(2_FIDELITY_LOGOS)FIDELITY
SELECT
PORTFOLIOS(REGISTERED TRADEMARK)
AIR TRANSPORTATION
AMERICAN GOLD
AUTOMOTIVE
BIOTECHNOLOGY
BROKERAGE AND INVESTMENT MANAGEMENT
CHEMICALS
COMPUTERS
CONSTRUCTION AND HOUSING
CONSUMER PRODUCTS
DEFENSE AND AEROSPACE
DEVELOPING COMMUNICATIONS
ELECTRONICS
ENERGY
ENERGY SERVICE
ENVIRONMENTAL SERVICES
FINANCIAL SERVICES
FOOD AND AGRICULTURE
HEALTH CARE
HOME FINANCE
INDUSTRIAL EQUIPMENT
INDUSTRIAL MATERIALS
INSURANCE
LEISURE
MEDICAL DELIVERY
MONEY MARKET
MULTIMEDIA
NATURAL GAS
PAPER AND FOREST PRODUCTS
PRECIOUS METALS AND MINERALS
REGIONAL BANKS
RETAILING
SOFTWARE AND COMPUTER SERVICES
TECHNOLOGY
TELECOMMUNICATIONS
TRANSPORTATION
UTILITIES GROWTH
ANNUAL REPORT
FOR THE YEAR ENDING
FEBRUARY 29, 1996
AND
PROSPECTUS
DATED APRIL 29, 1996
CONTENTS
PERFORMANCE OVERVIEW AND
MARKET RECAP A-2
FUND UPDATES*
CONSUMER SECTOR A-4 CONSUMER PRODUCTS
A-10 FOOD AND AGRICULTURE
A-16 LEISURE
A-23 MULTIMEDIA
A-29 RETAILING
CYCLICALS SECTOR A-35 AIR TRANSPORTATION
A-41 AUTOMOTIVE
A-47 CHEMICALS
A-53 CONSTRUCTION AND HOUSING
A-59 ENVIRONMENTAL SERVICES
A-65 INDUSTRIAL EQUIPMENT
A-71 INDUSTRIAL MATERIALS
A-77 PAPER AND FOREST PRODUCTS
A-82 TRANSPORTATION
ENERGY, UTILITIES AND A-87 AMERICAN GOLD
NATURAL RESOURCES SECTOR A-93 ENERGY
A-99 ENERGY SERVICE
A-105 NATURAL GAS
A-111 PRECIOUS METALS AND MINERALS
A-117 UTILITIES GROWTH
FINANCIAL SERVICES SECTOR A-123 BROKERAGE AND INVESTMENT MANAGEMENT
A-128 FINANCIAL SERVICES
A-133 HOME FINANCE
A-139 INSURANCE
A-145 REGIONAL BANKS
HEALTH CARE SECTOR A-150 BIOTECHNOLOGY
A-157 HEALTH CARE
A-163 MEDICAL DELIVERY
* FUND UPDATES FOR EACH SELECT PORTFOLIO INCLUDE: PERFORMANCE AND
INVESTMENT SUMMARY, MANAGER'S OVERVIEW, INVESTMENTS, AND FINANCIAL
STATEMENTS.
<TABLE>
<CAPTION>
<S> <C> <C>
TECHNOLOGY SECTOR A-169 COMPUTERS
A-176 DEFENSE AND AEROSPACE
A-182 DEVELOPING COMMUNICATIONS
A-188 ELECTRONICS
A-195 SOFTWARE AND COMPUTER SERVICES
A-201 TECHNOLOGY
A-209 TELECOMMUNICATIONS
A-216 MONEY MARKET
NOTES TO FINANCIAL STATEMENTS A-222 FOOTNOTES TO THE FINANCIAL STATEMENTS
REPORT OF INDEPENDENT ACCOUNTANTS A-225 THE AUDITORS' OPINION
DISTRIBUTIONS A-226
FIDELITY SELECT PORTFOLIOS PROSPECTUS P-1
</TABLE>
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR
THE GENERAL INFORMATION OF THE SHAREHOLDERS OF THE FUNDS. THIS REPORT IS
NOT AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS IN THE FUNDS
UNLESS PRECEDED OR ACCOMPANIED BY AN EFFECTIVE PROSPECTUS.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED BY,
ANY DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC, FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO INVESTMENT RISKS,
INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.
NEITHER THE FUNDS NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK.
PERFORMANCE OVERVIEW
DEAR SHAREHOLDER:
The 12-month period ended February 29, 1996, was a very rewarding year for
equity investors, with strong performance in many sectors. The Standard &
Poor's Composite Index of 500 Stocks (S&P 500) returned 34.70% during the
period, including reinvested dividends. Overall, 16 of our 35 Select equity
portfolios outperformed the S&P 500, and all 35 produced positive returns.
On top was Select Electronics, which generated a return of 72.75%, while at
the bottom was Select Paper and Forest, which produced a gain of 9.18%.
The market environment remained very positive as corporate earnings in many
industries proved better than expected. Signs of slowing economic activity
as 1995 progressed caused the Federal Reserve to lower short-term interest
rates from 6.00% to 5.25% from a year ago, encouraging continued capital
investment by companies and individuals. As a result of the sustained
favorable environment, the TECHNOLOGY sector showed the broadest strength
of any sector. Returns for Electronics, Computers, Defense and Aerospace,
Technology, and Software and Computers Services ranged from 72.75% to
40.17%. Developing Communications lagged the rest of the technology sector
with a 21.84% return, driven largely by disappointing performance in the
wireless service providers and cellular equipment stocks.
Falling interest rates were perceived as a positive for the FINANCIAL
SERVICES sector. Continued loan growth, healthy balance sheets, and stable
profit margins combined to drive solid fundamentals. Merger and acquisition
activity in this sector also heated up. As a result, Home Finance, Regional
Banks and Financial Services generated above-market returns.
The same perception of a slowdown was seen as a negative for certain
CYCLICALS, whose profitability levels tend to rise and fall in step with
the economy. Automotive and Transportation showed weak performance as a
result. However, Air Transportation and Industrial Equipment managed to
generate very strong returns due to surprisingly strong earnings and more
favorable competitive environments for companies in these industries. The
slower economy combined with excessive capacity additions resulted in
deteriorating commodity prices, negatively impacting Paper and Forest
Products.
Returns in the CONSUMER sector were varied. Food and Agriculture posted a
solid gain of 37.92% as many investors were attracted by the strong
earnings growth posted by these companies, especially the tobacco and
beverage companies. Merger and acquisition activity also continued to buoy
these stocks. Consumer Products gained 30.01% with the help of
better-than-expected earnings growth. Retailing was relatively weak, as
overcapacity and pricing pressures continue to afflict this group.
HEALTH CARE sector funds did well, due to a variety of factors. The
especially strong returns of Biotechnology and Health Care were driven by
acceleration of unit growth of pharmaceuticals, increased effort by the FDA
to approve new therapies quickly, and a diminished fear of government
regulation of these industries. Medical Delivery had moderate returns
relative to the others, as concerns about pricing pressures and higher
costs suffered by the health care payers offset the positive revenue and
consolidation trends enjoyed by the health care providers.
Investors' expectations of improvement in the supply and demand outlook for
gold, combined with improved stock valuations, benefited the NATURAL
RESOURCES sector and helped both American Gold and Precious Metals and
Minerals to strong returns.
The ENERGY sector continued to turn in varied results. Energy Service
gained 39.15% due largely to higher levels of profitability and higher
spending activity by the oil services customers. Strength in oil and
natural gas prices in the latter half of the year was not enough to offset
the low prices of the first half of the year, causing Energy and Natural
Gas to suffer. Chemicals performed slightly better than these last two, as
a huge increase in volumes and margins generated record returns for many
chemical companies.
Performance in the UTILITIES sector closely followed the bond market,
showing positive performance but underperforming the S&P 500. Utilities
stocks continued to be restrained by concerns over future deregulation of
the industry and the competitive pressures that should result. Emphasis on
telephone utilities, whose growth opportunities are superior to electric
utilities', positively impacted the fund's returns.
The past 12 months have been a very good period for financial investments,
as lower interest rates and the benign economic environment continued to
make equities very attractive, pushing the stock market to new highs.
However, recent increases in fixed-income yields could mean a more
competitive environment for stocks if the trend continues. Given the
widespread positive performance seen over the last 12 months, Select
investors should maintain reasonable expectations in the months ahead.
What follows are detailed summaries of all the funds. We hope you find them
useful in evaluating your investments. As always, we thank you for your
continued interest in Fidelity Select Portfolios.
Sincerely,
Bart A. Grenier
Select Group Leader
CUMULATIVE TOTAL RETURNS
FOR THE YEAR ENDED FEBRUARY 29, 1996
Row: 1, Col: 1, Value: 72.75
Row: 2, Col: 1, Value: 54.91
Row: 3, Col: 1, Value: 52.79000000000001
Row: 4, Col: 1, Value: 50.71
Row: 5, Col: 1, Value: 47.4
Row: 6, Col: 1, Value: 47.02
Row: 7, Col: 1, Value: 44.97
Row: 8, Col: 1, Value: 43.24
Row: 9, Col: 1, Value: 40.94
Row: 10, Col: 1, Value: 40.17
Row: 11, Col: 1, Value: 39.68
Row: 12, Col: 1, Value: 39.15
Row: 13, Col: 1, Value: 39.05
Row: 14, Col: 1, Value: 37.92
Row: 15, Col: 1, Value: 37.74
Row: 16, Col: 1, Value: 36.86
Row: 17, Col: 1, Value: 34.7
Row: 18, Col: 1, Value: 34.15
Row: 19, Col: 1, Value: 31.98
Row: 20, Col: 1, Value: 30.01
Row: 21, Col: 1, Value: 29.85
Row: 22, Col: 1, Value: 29.51
Row: 23, Col: 1, Value: 27.61
Row: 24, Col: 1, Value: 27.49
Row: 25, Col: 1, Value: 27.48
Row: 26, Col: 1, Value: 27.1
Row: 27, Col: 1, Value: 25.82
Row: 28, Col: 1, Value: 25.79
Row: 29, Col: 1, Value: 21.84
Row: 30, Col: 1, Value: 21.77
Row: 31, Col: 1, Value: 20.92
Row: 32, Col: 1, Value: 16.56
Row: 33, Col: 1, Value: 13.38
Row: 34, Col: 1, Value: 12.95
Row: 35, Col: 1, Value: 10.13
Row: 36, Col: 1, Value: 9.18
Electronics 72.75%Air Transportation 54.91%Computers 52.79%Technology
50.71%Defense and Aerospace 47.40%American Gold 47.02%Biotechnology
44.97%Home Finance 43.24%Regional Banks 40.94%Software and Computer
Services 40.17%Health Care 39.68%Energy Service 39.15%Financial Services
39.05%Food and Agriculture 37.92%Precious Metals and Minerals
37.74%Industrial Equipment 36.86%S&P 500 34.70%Medical Delivery
34.15%Multimedia 31.98%Consumer Products 30.01%Brokerage and Investment
Management 29.85%Insurance 29.51%Leisure 27.61%Environmental Services
27.49%Chemicals 27.48%Natural Gas 27.10%Utilities Growth
25.82%Telecommunications 25.79%Developing Communications
21.84%Construction and Housing 21.77%Energy 20.92%Retailing
16.56%Industrial Materials 13.38%Transportation 12.95%Automotive
10.13%Paper and Forest Products 9.18%
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. TOTAL RETURNS INCLUDE
CHANGES IN A FUND'S SHARE PRICE, PLUS REINVESTMENT OF ANY DIVIDENDS AND
CAPITAL GAINS BUT DOES NOT INCLUDE SELECT'S 3% SALES CHARGE, AND CERTAIN
FEES PAID BY SHAREHOLDERS UPON EXCHANGE OR REDEMPTION. FIGURES FOR THE
STANDARD & POOR'S COMPOSITE OF 500 STOCKS (S&P 500 (registered trademark)),
AN UNMANAGED INDEX OF COMMON STOCK PRICES, INCLUDE REINVESTMENT OF
DIVIDENDS. S&P 500 IS A REGISTERED TRADEMARK OF STANDARD & POOR'S. 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. IF FMR HAD NOT REIMBURSED CERTAIN EXPENSES FOR SOME OF THE
FUNDS, THOSE RETURNS WOULD HAVE BEEN LOWER.
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 securities that have grown in value), but does not include certain
fees paid by shareholders upon exchange or redemption. If Fidelity had not
reimbursed certain expenses, the past one year, five year, and life of fund
total returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
FEBRUARY 29, 1996 YEAR YEARS FUND
CONSUMER PRODUCTS 30.01% 108.76% 127.48%
CONSUMER PRODUCTS 26.11% 102.50% 120.65%
(INCL. 3% SALES CHARGE)
S&P 500 34.70% 101.14% 111.64%
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 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 PAST 5 LIFE OF
FEBRUARY 29, 1996 YEAR YEARS FUND
CONSUMER PRODUCTS 30.01% 15.86% 15.58%
CONSUMER PRODUCTS 26.11% 15.16% 14.96%
(INCL. 3% SALES CHARGE)
S&P 500 34.70% 14.99% 14.12%
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
19900629 9700.00 10000.00
19900731 9670.90 9980.27
19900831 8943.40 9078.05
19900930 8439.00 8635.95
19901031 8749.40 8598.82
19901130 9234.40 9154.30
19901231 9593.72 9409.71
19910131 9808.43 9819.97
19910228 10569.68 10522.10
19910331 11077.18 10776.73
19910430 10950.31 10802.60
19910531 11477.33 11269.27
19910630 10911.27 10753.14
19910731 11623.72 11254.23
19910831 12101.94 11520.96
19910930 11994.59 11328.56
19911031 12375.21 11480.36
19911130 11857.95 11017.70
19911231 13290.07 12278.13
19920131 13379.46 12049.75
19920229 13836.37 12206.40
19920331 13677.45 11968.38
19920430 13717.18 12320.25
19920531 13627.78 12380.62
19920630 13015.69 12196.14
19920731 13388.15 12694.97
19920831 13253.65 12434.72
19920930 13377.81 12581.45
19921031 13595.08 12625.48
19921130 14246.90 13056.01
19921231 14427.78 13216.60
19930131 14331.67 13327.62
19930228 13851.10 13508.88
19930331 14662.73 13793.92
19930430 14566.61 13460.10
19930531 15719.98 13820.83
19930630 15730.66 13860.91
19930731 15880.17 13805.47
19930831 16916.07 14328.70
19930930 17289.85 14218.37
19931031 17823.81 14512.69
19931130 17428.68 14374.82
19931231 17987.73 14548.75
19940131 17835.98 15043.41
19940228 17789.29 14635.73
19940331 16645.36 13997.61
19940430 16823.06 14176.78
19940531 16600.01 14409.28
19940630 15684.31 14056.26
19940731 16106.94 14517.30
19940831 17046.12 15112.51
19940930 16729.15 14742.25
19941031 17057.86 15073.95
19941130 16224.34 14524.96
19941231 16716.09 14740.37
19950131 16569.67 15122.58
19950228 16972.32 15711.91
19950331 17435.98 16175.57
19950430 17815.10 16651.94
19950531 18145.91 17317.52
19950630 18133.66 17719.80
19950731 18893.31 18307.39
19950831 18856.56 18353.34
19950930 19861.26 19127.86
19951031 20755.69 19059.57
19951130 21980.94 19896.28
19951231 21446.67 20279.49
19960131 21446.67 20969.80
19960229 22065.08 21164.19
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 29, 1996, your investment would have grown to $22,065 -
a 120.65% increase. That compares to $10,000 invested in the S&P 500, which
would have grown to $21,164 over the same period - a 111.64% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 29, 1996
% OF FUND'S
INVESTMENTS
Alberto-Culver Co. Class A 7.5
America Online, Inc. 5.7
Avon Products, Inc. 5.3
Gillette Co. 5.2
PepsiCo, Inc. 5.2
Ralston Purina Co. 5.0
Luxottica Group Spa sponsored ADR 4.1
HFS, Inc. 4.1
General Electric Co. 3.9
AT&T Corp. 3.7
TOP INDUSTRIES AS OF FEBRUARY 29, 1996
Cosmetics 22.4%
Computer Services 7.0%
Soft Drinks 5.7%
Footwear 5.7%
Grain Mill Products 5.0%
All Others 54.2% *
Row: 1, Col: 1, Value: 54.2
Row: 1, Col: 2, Value: 5.0
Row: 1, Col: 3, Value: 5.7
Row: 1, Col: 4, Value: 5.7
Row: 1, Col: 5, Value: 7.0
Row: 1, Col: 6, Value: 22.4
* INCLUDES SHORT-TERM INVESTMENTS
CONSUMER PRODUCTS PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Mary B. English,
Portfolio Manager of
Fidelity Select Consumer Products Portfolio
Q. HOW DID THE FUND PERFORM, MARY?
A. For the 12 months ended February 29, 1996, the fund returned 30.01%. The
S&P 500 Index returned 34.70% for the same time period.
Q. HOW WOULD YOU CATEGORIZE THE FUND'S PERFORMANCE DURING THE PAST SIX
MONTHS?
A. Although I would like to have beaten the S&P 500, I think the fund did
pretty well during the period. For a consumer products fund, I think
performance was quite strong during a time in which semiconductors and
other tech-related stocks drove the market to such dizzying heights. I also
think the fund benefited from a reduction in the number of holdings, and
the increased concentration of the top holdings. In general, I'm pleased
that the fund's performance during the past six months was better than that
of the previous six months.
Q. WHAT INVESTMENT STRATEGIES HELPED THE FUND'S PERFORMANCE?
A. There were a couple of things. Owning the key multinational cosmetics
companies helped during the period, as did continuing my theme of
"consumerology" stocks. By consumerology I mean technology stocks that
appeal directly to the consumer, such as on-line services. In each case,
owning the core brand names in the industry has been the key to
performance.
Q. LET'S START WITH THE TRADITIONAL CONSUMER STOCKS. WHAT CAN YOU TELL US
ABOUT YOUR TOP HOLDINGS?
A. I've found that the best way to be positioned in traditional consumer
nondurables is to own companies that have the greatest potential for solid
appreciation due to their name-brand equity. Most important, however, is
that they have a strong multinational presence. With worldwide sales and
strong brand recognition, I thought stocks such as Gillette had the
potential to do well, even in a slow-growth environment. Some of the fund's
top holdings, such as Alberto-Culver and Avon, have been implementing
managerial realignments and strategic initiatives that may enable them to
continue to expand and grow. Stocks such as Ralston Purina and PepsiCo were
attractive because they were among the best consumer nondurable companies
in their industries. Finally, how much the fund owned of any given stock is
a function of how expensive it gets relative to its peers.
Q. AND THE CONSUMEROLOGY THEME . . .
A. While this is not a technology fund, I think stocks such as America
Online, the fund's second largest holding, have a place in consumer
products funds. It is currently the key consumer brand in on-line services
and Internet access. I think America Online combines the best of name brand
recognition with the predictability of a service company and the growth
potential of a technology company.
Q. WHAT OTHER STOCKS DID YOU LIKE AT THE END OF FEBRUARY?
A. Luxottica is the world's premium manufacturer of eyeglasses and
sunglasses. It owns high-priced brands such as Giorgio Armani and others
that have done very well at retail. It is also a beneficiary of the trend
toward luxury goods, as well as a major player in the increasing
distribution channel for sunglasses. I also liked H&R Block. It should have
a strong showing in its core business going into tax season, as well as
benefit from spinning off its subsidiary, CompuServe.
Q. SIX MONTHS AGO YOU SAID YOU WERE CONSIDERING GETTING BACK INTO RETAIL.
WHAT HAPPENED DURING THE PERIOD?
A. I am currently moving back into retail and am being very cautious as I
continue to make selective investments. In general, I think retailers have
begun to address space concerns by shutting down unprofitable stores - a
trend that could help the industry as a whole. Though this investment
strategy may be short-lived, I've been buying some of the better retailers
that I think have the potential to go up after being beaten up with the
rest of the industry.
Q. ANY DISAPPOINTMENTS DURING THE PAST SIX MONTHS?
A. Not many. I was pretty pleased with the way many of the fund's top
holdings performed; the fund didn't own any real disasters in the consumer
products sector. There was a lot of money moving in and out of the fund,
and because of the increased inflows and outflows, turnover was much higher
than usual.
Q. WHAT'S YOUR OUTLOOK GOING FORWARD?
A. I really haven't changed my investment philosophy and don't expect to.
The fund will probably continue to be somewhat defensive - owning the core
consumer brand names across the spectrum is what I really think helps
performance. This is a portfolio of the top names in consumer products.
I'll just keep investing stock by stock in those companies that I believe
have the potential for strong performance.
FUND FACTS
START DATE: June 29, 1990
TRADING SYMBOL: FSCPX
SIZE: as of February 29, 1996 more than
$22 million
MANAGER: Mary B. English, since 1994;
manager, Fidelity Select Retailing Portfolio,
1993-1994; equity analyst, specialty retail
and advertising industries, 1991-1993; joined
Fidelity in 1991
(checkmark)
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
CONSUMER PRODUCTS PORTFOLIO
INVESTMENTS FEBRUARY 29, 1996
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 91.8%
SHARES VALUE (NOTE 1)
ADVERTISING - 0.2%
CKS Group, Inc. (a) 1,000 $ 33,250
APPAREL STORES - 1.1%
GENERAL APPAREL STORES - 1.1%
Gymboree Corp. 10,000 260,000
BEVERAGES - 5.7%
SOFT DRINKS - 5.7%
Coca-Cola Company (The) 1,600 129,200
PepsiCo, Inc. 18,800 1,189,100
1,318,300
COMPUTER SERVICES & SOFTWARE - 7.7%
COMPUTER SERVICES - 7.0%
America Online, Inc. (a) 26,500 1,301,810
Verity, Inc. (a) 6,500 308,750
1,610,560
CUSTOM COMPUTER PROGRAMMING SERVICES - 0.3%
Forefront Group, Inc. (a) 10,000 66,563
PREPACKAGED COMPUTER SOFTWARE - 0.4%
Netscape Communications Corp. (a) 1,200 61,200
Spyglass, Inc. (a) 800 18,500
79,700
TOTAL COMPUTER SERVICES & SOFTWARE 1,756,823
COMPUTERS & OFFICE EQUIPMENT - 0.3%
MAGNETIC & OPTICAL RECORDING MEDIA - 0.3%
Boca Research, Inc. (a) 3,000 60,750
DRUGS & PHARMACEUTICALS - 0.8%
BIOTECHNOLOGY - 0.4%
Pharmacia & Upjohn, Inc. 2,350 98,406
DRUGS - 0.4%
Bristol-Myers Squibb Co. 1,000 85,125
TOTAL DRUGS & PHARMACEUTICALS 183,531
ELECTRICAL EQUIPMENT - 3.9%
ELECTRICAL MACHINERY - 3.9%
General Electric Co. 12,000 906,000
ENTERTAINMENT - 2.1%
MOTION PICTURE PRODUCTION - 2.1%
Disney (Walt) Co. 7,500 491,250
FOODS - 6.0%
FOOD - 1.0%
Kellogg Co. 3,100 234,050
GRAIN MILL PRODUCTS - 5.0%
Ralston Purina Co. 17,000 1,139,000
TOTAL FOODS 1,373,050
HOUSEHOLD PRODUCTS - 28.5%
COSMETICS - 22.4%
Alberto-Culver Co. Class A 52,500 1,719,375
Avon Products, Inc. 15,100 1,213,663
Estee Lauder Companies, Inc. 11,000 402,875
Gillette Co. 22,000 1,190,750
Helene Curtis Industries, Inc. 9,000 627,750
5,154,413
SHARES VALUE (NOTE 1)
MANUFACTURED PRODUCTS - 4.2%
First Brands Corp. 500 $ 13,375
Luxottica Group Spa sponsored ADR 13,400 941,350
954,725
SOAPS & DETERGENTS - 1.9%
Colgate-Palmolive Co. 5,500 430,375
TOTAL HOUSEHOLD PRODUCTS 6,539,513
LEISURE DURABLES & TOYS - 2.9%
TOYS & GAMES - 2.9%
Galoob (Lewis) Toys, Inc. (a) 41,300 671,125
LODGING & GAMING - 4.6%
HOTELS, MOTELS, & TOURIST COURTS - 4.6%
Bally Entertainment Corp. 2,000 31,000
HFS, Inc. (a) 20,000 930,000
Host Marriott Corp. (a) 8,000 104,000
1,065,000
PAPER & FOREST PRODUCTS - 1.3%
PAPER - 1.3%
Kimberly-Clark Corp. 4,000 305,500
PHOTOGRAPHIC EQUIPMENT - 0.5%
Eastman Kodak Co. 1,500 107,250
RESTAURANTS - 0.2%
Wendy's International, Inc. 3,000 54,375
SERVICES - 9.7%
BUSINESS SERVICES - 0.8%
Franklin Quest Co. (a) 9,500 190,000
COMMUNICATION, ECONOMY,
SOCIAL & EDUCATION RESEARCH - 3.7%
Gartner Group, Inc. Class A (a) 15,500 838,938
GENERAL SERVICES - 3.7%
Service Corp. International 18,500 839,438
PERSONAL SERVICES - 1.5%
Block (H & R), Inc. 10,000 353,750
TOTAL SERVICES 2,222,126
TELEPHONE SERVICES - 3.7%
AT&T Corp. 13,300 846,213
TEXTILES & APPAREL - 9.0%
APPAREL - 3.3%
Warnaco Group, Inc. Class A 29,000 754,000
FOOTWEAR - 5.7%
NIKE, Inc. Class B 10,000 648,750
Wolverine World Wide, Inc. 23,000 661,250
1,310,000
TOTAL TEXTILES & APPAREL 2,064,000
TOBACCO - 3.6%
TOBACCO MANUFACTURERS - 3.6%
Philip Morris Companies, Inc. 8,300 821,700
TOTAL COMMON STOCKS
(Cost $18,497,329) 21,079,756
REPURCHASE AGREEMENTS - 8.2%
MATURITY VALUE
AMOUNT (NOTE 1)
Investments in repurchase agreements
(U.S. Treasury obligations) in a joint
trading account at 5.41%, dated
2/29/96 due 3/1/96 $ 1,883,283 $ 1,883,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $20,380,329) $ 22,962,756
LEGEND
1. Non-income producing
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $184,011,927 and $185,299,481, respectively (see Note 3 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $91,856 for the period (see
Note 4 of Notes to Financial Statements).
The maximum loan and the average daily loan balances during the periods for
which loans were outstanding amounted to $29,878,000 and $8,636,476,
respectively. The weighted average interest rate paid was 6.3% (see Note 5
of Notes to Financial Statements).
INCOME TAX INFORMATION
At February 29, 1996, the aggregate cost of investment securities for
income tax purposes was $20,439,507. Net unrealized appreciation aggregated
$2,523,249, of which $2,668,930 related to appreciated investment
securities and $145,681 related to depreciated investment securities.
The fund hereby designates approximately $334,000 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,
1997 approx- imately $2,016,000 of losses recognized during the period
November 1, 1995 to February 29, 1996.
A total of 21% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate shareholders
(unaudited).
The fund will notify shareholders in January 1997 of the applicable
percentage for use in preparing 1996 income tax returns.
CONSUMER PRODUCTS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
FEBRUARY 29, 1996
ASSETS
Investment in securities, at value (including repurchase agreements of $1,883,000) (cost $20,380,329) - $ 22,962,756
See accompanying schedule
Cash 809
Receivable for investments sold 505,781
Receivable for fund shares sold 144,857
Dividends receivable 21,102
Redemption fees receivable 503
Other receivables 1,486
TOTAL ASSETS 23,637,294
LIABILITIES
Payable for investments purchased $ 730,674
Payable for fund shares redeemed 498,796
Accrued management fee 12,820
Other payables and 32,713
accrued expenses
TOTAL LIABILITIES 1,275,003
NET ASSETS $ 22,362,291
Net Assets consist of:
Paid in capital $ 21,178,100
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions (1,398,236
)
Net unrealized appreciation (depreciation) on investments 2,582,427
NET ASSETS, for 1,253,340 $ 22,362,291
shares outstanding
NET ASSET VALUE and redemption price per share ($22,362,291 (divided by) 1,253,340 shares) $17.84
Maximum offering price per share (100/97.00 of $17.84) $18.39
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED FEBRUARY 29, 1996
INVESTMENT INCOME $ 490,967
Dividends
Interest 189,745
TOTAL INCOME 680,712
EXPENSES
Management fee $ 219,534
Transfer agent 222,743
Fees
Redemption fees (74,744
)
Accounting fees and expenses 59,535
Non-interested trustees' compensation 171
Custodian fees and expenses 21,346
Registration fees 62,572
Audit 18,158
Legal 103
Interest 31,874
Miscellaneous 307
Total expenses before reductions 561,599
Expense reductions (41,531 520,068
)
NET INVESTMENT INCOME 160,644
REALIZED AND UNREALIZED GAIN (LOSS) (15,575
Net realized gain (loss) on )
investment securities
Change in net unrealized appreciation (depreciation) 2,287,139
on investment securities
NET GAIN (LOSS) 2,271,564
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 2,432,208
OTHER INFORMATION $ 372,748
Sales charges paid to FDC
Deferred sales charges withheld $ 1,264
by FDC
Exchange fees withheld by FSC $ 58,785
Expense reductions $ 16,087
Directed brokerage arrangements
Custodian interest credits 414
Transfer agent interest credits 2,195
FMR reimbursement 22,835
$ 41,531
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
FEBRUARY 29, FEBRUARY 28,
1996 1995
<TABLE>
<CAPTION>
<S> <C> <C>
Operations $ 160,644 $ (85,126
Net investment income (loss) )
Net realized gain (loss) (15,575 323,207
)
Change in net unrealized appreciation (depreciation) 2,287,139 (648,664
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 2,432,208 (410,583
)
Distributions to shareholders (179,260 -
From net investment income )
From net realized gain (51,276 (290,362
) )
In excess of net realized gain (1,382,081 -
)
TOTAL DISTRIBUTIONS (1,612,617 (290,362
) )
Share transactions 203,425,708 18,706,244
Net proceeds from sales of shares
Reinvestment of distributions 1,603,782 284,767
Cost of shares redeemed (204,220,866 (6,171,937
) )
Paid in capital portion of redemption fees 232,770 9,205
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS 1,041,394 12,828,279
TOTAL INCREASE (DECREASE) IN NET ASSETS 1,860,985 12,127,334
NET ASSETS
Beginning of period 20,501,306 8,373,972
End of period $ 22,362,291 $ 20,501,306
OTHER INFORMATION
Shares
Sold 11,665,407 1,341,627
Issued in reinvestment of distributions 90,434 21,383
Redeemed (11,976,587 (438,536
) )
Net increase (decrease) (220,746 924,474
)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEAR ENDED YEARS ENDED FEBRUARY 28, TEN MONTHS YEAR ENDED
FEBRUARY 29, ENDED APRIL 30,
FEBRUARY 28,
SELECTED PER-SHARE DATA D 1996 1995 1994 1993 1992
Net asset value, beginning of period $ 13.91 $ 15.24 $ 12.97 $ 13.81 $ 11.22
Income from Investment Operations
Net investment income (loss) .08 (.15) (.20) (.09) (.07)
Net realized and unrealized gain (loss) 3.97 (.60) 3.84 .20 2.86
Total from investment operations 4.05 (.75) 3.64 .11 2.79
Less Distributions (.02) - - - -
From net investment income
From net realized gain (.01) (.60) (1.40) (.97) (.22)
In excess of net realized gain (.20) - - - -
Total distributions (.23) (.60) (1.40) (.97) (.22)
Redemption fees added to paid in capital .11 .02 .03 .02 .02
Net asset value, end of period $ 17.84 $ 13.91 $ 15.24 $ 12.97 $ 13.81
TOTAL RETURN B, C 30.01% (4.59)% 28.43% .98% 25.27%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 22,362 $ 20,501 $ 8,374 $ 7,005 $ 7,553
Ratio of expenses to average net assets 1.53% 2.49% 2.48% 2.47% A 2.48% F
F F F , F
Ratio of expenses to average net assets after expense reductions 1.48% 2.49% 2.48% 2.47% A 2.48%
E
Ratio of net investment income (loss) to average net assets .46% (1.08)% (1.34)% (.80)% (.56)%
A
Portfolio turnover rate 601% 190% 169% 215% A 140%
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 7 OF NOTES TO FINANCIAL
STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS
OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES
(SEE NOTE 7 OF NOTES TO
FINANCIAL STATEMENTS).
F DURING THE PERIOD, FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S
EXPENSES, OR EXPENSES WERE LIMITED IN ACCORDANCE WITH A STATE EXPENSE
LIMITATION. WITHOUT
THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD HAVE BEEN HIGHER.
</TABLE>
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 securities that have grown in value), but does not include certain
fees paid by shareholders upon exchange or redemption. If Fidelity had not
reimbursed certain expenses, the past 10 year total returns would have been
lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 29, 1996 YEAR YEARS YEARS
FOOD AND AGRICULTURE 37.92% 117.55% 452.45%
FOOD AND AGRICULTURE 33.79% 111.03% 435.87%
(INCL. 3% SALES CHARGE)
S&P 500 34.70% 101.14% 286.76%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one, five, or 10 years. You can compare
these figures to the performance of the S&P 500 - a common proxy for the
U.S. stock market. This benchmark includes reinvested dividends and capital
gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 29, 1996 YEAR YEARS YEARS
FOOD AND AGRICULTURE 37.92% 16.82% 18.64%
FOOD AND AGRICULTURE 33.79% 16.11% 18.28%
(INCL. 3% SALES CHARGE)
S&P 500 34.70% 14.99% 14.47%
AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and
show you what would have happened if the fund had performed at a constant
rate each year.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of growth in the long run
and volatility in the short run. Unlike the broader
market, however, some sectors may not have
a history of growth in the long run. And, as
with all stock funds, the share price and
return of a fund that invests in a sector will
vary. That means if you sell your shares
during a sector downturn, you might lose
money. But if you can identify a sector that is
about to experience rapid growth you may
have the potential for above-average gains.
(checkmark)
$10,000 OVER 10 YEARS
19860228 9700.00 10000.00
19860331 10341.07 10558.00
19860430 10722.66 10438.69
19860531 11134.78 10994.03
19860630 11760.58 11179.83
19860731 11096.62 10554.88
19860831 11630.84 11338.05
19860930 10692.13 10400.39
19861031 10928.72 11000.50
19861130 11058.46 11267.81
19861231 10760.82 10980.48
19870131 12073.49 12459.55
19870228 13012.20 12951.70
19870331 13409.05 13326.01
19870430 13363.26 13207.41
19870531 13279.31 13322.31
19870630 14050.12 13995.09
19870731 14561.45 14704.64
19870831 15072.78 15253.12
19870930 14920.14 14919.08
19871031 11554.52 11705.51
19871130 11043.19 10740.97
19871231 11569.26 11558.36
19880131 12021.86 12044.97
19880229 12617.40 12606.27
19880331 12704.74 12216.73
19880430 12744.44 12352.34
19880531 12839.73 12459.80
19880630 13363.80 13031.71
19880731 13459.09 12982.19
19880831 13451.15 12540.79
19880930 13991.10 13075.03
19881031 14642.21 13438.52
19881130 14300.77 13246.35
19881231 14666.85 13478.16
19890131 15423.28 14464.76
19890228 15144.60 14104.59
19890331 15717.89 14433.22
19890430 16530.07 15182.31
19890531 17549.26 15797.19
19890630 17894.08 15707.15
19890731 19601.00 17125.50
19890831 19298.82 17461.16
19890930 19380.49 17389.57
19891031 19184.48 16986.13
19891130 19911.35 17332.65
19891231 20367.48 17748.63
19900131 18950.76 16557.70
19900228 19221.86 16771.29
19900331 20052.65 17215.73
19900430 19973.95 16785.34
19900531 21714.23 18421.91
19900630 22418.61 18296.64
19900731 22409.77 18238.09
19900831 20774.99 16589.37
19900930 20112.24 15781.47
19901031 20589.42 15713.61
19901130 21437.74 16728.71
19901231 22267.16 17195.44
19910131 22906.24 17945.16
19910228 24631.74 19228.24
19910331 25836.85 19693.56
19910430 25444.27 19740.82
19910531 26375.50 20593.63
19910630 25288.80 19650.44
19910731 26347.14 20566.15
19910831 27396.20 21053.57
19910930 26913.45 20701.97
19911031 26922.73 20979.38
19911130 26737.06 20133.91
19911231 29857.97 22437.23
19920131 29412.90 22019.90
19920229 29248.42 22306.16
19920331 28600.18 21871.19
19920430 28271.22 22514.20
19920531 28522.78 22624.52
19920630 28210.92 22287.41
19920731 29300.57 23198.97
19920831 29170.61 22723.39
19920930 29660.45 22991.53
19921031 29980.35 23072.00
19921130 31129.98 23858.75
19921231 31657.20 24152.21
19930131 31667.43 24355.09
19930228 31585.55 24686.32
19930331 32445.30 25207.20
19930430 31185.51 24597.19
19930531 32167.39 25256.39
19930630 31847.21 25329.64
19930731 31452.32 25228.32
19930831 32957.17 26184.47
19930930 32850.44 25982.85
19931031 34088.47 26520.70
19931130 33693.58 26268.75
19931231 34448.55 26586.60
19940131 35490.41 27490.55
19940228 35277.56 26745.55
19940331 33630.75 25579.45
19940430 33254.97 25906.86
19940531 33013.33 26331.74
19940630 33266.48 25686.61
19940731 34382.65 26529.13
19940831 36568.96 27616.82
19940930 36638.00 26940.21
19941031 37328.42 27546.37
19941130 36419.37 26543.13
19941231 36547.83 26936.76
19950131 38088.58 27635.23
19950228 38852.98 28712.18
19950331 39736.81 29559.47
19950430 40605.32 30430.00
19950531 42062.45 31646.29
19950630 43058.15 32381.43
19950731 43531.72 33455.20
19950831 43458.86 33539.17
19950930 46870.97 34954.52
19951031 46943.83 34829.74
19951130 48789.52 36358.76
19951231 49938.52 37059.03
19960131 51998.10 38320.52
19960229 53587.28 38675.75
Let's say you invested $10,000 in Fidelity Select Food and Agriculture
Portfolio on February 28, 1986, and paid a 3% sales charge. By February 29,
1996, your investment would have grown to $53,587 - a 435.87% increase.
That compares to $10,000 invested in the S&P 500, which would have grown to
$38,676 over the same period - a 286.76% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 29, 1996
% OF FUND'S
INVESTMENTS
Philip Morris Companies, Inc. 9.9
RalCorp Holdings, Inc. 7.7
Ralston Purina Co. 7.7
PepsiCo, Inc. 7.3
Kellogg Co. 5.5
Nabisco Holdings Class A 5.1
RJR Nabisco Holdings Corp. 4.8
DEKALB Genetics Corp. Class B 4.5
Chiquita Brands International, Inc. 4.0
Panamerican Beverages, Inc. Class A 3.4
TOP INDUSTRIES AS OF FEBRUARY 29, 1996
Food 14.4%
Soft Drinks 12.3%
Tobacco Manufacturers 10.3%
Cereal Breakfast Foods 7.7%
Grain Mill Products 7.7%
All Others 47.6% *
Row: 1, Col: 1, Value: 47.6
Row: 1, Col: 2, Value: 7.7
Row: 1, Col: 3, Value: 7.7
Row: 1, Col: 4, Value: 10.3
Row: 1, Col: 5, Value: 12.3
Row: 1, Col: 6, Value: 14.4
* 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. HOW HAS THE FUND DONE OVER THE PAST YEAR, BILL?
A. For the 12 months ended February 29, 1996, the fund had a total return
of 37.92%. The S&P 500 Index returned 34.70% for the same period.
Q. WHAT HELPED THE FUND POST SUCH A STRONG RETURN?
A. The stocks in this fund - as well as many in the sector - are those of
companies that generally have provided strong earnings growth regardless of
the economic backdrop. Over the past six to eight months, economic
statistics have indicated that economic growth has been inconsistent and
sluggish. As a result, investors have been more interested in the "safe"
stocks found in this sector, rather than investing in other companies that
might be affected by the economic slowdown. In addition, the individual
stocks that I've chosen for the portfolio generally have done quite well.
Q. CAN YOU GIVE US SOME EXAMPLES?
A. The names that have worked best for the fund over the past year have
been those where I thought there was a discrepancy between the company's
growth rate and its valuation. The two most pronounced examples would be
Philip Morris and PepsiCo. With Philip Morris, the story was its aggressive
redeployment of cash flow. The company maintained growth in its tobacco,
food and brewing businesses, and used its free cash flow to repurchase
shares and increase its dividend. In the case of PepsiCo, many people in
the investment community were questioning the company's long-term growth
rate, especially with respect to the significant exposure it has in
restaurants, including Taco Bell, KFC and Pizza Hut. My belief was that the
market was overreacting to the problems and that management would come up
with a solution. In fact it has, by pursuing internal fixes and
refranchising more of its restaurants. By doing so, PepsiCo has been able
to extract capital from its restaurant business and reinvest it in
higher-returning, faster-growing international snack food and beverage
businesses. Furthermore, the company's beverage and Frito-Lay snack food
divisions have performed well.
Q. WHAT OTHER STOCKS PERFORMED WELL FOR THE FUND?
A. Kellogg was one, on the strength of continued earnings growth, cost
cutting and stock repurchases. DEKALB Genetics was another, as it received
a patent for a potentially revolutionary corn seed that is resistant to a
harmful pest, the European corn borer. DEKALB's stock price also surged
recently because Monsanto bought a 40% stake in the company.
Q. WHICH STOCKS DIDN'T PERFORM AS WELL AS YOU WOULD HAVE LIKED?
A. I'd say the main disappointment was Tyson Foods. The company made some
great strategic moves that helped it materially increase production
volumes. However, it has hit a rough patch due to an increase in corn
prices. Corn is the major raw material cost for the poultry business and
prices for it have reached the highest level in about a decade. In
addition, low beef and pork prices have made those meats a more attractive
alternative to poultry.
Q. WHAT'S YOUR OUTLOOK FOR THE NEXT SIX MONTHS?
A. It's hard to say which direction the economy or the market will take.
I'll be focusing on finding the companies with the best prospects that are
trying to make positive changes. Most companies are benefiting from
moderate price increases that should help offset moderate raw material cost
inflation, and are not resorting to deep price discount promotions to
increase market share. One problem I can foresee is that valuations are
fairly high in the sector so, among other things, I'll need to be diligent
in trying to sell a stock at or around its peak.
FUND FACTS
START DATE: July 29, 1985
TRADING SYMBOL: FDFAX
SIZE: as of February 29, 1996, more than
$301 million
MANAGER: William Mankivsky, since 1993;
manager, Fidelity Select Energy Service
Portfolio, 1991-1994; joined Fidelity in 1991
(checkmark)
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
FOOD AND AGRICULTURE PORTFOLIO
INVESTMENTS FEBRUARY 29, 1996
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 87.4%
SHARES VALUE (NOTE 1)
AGRICULTURE - 7.7%
CROPS - 7.7%
DEKALB Genetics Corp. Class B 208,700 $ 13,826,374
Pioneer Hi-Bred International, Inc. 175,400 9,449,675
Sylvan Foods Holdings, Inc. (a) 14,900 184,388
23,460,437
BEVERAGES - 13.0%
MALT BEVERAGE - 0.7%
Anheuser-Busch Companies, Inc. 20,000 1,347,500
Fomento Economico Mexicano SA
de CV Class B 36,000 90,544
Quilmes Industries SA 28,000 526,400
1,964,444
SOFT DRINKS - 12.3%
Celestial Seasonings, Inc. (a) 184,200 4,075,425
Panamerican Beverages, Inc. Class A 257,700 10,436,850
PepsiCo, Inc. 351,400 22,226,050
Serm Suk Co. Ltd. 38,800 985,006
37,723,331
TOTAL BEVERAGES 39,687,775
CONGLOMERATES - 1.7%
Whitman Corp. 225,600 5,245,200
FOODS - 44.7%
BAKERY PRODUCTS - 0.8%
Flowers Industries, Inc. 4,000 54,500
Interstate Bakeries Corp. 114,400 2,516,800
2,571,300
CANNED SPECIALTIES - 0.2%
Campbell Soup Co. 11,000 679,250
CEREAL BREAKFAST FOODS - 7.7%
RalCorp Holdings, Inc. (a) 848,466 23,544,932
COOKIES & CRACKERS - 5.1%
Nabisco Holdings Class A 443,400 15,574,425
DAIRY - 2.2%
Dean Foods Co. 259,600 6,652,250
FOOD - 14.4%
Chiquita Brands International, Inc. 776,800 12,234,600
Dole Food, Inc. 90,100 3,626,525
General Mills, Inc. 167,500 9,631,250
Kellogg Co. 221,600 16,730,800
Nestle SA (Reg.) 1,280 1,397,661
Universal Foods Corp. 14,000 530,250
44,151,086
GENERAL FOOD PREPARATIONS - 0.0%
Herdez SA de CV Class B (a) 438,846 128,597
GRAIN MILL PRODUCTS - 7.7%
Archer-Daniels-Midland Co. 4,000 77,000
Ralston Purina Co. 349,900 23,443,300
23,520,300
MEAT & FISH - 5.2%
Golden Poultry Co., Inc. 12,000 121,500
GoodMark Foods, Inc. (b) 445,300 7,013,475
Hormel Foods Corp. 17,000 427,125
Hudson Foods, Inc. Class A 43,000 580,500
Sanderson Farms, Inc. 43,000 462,250
Tyson Foods, Inc. 306,600 6,898,500
WLR Foods, Inc. 26,000 334,750
15,838,100
SHARES VALUE (NOTE 1)
POULTRY SLAUGHTER & PROCESSING - 0.1%
Pilgrims Pride Corp. 25,000 $ 175,000
RICE MILLING - 0.4%
Riviana Foods, Inc. 88,000 1,254,000
SUGAR & CANDIES - 0.9%
Grist Mill Co. (a)(b) 392,400 2,599,650
TOTAL FOODS 136,688,890
GROCERY STORES - 0.8%
GROCERY - RETAIL - 0.8%
Giant Food, Inc. Class A 70,600 2,320,975
HOLDING COMPANIES - 0.1%
Triarc Companies, Inc. Class A (a) 35,000 446,250
INDUSTRIAL MACHINERY & EQUIPMENT - 0.5%
FARM MACHINERY & EQUIPMENT - 0.5%
Case Corp. 32,350 1,718,594
RESTAURANTS - 3.8%
Brinker International, Inc. (a) 28,500 388,313
Darden Restaurants, Inc. 500,100 6,126,225
McDonald's Corp. 100,000 5,000,000
11,514,538
TOBACCO - 15.1%
CIGARETTES - 4.8%
RJR Nabisco Holdings Corp. 435,620 14,647,723
TOBACCO MANUFACTURERS - 10.3%
Philip Morris Companies, Inc. 307,400 30,432,600
UST, Inc. 34,000 1,207,000
31,639,600
TOTAL TOBACCO 46,287,323
TOTAL COMMON STOCKS
(Cost $226,484,119) 267,369,982
REPURCHASE AGREEMENTS - 12.6%
MATURITY VALUE
AMOUNT (NOTE 1)
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 5.41% dated
2/29/96 due 3/1/96 $38,556,793 38,551,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $265,035,119) $ 305,920,982
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. Transactions during the period with
companies that are or were affiliates are as follows:
PURCHASES SALES DIVIDEND MARKET
AFFILIATE COST COST INCOME VALUE
GoodMark Foods, Inc. $ 746,500 $ - $ - $ 7,013,475
Grist Mill Co. 403,519 - - 2,599,650
$ 1,150,019 $ - $ - $ 9,613,125
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $262,497,688 and $235,514,079, respectively (see Note 3 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $213,864 for the period
(see Note 4 of Notes to Financial Statements).
The maximum loan and the average daily loan balances during the period for
which the loan was outstanding amounted to $2,871,000. The weighted average
interest rate paid was 6.1% (see Note 5 of Notes to Financial Statements).
INCOME TAX INFORMATION
At February 29, 1996, the aggregate cost of investment securities for
income tax purposes was $265,255,405. Net unrealized appreciation
aggregated $40,665,577, of which $43,614,164 related to appreciated
investment securities and $2,948,587 related to depreciated investment
securities.
The fund hereby designates approximately $4,015,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 30% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate shareholders
(unaudited).
The fund will notify shareholders in January 1997 of the applicable
percentage for use in preparing 1996 income tax returns.
FOOD AND AGRICULTURE PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
FEBRUARY 29, 1996
ASSETS
Investment in securities, at value (including repurchase agreements of $38,551,000) (cost $265,035,119) - $ 305,920,982
See accompanying schedule
Cash 328
Receivable for investments sold 285,008
Receivable for fund shares sold 2,735,439
Dividends receivable 366,228
Redemption fees receivable 614
Other receivables 10,900
TOTAL ASSETS 309,319,499
LIABILITIES
Payable for investments purchased $ 6,912,049
Payable for fund shares redeemed 968,596
Accrued management fee 145,832
Other payables and accrued expenses 190,689
TOTAL LIABILITIES 8,217,166
NET ASSETS $ 301,102,333
Net Assets consist of:
Paid in capital $ 239,376,056
Undistributed net investment income 1,092,171
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 19,747,185
Net unrealized appreciation (depreciation) on investments 40,886,921
and assets and liabilities in
foreign currencies
NET ASSETS, for 7,144,275 shares outstanding $ 301,102,333
NET ASSET VALUE and redemption price per share ($301,102,333 (divided by) 7,144,275 shares) $42.15
Maximum offering price per share (100/97.00 of $42.15) $43.45
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED FEBRUARY 29, 1996
INVESTMENT INCOME $ 3,785,119
Dividends
Interest 1,269,478
TOTAL INCOME 5,054,597
EXPENSES
Management fee $ 1,286,233
Transfer agent 1,510,275
Fees
Redemption fees (143,943
)
Accounting fees and expenses 210,607
Non-interested trustees' compensation 927
Custodian fees and expenses 19,323
Registration fees 84,772
Audit 21,216
Legal 897
Interest 488
Miscellaneous 1,560
Total expenses before reductions 2,992,355
Expense reductions (15,543 2,976,812
)
NET INVESTMENT INCOME 2,077,785
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 29,465,665
Foreign currency transactions (823 29,464,842
)
Change in net unrealized appreciation (depreciation) on:
Investment securities 31,021,039
Assets and liabilities in 1,024 31,022,063
foreign currencies
NET GAIN (LOSS) 60,486,905
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 62,564,690
OTHER INFORMATION $ 1,756,887
Sales charges paid to FDC
Deferred sales charges withheld $ 2,759
by FDC
Exchange fees withheld by FSC $ 113,280
Expense reductions $ 12,099
Directed brokerage arrangements
Custodian interest credits 808
Transfer agent interest credits 2,636
$ 15,543
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
FEBRUARY 29, FEBRUARY 28,
1996 1995
<TABLE>
<CAPTION>
<S> <C> <C>
Operations $ 2,077,785 $ 456,946
Net investment income
Net realized gain (loss) 29,464,842 7,641,023
Change in net unrealized appreciation (depreciation) 31,022,063 1,271,971
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 62,564,690 9,369,940
Distributions to shareholders (1,144,034 (213,103
From net investment income ) )
From net realized gain (12,658,077 (5,012,131
) )
TOTAL DISTRIBUTIONS (13,802,111 (5,225,234
) )
Share transactions 355,816,771 177,269,912
Net proceeds from sales of shares
Reinvestment of distributions 13,613,779 5,111,970
Cost of shares redeemed (314,447,812 (84,479,607
) )
Paid in capital portion of redemption fees 227,026 72,669
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS 55,209,764 97,974,944
TOTAL INCREASE (DECREASE) IN NET ASSETS 103,972,343 102,119,650
NET ASSETS
Beginning of period 197,129,990 95,010,340
End of period (including undistributed net investment income of $1,092,171 and $245,442,
respectively) $ 301,102,333 $ 197,129,990
OTHER INFORMATION
Shares
Sold 9,278,227 5,597,630
Issued in reinvestment of distributions 361,809 172,511
Redeemed (8,554,944 (2,728,534
) )
Net increase (decrease) 1,085,092 3,041,607
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEAR ENDED YEARS ENDED FEBRUARY 28, TEN MONTHS YEAR ENDED
FEBRUARY 29, ENDED APRIL 30,
FEBRUARY 28,
SELECTED PER-SHARE DATA D 1996 1995 1994 1993 1992
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 32.53 $ 31.49 $ 30.86 $ 29.22 $ 27.87
Income from Investment Operations
Net investment income .37 .15 .09 .05 .13
Net realized and unrealized gain (loss) 11.61 2.80 3.29 3.26 2.89
Total from investment operations 11.98 2.95 3.38 3.31 3.02
Less Distributions (.20) (.08) (.06) (.10) (.11)
From net investment income
From net realized gain (2.20) (1.85) (2.70) (1.57) (1.59)
Total distributions (2.40) (1.93) (2.76) (1.67) (1.70)
Redemption fees added to paid in capital .04 .02 .01 - .03
Net asset value, end of period $ 42.15 $ 32.53 $ 31.49 $ 30.86 $ 29.22
TOTAL RETURN B, C 37.92% 10.14% 11.69% 11.72% 11.11%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 301,102 $ 197,130 $ 95,010 $ 108,377 $ 108,922
Ratio of expenses to average net assets 1.43% 1.70% 1.65% 1.67% 1.83%
A
Ratio of expenses to average net assets after expense reductions 1.42% 1.68% 1.64% 1.67% 1.83%
E E E A
Ratio of net investment income to average net assets .99% .49% .29% .21% .46%
A
Portfolio turnover rate 124% 126% 96% 515% 63%
A
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN (SEE NOTE 7 OF NOTES TO FINANCIAL
STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES
(SEE NOTE 7 OF NOTES TO
FINANCIAL STATEMENTS).
</TABLE>
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 securities that have grown in value), but does not include certain
fees paid by shareholders upon exchange or redemption.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 29, 1996 YEAR YEARS YEARS
LEISURE 27.61% 139.86% 275.36%
LEISURE 23.78% 132.66% 264.10%
(INCL. 3% SALES CHARGE)
S&P 500 34.70% 101.14% 286.76%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one, five, or 10 years. You can compare
these figures to the performance of the S&P 500 - a common proxy for the
U.S. stock market. This benchmark includes reinvested dividends and capital
gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 29, 1996 YEAR YEARS YEARS
LEISURE 27.61% 19.12% 14.14%
LEISURE 23.78% 18.40% 13.79%
(INCL. 3% SALES CHARGE)
S&P 500 34.70% 14.99% 14.47%
AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and
show you what would have happened if the fund had performed at a constant
rate each year.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of growth in the long run
and volatility in the short run. Unlike the broader
market, however, some sectors may not have
a history of growth in the long run. And, as
with all stock funds, the share price and
return of a fund that invests in a sector will
vary. That means if you sell your shares
during a sector downturn, you might lose
money. But if you can identify a sector that is
about to experience rapid growth you may
have the potential for above-average gains.
