[TEXT]
(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
ANNUAL REPORT AND
PROSPECTUS
FEBRUARY 28, 1994
CONTENTS
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PERFORMANCE OVERVIEW AND
MARKET RECAP
FUND UPDATES*
CONSUMER SECTOR CONSUMER PRODUCTS
FOOD AND AGRICULTURE
LEISURE
MULTIMEDIA (FORMERLY BROADCAST AND MEDIA)
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
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 FOOTNOTES TO THE FINANCIAL STATEMENTS
REPORT OF INDEPENDENT ACCOUNTANTS THE AUDITOR'S OPINION
DIVIDEND DISTRIBUTIONS
STATISTICAL ROUNDUP
FIDELITY SELECT PORTFOLIOS PROSPECTUS P-1
* FUND UPDATES FOR EACH SELECT PORTFOLIO INCLUDE: PERFORMANCE AND INVESTMENT SUMMARY, MANAGER'S OVERVIEW, INVESTMENTS, AND
FINANCIAL STATEMENTS.
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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. NEITHER THE
FUNDS NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK AND FUND SHARES ARE
NOT BACKED OR GUARANTEED BY ANY BANK OR INSURED BY THE FDIC.
PERFORMANCE OVERVIEW AND MARKET RECAP
DEAR SHAREHOLDER:
Despite a downturn in February, the last 12 months provided attractive
returns for U.S. stock investors, and Select fund investors in particular.
The Standard & Poor's 500 Composite Stock Price Index had a total
return of 8.33% for the year ended February 28, 1994, slightly below the
market's long-term annual average return. Most of the Select funds - 29 out
of 35 - outperformed the S&P 500. However, two - Insurance (down 1.24%)
and Natural Gas (down 3.84%) - had negative returns during the period.
Low inflation, low interest rates and a strengthening economy boosted U.S.
stocks from March 1993 through January 1994. The Dow Jones Industrial
Average - an index of 30 blue-chip stocks - broke the 3900 barrier for the
first time on January 21, before finishing the month at 3978. Then on
February 4, the Federal Reserve Board pushed up the federal funds rate -
the rate banks charge each other for overnight loans - from 3.00% to 3.25%,
which had the effect of raising most interest rates. Fear that inflation
concerns would lead the Fed to hike rates further caused the stock market
to stumble in February, and the S&P 500 lost 2.72% for the month.
Despite that late-period slide, strong performance from cyclical stocks -
whose prices tend to rise and fall in step with the economy - helped drive
the Dow to a 16.88% total return for the year ended February 28. The NASDAQ
Composite Index, which tracks over-the-counter securities, was up 18.15%.
TECHNOLOGY stocks were among the market's best performers over the past
year. Many technologies - from cellular communication to computers - became
more affordable, and consumers embraced new products and services. Related
Select funds reflected the sector's strong gains: Computers, Defense and
Aerospace, Developing Communications, Electronics, Software and Computer
Services, and Technology all were up at least 30% for the year, and
Telecommunications gained over 21%.
As the U.S. economy picked up steam, CYCLICALS made strong gains. After
often painful restructuring, U.S. manufacturers were well positioned once
demand for their goods began to rise, and they quickly found themselves
better able to compete globally. Industrial Equipment, Chemicals,
Industrial Materials, and Paper and Forest Products all rose at least 22%.
In addition, higher demand and effective cost-cutting benefited companies
in the Automotive, Air Transportation, and Transportation funds, which were
all up over 27%. A surge in home buying nationwide fueled Construction and
Housing's equally strong performance. Environmental Services continued to
suffer from an oversupply of environmental companies in the marketplace,
and lagged the rest of the group.
Many HEALTH-CARE stocks performed well considering the uncertainty
surrounding President Clinton's reform plan. Over the past year, many
health-care firms began to form alliances, and prepared to do business
under a new set of rules. Medical Delivery returned over 40%,
Biotechnology, 22% and Health Care, 20%.
The stocks of many traditional CONSUMER PRODUCTS companies stalled over the
past year. Low inflation prevented many food companies, in particular, from
raising prices, which slowed Food and Agriculture. However, Consumer
Products returned over 28%, largely by avoiding the large non-durable
names, and instead focusing on smaller consumer products companies and on
stocks tied to the explosion of communications technology. Many of these
companies produce and distribute new entertainment programming, which falls
under the broad category of consumer products. But they also helped boost
the strong returns of Multimedia and Leisure. Retailing, meanwhile, was
hurt by a consumer shift toward durable goods like homes and autos. Still,
the fund returned over 15%.
Although its overall performance placed it fifth out of the six groups,
ENERGY, UTILITIES AND NATURAL RESOURCES contained a couple of star
performers. Precious Metals and Minerals (up over 70%) and American Gold
(up over 60%) benefited from an increased demand worldwide, and led all
Select funds. But falling crude oil prices hurt Energy, Energy Services,
and Natural Gas. Utilities had a strong first half of 1993 as investors
sought refuge from falling interest rates in high-yielding utilities
stocks, but performance later suffered when rates began to rise.
The strong performance of the stock and bond markets through most of the
year boosted the earnings of Brokerage and Investment Management companies,
and the fund finished the year well ahead of the rest of the FINANCIAL
SERVICES group. Falling interest rates helped the profit margins of
companies in the Home Finance, Financial Services, and Regional Banks funds
through much of 1993. However, all three funds slowed after rates leveled
out, and then began to rise. Finally, the inability of insurers to raise
premiums continued to plague Insurance.
Given the strength of corporate earnings projections over the next six
months, the outlook for many Select funds may appear promising. However,
the valuation - stock prices relative to earnings - of the U.S. stock
market was at a 20-year high at the end of February, which is reason for
caution. Stock prices did fall in March, after the period ended, and the
market could be volatile in the coming months. But regardless of whether
this recent slide turns out to be a short-term correction or the start of a
longer market downturn, a long-term approach to stock investing can help
you weather the peaks and valleys.
Finally, you'll notice some changes in this year's report. The portfolio
manager interviews have been expanded, and we've added a "Fund Facts" box
that contains added information about each fund and its manager. You'll
also find a graph that illustrates how a hypothetical $10,000 investment
would have performed over the life of each fund, compared to the
performance of the S&P 500. We hope what follows will help you better
evaluate your investments. Thank you for your continued interest in
Fidelity Select Portfolios.
Sincerely,
Richard A. Spillane, Jr.
Select Group Leader
CUMULATIVE TOTAL RETURNS*
FOR THE YEAR ENDED FEBRUARY 28, 1994
Row: 1, Col: 1, Value: 70.58
Row: 2, Col: 1, Value: 60.14
Row: 3, Col: 1, Value: 46.24
Row: 4, Col: 1, Value: 45.06
Row: 5, Col: 1, Value: 40.25
Row: 6, Col: 1, Value: 40.07
Row: 7, Col: 1, Value: 37.14
Row: 8, Col: 1, Value: 35.87
Row: 9, Col: 1, Value: 35.62
Row: 10, Col: 1, Value: 34.86
Row: 11, Col: 1, Value: 33.19
Row: 12, Col: 1, Value: 32.04
Row: 13, Col: 1, Value: 30.45
Row: 14, Col: 1, Value: 30.24
Row: 15, Col: 1, Value: 28.43
Row: 16, Col: 1, Value: 27.94
Row: 17, Col: 1, Value: 27.47
Row: 18, Col: 1, Value: 27.45
Row: 19, Col: 1, Value: 24.66
Row: 20, Col: 1, Value: 23.63
Row: 21, Col: 1, Value: 22.17
Row: 22, Col: 1, Value: 22.03
Row: 23, Col: 1, Value: 21.9
Row: 24, Col: 1, Value: 20.57
Row: 25, Col: 1, Value: 19.61
Row: 26, Col: 1, Value: 15.61
Row: 27, Col: 1, Value: 11.69
Row: 28, Col: 1, Value: 10.85
Row: 29, Col: 1, Value: 9.69
Row: 30, Col: 1, Value: 6.46
Row: 31, Col: 1, Value: 6.359999999999999
Row: 32, Col: 1, Value: 5.02
Row: 33, Col: 1, Value: 2.53
Row: 34, Col: 1, Value: -1.24
Row: 35, Col: 1, Value: -3.84
Row: 36, Col: 1, Value: 8.33
Precious Metals and Minerals 70.58%American Gold 60.14%Electronics
46.24%Computers 45.06%Medical Delivery 40.25%Industrial Equipment
40.07%Leisure 37.14%Brokerage and Investment Management 35.87%Technology
35.62%Multimedia (formerly Broadcast and Media) 34.86%Software and
Computer Services 33.19%Defense and Aerospace 32.04%Automotive
30.45%Developing Communications 30.24%Consumer Products 28.43%Air
Transportation 27.94%Transportation 27.47%Construction and Housing
27.45%Industrial Materials 24.66%Chemicals 23.63%Biotechnology
22.17%Paper and Forest Products 22.03%Telecommunications 21.90%Health
Care 20.57%Home Finance 19.61%Retailing 15.61%Food and Agriculture
11.69%Financial Services 10.85%Energy 9.69%Regional Banks 6.46%Energy
Service 6.36%Environmental Services 5.02%Utilities 2.53%Insurance
- -1.24%**Natural Gas -3.84%S&P 500 8.33%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).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 LIFE OF
FEBRUARY 28, 1994 YEAR FUND
CONSUMER PRODUCTS 28.43% 83.39%
CONSUMER PRODUCTS
(INCL. 3% SALES CHARGE) 24.58% 77.89%
S&P 500 8.33% 46.34%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, 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
FEBRUARY 28, 1994 YEAR FUND
CONSUMER PRODUCTS 28.43% 17.95%
CONSUMER PRODUCTS
(INCL. 3% SALES CHARGE) 24.58% 16.97%
S&P 500 8.33% 10.92%
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 Prod S&P 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 14634.23
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 February 28, 1994, your investment would have grown to $17,789 -
a 77.89% increase. That compares to $10,000 invested in the S&P 500,
which would have grown to $14,634 over the same period - a 46.34% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1994
% OF FUND'S
INVESTMENTS
Premark International, Inc. 8.5
Dial Corp. (The) 5.3
Clear Channel Communications, Inc. 3.6
Standex International Corp. 3.5
Syratech Corp. 3.3
Stanhome, Inc. 3.0
Ford Motor Co. 2.7
Federated Department Stores, Inc. 2.6
Telefonos de Mexico SA sponsored ADR Class L 2.4
Fedders USA, Inc. 2.4
TOP INDUSTRIES AS OF FEBRUARY 28, 1994
Row: 1, Col: 1, Value: 68.90000000000001
Row: 1, Col: 2, Value: 3.3
Row: 1, Col: 3, Value: 4.2
Row: 1, Col: 4, Value: 4.4
Row: 1, Col: 5, Value: 8.5
Row: 1, Col: 6, Value: 10.7
Conglomerates 10.7%
Fabricated Rubber Products 8.5%
Hotels, Motels &
Tourist Courts 4.4%
Appliances 4.2%
Cutlery, Hand Tools,
Hardware 3.3%
All Others 68.9%*
* 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 DO?
A. Quite well. Total return was 28.43% for the 12 months ended February 28,
1994. That beat the S&P 500, which returned 8.33% during the same
period.
Q. WHY DID THE FUND DO SO MUCH BETTER THAN THE S&P?
A. I just recently took over the fund, but the previous manager did well by
being very creative. First, the fund avoided the bigger, traditional
consumer products companies, which were among the market laggards in 1993.
Staying away from the familiar tobacco, food and beverage stocks helped the
fund's performance. Second, the fund dodged retail stocks - again, among
the market's worst performers - and drug companies, which languished amid
doubts about the direction of health-care reform. Instead, the fund was
made up of an eclectic group of consumer products companies.
Q. DID ANY THEMES EMERGE?
A. Several of the fund's best performers were companies that provide
household products. They had in common attractive stock prices relative to
other measures like cash flow and earnings, and excellent growth potential.
Fabricated rubber manufacturer Premark - the fund's top investment at the
end of February - has experienced surging sales of its Tupperware products,
especially overseas. At Stanhome, which manufactures a wide variety of
household items, orders have risen over the past six months, and so has the
stock. Standex International, a conglomerate, produces a wide array of
goods ranging from grocery freezer cases to self-cleaning portable kitchen
hoods for restaurants. Finally, Syratech, a cutlery company, saw stronger
sales of its giftware lines and seasonal products during the Christmas
season. All of these stocks were up at least 25% from the end of August
through the end of February.
Q. WHERE ELSE WERE THERE OPPORTUNITIES?
A. The fund benefited from investor speculation about the roles companies
will play in the building of the information superhighway, which will
combine the technologies of computers, telephones and televisions. General
Instrument - a supplier of cable television and communications equipment -
was a strong performer. Motorola's advancements in wireless communications
and strong semiconductor sales helped boost its stock price. In addition,
Clear Channel Communications - which owns radio stations nationwide -
helped the fund. The company recently shed some of its less profitable
properties in favor of stations in larger markets, which could increase
revenues.
Q. THE IMPROVING ECONOMY HELPED MANY TRADITIONAL CYCLICAL STOCKS - THOSE
THAT RISE AND FALL WITH ECONOMIC CYCLES - IN 1993. DID THE FUND BENEFIT?
A. Yes. As companies that manufacture consumer non-durables struggled,
demand for consumer durable goods shot up. For example, the nationwide
housing boom fueled an increase in appliance sales. Fedders - a room
air-conditioner manufacturer - was among the fund's top 10 investments on
February 28. The company's stock rose on anticipation of increasing orders
heading into summer. Also, Ford - the fund's seventh largest investment -
benefited from a cyclical increase in domestic auto sales.
Q. BUT EACH OF THE BIG THREE AUTO MAKERS HAVE DONE WELL . . .
A. They have. In hindsight, the fund could have performed even better by
investing in Chrysler and General Motors, in addition to Ford. I'd like to
take advantage of the growth potential in auto stocks, but I think we may
already be late in the game.
Q. WHAT'S YOUR VIEW OF THE NEXT SEVERAL MONTHS, AND HOW ARE YOU PLANNING TO
POSITION THE FUND?
A. A shift of consumer spending from durables back to some non-durables may
be beginning. The fund is already invested in Federated Department Stores,
and I'm looking to add selectively to the fund's retail, apparel and
textile stake. In addition, if inflation shows signs of returning, I may
get back into food and beverage companies, which may gain the power to
raise prices without losing revenues. Also, I have my eye on drug
companies. Uncertainty over health-care reform continues to dog them, but
out of uncertainty may come opportunities.
FUND FACTS
START DATE: June 29, 1990
SIZE: as of February 28, 1994, over $8 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 FEBRUARY 28, 1994
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 88.8%
SHARES VALUE (NOTE 1)
APPAREL STORES - 1.2%
GENERAL APPAREL STORES - 1.0%
Edison Brothers Stores, Inc. 2,800 $ 81,895 28087510
SHOE STORES - 0.2%
United States Shoe Corp. 1,000 13,875 91260510
TOTAL APPAREL STORES 95,770
AUTOS, TIRES, & ACCESSORIES - 3.5%
MOTOR VEHICLES SUPPLIES & NEW PARTS - 0.8%
Custom Chrome, Inc. (a) 3,000 65,250 23190510
MOTOR VEHICLES & CAR BODIES - 2.7%
Ford Motor Co. 3,600 223,650 34537010
TOTAL AUTOS, TIRES, & ACCESSORIES 288,900
BROADCASTING - 4.7%
CABLE TV OPERATORS - 1.1%
Comcast Corp. Class A 1,000 20,375 20030010
Comcast Corp. Class A (Special) 500 10,125 20030020
Liberty Media Corp. Class A (a) 2,800 64,050 53071530
94,550
RADIO BROADCASTING - 3.6%
Clear Channel Communications,
Inc. (a) 7,375 295,922 18450210
TOTAL BROADCASTING 390,472
CELLULAR - 1.1%
CELLULAR & COMMUNICATION SERVICES - 1.1%
Rogers Cantel Mobile Communications,
Inc. Class B (non-vtg.) (a) 3,300 92,618 77510210
COMMUNICATIONS EQUIPMENT - 1.2%
TELEPHONE INTERCONNECT SYSTEMS - 1.2%
General Instrument Corp. (a) 2,000 94,750 37012110
CONGLOMERATES - 10.7%
Dial Corp. (The) 9,900 440,550 25247010
Lancaster Colony Corp. 2,000 89,000 51384710
Mark IV Industries, Inc. 3,475 67,328 57038710
Standex International Corp. 10,000 286,250 85423110
883,128
CONSUMER DURABLES - 5.0%
CUTLERY, HAND TOOLS, HARDWARE - 3.3%
Syratech Corp. (a) 14,900 271,925 87182410
GLASS, PRESSED OR BLOWN - 1.1%
Libbey, Inc. 5,100 93,713 52989810
POTTERY - 0.6%
Waterford Wedgewood (IR) unit 65,800 44,230 94151395
TOTAL CONSUMER DURABLES 409,868
CONSUMER ELECTRONICS - 5.1%
APPLIANCES - 4.2%
Fedders USA, Inc. (a) 28,100 196,700 31313510
Newell Co. 3,700 148,925 65119210
Toro Co. 100 2,838 89109210
348,463
WATCHES & CLOCKS - 0.9%
Fossil, Inc. 4,800 74,400 34988210
TOTAL CONSUMER ELECTRONICS 422,863
SHARES VALUE (NOTE 1)
ELECTRICAL EQUIPMENT - 2.5%
ELECTRICAL EQUIPMENT - WHOLESALE - 0.9%
Duracell International, Inc. 1,700 $ 70,763 26633L10
TV & RADIO COMMUNICATION EQUIPMENT -1.6%
Scientific-Atlanta, Inc. 5,000 135,000 80865510
TOTAL ELECTRICAL EQUIPMENT 205,763
ELECTRONICS - 0.9%
SEMICONDUCTORS - 0.9%
Motorola, Inc. 700 71,488 62007610
ENTERTAINMENT - 1.7%
CRUISES - 1.7%
Carnival Cruise Lines, Inc. Class A 2,700 130,613 14365810
Royal Caribbean Cruises Ltd. 400 10,950 78015392
141,563
FOODS - 0.6%
MEAT & FISH - 0.6%
IBP, Inc. 2,000 48,250 44922310
GENERAL MERCHANDISE STORES - 4.2%
DEPARTMENT STORES - 2.6%
Federated Department Stores, Inc. (a) 9,100 218,400 31410J10
VARIETY STORES - 1.6%
Mac Frugals Bargains C/O, Inc. (a) 8,000 131,000 55415210
TOTAL GENERAL MERCHANDISE STORES 349,400
HOME FURNISHINGS - 1.5%
FURNITURE - 1.2%
Rowe Furniture Corp. 6,450 102,394 77952810
WOOD HOUSEHOLD FURNITURE - 0.3%
O'Sullivan Industries Holdings (a) 1,000 22,625 68860910
TOTAL HOME FURNISHINGS 125,019
HOUSEHOLD PRODUCTS - 16.8%
COSMETICS - 2.8%
CCA Industries, Inc. (a) 21,800 177,125 12486710
DEP Corp. Class A (a) 10,000 52,500 23320220
229,625
FABRICATED RUBBER PRODUCTS - 8.5%
Premark International, Inc. 8,700 700,350 74045910
MANUFACTURED PRODUCTS - 2.5%
Paragon Trade Brands, Inc. (a) 5,000 166,875 69912K10
Windmere Corp. (a) 5,000 40,625 97341110
207,500
SOAPS & DETERGENTS - 3.0%
Stanhome, Inc. 7,000 250,250 85442510
TOTAL HOUSEHOLD PRODUCTS 1,387,725
LEASING & RENTAL - 0.9%
EQUIPMENT RENTAL & LEASING, NEC - 0.9%
Aaron Rents, Inc. Class B 5,000 71,250 00253520
LEISURE DURABLES & TOYS - 1.6%
LEISURE DURABLES - 1.1%
ARCTCO, Inc. 2,000 51,500 03966510
Outboard Marine Corp. 1,700 42,500 69002010
94,000
TOYS & GAMES - 0.5%
SLM International, Inc. (a) 2,000 40,000 78441410
TOTAL LEISURE DURABLES & TOYS 134,000
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
LODGING & GAMING - 5.8%
HOTELS, MOTELS, & TOURIST COURTS - 4.4%
Mirage Resorts, Inc. (a) 7,750 $ 195,688 60462E10
Showboat, Inc. 4,700 83,425 82539010
Station Casinos, Inc. 4,000 85,000 85768910
364,113
RACING & GAMING - 1.4%
WMS Industries, Inc. (a) 4,400 113,850 92929710
TOTAL LODGING & GAMING 477,963
PRINTING - 1.2%
COMMERCIAL PRINTING, NEC - 1.2%
Devon Group, Inc. 5,000 97,500 25180110
PUBLISHING - 5.0%
BOOK PUBLISHING & PRINTING - 2.2%
Harcourt General, Inc. 5,200 181,350 41163G10
GENERAL PUBLISHING - 1.1%
Score Board, Inc. (a) 6,000 89,250 80917320
NEWSPAPERS - 1.7%
Scripps (E.W.) Co. Class A 5,000 140,625 81103910
TOTAL PUBLISHING 411,225
RAILROADS - 1.4%
Santa Fe Pacific Corp. 5,000 113,750 80218310
REAL ESTATE - 0.0%
SUBDIVIDED REAL ESTATE DEVELOPMENT - 0.0%
Koll Real Estate Group, Inc. (a) 9,700 3,941 50043410
RESTAURANTS - 0.7%
Quantum Restaurant Group, Inc. (a) 6,100 59,475 74763T10
RETAIL & WHOLESALE, MISCELLANEOUS - 4.3%
MAIL ORDER - 1.4%
Lillian Vernon Corp. 6,500 112,938 53243010
MISCELLANEOUS NONDURABLE GOODS
- WHOLESALE - 0.5%
Amway Asia Pacific Ltd. (a) 1,000 44,250 03299H22
MUSIC, TV, & ELECTRONIC STORES - 0.6%
Futures Shops Ltd. 2,600 45,276 36091310
RETAIL, GENERAL - 1.8%
CML Group, Inc. 5,000 106,250 12582010
Little Switzerland, Inc. (a) 5,400 45,900 53752810
152,150
TOTAL RETAIL & WHOLESALE, MISCELLANEOUS 354,614
SERVICES - 2.8%
BUSINESS SERVICES - 1.7%
Catalina Marketing Corp. (a) 2,700 140,063 14886710
GENERAL SERVICES - 1.1%
Supercuts, Inc. (a) 5,700 91,200 86805710
TOTAL SERVICES 231,263
TELEPHONE SERVICES - 2.4%
Telefonos de Mexico SA sponsored ADR
representing shares Ord. Class L 3,000 201,375 87940378
TOBACCO - 2.0%
TOBACCO MANUFACTURERS - 2.0%
Philip Morris Companies, Inc. 3,000 168,000 71815410
TOTAL COMMON STOCKS
(Cost $6,387,981) 7,331,933
REPURCHASE AGREEMENTS - 11.2%
MATURITY VALUE (NOTE 1)
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account, at 3.47% dated
2/28/94 due 3/1/94 $ 925,089 $ 925,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $7,312,981) $ 8,256,933
LEGEND
(a) Non-income producing
OTHER INFORMATION
CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective March 1,
1993, the fund adopted Statement of Position 93-2: Determination,
Disclosure, and Financial Statement Presentation of Income, Capital Gain,
and Return of Capital Distributions by Investment Companies. As a result,
the fund changed the classification of distributions to shareholders to
better disclose the differences between financial statement amounts and
distributions determined in accordance with income tax regulations.
Accordingly, amounts as of February 28, 1993 have been restated to reflect
an increase in paid in capital of $18,091, a decrease in undistributed net
investment loss of $73,059 and a decrease in accumulated net realized gain
on investments of $91,150.
Purchases and sales of securities, other than short-term securities,
aggregated $13,472,614 and $14,014,758, respectively.
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 $10,852 for the period
(see Note 4 of Notes to Financial Statements).
The maximum loan and average daily loan balances during the periods for
which loans were outstanding amounted to $1,263,000 and $916,300,
respectively. The weighted average interest rate paid was 3.7% (see Note 7
of Notes to Financial Statements).
INCOME TAX INFORMATION
At February 28, 1994, the aggregate cost of investment securities for
income tax purposes was $7,313,632. Net unrealized appreciation aggregated
$943,301, of which $1,121,126 related to appreciated investment securities
and $177,825 related to depreciated investment securities.
The fund hereby designates $165,000 as a capital gain dividend for the
purpose of the dividend paid deduction.
CONSUMER PRODUCTS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
FEBRUARY 28, 1994
ASSETS
Investment in securities, at value (including repurchase agreements of $925,000) (cost $7,312,981) (Notes 1 $ 8,256,933
and 2) - See accompanying schedule
Cash 228
Receivable for investments sold 278,152
Receivable for fund shares sold 46,233
Dividends receivable 5,405
Redemption fees receivable (Note 1) 37
Receivable from investment adviser for expense reductions (Note 8) 3,146
TOTAL ASSETS 8,590,134
LIABILITIES
Payable for investments purchased $ 117,295
Payable for fund shares redeemed 76,351
Accrued management fee 4,477
Other payables and accrued expenses 18,039
TOTAL LIABILITIES 216,162
NET ASSETS $ 8,373,972
Net Assets consist of (Note 1):
Paid in capital $ 7,053,121
Undistributed net investment income 70
Accumulated undistributed net realized gain (loss) on investments 376,829
Net unrealized appreciation (depreciation) on investment securities 943,952
NET ASSETS, for 549,612 shares outstanding $ 8,373,972
NET ASSET VALUE and redemption price per share ($8,373,972 (divided by) 549,612 shares) $15.24
Maximum offering price per share (100/97 of $15.24) $15.71
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED FEBRUARY 28, 1994
INVESTMENT INCOME $ 70,117
Dividends
Interest 32,557
TOTAL INCOME 102,674
EXPENSES
Management fee (Note 4) $ 56,196
Transfer agent (Note 4) 121,453
Fees
Redemption fees (Note 1) (13,271
)
Accounting fees and expenses 45,448
(Note 4)
Non-interested trustees' compensation 63
Custodian fees and expenses 10,746
Registration fees 8,519
Audit 4,342
Legal 95
Interest (Note 7) 933
Reports to shareholders 1,252
Total expenses before reductions 235,776
Expense reductions (Note 8) (13,001 222,775
)
NET INVESTMENT INCOME (LOSS) (120,101
)
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 1) 1,327,222
Net realized gain (loss) on investment securities
Change in net unrealized appreciation (depreciation) on investment securities 607,019
NET GAIN (LOSS) 1,934,241
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 1,814,140
OTHER INFORMATION $19,410
Sales charges paid to FDC
(Note 4)
Deferred sales charges withheld $748
by FDC (Note 4)
Exchange fees withheld by FSC $11,543
(Note 4)
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED TEN MONTHS
FEBRUARY 28, ENDED
1994 FEBRUARY 28,
1993
Operations $ (120,101 $ (49,464
Net investment income (loss) ) )
Net realized gain (loss) on investments 1,327,222 293,358
Change in net unrealized appreciation (depreciation) on investments 607,019 (194,656
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 1,814,140 49,238
Distributions to shareholders from net realized gains (829,580 (557,742
) )
Share transactions 15,679,102 5,568,122
Net proceeds from sales of shares
Reinvestment of distributions 814,217 537,409
Cost of shares redeemed (16,130,050 (6,153,451
) )
Paid in capital portion of redemption fees (Note 1) 20,663 8,906
Net increase (decrease) in net assets resulting from share transactions 383,932 (39,014
)
TOTAL INCREASE (DECREASE) IN NET ASSETS 1,368,492 (547,518
)
NET ASSETS
Beginning of period 7,005,480 7,552,998
End of period (including undistributed net investment income (loss) of $70 and $(73,059), respectively)$ 8,373,972 $ 7,005,480
OTHER INFORMATION
Shares
Sold 1,044,542 420,803
Issued in reinvestment of distributions 54,101 40,868
Redeemed (1,089,262 (468,323
) )
Net increase (decrease) 9,381 (6,652)
</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>
YEAR ENDED TEN MONTHS YEAR ENDED JUNE 29, 1990
FEBRUARY 28, ENDED APRIL 30, (COMMENCEMEN
FEBRUARY 28, T OT OPERATIONS)
TO APRIL 30,
SELECTED PER-SHARE DATAC 1994 1993 1992 1991
Net asset value, beginning of period $ 12.97 $ 13.81 $ 11.22 $ 10.00
Income from Investment Operations
Net investment income (loss) (.20) (.09) (.07) .05F
Net realized and unrealized gain (loss) on investments 3.84 .20 2.86 1.18
Total from investment operations 3.64 .11 2.79 1.23
Less Distributions
From net investment income - - - (.06)
From net realized gain (1.40) (.97) (.22) -
Total distributions (1.40) (.97) (.22) (.06)
Redemption fees added to paid in capital .03 .02 .02 .05
Net asset value, end of period $ 15.24 $ 12.97 $ 13.81 $ 11.22
TOTAL RETURND, E 28.43% .98% 25.27% 12.89%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 8,374 $ 7,005 $ 7,553 $ 1,877
Ratio of expenses to average net assetsB 2.48% 2.47%A 2.48% 2.43%A
Ratio of expenses to average net assets before expense reductionsB 2.62% 3.17%A 2.83% 3.11%A
Ratio of net investment income (loss) to average net assets (1.34)% (.80)% (.56)% .62%A
A
Portfolio turnover rate 169% 215%A 140% 108%A
</TABLE>
1 ANNUALIZED
2 SEE NOTE 8 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 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 1 PAST 5 LIFE OF
FEBRUARY 28, 1994 YEAR YEARS FUND
FOOD AND AGRICULTURE 11.69% 132.94% 362.24%
FOOD AND AGRICULTURE
(INCL. 3% SALES CHARGE) 8.34% 125.95% 348.38%
S&P 500 8.33% 89.60% 222.99%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, 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
FEBRUARY 28, 1994 YEAR YEARS FUND
FOOD AND AGRICULTURE 11.69% 18.43% 19.50%
FOOD AND AGRICULTURE
(INCL. 3% SALES CHARGE) 8.34% 17.71% 19.07%
S&P 500 8.33% 13.65% 14.62%
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
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 15279.78 14547.40
02/29/88 16036.71 15225.31
03/31/88 16147.72 14754.84
04/30/88 16198.18 14918.62
05/31/88 16319.29 15048.41
06/30/88 16985.38 15739.14
07/31/88 17106.49 15679.33
08/31/88 17096.40 15146.23
09/30/88 17782.68 15791.46
10/31/88 18610.25 16230.46
11/30/88 18176.28 15998.37
12/31/88 18641.56 16278.34
01/31/89 19602.99 17469.91
02/28/89 19248.78 17034.91
03/31/89 19977.44 17431.83
04/30/89 21009.70 18336.54
05/31/89 22305.10 19079.17
06/30/89 22743.36 18970.42
07/31/89 24912.86 20683.44
08/31/89 24528.79 21088.84
09/30/89 24632.59 21002.38
10/31/89 24383.46 20515.12
11/30/89 25307.31 20933.63
12/31/89 25887.05 21436.04
01/31/90 24086.41 19997.68
02/28/90 24430.98 20255.65
03/31/90 25486.91 20792.42
04/30/90 25386.88 20272.61
05/31/90 27598.78 22249.19
06/30/90 28494.03 22097.90
07/31/90 28482.80 22027.18
08/31/90 26404.99 20035.93
09/30/90 25562.64 19060.18
10/31/90 26169.13 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 32838.62 23785.03
04/30/91 32339.65 23842.12
05/31/91 33523.24 24872.10
06/30/91 32142.04 23732.96
07/31/91 33487.19 24838.91
08/31/91 34820.54 25427.59
09/30/91 34206.97 25002.95
10/31/91 34218.77 25337.99
11/30/91 33982.78 24316.87
12/31/91 37949.44 27098.72
01/31/92 37383.77 26594.68
02/29/92 37174.71 26940.42
03/31/92 36350.79 26415.08
04/30/92 35932.69 27191.68
05/31/92 36252.42 27324.92
06/30/92 35856.03 26917.78
07/31/92 37240.98 28018.72
08/31/92 37075.80 27444.33
09/30/92 37698.39 27768.18
10/31/92 38104.98 27865.36
11/30/92 39566.15 28815.57
12/31/92 40236.27 29170.00
01/31/93 40249.28 29415.03
02/28/93 40145.20 29815.08
03/31/93 41237.95 30444.17
04/30/93 39636.74 29707.43
05/31/93 40884.72 30503.58
06/30/93 40477.77 30592.05
07/31/93 39975.87 30469.68
08/31/93 41888.52 31624.48
09/30/93 41752.87 31380.97
10/31/93 43326.41 32030.56
11/30/93 42824.50 31726.27
12/31/93 43784.06 32110.15
01/31/94 45108.26 33201.90
02/28/94 44837.72 32298.81
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 February 28, 1994, your investment would have grown to $44,838 -
a 348.38% increase. That compares to $10,000 invested in the S&P 500,
which would have grown to $32,299 over the same period - a 222.99%
increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1994
% OF FUND'S
INVESTMENTS
Ralston Purina Co. 10.1
Dr. Pepper/Seven-Up Companies, Inc. 4.8
Dole Food, Inc. 4.3
Tyson Foods, Inc. 3.6
McDonald's Corp. 2.9
Dean Foods, Inc. 2.9
Pioneer Hi-Bred International, Inc. 2.7
IBP, Inc. 2.4
CPC International, Inc. 2.2
ConAgra, Inc. 2.0
TOP INDUSTRIES AS OF FEBRUARY 28, 1994
Row: 1, Col: 1, Value: 39.4
Row: 1, Col: 2, Value: 6.4
Row: 1, Col: 3, Value: 12.5
Row: 1, Col: 4, Value: 12.5
Row: 1, Col: 5, Value: 13.5
Row: 1, Col: 6, Value: 15.7
Food 15.7%
Meat & Fish 13.5%
Soft Drinks 12.5%
Grain Mill Products 12.5%
Retail Grocery 6.4%
All Others 39.4%*
* 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. For the year ended February 28, 1994, the fund had a total return of
11.69%. That beat the S&P 500, which returned 8.33% during the same
period.
Q. WHAT HELPED THE FUND?
A. Partly the fact that we avoided packaged foods, which didn't fare very
well over the past 12 months. During most of the 1980s, those companies'
earnings were driven by their ability to increase product prices. But now
that's changed, and the companies may not be able to raise prices further.
Packaged food companies suffered as supermarkets resisted price increases,
and consumers turned to cheaper private-label foods. So I looked instead
for companies with products that appear to be on the brink of better
pricing, and as a result, had room to profit from price increases.
Q. WHAT COMPANIES WERE ATTRACTIVE?
A. Dole Food - which gets a significant portion of its revenues from
bananas - is one example. Bananas are currently at the bottom of their
price cycle, and the company has a fair amount of room to improve profits
if banana prices rise. Unfortunately, banana prices didn't recover as
quickly as I thought they would, and the stock was somewhat of a
disappointment. But I'm still optimistic that they have growth potential
so lately I've also been adding to the fund's investments in Chiquita
Brands. Dean Foods - which gets a majority of its profits from canned
vegetables - is another example of a company that could raise prices.
Bumper crops in the early 1990s had depressed vegetable prices. But last
year's floods may mean a decrease in the vegetable supply, which could help
boost their prices this year.
Q. IS THE PRICING CYCLE THE THREAD THAT RUNS THROUGH ALL YOUR TOP
INVESTMENTS?
A. Not necessarily. Ralston Purina Co. - the fund's largest investment at
the end of the period - was attractive in part because the company is
taking demonstrable steps to cut costs. The company also owns Eveready
Batteries, a soy protein business, and a private-label cereal division, in
addition to its core pet food business. What's more, I think the company's
stock is inexpensive compared to its value. Dr. Pepper/Seven-Up Companies
Inc. is re-entering the New York market, which may boost revenues, and it
has a strong cash flow. I also have investments in Tyson Foods Inc., the
nation's largest poultry company, because of its recent strong growth and
its potential for growth to continue.
Q. ONE OF YOUR TOP INVESTMENTS SIX MONTHS AGO WAS DEERE. WHY HAVE YOU
ELIMINATED IT NOW?
A. Deere was one of the fund's strongest performers throughout the period.
But I asked myself "How much higher can it go?" I thought the stock was at
a relatively high price, and I started to worry that any bad news could
send it tumbling. So I pared back the fund's stake in the company. But
there are others in the agriculture sector - like commodity processors - I
have continued to hold. The Midwest floods could have a major effect on
corn prices. If we see anything short of a bumper corn crop in 1994, corn
inventories could be drawn down. If that happens, a seed company like
Pioneer Hi-Bred International, Inc. could benefit from a higher demand for
seed.
Q. DO YOU SEE ANY SIGNIFICANT CHANGES IN YOUR STRATEGY OVER THE NEXT SIX
MONTHS?
A. Not really. I think the prospects for the fund may be better than they
were six months ago. I'll probably continue to avoid the packaged food
group since prices of those stocks seem high relative to their value.
Commodity processors, on the other hand, have been out of investors' favor
for some time and I think expectations for improvement are low. But if the
demand for products outpaces supply, investors' interest could come back
and that could help stocks in the group. Finally, I'll continue to look for
situations where product prices are low, with a reasonable chance for
improvement.
FUND FACTS
START DATE: July 29, 1985
SIZE: as of February 28, 1994, over $95 million
MANAGER: William Mankivsky, since April
1993; manager, Fidelity Select Energy Service
Portfolio, since January 1992; equity analyst,
energy service since 1991; medical device
industries, in 1992; joined Fidelity in 1991
(checkmark)
FOOD AND AGRICULTURE PORTFOLIO
INVESTMENTS FEBRUARY 28, 1994
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 93.2%
SHARES VALUE (NOTE 1)
AGRICULTURE - 4.1%
CROPS - 4.1%
DEKALB Genetics Corp. Class B 37,000 $ 1,295,000 24487820
Pioneer Hi-Bred International, Inc. 71,100 2,612,925 72368610
3,907,925
BEVERAGES - 18.8%
DISTILLED BEVERAGES - 1.7%
Seagram Co. Ltd. 28,600 818,581 81185010
Universal Foods Corp. 23,894 791,489 91353810
1,610,070
MALT BEVERAGE - 4.6%
Comp Cervecerias Unidas SA ADR 58,000 1,587,750 20442910
Fomento Economico Mexicano SA
de CV Class B 56,000 352,201 34441892
Greenalls Group PLC 50,000 334,687 39499193
Guinness PLC Ord. 90,000 702,733 40203310
Quilmes Industries SA 39,000 897,000 74899692
Whitbread Class A 65,000 545,678 96341499
4,420,049
SOFT DRINKS - 12.5%
Coca-Cola Beverages Canada 80,000 333,457 19108T10
Coca-Cola Bottling Co. Consolidated 32,300 1,057,825 19109810
Coca-Cola Enterprises, Inc. 36,000 639,000 19121910
Coca-Cola Femsa SA de CV
sponsored ADR (a) 38,000 1,206,500 19124110
Dr. Pepper/Seven-Up Companies, Inc. (a) 189,100 4,632,950 25613130
Grupo Embotallador Mexico
SA de CV Class B ADS (b) 35,000 1,176,875 40048J10
Panamerican Beverages, Inc. Class A 32,300 1,292,000 69829W10
PepsiCo, Inc. 35,565 1,391,481 71344810
Serm Suk Co. Ltd. 20,000 325,434 81799999
12,055,522
TOTAL BEVERAGES 18,085,641
CHEMICALS & PLASTICS - 0.4%
AGRICULTURAL CHEMICALS - 0.4%
Potash Corp. of Saskatchewan 15,000 387,643 73755L10
CONGLOMERATES - 0.7%
Whitman Corp. 41,700 667,200 96647K10
DRUGS & PHARMACEUTICALS - 0.2%
DRUGS - 0.2%
Bristol-Myers Squibb Co. 4,000 221,000 11012210
FOODS - 54.8%
BAKERY PRODUCTS - 2.3%
Flowers Industries, Inc. 41,300 748,563 34349610
Grupo Industries Bimbo Series A Ord. (a) 82,200 790,981 60899995
Ralston Continental Baking Group 94,000 681,500 75126210
2,221,044
CANDY - 1.3%
Hershey Foods Corp. 26,000 1,332,500 42786610
DAIRY - 2.9%
Dean Foods Co. 88,600 2,790,900 24236110
FOOD - 15.7%
CPC International, Inc. 42,500 2,082,500 12614910
Campbell Soup Co. 25,000 1,050,000 13442910
Chiquita Brands International, Inc. 40,800 719,100 17003210
Dole Food, Inc. 122,500 4,103,750 25660510
General Mills, Inc. 3,000 167,250 37033410
Hazlewood Foods Ord. 195,000 457,790 42199292
Heinz (H.J.) Co. 22,000 717,750 42307410
SHARES VALUE (NOTE 1)
Hillsdown Holdings PLC 96,734 $ 249,375 43258610
Michael Foods, Inc. 75,500 792,750 59407410
Nestle SA (Reg.) 1,780 1,601,220 64106992
Perkins Foods PLC 400,000 433,868 71499492
Pet, Inc. 90,000 1,766,250 71582510
Sylvan Foods Holdings, Inc. (a) 101,900 980,788 87137110
15,122,391
GENERAL FOOD PREPARATIONS - 2.9%
Herdez SA de CV Class B (a) 848,846 1,051,712 42799F23
McCormick & Co., Inc. (non-vtg.) 53,000 1,139,500 57978020
SYSCO Corp. 21,000 569,625 87182910
2,760,837
GRAIN MILL PRODUCTS - 12.5%
Archer-Daniels-Midland Co. 72,754 1,864,321 03948310
International Multifoods Corp. 25,000 434,375 46004310
Quaker Oats Co. 513 32,576 74740210
Ralston Purina Co. 222,500 9,678,750 75127730
12,010,022
MEAT & FISH - 13.5%
ConAgra, Inc. 70,200 1,921,725 20588710
Doskocil Companies, Inc. (a) 79,100 860,213 25848630
GoodMark Foods, Inc. 105,600 1,848,000 38238710
Hormel (George A) & Co. 40,700 864,875 44045210
Hudson Foods, Inc. Class A 44,600 624,400 44378210
IBP, Inc. 97,700 2,357,013 44922310
Pilgrims Pride Corp. 82,900 715,013 72146710
Sanderson Farms, Inc. 25,200 409,500 80001310
Tyson Foods, Inc. 160,000 3,440,000 90249410
13,040,739
PACKAGED & FROZEN FOODS - 1.8%
Dreyer's Grand Ice Cream, Inc. 38,000 902,500 26187810
Eskimo Pie Corp. 31,600 624,100 29644310
J&J Snack Foods Corp. (a) 9,500 181,688 46603210
1,708,288
SUGAR & CANDIES - 1.9%
Tate & Lyle PLC 27,574 174,945 87657010
Tootsie Roll Industries, Inc. 22,769 1,627,984 89051610
1,802,929
TOTAL FOODS 52,789,650
GROCERY STORES - 6.4%
RETAIL GROCERY - 6.4%
Albertson's, Inc. 39,000 1,126,125 01310410
American Stores Co. 23,300 1,112,575 03009610
Giant Food, Inc. Class A 50,500 1,313,000 37447810
Hannaford Brothers Co. 38,400 940,800 41055010
Safeway, Inc. (a) 22,000 544,500 78651420
Stop & Shop Companies, Inc. (a) 43,500 1,087,500 86209910
6,124,500
RESTAURANTS - 5.5%
ARK Restaurants Corp. (a) 46,700 467,000 04071210
Brinker International, Inc. 15,300 692,325 10964110
Ground Round Restaurants, Inc. (a) 75,900 488,606 39942710
IHOP Corp. (a) 27,500 818,125 44962310
McDonald's Corp. 46,100 2,794,813 58013510
5,260,869
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
TOBACCO - 2.3%
CIGARETTES - 0.6%
RJR Nabisco Holdings Corp. (a) 79,700 $ 547,939 74960K10
TOBACCO MANUFACTURERS - 1.7%
Philip Morris Companies, Inc. 30,000 1,680,000 71815410
TOTAL TOBACCO 2,227,939
TOTAL COMMON STOCKS
(Cost $81,079,480) 89,672,367
REPURCHASE AGREEMENTS - 6.8%
MATURITY VALUE (NOTE 1)
AMOUNT
Investments in repurchase agreements,
(U.S. Treasury obligations), in a joint
trading account, at 3.47% dated
2/28/94 due 3/1/94 $ 6,574,634 6,574,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $87,653,480) $ 96,246,367
(a) Non-income producing
(a) 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 $1,176,875 or 1.2% of net
assets.
OTHER INFORMATION
CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective March 1,
1993, the fund adopted Statement of Position 93-2: Determination,
Disclosure, and Financial Statement Presentation of Income, Capital Gain,
and Return of Capital Distributions by Investment Companies. As a result,
the fund changed the classification of distributions to shareholders to
better disclose the differences between financial statement amounts and
distributions determined in accordance with income tax regulations.
Accordingly, amounts as of February 28, 1993 have been reclassified to
reflect an increase in paid in capital of $9,784,974, a decrease in
undistributed net investment income of $126,000 and a decrease in
accumulated net realized gain on investments of $9,658,974.
Purchases and sales of securities, other than short-term securities,
aggregated $90,646,827 and $114,201,862, respectively.
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 $61,212 for the period
(see Note 4 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 84.5%
Mexico 4.8
United Kingdom 3.1
Switzerland 1.7
Chile 1.7
Canada 1.6
Panama 1.4
Others (individually less than 1%) 1.2
TOTAL 100.0%
INCOME TAX INFORMATION
At February 28, 1994, the aggregate cost of investment securities for
income tax purposes was $87,979,766. Net unrealized appreciation aggregated
$8,266,601, of which $10,655,278 related to appreciated investment
securities and $2,388,677 related to depreciated investment securities.
The fund hereby designates $2,355,000 as a capital gain dividend for the
purpose of the dividend paid deduction.
FOOD AND AGRICULTURE PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
FEBRUARY 28, 1994
ASSETS
Investment in securities, at value (including repurchase agreements of $6,574,000) (cost $87,653,480)
(Notes 1 $ 96,246,367
and 2) - See accompanying schedule
Cash 105
Receivable for investments sold 1,031,786
Receivable for fund shares sold 440,288
Dividends receivable 167,909
Redemption fees receivable (Note 1) 233
Other receivables 2,706
TOTAL ASSETS 97,889,394
LIABILITIES
Payable for investments purchased $ 592,224
Payable for fund shares redeemed 2,101,890
Accrued management fee 50,515
Other payables and accrued expenses 134,425
TOTAL LIABILITIES 2,879,054
NET ASSETS $ 95,010,340
Net Assets consist of (Note 1):
Paid in capital $ 82,207,907
Undistributed net investment 946
income
Accumulated undistributed net realized gain (loss) on investments 4,208,600
Net unrealized appreciation (depreciation) on investment securities 8,592,887
NET ASSETS, for 3,017,576 shares outstanding $ 95,010,340
NET ASSET VALUE and redemption price per share ($95,010,340 (divided by) 3,017,576 shares) $31.49
Maximum offering price per share (100/97 of $31.49) $32.46
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED FEBRUARY 28, 1994
INVESTMENT INCOME $ 1,625,560
Dividends
Interest (including security lending fees of $5,633) (Note 6) 494,083
TOTAL INCOME 2,119,643
EXPENSES
Management fee (Note 4) $ 687,792
Transfer agent (Note 4) 1,036,351
Fees
Redemption fees (Note 1) (121,107)
Accounting and security lending fees (Note 4) 111,592
Non-interested trustees' compensation 775
Custodian fees and expenses 26,390
Registration fees 33,892
Audit 18,086
Legal 1,092
Reports to shareholders 23,107
Miscellaneous 1,466
Total expenses before reductions 1,819,436
Expense reductions (Note 8) (14,243) 1,805,193
NET INVESTMENT INCOME 314,450
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 1) 12,506,767
Net realized gain (loss) on investment securities
Change in net unrealized appreciation (depreciation) on investment securities (1,004,065
)
NET GAIN (LOSS) 11,502,702
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 11,817,152
OTHER INFORMATION $401,721
Sales charges paid to FDC
(Note 4)
Deferred sales charges withheld $26,901
by FDC (Note 4)
Exchange fees withheld by FSC $104,895
(Note 4)
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED TEN MONTHS
FEBRUARY 28, ENDED
1994 FEBRUARY 28,
1993
Operations $ 314,450 $ 187,262
Net investment income
Net realized gain (loss) on investments 12,506,767 7,108,935
Change in net unrealized appreciation (depreciation) on investments (1,004,065 4,668,192
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 11,817,152 11,964,389
Distributions to shareholders (310,254 (369,385
From net investment income ) )
From net realized gain (12,323,186 (5,733,801
) )
TOTAL DISTRIBUTIONS (12,633,440 (6,103,186
) )
Share transactions 124,680,275 36,200,000
Net proceeds from sales of shares
Reinvestment of distributions 12,440,857 5,891,427
Cost of shares redeemed (149,706,361 (48,509,438
) )
Paid in capital portion of redemption fees (Note 1) 34,844 12,269
Net increase (decrease) in net assets resulting from share transactions (12,550,385 (6,405,742
) )
TOTAL INCREASE (DECREASE) IN NET ASSETS (13,366,673 (544,539
) )
NET ASSETS
Beginning of period 108,377,013 108,921,552
End of period (including undistributed of net investment income of $946 and $126,265, respectively)$ 95,010,340 $ 108,377,013
OTHER INFORMATION
Shares
Sold 3,975,362 1,224,392
Issued in reinvestment of distributions 414,802 201,093
Redeemed (4,884,544 (1,640,560
) )
Net increase (decrease) (494,380 (215,075
) )
</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>
YEAR ENDED TEN MONTHS YEARS ENDED APRIL 30,
FEBRUARY 28, ENDED
FEBRUARY 28,
SELECTED PER-SHARE DATAC 1994 1993 1992 1991 1990
Net asset value, beginning of period $ 30.86 $ 29.22 $ 27.87 $ 22.84 $ 20.76
Income from Investment Operations
Net investment income .09 .05 .13 .21 .19
Net realized and unrealized gain (loss) on investments 3.29 3.26 2.89 5.78 4.07
Total from investment operations 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 (2.70) (1.57) (1.59) (.79) (2.17)
Total distributions (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 $ 31.49 $ 30.86 $ 29.22 $ 27.87 $ 22.84
TOTAL RETURND, E 11.69% 11.72% 11.11% 27.39% 20.83%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 95,010 $ 108,377 $ 108,922 $ 64,490 $ 25,965
Ratio of expenses to average net assetsB 1.64% 1.67% 1.83% 2.22% 2.53%
A
Ratio of expenses to average net assets before expense 1.65% 1.67% 1.83% 2.22% 2.58%
reductionsB A
Ratio of net investment income to average net assets .29% .21% .46% .85% .82%
A
Portfolio turnover rate 96% 515% 63% 124% 267%
A
</TABLE>
1 ANNUALIZED
2 SEE NOTE 8 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.
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 1 PAST 5 LIFE OF
FEBRUARY 28, 1994 YEAR YEARS FUND
LEISURE 37.14% 106.24% 503.97%
LEISURE
(INCL. 3% SALES CHARGE) 33.03% 100.06% 485.85%
S&P 500 8.33% 89.60% 311.87%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one year, five years, or since the fund
started on May 8, 1984. 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
FEBRUARY 28, 1994 YEAR YEARS FUND
LEISURE 37.14% 15.58% 20.10%
LEISURE
(INCL. 3% SALES CHARGE) 33.03% 14.88% 19.73%
S&P 500 8.33% 13.65% 15.51%
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
05/08/84 9700.00 10000.00
05/31/84 9079.20 9471.39
06/30/84 9486.60 9676.92
07/31/84 9418.70 9556.92
08/31/84 10611.80 10612.96
09/30/84 10485.70 10615.09
10/31/84 10640.90 10656.49
11/30/84 10476.00 10537.13
12/31/84 11028.90 10815.31
01/31/85 12551.80 11657.83
02/28/85 13201.70 11801.22
03/31/85 13686.70 11809.48
04/30/85 13531.50 11798.85
05/31/85 14326.90 12480.82
06/30/85 15166.47 12676.77
07/31/85 15088.74 12657.76
08/31/85 15428.80 12550.17
09/30/85 14369.77 12157.35
10/31/85 15137.32 12719.02
11/30/85 16410.10 13591.54
12/31/85 17255.38 14249.37
01/31/86 17848.05 14329.17
02/28/86 19703.78 15400.99
03/31/86 21258.32 16260.36
04/30/86 21899.57 16076.62
05/31/86 23327.80 16931.90
06/30/86 23871.89 17218.05
07/31/86 21587.03 16255.56
08/31/86 22297.83 17461.72
09/30/86 20126.47 16017.64
10/31/86 21158.60 16941.85
11/30/86 20895.70 17353.54
12/31/86 19970.68 16911.03
01/31/87 22073.88 19188.94
02/28/87 24449.72 19946.90
03/31/87 24741.83 20523.37
04/30/87 24177.08 20340.71
05/31/87 25170.26 20517.68
06/30/87 26251.07 21553.82
07/31/87 28188.74 22646.60
08/31/87 28772.97 23491.32
09/30/87 28149.80 22976.86
10/31/87 20116.73 18027.64
11/30/87 18714.60 16542.16
12/31/87 21108.28 17801.02
01/31/88 21433.19 18550.45
02/29/88 23306.83 19414.90
03/31/88 24086.61 18814.98
04/30/88 24238.24 19023.82
05/31/88 23610.08 19189.33
06/30/88 25187.03 20070.12
07/31/88 25396.46 19993.85
08/31/88 24404.41 19314.06
09/30/88 26101.92 20136.84
10/31/88 26101.92 20696.65
11/30/88 25098.85 20400.68
12/31/88 26597.94 20757.70
01/31/89 28868.63 22277.16
02/28/89 28405.68 21722.46
03/31/89 29739.43 22228.59
04/30/89 31425.92 23382.25
05/31/89 32991.15 24329.24
06/30/89 33303.97 24190.56
07/31/89 36098.78 26374.97
08/31/89 36388.29 26891.92
09/30/89 36622.12 26781.66
10/31/89 33983.19 26160.32
11/30/89 34384.04 26693.99
12/31/89 34898.58 27334.65
01/31/90 30666.30 25500.50
02/28/90 30394.39 25829.45
03/31/90 30630.83 26513.93
04/30/90 29436.81 25851.08
05/31/90 31872.14 28371.57
06/30/90 31505.66 28178.64
07/31/90 30418.03 28088.47
08/31/90 26906.90 25549.27
09/30/90 24353.34 24305.02
10/31/90 24069.61 24200.51
11/30/90 25984.78 25763.86
12/31/90 27121.25 26482.67
01/31/91 28637.94 27637.32
02/28/91 30835.35 29613.39
03/31/91 31348.87 30330.03
04/30/91 31432.47 30402.82
05/31/91 32519.23 31716.22
06/30/91 30692.04 30263.62
07/31/91 32160.95 31673.91
08/31/91 32495.34 32424.58
09/30/91 33331.31 31883.09
10/31/91 34334.48 32310.32
11/30/91 32686.42 31008.21
12/31/91 36054.19 34555.55
01/31/92 36866.27 33912.82
02/29/92 38156.05 34353.69
03/31/92 37379.80 33683.79
04/30/92 37797.78 34674.09
05/31/92 38024.69 34844.00
06/30/92 37439.51 34324.82
07/31/92 37618.64 35728.71
08/31/92 37081.23 34996.27
09/30/92 37809.72 35409.22
10/31/92 38096.34 35533.16
11/30/92 40687.85 36744.84
12/31/92 41905.97 37196.80
01/31/93 42944.97 37509.25
02/28/93 42718.06 38019.38
03/31/93 44939.35 38821.59
04/30/93 43926.57 37882.10
05/31/93 47081.93 38897.34
06/30/93 48349.05 39010.15
07/31/93 49641.00 38854.11
08/31/93 53057.24 40326.68
09/30/93 55703.27 40016.16
10/31/93 58784.09 40844.50
11/30/93 56597.70 40456.47
12/31/93 58481.32 40946.00
01/31/94 59089.15 42338.16
02/28/94 58584.78 41186.56
Let's say you invested $10,000 in Fidelity Select Leisure Portfolio on May
8, 1984, when the fund started, and paid a 3% sales charge. By February 28,
1994, your investment would have grown to $58,585 - a 485.85% increase.
That compares to $10,000 invested in the S&P 500, which would have
grown to $41,187 over the same period - a 311.87% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1994
% OF FUND'S
INVESTMENTS
Capital Cities/ABC, Inc. 3.7
Clear Channel Communications, Inc. 2.5
La Quinta Motor Inns, Inc. 2.2
Canadaigua Wine Co. Class A 2.1
Mesa Airlines, Inc. 2.0
Disney (Walt) Co. 1.9
Sierra On-Line, Inc. 1.7
Cedar Fair LP (depositary units) 1.7
Blockbuster Entertainment Corp. 1.6
Tele-Communications, Inc. Class A 1.6
TOP INDUSTRIES AS OF FEBRUARY 28, 1994
Row: 1, Col: 1, Value: 59.4
Row: 1, Col: 2, Value: 4.8
Row: 1, Col: 3, Value: 7.5
Row: 1, Col: 4, Value: 7.8
Row: 1, Col: 5, Value: 9.6
Row: 1, Col: 6, Value: 10.9
Television Broadcasting 10.9%
Cable TV Operators 9.6%
Radio Broadcasting 7.8%
Hotels, Motels, & Tourist
Centers 7.5%
Air Transport, Major National 4.8%
All Others 59.4%*
* 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. Very well. For the year ended February 28, 1994, the fund had a total
return of 37.14%. This was significantly higher than the S&P 500, which
returned 8.33% for the same period.
Q. WHAT WAS BEHIND THESE RESULTS?
A. The fund was invested in certain consumer industries that I expected to
perform well. These industries had an excellent year - most of them were up
at least 30%. Standout industries included cable, cellular, entertainment,
hotels, radio, television, and gaming. Within these groups, several
companies performed particularly well, including LaQuinta Motor Inns and
Clear Channel Communications. In addition, the fund's performance was
enhanced by takeover offers for McCaw, New Line Cinema, Affiliated
Publications, McLean Hunter, Liberty Media, Tele-Communications and
Paramount.
Q. DID YOU SHIFT YOUR INDUSTRY FOCUS DURING THE LAST SIX MONTHS?
A. Yes. I increased investments in several industries, most notably
advertising and broadcasting. Ad agencies such as Omnicom have experienced
a pickup in U.S. revenue growth in the past six months as the economy has
recovered and companies have increased their ad budgets. This trend in turn
helped the television and radio broadcast industries by pushing up prices
for media time. Capital Cities/ ABC was the fund's largest position at the
end of February, and it seems well positioned in both television and radio
to benefit if this trend continues in 1994. I also moved a portion of the
fund's investment in regional airlines to major airlines, such as American
Airlines. This company is restructuring its labor agreements and route
schedules to lower costs. Internally generated cost savings, along with
lower oil prices, should improve earnings in 1994. I held onto Mesa
Airlines, a regional airline investment, because it could benefit from
internal route expansion as well as from acquisitions.
Q. WHAT SPECIFIC COMPANIES DID YOU LIKE?
A. In addition to Capital Cities/ABC, I liked La Quinta Motor Inns and
Clear Channel Communications. La Quinta is in the middle of a chain-wide
remodeling designed to improve occupancy and room rates. The outlook for
the hotel industry is favorable since demand for hotel rooms should grow
faster than supply for several years. Clear Channel is another potential
beneficiary of improving television and radio advertising prices.
Q. YOU HAVE ABOUT 14% OF THE FUND IN INVESTMENTS OVERSEAS. WHERE IS IT
INVESTED?
A. Most of it is invested in Latin American soft drink bottlers, Latin
American television and radio companies, and Asian television companies.
These companies could experience rapid earnings growth over the next five
years due to growing disposable income and demand for consumer products in
these regions.
Q. IN HINDSIGHT, DO YOU HAVE ANY REGRETS ABOUT YOUR INVESTMENT DECISIONS?
A. Yes. The fund's performance would have been stronger if it had invested
even more in Paramount in the first half of the period. Viacom offered a
significant premium for Paramount, which drove the stock up sharply.
Q. HOW DO YOU THINK THE FUND WILL PERFORM MOVING FORWARD?
A. While I'm comfortable with how the fund is invested, it will be
difficult to outperform last year's strong results. However, the industries
in which the fund is invested seem to have a positive long-term outlook
because world demand for leisure products and services could continue to
rise.
FUND FACTS
START DATE: May 8, 1984
SIZE: as of February 28, 1994, over $105 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 FEBRUARY 28, 1994
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 93.8%
SHARES VALUE (NOTE 1)
ADVERTISING - 3.1%
ADVERTISING - 0.1%
Regal Communication Corp. (a) 55,700 $ 109,690 75875630
ADVERTISING AGENCIES - 3.0%
Foote Cone & Belding
Communications, Inc. 36,200 1,678,775 34487210
Interpublic Group of Companies, Inc. 500 16,375 46069010
Omnicom Group, Inc. 29,100 1,422,263 68191910
3,117,413
TOTAL ADVERTISING 3,227,103
AIR TRANSPORTATION - 5.6%
AIR TRANSPORT, MAJOR NATIONAL - 4.8%
AMR Corp. (a) 18,000 1,138,500 00176510
Delta Air Lines, Inc. 18,800 932,950 24736110
Mesa Airlines, Inc. (a) 105,100 2,088,863 59048110
Southwest Airlines Co. 10,700 365,138 84474110
UAL Corp. (a) 4,200 563,850 90254910
5,089,301
AIR TRANSPORTATION, REGIONAL - 0.8%
Comair Holdings, Inc. 34,200 786,600 19978910
TOTAL AIR TRANSPORTATION 5,875,901
BEVERAGES - 8.2%
DISTILLED BEVERAGES - 2.1%
Canadaigua Wine Co. Class A (a) 80,800 2,222,000 13721920
Seagram Co. Ltd. 100 2,862 81185010
2,224,862
MALT BEVERAGE - 1.7%
Anheuser-Busch Companies, Inc. 12,000 594,000 03522910
Comp Cervecerias Unidas SA ADR 37,500 1,026,563 20442910
Coors (Adolph) Co. Class B 1,000 18,625 21701610
Grupo Modelo Class C Ord. (a) 6,800 149,686 40099M22
1,788,874
SOFT DRINKS - 4.4%
Buenos Aires Embotelladora
sponsored ADR 5,000 202,500 11942420
COTT Corp. 14,000 392,923 22163N10
Celestial Seasonings, Inc. (a) 200 5,750 15101610
Coca-Cola Company (The) 1,000 42,625 19121610
Coca-Cola Enterprises, Inc. 400 7,100 19121910
Dr. Pepper/Seven-Up Companies,
Inc. (a) 60,900 1,492,050 25613130
Emvasa Del Valle de Enah Ord. (a) 280,000 1,496,855 29299E22
PepsiCo, Inc. 21,441 838,879 71344810
Snapple Beverage Corp. (a) 7,000 203,000 83303710
4,681,682
TOTAL BEVERAGES 8,695,418
BROADCASTING - 27.9%
CABLE TV OPERATORS - 9.1%
ACS Enterprises, Inc. (a) 8,000 128,000 00087230
BET Holdings, Inc. Class A (a) 64,900 1,298,000 08658510
CAI Wireless Systems, Inc. 10,500 126,000 12476P10
Cablemaxx, Inc. 46,300 497,725 12685910
Gaylord Entertainment Co. Class A 10,400 282,100 36790110
Interactive Network, Inc. (a) 100 813 45837P10
International Family Entertainment
Class B (a) 15,100 292,563 45950M10
Liberty Media Corp. Class A (a) 24,000 549,000 53071530
NTN Communications, Inc. (a) 85,000 680,000 62941030
Peoples Choice TV Corp. (a) 21,100 659,375 71084710
SHARES VALUE (NOTE 1)
Preferred Entertainment, Inc. (a) 1,000 $ 19,750 74036T10
QVC Network, Inc. (a) 500 23,000 74726210
SPI Holding, Inc. Class B (a) 1,000 6,375 78462G40
Tele-Communications, Inc. Class A (a) 71,500 1,689,188 87924010
Time Warner, Inc. 39,890 1,520,806 88731510
Turner Broadcasting System, Inc. Class B 1,100 25,025 90026250
United International Holdings, Inc.
Class A (a) 23,500 775,500 91073410
Valuevision International, Inc. 5,000 45,625 92047K10
Viacom, Inc. (non-vtg.) (a) 30,000 866,250 92552430
Video Jukebox Network, Inc. (a) 64,500 193,500 92656G10
9,678,595
COMMUNICATIONS SERVICES, NEC - 0.1%
International Cabletel, Inc. 2,000 40,000 45921610
Lodgenet Entertainment Corp. (a) 5,000 72,500 54021110
112,500
RADIO BROADCASTING - 7.8%
Broadcasting Partners, Inc. Class A (a) 35,300 476,550 11131910
Clear Channel Communications, Inc. (a) 65,125 2,613,141 18450210
EZ Communications, Inc. 63,500 857,250 26928810
Emmis Broadcasting Corp. Class A 20,000 320,000 29152510
Evergreen Media Corp. Class A (a) 45,000 731,250 30024810
Grupo Radio Centro SA de CV
sponsored ADR (a) 35,000 953,750 40049C10
Infinity Broadcasting Corp. (a) 48,900 1,564,800 45662610
International Cablecasting
Technologies, Inc. (a) 137,100 454,144 45921L10
SFX Broadcasting, Inc. 600 8,550 78417410
Saga Communications, Inc. Class A (a) 15,700 237,463 78659810
8,216,898
TELEVISION BROADCASTING - 10.9%
CBS, Inc. 3,338 1,025,601 12484510
Capital Cities/ABC, Inc. 5,900 3,924,238 13985910
Chris-Craft Industries, Inc. 1,000 37,125 17052010
Groupo Televisa GDS (a) 20,000 1,287,500 40049J20
Home Shopping Network, Inc. (a) 96,300 1,275,975 43735110
Jacor Communications, Inc. Class A 9,400 159,800 46985840
Multimedia, Inc. (a) 3,800 118,750 62545K10
Renaissance Communications Corp. 36,500 766,500 75966110
Scandinavian Broadcasting Corp. (a) 53,100 1,460,250 80699E92
Silver King Communications, Inc. (a) 67,700 660,075 82774010
Television Broadcast Ltd. Ord. (a) 240,000 851,009 87953110
Westwood One, Inc. (a) 2,700 21,938 96181510
11,588,761
TOTAL BROADCASTING 29,596,754
CELLULAR - 3.1%
CELLULAR & COMMUNICATION SERVICES - 3.1%
Cellular Communications, Inc. Red.
Class P (a) 19,000 943,540 15091793
Nextel Communications, Inc. Class A (a) 1,100 48,675 65332V10
Pactel Corp. (a) 33,300 786,713 69525210
Rogers Communications, Inc. Class B (a) 92,000 1,491,293 77510920
3,270,221
COMMUNICATIONS EQUIPMENT - 0.6%
TELEPHONE EQUIPMENT - 0.6%
DSC Communications Corp. (a) 12,300 668,813 23331110
COMPUTER SERVICES & SOFTWARE - 2.3%
ELECTRONIC INFORMATION RETRIEVAL - 0.6%
CUC International, Inc. (a) 20,358 610,740 12654510
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
COMPUTER SERVICES & SOFTWARE - CONTINUED
PREPACKAGED COMPUTER SOFTWARE - 1.7%
Electronic Arts (a) 1,000 $ 26,000 28551210
Sierra On-Line, Inc. (a) 60,500 1,815,000 82640910
1,841,000
TOTAL COMPUTER SERVICES & SOFTWARE 2,451,740
CONGLOMERATES - 0.1%
Whitman Corp. 6,300 100,800 96647K10
CONSUMER ELECTRONICS - 1.0%
RADIOS, TELEVISIONS, STEREOS - 0.8%
Harman International Industries, Inc. (a) 27,300 890,663 41308610
3DO Co. (a) 100 2,450 88553W10
893,113
WATCHES & CLOCKS - 0.2%
Fossil, Inc. 11,800 182,900 34988210
TOTAL CONSUMER ELECTRONICS 1,076,013
DRUGS & PHARMACEUTICALS - 0.5%
BIOTECHNOLOGY - 0.5%
Idex Corp. (a) 17,000 522,750 45168D10
ELECTRIC UTILITY - 0.6%
ELECTRIC POWER - 0.6%
Meralco 'B' (a) 43,520 671,653 58799A92
ELECTRICAL EQUIPMENT - 1.8%
ELECTRICAL EQUIPMENT - WHOLESALE - 0.5%
Antec Corp. (a) 26,000 559,000 03664P10
ELECTRICAL MACHINERY - 0.7%
Philips NV (a) 31,900 789,525 71833750
TV & RADIO COMMUNICATION EQUIPMENT - 0.6%
California Amplifier, Inc. (a) 93,300 606,450 12990010
TOTAL ELECTRICAL EQUIPMENT 1,954,975
ENTERTAINMENT - 10.7%
AMUSEMENT - 0.7%
Iwerks Entertainment, Inc. (a) 15,200 349,600 46591610
Mountasia Entertainment International 36,000 369,000 62454710
718,600
CRUISES - 0.1%
Carnival Cruise Lines, Inc. Class A 1,500 72,563 14365810
MOTION PICTURE PRODUCTION - 3.1%
King World Productions, Inc. 33,000 1,229,250 49566710
RHI Entertainment, Inc. (a) 62,200 1,624,975 74955910
Samuel Goldwyn Company (a) 10,500 114,188 38157530
Spelling Entertainment Group, Inc. 30,000 333,750 84780710
3,302,163
MOVIE THEATERS - 1.6%
Carmike Cinemas, Inc. Class A (a) 3,500 59,938 14343610
GC Cos., Inc. (a) 17,800 634,125 36155Q10
Regal Cinemas, Inc. 40,400 1,060,500 75875410
1,754,563
RECORDS & CDS - 0.5%
PolyGram NV ADR 13,200 532,950 73173310
RECREATIONAL SERVICES - 4.7%
Cedar Fair LP (depositary units) 55,100 1,811,413 15018510
Discovery Zone, Inc. (a) 50,600 834,900 25468B10
Disney (Walt) Co. 42,000 2,021,250 25468710
Players International, Inc. 13,000 320,125 72790310
4,987,688
TOTAL ENTERTAINMENT 11,368,527
SHARES VALUE (NOTE 1)
GENERAL MERCHANDISE STORES - 0.4%
DEPARTMENT STORES - 0.4%
Penney (J.C.) Co., Inc. 8,100 $ 443,475 70816010
HOME FURNISHINGS - 0.4%
FURNITURE - 0.4%
Leggett & Platt, Inc. 9,000 407,250 52466010
HOUSEHOLD PRODUCTS - 0.0%
MANUFACTURED PRODUCTS - 0.0%
Windmere Corp. (warrants) (a) 845 739 97341193
LEASING & RENTAL - 1.6%
VIDEO TAPE RENTAL - 1.6%
Blockbuster Entertainment Corp. 65,500 1,727,563 09367610
LEISURE DURABLES & TOYS - 3.8%
LEISURE DURABLES - 2.0%
Brunswick Corp. 52,500 1,115,625 11704310
Outboard Marine Corp. 42,000 1,050,000 69002010
2,165,625
MOTORCYCLES - 0.5%
Harley Davidson, Inc. 9,800 480,200 41282210
TOYS & GAMES - 1.3%
Hasbro, Inc. 5,000 176,250 41805610
Mattel, Inc. 47,500 1,240,938 57708110
1,417,188
TOTAL LEISURE DURABLES & TOYS 4,063,013
LODGING & GAMING - 10.9%
HOTELS, MOTELS, & TOURIST CENTERS - 7.5%
Accor Asia Pacific Ltd. (AAPC) 400,000 342,552 00499N22
Caesars World, Inc. (a) 10,567 603,640 12769510
Circus Circus Enterprises, Inc. (a) 1,000 37,250 17290910
Club Med, Inc. 1,700 42,288 18947010
Four Seasons Hotels, Inc. 3,000 29,455 35100E10
Hospitality Franchise Systems, Inc. (a) 13,800 814,200 44091210
Kersaf Investments Ltd. 4,800 42,271 49299E22
La Quinta Motor Inns, Inc. 59,150 2,299,456 50419510
Marriott International, Inc. 27,600 807,300 57190010
Mirage Resorts, Inc. (a) 58,000 1,464,500 60462E10
Promus Companies, Inc. (a) 15,950 785,538 74342A10
Red Lion Inns LP 26,600 731,500 75670210
7,999,950
LODGING PLACES, OTHER THAN HOTEL, MOTEL - 0.5%
Sholodge, Inc. 17,500 507,500 82503410
RACING & GAMING - 2.9%
Boomtown, Inc. 20,000 355,000 09858810
Boyd Gaming Corp. (a) 31,000 542,500 10330410
International Game Technology 53,400 1,515,225 45990210
President Riverboat Casinos, Inc. (a) 37,000 619,750 74084810
WMS Industries, Inc. (a) 1,000 25,875 92929710
3,058,350
TOTAL LODGING & GAMING 11,565,800
PUBLISHING - 5.0%
BOOK PUBLISHING & PRINTING - 0.8%
Houghton Mifflin Co. 16,800 804,300 44156010
NEWSPAPERS - 4.2%
Belo (A.H.) Corp. Class A 20,400 1,065,900 08055510
Central Newspapers, Inc. Class A 23,600 657,850 15464710
New York Times Co. (The) Class A 30,000 840,000 65011110
News Corp. Ltd. ADR 3,500 202,563 65248770
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
PUBLISHING - CONTINUED
NEWSPAPERS - CONTINUED
Scripps (E.W.) Co. Class A 37,700 $ 1,060,313 81103910
Times Mirror Co., Series A 18,000 618,750 88736010
4,445,376
TOTAL PUBLISHING 5,249,676
RESTAURANTS - 2.2%
ARK Restaurants Corp. (a) 18,900 189,000 04071210
Back Bay Restaurant Group, Inc. (a) 1,000 20,000 05635V10
El Chico Restaurants, Inc. (a) 37,500 576,563 28287910
IHOP Corp. (a) 24,100 716,975 44962310
McDonald's Corp. 12,000 727,500 58013510
Uno Restaurant Corp. (a) 13,600 122,400 91490010
2,352,438
RETAIL & WHOLESALE, MISCELLANEOUS - 0.9%
HOBBY, TOY, & GAME SHOPS - 0.6%
Toys "R" Us, Inc. (a) 15,200 554,800 89233510
MUSIC, T, & ELECT. STORES - 0.3%
Futures Shops Ltd. 19,000 330,863 36091310
RETAIL, GENERAL - 0.0%
Body Shop International PLC (a) 8,000 28,112 09679992
TOTAL RETAIL & WHOLESALE, MISCELLANEOUS 913,775
SERVICES - 0.8%
GENERAL SERVICES - 0.8%
Children's Discovery Center `A' 66,500 831,250 16875720
TELEPHONE SERVICES - 2.3%
Philippine Long Distance Telephone Co. 8,000 573,000 71825210
Southwestern Bell Corp. 13,200 516,450 84533310
Telebras PN (Pfd. Reg.) 9,450,000 446,323 95499792
Telesp PN (Pfd. Reg.) 1,840,000 866,235 87999B93
2,402,008
TOTAL COMMON STOCKS
(Cost $90,189,528) 99,437,655
CORPORATE BONDS - 0.5%
PRINCIPAL
AMOUNT
CONVERTIBLE BONDS - 0.0%
CREDIT & OTHER FINANCE - 0.0%
FINANCIAL SERVICES - 0.0%
Benpress Holdings Corp.
4.20%, 12/31/49 (b) $ 12 41,482 082300AA
NONCONVERTIBLE BONDS - 0.5%
BROADCASTING - 0.5%
CABLE TV OPERATORS - 0.5%
Time Warner, Inc. Reset Note
11%, 8/15/02 (c) 577,000 527,955 887315AG
TOTAL CORPORATE BONDS
(Cost $534,480) 569,437
REPURCHASE AGREEMENTS - 5.7%
MATURITY VALUE (NOTE 1)
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account, at 3.47% dated
2/28/94 due 3/1/94 $ 6,003,579 $ 6,003,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $96,727,008) $ 106,010,092
LEGEND
(a) Non-income producing
(a) 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 $41,482 or 0.0% of net assets.
(a) Debt obligation initially issued in zero coupon form which converts to
coupon form at a specified rate and date.
OTHER INFORMATION
CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective March 1,
1993, the fund adopted Statement of Position 93-2: Determination,
Disclosure, and Financial Statement Presentation of Income, Capital Gain,
and Return of Capital Distributions by Investment Companies. As a result,
the fund changed the classification of distributions to shareholders to
better disclose the differences between financial statement amounts and
distributions determined in accordance with income tax regulations.
Accordingly, amounts as of February 28, 1993 have been reclassified to
reflect an increase in paid in capital of $64,961,336, a decrease in
undistributed net investment income of $197,028 and a decrease in
accumulated net realized gain on investments of $64,764,308.
Purchases and sales of securities, other than short-term securities,
aggregated $172,848,503 and $139,762,869, respectively.
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 $89,656 for the period
(see Note 4 of Notes to Financial Statements).
The maximum loan and average daily loan balances during the periods for
which loans were outstanding amounted to $10,699,000 and $3,847,000,
respectively. The weighted average interest rate paid was 3.6% (see Note 7
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 86.6%
Mexico 3.7
Canada 2.1
Luxembourg 1.4
Netherland 1.2
Brazil 1.2
Phillipines 1.2
Chile 1.0
Others (individually less than 1%) 1.6
TOTAL 100.0%
INCOME TAX INFORMATION
At February 28, 1994, the aggregate cost of investment securities for
income tax purposes was $96,865,219. Net unrealized appreciation aggregated
$9,144,873, of which $13,385,329 related to appreciated investment
securities and $4,240,456 related to depreciated investment securities.
The fund hereby designates $5,723,000 as a capital gain dividend for the
purpose of the dividend paid deduction.
LEISURE PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
FEBRUARY 28, 1994
ASSETS
Investment in securities, at value (including repurchase agreements of $6,003,000) (cost $96,727,008) $ 106,010,092
(Notes 1 and 2) - See accompanying schedule
Cash 511
Receivable for investments sold 1,663,494
Receivable for fund shares sold 1,133,933
Dividends receivable 39,888
Redemption fees receivable (Note 1) 187
Other receivables 66,079
TOTAL ASSETS 108,914,184
LIABILITIES
Payable for investments purchased $ 1,817,476
Payable for fund shares redeemed 1,112,300
Accrued management fee 55,330
Other payables and accrued expenses 96,008
TOTAL LIABILITIES 3,081,114
NET ASSETS $ 105,833,070
Net Assets consist of (Note 1):
Paid in capital $ 82,166,220
Undistributed net investment income 167,185
Accumulated undistributed net realized gain (loss) on investments 14,216,581
Net unrealized appreciation (depreciation) on investment securities 9,283,084
NET ASSETS, for 2,336,027 shares outstanding $ 105,833,070
NET ASSET VALUE and redemption price per share ($105,833,070 (divided by) 2,336,027 shares) $45.30
Maximum offering price per share (100/97 of $45.30) $46.70
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED FEBRUARY 28, 1994
INVESTMENT INCOME $ 514,043
Dividends
Interest 230,710
TOTAL INCOME 744,753
EXPENSES
Management fee (Note 4) $ 553,372
Transfer agent (Note 4) 681,395
Fees
Redemption fees (Note 1) (69,039
)
Accounting fees and expenses 89,132
(Note 4)
Non-interested trustees' compensation 558
Custodian fees and expenses 35,328
Registration fees 36,199
Audit 12,913
Legal 626
Interest (Note 7) 4,611
Reports to shareholders 16,216
Miscellaneous 927
Total expenses before reductions 1,362,238
Expense reductions (Note 8) (13,895 1,348,343
)
NET INVESTMENT INCOME (LOSS) (603,590
)
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 1) 19,779,082
Net realized gain (loss) on investment securities
Change in net unrealized appreciation (depreciation) on investment securities 3,359,954
NET GAIN (LOSS) 23,139,036
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 22,535,446
OTHER INFORMATION $692,826
Sales charges paid to FDC
(Note 4)
Deferred sales charges withheld $24,970
by FDC (Note 4)
Exchange fees withheld by FSC $56,078
(Note 4)
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED TEN MONTHS
FEBRUARY 28, ENDED
1994 FEBRUARY 28,
1993
<TABLE>
<CAPTION>
<S> <C> <C>
Operations $ (603,590 $ (129,194
Net investment income (loss) ) )
Net realized gain (loss) on investments 19,779,082 3,523,074
Change in net unrealized appreciation (depreciation) on investments 3,359,954 1,289,576
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 22,535,446 4,683,456
Distributions to shareholders from net realized gains (6,700,464 -
)
Share transactions 171,635,469 16,046,829
Net proceeds from sales of shares
Reinvestment of distributions 6,615,913 -
Cost of shares redeemed (133,273,761 (15,983,245
) )
Paid in capital portion of redemption fees (Note 1) 196,293 26,001
Net increase (decrease) in net assets resulting from share transactions 45,173,914 89,585
TOTAL INCREASE (DECREASE) IN NET ASSETS 61,008,896 4,773,041
NET ASSETS
Beginning of period 44,824,174 40,051,133
End of period (including undistributed net investment income of $167,185 and $197,028, respectively)$ 105,833,070 $ 44,824,174
OTHER INFORMATION
Shares
Sold 3,957,420 469,311
Issued in reinvestment of distributions 158,780 -
Redeemed (3,033,266 (481,775
) )
Net increase (decrease) 1,082,934 (12,464)
</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>
YEAR ENDED TEN MONTHS YEARS ENDED APRIL 30,
FEBRUARY 28, ENDED
FEBRUARY 28,
SELECTED PER-SHARE DATAC 1994 1993 1992 1991 1990
Net asset value, beginning of period $ 35.77 $ 31.65 $ 26.32 $ 24.90 $ 28.51
Income from Investment Operations
Net investment income (loss) (.29) (.11) (.08) .08 .26F
Net realized and unrealized gain (loss) on investments 12.98 4.21 5.40 1.55 (1.81)
Total from investment operations 12.69 4.10 5.32 1.63 (1.55)
Less Distributions
From net investment income - - - (.23) (.07)
From net realized gain (3.26) - - - (2.03)
Total distributions (3.26) - - (.23) (2.10)
Redemption fees added to paid in capital .10 .02 .01 .02 .04
Net asset value, end of period $ 45.30 $ 35.77 $ 31.65 $ 26.32 $ 24.90
TOTAL RETURND, E 37.14% 13.02% 20.25% 6.78% (6.33)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 105,833 $ 44,824 $ 40,051 $ 40,727 $ 49,609
Ratio of expenses to average net assetsB 1.53% 1.90%A 2.21% 2.27% 1.96%
Ratio of expenses to average net assets before expense 1.55% 1.90%A 2.21% 2.27% 1.96%
reductionsB
Ratio of net investment income (loss) to average net assets(.69)% (.39)% (.28)% .34% .86%
A
Portfolio turnover rate 170% 109%A 45% 75% 124%
</TABLE>
1 ANNUALIZED
2 SEE NOTE 8 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 REFLECTS A SPECIAL DIVIDEND WHICH AMOUNTED TO
$.16 PER SHARE.
MULTIMEDIA PORTFOLIO (FORMERLY BROADCAST AND MEDIA 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 1 PAST 5 LIFE OF
FEBRUARY 28, 1994 YEAR YEARS FUND
MULTIMEDIA 34.86% 102.62% 236.78%
MULTIMEDIA
(INCL. 3% SALES CHARGE) 30.82% 96.55% 226.68%
S&P 500 8.33% 89.60% 140.42%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, 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
FEBRUARY 28, 1994 YEAR YEARS FUND
MULTIMEDIA 34.86% 15.17% 17.14%
MULTIMEDIA
(INCL. 3% SALES CHARGE) 30.82% 14.47% 16.68%
S&P 500 8.33% 13.65% 12.10%
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 Broadcast&Media S&P 500
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 24041.62
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
February 28, 1994, your investment would have grown to $32,668 - a 226.68%
increase. That compares to $10,000 invested in the S&P 500, which would
have grown to $24,042 over the same period - a 140.42% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1994
% OF FUND'S
INVESTMENTS
Houghton Mifflin Co. 9.4
Rogers Communications, Inc. Class B 5.8
Times Mirror Co., Series A 5.7
Itel Corp. 5.4
Meredith Corp. 4.8
Tele-Communications, Inc. Class A 4.7
Reader's Digest Association, Inc. (The) Class A (non-vtg.) 4.4
Gannett Co., Inc. 4.1
Capital Cities/ABC, Inc. 3.6
Disney (Walt) Co. 2.8
TOP INDUSTRIES AS OF FEBRUARY 28, 1994
Row: 1, Col: 1, Value: 39.1
Row: 1, Col: 2, Value: 6.5
Row: 1, Col: 3, Value: 7.9
Row: 1, Col: 4, Value: 13.7
Row: 1, Col: 5, Value: 15.2
Row: 1, Col: 6, Value: 17.6
Newspapers 17.6%
Cable TV Operators 15.2%
Book Publishing & Printing
13.7%
Cellular & Communication
Services 7.9%
Television Broadcasting 6.5%
All Others 39.1%*
* INCLUDES SHORT-TERM INVESTMENTS
MULTIMEDIA PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Steve DuFour,
Portfolio Manager of
Fidelity Select Multimedia Portfolio
Q. STEVE, HOW DID THE FUND PERFORM?
A. Very well. For the year ended February 28, 1994, the fund had a total
return of 34.86%, beating the S&P 500, which had a total return of
8.33%.
Q. WHAT WAS BEHIND THESE RESULTS?
A. Most of the fund's gains occurred in the first half of the period.
During this time, investors pushed up the prices of many of the fund's
investments as they rushed to take part in the telecommunications
revolution. This revolution promised to provide multimedia technology to
the home by combining telephone, television, and computer services.
Telecommunication equipment companies that were on the cutting edge of this
technology, such as General Instrument, performed extremely well. In fact,
this stock doubled between February and October of 1993. The fund also
benefited from its stake in companies that were takeover targets, such as
McCaw, Paramount, Tele-Communications, and MacLean Hunter. This growth
ended in late October when the telecommunication market peaked, and many
investors sold their stocks.
Q. HOW HAS THE FUND DONE SINCE OCTOBER?
A. It has underperformed the S&P 500 since then. However, the fund's
entertainment and broadcasting stocks turned in solid results. Disney was
one example of a good buy. Rogers Communications, a Canadian cable,
cellular, and long distance company, also was one of my favorite companies.
That's because the Canadian regulatory environment looked more favorable
than the environment in the United States with regard to cable TV. In
addition, over the last six months I shifted more of the fund's assets into
newspaper, magazine, and publishing stocks.
Q. WHY DID THESE STOCKS LOOK GOOD?
A. As the U.S. economy picked up, companies spent more money on
advertising. This is exactly what happened at Meredith Publishing, which
owns BETTER HOMES AND GARDENS and LADIES HOME JOURNAL. Times Mirror, which
owns THE LOS ANGELES TIMES, and Gannett, one of the country's largest
newspaper companies, both benefited from higher revenues from retailers and
classified advertisers. I focused on publishing because these stocks could
be strong performers over the next few years. I think the fund's top stock,
Houghton Mifflin, will benefit for two reasons: an increasing focus on
upgrading the U.S. educational systems and an increasing demand for
textbooks because a growing number of children (the "baby boomlets") are
starting elementary school. This stock is also well positioned for 1995,
when states such as California and Florida are scheduled to purchase
textbooks.
Q. WHY DID THE FUND'S NAME CHANGE FROM "BROADCAST AND MEDIA" TO
"MULTIMEDIA"?
A. The name "Broadcast and Media" no longer accurately described the fund's
investments. For example, the word "broadcast" does not reflect the fund's
investments in satellite, cable, wireless, and publishing companies. We
think "Multimedia" more accurately reflects the fund's investments today.
Q. IN HINDSIGHT, DO YOU REGRET ANY OF YOUR INVESTMENT DECISIONS?
A. Sure. Like most managers of communications funds, I wish I'd lightened
up on telecommunications stocks before they fell last October.
Q. WHAT DO YOU THINK SHAREHOLDERS CAN EXPECT OVER THE NEXT YEAR?
A. I think the outlook for the fund may be very favorable over the next 12
months. However, I should caution shareholders that the fund might
experience some volatility during this period.
FUND FACTS
START DATE: June 30, 1986
SIZE: as of February 28, 1994, over $49 million
MANAGER: Stephen DuFour, since July 1993;
equity analyst, media, 1992-1993; joined
Fidelity in 1992
(checkmark)
MULTIMEDIA PORTFOLIO
INVESTMENTS FEBRUARY 28, 1994
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 95.0%
SHARES VALUE (NOTE 1)
ADVERTISING - 1.2%
ADVERTISING AGENCIES - 1.2%
ADVO-Systems, Inc. 30,000 $ 600,000 00758510
BROADCASTING - 23.8%
CABLE TV OPERATORS - 15.2%
ACS Enterprises, Inc. (a) 12,000 192,000 00087230
American Telecasting, Inc. (a) 5,800 143,550 03015110
Cablemaxx, Inc. 4,000 43,000 12685910
Comcast Corp. Class A (Special) 64,500 1,306,125 20030020
CAI Wireless Systems, Inc. 500 6,000 12476P10
Liberty Media Corp. Class A (a) 26,400 603,900 53071530
Peoples Choice TV Corp. (a) 20,000 625,000 71084710
Preferred Entertainment, Inc. (a) 2,000 39,500 74036T10
Tele-Communications, Inc. Class A (a) 98,000 2,315,250 87924010
Time Warner, Inc. 15,056 574,010 88731510
Turner Broadcasting System, Inc. Class B 10,000 227,500 90026250
United International Holdings, Inc.
Class A (a) 1,500 49,500 91073410
Viacom, Inc. (non-vtg.) (a) 47,000 1,357,125 92552430
7,482,460
COMMUNICATIONS SERVICES, NEC - 1.2%
International Cabletel, Inc. 30,600 612,000 45921610
RADIO BROADCASTING - 0.9%
Clear Channel Communications, Inc. (a) 2,750 110,344 18450210
International Cablecasting Technologies,
Inc. (a) 97,900 324,294 45921L10
434,638
TELEVISION BROADCASTING - 6.5%
CBS, Inc. 1,200 368,700 12484510
Capital Cities/ABC, Inc. 2,650 1,762,581 13985910
Heritage Media Corp. Class A (a) 11,400 213,750 42724120
Renaissance Communications Corp. 1,500 31,500 75966110
Scandinavian Broadcasting Corp. (a) 29,000 797,500 80699E92
3,174,031
TOTAL BROADCASTING 11,703,129
CELLULAR - 7.9%
CELLULAR & COMMUNICATION SERVICES - 7.9%
Rogers Communications, Inc. Class B (a) 174,700 2,831,836 77510920
Vodafone Group PLC sponsored ADR 11,800 1,066,425 92857T10
3,898,261
COMMUNICATIONS EQUIPMENT - 3.0%
TELEPHONE EQUIPMENT - 2.0%
DSC Communications Corp. (a) 15,000 815,625 23331110
Nokia AB free shares 2,900 167,851 65599992
983,476
TELEPHONE INTERCONNECT SYSTEMS - 1.0%
General Instrument Corp. (a) 10,000 473,750 37012110
TOTAL COMMUNICATIONS EQUIPMENT 1,457,226
ELECTRICAL EQUIPMENT - 11.1%
ELECTRICAL EQUIPMENT - WHOLESALE - 5.4%
Itel Corp. (a) 95,200 2,653,700 46564210
ELECTRICAL MACHINERY - 1.1%
Philips NV (a) 22,000 544,500 71833750
TV & RADIO COMMUNICATION EQUIPMENT - 4.6%
California Amplifier, Inc. (a) 150,000 975,000 12990010
Scientific-Atlanta, Inc. 48,300 1,304,100 80865510
2,279,100
TOTAL ELECTRICAL EQUIPMENT 5,477,300
SHARES VALUE (NOTE 1)
ELECTRONICS - 2.1%
SEMICONDUCTORS - 2.1%
Motorola, Inc. 10,000 $ 1,021,250 62007610
ENTERTAINMENT - 2.8%
RECREATIONAL SERVICES - 2.8%
Disney (Walt) Co. 28,300 1,361,937 25468710
MEDICAL FACILITIES MANAGEMENT - 1.1%
HEALTH SERVICES - 1.1%
Lambert Communications 150,000 525,000 51328G10
PUBLISHING - 38.6%
BOOK PUBLISHING & PRINTING - 13.7%
Houghton Mifflin Co. 96,400 4,615,150 44156010
Reader's Digest Association, Inc.
(The) Class A (non-vtg.) 50,000 2,150,000 75526710
6,765,150
GREETING CARDS - 2.3%
American Greetings Corp. Class A 40,200 1,120,575 02637510
NEWSPAPERS - 17.6%
Belo (A.H.) Corp. Class A 25,400 1,327,150 08055510
Gannett Co., Inc. 36,900 1,992,600 36473010
Pulitzer Publishing Co. 35,500 1,246,938 74577110
Scripps (E.W.) Co. Class A 46,000 1,293,750 81103910
Times Mirror Co., Series A 81,000 2,784,375 88736010
8,644,813
PERIODICALS - 5.0%
Enquirer/Star Group, Inc. Class A 6,700 118,925 29355410
Meredith Corp. 53,000 2,345,250 58943310
2,464,175
TOTAL PUBLISHING 18,994,713
SERVICES - 2.0%
BUSINESS SERVICES - 2.0%
Catalina Marketing Corp. (a) 18,900 980,438 14886710
TELEPHONE SERVICES - 1.4%
ABL CDA, Inc. 12,800 52,167 00095110
Cable & Wireless PLC ADR 30,000 637,500 12683020
689,667
TOTAL COMMON STOCKS
(Cost $44,591,557) 46,708,921
CONVERTIBLE PREFERRED STOCKS - 0.6%
COMMUNICATIONS EQUIPMENT - 0.5%
TELEPHONE EQUIPMENT - 0.5%
Nokia AB 4,800 269,141 65599910
CREDIT & OTHER FINANCE - 0.1%
FINANCIAL SERVICES - 0.1%
Benpress Holdings Corp.
4.2% (b) 9 31,111 082300AA
TOTAL CONVERTIBLE PREFERRED STOCKS
(Cost $165,935) 300,252
REPURCHASE AGREEMENTS - 4.4%
MATURITY VALUE (NOTE 1)
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account, at 3.47% dated
2/28/94 due 3/1/94 $2,172,209 $ 2,172,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $46,929,492) $ 49,181,173
LEGEND
(a) Non-income producing
(a) 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 $31,111 or .1% of net
assets.
OTHER INFORMATION
CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective March 1,
1993, the fund adopted Statement of Position 93-2: Determination,
Disclosure, and Financial Statement Presentation of Income, Capital Gain,
and Return of Capital Distributions by Investment Companies. As a result,
the fund changed the classification of distributions to shareholders to
better disclose the differences between financial statement amounts and
distributions determined in accordance with income tax regulations.
Accordingly, amounts as of February 28, 1993 have been reclassified to
reflect an increase in paid in capital of $10,753,788, a decrease in
undistributed net investment loss of $464,982 and a decrease in accumulated
net realized gain on investments of $11,218,770.
Purchases and sales of securities, other than short-term securities,
aggregated $200,835,908 and $179,543,185, respectively.
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 $80,739 for the period
(see Note 4 of Notes to Financial Statements).
The maximum loan and average daily loan balances during the periods for
which loans were outstanding amounted to $25,401,000 and $17,822,000,
respectively. The weighted average interest rate paid was 3.7% (see Note 7
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 86.9%
Canada 5.9
United Kingdom 3.5
Luxembourg 1.6
Netherlands 1.1
Others (individually less than 1%) 1.0
TOTAL 100.0%
INCOME TAX INFORMATION
At February 28, 1994, the aggregate cost of investment securities for
income tax purposes was $47,290,703. Net unrealized appreciation aggregated
$1,890,470, of which $3,837,954 related to appreciated investment
securities and $1,947,484 related to depreciated investment securities.
