 8,000 147,000
Vencor, Inc. (a) 43,400 1,844,500
6,458,407
HMO'S & OUTPATIENT CARE - 0.4%
FHP International Corp. (a) 45,000 1,215,000
Healthsource, Inc. (a) 11,000 360,250
Physician Corp of America (a) 10,000 210,000
Rightchoice Managed Care, Inc.
Class A (a) 50,000 575,000
2,360,250
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
MEDICAL FACILITIES MANAGEMENT - CONTINUED
MEDICAL LABS - 0.1%
National Health Laboratories Holdings,
Inc. 61,500 $ 761,063
MEDICAL SERVICES - 0.9%
Lincare Holdings, Inc. (a) 217,588 5,385,303
Surgical Care Affiliates, Inc. 20,000 345,000
Syncor International Corp. 65,000 520,000
6,250,303
TOTAL MEDICAL FACILITIES MANAGEMENT 27,075,155
REAL ESTATE INVESTMENT TRUSTS - 0.3%
Capstone Capital Corp. 100,000 1,762,500
TOTAL COMMON STOCKS
(Cost $543,978,119) 595,929,249
CONVERTIBLE PREFERRED STOCKS - 0.9%
MEDICAL EQUIPMENT & SUPPLIES - 0.9%
MEDICAL TECHNOLOGY - 0.9%
U.S. Surgical Corp. $2.20 (b)
(Cost $5,006,100) 222,000 6,465,750
CORPORATE BONDS - 0.4%
PRINCIPAL
AMOUNT
CONVERTIBLE BONDS - 0.4%
MEDICAL EQUIPMENT & SUPPLIES - 0.4%
MEDICAL TECHNOLOGY - 0.4%
Advanced Medical, Inc.
7 1/4%, 1/15/02 $ 4,180,000 2,194,500
NONCONVERTIBLE BONDS - 0.0%
HOUSEHOLD PRODUCTS - 0.0%
COSMETICS - 0.0%
Revlon Worldwide Corp. secured
0%, 3/15/98 360,000 150,300
TOTAL CORPORATE BONDS
(Cost $2,187,380) 2,344,800
REPURCHASE AGREEMENTS - 12.2%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account, at 4.83% dated
8/31/94 due 9/1/94 $ 84,315,311 84,304,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $635,475,599) $ 689,043,799
LEGEND
1. Non-income producing
2. 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 period
end, the value of this security amounted to $6,465,750 or 1.0% of net
assets.
3. A company in which the fund has ownership of at least 5% of the voting
securities is an affiliated compay. A summary of the transactions during
the period in which the issuers were affiliates is as follows:
PURCHASES SALES DIVIDEND MARKET
AFFILIATE COST COST INCOME VALUE
Protocol Systems, Inc. (a) $ 451,250 $ - $ - $ 3,392,400
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $582,140,895 and $540,564,878, respectively (see Note 4 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $138,122 for the period
(see Note 5 of Notes to Financial Statements).
At the period end, the value of securities loaned and the value of
collateral amounted to $20,261,100 and $19,664,550, respectively (see Note
7 of Notes to Financial Statements).
INCOME TAX INFORMATION
At August 31, 1994, the aggregate cost of investment securities for income
tax purposes was $637,602,917. Net unrealized appreciation aggregated
$51,440,882, of which $59,089,727 related to appreciated investment
securities and $7,648,845 related to depreciated investment securities.
At February 28, 1994, the fund had a capital loss carryforward of
approximately $605,000 which will expire on February 28, 2002.
The fund has elected to defer to its fiscal year ending February 28, 1995
$6,543,000 of losses recognized during the period November 1, 1993
to February 28, 1994.
HEALTH CARE PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
AUGUST 31, 1994 (UNAUDITED)
ASSETS
Investment in securities, at value (including repurchase agreements of $84,304,000) (cost $635,475,599) - See $ 689,043,799
accompanying schedule
Cash 147
Receivable for investments sold 39,542,126
Receivable for fund shares sold 15,316,233
Dividends receivable 1,605,976
Interest receivable 37,881
Redemption fees receivable 1,350
Other receivables 324,670
Prepaid expenses 12,941
TOTAL ASSETS 745,885,123
LIABILITIES
Payable for investments purchased $ 65,521,085
Payable for fund shares redeemed 2,871,910
Accrued management fee 303,488
Other payables and accrued expenses 1,825,176
Collateral on securities loaned, 20,261,100
at value
TOTAL LIABILITIES 90,782,759
NET ASSETS $ 655,102,364
Net Assets consist of:
Paid in capital $ 565,238,133
Undistributed net investment income 2,118,904
Accumulated undistributed net realized gain (loss) on investments 34,177,127
Net unrealized appreciation (depreciation) on investments 53,568,200
NET ASSETS, for 8,887,902 shares outstanding $ 655,102,364
NET ASSET VALUE and redemption price per share ($655,102,364 (divided by) shares) $73.71
Maximum offering price per share (100/97 of $73.71) $75.99
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED AUGUST 31, 1994 (UNAUDITED)
INVESTMENT INCOME $ 4,907,080
Dividends
Interest (including security lending fees of $60,921) 1,006,030
TOTAL INCOME 5,913,110
EXPENSES
Management fee $ 1,651,709
Transfer agent 1,905,923
Fees
Redemption fees (100,821
)
Accounting and security lending fees 265,454
Non-interested trustees' compensation 1,511
Custodian fees and expenses 22,992
Registration fees 12,941
Audit 28,812
Legal 6,317
Reports to shareholders 27,326
Miscellaneous 990
Total expenses before reductions 3,823,154
Expense reductions (92,251 3,730,903
)
NET INVESTMENT INCOME 2,182,207
REALIZED AND UNREALIZED GAIN (LOSS) 44,532,632
Net realized gain (loss) on investment securities
Change in net unrealized appreciation (depreciation) on investment securities 38,052,295
NET GAIN (LOSS) 82,584,927
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 84,767,134
OTHER INFORMATION $456,210
Sales Charges Paid to FDC
Deferred sales charges withheld $45,316
by FDC
Exchange fees withheld by FSC $61,538
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS YEAR ENDED
ENDED FEBRUARY 28,
AUGUST 31, 1994 1994
(UNAUDITED)
Operations $ 2,182,207 $ 1,451,437
Net investment income
Net realized gain (loss) 44,532,632 (3,984,876
)
Change in net unrealized appreciation (depreciation) 38,052,295 103,530,466
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 84,767,134 100,997,027
Distributions to shareholders from net investment income (883,343 (631,397
) )
Share transactions 182,902,241 255,996,151
Net proceeds from sales of shares
Reinvestment of distributions 852,517 614,017
Cost of shares redeemed (135,661,155 (370,922,213
) )
Paid in capital portion of redemption fees 235,406 469,371
Net increase (decrease) in net assets resulting from share transactions 48,329,009 (113,842,674
)
TOTAL INCREASE (DECREASE) IN NET ASSETS 132,212,800 (13,477,044
)
NET ASSETS
Beginning of period 522,889,564 536,366,608
End of period (including undistributed net investment income of $2,118,904 and $820,040,
respectively) $ 655,102,364 $ 522,889,564
OTHER INFORMATION
Shares
Sold 2,743,418 4,521,405
Issued in reinvestment of distributions 14,401 10,053
Redeemed (2,129,659 (6,474,354
) )
Net increase (decrease) 628,160 (1,942,896
)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS YEAR ENDED TEN MONTHS YEARS ENDED APRIL 30,
ENDED FEBRUARY 28, ENDED
AUGUST 31, 1994 FEBRUARY 28,
SELECTED PER-SHARE DATAC (UNAUDITED) 1994 1993 1992 1991 1990
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 63.31 $ 52.57 $ 70.42 $ 69.99 $ 46.15 $ 39.79
Income from Investment Operations
Net investment income (loss) .26 .15 .13 (.02) .73F .72
Net realized and unrealized gain (loss) 10.22 10.61 (9.34) 9.47 28.70 6.56
Total from investment operations 10.48 10.76 (9.21) 9.45 29.43 7.28
Less Distributions
From net investment income (.11) (.07) (.16) (.34) (.20) (.13)
From net realized gain - - (8.51) (8.81) (5.67) (.84)
Total distributions (.11) (.07) (8.67) (9.15) (5.87) (.97)
Redemption fees added to paid in capital .03 .05 .03 .13 .28 .05
Net asset value, end of period $ 73.71 $ 63.31 $ 52.57 $ 70.42 $ 69.99 $ 46.15
TOTAL RETURN D, E 16.64% 20.57 (14.81)% 13.92% 69.32% 18.55%
%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 655,102 $ 522,890 $ 536,367 $ 838,814 $ 624,018 $ 217,522
Ratio of expenses to average net assets B 1.38%A 1.55 1.46%A 1.44% 1.53% 1.74%
%
Ratio of expenses to average net assets before 1.41%A 1.59 1.46%A 1.44% 1.53% 1.74%
expense reductions B %
Ratio of net investment income (loss) to average net .81%A .26 .24%A (.02)% 1.28% 1.61%
assets %
Portfolio turnover rate 214%A 213 112%A 154% 159% 126%
%
</TABLE>
A ANNUALIZED
B SEE NOTE 9 OF NOTES TO FINANCIAL STATEMENTS.
C NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
D TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
E THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
F INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND WHICH AMOUNTED TO
$.55 PER SHARE.
MEDICAL DELIVERY PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance: total
percentage change in value, the average annual percentage change, or the
growth of a hypothetical $10,000 investment. Each performance figure
includes changes in a fund's share price, plus reinvestment of any
dividends (income) and capital gains (the profits the fund earns when it
sells stocks that have grown in value).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 6 PAST 1 PAST 5 LIFE OF
AUGUST 31, 1994 MONTH YEAR YEARS FUND
S
MEDICAL DELIVERY 9.42% 42.88% 128.74% 189.87%
MEDICAL DELIVERY
(INCL. 3% SALES CHARGE) 6.14% 38.60% 121.88% 181.17%
S&P 500 3.26% 5.47% 58.16% 148.27%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one year, five years, or
since the fund started on June 30, 1986. You can compare these figures to
the performance of the S&P 500 - a common proxy for the U.S. stock market.
This benchmark includes reinvested dividends and capital gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
AUGUST 31, 1994 YEAR YEARS FUND
MEDICAL DELIVERY 42.88% 18.00% 13.90%
MEDICAL DELIVERY (INCL. 3% SALES CHARGE) 38.60% 17.28% 13.47%
S&P 500 5.47% 9.60% 11.76%
AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and
show you what would have happened if the fund had performed at a constant
rate each year.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of growth in the long run
and volatility in the short run. Unlike the broader
market, however, some sectors may not have
a history of growth in the long run. And, as
with all stock funds, the share price and return
of a fund that invests in a sector will vary. That
means if you sell your shares during a sector
downturn, you might lose money. But if you
can identify a sector that is about to
experience rapid growth you may have the
potential for above-average gains.
(checkmark)
$10,000 OVER LIFE OF FUND
01/31/87 8342.00 11201.06
02/28/87 8953.10 11643.50
03/31/87 9379.90 11980.00
04/30/87 8409.90 11873.38
05/31/87 8671.80 11976.68
06/30/87 9263.50 12581.50
07/31/87 9661.20 13219.38
08/31/87 9438.10 13712.46
09/30/87 9292.60 13412.16
10/31/87 6644.50 10523.18
11/30/87 6246.80 9656.07
12/31/87 6984.29 10390.90
01/31/88 7025.49 10828.35
02/29/88 7386.04 11332.96
03/31/88 7581.76 10982.77
04/30/88 7643.57 11104.68
05/31/88 7519.96 11201.29
06/30/88 7756.89 11715.43
07/31/88 7674.48 11670.91
08/31/88 7458.15 11274.10
09/30/88 7880.50 11754.37
10/31/88 8086.53 12081.14
11/30/88 7829.00 11908.38
12/31/88 8086.53 12116.78
01/31/89 8684.00 13003.73
02/28/89 9003.34 12679.94
03/31/89 9497.81 12975.38
04/30/89 10146.79 13648.80
05/31/89 10672.16 14201.58
06/30/89 10548.09 14120.63
07/31/89 11745.33 15395.72
08/31/89 12292.35 15697.48
09/30/89 12632.94 15633.12
10/31/89 12209.78 15270.43
11/30/89 12777.44 15581.95
12/31/89 12778.17 15955.91
01/31/90 10896.86 14885.27
02/28/90 11171.65 15077.29
03/31/90 11689.55 15476.84
04/30/90 11805.81 15089.92
05/31/90 13475.74 16561.19
06/30/90 14120.46 16448.57
07/31/90 14173.31 16395.93
08/31/90 13042.41 14913.74
09/30/90 12175.73 14187.44
10/31/90 12027.76 14126.44
11/30/90 13697.70 15039.00
12/31/90 14856.15 15458.59
01/31/91 17250.55 16132.59
02/28/91 18317.15 17286.07
03/31/91 21038.06 17704.39
04/30/91 20406.81 17746.88
05/31/91 22093.77 18513.55
06/30/91 20232.49 17665.63
07/31/91 22262.54 18488.84
08/31/91 22523.38 18927.03
09/30/91 22727.52 18610.95
10/31/91 23226.53 18860.33
11/30/91 22580.09 18100.26
12/31/91 26417.99 20170.93
01/31/92 26441.20 19795.75
02/29/92 25419.77 20053.10
03/31/92 23736.72 19662.06
04/30/92 22796.54 20240.13
05/31/92 22564.40 20339.30
06/30/92 21376.21 20036.25
07/31/92 22592.64 20855.73
08/31/92 22567.30 20428.19
09/30/92 19919.03 20669.24
10/31/92 20907.38 20741.58
11/30/92 22960.11 21448.87
12/31/92 22934.76 21712.69
01/31/93 21769.02 21895.08
02/28/93 18322.47 22192.85
03/31/93 18727.94 22661.12
04/30/93 18499.86 22112.72
05/31/93 19070.07 22705.34
06/30/93 19260.13 22771.19
07/31/93 19741.64 22680.10
08/31/93 19678.28 23539.68
09/30/93 21300.19 23358.43
10/31/93 22301.21 23841.94
11/30/93 22668.67 23615.45
12/31/93 24201.88 23901.19
01/31/94 25557.69 24713.83
02/28/94 25697.07 24044.09
03/31/94 24417.29 22995.77
04/30/94 25202.90 23290.11
05/31/94 26051.86 23672.07
06/30/94 24442.63 23092.10
07/31/94 25532.35 23849.53
08/31/94 28117.26 24827.36
Let's say you invested $10,000 in Fidelity Select Medical Delivery
Portfolio on June 30, 1986, when the fund started, and paid a 3% sales
charge. By August 31, 1994, your investment would have grown to $28,117 - a
181.17% increase. That compares to $10,000 invested in the S&P 500, which
would have grown to $24,827 over the same period - a 148.27% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST 31, 1994
% OF FUND'S
INVESTMENTS
U.S. Healthcare, Inc. 11.1
United HealthCare Corp. 10.4
Columbia/HCA Healthcare Corp. 9.4
Humana, Inc. 8.4
Lincare Holdings, Inc. 8.2
Health Management Associates, Inc. Class A 5.6
Homedco Group, Inc. 5.5
Integrated Health Services, Inc. 4.3
Capstone Capital Corp. 3.5
Multicare Companies, Inc. 3.2
TOP INDUSTRIES AS OF AUGUST 31, 1994
Row: 1, Col: 1, Value: 26.9
Row: 1, Col: 2, Value: 4.4
Row: 1, Col: 3, Value: 5.5
Row: 1, Col: 4, Value: 8.199999999999999
Row: 1, Col: 5, Value: 26.6
Row: 1, Col: 6, Value: 28.4
Hospitals 28.4%
HMOs & Outpatient Care 26.6%
Medical Services 8.2%
Home Health Care Agencies 5.5%
Nursing Care & Nursing
Homes 4.4%
All Others 26.9%*
* INCLUDES SHORT-TERM INVESTMENTS
MEDICAL DELIVERY PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Louis Salemy,
Portfolio Manager of Fidelity Select Medical
Delivery Portfolio
Q. LOUIS, HOW DID THE FUND PERFORM?
A. Very well. For the six months and year ended August 31, 1994, the fund
had total returns of 9.42% and 42.88%. This was significantly above the S&P
500, which returned 3.26% and 5.47% over the same periods.
Q. WHAT WAS BEHIND ITS STRONG PERFORMANCE?
A. For most of the period, investors were relatively unconcerned about
possible health care reform - which could negatively impact the sector -
because it wasn't front page news. As a result, they were pretty optimistic
about medical services stocks, such as health maintenance organizations
(HMOs), which made up most of the fund. However, in June and July, the
fund's performance dropped off as the health care debate heated up again in
the House and Senate. In August, after Congress adjourned without
addressing the issue of health care reform and it looked like the issue was
dead in the water, medical services stocks picked up again.
Q. YOU MENTIONED HMOS. WHAT'S THE STORY WITH THESE STOCKS?
A. Over the past six months, HMOs were the best performing stocks the fund
owned. Especially noteworthy were the fund's two top stocks - U.S.
Healthcare and United HealthCare - which turned in strong results
throughout the period. However, as I just indicated, many HMOs stumbled a
bit early this summer. In addition to dropping because of investors'
concerns about health care reform, many HMOs went through a period of
slowing earnings growth, mostly due to reduced pricing. I took advantage of
the lower stock prices on HMOs during this period by buying a number of
companies that I thought had strong fundamentals - or business prospects -
and had been unfairly hit by dropping prices. A good example was Gencare,
an inexpensive HMO that was growing membership and controlling costs.
Q. HOW ABOUT HOSPITALS. SIX MONTHS AGO, SOME OF THE FUND'S STOCKS WERE
BENEFITING FROM ACQUISITIONS AND MERGERS. IS THAT STILL TRUE?
A. Yes. Columbia/ HCA Healthcare Corp., the fund's number one hospital
stock, was still acquiring hospitals within its market. In fact, it picked
up several large non-profit hospitals, such as Emory Hospital in Atlanta,
during the period. Columbia's goal is to bring prices for its medical
services down by increasing the amount of services it sells through its
many hospitals.
Q. THE FUND ADDED A NUMBER OF NEW STOCKS TO ITS TOP 10. WERE THERE ANY
STANDOUTS?
A. Yes. Integrated Health Services is worth noting. This company has been
successfully buying nursing homes and upgrading them so they can offer
patients more medical services at cheaper prices than most hospitals. Under
the company's plan, patients could receive, say, three hours of medical
rehabilitation services at one of their nursing homes for around $300 -
significantly less than the $800 it would probably cost for that patient to
receive the same treatment in a hospital.
Q. LOUIS, DO YOU REGRET ANY OF YOUR INVESTMENT DECISIONS OVER THE PAST SIX
MONTHS?
A. Sure. I wish I'd invested in pharmacy benefit management companies,
which help companies manage their pharmaceutical costs. During the second
quarter, these companies took off on rumors that some large pharmaceutical
companies were targeting them for takeover.
Q. WHAT DO YOU THINK SHAREHOLDERS CAN EXPECT GOING FORWARD?
A. I think the fund's outlook is fairly positive. As I see it, that's
mostly because health care reform is pretty much out of the picture. For
now, I think the private sector will depend on health care services
companies - especially HMOs - to help them control their medical costs.
Over the past few years, the United States has seen its medical costs drop
as more companies and state governments have shifted out of standard
indemnity plans and into HMOs.
FUND FACTS
START DATE: June 30,1986
SIZE: as of August 31, 1994, more than
$211 million
MANAGER: Louis Salemy, since April 1993;
manager, Fidelity Select Industrial Materials
Portfolio, since August 1992; joined Fidelity in
1992
(checkmark)
MEDICAL DELIVERY PORTFOLIO
INVESTMENTS AUGUST 31, 1994 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 82.7%
SHARES VALUE (NOTE 1)
DRUGS & PHARMACEUTICALS - 1.7%
BIOTECHNOLOGY - 1.7%
Chiron Corp. (a) 50,000 $ 3,487,498
LODGING & GAMING - 0.1%
RACING & GAMING - 0.1%
Boyd Gaming Corp. (a) 18,400 232,300
MEDICAL EQUIPMENT & SUPPLIES - 0.6%
MEDICAL, DENTAL, HOSPITAL EQUIPMENT - WHOLESALE - 0.5%
Owens and Minor, Inc. 75,150 1,108,463
MEDICAL TECHNOLOGY - 0.1%
Beckman Instruments, Inc. 5,600 162,400
TOTAL MEDICAL EQUIPMENT & SUPPLIES 1,270,863
MEDICAL FACILITIES MANAGEMENT - 76.8%
HEALTH PRACTITIONERS, NEC - 0.5%
Apogee, Inc. (a) 56,500 1,073,500
HOME HEALTH CARE AGENCIES - 5.5%
Abbey Healthcare Group, Inc. (a) 2,400 43,800
Homedco Group, Inc. (a) 402,800 11,177,700
11,221,500
HOSPITALS - 28.4%
Columbia/HCA Healthcare Corp. 453,282 19,264,485
Health Management Associates, Inc.
Class A (a) 480,012 11,460,287
Humana, Inc. (a) 808,200 17,174,250
Quorum Health Group, Inc. (a) 205,700 3,779,738
Universal Health Services, Inc.
Class B (a) 216,400 6,248,550
57,927,310
HMO'S & OUTPATIENT CARE - 26.6%
Coventry Corp. (a) 255,000 5,482,500
Gencare Health Systems, Inc. (a) 120,900 4,956,900
U.S. Healthcare, Inc. 523,700 22,650,025
United HealthCare Corp. 405,400 21,182,150
54,271,575
MEDICAL SERVICES - 8.2%
Lincare Holdings, Inc. (a) 672,800 16,651,800
NURSING CARE & NURSING HOMES - 4.4%
Integrated Health Services, Inc. (a) 242,900 8,835,488
SKILLED NURSING CARE FACILITIES - 3.2%
Multicare Companies, Inc. (a) 349,900 6,560,625
TOTAL MEDICAL FACILITIES MANAGEMENT 156,541,798
REAL ESTATE INVESTMENT TRUSTS - 3.5%
Capstone Capital Corp. (a)(b) 405,000 7,138,125
TOTAL COMMON STOCKS
(Cost $142,945,312) 168,670,584
REPURCHASE AGREEMENTS - 17.3%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account, at 4.83% dated
8/31/94 due 9/1/94 $ 35,203,723 $ 35,199,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $178,144,312) $ 203,869,584
LEGEND
1. Non-income producing
2. A company in which the fund has ownership of at least 5% of the voting
securities is an affiliated compay. A summary of the transactions during
the period in which the issuers were affiliates is as follows:
PURCHASES SALES DIVIDEND MARKET
AFFILIATE COST COST INCOME VALUE
Capstone Capital Corp. (a) $ 87,750 $ - $ - $ 7,138,125
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $149,811,923 and $138,934,857, respectively (see Note 4 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $57,317 for the period (see
Note 5 of Notes to Financial Statements).
The maximum loan and average daily loan balances during the periods for
which loans were outstanding amounted to $12,310,000 and $4,586,286,
respectively. The weighted average interest rate paid was 4.1% (see Note 8
of Notes to Financial Statements).
INCOME TAX INFORMATION
At August 31, 1994, the aggregate cost of investment securities for income
tax purposes was $178,144,312. Net unrealized appreciation aggregated
$25,725,272, of which $26,400,567 related to appreciated investment
securities and $675,295 related to depreciated investment securities.
At February 28, 1994, the fund had a capital loss carryforward of
approximately $12,510,000 of which $1,477,000 and $11,033,000 will expire
on February 28, 2001 and 2002, respectively.
MEDICAL DELIVERY PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
AUGUST 31, 1994 (UNAUDITED)
ASSETS
Investment in securities, at value (including repurchase agreements of $35,199,000) (cost $178,144,312) - See $ 203,869,584
accompanying schedule
Cash 21
Receivable for investments sold 15,433,683
Receivable for fund shares sold 10,197,597
Dividends receivable 15,001
Redemption fees receivable 952
Other receivables 56,698
Prepaid expenses 32,247
TOTAL ASSETS 229,605,783
LIABILITIES
Payable for investments purchased $ 16,497,615
Payable for fund shares redeemed 1,236,222
Accrued management fee 90,470
Other payables and accrued expenses 596,930
TOTAL LIABILITIES 18,421,237
NET ASSETS $ 211,184,546
Net Assets consist of:
Paid in capital $ 185,159,516
Undistributed net investment income 86,576
Accumulated undistributed net realized gain (loss) on investments 213,182
Net unrealized appreciation (depreciation) on investments 25,725,272
NET ASSETS, for 9,516,173 shares outstanding $ 211,184,546
NET ASSET VALUE and redemption price per share ($211,184,546 (divided by) shares) $22.19
Maximum offering price per share (100/97 of $22.19) $22.88
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED AUGUST 31, 1994 (UNAUDITED)
INVESTMENT INCOME $ 564,476
Dividends
Interest (including security lending fees of $7,468) 778,892
TOTAL INCOME 1,343,368
EXPENSES
Management fee $ 531,809
Transfer agent 671,191
Fees
Redemption fees (68,948
)
Accounting and security 87,063
lending fees
Non-interested trustees' compensation 498
Custodian fees and expenses 7,920
Registration fees 32,600
Audit 14,075
Legal 1,541
Interest 3,624
Reports to shareholders 7,849
Miscellaneous 280
Total expenses before reductions 1,289,502
Expense reductions (32,710 1,256,792
)
NET INVESTMENT INCOME 86,576
REALIZED AND UNREALIZED GAIN (LOSS) 13,441,652
Net realized gain (loss) on investment securities
Change in net unrealized appreciation (depreciation) on investment securities (19,279
)
NET GAIN (LOSS) 13,422,373
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 13,508,949
OTHER INFORMATION $367,766
Sales Charges Paid to FDC
Deferred sales charges withheld $4,342
by FDC
Exchange fees withheld by FSC $53,453
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS YEAR ENDED
ENDED FEBRUARY 28,
AUGUST 31, 1994 1994
(UNAUDITED)
Operations $ 86,576 $ (606,248
Net investment income (loss) )
Net realized gain (loss) 13,441,652 (9,573,815
)
Change in net unrealized appreciation (depreciation) (19,279 46,689,562
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 13,508,949 36,509,499
Share transactions 179,138,568 293,157,307
Net proceeds from sales of shares
Cost of shares redeemed (170,298,131 (213,446,953
) )
Paid in capital portion of redemption fees 282,533 523,366
Net increase (decrease) in net assets resulting from share transactions 9,122,970 80,233,720
TOTAL INCREASE (DECREASE) IN NET ASSETS 22,631,919 116,743,219
NET ASSETS
Beginning of period 188,552,627 71,809,408
End of period (including undistributed net investment income of $86,576 and $0, respectively) $ 211,184,546 $ 188,552,627
OTHER INFORMATION
Shares
Sold 8,767,724 17,052,395
Redeemed (8,547,480 (12,723,955
) )
Net increase (decrease) 220,244 4,328,440
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS YEAR ENDED TEN MONTHS YEARS ENDED APRIL 30,
ENDED FEBRUARY 28, ENDED
AUGUST 31, 1994 FEBRUARY 28,
SELECTED PER-SHARE DATAC (UNAUDITED) 1994 1993 1992 1991 1990
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 20.28 $ 14.46 $ 19.64 $ 18.75 $ 11.17 $ 9.85
Income from Investment Operations
Net investment income (loss) .01 (.10) (.13) (.15) (.01) .16
Net realized and unrealized gain (loss) 1.87 5.84 (3.56) 2.16 7.76 1.43
Total from investment operations 1.88 5.74 (3.69) 2.01 7.75 1.59
Less Distributions
From net investment income - - - - - (.05)
From net realized gain - - (1.55) (1.24) (.39) (.26)
Total distributions - - (1.55) (1.24) (.39) (.31)
Redemption fees added to paid in capital .03 .08 .06 .12 .22 .04
Net asset value, end of period $ 22.19 $ 20.28 $ 14.46 $ 19.64 $ 18.75 $ 11.17
TOTAL RETURND, E 9.42% 40.25% (19.63)% 11.71% 72.85% 16.35%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 211,185 $ 188,553 $ 71,809 $ 129,361 $ 131,622 $ 23,559
Ratio of expenses to average net assetsB 1.44%A 1.79% 1.77%A 1.69% 1.94% 2.16%
Ratio of expenses to average net assets before 1.48%A 1.82% 1.77%A 1.69% 1.94% 2.16%
expense reductionsB
Ratio of net investment income (loss) to average net .10%A (.57) (.89)% (.71)% (.07)% 1.43%
assets % A
Portfolio turnover rate 205%A 164% 155%A 181% 165% 253%
</TABLE>
A ANNUALIZED
B SEE NOTE 9 OF NOTES TO FINANCIAL STATEMENTS.
C NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
D TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
E THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
COMPUTERS PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance: total
percentage change in value, the average annual percentage change, or the
growth of a hypothetical $10,000 investment. Each performance figure
includes changes in a fund's share price, plus reinvestment of any
dividends (income) and capital gains (the profits the fund earns when it
sells stocks that have grown in value).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 6 PAST 1 PAST 5 LIFE OF
AUGUST 31, 1994 MONTH YEAR YEARS FUND
S
COMPUTERS 4.18% 28.87% 175.17% 227.44%
COMPUTERS
(INCL. 3% SALES CHARGE) 1.06% 25.00% 166.91% 217.62%
S&P 500 3.26% 5.47% 58.16% 233.54%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one year, five years, or
since the fund started on July 29, 1985. You can compare these figures to
the performance of the S&P 500 - a common proxy for the U.S. stock market.
This benchmark includes reinvested dividends and capital gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
AUGUST 31, 1994 YEAR YEARS FUND
COMPUTERS 28.87% 22.44% 13.92%
COMPUTERS
(INCL. 3% SALES CHARGE) 25.00% 21.70% 13.54%
S&P 500 5.47% 9.60% 14.16%
AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and
show you what would have happened if the fund had performed at a constant
rate each year
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of growth in the long run
and volatility in the short run. Unlike the broader
market, however, some sectors may not have
a history of growth in the long run. And, as
with all stock funds, the share price and return
of a fund that invests in a sector will vary. That
means if you sell your shares during a sector
downturn, you might lose money. But if you
can identify a sector that is about to
experience rapid growth you may have the
potential for above-average gains.
(checkmark)
$10,000 OVER LIFE OF FUND
Select Computer (007)Standard & Poor'
07/29/85 9700.00 10000.00
07/31/85 9515.70 9926.31
08/31/85 9312.00 9841.93
09/30/85 8904.60 9533.88
10/31/85 9438.10 9974.35
11/30/85 10476.00 10658.59
12/31/85 11019.20 11174.46
01/31/86 11145.30 11237.04
02/28/86 11727.30 12077.57
03/31/86 11727.30 12751.50
04/30/86 12901.00 12607.41
05/31/86 13405.40 13278.12
06/30/86 12513.00 13502.52
07/31/86 10571.75 12747.73
08/31/86 11603.62 13693.61
09/30/86 10708.04 12561.15
10/31/86 11759.37 13285.93
11/30/86 11837.25 13608.78
12/31/86 11885.92 13261.75
01/31/87 14251.43 15048.11
02/28/87 15672.67 15642.51
03/31/87 15779.75 16094.58
04/30/87 16159.40 15951.34
05/31/87 16091.26 16090.11
06/30/87 15760.29 16902.66
07/31/87 16023.12 17759.63
08/31/87 17123.13 18422.06
09/30/87 17269.14 18018.62
10/31/87 11175.30 14137.41
11/30/87 9666.44 12972.49
12/31/87 11131.17 13959.69
01/31/88 10549.01 14547.40
02/29/88 11502.54 15225.31
03/31/88 11321.87 14754.84
04/30/88 11904.02 14918.62
05/31/88 11552.73 15048.41
06/30/88 12646.77 15739.14
07/31/88 11693.24 15679.33
08/31/88 10579.12 15146.23
09/30/88 10860.16 15791.46
10/31/88 9986.93 16230.46
11/30/88 9926.71 15998.37
12/31/88 10569.09 16278.34
01/31/89 11191.39 17469.91
02/28/89 10990.65 17034.91
03/31/89 10468.72 17431.83
04/30/89 11643.06 18336.54
05/31/89 12676.88 19079.17
06/30/89 11171.31 18970.42
07/31/89 11372.06 20683.44
08/31/89 11542.69 21088.84
09/30/89 11813.69 21002.38
10/31/89 11422.24 20515.12
11/30/89 11171.31 20933.63
12/31/89 11291.76 21436.04
01/31/90 11191.39 19997.68
02/28/90 12205.14 20255.65
03/31/90 13078.37 20792.42
04/30/90 12727.07 20272.61
05/31/90 14383.19 22249.19
06/30/90 14644.16 22097.90
07/31/90 13600.30 22027.18
08/31/90 11442.32 20035.93
09/30/90 10689.53 19060.18
10/31/90 11091.02 18978.22
11/30/90 12917.77 20204.21
12/31/90 13370.20 20767.91
01/31/91 15649.21 21673.39
02/28/91 16662.11 23223.04
03/31/91 17978.87 23785.03
04/30/91 16814.04 23842.12
05/31/91 17664.87 24872.10
06/30/91 15259.51 23732.96
07/31/91 16792.77 24838.91
08/31/91 17835.80 25427.59
09/30/91 16897.07 25002.95
10/31/91 16563.30 25337.99
11/30/91 15426.40 24316.87
12/31/91 17481.17 27098.72
01/31/92 19306.47 26594.68
02/29/92 20631.11 26940.42
03/31/92 19003.99 26415.08
04/30/92 18388.60 27191.68
05/31/92 18618.07 27324.92
06/30/92 16824.06 26917.78
07/31/92 17648.05 28018.72
08/31/92 16636.31 27444.33
09/30/92 17460.31 27768.18
10/31/92 18837.10 27865.36
11/30/92 20005.30 28815.57
12/31/92 21319.51 29170.00
01/31/93 22560.72 29415.03
02/28/93 21017.03 29815.08
03/31/93 21434.25 30444.17
04/30/93 20825.49 29707.43
05/31/93 23265.47 30503.58
06/30/93 22334.43 30592.05
07/31/93 23265.47 30469.68
08/31/93 24645.99 31624.48
09/30/93 25341.60 31380.97
10/31/93 25341.60 32030.56
11/30/93 26422.47 31726.27
12/31/93 27474.01 32110.15
01/31/94 29245.43 33201.90
02/28/94 30486.56 32302.13
03/31/94 30170.64 30893.75
04/30/94 29978.82 31289.19
05/31/94 29956.26 31802.34
06/30/94 27496.57 31023.18
07/31/94 28365.36 32040.74
08/31/94 31761.53 33354.41
Let's say you invested $10,000 in Fidelity Select Computers Portfolio on
July 29, 1985, when the fund started, and paid a 3% sales charge. By August
31, 1994, your investment would have grown to $31,762 - a 217.62% increase.