(checkmark)
$10,000 OVER 10 YEARS
19860228 9700.00 10000.00
19860331 10465.29 10558.00
19860430 10780.97 10438.69
19860531 11484.07 10994.03
19860630 11751.92 11179.83
19860731 10627.11 10554.88
19860831 10977.03 11338.05
19860930 9908.09 10400.39
19861031 10416.19 11000.50
19861130 10286.77 11267.81
19861231 9831.39 10980.48
19870131 10866.78 12459.55
19870228 12036.38 12951.70
19870331 12180.19 13326.01
19870430 11902.17 13207.41
19870531 12391.10 13322.31
19870630 12923.18 13995.09
19870731 13877.07 14704.64
19870831 14164.68 15253.12
19870930 13857.90 14919.08
19871031 9903.29 11705.51
19871130 9213.04 10740.97
19871231 10391.42 11558.36
19880131 10551.37 12044.97
19880229 11473.75 12606.27
19880331 11857.63 12216.73
19880430 11932.27 12352.34
19880531 11623.03 12459.80
19880630 12399.35 13031.71
19880731 12502.45 12982.19
19880831 12014.07 12540.79
19880930 12849.74 13075.03
19881031 12849.74 13438.52
19881130 12355.93 13246.35
19881231 13093.93 13478.16
19890131 14211.77 14464.76
19890228 13983.86 14104.59
19890331 14640.45 14433.22
19890430 15470.69 15182.31
19890531 16241.24 15797.19
19890630 16395.25 15707.15
19890731 17771.11 17125.50
19890831 17913.63 17461.16
19890930 18028.74 17389.57
19891031 16729.62 16986.13
19891130 16926.96 17332.65
19891231 17180.26 17748.63
19900131 15096.74 16557.70
19900228 14962.89 16771.29
19900331 15079.28 17215.73
19900430 14491.48 16785.34
19900531 15690.37 18421.91
19900630 15509.95 18296.64
19900731 14974.52 18238.09
19900831 13246.02 16589.37
19900930 11988.93 15781.47
19901031 11849.25 15713.61
19901130 12792.07 16728.71
19901231 13351.55 17195.44
19910131 14098.20 17945.16
19910228 15179.97 19228.24
19910331 15432.77 19693.56
19910430 15473.93 19740.82
19910531 16008.93 20593.63
19910630 15109.42 19650.44
19910731 15832.55 20566.15
19910831 15997.17 21053.57
19910930 16408.71 20701.97
19911031 16902.56 20979.38
19911130 16091.24 20133.91
19911231 17749.16 22437.23
19920131 18148.94 22019.90
19920229 18783.89 22306.16
19920331 18401.74 21871.19
19920430 18607.51 22514.20
19920531 18719.22 22624.52
19920630 18431.14 22287.41
19920731 18519.33 23198.97
19920831 18254.76 22723.39
19920930 18613.39 22991.53
19921031 18754.49 23072.00
19921130 20030.27 23858.75
19921231 20629.94 24152.21
19930131 21141.43 24355.09
19930228 21029.72 24686.32
19930331 22123.25 25207.20
19930430 21624.67 24597.19
19930531 23178.02 25256.39
19930630 23801.81 25329.64
19930731 24437.83 25228.32
19930831 26119.61 26184.47
19930930 27422.23 25982.85
19931031 28938.89 26520.70
19931130 27862.55 26268.75
19931231 28789.84 26586.60
19940131 29089.07 27490.55
19940228 28840.77 26745.55
19940331 27096.32 25579.45
19940430 27150.95 25906.86
19940531 26863.60 26331.74
19940630 25728.22 25686.61
19940731 26723.43 26529.13
19940831 27788.72 27616.82
19940930 27781.71 26940.21
19941031 27683.59 27546.37
19941130 26499.16 26543.13
19941231 26821.55 26936.76
19950131 27312.14 27635.23
19950228 28531.62 28712.18
19950331 29281.53 29559.47
19950430 29540.95 30430.00
19950531 30112.57 31646.29
19950630 31276.99 32381.43
19950731 33450.57 33455.20
19950831 34523.24 33539.17
19950930 34579.70 34954.52
19951031 32914.23 34829.74
19951130 33986.91 36358.76
19951231 34052.04 37059.03
19960131 34556.74 38320.52
19960229 36409.97 38675.75
Let's say you invested $10,000 in Fidelity Select Leisure Portfolio on
February 28, 1986, and paid a 3% sales charge. By February 29, 1996, your
investment would have grown to $36,410 - a 264.10% increase. That compares
to $10,000 invested in the S&P 500, which would have grown to $38,676 over
the same period - a 286.76% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 29, 1996
% OF FUND'S
INVESTMENTS
Omnicom Group, Inc. 3.3
Time Warner, Inc. 2.5
PepsiCo, Inc. 2.5
Sierra On-Line, Inc. 2.3
American Express Co. 2.3
General Electric Co. 2.2
Hilton Hotels Corp. 2.2
Comcast Corp. Class A special 2.0
Disney (Walt) Co. 2.0
Renaissance Communications Corp. 1.9
TOP INDUSTRIES AS OF FEBRUARY 29, 1996
Row: 1, Col: 1, Value: 61.2
Row: 1, Col: 2, Value: 4.0
Row: 1, Col: 3, Value: 6.2
Row: 1, Col: 4, Value: 7.2
Row: 1, Col: 5, Value: 7.4
Row: 1, Col: 6, Value: 14.0
Cable TV Operators 14.0%
Hotels, Motels &
Tourist Courts 7.4%
Television Broadcasting 7.2%
Advertising Agencies 6.2%
Motion Picture Production 4.0%
All Others 61.2% *
* INCLUDES SHORT-TERM INVESTMENTS
LEISURE PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Katherine Collins, Portfolio Manager of Fidelity Select Leisure Portfolio
Note to shareholders: On February 1, 1996, Katherine Collins replaced
Deborah Wheeler as portfolio manager of the fund.
Q. KATHERINE, HOW HAS THE FUND PERFORMED?
A. For the 12 months ended February 29, 1996, the fund had a total return
of 27.61%. The S&P 500 Index returned 34.70% during the same 12-month
period.
Q. WHAT FACTORS AFFECTED THE SECTOR AND THE FUND?
A. In the broadcast industry, the passage of the federal telecommunications
bill, mergers and acquisitions, and the economic backdrop affected stock
performance. Through much of 1995, this industry generally performed well
in anticipation of the telecommunications legislation, until broadcasting
stocks hit a rough patch in October and November. At that time,
Congressional budget haggling caused temporary concerns, as did statistics
indicating that the economy was slowing down. When that slowdown occurred,
it created a difficult advertising environment for broadcasters. Since
then, though, the passage of the telecommunications bill and renewed merger
and acquisition activity have helped these stocks recover.
Q. WHAT ABOUT OTHER PARTS OF THE LEISURE SECTOR?
A. On the entertainment side, stock performance has been driven by
company-specific issues. There was continued merger activity, as the
Disney/Capital Cities and Westinghouse/CBS transactions were completed. In
addition, software-related companies posted strong performance for the
fund, including Sierra On-Line, which benefited from strong new product
sales, some disarray in its competition and, finally, a proposed merger
during February. I've also maintained the fund's stake in cable equipment
providers, such as California Amplifier, and increased investments in the
lodging and gaming industry.
Q. WHAT WAS THE APPEAL OF LODGING AND GAMING STOCKS?
A. Lodging and gaming stocks were more attractively valued than
alternatives. In addition, business prospects for the industry appeared to
be solid, with supply and demand looking quite favorable. I've picked
companies on individual merits, looking for such factors as new casino
development. Hilton Hotels, one of the fund's 10 largest investments,
posted strong stock price gains because of internal actions the company has
pursued, as well as the appointment of a well-respected, experienced chief
executive officer.
Q. WHAT OTHER INVESTMENTS HELPED THE FUND'S PERFORMANCE?
A. Along with Hilton Hotels and Sierra On-Line, Renaissance Communications
attracted investor interest on the strength of a solid base business and
very low debt levels. The latter quality made Renaissance attractive
because it signaled the company's ability to make a large acquisition or
become an attractive acquisition itself.
Q. WERE THERE INVESTMENTS THAT DIDN'T TURN OUT AS WELL AS EXPECTED?
A. I'd say the biggest disappointment toward the end of 1995 was Viacom.
Concerns over the company's Blockbuster Video franchise hurt performance,
as this business posted a weak fourth quarter. In addition, Viacom's
Paramount Pictures business had a tough fourth quarter in 1995.
Q. TWO OF THE 10 LARGEST INVESTMENTS CURRENTLY ARE GENERAL ELECTRIC AND
PEPSICO. HOW DO THOSE STOCKS FIT INTO A LEISURE FUND?
A. General Electric owns NBC, which has been the best performing network.
Even though NBC is not an overwhelmingly large piece of GE, I believed it
would be a mistake not to have it represented in the fund. PepsiCo is
connected to the leisure sector through its KFC, Pizza Hut and Taco Bell
restaurant businesses, as well as through its main beverage business.
Q. WHAT'S YOUR OUTLOOK?
A. Looking at broadcasting, I'd say the impact of the telecommunications
bill and consolidation activity should be the most important factors going
forward. I'll be looking for the companies with the best business and
acquisition prospects selling at attractive valuations. On the film and
entertainment side, large companies such as Viacom and Disney might have a
hard time matching their strong first-half 1995 performance. In that area,
I'll be looking for opportunities to find long-term winners with strong
assets and that have a good mix of both content and distribution
businesses. Beyond that, I'll be looking company-by-company for attractive
stories in other sectors, with no other major themes on the horizon besides
gaming and lodging.
FUND FACTS
START DATE: May 8, 1984
TRADING SYMBOL: FDLSX
SIZE: as of February 29, 1996, more than
$85 million
MANAGER: Katherine Collins, since February
1996; assistant director of research, 1994-May
1995; manager, Fidelity Select Construction
and Housing Portfolio, 1992-1994, analyst,
since 1990; joined Fidelity in 1990
(checkmark)
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
LEISURE PORTFOLIO
INVESTMENTS FEBRUARY 29, 1996
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 87.2%
SHARES VALUE (NOTE 1)
ADVERTISING - 6.2%
ADVERTISING AGENCIES - 6.2%
ADVO-Systems, Inc. 50,000 $ 1,093,750
Omnicom Group, Inc. 67,200 2,746,800
WPP Group PLC ADR 50,000 1,375,000
5,215,550
AIR TRANSPORTATION - 0.9%
AIR TRANSPORTATION, MAJOR NATIONAL - 0.6%
Southwest Airlines Co. 5,000 153,750
UAL Corp. 2,000 357,250
511,000
AIR TRANSPORTATION, REGIONAL - 0.3%
Atlantic Southeast Airlines, Inc. 10,000 262,500
TOTAL AIR TRANSPORTATION 773,500
APPAREL STORES - 0.7%
GENERAL APPAREL STORES - 0.7%
Gymboree Corp. (a) 21,300 553,800
BEVERAGES - 3.7%
DISTILLED & BLENDED LIQUOR - 1.2%
Seagram Co. Ltd. 30,000 1,020,725
SOFT DRINKS - 2.5%
PepsiCo, Inc. 33,441 2,115,143
TOTAL BEVERAGES 3,135,868
BROADCASTING - 26.4%
CABLE TV OPERATORS - 14.0%
BET Holdings, Inc. Class A (a) 10,300 318,013
CAI Wireless Systems, Inc. (a) 48,600 431,325
Cablevision Systems Corp. Class A (a) 14,600 848,625
Comcast Corp. Class A special 86,000 1,687,750
Gaylord Entertainment Co. Class A 17,500 468,125
Heartland Wireless
Communications, Inc. (a) 9,140 230,785
International Family Entertainment
Class B (a) 2,500 38,125
People's Choice TV Corp. (a) 65,328 1,233,066
TCA Cable TV, Inc. 29,000 978,750
TCI Group Class A 70,500 1,480,500
Tele-Communications Liberty Media Group
Series A (a) 10,875 300,422
Time Warner, Inc. 49,639 2,122,067
Turner Broadcasting System, Inc. Class B 11,100 321,900
Viacom, Inc. Class B (a):
(non-vtg.) 13,555 532,034
(warrants C) 122,000 213,500
(warrants E) 50,000 209,375
Videotron Holdings PLC
sponsored ADR (a) 25,000 421,875
Wireless One, Inc. (a) 1,000 14,750
11,850,987
COMMUNICATIONS SERVICES - 1.7%
Lodgenet Entertainment Corp. (a) 45,000 596,250
PanAmSat Corp. (a) 27,500 821,563
1,417,813
RADIO BROADCASTING - 3.5%
American Radio Systems Corp. Class A (a) 14,900 454,450
EZ Communications, Inc. Class A (a) 35,400 708,000
Emmis Broadcasting Corp. Class A (a) 18,900 722,925
Evergreen Media Corp. Class A (a) 3,858 127,796
SHARES VALUE (NOTE 1)
Grupo Radio Centro SA de CV
sponsored ADR 16,500 $ 136,125
Heftel Broadcasting Corp. Class A (a) 23,700 450,300
Infinity Broadcasting Corp. Class A (a) 6,150 253,688
Saga Communications, Inc. Class A (a) 5,000 91,250
2,944,534
TELEVISION BROADCASTING - 7.2%
Australis Media Ltd. (a) 300,000 206,483
British Sky Broadcasting Group
sponsored ADR 1,000 36,000
Capital Cities/ABC, Inc. 3,100 415,846
Carlton Communications PLC 37,500 240,183
Chris-Craft Industries, Inc. 12,030 509,771
Grupo Televisa SA de CV sponsored ADR 59,000 1,445,500
Home Shopping Network, Inc. (a) 20,600 216,300
Jacor Communications, Inc. Class A (a) 10,200 221,850
Renaissance Communications Corp. (a) 61,450 1,566,975
Sinclair Broadcast Group, Inc. Class A (a) 52,400 1,231,400
6,090,308
TOTAL BROADCASTING 22,303,642
CELLULAR - 1.1%
CELLULAR & COMMUNICATION SERVICES - 1.1%
AirTouch Communications, Inc. (a) 12,000 372,000
Cellular Communications, Inc.,
Series A (redeemable) (a) 5,600 288,400
International Cabletel, Inc. (a) 10,000 250,000
Rogers Communications, Inc. Class B (a) 2,000 20,068
930,468
COMMUNICATIONS EQUIPMENT - 0.7%
DATACOMMUNICATIONS EQUIPMENT - 0.7%
Echostar Communications Corp.
Class A (a) 15,600 561,600
COMPUTER SERVICES & SOFTWARE - 3.0%
CAD/CAM/CAE - 0.0%
CSG Systems International, Inc. 1,000 22,000
PREPACKAGED COMPUTER SOFTWARE - 3.0%
Maxis, Inc. (a) 10,200 295,800
Microsoft Corp. 2,000 198,250
Netscape Communications Corp. (a) 400 20,400
Sierra On-Line, Inc. (a) 52,000 1,982,500
Softkey International, Inc. (a) 400 9,644
2,506,594
TOTAL COMPUTER SERVICES & SOFTWARE 2,528,594
CONSUMER DURABLES - 0.5%
MANUFACTURING INDUSTRIES - 0.5%
Ballantyne of Omaha, Inc. (a) 44,000 387,750
CONSUMER ELECTRONICS - 0.9%
RADIOS, TELEVISIONS, STEREOS - 0.9%
Sony Corp. 13,200 772,451
CREDIT & OTHER FINANCE - 2.3%
FINANCIAL SERVICES - 2.3%
American Express Co. 42,200 1,941,200
ELECTRICAL EQUIPMENT - 7.3%
ELECTRICAL MACHINERY - 2.7%
Amphenol Corp. Class A (a) 15,400 375,375
General Electric Co. 25,000 1,887,500
2,262,875
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
ELECTRICAL EQUIPMENT - CONTINUED
TV & RADIO COMMUNICATION EQUIPMENT - 3.8%
Avid Technology, Inc. (a) 17,000 $ 284,750
California Amplifier, Inc. (a) 32,300 1,508,006
Pinnacle Systems (a) 18,600 427,800
Scientific-Atlanta, Inc. 57,200 958,100
3,178,656
WIRING & LIGHTING - 0.8%
Oak Industries, Inc. (a) 30,200 721,025
TOTAL ELECTRICAL EQUIPMENT 6,162,556
ENTERTAINMENT - 6.4%
AMUSEMENT & RECREATION SERVICES - 0.9%
IMAX Corp. (a) 26,000 750,750
MOTION PICTURE DISTRIBUTION - 0.3%
All American Communications, Inc.
Class B (non-vtg.) (a) 30,000 247,500
MOTION PICTURE PRODUCTION - 2.9%
Cinergi Pictures Entertainment, Inc. (a) 21,400 22,738
Disney (Walt) Co. 25,200 1,650,600
Spelling Entertainment Group, Inc. (a) 65,000 755,625
2,428,963
MOVIE THEATERS - 1.7%
AMC Entertainment, Inc. (a) 27,900 589,388
Carmike Cinemas, Inc. Class A (a) 21,600 507,600
Cineplex Odeon Corp. (a) 205,100 344,241
1,441,229
RECORDS & CD'S - 0.2%
PolyGram NV ADR 2,200 128,425
RECREATIONAL SERVICES - 0.4%
Cedar Fair LP (depositary units) 1,000 37,875
MGM Grand, Inc. (a) 10,300 342,475
380,350
TOTAL ENTERTAINMENT 5,377,217
GENERAL MERCHANDISE STORES - 0.7%
DEPARTMENT STORES - 0.7%
Carson Pirie Scott & Co. (a) 300 5,888
Federated Department Stores, Inc. 20,400 617,100
622,988
HOME FURNISHINGS - 0.3%
FURNITURE STORES - 0.3%
Ethan Allen Interiors, Inc. 11,700 267,638
HOUSEHOLD PRODUCTS - 0.8%
COSMETICS - 0.8%
Revlon, Inc. Class A 2,000 55,250
Estee Lauder Companies, Inc. 17,000 622,625
677,875
MANUFACTURED PRODUCTS - 0.0%
Windmere Corp. (warrants) (a) 845 -
TOTAL HOUSEHOLD PRODUCTS 677,875
LEISURE DURABLES & TOYS - 2.8%
MOTORCYCLES - 0.9%
Harley Davidson, Inc. 20,300 728,263
SPORTING & ATHLETIC GOODS - 0.5%
Coleman, Inc. (a) 9,000 393,750
SHARES VALUE (NOTE 1)
TOYS & GAMES - 1.4%
Galoob (Lewis) Toys, Inc. (a) 15,000 $ 243,750
Mattel, Inc. 375 12,469
Namco Ltd. 8,000 253,076
Toy Biz, Inc. Class A (a) 31,200 709,800
1,219,095
TOTAL LEISURE DURABLES & TOYS 2,341,108
LODGING & GAMING - 8.8%
HOTELS, MOTELS, & TOURIST COURTS - 7.4%
Circus Circus Enterprises, Inc. 15,000 478,125
Hilton Hotels Corp. 20,000 1,875,000
Host Marriott Corp. (a) 100,000 1,300,000
ITT Corp. 6,400 386,400
Marriott International, Inc. 25,600 1,257,600
Mirage Resorts, Inc. (a) 20,500 950,688
6,247,813
RACING & GAMING - 1.4%
International Speedway Corp. 1,700 493,000
Speedway Motorsports (a) 5,600 242,200
WMS Industries, Inc. (a) 26,900 484,200
1,219,400
TOTAL LODGING & GAMING 7,467,213
PHOTOGRAPHIC EQUIPMENT - 0.0%
Polaroid Corp. 700 30,800
PRINTING - 0.7%
COMMERCIAL PRINTING - 0.7%
Valassis Communications, Inc. (a) 36,000 603,000
PUBLISHING - 3.0%
NEWSPAPERS - 2.3%
News International PLC 150,000 693,702
News Corp. Ltd. sponsored ADR
(Ltd. vtg.) 20,000 400,000
Pulitzer Publishing Co. 16,000 808,000
1,901,702
PERIODICALS - 0.7%
Meredith Corp. 14,600 640,575
TOTAL PUBLISHING 2,542,277
RESTAURANTS - 0.2%
Host Marriott Services Corp. (a) 20,000 132,500
RETAIL & WHOLESALE, MISCELLANEOUS - 3.2%
DURABLE GOODS - WHOLESALE - 1.8%
Alliance Entertainment Corp. (a) 49,500 470,250
Sodak Gaming, Inc. (a) 36,400 982,800
1,453,050
LUMBER & BUILDING MATERIALS - RETAIL - 0.9%
Lowe's Companies, Inc. 25,000 775,000
MAIL ORDER - 0.4%
National Media Corp. (a) 20,000 355,000
MUSIC, TV, & ELECTRONIC STORES - 0.1%
Tandy Corp. 2,200 96,250
TOTAL RETAIL & WHOLESALE, MISCELLANEOUS 2,679,300
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
SERVICES - 1.2%
BUSINESS SERVICES - 0.9%
Sotheby's Holdings, Inc. Class A 52,500 $ 780,938
GENERAL SERVICES - 0.3%
Flextech PLC (a) 35,000 281,922
TOTAL SERVICES 1,062,860
TELEPHONE SERVICES - 1.5%
SBC Communications, Inc. 23,000 1,262,125
TEXTILES & APPAREL - 2.1%
APPAREL - 1.7%
Warnaco Group, Inc. Class A 55,000 1,430,000
FOOTWEAR - 0.4%
NIKE, Inc. Class B 5,000 324,375
TOTAL TEXTILES & APPAREL 1,754,375
TOBACCO - 1.8%
TOBACCO MANUFACTURERS - 1.8%
Philip Morris Companies, Inc. 15,000 1,485,000
TOTAL COMMON STOCKS
(Cost $63,974,875) 73,573,255
CONVERTIBLE PREFERRED STOCKS - 1.8%
CELLULAR - 0.7%
CELLULAR & COMMUNICATION SERVICES - 0.7%
Cellular Communications, Inc.
$0.01 (a) 11,596 585,590
ENTERTAINMENT - 1.1%
MOTION PICTURE PRODUCTION - 1.1%
Time Warner Financing Trust $1.24 28,100 969,450
TOTAL PREFERRED STOCKS
(Cost $1,449,248) 1,555,040
REPURCHASE AGREEMENTS - 11.0%
MATURITY VALUE
AMOUNT (NOTE 1)
Investments in repurchase agreements
(U.S. Treasury obligations) in a joint
trading account at 5.41%, dated
2/29/96 due 3/1/96 $ 9,257,391 9,256,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $74,680,123) $ 84,384,295
LEGEND
1. Non-income producing
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $102,120,608 and $109,208,709, respectively (see Note 3 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $61,874 for the period (see
Note 4 of Notes to Financial Statements).
The maximum loan and the average daily loan balances during the periods for
which loans were outstanding amounted to $6,979,000 and $1,433,455,
respectively. The weighted average interest rate paid was 6.2% (see Note 5
of Notes to Financial Statements).
INCOME TAX INFORMATION
At February 29, 1996, the aggregate cost of investment securities for
income tax purposes was $74,825,957. Net unrealized appreciation aggregated
$9,558,338, of which $11,930,292 related to appreciated investment
securities and $2,371,954 related to depreciated investment securities.
The fund hereby designates approximately $3,446,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 7% of the dividends distributed during the fiscal year qualifies
for the dividends-received deductions for corporate shareholders
(unaudited).
The fund will notify shareholders in January 1997 of the applicable
percentage for use in preparing 1996 income tax returns.
LEISURE PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
FEBRUARY 29, 1996
ASSETS
Investment in securities, at value (including repurchase agreements of $9,256,000) (cost $74,680,123) - See $ 84,384,295
accompanying schedule
Cash 122
Receivable for investments sold 1,228,520
Receivable for fund shares sold 1,383,917
Dividends receivable 25,560
Redemption fees receivable 69
Other receivables 33,965
TOTAL ASSETS 87,056,448
LIABILITIES
Payable for investments purchased $ 1,682,460
Payable for fund shares redeemed 247,866
Accrued management fee 40,732
Other payables and 72,523
accrued expenses
TOTAL LIABILITIES 2,043,581
NET ASSETS $ 85,012,867
Net Assets consist of:
Paid in capital $ 69,776,847
Undistributed net investment income 3,611
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 5,528,157
Net unrealized appreciation (depreciation) on investments 9,704,252
and assets and liabilities in
foreign currencies
NET ASSETS, for 1,841,410 shares outstanding $ 85,012,867
NET ASSET VALUE and redemption price per share ($85,012,867 (divided by) 1,841,410 shares) $46.17
Maximum offering price per share (100/97.00 of $46.17) $47.60
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED FEBRUARY 29, 1996
INVESTMENT INCOME $ 458,018
Dividends
Interest 463,263
TOTAL INCOME 921,281
EXPENSES
Management fee $ 486,216
Transfer agent 712,201
Fees
Redemption fees (40,678
)
Accounting fees and expenses 79,740
Non-interested trustees' compensation 508
Custodian fees and expenses 23,711
Registration fees 17,780
Audit 19,692
Legal 574
Interest 2,733
Miscellaneous 694
Total expenses before reductions 1,303,171
Expense reductions (12,762 1,290,409
)
NET INVESTMENT INCOME (LOSS) (369,128
)
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 14,883,047
Foreign currency transactions 142 14,883,189
Change in net unrealized appreciation (depreciation) on:
Investment securities 3,622,966
Assets and liabilities in 72 3,623,038
foreign currencies
NET GAIN (LOSS) 18,506,227
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 18,137,099
OTHER INFORMATION $ 451,945
Sales charges paid to FDC
Deferred sales charges withheld $ 17,764
by FDC
Exchange fees withheld by FSC $ 27,135
Expense reductions $ 11,148
Directed brokerage arrangements
Custodian interest credits 1,158
Transfer agent interest credits 456
$ 12,762
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
FEBRUARY 29, FEBRUARY 28,
1996 1995
<TABLE>
<CAPTION>
<S> <C> <C>
Operations $ (369,128 $ (380,902
Net investment income (loss) ) )
Net realized gain (loss) 14,883,189 203,901
Change in net unrealized appreciation (depreciation) 3,623,038 (3,201,870
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 18,137,099 (3,378,871
)
Distributions to shareholders from net realized gains (8,732,838 (8,699,446
) )
Share transactions 62,794,252 28,459,652
Net proceeds from sales of shares
Reinvestment of distributions 8,564,535 8,558,337
Cost of shares redeemed (65,359,698 (61,250,156
) )
Paid in capital portion of redemption fees 40,287 46,644
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS 6,039,376 (24,185,523
)
TOTAL INCREASE (DECREASE) IN NET ASSETS 15,443,637 (36,263,840
)
NET ASSETS
Beginning of period 69,569,230 105,833,070
End of period (including under (over) distribution of net investment income of $3,611 and $(68,073), $ 85,012,867 $ 69,569,230
respectively)
OTHER INFORMATION
Shares
Sold 1,338,175 715,555
Issued in reinvestment of distributions 200,267 219,557
Redeemed (1,405,986 (1,562,185
) )
Net increase (decrease) 132,456 (627,073
)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEAR ENDED YEARS ENDED FEBRUARY 28, TEN MONTHS YEAR ENDED
FEBRUARY 29, ENDED APRIL 30,
FEBRUARY 28,
SELECTED PER-SHARE DATA D 1996 1995 1994 1993 1992
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 40.71 $ 45.30 $ 35.77 $ 31.65 $ 26.32
Income from Investment Operations
Net investment income (loss) (.21) (.21) (.29) (.11) (.08)
Net realized and unrealized gain (loss) 10.97 (.48) 12.98 4.21 5.40
Total from investment operations 10.76 (.69) 12.69 4.10 5.32
Less Distributions (5.32) (3.93) (3.26) - -
From net realized gain
Redemption fees added to paid in capital .02 .03 .10 .02 .01
Net asset value, end of period $ 46.17 $ 40.71 $ 45.30 $ 35.77 $ 31.65
TOTAL RETURN B, C 27.61% (1.07)% 37.14% 13.02% 20.25%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 85,013 $ 69,569 $ 105,833 $ 44,824 $ 40,051
Ratio of expenses to average net assets 1.64% 1.64% 1.55% 1.90% 2.21%
A
Ratio of expenses to average net assets after expense reductions 1.63% 1.62% 1.53% 1.90% 2.21%
E E E A
Ratio of net investment income (loss) to average net assets (.46)% (.52)% (.69)% (.39)% (.28)%
A
Portfolio turnover rate 141% 103% 170% 109% 45%
A
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 7 OF NOTES TO FINANCIAL
STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED
ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH
THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE
FUND'S EXPENSES (SEE NOTE 7 OF
NOTES TO FINANCIAL STATEMENTS).
</TABLE>
MULTIMEDIA PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance: total
percentage change in value, the average annual percentage change, or the
growth of a hypothetical $10,000 investment. Each performance figure
includes changes in a fund's share price, plus reinvestment of any
dividends (income) and capital gains (the profits the fund earns when it
sells securities that have grown in value), but does not include certain
fees paid by shareholders upon exchange or redemption. If Fidelity had not
reimbursed certain expenses, the past five year and life of fund total
returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
FEBRUARY 29, 1996 YEAR YEARS FUND
MULTIMEDIA 31.98% 195.15% 386.04%
MULTIMEDIA 28.02% 186.29% 371.46%
(INCL. 3% SALES CHARGE)
S&P 500 34.70% 101.14% 247.69%
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 29, 1996 YEAR YEARS FUND
MULTIMEDIA 31.98% 24.17% 17.75%
MULTIMEDIA 28.02% 23.41% 17.38%
(INCL. 3% SALES CHARGE)
S&P 500 34.70% 14.99% 13.74%
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
19860630 9700.00 10000.00
19860731 9253.80 9488.77
19860831 9777.60 10192.84
19860930 9263.50 9349.89
19861031 9700.00 9889.38
19861130 9777.60 10129.69
19861231 9486.60 9871.39
19870131 10621.50 11201.06
19870228 11911.60 11643.50
19870331 11872.80 11980.00
19870430 11688.50 11873.38
19870531 12231.70 11976.68
19870630 12745.80 12581.50
19870731 13725.50 13219.38
19870831 13715.80 13712.46
19870930 13386.00 13412.16
19871031 10660.30 10523.18
19871130 9923.10 9656.07
19871231 11377.70 10390.90
19880131 11566.11 10828.35
19880229 12340.67 11332.96
19880331 12874.49 10982.77
19880430 13031.50 11104.68
19880531 12811.69 11201.29
19880630 13254.20 11715.43
19880731 13232.54 11670.91
19880831 12734.43 11274.10
19880930 13535.74 11754.37
19881031 13687.34 12081.14
19881130 13579.06 11908.38
19881231 14432.31 12116.78
19890131 16155.73 13003.73
19890228 16122.38 12679.94
19890331 16878.46 12975.38
19890430 18012.59 13648.80
19890531 18879.86 14201.58
19890630 19266.45 14120.63
19890731 20732.13 15395.72
19890831 20709.75 15697.48
19890930 20385.29 15633.12
19891031 19009.12 15270.43
19891130 19121.00 15581.95
19891231 19129.10 15955.91
19900131 16589.03 14885.27
19900228 16170.05 15077.29
19900331 16012.93 15476.84
19900430 15253.52 15089.92
19900531 16706.86 16561.19
19900630 16562.84 16448.57
19900731 15646.32 16395.93
19900831 13616.88 14913.74
19900930 12451.59 14187.44
19901031 11914.77 14126.44
19901130 13145.53 15039.00
19901231 14114.42 15458.59
19910131 14873.82 16132.59
19910228 15973.65 17286.07
19910331 16405.72 17704.39
19910430 16968.73 17746.88
19910531 17060.38 18513.55
19910630 15711.78 17665.63
19910731 16300.98 18488.84
19910831 16811.61 18927.03
19910930 17832.88 18610.95
19911031 18736.30 18860.33
19911130 17453.17 18100.26
19911231 19456.43 20170.93
19920131 19967.06 19795.75
19920229 21079.98 20053.10
19920331 20543.16 19662.06
19920430 20857.39 20240.13
19920531 21171.63 20339.30
19920630 21250.19 20036.25
19920731 21302.56 20855.73
19920831 21014.51 20428.19
19920930 20883.58 20669.24
19921031 21224.00 20741.58
19921130 22769.00 21448.87
19921231 23639.18 21712.69
19930131 24116.74 21895.08
19930228 24222.86 22192.85
19930331 25177.98 22661.12
19930430 24526.88 22112.72
19930531 26198.86 22705.34
19930630 27021.36 22771.19
19930731 28032.64 22680.10
19930831 30419.26 23539.68
19930930 31147.38 23358.43
19931031 33480.06 23841.94
19931130 31295.13 23615.45
19931231 32626.91 23901.19
19940131 33092.22 24713.83
19940228 32667.96 24044.09
19940331 30669.84 22995.77
19940430 30684.72 23290.11
19940531 31813.18 23672.07
19940630 31102.09 23092.10
19940731 31859.55 23849.53
19940831 33776.38 24827.36
19940930 33544.50 24219.09
19941031 34301.96 24764.01
19941130 33219.88 23862.11
19941231 33933.14 24215.98
19950131 34316.74 24843.91
19950228 35723.30 25812.07
19950331 37992.97 26573.79
19950430 38872.06 27356.38
19950531 39079.85 28449.82
19950630 40582.31 29110.71
19950731 42979.84 30076.02
19950831 44338.45 30151.51
19950930 45601.15 31423.90
19951031 44258.53 31311.72
19951130 45968.77 32686.31
19951231 45359.40 33315.84
19960131 45636.93 34449.91
19960229 47146.02 34769.27
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 29, 1996, your investment would have grown to $47,146 - a 371.46%
increase. That compares to $10,000 invested in the S&P 500, which would
have grown to $34,769 over the same period - a 247.69% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 29, 1996
% OF FUND'S
INVESTMENTS
Meredith Corp. 7.3
Scientific-Atlanta, Inc. 6.1
People's Choice TV Corp. 4.7
California Amplifier, Inc. 4.6
Times Mirror Co. Class A 4.3
ADVO-Systems, Inc. 3.6
Belo (A.H.) Corp. Class A 3.2
TCI Group Class A 3.2
NYNEX Corp. 3.1
DSC Communications Corp. 2.7
TOP INDUSTRIES AS OF FEBRUARY 29, 1996
Newspaper 21.2%
Cable TV Operators 14.0%
TV & Radio Communication
Equipment 12.2%
Periodicals 9.6%
Telephone Services 7.9%
All Others 35.1% *
Row: 1, Col: 1, Value: 35.1
Row: 1, Col: 2, Value: 7.9
Row: 1, Col: 3, Value: 9.6
Row: 1, Col: 4, Value: 12.2
Row: 1, Col: 5, Value: 14.0
Row: 1, Col: 6, Value: 21.1
* INCLUDES SHORT-TERM INVESTMENTS
MULTIMEDIA PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
John Porter,
Portfolio Manager of
Fidelity Select Multimedia Portfolio
Note to shareholders: On February 1, 1996, John Porter replaced Stephen
DuFour as portfolio manager of the fund.
Q. HOW DID THE FUND PERFORM, JOHN?
A. For the 12-month period ended February 29, 1996, the fund returned
31.98%. For the same period, the S&P 500 Index returned 34.70%.
Q. WHAT FACTORS CONTRIBUTED TO THE FUND'S PERFORMANCE?
A. Regional Bell phone companies were an important part of the portfolio
during the period. Over the past year and a half, these companies have
performed well in an environment of deregulation. Additionally, the fund
owned some selected publishing and cable equipment stocks that appreciated
significantly in value.
Q. ONE WOULD IMAGINE THAT THE PASSAGE OF THE NEW TELECOMMUNICATIONS LAW WAS
A MONUMENTAL EVENT FOR THE MULTIMEDIA INDUSTRY . . .
A. Clearly the new telecommunications law will have dramatic effects for
some time to come. The telecom law gave the long-distance phone service,
local phone service and broadcast and cable industries the regulatory
freedom to enter markets where they were previously excluded. For example,
long-distance carriers such as AT&T may compete for local services against
the Baby Bells and vice versa. The telecom law also allows cable TV
providers to expand their existing businesses as well as explore new
communications areas by reducing regulatory barriers. Cable equipment
companies such as Scientific-Atlanta, therefore, will be essential in
providing the equipment necessary to expand the cable providers'
businesses.
Q. THE STRONG PERFORMANCE OF RADIO STOCKS HAS BEEN WELL DOCUMENTED IN THE
FINANCIAL MEDIA. WHY DOESN'T THE FUND OWN SOME OF THE MAJOR RADIO STOCKS?
A. Radio stocks have performed well, but they have been expensive for a
while. Because it was expected for some time that the telecom law would
allow radio companies to expand the number of stations they may hold in one
market, investors have bid up the prices of many radio company stocks. In
addition, radio companies are facing increasing competition from other
forms of media for advertising revenues.
Q. HAS THE SAME SITUATION DEVELOPED WITH BROADCASTING COMPANIES?
A. Not to the same degree. In fact, that's what makes some of them
attractive right now. Let me explain. The telecom law allows companies to
own TV stations that serve 35% of the population, up from 25%. What this
means is freedom for broadcasting companies to own more stations. Unlike
radio, however, this hasn't been priced into the stocks of broadcast
companies. In my opinion, there is the potential to benefit from any merger
and acquisition activity involving broadcast companies.
Q. WHAT DOES ALL THIS MEAN FOR SOME OF THE COMPANIES THE FUND OWNS?
A. The new environment created by the telecom law creates new
opportunities. As a portfolio manager, it is up to me to identify those
opportunities. For example, Wall Street didn't seem to recognize the value
of TV stations to be either an asset a company could spin off or a business
a media company could grow. That's why the fund owned companies such as
Meredith, Belo and E.W. Scripps - all companies that own TV stations in
addition to their other core businesses.
Q. WERE THERE ANY DISAPPOINTMENTS?
A. Newspaper stocks continued to underperform as newsprint costs soared and
advertising revenues showed only modest growth. The combination of these
factors served to hold earnings down relative to the earnings of companies
in other markets. That said, the price of newsprint appears to have leveled
off and the combination of the Olympics in Atlanta along with a
presidential election bodes well for advertising revenue growth.
Q. WHAT'S YOUR OUTLOOK?
A. I'm optimistic about the potential in the multimedia industries that has
been unlocked by the passage of the telecom law. Of course, not every
company is going to be a winner in what is sure to be a more competitive
environment. For example, long distance phone companies are going to have
to learn how to compete with the Baby Bells and vice versa. Going forward,
however, I will seek to identify the companies I believe are most likely to
thrive in this new era.
FUND FACTS
START DATE: June 30, 1986
TRADING SYMBOL: FBMPX
SIZE: as of February 29, 1996, more than
$94 million
MANAGER: John Porter, since February 1996;
joined Fidelity in 1995
(checkmark)
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
MULTIMEDIA PORTFOLIO
INVESTMENTS FEBRUARY 29, 1996
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 95.1%
SHARES VALUE (NOTE 1)
ADVERTISING - 5.1%
ADVERTISING - 0.2%
Cordiant PLC sponsored ADR 51,000 $ 255,000
ADVERTISING AGENCIES - 4.9%
ADVO-Systems, Inc. 160,000 3,500,000
Interpublic Group of Companies, Inc. 30,000 1,263,728
4,763,728
TOTAL ADVERTISING 5,018,728
BEVERAGES - 0.4%
DISTILLED & BLENDED LIQUOR - 0.4%
Seagram Co. Ltd. 11,900 404,887
BROADCASTING - 17.0%
CABLE TV OPERATORS - 14.0%
American Telecasting, Inc. (a) 1,900 31,113
CAI Wireless Systems, Inc. (a) 204,400 1,814,050
Gaylord Entertainment Co. Class A 8,000 214,000
Heartland Wireless
Communications, Inc. 5,004 126,351
People's Choice TV Corp. (a) 242,912 4,584,964
TCI Group Class A 150,000 3,150,000
Tele-Communications Liberty Media
Group, Series A (a) 13,750 379,844
Time Warner, Inc. 30,000 1,282,500
Videotron Holdings PLC sponsored
ADR (a) 126,000 2,126,250
13,709,072
RADIO BROADCASTING - 1.1%
Grupo Radio Centro SA de CV
sponsored ADR 137,200 1,131,900
TELEVISION BROADCASTING - 1.9%
Central European Media Class C (a) 25,000 559,377
Grupo Televisa SA de CV sponsored
ADR 53,100 1,300,950
Lambert Communications, Inc. (a) 150,000 -
1,860,327
TOTAL BROADCASTING 16,701,299
CELLULAR - 1.8%
CELLULAR & COMMUNICATION SERVICES - 1.8%
AirTouch Communications, Inc. (a) 28,400 880,400
Mobile Telecommunications
Technologies, Inc. 40,000 575,000
Vodafone Group PLC sponsored ADR 10,300 364,363
1,819,763
COMMUNICATIONS EQUIPMENT - 5.5%
TELEPHONE EQUIPMENT - 3.5%
DSC Communications Corp. (a) 85,800 2,616,900
Westell Technologies, Inc. Class A (a) 21,900 854,100
3,471,000
TELEPHONE INTERCONNECT SYSTEMS - 2.0%
General Instrument Corp. (a) 70,600 1,923,850
TOTAL COMMUNICATIONS EQUIPMENT 5,394,850
COMPUTER SERVICES & SOFTWARE - 6.6%
CAD/CAM/CAE - 1.1%
CSG Systems International, Inc. 50,000 1,100,000
SHARES VALUE (NOTE 1)
COMPUTER SERVICES - 0.5%
Visioneer, Inc. (a) 26,000 $ 442,000
PREPACKAGED COMPUTER SOFTWARE - 5.0%
Broderbund Software, Inc. (a) 20,000 905,000
Hogan Systems, Inc. (a) 50,000 612,500
Maxis, Inc. (a) 50,000 1,450,000
Oracle Systems Corp. (a) 11,900 618,800
Sterling Software, Inc. 20,000 1,332,500
4,918,800
TOTAL COMPUTER SERVICES & SOFTWARE 6,460,800
COMPUTERS & OFFICE EQUIPMENT - 5.5%
COMPUTERS & OFFICE EQUIPMENT - 2.3%
International Business Machines Corp. 18,100 2,219,513
GRAPHICS WORKSTATIONS - 1.1%
Silicon Graphics, Inc. (a) 43,800 1,095,000
MINI & MICRO COMPUTERS - 0.3%
Compaq Computer Corp. (a) 5,200 263,250
OFFICE AUTOMATION - 1.8%
Bell & Howell Co. 60,000 1,792,500
TOTAL COMPUTERS & OFFICE EQUIPMENT 5,370,263
CONSUMER ELECTRONICS - 0.5%
RADIOS, TELEVISIONS, STEREOS - 0.5%
Sony Corp. ADR 9,300 544,050
ELECTRICAL EQUIPMENT - 12.2%
TV & RADIO COMMUNICATION EQUIPMENT - 12.2%
California Amplifier, Inc. (a) 96,500 4,505,344
Leitch Technology (a) 46,400 1,439,048
Scientific-Atlanta, Inc. 356,900 5,978,075
Spectrain Corp. (a) 1,000 24,750
11,947,217
ENTERTAINMENT - 0.3%
MOTION PICTURE PRODUCTION - 0.3%
Alliance Communications Corp.:
Class A (vtg.) (a) 12,500 142,527
Class B (non-vtg) 12,500 136,826
279,353
LODGING & GAMING - 0.1%
RACING & GAMING - 0.1%
WMS Industries, Inc. (a) 6,600 118,800
PUBLISHING - 30.5%
NEWSPAPERS - 20.9%
Belo (A.H.) Corp. Class A 90,000 3,150,000
Central Newspapers, Inc. Class A 60,000 2,197,500
Hollinger International, Inc. Class A 229,900 2,413,950
Knight-Ridder, Inc. 30,000 2,077,500
New York Times Co. (The) Class A 30,000 825,000
News Corp. sponsored ADR (ltd. vtg.) 86,700 1,734,000
Pulitzer Publishing Co. 43,850 2,214,425
Scripps (E.W.) Co. Class A 34,700 1,457,400
Times Mirror Co. Class A 122,900 4,178,600
Washington Post Co. Class B 800 230,400
20,478,775
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
PUBLISHING - CONTINUED
PERIODICALS - 9.6%
Big Flower Press Holdings, Inc. (a) 45,000 $ 849,375
K-III Communications Corp. (a) 80,000 930,000
Marvel Entertainment Group, Inc. (a) 41,700 479,550
Meredith Corp. 163,200 7,160,400
9,419,325
TOTAL PUBLISHING 29,898,100
SERVICES - 1.7%
GENERAL SERVICES - 1.7%
Flextech PLC (a) 211,100 1,700,390
TELEPHONE SERVICES - 7.9%
AT&T Corp. 22,300 1,418,838
Frontier Corp. 14,000 420,000
NYNEX Corp. 60,000 3,090,000
SBC Communications, Inc. 17,400 954,845
Telebras sponsored ADR 35,000 1,837,500
7,721,183
TOTAL COMMON STOCKS
(Cost $84,231,615) 93,379,683
NONCONVERTIBLE PREFERRED STOCKS - 0.3%
PUBLISHING - 0.3%
NEWSPAPERS - 0.3%
News Corp. Ltd. (ltd. vtg.)
(Cost $177,478) 50,669 255,744
REPURCHASE AGREEMENTS - 4.6%
MATURITY VALUE
AMOUNT (NOTE 1)
Investments in repurchase agreements
(U.S. Treasury obligations) in a joint
trading account at 5.41%, dated
2/29/96 due 3/1/96 $ 4,518,679 4,518,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $88,927,093) $ 98,153,427
LEGEND
1. Non-income producing
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $218,280,519 and $179,395,447, respectively (see Note 3 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $76,336 for the period (see
Note 4 of Notes to Financial Statements).
The maximum loan and the average daily loan balances during the periods for
which loans were outstanding amounted to $7,608,000 and $1,754,000,
respectively. The weighted average interest rate paid was 6.5% (see Note 5
of Notes to Financial Statements).
Distribution of investments by country of issue, as a percentage of total
value of investment in securities, is as follows:
United States 85.8%
United Kingdom 4.5
Mexico 2.5
Canada 2.2
Australia 2.0
Brazil 1.9
Others (individually less than 1%) 1.1
TOTAL 100.0%
INCOME TAX INFORMATION
At February 29, 1996, the aggregate cost of investment securities for
income tax purposes was $89,632,528. Net unrealized appreciation aggregated
$8,520,899 of which $12,699,332 related to appreciated investment
securities and $4,178,433 related to depreciated investment securities.
The fund hereby designates approximately $5,134,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 13% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate shareholders
(unaudited).
The fund will notify shareholders in January 1997 of the applicable
percentage for use in preparing 1996 income tax returns.
MULTIMEDIA PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
FEBRUARY 29, 1996
ASSETS
Investment in securities, at value (including repurchase agreements of $4,518,000) (cost $88,927,093) - See $ 98,153,427
accompanying schedule
Cash 828
Receivable for investments sold 2,064,190
Receivable for fund shares sold 584,105
Dividends receivable 48,774
Redemption fees receivable 68
Other receivables 231
TOTAL ASSETS 100,851,623
LIABILITIES
Payable for investments purchased $ 5,437,950
Payable for fund shares redeemed 319,193
Accrued management fee 47,376
Other payables and accrued expenses 77,383
TOTAL LIABILITIES 5,881,902
NET ASSETS $ 94,969,721
Net Assets consist of:
Paid in capital $ 77,671,343
Undistributed net investment income 16,907
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 8,055,137
Net unrealized appreciation (depreciation) on investments 9,226,334
NET ASSETS, for 3,493,792 shares outstanding $ 94,969,721
NET ASSET VALUE and redemption price per share ($94,969,721 (divided by) 3,493,792 shares) $27.18
Maximum offering price per share (100/97.00 of $27.18) $28.02
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED FEBRUARY 29, 1996
INVESTMENT INCOME $ 711,561
Dividends
Interest 846,589
TOTAL INCOME 1,558,150
EXPENSES
Management fee $ 587,354
Transfer agent 845,342
Fees
Redemption fees (105,634
)
Accounting fees and expenses 96,559
Non-interested trustees' compensation 364
Custodian fees and expenses 20,431
Registration fees 29,946
Audit 17,496
Legal 374
Interest 1,893
Miscellaneous 769
Total expenses before reductions 1,494,894
Expense reductions (16,245 1,478,649
)
NET INVESTMENT INCOME 79,501
REALIZED AND UNREALIZED GAIN (LOSS) 15,081,916
Net realized gain (loss) on
investment securities
Change in net unrealized appreciation (depreciation) 7,021,515
on investment securities
NET GAIN (LOSS) 22,103,431
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 22,182,932
OTHER INFORMATION $ 923,712
Sales charges paid to FDC
Deferred sales charges withheld $ 3,278
by FDC
Exchange fees withheld by FSC $ 85,584
Expense reductions $ 15,095
Directed brokerage arrangements
Custodian interest credits 343
Transfer agent interest credits 807
$ 16,245
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
FEBRUARY 29, FEBRUARY 28,
1996 1995
<TABLE>
<CAPTION>
<S> <C> <C>
Operations $ 79,501 $ (21,240
Net investment income (loss) )
Net realized gain (loss) 15,081,916 713,620
Change in net unrealized appreciation (depreciation) 7,021,515 (46,862
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 22,182,932 645,518
Distributions to shareholders (62,595 -
From net investment income )
From net realized gain (6,860,366 (5,781,614
) )
TOTAL DISTRIBUTIONS (6,922,961 (5,781,614
) )
Share transactions 226,094,070 35,047,458
Net proceeds from sales of shares
Reinvestment of distributions 6,804,045 5,728,603
Cost of shares redeemed (191,430,375 (46,707,859
) )
Paid in capital portion of redemption fees 84,905 48,397
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS 41,552,645 (5,883,401
)
TOTAL INCREASE (DECREASE) IN NET ASSETS 56,812,616 (11,019,497
)
NET ASSETS
Beginning of period 38,157,105 49,176,602
End of period (including undistributed net investment income of $16,907 and $0, respectively) $ 94,969,721 $ 38,157,105
OTHER INFORMATION
Shares
Sold 8,957,896 1,606,026
Issued in reinvestment of distributions 262,403 293,006
Redeemed (7,433,399 (2,252,403
) )
Net increase (decrease) 1,786,900 (353,371
)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEAR ENDED YEARS ENDED FEBRUARY 28, TEN MONTHS YEAR ENDED
FEBRUARY 29, ENDED APRIL 30,
FEBRUARY 28,
SELECTED PER-SHARE DATA D 1996 1995 1994 1993 1992
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 22.35 $ 23.87 $ 18.26 $ 15.93 $ 12.96
Income from Investment Operations
Net investment income (loss) .02 (.01) (.10) (.07) (.17)
Net realized and unrealized gain (loss) 7.00 1.67 6.28 2.61 3.08
Total from investment operations 7.02 1.66 6.18 2.54 2.91
Less Distributions (.02) - - - -
From net investment income
From net realized gain (2.19) (3.21) (.65) (.23) -
Total distributions (2.21) (3.21) (.65) (.23) -
Redemption fees added to paid in capital .02 .03 .08 .02 .06
Net asset value, end of period $ 27.18 $ 22.35 $ 23.87 $ 18.26 $ 15.93
TOTAL RETURN B, C 31.98% 9.35% 34.86% 16.14% 22.92%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 94,970 $ 38,157 $ 49,177 $ 16,647 $ 8,393
Ratio of expenses to average net assets 1.56% 2.05% 1.66% 2.49% A 2.49% F
, F
Ratio of expenses to average net assets after expense reductions 1.54% 2.03% 1.63% 2.49% A 2.49%
E E E
Ratio of net investment income (loss) to average net assets .08% (.07)% (.42)% (.52)% (1.22)%
A
Portfolio turnover rate 223% 107% 340% 70% A 111%
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 7 OF NOTES TO
FINANCIAL STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED
ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH
THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S
EXPENSES (SEE NOTE 7 OF NOTES TO
FINANCIAL STATEMENTS).
F DURING THE PERIOD, FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S
EXPENSES, OR EXPENSES WERE LIMITED IN ACCORDANCE WITH A STATE EXPENSE
LIMITATION.
WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD HAVE BEEN
HIGHER.
</TABLE>
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 securities that have grown in value), but does not include certain
fees paid by shareholders upon exchange or redemption. If Fidelity had not
reimbursed certain expenses, the past 10 year total returns would have been
lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 29, 1996 YEAR YEARS YEARS
RETAILING 16.56% 114.55% 330.38%
RETAILING 13.07%
(INCL. 3% SALES CHARGE) 108.11% 317.47%
S&P 500 34.70% 101.14% 286.76%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one, five, or 10 years. You can compare
these figures to the performance of the S&P 500 - a common proxy for the
U.S. stock market. This benchmark includes reinvested dividends and capital
gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 29, 1996 YEAR YEARS YEARS
RETAILING 16.56% 16.49% 15.71%
RETAILING 13.07% 15.79% 15.36%
(INCL. 3% SALES CHARGE)
S&P 500 34.70% 14.99% 14.47%
AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and
show you what would have happened if the fund had performed at a constant
rate each year.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of growth in the long run
and volatility in the short run. Unlike the broader
market, however, some sectors may not have
a history of growth in the long run. And, as
with all stock funds, the share price and
return of a fund that invests in a sector will
vary. That means if you sell your shares
during a sector downturn, you might lose
money. But if you can identify a sector that is
about to experience rapid growth you may
have the potential for above-average gains.