The fund hereby designates $2,278,000 as a capital gain dividend for the
purpose of the dividend paid deduction.
MULTIMEDIA PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
FEBRUARY 28, 1994
ASSETS
Investment in securities, at value (including repurchase agreements of $2,172,000) (cost $46,929,492) (Notes 1 $ 49,181,173
and 2) - See accompanying schedule
Cash 665
Receivable for investments sold 2,521,012
Receivable for fund shares sold 550,629
Dividends receivable 65,425
Redemption fees receivable (Note 1) 204
Other receivables 2,347
TOTAL ASSETS 52,321,455
LIABILITIES
Payable for investments purchased $ 1,616,102
Payable for fund shares redeemed 1,434,468
Accrued management fee 26,611
Other payables and accrued expenses 67,672
TOTAL LIABILITIES 3,144,853
NET ASSETS $ 49,176,602
Net Assets consist of (Note 1):
Paid in capital $ 37,258,685
Undistributed net investment income 3,010
Accumulated undistributed net realized gain (loss) on investments 9,663,226
Net unrealized appreciation (depreciation) on investment securities 2,251,681
NET ASSETS, for 2,060,263 shares outstanding $ 49,176,602
NET ASSET VALUE and redemption price per share ($49,176,602 (divided by) 2,060,263 shares) $23.87
Maximum offering price per share (100/97 of $23.87) $24.61
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED FEBRUARY 28, 1994
INVESTMENT INCOME $ 562,296
Dividends
Interest 197,775
TOTAL INCOME 760,071
EXPENSES
Management fee (Note 4) $ 394,337
Transfer agent (Note 4) 558,382
Fees
Redemption fees (Note 1) (114,833
)
Accounting fees and expenses 72,219
(Note 4)
Non-interested trustees' compensation 391
Custodian fees and expenses 24,178
Registration fees 73,633
Audit 11,596
Legal 344
Interest (Note 7) 5,510
Reports to shareholders 15,798
Miscellaneous 532
Total expenses before reductions 1,042,087
Expense reductions (Note 8) (18,779 1,023,308
)
NET INVESTMENT INCOME (LOSS) (263,237
)
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 1) 10,978,209
Net realized gain (loss) on investment securities
Change in net unrealized appreciation (depreciation) on investment securities 135,110
NET GAIN (LOSS) 11,113,319
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 10,850,082
OTHER INFORMATION $1,066,189
Sales charges paid to FDC
(Note 4)
Deferred sales charges withheld $9,363
by FDC (Note 4)
Exchange fees withheld by FSC $99,030
(Note 4)
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED TEN MONTHS
FEBRUARY 28, ENDED
1994 FEBRUARY 28,
1993
Operations $ (263,237 $ (60,307
Net investment income (loss) ) )
Net realized gain (loss) on investments 10,978,209 924,937
Change in net unrealized appreciation (depreciation) on investments 135,110 1,187,977
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 10,850,082 2,052,607
Distributions to shareholders from net realized gains (1,336,869 (189,652
) )
Share transactions 242,015,079 18,465,518
Net proceeds from sales of shares
Reinvestment of distributions 1,323,568 187,996
Cost of shares redeemed (220,542,573 (12,276,588
) )
Paid in capital portion of redemption fees (Note 1) 219,824 14,518
Net increase (decrease) in net assets resulting from share transactions 23,015,898 6,391,444
TOTAL INCREASE (DECREASE) IN NET ASSETS 32,529,111 8,254,399
NET ASSETS
Beginning of period 16,647,491 8,393,092
End of period (including undistributed net investment income (loss) of $3,010 and $(464,982),
respectively) $ 49,176,602 $ 16,647,491
OTHER INFORMATION
Shares
Sold 10,652,395 1,105,096
Issued in reinvestment of distributions 60,047 10,761
Redeemed (9,563,667 (731,293
) )
Net increase (decrease) 1,148,775 384,564
</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>
YEAR ENDED TEN MONTHS YEARS ENDED APRIL 30,
FEBRUARY 28, ENDED
FEBRUARY 28,
SELECTED PER-SHARE DATAC 1994 1993 1992 1991 1990
Net asset value, beginning of period $ 18.26 $ 15.93 $ 12.96 $ 11.65 $ 16.20
Income from Investment Operations
Net investment income (loss) (.10) (.07) (.17) (.05) (.02)F
Net realized and unrealized gain (loss) on investments 6.28 2.61 3.08 1.29 (1.96)
Total from investment operations 6.18 2.54 2.91 1.24 (1.98)
Less Distributions
From net investment income - - - - -
From net realized gain (.65) (.23) - - (2.57)
Total distributions (.65) (.23) - - (2.57)
Redemption fees added to paid in capital .08 .02 .06 .07 -
Net asset value, end of period $ 23.87 $ 18.26 $ 15.93 $ 12.96 $ 11.65
TOTAL RETURND, E 34.86% 16.14% 22.92% 11.24% (15.32)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 49,177 $ 16,647 $ 8,393 $ 5,177 $ 7,400
Ratio of expenses to average net assetsB 1.63% 2.49%A 2.49% 2.53% 2.51%
Ratio of expenses to average net assets before expense 1.66% 2.54%A 2.78% 2.77% 2.51%
reductionsB
Ratio of net investment income (loss) to average net assets(.42)% (.52)% (1.22)% (.43)% (.14)%
A
Portfolio turnover rate 340% 70%A 111% 150% 75%
</TABLE>
1 ANNUALIZED
2 SEE NOTE 8 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 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 1 PAST 5 LIFE OF
FEBRUARY 28, 1994 YEAR YEARS FUND
RETAILING 15.61% 173.13% 306.60%
RETAILING
(INCL. 3% SALES CHARGE) 12.14% 164.94% 294.40%
S&P 500 8.33% 89.60% 191.37%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, 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
FEBRUARY 28, 1994 YEAR YEARS FUND
RETAILING 15.61% 22.26% 18.63%
RETAILING
(INCL. 3% SALES CHARGE) 12.14% 21.51% 18.19%
S&P 500 8.33% 13.65% 13.91%
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 Retailing (046) S&P 500
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 29136.58
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
February 28, 1994, your investment would have grown to $39,440 - a 294.40%
increase. That compares to $10,000 invested in the S&P 500, which would
have grown to $29,137 over the same period - a 191.37% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1994
% OF FUND'S
INVESTMENTS
Lowe's Companies, Inc. 7.8
Gap, Inc. 5.1
Penney (J.C.) Co., Inc. 4.4
Burlington Coat Factory Warehouse Corp. 3.8
Dayton Hudson Corp. 3.1
May Department Stores Co. (The) 3.0
Federated Department Stores, Inc. 2.9
AnnTaylor Stores Corp. 2.4
Dillard Department Stores, Inc. Class A 2.4
Brookstone, Inc. 1.8
TOP INDUSTRIES AS OF FEBRUARY 28, 1994
Row: 1, Col: 1, Value: 48.1
Row: 1, Col: 2, Value: 4.9
Row: 1, Col: 3, Value: 5.0
Row: 1, Col: 4, Value: 10.0
Row: 1, Col: 5, Value: 15.0
Row: 1, Col: 6, Value: 17.0
Department Stores 17.0%
General Apparel Stores 15.0%
Lumber & Building Materials -
Retail 10.0%
Women's Clothing Stores 5.0%
General Merchandise Stores 4.9%
All Others 48.1%*
* INCLUDES SHORT-TERM INVESTMENTS
RETAILING PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Jeff Feinberg,
Portfolio Manager of Fidelity Select Retailing Portfolio
Q. JEFF, HOW DID THE FUND DO?
A. The fund performed well during a tough year for the retail industry.
Total return was 15.61% for the 12 months ended February 28, 1994, compared
to 8.33% for the S&P 500 during the same period.
Q. HOW DID THE FUND MANAGE TO BEAT THE S&P?
A. In 1993, a strengthening economy and falling interest rates led people
away from "soft" consumer non-durable products like apparel, and toward
"harder" goods like new homes, appliances and autos. I began managing the
fund on February 1, but the previous manager did well by avoiding specialty
apparel retailers - which were among the market laggards - and instead
emphasizing the stocks of growing grocery store chains like Safeway and
Stop & Shop. Some of these stocks got expensive in the fall, and the
fund's stake was reduced. In addition, the fund had a sizable stake in
department stores, many of which were reinventing themselves.
Q. WHAT DO YOU MEAN, "REINVENTING THEMSELVES?"
A. Last year, the successful department store chains realized that the best
way to improve performance was through store renovations, lower prices and
stringent cost control. Large-scale expansion was out of the question;
there are already too many stores serving too few people. So the only way
to improve profits was to become more efficient while, at the same time,
increasing volume at existing stores.
Q. WHAT ARE SOME EXAMPLES?
A. Sears is one. Over the last couple of years, the company struggled to
bring its expenses in line and modernize its stores. Through it all, Sears
never lost its customer goodwill; people wanted to shop at a store they
trusted, and wanted Sears to succeed. Sears helped the fund last year, as
did JC Penney, the fund's third largest investment on February 28. Penney's
has cut costs, has been well managed, and has benefited from a successful
line of private-label merchandise. In addition, Dayton Hudson offers the
stability of big department stores like Marshall Fields, but also owns
Target, a well-run chain of discount stores. The stock's low price compared
to other measures like sales and cash flow makes it appear attractive going
forward. The May and Federated Department store chains have also succeeded
in streamlining their operations. The performance of the latter three
stocks was essentially flat over the past six months, which was perhaps the
fund's biggest disappointment. However, I think there's a pent-up consumer
demand for apparel and other small household items, and cost cutting has
left these companies well-positioned to benefit. All three were among the
fund's top ten investments at the end of February.
Q. LOWE'S WAS THE FUND'S LARGEST INVESTMENT OVER THE LAST SIX MONTHS. WHAT
MAKES THE COMPANY SO ATTRACTIVE?
A. Lowe's was an exciting growth story in a year when there weren't many.
The company is opening home improvement stores, mainly in the Southeastern
United States. Lowe's is using the "big box" format made famous by chains
like Home Depot - large, single-destination stores that offer a large
assortment of products at value prices. It's what consumers seem to want,
and it gives the retailer buying power with vendors. The price of Lowe's
stock was up over 50% in the last six months, and I like the company's
business prospects going forward.
Q. YOU MENTIONED THE FUND DID WELL BY SIDESTEPPING SPECIALTY APPAREL
STORES, BUT THE GAP AND ANNTAYLOR WERE AMONG ITS TOP TEN INVESTMENTS AT THE
END OF FEBRUARY. WHY?
A. After last year's weak clothing sales, I believe consumers are ready to
begin replacing worn-out wardrobes. Lately, I've begun emphasizing
specialty retailers that I feel have the right fashions and excellent value
for the price. The Gap and AnnTaylor are two of the companies that fit
those requirements, and I'll be searching for more.
Q. WHAT'S YOUR OUTLOOK FOR THE NEXT SIX MONTHS?
A. The retail environment remains very competitive, with supply still
exceeding demand. As a result, certain retailers have to slash prices to
clear their inventories, which hurts profit margins. That said, I'm
optimistic about finding the selected retailers who have the right fashions
and offer consumers value for their money. In addition, I'll be looking for
companies that I think can turn their businesses around, while keeping an
eye out for upstart, fast-growing retail chains like Lowe's.
FUND FACTS
START DATE: December 16, 1985
SIZE: as of February 28, 1994, over $52 million
MANAGER: Jeff Feinberg, since February
1994; equity analyst, footwear and specialty
retail industries, 1992-1994; joined Fidelity in
1992
(checkmark)
RETAILING PORTFOLIO
INVESTMENTS FEBRUARY 28, 1994
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 88.6%
SHARES VALUE (NOTE 1)
APPAREL STORES - 20.6%
GENERAL APPAREL STORES - 15.0%
Burlington Coat Factory
Warehouse Corp. (a) 55,300 $ 1,527,662 12157910
Designs, Inc. (a) 34,950 537,356 25057L10
Edison Brothers Stores, Inc. 400 11,700 28087510
Filene's Basement Corp. (a) 6,700 62,813 31686610
Gap, Inc. 45,000 2,036,250 36476010
Goody's Family Clothing (a) 32,200 539,350 38258810
Limited, Inc. (The) 20,000 390,000 53271610
MacIntosh Confectionary Works (a) 10,000 335,563 58199292
S&K Famous Brands, Inc. (a) 13,300 187,863 78377410
TJX Companies, Inc. 15,000 403,125 87254010
6,031,682
MISCELLANEOUS APPAREL, ACCESSORIES - 0.6%
Urban Outfitters, Inc. (a) 10,000 261,250 91704710
WOMEN'S CLOTHING STORES - 5.0%
AnnTaylor Stores Corp. (a) 35,400 982,350 03611510
Cato Corp. Class A 34,800 635,100 14920510
One Price Clothing Stores, Inc. (a) 15,000 319,999 68241110
Talbots, Inc. 2,000 60,750 87416110
1,998,199
TOTAL APPAREL STORES 8,291,131
AUTOS, TIRES, & ACCESSORIES - 2.0%
AUTO DEALERS, GAS STATIONS - RETAIL - 0.6%
Uni Marts, Inc. 40,000 250,000 90457130
AUTO PARTS - RETAIL - 1.4%
Autozone, Inc. (a) 10,000 565,000 05333210
TOTAL AUTOS, TIRES, & ACCESSORIES 815,000
BROADCASTING - 0.5%
TELEVISION BROADCASTING - 0.5%
Home Shopping Network, Inc. (a) 15,000 198,750 43735110
COMPUTER SERVICES & SOFTWARE - 1.3%
ELECTRONIC INFORMATION RETRIEVAL - 1.3%
CUC International, Inc. (a) 17,500 525,000 12654510
CONSUMER ELECTRONICS - 1.0%
WATCHES & CLOCKS - 1.0%
Fossil, Inc. 25,000 387,500 34988210
DRUG STORES - 1.7%
Long Drug Stores, Inc. 11,000 435,875 54316210
Revco (D.S.), Inc. (a) 15,000 230,625 76133910
666,500
ELECTRICAL EQUIPMENT - 0.6%
WIRING & LIGHTING - 0.6%
Catalina Lighting, Inc. (a) 22,300 239,725 14886510
GENERAL MERCHANDISE STORES - 24.9%
DEPARTMENT STORES - 17.0%
Dillard Department Stores, Inc. Class A 26,600 947,625 25406310
Federated Department Stores, Inc. (a) 48,700 1,168,800 31410J10
Gottschalks, Inc. (a) 45,500 398,125 38348510
May Department Stores Co. (The) 27,600 1,207,500 57777810
Meyer (Fred), Inc. (a) 5,000 197,475 59309810
Penney (J.C.) Co., Inc. 32,300 1,768,425 70816010
Proffitts, Inc. (a) 14,000 248,500 74292510
Stein Mart, Inc. (a) 38,600 685,150 85837510
Younkers, Inc. (a) 12,400 221,650 98776710
6,843,250
SHARES VALUE (NOTE 1)
GENERAL MERCHANDISE STORES - 4.9%
Dayton Hudson Corp. 17,500 $ 1,251,250 23975310
Dollar General Corp. 8,000 216,000 25666910
Lechters, Inc. (a) 35,000 490,000 52323810
1,957,250
VARIETY STORES - 3.0%
Consolidated Stores Corp. (a) 15,000 292,500 21014910
Freds, Inc. Class A 11,700 169,650 35610810
Mac Frugals Bargains C/O, Inc. (a) 20,000 327,500 55415210
Michaels Stores, Inc. (a) 10,000 412,500 59408710
1,202,150
TOTAL GENERAL MERCHANDISE STORES 10,002,650
GROCERY STORES - 2.4%
GROCERY - RETAIL - 2.4%
American Stores Co. 8,600 410,650 03009610
Safeway, Inc. (a) 23,000 569,250 78651420
979,900
HOME FURNISHINGS - 2.5%
FURNITURE STORES - 2.5%
Haverty Furniture Companies, Inc. 28,000 511,000 41959610
Rhodes, Inc. (a) 26,000 500,500 76235P10
1,011,500
LEASING & RENTAL - 0.8%
VIDEO TAPE RENTAL - 0.8%
Hollywood Entertainment Corp. (a) 16,000 324,000 43614110
LEISURE DURABLES & TOYS - 0.5%
SPORTING & ATHLETIC GOODS - 0.5%
Leslie's Poolmart (a) 20,000 220,000 52706910
REAL ESTATE INVESTMENT TRUSTS - 1.4%
Tanger Factory Outlet Centers, Inc. 17,000 575,875 87546510
RETAIL & WHOLESALE, MISCELLANEOUS - 24.6%
BUILDING MATERIALS - RETAIL - 1.3%
BMC West Corp. (a) 14,700 503,475 05592610
HOBBY, TOY, & GAME SHOPS - 1.8%
Brookstone, Inc. (a) 49,000 735,000 11453710
LUMBER & BUILDING MATERIALS - RETAIL - 10.0%
Hechinger Co. Class A 31,400 423,900 42266020
Lowe's Companies, Inc. 47,700 3,154,163 54866110
Payless Cashways, Inc. (a) 23,100 444,675 70437830
4,022,738
MAIL ORDER - 2.2%
Blair Co. 2,000 86,250 09282810
Damark International, Inc. Class A 12,000 354,000 23569110
Micro Wharehouse, Inc. (a) 6,000 270,000 59501B10
Spiegel, Inc. Class A 9,200 193,200 84845710
903,450
MUSIC, TV, & ELECTRIC STORES - 3.2%
Best Buy Co., Inc. (a) 10,000 552,500 08651610
Musicland Stores Corp. (a) 5,700 109,725 62758B10
Rex Stores Corp. (a) 30,000 615,000 76162410
1,277,225
RECORD & TAPE STORES - 0.5%
Spec's Music, Inc. (a) 27,000 202,500 84752110
RETAIL, GENERAL - 3.9%
Bed Bath & Beyond, Inc. (a) 4,600 125,350 07589610
Crown Books Corp. (a) 27,400 561,700 22821010
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
RETAIL & WHOLESALE, MISCELLANEOUS - CONTINUED
RETAIL, GENERAL - CONTINUED
Little Switzerland, Inc. (a) 19,800 $ 168,300 53752810
Sotheby's Holdings, Inc. Class A 12,500 204,688 83589810
Sunglass Hut International, Inc. (a) 11,000 387,750 86736F10
Tuesday Morning Corp. (a) 22,700 130,525 89903510
1,578,313
SEWING STORES - 0.6%
Fabri-Centers of America, Inc. (a) 15,000 247,500 30284610
SPORTING GOODS & BIKES STORES - 1.1%
Forzani Group Ltd. A 59,700 442,386 34990710
TOTAL RETAIL & WHOLESALE, MISCELLANEOUS 9,912,587
SERVICES - 0.5%
GENERAL SERVICES - 0.5%
Regis Corporation (a) 15,000 195,000 75893210
TEXTILES & APPAREL - 3.3%
FOOTWEAR - 2.9%
NIKE, Inc. Class B 13,800 714,150 65410610
Nine West Group, Inc. (a) 14,000 458,500 65440D10
1,172,650
MEN'S & BOYS' CLOTHING - 0.4%
Nautica Enterprises, Inc. (a) 5,750 143,750 63908910
TOTAL TEXTILES & APPAREL 1,316,400
TOTAL COMMON STOCKS
(Cost $32,337,166) 35,661,518
REPURCHASE AGREEMENTS - 11.4%
MATURITY VALUE (NOTE 1)
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account, at 3.47% dated
2/28/94 due 3/1/94 $ 4,603,444 4,603,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $36,940,166) $ 40,264,518
LEGEND
(a) Non-income producing
OTHER INFORMATION
CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective March 1,
1993, the fund adopted Statement of Position 93-2: Determination,
Disclosure, and Financial Statement Presentation of Income, Capital Gain,
and Return of Capital Distributions by Investment Companies. As a result,
the fund changed the classification of distributions to shareholders to
better disclose the differences between financial statement amounts and
distributions determined in accordance with income tax regulations.
Accordingly, amounts as of February 28, 1993 have been reclassified to
reflect an increase in paid in capital of $4,398,779, a decrease in
undistributed net investment loss of $203,898 and a decrease in accumulated
net realized gain on investments of $4,602,677.
Purchases and sales of securities, other than short-term securities,
aggregated $83,876,946 and $131,691,675, respectively.
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 $78,686 for the period
(see Note 4 of Notes to Financial Statements).
The maximum loan and average daily loan balances during the periods for
which loans were outstanding amounted to $2,933,000 and $1,492,438,
respectively. The weighted average interest rate paid was 3.6% (see Note 7
of Notes to Financial Statements).
INCOME TAX INFORMATION
At February 28, 1994, the aggregate cost of investment securities for
income tax purposes was $37,086,592. Net unrealized appreciation aggregated
$3,177,926, of which $4,240,287 related to appreciated investment
securities and $1,062,361 related to depreciated investment securities.
The fund hereby designates $1,437,000 as a capital gain dividend for the
purpose of the dividend paid deduction.
RETAILING PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
FEBRUARY 28, 1994
ASSETS
Investment in securities, at value (including repurchase agreements of $4,603,000) (cost $36,940,166) $ 40,264,518
(Notes 1 and 2) - See accompanying schedule
Cash 469
Receivable for investments sold 4,846,641
Receivable for fund shares sold 11,992,157
Dividends receivable 27,077
Redemption fees receivable (Note 1) 212
Other receivables 7,576
TOTAL ASSETS 57,138,650
LIABILITIES
Payable for investments purchased $ 3,829,207
Payable for fund shares redeemed 415,861
Accrued management fee 20,203
Other payables and accrued expenses 83,247
TOTAL LIABILITIES 4,348,518
NET ASSETS $ 52,790,132
Net Assets consist of (Note 1):
Paid in capital $ 47,039,781
Accumulated undistributed net realized gain (loss) on investments 2,425,999
Net unrealized appreciation (depreciation) on investment securities 3,324,352
NET ASSETS, for 2,119,039 shares outstanding $ 52,790,132
NET ASSET VALUE and redemption price per share ($52,790,132 (divided by) 2,119,039 shares) $24.91
Maximum offering price per share (100/97 of $24.91) $25.68
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED FEBRUARY 28, 1994
INVESTMENT INCOME $ 442,770
Dividends
Interest (including security lending fees of $9,246) (Note 6) 111,831
TOTAL INCOME 554,601
EXPENSES
Management fee (Note 4) $ 359,512
Transfer agent (Note 4) 652,193
Fees
Redemption fees (Note 1) (71,262
)
Accounting and security lending fees (Note 4) 59,935
Non-interested trustees' compensation 442
Custodian fees and expenses 17,886
Registration fees 29,803
Audit 8,748
Legal 730
Interest (Note 7) 2,399
Reports to shareholders 8,837
Miscellaneous 1,005
Total expenses before reductions 1,070,228
Expense reductions (Note 8) (15,635 1,054,593
)
NET INVESTMENT INCOME (LOSS) (499,992
)
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 1) 8,382,130
Net realized gain (loss) on investment securities
Change in net unrealized appreciation (depreciation) on investment securities (727,175
)
NET GAIN (LOSS) 7,654,955
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 7,154,963
OTHER INFORMATION $377,946
Sales charges paid to FDC
(Note 4)
Deferred sales charges withheld $8,793
by FDC (Note 4)
Exchange fees withheld by FSC $60,608
(Note 4)
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED TEN MONTHS
FEBRUARY 28, ENDED
1994 FEBRUARY 28,
1993
<TABLE>
<CAPTION>
<S> <C> <C>
Operations $ (499,992 $ (229,179
Net investment income (loss) ) )
Net realized gain (loss) on investments 8,382,130 4,623,553
Change in net unrealized appreciation (depreciation) on investments (727,175 3,101,658
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 7,154,963 7,496,032
Distributions to shareholders from net realized gains (7,142,724 (3,211,103
) )
Share transactions 83,392,727 125,569,711
Net proceeds from sales of shares
Reinvestment of distributions 7,020,042 3,169,642
Cost of shares redeemed (112,598,899 (106,752,913
) )
Paid in capital portion of redemption fees (Note 1) 86,108 165,256
Net increase (decrease) in net assets resulting from share transactions (22,100,022 22,151,696
)
TOTAL INCREASE (DECREASE) IN NET ASSETS (22,087,783 26,436,625
)
NET ASSETS
Beginning of period 74,877,915 48,441,290
End of period (including accumulated net investment loss of $0 and $203,898, respectively) $ 52,790,132 $ 74,877,915
OTHER INFORMATION
Shares
Sold 3,246,217 5,367,039
Issued in reinvestment of distributions 282,598 142,983
Redeemed (4,546,561 (4,562,347
) )
Net increase (decrease) (1,017,746) 947,675
</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>
YEAR ENDED TEN MONTHS YEARS ENDED APRIL 30,
FEBRUARY 28, ENDED
FEBRUARY 28,
SELECTED PER-SHARE DATAC 1994 1993 1992 1991 1990
Net asset value, beginning of period $ 23.87 $ 22.13 $ 17.42 $ 13.94 $ 14.60
Income from Investment Operations
Net investment income (loss) (.22) (.08) (.03) (.05) .32F
Net realized and unrealized gain (loss) on investments 3.85 2.93 5.09 3.43 1.72
Total from investment operations 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 .04 .06 .15 .13 .03
Net asset value, end of period $ 24.91 $ 23.87 $ 22.13 $ 17.42 $ 13.94
TOTAL RETURND, E 15.61% 13.72% 30.28% 25.26% 15.01%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 52,790 $ 74,878 $ 48,441 $ 18,069 $ 8,451
Ratio of expenses to average net assetsB 1.83% 1.77%A 1.87% 2.54% 2.50%
Ratio of expenses to average net assets before expense 1.86% 1.77%A 1.87% 2.87% 3.18%
reductionsB
Ratio of net investment income (loss) to average net assets(.87)% (.44)% (.13)% (.34)% 2.13%
A
Portfolio turnover rate 154% 171%A 205% 115% 212%
</TABLE>
1 ANNUALIZED
2 SEE NOTE 8 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 REFLECTS A SPECIAL DIVIDEND WHICH AMOUNTED TO
$.29 PER SHARE.
AIR TRANSPORTATION PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
FEBRUARY 28, 1994
ASSETS
Investment in securities, at value (including repurchase agreements of $899,000) (cost $12,142,091) (Notes $ 12,772,088
1 and 2) - See accompanying schedule
Cash 315
Receivable for fund shares sold 86,663
Dividends receivable 10,633
Redemption fees receivable (Note 1) 1,200
Other receivables 225
TOTAL ASSETS 12,871,124
LIABILITIES
Payable for investments purchased $ 169,175
Payable for fund shares redeemed 1,638,436
Accrued management fee 7,006
Other payables and accrued expenses 21,765
TOTAL LIABILITIES 1,836,382
NET ASSETS $ 11,034,742
Net Assets consist of (Note 1):
Paid in capital $ 8,169,959
Accumulated undistributed net realized gain (loss) on investments 2,234,786
Net unrealized appreciation (depreciation) on investment securities 629,997
NET ASSETS, for 644,638 shares outstanding $ 11,034,742
NET ASSET VALUE and redemption price per share ($11,034,742 (divided by) 644,638 shares) $17.12
Maximum offering price per share (100/97 of $17.12) $17.65
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED FEBRUARY 28, 1994
INVESTMENT INCOME $ 160,705
Dividends
Interest 51,873
TOTAL INCOME 212,578
EXPENSES
Management fee (Note 4) $ 111,986
Transfer agent (Note 4) 249,148
Fees
Redemption fees (Note 1) (43,919
)
Accounting fees and expenses 45,503
(Note 4)
Non-interested trustees' compensation 136
Custodian fees and expenses 14,168
Registration fees 24,129
Audit 7,032
Legal 152
Interest (Note 7) 1,822
Reports to shareholders 4,447
Total expenses before reductions 414,604
Expense reductions (Note 8) (3,692 410,912
)
NET INVESTMENT INCOME (LOSS) (198,334
)
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 1) 2,844,048
Net realized gain (loss) on investment securities
Change in net unrealized appreciation (depreciation) on investment securities 638,748
NET GAIN (LOSS) 3,482,796
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 3,284,462
OTHER INFORMATION $194,234
Sales charges paid to FDC
(Note 4)
Deferred sales charges withheld $5,217
by FDC (Note 4)
Exchange fees withheld by FSC $37,545
(Note 4)
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED TEN MONTHS
FEBRUARY 28, ENDED
1994 FEBRUARY 28,
1993
Operations $ (198,334 $ (84,059
Net investment income (loss) ) )
Net realized gain (loss) on investments 2,844,048 93,062
Change in net unrealized appreciation (depreciation) on investments 638,748 987,122
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 3,284,462 996,125
Distributions to shareholders (252,463 (237,416
From net realized gain ) )
In excess of net realized gain (52,807 -
)
Total distributions (305,270 (237,416
) )
Share transactions 74,183,528 31,507,804
Net proceeds from sales of shares
Reinvestment of distributions 292,761 232,908
Cost of shares redeemed (78,501,131 (27,674,500
) )
Paid in capital portion of redemption fees (Note 1) 212,184 71,805
Net increase (decrease) in net assets resulting from share transactions (3,812,658 4,138,017
)
TOTAL INCREASE (DECREASE) IN NET ASSETS (833,466 4,896,726
)
NET ASSETS
Beginning of period 11,868,208 6,971,482
End of period (including accumulated net investment loss of $0 and $211,291, respectively) $ 11,034,742 $ 11,868,208
OTHER INFORMATION
Shares
Sold 4,831,385 2,505,094
Issued in reinvestment of distributions 17,788 18,435
Redeemed (5,077,239 (2,202,430
) )
Net increase (decrease) (228,066) 321,099
</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>
YEAR ENDED TEN MONTHS YEARS ENDED APRIL 30,
FEBRUARY 28, ENDED
FEBRUARY 28,
SELECTED PER-SHARE DATAC 1994 1993 1992 1991 1990
Net asset value, beginning of period $ 13.60 $ 12.64 $ 11.53 $ 11.05 $ 11.77
Income from Investment Operations
Net investment income (loss) (.18) (.09)F (.13) (.04) -
Net realized and unrealized gain (loss) on investments 3.78 1.33 1.40 .38 (.16)
Total from investment operations 3.60 1.24 1.27 .34 (.16)
Less Distributions
From net realized gain (.22) (.36) (.25) - (.57)
In excess of net realized gain (.05) - - - -
Total distributions (.27) (.36) (.25) - (.57)
Redemption fees added to paid in capital .19 .08 .09 .14 .01
Net asset value, end of period $ 17.12 $ 13.60 $ 12.64 $ 11.53 $ 11.05
TOTAL RETURND, E 27.94% 10.69% 11.90% 4.34% (1.54)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 11,035 $ 11,868 $ 6,971 $ 4,372 $ 4,688
Ratio of expenses to average net assetsB 2.31% 2.48%A 2.51% 2.48% 2.55%
Ratio of expenses to average net assets before expense 2.33% 2.64%A 3.06% 3.03% 3.61%
reductionsB
Ratio of net investment income (loss) to average net assets(1.11)% (.90)% (1.04)% (.34)% (.03)%
A
Portfolio turnover rate 171% 96%A 261% 106% 143%
</TABLE>
1 ANNUALIZED
2 SEE NOTE 8 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 REFLECTS A SPECIAL DIVIDEND WHICH AMOUNTED TO
$.01 PER SHARE.
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).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
FEBRUARY 28, 1994 YEAR YEARS FUND
AIR TRANSPORTATION 27.94% 77.75% 119.14%
AIR TRANSPORTATION
(INCL. 3% SALES CHARGE) 24.10% 72.42% 112.56%
S&P 500 8.33% 89.60% 191.37%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, 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
FEBRUARY 28, 1994 YEAR YEARS FUND
AIR TRANSPORTATION 27.94% 12.19% 10.03%
AIR TRANSPORTATION
(INCL. 3% SALES CHARGE) 24.10% 11.51% 9.62%
S&P 500 8.33% 13.65% 13.91%
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 Transport S&P 500
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 29136.58
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 February 28, 1994, your investment would have grown to $21,256 -
a 112.56% increase. That compares to $10,000 invested in the S&P 500,
which would have grown to $29,137 over the same period - a 191.37%
increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1994
% OF FUND'S
INVESTMENTS
Mesa Airlines, Inc. 7.8
AMR Corp. 6.3
Comair Holdings, Inc. 5.8
UAL Corp. 5.2
Airborne Freight Corp. 5.0
Delta Air Lines, Inc. 4.3
Southwest Airlines Co. 4.1
Atlantic Southeast Airlines, Inc. 4.0
SkyWest, Inc. 3.9
Allied-Signal, Inc. 3.8
TOP INDUSTRIES AS OF FEBRUARY 28, 1994
Row: 1, Col: 1, Value: 18.4
Row: 1, Col: 2, Value: 3.4
Row: 1, Col: 3, Value: 7.1
Row: 1, Col: 4, Value: 7.7
Row: 1, Col: 5, Value: 16.1
Row: 1, Col: 6, Value: 47.3
Air Transportation,
Major National 47.3%
Air Transportation,
Regional 16.1%
Air Courier Services 7.7%
Conglomerates 7.1%
Oil & Gas Exploration 3.4%
All Others 18.4%*
* 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 DO?
A. Very well. The fund had a total return of 27.94% for the 12 months ended
February 28, 1994. That beat the total return of the S&P 500, which was
8.33% during the same period.
Q. WHAT WAS BEHIND THE FUND'S ROBUST PERFORMANCE?
A. In short, the strengthening economy. Over the past year, investors
gravitated away from slumping health care and consumer non-durable stocks
in favor of cyclicals - stocks whose prices tend to move with changes in
the economy. Because air transportation companies are economically
sensitive, many benefited a great deal from this past year's recovery.
Q. DID THE MAJOR U.S. AIRLINES LEAD THE WAY?
A. Not really. Six months ago, the pieces were all in place. Economic
growth meant more people were flying, which boosted demand. In addition,
the airlines seriously began cutting costs. One of the ways they were doing
that was by dropping unprofitable, shorter routes which, in effect, reduced
the supply of flights. Because of these and other factors, the stocks of
United and American performed pretty well through the end of the year. But
there was one nagging problem.
Q. WHAT WAS THAT?
A. Too much competition from low-cost carriers like America West,
Continental "Lite" and Southwest Airlines. These companies offer no-frills
flights at cheap prices. That forces the major airlines to slash ticket
prices, which hurts their profitability. Southwest was among the fund's top
ten investments over the past 12 months, and helped performance. My concern
about the major airlines' ability to maintain or raise prices successfully
led me to reduce the fund's stake over the last few months. Instead, I
turned to the industry's big growth story during the period: the regional
airlines.
Q. WHY WERE THE REGIONALS SO ATTRACTIVE?
A. As the major airlines abandoned secondary routes, they entered into
partnership agreements with regional airlines to pick up the slack. In some
cases, the regionals have even flown their planes under a major's banner.
For example, during a short connecting flight from Salt Lake City to Sun
Valley, you might be sitting on a plane that has a Delta logo on the side,
but really belongs to SkyWest Airlines. It's a win-win situation: the
majors cut costs, and the regionals pick up new business. SkyWest, and to a
lesser extent Atlantic Southeast, boosted the fund's performance over the
last six months. Two more regional airlines, Mesa - the fund's largest
investment on February 28 - and Comair, have solid growth potential and
attractive stock prices relative to other measures like earnings.
Q. WHERE ELSE DID YOU FIND THE WINNERS?
A. Air freight companies - roughly 10% of the fund's investments over the
last six months - have helped a lot. From the end of August through the end
of February, Airborne Freight's stock rose 59% and Federal Express' stock
was up 25%. The improving economy meant these companies were able to
sustain the prices they charged per pound. Plus, both companies have
effectively cut costs.
Q. DO YOU HAVE ANY REGRETS ABOUT THE YEAR?
A. Sure. I wish I had maintained my original investment in British Airways
and KLM Airlines (an Amsterdam-based carrier) in the second half of the
year. Both stocks performed very well through last summer, but I felt they
were getting expensive so I reduced the fund's stake. As it turned out,
European cyclical stocks experienced tremendous growth last year, and
investors kept pushing up the prices of British Airways and KLM.
Q. WHAT'S YOUR OUTLOOK FOR THE NEXT SIX MONTHS?
A. The prices of many air transportation stocks have risen substantially
over past year, and I think it'll be a stock picker's market going forward.
However, there are reasons for optimism. If the U.S. economy can continue
its steady growth, more people could be flying. In addition, I'm hoping
fuel prices remain low, which would only help the airlines' cost cutting
efforts. In the United States, I expect to continue to focus on the
regional airlines; they're currently experiencing the best earnings growth.
Also, I'll look for more opportunities to invest in growing airlines
overseas.
FUND FACTS
START DATE: December 16, 1985
SIZE: as of February 28, 1994, over $11 million
MANAGER: Brenda Reed, since December
1992; assistant, Fidelity Fund, since 1993;
equity analyst, regional airline and air freight
industries, since 1993; office automation,
since 1993; major and national airlines, since
1992; apparel and textile industries,
1992-1993; joined Fidelity in 1992
(checkmark)
AIR TRANSPORTATION PORTFOLIO
INVESTMENTS FEBRUARY 28, 1994
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 93.0%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 5.1%
AIRCRAFT - 2.4%
Boeing Co. 6,500 $ 303,875 09702310
AIRCRAFT EQUIPMENT - 2.7%
Aviall, Inc. (a) 20,075 348,803 05366B10
TOTAL AEROSPACE & DEFENSE 652,678
AIR TRANSPORTATION - 63.4%
AIR TRANSPORTATION, MAJOR NATIONAL - 47.3%
AMR Corp. (a) 12,800 809,615 00176510
Aerovias De Mexico SA de CV sponsored
ADR representing B shares (a)(b) 35,400 278,775 00806510
Air Canada, Inc. (a) 49,200 246,091 00891110
AirTran Corp. 10,600 111,300 00949910
British Airways PLC ADR 6,100 409,463 11041930
Cathay Pacific Airways Ltd. 205,400 326,948 14890610
Delta Air Lines, Inc. 11,000 545,875 24736110
Great Lakes Aviation (a) 19,000 235,125 39054K10
KLM Royal Dutch Airlines (a) 12,300 315,187 48251610
Mesa Airlines, Inc. (a) 50,000 993,750 59048110
Singapore International Airlines 43,900 313,611 82868910
Southwest Airlines Co. 15,300 522,112 84474110
Tower Air, Inc. 18,000 272,250 89169710
UAL Corp. (a) 4,936 662,658 90254910
6,042,760
AIR TRANSPORTATION, REGIONAL - 16.1%
Amtran, Inc. 27,500 295,625 03234G10
Atlantic Southeast Airlines, Inc. 15,600 514,800 04886910
Comair Holdings, Inc. 32,250 741,750 19978910
SkyWest, Inc. 15,050 500,413 83087910
2,052,588
TOTAL AIR TRANSPORTATION 8,095,348
CONGLOMERATES - 7.1%
Allied-Signal, Inc. 6,400 488,800 01951210
Textron, Inc. 7,300 423,400 88320310
912,200
ENTERTAINMENT - 3.1%
RECREATIONAL SERVICES - 3.1%
Airtour PLC 50,000 401,179 00979999
OIL & GAS - 3.4%
OIL & GAS EXPLORATION - 3.4%
British Petroleum PLC ADR 6,600 429,825 11088940
TRUCKING & FREIGHT - 10.9%
AIR COURIER SERVICES - 7.7%
Airborne Freight Corp. 17,000 633,250 00926610
Federal Express Corp. (a) 4,700 351,913 31330910
985,163
FREIGHT FORWARDING - 1.2%
Harper Group 9,000 148,500 41345910
TRUCKING, LOCAL & LONG DISTANCE - 2.0%
Heartland Express Inc. (a) 7,041 248,195 42234710
TOTAL TRUCKING & FREIGHT 1,381,858
TOTAL COMMON STOCKS
(Cost $11,243,091) 11,873,088
REPURCHASE AGREEMENTS - 7.0%
MATURITY VALUE (NOTE 1)
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account, at 3.47% dated
2/28/94 due 3/1/94 $899,087 $ 899,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $12,142,091) $ 12,772,088
LEGEND
(a) Non-income producing
(a) 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 $278,775 or 2.5% of net
assets.
OTHER INFORMATION
CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective March 1,
1993, the fund adopted Statement of Position 93-2: Determination,
Disclosure, and Financial Statement Presentation of Income, Capital Gain,
and Return of Capital Distributions by Investment Companies. As a result,
the fund changed the classification of distributions to shareholders to
better disclose the differences between financial statement amounts and
distributions determined in accordance with income tax regulations.
Accordingly, amounts as of February 28, 1993 have been reclassified to
reflect an increase in paid in capital of $4,287,702, a decrease in
undistributed net investment loss of $211,291 and a decrease in accumulated
net realized gain on investments of $4,498,993.
Purchases and sales of securities, other than short-term securities,
aggregated $27,757,393 and $30,914,729, respectively.
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 $15,992 for the period
(see Note 4 of Notes to Financial Statements).
The maximum loan and average daily loan balances during the periods for
which loans were outstanding amounted to $1,773,000 and $944,556,
respectively. The weighted average interest rate paid was 3.9% (see Note 7
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 78.6%
United Kingdom 9.7
Hong Kong 2.6
Netherlands 2.5
Singapore 2.5
Mexico 2.2
Canada 1.9
TOTAL 100.0%
INCOME TAX INFORMATION
At February 28, 1994, the aggregate cost of investment securities for
income tax purposes was $12,187,907. Net unrealized appreciation
aggregated $584,181, of which $1,269,018 related to appreciated investment
securities and $684,837 related to depreciated investment securities.
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 1 PAST 5 LIFE OF
FEBRUARY 28, 1994 YEAR YEARS FUND
AUTOMOTIVE 30.45% 152.63% 222.14%
AUTOMOTIVE
(INCL. 3% SALES CHARGE) 26.54% 145.05% 212.47%
S&P 500 8.33% 89.60% 140.42%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, 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
FEBRUARY 28, 1994 YEAR YEARS FUND
AUTOMOTIVE 30.45% 20.36% 16.47%
AUTOMOTIVE
(INCL. 3% SALES CHARGE) 26.54% 19.63% 16.01%
S&P 500 8.33% 13.65% 12.10%
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 Auto S&P 500
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 24041.62
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 February 28,
1994, your investment would have grown to $31,247 - a 212.47% increase.
That compares to $10,000 invested in the S&P 500, which would have
grown to $24,042 over the same period - a 140.42% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1994
% OF FUND'S
INVESTMENTS
Chrysler Corp. 10.7
General Motors Corp. 8.4
General Electric Co. 8.2
Ford Motor Co. 7.6
Goodyear Tire & Rubber Co. 6.6
Magna International, Inc. Class A 4.7
Smith (A.O.) Corp. 4.5
Federal-Mogul Corp. 3.5
Bandag, Inc. 2.6
Snap-On Tools Corp. 2.5
TOP INDUSTRIES AS OF FEBRUARY 28, 1994
Durables 80.8%
Industrial Machinery &
Equment 8.4%
Motor Vehicles & Car
Bodies 31.6%
Autos & Truck Parts 29.5%
Tire & Inner Tubes 11.4%
Electric Machinery 8.2%
Auto Parts - Retail 3.6%
All Others 15.7%*
Row: 1, Col: 1, Value: 15.7
Row: 1, Col: 2, Value: 3.6
Row: 1, Col: 3, Value: 8.199999999999999
Row: 1, Col: 4, Value: 11.4
Row: 1, Col: 5, Value: 29.5
Row: 1, Col: 6, Value: 31.6
* INCLUDES SHORT-TERM INVESTMENTS
AUTOMOTIVE PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Richard Patton,
Portfolio Manager of
Fidelity Select Automotive
Portfolio
Q. RICHARD, HOW DID THE FUND DO?
A. Very well. With a total return of 30.45% for the 12 months ended
February 28, 1994, it topped the 8.33% return of the S&P 500.
Q. WHAT WAS THE STORY BEHIND THE FUND'S STRONG RETURNS?
A. U.S. auto makers and their suppliers tend to do well when the economy
improves, and that was certainly the case over the last 12 months. But
there's more to it. Consumers became more confident, and with consumer debt
at its lowest level in years, they could afford to buy. Also, there was
pent up demand; not surprising, when you consider that the average car in
the United States is eight years old. Finally, the dollar weakened against
the Japanese yen. That gave U.S. manufacturers the power to raise prices
and made Japanese auto makers less competitive.
Q. LET'S BEGIN WITH THE BIG THREE. DID YOU HAVE A PREFERENCE AMONG THEM?
A. Chrysler, General Motors and Ford - three of the fund's top five stocks
at the end of the period - all turned in strong performances over the last
six months. But I placed the fund's largest bet on Chrysler, which
benefited from all of the trends I listed earlier. Plus, it had the
freshest product line; Chrysler's new car and truck models arrived just as
sales began to explode. General Motors, on the other hand, will be hitting
a new product cycle soon, which is the main reason I invested the fund more
heavily in GM than in Ford. In addition, expectations seem lower for GM,
because it has trailed the others in restructuring and has a huge pension
liability. It only takes a little positive news, it seems, to make
investors like GM more and more.
Q. OVER THE LAST SIX MONTHS, ABOUT HALF THE FUND WAS INVESTED IN COMPANIES
THAT SUPPLY AUTO AND TRUCK PARTS. WHERE DID YOU FIND THE WINNERS?
A. Consider this: auto manufacturing was up nearly 20% during that period,
and the increase in truck manufacturing by the Big Three was double that of
autos. That hiked the demand for parts, which helped companies like A.O.
Smith. Smith builds frames for light trucks, and its stock has been a
steady performer. Magna and Mascotech were two more examples of parts
companies that did well. Finally, several after market suppliers - which
also fall under the heading of auto and truck parts - boosted the fund's
performance.
Q. WHAT ARE "AFTER MARKET SUPPLIERS?"
A. Companies that manufacture and distribute parts to auto repair shops.
Federal-Mogul, for instance, used to supply the Big Three with parts, but
recently turned to the after market with great success. It now provides
mechanics with critical engine parts. You'll probably only need these parts
once every few years, but your car won't run without them. In addition, I'm
looking for improved performance from Snap-On Tools, which franchises
dealerships that sell tools to mechanics. I've read that the average
mechanic owns $30,000 worth of tools, so you can see the potential in this
business. Snap-On has had court battles with dealers over franchise
arrangements in the past, but I think the company may have corrected the
bulk of those problems.
Q. IT SOUNDS LIKE ALL YOUR INVESTMENTS WERE WINNERS . . .
A. Not quite. Goodyear - the fund's fifth largest investment at the end of
February - was a disappointment. Although the company benefited from
stronger auto demand, earnings weren't as strong as investors had hoped.
But I still like Goodyear's business prospects, and plan to give the stock
time to come around. Ironically, another disappointment had a lot to do
with the fund's success. The fund more than doubled in size over the past
six months, and it was difficult to put all of that new cash to work
quickly. My relatively large cash position was a bit of a drag on
performance.
Q. WHAT'S YOUR OUTLOOK FOR THE NEXT SIX MONTHS?
A. I think this auto cycle still has some legs, so I feel pretty good about
the next several months. That said, many auto sector stocks are getting
expensive, and investors are increasingly wondering when the cycle will
slow. I'd like to gradually reduce the fund's investment in businesses
directly tied to U.S. auto production to help limit the downside should a
correction occur. I may do that by searching out attractive stocks of auto
makers and suppliers in Europe and Japan.
FUND FACTS
START DATE: June 30, 1986
SIZE: as of February 28, 1994, over $228 million
MANAGER: Richard Patton, since July 1993;
equity analyst, specialty chemicals, 1992-1993;
joined Fidelity in 1992
(checkmark)
AUTOMOTIVE PORTFOLIO
INVESTMENTS FEBRUARY 28, 1994
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 89.1%
SHARES VALUE (NOTE 1)
AUTOS, TIRES, & ACCESSORIES - 78.5%
AUTO & TRUCK PARTS - 29.5%
Allen Group, Inc. (The) 30,400 $ 467,400 01763410
Automotive Industries Holding, Inc. (a) 104,000 3,432,000 05329E10
Dana Corp. 35,200 1,953,600 23581110
Danaher Corp. 47,500 1,739,688 23585110
Donnelly Corp. Class A 64,700 1,002,850 25787010
Echlin, Inc. 147,900 4,418,513 27874910
Excel Industries, Inc. 57,700 1,024,175 30065710
Federal-Mogul Corp. 237,200 8,272,350 31354910
Hayes Wheels International, Inc. 57,000 1,816,875 42080410
Intermet Corp. 30,000 300,000 45881K10
Johnson Controls, Inc. 29,400 1,738,275 47836610
Magna International, Inc. Class A 229,300 11,214,375 55922240
Mascotech, Inc. 173,200 4,156,800 57467010
Modine Manufacturing Co. 32,750 892,438 60782810
Purolator Products Co. 100,000 1,650,000 74638110
Simpson Industries, Inc. 56,050 1,233,100 82906010
Smith (A.O.) Corp. Class B 289,200 10,628,100 83186520
Snap-on Tools Corp. 138,000 6,037,500 83303410
Standard Motor Products, Inc. 51,800 1,133,125 85366610
Standard Products Co. 72,587 2,667,572 85383610
Stant Corp. 12,000 205,500 85472710
Superior Industries International, Inc 40,040 1,626,625 86816810
TRW, Inc. 37,000 2,705,625 87264910
70,316,486
AUTO PARTS - RETAIL - 3.6%
Autozone, Inc. (a) 69,000 3,898,500 05333210
Discount Auto Parts, Inc. (a) 33,200 817,550 25464210
Hi-Lo Automotive, Inc. (a) 6,400 72,000 42839D10
Monro Muffler Brake, Inc. (a) 209,200 3,870,200 61023610
8,658,250
AUTOS & OTHER MOTOR VEHICLES - 2.4%
Genuine Parts Company 153,200 5,821,600 37246010
MOTOR VEHICLES & CAR BODIES - 31.6%
Chrysler Corp. 451,500 25,622,625 17119610
Fiat Spa 700,000 1,969,786 31562110
Ford Motor Co. 290,000 18,016,250 34537010
General Motors Corp. 345,000 20,096,250 37044210
General Motors Corp. Class H 30,000 1,080,000 37044250
Honda Motor Co. Ltd. 67,000 1,121,098 43812810
Nissan Motor Co. Ltd. Ord. 259,000 2,112,417 65474491
Suzuki Motor Corp. 159,000 2,052,397 86958592
Toyota Motor Corporation 57,000 1,100,923 89399999
Volkswagen AG 8,000 2,065,546 92866210
75,237,292
TIRES & INNER TUBES - 11.4%
Bandag, Inc. 107,600 6,334,950 05981510
Continental Gummi-Werke AG (a) 3,500 543,848 21199010
Cooper Tire & Rubber Co. 166,600 4,498,200 21683110
Goodyear Tire & Rubber Co. 348,000 15,747,000 38255010
27,123,998
TOTAL AUTOS, TIRES, & ACCESSORIES 187,157,626
BUILDING MATERIALS - 0.4%
PAINT & VARNISH - 0.4%
Sherwin-Williams Co. 30,000 1,057,500 82434810
CHEMICALS & PLASTICS - 1.3%
ADHESIVES & SEALANTS - 0.6%
Ferro Corp. 40,000 1,395,000 31540510
Nalco Chemical Co. 1,700 61,200 62985310
1,456,200
SHARES VALUE (NOTE 1)
INDUSTRIAL GASES - 0.5%
Airgas, Inc. (a) 55,200 $ 1,207,500 00936310
PLASTICS, NEC - 0.2%
Bailey Corp. (a) 32,000 416,000 05677130
TOTAL CHEMICALS & PLASTICS 3,079,700
ELECTRICAL EQUIPMENT - 8.2%
ELECTRICAL MACHINERY - 8.2%
General Electric Co. 185,000 19,494,375 36960410
HOUSEHOLD PRODUCTS - 0.7%
MANUFACTURED PRODUCTS - 0.7%
First Brands Corp. 44,400 1,592,850 31935610
TOTAL COMMON STOCKS
(Cost $181,071,969) 212,382,051
REPURCHASE AGREEMENTS - 10.9%
MATURITY VALUE (NOTE 1)
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account, at 3.47% dated
2/28/94 due 3/1/94 $26,034,509 26,032,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $207,103,969) $ 238,414,051
LEGEND
(a) Non-income producing
OTHER INFORMATION
CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective March 1,
1993, the fund adopted Statement of Position 93-2: Determination,
Disclosure, and Financial Statement Presentation of Income, Capital Gain,
and Return of Capital Distributions by Investment Companies. As a result,
the fund changed the classification of distributions to shareholders to
better disclose the differences between financial statement amounts and
distributions determined in accordance with income tax regulations.
Accordingly, amounts as of February 28, 1993 have been reclassified to
reflect an increase in paid in capital of $899,674, a decrease in
undistributed net investment income of $143,621 and a decrease in
accumulated net realized gain on investments of $756,053.
Purchases and sales of securities, other than short-term securities,
aggregated $148,982,188 and $78,673,098, respectively.
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 $47,865 for the period
(see Note 4 of Notes to Financial Statements).
The maximum loan and average daily loan balances during the periods for
which loans were outstanding amounted to $13,315,000 and $2,522,708,
respectively. The weighted average interest rate paid was 3.7% (see Note 7
of Notes to Financial Statements).
INCOME TAX INFORMATION
At February 28, 1994, the aggregate cost of investment securities for
income tax purposes was $207,144,985. Net unrealized appreciation
aggregated $31,269,066, of which $32,538,380 related to appreciated
investment securities and $1,269,314 related to depreciated investment
securities.
The fund hereby designates $3,732,000 as a capital gain dividend for the
purpose of the dividend paid deduction.
AUTOMOTIVE PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
FEBRUARY 28, 1994
ASSETS
Investment in securities, at value (including repurchase agreements of $26,032,000) (cost $207,103,969) $ 238,414,051
(Notes 1 and 2) - See accompanying schedule
Cash 782
Receivable for investments sold 143,445
Receivable for fund shares sold 2,373,944
Dividends receivable 394,418
Redemption fees receivable (Note 1) 2,506
TOTAL ASSETS 241,329,146
LIABILITIES
Payable for investments purchased $ 4,157,254
Payable for fund shares redeemed 8,166,872
Accrued management fee 124,712
Other payables and accrued expenses 182,057
TOTAL LIABILITIES 12,630,895
NET ASSETS $ 228,698,251
Net Assets consist of (Note 1):
Paid in capital $ 192,239,592
Undistributed net investment income 230,333
Accumulated undistributed net realized gain (loss) on investments 4,918,244
Net unrealized appreciation (depreciation) on investment securities 31,310,082
NET ASSETS, for 8,975,389 shares outstanding $ 228,698,251
NET ASSET VALUE and redemption price per share ($228,698,251 (divided by) 8,975,389 shares) $25.48
Maximum offering price per share (100/97 of $25.48) $26.27
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED FEBRUARY 28, 1994
INVESTMENT INCOME $ 2,067,003
Dividends
Interest 483,770
TOTAL INCOME 2,550,773
EXPENSES
Management fee (Note 4) $ 842,489
Transfer agent (Note 4) 1,290,911
Fees
Redemption fees (Note 1) (112,849
)
Accounting fees and expenses 135,527
(Note 4)
Non-interested trustees' compensation 939
Custodian fees and expenses 16,649
Registration fees 43,320
Audit 15,035
Legal 1,083
Interest (Note 7) 6,284
Reports to shareholders 19,684
Miscellaneous 1,493
Total expenses before reductions 2,260,565
Expense reductions (Note 8) (9,794 2,250,771
)
NET INVESTMENT INCOME 300,002
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 1) 9,992,964
Net realized gain (loss) on investment securities
Change in net unrealized appreciation (depreciation) on investment securities 22,125,239
NET GAIN (LOSS) 32,118,203
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 32,418,205
OTHER INFORMATION $1,317,313
Sales charges paid to FDC
(Note 4)
Deferred sales charges withheld $9,672
by FDC (Note 4)
Exchange fees withheld by FSC $98,835
(Note 4)
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED TEN MONTHS
FEBRUARY 28, ENDED
1994 FEBRUARY 28,
1993
Operations $ 300,002 $ 638,003
Net investment income
Net realized gain (loss) on investments 9,992,964 7,998,567
Change in net unrealized appreciation (depreciation) on investments 22,125,239 (137,565
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 32,418,205 8,499,005
Distributions to shareholders (277,866 (233,255
From net investment income ) )
From net realized gain (8,000,284 (1,283,605
) )
TOTAL DISTRIBUTIONS (8,278,150 (1,516,860
) )
Share transactions 296,617,520 251,798,700
Net proceeds from sales of shares
Reinvestment of distributions 8,140,832 1,495,074
Cost of shares redeemed (210,814,302 (328,696,276
) )
Paid in capital portion of redemption fees (Note 1) 254,484 335,379
Net increase (decrease) in net assets resulting from share transactions 94,198,534 (75,067,123
)
TOTAL INCREASE (DECREASE) IN NET ASSETS 118,338,589 (68,084,978
)
NET ASSETS
Beginning of period 110,359,662 178,444,640
End of period (including undistributed net investment income of $230,333 and $584,442, respectively)$ 228,698,251 $ 110,359,662
OTHER INFORMATION
Shares
Sold 12,377,664 13,056,135
Issued in reinvestment of distributions 357,869 79,310
Redeemed (9,094,036 (17,370,301
) )
Net increase (decrease) 3,641,497 (4,234,856)
</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>
YEAR ENDED TEN MONTHS YEARS ENDED APRIL 30,
FEBRUARY 28, ENDED
FEBRUARY 28,
SELECTED PER-SHARE DATAC 1994 1993 1992 1991 1990
Net asset value, beginning of period $ 20.69 $ 18.65 $ 12.58 $ 12.17 $ 12.86
Income from Investment Operations
Net investment income .05 .13 .06 .25 .23
Net realized and unrealized gain (loss) on investments 6.00 2.26 6.55 .29 (.52)
Total from investment operations 6.05 2.39 6.61 .54 (.29)
Less Distributions
From net investment income (.05) (.06) - (.18) (.41)
From net realized gain (1.26) (.36) (.70) - -
Total distributions (1.31) (.42) (.70) (.18) (.41)
Redemption fees added to paid in capital .05 .07 .16 .05 .01
Net asset value, end of period $ 25.48 $ 20.69 $ 18.65 $ 12.58 $ 12.17
TOTAL RETURND, E 30.45% 13.42% 56.27% 4.81% (2.07)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 228,698 $ 110,360 $ 178,445 $ 974 $ 1,213
Ratio of expenses to average net assetsB 1.68% 1.57%A 2.48% 2.25% 2.42%
Ratio of expenses to average net assets before expense 1.69% 1.57%A 2.48% 2.85% 3.85%
reductionsB
Ratio of net investment income to average net assets .22% .72%A .36% 2.06% 1.84%
Portfolio turnover rate 64% 140%A 29% 219% 121%
</TABLE>
1 ANNUALIZED
2 SEE NOTE 8 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.
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 1 PAST 5 LIFE OF
FEBRUARY 28, 1994 YEAR YEARS FUND
CHEMICALS 23.63% 95.62% 349.99%
CHEMICALS
(INCL. 3% SALES CHARGE) 19.92% 89.75% 336.49%
S&P 500 8.33% 89.60% 222.99%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, 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
FEBRUARY 28, 1994 YEAR YEARS FUND
CHEMICALS 23.63% 14.36% 19.12%
CHEMICALS
(INCL. 3% SALES CHARGE) 19.92% 13.67% 18.70%
S&P 500 8.33% 13.65% 14.62%
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 S&P 500
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 32298.81
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
February 28, 1994, your investment would have grown to $43,649 - a 336.49%
increase. That compares to $10,000 invested in the S&P 500, which would
have grown to $32,299 over the same period - a 222.99% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1994
% OF FUND'S
INVESTMENTS
Akzo N V sponsored ADR 5.9
Union Carbide Corp. 5.9
Grace (W.R.) & Co. 5.0
Lubrizoil Corp. 4.8
Raychem Corp. 3.8
GEON 3.7
Eastman Chemical Co. 3.6
Imperial Chemical Industries ADR 3.6
Nalco Chemical Co. 3.0
Hanna (M.A.) Co. 2.8
TOP INDUSTRIES AS OF FEBRUARY 28, 1994
Row: 1, Col: 1, Value: 27.8
Row: 1, Col: 2, Value: 4.6
Row: 1, Col: 3, Value: 4.8
Row: 1, Col: 4, Value: 4.9
Row: 1, Col: 5, Value: 5.9
Row: 1, Col: 6, Value: 52.0
Chemicals 52.0%
Plastics, Resins &
Elastomers 5.9%
Plastics & Synthetic
Resins 4.9%
Organic Chemicals 4.8%
Agricultural Chemicals 4.6%
All Others 27.8%*
* INCLUDES SHORT-TERM INVESTMENTS
CHEMICALS PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Steve Wymer,
Portfolio Manager of
Fidelity Select Chemicals Portfolio
Q. STEVE, HOW DID THE FUND PERFORM?
A. Very well. For the year ended February 28, 1994, it had a total return
of 23.63%, well above the S&P 500's total return of 8.33%.
Q. WHAT WAS BEHIND THE FUND'S STRONG PERFORMANCE?
A. A stronger than expected economic upturn. In general, when the economy
improves, chemical stocks pick up, since the demand for chemical products
is tied to almost all areas of the economy. As the U.S. and European
economies improved, investors shifted into chemical stocks and pushed stock
prices higher.
Q. DID YOUR STRATEGY CHANGE OVER THE LAST SIX MONTHS?
A. I moved some of the fund's investments out of diversified chemical
companies into commodity and selected specialty chemical companies.
Commodity companies produce various chemical products, such as
polyethylene, which is used to make trash bags. Over the last six months,
these companies have begun performing well as worldwide demand and prices
for chemical products have increased. Specialty chemical companies looked
good because they had underperformed the market over the past two years and
were selling at attractive prices.
Q. WHAT COMMODITY CHEMICAL COMPANIES DID YOU BUY?
A. Union Carbide is a good example. This company produces polyethylene and
ethylene glycol, used for polyester fiber and antifreeze. It also has a
specialty chemical unit and a solvents and coatings unit. Since breaking
off from its industrial gas business, Praxair, in the summer of 1992, Union
Carbide has been a solid performer. Over the past year, it cut costs
further than most people expected and improved profitability even when
commodities were not performing well. Now, with commodities looking to pick
up, it could be well positioned to improve its earnings. Another company
was GEON, a spin-off of B.F. Goodrich. GEON focuses on polyvinylchloride
(PVC), which is used to make vinyl siding and pipes and could be one of the
first commodities to do well.
Q. WHAT ABOUT SPECIALTY COMPANIES?
A. Lubrizoil, a petroleum additives company, is a recent addition. The
company raised prices and reduced its investment in non-core areas, such as
health care. Lubrizoil plans to use proceeds from these divestments to buy
back its own stock. Nalco, which makes water treatment chemicals, is also
well positioned to grow over the next year.
Q. YOU HAVE 13.4% OF THE FUND OVERSEAS. WHERE DID YOU INVEST?
A. My largest investment was the Dutch chemical company, Akzo, which sells
products ranging from paint to pharmaceuticals. It was attractive because
it had closed and sold low-earning fiber divisions and focused on the more
profitable coatings and specialty chemical divisions. My second largest
foreign stake was in Imperial Chemical Industries (ICI), a diversified
chemical company based out of the U.K. Last June, it split apart its
diversified chemical business from its pharmaceutical and agricultural
businesses. Since then, the chemical business has taken steps to enhance
productivity and increase returns.
Q. AS YOU LOOK BACK OVER THE LAST YEAR, ANY REGRETS?
A. Yes. I wish I'd taken advantage of some short-term trading
opportunities. For example, I wish I'd owned more Dow stock between
November and January, when it grew 23%.
Q. HOW DO YOU THINK THE FUND WILL PERFORM IN 1994?
A. It depends on supply and demand. If the economy continues to improve,
that will help out the demand side. If companies continue to focus their
efforts on restructuring and cost cutting, as opposed to expansion, that
will help out the supply side. Right now, the situation seems encouraging.
However, the supply and demand balance could worsen if the economy drops or
companies start adding production capacity.
FUND FACTS
START DATE: July 29, 1985
SIZE: as of February 28, 1994, over $62 million
MANAGER: Steven Wymer, since January 1993;
assistant, 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 FEBRUARY 28, 1994
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 88.4%
SHARES VALUE (NOTE 1)
BASIC INDUSTRIES - 0.8%
Albermarle Corp. (c) 41,800 $ 553,850 01265310
BUILDING MATERIALS - 0.9%
PAINT & VARNISH - 0.6%
Dexter Corp. 13,200 336,600 25216510
Sherwin-Williams Co. 2,000 70,500 82434810
407,100
PAVING, ROOFING & SIDING - 0.3%
Carlisle Companies, Inc. 5,200 172,250 14233910
TOTAL BUILDING MATERIALS 579,350
CHEMICALS & PLASTICS - 80.9%
ADHESIVES & SEALANTS - 4.3%
Ferro Corp. 7,700 268,538 31540510
Fuller (H.B.) Co. 2,700 97,875 35969410
Furon Co. 2,000 34,500 36110610
Loctite Corp. 11,000 459,250 54013710
Nalco Chemical Co. 55,700 2,005,200 62985310
2,865,363
AGRICULTURAL CHEMICALS - 4.6%
FMC Corp. (a) 9,100 444,763 30249130
IMC Fertilizer Group, Inc. (a) 20,000 915,000 44966910
Indo Gulf Fertilizer and Chemical
GDR (b) 1,000 4,200 45577P10
OM Group, Inc. (a) 47,500 1,098,438 67087210
Terra Industries, Inc. (a) 20,000 167,500 88091510
Vigoro Corp. 12,000 390,000 92675410
3,019,901
CHEMICALS - 52.0%
Akzo NV:
Ord. 2,200 245,505 01019910
sponsored ADR 70,000 3,893,750 01019930
Avery Dennison Corp. 13,300 415,625 05361110
Betz Laboratories, Inc. 1,000 50,625 08777910
Crompton & Knowles Corp. 6,000 138,750 22711110
Cytec Industries, Inc. (a) 114,671 1,763,067 23282010
Dow Chemical Co. 11,000 699,875 26054310
du Pont (E.I.) de Nemours & Co. 35,400 1,889,475 26353410
Engelhard Corp. 13,600 374,000 29284510
Ethyl Corp. 92,000 1,690,500 29765910
Georgia Gulf Corp. (a) 38,000 1,083,000 37320020
Goodrich (B.F.) Company 19,800 811,800 38238810
Grace (W.R.) & Co. 74,000 3,311,500 38388310
Great Lakes Chemical Corp. 13,800 1,079,850 39056810
Hercules, Inc. 5,800 667,725 42705610
Imperial Chemical Industries:
Ord. 30,000 339,220 45270440
PLC ADR 51,700 2,358,813 45270450
Lawter International, Inc. 8,988 105,609 52078610
Lyondell Petrochemical Co. 81,700 1,848,463 55207810
Monsanto Co. 16,200 1,241,325 61166210
Morton International, Inc. 500 52,188 61933110
NOVA Corp. of Alberta Class A 40,000 281,586 66977110
Olin Corp. 22,900 1,124,963 68066520
PPG Industries, Inc. 6,000 460,500 69350610
Quaker Chemical Corp. 4,100 68,675 74731610
Raychem Corp. 68,000 2,550,000 75460310
Reliance Industries GDS (b) 17,000 378,250 75947093
Rohm & Haas Co. 15,000 856,875 77537110
Sterling Chemical, Inc. 50,000 300,000 85890310
Union Carbide Corp. 164,700 3,932,213 90558110
Witco Corp. 16,000 542,000 97738510
34,555,727
SHARES VALUE (NOTE 1)
CHEMICALS, GENERAL - 0.3%
Sybron Chemical Industry Corp. (a) 7,200 $ 174,600 87090310
INDUSTRIAL GASES - 0.7%
Air Products & Chemicals, Inc. 10,000 476,250 00915810
ORGANIC CHEMICALS - 4.8%
Lubrizol Corp. 85,000 3,198,125 54927110
PLASTICS & SYNTHETIC RESINS - 4.9%
AEP Industries, Inc. 25,350 456,300 00103110
ARCO Chemical Co. 3,100 150,350 00192010
GEON 91,800 2,478,600 37246W10
Schulman (A.), Inc. 5,250 179,813 80819410
Wellman, Inc. 1,000 21,000 94970210
3,286,063
PLASTICS - 3.4%
Carlisle Plastics, Inc. Class A (a) 27,700 218,138 14252210
Hanna (M.A.) Co. 53,100 1,891,680 41052210
Sealed Air Corp. (a) 2,300 67,563 81211510
2,177,381
PLASTICS, RESINS & ELASTOMERS - 5.9%
Borden Chemical & Plastics Ltd. 20,000 237,500 09954120
Eastman Chemical Co. 58,050 2,423,588 27743210
Praxair, Inc. 68,253 1,279,744 74005P10
3,940,832
TOTAL CHEMICALS & PLASTICS 53,694,242
CONGLOMERATES - 0.4%
Canadian Pacific Ltd. Ord. 15,000 261,208 13644030
DRUGS & PHARMACEUTICALS - 1.0%
DRUGS - 1.0%
American Cyanamid Co. 4,000 177,500 02532110
IMCERA Group, Inc. 6,800 252,450 45245410
Rhone Poulenc SA Class A 10,000 244,517 76242695
674,467
FOODS - 0.5%
Montedison S.P.A. ADR 50,000 343,750 61237630
HOUSEHOLD PRODUCTS - 0.3%
MANUFACTURED PRODUCTS - 0.3%
First Brands Corp. 4,800 172,200 31935610
OIL & GAS - 2.2%
CRUDE PETROLEUM & GAS - 1.3%
Burlington Resources, Inc. 10,100 434,300 12201410
Occidental Petroleum Corp. 23,000 416,875 67459910
851,175
GENERAL PETROLEUM PRODUCTS - 0.5%
Shangai Petrochem Class H ADR 10,000 340,000 81942410
OIL & GAS EXPLORATION - 0.4%
Unocal Corp. 10,300 283,250 91528910
TOTAL OIL & GAS 1,474,425
PHOTOGRAPHIC EQUIPMENT - 0.2%
Eastman Kodak Co. 3,000 129,000 27746110
POLLUTION CONTROL - 0.0%
POLLUTION EQUIPMENT & DESIGN - 0.0%
Harding Associates, Inc. (a) 3,500 32,375 41226410
RETAIL & WHOLESALE, MISCELLANEOUS - 0.1%
MISCELLANEOUS NONDURABLE GOODS - WHOLESALE - 0.1%
Amway Asia Pacific Ltd. (a) 2,000 88,500 03299H22
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
TEXTILES & APPAREL - 1.1%
CARPETS & RUGS - 0.7%
Image Industries, Inc. (a) 45,000 $ 444,375 45244B10
SILK MILLS - 0.3%
Worldtex Corp. (a) 34,000 187,000 98190710
TEXTILE MILL PRODUCTS - 0.1%
Unifi, Inc. 2,100 49,088 90467710
TOTAL TEXTILES & APPAREL 680,463
TOTAL COMMON STOCKS
(Cost $54,759,274) 58,683,830
NONCONVERTIBLE BONDS - 0.0%
PRINCIPAL
AMOUNT
CHEMICALS & PLASTICS - 0.0%
PLASTICS - 0.0%
Interpak Holdings, Inc., 12%,
12/31/96 (Cost $20,180) $25,218 20,174 460584AA
REPURCHASE AGREEMENTS - 11.6%
MATURITY VALUE (NOTE 1)
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account, at 3.47% dated
2/28/94 due 3/1/94 $7,701,742 7,701,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $62,480,454) $ 66,405,004
LEGEND
(a) Non-income producing
(b) Security exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of these securities amounted to $378,250 or 0.6% of net
assets.
(c) Security purchased on a delayed delivery basis (see Note 2 of Notes
to Financial Statements).
OTHER INFORMATION
CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective March 1,
1993, the fund adopted Statement of Position 93-2: Determination,
Disclosure, and Financial Statement Presentation of Income, Capital Gain,
and Return of Capital Distributions by Investment Companies. As a result,
the fund changed the classification of distributions to shareholders to
better disclose the differences between financial statement amounts and
distributions determined in accordance with income tax regulations.
Accordingly, amounts as of February 28, 1993 have been reclassified to
reflect an increase in paid in capital of $29,813,945, a decrease in
undistributed net investment income of $4,255,331 and a decrease in
accumulated net realized gain on investments of $25,558,614.
Purchases and sales of securities, other than short-term securities,
aggregated $49,070,182 and $22,402,918, respectively.
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 $27,722 for the period
(see Note 4 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 86.6%
Netherlands 6.7
United Kingdom 4.3
Others (individually less than 1%) 2.4
TOTAL 100.0%
INCOME TAX INFORMATION
At February 28, 1994, the aggregate cost of investment securities for
income tax purposes was $62,570,868. Net unrealized appreciation
aggregated $3,834,136, of which $4,655,385 related to appreciated
investment securities and $821,249 related to depreciated investment
securities.
The fund hereby designates $680,000 as a capital gain dividend for the
purpose of the dividend paid deduction.
CHEMICALS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
FEBRUARY 28, 1994
ASSETS
Investment in securities, at value (including repurchase agreements of $7,701,000) (cost $62,480,454) $ 66,405,004
(Notes 1 and 2) - See accompanying schedule
Cash 4,984
Receivable for investments sold 369,308
Receivable for fund shares sold 4,576,868
Dividends receivable 135,654
Interest receivable 504
Redemption fees receivable (Note 1) 13,509
Other receivables 10,278
TOTAL ASSETS 71,516,109
LIABILITIES
Payable for investments purchased $ 4,545,985
Regular delivery
Delayed delivery (Note 2) 560,779
Payable for fund shares redeemed 4,124,974
Accrued management fee 25,766
Other payables and accrued expenses 41,445
TOTAL LIABILITIES 9,298,949
NET ASSETS $ 62,217,160
Net Assets consist of (Note 1):
Paid in capital $ 57,291,415
Undistributed net investment income 96,969
Accumulated undistributed net realized gain (loss) on investments 904,226
Net unrealized appreciation (depreciation) on investment securities 3,924,550
NET ASSETS, for 1,965,175 shares outstanding $ 62,217,160
NET ASSET VALUE and redemption price per share ($62,217,160 (divided by) 1,965,175 shares) $31.66
Maximum offering price per share (100/97 of $31.66) $32.64
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED FEBRUARY 28, 1994
INVESTMENT INCOME $ 733,402
Dividends
Interest (including security lending fees of $1,690) (Note 6) 59,287
TOTAL INCOME 792,689
EXPENSES
Management fee (Note 4) $ 172,586
Transfer agent (Note 4) 300,053
Fees
Redemption fees (Note 1) (23,853
)
Accounting and security lending fees (Note 4) 46,188
Non-interested trustees' compensation 187
Custodian fees and expenses 12,417
Registration fees 13,361
Audit 766
Legal 286
Reports to shareholders 7,161
Miscellaneous 405
Total expenses before reductions 529,557
Expense reductions (Note 8) (2,470 527,087
)
NET INVESTMENT INCOME 265,602
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 1) 2,851,580
Net realized gain (loss) on investment securities
Change in net unrealized appreciation (depreciation) on investment securities 2,343,419
NET GAIN (LOSS) 5,194,999
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 5,460,601
OTHER INFORMATION $192,261
Sales charges paid to FDC
(Note 4)
Deferred sales charges withheld $15,021
by FDC (Note 4)
Exchange fees withheld by FSC $20,265
(Note 4)
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED TEN MONTHS
FEBRUARY 28, ENDED
1994 FEBRUARY 28,
1993
Operations $ 265,602 $ 352,037
Net investment income
Net realized gain (loss) on investments 2,851,580 2,861,673
Change in net unrealized appreciation (depreciation) on investments 2,343,419 (4,089,633
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 5,460,601 (875,923
)
Distributions to shareholders (189,427 (358,547
From net investment income ) )
From net realized gain (2,552,992 (3,962,530
) )
TOTAL DISTRIBUTIONS (2,742,419 (4,321,077
) )
Share transactions 59,344,504 18,786,960
Net proceeds from sales of shares
Reinvestment of distributions 2,653,509 4,236,204
Cost of shares redeemed (31,346,756 (28,622,632
) )
Paid in capital portion of redemption fees (Note 1) 51,531 26,570
Net increase (decrease) in net assets resulting from share transactions 30,702,788 (5,572,898
)
TOTAL INCREASE (DECREASE) IN NET ASSETS 33,420,970 (10,769,898
)
NET ASSETS
Beginning of period 28,796,190 39,566,088
End of period (including undistributed net investment income of $96,969 and $4,291,819, respectively)$ 62,217,160 $ 28,796,190
OTHER INFORMATION
Shares
Sold 1,911,622 617,345
Issued in reinvestment of distributions 93,252 143,092
Redeemed (1,045,994 (960,200
) )
Net increase (decrease) 958,880 (199,763)
</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>
YEAR ENDED TEN MONTHS YEARS ENDED APRIL 30,
FEBRUARY 28, ENDED
FEBRUARY 28,
SELECTED PER-SHARE DATAC 1994 1993 1992 1991 1990
Net asset value, beginning of period $ 28.62 $ 32.81 $ 26.25 $ 22.70 $ 23.77
Income from Investment Operations
Net investment income .29 .30 .12 .28 .41
Net realized and unrealized gain (loss) on investments 5.97 (.84) 7.27 3.94 (.21)
Total from investment operations 6.26 (.54) 7.39 4.22 .20
Less Distributions
From net investment income (.23) (.31) (.18) (.10) (.16)
From net realized gain (3.05) (3.36) (.71) (.60) (1.13)
Total distributions (3.28) (3.67) (.89) (.70) (1.29)
Redemption fees added to paid in capital .06 .02 .06 .03 .02
Net asset value, end of period $ 31.66 $ 28.62 $ 32.81 $ 26.25 $ 22.70
TOTAL RETURND, E 23.63% (1.61)% 29.07% 18.99% .71%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 62,217 $ 28,796 $ 39,566 $ 20,396 $ 21,150
Ratio of expenses to average net assetsB 1.93% 1.89%A 2.16% 2.50% 2.37%
Ratio of expenses to average net assets before expense 1.93% 1.89%A 2.16% 2.52% 2.37%
reductionsB
Ratio of net investment income to average net assets .97% 1.21%A .40% 1.21% 1.65%
Portfolio turnover rate 81% 214%A 87% 87% 99%
</TABLE>
1 ANNUALIZED
2 SEE NOTE 8 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.
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 1 PAST 5 LIFE OF
FEBRUARY 28, 1994 YEAR YEARS FUND
CONSTRUCTION AND HOUSING 27.45% 127.96% 190.88%
CONSTRUCTION AND HOUSING
(INCL. 3% SALES CHARGE) 23.63% 121.12% 182.15%
S&P 500 8.33% 89.60% 156.18%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, 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
FEBRUARY 28, 1994 YEAR YEARS FUND
CONSTRUCTION AND HOUSING 27.45% 17.92% 15.47%
CONSTRUCTION AND HOUSING
(INCL. 3% SALES CHARGE) 23.63% 17.20% 14.99%
S&P 500 8.33% 13.65% 13.51%
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 Construct & Hsg S&P 500
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 25617.61
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 February 28, 1994, your investment would have grown to $28,215 -
a 182.15% increase. That compares to $10,000 invested in the S&P 500,
which would have grown to $25,618 over the same period - a 156.18%
increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1994
% OF FUND'S
INVESTMENTS
General Electric Co. 8.5
Medusa Corp. 5.1
Lowe's Companies, Inc. 4.9
Federal National Mortgage Association 4.8
Federal Home Loan Mortgage Corporation 4.6
Armstrong World Industries, Inc. 3.3
Pulte Corp. 3.2
Lafarge Corp. 3.1
Centex Corp. 2.9
Leggett & Platt, Inc. 2.3
TOP INDUSTRIES AS OF FEBRUARY 28, 1994
Row: 1, Col: 1, Value: 54.3
Row: 1, Col: 2, Value: 5.8
Row: 1, Col: 3, Value: 8.5
Row: 1, Col: 4, Value: 9.300000000000001
Row: 1, Col: 5, Value: 9.300000000000001
Row: 1, Col: 6, Value: 12.8
Cement 12.8%
Federal & Federally Sponsored
Credit Agencies 9.3%
Operative Builders 9.3%
Electrical Machinery 8.5%
Furniture 5.8%
All Others 54.3%*
* 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. Quite well. The fund's total return for the year ended February 28, 1994
was 27.45%. This was substantially higher than the S& P 500, which had
a return of 8.33% for the same period.
Q. WHAT'S BEHIND THESE NUMBERS?
A. The housing market had a strong year. In general, interest rates stayed
low and consumer confidence improved. As a result, there was an increased
demand for houses, especially single family homes. Also, I heavily weighted
the fund - almost 13% - in cement stocks. Cement factories were at 90% of
their production capacity, allowing cement companies to raise their prices
over the inflation level for the first time in a decade. One of my top
stocks was the Midwestern cement company, Medusa. This company benefited
from the tight supply of cement in the Midwest and Great Lakes region.
Lafarge, a cement and concrete company, also turned in good results because
it increased prices and cut operating costs.
Q. WHAT INDUSTRIES BENEFITED FROM THE UPSWING IN THE HOUSING MARKET?
A. Home builders performed especially well. For example, Pulte, a national
home builder, was up over 50% for the year ended February 28, 1994. I was
also pleased with Centex, a diversified home-building company that produces
materials such as cement and gypsum. It also profited from improved
pricing. A company that benefited from extensive internal restructuring as
well as the upturn in the market was Armstrong, which makes floors,
ceilings, and industrial products. It cut its costs significantly over the
past few years. So, when sales picked up this year, its profits increased
dramatically. In fact, its stock price almost doubled.
Q. WHAT'S THE STORY BEHIND YOUR TOP STOCK, GENERAL ELECTRIC?
A. GE, which makes a variety of products, including home appliances, was
attractive for several reasons. First, it had a huge cash supply on hand,
which the company could use to make some interesting acquisitions. It also
owns Kidder Peabody, which was up about 20% in the past year. Most
importantly, I was pleased with changes GE made to its culture that
resulted in increased employee commitment and strong earnings improvement
despite a difficult economic environment.
Q. IN FEBRUARY, THE FEDERAL RESERVE INCREASED SHORT-TERM INTEREST RATES.
HAS THAT AFFECTED THE FUND'S PERFORMANCE?
A. Yes. The fund was down about 2% after the Fed's decision. However, after
that it leveled off and slightly outperformed the S&P 500. Rising
interest rates increase concerns about the affordability of housing, as
well as concerns about the profitability of some companies' mortgage
banking operations. Home builders were the hardest hit. For example, during
the month of February, Pulte was down 18% and Centex dropped 26%.
Q. DO YOU HAVE ANY REGRETS ABOUT YOUR INVESTMENT DECISIONS?
A. Not any major ones. However, I wish I'd invested more heavily in
companies like Armstrong - up 87% this year. I also wish I'd bought more
stock in Shaw Industries, the largest U.S. carpet producer. It had a
volatile year, but from its low point to its high point, it grew about 65%.
Q. HOW DO YOU THINK THE SECTOR AND THE FUND LOOK GOING FORWARD?
A. As we discussed, the overall housing environment looks good, and I
expect the demand for housing could continue to rise in 1994. This should
be helped by an increase in construction of multifamily housing, like
apartment buildings, which have been depressed. Plus, it looks like the
commercial sector might pick up, something that was unthinkable several
years ago. In terms of the fund, I believe my top 10 stocks are well
positioned to take advantage of the construction market if it continues to
improve. Going forward, I'm keeping my eye on furniture and appliance
companies, such as the furniture company Leggett & Platt, which could
continue to benefit from a strong new housing market. In addition, they're
likely to be buoyed by last year's refinancings, which provided cash
savings to homeowners.
FUND FACTS
START DATE: September 29, 1986
SIZE: as of February 28, 1994, over $80 million
MANAGER: Katherine Collins, since June 1992;
equity analyst, home-building and construction
industries, 1990-1992; joined Fidelity in 1990
(checkmark)
CONSTRUCTION AND HOUSING PORTFOLIO
INVESTMENTS FEBRUARY 28, 1994
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 82.5%
SHARES VALUE (NOTE 1)
BUILDING MATERIALS - 20.5%
CEMENT - 12.8%
Cemex SA, Series B 10,000 $ 295,588 15299293
Florida Rock Industries, Inc. 28,200 920,025 34114010
Lafarge Corp. 109,100 2,632,038 50586210
Medusa Corp. 138,900 4,305,900 58507230
St. Lawrence Cement, Inc. Class A (a) 52,700 429,567 79106010
Southdown, Inc. (a) 14,000 409,500 84129710
Texas Industries, Inc. 48,100 1,725,588 88249110
Vulcan Materials Co. 2,900 141,738 92916010
10,859,944
CONCRETE, GYPSUM, PLASTER - 0.6%
Devcon International Corp. (a) 11,400 82,650 25158810
USG Corp. (a) 13,600 413,100 90329340
495,750
FLOOR COVERINGS - 3.3%
Armstrong World Industries, Inc. 52,300 2,830,738 04247610
PAINT & VARNISH - 1.2%
Sherwin-Williams Co. 29,700 1,046,925 82434810
PAVING, ROOFING & SIDING - 1.3%
AMRE, Inc. 1,700 6,588 03215310
Bird Corp. 22,600 226,000 09076310
Carlisle Companies, Inc. 18,000 596,250 14233910
Jannock Ltd. 5,700 88,172 47088880
Ply-Gem Industries, Inc. 7,300 179,763 72941610
1,096,773
PLUMBING SUPPLIES - WHOLESALE - 1.3%
Masco Corp. 30,700 1,078,338 57459910
TOTAL BUILDING MATERIALS 17,408,468
CHEMICALS & PLASTICS - 0.4%
CHEMICALS - 0.4%
PPG Industries, Inc. 3,900 299,325 69350610
COMPUTERS & OFFICE EQUIPMENT - 0.1%
COMPUTER PERIPHERALS - 0.1%
Cherry Corp. (a) 5,000 121,250 16454110
CONSTRUCTION - 10.9%
GENERAL BUILDING - 0.9%
Schuler Homes, Inc. (a) 18,600 483,600 80818810
Toll Brothers, Inc. (a) 20,000 300,000 88947810
783,600
MOBILE HOMES - 0.7%
Clayton Homes, Inc. (a) 21,650 503,363 18419010
Oakwood Homes Corp. 2,000 49,000 67409810
Redman Industries (a) 2,000 40,500 75764210
592,863
OPERATIVE BUILDERS - 9.3%
Centex Corp. 66,500 2,477,125 15231210
Continental Homes Holding Corp. 29,900 639,113 21148C10
Engle Homes, Inc. 16,100 261,625 29289610
Inco Homes (a) 10,000 72,500 45325710
Lennar Corp. 26,300 897,488 52605710
Pulte Corp. 79,300 2,686,288 74586710
Standard Pacific Corp. 49,000 526,750 85375C10
Sundance Homes, Inc. (a) 20,000 250,000 86724Q10
Washington Homes, Inc. 8,500 72,250 93886410
7,883,139
TOTAL CONSTRUCTION 9,259,602
SHARES VALUE (NOTE 1)
CONSUMER ELECTRONICS - 0.7%
APPLIANCES - 0.7%
Fedders USA, Inc. (a) 40,000 $ 280,000 31313510
Stanley Works 7,300 313,900 85461610
593,900
ELECTRICAL EQUIPMENT - 10.0%
ELECTRICAL EQUIPMENT - WHOLESALE - 0.8%
Hughes Supply, Inc. 24,800 663,400 44448210
ELECTRICAL MACHINERY - 8.5%
General Electric Co. 68,500 7,218,188 36960410
ELECTRICAL TRANSMISSION EQUIPMENT - 0.7%
MagneTek, Inc. (a) 40,000 610,000 55942410
TOTAL ELECTRICAL EQUIPMENT 8,491,588
ENGINEERING - 2.5%
ARCHITECTS & ENGINEERS - 0.6%
Fluor Corp. 11,400 505,875 34386110
SPECIAL CONTRACTORS - 1.9%
CBI Industries, Inc. 16,400 551,450 12480010
Foster Wheeler Corp. 25,000 1,046,875 35024410
1,598,325
TOTAL ENGINEERING 2,104,200
FEDERAL SPONSORED CREDIT - 9.3%
FEDERAL & FEDERALLY SPONSORED CREDIT AGENCIES - 9.3%
Federal Home Loan Mortgage Corporation 69,600 3,880,200 31340030
Federal National Mortgage Association 48,700 4,048,188 31358610
7,928,388
HOME FURNISHINGS - 10.3%
FURNITURE - 5.8%
Bassett Furniture Industries, Inc. 10,062 299,345 07020310
Bush Industries, Inc. Class A 3,550 93,188 12316410
LADD Furniture, Inc. 91,500 915,000 50573910
La-Z Boy Chair Co. 5,000 178,750 50533610
Leggett & Platt, Inc. 43,800 1,981,950 52466010
Loewenstein Furniture Group, Inc. (a) 1,000 11,625 54042210
Rowe Furniture Corp. 60,150 954,881 77952810
Stanley Furniture (a) 32,000 464,000 85430520
4,898,739
FURNITURE STORES - 3.4%
Bombay Company, Inc. (The) (a) 12,450 342,375 09792410
Ethan Allen Interiors, Inc. (a) 27,000 745,875 29760210
Haverty Furniture Companies, Inc. 31,550 575,788 41959610
Heilig-Meyers Co. 27,500 907,500 42289310
Rhodes, Inc. (a) 20,000 385,000 76235P10
2,956,538
NON-WOOD OFFICE FURNITURE - 1.1%
Falcon Products, Inc. (a) 17,500 188,125 30607510
Miller (Herman), Inc. 21,900 733,650 60054410
921,775
TOTAL HOME FURNISHINGS 8,777,052
INDUSTRIAL MACHINERY & EQUIPMENT - 2.1%
CONSTRUCTION EQUIPMENT - 1.9%
Caterpillar, Inc. 14,500 1,571,438 14912310
PUMPING EQUIPMENT - 0.2%
Amtrol, Inc. 10,000 210,000 03234A10
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 1,781,438
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
IRON & STEEL - 1.2%
IRON & STEEL BLAST FURNITURE, MILLS - 1.2%
Allegheny Ludlum Industries, Inc. 30,000 $ 596,250 01690010
Birmingham Steel Corp. 6,200 182,900 09125010
Oregon Steel Mills, Inc. 9,800 249,900 68607910
1,029,050
LEISURE DURABLES & TOYS - 1.6%
LEISURE DURABLES - 1.0%
Champion Enterprises, Inc. (a) 37,200 827,700 15849610
MOTOR HOMES - 0.2%
Fleetwood Enterprises, Inc. 10,000 223,750 33909910
SPORTING & ATHLETIC GOODS - 0.4%
Coleman, Inc. (a) 12,600 341,775 19355910
TOTAL LEISURE DURABLES & TOYS 1,393,225
METALS & MINING - 0.2%
METAL ORES - 0.2%
Wolverine Tube, Inc. (a) 8,500 189,125 97809310
PAPER & FOREST PRODUCTS - 0.4%
PAPER - 0.4%
Champion International Corp. 10,000 315,000 15852510
REAL ESTATE - 1.1%
SUBDIVIDED REAL ESTATE DEVELOPMENT - 1.1%
Hovnanian Enterprises, Inc. Class A (a) 11,000 143,000 44248720
Newhall Land & Farming Co. (CA) 51,400 777,425 65142610
920,425
RETAIL & WHOLESALE, MISCELLANEOUS - 7.1%
BUILDING MATERIALS - RETAIL - 2.1%
Home Depot, Inc. (The) 43,266 1,800,947 43707610
LUMBER & BUILDING MATERIALS - RETAIL - 5.0%
Lowe's Companies, Inc. 63,600 4,205,550 54866110
TOTAL RETAIL & WHOLESALE, MISC. 6,006,497
TEXTILES & APPAREL - 4.1%
CARPETS & RUGS - 3.3%
Interface, Inc. Class A 39,400 625,475 45866510
Mohawk Industries, Inc. (a) 45,206 1,231,864 60819010
Shaw Industries, Inc. 48,800 915,000 82028610
2,772,339
FOOTWEAR - 0.4%
Justin Industries, Inc. 24,900 361,050 48217110
TEXTILE MILL PRODUCTS - 0.4%
Unifi, Inc. 16,600 388,025 90467710
TOTAL TEXTILES & APPAREL 3,521,414
TOTAL COMMON STOCKS
(Cost $59,291,046) 70,139,947
PREFERRED STOCKS - 0.4%
CONVERTIBLE PREFERRED STOCKS - 0.0%
BUILDING MATERIALS - 0.0%
PAVING, ROOFING & SIDING - 0.0%
Bird Corp. $1.85 1,200 21,150 09076330
SHARES VALUE (NOTE 1)
NONCONVERTIBLE PREFERRED STOCKS - 0.4%
BUILDING MATERIALS - 0.4%
CEMENT - 0.4%
Unicem Di Risp 80,000 $ 312,322 91199792
TOTAL PREFERRED STOCKS
(Cost $280,118) 333,472
REPURCHASE AGREEMENTS - 17.1%
MATURITY VALUE (NOTE 1)
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account, at 3.47% dated
2/28/94 due 3/1/94 $14,534,401 $ 14,533,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $74,104,164) $ 85,006,419
LEGEND
(a) Non-income producing
OTHER INFORMATION
CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective March 1,
1993, the fund adopted Statement of Position 93-2: Determination,
Disclosure, and Financial Statement Presentation of Income, Capital Gain,
and Return of Capital Distributions by Investment Companies. As a result,
the fund changed the classification of distributions to shareholders to
better disclose the differences between financial statement amounts and
distributions determined in accordance with income tax regulations.
Accordingly, amounts as of February 28, 1993 have been reclassified to
reflect an increase in paid in capital of $1,160,262, an increase in
undistributed net investment income of $21,031 and a decrease in
accumulated net realized gain on investments of $1,181,293.
Purchases and sales of securities, other than short-term securities,
aggregated $52,217,739 and $12,438,943, respectively.
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 $21,215 for the period
(see Note 4 of Notes to Financial Statements).
INCOME TAX INFORMATION
At February 28, 1994, the aggregate cost of investment securities for
income tax purposes was $74,113,734. Net unrealized appreciation aggregated
$10,892,685, of which $12,388,214 related to appreciated investment
securities and $1,495,529 related to depreciated investment securities.
The fund hereby designates $329,000 as a capital gain dividend for the
purpose of the dividend paid deduction.