That compares to $10,000 invested in the S&P 500, which would have grown to
$33,354 over the same period - a 233.54% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST 31, 1994
% OF FUND'S
INVESTMENTS
Advanced Micro Devices, Inc. 7.6
Compaq Computer Corp. 6.2
Texas Instruments, Inc. 6.1
International Business Machines Corp. 5.3
Intel Corp. 5.3
Sun Microsystems, Inc. 4.9
EMC Corp. 4.1
Digital Equipment Corp. 4.1
LSI Logic Corp. 2.5
Samsung Electronics Ltd. GDR (non-vtg.) 2.3
TOP INDUSTRIES AS OF AUGUST 31, 1994
Row: 1, Col: 1, Value: 35.6
Row: 1, Col: 2, Value: 4.9
Row: 1, Col: 3, Value: 6.4
Row: 1, Col: 4, Value: 6.7
Row: 1, Col: 5, Value: 11.2
Row: 1, Col: 6, Value: 35.2
Semiconductors 35.2%
Mini & Micro Computers 11.2%
Mainframe Computers 6.7%
Graphics Workstations 6.4%
Computer Peripherals 4.9%
All Others 35.6%*
* INCLUDES SHORT-TERM INVESTMENTS
COMPUTERS PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Harry Lange,
Portfolio Manager of Fidelity Select Computers Portfolio
Q. HARRY, HOW HAS THE FUND PERFORMED?
A. The fund returned 4.18% during the six months ended August 31, 1994.
That topped the S&P 500, which returned 3.26% during the same period. For
the 12 months ended August 31, the fund was up 28.87%, compared to 5.47%
for the S&P 500.
Q. ALTHOUGH THE FUND OUT-PERFORMED THE BROAD MARKET OVER THE PAST SIX
MONTHS, PERFORMANCE APPEARS TO HAVE SLOWED FROM LAST YEAR. WHAT HAPPENED?
A. Two things. First, investors sold technology stocks heavily in March and
April, because they were concerned about a summer slowdown in orders. Often
business slows as a result of summer vacations. Over the past couple of
years, explosive growth in the personal computer industry has allowed these
stocks to continue performing well right through the summer, but this year
the momentum wasn't strong enough. In addition, some of the highest-flying
computer-related stocks over the past few years - those of data
communications companies - fell particularly hard as earnings growth slowed
at a couple of key companies. Although the fund had less than a 2% stake in
these networking stocks at the end of February, their performance led
investors to worry about the future earnings potential of many companies
linked to the PC industry.
Q. DO YOU FEEL THAT GROWTH IN THE PC INDUSTRY MAY BE SLOWING?
A. Not at all; I think the underlying story behind these companies remains
very positive. In fact, once the valuations - prices relative to earnings -
of some of the fund's stocks had fallen, investors rushed back to these
companies because they have such strong earnings potential. That caused the
fund to bounce back quickly from the spring correction - it was up nearly
12% in August alone. In addition, the correction had little or no effect on
several of the fund's largest investments.
Q. WHICH STOCKS WERE THOSE?
A. Two companies that manufacture computer hardware - IBM and Compaq -
performed well over the past six months. IBM has done a good job of cutting
costs, and the marketplace has embraced many of the company's new products.
Meanwhile, Compaq continues to gain market share with its successful line
of PCs. Sun Microsystems and Digital Equipment are two more
hardware-related companies that are among the fund's top 10 investments.
Sun manufactures low-end computer workstations that are competing very well
in the marketplace. Data processing equipment manufacturer Digital has
fallen on rough times recently, but I believe a major restructuring plan is
helping to turn things around.
Q. WHERE ELSE DID YOU FIND OPPORTUNITIES?
A. The fund had about a 14% stake in overseas computer-related companies on
August 31, and they have performed well lately. Three Taiwanese companies
offered very strong earnings growth coupled with attractive valuations:
Acer, the country's largest PC company; UMC, a semiconductor manufacturer;
and Kinpo Electronics, which makes electronics products. In addition, the
fund benefited from owning Samsung, a Korean company that is the largest
semiconductor memory maker in the world.
Q. THE FUND CONTINUES TO HOLD A SIZABLE INVESTMENT IN MAJOR U.S. CHIP
MAKERS. HOW DID THEY PERFORM?
A. Micron Technology led the pack, on the heels of an upward surprise in
earnings. However, the summer slowdown I described earlier contributed to
disappointing stock performance from most of the fund's other U.S. chip
makers, including Advanced Micro Devices, Intel and Texas Instruments,
despite continued strong earnings.
Q. WERE THERE ANY OTHER NOTABLE DISAPPOINTMENTS?
A. Yes. Although they've had a strong past couple of years, increased price
competition hurt computer distributors such as Merisel, MicroAge and Tech
Data. Longer term, I think these "middle men" will continue to grow faster
than the PC industry as a whole. But I've cut back on the fund's
investments in some of these companies until I can see some improvement in
their ability to raise prices.
Q. HOW DO YOU SEE THE REST OF THE YEAR SHAPING UP?
A. All signs point to a strong Christmas season for personal computers.
However, there is reason for caution. While I believe that PC sales should
remain strong through the end of the year, pricing is critical. PC
manufacturers have higher inventories than they've had for a while. That
means that even if they sell all of their units, they may not be able to
price them high enough to create desirable profit margins. Although this
could lead to some short-term volatility, I believe the long-term picture
for the industry remains encouraging.
FUND FACTS
START DATE: July 29, 1985
SIZE: as of August 31, 1994, more than
$110 million
MANAGER: Harry Lange, since June 1992;
manager, Fidelity Electronics Portfolio, since
January 1994; Fidelity Select Technology
Portfolio, since November 1993; manager
Fidelity Select Capital Goods and Automation
Machinery Portfolios, 1988; joined Fidelity in
1987
(checkmark)
COMPUTERS PORTFOLIO
INVESTMENTS AUGUST 31, 1994 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 86.6%
SHARES VALUE (NOTE 1)
COMMUNICATIONS EQUIPMENT - 1.4%
DATACOMMUNICATIONS EQUIPMENT - 0.3%
3Com Corp. (a) 5,000 $ 334,687
TELEPHONE EQUIPMENT - 1.1%
DSC Communications Corp. (a) 1,000 28,625
Natural Microsystems (a) 57,200 672,100
Perceptron, Inc. (a) 31,700 594,375
1,295,100
TOTAL COMMUNICATIONS EQUIPMENT 1,629,787
COMPUTER SERVICES & SOFTWARE - 6.7%
COMPUTER & SOFTWARE STORES - 2.1%
Intelligent Electronics, Inc. 3,800 58,900
MicroAge, Inc. (a) 187,600 2,391,900
2,450,800
CUSTOM COMPUTER PROGRAMMING SERVICES - 0.0%
Softdesk, Inc. (a) 2,500 38,750
CAD/CAM/CAE - 0.5%
Brooktrout Technology (a) 22,100 226,525
Computervision Corporation 52,000 143,000
ECI Telecom Ltd. 10,000 180,625
Integrated Silicon Systems, Inc. (a) 500 12,500
Tecnomatix Technologies (a) 7,500 46,875
609,525
DATA PROCESSING - 0.2%
Ceridian Corp. (a) 10,000 267,500
ELECTRONIC INFORMATION RETRIEVAL - 0.1%
Data Broadcasting Corp. (a) 15,000 75,000
PREPACKAGED COMPUTER SOFTWARE - 3.8%
Cheyenne Software, Inc. (a) 6,450 80,625
Fuji Software, Inc. 13,000 323,054
Geoworks (a) 3,300 23,100
Globalink, Inc. (a) 118,200 1,462,725
Infosoft International, Inc. (a) 17,500 470,313
Oracle Systems Corp. (a) 40,000 1,707,500
Tulip Computers NV 20,000 190,476
Wonderware Corp. (a) 4,000 75,000
4,332,793
TOTAL COMPUTER SERVICES & SOFTWARE 7,774,368
COMPUTERS & OFFICE EQUIPMENT - 39.1%
COMPUTER EQUIPMENT - 1.0%
Stratus Computer, Inc. (a) 20,000 760,000
Syquest Technology, Inc. (a) 35,200 343,200
1,103,200
COMPUTER EQUIPMENT - WHOLESALE - 3.8%
GBC Technologies, Inc. (a) 138,700 1,230,963
Merisel, Inc. (a) 50,000 456,250
Southern Electronics Corp. (a) 20,000 127,500
Tech Data Corp. (a) 134,800 2,527,500
4,342,213
COMPUTER PERIPHERALS - 4.9%
EMC Corp. (a) 263,100 4,735,800
Komag, Inc. (a) 15,700 368,950
Liuski International, Inc. (a) 22,500 123,750
Radius, Inc. (a) 28,350 272,869
Western Digital Corp. (a) 6,200 93,000
5,594,369
SHARES VALUE (NOTE 1)
COMPUTER RENTAL & LEASING - 1.5%
Comdisco, Inc. 76,600 $ 1,675,625
COMPUTER STORAGE DEVICES - 0.3%
Exabyte (a) 20,900 394,488
COMPUTERS & OFFICE EQUIPMENT - 3.0%
Canon, Inc. 35,000 611,277
Fujitsu Ltd. 50,000 543,912
Hewlett-Packard Co. 20,500 1,842,438
Nippon Data Kiki Co. Ltd. 18,000 395,210
3,392,837
ELECTRONIC COMPUTERS - 0.2%
Integrated Micro Products
sponsored ADR (a) 25,000 237,500
GRAPHICS WORKSTATIONS - 6.4%
Silicon Graphics, Inc. (a) 52,000 1,365,000
Sun Microsystems, Inc. (a) 212,100 5,620,650
Supermac Technology, Inc. (a) 50,000 343,750
7,329,400
MAINFRAME COMPUTERS - 6.7%
Amdahl Corp. 170,800 1,579,900
Control Data Systems, Inc. (a) 5,000 38,125
International Business Machines Corp. 89,300 6,128,213
7,746,238
MINI & MICRO COMPUTERS - 11.2%
Compaq Computer Corp. (a) 191,600 7,161,050
Concurrent Computer Corp. (a) 23,200 49,300
Digital Equipment Corp. (a) 195,200 4,733,600
Sequent Computer Systems, Inc. (a) 10,000 165,000
Tandem Computers, Inc. (a) 50,000 756,250
12,865,200
PENS, PENCILS, OFFICE SUPPLIES - 0.1%
International Imaging Materials, Inc. (a) 6,000 144,750
TOTAL COMPUTERS & OFFICE EQUIPMENT 44,825,820
CONSUMER ELECTRONICS - 0.3%
RADIOS, TELEVISIONS, STEREOS - 0.3%
Foster Electric Co. Ltd. (a) 7,000 62,892
Odetics, Inc. Class A (a) 32,000 296,000
358,892
ELECTRICAL EQUIPMENT - 0.3%
TV & RADIO COMMUNICATION EQUIPMENT - 0.1%
Avid Technology, Inc. (a) 3,000 99,750
WIRING & LIGHTING - 0.2%
Oak Industries, Inc. (a) 7,400 198,875
TOTAL ELECTRICAL EQUIPMENT 298,625
ELECTRONIC INSTRUMENTS - 3.3%
ELECTRONIC EQUIPMENT - 1.2%
ASECO Corp. (a) 35,700 294,525
Credence Systems Corp. (a) 15,400 342,650
GenRad, Inc. (a) 51,500 270,375
LTX Corp. (a) 10,000 40,000
Megatest Corp. (a) 20,300 390,775
Micro Component Technology, Inc. 200 975
1,339,300
MEASURING INSTRUMENTS - 0.3%
Perkin-Elmer Corp. (a) 10,000 298,750
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
ELECTRONIC INSTRUMENTS - CONTINUED
SEMI-CONDUCTOR CAPITAL EQUIPMENT - 1.8%
Applied Materials, Inc. (a) 3,300 $ 166,650
Electro Scientific Industries, Inc. (a) 32,500 402,188
KLA Instruments Corp. (a) 32,600 1,548,500
2,117,338
TOTAL ELECTRONIC INSTRUMENTS 3,755,388
ELECTRONICS - 34.6%
ELECTRONIC PARTS - WHOLESALE - 1.1%
Arrow Electronics, Inc. (a) 7,703 295,603
Pioneer-Standard Electronics, Inc. 4,950 84,769
Sterling Electronics Corp. (a) 68,800 877,200
1,257,572
ELECTRONICS AND ELECTRIC COMPONENTS - 1.2%
Cirrus Logic, Inc. (a) 15,000 414,375
Sanmina Corp. (a) 10,000 202,500
Toshiba Corp. 100,000 757,485
1,374,360
SEMICONDUCTORS - 32.3%
Advanced Micro Devices, Inc. (a) 302,000 8,758,000
Atmel Corp. (a) 20,000 550,000
Austria Mikro Systems International (b) 10,000 621,174
Burr-Brown Corp. (a) 5,000 49,375
Cyrix Corp. (a) 5,700 226,575
Geotek Industries, Inc. (a) 50,000 568,750
IMP, Inc. (a) 180,000 320,625
Integrated Device Technology, Inc. (a) 700 16,363
Intel Corp. 92,900 6,108,170
Interpoint Corp. (a) 10,000 107,500
LSI Logic Corp. (a) 90,800 2,860,200
Lattice Semiconductor Corp. (a) 12,200 230,275
Logic Devices, Inc. (a) 30,000 88,125
Micron Technology, Inc. (a) 23,500 945,875
Motorola, Inc. (a) 10,000 540,000
National Semiconductor Corp. (a) 93,200 1,735,850
Opti, Inc. (a) 48,700 645,275
Samsung Electronics Co. Ltd.:
GDS (b) 25,400 1,993,900
GDR (a) (b) 2,831 222,234
GDR (non - vtg.) (b) 34,275 2,690,588
GDR Part Dividend (a) (b) 2,589 110,092
Supertex, Inc. (a) 20,000 82,500
Texas Instruments, Inc. (a) 90,000 7,008,750
VLSI Technology, Inc. (a) 40,200 560,288
37,040,484
TOTAL ELECTRONICS 39,672,416
INDUSTRIAL MACHINERY & EQUIPMENT - 0.2%
GENERAL INDUSTRIAL MACHINERY - 0.0%
Robotic Vision Systems, Inc. (a) 5,000 25,000
SPECIAL INDUSTRIAL MACHINERY - 0.2%
Asyst Technologies, Inc. (a) 10,700 173,875
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 198,875
LEASING & RENTAL - 0.1%
EQUIPMENT RENTAL AND LEASING, NEC - 0.1%
Leasing Solutions, Inc. (a) 14,000 115,500
MEDICAL EQUIPMENT & SUPPLIES - 0.2%
MEDICAL SUPPLIES & APPLIANCES - 0.2%
Steris Corporation (a) 10,000 225,000
SHARES VALUE (NOTE 1)
PHOTOGRAPHIC EQUIPMENT - 0.1%
Megahertz Corp. (a) 13,800 $ 79,350
SERVICES - 0.3%
ELECTRICAL REPAIR SHOPS, NEC - 0.3%
Cerplex Group, Inc. (a) 22,500 354,375
TOTAL COMMON STOCKS
(Cost $88,721,449) 99,288,396
CORPORATE BONDS - 6.1%
PRINCIPAL
AMOUNT
CONVERTIBLE BONDS - 6.1%
COMPUTERS & OFFICE EQUIPMENT - 3.2%
ELECTRONIC COMPUTERS - 2.7%
Acer, Inc. 4%, 6/10/01 $ 1,070,000 3,156,500
OFFICE EQUIPMENT - WHOLESALE - 0.5%
Kinpo Electronics, Inc. euro 3%,
7/21/01 450,000 533,250
TOTAL COMPUTERS & OFFICE EQUIPMENT 3,689,750
ELECTRONICS - 2.9%
SEMICONDUCTORS - 2.9%
United Microelectronics Corp.:
1 1/4%, 6/8/04 (b) 1,070,000 1,845,750
1 1/4%, 6/8/04 850,000 1,466,250
3,312,000
TOTAL CONVERTIBLE BONDS
(Cost $5,773,444) 7,001,750
OTHER SECURITIES - 0.4%
INDEXED SECURITIES - 0.4%
Hewlett Packard Finance Co.
0%, 4/25/95 (indexed to the
price of Hewlett Packard
common stock) (b)
(Cost $424,000) 400,000 451,600
REPURCHASE AGREEMENTS - 6.9%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account, at 4.83% dated
8/31/94 due 9/1/94 $ 7,948,066 7,947,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $102,865,893) $ 114,688,746
LEGEND
1. Non-income producing
2. 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 period
end, the value of these securities amounted to $7,935,338 or 7.2% of net
assets.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $193,867,108 and $164,444,384, respectively (see Note 4 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $98,114 for the period (see
Note 5 of Notes to Financial Statements).
The maximum loan and average daily loan balances during the periods for
which loans were outstanding amounted to $14,435,000 and $5,307,625,
respectively. The weighted average interest rate paid was 4.2% (see Note 8
of Notes to Financial Statements).
Distribution of investments by country, as a percentage of total value of
investment in securities, is as follows:
United States 85.6%
Taiwan (Free China) 6.3
Korea 4.5
Japan 2.4
Others (individually less than 1%) 1.2
TOTAL 100.0%
INCOME TAX INFORMATION
At August 31, 1994, the aggregate cost of investment securities for income
tax purposes was $102,871,639. Net unrealized appreciation aggregated
$11,817,107, of which $15,550,832 related to appreciated investment
securities and $3,733,725 related to depreciated investment securities.
COMPUTERS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
AUGUST 31, 1994 (UNAUDITED)
ASSETS
Investment in securities, at value (including repurchase agreements of $7,947,000) (cost $102,865,893) - See $ 114,688,746
accompanying schedule
Cash 63,917
Receivable for investments sold 810,350
Receivable for fund shares sold 5,199,675
Dividends receivable 34,879
Interest receivable 5,703
Redemption fees receivable 2,038
Other receivables 38,959
TOTAL ASSETS 120,844,267
LIABILITIES
Payable for investments purchased $ 6,795,136
Payable for fund shares redeemed 2,996,737
Accrued management fee 49,563
Other payables and accrued expenses 53,294
TOTAL LIABILITIES 9,894,730
NET ASSETS $ 110,949,537
Net Assets consist of:
Paid in capital $ 101,913,592
Accumulated net investment (loss) (678,906
)
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions (2,108,006
)
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies 11,822,857
NET ASSETS, for 3,941,482 shares outstanding $ 110,949,537
NET ASSET VALUE and redemption price per share ($110,949,537 (divided by) shares) $28.15
Maximum offering price per share (100/97 of $28.15) $29.02
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED AUGUST 31, 1994 (UNAUDITED)
INVESTMENT INCOME $ 173,530
Dividends
Interest 152,184
TOTAL INCOME 325,714
EXPENSES
Management fee $ 354,216
Transfer agent 583,523
Fees
Redemption fees (98,602
)
Accounting fees and expenses 57,172
Non-interested trustees' compensation 328
Custodian fees and expenses 9,396
Registration fees 47,649
Audit 11,163
Legal 706
Interest 34,423
Reports to shareholders 4,025
Miscellaneous 117
Total expenses before reductions 1,004,116
Expense reductions (10,193 993,923
)
NET INVESTMENT INCOME (LOSS) (668,209
)
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities (1,854,019
)
Foreign currency transactions 388 (1,853,631
)
Change in net unrealized appreciation (depreciation) on:
Investment securities (3,756,702
)
Assets and liabilities in foreign currencies 4 (3,756,698
)
NET GAIN (LOSS) (5,610,329
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ (6,278,538
)
OTHER INFORMATION $1,101,177
Sales Charges Paid to FDC
Deferred sales charges withheld $4,813
by FDC
Exchange fees withheld by FSC $78,945
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS YEAR ENDED
ENDED FEBRUARY 28,
AUGUST 31, 1994 1994
(UNAUDITED)
Operations $ (668,209 $ (377,060
Net investment income (loss) ) )
Net realized gain (loss) (1,853,631 5,305,912
)
Change in net unrealized appreciation (depreciation) (3,756,698 11,882,729
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (6,278,538 16,811,581
)
Distributions to shareholders from net realized gain - (3,924,122
)
Share transactions 259,585,198 184,130,331
Net proceeds from sales of shares
Reinvestment of distributions - 3,842,739
Cost of shares redeemed (263,741,545 (128,419,730
) )
Paid in capital portion of redemption fees 949,848 398,209
Net increase (decrease) in net assets resulting from share transactions (3,206,499 59,951,549
)
TOTAL INCREASE (DECREASE) IN NET ASSETS (9,485,037 72,839,008
)
NET ASSETS
Beginning of period 120,434,574 47,595,566
End of period (including accumulated net investment (loss) of $(678,906) and $(10,697),
respectively) $ 110,949,537 $ 120,434,574
OTHER INFORMATION
Shares
Sold 9,514,215 7,631,888
Issued in reinvestment of distributions - 169,028
Redeemed (10,029,160 (5,706,315
) )
Net increase (decrease) (514,945 2,094,601
)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS YEAR ENDED TEN MONTHS YEARS ENDED APRIL 30,
ENDED FEBRUARY 28, ENDED
AUGUST 31, 1994 FEBRUARY 28,
SELECTED PER-SHARE DATAC (UNAUDITED) 1994 1993 1992 1991 1990
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 27.02 $ 20.15 $ 17.63 $ 16.60 $ 12.68 $ 11.60
Income from Investment Operations
Net investment income (loss) (.15) (.21)H (.15) (.03)G .42F (.11)
Net realized and unrealized gain (loss) 1.06I 8.66 2.44 1.18 3.21 .98
Total from investment operations .91 8.45 2.29 1.15 3.63 .87
Less Distributions
From net investment income - - - - (.12) -
In excess of net investment income - - - (.27) - -
From net realized gain - (1.80) - (.22) - -
Total distributions - (1.80) - (.49) (.12) -
Redemption fees added to paid in capital .22 .22 .23 .37 .41 .21
Net asset value, end of period $ 28.15 $ 27.02 $ 20.15 $ 17.63 $ 16.60 $ 12.68
TOTAL RETURND, E 4.18% 45.06% 14.29% 9.36% 32.11% 9.31%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 110,950 $ 120,435 $ 47,596 $ 32,810 $ 29,455 $ 27,561
Ratio of expenses to average net assetsB 1.70%A 1.89% 1.81%A 2.17% 2.26% 2.64%
Ratio of expenses to average net assets before 1.72%A 1.90% 1.81%A 2.17% 2.26% 3.82%
expense reductionsB
Ratio of net investment income (loss) to average net (1.15)% (.91) (.98)% (.18)% 2.94% (.94)%
assets A % A
Portfolio turnover rate 332%A 145% 254%A 568% 695% 596%
</TABLE>
1 ANNUALIZED 2 SEE NOTE 9 OF NOTES TO FINANCIAL STATEMENTS. 3 NET
INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING EACH PERIOD. 4 TOTAL RETURNS DO NOT INCLUDE THE ONE TIME
SALES CHARGE AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. 5
THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN. 6 INVESTMENT INCOME PER SHARE INCLUDES A
SPECIAL DIVIDEND WHICH AMOUNTED TO $.08 PER SHARE AND $.36 PER SHARE
RELATING TO A NONRECURRING INITIATIVE TO INVEST IN DIVIDEND INCOME
PRODUCING SECURITIES WHICH WAS IN EFFECT FOR A PORTION OF 1991. 7
INVESTMENT INCOME PER SHARE INCLUDES $.22 PER SHARE RELATING TO A
NONRECURRING INITIATIVE TO INVEST IN DIVIDEND INCOME PRODUCING SECURITIES
WHICH WAS IN EFFECT FOR A PORTION OF 1992. 8 INVESTMENT INCOME PER SHARE
REFLECTS A SPECIAL DIVIDEND FROM INTELLIGENT ELECTRONICS WHICH AMOUNTED TO
$.07 PER SHARE. I THE AMOUNT SHOWN FOR A SHARE OUTSTANDING DOES NOT
CORRESPOND WITH THE AGGREGATE NET LOSS ON INVESTMENTS FOR THE PERIOD ENDED
DUE TO THE TIMING OF SALES AND REPURCHASES OF FUND SHARES IN RELATION TO
FLUCTUATING MARKET VALUES OF THE INVESTMENTS OF THE FUND.
DEFENSE AND AEROSPACE PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance: total
percentage change in value, the average annual percentage change, or the
growth of a hypothetical $10,000 investment. Each performance figure
includes changes in a fund's share price, plus reinvestment of any
dividends (income) and capital gains (the profits the fund earns when it
sells stocks that have grown in value). If Fidelity had not reimbursed
certain fund expenses during the period, the fund's total returns would
have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 6 PAST 1 PAST 5 PAST 10
AUGUST 31, 1994 MONTH YEAR YEARS YEARS
S
DEFENSE AND AEROSPACE 0.05% 12.05% 48.10% 82.53%
DEFENSE AND AEROSPACE
(INCL. 3% SALES CHARGE) -2.95% 8.68% 43.66% 77.05%
S&P 500 3.26% 5.47% 58.16% 300.76%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one year, five years, or ten
years. You can compare these figures to the performance of the S&P 500 - a
common proxy for the U.S. stock market. This benchmark includes reinvested
dividends and capital gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
AUGUST 31, 1994 YEAR YEARS YEARS
DEFENSE AND AEROSPACE 12.05% 8.17% 6.20%
DEFENSE AND AEROSPACE
(INCL. 3% SALES CHARGE) 8.68% 7.51% 5.88%
S&P 500 5.47% 9.60% 14.89%
AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and
show you what would have happened if the fund had performed at a constant
rate each year.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of growth in the long run
and volatility in the short run. Unlike the broader
market, however, some sectors may not have
a history of growth in the long run. And, as
with all stock funds, the share price and return
of a fund that invests in a sector will vary. That
means if you sell your shares during a sector
downturn, you might lose money. But if you
can identify a sector that is about to
experience rapid growth you may have the
potential for above-average gains.
(checkmark)
$10,000 OVER TEN YEARS
Select Defense (067) Standard & Poor's
08/31/84 9700.00 10000.00
09/30/84 9404.32 10002.00
10/31/84 9535.73 10041.01
11/30/84 9059.36 9928.55
12/31/84 9371.47 10190.66
01/31/85 10603.47 10984.51
02/28/85 10973.08 11119.62
03/31/85 10660.97 11127.41
04/30/85 10274.94 11117.39
05/31/85 10521.34 11759.98
06/30/85 10967.56 11944.61
07/31/85 11282.10 11926.69
08/31/85 11248.99 11825.32
09/30/85 10595.07 11455.18
10/31/85 10785.45 11984.41
11/30/85 11364.87 12806.54
12/31/85 11844.96 13426.38
01/31/86 11695.97 13501.57
02/28/86 12333.33 14511.49
03/31/86 13036.91 15321.23
04/30/86 13136.23 15148.10
05/31/86 13459.05 15953.98
06/30/86 13740.48 16223.60
07/31/86 12886.06 15316.70
08/31/86 13549.26 16453.20
09/30/86 12457.93 15092.52
10/31/86 12625.82 15963.36
11/30/86 13028.78 16351.27
12/31/86 12415.95 15934.31
01/31/87 13498.89 18080.66
02/28/87 14355.16 18794.85
03/31/87 14086.52 19338.02
04/30/87 13473.70 19165.91
05/31/87 13289.02 19332.65
06/30/87 13163.09 20308.95
07/31/87 13515.68 21338.62
08/31/87 13372.96 22134.55
09/30/87 13104.33 21649.80
10/31/87 9763.19 16986.43
11/30/87 9259.50 15586.75
12/31/87 9535.62 16772.90
01/31/88 10149.13 17479.04
02/29/88 10753.87 18293.57
03/31/88 10727.58 17728.29
04/30/88 10657.46 17925.08
05/31/88 10254.30 18081.03
06/30/88 10674.99 18910.95
07/31/88 10464.65 18839.08
08/31/88 10210.48 18198.55
09/30/88 10517.23 18973.81
10/31/88 10499.70 19501.29
11/30/88 10035.19 19222.42
12/31/88 9947.55 19558.81
01/31/89 10341.94 20990.51
02/28/89 10298.12 20467.85
03/31/89 10508.47 20944.75
04/30/89 10885.34 22031.78
05/31/89 11078.15 22924.07
06/30/89 10946.69 22793.40
07/31/89 11656.60 24851.65
08/31/89 11954.59 25338.74
09/30/89 11735.48 25234.85
10/31/89 11069.39 24649.40
11/30/89 10648.70 25152.25
12/31/89 10823.98 25755.90
01/31/90 10210.48 24027.68
02/28/90 10245.54 24337.64
03/31/90 10876.57 24982.59
04/30/90 10429.59 24358.02
05/31/90 11200.85 26732.93
06/30/90 11208.91 26551.15
07/31/90 10759.14 26466.18
08/31/90 9815.51 24073.64
09/30/90 9498.03 22901.25
10/31/90 9374.57 22802.78
11/30/90 9877.25 24275.84
12/31/90 10327.82 24953.13
01/31/91 11239.36 26041.09
02/28/91 11460.61 27903.03
03/31/91 12345.60 28578.28
04/30/91 12142.05 28646.87
05/31/91 12708.44 29884.41
06/30/91 12069.03 28515.71
07/31/91 12593.39 29844.54
08/31/91 12460.08 30551.86
09/30/91 12166.80 30041.64
10/31/91 12753.36 30444.20
11/30/91 12175.68 29217.30
12/31/91 13108.86 32559.76
01/31/92 13064.42 31954.14
02/29/92 13268.83 32369.55
03/31/92 13002.21 31738.34
04/30/92 12771.14 32671.45
05/31/92 12131.25 32831.54
06/30/92 11562.46 32342.35
07/31/92 12006.82 33665.15
08/31/92 11775.75 32975.02
09/30/92 11944.61 33364.12
10/31/92 12042.37 33480.90
11/30/92 12460.08 34622.59
12/31/92 13108.86 35048.45
01/31/93 13499.90 35342.86
02/28/93 13402.14 35823.52
03/31/93 14113.13 36579.40
04/30/93 14157.56 35694.18
05/31/93 14593.05 36650.78
06/30/93 15206.27 36757.07
07/31/93 15828.39 36610.04
08/31/93 15801.73 37997.56
09/30/93 16210.54 37704.98
10/31/93 16859.32 38485.47
11/30/93 16361.63 38119.86
12/31/93 16891.78 38581.11
01/31/94 17696.15 39892.87
02/28/94 17696.15 38811.77
03/31/94 16984.24 37119.58
04/30/94 17076.42 37594.71
05/31/94 17132.72 38211.26
06/30/94 16701.12 37275.09
07/31/94 16945.07 38497.71
08/31/94 17705.06 40076.11
Let's say you invested $10,000 in Fidelity Select Defense and Aerospace
Portfolio on August 31, 1984, and paid a 3% sales charge. By August 31,
1994, your investment would have grown to $17,705 - a 77.05% increase. That
compares to $10,000 invested in the S&P 500, which would have grown to
$40,076 over the same period - a 300.76% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST 31, 1994
% OF FUND'S
INVESTMENTS
McDonnell Douglas Corp. 9.1
United Technologies Corp. 8.5
General Motors Corp. Class H 7.2
Allied-Signal, Inc. 6.2
Raytheon Co. 6.1
Harris Corp. 5.8
TRW, Inc. 5.6
AMR Corp. 4.6
General Electric Co. 4.5
Loral Corp. 4.2
TOP INDUSTRIES AS OF AUGUST 31, 1994
Row: 1, Col: 1, Value: 20.8
Row: 1, Col: 2, Value: 6.6
Row: 1, Col: 3, Value: 7.2
Row: 1, Col: 4, Value: 12.2
Row: 1, Col: 5, Value: 13.2
Row: 1, Col: 6, Value: 13.7
Row: 1, Col: 7, Value: 26.3
Conglomerates 26.3%
Missiles & Space Vehicles 13.9%
Defense Electronics 13.7%
Aircraft 12.2%
Motor Vehicles & Car Bodies 7.2%
Air Transportation, Major
National 6.6%
All Others 20.1%
DEFENSE AND AEROSPACE PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Stephen Binder,
Portfolio Manager of
Fidelity Select Defense and Aerospace Portfolio
Q. STEVE, HOW DID THE FUND PERFORM?
A. The fund essentially broke even, returning 0.05% for the six months
ended August 31, 1994. That trailed the S&P 500's 3.26% return during the
same period. However, the fund posted better results for the 12 months
ended August 31, returning 12.05% versus the S&P 500's 5.47% return.
Q. WHAT WAS THE BIGGEST INFLUENCE ON THE FUND'S PERFORMANCE OVER THE PAST
SIX MONTHS?
A. The fund holds a lot of multi-industrial conglomerates that have
aerospace or defense subsidiaries. These companies are largely cyclical,
which means their fortunes tend to rise and fall with the ups and downs in
the economy. When the economy improved late last year and into this year,
many of the fund's conglomerate stocks likewise improved. The restructuring
and cost-cutting that many of these companies undertook really benefited
their profits and their stock prices once the economy picked up. However,
this year's rise in interest rates held back the stock prices of many
conglomerates. More recently, with evidence that inflation remains under
control and the economic recovery remains intact, many of the stocks have
made a comeback.