(checkmark)
$10,000 OVER 10 YEARS
19860228 9700.00 10000.00
19860331 10571.81 10558.00
19860430 10764.52 10438.69
19860531 11985.05 10994.03
19860630 12278.71 11179.83
19860731 10663.58 10554.88
19860831 10663.58 11338.05
19860930 9883.54 10400.39
19861031 10755.35 11000.50
19861130 11049.01 11267.81
19861231 10268.97 10980.48
19870131 11122.42 12459.55
19870228 12416.37 12951.70
19870331 12792.62 13326.01
19870430 12398.01 13207.41
19870531 12618.26 13322.31
19870630 13306.53 13995.09
19870731 13976.44 14704.64
19870831 14288.46 15253.12
19870930 13269.82 14919.08
19871031 9305.39 11705.51
19871130 8663.01 10740.97
19871231 9513.03 11558.36
19880131 10113.96 12044.97
19880229 11285.26 12606.27
19880331 11427.86 12216.73
19880430 11784.34 12352.34
19880531 11448.23 12459.80
19880630 12456.57 13031.71
19880731 12344.53 12982.19
19880831 12313.97 12540.79
19880930 13037.13 13075.03
19881031 13312.13 13438.52
19881130 13128.80 13246.35
19881231 13195.06 13478.16
19890131 13847.57 14464.76
19890228 13661.14 14104.59
19890331 14313.64 14433.22
19890430 15121.50 15182.31
19890531 16167.58 15797.19
19890630 15879.75 15707.15
19890731 17160.38 17125.50
19890831 17992.79 17461.16
19890930 17950.10 17389.57
19891031 17085.68 16986.13
19891130 17192.39 17332.65
19891231 17091.69 17748.63
19900131 15756.79 16557.70
19900228 16305.72 16771.29
19900331 17640.62 17215.73
19900430 17391.11 16785.34
19900531 19711.59 18421.91
19900630 19462.07 18296.64
19900731 18663.63 18238.09
19900831 15981.35 16589.37
19900930 14197.33 15781.47
19901031 13536.12 15713.61
19901130 15382.52 16728.71
19901231 16231.84 17195.44
19910131 17807.51 17945.16
19910228 19458.21 19228.24
19910331 21484.06 19693.56
19910430 21784.19 19740.82
19910531 23597.45 20593.63
19910630 22847.13 19650.44
19910731 24310.25 20566.15
19910831 25598.29 21053.57
19910930 25323.18 20701.97
19911031 24847.98 20979.38
19911130 24372.78 20133.91
19911231 27291.12 22437.23
19920131 28804.44 22019.90
19920229 30189.52 22306.16
19920331 29586.75 21871.19
19920430 28381.23 22514.20
19920531 28971.17 22624.52
19920630 27618.82 22287.41
19920731 28847.51 23198.97
19920831 28193.10 22723.39
19920930 29034.48 22991.53
19921031 31024.43 23072.00
19921130 33374.97 23858.75
19921231 33315.98 24152.21
19930131 33545.84 24355.09
19930228 32274.86 24686.32
19930331 34762.74 25207.20
19930430 32767.44 24597.19
19930531 34582.46 25256.39
19930630 33751.15 25329.64
19930731 33917.41 25228.32
19930831 35469.19 26184.47
19930930 36549.89 25982.85
19931031 37117.96 26520.70
19931130 37478.19 26268.75
19931231 37657.57 26586.60
19940131 35979.91 27490.55
19940228 37313.05 26745.55
19940331 36534.14 25579.45
19940430 37642.59 25906.86
19940531 35785.18 26331.74
19940630 35485.60 25686.61
19940731 36084.76 26529.13
19940831 38376.57 27616.82
19940930 37627.61 26940.21
19941031 37792.38 27546.37
19941130 36474.22 26543.13
19941231 35770.20 26936.76
19950131 35485.60 27635.23
19950228 35815.14 28712.18
19950331 36219.57 29559.47
19950430 34811.53 30430.00
19950531 35425.68 31646.29
19950630 37687.53 32381.43
19950731 39994.32 33455.20
19950831 39440.09 33539.17
19950930 40623.44 34954.52
19951031 38810.97 34829.74
19951130 40758.25 36358.76
19951231 40054.24 37059.03
19960131 38885.86 38320.52
19960229 41746.88 38675.75
Let's say you invested $10,000 in Fidelity Select Retailing Portfolio on
February 28, 1986, and paid a 3% sales charge. By February 29, 1996, your
investment would have grown to $41,747 - a 317.47% increase. That compares
to $10,000 invested in the S&P 500, which would have grown to $38,676 over
the same period - a 286.76% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 29, 1996
% OF FUND'S
INVESTMENTS
Sears, Roebuck & Co. 8.2
Home Depot, Inc. (The) 4.4
Federated Department Stores, Inc. 4.0
NIKE, Inc. Class B 3.9
Lowe's Companies, Inc. 3.8
Tandy Corp. 3.5
Strawbridge & Clothier Class A 3.4
McDonald's Corp. 3.0
Carson Pirie Scott & Co. 2.7
Talbots, Inc. 2.6
TOP INDUSTRIES AS OF FEBRUARY 29, 1996
Department Stores 20.0%
General Apparel Stores 6.9%
Apparel 5.7%
Footwear 5.1%
Music, TV & Electronic
Stores 4.5%
All Others 57.8% *
Row: 1, Col: 1, Value: 57.8
Row: 1, Col: 2, Value: 4.5
Row: 1, Col: 3, Value: 5.1
Row: 1, Col: 4, Value: 5.7
Row: 1, Col: 5, Value: 6.9
Row: 1, Col: 6, Value: 20.0
* INCLUDES SHORT-TERM INVESTMENTS
RETAILING PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Erin Sullivan,
Portfolio Manager of
Fidelity Select Retailing Portfollio
Q. HOW HAS THE FUND BEEN PERFORMING, ERIN?
A. Although the retailing sector trailed the market by a significant
margin, the fund has done pretty well over the past 12 months. For the year
ended February 29, 1996, the fund showed a 16.56% gain. The S&P 500 Index
returned 34.70% for the same period.
Q. WHAT WAS AT THE ROOT OF THE SECTOR'S PROBLEMS?
A. Several factors. The retail industry continues to be plagued by a
significant over-supply of stores, which makes it difficult for many
retailers to post strong results. Compounding those problems was the fact
that many retailers went into the holiday season with too much inventory,
which forced them to begin discounting earlier than normal. When the
holiday season produced weak sales, retail stocks languished. In February,
however, annual comparable store sales numbers were positive, partly
because the previous year was so weak. During the late part of the period,
some investors looking for value began to favor retail stocks.
Q. AT THE END OF THE PERIOD, 15.3% OF THE FUND'S ASSETS WAS IN CASH AND
SHORT-TERM INVESTMENTS. DOES THAT SIGNAL THAT YOU BECAME MORE DEFENSIVE IN
LIGHT OF THE NEGATIVE ENVIRONMENT FOR RETAILERS?
A. Not at all. Rather, it was a reflection of a lot of money coming very
quickly into the fund. In the last weeks of February, when investors became
more enthusiastic about the retail sector in general, the fund attracted a
lot of new shareholder funds. However, as a matter of policy, my goal is to
keep the fund fully invested, which to me means keeping its cash level low
under normal conditions. So as I find opportunities, I'll most likely
selectively put this cash to work in the market.
Q. WHICH COMPANIES WERE THE STRONGEST PERFORMERS THROUGHOUT THE YEAR?
A. The fund's department store holdings did quite well during the year, in
large part because they became more efficient operators by effectively
managing costs. Sears, Roebuck & Co., one of the fund's largest holdings at
the end of the period, has benefited significantly under the leadership of
CEO Arthur Martinez, who joined the company in 1992. Not only has the
company managed to reduce costs, it also has grown revenues by focusing on
its apparel and other "soft" consumer goods. Federated Department Stores
Inc., which acquired Macy's in 1994, enjoyed the benefits of its
consolidation of the two operations, while Carson Pirie Scott & Co., which
is a strong regional player, got a boost from remodeling its stores.
Strawbridge & Clothier, another regional retailer which I purchased in the
last half of the period, benefited from rumors that it was a potential
takeover candidate.
Q. GIVEN THE RATHER DISMAL PICTURE FOR MOST OF THE YEAR, WHAT OTHER
STRATEGIES WORKED?
A. The fund's investments in "niche" companies - those concentrating on one
specialized line or product that dominates or leads their industry - has
been a plus. Good examples of niche players that did well during the period
were Gymboree, a mall-based retailer of children's clothing; Talbots, the
women's specialty apparel company; and Sunglass Hut, a mall-based retailer
of sunglasses that has expanded its franchises.
Q. WHAT STOCKS DIDN'T WORK OUT AS WELL AS YOU HAD HOPED?
A. Lowe's Companies, a home construction and improvement store, fell during
the year and was disappointing. Slow activity in the housing market and
disappointing sales and earnings caused Lowe's stock to fare poorly during
the period. But I took advantage of the weakness in this sector to add Home
Depot at a fairly attractive price.
Q. WHAT'S YOUR OUTLOOK FOR THE RETAIL ENVIRONMENT OVER THE NEXT SIX MONTHS
OR SO?
A. I don't see any dramatic changes. I believe that excess capacity will
continue to make it difficult for retailers, and I think apparel spending
will remain sluggish. As a result, it's likely that we'll see some
retailers shut down operations or close stores. On a positive note,
retailers in general are being managed more conservatively. This should
limit markup exposure, which in turn could hold their gross margins steady.
Against that backdrop, I plan to continue to focus on stocks whose
fundamentals and market positioning look the strongest, and identify
opportunities among larger companies that have the financial resources to
close stores if they need to, or to make acquisitions. And as I already
mentioned, I'll focus on investing the fund's cash in situations I find
attractive.
FUND FACTS
START DATE: December 16, 1985
TRADING SYMBOL: FSRPX
SIZE: as of February 29, 1996, more than
$44 million
MANAGER: Erin Sullivan, since February 1995;
equity analyst, medical technology and
hospital supply industries, 1993-1995;
analyst, initial public offerings 1991-1992;
joined Fidelity in 1991
(checkmark)
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
RETAILING PORTFOLIO
INVESTMENTS FEBRUARY 29, 1996
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 84.3%
SHARES VALUE (NOTE 1)
APPAREL STORES - 11.8%
CHILDREN'S & INFANT'S WEAR STORES - 1.7%
Baby Superstore, Inc. 20,000 $ 842,500
GENERAL APPAREL STORES - 6.9%
Gymboree Corp. (a) 43,800 1,138,800
Men's Wearhouse, Inc. (The) 20,000 545,000
Ross Stores, Inc. 49,300 1,207,850
TJX Companies, Inc. 23,400 520,650
3,412,300
WOMEN'S CLOTHING STORES - 3.2%
Cache, Inc. (a) 49,100 141,161
Mothers Work 10,400 175,500
Talbots, Inc. 42,400 1,282,600
1,599,261
TOTAL APPAREL STORES 5,854,061
BROADCASTING - 0.0%
TELEVISION BROADCASTING - 0.0%
Home Shopping Network, Inc. 900 9,450
COMPUTER SERVICES & SOFTWARE - 2.4%
COMPUTER & SOFTWARE STORES - 1.8%
CompUSA, Inc. (a) 21,900 876,000
ELECTRONIC INFORMATION RETRIEVAL - 0.6%
CUC International, Inc. 10,000 323,561
TOTAL COMPUTER SERVICES & SOFTWARE 1,199,561
DRUG STORES - 1.7%
General Nutrition Companies, Inc. (a) 10,000 226,250
Revco (D.S.), Inc. (a) 22,900 635,475
861,725
GENERAL MERCHANDISE STORES - 22.1%
DEPARTMENT STORES - 20.0%
Carson Pirie Scott & Co. (a) 68,172 1,337,876
Federated Department Stores, Inc. (a) 66,300 2,005,575
Mercantile Stores Co., Inc. 10,000 523,750
Neiman-Marcus Group, Inc. 5,000 99,025
Proffitts, Inc. (a) 8,052 211,365
Sears, Roebuck & Co. 90,200 4,092,825
Stein Mart, Inc. 200 2,450
Strawbridge & Clothier Class A 64,200 1,701,300
9,974,166
GENERAL MERCHANDISE STORES - 0.4%
Wal-Mart Stores, Inc. 10,000 212,500
VARIETY STORES - 1.7%
Consolidated Stores Corp. (a) 31,500 819,000
TOTAL GENERAL MERCHANDISE STORES 11,005,666
GROCERY STORES - 2.4%
GROCERIES & RELATED PRODUCTS - WHOLESALE - 0.3%
Provigo, Inc. (a) 30,000 166,928
GROCERY - RETAIL - 2.1%
Albertson's, Inc. 10,000 370,000
Safeway, Inc. (a) 16,400 489,950
Stop & Shop Companies, Inc. (a) 3,000 69,000
Vons Companies, Inc. (a) 3,700 106,375
1,035,325
TOTAL GROCERY STORES 1,202,253
SHARES VALUE (NOTE 1)
HOUSEHOLD PRODUCTS - 0.3%
COSMETICS - 0.3%
Estee Lauder Companies, Inc. 2,000 $ 73,250
Revlon, Inc. Class A 2,000 55,250
128,500
LEASING & RENTAL - 2.1%
VIDEO TAPE RENTAL - 2.1%
Hollywood Entertainment Corp. (a) 61,300 559,363
Movie Gallery, Inc. (a) 20,100 497,475
1,056,838
LEISURE DURABLES & TOYS - 0.0%
BOAT DEALERS - RETAIL - 0.0%
West Marine, Inc. (a) 100 4,375
MEDICAL EQUIPMENT & SUPPLIES - 2.4%
OPHTHALMIC GOODS - 2.4%
Oakley, Inc. 35,000 1,203,125
RESTAURANTS - 4.3%
Apple South, Inc. 20,000 440,000
Brinker International, Inc. (a) 300 4,088
McDonald's Corp. 30,000 1,500,000
Starbucks Corp. (a) 10,000 176,250
2,120,338
RETAIL & WHOLESALE, MISCELLANEOUS - 19.8%
BUILDING MATERIALS - RETAIL - 4.4%
Home Depot, Inc. (The) 50,400 2,179,800
JEWELRY STORES - 1.6%
Friedmans, Inc. Class A (a) 29,100 487,425
Zale Corp. (a) 20,000 302,500
789,925
LUMBER & BUILDING MATERIALS - RETAIL - 3.7%
Lowe's Companies, Inc. 60,300 1,869,300
MAIL ORDER - 0.9%
Micro Warehouse, Inc. (a) 10,000 475,000
MUSIC, TV, & ELECTRONIC STORES - 4.5%
InterTan, Inc. (a) 34,500 172,500
Rex Stores Corp. (a) 24,600 316,725
Sound Advice, Inc. (warrants) (a) 50 -
Tandy Corp. 40,000 1,750,000
2,239,225
RETAIL STORES - 2.1%
Gadzooks, Inc. 38,000 1,035,500
RETAIL, GENERAL - 1.1%
Sunglass Hut International, Inc. (a) 20,000 555,000
SEWING STORES - 1.5%
Fabri-Centers of America, Inc. (a):
Class A 35,000 428,750
Class B (non-vtg) 25,000 296,875
725,625
TOTAL RETAIL & WHOLESALE, MISCELLANEOUS 9,869,375
SERVICES - 0.3%
GENERAL SERVICES - 0.3%
Regis Corp. 5,400 152,550
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
TEXTILES & APPAREL - 14.7%
APPAREL - 5.7%
Fila Holding Spa sponsored ADR . 19,600 $ 1,073,100
Liz Claiborne, Inc. 30,000 941,250
Warnaco Group, Inc. Class A 31,800 826,800
2,841,150
FOOTWEAR - 5.1%
NIKE, Inc. Class B 30,000 1,946,250
Nine West Group, Inc. (a) 15,200 596,600
2,542,850
FOOTWEAR, EXCEPT RUBBER - 2.1%
Adidas AG (a)(b) 1,000 63,818
Adidas AG (a) 15,000 957,274
1,021,092
MEN'S & BOYS' CLOTHING - 1.0%
Mossimo, Inc. 21,000 514,500
WOMEN'S & MISSES' OUTERWEAR - 0.8%
Jones Apparel Group, Inc. 10,000 413,750
TOTAL TEXTILES & APPAREL 7,333,342
TOTAL COMMON STOCKS
(Cost $39,867,616) 42,001,159
REPURCHASE AGREEMENTS - 15.7%
MATURITY VALUE
AMOUNT (NOTE 1)
Investments in repurchase agreements
(U.S. Treasury obligations) in a joint
trading account at 5.41%, dated
2/29/96 due 3/1/96 $ 7,825,176 7,824,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $47,691,616) $ 49,825,159
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 $63,818 or 0.1% of net
assets.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $84,033,091 and $77,984,268, respectively (see Note 3 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $55,131 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 $497,475 and $502,500, respectively (see Note 6 of
Notes to Financial Statements).
The maximum loan and the average daily loan balances during the periods for
which loans were outstanding amounted to $5,939,000 and $5,054,800,
respectively. The weighted average interest rate paid was 6.2% (see Note 5
of Notes to Financial Statements).
INCOME TAX INFORMATION
At February 29, 1996, the aggregate cost of investment securities for
income tax purposes was $48,130,494. Net unrealized appreciation aggregated
$1,694,665, of which $3,161,722 related to appreciated investment
securities and $1,467,057 related to depreciated investment securities.
At February 29, 1996, the fund had a capital loss carryforward of
approximately $591,000 which will expire on February 28, 2003.
RETAILING PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
FEBRUARY 29, 1996
ASSETS
Investment in securities, at value (including repurchase agreements of $7,824,000) (cost $47,691,616) - See $ 49,825,159
accompanying schedule
Cash 107,294
Receivable for investments sold 970,722
Receivable for fund shares sold 816,511
Dividends receivable 28,921
Redemption fees receivable 245
Other receivables 19,894
TOTAL ASSETS 51,768,746
LIABILITIES
Payable for investments purchased $ 6,975,002
Payable for fund shares redeemed 180,027
Accrued management fee 17,782
Other payables and accrued expenses 42,252
Collateral on securities loaned, 502,500
at value
TOTAL LIABILITIES 7,717,563
NET ASSETS $ 44,051,183
Net Assets consist of:
Paid in capital $ 42,927,486
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions (1,009,843
)
Net unrealized appreciation (depreciation) on investments 2,133,540
and assets and liabilities in
foreign currencies
NET ASSETS, for 1,580,707 $ 44,051,183
shares outstanding
NET ASSET VALUE and redemption price per share ($44,051,183 (divided by) 1,580,707 shares) $27.87
Maximum offering price per $28.73
share (100/97.00 of $27.87)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED FEBRUARY 29, 1996
INVESTMENT INCOME $ 229,906
Dividends
Interest (including income on 284,580
securities loaned of $19,694)
TOTAL INCOME 514,486
EXPENSES
Management fee $ 226,958
Transfer agent 436,866
Fees
Redemption fees (48,323
)
Accounting and security lending fees 49,640
Non-interested trustees' compensation 321
Custodian fees and expenses 11,649
Registration fees 20,037
Audit 18,787
Legal 325
Interest 4,318
Miscellaneous 660
Total expenses before reductions 721,238
Expense reductions (8,988 712,250
)
NET INVESTMENT INCOME (LOSS) (197,764
)
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 2,252,368
Foreign currency transactions 1,545 2,253,913
Change in net unrealized appreciation (depreciation) on:
Investment securities 3,066,067
Assets and liabilities in (3 3,066,064
foreign currencies )
NET GAIN (LOSS) 5,319,977
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 5,122,213
OTHER INFORMATION $ 266,970
Sales charges paid to FDC
Deferred sales charges withheld $ 5,475
by FDC
Exchange fees withheld by FSC $ 35,813
Expense reductions $ 8,511
Directed brokerage arrangements
Custodian interest credits 401
Transfer agent interest credits 76
$ 8,988
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
FEBRUARY 29, FEBRUARY 28,
1996 1995
<TABLE>
<CAPTION>
<S> <C> <C>
Operations $ (197,764 $ (448,078
Net investment income (loss) ) )
Net realized gain (loss) 2,253,913 (3,125,930
)
Change in net unrealized appreciation (depreciation) 3,066,064 (4,256,876
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 5,122,213 (7,830,884
)
Share transactions 68,570,912 159,368,155
Net proceeds from sales of shares
Cost of shares redeemed (60,782,922 (173,586,110
) )
Paid in capital portion of redemption fees 50,523 349,164
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS 7,838,513 (13,868,791
)
TOTAL INCREASE (DECREASE) IN NET ASSETS 12,960,726 (21,699,675
)
NET ASSETS
Beginning of period 31,090,457 52,790,132
End of period $ 44,051,183 $ 31,090,457
OTHER INFORMATION
Shares
Sold 2,635,958 6,306,112
Redeemed (2,355,724 (7,124,678
) )
Net increase (decrease) 280,234 (818,566
)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEAR ENDED YEARS ENDED FEBRUARY 28, TEN MONTHS YEAR ENDED
FEBRUARY 29, ENDED APRIL 30,
FEBRUARY 28,
SELECTED PER-SHARE DATA D 1996 1995 1994 1993 1992
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 23.91 $ 24.91 $ 23.87 $ 22.13 $ 17.42
Income from Investment Operations
Net investment income (loss) (.14) (.18) (.22) (.08) (.03)
Net realized and unrealized gain (loss) 4.07 (.96) 3.85 2.93 5.09
Total from investment operations 3.93 (1.14) 3.63 2.85 5.06
Less Distributions - - (2.63) (1.17) (.50)
From net realized gain
Redemption fees added to paid in capital .03 .14 .04 .06 .15
Net asset value, end of period $ 27.87 $ 23.91 $ 24.91 $ 23.87 $ 22.13
TOTAL RETURN B, C 16.56% (4.01)% 15.61% 13.72% 30.28%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 44,051 $ 31,090 $ 52,790 $ 74,878 $ 48,441
Ratio of expenses to average net assets 1.94% 2.07% 1.86% 1.77% 1.87%
A
Ratio of expenses to average net assets after expense reductions 1.92% 1.96% 1.83% 1.77% 1.87%
E E E A
Ratio of net investment income (loss) to average net assets (.53)% (.74)% (.87)% (.44)% (.13)%
A
Portfolio turnover rate 235% 481% 154% 171% 205%
A
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 7 OF NOTES TO
FINANCIAL STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED
BASED ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH
THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S
EXPENSES (SEE NOTE 7 OF NOTES TO
FINANCIAL STATEMENTS).
</TABLE>
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 securities that have grown in value), but does not include certain
fees paid by shareholders upon exchange or redemption. If Fidelity had not
reimbursed certain expenses, the past five and 10 year total returns would
have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 29, 1996 YEAR YEARS YEARS
AIR TRANSPORTATION 54.91% 108.74% 173.15%
AIR TRANSPORTATION 50.26% 102.47% 164.95%
(INCL. 3% SALES CHARGE)
S&P 500 34.70% 101.14% 286.76%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one, five, or 10 years. You can compare
these figures to the performance of the S&P 500 - a common proxy for the
U.S. stock market. This benchmark includes reinvested dividends and capital
gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 29, 1996 YEAR YEARS YEARS
AIR TRANSPORTATION 54.91% 15.86% 10.57%
AIR TRANSPORTATION 50.26% 15.15% 10.23%
(INCL. 3% SALES CHARGE)
S&P 500 34.70% 14.99% 14.47%
AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and
show you what would have happened if the fund had performed at a constant
rate each year.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of growth in the long run
and volatility in the short run. Unlike the broader
market, however, some sectors may not have
a history of growth in the long run. And, as
with all stock funds, the share price and
return of a fund that invests in a sector will
vary. That means if you sell your shares
during a sector downturn, you might lose
money. But if you can identify a sector that is
about to experience rapid growth you may
have the potential for above-average gains.
(checkmark)
$10,000 OVER 10 YEARS
19860228 9700.00 10000.00
19860331 9717.83 10558.00
19860430 9548.44 10438.69
19860531 9566.27 10994.03
19860630 9031.34 11179.83
19860731 8487.50 10554.88
19860831 8719.30 11338.05
19860930 8897.61 10400.39
19861031 9370.13 11000.50
19861130 9486.03 11267.81
19861231 9637.59 10980.48
19870131 10502.39 12459.55
19870228 10948.16 12951.70
19870331 10573.71 13326.01
19870430 10582.63 13207.41
19870531 11215.63 13322.31
19870630 11358.27 13995.09
19870731 11607.90 14704.64
19870831 11705.97 15253.12
19870930 11278.03 14919.08
19871031 7872.33 11705.51
19871130 7337.41 10740.97
19871231 7646.98 11558.36
19880131 7861.10 12044.97
19880229 8513.64 12606.27
19880331 8880.70 12216.73
19880430 8778.74 12352.34
19880531 8646.19 12459.80
19880630 9757.55 13031.71
19880731 9472.06 12982.19
19880831 8941.87 12540.79
19880930 9533.24 13075.03
19881031 9716.77 13438.52
19881130 9492.46 13246.35
19881231 9869.71 13478.16
19890131 10787.35 14464.76
19890228 10991.27 14104.59
19890331 11541.85 14433.22
19890430 12000.67 15182.31
19890531 12306.55 15797.19
19890630 12245.03 15707.15
19890731 13107.21 17125.50
19890831 14102.83 17461.16
19890930 13548.57 17389.57
19891031 12481.10 16986.13
19891130 12357.93 17332.65
19891231 12468.69 17748.63
19900131 11185.46 16557.70
19900228 11655.98 16771.29
19900331 12265.51 17215.73
19900430 11816.38 16785.34
19900531 12639.79 18421.91
19900630 12671.87 18296.64
19900731 12286.90 18238.09
19900831 10340.67 16589.37
19900930 9303.40 15781.47
19901031 9795.30 15713.61
19901130 9645.59 16728.71
19901231 10201.66 17195.44
19910131 11410.03 17945.16
19910228 12693.26 19228.24
19910331 12639.79 19693.56
19910430 12329.68 19740.82
19910531 13056.84 20593.63
19910630 12781.53 19650.44
19910731 13174.47 20566.15
19910831 13010.74 21053.57
19910930 12574.14 20701.97
19911031 13185.38 20979.38
19911130 12595.97 20133.91
19911231 13982.18 22437.23
19920131 14789.89 22019.90
19920229 15455.71 22306.16
19920331 14549.76 21871.19
19920430 13796.63 22514.20
19920531 13982.18 22624.52
19920630 13528.14 22287.41
19920731 13450.39 23198.97
19920831 12883.95 22723.39
19920930 13306.01 22991.53
19921031 13783.60 23072.00
19921130 14116.81 23858.75
19921231 14900.50 24152.21
19930131 15035.24 24355.09
19930228 15271.05 24686.32
19930331 16955.35 25207.20
19930430 17147.02 24597.19
19930531 18126.53 25256.39
19930630 16775.48 25329.64
19930731 17349.68 25228.32
19930831 18385.48 26184.47
19930930 18013.94 25982.85
19931031 19049.75 26520.70
19931130 19094.78 26268.75
19931231 19502.85 26586.60
19940131 20256.03 27490.55
19940228 19537.09 26745.55
19940331 18407.31 25579.45
19940430 18286.26 25906.86
19940531 17521.81 26331.74
19940630 16987.90 25686.61
19940731 17873.70 26529.13
19940831 18553.22 27616.82
19940930 16478.26 26940.21
19941031 16611.74 27546.37
19941130 15507.53 26543.13
19941231 15262.24 26936.76
19950131 15753.39 27635.23
19950228 17104.03 28712.18
19950331 18209.10 29559.47
19950430 19670.25 30430.00
19950531 19989.49 31646.29
19950630 22518.87 32381.43
19950731 23280.14 33455.20
19950831 22383.81 33539.17
19950930 23206.47 34954.52
19951031 22936.34 34829.74
19951130 25895.47 36358.76
19951231 24349.23 37059.03
19960131 23796.98 38320.52
19960229 26495.48 38675.75
Let's say you invested $10,000 in Fidelity Select Air Transportation
Portfolio on February 28, 1986, and paid a 3% sales charge. By February 29,
1996, your investment would have grown to $26,495 - a 164.95% increase.
That compares to $10,000 invested in the S&P 500, which would have grown to
$38,676 over the same period - a 286.76% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 29, 1996
% OF FUND'S
INVESTMENTS
UAL Corp. 8.8
Northwest Airlines Corp. Class A 7.0
Atlantic Southeast Airlines, Inc. 6.1
Continental Airlines, Inc. 5.1
Boeing Co. 5.0
Airborne Freight Corp. 4.9
United Technologies Corp. 4.8
Textron, Inc. 4.2
America West Airlines, Inc. Class B 4.1
McDonnell Douglas Corp. 4.1
TOP INDUSTRIES AS OF FEBRUARY 29, 1996
Air Transportation,
Major National 46.6%
Conglomerates 11.6%
Air Transportation, Regional 9.6%
Aircraft 9.1%
Air Courier Services 6.2%
All Others 16.9% *
Row: 1, Col: 1, Value: 16.9
Row: 1, Col: 2, Value: 6.2
Row: 1, Col: 3, Value: 9.1
Row: 1, Col: 4, Value: 9.6
Row: 1, Col: 5, Value: 11.6
Row: 1, Col: 6, Value: 46.6
* INCLUDES SHORT-TERM INVESTMENTS
AIR TRANSPORTATION PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Jason Weiner,
Portfolio Manager of
Fidelity Select Air
Transportation Portfolio
Q. HOW DID THE FUND PERFORM, JASON?
A. Very well. For the 12 months ended February 29, 1996, the fund had a
total return of 54.91%. For the same period, the S&P 500 Index returned
34.70%.
Q. WHY DID AIRLINE STOCKS DO SO WELL?
A. The head-spinning performance of many airline stocks can be traced to
two important factors. First, the companies that fell the hardest during
the last industry downturn - such as Continental - came back the strongest.
Historically in the airline industry, the weaker companies generally
outperform when the industry turns up. Second, with decent consumer
spending on travel and decreasing domestic capacity, the airline industry
was able to raise revenues through higher ticket prices, while several
airlines have taken proactive steps to lower costs.
Q. HOW DOES THE AIRLINE INDUSTRY MEASURE "CAPACITY?"
A. The industry measures capacity by available seat miles. That is, the
number of seats in the air multiplied by the number of miles flown. Some
carriers decreased domestic available seat miles by 20% in 1995. A company
can cut capacity by retiring planes, eliminating markets or replacing wide
body aircrafts with narrow body ones.
Q. WHY HAVE SOME OF THE SMALLER REGIONAL "NO FRILLS" CARRIERS DONE WELL?
A. The smaller regional carriers, such as ValuJet and Southwest Airlines,
have lower fares than the majors, but also have lower costs. Specifically,
their labor costs are much lower.
Q. WHY ISN'T VALUJET IN THE PORTFOLIO ANYMORE, THEN?
A. ValuJet has had phenomenal growth in the past year with a total return
of over 300%. The fund, therefore, was able to take some profits as the
stock got more expensive relative to the rest of the industry.
Q. AMR - THE PARENT COMPANY OF AMERICAN AIRLINES - IS REPORTEDLY
CONSIDERING SELLING ITS SABRE TICKET RESERVATION UNIT. WHAT'S YOUR OPINION
ON THIS DEVELOPMENT?
A. Sabre is a computer reservation system used by travel agents. Because
the market seems to have priced the value of Sabre into AMR's stock price,
there doesn't appear to be any additional value gained by spinning the
company off. Additionally, Sabre generates its revenues from travelers
booking trips through travel agents. In my mind, with more and more people
owning computers with Internet access, I think the airline business is
quickly moving towards direct sales. If that's the case, one has to
question the growth prospects of Sabre or any other system as an
independent entity.
Q. IN THE FUND'S SEMIANNUAL REPORT, YOU DISCUSSED THE BENEFITS OF OWNING
AIR FREIGHT CARRIERS THAT DO NOT OWN THEIR OWN FLEET OF PLANES. ARE YOU
STILL INTERESTED IN THIS AREA OF THE MARKET?
A. Sure. Asset-based freight companies - those that own their own fleets of
planes - face higher fixed costs than non-asset-based freight companies.
Therefore, I favor companies like Air Express International, which buy
space in the belly of commercial airlines rather than use intermediaries to
handle air transportation.
Q. ARE YOU CONCERNED ABOUT CONGRESS RENEWING THE AIRLINE EXCISE TAX?
A. During the current budget stalemate in Washington, Congress let a 10%
excise tax on airline tickets expire. For a while, the airlines allowed
consumers to pocket a 10% discount. However, many airlines incrementally
raised fares to capture that 10% discount. Therefore, when Congress renews
the tax, it's uncertain whether or not the industry will be able to
maintain current fare levels.
Q. WHAT'S YOUR OUTLOOK?
A. The bottom line is that airlines is a cyclical industry and, as such,
investors should consider their willingness to deal with any eventual
downturn. That said, though, I will continue to look for airlines with good
cash flow, strong route structures, a young fleet and good balance sheets.
FUND FACTS
START DATE: December 16, 1985
TRADING SYMBOL: FSAIX
SIZE: as of February 29, 1996, more than
$75 million
MANAGER: Jason Weiner, since 1994; joined
Fidelity in 1991
(checkmark)
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
AIR TRANSPORTATION PORTFOLIO
INVESTMENTS FEBRUARY 29, 1996
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 86.7%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 9.1%
AIRCRAFT - 9.1%
Boeing Co. 45,100 $ 3,658,736
McDonnell Douglas Corp. 34,000 3,000,500
6,659,236
AIR TRANSPORTATION - 56.3%
AIR TRANSPORTATION, MAJOR NATIONAL - 46.3%
AMR Corp. (a) 29,800 2,614,950
Alaska Air Group, Inc. (a) 117,800 2,621,050
America West Airlines, Inc. Class B (a) 146,000 3,011,250
Atlantic Coast Airlines, Inc. (a) 47,400 545,100
Continental Airlines, Inc. Class B (a) 77,600 3,724,800
Delta Air Lines, Inc. 36,500 2,847,000
Finnair OY 8,300 69,250
Lufthansa 11,400 1,777,457
Mesaba Holdings, Inc. 10,000 88,750
Northwest Airlines Corp. Class A (a) 112,000 5,138,000
Pan Am Corp. (bankruptcy)(a) 5,900 -
Southwest Airlines Co. 84,000 2,583,000
Trans World Airlines, Inc. (a) 81,394 1,383,698
UAL Corp. (a) 36,100 6,448,363
USAir Group, Inc. (a) 55,000 928,125
33,780,793
AIR TRANSPORTATION, REGIONAL - 9.6%
Atlantic Southeast Airlines, Inc. 170,500 4,475,625
Comair Holdings, Inc. 76,700 2,387,288
SkyWest, Inc. 10,000 126,250
6,989,163
AIRPORTS & TERMINAL SERVICES - 0.4%
Kobenhaven Lufthave AS 3,100 269,115
TOTAL AIR TRANSPORTATION 41,039,071
CONGLOMERATES - 11.6%
Allied-Signal, Inc. 34,000 1,891,250
Textron, Inc. 38,500 3,031,875
United Technologies Corp. 32,700 3,515,250
8,438,375
RAILROADS - 1.6%
RAILROAD EQUIPMENT - 1.6%
Bombardier, Inc. Class B 76,300 1,141,424
SERVICES - 0.2%
TRAVEL AGENCIES - 0.2%
His Co. Ltd. 3,800 180,497
TRUCKING & FREIGHT - 7.9%
AIR COURIER SERVICES - 6.2%
Airborne Freight Corp. 128,800 3,590,300
Pittston Co. (Burlington Group) 50,000 937,500
4,527,800
FREIGHT FORWARDING - 1.7%
Air Express International Corp. 46,600 1,141,700
Harper Group 3,900 68,250
1,209,950
TOTAL TRUCKING & FREIGHT 5,737,750
TOTAL COMMON STOCKS
(Cost $59,740,206) 63,196,353
PREFERRED STOCKS - 1.0%
SHARES VALUE (NOTE 1)
CONVERTIBLE PREFERRED STOCKS - 0.8%
CREDIT & OTHER FINANCE - 0.8%
TRUSTS - 0.8%
Continental Airlines Finance Trust
$4.25 (a)(b) 10,000 $ 592,500
NONCONVERTIBLE PREFERRED STOCKS - 0.2%
AIR TRANSPORTATION - 0.2%
AIR TRANSPORTATION, MAJOR NATIONAL - 0.2%
Trans World Airlines, Inc. 12% 1,700 122,400
TOTAL PREFERRED STOCKS
(Cost $598,435) 714,900
NONCONVERTIBLE BONDS - 0.1%
PRINCIPAL
AMOUNT
AIR TRANSPORTATION - 0.1%
AIR TRANSPORTATION, MAJOR NATIONAL - 0.1%
AMR Corp. 9 1/2%, 7/15/98
(Cost $79,922) $ 80,000 85,487
REPURCHASE AGREEMENTS - 12.2%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 5.41% dated
2/29/96 due 3/1/96 $ 8,935,343 8,934,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $69,352,563) $ 72,930,740
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 $592,500 or 0.8% of net
assets.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $333,787,440 and $305,216,487, respectively (see Note 3 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $120,994 for the period
(see Note 4 of Notes to Financial Statements).
The maximum loan and the average daily loan balances during the periods for
which loans were outstanding amounted to $31,185,000 and $6,084,143,
respectively. The weighted average interest rate paid was 6.2% (see Note 5
of Notes to Financial Statements).
INCOME TAX INFORMATION
At February 29, 1996, the aggregate cost of investment securities for
income tax purposes was $70,911,617. Net unrealized appreciation aggregated
$2,019,123, of which $2,659,385 related to appreciated investment
securities and $640,262 related to depreciated investment securities.
A total of 3% of the dividends distributed during the fiscal year qualifies
for the dividends-received deductions for corporate shareholders
(unaudited).
The fund will notify shareholders in January 1997 of the applicable
percentage for use in preparing 1996 income tax returns.
AIR TRANSPORTATION PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
FEBRUARY 29, 1996
ASSETS
Investment in securities, at value (including repurchase agreements of $8,934,000) (cost $69,352,563) - See $ 72,930,740
accompanying schedule
Cash 409
Receivable for investments sold 618,173
Receivable for fund shares sold 3,802,710
Dividends receivable 50,056
Interest receivable 950
Redemption fees receivable 247
Other receivables 510
TOTAL ASSETS 77,403,795
LIABILITIES
Payable for investments purchased $ 1,411,172
Payable for fund shares redeemed 558,949
Accrued management fee 23,707
Other payables and accrued expenses 51,288
TOTAL LIABILITIES 2,045,116
NET ASSETS $ 75,358,679
Net Assets consist of:
Paid in capital $ 60,602,974
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 11,177,528
Net unrealized appreciation (depreciation) on investments 3,578,177
NET ASSETS, for 3,570,505 shares outstanding $ 75,358,679
NET ASSET VALUE and redemption price per share ($75,358,679 (divided by) 3,570,505 shares) $21.11
Maximum offering price per share (100/97.00 of $21.11) $21.76
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED FEBRUARY 29, 1996
INVESTMENT INCOME $ 566,363
Dividends
Interest 363,667
TOTAL INCOME 930,030
EXPENSES
Management fee $ 425,938
Transfer agent 476,504
Fees
Redemption fees (150,619
)
Accounting fees and expenses 73,290
Non-interested trustees' compensation 307
Custodian fees and expenses 29,193
Registration fees 96,985
Audit 17,848
Legal 329
Interest 44,262
Miscellaneous 874
Total expenses before reductions 1,014,911
Expense reductions (39,496 975,415
)
NET INVESTMENT INCOME (LOSS) (45,385
)
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 15,525,178
Foreign currency transactions (2,402 15,522,776
)
Change in net unrealized appreciation (depreciation) 2,826,938
on investment securities
NET GAIN (LOSS) 18,349,714
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 18,304,329
OTHER INFORMATION $ 880,267
Sales charges paid to FDC
Deferred sales charges withheld $ 1,398
by FDC
Exchange fees withheld by FSC $ 99,893
Expense reductions $ 35,308
Directed brokerage arrangements
Custodian interest credits 814
Transfer agent interest credits 3,374
$ 39,496
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
FEBRUARY 29, FEBRUARY 28,
1996 1995
<TABLE>
<CAPTION>
<S> <C> <C>
Operations $ (45,385 $ (123,112
Net investment income (loss) ) )
Net realized gain (loss) 15,522,776 (856,081
)
Change in net unrealized appreciation (depreciation) 2,826,938 121,242
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 18,304,329 (857,951
)
Distributions to shareholders (3,187,856 (527,219
From net realized gain ) )
In excess of net realized gain - (98,627
)
TOTAL DISTRIBUTIONS (3,187,856 (625,846
) )
Share transactions 431,292,376 30,972,770
Net proceeds from sales of shares
Reinvestment of distributions 3,161,234 593,907
Cost of shares redeemed (393,536,104 (22,544,984
) )
Paid in capital portion of redemption fees 691,969 60,093
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS 41,609,475 9,081,786
TOTAL INCREASE (DECREASE) IN NET ASSETS 56,725,948 7,597,989
NET ASSETS
Beginning of period 18,632,731 11,034,742
End of period $ 75,358,679 $ 18,632,731
OTHER INFORMATION
Shares
Sold 23,122,779 2,243,732
Issued in reinvestment of distributions 152,569 41,090
Redeemed (21,042,298 (1,592,005
) )
Net increase (decrease) 2,233,050 692,817
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEAR ENDED YEARS ENDED FEBRUARY 28, TEN MONTHS YEAR ENDED
FEBRUARY 29, ENDED APRIL 30,
FEBRUARY 28,
SELECTED PER-SHARE DATA D 1996 1995 1994 1993 1992
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 13.93 $ 17.12 $ 13.60 $ 12.64 $ 11.53
Income from Investment Operations
Net investment income (loss) (.01) (.18) (.18) (.09) E (.13)
Net realized and unrealized gain (loss) 7.47 (2.01) 3.78 1.33 1.40
Total from investment operations 7.46 (2.19) 3.60 1.24 1.27
Less Distributions (.46) (.92) (.22) (.36) (.25)
From net realized gain
In excess of net realized gain - (.17) (.05) - -
Total distributions (.46) (1.09) (.27) (.36) (.25)
Redemption fees added to paid in capital .18 .09 .19 .08 .09
Net asset value, end of period $ 21.11 $ 13.93 $ 17.12 $ 13.60 $ 12.64
TOTAL RETURN B, C 54.91% (12.45)% 27.94% 10.69% 11.90%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 75,359 $ 18,633 $ 11,035 $ 11,868 $ 6,971
Ratio of expenses to average net assets 1.47% 2.50% 2.33% 2.48% A 2.51%
G , G G
Ratio of expenses to average net assets after expense reductions 1.41% 2.50% 2.31% 2.48% A 2.51%
F F
Ratio of net investment income (loss) to average net assets (.07)% (1.31)% (1.11)% (.90)% (1.04)%
A
Portfolio turnover rate 504% 200% 171% 96% A 261%
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 7 OF NOTES TO FINANCIAL
STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED
BASED ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
E INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND
WHICH AMOUNTED TO $.01 PER SHARE.
F FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH
THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE
FUND'S EXPENSES (SEE NOTE 7 OF
NOTES TO FINANCIAL STATEMENTS).
G DURING THE PERIOD, FMR AGREED TO REIMBURSE A PORTION OF
THE FUND'S EXPENSES, OR EXPENSES WERE LIMITED IN ACCORDANCE
WITH A STATE EXPENSE LIMITATION.
WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
</TABLE>
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 securities that have grown in value), but does not include certain
fees paid by shareholders upon exchange or redemption. If Fidelity had not
reimbursed certain expenses, the life of fund total returns would have been
lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
FEBRUARY 29, 1996 YEAR YEARS FUND
AUTOMOTIVE 10.13% 126.90% 210.11%
AUTOMOTIVE 6.83%
(INCL. 3% SALES CHARGE) 120.09% 200.80%
S&P 500 34.70% 101.14% 247.69%
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 29, 1996 YEAR YEARS FUND
AUTOMOTIVE 10.13% 17.81% 12.41%
AUTOMOTIVE 6.83% 17.09% 12.05%
(INCL. 3% SALES CHARGE)
S&P 500 34.70% 14.99% 13.74%
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
19860630 9700.00 10000.00
19860731 9176.20 9488.77
19860831 9603.00 10192.84
19860930 8943.40 9349.89
19861031 9399.30 9889.38
19861130 9506.00 10129.69
19861231 9341.10 9871.39
19870131 10747.60 11201.06
19870228 11707.90 11643.50
19870331 12028.00 11980.00
19870430 12202.60 11873.38
19870531 12183.20 11976.68
19870630 12367.50 12581.50
19870731 13230.80 13219.38
19870831 13744.90 13712.46
19870930 13541.20 13412.16
19871031 9476.90 10523.18
19871130 9098.60 9656.07
19871231 9952.20 10390.90
19880131 10402.71 10828.35
19880229 11068.24 11332.96
19880331 11866.87 10982.77
19880430 12071.65 11104.68
19880531 12030.69 11201.29
19880630 12726.94 11715.43
19880731 12583.59 11670.91
19880831 11999.98 11274.10
19880930 12051.17 11754.37
19881031 11959.02 12081.14
19881130 11703.05 11908.38
19881231 11948.78 12116.78
19890131 12501.68 13003.73
19890228 12368.58 12679.94
19890331 12604.07 12975.38
19890430 13167.21 13648.80
19890531 13361.75 14201.58
19890630 13126.26 14120.63
19890731 13587.01 15395.72
19890831 13720.11 15697.48
19890930 13402.71 15633.12
19891031 12286.67 15270.43
19891130 12399.29 15581.95
19891231 12438.82 15955.91
19900131 12110.37 14885.27
19900228 12470.61 15077.29
19900331 12936.80 15476.84
19900430 12894.42 15089.92
19900531 13625.49 16561.19
19900630 13869.48 16448.57
19900731 13912.45 16395.93
19900831 11914.22 14913.74
19900930 10775.44 14187.44
19901031 10560.57 14126.44
19901130 11183.68 15039.00
19901231 11602.66 15458.59
19910131 12258.00 16132.59
19910228 13257.12 17286.07
19910331 13364.55 17704.39
19910430 13514.95 17746.88
19910531 14600.02 18513.55
19910630 14567.79 17665.63
19910731 15169.41 18488.84
19910831 15663.59 18927.03
19910930 15201.64 18610.95
19911031 15599.14 18860.33
19911130 14825.62 18100.26
19911231 15933.39 20170.93
19920131 17654.69 19795.75
19920229 19432.62 20053.10
19920331 19851.62 19662.06
19920430 21119.95 20240.13
19920531 21108.62 20339.30
19920630 20983.04 20036.25
19920731 21175.86 20855.73
19920831 19860.16 20428.19
19920930 19531.24 20669.24
19921031 20347.88 20741.58
19921130 21334.65 21448.87
19921231 22564.01 21712.69
19930131 23605.96 21895.08
19930228 23953.28 22192.85
19930331 25238.35 22661.12
19930430 25092.53 22112.72
19930531 26620.52 22705.34
19930630 27086.08 22771.19
19930731 27396.46 22680.10
19930831 28351.45 23539.68
19930930 28649.89 23358.43
19931031 29258.70 23841.94
19931130 29258.70 23615.45
19931231 30548.19 23901.19
19940131 32289.60 24713.83
19940228 31247.21 24044.09
19940331 29052.05 22995.77
19940430 28461.32 23290.11
19940531 28039.67 23672.07
19940630 27680.03 23092.10
19940731 28510.92 23849.53
19940831 28039.67 24827.36
19940930 26849.13 24219.09
19941031 27357.59 24764.01
19941130 25708.20 23862.11
19941231 26652.41 24215.98
19950131 26019.14 24843.91
19950228 27313.22 25812.07
19950331 27175.55 26573.79
19950430 27092.95 27356.38
19950531 27643.62 28449.82
19950630 28331.96 29110.71
19950731 30369.43 30076.02
19950831 30094.10 30151.51
19950930 30245.53 31423.90
19951031 28841.32 31311.72
19951130 29557.20 32686.31
19951231 30231.77 33315.84
19960131 29873.83 34449.91
19960229 30080.33 34769.27
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 29,
1996, your investment would have grown to $30,080 - a 200.80% increase.
That compares to $10,000 invested in the S&P 500, which would have grown to
$34,769 over the same period - a 247.69% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 29, 1996
% OF FUND'S
INVESTMENTS
Echlin, Inc. 6.4
Genuine Parts Co. 6.0
Lear Seating Corp. 5.2
Michelin SA Cie Generale des Etablissements Class B 4.8
General Motors Corp. 4.6
Magna International, Inc. Class A 4.2
Gentex Corp. 4.2
Danaher Corp. 3.9
Tower Automotive, Inc. 3.7
Borg-Warner Automotive, Inc. 3.6
TOP INDUSTRIES AS OF FEBRUARY 29, 1996
Auto & Truck Parts 46.1%
Motor Vehicles & Car Bodies 17.9%
Tires & Inner Tubes 8.2%
Auto Parts - Retail 6.6%
Autos & Other Motor Vehicles 6.0%
All Others 15.2% *
Row: 1, Col: 1, Value: 15.2
Row: 1, Col: 2, Value: 6.0
Row: 1, Col: 3, Value: 6.6
Row: 1, Col: 4, Value: 8.199999999999999
Row: 1, Col: 5, Value: 17.9
Row: 1, Col: 6, Value: 46.1
* INCLUDES SHORT-TERM INVESTMENTS
AUTOMOTIVE PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Brenda Reed,
Portfolio Manager
of Fidelity Select Automotive Portfolio
Q. HOW DID THE FUND PERFORM, BRENDA?
A. For the 12 months ended February 29, 1996, the fund had a total return
of 10.13%. For the same period, the S&P 500 Index returned 34.70%.
Q. WHAT HURT THE FUND'S PERFORMANCE?
A. Car sales were mediocre in 1995. The fact is, it's hard for the auto
makers to have the earnings necessary to drive up their stocks when overall
unit sales are down. Basically, because this is a cyclical industry, as the
economy slows, car sales will trend downward. On the other hand, I am
encouraged by the fact that in the last couple of months sales have
improved.
Q. IN YOUR LAST REPORT, YOU DISCUSSED THE BENEFITS OF OWNING THE STOCKS OF
AUTO PARTS SUPPLIERS. ARE YOU STILL OPTIMISTIC ABOUT THIS AREA OF THE
MARKET?
A. Sure. As I explained in the last report, there is clearly a trend in the
Big Three auto makers to outsource as much parts production as possible in
order to lower their costs. Additionally, there is a great amount of
consolidation in the parts supply industry. For example, Ford has stated it
would like to pare its approximately 2,300 suppliers down to about 1,150.
Therefore, parts companies that are low-cost/high-quality providers and
have technologically advanced products will be the winners in a more
consolidated industry.
Q. WHICH AUTO PARTS SUPPLY COMPANIES SEEMED TO FIT THE BILL DURING THE
PERIOD?
A. Lear Seating, which makes seats, side panels, door moldings and other
automotive accoutrements, showed it could successfully grow sales after it
made some key acquisitions. I also look for suppliers that offer their
products worldwide, such as Magna International.
Q. HAVE YOU TARGETED ANY OTHER SPECIFIC AREAS OF THE AUTO MARKET?
A. After enduring a hard 1995, I recently began adding to the fund's
positions in auto parts retailers. The stock prices of retailers such as
Pep Boys and Autozone were pushed down with other retailers as consumers
kept a tight rein on their pursestrings. Additionally, a mild winter in
1994 brought less need for consumers to replace worn-out parts. This
winter, however, has been anything but mild and many retailers have
credited the severe weather for the recent jump in sales.
Q. WHAT ABOUT FOREIGN HOLDINGS?
A. For the most part, I've recently increased the fund's foreign holdings
in Europe and Japan which, of course, have greater risks than U.S.
securities. In Europe, Volkswagen and Daimler-Benz have embarked on
aggressive restructuring and cost-cutting programs. Japanese auto
companies, which continue to dominate the Asian market, have also
aggressively cut costs as well as moved many more plants overseas - which
helped to counter any negative currency effects.
Q. HOW WILL THE INCREASINGLY GLOBAL NATURE OF THE AUTOMOTIVE INDUSTRY
AFFECT YOUR DECISION MAKING IN THE FUTURE?
A. New markets are beginning to open up around the world as the economies
of regions like Eastern Europe begin to stabilize and consumer spending
grows. In fact, the major auto makers already have fairly successful
operations in Europe and South America. As these new markets develop, I
will continue to look for companies that show the potential to grow
earnings through market downturns, as well as those with the international
market experience that will be necessary in the future.
FUND FACTS
START DATE: June 30, 1986
TRADING SYMBOL: FSAVX
SIZE: as of February 29, 1996, more than
$55 million
MANAGER: Brenda Reed, since 1994;
manager, Fidelity Select Air Transportation
Portfolio, 1992-1994; joined Fidelity in 1992
(checkmark)
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
AUTOMOTIVE PORTFOLIO
INVESTMENTS FEBRUARY 29, 1996
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 93.1%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 0.8%
AIRCRAFT EQUIPMENT - 0.8%
Aviall, Inc. 40,000 $ 290,000
Simula, Inc. (a) 10,000 156,250
446,250
AUTOS, TIRES, & ACCESSORIES - 87.2%
AUTO & TRUCK PARTS - 46.1%
Borg-Warner Automotive, Inc. 60,000 1,965,000
Dana Corp. 26,800 810,700
Danaher Corp. 63,400 2,155,600
Echlin, Inc. 105,000 3,556,875
Federal-Mogul Corp. 20,000 370,000
Gentex Corp. (a) 93,000 2,301,750
Harvard Industries, Inc. (a) 18,500 467,125
Intermet Corp. (a) 20,000 260,000
Johnson Controls, Inc. 22,700 1,628,725
Lear Seating Corp. (a) 89,700 2,859,188
Magna International, Inc. Class A 58,500 2,326,595
MascoTech, Inc. 16,700 215,013
Masland Corp. 30,000 420,000
SPX Corp. 20,200 310,575
Safety Components International, Inc. (a) 1,000 14,125
Smith (A.O.) Corp. Class B 16,600 402,550
Snap-on Tools Corp. 40,200 1,798,950
Standard Products Co. 27,400 568,550
Superior Industries International, Inc. 3,600 89,550
TRW, Inc. 5,000 433,125
Titan Wheel International, Inc. 33,000 503,250
Tower Automotive, Inc. (a) 132,500 2,020,625
25,477,871
AUTO PARTS - RETAIL - 6.6%
Autozone, Inc. (a) 68,100 1,753,572
Discount Auto Parts, Inc. 12,000 303,000
Monro Muffler Brake, Inc. 53,530 762,803
Pep Boys-Manny, Moe & Jack 27,600 828,000
3,647,375
AUTOS & OTHER MOTOR VEHICLES - 6.0%
Genuine Parts Co. 78,200 3,343,050
MOTOR VEHICLE SUPPLIES & NEW PARTS - 1.4%
APS Holding Corp. Class A (a) 44,000 693,000
Hahn Automotive Warehouse, Inc. 12,500 103,125
796,125
MOTOR VEHICLES & CAR BODIES - 17.9%
Chrysler Corp. 27,800 1,567,225
Daimler-Benz AG Ord. 1,100 605,392
Ford Motor Co. 25,000 781,250
General Motors Corp. 49,300 2,526,625
Honda Motor Co. Ltd. 73,000 1,546,478
Hyundai Motor Co. sponsored
GDR (a)(b) 5,500 85,250
Mitsubishi Motors Corp. 30,000 247,661
Suzuki Motor Corp. 21,000 245,381
Toyota Motor Corp. 36,000 776,326
Volkswagen AG 3,000 1,137,335
Volvo AB Class B 17,500 373,675
9,892,598
TIRES & INNER TUBES - 8.2%
Bandag, Inc. 6,700 341,700
Cooper Tire & Rubber Co. 29,300 743,488
Goodyear Tire & Rubber Co. 15,500 736,250
Michelin SA Cie Generale
des Etablissements Class B 60,000 2,681,710
4,503,148
SHARES VALUE (NOTE 1)
TRUCK & BUS BODIES - 1.0%
Miller Industries, Inc. (a) 20,000 $ 567,500
TOTAL AUTOS, TIRES, & ACCESSORIES 48,227,667
CHEMICALS & PLASTICS - 0.5%
CHEMICALS - 0.5%
Quaker State Corp. 20,000 280,000
COMMUNICATIONS EQUIPMENT - 1.1%
DATACOMMUNICATIONS EQUIPMENT - 1.1%
Lo Jack Corp. (a) 60,000 630,000
CONGLOMERATES - 1.1%
Mark IV Industries, Inc. 30,000 600,000
INDUSTRIAL MACHINERY & EQUIPMENT - 2.4%
METAL WORKING MACHINERY - 0.8%
Exco Technologies Ltd. (a) 79,500 435,108
STORAGE BATTERIES - 1.6%
Exide Corp. 28,400 866,200
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 1,301,308
TOTAL COMMON STOCKS
(Cost $48,747,730) 51,485,225
REPURCHASE AGREEMENTS - 6.9%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 5.41% dated
2/29/96 due 3/1/96 $ 3,830,576 3,830,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $52,577,730) $ 55,315,225
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 $85,250 or 0.2% of net
assets.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $33,003,006 and $45,148,838, respectively (see Note 3 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $23,214 for the period (see
Note 4 of Notes to Financial Statements).