CONSTRUCTION AND HOUSING PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
FEBRUARY 28, 1994
ASSETS
Investment in securities, at value (including repurchase agreements of $14,533,000) (cost $74,104,164) $ 85,006,419
(Notes 1 and 2) - See accompanying schedule
Cash 362
Receivable for fund shares sold 1,122,386
Dividends receivable 67,895
Redemption fees receivable (Note 1) 856
TOTAL ASSETS 86,197,918
LIABILITIES
Payable for fund shares redeemed $ 5,081,627
Accrued management fee 46,395
Other payables and accrued expenses 70,753
TOTAL LIABILITIES 5,198,775
NET ASSETS $ 80,999,143
Net Assets consist of (Note 1):
Paid in capital $ 69,457,310
Undistributed net investment income 12,162
Accumulated undistributed net realized gain (loss) on investments 627,416
Net unrealized appreciation (depreciation) on investment securities 10,902,255
NET ASSETS, for 4,086,603 shares outstanding $ 80,999,143
NET ASSET VALUE and redemption price per share ($80,999,143 (divided by) 4,086,603 shares) $19.82
Maximum offering price per share (100/97 of $19.82) $20.43
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED FEBRUARY 28, 1994
INVESTMENT INCOME $ 466,457
Dividends
Interest 245,385
TOTAL INCOME 711,842
EXPENSES
Management fee (Note 4) $ 266,225
Transfer agent (Note 4) 374,727
Fees
Redemption fees (Note 1) (40,431
)
Accounting fees and expenses 52,429
(Note 4)
Non-interested trustees' compensation 253
Custodian fees and expenses 13,746
Registration fees 24,859
Audit 3,008
Legal 309
Reports to shareholders 6,013
Miscellaneous 571
Total expenses before reductions 701,709
Expense reductions (Note 8) (1,748 699,961
)
NET INVESTMENT INCOME 11,881
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 1) 1,149,357
Net realized gain (loss) on investment securities
Change in net unrealized appreciation (depreciation) on investment securities 7,883,107
NET GAIN (LOSS) 9,032,464
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 9,044,345
OTHER INFORMATION $550,583
Sales charges paid to FDC
(Note 4)
Deferred sales charges withheld $3,922
by FDC (Note 4)
Exchange fees withheld by FSC $33,368
(Note 4)
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED TEN MONTHS
FEBRUARY 28, ENDED
1994 FEBRUARY 28,
1993
Operations $ 11,881 $ 37,290
Net investment income
Net realized gain (loss) on investments 1,149,357 151,713
Change in net unrealized appreciation (depreciation) on investments 7,883,107 2,252,597
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 9,044,345 2,441,600
Distributions to shareholders from net realized gains (529,457 (18,518
) )
Share transactions 103,244,564 30,616,107
Net proceeds from sales of shares
Reinvestment of distributions 523,498 18,207
Cost of shares redeemed (62,476,673 (28,668,964
) )
Paid in capital portion of redemption fees (Note 1) 81,997 35,913
Net increase (decrease) in net assets resulting from share transactions 41,373,386 2,001,263
TOTAL INCREASE (DECREASE) IN NET ASSETS 49,888,274 4,424,345
NET ASSETS
Beginning of period 31,110,869 26,686,524
End of period (including undistributed net investment income of $12,162 and $16,260, respectively) $ 80,999,143 $ 31,110,869
OTHER INFORMATION
Shares
Sold 5,578,570 2,129,257
Issued in reinvestment of distributions 28,856 1,324
Redeemed (3,497,427 (2,082,580
) )
Net increase (decrease) 2,109,999 48,001
</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>
YEAR ENDED TEN MONTHS YEARS ENDED APRIL 30,
FEBRUARY 28, ENDED
FEBRUARY 28,
SELECTED PER-SHARE DATAC 1994 1993 1992 1991 1990
Net asset value, beginning of period $ 15.74 $ 13.84 $ 11.76 $ 11.66 $ 13.01
Income from Investment Operations
Net investment income (loss) .01 .02 (.06) .01 -
Net realized and unrealized gain (loss) on investments 4.26 1.87 2.93 1.45 .34
Total from investment operations 4.27 1.89 2.87 1.46 .34
Less Distributions
From net investment income - - - (.16) (.08)
From net realized gain (.22) (.01) (.88) (1.27) (1.62)
Total distributions (.22) (.01) (.88) (1.43) (1.70)
Redemption fees added to paid in capital .03 .02 .09 .07 .01
Net asset value, end of period $ 19.82 $ 15.74 $ 13.84 $ 11.76 $ 11.66
TOTAL RETURND, E 27.45% 13.81% 26.96% 13.46% 2.39%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 80,999 $ 31,111 $ 26,687 $ 4,070 $ 1,217
Ratio of expenses to average net assetsB 1.66% 2.02%A 2.50% 2.48% 2.41%
Ratio of expenses to average net assets before expense 1.67% 2.02%A 3.10% 3.48% 3.30%
reductionsB
Ratio of net investment income (loss) to average net assets.03% .20%A (.49)% .08% (.03)%
Portfolio turnover rate 35% 60%A 183% 137% 185%
</TABLE>
1 ANNUALIZED
2 SEE NOTE 8 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.
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 1 LIFE OF
FEBRUARY 28, 1994 YEAR FUND
ENVIRONMENTAL SERVICES 5.02% 28.47%
ENVIRONMENTAL SERVICES
(INCL. 3% SALES CHARGE) 1.87% 24.62%
S&P 500 8.33% 66.19%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one year, 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 LIFE OF
FEBRUARY 28, 1994 YEAR FUND
ENVIRONMENTAL SERVICES 5.02% 5.51%
ENVIRONMENTAL SERVICES
(INCL. 3% SALES CHARGE) 1.87% 4.82%
S&P 500 8.33% 11.48%
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
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 10562.83 10422.44
03/31/90 11019.13 10698.64
04/30/90 11077.38 10431.17
05/31/90 12106.48 11448.21
06/30/90 12485.11 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 11087.09 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 12232.69 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 11936.55 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 11482.88 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 12002.38 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 16619.19
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 February 28, 1994, your investment would have grown to $12,462 -
a 24.62% increase. That compares to $10,000 invested in the S&P 500,
which would have grown to $16,619 over the same period - a 66.19% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1994
% OF FUND'S
INVESTMENTS
Thermedics, Inc. 6.1
Thermo Electron Corp. 5.4
Attwoods PLC ADR 4.8
TETRA Technologies, Inc. 3.9
United Waste Systems, Inc. 3.8
Heidemij NV 3.7
OHM Corp. 3.4
Thermo Instrument Systems, Inc. 3.3
EA Engineering Science & Technology, Inc. 2.3
American Ecology Corp. 2.3
TOP INDUSTRIES AS OF FEBRUARY 28, 1994
Row: 1, Col: 1, Value: 49.4
Row: 1, Col: 2, Value: 6.1
Row: 1, Col: 3, Value: 6.1
Row: 1, Col: 4, Value: 9.9
Row: 1, Col: 5, Value: 13.4
Row: 1, Col: 6, Value: 15.1
Pollution Equipment & Design
15.1%
Refuse Systems 13.4%
Hazardous Waste
Management 9.9%
Medical Technology 6.1%
Business Consulting Services 6.1%
All Others 49.4%*
* 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. Quite well, considering the terrible performance of the industry during
1993. For the year ended February 28, 1994, the fund had a total return of
5.02%, underperforming the S&P 500, which had a total return of 8.33%.
Q. WHY DID THE FUND'S PERFORMANCE LAG THE INDEX?
A. The S&P Pollution Control index, which measures environmental
services stocks, was the worst performing of all the S&P indexes, down
30.2%. That means that the whole sector had a tough year. The fund's return
was especially weak for the first six months of the year.
Q. YOU TOOK OVER AS FUND MANAGER IN AUGUST. HAVE YOU CHANGED THE FUND'S
STRATEGY?
A. Yes, dramatically. I dropped WMX, the dominant integrated waste
management company, from the fund. Before August, WMX and its publicly
traded divisions made up 17% of the fund's portfolio. I sold it because I
saw a number of potential problems resulting from poor management. This
turned out to be a good move. WMX's price dropped by 31% between August,
when I sold it, and the end of this period. Instead, I focused on
traditional companies with high growth potential and what I call "new
age"companies. Since I've made these changes, the fund has beaten the
S&P 500 every month through the end of February.
Q. WHAT DO YOU MEAN BY "NEW AGE" COMPANIES?
A. New age companies develop advanced technologies and instruments to solve
long-standing environmental issues. They also look for solutions to newer
environmental problems, such as noise pollution. For example, my number one
investment is Thermedics, a company that produces quality control products
for food producers and beverage bottlers. This company uses modern
technology to check for contamination in carbonated beverages. Since the
benzene contamination incident nearly destroyed Perrier, bottlers are
increasingly concerned about protecting their reputation for quality and
purity. This is especially important in the third world, where soda bottles
are often reused, sometimes to transport gasoline. The fund's second
largest investment is Thermo Electron, an innovative energy, environmental,
and medical company that has turned in a great performance this year.
Q. WHAT MORE TRADITIONAL COMPANIES DO YOU HAVE A STAKE IN?
A. I like environmental remediation, consulting, and engineering firms, and
secondary market waste collection companies, smaller companies that work
within a specific region or regions. United Waste Systems, a secondary
waste collection company that does business primarily in Michigan's Upper
Peninsula, was a good performer for the fund. I bought this company when
its stock fell in November. Since then, United Waste's price has increased
by 40%. Another attractive traditional company was OHM, which disposes of
hazardous waste. When business slowed over the last few years, it sold off
its non-essential holdings, such as testing labs it rarely used. This
increased the company's profitability. The company also has a $1.6 billion
backlog of awards to clean Department of Defense and Department of Energy
facilities. This will be an extremely attractive contract because many of
the facilities haven't complied with Environmental Protection Agency (EPA)
requirements, and the cost to rid these bases of toxic waste will be high.
Q. YOUR FOREIGN INVESTMENTS MAKE UP ABOUT 15% OF THE FUND. WHERE ARE YOU
INVESTING?
A. My largest foreign investment was in Attwoods PLC, a waste collection
company in the U.K. Last year, Attwoods dropped a poorly performing
recycling business it owned, and it's now much better positioned to
increase its operating income going forward. Another reason the company
looked good is that, after a failed merger with Laidlaw, it may be ripe for
a takeover by another company.
Q. WHAT'S YOUR OUTLOOK FOR THE FUND GOING FORWARD?
A. I'm generally optimistic. I believe the companies I've invested in have
growth potential and will continue to receive broader investor attention.
In addition, some of them may benefit from mergers due to industry
consolidation. Since the sector is out of favor with investors and stocks
are priced low right now, I think there might be a real opportunity for
price appreciation over the next few years.
FUND FACTS
START DATE: June 29, 1989
SIZE: as of February 28, 1994, over $65 million
MANAGER: Philip Barton, since August;
manager, Fidelity Select Developing
Communications Portfolio, since January
1993; Senior European technology analyst,
Fidelity International, London, 1989-1993;
joined Fidelity in 1986
(checkmark)
ENVIRONMENTAL SERVICES PORTFOLIO
INVESTMENTS FEBRUARY 28, 1994
COMMON STOCKS - 98.0%
SHARES VALUE (NOTE 1)
AUTOS, TIRES, & ACCESSORIES - 2.4%
AUTO & TRUCK PARTS - 2.4%
Air Sensors, Inc. (a) 69,300 $ 961,538 00918720
Air Sensors, Inc. (warrants) (a) 195,000 609,369 00918711
1,570,907
BUILDING MATERIALS - 2.9%
AIRCONDITIONING EQUIPMENT - 0.3%
Thermo Power Corp. (a) 21,500 188,125 88358910
FURNACES - 2.6%
Thermo Process Systems, Inc. (a) 60,800 539,600 88359010
Thermo Remediation 81,000 1,164,375 88359210
1,703,975
TOTAL BUILDING MATERIALS 1,892,100
CHEMICALS & PLASTICS - 1.8%
PLASTICS, NEC - 1.8%
ESSEF Industries Inc. (a) 69,500 1,207,563 26914510
COMPUTER SERVICES & SOFTWARE - 2.5%
CAD/CAM/CAE - 1.4%
Electrocom Automation, Inc. (a) 113,600 908,800 28529410
PREPACKAGED COMPUTER SOFTWARE - 1.1%
Micro Focus Group, PLC ADR (a) 20,000 302,500 59483630
Triconex Corp. (a) 27,000 425,250 89611610
727,750
TOTAL COMPUTER SERVICES & SOFTWARE 1,636,550
COMPUTERS & OFFICE EQUIPMENT - 0.2%
COMPUTER PERIPHERALS - 0.2%
Identix, Inc. (a) 30,500 106,750 45190610
DEFENSE ELECTRONICS - 0.7%
Graseby PLC Ord. 165,000 456,007 40099A92
DRUGS & PHARMACEUTICALS - 1.8%
COMMERCIAL LABORATORY RESEARCH - 1.8%
Catalytica, Inc. (a) 117,600 793,800 14888510
Zenon Environmental, Inc. 44,000 407,558 98942B10
1,201,358
ELECTRICAL EQUIPMENT - 0.8%
TV & RADIO COMMUNICATION EQUIPMENT - 0.8%
California Amplifier, Inc. (a) 84,300 547,950 12990010
ELECTRONIC INSTRUMENTS - 6.8%
INDUSTRIAL MEASUREMENT INSTRUMENTS - 1.7%
Industrial Scientific Corp. 21,000 577,500 45631G10
TSI, Inc. 44,000 561,000 87287610
1,138,500
LABORATORY & RESEARCH EQUIPMENT - 2.8%
Fisher Scientific International, Inc. 33,200 1,178,600 33803210
Microfluidics International Corp 125,000 710,938 59507310
1,889,538
LABORATORY ANALYTICAL INSTRUMENTS - 0.0%
Hach Co. 1,400 26,950 40450410
MEASURING INSTRUMENTS - 2.3%
Liberty Technologies, Inc. 171,900 1,504,125 53128110
TOTAL ELECTRONIC INSTRUMENTS 4,559,113
SHARES VALUE (NOTE 1)
ELECTRONICS - 1.5%
SEMICONDUCTORS - 1.5%
Geotek Industries, Inc. (a) 80,800 $ 979,700 37365410
ENERGY SERVICES - 0.8%
OIL & GAS SERVICES - 0.8%
Serv-Tech, Inc. (a) 53,500 521,625 81753910
ENGINEERING - 3.2%
ARCHITECTS & ENGINEERS - 2.3%
EA Engineering Science &
Technology, Inc. (a) 91,000 1,547,000 26791110
WATER & SEWER PIPES - 0.9%
UTILX Corporation (a) 87,500 601,563 91803110
TOTAL ENGINEERING 2,148,563
GAS - 2.2%
GAS TRANSMISSION - 1.4%
Enron Corp. 6,100 194,438 29356110
Tejas Power Corp. (a) 62,600 704,250 87907910
898,688
GAS TRANSMISSION & DISTRIBUTION - 0.8%
ENSERCH Corp. 15,000 232,500 29356710
Questar Corp. 9,700 298,275 74835610
530,775
TOTAL GAS 1,429,463
INDEPENDENT POWER - 6.0%
STEAM SUPPLY - 6.0%
California Energy Co., Inc. (a) 20,000 365,000 13019010
Thermo Electron Corp. 87,250 3,599,063 88355610
3,964,063
INDUSTRIAL MACHINERY & EQUIPMENT - 2.1%
MEASURING & DISPENSING PUMPS - 0.6%
Total Containment, Inc. 40,000 410,000 89149T10
SERVICE INDUSTRY MACHINERY, NEC - 1.5%
Trojan Technologies (a) 111,400 1,021,545 89692410
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 1,431,545
MEDICAL EQUIPMENT & SUPPLIES - 8.0%
MEDICAL SUPPLIES & APPLIANCES - 1.9%
Steris Corporation (a) 45,000 1,248,750 85915210
MEDICAL TECHNOLOGY - 6.1%
Thermedics, Inc. (a) 313,300 4,033,738 88390110
TOTAL MEDICAL EQUIPMENT & SUPPLIES 5,282,488
MEDICAL FACILITIES MANAGEMENT - 1.3%
MEDICAL LABORATORIES - 1.3%
Huntingdon International Holdings
PLC ADR 135,300 862,538 44589120
METALS & MINING - 0.6%
SECONDARY NONFERROUS SMELTING - 0.6%
IMCO Recycling, Inc. (a) 25,100 363,950 44968110
OIL & GAS - 0.9%
CRUDE PETROLEUM & GAS - 0.9%
Apache Corp. 10,000 250,000 03741110
Unimar Co., Indonesian
Participating Certificate 37,100 329,263 90478810
579,263
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
PACKAGING & CONTAINERS - 0.1%
METAL CANS & SHIPPING CONTAINERS - 0.1%
Air Packaging Technologies, Inc 150,300 $ 94,668 00891310
POLLUTION CONTROL - 40.2%
HAZARDOUS WASTE MANAGEMENT - 9.9%
American Ecology Corp. 127,600 1,531,200 02553310
GNI Group, Inc. (a) 177,500 1,153,750 36202210
NSC Corp. 100,000 425,000 62938T10
OHM Corp. 142,400 2,278,400 67083910
TRC Companies, Inc. (a) 101,900 1,133,638 87262510
6,521,988
POLLUTION EQUIPMENT & DESIGN - 15.1%
Canonie Environmental Services Corp. 81,700 377,863 13801210
Dames & Moore, Inc. 29,200 587,650 23571310
EMCON Associates (a) 52,600 466,825 29084310
Envirosource, Inc. (a) 212,600 823,825 29409K10
GZA GeoEnvironmental
Technologies, Inc. (a) 76,100 437,575 36238610
Harding Associates Inc. (a) 89,300 826,025 41226410
MFRI Inc. (a) 100,000 762,500 55272110
Sevenson Environmental Services, Inc. 5,000 90,000 81806310
TETRA Technologies, Inc. (a) 338,000 2,577,250 88162F10
Thermo Instrument Systems, Inc. (a) 67,350 2,163,619 88355910
Versar, Inc. (a) 32,000 102,000 92529710
Weston (Roy F.), Inc. Class A (a) 97,700 757,175 96113710
9,972,307
REFUSE SYSTEMS - 13.2%
Attwoods PLC ADR 263,600 3,196,150 04987020
International Recovery Corp. (a) 35,300 507,438 46024210
Sanifill, Inc. (a) 49,500 1,175,625 80101810
Security Environmental Systems, Inc. (a) 15,000 75,000 81421T30
United Waste Systems, Inc. (a) 128,500 2,505,750 91317410
Western Waste Industries, Inc. (a) 77,600 1,261,000 95988010
8,720,963
SANITARY SERVICES - 2.0%
USA Waste Services, Inc. (a) 104,300 1,368,938 90291710
TOTAL POLLUTION CONTROL 26,584,196
SERVICES - 11.2%
BUSINESS CONSULTING SERVICES - 6.1%
Centex Telemanagement, Inc. (a) 120,000 600,000 15231510
Earth Technology Corp. (USA) (a) 71,900 943,688 27031510
Heidemij NV (a) 200,500 2,456,125 42099522
3,999,813
BUSINESS SERVICES - 2.6%
Marcum Natural Gas Services, Inc. 68,100 476,700 56632310
Vectra Technologies (a) 139,500 1,255,500 92239910
1,732,200
LINEN SUPPLY - 2.2%
G&K Services Inc. Class A 97,650 1,464,750 36126810
PERSONNEL SUPPLY SERVICES - 0.1%
Nuclear Support Services, Inc. (a) 15,000 82,500 67030910
SPECIAL WAREHOUSING & STORAGE, NEC - 0.2%
Astrotech International Corp. (a) 46,400 145,000 04648710
TOTAL SERVICES 7,424,263
TOTAL COMMON STOCKS
(Cost $61,993,505) 64,844,623
CONVERTIBLE PREFERRED STOCKS - 0.5%
SHARES VALUE (NOTE 1)
DRUGS & PHARMACEUTICALS - 0.5%
BIOTECHNOLOGY - 0.5%
DNA Plant Technology Corp. $2.25
exchangeable (a) (Cost $302,505) 11,000 $ 299,750 23323630
CONVERTIBLE BONDS - 0.2%
PRINCIPAL
AMOUNT
POLLUTION CONTROL - 0.2%
REFUSE SYSTEMS - 0.2%
Sanifill, Inc. 7 1/2%, 6/1/06
(Cost $100,505) $100,000 103,250 801018AA
REPURCHASE AGREEMENTS - 1.3%
MATURITY VALUE (NOTE 1)
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account, at 3.47% dated
2/28/94 due 3/1/94 $827,080 827,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $63,223,515) $ 66,074,623
LEGEND
(a) Non-income producing
OTHER INFORMATION
CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective March 1,
1993, the fund adopted Statement of Position 93-2: Determination,
Disclosure, and Financial Statement Presentation of Income, Capital Gain,
and Return of Capital Distributions by Investment Companies. As a result,
the fund changed the classification of distributions to shareholders to
better disclose the differences between financial statement amounts and
distributions determined in accordance with income tax regulations.
Accordingly, amounts as of February 28, 1993 have been reclassified to
reflect an increase in paid in capital of $492,349, a decrease in
undistributed net investment loss of $1,280,096 and an increase in
accumulated net realized loss on investments of $1,772,445.
Purchases and sales of securities, other than short-term securities,
aggregated $105,614,637 and $102,839,401, respectively.
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 $84,034 for the period
(see Note 4 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 $1,817,500,
respectively. The weighted average interest rate paid was 3.6% (see Note 7
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 84.8%
United Kingdom 9.2
Netherlands 3.7
Canada 2.3
TOTAL 100.0%
INCOME TAX INFORMATION
At February 28, 1994, the aggregate cost of investment securities for
income tax purposes was $63,475,313. Net unrealized appreciation aggregated
$2,599,310, of which $6,051,468 related to appreciated investment
securities and $3,452,158 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>
FEBRUARY 28, 1994
ASSETS
Investment in securities, at value (including repurchase agreements of $827,000) (cost $63,223,515) (Notes $ 66,074,623
1 and 2) - See accompanying schedule
Cash 697
Receivable for investments sold 1,860,210
Receivable for fund shares sold 622,325
Dividends receivable 38,381
Interest receivable 1,854
Redemption fees receivable (Note 1) 529
Other receivables 29,257
TOTAL ASSETS 68,627,876
LIABILITIES
Payable for investments purchased $ 918,560
Payable for fund shares redeemed 1,651,503
Accrued management fee 34,651
Other payables and accrued expenses 67,379
TOTAL LIABILITIES 2,672,093
NET ASSETS $ 65,955,783
Net Assets consist of (Note 1):
Paid in capital $ 63,607,736
Accumulated undistributed net realized gain (loss) on investments (503,061
)
Net unrealized appreciation (depreciation) on investment securities 2,851,108
NET ASSETS, for 5,527,301 shares outstanding $ 65,955,783
NET ASSET VALUE and redemption price per share ($65,955,783 (divided by) 5,527,301 shares) $11.93
Maximum offering price per share (100/97 of $11.93) $12.30
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED FEBRUARY 28, 1994
INVESTMENT INCOME $ 457,429
Dividends
Interest 116,876
TOTAL INCOME 574,305
EXPENSES
Management fee (Note 4) $ 354,982
Transfer agent (Note 4) 758,516
Fees
Redemption fees (66,390
)
Accounting fees and expenses 57,311
(Note 4)
Non-interested trustees' compensation 408
Custodian fees and expenses 15,931
Registration fees 24,610
Audit 6,114
Legal 615
Interest (Note 7) 364
Reports to shareholders 18,379
Miscellaneous 870
Total expenses before reductions 1,171,710
Expense reductions (Note 8) (21,649 1,150,061
)
NET INVESTMENT INCOME (LOSS) (575,756
)
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 1) 1,694,174
Net realized gain (loss) on investment securities
Change in net unrealized appreciation (depreciation) on investment securities 1,070,736
NET GAIN (LOSS) 2,764,910
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 2,189,154
OTHER INFORMATION $373,455
Sales charges paid to FDC
(Note 4)
Deferred sales charges withheld $70,630
by FDC (Note 4)
Exchange fees withheld by FSC $51,563
(Note 4)
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED TEN MONTHS
FEBRUARY 28, ENDED
1994 FEBRUARY 28,
1993
Operations $ (575,756 $ (365,176
Net investment income (loss) ) )
Net realized gain (loss) on investments 1,694,174 (726,250
)
Change in net unrealized appreciation (depreciation) on investments 1,070,736 3,425,443
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 2,189,154 2,334,017
Distributions to shareholders from net realized gains - (2,168,222
)
Share transactions 46,687,197 30,459,906
Net proceeds from sales of shares
Reinvestment of distributions - 2,143,441
Cost of shares redeemed (48,886,268 (32,015,265
) )
Paid in capital portion of redemption fees (Note 1) 53,169 27,062
Net increase (decrease) in net assets resulting from share transactions (2,145,902 615,144
)
TOTAL INCREASE (DECREASE) IN NET ASSETS 43,252 780,939
NET ASSETS
Beginning of period 65,912,531 65,131,592
End of period (including accumulated net investment loss of $0 and $1,280,096, respectively) $ 65,955,783 $ 65,912,531
OTHER INFORMATION
Shares
Sold 4,126,128 2,820,987
Issued in reinvestment of distributions - 198,650
Redeemed (4,401,687 (2,936,705
) )
Net increase (decrease) (275,559) 82,932
</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>
YEAR ENDED TEN MONTHS YEARS ENDED APRIL 30, JUNE 29, 1989
FEBRUARY 28, ENDED (COMMENCEMEN
FEBRUARY 28, T OF OPERATIONS)
TO APRIL 30,
SELECTED PER-SHARE DATAC
1994 1993 1992 1991 1990
Net asset value, beginning of period
$ 11.36 $ 11.39 $ 12.95 $ 11.41 $ 10.00
Income from Investment Operations
Net investment income (loss)
(.11) (.06) (.09) (.04) .02
Net realized and unrealized gain (loss) on investments
.67 .42 (1.06) 1.55 1.38
Total from investment operations
.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
$ 11.93 $ 11.36 $ 11.39 $ 12.95 $ 11.41
TOTAL RETURND, E
5.02% 3.34% (8.67)% 13.50% 14.20%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted)
$ 65,956 $ 65,913 $ 65,132 $ 100,263 $ 101,736
Ratio of expenses to average net assetsB
2.03% 1.99%A 2.03% 2.03% 2.25%A
Ratio of expenses to average net assets before expense
2.07% 1.99%A 2.03% 2.03% 2.25%A
reductionsB
Ratio of net investment income (loss) to average net assets
(1.02)% (.70)% (.74)% (.30)% .16%A
A
Portfolio turnover rate
191% 176%A 130% 122% 72%A
</TABLE>
1 ANNUALIZED
2 SEE NOTE 8 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.
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 1 PAST 5 LIFE OF
FEBRUARY 28, 1994 YEAR YEARS FUND
INDUSTRIAL EQUIPMENT 40.07% 110.78% 119.78%
INDUSTRIAL EQUIPMENT
(INCL. 3% SALES CHARGE) 35.87% 104.46% 113.19%
S&P 500 8.33% 89.60% 156.18%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, 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
FEBRUARY 28, 1994 YEAR YEARS FUND
INDUSTRIAL EQUIPMENT 40.07% 16.08% 11.19%
INDUSTRIAL EQUIPMENT
(INCL. 3% SALES CHARGE) 35.87% 15.38% 10.73%
S&P 500 8.33% 13.65% 13.51%
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
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 10024.37 12075.86
03/31/88 10173.69 11702.72
04/30/88 10472.33 11832.62
05/31/88 10412.60 11935.56
06/30/88 11149.25 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 9815.32 12911.07
01/31/89 10532.05 13856.16
02/28/89 10113.96 13511.14
03/31/89 10263.28 13825.95
04/30/89 10999.92 14543.52
05/31/89 11597.21 15132.53
06/30/89 11099.47 15046.28
07/31/89 11806.25 16404.95
08/31/89 12025.26 16726.49
09/30/89 11856.03 16657.91
10/31/89 11069.61 16271.45
11/30/89 11378.20 16603.39
12/31/89 11577.30 17001.87
01/31/90 11189.06 15861.04
02/28/90 11756.48 16065.65
03/31/90 12453.31 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 9440.39 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 11625.11 18910.24
05/31/91 12116.17 19727.16
06/30/91 11725.02 18823.66
07/31/91 11825.32 19700.84
08/31/91 12005.86 20167.75
09/30/91 12286.70 19830.95
10/31/91 12216.49 20096.68
11/30/91 11634.75 19286.79
12/31/91 12406.42 21493.19
01/31/92 13519.56 21093.42
02/29/92 14480.90 21367.64
03/31/92 14055.89 20950.97
04/30/92 14055.89 21566.92
05/31/92 14167.20 21672.60
06/30/92 13296.93 21349.68
07/31/92 13418.36 22222.88
08/31/92 12720.12 21767.31
09/30/92 12983.23 22024.17
10/31/92 12932.63 22101.25
11/30/92 13549.91 22854.91
12/31/92 13813.02 23136.02
01/31/93 14460.66 23330.36
02/28/93 15219.62 23647.66
03/31/93 15492.84 24146.62
04/30/93 16201.67 23562.27
05/31/93 17011.75 24193.74
06/30/93 17234.53 24263.90
07/31/93 17477.55 24166.85
08/31/93 18672.42 25082.77
09/30/93 18459.78 24889.63
10/31/93 19077.47 25404.85
11/30/93 19057.21 25163.50
12/31/93 19798.05 25467.98
01/31/94 20728.99 26333.89
02/28/94 21318.59 25617.61
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 February 28, 1994, your investment would have grown to $21,319 -
a 113.19% increase. That compares to $10,000 invested in the S&P 500,
which would have grown to $25,618 over the same period - a 156.18%
increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1994
% OF FUND'S
INVESTMENTS
Caterpillar, Inc. 10.8
Digital Equipment Corp. 6.7
International Business Machines Corp. 6.1
NACCO Industries, Inc. Class A 5.4
TRINOVA Corp. 5.2
Trinity Industries, Inc. 5.0
Joy Technologies, Inc. Class A 5.0
Finning Ltd. 4.3
BWIP Holdings, Inc. Class A 3.7
Compaq Computer Corp. 3.4
TOP INDUSTRIES AS OF FEBRUARY 28, 1994
Row: 1, Col: 1, Value: 47.2
Row: 1, Col: 2, Value: 6.1
Row: 1, Col: 3, Value: 7.5
Row: 1, Col: 4, Value: 10.2
Row: 1, Col: 5, Value: 13.4
Row: 1, Col: 6, Value: 15.6
Construction Equipment 15.6%
General Industrial
Machinery 13.4%
Mini & Micro Computers 10.2%
Pumping Equipment 7.5%
Mainframe Computers 6.1%
All Others 47.2%*
* 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 DO?
A. For the year ended February 28, 1994, the fund returned 40.07%. That
beat the S&P 500, which returned 8.33% for the same period.
Q. WAS IT A STRAIGHT ONE-WAY RIDE UP?
A. It usually isn't and it wasn't during the past year either. In the first
half the fund enjoyed strong returns as new equipment demand, reduced
product inventories and cost-cutting boosted earnings for many agricultural
and construction equipment firms. But by late last year, many of these
companies' stock prices had gotten ahead of themselves, and it became more
difficult to find good values. In the beginning of 1994, investors lost
faith in the group's ability to maintain earnings growth, and there was a
sell-off. At that point, both the sector and the fund dropped.
Q. WERE THERE ANY STOCKS THAT DID PARTICULARLY WELL THROUGHOUT THE ENTIRE
PERIOD?
A. Construction equipment manufacturer Caterpillar, the fund's largest
investment making up 10.8% on February 28, 1994, withstood most of the
sector's ups and downs. That's in part because the company posted
significantly higher profits without huge gains in revenues. It did that by
maintaining relatively low costs. Despite its recent strong gains, I think
Caterpillar has the potential to move higher. About half of the company's
sales comes from abroad, and it has recently been helped by orders from the
relatively untapped markets of the former Soviet Union and China. Finning,
one of the fund's top investments, also did well as the demand for
earth-moving equipment improved both in Canada and Britain.
Q. WHAT ABOUT THE AGRICULTURAL EQUIPMENT COMPANIES?
A. They, too, did well for a good part of the period and the fund enjoyed
strong gains from its investments in companies like Deere and Tenneco. But
recently I pared back the fund's stake in some of these companies because I
thought their stock prices were beginning to reflect peak levels of
production. I used some of the proceeds to buy stocks in other industries
that seemed more attractively priced.
Q. WHAT ARE SOME EXAMPLES?
A. I focused on companies that could be helped by a U.S. economic recovery
like Joy Technologies, a manufacturer of coal mining machinery and NACCO, a
lift truck company. Both of these companies could benefit if global
economic recovery translates into stronger-than-expected sales of their
products.
Q. SOME OF THE FUND'S TOP INVESTMENTS WERE COMPUTER AND RELATED COMPANIES.
WHAT'S THE ATTRACTION THERE?
A. Companies like Digital Equipment, IBM and Compaq Computer were
attractive because I thought they, too, could be helped by a stronger U.S.
economy. Much of American business is investing in technology as a means of
improving productivity. That trend helped fuel growth for some
computer-related companies. What's more, many technology companies are
aggressively cutting costs, which in turn seems to have helped their
profitability. However, some of these companies didn't improve as quickly
as I thought they would and proved to be disappointing.
Q. WERE THERE OTHER DISAPPOINTMENTS?
A. The flow of money into the fund was uneven, and at times I had more cash
in the fund than I would have liked. At the end of the period, about 17% of
the fund was in cash. If the amount of money coming into the fund had been
slower, and the fund's cash level was down to under 10% of investments, the
fund may have done better.
Q. AFTER COMING OFF SUCH A STRONG YEAR, WHAT'S AHEAD FOR THE SECTOR AND THE
FUND IN 1994?
A. I think it will be more difficult for both the sector and the fund to
enjoy the same substantial gains we saw in 1993. Lately it's been harder to
find companies that seem to be a good value. But I'll continue to focus on
finding companies that are inexpensive relative to their value, and could
benefit from continued cost-cutting and increased overseas sales.
FUND FACTS
START DATE: September 29, 1986
SIZE: as of February 28, 1994, over $206 million
MANAGER: Albert Ruback, since September
1991; joined Fidelity in 1991
(checkmark)
INDUSTRIAL EQUIPMENT PORTFOLIO
INVESTMENTS FEBRUARY 28, 1994
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 83.4%
SHARES VALUE (NOTE 1)
AUTOS, TIRES, & ACCESSORIES - 8.0%
AUTO & TRUCK PARTS - 2.5%
Titan Wheel International, Inc. (a) 161,200 $ 4,755,395 88832810
INDUSTRIAL TRUCKS - 5.5%
NACCO Industries, Inc. Class A 177,600 10,189,800 62957910
Raymond Corp. (The) (a) 10,300 182,825 75468810
10,372,625
TRUCK & BUS BODIES - 0.0%
Grupo Dina (Consorcio G) ADR (a) 100 1,825 21030610
TOTAL AUTOS, TIRES, & ACCESSORIES 15,129,845
BUILDING MATERIALS - 1.7%
AIRCONDITIONING EQUIPMENT - 1.7%
Tecumseh Products Co. Class A 60,500 3,100,625 87889520
COMPUTERS & OFFICE EQUIPMENT - 16.3%
MAINFRAME COMPUTERS - 6.1%
International Business Machines Corp. 216,600 11,452,725 45920010
MINI & MICRO COMPUTERS - 10.2%
Apple Computer, Inc. 10,000 365,000 03783310
Compaq Computer Corp. (a) 63,900 6,310,125 20449310
Digital Equipment Corp. (a) 428,900 12,491,713 25384910
19,166,838
TOTAL COMPUTERS & OFFICE EQUIPMENT 30,619,563
ELECTRICAL EQUIPMENT - 0.6%
FLUID METERS - 0.6%
Roper Industries, Inc. 38,000 1,102,000 77669610
ELECTRONICS - 1.6%
ELECTRONIC PARTS - WHOLESALE - 0.1%
Pioneer-Standard Electronics, Inc. 10,000 257,500 72387710
SEMICONDUCTORS - 1.5%
Intel Corp. 40,000 2,749,120 45814010
TOTAL ELECTRONICS 3,006,620
ENERGY SERVICES - 0.2%
OIL & GAS SERVICES - 0.2%
Dresser Industries, Inc. 20,000 455,000 26159710
INDUSTRIAL MACHINERY & EQUIPMENT - 49.0%
BALL & ROLLER BEARINGS - 1.9%
Bearings, Inc. 106,900 3,487,613 07400520
SKF AB sponsored ADR (a) 5,000 94,375 78437540
3,581,988
CONSTRUCTION EQUIPMENT - 15.6%
Astec Industries, Inc. (a) 19,400 354,050 04622410
Caterpillar, Inc. 187,500 20,320,313 14912310
Finning Ltd. 510,500 8,085,912 31807140
Rexworks, Inc. (b) 97,500 548,438 76190310
29,308,713
ENGINES & TURBINES - 0.5%
Briggs & Stratton Corp. 11,700 997,425 10904310
FARM MACHINERY & EQUIPMENT - 3.0%
AGCO Corp. 19,900 825,850 00108410
Allied Products Corp. (a) 110,700 1,618,988 01941110
Deere & Co. 16,000 1,352,029 24419910
Lindsay Manufacturing Co. 2,000 65,000 53555510
Tenneco, Inc. 24,900 1,388,175 88037010
Valmont Industries, Inc. 25,000 456,250 92025310
5,706,292
SHARES VALUE (NOTE 1)
GENERAL INDUSTRIAL MACHINERY - 13.4%
Cascade Corp. 4,600 $ 94,300 14719510
Gorman Rupp Co. 3,000 82,875 38308210
Harnischfeger Industries, Inc. 233,600 5,898,400 41334510
Manitowoc Co., Inc. 32,700 976,913 56357110
Park-Ohio Industries, Inc. (a) 234,200 3,835,025 70067710
TRINOVA Corp. 260,600 9,805,075 89667810
Watts Industries, Inc. Class A 78,900 4,497,300 94274910
25,189,888
MACHINE TOOLS, METAL CUTTING - 1.1%
Brown & Sharpe Manufacturing Co.
Class A (a) 6,100 44,225 11522310
Cincinnati Milacron, Inc. 85,500 2,041,313 17217210
2,085,538
METAL WORKING MACHINERY - 0.9%
Acme-Cleveland Corp. 169,000 1,584,375 00462610
MINING & HANDLING EQUIPMENT - 5.0%
Joy Technologies, Inc. Class A (a) 692,199 9,344,687 48120610
PRINTING TRADES MACHINERY - 0.1%
Stevens Graphics, Inc. Class A (a) 16,200 109,350 86024C20
PUMPING EQUIPMENT - 7.5%
Amtrol, Inc. 32,500 682,500 03234A10
BWIP Holdings, Inc. Class A 346,000 7,006,500 05604410
Duriron Company, Inc. 4,900 127,400 26684910
Goulds Pumps, Inc. 233,200 6,150,650 38355010
IDEX Corp. (a) 1,200 44,700 45167R10
14,011,750
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 91,920,006
IRON & STEEL - 0.1%
IRON & STEEL BLAST FURNACES, MILLS - 0.1%
UNR Industries, Inc. 40,000 250,000 90318510
METALS & MINING - 0.5%
NON-METALLIC MINERAL MINING - 0.5%
American Colloid Co. 49,800 846,600 02516810
RAILROADS - 5.4%
RAILROAD EQUIPMENT - 5.4%
Johnstown America Industries, Inc. (a) 27,900 774,225 47947710
Trinity Industries, Inc. 210,550 9,343,156 89652210
10,117,381
RETAIL & WHOLESALE, MISCELLANEOUS - 0.0%
RETAIL, GENERAL - 0.0%
CML Group, Inc. 2,550 54,188 12582010
TOTAL COMMON STOCKS
(Cost $142,686,605) 156,601,828
REPURCHASE AGREEMENTS - 16.6%
MATURITY VALUE (NOTE 1)
AMOUNT
Investments in repurchase agreements,
(U.S. Treasury obligations), in a joint
trading account, at 3.47% dated
2/28/94 due 3/1/94 $ 31,174,005 31,171,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $173,857,605) $ 187,772,828
LEGEND
(a) Non-income producing
(a) 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
Rexworks, Inc. $ 45,000 $ 28,125 $ - $ 548,438
OTHER INFORMATION
CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective March 1,
1993, the fund adopted Statement of Position 93-2: Determination,
Disclosure, and Financial Statement Presentation of Income, Capital Gain,
and Return of Capital Distributions by Investment Companies. As a result,
the fund changed the classification of distributions to shareholders to
better disclose the differences between financial statement amounts and
distributions determined in accordance with income tax regulations.
Accordingly, amounts as of February 28, 1993 have been reclassified to
reflect an increase in paid in capital of $4,361,142, a decrease in
undistributed net investment loss of $79,974 and an increase in accumulated
net realized loss on investments of $4,441,116.
Purchases and sales of securities, other than short-term securities,
aggregated $179,127,105 and $53,192,950, respectively.
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 $60,492 for the period
(see Note 4 of Notes to Financial Statements).
The maximum loan and average daily loan balances during the periods for
which loans were outstanding amounted to $1,736,000 and $1,736,000,
respectively. The weighted average interest rate paid was 3.8% (see Note 7
of Notes to Financial Statements).
INCOME TAX INFORMATION
At February 28, 1994, the aggregate cost of investment securities for
income tax purposes was $173,883,615. Net unrealized appreciation
aggregated $13,889,213, of which $15,176,944 related to appreciated
investment securities and $1,287,731 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 has a
capital loss carryover of approximately $106,000 available to offset future
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>
FEBRUARY 28, 1994
ASSETS
Investment in securities, at value (including repurchase agreements of $31,171,000) (cost $173,857,605) $ 187,772,828
(Notes 1 and 2) - See accompanying schedule
Cash 889
Receivable for investments sold 32,901
Receivable for fund shares sold 73,616,467
Dividends receivable 148,557
Redemption fees receivable (Note 1) 334
TOTAL ASSETS 261,571,976
LIABILITIES
Payable for investments purchased $ 53,921,303
Payable for fund shares redeemed 1,485,540
Accrued management fee 62,227
Other payables and accrued expenses 90,562
TOTAL LIABILITIES 55,559,632
NET ASSETS $ 206,012,344
Net Assets consist of (Note 1):
Paid in capital $ 190,332,309
Undistributed net investment income 3,928
Accumulated undistributed net realized gain (loss) on investments 1,760,884
Net unrealized appreciation (depreciation) on investment securities 13,915,223
NET ASSETS, for 9,997,636 shares outstanding $ 206,012,344
NET ASSET VALUE and redemption price per share ($206,012,344 (divided by) 9,997,636 shares) $20.61
Maximum offering price per share (100/97 of $20.61) $21.25
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED FEBRUARY 28, 1994
INVESTMENT INCOME $ 720,332
Dividends
Interest 264,873
TOTAL INCOME 985,205
EXPENSES
Management fee (Note 4) $ 368,162
Transfer agent (Note 4) 531,744
Fees
Redemption fees (Note 1) (48,959
)
Accounting fees and expenses 67,846
(Note 4)
Non-interested trustees' compensation 315
Custodian fees and expenses 14,496
Registration fees 33,941
Audit 7,576
Legal 305
Interest (Note 7) 181
Reports to shareholders 10,387
Miscellaneous 325
Total expenses before reductions 986,319
Expense reductions (Note 8) (6,992 979,327
)
NET INVESTMENT INCOME 5,878
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 1) 6,549,137
Net realized gain (loss) on investment securities (including realized gain (loss) of $(4,375) on sales of
affiliated issuers)
Change in net unrealized appreciation (depreciation) on investment securities 13,055,339
NET GAIN (LOSS) 19,604,476
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 19,610,354
OTHER INFORMATION $1,055,685
Sales charges paid to FDC
(Note 4)
Deferred sales charges withheld $4,828
by FDC (Note 4)
Exchange fees withheld by FSC $41,760
(Note 4)
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED TEN MONTHS
FEBRUARY 28, ENDED
1994 FEBRUARY 28,
1993
<TABLE>
<CAPTION>
<S> <C> <C>
Operations $ 5,878 $ 7,438
Net investment income
Net realized gain (loss) on investments 6,549,137 (263,782
)
Change in net unrealized appreciation (depreciation) on investments 13,055,339 630,456
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 19,610,354 374,112
Distributions to shareholders (9,388 -
From net investment income )
From net realized gain (1,748,414 -
)
TOTAL DISTRIBUTIONS (1,757,802 -
)
Share transactions 267,189,015 17,737,753
Net proceeds from sales of shares
Reinvestment of distributions 1,738,476 -
Cost of shares redeemed (95,571,492 (11,058,859
) )
Paid in capital portion of redemption fees (Note 1) 202,432 19,767
Net increase (decrease) in net assets resulting from share transactions 173,558,431 6,698,661
TOTAL INCREASE (DECREASE) IN NET ASSETS 191,410,983 7,072,773
NET ASSETS
Beginning of period 14,601,361 7,528,588
End of period (including undistributed net investment income (loss) of $3,928 and $(72,535),
respectively) $ 206,012,344 $ 14,601,361
OTHER INFORMATION
Shares
Sold 14,282,723 1,248,814
Issued in reinvestment of distributions 93,575 -
Redeemed (5,349,531 (819,990
) )
Net increase (decrease) 9,026,767 428,824
</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>
YEAR ENDED TEN MONTHS YEARS ENDED APRIL 30,
FEBRUARY 28, ENDED
FEBRUARY 28,
SELECTED PER-SHARE DATAC 1994 1993 1992 1991 1990
Net asset value, beginning of period $ 15.04 $ 13.89 $ 11.60 $ 12.41 $ 11.05
Income from Investment Operations
Net investment income (loss) - .02 (.07) .01 .13F
Net realized and unrealized gain (loss) on investments 5.92 1.09 2.39 (.80) 1.19
Total from investment operations 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 (.40) - - - -
Total distributions (.41) - (.11) (.09) -
Redemption fees added to paid in capital .06 .04 .08 .07 .04
Net asset value, end of period $ 20.61 $ 15.04 $ 13.89 $ 11.60 $ 12.41
TOTAL RETURND, E 40.07% 8.28% 20.91% (5.90)% 12.31%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 206,012 $ 14,601 $ 7,529 $ 1,949 $ 3,240
Ratio of expenses to average net assetsB 1.68% 2.49%A 2.49% 2.52% 2.59%
Ratio of expenses to average net assets before expense 1.69% 3.40%A 2.86% 2.99% 3.86%
reductionsB
Ratio of net investment income (loss) to average net assets.01% .15%A (.57)% .09% 1.06%
Portfolio turnover rate 95% 407%A 167% 43% 132%
</TABLE>
1 ANNUALIZED
2 SEE NOTE 8 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 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 1 PAST 5 LIFE OF
FEBRUARY 28, 1994 YEAR YEARS FUND
INDUSTRIAL MATERIALS 24.66% 67.26% 129.42%
INDUSTRIAL MATERIALS
(INCL. 3% SALES CHARGE) 20.92% 62.24% 122.54%
S&P 500 8.33% 89.60% 156.18%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, 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
FEBRUARY 28, 1994 YEAR YEARS FUND
INDUSTRIAL MATERIALS 24.66% 10.83% 11.83%
INDUSTRIAL MATERIALS
(INCL. 3% SALES CHARGE) 20.92% 10.16% 11.38%
S&P 500 8.33% 13.65% 13.51%
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
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 11834.99 11072.05
01/31/88 11222.33 11538.18
02/29/88 12544.90 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 12710.22 12524.91
10/31/88 12476.82 12873.10
11/30/88 12360.13 12689.01
12/31/88 13117.43 12911.07
01/31/89 13908.23 13856.16
02/28/89 13305.25 13511.14
03/31/89 13166.86 13825.95
04/30/89 13572.14 14543.52
05/31/89 13750.07 15132.53
06/30/89 12949.39 15046.28
07/31/89 14115.82 16404.95
08/31/89 15242.71 16726.49
09/30/89 14313.52 16657.91
10/31/89 13137.20 16271.45
11/30/89 13325.02 16603.39
12/31/89 13700.65 17001.87
01/31/90 12652.84 15861.04
02/28/90 12870.31 16065.65
03/31/90 13245.94 16491.39
04/30/90 12287.09 16079.11
05/31/90 13028.47 17646.82
06/30/90 12890.20 17526.82
07/31/90 12738.07 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 10892.27 16024.85
12/31/90 11348.65 16471.95
01/31/91 11754.32 17190.12
02/28/91 12616.37 18419.22
03/31/91 12788.78 18864.96
04/30/91 12809.06 18910.24
05/31/91 13904.38 19727.16
06/30/91 13752.20 18823.66
07/31/91 14302.29 19700.84
08/31/91 14638.45 20167.75
09/30/91 14444.90 19830.95
10/31/91 15066.30 20096.68
11/30/91 13864.25 19286.79
12/31/91 15412.65 21493.19
01/31/92 16084.98 21093.42
02/29/92 16869.36 21367.64
03/31/92 16573.95 20950.97
04/30/92 17439.83 21566.92
05/31/92 17643.56 21672.60
06/30/92 17215.31 21349.68
07/31/92 17602.63 22222.88
08/31/92 16491.63 21767.31
09/30/92 16267.40 22024.17
10/31/92 16450.86 22101.25
11/30/92 17062.42 22854.91
12/31/92 17319.00 23136.02
01/31/93 17687.49 23330.36
02/28/93 17851.27 23647.66
03/31/93 18148.11 24146.62
04/30/93 17881.97 23562.27
05/31/93 18618.95 24193.74
06/30/93 18669.80 24263.90
07/31/93 18926.54 24166.85
08/31/93 19419.47 25082.77
09/30/93 18813.58 24889.63
10/31/93 19922.67 25404.85
11/30/93 20189.68 25163.50
12/31/93 21021.50 25467.98
01/31/94 22726.22 26333.89
02/28/94 22253.83 25617.61
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 February 28, 1994, your investment would have grown to $22,254 -
a 122.54% increase. That compares to $10,000 invested in the S&P 500,
which would have grown to $25,618 over the same period - a 156.18%
increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1994
% OF FUND'S
INVESTMENTS
British Petroleum PLC ADR 7.8
PPG Industries, Inc. 5.9
CSX Corp. 4.7
Temple-Inland, Inc. 3.9
Imperial Chemical Industries PLC ADR 3.4
Amerada Hess Corp. 3.4
du Pont (E.I.) de Nemours & Co. 3.3
Georgia Gulf Corp. 3.2
Dow Chemical Co. 3.1
Monsanto Co. 3.1
TOP INDUSTRIES AS OF FEBRUARY 28, 1994
Row: 1, Col: 1, Value: 44.5
Row: 1, Col: 2, Value: 3.0
Row: 1, Col: 3, Value: 5.9
Row: 1, Col: 4, Value: 7.4
Row: 1, Col: 5, Value: 11.3
Row: 1, Col: 6, Value: 27.9
Chemicals 27.9%
Oil & Gas Exploration 11.3%
Railroads 7.4%
Paper 5.9%
Conglomerates 3.0%
All Others 44.5%*
* 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 DO?
A. It was a good year for both the sector and the fund. For the year ended
February 28, 1994, the fund returned 24.66%. That outpaced the S&P 500,
which returned 8.33% for the same period.
Q. HOW DO YOU ACCOUNT FOR THE FUND'S STRONG PERFORMANCE?
A. Most industrial materials stocks are cyclical, meaning they tend to do
well during periods of economic recovery - which is exactly what happened
over the past 12 months. With the economy heating up, stock prices in this
group rose from low levels. Among the fund's strongest performers were
railroads, which could enjoy stronger revenues as more raw materials and
goods are shipped over the next year. At the same time, many rails
aggressively cut costs, which added to their profitability. Railroad
stocks, like CSX, accounted for 7.4% of the fund's investments at the end
of February.
Q. DID ANY OTHER INDUSTRIES PERFORM AS WELL?
A. For part of the period, steel companies did well. Late last year, I had
as much as one-quarter of the fund in steel stocks; by January, their
prices had skyrocketed. In February, I thought the business prospects for
steel companies started to look weak, so I sold most of the fund's steel
investments and used the proceeds to buy more chemical companies like Dow
Chemical, DuPont and Imperial Chemicals - which were about 10% of the
fund's investments on February 28. Right now, there is an overcapacity of
chemical production in Europe, meaning production is outpacing demand. As
production capacity is reduced and the economy there recovers, chemical
prices could rise, helping the producers.
Q. RECENTLY THERE WAS A CORRECTION IN MANY CYCLICAL STOCKS. DID THAT AFFECT
YOUR STRATEGY?
A. Yes, it forced me to raise the amount of cash in the fund up to 32% at
the end of February. That's mainly because I was having difficulty, even
before the correction, finding stocks that seemed reasonably priced. Even
so, the fund had a strong year. In hindsight, the fund might have done even
better if I had kept it fully invested.
Q. ARE YOU FINDING STOCKS THAT NOW SEEM MORE APPEALING FROM A PRICE
STANDPOINT?
A. Some. The liner board industry is currently experiencing the best of
both worlds, since inventories are falling and shipments are rising. Many
liner board companies, like Stone Container, have already started to see
improved profits from this favorable supply and demand situation. I've also
recently added to the fund's stake in oils. Oil prices are extremely low
right now, and the stocks are out of favor with investors. An increase in
demand, or a decrease in supply, could send oil stocks higher. There's
been a depletion of the world's oil supply lately, and an economic recovery
in Europe could mean increased demand at a time when supply is low. If that
happens, companies like British Petroleum, the fund's largest investment at
the end of February, could benefit.
Q. INDUSTRIAL MATERIALS STOCKS HAVE RISEN SHARPLY OVER THE PAST YEAR. ISN'T
THE GAME ALMOST OVER?
A. For some companies it might be, while for others it's just beginning.
There's probably room for these stocks as a whole to rise, but the
potential gains will most likely be smaller and more selective. My view of
the U.S. economy is that it could slow from the fourth quarter, but
continue to expand at a more modest pace. A European recovery, on the other
hand, probably won't start to pick up steam until 1995. I'll focus on
opportunities that can benefit from further improvements both here and in
Europe.
FUND FACTS
START DATE: September 29, 1986
SIZE: as of February 28, 1994, over $155 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 FEBRUARY 28, 1994
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 67.9%
SHARES VALUE (NOTE 1)
AIR TRANSPORTATION - 2.7%
AIR TRANSPORT, MAJOR NATIONAL - 2.7%
AMR Corp. (a) 70,000 $ 4,427,500 00176510
CHEMICALS & PLASTICS - 28.9%
CHEMICALS - 27.9%
Akzo N V sponsored ADR 30,000 1,668,750 01019930
du Pont (E.I.) de Nemours & Co. 100,000 5,337,500 26353410
Dow Chemical Co. 80,000 5,090,000 26054310
Georgia Gulf Corp. (a) 183,200 5,221,200 37320020
Grace (W.R.) & Co. 56,600 2,532,850 38388310
Imperial Chemical Industries PLC ADR 122,800 5,602,750 45270450
Monsanto Co. 65,000 4,980,625 61166210
PPG Industries, Inc. 125,000 9,593,750 69350610
Rohm & Haas Co. 25,000 1,428,125 77537110
Union Carbide Corp. 173,200 4,135,151 90558110
45,590,701
PLASTICS & SYNTHETIC RESINS - 1.0%
ARCO Chemical Co. 1,100 53,350 00192010
GEON 58,600 1,582,200 37246W10
1,635,550
TOTAL CHEMICALS & PLASTICS 47,226,251
CONGLOMERATES - 3.0%
Litton Industries, Inc. (a) 60,000 4,012,500 53802110
Textron, Inc. 15,000 870,000 88320310
4,882,500
INDUSTRIAL MACHINERY & EQUIPMENT - 2.9%
CONSTRUCTION EQUIPMENT - 2.7%
Caterpillar, Inc. 40,000 4,335,000 14912310
FARM MACHINERY & EQUIPMENT - 0.2%
Kverneland Gruppen AS 34,300 320,248 50599692
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 4,655,248
IRON & STEEL - 2.7%
IRON & STEEL BLAST FURN, MILLS - 2.7%
Nucor Corp. 75,000 4,340,625 67034610
METALS & MINING - 0.0%
PRIME NONFERROUS SMELTING - 0.0%
Alcan Aluminium Ltd. 75 1,778 01371610
OIL & GAS - 11.8%
CRUDE PETROLEUM & GAS - 0.5%
Burlington Resources, Inc. 20,000 860,000 12201410
OIL & GAS EXPLORATION - 11.3%
Amerada Hess Corp. 120,000 5,565,000 02355110
British Petroleum PLC ADR 196,200 12,777,525 11088940
18,342,525
TOTAL OIL & GAS 19,202,525
PAPER & FOREST PRODUCTS - 7.6%
PAPER - 5.9%
Abitibi-Price Inc. 12,000 151,167 00368010
Stone Container Corp. (a) 190,000 3,016,250 86158910
Temple-Inland, Inc. 124,500 6,380,625 87986810
9,548,042
PAPER MILLS - 1.7%
Bowater, Inc. 121,200 2,817,900 10218310
TOTAL PAPER & FOREST PRODUCTS 12,365,942
SHARES VALUE (NOTE 1)
PRECIOUS METALS - 0.9%
GOLD ORES - 0.9%
Hecla Mining Co. (a) 125,000 $ 1,546,875 42270410
RAILROADS - 7.4%
CSX Corp. 87,800 7,726,400 12640810
Conrail, Inc. 70,000 4,348,750 20836810
12,075,150
TOTAL COMMON STOCKS
(Cost $110,603,720) 110,724,394
REPURCHASE AGREEMENTS - 32.1%
MATURITY VALUE (NOTE 1)
AMOUNT
Investments in repurchase agreements,
(U.S. Treasury obligations), in a joint
trading account, at 3.47% dated
2/28/94 due 3/1/94 $ 52,236,034 52,231,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $162,834,720) $ 162,955,394
LEGEND
(a) Non-income producing
OTHER INFORMATION
CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective March 1,
1993, the fund adopted Statement of Position 93-2: Determination,
Disclosure, and Financial Statement Presentation of Income, Capital Gain,
and Return of Capital Distributions by Investment Companies. As a result,
the fund changed the classification of distributions to shareholders to
better disclose the differences between financial statement amounts and
distributions determined in accordance with income tax regulations.
Accordingly, amounts as of February 28, 1993 have been reclassified to
reflect a decrease in paid in capital of $261,217, a decrease in
accumulated net investment loss of $233,906 and a decrease in accumulated
net realized loss on investments of $27,311.
Purchases and sales of securities, other than short-term securities,
aggregated $137,177,303 and $55,557,878, respectively.
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 $33,380 for the period
(see Note 4 of Notes to Financial Statements).
At the period end, the value of securities loaned and the value of
collateral amounted to $9,484,725 and $9,649,200, respectively (see Note 6
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 87.4%
United Kingdom 11.3
Netherlands 1.0
Others (individually less than 1%) 0.3
TOTAL 100.0%
INCOME TAX INFORMATION
At February 28, 1994, the aggregate cost of investment securities for
income tax purposes was $162,834,720. Net unrealized appreciation
aggregated $120,674, of which $2,926,216 related to appreciated investment
securities and $2,805,542 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>
FEBRUARY 28, 1994
ASSETS
Investment in securities, at value (including repurchase agreements of $52,231,000) (cost $162,834,720) $ 162,955,394
(Notes 1 and 2) - See accompanying schedule
Cash 970
Receivable for investments sold 762,271
Receivable for fund shares sold 8,975,027
Dividends receivable 373,473
Redemption fees receivable (Note 1) 8,447
Other receivables 631
TOTAL ASSETS 173,076,213
LIABILITIES
Payable for investments purchased $ 572,418
Payable for fund shares redeemed 6,948,848
Accrued management fee 72,541
Other payables and accrued expenses 112,583
Collateral on securities loaned, at value (Note 6) 9,649,200
TOTAL LIABILITIES 17,355,590
NET ASSETS $ 155,720,623
Net Assets consist of (Note 1):
Paid in capital $ 166,645,377
Undistributed net investment income 246,597
Accumulated undistributed net realized gain (loss) on investments (11,292,025
)
Net unrealized appreciation (depreciation) on investment securities 120,674
NET ASSETS, for 7,184,804 shares outstanding $ 155,720,623
NET ASSET VALUE and redemption price per share ($155,720,623 (divided by) 7,184,804 shares) $21.67
Maximum offering price per share (100/97 of $21.67) $22.34
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED FEBRUARY 28, 1994
INVESTMENT INCOME $ 700,566
Dividends
Interest (including security lending fees of $1,284) (Note 6) 256,355
TOTAL INCOME 956,921
EXPENSES
Management fee (Note 4) $ 217,293
Transfer agent (Note 4) 425,367
Fees
Redemption fees (Note 1) (33,857
)
Accounting and security lending fees (Note 4) 55,728
Non-interested trustees' compensation 173
Custodian fees and expenses 13,621
Registration fees 20,706
Audit 6,572
Legal 229
Reports to shareholders 4,972
Total expenses before reductions 710,804
Expense reductions (Note 8) (6,562 704,242
)
NET INVESTMENT INCOME 252,679
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 1) 5,537,215
Net realized gain (loss) on investment securities
Change in net unrealized appreciation (depreciation) on investment securities 584,391
NET GAIN (LOSS) 6,121,606
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 6,374,285
OTHER INFORMATION $878,092
Sales charges paid to FDC
(Note 4)
Deferred sales charges withheld $5,148
by FDC (Note 4)
Exchange fees withheld by FSC $56,700
(Note 4)
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED TEN MONTHS
FEBRUARY 28, ENDED
1994 FEBRUARY 28,
1993
Operations $ 252,679 $ 177,803
Net investment income
Net realized gain (loss) on investments 5,537,215 355,428
Change in net unrealized appreciation (depreciation) on investments 584,391 (1,437,314
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 6,374,285 (904,083
)
Distributions to shareholders from net investment income (63,962 (130,384
) )
Share transactions 184,699,746 54,448,279
Net proceeds from sales of shares
Reinvestment of distributions 62,757 128,401
Cost of shares redeemed (60,508,680 (50,819,188
) )
Paid in capital portion of redemption fees (Note 1) 115,446 134,001
Net increase (decrease) in net assets resulting from share transactions 124,369,269 3,891,493
TOTAL INCREASE (DECREASE) IN NET ASSETS 130,679,592 2,857,026
NET ASSETS
Beginning of period 25,041,031 22,184,005
End of period (including undistributed net investment income (loss) of $246,597 and $(168,549), $ 155,720,623 $ 25,041,031
respectively)
OTHER INFORMATION
Shares
Sold 8,798,809 3,148,060
Issued in reinvestment of distributions 3,433 7,711
Redeemed (3,053,659 (3,015,310
) )
Net increase (decrease) 5,748,583 140,461
</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>
YEAR ENDED TEN MONTHS YEARS ENDED APRIL 30,
FEBRUARY 28, ENDED
FEBRUARY 28,
SELECTED PER-SHARE DATAC 1994 1993 1992 1991 1990
Net asset value, beginning of period $ 17.44 $ 17.12 $ 12.63 $ 12.43 $ 13.73
Income from Investment Operations
Net investment income .15 .12 .04 .15 .17
Net realized and unrealized gain (loss) on investments 4.07 .19F 4.32 .37 (1.50)
Total from investment operations 4.22 .31 4.36 .52 (1.33)
Less Distributions
From net investment income (.06) (.08) - - -
In excess of investment income - - (.06) (.34) -
From net realized gain - - - - -
Total distributions (.06) (.08) (.06) (.34) -
Redemption fees added to paid in capital .07 .09 .19 .02 .03
Net asset value, end of period $ 21.67 $ 17.44 $ 17.12 $ 12.63 $ 12.43
TOTAL RETURND, E 24.66% 2.36% 36.15% 4.25% (9.47)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 155,721 $ 25,041 $ 22,184 $ 2,689 $ 3,140
Ratio of expenses to average net assetsB 2.08% 2.02%A 2.47% 2.49% 2.59%
Ratio of expenses to average net assets before expense 2.10% 2.02%A 2.81% 2.67% 3.81%
reductionsB
Ratio of net investment income to average net assets .75% .86%A .25% 1.30% 1.22%
Portfolio turnover rate 185% 273%A 222% 148% 250%
</TABLE>
1 ANNUALIZED
2 SEE NOTE 8 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 THE AMOUNT SHOWN FOR A SHARE OUTSTANDING THROUGHOUT THAT PERIOD DOES NOT
ACCORD WITH THE AGGREGATE NET LOSSES ON INVESTMENTS FOR THAT PERIOD BECAUSE
OF THE TIMING OF SALES AND REPURCHASES OF THE FUND SHARES IN RELATION TO
FLUCTUATING MARKET VALUES OF THE INVESTMENTS OF THE FUND.
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 1 PAST 5 LIFE OF
FEBRUARY 28, 1994 YEAR YEARS FUND
PAPER AND FOREST PRODUCTS 22.03% 75.03% 128.86%
PAPER AND FOREST PRODUCTS
(INCL. 3% SALES CHARGE) 18.37% 69.78% 121.99%
S&P 500 8.33% 89.60% 140.42%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, 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
FEBRUARY 28, 1994 YEAR YEARS FUND
PAPER AND FOREST PRODUCTS 22.03% 11.85% 11.39%
PAPER AND FOREST PRODUCTS
(INCL. 3% SALES CHARGE) 18.37% 11.17% 10.95%
S&P 500 8.33% 13.65% 12.11%
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) S&P 500
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 24041.62
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 February 28, 1994, your investment would have grown to $22,199 -
a 121.99% increase. That compares to $10,000 invested in the S&P 500,
which would have grown to $24,402 over the same period - a 140.42%
increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1994
% OF FUND'S
INVESTMENTS
Stone Container Corp. 6.3
Temple-Inland, Inc. 4.9
Weyerhaeuser Co. 4.2
Willamette Industries, Inc. 4.2
Stora Kopparbergs B Free shares 3.8
International Paper Co. 3.7
Alco Standard Corp. 3.3
Wausau Paper Mills Co. 3.0
Georgia Pacific Corp. 2.9
Union Camp Corp. 2.5
TOP INDUSTRIES AS OF FEBRUARY 28, 1994
Row: 1, Col: 1, Value: 19.7
Row: 1, Col: 2, Value: 3.3
Row: 1, Col: 3, Value: 3.8
Row: 1, Col: 4, Value: 5.0
Row: 1, Col: 5, Value: 6.9
Row: 1, Col: 6, Value: 61.3
Paper 61.3%
Paper Mills 6.9%
Lumber & Wood 5.0%
Forestry 3.8%
Services for Print Industry 3.3%
All Others 19.7%*
* 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 DID THE FUND PERFORM?
A. It had a good year. The fund's total return for the year ended February
28, 1994 was 22.03%. This was well above the S&P 500, which had a total
annual return of 8.33%.
Q. WHAT WAS BEHIND THESE SOLID RESULTS?
A. The fund performed well for three reasons. First, paper stocks rebounded
in the fourth quarter, after hitting their lowest price for the year in
October. During this period, the fund's paper stocks climbed between 10%
and 50%, resulting in strong gains. I should note that cyclical stocks,
like paper, often do well between November and April, when investors'
economic outlook is brighter. Cyclical stocks are stocks that tend to
increase in value as the economy improves or decrease in value when the
economy performs poorly. The second reason the fund performed well is that
I had about 5% invested in gypsum stocks, such as National Gypsum. These
companies were up 40% to 50% over the past year as demand for this building
material increased. Finally, the fund performed well because its foreign
investments turned in some good results.
Q. AT THE END OF FEBRUARY, YOU HAD 25% OF THE FUND OVERSEAS. WHAT FOREIGN
STOCKS DID YOU OWN?
A. Most of my international investments were in Scandinavian paper
companies. I had large stakes in Repola and Metsa Serla, Finnish
coated-paper companies that rely heavily on exports to the United States.
Coated paper is used for magazines, catalogues, and company annual reports.
These companies were profitable partly because the Finnish government
devalued its currency, making it worth less than the currencies of other
countries. As a result of this devaluation, the company's exports became
less expensive in other countries and thus more competitive. The fund's
Finnish paper companies also did well because they dramatically cut their
labor costs and their number of employees. As a result, they decreased
their cost for raw materials, like fiber. Swedish companies, such as Stora
Kopparbergs, also performed well. Like Finnish companies, Swedish companies
benefited from a devalued currency and lower costs for labor and raw
materials.
Q. YOU MENTIONED COATED PAPER. HOW MANY DIFFERENT TYPES OF PAPER ARE THERE?
A. As I look at it, there are six major grades of paper: lumber, liner
board, newsprint, pulp, coated paper, and uncoated white paper. In the
past, all the grades of paper usually increased or decreased in price at
the same time. However, over the past year, some grades dramatically
outperformed others. I thought Lumber looked the best because it was the
biggest beneficiary of the upswing in the housing market in the late fall.
Weyerhaeuser, the largest private owner of forest land in the United
States, had a great year. Another grade that looked good was liner board,
used for building walls and constructing corrugated boxes. My top stock,
Stone Container, which focused almost exclusively on liner board, was a
standout. Temple-Inland, a company that was big in lumber and liner board,
also performed well.
Q. WHAT ABOUT THE OTHER GRADES OF PAPER?
A. In 1994, the newsprint industry started to pick up, and I think it looks
pretty good going forward. Demand for newsprint could grow slowly, and we
may see some decline in capacity, which could raise prices. The wild card
is increased capacity in Eastern Europe, Latin America, and Asia. If
capacity increases in these overseas markets, newsprint prices may not
increase. Another grade of paper, pulp, did well the first two months of
1994, but I don't expect any dramatic increases or decreases going forward.
In the United States, coated and uncoated white paper had a tough year
because cheap imports flooded the market.
Q. SINCE YOU TOOK OVER THE FUND IN OCTOBER, HAVE YOU CHANGED ITS STRATEGY?
WHAT ABOUT YOUR OUTLOOK?
A. I don't think there's been any notable shift in strategy. As for the
sector's outlook, I think it's a mixed bag. As I noted earlier, we're
beginning to see some grades of paper do very well. However, since paper
stocks are cyclicals, I think the real deciding factor is how well the
economy performs over the next 12 months.
FUND FACTS
START DATE: June 30, 1986
SIZE: as of February 28, 1994, over $66 million
MANAGER: Scott Offen, since October 1993;
manager, Fidelity Select Life Insurance
Portfolio, 1990-1993; equity analyst,
insurance and financial industries, 1988-1990;
joined Fidelity in 1985
(checkmark)
PAPER AND FOREST PRODUCTS PORTFOLIO
INVESTMENTS FEBRUARY 28, 1994
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 91.0%
SHARES VALUE (NOTE 1)
BUILDING MATERIALS - 2.5%
CONCRETE, GYPSUM, PLASTER - 2.5%
National Gypsum Co. (b) 8,700 $ 366,483 63631710
Republic Gypsum Co. 28,600 414,700 76047310
USG Corp. (b) 35,200 1,069,200 90329340
1,850,383
PACKAGING & CONTAINERS - 4.1%
FIBER CANS, TUBES & DRUMS - 1.3%
Sonoco Products Co. 38,600 974,650 83549510
PAPER CONTAINERS - 2.8%
Gaylord Container Corp.:
Class A (b) 257,600 1,449,000 36814510
(warrants) (b) 100,000 437,500 36814511
NCB AB A Free shares (b) 600,000 176,862 63099F22
2,063,362
TOTAL PACKAGING & CONTAINERS 3,038,012
PAPER & FOREST PRODUCTS - 80.7%
CONVERTED PAPER & PAPERBOARD - 1.2%
Caraustar Industries, Inc. 48,000 900,000 14090910
FORESTRY - 3.8%
Stora Kopparbergs B Free shares 50,000 2,778,335 86210998
LOGGING - 1.3%
Timberwest Forest Ltd. 85,700 984,328 88690810
LUMBER & WOOD - 5.0%
Fibreboard Corp. (b) 1,300 49,075 31571210
Louisiana-Pacific Corp. 39,400 1,694,200 54634710
Pope & Talbot, Inc. 58,700 1,768,338 73282710
West Fraser Timer Ltd. (b) 5,100 157,781 95284510
3,669,394
PAPER - 61.2%
Abitibi-Price, Inc. 68,700 865,432 00368010
Abitibi Price, Inc. installment receipts (c) 1,200 6,891 00368070
Arjo Wiggins Appleton PLC 34,900 152,198 04199592
Canadian Pacific Forest Products Ltd. (b) 20,000 314,931 13642N10
Champion International Corp. 52,200 1,644,300 15852510
Chesapeake Corp. 3,900 96,038 16515910
Consolidated Papers, Inc. 14,000 635,250 20975910
Domtar, Inc. (b) 114,800 701,816 25756110
Donohue, Inc. (vtg.) 5,700 110,874 25804140
Enso Gutzeit OY R Free shares 40,000 308,210 29357810
Federal Paper Board Co., Inc. 43,700 1,168,975 31369310
Georgia-Pacific Corp. 29,200 2,080,500 37329810
Glatfelter (P.H.) Co. 27,500 460,625 37731610
International Paper Co. 38,000 2,759,750 46014610
James River Corp. of Virginia 27,300 522,113 47034910
KNP BT NV Koninklijke 60,000 1,436,337 50099193
Kimberly-Clark Corp. 26,600 1,469,650 49436810
Longview Fibre Co. 26,800 525,950 54321310
MacMillan Bloedel Ltd. 14,800 256,354 55478320
Mead Corp. 22,300 981,200 58283410
Metsa Serla B 23,000 969,306 59299992
Mo Och Domsjoe AB (Modo):
A 711 27,468 61399794
B 20,789 792,717 61399792
Mosinee Paper Corp. 3,000 93,000 61960010
Norske Skogindustrier AS 70,000 1,733,376 66499593
Pentair, Inc. 25,300 910,800 70963110
Potlatch Corp. 900 41,850 73762810
Repap Enterprises, Inc. 85,700 333,401 76026M10
Repola OY 84,800 1,717,872 75999A92
Scott Paper Co. 31,000 1,406,625 80987710
SHARES VALUE (NOTE 1)
Smurfit (Jeff) Group PLC 205,900 $ 1,009,592 84699793
Stone Container Corp. (b) 294,800 4,679,950 86158910
Svenska Cellulosa Aktiebolaget SCA
Ord. B Free shares 25,000 451,558 86958730
Temple-Inland, Inc. 70,000 3,587,500 87986810
Union Camp Corp. 38,900 1,872,063 90553010
Wausau Paper Mills Co. 75,400 2,205,450 94331710
Westvaco Corp. 18,200 627,900 96154810
Weyerhaeuser Co. 65,000 3,087,500 96216610
Willamette Industries, Inc. 53,500 3,076,250 96913310
45,121,572
PAPER MILLS - 6.9%
Aracruz Celulose SA ADR (b) 42,800 658,050 03849610
Boise Cascade Corp. 68,400 1,778,400 09738310
Bowater, Inc. 57,900 1,346,175 10218310
Cascades, Inc. 150,300 863,153 14690010
Stone Consolidated Corp. (b) 34,400 458,836 86158K10
5,104,614
SAWMILLS - 1.3%
Riverside Forest Products 42,800 935,606 76890410
TOTAL PAPER & FOREST PRODUCTS 59,493,849
PRINTING - 3.3%
SERVICES FOR PRINT INDUSTRY - 3.3%
Alco Standard Corp. 42,900 2,397,038 01378810
PUBLISHING - 0.2%
PERIODICALS - 0.2%
Wolters Kluwer NV 2,600 161,855 49874710
TEXTILES & APPAREL - 0.2%
COATED FABRICS, NOT RUBBERIZED - 0.2%
Tufco Technologies, Inc. 20,000 180,000 89904010
TOTAL COMMON STOCKS
(Cost $64,099,036) 67,121,137
CONVERTIBLE BONDS - 0.1%
PRINCIPAL
AMOUNT
PAPER & FOREST PRODUCTS - 0.1%
PAPER - 0.1%
Canadian Pacific Forest
Products Ltd. 7 1/2%,
2/8/04 (Cost $42,470) CAD 55,700 51,180 13642NAE
REPURCHASE AGREEMENTS - 8.9%
MATURITY VALUE (NOTE 1)
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account, at 3.47% dated
2/28/94 due 3/1/94 $ 6,535,630 6,535,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $70,676,506) $ 73,707,317
CURRENCY ABBREVIATIONS
CAD - Canadian dollar
LEGEND
(a) Principal amount is stated in United States dollars unless otherwise
noted.
(a) Non-income producing
(a) Market value reflects the payment of the first installment. Additional
equal payments of $6,000 are payable in January and October of 1995.
OTHER INFORMATION
CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective March 1,
1993, the fund adopted Statement of Position 93-2: Determination,
Disclosure, and Financial Statement Presentation of Income, Capital Gain,
and Return of Capital Distributions by Investment Companies. As a result,
the fund changed the classification of distributions to shareholders to
better disclose the differences between financial statement amounts and
distributions determined in accordance with income tax regulations.
Accordingly, amounts as of February 28, 1993 have been restated to reflect
an increase in paid in capital of $20,720,289, a decrease in undistributed
net investment income of $709,366 and a decrease in accumulated net
realized gain on investments of $20,010,923.
Purchases and sales of securities, other than short-term securities,
aggregated $87,988,288 and $47,095,105, respectively.
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 $47,840 for the period
(see Note 4 of Notes to Financial Statements).
The maximum loan and average daily loan balances during the periods for
which loans were outstanding amounted to $8,945,000 and $8,945,000,
respectively. The weighted average interest rate paid was 3.6% (see Note 7
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 74.7%
Canada 8.3
Sweden 5.8
Finland 4.1
Norway 2.4
Netherlands 2.2
Ireland 1.4
Others (individually less than 1%) 1.1
TOTAL 100.0%
INCOME TAX INFORMATION
At February 28, 1994, the aggregate cost of investment securities for
income tax purposes was $70,852,105. Net unrealized appreciation aggregated
$2,855,212, of which $4,239,880 related to appreciated investment
securities and $1,384,668 related to depreciated investment securities.
The fund hereby designates $61,000 as a capital gain dividend for the
purpose of the dividend paid deduction.
PAPER AND FOREST PRODUCTS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
FEBRUARY 28, 1994
ASSETS
Investment in securities, at value (including repurchase agreements of $6,535,000) (cost $70,676,506) $ 73,707,317
(Notes 1 and 2) - See accompanying schedule
Cash 96
Receivable for investments sold 8,296,080
Receivable for fund shares sold 1,236,283
Dividends receivable 174,488
Interest receivable 160
Redemption fees receivable (Note 1) 2,508
Other receivables 180,305
TOTAL ASSETS 83,597,237
LIABILITIES
Payable for investments purchased $ 1,036,138
Payable for fund shares redeemed 15,529,183
Accrued management fee 45,019
Other payables and accrued expenses 79,152
TOTAL LIABILITIES 16,689,492
NET ASSETS $ 66,907,745
Net Assets consist of (Note 1):
Paid in capital $ 63,475,015
Accumulated net investment loss (1,289
)
Accumulated undistributed net realized gain (loss) on investments 403,208
Net unrealized appreciation (depreciation) on investment securities 3,030,811
NET ASSETS, for 3,412,516 shares outstanding $ 66,907,745
NET ASSET VALUE and redemption price per share ($66,907,745 (divided by) 3,412,516 shares) $19.61
Maximum offering price per share (100/97 of $19.61) $20.22
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED FEBRUARY 28, 1994
INVESTMENT INCOME $ 416,732
Dividends
Interest 120,829
TOTAL INCOME 537,561
EXPENSES
Management fee (Note 4) $ 171,761
Transfer agent (Note 4) 330,132
Fees
Redemption fees (Note 1) (49,942
)
Accounting fees and expenses 50,532
(Note 4)
Non-interested trustees' compensation 110
Custodian fees and expenses 17,813
Registration fees 30,769
Audit 7,585
Legal 205
Interest (Note 7) 885
Reports to shareholders 3,061
Total expenses before reductions 562,911
Expense reductions (Note 8) (5,048 557,863
)
NET INVESTMENT INCOME (LOSS) (20,302
)
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 1) 2,597,166
Net realized gain (loss) on investment securities
Change in net unrealized appreciation (depreciation) on investment securities 2,559,400
NET GAIN (LOSS) 5,156,566
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 5,136,264
OTHER INFORMATION $414,022
Sales charges paid to FDC
(Note 4)
Deferred sales charges withheld $7,297
by FDC (Note 4)
Exchange fees withheld by FSC $44,348
(Note 4)
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED TEN MONTHS
FEBRUARY 28, ENDED
1994 FEBRUARY 28,
1993
Operations $ (20,302 $ 70,955
Net investment income (loss) )
Net realized gain (loss) on investments 2,597,166 (490,669
)
Change in net unrealized appreciation (depreciation) on investments 2,559,400 (53,245
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 5,136,264 (472,959
)
Distributions to shareholders from net investment income (10,601 (105,310
) )
Share transactions 149,638,420 36,795,839
Net proceeds from sales of shares
Reinvestment of distributions 10,249 103,298
Cost of shares redeemed (113,224,182 (40,282,751
) )
Paid in capital portion of redemption fees (Note 1) 259,283 103,496
Net increase (decrease) in net assets resulting from share transactions 36,683,770 (3,280,118
)
TOTAL INCREASE (DECREASE) IN NET ASSETS 41,809,433 (3,858,387
)
NET ASSETS
Beginning of period 25,098,312 28,956,699
End of period (including accumulated net investment income (loss) of $(1,289) and $713,690,
respectively) $ 66,907,745 $ 25,098,312
OTHER INFORMATION
Shares
Sold 8,097,781 2,360,295
Issued in reinvestment of distributions 645 6,892
Redeemed (6,246,980 (2,689,497
) )
Net increase (decrease) 1,851,446 (322,310)
</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>
YEAR ENDED TEN MONTHS YEARS ENDED APRIL 30,
FEBRUARY 28, ENDED
FEBRUARY 28,
SELECTED PER-SHARE DATAC 1994 1993 1992 1991 1990
Net asset value, beginning of period $ 16.08 $ 15.37 $ 12.64 $ 11.00 $ 12.33
Income from Investment Operations
Net investment income (loss) (.01) .06 .13 .19 .11
Net realized and unrealized gain (loss) on investments 3.38 .65F 2.64 1.56 (1.31)
Total from investment operations 3.37 .71 2.77 1.75 (1.20)
Less Distributions
From net investment income (.01) (.09) (.30) (.17) (.15)
From net realized gain - - - - -
Total distributions (.01) (.09) (.30) (.17) (.15)
Redemption fees added to paid in capital .17 .09 .26 .06 .02
Net asset value, end of period $ 19.61 $ 16.08 $ 15.37 $ 12.64 $ 11.00
TOTAL RETURND, E 22.03% 5.25% 24.52% 16.85% (9.68)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 66,908 $ 25,098 $ 28,957 $ 12,579 $ 5,289
Ratio of expenses to average net assetsB 2.07% 2.21%A 2.05% 2.49% 2.57%
Ratio of expenses to average net assets before expense 2.08% 2.21%A 2.05% 2.72% 3.28%
reductionsB
Ratio of net investment income (loss) to average
net assets (.08)% .49%A .92% 1.73% .92%
Portfolio turnover rate 176% 222%A 421% 171% 221%
</TABLE>
1 ANNUALIZED
2 SEE NOTE 8 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 THE AMOUNT SHOWN FOR THE PERIOD ENDED FEBRUARY 28, 1993 FOR A SHARE
OUTSTANDING THROUGHOUT THE PERIOD DOES NOT ACCORD WITH THE AGGREGATE NET
GAIN (LOSS) ON INVESTMENTS FOR THE PERIOD BECAUSE OF THE TIMING OF SALES
AND REPURCHASES OF THE FUND SHARES IN RELATION TO FLUCTUATING MARKET VALUES
OF THE INVESTMENTS OF THE FUND.
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 1 PAST 5 LIFE OF
FEBRUARY 28, 1994 YEAR YEARS FUND
TRANSPORTATION 27.47% 136.51% 206.84%
TRANSPORTATION
(INCL. 3% SALES CHARGE) 23.65% 129.42% 197.64%
S&P 500 8.33% 89.60% 156.18%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, 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
FEBRUARY 28, 1994 YEAR YEARS FUND
TRANSPORTATION 27.47% 18.79% 16.30%
TRANSPORTATION
(INCL. 3% SALES CHARGE) 23.65% 18.07% 15.82%
S&P 500 8.33% 13.65% 13.51%
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 Transportation (512) S&P 500
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 25617.61
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
February 28, 1994, your investment would have grown to $29,764 - a 197.64%
increase. That compares to $10,000 invested in the S&P 500, which would
have grown to $25,618 over the same period - a 156.18% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1994
% OF FUND'S
INVESTMENTS
CSX Corp. 4.5
Santa Fe Pacific Corp. 3.6
Smith (A.O.) Corp. Class B 3.5
Swift Transportation Co., Inc. 3.1
TNT Freightways Corp. 2.9
Landstar System, Inc. 2.9
Burlington Northern, Inc. 2.8
Illinois Central Corp., Series A 2.7
Wisconsin Central Transportation Corp. 2.6
Mesa Airlines, Inc. 2.6
TOP INDUSTRIES AS OF FEBRUARY 28, 1994
Row: 1, Col: 1, Value: 46.2
Row: 1, Col: 2, Value: 5.7
Row: 1, Col: 3, Value: 5.8
Row: 1, Col: 4, Value: 6.7
Row: 1, Col: 5, Value: 14.8
Row: 1, Col: 6, Value: 20.8
Railroads 20.8%
Trucking, Local &
Long Distance 14.8%
Trucking, Long Distance 6.7%
Air Transport,
Major National 5.8%
Auto & Truck Parts 5.7%
All Others 46.2%*
* INCLUDES SHORT-TERM INVESTMENTS
TRANSPORTATION PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Beso Sikharulidze,
Portfolio Manager of Fidelity Select
Transportation Portfolio
Q. BESO, HOW DID THE FUND PERFORM?
A. The fund had a strong year. Its total return for the 12 months ended
February 28, 1994 was 27.47%. The S&P 500 returned 8.33% during the
same period.
Q. WHY DID THE FUND DO SO WELL, COMPARED TO THE S&P?
A. Broadly speaking, the strengthening economy jump started many
transportation stocks, which tend to rise and fall with economic cycles.
The fund kept about a 30% stake in railroad stocks over the past six
months, which boosted performance. Railroad companies benefited from the
improving economy, but the bigger story was their effective cost cutting,
which improved profitability.
Q. ANY EXAMPLES?
A. The stocks of Burlington Northern, CSX, Illinois Central, and Santa Fe
Pacific were up between 10 and 20% from the end of August through the end
of February. Even if rail demand dips a bit in the next six months, trimmed
expenses could lead to fatter profits. That's why all four of these stocks
were still among the fund's top ten investments on February 28.
Q. DIDN'T THE IMPROVING ECONOMY HELP THE AIRLINES AS WELL?
A. Not as much as you might think. The supply and demand story looks
positive: people are flying more often, which has increased demand, and the
major airlines have reduced the supply by abandoning their less profitable
routes. The problem is, the big airlines are still weighted down so heavily
on the cost side that it may take a while to see the benefits. That's why
I've reduced the fund's investment in the major carriers, focusing instead
on regional airlines.
Q. WHAT MAKES THE REGIONALS SO ATTRACTIVE?
A. Because it's no longer cost-effective for the major airlines to handle
all of the shorter routes, the regional airlines are filling the need. That
has meant solid growth for these companies. In addition, the regionals
operate with much lower expenses than the majors. Comair and Mesa were the
fund's two largest regional airline investments on February 28.
Unfortunately, Comair has been a disappointment so far. Fears that
Continental would compete directly with Comair for regional business drove
down the price of the stock. But I think investors overreacted, and I like
Comair's prospects going forward. Mesa Airlines' stock also has been flat
over the past few months, but the company is launching new routes and
acquiring some profitable side businesses.
Q. THE BIG THREE AUTO MAKERS HAVE BEEN BIG PERFORMERS ON WALL STREET, YET
NONE APPEARS IN THE FUND'S TOP TEN INVESTMENTS. WHY?
A. Surging consumer demand and effective cost cutting boosted profits and
stock performance at Chrysler, Ford and General Motors. However, I had
reservations about increasing the fund's limited investment in auto stocks
when I began managing the fund in November. Prices had already risen
substantially during the year, and I wondered how much gas these stocks had
left. I did some investing in Chrysler and Ford, which performed well. But
in hindsight, not participating more heavily in the run-up in auto stocks
was my biggest disappointment over the last 12 months. The fund did,
however, take advantage of increasing auto sales by investing in parts
suppliers. For example, A.O. Smith's stock rose 40% over the last six
months.
Q. DID YOU MAKE ANY OTHER CHANGES TO THE FUND?
A. I increased its stake in trucking companies, specifically truckload
carriers that regularly haul loads of 10,000 pounds or more. This industry
is consolidating: the big companies appear to be getting stronger, and many
of the weak ones are going out of business. Stocks like Swift and Werner
have already helped the fund; both were sizable investments at the end of
February.
Q. CAN THE FUND KEEP UP THIS PACE?
A. I think it'll be more difficult in the next six months. Many of 1993's
top performing transportation stocks - I'm thinking specifically of the
railroads - are getting expensive. I probably won't increase my investment
in these companies, but I don't plan to sell them just yet either. Going
forward, I'll have an eye out for new opportunities, perhaps overseas. I
recently invested in Fiat and BMW, which could benefit from an economic
recovery in Europe. I'm also watching shipping companies very closely. If I
see demand improve for their services, it might be time to invest.
FUND FACTS
START DATE: September 29, 1986
SIZE: as of February 28, 1994, over $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 FEBRUARY 28, 1994
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 93.0%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 0.6%
AIRCRAFT EQUIPMENT - 0.6%
Aviall, Inc. (a) 4,750 $ 82,531 05366B10
AIR TRANSPORTATION - 9.1%
AIR TRANSPORT, MAJOR NATIONAL - 5.8%
AMR Corp. (a) 4,000 253,000 00176510
Great Lakes Aviation (a) 2,000 24,750 39054K10
Mesa Airlines, Inc. (a) 17,000 337,820 59048110
Southwest Airlines Co. 4,200 143,325 84474110
758,895
AIR TRANSPORTATION, REGIONAL - 3.3%
Comair Holdings, Inc. 10,700 246,100 19978910
SkyWest, Inc. 6,000 199,500 83087910
445,600
TOTAL AIR TRANSPORTATION 1,204,495
AUTOS, TIRES, & ACCESSORIES - 13.9%
AUTO & TRUCK PARTS - 5.7%
Echlin, Inc. 3,000 89,625 27874910
Pirelli Tyre Holdings NV Ord. (a) 12,300 104,793 72499092
Smith (A.O.) Corp. Class B 12,600 463,050 83186520
Snap-on Tools Corp. 2,000 87,500 83303410
744,968
MOTOR VEHICLE SUPPLIES & NEW PARTS - 1.2%
Custom Chrome, Inc. (a) 2,000 43,500 23190510
European Motor Holdings PLC 50,000 111,439 29899C22
154,939
MOTOR VEHICLES & CAR BODIES - 3.8%
BMW (a) 200 97,527 05528310
Fiat Spa 45,000 126,629 31562110
Nissan Motor Co. Ltd. Ord. 23,000 187,589 65474491
Pininfarina Spa 12,400 90,355 72399392
502,100
TIRES & INNER TUBES - 3.2%
Bandag, Inc. 2,000 117,750 05981510
Continental Gummi-Werke AG (a) 1,400 217,540 21199010
Goodyear Tire & Rubber Co. 2,000 90,500 38255010
425,790
TOTAL AUTOS, TIRES, & ACCESSORIES 1,827,797
BUILDING MATERIALS - 1.4%
PAINT & VARNISH - 1.4%
Chugoku Marine Paints Ord. 30,000 183,009 17199392
CHEMICALS & PLASTICS - 0.9%
CHEMICALS - 0.9%
Goodrich (B.F.) Company 3,000 123,000 38238810
CONGLOMERATES - 2.0%
Canadian Pacific Ltd. Ord. 14,900 259,467 13644030
ELECTRONICS - 0.6%
ELECTRONIC PARTS - WHOLESALE - 0.6%
Airport Systems International, Inc. (a) 9,000 83,250 00949N10
ENGINEERING - 1.1%
ELECTRICAL WORK - 1.1%
Nippondenso Co. Ltd. 8,000 142,277 65463710
ENTERTAINMENT - 0.4%
CRUISES - 0.4%
Carnival Cruise Lines, Inc. Class A 1,000 48,375 14365810
SHARES VALUE (NOTE 1)
HOME FURNISHINGS - 1.0%
PUBLIC BUILDING & RELATED FURNITURE - 1.0%
Dapta-Mallinjoud SA 3,630 $ 130,382 23799H22
INDUSTRIAL MACHINERY & EQUIPMENT - 1.9%
CONSTRUCTION EQUIPMENT - 1.9%
Astec Industries, Inc. (a) 8,000 146,000 04622410
JLG Industries, Inc. 4,000 106,000 46621010
252,000
IRON & STEEL - 0.7%
IRON & STEEL FOUNDRIES - 0.7%
Steel of West Virginia, Inc. (a) 7,900 98,750 85815410
LEASING & RENTAL - 3.4%
AUTO REPAIR SERVICES & GARAGES - 0.6%
PHH Corp. 2,000 78,000 69332010
EQUIPMENT RENTAL & LEASING, NEC - 2.8%
GATX Corp. 1,400 57,925 36144810
Interpool, Inc. (a) 4,000 79,500 46062R10
Ryder Systems, Inc. 8,600 231,125 78354910
368,550
TOTAL LEASING & RENTAL 446,550
LEISURE DURABLES & TOYS - 0.8%
LEISURE DURABLES - 0.8%
Champion Enterprises, Inc. (a) 4,700 104,575 15849610
LODGING & GAMING - 0.9%
HOTELS, MOTELS, & TOURIST COURTS - 0.9%
Showboat, Inc. 7,000 124,250 82539010
OIL & GAS - 1.1%
OIL & GAS EXPLORATION - 1.1%
Amerada Hess Corp. 3,000 139,125 02355110
RAILROADS - 20.8%
RAILROAD EQUIPMENT - 1.3%
Trinity Industries, Inc. 3,750 166,406 89652210
RAILROADS - 19.5%
Burlington Northern, Inc. 5,900 370,963 12189710
CSX Corp. 6,700 589,600 12640810
Chicago & North Western Holdings
Corp. (a) 9,700 266,750 16715510
Conrail, Inc. 2,800 173,950 20836810
Illinois Central Corp., Series A 10,100 361,075 45184110
Santa Fe Pacific Corp. 20,934 476,249 80218310
Wisconsin Central Transportation
Corp. (a) 4,700 338,400 97659210
2,576,987
TOTAL RAILROADS 2,743,393
SHIP BUILDING & REPAIR - 0.8%
SHIP BUILDING & REPAIRING - 0.8%
Hitachi Zosen Singapore Ltd. (a) 82,000 99,014 43399A22
SHIPPING - 3.9%
SHIPPING - 3.9%
Kirby Corp. (a) 4,800 104,400 49726610
Ned Lloyd (a) 7,800 297,209 63983210
Smedvig Tankship Ltd. (a) 12,600 109,118 83169E92
510,727
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
TRUCKING & FREIGHT - 27.7%
AIR COURIER SERVICES - 1.7%
Airborne Freight Corp. 6,000 $ 223,500 00926610
FREIGHT FORWARDING - 4.5%
Air Express International Corp. 6,800 140,250 00910410
Expeditors International of Washington,
Inc. 6,000 114,000 30213010
Fritz Companies, Inc. (a) 3,000 90,000 35884610
Intertrans Corp. 8,000 121,000 46113710
TNT Ltd. (a) 81,000 130,063 93599292
595,313
TRUCKING, LOCAL & LONG DISTANCE - 14.8%
Carolina Freight Corp. 28,000 301,000 14389810
Landstar System, Inc. 16,000 376,000 51509810
Matlack Systems, Inc. (a) 5,000 73,750 57690110
Roadway Services, Inc. 3,100 217,775 76974810
Swift Transportation Co., Inc. (a) 15,900 411,413 87075610
Werner Enterprises, Inc. 10,700 310,300 95075510
XTRA Corp. 6,000 265,500 98413810
1,955,738
TRUCKING, LONG DISTANCE - 6.7%
Arkansas Best Corp. 18,600 253,425 04079010
Arnold Industries, Inc. 4,000 84,000 04259510
Celadon Group, Inc. (a) 2,000 31,500 15083810
TNT Freightways Corp. 13,100 376,625 87259J10
Trimac Ltd. 10,900 138,320 89620810
883,870
TOTAL TRUCKING & FREIGHT 3,658,421
TOTAL COMMON STOCKS
(Cost $10,154,410) 12,261,388
PREFERRED STOCKS - 0.8%
AUTOS, TIRES, & ACCESSORIES - 0.8%
MOTOR VEHICLES & CAR BODIES - 0.8%
Porsche AG (non-vtg.) (a)
(Cost $102,363) 200 102,104 73380110
REPURCHASE AGREEMENTS - 6.2%
MATURITY VALUE (NOTE 1)
AMOUNT
Investments in repurchase agreements,
(U.S. Treasury obligations), in a joint
trading account, at 3.47% dated
2/28/94 due 3/1/94 $ 825,080 825,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $11,081,773) $ 13,188,492
LEGEND
(a) Non-income producing
OTHER INFORMATION
CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective March 1,
1993, the fund adopted Statement of Position 93-2: Determination,
Disclosure, and Financial Statement Presentation of Income, Capital Gain,
and Return of Capital Distributions by Investment Companies. As a result,
the fund changed the classification of distributions to shareholders to
better disclose the differences between financial statement amounts and
distributions determined in accordance with income tax regulations.