Q. UNITED TECHNOLOGIES IS THE FUND'S LARGEST INVESTMENT IN A CONGLOMERATE.
HOW DID IT DO DURING THE PERIOD?
A. United Technologies (UT) continues to benefit from economic recoveries
in many parts of the world. This is particularly evident in its Carrier air
conditioning subsidiary. Demand for air conditioning systems and equipment
has been very strong, especially in North America. In addition, Pratt &
Whitney, UT's aerospace subsidiary, installed new management which
implemented an aggressive cost-cutting and downsizing plan. These solid
contributions from UT's major subsidiaries increased the company's free
cash flow substantially. It is using this cash to reduce its debt, buy back
shares of its stock and increase the stock's dividend. The stock was down
about 6% for the past six months, but the company's prospects going forward
are quite compelling.
Q. WHICH STOCKS HAVE HELPED THE FUND THIS YEAR?
A. Examples include Watkins-Johnson - up over 80% year-to-date through
August 31 - and Harris Corporation. Both have semiconductor operations in
addition to their defense businesses. Semiconductor sales have been strong
due to increased computer sales and higher levels of industrial production.
These stocks performed well early in the year, corrected through the spring
and summer, and have recovered lately.
Q. WHAT'S YOUR TAKE ON THE CURRENT STATE OF THE DEFENSE INDUSTRY?
A. There continues to be immense pressure on revenues due to the reduced
federal defense budget. Companies are trying to deal with this in three
primary ways: downsizing, which means cutting employees and shedding
non-core operations; generating more export sales to U. S. allies; and
consolidating operations through mergers. The most notable combinations of
defense contractors this year have been Northrop's purchase of Grumman and,
at the end of August, Martin Marietta's agreement to merge with Lockheed,
thus forming the largest company in the industry.
Q. MCDONNELL DOUGLAS IS THE FUND'S LARGEST PURE PLAY ON THE DEFENSE
INDUSTRY. HOW HAS IT DONE RECENTLY?
A. The stock was somewhat volatile during the past six months and ended the
period close to where it started. However, McDonnell Douglas improved its
profit margins and balance sheet significantly in 1993 through aggressive
cost cutting and debt repayment. One question mark for the stock is the
impact of cost overruns in the C-17 military airlift program, which has
stirred controversy in Congress. McDonnell Douglas appears to have reached
an agreement with the Defense Department, but Congress has yet to approve
acquisition funding for the aircraft.
Q. WHAT IS YOUR OUTLOOK AND GAME PLAN GOING FORWARD?
A. The overall performance of the conglomerates hasn't been as strong as I
had hoped. However, I'm going to stick with them because many of the
companies are showing improving profit margins and plenty of free cash
flow. This gives them options that they wouldn't otherwise have, such as
paying down debt, buying their own shares, or making strategic
acquisitions. As for pure defense companies, industry consolidation will
likely continue. I expect to maintain the fund's investment in defense
contractors because I think the consolidation trend will support their
stock prices.
FUND FACTS
START DATE: May 8, 1984
SIZE: as of August 31, 1994, more than
$4 million
MANAGER: Stephen Binder, since October
1992; manager, Fidelity Select Regional
Banks Portfolio, since May 1990; Fidelity
Select Financial Services Portfolio, since
November 1993; joined Fidelity in 1989
(checkmark)
DEFENSE AND AEROSPACE PORTFOLIO
INVESTMENTS AUGUST 31, 1994 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 99.3%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 34.2%
AIRCRAFT - 12.2%
Boeing Co. 2,500 $ 113,750
McDonnell Douglas Corp. 2,800 331,100
444,850
AIRCRAFT & PARTS - 1.4%
ROHR Industries, Inc. (a) 5,000 51,875
AIRCRAFT EQUIPMENT - 3.4%
Aviall, Inc. 4,000 42,500
Transtechnology Corp. 6,400 82,400
124,900
MISSILES & SPACE VEHICLES - 13.2%
Lockheed Corp. 1,000 78,750
Martin Marietta Corp. 2,500 127,188
Orbital Sciences Corporation (a) 3,000 55,500
Rockwell International Corp. 3,600 130,050
Thiokol Corp. 3,500 89,688
481,176
ORDNANCE - 1.0%
Alliant Techsystems, Inc. (a) 1,200 38,250
TRNG EQUIPMENT & SIMULATORS - 3.0%
Flightsafety International, Inc. 2,800 109,550
TOTAL AEROSPACE & DEFENSE 1,250,601
AIR TRANSPORTATION - 6.6%
AIR TRANSPORT, MAJOR NATIONAL - 6.6%
AMR Corp. (a) 2,800 168,700
KLM Royal Dutch Airlines (a) 2,400 70,500
239,200
AUTOS, TIRES, & ACCESSORIES - 12.8%
AUTO & TRUCK PARTS - 5.6%
TRW, Inc. 2,700 202,500
MOTOR VEHICLES & CAR BODIES - 7.2%
General Motors Corp. Class H 7,000 262,500
TOTAL AUTOS, TIRES, & ACCESSORIES 465,000
CONGLOMERATES - 26.3%
Allied-Signal, Inc. 6,000 224,250
Harris Corp. 4,400 212,850
Sequa Corp. Class A (a) 3,000 84,000
Textron, Inc. 2,300 127,075
United Technologies Corp. 4,850 308,581
956,756
DEFENSE ELECTRONICS - 13.7%
Loral Corp. 3,700 154,475
Raytheon Co. 3,300 223,163
Watkins-Johnson Co. 3,300 120,450
498,088
ELECTRICAL EQUIPMENT - 4.5%
ELECTRICAL MACHINERY - 4.5%
General Electric Co. 3,300 164,175
SHIP BUILDING & REPAIR - 1.2%
SHIP BUILDERS - 1.2%
General Dynamics Corp. 1,000 45,124
TOTAL COMMON STOCKS
(Cost $3,549,113) 3,618,944
CORPORATE BONDS - 0.7%
PRINCIPAL
AMOUNT
CONVERTIBLE BONDS - 0.7%
AEROSPACE & DEFENSE - 0.7%
MISSILES & SPACE VEHICLES - 0.7%
Orbital Sciences Corp. 6 3/4%,
3/1/03 (Cost $18,000) $18,000 $ 24,390
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $3,567,113) $ 3,643,334
LEGEND
1. Non-income producing
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $4,483,840 and $9,391,841, respectively. (see Note 4 of Notes to
Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $4,047 for the period (see
Note 5 of Notes to Financial Statements).
The maximum loan and average daily loan balances during the periods for
which loans were outstanding amounted to $2,032,000 and $2,009,750
respectively. The weighted average interest rate paid was 4.2% (see Note 8
of Notes to Financial Statements).
INCOME TAX INFORMATION
At August 31, 1994, the aggregate cost of investment securities for income
tax purposes was $3,567,113. Net unrealized appreciation aggregated
$76,221, of which $153,966 related to appreciated investment securities and
$77,745 related to depreciated investment securities.
DEFENSE AND AEROSPACE PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
AUGUST 31, 1994 (UNAUDITED)
ASSETS
Investment in securities, at value (cost $3,567,113) - See accompanying schedule $ 3,643,334
Receivable for investments sold 468,138
Receivable for fund shares sold 281,504
Dividends receivable 14,220
Interest receivable 604
Redemption fees receivable 10
Other receivables 1,084
Prepaid expenses 10,403
Receivable from investment adviser for expense reductions 4,726
TOTAL ASSETS 4,424,023
LIABILITIES
Payable to custodian bank $ 108,799
Payable for investments purchased 116,304
Payable for fund shares redeemed 160,872
Accrued management fee 2,053
Other payables and accrued expenses 21,224
TOTAL LIABILITIES 409,252
NET ASSETS $ 4,014,771
Net Assets consist of:
Paid in capital $ 4,229,685
Accumulated net investment (loss) (16,654
)
Accumulated undistributed net realized gain (loss) on investments (274,481
)
Net unrealized appreciation (depreciation) on investments 76,221
NET ASSETS, for 212,736 shares outstanding $ 4,014,771
NET ASSET VALUE and redemption price per share ($4,014,771 (divided by)shares) $18.87
Maximum offering price per share (100/97 of $18.87) $19.45
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED AUGUST 31, 1994 (UNAUDITED)
INVESTMENT INCOME $ 55,359
Dividends
Interest 12,947
TOTAL INCOME 68,306
EXPENSES
Management fee $ 20,860
Transfer agent 56,822
Fees
Redemption fees (11,173
)
Accounting fees and expenses 22,516
Non-interested trustees' compensation 21
Custodian fees and expenses 4,388
Registration fees 10,403
Audit 8,473
Interest 942
Reports to shareholders 822
Miscellaneous 40
Total expenses before reductions 114,114
Expense reductions (29,154 84,960
)
NET INVESTMENT INCOME (LOSS) (16,654
)
REALIZED AND UNREALIZED GAIN (LOSS) (269,720
Net realized gain (loss) on investment securities )
Change in net unrealized appreciation (depreciation) on investment securities (250,974
)
NET GAIN (LOSS) (520,694
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ (537,348
)
OTHER INFORMATION $44,842
Sales Charges Paid to FDC
Deferred sales charges withheld $537
by FDC
Exchange fees withheld by FSC $10,170
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS YEAR ENDED
ENDED FEBRUARY 28,
AUGUST 31, 1994 1994
(UNAUDITED)
Operations $ (16,654 $ 18,345
Net investment income (loss) )
Net realized gain (loss) (269,720 629,513
)
Change in net unrealized appreciation (depreciation) (250,974 236,253
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (537,348 884,111
)
Distributions to shareholders - (15,420
From net investment income )
From net realized gain (145,443 (95,604
) )
TOTAL DISTRIBUTIONS (145,443 (111,024
) )
Share transactions 8,326,513 29,885,117
Net proceeds from sales of shares
Reinvestment of distributions 142,332 109,302
Cost of shares redeemed (14,933,345 (21,129,974
) )
Paid in capital portion of redemption fees 26,165 35,674
Net increase (decrease) in net assets resulting from share transactions (6,438,335 8,900,119
)
TOTAL INCREASE (DECREASE) IN NET ASSETS (7,121,126 9,673,206
)
NET ASSETS
Beginning of period 11,135,897 1,462,691
End of period (including undistributed net investment income (loss) of $(16,654) and $2,925,
respectively) $ 4,014,771 $ 11,135,897
OTHER INFORMATION
Shares
Sold 436,221 1,666,363
Issued in reinvestment of distributions 7,812 6,120
Redeemed (813,221 (1,187,524
) )
Net increase (decrease) (369,188 484,959
)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS YEAR ENDED TEN MONTHS YEARS ENDED APRIL 30,
ENDED FEBRUARY 28, ENDED
AUGUST 31, 1994 FEBRUARY 28,
SELECTED PER-SHARE DATAC (UNAUDITED) 1994 1993 1992 1991 1990
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 19.14 $ 15.08 $ 14.37 $ 13.72 $ 11.90 $ 12.42
Income from Investment Operations
Net investment income (loss) (.05) .07 (.02) (.01) .10 .04
Net realized and unrealized gain (loss) (.02) 4.57 .69 .67 1.72 (.56)
Total from investment operations (.07) 4.64 .67 .66 1.82 (.52)
Less Distributions
From net investment income - (.10) - (.04) (.12) -
In excess of net investment income - - - (.02) - -
From net realized gain (.27) (.62) - - - -
Total distributions (.27) (.72) - (.06) (.12) -
Redemption fees added to paid in capital .07 .14 .04 .05 .12 -
Net asset value, end of period $ 18.87 $ 19.14 $ 15.08 $ 14.37 $ 13.72 $ 11.90
TOTAL RETURN D, E .05% 32.04% 4.94% 5.18% 16.42% (4.19)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 4,015 $ 11,136 $ 1,463 $ 1,280 $ 3,070 $ 1,599
Ratio of expenses to average net assets B 2.48%A 2.53% 2.48%A 2.46% 2.49% 2.43%
Ratio of expenses to average net assets before 3.33%A 3.58% 9.63%A 2.72% 3.11% 3.26%
expense reductions B
Ratio of net investment income (loss) to average net (.49)% .40% (.14)% (.10)% .78% .34%
assets A A
Portfolio turnover rate 148%A 324% 87%A 32% 162% 96%
</TABLE>
A ANNUALIZED
B SEE NOTE 9 OF NOTES TO FINANCIAL STATEMENTS.
C NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
D TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
E THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
DEVELOPING COMMUNICATIONS PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance: total
percentage change in value, the average annual percentage change, or the
growth of a hypothetical $10,000 investment. Each performance figure
includes changes in a fund's share price, plus reinvestment of any
dividends (income) and capital gains (the profits the fund earns when it
sells stocks that have grown in value).
CUMULATIVE TOTAL RETURNS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
PERIODS ENDED PAST 6 PAST 1 LIFE OF
AUGUST 31, 1994 MONTHS YEAR FUND
DEVELOPING COMMUNICATIONS 1.61% 6.26% 133.59%
DEVELOPING COMMUNICATIONS (INCL. 3% SALES CHARGE)
-1.44% 3.07% 126.58%
S&P 500 3.26% 5.47% 51.13%
</TABLE>
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one year, or since the fund
started on June 29, 1990. You can compare these figures to the performance
of the S&P 500 - a common proxy for the U.S. stock market. This benchmark
includes reinvested dividends and capital gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 LIFE OF
AUGUST 31, 1994 YEAR FUND
DEVELOPING COMMUNICATIONS 6.26% 22.51%
DEVELOPING COMMUNICATIONS
(INCL. 3% SALES CHARGE) 3.07% 21.62%
S&P 500 5.47% 10.39%
AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and
show you what would have happened if the fund had performed at a constant
rate each year.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of growth in the long run
and volatility in the short run. Unlike the broader
market, however, some sectors may not have
a history of growth in the long run. And, as
with all stock funds, the share price and return
of a fund that invests in a sector will vary. That
means if you sell your shares during a sector
downturn, you might lose money. But if you
can identify a sector that is about to
experience rapid growth you may have the
potential for above-average gains.
(checkmark)
$10,000 OVER LIFE OF FUND
Developing Comm. (518) Standard & Poor
06/29/90 9700.00 10000.00
06/30/90 9700.00 10012.31
07/31/90 8953.10 9980.27
08/31/90 7866.70 9078.05
09/30/90 6751.20 8635.95
10/31/90 7081.00 8598.82
11/30/90 8235.30 9154.30
12/31/90 8759.10 9409.71
01/31/91 10146.20 9819.97
02/28/91 10776.70 10522.10
03/31/91 11494.50 10776.73
04/30/91 11591.50 10802.60
05/31/91 11766.10 11269.27
06/30/91 10841.06 10753.14
07/31/91 11963.62 11254.23
08/31/91 12670.42 11520.96
09/30/91 12815.94 11328.56
10/31/91 13564.31 11480.36
11/30/91 12888.70 11017.70
12/31/91 14135.99 12278.13
01/31/92 14510.18 12049.75
02/29/92 14998.70 12206.40
03/31/92 14260.72 11968.38
04/30/92 14073.62 12320.25
05/31/92 14011.26 12380.62
06/30/92 13512.34 12196.14
07/31/92 14104.81 12694.97
08/31/92 13574.71 12434.72
09/30/92 14032.05 12581.45
10/31/92 14655.70 12625.48
11/30/92 15986.14 13056.01
12/31/92 16569.33 13216.60
01/31/93 17017.15 13327.62
02/28/93 17121.29 13508.88
03/31/93 17735.74 13793.92
04/30/93 17206.92 13460.10
05/31/93 18365.82 13820.83
06/30/93 19160.49 13860.91
07/31/93 19535.76 13805.47
08/31/93 21323.77 14328.70
09/30/93 21621.78 14218.37
10/31/93 22372.30 14512.69
11/30/93 20672.58 14374.82
12/31/93 21833.49 14548.75
01/31/94 22673.24 15043.41
02/28/94 22298.76 14635.73
03/31/94 20744.09 13997.61
04/30/94 21598.01 14176.78
05/31/94 20440.76 14409.28
06/30/94 18918.06 14056.26
07/31/94 20879.30 14517.30
08/31/94 22657.81 15112.51
Let's say you invested $10,000 in Fidelity Select Developing Communications
Portfolio on June 29, 1990, when the fund started, and paid a 3% sales
charge. By August 31, 1994, your investment would have grown to $22,658 - a
126.58% increase. That compares to $10,000 invested in the S&P 500, which
would have grown to $15,113 over the same period - a 51.13% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST 31, 1994
% OF FUND'S
INVESTMENTS
DSC Communications Corp. 8.7
Nokia AB Free shares 7.4
Glenayre Technologies, Inc. 4.6
Airtouch Communications 4.2
Vanguard Cellular Systems, Inc. Class A 4.2
Ericsson (L.M.) Telephone Co. Class B ADR 3.4
Philips NV 3.0
Commnet Cellular, Inc. 2.8
Nokia Corp. sponsored ADR 2.3
Sanmina Corp. 2.2
TOP INDUSTRIES AS OF AUGUST 31, 1994
Row: 1, Col: 1, Value: 35.1
Row: 1, Col: 2, Value: 4.7
Row: 1, Col: 3, Value: 9.1
Row: 1, Col: 4, Value: 9.6
Row: 1, Col: 5, Value: 17.1
Row: 1, Col: 6, Value: 24.4
Cellular & Communication
Services 24.4%
Telephone Equipment 17.1%
Special Industrial
Machinery 9.6%
Telephone Services 9.1%
Electronics & Electric
Components 4.7%
All Others 35.1%*
* INCLUDES SHORT-TERM INVESTMENTS
DEVELOPING COMMUNICATIONS PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Paul Antico,
Portfolio Manager of
Select Developing
Communications
Q. PAUL, HOW DID THE FUND PERFORM?
A. Its results were mixed. For the six months and year ended August 31,
1994, the fund had total returns of 1.61% and 6.26%, respectively. As a
comparison, the S& P 500 returned 3.26% and 5.47% over the same periods.
Q. WHY DID THE FUND UNDER-PERFORM THE S&P?
A. The fund had a fairly tough time at the beginning of the six month
period, which I attribute to the normal learning curve of a new manager.
When I took over the fund in December of 1993, I wanted to restructure the
fund with names I knew well. Unfortunately, the group of stocks I knew best
was the communications equipment group, which experienced a sharp downturn
in the early spring. It was during this time - when I was overweighted in
equipment stocks and before I added wireless stocks - that the fund's
performance suffered. Around May, I repositioned the fund with a focus on
wireless communications. This move has paid off. Over the past two months,
the fund's cellular stocks were up at least 10%.
Q. WHY DID WIRELESS COMMUNICATION STOCKS LOOK SO GOOD?
A. Because there's tremendous potential for growth with these stocks. At
the end of 1993, only 6% of Americans had cellular phones. That number is
projected to grow by 45% this year alone. And long-term projections call
for more than 20% of Americans to have a cellular device by the year 2000.
Right now, the industry is picking up as major players such as AT&T are
getting into the game. As a result, I expect cellular phones to finally be
widely advertised, which should boost sales. In addition, rates are coming
down, making cellular phones increasingly economical.
Q. HOW'S WIRELESS TECHNOLOGY DOING INTERNATIONALLY?
A. The overseas market for cellular phones and pagers - which are also big
in the United States - is even stronger. One reason behind this is that
most developing countries realize that they need top-notch communication
capacities to be a player in the global economy. But, it would cost a
fortune and take forever to set up an entire wired-line network. It's much
cheaper and easier for these countries to set up cellular networks. Another
important trend is the worldwide growth of paging, especially in lesser
developed nations where there are no existing telephone networks and pagers
are cheaper than cellular phones. In China and India, people use pagers
with handbooks to communicate in codes.
Q. WHAT ARE SOME NOTABLE STOCKS THAT THE FUND OWNS?
A. Probably the best performer was the Finnish company Nokia, a less known
but better play on global cellular growth than Motorola or Ericsson, in my
opinion. This stock was up almost 40% over the past few months. Another top
company was Glenayre Technologies, which focuses on the worldwide growth of
paging. In addition, Airtouch Communications is not only a fantastic U.S.
cellular company, but it also has the best portfolio of international
licenses of any carrier I know.
Q. IS THE REST OF THE MARKET AS OPTIMISTIC ABOUT CELLULAR STOCKS?
A. Some investors are, although wireless stocks fell out of favor with
others during the period. That's because it costs money for growing
companies to add subscribers. During this spring when the number of
cellular subscribers was up, the prices of these companies dropped. I saw
this as an opportunity for the fund to buy these stocks inexpensively.
Q. WHAT'S HAPPENING WITH THE BROADBAND REVOLUTION WE TALKED ABOUT SIX
MONTHS AGO?
A. It's definitely still happening. Many large companies continue to use
broadband networks for high speed data services. DSC Communications, which
makes several products for broadband networks, is still one of the fund's
top stocks.
Q. HOW DOES THE FUND LOOK GOING FORWARD?
A. I think its outlook is great because I feel confident that the fund's
cellular stocks should be strong performers.
FUND FACTS
START DATE: June 29, 1990
SIZE: as of August 31, 1994, more than
$201 million
MANAGER: Paul Antico, since December 1993;
equity analyst, telecommunications
equipment, since 1993; restaurant industry,
1992-1993; and wireless communication,
since 1993;
assistant, Fidelity Balanced Fund and Fidelity
Equity Income Fund, 1991-1992; joined
Fidelity in 1991
(checkmark)
DEVELOPING COMMUNICATIONS PORTFOLIO
INVESTMENTS AUGUST 31, 1994 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 92.2%
SHARES VALUE (NOTE 1)
AUTOS, TIRES, & ACCESSORIES - 1.1%
AUTO & TRUCK PARTS - 1.1%
Allen Group, Inc. (The) 106,000 $ 2,093,500
BROADCASTING - 0.2%
RADIO BROADCASTING - 0.2%
International Cablecasting
Technologies, Inc. (a) 131,000 384,813
CELLULAR - 24.4%
CELLULAR & COMMUNICATION SERVICES - 24.4%
Airtouch Communications (a) 298,425 8,430,506
American Paging, Inc. (a) 58,500 468,000
Arch Communications Group, Inc. (a) 188,900 3,541,877
BCE Mobile Communications, Inc. 40,000 1,119,566
Call-Net Enterprises, Inc. (a) 96,700 707,362
Cellular Communications, Inc. (redeemable) (a):
Series A 53,000 2,822,250
Class P 19,550 1,062,152
Century Telephone Enterprises, Inc. 57,500 1,732,188
Commnet Cellular, Inc. (a) 225,800 5,503,875
McCaw Cellular Communications, Inc.
Class A (a) 25,000 1,353,125
Metrocall, Inc. (a) 85,100 1,340,325
Nationwide Cellular Service, Inc. (a) 70,000 1,050,000
Premier Page Co. (a) 345,300 3,021,375
Rogers Cantel Mobile Communications,
Inc. Class B (non-vtg.) (a) 99,700 2,926,347
United States Cellular Corp. (a) 71,000 2,201,000
Vanguard Cellular Systems, Inc.
Class A 298,150 8,348,200
Vodafone Group PLC sponsored ADR 89,700 2,870,400
48,498,548
COMMUNICATIONS EQUIPMENT - 21.2%
DATACOMMUNICATIONS EQUIPMENT - 2.3%
Aspect Telecommunications Corp. (a) 52,500 1,942,500
Cabletron Systems, Inc. (a) 23,900 2,530,413
Tekelec (a) 7,300 59,313
4,532,226
TELEPHONE EQUIPMENT - 17.1%
Coherent Communications Systems
Corp. (a) 148,000 1,147,000
DSC Communications Corp. (a) 599,900 17,172,138
Dialogoc Corp. (a) 72,200 1,119,100
Ericsson (L.M.) Telephone Co.
Class B ADR 124,800 6,754,800
Inter-Tel, Inc. (a) 133,500 1,168,125
Keptel, Inc. (a) 48,800 927,200
Newbridge Networks Corp. (a) 55,600 1,779,200
Octel Communications Corp. (a) 75,000 1,818,750
Porta Systems Corp. (a) 39,500 306,125
Telco Systems, Inc. (a) 104,100 1,223,175
Tellabs, Inc. (a) 11,300 476,013
33,891,626
TELEPHONE INTERCONNECT SYSTEMS - 1.8%
General Instrument Corp. 123,000 3,751,500
TOTAL COMMUNICATIONS EQUIPMENT 42,175,352
COMPUTER SERVICES & SOFTWARE - 5.5%
CAD/CAM/CAE - 3.5%
EIS International, Inc. (a) 318,700 3,744,725
Stratacom, Inc. (a) 84,700 3,218,600
6,963,325
SHARES VALUE (NOTE 1)
PREPACKAGED COMPUTER SOFTWARE - 2.0%
Lotus Development Corp. (a) 57,000 $ 2,329,875
Oracle Systems Corp. (a) 38,000 1,622,125
3,952,000
TOTAL COMPUTER SERVICES & SOFTWARE 10,915,325
COMPUTERS & OFFICE EQUIPMENT - 1.6%
COMPUTER PERIPHERALS - 1.5%
Micom Communication Corp. (a) 244,933 3,061,663
COMPUTER STORAGE DEVICES - 0.1%
Xylogics, Inc. (a) 10,100 214,625
TOTAL COMPUTERS & OFFICE EQUIPMENT 3,276,288
ELECTRICAL EQUIPMENT - 5.4%
ELECTRICAL EQUIPMENT - WHOLESALE - 0.3%
Cabletel Communications Corp. (a) 25,000 90,524
Cabletel Communications Corp. (b) 125,000 452,618
543,142
ELECTRICAL MACHINERY - 3.0%
Philips NV 180,400 5,885,550
TV & RADIO COMMUNICATION EQUIPMENT - 2.1%
C COC Electronics, Inc. (a) 18,800 639,200
Scientific-Atlanta, Inc. 28,900 1,293,275
Spectrain Corp. (a) 142,000 2,183,250
4,115,725
TOTAL ELECTRICAL EQUIPMENT 10,544,417
ELECTRONICS - 8.6%
ELECTRONIC PARTS - WHOLESALE - 0.5%
ARC International Corp. (a) 411,200 1,028,000
ELECTRONICS & ELECTRIC COMPONENTS - 4.7%
Allgon AB B Free shares 210,000 3,063,384
Benefon Oy 2,200 740,422
Digital Microwave Corp. (a) 67,900 1,052,450
Sanmina Corp. (a) 218,900 4,432,725
9,288,981
SEMICONDUCTORS - 3.4%
Austria Mikro Systeme International (b) 23,000 1,428,700
Intel Corp. 19,100 1,255,825
LSI Logic Corp. (a) 63,900 2,012,850
Motorola, Inc. 39,200 2,116,800
6,814,175
TOTAL ELECTRONICS 17,131,156
ENGINEERING - 4.6%
WATER & SEWER PIPES - 4.6%
Glenayre Technologies, Inc. (a) 161,800 9,182,150
INDUSTRIAL MACHINERY & EQUIPMENT - 9.6%
SPECIAL INDUSTRIAL MACHINERY - 9.6%
Nokia AB Free shares 135,000 14,634,289
Nokia Corp. sponsored ADR (a) 81,900 4,484,025
19,118,314
RESTAURANTS - 0.8%
McDonald's Corp. 55,000 1,553,750
SERVICES - 0.1%
PERSONAL SERVICES - 0.1%
Value-Added Communications, Inc. (a) 120,000 157,500
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
TELEPHONE SERVICES - 9.1%
ALLTEL Corp. 40,000 $ 1,115,000
Ameritech Corp. 40,000 1,655,000
BellSouth Corp. 20,000 1,187,500
Cable & Wireless PLC ADR 45,000 961,875
Rochester Telephone Corp. 65,500 1,473,750
Telebras PN:
(Pfd. Reg.) 41,700,000 2,453,211
(rights) (a) 836,650 3,991
Telecom Argentina Stet France 48,700 355,564
Telecom Italia Ord. 700,000 2,031,477
Telefonica Argentina Class B 40,000 291,244
Telefonos de Mexico SA sponsored ADR
representing shares Ord. Class L 57,600 3,614,400
Telephone & Data Systems, Inc. 67,058 2,917,023
18,060,035
TOTAL COMMON STOCKS
(Cost $162,787,460) 183,091,148
REPURCHASE AGREEMENTS - 7.8%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account, at 4.83% dated
8/31/94 due 9/1/94 $ 15,405,066 15,403,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $178,190,460) $ 198,494,148
LEGEND
1. Non-income producing
2. 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 period
end, the value of this security amounted to $1,881,318 or 0.9% of net
assets.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $234,096,926 and $264,611,995, respectively (see Note 4 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $67,627 for the period
(see Note 5 of Notes to Financial Statements).
The maximum loan and average daily loan balances during the periods for
which loans were outstanding amounted to $16,231,000 and $3,648,600
respectively. The weighted average interest rate paid was 4.1% (see Note 8
of Notes to Financial Statements).
Distribution of investments by country, as a percentage of total value of
investment in securities, is as follows:
United States 71.5%
Finland 10.0
Sweden 5.0
Canada 3.6
Netherland 3.0
United Kingdom 1.9
Mexico 1.8
Brazil 1.2
Italy 1.0
Others (individually less than 1%) 1.0
TOTAL 100.0%
INCOME TAX INFORMATION
At August 31, 1994, the aggregate cost of investment securities for income
tax purposes was $178,233,925. Net unrealized appreciation aggregated
$20,260,223, of which $25,398,889 related to appreciated investment
securities and $5,138,666 related to depreciated investment securities.
DEVELOPING COMMUNICATIONS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
AUGUST 31, 1994 (UNAUDITED)
ASSETS
Investment in securities, at value (including repurchase agreements of $15,403,000) (cost $178,190,460) - See $ 198,494,148
accompanying schedule
Cash 545
Receivable for investments sold 9,868,610
Receivable for fund shares sold 4,760,748
Dividends receivable 31,971
Redemption fees receivable 568
Other receivables 272
Prepaid expenses 35,140
TOTAL ASSETS 213,192,002
LIABILITIES
Payable for investments purchased $ 9,859,999
Payable for fund shares redeemed 1,430,934
Accrued management fee 94,291
Other payables and accrued expenses 172,060
TOTAL LIABILITIES 11,557,284
NET ASSETS $ 201,634,718
Net Assets consist of:
Paid in capital $ 185,134,170
Accumulated net investment (loss) (945,975
)
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions (2,857,346
)
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies 20,303,869
NET ASSETS, for 10,842,897 shares outstanding $ 201,634,718
NET ASSET VALUE and redemption price per share ($201,634,718 (divided by) shares) $18.60
Maximum offering price per share (100/97 of $18.60) $19.18
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED AUGUST 31, 1994 (UNAUDITED)
INVESTMENT INCOME $ 383,271
Dividends
Interest 128,436
TOTAL INCOME 511,707
EXPENSES
Management fee $ 565,460
Transfer agent 779,279
Fees
Redemption fees (49,846
)
Accounting fees and expenses 91,297
Non-interested trustees' compensation 554
Custodian fees and expenses 28,317
Registration fees 35,140
Audit 17,153
Legal 2,720
Interest 4,140
Reports to shareholders 10,909
Miscellaneous 415
Total expenses before reductions 1,485,538
Expense reductions (28,132 1,457,406
)
NET INVESTMENT INCOME (LOSS) (945,699
)
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities (1,959,099
)
Foreign currency transactions (22,710 (1,981,809
) )
Change in net unrealized appreciation (depreciation) on:
Investment securities 4,252,842
Assets and liabilities in foreign 181 4,253,023
currencies
NET GAIN (LOSS) 2,271,214
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 1,325,515
OTHER INFORMATION $521,307
Sales Charges Paid to FDC
Deferred sales charges withheld $3,465
by FDC
Exchange fees withheld by FSC $36,405
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS YEAR ENDED
ENDED FEBRUARY 28,
AUGUST 31, 1994 1994
(UNAUDITED)
Operations $ (945,699 $ (1,552,126
Net investment income (loss) ) )
Net realized gain (loss) (1,981,809 27,786,284
)
Change in net unrealized appreciation (depreciation) 4,253,023 9,550,677
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 1,325,515 35,784,835
Distributions to shareholders from net realized gain (14,149,454 (12,078,883
) )
Share transactions 63,734,668 326,209,686
Net proceeds from sales of shares
Reinvestment of distributions 13,955,364 11,939,467
Cost of shares redeemed (85,395,211 (223,354,110
) )
Paid in capital portion of redemption fees 54,616 225,044
Net increase (decrease) in net assets resulting from share transactions (7,650,563 115,020,087
)
TOTAL INCREASE (DECREASE) IN NET ASSETS (20,474,502 138,726,039
)
NET ASSETS
Beginning of period 222,109,220 83,383,181
End of period (including accumulated net investment (loss) of $(945,975) and $(276), respectively)$ 201,634,718 $ 222,109,220
OTHER INFORMATION
Shares
Sold 3,611,623 17,423,530
Issued in reinvestment of distributions 794,724 685,710
Redeemed (4,869,116 (11,874,788
) )
Net increase (decrease) (462,769 6,234,452
)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
SIX MONTHS YEAR ENDED TEN MONTHS YEAR ENDED JUNE 29, 1990
ENDED FEBRUARY 28, ENDED APRIL 30, (COMMENCEMENT
AUGUST 31, 1994 FEBRUARY 28, OF OPERATIONS) TO
APRIL 30,
SELECTED PER-SHARE DATAC (UNAUDITED) 1994 1993 1992 1991
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 19.65 $ 16.44 $ 13.54 $ 11.95 $ 10.00
Income from Investment Operations
Net investment income (loss) (.09) (.16) (.07) (.08)F (.10)
Net realized and unrealized gain (loss) .32 4.82 2.98 2.42 1.86
Total from investment operations .23 4.66 2.91 2.34 1.76
Less Distributions
From net realized gain (1.29) (1.47) (.03) (.79) -
Redemption fees added to paid in capital .01 .02 .02 .04 .19
Net asset value, end of period $ 18.60 $ 19.65 $ 16.44 $ 13.54 $ 11.95
TOTAL RETURN D, E 1.61% 30.24% 21.66% 21.41% 19.50%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 201,635 $ 222,109 $ 83,383 $ 39,261 $ 7,745
Ratio of expenses to average net assets B 1.57%A 1.56% 1.88%A 2.50% 2.50%A
Ratio of expenses to average net assets before 1.60%A 1.56% 1.88%A 2.50% 3.29%A
expense reductions B
Ratio of net investment income (loss) to average net assets (1.02)% (.88)% (.59)% (.61)% (1.23)%
A A A
Portfolio turnover rate 262%A 280% 77%A 25% 469%A
</TABLE>
A ANNUALIZED
B SEE NOTE 9 OF NOTES TO FINANCIAL STATEMENTS.
C NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
D TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
E THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
F INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND WHICH AMOUNTED TO
$.06 PER SHARE.
ELECTRONICS PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance: total
percentage change in value, the average annual percentage change, or the
growth of a hypothetical $10,000 investment. Each performance figure
includes changes in a fund's share price, plus reinvestment of any
dividends (income) and capital gains (the profits the fund earns when it
sells stocks that have grown in value).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 6 PAST 1 PAST 5 LIFE OF
AUGUST 31, 1994 MONTH YEAR YEARS FUND
S
ELECTRONICS 4.30% 19.90% 188.47% 118.08%
ELECTRONICS
(INCL. 3% SALES CHARGE) 1.17% 16.30% 179.82% 111.54%
S&P 500 3.26% 5.47% 58.16% 233.54%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one year, five years, or
since the fund started on July 29, 1985. You can compare these figures to
the performance of the S&P 500 - a common proxy for the U.S. stock market.
This benchmark includes reinvested dividends and capital gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
AUGUST 31, 1994 YEAR YEARS FUND
ELECTRONICS 19.90% 23.60% 8.95%
ELECTRONICS
(INCL. 3% SALES CHARGE) 16.30% 22.85% 8.58%
S&P 500 5.47% 9.60% 14.16%
AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and
show you what would have happened if the fund had performed at a constant
rate each year.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of growth in the long run
and volatility in the short run. Unlike the broader
market, however, some sectors may not have
a history of growth in the long run. And, as
with all stock funds, the share price and return
of a fund that invests in a sector will vary. That
means if you sell your shares during a sector
downturn, you might lose money. But if you
can identify a sector that is about to
experience rapid growth you may have the
potential for above-average gains.
(checkmark)
$10,000 OVER LIFE OF FUND
Select Elect. (008) Standard & Poor
07/29/85 9700.00 10000.00
07/31/85 9544.80 9926.31
08/31/85 10126.80 9841.93
09/30/85 9030.70 9533.88
10/31/85 8982.20 9974.35
11/30/85 10078.30 10658.59
12/31/85 10776.70 11174.46
01/31/86 10883.40 11237.04
02/28/86 11096.80 12077.57
03/31/86 10883.40 12751.50
04/30/86 11775.80 12607.41
05/31/86 10854.30 13278.12
06/30/86 9797.00 13502.52
07/31/86 8623.30 12747.73
08/31/86 9360.50 13693.61
09/30/86 8322.60 12561.15
10/31/86 8351.70 13285.93
11/30/86 8351.70 13608.78
12/31/86 8206.20 13261.75
01/31/87 9564.20 15048.11
02/28/87 10330.50 15642.51
03/31/87 10165.60 16094.58
04/30/87 10466.30 15951.34
05/31/87 10252.90 16090.11
06/30/87 10029.80 16902.66
07/31/87 10340.20 17759.63
08/31/87 11087.10 18422.06
09/30/87 11077.40 18018.62
10/31/87 7313.80 14137.41
11/30/87 6169.20 12972.49
12/31/87 7100.40 13959.69
01/31/88 6693.00 14547.40
02/29/88 7401.10 15225.31
03/31/88 7294.40 14754.84
04/30/88 7624.20 14918.62
05/31/88 7362.30 15048.41
06/30/88 8080.10 15739.14
07/31/88 7585.40 15679.33
08/31/88 6828.80 15146.23
09/30/88 6935.50 15791.46
10/31/88 6431.10 16230.46
11/30/88 6111.00 15998.37
12/31/88 6499.00 16278.34
01/31/89 6731.80 17469.91
02/28/89 6634.80 17034.91
03/31/89 6586.30 17431.83
04/30/89 7100.40 18336.54
05/31/89 7779.40 19079.17
06/30/89 7013.10 18970.42
07/31/89 7090.70 20683.44
08/31/89 7333.20 21088.84
09/30/89 7536.90 21002.38
10/31/89 7197.40 20515.12
11/30/89 7216.80 20933.63
12/31/89 7517.50 21436.04
01/31/90 7769.70 19997.68
02/28/90 8390.50 20255.65
03/31/90 8797.90 20792.42
04/30/90 8836.70 20272.61
05/31/90 10136.50 22249.19
06/30/90 10291.70 22097.90
07/31/90 9806.70 22027.18
08/31/90 8274.10 20035.93
09/30/90 7022.80 19060.18
10/31/90 6770.60 18978.22
11/30/90 7469.00 20204.21
12/31/90 7954.10 20767.91
01/31/91 9061.26 21673.39
02/28/91 9857.64 23223.04
03/31/91 10382.09 23785.03
04/30/91 10440.36 23842.12
05/31/91 10780.28 24872.10
06/30/91 9469.16 23732.96
07/31/91 10119.86 24838.91
08/31/91 10537.48 25427.59
09/30/91 9731.38 25002.95
10/31/91 10207.27 25337.99
11/30/91 9585.70 24316.87
12/31/91 10760.85 27098.72
01/31/92 12033.12 26594.68
02/29/92 12693.53 26940.42
03/31/92 11693.20 26415.08
04/30/92 11469.82 27191.68
05/31/92 11489.25 27324.92
06/30/92 10654.02 26917.78
07/31/92 11217.31 28018.72
08/31/92 11333.86 27444.33
09/30/92 11741.76 27768.18
10/31/92 12625.55 27865.36
11/30/92 13451.06 28815.57
12/31/92 13713.29 29170.00
01/31/93 14179.46 29415.03
02/28/93 13868.68 29815.08
03/31/93 14354.28 30444.17
04/30/93 14101.25 29707.43
05/31/93 15516.25 30503.58
06/30/93 15799.25 30592.05
07/31/93 16248.15 30469.68
08/31/93 17643.64 31624.48
09/30/93 17936.40 31380.97
10/31/93 17594.85 32030.56
11/30/93 17458.22 31726.27
12/31/93 18112.47 32110.15
01/31/94 19363.59 33201.90
02/28/94 20281.84 32302.13
03/31/94 20063.75 30893.75
04/30/94 20006.36 31289.19
05/31/94 19948.97 31802.34
06/30/94 18881.51 31023.18
07/31/94 19271.76 32040.74
08/31/94 21154.18 33354.41
Let's say you invested $10,000 in Fidelity Select Electronics Portfolio on
July 29, 1985, when the fund started, and paid a 3% sales charge. By August
31, 1994, your investment would have grown to $21,154 - a 111.54% increase.
That compares to $10,000 invested in the S&P 500, which would have grown to
$33,354 over the same period - a 233.54% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST 31, 1994
% OF FUND'S
INVESTMENTS
Intel Corp. 9.8
Advanced Micro Devices, Inc. 7.8
Texas Instruments, Inc. 7.3
Micron Technology, Inc. 5.7
Compaq Computer Corp. 4.3
International Business Machines Corp. 4.2
National Semiconductor Corp. 3.6
EMC Corp. 2.5
Kyocera Corp. 2.4
Opti, Inc. 2.4
TOP INDUSTRIES AS OF AUGUST 31, 1994
Row: 1, Col: 1, Value: 32.5
Row: 1, Col: 2, Value: 3.0
Row: 1, Col: 3, Value: 4.2
Row: 1, Col: 4, Value: 4.3
Row: 1, Col: 5, Value: 4.4
Row: 1, Col: 6, Value: 51.6
Semiconductors 51.6%
Electronics and Electronic
Component 4.4%
Mini & Micro Computers 4.3%
Mainframe Computer 4.2%
Semi-Conductor
Capital Equipment 3.0%
All Others 32.5%*
* INCLUDES SHORT-TERM INVESTMENTS
ELECTRONICS PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Harry Lange,
Portfolio Manager of
Fidelity Select Electronics Portfolio
Q. HARRY, HOW DID THE FUND DO?
A. The fund had a total return of 4.30% for the six months ended August 31,
1994. That topped the S&P 500, which returned 3.26% during the same period.
For the year ended August 31, the fund was up 19.9%, compared to 5.47% for
the S&P 500.
Q. WHAT CAUSED THE FUND'S PERFORMANCE TO DROP OFF DURING THE FIRST SIX
MONTHS OF 1994?
A. Technology stocks suffered in March and April as investors anticipated a
summer slowdown in PC sales. This has happened in the past; orders
sometimes diminish when industry people in the U.S. and Europe start taking
vacations. Over the past couple of years, growth among electronics
companies has been so rapid their earnings have been able to surge right
through the summer. However, this year the momentum wasn't strong enough.
That said, the business prospects of many of the fund's semiconductor
stocks - 51.6% of the fund on August 31 - remained excellent. The supply of
computer chips has not yet met the rising demand worldwide due to the boom
in personal computers. Because the underlying story behind these stocks
remained positive, their prices began to rise again in July and August.
Q. AND YOU'VE STAYED WITH SEVERAL OF THE FUND'S LARGEST
INVESTMENTS . . .
A. I have. Despite sluggish stock performance, I think investors will
eventually reward the strong earnings growth and earnings potential of
several of the fund's largest companies. For example, Advanced Micro
Devices- the fund's second largest investment on August 31 - is operating
at capacity and I expect earnings to remain strong. In addition, I still
believe the new Pentium cycle of microprocessors - though off to a slower
start than I had hoped - will boost the fortunes of Intel. And, although
Texas Instruments (TI) lost a recent court case that may diminish earnings
from royalties, I'm still optimistic about the company's future. There's
still plenty of room for TI to cut costs, which goes right to the bottom
line.
Q. WHICH OF THE FUND'S INVESTMENTS WERE AMONG ITS BEST PERFORMERS OVER THE
PAST SIX MONTHS?
A. Among the semiconductor companies, Micron turned in the best
performance. The company only makes one product - dynamic rams, a type of
memory chip for PCs - but it does it more efficiently than anyone else. In
addition, the fund had about a 14.4% stake in foreign technology companies
at the end of August, and they have been strong performers. UMC is a chip
maker in Taiwan, while Samsung - a Korean company - is the largest memory
chip maker in the world. Both companies have shown strong earnings growth.
In addition, IBM was an excellent stock. The company has succeeded in
effectively cutting costs. Even though it's still struggling a bit to find
its niche in the PC market, demand for many of the company's other products
has been strong.
Q. WHAT ABOUT DISAPPOINTMENTS?
A. I would say the biggest was the lackluster performance of most of the
big-name U.S. chip makers. But there were others. Xilinx - a small
semiconductor company - suffered from slowing sales, and I eventually sold
the fund's investment. Also, Opti - which makes the computer chips that
surround Intel's Pentium chip - was a disappointment. I expected the stock
to do well based on its ties to the Pentium but so far, performance has
been lackluster.
Q. WHAT'S YOUR OUTLOOK FOR THE REST OF THE YEAR?
A. The big picture for stocks tied to the fortunes of personal computers
looks good. PC sales in the U.S. and Japan should remain strong through the
holiday season, and I expect sales in Europe to pick up as economies begin
to recover there. In addition, there's still not enough semiconductor
capacity worldwide to cover demand, so I remain upbeat about the earnings
of microchip companies. That said, a slowdown in the U.S. economy could
have a negative effect on the fund's stocks. Also, it's unclear whether the
market will ultimately embrace new products such as Intel's Pentium chip
and Microsoft's Chicago operating system - which the company is scheduled
to unveil next year. So while I'm optimistic in my outlook, I'm not
discounting the possibility of volatility along the way.
FUND FACTS
START DATE: July 29, 1985
SIZE: as of August 31, 1994, more than
$148 million
MANAGER: Harry Lange, since January 1994;
manager, Fidelity Select Technology Portfolio,
since November 1993; Fidelity Select
Computers Portfolio, since June 1992; manager,
Fidelity Select Capital Goods and Automation
Machinery Portfolios, 1988; joined Fidelity in
1987
(checkmark)
ELECTRONICS PORTFOLIO
INVESTMENTS AUGUST 31, 1994 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 88.6%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 0.4%
MISSILES & SPACE VEHICLES - 0.4%
Orbital Sciences Corporation (a) 33,400 $ 617,894
AUTOS, TIRES, & ACCESSORIES - 0.3%
MOTOR VEHICLES & CAR BODIES - 0.3%
General Motors Corp. Class H 14,100 528,750
CELLULAR - 0.0%
CELLULAR & COMMUNICATION SERVICES - 0.0%
Millicom International Cellular SA 1,900 45,600
COMMUNICATIONS EQUIPMENT - 1.9%
DATACOMMUNICATIONS EQUIPMENT - 0.3%
General DataComm Industries, Inc. (a) 20,000 395,000
TELEPHONE EQUIPMENT - 1.6%
ADC Telecommunications, Inc. (a) 20,600 957,900
Natural Microsystems Corp. (a) 69,000 810,750
Perceptron, Inc. (a) 33,300 624,375
2,393,025
TOTAL COMMUNICATIONS EQUIPMENT 2,788,025
COMPUTER SERVICES & SOFTWARE - 3.5%
CAD/CAM/CAE - 0.2%
Brooktrout Technology (a) 13,600 139,400
ECI Telecom Ltd. 12,200 220,363
Integrated Silicon Systems, Inc. (a) 500 12,500
372,263
COMPUTER & SOFTWARE STORES - 0.7%
Inacom Corp. (a) 18,200 170,625
Intelligent Electronics, Inc. 5,800 89,900
MicroAge, Inc. (a) 58,450 745,238
1,005,763
COMPUTER SERVICES - 0.2%
Wave Systems Corp. Class A 50,000 250,000
CUSTOM COMPUTER PROGRAMMING SERVICES - 0.0%
Softdesk, Inc. (a) 2,500 38,750
ELECTRONIC INFORMATION RETRIEVAL - 0.0%
Data Broadcasting Corp. (a) 15,000 75,000
PREPACKAGED COMPUTER SOFTWARE - 2.4%
Cheyenne Software, Inc. (a) 5,650 70,625
Geoworks (a) 103,300 723,100
Globalink, Inc. (a) 106,400 1,316,700
Infosoft International, Inc. (a) 30,000 806,250
Media Logic, Inc. (a) 22,200 43,013
Microsoft Corp. (a) 13,000 755,625
3,715,313
TOTAL COMPUTER SERVICES & SOFTWARE 5,457,089
COMPUTERS & OFFICE EQUIPMENT - 18.7%
COMPUTER EQUIPMENT - 0.1%
Syquest Technology, Inc. (a) 14,500 141,375
COMPUTER EQUIPMENT - WHOLESALE - 1.8%
GBC Technologies, Inc. (a) 89,000 789,875
Merisel, Inc. (a) 50,000 456,250
Southern Electronics Corp. (a) 20,000 127,500
Tech Data Corp. (a) 75,000 1,406,250
2,779,875
COMPUTER PERIPHERALS - 2.8%
EMC Corp. (a) 210,000 3,780,000
Komag, Inc. (a) 19,100 448,850
4,228,850
SHARES VALUE (NOTE 1)
COMPUTER RENTAL & LEASING - 1.2%
Comdisco, Inc. 85,800 $ 1,876,875
COMPUTER STORAGE DEVICES - 1.2%
ADAPTEC, Inc. (a) 56,100 1,072,913
Exabyte (a) 46,300 873,913
1,946,826
COMPUTERS & OFFICE EQUIPMENT - 0.4%
Fujitsu Ltd. 50,000 543,912
Hewlett-Packard Co. 400 35,950
579,862
ELECTRONIC COMPUTERS - 0.2%
Intergrated Micro Products
sponsored ADR (a) 25,000 237,500
GRAPHICS WORKSTATIONS - 2.5%
Silicon Graphics, Inc. (a) 30,200 792,750
Sun Microsystems, Inc. (a) 113,300 3,002,450
3,795,200
MAINFRAME COMPUTERS - 4.2%
International Business Machines Corp. 92,300 6,334,088
MINI & MICRO COMPUTERS - 4.3%
Compaq Computer Corp. (a) 175,800 6,570,525
TOTAL COMPUTERS & OFFICE EQUIPMENT 28,490,976
CONSUMER ELECTRONICS - 1.8%
RADIOS, TELEVISIONS, STEREOS - 1.8%
Sony Corp. ADR 44,700 2,709,938
DEFENSE ELECTRONICS - 0.1%
Watkins-Johnson Co. 5,300 193,450
ELECTRICAL EQUIPMENT - 1.7%
ELECTRICAL MACHINERY - 1.5%
Murata Manufacturing Co. Ord. 41,000 1,775,848
Philips NV 16,600 541,575
2,317,423
WIRING & LIGHTING - 0.2%
Oak Industries, Inc. (a) 11,600 311,750
TOTAL ELECTRICAL EQUIPMENT 2,629,173
ELECTRONIC INSTRUMENTS - 4.1%
ELECTRONIC EQUIPMENT - 1.1%
ASECO Corp. (a) 35,500 292,875
Credence Systems Corp. (a) 5,400 120,150
Megatest Corp. (a) 55,100 1,060,675
Teradyne, Inc. (a) 5,100 151,725
1,625,425
SEMI-CONDUCTOR CAPITAL EQUIPMENT - 3.0%
Applied Materials, Inc. (a) 36,500 1,843,250
KLA Instruments Corp. (a) 52,600 2,498,500
Kulicke & Soffa Industries, Inc. (a) 10,700 168,525
4,510,275
TOTAL ELECTRONIC INSTRUMENTS 6,135,700
ELECTRONICS - 55.8%
CONNECTORS - 0.7%
AMP, Inc. 10,000 726,250
Methode Electronics, Inc. Class A 20,000 340,000
Thomas & Betts Corp. 1,400 90,300
1,156,550
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
ELECTRONICS - CONTINUED
ELECTRONIC PARTS - WHOLESALE - 2.8%
Kent Electronics Corp. (a) 12,300 $ 448,950
Marshall Industries (a) 26,100 655,763
Pioneer-Standard Electronics, Inc. 79,950 1,369,144
Sterling Electronics Corp. (a) 106,500 1,357,875
Wyle Laboratories 19,500 382,688
4,214,420
ELECTRONICS AND ELECTRONIC COMPONENTS - 4.4%
Cirrus Logic, Inc. (a) 20,000 552,500
Hitachi Ltd. ADR 11,300 1,122,937
Kyocera Corp. 50,000 3,727,250
Sanmina Corp. (a) 30,000 607,500
Toshiba Corp. 100,000 757,485
6,767,672
SEMICONDUCTORS - 47.9%
Advanced Micro Devices, Inc. (a) 411,300 11,927,700
Altera Corp. (a) 50,000 1,525,000
Atmel Corp. (a) 30,000 825,000
Burr-Brown Corp. (a) 5,000 49,375
Cyrix Corp. (a) 18,600 739,350
Geotek Industries, Inc. (a) 50,000 568,750
Integrated Device Technology, Inc. (a) 15,600 364,650
Intel Corp. 226,700 14,905,525
Interpoint Corp. (a) 10,000 107,500
LSI Logic Corp. (a) 30,000 945,000
Lattice Semiconductor Corp. (a) 42,200 796,525
Linear Technology Corp. 21,100 938,950
Logic Devices, Inc. (a) 30,000 88,125
Maxim Integrated Products, Inc. (a) 35,500 2,156,625
Micron Technology, Inc. 215,250 8,663,813
Motorola, Inc. 54,600 2,948,400
National Semiconductor Corp. (a) 294,400 5,483,200
Opti, Inc. (a) 281,300 3,727,225
Samsung Electronics Co. Ltd.:
GDR:
(New) (a)(b) 621 48,749
(non-vtg.) (b) 43,475 3,412,788
GDS (b) 1,826 77,647
Texas Instruments, Inc. 142,200 11,073,825
VLSI Technology, Inc. (a) 105,300 1,467,619
72,841,341
TOTAL ELECTRONICS 84,979,983
INDUSTRIAL MACHINERY & EQUIPMENT - 0.1%
SPECIAL INDUSTRIAL MACHINERY - 0.1%
Asyst Technologies, Inc. (a) 9,900 160,875
LEASING & RENTAL - 0.1%
EQUIPMENT RENTAL AND LEASING, NEC - 0.1%
Leasing Solutions, Inc. (a) 11,000 90,750
PHOTOGRAPHIC EQUIPMENT - 0.1%
Megahertz Corp. (a) 16,200 93,150
TOTAL COMMON STOCKS
(Cost $121,964,183) 134,921,353
CONVERTIBLE PREFERRED STOCKS - 0.4%
ELECTRONICS - 0.4%
SEMICONDUCTORS - 0.4%
Advanced Micro Devices, Inc. $3.00
(Cost $506,250) 10,000 592,500
CONVERTIBLE BONDS - 4.8%
PRINCIPAL
AMOUNT
COMPUTERS & OFFICE EQUIPMENT - 1.5%
COMPUTER STORAGE DEVICES - 0.3%
Maxtor Corporation 5 3/4%,
3/1/12 $ 1,000,000 $ 525,000
ELECTRONIC COMPUTERS - 0.8%
Acer, Inc. 4%, 6/10/01 400,000 1,180,000
OFFICE EQUIPMENT - WHOLESALE - 0.4%
Kinpo Electronics, Inc. euro
3%, 7/21/01 540,000 639,900
TOTAL COMPUTERS & OFFICE EQUIPMENT 2,344,900
ELECTRONICS - 3.3%
SEMICONDUCTORS - 3.3%
United Microelectronics Corp.:
1 1/4%, 6/8/04 (b) 1,120,000 1,932,000
euro 1 1/4%, 6/8/04 1,770,000 3,053,250
4,985,250
TOTAL CONVERTIBLE BONDS
(Cost $6,474,819) 7,330,150
REPURCHASE AGREEMENTS - 6.2%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account, at 4.83% dated
8/31/94 due 9/1/94 $ 9,362,256 9,361,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $138,306,252) $ 152,205,003
LEGEND
1. Non-income producing
2. 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 period
end, the value of these securities amounted to $5,471,184 or 3.7% of net
assets.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $299,995,959 and $206,512,842, respectively (see Note 4 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $102,772 for the period
(see Note 5 of Notes to Financial Statements).
At the period end, the value of securities loaned and the value of
collateral amounted to $1,530,375 and $1,617,000, respectively (see Note 7
of Notes to Financial Statements).
The maximum loan and average daily loan balances during the periods for
which loans were outstanding amounted to $11,441,000 and $5,279,875,
respectively. The weighted average interest rate paid was 4.3% (see Note 8
of Notes to Financial Statements).
OTHER INFORMATION - CONTINUED
Distribution of investments by country, as a percentage of total value
of investment in securities, is as follows:
United States 85.6%
Japan 7.0
Taiwan (Free China) 4.5
Korea 2.3
Others (individually less than 1%) 0.6
TOTAL 100.0%
INCOME TAX INFORMATION
At August 31, 1994, the aggregate cost of investment securities for income
tax purposes was $138,333,666. Net unrealized appreciation aggregated
$13,871,337, of which $18,906,041 related to appreciated investment
securities and $5,034,704 related to depreciated investment securities.
ELECTRONICS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
AUGUST 31, 1994 (UNAUDITED)
ASSETS
Investment in securities, at value (including repurchase agreements of $9,361,000) (cost $138,306,252) - See $ 152,205,003
accompanying schedule
Cash 82,398
Receivable for investments sold 1,821,810
Receivable for fund shares sold 5,384,257
Dividends receivable 61,295
Interest receivable 32,610
Redemption fees receivable 8,547
Other receivables 44,280
Prepaid expenses 62,617
TOTAL ASSETS 159,702,817
LIABILITIES
Payable for investments purchased $ 5,582,153
Payable for fund shares redeemed 3,489,867
Accrued management fee 70,353
Other payables and accrued expenses 259,090
Collateral on securities loaned, 1,617,000
at value
TOTAL LIABILITIES 11,018,463
NET ASSETS $ 148,684,354
Net Assets consist of:
Paid in capital $ 151,733,237
Accumulated net investment (loss) (707,245
)
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions (16,240,389
)
Net unrealized appreciation (depreciation) on investments 13,898,751
NET ASSETS, for 8,065,524 shares outstanding $ 148,684,354
NET ASSET VALUE and redemption price per share ($148,684,354 (divided by) shares) $18.43
Maximum offering price per share (100/97 of $18.43) $19.00
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED AUGUST 31, 1994 (UNAUDITED)
INVESTMENT INCOME $ 339,854
Dividends
Interest (including security lending fees of $13,910) 315,607
TOTAL INCOME 655,461
EXPENSES
Management fee $ 487,265
Transfer agent 841,413
Fees
Redemption fees (145,860
)
Accounting and security lending fees 79,829
Non-interested trustees' compensation 418
Custodian fees and expenses 10,553
Registration fees 69,686
Audit 11,513
Legal 581
Interest 18,703
Reports to shareholders 3,679
Miscellaneous 83
Total expenses before reductions 1,377,863
Expense reductions (15,157 1,362,706
)
NET INVESTMENT INCOME (LOSS) (707,245
)
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities (16,187,784
)
Foreign currency transactions 630 (16,187,154
)
Change in net unrealized appreciation (depreciation) on investment securities 2,302,605
NET GAIN (LOSS) (13,884,549
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ (14,591,794
)
OTHER INFORMATION $1,460,185
Sales Charges Paid to FDC
Deferred sales charges withheld $5,505
by FDC
Exchange fees withheld by FSC $122,145
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS YEAR ENDED
ENDED FEBRUARY 28,
AUGUST 31, 1994 1994
(UNAUDITED)
Operations $ (707,245 $ (283,946
Net investment income (loss) ) )
Net realized gain (loss) (16,187,154 10,940,991
)
Change in net unrealized appreciation (depreciation) 2,302,605 7,342,630
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (14,591,794 17,999,675
)
Distributions to shareholders from net realized gain - (6,751,718
)
Share transactions 435,361,550 234,477,570
Net proceeds from sales of shares
Reinvestment of distributions - 6,551,694
Cost of shares redeemed (384,578,350 (189,780,938
) )
Paid in capital portion of redemption fees 1,499,468 469,729
Net increase (decrease) in net assets resulting from share transactions 52,282,668 51,718,055
TOTAL INCREASE (DECREASE) IN NET ASSETS 37,690,874 62,966,012
NET ASSETS
Beginning of period 110,993,480 48,027,468
End of period (including undistributed net investment income (loss) of $(707,245) and $0,
respectively) 148,684,354 110,993,480
OTHER INFORMATION
Shares
Sold 24,230,773 13,902,581
Issued in reinvestment of distributions - 431,270
Redeemed (22,448,026 (11,413,385
) )
Net increase (decrease) 1,782,747 2,920,466
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS YEAR ENDED TEN MONTHS YEARS ENDED APRIL 30,
ENDED FEBRUARY 28, ENDED
AUGUST 31, 1994 FEBRUARY 28,
SELECTED PER-SHARE DATAC (UNAUDITED) 1994 1993 1992 1991 1990
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 17.67 $ 14.28 $ 11.81 $ 10.75 $ 9.11 $ 7.32
Income from Investment Operations
Net investment income (loss) (.08) (.09) (.05) (.12) (.04) -
Net realized and unrealized gain (loss) .67F 6.09 2.33 1.00 1.53 1.62
Total from investment operations .59 6.00 2.28 .88 1.49 1.62
Less Distributions
From net investment income - - - - (.01) -
From net realized gain - (2.75) - - - -
Total distributions - (2.75) - - (.01) -
Redemption fees added to paid in capital .17 .14 .19 .18 .16 .17
Net asset value, end of period $ 18.43 $ 17.67 $ 14.28 $ 11.81 $ 10.75 $ 9.11
TOTAL RETURN D, E 4.30% 46.24% 20.91% 9.86% 18.15% 24.45%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 148,684 $ 110,993 $ 48,027 $ 34,222 $ 18,178 $ 26,141
Ratio of expenses to average net assets B 1.71% 1.67% 1.69%A 2.16% 2.26% 2.57%
A
Ratio of expenses to average net assets before 1.73% 1.67% 1.69%A 2.16% 2.26% 3.47%
expense reductions B A
Ratio of net investment income (loss) to average net (.89)% (.52)% (.50)% (1.07)% (.45)% (.02)%
assets A A
Portfolio turnover rate 312% 163% 293%A 299% 268% 378%
A
</TABLE>
A ANNUALIZED
B SEE NOTE 9 OF NOTES TO FINANCIAL STATEMENTS.
C NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
D TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
E THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
F THE AMOUNT SHOWN FOR A SHARE OUTSTANDING DOES NOT CORRESPOND WITH THE
AGGREGATE NET GAIN (LOSS) ON INVESTMENTS FOR THE PERIOD ENDED DUE TO THE
TIMING OF SALES AND REPURCHASES OF FUND SHARES IN RELATION TO FLUCTUATING
MARKET VALUES OF THE INVESTMENTS OF THE FUND.
SOFTWARE AND COMPUTER SERVICES PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance: total
percentage change in value, the average annual percentage change, or the
growth of a hypothetical $10,000 investment. Each performance figure
includes changes in a fund's share price, plus reinvestment of any
dividends (income) and capital gains (the profits the fund earns when it
sells stocks that have grown in value).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 6 PAST 1 PAST 5 LIFE OF
AUGUST 31, 1994 MONTH YEAR YEARS FUND
S
SOFTWARE AND COMPUTER
SERVICES -14.34% -6.20% 155.98% 302.11%
SOFTWARE AND COMPUTER
SERVICES (INCL. 3% SALES CHARGE)
-16.91% -9.02% 148.30% 290.05%
S&P 500 3.26% 5.47% 58.16% 233.54%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one year, five years, or
since the fund started on July 29, 1985. You can compare these figures to
the performance of the S&P 500 - a common proxy for the U.S. stock market.
This benchmark includes reinvested dividends and capital gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
AUGUST 31, 1994 YEAR YEARS FUND
SOFTWARE AND COMPUTER SERVICES -6.20% 20.68% 16.52%
SOFTWARE AND COMPUTER
SERVICES (INCL. 3% SALES CHARGE) -9.02% 19.95% 16.14%
S&P 500 5.47% 9.60% 14.16%
AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and
show you what would have happened if the fund had performed at a constant
rate each year.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of growth in the long run
and volatility in the short run. Unlike the broader
market, however, some sectors may not have
a history of growth in the long run. And, as
with all stock funds, the share price and return
of a fund that invests in a sector will vary. That
means if you sell your shares during a sector
downturn, you might lose money. But if you
can identify a sector that is about to
experience rapid growth you may have the
potential for above-average gains.