Distribution of investments by country of issue, as a percentage of total
value of investment in securities, is as follows:
United States 81.1%
Japan 5.1
Canada 5.0
France 4.8
Germany 3.1
Others (individually less than 1%) 0.9
TOTAL 100.0%
INCOME TAX INFORMATION
At February 29, 1996, the aggregate cost of investment securities for
income tax purposes was $52,862,154. Net unrealized appreciation aggregated
$2,453,071, of which $4,808,784 related to appreciated investment
securities and $2,355,713 related to depreciated investment securities.
At February 29, 1996, the fund had a capital loss carryforward of
approximately $2,947,000 which will expire on February 29, 2004.
The fund intends to elect to defer to its fiscal year ending February 28,
1997 approximately $30,000 of losses recognized during the period November
1, 1995 to February 29, 1996.
AUTOMOTIVE PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
FEBRUARY 29, 1996
ASSETS
Investment in securities, at value (including repurchase agreements of $3,830,000) (cost $52,577,730) - See $ 55,315,225
accompanying schedule
Cash 897
Receivable for investments sold 1,698,672
Receivable for fund shares sold 450,761
Dividends receivable 76,747
Redemption fees receivable 124
Other receivables 2,403
TOTAL ASSETS 57,544,829
LIABILITIES
Payable for investments purchased $ 1,287,230
Payable for fund shares redeemed 419,450
Accrued management fee 28,698
Other payables and 55,968
accrued expenses
TOTAL LIABILITIES 1,791,346
NET ASSETS $ 55,753,483
Net Assets consist of:
Paid in capital $ 56,198,071
Undistributed net investment income 76,192
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions (3,258,158
)
Net unrealized appreciation (depreciation) on investments 2,737,378
and assets and liabilities in
foreign currencies
NET ASSETS, for 2,551,419 $ 55,753,483
shares outstanding
NET ASSET VALUE and redemption price per share ($55,753,483 (divided by) 2,551,419 shares) $21.85
Maximum offering price per share (100/97.00 of $21.85) $22.53
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED FEBRUARY 29, 1996
INVESTMENT INCOME $ 851,928
Dividends
Interest 290,833
TOTAL INCOME 1,142,761
EXPENSES
Management fee $ 363,327
Transfer agent 664,631
Fees
Redemption fees (73,551
)
Accounting fees and expenses 60,082
Non-interested trustees' compensation 611
Custodian fees and expenses 15,850
Registration fees 20,356
Audit 19,860
Legal 419
Miscellaneous 1,127
Total expenses before reductions 1,072,712
Expense reductions (5,967 1,066,745
)
NET INVESTMENT INCOME 76,016
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 1,306,938
Foreign currency transactions 635 1,307,573
Change in net unrealized appreciation (depreciation) on:
Investment securities 3,088,771
Assets and liabilities in (117 3,088,654
foreign currencies )
NET GAIN (LOSS) 4,396,227
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 4,472,243
OTHER INFORMATION $ 381,296
Sales charges paid to FDC
Deferred sales charges withheld $ 3,109
by FDC
Exchange fees withheld by FSC $ 54,600
Expense reductions $ 4,980
Directed brokerage arrangements
Custodian interest credits 78
Transfer agent interest credits 909
$ 5,967
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
FEBRUARY 29, FEBRUARY 28,
1996 1995
<TABLE>
<CAPTION>
<S> <C> <C>
Operations $ 76,016 $ 346,115
Net investment income
Net realized gain (loss) 1,307,573 11,541,717
Change in net unrealized appreciation (depreciation) 3,088,654 (31,661,358
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 4,472,243 (19,773,526
)
Distributions to shareholders - (154,502
From net investment income )
From net realized gain - (7,650,364
)
TOTAL DISTRIBUTIONS - (7,804,866
)
Share transactions 79,629,136 91,986,801
Net proceeds from sales of shares
Reinvestment of distributions - 7,692,677
Cost of shares redeemed (88,521,546 (240,957,682
) )
Paid in capital portion of redemption fees 98,432 233,563
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS (8,793,978 (141,044,641
) )
TOTAL INCREASE (DECREASE) IN NET ASSETS (4,321,735 (168,623,033
) )
NET ASSETS
Beginning of period 60,075,218 228,698,251
End of period (including undistributed net investment income of $76,192 and $165,781, respectively) $ 55,753,483 $ 60,075,218
OTHER INFORMATION
Shares
Sold 3,758,408 4,119,242
Issued in reinvestment of distributions - 397,089
Redeemed (4,235,574 (10,463,135
) )
Net increase (decrease) (477,166 (5,946,804
) )
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEAR ENDED YEARS ENDED FEBRUARY 28, TEN MONTHS YEAR ENDED
FEBRUARY 29, ENDED APRIL 30,
FEBRUARY 28,
SELECTED PER-SHARE DATA D 1996 1995 1994 1993 1992
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 19.84 $ 25.48 $ 20.69 $ 18.65 $ 12.58
Income from Investment Operations
Net investment income .03 .08 .05 .13 .06
Net realized and unrealized gain (loss) 1.95 (3.46) 6.00 2.26 6.55
Total from investment operations 1.98 (3.38) 6.05 2.39 6.61
Less Distributions - (.05) (.05) (.06) -
From net investment income
From net realized gain - (2.26) (1.26) (.36) (.70)
Total distributions - (2.31) (1.31) (.42) (.70)
Redemption fees added to paid in capital .03 .05 .05 .07 .16
Net asset value, end of period $ 21.85 $ 19.84 $ 25.48 $ 20.69 $ 18.65
TOTAL RETURN B, C 10.13% (12.59)% 30.45% 13.42% 56.27%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 55,753 $ 60,075 $ 228,698 $ 110,360 $ 178,445
Ratio of expenses to average net assets 1.81% 1.82% 1.69% 1.57% 2.48%
A
Ratio of expenses to average net assets after expense reductions 1.80% 1.80% 1.68% 1.57% 2.48%
E E E A
Ratio of net investment income to average net assets .13% .34% .22% .72% .36%
A
Portfolio turnover rate 61% 63% 64% 140% 29%
A
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES
NOT BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 7 OF NOTES
TO FINANCIAL STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND
FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED
ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH
THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE
FUND'S EXPENSES (SEE NOTE 7 OF NOTES TO
FINANCIAL STATEMENTS).
</TABLE>
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 securities that have grown in value), but does not include certain
fees paid by shareholders upon exchange or redemption. If Fidelity had not
reimbursed certain expenses, the past 10 year total returns would have been
lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 29, 1996 YEAR YEARS YEARS
CHEMICALS 27.48% 123.42% 337.47%
CHEMICALS 23.65%
(INCL. 3% SALES CHARGE) 116.72% 324.35%
S&P 500 34.70% 101.14% 286.76%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one, five, or 10 years. You can compare
these figures to the performance of the S&P 500 - a common proxy for the
U.S. stock market. This benchmark includes reinvested dividends and capital
gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 29, 1996 YEAR YEARS YEARS
CHEMICALS 27.48% 17.44% 15.90%
CHEMICALS 23.65% 16.73% 15.55%
(INCL. 3% SALES CHARGE)
S&P 500 34.70% 14.99% 14.47%
AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and
show you what would have happened if the fund had performed at a constant
rate each year.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of growth in the long run
and volatility in the short run. Unlike the broader
market, however, some sectors may not have
a history of growth in the long run. And, as
with all stock funds, the share price and
return of a fund that invests in a sector will
vary. That means if you sell your shares
during a sector downturn, you might lose
money. But if you can identify a sector that is
about to experience rapid growth you may
have the potential for above-average gains.
(checkmark)
$10,000 OVER 10 YEARS
19860228 9700.00 10000.00
19860331 10218.32 10558.00
19860430 10258.71 10438.69
19860531 10548.16 10994.03
19860630 10803.96 11179.83
19860731 10096.59 10554.88
19860831 10846.74 11338.05
19860930 9988.47 10400.39
19861031 10596.69 11000.50
19861130 10779.16 11267.81
19861231 10583.18 10980.48
19870131 11995.62 12459.55
19870228 13110.71 12951.70
19870331 13509.43 13326.01
19870430 13806.79 13207.41
19870531 13624.32 13322.31
19870630 14387.99 13995.09
19870731 15327.36 14704.64
19870831 15888.28 15253.12
19870930 16172.12 14919.08
19871031 11252.23 11705.51
19871130 10873.78 10740.97
19871231 12151.99 11558.36
19880131 11853.95 12044.97
19880229 13168.04 12606.27
19880331 13838.64 12216.73
19880430 14001.21 12352.34
19880531 13472.86 12459.80
19880630 15254.34 13031.71
19880731 14793.73 12982.19
19880831 14150.23 12540.79
19880930 14326.34 13075.03
19881031 14549.88 13438.52
19881130 14062.17 13246.35
19881231 14698.90 13478.16
19890131 15681.08 14464.76
19890228 15484.64 14104.59
19890331 15653.99 14433.22
19890430 16101.05 15182.31
19890531 16473.60 15797.19
19890630 16276.91 15707.15
19890731 17314.13 17125.50
19890831 18107.30 17461.16
19890930 17463.27 17389.57
19891031 16229.46 16986.13
19891130 16575.20 17332.65
19891231 17243.47 17748.63
19900131 16014.85 16557.70
19900228 16122.00 16771.29
19900331 16600.59 17215.73
19900430 16214.86 16785.34
19900531 17629.20 18421.91
19900630 17773.09 18296.64
19900731 17831.90 18238.09
19900831 15450.39 16589.37
19900930 14685.96 15781.47
19901031 14855.01 15713.61
19901130 15847.31 16728.71
19901231 16530.89 17195.44
19910131 17640.79 17945.16
19910228 18993.25 19228.24
19910331 19448.97 19693.56
19910430 19294.61 19740.82
19910531 20632.37 20593.63
19910630 20071.65 19650.44
19910731 21039.05 20566.15
19910831 21452.59 21053.57
19910930 21290.13 20701.97
19911031 21629.82 20979.38
19911130 20551.66 20133.91
19911231 22922.01 22437.23
19920131 23362.23 22019.90
19920229 24204.73 22306.16
19920331 24030.16 21871.19
19920430 24903.02 22514.20
19920531 24758.81 22624.52
19920630 24024.92 22287.41
19920731 24783.01 23198.97
19920831 23936.21 22723.39
19920930 23960.40 22991.53
19921031 23718.46 23072.00
19921130 24436.23 23858.75
19921231 24963.15 24152.21
19930131 24937.47 24355.09
19930228 24500.87 24686.32
19930331 25083.00 25207.20
19930430 25548.24 24597.19
19930531 25935.07 25256.39
19930630 25284.50 25329.64
19930731 25671.32 25228.32
19930831 26928.52 26184.47
19930930 26075.74 25982.85
19931031 27060.39 26520.70
19931130 27262.59 26268.75
19931231 28147.72 26586.60
19940131 30338.69 27490.55
19940228 30290.85 26745.55
19940331 29381.93 25579.45
19940430 30802.82 25906.86
19940531 31544.48 26331.74
19940630 31149.57 25686.61
19940731 32555.83 26529.13
19940831 34443.68 27616.82
19940930 34193.25 26940.21
19941031 34135.46 27546.37
19941130 31457.79 26543.13
19941231 32306.64 26936.76
19950131 31462.41 27635.23
19950228 33288.31 28712.18
19950331 34309.24 29559.47
19950430 35044.73 30430.00
19950531 35393.68 31646.29
19950630 35991.88 32381.43
19950731 37696.76 33455.20
19950831 37856.28 33539.17
19950930 38454.48 34954.52
19951031 36540.23 34829.74
19951130 38135.44 36358.76
19951231 39235.86 37059.03
19960131 41039.31 38320.52
19960229 42434.84 38675.75
Let's say you invested $10,000 in Fidelity Select Chemicals Portfolio on
February 28, 1986, and paid a 3% sales charge. By February 29, 1996, your
investment would have grown to $42,435 - a 324.35% increase. That compares
to $10,000 invested in the S&P 500, which would have grown to $38,676 over
the same period - a 286.76% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 29, 1996
% OF FUND'S
INVESTMENTS
Cytec Industries, Inc. 5.0
du Pont (E.I.) de Nemours & Co. 4.8
Monsanto Co. 4.3
Praxair, Inc. 3.4
Ferro Corp. 3.3
Union Carbide Corp. 3.1
Albemarle Corp. 2.9
Raychem Corp. 2.8
Hanna (M.A.) Co. 2.7
Airgas, Inc. 2.7
TOP INDUSTRIES AS OF FEBRUARY 29, 1996
36
Chemicals 40.9%
Adhesives & Sealants 7.6%
Industrial Gases 7.3%
Agricultural Chemicals 6.9%
Chemicals, General 4.1%
All Others 33.2% *
Row: 1, Col: 1, Value: 33.2
Row: 1, Col: 2, Value: 4.1
Row: 1, Col: 3, Value: 6.9
Row: 1, Col: 4, Value: 7.3
Row: 1, Col: 5, Value: 7.6
Row: 1, Col: 6, Value: 40.9
* INCLUDES SHORT-TERM INVESTMENTS
CHEMICALS PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
John Avery,
Portfolio Manager of
Fidelity Select Chemicals Portfolio
Q. HOW DID THE FUND PERFORM, JOHN?
A. For the 12 months ended February 29, 1996, the fund had a total return
of 27.48%. For the same period, the S&P 500 Index returned 34.70%.
Q. WHY DID THE FUND TRAIL THE GENERAL MARKET?
A. In general, the chemical industry endured what is known as an inventory
correction. Earlier in the year, buyers purchased large quantities of
chemical products and built their inventories - which helped chemical
stocks start 1995 on a positive note. However, when the economy slowed,
these buyers curtailed their purchases and used their inventories, thus
slowing the demand for chemical products.
Q. GIVEN THEIR NAME, ONE WOULD ASSUME THERE IS A STRONG CORRELATION BETWEEN
COMMODITY PRICES AND COMMODITY CHEMICAL STOCK PRICES . . .
A. Absolutely. If you look at the prices of these raw materials - such as
ethylene and methanol - and commodity chemical companies that supply them,
they pretty much move in tandem. That really was a big part of the story
last year. Throughout 1995, as economic reports indicated the economy was
showing signs of slowing, commodity prices fell. Therefore, I positioned
the portfolio for a slowdown in the economy by moving some assets into
specialty chemical companies - diversified companies that are less
susceptible to changes in the economy.
Q. AND IS THAT WHAT WAS HAPPENING NEAR THE END OF THE PERIOD?
A. A couple of months ago, there were signs the economy may have some
strength. As a result, commodity prices began to rally. Therefore, I began
repositioning some assets into commodity chemical stocks. This decision has
paid off recently as the stock prices of many of the commodity chemical
companies have moved with commodity prices.
Q. LOOKING AT SOME SPECIFIC HOLDINGS, CYTEC INDUSTRIES CONTINUES TO BE ONE
OF YOUR FAVORITE COMPANIES . . .
A. Cytec is a specialty chemical company that had originally been part of
American Cyanamid. When it was spun off from American Cyanamid two years
ago, it was a company starved of capital and lacking independence. Since
then, it has become a classic turnaround company. Cytec's management has
focused on higher-return businesses, closed unprofitable plants and
demonstrated an ability to generate consistent levels of profitability.
While the company still has to bring its profitability up to the level of
its peers, it has done the things necessary to make me optimistic about its
future prospects.
Q. WHILE CYTEC REMAINS A TOP HOLDING, W.R. GRACE IS A MUCH SMALLER PART OF
THE PORTFOLIO NOW . . .
A. Like many other diversified chemical companies, W.R. Grace performed
pretty well in 1995. The stock, however, had achieved the target price
level I had set for it earlier in the year. Therefore, I scaled back the
fund's Grace position.
Q. WHAT ABOUT FOREIGN HOLDINGS?
A. A little more than a month ago, I increased the fund's foreign exposure.
As in the U.S., foreign chemical companies have been sensitive to movements
in commodity prices. Recently, foreign commodity prices bottomed.
Therefore, I established some positions primarily in Europe in companies
such as Imperial Chemical Industries of the United Kingdom and BASF of
Germany.
Q. WERE THERE ANY DISAPPOINTMENTS?
A. Unfortunately, the cyclical nature of the chemical group as a whole
often undermines the performance of some solid companies.
Q. WHAT'S YOUR OUTLOOK?
A. Recently, there have been signs that the economy may be stronger than
the market once believed. Should this trend continue, it could benefit the
commodity chemical companies. That said, I will continue to monitor
economic reports for any drastic shifts in the economic environment and, if
need be, shift the portfolio to more diversified chemical companies that
are less economically sensitive.
FUND FACTS
START DATE: July 29, 1985
TRADING SYMBOL: FSCHX
SIZE: as of February 29, 1996, more than
$89 million
MANAGER: John Avery, since July 1995; joined
Fidelity in December 1994
(checkmark)
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
CHEMICALS PORTFOLIO
INVESTMENTS FEBRUARY 29, 1996
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 88.5%
SHARES VALUE (NOTE 1)
BUILDING MATERIALS - 0.4%
PAINT & VARNISH - 0.4%
Dexter Corp. 13,600 $ 319,600
CHEMICALS & PLASTICS - 79.7%
ADHESIVES & SEALANTS - 7.6%
Ferro Corp. 115,100 2,935,045
Fuller (H.B.) Co. 13,227 476,172
International Specialty Products, Inc. (a) 87,700 1,085,288
Loctite Corp. 14,000 742,000
Lydall, Inc. 20,000 485,000
Methanex Corp. (a) 97,500 747,072
Nalco Chemical Co. 11,500 365,125
6,835,702
AGRICULTURAL CHEMICALS - 6.9%
Agrium, Inc. 61,600 949,611
First Mississippi Corp. 21,400 559,075
IMC Fertilizer Group, Inc. 52,100 2,149,125
OM Group, Inc. 37,600 1,316,000
Potash Corp. of Saskatchewan 5,900 438,082
Vigoro Corp. 11,900 788,375
6,200,268
CHEMICALS - 40.9%
AKZO NV sponsored ADR 8,900 493,950
BASF AG 5,000 1,245,846
Cabot Corp. 8,900 538,450
Cytec Industries, Inc. (a) 58,171 4,479,167
Dow Chemical Co. 10,000 802,500
du Pont (E.I.) de Nemours & Co. 56,500 4,322,250
Engelhard Corp. 22,400 456,400
Ethyl Corp. 100,000 1,075,000
Grace (W.R.) & Co. 34,000 2,346,000
Hercules, Inc. 39,700 2,382,000
Imperial Chemical Industries PLC:
ADR 30,000 1,668,750
Ord. 30,000 414,843
Minnesota Mining & Manufacturing Co. 19,500 1,269,938
Monsanto Co. 28,800 3,877,200
NL Industries, Inc. (a) 46,700 647,963
Olin Corp. 17,100 1,415,025
Raychem Corp. 38,200 2,478,225
Rohm & Haas Co. 11,700 814,613
Union Carbide Corp. 61,400 2,763,000
Uniroyal Chemical Corp. (a) 135,000 1,231,875
Witco Corp. 62,200 2,029,275
36,752,270
CHEMICALS & ALLIED PRODUCTS - 2.1%
Kemira OY sponsored ADR (b) 61,100 1,084,525
Kemira OY 89,700 807,487
1,892,012
CHEMICALS, GENERAL - 4.1%
Albemarle Corp. 136,700 2,631,475
Great Lakes Chemical Corp. 14,200 1,015,300
3,646,775
INDUSTRIAL GASES - 7.3%
Air Products & Chemicals, Inc. 20,300 1,080,975
Airgas, Inc. (a) 66,600 2,397,600
Praxair, Inc. 89,653 3,093,029
6,571,604
SHARES VALUE (NOTE 1)
INORGANIC CHEMICALS - 1.2%
DSM NV 10,000 $ 932,897
Valspar Corp. 3,100 138,338
1,071,235
NITROGENOUS FERTILIZERS - 0.8%
Soc Quimica y Minera de Chile ADR 14,300 725,725
ORGANIC CHEMICALS - 1.9%
Cambrex Corp. 18,000 843,750
Lubrizol Corp. 28,300 827,775
1,671,525
PLASTICS & SYNTHETIC RESINS - 2.0%
Geon Co. 11,400 304,950
Schulman (A.), Inc. 30,000 682,500
Sekisui Chemical Co. Ltd. 40,000 509,191
Spartech Corp. 44,100 336,263
1,832,904
PLASTICS - 3.8%
Applied Extrusion Technologies Inc. (a) 41,700 500,400
Hanna (M.A.) Co. 86,350 2,439,388
Sealed Air Corp. (a) 14,900 439,550
3,379,338
PLASTICS, RESINS & ELASTOMERS - 1.1%
AT Plastics, Inc. 30,000 265,443
PT Tri Polyta Indonesia sponsored ADR 50,900 712,600
978,043
TOTAL CHEMICALS & PLASTICS 71,557,401
DRUGS & PHARMACEUTICALS - 3.6%
BIOTECHNOLOGY - 2.6%
Sigma Aldrich Corp. 41,700 2,387,325
PHARMACEUTICAL PREPARATIONS - 1.0%
Copley Pharmaceutical, Inc. (a) 47,300 892,788
TOTAL DRUGS & PHARMACEUTICALS 3,280,113
INDUSTRIAL MACHINERY & EQUIPMENT - 0.8%
PUMPING EQUIPMENT - 0.8%
Duriron Co., Inc. 25,000 681,250
METALS & MINING - 2.4%
MISCELLANEOUS METAL ORES - 0.7%
Stillwater Mining Co. (a) 7,700 169,400
Stillwater Mining Co. (a)(b) 19,400 426,800
596,200
NON-METALLIC MINERAL MINING - 1.7%
Freeport McMoRan, Inc. 36,500 1,555,813
TOTAL METALS & MINING 2,152,013
OIL & GAS - 0.7%
CRUDE PETROLEUM & GAS - 0.7%
Occidental Petroleum Corp. 29,600 680,800
PRECIOUS METALS - 0.4%
GOLD ORES - 0.4%
Firstmiss Gold, Inc. (a) 15,140 408,780
TEXTILES & APPAREL - 0.5%
CARPETS & RUGS - 0.5%
Image Industries, Inc. (a) 40,300 453,375
TOTAL COMMON STOCKS
(Cost $66,214,892) 79,533,332
CONVERTIBLE PREFERRED STOCKS - 0.5%
SHARES VALUE (NOTE 1)
OIL & GAS - 0.5%
CRUDE PETROLEUM & GAS - 0.5%
Atlantic Richfield Co.
exchangeable $2.23 (Cost $342,523) 15,200 $ 410,400
REPURCHASE AGREEMENTS - 11.0%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations) in a joint
trading account at 5.41%, dated
2/29/96 due 3/1/96 $ 9,882,485 9,881,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $76,438,415) $ 89,824,732
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 $1,511,325 or 1.7% of net
assets.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $65,335,715 and $96,076,087, respectively (see Note 3 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $70,381 for the period (see
Note 4 of Notes to Financial Statements).
The maximum loan and the average daily loan balances during the periods for
which loans were outstanding amounted to $1,328,000 and $1,161,500,
respectively. The weighted average interest rate paid was 6.5% (see Note 5
of Notes to Financial Statements).
Distribution of investments by country of issue, as a percentage of total
value of investment in securities, is as follows:
United States 87.8%
Canada 2.7
United Kingdom 2.3
Finland 2.1
Netherlands 1.6
Germany 1.4
Others (individually less than 1%) 2.1
TOTAL 100.0%
INCOME TAX INFORMATION
At February 29, 1996, the aggregate cost of investment securities for
income tax purposes was $76,460,811. Net unrealized appreciation aggregated
$13,363,921, of which $15,008,907 related to appreciated investment
securities and $1,644,986 related to depreciated investment securities.
The fund hereby designates approximately $2,934,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 48% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate shareholders
(unaudited).
The fund will notify shareholders in January 1997 of the applicable
percentage for use in preparing 1996 income tax returns.
CHEMICALS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
FEBRUARY 29, 1996
ASSETS
Investment in securities, at value (including repurchase agreements of $9,881,000) (cost $76,438,415) - See $ 89,824,732
accompanying schedule
Cash 460
Receivable for investments sold 443,043
Receivable for fund shares sold 497,774
Dividends receivable 166,711
Redemption fees receivable 121
Other receivables 62,675
TOTAL ASSETS 90,995,516
LIABILITIES
Payable for investments purchased $ 707,548
Payable for fund shares redeemed 941,753
Accrued management fee 43,704
Other payables and 72,047
accrued expenses
TOTAL LIABILITIES 1,765,052
NET ASSETS $ 89,230,464
Net Assets consist of:
Paid in capital $ 70,976,617
Undistributed net investment income 15,890
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 4,851,743
Net unrealized appreciation (depreciation) on investments 13,386,214
and assets and liabilities in
foreign currencies
NET ASSETS, for 2,257,014 $ 89,230,464
shares outstanding
NET ASSET VALUE and redemption price per share ($89,230,464 (divided by) 2,257,014 shares) $39.53
Maximum offering price per share (100/97.00 of $39.53) $40.75
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED FEBRUARY 29, 1996
INVESTMENT INCOME $ 1,328,564
Dividends
Interest (including income on 250,530
securities loaned of $1,830)
TOTAL INCOME 1,579,094
EXPENSES
Management fee $ 481,260
Transfer agent 992,446
Fees
Redemption fees (74,986
)
Accounting and security lending fees 79,105
Non-interested trustees' compensation 808
Custodian fees and expenses 16,693
Registration fees 30,728
Audit 33,352
Legal 865
Interest 835
Miscellaneous 870
Total expenses before reductions 1,561,976
Expense reductions (14,780 1,547,196
)
NET INVESTMENT INCOME 31,898
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 9,932,182
Foreign currency transactions (272 9,931,910
)
Change in net unrealized appreciation (depreciation) on:
Investment securities 8,885,714
Assets and liabilities in (103 8,885,611
foreign currencies )
NET GAIN (LOSS) 18,817,521
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 18,849,419
OTHER INFORMATION $ 529,419
Sales charges paid to FDC
Deferred sales charges withheld $ 23,318
by FDC
Exchange fees withheld by FSC $ 53,220
Expense reductions $ 7,713
Directed brokerage arrangements
Custodian interest credits 6,171
Transfer agent interest credits 896
$ 14,780
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
FEBRUARY 29, FEBRUARY 28,
1996 1995
<TABLE>
<CAPTION>
<S> <C> <C>
Operations $ 31,898 $ 1,534,984
Net investment income
Net realized gain (loss) 9,931,910 4,787,546
Change in net unrealized appreciation (depreciation) 8,885,611 576,053
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 18,849,419 6,898,583
Distributions to shareholders (214,329 (1,029,165
From net investment income ) )
From net realized gain (6,011,068 (2,261,141
) )
TOTAL DISTRIBUTIONS (6,225,397 (3,290,306
) )
Share transactions 70,422,861 295,805,417
Net proceeds from sales of shares
Reinvestment of distributions 6,107,748 3,230,231
Cost of shares redeemed (97,475,212 (267,599,716
) )
Paid in capital portion of redemption fees 40,196 249,480
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS (20,904,407 31,685,412
)
TOTAL INCREASE (DECREASE) IN NET ASSETS (8,280,385 35,293,689
)
NET ASSETS
Beginning of period 97,510,849 62,217,160
End of period (including undistributed net investment income of $15,890 and $426,403, respectively) $ 89,230,464 $ 97,510,849
OTHER INFORMATION
Shares
Sold 1,900,418 8,887,417
Issued in reinvestment of distributions 171,374 101,777
Redeemed (2,690,711 (8,078,436
) )
Net increase (decrease) (618,919 910,758
)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEAR ENDED YEARS ENDED FEBRUARY 28, TEN MONTHS YEAR ENDED
FEBRUARY 29, ENDED APRIL 30,
FEBRUARY 28,
SELECTED PER-SHARE DATA D 1996 1995 1994 1993 1992
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 33.91 $ 31.66 $ 28.62 $ 32.81 $ 26.25
Income from Investment Operations
Net investment income .01 .36 .29 .30 .12
Net realized and unrealized gain (loss) 8.89 2.65 5.97 (.84) 7.27
Total from investment operations 8.90 3.01 6.26 (.54) 7.39
Less Distributions (.08) (.22) (.23) (.31) (.18)
From net investment income
From net realized gain (3.22) (.60) (3.05) (3.36) (.71)
Total distributions (3.30) (.82) (3.28) (3.67) (.89)
Redemption fees added to paid in capital .02 .06 .06 .02 .06
Net asset value, end of period $ 39.53 $ 33.91 $ 31.66 $ 28.62 $ 32.81
TOTAL RETURN B, C 27.48% 9.90% 23.63% (1.61)% 29.07%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 89,230 $ 97,511 $ 62,217 $ 28,796 $ 39,566
Ratio of expenses to average net assets 1.99% 1.52% 1.93% 1.89% 2.16%
A
Ratio of expenses to average net assets after expense reductions 1.97% 1.51% 1.93% 1.89% 2.16%
E E A
Ratio of net investment income to average net assets .04% 1.07% .97% 1.21% .40%
A
Portfolio turnover rate 87% 106% 81% 214% 87%
A
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 7 OF NOTES TO
FINANCIAL STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND
FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED
ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS
WITH THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF
THE FUND'S EXPENSES (SEE NOTE 7 OF NOTES TO
FINANCIAL STATEMENTS).
</TABLE>
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 securities that have grown in value), but does not include certain
fees paid by shareholders upon exchange or redemption. If Fidelity had not
reimbursed certain expenses, the past five year and life of fund total
returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
FEBRUARY 29, 1996 YEAR YEARS FUND
CONSTRUCTION AND HOUSING 21.77% 104.11% 209.78%
CONSTRUCTION AND HOUSING 18.12% 97.98% 200.49%
(INCL. 3% SALES CHARGE)
S&P 500 34.70% 101.14% 270.48%
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 29, 1996 YEAR YEARS FUND
CONSTRUCTION AND HOUSING 21.77% 15.34% 12.74%
CONSTRUCTION AND HOUSING 18.12% 14.64% 12.38%
(INCL. 3% SALES CHARGE)
S&P 500 34.70% 14.99% 14.90%
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
19860929 9700.00 10000.00
19860930 9709.70 9962.80
19861031 10262.60 10537.66
19861130 10369.30 10793.72
19861231 10437.20 10518.48
19870131 12192.90 11935.32
19870228 13483.00 12406.77
19870331 14307.50 12765.32
19870430 13327.80 12651.71
19870531 12949.50 12761.78
19870630 12804.00 13406.25
19870731 13599.40 14085.95
19870831 13890.40 14611.35
19870930 12823.40 14291.37
19871031 8749.40 11213.00
19871130 8109.20 10289.05
19871231 9141.24 11072.05
19880131 9466.31 11538.18
19880229 10352.85 12075.86
19880331 10766.57 11702.72
19880430 11081.79 11832.62
19880531 11012.83 11935.56
19880630 11662.97 12483.41
19880731 11544.76 12435.97
19880831 10953.73 12013.15
19880930 11288.65 12524.91
19881031 11367.45 12873.10
19881130 11229.54 12689.01
19881231 11809.46 12911.07
19890131 12529.18 13856.16
19890228 12377.13 13511.14
19890331 12691.37 13825.95
19890430 13188.08 14543.52
19890531 13654.38 15132.53
19890630 13645.75 15046.28
19890731 14199.39 16404.95
19890831 14438.22 16726.49
19890930 14698.76 16657.91
19891031 13873.72 16271.45
19891130 14079.98 16603.39
19891231 13769.49 17001.87
19900131 12900.94 15861.04
19900228 13167.30 16065.65
19900331 13908.46 16491.39
19900430 13503.14 16079.11
19900531 14753.86 17646.82
19900630 14487.50 17526.82
19900731 13731.86 17470.73
19900831 11986.06 15891.38
19900930 10748.37 15117.47
19901031 10370.55 15052.46
19901130 11373.73 16024.85
19901231 12442.05 16471.95
19910131 13536.43 17190.12
19910228 14722.01 18419.22
19910331 15086.80 18864.96
19910430 15321.31 18910.24
19910531 16845.63 19727.16
19910630 15985.76 18823.66
19910731 16402.66 19700.84
19910831 17080.14 20167.75
19910930 16702.32 19830.95
19911031 16415.69 20096.68
19911130 15594.91 19286.79
19911231 17582.47 21493.19
19920131 18889.56 21093.42
19920229 19198.76 21367.64
19920331 19184.71 20950.97
19920430 19451.75 21566.92
19920531 20070.16 21672.60
19920630 18636.06 21349.68
19920731 18973.62 22222.88
19920831 18326.63 21767.31
19920930 18565.74 22024.17
19921031 19212.72 22101.25
19921130 20323.86 22854.91
19921231 20872.39 23136.02
19930131 21744.42 23330.36
19930228 22138.23 23647.66
19930331 22658.64 24146.62
19930430 22123.98 23562.27
19930531 22363.23 24193.74
19930630 22630.63 24263.90
19930731 23404.69 24166.85
19930831 24375.78 25082.77
19930930 25163.91 24889.63
19931031 26078.71 25404.85
19931130 25670.57 25163.50
19931231 27887.78 25467.98
19940131 28798.86 26333.89
19940228 28215.20 25620.25
19940331 26563.85 24503.20
19940430 26503.76 24816.84
19940531 25101.29 25223.84
19940630 24485.92 24605.86
19940731 25187.15 25412.93
19940831 26145.98 26454.86
19940930 24686.27 25806.71
19941031 23956.42 26387.37
19941130 22983.28 25426.34
19941231 23441.19 25803.41
19950131 23544.07 26472.49
19950228 24675.71 27504.13
19950331 25116.61 28315.77
19950430 25146.00 29149.67
19950531 26380.52 30314.78
19950630 26630.37 31019.00
19950731 27864.89 32047.59
19950831 27879.58 32128.03
19950930 27717.92 33483.83
19951031 27703.22 33364.29
19951130 29408.04 34828.98
19951231 30186.91 35499.79
19960131 30125.46 36708.20
19960229 30048.65 37048.49
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 29, 1996, your investment would have grown to $30,049 -
a 200.49% increase. That compares to $10,000 invested in the S&P 500, which
would have grown to $37,048 over the same period - a 270.48% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 29, 1996
% OF FUND'S
INVESTMENTS
Lowe's Companies, Inc. 5.4
Sherwin-Williams Co. 5.0
Fluor Corp. 4.9
Masco Corp. 4.5
Pulte Corp. 3.4
Toro Co. 3.2
American Homestar Corp. 2.9
Champion Enterprises, Inc. 2.7
Beazer Homes USA, Inc. 2.5
Continental Homes Holding Corp. 2.4
TOP INDUSTRIES AS OF FEBRUARY 29, 1996
Operative Builders 11.2%
Cement 7.5%
Plumbing
Supplies - Wholesale 5.6%
Lumber & Building
Materials - Retail 5.4%
Paint & Varnish 5.0%
All Others 65.3% *
Row: 1, Col: 1, Value: 65.3
Row: 1, Col: 2, Value: 5.0
Row: 1, Col: 3, Value: 5.4
Row: 1, Col: 4, Value: 5.6
Row: 1, Col: 5, Value: 7.5
Row: 1, Col: 6, Value: 11.2
* INCLUDES SHORT-TERM INVESTMENTS
CONSTRUCTION AND HOUSING PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
William Bower,
Portfolio Manager of Fidelity Select Construction and Housing Portfolio
Q. HOW DID THE FUND PERFORM, BILL?
A. For the 12 months ended February 29, 1996, the fund had a total return
of 21.77%. For the same period, the S&P 500 Index returned 34.70%.
Q. WHAT DO YOU THINK HELD THE FUND BACK?
A. Earlier in the period, I placed a significant amount of the fund's
assets in the stocks of home building companies. Home builders' stocks,
which have correlated historically to the performance of the 10-year U.S.
Treasury note, faded as the bond market peaked in November and remained
choppy for the remainder of the fund's reporting period.
Q. SO DO YOU NOW HAVE A NEGATIVE OPINION ABOUT HOME BUILDERS?
A. Not at all. Although I have scaled back the fund's weighting in home
builders and redistributed the assets elsewhere, I still have a positive
view of this part of the sector. During the period, many home building
companies raised revenues and beat analysts' estimates, but they were
undercut by the bond market as I discussed before.
Q. HOW DID YOU REDISTRIBUTE THE ASSETS YOU DISCUSSED ABOVE?
A. One area of the stock market that generally underperformed in 1995 was
retail stocks. I sought to take advantage of the low stock prices in this
area by buying more of construction-related retailers, such as Lowe's, Home
Depot and Sherwin-Williams. I also shifted more assets into manufactured
housing companies and related businesses. For example, companies like
American Homestar, Champion Enterprises, Palm Harbor Homes and Green Tree
Financial - which is the largest underwriter of manufactured housing loans
- - tend to be less sensitive to interest rates.
Q. WHY HAS FLUOR REMAINED A TOP HOLDING OF THE FUND FOR MOST OF LAST YEAR?
A. Fluor is a construction and engineering contractor that specializes in
worldwide infrastructure spending. The uptick in construction could be
beneficial to some international firms such as Fluor.
Q. WHAT WERE SOME STOCKS THAT PERFORMED WELL FOR THE FUND?
A. Sherwin-Williams bucked the low-performance trend of many retail stocks
as the paint company showed steady earnings growth during the period.
Additionally, as many parts of the country were blanketed with over 100
inches of snow, Toro - the lawn and garden equipment maker - saw snowblower
sales rise appreciably.
Q. WERE THERE ANY OTHER DISAPPOINTMENTS?
A. The cement industry had the same problem as the home building industry -
solid prospects undermined by the bond market. Despite the interest rate
environment, however, I found many cement companies to be attractively
priced and able to fetch good prices for their product. Some companies the
fund owned - which I call "cement and aggregates" because they often mine
the rocks used to make cement as well as distribute it - include Medusa,
Lafarge, Texas Industries and CalMat.
Q. WHAT'S YOUR OUTLOOK?
A. The cyclicality of the construction and housing market always plays a
role in the fund's performance. I believe that if current economic
conditions hold, these stocks have the potential to deliver better than
expected earnings. Additionally, given a stable economy and reasonable
valuations of construction and housing stocks, the fund would also appear
to have solid prospects.
FUND FACTS
START DATE: September 29, 1986
TRADING SYMBOL: FSHOX
SIZE: as of February 29, 1996, more than
$42 million
MANAGER: William Bower, since 1994; joined
Fidelity in 1994
(checkmark)
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
CONSTRUCTION AND HOUSING PORTFOLIO
INVESTMENTS FEBRUARY 29, 1996
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 89.4%
SHARES VALUE (NOTE 1)
AUTOS, TIRES, & ACCESSORIES - 1.3%
AUTO & TRUCK PARTS - 1.1%
Titan Wheel International, Inc. 30,000 $ 457,500
MOTOR VEHICLES & CAR BODIES - 0.2%
Spartan Motors, Inc. 10,000 87,500
TOTAL AUTOS, TIRES, & ACCESSORIES 545,000
BUILDING MATERIALS - 21.8%
ABRASIVES AND ASBESTOS - 0.0%
Manville Corp. (a) 100 1,275
CEMENT - 7.5%
Centex Construction Products 15,900 230,550
Lafarge Corp. 30,000 555,000
Medusa Corp. 27,700 810,225
Texas Industries, Inc. 10,000 617,500
Vulcan Materials Co. 17,000 922,250
3,135,525
CONCRETE, GYPSUM, PLASTER - 0.7%
CalMat Co. 15,000 271,875
FABRICATED STRUCTURAL METAL - 0.5%
United Dominion Industries Ltd. 9,100 219,141
HEATING & AIR-CONDITION EQUIPMENT - 1.4%
Falcon Building Products, Inc. (a) 60,000 577,500
PAINT & VARNISH - 5.0%
Sherwin-Williams Co. 48,900 2,072,133
PAVING, ROOFING & SIDING - 1.1%
Elcor Corp. 21,000 467,250
PLUMBING SUPPLIES - WHOLESALE - 5.6%
Masco Corp. 66,050 1,882,425
Shelter Components Corp. 36,000 472,500
2,354,925
TOTAL BUILDING MATERIALS 9,099,624
CHEMICALS & PLASTICS - 1.4%
CHEMICALS - 1.1%
PPG Industries, Inc. 10,000 463,750
PLASTICS - 0.3%
Applied Extrusion Technologies Inc. (a) 10,000 120,000
TOTAL CHEMICALS & PLASTICS 583,750
CONSTRUCTION - 21.5%
CONSTRUCTION - 1.7%
Walter Industries, Inc. (a) 52,500 715,313
GENERAL BUILDING - 1.1%
Crossman Communities, Inc. (a) 5,000 95,000
DR Horton, Inc. 33,000 371,250
466,250
MOBILE HOMES - 1.0%
Oakwood Homes Corp. 5,300 236,513
Redman Industries, Inc. (a) 5,000 181,250
417,763
OPERATIVE BUILDERS - 11.2%
Centex Corp. 8,100 232,875
Continental Homes Holding Corp. 48,600 1,002,375
Engle Homes, Inc. 20,000 195,000
Lennar Corp. 29,050 697,200
Pulte Corp. 47,000 1,404,125
SHARES VALUE (NOTE 1)
Ryland Group, Inc. 10,000 $ 152,500
U.S. Home Corp. (a) 19,000 496,375
Washington Homes, Inc. (a) 101,700 483,075
4,663,525
PREFABRICATED WOOD BUILDINGS - 3.5%
American Homestar Corp. (a) 76,000 1,197,000
Palm Harbor Homes, Inc. (a) 12,000 252,000
1,449,000
SINGLE-FAMILY HOUSING CONSTRUCTION - 3.0%
Beazer Homes USA, Inc. (a) 55,000 1,045,000
Weitzer Homebuilders, Inc. Class A 50,000 200,000
1,245,000
TOTAL CONSTRUCTION 8,956,851
CONSUMER ELECTRONICS - 4.4%
APPLIANCES - 3.8%
Black & Decker Corp. 20,600 695,250
Sunbeam-Oster, Inc. 56,700 914,288
1,609,538
ELECTRIC HOUSEWARES & FANS - 0.6%
Duracraft Corp. (a) 5,700 246,525
TOTAL CONSUMER ELECTRONICS 1,856,063
CREDIT & OTHER FINANCE - 2.3%
MORTGAGE BANKERS - 2.3%
Green Tree Financial Corp. 30,000 948,750
ENGINEERING - 5.9%
ARCHITECTS & ENGINEERS - 4.9%
Fluor Corp. 30,200 2,027,175
SPECIAL CONTRACTORS - 1.0%
Foster Wheeler Corp. 10,000 440,000
TOTAL ENGINEERING 2,467,175
ENTERTAINMENT - 0.5%
RECREATIONAL SERVICES - 0.5%
Vacation Break USA, Inc. (a) 25,000 193,750
FEDERAL SPONSORED CREDIT - 1.7%
FEDERAL & FEDERALLY SPONSORED CREDIT AGENCIES - 1.7%
Federal National Mortgage Association 23,200 733,700
GROCERY STORES - 0.4%
NONDURABLE GOODS - WHOLESALE - 0.4%
Central Garden & Pet Co. (a) 20,000 177,500
HOME FURNISHINGS - 4.7%
FURNITURE - 2.9%
Interco, Inc. (a) 45,000 410,625
Leggett & Platt, Inc. 35,000 818,125
1,228,750
FURNITURE STORES - 1.8%
Haverty Furniture Companies, Inc. 41,750 511,438
Heilig-Meyers Co. 15,753 220,542
731,980
TOTAL HOME FURNISHINGS 1,960,730
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
HOUSEHOLD PRODUCTS - 1.4%
SOAPS & DETERGENTS - 1.4%
Rubbermaid, Inc. 20,500 $ 576,563
INDUSTRIAL MACHINERY & EQUIPMENT - 9.2%
ACCESS & MEASURING CUTTING TOOLS - 0.1%
Stanley Works 500 28,250
CONSTRUCTION EQUIPMENT - 0.8%
Caterpillar, Inc. 5,100 341,063
FARM MACHINERY & EQUIPMENT - 2.9%
Allied Products Corp. 10,200 244,800
Deere & Co. 25,000 978,125
1,222,925
GENERAL INDUSTRIAL MACHINERY - 2.2%
Ingersoll-Rand Co. 21,900 895,163
LAWN, GARDEN TRACTORS, EQUIPMENT - 3.2%
Toro Co. 40,200 1,346,700
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 3,834,101
IRON & STEEL - 0.6%
BLAST FURNACES - 0.3%
Northwestern Steel & Wire Co. (a) 16,100 128,800
IRON & STEEL BLAST FURNACES, MILLS - 0.3%
Steel Technologies, Inc. 10,000 118,125
TOTAL IRON & STEEL 246,925
LEISURE DURABLES & TOYS - 3.1%
MOTOR HOMES - 0.4%
Thor Industries, Inc. 10,000 175,000
TRAVEL TRAILERS AND CAMPERS - 2.7%
Champion Enterprises, Inc. (a) 37,000 1,119,250
TOTAL LEISURE DURABLES & TOYS 1,294,250
METALS & MINING - 1.8%
METAL ORES - 0.9%
Wolverine Tube, Inc. (a) 10,100 392,638
NON-METALLIC MINERAL MINING - 0.9%
Martin Marietta Materials, Inc. 16,800 378,000
TOTAL METALS & MINING 770,638
POLLUTION CONTROL - 0.0%
POLLUTION EQUIPMENT & DESIGN - 0.0%
Zurn Industries, Inc. 100 2,163
REAL ESTATE - 0.4%
SUBDIVIDED REAL ESTATE DEVELOPMENT - 0.4%
Catellus Development Corp. (a) 20,000 152,500
RETAIL & WHOLESALE, MISCELLANEOUS - 7.0%
BUILDING MATERIALS - RETAIL - 1.2%
Home Depot, Inc. (The) 11,300 488,725
LUMBER & BUILDING MATERIALS - RETAIL - 5.4%
Lowe's Companies, Inc. 73,000 2,263,000
LUMBER - WHOLESALE - 0.4%
Cameron Ashley, Inc. (a) 20,000 177,500
TOTAL RETAIL & WHOLESALE, MISCELLANEOUS 2,929,225
TOTAL COMMON STOCKS
(Cost $34,001,038) 37,329,258
REPURCHASE AGREEMENTS - 10.6%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations) in a joint
trading account at 5.41%, dated
2/29/96 due 3/1/96 $ 4,411,663 $ 4,411,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $38,412,038) $ 41,740,258
LEGEND
1. Non-income producing
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $65,687,110 and $51,684,234, respectively (see Note 3 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $27,836 for the period (see
Note 4 of Notes to Financial Statements).
The maximum loan and the average daily loan balances during the periods for
which loans were outstanding amounted to $3,426,000 and $2,078,462,
respectively. The weighted average interest rate paid was 6.4% (see Note 5
of Notes to Financial Statements).
INCOME TAX INFORMATION
At February 29, 1996, the aggregate cost of investment securities for
income tax purposes was $38,463,596. Net unrealized appreciation aggregated
$3,276,662, of which $4,330,777 related to appreciated investment
securities and $1,054,115 related to depreciated investment securities.
The fund hereby designates approximately $710,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 28% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate shareholders
(unaudited).
The fund will notify shareholders in January 1997 of the applicable
percentage for use in preparing 1996 income tax returns.
CONSTRUCTION AND HOUSING PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
FEBRUARY 29, 1996
ASSETS
Investment in securities, at value (including repurchase agreements of $4,411,000) (cost $38,412,038) - See $ 41,740,258
accompanying schedule
Cash 59
Receivable for investments sold 875,651
Receivable for fund shares sold 176,726
Dividends receivable 36,208
Redemption fees receivable 124
Other receivables 156
TOTAL ASSETS 42,829,182
LIABILITIES
Payable for fund shares redeemed $ 108,620
Accrued management fee 21,898
Other payables and 30,651
accrued expenses
TOTAL LIABILITIES 161,169
NET ASSETS $ 42,668,013
Net Assets consist of:
Paid in capital $ 37,005,694
Undistributed net investment income 1,803
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 2,332,295
Net unrealized appreciation (depreciation) on investments 3,328,221
and assets and liabilities in
foreign currencies
NET ASSETS, for 2,181,801 $ 42,668,013
shares outstanding
NET ASSET VALUE and redemption price per share ($42,668,013 (divided by) 2,181,801 shares) $19.56
Maximum offering price per share (100/97.00 of $19.56) $20.16
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED FEBRUARY 29, 1996
INVESTMENT INCOME $ 531,053
Dividends
Interest 227,523
TOTAL INCOME 758,576
EXPENSES
Management fee $ 258,650
Transfer agent 282,074
Fees
Redemption fees (39,552
)
Accounting fees and expenses 49,539
Non-interested trustees' compensation 280
Custodian fees and expenses 16,231
Registration fees 14,601
Audit 16,932
Legal 201
Interest 4,837
Miscellaneous 1,316
Total expenses before reductions 605,109
Expense reductions (12,569 592,540
)
NET INVESTMENT INCOME 166,036
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 4,719,864
Foreign currency transactions (17 4,719,847
)
Change in net unrealized appreciation (depreciation) on
investment securities 2,880,267
NET GAIN (LOSS) 7,600,114
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 7,766,150
OTHER INFORMATION $ 309,250
Sales charges paid to FDC
Deferred sales charges withheld $ 1,448
by FDC
Exchange fees withheld by FSC $ 27,915
Expense reductions $ 11,744
Directed brokerage arrangements
Custodian interest credits 825
$ 12,569
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
FEBRUARY 29, FEBRUARY 28,
1996 1995
<TABLE>
<CAPTION>
<S> <C> <C>
Operations $ 166,036 $ (45,685
Net investment income (loss) )
Net realized gain (loss) 4,719,847 847,689
Change in net unrealized appreciation (depreciation) 2,880,267 (10,454,301
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 7,766,150 (9,652,297
)
Distributions to shareholders (162,155 -
From net investment income )
From net realized gain (1,876,368 (804,434
) )
TOTAL DISTRIBUTIONS (2,038,523 (804,434
) )
Share transactions 90,250,248 23,825,749
Net proceeds from sales of shares
Reinvestment of distributions 2,017,008 794,528
Cost of shares redeemed (72,254,026 (78,326,758
) )
Paid in capital portion of redemption fees 64,179 27,046
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS 20,077,409 (53,679,435
)
TOTAL INCREASE (DECREASE) IN NET ASSETS 25,805,036 (64,136,166
)
NET ASSETS
Beginning of period 16,862,977 80,999,143
End of period (including undistributed net investment income of $1,803 and $1,585, respectively) $ 42,668,013 $ 16,862,977
OTHER INFORMATION
Shares
Sold 4,943,241 1,308,527
Issued in reinvestment of distributions 103,809 47,271
Redeemed (3,869,788 (4,437,862
) )
Net increase (decrease) 1,177,262 (3,082,064
)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEAR ENDED YEARS ENDED FEBRUARY 28, TEN MONTHS YEAR ENDED
FEBRUARY 29, ENDED APRIL 30,
FEBRUARY 28,
SELECTED PER-SHARE DATA D 1996 1995 1994 1993 1992
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 16.79 $ 19.82 $ 15.74 $ 13.84 $ 11.76
Income from Investment Operations
Net investment income (loss) .07 (.02) .01 .02 (.06)
Net realized and unrealized gain (loss) 3.55 (2.50) 4.26 1.87 2.93
Total from investment operations 3.62 (2.52) 4.27 1.89 2.87
Less Distributions (.07) - - - -
From net investment income
From net realized gain (.81) (.52) (.22) (.01) (.88)
Total distributions (.88) (.52) (.22) (.01) (.88)
Redemption fees added to paid in capital .03 .01 .03 .02 .09
Net asset value, end of period $ 19.56 $ 16.79 $ 19.82 $ 15.74 $ 13.84
TOTAL RETURN B, C 21.77% (12.54)% 27.45% 13.81% 26.96%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 42,668 $ 16,863 $ 80,999 $ 31,111 $ 26,687
Ratio of expenses to average net assets 1.43% 1.76% 1.67% 2.02% 2.50% F
A
Ratio of expenses to average net assets after expense reductions 1.40% 1.74% 1.66% 2.02% 2.50%
E E E A
Ratio of net investment income (loss) to average net assets .39% (.11)% .03% .20% (.49)%
A
Portfolio turnover rate 139% 45% 35% 60% 183%
A
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 7 OF NOTES TO
FINANCIAL STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED
BASED ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS
WITH THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF
THE FUND'S EXPENSES (SEE NOTE 7 OF NOTES TO
FINANCIAL STATEMENTS).
F DURING THE PERIOD, FMR AGREED TO REIMBURSE A PORTION OF
THE FUND'S EXPENSES, OR EXPENSES WERE LIMITED IN ACCORDANCE
WITH A STATE LIMITATION. WITHOUT THIS
REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD HAVE BEEN HIGHER.