Accordingly, amounts as of February 28, 1993 have been restated to reflect
an increase in paid in capital of $756,841, a decrease in accumulated net
investment loss of $57,304 and a decrease in accumulated net realized gain
on investments of $814,145.
Purchases and sales of securities, other than short-term securities,
aggregated $12,237,884 and $11,059,303, respectively.
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 $9,066 for the period
(see Note 4 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 81.3%
Japan 3.8
Germany 3.1
Netherlands 3.0
Canada 2.9
Italy 1.6
France 1.0
Australia 1.0
Others (individually less than 1%) 2.3
TOTAL 100.0%
INCOME TAX INFORMATION
At February 28, 1994, the aggregate cost of investment securities for
income tax purposes was $11,081,773. Net unrealized appreciation aggregated
$2,106,719, of which $2,236,451 related to appreciated investment
securities and $129,732 related to depreciated investment securities.
The fund hereby designates $299,000 as a capital gain dividend for the
purpose of the dividend paid deduction.
TRANSPORTATION PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
FEBRUARY 28, 1994
ASSETS
Investment in securities, at value (including repurchase agreements of $825,000) (cost $11,081,773) (Notes 1 $ 13,188,492
and 2) - See accompanying schedule
Cash 11
Receivable for investments sold 1,117,088
Receivable for fund shares sold 392,253
Dividends receivable 11,375
Redemption fees receivable (Note 1) 3,008
TOTAL ASSETS 14,712,227
LIABILITIES
Payable for investments purchased $ 668,080
Payable for fund shares redeemed 935,891
Accrued management fee 6,961
Other payables and accrued expenses 24,502
TOTAL LIABILITIES 1,635,434
NET ASSETS $ 13,076,793
Net Assets consist of (Note 1):
Paid in capital $ 10,426,320
Accumulated undistributed net realized gain (loss) on investments 543,754
Net unrealized appreciation (depreciation) on investment securities 2,106,719
NET ASSETS, for 603,367 shares outstanding $ 13,076,793
NET ASSET VALUE and redemption price per share ($13,076,793 (divided by) 603,367 shares) $21.67
Maximum offering price per share (100/97 of $21.67) $22.34
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED FEBRUARY 28, 1994
INVESTMENT INCOME $ 118,700
Dividends
Interest 31,397
TOTAL INCOME 150,097
EXPENSES
Management fee (Note 4) $ 66,064
Transfer agent (Note 4) 126,388
Fees
Redemption fees (Note 1) (14,991
)
Accounting fees and expenses 45,464
(Note 4)
Non-interested trustees' compensation 75
Custodian fees and expenses 11,400
Registration fees 11,253
Audit 3,878
Legal 91
Reports to shareholders 2,569
Total expenses before reductions 252,191
Expense reductions (Note 8) (1,347 250,844
)
NET INVESTMENT INCOME (LOSS) (100,747
)
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 1) 1,441,309
Net realized gain (loss) on investment securities
Change in net unrealized appreciation (depreciation) on investment securities 1,066,611
NET GAIN (LOSS) 2,507,920
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 2,407,173
OTHER INFORMATION $153,950
Sales charges paid to FDC
(Note 4)
Deferred sales charges withheld $935
by FDC (Note 4)
Exchange fees withheld by FSC $12,585
(Note 4)
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED TEN MONTHS
FEBRUARY 28, ENDED
1994 FEBRUARY 28,
1993
Operations $ (100,747 $ (19,234
Net investment income (loss) ) )
Net realized gain (loss) on investments 1,441,309 172,466
Change in net unrealized appreciation (depreciation) on investments 1,066,611 824,934
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 2,407,173 978,166
Distributions to shareholders from net realized gains (827,694 (85,058
) )
Share transactions 25,059,536 16,011,990
Net proceeds from sales of shares
Reinvestment of distribution 796,335 84,011
Cost of shares redeemed (25,177,172 (9,226,420
) )
Paid in capital portion of redemption fees (Note 1) 39,052 18,745
Net increase (decrease) in net assets resulting from share transactions 717,751 6,888,326
TOTAL INCREASE (DECREASE) IN NET ASSETS 2,297,230 7,781,434
NET ASSETS
Beginning of period 10,779,563 2,998,129
End of period (including accumulated net investment loss of $0 and $57,304, respectively) $ 13,076,793 $ 10,779,563
OTHER INFORMATION
Shares
Sold 1,225,390 922,573
Issued in reinvestment of distributions 40,016 4,919
Redeemed (1,239,184 (543,866
) )
Net increase (decrease) 26,222 383,626
</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>
YEAR ENDED TEN MONTHS YEARS ENDED APRIL 30,
FEBRUARY 28, ENDED
FEBRUARY 28,
SELECTED PER-SHARE DATAC 1994 1993 1992 1991 1990
Net asset value, beginning of period $ 18.68 $ 15.49 $ 11.26 $ 12.23 $ 13.59
Income from Investment Operations
Net investment income (loss) (.20) (.07) (.05) .06 (.03)
Net realized and unrealized gain (loss) on investments 5.07 3.55 4.18 (.57) .96
Total from investment operations 4.87 3.48 4.13 (.51) .93
Less Distributions
From net investment income - - - - -
In excess of net investment income - - (.04) - -
From net realized gain (1.96) (.36) - (.50) (2.32)
Total distributions (1.96) (.36) (.04) (.50) (2.32)
Redemption fees added to paid in capital .08 .07 .14 .04 .03
Net asset value, end of period $ 21.67 $ 18.68 $ 15.49 $ 11.26 $ 12.23
TOTAL RETURND, E 27.47% 23.14% 38.01% (4.10)% 6.90%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 13,077 $ 10,780 $ 2,998 $ 770 $ 1,630
Ratio of expenses to average net assetsB 2.39% 2.48%A 2.43% 2.39% 2.50%
Ratio of expenses to average net assets before expense 2.40% 4.20%A 3.13% 2.89% 3.92%
reductionsB
Ratio of net investment income (loss) to average net assets(.96)% (.53)% (.34)% .52% (.20)%
A
Portfolio turnover rate 115% 116%A 423% 187% 156%
</TABLE>
1 ANNUALIZED
2 SEE NOTE 8 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.
[TEXT]
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).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
FEBRUARY 28, 1994 YEAR YEARS FUND
BROKERAGE AND INVESTMENT MANAGEMENT
35.87% 140.37% 141.38%
BROKERAGE AND INVESTMENT MANAGEMENT
(INCL. 3% SALES CHARGE)
31.80% 133.16% 134.14%
S&P 500 8.33% 89.60% 222.99%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, 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
FEBRUARY 28, 1994 YEAR YEARS FUND
BROKERAGE AND INVESTMENT MANAGEMENT
35.87% 19.17% 10.80%
BROKERAGE AND INVESTMENT MANAGEMENT
(INCL. 3% SALES CHARGE)
31.80% 18.45% 10.40%
S&P 500 8.33% 13.65% 14.62%
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 S&P 500
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 24627.78 33201.90
02/28/94 23414.20 32298.81
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 February 28, 1994, your investment would have grown to
$23,414 - a 134.14% increase. That compares to $10,000 invested in the
S&P 500, which would have grown to $32,299 over the same period - a
222.99% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1994
% OF FUND'S
INVESTMENTS
Nomura Securities Co. Ltd. 7.9
Yamaichi Securities 7.7
Daiwa Securities 6.7
Nikko Securities 6.5
Warburg (SG) Group PLC Ord. 6.3
Peregrine Investments Holdings 6.0
Invesco Mim PLC 5.7
Midland Walwyn Inc. 5.3
Sun Hung Kai Properties 5.2
Mackenzie Financial Corporation 5.2
TOP INDUSTRIES AS OF FEBRUARY 28, 1994
Row: 1, Col: 1, Value: 4.3
Row: 1, Col: 2, Value: 1.7
Row: 1, Col: 3, Value: 5.9
Row: 1, Col: 4, Value: 11.4
Row: 1, Col: 5, Value: 18.2
Row: 1, Col: 6, Value: 58.5
Security & Commodity Brokers 58.5%
Investment Managers 18.2%
Financial Services 11.4%
Management & Investment
Offices 5.9%
International Banks 1.7%
All Others 4.3%*
* 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 HAS THE FUND PERFORMED?
A. For the year ended February 28, 1994, the fund had a total return of
35.87%. That beat the S&P 500, which returned 8.33% for the same
period.
Q. WHY DID THE FUND DO SO WELL?
A. For much of the period, the fund was invested primarily in U.S. brokers,
which were operating in a nearly ideal environment for that group. Falling
interest rates encouraged investors to put more money into stocks, bonds
and other long-term financial products, and trading volume soared. Low
interest rates and high stock prices led to a boom in the new issuance of
corporate securities. At that time, the fund's emphasis on U.S. brokers
helped its performance. But in October, I started to pare back the fund's
stake in some of the names that had been strong performers.
Q. WHAT CHANGED?
A. At that point I felt that the group's earnings could decline in 1994,
and that U.S. brokerage stock prices were fairly valued. I also believed
U.S. brokers wouldn't see much, if any, growth in commission revenues and
at the same time their expenses might rise. When revenues drop and expenses
rise, it's difficult for a company to have higher earnings. What's more,
periods of higher interest rates historically tend to hurt brokers.
Q. SO WHERE HAVE YOU TURNED INSTEAD?
A. Mostly to Japan and Canada. The Japanese stock market peaked in
1989-1990. Profits for brokers have been down about 90% since then, and
stock prices were shellshocked and appeared inexpensive. What's more, I
have compared the Japanese situation in 1992-1993 to that of the United
States in 1990. There are three similarities: first, a stock market
recovering after a slump; second, depressed trading volume; third, minimal
profits for brokerage firms. To me, that looks like the stock market could
pick up and it may signal that Japan could be close to coming out of its
recession. So far, the Japanese market has done well in 1994, trading
volume has increased, and so have broker revenues. That, in turn, helped
Japanese brokers, including some of the fund's largest investments, such as
Nomura, Nikko and Daiwa.
Q. WHAT'S THE STORY WITH CANADIAN BROKERS?
A. Canada is a faster-growth version of the U.S. mutual fund story. Mutual
funds there have a low rate of penetration, far less than in the United
States. The Canadian mutual fund industry has shown impressive growth over
the past five years. Some of the fund's largest investments - Midland
Walwyn, Mackenzie Financial and Trimark Financial - are examples of
companies that could benefit from further growth in this industry.
Q. LOOKING BACK, IS THERE ANYTHING YOU REGRET?
A. I overstayed my welcome in Southeast Asian stocks. I had invested the
fund in a number of brokers in Hong Kong, Malaysia and Singapore. They did
very well in December 1993, but gave back some of their gains in early
1994. Knowing what I know now, I wish I had pared back the fund's stake in
them earlier. The fund continues to own some of the Hong Kong brokers, like
Peregrine Investments and Sun Hung Kai. Hong Kong has a rapidly-growing
economy, which benefits from its proximity to China. Also, trading volume
could continue to increase if more money flows into that market.
Q. WHAT'S YOUR STRATEGY FOR THE NEXT SIX MONTHS?
A. I'll probably continue to keep a significant amount of the fund invested
overseas for the time being. Until U.S. brokerage stocks come down
significantly, I'll probably avoid the group. We had a 20% correction in
the U.S. brokerage group from October 1993 through the end of February. But
I think the stocks are still unattractive and I think the companies could
see a decline in earnings in 1994.
FUND FACTS
START DATE: July 29, 1985
SIZE: as of February 28, 1994, over $59 million
MANAGER: Arieh Coll, since December 1993;
manager, Fidelity Select Technology Portfolio,
since July 1992; Fidelity Select Software and
Computer Services Portfolio, since October
1991; joined Fidelity in1989
(checkmark)
BROKERAGE AND INVESTMENT MANAGEMENT PORTFOLIO
INVESTMENTS FEBRUARY 28, 1994
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 95.0%
SHARES VALUE (NOTE 1)
BANKS - 1.7%
INTERNATIONAL BANKS - 1.7%
Finance One Public Co. 65,000 $ 996,050 31799E93
National Bank of Greece 200 10,616 63499622
Union Financiere de France BQ 100 14,643 90699992
1,021,309
CREDIT & OTHER FINANCE - 17.7%
BUSINESS CREDIT - 0.4%
Dhana Siam Finance & Securities 12,000 219,905 24299593
FINANCIAL SERVICES - 11.4%
Finansbank (a) 16,000 2,348 31799K22
Kay Hian James Capel Holdings 697,000 1,295,472 48699B22
Marleau Lemire, Inc. 532,300 1,676,378 57090310
McIntosh Securities Ltd. 942,800 955,415 58199522
Perpetual PLC 50,000 814,246 71499822
Rashid Hussain BHD 231,000 673,310 75399492
TA Enterprise BHD 268,000 1,513,182 94899892
6,930,351
MANAGEMENT & INVESTMENT OFFICES - 5.9%
Govett & Co. Ltd. 216,900 1,380,974 38399992
Trimark Financial Corp. (a) 76,800 2,205,261 89621H10
3,586,235
TOTAL CREDIT & OTHER FINANCE 10,736,491
SECURITIES INDUSTRY - 75.6%
INVESTMENT MANAGERS - 18.2%
Invesco Mim PLC (a) 1,095,000 3,432,974 46199C92
Mackenzie Financial Corporation 375,400 3,129,492 55453110
Mutual Fund Co. Ltd. (a) 40,000 862,559 65499B22
Peregrine Investments Holdings 1,685,000 3,619,768 71399492
11,044,793
SECURITY & COMMODITY BROKERS - 57.0%
Asia Securities Trading Co. 134,000 529,226 04599D23
Daiwa Securities 238,000 4,096,189 23499010
First Marathon Inc. Class A (non vtg.) 69,100 998,481 32076L20
GK Goh Holdings Ltd. (a) 563,000 889,810 36199B22
Guoco Group Ltd. 1,000 4,529 40299692
Jefferies Group, Inc. 21,100 664,650 47231810
Kim Eng Holdings Ltd. 496,000 965,786 49499D92
Kim Eng Holdings Ltd. (warrants ) (a) 303,800 318,820 49499D94
Kokusai Securities 66,000 1,249,510 50299092
McDonald & Co. Investments, Inc. 44,200 701,675 58004710
Midland Walwyn Inc. (a) 315,900 3,218,692 59780110
Nikko Securities 297,000 3,947,317 65399010
Nomura Securities Co. Ltd. 210,000 4,778,883 65536130
Phatra Thanakit 1,000 30,964 71799593
Securities One Ltd. 23,000 548,657 81399692
Sun Hung Kai Properties 4,746,000 3,163,067 86690810
Warburg (SG) Group PLC Ord. 285,000 3,811,205 81799099
Yamaichi Securities 547,000 4,701,946 98499210
34,619,407
SECURITY BROKERS & DEALERS - 0.4%
20/20 Financial Corp. 23,100 248,203 90136T10
TOTAL SECURITIES INDUSTRY 45,912,403
TOTAL COMMON STOCKS
(Cost $50,573,339) 57,670,203
NONCONVERTIBLE PREFERRED STOCKS - 1.2%
SHARES VALUE (NOTE 1)
SECURITIES INDUSTRY - 1.2%
SECURITY & COMMODITY BROKERS - 1.2%
AGF Management Ltd. Class A (a)
(Cost $809,023) 52,900 $ 759,494 00109210
NONCONVERTIBLE BONDS - 0.3%
PRINCIPAL
AMOUNT
SECURITIES INDUSTRY - 0.3%
SECURITY & COMMODITY BROKERS - 0.3%
Kim Eng Holdings Ltd. 3 1/2%,
12/27/97 (Cost $188,864) $303,800 $ 176,695 49499DAA
REPURCHASE AGREEMENTS - 3.5%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account, at 3.47% dated
2/28/94 due 3/1/94 $2,151,207 2,151,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $53,722,226) $ 60,757,392
LEGEND
1. Non-income producing
OTHER INFORMATION
CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective March 1,
1993, the fund adopted Statement of Position 93-2: Determination,
Disclosure, and Financial Statement Presentation of Income, Capital Gain,
and Return of Capital Distributions by Investment Companies. As a result,
the fund changed the classification of distributions to shareholders to
better disclose the differences between financial statement amounts and
distributions determined in accordance with income tax regulations.
Accordingly, amounts as of February 28, 1993 have been reclassified to
reflect an increase in paid in capital of $10,852,935, a decrease in
undistributed net investment income of $399,839 and a decrease in
accumulated net realized gain on investments of $10,453,096.
Purchases and sales of securities, other than short-term securities,
aggregated $194,106,502 and $172,745,490, respectively.
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 $96,223 for the period
(see Note 4 of Notes to Financial Statements).
The maximum loan and average daily loan balances during the periods for
which loans were outstanding amounted to $12,531,000 and $4,342,143,
respectively. The weighted average interest rate paid was 3.7% (see Note 7
of Notes to Financial Statements).
Distribution of investments by country, as a percentage of total value of
investment in securities, is as follows:
Japan 30.9%
Canada 20.1
United Kingdom 17.1
Hong Kong 11.2
Singapore 6.0
Thailand 5.3
United States 4.2
Malaysia 3.6
Australia 1.6
TOTAL 100.0%
INCOME TAX INFORMATION
At February 28, 1994, the aggregate cost of investment securities for
income tax purposes was $53,812,398. Net unrealized appreciation aggregated
$6,944,994, of which $8,959,410 related to appreciated investment
securities and $2,014,416 related to depreciated investment securities.
The fund hereby designates $2,911,000 as a capital gain dividend for the
purpose of the dividend paid deduction.
The fund intends to elect 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>
FEBRUARY 28, 1994
ASSETS
Investment in securities, at value (including repurchase agreements of $2,151,000) (cost $53,722,226) $ 60,757,392
(Notes 1 and 2) - See accompanying schedule
Cash 884
Receivable for investments sold 935,811
Receivable for fund shares sold 1,565,714
Dividends receivable 76,589
Interest receivable 486
Redemption fees receivable (Note 1) 798
Other receivables 71,076
TOTAL ASSETS 63,408,750
LIABILITIES
Payable for fund shares redeemed $ 3,428,943
Accrued management fee 34,366
Other payables and accrued expenses 135,603
TOTAL LIABILITIES 3,598,912
NET ASSETS $ 59,809,838
Net Assets consist of (Note 1):
Paid in capital $ 50,139,294
Accumulated net investment loss (95,197
)
Accumulated undistributed net realized gain (loss) on investments 2,730,575
Net unrealized appreciation (depreciation) on investment securities 7,035,166
NET ASSETS, for 3,369,472 shares outstanding $ 59,809,838
NET ASSET VALUE and redemption price per share ($59,809,838 (divided by) 3,369,472 shares) $17.75
Maximum offering price per share (100/97 of $17.75) $18.30
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED FEBRUARY 28, 1994
INVESTMENT INCOME $ 837,789
Dividends
Interest 294,112
TOTAL INCOME 1,131,901
EXPENSES
Management fee (Note 4) $ 434,585
Transfer agent (Note 4) 744,934
Fees
Redemption fees (Note 1) (109,484
)
Accounting fees and expenses 74,109
(Note 4)
Non-interested trustees' compensation 442
Custodian fees and expenses 31,913
Registration fees 41,896
Audit 3,682
Legal 477
Interest (Note 7) 6,266
Reports to shareholders 10,779
Miscellaneous 477
Total expenses before reductions 1,240,076
Expense reductions (Note 8) (12,979 1,227,097
)
NET INVESTMENT INCOME (LOSS) (95,196
)
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 1) 9,170,168
Net realized gain (loss) on investment securities
Change in net unrealized appreciation (depreciation) on investment securities 5,304,530
NET GAIN (LOSS) 14,474,698
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 14,379,502
OTHER INFORMATION $866,722
Sales charges paid to FDC
(Note 4)
Deferred sales charges withheld $5,944
by FDC (Note 4)
Exchange fees withheld by FSC $93,203
(Note 4)
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED TEN MONTHS
FEBRUARY 28, ENDED
1994 FEBRUARY 28,
1993
Operations $ (95,196 $ 3,536
Net investment income (loss) )
Net realized gain (loss) on investments 9,170,168 (1,185,727
)
Change in net unrealized appreciation (depreciation) on investments 5,304,530 4,169,487
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 14,379,502 2,987,296
Distributions to shareholders (3,536 -
From net investment income )
From net realized gain (5,264,467 -
)
TOTAL DISTRIBUTIONS (5,268,003 -
)
Share transactions 254,155,679 51,765,156
Net proceeds from sales of shares
Reinvestment of distributions 5,046,669 -
Cost of shares redeemed (233,513,002 (48,113,103
) )
Paid in capital portion of redemption fees (Note 1) 322,223 132,746
Net increase (decrease) in net assets resulting from share transactions 26,011,569 3,784,799
TOTAL INCREASE (DECREASE) IN NET ASSETS 35,123,068 6,772,095
NET ASSETS
Beginning of period 24,686,770 17,914,675
End of period (including accumulated net investment income (loss) of $(95,197) and $403,376,
respectively) $ 59,809,838 $ 24,686,770
OTHER INFORMATION
Shares
Sold 14,759,782 4,018,432
Issued in reinvestment of distributions 301,596 -
Redeemed (13,428,141 (3,843,030
) )
Net increase (decrease) 1,633,237 175,402
</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>
YEAR ENDED TEN MONTHS YEARS ENDED APRIL 30,
FEBRUARY 28, ENDED
FEBRUARY 28,
SELECTED PER-SHARE DATAC 1994 1993 1992 1991 1990
Net asset value, beginning of period $ 14.22 $ 11.48 $ 9.28 $ 7.97 $ 8.39
Income from Investment Operations
Net investment income (loss) (.02) - .02 .08 .08
Net realized and unrealized gain (loss) on investments 4.95 2.65 1.96 1.15 (.35)
Total from investment operations 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 .08 .09 .23 .17 .01
Net asset value, end of period $ 17.75 $ 14.22 $ 11.48 $ 9.28 $ 7.97
TOTAL RETURND, E 35.87% 23.87% 23.84% 17.90% (3.23)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 59,810 $ 24,687 $ 17,915 $ 11,285 $ 2,298
Ratio of expenses to average net assetsB 1.77% 2.21%A 2.17% 2.50% 2.50%
Ratio of expenses to average net assets before expense 1.79% 2.21%A 2.17% 2.91% 3.16%
reductionsB
Ratio of net investment income (loss) to average net
assets (.14)% .02%A .16% .94% .91%
Portfolio turnover rate 295% 111%A 254% 62% 142%
</TABLE>
1 ANNUALIZED
2 SEE NOTE 8 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.
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 1 PAST 5 PAST 10
FEBRUARY 28, 1994 YEAR YEARS YEARS
FINANCIAL SERVICES 10.85% 140.41% 362.83%
FINANCIAL SERVICES
(INCL. 3% SALES CHARGE) 7.53% 133.20% 348.95%
S&P 500 8.33% 89.60% 321.84%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, 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
FEBRUARY 28, 1994 YEAR YEARS YEARS
FINANCIAL SERVICES 10.85% 19.18% 16.56%
FINANCIAL SERVICES
(INCL. 3% SALES CHARGE) 7.53% 18.45% 16.20%
S&P 500 8.33% 13.65% 15.48%
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
02/29/84 10000.00 10000.00
03/31/84 9746.74 10173.00
04/30/84 9717.52 10269.64
05/31/84 9086.44 9700.71
06/30/84 9355.08 9911.21
07/31/84 9425.56 9788.31
08/31/84 10206.61 10869.92
09/30/84 10588.33 10872.09
10/31/84 10940.69 10914.50
11/30/84 11310.67 10792.25
12/31/84 11721.75 11077.17
01/31/85 12702.48 11940.08
02/28/85 12843.42 12086.94
03/31/85 12755.33 12095.40
04/30/85 13370.19 12084.52
05/31/85 14111.91 12783.00
06/30/85 14683.84 12983.70
07/31/85 14660.07 12964.22
08/31/85 14767.04 12854.02
09/30/85 14131.19 12451.69
10/31/85 15058.22 13026.96
11/30/85 15949.59 13920.61
12/31/85 16555.72 14594.37
01/31/86 17536.23 14676.10
02/28/86 19354.62 15773.87
03/31/86 20608.49 16654.05
04/30/86 20418.33 16465.86
05/31/86 21256.22 17341.84
06/30/86 21880.17 17634.92
07/31/86 20314.76 16649.13
08/31/86 21599.89 17884.49
09/30/86 19289.07 16405.45
10/31/86 19717.45 17352.04
11/30/86 19524.37 17773.70
12/31/86 19041.69 17320.47
01/31/87 20381.13 19653.53
02/28/87 21732.63 20429.85
03/31/87 20906.04 21020.27
04/30/87 19590.74 20833.19
05/31/87 19451.97 21014.44
06/30/87 20169.96 22075.67
07/31/87 20405.26 23194.90
08/31/87 21587.83 24060.07
09/30/87 20821.57 23533.16
10/31/87 16109.42 18464.12
11/30/87 15125.96 16942.67
12/31/87 15892.34 18232.01
01/31/88 17088.96 18999.58
02/29/88 17658.16 19884.96
03/31/88 17354.15 19270.51
04/30/88 17050.15 19484.42
05/31/88 17218.32 19653.93
06/30/88 18279.10 20556.05
07/31/88 18156.21 20477.93
08/31/88 18104.46 19781.68
09/30/88 18854.77 20624.38
10/31/88 18906.52 21197.74
11/30/88 18123.87 20894.61
12/31/88 17801.70 21260.27
01/31/89 18714.09 22816.52
02/28/89 18674.14 22248.39
03/31/89 20039.40 22766.78
04/30/89 20405.69 23948.37
05/31/89 21684.37 24918.28
06/30/89 21533.29 24776.25
07/31/89 23256.75 27013.54
08/31/89 23913.95 27543.01
09/30/89 24410.20 27430.08
10/31/89 22083.19 26793.70
11/30/89 21781.41 27340.30
12/31/89 21244.97 27996.46
01/31/90 19451.43 26117.90
02/28/90 20155.31 26454.82
03/31/90 19843.98 27155.87
04/30/90 19140.10 26476.98
05/31/90 20825.35 29058.48
06/30/90 20243.30 28860.88
07/31/90 18943.83 28768.53
08/31/90 16676.52 26167.85
09/30/90 14192.64 24893.48
10/31/90 12954.09 24786.44
11/30/90 14781.46 26387.64
12/31/90 16076.09 27123.86
01/31/91 17536.92 28306.46
02/28/91 19551.63 30330.37
03/31/91 20486.28 31064.36
04/30/91 21150.93 31138.92
05/31/91 22771.00 32484.12
06/30/91 20922.45 30996.35
07/31/91 22577.14 32440.78
08/31/91 24072.59 33209.62
09/30/91 23927.20 32655.02
10/31/91 24453.38 33092.60
11/30/91 22639.45 31758.97
12/31/91 25983.52 35392.19
01/31/92 27277.79 34733.90
02/29/92 29236.70 35185.44
03/31/92 28579.07 34499.32
04/30/92 29677.46 35513.60
05/31/92 30950.75 35687.62
06/30/92 31662.91 35155.87
07/31/92 32568.38 36593.75
08/31/92 30700.40 35843.58
09/30/92 31655.78 36266.53
10/31/92 32910.60 36393.47
11/30/92 35384.60 37634.48
12/31/92 37109.68 38097.39
01/31/93 39450.41 38417.40
02/28/93 40499.17 38939.88
03/31/93 42619.51 39761.51
04/30/93 40579.20 38799.28
05/31/93 40594.59 39839.10
06/30/93 42110.06 39954.64
07/31/93 43240.89 39794.82
08/31/93 44587.12 41303.04
09/30/93 45617.95 40985.01
10/31/93 44394.80 41833.40
11/30/93 42417.77 41435.98
12/31/93 43624.06 41937.36
01/31/94 46585.48 43363.23
02/28/94 44894.49 42183.75
Let's say you invested $10,000 in Fidelity Select Financial Services
Portfolio on February 29, 1984 and paid a 3% sales charge. By February 28,
1994, your investment would have grown to $44,895 - a 348.95% increase.
That compares to $10,000 invested in the S&P 500, which would have
grown to $42,184 over the same period - a 321.84% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1994
% OF FUND'S
INVESTMENTS
Citicorp 10.0
Bank of New York Co., Inc. 9.8
First Chicago Corp. 4.4
Federal Home Loan Mortgage Corporation 3.6
Lend Lease Corp. Ltd. 3.4
Federal National Mortgage Association 3.1
State Street Boston Corp. 3.1
Dean Witter Discover & Co. 2.8
Household International, Inc. 2.8
Argentaria Corp. Bancaria de Esp 2.8
TOP INDUSTRIES AS OF FEBRUARY 28, 1994
Row: 1, Col: 1, Value: 26.8
Row: 1, Col: 2, Value: 5.6
Row: 1, Col: 3, Value: 6.0
Row: 1, Col: 4, Value: 6.7
Row: 1, Col: 5, Value: 23.4
Row: 1, Col: 6, Value: 31.5
National Commercial Banks 31.5%
State Banks Federal Reserve 23.4%
Federal & Federally Sponsored
Credit Agencies 6.7%
Financial Services 6.0%
Property-Casualty &
Reinsurance 5.6%
All Others 26.8%
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. The total return for the year ended February 28, 1994 was 10.85%. That
beat the S&P 500, which returned 8.33% for the same period. Most of the
growth occurred during the first six months of the fund's fiscal year.
Since then, gains and losses, while occasionally sharp, have tended to
cancel each other out.
Q. WHAT WAS THE DIFFERENCE IN THE SECOND HALF OF THE YEAR?
A. Interest rates were obviously a big factor. Banks and thrifts, 61.4% of
the fund, have profited in recent years from the wide spread between the
federal funds rate, or what banks charge each other for overnight loans,
and the prime rate, the benchmark for loans. The wider the spread, the
less banks have to pay for funds and the more they can earn making loans.
The spread stayed wide by historical standards until October, when interest
rates bottomed. Then, the Federal Reserve raised short-term rates in
February and the spread narrowed further. The perception, at least, is that
bank profit margins will suffer as a result. And that puts downward
pressure on their stocks. It was a big reason the fund fell back 3.63% in
the final month of the fiscal year.
Q. ARE YOU SUGGESTING THAT REALITY MAY DIFFER FROM PERCEPTION?
A. It can, depending on the bank and what else it has going for it.
Domestic loan growth is critical, but it's not the only factor. Citicorp,
for example, can point to revenue growth overseas in emerging markets and a
strong commitment to cutting costs at home. It was up nearly 20% in January
alone, before sliding back somewhat in February. Bank of New York, on the
other hand, has found ways to increase its fee income from securities
processing and trust-related services. It also has a growing low-price
credit card business. Together, these two stocks accounted for almost
one-fifth of the fund's total investments at the end of February.
Q. SIX MONTHS AGO, THE FUND WAS MOVING INCREASINGLY INTO FOREIGN STOCKS. IS
THAT TREND STILL EVIDENT?
A. No, foreign stocks were a specialty of the previous fund manager. Since
I took over in November, I've been slowly weeding out some of the
unfamiliar foreign names and replacing them with stocks I follow more
closely: regional banks like State Street Boston, Signet and Crestar
Financial; and a handful of smaller thrifts like Collective BanCorp,
Astoria Financial and Lakeview Savings Bank. The savings and loans have
been cheaper on the whole than banks, and they keep getting taken over. You
may as well be where lightning strikes.
Q. WHY DOES THE FUND HAVE SUCH A LARGE STAKE IN MORTGAGE AGENCY STOCKS?
A. Both the Federal Home Loan Mortgage Corporation and the Federal National
Mortgage Association have been steady double-digit growers, and yet they
looked cheap compared to most other financial stocks. Moreover, as mortgage
refinancings subside, they won't have to worry so much about losing fees
derived from servicing existing mortgages. That makes them potentially more
attractive, not less, as long as interest rates continue rising only
gradually in the months ahead.
Q. YOU'VE BEEN AVOIDING INSURANCE STOCKS LATELY. WHY?
A. Insurance companies, particularly the property and casualty ones, are
loaded with capital. That's despite recent disasters like Hurricane Andrew
and the Los Angeles earthquake. Whenever there's too much capital chasing
too few deals, pricing suffers, and that's pretty much the story throughout
the industry. Until pricing improves - and I see no evidence of that
happening soon - I'll continue to deemphasize insurance stocks.
Q. WHAT'S AHEAD FOR THE FUND?
A. I'm guardedly optimistic, despite the upward trend in interest rates.
Most financial institutions are in better shape today than they've been for
some time, with ample capital reserves, fewer bad loans, and better control
over costs. And since many of the stocks were jolted by the uptick in
rates, they look cheap again by historical standards. The question is, can
they deliver projected earnings? That will depend in large part on loan
growth, which probably needs to be in the double-digit range to offset the
effect of narrower spreads.
FUND FACTS
START DATE: December 10, 1981
SIZE: as of February 28, 1994, over $116 million
MANAGER: Stephen Binder, since May 1990;
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 FEBRUARY 28, 1994
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 99.9%
SHARES VALUE (NOTE 1)
BANKS - 55.5%
INTERNATIONAL BANKS - 0.6%
Bank of Ireland U.S. Holdings, Inc. 170,800 $ 680,140 06278793
NATIONAL COMMERCIAL BANKS - 31.5%
Citicorp (a) 279,300 11,590,950 17303410
First Chicago Corp. 105,003 5,132,022 31945510
First Interstate Bancorp 48,000 3,210,000 32054810
Grupo Financiero Bancomer SA de CV
sponsored ADR, Series C (b) 9,000 321,750 40048610
Huntington Bancshares, Inc. 90,000 2,036,250 44615010
Imperial Bancorp (a) 51,100 753,725 45255610
KeyCorp. 36,900 1,402,200 49326310
Mellon Bank Corp. 19,456 1,079,808 58550910
Mercantile Bancorporation, Inc. 15,200 708,700 58734210
Midlantic Corp. (a) 84,500 2,344,875 59780E10
NationsBank Corp. 28,300 1,383,162 63858510
Norwest Corp. 20,000 470,000 66938010
Silicon Valley Bancshares (a) 49,600 465,000 82706410
Svenska Handelsbanken 90,000 1,422,408 86959991
West One Bancorp 64,700 1,722,638 95482810
Zions Bancorporation 64,400 2,479,400 98970110
36,522,888
STATE BANKS FEDERAL RESERVE - 23.4%
Bank of New York Co., Inc. 209,067 11,368,018 06405710
Bank of New York Co., Inc. (warrants) (a) 75,000 703,125 06405711
Chemical Banking Corp. 50,000 1,862,500 16372210
Compass Bancshares, Inc. 69,500 1,633,250 20449H10
Crestar Financial Corp. 60,437 2,644,119 22609110
First Empire State Corp. 8,000 1,086,000 32007610
Pacific Western Bancshares, Inc. (a) 103,200 980,400 69507210
Signet Banking Corp. (a) 84,015 3,066,547 82668110
State Street Boston Corp. 96,100 3,579,725 85747310
TR Financial Corp. (a) 24,700 299,488 87263010
27,223,172
TOTAL BANKS 64,426,200
CREDIT & OTHER FINANCE - 9.3%
FINANCIAL SERVICES - 5.9%
Argentaria Corp. Bancaria de Esp 70,200 3,251,634 21991392
Corporacion Bancaria de Espana SA
sponsored ADR 4,000 93,000 21991310
Dean Witter Discover & Co. 89,300 3,214,800 24240V10
GFC Financial Corp. 10,200 298,350 36160910
6,857,784
PERSONAL CREDIT INSTITUTIONS - 3.4%
Beneficial Corp. 17,800 671,950 08172110
Household International, Inc. 94,897 3,285,809 44181510
3,957,759
TOTAL CREDIT & OTHER FINANCE 10,815,543
FEDERAL SPONSORED CREDIT - 6.7%
FEDERAL & FEDERALLY SPONSORED CREDIT AGENCIES - 6.7%
Federal Home Loan Mortgage
Corporation 75,600 4,214,700 31340030
Federal National Mortgage Association 43,500 3,615,937 31358610
7,830,637
SHARES VALUE (NOTE 1)
INSURANCE - 13.0%
INSURANCE BROKERS & SERVICES - 0.7%
Heath (CE) International Holdings 146,400 $ 852,711 42299892
LIFE INSURANCE - 4.0%
Capital Holding Corp. 56,100 1,935,450 14018610
UNUM Corp. 50,000 2,687,500 90319210
4,622,950
MULTI-LINE INSURANCE - 2.7%
FAI Insurance Ltd. Ord. (a) 3,664,900 3,138,547 30239330
PROPERTY-CASUALTY & REINSURANCE - 5.6%
Allstate Corp. 70,000 1,820,000 02000210
Skandia International Holding Co.
AB ADR 100,000 2,169,986 83055510
Travelers, Inc. (The) 35,733 1,331,054 89419010
USF&G Corp. 60,300 859,275 90329010
Zenith National Insurance Corp. 12,600 289,800 98939010
6,470,115
TOTAL INSURANCE 15,084,323
REAL ESTATE INVESTMENT TRUSTS - 5.1%
Developers Diversified Realty 65,000 1,974,375 25159110
Lend Lease Corp. Ltd. 319,300 3,974,027 52599292
5,948,402
SAVINGS & LOANS - 5.9%
SAVINGS BANKS & SAVINGS & LOANS - 3.5%
Astoria Financial Corp. (a) 15,000 442,500 04626510
Bay View Capital, Inc. 5,600 116,200 07262L10
Collective Bancorp, Inc. 26,000 484,250 19390110
Golden West Financial Corp. 60,000 2,482,500 38131710
Standard Federal Bank 19,300 540,400 85338910
4,065,850
SAVINGS BANKS, FEDERAL CHARTER - 1.9%
Ahmanson (H.F.) & Co. 110,600 1,949,325 00867710
Haven Bancorp, Inc. (a) 17,600 211,200 41935210
2,160,525
SAVINGS BANKS, NO FEDERAL CHARTER - 0.5%
Bankatlantic Federal Savings Bank 21,700 292,950 06590310
Lakeview Savings Bank 24,300 315,900 51234610
608,850
TOTAL SAVINGS & LOANS 6,835,225
SECURITIES INDUSTRY - 4.4%
INVESTMENT MANAGERS - 1.4%
Invesco Mim PLC (a) 320,000 1,003,245 46199C92
Mackenzie Financial Corporation 70,000 583,549 55453110
1,586,794
SECURITY & COMMODITY BROKERS - 1.8%
Midland Walwyn Inc. (a) 37,200 379,029 59780110
Salomon, Inc. 35,400 1,761,150 79549B10
2,140,179
SECURITY BROKERS & DEALERS - 1.2%
Paine Webber Group, Inc. 52,500 1,404,375 69562910
TOTAL SECURITIES INDUSTRY 5,131,348
TOTAL COMMON STOCKS
(Cost $104,089,400) 116,071,678
CONVERTIBLE BONDS - 0.1%
PRINCIPAL
AMOUNT
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 $ 118,500 526025AA
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $104,189,400) $ 116,190,178
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 $440,250 or 0.4% of net
assets.
OTHER INFORMATION
CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective March 1,
1993, the fund adopted Statement of Position 93-2: Determination,
Disclosure, and Financial Statement Presentation of Income, Capital Gain,
and Return of Capital Distributions by Investment Companies. As a result,
the fund changed the classification of distributions to shareholders to
better disclose the differences between financial statement amounts and
distributions determined in accordance with income tax regulations.
Accordingly, amounts as of February 28, 1993 have been reclassified to
reflect an increase in paid in capital of $74,143,155, a decrease in
undistributed net investment income of $7,125,591 and a decrease in
accumulated net realized gain on investments of $67,017,564.
Purchases and sales of securities, other than short-term securities,
aggregated $147,511,233 and $246,203,193, respectively.
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 $67,939 for the period
(see Note 4 of Notes to Financial Statements).
The maximum loan and average daily loan balances during the periods for
which loans were outstanding amounted to $10,317,000 and $3,288,183,
respectively. The weighted average interest rate paid was 3.7% (see Note 7
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 83.3%
Australia 6.4
Sweden 3.1
Spain 2.9
United Kingdom 1.6
France 1.0
Others (individually less than 1%) 1.7
TOTAL 100.0%
INCOME TAX INFORMATION
At February 28, 1994, the aggregate cost of investment securities for
income tax purposes was $104,190,008. Net unrealized appreciation
aggregated $12,000,170, of which $14,401,670 related to appreciated
investment securities and $2,401,500 related to depreciated investment
securities.
The fund hereby designates $14,691,000 as a capital gain dividend for the
purpose of the dividend paid deduction.
FINANCIAL SERVICES PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
FEBRUARY 28, 1994
ASSETS
Investment in securities, at value (cost $104,189,400) (Notes 1 and 2) - See accompanying schedule $ 116,190,178
Cash 980
Receivable for investments sold 4,273,638
Receivable for fund shares sold 320,407
Dividends receivable 176,910
Interest receivable 1,174
Redemption fees receivable (Note 1) 448
Other receivables 12,264
TOTAL ASSETS 120,975,999
LIABILITIES
Payable for investments purchased $ 71,036
Payable for fund shares redeemed 1,942,107
Accrued management fee 64,751
Notes payable 2,561,000
Other payables and accrued expenses 141,733
TOTAL LIABILITIES 4,780,627
NET ASSETS $ 116,195,372
Net Assets consist of (Note 1):
Paid in capital $ 88,744,872
Undistributed net investment income 450,603
Accumulated undistributed net realized gain (loss) on investments 14,999,119
Net unrealized appreciation (depreciation) on investment securities 12,000,778
NET ASSETS, for 2,267,572 shares outstanding $ 116,195,372
NET ASSET VALUE and redemption price per share ($116,195,372 (divided by) 2,267,572 shares) $51.24
Maximum offering price per share (100/97 of $51.24) $52.82
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED FEBRUARY 28, 1994
INVESTMENT INCOME $ 3,338,481
Dividends
Interest (including security lending fees of $2,973) (Note 6) 308,628
TOTAL INCOME 3,647,109
EXPENSES
Management fee (Note 4) $ 1,053,341
Transfer agent (Note 4) 1,550,290
Fees
Redemption fees (Note 1) (187,963
)
Accounting and security lending fees (Note 4) 169,723
Non-interested trustees' compensation 1,267
Custodian fees and expenses 43,967
Registration fees 64,199
Audit 20,240
Legal 1,749
Interest (Notes 5 and 7) 23,539
Reports to shareholders 26,518
Miscellaneous 2,379
Total expenses before reductions 2,769,249
Expense reductions (Note 8) (21,297 2,747,952
)
NET INVESTMENT INCOME 899,157
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 1) 30,258,224
Net realized gain (loss) on investment securities
Change in net unrealized appreciation (depreciation) on investment securities (19,675,121
)
NET GAIN (LOSS) 10,583,103
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 11,482,260
OTHER INFORMATION $1,313,086
Sales charges paid to FDC
(Note 4)
Deferred sales charges withheld $50,399
by FDC (Note 4)
Exchange fees withheld by FSC $157,823
(Note 4)
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED TEN MONTHS
FEBRUARY 28, ENDED
1994 FEBRUARY 28,
1993
Operations $ 899,157 $ 856,271
Net investment income
Net realized gain (loss) on investments 30,258,224 13,054,305
Change in net unrealized appreciation (depreciation) on investments (19,675,121 21,774,498
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 11,482,260 35,685,074
Distributions to shareholders (452,372 (1,128,586
From net investment income ) )
From net realized gain (18,241,269 (7,501,140
) )
TOTAL DISTRIBUTIONS (18,693,641 (8,629,726
) )
Share transactions 237,223,869 251,884,404
Net proceeds from sales of shares
Reinvestment of distributions 18,154,544 8,508,770
Cost of shares redeemed (347,083,133 (164,884,135
) )
Paid in capital portion of redemption fees (Note 1) 499,434 347,673
Net increase (decrease) in net assets resulting from share transactions (91,205,286 95,856,712
)
TOTAL INCREASE (DECREASE) IN NET ASSETS (98,416,667 122,912,060
)
NET ASSETS
Beginning of period 214,612,039 91,699,979
End of period (including undistributed net investment income of $450,603 and $7,125,591,
respectively) $ 116,195,372 $ 214,612,039
OTHER INFORMATION
Shares
Sold 4,310,339 5,234,307
Issued in reinvestment of distributions 361,878 186,274
Redeemed (6,431,527 (3,555,617
) )
Net increase (decrease) (1,759,310) 1,864,964
</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>
YEAR ENDED TEN MONTHS YEARS ENDED APRIL 30,
FEBRUARY 28, ENDED
FEBRUARY 28,
SELECTED PER-SHARE DATAC 1994 1993 1992 1991 1990
Net asset value, beginning of period $ 53.29 $ 42.42 $ 30.55 $ 28.28 $ 30.64
Income from Investment Operations
Net investment income .29 .33 .54 .58 .66
Net realized and unrealized gain (loss) on investments 5.02 14.30 11.35 1.67 (2.53)
Total from investment operations 5.31 14.63 11.89 2.25 (1.87)
Less Distributions
From net investment income (.20) (.51) (.35) (.52) (.33)
From net realized gain (7.32) (3.38) - - (.19)
Total distributions (7.52) (3.89) (.35) (.52) (.52)
Redemption fees added to paid in capital .16 .13 .33 .54 .03
Net asset value, end of period $ 51.24 $ 53.29 $ 42.42 $ 30.55 $ 28.28
TOTAL RETURND,E 10.85% 36.46% 40.31% 10.51% (6.20)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 116,195 $ 214,612 $ 91,700 $ 35,962 $ 21,087
Ratio of expenses to average net assetsB 1.63% 1.54%A 1.85% 2.49% 2.22%
Ratio of expenses to average net assets before expense 1.64% 1.54%A 1.85% 2.49% 2.22%
reductionsB
Ratio of net investment income to average net assets .53% .86%A 1.49% 2.22% 2.03%
Portfolio turnover rate 93% 100%A 164% 237% 308%
</TABLE>
1 ANNUALIZED
2 SEE NOTE 8 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.
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 1 PAST 5 LIFE OF
FEBRUARY 28, 1994 YEAR YEARS FUND
HOME FINANCE 19.61% 183.94% 341.82%
HOME FINANCE
(INCL. 3% SALES CHARGE) 16.02% 175.43% 328.57%
S&P 500 8.33% 89.60% 191.37%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, 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
FEBRUARY 28, 1994 YEAR YEARS FUND
HOME FINANCE 19.61% 23.21% 19.83%
HOME FINANCE
(INCL. 3% SALES CHARGE) 16.02% 22.46% 19.39%
S&P 500 8.33% 13.65% 13.91%
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
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 9347.08 12592.97
01/31/88 10066.09 13123.13
02/29/88 10056.24 13734.67
03/31/88 9819.85 13310.27
04/30/88 9750.91 13458.01
05/31/88 10016.84 13575.09
06/30/88 10469.91 14198.19
07/31/88 10519.16 14144.24
08/31/88 10627.50 13663.33
09/30/88 10991.93 14245.39
10/31/88 10942.68 14641.41
11/30/88 10706.30 14432.04
12/31/88 10973.61 14684.60
01/31/89 11807.80 15759.52
02/28/89 11887.25 15367.10
03/31/89 12165.32 15725.16
04/30/89 12562.55 16541.29
05/31/89 12632.07 17211.21
06/30/89 12910.01 17113.11
07/31/89 13994.13 18658.42
08/31/89 14421.81 19024.13
09/30/89 14620.74 18946.13
10/31/89 15098.15 18506.58
11/30/89 15505.94 18884.12
12/31/89 15125.06 19337.33
01/31/90 13841.23 18039.80
02/28/90 14232.40 18272.51
03/31/90 14162.19 18756.73
04/30/90 13670.72 18287.82
05/31/90 14924.46 20070.88
06/30/90 14964.58 19934.40
07/31/90 14743.92 19870.61
08/31/90 13209.35 18074.30
09/30/90 12065.94 17194.08
10/31/90 11584.51 17120.15
11/30/90 13119.08 18226.11
12/31/90 13640.63 18734.62
01/31/91 14372.81 19551.45
02/28/91 15827.15 20949.38
03/31/91 16870.25 21456.35
04/30/91 16779.99 21507.85
05/31/91 17201.24 22436.99
06/30/91 16131.96 21409.37
07/31/91 16730.94 22407.05
08/31/91 16629.42 22938.10
09/30/91 16791.86 22555.03
10/31/91 17299.47 22857.27
11/30/91 17147.19 21936.12
12/31/91 18644.07 24445.61
01/31/92 18623.69 23990.92
02/29/92 19122.91 24302.81
03/31/92 18847.83 23828.90
04/30/92 18368.99 24529.47
05/31/92 18613.51 24649.67
06/30/92 19002.92 24282.39
07/31/92 20079.60 25275.53
08/31/92 19491.31 24757.39
09/30/92 20523.60 25049.52
10/31/92 21400.48 25137.20
11/30/92 22133.07 25994.38
12/31/92 22839.21 26314.11
01/31/93 23794.12 26535.14
02/28/93 24243.49 26896.02
03/31/93 25524.19 27463.53
04/30/93 24916.84 26798.91
05/31/93 24275.06 27517.12
06/30/93 24534.02 27596.92
07/31/93 25389.73 27486.53
08/31/93 26684.55 28528.27
09/30/93 26774.63 28308.61
10/31/93 25997.73 28894.59
11/30/93 24410.17 28620.10
12/31/93 24706.65 28966.40
01/31/94 25039.69 29951.26
02/28/94 23941.89 29136.58
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
February 28, 1994, your investment would have grown to $42,857 - a 328.57%
increase. That compares to $10,000 invested in the S&P 500, which would
have grown to $29,137 over the same period - a 191.37% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1994
% OF FUND'S
INVESTMENTS
Crossland Federal Savings Bank (Brooklyn, NY) 5.5
Citicorp 5.2
FirstFed Michigan Corp. 3.7
North Side Savings Bank (Bronx, NY) 3.4
Coast Savings Financial, Inc. 3.1
Fidelity FSB (Garden City, NY) 2.9
Ahmanson (H.F.) & Co. 2.7
Standard Federal Bank 2.3
Dime Savings Bank of New York, FSB 2.2
Bay View Capital, Inc. 2.2
TOP INDUSTRIES AS OF FEBRUARY 28, 1994
Row: 1, Col: 1, Value: 30.1
Row: 1, Col: 2, Value: 3.4
Row: 1, Col: 3, Value: 4.8
Row: 1, Col: 4, Value: 10.1
Row: 1, Col: 5, Value: 21.9
Row: 1, Col: 6, Value: 29.7
Savings Banks & Savings &
Loans 29.7%
Savings Banks,
Federal Charter 21.9%
National Commercial
Banks 10.1%
Savings Banks,
no Federal Charter 4.8%
State Banks Federal Reserve 3.4%
All Others 30.1%*
* 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 DO?
A. Quite well. For the year ended February 28, 1994, the fund returned
19.61%. That outpaced the S&P 500, which returned 8.33% for the same
period.
Q. WHAT'S THE STORY BEHIND THOSE NUMBERS?
A. Over the past year, it was nearly the best of all possible worlds for
home finance companies. First, there was an industry-wide decline in
problem loans. Second, there was a fairly large and stable interest rate
spread in the difference in the companies' costs of gathering money and the
rates at which they lend. Finally, there was a feeling that takeover
activity in this sector would heat up. As it turned out, there was only
modest activity, but the takeover sentiment was enough to send the stock
prices higher. Those factors translated into the third year of increased
earnings for home finance companies. Plus the fund invested in some of the
top performers in the sector.
Q. WHAT ARE SOME EXAMPLES?
A. I focused the fund on savings and loans - 56.4% of the fund's total
investments at the end of February - that were selling at cheap prices
compared to their worth, but had attractive earnings growth potential. One
strong performer was New York-based Crossland Savings. The company was
attractively priced, its troubled loans continued to decline, and there was
a strong management team in place. A number of special situations also
helped performance. FirstFed Michigan, the fund's third largest investment
at the end of the period, benefited when a large amount of its high-cost
debt matured, and was refinanced at a lower cost.
Q. SOME OF THE FUND'S LARGEST INVESTMENTS WERE BANKS. WHAT WAS ATTRACTIVE
ABOUT THEM?
A. Many banks - which were 13.5% of the fund's investments on February 28 -
benefited from the interest rate spread. Citicorp - the fund's
second-largest investment at the end of the period - was also helped by a
reduction in problem loans. Six months ago, Citicorp's stock price was $33;
by the end of February it had risen to $41.50.
Q. DID ALL OF THE FUND'S INVESTMENTS BENEFIT FROM THESE TRENDS?
A. No - there are always some laggards. In this case, California thrifts
didn't do as well as I'd expected. The turnaround in the state's economy
was slower than I anticipated, and earnings were disappointing. Recently,
I've started to pare back the fund's investments in some of those thrifts.
In addition, the fund may have done better if it had been fully invested.
But when the Federal Reserve raised interest rates in February, I thought
it prudent to keep a higher than usual amount in cash, until the
uncertainty settled out. What's more, it has become more difficult to find
stocks I like at attractive prices.
Q. NOW THAT INTEREST RATES HAVE RISEN, WHAT'S AHEAD FOR HOME FINANCE
COMPANIES?
A. If interest rates continue to rise, banks, savings and loans and thrifts
could have the wind in their faces, rather than at their backs as they have
over the past year. Rising rates will mean that interest spreads will start
to shrink, so companies will have to find other ways to improve earnings.
One way is to cut costs. Another is to increase the amount of loans given.
If the economy improves, demand for homes, cars, boats and other consumer
goods could increase, which could in turn push up loan demand.
Q. SO WHAT'S AHEAD FOR THE FUND?
A. Given that this is a cyclical industry coming off three very strong
years, I think it's more realistic to expect lower returns over the next
several months. Over the long-term - maybe by 1995 - I think prospects are
brighter. I believe that we'll see more savers in the next ten years than
we saw in the previous ten. That means there would be more money flowing
into savings and investments. In turn, that could translate into a good
supply of money to lend and keep the home finance companies' efforts to
increase loans on track.
FUND FACTS
START DATE: December 16, 1985
SIZE: as of February 28, 1994, over $155 million
MANAGER: David Ellison, since December
1985; manager, Fidelity Select Financial
Services Portfolio, 1985-1987; Fidelity Select
Brokerage and Investment Management Porfolio,
1987-
1990; joined Fidelity in 1985
(checkmark)
HOME FINANCE PORTFOLIO
INVESTMENTS FEBRUARY 28, 1994
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 76.2%
SHARES VALUE (NOTE 1)
BANKS - 13.5%
NATIONAL COMMERCIAL BANKS - 10.1%
Banc One Corp. 27,000 $ 918,000 05943810
Bank of Boston Corp. 20,529 479,865 06071610
Citicorp (a) 265,000 10,997,500 17303410
Fidelity FSB (Garden City, NY) (b) 365,100 6,115,425 31633610
Peoples Heritage Financial Group, Inc. (a) 288,825 3,068,766 71114710
21,579,556
STATE BANKS FEDERAL RESERVE - 3.4%
Chemical Banking Corp. 60,000 2,235,000 16372210
Guardian Bancorp (a) 35,000 67,813 40132110
Independent Bank Corp. (MA) (a) 176,200 836,950 45383610
Letchworth Independent Bancshares (a) 20,000 435,000 52725110
Letchworth Independent Bancshares
(warrants) (a) 20,000 60,000 52725111
T R Financial Corp. (a) 290,400 3,521,100 87263010
7,155,863
TOTAL BANKS 28,735,419
COMPUTER SERVICES & SOFTWARE - 0.0%
CAD/CAM/CAE - 0.0%
General Automation, Inc. (a) 5,300 4,306 36903210
CONSTRUCTION - 1.6%
OPERATIVE BUILDERS - 1.6%
Inco Homes (a) 52,500 380,625 45325710
Standard Pacific Corp. 230,000 2,472,500 85375C10
UDC Homes, Inc. 58,800 492,450 90264610
3,345,575
FEDERAL SPONSORED CREDIT - 1.7%
FEDERAL & FEDERALLY SPONSORED CREDIT AGENCIES - 1.7%
Federal Home Loan Mortgage
Corporation 33,300 1,856,475 31340030
Federal National Mortgage Association 20,000 1,662,500 31358610
3,518,975
INSURANCE - 1.0%
INSURANCE BROKERS & SERVICES - 1.0%
Stewart Information Services Corp. 64,500 2,064,000 86037210
REAL ESTATE - 0.7%
SUBDIVIDED REAL ESTATE DEVELOPMENT - 0.7%
Castle & Cooke Homes, Inc. 57,900 788,887 14842610
Hovnanian Enterprises, Inc. Class A (a) 8,600 111,800 44248720
Newhall Land & Farming Co. (CA) 37,500 567,188 65142610
1,467,875
REAL ESTATE INVESTMENT TRUSTS - 0.8%
Banyan Strategic Land Trust (SBI) 35,400 168,150 06683M10
RFS Hotel Investors, Inc. 90,000 1,575,000 74955J10
1,743,150
SAVINGS & LOANS - 56.4%
SAVINGS BANKS & SAVINGS & LOANS - 29.7%
Andover Bancorp, Inc. (Del.) (b) 208,300 3,723,362 03425810
Astoria Financial Corp. (a) 75,000 2,212,500 04626510
Bay View Capital, Inc. 225,400 4,677,050 07262L10
Charter One Financial Corp. 217,600 4,052,800 16090310
Coast Savings Financial, Inc. (a) 444,700 6,559,325 19039M10
Collective Bancorp, Inc. 139,000 2,588,875 19390110
Crestmont Financial Corp. (a) 39,300 795,825 22621710
Eastern Bancorp (b) 131,700 2,173,050 27626910
First Essex Bancorp Inc. 225,000 1,631,250 32010310
FirstFed Financial Corp. (a) 47,500 730,313 33790710
SHARES VALUE (NOTE 1)
FirstFed Michigan Corp. 358,250 $ 7,926,281 33761R10
Golden West Financial Corp. 70,000 2,896,250 38131710
Great Western Financial Corp. 30,474 521,867 39144210
Grove Bank For Savings (Brighton, MA) 33,800 557,700 39948110
Lawrence Savings Bank 35,000 118,125 52034110
Massbank for Savings 26,500 954,000 57615210
Metropolitan Bancorp 66,000 940,500 59175310
NFS Financial Corp. 70,800 1,150,500 62910410
North Side Savings Bank
(Bronx, NY) (a)(b) 374,470 7,208,548 66248810
Pamrapo Bancorp, Inc. (b) 117,900 3,301,200 69773810
Progressive Bancorporation Inc. 9,300 172,050 74331310
SFFed Corp. 6,000 112,500 78413210
Standard Federal Bank 174,600 4,888,800 85338910
TCF Financial Corporation 7,500 240,000 87227510
Webster Financial Corp. (Waterbury, CT) 141,450 2,970,450 94789010
63,103,121
SAVINGS BANKS, FEDERAL CHARTER - 21.9%
Ahmanson (H.F.) & Co. 328,800 5,795,100 00867710
Ameribanc Investors Group (SBI) (a) 1,055,000 1,582,500 02362210
Anchor Bancorp Inc. (a) 274,400 3,361,400 03283710
CenFed Financial Corp. (b) 254,250 4,512,937 15131U10
Coral Gables Fedcorp, Inc. 10,000 181,250 21777510
Crossland Federal Savings Bank
(Brooklyn, NY) (a) 350,000 11,637,500 22764B10
D&N Financial Corp. (a)(b) 355,000 2,706,875 23286410
Dime Savings Bank of New York, FSB (a) 571,640 4,716,030 25432R10
First Palm Beach Bancorp, Inc. (a) 80,000 1,200,000 33589B10
Hamilton Bancorp, Inc. (a) 127,795 2,651,746 40700810
Haven Bancorp, Inc. (a) 175,800 2,109,600 41935210
Main Street Community Bancorp (a) 40,000 505,000 56035010
Metropolitan Financial Corp. 45,000 714,375 59190810
Palfed, Inc. (a) 60,000 420,000 69637010
Peterborough Savings Bank (b) 87,404 874,040 71603K10
Roosevelt Financial Group, Inc. 67,000 3,048,500 77649310
Sunrise Bancorp 23,500 376,000 86768H10
Westerfed Financial Corp. (a) 20,000 265,000 95755010
46,657,853
SAVINGS BANKS, NO FEDERAL CHARTER - 4.8%
Bankatlantic Federal Savings Bank 87,300 1,178,550 06590310
Dime Financial Corp. (a) 162,500 1,096,875 25432H10
Farmers & Mechanics Bank 17,100 205,200 30775910
GP Financial Corp. (a) 77,300 1,555,663 36193510
Great Bay Bancshares, Inc. 40,000 520,000 39013810
Lakeview Savings Bank 78,600 1,021,800 51234610
People Bank (Bridgeport, CT) 158,200 1,759,975 71019810
Somerset Savings Bank 765,000 1,147,500 83506120
Sterling Financial Corp. (a) 125,000 1,687,500 85931910
10,173,063
TOTAL SAVINGS & LOANS 119,934,037
SECURITIES INDUSTRY - 0.5%
INVESTMENT MANAGERS - 0.5%
Hyperion 1999 Term Trust, Inc. 165,000 1,155,000 44891310
TOTAL COMMON STOCKS
(Cost $143,349,525) 161,968,337
REPURCHASE AGREEMENTS - 23.8%
MATURITY
AMOUNT
Investments in repurchase agreements,
(U.S. Treasury obligations), in a joint
trading account, at 3.47% dated
2/28/94 due 3/1/94 $ 50,610,878 $ 50,606,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $193,955,525) $ 212,574,337
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. $ - $ - $ - $ 3,723,362
CenFed Financial Corp. 507,813 36,667 37,888 4,512,937
Central Co-operative Bank of
Somerville (MA) (a) - 357,428 - -
Central Pennsylvania Financial
Corp. 257,050 780,450 53,977 -
Community Bankshares, Inc. (NH) 52,500 306,250 - -
D&N Financial Corp. (a) 1,689,500 1,094,721 - 2,706,875
Dime Financial Corp. (a) 515,000 713,438 - -
Eastern Bancorp, Inc. 511,225 456,403 9,669 2,173,050
Family Bancorp, Inc. (a) - 824,350 - -
Fidelity FSB (Garden City, NY) 1,183,005 - - 6,115,425
Great Bay Bankshares, Inc. 914,063 1,196,976 27,218 -
Grove Bank for Savings,
(Brighton, MA) 207,500 577,500 40,188 -
Lexington Savings Bank (MA) 163,750 619,793 52,290 -
Medford Savings Bank (MA) - 690,625 27,750 -
MidConn Bank 133,250 261,775 - -
North Side Savings Bank
(Bronx, NY) (a) 2,985,755 70,542 - 7,208,548
Norwich Financial Corp. (a) - 430,750 - -
Pamrapo Bancorp, Inc. 435,000 638,951 79,628 3,301,200
Peterborough Savings Bank 431,825 259,767 - 874,040
Quincy Savings Bank (a) - 149,625 - -
Regional Bancorp, Inc. 1,093,475 657,552 - -
Sandwich Co-operative Bank - 96,550 - -
Somerset Savings Bank - 301,875 - -
Village Financial Services Ltd. - 564,800 - -
TOTALS $ 11,080,711 $ 11,086,788 $ 328,608 $ 30,615,437
OTHER INFORMATION
CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective March 1,
1993, the fund adopted Statement of Position 93-2: Determination,
Disclosure, and Financial Statement Presentation of Income, Capital Gain,
and Return of Capital Distributions by Investment Companies. As a result,
the fund changed the classification of distributions to shareholders to
better disclose the differences between financial statement amounts and
distributions determined in accordance with income tax regulations.
Accordingly, amounts as of February 28, 1993 have been reclassified to
reflect an increase in paid in capital of $5,728,746, a decrease in
undistributed net investment income of $154,576 and a decrease in
accumulated net realized gain on investments of $5,574,170.
Purchases and sales of securities, other than short-term securities,
aggregated $184,019,050 and $316,305,013, respectively.
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 $145,280 for the period
(see Note 4 of Notes to Financial Statements).
The maximum loan and average daily loan balances during the periods for
which loans were outstanding amounted to $11,576,000 and $4,157,382,
respectively. The weighted average interest rate paid was 3.7% (see Note 7
of Notes to Financial Statements).
INCOME TAX INFORMATION
At February 28, 1994, the aggregate cost of investment securities for
income tax purposes was $194,101,616. Net unrealized appreciation
aggregated $18,472,721, of which $22,658,062 related to appreciated
investment securities and $4,185,341 related to depreciated investment
securities.
The fund hereby designates $21,775,000 as a capital gain dividend for the
purpose of the dividend paid deduction.
HOME FINANCE PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
FEBRUARY 28, 1994
ASSETS
Investment in securities, at value (including repurchase agreements of $50,606,000) (cost $193,955,525) $ 212,574,337
(Notes 1 and 2) - See accompanying schedule
Receivable for investments sold 11,006,802
Receivable for fund shares sold 970,769
Dividends receivable 242,546
Redemption fees receivable (Note 1) 41,709
Other receivables 131,775
TOTAL ASSETS 224,967,938
LIABILITIES
Payable to custodian bank $ 3,626
Payable for investments purchased 3,160,014
Payable for fund shares redeemed 65,933,038
Accrued management fee 118,969
Other payables and accrued expenses 189,014
TOTAL LIABILITIES 69,404,661
NET ASSETS $ 155,563,277
Net Assets consist of (Note 1):
Paid in capital $ 97,515,705
Undistributed net investment income 213,666
Accumulated undistributed net realized gain (loss) on investments 39,215,094
Net unrealized appreciation (depreciation) on investment securities 18,618,812
NET ASSETS, for 6,214,578 shares outstanding $ 155,563,277
NET ASSET VALUE and redemption price per share ($155,563,277 (divided by) 6,214,578 shares) $25.03
Maximum offering price per share (100/97 of $25.03) $25.80
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED FEBRUARY 28, 1994
INVESTMENT INCOME $ 2,859,680
Dividends (inclulding $328,608 received from affiliated issuers)
Interest 925,720
TOTAL INCOME 3,785,400
EXPENSES
Management fee (Note 4) $ 1,403,951
Transfer agent (Note 4) 2,042,535
Fees
Redemption fees (Note 1) (352,584
)
Accounting fees and expenses 225,185
(Note 4)
Non-interested trustees' compensation 1,687
Custodian fees and expenses 30,577
Registration fees 114,291
Audit 24,911
Legal 2,241
Interest (Note 7) 23,605
Reports to shareholders 26,701
Miscellaneous 6,567
Total expenses before reductions 3,549,667
Expense reductions (Note 8) (10,686 3,538,981
)
NET INVESTMENT INCOME 246,419
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 1) 47,403,270
Net realized gain (loss) on investment securities (including realized gain (loss) of $6,137,787 on sales of
investments in affiliated issuers)
Change in net unrealized appreciation (depreciation) on investment securities (23,478,057
)
NET GAIN (LOSS) 23,925,213
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 24,171,632
OTHER INFORMATION $2,256,099
Sales charges paid to FDC
(Note 4)
Deferred sales charges withheld $27,550
by FDC (Note 4)
Exchange fees withheld by FSC $306,060
(Note 4)
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED TEN MONTHS
FEBRUARY 28, ENDED
1994 FEBRUARY 28,
1993
Operations $ 246,419 $ 702,773
Net investment income
Net realized gain (loss) on investments 47,403,270 7,416,659
Change in net unrealized appreciation (depreciation) on investments (23,478,057 38,750,533
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 24,171,632 46,869,965
Distributions to shareholders (144,027 (66,486
From net investment income ) )
From net realized gain (9,550,960 (1,912,821
) )
TOTAL DISTRIBUTIONS (9,694,987 (1,979,307
) )
Share transactions 480,076,731 662,426,482
Net proceeds from sales of shares
Reinvestment of distributions 9,482,227 1,953,201
Cost of shares redeemed (687,125,356 (422,766,634
) )
Paid in capital portion of redemption fees (Note 1) 750,443 1,494,043
Net increase (decrease) in net assets resulting from share transactions (196,815,955 243,107,092
)
TOTAL INCREASE (DECREASE) IN NET ASSETS (182,339,310 287,997,750
)
NET ASSETS
Beginning of period 337,902,587 49,904,837
End of period (including undistributed net investment income of $213,666 and $790,863, respectively)$ 155,563,277 $ 337,902,587
OTHER INFORMATION
Shares
Sold 19,770,402 34,847,456
Issued in reinvestment of distributions 403,141 103,783
Redeemed (29,193,857 (22,960,723
) )
Net increase (decrease) (9,020,314) 11,990,516
</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>
YEAR ENDED TEN MONTHS YEARS ENDED APRIL 30,
FEBRUARY 28, ENDED
FEBRUARY 28,
SELECTED PER-SHARE DATAC 1994 1993 1992 1991 1990
Net asset value, beginning of period $ 22.18 $ 15.38 $ 10.84 $ 8.98 $ 10.88
Income from Investment Operations
Net investment income (loss) .03 .09 .05 .16 .09
Net realized and unrealized gain (loss) on investments 4.15 6.80 4.40 1.69 (1.47)
Total from investment operations 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 (1.40) (.28) - - (.49)
Total distributions (1.41) (.29) (.14) (.14) (.53)
Redemption fees added to paid in capital .08 .20 .23 .15 .01
Net asset value, end of period $ 25.03 $ 22.18 $ 15.38 $ 10.84 $ 8.98
TOTAL RETURND, E 19.61% 46.43% 43.62% 22.88% (13.04)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 155,563 $ 337,903 $ 49,405 $ 8,782 $ 5,432
Ratio of expenses to average net assetsB 1.58% 1.55%A 2.08% 2.50% 2.53%
Ratio of expenses to average net assets before expense 1.58% 1.55%A 2.08% 2.82% 2.92%
reductionsB
Ratio of net investment income to average net assets .11% .61%A .40% 1.78% .83%
Portfolio turnover rate 95% 61%A 134% 159% 282%
</TABLE>
1 ANNUALIZED
2 SEE NOTE 8 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.
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 1 PAST 5 LIFE OF
FEBRUARY 28, 1994 YEAR YEARS FUND
INSURANCE -1.24% 101.41% 146.82%
INSURANCE
(INCL. 3% SALES CHARGE) -4.21% 95.37% 139.42%
S&P 500 8.33% 89.60% 191.37%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, 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
FEBRUARY 28, 1994 YEAR YEARS FUND
INSURANCE -1.24% 15.03% 11.63%
INSURANCE
(INCL. 3% SALES CHARGE) -4.21% 14.33% 11.22%
S&P 500 8.33% 13.65% 13.91%
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
$29,137
$23,942
'94
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
February 28, 1994, your investment would have grown to $23,942 - a 139.42%
increase. That compares to $10,000 invested in the S&P 500, which would
have grown to $29,137 over the same period - a 191.37% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1994
% OF FUND'S
INVESTMENTS
Aetna Life & Casualty Co. 7.9
General Re Corp. 7.5
St. Paul Companies, Inc. (The) 7.2
Allied Group, Inc. 7.0
Allstate Corp. 6.4
Berkley (W.R.) Corp. 5.9
ACE Ltd. 5.3
CIGNA Corp. 4.3
Gryphon Holdings, Inc. 4.0
Travelers, Inc. (The) 3.7
TOP INDUSTRIES AS OF FEBRUARY 28, 1994
Row: 1, Col: 1, Value: 3.1
Row: 1, Col: 2, Value: 1.4
Row: 1, Col: 3, Value: 4.3
Row: 1, Col: 4, Value: 4.8
Row: 1, Col: 5, Value: 15.0
Row: 1, Col: 6, Value: 71.40000000000001
Property-Casualty &
Reinsurance 71.4%
Multi-Line Insurance 15.0%
Insurance Carriers 4.8%
Life Insurance 4.3%
Holding Company Offices,
NEC 1.4%
All Others 3.1%*
* INCLUDES SHORT-TERM INVESTMENTS
INSURANCE PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Robert Chow,
Portfolio Manager of
Fidelity Select Insurance Portfolio
Q. HOW DID THE FUND DO, BOB?
A. For the year ended February 28, 1994, the fund had a total return of
- -1.24%. That lagged the S&P 500, which returned 8.33% for the same
period.
Q. WHAT ACCOUNTS FOR THE NEGATIVE PERFORMANCE?
A. Insurance stocks had a tough year, and so did the fund. In early 1993,
the group had risen to very high levels. At that time, many investors
assumed that the losses stemming from 1992's Hurricane Andrew would allow
the insurance companies to finally raise premium prices. They also expected
falling interest rates to help the insurance companies' investment pools,
made up primarily of bonds. That's because historically when interest rates
fall, bond prices rise. But by the fall of 1993, there was a realization
that insurance premiums would stay at their current levels. In addition,
interest rates had begun to rise. So insurance stocks started to fall, and
have continued to since.
Q. HOW DID THESE FACTORS AFFECT YOUR STRATEGY?
A. Unfortunately, there was little I could do to protect the fund from the
decline. By late summer, I had anticipated that the insurance group would
eventually fall, so I focused on stocks that hadn't been bid up to
extremely high levels. That was because I felt that once they did fall, the
more reasonably-priced stocks would fall less. But even that strategy
couldn't insulate the fund from a broad-based downdraft in the industry.
Many insurance stocks had fallen to half their summer peak, and the stocks
hit the least were off by about 20%.
Q. WASN'T KEEPING PART OF THE FUND IN CASH AN OPTION?
A. Yes, but not one I was willing to use. While it was tempting not to
invest and just hold some of the fund in cash, in my view that's too big of
a timing risk. Huge losses stemming from a natural disaster might mean that
the insurance industry could finally pass higher premiums on to their
customers. But, obviously, there's no way to predict when that might occur.
Q. WHAT WERE SOME EXAMPLES OF THE STOCKS YOU CHOSE?
A. I mainly focused on property and casualty insurers, since I felt that
stock prices of many life insurers were too high. Aetna - the fund's
largest investment at the end of February - is going through a
restructuring now, which should help earnings in the future. General Re's
stock price is down to historically low levels, and could be helped by an
increase in its European operation. Allied Group, a small midwestern
insurer, was also attractive because its stock was selling at a low price
relative to earnings, and it looked like a good value. I also invested in
St. Paul Companies. Although its main business is medical malpractice, it
has a 74% interest in John Nuveen, a financial services firm. While I still
mostly favor these companies, they all suffered in the second half of the
period.
Q. DO YOU SEE A TURNAROUND FOR THE GROUP?
A. Because they're at such low levels, I expect insurance stocks to do a
little better over the next six months. But over the long term, I'm still
not that optimistic yet. The industry suffers from over-capacity - too many
insurers providing services to too few individuals and businesses. It's
going to be very difficult for insurers over the next couple of years.
Q. WHAT WOULD HAVE TO OCCUR FOR YOU TO BECOME MORE POSITIVE ON INSURANCE
STOCKS?
A. To turn the corner, insurers need to be able to raise premium prices.
But unless we see a huge loss coming from their bond investments, or losses
stemming from payouts on natural disasters, there's probably little room
for insurance premiums to rise. There's such a large capacity of insurers
that even fairly large losses to the industry can't be passed on in the
form of higher premium prices. For instance, the recent Los Angeles
earthquake, which is expected to cost the insurance industry $4 or $5
billion, wasn't a large enough loss to boost premiums. My estimation is
that the industry would have to experience a loss in the $50 billion range
for the group to turn. Until that happens, I'll continue to focus on
finding companies that are selling at low prices relative to earnings,
making them good values.
FUND FACTS
START DATE: December 16, 1985
SIZE: as of February 28, 1994, over $18 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 FEBRUARY 28, 1994
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 97.1%
SHARES VALUE (NOTE 1)
CREDIT & OTHER FINANCE - 1.5%
HOLDING COMPANY OFFICES, NEC - 1.4%
Partner Re Holdings (a) 1,000 $ 20,625 70299522
Sphere Drake Holdings Ltd. 15,000 240,000 85099222
260,625
MORTGAGE BANKERS - 0.1%
Triad Guaranty, Inc. (a) 1,000 16,625 89592510
TOTAL CREDIT & OTHER FINANCE 277,250
INSURANCE - 95.6%
INSURANCE BROKERS & SERVICES - 0.1%
Hilb, Rogal & Hamilton Co. 1,000 11,500 43129410
INSURANCE CARRIERS - 4.8%
AFLAC, Inc. 13,000 385,125 00105510
Blanch (E.W.) Holdings, Inc. 500 8,375 09321010
Capital Guaranty Corp. (a) 15,000 273,750 14018K10
MBIA, Inc. 3,000 181,500 55262C10
MGIC Investment Corp. 1,000 31,000 55284810
879,750
LIFE INSURANCE - 4.3%
American General Corp. 1,000 26,875 02635110
Aon Corp. 1,000 49,875 03738910
Capital Holding Corp. 10,000 345,000 14018610
Torchmark Corp. 1,000 43,000 89102710
UNUM Corp. 5,000 268,750 90319210
USLIFE Corp. 1,000 39,000 91731810
772,500
MULTI-LINE INSURANCE - 15.0%
Aetna Life & Casualty Co. 24,000 1,440,000 00814010
CIGNA Corp. 12,000 786,000 12550910
Lincoln National Corp. 10,000 407,500 53418710
Reliance Group Holdings, Inc.
(warrants) (a) 4,035 8,534 75946411
US Facilities Corp. (a) 10,000 95,000 91182210
2,737,034
PROPERTY-CASUALTY & REINSURANCE - 71.4%
ACE Ltd. 35,000 966,875 00499G92
Allied Group, Inc. 50,000 1,275,000 01922010
Allmerica Property & Casualty
Insurance Co. 20,000 372,500 01975T10
Allstate Corp. 45,000 1,170,000 02000210
Berkley (W.R.) Corp. 30,000 1,072,500 08442310
Capital RE Corp. 1,000 20,000 14043210
Capsure Holdings Corp. (a) 11,000 154,000 14067310
Chubb Corp. (The) 7,000 515,375 17123210
Cincinnati Financial Corporation 1,000 54,500 17206210
Citizens Corp. 1,000 19,000 17453310
Commerce Group, Inc. 15,000 247,500 20064110
Continental Corp. 11,000 277,750 21132710
Exel Ltd. 1,000 43,125 30161610
Fremont General Corp. 1,000 24,375 35728810
General Re Corp. 13,000 1,373,125 37056310
Gryphon Holdings, Inc. (a) 50,000 737,500 40051510
Harleysville Group Inc. 1,000 27,000 41282410
Home State Holdings, Inc. 2,000 35,500 43736810
Horace Mann Educators Corp. 1,000 23,875 44032710
Loews Corp. 1,000 95,000 54042410
Mercury General Corp. 1,000 28,875 58940010
Mid Ocean Ltd. (a) 10,000 260,000 59599D23
Mutual Assurance, Inc. (a) 9,000 204,750 62823T10
SHARES VALUE (NOTE 1)
NAC Re Corp. 13,100 $ 389,725 62890710
National Re Corp. 1,000 28,625 63734020
Old Republic International Corp. 14,000 332,500 68022310
Orion Capital Corp. 1,000 32,500 68626810
Phoenix Re Corp. 1,000 25,000 71912310
Progressive Corp. (Ohio) 1,000 33,750 74331510
Re Capital Corp. 20,000 285,000 75490410
SAFECO Corp. 5,000 286,875 78642910
Selective Insurance Group, Inc. 10,000 292,500 81630010
St. Paul Companies, Inc. (The) 15,700 1,305,063 79286010
Travelers, Inc. (The) 18,000 670,500 89419010
Trenwick Group, Inc. 8,500 282,625 89529010
USF&G Corp. 1,000 14,250 90329010
20th Century Industries 1,000 26,000 90127220
13,003,038
TOTAL INSURANCE 17,403,822
TOTAL COMMON STOCKS
(Cost $18,068,418) 17,681,072
CONVERTIBLE PREFERRED STOCKS - 0.3%
INSURANCE - 0.3%
LIFE INSURANCE - 0.3%
Conseco, Inc., Series D, $3.25
(Cost $50,005) 1,000 54,500 20846430
REPURCHASE AGREEMENTS - 2.6%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account, at 3.47% dated
2/28/94 due 3/1/94 $ 478,046 478,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $18,596,423) $ 18,213,572
LEGEND
1. Non-income producing
OTHER INFORMATION
CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective March 1,
1993, the fund adopted Statement of Position 93-2: Determination,
Disclosure, and Financial Statement Presentation of Income, Capital Gain,
and Return of Capital Distributions by Investment Companies. As a result,
the fund changed the classification of distributions to shareholders to
better disclose the differences between financial statement amounts and
distributions determined in accordance with income tax regulations.
Accordingly, amounts as of February 28, 1993 have been restated to reflect
a decrease in paid in capital of $136,123, a decrease in accumulated net
investment loss of $31,925 and an increase in accumulated net realized gain
on investments of $104,198.
Purchases and sales of securities, other than short-term securities,
aggregated $20,804,072 and $28,064,387, respectively.
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 $18,400 for the period
(see Note 4 of Notes to Financial Statements).
The maximum loan and average daily loan balances during the periods for
which loans were outstanding amounted to $1,493,000 and $1,149,600,
respectively. The weighted average interest rate paid was 3.8% (see Note 7
of Notes to Financial Statements).
INCOME TAX INFORMATION
At February 28, 1994, the aggregate cost of investment securities for
income tax purposes was $18,597,622. Net unrealized depreciation aggregated
$384,050, of which $692,636 related to appreciated investment securities
and $1,076,686 related to depreciated investment securities.
The fund hereby designates $451,000 as a capital gain dividend for the
purpose of the dividend paid deduction.
On October 26, 1990, the fund acquired substantially all of the assets of
Life Insurance Portfolio in a tax-free exchange for shares of Insurance
Portfolio; Life Insurance Portfolio has a capital loss carryover of
approximately $101,000 is currently 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>
FEBRUARY 28, 1994
ASSETS
Investment in securities, at value (including repurchase agreements of $478,000) (cost $18,596,423) (Notes $ 18,213,572
1 and 2) - See accompanying schedule
Cash 17
Receivable for fund shares sold 358,257
Dividends receivable 13,258
Redemption fees receivable (Note 1) 67
Other receivables 2,749
TOTAL ASSETS 18,587,920
LIABILITIES
Payable for fund shares redeemed $ 137,029
Accrued management fee 9,579
Other payables and accrued expenses 22,585
TOTAL LIABILITIES 169,193
NET ASSETS $ 18,418,727
Net Assets consist of (Note 1):
Paid in capital $ 17,906,677
Accumulated undistributed net realized gain (loss) on investments 894,901
Net unrealized appreciation (depreciation) on investment securities (382,851
)
NET ASSETS, for 949,145 shares outstanding $ 18,418,727
NET ASSET VALUE and redemption price per share ($18,418,727 (divided by) 949,145 shares) $19.41
Maximum offering price per share (100/97 of $19.41) $20.01
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED FEBRUARY 28, 1994
INVESTMENT INCOME $ 361,462
Dividends
Interest 64,820
TOTAL INCOME 426,282
EXPENSES
Management fee (Note 4) $ 140,010
Transfer agent (Note 4) 231,450
Fees
Redemption fees (Note 1) (27,638
)
Accounting fees and expenses 45,505
(Note 4)
Non-interested trustees' compensation 170
Custodian fees and expenses 12,842
Registration fees 20,817
Audit 6,005
Legal 239
Interest (Note 7) 1,209
Reports to shareholders 2,563
Total expenses before reductions 433,172
Expense reductions (Note 8) (1,985 431,187
)
NET INVESTMENT INCOME (LOSS) (4,905
)
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 1) 2,620,140
Net realized gain (loss) on investment securities
Change in net unrealized appreciation (depreciation) on investment securities (2,713,783
)
NET GAIN (LOSS) (93,643
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ (98,548
)
OTHER INFORMATION $228,651
Sales charges paid to FDC
(Note 4)
Deferred sales charges withheld $1,677
by FDC (Note 4)
Exchange fees withheld by FSC $22,440
(Note 4)
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED TEN MONTHS
FEBRUARY 28, ENDED
1994 FEBRUARY 28,
1993
Operations $ (4,905 $ (26,582
Net investment income (loss) ) )
Net realized gain (loss) on investments 2,620,140 629,240
Change in net unrealized appreciation (depreciation) on investments (2,713,783 2,149,155
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (98,548 2,751,813
)
Distributions to shareholders (8,586 (4,247
From net investment income ) )
From net realized gain (1,719,115 (475,698
) )
TOTAL DISTRIBUTIONS (1,727,701 (479,945
) )
Share transactions 31,795,113 62,793,619
Net proceeds from sales of shares
Reinvestment of distributions 1,707,519 471,898
Cost of shares redeemed (39,665,244 (41,876,384
) )
Paid in capital portion of redemption fees (Note 1) 40,196 133,144
Net increase (decrease) in net assets resulting from share transactions (6,122,416 21,522,277
)
TOTAL INCREASE (DECREASE) IN NET ASSETS (7,948,665 23,794,145
)
NET ASSETS
Beginning of period 26,367,392 2,573,247
End of period (including accumulated net investment loss of $0 and $31,925, respectively) $ 18,418,727 $ 26,367,392
OTHER INFORMATION
Shares
Sold 1,431,358 3,176,231
Issued in reinvestment of distributions 84,550 25,719
Redeemed (1,788,708 (2,122,731
) )
Net increase (decrease) (272,800) 1,079,219
</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>
YEAR ENDED TEN MONTHS YEARS ENDED APRIL 30,
FEBRUARY 28, ENDED
FEBRUARY 28,
SELECTED PER-SHARE DATAC 1994 1993 1992 1991 1990
Net asset value, beginning of period $ 21.58 $ 18.03 $ 16.73 $ 13.63 $ 12.65
Income from Investment Operations
Net investment income (loss) - (.04) .04 .23 .17
Net realized and unrealized gain (loss) on investments (.24) 5.12 1.48 2.83 .93
Total from investment operations (.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 .04 .21 .04 .04 .03
Net asset value, end of period $ 19.41 $ 21.58 $ 18.03 $ 16.73 $ 13.63
TOTAL RETURND, E (1.24)% 31.98% 9.47% 22.74% 8.82%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 18,419 $ 26,367 $ 2,573 $ 2,176 $ 2,240
Ratio of expenses to average net assetsB 1.93% 2.49%A 2.47% 2.49% 2.50%
Ratio of expenses to average net assets before expense 1.93% 2.52%A 2.71% 2.73% 2.97%
reductionsB
Ratio of net investment income (loss) to average net assets(.02)% (.26)% .22% 1.58% 1.15%
A
Portfolio turnover rate 101% 81%A 112% 98% 158%
</TABLE>
1 ANNUALIZED
2 SEE NOTE 8 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.
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 1 PAST 5 LIFE OF
FEBRUARY 28, 1994 YEAR YEARS FUND
REGIONAL BANKS 6.46% 162.10% 194.44%
REGIONAL BANKS
(INCL. 3% SALES CHARGE) 3.27% 154.23% 185.61%
S&P 500 8.33% 89.60% 140.42%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, 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
FEBRUARY 28, 1994 YEAR YEARS FUND
REGIONAL BANKS 6.46% 21.25% 15.11%
REGIONAL BANKS
(INCL. 3% SALES CHARGE) 3.27% 20.52% 14.65%
S&P 500 8.33% 13.65% 12.11%
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 Regional Banks (507) S&P 500
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 24041.62
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
February 28, 1994, your investment would have grown to $28,561 - a 185.61%
increase. That compares to $10,000 invested in the S&P 500, which would
have grown to $24,042 over the same period - a 140.42% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1994
% OF FUND'S
INVESTMENTS
Citicorp 10.2
Bank of New York Co., Inc. 8.1
Signet Banking Corp. 6.9
Bank of Boston Corp. 6.3
NationsBank Corp. 4.7
Banc One Corp. 4.6
First Chicago Corp. 3.7
State Street Boston Corp. 3.7
Boatmen's Bancshares, Inc. 3.7
Crestar Financial Corp. 3.6
TOP REGIONS AS OF FEBRUARY 28, 1994
Row: 1, Col: 1, Value: 17.8
Row: 1, Col: 2, Value: 9.199999999999999
Row: 1, Col: 3, Value: 10.4
Row: 1, Col: 4, Value: 14.6
Row: 1, Col: 5, Value: 22.7
Row: 1, Col: 6, Value: 25.3
Northeast 25.3%
Midwest 22.7%
Mid-Atlantic 14.6%
Multi-Regional 10.4%
West 9.2%
All Others 17.8%
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. The total return for the year ended February 28, 1994 was 6.46%. That
lagged the S&P 500, which returned 8.33% for the same period. Like the
financial services fund, which I also manage, this fund surrendered much of
the modest gain it had achieved during the last six months after long-term
interest rates rose in October and the Federal Reserve raised short-term
interest rates on February 4.
Q. HOW DO RISING INTEREST RATES AFFECT BANK STOCKS?
A. Rising interest rates can be hard on all stocks but bank stocks are
especially vulnerable, at least in the short run. That's because rate
increases often lead to a narrower spread between how much banks pay
depositors for the use of their money and how much they earn when they turn
around and lend that money to others. The spread widened in 1991 and 1992,
and stayed wide in 1993, but lately it has begun to narrow. When that
happens, you look for banks that can offset the effect of a narrower spread
with growth in other areas.
Q. WHAT BANKS HAVE YOU FOUND THAT FIT THAT DESCRIPTION?
A. Both of the fund's two largest investments are good examples: Citicorp,
because of its growth in emerging markets, its success in cutting costs,
and its improving credit quality; and Bank of New York, for its strength in
providing services that generate fees and its expanding credit card
division. But I'd also mention NationsBank, which wasn't among the fund's
top-ten holdings six months ago but had risen to number five by the end of
February. NationsBank has aggressively expanded its loan portfolio and
purchased profitable non-bank businesses, including a corporate finance
operation from US West, a consumer finance operation from Chrysler, and
CRT, a trading company.
Q. WHAT ABOUT THE OTHER NEWCOMERS TO THE TOP OF THE LIST: BANC ONE AND
STATE STREET BOSTON?
A. Banc One has been trading at historic lows compared to the broader
market and to other bank stocks. Yet it remains a strong company capable of
double-digit loan growth, so I took the opportunity to increase the fund's
stake in that company. The start of State Street Boston, a leading
securities custodian and processor, faltered as expenses grew faster than
revenues. I took that as a buying opportunity because I expected to see
improvement in State Street's expense ratio sometime during the next year
or two, leading in turn to accelerated earnings growth.
Q. ANY INTEREST YET IN THE HARD-HIT CALIFORNIA BANKS?
A. Not on my part. I see little hope for revenue growth in California,
which is why the fund has avoided regional giants BankAmerica and Wells
Fargo. I invested in First Interstate, whose stock has risen thanks to
aggressive cost-cutting and takeover speculation; but half of their
business is outside California. The only regional story I've been playing
lately is the mountain states, with West One, First Security and Zions. All
are logical takeover candidates, and have been for some time. Meanwhile,
they've been posting strong loan growth, thanks to their dominance in the
fastest-growing region of the country. That makes them worth owning in
their own right.
Q. WHAT'S YOUR OUTLOOK FOR THE FUND?
A. I'm somewhat optimistic. There's little question that if interest rates
continue to rise sharply, bank stocks will suffer. On the other hand, if
rates rise gradually, that's not necessarily such a bad thing.
Historically, bank stocks have done reasonably well during the early stages
of those periods when interest rates were rising - by making up for rising
rates with accelerating loan growth. After all, part of what causes
interest rates to rise in the first place is an improving economy, which
can mean an increased demand for loans. In any case, banks with expanding
loan portfolios, rising fee income and good cost control are likely to be
less susceptible to interest-rate shocks than their competitors. It's those
banks I'll continue to emphasize.
FUND FACTS
START DATE: June 30, 1986
SIZE: as of February 28, 1994, over $97 million
MANAGER: Stephen Binder, since May 1990;
manager, Fidelity Select Defense and
Aerospace Portfolio, since October 1992;
Fidelity Select Financial Services, since May
1990; joined Fidelity in 1989
(checkmark)
REGIONAL BANKS PORTFOLIO
INVESTMENTS FEBRUARY 28, 1994
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 100.0%
SHARES VALUE (NOTE 1)
BANKS - 98.8%
MID-ATLANTIC - 14.6%
Commerce Bank, Virginia Beach 12,962 $ 353,215 20056M10
Crestar Financial Corp. 78,779 3,446,581 22609110
HUBCO, Inc. 36,220 824,005 40438210
Integra Financial Corp. 24,080 1,086,610 45810410
Mellon Bank Corp. 18,472 1,025,192 58550910
PNC Financial Corp. 18,000 497,250 69347510
Pamrapo Bancorp, Inc. 7,000 196,000 69773810
Signet Banking Corp. 180,692 6,595,258 82668110
14,024,111
MIDWEST - 22.7%
Boatmen's Bancshares, Inc. 124,700 3,553,950 09665010
First Bank System, Inc. 98,201 3,240,633 31927910
First Chicago Corp. 73,500 3,592,313 31945510
Firstier, Inc. 10,000 450,000 33790310
Huntington Bancshares, Inc. 110,709 2,504,791 44615010
Mercantile Bancorporation, Inc. 28,800 1,342,800 58734210
National City Corp. 87,109 2,221,280 63540510
Norwest Corp. 146,496 3,442,656 66938010
Standard Federal Bank 37,400 1,047,200 85338910
Suburban Bancorp Class A 9,500 403,750 86434620
21,799,373
NORTHEAST - 25.3%
Bank of Boston Corp. 260,339 6,085,425 06071610
Bank of New York Co., Inc. 143,112 7,781,715 06405710
Banknorth Group, Inc. (Del.) 26,500 523,375 06646L10
BayBanks, Inc. 27,300 1,508,325 07272310
First Empire State Corp. 4,800 651,600 32007610
Independent Bank Corp. (Mass.) (a) 8,500 40,375 45383610
NBB Bancorp Inc. 2,000 75,000 62872P10
North Fork Bancorporation, Inc. (a) 22,800 310,650 65942410
North Side Savings Bank (Bronx NY) (a) 5,460 105,105 66248810
Shawmut National Corp. 157,000 3,336,250 82048410
State Street Boston Corp. 96,000 3,576,000 85747310
Webster Financial Corp. (Waterbury
Conn.) 17,350 364,350 94789010
24,358,170
SOUTHEAST - 4.2%
BanPonce Corp. 54,801 1,781,164 06670410
Compass Bancshares, Inc. 50,600 1,189,100 20449H10
Deposit Guaranty Corp. 8,600 230,050 24955510
Grenda Sunburst System Corp. 4,500 104,625 39769910
Union Planters Corp. 15,769 378,456 90806810
Whitney Holding Corp. 16,800 378,000 96661210
4,061,395
SOUTHWEST - 1.0%
Liberty Bancorporation, Inc. 34,200 923,400 53017510
WEST - 9.2%
CenFed Financial Corp. 23,950 425,113 15131U10
First Interstate Bancorp 20,000 1,337,500 32054810
First Security Corp. 67,105 1,946,045 33629410
Silicon Valley Bancshares (a) 64,700 606,563 82706410
West One Bancorp 70,300 1,871,738 95482810
Westamerica Bancorp 9,900 268,538 95709010
Zions Bancorporation 62,300 2,398,550 98970110
8,854,047
SHARES VALUE (NOTE 1)
MONEY CENTER - 11.4%
Chemical Banking Corp. 30,000 $ 1,117,500 16372210
Citicorp (a) 236,800 9,827,200 17303410
10,944,700
MULTI-REGIONAL - 10.4%
Banc One Corp. 129,140 4,390,760 05943810
KeyCorp. 28,650 1,088,700 49326310
NationsBank Corp. 92,653 4,528,415 63858510
10,007,875
TOTAL BANKS 94,973,071
CREDIT & OTHER FINANCE - 1.2%
MORTGAGE BANKERS - 0.2%
Green Tree Acceptance, Inc. 5,000 230,000 39350510
PERSONAL CREDIT INSTITUTIONS - 1.0%
Household International, Inc. 28,512 987,228 44181510
TOTAL CREDIT & OTHER FINANCE 1,217,228
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $88,581,397) $ 96,190,299
LEGEND
1. Non-income producing
OTHER INFORMATION
CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective March 1,
1993, the fund adopted Statement of Position 93-2: Determination,
Disclosure, and Financial Statement Presentation of Income, Capital Gain,
and Return of Capital Distributions by Investment Companies. As a result,
the fund changed the classification of distributions to shareholders to
better disclose the differences between financial statement amounts and
distributions determined in accordance with income tax regulations.