(checkmark)
$10,000 OVER LIFE OF FUND
Select Software (028) Standard & Poor's
07/29/85 9700.00 10000.00
07/31/85 9622.40 9926.31
08/31/85 9515.70 9841.93
09/30/85 8933.70 9533.88
10/31/85 9215.00 9974.35
11/30/85 10282.00 10658.59
12/31/85 10776.70 11174.46
01/31/86 11019.20 11237.04
02/28/86 11775.80 12077.57
03/31/86 11853.40 12751.50
04/30/86 12959.20 12607.41
05/31/86 13483.00 13278.12
06/30/86 13143.50 13502.52
07/31/86 11232.60 12747.73
08/31/86 12163.80 13693.61
09/30/86 11232.60 12561.15
10/31/86 12280.20 13285.93
11/30/86 12551.80 13608.78
12/31/86 12270.50 13261.75
01/31/87 14879.80 15048.11
02/28/87 16276.60 15642.51
03/31/87 16548.20 16094.58
04/30/87 16829.50 15951.34
05/31/87 16907.10 16090.11
06/30/87 16315.40 16902.66
07/31/87 16266.90 17759.63
08/31/87 17411.50 18422.06
09/30/87 17595.80 18018.62
10/31/87 12939.80 14137.41
11/30/87 11707.90 12972.49
12/31/87 13428.92 13959.69
01/31/88 13040.86 14547.40
02/29/88 14113.14 15225.31
03/31/88 14235.68 14754.84
04/30/88 14664.59 14918.62
05/31/88 14266.32 15048.41
06/30/88 15389.65 15739.14
07/31/88 14623.74 15679.33
08/31/88 13612.74 15146.23
09/30/88 14490.98 15791.46
10/31/88 13725.08 16230.46
11/30/88 13520.83 15998.37
12/31/88 14644.17 16278.34
01/31/89 15736.86 17469.91
02/28/89 15032.23 17034.91
03/31/89 14664.59 17431.83
04/30/89 16084.07 18336.54
05/31/89 16666.16 19079.17
06/30/89 15015.60 18970.42
07/31/89 14572.41 20683.44
08/31/89 15237.19 21088.84
09/30/89 15543.20 21002.38
10/31/89 15870.31 20515.12
11/30/89 16334.60 20933.63
12/31/89 16408.68 21436.04
01/31/90 15825.35 19997.68
02/28/90 16235.84 20255.65
03/31/90 16883.98 20792.42
04/30/90 16829.97 20272.61
05/31/90 18947.22 22249.19
06/30/90 19390.11 22097.90
07/31/90 17618.53 22027.18
08/31/90 15155.61 20035.93
09/30/90 13416.44 19060.18
10/31/90 13686.50 18978.22
11/30/90 15447.27 20204.21
12/31/90 16549.11 20767.91
01/31/91 18979.62 21673.39
02/28/91 20362.32 23223.04
03/31/91 21518.16 23785.03
04/30/91 21356.13 23842.12
05/31/91 21745.01 24872.10
06/30/91 20151.25 23732.96
07/31/91 21389.13 24838.91
08/31/91 23126.93 25427.59
09/30/91 22365.15 25002.95
10/31/91 23484.01 25337.99
11/30/91 20913.03 24316.87
12/31/91 24136.01 27098.72
01/31/92 28010.15 26594.68
02/29/92 28851.81 26940.42
03/31/92 27465.54 26415.08
04/30/92 26772.40 27191.68
05/31/92 27193.24 27324.92
06/30/92 25720.32 26917.78
07/31/92 27539.80 28018.72
08/31/92 25485.15 27444.33
09/30/92 27329.39 27768.18
10/31/92 29532.57 27865.36
11/30/92 32107.08 28815.57
12/31/92 32713.57 29170.00
01/31/93 34396.91 29415.03
02/28/93 34186.49 29815.08
03/31/93 34916.76 30444.17
04/30/93 34329.13 29707.43
05/31/93 38200.94 30503.58
06/30/93 40171.79 30592.05
07/31/93 38955.74 30469.68
08/31/93 41583.54 31624.48
09/30/93 42422.20 31380.97
10/31/93 42324.35 32030.56
11/30/93 41276.03 31726.27
12/31/93 43421.00 32110.15
01/31/94 44934.04 33201.90
02/28/94 45532.95 32302.13
03/31/94 40647.10 30893.75
04/30/94 40857.40 31289.19
05/31/94 36768.46 31802.34
06/30/94 33542.04 31023.18
07/31/94 35187.20 32040.74
08/31/94 39004.60 33354.41
Let's say you invested $10,000 in Fidelity Select Software and Computer
Services Portfolio on July 29, 1985, when the fund started, and paid a 3%
sales charge. By August 31, 1994, your investment would have grown to
$39,005 - a 290.05% increase. That compares to $10,000 invested in the S&P
500, which would have grown to $33,354 over the same period - a 233.54%
increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST 31, 1994
% OF FUND'S
INVESTMENTS
Cabletron Systems, Inc. 8.0
DSC Communications Corp. 7.4
Oracle Systems Corp. 7.4
3Com Corp. 7.0
Electronics for Imaging, Inc. 5.6
EMC Corp. 4.7
Sybase, Inc. 3.8
Nokia AB Free shares 3.6
Chipcom Corp. 3.2
Micron Technology, Inc. 3.1
TOP INDUSTRIES AS OF AUGUST 31, 1994
Row: 1, Col: 1, Value: 32.3
Row: 1, Col: 2, Value: 7.9
Row: 1, Col: 3, Value: 8.5
Row: 1, Col: 4, Value: 9.4
Row: 1, Col: 5, Value: 17.0
Row: 1, Col: 6, Value: 24.9
Prepackaged Computer
Software 24.9%
Datacommunications
Equipment 17.0%
Semiconductors 9.4%
Telephone Equipment 8.5%
CAD/CAM/CAE 7.9%
All Others 32.3%*
* INCLUDES SHORT-TERM INVESTMENTS
SOFTWARE & COMPUTER SERVICES PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
John Hurley,
Portfolio Manager of
Select Software and
Computer Services Portfolio
Q. JOHN, HOW DID THE FUND PERFORM?
A. It's been a volatile year so far. The fund had a total return of -14.34%
for the six months ended August 31, 1994. That compared to a 3.26% total
return for the S&P 500 during the same period.
The fund returned -6.20% for the 12 months ended August 31, compared to
5.47% for the S&P 500.
Q. WHY DID THE FUND UNDER-PERFORM THE BROADER MARKET?
A. Although I only began managing the fund at the beginning of August, I
can point to a couple of reasons why it stumbled during the first six
months of this year. First, the fund had a large stake - nearly 30% at the
end of February - in data communications stocks. These companies provide
equipment that ties together computer networks. When many technology stocks
suffered a correction in March and April, networking stocks were hit
hardest. Second, one of the fund's largest investments at the end of
February - Cheyenne Software - hurt performance. The company's stock price
fell roughly 50% earlier this year on the heels of disappointing earnings.
Q. LET'S GO BACK TO THE NETWORKING STOCKS. DIDN'T THOSE
PERFORM WELL OVER THE PREVIOUS COUPLE OF YEARS?
A. They did, and the fund benefited from emphasizing these stocks in 1992
and 1993. Networking companies capitalized on the trend away from mainframe
computer systems and toward "client-server" set-ups - personal computers
linked through wide and local area networks. However, despite strong
growth, the leader in this field - Cisco Systems - missed analysts'
earnings projections by a mere penny per share in the first quarter of
1994. As a result, investors heavily sold Cisco and most other networking
stocks, regardless of the business prospects of each company. This type of
"group psychology" is not rare in the technology sector. Investors
sometimes panic at the slightest bit of bad news, which can make these
stocks very volatile. When Cisco went down, so did many of the fund's
largest networking companies, including Cabletron, DSC Communications, 3Com
and Wellfeet.
Q. HAVE THESE STOCKS BOUNCED BACK AT ALL SINCE THEN?
A. Many have. The stocks of networking companies that continued to show
strong earnings growth right through the correction rebounded in July and
August. In addition, Oracle Systems, a recent addition to the fund's top 10
investments, has performed very well lately. Oracle manufactures database
software, and has strong earnings prospects. The company is at the center
of this shift from mainframe to client-server architecture that I described
earlier, much the same way that DOS and Windows software is at the heart of
the PC movement.
Q. CAN YOU DESCRIBE YOUR STRATEGY FOR THE FUND GOING FORWARD?
A. Sure. I'm in no hurry to get rid of high-quality technology companies
already in the fund that continue to show solid short-term business
prospects. However, I do expect to look for opportunities to rotate the
fund more heavily into its namesake software and computer services
companies. For example, I took advantage of a sharp drop in the price of
Sybase - a database software company similar to Oracle - to move it up into
the fund's top 10 largest investments. So far, the move has paid off very
well. In addition, I plan to look very closely at the stocks of smaller
companies. Often these companies have the best ideas and the best software,
or their stocks are simply overlooked and undervalued. It can take a lot of
legwork to thoroughly research these small companies, but often they offer
stronger growth and better valuations - stock prices relative to earnings -
than the bigger, more closely followed names.
Q. HOW DO YOU SEE THE REST OF THE YEAR SHAPING UP?
A. I think the underlying story behind the fund's stocks remains strong. I
have de-emphasized personal computer software stocks. I'm concerned that
these companies may face major product transitions over the next year
surrounding the release of Microsoft's new Chicago operating system. I am
very optimistic, however, about the prospects for the "enterprise software"
companies - those that write programs to support the operations of entire
corporations. We're still early on in the migration away from IBM
mainframes, and that should continue to open up an enormous market
opportunity for the best client-server companies such as Oracle, Sybase and
Peoplesoft, among others. As we have seen lately, though, the effects of
market psychology on these stocks are often unpredictable. So although I'm
optimistic, a certain level of volatility is a given.
FUND FACTS
START DATE: July 29, 1985
SIZE: as of August 31, 1994, more than
$180 million
MANAGER: John Hurley, since August 1994;
analyst for the PC software, database
software and mainframe software industries;
joined
Fidelity in 1993
(checkmark)
SOFTWARE & COMPUTER SERVICES PORTFOLIO
INVESTMENTS AUGUST 31, 1994 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 89.1%
SHARES VALUE (NOTE 1)
COMMUNICATIONS EQUIPMENT - 25.5%
DATACOMMUNICATIONS EQUIPMENT - 17.0%
Cabletron Systems, Inc. (a) 131,200 $ 13,890,800
Network General Corp. (a) 149,100 2,944,725
3Com Corp. (a) 182,900 12,242,869
Wellfleet Communications, Inc. (a) 23,200 524,900
29,603,294
TELEPHONE EQUIPMENT - 8.5%
DSC Communications Corp. (a) 452,000 12,938,500
Inter-Tel, Inc. (a) 203,100 1,777,125
14,715,625
TOTAL COMMUNICATIONS EQUIPMENT 44,318,919
COMPUTER SERVICES & SOFTWARE - 36.8%
CAD/CAM/CAE - 7.9%
Ascend Communications, Inc. (a) 4,000 103,000
Chipcom Corp. (a) 97,900 5,519,113
Clinicom, Inc. (a) 10,000 197,500
Computer Data Systems, Inc. (a) 50,000 631,250
Crosscommunications Corp. (a) 361,500 3,615,000
ECI Telecom Ltd. 100,000 1,806,250
Network Peripherals, Inc. (a) 100,000 1,100,000
State of The Art, Inc. (a) 80,000 580,000
Stratacom, Inc. (a) 4,400 167,200
13,719,313
COMPUTER SERVICES - 3.2%
Cerner Corp. (a) 25,000 1,043,750
SHL Systemhouse, Inc. (a) 546,000 2,764,125
SunGard Data Systems, Inc. (a) 50,000 1,737,500
5,545,375
DATA PROCESSING - 0.8%
Investment Technology Group, Inc. (a) 106,000 1,391,250
PREPACKAGED COMPUTER SOFTWARE - 24.9%
Artisoft, Inc. (a) 100,000 1,362,500
Banyan Systems, Inc. (a) 50,000 837,500
Boole & Babbage, Inc. (a) 1,000 28,250
Compuware Corp. (a) 84,500 3,506,750
Data Systems & Software (a) 55,000 412,500
EICON Technology Corp. (a) 221,200 1,719,213
Electronics for Imaging, Inc. (a) 397,800 9,746,100
FTP Software, Inc. (a) 115,000 2,213,750
Gupta Corp. (a) 150,000 1,481,250
Manugistics Group, Inc. (a) 55,000 591,250
MathSoft, Inc. (a) 40,000 90,000
Midisoft Corp. (a) 80,000 1,180,000
Modatech Systems, Inc. (a) 250,000 156,250
Oracle Systems Corp. (a) 300,000 12,806,250
Peoplesoft, Inc. (a) 10,000 447,500
Platinum Technology, Inc. (a) 100 1,450
Sanctuary Woods Multimedia Corp. (a) 53,300 99,812
Sybase, Inc. (a) 151,500 6,590,250
Xcellenet, Inc. (a) 3,000 35,250
43,305,825
TOTAL COMPUTER SERVICES & SOFTWARE 63,961,763
COMPUTERS & OFFICE EQUIPMENT - 8.8%
COMPUTER EQUIPMENT - WHOLESALE - 0.1%
Kenfil, Inc. (a) 185,000 150,313
SHARES VALUE (NOTE 1)
COMPUTER PERIPHERALS - 5.1%
Asante Technologies, Inc. (a) 135,000 $ 624,375
EMC Corp. (a) 454,600 8,182,800
8,807,175
COMPUTER STORAGE DEVICES - 1.5%
ADAPTEC, Inc. (a) 10,000 191,250
Read Rite Corp. (a) 50,000 881,250
Xylogics, Inc. (a) 73,900 1,570,375
2,642,875
COMPUTERS & OFFICE EQUIPMENT - 2.1%
Netframe Systems, Inc. (a) 377,700 3,588,150
TOTAL COMPUTERS & OFFICE EQUIPMENT 15,188,513
ELECTRONIC INSTRUMENTS - 0.5%
OPTICAL INSTRUMENTS - 0.4%
Cognex Corp. (a) 40,000 760,000
SEMICONDUCTOR CAPITAL EQUIPMENT - 0.1%
Quad Systems Corp. (a) 6,700 82,075
TOTAL ELECTRONIC INSTRUMENTS 842,075
ELECTRONICS - 12.2%
ELECTRONIC PARTS - WHOLESALE - 0.2%
ARC International Corp. (a) 133,500 333,750
ELECTRONICS AND ELECTRONIC COMPONENTS - 2.6%
Cascade Communications Corp. (a) 1,000 37,250
Digital Microwave Corp. (a) 50,000 775,000
Sanmina Corp. (a) 184,200 3,730,050
4,542,300
SEMICONDUCTORS - 9.4%
Advanced Micro Devices, Inc. (a) 6,000 174,000
Intel Corp. 81,500 5,358,625
Intel Corp. (warrants) (a) 201,600 3,124,800
Micron Technology, Inc. (a) 134,000 5,393,500
Motorola, Inc. (a) 40,000 2,160,000
Texas Instruments, Inc. 2,000 155,750
16,366,675
TOTAL ELECTRONICS 21,242,725
ENGINEERING - 0.0%
ARCHITECTS & ENGINEERS - 0.0%
DSP Group, Inc. (a) 200 4,650
INDUSTRIAL MACHINERY & EQUIPMENT - 3.6%
SPECIAL INDUSTRIAL MACHINERY - 3.6%
Nokia AB Free shares 57,700 6,254,803
SECURITIES INDUSTRY - 0.1%
SECURITY & COMMODITY BROKERS - 0.1%
Kim Eng Holdings Ltd. (warrants) (a) 90,600 91,839
SERVICES - 1.1%
BUSINESS SERVICES - 1.1%
Zebra Technologies Corp. Class A (a) 50,000 1,962,499
TELEPHONE SERVICES - 0.5%
ALC Communications Corp. (a) 26,200 936,650
TOTAL COMMON STOCKS
(Cost $151,234,474) 154,804,436
NONCONVERTIBLE PREFERRED STOCKS - 2.4%
SHARES VALUE (NOTE 1)
INDUSTRIAL MACHINERY & EQUIPMENT - 2.4%
SPECIAL INDUSTRIAL MACHINERY - 2.4%
Nokia (Cost $2,720,645) 37,300 $ 4,050,699
NONCONVERTIBLE BONDS - 0.0%
PRINCIPAL
AMOUNT
SECURITIES INDUSTRY - 0.0%
SECURITY & COMMODITY BROKERS - 0.0%
Kim Eng Holdings Ltd. 3 1/2%,
12/27/97 (Cost $56,322) SGD 90,600 55,284
REPURCHASE AGREEMENTS - 8.5%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account, at 4.83% dated
8/31/94 due 9/1/94 $ 14,830,990 14,829,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $168,840,441) $ 173,739,419
CURRENCY ABBREVIATIONS
SGD - Singapore dollar
LEGEND
1. Non-income producing
2. Principal amount is stated in United States dollars unless otherwise
noted.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $141,076,407 and $132,059,808, respectively. (see Note 4 of
Notes to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $30,172 for the period
(see Note 5 of Notes to Financial Statements).
At the period end, the value of securities loaned and the value of
collateral amounted to $126,263 and $136,500, respectively (see Note 7 of
Notes to Financial Statements).
The maximum loan and average daily loan balances during the periods for
which loans were outstanding amounted to $2,092,000 and $1,447,167,
respectively. The weighted average interest rate paid was 4.6% (see Note 8
of Notes to Financial Statements).
Distribution of investments by country, as a percentage of total value
of investment in securities, is as follows:
United States 89.9%
Finland 5.9
Canada 2.7
Israel 1.0
Others (individually less than 1%) 0.5
TOTAL 100.0%
INCOME TAX INFORMATION
At August 31, 1994, the aggregate cost of investment securities for income
tax purposes was $169,588,682. Net unrealized appreciation aggregated
$4,150,737, of which $19,465,884 related to appreciated investment
securities and $15,315,147 related to depreciated investment securities.
SOFTWARE AND COMPUTER SERVICES PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
AUGUST 31, 1994 (UNAUDITED)
ASSETS
Investment in securities, at value (including repurchase agreements of $14,829,000) (cost $168,840,441) - See $ 173,739,419
accompanying schedule
Cash 299
Receivable for investments sold 4,700,039
Receivable for fund shares sold 11,045,808
Dividends receivable 39,366
Interest receivable 1,210
Redemption fees receivable 2,856
Other receivables 169,793
Prepaid expenses 18,125
TOTAL ASSETS 189,716,915
LIABILITIES
Payable for investments purchased $ 6,386,245
Payable for fund shares redeemed 2,908,435
Accrued management fee 79,388
Other payables and accrued expenses 141,172
Collateral on securities loaned, at value 136,500
TOTAL LIABILITIES 9,651,740
NET ASSETS $ 180,065,175
Net Assets consist of:
Paid in capital $ 190,745,283
Accumulated net investment (loss) (892,068
)
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions (14,669,012
)
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies 4,880,972
NET ASSETS, for 7,372,607 shares outstanding $ 180,065,175
NET ASSET VALUE and redemption price per share ($180,065,175 (divided by) shares) $24.42
Maximum offering price per share (100/97 of $24.42) $25.18
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED AUGUST 31, 1994 (UNAUDITED)
INVESTMENT INCOME $ 143,204
Dividends
Interest (including security lending fees of $18,255) 126,780
TOTAL INCOME 269,984
EXPENSES
Management fee $ 472,402
Transfer agent 621,229
Fees
Redemption fees (58,560
)
Accounting and security lending fees 80,255
Non-interested trustees' compensation 450
Custodian fees and expenses 19,820
Registration fees 19,939
Audit 17,593
Legal 1,817
Interest 2,195
Reports to shareholders 8,502
Miscellaneous 292
Total expenses before reductions 1,185,934
Expense reductions (23,882 1,162,052
)
NET INVESTMENT INCOME (LOSS) (892,068
)
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities (13,681,276
)
Foreign currency transactions 74,187 (13,607,089
)
Change in net unrealized appreciation (depreciation) on:
Investment securities (10,318,355
)
Assets and liabilities in foreign (18,006 (10,336,361
currencies ) )
NET GAIN (LOSS) (23,943,450
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ (24,835,518
)
OTHER INFORMATION $635,928
Sales Charges Paid to FDC
Deferred sales charges withheld $6,601
by FDC
Exchange fees withheld by FSC $38,250
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS YEAR ENDED
ENDED FEBRUARY 28,
AUGUST 31, 1994 1994
(UNAUDITED)
Operations $ (892,068 $ (2,049,464
Net investment income (loss) ) )
Net realized gain (loss) (13,607,089 35,000,477
)
Change in net unrealized appreciation (depreciation) (10,336,361 10,379,359
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (24,835,518 43,330,372
)
Distributions to shareholders from net realized gain (2,015,425 (32,503,084
) )
Share transactions 126,284,559 412,354,230
Net proceeds from sales of shares
Reinvestment of distributions 1,989,953 32,019,820
Cost of shares redeemed (99,735,898 (429,424,876
) )
Paid in capital portion of redemption fees 343,679 1,045,419
Net increase (decrease) in net assets resulting from share transactions 28,882,293 15,994,593
TOTAL INCREASE (DECREASE) IN NET ASSETS 2,031,350 26,821,881
NET ASSETS
Beginning of period 178,033,825 151,211,944
End of period (including net investment income (loss) of ($892,068) and $0, respectively) $ 180,065,175 $ 178,033,825
OTHER INFORMATION
Shares
Sold 5,339,758 14,575,603
Issued in reinvestment of distributions 80,951 1,265,940
Redeemed (4,209,752 (15,154,744
) )
Net increase (decrease) 1,210,957 686,799
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS YEAR ENDED TEN MONTHS YEARS ENDED APRIL 30,
ENDED FEBRUARY 28, ENDED
AUGUST 31, 1994 FEBRUARY 28,
SELECTED PER-SHARE DATAC (UNAUDITED) 1994 1993 1992 1991 1990
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 28.89 $ 27.62 $ 21.63 $ 19.77 $ 15.58 $ 15.75
Income from Investment Operations
Net investment income (loss) (.14) (.34) (.07)F (.28) (.14)G (.20)
Net realized and unrealized gain (loss) (4.05) 7.92 5.88 4.37 4.06 .82
Total from investment operations (4.19) 7.58 5.81 4.09 3.92 .62
Less Distributions
From net realized gain (.33) (6.48) - (2.50) - (.86)
Redemption fees added to paid in capital .05 .17 .18 .27 .27 .07
Net asset value, end of period $ 24.42 $ 28.89 $ 27.62 $ 21.63 $ 19.77 $ 15.58
TOTAL RETURN D, E (14.34)% 33.19 27.69% 25.36% 26.89% 4.64%
%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 180,065 $ 178,034 $ 151,212 $ 89,571 $ 17,290 $ 10,539
Ratio of expenses to average net assets B 1.50%A 1.57 1.64%A 1.98% 2.50% 2.56%
%
Ratio of expenses to average net assets before 1.53%A 1.57 1.64%A 1.98% 2.82% 3.39%
expense reductions B %
Ratio of net investment income (loss) to average net (1.15)%A (1.19) (.37)%A (1.30)% (.84)% (1.30)%
assets %
Portfolio turnover rate 176%A 376 402%A 348% 326% 284%
%
</TABLE>
A ANNUALIZED
B SEE NOTE 9 OF NOTES TO FINANCIAL STATEMENTS.
C NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
D TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
E THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
F INVESTMENT INCOME PER SHARE REFLECTS DIVIDENDS RECEIVED IN ARREARS FROM
UNISYS CORP.,$3.75 SERIES A WHICH AMOUNTED TO $.03 PER SHARE.
G INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND WHICH AMOUNTED TO
$.02 PER SHARE.
TECHNOLOGY PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance: total
percentage change in value, the average annual percentage change, or the
growth of a hypothetical $10,000 investment. Each performance figure
includes changes in a fund's share price, plus reinvestment of any
dividends (income) and capital gains (the profits the fund earns when it
sells stocks that have grown in value).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 6 PAST 1 PAST 5 PAST 10
AUGUST 31, 1994 MONTH YEAR YEARS YEARS
S
TECHNOLOGY -0.34% 13.00% 172.77% 144.72%
TECHNOLOGY
(INCL. 3% SALES CHARGE) -3.33% 9.61% 164.58% 137.38%
S&P 500 3.26% 5.47% 58.16% 300.76%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one year, five years, or ten
years. You can compare these figures to the performance of the S&P 500 - a
common proxy for the U.S. stock market. This benchmark includes reinvested
dividends and capital gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
AUGUST 31, 1994 YEAR YEARS YEARS
TECHNOLOGY 13.00% 22.22% 9.36%
TECHNOLOGY (INCL. 3% SALES CHARGE) 9.61% 21.48% 9.03%
S&P 500 5.47% 9.60% 14.89%
AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and
show you what would have happened if the fund had performed at a constant
rate each year.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of growth in the long run
and volatility in the short run. Unlike the broader
market, however, some sectors may not have
a history of growth in the long run. And, as
with all stock funds, the share price and return
of a fund that invests in a sector will vary. That
means if you sell your shares during a sector
downturn, you might lose money. But if you
can identify a sector that is about to
experience rapid growth you may have the
potential for above-average gains.
(checkmark)
$10,000 OVER TEN YEARS
Select Tech. (064) Standard & Poor's
08/31/84 9700.00 10000.00
09/30/84 9054.48 10002.00
10/31/84 8942.59 10041.01
11/30/84 8529.46 9928.55
12/31/84 8981.32 10190.66
01/31/85 10319.70 10984.51
02/28/85 10052.88 11119.62
03/31/85 9200.80 11127.41
04/30/85 8507.94 11117.39
05/31/85 8645.65 11759.98
06/30/85 8665.75 11944.61
07/31/85 9069.83 11926.69
08/31/85 8696.50 11825.32
09/30/85 8046.46 11455.18
10/31/85 8270.46 11984.41
11/30/85 9170.85 12806.54
12/31/85 9658.38 13426.38
01/31/86 9755.01 13501.57
02/28/86 10396.27 14511.49
03/31/86 10418.23 15321.23
04/30/86 10949.68 15148.10
05/31/86 10611.48 15953.98
06/30/86 9952.66 16223.60
07/31/86 8677.01 15316.70
08/31/86 9113.51 16453.20
09/30/86 8306.65 15092.52
10/31/86 8782.83 15963.36
11/30/86 9131.14 16351.27
12/31/86 8937.14 15934.31
01/31/87 10603.77 18080.66
02/28/87 11803.03 18794.85
03/31/87 11132.85 19338.02
04/30/87 11454.71 19165.91
05/31/87 11714.85 19332.65
06/30/87 11366.53 20308.95
07/31/87 11481.17 21338.62
08/31/87 12155.75 22134.55
09/30/87 12217.48 21649.80
10/31/87 7918.65 16986.43
11/30/87 6886.94 15586.75
12/31/87 7884.55 16772.90
01/31/88 7459.36 17479.04
02/29/88 8198.82 18293.57
03/31/88 8111.01 17728.29
04/30/88 8420.66 17925.08
05/31/88 8189.58 18081.03
06/30/88 8942.91 18910.95
07/31/88 8277.39 18839.08
08/31/88 7514.82 18198.55
09/30/88 7718.17 18973.81
10/31/88 7399.28 19501.29
11/30/88 7177.44 19222.42
12/31/88 7671.96 19558.81
01/31/89 8291.26 20990.51
02/28/89 8064.80 20467.85
03/31/89 7916.90 20944.75
04/30/89 8489.99 22031.78
05/31/89 9183.24 22924.07
06/30/89 8369.83 22793.40
07/31/89 8517.72 24851.65
08/31/89 8702.59 25338.74
09/30/89 8910.56 25234.85
10/31/89 8845.86 24649.40
11/30/89 8868.97 25152.25
12/31/89 8975.26 25755.90
01/31/90 8790.40 24027.68
02/28/90 9284.91 24337.64
03/31/90 9719.35 24982.59
04/30/90 9280.29 24358.02
05/31/90 10477.30 26732.93
06/30/90 10569.74 26551.15
07/31/90 10005.89 26466.18
08/31/90 8642.50 24073.64
09/30/90 7907.66 22901.25
10/31/90 8134.12 22802.78
11/30/90 9354.24 24275.84
12/31/90 9918.08 24953.13
01/31/91 11591.12 26041.09
02/28/91 12178.07 27903.03
03/31/91 13153.24 28578.28
04/30/91 12506.21 28646.87
05/31/91 13199.46 29884.41
06/30/91 11918.97 28515.71
07/31/91 13238.65 29844.54
08/31/91 13889.20 30551.86
09/30/91 13958.90 30041.64
10/31/91 14335.29 30444.20
11/30/91 13865.96 29217.30
12/31/91 15766.93 32559.76
01/31/92 16366.56 31954.14
02/29/92 16622.21 32369.55
03/31/92 15302.10 31738.34
04/30/92 15078.99 32671.45
05/31/92 15227.73 32831.54
06/30/92 14139.09 32342.35
07/31/92 14859.49 33665.15
08/31/92 14098.51 32975.02
09/30/92 14788.47 33364.12
10/31/92 15661.06 33480.90
11/30/92 16929.37 34622.59
12/31/92 17142.44 35048.45
01/31/93 17664.99 35342.86
02/28/93 17563.52 35823.52
03/31/93 17791.82 36579.40
04/30/93 17740.81 35694.18
05/31/93 19530.60 36650.78
06/30/93 20484.41 36757.07
07/31/93 19940.18 36610.04
08/31/93 21006.20 37997.56
09/30/93 21331.62 37704.98
10/31/93 20910.82 38485.47
11/30/93 20708.84 38119.86
12/31/93 22053.79 38581.11
01/31/94 23164.17 39892.87
02/28/94 23819.01 38811.77
03/31/94 23016.12 37119.58
04/30/94 22552.57 37594.71
05/31/94 22588.12 38211.26
06/30/94 20674.17 37275.09
07/31/94 21474.12 38497.71
08/31/94 23737.67 40076.11
Let's say you invested $10,000 in Fidelity Select Technology Portfolio on
August 31, 1984, and paid a 3% sales charge. By August 31, 1994, your
investment would have grown to $23,738 - a 137.38% increase. That compares
to $10,000 invested in the S&P 500, which would have grown to $40,076 over
the same period - a 300.76% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST 31, 1994
% OF FUND'S
INVESTMENTS
Intel Corp. 6.4
International Business Machines Corp. 6.2
Oracle Systems Corp. 5.8
Texas Instruments, Inc. 4.8
Advanced Micro Devices, Inc. 4.1
Compaq Computer Corp. 4.1
Micron Technology, Inc. 2.9
EMC Corp. 2.5
Digital Equipment Corp. 2.1
Samsung Electronics Co., Ltd. GDS 2.1
TOP INDUSTRIES AS OF AUGUST 31, 1994
Row: 1, Col: 1, Value: 37.5
Row: 1, Col: 2, Value: 5.5
Row: 1, Col: 3, Value: 6.6
Row: 1, Col: 4, Value: 7.6
Row: 1, Col: 5, Value: 13.8
Row: 1, Col: 6, Value: 29.0
Semiconductors 29.0%
Prepackaged Computer
Software 13.8%
Mainframe Computers 7.6%
Mini & Micro Computers 6.6%
Datacommunications
Equipment 5.5%
All Others 37.5%*
* INCLUDES SHORT-TERM INVESTMENTS
TECHNOLOGY PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Harry Lange,
Portfolio Manager of Fidelity Select Technology Portfolio
Q. HARRY, CAN YOU DESCRIBE THE FUND'S RECENT PERFORMANCE?
A. The fund had total returns of -0.34% and 13.00% for the six and 12
months ended August 31, 1994, respectively. That compares to total returns
of 3.26% and 5.47% for the S&P 500 during the same periods.
Q. IT LOOKS LIKE THE FUND'S PERFORMANCE HAS FALLEN OFF SOMEWHAT THROUGH THE
FIRST SIX MONTHS OF 1994 . . .
A. That's true. However, it's also important to keep in mind that 1993 was
an extraordinarily strong year for technology stocks and for the fund. The
fortunes of the fund are very closely tied to those of the personal
computer market. While growth in the PC industry remains strong, small bits
of negative news now and then can have a huge impact on these stocks.
Q. CAN YOU GIVE US AN EXAMPLE?
A. Sure. When Cisco Systems - a leading computer networking equipment
manufacturer - reported first quarter 1994 earnings that fell but a penny
per share short of analysts' expectations, investors reacted by heavily
selling most other networking stocks such as 3Com and Cabletron. I had
previously scaled back on these stocks because I thought that they were
getting expensive, but this correction did hurt the fund. I later reduced
the fund's stake in networking stocks.
Q. CONVERSELY, WHICH STOCKS SHONE?
A. Compaq and IBM - two computer stocks - continued to perform well over
the past six months. Compaq had first quarter 1994 earnings growth that
surprised even the most optimistic analysts. IBM's performance was even
better. The company has succeeded in trimming layers of its extensive
bureaucracy, and its products are in strong demand.
Q. DID YOU MAKE ANY STRATEGIC CHANGES TO THE FUND OVER THE PAST SIX MONTHS?
A. Yes. I feel that the technological nature of pharmaceutical research
falls in line with the fund's objectives, so I began investing more heavily
in drug stocks - roughly 4% of the fund on August 31. The prices of these
stocks were severely beaten down on fears of the effects of health care
reform. However, companies such as Pfizer, Schering-Plough and
Warner-Lambert are capable of strong earnings growth. The investments paid
off; these stocks rose recently amid merger activity and Congress' apparent
unwillingness to enact major new health care legislation. In addition, the
fund had about a 14% stake in overseas technology companies at the end of
August. Kinpo Electronics - a Taiwanese electronic goods manufacturer - and
Samsung - a Korean company that is the largest semiconductor memory
manufacturer in the world - have boosted performance.
Q. THE FUND HAS A SIZABLE STAKE IN LARGE U.S. SEMICONDUCTOR COMPANIES. HOW
DID THEY DO?
A. The stocks of most U.S. chip companies such as Advanced Micro Devices,
Texas Instruments and Intel were relatively flat during the period. That
was due mainly to investor worries about a summer slowdown in orders that
often negatively affects the stocks of technology companies. Also, Intel's
new Pentium microprocessor didn't take off in the marketplace as quickly as
I had hoped. But I'm sticking with these companies. They continue to show
strong earnings growth as worldwide semiconductor demand exceeds available
supply. Their stock prices did rebound somewhat in July and August, and I
think its just a matter of time until investors appropriately reward chip
makers for their excellent earnings prospects.
Q. WAS THE PERFORMANCE OF THE CHIP MANUFACTURERS AND THE NETWORKING STOCKS
YOUR BIGGEST DISAPPOINTMENT?
A. Actually, PC software maker Lotus Development - one of the fund's top 10
investments six months ago - was my biggest disappointment. The company
experienced a significant slowdown in sales of its word processing, spread
sheet and other applications products. I sold much of the fund's investment
before the stock bottomed out in July, but not in time to avoid a loss.
Q. LET'S TALK ABOUT THE REST OF THE YEAR. WHAT'S YOUR OUTLOOK?
A. I'm pretty optimistic about the next six months. At this point, signs
are pointing toward a strong Christmas season for PC manufacturers and
those who make related products such as semiconductors and software. In
addition, companies in large numbers continue to make the shift from
mainframe computer set-ups to PC-based networks, which bodes well for the
PC industry in the long term. However, as we've seen recently, the chances
are good there will be corrections and volatility along the way.