</TABLE>
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 securities that have grown in value), but does not include certain
fees paid by shareholders upon exchange or redemption. If Fidelity had not
reimbursed certain expenses, the life of fund total returns would have been
lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
FEBRUARY 29, 1996 YEAR YEARS FUND
ENVIRONMENTAL SERVICES 27.49% 8.45% 41.00%
ENVIRONMENTAL SERVICES 23.67% 5.20% 36.77%
(INCL. 3% SALES CHARGE)
S&P 500 34.70% 101.14% 140.35%
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 29, 1989. You can compare these figures to the performance
of the S&P 500 - a common proxy for the U.S. stock market. This benchmark
includes reinvested dividends and capital gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
FEBRUARY 29, 1996 YEAR YEARS FUND
ENVIRONMENTAL SERVICES 27.49% 1.64% 5.28%
ENVIRONMENTAL SERVICES 23.67% 1.02% 4.80%
(INCL. 3% SALES CHARGE)
S&P 500 34.70% 14.99% 14.03%
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
19890629 9700.00 10000.00
19890630 9573.90 9761.13
19890731 10485.70 10642.57
19890831 10621.50 10851.16
19890930 11193.80 10806.67
19891031 10941.60 10555.96
19891130 11009.50 10771.30
19891231 11368.64 11029.81
19900131 10358.96 10289.71
19900228 10562.83 10422.44
19900331 11019.13 10698.64
19900430 11077.38 10431.17
19900531 12106.48 11448.21
19900630 12485.11 11370.37
19900731 12407.45 11333.98
19900831 10863.80 10309.39
19900930 10281.29 9807.32
19901031 10135.66 9765.15
19901130 10485.17 10395.98
19901231 11087.09 10686.03
19910131 12057.94 11151.94
19910228 12611.32 11949.30
19910331 12611.32 12238.47
19910430 12572.49 12267.85
19910531 12601.62 12797.82
19910630 11650.18 12211.68
19910731 12019.11 12780.74
19910831 12232.69 13083.64
19910930 11941.44 12865.15
19911031 11494.85 13037.54
19911130 10863.80 12512.13
19911231 11936.55 13943.51
19920131 13005.20 13684.17
19920229 13146.34 13862.06
19920331 11835.74 13591.75
19920430 11482.88 13991.35
19920531 11190.52 14059.90
19920630 10592.18 13850.41
19920731 10665.31 14416.89
19920831 10445.94 14121.35
19920930 10571.29 14287.98
19921031 11072.70 14337.99
19921130 11762.13 14826.91
19921231 11772.58 15009.28
19930131 12002.39 15135.36
19930228 11866.59 15341.20
19930331 11574.10 15664.90
19930430 11333.85 15285.81
19930531 11584.55 15695.47
19930630 11438.31 15740.99
19930731 10957.79 15678.02
19930831 11542.77 16272.22
19930930 11553.21 16146.93
19931031 11877.04 16481.17
19931130 11354.74 16324.60
19931231 11699.45 16522.12
19940131 12691.82 17083.88
19940228 12462.01 16620.90
19940331 11333.85 15896.23
19940430 11521.87 16099.70
19940531 11490.54 16363.74
19940630 10801.10 15962.83
19940731 11030.91 16486.41
19940831 11417.41 17162.35
19940930 11344.29 16741.87
19941031 10957.79 17118.56
19941130 10341.48 16495.11
19941231 10581.74 16739.73
19950131 10592.18 17173.79
19950228 10727.98 17843.05
19950331 11239.83 18369.60
19950430 12044.17 18910.59
19950531 12232.20 19666.44
19950630 12733.60 20123.29
19950731 13214.12 20790.58
19950831 13402.14 20842.77
19950930 13872.21 21722.33
19951031 12890.29 21644.78
19951130 13339.47 22594.99
19951231 13346.83 23030.17
19960131 13809.34 23814.11
19960229 13677.20 24034.87
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 29, 1996, your investment would have grown to $13,677 -
a 36.77% increase. That compares to $10,000 invested in the S&P 500, which
would have grown to $24,035 over the same period - a 140.35% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 29, 1996
% OF FUND'S
INVESTMENTS
Addington Resources, Inc. 9.0
Memtec Ltd. sponsored ADR 8.2
Harsco Corp. 6.2
WMX Technologies, Inc. 5.5
Allied Waste Industries, Inc. 4.8
Browning-Ferris Industries, Inc. 4.6
IMCO Recycling, Inc. 4.1
TSI, Inc. 4.0
Wheelabrator Technologies, Inc. 3.7
Cadiz Land, Inc. 3.3
TOP INDUSTRIES AS OF FEBRUARY 29, 1996
Refuse Systems 26.9%
Pollution Equipment & Design 9.3%
Coal 9.0%
Manufactured Products 8.2%
Ordnance 6.2%
All Others 40.4% *
Row: 1, Col: 1, Value: 40.4
Row: 1, Col: 2, Value: 6.2
Row: 1, Col: 3, Value: 8.199999999999999
Row: 1, Col: 4, Value: 9.0
Row: 1, Col: 5, Value: 9.300000000000001
Row: 1, Col: 6, Value: 26.9
* INCLUDES SHORT-TERM INVESTMENTS
ENVIRONMENTAL SERVICES PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Robert Ewing,
Portfolio Manager of
Fidelity Select Environmental Services Portfolio
Note to Shareholders: On January 3, 1996, Bob Ewing replaced Pip Barton as
portfolio manager of the fund.
Q. BOB, HOW HAS THE FUND PERFORMED?
A. For the 12 months ended February 29, 1996, the fund had a total return
of 27.49%. By comparison, the S&P 500 Index returned 34.70% during the same
12-month period.
Q. WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE?
A. The fund underperformed the market due primarily to weakness in the
stocks of the large solid waste companies during the second half of 1995.
The principal reason that these stocks lagged was the influence of
weakening paper prices. As the economy weakened, these companies received
less and less for their recycled paper. At the same time, the fund was up
more than 27% over the past 12 months. The fund did this well principally
due to its positioning outside of the solid waste industry through most of
the year, and because of its avoidance of the hazardous waste sector,
consulting and other areas that underperformed dramatically over the year.
Mid-capitalization solid waste companies helped the fund, as did individual
situations such as small equipment and monitoring firms.
Q. HOW HAVE YOU POSITIONED THE FUND SINCE TAKING IT OVER IN JANUARY?
A. I'm concentrating on four strategies. First, I've increased investments
in large solid waste companies that have recycling businesses. Current
recycling prices are below long-term equilibrium levels and, if the economy
improves at all, we should start to see the prices that these companies
receive for their recycled paper go up. Examples of the fund's holdings
that have exposure to recycled paper products are WMX and Browning-Ferris.
Second, I'm trying to take advantage of consolidation activity in the
mid-cap sector by owning companies that will benefit from the consolidating
solid waste environment, as well as companies that are acquisition
candidates. The third strategy is to stay away from sectors that are in
supply/demand imbalances. Hazardous waste disposal, which is in serious
oversupply, is a good example. Finally, I've also tried to concentrate the
fund's holdings. Over time, you might see that the fund's top 20 holdings
represent a bigger portion of fund assets, as I try to concentrate on the
best opportunities at the fairest prices.
Q. WHAT WERE SOME STOCKS THAT HELPED THE FUND?
A. TSI was one. It makes environmental monitoring and protection equipment,
and has specifically benefited from contracts to make military gas mask fit
testers. Memtec is another. It makes filters, and has been one of the most
attractively valued ways to participate in the water treatment industry.
This industry is going through a lot of change in industrial and commercial
applications. Companies and municipalities are starting to contract outside
specialists to run drinking, process and waste water treatment facilities.
Memtec makes the raw materials that go into this kind of plant. And
finally, Allied Waste has been the beneficiary of consolidation in the
solid waste industry.
Q. WHAT WERE SOME OF THE STOCKS THAT DIDN'T TURN OUT AS WELL AS EXPECTED?
A. Addington Resources was one example. It finally sold its
non-environmental assets at the end of the year, but the story isn't well
understood. Currently, it has some attractive but under-utilized assets.
TETRA Technologies - which makes calcium chloride for oil rig drilling
fluids and ice melt - suffered from fears that added capacity in the
industry would hurt the commodity's price.
Q. WHAT'S YOUR OUTLOOK?
A. I'll be concentrating on three factors that I believe will be driving
environmental stocks in 1996. First, I will closely monitor economic
activity. If the economy accelerates, I would expect to see recycled paper
prices increase, helping the fund's large solid waste company investments.
Second, I'll watch for any hint of price stabilization in the hazardous
waste sector. If there is any such stability, the stocks could become
relatively attractive. Finally, I'll closely watch what happens in Congress
with Superfund and other clean-up authorizations.
FUND FACTS
START DATE: June 29, 1989
TRADING SYMBOL: FSLEX
SIZE: as of February 29, 1996, more than
$27 million
MANAGER: Robert Ewing, since January 1996;
analyst, restaurant, foods, specialty retail,
toy retail industries, initial public offerings,
1990-1993; analyst, insurance, mortgage,
specialty finance industries, since 1993;
joined Fidelity in 1990
(checkmark)
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
ENVIRONMENTAL SERVICES PORTFOLIO
INVESTMENTS FEBRUARY 29, 1996
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 96.8%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 6.2%
ORDNANCE - 6.2%
Harsco Corp. 26,100 $ 1,722,600
BUILDING MATERIALS - 2.4%
AIRCONDITIONING EQUIPMENT - 2.4%
Thermo Power Corp. (a) 49,900 654,934
COAL - 9.0%
Addington Resources, Inc. (a) 199,800 2,497,500
COMPUTER SERVICES & SOFTWARE - 0.3%
PREPACKAGED COMPUTER SOFTWARE - 0.3%
Telepanel Systems, Inc. (a) 70,400 97,610
CONSTRUCTION - 2.9%
PREFABRICATED METAL BUILDINGS - 2.9%
American Buildings Co. (a) 37,800 798,525
DRUGS & PHARMACEUTICALS - 1.6%
COMMERCIAL LABORATORY RESEARCH - 1.6%
Energy Biosystems Corp. (a) 49,900 336,825
Zenon Environmental, Inc. (a) 34,400 97,902
434,727
ELECTRONIC INSTRUMENTS - 5.2%
INDUSTRIAL MEASUREMENT INSTRUMENTS - 4.0%
TSI, Inc. 62,800 1,099,000
LABORATORY & RESEARCH EQUIPMENT - 1.2%
Microfluidics International Corp. (a) 191,400 334,950
TOTAL ELECTRONIC INSTRUMENTS 1,433,950
ENERGY SERVICES - 2.0%
OIL & GAS SERVICES - 2.0%
Newpark Resources, Inc. 16,000 390,000
Serv-Tech, Inc. (a) 27,300 160,388
550,388
ENGINEERING - 3.6%
ARCHITECTS & ENGINEERS - 3.6%
Fluor Corp. 12,400 832,350
Harding Lawson Associations Group,
Inc. (a) 27,900 174,375
1,006,725
HOUSEHOLD PRODUCTS - 8.2%
MANUFACTURED PRODUCTS - 8.2%
Memtec Ltd. sponsored ADR 96,000 2,280,000
INDUSTRIAL MACHINERY & EQUIPMENT - 5.5%
SERVICE INDUSTRY MACHINERY - 2.8%
Trojan Technologies Corp. (a) 99,300 778,980
SPECIAL INDUSTRIAL MACHINERY - 2.7%
Thermo Fibertek, Inc. (a) 34,250 753,500
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 1,532,480
MEDICAL EQUIPMENT & SUPPLIES - 0.4%
MEDICAL TECHNOLOGY - 0.1%
Thermedics, Inc. (a) 1,000 26,000
X-RAY ELECTRO-MEDICAL APPARATUS - 0.3%
Imatron, Inc. (a) 37,100 77,678
TOTAL MEDICAL EQUIPMENT & SUPPLIES 103,678
SHARES VALUE (NOTE 1)
METALS & MINING - 4.1%
SECONDARY NONFERROUS SMELTING - 4.1%
IMCO Recycling, Inc. 52,700 $ 1,146,225
POLLUTION CONTROL - 41.7%
HAZARDOUS WASTE MANAGEMENT - 2.8%
American Ecology Corp. 77,100 250,575
TRC Companies, Inc. (a) 74,900 524,300
774,875
POLLUTION EQUIPMENT & DESIGN - 9.3%
Ogden Corp. 42,400 906,300
Sevenson Environmental Services, Inc. 30,600 512,550
TETRA Technologies, Inc. (a) 36,300 494,588
Waste Management International PLC
sponsored ADR (a) 33,700 341,213
Zurn Industries, Inc. 15,500 335,188
2,589,839
REFUSE SYSTEMS - 26.9%
Allied Waste Industries, Inc. (a) 162,600 1,341,450
Biosafe International, Inc. 125,000 421,875
Browning-Ferris Industries, Inc. 43,300 1,282,763
Laidlaw, Inc. Class B 5,000 49,714
Sanifill, Inc. (a) 11,000 430,375
United Waste Systems, Inc. (a) 12,000 558,000
WMX Technologies, Inc. 53,100 1,513,350
Western Waste Industries, Inc. (a) 26,780 840,223
Wheelabrator Technologies, Inc. 64,800 1,028,700
7,466,450
SANITARY SERVICES - 2.7%
Safety Kleen Corp. 10,000 145,000
USA Waste Services, Inc. (a) 28,000 598,500
743,500
TOTAL POLLUTION CONTROL 11,574,664
REAL ESTATE - 3.3%
REAL ESTATE, GENERAL - 3.3%
Cadiz Land, Inc. (a) 163,600 910,025
SERVICES - 0.4%
BUSINESS SERVICES - 0.4%
Prins Recycling Corp. 20,000 121,250
TOTAL COMMON STOCKS
(Cost $26,427,853) 26,865,281
REPURCHASE AGREEMENTS - 3.2%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations) in a joint
trading account at 5.41%, dated
2/29/96 due 3/1/96 $ 883,133 883,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $27,310,853) $ 27,748,281
LEGEND
2. Non-income producing
OTHER INFORMATION
A company in which the fund has ownership of at least 5% of the voting
securities is an affiliated company. Transactions during the period with
companies that are or were affiliates are as follows:
PURCHASES SALES DIVIDEND MARKET
AFFILIATE COST COST INCOME VALUE
Microfluidics International Corp. $ 581,603 $ 1,065,109 $ - $ -
Purchases and sales of securities, other than short-term securities,
aggregated $41,139,581 and $52,729,523, respectively (see Note 3 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $36,310 for the period (see
Note 4 of Notes to Financial Statements).
Distribution of investments by country of issue, as a percentage of total
value of investment in securities, is as follows:
United States 86.9%
Australia 8.2
Canada 3.7
United Kingdom 1.2
TOTAL 100.0%
INCOME TAX INFORMATION
At February 29, 1996, the aggregate cost of investment securities for
income tax purposes was $27,358,288. Net unrealized appreciation aggregated
$389,993, of which $3,064,683 related to appreciated investment securities
and $2,674,690 related to depreciated investment securities.
The fund intends to elect to defer to its fiscal year ending February 28,
1997 approximately $245,000 of losses recognized during the period November
1, 1995 to February 29, 1996.
A total of 10% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate shareholders
(unaudited).
The fund will notify shareholders in January 1997 of the applicable
percentage for use in preparing 1996 income tax returns.
ENVIRONMENTAL SERVICES PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
FEBRUARY 29, 1996
ASSETS
Investment in securities, at value (including repurchase agreements $ 27,748,281
of $883,000)
(cost $27,310,853) - See accompanying schedule
Cash 291,970
Receivable for investments sold 13,125
Receivable for fund shares sold 65,254
Dividends receivable 8,157
Redemption fees receivable 45
Other receivables 45,086
TOTAL ASSETS 28,171,918
LIABILITIES
Payable for investments purchased $ 291,216
Payable for fund shares redeemed 232,335
Accrued management fee 14,750
Other payables and 46,397
accrued expenses
TOTAL LIABILITIES 584,698
NET ASSETS $ 27,587,220
Net Assets consist of:
Paid in capital $ 27,195,305
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions (46,325
)
Net unrealized appreciation (depreciation) on investments 438,240
and assets and liabilities in
foreign currencies
NET ASSETS, for 2,221,547 $ 27,587,220
shares outstanding
NET ASSET VALUE and redemption price per share ($27,587,220 (divided by) 2,221,547 shares) $12.42
Maximum offering price per share (100/97.00 of $12.42) $12.80
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED FEBRUARY 29, 1996
INVESTMENT INCOME $ 181,397
Dividends
Interest 103,519
TOTAL INCOME 284,916
EXPENSES
Management fee $ 195,326
Transfer agent 481,385
Fees
Redemption fees (33,944
)
Accounting fees and expenses 47,732
Non-interested trustees' compensation 266
Custodian fees and expenses 21,274
Registration fees 19,522
Audit 18,892
Legal 487
Miscellaneous 1,320
Total expenses before reductions 752,260
Expense reductions (11,422 740,838
)
NET INVESTMENT INCOME (LOSS) (455,922
)
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities (including realized loss of $680,343 on sales of investments in affiliated issuers)5,167,968
Foreign currency transactions (812 5,167,156
)
Change in net unrealized appreciation (depreciation) on:
Investment securities 2,837,246
Assets and liabilities in 812 2,838,058
foreign currencies
NET GAIN (LOSS) 8,005,214
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 7,549,292
OTHER INFORMATION $ 80,412
Sales charges paid to FDC
Deferred sales charges withheld $ 12,652
by FDC
Exchange fees withheld by FSC $ 25,095
Expense reductions $ 9,088
Directed brokerage arrangements
Custodian interest credits 2,176
Transfer agent interest credits 158
$ 11,422
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
FEBRUARY 29, FEBRUARY 28,
1996 1995
<TABLE>
<CAPTION>
<S> <C> <C>
Operations $ (455,922 $ (595,469
Net investment income (loss) ) )
Net realized gain (loss) 5,167,156 (2,723,480
)
Change in net unrealized appreciation (depreciation) 2,838,058 (5,250,926
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 7,549,292 (8,569,875
)
Distributions to shareholders from net realized gains (1,461,704 -
)
Share transactions 22,448,123 27,529,233
Net proceeds from sales of shares
Reinvestment of distributions 1,440,232 -
Cost of shares redeemed (33,702,230 (53,674,761
) )
Paid in capital portion of redemption fees 43,195 29,932
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS (9,770,680 (26,115,596
) )
TOTAL INCREASE (DECREASE) IN NET ASSETS (3,683,092 (34,685,471
) )
NET ASSETS
Beginning of period 31,270,312 65,955,783
End of period $ 27,587,220 $ 31,270,312
OTHER INFORMATION
Shares
Sold 1,846,010 2,591,147
Issued in reinvestment of distributions 120,119 -
Redeemed (2,790,218 (5,072,812
) )
Net increase (decrease) (824,089 (2,481,665
) )
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEAR ENDED YEARS ENDED FEBRUARY 28, TEN MONTHS YEAR ENDED
FEBRUARY 29, ENDED APRIL 30,
FEBRUARY 28,
SELECTED PER-SHARE DATA D 1996 1995 1994 1993 1992
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 10.27 $ 11.93 $ 11.36 $ 11.39 $ 12.95
Income from Investment Operations
Net investment income (loss) (.17) (.14) (.11) (.06) (.09)
Net realized and unrealized gain (loss) 2.95 (1.53) .67 .42 (1.06)
Total from investment operations 2.78 (1.67) .56 .36 (1.15)
Less distributions
From net realized gain (.65) - - (.39) (.42)
Redemption fees added to paid in capital .02 .01 .01 - .01
Net asset value, end of period $ 12.42 $ 10.27 $ 11.93 $ 11.36 $ 11.39
TOTAL RETURN B, C 27.49% (13.91)% 5.02% 3.34% (8.67)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 27,587 $ 31,270 $ 65,956 $ 65,913 $ 65,132
Ratio of expenses to average net assets 2.36% 2.04% 2.07% 1.99% 2.03%
A
Ratio of expenses to average net assets after expense reductions 2.32% 2.01% 2.03% 1.99% 2.03%
E E E A
Ratio of net investment income (loss) to average net assets (1.43)% (1.32)% (1.02)% (.70)% (.74)%
A
Portfolio turnover rate 138% 82% 191% 176% 130%
A
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 7 OF NOTES TO
FINANCIAL STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED
BASED ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH
THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE
FUND'S EXPENSES (SEE NOTE 7 OF NOTES TO
FINANCIAL STATEMENTS).
</TABLE>
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 securities that have grown in value), but does not include certain
fees paid by shareholders upon exchange or redemption. If Fidelity had not
reimbursed certain expenses, the past five year and life of fund total
returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
FEBRUARY 29, 1996 YEAR YEARS FUND
INDUSTRIAL EQUIPMENT 36.86% 141.56% 194.99%
INDUSTRIAL EQUIPMENT 32.76%
(INCL. 3% SALES CHARGE) 134.31% 186.14%
S&P 500 34.70% 101.14% 270.48%
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 29, 1996 YEAR YEARS FUND
INDUSTRIAL EQUIPMENT 36.86% 19.29% 12.16%
INDUSTRIAL EQUIPMENT 32.76% 18.57%
(INCL. 3% SALES CHARGE) 11.80%
S&P 500 34.70% 14.99% 14.90%
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
19860929 9700.00 10000.00
19860930 9729.10 9962.80
19861031 10039.50 10537.66
19861130 10291.70 10793.72
19861231 10311.10 10518.48
19870131 11804.90 11935.32
19870228 12804.00 12406.77
19870331 12580.90 12765.32
19870430 12367.50 12651.71
19870531 12357.80 12761.78
19870630 12707.00 13406.25
19870731 13483.00 14085.95
19870831 14084.40 14611.35
19870930 14414.20 14291.37
19871031 8759.10 11213.00
19871130 8361.40 10289.05
19871231 9357.40 11072.05
19880131 9188.17 11538.18
19880229 10024.36 12075.86
19880331 10173.68 11702.72
19880430 10472.32 11832.62
19880531 10412.60 11935.56
19880630 11149.24 12483.41
19880731 10561.92 12435.97
19880831 9606.27 12013.15
19880930 9785.45 12524.91
19881031 9626.18 12873.10
19881130 9317.58 12689.01
19881231 9815.31 12911.07
19890131 10532.05 13856.16
19890228 10113.96 13511.14
19890331 10263.28 13825.95
19890430 10999.92 14543.52
19890531 11597.20 15132.53
19890630 11099.47 15046.28
19890731 11806.25 16404.95
19890831 12025.25 16726.49
19890930 11856.02 16657.91
19891031 11069.60 16271.45
19891130 11378.20 16603.39
19891231 11577.29 17001.87
19900131 11189.06 15861.04
19900228 11756.48 16065.65
19900331 12453.31 16491.39
19900430 12353.76 16079.11
19900531 13498.55 17646.82
19900630 13258.63 17526.82
19900731 13008.09 17470.73
19900831 10863.46 15891.38
19900930 9390.28 15117.47
19901031 9139.74 15052.46
19901130 9440.38 16024.85
19901231 9781.12 16471.95
19910131 10823.37 17190.12
19910228 11845.58 18419.22
19910331 11745.36 18864.96
19910430 11625.10 18910.24
19910531 12116.16 19727.16
19910630 11725.01 18823.66
19910731 11825.31 19700.84
19910831 12005.85 20167.75
19910930 12286.69 19830.95
19911031 12216.48 20096.68
19911130 11634.74 19286.79
19911231 12406.41 21493.19
19920131 13519.55 21093.42
19920229 14480.89 21367.64
19920331 14055.88 20950.97
19920430 14055.88 21566.92
19920531 14167.19 21672.60
19920630 13296.92 21349.68
19920731 13418.36 22222.88
19920831 12720.11 21767.31
19920930 12983.22 22024.17
19921031 12932.62 22101.25
19921130 13549.91 22854.91
19921231 13813.01 23136.02
19930131 14460.66 23330.36
19930228 15219.61 23647.66
19930331 15492.84 24146.62
19930430 16201.67 23562.27
19930531 17011.75 24193.74
19930630 17234.52 24263.90
19930731 17477.55 24166.85
19930831 18672.42 25082.77
19930930 18459.77 24889.63
19931031 19077.46 25404.85
19931130 19057.21 25163.50
19931231 19798.04 25467.98
19940131 20728.99 26333.89
19940228 21318.58 25620.25
19940331 20087.67 24503.20
19940430 19905.86 24816.84
19940531 19498.98 25223.84
19940630 18497.43 24605.86
19940731 19373.79 25412.93
19940831 20750.92 26454.86
19940930 20813.52 25806.71
19941031 21074.34 26387.37
19941130 20051.92 25426.34
19941231 20417.07 25803.41
19950131 20302.31 26472.49
19950228 20907.41 27504.13
19950331 22639.27 28315.77
19950430 23703.68 29149.67
19950531 24183.81 30314.78
19950630 25102.32 31019.00
19950731 27461.20 32047.59
19950831 26928.89 32128.03
19950930 25697.26 33483.83
19951031 25645.07 33364.29
19951130 26521.82 34828.98
19951231 26095.90 35499.79
19960131 27144.29 36708.20
19960229 28614.33 37048.49
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 29, 1996, your investment would have grown to $28,614 -
a 186.14% increase. That compares to $10,000 invested in the S&P 500, which
would have grown to $37,048 over the same period - a 270.48% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 29, 1996
% OF FUND'S
INVESTMENTS
Caterpillar, Inc. 7.4
Ingersoll-Rand Co. 7.0
International Business Machines Corp. 5.4
Harnischfeger Industries, Inc. 5.1
Dresser Industries, Inc. 4.7
Deere & Co. 4.6
Compaq Computer Corp. 4.6
Dover Corp. 4.4
General Electric Co. 4.4
Case Corp. 4.0
TOP INDUSTRIES AS OF FEBRUARY 29, 1996
Row: 1, Col: 1, Value: 44.4
Row: 1, Col: 2, Value: 6.9
Row: 1, Col: 3, Value: 7.8
Row: 1, Col: 4, Value: 7.8
Row: 1, Col: 5, Value: 10.8
Row: 1, Col: 6, Value: 22.3
General Industrial Machinery 22.3%
Farm Machinery & Equipment 10.8%
Construction Equipment 7.8%
Electrical Machinery 7.8%
Computer & Office Equipment 6.9%
All Others 44.4% *
* INCLUDES SHORT-TERM INVESTMENTS
INDUSTRIAL EQUIPMENT PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Robert Bertelson,
Portfolio Manager of Fidelity Select Industrial Equipment Portfolio
Q. HOW DID THE FUND PERFORM, BOB?
A. The fund did well. For the 12-month period ending February 29, 1996, it
returned 36.86%, while the S&P 500 Index returned 34.70%.
Q. THE FUND ACHIEVED ITS RESULTS DURING AN INVESTMENT CLIMATE THAT WAS
QUITE VOLATILE FOR INDUSTRIAL EQUIPMENT COMPANIES . . .
A. From an investment perspective, I think the period could be divided into
three different parts. There was a strong burst of enthusiasm during the
first four months of the period, followed by a period of great pessimism
and concern that started in the summer and ran through the end of the year.
With the new year, though, the first signs of renewed optimism for the
sector appeared. By focusing on global companies with leadership positions
both in this country and abroad, the fund has moved from period to period
with good results even compared to a market that was up strongly.
Q. THE MAJORITY OF THE FUND'S LARGEST HOLDINGS AT THE END OF THE PERIOD
WERE THE SAME AS YOUR TOP 10 HOLDINGS WHEN WE LAST SPOKE. ON THE FACE OF
IT, IT SEEMS LIKE YOU'VE MAINTAINED A CONSISTENT STRATEGY FROM SIX MONTHS
AGO . . .
A. That's basically true. I've rearranged positions somewhat where there
have been particularly strong price performances and tried to move some new
names into the fund where there seemed to be greater upside potential and
new earnings momentum developing. Dresser Industries, a supplier of capital
goods to the energy industry, is a good example. After several years of
stagnant earnings, the company seemed to be on the brink of some fairly
significant earnings acceleration. Also, some of the strong performers in
the agricultural equipment area have been trimmed a bit owing to their
price appreciation.
Q. WAS THERE ANY SIGNIFICANT CHANGE IN YOUR SECTOR ALLOCATION WITHIN THE
INDUSTRIAL EQUIPMENT AREA?
A. Not really. I've remained focused on the agricultural equipment area, as
well as construction equipment. In addition, I've maintained a fairly good
weighting in the technology-related parts of capital equipment. But I
really examine the sector from a bottom-up, company-by-company approach,
rather than on a sector basis.
Q. THE FUND'S LARGEST HOLDING AT THE END OF FEBRUARY, CATERPILLAR, HAS BEEN
AN UP AND DOWN RIDE DURING THE PERIOD, HASN'T IT?
A. That's certainly been the case. It's been terrific over the last two
months, but it went through a difficult period from the end of September
right through the end of the year, after hitting an all-time high of $75
last July. It had an earnings disappointment during the third quarter, but
fourth quarter performance was better than anticipated and the stock has
bounced back sharply.
Q. DESPITE THE FUND'S OUTPERFORMANCE OF THE MARKET IN GENERAL, THERE MUST
HAVE BEEN SOME DISAPPOINTMENTS FOR YOU.
A. While there were very few among the top 10 holdings, the component
manufacturers have been somewhat less than inspiring in their recovery over
the past couple of months. Several of the end-good manufacturers, such as
Deere & Co., Caterpillar and Case, have done well. But the companies that
supply them with equipment parts, including Parker-Hannifin and Titan
Wheel, have been disappointing. In a different vein, Albany International,
which is a terrific company, has gotten caught up in the bearish psychology
lately in the paper industry and its stock has not performed.
Note to shareholders: As of March 26, 1996, Paul Antico became manager of
the portfolio.
Q. PAUL, WHAT'S YOUR OUTLOOK GOING FORWARD?
A. I'm relatively optimistic about the outlook for this sector. Over the
last six months, the market has been reluctant to invest in cyclical areas
because people have grown concerned about the outlook for the economy. So,
this sector has been largely overlooked. But as people grow more confident
that the U.S. will not go into recession, I think Wall Street will reassess
the earnings outlook for many of the companies in this sector and become
more positive about their prospects.
FUND FACTS
START DATE: September 29, 1986
TRADING SYMBOL: FSCGX
SIZE: as of February 29, 1996, more than
$137 million
MANAGER: Robert Bertelson, since December
1994; manager, Fidelity Select Energy
Portfolio, 1992-1994; equity analyst, since
1991; joined Fidelity in 1991
(checkmark)
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGERS
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGERS' VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
INDUSTRIAL EQUIPMENT PORTFOLIO
INVESTMENTS FEBRUARY 29, 1996
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 86.8%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 0.8%
AIRCRAFT - 0.6%
Boeing Co. 10,000 $ 811,250
TRAINING EQUIPMENT & SIMULATORS - 0.2%
C A E Industries Ltd. 30,700 243,633
TOTAL AEROSPACE & DEFENSE 1,054,883
AUTOS, TIRES, & ACCESSORIES - 2.5%
AUTO & TRUCK PARTS - 1.6%
Titan Wheel International, Inc. 144,675 2,206,294
INDUSTRIAL TRUCKS - 0.9%
NACCO Industries, Inc. Class A 21,600 1,204,200
TOTAL AUTOS, TIRES, & ACCESSORIES 3,410,494
BUILDING MATERIALS - 0.6%
AIR CONDITIONING EQUIPMENT - 0.6%
Tecumseh Products Co. Class A 14,600 824,900
COMMUNICATIONS EQUIPMENT - 1.7%
DATACOMMUNICATIONS EQUIPMENT - 1.7%
Cisco Systems, Inc. (a) 50,000 2,375,000
COMPUTERS & OFFICE EQUIPMENT - 14.3%
COMPUTERS & OFFICE EQUIPMENT - 6.9%
International Business Machines Corp. 60,300 7,394,288
Lexmark International Group, Inc. (a) 90,000 2,036,250
9,430,538
MINI & MICRO COMPUTERS - 4.6%
Compaq Computer Corp. (a) 123,300 6,242,063
OFFICE AUTOMATION - 2.8%
Xerox Corp. 30,000 3,907,500
TOTAL COMPUTERS & OFFICE EQUIPMENT 19,580,101
CONGLOMERATES - 2.0%
Allied-Signal, Inc. 50,000 2,781,250
ELECTRICAL EQUIPMENT - 7.8%
ELECTRICAL MACHINERY - 7.8%
Emerson Electric Co. 60,000 4,672,500
General Electric Co. 80,000 6,040,000
10,712,500
ELECTRONICS - 0.8%
SEMICONDUCTORS - 0.8%
Intel Corp. 19,500 1,146,844
ENERGY SERVICES - 4.7%
OIL & GAS SERVICES - 4.7%
Dresser Industries, Inc. 226,700 6,375,938
INDUSTRIAL MACHINERY & EQUIPMENT - 50.0%
BALL & ROLLER BEARINGS - 1.4%
Bearings, Inc. 69,600 1,861,800
CONSTRUCTION EQUIPMENT - 7.8%
Caterpillar, Inc. 152,000 10,165,000
Svedala Industrial 19,000 583,989
10,748,989
ENGINES & TURBINES - 1.1%
Stewart & Stevenson Services, Inc. 61,500 1,568,250
SHARES VALUE (NOTE 1)
FARM MACHINERY & EQUIPMENT - 10.8%
AGCO Corp. 50,200 $ 1,361,675
Case Corp. 102,000 5,418,750
Deere & Co. 161,900 6,334,338
Varity Corp. (a) 45,100 1,702,525
14,817,288
GENERAL INDUSTRIAL MACHINERY - 22.3%
Dover Corp. 135,800 6,043,100
Harnischfeger Industries, Inc. 184,317 6,981,006
Illinois Tool Works, Inc. 27,800 1,831,325
Ingersoll-Rand Co. 236,100 9,650,588
Parker-Hannifin Corp. 58,900 2,068,863
Timken Co. 77,400 3,483,000
TRINOVA Corp. 14,200 427,775
30,485,657
MACHINE TOOLS, METAL CUTTING - 2.9%
Cincinnati Milacron, Inc. 50,000 1,437,500
Gleason Corp. 17,400 696,000
Greenfield Industries, Inc. 35,100 1,167,075
Kennametal, Inc. 20,400 660,450
3,961,025
PUMPING EQUIPMENT - 3.7%
BW/IP Holdings, Inc. Class A 53,600 830,800
Duriron Co., Inc. 52,950 1,442,888
Goulds Pumps, Inc. 61,000 1,319,125
Keystone International, Inc. 74,800 1,505,350
5,098,163
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 68,541,172
PAPER & FOREST PRODUCTS - 1.6%
PAPER - 1.6%
Albany International Corp. Class A 109,700 2,125,434
TOTAL COMMON STOCKS
(Cost $106,140,861) 118,928,516
REPURCHASE AGREEMENTS - 13.2%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations) in a joint
trading account at 5.41%, dated
2/29/96 due 3/1/96 $ 18,111,721 18,109,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $124,249,861) $ 137,037,516
LEGEND
1. Non-income producing
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $111,416,956 and $127,547,957, respectively (see Note 3 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $65,425 for the period (see
Note 4 of Notes to Financial Statements).
The maximum loan and the average daily loan balances during the periods for
which loans were outstanding amounted to $4,448,000 and $1,885,143,
respectively. The weighted average interest rate paid was 6.6% (see Note 5
of Notes to Financial Statements).
INCOME TAX INFORMATION
At February 29, 1996, the aggregate cost of investment securities for
income tax purposes was $124,388,497. Net unrealized appreciation
aggregated $12,649,019, of which $14,833,465 related to appreciated
investment securities and $2,184,446 related to depreciated investment
securities.
The fund hereby designates approximately $3,565,000 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
Automation and Machinery Portfolio in a tax-free exchange for shares of
Industrial Equipment Portfolio. Automation and Machinery Portfolio has a
capital loss carryover of approximately $74,000 available to offset future
realized capital gains in Industrial Equipment Portfolio, to the extent
provided by regulations.
A total of 20% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate shareholders
(unaudited).
The fund will notify shareholders in January 1997 of the applicable
percentage for use in preparing 1996 income tax returns.
INDUSTRIAL EQUIPMENT PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 29, 1996
ASSETS
Investment in $ 137,037,516
securities, at
value
(including
repurchase
agreements
of
$18,109,000)
(cost
$124,249,861
) - See
accompanyin
g schedule
Cash 164
Receivable for 4,876,561
investments
sold
Receivable for 7,988,796
fund shares
sold
Dividends 155,064
receivable
Redemption 832
fees
receivable
Other 10,281
receivables
TOTAL ASSETS 150,069,214
LIABILITIES
Payable for $ 11,800,034
investments
purchased
Payable for 640,505
fund shares
redeemed
Accrued 48,646
management
fee
Other payables 60,041
and
accrued
expenses
TOTAL 12,549,226
LIABILITIES
NET ASSETS $ 137,519,988
Net Assets
consist of:
Paid in capital $ 117,117,848
Undistributed 51,339
net
investment
income
Accumulated 7,563,146
undistributed
net realized
gain (loss) on
investments
and foreign
currency
transactions
Net unrealized 12,787,655
appreciation
(depreciation
) on
investments
NET ASSETS, for $ 137,519,988
5,476,600
shares
outstanding
NET ASSET $25.11
VALUE and
redemption
price per
share
($137,519,98
8 (divided by)
5,476,600
shares)
Maximum $25.89
offering price
per share
(100/97.00 of
$25.11)
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED FEBRUARY 29, 1996
INVESTMENT INCOME $ 1,375,984
Dividends
Interest 376,525
TOTAL INCOME 1,752,509
EXPENSES
Management fee $ 623,645
Transfer agent 885,579
Fees
Redemption fees (114,602
)
Accounting fees and expenses 102,205
Non-interested trustees' compensation 754
Custodian fees and expenses 15,501
Registration fees 24,407
Audit 25,433
Legal 694
Interest 7,298
Miscellaneous 1,640
Total expenses before reductions 1,572,554
Expense reductions (11,613 1,560,941
)
NET INVESTMENT INCOME 191,568
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 16,164,118
Foreign currency transactions (483 16,163,635
)
Change in net unrealized appreciation (depreciation) on:
Investment securities 13,213,444
Assets and liabilities in (15 13,213,429
foreign currencies )
NET GAIN (LOSS) 29,377,064
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 29,568,632
OTHER INFORMATION $ 541,013
Sales charges paid to FDC
Deferred sales charges withheld $ 7,928
by FDC
Exchange fees withheld by FSC $ 86,340
Expense reductions $ 10,255
Directed brokerage arrangements
Custodian interest credits 35
Transfer agent interest credits 1,323
$ 11,613
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
FEBRUARY 29, FEBRUARY 28,
1996 1995
<TABLE>
<CAPTION>
<S> <C> <C>
Operations $ 191,568 $ 79,635
Net investment income
Net realized gain (loss) 16,163,635 (1,498,946
)
Change in net unrealized appreciation (depreciation) 13,213,429 (14,340,997
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 29,568,632 (15,760,308
)
Distributions to shareholders (185,403 (37,665
From net investment income ) )
From net realized gain (7,003,238 (1,765,984
) )
TOTAL DISTRIBUTIONS (7,188,641 (1,803,649
) )
Share transactions 176,105,552 154,753,559
Net proceeds from sales of shares
Reinvestment of distributions 7,099,056 1,784,486
Cost of shares redeemed (178,150,788 (235,232,664
) )
Paid in capital portion of redemption fees 118,239 214,170
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS 5,172,059 (78,480,449
)
TOTAL INCREASE (DECREASE) IN NET ASSETS 27,552,050 (96,044,406
)
NET ASSETS
Beginning of period 109,967,938 206,012,344
End of period (including undistributed net investment income of $51,339 and $45,655, respectively) $ 137,519,988 $ 109,967,938
OTHER INFORMATION
Shares
Sold 7,343,923 7,719,747
Issued in reinvestment of distributions 311,832 90,354
Redeemed (7,667,655 (12,319,237
) )
Net increase (decrease) (11,900 (4,509,136
) )
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEAR ENDED YEARS ENDED FEBRUARY 28, TEN MONTHS YEAR ENDED
FEBRUARY 29, ENDED APRIL 30,
FEBRUARY 28,
SELECTED PER-SHARE DATA D 1996 1995 1994 1993 1992
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of $ 20.04 $ 20.61 $ 15.04 $ 13.89 $ 11.60
period
Income from Investment
Operations
Net investment income (loss) .04 .01 - .02 (.07)
Net realized and unrealized gain 7.10 (.44) 5.92 1.09 2.39
(loss)
Total from investment operations 7.14 (.43) 5.92 1.11 2.32
Less Distributions (.05) (.01) (.01) - -
From net investment income
In excess of net investment - - - - (.11)
income
From net realized gain (2.05) (.16) (.40) - -
Total distributions (2.10) (.17) (.41) - (.11)
Redemption fees added to paid in .03 .03 .06 .04 .08
capital
Net asset value, end of period $ 25.11 $ 20.04 $ 20.61 $ 15.04 $ 13.89
TOTAL RETURN B, C 36.86% (1.93)% 40.07% 8.28% 20.91%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 $ 137,520 $ 109,968 $ 206,012 $ 14,601 $ 7,529
omitted)
Ratio of expenses to average net 1.54% 1.80% 1.69% 2.49% A, 2.49%
assets F F
Ratio of expenses to average net 1.53% 1.78% 1.68% 2.49% A 2.49%
assets after expense reductions E E E
Ratio of net investment income .19% .06% .01% .15% A (.57)%
(loss) to average net assets
Portfolio turnover rate 115% 131% 95% 407% A 167%
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 7
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED
BASED ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS
WITH THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE
FUND'S EXPENSES (SEE NOTE 7 OF NOTES TO FINANCIAL STATEMENTS).
F DURING THE PERIOD, FMR AGREED TO REIMBURSE A PORTION OF THE
FUND'S EXPENSES, OR EXPENSES WERE LIMITED IN ACCORDANCE
WITH A STATE EXPENSE LIMITATION. WITHOUT THIS REIMBURSEMENT,
THE FUND'S EXPENSE RATIO WOULD HAVE BEEN HIGHER.
</TABLE>
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 securities that have grown in value), but does not include certain
fees paid by shareholders upon exchange or redemption. If Fidelity had not
reimbursed certain expenses, the past five year and life of fund total
returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
FEBRUARY 29, 1996 YEAR YEARS FUND
INDUSTRIAL MATERIALS 13.38% 115.28% 180.01%
INDUSTRIAL MATERIALS 9.98% 108.83% 171.61%
(INCL. 3% SALES CHARGE)
S&P 500 34.70% 101.14% 270.48%
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 29, 1996 YEAR YEARS FUND
INDUSTRIAL MATERIALS 13.38% 16.57% 11.54%
INDUSTRIAL MATERIALS 9.98% 15.87% 11.18%
(INCL. 3% SALES CHARGE)
S&P 500 34.70% 14.99% 14.90%
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
19860929 9700.00 10000.00
19860930 9729.10 9962.80
19861031 10262.60 10537.66
19861130 10621.50 10793.72
19861231 10233.50 10518.48
19870131 12008.60 11935.32
19870228 13017.40 12406.77
19870331 13958.30 12765.32
19870430 14123.20 12651.71
19870531 13764.30 12761.78
19870630 14482.10 13406.25
19870731 15820.70 14085.95
19870831 16363.90 14611.35
19870930 16606.40 14291.37
19871031 10301.40 11213.00
19871130 10252.90 10289.05
19871231 11834.99 11072.05
19880131 11222.33 11538.18
19880229 12544.89 12075.86
19880331 12768.56 11702.72
19880430 12788.01 11832.62
19880531 12476.82 11935.56
19880630 13838.28 12483.41
19880731 13322.87 12435.97
19880831 12603.24 12013.15
19880930 12710.21 12524.91
19881031 12476.82 12873.10
19881130 12360.12 12689.01
19881231 13117.42 12911.07
19890131 13908.23 13856.16
19890228 13305.24 13511.14
19890331 13166.85 13825.95
19890430 13572.13 14543.52
19890531 13750.06 15132.53
19890630 12949.38 15046.28
19890731 14115.81 16404.95
19890831 15242.70 16726.49
19890930 14313.51 16657.91
19891031 13137.19 16271.45
19891130 13325.01 16603.39
19891231 13700.64 17001.87
19900131 12652.83 15861.04
19900228 12870.30 16065.65
19900331 13245.93 16491.39
19900430 12287.08 16079.11
19900531 13028.46 17646.82
19900630 12890.20 17526.82
19900731 12738.07 17470.73
19900831 11267.51 15891.38
19900930 10466.31 15117.47
19901031 10344.61 15052.46
19901130 10892.27 16024.85
19901231 11348.65 16471.95
19910131 11754.32 17190.12
19910228 12616.37 18419.22
19910331 12788.78 18864.96
19910430 12809.06 18910.24
19910531 13904.37 19727.16
19910630 13752.20 18823.66
19910731 14302.29 19700.84
19910831 14638.46 20167.75
19910930 14444.91 19830.95
19911031 15066.30 20096.68
19911130 13864.26 19286.79
19911231 15412.65 21493.19
19920131 16084.98 21093.42
19920229 16869.37 21367.64
19920331 16573.95 20950.97
19920430 17439.83 21566.92
19920531 17643.57 21672.60
19920630 17215.31 21349.68
19920731 17602.63 22222.88
19920831 16491.63 21767.31
19920930 16267.40 22024.17
19921031 16450.86 22101.25
19921130 17062.42 22854.91
19921231 17319.00 23136.02
19930131 17687.49 23330.36
19930228 17851.26 23647.66
19930331 18148.10 24146.62
19930430 17881.97 23562.27
19930531 18618.95 24193.74
19930630 18669.79 24263.90
19930731 18926.53 24166.85
19930831 19419.46 25082.77
19930930 18813.56 24889.63
19931031 19922.66 25404.85
19931130 20189.67 25163.50
19931231 21021.49 25467.98
19940131 22726.21 26333.89
19940228 22253.82 25620.25
19940331 21627.38 24503.20
19940430 22439.14 24816.84
19940531 22665.59 25223.84
19940630 22428.85 24605.86
19940731 23262.60 25412.93
19940831 24518.37 26454.86
19940930 24209.57 25806.71
19941031 23890.48 26387.37
19941130 22202.40 25426.34
19941231 22743.96 25803.41
19950131 22101.83 26472.49
19950228 23955.73 27504.13
19950331 24504.65 28315.77
19950430 24618.13 29149.67
19950531 24369.15 30314.78
19950630 25458.44 31019.00
19950731 27657.79 32047.59
19950831 27585.17 32128.03
19950930 26807.10 33483.83
19951031 25250.96 33364.29
19951130 27574.79 34828.98
19951231 26244.23 35499.79
19960131 26650.56 36708.20
19960229 27161.06 37048.49
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 29, 1996, your investment would have grown to $27,161 -
a 171.61% increase. That compares to $10,000 invested in the S&P 500, which
would have grown to $37,048 over the same period - a 270.48% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 29, 1996
% OF FUND'S
INVESTMENTS
Inco Ltd. 9.7
Kaiser Aluminum Corp. 8.6
QNI Ltd. 7.5
Alumax, Inc. 7.2
Aluminum Co. of America 6.5
Monsanto Co. 4.6
Western Mining Holdings Ltd. 4.2
Pechiney SA Class A 4.1
Huntco, Inc. Class A 4.1
Western Atlas, Inc. 3.7
TOP INDUSTRIES AS OF FEBRUARY 29, 1996
Prime Nonferrous Smelting 18.0%
Metal Ores 12.3%
Aluminum Sheet, Plate & Foil 8.6%
Chemicals 7.5%
Blast Furnaces 7.4%
All Others 46.2% *
Row: 1, Col: 1, Value: 46.2
Row: 1, Col: 2, Value: 7.4
Row: 1, Col: 3, Value: 7.5
Row: 1, Col: 4, Value: 8.6
Row: 1, Col: 5, Value: 12.3
Row: 1, Col: 6, Value: 18.0
* INCLUDES SHORT-TERM INVESTMENTS
INDUSTRIAL MATERIALS PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Doug Chase,
Portfolio Manager of
Fidelity Select Industrial
Materials Portfolio
Q. HOW DID THE FUND PERFORM, DOUG?
A. For the 12 months ended February 29, 1996, the fund returned 13.38%,
while the S&P 500 Index returned 34.70%.
Q. WHAT CAUSED THE FUND TO UNDERPERFORM THE OVERALL MARKET?
A. During the past 12 months, we've seen very weak relative performance of
cyclical stocks - those stocks that rise and fall in tandem with the
economy. Because the U.S. economy slowed, and because expectations for the
world economy fell, many commodity cyclicals suffered. This fund is geared
toward cyclical commodities and, when people worry about the economy, the
fund tends to underperform.
Q. HAVE YOU MADE ANY SIGNIFICANT CHANGES TO THE FUND'S AREAS OF EMPHASIS
DURING THE PAST SIX MONTHS?
A. No, not really. I still believe that aluminum and nickel have the best
overall supply/demand/inventory combination in the industrial materials
universe. In fact, during the period, aluminum stocks such as Kaiser, Alcan
and Aluminum Company of America were up by more than 20%. The overall
market, however, was up even more. The fund largely avoided stocks in
underperforming sectors such as copper, steel and paper.
Q. LET'S START WITH ALUMINUM. WHAT HAPPENED DURING THE PERIOD?
A. Aluminum is still a great story. Here's why: although inventory levels
have begun to move up slightly, they're still very low on an overall basis.
I believe that when investor sentiment toward the economy becomes more
positive, aluminum stocks will have the potential to outperform. I also
believe that the aluminum stocks in the fund are reasonably valued and
should fare better than other commodity cyclicals regardless of how the
economy performs.
Q. AND NICKEL?
A. While I like aluminum stocks very much, I like nickel stocks even more.
During the period, I increased the fund's holdings in nickel stocks such as
Inco Ltd, QNI and Western Mining. Unlike the aluminum market, nickel
inventories continue to decline and remain at historically low levels.
Again, once investor sentiment toward the world economy turns around - as
it inevitably will - it should trigger price increases in both the
commodity and the stocks.
Q. THE FUND'S HOLDINGS IN INTERNATIONAL STOCKS HAVE INCREASED. WHY?
A. There are a couple of reasons. First, there are no nickel investment
opportunities in the U.S.; Inco is in Canada, and QNI and Western Mining
are located in Australia. Secondly, foreign stocks in the industrial
materials sectors are more attractive than their U.S. counterparts because
of the phenomenal performance of the U.S. stock market during the past
year. But, in any case, I employ a bottom-up strategy. I believe the
foreign stocks the fund owns to be inexpensive relative to their history
and the fundamentals. While foreign investing can be risky, it's important
for investors in this fund to understand that cyclical commodities such as
nickel and aluminum are traded nearly worldwide in U.S. dollars. No matter
who is buying these materials, and regardless of where they are in the
world, the pricing is almost always done in U.S. dollars. For that reason,
there is less foreign currency exposure, which makes it more comfortable
for the fund to invest in these particular foreign companies.
Q. WHERE ELSE DID YOU FIND OPPORTUNITIES DURING THE PERIOD?
A. I've slowly begun investing in several different areas of the steel
industry. Steel prices peaked in February 1995 and I believe they have
recently bottomed because inventories are low and some of the large steel
producers have begun to raise prices. Huntco, a steel processor, is new to
the fund's top 10 holdings. It has managed to increase its production by
40% per year, despite the market backdrop. I also think the stock is
relatively inexpensive. I've also taken a position in LTV, a quality steel
producer with strong cash flow. LTV was left behind when other steel
companies participated in the overall market rally to date, making it
attractive to me.
Q. ANY SPECIFIC DISAPPOINTMENTS DURING THE PAST SIX MONTHS?
A. Yes. I wish I'd held on to my investments in specialty chemicals longer
than I did. The economic outlook slowed faster than I thought it would and
the demand for growth-oriented cyclicals remained strong. Specialty
chemicals continued to perform well during late 1995, but I'd already sold
my position in them because I'd viewed them as fully valued.
Q. WHAT'S YOUR OUTLOOK GOING FORWARD?
A. I think that worldwide demand for industrial materials stocks is going
to increase as soon as investor sentiment toward the worldwide economy
improves. Japan's economy is poised to improve and I think the U.S. is
economically strong. I believe my current investment strategy is sound and
I will continue to try to own the commodity stocks that have the best
supply/demand/inventory characteristics and reasonable valuations.
FUND FACTS
START DATE: September 29, 1986
TRADING SYMBOL: FSDPX
SIZE: as of February 29, 1996, more than
$86 million
MANAGER: Douglas B. Chase, since 1994;
equity analyst, steel, non-ferrous metals, since
1993; joined Fidelity in 1993
(checkmark)
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
INDUSTRIAL MATERIALS PORTFOLIO
INVESTMENTS FEBRUARY 29, 1996
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 97.4%
SHARES VALUE (NOTE 1)
BUILDING MATERIALS - 2.7%
CEMENT - 0.9%
Lafarge Corp. 40,000 $ 740,000
PAINT & VARNISH - 1.0%
Sherwin-Williams Co. 20,000 847,500
PLUMBING SUPPLIES - WHOLESALE - 0.8%
Masco Corp. 25,000 712,500
TOTAL BUILDING MATERIALS 2,300,000
CHEMICALS & PLASTICS - 7.5%
CHEMICALS - 7.5%
Lyondell Petrochemical Co. 40,000 1,075,000
Monsanto Co. 29,000 3,904,123
Raychem Corp. 3,610 234,199
Union Carbide Corp. 26,200 1,179,000
6,392,322
CONGLOMERATES - 1.0%
Brascan Ltd. Class A 50,000 843,763
INDUSTRIAL MACHINERY & EQUIPMENT - 7.4%
CONSTRUCTION EQUIPMENT - 1.1%
Caterpillar, Inc. 14,000 936,250
GENERAL INDUSTRIAL MACHINERY - 5.1%
Harnischfeger Industries, Inc. 60,000 2,272,500
Ingersoll-Rand Co. 51,900 2,121,413
4,393,913
STORAGE BATTERIES - 1.2%
Exide Corp. 32,700 997,350
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 6,327,513
IRON & STEEL - 10.0%
BLAST FURNACES - 7.4%
Huntco, Inc. Class A 200,000 3,450,000
LTV Corp. (a) 200,000 2,550,000
Republic Engineered Steels, Inc. (a) 50,000 262,500
6,262,500
IRON & STEEL BLAST FURNACES MILLS - 2.6%
Birmingham Steel Corp. 100,000 1,487,500
Inland Steel Industries, Inc. 30,000 731,250
2,218,750
TOTAL IRON & STEEL 8,481,250
METALS & MINING - 55.2%
ALUMINUM SHEET, PLATE & FOIL - 8.6%
Kaiser Aluminum Corp. (a) 481,629 7,284,639
ALUMINUM, EXTRUDED PRODUCTS - 7.1%
Alumax, Inc. (a) 168,800 6,097,900
METAL MINING SERVICES - 3.6%
Eramet SA 42,500 3,060,471
METAL ORES - 12.3%
Falconbridge Ltd. 1st Installment
Receipt (c) 78,900 626,145
Pechiney SA Class A 85,625 3,466,016
QNI Ltd. 3,104,484 6,362,733
10,454,894
MISCELLANEOUS METAL ORES - 1.3%
Stillwater Mining Co. (a)(b) 50,000 1,100,000
SHARES VALUE (NOTE 1)
PRIMARY PRODUCTION OF ALUMINUM - 4.3%
Capral Aluminum Ltd. 636,200 $ 1,629,889
Reynolds Metals Co. 40,000 2,065,000
3,694,889
PRIME NONFERROUS SMELTING - 18.0%
Alcan Aluminium Ltd. 51,975 1,588,246
Aluminum Co. of America 96,800 5,493,400
Inco Ltd. 260,000 8,253,366
15,335,012
TOTAL METALS & MINING 47,027,805
OIL & GAS - 0.1%
OIL & GAS EXPLORATION - 0.1%
British Petroleum PLC ADR 432 43,362
PRECIOUS METALS - 4.2%
Western Mining Holdings Ltd. 549,400 3,533,492
RAILROADS - 5.6%
Burlington Northern Santa Fe Corp. 29,592 2,367,360
CSX Corp. 54,000 2,423,250
4,790,610
SERVICES - 3.7%
SURVEYING SERVICES - 3.7%
Western Atlas, Inc. (a) 60,000 3,157,500
TOTAL COMMON STOCKS
(Cost $80,696,396) 82,897,617
REPURCHASE AGREEMENTS - 2.6%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations) in a joint
trading account at 5.41%, dated
2/29/96 due 3/1/96 $ 2,228,335 2,228,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $82,924,396) $ 85,125,617
CURRENCY ABBREVIATIONS
CAD - Canadian dollar
LEGEND
1. Non-income producing
2. Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of these securities amounted to $1,100,000 or 1.3% of net
assets.
3. Purchased on an installment basis. Market value reflects only those
payments made through February 29, 1996. The remaining installments
aggregating CAD 1,499,100 are due July 31, 1996 and January 31, 1997.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $157,935,689 and $248,203,490, respectively (see Note 3 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $116,889 for the period
(see Note 4 of Notes to Financial Statements).
The maximum loan and the average daily loan balances during the periods for
which loans were outstanding amounted to $1,843,000 and $1,336,500,
respectively. The weighted average interest rate paid was 6.4% (see Note 5
of Notes to Financial Statements).
Distribution of investments by country of issue, as a percentage of total
value of investment in securities, is as follows:
United States 65.4%
Australia 13.5
Canada 13.3
France 7.7
Others (individually less than 1%) 0.1
TOTAL 100.0%
INCOME TAX INFORMATION
At February 29, 1996, the aggregate cost of investment securities for
income tax purposes was $83,468,429. Net unrealized appreciation aggregated
$1,657,188 of which $5,544,798 related to appreciated investment securities
and $3,887,610 related to depreciated investment securities.