Accordingly, amounts as of February 28, 1993 have been restated to reflect
an increase in paid in capital of $5,438,813, a decrease in undistributed
net investment income of $656,067 and a decrease in accumulated net
realized gain on investments of $4,782,746.
Purchases and sales of securities, other than short-term securities,
aggregated $139,268,223 and $308,044,405, respectively.
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 $81,725 for the period
(see Note 4 of Notes to Financial Statements).
The maximum loan and average daily loan balances during the periods for
which loans were outstanding amounted to $13,810,000 and $4,001,063,
respectively. The weighted average interest rate paid was 3.7% (see Note 7
of Notes to Financial Statements).
INCOME TAX INFORMATION
At February 28, 1994, the aggregate cost of investment securities for
income tax purposes was $88,642,202. Net unrealized appreciation aggregated
$7,548,097, of which $9,407,088 related to appreciated investment
securities and $1,858,991 related to depreciated investment securities.
The fund hereby designates $26,837,000 as a capital gain dividend for the
purpose of the dividend paid deduction.
REGIONAL BANKS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
FEBRUARY 28, 1994
ASSETS
Investment in securities, at value (cost $88,581,397) (Notes 1 and 2) - See accompanying schedule $ 96,190,299
Cash 244
Receivable for investments sold 4,731,338
Receivable for fund shares sold 1,858,876
Dividends receivable 240,146
Redemption fees receivable (Note 1) 476
Other receivables 1,677
TOTAL ASSETS 103,023,056
LIABILITIES
Payable for investments purchased $ 1,460,244
Payable for fund shares redeemed 2,456,028
Accrued management fee 52,533
Notes payable 1,523,000
Other payables and accrued expenses 102,386
TOTAL LIABILITIES 5,594,191
NET ASSETS $ 97,428,865
Net Assets consist of (Note 1):
Paid in capital $ 61,625,399
Undistributed net investment income 1,064,151
Accumulated undistributed net realized gain (loss) on investments 27,130,413
Net unrealized appreciation (depreciation) on investment securities 7,608,902
NET ASSETS, for 5,414,943 shares outstanding $ 97,428,865
NET ASSET VALUE and redemption price per share ($97,428,865 (divided by) 5,414,943 shares) $17.99
Maximum offering price per share (100/97 of $17.99) $18.55
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED FEBRUARY 28, 1994
INVESTMENT INCOME $ 4,582,311
Dividends
Interest 418,808
TOTAL INCOME 5,001,119
EXPENSES
Management fee (Note 4) $ 1,251,566
Transfer agent (Note 4) 1,912,770
Fees
Redemption fees (Note 1) (306,165
)
Accounting fees and expenses 200,635
(Note 4)
Non-interested trustees' compensation 1,611
Custodian fees and expenses 20,334
Registration fees 66,492
Audit 30,053
Legal 2,361
Interest (Notes 5 and 7) 47,641
Reports to shareholders 29,633
Miscellaneous 3,530
Total expenses before reductions 3,260,461
Expense reductions (Note 8) (34,824 3,225,637
)
NET INVESTMENT INCOME 1,775,482
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 1) 47,667,500
Net realized gain (loss) on investment securities
Change in net unrealized appreciation (depreciation) on investment securities (45,382,083
)
NET GAIN (LOSS) 2,285,417
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 4,060,899
OTHER INFORMATION $1,693,121
Sales charges paid to FDC
(Note 4)
Deferred sales charges withheld $34,490
by FDC (Note 4)
Exchange fees withheld by FSC $260,190
(Note 4)
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED TEN MONTHS
FEBRUARY 28, ENDED
1994 FEBRUARY 28,
1993
Operations $ 1,775,482 $ 1,703,705
Net investment income
Net realized gain (loss) on investments 47,667,500 15,783,618
Change in net unrealized appreciation (depreciation) on investments (45,382,083 38,108,263
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 4,060,899 55,595,586
Distributions to shareholders (1,037,780 (1,100,824
From net investment income ) )
From net realized gain (23,400,595 (8,039,514
) )
TOTAL DISTRIBUTIONS (24,438,375 (9,140,338
) )
Share transactions 278,064,736 438,631,499
Net proceeds from sales of shares
Reinvestment of distributions 23,731,357 8,952,700
Cost of shares redeemed (500,062,192 (335,884,574
) )
Paid in capital portion of redemption fees (Note 1) 552,081 795,774
Net increase (decrease) in net assets resulting from share transactions (197,714,018 112,495,399
)
TOTAL INCREASE (DECREASE) IN NET ASSETS (218,091,494 158,950,647
)
NET ASSETS
Beginning of period 315,520,359 156,569,712
End of period (including undistributed net investment income of $1,064,151 and $1,465,712,
respectively) $ 97,428,865 $ 315,520,359
OTHER INFORMATION
Shares
Sold 13,266,789 24,186,813
Issued in reinvestment of distributions 1,338,190 489,280
Redeemed (24,299,694 (19,065,368
) )
Net increase (decrease) (9,694,715) 5,610,725
</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>
YEAR ENDED TEN MONTHS YEARS ENDED APRIL 30,
FEBRUARY 28, ENDED
FEBRUARY 28,
SELECTED PER-SHARE DATAC 1994 1993 1992 1991 1990
Net asset value, beginning of period $ 20.88 $ 16.48 $ 11.40 $ 9.77 $ 11.33
Income from Investment Operations
Net investment income .19 .16 .25 .22 .21
Net realized and unrealized gain (loss) on investments .93 5.09 5.37 1.41 (1.03)
Total from investment operations 1.12 5.25 5.62 1.63 (.82)
Less Distributions
From net investment income (.15) (.11) (.15) (.15) (.11)
From net realized gain (3.92) (.81) (.53) - (.65)
Total distributions (4.07) (.92) (.68) (.15) (.76)
Redemption fees added to paid in capital .06 .07 .14 .15 .02
Net asset value, end of period $ 17.99 $ 20.88 $ 16.48 $ 11.40 $ 9.77
TOTAL RETURND, E 6.46% 33.10% 52.34% 18.73% (7.94)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 97,429 $ 315,520 $ 156,570 $ 24,212 $ 5,410
Ratio of expenses to average net assetsB 1.60% 1.49%A 1.77% 2.51% 2.55%
Ratio of expenses to average net assets before expense 1.62% 1.49%A 1.77% 2.94% 2.72%
reductionsB
Ratio of net investment income to average net assets .88% 1.06%A 1.80% 2.34% 1.74%
Portfolio turnover rate 74% 63%A 89% 110% 411%
</TABLE>
1 ANNUALIZED
2 SEE NOTE 8 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.
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 1 PAST 5 LIFE OF
FEBRUARY 28, 1994 YEAR YEARS FUND
AMERICAN GOLD 60.14% 44.88% 129.94%
AMERICAN GOLD
(INCL. 3% SALES CHARGE) 55.34% 40.54% 123.04%
S&P 500 8.33% 89.60% 191.37%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, 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
FEBRUARY 28, 1994 YEAR YEARS FUND
AMERICAN GOLD 60.14% 7.70% 10.67%
AMERICAN GOLD
(INCL. 3% SALES CHARGE) 55.34% 7.04% 10.26%
S&P 500 8.33% 13.65% 13.91%
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 Am Gold S&P500
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 29136.58
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
February 28, 1994, your investment would have grown to $22,304 - a 123.04%
increase. That compares to $10,000 invested in the S&P 500, which would
have grown to $29,137 over the same period - a 191.37% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1994
% OF FUND'S
INVESTMENTS
American Barrick Resources Corp. 11.5
Homestake Mining Co. 5.7
Placer Dome, Inc. 5.7
Cambior, Inc. 5.3
Euro-Nevada Mining Corp. 5.0
Newmont Mining Corp. 4.7
Franco Nevada Mining Corp. 4.1
Santa Fe Pacific Corp. 4.0
Agnico Eagle Mines Ltd. 3.6
Battle Mountain Gold Co. 3.3
TOP INDUSTRIES AS OF FEBRUARY 28, 1994
Gold Ores 63.1%
Gold & Silver
Ores 12.1%
Railroads 4.0%
Metal Ores 1.4%
All Others 19.4%*
Row: 1, Col: 1, Value: 19.4
Row: 1, Col: 2, Value: 1.4
Row: 1, Col: 3, Value: 4.0
Row: 1, Col: 4, Value: 12.1
Row: 1, Col: 5, Value: 63.1
* 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. Very well. The fund's total return for the year ended February 28, 1994
was 60.14%. This was significantly higher than the S&P 500's return of
8.33% for the same period.
Q. WHAT WAS BEHIND THESE STRONG RESULTS?
A. The fund turned in an unusually good performance in the first half of
the year largely because of the upturn in the U.S. and world economies. At
home, the improving U.S. economy and a corresponding higher demand for gold
helped the fund. On the international front, the increased demand for gold
from China and Southeast Asia boosted prices. The sector also benefited
from improving economic conditions in India, which drove up that country's
demand for gold. Another reason the fund performed well was that I chose a
variety of stocks from large and small mining companies that outperformed
their competition. In the second half of the year, the fund lost ground.
The downturn began in August, when commodity and hedge funds began selling
gold bullion, sending prices of gold mining company stocks tumbling between
10% and 20%. This drop happened because stocks of gold mining companies are
typically more volatile than bullion.
Q. YOU SAID YOU INVESTED IN A VARIETY OF LARGE AND SMALL MINING CONCERNS.
WHAT COMPANIES CAUGHT YOUR ATTENTION?
A. Two different types of companies interested me. I looked for established
companies that were growing, like American Barrick, my top stock at the end
of the period. This company, which has exploration prospects in Nevada and
South America, appears to have excellent production potential for the next
three years. Its gold production could exceed two million ounces by 1996.
Last year, Placer Dome, another large company, embarked on a successful
exploration to increase its reserves. Newmont Mining, based in Colorado, is
another established company that has continued to grow. This past year it
found new gold and copper mines in the Philippines. It also has prospects
in Russia and Peru. I think this company could be a top performer going
forward. I also was attracted to young companies that have found a
significant new ore body. A good example was Kinross Gold, which may have
located a large gold vein in Ontario.
Q. DO YOU CONSIDER ANY OTHER FACTORS?
A. Definitely. I look for good management. I've seen too many promising
companies fail because of poor management. Homestake Mining is a great
example of a changed company. It has significantly improved its operating
management and has cut production costs over the past year. This company
could be an excellent performer going forward if the price of gold
increases.
Q. WHERE ARE MOST OF YOUR NEW PURCHASES COMING FROM NOW?
A. South America. There's a tremendous opportunity to find undiscovered ore
bodies in Chili, Peru, Venezuela, and Guinea. These countries have become
more politically stable, and they've introduced advantageous mining laws
for foreign investors. I should note that this gives South America an
advantage over the United States and Canada because both countries have
quite restrictive environmental mining laws. Plus, the U.S. government
wants to impose an 8% royalty on mining revenues in addition to income
taxes.
Q. WHAT CAN SHAREHOLDERS EXPECT GOING FORWARD?
A. I believe the price of gold could be higher a year from now than it is
today. That's because worldwide supply and demand are almost in balance,
and the demand for jewelry should increase. In 1993, the demand for jewelry
fell one or two percentage points because of economic problems in Western
Europe and Japan. If Europe's economy improves, like I think it will,
jewelry sales should grow no matter what happens in Japan. That said, I
would like to remind shareholders that gold stocks are extremely volatile,
and world economic and political conditions can alter
expectations dramatically.
FUND FACTS
START DATE: December 16, 1985
SIZE: as of February 28, 1994, over $347 million
MANAGER: Malcolm MacNaught, since
December 1985; manager, Precious Metals
and Minerals, since July 1981; Advisor Global
Natural Resources, since November 1988;
joined Fidelity in 1968
(checkmark)
AMERICAN GOLD PORTFOLIO
INVESTMENTS FEBRUARY 28, 1994
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 81.8%
SHARES VALUE (NOTE 1)
CANADA - 64.0%
CREDIT & OTHER FINANCE - 0.3%
HOLDING COMPANY OFFICES - 0.3%
Bolivar Goldfields Ltd. 260,000 $ 1,011,486 09760Q10
METALS & MINING - 1.5%
MINING - 0.5%
Cominco Resources International Ltd. (a) 662,900 1,129,804 20044D10
Southernera Resources Ltd. (a) 153,900 712,764 84390110
1,842,568
METAL MINING SERVICES - 0.1%
Tombstone Exploration (Spec Wts.) (a) 200,000 472,471 88990492
MISCELLANEOUS NONMETAL MINERALS - 0.9%
Dai Metal Minerals Ltd. (a) 60,600 2,952,538 25243K10
TOTAL METALS & MINING 5,267,577
OIL & GAS - 0.1%
PETROLEUM REFINERS - 0.1%
Horsham Corp. 22,000 301,593 44090710
PRECIOUS METALS - 62.1%
GOLD ORES - 62.1%
Agnico Eagle Mines Ltd. 1,040,000 12,426,825 00847410
American Barrick Resources Corp. 1,600,000 40,163,023 02451E10
Aurizon Mines Ltd. 259,500 153,835 05155P10
Bema Gold Corp. (a) 330,000 660,245 08135F10
Breakwater Resources Ltd. (a) 474,500 58,016 10690210
Cambior, Inc. 1,173,600 18,480,178 13201L10
Campbell Resources, Inc. (a) 1,320,000 792,293 13442292
Canarc Resources Corp. 520,000 1,656,910 13722D10
Cathedral Gold Corp. (a) 32,400 91,234 14890710
Crystallex International Corp. 84,100 451,815 22942F10
Echo Bay Mines Ltd. 400,000 5,150,056 27875110
Euro-Nevada Mining Corp. 550,000 17,525,009 29870P10
Exall Resource Ltd. 100,000 100,778 30090010
Franco Nevada Mining Corp. 240,000 14,316,413 35186010
Golden Knight Resources, Inc. 386,200 2,790,256 38109010
Golden Star Resources, Ltd. Canada (a) 740,000 11,172,657 38119T10
Hemlo Gold Mines Inc. 780,000 7,297,147 42366F10
Kinross Gold Corp. (a) 565,000 1,779,363 49690210
Lac Minerals Ltd. 979,700 8,348,685 50545810
MILL City Gold 200,000 299,370 59990020
Newmont Mining Corp. 304,000 16,492,000 65163910
Orvana Minerals Corp. (a) 800,000 3,482,770 68759M10
Orvana Minerals Corp. (warrants) (a) 50,000 206,780 68759M92
Pegasus Gold, Inc. 490,000 9,531,308 70556K10
Placer Dome, Inc. 820,000 19,824,009 72590610
Prime Equities, Inc. (a) 55,883 132,512 74155692
Prime Resources Group, Inc. (a) 1,350,000 10,003,705 74157L10
Rayrock Yellowknife Resources, Inc. (a) 200,000 2,667,655 75509N10
Royal Oaks Mines, Inc. (warrant) (a) 100,000 118,562 78051D12
Sudbury Contact Mines, Ltd. 200,000 889,218 86462610
Viceroy Resources Corp. (a) 618,100 4,694,720 92564C10
Wharf Resources Ltd. 550,000 4,992,590 96226010
216,749,937
TOTAL CANADA 223,330,593
UNITED KINGDOM - 0.1%
RETAIL & WHOLESALE, MISCELLANEOUS - 0.1%
RETAIL, GENERAL - 0.1%
Signet Group PLC (a) 850,000 448,355 82999F22
SHARES VALUE (NOTE 1)
UNITED STATES - 17.7%
METALS & MINING - 1.4%
METAL ORES - 1.4%
Freeport-McMoran Copper Co. Class A 200,000 $ 5,050,000 35671D10
PRECIOUS METALS - 12.1%
GOLD & SILVER ORES - 12.1%
Amax Gold, Inc. 612,500 3,981,250 02312010
Battle Mountain Gold Co. 1,000,000 11,375,000 07159310
Canyon Resources Corp. (a) 820,100 3,177,888 13886910
Coeur d'Alene Mines Corp. 181,700 3,565,863 19210810
Homestake Mining Co. 936,400 19,898,500 43761410
MK Gold Co. (a) 50,000 309,375 55305P10
42,307,876
RAILROADS - 4.0%
Santa Fe Pacific Corp. 608,000 13,832,000 80218310
SERVICES - 0.2%
JEWELRY, PRECIOUS METAL - 0.2%
Oroamerica, Inc. 50,000 762,500 68702710
TOTAL UNITED STATES 61,952,376
TOTAL COMMON STOCKS
(Cost $207,092,761) 285,731,324
CONVERTIBLE PREFERRED STOCKS - 1.0%
UNITED STATES - 1.0%
PRECIOUS METALS - 1.0%
GOLD ORES - 1.0%
Newmont Mining Corp. depositary shares
representing 1/2 $1.375 (b)
(Cost $3,355,639) 53,000 3,445,000 65163930
OTHER SECURITIES - 2.6%
PRINCIPAL
AMOUNT
UNITED STATES - 2.6%
INDEXED SECURITIES - 2.6%
Goldman Sachs Group, LP note 3.1273%,
3/28/94 (indexed to silver price)
(Cost $8,400,000) $8,400,000 8,975,400 38142T9Y
BULLION - 3.6%
TROY OUNCES
Gold Bullion (a) (Cost $12,302,849) 32,974 12,566,534 68999410
REPURCHASE AGREEMENTS - 11.0%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account, at 3.47% dated
2/28/94 due 3/1/94 $ 38,213,683 $ 38,210,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $269,361,249) $ 348,928,258
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 $3,445,000 or 1.0% of net
assets.
OTHER INFORMATION
CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective March 1,
1993, the fund adopted Statement of Position 93-2: Determination,
Disclosure, and Financial Statement Presentation of Income, Capital Gain,
and Return of Capital Distributions by Investment Companies. As a result,
the fund changed the classification of distributions to shareholders to
better disclose the differences between financial statement amounts and
distributions determined in accordance with income tax regulations.
Accordingly, amounts as of February 28, 1993 have been reclassified to
reflect an increase in paid in capital of $16,282,118, a decrease in
undistributed net investment loss of $3,782,513 and an increase in
accumulated net realized loss on investments of $20,064,631.
Purchases and sales of securities, other than short-term securities,
aggregated $140,616,874 and $107,607,735, respectively.
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 $59,125 for the period
(see Note 4 of Notes to Financial Statements).
The maximum loan and average daily loan balances during the periods for
which loans were outstanding amounted to $5,482,000 and $2,316,000,
respectively. The weighted average interest rate paid was 3.8% (see Note 7
of Notes to Financial Statements).
INCOME TAX INFORMATION
At February 28, 1994, the aggregate cost of investment securities for
income tax purposes was $271,131,319. Net unrealized appreciation
aggregated $77,796,939, of which $96,373,305 related to appreciated
investment securities and $18,576,366 related to depreciated investment
securities.
At February 28, 1994, the fund has 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>
FEBRUARY 28, 1994
ASSETS
Investment in securities, at value (including repurchase agreements of $38,210,000) (cost $269,361,249)$ 348,928,258
(Notes 1 and 2) - See accompanying schedule
Cash 996
Receivable for investments sold 413,832
Receivable for fund shares sold 10,758,471
Dividends receivable 126,760
Interest receivable 48,890
Redemption fees receivable 527
(Note 1)
Other receivables 16,098
TOTAL ASSETS 360,293,832
LIABILITIES
Payable for investments purchased $ 4,689,430
Payable for fund shares redeemed 7,764,004
Accrued management fee 180,207
Other payables and accrued expenses 253,747
TOTAL LIABILITIES 12,887,388
NET ASSETS $ 347,406,444
Net Assets consist of (Note 1):
Paid in capital $ 308,559,856
Accumulated net investment loss (102,615
)
Accumulated undistributed net realized gain (loss) on investments (40,617,806
)
Net unrealized appreciation (depreciation) on investment securities 79,567,009
NET ASSETS, for 15,332,802 shares outstanding $ 347,406,444
NET ASSET VALUE and redemption price per share ($347,406,444 (divided by) 15,332,802 shares) $22.66
Maximum offering price per share (100/97 of $22.66) $23.36
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED FEBRUARY 28, 1994
INVESTMENT INCOME $ 1,711,227
Dividends
Interest 1,364,517
TOTAL INCOME 3,075,744
EXPENSES
Management fee (Note 4) $ 1,968,132
Transfer agent (Note 4) 2,466,796
Fees
Redemption fees (Note 1) (340,522
)
Accounting fees and expenses (Note 4) 316,381
Non-interested trustees' compensation 2,057
Custodian fees and expenses 57,814
Registration fees 131,911
Audit 48,896
Legal 2,365
Interest (Note 7) 1,457
Reports to shareholders 29,774
Miscellaneous 3,595
Total expenses before reductions 4,688,656
Expense reductions (Note 8) (5,580 4,683,076
)
NET INVESTMENT INCOME (LOSS) (1,607,332
)
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 1) 5,091,181
Net realized gain (loss) on investment securities (including realized gain of $327,518 on sales of investment in
precious metals)
Change in net unrealized appreciation (depreciation) on investment securities 102,337,003
NET GAIN (LOSS) 107,428,184
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 105,820,852
OTHER INFORMATION $3,246,632
Sales charges paid to FDC
(Note 4)
Deferred sales charges withheld $124,747
by FDC (Note 4)
Exchange fees withheld by FSC $282,405
(Note 4)
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED TEN MONTHS
FEBRUARY 28, ENDED
1994 FEBRUARY 28,
1993
INCREASE (DECREASE) IN NET ASSETS
Operations $ (1,607,332 $ (580,346
Net investment income (loss) ) )
Net realized gain (loss) on investments 5,091,181 (3,276,498
)
Change in net unrealized appreciation (depreciation) on investments 102,337,003 26,766,898
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 105,820,852 22,910,054
Share transactions 927,864,527 314,614,089
Net proceeds from sales of shares
Cost of shares redeemed (857,107,198 (301,135,985
) )
Paid in capital portion of redemption fees (Note 1) 2,794,982 1,237,751
Net increase (decrease) in net assets resulting from share transactions 73,552,311 14,715,855
TOTAL INCREASE (DECREASE) IN NET ASSETS 179,373,163 37,625,909
NET ASSETS
Beginning of period 168,033,281 130,407,372
End of period (including accumulated net investment loss of $102,615 and $3,782,513, respectively)$ 347,406,444 $ 168,033,281
OTHER INFORMATION
Shares
Sold 46,202,228 22,966,740
Redeemed (42,741,926 (22,013,035
) )
Net increase (decrease) 3,460,302 953,705
</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>
YEAR ENDED TEN MONTHS YEARS ENDED APRIL 30,
FEBRUARY 28, ENDED
FEBRUARY 28,
SELECTED PER-SHARE DATAC 1994 1993 1992 1991 1990
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 14.15 $ 11.94 $ 13.08 $ 15.22 $ 14.36
Income from Investment Operations
Net investment income (loss) (.11) (.05) (.06) (.04) (.06)
Net realized and unrealized gain (loss) on investments 8.44 2.16 (1.17) (2.23) .85
Total from investment operations 8.33 2.11 (1.23) (2.27) .79
Less Distributions
From net investment income - - - - -
From net realized gain - - - - -
Total distributions - - - - -
Redemption fees added to paid in capital .18 .10 .09 .13 .07
Net asset value, end of period $ 22.66 $ 14.15 $ 11.94 $ 13.08 $ 15.22
TOTAL RETURND,E 60.14% 18.51% (8.72)% (14.06)% 5.99%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 347,406 $ 168,033 $ 130,407 $ 164,137 $ 195,322
Ratio of expenses to average net assetsB 1.49% 1.59% 1.75% 1.75% 1.85%
A
Ratio of expenses to average net assets before expense 1.50% 1.59% 1.75% 1.75% 1.85%
reductionsB A
Ratio of net investment income (loss) to average net assets (.51)% (.44)% (.47)% (.29)% (.38)%
A
Portfolio turnover rate 39% 30% 40% 38% 68%
A
</TABLE>
1 ANNUALIZED
2 SEE NOTE 8 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.
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 1 PAST 5 PAST 10
FEBRUARY 28, 1994 YEAR YEARS YEARS
ENERGY 9.69% 52.65% 127.02%
ENERGY
(INCL. 3% SALES CHARGE) 6.40% 48.07% 120.21%
S&P 500 8.33% 89.60% 321.84%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, 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
FEBRUARY 28, 1994 YEAR YEARS YEARS
ENERGY 9.69% 8.83% 8.54%
ENERGY
(INCL. 3% SALES CHARGE) 6.40% 8.17% 8.21%
S&P 500 8.33% 13.65% 15.48%
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
02/29/84 9700.00 10000.00
03/31/84 9979.90 10173.00
04/30/84 10182.59 10269.64
05/31/84 9680.70 9700.71
06/30/84 9487.02 9911.21
07/31/84 8880.63 9788.31
08/31/84 10259.67 10869.92
09/30/84 10406.38 10872.09
10/31/84 9741.31 10914.50
11/30/84 9623.94 10792.25
12/31/84 9614.16 11077.17
01/31/85 10230.33 11940.08
02/28/85 10807.38 12086.94
03/31/85 11227.93 12095.40
04/30/85 11384.42 12084.52
05/31/85 11227.93 12783.00
06/30/85 10784.62 12983.70
07/31/85 10898.80 12964.22
08/31/85 11293.23 12854.02
09/30/85 10940.32 12451.69
10/31/85 11594.25 13026.96
11/30/85 11781.08 13920.61
12/31/85 11345.13 14594.37
01/31/86 10566.65 14676.10
02/28/86 10327.91 15773.87
03/31/86 10276.01 16654.05
04/30/86 10296.77 16465.86
05/31/86 10774.24 17341.84
06/30/86 10805.38 17634.92
07/31/86 10130.69 16649.13
08/31/86 11469.69 17884.49
09/30/86 11345.13 16405.45
10/31/86 11646.15 17352.04
11/30/86 11884.88 17773.70
12/31/86 11967.92 17320.47
01/31/87 13234.26 19653.53
02/28/87 13493.75 20429.85
03/31/87 14614.77 21020.27
04/30/87 14199.58 20833.19
05/31/87 14697.81 21014.44
06/30/87 15206.42 22075.67
07/31/87 15995.29 23194.90
08/31/87 15901.87 24060.07
09/30/87 15559.34 23533.16
10/31/87 11448.93 18464.12
11/30/87 10971.46 16942.67
12/31/87 11752.53 18232.01
01/31/88 12190.18 18999.58
02/29/88 12627.83 19884.96
03/31/88 13524.48 19270.51
04/30/88 14036.85 19484.42
05/31/88 13524.48 19653.93
06/30/88 13673.92 20556.05
07/31/88 13759.31 20477.93
08/31/88 13236.27 19781.68
09/30/88 13086.83 20624.38
10/31/88 13204.25 21197.74
11/30/88 13236.27 20894.61
12/31/88 13626.13 21260.27
01/31/89 14655.76 22816.52
02/28/89 14425.73 22248.39
03/31/89 15258.20 22766.78
04/30/89 15773.01 23948.37
05/31/89 15959.22 24918.28
06/30/89 16287.82 24776.25
07/31/89 16966.94 27013.54
08/31/89 17339.36 27543.01
09/30/89 17613.20 27430.08
10/31/89 17492.71 26793.70
11/30/89 18149.92 27340.30
12/31/89 19461.58 27996.46
01/31/90 18592.66 26117.90
02/28/90 19171.94 26454.82
03/31/90 19183.08 27155.87
04/30/90 18536.96 26476.98
05/31/90 19662.10 29058.48
06/30/90 19198.70 28860.88
07/31/90 20506.35 28768.53
08/31/90 20874.87 26167.85
09/30/90 20815.43 24893.48
10/31/90 19745.54 24786.44
11/30/90 19531.56 26387.64
12/31/90 18587.30 27123.86
01/31/91 17383.36 28306.46
02/28/91 19004.99 30330.37
03/31/91 18747.00 31064.36
04/30/91 18955.85 31138.92
05/31/91 19066.41 32484.12
06/30/91 18216.99 30996.35
07/31/91 19152.46 32440.78
08/31/91 19521.73 33209.62
09/30/91 19324.78 32655.02
10/31/91 19903.30 33092.60
11/30/91 18426.24 31758.97
12/31/91 18593.84 35392.19
01/31/92 17598.85 34733.90
02/29/92 17623.72 35185.44
03/31/92 17113.79 34499.32
04/30/92 18282.90 35513.60
05/31/92 19153.52 35687.62
06/30/92 18205.73 35155.87
07/31/92 18692.05 36593.75
08/31/92 19028.73 35843.58
09/30/92 19140.96 36266.53
10/31/92 18317.96 36393.47
11/30/92 17893.99 37634.48
12/31/92 18149.73 38097.39
01/31/93 18834.14 38417.40
02/28/93 20076.23 38939.88
03/31/93 21102.86 39761.51
04/30/93 21508.79 38799.28
05/31/93 22155.58 39839.10
06/30/93 22447.26 39954.64
07/31/93 22282.40 39794.82
08/31/93 24045.20 41303.04
09/30/93 23905.70 40985.01
10/31/93 23563.29 41833.40
11/30/93 20709.82 41435.98
12/31/93 21626.22 41937.36
01/31/94 22784.53 43363.23
02/28/94 22021.10 42183.75
Let's say you invested $10,000 in Fidelity Select Energy Portfolio on
February 29, 1984 and paid a 3% sales charge. By February 28, 1994, your
investment would have grown to $22,021 - a 120.21% increase. That compares
to $10,000 invested in the S&P 500, which would have grown to $42,184
over the same period - a 321.84% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1994
% OF FUND'S
INVESTMENTS
British Petroleum PLC ADR 7.5
Chevron Corp. 6.1
Mobil Corp. 5.6
Unocal Corp. 5.3
Exxon Corp. 5.0
Royal Dutch Petroleum Co. 4.8
Shell Transport & Trading PLC 3.7
Amoco Corp. 3.7
Canadian Natural Resources Ltd. 3.4
Apache Corp. 3.3
TOP INDUSTRIES AS OF FEBRUARY 28, 1994
Row: 1, Col: 1, Value: 16.9
Row: 1, Col: 2, Value: 3.5
Row: 1, Col: 3, Value: 3.7
Row: 1, Col: 4, Value: 5.9
Row: 1, Col: 5, Value: 23.9
Row: 1, Col: 6, Value: 46.1
Oil & Gas Exploration 46.1%
Crude Petroleum & Gas 23.9%
Petroleum Refiners 5.9%
Holding Company Offices 3.7%
Oil & Gas Services 3.5%
All Others 16.9%*
* INCLUDES SHORT-TERM INVESTMENTS
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 year ended February 28, 1994, the fund had a total return of
9.69%. That beat the S&P 500, which returned 8.33% for the same period.
Q. WHAT DROVE THE ENERGY SECTOR AND THE FUND?
A. Energy stocks are sensitive to oil and natural gas prices, and so the
sector and the fund have performed relative to the prices of those
commodities. During the first six months of the period, the fund benefited
from investments in natural gas stocks, which rose sharply on tighter
supply and increased demand. During that period, the fund's biggest gains
came from independent U.S. and Canadian gas producers such as Apache Corp.,
and integrated companies with strong natural gas holdings. The fund also
profited from owning stocks in major oil companies, such as British
Petroleum and Chevron, whose share prices were boosted by cost- cutting
programs and restructuring.
Q. WHAT HAPPENED IN THE SECOND HALF OF THE PERIOD?
A. By the Fall, some natural gas stocks had gotten a little ahead of
themselves and their prices became very expensive. In November, OPEC failed
to reach an agreement that would control the supply of oil, so the price of
oil and oil stocks fell. What's more, the price of natural gas, which tends
to move with the price of oil, also fell and that hurt the fund's natural
gas investments. But by mid-December, after the market had digested the
OPEC decision, oil prices crept up and natural gas prices rocketed higher.
I believe that both oil and natural gas prices could continue to rise.
Q. SO DID THAT MEAN A CHANGE IN YOUR STRATEGY?
A. A slight modification. The fund continued to have core holdings in the
natural gas companies I've already mentioned. I also continued to hold
companies like British Petroleum, the fund's largest investment. The
company's earnings are less sensitive to low oil prices than other oil
companies and it should continue to benefit from its cost-cutting programs.
Chevron and Exxon, too, are less sensitive to oil prices and could continue
to benefit from restructuring.
Q. WHAT IS YOUR OUTLOOK FOR OIL?
A. Over the past several years, the price of crude oil has been driven down
by an increase in supply. Last year that heavy supply was driven by
Kuwait's re-entrance into the OPEC production pool, increased exports from
the former Soviet Union, and increased production coming from the North
Sea. If any of those producers cut back, it could help prices. Plus, I
don't think there will be any increase in oil production during 1994. One
exception could be Iraq if the United Nations lifts export sanctions
against that country, but I don't think that's very likely at this point.
From the demand side, a continued global economic recovery could help boost
prices. The U.S. recovery is well under way and oil consumption has been
growing at a healthy 2% annually. In some emerging markets, consumption is
growing at about 4% per year. Economic improvements in Japan and Europe
could further help oil prices.
Q. WHAT'S YOUR OUTLOOK FOR NATURAL GAS PRICES?
A. I believe that the recent harsh winter could help prices. Inventories
have been drawn down to very low levels. During the summer, the inventories
will most likely be built back up, which could help demand for natural gas.
That increased demand should result in higher natural gas prices over the
course of the year.
Q. SO HOW ARE YOU PLANNING TO POSITION THE FUND?
A. For the near term, I'll probably continue the same course. I'm starting
to look closely at energy service companies that could benefit from
increased drilling activity. If drilling activity does start to improve,
I'd probably build up the fund's stake in companies which could benefit
from that trend.
FUND FACTS
START DATE: July 14, 1981
SIZE: as of February 28, 1994, over $145 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 FEBRUARY 28, 1994
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 85.0%
SHARES VALUE (NOTE 1)
CREDIT & OTHER FINANCE - 3.7%
HOLDING COMPANY OFFICES - 3.7%
Shell Transport & Trading PLC 90,700 $ 5,759,450 82270360
ENERGY SERVICES - 4.2%
DRILLING - 0.7%
Dual Drilling Co. (a) 40,000 445,000 26356410
Global Marine, Inc. (a) 160,000 640,000 37935240
1,085,000
OIL & GAS SERVICES - 3.5%
BJ Services Co. (a) 14,400 277,200 05548210
Halliburton Co. 140,000 4,392,500 40621610
Weatherford International, Inc. (a) 16,700 175,350 94707610
Western Co. of North America (a) 40,000 560,000 95804340
5,405,050
TOTAL ENERGY SERVICES 6,490,050
OIL & GAS - 76.7%
CRUDE PETROLEUM & GAS - 23.9%
Anadarko Petroleum Corp. 75,000 3,337,500 03251110
Apache Corp. 205,800 5,145,000 03741110
Basin Exploration, Inc. (a) 80,500 966,000 07010710
Benton Oil & Gas Co. (a) 32,300 178,659 08328810
Blue Dolphin Energy Corp. 100,000 56,250 09539510
British Borneo Petroleum 245,900 814,777 11099D22
Burlington Resources, Inc. 109,600 4,712,800 12201410
Coho Resources, Inc. 50,000 200,000 19248110
DEKALB Energy Corp. Class B (a) 49,000 722,750 24487410
Encal Energy Ltd. (a) 50,000 105,594 29250D10
Excel Energy, Inc. (a) 30,000 119,489 30065410
Gulf Canada Corp. 50,000 170,433 40218L30
Intensity Resources Ltd. (a) 146,100 279,317 45816E10
Inverness Petroleum Ltd. (a) 14,000 103,742 46190810
Louis Dreyfus Natural Gas Corp. (a) 53,300 1,199,250 54601110
Morrison Petroleums Ltd. 125,800 862,282 61847310
Newfield Exploration Co. (a) 120,500 2,635,938 65129010
Noble Affiliates, Inc. 20,000 515,000 65489410
Nuevo Energy Corporation (a) 26,200 550,200 67050910
Pancanadian Petroleum Ltd. 10,000 280,659 69890020
Paramount Resources Ltd. (a) 31,000 459,429 69932010
Parker & Parsley Petroleum Co. 74,800 1,683,000 70101810
Petromet Resources Ltd. Ord. (a) 25,000 138,940 71673110
Pinnacle Resources Ltd. 10,000 150,056 72348R10
Pogo Producing Co. (a) 20,000 370,000 73044810
Renaissance Energy Ltd. (a) 102,908 2,097,051 75966610
Rio Alto Exploration Ltd. 317,500 2,088,042 76689210
Sceptre Resources Ltd. (a) 57,500 591,191 80621470
Tide West Oil Co. 11,700 143,325 88635540
Total SA sponsored ADR 151,300 4,236,400 89151E10
Ulster Petroleums Ltd. (a) 168,900 494,372 90384010
United Meridian Corp. (a) 20,000 310,000 91086510
Vintage Petroleum, Inc. 68,800 1,315,800 92746010
37,033,246
OIL & GAS EXPLORATION - 46.1%
Amerada Hess Corp. 67,400 3,125,675 02355110
Amoco Corp. 110,000 5,747,500 03190510
British Petroleum PLC ADR 178,700 11,637,838 11088940
Canadian Natural Resources Ltd. (a) 385,200 5,280,622 13638510
Chevron Corp. 110,000 9,542,500 16675110
Exxon Corp. 120,000 7,785,000 30229010
Kerr-McGee Corp. 43,600 1,956,550 49238610
Louisiana Land & Exploration Co. 32,500 1,210,625 54626810
Mobil Corp. 110,000 8,648,750 60705910
SHARES VALUE (NOTE 1)
Phillips Petroleum Co. 38,900 $ 1,055,163 71850710
Royal Dutch Petroleum Co. 70,000 7,481,250 78025770
Unocal Corp. 298,400 8,206,000 91528910
71,677,473
OIL FIELD EQUIPMENT - 0.8%
Camco International, Inc. 70,300 1,212,675 13263210
PETROLEUM REFINERS - 5.9%
Ashland Oil, Inc. 40,000 1,640,000 04454010
Diamond Shamrock, Inc. 62,000 1,798,000 25274710
Repsol SA Ord. (a) 80,000 2,619,749 76026T10
Shell Canada Ltd. Class A 50,000 1,426,454 82256710
Tesoro Petroleum Corp. (a) 20,000 200,000 88160910
Tosco Corp. 44,900 1,504,150 89149030
9,188,353
TOTAL OIL & GAS 119,111,747
SERVICES - 0.4%
Pittston Co. Minerals Group 24,600 590,400 72570120
TOTAL COMMON STOCKS
(Cost $125,506,722) 131,951,647
PREFERRED STOCKS - 0.0%
OIL & GAS - 0.0%
CRUDE PETROLEUM & GAS - 0.0%
Gulf Canada Resources Ltd.
Series 1, adj. rate (a) (Cost $27,709) 11,000 32,313 40218L40
REPURCHASE AGREEMENTS - 15.0%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account, at 3.47% dated
2/28/94 due 3/1/94 $23,265,242 23,263,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $148,797,431) $ 155,246,960
LEGEND
1. Non-income producing
OTHER INFORMATION
CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective March 1,
1993, the fund adopted Statement of Position 93-2: Determination,
Disclosure, and Financial Statement Presentation of Income, Capital Gain,
and Return of Capital Distributions by Investment Companies. As a result,
the fund changed the classification of distributions to shareholders to
better disclose the differences between financial statement amounts and
distributions determined in accordance with income tax regulations.
Accordingly, amounts as of February 28, 1993 have been reclassified to
reflect an increase in paid in capital of $30,318,422, a decrease in
undistributed net investment income of $10,003,482 and a decrease in
accumulated net realized gain on investments of $20,314,940.
Purchases and sales of securities, other than short-term securities,
aggregated $175,105,313 and $201,310,162, respectively.
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 $157,374 for the period
(see Note 4 of Notes to Financial Statements).
The maximum loan and average daily loan balances during the periods for
which loans were outstanding amounted to $2,676,000 and $1,258,500,
respectively. The weighted average interest rate paid was 3.7% (see Note 7
of Notes to Financial Statements).
At the period end, the value of securities loaned and the value of
collateral amounted to $8,998,163 and $9,154,200, respectively. (see Note 6
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 67.6%
United Kingdom 12.5
Canada 10.1
Netherlands 5.1
France 2.9
Spain 1.8
TOTAL 100.0%
INCOME TAX INFORMATION
At February 28, 1994, the aggregate cost of investment securities for
income tax purposes was $149,094,169. Net unrealized appreciation
aggregated $6,152,791, of which $10,178,080 related to appreciated
investment securities and $4,025,289 related to depreciated investment
securities.
The fund hereby designates $5,330,000 as a capital gain dividend for the
purpose of the dividend paid deduction.
ENERGY PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
FEBRUARY 28, 1994
ASSETS
Investment in securities, at value (including repurchase agreements of $23,263,000) (cost $148,797,431) $ 155,246,960
(Notes 1 and 2) - See accompanying schedule
Cash 563
Receivable for investments sold 267,764
Receivable for fund shares sold 1,608,317
Dividends receivable 495,727
Redemption fees receivable (Note 1) 1,832
Other receivables 500
TOTAL ASSETS 157,621,663
LIABILITIES
Payable for investments purchased $ 41,000
Payable for fund shares redeemed 2,772,727
Accrued management fee 73,011
Other payables and accrued expenses 90,749
Collateral on securities loaned, at value (Note 6) 9,154,200
TOTAL LIABILITIES 12,131,687
NET ASSETS $ 145,489,976
Net Assets consist of (Note 1):
Paid in capital $ 131,573,923
Undistributed net investment income 354,166
Accumulated undistributed net realized gain (loss) on investments 7,112,358
Net unrealized appreciation (depreciation) on investment securities 6,449,529
NET ASSETS, for 8,694,149 shares outstanding $ 145,489,976
NET ASSET VALUE and redemption price per share ($145,489,976 (divided by) 8,694,149 shares) $16.73
Maximum offering price per share (100/97 of $16.73) $17.25
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED FEBRUARY 28, 1994
INVESTMENT INCOME $ 2,064,040
Dividends
Interest (including security lending fees of $2,387) (Note 6) 495,079
TOTAL INCOME 2,559,119
EXPENSES
Management fee (Note 4) $ 790,258
Transfer agent (Note 4) 1,239,670
Fees
Redemption fees (Note 1) (185,135
)
Accounting and security lending fees (Note 4) 115,301
Non-interested trustees' compensation 868
Custodian fees and expenses 34,778
Registration fees 65,849
Audit 11,834
Legal 4,801
Interest (Note 7) 1,580
Reports to shareholders 19,898
Miscellaneous 1,748
Total expenses before reductions 2,101,450
Expense reductions (Note 8) (10,026 2,091,424
)
NET INVESTMENT INCOME 467,695
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 1) 11,660,936
Net realized gain (loss) on investment securities
Change in net unrealized appreciation (depreciation) on investment securities 35,273
NET GAIN (LOSS) 11,696,209
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 12,163,904
OTHER INFORMATION $961,537
Sales charges paid to FDC
(Note 4)
Deferred sales charges withheld $42,214
by FDC (Note 4)
Exchange fees withheld by FSC $163,388
(Note 4)
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED TEN MONTHS
FEBRUARY 28, ENDED
1994 FEBRUARY 28,
1993
<TABLE>
<CAPTION>
<S> <C> <C>
Operations $ 467,695 $ 1,223,309
Net investment income
Net realized gain (loss) on investments 11,660,936 1,974,355
Change in net unrealized appreciation (depreciation) on investments 35,273 4,409,759
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 12,163,904 7,607,423
Distributions to shareholders (210,175 (1,320,569
From net investment income ) )
From net realized gain (2,444,037 -
)
TOTAL DISTRIBUTIONS (2,654,212 (1,320,569
) )
Share transactions 307,692,300 154,045,187
Net proceeds from sales of shares
Reinvestment of distributions 2,596,445 1,286,868
Cost of shares redeemed (353,996,623 (59,918,201
) )
Paid in capital portion of redemption fees (Note 1) 555,239 98,164
Net increase (decrease) in net assets resulting from share transactions (43,152,639 95,512,018
)
TOTAL INCREASE (DECREASE) IN NET ASSETS (33,642,947 101,798,872
)
NET ASSETS
Beginning of period 179,132,923 77,334,051
End of period (including undistributed net investment income of $354,166 and $10,107,273,
respectively) $ 145,489,976 $ 179,132,923
OTHER INFORMATION
Shares
Sold 17,743,944 10,002,231
Issued in reinvestment of distributions 166,316 90,362
Redeemed (20,523,434 (4,046,459
) )
Net increase (decrease) (2,613,174) 6,046,134
</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>
YEAR ENDED TEN MONTHS YEARS ENDED APRIL 30,
FEBRUARY 28, ENDED
FEBRUARY 28,
SELECTED PER-SHARE DATAC 1994 1993 1992 1991 1990
Net asset value, beginning of period $ 15.84 $ 14.70 $ 15.43 $ 16.64 $ 14.40
Income from Investment Operations
Net investment income .06 .23 .17 .16 .27
Net realized and unrealized gain (loss) on investments 1.35 1.16 (.75) .15 2.23
Total from investment operations 1.41 1.39 (.58) .31 2.50
Less Distributions
From net investment income (.03) (.27) (.16) (.15) (.07)
From net realized gain (.57) - (.02) (1.43) (.22)
Total distributions (.60) (.27) (.18) (1.58) (.29)
Redemption fees added to paid in capital .08 .02 .03 .06 .03
Net asset value, end of period $ 16.73 $ 15.84 $ 14.70 $ 15.43 $ 16.64
TOTAL RETURND, E 9.69% 9.81% (3.55)% 2.26% 17.52%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 145,490 $ 179,133 $ 77,334 $ 92,611 $ 83,912
Ratio of expenses to average net assetsB 1.66% 1.71% 1.78% 1.79% 1.94%
A
Ratio of expenses to average net assets before expense 1.67% 1.71% 1.78% 1.79% 1.94%
reductionsB A
Ratio of net investment income to average net assets .37% 1.88% 1.16% .99% 1.69%
A
Portfolio turnover rate 157% 72% 81% 61% 74%
A
</TABLE>
1 ANNUALIZED
2 SEE NOTE 8 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.
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 1 PAST 5 LIFE OF
FEBRUARY 28, 1994 YEAR YEARS FUND
ENERGY SERVICE 6.36% 45.35% 17.30%
ENERGY SERVICE
(INCL. 3% SALES CHARGE) 3.17% 40.99% 13.78%
S&P 500 8.33% 89.60% 191.37%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, 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
FEBRUARY 28, 1994 YEAR YEARS FUND
ENERGY SERVICE 6.36% 7.77% 1.96%
ENERGY SERVICE
(INCL. 3% SALES CHARGE) 3.17% 7.11% 1.58%
S&P 500 8.33% 13.65% 13.91%
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
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 29136.58
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
February 28, 1994, your investment would have grown to $11,378 - a 13.78%
increase. That compares to $10,000 invested in the S&P 500, which would
have grown to $29,137 over the same period - a 191.37% increase.
INVESTMENT CHANGES
TOP TEN STOCKS AS OF FEBRUARY 28, 1994
% OF FUND'S
INVESTMENTS
Halliburton Co. 9.6
BJ Services Co. 7.3
Schlumberger Ltd. 7.3
ICO, Inc. 6.2
Tuboscope Vetco Corp. 5.5
Weatherford International, Inc. 5.4
Wheatley TXT Corp. 5.3
Camco International, Inc. 4.3
Western Co. of North America 4.2
Enterra Corp. 3.9
TOP INDUSTRIES AS OF FEBRUARY 28, 1994
Row: 1, Col: 1, Value: 2.1
Row: 1, Col: 2, Value: 1.6
Row: 1, Col: 3, Value: 4.3
Row: 1, Col: 4, Value: 6.2
Row: 1, Col: 5, Value: 16.8
Row: 1, Col: 6, Value: 69.0
Oil & Gas Services 69.0%
Drilling 16.8%
Fabricated Metal
Products 6.2%
Oil Field Equipment 4.3%
Transportation Services 1.6%
All Others 2.1%
ENERGY SERVICE PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
William Mankivsky,
Portfolio Manager of
Fidelity Select Energy
Service Portfolio
Q. BILL, HOW DID THE FUND DO?
A. For the 12 months ended February 28, 1994, the fund had a total return
of 6.36%. That lagged the S&P 500's return of 8.33% for the same
period.
Q. WHY DID THE FUND FALL BEHIND?
A. Throughout most of the period, the fund benefited from its investment in
companies that profited from higher natural gas prices, which rose sharply
on strong demand and weak supply. But late last fall, investors dumped
these stocks after they had reached very high levels. What's more, oil
prices - which tend to set the direction for natural gas prices - fell
sharply in November. Those events hurt the fund's natural gas and
oil-related stocks. Plus, the fund's assets fluctuated wildly during the
year, as energy services companies moved in and out of investors' favor. At
times, that meant that I had to sell some of the fund's investments when
they were falling in order to meet the fund's redemptions.
Q. SINCE THE NOVEMBER CORRECTION, WHAT HAS YOUR STRATEGY BEEN?
A. The price of natural gas has rebounded some since the first of the year,
so I've focused on companies that could benefit from that recovery. I've
also slowly increased the fund's investments in companies that could be
helped by rising worldwide oil prices, which haven't yet materialized. If
prices of these commodities rise, exploration and production may become
more profitable.
Q. WHAT'S CAUSING NATURAL GAS PRICES TO REBOUND?
A. Over the last decade there was a fairly large build-up of natural gas
inventory. That build-up depressed natural gas prices until about two years
ago. But as inventory began to be depleted in 1993, natural gas prices
rose. Despite the drop-off last fall, I think they could continue to
recover as inventories stay low.
Q. WHAT OIL-RELATED COMPANIES DID YOU FAVOR?
A. I focused on companies that had more of their revenues coming from
abroad, since oil is the most widely-used fuel across the world. In the
fourth quarter of 1993, oil prices dropped from about $18 a barrel to about
$14. Since then, investors have anticipated that oil prices won't recover
quickly, and that fear seems to be already factored into stock prices. To
me that means that any whiff of positive news might boost oil prices.
That's why I've favored companies like Schlumberger - one of the fund's top
five holdings at the end of the period - because it's inexpensive relative
to its competitors and generates roughly 80% of its oil field profits from
overseas. I also invested in Halliburton - the fund's largest investment at
the end of February. The company gets a considerable share of its profits
from pressure pumping, which helps wring more oil and gas out of existing
wells.
Q. WHAT EFFECT WOULD RISING OIL PRICES HAVE ON PRODUCTION?
A. When commodity prices start to rise, the first thing well operators are
likely to do is improve the production from their existing wells. The next
thing is drill new wells. The fund holds BJ Services, which is a leader in
providing equipment and services that both stimulate old wells and help
cement new ones. It's a well managed company with significant businesses in
the U.S. and abroad. The fund also invested in ICO, which inspects pipes
used to drill wells, and produces a protective pipe coating which makes
those pipes stronger. Both these companies could benefit if commodity
prices start to rise.
Q. WERE THERE ANY DISAPPOINTMENTS?
A. Tuboscope, which provides products and services similar to ICO's, didn't
fare as well as I'd hoped. A proposed acquisition of the company fell apart
late last year, and its stock price dropped to about half of its 1993 high.
The fund still holds the company's stock because it's well-managed and has
good cash flow.
Q. WHAT'S ON THE HORIZON FOR ENERGY SERVICE STOCKS?
A. While I can't say for certain what the price of natural gas or oil will
be over the next six months, I see a couple of positive signs for the
stocks. I think that the demand for natural gas may slightly outpace the
supply, which would help prices. I also believe the worst case for oil
prices has already been factored into stock prices, and that there probably
won't be a drop-off in international drilling activity. And since these
stocks have been beaten down recently, a rise in oil or gas prices could
translate to improved earnings for energy service companies.
FUND FACTS
START DATE: December 16, 1985
SIZE: as of February 28, 1994, over $40 million
MANAGER: William Mankivsky, since January
1992; manager, Fidelity Select Food and
Agriculture Portfolio, since April 1993; equity
analyst, energy service, since 1992 and medical
device industries, in 1992; joined Fidelity in 1991
(checkmark)
ENERGY SERVICE PORTFOLIO
INVESTMENTS FEBRUARY 28, 1994
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 93.5%
SHARES VALUE (NOTE 1)
AIR TRANSPORTATION - 1.6%
TRANSPORTATION SERVICES - 1.6%
Helikopter Services 42,750 $ 647,885 42499192
BUILDING MATERIALS - 1.0%
FABRICATED PIPE & FITTINGS - 1.0%
Coflexip sponsored ADR 24,000 429,000 19238410
ENERGY SERVICES - 79.3%
DRILLING - 16.2%
Arethusa Offshore Ltd. (a) 24,000 258,000 03999792
Atwood Oceanics, Inc. (a) 104,600 1,399,025 05009510
Chiles Offshore Corp. (a) 131,400 706,275 16888710
Cliffs Drilling Co. (a) 56,200 674,400 18682C10
Dual Drilling Co. (a) 43,000 478,375 26356410
Energy Service, Inc. (a) 90,000 309,375 29271910
Global Marine, Inc. (a) 192,600 770,400 37935240
Marine Drilling Cos., Inc. par $0.01 (a) 125,100 719,325 56824020
Nabors Industries, Inc. (a) 15,000 99,375 62956810
Noble Drilling Corp. (a) 129,000 1,048,125 65504210
Tucker Drilling Co., Inc. (a) 23,000 123,625 89865210
6,586,300
OIL & GAS SERVICES - 63.1%
BJ Services Co. (a) 153,831 2,961,247 05548210
Dreco Energy Services Ltd. Class A (a) 19,900 201,487 26152820
Enterra Corp. (a) 81,600 1,581,000 29380510
Geophysique 8,000 813,676 38265091
Gulfmark International, Inc. (a) 23,500 311,375 40262810
H & H Oil Tool Co., Inc. (a) 110,000 522,500 40404010
Halliburton Co. 124,000 3,890,500 40621610
Nowsco Well Service Ltd. 34,200 500,519 67012210
Offshore Logistics, Inc. (a) 13,200 189,750 67625510
Offshore Pipelines, Inc. 13,200 242,550 67626910
Petroleum Helicopters, Inc. (a) 28,000 294,000 71660410
Petroleum Helicopters, Inc. (non-vtg.) (a) 9,600 100,800 71660420
Schlumberger Ltd. 51,900 2,951,812 80685710
Service Fracturing Co. (a)(b) 360,900 1,263,150 81790810
Smith International, Inc. (a) 126,478 1,280,590 83211010
Tidewater, Inc. 12,400 275,900 88642310
Tuboscope Vetco Corp. (a) 367,820 2,252,898 89860010
Weatherford International, Inc. (a) 207,900 2,182,950 94707610
Western Co. of North America (a) 121,000 1,694,000 95804340
Wheatley TXT Corp. 191,500 2,154,375 96271810
25,665,079
TOTAL ENERGY SERVICES 32,251,379
IRON & STEEL - 6.2%
FABRICATED METAL PRODUCTS - 6.2%
ICO, Inc. (a) 306,700 2,530,275 44929420
OIL & GAS - 5.4%
CRUDE PETROLEUM & GAS - 1.1%
Unit Corp. unit (3 common & 1
warrant) (a) 50,700 430,950 90921820
OIL FIELD EQUIPMENT - 4.3%
Camco International, Inc. 100,600 1,735,350 13263210
TOTAL OIL & GAS 2,166,300
TOTAL COMMON STOCKS
(Cost $39,673,567) 38,024,839
CONVERTIBLE PREFERRED STOCKS - 3.5%
SHARES VALUE (NOTE 1)
ENERGY SERVICES - 3.5%
DRILLING - 0.6%
Energy Service, Inc. $1.50 8,600 $ 228,975 29271930
OIL & GAS SERVICES - 2.9%
Offshore Pipeline 26,500 1,172,625 67626920
TOTAL ENERGY SERVICES 1,401,600
TOTAL CONVERTIBLE PREFERRED STOCKS
(Cost $1,145,047) 1,401,600
NONCONVERTIBLE BONDS - 3.0%
PRINCIPAL
AMOUNT
ENERGY SERVICES - 3.0%
OIL & GAS SERVICES - 3.0%
Tuboscope Vetco International, Inc.
gtd. 10 3/4%, 4/15/03
(Cost $1,200,000) $ 1,200,000 1,236,000 898602AA
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $42,018,614) $ 40,662,439
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
Service Fracturing Co. (a) $ 525,506 $ 204,475 $ - $ 1,263,150
OTHER INFORMATION
CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective March 1,
1993, the fund adopted Statement of Position 93-2: Determination,
Disclosure, and Financial Statement Presentation of Income, Capital Gain,
and Return of Capital Distributions by Investment Companies. As a result,
the fund changed the classification of distributions to shareholders to
better disclose the differences between financial statement amounts and
distributions determined in accordance with income tax regulations.
Accordingly, amounts as of February 28, 1993 have been reclassified to
reflect an increase in paid in capital of $4,936,341, a decrease in
undistributed net investment loss of $1,686,758 and a decrease in
accumulated net realized loss on investments of $6,623,099.
Purchases and sales of securities, other than short-term securities,
aggregated $111,824,655 and $152,222,235, respectively.
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 $154,629 for the period
(see Note 4 of Notes to Financial Statements).
At the period end, the value of securities loaned and the value of
collateral amounted to $1,048,125 and $1,163,700, respectively (see Note 6
of Notes to Financial Statements).
The maximum loan and average daily loan balances during the periods for
which loans were outstanding amounted to $13,078,000 and $3,019,744,
respectively. The weighted average interest rate paid was 3.6% (see Note 7
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 85.7%
Netherlands 7.3
France 3.1
Norway 2.2
Canada 1.7
TOTAL 100.0%
INCOME TAX INFORMATION
At February 28, 1994, the aggregate cost of investment securities for
income tax purposes was $43,113,367. Net unrealized depreciation aggregated
$2,450,928, of which $2,091,040 related to appreciated investment
securities and $4,541,968 related to depreciated investment securities.
ENERGY SERVICE PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
FEBRUARY 28, 1994
ASSETS
Investment in securities, at value (cost $42,018,614) (Notes 1 and 2) - See accompanying schedule $ 40,662,439
Receivable for investments sold 2,180,927
Receivable for fund shares sold 729,188
Dividends receivable 59,912
Interest receivable 48,375
Redemption fees receivable (Note 1) 919
TOTAL ASSETS 43,681,760
LIABILITIES
Payable to custodian bank $ 358,633
Payable for fund shares redeemed 1,224,702
Accrued management fee 22,063
Other payables and accrued expenses 55,834
Collateral on securities loaned, at value (Note 6) 1,163,700
TOTAL LIABILITIES 2,824,932
NET ASSETS $ 40,856,828
Net Assets consist of (Note 1):
Paid in capital $ 42,225,413
Undistributed net investment income 44,725
Accumulated undistributed net realized gain (loss) on investments (57,135
)
Net unrealized appreciation (depreciation) on investment securities (1,356,175
)
NET ASSETS, for 3,505,172 shares outstanding $ 40,856,828
NET ASSET VALUE and redemption price per share ($40,856,828 (divided by) 3,505,172 shares) $11.66
Maximum offering price per share (100/97 of $11.66) $12.02
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED FEBRUARY 28, 1994
INVESTMENT INCOME $ 1,077,841
Dividends
Interest (including security lending fees of $895) (Note 6) 686,793
TOTAL INCOME 1,764,634
EXPENSES
Management fee (Note 4) $ 588,460
Transfer agent (Note 4) 920,773
Fees
Redemption fees (Note 1) (165,409
)
Accounting and security lending fees (Note 4) 95,263
Non-interested trustees' compensation 695
Custodian fees and expenses 25,801
Registration fees 65,446
Audit 6,412
Legal 912
Interest (Note 7) 13,122
Reports to shareholders 7,681
Miscellaneous 1,377
Total expenses before reductions 1,560,533
Expense reductions (Note 8) (10,792 1,549,741
)
NET INVESTMENT INCOME 214,893
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 1) 17,604,019
Net realized gain (loss) on investment securities (including realized gain (loss) of $211,250 on sales of
investments in
affiliated issuers)
Change in net unrealized appreciation (depreciation) on investment securities (4,993,642
)
NET GAIN (LOSS) 12,610,377
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 12,825,270
OTHER INFORMATION $861,986
Sales charges paid to FDC
(Note 4)
Deferred sales charges withheld $22,626
by FDC (Note 4)
Exchange fees withheld by FSC $143,145
(Note 4)
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED TEN MONTHS
FEBRUARY 28, ENDED
1994 FEBRUARY 28,
1993
INCREASE (DECREASE) IN NET ASSETS
Operations $ 214,893 $ 55,841
Net investment income
Net realized gain (loss) on investments 17,604,019 751,971
Change in net unrealized appreciation (depreciation) on investments (4,993,642 6,208,748
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 12,825,270 7,016,560
Distributions to shareholders from net investment income (269,046 -
)
Share transactions 359,408,419 211,905,434
Net proceeds from sales of shares
Reinvestment of distributions 265,568 -
Cost of shares redeemed (417,772,180 (175,545,993
) )
Paid in capital portion of redemption fees (Note 1) 1,164,835 536,363
Net increase (decrease) in net assets resulting from share transactions (56,933,358 36,895,804
)
TOTAL INCREASE (DECREASE) IN NET ASSETS (44,377,134 43,912,364
)
NET ASSETS
Beginning of period 85,233,962 41,321,598
End of period (including undistributed net investment income (loss) of $44,725 and $(1,629,894), $ 40,856,828 $ 85,233,962
respectively)
OTHER INFORMATION
Shares
Sold 29,627,725 20,799,247
Issued in reinvestment of distributions 22,698 -
Redeemed (33,889,248 (17,438,325
) )
Net increase (decrease) (4,238,825 3,360,922
)
</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>
YEAR ENDED TEN MONTHS YEARS ENDED APRIL 30,
FEBRUARY 28, ENDED
FEBRUARY 28,
SELECTED PER-SHARE DATAC 1994 1993 1992 1991 1990
Net asset value, beginning of period $ 11.01 $ 9.43 $ 12.51 $ 12.19 $ 8.99
Income from Investment Operations
Net investment income (loss) .03 .01 (.12) - (.05)
Net realized and unrealized gain (loss) on investments .51 1.47 (3.11) .15 3.17
Total from investment operations .54 1.48 (3.23) .15 3.12
Less Distributions
From net investment income (.05) - - (.02) -
Redemption fees added to paid in capital .16 .10 .15 .19 .08
Net asset value, end of period $ 11.66 $ 11.01 $ 9.43 $ 12.51 $ 12.19
TOTAL RETURND,E 6.36% 16.76% (24.62)% 2.80% 35.60%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 40,857 $ 85,234 $ 41,322 $ 73,398 $ 61,821
Ratio of expenses to average net assetsB 1.65% 1.76% 2.07% 1.82% 2.29%
A
Ratio of expenses to average net assets before expense 1.66% 1.76% 2.07% 1.82% 2.29%
reductionsB A
Ratio of net investment income to average net assets .23% .13% (1.13)% (.02)% (.42)%
A
Portfolio turnover rate 137% 236% 89% 62% 128%
A
</TABLE>
1 ANNUALIZED
2 SEE NOTE 8 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.
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
PERIOD ENDED LIFE OF
FEBRUARY 28, 1994 FUND
NATURAL GAS -3.84%
NATURAL GAS
(INCL. 3% SALES CHARGE) -6.72%
S&P 500 7.57%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, 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.
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
Natural Gas (513) S&P 500
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 10756.84
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
February 28, 1994, your investment would be valued at $9,328 - a 6.72%
decrease. That compares to $10,000 invested in the S&P 500, which would
have grown to $10,757 over the same period - a 7.57% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1994
% OF FUND'S
INVESTMENTS
Burlington Resources, Inc. 8.8
Anadarko Petroleum Corp. 7.7
Cabot Oil & Gas Corp. Class A 5.4
Enron Oil & Gas Co. 5.3
Columbia Gas System, Inc. (The) 4.9
Halliburton Co. 3.8
Apache Corp. 3.6
ENSERCH Corp. 3.1
Enron Corp. 3.1
Sonat, Inc. 2.8
TOP INDUSTRIES AS OF FEBRUARY 28, 1994
Row: 1, Col: 1, Value: 13.4
Row: 1, Col: 2, Value: 3.6
Row: 1, Col: 3, Value: 4.0
Row: 1, Col: 4, Value: 6.9
Row: 1, Col: 5, Value: 15.2
Row: 1, Col: 6, Value: 15.5
Row: 1, Col: 7, Value: 41.4
Crude Petroleum & Gas 41.4%
Gas Transmission &
Distribution 15.5%
Gas Transmission 15.2%
Gas Distribution 6.9%
Oil & Gas Services 4.0%
Oil & Gas Exploration 3.6%
All Others 13.4%*
* 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 DID THE FUND DO?
A. From the fund's commencement of operations on April 21, 1993 through
February 28, 1994, it returned -3.84%. That lagged the S&P 500, which
returned 7.57% for the same period.
Q. EVEN THOUGH YOU'VE ONLY MANAGED THE FUND SINCE FEBRUARY 1, CAN YOU TELL
US WHAT HAPPENED SINCE LAST APRIL?
A. Basically, the fund began operations in April of 1993, when natural gas
prices were at their peak. Since then, the fund has been swimming upstream
against falling natural gas prices. What's more, the fourth quarter is
historically very hard on natural gas stocks, and 1993 was no exception.
There was an inventory build-up between March and November - in preparation
for winter - which increased demand for natural gas and drove stock prices
higher. Then, before it was certain how severe the winter weather would
actually be, the stocks were in a dead period. Storage was full and there
was ample supply. At that point, natural gas prices fell and so did stock
prices.
Q. SO WHEN IT BECAME APPARENT THAT LAST WINTER WAS GOING TO BE HARSH, DID
PRICES MOVE HIGHER?
A. Yes, and I expect the effects of a colder-than-normal winter might
continue to drive prices higher through the rest of 1994. Storage levels
are quite low on a historical basis, drawn down by higher-than-expected
heating needs. That should only magnify some of the trends that have
already been helping natural gas prices. First, a decade-long decline in
drilling has kept supply very low. Second, the industry has benefited from
federal policies designed to promote gas as a clean, abundant, domestic
alternative to foreign oil. The combination of lower supply and higher
demand could bode well for natural gas prices.
Q. WHAT KINDS OF COMPANIES DID YOU FOCUS ON?
A. I focused on exploration and production (E&P) like Burlington
Resources - which produces both oil and gas. The company is expected to
have healthy growth in production and also a large drilling inventory. That
means it has a lot of land it can drill on currently, before it's forced to
go out and buy additional land to raise production levels. Despite the
decline in oil prices, the company should continue to do well.
Q. WHAT OTHER COMPANIES ARE ATTRACTIVE?
A. Cabot, an Appalachian producer, is expected to have relatively higher
levels of oil and gas production in 1994. Enron, whose production growth
over the past few years has been strong, has also been helped by aggressive
cost-cutting efforts. Plus, Enron is turning to new locations - namely
Trinidad and India - to increase production growth. Anadarko Petroleum is
the only company drilling for oil in the Gulf of Mexico under layers of
salt. That technique is one that none of Anadarko's competitors has yet
mastered. Apache, on the other hand, has been extremely successful in
buying old properties and making them pay off in terms of production.
Q. WHAT'S YOUR OUTLOOK FOR NATURAL GAS PRICES?
A. I'm fairly optimistic. Storage inventory has been drawn down to very low
levels. Companies will need to re-build that inventory this summer. Demand,
on the other hand, has been increasing 3 to 5% over the past several years,
and it looks like that trend may continue. I also think oil prices could
turn around this summer and begin to rise. If you believe, as I do, that
low oil prices have held back natural gas prices, a recovery in oil prices
could ultimately benefit natural gas prices.
FUND FACTS
START DATE: April 21, 1993
SIZE: as of February 28, 1994, over $63 million
MANAGER: Michael Tempero, since February
1994; joined Fidelity in 1993
(checkmark)
NATURAL GAS PORTFOLIO
INVESTMENTS FEBRUARY 28, 1994
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 89.6%
SHARES VALUE (NOTE 1)
ELECTRIC UTILITY - 0.5%
ELECTRIC & OTHER SERVICES - 0.4%
LG&E Energy Corp. 8,225 $ 296,100 50191710
ELECTRIC POWER - 0.1%
Sithe Energies, Inc. (a) 3,500 49,000 82990410
TOTAL ELECTRIC UTILITY 345,100
ENERGY SERVICES - 4.0%
OIL & GAS SERVICES - 4.0%
BJ Services Co. (a) 2,186 42,081 05548210
Baker Hughes, Inc. 400 7,600 05722410
Enterra Corp. (a) 2,658 51,499 29380510
Halliburton Co. 77,375 2,427,641 40621610
Weatherford International, Inc. (a) 880 9,240 94707610
2,538,061
GAS - 38.4%
GAS & OTHER SERVICES - 0.8%
UGI Corporation 21,290 489,670 90268110
GAS DISTRIBUTION - 6.9%
MCN Corp. 37,910 1,459,535 55267J10
Northwest Natural Gas Co. 4,820 172,315 66765510
NICOR, Inc. 23,740 640,980 65408610
Pacific Enterprises 54,443 1,156,914 69423210
Peoples Energy Corp. 24,100 719,988 71103010
WICOR, Inc. 8,320 251,680 92925310
4,401,412
GAS TRANSMISSION - 15.2%
Associated Nature Gas Corp. 29,420 963,505 04574410
Coastal Corp. (The) 14,235 448,403 19044110
Enron Corp. 63,110 2,011,631 29356110
ONEOK, Inc. 30,925 560,516 68267810
Panhandle Eastern Corp. 63,387 1,386,591 69846210
Sonat, Inc. 59,926 1,820,252 83541510
Tejas Power Corp. (a) 1,000 11,250 87907910
TransCanada PipeLines Ltd. 86,732 1,277,361 89352610
Williams Companies, Inc. 51,152 1,259,618 96945710
9,739,127
GAS TRANSMISSION & DISTRIBUTION - 15.5%
Columbia Gas System, Inc. (The) (a) 111,095 3,152,321 19764810
Consolidated Natural Gas Co. 22,028 966,479 20961510
ENSERCH Corp. 130,000 2,015,000 29356710
El Paso Natural Gas Co. 19,980 771,728 28369587
Equitable Resources, Inc. 34,099 1,231,826 29454910
Questar Corp. 37,140 1,142,055 74835610
Tejas Gas Corp. 11,250 634,219 87907510
9,913,628
TOTAL GAS 24,543,837
INDEPENDENT POWER - 0.2%
STEAM SUPPLY - 0.2%
Magma Power Co. 3,500 110,688 55919410
OIL & GAS - 46.5%
CRUDE PETROLEUM & GAS - 41.4%
Anadarko Petroleum Corp. 111,175 4,947,288 03251110
Apache Corp. 92,225 2,305,625 03741110
Burlington Resources, Inc. 131,457 5,652,651 12201410
Cabot Oil & Gas Corp. Class A 160,167 3,463,611 12709710
Enron Oil & Gas Co. 78,800 3,388,400 29356210
Inverness Petroleum Ltd. (a) 72,000 533,531 46190810
Louis Dreyfus Natural Gas Corp. (a) 19,000 427,500 54601110
Maxus Energy Corp. (a) 19,500 92,625 57773010
SHARES VALUE (NOTE 1)
Noble Affiliates, Inc. 32,550 $ 838,163 65489410
Northstar Energy Corp. (a) 25,900 482,206 66703R10
Nuevo Energy Corporation (a) 4,015 84,315 67050910
Oryx Energy Co. 51,900 934,200 68763F10
Paramount Resources Ltd. (a) 40,100 594,294 69932010
Petromet Resources Ltd. Ord. (a) 72,000 400,148 71673110
Pinnacle Resources Ltd. 48,900 733,772 72348R10
Renaissance Energy Ltd. (a) 14,500 295,480 75966610
Rio Alto Exploration Ltd. (a) 77,400 509,022 76689210
Summit Resources Ltd. 91,000 573,175 86624610
Tarragon Oil & Gas Ltd. (a) 5,300 60,874 87629E20
Tide West Oil Co. 17,000 208,250 88635540
26,525,130
NATURAL GAS LIQUIDS - 1.4%
Western Gas Resources, Inc. 30,135 885,216 95825910
OIL & GAS EXPLORATION - 3.6%
Anderson Exploration Ltd. (a) 24,900 595,054 03390110
Canadian Natural Resources Ltd. (a) 17,800 244,016 13638510
Chauvco Resources Ltd. Class A 111,900 1,419,994 16260010
Forcenergy AB 'B' Free shares 1,300 12,963 56099F22
2,272,027
PETROLEUM REFINERS - 0.1%
Murphy Oil Corp. 2,200 87,450 62671710
TOTAL OIL & GAS 29,769,823
TOTAL COMMON STOCKS
(Cost $62,218,635) 57,307,509
REPURCHASE AGREEMENTS - 10.4%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account, at 3.47% dated
2/28/94 due 3/1/94 $6,671,643 6,671,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $68,889,635) $ 63,978,509
LEGEND
1. Non-income producing
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $77,530,257 and $15,701,918, respectively.
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 $33,752 for the period
(see Note 4 of Notes to Financial Statements).
The maximum loan and average daily loan balances during the periods for
which loans were outstanding amounted to $1,202,000. The weighted average
interest rate paid was 3.6% (see Note 7 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 87.8%
Canada 12.2
TOTAL 100.0%
INCOME TAX INFORMATION
At February 28, 1994, the aggregate cost of investment securities for
income tax purposes was $69,042,045. Net unrealized depreciation aggregated
$5,063,536, of which $1,088,599 related to appreciated investment
securities and $6,152,135 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 29, 1994.
NATURAL GAS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
FEBRUARY 28, 1994
ASSETS
Investment in securities, at value (including repurchase agreements of $6,671,000) (cost $68,889,635) $ 63,978,509
(Notes 1 and 2) - See accompanying schedule
Cash 618
Receivable for investments sold 1,698,760
Receivable for fund shares sold 587,952
Dividends receivable 104,931
Redemption fees receivable (Note 1) 390
TOTAL ASSETS 66,371,160
LIABILITIES
Payable for investments purchased $ 1,075,109
Payable for fund shares redeemed 2,121,792
Accrued management fee 34,945
Other payables and accrued expenses 66,419
TOTAL LIABILITIES 3,298,265
NET ASSETS $ 63,072,895
Net Assets consist of (Note 1):
Paid in capital $ 68,213,252
Undistributed net investment income 66,827
Accumulated undistributed net realized gain (loss) on investments (296,058
)
Net unrealized appreciation (depreciation) on investment securities (4,911,126
)
NET ASSETS, for 6,653,849 shares outstanding $ 63,072,895
NET ASSET VALUE and redemption price per share ($63,072,895 (divided by) 6,653,849 shares) $9.48
Maximum offering price per share (100/97 of $9.48) $9.77
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
APRIL 21, 1993 (COMMENCEMENT OF OPERATIONS) TO FEBRUARY 28, 1994
INVESTMENT INCOME $ 686,681
Dividends
Interest 123,115
TOTAL INCOME 809,796
EXPENSES
Management fee (Note 4) $ 243,289
Transfer agent (Note 4) 415,191
Fees
Redemption fees (Note 1) (52,768
)
Accounting fees and expenses 46,258
(Note 4)
Non-interested trustees' compensation 197
Custodian fees and expenses 20,984
Registration fees 52,690
Audit 9,747
Legal 192
Interest (Note 7) 121
Reports to shareholders 9,569
Miscellaneous 328
Total expenses before reductions 745,798
Expense reductions (Note 8) (2,943 742,855
)
NET INVESTMENT INCOME 66,941
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 1) 390,296
Net realized gain (loss) on investment securities
Change in net unrealized appreciation (depreciation) on investment securities (4,911,126
)
NET GAIN (LOSS) (4,520,830
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ (4,453,889
)
OTHER INFORMATION $1,039,836
Sales charges paid to FDC
(Note 4)
Deferred sales charges withheld $2,886
by FDC (Note 4)
Exchange fees withheld by FSC $45,180
(Note 4)
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C>
INCREASE (DECREASE) IN NET ASSETS APRIL 21, 1993
(COMMENCEMENT
OF OPERATIONS) TO
FEBRUARY 28, 1994
Operations $ 66,941
Net investment income
Net realized gain (loss) on investments 390,296
Change in net unrealized appreciation (depreciation) on investments (4,911,126)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (4,453,889)
Distributions to shareholders: (390,296)
From net realized gains
In excess of net realized gain (296,172)
Total distributions (686,468)
Share transactions 154,654,614
Net proceeds from sales of shares
Reinvestment of distributions 673,872
Cost of shares redeemed (87,329,043)
Paid in capital portion of redemption fees (Note 1) 213,809
Net increase (decrease) in net assets resulting from share transactions 68,213,252
TOTAL INCREASE (DECREASE) IN NET ASSETS 63,072,895
NET ASSETS
Beginning of period -
End of period (including undistributed net investment income of $66,827) $ 63,072,895
OTHER INFORMATION
Shares
Sold 15,170,940
Issued in reinvestment of distributions 74,626
Redeemed (8,591,717)
Net increase (decrease) 6,653,849
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C>
SELECTED PER-SHARE DATAC APRIL 21, 1993
(COMMENCEMENT
OT
OPERATIONS) TO
FEBRUARY 28, 1994
Net asset value, beginning of period $ 10.00
Income from Investment Operations
Net investment income .02
Net realized and unrealized gain (loss) on investments (.46)
Total from investment operations (.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 .05
Net asset value, end of period $ 9.48
TOTAL RETURND, E (3.84)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 63,073
Ratio of expenses to average net assetsB 1.93%A
Ratio of expenses to average net assets before expense reductionsB 1.94%A
Ratio of net investment income to average net assets .17%A
Portfolio turnover rate 44%A
</TABLE>
1 ANNUALIZED
2 SEE NOTE 8 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.
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 1 PAST 5 PAST 10
FEBRUARY 28, 1994 YEAR YEARS YEARS
PRECIOUS METALS AND MINERALS 70.58% 49.34% 28.66%
PRECIOUS METALS AND MINERALS
(INCL. 3% SALES CHARGE) 65.47% 44.86% 24.80%
S&P 500 8.33% 89.60% 321.84%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, 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
FEBRUARY 28, 1994 YEAR YEARS YEARS
PRECIOUS METALS AND MINERALS 70.58% 8.35% 2.55%
PRECIOUS METALS AND MINERALS
(INCL. 3% SALES CHARGE) 65.47% 7.69% 2.24%
S&P 500 8.33% 13.65% 15.48%
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 Precious Metals (061) S&P 500
02/29/84 9700.00 10000.00
03/31/84 9455.46 10173.00
04/30/84 9311.25 10269.64
05/31/84 9116.87 9700.71
06/30/84 8530.61 9911.21
07/31/84 6723.01 9788.31
08/31/84 7820.25 10869.92
09/30/84 7477.76 10872.09
10/31/84 6811.80 10914.50
11/30/84 7147.95 10792.25
12/31/84 6247.32 11077.17
01/31/85 6348.80 11940.08
02/28/85 6044.36 12086.94
03/31/85 7300.17 12095.40
04/30/85 7084.53 12084.52
05/31/85 6995.73 12783.00
06/30/85 6750.93 12983.70
07/31/85 6211.38 12964.22
08/31/85 6073.20 12854.02
09/30/85 5869.23 12451.69
10/31/85 5342.84 13026.96
11/30/85 5961.34 13920.61
12/31/85 5586.29 14594.37
01/31/86 6770.67 14676.10
02/28/86 6856.20 15773.87
03/31/86 6435.09 16654.05
04/30/86 6099.52 16465.86
05/31/86 5481.02 17341.84
06/30/86 5592.87 17634.92
07/31/86 5520.05 16649.13
08/31/86 6572.12 17884.49
09/30/86 7431.09 16405.45
10/31/86 6778.54 17352.04
11/30/86 7477.70 17773.70
12/31/86 7424.43 17320.47
01/31/87 8316.69 19653.53
02/28/87 8902.66 20429.85
03/31/87 11446.27 21020.27
04/30/87 12238.65 20833.19
05/31/87 11146.63 21014.44
06/30/87 10986.82 22075.67
07/31/87 13224.14 23194.90
08/31/87 12877.89 24060.07
09/30/87 13277.41 23533.16
10/31/87 9615.13 18464.12
11/30/87 10827.01 16942.67
12/31/87 10209.19 18232.01
01/31/88 8415.50 18999.58
02/29/88 8428.99 19884.96
03/31/88 9130.28 19270.51
04/30/88 8826.84 19484.42
05/31/88 8874.04 19653.93
06/30/88 8550.36 20556.05
07/31/88 8604.31 20477.93
08/31/88 8091.83 19781.68
09/30/88 7545.63 20624.38
10/31/88 7822.10 21197.74
11/30/88 8112.06 20894.61
12/31/88 7773.29 21260.27
01/31/89 8096.59 22816.52
02/28/89 8356.64 22248.39
03/31/89 8356.64 22766.78
04/30/89 7977.11 23948.37
05/31/89 7597.58 24918.28
06/30/89 8194.99 24776.25
07/31/89 8419.89 27013.54
08/31/89 8588.57 27543.01
09/30/89 8890.79 27430.08
10/31/89 8883.76 26793.70
11/30/89 10015.31 27340.30
12/31/89 10273.38 27996.46
01/31/90 11091.55 26117.90
02/28/90 10138.21 26454.82
03/31/90 9697.10 27155.87
04/30/90 8701.07 26476.98
05/31/90 9199.09 29058.48
06/30/90 8530.32 28860.88
07/31/90 9049.68 28768.53
08/31/90 9142.17 26167.85
09/30/90 8935.85 24893.48
10/31/90 7932.70 24786.44
11/30/90 7790.41 26387.64
12/31/90 8108.41 27123.86
01/31/91 7228.32 28306.46
02/28/91 7877.57 30330.37
03/31/91 7726.08 31064.36
04/30/91 7704.43 31138.92
05/31/91 8137.27 32484.12
06/30/91 8671.10 30996.35
07/31/91 8671.10 32440.78
08/31/91 7762.15 33209.62
09/30/91 7920.85 32655.02
10/31/91 8454.68 33092.60
11/30/91 8721.59 31758.97
12/31/91 8233.08 35392.19
01/31/92 8407.79 34733.90
02/29/92 7971.02 35185.44
03/31/92 7658.00 34499.32
04/30/92 7206.68 35513.60
05/31/92 7679.84 35687.62
06/30/92 7723.17 35155.87
07/31/92 7825.27 36593.75
08/31/92 7475.21 35843.58
09/30/92 7168.91 36266.53
10/31/92 6709.46 36393.47
11/30/92 6315.64 37634.48
12/31/92 6432.84 38097.39
01/31/93 6588.65 38417.40
02/28/93 7315.77 38939.88
03/31/93 8310.01 39761.51
04/30/93 9652.96 38799.28
05/31/93 10929.14 39839.10
06/30/93 11107.22 39954.64
07/31/93 12554.05 39794.82
08/31/93 11292.71 41303.04
09/30/93 10402.35 40985.01
10/31/93 11878.86 41833.40
11/30/93 11856.60 41435.98
12/31/93 13613.44 41937.36
01/31/94 13050.28 43363.23
02/28/94 12479.61 42183.75
Let's say you invested $10,000 in Fidelity Select Precious Metals and
Minerals Portfolio on February 29, 1984 and paid a 3% sales charge. By
February 28, 1994, your investment would have grown to $12,480 - a 24.80%
increase. That compares to $10,000 invested in the S&P 500, which would
have grown to $42,184 over the same period - a 321.84% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1994
% OF FUND'S
INVESTMENTS
American Barrick Resources Corp. 8.7
Vaal Reefs Exploration & Mining Co. Ltd. ADR 4.8
Free State Consolidated Gold Mines Ltd. ADR 4.3
Western Deep Levels Ltd. ADR 4.2
Anglo American Corp. of South Africa Ltd. ADR 4.1
Kloof Gold Mining Ltd. ADR 2.8
Plutonic Resources Ltd. 2.8
Poseidon Gold Ltd. 2.5
Anglo American Gold Investments Co. Ltd. ADR 2.5
Driefontein Consolidated Ltd. ADR 2.5
TOP INDUSTRIES AS OF FEBRUARY 28, 1994
Row: 1, Col: 1, Value: 29.8
Row: 1, Col: 2, Value: 3.2
Row: 1, Col: 3, Value: 30.2
Row: 1, Col: 4, Value: 22.3
Row: 1, Col: 5, Value: 14.5
Gold & Silver Ores
(South Africa) 28.6%
Gold Ores (Canada) 23.9%
Gold & Silver Ores
(Australia) 13.2%
Gold Ores (U.S.) 4.6%
All Others 29.7%*
* 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. MALCOLM, HOW DID THE FUND PERFORM?
A. It had an excellent year. The fund's total return for the year ended
February 28, 1994 was 70.58%, dramatically higher than the S&P 500's
return of 8.33% for the same period.
Q. WHY DID THE FUND TURN IN THESE OUTSTANDING RESULTS?
A. The fund benefited from its heavy weighting in volatile South African
and Australian gold shares during the first half of the year. This market
was driven by higher gold prices and improving social and economic
situations in South Africa and Australia. Demand from China and Southeast
Asia also boosted the price of gold, as did improving economic conditions
in India, which increased that country's gold demand. Another influence was
turmoil in Turkey, where the people were trying to protect themselves from
rampant inflation by buying gold.
Q. HOW DID YOUR STOCK SELECTION AFFECT THE FUND'S PERFORMANCE?
A. I focused on two different types of gold stocks. I liked established,
growing companies, such as a South African mining concern, Vaal Reefs
Exploration and Mining, and two Australian companies, Poseidon Gold and
Plutonic Resources. I also was attracted to young companies that have found
a significant new source of precious metals. A good example is Delta Gold,
a well-managed Australian company with growth prospects in Australia and
Zimbabwe. Smaller companies can be more volatile than established ones, but
they also can produce excellent returns when things go well.
Q. OVER THE LAST SIX MONTHS, THE FUND TURNED IN WEAKER PERFORMANCE. WHAT
HAPPENED?
A. Probably the biggest reason was the decline in the price of gold.
Commodity funds and hedge funds were quick to drop their gold investments
as soon as prices started falling in August. As a result, gold prices
tumbled between 10% and 20%. Asian buyers, who are very price conscious,
stopped buying gold around the same time. The South African stock index
also experienced some weakness in anticipation of April's national
elections. And in Australia, gold prices saw a much-needed correction after
the gold index had climbed by as much as 140%. Prices picked up a bit
after Christmas and following Ramadan, a Muslim holiday in February,
reflecting better jewelry sales.
Q. WE'VE TALKED ABOUT THE STRONG PERFORMANCE OF SOUTH AFRICAN AND
AUSTRALIAN STOCKS. WHY WAS YOUR TOP STOCK A CANADIAN COMPANY?
A. American Barrick, a mining company with exploration prospects in Nevada
and South America, appears to have excellent production potential over the
next three years. Fourth quarter gold sales and earnings were a bit below
expectations, but the first quarter of 1994 should be very good, and I
expect it will be an excellent long-term performer.
Q. WHAT'S YOUR OUTLOOK FOR THE FUND GOING FORWARD?
A. I believe the price of gold could be higher a year from now than it is
today. That's because worldwide supply and demand are almost in balance and
the demand for jewelry should increase about 4% to 6%. In 1993, the demand
for jewelry fell one or two percentage points because of economic problems
in Western Europe and Japan. If Europe's economy improves, like I expect it
to, jewelry sales should grow no matter what happens in Japan. That said,
I would like to remind shareholders that the fund had an unusually good
year. In general, gold stocks are extremely volatile, and world economic
and political circumstances can alter expectations dramatically.
FUND FACTS
START DATE: July 14, 1981
SIZE: as of February 28, 1994, over $409 million
MANAGER: Malcolm MacNaught, since July
1981; manager, American Gold Portfolio, since
December 1985; Advisor Global Natural
Resources, since November 1988; joined
Fidelity in 1968
(checkmark)
PRECIOUS METALS AND MINERALS PORTFOLIO
INVESTMENTS FEBRUARY 28, 1994
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 90.7%
SHARES VALUE (NOTE 1)
AUSTRALIA - 13.5%
METALS & MINING - 0.3%
METAL MINING - 0.3%
Orion Resources N.L. (a) 250,000 $ 385,370 68699E22
Samantha Gold N.L. 200,000 927,744 93599C22
1,313,114
PRECIOUS METALS - 13.2%
GOLD & SILVER ORES - 7.0%
Macraes Mining Co. Ltd. 850,000 1,759,151 55599222
Niugini Mining (a) 100,000 417,485 65410810
North Flindes (a) 850,000 6,551,307 65940091
Plutonic Resources Ltd. 1,960,000 11,329,917 72999192
Sons of Gwalia 80,000 528,101 83568810
Zapopan N.L. 3,624,500 7,501,201 98999293
28,087,162
GOLD ORES - 6.2%
Asarco Australia Ltd. 900,000 1,181,808 04341799
Delta Gold (a) 578,000 1,567,461 24763810
Gold Mines Kalgoorlie (a) 4,256,948 4,222,765 38065310
Great Central Mines N.L. (a) 515,000 3,491,535 39029092
Great Central Mines N.L. ADR (a) 115,000 805,000 39029010
Homestake Gold of Australia 63,600 78,521 43761399
Mount Burgess Gold Mining Co. (a) 350,000 197,323 62499922
Newcrest Mining Ltd. (a) 293,200 1,270,101 65163810
Poseidon Gold Ltd. 4,355,223 10,256,768 36899192
St. Barbara Mines Ltd. (a) 1,464,100 1,838,939 79999H22
24,910,221
TOTAL PRECIOUS METALS 52,997,383
TOTAL AUSTRALIA 54,310,497
CANADA - 24.1%
CREDIT & OTHER FINANCE - 0.2%
HOLDING COMPANY OFFICES, NEC - 0.2%
Bolivar Goldfields Ltd. 200,800 781,178 09760Q10
PRECIOUS METALS - 23.9%
GOLD ORES - 23.9%
Agnico Eagle Mines Ltd. 760,000 9,081,141 00847410
American Barrick Resources Corp. 1,390,000 34,891,627 02451E10
Breakwater Resources Ltd. (a) 387,600 47,392 10690210
Cambior, Inc. 400,000 6,298,628 13201L10
Crown Resources Corp. 144,700 949,594 22856910
Euro-Nevada Mining Corp. 310,000 9,877,731 29870P10
Franco Nevada Mining Corp. 166,000 9,902,186 35186010
Golden Star Resources Ltd. (a) 180,000 2,717,672 38119T10
Hemlo Gold Mines, Inc. 301,400 2,819,693 42366F10
Lac Minerals Ltd. 650,000 5,539,085 50545810
Orvana Minerals Corp. (warrants) (a) 100,000 413,561 68759M92
Pegasus Gold, Inc. 140,000 2,723,231 70556K10
Placer Dome, Inc. 185,000 4,472,490 72590610
Prime Resources Group, Inc. (a) 866,956 6,424,274 74157L10
96,158,305
TOTAL CANADA 96,939,483
SHARES VALUE (NOTE 1)
SOUTH AFRICA - 47.1%
CLOSED END INVESTMENT COMPANY - 7.0%
REG'D INVESTMENT COMPANIES - 7.0%
Free State Consolidated Gold Mines
Ltd. ADR 1,203,600 $ 17,151,300 35614220
Genbel Investments Ltd. Ord. 793,600 1,128,301 36867310
Orange Free State Investments Ltd.:
ADR 256,400 9,166,300 68486520
Ord. 20,000 721,485 68486510
28,167,386
CREDIT & OTHER FINANCE - 6.9%
HOLDING COMPANY OFFICES, NEC - 0.8%
Anglovaal Ltd. 2,400 58,568 03599722
Beatrix Mines Ltd. ADR 401,300 1,856,013 07419020
Gencor Ltd. (Reg.) (a) 650,000 1,186,204 36868193
3,100,785
MISCELLANEOUS NONMETAL MINERALS - 2.3%
De Beers Consolidated Mines Ltd. ADR 420,000 9,292,500 24025330
MISCELLANEOUS METAL ORES, NEC - 3.8%
Impala Platinum Holdings Ltd.:
ADR 434,900 5,653,700 45255320
Ord. 83,000 1,074,377 45255310
Rustenberg Platinum Holding Ltd. ADR 500,000 8,750,000 78307820
15,478,077
TOTAL CREDIT & OTHER FINANCE 27,871,362
PRECIOUS METALS - 28.6%
GOLD & SILVER ORES - 2.5%
Eastvaal Gold Holdings Ltd. (a) 1,300,000 2,027,584 27799322
Southvaal Holdings Ltd. ADR 296,000 7,844,000 84473820
9,871,584
GOLD ORES - 26.1%
Anglo American Corp. of South Africa
Ltd.:
ADR 393,100 16,411,925 03486130
(Reg.) (a) 10,100 422,217 03486110
Buffelsfontein Gold Mining Co. Ltd. ADR 300,300 3,190,688 11987120
Deelkraal Gold Mining Ltd. ADR 767,000 1,073,800 24368020
Driefontein Consolidated Ltd. ADR 853,800 10,138,875 26202640
East Rand Proprietary Mines 500,000 716,180 27467710
Harmony Gold Mining Co. Ltd. ADR (a) 220,000 1,237,500 41321620
Hartebeestfontein Gold Mining Co.
Ltd. ADR 1,462,100 7,493,263 41619840
Kloof Gold Mining Ltd. ADR 1,125,100 11,391,638 49874650
Randfontein Estates Gold Mining Co.
Ltd. ADR 919,000 7,696,625 75233640
Unisel Gold Mines Ltd. 956,500 1,243,450 90917020
Vaal Reefs Exploration & Mining Co.
Ltd. ADR 2,127,900 19,151,100 91850640
Western Areas Gold Mining Ltd. ADR 566,500 4,673,625 95765420
Western Deep Levels Ltd.:
ADR 419,000 17,074,250 95807720
Ord. 5,000 202,652 95807710
Winkelhaak Mines Ltd. ADR 280,700 2,807,000 97420420
104,924,788
TOTAL PRECIOUS METALS 114,796,372
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
SOUTH AFRICA - CONTINUED
SECURITIES INDUSTRY - 4.6%
INVESTMENT MANAGERS - 4.6%
Anglo American Gold Investment Co.