FUND FACTS
START DATE: July 14, 1981
SIZE: as of August 31, 1994, more than
$217 million
MANAGER: Harry Lange, since November, 1993;
manager, Fidelity Select Electronics Portfolio,
since January 1994; Fidelity Select Computers
Portfolio, since June 1992; manager, Fidelity
Select Capital Goods and Automation Machinery
Portfolios, 1988; joined Fidelity in 1987
(checkmark)
TECHNOLOGY PORTFOLIO
INVESTMENTS AUGUST 31, 1994 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 89.4%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 0.1%
AIRCRAFT & PARTS - 0.1%
Hong Kong Aircraft & Engineering Co. 50,000 $ 236,802
BROADCASTING - 0.7%
CABLE TV OPERATORS - 0.0%
NTN Communications, Inc. (a) 3,800 28,500
TELEVISION BROADCASTING - 0.7%
Scandinavian Broadcasting Corp. (a) 60,000 1,590,000
TOTAL BROADCASTING 1,618,500
CELLULAR - 0.1%
CELLULAR & COMMUNICATION SERVICES - 0.1%
Advanced Information Services
(For. Reg.) 2,500 109,425
Millicom International Cellular SA 2,800 67,200
176,625
COMMUNICATIONS EQUIPMENT - 6.6%
DATACOMMUNICATIONS EQUIPMENT - 5.5%
Broadband Technologies, Inc. (a) 20,000 385,000
Cabletron Systems, Inc. (a) 43,600 4,616,150
Cisco Systems, Inc. (a) 105,900 2,627,644
General DataComm Industries, Inc. (a) 20,000 395,000
Network General Corp. (a) 157,500 3,110,625
Wellfleet Communications, Inc. (a) 50,000 1,131,250
12,265,669
TELEPHONE EQUIPMENT - 1.1%
Ericsson (L.M.) Telephone Co. Class B
ADR 20,000 1,082,500
Natural Microsystems (a) 1,300 15,275
Newbridge Networks Corp.(a) 41,000 1,312,000
Teledata Communications Ltd. (a) 7,300 66,613
2,476,388
TOTAL COMMUNICATIONS EQUIPMENT 14,742,057
COMPUTER SERVICES & SOFTWARE - 15.6%
COMPUTER & SOFTWARE STORES - 1.3%
Inacom Corp. (a) 37,300 349,688
MicroAge, Inc. (a) 198,000 2,524,500
Software Spectrum, Inc. (a) 8,000 102,000
2,976,188
COMPUTER SERVICES - 0.1%
Wave Systems Corp. Class A (a) 50,000 250,000
CAD/CAM/CAE - 0.4%
Brooktrout Technology (a) 17,900 183,475
Chipcom Corp. (a) 6,200 349,525
Viewlogic Systems, Inc. (a) 20,000 370,000
903,000
ELECTRONIC INFORMATION RETRIEV - 0.0%
Data Broadcasting Corp. (a) 15,000 75,000
Quickresponse Services, Inc. (a) 1,500 19,125
94,125
PREPACKAGED COMPUTER SOFTWARE - 13.8%
Brock Control Systems, Inc. (a) 82,400 803,400
Corel Systems Corp. (a) 105,800 1,818,734
EICON Technology Corp. (a) 21,000 163,216
FTP Software, Inc. (a) 34,900 671,825
Fourth Shift Corp. (a) 54,000 276,750
Fourth Dimension Software (a) 38,000 218,500
Geoworks (a) 103,400 723,800
Globalink, Inc. (a) 127,100 1,572,863
Informix Corp. (a) 86,000 2,031,750
Infosoft International, Inc. (a) 7,500 201,563
SHARES VALUE (NOTE 1)
LEGENT Corp. (a) 20,000 $ 465,000
Lotus Development Corp. (a) 30,000 1,226,250
MDL Information Systems, Inc. (a) 16,000 92,000
Media Logic, Inc. (a) 65,000 125,938
Microsoft Corp. (a) 42,100 2,447,063
Midisoft Corp. (a) 40,000 590,000
Novell, Inc. (a) 100,000 1,562,500
Oracle Systems Corp. (a) 303,800 12,968,463
Sybase, Inc. (a) 40,000 1,740,000
Systems Software Associates, Inc. (a) 50,000 712,500
Tulip Computers NV 20,000 190,476
Wonderware Corp. (a) 9,300 174,375
30,776,966
TOTAL COMPUTER SERVICES & SOFTWARE 35,000,279
COMPUTERS & OFFICE EQUIPMENT - 26.6%
COMPUTER EQUIPMENT - 1.2%
Stratus Computer, Inc. (a) 50,000 1,900,000
Syquest Technology, Inc. (a) 70,400 686,400
2,586,400
COMPUTER EQUIPMENT - WHOLESALE - 1.2%
GBC Technologies, Inc. (a) 170,100 1,509,638
Kenfil, Inc. (a) 56,300 45,744
Merisel, Inc. (a) 70,000 638,750
Tech Data Corp. (a) 24,700 463,125
2,657,257
COMPUTER PERIPHERALS - 2.9%
EMC Corp. (a) 306,800 5,522,400
Komag, Inc. (a) 19,800 465,300
Liuski International, Inc. (a) 2,500 13,750
Radius, Inc. (a) 36,650 352,757
Western Digital Corp. (a) 3,900 58,500
6,412,707
COMPUTER RENTAL & LEASING - 0.2%
Comdisco, Inc. 23,300 509,688
COMPUTER STORAGE DEVICES - 0.5%
Pinnacle Micro, Inc. (a) 84,500 1,119,625
COMPUTERS & OFFICE EQUIPMENT - 2.0%
Fujitsu Ltd. 100,000 1,087,824
Hewlett-Packard Co. 37,000 3,325,375
4,413,199
ELECTRONIC COMPUTERS - 0.1%
TSL Holding, Inc. (a) 10,864 326
Tricord Systems, Inc. (a) 40,500 227,813
228,139
GRAPHICS WORKSTATIONS - 2.4%
Intergraph Corp. (a) 20,000 192,500
Silicon Graphics, Inc. (a) 24,600 645,750
Sun Microsystems, Inc. (a) 170,200 4,510,300
5,348,550
MAINFRAME COMPUTERS - 7.6%
Amdahl Corp. (a) 348,400 3,222,700
Control Data Systems, Inc. (a) 5,000 38,125
International Business Machines Corp. 200,800 13,779,900
17,040,725
MINI & MICRO COMPUTERS - 6.6%
Compaq Computer Corp. (a) 244,600 9,141,925
Digital Equipment Corp. (a) 195,300 4,736,025
Tandem Computers, Inc. (a) 50,000 756,250
14,634,200
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
COMPUTERS & OFFICE EQUIPMENT - CONTINUED
OFFICE AUTOMATION - 0.5%
Xerox Corp. (a) 10,000 $ 1,071,250
PENS, PENCILS, OFFICE SUPPLIES - 1.4%
International Imaging Materials, Inc. (a) 129,700 3,129,013
TOTAL COMPUTERS & OFFICE EQUIPMENT 59,150,753
CONSUMER ELECTRONICS - 0.3%
RADIOS, TELEVISIONS, STEREOS - 0.3%
Foster Electric Co. Ltd. (a) 7,000 62,892
Odetics, Inc. Class A (a) 66,000 610,500
673,392
DEFENSE ELECTRONICS - 0.0%
DEFENSE ELECTRONICS - 0.0%
Stanford Telecommunications, Inc. (a) 200 3,813
DRUGS & PHARMACEUTICALS - 3.8%
BIOTECHNOLOGY - 1.5%
Amgen, Inc. (a) 20,000 1,055,000
Applied Immune Sciences, Inc. (a) 1,100 8,113
COR Therapeutics, Inc. (a) 80,000 1,180,000
Genentech, Inc. (redeemable)(a) 20,000 1,027,500
3,270,613
DRUGS - 2.3%
A.L. Laboratories, Inc. Class A 5,000 77,500
Pfizer, Inc. (a) 20,000 1,365,000
Schering-Plough Corp. 30,000 2,096,250
Warner-Lambert Co. 20,000 1,672,500
Watson Pharmaceuticals, Inc. (a) 400 9,150
5,220,400
TOTAL DRUGS & PHARMACEUTICALS 8,491,013
ELECTRICAL EQUIPMENT - 0.5%
ELECTRICAL EQUIPMENT, NEC - 0.0%
IEC Electronics Corp. (a) 5,000 71,250
TV & RADIO COMMUNICATION EQUIPMENT - 0.2%
Avid Technology, Inc. (a) 12,000 399,000
WIRING & LIGHTING - 0.3%
Oak Industries, Inc. (a) 20,800 559,000
TOTAL ELECTRICAL EQUIPMENT 1,029,250
ELECTRONIC INSTRUMENTS - 2.3%
ELECTRONIC EQUIPMENT - 1.3%
ASECO Corp. (a) 15,000 123,750
Credence Systems Corp. (a) 55,400 1,232,650
GenRad, Inc. (a) 41,500 217,875
Megatest Corp. (a) 35,800 689,150
Micro Component Technology, Inc. (a) 600 2,925
Teradyne, Inc. (a) 20,000 595,000
2,861,350
MEASURING INSTRUMENTS - 0.3%
Perkin-Elmer Corp. (a) 20,000 597,500
SEMI-CONDUCTOR CAPITAL EQUIPMENT - 0.7%
KLA Instruments Corp. (a) 29,100 1,382,250
Kulicke & Soffa Industries, Inc. (a) 10,800 170,100
1,552,350
TOTAL ELECTRONIC INSTRUMENTS 5,011,200
ELECTRONICS - 28.3%
CONNECTORS - 0.0%
Thomas & Betts Corp. (a) 2,000 129,000
SHARES VALUE (NOTE 1)
ELECTRONIC PARTS - WHOLESALE - 0.3%
Pioneer-Standard Electronics, Inc. 5,100 $ 87,338
Sterling Electronics Corp. (a) 40,000 510,000
597,338
ELECTRONICS AND ELECTRONIC COMPONENT - 0.8%
GTI Corp. (a) 20,000 260,000
Hitachi Ltd. ADR 10,800 1,073,250
Toshiba Corp. 50,000 378,743
1,711,993
SEMICONDUCTORS - 27.2%
Advanced Micro Devices, Inc. (a) 316,700 9,184,300
Cyrix Corp. (a) 7,300 290,175
Geotek Industries, Inc. (a) 99,000 1,126,125
Integrated Device Technology, Inc. (a) 1,700 39,738
Intel Corp. 217,600 14,307,200
Interpoint Corp. (a) 10,000 107,500
LSI Logic Corp. (a) 98,500 3,102,750
Lattice Semiconductor Corp. (a) 30,000 566,250
Linear Technology Corp. 20,000 890,000
Micron Technology, Inc. 159,000 6,399,750
Motorola, Inc. 41,400 2,235,600
National Semiconductor Corp. (a) 145,200 2,704,350
Opti, Inc. (a) 10,000 132,500
Samsung Electronics Co. Ltd.:
GDR (non-vtg.)(b) 43,475 3,412,788
GDR Part Dividend (b) 4,258 181,063
GDS (b) 59,300 4,655,050
Texas Instruments, Inc. 137,400 10,700,025
VLSI Technology, Inc. (a) 50,000 696,875
60,732,039
TOTAL ELECTRONICS 63,170,370
INDUSTRIAL MACHINERY & EQUIPMENT - 0.1%
GENERAL INDUSTRIAL MACHINERY - 0.0%
Robotic Vision Systems, Inc. (a) 5,000 25,000
SPECIAL INDUSTRIAL MACHINERY - 0.1%
Asyst Technologies, Inc. (a) 9,400 152,750
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 177,750
MEDICAL EQUIPMENT & SUPPLIES - 1.1%
MEDICAL SUPPLIES & APPLIANCES - 0.5%
Healthdyne, Inc. (a) 25,000 171,875
Johnson & Johnson (a) 17,300 867,163
Medical Technology Systems, Inc. (a) 9,800 72,275
1,111,313
MEDICAL TECHNOLOGY - 0.6%
Mallinckrodt Group, Inc. 11,900 383,775
Medtronic, Inc. 10,000 987,500
1,371,275
TOTAL MEDICAL EQUIPMENT & SUPPLIES 2,482,588
MEDICAL FACILITIES MANAGEMENT - 0.4%
HOME HEALTH CARE AGENCIES - 0.1%
Abbey Healthcare Group, Inc. (a) 375 6,844
Homedco Group, Inc. (a) 5,900 163,725
Medical Care America, Inc. (a) 4,408 130,587
301,156
HOSPITALS - 0.3%
Columbia/HCA Healthcare Corp. 2,300 97,750
Health Management Associates, Inc.
Class A (a) 19,575 467,353
565,103
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
MEDICAL FACILITIES MANAGEMENT - CONTINUED
HOSPITALS, GENERAL MEDICAL - 0.0%
Charter Medical Corp. (a) 5,000 $ 141,250
TOTAL MEDICAL FACILITIES MANAGEMENT 1,007,509
RETAIL & WHOLESALE, MISC - 1.1%
MAIL ORDER - 1.1%
Micro Warehouse, Inc. (a) 87,400 2,381,650
SERVICES - 0.0%
JEWELRY, SILVERWARE, & PLATED - 0.0%
Aurora Electronics (a) 7,000 55,125
TELEPHONE SERVICES - 1.8%
TELEPHONE SERVICES - 1.8%
MFS Communications, Inc. (a) 3,300 116,325
Japan Telecom Co. Ltd. (a)(b) 5 235,896
Southwestern Bell Corp. 10,000 413,750
Telebras PN:
(Pfd. Reg.) 53,000,000 3,117,990
PN (rights) (a) 1,208,241 5,763
US Long Distance Corp.(a) 12,500 134,377
4,024,101
TOTAL COMMON STOCKS
(Cost $171,016,082) 199,432,777
PREFERRED STOCKS - 1.2%
NONCONVERTIBLE PREFERRED STOCKS - 1.2%
TELEPHONE SERVICES - 1.2%
Stet (Societa Finanziaria Telefonica)
Spa (Cost $1,559,319) 1,035,100 2,697,057
CORPORATE BONDS - 4.0%
PRINCIPAL
AMOUNT
CONVERTIBLE BONDS - 4.0%
COMPUTER SERVICES & SOFTWARE - 0.0%
PREPACKAGED COMPUTER SOFTWARE - 0.0%
Sterling Software, Inc.
5 3/4%, 2/01/03 $ 62,000 73,470
COMPUTERS & OFFICE EQUIPMENT - 2.2%
COMPUTERS & OFFICE EQUIPMENT - 0.3%
Data General Corp.
7 3/4%, 6/1/01 770,000 635,250
ELECTRONIC COMPUTERS - 1.4%
Acer, Inc. 4%, 6/10/01 1,070,000 3,156,500
OFFICE EQUIPMENT - WHOLESALE - 0.5%
Kinpo Electronics, Inc. euro 3%,
7/21/01 860,000 1,019,100
TOTAL COMPUTERS & OFFICE EQUIPMENT 4,810,850
ELECTRONICS - 1.8%
SEMICONDUCTORS - 1.8%
United Microelectronics Corp.:
1 1/4%, 6/8/04 (b) 870,000 1,500,750
euro 1 1/4%, 6/8/04 1,500,000 2,587,500
4,088,250
TOTAL CORPORATE BONDS
(Cost $7,785,015) 8,972,570
REPURCHASE AGREEMENTS - 5.4%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasure obligations), in a joint
trading account, at 4.83% dated
8/31/94 due 9/1/94 $12,049,616 $ 12,048,000
TOTAL INVESTMENTS IN SECURITIES - 100%
(Cost $192,408,416) $ 223,150,404
LEGEND
1. Non-income producing
2. 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 period
end, the value of these securities amounted to $9,985,547 or 4.6% of net
assets.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $146,719,499 and $115,464,703, respectively. (see Note 4 of
Notes to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $120,412 for the period
(see Note 5 of Notes to Financial Statements).
The maximum loan and average daily loan balances during the periods for
which loans were outstanding amounted to $12,443,000 and $6,434,364,
respectively. The weighted average interest rate paid was 4.2% (see Note 8
of Notes to Financial Statements).
Distribution of investments by country, as a percentage of total value of
investment in securities, is as follows:
United States 85.6%
Taiwan 3.7
Korea 3.7
Canada 1.5
Brazil 1.4
Japan 1.3
Italy 1.2
Others (individually less than 1%) 1.6
TOTAL 100.0%
INCOME TAX INFORMATION
At August 31, 1994, the aggregate cost of investment securities for income
tax purposes was $192,582,863. Net unrealized appreciation aggregated
$30,567,541, of which $39,330,225 related to appreciated investment
securities and $8,762,684 related to depreciated investment securities.
TECHNOLOGY PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
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AUGUST 31, 1994 (UNAUDITED)
ASSETS
Investment in securities, at value (including repurchase agreements of $12,048,000) (cost $192,408,416) - See $ 223,150,404
accompanying schedule
Cash 21,074
Receivable for investments sold 3,198,145
Receivable for fund shares sold 5,028,600
Dividends receivable 85,780
Interest receivable 22,060
Redemption fees receivable 1,520
Other receivables 188,962
Prepaid expenses 25,140
TOTAL ASSETS 231,721,685
LIABILITIES
Payable for investments purchased $ 11,127,569
Payable for fund shares redeemed 2,915,466
Accrued management fee 100,285
Other payables and accrued expenses 176,596
TOTAL LIABILITIES 14,319,916
NET ASSETS $ 217,401,769
Net Assets consist of:
Paid in capital $ 186,545,714
Accumulated net investment (loss) (889,734
)
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 1,003,801
Net unrealized appreciation (depreciation) on investments 30,741,988
NET ASSETS, for 5,427,318 shares outstanding $ 217,401,769
NET ASSET VALUE and redemption price per share ($217,401,769 (divided by) shares) $40.06
Maximum offering price per share (100/97 of $40.06) $41.30
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED AUGUST 31, 1994 (UNAUDITED)
INVESTMENT INCOME $ 442,040
Dividends
Interest 208,276
TOTAL INCOME 650,316
EXPENSES
Management fee $ 596,856
Transfer agent 839,730
Fees
Redemption fees (64,356
)
Accounting fees and expenses 96,339
Non-interested trustees' compensation 563
Custodian fees and expenses 13,593
Registration fees 25,140
Audit 16,839
Legal 1,951
Interest 8,263
Reports to shareholders 12,042
Miscellaneous 416
Total expenses before reductions 1,547,376
Expense reductions (7,326 1,540,050
)
NET INVESTMENT INCOME (LOSS) (889,734
)
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 1,025,035
Foreign currency transactions (13,497 1,011,538
)
Change in net unrealized appreciation (depreciation) on investment securities (4,317,292
)
NET GAIN (LOSS) (3,305,754
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ (4,195,488
)
OTHER INFORMATION $656,294
Sales Charges Paid to FDC
Deferred sales charges withheld $12,772
by FDC
Exchange fees withheld by FSC $49,403
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
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<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS YEAR ENDED
ENDED FEBRUARY 28,
AUGUST 31, 1994 1994
(UNAUDITED)
Operations $ (889,734 $ (1,061,686
Net investment income (loss) ) )
Net realized gain (loss) 1,011,538 20,812,741
Change in net unrealized appreciation (depreciation) (4,317,292 26,720,283
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (4,195,488 46,471,338
)
Distributions to shareholders - (436,840
From net investment income )
From net realized gain (7,172,822 (13,053,941
) )
TOTAL DISTRIBUTIONS (7,172,822 (13,490,781
) )
Share transactions 162,566,837 372,847,019
Net proceeds from sales of shares
Reinvestment of distributions 6,939,366 13,219,760
Cost of shares redeemed (143,735,805 (350,325,262
) )
Paid in capital portion of redemption fees 525,022 1,063,853
Net increase (decrease) in net assets resulting from share transactions 26,295,420 36,805,370
TOTAL INCREASE (DECREASE) IN NET ASSETS 14,927,110 69,785,927
NET ASSETS
Beginning of period 202,474,659 132,688,732
End of period (including accumulated net investment (loss) of $(889,734) and $0, respectively) $ 217,401,769 $ 202,474,659
OTHER INFORMATION
Shares
Sold 4,086,827 10,038,649
Issued in reinvestment of distributions 187,906 415,252
Redeemed (3,687,475 (9,446,149
) )
Net increase (decrease) 587,258 1,007,752
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
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SIX MONTHS YEAR ENDED TEN MONTHS YEARS ENDED APRIL 30,
ENDED FEBRUARY 28, ENDED
AUGUST 31, 1994 FEBRUARY 28,
SELECTED PER-SHARE DATAC (UNAUDITED) 1994 1993 1992 1991 1990
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 41.83 $ 34.62 $ 32.44 $ 27.06 $ 20.08 $ 18.37
Income from Investment Operations
Net investment income (loss) (.18) (.24)F .13G (.26) .14H (.15)
Net realized and unrealized gain (loss) (.19) 11.04 4.68 5.56 6.46 1.75
Total from investment operations (.37) 10.80 4.81 5.30 6.60 1.60
Less Distributions
From net investment income - (.13) - - - -
In excess of net investment income - - - (.16) - -
From net realized gain (1.50) (3.70) (2.75) - - -
Total distributions (1.50) (3.83) (2.75) (.16) - -
Redemption fees added to paid in capital .10 .24 .12 .24 .38 .11
Net asset value, end of period $ 40.06 $ 41.83 $ 34.62 $ 32.44 $ 27.06 $ 20.08
TOTAL RETURND, E (.34)% 35.62% 16.48% 20.57% 34.76% 9.31%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 217,402 $ 202,475 $ 132,689 $ 105,954 $ 117,055 $ 78,535
Ratio of expenses to average net assetsB 1.57%A 1.54% 1.64%A 1.72% 1.83% 2.09%
Ratio of expenses to average net assets before 1.58%A 1.55% 1.64%A 1.72% 1.83% 2.09%
expense reductionsB
Ratio of net investment income (loss) to average net (.91)% (.65) .52%A (.84)% .61% (.76)%
assets A %
Portfolio turnover rate 125%A 213% 259%A 353% 442% 327%
</TABLE>
1 ANNUALIZED 2 SEE NOTE 9 OF NOTES TO FINANCIAL STATEMENTS. 3 NET
INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING EACH PERIOD. 4 TOTAL RETURNS DO NOT INCLUDE THE ONE TIME
SALES CHARGE AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. 5
THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN. 6 INVESTMENT INCOME (LOSS) PER SHARE
REFLECTS DIVIDENDS RECEIVED IN ARREARS FROM UNISYS CORP. $3.75 SERIES A
WHICH AMOUNTED TO $.03 PER SHARE. 7 INVESTMENT INCOME (LOSS) PER SHARE
REFLECTS DIVIDENDS RECEIVED IN ARREARS WHICH AMOUNTED TO $.10 PER SHARE. 8
INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND WHICH AMOUNTED TO
$.06 PER SHARE AND $.20 PER SHARE RELATING TO A NONRECURRING INITIATIVE TO
INVEST IN DIVIDEND INCOME PRODUCING SECURITIES WHICH WAS IN EFFECT FOR A
PORTION OF 1991.
TELECOMMUNICATIONS PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance: total
percentage change in value, the average annual percentage change, or the
growth of a hypothetical $10,000 investment. Each performance figure
includes changes in a fund's share price, plus reinvestment of any
dividends (income) and capital gains (the profits the fund earns when it
sells stocks that have grown in value).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 6 PAST 1 PAST 5 LIFE OF
AUGUST 31, 1994 MONTH YEAR YEARS FUND
S
TELECOMMUNICATIONS 6.38% 3.51% 85.10% 403.60%
TELECOMMUNICATIONS
(INCL. 3% SALES CHARGE) 3.19% 0.40% 79.54% 388.49%
S&P 500 3.26% 5.47% 58.16% 233.54%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one year, five years, or
since the fund started on July 29, 1985. You can compare these figures to
the performance of the S&P 500 - a common proxy for the U.S. stock market.
This benchmark includes reinvested dividends and capital gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
AUGUST 31, 1994 YEAR YEARS FUND
TELECOMMUNICATIONS 3.51% 13.10% 19.44%
TELECOMMUNICATIONS
(INCL. 3% SALES CHARGE) 0.40% 12.42% 19.04%
S&P 500 5.47% 9.60% 14.16%
AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and
show you what would have happened if the fund had performed at a constant
rate each year.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of growth in the long run
and volatility in the short run. Unlike the broader
market, however, some sectors may not have
a history of growth in the long run. And, as
with all stock funds, the share price and return
of a fund that invests in a sector will vary. That
means if you sell your shares during a sector
downturn, you might lose money. But if you
can identify a sector that is about to
experience rapid growth you may have the
potential for above-average gains.
(checkmark)
$10,000 OVER LIFE OF FUND
Select Telecomm.(096)Standard & Poor's
07/29/85 9700.00 10000.00
07/31/85 9612.70 9926.31
08/31/85 9641.80 9841.93
09/30/85 9263.50 9533.88
10/31/85 9612.70 9974.35
11/30/85 10020.10 10658.59
12/31/85 10670.00 11174.46
01/31/86 10893.10 11237.04
02/28/86 11649.70 12077.57
03/31/86 11892.20 12751.50
04/30/86 12348.10 12607.41
05/31/86 12658.50 13278.12
06/30/86 12716.70 13502.52
07/31/86 12095.90 12747.73
08/31/86 12920.40 13693.61
09/30/86 12125.00 12561.15
10/31/86 12745.80 13285.93
11/30/86 12968.90 13608.78
12/31/86 12784.60 13261.75
01/31/87 14394.80 15048.11
02/28/87 15607.30 15642.51
03/31/87 15413.30 16094.58
04/30/87 15180.50 15951.34
05/31/87 15762.50 16090.11
06/30/87 16363.90 16902.66
07/31/87 16878.00 17759.63
08/31/87 17673.40 18422.06
09/30/87 18032.30 18018.62
10/31/87 14860.40 14137.41
11/30/87 13841.90 12972.49
12/31/87 14729.67 13959.69
01/31/88 15417.32 14547.40
02/29/88 15875.76 15225.31
03/31/88 15945.52 14754.84
04/30/88 16463.75 14918.62
05/31/88 16673.03 15048.41
06/30/88 17540.07 15739.14
07/31/88 17290.92 15679.33
08/31/88 16653.10 15146.23
09/30/88 17679.60 15791.46
10/31/88 18038.37 16230.46
11/30/88 18197.82 15998.37
12/31/88 18818.97 16278.34
01/31/89 20346.19 17469.91
02/28/89 20426.57 17034.91
03/31/89 21260.51 17431.83
04/30/89 22868.11 18336.54
05/31/89 24556.09 19079.17
06/30/89 23956.18 18970.42
07/31/89 25774.87 20683.44
08/31/89 26391.20 21088.84
09/30/89 27361.17 21002.38
10/31/89 26391.20 20515.12
11/30/89 27058.06 20933.63
12/31/89 28394.36 21436.04
01/31/90 25315.08 19997.68
02/28/90 25220.81 20255.65
03/31/90 25807.34 20792.42
04/30/90 24288.65 20272.61
05/31/90 26844.25 22249.19
06/30/90 26310.09 22097.90
07/31/90 25105.60 22027.18
08/31/90 22183.42 20035.93
09/30/90 20748.52 19060.18
10/31/90 21471.21 18978.22
11/30/90 22696.64 20204.21
12/31/90 23738.66 20767.91
01/31/91 24582.28 21673.39
02/28/91 25404.53 23223.04
03/31/91 26120.00 23785.03
04/30/91 26675.29 23842.12
05/31/91 26952.94 24872.10
06/30/91 25831.68 23732.96
07/31/91 27294.65 24838.91
08/31/91 28106.23 25427.59
09/30/91 28469.31 25002.95
10/31/91 29590.57 25337.99
11/30/91 28458.63 24316.87
12/31/91 31062.45 27098.72
01/31/92 31105.61 26594.68
02/29/92 31494.03 26940.42
03/31/92 30382.73 26415.08
04/30/92 31526.39 27191.68
05/31/92 31159.56 27324.92
06/30/92 30435.91 26917.78
07/31/92 32069.11 28018.72
08/31/92 31690.56 27444.33
09/30/92 32307.06 27768.18
10/31/92 32631.54 27865.36
11/30/92 34329.63 28815.57
12/31/92 35820.62 29170.00
01/31/93 35710.44 29415.03
02/28/93 37671.70 29815.08
03/31/93 39214.27 30444.17
04/30/93 39297.02 29707.43
05/31/93 40878.84 30503.58
06/30/93 42641.44 30592.05
07/31/93 43884.31 30469.68
08/31/93 47194.84 31624.48
09/30/93 47872.76 31380.97
10/31/93 49251.21 32030.56
11/30/93 45217.56 31726.27
12/31/93 46464.95 32110.15
01/31/94 47405.63 33201.90
02/28/94 45920.34 32302.13
03/31/94 44484.56 30893.75
04/30/94 45278.56 31289.19
05/31/94 45012.66 31802.34
06/30/94 44974.68 31023.18
07/31/94 47469.05 32040.74
08/31/94 48849.19 33354.41
Let's say you invested $10,000 in Fidelity Select Telecommunications
Portfolio on July 29, 1985, when the fund started, and paid a 3% sales
charge. By August 31, 1994, your investment would have grown to $48,849 - a
388.49% increase. That compares to $10,000 invested in the S&P 500, which
would have grown to $33,354 over the same period - a 233.54% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST 31, 1994
% OF FUND'S
INVESTMENTS
Ameritech Corp. 8.5
Ericsson (L.M.) Telephone Co. Class B ADR 6.8
Southwestern Bell Corp. 6.2
BellSouth Corp. 5.0
Nokia AB 3.7
Philips NV 3.5
Sprint Corporation 3.3
NYNEX Corp. 3.3
Rochester Telephone Corp. 3.2
ALC Communications Corp. 2.8
TOP INDUSTRIES AS OF AUGUST 31, 1994
Row: 1, Col: 1, Value: 20.3
Row: 1, Col: 2, Value: 4.3
Row: 1, Col: 3, Value: 6.6
Row: 1, Col: 4, Value: 8.699999999999999
Row: 1, Col: 5, Value: 9.199999999999999
Row: 1, Col: 6, Value: 50.9
Telephone Services 50.9%
Cellular & Communication
Services 9.2%
Telephone Equipment 8.7%
Special Industrial Machinery 6.6%
Electrical Machinery 4.3%
All Others 20.3%*
* INCLUDES SHORT-TERM INVESTMENTS
TELECOMMUNICATIONS PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
David Felman,
Portfolio Manager of
Select Telecommunications Portfolio
Q. DAVID, HOW HAS THE FUND PERFORMED?
A. Results have been mixed, but are improving. The fund is up 6.38% for
the past six months ending August 31, 1994, and 3.51 % for the year. That
compares to the S&P 500's gain of 3.26% and 5.47% for the same time
periods, respectively.
Q. HOW WOULD YOU DESCRIBE THE INVESTING ENVIRONMENT SINCE YOU TOOK OVER THE
FUND IN APRIL?
A. The biggest variables in the telecommunications industry today are the
opening of currently protected markets and the creation of new markets. In
the future, local phone companies, long distance companies, cable companies
and wireless companies may all compete in each other's markets. For
example, a local phone company may be able to provide its customers with
wireless cable television and long distance service. At the same time, all
these companies may compete in a new market such as video on-demand. How
current markets open to competition and how new markets are created will
depend on many factors, including legislation and technology.
Q. WHAT SIGNIFICANT CHANGES HAVE YOU MADE TO THE FUND?
A. The excitement surrounding the primary telecommunications companies
peaked at the end of 1993 and the stocks headed into
a decline throughout the first quarter of 1994. Cellular stocks, however,
have continued to surprise everyone with their strength. I've increased my
cellular exposure in both equipment and cellular operators. Cellular
subscribers are growing 40% - 50% this year and revenues are up about 30% -
40%. That's very strong growth and I wouldn't be surprised if that pace
continues. I've increased my holdings in Ericsson, a very strong player in
the cellular market that makes equipment for wireless communications. I
sold those regional Bell holdings and other stocks such as Motorola that
did not offer as much wireless leverage as I would have liked.
Q. DO YOU SEE ANY POTENTIAL IN FOREIGN MARKETS?
A. Foreign markets could be very exciting in the next few years both from
an equipment and phone service standpoint. I'm interested anytime I can
find a company with exposure to a rapidly developing nation, as long as
it's not too expensive. One of the most interesting foreign opportunities
could be in Asia. Phone penetration - the number of phone lines and phone
users - is very low there. If you consider the increasing penetration and
the cellular opportunities, the growth potential could be enormous. Several
of my holdings currently supply equipment to the Asian market.
Q. CAN YOU THINK OF ANY STOCKS THAT DIDN'T WORK OUT AS YOU HAD HOPED?
A. Sure. PacTel was recently a top 10 holding in anticipation of
congressional legislation opening up the intrastate long distance market to
the local phone companies. PacTel would have benefited greatly had it been
allowed to carry all the long distance phone calls within California. As
passage of congressional legislation began looking less and less likely in
1994, PacTel disappointed.
Q. WHAT'S YOUR BUYING STRATEGY?
A. I am looking for companies that exhibit strong balance sheets and growth
potential, yet are still a value. I also have a mix right now of both
established and high-growth companies. One example of the former is
Philips. It's a British company that's been around a long time, yet has
successfully restructured itself so it will be better leveraged for a
cyclical upturn in Europe. An example of the latter is Nokia, a newer, high
growth equipment supplier. I also think there are good opportunities in the
more stable Bells such as Ameritech and Southwestern Bell which are growing
and paying good dividends.
Q. WHERE DO YOU SEE THE FUND HEADING?
A. I think AT&T's acquisition of McCaw is emblematic of the direction of
the industry. In that acquisition we see both an opening of markets and the
possibility of completely new products and markets. If you think about this
industry, the reshaping it is undergoing and where it could be 10 years
from now, the prospects are very exciting. The fund will seek to own those
stocks that benefit the most during this reshaping.
FUND FACTS
START DATE: July 29, 1985
SIZE: As of August 31, 1994, more than
$395 million
MANAGER: David Felman, since April 1994;
also follows the specialty chemicals,
construction and engineering industries; joined
Fidelity in 1992
(checkmark)
TELECOMMUNICATIONS PORTFOLIO
INVESTMENTS AUGUST 31, 1994 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 87.5%
SHARES VALUE (NOTE 1)
ADVERTISING - 0.5%
ADVERTISING AGENCIES - 0.5%
ADVO-Systems, Inc. 79,500 $ 1,430,998
Foote Cone & Belding
Communications, Inc. 12,500 537,500
1,968,498
BROADCASTING - 3.7%
CABLE TV OPERATORS - 3.1%
Gaylord Entertainment Co. Class A 57,400 1,305,850
International Family Entertainment
Class B (a) 1,500 23,813
Tele Communications, Inc. Class A (a) 9,750 219,984
Time Warner, Inc. 199 7,587
Viacom, Inc. (a) 115,700 4,382,138
Viacom, Inc. (non-vtg.) (a) 195,100 6,438,300
12,377,672
TELEVISION BROADCASTING - 0.6%
Grupo Televisa GDS (b) 5,000 293,125
Heritage Media Corp. Class A (a) 19,700 428,475
Multimedia, Inc. (a) 50,000 1,562,500
2,284,100
TOTAL BROADCASTING 14,661,772
CELLULAR - 9.2%
CELLULAR & COMMUNICATION SERVICES - 9.2%
Airtouch Communications (a) 165,900 4,686,675
Call-Net Enterprises Class B (a)(b) 20,000 142,643
Cellular Communications, Inc.
