(2_FIDELITY_LOGOS)FIDELITY
SELECT
PORTFOLIOS(REGISTERED TRADEMARK):ELECTRIC UTILITIES PORTFOLIO
ANNUAL REPORT
FEBRUARY 25, 1994
ELECTRIC UTILITIES PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 25, 1994 (UNAUDITED)
ASSETS
Cash $ 287,766
Dividends receivable 110,790
TOTAL ASSETS 398,556
LIABILITIES
Payable for fund shares redeemed $ 359,031
Accrued management fee 9,063
Other payables and accrued expenses 30,462
TOTAL LIABILITIES 398,556
NET ASSETS $ 0
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
STATEMENT OF OPERATIONS
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PERIOD ENDED FEBRUARY 25, 1994 (UNAUDITED)
INVESTMENT INCOME $ 1,132,241
Dividends
Interest 50,329
TOTAL INCOME 1,182,570
EXPENSES
Management fee (Note 4) $ 170,119
Transfer agent (Note 4) 219,867
Fees
Redemption fees (Note 1) (25,179
)
Accounting fees (Note 4) 45,530
Non-Interested trustees' compensation 203
Custodian fees and expenses 12,988
Registration fees 13,192
Audit 853
Legal 391
Interest (Note 5) 122
Reports to shareholders 18,179
Miscellaneous 421
Total Expense 456,686
NET INVESTMENT INCOME 725,884
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTES 1 AND 2) 2,779,021
Net realized gain (loss) on investment securities
Change in net unrealized appreciation (depreciation) on investment securities (3,352,828
)
NET GAIN (LOSS) (573,807
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 152,077
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STATEMENT OF CHANGES IN NET ASSETS
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INCREASE (DECREASE) IN NET ASSETS PERIOD ENDED TEN MONTHS
FEBRUARY 25, ENDED
1994 FEBRUARY 28,
(UNAUDITED) 1993
Operations $ 725,884 $ 811,957
Net investment income
Net realized gain (loss) on investments 2,779,021 1,661,761
Change in net unrealized appreciation (depreciation) on investments (3,352,828 2,914,650
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 152,077 5,388,368
Distributions to shareholders (737,056 (900,760
From net investment income ) )
From net realized gain (2,511,122 (2,034,533
) )
TOTAL DISTRIBUTIONS (3,248,178 (2,935,293
) )
Share transactions 18,745,507 25,231,156
Net proceeds from sales of shares
Reinvestment of distributions 3,142,549 2,872,137
Cost of shares redeemed (32,763,232 (25,554,805
) )
Paid in capital portion of redemption fees (Note 1) 30,395 21,752
Net asset value of shares redeemed in exchange for the net assets of Fidelity Select Utilities
Portfolio (16,679,364 -
(Note 6) )
Net increase (decrease) in net assets resulting from share transactions (27,524,145 2,570,240
)
TOTAL INCREASE (DECREASE) IN NET ASSETS (30,620,246 5,023,315
)
NET ASSETS
Beginning of period 30,620,246 25,596,931
End of period (including undistributed net investment income of $0 and $927,148, respectively) $ - $ 30,620,246
OTHER INFORMATION
Shares
Sold 1,341,006 1,966,497
Issued in reinvestment of distributions 252,272 232,620
Redeemed (2,377,936 (1,982,163
) )
Redeemed by shareholders in exchange for shares of Fidelity Select Utilities Portfolio (Note 6) (1,447,861 -
)
Net increase (decrease) (2,232,519) 216,954
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THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
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FINANCIAL HIGHLIGHTS
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PERIOD ENDED TEN MONTHS YEARS ENDED APRIL 30,
FEBRUARY 25, ENDED
FEBRUARY 28,
SELECTED PER-SHARE DATA B 1994 1993 1992 1991 1990
(UNAUDITED)
Net asset value, beginning of period $ 13.72 $ 12.70 $ 11.71 $ 10.37 $ 9.58
Income from Investment Operations
Net investment income .34 .34 .44 .45 .41
Net realized and unrealized gain (loss) on investments(.13) 2.12 1.32 1.18 .59
Total from investment operations (.21) 2.46 1.76 1.63 1.00
Less Distributions
From net investment income (.43) (.44) (.50) (.15) (.22)
From net realized gain (1.57) (1.01) (.31) (.16) -
Total distributions (2.00) (1.45) (.81) (.31) (.22)
Redemption fees added to paid in capital .01 .01 .04 .02 .01
Net asset value, end of period $ 11.52 $ 13.72 $ 12.70 $ 11.70 $ 10.37
TOTAL RETURN C (1.85)% 21.09% 16.16% 16.21% 10.47%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ - $ 30,620 $ 25,597 $ 24,072 $ 23,311
Ratio of expenses to average net assets 1.66%A 1.70%A 1.83% 2.27% 2.30%