Ltd. ADR 1,250,000 $ 10,234,375 03487050
Gold Fields Property Co. Ltd. ADR 385,000 7,700,000 38059740
Middle Witwatersrand West Area 180,000 425,889 59603410
18,360,264
TOTAL SOUTH AFRICA 189,195,384
UNITED KINGDOM - 0.1%
RETAIL & WHOLESALE, MISCELLANEOUS - 0.1%
RETAIL, GENERAL - 0.1%
Signet Group PLC (a) 800,000 421,984 82999F22
UNITED STATES - 5.9%
PRECIOUS METALS - 4.2%
GOLD ORES - 4.2%
Amax Gold, Inc. 287,500 1,868,750 02312010
Homestake Mining Co. 449,700 9,556,125 43761410
Newmont Mining Corp. 100,000 5,425,000 65163910
16,849,875
RAILROADS - 1.7%
RAILROADS - 1.7%
Santa Fe Pacific Corp. 294,800 6,706,700 80218310
TOTAL UNITED STATES 23,556,575
TOTAL COMMON STOCKS
(Cost $292,773,886) 364,423,923
NONCONVERTIBLE PREFERRED STOCKS - 0.4%
UNITED STATES - 0.4%
PRECIOUS METALS - 0.4%
GOLD ORES - 0.4%
Newmont Mining Corp. depositary
shares representing 1/2 preferred
$1.375 (b) (Cost $1,613,122) 23,800 1,547,000 65163930
OTHER SECURITIES - 0.4%
PRINCIPAL
AMOUNT
UNITED STATES - 0.4%
INDEXED SECURITIES - 0.4%
Goldman Sachs Group, LP notes
3.1273%, 3/28/94 (indexed to
silver price) (Cost $1,600,005) $ 1,600,000 1,709,600 38142T9Y
BULLION - 0.0%
TROY OUNCES
Gold Bullion (a) (Cost $3,468) 9 $ 3,437 68999410
REPURCHASE AGREEMENTS - 8.5%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account, at 3.47% dated
2/28/94 due 3/1/94 $ 34,069,284 $ 34,066,000
TOTAL INVESTMENT IN SECURITES - 100%
(Cost $330,056,481) $ 401,749,960
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 $1,547,000 or 0.4% of net
assets.
OTHER INFORMATION
CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective March 1,
1993, the fund adopted Statement of Position 93-2: Determination,
Disclosure, and Financial Statement Presentation of Income, Capital Gain,
and Return of Capital Distributions by Investment Companies. As a result,
the fund changed the classification of distributions to shareholders to
better disclose the differences between financial statement amounts and
distributions determined in accordance with income tax regulations.
Accordingly, amounts as of February 28, 1993 have been restated to reflect
an increase in paid in capital of $2,542,641, a decrease in undistributed
net investment income of $19,448,225 and a decrease in accumulated net
realized loss on investments of $16,905,584.
Purchases and sales of securities, other than short-term securities,
aggregated $346,823,341 and $242,573,923, respectively.
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 $78,769 for the period
(see Note 4 of Notes to Financial Statements).
The maximum loan and average daily loan balances during the periods for
which loans were outstanding amounted to $7,803,000 and $6,252,500,
respectively. The weighted average interest rate paid was 3.6% (see Note 7
of Notes to Financial Statements).
INCOME TAX INFORMATION
At February 28, 1994, the aggregate cost of investment securities for
income tax purposes was $330,879,856. Net unrealized appreciation
aggregated $70,870,104, of which $98,042,314 related to appreciated
investment securities and $27,172,210 related to depreciated investment
securities.
At February 28, 1994, the fund had a capital loss carryforward of
approximately $69,642,000 of which $41,690,000, $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>
FEBRUARY 28, 1994
ASSETS
Investment in securities, at value (including repurchase agreements of $34,066,000) (cost $330,056,481) $ 401,749,960
(Notes 1 and 2) - See accompanying schedule
Cash 884
Receivable for investments sold 898,450
Receivable for fund shares sold 23,208,768
Dividends receivable 1,310,885
Interest receivable 9,312
Redemption fees receivable (Note 1) 1,599
TOTAL ASSETS 427,179,858
LIABILITIES
Payable for fund shares redeemed $ 17,387,594
Accrued management fee 216,565
Other payables and accrued expenses 363,226
TOTAL LIABILITIES 17,967,385
NET ASSETS $ 409,212,473
Net Assets consist of (Note 1):
Paid in capital $ 408,885,783
Accumulated net investment loss (449,228
)
Accumulated undistributed net realized gain (loss) on investments (70,917,561
)
Net unrealized appreciation (depreciation) on investment securities 71,693,479
NET ASSETS, for 24,623,877 shares outstanding $ 409,212,473
NET ASSET VALUE and redemption price per share ($409,212,473 (divided by) 24,623,877 shares) $16.62
Maximum offering price per share (100/97 of $16.62) $17.13
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED FEBRUARY 28, 1994
INVESTMENT INCOME $ 9,473,324
Dividends
Interest (including security lending fees of $2,476) (Note 6) 1,592,962
TOTAL INCOME 11,066,286
EXPENSES
Management fee (Note 4) $ 2,378,390
Transfer agent (Note 4) 3,158,227
Fees
Redemption fees (Note 1) (486,660
)
Accounting and security lending fees (Note 4) 381,783
Non-interested trustees' compensation 2,415
Custodian fees and expenses 105,443
Registration fees 201,682
Audit 57,530
Legal 2,530
Interest (Note 7) 1,266
Reports to shareholders 56,692
Miscellaneous 3,959
Total expenses before reductions 5,863,257
Expense reductions (Note 8) (4,922 5,858,335
)
NET INVESTMENT INCOME 5,207,951
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 1) 18,030,231
Net realized gain (loss) on investment securities (including realized gain of $502,854 on sales of investments
in precious metals)
Change in net unrealized appreciation (depreciation) on investment securities 112,846,238
NET GAIN (LOSS) 130,876,469
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 136,084,420
OTHER INFORMATION $4,693,581
Sales charges paid to FDC
(Note 4)
Deferred sales charges withheld $125,117
by FDC (Note 4)
Exchange fees withheld by FSC $401,828
(Note 4)
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED TEN MONTHS
FEBRUARY 28, ENDED
1994 FEBRUARY 28,
1993
Operations $ 5,207,951 $ 1,182,389
Net investment income
Net realized gain (loss) on investments 18,030,231 (7,077,957
)
Change in net unrealized appreciation (depreciation) on investments 112,846,238 7,276,087
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 136,084,420 1,380,519
Distributions to shareholders (5,127,603) (2,313,988
From net investment income )
In excess of net investment income (551,255) -
Total distributions (5,678,858) (2,313,988
)
Share transactions 1,777,546,533 207,366,366
Net proceeds from sales of shares
Reinvestment of distributions 5,586,071 2,260,600
Cost of shares redeemed (1,649,222,991) (201,988,826
)
Paid in capital portion of redemption fees (Note 1) 6,974,855 1,216,068
Net increase (decrease) in net assets resulting from share transactions 140,884,468 8,854,208
TOTAL INCREASE (DECREASE) IN NET ASSETS 271,290,030 7,920,739
NET ASSETS
Beginning of period 137,922,443 130,001,704
End of period (including accumulated net investment income (loss) of $(449,228) and $19,448,225,$ 409,212,473 $ 137,922,443
respectively)
OTHER INFORMATION
Shares
Sold 119,380,060 21,004,885
Issued in reinvestment of distributions 319,586 255,184
Redeemed (109,070,745) (20,398,310
)
Net increase (decrease) 10,628,901 861,759
</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>
YEAR ENDED TEN MONTHS YEARS ENDED APRIL 30,
FEBRUARY 28, ENDED
FEBRUARY 28,
SELECTED PER-SHARE DATAC 1994 1993 1992 1991 1990
Net asset value, beginning of period $ 9.86 $ 9.90 $ 10.68 $ 12.23 $ 11.35
Income from Investment Operations
Net investment income .21 .09 .10 .18 .13
Net realized and unrealized gain (loss) on investments6.48 (.05) (.91) (1.71) .84
Total from investment operations 6.69 .04 (.81) (1.53) .97
Less Distributions
From net investment income (.19) (.17) (.10) (.15) (.18)
In excess of net investment income (.02) - - - -
From net realized gain - - - - -
Total distributions (.21) (.17) (.10) (.15) (.18)
Redemption fees added to paid in capital .28 .09 .13 .13 .09
Net asset value, end of period $ 16.62 $ 9.86 $ 9.90 $ 10.68 $ 12.23
TOTAL RETURND, E 70.58% 1.51% (6.46)% (11.45)% 9.08%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 409,212 $ 137,922 $ 130,002 $ 155,367 $ 192,551
Ratio of expenses to average net assetsB 1.55% 1.73% 1.81% 1.79% 1.93%
A
Ratio of expenses to average net assets before expense 1.55% 1.73% 1.81% 1.79% 1.93%
reductionsB A
Ratio of net investment income to average net assets 1.38% 1.12% .92% 1.52% 1.01%
A
Portfolio turnover rate 73% 36% 44% 41% 98%
A
</TABLE>
1 ANNUALIZED
2 SEE NOTE 8 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.
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 1 PAST 5 PAST 10
FEBRUARY 28, 1994 YEAR YEARS YEARS
UTILITIES 2.53% 97.16% 344.02%
UTILITIES
(INCL. 3% SALES CHARGE) -0.54% 91.24% 330.70%
S&P 500 8.33% 89.60% 321.84%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, 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
FEBRUARY 28, 1994 YEAR YEARS YEARS
UTILITIES 2.53% 14.54% 16.08%
UTILITIES
(INCL. 3% SALES CHARGE) -0.54% 13.85% 15.72%
S&P 500 8.33% 13.65% 15.48%
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 Utilities (065) S&P 500
02/29/84 9700.00 10000.00
03/31/84 9727.68 10173.00
04/30/84 9893.73 10269.64
05/31/84 9734.60 9700.71
06/30/84 9942.15 9911.21
07/31/84 10124.58 9788.31
08/31/84 10713.95 10869.92
09/30/84 11155.98 10872.09
10/31/84 11513.81 10914.50
11/30/84 11745.35 10792.25
12/31/84 12159.32 11077.17
01/31/85 12404.89 11940.08
02/28/85 12524.17 12086.94
03/31/85 13232.82 12095.40
04/30/85 13520.49 12084.52
05/31/85 14271.24 12783.00
06/30/85 14651.44 12983.70
07/31/85 13811.14 12964.22
08/31/85 14206.15 12854.02
09/30/85 13566.95 12451.69
10/31/85 14500.62 13026.96
11/30/85 15103.91 13920.61
12/31/85 16016.04 14594.37
01/31/86 16461.33 14676.10
02/28/86 17624.82 15773.87
03/31/86 18213.75 16654.05
04/30/86 17854.65 16465.86
05/31/86 18594.41 17341.84
06/30/86 19671.72 17634.92
07/31/86 20550.35 16649.13
08/31/86 21910.67 17884.49
09/30/86 19488.28 16405.45
10/31/86 20397.59 17352.04
11/30/86 20579.45 17773.70
12/31/86 19866.55 17320.47
01/31/87 21474.21 19653.53
02/28/87 20717.66 20429.85
03/31/87 20303.02 21020.27
04/30/87 19139.10 20833.19
05/31/87 18833.58 21014.44
06/30/87 19502.83 22075.67
07/31/87 19233.67 23194.90
08/31/87 19837.45 24060.07
09/30/87 19677.41 23533.16
10/31/87 18491.68 18464.12
11/30/87 17873.35 16942.67
12/31/87 18027.71 18232.01
01/31/88 19585.66 18999.58
02/29/88 19432.16 19884.96
03/31/88 18879.59 19270.51
04/30/88 18933.31 19484.42
05/31/88 19524.26 19653.93
06/30/88 20038.46 20556.05
07/31/88 19974.86 20477.93
08/31/88 19943.28 19781.68
09/30/88 20638.05 20624.38
10/31/88 21072.29 21197.74
11/30/88 21032.81 20894.61
12/31/88 20994.38 21260.27
01/31/89 21983.31 22816.52
02/28/89 21845.51 22248.39
03/31/89 22218.38 22766.78
04/30/89 23361.32 23948.37
05/31/89 24471.83 24918.28
06/30/89 25089.94 24776.25
07/31/89 26463.94 27013.54
08/31/89 26580.52 27543.01
09/30/89 26963.57 27430.08
10/31/89 26838.66 26793.70
11/30/89 27721.35 27340.30
12/31/89 29186.94 27996.46
01/31/90 27746.33 26117.90
02/28/90 27696.37 26454.82
03/31/90 27546.48 27155.87
04/30/90 26397.32 26476.98
05/31/90 27771.31 29058.48
06/30/90 28100.39 28860.88
07/31/90 28331.08 28768.53
08/31/90 26776.11 26167.85
09/30/90 26844.46 24893.48
10/31/90 28220.01 24786.44
11/30/90 28963.31 26387.64
12/31/90 29348.78 27123.86
01/31/91 29219.38 28306.46
02/28/91 30478.91 30330.37
03/31/91 30823.99 31064.36
04/30/91 30685.95 31138.92
05/31/91 30694.58 32484.12
06/30/91 30322.25 30996.35
07/31/91 31309.07 32440.78
08/31/91 32026.76 33209.62
09/30/91 33013.57 32655.02
10/31/91 33471.10 33092.60
11/30/91 33856.86 31758.97
12/31/91 35520.27 35392.19
01/31/92 34426.91 34733.90
02/29/92 34174.59 35185.44
03/31/92 33819.48 34499.32
04/30/92 34744.64 35513.60
05/31/92 35417.47 35687.62
06/30/92 35827.20 35155.87
07/31/92 37732.18 36593.75
08/31/92 37712.84 35843.58
09/30/92 37915.91 36266.53
10/31/92 37906.24 36393.47
11/30/92 38167.33 37634.48
12/31/92 39282.71 38097.39
01/31/93 39950.92 38417.40
02/28/93 42006.18 38939.88
03/31/93 43140.11 39761.51
04/30/93 42904.35 38799.28
05/31/93 42996.38 39839.10
06/30/93 44642.61 39954.64
07/31/93 45153.86 39794.82
08/31/93 47117.08 41303.04
09/30/93 47117.08 40985.01
10/31/93 46636.50 41833.40
11/30/93 44356.31 41435.98
12/31/93 44210.62 41937.36
01/31/94 45116.47 43363.23
02/28/94 43069.50 42183.75
Let's say you invested $10,000 in Fidelity Select Utilities Portfolio on
February 29, 1984 and paid a 3% sales charge. By February 28, 1994, your
investment would have grown to $43,070 - a 330.70% increase. That compares
to $10,000 invested in the S&P 500, which would have grown to $42,184
over the same period - a 321.84% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1994
% OF FUND'S
INVESTMENTS
Ameritech Corp. 5.3
Pacific Telesis Group 5.1
Southwestern Bell Corp. 4.8
BellSouth Corp. 4.8
U.S. West, Inc. 4.4
Bell Atlantic Corp. 4.0
NYNEX Corp. 3.6
Enron Corp. 3.5
Entergy Corp. 2.8
MCN Corp. 2.4
TOP INDUSTRIES AS OF FEBRUARY 28, 1994
Row: 1, Col: 1, Value: 11.3
Row: 1, Col: 2, Value: 7.2
Row: 1, Col: 3, Value: 10.7
Row: 1, Col: 4, Value: 12.2
Row: 1, Col: 5, Value: 22.1
Row: 1, Col: 6, Value: 36.5
Telephone Services 36.5%
Electric Power 22.1%
Electric & Other Services 12.2%
Gas Transmission 10.7%
Gas Transmission &
Distribution 7.2%
All Others 11.3%*
* INCLUDES SHORT-TERM INVESTMENTS
UTILITIES PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
John Muresianu,
Portfolio Manager of Fidelity Select Utilities
Portfolio
Q. JOHN, HOW HAS THE FUND PERFORMED?
A. For the year ended February 28, 1994, the fund had a total return of
2.53%. That lagged the S&P 500, which returned 8.33% for the same
period.
Q. WHAT DROVE THE SECTOR'S - AND THE FUND'S - PERFORMANCE?
A. The first half of the period was good for gas, electric and telephone
utility stocks. As interest rates fell, investors looked to utility stocks
to boost their income. Moreover, utility companies generally carry a lot of
debt, so their interest expense declines significantly as rates fall. That
in turn boosts their earnings potential. But in the second half of the
period all utility groups fell as interest rates turned up. That was
particularly true in February of this year, when the Federal Reserve raised
rates a quarter of a percentage point, and at that point the fund gave
back much of its previous gains.
Q. SINCE THAT REVERSAL IN THE DIRECTION OF INTEREST RATES HAVE YOU CHANGED
YOUR STRATEGY?
A. Not really, because I don't build the fund around where I think interest
rates will go. Rather, I try to invest in stocks that offer the best
potential for higher revenue and earnings growth. For that reason, I
continued to focus on telephone utilities and gas, and de-emphasized
electric utilities. The electric companies are just beginning the process
of deregulation, which adds a greater degree of unpredictability to their
earnings prospects.
Q. WHY DO YOU FAVOR TELEPHONE UTILITIES?
A. Mainly because of their superior earnings growth potential. Higher
earnings are driven by a combination of modest revenue growth and expense
control. On the revenue side, access lines have grown 2 to 4% a year, with
call volumes up 5 to 8% annually. The companies have also profited from
adding new services, such as call waiting, at little additional cost. Plus,
cellular subscribers have been growing at 30 to 50% per year. On the cost
side, headcount is being reduced. The prices of key components of capital
spending budgets, such as fiber, have come down. Finally, many of these
companies generate substantial cash flow, even after dividends and capital
spending.
Q. LET'S MOVE TO GAS UTILITIES. WHAT WAS THE STORY THERE?
A. Gas utilities as a group did better than electric utilities during the
first half of the period because they benefited not only from a decline in
interest rates but also from a tighter supply/demand balance for natural
gas. Also, they generally held up better than telephones in February of
this year. But their decline - when interest rates rose last - was made
more severe by a sharp drop in natural gas prices. But despite that drop,
I'm optimistic. On the demand side, federal policy is promoting the use of
this clean, abundant domestic fuel. On the supply side, drilling had
declined to historic lows in 1992, reducing supply and pushing up prices.
With the recent hard winter, inventories have been drawn down further. The
fund's investments in natural gas include Enron, which I think is one of
the best-managed companies in the group and has a consistent record of
earnings growth, and Sonat, which has had substantial gas reserves and has
benefited from the rise in natural gas prices.
Q. DID YOU INVEST IN ANY GAS COMPANIES THAT DIDN'T DO AS WELL?
A. ENSERCH didn't do as well as I had expected. And there were
disappointments in the other groups - like NYNEX in the telephones and
Commonwealth Edison in the electrics. In each instance, however, the stocks
were very cheap, turnaround stories which should do well over the long
term.
Q. WHAT'S THE OUTLOOK FOR UTILITIES FROM HERE?
A. With U.S. stock prices near historic highs, a general stock market
correction is a significant risk. During such a correction, utilities could
possibly outperform the market because of their high yield potential -
unless inflation was accelerating dramatically, which I don't think will
happen soon. However, if interest rates rise during a correction, utility
stocks would probably decline, though they may still do well relative to
other sectors. If, on the other hand, the stock market and interest rates
both rise, utilities would most likely lag the market. And finally, if
interest rates decline, the stocks should do well in both absolute and
relative terms.
FUND FACTS
START DATE: December 10, 1981
SIZE: as of February 28, 1994, over $250 million
MANAGER: John Muresianu, since December
1992; manager, Fidelity Select Natural Gas
Portfolio, April 1993 to February 1994; Fidelity
International Fund, 1987-1989, Fidelity
Utilities Income Fund, December 1992 to
present; senior analyst, joined Fidelity in 1986
(checkmark)
UTILITIES PORTFOLIO
INVESTMENTS FEBRUARY 28, 1994
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 97.1%
SHARES VALUE (NOTE 1)
COMPUTERS & OFFICE EQUIPMENT - 0.0%
ELECTRONIC COMPUTERS - 0.0%
Itron, Inc. (a) 1,100 $ 19,800 46574110
ELECTRIC UTILITY - 33.2%
ELECTRIC & OTHER SERVICES - 11.5%
CIPSCO, Inc. 4,500 127,675 12553910
CMS Energy Corp. 158,300 3,621,113 12589610
Cincinnati Gas & Electric Co. 39,600 970,200 17207010
DPL, Inc. 139,200 2,766,600 23329310
Hidro Cantabrico 33,050 1,157,047 42899999
IES Industries, Inc. 21,900 626,901 44949M10
Illinois Power Co. 163,100 3,506,650 45209210
LG&E Energy Corp. 9,900 356,400 50191710
Long Island Lighting Co. 18,000 416,250 54267110
Montana Power Co. 73,300 1,740,875 61208510
NIPSCO Industries, Inc. 117,100 3,542,275 62914010
New York State Electric & Gas Corp. 300 8,175 64984010
Niagara Mohawk Power Corp. 147,300 2,761,875 65352210
Pacific Gas & Electric Co. 19,200 607,200 69430810
Peco Energy Co. 92,600 2,488,625 69330410
Public Service Co. of Colorado 17,236 514,926 74444810
Public Service Co. of New Mexico (a) 125,500 1,694,250 74449910
Public Service Enterprise Group, Inc. 29,900 908,213 74457310
Rochester Gas & Electric Corp. 21,200 516,750 77136710
Sierra Pacific Resources 12,400 237,150 82642510
Utilicorp United, Inc. 7,610 222,593 91800510
28,791,743
ELECTRIC POWER - 21.7%
AES Corp. 244,902 5,632,746 00130H10
American Electric Power Co., Inc. 41,800 1,384,625 02553710
Boston Edison Co. 56,700 1,530,900 10059910
Centerior Energy Corp. 48,700 578,313 15188310
Central & South West Corp. 49,200 1,346,850 15235710
Central Louisiana Electric Co., Inc. 66,106 1,503,912 15389760
Commonwealth Edison Co. 59,100 1,580,925 20279510
Consolidated Electric Power Asia Ltd.
sponsored ADR (c) 12,900 156,413 20855210
DQE, Inc. 100,300 3,184,525 23329J10
Detroit Edison Company 34,500 970,313 25084710
EUA Power Corp. (interest certificates) (a) 800 800 26926020
Eastern Utilities Associates 112,143 2,859,647 27717310
El Paso Electric Co. (a) 76,900 211,475 28367710
Empresa Nacional De Electricidad SA
sponsored ADR 44,300 2,342,363 29244720
Entergy Corp. 211,014 7,016,216 29364G10
General Public Utilities Corp. 64,600 1,849,175 37055010
Hawaiian Electric Industries, Inc. 4,200 139,125 41987010
Houston Industries, Inc. 84,400 3,407,650 44216110
IPALCO Enterprises, Inc. 800 26,100 46261310
Kansas City Power & Light Co. 1,300 28,275 48513410
Maine Public Service Co. 44,200 1,187,875 56048310
National Power PLC (c) 198,500 1,452,585 63719496
New England Electric Systems 27,800 993,850 64400110
Northeast Utilities 53,000 1,238,875 66439710
Nova Scotia Power, Inc. 49,700 478,770 66981610
Ohio Edison Co. 26,500 543,250 67734710
PSI Resources, Inc. 91,600 2,198,400 69363210
Pinnacle West Capital Corp. 170,200 3,638,025 72348410
Portland General Corp. 47,100 871,350 73650610
SCEcorp 28,200 507,600 78388210
Sithe Energies, Inc. (a) 27,200 380,800 82990410
Southern Co. 108,200 2,231,625 84258710
TECO Energy, Inc. 16,900 344,338 87237510
Texas Utilities Co. 37,998 1,467,660 88284810
SHARES VALUE (NOTE 1)
Union Electric Co. 9,800 $ 362,600 90654810
United Illuminating Co. 22,500 812,813 91063710
54,460,764
TOTAL ELECTRIC UTILITY 83,252,507
GAS - 26.6%
GAS & OTHER SERVICES - 1.5%
MDU Resources Group, Inc. 66,600 1,998,000 55269010
UGI Corporation 52,347 1,203,981 90268110
Western Resources, Inc. 15,000 455,625 95942510
3,657,606
GAS DISTRIBUTION - 7.2%
Energen Corp. 43,500 935,250 29265N10
MCN Corp. 158,900 6,117,650 55267J10
NICOR, Inc. 37,100 1,001,700 65408610
NUI Corp. 27,100 741,863 62943010
National Fuel Gas Co. 46,800 1,444,950 63618010
New Jersey Resources Corp. 18,400 478,400 64602510
Pacific Enterprises 277,800 5,903,250 69423210
Peoples Energy Corp. 21,300 636,338 71103010
WICOR, Inc. 24,700 747,175 92925310
18,006,576
GAS TRANSMISSION - 10.7%
Arkla, Inc. 88,900 711,200 04123710
Coastal Corp. (The) 39,700 1,250,550 19044110
Enron Corp. 271,600 8,657,250 29356110
ONEOK, Inc. 58,600 1,062,125 68267810
Panhandle Eastern Corp. 85,000 1,859,375 69846210
Sonat, Inc. 200,800 6,099,300 83541510
Tejas Power Corp. (a) 4,500 50,625 87907910
Transco Energy Co. 13,400 207,700 89353210
TransCanada PipeLines Ltd. 66,300 976,445 89352610
Williams Companies, Inc. 236,000 5,811,500 96945710
26,686,070
GAS TRANSMISSION & DISTRIBUTION - 7.2%
Columbia Gas System, Inc. (The) (a) 129,900 3,685,913 19764810
Consolidated Natural Gas Co. 29,400 1,289,925 20961510
ENSERCH Corp. 87,400 1,354,700 29356710
El Paso Natural Gas Co. 23,600 911,550 28369587
Equitable Resources, Inc. 28,150 1,016,919 29454910
Questar Corp. 142,300 4,375,725 74835610
Tejas Gas Corp. (Del.) (a) 10,300 580,663 87907510
Westcoat Energy, Inc. 218,700 3,950,214 95751D10
Yankee Energy System, Inc. 36,600 915,000 98477910
18,080,609
TOTAL GAS 66,430,861
INDEPENDENT POWER - 0.4%
STEAM SUPPLY - 0.4%
Bonneville Pacific Corp. (a) 11,300 56 09890410
Magma Power Co. (a) 28,700 907,638 55919410
907,694
METALS & MINING - 0.2%
METAL ORES - 0.2%
Cameco, Inc. 32,500 617,127 13321L10
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
OIL & GAS - 0.2%
CRUDE PETROLEUM & GAS - 0.2%
Nuevo Energy Corporation (a) 1,400 $ 29,400 67050910
Occidental Petroleum Corp. 26,500 480,313 67459910
509,713
TELEPHONE SERVICES - 36.5%
ALLTEL Corp. 33,600 915,600 02003910
American Telephone & Telegraph Co. 3,500 183,750 03017710
Ameritech Corp. 329,000 13,201,125 03095410
BCE, Inc. 18,248 660,890 05534B10
Bell Atlantic Corp. 182,000 9,964,500 07785310
BellSouth Corp. 214,200 11,941,650 07986010
British Telecommunications PLC ADR 23,200 1,516,700 11102140
Cincinnati Bell, Inc. 23,200 382,800 17187010
GTE Corp. 154,500 5,040,563 36232010
MCI Communications Corp. 66,300 1,814,963 55267310
NYNEX Corp. 244,900 9,122,525 67076810
Pacific Telesis Group 233,600 12,731,200 69489010
Southwestern Bell Corp. 307,400 12,027,025 84533310
Sprint Corporation 5,100 189,338 85206110
Telephone & Data Systems, Inc. 18,247 827,958 87943310
U.S. West, Inc. 265,659 10,892,019 91288910
91,412,606
TOTAL COMMON STOCKS
(Cost $235,299,007) 243,150,308
PREFERRED STOCKS - 0.7%
ELECTRIC UTILITY - 0.7%
ELECTRIC & OTHER SERVICES - 0.7%
Long Island Lighting Co. $7.95
(Cost $1,595,005) 63,800 1,626,900 54267177
NONCONVERTIBLE BONDS - 0.4%
PRINCIPAL
AMOUNT
ELECTRIC UTILITY - 0.4%
ELECTRIC POWER - 0.4%
EUA Power Corp. secured, pay-in-kind:
17 1/2%, 5/15/93 (b) $ 800,000 104,000 269260AC
17 1/2%, 11/15/92 (b)(c) 442,800 57,564 269260AB
Northern Indiana Public Service Co.,
1st mtg 8 1/4%, 7/15/03 845,000 871,950 665262AR
TOTAL NONCONVERTIBLE BONDS
(Cost $1,718,049) 1,033,514
REPURCHASE AGREEMENTS - 1.8%
MATURITY
AMOUNT
Investments in repurchase agreements,
(U.S. Treasury obligations), in a joint
trading account, at 3.47% dated
2/28/94 due 3/1/94 $ 4,570,440 4,570,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $243,182,061) $ 250,380,722
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 $1,666,562 or 0.7% of net
assets.
OTHER INFORMATION
CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective March 1,
1993, the fund adopted Statement of Position 93-2: Determination,
Disclosure, and Financial Statement Presentation of Income, Capital Gain,
and Return of Capital Distributions by Investment Companies. As a result,
the fund changed the classification of distributions to shareholders to
better disclose the differences between financial statement amounts and
distributions determined in accordance with income tax regulations.
Accordingly, amounts as of February 28, 1993 have been reclassified to
reflect an increase in paid in capital of $45,368,784, a decrease in
undistributed net investment income of $20,656,342 and a decrease in
accumulated net realized gain on investments of $24,712,442.
Purchases and sales of securities, other than short-term securities,
aggregated $179,667,186 and $208,526,586, respectively.
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 $137,624 for the period
(see Note 4 of Notes to Financial Statements).
The maximum loan and average daily loan balances during the periods for
which loans were outstanding amounted to $2,205,000 and $1,317,750,
respectively. The weighted average interest rate paid was 3.7% (see Note 7
of Notes to Financial Statements).
INCOME TAX INFORMATION
At February 28, 1994, the aggregate cost of investment securities for
income tax purposes was $242,856,965. Net unrealized appreciation
aggregated $7,523,757, of which $21,884,088 related to appreciated
investment securities and $14,360,331 related to depreciated investment
securities.
The fund hereby designates $15,693,000 as a capital gain dividend for the
purpose of the dividend paid deduction.
On February 25, 1994, the fund acquired substantially all of the assets of
Electric Utilities Portfolio in a tax-free exchange for shares of Utilities
Portfolio. Electric Utilities Portfolio had net unrealized appreciation of
$1,838,111 (see Note 9 of Notes to Financial Statements).
UTILITIES PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
FEBRUARY 28, 1994
ASSETS
Investment in securities, at value (including repurchase agreements of $4,570,000) (cost $243,182,061) $ 250,380,722
(Notes 1 and 2) - See accompanying schedule
Cash 51,946
Receivable for investments sold 2,448,338
Receivable for fund shares sold 425,772
Dividends receivable 918,637
Interest receivable 8,582
Redemption fees receivable (Note 1) 730
Other receivables 647
TOTAL ASSETS 254,235,374
LIABILITIES
Payable for investments purchased $ 87,514
Payable for fund shares redeemed 3,316,108
Accrued management fee 125,973
Other payables and accrued expenses 183,504
TOTAL LIABILITIES 3,713,099
NET ASSETS $ 250,522,275
Net Assets consist of (Note 1):
Paid in capital $ 222,860,730
Undistributed net investment income 3,613,887
Accumulated undistributed net realized gain (loss) on investments 16,848,997
Net unrealized appreciation (depreciation) on investment securities 7,198,661
NET ASSETS, for 6,842,654 shares outstanding $ 250,522,275
NET ASSET VALUE and redemption price per share ($250,522,275 (divided by) 6,842,654 shares) $36.61
Maximum offering price per share (100/97 of $36.61) $37.74
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED FEBRUARY 28, 1994
INVESTMENT INCOME $ 12,689,617
Dividends
Interest (including security lending fees of $1,645) (Note 6) 1,183,815
TOTAL INCOME 13,873,432
EXPENSES
Management fee (Note 4) $ 1,945,321
Transfer agent (Note 4) 1,970,501
Fees
Redemption fees (Note 1) (196,999
)
Accounting and security lending fees (Note 4) 312,148
Non-interested trustees' compensation 2,213
Custodian fees and expenses 32,017
Registration fees 47,882
Audit 51,005
Legal 2,943
Interest (Note 7) 537
Reports to shareholders 41,217
Miscellaneous 4,418
Total expenses before reductions 4,213,203
Expense reductions (Note 8) (15,302 4,197,901
)
NET INVESTMENT INCOME 9,675,531
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 1) 46,918,583
Net realized gain (loss) on investment securities
Change in net unrealized appreciation (depreciation) on investment securities (44,694,870
)
NET GAIN (LOSS) 2,223,713
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 11,899,244
OTHER INFORMATION $1,890,168
Sales charges paid to FDC
(Note 4)
Deferred sales charges withheld $109,099
by FDC (Note 4)
Exchange fees withheld by FSC $163,043
(Note 4)
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED TEN MONTHS ENDED
FEBRUARY 28, 1994 FEBRUARY 28, 1993
Operations $ 9,675,531 $ 7,505,882
Net investment income
Net realized gain (loss) on investments 46,918,583 9,381,721
Change in net unrealized appreciation (depreciation) on investments (44,694,870) 29,611,696
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 11,899,244 46,499,299
Distributions to shareholders (7,450,649) (7,793,357)
From net investment income
From net realized gain (32,195,614) (9,926,828)
TOTAL DISTRIBUTIONS (39,646,263) (17,720,185)
Share transactions 246,579,723 144,930,165
Net proceeds from sales of shares
Net asset value of shares issued in exchange for the net assets
of Electric Utilities Portfolio (Note 9) 16,679,364 -
Reinvestment of distributions 38,572,943 17,242,207
Cost of shares redeemed (314,447,184) (107,157,064)
Paid in capital portion of redemption fees (Note 1) 166,488 51,525
Net increase (decrease) in net assets resulting from share transactions (12,448,666) 55,066,833
TOTAL INCREASE (DECREASE) IN NET ASSETS (40,195,685) 83,845,947
NET ASSETS
Beginning of period 290,717,960 206,872,013
End of period (including undistributed net investment income of $3,613,887 and $23,592,222,$ 250,522,275 $ 290,717,960
respectively)
OTHER INFORMATION
Shares
Sold 5,763,803 3,750,788
Issued in exchange for the net assets of Electric Utilities Portfolio (Note 9) 458,728 -
Issued in reinvestment of distributions 1,019,080 465,066
Redeemed (7,406,487) (2,771,946)
Net increase (decrease) (164,876) 1,443,908
</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>
YEAR ENDED TEN MONTHS YEARS ENDED APRIL 30,
FEBRUARY 28, ENDED
FEBRUARY 28,
SELECTED PER-SHARE DATAC 1994 1993 1992 1991 1990
Net asset value, beginning of period $ 41.49 $ 37.18 $ 35.57 $ 31.70 $ 28.82
Income from Investment Operations
Net investment income 1.33 1.19 1.66 1.59 1.27
Net realized and unrealized gain (loss) on investments(.16)F 6.14 2.82 3.41 2.40
Total from investment operations 1.17 7.33 4.48 5.00 3.67
Less Distributions
From net investment income (1.13) (1.33) (1.69) (.60) (.81)
From net realized gain (4.94) (1.70) (1.19) (.58) -
Total distributions (6.07) (3.03) (2.88) (1.18) (.81)
Redemption fees added to paid in capital .02 .01 .01 .05 .02
Net asset value, end of period $ 36.61 $ 41.49 $ 37.18 $ 35.57 $ 31.70
TOTAL RETURND, E 2.53% 20.90% 13.23% 16.25% 13.00%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 250,522 $ 290,718 $ 206,872 $ 197,409 $ 124,931
Ratio of expenses to average net assetsB 1.35% 1.42%A 1.51% 1.65% 1.67%
Ratio of expenses to average net assets before expense 1.36% 1.42%A 1.51% 1.65% 1.67%
reductionsB
Ratio of net investment income to average net assets 3.11% 3.71%A 4.58% 4.75% 3.93%
Portfolio turnover rate 61% 34%A 45% 45% 75%
</TABLE>
1 ANNUALIZED 2 SEE NOTE 8 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 THE AMOUNT SHOWN FOR A SHARE
OUTSTANDING THROUGHOUT THAT PERIOD DOES NOT ACCORD WITH THE AGGREGATE NET
GAINS ON INVESTMENTS FOR THAT PERIOD BECAUSE OF THE TIMING OF SALES AND
REPURCHASES OF THE FUND SHARES IN RELATION TO FLUCTUATING MARKET VALUES OF
THE INVESTMENTS OF THE FUND.
[TEXT]
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 1 PAST 5 LIFE OF
FEBRUARY 28, 1994 YEAR YEARS FUND
BIOTECHNOLOGY 22.17% 239.49% 275.23%
BIOTECHNOLOGY
(INCL. 3% SALES CHARGE) 18.50% 229.30% 263.97%
S&P 500 8.33% 89.60% 191.37%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, 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
FEBRUARY 28, 1994 YEAR YEARS FUND
BIOTECHNOLOGY 22.17% 27.69% 17.47%
BIOTECHNOLOGY
(INCL. 3% SALES CHARGE) 18.50% 26.92% 17.04%
S&P 500 8.33% 13.65% 13.91%
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 Biotech S&P500
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 29136.58
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
February 28, 1994, your investment would have grown to $36,397 - a 263.97%
increase. That compares to $10,000 invested in the S&P 500, which would
have grown to $29,137 over the same period - a 191.37% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1994
% OF FUND'S
INVESTMENTS
Genentech, Inc. 7.3
Amgen, Inc. 4.6
Schering-Plough Corp. 4.4
Roche Holdings Division (rights certificates) 3.7
Biogen, Inc. 3.2
Genetics Institute, Inc. (depositary shares) 3.2
Cellpro, Inc. 2.9
COR Therapeutics, Inc. 2.6
Liposome Technologies, Inc. 2.2
Elan PLC ADR 2.1
TOP INDUSTRIES AS OF FEBRUARY 28, 1994
Row: 1, Col: 1, Value: 17.2
Row: 1, Col: 2, Value: 1.3
Row: 1, Col: 3, Value: 1.5
Row: 1, Col: 4, Value: 2.6
Row: 1, Col: 5, Value: 22.6
Row: 1, Col: 6, Value: 54.8
Biotechnology 54.8%
Drugs 22.6%
Pharmaceutical
Preparations 2.6%
Hospitals 1.5%
Medical Technology 1.3%
All Others 17.2%*
* 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. The fund had a total return of 22.17% for the 12 months ended February
28. That topped the S&P 500, which returned 8.33% during the same
period.
Q. WHAT FACTORS INFLUENCED PERFORMANCE?
A. Often the biotechnology group will rise and fall on the fortunes of one
company that emerges at any given time as the sector leader. Over the past
year, that company was Chiron, one of the fund's top 10 investments for
most of that time. The stock went on an uphill ride starting last spring,
after the company won FDA approval for Betaseron, a new treatment for
multiple sclerosis. Investors began to feel good again about the prospects
of biotech stocks, and Chiron's success fueled a moderate sector rally in
the second half of 1993. However, by mid-January 1994 investors began to
question whether biotech stock prices were inflated. Once they decided the
answer was yes, they began taking profits. I reduced the fund's investment
in Chiron for the same reason. To illustrate, the price of a share of
Chiron went from $48.25 at the end of March to $84.00 at the end of
December, before falling to $77.50 by February 28. Most stocks in the
sector followed the same pattern.
Q. WHAT ELSE DROVE PERFORMANCE?
A. Focusing on established biotech companies, which usually aren't as
volatile as many of the smaller names. These are often companies that have
products on the market generating solid earnings, as well as new products
in the pipeline. For example, Biogen has a strong base of business in its
hepatitis vaccine and therapy treatment. Plus, investors got excited about
promising drugs in development to prevent cardiovascular clotting and treat
multiple sclerosis. Biogen's stock price made solid gains from the end of
August through the end of January, but I eventually cut back because I
thought the stock had gotten expensive. Amgen wasn't quite as strong a
performer, but it had the most revenue and best profit margins in the
industry. Amgen's growth has slowed in recent years, but I like the stock's
low valuation - its price compared to other measures like earnings.
Q. DOES THAT MEAN YOU STAYED AWAY FROM THE SMALLER, LESSER-KNOWN BIOTECH
NAMES?
A. Not entirely. I did have some success with companies that have promising
products under development. Cellpro is testing a blood-cell separation drug
that could allow doctors to administer chemotherapy to cancer patients more
quickly, presumably enhancing chances for survival. Protein Design Labs
stock shot up in the second half of '93 after a larger pharmaceutical name
made a big investment in the company. It's a move that often helps confirm
the worth of the smaller company's stock in the eyes of investors.
Q. YOU'VE ALREADY MENTIONED THAT THE SECTOR BEGAN A CORRECTION IN JANUARY.
WERE THERE INDIVIDUAL DISAPPOINTMENTS?
A. Sure. Gilead Sciences looked like a leader in AIDS research and
anti-viral drug development last year. However, concrete results were slow
in coming, and didn't justify the hopes investors had built into the
company's stock price. Gilead was one of the fund's 10 largest investments
six months ago, but I cut back as its stock price began to fall. In
addition, the performance of drug companies like Schering-Plough and Pfizer
was flat over the last six months. Investors continued to worry that these
companies would lose the ability to raise prices because of health-care
reform.
Q. HAS THE RECENT CORRECTION INFLUENCED YOUR OUTLOOK FOR THE NEXT SIX
MONTHS?
A. Somewhat. I think investor fears about health-care reform are already
priced into most biotech stocks, but this latest correction may still have
some legs. I don't see one company taking the lead in pulling the sector
back up the way Chiron did last year. Over the next six months, it doesn't
appear as if any of the biotech companies will either produce very strong
earnings, gain approval for a new product, or form an alliance with a major
corporation - all examples of what often triggers sector rallies. For these
reasons, I'll probably stay focused on bigger names like Genentech - the
fund's largest investment on February 28. The company's products are
diverse, and it has a big research pipeline. I think this type of company
is best equipped to weather downturns in the market, but still has good
growth potential should the sector turn around.
FUND FACTS
START DATE: December 16, 1985
SIZE: As of February 28, 1994, over $481 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 FEBRUARY 28, 1994
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 89.2%
SHARES VALUE (NOTE 1)
AGRICULTURE - 0.1%
CROPS - 0.1%
DEKALB Genetics Corp. Class B 17,400 $ 609,000 24487820
CELLULAR - 0.1%
CELLULAR & COMMUNICATION SERVICES - 0.1%
Millicom International Cellular SA (a) 25,748 627,608 60081492
COMPUTER SERVICES & SOFTWARE - 0.2%
COMPUTER SERVICES - 0.2%
Cerner Corp. (a) 24,400 1,152,900 15678210
DRUGS & PHARMACEUTICALS - 81.8%
BIOTECHNOLOGY - 54.8%
ASN (warrants) (a) 5,000 1 04599F22
Advanced Tissue Sciences Corp. Class A 221,000 1,850,867 00755F10
Alkermes, Inc. (c) 673,500 4,967,063 01642T10
Alpha 1 Biomedicals, Inc. (a) 83,200 1,144,000 02091010
Amgen, Inc. (a) 531,800 22,202,650 03116210
Aprogenex, Inc. (a) 100,000 1,100,000 03833310
Athena Neurosciences, Inc. 320,300 2,922,738 04685410
Biogen, Inc. (a) 359,700 15,781,838 09059710
COR Therapeutics, Inc. (a)(c) 952,500 12,858,750 21775310
Calgene, Inc. (a) 185,000 2,428,125 12959810
Cambridge Neuroscience, Inc. 93,900 727,725 13242610
Cell Genesys, Inc. (a) 290,300 5,297,975 15092110
Cellcor, Inc. 150,000 131,250 15115510
Cellpro, Inc. (a) 501,200 14,346,850 15115610
Celtrix Laboratories, Inc. (a) 511,400 3,579,800 15118610
Cephalon, Inc. (a) 490,800 7,914,150 15670810
Chiron Corp. (a) 117,730 9,124,075 17004010
Collagen Corp. (a) 40,300 957,125 19419410
Corvas International, Inc. 69,000 284,625 22100510
Creative Biomolecules, Inc. (a) 488,400 4,884,000 22527010
Curative Technologies, Inc. (a) 100,000 500,000 23126410
Cygnus Therapeutics Systems (a) 87,000 1,011,375 23256410
Cytotheraputics, Inc. (a) 415,100 4,099,113 23292310
DynaGen, Inc. 87,000 152,250 26791710
DynaGen, Inc. (warrants) (a) 40,000 35,000 26791712
Emisphere Technologies, Inc. 341,500 2,646,625 29134510
Genentech, Inc. (a) 730,800 35,717,850 36871020
Genetics Institute, Inc. (depositary
shares) (a) 345,280 15,623,920 37185530
Genetics Institute, Inc. (warrants) (a) 40,000 710,000 37185511
Genzyme Corp. (a) 49,000 1,396,500 37291710
Gilead Sciences, Inc. 291,000 3,492,000 37555810
Glycomed, Inc. (a) 539,500 3,641,625 38000210
ICOS Corporation (a) 30,000 165,000 44929510
Idexx Corp. (a) 120,000 3,690,000 45168D10
Imclone Systems, Inc. (a) 300,000 1,500,000 45245W10
Immulogic Pharmaceutical Corp. (a) 451,800 6,042,825 45252R10
Immunogen, Inc. 114,000 783,750 45253H10
Insite Vision, Inc. (a)(c) 629,700 5,982,150 45766010
Interneuron Pharmaceuticals, Inc. (a) 35,000 367,500 46057310
Life Medical Sciences, Inc. 105,000 866,250 53215M10
Life Medical Sciences, Inc. (warrants) (a) 50,000 118,750 53215M11
Liposome Technology, Inc. (a)(c) 1,080,000 10,530,000 53631110
Magainin Pharmaceuticals, Inc. (a) 275,700 3,963,188 55903610
Molecular Biosystems, Inc. (a) 188,500 3,487,250 60851310
Mycogen Corp. (a) 20,300 223,300 62845210
Neurogen Corp. (a)(c) 467,800 3,391,550 64124E10
ONCOR, Inc. 572,600 4,294,500 68231110
Oncogene Science, Inc. (a) 132,000 478,500 68230510
Perspective Biosystems, Inc. (a) 344,600 9,648,800 71527110
Protein Design Labs, Inc. (a) 369,400 9,512,050 74369L10
Protein Polymer Technologies, Inc. (a) 50,000 20,313 74369710
SHARES VALUE (NOTE 1)
Protein Polymer Technologies, Inc.
(warrants) (a) 40,000 $ 5,000 74369711
Quidel Corp. (a) 570,800 3,139,400 74838J10
Repligen Corp. (a) 410,200 2,615,025 75991610
Ribi ImmunoChem Research, Inc. (a) 241,700 2,024,238 76255310
SciGenics, Inc. 77,000 1,328,250 80890410
Sepracor, Inc. 151,400 1,305,825 81731510
Seragen, Inc. 251,200 1,601,400 81747410
Somatix Therapy Corp. (a) 386,900 2,950,113 83444710
Telios Pharmaceuticals, Inc. 355,000 1,641,875 87960N10
Vestar, Inc. 10,000 80,000 92545410
Viagene, Inc. 50,000 462,500 92552T10
Vical, Inc. 278,900 3,346,800 92560210
267,095,967
COMMERCIAL LABORATORY RESEARCH - 1.2%
Cantab Pharmaceutical sponsored ADR (a) 25,000 162,500 13808410
Medarex, Inc. (a) (b) 175,000 1,093,750 58391692
Medarex, Inc. (a) 30,000 187,500 58391610
Medarex, Inc. (warrants) (a) 175,000 328,125 58391611
Scios Nova, Inc. (a) 480,203 4,141,751 80890510
5,913,626
DRUGS - 22.6%
A.L. Laboratories, Inc. Class A 31,700 483,425 00162910
Allergan, Inc. 399,100 9,378,850 01849010
Argus Pharmaceuticals, Inc. (a) 105,000 630,000 04027210
Astra AB B Free shares 125,000 2,790,879 04632299
Biocraft Laboratories, Inc. 40,500 718,875 09058710
Carter-Wallace, Inc. 49,700 1,025,063 14628510
Cortech, Inc. 324,000 4,293,000 22051J10
Elan PLC ADR (a) 256,815 10,240,498 28413120
Elan PLC (warrants) (a) 76,575 1,885,659 28413112
Elan PLC (Therapeutic Systems, Inc.
common &1 ADR warrant) (a) 35,539 1,119,479 28413140
Glaxo Holdings PLC sponsored ADR 120,000 2,460,000 37732730
Lynx Therapeutics, Inc. 79,035 15,807 55181210
Matrix Pharmaceutical, Inc. 146,000 1,825,000 57684410
Mylan Laboratories, Inc. 227,100 5,336,850 62853010
Novo Industries A/S ADR 4,000 418,000 67010020
Pfizer, Inc. 105,900 6,142,200 71708110
Roche Holdings Division (rights certificates) 3,700 18,159,509 77157092
Schering-Plough Corp. 359,900 21,504,025 80660510
Schering-Plough Corp. (a) (d) 6,300 64,197 80660540
Teva Pharmaceutical Industries Ltd. ADR 300,400 10,025,850 88162420
Vertex Pharmaceuticals, Inc. (a) 50,000 850,000 92532F10
Warner-Lambert Co. 152,000 9,671,000 93448810
Watson Pharmaceuticals, Inc. (a) 50,000 987,500 94268310
110,025,666
IN VITRO, IN VIVO DIAGNOSTIC SUBSTANCE - 0.1%
Igen, Inc. 53,900 579,425 44953610
MEDICINAL CHEMICALS - 0.5%
Martek Biosciences 200,000 2,200,000 57290110
PHARMACEUTICAL PREPARATIONS - 2.6%
Affymax NV (a) 110,000 1,980,000 00826710
Alpha-Beta Technology, Inc. 200,300 5,057,575 02071K10
Cocensys, Inc. (a) 206,000 1,081,500 19126310
Ligand Pharmaceuticals, Inc. 110,500 1,353,625 53220K10
T Cell Sciences, Inc. 394,100 2,118,288 87234210
Neurobiological Technologies, Inc. 79,200 693,000 64124W10
Theratech, Inc. (a) 30,000 427,500 88338310
12,711,488
TOTAL DRUGS & PHARMACEUTICALS 398,526,172
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
ELECTRONIC INSTRUMENTS - 0.5%
MEASURING INSTRUMENTS - 0.5%
Perkin-Elmer Corp. 70,481 $ 2,651,848 71404110
INDUSTRIAL MACHINERY & EQUIPMENT - 0.3%
SPECIAL INDUSTRIAL MACHINERY, NEC - 0.3%
Perspective Technologies Corp. (a) 50,000 1,412,500 71527520
MEDICAL EQUIPMENT & SUPPLIES - 2.1%
MEDICAL SUPPLIES & APPLIANCES - 0.8%
Abaxis, Inc. (a) 98,000 539,000 00256710
Boston Scientific Corp. (a) 166,400 2,600,000 10113710
Hycor Biomedical, Inc. (a) 42,500 217,813 44862310
Johnson & Johnson 10,000 401,250 47816010
3,758,063
MEDICAL TECHNOLOGY - 1.3%
Medical Marketing Group, Inc. (a) 34,500 927,188 58494310
St. Jude Medical, Inc. 54,500 1,553,250 79084910
SciMed Life Systems, Inc. (a) 40,900 1,451,950 80861410
Target Therapeutics, Inc. (a) 78,100 1,835,350 87591910
Techne Corp. 40,800 418,200 87837710
6,185,938
TOTAL MEDICAL EQUIPMENT & SUPPLIES 9,944,001
MEDICAL FACILITIES MANAGEMENT - 3.4%
HEALTH SERVICES - 0.1%
Healthwise America, Inc. (a) 15,300 420,750 42221L10
Vitalink Pharmacy Services, Inc. (a) 12,200 155,550 92846E10
576,300
HOSPITALS - 1.5%
Columbia/HCA Healthcare Corp. 21,000 903,000 19767710
NovaCare, Inc. (a) 343,670 6,186,060 66993010
7,089,060
HMO'S & OUTPATIENT CARE - 1.2%
U.S. Healthcare, Inc. 90,800 5,765,800 91191010
MEDICAL LABORATORIES - 0.1%
Health Images, Inc. 96,600 458,850 42217810
MEDICAL SERVICES - 0.5%
Surgical Care Affiliates, Inc. 153,000 2,639,250 86881810
TOTAL MEDICAL FACILITIES MANAGEMENT 16,529,260
SERVICES - 0.7%
BUSINESS SERVICES - 0.0%
Advacare, Inc. 100,000 175,000 00738B10
COMMERCIAL TESTING LABS - 0.7%
IG Laboratories, Inc. 436,000 3,161,000 44958310
TOTAL SERVICES 3,336,000
TOTAL COMMON STOCKS
(Cost $408,490,599) 434,789,289
NONCONVERTIBLE PREFERRED STOCKS - 0.0%
DRUGS & PHARMACEUTICALS - 0.0%
DRUGS - 0.0%
Lynx Therapeutics, Inc. Series A
(Cost $114,965) 114,960 114,960 55181220
REPURCHASE AGREEMENTS - 10.8%
MATURITY VALUE (NOTE 1)
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account, at 3.47% dated
2/28/94 due 3/1/94 $ 52,332,044 $ 52,327,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $460,932,564) $ 487,231,249
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. - $ 1,604,980 - $ 4,967,063
Alpha 1 Biomedicals, Inc. (a) - - - -
Applied Immune Sciences, Inc. - 2,610,683 - -
COR Therapeuitcs, Inc. (a) $ 750,000 50,625 - 12,858,750
Cellpro, Inc. (a) 46,963 183,700 - -
Celtrix Laboratories, Inc. (a) - 312,825 - -
Emisphere Technologies, Inc. 337,500 1,000,550 - -
Glycomed, Inc. (a) - 891,750 - -
Insite Vision, Inc. (a) 1,587,813 - - 5,982,150
Liposome Technologies, Inc. (a) 2,021,165 3,190,500 - 10,530,000
Neurogen Corp. (a) - - - 3,391,550
TOTALS $ 4,743,441 $ 9,845,613 - $ 37,729,513
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 these securities amounted to $64,197 or 0.0% of net
assets.
OTHER INFORMATION
CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective March 1,
1993, the fund adopted Statement of Position 93-2: Determination,
Disclosure, and Financial Statement Presentation of Income, Capital Gain,
and Return of Capital Distributions by Investment Companies. As a result,
the fund changed the classification of distributions to shareholders to
better disclose the differences between financial statement amounts and
distributions determined in accordance with income tax regulations.
Accordingly, amounts as of February 28, 1993 have been reclassified to
reflect an increase in paid in capital of $74,326,546, a decrease in
undistributed net investment loss of $6,072,705 and a decrease in
accumulated net realized gain on investments of $80,399,251.
Purchases and sales of securities, other than short-term securities,
aggregated $240,824,980 and $355,165,920, respectively.
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 $42,992 for the period
(see Note 4 of Notes to Financial Statements).
At the period end, the value of securities loaned and the value of
collateral amounted to $2,430,000 and $2,520,000, respectively (see Note 6
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 89.8%
Switzerland 3.7
Ireland 2.7
Israel 2.1
Others (individually less than 1%) 1.7
TOTAL 100.0%
INCOME TAX INFORMATION
At February 28, 1994, the aggregate cost of investment securities for
income tax purposes was $463,745,996. Net unrealized appreciation
aggregated $23,485,253, of which $76,491,505 related to appreciated
investment securities and $53,006,252 related to depreciated investment
securities.
At February 28, 1994, the fund had a capital loss carryforward of
approximately $10,841,000 which will expire on February 28, 2002.
BIOTECHNOLOGY PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
FEBRUARY 28, 1994
ASSETS
Investment in securities, at value (including repurchase agreements of $52,327,000) (cost $460,932,564) $ 487,231,249
(Notes 1 and 2) - See accompanying schedule
Cash 356
Receivable for investments sold 8,858,925
Receivable for fund shares sold 1,352,951
Dividends receivable 405,109
Redemption fees receivable (Note 1) 334
Other receivables 30,217
TOTAL ASSETS 497,879,141
LIABILITIES
Payable for investments purchased $ 7,921,150
Payable for fund shares redeemed 5,583,162
Accrued management fee 263,856
Other payables and accrued expenses 444,755
Collateral on securities loaned, at value (Note 6) 2,520,000
TOTAL LIABILITIES 16,732,923
NET ASSETS $ 481,146,218
Net Assets consist of (Note 1):
Paid in capital $ 472,352,313
Accumulated net investment loss (3,787,602
)
Accumulated undistributed net realized gain (loss) on investments (13,717,178
)
Net unrealized appreciation (depreciation) on investment securities 26,298,685
NET ASSETS, for 17,425,319 shares outstanding $ 481,146,218
NET ASSET VALUE and redemption price per share ($481,146,218 (divided by) 17,425,319 shares) $27.61
Maximum offering price per share (100/97 of $27.61) $28.46
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED FEBRUARY 28, 1994
INVESTMENT INCOME $ 2,388,783
Dividends
Interest (including security lending fees of $58,348) (Note 6) 2,690,317
TOTAL INCOME 5,079,100
EXPENSES
Management fee (Note 4) $ 3,444,469
Transfer agent (Note 4) 4,957,823
Fees
Redemption fees (Note 1) (409,513
)
Accounting and security lending fees (Note 4) 537,640
Non-interested trustees' compensation 3,983
Custodian fees and expenses 54,058
Registration fees 58,074
Audit 105,625
Legal 6,046
Reports to shareholders 85,223
Miscellaneous 28,692
Total expenses before reductions 8,872,120
Expense reductions (Note 8) (5,419 8,866,701
)
NET INVESTMENT INCOME (LOSS) (3,787,601
)
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 1) (8,338,254
Net realized gain loss on investment securities (including realized loss of $3,143,188 on sales of investment )
in affiliated issuers)
Change in net unrealized appreciation (depreciation) on investment securities 118,233,161
NET GAIN (LOSS) 109,894,907
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 106,107,306
OTHER INFORMATION $2,082,038
Sales charges paid to FDC
(Note 4)
Deferred sales charges withheld $81,524
by FDC (Note 4)
Exchange fees withheld by FSC $313,350
(Note 4)
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED TEN MONTHS
FEBRUARY 28, ENDED
1994 FEBRUARY 28,
1993
INCREASE (DECREASE) IN NET ASSETS
Operations $ (3,787,601 $ (2,304,437
Net investment income (loss) ) )
Net realized gain (loss) on investments (8,338,254 45,854,032
)
Change in net unrealized appreciation (depreciation) on investments 118,233,161 (60,353,824
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 106,107,306 (16,804,229
)
Distributions to shareholders from net realized gains - (103,984,016
)
Share transactions 439,265,841 571,192,197
Net proceeds from sales of shares
Reinvestment of distributions - 102,424,611
Cost of shares redeemed (573,106,933 (726,104,937
) )
Paid in capital portion of redemption fees (Note 1) 886,916 1,392,013
Net increase (decrease) in net assets resulting from share transactions (132,954,176 (51,096,116
) )
TOTAL INCREASE (DECREASE) IN NET ASSETS (26,846,870 (171,884,361
) )
NET ASSETS
Beginning of period 507,993,088 679,877,449
End of period (including accumulated net investment loss of $3,787,602 and $6,072,705, respectively)$ 481,146,218 $ 507,993,088
OTHER INFORMATION
Shares
Sold 16,958,709 20,791,723
Issued in reinvestment of distributions - 3,798,543
Redeemed (22,006,765 (26,743,160
) )
Net increase (decrease) (5,048,056) (2,152,894)
</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>
YEAR ENDED TEN MONTHS YEARS ENDED APRIL 30,
FEBRUARY 28, ENDED
FEBRUARY 28,
SELECTED PER-SHARE DATAC 1994 1993 1992 1991 1990
Net asset value, beginning of period $ 22.60 $ 27.61 $ 26.78 $ 15.28 $ 11.90
Income from Investment Operations
Net investment income (loss) (.18) (.08) (.11) .05F (.04)G
Net realized and unrealized gain (loss) on investments 5.15 (1.09) 3.36 11.80 3.60
Total from investment operations 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 $ 27.61 $ 22.60 $ 27.61 $ 26.78 $ 15.28
TOTAL RETURND, E 22.17% (5.92)% 12.36% 81.43% 30.53%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 481,146 $ 507,993 $ 679,877 $ 482,271 $ 70,994
Ratio of expenses to average net assetsB 1.61% 1.50% 1.50% 1.63% 2.07%
A
Ratio of expenses to average net assets before expense 1.62% 1.50% 1.50% 1.63% 2.07%
reductionsB A
Ratio of net investment income (loss) to average net
assets (.69)% (.37)% (.34)% .24% (.31)%
A
Portfolio turnover rate 51% 79% 160% 166% 290%
A
</TABLE>
1 ANNUALIZED
2 SEE NOTE 8 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 REFLECTS A SPECIAL DIVIDEND WHICH AMOUNTED TO
$.02 PER SHARE.
7 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 1 PAST 5 PAST 10
FEBRUARY 28, 1994 YEAR YEARS YEARS
HEALTH CARE 20.57% 160.75% 518.97%
HEALTH CARE
(INCL. 3% SALES CHARGE) 16.95% 152.92% 500.40%
S&P 500 8.33% 89.60% 321.84%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, 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
FEBRUARY 28, 1994 YEAR YEARS YEARS
HEALTH CARE 20.57% 21.13% 20.00%
HEALTH CARE
(INCL. 3% SALES CHARGE) 16.95% 20.39% 19.63%
S&P 500 8.33% 13.65% 15.48%
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
02/29/84 9699.99 10000.00
03/31/84 9852.32 10173.00
04/30/84 9858.41 10269.64
05/31/84 9364.88 9700.71
06/30/84 9809.66 9911.21
07/31/84 9400.16 9788.31
08/31/84 10714.23 10869.92
09/30/84 10555.32 10872.09
10/31/84 10524.76 10914.50
11/30/84 10139.71 10792.25
12/31/84 10426.97 11077.17
01/31/85 11716.59 11940.08
02/28/85 12529.48 12086.94
03/31/85 12816.74 12095.40
04/30/85 13342.37 12084.52
05/31/85 14986.48 12783.00
06/30/85 15320.00 12983.70
07/31/85 15460.83 12964.22
08/31/85 15105.69 12854.02
09/30/85 13887.19 12451.69
10/31/85 14799.53 13026.96
11/30/85 16189.48 13920.61
12/31/85 16624.22 14594.37
01/31/86 16734.43 14676.10
02/28/86 17916.19 15773.87
03/31/86 20310.32 16654.05
04/30/86 20555.25 16465.86
05/31/86 21828.85 17341.84
06/30/86 23292.27 17634.92
07/31/86 21626.71 16649.13
08/31/86 22424.72 17884.49
09/30/86 19362.59 16405.45
10/31/86 21051.40 17352.04
11/30/86 20742.09 17773.70
12/31/86 20278.13 17320.47
01/31/87 23303.15 19653.53
02/28/87 26761.20 20429.85
03/31/87 26600.36 21020.27
04/30/87 25969.37 20833.19
05/31/87 26223.01 21014.44
06/30/87 26847.80 22075.67
07/31/87 27874.70 23194.90
08/31/87 28697.46 24060.07
09/30/87 28159.26 23533.16
10/31/87 20729.72 18464.12
11/30/87 18719.23 16942.67
12/31/87 20148.64 18232.01
01/31/88 21646.09 18999.58
02/29/88 22296.05 19884.96
03/31/88 21741.67 19270.51
04/30/88 21403.95 19484.42
05/31/88 21346.60 19653.93
06/30/88 21907.35 20556.05
07/31/88 21875.49 20477.93
08/31/88 21282.88 19781.68
09/30/88 21996.56 20624.38
10/31/88 22270.56 21197.74
11/30/88 21620.60 20894.61
12/31/88 21927.50 21260.27
01/31/89 23475.85 22816.52
02/28/89 23026.12 22248.39
03/31/89 24240.39 22766.78
04/30/89 25563.88 23948.37
05/31/89 26360.54 24918.28
06/30/89 25766.36 24776.25
07/31/89 28957.97 27013.54
08/31/89 29658.56 27543.01
09/30/89 29872.64 27430.08
10/31/89 29652.08 26793.70
11/30/89 30930.02 27340.30
12/31/89 31244.17 27996.46
01/31/90 29451.47 26117.90
02/28/90 29142.84 26454.82
03/31/90 30305.14 27155.87
04/30/90 30305.14 26476.98
05/31/90 34474.97 29058.48
06/30/90 35649.64 28860.88
07/31/90 36141.83 28768.53
08/31/90 34521.70 26167.85
09/30/90 33482.63 24893.48
10/31/90 34248.26 24786.44
11/30/90 37891.84 26387.64
12/31/90 38841.65 27123.86
01/31/91 42675.96 28306.46
02/28/91 47947.23 30330.37
03/31/91 52221.42 31064.36
04/30/91 51312.33 31138.92
05/31/91 54098.25 32484.12
06/30/91 51658.86 30996.35
07/31/91 56229.89 32440.78
08/31/91 59039.82 33209.62
09/30/91 60229.53 32655.02
10/31/91 64197.87 33092.60
11/30/91 60691.33 31758.97
12/31/91 71349.24 35392.19
01/31/92 69008.29 34733.90
02/29/92 65994.94 35185.44
03/31/92 61968.83 34499.32
04/30/92 58457.40 35513.60
05/31/92 59661.08 35687.62
06/30/92 57361.54 35155.87
07/31/92 60812.19 36593.75
08/31/92 59172.01 35843.58
09/30/92 55076.04 36266.53
10/31/92 56770.00 36393.47
11/30/92 59880.07 37634.48
12/31/92 58910.10 38097.39
01/31/93 55746.25 38417.40
02/28/93 49797.46 38939.88
03/31/93 51170.99 39761.51
04/30/93 51152.04 38799.28
05/31/93 53198.12 39839.10
06/30/93 53008.67 39954.64
07/31/93 51284.66 39794.82
08/31/93 53112.87 41303.04
09/30/93 54770.57 40985.01
10/31/93 58843.79 41833.40
11/30/93 58644.87 41435.98
12/31/93 60333.77 41937.36
01/31/94 61528.69 43363.23
02/28/94 60039.79 42183.75
Let's say you invested $10,000 in Fidelity Select Health Care Portfolio on
February 29, 1984 and paid a 3% sales charge. By February 28, 1994, your
investment would have grown to $60,040 - a 500.40% increase. That compares
to $10,000 invested in the S&P 500, which would have grown to $42,184
over the same period - a 321.84% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1994
% OF FUND'S
INVESTMENTS
Warner-Lambert Co. 9.6
Schering-Plough Corp. 7.8
Pfizer, Inc. 7.5
IMCERA Group, Inc. 5.7
U.S. Healthcare, Inc. 5.6
Johnson & Johnson 5.0
Allergan, Inc. 4.0
McKesson Corp. 3.7
Cardinal Health, Inc. 3.4
Bergen Brunswig Corp. Class A 3.2
TOP INDUSTRIES AS OF FEBRUARY 28, 1994
Row: 1, Col: 1, Value: 23.9
Row: 1, Col: 2, Value: 5.7
Row: 1, Col: 3, Value: 5.8
Row: 1, Col: 4, Value: 8.6
Row: 1, Col: 5, Value: 11.9
Row: 1, Col: 6, Value: 44.1
Drugs 44.1%
Drug Distributors -
Wholesale 11.9%
Medical Supplies &
Appliances 8.6%
Medical Technology 5.8%
HMOs & Outpatient Care 5.7%
All Others 23.9%*
* 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. Quite well. The fund's total return for the year ended February 28, 1994
was 20.57%. This was more than double the 8.33% return of the S&P 500.
Q. GIVEN THE CONCERNS AROUND HEALTH-CARE REFORM, HOW DID THE FUND END UP
OUTPERFORMING THE S&P 500?
A. In part, it was the sector itself that performed well. Over the past
year, the sector received a psychological boost as fears about health-care
reform subsided. February of 1993 marked the psychological bottom, and
since then the stocks have made a significant recovery. During this fall,
many investors shifted their focus from companies they expected to survive
reform to companies that promised innovation and growth.
Q. IN LIGHT OF THIS SHIFT, DID YOU CHANGE YOUR STRATEGY?
A. Yes. Over the past six months, I increased my stake in two fast growing
areas- biotechnology and health maintenance organizations, or HMOs. Both
helped the fund's performance dramatically. In particular, biotechnology
stocks did well as demand for innovative products increased. The expected
success of Chiron's Betaseron, a promising new treatment for multiple
sclerosis, propelled the company's stock from about $48 at the end of March
to $84 at the end of December. Biogen was another winner. Its licensed
products for the prevention and treatment of hepatitis helped push its
stock up dramatically. In the late fall I sold both Chiron and Biogen at a
profit. Some HMOs also looked good as low-cost providers that would benefit
from any reasonable plan passed by Congress. The fund had investments in
U.S. Healthcare, a Northeastern HMO that has done an excellent job holding
down costs while increasing its membership.
Q. YOU SAID THE SECTOR IS BECOMING INCREASINGLY DESENSITIZED TO HEALTH-CARE
REFORM. WHAT'S BEHIND THIS TREND?
A. The news out of Washington changes every day, and I think investors are
taking it less seriously. In addition, the public seems to be losing
interest in health-care reform and focusing instead on issues like crime
and welfare. I think this trend away from health-care reform will become
more pronounced as the economy picks up and people feel more secure in
their jobs. In my opinion, President Clinton's proposed reform will face
strong opposition because people will decide that any form of price control
is detrimental to quality care and that mandatory coverage is too
burdensome for government and business. I believe that reform will be
incremental over the next few years.
Q. PHARMACEUTICAL COMPANIES HAD A TOUGH TIME OVER THE LAST YEAR. WHY DO YOU
HAVE THREE DRUG COMPANIES IN YOUR TOP 10 STOCKS?
A. Many drug companies had a difficult year, largely because health-care
reform targeted them as expensive providers. In addition, the industry
experienced some fundamental problems in Italy and Germany, where
pharmaceutical spending was down 15% to 20%. My top three stocks,
Warner-Lambert, Schering-Plough, and Pfizer all had a mixed year. However,
Schering-Plough had a better year than the other two stocks. Its earnings
per share were up about 18% after the introduction of Claritin, a new
allergy medication. I'm keeping a significant stake in pharmaceutical drugs
because I think they have strong potential going forward.
Q. DO YOU REGRET ANY OF THE FUND DECISIONS YOU'VE MADE OVER THE LAST YEAR?
A. Yes. I wish I'd owned fewer drug stocks and more HMOs in the last six
months when HMOs performed well. However, when I consider my decision to
stay with pharmaceutical drugs for the coming 12 months, I come to the same
conclusion. HMOs are extremely expensive, and the market's growth
expectations are unrealistic. Pharmaceuticals are exactly the opposite.
Their expectations are at rock bottom and a number of positive changes are
taking place in the industry.
Q. HOW DOES THE FUND LOOK GOING FORWARD?
A. Although the market is still volatile, I think the fund's performance
may be more consistent over the next year than it was over the past year.
This is mostly because I believe investors will be less influenced by
health-care reform. I also expect that the fund could profit from its
investments in pharmaceuticals. When I look at both of these factors, I'm
increasingly optimistic.
FUND FACTS
START DATE: July 14, 1981
SIZE: as of February 28, 1994, over $522 million
MANAGER: Charles Mangum, since March
1992; manager, Fidelity Select Medical
Delivery Portfolio, 1991-1993; joined Fidelity
in 1990
(checkmark)
HEALTH CARE PORTFOLIO
INVESTMENTS FEBRUARY 28, 1994
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 91.5%
SHARES VALUE (NOTE 1)
DRUGS & PHARMACEUTICALS - 47.9%
BIOTECHNOLOGY - 3.3%
Alkermes, Inc. 93,900 $ 692,510 01642T10
Amgen, Inc. (a) 310,000 12,942,500 03116210
Biogen, Inc. (a) 4,600 201,825 09059710
COR Therapeutics, Inc. (a) 30,500 411,750 21775310
Centocor, Inc. (a) 83,300 895,475 15234210
Cephalon, Inc. (a) 42,800 690,150 15670810
Immune Response Corp. (a) 1,800 20,700 45252T10
Magainin Pharmaceuticals, Inc. (a) 53,400 767,625 55903610
Synergen, Inc. (a) 50,000 600,000 87159410
17,222,535
DRUGS - 44.1%
Allergan, Inc. 881,800 20,722,300 01849010
American Cyanamid Co. 224,500 9,962,188 02532110
Carter-Wallace, Inc. 95,700 1,973,813 14628510
Cortech, Inc. 12,500 165,625 22051J10
Elan PLC:
ADR (a) 393,350 15,684,831 28413120
Unit (Common & 1 ADR warrant) (a) 56,806 1,789,389 28413140
Forest Laboratories, Inc. (a) 239,800 12,019,975 34583810
IMCERA Group, Inc. 801,600 29,759,400 45245410
IVAX Corp. 230,000 8,078,750 46582310
Pfizer, Inc. 672,500 39,005,000 71708110
Schering-Plough Corp. 676,700 40,432,825 80660510
Vertex Pharmaceuticals, Inc. (a) 3,900 66,300 92532F10
Warner-Lambert Co. 784,600 49,920,175 93448810
229,580,571
IN VITRO, IN VIVO DIAGNOSTIC SUBSTANCE - 0.2%
Igen, Inc. 114,000 1,225,500 44953610
PHARMACEUTICAL PREPARATIONS - 0.3%
Ligand Pharmaceuticals, Inc. 35,000 428,750 53220K10
Shaman Pharmaceuticals (a) 79,000 869,000 81931910
1,297,750
TOTAL DRUGS & PHARMACEUTICALS 249,326,356
HOUSEHOLD PRODUCTS - 0.4%
FABRICATED RUBBER PRODUCTS - 0.4%
Safeskin Corp. 131,200 2,263,200 78645410
MEDICAL EQUIPMENT & SUPPLIES - 28.2%
DENTAL EQUIPMENT - 0.4%
Sybron Corp. (a) 67,600 2,154,750 87114F10
DRUG DISTRIBUTORS - WHOLESALE - 11.9%
Bergen Brunswig Corp. Class A 843,600 16,661,100 08373910
Cardinal Health, Inc. 366,193 17,668,812 14149Y10
FoxMeyer Corp. 154,700 2,088,450 35165410
McKesson Corp. 297,700 19,052,800 58155610
Owens & Minor, Inc. 255,200 6,635,200 69073010
62,106,362
MEDICAL SUPPLIES & APPLIANCES - 8.6%
Baxter International, Inc. 102,200 2,325,050 07181310
Becton, Dickinson & Co. 161,600 6,342,800 07588710
Boston Scientific Corp. (a) 108,600 1,696,875 10113710
Johnson & Johnson 643,100 25,804,388 47816010
Kendall International, Inc. (a) 154,100 6,857,450 48875110
Sofamor/Danek Group, Inc. (a) 52,800 1,478,400 83400510
44,504,963
MEDICAL TECHNOLOGY - 5.4%
Applied Bioscience International, Inc. (a) 15,000 80,625 03791710
Cordis Corp. (a) 23,600 1,091,500 21852510
Datascope Corp. (a) 43,800 700,800 23811310
SHARES VALUE (NOTE 1)
Haemonetics Corp. (a) 110,000 $ 2,447,500 40502410
Medtronic, Inc. 164,700 13,134,825 58505510
Mentor Corp. 274,900 4,260,950 58718810
SciMed Life Systems, Inc. (a) 5,400 191,700 80861410
Spacelabs Medical, Inc. (a) 19,100 487,050 84624710
St. Jude Medical, Inc. 160,000 4,560,000 79084910
Utah Medical Products, Inc. 134,300 1,040,825 91748810
27,995,775
OPHTHALMIC GOODS - 1.8%
Bausch & Lomb, Inc. 183,900 9,240,975 07170710
X-RAY ELECTRO-MED APPARATUS - 0.1%
Fischer Imaging Corp. 86,000 526,750 33771910
TOTAL MEDICAL EQUIPMENT & SUPPLIES 146,529,575
MEDICAL FACILITIES MANAGEMENT - 15.0%
HEALTH SERVICES - 0.0%
Healthwise America, Inc. (a) 2,640 72,600 42221L10
HOME HEALTH CARE AGENCIES - 2.7%
Abbey Healthcare Group, Inc. (a) 76,630 1,877,435 00278610
Curaflex Health Services, Inc. (a) 84,400 411,450 23126310
Healthinfusion, Inc. (a) 73,300 458,125 42221C10
Homedco Group, Inc. (a) 162,000 5,751,000 43739A10
Medisys, Inc. 110,000 343,750 58494410
Vivra, Inc. (a) 219,700 5,327,725 92855M10
14,169,485
HOSPITALS - 4.2%
Columbia/HCA Healthcare Corp. 1,705 73,315 19767710
HEALTHSOUTH Rehabilitation Corp. (a) 486,550 14,353,225 42192410
Health Management Associates, Inc.
Class A (a) 26,100 871,088 42193310
Summit Health Ltd. 135,800 1,247,663 86606410
Vencor, Inc. (a) 156,100 5,307,400 92260210
21,852,691
HOSPITALS, GENERAL MEDICAL - 0.2%
Ornda Healthcorp (a) 66,800 1,252,500 68685710
HMOS & OUTPATIENT CARE - 5.7%
U.S. Healthcare, Inc. 462,500 29,368,750 91191010
MEDICAL LABORATORIES - 0.0%
National Health Laboratories, Inc. 11,500 152,375 63633F10
MEDICAL SERVICES - 1.2%
Lincare Holdings, Inc. (a) 231,588 5,847,597 53279110
Surgical Care Affiliates, Inc. 11,800 203,550 86881810
6,051,147
NURSING CARE & NURSING HOMES - 0.8%
Integrated Health Services, Inc. (a) 120,300 4,015,013 45812C10
SPECIALTY OUTPATIENT CLINICS - 0.2%
American Healthcorp, Inc. (a) 45,550 694,638 02649V10
Coastal Healthcare Group, Inc. (a) 5,000 181,250 19046510
875,888
TOTAL MEDICAL FACILITIES MANAGEMENT 77,810,449
TOTAL COMMON STOCKS
(Cost $461,153,055) 475,929,580
CONVERTIBLE BONDS - 0.9%
PRINCIPAL VALUE (NOTE 1)
AMOUNT
MEDICAL EQUIPMENT & SUPPLIES - 0.4%
MEDICAL TECHNOLOGY - 0.4%
Advanced Medical, Inc.
7 1/4%, 1/15/02 $ 4,180,000 $ 2,069,100 00754CAA
MEDICAL FACILITIES MANAGEMENT - 0.5%
HOME HEALTH CARE AGENCIES - 0.0%
Abbey Healthcare Group, Inc.
6 1/2%, 12/1/02 (b) 65,000 77,675 002786AA
NURSING CARE & NURSING HOMES - 0.5%
Greenery Rehabilitation Group,
Inc. 6 1/2%, 6/15/11 3,250,000 2,502,500 394797AA
TOTAL MEDICAL FACILITIES MANAGEMENT 2,580,175
TOTAL CONVERTIBLE BONDS
(Cost $3,909,895) 4,649,275
REPURCHASE AGREEMENTS - 7.6%
MATURITY VALUE (NOTE 1)
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account, at 3.47% dated
2/28/94 due 3/1/94 $ 39,651,822 39,648,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $504,710,950) $ 520,226,855
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 $77,675 or 0.0% of net assets.
OTHER INFORMATION
CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective March 1,
1993, the fund adopted Statement of Position 93-2: Determination,
Disclosure, and Financial Statement Presentation of Income, Capital Gain,
and Return of Capital Distributions by Investment Companies. As a result,
the fund changed the classification of distributions to shareholders to
better disclose the differences between financial statement amounts and
distributions determined in accordance with income tax regulations.
Accordingly, amounts as of February 28, 1993 have been reclassified to
reflect an increase in paid in capital of $175,972,829, a decrease in
undistributed net investment income of $4,958,402 and a decrease in
accumulated net realized gain on investments of $171,014,427.
Purchases and sales of securities, other than short-term securities,
aggregated $1,075,375,355 and $1,208,758,948 respectively.
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 $342,394 for the period
(see Note 4 of Notes to Financial Statements).
At the period end, the value of securities loaned and the value of
collateral amounted to $15,469,000 and $15,896,700, respectively (see Note
6 of Notes to Financial Statements).
INCOME TAX INFORMATION
At February 28, 1994, the aggregate cost of investment securities for
income tax purposes was $508,083,012. Net unrealized appreciation
aggregated $12,143,843, of which $33,184,087 related to appreciated
investment securities and $21,040,244 related to depreciated investment
securities.
At February 28, 1994, the fund had a capital loss carryforward of
approximately $529,000 which will expire on February 28, 2002.
The fund intends to elect 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>
FEBRUARY 28, 1994
ASSETS
Investment in securities, at value (including repurchase agreements of $39,648,000) (cost $504,710,950) $ 520,226,855
(Notes 1 and 2) - See accompanying schedule
Cash 23
Receivable for investments sold 33,013,712
Receivable for fund shares sold 453,023
Dividends receivable 1,696,386
Interest receivable 82,088
Redemption fees receivable (Note 1) 448
Other receivables 164,103
TOTAL ASSETS 555,636,638
LIABILITIES
Payable for investments purchased $ 10,412,266
Payable for fund shares redeemed 4,037,650
Accrued management fee 281,699
Other payables and accrued expenses 2,118,759
Collateral on securities loaned, at value (Note 6) 15,896,700
TOTAL LIABILITIES
32,747,074
NET ASSETS $
522,889,564
Net Assets consist of (Note 1):
Paid in capital $
516,909,124
Undistributed net investment income 820,040
Accumulated undistributed net realized gain (loss) on investments
(10,355,505
)
Net unrealized appreciation (depreciation) on investment securities
15,515,905
NET ASSETS, for 8,259,742 shares outstanding $
522,889,564
NET ASSET VALUE and redemption price per share ($522,889,564 (divided by) 8,259,742 shares) $63.31
Maximum offering price per share (100/97 of $63.31) $65.27
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED FEBRUARY 28, 1994
INVESTMENT INCOME $ 7,956,141
Dividends
Interest (including security lending fees of $83,391) (Note 6) 2,082,797
TOTAL INCOME 10,038,938
EXPENSES
Management fee (Note 4) $ 3,460,974
Transfer agent (Note 4) 4,740,085
Fees
Redemption fees (Note 1) (321,857
)
Accounting and security lending fees (Note 4) 543,706
Non-interested trustees' compensation 4,010
Custodian fees and expenses 51,189
Registration fees 57,704
Audit 106,105
Legal 6,058
Reports to shareholders 108,538
Miscellaneous 18,736
Total expenses before reductions 8,775,248
Expense reductions (Note 8) (187,747 8,587,501
)
NET INVESTMENT INCOME 1,451,437
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 1) (3,984,876
Net realized gain (loss) on investment securities )
Change in net unrealized appreciation (depreciation) on investment securities 103,530,466
NET GAIN (LOSS) 99,545,590
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 100,997,027
OTHER INFORMATION $1,328,141
Sales charges paid to FDC
(Note 4)
Deferred sales charges withheld $187,745
by FDC (Note 4)
Exchange fees withheld by FSC $234,923
(Note 4)
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED TEN MONTHS
FEBRUARY 28, ENDED
1994 FEBRUARY 28,
1993
<TABLE>
<CAPTION>
<S> <C> <C>
Operations $ 1,451,437 $ 1,552,778
Net investment income
Net realized gain (loss) on investments (3,984,876 32,603,514
)
Change in net unrealized appreciation (depreciation) on investments 103,530,466 (137,590,291
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 100,997,027 (103,433,999
)
Distributions to shareholders (631,397 (1,898,493
From net investment income ) )
From net realized gain - (100,363,617
)
TOTAL DISTRIBUTIONS (631,397 (102,262,110
) )
Share transactions 255,996,151 237,965,905
Net proceeds from sales of shares
Reinvestment of distributions 614,017 100,014,699
Cost of shares redeemed (370,922,213 (435,137,216
) )
Paid in capital portion of redemption fees (Note 1) 469,371 404,969
Net increase (decrease) in net assets resulting from share transactions (113,842,674 (96,751,643
) )
TOTAL INCREASE (DECREASE) IN NET ASSETS (13,477,044 (302,447,752
) )
NET ASSETS
Beginning of period 536,366,608 838,814,360
End of period (including undistributed net investment income of $820,040 and $4,958,402,
respectively) $ 522,889,564 $ 536,366,608
OTHER INFORMATION
Shares
Sold 4,521,405 3,692,984
Issued in reinvestment of distributions 10,053 1,575,456
Redeemed (6,474,354 (6,977,952
) )
Net increase (decrease) (1,942,896) (1,709,512)
</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>
YEAR ENDED TEN MONTHS YEARS ENDED APRIL 30,
FEBRUARY 28, ENDED
FEBRUARY 28,
SELECTED PER-SHARE DATAC 1994 1993 1992 1991 1990
Net asset value, beginning of period $ 52.57 $ 70.42 $ 69.99 $ 46.15 $ 39.79
Income from Investment Operations
Net investment income (loss) .15 .13 (.02) .73F .72
Net realized and unrealized gain (loss) on investments 10.61 (9.34) 9.47 28.70 6.56
Total from investment operations 10.76 (9.21) 9.45 29.43 7.28
Less Distributions
From net investment income (.07) (.16) (.34) (.20) (.13)
From net realized gain - (8.51) (8.81) (5.67) (.84)
Total distributions (.07) (8.67) (9.15) (5.87) (.97)
Redemption fees added to paid in capital .05 .03 .13 .28 .05
Net asset value, end of period $ 63.31 $ 52.57 $ 70.42 $ 69.99 $ 46.15
TOTAL RETURND, E 20.57% (14.81)% 13.92% 69.32% 18.55%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 522,890 $ 536,367 $ 838,814 $ 624,018 $ 217,522
Ratio of expenses to average net assetsB 1.55% 1.46%A 1.44% 1.53% 1.74%
Ratio of expenses to average net assets before expense 1.59% 1.46%A 1.44% 1.53% 1.74%
reductionsB
Ratio of net investment income (loss) to average net
assets .26% .24%A (.02)% 1.28% 1.61%
Portfolio turnover rate 213% 112%A 154% 159% 126%
</TABLE>
1 ANNUALIZED
2 SEE NOTE 8 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 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 1 PAST 5 LIFE OF
FEBRUARY 28, 1994 YEAR YEARS FUND
MEDICAL DELIVERY 40.25% 185.42% 164.92%
MEDICAL DELIVERY
(INCL. 3% SALES CHARGE) 36.04% 176.85% 156.97%
S&P 500 8.33% 89.60% 140.42%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, 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
FEBRUARY 28, 1994 YEAR YEARS FUND
MEDICAL DELIVERY 40.25% 23.34% 13.54%
MEDICAL DELIVERY
(INCL. 3% SALES CHARGE) 36.04% 22.59% 13.09%
S&P 500 8.33% 13.65% 12.11%
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 Medical Delivery (505) S&P 500
06/30/86 9700.00 10000.00
07/31/86 9011.30 9488.77
08/31/86 9108.30 10192.84
09/30/86 8380.80 9349.89
10/31/86 9040.40 9889.38
11/30/86 8506.90 10129.69
12/31/86 7944.30 9871.39
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 24041.62
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 February 28, 1994, your investment would have grown to $25,697 -
a 156.97% increase. That compares to $10,000 invested in the S&P 500,
which would have grown to $24,042 over the same period - a 140.42%
increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1994
% OF FUND'S
INVESTMENTS
Columbia/HCA Healthcare Corp. 10.0
U.S. Healthcare, Inc. 9.2
United Healthcare Corp. 9.1
Health Management Associates, Inc. Class A 8.4
Lincare Holdings, Inc. 4.9
Medtonic, Inc. 4.2
Lilly (Eli) & Co. 3.6
Multicare Companies, Inc. 2.5
Allergan, Inc. 2.3
Elan PLC ADR 2.2
TOP INDUSTRIES AS OF FEBRUARY 28, 1994
Row: 1, Col: 1, Value: 41.5
Row: 1, Col: 2, Value: 4.2
Row: 1, Col: 3, Value: 4.9
Row: 1, Col: 4, Value: 10.9
Row: 1, Col: 5, Value: 18.3
Row: 1, Col: 6, Value: 20.2
Hospitals 20.2%
HMOs & Outpatient Care 18.3%
Drugs 10.9%
Medical Services 4.9%
Medical Technology 4.2%
All Others 41.5%*
* 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 DO?
A. Very well. It had a total return of 40.25% for the year ended February
28, 1994. This was dramatically above the S&P 500's 8.33% return.
Q. WHY DID THE FUND TURN IN SUCH STRONG PERFORMANCE, ESPECIALLY OVER THE
LAST SIX MONTHS?
A. There were two reasons. First, after a series of ups and downs in the
market during the year, investors became less nervous about health-care
reform. Since September, support for President Clinton's plan has weakened,
and the market has become more resilient to speculation about reform. As a
result, investors have switched their focus from companies they thought
would survive health-care reform to innovative companies with strong
prospects.
Q. AND THE SECOND REASON?
A. The fund benefited from an increased number of mergers and acquisitions
in the health-care industry. For example, this February, two companies in
the fund's top 10 holdings merged: Columbia bought HCA (Hospital Corp. of
America) at a high premium. I sold the fund's HCA stock at a 60% profit,
and held on to Columbia, which was much more profitable than I expected it
to be in the fourth quarter. With the acquisition of HCA, Columbia became
one of the largest hospital companies in the country. It also looks good
going forward. Since December of 1993, its share price has increased from
$30 to $44.
Q. HAVE YOU CHANGED THE FUND'S INVESTMENT STRATEGY OVER THE PAST YEAR?
A. Yes. I've made two significant changes. First, the fund owned larger
stakes in the top 10 stocks than the fund has held in the past. In fact,
the top six stocks account for nearly 50% of the fund's investments. The
other major change I've made is to drop most of the fund's alternative site
delivery companies - companies that offer specific services, such as
inpatient mental health care, physical rehabilitation, and home infusion,
at sites away from hospitals. These companies accounted for about 30% of
the fund before I took it over in April. Because they could offer services
less expensively than many hospitals, they were favored by insurance
companies, especially during the late 1980s. However, in 1991, alternative
site companies added so much capacity for patients that they exceeded
demand for their services. At the same time, hospitals changed the way they
charged for services, which made them more competitive. As a result, the
alternative site industry has shown disappointing earnings. Right now, the
only notable alternative site company in the fund is Lincare, which
provides respiratory therapy at home. It has a jump on its competitors
because of its large customer base and ability to provide services at a low
cost.
Q. WHAT DID YOU BUY INSTEAD?
A. Mainly HMOs. I believe that HMOs with a dominant local market position
have high growth potential. That's because these companies will be able to
offer a package of benefits at a competitive price, which should drive
membership and earnings growth. My biggest investments were U.S.
Healthcare, an HMO in the Northeast, and United Healthcare, an HMO with
offices throughout the country. Over the past year, United Healthcare has
been actively acquiring other HMOs and improving its operations.
Q. IN HINDSIGHT, DO YOU REGRET ANY OF YOUR DECISIONS?
A. Sure. I wish I'd bought some of the high-performing stocks the fund
didn't own, like Humana HMO. This company turned in a great performance in
1993, mostly because it cut costs dramatically - much more than I thought
it could.
Q. WHAT DO YOU THINK SHAREHOLDERS CAN EXPECT GOING FORWARD?
A. I'm reasonably optimistic about the fund. Each of the companies the fund
owns has a unique service or product. If my earnings estimates are correct,
the fund has good potential for 1994.
FUND FACTS
START DATE: June 30, 1986
SIZE: as of February 28, 1994, over $188 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 FEBRUARY 28, 1994
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 71.9%
SHARES VALUE (NOTE 1)
CHEMICALS & PLASTICS - 0.5%
CHEMICALS - 0.5%
Grace (W.R.) & Co. 21,100 $ 944,225 38388310
DRUGS & PHARMACEUTICALS - 10.9%
DRUGS - 10.9%
Allergan, Inc. 195,600 4,596,600 01849010
Bristol-Myers Squibb Co. 75,000 4,143,750 11012210
Elan PLC Therapeutic Systems, Inc. unit
(Common & 1 ADR ) (a) 4,337 136,616 28413140
Elan PLC ADR (a) 110,800 4,418,150 28413120
Lilly (Eli) & Co. 130,000 7,166,250 53245710
Mylan Laboratories, Inc. 400 9,400 62853010
Upjohn Co. 50,000 1,450,000 91530210
21,920,766
ELECTRICAL EQUIPMENT - 1.8%
ELECTRICAL MACHINERY - 1.8%
General Electric Co. 34,000 3,582,750 36960410
LODGING & GAMING - 1.8%
HOTELS, MOTELS, & TOURIST COURTS - 0.5%
Promus Companies, Inc. (a) 21,300 1,049,025 74342A10
RACING & GAMING - 1.3%
Boyd Gaming Corp. (a) 50,000 875,000 10330410
International Game Technology 25,000 709,375 45990210
President Riverboat Casinos, Inc. (a) 55,500 929,625 74084810
2,514,000
TOTAL LODGING & GAMING 3,563,025
MEDICAL EQUIPMENT & SUPPLIES - 9.1%
DRUG DISTRIBUTORS - WHOLESALE - 2.5%
Bergen Brunswig Corp. Class A 75,300 1,487,175 08373910
Cardinal Health, Inc. 44,900 2,166,425 14149Y10
Owens & Minor, Inc. 50,100 1,302,600 69073010
4,956,200
MEDICAL SUPPLIES & APPLIANCES - 2.4%
Baxter International, Inc. 150,000 3,412,500 07181310
Hillenbrand Industries, Inc. 16,300 674,413 43157310
Johnson & Johnson 20,000 802,500 47816010
4,889,413
MEDICAL TECHNOLOGY - 4.2%
Ballard Medical Products 2,700 37,125 05856610
Medtronic, Inc. 105,800 8,437,550 58505510
Ventritex, Inc. (a) 1,900 53,200 92281410
8,527,875
TOTAL MEDICAL EQUIPMENT & SUPPLIES 18,373,488
MEDICAL FACILITIES MANAGEMENT - 47.8%
HEALTH SERVICES - 0.3%
Vitalink Pharmacy Services, Inc. (a) 46,900 597,975 92846E10
HOME HEALTH CARE AGENCIES - 0.2%
Homedco Group, Inc. (a) 13,800 489,900 43739A10
HOSPITALS - 20.2%
Columbia/HCA Healthcare Corp. 468,582 20,149,026 19767710
HEALTHSOUTH Rehabilitation Co. (a) 97,900 2,888,050 42192410
Health Management Associates, Inc.
Class A (a) 503,575 16,806,816 42193310
Universal Health Services, Inc.
Class B (a) 26,400 656,700 91390310
40,500,592
HOSPITALS, GENERAL MEDICAL - 0.7%
Ornda Healthcorp (a) 86,700 1,625,625 68685710
SHARES VALUE (NOTE 1)
HMOS & OUTPATIENT CARE - 18.3%
U.S. Healthcare, Inc. 290,800 $ 18,465,800 91191010
United HealthCare Corp. 220,200 18,194,024 91058110
36,659,824
MEDICAL SERVICES - 4.9%
Lincare Holdings, Inc. (a) 386,700 9,764,175 53279110
NURSING CARE & NURSING HOMES - 0.7%
Health Care & Retirement Corp. (a) 53,800 1,398,800 42193710
SKILLED NURSING CARE FACILITIES - 2.5%
Multicare Companies, Inc. (a) 264,000 4,950,000 62543V10
TOTAL MEDICAL FACILITIES MANAGEMENT 95,986,891
TOTAL COMMON STOCKS
(Cost $118,626,594) 144,371,145
REPURCHASE AGREEMENTS - 28.1%
MATURITY VALUE (NOTE 1)
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account, at 3.47% dated
2/28/94 due 3/1/94 $56,325,429 56,320,000
TOTAL INVESTMENT IN SECURITIES - 100.0%
(Cost $174,946,594) $ 200,691,145
LEGEND
3. Non-income producing
OTHER INFORMATION
CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective March 1,
1993, the fund adopted Statement of Position 93-2: Determination,
Disclosure, and Financial Statement Presentation of Income, Capital Gain,
and Return of Capital Distributions by Investment Companies. As a result,
the fund changed the classification of distributions to shareholders to
better disclose the differences between financial statement amounts and
distributions determined in accordance with income tax regulations.
Accordingly, amounts as of February 28, 1993 have been reclassified to
reflect an increase in paid in capital of $19,878,373, a decrease in
undistributed net investment loss of $1,691,792 and a decrease in
accumulated net realized gain on investments of $21,570,165.