The fund hereby designates approximately $783,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 100% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate shareholders
(unaudited).
The fund will notify shareholders in January 1997 of the applicable
percentage for use in preparing 1996 income tax returns.
INDUSTRIAL MATERIALS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 29, 1996
ASSETS
Investment in $ 85,125,617
securities, at
value
(including
repurchase
agreements
of
$2,228,000)
(cost
$82,924,396)
- - See
accompanyin
g schedule
Receivable for 3,558,683
investments
sold
Receivable for 373,820
fund shares
sold
Dividends 256,212
receivable
Redemption 268
fees
receivable
Other 325
receivables
TOTAL ASSETS 89,314,925
LIABILITIES
Payable to $ 7,147
custodian
bank
Payable for 2,053,756
investments
purchased
Payable for 794,700
fund shares
redeemed
Accrued 45,456
management
fee
Other payables 75,544
and accrued
expenses
TOTAL 2,976,603
LIABILITIES
NET ASSETS $ 86,338,322
Net Assets
consist of:
Paid in capital $ 81,900,279
Undistributed 81,888
net
investment
income
Accumulated 2,154,640
undistributed
net realized
gain (loss) on
investments
and foreign
currency
transactions
Net unrealized 2,201,515
appreciation
(depreciation
) on
investments
and assets
and liabilities
in foreign
currencies
NET ASSETS, for $ 86,338,322
3,311,477
shares
outstanding
NET ASSET $26.07
VALUE and
redemption
price per
share
($86,338,322
(divided by) 3,311,477
shares)
Maximum $26.88
offering price
per share
(100/97.00 of
$26.07)
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED FEBRUARY 29, 1996
INVESTMENT INCOME $ 1,928,364
Dividends
Interest (including income on 741,370
securities loaned of $87,837)
TOTAL INCOME 2,669,734
EXPENSES
Management fee $ 777,296
Transfer agent 1,259,761
Fees
Redemption fees (187,229
)
Accounting and security lending fees 129,456
Non-interested trustees' compensation 1,059
Custodian fees and expenses 31,195
Registration fees 27,312
Audit 35,036
Legal 1,037
Interest 1,418
Miscellaneous 2,381
Total expenses before reductions 2,078,722
Expense reductions (36,761 2,041,961
)
NET INVESTMENT INCOME 627,773
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 13,695,198
Foreign currency transactions (6,229 13,688,969
)
Change in net unrealized appreciation (depreciation) on:
Investment securities (3,691,291
)
Assets and liabilities in foreign (96 (3,691,387
currencies ) )
NET GAIN (LOSS) 9,997,582
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 10,625,355
OTHER INFORMATION $ 596,846
Sales charges paid to FDC
Deferred sales charges withheld $ 12,636
by FDC
Exchange fees withheld by FSC $ 148,268
Expense Reductions $ 32,034
Directed brokerage arrangements
Custodian interest credits 1,799
Transfer agent interest credits 2,928
$ 36,761
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
FEBRUARY 29, FEBRUARY 28,
1996 1995
<TABLE>
<CAPTION>
<S> <C> <C>
Operations $ 627,773 $ 1,365,664
Net investment income
Net realized gain (loss) 13,688,969 (284,364
)
Change in net unrealized appreciation (depreciation) (3,691,387 5,772,228
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 10,625,355 6,853,528
Distributions to shareholders from net investment income (782,540 (1,376,864
) )
Share transactions 164,160,384 260,333,131
Net proceeds from sales of shares
Reinvestment of distributions 774,191 1,355,960
Cost of shares redeemed (272,164,952 (239,750,488
) )
Paid in capital portion of redemption fees 271,871 318,123
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS (106,958,506 22,256,726
)
TOTAL INCREASE (DECREASE) IN NET ASSETS (97,115,691 27,733,390
)
NET ASSETS
Beginning of period 183,454,013 155,720,623
End of period (including undistributed net investment income of $81,888 and $242,884, respectively)$ 86,338,322 $ 183,454,013
OTHER INFORMATION
Shares
Sold 6,349,116 11,552,985
Issued in reinvestment of distributions 30,728 64,252
Redeemed (10,999,650 (10,870,758
) )
Net increase (decrease) (4,619,806 746,479
)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEAR ENDED YEARS ENDED FEBRUARY 28, TEN MONTHS YEAR ENDED
FEBRUARY 29, ENDED APRIL 30,
FEBRUARY 28,
SELECTED PER-SHARE DATA D 1996 1995 1994 1993 1992
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of $ 23.13 $ 21.67 $ 17.44 $ 17.12 $ 12.63
period
Income from Investment
Operations
Net investment income .12 .17 .15 .12 .04
Net realized and unrealized gain 2.92 1.43 4.07 .19 4.32
(loss)
Total from investment operations 3.04 1.60 4.22 .31 4.36
Less Distributions (.15) (.18) (.06) (.08) -
From net investment income
In excess of net investment - - - - (.06)
income
Total distributions (.15) (.18) (.06) (.08) (.06)
Redemption fees added to paid in .05 .04 .07 .09 .19
capital
Net asset value, end of period $ 26.07 $ 23.13 $ 21.67 $ 17.44 $ 17.12
TOTAL RETURN B, C 13.38% 7.65% 24.66% 2.36% 36.15%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 $ 86,338 $ 183,454 $ 155,721 $ 25,041 $ 22,184
omitted)
Ratio of expenses to average net 1.64% 1.56% 2.10% 2.02% 2.47% F
assets A
Ratio of expenses to average net 1.61% 1.53% 2.08% 2.02% 2.47%
assets after expense reductions E E E A
Ratio of net investment income to .49% .77% .75% .86% .25%
average net assets A
Portfolio turnover rate 138% 139% 185% 273% 222%
A
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 7
OF NOTES TO FINANCIAL STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND
FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED
ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS
WITH THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE
FUND'S EXPENSES (SEE NOTE 7 OF NOTES TO FINANCIAL STATEMENTS).
F DURING THE PERIOD, FMR AGREED TO REIMBURSE A PORTION OF THE
FUND'S EXPENSES, OR EXPENSES WERE LIMITED IN ACCORDANCE
WITH A STATE EXPENSE LIMITATION. WITHOUT THIS REIMBURSEMENT,
THE FUND'S EXPENSE RATIO WOULD HAVE BEN HIGHER.
</TABLE>
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 securities that have grown in value), but does not include certain
fees paid by shareholders upon exchange or redemption. If Fidelity had not
reimbursed certain expenses, the life of fund total returns would have been
lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
FEBRUARY 29, 1996 YEAR YEARS FUND
PAPER AND FOREST PRODUCTS 9.18% 114.73% 187.12%
PAPER AND FOREST PRODUCTS 5.90%
(INCL. 3% SALES CHARGE) 108.29% 178.50%
S&P 500 34.70% 101.14% 247.69%
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 29, 1996 YEAR YEARS FUND
PAPER AND FOREST PRODUCTS 9.18% 16.51% 11.52%
PAPER AND FOREST PRODUCTS 5.90% 15.81% 11.16%
(INCL. 3% SALES CHARGE)
S&P 500 34.70% 14.99% 13.74%
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
19860630 9700.00 10000.00
19860731 9515.70 9488.77
19860831 10689.40 10192.84
19860930 10573.00 9349.89
19861031 11358.70 9889.38
19861130 11834.00 10129.69
19861231 11659.40 9871.39
19870131 14714.90 11201.06
19870228 15190.20 11643.50
19870331 16354.20 11980.00
19870430 15384.20 11873.38
19870531 14501.50 11976.68
19870630 15141.70 12581.50
19870731 15326.00 13219.38
19870831 16441.50 13712.46
19870930 15946.80 13412.16
19871031 11213.20 10523.18
19871130 10825.20 9656.07
19871231 12118.45 10390.90
19880131 11629.03 10828.35
19880229 12724.90 11332.96
19880331 12320.60 10982.77
19880430 12458.91 11104.68
19880531 12320.60 11201.29
19880630 13597.35 11715.43
19880731 12990.89 11670.91
19880831 12352.52 11274.10
19880930 12597.23 11754.37
19881031 12320.60 12081.14
19881130 12054.61 11908.38
19881231 12938.95 12116.78
19890131 13066.96 13003.73
19890228 12682.95 12679.94
19890331 12693.61 12975.38
19890430 13152.29 13648.80
19890531 13386.96 14201.58
19890630 12533.61 14120.63
19890731 13738.97 15395.72
19890831 14720.33 15697.48
19890930 13909.64 15633.12
19891031 13280.29 15270.43
19891130 13184.29 15581.95
19891231 13466.66 15955.91
19900131 12235.55 14885.27
19900228 12354.34 15077.29
19900331 12699.91 15476.84
19900430 11879.17 15089.92
19900531 12667.52 16561.19
19900630 12365.14 16448.57
19900731 12548.72 16395.93
19900831 11047.63 14913.74
19900930 9978.50 14187.44
19901031 9665.33 14126.44
19901130 10637.26 15039.00
19901231 11432.18 15458.59
19910131 12376.62 16132.59
19910228 12969.65 17286.07
19910331 13233.21 17704.39
19910430 13881.15 17746.88
19910531 15473.53 18513.55
19910630 15078.18 17665.63
19910731 15089.16 18488.84
19910831 15166.03 18927.03
19910930 14583.99 18610.95
19911031 15133.09 18860.33
19911130 13979.98 18100.26
19911231 15406.61 20170.93
19920131 16823.56 19795.75
19920229 16902.28 20053.10
19920331 17014.74 19662.06
19920430 17284.64 20240.13
19920531 16801.07 20339.30
19920630 16689.46 20036.25
19920731 16565.50 20855.73
19920831 15900.62 20428.19
19920930 15731.59 20669.24
19921031 16497.88 20741.58
19921130 17106.41 21448.87
19921231 17263.87 21712.69
19930131 17795.59 21895.08
19930228 18191.55 22192.85
19930331 18168.92 22661.12
19930430 18995.42 22112.72
19930531 19052.02 22705.34
19930630 18644.49 22771.19
19930731 18452.05 22680.10
19930831 18950.14 23539.68
19930930 18044.52 23358.43
19931031 18746.37 23841.94
19931130 19912.36 23615.45
19931231 20467.06 23901.19
19940131 22844.31 24713.83
19940228 22199.06 24044.09
19940331 19844.44 22995.77
19940430 19822.26 23290.11
19940531 20630.86 23672.07
19940630 20422.94 23092.10
19940731 22155.65 23849.53
19940831 24627.66 24827.36
19940930 25066.62 24219.09
19941031 23507.17 24764.01
19941130 22479.09 23862.11
19941231 23360.76 24215.98
19950131 23203.89 24843.91
19950228 25508.60 25812.07
19950331 25689.59 26573.79
19950430 25795.82 27356.38
19950531 26222.30 28449.82
19950630 28598.39 29110.71
19950731 29573.20 30076.02
19950831 29548.83 30151.51
19950930 29061.42 31423.90
19951031 28634.95 31311.72
19951130 29061.42 32686.31
19951231 28480.22 33315.84
19960131 29190.55 34449.91
19960229 27850.30 34769.27
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 29, 1996, your investment would have grown to $27,850 -
a 178.50% increase. That compares to $10,000 invested in the S&P 500, which
would have grown to $34,769 over the same period - a 247.69% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 29, 1996
% OF FUND'S
INVESTMENTS
Weyerhaeuser Co. 7.3
Rayonier, Inc. 7.1
Mosinee Paper Corp. 6.6
Westvaco Corp. 6.4
Wausau Paper Mills Co. 6.2
Boise Cascade Corp. 5.2
Champion International Corp. 4.9
Kimberly-Clark Corp. 4.0
Willamette Industries, Inc. 3.8
Georgia-Pacific Corp. 3.7
TOP INDUSTRIES AS OF FEBRUARY 29, 1996
Paper & Allied Products 87.8%
Services for Print Industry 1.5%
Paper Containers 0.9%
All Others 9.8% *
Row: 1, Col: 1, Value: 9.800000000000001
Row: 1, Col: 2, Value: 1.9
Row: 1, Col: 3, Value: 2.5
Row: 1, Col: 4, Value: 85.8
* INCLUDES SHORT-TERM INVESTMENTS
PAPER AND FOREST PRODUCTS PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Larry Rakers, Portfolio Manager of Fidelity Select Paper and Forest
Products Portfolio
Note to shareholders: On February 1, 1996, Larry Rakers replaced Scott
Offen as portfolio manager of the fund.
Q. LARRY, HOW HAS THE FUND PERFORMED OVER THE PAST YEAR?
A. For the 12 months ended February 29, 1996, the fund had a total return
of 9.18%. The S&P 500 Index returned 34.70% for the same period.
Q. WHAT FACTORS AFFECTED THE SECTOR AND THE FUND'S RETURN?
A. Paper and forest product stocks are driven by the global supply and
demand fundamentals of the various grades of paper and forest products.
There is a strong correlation between demand and general economic growth,
while supply is determined by capacity additions. In the middle of 1995,
the economic growth rate began to slow. At the same time, the improvement
in paper prices encouraged many companies to add to capacity. These
additions have been greater than the economic growth rate, resulting in the
recent decline in commodity prices. Investors foresaw the current
supply/demand imbalance in late 1995 and, as a result, the stocks have
underperformed the broader market.
Q. WHAT IS YOUR CURRENT STRATEGY AND WHAT CHANGES HAVE YOU MADE TO THE FUND
SINCE TAKING IT OVER IN FEBRUARY?
A. My strategy is to concentrate the fund's investments in companies that
have a unique market niche or in companies that deal with paper grades that
have the best supply/demand fundamentals. Globally, there appears to be a
good deal of new capacity coming on in newsprint, pulp and containerboard -
the latter used to make corrugated boxes. There is less capacity coming on
in tissue, paper and some coated paper grades. When I took over the fund,
it had major weightings in tissue, paper and niche producers, with minor
weightings in newsprint, pulp and containerboard companies. Since taking
over the fund, I have further reduced investments in newsprint, pulp and
containerboard, increasing the emphasis on white papers and specialty
grades. Because I am concerned that the recent decline in pulp prices could
lead to a decline in tissue prices, I've modestly reduced investments in
tissue producers. I also have increased investments in companies with an
emphasis on timber.
Q. WHAT WERE SOME OF THE OTHER STOCKS THAT YOU'VE TARGETED?
A. Mosinee Paper, a company that buys pulp instead of creating it, was one.
With pulp prices in a freefall, the company's profit margins have expanded.
Wausau Paper Mills was another. This company produces specialty grades of
paper, so it's been less sensitive to price declines. Finally, there was
Rayonier, a company that produces specialty pulp - which tends to have more
stable pricing - and timber.
Q. WHAT WERE SOME OF THE STOCKS WHOSE PERFORMANCE HELPED THE FUND?
A. The stocks that did well over the past six months were those with less
business in commodity grades and more exposure to specialty grades, such as
Wausau. In addition, Kimberly-Clark performed well, having benefited from
rising tissue prices and a consolidation with Scott Paper in a cost-cutting
plan.
Q. WHICH STOCKS DIDN'T TURN OUT AS WELL AS EXPECTED?
A. Those that suffered from downturns in commodity prices. Boise Cascade
saw price drops in its uncoated white paper business. Bowater, one the
largest producers of newsprint in the U.S., also saw share price declines,
even though the price of newsprint hasn't collapsed. That's because paper
and forest product stock prices tend to rise or fall six months in advance
of product prices. As a result, I tend to manage the fund with an eye
toward what I perceive the environment will be like in nine months or a
year.
Q. WHAT'S YOUR OUTLOOK?
A. I look for continued downward pricing pressure in all of the commodity
grades through most of this year. Those companies with exposure to
specialty grades, tissue and lumber are more likely to perform better. I
expect that prices of white and coated paper will be the first to rebound.
FUND FACTS
START DATE: June 30, 1986
TRADING SYMBOL: FSPFX
SIZE: as of February 29, 1996, more than
$27 million
MANAGER: Larry Rakers, since February 1996;
manager, Fidelity Select American Gold
Portfolio, since July 1995; research analyst,
since 1993; joined Fidelity in 1993
(checkmark)
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
PAPER AND FOREST PRODUCTS PORTFOLIO
INVESTMENTS FEBRUARY 29, 1996
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 88.9%
SHARES VALUE (NOTE 1)
PACKAGING & CONTAINERS - 0.9%
PAPER CONTAINERS - 0.9%
Mayr Melnhof Karton AG 5,000 $ 249,554
PAPER & FOREST PRODUCTS - 86.5%
PAPER & ALLIED PRODUCTS - 86.5%
Avenor, Inc. 20,000 280,950
Boise Cascade Corp. 40,000 1,410,000
Bowater, Inc. 13,500 499,500
Champion International Corp. 33,500 1,340,000
Domtar, Inc. 17,400 120,626
Donohue, Inc. (vtg.) 16,800 213,011
Enso-Gutzeit OY Class R Free shares 25,000 177,297
Fletcher Challenge Canada Ltd. Class A 25,000 328,383
Fort Howard Corp. (a) 37,500 862,500
Georgia-Pacific Corp. 16,000 1,010,000
IP Timberlands Ltd. Class A 20,000 442,500
International Paper Co. 24,500 872,813
Kimberly-Clark Corp. 14,430 1,102,091
Kymmene Corp. 6,000 167,307
Louisiana-Pacific Corp. 28,900 668,313
MacMillan Bloedel Ltd. 5,000 63,852
Mead Corp. 6,000 300,000
Metsa-Serla Ltd. Class B 2,500 77,396
Mo Och Domsjoe AB Class B 1,500 73,811
Mosinee Paper Corp. 64,000 1,792,000
Plum Creek Timber Co. LP depositary unit 10,000 267,500
QUNO Corp. (a) 29,000 650,746
Rayonier, Inc. 56,800 1,945,400
Repola OY 10,000 199,583
Slocan Forest Products Ltd. 30,000 279,126
Specialty Paperboard, Inc. (a) 20,000 242,500
Stone Consolidated Corp. (a) 55,400 656,949
Stora Kopparbergs B Free shares 7,000 89,992
SCA (Svenska Cellulosa Aktiebolaget)
Class B Ord. 15,000 252,688
Temple-Inland, Inc. 10,000 402,500
Union Camp Corp. 7,500 349,688
Wausau Paper Mills Co. 75,637 1,701,833
Westvaco Corp. 60,000 1,740,000
Weyerhaeuser Co. 46,800 1,983,150
Willamette Industries, Inc. 20,000 1,050,000
23,614,005
PRINTING - 1.5%
SERVICES FOR PRINT INDUSTRY - 1.5%
Alco Standard Corp. 8,700 412,161
TOTAL COMMON STOCKS
(Cost $24,619,692) 24,275,720
CONVERTIBLE PREFERRED STOCKS - 1.3%
PAPER & FOREST PRODUCTS - 1.3%
PAPER & ALLIED PRODUCTS - 1.3%
James River Corp., Series P, $1.55
depositary shares representing
1/100 share (dividend enhanced
conversion stock) (Cost $378,750) 14,000 364,000
REPURCHASE AGREEMENTS - 9.8%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations) in a joint
trading account at 5.41%, dated
2/29/96 due 3/1/96 $ 2,658,399 $ 2,658,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $27,656,442) $ 27,297,720
LEGEND
1. Non-income producing
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $40,211,312 and $104,923,848, respectively (see Note 3 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
com-missions paid to these affiliated firms were $42,499 for the period
(see Note 4 of Notes to Financial Statements).
The maximum loan and the average daily loan balances during the periods for
which loans were outstanding amounted to $2,982,000 and $2,948,000,
respectively. The weighted average interest rate paid was 6.4% (see Note 5
of Notes to Financial Statements).
Distribution of investments by country of issue, as a percentage of total
value of investment in securities, is as follows:
United States 85.8%
Canada 9.5
Finland 2.3
Sweden 1.5
Others (individually less than 1%) 0.9
TOTAL 100.0%
INCOME TAX INFORMATION
At February 29, 1996, the aggregate cost of investment securities for
income tax purposes was $28,074,447. Net unrealized depreciation aggregated
$776,727, of which $1,199,496 related to appreciated investment securities
and $1,976,223 related to depreciated investment securities.
The fund hereby designates approximately $2,469,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 27% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate shareholders
(unaudited).
The fund will notify shareholders in January 1997 of the applicable
percentage for use in preparing 1996 income tax returns.
PAPER AND FOREST PRODUCTS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 29, 1996
ASSETS
Investment in $ 27,297,720
securities, at
value
(including
repurchase
agreements
of
$2,658,000)
(cost
$27,656,442)
- - See
accompanyin
g schedule
Cash 382
Receivable for 183,797
investments
sold
Receivable for 260,514
fund shares
sold
Dividends 71,432
receivable
Redemption 180
fees
receivable
TOTAL ASSETS 27,814,025
LIABILITIES
Payable for $ 483,998
fund shares
redeemed
Accrued 16,028
management
fee
Other payables 43,960
and
accrued
expenses
TOTAL 543,986
LIABILITIES
NET ASSETS $ 27,270,039
Net Assets
consist of:
Paid in capital $ 22,215,181
Undistributed 46,687
net
investment
income
Accumulated 5,366,849
undistributed
net realized
gain (loss) on
investments
and foreign
currency
transactions
Net unrealized (358,678
appreciation )
(depreciation
) on
investments
and assets
and liabilities
in
foreign
currencies
NET ASSETS, for $ 27,270,039
1,312,156
shares
outstanding
NET ASSET $20.78
VALUE and
redemption
price per
share
($27,270,039
(divided by) 1,312,156
shares)
Maximum $21.42
offering price
per share
(100/97.00 of
$20.78)
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED FEBRUARY 29, 1996
INVESTMENT INCOME $ 979,846
Dividends
Interest (including income on 320,088
securities loaned of $2,764)
TOTAL INCOME 1,299,934
EXPENSES
Management fee $ 355,643
Transfer agent 714,803
Fees
Redemption fees (106,137
)
Accounting and security lending fees 63,221
Non-interested trustees' compensation 456
Custodian fees and expenses 29,405
Registration fees 27,502
Audit 22,677
Legal 487
Interest 2,093
Miscellaneous 818
Total expenses before reductions 1,110,968
Expense reductions (7,391 1,103,577
)
NET INVESTMENT INCOME 196,357
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 10,194,135
Foreign currency transactions (1,485 10,192,650
)
Change in net unrealized appreciation (depreciation) on:
Investment securities (5,417,427
)
Assets and liabilities in (12 (5,417,439
foreign currencies ) )
NET GAIN (LOSS) 4,775,211
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 4,971,568
OTHER INFORMATION $ 526,735
Sales charges paid to FDC
Deferred sales charges withheld $ 3,068
by FDC
Exchange fees withheld by FSC $ 76,058
Expense reductions $ 6,886
Directed brokerage arrangements
Custodian interest credits 248
Transfer agent interest credits 257
$ 7,391
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
FEBRUARY 29, FEBRUARY 28,
1996 1995
<TABLE>
<CAPTION>
<S> <C> <C>
Operations $ 196,357 $ 27,739
Net investment income
Net realized gain (loss) 10,192,650 2,948,989
Change in net unrealized appreciation (depreciation) (5,417,439 2,027,950
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 4,971,568 5,004,678
Distributions to shareholders (148,185 -
From net investment income )
From net realized gain (4,557,795 (2,454,993
) )
TOTAL DISTRIBUTIONS (4,705,980 (2,454,993
) )
Share transactions 89,748,449 242,587,009
Net proceeds from sales of shares
Reinvestment of distributions 4,602,520 2,407,320
Cost of shares redeemed (161,775,476 (220,695,611
) )
Paid in capital portion of redemption fees 210,077 462,733
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS (67,214,430 24,761,451
)
TOTAL INCREASE (DECREASE) IN NET ASSETS (66,948,842 27,311,136
)
NET ASSETS
Beginning of period 94,218,881 66,907,745
End of period (including undistributed net investment income of $46,687 and $31,587, respectively) $ 27,270,039 $ 94,218,881
OTHER INFORMATION
Shares
Sold 3,969,187 12,091,048
Issued in reinvestment of distributions 214,948 132,918
Redeemed (7,328,171 (11,180,290
) )
Net increase (decrease) (3,144,036 1,043,676
)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEAR ENDED YEARS ENDED FEBRUARY 28, TEN MONTHS YEAR ENDED
FEBRUARY 29, ENDED APRIL 30,
FEBRUARY 28,
SELECTED PER-SHARE DATA D 1996 1995 1994 1993 1992
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of $ 21.14 $ 19.61 $ 16.08 $ 15.37 $ 12.64
period
Income from Investment
Operations
Net investment income (loss) .08 .01 (.01) .06 .13
Net realized and unrealized gain 1.83 2.53 3.38 .65 2.64
(loss)
Total from investment operations 1.91 2.54 3.37 .71 2.77
Less Distributions (.08) - (.01) (.09) (.30)
From net investment income
From net realized gain (2.27) (1.17) - - -
Total distributions (2.35) (1.17) (.01) (.09) (.30)
Redemption fees added to paid in .08 .16 .17 .09 .26
capital
Net asset value, end of period $ 20.78 $ 21.14 $ 19.61 $ 16.08 $ 15.37
TOTAL RETURN B, C 9.18% 14.91% 22.03% 5.25% 24.52%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 $ 27,270 $ 94,219 $ 66,908 $ 25,098 $ 28,957
omitted)
Ratio of expenses to average net 1.91% 1.88% 2.08% 2.21% 2.05%
assets A
Ratio of expenses to average net 1.90% 1.87% 2.07% 2.21% 2.05%
assets after expense reductions E E E A
Ratio of net investment income .34% .05% (.08)% .49% .92%
(loss) to average net assets A
Portfolio turnover rate 78% 209% 176% 222% 421%
A
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 7
OF NOTES TO FINANCIAL STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE
AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN
CALCULATED BASED ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS
WITH THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE
FUND'S EXPENSES (SEE NOTE 7 OF NOTES TO FINANCIAL STATEMENTS).
</TABLE>
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 securities that have grown in value), but does not include certain
fees paid by shareholders upon exchange or redemption. If Fidelity had not
reimbursed certain expenses, the past one year, five year, and life of fund
total returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
FEBRUARY 29, 1996 YEAR YEARS FUND
TRANSPORTATION 12.95% 158.67% 267.04%
TRANSPORTATION 9.56% 150.91% 256.03%
(INCL. 3% SALES CHARGE)
S&P 500 34.70% 101.14% 270.48%
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 29, 1996 YEAR YEARS FUND
TRANSPORTATION 12.95% 20.93% 14.79%
TRANSPORTATION 9.56% 20.20% 14.42%
(INCL. 3% SALES CHARGE)
S&P 500 34.70% 14.99% 14.90%
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
19860929 9700.00 10000.00
19860930 9748.50 9962.80
19861031 10039.50 10537.66
19861130 10204.40 10793.72
19861231 10039.50 10518.48
19870131 10737.90 11935.32
19870228 11397.50 12406.77
19870331 11397.50 12765.32
19870430 11475.10 12651.71
19870531 11649.70 12761.78
19870630 11998.90 13406.25
19870731 12474.20 14085.95
19870831 12474.20 14611.35
19870930 11795.20 14291.37
19871031 7992.80 11213.00
19871130 7527.20 10289.05
19871231 8284.50 11072.05
19880131 8698.73 11538.18
19880229 9418.69 12075.86
19880331 9704.70 11702.72
19880430 9734.29 11832.62
19880531 9675.11 11935.56
19880630 10661.36 12483.41
19880731 10523.29 12435.97
19880831 10030.16 12013.15
19880930 10690.95 12524.91
19881031 11036.14 12873.10
19881130 11134.76 12689.01
19881231 11470.09 12911.07
19890131 12456.34 13856.16
19890228 12584.55 13511.14
19890331 12969.19 13825.95
19890430 13403.14 14543.52
19890531 13975.16 15132.53
19890630 13889.01 15046.28
19890731 14730.77 16404.95
19890831 15688.27 16726.49
19890930 15383.13 16657.91
19891031 14404.59 16271.45
19891130 14530.85 16603.39
19891231 14737.71 17001.87
19900131 13812.21 15861.04
19900228 14456.54 16065.65
19900331 14890.01 16491.39
19900430 14327.68 16079.11
19900531 14854.86 17646.82
19900630 14691.33 17526.82
19900731 14642.53 17470.73
19900831 12494.96 15891.38
19900930 10884.28 15117.47
19901031 10713.45 15052.46
19901130 11152.72 16024.85
19901231 11555.39 16471.95
19910131 12543.76 17190.12
19910228 13763.97 18419.22
19910331 13776.18 18864.96
19910430 13739.57 18910.24
19910531 14825.56 19727.16
19910630 14702.46 18823.66
19910731 15596.12 19700.84
19910831 15877.68 20167.75
19910930 15583.88 19830.95
19911031 16734.61 20096.68
19911130 15694.05 19286.79
19911231 17811.89 21493.19
19920131 17971.04 21093.42
19920229 18938.14 21367.64
19920331 18485.20 20950.97
19920430 18962.63 21566.92
19920531 19354.37 21672.60
19920630 18521.92 21349.68
19920731 18791.24 22222.88
19920831 18228.12 21767.31
19920930 18950.39 22024.17
19921031 19758.35 22101.25
19921130 21190.65 22854.91
19921231 22049.78 23136.02
19930131 23037.27 23330.36
19930228 23349.77 23647.66
19930331 24912.25 24146.62
19930430 24850.15 23562.27
19930531 25778.43 24193.74
19930630 25853.69 24263.90
19930731 25853.69 24166.85
19930831 26330.38 25082.77
19930930 26393.10 24889.63
19931031 26945.04 25404.85
19931130 27095.57 25163.50
19931231 28513.94 25467.98
19940131 29763.83 26333.89
19940228 29763.83 25620.25
19940331 28967.19 24503.20
19940430 29508.50 24816.84
19940531 29034.13 25223.84
19940630 29006.23 24605.86
19940731 29982.87 25412.93
19940831 30875.80 26454.86
19940930 30052.63 25806.71
19941031 30499.09 26387.37
19941130 28671.38 25426.34
19941231 29616.40 25803.41
19950131 29416.80 26472.49
19950228 31520.20 27504.13
19950331 31934.73 28315.77
19950430 32410.69 29149.67
19950531 31443.43 30314.78
19950630 31105.66 31019.00
19950731 33777.12 32047.59
19950831 33746.42 32128.03
19950930 33439.35 33483.83
19951031 33024.81 33364.29
19951130 34160.95 34828.98
19951231 34108.67 35499.79
19960131 34628.42 36708.20
19960229 35602.96 37048.49
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 29, 1996, your investment would have grown to $35,603 - a 256.03%
increase. That compares to $10,000 invested in the S&P 500, which would
have grown to $37,048 over the same period - a 270.48% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 29, 1996
% OF FUND'S
INVESTMENTS
Burlington Northern Santa Fe Corp. 10.1
CSX Corp. 9.1
Hunt (J.B.) Transport Services, Inc. 8.6
Wisconsin Central Transportation Corp. 7.4
Kirby Corp. 5.4
Delta Air Lines, Inc. 4.6
Eaton Corp. 4.6
AMR Corp. 3.7
PACCAR, Inc. 3.5
Atlantic Southeast Airlines, Inc. 2.5
TOP INDUSTRIES AS OF FEBRUARY 29, 1996
Railroads 27.3%
Air Transport, Major
National 17.9%
Trucking, Long Distance 9.7%
Auto & Truck Parts 6.7%
Shipping 6.7%
All Others 31.7% *
Row: 1, Col: 1, Value: 31.7
Row: 1, Col: 2, Value: 6.7
Row: 1, Col: 3, Value: 6.7
Row: 1, Col: 4, Value: 9.699999999999999
Row: 1, Col: 5, Value: 17.9
Row: 1, Col: 6, Value: 27.3
* INCLUDES SHORT-TERM INVESTMENTS
TRANSPORTATION PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Stephen DuFour,
Portfolio Manager of Fidelity Select Transportation Portfolio
Q. STEVE, HOW DID THE FUND PERFORM?
A. Fidelity Select Transportation had a total return of 12.95% for the year
that ended February 29, 1996. During the same period, the S&P 500 Index had
a total return of 34.70%.
Q. HOW WOULD YOU SUM UP THE FUND'S PERFORMANCE DURING THE PAST YEAR?
A. The fund invests primarily in three sectors: railroads, airlines and
trucking. The main reason the fund trailed the broader market during the
past 12 months was that I overemphasized trucking and underemphasized
airlines. On average, airline stocks outperformed the broader market during
the fund's fiscal year, railroad stocks matched the broader market and
trucking stocks underperformed. The reasons for the disparity have to do
with separate issues of supply and demand that apply individually to each
sector.
Q. DID RAILROADS STILL CONSTITUTE THE LARGEST SECTOR IN THE FUND AT THE END
OF THE PERIOD?
A. Yes, although the percentage was not as high as it was six months ago.
At the end of the period, railroad stocks totaled 27.3% of the fund's
investments, compared to 43.6% at the end of August. As the economy slowed
down, I looked for opportunities in less economically sensitive sectors,
namely airlines. Nevertheless, railroads still dominate the fund. My two
largest holdings at the end of the period were both railroads - Burlington
Northern Santa Fe and CSX. Together they accounted for about 20% of the
fund's investments. Burlington Northern Santa Fe is a cost-cutting story
following its recent merger with Santa Fe Pacific. CSX is more of a
turnaround story - cost-cutting, debt reduction and better asset
utilization.
Q. WHAT'S BEEN RESPONSIBLE FOR THE RECENT STRONG PERFORMANCE BY AIRLINES?
A. Basic economics. The demand for seats was greater than the new capacity
added during the year, resulting in higher yields per plane. One of the
biggest concerns lately has been that discount carriers such as Southwest
and ValuJet - both of which the fund owned - would erode pricing throughout
the industry. While that happened in isolated markets, the overall impact
was less than expected, and that, too, was a positive factor. Airline
stocks totaled 21.7% of the fund's investments at the end of the period.
The largest holdings were two industry leaders: AMR, the parent company of
American Airlines, and Delta. Both have strong route structures and a
commitment to cost-containment.
Q. HOW DO YOU EXPLAIN THE SUBPAR PERFORMANCE BY THE FUND'S TRUCKING-RELATED
STOCKS?
A. The story here was pretty much the opposite of the airlines: lower
volume, measured in terms of tonnage transported, and more trucks on the
road. Nineteen ninety-five was a record year for new truck deliveries.
Among the fund's largest trucking holdings at the end of the period was
J.B. Hunt. I'm a believer in J.B. Hunt's intermodal strategy, which could
be very profitable for the company once the economy improves and tonnage
increases. Lately, I've increased the fund's stake in truck manufacturers
such as Eaton. Manufacturers tend to be among the first companies to
respond to an increase in economic activity. At the end of February,
trucking stocks totaled about 21% of the fund's investments.
Q. WHAT'S THE OUTLOOK?
A. As I've tried to explain, transportation stocks are driven mostly by the
law of supply and demand. The companies themselves determine supply, and
that's something I try to monitor closely. For example, the airlines have
started to order more planes and Boeing is increasing production; that's a
negative sign. The truckers, on the other hand, have cut back on new
orders; that's a good sign. The railroads, finally, have less ability to
add capacity than other sectors, and that's the main reason I think
railroads may be the most promising sector in the long run. Demand, on the
other hand, determines revenue growth, and that will always be a function
of how fast the economy is growing. After all, we're talking about
companies that build and operate vehicles that transport the nation's
economic output. I'll continue to look for companies that have the
resources to weather the inevitable economic downturns, as well as the
leverage to outperform the broader market once the economy improves.
FUND FACTS
START DATE: September 29, 1986
TRADING SYMBOL: FSRFX
SIZE: as of February 29, 1996, more than
$11 million
MANAGER: Stephen Dufour, since 1994;
manager, Fidelity Select Multimedia Portfolio,
1993-February 1996; equity analyst, media,
1992-1993; joined Fidelity in 1992
(checkmark)
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
TRANSPORTATION PORTFOLIO
INVESTMENTS FEBRUARY 29, 1996
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 88.7%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 1.4%
Boeing Co. 2,000 $ 162,250
AIR TRANSPORTATION - 21.7%
AIR TRANSPORT, MAJOR NATIONAL - 17.9%
AMR Corp. (a) 5,000 438,750
America West Airlines, Inc. Class B 11,000 226,875
Atlantic Coast Airlines, Inc. (a) 10,000 115,000
Continental Airlines, Inc. Class B (a) 4,000 192,000
Delta Air Lines, Inc. 7,000 546,000
Northwest Airlines Corp. Class A 2,000 91,750
Southwest Airlines Co. 7,000 215,250
Trans World Airlines, Inc. 1,000 17,000
UAL Corp. 1,000 178,625
USAir Group, Inc. (a) 2,200 37,125
ValuJet, Inc. (a) 2,000 46,250
2,104,625
AIR TRANSPORTATION, REGIONAL - 3.8%
Atlantic Southeast Airlines, Inc. 11,300 296,625
Comair Holdings, Inc. 5,000 155,625
452,250
TOTAL AIR TRANSPORTATION 2,556,875
AUTOS, TIRES, & ACCESSORIES - 11.7%
AUTO & TRUCK PARTS - 6.7%
Cummins Engine Co., Inc. 5,800 244,325
Eaton Corp. 9,400 544,025
788,350
MOTOR VEHICLES & CAR BODIES - 5.0%
General Motors Corp. 54 2,768
PACCAR, Inc. 8,800 415,800
Sime Darby Hongkong Ltd. 20,000 20,695
Volvo AB ADR Class B 7,000 148,750
588,013
TRUCK & BUS BODIES - 0.0%
Grupo Dina sponsored ADR, Series L 11 10
TOTAL AUTOS, TIRES, & ACCESSORIES 1,376,373
HOLDING COMPANIES - 1.4%
Norfolk Southern Corp. 2,100 171,150
RAILROADS - 27.3%
Burlington Northern Santa Fe Corp. 14,930 1,194,400
CSX Corp. 24,000 1,077,000
Illinois Central Corp., Series A 2,200 81,950
Wisconsin Central Transportation
Corp. (a) 11,700 868,723
3,222,073
SECURITIES INDUSTRY - 0.1%
Alleghany Corp. 30 5,910
SHIPPING - 9.1%
DEEP SEA TRANSPORT - 2.4%
Pacific Basin Bulk Shipping Ltd. 10,010 118,869
Pacific Basin Bulk Shipping Ltd.
(warrants) (a) 1,000 813
Transportacion Maritima Mexicana SA
de CV ADR representing L share (a) 20,000 162,500
282,182
SHIPPING - 6.7%
Bergesen Group Class B 5,000 89,666
IM Skaugen AS (a) 50,000 26,510
SHARES VALUE (NOTE 1)
Kirby Corp. (a) 35,100 $ 640,575
Storli Skibs, Series A AS 2,000 31,344
788,095
TOTAL SHIPPING 1,070,277
TRUCKING & FREIGHT - 16.0%
AIR COURIER SERVICES - 1.9%
Federal Express Corp. 3,000 222,000
TRUCKING, LOCAL & LONG DISTANCE - 4.4%
Caliber System, Inc. 3,200 135,200
Hitachi Transport System Co. 5,000 50,349
Landstar System, Inc. (a) 4,000 100,500
M.S. Carriers, Inc. (a) 14,000 232,750
518,799
TRUCKING, LONG DISTANCE - 9.7%
Hunt (J.B.) Transport Services, Inc. 55,500 1,012,875
PST Vans, Inc. (a) 7,500 32,813
TNT Freightways Corp. 5,000 103,750
1,149,438
TOTAL TRUCKING & FREIGHT 1,890,237
TOTAL COMMON STOCKS
(Cost $9,567,824) 10,455,145
REPURCHASE AGREEMENTS - 11.3%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations) in a joint
trading account at 5.41%, dated
2/29/96 due 3/1/96 $ 1,326,199 1,326,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $10,893,824) $ 11,781,145
LEGEND
1. Non-income producing
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $17,403,862 and $19,782,975, respectively (see Note 3 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $7,351 for the period (see
Note 4 of Notes to Financial Statements).
INCOME TAX INFORMATION
At February 29, 1996, the aggregate cost of investment securities for
income tax purposes was $10,938,431. Net unrealized appreciation aggregated
$842,714, of which $1,065,782 related to appreciated investment securities
and $223,068 related to depreciated investment securities.
The fund hereby designates aproximately $474,000 as a capital gain dividend
for the purpose of the dividend paid deduction.
A total of 37% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate shareholders
(unaudited).
The fund will notify shareholders in January 1997 of the applicable
percentage for use in preparing 1996 income tax returns.
TRANSPORTATION PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 29, 1996
ASSETS
Investment in $ 11,781,145
securities, at
value
(including
repurchase
agreements
of
$1,326,000)
(cost
$10,893,824)
- - See
accompanyin
g schedule
Cash 886
Receivable for 57,448
fund shares
sold
Dividends 13,634
receivable
Redemption 32
fees
receivable
Other 5,875
receivables
TOTAL ASSETS 11,859,020
LIABILITIES
Payable for $ 338,357
investments
purchased
Payable for 52,744
fund shares
redeemed
Accrued 1,733
management
fee
Other payables 20,953
and
accrued
expenses
TOTAL 413,787
LIABILITIES
NET ASSETS $ 11,445,233
Net Assets
consist of:
Paid in capital $ 9,847,898
Accumulated 710,014
undistributed
net realized
gain (loss) on
investments
and foreign
currency
transactions
Net unrealized 887,321
appreciation
(depreciation
) on
investments
NET ASSETS, for $ 11,445,233
522,138
shares
outstanding
NET ASSET $21.92
VALUE and
redemption
price per
share
($11,445,233
(divided by) 522,138
shares)
Maximum $22.60
offering price
per share
(100/97.00 of
$21.92)
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED FEBRUARY 29, 1996
INVESTMENT INCOME $ 135,444
Dividends
Special dividend from PACCAR, Inc. 26,400
Interest 56,549
TOTAL INCOME 218,393
EXPENSES
Management fee $ 66,606
Transfer agent 148,272
Fees
Redemption fees (20,247
)
Accounting fees and expenses 47,681
Non-interested trustees' compensation 83
Custodian fees and expenses 15,277
Registration fees 15,140
Audit 18,189
Legal 74
Miscellaneous 225
Total expenses before reductions 291,300
Expense reductions (26,009 265,291
)
NET INVESTMENT INCOME (LOSS) (46,898
)
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 1,652,647
Foreign currency transactions 1,541 1,654,188
Change in net unrealized appreciation (depreciation) on:
Investment securities (414,455
)
Assets and liabilities in (13 (414,468
foreign currencies ) )
NET GAIN (LOSS) 1,239,720
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 1,192,822
OTHER INFORMATION $ 157,256
Sales charges paid to FDC
Deferred sales charges withheld $ 2,170
by FDC
Exchange fees withheld by FSC $ 16,530
Expense reductions $ 3,305
Directed brokerage arrangements
Custodian interest credits 55
FMR reimbursement 22,649
$ 26,009
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
FEBRUARY 29, FEBRUARY 28,
1996 1995
<TABLE>
<CAPTION>
<S> <C> <C>
Operations $ (46,898 $ (105,448
Net investment income (loss) ) )
Net realized gain (loss) 1,654,188 1,298,543
Change in net unrealized appreciation (depreciation) (414,468 (804,930
) )
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 1,192,822 388,165
Distributions to shareholders from net realized gains (578,339 (1,219,559
) )
Share transactions 23,608,416 21,385,934
Net proceeds from sales of shares
Reinvestment of distributions 567,930 1,177,973
Cost of shares redeemed (26,101,274 (22,133,063
) )
Paid in capital portion of redemption fees 51,261 28,174
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS (1,873,667 459,018
)
TOTAL INCREASE (DECREASE) IN NET ASSETS (1,259,184 (372,376
) )
NET ASSETS
Beginning of period 12,704,417 13,076,793
End of period $ 11,445,233 $ 12,704,417
OTHER INFORMATION
Shares
Sold 1,097,987 1,018,198
Issued in reinvestment of distributions 26,954 62,121
Redeemed (1,221,676 (1,064,813
) )
Net increase (decrease) (96,735 15,506
)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEAR ENDED YEARS ENDED FEBRUARY 28, TEN MONTHS YEAR ENDED
FEBRUARY 29, ENDED APRIL 30,
FEBRUARY 28,
SELECTED PER-SHARE DATA D 1996 1995 1994 1993 1992
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of $ 20.53 $ 21.67 $ 18.68 $ 15.49 $ 11.26
period
Income from Investment
Operations
Net investment income (loss) (.09) F (.17) (.20) (.07) (.05)
Net realized and unrealized gain 2.60 1.17 5.07 3.55 4.18
(loss)
Total from investment operations 2.51 1.00 4.87 3.48 4.13
Less Distributions - - - - (.04)
From net investment income
From net realized gain (1.22) (2.19) (1.96) (.36) -
Total distributions (1.22) (2.19) (1.96) (.36) (.04)
Redemption fees added to paid in .10 .05 .08 .07 .14
capital
Net asset value, end of period $ 21.92 $ 20.53 $ 21.67 $ 18.68 $ 15.49
TOTAL RETURN B, C 12.95% 5.90% 27.47% 23.14% 38.01%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 $ 11,445 $ 12,704 $ 13,077 $ 10,780 $ 2,998
omitted)
Ratio of expenses to average net 2.47% 2.37% 2.40% 2.48% A 2.43%
assets G , G G
Ratio of expenses to average net 2.44% 2.36% 2.39% 2.48% A 2.43%
assets after expense reductions E E E
Ratio of net investment income (.43)% (.83)% (.96)% (.53)% (.34)%
(loss) to average net assets A
Portfolio turnover rate 175% 178% 115% 116% A 423%
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 7
OF NOTES TO FINANCIAL STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE
AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED
BASED ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS
WITH THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE
FUND'S EXPENSES (SEE NOTE 7 OF NOTES TO FINANCIAL STATEMENTS).
F INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND
FROM PACCAR, INC. WHICH AMOUNTED TO $ .05 PER SHARE.
G DURING THE PERIOD, FMR AGREED TO REIMBURSE A PORTION OF
THE FUND'S EXPENSES, OR EXPENSES WERE LIMITED IN ACCORDANCE
WITH A STATE EXPENSE LIMITATION. WITHOUT THIS REIMBURSEMENT,
THE FUND'S EXPENSE RATIO WOULD HAVE BEEN HIGHER.
</TABLE>
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 securities that have grown in value), but does not include certain
fees paid by shareholders upon exchange or redemption.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 29, 1996 YEAR YEARS YEARS
AMERICAN GOLD 47.02% 99.19% 177.32%
AMERICAN GOLD 42.61% 93.22%
(INCL. 3% SALES CHARGE) 169.00%
S&P 500 34.70% 101.14% 286.76%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one, five, or 10 years. You can compare
these figures to the performance of the S&P 500 - a common proxy for the
U.S. stock market. This benchmark includes reinvested dividends and capital
gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 29, 1996 YEAR YEARS YEARS
AMERICAN GOLD 47.02% 14.78% 10.74%
AMERICAN GOLD 42.61% 14.08% 10.40%
(INCL. 3% SALES CHARGE)
S&P 500 34.70% 14.99% 14.47%
AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and
show you what would have happened if the fund had performed at a constant
rate each year.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of growth in the long run
and volatility in the short run. Unlike the broader
market, however, some sectors may not have
a history of growth in the long run. And, as
with all stock funds, the share price and
return of a fund that invests in a sector will
vary. That means if you sell your shares
during a sector downturn, you might lose
money. But if you can identify a sector that is
about to experience rapid growth you may
have the potential for above-average gains.
(checkmark)
$10,000 OVER 10 YEARS
19860228 9700.00 10000.00
19860331 10091.13 10558.00
19860430 9885.79 10438.69
19860531 9934.68 10994.03
19860630 9954.23 11179.83
19860731 9905.34 10554.88
19860831 11029.84 11338.05
19860930 11567.64 10400.39
19861031 11401.41 11000.50
19861130 11587.20 11267.81
19861231 11567.64 10980.48
19870131 13327.72 12459.55
19870228 14706.45 12951.70
19870331 17111.90 13326.01
19870430 18177.72 13207.41
19870531 17209.68 13322.31
19870630 16671.88 13995.09
19870731 19898.69 14704.64
19870831 19566.23 15253.12
19870930 20397.38 14919.08
19871031 14442.44 11705.51
19871130 16750.10 10740.97
19871231 16253.00 11558.36
19880131 13812.07 12044.97
19880229 14179.20 12606.27
19880331 15598.12 12216.73
19880430 15697.34 12352.34
19880531 15598.12 12459.80
19880630 15905.71 13031.71
19880731 15866.02 12982.19
19880831 14933.31 12540.79
19880930 14288.35 13075.03
19881031 14437.19 13438.52
19881130 14635.64 13246.35
19881231 14228.82 13478.16
19890131 14744.78 14464.76
19890228 15518.74 14104.59
19890331 14973.00 14433.22
19890430 14248.66 15182.31
19890531 13732.69 15797.19
19890630 14506.64 15707.15
19890731 14655.48 17125.50
19890831 15399.67 17461.16
19890930 15488.97 17389.57
19891031 15647.73 16986.13
19891130 17642.14 17332.65
19891231 17364.31 17748.63
19900131 18128.34 16557.70
19900228 17622.30 16771.29
19900331 16937.65 17215.73
19900430 15101.99 16785.34
19900531 16431.60 18421.91
19900630 15379.82 18296.64
19900731 16451.45 18238.09
19900831 16153.77 16589.37
19900930 16143.85 15781.47
19901031 13494.55 15713.61
19901130 13325.87 16728.71
19901231 14377.65 17195.44
19910131 12383.24 17945.16
19910228 13504.48 19228.24
19910331 13454.86 19693.56
19910430 12978.58 19740.82
19910531 13425.10 20593.63
19910630 14328.04 19650.44
19910731 14169.28 20566.15
19910831 13018.27 21053.57
19910930 12799.98 20701.97
19911031 13782.30 20979.38
19911130 13752.54 20133.91
19911231 13494.55 22437.23
19920131 13821.99 22019.90
19920229 13395.33 22306.16
19920331 12482.46 21871.19
19920430 11847.42 22514.20
19920531 12690.83 22624.52
19920630 13514.40 22287.41
19920731 14367.73 23198.97
19920831 14099.82 22723.39
19920930 14020.44 22991.53
19921031 13603.70 23072.00
19921130 12452.69 23858.75
19921231 13077.81 24152.21
19930131 12829.75 24355.09
19930228 14040.29 24686.32
19930331 15617.96 25207.20
19930430 17592.53 24597.19
19930531 19547.26 25256.39
19930630 20688.34 25329.64
19930731 22335.47 25228.32
19930831 21164.62 26184.47
19930930 18922.14 25982.85
19931031 21750.04 26520.70
19931130 21769.89 26268.75
19931231 23367.41 26586.60
19940131 23377.33 27490.55
19940228 22484.31 26745.55
19940331 23030.04 25579.45
19940430 21085.24 25906.86
19940531 21998.11 26331.74
19940630 20916.56 25686.61
19940731 20608.96 26529.13
19940831 21581.36 27616.82
19940930 23466.63 26940.21
19941031 21769.89 27546.37
19941130 19190.05 26543.13
19941231 19755.63 26936.76
19950131 17691.76 27635.23
19950228 18297.03 28712.18
19950331 21105.08 29559.47
19950430 21025.70 30430.00
19950531 21462.29 31646.29
19950630 21759.97 32381.43
19950731 22345.39 33455.20
19950831 22395.00 33539.17
19950930 22385.08 34954.52
19951031 19686.17 34829.74
19951130 21511.90 36358.76
19951231 21968.34 37059.03
19960131 25867.87 38320.52
19960229 26899.80 38675.75
Let's say you invested $10,000 in Fidelity Select American Gold Portfolio
on February 28, 1986, and paid a 3% sales charge. By February 29, 1996,
your investment would have grown to $26,900 - a 169.00% increase. That
compares to $10,000 invested in the S&P 500, which would have grown to
$38,676 over the same period - a 286.76% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 29, 1996
% OF FUND'S
INVESTMENTS
Newmont Mining Corp. 10.3
Barrick Gold Corp. 8.3
Euro-Nevada Mining Corp. 4.6
Cambior, Inc. 4.3
Kinross Gold Corp. 4.3
Agnico Eagle Mines Ltd. 4.1
Bre-X Minerals Ltd. 3.9
Pegasus Gold, Inc. 3.9
Placer Dome, Inc. 3.8
Firstmiss Gold, Inc. 3.5
TOP INDUSTRIES AS OF FEBRUARY 29, 1996
Gold Ores 76.4%
Metal Mining Services 4.6%
Miscellaneous Metal Ores 4.1%
Copper Ores 2.2%
Investment Managers 1.7%
All Others 11.0% *
Row: 1, Col: 1, Value: 11.3
Row: 1, Col: 2, Value: 1.4
Row: 1, Col: 3, Value: 2.2
Row: 1, Col: 4, Value: 4.1
Row: 1, Col: 5, Value: 4.6
Row: 1, Col: 6, Value: 76.40000000000001
* INCLUDES SHORT-TERM INVESTMENTS
AMERICAN GOLD PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Larry Rakers,
Portfolio Manager of
Fidelity Select American Gold Portfolio
Q. LARRY, HOW HAS THE FUND PERFORMED?
A. It has done quite well. For the 12 months ended February 29, 1996, the
fund had a total return of 47.02%. That beat the S&P 500 Index, which
returned 34.70% during the same 12-month period.
Q. WHAT HELPED THE FUND POST SUCH A STRONG PERFORMANCE?
A. There were two reasons. First, gold prices were favorable, rising as
investors became more interested in owning this commodity. Second and more
importantly, the fund's performance was helped by individual stock
selection. I was able to select companies that were able to grow production
and reserves faster than others. The focus of the fund is to buy stocks of
gold companies that are showing solid cash-flow growth. When I've done
supply and demand analysis on gold recently, it has looked favorable,
convincing me that over the long term the price of gold is going higher.
But, over the short-term there are a lot of unknowns and variables that
make the movement of gold's price almost incalculable. With that kind of
backdrop, my strategy is to buy stocks that are growing production and
reserves, because I should get capital appreciation and growth, even in a
flat gold price environment.
Q. WHAT WERE THE FACTORS THAT HELPED GOLD BECOME MORE ATTRACTIVE?
A. For several complex reasons, demand has exceeded supply, and has done so
since 1990. Around 35% of demand is being met from inventory and the
deficit continues to grow. In other words, we're consuming more gold than
we mine. This has been the case for several years.
Q. DO THE FUND'S LARGER HOLDINGS REFLECT YOUR GROWTH STRATEGY?
A. Yes, they do, or they were attractive "buy" candidates because of their
valuations - their stock prices compared to other measures such as earnings
or cash flow. For example, the stock of Cambior plummeted in August because
a dam failed at one of its mines, causing cyanide to taint a river. The
company closed the mine and the stock fell sharply. My research showed that
the mine would be out of commission for only about six months, leading me
to believe the stock's valuation could rebound. So I bought the stock. But
in most of the other cases, I've bought the stocks because the companies
are growing reserves or production faster than the industry average.
Q. WHICH STOCKS PERFORMED WELL FOR THE FUND?
A. Most of the stocks in the sector have shown positive performance,
especially those I've chosen for the fund's largest investments. Bre-X
Minerals, a Canadian company, discovered a gold deposit in Indonesia that
holds at least 30 million ounces of gold. Its exploration success continued
to drive the stock higher. FirstMiss Gold, spun off from a fertilizer
company, has a strong new management team running its property in Nevada.