(redeemable) (a):
Series A 13,000 692,250
Class P 51,100 2,776,263
Century Telephone Enterprises, Inc. 200,887 6,051,721
IDB Communications Group, Inc. 214,400 2,063,600
McCaw Cellular Communications, Inc.
Class A (a) 66,000 3,572,250
Nextel Communications, Inc. Class A (a) 5,000 130,625
Onecomm Corp. (a) 15,000 397,500
Rogers Cantel Mobile Communications,
Inc. Class B (non-vtg.) (a) 100,600 2,952,763
Rogers Communications, Inc. Class B (a) 620,000 10,431,221
Vanguard Cellular Systems, Inc.
Class A 9,300 260,400
Vodafone Group PLC sponsored ADR 69,600 2,227,200
36,385,111
COMMUNICATIONS EQUIPMENT - 8.5%
TELEPHONE EQUIPMENT - 8.5%
ADC Telecommunications, Inc. (a) 3,300 153,450
Boston Technology, Inc. (a) 20,000 242,500
DSC Communications Corp. (a) 196,200 5,616,225
Ericsson (L.M.) Telephone Co.
Class B ADR 495,000 26,791,875
Inter-Tel, Inc. (a) 6,500 56,875
InterVoice, Inc. (a) 10,000 116,875
Newbridge Networks Corp. (a) 18,400 588,800
33,566,600
COMPUTER SERVICES & SOFTWARE - 1.8%
CAD/CAM/CAE - 0.2%
ECI Telecom Ltd. 10,000 180,625
EIS International, Inc. (a) 55,500 652,125
832,750
SHARES VALUE (NOTE 1)
DATA PROCESSING - 1.6%
Automatic Data Processing, Inc. 70,000 $ 3,788,750
Ceridian Corp. (a) 100,000 2,675,000
6,463,750
TOTAL COMPUTER SERVICES & SOFTWARE 7,296,500
COMPUTERS & OFFICE EQUIPMENT - 0.5%
COMPUTER PERIPHERALS - 0.5%
Norand Corp. (a) 65,000 2,161,250
ELECTRICAL EQUIPMENT - 4.4%
ELECTRICAL EQUIPMENT - WHOLESALE - 0.1%
Antec Corp. (a) 5,900 222,725
ELECTRICAL MACHINERY - 4.3%
Philips Electronics 101,100 3,281,691
Philips NV 419,800 13,695,975
16,977,666
TOTAL ELECTRICAL EQUIPMENT 17,200,391
ELECTRONICS - 4.0%
ELECTRONIC PARTS - WHOLESALE - 0.3%
Marshall Industries (a) 40,600 1,020,075
SEMICONDUCTORS - 3.7%
Intel Corp. 66,800 4,392,100
Motorola, Inc. 190,100 10,265,400
Texas Instruments, Inc. 100 7,788
14,665,288
TOTAL ELECTRONICS 15,685,363
ENGINEERING - 1.0%
WATER & SEWER PIPES - 1.0%
Glenayre Technologies, Inc. 69,300 3,932,775
INDUSTRIAL MACHINERY & EQUIPMENT - 2.9%
SPECIAL INDUSTRIAL MACHINERY - 2.9%
Nokia AB sponsored ADR (a) 64,500 3,531,375
Nokia AB Free shares 74,900 8,119,320
11,650,695
LEASING & RENTAL - 0.2%
VIDEO TAPE RENTAL - 0.2%
Blockbuster Entertainment Corp. 36,600 947,025
MEDICAL FACILITIES MANAGEMENT - 0.0%
HEALTH SERVICES - 0.0%
Lambert Communications (a) 190,000 5,938
PRINTING - 0.6%
MANIFOLD BUSINESS FORMS - 0.6%
Reynolds & Reynolds Co. Class A 94,400 2,489,800
TELEPHONE SERVICES - 50.2%
ALC Communications Corp. (a) 312,100 11,157,575
ALLTEL Corp. 1,300 36,238
AT & T Corporation 95,000 5,201,250
Ameritech Corp. 819,300 33,898,538
Bell Atlantic Corp. 202,700 11,097,825
BellSouth Corp. 331,200 19,665,000
British Telecommunications PLC ADR 5,000 297,500
Cincinnati Bell, Inc. 30,000 566,250
Comsat Corp., Series 1 278,750 7,003,594
DDI Corp. Ord. 890 9,148,703
GTE Corp. 17,773 564,293
Koninklijke PPT Nederland 149,300 4,560,192
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
TELEPHONE SERVICES - CONTINUED
Koninklijke PTT Nederland (b) 44,200 $ 1,350,037
Koninklijke PTT Nederland sponsored
ADR (b) 20,000 610,000
LCI International, Inc. (a) 143,900 2,878,000
LDDS Communications, Inc. (a) 67,470 1,568,678
MCI Communications Corp. 20,000 486,250
MFS Communications, Inc. (a) 10,000 352,500
Nippon Telegraph & Telephone Ord. 442 4,022,994
NYNEX Corp. 338,700 13,082,288
Pacific Telesis Group 173,100 5,712,300
Rochester Telephone Corp. 572,900 12,890,250
Southern New England
Telecommunications Corp. 58,400 1,919,900
Southwestern Bell Corp. 595,600 24,642,950
Sprint Corporation 332,900 13,191,163
Telebras PN (Pfd. Reg.) 9,700,000 570,651
Telebras (rights) (a) 221,130 1,055
Telecom Argentina Stet France 53,500 390,609
Tele Denmark Class B AS 10,000 537,014
Telefonica Argentina Class B 20,500 149,262
Telefonica de Espana SA sponsored ADR 20,000 827,500
Telephone & Data Systems, Inc. 199,712 8,687,472
U.S. West, Inc. 56,700 2,289,263
199,357,094
TOTAL COMMON STOCKS
(Cost $334,034,218) 347,308,812
PREFERRED STOCKS - 4.4%
CONVERTIBLE PREFERRED STOCKS - 0.1%
TELEPHONE SERVICES - 0.1%
LCI International (a) 10,000 275,000
NONCONVERTIBLE PREFERRED STOCKS - 4.3%
INDUSTRIAL MACHINERY & EQUIPMENT - 3.7%
SPECIAL INDUSTRIAL MACHINERY - 3.7%
Nokia AB 136,100 14,780,163
TELEPHONE SERVICES - 0.6%
Stet (Societa Finanziaria Telefonica) Spa (a) 945,200 2,462,813
TOTAL NONCONVERTIBLE PREFERRED STOCKS 17,242,976
TOTAL PREFERRED STOCKS
(Cost $11,862,480) 17,517,976
CORPORATE BONDS - 0.2%
PRINCIPAL
AMOUNT
CONVERTIBLE BONDS - 0.2%
COMMUNICATIONS EQUIPMENT - 0.2%
TELEPHONE EQUIPMENT - 0.2%
Ericsson (L.M.) Telephone Co.
4 1/4%, 6/30/00
(Cost $480,442) $ 345,700 639,545
REPURCHASE AGREEMENTS - 7.9%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account, at 4.83% dated
8/31/94 due 9/1/94 $ 31,256,193 $ 31,252,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $377,629,140) $ 396,718,333
LEGEND
1. Non-income producing
2. 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 period
end, the value of these securities amounted to $2,395,805 or 0.6% of net
assets.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $261,453,599 and $252,402,675, respectively (see Note 4 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $113,085 for the period
(see Note 5 of Notes to Financial Statements).
At the period end, the value of securities loaned and the value of
collateral amounted to $1,344,563 and $1,384,500, respectively (see Note 7
of Notes to Financial Statements).
The maximum loan and average daily loan balances during the periods for
which loans were outstanding amounted to $6,463,000 and $5,133,250,
respectively. The weighted average interest rate paid was 4.1% (see Note 8
of Notes to Financial Statements).
Distribution of investments by country, as a percentage of total value of
investment in securities, is as follows:
United States 73.9%
Sweden 6.9
Finland 6.7
Netherland 5.8
Canada 3.6
Japan 1.1
Others (individually less than 1%) 2.0
TOTAL 100.0%
INCOME TAX INFORMATION
At August 31, 1994, the aggregate cost of investment securities for income
tax purposes was $378,146,030. Net unrealized appreciation aggregated
$18,572,303, of which $32,148,206 related to appreciated investment
securities and $13,575,903 related to depreciated investment securities.
TELECOMMUNICATIONS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
AUGUST 31, 1994 (UNAUDITED)
ASSETS
Investment in securities, at value (including repurchase agreements of $31,252,000) (cost $377,629,140) - See $ 396,718,333
accompanying schedule
Cash 881
Receivable for investments sold 4,175,150
Receivable for fund shares sold 1,768,961
Dividends receivable 168,213
Interest receivable 7,958
Redemption fees receivable 1,299
Other receivables 67,214
Prepaid expenses 47,741
TOTAL ASSETS 402,955,750
LIABILITIES
Payable for investments purchased $ 3,385,148
Payable for fund shares redeemed 2,429,323
Accrued management fee 200,294
Other payables and accrued expenses 359,576
Collateral on securities loaned, 1,384,500
at value
TOTAL LIABILITIES 7,758,841
NET ASSETS $ 395,196,909
Net Assets consist of:
Paid in capital $ 375,616,578
Undistributed net investment income 1,455,657
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions (963,899
)
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign
currencies 19,088,573
NET ASSETS, for 10,243,612 shares outstanding $ 395,196,909
NET ASSET VALUE and redemption price per share ($395,196,909 (divided by) shares) $38.58
Maximum offering price per share (100/97 of $38.58) $39.77
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED AUGUST 31, 1994 (UNAUDITED)
INVESTMENT INCOME $ 3,381,371
Dividends
Interest (including security lending fees of $71,173) 1,016,295
TOTAL INCOME 4,397,666
EXPENSES
Management fee $ 1,155,620
Transfer agent 1,536,524
Fees
Redemption fees (109,347
)
Accounting and security lending fees 190,034
Non-interested trustees' compensation 1,076
Custodian fees and expenses 31,818
Registration fees 48,436
Audit 23,426
Legal 4,618
Interest 2,332
Reports to shareholders 20,847
Miscellaneous 693
Total expenses before reductions 2,906,077
Expense reductions (30,067 2,876,010
)
NET INVESTMENT INCOME 1,521,656
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities (37,987
)
Foreign currency transactions (18,754 (56,741
) )
Change in net unrealized appreciation (depreciation) on:
Investment securities 20,647,592
Assets and liabilities in foreign currencies (620 20,646,972
)
NET GAIN (LOSS) 20,590,231
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 22,111,887
OTHER INFORMATION $957,975
Sales Charges Paid to FDC
Deferred sales charges withheld $10,731
by FDC
Exchange fees withheld by FSC $86,408
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS YEAR ENDED
ENDED FEBRUARY 28,
AUGUST 31, 1994 1994
(UNAUDITED)
Operations $ 1,521,656 $ 2,274,500
Net investment income
Net realized gain (loss) (56,741 68,364,890
)
Change in net unrealized appreciation (depreciation) 20,646,972 (16,004,271
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 22,111,887 54,635,119
Distributions to shareholders (289,902 (1,564,699
From net investment income ) )
From net realized gain (7,575,678 (37,644,735
) )
TOTAL DISTRIBUTIONS (7,865,580 (39,209,434
) )
Share transactions 140,611,006 778,655,072
Net proceeds from sales of shares
Reinvestment of distributions 7,698,934 38,499,190
Cost of shares redeemed (138,433,650 (596,254,864
) )
Paid in capital portion of redemption fees 49,134 361,815
Net increase (decrease) in net assets resulting from share transactions 9,925,424 221,261,213
TOTAL INCREASE (DECREASE) IN NET ASSETS 24,171,731 236,686,898
NET ASSETS
Beginning of period 371,025,178 134,338,280
End of period (including undistributed net investment income of $1,455,657 and $1,033,664,
respectively) $ 395,196,909 $ 371,025,178
OTHER INFORMATION
Shares
Sold 3,871,578 19,999,193
Issued in reinvestment of distributions 218,348 1,056,452
Redeemed (3,845,905 (14,984,685
) )
Net increase (decrease) 244,021 6,070,960
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS YEAR ENDED TEN MONTHS YEARS ENDED APRIL 30,
ENDED FEBRUARY 28, ENDED
AUGUST 31, 1994 FEBRUARY 28,
SELECTED PER-SHARE DATAC (UNAUDITED) 1994 1993 1992 1991 1990
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 37.10 $ 34.19 $ 29.22 $ 24.98 $ 23.19 $ 22.76
Income from Investment Operations
Net investment income .15 .25 .29 .36 .31 .46
Net realized and unrealized gain (loss) 2.14 7.00 5.29 4.13 1.86 1.02
Total from investment operations 2.29 7.25 5.58 4.49 2.17 1.48
Less Distributions
From net investment income (.03) (.20) (.18) (.28) (.43) (.12)
From net realized gain (.78) (4.18) (.48) - - (.98)
Total distributions (.81) (4.38) (.66) (.28) (.43) (1.10)
Redemption fees added to paid in capital - .04 .05 .03 .05 .05
Net asset value, end of period $ 38.58 $ 37.10 $ 34.19 $ 29.22 $ 24.98 $ 23.19
TOTAL RETURND, E 6.38% 21.90% 19.49% 18.19% 9.83% 6.21%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 395,197 $ 371,025 $ 134,338 $ 78,533 $ 55,162 $ 77,019
Ratio of expenses to average net assetsB 1.52%A 1.53% 1.74%A 1.90% 1.97% 1.85%
Ratio of expenses to average net assets before 1.54%A 1.54% 1.74%A 1.90% 1.97% 1.85%
expense reductionsB
Ratio of net investment income to average net .80%A .64% 1.16%A 1.32% 1.35% 1.83%
assets
Portfolio turnover rate 152%A 241% 115%A 20% 262% 341%
</TABLE>
A ANNUALIZED
B SEE NOTE 9 OF NOTES TO FINANCIAL STATEMENTS.
C NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
D TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
E THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
MONEY MARKET PORTFOLIO
PERFORMANCE
PERFORMANCE
To measure a money market fund's performance, you can look at either total
return or yield. Total return reflects both the change in a fund's share
price over a given period, and reinvestment of its dividends (or income).
Yield measures the income paid by a fund. Since a money market fund tries
to maintain a $1 share price, yield is an important measure of performance.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 6 PAST 1 PAST 5 LIFE OF
AUGUST 31, 1994 MONTH YEAR YEARS FUND
S
MONEY MARKET 1.78% 3.03% 27.29% 67.45%
MONEY MARKET
(INCL. 3% SALES CHARGE) -1.28% -0.06% 23.47% 62.42%
Average All Taxable
Money Market Fund 1.75% 3.11% 27.06% 66.55%
Consumer Price Index 1.57% 2.90% 19.58% 37.96%
CUMULATIVE TOTAL RETURNS reflect actual performance over a specific period.
In this case, past six months, one year, five years, or since the fund
started on August 30, 1985. For example, if you invested $1,000 in a fund
that had a 5% return over the past year, you would end up with $1,050.
Comparing the fund's performance to the consumer price index (CPI) helps
show how your investment did compared to inflation. To measure how the fund
stacked up against its peers, you can compare its return to the average
taxable money market fund's total return. This average currently reflects
the performance of 696 money market funds tracked by IBC/Donoghue's MONEY
FUND REPORT.(registered trademark) (The periods covered by the CPI numbers
are the closest available match to those covered by the fund.)
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
AUGUST 31, 1994 YEAR YEARS FUND
MONEY MARKET 3.03% 4.94% 5.89%
MONEY MARKET
(INCL. 3% SALES CHARGE) -0.06% 4.31% 5.53%
Average All Taxable
Money Market Fund 3.11% 4.91% 5.83%
Consumer Price Index 2.90% 3.64% 3.64%
AVERAGE ANNUAL TOTAL RETURNS take the fund's actual (or cumulative) return
and show you what would have happened if the fund had achieved that return
by performing at a constant rate each year.
YIELD
Row: 1, Col: 1, Value: 2.53
Row: 1, Col: 2, Value: 2.64
Row: 1, Col: 3, Value: 2.42
Row: 2, Col: 1, Value: 2.37
Row: 2, Col: 2, Value: 2.69
Row: 2, Col: 3, Value: 2.35
Row: 3, Col: 1, Value: 2.45
Row: 3, Col: 2, Value: 2.79
Row: 3, Col: 3, Value: 2.3
Row: 4, Col: 1, Value: 3.64
Row: 4, Col: 2, Value: 3.51
Row: 4, Col: 3, Value: 2.34
Row: 5, Col: 1, Value: 4.29
Row: 5, Col: 2, Value: 4.08
Row: 5, Col: 3, Value: 2.42
4% -
3% -
2% -
1% -
0%
Money Market
Average All
Taxable Money
Market Fund
MMDA
8/31/93 11/30/93 2/28/94 5/31/94 8/31/94
Money Market 2.53% 2.37% 2.45% 3.64% 4.29%
Average All
Taxable Money
Market Fund 2.64% 2.69% 2.79% 3.51% 4.08%
MMDA 2.42% 2.35% 2.30% 2.34% 2.42%
YIELD refers to the income paid by the fund over a given period. Yields for
money market funds are usually for seven-day periods, expressed as annual
percentage rates. A yield that assumes income earned is reinvested or
compounded is called an effective yield. The chart above shows the fund's
current seven-day yield at quarterly intervals over the past year. This is
compared to similar yields for the average all taxable money market fund
and the average bank money market deposit account (MMDA). Figures for the
average taxable money market fund are from the IBC/Donoghue's MONEY FUND
REPORT.(registered trademark) The MMDA average is supplied by BANK RATE
MONITOR.(Trademark)
COMPARING PERFORMANCE
There are some important differences between
a bank money market deposit account (MMDA)
and a money market fund. First, the U.S.
government neither insures nor guarantees a
money market fund. In fact, there is no
assurance that a money fund will maintain a $1
share price. Second, a money market fund
returns to its shareholders income earned by the
fund's investments after expenses. This is in
contrast to banks, which set their MMDA rates
periodically based on current interest rates,
competitors' rates, and internal criteria.
(checkmark)
MONEY MARKET PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
John Todd,
Portfolio Manager of Fidelity Select Money
Market Portfolio
Q. JOHN, SHORT-TERM INTEREST RATES HAD BEGUN HEADING UP AT THE TIME OF THE
LAST REPORT. WHAT HAS HAPPENED SINCE?
A. More of the same. The first increase in short-term interest rates
occurred on February 4, 1994, before the start of the current period. I
mention it again only because it was such an important turning point in
Federal Reserve policy. February 4 marked the end of a more accommodative
stance designed to promote economic growth. This was the first tightening
of monetary policy in nearly five years and signaled the beginning of a
new, more restrictive stance aimed at choking off inflation before it
becomes a problem. Since February, the Fed has raised rates again on four
separate occasions.
Q. WHAT ARE THE NUMBERS?
A. We started 1994 with a stable federal funds rate of 3.00%. That's the
rate banks charge each other for overnight loans, and it influences other
short-term rates. The first increase in February brought us up to 3.25%.
Three more increases followed in March, April and May, totaling a full
percentage point. The final increase was half a point in August. So by the
end of the period, the federal funds rate stood at 4.75%.
Q. HOW DID RISING RATES AFFECT YOUR STRATEGY?
A. The fund's average maturity was 64 days at the end of February. That's
longer than I would normally want it to be during periods when I'm
expecting rates to go up. However, after the initial rate increase in
February the market sold off sharply, and there were bargains to be had at
the longer end of the maturity scale. Later, as the market recovered, I
positioned the fund for a rising-rate environment by scaling back the
average maturity. From March through the end of summer, the fund's average
maturity hovered between 35 and 45 days, reaching 48 days at the end of
August.
Q. ARE VARIABLE RATE INSTRUMENTS PART OF YOUR STRATEGY?
A. Definitely. Variable rate instruments are valuable tools in a
rising-rate environment because they offer rates that reset in line with
prevailing rates on a monthly, weekly or even daily basis. Variable rate
instruments totaled about 18% of the fund's investments at the end of
February. That number has been climbing steadily ever since, to 33% at the
end of August.
Q. HOW DID THE FUND PERFORM?
A. The fund's seven-day yield on August 31, 1994, was 4.29%, compared to
2.45% six months ago. That reflects the impact of the Fed's rate increases.
The fund's total return for the latest six-month period was 1.78%, compared
to 1.75% for the average all taxable money market fund, according to
IBC/Donoghue.
Q. ARE RATES LIKELY TO CONTINUE RISING?
A. Yes, I think there's a good chance they will. The latest increase in
August suggests that the Fed is determined to raise rates to whatever level
is needed to slow the pace of economic growth to a sustainable,
non-inflationary rate. Warning signs have appeared lately that suggest
price pressures are building. Capacity utilization has been edging toward
84%, and labor shortages are developing in some parts of the country.
Accordingly, I wouldn't be surprised to see the federal funds rate trading
at 5% or perhaps higher by the end of the year. But no matter how high
rates go from here, one thing seems clear: future increases will be less
predictable, both in timing and in magnitude.
Q. WHAT DOES THAT MEAN FOR YOUR STRATEGY GOING FORWARD?
A. It puts a premium on being nimble. As long as rates are rising, I'll
generally want to keep the fund's average maturity at the short end of the
scale. So I'll likely continue to rely heavily on variable rate
instruments, particularly those with rates that reset at shorter intervals.
But I'll also want to stay alert to opportunities to selectively lock in
higher rates at longer maturities. What does that mean in terms of the
fund's average maturity? Probably that it will vary between 35 and 50 days
in the months ahead; longer when buying opportunities arise and shorter
when a more defensive posture is required.
FUND FACTS
START DATE: August 30, 1985
SIZE: as of August 31, 1994, more than
$574 million
MANAGER: John Todd, since January 1991;
manager, Spartan Money Market Fund, since
1989; Daily Money Fund and Fidelity
Institutional Cash Portfolios: Money Market,
since 1992; joined Fidelity in 1981
(checkmark)
MONEY MARKET PORTFOLIO
INVESTMENTS AUGUST 31, 1994 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
BANKERS' ACCEPTANCES - 1.8%
ANNUALIZED YIELD
DUE AT TIME OF PRINCIPAL VALUE
DATE PURCHASE AMOUNT (NOTE 1)
DOMESTIC BANKERS ACCEPTANCE - 0.5%
CHEMICAL BANK
9/1/94 4.08% $ 2,830,430 $ 2,830,430
NEW YORK BRANCH, YANKEE DOLLAR, FOREIGN BANKS - 1.3%
DAI-ICHI KANGYO BANK, LTD.
9/6/94 4.76 8,000,000 7,994,755
Total Bankers' Acceptance 10,825,185
CERTIFICATES OF DEPOSIT - 10.9%
NEW YORK BRANCH, YANKEE DOLLAR, FOREIGN BANKS - 10.9%
CREDIT LYONNAIS (A)
9/1/94 4.92 15,000,000 15,000,000
MITSUBISHI BANK, LTD.
10/31/94 4.94 10,000,000 10,000,164
12/19/94 4.95 11,000,000 11,000,000
ROYAL BANK OF CANADA
11/30/94 5.00 11,000,000 10,996,606
SOCIETE GENERALE
1/17/95 5.18 10,000,000 10,000,000
SUMITOMO BANK, LTD.
10/3/94 4.83 10,000,000 10,000,000
Total Certificates of Deposit 66,996,770
COMMERCIAL PAPER - 28.9%
BHF FINANCE (DELAWARE), INC.
9/22/94 4.80 15,000,000 14,958,175
CANADIAN WHEAT BOARD
11/18/94 4.91 11,000,000 10,884,408
DEAN WITTER, DISCOVER & CO.
11/15/94 4.91 15,000,000 14,848,437
EXXON ASSET MANAGEMENT CO.
10/13/94 4.80 15,000,000 14,916,525
FORD MOTOR CREDIT CORP.
10/12/94 4.80 15,000,000 14,918,512
11/16/94 4.88 10,000,000 9,898,667
GENERAL ELECTRIC CAPITAL CORP.
9/19/94 4.09 9,000,000 8,982,000
12/12/94 5.02 15,000,000 14,790,900
GENERAL MOTORS ACCEPTANCE CORP.
10/24/94 4.89 15,000,000 14,892,896
10/31/94 4.81 10,000,000 9,920,833
GRAND METROPOLITAN FINANCE
10/24/94 5.12 20,000,000 19,852,778
ITT CORP.
10/24/94 4.87 10,000,000 9,928,892
NEW CENTER ASSET TRUST
11/21/94 4.94 17,000,000 16,813,340
UNOCAL CORP.
9/15/94 4.89 2,000,000 1,996,208
Total Commercial Paper 177,602,571
FEDERAL AGENCIES - 13.0%
ANNUALIZED YIELD
DUE AT TIME OF PRINCIPAL VALUE
DATE PURCHASE AMOUNT (NOTE 1)
FEDERAL FARM CREDIT BANK - DISCOUNT NOTES - 1.6%
11/14/94 4.81% $ 10,000,000 $ 9,902,361
FEDERAL HOME LOAN MORTGAGE CORP. - DISCOUNT NOTES - 0.5%
9/29/94 3.33 2,900,000 2,892,669
FEDERAL NATIONAL MORTGAGE ASSOC. - DISCOUNT NOTES - 10.9%
10/5/94 4.29 7,805,000 7,774,040
10/26/94 4.45 20,000,000 19,867,084
10/27/94 4.50 25,000,000 24,828,889
1/19/95 5.10 15,000,000 14,709,500
67,179,513
Total Federal Agencies 79,974,543
U.S. TREASURY OBLIGATIONS - 2.4%
U.S. TREASURY BILLS
3/2/95 5.08 15,000,000 14,624,625
BANK NOTES - 9.0%
COMERICA BANK-DETROIT (A)
9/1/94 5.46 10,000,000 10,000,000
HUNTINGTON NATIONAL BANK (A)
9/1/94 4.85 12,000,000 11,989,841
9/1/94 5.72 3,000,000 2,997,002
PNC BANK, N.A.
9/6/94 4.86 (a) 15,000,000 14,983,825
9/7/94 4.90 (a) 10,000,000 9,986,290
11/3/94 4.74 5,000,000 4,988,939
Total Bank Notes 54,945,897
FOREIGN GOVERNMENT OBLIGATIONS (U.S. DOLLARS) - 3.2%
GOVERNMENT OF CANADA
10/17/94 4.50 20,000,000 19,887,556
MASTER NOTES (A) - 4.2%
J.P. MORGAN SECURITIES
9/1/94 5.11 12,000,000 12,000,000
9/1/94 5.13 9,000,000 9,000,000
MORGAN STANLEY GROUP, INC.
9/1/94 5.08 5,000,000 5,000,000
Total Master Notes 26,000,000
MEDIUM-TERM NOTES (A) - 12.3%
ANNUALIZED YIELD
DUE AT TIME OF PRINCIPAL VALUE
DATE PURCHASE AMOUNT (NOTE 1)
ABBEY NATIONAL TREASURY SERVICE
9/30/94 4.77% $ 15,000,000 $ 15,000,000
ABBEY NATIONAL (UK), PLC
9/1/94 5.48 15,000,000 14,998,060
GENERAL MOTORS ACCEPTANCE CORP.
11/7/94 4.86 5,000,000 5,000,000
GOLDMAN SACHS GROUP, L.P. (THE) (B)
9/1/94 4.48 4,000,000 4,000,000
12/16/94 4.91 4,000,000 4,000,000
NORWEST CORPORATION
9/15/94 4.54 8,000,000 8,000,000
KINGDOM OF SWEDEN - A
10/23/94 4.81 3,500,000 3,500,000
KINGDOM OF SWEDEN - B
11/23/94 5.00 3,500,000 3,500,000
KINGDOM OF SWEDEN - C
9/23/94 4.63 3,500,000 3,500,000
SWEDISH NATIONAL HOUSING FINANCE CORP. A
9/20/94 4.59 2,000,000 2,000,000
SWEDISH NATIONAL HOUSING FINANCE CORP. B
10/5/94 4.97 1,000,000 1,000,000
SWEDISH NATIONAL HOUSING FINANCE CORP. C
11/23/94 5.03 1,000,000 1,000,000
U.S. LEASING INTERNATIONAL, INC.
9/16/94 4.86 10,000,000 10,013,303
Total Medium-Term Notes 75,511,363
SHORT-TERM NOTES (A) (C) - 5.5%
SMM TRUST COMPANY (1993-F)
11/15/94 4.91 20,000,000 20,000,000
SMM TRUST COMPANY (1994-E)
10/13/94 4.64 12,000,000 12,000,000
10/13/94 4.73 2,000,000 1,998,990
Total Short-Term Notes 33,998,990
TIME DEPOSITS - 3.3%
DAI-ICHI KANGYO BANK, LTD.
9/6/94 4.50 10,000,000 10,000,000
SUMITOMO BANK, LTD.
9/1/94 4.75 10,000,000 10,000,000
Total time deposits 20,000,000
MUNICIPAL BONDS - 0.8%
LOUISIANA PUBLIC FACILITIES AUTHORITY (A)
9/7/94 4.71 4,600,000 4,600,000
REPURCHASE AGREEMENTS - 4.7%
MATURITY
AMOUNT
Investments in repurchase agreements,
(U.S. Treasury Obligations), in a joint
trading account, at 4.89% dated
8/31/94 due 9/1/94 $ 28,966,934 $ 28,963,000
TOTAL INVESTMENTS - 100% $ 613,930,500
TOTAL COST FOR INCOME TAX PURPOSES - $613,930,500
LEGEND
1. The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
2. 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 period
end, the value of these securities amounted to $8,000,000 or 1.4% of net
assets.
3. Restricted securities - Investment in securities not registered under
the Securities Act of 1933 (see Note 2 of Notes to Financial Statements).
Additional information on each holding is as follows:
ACQUISITION ACQUISITION
SECURITY DATE COST
SMM Trust Company:
(1993-F) 11/12/93 $20,000,000
(1994-E) 4/13/94 $12,000,000
(1994-E) 5/23/94 $1,998,534
INCOME TAX INFORMATION
At February 28, 1994, the fund had a capital loss carryforward of
approximately $65,000 of which $2,000, $31,000, $5,000, $21,000 and $6,000
will expire on February 28, 1996, 1997, 1998, 2000, and 2002, respectively.
MONEY MARKET PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
AUGUST 31, 1994 (UNAUDITED)
ASSETS
Investment in securities, at value (including repurchase agreements of $28,963,000) - See accompanying $ 613,930,500
schedule
Receivable for investments sold 41,242,376
Receivable for fund shares sold 67,796,461
Interest receivable 1,601,480
TOTAL ASSETS 724,570,817
LIABILITIES
Payable for investments purchased $ 56,114,097
Payable for fund shares redeemed 93,347,320
Dividends payable 69,958
Accrued management fee 109,821
Other payables and accrued expenses 427,089
TOTAL LIABILITIES 150,068,285
NET ASSETS $ 574,502,532
Net Assets consist of:
Paid in capital $ 574,548,212
Accumulated net realized gain (loss) on investments (45,680
)
NET ASSETS, for 574,542,954 shares outstanding $ 574,502,532
NET ASSET VALUE, offering price and redemption price per share ($574,502,532 (divided by) shares) $1.00
Maximum offering price per share $1.03
(100/97 of $1.00)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED AUGUST 31, 1994 (UNAUDITED)
INTEREST INCOME $ 15,299,024
EXPENSES
Management fee $ 687,679
Transfer agent fees 1,367,344
Accounting fees and expenses 51,815
Non-interested trustees' compensation 1,953
Custodian fees and expenses 19,177
Registration fees 340,273
Audit 42,600
Legal 10,784
Reports to shareholders 12,488
Miscellaneous 739
TOTAL EXPENSES 2,534,852
NET INTEREST INCOME 12,764,172
NET REALIZED GAIN (LOSS) ON 18,989
INVESTMENTS
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 12,783,161
OTHER INFORMATION
Sales charges paid to FDC $1,879,602
Deferred sales charges withheld $92,060
by FDC
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS ENDED YEAR ENDED
AUGUST 31, 1994 FEBRUARY 28,
(UNAUDITED) 1994
Operations $ 12,764,172 $ 11,974,045
Net interest income
Net realized gain (loss) 18,989 (5,966)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 12,783,161 11,968,079
Dividends to shareholders from net interest income (12,764,172) (11,974,045)
Share transactions at net asset value of $1.00 per share 2,687,092,699 4,535,732,020
Proceeds from sales of shares
Reinvestment of dividends from net interest income 11,807,813 10,826,362
Cost of shares redeemed (2,643,073,837) (4,459,028,175)
Net increase (decrease) in net assets resulting from 55,826,675 87,530,207
share transactions
TOTAL INCREASE (DECREASE) IN NET ASSETS 55,845,664 87,524,241
NET ASSETS
Beginning of period 518,656,868 431,132,627
End of period $ 574,502,532 $ 518,656,868
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS YEAR ENDED TEN MONTHS YEARS ENDED APRIL 30,
ENDED FEBRUARY 28, ENDED
AUGUST 31, 1994 FEBRUARY 28,
SELECTED PER-SHARE DATA (UNAUDITED) 1994 1993 1992 1991 1990
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Income from Investment Operations .018 .026 .026 .048 .073 .081
Net interest income
Less Distributions (.018) (.026) (.026) (.048) (.073) (.081)
From net interest income
Net asset value, end of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
TOTAL RETURN B 1.78% 2.62% 2.63% 4.93% 7.50% 8.45%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 574,503 $ 518,657 $ 431,133 $ 542,620 $ 608,394 $ 643,272
Ratio of expenses to average net assets .70%A .72% .56%A .64% .73% .83%
Ratio of net interest income to average net assets 3.53%A 2.59% 3.09%A 4.84% 7.20% 8.13%
</TABLE>
A ANNUALIZED
B TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
NOTES TO FINANCIAL STATEMENTS
For the period ended August 31, 1994 (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Select Portfolios (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 trust
has thirty-five equity funds (the fund or the funds) which invest primarily
in securities of companies whose principal business activities fall within
specific industries, and a money market fund which invests in high quality
money market instruments. Each fund is authorized to issue an unlimited
number of shares. The American Gold Portfolio and the Precious Metals and
Minerals Portfolio may also invest in certain precious metals. The
following summarizes the significant accounting policies of the funds:
SECURITY VALUATION:
EQUITY FUNDS. Securities for which exchange quotations are readily
available are valued at the last sale price, or if no sale price, at the
closing bid price. Securities (including restricted securities) for which
exchange quotations are not readily available (and in certain cases debt
securities which trade on an exchange), are valued primarily using
dealer-supplied valuations or at their fair value as determined in good
faith following consistently applied procedures under the general
supervision of the Board of Trustees. Short-term securities maturing within
sixty days are valued at amortized cost or original cost plus accrued
interest, both of which approximate current value. Direct investments in
precious metals in the form of bullion are valued at the most recent bid
price quoted by a major bank on the New York Commodities Exchange.