Purchases and sales of securities, other than short-term securities,
aggregated $184,954,212 and $140,931,022, respectively.
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 $71,221 for the period
(see Note 4 of Notes to Financial Statements).
At the period end, the value of securities loaned and the value of
collateral amounted to $2,326,600 and $2,362,700, respectively (see Note 6
of Notes to Financial Statements).
INCOME TAX INFORMATION
At February 28, 1994, the aggregate cost of investment securities for
income tax purposes was $175,170,766. Net unrealized appreciation
aggregated $25,520,379, of which $27,509,658 related to appreciated
investment securities and $1,989,279 related to depreciated investment
securities.
At February 28, 1994, the fund had a capital loss carryforward of
approximately $12,438,000 of which $1,480,000 and $10,958,000 will expire
on February 28, 2001 and 2002, respectively.
MEDICAL DELIVERY PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
FEBRUARY 28, 1994
ASSETS
Investment in securities, at value (including repurchase agreements of $56,320,000) (cost $174,946,594) $ 200,691,145
(Notes 1 and 2) - See accompanying schedule
Cash 25,358
Receivable for investments sold 776,450
Receivable for fund shares sold 5,959,263
Dividends receivable 123,181
Redemption fees receivable (Note 1) 4,272
Other receivables 112,222
TOTAL ASSETS 207,691,891
LIABILITIES
Payable for investments purchased $ 655,293
Payable for fund shares redeemed 15,800,441
Accrued management fee 97,269
Other payables and accrued expenses 223,561
Collateral on securities loaned, at value (Note 6) 2,362,700
TOTAL LIABILITIES 19,139,264
NET ASSETS $ 188,552,627
Net Assets consist of (Note 1):
Paid in capital $ 175,430,958
Accumulated undistributed net realized gain (loss) on investments (12,622,882
)
Net unrealized appreciation (depreciation) on investment securities 25,744,551
NET ASSETS, for 9,295,929 shares outstanding $ 188,552,627
NET ASSET VALUE and redemption price per share ($188,552,627 (divided by) 9,295,929 shares) $20.28
Maximum offering price per share (100/97 of $20.28) $20.91
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED FEBRUARY 28, 1994
INVESTMENT INCOME $ 529,092
Dividends
Interest (including security lending fees of $34,005) (Note 6) 756,237
TOTAL INCOME 1,285,329
EXPENSES
Management fee (Note 4) $ 667,707
Transfer agent (Note 4) 1,154,295
Fees
Redemption fees (Note 1) (110,989
)
Accounting and security lending fees (Note 4) 111,491
Non-interested trustees' compensation 681
Custodian fees and expenses 16,785
Registration fees 41,744
Audit 16,139
Legal 1,103
Reports to shareholders 26,397
Miscellaneous 1,574
Total expenses before reductions 1,926,927
Expense reductions (Note 8) (35,350 1,891,577
)
NET INVESTMENT INCOME (LOSS) (606,248
)
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 1) (9,573,815
Net realized gain (loss) on investment securities )
Change in net unrealized appreciation (depreciation) on investment securities 46,689,562
NET GAIN (LOSS) 37,115,747
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 36,509,499
OTHER INFORMATION $734,682
Sales charges paid to FDC
(Note 4)
Deferred sales charges withheld $15,852
by FDC (Note 4)
Exchange fees withheld by FSC $89,265
(Note 4)
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED TEN MONTHS
FEBRUARY 28, ENDED
1994 FEBRUARY 28,
1993
Operations $ (606,248 $ (930,627
Net investment income (loss) ) )
Net realized gain (loss) on investments (9,573,815 (3,067,496
) )
Change in net unrealized appreciation (depreciation) on investments 46,689,562 (20,540,446
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 36,509,499 (24,538,569
)
Distributions to shareholders from net realized gains - (9,395,175
)
Share transactions 293,157,307 212,205,693
Net proceeds from sales of shares
Reinvestment of distributions - 9,212,168
Cost of shares redeemed (213,446,953 (245,468,808
) )
Paid in capital portion of redemption fees (Note 1) 523,366 433,027
Net increase (decrease) in net assets resulting from share transactions 80,233,720 (23,617,920
)
TOTAL INCREASE (DECREASE) IN NET ASSETS 116,743,219 (57,551,664
)
NET ASSETS
Beginning of period 71,809,408 129,361,072
End of period (including accumulated net investment loss of $0 and $1,691,792, respectively) $ 188,552,627 $ 71,809,408
OTHER INFORMATION
Shares
Sold 17,052,395 12,114,797
Issued in reinvestment of distributions - 544,776
Redeemed (12,723,955 (14,278,178
) )
Net increase (decrease) 4,328,440 (1,618,605)
</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>
YEAR ENDED TEN MONTHS YEARS ENDED APRIL 30,
FEBRUARY 28, ENDED
FEBRUARY 28,
SELECTED PER-SHARE DATAC 1994 1993 1992 1991 1990
Net asset value, beginning of period $ 14.46 $ 19.64 $ 18.75 $ 11.17 $ 9.85
Income from Investment Operations
Net investment income (loss) (.10) (.13) (.15) (.01) .16
Net realized and unrealized gain (loss) on investments 5.84 (3.56) 2.16 7.76 1.43
Total from investment operations 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 .08 .06 .12 .22 .04
Net asset value, end of period $ 20.28 $ 14.46 $ 19.64 $ 18.75 $ 11.17
TOTAL RETURND, E 40.25% (19.63)% 11.71% 72.85% 16.35%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 188,553 $ 71,809 $ 129,361 $ 131,622 $ 23,559
Ratio of expenses to average net assetsB 1.79% 1.77% 1.69% 1.94% 2.16%
A
Ratio of expenses to average net assets before expense 1.82% 1.77% 1.69% 1.94% 2.16%
reductionsB A
Ratio of net investment income (loss) to average net
assets (.57)% (.89)% (.71)% (.07)% 1.43%
A
Portfolio turnover rate 164% 155% 181% 165% 253%
A
</TABLE>
1 ANNUALIZED
2 SEE NOTE 8 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.
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 1 PAST 5 LIFE OF
FEBRUARY 28, 1994 YEAR YEARS FUND
COMPUTERS 45.06% 177.39% 214.29%
COMPUTERS
(INCL. 3% SALES CHARGE) 40.70% 169.07% 204.87%
S&P 500 8.33% 89.60% 222.99%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, 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
FEBRUARY 28, 1994 YEAR YEARS FUND
COMPUTERS 45.06% 22.64% 14.25%
COMPUTERS
(INCL. 3% SALES CHARGE) 40.70% 21.89% 13.85%
S&P 500 8.33% 13.65% 14.62%
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 S&P 500
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 32298.81
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
February 28, 1994, your investment would have grown to $30,487 - a 204.87%
increase. That compares to $10,000 invested in the S&P 500, which would
have grown to $32,299 over the same period - a 222.99% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1994
% OF FUND'S
INVESTMENTS
Intel Corp. 6.5
Compaq Computer Corp. 5.9
International Business Machines Corp. 5.0
Micron Technology, Inc. 4.7
Advanced Micro Devices, Inc. 4.5
Texas Instruments, Inc. 4.1
Hewlett Packard Co. 3.8
Sun Microsystems, Inc. 3.7
Samsung Electronics, Ltd. GDS 3.2
Intelligent Electronics, Inc. 2.1
TOP INDUSTRIES AS OF FEBRUARY 28, 1994
Row: 1, Col: 1, Value: 1.3
Row: 1, Col: 2, Value: 2.1
Row: 1, Col: 3, Value: 3.5
Row: 1, Col: 4, Value: 10.9
Row: 1, Col: 5, Value: 25.0
Row: 1, Col: 6, Value: 32.8
Semiconductors 28.3%
Mini & Micro Computers 9.6%
Mainframe Computers 6.4%
Computer & Software
Stores 5.6%
Computer Equipment -
Wholesale 5.5%
All Others 44.6%*
* INCLUDES SHORT-TERM INVESTMENTS
COMPUTERS PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Harry Lange,
Portfolio Manager of Fidelity Select Computers Portfolio
Q. HARRY, HOW DID THE FUND PERFORM?
A. Very well. The fund had a total return of 45.06% for the 12 months ended
February 28, 1994. That easily outdistanced the S&P 500, which returned
8.33% during the same period.
Q. WHAT WAS BEHIND THE FUND'S SUCCESS?
A. A broad answer is the continuing boom in personal computers. The PC
market and related industries picked up in 1993 for several reasons:
corporations upgraded their systems more quickly, demand increased among
home users, and international markets - especially the Far East - were
strong. However, I can also attribute a fair amount of the fund's
performance to successful trading. I bought stocks like Apple, Dell and
Digital Equipment when valuations (prices compared to other measures like
earnings) were low and sold them after the stocks had risen. The exception
was Compaq. It was the fund's largest investment over most of the last six
months and was a star performer throughout.
Q. WHAT MADE COMPAQ SO ATTRACTIVE?
A. I'll try to limit the superlatives, but it's not easy. Compaq now claims
an 11% share of the world PC market, up from 7% a year ago. The company is
big enough to produce its computers at low cost, but agile enough to
respond to a rapidly changing market. Compaq's stock price has nearly
doubled over the last six months, but amazingly its price-to-earnings ratio
hasn't changed much because earnings estimates have risen just as rapidly.
The company's relatively low stock valuation, combined with its growth
potential, make me optimistic about Compaq's future.
Q. WHAT OTHER COMPANIES BENEFITED FROM THE INCREASED DEMAND FOR PCS AND
RELATED PRODUCTS?
A. Computer and software stores and computer equipment wholesalers. For
example, Micro-Age has done very well providing equipment to firms that
specialize in system installation for small businesses. Merisel is a
wholesaler that distributes software and networking products, as well as
computers. Lately, I've decreased the fund's investment in both groups; I
felt the stocks had gotten expensive.
Q. WHERE DID YOU TURN?
A. To semiconductors. The stocks of chip makers suffered a technical
correction last fall, which provided a buying opportunity. On February 28,
28.3% of the fund was invested in semiconductor stocks, up from 13.4% six
months ago. I like this sector because I see no letup in the demand for
semiconductors. My largest bet is Intel, which is putting out its new
microprocessor, the Pentium, this year. Intel stands alone with this
technology, and I believe it could gain greater market share. Texas
Instruments, Advanced Micro Devices and Samsung are other chipmakers that
may benefit from a solid market for semiconductors.
Q. DESPITE THE FUND'S EXCELLENT RETURNS, THERE MUST HAVE BEEN AT LEAST A
FEW DISAPPOINTMENTS ALONG THE WAY . . .
A. There were. Sun Microsystems - which produces computer workstations -
changed its operating system last year and had some trouble making the
transition. Despite the stock's flat performance so far, I'll probably
stick with it because I think demand for workstations is still there. Also,
a small investment in a few Japanese electronics companies hurt the fund's
performance. The Japanese stock market corrected sharply in the fall, and I
didn't get the fund out in time.
Q. CAN THE FUND CONTINUE TO PERFORM AT THIS PACE?
A. That's a tricky question. Certainly the underlying story of this sector
seems solid. I don't see a slowdown in the personal computer market, which
helps all the industries surrounding it. But there's always the risk of a
correction, which can be quick and sharp. When a sector has done so well,
investors look for any small reason to sell, even if common logic
disagrees. I'll most likely use any correction as an opportunity to add to
my top investments, because I believe the business prospects of these
companies are very compelling.
FUND FACTS
START DATE: July 29, 1985
SIZE: as of February 28, 1994, over $120 million
MANAGER: Harry Lange, since June 1992;
manager, Fidelity Select 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 FEBRUARY 28, 1994
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 86.2%
SHARES VALUE (NOTE 1)
COMMUNICATIONS EQUIPMENT - 2.3%
DATACOMMUNICATIONS EQUIPMENT - 1.7%
Cisco Systems, Inc. (a) 5,000 $ 368,750 17275R10
3Com Corp. (a) 20,000 1,212,500 88553510
1,581,250
TELEPHONE EQUIPMENT - 0.6%
Natural Microsystems 33,000 420,750 63888210
Perceptron, Inc. 15,000 206,250 71361F10
Zoom Telephonics, Inc. 2,900 34,075 98976E10
661,075
TOTAL COMMUNICATIONS EQUIPMENT 2,242,325
COMPUTER SERVICES & SOFTWARE - 12.4%
COMPUTER & SOFTWARE STORES - 5.6%
Inacom Corp. (a) 75,000 1,312,500 45323G10
Intelligent Electronics, Inc. 83,800 2,042,625 45815710
Micro-Age, Inc. (a) 72,600 1,923,900 59492810
5,279,025
CAD/CAM/CAE - 3.9%
Computervision Corporation 52,000 214,500 20557T10
ECI Telecom Ltd. 30,000 735,000 26825810
Integrated Silicon Systems, Inc. 500 10,750 45812Q10
Landmark Graphics Corp. (a) 20,000 580,000 51491310
PDA Engineering (a) 24,100 114,475 69326810
Structural Dynamics Research Corp. (a) 83,000 1,234,625 86355510
Synopsys, Inc. (a) 6,000 269,250 87160710
Tecnomatix Technologies (a) 7,500 72,188 91299A92
Viewlogic Systems, Inc. (a) 19,000 532,000 92672110
3,762,788
DATA PROCESSING - 0.2%
Ceridian Corp. (a) 10,000 227,500 15677T10
PREPACKAGED COMPUTER SOFTWARE - 2.7%
Fuji Software, Inc. 13,000 175,264 36599392
Informix Corp. (a) 15,000 352,500 45677910
Novell, Inc. (a) 80,000 2,040,000 67000610
2,567,764
TOTAL COMPUTER SERVICES & SOFTWARE 11,837,077
COMPUTERS & OFFICE EQUIPMENT - 38.3%
COMPUTER EQUIPMENT - 0.4%
Syquest Technology, Inc. (a) 35,200 338,800 87166010
COMPUTER EQUIPMENT - WHOLESALE - 5.5%
GBC Technologies, Inc. 72,000 1,008,000 36149F10
Gates/FA Distributing, Inc. (a) 33,000 709,500 36740830
Merisel, Inc. (a) 86,300 1,812,300 58984910
Tech Data Corp. (a) 45,600 1,721,400 87823710
5,251,200
COMPUTER PERIPHERALS - 3.4%
Komag, Inc. (a) 30,000 750,000 50045310
Liuski International, Inc. (a) 20,000 235,000 53802910
Media Vision Technology, Inc. 25,000 775,000 58445H10
Microtouch Systems, Inc. (a) 2,000 29,000 59514510
Radius, Inc. (a) 121,700 867,113 75047010
Western Digital Corp. (a) 42,400 641,300 95810210
3,297,413
COMPUTER RENTAL & LEASING - 0.2%
Comdisco, Inc. 7,900 165,900 20033610
SHARES VALUE (NOTE 1)
COMPUTER STORAGE DEVICES - 2.5%
Exabyte (a) 20,900 $ 381,425 30061510
Hutchinson Technology, Inc. (a) 19,600 715,400 44840710
Micropolis Corp. (a) 37,200 190,650 59490710
Quantum Corp. (a) 1,200 20,250 74790610
Seagate Technology (a) 25,200 645,750 81180410
Sunward Technologies, Inc. (a) 46,000 414,000 86792720
2,367,475
COMPUTERS & OFFICE EQUIPMENT - 5.5%
Canon, Inc. 35,000 572,262 13780199
Diebold, Inc. 18,450 680,344 25365110
Hewlett-Packard Co. 39,700 3,597,813 42823610
Nippon Data Kiki Co, Ltd. 18,000 397,571 68299792
5,247,990
ELECTRONIC COMPUTERS - 0.6%
Tricord Systems, Inc. (a) 30,000 615,000 89612110
GRAPHICS WORKSTATIONS - 4.1%
Silicon Graphics, Inc. (a) 18,800 448,850 82705610
Sun Microsystems, Inc. (a) 129,300 3,507,263 86681010
3,956,113
MAINFRAME COMPUTERS - 6.4%
Amdahl Corp. 224,000 1,316,000 02390510
International Business Machines Corp. 90,900 4,806,338 45920010
6,122,338
MINI & MICRO COMPUTERS - 9.6%
AST Research, Inc. (a) 10,000 315,000 00190710
Apple Computer, Inc. 48,000 1,752,000 03783310
Compaq Computer Corp. (a) 56,700 5,599,125 20449310
Concurrent Computer Corp. (a) 23,200 31,900 20671020
Digital Equipment Corp. (a) 30,000 873,750 25384910
Sequent Computer Systems, Inc. (a) 40,000 585,000 81733810
9,156,775
PENS, PENCILS, OFFICE SUPPLIES - 0.1%
International Imaging Materials, Inc. 6,000 102,000 45968C10
TOTAL COMPUTERS & OFFICE EQUIPMENT 36,621,004
CONSUMER ELECTRONICS - 0.4%
RADIOS, TELEVISIONS, STEREOS - 0.4%
Odetics, Inc. Class A (a) 32,000 352,000 67606520
ELECTRICAL EQUIPMENT - 0.2%
TV & RADIO COMMUNICATION EQUIPMENT - 0.1%
Avid Technology Inc. (a) 3,000 70,500 05367P10
WIRING & LIGHTING - 0.1%
Oak Industries, Inc. (a) 4,200 79,270 67140050
TOTAL ELECTRICAL EQUIPMENT 149,770
ELECTRONIC INSTRUMENTS - 3.9%
ELECTRONIC EQUIPMENT - 3.9%
ASECO Corp. (a) 5,400 40,500 04365910
Credence Systems Corp. (a) 10,000 272,500 22530210
GenRad, Inc. (a) 41,500 243,813 37244710
LTX Corp. 10,000 41,250 50239210
Megatest Corp. (a) 101,600 1,905,000 58495810
Micro Component Technology, Inc. 200 3,100 59479Q10
Teradyne, Inc. (a) 42,800 1,235,850 88077010
3,742,013
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
ELECTRONICS - 28.3%
SEMICONDUCTORS - 28.3%
Advanced Micro Devices, Inc. (a) 201,100 $ 4,323,650 00790310
Austria MiKro Systems
International (a)(b) 10,000 492,508 05299B22
IMP, Inc. (a) 180,000 326,250 44969310
Integrated Device Technology, Inc. (a) 7,900 205,400 45811810
Intel Corp. 90,500 6,233,188 45814010
LSI Logic Corp. (a) 102,100 1,952,663 50216110
Micron Technology, Inc. 64,100 4,543,088 59511210
National Semiconductor Corp. (a) 60,000 1,305,000 63764010
Samsung Electronics Co. Ltd. (b):
GDR (a) 2,831 117,232 79605060
GDS 51,000 2,983,500 79605020
Supertex, Inc. 20,000 67,500 86853210
Texas Instruments, Inc. 48,100 3,884,075 88250810
VLSI Technology, Inc. (a) 50,000 675,000 91827010
27,109,054
INDUSTRIAL MACHINERY & EQUIPMENT - 0.0%
SPECIAL INDUSTRIAL MACHINERY - 0.0%
Asyst Technologies, Inc. 1,000 18,250 04648X10
LEASING & RENTAL - 0.1%
EQUIP RENTAL & LEASING - 0.1%
Leasing Solutions, Inc. (a) 14,000 134,750 52211310
MEDICAL EQUIPMENT & SUPPLIES - 0.3%
MEDICAL SUPPLIES & APPLIANCES - 0.3%
Steris Corporation (a) 10,000 277,500 85915210
TOTAL COMMON STOCKS
(Cost $66,926,183) 82,483,743
OTHER SECURITIES - 0.5%
PRINCIPAL
AMOUNT
INDEXED SECURITIES - 0.5%
Hewlett Packard Finance Co.
0%, 4/25/95 (indexed to the price
of Hewlett Packard common
stock) (b) (Cost $424,005) $400,000 446,000 4282399A
REPURCHASE AGREEMENT - 13.3%
MATURITY VALUE (NOTE 1)
AMOUNT
Investments in repurchase agreements,
(U.S. Treasury obligations), in a joint
trading account, at 3.47% dated
2/28/94 due 3/1/94 $ 12,752,229 12,751,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $80,101,188) $ 95,680,743
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 $4,039,240 or 3.4% of net
assets.
OTHER INFORMATION
CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective March 1,
1993, the fund adopted Statement of Position 93-2: Determination,
Disclosure, and Financial Statement Presentation of Income, Capital Gain,
and Return of Capital Distributions by Investment Companies. As a result,
the fund changed the classification of distributions to shareholders to
better disclose the differences between financial statement amounts and
distributions determined in accordance with income tax regulations.
Accordingly, amounts as of February 28, 1993 have been reclassified to
reflect an increase in paid in capital of $9,923,134, a decrease in
undistributed net investment loss of $800,930 and a decrease in accumulated
net realized gain on investments of $10,724,064.
Purchases and sales of securities, other than short-term securities,
aggregated $77,616,646 and $57,928,832, respectively.
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 $45,787 for the period
(see Note 4 of Notes to Financial Statements).
The maximum loan and average daily loan balances during the periods for
which loans were outstanding amounted to $3,561,000 and $2,381,789,
respectively. The weighted average interest rate paid was 3.8% (see Note 7
of Notes to Financial Statements).
INCOME TAX INFORMATION
At February 28, 1994, the aggregate cost of investment securities for
income tax purposes was $80,381,627. Net unrealized appreciation aggregated
$15,299,116, of which $16,587,393 related to appreciated investment
securities and $1,288,277 related to depreciated investment securities.
The fund hereby designates $1,031,000 as a capital gain dividend for the
purpose of the dividend paid deduction.
COMPUTERS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
FEBRUARY 28, 1994
ASSETS
Investment in securities, at value (including repurchase agreements of $12,751,000) (cost $80,101,188) $ 95,680,743
(Notes 1 and 2) - See accompanying schedule
Cash 159
Receivable for fund shares sold 29,220,009
Dividends receivable 39,530
Redemption fees receivable (Note 1) 1,119
Other receivables 26,054
TOTAL ASSETS 124,967,614
LIABILITIES
Payable for investments purchased $ 1,324,523
Payable for fund shares redeemed 3,100,427
Accrued management fee 44,504
Other payables and accrued expenses 63,586
TOTAL LIABILITIES 4,533,040
NET ASSETS $ 120,434,574
Net Assets consist of (Note 1):
Paid in capital $ 103,336,133
Accumulated net investment loss (10,697
)
Accumulated undistributed net realized gain (loss) on investments 1,529,583
Net unrealized appreciation (depreciation) on investment securities 15,579,555
NET ASSETS, for 4,456,427 shares outstanding $ 120,434,574
NET ASSET VALUE and redemption price per share ($120,434,574 (divided by) 4,456,427 shares) $27.02
Maximum offering price per share (100/97 of $27.02) $27.86
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED FEBRUARY 28, 1994
INVESTMENT INCOME $ 138,282
Dividends
Special dividend from Intelligent Electronics, Inc. 133,000
Interest 130,112
TOTAL INCOME 401,394
EXPENSES
Management fee (Note 4) $ 260,092
Transfer agent (Note 4) 464,030
Fees
Redemption fees (Note 1) (55,710
)
Accounting fees and expenses 52,178
(Note 4)
Non-interested trustees' compensation 283
Custodian fees and expenses 10,324
Registration fees 33,192
Audit 5,535
Legal 406
Interest (Note 7) 4,775
Reports to shareholders 7,426
Miscellaneous 552
Total expenses before reductions 783,083
Expense reductions (Note 8) (4,629 778,454
)
NET INVESTMENT INCOME (LOSS) (377,060
)
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 1) 5,305,912
Net realized gain (loss) on investment securities
Change in net unrealized appreciation (depreciation) on investment securities 11,882,729
NET GAIN (LOSS) 17,188,641
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 16,811,581
OTHER INFORMATION $394,106
Sales charges paid to FDC
(Note 4)
Deferred sales charges withheld $7,292
by FDC (Note 4)
Exchange fees withheld by FSC $45,938
(Note 4)
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED TEN MONTHS
FEBRUARY 28, ENDED
1994 FEBRUARY 28,
1993
Operations $ (377,060 $ (310,705
Net investment income (loss) ) )
Net realized gain (loss) on investments 5,305,912 1,620,786
Change in net unrealized appreciation (depreciation) on investments 11,882,729 3,739,800
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 16,811,581 5,049,881
Distributions to shareholders from net realized gains (3,924,122 -
)
Share transactions 184,130,331 162,012,620
Net proceeds from sales of shares
Reinvestment of distributions 3,842,739 -
Cost of shares redeemed (128,419,730 (152,760,836
) )
Paid in capital portion of redemption fees (Note 1) 398,209 483,699
Net increase (decrease) in net assets resulting from share transactions 59,951,549 9,735,483
TOTAL INCREASE (DECREASE) IN NET ASSETS 72,839,008 14,785,364
NET ASSETS
Beginning of period 47,595,566 32,810,202
End of period (including accumulated net investment loss of $10,697 and $800,930, respectively) $ 120,434,574 $ 47,595,566
OTHER INFORMATION
Shares
Sold 7,631,888 8,584,924
Issued in reinvestment of distributions 169,028 -
Redeemed (5,706,315 (8,084,655
) )
Net increase (decrease) 2,094,601 500,269
</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>
YEAR ENDED TEN MONTHS YEARS ENDED APRIL 30,
FEBRUARY 28, ENDED
FEBRUARY 28,
SELECTED PER-SHARE DATAC 1994 1993 1992 1991 1990
Net asset value, beginning of period $ 20.15 $ 17.63 $ 16.60 $ 12.68 $ 11.60
Income from Investment Operations
Net investment income (loss) (.21)H (.15) (.03)G .42F (.11)
Net realized and unrealized gain (loss) on investments 8.66 2.44 1.18 3.21 .98
Total from investment operations 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 .23 .37 .41 .21
Net asset value, end of period $ 27.02 $ 20.15 $ 17.63 $ 16.60 $ 12.68
TOTAL RETURND, E 45.06% 14.29% 9.36% 32.11% 9.31%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 120,435 $ 47,596 $ 32,810 $ 29,455 $ 27,561
Ratio of expenses to average net assetsB 1.89% 1.81%A 2.17% 2.26% 2.64%
Ratio of expenses to average net assets before expense 1.90% 1.81%A 2.17% 2.26% 3.82%
reductionsB
Ratio of net investment income (loss) to average net
assets (.91)% (.98)% (.18)% 2.94% (.94)%
A
Portfolio turnover rate 145% 254%A 568% 695% 596%
</TABLE>
1 ANNUALIZED 2 SEE NOTE 8 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 INTELLEGENT ELECTRONICS WHICH AMOUNTED TO
$.07 PER SHARE.
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).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
FEBRUARY 28, 1994 YEAR YEARS FUND
DEFENSE AND AEROSPACE 32.04% 71.84% 115.45%
DEFENSE AND AEROSPACE
(INCL. 3% SALES CHARGE) 28.08% 66.68% 108.99%
S&P 500 8.33% 89.60% 311.87%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one year, five years, or since the fund
started on May 8, 1984. 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
FEBRUARY 28, 1994 YEAR YEARS FUND
DEFENSE AND AEROSPACE 32.04% 11.44% 8.13%
DEFENSE AND AEROSPACE
(INCL. 3% SALES CHARGE) 28.08% 10.76% 7.80%
S&P 500 8.33% 13.65% 15.51%
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 Defense S&P 500
05/08/84 9700.00 10000.00
05/31/84 9263.50 9471.39
06/30/84 10117.10 9676.92
07/31/84 10223.80 9556.92
08/31/84 11455.70 10612.96
09/30/84 11106.50 10615.09
10/31/84 11261.70 10656.49
11/30/84 10699.10 10537.13
12/31/84 11067.70 10815.31
01/31/85 12522.70 11657.83
02/28/85 12959.20 11801.22
03/31/85 12590.60 11809.48
04/30/85 12134.70 11798.85
05/31/85 12425.70 12480.82
06/30/85 12952.67 12676.77
07/31/85 13324.14 12657.76
08/31/85 13285.04 12550.17
09/30/85 12512.77 12157.35
10/31/85 12737.61 12719.02
11/30/85 13421.90 13591.54
12/31/85 13988.88 14249.37
01/31/86 13812.92 14329.17
02/28/86 14565.64 15400.99
03/31/86 15396.57 16260.36
04/30/86 15513.88 16076.62
05/31/86 15895.13 16931.90
06/30/86 16227.50 17218.05
07/31/86 15218.42 16255.56
08/31/86 16001.65 17461.72
09/30/86 14712.79 16017.64
10/31/86 14911.08 16941.85
11/30/86 15386.96 17353.54
12/31/86 14663.22 16911.03
01/31/87 15942.16 19188.94
02/28/87 16953.42 19946.90
03/31/87 16636.16 20523.37
04/30/87 15912.42 20340.71
05/31/87 15694.31 20517.68
06/30/87 15545.59 21553.82
07/31/87 15961.99 22646.60
08/31/87 15793.45 23491.32
09/30/87 15476.19 22976.86
10/31/87 11530.31 18027.64
11/30/87 10935.45 16542.16
12/31/87 11261.56 17801.02
01/31/88 11986.11 18550.45
02/29/88 12700.31 19414.90
03/31/88 12669.26 18814.98
04/30/88 12586.45 19023.82
05/31/88 12110.32 19189.33
06/30/88 12607.15 20070.12
07/31/88 12358.74 19993.85
08/31/88 12058.57 19314.06
09/30/88 12420.84 20136.84
10/31/88 12400.14 20696.65
11/30/88 11851.55 20400.68
12/31/88 11748.04 20757.70
01/31/89 12213.83 22277.16
02/28/89 12162.07 21722.46
03/31/89 12410.49 22228.59
04/30/89 12855.57 23382.25
05/31/89 13083.28 24329.24
06/30/89 12928.02 24190.56
07/31/89 13766.43 26374.97
08/31/89 14118.35 26891.92
09/30/89 13859.59 26781.66
10/31/89 13072.93 26160.32
11/30/89 12576.10 26693.99
12/31/89 12783.11 27334.65
01/31/90 12058.57 25500.50
02/28/90 12099.97 25829.45
03/31/90 12845.22 26513.93
04/30/90 12317.33 25851.08
05/31/90 13228.19 28371.57
06/30/90 13237.71 28178.64
07/31/90 12706.53 28088.47
08/31/90 11592.11 25549.27
09/30/90 11217.16 24305.02
10/31/90 11071.35 24200.51
11/30/90 11665.01 25763.86
12/31/90 12197.13 26482.67
01/31/91 13273.66 27637.32
02/28/91 13534.95 29613.39
03/31/91 14580.12 30330.03
04/30/91 14339.73 30402.82
05/31/91 15008.64 31716.22
06/30/91 14253.51 30263.62
07/31/91 14872.78 31673.91
08/31/91 14715.34 32424.58
09/30/91 14368.97 31883.09
10/31/91 15061.70 32310.32
11/30/91 14379.47 31008.21
12/31/91 15481.54 34555.55
01/31/92 15429.06 33912.82
02/29/92 15670.47 34353.69
03/31/92 15355.59 33683.79
04/30/92 15082.69 34674.09
05/31/92 14326.99 34844.00
06/30/92 13655.24 34324.82
07/31/92 14180.04 35728.71
08/31/92 13907.15 34996.27
09/30/92 14106.57 35409.22
10/31/92 14222.03 35533.16
11/30/92 14715.34 36744.84
12/31/92 15481.54 37196.80
01/31/93 15943.36 37509.25
02/28/93 15827.91 38019.38
03/31/93 16667.58 38821.59
04/30/93 16720.06 37882.10
05/31/93 17234.37 38897.34
06/30/93 17958.59 39010.15
07/31/93 18693.30 38854.11
08/31/93 18661.82 40326.68
09/30/93 19144.63 40016.16
10/31/93 19910.84 40844.50
11/30/93 19323.06 40456.47
12/31/93 19949.18 40946.00
01/31/94 20899.14 42338.16
02/28/94 20899.14 41186.56
Let's say you invested $10,000 in Fidelity Select Defense and Aerospace
Portfolio on May 8, 1984, when the fund started, and paid a 3% sales
charge. By February 28, 1994, your investment would have grown to $20,899 -
a 108.99% increase. That compares to $10,000 invested in the S&P 500,
which would have grown to $41,187 over the same period - a 311.87%
increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1994
% OF FUND'S
INVESTMENTS
McDonnell Douglas Corp. 8.0
United Technologies Corp. 5.7
Harris Corp. 5.0
General Motors Corp. Class H 4.9
Loral Corp. 4.8
Watkins-Johnson Co. 4.3
TRW, Inc. 3.9
Textron, Inc. 3.4
Martin Marietta Corp. 2.5
General Electric Co. 2.4
TOP INDUSTRIES AS OF FEBRUARY 28, 1994
Row: 1, Col: 1, Value: 45.5
Row: 1, Col: 2, Value: 4.2
Row: 1, Col: 3, Value: 4.9
Row: 1, Col: 4, Value: 7.2
Row: 1, Col: 5, Value: 9.0
Row: 1, Col: 6, Value: 11.8
Row: 1, Col: 7, Value: 17.4
Conglomerates 17.4%
Defense Electronics 11.8%
Aircraft 9.0%
Missiles & Space
Vehicles 7.2%
Motor Vehicles & Car
Bodies 4.9%
Air Transport, Major National 4.2%
All Others 45.5%
* INCLUDES SHORT-TERM INVESTMENTS
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 total return for the year ended February 28, 1994 was 32.04%. That
beat the S&P 500, which returned 8.33% for the same period. The big
story this past year has been the shift in the fund's focus - away from
pure defense contractors and toward large industrial conglomerates with
defense components.
Q. CAN YOU EXPAND ON THAT?
A. Last spring, military contractors like Loral, Martin Marietta, Raytheon,
Grumman and Northrop still dominated the fund. Defense stocks had soared
during the Gulf War but since then had underperformed the broader market
due to reduced federal spending and a gloomy outlook for revenues. But by
then they were already busy cleaning up their balance sheets - reducing
payrolls, slashing capital spending, accumulating cash and paying down
debt. Part of that industry-wide restructuring involved consolidation.
Martin Marietta's acquisition of General Electric's aerospace division and
Lockheed's purchase of General Dynamic's fighter aircraft division were the
two important deals. The upshot was a surge of investor interest that
lifted defense stocks across the board, and drove the fund's performance in
the first half of the year.
Q. YOU'VE SINCE SOLD THE DEFENSE STOCKS?
A. Sold or cut back, with the exception of McDonnell Douglas, the fund's
largest investment at the end of February. McDonnell Douglas was among the
last of the big defense contractors to go through the restructuring
process. And as earnings exploded last year, the stock nearly doubled. I
still own it because of McDonnell Douglas's success selling jet fighters
overseas, which bodes well for maintaining revenues.
Q. CAN EXPORTS MAKE UP FOR REDUCED DOMESTIC SALES?
A. Not for the industry as a whole; the domestic market is just too big to
be offset by the foreign market. That's not to say exports aren't vitally
important to individual companies. For example, China's growing power and
North Korea's emergence as a regional troublemaker in the Far East have
raised fears among the so-called Asian Tigers - countries like Malaysia and
Taiwan. That could prove to be a fertile opportunity, particularly for
fighter-aircraft makers McDonnell Douglas and Lockheed.
Q. BUT OTHERWISE THE FUND HAS SHIFTED AWAY FROM PURE DEFENSE PLAYS
RECENTLY?
A. That's right. By the end of February, a good two-thirds of the fund's
investments were conglomerates. As a group, they're especially sensitive to
broad movements in the economy, and so have prospered as the economic
recovery has begun to take hold. These are names like Watkins-Johnson,
which makes semiconductors; Thiokol, whose products include rocket engines
and fasteners, and which is a restructuring story; Harris Corp., another
semiconductor play; United Technologies, a conglomerate with exposure to
defense and aerospace through its Pratt & Whitney engine subsidiary;
and TRW, which has a sizable defense component but also makes air bags and
so stands to benefit from increased auto sales.
Q. WHAT MAKES THE CONGLOMERATES SO ATTRACTIVE RIGHT NOW?
A. For one, they're cyclicals, which means they tend to move in tandem with
the economy. You want to own them during times like these, when the economy
seems to be improving. But beyond that, there's an ongoing restructuring
theme here, too, as there is in the defense industry. Many of these
companies are eliminating non-core operations, trying to raise returns on
their remaining businesses and generally improving their balance sheets.
Who knows how far they could go in a decent economy? Especially if and when
Europe recovers, which could be a 1995 story.
Q. WHAT'S THE OUTLOOK FOR THE FUND?
A. Most of the stocks in the fund have had big runs lately, which suggests
there may not be as much room for continued price gains in 1994. On the
other hand, while revenue growth opportunities in the defense industry are
limited, cash flow is strong and the earnings outlook remains positive.
Loral, for example, with its recent acquisition of IBM's Federal Systems,
may well have locked in 20% earnings growth for the next couple of years.
As for the conglomerates, I think it's reasonable to expect earnings for
the group to have the potential to grow at a faster pace than the rest of
the market, and for the stocks to perform accordingly.
FUND FACTS
START DATE: May 8, 1984
SIZE: as of February 28, 1994, over $11 million
MANAGER: Stephen Binder, since October
1992; manager, Fidelty Select Regional Banks
Portfolio, since February 1989; Fidelity Select
Financial Services, since May 1990; joined
Fidelity in 1989
(checkmark)
DEFENSE AND AEROSPACE PORTFOLIO
INVESTMENTS FEBRUARY 28, 1994
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 68.9%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 21.4%
AIRCRAFT - 9.0%
Grumman Corp. 2,400 $ 90,000 40018110
McDonnell Douglas Corp. 8,800 1,049,400 58016910
Northrop Corp. 1,000 39,875 66680710
1,179,275
AIRCRAFT & PARTS - 0.5%
Sundstrand Corp. 1,500 67,688 86732310
AIRCRAFT EQUIPMENT - 2.7%
Aviall, Inc. (a) 7,900 137,263 05366B10
BE Aerospace, Inc. (a) 5,300 60,950 07330210
Transtechnology Corp. 10,700 159,163 89388910
357,376
MISSILES & SPACE VEHICLES - 7.2%
Lockheed Corp. 2,000 131,250 53982110
Martin Marietta Corp. 7,200 331,200 57290010
Orbital Sciences Corporation 3,000 50,250 68556410
Rockwell International Corp. 4,500 187,313 77434710
Thiokol Corp. 9,000 249,750 88410310
949,763
ORDNANCE - 0.4%
Alliant Techsystems, Inc. (a) 2,000 54,500 01880410
TRAINING EQUIPMENT & SIMULATORS - 1.6%
Flightsafety International, Inc. 5,000 210,625 33942310
TOTAL AEROSPACE & DEFENSE 2,819,227
AIR TRANSPORTATION - 4.2%
AIR TRANSPORT, MAJOR NATIONAL - 4.2%
AMR Corp. (a) 4,500 284,625 00176510
Continental Airlines, Inc. (a) 12,000 268,500 21079530
553,125
AUTOS, TIRES, & ACCESSORIES - 8.8%
AUTO & TRUCK PARTS - 3.9%
TRW, Inc. 7,000 511,875 87264910
MOTOR VEHICLES & CAR BODIES - 4.9%
General Motors Corp. Class H 17,700 637,200 37044250
TOTAL AUTOS, TIRES, & ACCESSORIES 1,149,075
COMPUTERS & OFFICE EQUIPMENT - 1.4%
COMPUTER PERIPHERALS - 1.4%
Miltope Group, Inc. (a) 41,000 179,375 60219110
CONGLOMERATES - 17.4%
Allied-Signal, Inc. 4,000 305,500 01951210
Harris Corp. 13,000 661,375 41387510
Sequa Corp. Class A 3,500 127,313 81732010
Textron, Inc. 7,600 440,800 88320310
United Technologies Corp. 11,050 751,400 91301710
2,286,388
DEFENSE ELECTRONICS - 11.8%
E-Systems, Inc. 1,500 68,250 26915730
Loral Corp. 16,200 625,725 54385910
Raytheon Co. 4,300 266,600 75511110
Tracor, Inc. 2,000 19,500 89234920
Watkins-Johnson Co. 25,000 568,750 94248610
1,548,825
SHARES VALUE (NOTE 1)
ELECTRICAL EQUIPMENT - 2.4%
ELECTRICAL MACHINERY - 2.4%
General Electric Co. 3,000 $ 316,123 36960410
ENERGY SERVICES - 0.1%
OIL & GAS SERVICES - 0.1%
Petroleum Helicopters, Inc. (a) 500 5,250 71660410
Petroleum Helicopters, Inc. (non-vtg.) (a) 400 4,200 71660420
9,450
SHIP BUILDING & REPAIR - 1.4%
SHIP BUILDERS - 1.4%
General Dynamics Corp. 2,000 186,500 36955010
TOTAL COMMON STOCKS
(Cost $8,726,833) 9,048,088
CONVERTIBLE BONDS - 0.2%
PRINCIPAL VALUE (NOTE 1)
AMOUNT
AEROSPACE & DEFENSE - 0.2%
MISSILES & SPACE VEHICLES - 0.2%
Orbital Sciences Corp. 6 3/4%,
3/1/03 (Cost $18,000) $18,000 23,940 685564AA
REPURCHASE AGREEMENTS - 30.9%
MATURITY VALUE (NOTE 1)
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account, at 3.47% dated
2/28/94 due 3/1/94 $4,060,391 4,060,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $12,804,833) $ 13,132,028
LEGEND
3. Non-income producing
OTHER INFORMATION
CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective March 1,
1993, the fund adopted Statement of Position 93-2: Determination,
Disclosure, and Financial Statement Presentation of Income, Capital Gain,
and Return of Capital Distributions by Investment Companies. As a result,
the fund changed the classification of distributions to shareholders to
better disclose the differences between financial statement amounts and
distributions determined in accordance with income tax regulations.
Accordingly, amounts as of February 28, 1993 have been reclassified to
reflect an increase in paid in capital of $2,737,125, a decrease in
undistributed net investment loss of $5,451 and a decrease in accumulated
net realized gain on investments of $2,742,576.
Purchases and sales of securities, other than short-term securities,
aggregated $19,454,896 and $12,708,670, respectively.
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 $7,073 for the period
(see Note 4 of Notes to Financial Statements).
The maximum loan and average daily loan balances during the periods for
which loans were outstanding amounted to $3,609,000 and $1,919,545,
respectively. The weighted average interest rate paid was 3.6% (see Note 7
of Notes to Financial Statements).
INCOME TAX INFORMATION
At February 28, 1994, the aggregate cost of investment securities for
income tax purposes was $12,810,520. Net unrealized appreciation aggregated
$321,508, of which $429,932 related to appreciated investment securities
and $108,424 related to depreciated investment securities.
The fund hereby designates $151,000 as a capital gain dividend for the
purpose of the dividend paid deduction.
DEFENSE AND AEROSPACE PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
FEBRUARY 28, 1994
ASSETS
Investment in securities, at value (including repurchase agreements of $4,060,000) (cost $12,804,833) $ 13,132,028
(Notes 1 and 2) - See accompanying schedule
Cash 497
Receivable for fund shares sold 2,694,840
Dividends receivable 12,541
Interest receivable 604
Redemption fees receivable (Note 1) 195
Other receivables 1,871
Receivable from investment adviser for expense reductions (Note 8) 6,786
TOTAL ASSETS 15,849,362
LIABILITIES
Payable for investments purchased $ 4,270,027
Payable for fund shares redeemed 421,409
Accrued management fee 3,375
Other payables and accrued expenses 18,654
TOTAL LIABILITIES 4,713,465
NET ASSETS $ 11,135,897
Net Assets consist of (Note 1):
Paid in capital $ 10,442,394
Undistributed net investment income 2,925
Accumulated undistributed net realized gain (loss) on investments 363,383
Net unrealized appreciation (depreciation) on investment securities 327,195
NET ASSETS, for 581,924 shares outstanding $ 11,135,897
NET ASSET VALUE and redemption price per share ($11,135,896 (divided by) 581,924 shares) $19.14
Maximum offering price per share (100/97 of $19.14) $19.73
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED FEBRUARY 28, 1994
INVESTMENT INCOME $ 107,275
Dividends
Interest 28,583
TOTAL INCOME 135,858
EXPENSES
Management fee (Note 4) $ 29,101
Transfer agent (Note 4) 70,376
Fees
Redemption fees (Note 1) (10,019
)
Accounting fees and expenses 45,439
(Note 4)
Non-interested trustees' compensation 29
Custodian fees and expenses 12,461
Registration fees 11,551
Audit 3,613
Interest (Note 7) 2,147
Reports to shareholders 1,525
Total expenses before reductions 166,223
Expense reductions (Note 8) (48,710 117,513
)
NET INVESTMENT INCOME 18,345
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 1) 629,513
Net realized gain (loss) on investment securities
Change in net unrealized appreciation (depreciation) on investment securities 236,253
NET GAIN (LOSS) 865,766
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 884,111
OTHER INFORMATION $68,555
Sales charges paid to FDC
(Note 4)
Deferred sales charges withheld $877
by FDC (Note 4)
Exchange fees withheld by FSC $10,358
(Note 4)
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED TEN MONTHS
FEBRUARY 28, ENDED
1994 FEBRUARY 28,
1993
Operations $ 18,345 $ (1,461
Net investment income (loss) )
Net realized gain (loss) on investments 629,513 6,237
Change in net unrealized appreciation (depreciation) on investments 236,253 44,329
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 884,111 49,105
Distributions to shareholders (15,420 -
From net investment income )
From net realized gain (95,604 -
)
TOTAL DISTRIBUTIONS (111,024 -
)
Share transactions 29,885,117 1,806,013
Net proceeds from sales of shares
Reinvestment of distributions 109,302 -
Cost of shares redeemed (21,129,974 (1,676,387
) )
Paid in capital portion of redemption fees (Note 1) 35,674 3,741
Net increase (decrease) in net assets resulting from share transactions 8,900,119 133,367
TOTAL INCREASE (DECREASE) IN NET ASSETS 9,673,206 182,472
NET ASSETS
Beginning of period 1,462,691 1,280,219
End of period (including undistributed net investment income (loss) of 2,925 and $(5,451),
respectively) $ 11,135,897 $ 1,462,691
OTHER INFORMATION
Shares
Sold 1,666,363 124,001
Issued in reinvestment of distributions 6,120 -
Redeemed (1,187,524 (116,146
) )
Net increase (decrease) 484,959 7,855
</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>
YEAR ENDED TEN MONTHS YEARS ENDED APRIL 30,
FEBRUARY 28, ENDED
FEBRUARY 28,
SELECTED PER-SHARE DATAC 1994 1993 1992 1991 1990
Net asset value, beginning of period $ 15.08 $ 14.37 $ 13.72 $ 11.90 $ 12.42
Income from Investment Operations
Net investment income (loss) .07 (.02) (.01) .10 .04
Net realized and unrealized gain (loss) on investments 4.57 .69 .67 1.72 (.56)
Total from investment operations 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 (.62) - - - -
Total distributions (.72) - (.06) (.12) -
Redemption fees added to paid in capital .14 .04 .05 .12 -
Net asset value, end of period $ 19.14 $ 15.08 $ 14.37 $ 13.72 $ 11.90
TOTAL RETURND, E 32.04% 4.94% 5.18% 16.42% (4.19)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 11,136 $ 1,463 $ 1,280 $ 3,070 $ 1,599
Ratio of expenses to average net assetsB 2.53% 2.48%A 2.46% 2.49% 2.43%
Ratio of expenses to average net assets before expense 3.58% 9.63%A 2.72% 3.11% 3.26%
reductionsB
Ratio of net investment income (loss) to average net
assets .40% (.14)% (.10)% .78% .34%
A
Portfolio turnover rate 324% 87%A 32% 162% 96%
</TABLE>
1 ANNUALIZED
2 SEE NOTE 8 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.
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
PERIODS ENDED PAST 1 LIFE OF
FEBRUARY 28, 1994 YEAR FUND
DEVELOPING COMMUNICATIONS 30.24% 129.88%
DEVELOPING COMMUNICATIONS
(INCL. 3% SALES CHARGE) 26.33% 122.99%
S&P 500 8.33% 46.34%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, 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
FEBRUARY 28, 1994 YEAR FUND
DEVELOPING COMMUNICATIONS 30.24% 25.43%
DEVELOPING COMMUNICATIONS
(INCL. 3% SALES CHARGE) 26.33% 24.39%
S&P 500 8.33% 10.92%
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 S&P500
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 14634.23
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 February 28, 1994, your investment would have grown to $22,299 -
a 122.99% increase. That compares to $10,000 invested in the S&P 500,
which would have grown to $14,634 over the same period - a 46.34% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1994
% OF FUND'S
INVESTMENTS
DSC Communications Corp. 9.5
Motorola, Inc. 4.5
Glenayre Technologies, Inc. 4.1
Tellabs, Inc. 3.3
Cisco Systems, Inc. 3.2
Telephone & Data Systems, Inc. 2.7
Cabletron Systems, Inc. 2.7
Oracle Systems Corp. 2.6
IDB Communications Group, Inc. 2.5
Intel Corp. 2.5
TOP INDUSTRIES AS OF FEBRUARY 28, 1994
Row: 1, Col: 1, Value: 38.6
Row: 1, Col: 2, Value: 8.1
Row: 1, Col: 3, Value: 10.2
Row: 1, Col: 4, Value: 12.3
Row: 1, Col: 5, Value: 13.1
Row: 1, Col: 6, Value: 17.6
Telephone Equipment 17.6%
Telephone Services 13.1%
Datacommunications
Equipment 12.4%
Cellular & Communications
Services 10.2%
Prepackaged Computer
Software 8.1%
All Others 38.6%*
* INCLUDES SHORT-TERM INVESTMENTS
DEVELOPING COMMUNICATIONS PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Paul Antico,
Portfolio Manager of
Fidelity Select Developing
Communications Portfolio
Q. PAUL, HOW DID THE FUND PERFORM?
A. Quite well. The fund had a total return of 30.24% for the year ended
February 28, 1994, compared to the S&P 500, which was up 8.33% for the
year.
Q. WHY DID THE FUND COME OUT SO FAR AHEAD?
A. There were two reasons. Until this fall, many people invested heavily in
telecommunication stocks to take advantage of the information superhighway
they'd been reading about in the media. The information superhighway
promised to provide American homes with multimedia technology that combined
telephone, television, and computer services. The increased interest in
these stocks drove prices way up. However, in October, the market began to
correct itself when investors realized that this multimedia product
wouldn't become a reality for at least a couple years. As a result, the
fund's six-month total return ending February 28 fell to 4.57%.
Q. WHAT WAS THE OTHER REASON FOR THE FUND'S STRONG ANNUAL PERFORMANCE?
A. The fund took advantage of what I call the broadband revolution. A
broadband network is made up of fiber optic lines that can hold more than
2,000 times the volume of a regular copper telephone line. I call it a
revolution because it's a major change in the design of the public
telecommunication network. This network allows telephone companies to send
a large number of calls on one line, which cuts costs. It also lets them
transmit high-speed data for large businesses, increasing current revenues.
Many telephone equipment companies involved in the broadband network are
profitable right now, and they could be critical players when multimedia
products become a reality in about five years. My largest stock, DSC
Communications, makes several products for the broadband network. One
example is Lightspan, a product that sends fiber optic signals over
telephone lines. Since July of 1992, DSC's stock was up more than 900%, and
it could continue to perform well as this industry grows. Tellabs, which
makes similar products, was also a notable performer, as was Newbridge
Networks.
Q. YOU TOOK OVER THE FUND IN DECEMBER. HAVE YOU CHANGED ITS STRATEGY?
A. Yes. I've focused more on equipment suppliers than the fund has in the
past. I think these companies have the potential to be winners because they
provide products that both telephone and cable companies need, such as
broadband equipment, wireless communication equipment, and data
communication equipment. I think Motorola is a good example of an
outstanding equipment company - it provides several products that may be
crucial to today's and tomorrow's telecommunications industry. I also
reduced the number of computer stocks in the fund because computers are not
my area of expertise.
Q. HAVE YOU MADE ANY OTHER NOTABLE CHANGES?
A. I moved away from land-line phone services, such as AT&T, into
cellular services. In fact, cellular stocks now make up more than 10% of
the fund. Over the past year, the fund had a heavy stake in Telephone and
Data Systems, the company that owns U.S. Cellular. I believe that U.S.
Cellular, like other cellular companies, may have the potential to expand
its market penetration and grow.
Q. WHAT ELSE CAUGHT YOUR INTEREST?
A. NTN Communications, a small multimedia company. NTN makes an interactive
game called QB1 that's sold to bars. QB1 lets patrons guess on the next
play in a televised sporting event, like a football game. I like it because
it's an interactive product that's used right now. And, if the government
allows off-track betting or other interactive gaming at home in the future,
this product could have tremendous potential.
Q. WHAT CAN SHAREHOLDERS EXPECT GOING FORWARD?
A. I think the fund will probably be more stable than it was over the past
year. While the market for telecommunication stocks may continue to be
somewhat volatile over the coming months, I've invested the fund in
companies that are turning in results now. As a result, I believe the
fund's long-term strategy is sound.
FUND FACTS
START DATE: June 29, 1990
SIZE: as of February 28, 1994, over $222 million
MANAGER: Paul Antico, since December 1993;
equity analyst, telecommunications
equipment, since 1993, restaurant industry,
1992-1993,
and wireless communications, since 1993;
assistant, Fidelity Balanced Fund and Fidelity
Equity Income II Fund, 1991-1992; joined
Fidelity in 1991
(checkmark)
DEVELOPING COMMUNICATIONS PORTFOLIO
INVESTMENTS FEBRUARY 28, 1994
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 96.8%
SHARES VALUE (NOTE 1)
APPLIANCE STORES - 0.7%
ELECTRIC APPLIANCES - WHOLESALE - 0.7%
Cellstar Corp. (a) 88,000 $ 1,606,000 15092510
BROADCASTING - 3.2%
CABLE TV OPERATORS - 3.0%
ACS Enterprises, Inc. (a) 50,000 800,000 00087230
CAI Wireless Systems, Inc. 1,500 18,000 12476P10
NTN Communications, Inc. (a) 498,899 3,991,192 62941030
Peoples Choice TV Corp. (a) 54,000 1,687,500 71084710
6,496,692
RADIO BROADCASTING - 0.2%
International Cablecasting
Technologies, Inc. (a) 131,000 433,938 45921L10
TOTAL BROADCASTING 6,930,630
CELLULAR - 10.2%
CELLULAR & COMMUNICATION SERVICES - 10.2%
Arch Communications Group, Inc. 159,500 2,352,625 03938110
Call-Net Enterprises, Inc. (a) 122,500 1,134,680 13091010
Cellular Communications, Inc.
(redeemable) (a):
Series A 20,500 989,125 15091710
Class P 19,550 970,853 15091793
Cellular, Inc. (a) 62,000 1,216,750 15116310
Centennial Cellular Corp. Class A 34,600 700,650 15133V10
IDB Communications Group, Inc. 305,450 5,498,100 44935510
Netas SA Class B (a) 440,000 645,766 64199522
Nextel Communications, Inc. Class A (a) 20,000 880,000 65332V10
Premier Page Co. (a) 215,000 1,908,125 74058E10
Rogers Cantel Mobile Communications,
Inc. Class B (non-vtg.) (a) 158,800 4,456,873 77510210
Vodafone Group PLC sponsored ADR 14,900 1,346,588 92857T10
22,100,135
COMMUNICATIONS EQUIPMENT - 30.0%
DATACOMMUNICATIONS EQUIPMENT - 12.4%
Cabletron Systems, Inc. (a) 46,500 5,812,500 12692010
Cisco Systems, Inc. (a) 93,200 6,873,500 17275R10
Digital Link Corp. 1,000 17,000 25385610
Digital Microwave Corp. (a) 85,600 1,498,000 25385910
Digital Sound Corporation (a) 160,000 340,000 25391110
General DataComm Industries, Inc. (a) 67,800 1,067,850 36948710
MB Communications, Inc. 95,000 1,733,750 55262M10
Network General Corp. (a) 100,000 2,075,000 64121010
3Com Corp. (a) 30,000 1,818,750 88553510
Wellfleet Communications, Inc. (a) 39,200 3,116,400 94949710
Xircom, Inc. (a) 99,400 2,509,850 98392210
26,862,600
TELEPHONE EQUIPMENT - 17.6%
ADC Telecommunications, Inc. (a) 11,700 441,675 00088610
DSC Communications Corp. (a) 377,500 20,526,563 23331110
Intelcom Group, Inc. (a) 120,000 2,445,000 45814F10
Inter-Tel, Inc. (a) 84,000 892,500 45837210
Newbridge Networks Corp. (a) 52,600 3,004,775 65090110
Nokia AB free shares 47,700 2,760,866 65599992
Tellabs, Inc. (a) 135,000 7,188,750 87966410
VMX, Inc. (a) 150,000 806,250 91827610
38,066,379
TOTAL COMMUNICATIONS EQUIPMENT 64,928,979
SHARES VALUE (NOTE 1)
COMPUTER SERVICES & SOFTWARE - 11.6%
COMPUTER SERVICES - 2.1%
Equifax Inc. 37,500 $ 881,250 29442910
Shinawatra Computer &
Communications Co. (a) 74,000 1,823,697 94799193
SunGard Data Systems, Inc. (a) 45,000 1,743,750 86736310
4,448,697
CAD/CAM/CAE - 1.4%
Crosscommunications Corp. (a) 36,500 793,875 22757K10
Electronic Information Systems, Inc. 174,000 2,283,750 28573810
3,077,625
PREPACKAGED COMPUTER SOFTWARE - 8.1%
Cheyenne Software, Inc. (a) 110,000 4,427,500 16688810
Informix Corp. (a) 45,000 1,057,500 45677910
Lotus Development Corp. (a) 57,000 3,961,500 54570010
Manugistics Group, Inc. (a) 140,000 2,065,000 56501110
Media Logic, Inc. (a) 131,900 527,600 58441B10
Oracle Systems Corp. (a) 170,600 5,629,800 68389X10
17,668,900
TOTAL COMPUTER SERVICES & SOFTWARE 25,195,222
COMPUTERS & OFFICE EQUIPMENT - 1.9%
COMPUTER STORAGE DEVICES - 1.4%
ADAPTEC, Inc. (a) 140,000 3,045,000 00651F10
MAINFRAME COMPUTERS - 0.5%
International Business Machines Corp. 20,000 1,057,500 45920010
TOTAL COMPUTERS & OFFICE EQUIPMENT 4,102,500
ELECTRICAL EQUIPMENT - 2.4%
ELECTRICAL EQUIPMENT - WHOLESALE - 1.3%
Itel Corp. (a) 101,500 2,829,313 46564210
TV & RADIO COMMUNICATION EQUIPMENT - 1.1%
Scientific-Atlanta, Inc. 88,200 2,381,400 80865510
TOTAL ELECTRICAL EQUIPMENT 5,210,713
ELECTRONIC INSTRUMENTS - 3.4%
SEMI-CONDUCTOR CAPITAL EQUIPMENT - 3.4%
Applied Materials, Inc. (a) 71,900 3,415,250 03822210
KLA Instruments Corp. (a) 100,000 3,925,000 48248010
7,340,250
ELECTRONICS - 15.0%
ELECTRONIC PARTS - WHOLESALE - 2.5%
ARC International Corp. (a) 392,200 1,446,238 00190510
Audiovox Corp. Class A (a) 98,100 1,508,288 05075710
Marshall Industries (a) 51,000 1,377,000 57239310
Sterling Electronics Corp. (a) 95,100 1,081,763 85928110
5,413,289
ELECTRONICS & ELECTRIC COMPONENTS - 2.2%
Benefon Oy (a) 3,200 723,497 08199822
Sanmina Corp.(a) 149,800 3,969,700 80090710
4,693,197
SEMICONDUCTORS - 10.3%
Geotek Industries, Inc. (a) 80,600 977,275 37365410
Intel Corp. 78,100 5,379,138 45814010
LSI Logic Corp. (a) 103,900 1,987,088 50216110
Maxim Integrated Products, Inc. (a) 39,400 2,078,350 57772K10
Motorola, Inc. 95,400 9,742,725 62007610
National Semiconductor Corp. (a) 100,000 2,175,000 63764010
22,339,576
TOTAL ELECTRONICS 32,446,062
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
ENGINEERING - 4.1%
WATER & SEWER PIPES - 4.1%
Glenayre Technologies, Inc. 237,500 $ 8,965,625 37789910
HOME FURNISHINGS - 0.5%
FURNITURE - 0.5%
Rowe Furniture Corp. 71,100 1,128,713 77952810
RESTAURANTS - 1.3%
McDonald's Corp. 45,000 2,728,125 58013510
SERVICES - 0.2%
PERSONAL SERVICES - 0.2%
Value-Added Communications, Inc. 75,000 365,625 92038310
TELEPHONE SERVICES - 12.3%
ABL CDA, Inc. 138,400 564,060 00095110
ALC Communications Corp. (a) 75,000 2,484,375 00157530
Ameritech Corp. 40,000 1,605,000 03095410
Cable & Wireless PLC ADR 80,000 1,700,000 12683020
Comsat Corp., Series 1 25,700 687,475 20564D10
GTE Corp. 40,000 1,305,000 36232010
LDDS Communications, Inc. (a) 57,626 1,563,105 50182L10
MCI Communications Corp. 20,000 547,500 55267310
Pacific Telesis Group 20,000 1,090,000 69489010
Southwestern Bell Corp. 60,000 2,347,500 84533310
Sprint Corporation 40,200 1,492,425 85206110
Telebras PN (Pfd. Reg.) 45,000,000 2,125,564 95499792
Telecom Argentina Stet France 98,700 631,838 90899992
Telefonica Argentina Class B 80,000 608,152 87999D92
Telefonos de Mexico SA sponsored ADR
representing shares Ord. Class L 30,000 2,013,750 87940378
Telephone & Data Systems, Inc. 128,411 5,826,649 87943310
26,592,393
TOTAL COMMON STOCKS
(Cost $193,787,151) 209,640,972
PREFERRED STOCKS - 0.8%
TELEPHONE SERVICES - 0.8%
Stet Societa Finanziaria
Telefonica Spa (Cost $1,474,477) 750,000 1,671,502 85982592
REPURCHASE AGREEMENTS - 2.4%
MATURITY VALUE (NOTE 1)
AMOUNT
Investments in repurchase agreements,
(U.S. Treasury obligations), in a joint
trading account, at 3.47% dated
2/28/94 due 3/1/94 $ 5,194,501 5,194,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $200,455,628) $ 216,506,474
LEGEND
1. Non-income producing
OTHER INFORMATION
CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective March 1,
1993, the fund adopted Statement of Position 93-2: Determination,
Disclosure, and Financial Statement Presentation of Income, Capital Gain,
and Return of Capital Distributions by Investment Companies. As a result,
the fund changed the classification of distributions to shareholders to
better disclose the differences between financial statement amounts and
distributions determined in accordance with income tax regulations.
Accordingly, amounts as of February 28, 1993 have been reclassified to
reflect an increase in paid in capital of $709,857, a decrease in
accumulated net investment loss of $394,017 and a decrease in accumulated
net realized gain on investments of $1,103,874.
Purchases and sales of securities, other than short-term securities,
aggregated $566,725,350 and $463,490,116, respectively.
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 $168,725 for the period
(see Note 4 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 88.4%
Canada 4.2
Finland 1.6
United Kingdom 1.4
Brazil 1.0
Others (individually less than 1%) 3.4
TOTAL 100.0%
INCOME TAX INFORMATION
At February 28, 1994, the aggregate cost of investment securities for
income tax purposes was $201,294,460. Net unrealized appreciation
aggregated $15,212,014, of which $22,324,973 related to appreciated
investment securities and $7,112,959 related to depreciated investment
securities.
The fund hereby designates $5,729,000 as a capital gain dividend for the
purpose of the dividend paid deduction.
DEVELOPING COMMUNICATIONS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
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<S> <C> <C>
FEBRUARY 28, 1994
ASSETS
Investment in securities, at value (including repurchase agreements of $5,194,000) (cost $200,455,628) $ 216,506,474
(Notes 1 and 2) - See accompanying schedule
Cash 23
Receivable for investments sold 16,394,291
Receivable for fund shares sold 2,661,401
Dividends receivable 79,484
Redemption fees receivable (Note 1) 715
TOTAL ASSETS 235,642,388
LIABILITIES
Payable for investments purchased $ 9,759,790
Payable for fund shares redeemed 3,433,341
Accrued management fee 117,383
Other payables and accrued expenses 222,654
TOTAL LIABILITIES 13,533,168
NET ASSETS $ 222,109,220
Net Assets consist of (Note 1):
Paid in capital $ 187,055,623
Accumulated net investment loss (276
)
Accumulated undistributed net realized gain (loss) on investments 19,003,027
Net unrealized appreciation (depreciation) on investment securities 16,050,846
NET ASSETS, for 11,305,666 shares outstanding $ 222,109,220
NET ASSET VALUE and redemption price per share ($222,109,220 (divided by) 11,305,666 shares) $19.65
Maximum offering price per share (100/97 of $19.65) $20.26
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED FEBRUARY 28, 1994
INVESTMENT INCOME $ 749,145
Dividends
Interest 454,404
TOTAL INCOME 1,203,549
EXPENSES
Management fee (Note 4) $ 1,112,057
Transfer agent (Note 4) 1,415,165
Fees
Redemption fees (Note 1) (133,064
)
Accounting fees and expenses 178,709
(Note 4)
Non-interested trustees' compensation 1,102
Custodian fees and expenses 76,366
Registration fees 54,932
Audit 25,825
Legal 1,206
Reports to shareholders 35,045
Miscellaneous 1,342
Total expenses before reductions 2,768,685
Expense reductions (Note 8) (13,010 2,755,675
)
NET INVESTMENT INCOME (LOSS) (1,552,126
)
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 1)
Net realized gain (loss) on:
Investment securities 27,821,155
Foreign currency contracts (34,871 27,786,284
)
Change in net unrealized appreciation (depreciation) on investment securities 9,550,677
NET GAIN (LOSS) 37,336,961
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 35,784,835
OTHER INFORMATION $3,151,721
Sales charges paid to FDC
(Note 4)
Deferred sales charges withheld $15,156
by FDC (Note 4)
Exchange fees withheld by FSC $108,930
(Note 4)
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
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INCREASE (DECREASE) IN NET ASSETS YEAR ENDED TEN MONTHS
FEBRUARY 28, ENDED
1994 FEBRUARY 28,
1993
Operations $ (1,552,126 $ (249,204
Net investment income (loss) ) )
Net realized gain (loss) on investments 27,786,284 5,918,413
Change in net unrealized appreciation (depreciation) on investments 9,550,677 5,239,635
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 35,784,835 10,908,844
Distributions to shareholders from net realized gains (12,078,883 (121,166
) )
Share transactions 326,209,686 70,309,785
Net proceeds from sales of shares
Reinvestment of distributions 11,939,467 119,925
Cost of shares redeemed (223,354,110 (37,153,609
) )
Paid in capital portion of redemption fees (Note 1) 225,044 58,225
Net increase (decrease) in net assets resulting from share transactions 115,020,087 33,334,326
TOTAL INCREASE (DECREASE) IN NET ASSETS 138,726,039 44,122,004
NET ASSETS
Beginning of period 83,383,181 39,261,177
End of period (including accumulated net investment loss of $276 and $394,017, respectively) $ 222,109,220 $ 83,383,181
OTHER INFORMATION
Shares
Sold 17,423,530 4,631,656
Issued in reinvestment of distributions 685,710 7,808
Redeemed (11,874,788 (2,468,729
) )
Net increase (decrease) 6,234,452 2,170,735
</TABLE>
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THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
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YEAR ENDED TEN MONTHS YEAR ENDED JUNE 29, 1990
FEBRUARY 28, ENDED APRIL 30, (COMMENCEMEN
FEBRUARY 28, T OT OPERATIONS)
TO APRIL 30,
SELECTED PER-SHARE DATAC 1994 1993 1992 1991
Net asset value, beginning of period $ 16.44 $ 13.54 $ 11.95 $ 10.00
Income from Investment Operations
Net investment income (loss) (.16) (.07) (.08)F (.10)
Net realized and unrealized gain (loss) on investments 4.82 2.98 2.42 1.86
Total from investment operations 4.66 2.91 2.34 1.76
Less Distributions
From net realized gain (1.47) (.03) (.79) -
Redemption fees added to paid in capital .02 .02 .04 .19
Net asset value, end of period $ 19.65 $ 16.44 $ 13.54 $ 11.95
TOTAL RETURND, E 30.24% 21.66% 21.41% 19.50%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 222,109 $ 83,383 $ 39,261 $ 7,745
Ratio of expenses to average net assetsB 1.56% 1.88%A 2.50% 2.50%A
Ratio of expenses to average net assets before expense reductionsB 1.56% 1.88%A 2.50% 3.29%A
Ratio of net investment income (loss) to average net assets (.88)% (.59)% (.61)% (1.23)%
A A
Portfolio turnover rate 280% 77%A 25% 469%A
</TABLE>
1 ANNUALIZED
2 SEE NOTE 8 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 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 1 PAST 5 LIFE OF
FEBRUARY 28, 1994 YEAR YEARS FUND
ELECTRONICS 46.24% 205.69% 109.09%
ELECTRONICS
(INCL. 3% SALES CHARGE) 41.85% 196.52% 102.82%
S&P 500 8.33% 89.60% 222.99%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, 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
FEBRUARY 28, 1994 YEAR YEARS FUND
ELECTRONICS 46.24% 25.04% 8.96%
ELECTRONICS
(INCL. 3% SALES CHARGE) 41.85% 24.28% 8.58%
S&P 500 8.33% 13.65% 14.62%
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
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 14101.26 29707.43
05/31/93 15516.26 30503.58
06/30/93 15799.26 30592.05
07/31/93 16248.16 30469.68
08/31/93 17643.65 31624.48
09/30/93 17936.41 31380.97
10/31/93 17594.86 32030.56
11/30/93 17458.24 31726.27
12/31/93 18112.48 32110.15
01/31/94 19363.60 33201.90
02/28/94 20281.85 32298.81
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
February 28, 1994, your investment would have grown to $20,282 - a 102.82%
increase. That compares to $10,000 invested in the S&P 500, which would
have grown to $32,299 over the same period - a 222.99% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1994
% OF FUND'S
INVESTMENTS
Intel Corp. 7.7
Texas Instruments, Inc. 5.9
Advanced Micro Devices, Inc. 5.4
Micron Technology, Inc. 5.4
Compaq Computer Corp. 5.0
Motorola, Inc. 3.3
Sony Corp. ADR 2.5
Murata Manufacturing Co. Ord. 2.3
Maxim Integrated Products, Inc. 2.2
IBM Corporation 2.1
TOP INDUSTRIES AS OF FEBRUARY 28, 1994
Row: 1, Col: 1, Value: 43.9
Row: 1, Col: 2, Value: 2.8
Row: 1, Col: 3, Value: 3.7
Row: 1, Col: 4, Value: 6.0
Row: 1, Col: 5, Value: 6.5
Row: 1, Col: 6, Value: 37.2
Semiconductors 37.2%
Computer Storage Devices 6.4%
Mini & Micro Computers 6.0%
Semi-Conductor
Capital Equipment 3.7%
Electrical Equipment 2.8%
All Others 43.9%*
* 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 solid year. For the 12 months ended February 28, 1994, it
had a total return of 46.24%. That easily topped the S&P 500, which
returned 8.33% during the same period.
Q. WHAT DROVE THIS STRONG PERFORMANCE?
A. In a word, semiconductors. The fund did well to the extent that it
focused on electronics companies that were directly tied to the explosion
in the sales of personal computers. Most of us know the PC story by now:
price wars helped to make them affordable to the masses. And as PC cycles
go, so go companies that manufacture the computer's "brains" - the
semiconductors. More than half of all chips made are used in personal
computers, and every new generation of computers requires greater memory
capacity, i.e. more chips. But sidestepping the sector losers over the past
year was almost as important as picking the winners. I avoided companies
that manufacture electronic instruments or equipment used for national
defense. This group is heavily dependent upon military spending by the
government, which just wasn't there.
Q. LET'S GO BACK TO THE WINNERS. WASN'T THERE A CORRECTION IN SEMICONDUCTOR
STOCKS LAST FALL?
A. Yes there was. The semiconductor market has a history of volatility.
After performing very well during the first six months of 1993, the stocks
of many chip makers had very high valuations (prices compared to other
measures like earnings). Investors took profits in the fall, which allowed
me to add to the fund's semiconductor investments. Even though stock prices
had dropped, I still believed in the underlying story: the demand for chips
was still increasing. Since then the stocks of semiconductor manufacturers
like Advanced Micro Devices, Micron Technology, and Texas Instruments have
risen steadily. All were among the fund's top 10 investments at the end of
February. Motorola's stock performed strongly, due in part to its
semiconductor business, but the company is also a big player in the move
toward wireless communications. The one chip maker that hasn't yet come
along for the ride is Intel, the fund's largest investment on February 28.
Q. IF INTEL'S PERFORMANCE HAS BEEN FLAT LATELY, WHY ARE YOU STICKING WITH
IT?
A. The company is issuing a new line of microprocessors this year that
signals the turnover of another generation of personal computers. Intel
stands alone with this technology. If it clicks, I believe the company
could see increased earnings and market share.
Q. BESIDES INTEL, DID THE FUND HAVE ANY OTHER LAGGARDS OVER THE PAST YEAR?
A. Some companies that design and market computer software were
disappointments. I'm thinking specifically of Borland International, and to
a lesser extent, Microsoft. Borland had sluggish earnings, and the company
lost market share. Microsoft's earnings came in pretty much on target, but
in 1993 that wasn't good enough. That's because the earnings of so many
other companies in the computer industry exceeded expectations.
Q. HAS THE FUND'S LARGE CASH POSITION - 25% ON FEBRUARY 28 - HURT
PERFORMANCE?
A. Not yet. The fund surged in the first two months of 1994, and investors
have recently poured in a lot of new money. I'm working hard to invest that
money before it becomes a drag on performance. My goal is to quickly get
the fund's cash stake below 10%.
Q. CAN THE FUND KEEP UP THE STRONG PACE?
A. Well, I see no letup in the demand for personal computers, which bodes
well for semiconductor demand. On the supply side, U.S. chip makers are
regaining market leadership; their Japanese counterparts aren't adding
production capacity due to the recession there. While all of this sounds
good, shareholders need to realize that my aggressive focus on
semiconductors could make the fund very volatile in the short run. Even if
the underlying story remains positive, these stocks can correct more
sharply than most in a market downturn. If investors are comfortable with
that level of risk, I believe they could be rewarded in time.
FUND FACTS
START DATE: July 29, 1985
SIZE: as of February 28, 1994, over $110 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 FEBRUARY 28, 1994
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 72.6%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 0.8%
MISSILES & SPACE VEHICLES - 0.8%
Orbital Sciences Corporation 41,700 $ 698,472 68556410
COMMUNICATIONS EQUIPMENT - 2.0%
DATACOMMUNICATIONS EQUIPMENT - 0.6%
Cabletron Systems, Inc. (a) 3,900 487,500 12692010
TELEPHONE EQUIPMENT - 1.4%
ADC Telecommunications, Inc. (a) 20,600 777,650 00088610
National Microsystems Corp. 32,000 408,000 63888210
1,185,650
TOTAL COMMUNICATIONS EQUIPMENT 1,673,150
COMPUTER SERVICES & SOFTWARE - 4.3%
CAD/CAM/CAE - 0.4%
ECI Telecom Ltd. 12,200 298,900 26825810
Integrated Silicon Systems, Inc. 500 10,750 45812Q10
309,650
COMPUTER & SOFTWARE STORES - 1.4%
Inacom Corp. (a) 30,000 525,000 45323G10
Intelligent Electronics, Inc. 5,800 141,375 45815710
MicroAge, Inc. (a) 18,450 488,925 59492810
1,155,300
PREPACKAGED COMPUTER SOFTWARE - 2.5%
Informix Corp. (a) 12,400 291,400 45677910
Media Logic, Inc. (a) 22,200 88,800 58441B10
Microsoft Corp. (a) 21,000 1,732,500 59491810
2,112,700
TOTAL COMPUTER SERVICES & SOFTWARE 3,577,650
COMPUTERS & OFFICE EQUIPMENT - 15.0%
COMPUTER EQUIPMENT - WHOLESALE - 0.7%
Merisel, Inc. (a) 27,700 581,700 58984910
COMPUTER PERIPHERALS - 1.1%
Media Vision Technology, Inc. 25,000 775,000 58445H10
Western Digital Corp. (a) 11,000 166,375 95810210
941,375
COMPUTER STORAGE DEVICES - 4.2%
ADAPTEC, Inc. (a) 61,800 1,344,150 00651F10
Exabyte (a) 44,700 815,775 30061510
Hutchinson Technology, Inc. (a) 17,800 649,700 44840710
Quantum Corp. (a) 12,300 207,563 74790610
Seagate Technology (a) 18,600 476,625 81180410
3,493,813
GRAPHICS WORKSTATIONS - 0.9%
Silicon Graphics, Inc. (a) 30,200 721,025 82705610
MAINFRAME COMPUTERS - 2.1%
International Business Machines Corp. 33,000 1,744,875 45920010
MINI & MICRO COMPUTERS - 6.0%
Compaq Computer Corp. (a) 42,500 4,196,875 20449310
Digital Equipment Corp. (a) 30,000 873,750 25384910
5,070,625
TOTAL COMPUTERS & OFFICE EQUIPMENT 12,553,413
CONSUMER ELECTRONICS - 2.5%
RADIOS, TELEVISIONS, STEREOS - 2.5%
Sony Corp. 34,700 2,134,050 83569930
SHARES VALUE (NOTE 1)
DEFENSE ELECTRONICS - 1.2%
DEFENSE ELECTRONICS - 1.2%
General Motors Corp. Class H 14,100 $ 507,600 37044250
Watkins-Johnson Co. 20,900 475,475 94248610
983,075
ELECTRICAL EQUIPMENT - 2.8%
Murata Manufacturing Co. 41,000 1,901,324 62699110
Philips NV (a) 16,600 410,850 71833750
2,312,174
ELECTRONIC INSTRUMENTS - 3.8%
ELECTRONIC EQUIPMENT - 0.1%
ASECO Corp. (a) 15,000 112,500 04365910
SEMI-CONDUCTOR CAPITAL EQUIPMENT - 3.7%
Applied Materials, Inc. (a) 30,000 1,425,000 03822210
KLA Instruments Corp. (a) 36,000 1,413,000 48248010
Silicon Valley Group, Inc. (a) 22,900 254,763 82706610
3,092,763
TOTAL ELECTRONIC INSTRUMENTS 3,205,263
ELECTRONICS - 39.7%
ELECTRONIC PARTS - WHOLESALE - 1.7%
Kent Electronics Corp. 12,300 378,225 49055310
Marshall Industries (a) 12,000 648,000 57239310
Wyle Laboratories 19,500 399,750 98305110
1,425,975
ELECTRONICS & ELECTRONIC COMPONENTS - 1.4%
Hitachi Ltd. ADR 12,300 1,136,213 43357850
SEMICONDUCTORS - 36.6%
Advanced Micro Devices, Inc. (a) 211,000 4,536,500 00790310
Analog Devices, Inc. (a) 10,000 277,500 03265410
Dallas Semiconductor Corp. (a) 25,200 456,750 23520410
Exar Corp. (a) 28,900 758,625 30064510
Integrated Device Technology, Inc. (a) 19,200 499,200 45811810
Intel Corp. 93,900 6,467,363 45814010
LSI Logic Corp. (a) 30,000 573,750 50216110
Maxim Integrated Products, Inc. (a) 35,500 1,872,625 57772K10
Micron Technology, Inc. 63,700 4,514,738 59511210
Motorola, Inc. 27,300 2,788,013 62007610
National Semiconductor Corp. (a) 79,800 1,735,650 63764010
Opti, Inc. (a) 30,000 472,500 68396010
Samsung Electronics Co. Ltd. (b):
GDR (a) 621 25,716 79605060
GDS 12,300 719,550 79605020
Texas Instruments, Inc. 61,700 4,982,275 88250810
30,680,755
TOTAL ELECTRONICS 33,242,943
INDUSTRIAL MACHINERY & EQUIPMENT - 0.4%
SPECIAL INDUSTRIAL MACHINERY - 0.4%
Asyst Technologies, Inc. 20,000 365,000 04648X10
LEASING & RENTAL - 0.1%
EQUIPMENT RENTAL & LEASING, NEC - 0.1%
Leasing Solutions, Inc. (a) 11,000 105,875 52211310
TOTAL COMMON STOCKS
(Cost $49,193,659) 60,851,065
PREFERRED CONVERTIBLE STOCKS - 0.6%
SHARES VALUE (NOTE 1)
ELECTRONICS - 0.6%
SEMICONDUCTORS - 0.6%
Advanced Micro Devices, Inc. $3.00
(Cost $506,255) 10,000 $ 505,000 00790330
CONVERTIBLE BONDS - 2.2%
PRINCIPAL VALUE (NOTE 1)
AMOUNT
COMPUTERS & OFFICE EQUIPMENT - 2.2%
COMPUTER STORAGE DEVICES - 2.2%
Maxtor Corporation 5 3/4%,
3/1/12 (Cost $1,950,005) $ 3,000,000 1,890,000 577729AA
REPURCHASE AGREEMENTS - 24.6%
MATURITY VALUE (NOTE 1)
AMOUNT
Investments in repurchase agreements,
(U.S. Treasury obligations), in a joint
trading account, at 3.47% dated
2/28/94 due 3/1/94 $ 20,607,986 20,606,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $72,255,919) $ 83,852,065
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 $745,266 or 0.7% of net
assets.
OTHER INFORMATION
CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective March 1,
1993, the fund adopted Statement of Position 93-2: Determination,
Disclosure, and Financial Statement Presentation of Income, Capital Gain,
and Return of Capital Distributions by Investment Companies. As a result,
the fund changed the classification of distributions to shareholders to
better disclose the differences between financial statement amounts and
distributions determined in accordance with income tax regulations.
Accordingly, amounts as of February 28, 1993 have been restated to reflect
an increase in paid in capital of $499,365, a decrease in accumulated net
investment loss of $803,731 and a decrease in accumulated net realized gain
on investments of $1,303,096.
Purchases and sales of securities, other than short-term securities,
aggregated $74,437,895 and $74,139,089, respectively.
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 $35,182 for the period
(see Note 4 of Notes to Financial Statements).
The maximum loan and average daily loan balances during the periods for
which loans were outstanding amounted to $3,089,000 and $1,799,500,
respectively. The weighted average interest rate paid was 3.6% (see Note 7
of Notes to Financial Statements).
INCOME TAX INFORMATION
At February 28, 1994, the aggregate cost of investment securities for
income tax purposes was $72,484,827. Net unrealized appreciation aggregated
$11,367,238, of which $12,179,159 related to appreciated investment
securities and $811,921 related to depreciated investment securities.
The fund hereby designates $3,913,000 as a capital gain dividend for the
purpose of the dividend paid deduction.
ELECTRONICS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
FEBRUARY 28, 1994
ASSETS
Investment in securities, at value (including repurchase agreements of $20,606,000) (cost $72,255,919) $ 83,852,065
(Notes 1 and 2) - See accompanying schedule
Cash 357
Receivable for fund shares sold 29,574,887
Dividends receivable 20,589
Interest receivable 85,771
Redemption fees receivable (Note 1) 250
Other receivables 12,857
TOTAL ASSETS 113,546,776
LIABILITIES
Payable for investments purchased $ 1,343,352
Payable for fund shares redeemed 1,123,007
Accrued management fee 33,498
Other payables and accrued expenses 53,439
TOTAL LIABILITIES 2,553,296
NET ASSETS $ 110,993,480
Net Assets consist of (Note 1):
Paid in capital $ 96,096,762
Accumulated undistributed net realized gain (loss) on investments 3,300,572
Net unrealized appreciation (depreciation) on investment securities 11,596,146
NET ASSETS, for 6,282,777 shares outstanding $ 110,993,480
NET ASSET VALUE and redemption price per share ($110,993,480 (divided by) 6,282,777 shares) $17.67
Maximum offering price per share (100/97 of $17.67) $18.22
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED FEBRUARY 28, 1994
INVESTMENT INCOME $ 229,581
Dividends
Interest (including security lending fees of $1,141) (Note 6) 392,272
TOTAL INCOME 621,853
EXPENSES
Management fee (Note 4) $ 340,672
Transfer agent (Note 4) 517,315
Fees
Redemption fees (Note 1) (77,441
)
Accounting and security lending fees (Note 4) 56,600
Non-interested trustees' compensation 381
Custodian fees and expenses 13,396
Registration fees 41,586
Audit 4,917
Legal 553
Interest (Note 7) 2,132
Reports to shareholders 9,293
Miscellaneous 726
Total expenses before reductions 910,130
Expense reductions (Note 8) (4,331 905,799
)
NET INVESTMENT INCOME (LOSS) (283,946
)
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 1) 10,940,991
Net realized gain (loss) on investment securities
Change in net unrealized appreciation (depreciation) on investment securities 7,342,630
NET GAIN (LOSS) 18,283,621
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 17,999,675
OTHER INFORMATION $577,919
Sales charges paid to FDC
(Note 4)
Deferred sales charges withheld $6,868
by FDC (Note 4)
Exchange fees withheld by FSC $66,285
(Note 4)
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED TEN MONTHS
FEBRUARY 28, ENDED
1994 FEBRUARY 28,
1993
Operations $ (283,946 $ (194,758
Net investment income (loss) ) )
Net realized gain (loss) on investments 10,940,991 2,247,326
Change in net unrealized appreciation (depreciation) on investments 7,342,630 6,163,563
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 17,999,675 8,216,131
Distributions to shareholders from net realized gains (6,751,718 -
)
Share transactions 234,477,570 214,834,141
Net proceeds from sales of shares
Reinvestment of distributions 6,551,694 -
Cost of shares redeemed (189,780,938 (209,950,220
) )
Paid in capital portion of redemption fees (Note 1) 469,729 705,774
Net increase (decrease) in net assets resulting from share transactions 51,718,055 5,589,695
TOTAL INCREASE (DECREASE) IN NET ASSETS 62,966,012 13,805,826
NET ASSETS
Beginning of period 48,027,468 34,221,642
End of period (including accumulated net investment loss of $0 and $803,731, respectively) $ 110,993,480 $ 48,027,468
OTHER INFORMATION
Shares
Sold 13,902,581 16,634,247
Issued in reinvestment of distributions 431,270 -
Redeemed (11,413,385 (16,169,840
) )
Net increase (decrease) 2,920,466 464,407
</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>
YEAR ENDED TEN MONTHS YEARS ENDED APRIL 30,
FEBRUARY 28, ENDED
FEBRUARY 28,
SELECTED PER-SHARE DATAC 1994 1993 1992 1991 1990
Net asset value, beginning of period $ 14.28 $ 11.81 $ 10.75 $ 9.11 $ 7.32
Income from Investment Operations
Net investment income (loss) (.09) (.05) (.12) (.04) -
Net realized and unrealized gain (loss) on investments 6.09 2.33 1.00 1.53 1.62
Total from investment operations 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 .14 .19 .18 .16 .17
Net asset value, end of period $ 17.67 $ 14.28 $ 11.81 $ 10.75 $ 9.11
TOTAL RETURND, E 46.24% 20.91% 9.86% 18.15% 24.45%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 110,993 $ 48,027 $ 34,222 $ 18,178 $ 26,141
Ratio of expenses to average net assetsB 1.67% 1.69%A 2.16% 2.26% 2.57%
Ratio of expenses to average net assets before expense 1.67% 1.69%A 2.16% 2.26% 3.47%
reductionsB
Ratio of net investment income (loss) to average net
assets (.52)% (.50)% (1.07)% (.45)% (.02)%
A
Portfolio turnover rate 163% 293%A 299% 268% 378%
</TABLE>
1 ANNUALIZED
2 SEE NOTE 8 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.
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 1 PAST 5 LIFE OF
FEBRUARY 28, 1994 YEAR YEARS FUND
SOFTWARE AND COMPUTER
SERVICES 33.19% 202.90% 369.41%
SOFTWARE AND COMPUTER
SERVICES (INCL. 3% SALES CHARGE) 29.19% 193.82% 355.33%
S&P 500 8.33% 89.60% 222.99%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, 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
FEBRUARY 28, 1994 YEAR YEARS FUND
SOFTWARE AND COMPUTER
SERVICES 33.19% 24.81% 19.71%
SOFTWARE AND COMPUTER
SERVICES (INCL. 3% SALES CHARGE) 29.19% 24.06% 19.29%
S&P 500 8.33% 13.65% 14.62%
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) S&P 500
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 32298.81
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 February 28, 1994, your investment would have grown to
$45,533 - a 355.33% increase. That compares to $10,000 invested in the
S&P 500, which would have grown to $32,299 over the same period - a
222.99% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1994
% OF FUND'S
INVESTMENTS
Cisco Systems, Inc. 9.4
Cheyenne Software, Inc. 9.1
Cabletron Systems, Inc. 7.4
DSC Communications Corp. 6.8
Wellfleet Communications, Inc. 5.5
Crosscommunications Corp. 4.1
Netframe Systems, Inc. 3.4
3Com Corp. 3.4
Informix Corp. 2.9
Electronics for Imaging Incorporated 2.9
TOP INDUSTRIES AS OF FEBRUARY 28, 1994
Row: 1, Col: 1, Value: 30.1
Row: 1, Col: 2, Value: 4.4
Row: 1, Col: 3, Value: 4.4
Row: 1, Col: 4, Value: 5.5
Row: 1, Col: 5, Value: 26.6
Row: 1, Col: 6, Value: 29.0
Datacommunications Equipment 29.0%
Prepackaged Computer
Software 26.6%
Semiconductors 5.5%
CAD/CAM/CAE 4.4%
Computer Peripherals 4.4%
All Others 30.1%*
* INCLUDES SHORT-TERM INVESTMENTS
SOFTWARE AND COMPUTER SERVICES PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Arieh Coll,
Portfolio Manager of Fidelity Select Software
and Computer Services Portfolio
Q. ARIEH, HOW HAS THE FUND PERFORMED?
A. For the year ended February 28, 1994, the fund had a total return of
33.19%. That beat the S&P 500, which returned 8.33% for the same
period.
Q. WHAT HELPED THE FUND COME OUT AHEAD?
A. Avoiding losses was one factor. In the early spring of 1993, the fund
was invested very defensively and did well when technology stocks fell
back. Investing defensively meant buying some foreign stocks as well as
domestic stocks that had already come down and were therefore less likely
to deteriorate further. In the summer, there was a second, more mild
correction for the sector, which I had anticipated. Building up the fund's
cash level and investing defensively before that correction again helped
insulate the fund from the downturn.
Q. WHAT WAS THE OTHER FACTOR?
A. After each of those two corrections, I focused on buying the stocks of
companies I thought were fast growing. The computer networker Cisco
Systems, for example, was one of the fund's top performers. I was able to
buy it at a relatively inexpensive price after both corrections. I also
found opportunities among otherwise solid stocks that suffered sharp,
temporary setbacks. Informix, a database company, was an example of a
company that fell last spring on false rumors, a common occurrence in the
technology sector.
Q. WHY HAVE YOU AVOIDED MANY OF THE MAINFRAME COMPANIES?
A. Because there's a secular move away from mainframes to a world where
personal computers are networked with one another. Building the
infrastructure needed to network requires all sorts of technology -
routers, hubs, adapter cards. I've focused on companies like Cabletron
Systems, 3Com and Wellfleet that sell this type of equipment. The move to
networks is the predominant theme for the fund, and several of its
best-performing stocks came from this area.
Q. HAVE YOU BOUGHT MANY FOREIGN COMPANIES WHICH COULD BENEFIT FROM THE MOVE
AWAY FROM MAINFRAMES?
A. U.S. companies dominate the field and there really aren't that many
overseas investments of this type. One exception is the Canadian-based SHL
Systemhouse, which essentially is a systems integrator/consulting firm. SHL
helps companies that rely on mainframes transition to a network-based
architecture.
Q. LOOKING BACK, IS THERE ANYTHING YOU REGRET?
A. Sure, I made some mistakes. Synoptics was one disappointment. The
company is a leader in the intelligent hub market - which means they're a
central point of control to manage local area networks (LANs). I
over-estimated its revenue growth since backlogged orders proved to be a
poor indicator of the health of the company's business. Much of the
backlog was based on double- ordering from customers, a common practice
with technology products. Distributors were afraid they wouldn't get the
amount of product they needed on a timely basis, so they double-ordered in
the hopes they'd get the minimum. Once the company was able to meet orders,
the backlog disappeared, earnings estimates fell, and the stock dropped. I
eliminated the stock from the fund in the spring.
Q. IN YOUR VIEW, WILL THE TECHNOLOGY SECTOR CONTINUE TO BE VOLATILE?
A. Most likely. There are a lot of speculative investors in technology
stocks, and that causes the sector to go through some psychological traumas
from time to time. The sector historically has had one very large
correction during the year. In 1993, it happened in early spring, but this
year I believe it will be fairly clear sailing until the summer. If I do
anticipate a correction, I'd probably raise the fund's cash level somewhat
and get more defensive, much as I have in previous corrections. And I would
use a downturn as an opportunity to buy some of the growing companies I
like at less expensive prices. But it's important to remember that
technology has been one of the fastest growing industries in the world, and
its long-term prospects - despite some temporary setbacks - seem to be
strong.