Newmont Mining Corporation had strong production and reserve growth coming
from properties in Nevada and Peru. Euro-Nevada had a new project in Nevada
where it found large reserves. Kinross has two growth prospects in Nevada
and Canada where it found reserves and is developing production. Agnico
Eagle has a project in Quebec where it found deep reserves. Barrick Gold
has some projects in Nevada and in Chile, where it was able to grow
reserves and production at a faster-than-average rate. Placer Dome has
projects throughout Latin America, where it was growing reserves and
production. In every case, I'm buying the companies that are growing
reserves and production.
Q. WHICH STOCKS DIDN'T PERFORM AS WELL AS YOU WOULD HAVE LIKED OVER THE
PAST SIX MONTHS?
A. Stillwater Mining, a company that produces platinum and palladium,
showed strong growth potential. Unfortunately, the price of both metals
fell faster than the company's growth, due largely to alleged dumping of
inventory by Russia and a perception that automobile demand was weakening;
both metals are used in auto production. The other disappointment for me
was that the rally in gold prices was not sustained through the end of the
period. I should add that I always want to caution the investor that the
short-term price movement of gold is very unpredictable. That can lead to
volatility in fund performance, but I continue to believe there is a
long-term upward bias in the price of gold.
Q. WHAT'S YOUR OUTLOOK?
A. Because of the unpredictable nature of short-term gold price movements,
I'm going to continue to focus on growth. At the same time, because I'm
optimistic about the long-term increase in the price of gold, I will also
try to keep the fund structured so that it can take advantage of gold price
movements.
FUND FACTS
START DATE: December 16, 1985
TRADING SYMBOL: FSAGX
SIZE: as of February 29, 1996, more than
$451 million
MANAGER: Larry Rakers, since July 1995;
manager, Fidelity Select Paper and Forest
Products Portfolio, since February 1996;
research analyst following precious metals,
coal and restaurants, since 1993; joined
Fidelity in 1993
(checkmark)
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
AMERICAN GOLD PORTFOLIO
INVESTMENTS FEBRUARY 29, 1996
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 91.6%
SHARES VALUE (NOTE 1)
CANADA - 58.8%
HOLDING COMPANIES - 0.1%
HOLDING COMPANY OFFICES - 0.1%
Bolivar Goldfields Ltd. (a) 613,900 $ 640,622
METALS & MINING - 5.8%
METAL MINING - 0.8%
Altai Resources, Inc. 100,000 186,084
Dayton Mining Corp. (a) 320,100 1,722,726
Etruscan Enterprises Ltd. (a) 43,300 91,634
Morgain Minerals, Inc. (a) 400,000 213,084
Southernera Resources Ltd. (a)(c) 253,900 1,158,007
3,371,535
METAL MINING SERVICES - 4.6%
Bre-X Minerals Ltd. (a) 151,300 17,596,554
Da Capo Resources Ltd. (a)(c) 665,700 2,088,890
Eldorado Ltd. (a) 100,000 574,671
Pentland Firth Ventures Ltd. (a) 365,900 435,230
20,695,345
MISCELLANEOUS NONMETAL MINERALS - 0.4%
DIA Metropolitan Minerals Ltd. (a):
Class A 42,450 360,113
Class B 154,800 1,482,650
Winspear Resources Ltd. (a)(c) 100,000 72,974
1,915,737
MISCELLANEOUS METAL ORES - 0.0%
Redaurum Red Lake Mines Ltd. (a) 50,000 52,176
TOTAL METALS & MINING 26,034,793
PRECIOUS METALS - 52.9%
GOLD & SILVER ORES - 1.4%
GoldCorp, Inc. Class A 65,000 1,233,262
Greenstone Resources Ltd. (a) 704,800 3,085,927
La Teko Resources Ltd. (a) 800 2,510
Mentor Exploration & Development
Co. Ltd. (a)(c) 188,000 1,989,273
6,310,972
GOLD ORES - 51.1%
Aber Resources Ltd. (a) 14,900 182,124
Adrian Resources Ltd. (a) 83,400 349,947
Agnico Eagle Mines Ltd. 1,108,700 18,709,591
Barrick Gold Corp. 1,243,300 37,652,388
Cambior, Inc. 1,412,900 19,332,196
Campbell Resources, Inc. (a) 847,800 977,505
Campbell Resources, Inc. (warrants) (a) 212,500 83,738
Canaarc Resources Corp. (a) 280,000 480,169
Cathedral Gold Corp. (a) 211,000 275,616
Crown Resources Corp. (a) 144,600 822,413
Echo Bay Mines Ltd. 353,100 4,895,757
Euro-Nevada Mining Corp. 551,000 20,908,527
Franco Nevada Mining Corp. 232,000 14,094,209
Golden Knight Resources, Inc. (a) 403,700 2,577,717
Golden Star Resources Ltd. (a) 892,100 5,452,138
Iamgold International African Mining
Gold Corp. 100,000 419,601
International Gold Resources Corp. (a) 452,300 1,732,824
Kinross Gold Corp. (a) 2,075,000 19,306,199
Loki Gold Corp. (a) 97,400 206,123
Mountain Province Mining, Inc. (a) 362,100 2,047,853
Naxos Resources Ltd. (a) 40,000 270,004
SHARES VALUE (NOTE 1)
Orvana Minerals Corp. (a) 1,099,400 $ 6,819,353
Pegasus Gold, Inc. (a) 1,114,900 17,492,137
Placer Dome, Inc. 608,400 17,259,496
Prime Resources Group, Inc. (a) 742,300 7,177,345
Rayrock Yellowknife Resources, Inc. (a) 264,100 2,119,969
Royal Oak Mines, Inc. (a) 175,000 766,228
Royal Oak Mines, Inc. (warrants)(a) 100,000 21,162
Silver Standard Resources, Inc. (a)(c) 103,400 660,233
Sudbury Contact Mines Ltd. (a) 420,100 5,403,191
TVI Pacific, Inc. (a) 2,328,100 4,298,240
TVX Gold, Inc. (a) 1,294,700 12,754,734
War Eagle Mining, Inc. (a) 490,000 1,001,204
Wharf Resources Ltd. 570,000 4,055,533
230,605,464
SILVER ORES - 0.4%
Pan American Silver Corp. (a) 151,700 1,508,310
Rea Gold Corp. (a) 125,000 305,579
1,813,889
TOTAL PRECIOUS METALS 238,730,325
TOTAL CANADA 265,405,740
FRANCE - 0.3%
PRECIOUS METALS - 0.3%
GOLD ORES - 0.3%
Guyanor Resources SA Class B 313,440 823,428
Guyanor Resources SA
Class B (a)(b) 200,000 525,413
1,348,841
GHANA - 1.8%
PRECIOUS METALS - 1.8%
GOLD ORES - 1.8%
Ashanti Goldfields Co. Ltd.
GDR (b) 23,000 523,250
Ashanti Goldfields Co. Ltd. GDR 342,000 7,780,500
8,303,750
PERU - 1.8%
PRECIOUS METALS - 1.8%
GOLD ORES - 1.8%
Buenaventura (Cia de Minas)
Class T 741,700 5,985,207
Minera Buenaventura SA 255,673 2,109,818
8,095,025
UNITED STATES OF AMERICA - 28.9%
METALS & MINING - 6.3%
COPPER ORES - 2.2%
Freeport McMoRan Copper &
Gold, Inc. Class A 304,900 9,756,800
METAL MINING - 0.0%
Arizona Star Resource Corp. (a) 13,000 10,435
MISCELLANEOUS METAL ORES - 4.1%
Stillwater Mining Co. (a) 384,700 8,463,400
Stillwater Mining Co. (a)(b) 460,600 10,133,200
18,596,600
TOTAL METALS & MINING 28,363,835
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
PRECIOUS METALS - 20.9%
GOLD ORES - 20.9%
Amax Gold, Inc. (a) 180,300 $ 1,352,250
Canyon Resources Corp. (a) 499,200 1,622,400
Coeur d'Alene Mines Corp. 205,152 4,846,716
Firstmiss Gold, Inc. (a) 592,348 15,993,396
Homestake Mining Co. 61,230 1,186,331
Newmont Gold Co. 211,700 11,908,125
Newmont Mining Corp. 820,190 46,648,306
Santa Fe Pacific Gold Corp. 696,200 10,878,125
94,435,649
SECURITIES INDUSTRY - 1.7%
INVESTMENT MANAGERS - 1.7%
Pioneer Group, Inc. 258,800 7,505,200
TOTAL UNITED STATES OF AMERICA 130,304,684
TOTAL COMMON STOCKS
(Cost $307,352,404) 413,458,040
CONVERTIBLE PREFERRED STOCKS - 0.4%
UNITED STATES OF AMERICA - 0.4%
PRECIOUS METALS - 0.4%
GOLD ORES - 0.4%
Battle Mountain Gold Co. $3.25
(Cost $1,845,881) 29,000 1,638,500
CONVERTIBLE BONDS - 0.1%
PRINCIPAL
AMOUNT
UNITED STATES OF AMERICA - 0.1%
PRECIOUS METALS - 0.1%
GOLD ORES - 0.1%
Canyon Resources Corp. 6%,
6/1/98 (Cost $249,000)(b) $300,000 294,000
REPURCHASE AGREEMENTS - 7.9%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations) in a joint
trading account at 5.41%, dated
2/29/96 due 3/1/96 $ 35,721,367 35,716,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $345,163,285) $ 451,106,540
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 $11,475,863 or 2.5% of net
assets.
3. A company in which the fund has ownership of at least 5% of the voting
securities is an affiliated company. Transactions during the period with
companies that are or were affiliates are as follows:
PURCHASES SALES DIVIDEND MARKET
AFFILIATE COST COST INCOME VALUE
Bolivar Goldfields Ltd. $ - $ - $ - $ -
Da Capo Resources Ltd. - - - 2,088,890
Mentor Exploration & Development
Co. Ltd. - - - 1,989,273
Orvana Minerals Corp. 345,266 352,657 - -
Silver Standard Resources, Inc. - - - 660,233
Southernera Resources, Inc. - - - 1,158,007
Winspear Resources Ltd. - - - 72,974
Totals $ 345,266 $ 352,657 $ - $ 5,969,377
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $205,833,041 and $182,603,857, respectively (see Note 3 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $341,569 for the period
(see Note 4 of Notes to Financial Statements).
The maximum loan and the average daily loan balances during the period for
which the loan was outstanding amounted to $4,084,000. The weighted average
interest rate paid was 6.4% (see Note 5 of Notes to Financial Statements).
Distribution of investments by country of issue, as a percentage of total
value of investment in securities, is as follows:
Canada 58.8%
United States 37.3
Ghana 1.8
Peru 1.8
France 0.3
TOTAL 100.0%
INCOME TAX INFORMATION
At February 29, 1996, the aggregate cost of investment securities for
income tax purposes was $345,837,712. Net unrealized appreciation
aggregated $105,268,828, of which $118,163,177 related to appreciated
investment securities and $12,894,349 related to depreciated investment
securities.
At February 29, 1996, the fund had a capital loss carryforward of
approximately $10,611,000 of which $2,272,000 and $8,339,000 will expire on
February 29, 2000, and February 28, 2001, respectively.
AMERICAN GOLD PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 29, 1996
ASSETS
Investment in $ 451,106,540
securities, at
value
(including
repurchase
agreements
of
$35,716,000)
(cost
$345,163,285
) - See
accompanyin
g schedule
Cash 645
Receivable for 3,961,587
investments
sold
Receivable for 9,673,103
fund shares
sold
Dividends 223,787
receivable
Interest 4,450
receivable
Redemption 1,195
fees
receivable
Other 3,500
receivables
TOTAL ASSETS 464,974,807
LIABILITIES
Payable for $ 1,426,038
investments
purchased
Payable for 11,550,153
fund shares
redeemed
Accrued 231,233
management
fee
Other payables 274,288
and
accrued
expenses
TOTAL 13,481,712
LIABILITIES
NET ASSETS $ 451,493,095
Net Assets
consist of:
Paid in capital $ 357,289,998
Accumulated (458,668
net )
investment
(loss)
Accumulated (11,281,490
undistributed )
net realized
gain (loss) on
investments
and foreign
currency
transactions
Net unrealized 105,943,255
appreciation
(depreciation
) on
investments
NET ASSETS, for $ 451,493,095
16,656,078
shares
outstanding
NET ASSET $27.11
VALUE and
redemption
price per
share
($451,493,09
5 (divided by)
16,656,078
shares)
Maximum $27.95
offering price
per share
(100/97.00 of
$27.11)
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED FEBRUARY 29, 1996
INVESTMENT INCOME $ 2,496,407
Dividends
Interest (including income on 1,422,833
securities loaned of $51,754)
TOTAL INCOME 3,919,240
EXPENSES
Management fee $ 2,155,590
Transfer agent 2,446,113
Fees
Redemption fees (259,949
)
Accounting and security lending fees 355,832
Non-interested trustees' compensation 2,299
Custodian fees and expenses 69,923
Registration fees 81,084
Audit 36,507
Legal 2,089
Interest 2,191
Reports to shareholders 2,844
Miscellaneous 542
Total expenses before reductions 4,895,065
Expense reductions (23,361 4,871,704
)
NET INVESTMENT INCOME (LOSS) (952,464
)
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities (including 25,996,813
realized gain of $242,369
and $1,280,848 on sales of
investments in affiliated issuers and
precious metals, respectively)
Foreign currency transactions (11,159 25,985,654
)
Change in net unrealized appreciation (depreciation) 105,571,674
on investment securities
NET GAIN (LOSS) 131,557,328
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 130,604,864
OTHER INFORMATION $ 1,434,655
Sales charges paid to FDC
Deferred sales charges withheld $ 40,619
by FDC
Exchange fees withheld by FSC $ 190,665
Expense reductions $ 8,324
Directed brokerage arrangements
Custodian interest credits 6,699
Transfer agent interest credits 8,338
$ 23,361
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
FEBRUARY 29, FEBRUARY 28,
1996 1995
<TABLE>
<CAPTION>
<S> <C> <C>
Operations $ (952,464 $ (779,678
Net investment income (loss) ) )
Net realized gain (loss) 25,985,654 3,326,739
Change in net unrealized appreciation (depreciation) 105,571,674 (79,195,428
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 130,604,864 (76,648,367
)
Share transactions 656,288,557 526,647,371
Net proceeds from sales of shares
Cost of shares redeemed (615,297,920 (520,560,579
) )
Paid in capital portion of redemption fees 1,700,313 1,352,412
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS 42,690,950 7,439,204
TOTAL INCREASE (DECREASE) IN NET ASSETS 173,295,814 (69,209,163
)
NET ASSETS
Beginning of period 278,197,281 347,406,444
End of period (including accumulated net investment loss of $458,668 and $102,590, respectively) $ 451,493,095 $ 278,197,281
OTHER INFORMATION
Shares
Sold 28,496,378 24,289,524
Redeemed (26,927,012 (24,535,614
) )
Net increase (decrease) 1,569,366 (246,090
)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEAR ENDED YEARS ENDED FEBRUARY 28, TEN MONTHS YEAR ENDED
FEBRUARY 29, ENDED APRIL 30,
FEBRUARY 28,
SELECTED PER-SHARE DATA D 1996 1995 1994 1993 1992
</TABLE>
Net asset $ 18.44 $ 22.66 $ 14.15 $ 11.94 $ 13.08
value,
beginning of
period
Income from
Investment
Operations
Net (.06) (.05) (.11) (.05) (.06)
investment
income (loss)
Net realized 8.62 (4.25) 8.44 2.16 (1.17)
and
unrealized
gain (loss)
Total from 8.56 (4.30) 8.33 2.11 (1.23)
investment
operations
Redemption .11 .08 .18 .10 .09
fees added to
paid in
capital
Net asset $ 27.11 $ 18.44 $ 22.66 $ 14.15 $ 11.94
value, end of
period
TOTAL 47.02% (18.62)% 60.14% 18.51% (8.72)%
RETURN B, C
RATIOS AND
SUPPLEMENT
AL DATA
Net assets, $ 451,493 $ 278,197 $ 347,406 $ 168,033 $ 130,407
end of period
(000 omitted)
Ratio of 1.39% 1.41% 1.50% 1.59% 1.75%
expenses to A
average net
assets
Ratio of 1.39% 1.41% 1.49% 1.59% 1.75%
expenses to E A
average net
assets after
expense
reductions
Ratio of net (.27)% (.22)% (.51)% (.44)% (.47)%
investment A
income (loss)
to average
net assets
Portfolio 56% 34% 39% 30% 40%
turnover rate A
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN (SEE NOTE 7 OF NOTES TO FINANCIAL STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN
ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES WHO EITHER
PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES (SEE NOTE 7 OF NOTES TO FINANCIAL
STATEMENTS).
</TABLE>
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 securities that have grown in value), but does not include certain
fees paid by shareholders upon exchange or redemption.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 29, 1996 YEAR YEARS YEARS
ENERGY 20.92% 40.17% 157.94%
ENERGY 17.30% 35.97% 150.20%
(INCL. 3% SALES CHARGE)
S&P 500 34.70% 101.14% 286.76%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one, five, or 10 years. You can compare
these figures to the performance of the S&P 500 - a common proxy for the
U.S. stock market. This benchmark includes reinvested dividends and capital
gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 29, 1996 YEAR YEARS YEARS
ENERGY 20.92% 6.99% 9.94%
ENERGY 17.30% 6.34% 9.60%
(INCL. 3% SALES CHARGE)
S&P 500 34.70% 14.99% 14.47%
AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and
show you what would have happened if the fund had performed at a constant
rate each year.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of growth in the long run
and volatility in the short run. Unlike the broader
market, however, some sectors may not have
a history of growth in the long run. And, as
with all stock funds, the share price and
return of a fund that invests in a sector will
vary. That means if you sell your shares
during a sector downturn, you might lose
money. But if you can identify a sector that is
about to experience rapid growth you may
have the potential for above-average gains.
(checkmark)
$10,000 OVER 10 YEARS
19860228 9700.00 10000.00
19860331 9651.26 10558.00
19860430 9670.75 10438.69
19860531 10119.20 10994.03
19860630 10148.44 11179.83
19860731 9514.77 10554.88
19860831 10772.36 11338.05
19860930 10655.38 10400.39
19861031 10938.09 11000.50
19861130 11162.31 11267.81
19861231 11240.30 10980.48
19870131 12429.65 12459.55
19870228 12673.37 12951.70
19870331 13726.23 13326.01
19870430 13336.28 13207.41
19870531 13804.22 13322.31
19870630 14281.91 13995.09
19870731 15022.81 14704.64
19870831 14935.08 15253.12
19870930 14613.37 14919.08
19871031 10752.86 11705.51
19871130 10304.42 10740.97
19871231 11038.00 11558.36
19880131 11449.05 12044.97
19880229 11860.09 12606.27
19880331 12702.23 12216.73
19880430 13183.45 12352.34
19880531 12702.23 12459.80
19880630 12842.58 13031.71
19880731 12922.79 12982.19
19880831 12431.54 12540.79
19880930 12291.18 13075.03
19881031 12401.46 13438.52
19881130 12431.54 13246.35
19881231 12797.70 13478.16
19890131 13764.73 14464.76
19890228 13548.69 14104.59
19890331 14330.54 14433.22
19890430 14814.05 15182.31
19890531 14988.94 15797.19
19890630 15297.57 15707.15
19890731 15935.40 17125.50
19890831 16285.17 17461.16
19890930 16542.36 17389.57
19891031 16429.20 16986.13
19891130 17046.45 17332.65
19891231 18278.37 17748.63
19900131 17462.28 16557.70
19900228 18006.34 16771.29
19900331 18016.81 17215.73
19900430 17409.97 16785.34
19900531 18466.70 18421.91
19900630 18031.48 18296.64
19900731 19259.63 18238.09
19900831 19605.75 16589.37
19900930 19549.92 15781.47
19901031 18545.07 15713.61
19901130 18344.10 16728.71
19901231 17457.25 17195.44
19910131 16326.51 17945.16
19910228 17849.54 19228.24
19910331 17607.24 19693.56
19910430 17803.39 19740.82
19910531 17907.24 20593.63
19910630 17109.45 19650.44
19910731 17988.05 20566.15
19910831 18334.86 21053.57
19910930 18149.89 20701.97
19911031 18693.23 20979.38
19911130 17305.98 20133.91
19911231 17463.39 22437.23
19920131 16528.90 22019.90
19920229 16552.26 22306.16
19920331 16073.33 21871.19
19920430 17171.36 22514.20
19920531 17989.05 22624.52
19920630 17098.88 22287.41
19920731 17555.63 23198.97
19920831 17871.84 22723.39
19920930 17977.24 22991.53
19921031 17204.28 23072.00
19921130 16806.09 23858.75
19921231 17046.28 24152.21
19930131 17689.08 24355.09
19930228 18855.66 24686.32
19930331 19819.87 25207.20
19930430 20201.12 24597.19
19930531 20808.59 25256.39
19930630 21082.54 25329.64
19930731 20927.70 25228.32
19930831 22583.33 26184.47
19930930 22452.31 25982.85
19931031 22130.71 26520.70
19931130 19450.73 26268.75
19931231 20311.41 26586.60
19940131 21399.30 27490.55
19940228 20682.28 26745.55
19940331 19680.92 25579.45
19940430 21184.29 25906.86
19940531 21408.46 26331.74
19940630 21296.37 25686.61
19940731 21620.18 26529.13
19940831 21259.01 27616.82
19940930 21097.11 26940.21
19941031 22292.69 27546.37
19941130 20922.75 26543.13
19941231 20395.18 26936.76
19950131 19906.82 27635.23
19950228 20690.76 28712.18
19950331 21821.68 29559.47
19950430 22492.33 30430.00
19950531 23072.69 31646.29
19950630 22402.05 32381.43
19950731 22930.82 33455.20
19950831 22763.16 33539.17
19950930 22776.06 34954.52
19951031 21795.89 34829.74
19951130 23046.90 36358.76
19951231 24756.28 37059.03
19960131 25138.77 38320.52
19960229 25020.06 38675.75
Let's say you invested $10,000 in Fidelity Select Energy Portfolio on
February 28, 1986, and paid a 3% sales charge. By February 29, 1996, your
investment would have grown to $25,020 - a 150.20% increase. That compares
to $10,000 invested in the S&P 500, which would have grown to $38,676 over
the same period - a 286.76% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 29, 1996
% OF FUND'S
INVESTMENTS
Royal Dutch Petroleum Co. 8.1
Shell Transport & Trading PLC 5.6
Kerr-McGee Corp. 5.6
Amerada Hess Corp. 5.6
Atlantic Richfield Co. 5.1
Phillips Petroleum Co. 4.2
Schlumberger Ltd. 4.0
Unocal Corp. 3.9
British Petroleum PLC ADR 3.9
Total SA sponsored ADR 3.5
TOP INDUSTRIES AS OF FEBRUARY 29, 1996
Oil & Gas Exploration 39.1%
Crude Petroleum & Gas 31.8%
Oil & Gas Services 6.7%
Holding Companies 5.6%
Drilling 3.3%
All Others 13.5% *
Row: 1, Col: 1, Value: 13.5
Row: 1, Col: 2, Value: 3.3
Row: 1, Col: 3, Value: 5.6
Row: 1, Col: 4, Value: 6.7
Row: 1, Col: 5, Value: 31.8
Row: 1, Col: 6, Value: 39.1
* INCLUDES SHORT-TERM INVESTMENTS
ENERGY PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Albert Ruback,
Portfolio Manager of Fidelity Select Energy
Portfolio
Q. ALBERT, HOW HAS THE FUND PERFORMED?
A. For the 12 months ended February 29, 1996, the fund had a total return
of 20.92%. The S&P 500 Index posted a 34.70% return during the same period.
Q. WHAT FACTORS AFFECTED STOCKS IN THE SECTOR?
A. The main factor was a generally mediocre environment for commodity
prices. Although they showed some strength during the past three months,
oil and North American natural gas prices languished for most of the
12-month period. Sustained cold weather through much of the country has
changed that recently. Since commodity prices are critical revenue drivers
for oil companies, generally lower prices have put pressure on revenue and
earnings growth, especially in the exploration and production business. On
the marketing and refining front, refining margins were weak throughout
1995.
Q. OVER THE PAST YEAR OR SO, YOU'VE FOCUSED ON COMPANIES WITH SIGNIFICANT
CHEMICAL DIVISIONS. HOW HAVE THOSE INVESTMENTS FARED?
A. For the most part, 1995 was a banner year for energy companies with
chemical divisions. Prices went up through the second quarter of 1995, with
chemicals contributing significantly to profitability. Business prospects
and prices started to turn down in the third quarter of 1995, and profit
margins began to fall from peak levels. The main problem was dampened
demand due to a worldwide economic slowdown. In addition, China, which
usually accounts for 5% to 10% of the market in styrene, abruptly stopped
buying it, leading to excess supply.
Q. AS CHEMICAL PRICES STARTED TO FALTER, DID YOU ALTER YOUR STRATEGY?
A. Going into a period when chemical prices showed weakness, I didn't make
any moves of note. That's because the key companies with chemical divisions
- - such as Occidental Petroleum and Phillips Petroleum - are part of what I
see as a diversified investment. That is, they have other merits besides
strong chemical components to their businesses. Both companies, for
example, were attractive to me because of the combination of the cost
cutting they have pursued and their solid production growth.
Q. WHICH STOCKS PERFORMED WELL FOR THE FUND?
A. Chesapeake Energy was one of the strongest contributors. It has had a
lot of exploration success in the past few months. Amerada Hess also was a
winner for the fund. Its positive performance was driven by initial
restructuring moves the company has made, as well as a management change.
The company has put some of its marginally profitable properties and
businesses up for sale, and has seen strong production growth in the North
Sea.
Q. WHICH INVESTMENTS DIDN'T TURN OUT AS WELL AS YOU WOULD HAVE LIKED?
A. USX-Marathon Group was one. I bought this refining and marketing stock
because it was cheap, the company was having some production success and
its business usually is strong in the second and third quarters.
Unfortunately, production growth was not as fast as the company
anticipated. Arakis - another stock I've since sold off - had problems
financing production in the Sudan.
Q. THERE'S BEEN TALK IN THE NEWS ABOUT THE U.S. IMPOSING SANCTIONS TO PRESS
NIGERIA FOR DEMOCRACY, AS WELL AS INDICATIONS THAT IRAQ MIGHT RESUME
PRODUCTION IN THE NEAR FUTURE. WHAT SORT OF EFFECT WILL THESE SITUATIONS
HAVE ON THE SECTOR?
A. I always keep an eye on the possible industry ramifications of political
changes, and it's important to note that foreign investments can involve
greater risks than U.S. investments. Although the Nigerian situation may
change, my research leads me to believe that although sanctions could
occur, they probably will not include an oil embargo. Looking at Iraq, my
feeling is that it will resume production at some point this year, possibly
in the second half. My estimate is that overall production will then
increase by about 750,000 barrels per day. I don't think OPEC - the
Organization of Petroleum Exporting Countries -will be able to rein in
production commensurate with this increase, so I anticipate prices will
fall.
Q. WHAT ELSE DO YOU SEE LOOKING OUT OVER THE NEXT FEW MONTHS?
A. U.S. natural gas prices have been strong in the first quarter of 1996
and inventories have been drawn down, so it looks as if natural gas prices
should be materially higher in 1996 than they were in 1995. The continued
cold weather has drawn down inventories and kept commodity prices high,
thus improving companies' business prospects. In addition, signs of
economic strength would be helpful to companies with chemical divisions, as
economic activity should spark demand.
FUND FACTS
START DATE: July 14, 1981
TRADING SYMBOL: FSENX
SIZE: as of February 29, 1996, more than
$119 million
MANAGER: Albert Ruback, since December
1994; manager, Fidelity Select Industrial
Equipment Portfolio, 1991-1994; joined
Fidelity in 1991
(checkmark)
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
ENERGY PORTFOLIO
INVESTMENTS FEBRUARY 29, 1996
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 94.2%
SHARES VALUE (NOTE 1)
CHEMICALS & PLASTICS - 0.5%
PLASTICS & SYNTHETIC RESINS - 0.5%
ARCO Chemical Co. 12,800 $ 656,000
COAL - 1.3%
MAPCO, Inc. 30,000 1,635,000
CONSTRUCTION - 1.0%
HEAVY CONSTRUCTION - 1.0%
McDermott (J. Ray) SA (a) 75,000 1,331,250
ENERGY SERVICES - 10.0%
DRILLING - 3.3%
Transocean Drilling AS 95,000 2,103,639
Noble Drilling Corp. (a) 47,200 460,200
Reading & Bates Corp. (a) 48,400 925,650
Sonat Offshore Drilling, Inc. 17,300 752,550
4,242,039
OIL & GAS SERVICES - 6.7%
Halliburton Co. 50,800 2,787,650
Schlumberger Ltd. 70,000 5,101,250
Tidewater, Inc. 16,000 546,000
8,434,900
TOTAL ENERGY SERVICES 12,676,939
GAS - 3.1%
GAS DISTRIBUTION - 0.5%
Aquila Gas Pipeline Corp. 57,900 651,375
GAS TRANSMISSION - 0.8%
Enron Corp. 28,200 1,032,825
GAS TRANSMISSION & DISTRIBUTION - 1.8%
Gas Natural SDG SA, Series E 4,700 790,821
Questar Corp. 45,000 1,417,500
2,208,321
TOTAL GAS 3,892,521
HOLDING COMPANIES - 5.6%
Shell Transport & Trading PLC 90,000 7,065,000
INSURANCE - 0.1%
PROPERTY-CASUALTY & REINSURANCE - 0.1%
Highlands Insurance Group, Inc. (a) 6,120 124,695
OIL & GAS - 72.6%
CRUDE PETROLEUM & GAS - 31.8%
Anadarko Petroleum Corp. 15,000 817,500
Apache Corp. 19,015 494,390
Atlantic Richfield Co. 58,400 6,394,800
Bellwether Exploration Co. (a) 47,000 305,500
Burlington Resources, Inc. 68,500 2,491,688
Cairn Energy USA, Inc. (a) 40,000 435,000
Canada Occidental Petroleum Ltd. 20,000 651,293
Chesapeake Energy Corp. (a) 44,000 1,820,500
Coho Resources, Inc. (a) 47,000 252,625
Elan Energy, Inc. (a) 20,000 169,665
Flores & Rucks, Inc. (a) 76,400 1,107,800
Global Natural Resources, Inc. (a) 97,000 1,212,500
Norsk Hydro AS ADR 73,600 3,137,200
Nuevo Energy Corp. (a) 24,600 639,600
Occidental Petroleum Corp. 182,400 4,195,200
Paramount Resources Ltd. 29,200 319,626
SHARES VALUE (NOTE 1)
Renaissance Energy Ltd. (a) 96,808 $ 2,454,904
Renaissance Energy Ltd. (a)(b) 10,300 261,192
Rio Alto Exploration Ltd. (a) 248,600 1,088,481
Santa Fe Energy Resources, Inc. (a) 302,100 2,794,425
Swift Energy Co. (a) 75,000 871,875
Total SA sponsored ADR 132,767 4,364,715
Triton Energy Corp. 12,600 625,275
Tullow Oil PLC (a) 705,300 826,247
Ulster Petroleums Ltd. (a) 158,800 556,237
Vintage Petroleum, Inc. 90,600 1,857,300
40,145,538
OIL & GAS EXPLORATION - 39.1%
Amerada Hess Corp. 136,400 7,024,600
Amoco Corp. 15,000 1,042,500
British Petroleum PLC ADR 48,830 4,901,311
Chieftain International, Inc. (a) 110,000 1,786,040
Kerr-McGee Corp. 118,200 7,047,675
Louisiana Land & Exploration Co. 33,500 1,398,625
Phillips Petroleum Co. 151,600 5,306,000
Royal Dutch Petroleum Co. 74,700 10,289,925
Texaco, Inc. 25,000 1,993,750
USX-Marathon Group 160,000 2,960,000
Union Pacific Resources Group, Inc. 29,200 751,900
Unocal Corp. 164,247 4,927,410
49,429,736
OIL FIELD EQUIPMENT - 1.2%
Camco International, Inc. 55,200 1,566,300
PETROLEUM REFINERS - 0.5%
Giant Industries, Inc. 54,000 627,750
TOTAL OIL & GAS 91,769,324
TOTAL COMMON STOCKS
(Cost $109,813,491) 119,150,729
REPURCHASE AGREEMENTS - 5.8%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations) in a joint
trading account at 5.41%, dated
2/29/96 due 3/1/96 $ 7,326,101 7,325,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $117,138,491) $ 126,475,729
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 $261,192 or 0.2% of net
assets.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $108,670,862 and $101,681,981, respectively (see Note 3 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $60,047 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 $7,065,000 and $7,290,000, respectively (see Note 6
of Notes to Financial Statements).
The maximum loan and the average daily loan balances during the periods for
which loans were outstanding amounted to $3,833,000 and $2,730,500,
respectively. The weighted average interest rate paid was 6.2% (see Note 5
of Notes to Financial Statements).
Distribution of investments by country of issue, as a percentage of total
value of investment in securities, is as follows:
United States 62.7%
United Kingdom 9.5
Netherlands 8.1
Canada 5.8
Norway 4.1
Netherlands Antilles 4.0
France 3.5
Panama 1.1
Others (individually less than 1%) 1.2
TOTAL 100.0%
INCOME TAX INFORMATION
At February 29, 1996, the aggregate cost of investment securities for
income tax purposes was $117,643,116. Net unrealized appreciation
aggregated $8,832,613, of which $11,056,769 related to appreciated
investment securities and $2,224,156 related to depreciated investment
securities.
The fund hereby designates approximately $2,385,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 77% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate shareholders
(unaudited).
The fund will notify shareholders in January 1997 of the applicable
percentage for use in preparing 1996 income tax returns.
ENERGY PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 29, 1996
ASSETS
Investment in $ 126,475,729
securities, at
value
(including
repurchase
agreements
of
$7,325,000)
(cost
$117,138,491
) - See
accompanyin
g schedule
Cash 888
Receivable for 1,094,127
investments
sold
Receivable for 503,695
fund shares
sold
Dividends 384,599
receivable
Redemption 774
fees
receivable
Other 1,542
receivables
TOTAL ASSETS 128,461,354
LIABILITIES
Payable for $ 1,290,807
fund shares
redeemed
Accrued 66,670
management
fee
Other payables 138,360
and
accrued
expenses
Collateral on 7,290,000
securities
loaned,
at value
TOTAL 8,785,837
LIABILITIES
NET ASSETS $ 119,675,517
Net Assets
consist of:
Paid in capital $ 102,454,278
Undistributed 486,372
net
investment
income
Accumulated 7,397,813
undistributed
net realized
gain (loss) on
investments
and foreign
currency
transactions
Net unrealized 9,337,054
appreciation
(depreciation
) on
investments
and assets
and liabilities
in
foreign
currencies
NET ASSETS, for $ 119,675,517
6,309,548
shares
outstanding
NET ASSET $18.97
VALUE and
redemption
price per
share
($119,675,51
7 (divided by)
6,309,548
shares)
Maximum $19.56
offering price
per share
(100/97.00 of
$18.97)
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED FEBRUARY 29, 1996
INVESTMENT INCOME $ 2,507,485
Dividends
Interest (including income on 502,595
securities loaned of $10,804)
TOTAL INCOME 3,010,080
EXPENSES
Management fee $ 691,768
Transfer agent 1,071,597
Fees
Redemption fees (106,230
)
Accounting and security lending fees 113,915
Non-interested trustees' compensation 715
Custodian fees and expenses 15,351
Registration fees 25,496
Audit 25,191
Legal 691
Interest 4,730
Miscellaneous 1,404
Total expenses before reductions 1,844,628
Expense reductions (5,841 1,838,787
)
NET INVESTMENT INCOME 1,171,293
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 9,825,411
Foreign currency transactions 2,191 9,827,602
Change in net unrealized appreciation (depreciation) on:
Investment securities 9,441,344
Assets and liabilities in (184 9,441,160
foreign currencies )
NET GAIN (LOSS) 19,268,762
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 20,440,055
OTHER INFORMATION $ 555,520
Sales charges paid to FDC
Deferred sales charges withheld $ 29,054
by FDC
Exchange fees withheld by FSC $ 94,680
Expense reductions $ 3,049
Directed brokerage arrangements
Custodian interest credits 1,404
Transfer agent interest credits 1,388
$ 5,841
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
FEBRUARY 29, FEBRUARY 28,
1996 1995
<TABLE>
<CAPTION>
<S> <C> <C>
Operations $ 1,171,293 $ 441,180
Net investment income
Net realized gain (loss) 9,827,602 3,967,653
Change in net unrealized appreciation (depreciation) 9,441,160 (6,553,635
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 20,440,055 (2,144,802
)
Distributions to shareholders (687,111 (468,393
From net investment income ) )
From net realized gain (2,283,890 (3,119,569
) )
TOTAL DISTRIBUTIONS (2,971,001 (3,587,962
) )
Share transactions 161,715,061 139,154,943
Net proceeds from sales of shares
Reinvestment of distributions 2,918,567 3,509,410
Cost of shares redeemed (158,608,994 (186,610,132
) )
Paid in capital portion of redemption fees 159,215 211,181
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS 6,183,849 (43,734,598
)
TOTAL INCREASE (DECREASE) IN NET ASSETS 23,652,903 (49,467,362
)
NET ASSETS
Beginning of period 96,022,614 145,489,976
End of period (including undistributed net investment income of $486,372 and $0, respectively) $ 119,675,517 $ 96,022,614
OTHER INFORMATION
Shares
Sold 8,981,770 8,177,307
Issued in reinvestment of distributions 162,874 222,729
Redeemed (8,799,673 (11,129,608
) )
Net increase (decrease) 344,971 (2,729,572
)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEAR ENDED YEARS ENDED FEBRUARY 28, TEN MONTHS YEAR ENDED
FEBRUARY 29, ENDED APRIL 30,
FEBRUARY 28,
SELECTED PER-SHARE DATA D 1996 1995 1994 1993 1992
</TABLE>
Net asset $ 16.10 $ 16.73 $ 15.84 $ 14.70 $ 15.43
value,
beginning of
period
Income from
Investment
Operations
Net .18 .07 .06 .23 .17
investment
income
Net realized 3.13 (.11) 1.35 1.16 (.75)
and
unrealized
gain (loss)
Total from 3.31 (.04) 1.41 1.39 (.58)
investment
operations
Less (.11) (.08) (.03) (.27) (.16)
Distributions
From net
investment
income
From net (.36) (.54) (.57) - (.02)
realized gain
Total (.47) (.62) (.60) (.27) (.18)
distributions
Redemption .03 .03 .08 .02 .03
fees added to
paid in
capital
Net asset $ 18.97 $ 16.10 $ 16.73 $ 15.84 $ 14.70
value, end of
period
TOTAL RETURN B, 20.92% .04% 9.69% 9.81% (3.55)%
C
RATIOS AND
SUPPLEMENT
AL DATA
Net assets, $ 119,676 $ 96,023 $ 145,490 $ 179,133 $ 77,334
end of period
(000 omitted)
Ratio of 1.63% 1.85% 1.67% 1.71% 1.78%
expenses to A
average net
assets
Ratio of 1.63% 1.85% 1.66% 1.71% 1.78%
expenses to E A
average net
assets after
expense
reductions
Ratio of net 1.04% .42% .37% 1.88% 1.16%
investment A
income to
average net
assets
Portfolio 97% 106% 157% 72% 81%
turnover rate A
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING
THE PERIODS SHOWN (SEE NOTE 7 OF NOTES TO FINANCIAL STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE
YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES
OUTSTANDING DURING THE PERIOD.
E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES WHO EITHER PAID
OR REDUCED A PORTION OF THE FUND'S EXPENSES (SEE NOTE 7 OF NOTES TO FINANCIAL
STATEMENTS).
</TABLE>
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 securities that have grown in value), but does not include certain
fees paid by shareholders upon exchange or redemption. If Fidelity had not
reimbursed certain expenses, the 10 year total returns would have been
lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 29, 1996 YEAR YEARS YEARS
ENERGY SERVICE 39.15% 29.87% 94.92%
ENERGY SERVICE 34.97%
(INCL. 3% SALES CHARGE) 25.98% 89.07%
S&P 500 34.70% 101.14% 286.76%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one, five, or 10 years. You can compare
these figures to the performance of the S&P 500 - a common proxy for the
U.S. stock market. This benchmark includes reinvested dividends and capital
gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 29, 1996 YEAR YEARS YEARS
ENERGY SERVICE 39.15% 5.37% 6.90%
ENERGY SERVICE 34.97% 4.73% 6.58%
(INCL. 3% SALES CHARGE)
S&P 500 34.70% 14.99% 14.47%
AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and
show you what would have happened if the fund had performed at a constant
rate each year.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of growth in the long run
and volatility in the short run. Unlike the broader
market, however, some sectors may not have
a history of growth in the long run. And, as
with all stock funds, the share price and
return of a fund that invests in a sector will
vary. That means if you sell your shares
during a sector downturn, you might lose
money. But if you can identify a sector that is
about to experience rapid growth you may
have the potential for above-average gains.
(checkmark)
$10,000 OVER 10 YEARS
19860228 9700.00 10000.00
19860331 9624.64 10558.00
19860430 9495.45 10438.69
19860531 10044.51 10994.03
19860630 9861.49 11179.83
19860731 8451.17 10554.88
19860831 9290.90 11338.05
19860930 9140.18 10400.39
19861031 8817.20 11000.50
19861130 9118.65 11267.81
19861231 9215.54 10980.48
19870131 10249.06 12459.55
19870228 10679.69 12951.70
19870331 11691.68 13326.01
19870430 11691.68 13207.41
19870531 12596.00 13322.31
19870630 13834.07 13995.09
19870731 14738.40 14704.64
19870831 13618.76 15253.12
19870930 13177.36 14919.08
19871031 8472.70 11705.51
19871130 7546.84 10740.97
19871231 8128.19 11558.36
19880131 8451.17 12044.97
19880229 9194.01 12606.27
19880331 9732.30 12216.73
19880430 9926.08 12352.34
19880531 9247.84 12459.80
19880630 8720.31 13031.71
19880731 8580.36 12982.19
19880831 8741.84 12540.79
19880930 8365.04 13075.03
19881031 8085.13 13438.52
19881130 7740.62 13246.35
19881231 8095.89 13478.16
19890131 8591.12 14464.76
19890228 8688.01 14104.59
19890331 9237.07 14433.22
19890430 9678.47 15182.31
19890531 9850.72 15797.19
19890630 10173.70 15707.15
19890731 10744.28 17125.50
19890831 11250.28 17461.16
19890930 11088.79 17389.57
19891031 10539.73 16986.13
19891130 11444.06 17332.65
19891231 12908.21 17748.63
19900131 12079.25 16557.70
19900228 13220.42 16771.29
19900331 13855.60 17215.73
19900430 13123.53 16785.34
19900531 15330.52 18421.91
19900630 14544.62 18296.64
19900731 15911.88 18238.09
19900831 15631.96 16589.37
19900930 15330.52 15781.47
19901031 13403.44 15713.61
19901130 13607.99 16728.71
19901231 13134.75 17195.44
19910131 12541.63 17945.16
19910228 14558.22 19228.24
19910331 13425.91 19693.56
19910430 13490.61 19740.82
19910531 13846.48 20593.63
19910630 12034.79 19650.44
19910731 12940.64 20566.15
19910831 12800.45 21053.57
19910930 11625.01 20701.97
19911031 11797.55 20979.38
19911130 10384.86 20133.91
19911231 10050.56 22437.23
19920131 9910.37 22019.90
19920229 10115.26 22306.16
19920331 9392.75 21871.19
19920430 10169.18 22514.20
19920531 10977.97 22624.52
19920630 10341.73 22287.41
19920731 10773.08 23198.97
19920831 11323.06 22723.39
19920930 11668.14 22991.53
19921031 11064.24 23072.00
19921130 10837.78 23858.75
19921231 10395.64 24152.21
19930131 10805.43 24355.09
19930228 11873.03 24686.32
19930331 12811.23 25207.20
19930430 13501.83 24597.19
19930531 14127.81 25256.39
19930630 14052.26 25329.64
19930731 14246.53 25228.32
19930831 14743.00 26184.47
19930930 14311.29 25982.85
19931031 14106.23 26520.70
19931130 12616.82 26268.75
19931231 12574.21 26586.60
19940131 12693.35 27490.55
19940228 12628.36 26745.55
19940331 11686.11 25579.45
19940430 12297.11 25906.86
19940531 12844.89 26331.74
19940630 13236.16 25686.61
19940731 13482.10 26529.13
19940831 12945.50 27616.82
19940930 13437.38 26940.21
19941031 13973.99 27546.37
19941130 13247.34 26543.13
19941231 12645.56 26936.76
19950131 12725.02 27635.23
19950228 13587.73 28712.18
19950331 14336.93 29559.47
19950430 15210.99 30430.00
19950531 15608.30 31646.29
19950630 15074.78 32381.43
19950731 15823.97 33455.20
19950831 16459.66 33539.17
19950930 16505.06 34954.52
19951031 15074.78 34829.74
19951130 15926.14 36358.76
19951231 17814.31 37059.03
19960131 18202.09 38320.52
19960229 18907.14 38675.75
Let's say you invested $10,000 in Fidelity Select Energy Service Portfolio
on February 28, 1986, and paid a 3% sales charge. By February 29, 1996,
your investment would have grown to $18,907 - an 89.07% increase. That
compares to $10,000 invested in the S&P 500, which would have grown to
$38,676 over the same period - a 286.76% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 29, 1996
% OF FUND'S
INVESTMENTS
Schlumberger Ltd. 10.3
Halliburton Co. 6.8
Baker Hughes, Inc. 5.7
Western Atlas, Inc. 4.8
BJ Services Co. 4.4
Transocean Drilling AS 4.1
Weatherford Enterra, Inc. 3.2
Diamond Offshore Drilling, Inc. 3.1
McDermott (J. Ray) SA 2.5
Dresser Industries, Inc. 2.0
TOP INDUSTRIES AS OF FEBRUARY 29, 1996
Oil & Gas Services 39.6%
Drilling 17.8%
Oil & Gas Exploration 7.7%
Surveying Services 4.8%
Crude Petroleum & Gas 4.5%
All Others 25.6% *
Row: 1, Col: 1, Value: 25.6
Row: 1, Col: 2, Value: 4.5
Row: 1, Col: 3, Value: 4.8
Row: 1, Col: 4, Value: 7.7
Row: 1, Col: 5, Value: 17.8
Row: 1, Col: 6, Value: 39.6
* INCLUDES SHORT-TERM INVESTMENTS
ENERGY SERVICE PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Daniel Pickering,
Portfolio Manager of Fidelity Select Energy
Service Portfolio
Q. DAN, HOW WOULD YOU DESCRIBE THE FUND'S RECENT PERFORMANCE?
A. The fund returned 39.15% for the year ended February 29, 1996, which
means it did well for an energy fund. Plus, it beat the S&P 500 Index,
which returned 34.70% during the same period.
Q. WHAT WAS GOING ON IN THE SECTOR?
A. Business improved, as oil companies picked up their drilling activities
outside the United States and demand increased for energy services. The
biggest beneficiaries were deep water drillers, which typically drill in
water that's anywhere from 400 to 6,000 feet deep; offshore drillers, which
also drill in shallower water; and large, diversified energy service
companies, which often get more than 50% of their revenues from
international activity.
Q. SO IS THIS WHERE YOU FOCUSED THE FUND?
A. In fact, about 40% of the fund's investments was in large energy service
companies - which are the core of the fund. They include companies such as
Schlumberger, Halliburton, Baker Hughes, Western Atlas and Dresser
Industries - five of the fund's top 10 holdings. All were solid performers,
especially Halliburton, whose stock price shot up 29% during the last six
months of the period thanks to a restructuring and improved earnings. The
other focus - about 30% of the fund's investments - was on deep water
drillers, whose stocks rose between 25% and 60% during the same time.
Diamond Offshore, Transocean, Sonat Offshore, and Reading & Bates fell into
this group. I took some profits in Sonat Offshore and Reading & Bates as
prices rose, cutting the fund's stake in this segment to about 18% by the
end of February.
Q. WERE THERE ANY DISAPPOINTMENTS?
A. Sure. I missed a good opportunity by not owning more "jack-up" stocks -
off-shore drillers that work in up to 350 feet of water. Business there was
much stronger than I had expected, and the stocks had a great run-up. In
addition, it wasn't a good time to own stocks of companies in the sub-sea
sector - like J Ray McDermott - that install underwater pipelines and well
heads. Although our stake in the sector was small, it still hurt the fund
when the stocks dropped on poor earnings.
Q. WHERE DO COMPANIES LIKE BJ SERVICES AND WEATHERFORD ENTERRA FIT INTO
YOUR STRATEGY?
A. They're mid-size service suppliers, a group which is about 15% of the
fund's investments. They often have a solid niche, plus their stocks are
usually cheaper than the larger service companies'. BJ Services, for
example, is the largest stand-alone provider of pressure pumping services;
the other suppliers are part of large diversified companies like
Halliburton and Schlumberger. So BJ is the supplier of choice when the
customer is another energy service company. And Weatherford Enterra is the
largest rental company in the business.
Q. THE FUND'S ASSETS TRIPLED IN THE SIX MONTHS FROM SEPTEMBER TO FEBRUARY.
WAS THAT A DRAG ON PERFORMANCE?
A. Not really. I usually can find some good quality names I can invest in.
When new money came in over that time, I put it to work in big oil
companies like Exxon, British Petroleum, Royal Dutch or Mobil. Then I moved
it back into service companies as I found opportunities. I also routinely
keep the fund's cash position somewhere between 5% and 15%, just because
this can be such a volatile sector.
Q. CAN THE MOMENTUM CONTINUE FOR ENERGY SERVICE STOCKS?
A. My expectations are that business will continue to improve. But I think
it's going to be tougher to generate as high a level of returns as we've
seen. I expect the stocks to grow but at a slower pace.
Q. SO WHAT WILL YOUR STRATEGY BE?
A. Right now, I plan to focus on a few areas. First, I'll be looking at
companies that can benefit from increases in U.S. gas production. With gas
inventories low, there's likely to be an increase in demand for gas-related
services in 1996. Second, I plan to increase my emphasis in the sub-sea
sector. Although the stocks in this sector haven't done well recently, I
think that may change based on the fact that the forward indicator for this
business - deep water drilling - has had a terrific run. Third, I'll keep
my core investment in large, diversified energy service names since they're
in the best position to benefit from a continued increase in international
activity. If anything, I may add to some of the companies that offer new
technologies to help reach pools of oil that were previously inaccessible.
FUND FACTS
START DATE: December 16, 1985
TRADING SYMBOL: FSESX
SIZE: as of February 29, 1996, more than
$273 million
MANAGER: Daniel Pickering, since 1994;
manager, Fidelity Select Natural Gas Portfolio,
since February 1995; equity analyst, since
1994; joined Fidelity in 1994
(checkmark)
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
ENERGY SERVICE PORTFOLIO
INVESTMENTS FEBRUARY 29, 1996
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 86.0%
SHARES VALUE (NOTE 1)
BUILDING MATERIALS - 0.1%
FABRICATED PIPE & FITTINGS - 0.1%
Coflexip sponsored ADR 15,000 $ 264,375
COMPUTER SERVICES & SOFTWARE - 1.7%
CAD/CAM/CAE - 1.7%
Landmark Graphics Corp. (a) 207,100 4,659,750
CONSTRUCTION - 2.5%
HEAVY CONSTRUCTION - 2.5%
McDermott (J. Ray) SA 379,100 6,729,025
ELECTRONIC INSTRUMENTS - 0.3%
LAB ANALYTICAL INSTRUMENTS - 0.3%
Numar Corp. (a) 69,600 817,800
ENERGY SERVICES - 57.1%
DRILLING - 17.8%
Arethusa Offshore Ltd. 87,300 2,815,425
Atwood Oceanics, Inc. (a) 44,100 1,411,200
Cliffs Drilling Co. 3,000 46,125
Diamond Offshore Drilling, Inc. (a) 227,200 8,321,200
ENSCO International, Inc. (a) 164,300 3,963,738
Falcon Drilling, Inc. (a) 106,600 2,158,650
Global Marine, Inc. (a) 198,400 1,760,800
Helmerich & Payne, Inc. 21,000 703,500
Marine Drilling Companies, Inc. (a) 107,900 755,300
Nabors Industries, Inc. (a) 266,000 3,424,750
Noble Drilling Corp. (a) 176,050 1,716,488
Patterson Energy, Inc. 2,000 25,750
Reading & Bates Corp. (a) 190,200 3,637,575
Rowan Companies, Inc. (a) 110,000 1,196,250
Smedvig AS 61,000 1,322,220
Sonat Offshore Drilling, Inc. 88,400 3,845,400
Transocean Drilling AS (a) 500,000 11,071,779
Tucker Drilling Co., Inc. 20,000 187,500
48,363,650
OIL & GAS SERVICES - 39.3%
BJ Services Co. (a) 428,788 11,845,269
Baker Hughes, Inc. 591,800 15,608,725
Dawson Geophysical Co. (a) 69,500 608,125
Dresser Industries, Inc. 193,500 5,442,188
Energy Ventures, Inc. (a) 136,900 3,542,288
Geophysique 10,000 544,537
Global Industries Ltd. (a) 12,200 222,650
Grant Geophysical, Inc. (a) 10,000 24,375
Halliburton Co. 335,000 18,383,125
Hornbeck Offshore Services, Inc. (a) 75,900 1,622,363
Input/Output, Inc. (a) 109,600 3,260,600
McDermott International, Inc. 155,800 2,999,150
Oceaneering International, Inc. (a) 2,000 24,250
Offshore Logistics, Inc. (a) 63,100 788,750
Pool Energy Services Co. (a) 51,000 478,125
Pride Petroleum Services, Inc. (a) 43,600 487,775
Schlumberger Ltd. 384,700 28,035,013
Smith International, Inc. (a) 16,800 342,300
Tidewater, Inc. 114,400 3,903,900
Weatherford Enterra, Inc. (a) 281,700 8,627,063
106,790,571
TOTAL ENERGY SERVICES 155,154,221
SHARES VALUE (NOTE 1)
GAS - 3.5%
GAS & OTHER SERVICES - 0.2%
Enron Global Power & Pipelines 20,000 $ 520,000
GAS DISTRIBUTION - 0.3%
Aquila Gas Pipeline Corp. 65,900 741,375
GAS TRANSMISSION - 2.5%
Enron Corp. 115,000 4,211,875
Leviathan Gas Pipeline Partners LP (Unit) 20,000 595,000
Williams Companies, Inc. 45,000 2,137,500
6,944,375
GAS TRANSMISSION & DISTRIBUTION - 0.5%
Tejas Gas Corp. (a) 30,000 1,432,500
TOTAL GAS 9,638,250
OIL & GAS - 15.2%
CRUDE PETROLEUM & GAS - 4.1%
Anadarko Petroleum Corp. 58,700 3,199,150
Burlington Resources, Inc. 60,000 2,182,500
Canada Occidental Petroleum Ltd. 20,000 651,293
NGC Corp. 93,200 1,060,150
Noble Affiliates, Inc. 30,000 918,750
Occidental Petroleum Corp. 57,500 1,322,500
Renaissance Energy Ltd. (a) 20,100 509,706
Unit Corp. (a) 170,400 809,400
Vintage Petroleum, Inc. 30,000 615,000
11,268,449
OIL & GAS EXPLORATION - 7.7%
Abacan Resource Corp. (a) 25,000 73,438
Amerada Hess Corp. 10,600 545,900
British Petroleum PLC ADR 49,200 4,938,450
Exxon Corp. 33,000 2,623,500
Kerr-McGee Corp. 11,100 661,838
Louisiana Land & Exploration Co. 15,000 626,250
Mobil Corp. 24,700 2,707,738
Phillips Petroleum Co. 54,600 1,911,000
Royal Dutch Petroleum Co. 33,900 4,669,725
3-D Geophysical, Inc. 30,000 285,000
Union Pacific Resources Group, Inc. 38,800 999,100
Unocal Corp. 33,000 990,000
21,031,939
OIL FIELD EQUIPMENT - 2.5%
Camco International, Inc. 98,700 2,800,613
Cooper Cameron Corp. 119,288 3,876,860
6,677,473
PETROLEUM REFINERS - 0.9%
Coastal Corp. (The) 57,000 2,094,750
Giant Industries, Inc. 30,000 348,750
2,443,500
TOTAL OIL & GAS 41,421,361
SERVICES - 4.8%
SURVEYING SERVICES - 4.8%
Western Atlas, Inc. (a) 245,900 12,940,482
SHIPPING - 0.8%
WATER TRANSPORTATION SERVICES - 0.8%
Seacor Holdings, Inc. (a) 65,000 2,177,500
TOTAL COMMON STOCKS
(Cost $207,164,104) 233,802,764
CONVERTIBLE PREFERRED STOCKS - 0.4%
SHARES VALUE (NOTE 1)
OIL & GAS - 0.4%
CRUDE PETROLEUM & GAS - 0.4%
Occidental Petroleum Corp. Indexed $1.00
(Cost $1,016,158) 16,300 $ 1,002,450
NONCONVERTIBLE BONDS - 0.3%
PRINCIPAL
AMOUNT
ENERGY SERVICES - 0.3%
OIL & GAS SERVICES - 0.3%
Tuboscope Vetco International, Inc.
gtd. 10 3/4%, 4/15/03
(Cost $900,000) $ 900,000 949,500
REPURCHASE AGREEMENTS - 13.3%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations) in a joint
trading account at 5.41%, dated
2/29/96 due 3/1/96 $ 36,147,431 36,142,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $245,222,262) $ 271,896,714
LEGEND
1. Non-income producing
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $441,463,460 and $308,319,308, respectively (see Note 3 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $376,373 for the period
(see Note 4 of Notes to Financial Statements).