MONEY MARKET FUND. As permitted under Rule 2a-7 of the 1940 Act, and
certain conditions therein, securities are valued initially at cost and
thereafter assume a constant amortization to maturity of any discount or
premium.
FOREIGN CURRENCY TRANSLATION. The accounting records of each fund are
maintained in U.S. dollars. Investment securities and other assets and
liabilities denominated in a foreign currency are translated into U.S.
dollars at the prevailing rates of exchange at period end. Purchases and
sales of securities, income receipts, and expense payments are translated
into U.S. dollars at the prevailing exchange rate on the respective dates
of the transactions.
Effective March 1, 1994, each fund adopted Statement of Position (SOP)
93-4: Foreign Currency Accounting and Financial Statement Presentation for
Investment Companies. In accordance with this SOP, reported net realized
gains and losses on foreign currency transactions represent net gains and
losses from sales and maturities of forward currency contracts, disposition
of foreign currencies, currency gains and losses realized between the trade
and settlement dates on securities transactions, and the difference between
the amount of net investment income accrued and the U.S. dollar amount
actually received. Further, as permitted under the SOP, the effects of
changes in foreign currency exchange rates on investments in securities are
not segregated in the Statement of Operations from the effects of changes
in market prices of those securities, but are included with the net
realized and unrealized gain or loss on investment in securities.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, each fund is not subject to income taxes to
the extent that it distributes all of its taxable income for the fiscal
year. The schedules of investments include information regarding income
taxes under the caption "Income Tax Information."
INVESTMENT INCOME:
EQUITY FUNDS. Dividend income is recorded on the ex-dividend date, except
certain dividends from foreign securities where the ex-dividend date may
have passed, are recorded as soon as the funds are informed of the
ex-dividend date. Interest income, which includes accretion of original
issue discount, is accrued as earned. Dividend and interest income is
recorded net of foreign taxes where recovery of such taxes is uncertain.
MONEY MARKET FUND. Interest income, which includes amortization of premium
and accretion of discount, is accrued as earned.
EXPENSES. Most expenses of the trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned between the
funds in the trust.
PREPAID EXPENSES. FMR will bear all organizational expenses except for
registering and qualifying the fund and shares of the fund for distribution
under federal and state securities law, which will be borne by the fund and
amortized over one year.
DISTRIBUTIONS TO SHAREHOLDERS. Dividends are declared daily and paid
monthly from net interest income for the money market fund. Distributions
are recorded on the ex-dividend date, for all other funds.
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences are primarily due to differing treatments for
partnerships, non-taxable dividends, net operating losses, expiring capital
loss carryforwards and losses deferred due to wash sales and excise tax
regulations. The funds also utilized earnings and profits distributed to
shareholders on redemption of shares as a part of the dividends paid
deduction for income tax purposes. Permanent book and tax basis differences
relating to shareholder distributions will result in reclassifications to
paid in capital.
REDEMPTION FEES. Shares redeemed (including exchanges) from an equity fund
are subject to redemption fees. Shares held less than 30 days are subject
to a short-term redemption fee equal to .75% of the net asset value of
shares redeemed. Shares held 30 days or more are subject to a long-term
redemption fee equal to the lesser of $7.50 or .75% of the net asset value
of shares redeemed. The long-term redemption fee and the first $7.50 of the
short-term redemption fee are accounted for as a reduction of transfer
agent expenses. This portion of the redemption fee is
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
REDEMPTION FEES - CONTINUED
used to offset the transaction costs and other expenses that short-term
trading imposes on each fund and its shareholders. The remainder of the
short-term redemption fee is accounted for as an addition to paid in
capital.
SECURITY TRANSACTIONS. Security transactions are accounted for as of trade
date. Gains and losses on securities sold are determined on the basis of
identified cost.
2. OPERATING POLICIES.
FORWARD FOREIGN CURRENCY CONTRACTS. The equity funds may enter into forward
foreign currency contracts. These contracts involve market risk in excess
of the amount reflected in each fund's Statement of Assets and Liabilities.
The face or contract amount in U.S. dollars reflects the total exposure
each fund has in that particular currency contract. The U.S. dollar value
of forward foreign currency contracts is determined using forward currency
exchange rates supplied by a quotation service. Losses may arise due to
changes in the value of the foreign currency or if the counterparty does
not perform under the contract.
Purchases and sales of forward foreign currency contracts having the same
settlement date and broker are offset and presented net on the Statement of
Assets and Liabilities. Gain (loss) on the purchase or sale of forward
foreign currency contracts having the same settlement date and broker is
recognized on the date of offset, otherwise gain (loss) is recognized on
settlement date.
REPURCHASE AGREEMENTS. The funds, through their custodian, receive delivery
of the underlying securities, whose market value is required to be at least
102% of the resale price at the time of purchase. The funds' investment
adviser, Fidelity Management & Research Company (FMR), is responsible for
determining that the value of these underlying securities remains at least
equal to the resale price.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission (SEC), the funds, along with other
registered investment companies having management contracts with FMR, may
transfer uninvested cash balances into a joint trading account. These
balances are invested in one or more repurchase agreements that are
collateralized by U.S. Treasury or Federal Agency obligations.
INTERFUND LENDING PROGRAM. Pursuant to an Exemptive Order issued by the
SEC, the funds, along with other registered investment companies having
management contracts with FMR, may participate in an interfund lending
program. This program provides an alternative credit facility allowing the
funds to borrow from, or lend money to, other participating funds.
INDEXED SECURITIES. The funds may invest in indexed securities whose value
is linked either directly or inversely to changes in foreign currencies,
interest rates, commodities, indices, or other reference instruments.
Indexed securities may be more volatile than the reference instrument
itself, but any loss is limited to the amount of the original investment.
RESTRICTED SECURITIES. The funds are permitted to invest in privately
placed restricted securities. These securities 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. At the end of the period, restricted securities (excluding 144A
issues) amounted to $853,125, $400,000, $354,002 and $33,998,990 or 0.2%,
0.8%, 0.4% and 5.9% of the net assets of the Biotechnology Portfolio,
Construction and Housing Portfolio, Energy Portfolio and Money Market
Portfolio, respectively.
3. JOINT TRADING ACCOUNT.
At the end of the period, the following funds had 20% or more of their
total investments in repurchase agreements through a joint trading account.
These repurchase agreements were with entities whose creditworthiness has
been reviewed and found satisfactory by FMR. The repurchase agreements were
dated August 31, 1994 and due September 1, 1994. The maturity values of the
joint trading account investments were $133,428,899 for Biotechnology
Portfolio, and $89,531,010 for Home Finance Portfolio, both at 4.83%. The
investments in repurchase agreements through the joint trading account are
summarized as follows:
SUMMARY OF JOINT TRADING
Number of dealers or banks 23
Maximum amount with one dealer or bank 12.4%
Aggregate principal amount of agreements $17,522,348,000
Aggregate maturity amount of agreements $17,524,700,201
Aggregate market value of collateral $17,897,775,355
Coupon rates of collateral 3.875% to 15.75%
Maturity dates of collateral 9/1/94 to 11/15/24
4. PURCHASES AND SALES OF INVESTMENTS.
Information regarding purchases and sales of securities (other than
short-term securities)is included under the caption "Other Information" at
the end of each applicable fund's schedule of investments.
5. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As each fund's investment adviser, FMR receives a monthly
fee.
For each equity fund, the monthly fee is calculated on the basis of a group
fee rate plus a fixed individual fund fee rate applied to the average net
assets of each fund. The group fee rate is the weighted average of a series
of rates and is based on the monthly average net assets of all the mutual
funds advised by FMR. The rates ranged from .2850% to .5200% for the period
March 1, 1994 to July 31, 1994, and .2700% to .5200% for the period August
1, 1994 to August 31, 1994. In the event that these rates were lower than
5. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
MANAGEMENT FEE - CONTINUED
the contractual rates in effect during those periods, FMR voluntarily
implemented the above rates, as they resulted in the same or a lower
management fee. The annual individual fund fee rate is .30%. For the
period, the management fee was equivalent to an annualized rate of .62% of
average net assets for each equity fund.
For the money market fund, FMR receives a monthly fee that is calculated on
the basis of a group fee rate plus a fixed individual fund fee rate applied
to the average net assets of the fund and an income-based fee. The group
fee rate is the weighted average of a series of rates and is based on the
monthly average net assets of all the mutual funds advised by FMR. The
rates ranged from .12% to .37% for the period. In the event that these
rates were lower than the contractual rates in effect during those periods,
FMR voluntarily implemented the above rates, as they resulted in the same
or a lower management fee. The annual individual fund fee rate is .03%. The
income based fee is added only when the fund's yield exceeds 5%. At the
time the fee would equal 6% of that portion of the fund's gross income that
represents a gross yield of more than 5% per year. The maximum income-based
component is .24% (annualized)of average net assets. For the period, the
management fee was equivalent to an annualized rate of .19% of average net
assets.
SUB-ADVISER FEE. As the money market fund's investment sub- adviser, FMR
Texas Inc., a wholly owned subsidiary of FMR, receives a fee from FMR of
50% of the management fee payable to FMR. The fee is paid prior to any
voluntary expense reimbursements which may be in effect, and after reducing
the fee for any payments by FMR pursuant to the fund's Distribution and
Service Plan.
SALES LOAD. Fidelity Distributors Corporation (FDC), an affiliate of FMR,
is the general distributor of each fund. FDC is paid a 3% sales charge on
sales of shares of each fund. Prior to October 12, 1990, FDC was paid a 2%
sales charge and a 1% deferred sales charge. Shares purchased before
October 12, 1990 are subject to the deferred sales charge upon redemption
or exchange to any other Fidelity fund (other than Select funds). The
amounts received by FDC for sales charges and deferred sales charges are
shown under the caption "Other Information" on each fund's Statement of
Operations.
TRANSFER AGENT FEE. Fidelity Service Co. (FSC), an affiliate of FMR, is the
funds' transfer, dividend disbursing and shareholder servicing agent. FSC
receives fees based on the type, size, and number of accounts and the
number of transactions made by shareholders. FSC pays for typesetting,
printing and mailing of all shareholder reports, except proxy statements.
ACCOUNTING AND SECURITY LENDING FEES. FSC maintains the funds' accounting
records and administers their security lending program. The security
lending fee is based on the number and duration of lending transactions.
The accounting fee is based on the level of average net assets for the
month plus out-of-pocket expenses.
EXCHANGE FEES. FSC charges an exchange fee of $7.50 to cover administrative
costs associated with exchanges out of an equity fund to any other Fidelity
Select fund or to any other Fidelity fund. The exchange fees retained by
FSC are shown under the caption "Other Information" on each fund's
Statement of Operations.
BROKERAGE COMMISSIONS. Each equity fund placed a portion of its portfolio
transactions with brokerage firms which are affiliates of FMR. The
commissions paid to these affiliated firms are shown under the caption
"Other Information" on each fund's schedule of investments.
6. INTERFUND LENDING PROGRAM.
Certain funds participated in the interfund lending program as a borrower.
The maximum loan, average daily loan balances and the weighted average
interest rates, during the periods for which loans were outstanding are as
follows:
AVERAGE WEIGHTED
MAXIMUM DAILY AVERAGE
LOAN LOAN BALANCE INTEREST RATE
Electronics Portfolio $28,856,000 $19,714,500 4.0%
Retailing Portfolio $17,178,000 $17,178,000 4.5%
Interest expense includes $8,656, and $2,161 paid under the interfund
lending program for Electronics Portfolio, and Retailing Portfolio,
respectively.
Certain funds participated in the interfund lending program as a lender.
The maximum loan, the average daily loan balances and the weighted average
interest rates, during the periods for which loans were outstanding are as
follows:
AVERAGE WEIGHTED
MAXIMUM DAILY AVERAGE
LOAN LOAN BALANCE INTEREST RATE
American Gold Portfolio $21,109,000 $19,072,286 4.0%
Healthcare Portfolio $12,452,000 $4,786,500 4.0%
Precious Metals and
Minerals Portfolio $15,357,000 $7,849,667 3.9%
Interest income includes $14,727, $4,190, $5,087, earned from the interfund
lending program for American Gold Portfolio, Healthcare Portfolio, and
Precious Metals and Minerals Portfolio.
7. SECURITY LENDING.
Certain equity funds loaned securities to certain brokers who paid the fund
negotiated lenders' fees during the period. These fees are included in
interest income. Each fund receives U.S. Treasury obligations and/or cash
as collateral against the loaned securities, in an amount at least equal to
102% of the market value of the loaned securities at the inception of each
loan. This collateral must be maintained at not less than 100% of the
market value of the loaned securities during the period of the loan. For
funds with loans outstanding at the period end, the value of the securities
loaned and the value of collateral held are shown under the caption "Other
Information" on each fund's schedule of investments.
8. BANK BORROWINGS.
Each fund is permitted to have bank borrowings for temporary or emergency
purposes to fund shareholder redemptions. The fund has established
borrowing arrangements with certain banks. Under the most restrictive
arrangement, each fund must pledge to the bank securities having a market
value in excess of 220% of the total bank borrowings. The interest rate on
the borrowings is the bank's base rate, as revised from time to time. At
the period end, the maximum loan and average daily loan balances during the
periods for which loans were outstanding are shown under the caption "Other
Information" on each fund's schedule of investments.
9. EXPENSE REDUCTIONS.
FMR voluntarily limits expenses, excluding interest, taxes, brokerage
commissions and extraordinary expenses of each fund to 2.5% of average net
assets. In addition, FMR has agreed to reimburse each fund in accordance
with a state expense limitation if, and to the extent that the total
operating expenses of each fund, excluding interest, taxes, brokerage
commissions and extraordinary expenses, are in excess of specified
percentages of the average net assets of the fund for its fiscal year.
Therefore, the lowest limitation applicable to the fund is either the
lesser of 2.5% of average net assets; or 2.5% of the first $30 million of
average net assets, 2% of the next $70 million and 1.5% of the excess. FMR
retains the ability to be repaid by a fund for these expense reimbursements
in the amount that the expenses fall below the limit prior to the end of
the fiscal year. The reimbursement amounted to $15,354, $69,208, $13,891
and $29,154 for Air Transportation Portfolio, Brokerage and Investment
Management Portfolio, Consumer Products Portfolio, and Defense and
Aerospace Portfolio, respectively.
FMR directed certain portfolio trades to brokers who paid a portion of the
funds' expenses. The amount of reduction of expenses for each fund
(excluding Air Transportation Portfolio, Brokerage and Investment
Management Portfolio, Consumer Products Portfolio, and Defense and
Aerospace Portfolio) is shown on each fund's Statement of Operations. For
the period, the aggregate reductions totalled $460,621.
10. MERGERS.
Pursuant to an Agreement and Plan of Reorganization approved by the
shareholders of Electric Utilities Portfolio at a meeting held on February
16, 1994, Utilities Growth Portfolio (formerly Utilities Portfolio)
acquired substantially all of the assets of the Electric Utilities
Portfolio on February 25, 1994. The acquisition was accomplished by a
tax-free exchange of assets of Electric Utilities Portfolio in exchange for
458,728 shares of Utilities Growth Portfolio (valued at $36.36 per share).
Electric Utilities Portfolio's net assets at that date (valued at
$16,679,364), including $1,838,111 of unrealized appreciation were combined
with those of Utilities Growth Portfolio. The aggregate net assets of
Utilities Growth Portfolio and Electric Utilities Portfolio immediately
before the acquisition were $233,107,469 and $16,679,364, respectively.
11. CREDIT RISK.
The Computer Portfolio's relatively large investment in countries with
limited or developing capital markets may involve greater risks than
investments in more developed markets and the prices of such investments
may be volatile. The consequences of political, social or economic changes
in these markets may have disruptive effects on the market prices of the
fund's investments and the income they generate, as well as the fund's
ability to repatriate such amounts.
STATISTICAL ROUNDUP: FIDELITY SELECT PORTFOLIOS(REGISTERED TRADEMARK)
LEGEND
TOTAL RETURNS include change in share price and reinvestment of dividends
and capital gains. CUMULATIVE TOTAL RETURNS do not reflect Select's 3%
sales charge. However, each Fund Update includes load-adjusted cumulative
total returns. AVERAGE ANNUAL RETURNS are load-adjusted. Average Annual
Returns assume a steady compounded rate of return and are not year-by-year
results, which fluctuated over the periods shown. LIFE OF FUND figures are
from commencement of operations to August 31, 1994.
Figures for the S&P 500(registered trademark), an unmanaged index of common
stock prices, include reinvestment of dividends. S&P 500 is registered
trademark of Standard & Poor's Corporation.
If the advisor had not reimbursed certain expenses for some of the funds
during the periods shown, those funds' returns would have been lower. Air
Transportation, Brokerage and Investment Management, Consumer Products and
Defense and Aerospace received reimbursement for the six-month period ended
August 31, 1994. Expense reimbursements may be revised at any time, at
which time the fund's return will decline.
All performance numbers are historical; each equity fund's share price and
return will vary and shareholders may have a gain or loss when they sell
their shares.
VOLATILITY
Volatility measures the variability of a return from its mean, in terms of
STANDARD DEVIATIONS. (Standard deviation measures the variation from the
mean for a series of numbers.) Measures of volatility are based on
historical performance and seek to compare each fund's relative share price
fluctuations or total returns compared to the S&P 500. (Volatility measures
are not calculated for funds which are less than three years old.)
Volatility measures are given to investors to assist in determining the
historical risk versus return relationship between the fund and a benchmark
index. THE CALCULATIONS ARE NOT MEANT TO PREDICT PERFORMANCE and may change
quickly as fund composition and company fundamentals change.
A fund's RELATIVE VOLATILITY is a ratio that compares the fund's volatility
to the volatility of a benchmark index, such as the S&P 500. By definition,
the S&P 500 has a relative volatility of 1.0. A fund with a relative
volatility greater than 1.0 has had returns that have been more variable
than those returns of the benchmark index, while a fund with a relative
volatility less than 1.0 would have had less volatility than the benchmark
index.
MEDIAN PRICE/SALES
This figure represents the median price-to-sales ratio for all the stocks
in a fund on a given date. A stock's price-to-sales ratio compares the
company's market value with its total revenue. The ratio is calculated by
dividing the stock price by the most recent 12 months' revenues per share.
All price-to-sales ratios are from company 10Q filings. Excluded from the
median price/sales calculations are foreign companies without ADRs
(American Depository Receipts), IPOs (Initial Public Offerings) and certain
financial companies. As a result, figures are not available for Precious
Metals and Minerals.
MEDIAN PRICE/BOOK
This figure represents the median price-to-book ratio of all the stocks in
a fund on a given date. A stock's price-to-book ratio compares the
company's market value with its book value or net asset value. The ratio is
calculated by dividing the stock price by the book value per share. All
price-to-book ratios are from company 10Q filings. Excluded from the median
price/book calculations are foreign companies without ADRs and certain
financial companies.
STATISTICAL ROUNDUP(DAGGER) (UNAUDITED)
CUMULATIVE TOTAL RETURNS AVERAGE ANNUAL RETURNS OPENING CLOSING
FOR PERIODS ENDED 8/31/94 FOR PERIODS ENDED 8/31/94 NAV NAV
YTD 1 YEAR LIFE OF FUND 1 YEAR 5 YEARS LIFE OF FUND 3/1/94 8/31/94
Air Transportation (12/16/85) -4.87% 0.91% 108.10% -2.12% 5.00% 8.39% $
17.12 $ 15.29
American Gold (12/16/85) -7.64 1.97 120.71 -1.09 6.33 9.13 22.66 21.75
Automotive (6/30/86) -8.21 -1.10 189.07 -4.07 14.67 13.44 25.48 22.61
Biotechnology (12/16/85) -11.81 -0.24 242.88 -3.23 18.61 14.79 27.61 25.23
Brokerage and Investment Mgmt. (7/29/85) -10.66 -3.60 122.34 -6.49 12.31
8.81 17.75 16.35
Chemicals (7/29/85) 22.37 27.91 411.68 24.07 13.03 19.25 31.66 35.76
Computers (7/29/85) 15.61 28.87 227.44 25.00 21.70 13.54 27.02 28.15
Construction and Housing (9/29/86) -6.25 7.26 169.55 4.04 11.93 12.89 19.82
18.27
Consumer Products (6/29/90) -5.23 0.77 75.73 -2.25 - 13.62 15.24 14.52
Defense and Aerospace* (5/8/84) 4.81 12.05 115.56 8.68 7.51 7.41 19.14
18.87
Developing Communications (6/29/90) 3.78 6.26 133.59 3.07 - 21.62 19.65
18.60
Electronics (7/29/85) 16.79 19.90 118.08 16.30 22.85 8.58 17.67 18.43
Energy* (7/14/81) 4.67 -5.86 134.52 -8.69 4.83 7.91 16.73 17.07
Energy Service (12/16/85) 2.95 -12.19 20.25 -14.83 2.22 1.78 11.66 11.58
Environmental Services (6/29/89) -2.41 -1.09 17.71 -4.05 0.84 2.59 11.93
10.93
Financial Services* (12/10/81) 11.17 8.77 732.33 5.51 14.49 17.82 51.24
54.93
Food and Agriculture (7/29/85) 6.12 10.96 379.17 7.63 12.95 18.39 31.49
31.78
Health Care* (7/14/81) 16.08 31.86 1059.39 27.90 18.03 20.22 63.31 73.71
Home Finance (12/16/85) 18.88 25.60 412.87 21.83 20.96 20.21 25.03 27.70
Industrial Equipment (9/29/86) 4.81 11.13 113.93 7.80 10.85 9.64 20.61
19.89
Industrial Materials (9/29/86) 16.63 26.26 152.77 22.47 9.31 11.98 21.67
23.82
Insurance (12/16/85) 1.60 -5.93 158.78 -8.75 11.04 11.14 19.41 20.35
Leisure* (5/8/84) -3.48 6.39 481.94 3.20 8.52 18.25 45.30 39.65
Medical Delivery (6/30/86) 16.18 42.88 189.87 38.60 17.28 13.47 20.28 22.19
Multimedia (6/30/86) 3.52 11.04 248.21 7.71 9.61 16.05 23.87 21.85
Natural Gas (dagger)(dagger) (4/21/93) 0.85 -13.73 -4.24 -16.32 - -5.27
9.48 9.44
Paper and Forest Products (6/30/86) 20.33 29.96 153.89 26.06 10.17 11.65
19.61 21.32
Precious Metals and Minerals* (7/14/81) 3.10 24.29 124.91 20.56 9.65 6.17
16.62 18.68
Regional Banks (6/30/86) 14.83 13.06 228.72 9.67 16.68 15.23 17.99 19.85
Retailing (12/16/85) 1.91 8.20 318.19 4.95 15.65 17.43 24.91 25.62
Software and Computer Services (7/29/85) -10.17 -6.20 302.11 -9.02 19.95
16.14 28.89 24.42
Technology* (7/14/81) 7.64 13.00 463.34 9.61 21.48 13.79 41.83 40.06
Telecommunications (7/29/85) 5.13 3.51 403.60 0.40 12.42 19.04 37.10 38.58
Transportation (9/29/86) 8.28 17.26 218.31 13.75 13.81 15.28 21.67 22.13
Utilities Growth*(diamond) (12/10/81) -3.28 -9.25 519.29 -11.97 9.31 15.12
36.61 35.60
S&P 500 3.88 5.47 - 5.47 9.60 - 467.14 475.98
* Ten-year Average Annual Total Returns for the period ended 8/31/94 for
these funds were as follows: Defense = 5.88%; Energy = 7.91%; Financial
Services = 16.51%;
Health Care = 20.28%; Leisure = 17.83%; Precious Metals and Minerals =
5.70%; Technology = 9.03%; Utilities Growth = 14.49%.
(dagger) See "Legend" on page for explanation of information on this
table.
(dagger)(dagger) Natural Gas data is from 4/21/93 (commencement of
operations).
(diamond) Formerly Utilities
** High/Low NAVs are based on 4:00 p.m. prices for the period 3/1/94 -
8/31/94.
HIGH LOW TOTAL NET ASSETS DISTRIBUTIONS MEDIAN MEDIAN
NAV** NAV** $MM 1/1/94-8/31/94 PRICE/SALES PRICE/BOOK
FOR 6 MONTHS ENDED 8/31/94 2/28/94 8/31/94 CAP GAINS DIVS RELATIVE
VOLATILITY AS OF 8/31/94
$17.25 $13.59 $ 11.0 12.3 $3.94 $ - 1.60 $ 0.5 $1.7
23.66 20.21 347.4 366.3 - - 2.21 3.9 2.1
26.01 22.06 228.7 90.1 .27 - 1.43 0.5 2.1
27.41 22.70 481.1 462.9 - - 2.31 10.0 2.9
17.62 15.25 59.8 28.4 - - 1.96 0.6 1.3
35.76 30.29 62.2 205.1 .20 .01 1.16 1.0 2.8
29.31 23.79 120.4 110.9 - - 2.08 1.4 2.7
20.17 16.97 81.0 48.6 .10 - 1.41 0.7 2.1
15.38 13.28 8.4 7.9 .08 - 1.30 0.8 2.9
19.58 17.49 11.1 4.0 .27 - 1.12 0.5 2.1
20.22 15.25 222.1 201.6 1.29 - 1.72 2.0 3.2
19.14 15.86 111.0 148.7 - - 1.81 1.8 2.5
17.78 15.64 145.5 100.5 .11 .01 1.50 1.8 1.9
12.20 10.61 40.9 46.7 .32 .01 1.87 1.2 1.3
11.85 10.20 66.0 52.8 - -. 1.58 1.1 2.0
54.93 48.24 116.2 121.0 .37 .02 1.53 1.3 1.4
31.78 28.20 95.0 101.1 .79 - 1.04 0.9 3.0
74.03 58.13 522.9 655.1 - .11 1.96 1.9 3.3
27.70 23.69 155.6 312.9 1.17 - 1.65 1.2 1.1
20.92 17.73 206.0 89.8 .17 - 1.36 0.8 2.5
23.82 20.73 155.7 212.9 - .05 1.30 0.8 2.3
20.35 18.17 18.4 6.5 - - 1.14 1.1 1.3
45.73 36.29 105.8 70.3 3.93 - 1.23 2.0 3.3
22.19 19.22 188.6 211.2 - - 2.11 1.3 3.6
24.27 19.00 49.2 28.9 2.51 - 1.42 2.0 3.0
10.05 8.98 63.1 76.6 - - - 1.5 2.0
21.32 16.42 66.9 66.4 .35 - 1.69 0.9 2.1
18.68 15.14 409.2 467.1 - .01 2.45 -- --
19.85 17.40 97.4 163.2 .21 .01 1.45 1.8 1.7
25.82 22.85 52.8 58.3 - - 1.44 0.6 2.1
29.31 19.81 178.0 180.1 .33 - 2.34 2.8 3.2
44.41 34.13 202.5 217.4 1.50 - 1.72 1.4 2.7
38.58 34.86 371.0 395.2 .78 .03 1.20 1.7 3.6
22.23 20.31 13.1 13.4 .33 - 1.28 0.6 2.5
36.88 33.67 250.5 233.2 .60 .12 .87 0.9 1.4
476.07 438.92 - - - - N/A 1.0 3.1
TO CALL FIDELITY
FOR PORTFOLIO INFORMATION AND QUOTES
The Fidelity Telephone Connection offers you special automated telephone
services for quotes and balances. The services are easy to use,
confidential and quick. All you need is a Touch Tone telephone.
YOUR PERSONAL IDENTIFICATION NUMBER
(PIN)
The first time you call one of our automated telephone services, we'll ask
you to set up your Personal Identification Number (PIN). The PIN assures
that only you have automated telephone access to your account information.
Please have your Customer Number (T-account #) handy when you call --
you'll need it to establish your PIN. If you would ever like to change your
PIN, just choose the "Change your Personal Identification Number" option
when you call. If you forget your PIN, please call a Fidelity
representative at 1-800-544-6666 for assistance.
(PHONE_GRAPHIC)(PHONE_GRAPHIC)MUTUAL FUND QUOTES*
1-800-544-8544
Just make a selection from this record-ed menu:
PRESS
For quotes on funds you own.
1
For an individual fund quote.
2
For the ten most frequently
requested Fidelity fund quotes.
3
For quotes on Fidelity Select
Portfolios(registered trademark).
4
To change your Personal
Identification Number (PIN).
5
To speak with a Fidelity
representative.
6
(PHONE_GRAPHIC)(PHONE_GRAPHIC)MUTUAL FUND ACCOUNT
BALANCES 1-800-544-7544
Just make a selection from this record-
ed menu:
PRESS
For balances on funds you own.
1
For your most recent fund activity
(purchases, redemptions, and
dividends).
2
To change your Personal
Identification Number (PIN).
3
To speak with a Fidelity
representative.
4
* WHEN YOU CALL THE QUOTES LINE, PLEASE REMEMBER THAT A FUND'S YIELD AND
RETURN WILL VARY AND, EXCEPT FOR MONEY MARKET FUNDS, SHARE PRICE WILL
ALSO VARY. THIS MEANS THAT YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL YOUR
SHARES. THERE IS NO ASSURANCE THAT MONEY MARKET FUNDS WILL BE ABLE
TO MAINTAIN A STABLE $1 SHARE PRICE; AN INVESTMENT IN A MONEY MARKET FUND
IS NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT. TOTAL RETURNS
ARE HISTORICAL AND INCLUDE CHANGES IN SHARE PRICE, REINVESTMENT OF
DIVIDENDS AND CAPITAL GAINS, AND THE EFFECTS OF ANY SALES CHARGES. FOR MORE
INFORMATION ON ANY FIDELITY FUND INCLUDING MANAGEMENT FEES AND CHARGES,
CALL 1-800-544-8888 FOR A FREE PROSPECTUS. READ IT CAREFULLY BEFORE
YOU INVEST OR SEND MONEY.
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
INVESTMENT SUB-ADVISERS
Fidelity Management & Research
FMR Texas Inc., Irving, TX
Fidelity Management & Research
(U.K.) Inc., London, England
Fidelity Management & Research
(Far East) Inc., Tokyo, Japan
OFFICERS
Edward C. Johnson 3d, PRESIDENT
J. Gary Burkhead, SENIOR VICE PRESIDENT
William J. Hayes, VICE PRESIDENT
Thomas D. Maher, ASSISTANT VICE PRESIDENT, MONEY MARKET FUND
Gary L. French, TREASURER
John H. Costello, ASSISTANT TREASURER
Leonard M. Rush, ASSISTANT TREASURER
Arthur S. Loring, SECRETARY
Robert H. Morrison, MANAGER, SECURITY TRANSACTIONS
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox *
Phyllis Burke Davis *
Richard J. Flynn *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk
Peter S. Lynch
Edward H. Malone *
Marvin L. Mann *
Gerald C. McDonough *
Thomas R. Williams *
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Co.
Boston, MA
CUSTODIANS
Brown Brothers Harriman & Co.
Boston, MA
and
The Bank of New York
New York, NY
CORPORATE HEADQUARTERS
82 Devonshire Street
Boston, MA 02109
1-800-544-8888
* INDEPENDENT TRUSTEES
FIDELITY SELECT PORTFOLIOS
CONSUMER SECTOR
Consumer Products
Food and Agriculture
Leisure
Multimedia
Retailing
CYCLICALS SECTOR
Air Transportation
Automotive
Chemicals
Construction and Housing
Environmental Services
Industrial Equipment
Industrial Materials
Paper and Forest Products
Transportation
ENERGY, UTILITIES & NATURAL RESOURCES SECTOR
American Gold
Energy
Energy Service
Natural Gas
Precious Metals and Minerals
Utilities Growth
FINANCIAL SERVICES SECTOR
Brokerage and Investment Management
Financial Services
Home Finance
Insurance
Regional Banks
HEALTH CARE SECTOR
Biotechnology
Health Care
Medical Delivery
TECHNOLOGY SECTOR
Computers
Defense and Aerospace
Developing Communications
Electronics
Software and Computer Services
Technology
Telecommunications
Money Market
THE FIDELITY TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Account Balances 1-800-544-7544
Exchanges/Redemptions 1-800-544-7777
Mutual Fund Quotes 1-800-544-8544
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 1-800-544-0111
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
AUTOMATED LINES FOR QUICKEST SERVICE
FIDELITY INVESTMENTS
P.O. Box 193
BOSTON, MA 02101
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