Ratio of net investment income to average net assets 2.64%A 3.20%A 3.63% 4.17% 3.80%
Portfolio turnover rate 5%A 55%A 76% 50% 62%
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1 ANNUALIZED 2 NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED
BASED ON AVERAGE SHARES OUTSTANDING EACH PERIOD. 3 TOTAL RETURNS DO NOT
INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE YEAR ARE
NOT ANNUALIZED.
NOTES TO FINANCIAL STATEMENTS
For the period ended February 25, 1994 (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Select Portfolios (the trust) is registered under the Investment
Company Act of 1940, as amended (the 1940 Act), as an open-end management
investment company organized as a Massachusetts business trust. The trust
has thirty-five equity funds (the fund or the funds) which invest primarily
in securities of companies whose principal business activities fall within
specific industries, and a money market fund which invests in high quality
money market instruments. Each fund is authorized to issue an unlimited
number of shares. Financial information is presented for Electric Utilities
Portfolio which was merged into Utilities Portfolio as of the close of
business on February 25, 1994 (see Note 6). The following summarizes the
significant accounting policies of the funds:
SECURITY VALUATION. 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 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 under 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.
FOREIGN CURRENCY TRANSLATION. The accounting records of the 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 the
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, the fund is not subject to income taxes to
the extent that it distributes all of its taxable income for the fiscal
year.
INVESTMENT INCOME. 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 fund is 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.
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. Distributions are recorded on the
ex-dividend date.
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 fund may also utilize 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.
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 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 $1,276,153, a decrease in undistributed
net investment income of $658,012 and a decrease in accumulated net
realized gain on investments of $618,141.
2. OPERATING POLICIES.
REPURCHASE AGREEMENTS. The fund, through its custodian, receives 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 fund's 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, the fund, 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.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $1,273,456 and $13,383,289, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a monthly
fee that is calculated on the basis of a group fee rate plus a fixed
individual fund fee rate applied to the average net assets of 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%.
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 November 1, 1993, FMR
has voluntarily agreed to implement a revised group fee rate schedule with
rates ranging from .2850% to .5200%. On February 16, 1994, the shareholders
of the fund approved this new group fee rate schedule. For the period, the
management fee was equivalent to an annualized rate of .62% of average net
assets.
SALES LOAD. Fidelity Distributors Corporation (FDC), an affiliate of FMR,
is the general distributor the fund. FDC is paid a 3% sales charge on sales
of shares of the 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 $126,054 and
$15,651, respectively.
TRANSFER AGENT FEE. Fidelity Service Co. (FSC), an affiliate of FMR, is the
fund's 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 FEES. FSC maintains the fund's 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 were $34,995 for the period.
BROKERAGE COMMISSIONS. The fund placed a portion of its portfolio
transactions with brokerage firms which are affiliates of FMR. The
commissions paid to these affiliated firms were $3,466 for the period.
5. BANK BORROWINGS.
The 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, the 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 amounted to $1,154,000. The
weighted average interest rate was 3.8%.
6. 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.