FUND FACTS
START DATE: July 29, 1985
SIZE: as of February 28, 1994, over $178 million
MANAGER: Arieh Coll, since October 1991;
manager, Fidelity Select Technology Portfolio,
since July 1992; joined Fidelity in 1989
(checkmark)
SOFTWARE AND COMPUTER SERVICES PORTFOLIO
INVESTMENTS FEBRUARY 28, 1994
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 97.5%
SHARES VALUE (NOTE 1)
APPLIANCE STORES - 2.1%
ELECTRIC APPLIANCES - WHOLESALE - 2.1%
Cellstar Corp. (a) 202,000 $ 3,686,490 15092510
COMMUNICATIONS EQUIPMENT - 36.9%
DATACOMMUNICATIONS EQUIPMENT - 29.0%
Cabletron Systems, Inc. (a) 105,800 13,225,000 12692010
Cisco Systems, Inc. (a) 226,400 16,697,000 17275R10
Digital Microwave Corp. (a) 50,000 875,000 25385910
Network General Corp. (a) 149,100 3,093,825 64121010
Wellfleet Communications, Inc. (a) 123,700 9,834,150 94949710
Xircom, Inc. (a) 75,000 1,893,750 98392210
3Com Corp. (a) 100,000 6,062,500 88553510
51,681,225
TELEPHONE EQUIPMENT - 7.9%
DSC Communications Corp. (a) 222,100 12,076,688 23331110
Inter-Tel, Inc. 184,700 1,962,438 45837210
Global Village Communications 1,000 12,000 37935Q10
14,051,126
TOTAL COMMUNICATIONS EQUIPMENT 65,732,351
COMPUTER SERVICES & SOFTWARE - 34.2%
CAD/CAM/CAE - 4.4%
Alantec Corp. 400 7,400 01163010
Crosscommunications Corp. (a) 337,700 7,344,975 22757K10
State of The Art, Inc. (a) 80,000 560,000 85730710
7,912,375
COMPUTER RELATED SERVICES, NEC - 0.2%
Xpedite Systems, Inc. 22,100 374,275 98392910
COMPUTER SERVICES - 3.0%
Bisys Group, Inc. (The) (a) 50,000 937,500 05547210
Medic Computer Systems, Inc. 30,000 517,500 58447210
SHL Systemhouse, Inc. (a) 446,000 3,177,750 78424R10
Warner Insurance Services, Inc. 157,525 708,863 93446710
5,341,613
PREPACKAGED COMPUTER SOFTWARE - 26.6%
Banyan Systems, Inc. (a) 95,000 1,401,250 06690810
Brock Control Systems, Inc. (a) 80,000 1,620,000 11162610
Cheyenne Software, Inc. (a) 402,900 16,216,725 16688810
Data Systems & Software (a) 55,000 536,250 23788710
EICON Technology Corp. (a) 224,000 2,282,327 28248F10
Electronics for Imaging Incorporated (a) 335,600 5,117,900 28608210
Hummingbird Communications Ltd. (a) 58,600 879,326 44544R10
Informix Corp. (a) 219,200 5,151,200 45677910
MDL Information Systems, Inc. (a) 30,000 232,500 55267R10
Manugistics Group, Inc. (a) 55,000 811,250 56501110
MathSoft, Inc. (a) 40,000 255,000 57679810
Microsoft Corp. (a) 40,000 3,300,000 59491810
Midisoft Corp. (a) 30,000 405,000 59741310
Modatech Systems, Inc. (a) 250,000 1,171,875 60750D10
Platinum Technology, Inc. (a) 35,000 490,000 72764T10
Sanctuary Woods Multimedia Corp. 53,300 222,166 79971E10
Santa Cruz Operation, Inc. (a) 95,000 581,875 80183310
Softimage, Inc. (a) 35,000 761,250 83396110
Sterling Software, Inc. (a) 72,000 2,466,000 85954710
Wall Data, Inc. (a) 70,000 3,517,500 93204510
47,419,394
TOTAL COMPUTER SERVICES & SOFTWARE 61,047,657
SHARES VALUE (NOTE 1)
COMPUTERS & OFFICE EQUIPMENT - 11.1%
COMPUTER EQUIPMENT - WHOLESALE - 0.2%
Kenfil, Inc. (a) 185,000 $ 393,125 48888310
COMPUTER PERIPHERALS - 4.4%
Asante Technologies, Inc. (a) 135,000 1,670,625 04341210
Creative Technologies Corp. (a) 143,100 5,080,050 22599992
Media Vision Technology, Inc. 34,700 1,075,700 58445H10
7,826,375
COMPUTER STORAGE DEVICES - 0.8%
Xylogics, Inc. (a) 73,900 1,348,675 98415210
COMPUTERS & OFFICE EQUIPMENT - 3.4%
Netframe Systems, Inc. (a) 377,700 6,137,625 64110610
ELECTRONIC COMPUTERS - 1.4%
Auspex Systems, Inc. (a) 50,000 325,000 05211610
SynOptics Communications, Inc. (a) 86,700 2,232,525 87160910
2,557,525
PENS, PENCILS, OFFICE SUPPLIES - 0.9%
International Imaging Materials, Inc. (a) 97,200 1,652,400 45968C10
TOTAL COMPUTERS & OFFICE EQUIPMENT 19,915,725
ELECTRICAL EQUIPMENT - 1.6%
ELECTRICAL EQUIPMENT - WHOLESALE - 0.9%
Itel Corp. (a) 60,000 1,672,500 46564210
TV & RADIO COMMUNICATION EQUIPMENT - 0.7%
Avid Technology, Inc. (a) 49,000 1,151,500 05367P10
TOTAL ELECTRICAL EQUIPMENT 2,824,000
ELECTRONIC INSTRUMENTS - 2.1%
SEMICONDUCTOR CAPITAL EQUIPMENT - 2.1%
Applied Materials, Inc. (a) 80,000 3,800,000 03822210
ELECTRONICS - 5.8%
ELECTRONIC PARTS - WHOLESALE - 0.3%
ARC International Corp. (a) 133,500 492,281 00190510
SEMICONDUCTORS - 5.5%
Intel Corp. (a) 61,500 4,235,813 45814010
Intel Corp. (warrants) (a) 201,600 3,477,600 45814014
Motorola, Inc. 20,000 2,042,500 62007610
9,755,913
TOTAL ELECTRONICS 10,248,194
ENGINEERING - 0.0%
ARCHITECTS & ENGINEERS - 0.0%
DSP Group (a) 200 3,100 23332B10
INDUSTRIAL MACHINERY & EQUIPMENT - 0.4%
SPECIAL INDUSTRIAL MACHINERY, NEC - 0.4%
ATS Automation Tooling Systems, Inc. 94,000 766,210 00194010
INSURANCE - 0.5%
LIFE INSURANCE - 0.5%
GMIS, Inc. (a) 70,000 857,500 36189710
MEDICAL EQUIPMENT & SUPPLIES - 0.2%
MEDICAL SUPPLIES & APPLIANCES - 0.2%
Steris Corporation (a) 13,100 363,525 85915210
SECURITIES INDUSTRY - 2.4%
INVESTMENT MANAGERS - 1.0%
Peregrine Investments Holdings 829,000 1,780,883 71399492
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
SECURITIES INDUSTRY - CONTINUED
SECURITY & COMMODITY BROKERS - 1.4%
Kim Eng Holdings Ltd. 453,000 $ 882,059 49499D92
Kim Eng Holdings Ltd. (warrants) (a) 90,600 95,079 49499D94
Sun Hung Kai Properties Ltd. 2,323,000 1,548,210 86690810
2,525,348
TOTAL SECURITIES INDUSTRY 4,306,231
TELEPHONE SERVICES - 0.2%
ABL, Inc. 71,100 289,774 00095110
TOTAL COMMON STOCKS
(Cost $158,619,791) 173,840,757
NONCONVERTIBLE BONDS - 0.0%
PRINCIPAL VALUE (NOTE 1)
AMOUNT
SECURITIES INDUSTRY - 0.0%
SECURITY & COMMODITY BROKERS - 0.0%
Kim Eng Holdings Ltd. 3 1/2%,
12/27/97 (Cost $56,327) SGD 90,600 $ 52,694 49499DAA
REPURCHASE AGREEMENTS - 2.5%
MATURITY VALUE (NOTE 1)
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account, at 3.47% dated
2/28/94 due 3/1/94 $ 4,417,426 4,417,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $163,093,118) $ 178,310,451
CURRENCY ABBREVIATIONS:
SGD - Singapore dollar
LEGEND
1. Non-income producing
2. Principal amount is stated in United States dollars unless otherwise
noted.
OTHER INFORMATION
CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective March 1,
1993, the fund adopted Statement of Position 93-2: Determination,
Disclosure, and Financial Statement Presentation of Income, Capital Gain,
and Return of Capital Distributions by Investment Companies. As a result,
the fund changed the classification of distributions to shareholders to
better disclose the differences between financial statement amounts and
distributions determined in accordance with income tax regulations.
Accordingly, amounts as of February 28, 1993 have been restated to reflect
an increase in paid in capital of $13,841,831, a decrease in accumulated
net investment loss of $1,682,130 and a decrease in accumulated net
realized gain on investments of $15,523,961.
Purchases and sales of securities, other than short-term securities,
aggregated $604,996,895 and $618,326,233, respectively.
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 $136,866 for the period
(see Note 4 of Notes to Financial Statements).
At the period end, the value of securities loaned and the value of
collateral amounted to $2,693,550 and $2,764,000, respectively (see Note 6
of Notes to Financial Statements).
The maximum loan and average daily loan balances during the periods for
which loans were outstanding amounted to $7,894,000 and $3,213,792,
respectively. The weighted average interest rate paid was 3.7% (see Note 7
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 88.4%
Canada 5.4
Singapore 3.4
Hong Kong 1.9
Others (individually less than 1%) 0.9
TOTAL 100.0%
INCOME TAX INFORMATION
At February 28, 1994, the aggregate cost of investment securities for
income tax purposes was $164,188,229. Net unrealized appreciation
aggregated $14,122,222, of which $20,811,704 related to appreciated
investment securities and $6,689,482 related to depreciated investment
securities.
The fund hereby designates $1,410,000 as a capital gain dividend for the
purpose of the dividend paid deduction.
SOFTWARE AND COMPUTER SERVICES PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
FEBRUARY 28, 1994
ASSETS
Investment in securities, at value (including repurchase agreements of $4,417,000) (cost $163,093,118) $ 178,310,451
(Notes 1 and 2) - See accompanying schedule
Cash 693
Receivable for investments sold 14,203,242
Receivable for fund shares sold 5,440,417
Dividends receivable 19,996
Interest receivable 145
Redemption fees receivable (Note 1) 994
Other receivables 47,464
TOTAL ASSETS 198,023,402
LIABILITIES
Payable for investments purchased $ 13,308,377
Payable for fund shares redeemed 3,094,175
Accrued management fee 88,999
Other payables and accrued expenses 734,026
Collateral on securities loaned, at value (Note 6) 2,764,000
TOTAL LIABILITIES 19,989,577
NET ASSETS $ 178,033,825
Net Assets consist of (Note 1):
Paid in capital $ 148,168,536
Accumulated undistributed net realized gain (loss) on investments 14,647,956
Net unrealized appreciation (depreciation) on investment securities 15,217,333
NET ASSETS, for 6,161,650 shares outstanding $ 178,033,825
NET ASSET VALUE and redemption price per share ($178,033,825 (divided by) 6,161,650 shares) $28.89
Maximum offering price per share (100/97 of $28.89) $29.78
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED FEBRUARY 28, 1994
INVESTMENT INCOME $ 298,461
Dividends
Interest (including security lending fees of $47,901) (Note 6) 349,659
TOTAL INCOME 648,120
EXPENSES
Management fee (Note 4) $ 1,077,770
Transfer agent (Note 4) 1,469,576
Fees
Redemption fees (Note 1) (188,207
)
Accounting and security lending fees (Note 4) 180,104
Non-interested trustees' compensation 1,225
Custodian fees and expenses 42,894
Registration fees 58,442
Audit 28,109
Legal 1,710
Interest (Note 7) 7,864
Reports to shareholders 26,638
Miscellaneous 2,467
Total expenses before reductions 2,708,592
Expense reductions (Note 8) (11,008 2,697,584
)
NET INVESTMENT INCOME (LOSS) (2,049,464
)
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 1) 35,000,477
Net realized gain (loss) on investment securities
Change in net unrealized appreciation (depreciation) on investment securities 10,379,359
NET GAIN (LOSS) 45,379,836
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 43,330,372
OTHER INFORMATION $1,796,117
Sales charges paid to FDC
(Note 4)
Deferred sales charges withheld $18,078
by FDC (Note 4)
Exchange fees withheld by FSC $157,755
(Note 4)
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED TEN MONTHS
FEBRUARY 28, ENDED
1994 FEBRUARY 28,
1993
Operations $ (2,049,464 $ (348,037
Net investment income (loss) ) )
Net realized gain (loss) on investments 35,000,477 23,171,878
Change in net unrealized appreciation (depreciation) on investments 10,379,359 7,473,848
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 43,330,372 30,297,689
Distributions to shareholders from net realized gains (32,503,084 -
)
Share transactions 412,354,230 400,316,696
Net proceeds from sales of shares
Reinvestment of distributions 32,019,820 -
Cost of shares redeemed (429,424,876 (369,831,627
) )
Paid in capital portion of redemption fees (Note 1) 1,045,419 858,352
Net increase (decrease) in net assets resulting from share transactions 15,994,593 31,343,421
TOTAL INCREASE (DECREASE) IN NET ASSETS 26,821,881 61,641,110
NET ASSETS
Beginning of period 151,211,944 89,570,834
End of period (including undistributed net investment loss of $0 and $1,682,130, respectively) $ 178,033,825 $ 151,211,944
OTHER INFORMATION
Shares
Sold 14,575,603 16,271,040
Issued in reinvestment of distributions 1,265,940 -
Redeemed (15,154,744 (14,936,285
) )
Net increase (decrease) 686,799 1,334,755
</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>
YEAR ENDED TEN MONTHS YEARS ENDED APRIL 30,
FEBRUARY 28, ENDED
FEBRUARY 28,
SELECTED PER-SHARE DATAC 1994 1993 1992 1991 1990
Net asset value, beginning of period $ 27.62 $ 21.63 $ 19.77 $ 15.58 $ 15.75
Income from Investment Operations
Net investment income (loss) (.34) (.07)F (.28) (.14)G (.20)
Net realized and unrealized gain (loss) on investments 7.92 5.88 4.37 4.06 .82
Total from investment operations 7.58 5.81 4.09 3.92 .62
Less Distributions
From net realized gain (6.48) - (2.50) - (.86)
Redemption fees added to paid in capital .17 .18 .27 .27 .07
Net asset value, end of period $ 28.89 $ 27.62 $ 21.63 $ 19.77 $ 15.58
TOTAL RETURND, E 33.19% 27.69% 25.36% 26.89% 4.64%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 178,034 $ 151,212 $ 89,571 $ 17,290 $ 10,539
Ratio of expenses to average net assetsB 1.57% 1.64%A 1.98% 2.50% 2.56%
Ratio of expenses to average net assets before expense 1.57% 1.64%A 1.98% 2.82% 3.39%
reductionsB
Ratio of net investment income (loss) to average net assets(1.19)% (.37)%A (1.30)% (.84)% (1.30)%
Portfolio turnover rate 376% 402%A 348% 326% 284%
</TABLE>
1 ANNUALIZED
2 SEE NOTE 8 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 REFLECTS DIVIDENDS RECEIVED IN ARREARS FROM
UNISYS CORP. $3.75 SERIES A, WHICH AMOUNTED TO $.03 PER SHARE.
7 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 1 PAST 5 PAST 10
FEBRUARY 28, 1994 YEAR YEARS YEARS
TECHNOLOGY 35.62% 195.34% 166.48%
TECHNOLOGY
(INCL. 3% SALES CHARGE) 31.55% 186.48% 158.49%
S&P 500 8.33% 89.60% 321.84%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, 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
FEBRUARY 28, 1994 YEAR YEARS YEARS
TECHNOLOGY 35.62% 24.18% 10.30%
TECHNOLOGY
(INCL. 3% SALES CHARGE) 31.55% 23.43% 9.96%
S&P 500 8.33% 13.65% 15.48%
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 Retailing (046) S&P 500
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 29136.58
Let's say you invested $10,000 in Fidelity Select Technology Portfolio on
February 29, 1984, and paid a 3% sales charge. By February 28, 1994, your
investment would have grown to $25,849 - a 158.49% increase. That compares
to $10,000 invested in the S&P 500, which would have grown to $42,184
over the same period - a 321.84% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1994
% OF FUND'S
INVESTMENTS
Compaq Computer Corp. 6.8
International Business Machines Corp. 6.7
Intel Corp. 6.2
Texas Instruments, Inc. 5.6
Lotus Development Corp. 4.4
Cisco Systems, Inc. 4.0
Oracle Systems Corp. 3.9
Advanced Micro Devices, Inc. 3.7
Informix Corp. 3.7
Cabletron Systems, Inc. 3.6
TOP INDUSTRIES AS OF FEBRUARY 28, 1994
Row: 1, Col: 1, Value: 32.3
Row: 1, Col: 2, Value: 7.4
Row: 1, Col: 3, Value: 7.9
Row: 1, Col: 4, Value: 11.2
Row: 1, Col: 5, Value: 20.6
Row: 1, Col: 6, Value: 20.6
Prepackaged Computer Software 20.6%
Semiconductors 20.6%
Datacommunications
Equipment 11.2%
Mainframe Computers 7.9%
Mini & Micro Computers 7.4%
All Others 32.3%*
* INCLUDES SHORT-TERM INVESTMENTS
TECHNOLOGY PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Harry Lange,
Portfolio Manager of Fidelity Select Technology
Portfolio
Q. HARRY, HOW DID THE FUND PERFORM?
A. The fund had a total return of 35.62% for the 12 months ended February
28, 1994. That easily outdistanced the S&P 500, which returned 8.33%
during the same period.
Q. WHAT ACCOUNTED FOR THE STRONG NUMBERS?
A. Technology stocks of many types fell under the Wall Street spotlight
this past year, and they didn't disappoint. Speculation surrounding the
roles technology companies would play in the building of the information
superhighway pushed up stock prices. In addition, the enormous growth of
personal computers triggered gains in the stocks of computer-related
industries. The fund did well by focusing on datacommunications companies,
especially those that manufacture computer networking equipment.
Q. WHAT'S THE STORY BEHIND THE NETWORKING COMPANIES?
A. Not only are PCs exploding in the workplace, but a bigger portion of
them are being tied together through local area networks, or LANs. The
companies that sell the building blocks for these networks - hubs, routers
and the like - experienced tremendous growth last year. Datacommunications
companies like Cisco and Cabletron - both among the fund's top 10
investments at the end of February - helped the fund in 1993. In addition,
when businesses set up these networks, they need software. Database
software companies like Oracle and Informix were there to fill the need. In
late fall, I cut back a bit on the fund's investment in these networking
and software stocks. I still believed strongly in their business prospects,
but their stock prices compared to other measures like earnings had gotten
high enough to make me a bit nervous.
Q. WHERE DID YOU TURN YOUR ATTENTION?
A. I worked to broaden the fund's investments to take better advantage of
the boom in PCs. I added computer manufacturers Compaq and IBM - the fund's
top two names on February 28 - as well as several semiconductor companies.
IBM was a classic American business turnaround story. The company's
technology has always been solid, but now new management appears serious
about cutting costs. The stock rose steadily through the fall. Although it
has stalled a bit in 1994, I still feel good about the company's comeback.
Meanwhile, I can't say enough good things about Compaq. The company has
emerged as the leading low-cost PC producer, and has increased its market
share by 50% over the past year. The stock has risen dramatically, and I
think there's potential for more solid growth in '94.
Q. WHAT ABOUT SEMICONDUCTORS?
A. The increased demand for PCs, and the need for computers with better
memory capacity, have done wonders for the semiconductor industry. This
year, Intel is issuing its new state-of-the-art microprocessor, the
Pentium, which I think could set the company apart from its competition.
Texas Instruments and Advanced Micro Devices are two more companies that
should benefit from the need for more semiconductors.
Q. DID ANY INVESTMENTS NOT GO YOUR WAY?
A. Sure. Although it helped to avoid health-care stocks for most of the
year, I consider many of them to be suitable investments for the fund.
Pharmaceutical companies, in particular, benefit significantly from
technological advances and improvements. By late fall, I felt many of the
drug companies had been beaten up so badly they were primed for a rebound.
So I invested about 10% of the fund in drug firms like Pfizer,
Warner-Lambert and Schering-Plough. However, my timing was poor. Fears that
these companies would lose the ability to raise prices under health-care
reform continued to keep investors away. I had sold most of the fund's
health-care investment by the end of January.
Q. WHAT ARE YOUR EXPECTATIONS FOR THE NEXT SIX MONTHS?
A. The PC market is the key to performance for many stocks in the fund.
That said, I see no signs of a slowdown in the demand for PCs and related
equipment, which makes me optimistic about the next several months. Taken
separately, computer manufacturers, networkers, software producers, and
semiconductor manufacturers are very volatile groups. By diversifying the
fund into all of these areas, I hope to limit downside potential should
there be a market correction.
FUND FACTS
START DATE: July 14, 1981
SIZE: as of February 28, 1994, over $202 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 FEBRUARY 28, 1994
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 93.8%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 0.5%
AIRCRAFT & PARTS - 0.5%
Hong Kong Aircraft &
Engineering Co. (a) 150,000 $ 897,790 43899410
BROADCASTING - 0.9%
CABLE TV OPERATORS - 0.0%
NTN Communications, Inc. (a) 3,800 30,400 62941030
TELEVISION BROADCASTING - 0.9%
Scandinavian Broadcasting Corp. (a) 60,000 1,650,000 80699E92
TOTAL BROADCASTING 1,680,400
CELLULAR - 0.1%
CELLULAR & COMMUNICATION SERVICES - 0.1%
Advanced Information Services 2,500 87,678 00799793
COMMUNICATIONS EQUIPMENT - 13.0%
DATACOMMUNICATIONS EQUIPMENT - 11.2%
Cabletron Systems, Inc. (a) 53,700 6,712,500 12692010
Cisco Systems, Inc. (a) 101,200 7,463,500 17275R10
Network General Corp. (a) 187,500 3,890,625 64121010
3Com Corp. (a) 50,000 3,031,250 88553510
21,097,875
TELEPHONE EQUIPMENT - 1.8%
Ericsson (L.M.) Telephone Co.
Class B ADR 20,000 880,000 29482140
Newbridge Networks Corp. (a) 41,000 2,342,125 65090110
Teledata Communications Ltd. (a) 7,300 105,850 93799992
Zoom Telephonics, Inc. 7,100 83,425 98976E10
3,411,400
TOTAL COMMUNICATIONS EQUIPMENT 24,509,275
COMPUTER SERVICES & SOFTWARE - 21.8%
COMPUTER & SOFTWARE STORES - 0.7%
Inacom Corp. (a) 67,300 1,177,750 45323G10
Software Spectrum, Inc. (a) 8,000 134,000 83396010
1,311,750
CUSTOM COMPUTER PROGRAMMING SERVICES - 0.2%
Progress Software Corp. (a) 7,900 319,950 74331210
CAD/CAM/CAE - 0.3%
Chipcom Corp. (a) 6,200 322,400 16961710
Structural Dynamics Research Corp. (a) 20,000 297,500 86355510
619,900
ELECTRONIC INFORMATION RETRIEVAL - 0.0%
Quickresponse Services, Inc. (a) 1,500 33,750 74837W10
PREPACKAGED COMPUTER SOFTWARE - 20.6%
Brock Control Systems, Inc. (a) 82,400 1,668,600 11162610
Cheyenne Software, Inc. (a) 7,500 301,875 16688810
Corel Systems Corp. (a) 105,800 2,116,784 21868Q10
EICON Technology Corp. (a) 21,000 213,968 28248F10
Fourth Dimension Software (a) 38,000 446,500 35199792
Fourth Shift Corp. 54,000 540,000 35112810
Informix Corp. (a) 294,800 6,927,800 45677910
Lotus Development Corp. (a) 120,000 8,340,000 54570010
MDL Information Systems, Inc. (a) 16,000 124,000 55267R10
Media Logic, Inc. (a) 65,000 260,000 58441B10
Microsoft Corp. (a) 30,000 2,475,000 59491810
Midisoft Corp. (a) 40,000 540,000 59741310
Oracle Systems Corp. (a) 223,800 7,385,400 68389X10
SHARES VALUE (NOTE 1)
Sybase, Inc. (a) 60,000 $ 2,707,500 87113010
Systems Software Associates, Inc. (a) 107,900 1,807,325 87183910
VMark Software, Inc. (a) 3,700 56,425 92856110
Wall Data, Inc. (a) 58,200 2,924,550 93204510
38,835,727
TOTAL COMPUTER SERVICES & SOFTWARE 41,121,077
COMPUTERS & OFFICE EQUIPMENT - 26.4%
COMPUTER EQUIPMENT - 0.5%
Syquest Technology, Inc. (a) 90,000 866,250 87166010
COMPUTER EQUIPMENT - WHOLESALE - 0.7%
GBC Technologies, Inc. 83,800 1,173,200 36149F10
Kenfil, Inc. (a) 56,300 119,638 48888310
1,292,838
COMPUTER PERIPHERALS - 1.9%
Komag, Inc. (a) 8,400 210,000 50045310
Media Vision Technology, Inc. 86,900 2,693,900 58445H10
Microtouch Systems, Inc. (a) 16,000 232,000 59514510
Radius, Inc. (a) 58,300 415,388 75047010
Western Digital Corp. (a) 6,000 90,750 95810210
3,642,038
COMPUTER RENTAL & LEASING - 0.0%
Comdisco, Inc. 3,300 69,300 20033610
COMPUTER STORAGE DEVICES - 0.9%
Pinnacle Micro, Inc. (a) 84,500 1,563,250 72346910
Quantum Corp. (a) 2,300 38,813 74790610
1,602,063
COMPUTERS & OFFICE EQUIPMENT - 2.6%
Hewlett-Packard Co. 42,800 3,878,750 42823610
Netframe Systems, Inc. (a) 59,600 968,500 64110610
4,847,250
ELECTRONIC COMPUTERS - 1.2%
SynOptics Communications, Inc. (a) 35,100 903,825 87160910
TSL Holding, Inc. 10,864 326 87291810
Tricord Systems, Inc. (a) 70,500 1,445,250 89612110
2,349,401
GRAPHICS WORKSTATIONS - 1.5%
Sun Microsystems, Inc. (a) 103,900 2,818,288 86681010
MAINFRAME COMPUTERS - 7.9%
Amdahl Corp. 381,600 2,241,900 02390510
International Business Machines Corp. 240,000 12,690,000 45920010
14,931,900
MINI & MICRO COMPUTERS - 7.4%
Compaq Computer Corp. (a) 130,000 12,837,748 20449310
Digital Equipment Corp. (a) 40,000 1,165,000 25384910
14,002,748
PENS, PENCILS, OFFICE SUPPLIES - 1.8%
International Imaging
Materials, Inc. (a) 199,700 3,394,900 45968C10
TOTAL COMPUTERS & OFFICE EQUIPMENT 49,816,976
CONSUMER ELECTRONICS - 0.4%
RADIOS, TELEVISIONS, STEREOS - 0.4%
Odetics, Inc. Class A (a) 66,000 726,000 67606520
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
DEFENSE ELECTRONICS - 0.0%
Stanford Telecommunications, Inc. (a) 200 $ 4,150 85440210
DRUGS & PHARMACEUTICALS - 1.0%
BIOTECHNOLOGY - 0.8%
Applied Immune Sciences, Inc. (a) 1,100 13,475 03820F10
Biogen, Inc. (a) 11,600 508,950 09059710
Genentech, Inc. (redeemable) (a) 20,000 977,500 36871020
1,499,925
DRUGS - 0.2%
IMCERA Group, Inc. 11,900 441,788 45245410
Watson Pharmaceuticals, Inc. (a) 400 7,900 94268310
449,688
TOTAL DRUGS & PHARMACEUTICALS 1,949,613
ELECTRICAL EQUIPMENT - 0.5%
ELECTRICAL EQUIPMENT, NEC - 0.1%
IEC Electronics Corp. (a) 5,000 90,000 44949L10
TV & RADIO COMMUNICATION EQUIPMENT - 0.1%
Avid Technology Inc. (a) 12,000 282,000 05367P10
WIRING & LIGHTING - 0.3%
Oak Industries, Inc. (a) 27,800 524,726 67140050
TOTAL ELECTRICAL EQUIPMENT 896,726
ELECTRONIC INSTRUMENTS - 3.3%
ELECTRONIC EQUIPMENT - 2.8%
Credence Systems Corp. (a) 50,000 1,362,500 22530210
GenRad, Inc. (a) 41,500 243,813 37244710
Megatest Corp. (a) 15,800 296,250 58495810
Micro Component Technology, Inc. 600 9,300 59479Q10
Tektronix, Inc. 50,000 1,331,250 87913110
Teradyne, Inc. (a) 70,000 2,021,250 88077010
5,264,363
SEMI-CONDUCTOR CAPITAL EQUIPMENT - 0.5%
Applied Materials, Inc. (a) 20,000 950,000 03822210
TOTAL ELECTRONIC INSTRUMENTS 6,214,363
ELECTRONICS - 20.8%
ELECTRONICS & ELECTRONIC COMPONENTS - 0.2%
GTI Corp. (a) 20,000 410,000 36236010
SEMICONDUCTORS - 20.6%
Advanced Micro Devices, Inc. (a) 326,700 7,024,050 00790310
Geotek Industries, Inc. (a) 29,000 351,625 37365410
Intel Corp. 169,000 11,639,875 45814010
LSI Logic Corp. (a) 98,500 1,883,813 50216110
Micron Technology, Inc. 49,300 3,494,138 59511210
National Semiconductor Corp. (a) 20,000 435,000 63764010
Samsung Electronics Co. Ltd. 59,300 3,469,050 79605020
Texas Instruments, Inc. 131,200 10,594,400 88250810
38,891,951
TOTAL ELECTRONICS 39,301,951
LODGING & GAMING - 1.3%
RACING & GAMING - 1.3%
Video Lottery Technologies, Inc. (a) 120,700 2,444,175 92656M10
MEDICAL EQUIPMENT & SUPPLIES - 0.5%
MEDICAL SUPPLIES & APPLIANCES - 0.1%
Healthdyne, Inc. (a) 25,000 175,000 42220310
Medical Technology Systems, Inc. (a) 9,800 78,400 58462R50
253,400
SHARES VALUE (NOTE 1)
MEDICAL TECHNOLOGY - 0.4%
Medtronic, Inc. 10,000 $ 797,500 58505510
TOTAL MEDICAL EQUIPMENT & SUPPLIES 1,050,900
MEDICAL FACILITIES MANAGEMENT - 0.6%
HOME HEALTH CARE AGENCIES - 0.2%
Abbey Healthcare Group, Inc. (a) 375 9,188 00278610
Homedco Group, Inc. (a) 5,900 209,450 43739A10
Medical Care America, Inc. (a) 7,600 187,150 58450C10
405,788
HOSPITALS - 0.3%
Columbia/HCA Healthcare Corp. 2,300 98,900 19767710
Health Management Associates, Inc.
Class A (a) 13,050 435,544 42193310
534,444
HOSPITALS, GENERAL MEDICAL - 0.1%
Charter Medical Corp. (a) 5,000 116,875 16124170
TOTAL MEDICAL FACILITIES MANAGEMENT 1,057,107
RETAIL & WHOLESALE, MISCELLANEOUS - 1.0%
MAIL ORDER - 1.0%
Micro Warehouse, Inc. (a) 43,700 1,966,500 59501B10
SERVICES - 0.0%
JEWELRY, SILVERWARE, & PLATED WARE - 0.0%
Aurora Electronics (a) 7,000 56,875 05162910
TELEPHONE SERVICES - 1.7%
MFS Communications, Inc. (a) 3,300 107,250 55272T10
Southwestern Bell Corp. 10,000 391,250 84533310
Telebras "PN" 53,000,000 2,503,190 95499792
US Long Distance Corp. (a) 12,500 132,813 91191220
3,134,503
TOTAL COMMON STOCKS
(Cost $144,041,163) 176,916,059
NONCONVERTIBLE PREFERRED STOCKS - 2.9%
TELEPHONE SERVICES - 2.9%
Stet Societa Finanziaria Telefonica
Spa (Cost $3,329,218) 2,435,100 5,427,041 85982592
CONVERTIBLE BONDS - 0.4%
PRINCIPAL VALUE (NOTE 1)
AMOUNT
COMPUTER SERVICES & SOFTWARE - 0.0%
PREPACKAGED COMPUTER SOFTWARE - 0.0%
Sterling Software, Inc. 5 3/4%,
2/1/03 $ 62,000 78,740 859547AD
COMPUTERS & OFFICE EQUIPMENT - 0.4%
Data General Corp. 7 3/4%,
6/1/01 770,000 718,025 237688AD
TOTAL CONVERTIBLE BONDS
(Cost $710,204) 796,765
REPURCHASE AGREEMENTS - 2.9%
MATURITY VALUE (NOTE 1)
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account, at 3.47% dated
2/28/94 due 3/1/94 $ 5,394,520 $ 5,394,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $153,474,585) $ 188,533,865
LEGEND
1. Non-income producing
OTHER INFORMATION
CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective March 1,
1993, the fund adopted Statement of Position 93-2: Determination,
Disclosure, and Financial Statement Presentation of Income, Capital Gain,
and Return of Capital Distributions by Investment Companies. As a result,
the fund changed the classification of distributions to shareholders to
better disclose the differences between financial statement amounts and
distributions determined in accordance with income tax regulations.
Accordingly, amounts as of February 28, 1993 have been reclassified to
reflect a decrease in paid in capital of $50,851,723, a decrease in
accumulated net investment loss of $4,483,576 and a decrease in accumulated
net realized loss on investments of $46,368,147.
Purchases and sales of securities, other than short-term securities,
aggregated $366,833,149 and $326,571,291, respectively.
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 $93,434 for the period
(see Note 4 of Notes to Financial Statements).
The maximum loan and average daily loan balances during the periods for
which loans were outstanding amounted to $9,217,000 and $3,030,867,
respectively. The weighted average interest rate paid was 3.8% (see Note 7
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 89.3%
Italy 2.9
Canada 2.5
Korea 1.8
Brazil 1.3
Others (individually less than 1%) 2.2
TOTAL 100.0%
INCOME TAX INFORMATION
At February 28, 1994, the aggregate cost of investment securities for
income tax purposes was $153,690,083. Net unrealized appreciation
aggregated $34,843,782, of which $38,342,131 related to appreciated
investment securities and $3,498,349 related to depreciated investment
securities.
The fund hereby designates $7,397,000 as a capital gain dividend for the
purpose of the dividend paid deduction.
TECHNOLOGY PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
FEBRUARY 28, 1994
ASSETS
Investment in securities, at value (including repurchase agreements of $5,394,000) (cost $153,474,585) $ 188,533,865
(Notes 1 and 2) - See accompanying schedule
Cash 915
Receivable for investments sold 708,284
Receivable for fund shares sold 16,704,089
Dividends receivable 210,369
Interest receivable 15,040
Redemption fees receivable (Note 1) 595
Other receivables 227,005
TOTAL ASSETS 206,400,162
LIABILITIES
Payable for fund shares redeemed $ 3,649,961
Accrued management fee 105,955
Other payables and accrued expenses 169,587
TOTAL LIABILITIES 3,925,503
NET ASSETS $ 202,474,659
Net Assets consist of (Note 1):
Paid in capital $ 149,586,455
Accumulated undistributed net realized gain (loss) on investments 17,828,924
Net unrealized appreciation (depreciation) on investment securities 35,059,280
NET ASSETS, for 4,840,060 shares outstanding $ 202,474,659
NET ASSET VALUE and redemption price per share ($202,474,659 (divided by) 4,840,060 shares) $41.83
Maximum offering price per share (100/97 of $41.83) $43.12
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED FEBRUARY 28, 1994
INVESTMENT INCOME $ 143,691
Dividends received in arrears from Unisys Corp. $3.75 Series A
Other dividends 924,956 $ 1,068,647
Interest 381,969
TOTAL INCOME 1,450,616
EXPENSES
Management fee (Note 4) $ 1,025,784
Transfer agent (Note 4) 1,330,867
Fees
Redemption fees (Note 1) (147,719
)
Accounting fees and expenses 164,841
(Note 4)
Non-interested trustees' compensation 1,105
Custodian fees and expenses 39,761
Registration fees 45,491
Audit 22,809
Legal 1,474
Interest (Notes 5 and 7) 11,972
Reports to shareholders 26,729
Miscellaneous 2,116
Total expenses before reductions 2,525,230
Expense reductions (Note 8) (12,928 2,512,302
)
NET INVESTMENT INCOME (LOSS) (1,061,686
)
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 1) 20,812,741
Net realized gain (loss) on investment securities
Change in net unrealized appreciation (depreciation) on investment securities 26,720,283
NET GAIN (LOSS) 47,533,024
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 46,471,338
OTHER INFORMATION $801,665
Sales charges paid to FDC
(Note 4)
Deferred sales charges withheld $39,741
by FDC (Note 4)
Exchange fees withheld by FSC $126,473
(Note 4)
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED TEN MONTHS
FEBRUARY 28, ENDED
1994 FEBRUARY 28,
1993
Operations $ (1,061,686 $ 496,979
Net investment income (loss) )
Net realized gain (loss) on investments 20,812,741 11,972,913
Change in net unrealized appreciation (depreciation) on investments 26,720,283 5,571,870
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 46,471,338 18,041,762
Distributions to shareholders (436,840 -
From net investment income )
From net realized gain (13,053,941 (8,872,686
) )
TOTAL DISTRIBUTIONS (13,490,781 (8,872,686
) )
Share transactions 372,847,019 150,298,713
Net proceeds from sales of shares
Reinvestment of distributions 13,219,760 8,704,213
Cost of shares redeemed (350,325,262 (141,893,474
) )
Paid in capital portion of redemption fees (Note 1) 1,063,853 456,675
Net increase (decrease) in net assets resulting from share transactions 36,805,370 17,566,127
TOTAL INCREASE (DECREASE) IN NET ASSETS 69,785,927 26,735,203
NET ASSETS
Beginning of period 132,688,732 105,953,529
End of period (including accumulated net investment loss of $0 and $3,981,456, respectively) $ 202,474,659 $ 132,688,732
OTHER INFORMATION
Shares
Sold 10,038,649 4,802,048
Issued in reinvestment of distributions 415,252 289,369
Redeemed (9,446,149 (4,525,453
) )
Net increase (decrease) 1,007,752 565,964
</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>
YEAR ENDED TEN MONTHS YEARS ENDED APRIL 30,
FEBRUARY 28, ENDED
FEBRUARY 28,
SELECTED PER-SHARE DATAC 1994 1993 1992 1991 1990
Net asset value, beginning of period $ 34.62 $ 32.44 $ 27.06 $ 20.08 $ 18.37
Income from Investment Operations
Net investment income (loss) (.24)F .13G (.26) .14H (.15)
Net realized and unrealized gain (loss) on investments 11.04 4.68 5.56 6.46 1.75
Total from investment operations 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 (3.70) (2.75) - - -
Total distributions (3.83) (2.75) (.16) - -
Redemption fees added to paid in capital .24 .12 .24 .38 .11
Net asset value, end of period $ 41.83 $ 34.62 $ 32.44 $ 27.06 $ 20.08
TOTAL RETURND, E 35.62% 16.48% 20.57% 34.76% 9.31%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 202,475 $ 132,689 $ 105,954 $ 117,055 $ 78,535
Ratio of expenses to average net assetsB 1.54% 1.64%A 1.72% 1.83% 2.09%
Ratio of expenses to average net assets before expense 1.55% 1.64%A 1.72% 1.83% 2.09%
reductionsB
Ratio of net investment income (loss) to average net
assets (.65)% .52%A (.84)% .61% (.76)%
Portfolio turnover rate 213% 259%A 353% 442% 327%
</TABLE>
1 ANNUALIZED 2 SEE NOTE 8 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 1 PAST 5 LIFE OF
FEBRUARY 28, 1994 YEAR YEARS FUND
TELECOMMUNICATIONS 21.90% 124.81% 373.41%
TELECOMMUNICATIONS
(INCL. 3% SALES CHARGE) 18.24% 118.06% 359.20%
S&P 500 8.33% 89.60% 222.99%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, 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
FEBRUARY 28, 1994 YEAR YEARS FUND
TELECOMMUNICATIONS 21.90% 17.59% 19.83%
TELECOMMUNICATIONS
(INCL. 3% SALES CHARGE) 18.24% 16.87% 19.40%
S&P 500 8.33% 13.65% 14.62%
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 Telecommunications (096) S&P 500
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 45920.00 32298.81
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 February 28, 1994, your investment would have grown to $45,920 -
a 359.20% increase. That compares to $10,000 invested in the S&P 500,
which would have grown to $32,299 over the same period - a 222.99%
increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1994
% OF FUND'S
INVESTMENTS
Southwestern Bell Corp. 5.8
Ameritech Corp. 5.5
BellSouth Corp. 5.0
Sprint Corporation 4.9
Motorola, Inc. 4.4
Rogers Communication, Inc. Class B 4.4
Telephone & Data Systems, Inc. 4.1
Pacific Telesis Group 3.3
Telefonos de Mexico SA sponsored ADR 3.1
Vodafone Group PLC sponsored ADR 3.0
TOP INDUSTRIES AS OF FEBRUARY 28, 1994
Row: 1, Col: 1, Value: 19.5
Row: 1, Col: 2, Value: 3.4
Row: 1, Col: 3, Value: 4.3
Row: 1, Col: 4, Value: 5.8
Row: 1, Col: 5, Value: 13.5
Row: 1, Col: 6, Value: 53.5
Telephone Services 52.5%
Cellular & Communication
Services 13.5%
Semiconductors 5.8%
Cable TV Operators 4.3%
Telephone Equipment 3.4%
All Others 20.5%*
* INCLUDES SHORT-TERM INVESTMENTS
TELECOMMUNICATIONS PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Fergus Shiel,
Portfolio Manager of
Fidelity Select
Telecommunications
Portfolio
Q. FERGUS, HOW DID THE FUND PERFORM?
A. Quite well. For the year ending February 28, 1994, the fund had a total
return of 21.90%. This was more than double the 8.33% return of the S&P
500.
Q. WHILE THE FUND HAD A SOLID YEAR OVERALL, ITS PERFORMANCE FELL
DRAMATICALLY IN THE PAST SIX MONTHS. WHAT HAPPENED?
A. Telecommunications stocks corrected this fall, after hitting their peak
near the end of October. Up until this time, investors, spurred on by media
coverage of the information superhighway, were pouring money into
telecommunication stocks. The information superhighway promised to provide
Americans with multimedia technology at home by combining telephone,
television, and computer services. The market corrected because many
investors realized that the technology and capital needed for this kind of
multimedia product were at least several years away.
Q. HAVE YOU CHANGED YOUR INVESTMENT STRATEGY IN LIGHT OF THIS MARKET
CORRECTION?
A. Not really. I've been leery of "hyped" stocks that promised rewards from
future technology all year. While I did own some speculative stocks, I took
a more conservative path. I invested in companies that were positioned to
take advantage of upcoming technological changes but also focused on making
money now. For instance, I invested in Motorola, which makes several
products crucial to today's cellular industry. Cellular subscribers grew
about 40% in the U.S. this year, and more overseas. Motorola is well
positioned for future technological changes in a market that could grow
even more dramatically over the next year.
Q. A LARGE PART OF THE FUND'S INVESTMENT IS IN REGIONAL BELL OPERATING
COMPANIES, OR RBOCS. WHY DO THESE STOCKS CONTINUE TO LOOK GOOD?
A. I like RBOCs because they potentially offer growth plus dividends. In
fact, three of the fund's top stocks are RBOCs - Southwestern Bell,
Ameritech, and BellSouth. Each of these companies grew over 10% last year
and paid dividends of about 5%. Over the next year, I expect they could to
continue to expand their number of telephone lines and cut costs. I should
note that the fund has fewer investments in RBOCs than it did a year ago.
That's because many of them are acquiring companies that could slow their
earnings growth.
Q. RIGHT NOW YOU HAVE ABOUT 26% OF THE FUND IN FOREIGN STOCKS. WHERE ARE
YOU INVESTING?
A. Mostly in Canada and developing countries. Canadian cable companies,
like Rogers Communication - a cable, cellular, and long-distance company -
have had a great year. In the past, the Canadian government strictly
regulated cable companies, but over the last few years they've relaxed
restrictions. Now, Canadian cable companies can offer a broader range of
services and charge for them. As a result, they have been seeing solid
profits. I also have a sizable investment in Telefonos de Mexico and in two
Argentinian telephone companies, Telephonica Argentina and Telecom
Argentina. Phone companies in developing countries like these are adding
telephone lines much faster than companies in developed areas such as the
United States or Europe. In addition, since there are fewer existing phone
lines, each line typically generates high revenues. This further boosts
earnings for these phone companies.
Q. WHERE DO YOU SEE THE SECTOR AND THE FUND HEADING OVER THE NEXT YEAR?
A. I think the telecommunications industry may be positioned to do well. As
a result of technological advancements in the industry, the cost of phone
service is down, but usage is up. In general, the amount of money companies
make from higher usage can strongly outweigh the effects of price drops.
The wild card in this situation is regulation. As long as the government
doesn't regulate the telecommunications industry, I think it can thrive.
Prices could stay low because of competition, and people would invest more
money, resulting in a win-win situation for both telecommunications
companies and consumers. However, if government regulations increase, it
could negatively affect telecommunications stocks.
FUND FACTS
START DATE: July 29, 1985
SIZE: as of February 28, 1994, over $371 million
MANAGER: Fergus Shiel, since June 1992;
manager, Fidelity Select Broadcast and Media
Portfolio, February 1993-June 1993; Select
Consumer Products 1990-1992; joined
Fidelity in 1989
(checkmark)
TELECOMMUNICATIONS PORTFOLIO
INVESTMENTS FEBRUARY 28, 1994
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 87.2%
SHARES VALUE (NOTE 1)
ADVERTISING - 0.5%
ADVERTISING AGENCIES - 0.5%
ADVO-Systems, Inc. 96,800 $ 1,936,000 00758510
BROADCASTING - 6.8%
CABLE TV OPERATORS - 4.3%
Gaylord Entertainment Co. Class A 95,100 2,579,588 36790110
International Family Entertainment
Class B (a) 41,000 794,375 45950M10
Liberty Media Corp. Class A (a) 40,000 915,000 53071530
Time Warner, Inc. 197 8,280 88731510
Viacom, Inc. (a) 151,000 4,945,250 92552410
Viacom, Inc. (non-vtg.) (a) 235,100 6,788,513 92552430
16,031,006
TELEVISION BROADCASTING - 2.5%
Grupo Televisa GDS (b) 140,000 9,012,500 40049J20
TOTAL BROADCASTING 25,043,506
CELLULAR - 13.5%
CELLULAR & COMMUNICATION SERVICES - 13.5%
Call-Net Enterprises Class B (a)(b) 20,000 187,106 13091030
Cellular Communications, Inc. (a):
Class P 51,100 2,537,626 15091793
Series A 13,000 627,250 15091710
Cencall Communications Corp. (a) 50,000 1,350,000 15129710
Century Telephone Enterprises, Inc. 180,887 4,703,062 15668610
Dial Page, Inc. 4,000 201,000 25247P10
IDB Communications Group, Inc. 348,100 6,265,800 44935510
LIN Broadcasting Corp. (a) 23,400 2,614,950 53276310
Nextel Communications, Inc. Class A (a) 25,000 1,040,625 65332V10
Pactel Corp. (a) 11,000 259,875 69525210
Rogers Cantel Mobile Communications,
Inc. Class B (non-vtg.) (a) 100,600 2,823,435 77510210
Rogers Communications, Inc. Class B (a) 998,500 16,185,395 77510920
Vodafone Group PLC sponsored ADR 123,200 11,134,200 92857T10
49,930,324
COMMUNICATIONS EQUIPMENT - 2.4%
DATACOMMUNICATIONS EQUIPMENT - 0.0%
Digital Microwave Corp. (a) 4,400 77,000 25385910
TELEPHONE EQUIPMENT - 2.4%
ADC Telecommunications, Inc. (a) 8,300 313,325 00088610
Communications Systems, Inc. 82,000 1,045,500 20390010
DSC Communications Corp. (a) 100,300 5,453,813 23331110
Inter-Tel, Inc. (a) 6,500 69,063 45837210
InterVoice, Inc. (a) 10,000 112,500 46114210
Nokia AB Free shares 30,100 1,742,182 65599992
8,736,383
TOTAL COMMUNICATIONS EQUIPMENT 8,813,383
COMPUTER SERVICES & SOFTWARE - 0.7%
CAD/CAM/CAE - 0.5%
ECI Telecom Ltd. 30,000 735,000
Electronic Information Systems, Inc. 90,500 1,187,813 26825810
1,922,813
DATA PROCESSING - 0.2%
Automatic Data Processing, Inc. 10,000 512,630 05301510
Ceridian Corp. (a) 10,000 226,060 15677T10
738,690
TOTAL COMPUTER SERVICES & SOFTWARE 2,661,503
SHARES VALUE (NOTE 1)
COMPUTERS & OFFICE EQUIPMENT - 0.4%
COMPUTER PERIPHERALS - 0.4%
Norand Corp. (a) 45,000 $ 1,406,250 65542110
CONGLOMERATES - 0.5%
Mark IV Industries, Inc. 101,000 1,956,875 57038710
ELECTRICAL EQUIPMENT - 1.9%
ELECTRICAL EQUIPMENT - WHOLESALE - 0.3%
Antec Corp. (a) 35,900 771,850 03664P10
Itel Corp. (a) 9,200 256,450 46564210
1,028,300
ELECTRICAL MACHINERY - 1.3%
Philips Electronics (a) 101,100 2,499,493 71833799
Philips NV (a) 86,300 2,135,925 71833750
4,635,418
TV & RADIO COMMUNICATION EQUIPMENT - 0.3%
Radiation Systems, Inc. 57,500 1,013,438 75031010
Scientific-Atlanta, Inc. 8,000 216,000 80865510
1,229,438
TOTAL ELECTRICAL EQUIPMENT 6,893,156
ELECTRONICS - 6.5%
ELECTRONIC PARTS - WHOLESALE - 0.7%
Marshall Industries (a) 45,000 2,430,000 57239310
SEMICONDUCTORS - 5.8%
Intel Corp. 40,000 2,755,000 45814010
Motorola, Inc. 160,000 16,340,000 62007610
Texas Instruments, Inc. 30,100 2,430,575 88250810
21,525,575
TOTAL ELECTRONICS 23,955,575
ENGINEERING - 0.9%
WATER & SEWER PIPES - 0.9%
Glenayre Technologies, Inc. 89,300 3,371,075 37789910
LEASING & RENTAL - 0.5%
VIDEO TAPE RENTAL - 0.5%
Blockbuster Entertainment Corp. 71,600 1,888,450 09367610
MEDICAL FACILITIES MANAGEMENT - 0.2%
HEALTH SERVICES - 0.2%
Lambert Communications 200,000 700,000 51328G10
PRINTING - 0.8%
MANIFOLD BUSINESS FORMS - 0.8%
Reynolds & Reynolds Co. Class A 62,200 2,993,375 76169510
PUBLISHING - 1.4%
BOOK PUBLISHING & PRINTING - 1.1%
Houghton Mifflin Co. 86,700 4,150,763 44156010
NEWSPAPERS - 0.3%
Times Mirror Co., Series A 37,400 1,285,625 88736010
TOTAL PUBLISHING 5,436,388
TELEPHONE SERVICES - 50.2%
ALC Communications Corp. (a) 270,000 8,943,750 00157530
ALLTEL Corp. 1,300 35,425 02003910
Ameritech Corp. 509,200 20,431,650 03095410
BellSouth Corp. 329,600 18,375,200 07986010
British Telecommunications PLC ADR 10,000 653,750 11102140
Cincinnati Bell, Inc. 40,000 660,000 17187010
Comsat Corp., Series 1 213,900 5,721,825 20564D10
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
TELEPHONE SERVICES - CONTINUED
DDI Corp. Ord. 32 $ 2,665,009 23399J22
GTE Corp. 77,773 2,537,344 36232010
LCI International, Inc. 134,600 4,912,900 50181310
LDDS Communications, Inc. (a) 162,470 4,406,999 50182L10
MFS Communications, Inc. (a) 40,000 1,300,000 55272T10
Nippon Telegraph & Telephone Ord. (a) 442 4,124,798 65462492
Pacific Telesis Group 222,900 12,148,050 69489010
Rochester Telephone Corp. 45,100 1,961,850 77175810
Southern New England
Telecommunications Corp. 28,400 898,150 84348510
Southwestern Bell Corp. 548,300 21,452,238 84533310
Sprint Corporation 490,400 18,206,100 85206110
Telebras PN (Pfd. Reg.) 160,700,000 7,589,861 95499792
Telecom Argentina Stet France Class B 945,200 6,050,792 90899992
Telefonica Argentina Class B 643,500 4,891,823 87999D92
Telefonica de Espana SA sponsored
ADR 40,000 1,585,000 87938220
Telefonos de Mexico SA sponsored
ADR representing shares Ord. Class L 170,000 11,411,250 87940378
Telephone & Data Systems, Inc. 335,946 15,243,550 87943310
U.S. West, Inc. 236,700 9,704,700 91288910
185,912,014
TOTAL COMMON STOCKS
(Cost $326,531,850) 322,897,874
PREFERRED STOCKS - 3.3%
CONVERTIBLE PREFERRED STOCKS - 0.1%
TELEPHONE SERVICES - 0.1%
LCI International (a) 10,000 277,500 50181320
NONCONVERTIBLE PREFERRED STOCKS - 3.2%
COMMUNICATIONS EQUIPMENT - 1.0%
TELEPHONE EQUIPMENT - 1.0%
Nokia 66,100 3,706,296 65599910
TELEPHONE SERVICES - 2.2%.
Stet Societa Finanziaria Telefonica Spa 3,745,200 8,346,815 85982592
TOTAL NONCONVERTIBLE
PREFERRED STOCKS 12,053,111
TOTAL PREFERRED STOCKS
(Cost $10,351,906) 12,330,611
CONVERTIBLE BONDS - 0.2%
PRINCIPAL VALUE (NOTE 1)
AMOUNT
COMMUNICATIONS EQUIPMENT - 0.2%
TELEPHONE EQUIPMENT - 0.2%
Ericsson (L.M.) Telephone Co.
4 1/4%, 6/30/00
(Cost $480,447) $ 345,700 577,319 294821AA
REPURCHASE AGREEMENTS - 9.3%
MATURITY VALUE (NOTE 1)
AMOUNT
Investments in repurchase agreements,
(U.S. Treasury obligations), in a joint
trading account, at 3.47% dated
2/28/94 due 3/1/94 $ 34,561,331 $ 34,558,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $371,922,203) $ 370,363,804
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 $9,199,606 or 2.5% of net
assets.
OTHER INFORMATION
CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective March 1,
1993, the fund adopted Statement of Position 93-2: Determination,
Disclosure, and Financial Statement Presentation of Income, Capital Gain,
and Return of Capital Distributions by Investment Companies. As a result,
the fund changed the classification of distributions to shareholders to
better disclose the differences between financial statement amounts and
distributions determined in accordance with income tax regulations.
Accordingly, amounts as of February 28, 1993 have been restated to reflect
an increase in paid in capital of $27,655,078, a decrease in undistributed
net investment income of $2,334,320 and a decrease in accumulated net
realized gain on investments of $25,320,758.
Purchases and sales of securities, other than short-term securities,
aggregated $949,256,011 and $783,432,752, respectively.
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 $326,700 for the period
(see Note 4 of Notes to Financial Statements).
At the period end, the value of securities loaned and the value of
collateral amounted to $11,733,763 and $11,179,700, respectively (see Note
6 of Notes to Financial Statements).
The maximum loan and average daily loan balances during the periods for
which loans were outstanding amounted to $51,745,000 and $36,417,000,
respectively. The weighted average interest rate paid was 3.6% (see Note 7
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 74.4%
Mexico 5.5
Canada 5.2
United Kingdom 3.2
Argentina 2.9
Italy 2.2
Brazil 2.0
Finland 1.5
Netherlands 1.2
Japan 1.1
Others (individually less than 1%) 0.8
TOTAL 100.0%
INCOME TAX INFORMATION
At February 28, 1994, the aggregate cost of investment securities for
income tax purposes was $372,868,420. Net unrealized depreciation
aggregated $2,504,616, of which $18,143,193 related to appreciated
investment securities and $20,647,809 related to depreciated investment
securities.
The fund hereby designates $14,448,000 as a capital gain dividend for the
purpose of the dividend paid deduction.
TELECOMMUNICATIONS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
FEBRUARY 28, 1994
ASSETS
Investment in securities, at value (including repurchase agreements of $34,558,000) (cost $371,922,203) $ 370,363,804
(Notes 1 and 2) - See accompanying schedule
Cash 404
Receivable for investments sold 25,523,148
Receivable for fund shares sold 2,998,714
Dividends receivable 316,028
Interest receivable 9,795
Redemption fees receivable (Note 1) 1,416
Other receivables 4,553,130
TOTAL ASSETS 403,766,439
LIABILITIES
Payable for investments purchased $ 13,491,073
Payable for fund shares redeemed 7,193,132
Accrued management fee 199,750
Other payables and accrued expenses 677,606
Collateral on securities loaned, at value (Note 6) 11,179,700
TOTAL LIABILITIES 32,741,261
NET ASSETS $ 371,025,178
Net Assets consist of (Note 1):
Paid in capital $ 337,374,817
Undistributed net investment income 1,033,664
Accumulated undistributed net realized gain (loss) on investments 34,175,096
Net unrealized appreciation (depreciation) on investment securities (1,558,399
)
NET ASSETS, for 9,999,591 shares outstanding $ 371,025,178
NET ASSET VALUE and redemption price per share ($371,025,178 (divided by) 9,999,591 shares) $37.10
Maximum offering price per share (100/97 of $37.10) $38.25
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED FEBRUARY 28, 1994
INVESTMENT INCOME $ 6,817,001
Dividends
Interest (including security lending fees of $21,143) (Note 6) 849,995
TOTAL INCOME 7,666,996
EXPENSES
Management fee (Note 4) $ 2,219,724
Transfer agent (Note 4) 2,848,274
Fees
Redemption fees (Note 1) (342,354
)
Accounting and security lending fees (Note 4) 355,887
Non-interested trustees' compensation 2,220
Custodian fees and expenses 113,442
Registration fees 109,848
Audit 48,771
Legal 2,517
Interest (Note 7) 10,838
Reports to shareholders 61,864
Miscellaneous 2,751
Total expenses before reductions 5,433,782
Expense reductions (Note 8) (41,286 5,392,496
)
NET INVESTMENT INCOME 2,274,500
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 1) 68,364,890
Net realized gain (loss) on investment securities
Change in net unrealized appreciation (depreciation) on investment securities (16,004,271
)
NET GAIN (LOSS) 52,360,619
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 54,635,119
OTHER INFORMATION $6,400,493
Sales charges paid to FDC
(Note 4)
Deferred sales charges withheld $41,417
by FDC (Note 4)
Exchange fees withheld by FSC $292,778
(Note 4)
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED TEN MONTHS
FEBRUARY 28, ENDED
1994 FEBRUARY 28,
1993
Operations $ 2,274,500 $ 914,573
Net investment income
Net realized gain (loss) on investments 68,364,890 11,667,033
Change in net unrealized appreciation (depreciation) on investments (16,004,271 4,830,788
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 54,635,119 17,412,394
Distributions to shareholders (1,564,699 (516,255
From net investment income ) )
From net realized gain (37,644,735 (1,452,335
) )
TOTAL DISTRIBUTIONS (39,209,434 (1,968,590
) )
Share transactions 778,655,072 147,602,753
Net proceeds from sales of shares
Reinvestment of distributions 38,499,190 1,929,056
Cost of shares redeemed (596,254,864 (109,331,842
) )
Paid in capital portion of redemption fees (Note 1) 361,815 161,883
Net increase (decrease) in net assets resulting from share transactions 221,261,213 40,361,850
TOTAL INCREASE (DECREASE) IN NET ASSETS 236,686,898 55,805,654
NET ASSETS
Beginning of period 134,338,280 78,532,626
End of period (including undistributed net investment income of $1,033,664 and $2,911,193,
respectively) $ 371,025,178 $ 134,338,280
OTHER INFORMATION
Shares
Sold 19,999,193 4,784,069
Issued in reinvestment of distributions 1,056,452 61,818
Redeemed (14,984,685 (3,605,042
) )
Net increase (decrease) 6,070,960 1,240,845
</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>
YEAR ENDED TEN MONTHS YEARS ENDED APRIL 30,
FEBRUARY 28, ENDED
FEBRUARY 28,
SELECTED PER-SHARE DATAC 1994 1993 1992 1991 1990
Net asset value, beginning of period $ 34.19 $ 29.22 $ 24.98 $ 23.19 $ 22.76
Income from Investment Operations
Net investment income .25 .29 .36 .31 .46
Net realized and unrealized gain (loss) on investments 7.00 5.29 4.13 1.86 1.02
Total from investment operations 7.25 5.58 4.49 2.17 1.48
Less Distributions
From net investment income (.20) (.18) (.28) (.43) (.12)
From net realized gain (4.18) (.48) - - (.98)
Total distributions (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 $ 37.10 $ 34.19 $ 29.22 $ 24.98 $ 23.19
TOTAL RETURND, E 21.90% 19.49% 18.19% 9.83% 6.21%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 371,025 $ 134,338 $ 78,533 $ 55,162 $ 77,019
Ratio of expenses to average net assetsB 1.53% 1.74%A 1.90% 1.97% 1.85%
Ratio of expenses to average net assets before expense 1.54% 1.74%A 1.90% 1.97% 1.85%
reductionsB
Ratio of net investment income to average net assets .64% 1.16%A 1.32% 1.35% 1.83%
Portfolio turnover rate 241% 115%A 20% 262% 341%
</TABLE>
1 ANNUALIZED
2 SEE NOTE 8 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.
[TEXT]
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 1 PAST 5 LIFE OF
FEBRUARY 28, 1994 YEAR YEARS FUND
MONEY MARKET 2.62% 30.84% 64.53%
MONEY MARKET
(INCL. 3% SALES CHARGE) -0.46% 26.92% 59.59%
Average All Taxable
Money Market Fund 2.69% 30.56% 63.67%
Consumer Price Index 2.52% 20.64% 35.83%
CUMULATIVE TOTAL RETURNS reflect actual performance over a specific period.
In this case, past 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 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 644 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
FEBRUARY 28, 1994 YEAR YEARS FUND
MONEY MARKET 2.62% 5.52% 6.03%
MONEY MARKET
(INCL. 3% SALES CHARGE) -0.46% 4.88% 5.65%
Average All Taxable
Money Market Fund 2.69% 5.48% 6.44%
Consumer Price Index 2.52% 3.82% 3.67%
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: 2.28
Row: 1, Col: 2, Value: 2.71
Row: 1, Col: 3, Value: 2.63
Row: 2, Col: 1, Value: 2.79
Row: 2, Col: 2, Value: 2.62
Row: 2, Col: 3, Value: 2.48
Row: 3, Col: 1, Value: 2.53
Row: 3, Col: 2, Value: 2.64
Row: 3, Col: 3, Value: 2.42
Row: 4, Col: 1, Value: 2.37
Row: 4, Col: 2, Value: 2.69
Row: 4, Col: 3, Value: 2.35
Row: 5, Col: 1, Value: 2.45
Row: 5, Col: 2, Value: 2.79
Row: 5, Col: 3, Value: 2.3
4% -
3% -
2% -
1% -
0%
Money Market
Average All
Taxable Money
Market Fund
MMDA
2/28/93 5/31/93 8/31/93 11/30/93 2/28/94
Money Market 2.88% 2.79% 2.53% 2.37% 2.45%
Average All
Taxable Money
Market Fund 2.71% 2.62% 2.64% 2.69% 2.79%
MMDA 2.63% 2.48% 2.42% 2.35% 2.30%
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.(double dagger)
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, HOW HAVE SHORT-TERM INTEREST RATES BEHAVED WITHIN THE PAST SIX
MONTHS?
A. Short-term rates moved within a narrow range from the end of August
through the end of October. During this time, the Federal Reserve felt
comfortable maintaining a steady monetary policy. The federal funds rate -
the rate banks charge each other for overnight loans - remained at or near
3%, where it had been since September 1992. Through September and into
October, market interest rates generally fell. I kept the fund's average
maturity on the long side - 70 to 80 days - because I'd been locking in
higher yields while they were still available. Then in November, two
factors caused me to shorten the fund's average maturity. First, stronger
economic data were causing forecasts of fourth quarter growth to be revised
upward. Scaling back the average maturity provided me greater flexibility
to respond to future rate changes. Second, year-end pressures were inching
up yields. As often happens in December, issuers are forced to offer more
attractive yields on debt instruments with maturities that extend into the
new year. Shortening the fund's average maturity to 64 days by the end of
November allowed me to take advantage of this buying opportunity.
Q. YOU THEN ROLLED BACK THE AVERAGE MATURITY TO 55 DAYS BY THE END OF
JANUARY. WHY?
A. I felt that the economy had more momentum than many people thought, and
that inflation fears would soon play more of a role in the short-term
market. The fourth quarter economic numbers turned out to be strong. In
addition, Federal Reserve Chairman Alan Greenspan implied again in public
testimony that a rise in short-term rates was inevitable. All of this
caused me to shorten the fund's average maturity through January. Then on
February 4, the Fed raised the fed funds rate a quarter of a point to
3.25%, the first hike in short-term interest rates in five years.
Q. WHAT DID THE FED'S TIGHTENING OF MONETARY POLICY MEAN TO THE FUND?
A. Because I had shortened the average maturity through January, the fund
was pretty well prepared. My neutral stance allowed me to capture some of
the higher-yielding instruments that came to market after the rate
increase. That caused the average maturity to extend to 64 days by the end
of February.
Q. GIVEN THOSE CONDITIONS, HOW DID THE FUND PERFORM?
A. Despite February's rate hike, the fund's seven-day yield was 2.45% on
February 28, 1994. That's down slightly from a year ago, when the yield was
2.88%. The similarity of these numbers reflects a year of mostly stable
interest rates. The fund's total return for the 12 months ended February 28
was 2.62%. The average total return for all taxable money funds tracked by
IBC/Donoghue was 2.69% during the same period.
Q. HOW DO YOU SEE THE NEXT SIX MONTHS SHAPING UP?
A. Since inflation doesn't appear to be a serious threat, I don't expect
the Fed to raise interest rates quickly and sharply. Instead, I anticipate
a policy of measured, gradual moves to push rates in an upward direction. I
plan to keep the fund's average maturity in the 55 to 70 day range. That
will give me the flexibility to respond to rising rates, while allowing me
to capture a portion of the higher yields available from issues with longer
maturities. In addition, the fund had a 15.9% stake in variable and
floating rate securities at the end of February. I'll probably keep the
fund at about that level, or higher, based on the availability of
attractively priced issues.
Q. HOW DO VARIABLE RATE INSTRUMENTS WORK?
A. Variable and floating rate instruments generally have longer stated
maturities. That requires a longer-term commitment to the issuer, which
results in a somewhat higher yield for the buyer. The advantage comes in
the form of stated, periodic interest rate resets. The frequency of these
resets can be negotiated - for example, they often happen weekly, monthly
or quarterly. When rates are rising, the fund can obtain a higher stated
interest rate on these issues at their reset intervals.
FUND FACTS
START DATE: August 30, 1985
SIZE: as of February 28, 1994, over $518 million
MANAGER: John Todd, since January 1991;
manager, Fidelity 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 FEBRUARY 28, 1994
Showing Percentage of Total Value of Investment in Securities
BANKERS' ACCEPTANCES - 3.9%
ANNUALIZED YIELD
DUE AT TIME OF PRINCIPAL VALUE
DATE PURCHASE AMOUNT (NOTE 1)
DOMESTIC BANKERS' ACCEPTANCES - 0.4%
CORESTATES BANK OF DELAWARE, N.A.
3/30/94 3.41% $ 2,000,000 $ 1,994,571 2186989C
NEW YORK BRANCH, YANKEE DOLLAR, FOREIGN BANKS - 3.5%
SAKURA BANK, LTD.
3/1/94 3.42 6,000,000 6,000,000 793999KK
3/11/94 3.43 5,200,000 5,195,060 793999KL
4/12/94 3.52 7,900,000 7,867,742 793999KN
19,062,802
TOTAL BANKERS' ACCEPTANCES 21,057,373
CERTIFICATES OF DEPOSIT - 22.3%
DOMESTIC CERTIFICATES OF DEPOSIT - 0.6%
HUNTINGTON NATIONAL BANK
3/1/94 3.68 3,000,000 2,993,419 4464389H
NEW YORK BRANCH, YANKEE DOLLAR, FOREIGN BANKS - 20.8%
CANADIAN IMPERIAL BANK OF COMMERCE
4/6/94 3.27 20,000,000 20,000,000 136990ED
CREDIT LYONNAIS
3/31/94 3.42 11,000,000 10,998,553 227993NN
CREDIT SUISSE
6/1/94 3.31 7,000,000 7,005,564 225991BS
GENERALE BANK
6/3/94 3.25 20,000,000 20,000,517 371995CA
KINGDOM OF SWEDEN
3/23/94 3.08 21,000,000 21,000,000 998999AV
SAKURA BANK, LTD.
3/28/94 3.50 5,000,000 5,000,000 793999KU
SOCIETE GENERALE
4/18/94 3.41 10,000,000 9,999,542 833991SR
4/25/94 3.43 15,000,000 15,000,000 833991SK
SWEDISH NATIONAL HOUSING FINANCE CORP.
5/23/94 3.65 4,000,000 4,000,000 956995AM
113,004,176
LONDON BRANCH, EURODOLLAR, FOREIGN BANKS - 0.9%
ABN-AMRO BANK
4/7/94 3.37 5,000,000 5,000,203 032993KQ
TOTAL CERTIFICATES OF DEPOSIT 120,997,798
COMMERCIAL PAPER - 48.9%
ABN-AMRO NORTH AMERICA, N.V.
6/3/94 3.54 10,000,000 9,908,611 03299BAL
ABBEY NATIONAL PLC, UK
4/4/94 3.45 5,000,000 4,983,803 007994GQ
4/4/94 3.47 1,000,000 996,742 007994GR
ASSOCIATES CORPORATION OF NORTH AMERICA
3/15/94 3.43 15,000,000 14,980,050 045992UL
BANC ONE CORP.
4/14/94 3.47 15,000,000 14,936,750 059995BE
COMMERZBANK U.S. FINANCE, INC.
7/15/94 3.60 8,650,000 8,533,994 202995AR
CORPORATE ASSET FUNDING COMPANY, INC.
3/10/94 3.38 5,000,000 4,995,788 1769922W
ANNUALIZED YIELD
DUE AT TIME OF PRINCIPAL VALUE
DATE PURCHASE AMOUNT (NOTE 1)
DEN DANSKE CORPORATION, INC.
4/8/94 3.47% $ 25,000,000 $ 24,908,958 250998ED
DRESDNER U.S. FINANCE INC.
5/19/94 3.43 10,000,000 9,926,047 261998AC
FORD MOTOR CREDIT PLC
4/6/94 3.28 5,000,000 4,983,750 34599DAE
GTE CORPORATION
3/7/94 3.44 1,000,000 999,428 362991CP
GENERAL ELECTRIC CAPITAL CORPORATION
3/30/94 3.39 10,000,000 9,973,014 369998KW
GENERAL MOTORS ACCEPTANCE CORPORATION
3/30/94 3.51 7,000,000 6,980,264 638998PK
5/31/94 3.75 15,000,000 14,858,950 638998PR
GOLDMAN SACHS GROUP, L.P. (THE)
3/7/94 3.30 10,000,000 9,994,583 696992HG
HYPO U.S. FINANCE
4/14/94 3.38 10,000,000 9,959,178 07299DAB
HANSON FINANCE
3/4/94 3.38 15,000,000 14,995,788 41199AAQ
J.P. MORGAN & CO.
3/1/94 3.50 5,000,000 5,000,000 61799HBH
MCI COMMUNICATIONS CORP.
3/1/94 3.45 10,000,000 10,000,000 5526739V
MERRILL LYNCH & CO., INC.
3/30/94 3.41 4,606,000 4,593,385 59099A9K
MORGAN STANLEY GROUP, INC.
4/26/94 3.60 20,000,000 19,888,622 61799EJY
NEW CENTER ASSET TRUST
3/7/94 3.41 10,000,000 9,994,367 643995AS
3/21/94 3.41 5,000,000 4,990,611 643995AX
NEW SOUTH WALES TREASURY CORP.
8/30/94 3.83 5,000,000 4,903,186
PHH CORPORATION
3/11/94 3.38 4,900,000 4,895,413 699990XK
PARIBAS FINANCE, INC.
5/2/94 3.50 5,000,000 4,970,076 719993AE
PRINCIPAL MUTUAL LIFE INSURANCE COMPANY
3/11/94 3.38 5,000,000 4,995,319 742992JS
RABOBANK U.S.A. FINANCIAL CORPORATION
6/23/94 3.54 5,936,000 5,870,209 749995AD
REPUBLIC NEW YORK CORP.
4/4/94 3.44 5,000,000 4,983,850 7607199J
SEARS ROEBUCK ACCEPTANCE CORP.
3/14/94 3.51 1,000,000 998,736 81299ECJ
WEYERHAEUSER COMPANY
3/8/94 3.38 5,000,000 4,996,724 962993BW
WHIRLPOOL FINANCIAL CORPORATION
3/22/94 3.46 7,650,000 7,634,604 963999AG
TOTAL COMMERCIAL PAPER 265,630,800
FEDERAL AGENCIES - 5.6%
ANNUALIZED YIELD
DUE AT TIME OF PRINCIPAL VALUE
DATE PURCHASE AMOUNT (NOTE 1)
FEDERAL FARM CREDIT BANK - AGENCY COUPONS - 0.8%
3/10/98 5.05%(a) $ 4,350,000 $ 4,352,135 313993NH
FEDERAL FARM CREDIT BANK - DISCOUNT NOTES - 1.2%
5/3/94 3.42 6,535,000 6,496,117 313993NJ
FEDERAL HOME LOAN BANK - DISCOUNT NOTES - 1.8%
6/16/94 3.37 10,000,000 9,997,648 567995GP
FEDERAL HOME LOAN MORTGAGE CORP. - DISCOUNT NOTES - 0.5%
9/29/94 3.32 2,900,000 2,844,497 355993PU
FEDERAL NATIONAL MORTGAGE ASSOC. - DISCOUNT NOTES - 1.3%
7/6/94 3.47 7,000,000 6,916,039 9931164R
TOTAL FEDERAL AGENCIES 30,606,436
MEDIUM-TERM NOTES (A) - 8.5%
ABBEY NATIONAL PLC, UK
6/24/94 3.49 5,000,000 5,000,000 007994GK
ABBEY NATIONAL TREASURY SERVICE
9/30/94 3.36 15,000,000 15,000,000 010998AJ
GENERAL MOTORS ACCEPTANCE CORPORATION
5/7/94 3.49 5,000,000 5,000,000 638998PF
GOLDMAN SACHS GROUP, L.P. (THE) (B)
6/16/94 3.47 4,000,000 4,000,000 696992KB
9/1/94 3.47 4,000,000 4,000,000 696992KB
NORTHERN TRUST COMPANY
8/1/94 3.85 5,250,000 5,363,939 6658579B
NORWEST CORPORATION
3/15/94 3.37 8,000,000 8,000,000 66899CBK
TOTAL MEDIUM-TERM NOTES 46,363,939
SHORT-TERM NOTES (A) - 7.4%
J.P. MORGAN SECURITIES
3/1/94 3.75 10,000,000 10,000,000 616998EC
3/1/94 3.77 5,000,000 5,000,000 616998AW
MORGAN STANLEY GROUP, INC.
3/1/94 3.70 5,000,000 5,000,000 61799EJQ
SMM TRUST COMPANY (1993-F) (C)
5/15/94 3.61 20,000,000 20,000,000 7845689T
TOTAL SHORT-TERM NOTES 40,000,000
MUNICIPAL SECURITIES - 0.9%
LOS ANGELES COUNTY CALIFORNIA TRANSPORTATION COMMISSION
4/11/94 3.45 4,600,000 4,600,000 616998EC
REPURCHASE AGREEMENTS - 2.5%
MATURITY VALUE
AMOUNT (NOTE 1)
In a joint trading account
(U.S. Treasury Obligations) dated
2/28/94, due 3/1/94
At 3.47% $ 8,001 $ 8,000 99799MXK
At 3.50% 874,085 874,000 99799MXL
At 3.51% 12,933,261 12,932,000 99799MXJ
TOTAL REPURCHASE AGREEMENTS 13,814,000
TOTAL INVESTMENTS - 100% $ 543,070,346
TOTAL COST FOR INCOME TAX PURPOSES - $543,070,346
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 1.5% 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
OTHER INFORMATION
CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective March 1,
1993, the fund adopted Statement of Position 93-2: Determination,
Disclosure, and Financial Statement Presentation of Income, Capital Gain,
and Return of Capital Distributions by Investment Companies. As a result,
the fund changed the classification of distributions to shareholders to
better disclose the differences between financial statement amounts and
distributions determined in accordance with income tax regulations.
Accordingly, amounts as of February 28, 1993 have been reclassified to
reflect an increase in paid in capital and an increase in accumulated net
realized loss of $5,258.
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>
FEBRUARY 28, 1994
ASSETS
Investment in securities, at value (including repurchase agreements of $13,814,000) (Notes 1 and 2) - See $ 543,070,346
accompanying schedule
Share transactions in process 115,909,654
Interest receivable 1,493,886
TOTAL ASSETS 660,473,886
LIABILITIES
Payable for investments purchased $ 4,903,186
Share transactions in process 136,608,587
Dividends payable 33,703
Accrued management fee 51,364
Other payables and accrued expenses 220,178
TOTAL LIABILITIES 141,817,018
NET ASSETS $ 518,656,868
Net Assets consist of (Note 1):
Paid in capital $ 518,721,537
Accumulated net realized gain (loss) on investments (64,669
)
NET ASSETS, for 518,716,279 shares outstanding $ 518,656,868
NET ASSET VALUE, offering price and redemption price per share ($518,656,868 (divided by) 518,716,279 shares) $1.00
Maximum offering price per share (100/97 of $1.00) $1.03
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED FEBRUARY 28, 1994
INTEREST INCOME $ 15,290,233
EXPENSES
Management fee (Note 4) $ 609,866
Transfer agent fees (Note 4) 2,285,303
Accounting fees and expenses 81,066
(Note 4)
Non-interested trustees' compensation 6,055
Custodian fees and expenses 28,673
Registration fees 186,049
Audit 61,635
Legal 4,275
Shareholder Reports 46,916
Miscellaneous 6,350
TOTAL EXPENSES 3,316,188
NET INTEREST INCOME 11,974,045
NET REALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 1) (5,966
)
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 11,968,079
OTHER INFORMATION $3,315,583
Sales charges paid to FDC
(Note 4)
Deferred sales charges withheld $352,738
by FDC (Note 4)
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED TEN MONTHS
FEBRUARY 28, ENDED
1994 FEBRUARY 28,
1993
INCREASE (DECREASE) IN NET ASSETS
Operations $ 11,974,045 $ 12,692,694
Net interest income
Net realized gain (loss) on investments (5,966) 4,670
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 11,968,079 12,697,364
Dividends to shareholders from net interest income (11,974,045) (12,692,694)
Share transactions at net asset value of $1.00 per share 4,535,732,020 2,600,580,695
Proceeds from sales of shares
Reinvestment of dividends from net interest income 10,826,362 11,783,587
Cost of shares redeemed (4,459,028,175) (2,723,856,195)
Net increase (decrease) in net assets and shares resulting from share transactions 87,530,207 (111,491,913)
TOTAL INCREASE (DECREASE) IN NET ASSETS 87,524,241 (111,487,243)
NET ASSETS
Beginning of period 431,132,627 542,619,870
End of period $ 518,656,868 $ 431,132,627
</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>
YEAR ENDED TEN MONTHS YEARS ENDED APRIL 30,
FEBRUARY 28, ENDED
FEBRUARY 28,
SELECTED PER-SHARE DATA
1994 1993 1992 1991 1990
Net asset value, beginning of period
$ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Income from Investment Operations
.026 .026 .048 .073 .081
Net interest income
Less Distributions
(.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
TOTAL RETURN(dagger)
2.62% 2.63% 4.93% 7.50% 8.45%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted)
$ 518,657 $ 431,133 $ 542,620 $ 608,394 $ 643,272
Ratio of expenses to average net assets
.72% .56%* .64% .73% .83%
Ratio of net interest income to average net assets
2.59% 3.09%* 4.84% 7.20% 8.13%
* ANNUALIZED.
(dagger) THE TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
</TABLE>
NOTES TO FINANCIAL STATEMENTS
For the period ended February 28, 1994
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 current exchange rate. Purchases and sales of securities,
income receipts and expense payments are translated into U.S. dollars at
the exchange rate on the dates of the transactions.
It is not practical to identify the portion of each amount shown in each
fund's Statement of Operations under the caption "Realized and Unrealized
Gain (Loss) on Investments" that arises from changes in foreign currency
exchange rates. Investment income includes net realized and unrealized
currency gains and losses recognized between accrual and payment dates.
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 not assured.
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.
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 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.
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective March 1,
1993, the funds adopted Statement of Position 93-2: Determination,
Disclosure, and Financial Statement Presentation of Income, Capital Gain,
and Return of Capital Distributions by Investment Companies. As a result,
the funds changed the classification of distributions to shareholders to
better disclose the differences between financial statement amounts and
distributions determined in accordance with income tax regulations. The
effect of the change in classification is shown under the caption "Other
Information" on each fund's schedule of investments.
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.
DELAYED DELIVERY TRANSACTIONS. Each fund may purchase or sell securities on
a when-issued or forward commitment basis. Payment and delivery may take
place a month or more after the date of the transaction. The price of the
underlying securities and the date when the securities will be delivered
and paid for are fixed at the time the transaction is negotiated. Each fund
identifies securities as segregated in its custodial records with a value
at least equal to the amount of the purchase commitment.
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 Biotechnology Portfolio and Money Market
Portfolio 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
$1,093,750 and $20,000,000 or 0.2% and 3.9% of the net assets of the
Biotechnology 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 February 28, 1994 and due March 1, 1994. The maturity values of the
joint trading account investments were $4,060,391 for Defense and Aerospace
Portfolio, $20,607,986 for Electronics Portfolio, $52,236,034 for
Industrial Materials Portfolio, $56,325,429 for Medical Delivery Portfolio,
and $50,610,878 for Home Finance Portfolio, all at 3.47%. The investments
in repurchase agreements through the joint trading account are summarized
as follows:
SUMMARY OF JOINT TRADING
Number of dealers or banks 24
Maximum amount with one dealer or bank 12.7%
Aggregate principal amount of agreements $18,432,895,000
Aggregate maturity amount of agreements $18,434,670,665
Aggregate market value of collateral $18,922,724,282
Coupon rates of collateral 3% to 15.75%
Maturity dates of collateral 3/10/94 to 8/15/23
4. 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 ranging from .30% to .52% and is based on the monthly average net
assets of all the mutual funds advised by FMR. The annual individual fund
fee rate is .30%. For the period, the management fee was equivalent to an
annual rate of .63% of average net assets for each equity funds.
On December 12, 1991, the Board of Trustees approved a new group fee rate
schedule with rates ranging from .30% to .52%. Effective January 1, 1992,
FMR voluntarily agreed to implement the new group fee rate schedule as it
resulted in the same or a lower management fee. On February 17, 1993, the
shareholders of Home Finance Portfolio approved an amended management
contract containing revised group fee rate schedule. Natural Gas Portfolio
commenced operations on April 21, 1993 and has a management contract which
includes that revised group fee rate schedule. Effective November 1, 1993
FMR has voluntarily agreed to implement a new group fee rate schedule with
rates ranging from .2850% to .5200%. New management contracts with this
revised group fee rate schedule for the equity funds were approved by
shareholders on
February 16, 1994.
For the money market fund, FMR receives a monthly fee that is computed
daily at an annual rate of 4% of that portion of gross income that
represents a gross yield of 5% or less and an annual rate of 6% of that
portion of gross income that represents a gross yield in excess of 5%. For
this purpose, gross income excludes realized gains and losses, if any. The
amount of the monthly management fee paid by the money market fund is
limited to a maximum annualized rate of .50% of the money market fund's
average net assets. For the period, the management fee was equivalent to an
annual rate of .13% of average net assets.
On February 16, 1994, the shareholders of the money market fund voted to
approve a proposal to amend the management contract. The new management fee
will be composed of a basic fund fee rate of .03% of the fund's average net
assets, plus a fixed income group fee that varies depending on FMR's total
assets under management, and an income based fee. The income based fee is
added only when the fund's yield exceeds 5%. At that 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 0.24%
(annualized) 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, 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.
5. 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
Financial Services
Portfolio $18,120,000 $ 5,321,125 3.4%
Regional Banks Portfolio $15,419,000 $11,209,500 3.6%
Technology Portfolio $24,687,000 $24,687,000 3.6%
Interest expense includes $3,989, $2,236 and $2,481 paid under the
interfund lending program for Financial Services Portfolio, Regional Banks
Portfolio and Technology Portfolio, respectively.
6. SECURITY LENDING.
Certain equity funds loaned securities to certain brokers who paid the fund
negotiated lenders' fees. 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. 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.
7. 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.
8. 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 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 $48,710 and $13,001 for Defense and Aerospace
Portfolio and Consumer Products 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 Defense and Aerospace Portfolio and Consumer Products Portfolio)
is shown on each fund's Statement of Operations. For the period, the
aggregate reductions totalled $568,892.
9. 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 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 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 Portfolio. The aggregate net assets
of Utilities Portfolio and Electric Utilities Portfolio immediately before
the acquisition were $233,107,469 and $16,679,364, respectively.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees and the Shareholders of Fidelity Select Portfolios:
In our opinion, the accompanying statements of assets and liabilities,
including the schedules of investments (except for Moody's and Standard
& Poor's ratings), and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of each of the thirty-six funds
constituting Fidelity Select Portfolios at February 28, 1994, the results
of their operations, the changes in their net assets and the financial
highlights for the periods indicated in conformity with generally accepted
accounting principles. These financial statements and financial highlights
(hereafter referred to as "financial statements") are the responsibility of
Fidelity Select Portfolios' management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant
estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits, which included
confirmation of securities owned at February 28, 1994 by correspondence
with the custodian and brokers and the application of alternative auditing
procedures where confirmations from brokers were not received, provide a
reasonable basis for the opinion expressed above.
PRICE WATERHOUSE
Boston, Massachusetts
April 15, 1994
TO THE SHAREHOLDERS
The Board of Trustees of Fidelity Select Portfolios voted to pay on each
fund's pay date, to shareholders of record at the opening of business on
each fund's respective record date, a distribution derived from capital
gains realized from the sale of portfolio securities, and a dividend
derived from net investment income, for each of the following funds:
AMOUNTS PER SHARE
RECORD &
FUND EX-DATE PAY DATE DIVIDENDS CAPITAL GAINS TOTAL REINVESTMENT PRICE
Air Transportation 4/15/94 4/18/94 $- $.94 $.94 $14.85
Automotive 4/8/94 4/11/94 - .27 .27 23.99
Chemicals 4/8/94 4/11/94 .01 .20 .21 31.22
Construction and Housing 4/8/94 4/11/94 - .10 .10 18.94
Consumer Products 4/15/94 4/18/94 - .08 .08 13.94
Defense and Aerospace 4/15/94 4/18/94 - .27 .27 18.22
Developing Communications 4/8/94 4/11/94 - 1.29 1.29 17.56
Energy 4/8/94 4/11/94 .01 .11 .12 16.19
Energy Service 4/15/94 4/18/94 .01 .32 .33 10.25
Financial Services 4/15/94 4/18/94 .02 .37 .39 50.77
Food and Agriculture 4/8/94 4/11/94 - .79 .79 29.10
Health Care 4/8/94 4/11/94 .11 - .11 59.20
Home Finance 4/15/94 4/18/94 - 1.17 1.17 23.92
Industrial Equipment 4/8/94 4/11/94 - .17 .17 19.75
Industrial Materials 4/15/94 4/18/94 .05 - .05 21.60
Leisure 4/8/94 4/11/94 - 3.93 3.93 38.98
Multimedia (formerly Broadcast and Media) 4/15/94 4/18/94 - 2.51 2.51
19.38
Paper and Forest Products 4/15/94 4/18/94 - .35 .35 17.14
Precious Metals and Minerals 4/15/94 4/18/94 .01 - .01 15.42
Regional Banks 4/15/94 4/18/94 .01 .21 .22 18.63
Software and Computer Services 4/15/94 4/18/94 - .33 .33 24.58
Technology 4/15/94 4/18/94 - 1.50 1.50 36.93
Telecommunications 4/8/94 4/11/94 .03 .78 .81 35.26
Transportation 4/15/94 4/18/94 - .33 .33 20.89
Utilities 4/8/94 4/11/94 .12 .60 .72 34.36
FEDERAL TAX STATUS
Dividend and capital gain distributions will be taxable regardless of
whether you take them in cash or in additional shares. You will be notified
at a later date as to the tax treatment of these distributions and
dividends. Since each fund's distribution and dividend are reportable for
tax purposes, the receipt of additional shares does not affect the basic
cost of the original shares owned. For federal tax purposes, these
additional shares are treated as though you purchased them at the net asset
value applicable to these shares at the 10:00 A.M. opening price on each
fund's ex-date. (See Reinvestment Price above.)
NOTE: IF YOUR ACCOUNT IS A FIDELITY PROTOTYPE RETIREMENT PLAN SUCH AS AN
INDIVIDUAL RETIREMENT ACCOUNT (IRA), A KEOGH PLAN, A 403(B), OR A QUALIFIED
PENSION OR PROFIT SHARING PLAN, THE ABOVE DATA IS PROVIDED FOR
INFORMATIONAL PURPOSES ONLY AND IS NOT REPORTABLE FOR TAX PURPOSES IN 1994.
STATISTICAL ROUNDUP: FIDELITY SELECT PORTFOLIOS<UNDEF>
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 February 28, 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.
Consumer Products and Defense and Aerospace received reimbursement for the
year ended February 28, 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.
DISTRIBUTIONS
The fiscal year end for Fidelity Select Portfolios recently changed from
April to February. Consequently, in 1993 distribution dates changed from
June and December to April and December.
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 Home
Finance and 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 2/28/94 FOR PERIODS ENDED 2/28/94 NAV NAV
YTD 1 YEAR LIFE OF FUND 1 YEAR 5 YEARS LIFE OF FUND 3/1/93 2/28/94
Air Transportation (12/16/85) 0.18% 27.94% 119.14% 24.10% 11.51% 9.62%
$013.60 $17.12
American Gold (12/16/85) -3.78 60.14 129.94 55.34 7.04 10.26 14.15 22.66
Automotive (6/30/86) 2.29 30.45 222.14 26.54 19.63 16.01 20.69 25.48
Biotechnology (12/16/85) -3.50 22.17 275.23 18.50 26.92 17.04 22.60 27.61
Brokerage and Investment Mgmt. (7/29/85) -3.01 35.87 141.38 31.80 18.45
10.40 14.22 17.75
Chemicals (7/29/85) 7.61 23.63 349.99 19.92 13.67 18.70 28.62 31.66
Computers (7/29/85) 10.97 45.06 214.29 40.70 21.89 13.85 20.15 27.02
Construction and Housing (9/29/86) 1.17 27.45 190.88 23.63 17.20 14.99
15.74 19.82
Consumer Products (6/29/90) -1.10 28.43 83.39 24.58 - 16.97 12.97 15.24
Defense and Aerospace (5/8/84) 4.76 32.04 115.45 28.08 10.76 7.80 15.08
19.14
Developing Communications (6/29/90) 2.13 30.24 129.88 26.33 - 24.39 16.44
19.65
Electronics (7/29/85) 11.98 46.24 109.09 41.85 24.28 8.58 14.28 17.67
Energy* (7/14/81) 1.83 9.69 128.16 6.40 8.17 6.49 15.84 16.73
Energy Service (12/16/85) 0.43 6.36 17.30 3.17 7.11 1.58 11.01 11.66
Environmental Services (6/29/89) 6.52 5.02 28.47 1.87 - 4.82 11.36 11.93
Financial Services* (12/10/81) 2.91 10.85 670.49 7.53 18.45 17.88 53.29
51.24
Food and Agriculture (7/29/85) 2.41 11.69 362.24 8.34 17.71 19.07 30.86
31.49
Health Care* (7/14/81) -0.49 20.57 893.96 16.95 20.39 19.64 52.57 63.31
Home Finance (12/16/85) 2.41 19.61 341.82 16.02 22.46 19.39 22.18 25.03
Industrial Equipment (9/29/86) 7.68 40.07 119.78 35.87 15.38 10.73 15.04
20.61
Industrial Materials (9/29/86) 5.86 24.66 129.42 20.92 10.16 11.38 17.44
21.67
Insurance (12/16/85) -3.10 -1.24 146.82 -4.21 14.33 11.22 21.58 19.41
Leisure (5/8/84) 0.18 37.14 503.97 33.03 14.88 19.73 35.77 45.30
Medical Delivery (6/30/86) 6.18 40.25 164.92 36.04 22.59 13.09 14.46 20.28
Multimedia** (6/30/86) 0.13 34.86 236.78 30.82 14.47 16.68 18.26 23.87
Natural Gas (dagger)(dagger) (4/21/93) 1.28 - -3.84 - - - 10.00 9.48
Paper and Forest Products (6/30/86) 8.46 22.03 128.86 18.37 11.17 10.95
16.08 19.61
Precious Metals and Minerals* (7/14/81) -8.33 70.58 99.98 65.47 7.69 5.38
9.86 16.62
Regional Banks (6/30/86) 2.86 6.46 194.44 3.27 20.52 14.65 20.88 17.99
Retailing (12/16/85) -0.91 15.61 306.60 12.14 21.51 18.19 23.87 24.91
Software and Computer Services (7/29/85) 4.86 33.19 369.41 29.19 24.06
19.29 27.62 28.89
Technology* (7/14/81) 8.00 35.62 465.27 31.55 23.43 14.41 34.62 41.83
Telecommunications (7/29/85) -1.17 21.90 373.41 18.24 16.87 19.40 34.19
37.10
Transportation (9/29/86) 4.38 27.47 206.84 23.65 18.07 15.82 18.68 21.67
Utilities* (12/10/81) -2.58 2.53 523.79 -0.54 13.85 15.86 41.49 36.61
S&P 500 0.59 8.33 - 8.33 13.65 - 443.38 467.14
* Ten-year Average Annual Total Returns for the period ended 2/28/94 for
these funds were as follows: Energy = 8.21%; Financial Services = 16.20%;
Health Care = 19.63%;
Precious Metals and Minerals = 2.24%; Technology = 9.96%; Utilities =
15.72%.
(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).
** Formerly Broadcast and Media
HIGH LOW TOTAL NET ASSETS DISTRIBUTIONS MEDIAN MEDIAN
NAV NAV $MM 1/1/93-12/31/93 PRICE/SALES PRICE/BOOK
FOR 12 MONTHS ENDED 2/28/94 2/28/93 2/28/94 CAP GAINS DIVS RELATIVE
VOLATILITY AS OF 2/28/94
$017.85 $013.60 $011.9 $011.0 $0.27 $$- 1.52 0.6 2.2
25.13 14.10 168.0 347.4 - - 2.18 4.4 2.3
26.52 20.62 110.4 228.7 1.26 .05 1.30 0.9 3.0
29.59 21.38 508.0 481.1 - - 2.34 18.1 3.4
19.12 14.14 24.7 59.8 1.47 .01 1.92 0.6 1.3
32.06 28.20 28.8 62.2 3.05 .23 1.14 0.9 2.6
27.02 18.97 47.6 120.4 1.80 - 2.23 1.1 2.9
20.46 15.50 31.1 81.0 .22 - 1.39 0.8 2.5
16.75 12.91 7.0 8.4 1.40 - 1.24 0.9 3.4
19.41 15.07 1.5 11.1 .62 .10 1.20 0.6 2.1
20.53 15.35 83.4 222.1 1.47 - 1.57 1.5 4.2
18.82 13.98 48.0 111.0 2.75 - 1.88 1.1 2.8
19.13 15.41 179.1 145.5 .57 .03 1.45 1.0 2.1
13.89 11.01 85.2 40.9 - .05 1.99 1.2 1.3
12.19 10.49 65.9 66.0 - - 1.50 1.3 2.4
60.83 48.62 214.6 116.2 7.32 .20 1.63 1.0 1.3
32.12 28.74 108.4 95.0 2.68 .08 1.03 0.6 2.7
65.20 50.30 536.4 522.9 - .07 1.91 2.4 3.3
26.84 20.58 337.9 155.6 1.40 .01 1.74 - 0.9
20.61 14.89 14.6 206.0 .40 .01 1.20 0.8 2.7
22.28 17.20 25.0 155.7 - .06 1.30 1.1 2.9
24.08 19.41 26.4 18.4 1.96 .01 1.19 1.1 1.4
47.64 34.90 44.8 105.8 3.26 - 1.16 1.7 3.7
20.39 13.45 71.8 188.6 - - 2.27 1.9 4.2
25.04 17.99 16.6 49.2 .65 - 1.40 1.2 4.2
11.14 8.94 - 63.1 .13 - - 1.3 2.2
20.22 15.69 25.1 66.9 - .01 1.50 0.8 1.9
18.93 9.82 137.9 409.2 - .21 2.53 - 2.0
22.90 17.34 315.5 97.4 3.92 .15 1.57 1.5 1.5
27.38 23.53 74.9 52.8 2.63 - 1.54 0.7 2.9
30.88 24.01 151.2 178.0 6.48 - 2.05 2.1 3.2
41.83 30.77 132.7 202.5 3.70 .13 1.79 1.6 3.4
44.67 34.05 134.3 371.0 4.18 .20 1.20 2.0 3.8
21.90 18.64 10.8 13.1 1.96 - 1.30 0.9 2.9
46.60 36.21 290.7 250.5 4.94 1.13 0.81 1.1 1.6
482.00 433.54 - - - - 1.00 1.0 2.8