The maximum loan and the average daily loan balances during the periods for
which loans were outstanding amounted to $9,685,000 and $2,979,627,
respectively. The weighted average interest rate paid was 6.3% (see Note 5
of Notes to Financial Statements).
Distribution of investments by country of issue, as a percentage of total
value of investment in securities, is as follows:
United States 87.6%
Norway 4.6
Panama 2.5
United Kingdom 1.8
Netherlands 1.7
Bermuda 1.0
Others (individually less than 1%) 0.8
TOTAL 100.0%
INCOME TAX INFORMATION
At February 29, 1996, the aggregate cost of investment securities for
income tax purposes was $246,163,977. Net unrealized appreciation
aggregated $25,732,737, of which $29,039,725 related to appreciated
investment securities and $3,306,988 related to depreciated investment
securities.
The fund hereby designates approximately $1,445,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 13% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate shareholders
(unaudited).
The fund will notify shareholders in January 1997 of the applicable
percentage for use in preparing 1996 income tax returns.
ENERGY SERVICE PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 29, 1996
ASSETS
Investment in $ 271,896,714
securities, at
value
(including
repurchase
agreements
of
$36,142,000)
(cost
$245,222,262
) - See
accompanyin
g schedule
Cash 673
Receivable for 875,000
investments
sold
Receivable for 6,834,219
fund shares
sold
Dividends 363,232
receivable
Interest 36,281
receivable
Redemption 1,478
fees
receivable
TOTAL ASSETS 280,007,597
LIABILITIES
Payable for $ 3,627,315
investments
purchased
Payable for 2,259,252
fund shares
redeemed
Accrued 128,561
management
fee
Other payables 187,206
and
accrued
expenses
TOTAL 6,202,334
LIABILITIES
NET ASSETS $ 273,805,263
Net Assets
consist of:
Paid in capital $ 234,674,110
Undistributed 619,525
net
investment
income
Accumulated 11,837,176
undistributed
net realized
gain (loss) on
investments
and foreign
currency
transactions
Net unrealized 26,674,452
appreciation
(depreciation
) on
investments
NET ASSETS, for $ 273,805,263
17,020,101
shares
outstanding
NET ASSET $16.09
VALUE and
redemption
price per
share
($273,805,26
3 (divided by)
17,020,101
shares)
Maximum $16.59
offering price
per share
(100/97.00 of
$16.09)
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED FEBRUARY 29, 1996
INVESTMENT INCOME $ 1,762,357
Dividends
Special dividend from Arethusa Offshore Ltd. 231,300
Interest (including income on 1,496,739
securities loaned of $7,429)
TOTAL INCOME 3,490,396
EXPENSES
Management fee $ 983,400
Transfer agent 1,433,465
Fees
Redemption fees (279,873
)
Accounting and security lending fees 161,182
Non-interested trustees' compensation 542
Custodian fees and expenses 29,539
Registration fees 176,387
Audit 22,086
Legal 558
Interest 26,518
Miscellaneous 1,450
Total expenses before reductions 2,555,254
Expense reductions (27,974 2,527,280
)
NET INVESTMENT INCOME 963,116
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 18,791,586
Foreign currency transactions 5,565 18,797,151
Change in net unrealized appreciation (depreciation) 27,955,663
on investment securities
NET GAIN (LOSS) 46,752,814
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 47,715,930
OTHER INFORMATION $ 1,453,689
Sales charges paid to FDC
Deferred sales charges withheld $ 6,886
by FDC
Exchange fees withheld by FSC $ 225,555
Expense reductions $ 23,031
Directed brokerage arrangements
Custodian interest credits 1,207
Transfer agent interest credits 3,736
$ 27,974
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
FEBRUARY 29, FEBRUARY 28,
1996 1995
<TABLE>
<CAPTION>
<S> <C> <C>
Operations $ 963,116 $ 114,673
Net investment income
Net realized gain (loss) 18,797,151 274,562
Change in net unrealized appreciation (depreciation) 27,955,663 74,964
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 47,715,930 464,199
Distributions to shareholders (345,905 (50,886
From net investment income ) )
In excess of net investment income - (42,014
)
From net realized gain (4,150,860 (1,312,181
) )
In excess of net realized gain - (498,798
)
TOTAL DISTRIBUTIONS (4,496,765 (1,903,879
) )
Share transactions 762,157,835 244,302,548
Net proceeds from sales of shares
Reinvestment of distributions 4,455,875 1,876,010
Cost of shares redeemed (600,660,872 (222,407,429
) )
Paid in capital portion of redemption fees 838,814 606,169
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS 166,791,652 24,377,298
TOTAL INCREASE (DECREASE) IN NET ASSETS 210,010,817 22,937,618
NET ASSETS
Beginning of period 63,794,446 40,856,828
End of period (including undistributed net investment income of $619,525 and $66,450, respectively)$ 273,805,263 $ 63,794,446
OTHER INFORMATION 54,578,475 20,716,490
Shares
Sold
Issued in reinvestment of distributions 301,480 177,460
Redeemed (43,190,194 (19,068,782
) )
Net increase (decrease) 11,689,761 1,825,168
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEAR ENDED YEARS ENDED FEBRUARY 28, TEN MONTHS YEAR ENDED
FEBRUARY 29, ENDED APRIL 30,
FEBRUARY 28,
SELECTED PER-SHARE DATA D 1996 1995 1994 1993 1992
</TABLE>
Net asset $ 11.97 $ 11.66 $ 11.01 $ 9.43 $ 12.51
value,
beginning of
period
Income from
Investment
Operations
Net .08 F .02 .03 .01 (.12)
investment
income (loss)
Net realized 4.49 .67 .51 1.47 (3.11)
and
unrealized
gain (loss)
Total from 4.57 .69 .54 1.48 (3.23)
investment
operations
Less (.04) (.01) (.05) - -
Distributions
From net
investment
income
In excess of - (.01) - - -
net
investment
income
From net (.48) (.35) - - -
realized gain
In excess of - (.13) - - -
net realized
gain
Total (.52) (.50) (.05) - -
distributions
Redemption .07 .12 .16 .10 .15
fees added to
paid in
capital
Net asset $ 16.09 $ 11.97 $ 11.66 $ 11.01 $ 9.43
value, end of
period
TOTAL 39.15% 7.60% 6.36% 16.76% (24.62)%
RETURN B, C
RATIOS AND
SUPPLEMENT
AL DATA
Net assets, $ 273,805 $ 63,794 $ 40,857 $ 85,234 $ 41,322
end of period
(000 omitted)
Ratio of 1.59% 1.81% 1.66% 1.76% 2.07%
expenses to A
average net
assets
Ratio of 1.58% 1.79% 1.65% 1.76% 2.07%
expenses to E E E A
average net
assets after
expense
reductions
Ratio of net .60% .19% .23% .13% (1.13)%
investment A
income (loss)
to average
net assets
Portfolio 223% 209% 137% 236% 89%
turnover rate A
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
A ANNUALIZED B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN (SEE NOTE 7 OF NOTES TO FINANCIAL STATEMENTS). C TOTAL
RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE YEAR ARE
NOT ANNUALIZED. D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD. E FMR OR THE FUND HAS ENTERED INTO
VARYING ARRANGEMENTS WITH THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S
EXPENSES (SEE NOTE 7 OF NOTES TO FINANCIAL STATEMENTS). F INVESTMENT INCOME PER SHARE
REFLECTS A SPECIAL DIVIDEND FROM ARETHUSA OFFSHORE LTD. WHICH AMOUNTED TO $.02 PER SHARE.
</TABLE>
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 securities that have grown in value), but does not include certain
fees paid by shareholders upon exchange or redemption.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 LIFE OF
FEBRUARY 29, 1996 YEAR FUND
NATURAL GAS 27.10% 16.05%
NATURAL GAS 23.29% 12.56%
(INCL. 3% SALES CHARGE)
S&P 500 34.70% 55.57%
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
April 21, 1993. You can compare these figures to the performance of the S&P
500 - a common proxy for the U.S. stock market. This benchmark includes
reinvested dividends and capital gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 LIFE OF
FEBRUARY 29, 1996 YEAR FUND
NATURAL GAS 27.10% 5.34%
NATURAL GAS 23.29% 4.22%
(INCL. 3% SALES CHARGE)
S&P 500 34.70% 16.69%
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
19930421 9700.00 10000.00
19930430 9515.70 9893.80
19930531 9670.90 10158.96
19930630 9952.20 10188.42
19930731 9913.40 10147.66
19930831 10767.00 10532.26
19930930 10582.70 10451.16
19931031 10010.40 10667.50
19931130 9156.80 10566.16
19931231 9209.91 10694.01
19940131 9672.37 11057.61
19940228 9327.98 10757.95
19940331 8993.44 10288.90
19940430 9692.05 10420.60
19940531 9613.33 10591.50
19940630 9662.53 10332.00
19940731 9603.49 10670.89
19940831 9288.63 11108.40
19940930 9229.59 10836.24
19941031 9554.30 11080.06
19941130 8717.93 10676.52
19941231 8580.06 10834.86
19950131 8313.78 11115.81
19950228 8856.20 11548.99
19950331 9378.89 11889.80
19950430 9536.79 12239.95
19950531 9902.07 12729.18
19950630 9665.13 13024.88
19950731 9665.13 13456.79
19950831 9951.43 13490.56
19950930 10237.73 14059.87
19951031 9793.47 14009.67
19951130 10632.63 14624.70
19951231 11187.09 14906.37
19960131 11236.63 15413.78
19960229 11256.45 15556.67
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 29, 1996, your investment would be valued at $11,256 - a 12.56%
increase. That compares to $10,000 invested in the S&P 500, which would
have grown to $15,557 over the same period - a 55.57% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 29, 1996
% OF FUND'S
INVESTMENTS
Anadarko Petroleum Corp. 7.3
Enron Corp. 5.8
Louisiana Land & Exploration Co. 3.5
Burlington Resources, Inc. 3.2
Panhandle Eastern Corp. 3.0
Global Natural Resources, Inc. 3.0
Chesapeake Energy Corp. 2.7
Coastal Corp. (The) 2.5
Pacific Enterprises 2.4
Pogo Producing Co. 2.4
TOP INDUSTRIES AS OF FEBRUARY 29, 1996
Crude Petroleum & Gas 47.4%
Gas Transmission 13.7%
Gas Distribution 13.2%
Oil & Gas Exploration 10.7%
Gas Transmission &
Distribution 6.9%
All Others 8.1% *
Row: 1, Col: 1, Value: 8.1
Row: 1, Col: 2, Value: 6.9
Row: 1, Col: 3, Value: 10.7
Row: 1, Col: 4, Value: 13.2
Row: 1, Col: 5, Value: 13.7
Row: 1, Col: 6, Value: 47.4
* INCLUDES SHORT-TERM INVESTMENTS
NATURAL GAS PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Daniel Pickering,
Portfolio Manager of
Fidelity Select Natural
Gas Portfolio
Q. DAN, HOW DID THE FUND DO?
A. The fund did well, but it was a tough market to beat. For the year ended
February 29, 1996, the fund returned 27.10% compared to 34.70% for the S&P
500 Index.
Q. WHAT HAPPENED TO GAS PRICES?
A. They spiked, thanks to colder-than-normal weather this winter,
especially in the Northeast; low inventories; and inadequate supply from
the Gulf of Mexico. In addition, there were pipeline constraints that
prevented gas in the West from coming east. That meant prices were
especially high in the East, benefiting exploration and production (E&P)
companies that supplied gas to this region. Lower interest rates were
another big factor. Pipeline companies and, to some extent, local
distribution companies (LDCs) tend to do well when the dividend yield on
alternative investments such as bonds is coming down.
Q. SO WHAT WAS YOUR STRATEGY?
A. Basically to strike a balance between what I call quality names and
smaller, faster growing companies. By quality names, I mean companies like
Anadarko and Burlington Resources, both E&P operations, and Enron, a
pipeline outfit. These are all solid companies, which usually will be
somewhere among the fund's top 10 names. I use these stocks, which tend to
be more liquid, to offset the smaller, faster growing names - companies
like Louisiana Land & Exploration, Global Natural Resources, Chesapeake,
and Pogo Producing. For these smaller companies, a good well can cause the
stock price to double, and a bad well can cut it in half. As it turned out,
about 60% of the fund's investments were in E&P companies, 15% in pipeline
companies, and 25% in LDCs.
Q. DID THE FUND HAVE ANY SUCCESS STORIES?
A. Yes, we recently hit a home run with Chesapeake. From September through
February, its stock price was up 150% - and it was as high as 7% of the
fund's investments during the period. Chesapeake has carved out a
profitable niche by using technology to tap reserves that other companies
didn't think they could get at. In 1995, its production grew over 100%.
Pogo was another stock that really helped the fund's performance. During
the past six months, it rose 42% thanks to three big well discoveries in
Thailand. I bought the stock when the company hit the first well, and they
were fortunate enough to find two more fields.
Q. WERE THERE ANY MAJOR DISAPPOINTMENTS?
A. Well, we really didn't get hurt by a lot of stocks. The worst performer
was probably TransTexas Gas, a mid-size E&P company, whose stock price fell
39% between August 31 and February 29. The company has a lot of reserves,
but it's taken longer than expected to bring the assets to production. In
addition, complications around some stock issuance have hurt its
performance. Nevertheless, the fund continues to own TransTexas because I
believe the value is still there. Although not nearly on the same scale,
Burlington Resources was also a disappointment. When gas prices started to
turn up, investors shifted out of the quality names into some of the faster
growing companies. That hurt Burlington's stock, as did the fact that the
company sells a large part of its production on the West coast where gas
prices were softer. Again, I've kept the stock because I think there's
potential once the price differences narrow between the two coasts.
Q. WHAT'S AHEAD?
A. I expect low inventories and growing demand to keep gas prices high for
at least the first three quarters of 1996. But, as business has gotten
better, stock prices have improved. So I think it will be harder to find
stocks like Chesapeake that are both cheap and growing quickly. That means
it could be tougher to make money in them.
Q. WHERE WILL YOU BE LOOKING FOR OPPORTUNITIES?
A. I'm not going to count on gas prices going up. Instead, I plan to keep
my sector weightings steady and look for cheap stocks. In the E&P group,
I'm going to focus on names with faster-than-average growth. On the
pipeline side of the business, I'll be looking for companies that are
either cutting costs or adding to their distribution network. I'm also
going to start paying a little more attention to Canadian E&P companies.
There's plenty of gas there, and by 1998 there should be new pipelines in
place to bring it to the United States. I expect the stocks to begin to
reflect these improved prospects.
FUND FACTS
START DATE: April 21, 1993
TRADING SYMBOL: FSNGX
SIZE: as of February 29, 1996, more than
$60 million
MANAGER: Daniel Pickering, since February
1995; manager, Fidelity Select Energy Service
Portfolio, since 1994; equity analyst, energy
service and hotel industries, since 1994; joined
Fidelity in 1994
(checkmark)
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
NATURAL GAS PORTFOLIO
INVESTMENTS FEBRUARY 29, 1996
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 94.7%
SHARES VALUE (NOTE 1)
COAL - 1.7%
Eastern Enterprises Co. 29,400 $ 1,040,022
COMPUTER SERVICES & SOFTWARE - 0.3%
CAD/CAM/CAE - 0.3%
Landmark Graphics Corp. (a) 10,000 225,000
GAS - 33.7%
GAS & OTHER SERVICES - 0.9%
UGI Corp. 26,404 554,484
GAS DISTRIBUTION - 13.2%
Aquila Gas Pipeline Corp. 121,300 1,364,625
Brooklyn Union Gas Co. (The) 25,000 653,125
Indiana Energy, Inc. 10,000 250,000
K N Energy, Inc. 21,400 655,375
MCN Corp. 32,000 804,000
National Fuel Gas Co. 10,000 321,250
NICOR, Inc. 20,000 537,500
Northwest Natural Gas Co. 11,000 363,000
Pacific Enterprises 57,100 1,527,425
Piedmont Natural Gas, Inc. 32,381 728,573
Public Service Co. of North Carolina, Inc. 10,556 174,174
WICOR, Inc. 2,500 82,500
Washington Gas Light Co. 37,000 804,750
8,266,297
GAS TRANSMISSION - 12.7%
Enron Corp. 99,410 3,640,891
ONEOK, Inc. 24,700 537,225
Panhandle Eastern Corp. 66,550 1,904,994
Tejas Power Corp. (a) 61,000 518,500
Williams Companies, Inc. 27,800 1,320,500
7,922,110
GAS TRANSMISSION & DISTRIBUTION - 6.9%
Bay State Gas Co. 10,000 283,750
Columbia Gas System, Inc. (The) (a) 9,695 424,156
Consolidated Natural Gas Co. 18,000 774,000
El Paso Natural Gas Co. 3,400 114,750
Equitable Resources, Inc. 15,000 429,375
Questar Corp. 29,740 936,810
South Jersey Industries, Inc. 5,000 109,375
Southern Union Co. 10,500 275,625
Tejas Gas Corp. (a) 15,670 748,243
Yankee Energy System, Inc. 10,000 236,250
4,332,334
TOTAL GAS 21,075,225
OIL & GAS - 59.0%
CRUDE PETROLEUM & GAS - 45.8%
American Exploration Co. (a) 12,000 132,000
Anadarko Petroleum Corp. 84,075 4,582,088
Apache Corp. 8,225 213,850
Barrett Resources Corp. (a) 34,100 818,400
Beau Canada Exploration Ltd. (a) 558,000 732,951
Belden & Blake Corp. (a) 20,000 350,000
Burlington Resources, Inc. 55,657 2,024,523
Canada Occidental Petroleum Ltd. 15,000 488,470
Chesapeake Energy Corp. (a) 41,300 1,708,788
Devon Energy Corp. 41,100 919,613
Elan Energy, Inc. (a) 67,700 574,315
Enron Oil & Gas Co. 29,900 747,500
Flores & Rucks, Inc. (a) 41,700 604,650
Fortune Petroleum Corp. (a) 20,000 50,000
Global Natural Resources, Inc. (a) 150,500 1,881,250
SHARES VALUE (NOTE 1)
Morgan Hydrocarbons, Inc. (a) 70,000 $ 209,436
NGC Corp. 91,800 1,044,225
Newfield Exploration Co. (a) 37,450 1,095,413
Noble Affiliates, Inc. 37,950 1,162,219
Northstar Energy Corp. (a) 47,800 514,504
Northstar Energy Corp. (a)(b) 20,000 215,273
Pancanadian Petroleum Ltd. 4,000 150,327
Pinnacle Resources Ltd. (a) 22,900 292,444
Pogo Producing Co. 45,000 1,524,375
Renaissance Energy Ltd. (a) 28,100 712,573
Stone Energy Corp. (a) 40,000 605,000
Swift Energy Co. (a) 50,000 581,250
Texas Meridian Resources Corp. (a) 100,000 1,237,500
TransTexas Gas Corp. (a) 107,800 1,158,850
Triton Energy Corp. 1,900 94,288
Unit Corp. (a) 30,000 142,500
Vastar Resources, Inc. 20,900 660,963
Vintage Petroleum, Inc. 43,100 883,550
Wascana Energy, Inc. (a) 51,500 493,259
28,606,347
OIL & GAS EXPLORATION - 10.7%
Abacan Resource Corp. (a) 200,000 587,500
Chieftain International, Inc. (a) 72,900 1,183,657
Louisiana Land & Exploration Co. 52,000 2,171,000
Newport Petroleum Corp. (a) 40,000 116,758
Petro-Canada 15,000 184,716
Petro-Canada 1st installment receipt (c) 90,900 580,417
Union Pacific Resources Group, Inc. 55,000 1,416,250
Unocal Corp. 229 6,870
Zydeco Energy, Inc. (a) 85,000 456,875
6,704,043
PETROLEUM REFINERS - 2.5%
Coastal Corp. (The) 42,900 1,576,575
TOTAL OIL & GAS 36,886,965
TOTAL COMMON STOCKS
(Cost $53,725,680) $ 59,227,212
CONVERTIBLE PREFERRED STOCKS - 2.6%
GAS - 1.0%
GAS TRANSMISSION - 1.0%
Enron Corp. $1.3593 Automatic
Common Exchange 25,000 621,875
OIL & GAS - 1.6%
CRUDE PETROLEUM & GAS - 1.6%
Occidental Petroleum Corp. Indexed $3.00 16,300 1,002,450
TOTAL PREFERRED STOCKS
(Cost $1,559,908) $ 1,624,325
REPURCHASE AGREEMENTS - 2.7%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 5.41% dated
2/29/96 due 3/1/96 $ 1,664,250 1,664,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $56,949,588) $ 62,515,537
CURRENCY ABBREVIATIONS
CAD - Canadian dollar
LEGEND
1. Non-income producing
2. Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of these securities amounted to $215,273 or 0.4% of net
assets.
3. Purchased on an installment basis. Market value reflects only those
payments made through February 29, 1996. The remaining installments
aggregating CAD 772,650 are due September 23, 1996 and March 24, 1997.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $51,406,495 and $83,429,857, respectively (see Note 3 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $87,403 for the period (see
Note 4 of Notes to Financial Statements).
The maximum loan and the average daily loan balances during the periods for
which loans were outstanding amounted to $1,782,000 and $1,395,000,
respectively. The weighted average interest rate paid was 6.5% (see Note 5
of Notes to Financial Statements).
Distribution of investments by country of issue, as a percentage of total
value of investment in securities, is as follows:
United States 88.7%
Canada 11.3
TOTAL 100.0%
INCOME TAX INFORMATION
At February 29, 1996, the aggregate cost of investment securities for
income tax purposes was $57,173,800. Net unrealized appreciation aggregated
$5,341,737, of which $7,087,247 related to appreciated investment
securities and $1,745,510 related to depreciated investment securities.
The fund hereby designates approximately $20,000 as a capital gain dividend
for the purpose of the dividend paid deduction.
A total of 100% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate shareholders
(unaudited).
The fund will notify shareholders in January 1997 of the applicable
percentage for use in preparing 1996 income tax returns.
NATURAL GAS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 29, 1996
ASSETS
Investment in $ 62,515,537
securities, at
value
(including
repurchase
agreements
of
$1,664,000)
(cost
$56,949,588)
- - See
accompanyin
g schedule
Cash 199
Receivable for 1,454,447
investments
sold
Receivable for 119,310
fund shares
sold
Dividends 102,572
receivable
Redemption 5,136
fees
receivable
Other 230
receivables
TOTAL ASSETS 64,197,431
LIABILITIES
Payable for $ 3,851,501
fund shares
redeemed
Accrued 35,390
management
fee
Other payables 82,458
and
accrued
expenses
TOTAL 3,969,349
LIABILITIES
NET ASSETS $ 60,228,082
Net Assets
consist of:
Paid in capital $ 54,375,745
Undistributed 56,526
net
investment
income
Accumulated 229,852
undistributed
net realized
gain (loss) on
investments
and foreign
currency
transactions
Net unrealized 5,565,959
appreciation
(depreciation
) on
investments
and assets
and liabilities
in foreign
currencies
NET ASSETS, for $ 60,228,082
5,303,396
shares
outstanding
NET ASSET $11.36
VALUE and
redemption
price per
share
($60,228,082
(divided by) 5,303,396
shares)
Maximum $11.71
offering price
per share
(100/97.00 of
$11.36)
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED FEBRUARY 29, 1996
INVESTMENT INCOME $ 1,194,244
Dividends
Interest 305,039
TOTAL INCOME 1,499,283
EXPENSES
Management fee $ 431,858
Transfer agent 672,210
Fees
Redemption fees (92,094
)
Accounting fees and expenses 70,811
Non-interested trustees' compensation 492
Custodian fees and expenses 22,588
Registration fees 50,295
Audit 24,960
Legal 474
Interest 1,504
Miscellaneous 785
Total expenses before reductions 1,183,883
Expense reductions (5,451 1,178,432
)
NET INVESTMENT INCOME 320,851
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 9,256,308
Foreign currency transactions (52 9,256,256
)
Change in net unrealized appreciation (depreciation) on:
Investment securities 7,236,477
Assets and liabilities in 10 7,236,487
foreign currencies
NET GAIN (LOSS) 16,492,743
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 16,813,594
OTHER INFORMATION $ 268,316
Sales charges paid to FDC
Deferred sales charges withheld $ 7,860
by FDC
Exchange fees withheld by FSC $ 56,678
Expense reductions $ 4,505
Directed brokerage arrangements
Transfer agent interest credits 946
$ 5,451
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
FEBRUARY 29, FEBRUARY 28,
1996 1995
<TABLE>
<CAPTION>
<S> <C> <C>
Operations $ 320,851 $ 233,355
Net investment income
Net realized gain (loss) 9,256,256 (8,500,543
)
Change in net unrealized appreciation (depreciation) 7,236,487 3,240,598
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 16,813,594 (5,026,590
)
Distributions to shareholders from net investment income (323,738 (174,881
) )
Share transactions 96,403,538 105,674,129
Net proceeds from sales of shares
Reinvestment of distributions 314,856 162,769
Cost of shares redeemed (132,986,230 (83,945,454
) )
Paid in capital portion of redemption fees 112,239 130,955
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS (36,155,597 22,022,399
)
TOTAL INCREASE (DECREASE) IN NET ASSETS (19,665,741 16,820,928
)
NET ASSETS
Beginning of period 79,893,823 63,072,895
End of period (including undistributed net investment income of $56,526 and $58,168, respectively) $ 60,228,082 $ 79,893,823
OTHER INFORMATION
Shares
Sold 9,263,323 11,247,429
Issued in reinvestment of distributions 30,032 18,602
Redeemed (12,883,616 (9,026,223
) )
Net increase (decrease) (3,590,261 2,239,808
)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
YEAR ENDED YEAR ENDED APRIL 21, 1993
FEBRUARY 29, FEBRUARY 28, (COMMENCEMENT
OF
OPERATIONS) TO
FEBRUARY 28,
SELECTED PER-SHARE DATA D 1996 1995 1994
Net asset $ 8.98 $ 9.48 $ 10.00
value,
beginning of
period
Income from
Investment
Operations
Net .05 .03 .02
investment
income
Net realized 2.36 (.53) (.46)
and
unrealized
gain (loss)
Total from 2.41 (.50) (.44)
investment
operations
Less (.05) (.02) -
Distributions
From net
investment
income
From net - - (.07)
realized gain
In excess of - - (.06)
net realized
gain
Total (.05) (.02) (.13)
distributions
Redemption .02 .02 .05
fees added to
paid in
capital
Net asset $ 11.36 $ 8.98 $ 9.48
value, end of
period
TOTAL 27.10% (5.06)% (3.84)%
RETURN B, C
RATIOS AND
SUPPLEMENT
AL DATA
Net assets, $ 60,228 $ 79,894 $ 63,073
end of period
(000 omitted)
Ratio of 1.68% 1.70% 1.94% A
expenses to
average net
assets
Ratio of 1.67% 1.66% 1.93% A,
expenses to E E E
average net
assets after
expense
reductions
Ratio of net .46% .30% .17% A
investment
income to
average net
assets
Portfolio 79% 177% 44% A
turnover rate
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN
(SEE NOTE 7 OF NOTES TO FINANCIAL STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE
AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT
ANNUALIZED.
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED
BASED ON AVERAGE SHARES OUTSTANDING DURING THE
PERIOD.
E FMR OR THE FUND HAS ENTERED INTO VARYING
ARRANGEMENTS WITH THIRD PARTIES WHO EITHER PAID OR
REDUCED A PORTION OF THE FUND'S EXPENSES (SEE NOTE 7
OF NOTES TO FINANCIAL STATEMENTS).
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 securities that have grown in value), but does not include certain
fees paid by shareholders upon exchange or redemption.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 29, 1996 YEAR YEARS YEARS
PRECIOUS METALS AND MINERALS 37.74% 103.24% 133.52%
PRECIOUS METALS AND MINERALS 33.61% 97.15% 126.52%
(INCL. 3% SALES CHARGE)
S&P 500 34.70% 101.14% 286.76%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one, five, or 10 years. You can compare
these figures to the performance of the S&P 500 - a common proxy for the
U.S. stock market. This benchmark includes reinvested dividends and capital
gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 29, 1996 YEAR YEARS YEARS
PRECIOUS METALS AND MINERALS 37.74% 15.24% 8.85%
PRECIOUS METALS AND MINERALS 33.61% 14.54% 8.52%
(INCL. 3% SALES CHARGE)
S&P 500 34.70% 14.99% 14.47%
AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and
show you what would have happened if the fund had performed at a constant
rate each year.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of growth in the long run
and volatility in the short run. Unlike the broader
market, however, some sectors may not have a
history of growth in the long run. And, as with all
stock funds, the share price and return of a
fund that invests in a sector will vary. That
means if you sell your shares during a sector
downturn, you might lose money. But if you
can identify a sector that is about to experience
rapid growth you may have the potential for
above-average gains.
(checkmark)
$10,000 OVER 10 YEARS
19860228 9700.00 10000.00
19860331 9104.22 10558.00
19860430 8629.46 10438.69
19860531 7754.41 10994.03
19860630 7912.67 11179.83
19860731 7809.63 10554.88
19860831 9298.07 11338.05
19860930 10513.32 10400.39
19861031 9590.11 11000.50
19861130 10579.27 11267.81
19861231 10503.90 10980.48
19870131 11766.26 12459.55
19870228 12595.26 12951.70
19870331 16193.91 13326.01
19870430 17314.96 13207.41
19870531 15769.99 13322.31
19870630 15543.89 13995.09
19870731 18709.20 14704.64
19870831 18219.33 15253.12
19870930 18784.56 14919.08
19871031 13603.26 11705.51
19871130 15317.80 10740.97
19871231 14443.72 11558.36
19880131 11906.05 12044.97
19880229 11925.13 12606.27
19880331 12917.31 12216.73
19880430 12488.00 12352.34
19880531 12554.78 12459.80
19880630 12096.86 13031.71
19880731 12173.18 12982.19
19880831 11448.13 12540.79
19880930 10675.38 13075.03
19881031 11066.52 13438.52
19881130 11476.75 13246.35
19881231 10997.46 13478.16
19890131 11454.86 14464.76
19890228 11822.77 14104.59
19890331 11822.77 14433.22
19890430 11285.82 15182.31
19890531 10748.88 15797.19
19890630 11594.07 15707.15
19890731 11912.26 17125.50
19890831 12150.91 17461.16
19890930 12578.47 17389.57
19891031 12568.53 16986.13
19891130 14169.43 17332.65
19891231 14534.53 17748.63
19900131 15692.06 16557.70
19900228 14343.29 16771.29
19900331 13719.23 17215.73
19900430 12310.06 16785.34
19900531 13014.64 18421.91
19900630 12068.49 18296.64
19900731 12803.27 18238.09
19900831 12934.12 16589.37
19900930 12642.22 15781.47
19901031 11222.99 15713.61
19901130 11021.68 16728.71
19901231 11471.59 17195.44
19910131 10226.45 17945.16
19910228 11145.00 19228.24
19910331 10930.67 19693.56
19910430 10900.05 19740.82
19910531 11512.42 20593.63
19910630 12267.66 19650.44
19910731 12267.66 20566.15
19910831 10981.70 21053.57
19910930 11206.23 20701.97
19911031 11961.48 20979.38
19911130 12339.11 20133.91
19911231 11647.97 22437.23
19920131 11895.14 22019.90
19920229 11277.21 22306.16
19920331 10834.36 21871.19
19920430 10195.84 22514.20
19920531 10865.26 22624.52
19920630 10926.56 22287.41
19920731 11071.01 23198.97
19920831 10575.75 22723.39
19920930 10142.41 22991.53
19921031 9492.38 23072.00
19921130 8935.22 23858.75
19921231 9101.02 24152.21
19930131 9321.46 24355.09
19930228 10350.18 24686.32
19930331 11756.80 25207.20
19930430 13656.79 24597.19
19930531 15462.29 25256.39
19930630 15714.23 25329.64
19930731 17761.17 25228.32
19930831 15976.65 26184.47
19930930 14717.00 25982.85
19931031 16805.93 26520.70
19931130 16774.44 26268.75
19931231 19259.96 26586.60
19940131 18463.22 27490.55
19940228 17655.85 26745.55
19940331 17475.25 25579.45
19940430 17475.96 25906.86
19940531 17507.85 26331.74
19940630 17858.64 25686.61
19940731 18538.97 26529.13
19940831 19857.11 27616.82
19940930 21377.22 26940.21
19941031 20548.07 27546.37
19941130 18347.63 26543.13
19941231 19040.21 26936.76
19950131 15723.25 27635.23
19950228 16444.79 28712.18
19950331 18114.04 29559.47
19950430 18264.81 30430.00
19950531 18038.66 31646.29
19950630 18254.05 32381.43
19950731 19007.90 33455.20
19950831 19266.36 33539.17
19950930 19320.21 34954.52
19951031 16907.88 34829.74
19951130 18092.50 36358.76
19951231 18404.40 37059.03
19960131 22262.52 38320.52
19960229 22651.57 38675.75
Let's say you invested $10,000 in Fidelity Select Precious Metals and
Minerals Portfolio on February 28, 1986, and paid a 3% sales charge. By
February 29, 1996, your investment would have grown to $22,652 - a 126.52%
increase. That compares to $10,000 invested in the S&P 500, which would
have grown to $38,676 over the same period - a 286.76% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 29, 1996
% OF FUND'S
INVESTMENTS
Barrick Gold Corp. 8.4
Newmont Mining Corp. 7.6
Vaal Reefs Exploration & Mining Co. Ltd. ADR 5.0
Western Deep Levels Ltd. ADR 4.6
De Beers Consolidated Mines Ltd. ADR 4.1
Agnico Eagle Mines Ltd. 3.1
Driefontein Consolidated Ltd. ADR 3.1
Gold Fields South Africa Ltd. sponsored ADR 3.0
Bre-X Minerals Ltd. 3.0
Western Areas Gold Mining Ltd. Ord. 2.6
TOP INDUSTRIES AS OF FEBRUARY 29, 1996
Gold Ores (South Africa) 27.9%
Gold Ores (Canada) 24.8%
Gold Ores (U.S.) 9.5%
Miscellaneous Nonmetal
Minerals 4.1%
Gold Ores (Australia) 3.9%
All Others 29.8% *
Row: 1, Col: 1, Value: 29.8
Row: 1, Col: 2, Value: 3.9
Row: 1, Col: 3, Value: 4.1
Row: 1, Col: 4, Value: 9.5
Row: 1, Col: 5, Value: 24.8
Row: 1, Col: 6, Value: 27.9
* INCLUDES SHORT-TERM INVESTMENTS
PRECIOUS METALS AND MINERALS PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Malcolm MacNaught, Portfolio Manager of Fidelity Select Precious
Metals and Minerals
Portfolio
Q. HOW DID THE FUND PERFORM, MALCOLM?
A. For the 12 months ended February 29, 1996, the fund returned 37.74%. The
fund's total return outpaced the S&P 500 Index, which returned 34.70% for
the same period.
Q. DID GOLD'S PRICE BREAKING THROUGH THE $400 BARRIER PLAY A PART IN THE
FUND'S PERFORMANCE?
A. Sure. Gold reached a 12-month high of $414.70 late in the fund's
reporting period and closed on February 29 at $399.50. Prior to this price
surge, supply and demand dynamics had been positive, but the price of gold
had remained flat for most of 1995. In 1995, demand increased by 8.5%
compared to 1994, fueled in part by increased consumer demand in China,
India and other parts of Asia. Supply, on the other hand, fell slightly as
mine production eased 1% in 1995 versus production in 1994.
Q. WHAT'S HAPPENED WITH SOME OF THE OTHER COMMODITIES?
A. Silver's price remained within a $4.50 to $6.00 range. While excess
inventories are being consumed by the market, silver's price has been
controlled by how much of it is produced as a by-product of copper, lead,
zinc and gold. Platinum has traded in a narrow range of $10 above or below
$410, mainly because of selling by Russia and some of the other former
Soviet republics. Additionally, palladium and rhodium have remained in
excess supply as additional industrial uses are sought for these elements.
Q. SO HOW HAVE THE FUND'S GOLD STOCKS PERFORMED?
A. Gold stocks are generally driven by gold price changes or fundamental
improvements in their reserves. Breaking the market down further, South
African and Australian stocks significantly underperformed their North
American counterparts as a result of political risks, labor strife and
local demand. Additionally, South African and Australian gold stocks have
historically had a high beta - meaning they have risen higher or fallen
lower than other gold stocks relative to any change in the price of this
precious metal. Therefore, it was not surprising that their performance
significantly improved early in 1996 when gold prices rose after being flat
for most of 1995. The improvement in the price of gold also helped
companies with good fundamentals, including such South African firms as
Western Deep Levels, Western Areas Gold Mining and Gold Fields South
Africa, as well as Australian gold producer Poseidon Gold.
Q. WHICH NORTH AMERICAN COMPANIES DID YOU TARGET DURING THE PERIOD?
A. Barrick Gold and Newmont Mining were the cornerstones of the fund's
North American investments. Both companies had solid production rates and
good reserves during the period. In general, North American mining
companies lent some stability to the fund's performance, given their
outperformance of South African and Australian gold stocks.
Q. WHAT'S YOUR STRATEGY GOING FORWARD?
A. Basically, I look for companies that are developing a major new ore body
- - precious metal deposits - or have achieved sustained increases in
production. That said, I currently see opportunities in Indonesia, central
Africa, Peru and Russia. Of course, one has to factor in certain additional
risks such as changes in the political climate of these respective regions.
Q. WHAT'S YOUR OUTLOOK?
A. South African gold, platinum and diamond companies could potentially
perform well given that labor strife has lessened and costs are more under
control. Shareholders, however, should not overlook the fact that the value
of gold and other precious metals is affected by a variety of unpredictable
factors including the perceived rate of inflation and foreign buying.
FUND FACTS
START DATE: July 14, 1981
TRADING SYMBOL: FDPMX
SIZE: as of February 29, 1996, more than
$467 million
MANAGER: Malcolm MacNaught, since 1981;
manager, Fidelity Select American Gold
Portfolio, 1985-1995; Fidelity Advisor
Global Resources Fund, since 1988; joined
Fidelity in 1968
(checkmark)
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
PRECIOUS METALS AND MINERALS PORTFOLIO
INVESTMENTS FEBRUARY 29, 1996
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 88.7%
SHARES VALUE (NOTE 1)
AUSTRALIA - 6.3%
METALS & MINING - 0.6%
METAL MINING SERVICES - 0.6%
Acacia Resources Ltd. (a) 1,258,500 $ 2,829,564
PRECIOUS METALS - 5.7%
GOLD & SILVER ORES - 1.8%
North Flindes 524,060 3,326,432
Plutonic Resources Ltd. 900,000 5,058,821
8,385,253
GOLD ORES - 3.9%
Aurora Gold Ltd. (a) 500,000 898,581
Great Central Mines NL
sponsored ADR (a) 100,000 818,750
Great Central Mines NL (a) 1,730,000 4,815,784
Newcrest Mining Ltd. 350,000 1,678,244
Poseidon Gold Ltd. 3,404,800 9,035,258
Ranger Minerals NL (a) 100,000 308,959
Wiluna Mines Ltd. (a) 767,900 704,702
18,260,278
TOTAL PRECIOUS METALS 26,645,531
TOTAL AUSTRALIA 29,475,095
CANADA - 28.9%
HOLDING COMPANIES - 0.2%
Bolivar Goldfields Ltd. (a) 725,200 756,767
METALS & MINING - 3.7%
COPPER ORES - 0.2%
Arequipa Resources Ltd. (a) 100,000 893,932
METAL MINING - 0.3%
Dayton Mining Corp. (a) 255,000 1,372,368
METAL MINING SERVICES - 3.2%
Bre-X Minerals Ltd. (a) 120,000 13,956,289
Eldorado Ltd. (a) 200,000 1,149,341
15,105,630
TOTAL METALS & MINING 17,371,930
PRECIOUS METALS - 25.0%
GOLD & SILVER ORES - 0.2%
Greenstone Resources Ltd. (a) 200,000 875,689
GOLD ORES - 24.8%
Agnico Eagle Mines Ltd. 851,100 14,362,526
Barrick Gold Corp. 1,301,000 39,399,788
Cambior, Inc. 102,700 1,405,207
Echo Bay Mines Ltd. 681,700 9,451,819
Euro-Nevada Mining Corp. 300,000 11,383,953
Franco Nevada Mining Corp. 127,000 7,715,365
Golden Star Resources Ltd. (a) 7,700 47,059
Kinross Gold Corp. (a) 1,000,000 9,304,192
Orvana Minerals Corp. (a) 700,000 4,341,956
Placer Dome, Inc. 272,200 7,721,951
Prime Resources Group, Inc. (a) 506,156 4,894,054
TVI Pacific, Inc. (a) 799,300 1,475,703
TVX Gold, Inc. (a) 505,300 4,977,962
116,481,535
TOTAL PRECIOUS METALS 117,357,224
TOTAL CANADA 135,485,921
SHARES VALUE (NOTE 1)
GHANA - 1.8%
PRECIOUS METALS - 1.8%
GOLD ORES - 1.8%
Ashanti Goldfields Ltd. GDR 376,100 $ 8,556,275
SOUTH AFRICA - 35.9%
HOLDING COMPANIES - 0.8%
Gencor Ltd. (Reg.) 983,900 3,656,299
METALS & MINING - 7.2%
MISCELLANEOUS NONMETAL MINERALS - 4.1%
De Beers Consolidated Mines Ltd. ADR 603,900 19,249,313
MISCELLANEOUS METAL ORES - 3.1%
Anglo American Platinum Ltd. (a) 434,400 2,746,529
Impala Platinum Holdings Ltd.:
ADR 200,000 3,525,000
Ord. 138,200 2,496,516
Rustenberg Platinum Holding Ltd. ADR 316,928 5,942,400
14,710,445
TOTAL METALS & MINING 33,959,758
PRECIOUS METALS - 27.9%
GOLD ORES - 27.9%
Anglo American Corp. of South
Africa Ltd. ADR 63,000 4,126,500
Buffelsfontein Gold Mining Co. Ltd.:
ADR 100,000 512,500
Ord. 500,000 2,451,613
Driefontein Consolidated Ltd.:
ADR 939,400 14,325,850
Ord. 150,000 2,264,516
Free State Consolidated Gold Mines
Ltd. ADR 924,100 8,894,463
Gold Fields South Africa Ltd.
sponsored ADR 431,200 14,229,600
Kloof Gold Mining Co. Ltd.:
Ord. 157,000 2,106,839
sponsored ADR 828,000 11,281,500
Randfontein Estates Gold Mining Co.
Ltd. ADR 800,700 6,906,038
Unisel Gold Mines Ltd. 36,400 143,252
Vaal Reefs Exploration & Mining Co. Ltd.:
ADR 2,377,500 23,626,406
(Reg.) 14,000 1,372,903
Western Areas Gold Mining Ltd. Ord. 720,000 12,170,323
Western Deep Levels Ltd.:
ADR 435,000 21,750,000
Ord. 50,000 2,458,065
Winkelhaak Mines Ltd. ADR 200,000 1,975,000
130,595,368
TOTAL SOUTH AFRICA 168,211,425
UNITED KINGDOM - 0.6%
HOLDING COMPANIES - 0.6%
Lonrho Ltd. Ord. 1,000,000 2,978,476
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
UNITED STATES OF AMERICA - 15.2%
CLOSED END INVESTMENT COMPANY - 1.5%
REGIONALIZED INVESTMENT COMPANIES - 1.5%
ASA Ltd. (a) 150,000 $ 7,050,000
METALS & MINING - 2.7%
MISCELLANEOUS METAL ORES - 2.7%
Stillwater Mining Co. (a) 216,200 4,756,400
Stillwater Mining Co. (a)(b) 366,600 8,065,200
12,821,600
PRECIOUS METALS - 9.5%
GOLD ORES - 9.5%
Firstmiss Gold, Inc. (a) 137,000 3,699,000
Newmont Mining Corp. 628,195 35,728,591
Santa Fe Pacific Gold Corp. 320,000 5,000,000
44,427,591
SECURITIES INDUSTRY - 1.5%
INVESTMENT MANAGERS - 1.5%
Pioneer Group, Inc. 246,500 7,148,500
TOTAL UNITED STATES OF AMERICA 71,447,691
TOTAL COMMON STOCKS
(Cost $335,162,826) 416,154,883
BULLION - 3.0%
TROY OUNCES
Gold Bullion (a)
(Cost $14,220,000) 35,005 13,984,462
REPURCHASE AGREEMENTS - 8.3%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations) in a joint
trading account at 5.41%, dated
2/29/96 due 3/1/96 $ 39,025,864 39,020,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $388,402,826) $ 469,159,345
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 $8,065,200 or 1.7% of net
assets.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $187,945,622 and $219,578,782, respectively (see Note 3 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $179,259 for the period
(see Note 4 of Notes to Financial Statements).
The maximum loan and the average daily loan balances during the periods for
which loans were outstanding amounted to $4,971,000 and $3,307,417,
respectively. The weighted average interest rate paid was 6.6% (see Note 5
of Notes to Financial Statements).
Distribution of investments by country of issue, as a percentage of total
value of investment in securities, is as follows:
South Africa 35.9%
Canada 28.9
United States (including gold bullion) 26.5
Australia 6.3
Ghana 1.8
United Kingdom 0.6
TOTAL 100.0%
INCOME TAX INFORMATION
At February 29, 1996, the aggregate cost of investment securities for
income tax purposes was $390,319,062. Net unrealized appreciation
aggregated $78,840,283, of which $93,520,966 related to appreciated
investment securities and $14,680,683 related to depreciated investment
securities.
At February 29, 1996, the fund had a capital loss carryforward of
approximately $16,253,000 of which $5,571,000, and $10,682,000 will expire
on February 29, 2000 and February 28, 2001, respectively.
A total of 41% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate shareholders
(unaudited).
The fund will notify shareholders in January 1997 of the applicable
percentage for use in preparing 1996 income tax returns.
PRECIOUS METALS AND MINERALS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 29, 1996
ASSETS
Investment in $ 469,159,345
securities, at
value
(including
repurchase
agreements
of
$39,020,000)
(cost
$388,402,826
) - See
accompanyin
g schedule
Cash 843
Receivable for 1,362,608
investments
sold
Receivable for 7,394,926
fund shares
sold
Dividends 1,226,243
receivable
Redemption 4,170
fees
receivable
TOTAL ASSETS 479,148,135
LIABILITIES
Payable for $ 2,249,370
investments
purchased
Payable for 9,125,872
fund shares
redeemed
Accrued 247,825
management
fee
Other payables 329,183
and
accrued
expenses
TOTAL 11,952,250
LIABILITIES
NET ASSETS $ 467,195,885
Net Assets
consist of:
Paid in capital $ 403,728,978
Undistributed 846,595
net
investment
income
Accumulated (18,135,773
undistributed )
net realized
gain (loss) on
investments
and foreign
currency
transactions
Net unrealized 80,756,085
appreciation
(depreciation
) on
investments
and assets
and liabilities
in
foreign
currencies
NET ASSETS, for $ 467,195,885
22,286,239
shares
outstanding
NET ASSET $20.96
VALUE and
redemption
price per
share
($467,195,88
5 (divided by)
22,286,239
shares)
Maximum $21.61
offering price
per share
(100/97.00 of
$20.96)
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED FEBRUARY 29, 1996
INVESTMENT INCOME $ 5,921,207
Dividends
Interest (including income on 1,359,959
securities loaned of $5,031)
TOTAL INCOME 7,281,166
EXPENSES
Management fee $ 2,345,736
Transfer agent 3,093,937
Fees
Redemption fees (338,171
)
Accounting and security lending fees 384,066
Non-interested trustees' compensation 2,750
Custodian fees and expenses 101,368
Registration fees 165,721
Audit 46,315
Legal 2,580
Interest 7,250
Reports to shareholders 4,204
Miscellaneous 724
Total expenses before reductions 5,816,480
Expense reductions (12,778 5,803,702
)
NET INVESTMENT INCOME 1,477,464
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities (including realized loss of $123,664 on sale of investments in precious metals) 29,499,362
Foreign currency transactions 10,409 29,509,771
Change in net unrealized appreciation (depreciation) on:
Investment securities 86,599,170
Assets and liabilities in (416 86,598,754
foreign currencies )
NET GAIN (LOSS) 116,108,525
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 117,585,989
OTHER INFORMATION $ 1,543,064
Sales charges paid to FDC
Deferred sales charges withheld $ 52,879
by FDC
Exchange fees withheld by FSC $ 251,108
Expense reductions $ 3,473
Directed brokerage arrangements
Custodian interest credits 584
Transfer agent interest credits 8,721
$ 12,778
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
FEBRUARY 29, FEBRUARY 28,
1996 1995
<TABLE>
<CAPTION>
<S> <C> <C>
Operations $ 1,477,464 $ 4,315,352
Net investment income
Net realized gain (loss) 29,509,771 25,267,179
Change in net unrealized appreciation (depreciation) 86,598,754 (77,536,148
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 117,585,989 (47,953,617
)
Distributions to shareholders (1,115,809 (4,315,352
From net investment income ) )
In excess of net investment income - (1,235,277
)
TOTAL DISTRIBUTIONS (1,115,809 (5,550,629
) )
Share transactions 820,033,799 934,524,938
Net proceeds from sales of shares
Reinvestment of distributions 1,089,810 5,435,430
Cost of shares redeemed (837,693,561 (934,775,405
) )
Paid in capital portion of redemption fees 3,091,710 3,310,757
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS (13,478,242 8,495,720
)
TOTAL INCREASE (DECREASE) IN NET ASSETS 102,991,938 (45,008,526
)
NET ASSETS
Beginning of period 364,203,947 409,212,473
End of period (including under (over) distribution of net investment income of $846,595 and
$(912,704), $ 467,195,885 $ 364,203,947
respectively)
OTHER INFORMATION
Shares
Sold 44,966,074 53,173,413
Issued in reinvestment of distributions 63,583 324,762
Redeemed (46,598,892 (54,266,578
) )
Net increase (decrease) (1,569,235 (768,403
) )
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEAR ENDED YEARS ENDED FEBRUARY 28, TEN MONTHS YEAR ENDED
FEBRUARY 29, ENDED APRIL 30,
FEBRUARY 28,
SELECTED PER-SHARE DATA D 1996 1995 1994 1993 1992
</TABLE>
Net asset $ 15.27 $ 16.62 $ 9.86 $ 9.90 $ 10.68
value,
beginning of
period
Income from
Investment
Operations
Net .07 .17 .21 .09 .10
investment
income
Net realized 5.54 (1.42) 6.48 (.05) (.91)
and
unrealized
gain (loss)
Total from 5.61 (1.25) 6.69 .04 (.81)
investment
operations
Less (.06) (.18) (.19) (.17) (.10)
Distributions
From net
investment
income
In excess of - (.05) (.02) - -
net
investment
income
Total (.06) (.23) (.21) (.17) (.10)
distributions
Redemption .14 .13 .28 .09 .13
fees added to
paid in
capital
Net asset $ 20.96 $ 15.27 $ 16.62 $ 9.86 $ 9.90
value, end of
period
TOTAL 37.74% (6.86)% 70.58% 1.51% (6.46)%
RETURN B, C
RATIOS AND
SUPPLEMENT
AL DATA
Net assets, $ 467,196 $ 364,204 $ 409,212 $ 137,922 $ 130,002
end of period
(000 omitted)
Ratio of 1.52% 1.46% 1.55% 1.73% 1.81%
expenses to A
average net
assets
Ratio of net .39% .99% 1.38% 1.12% .92%
investment A
income to
average net
assets
Portfolio 53% 43% 73% 36% 44%
turnover rate A
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING
THE PERIODS SHOWN (SEE NOTE 7 OF NOTES TO FINANCIAL STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE
YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES
OUTSTANDING DURING THE PERIOD.
</TABLE>
UTILITIES GROWTH 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 securities that have grown in value), but does not include certain
fees paid by shareholders upon exchange or redemption.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 29, 1996 YEAR YEARS YEARS
UTILITIES GROWTH 25.82% 78.17% 208.11%
UTILITIES GROWTH 22.04% 72.83% 198.87%
(INCL. 3% SALES CHARGE)
S&P 500 34.70% 101.14% 286.76%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one, five, or 10 years. You can compare
these figures to the performance of the S&P 500 - a common proxy for the
U.S. stock market. This benchmark includes reinvested dividends and capital
gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 29, 1996 YEAR YEARS YEARS
UTILITIES GROWTH 25.82% 12.25% 11.91%
UTILITIES GROWTH 22.04% 11.56% 11.57%
(INCL. 3% SALES CHARGE)
S&P 500 34.70% 14.99% 14.47%
AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and
show you what would have happened if the fund had performed at a constant
rate each year.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of growth in the long run
and volatility in the short run. Unlike the broader
market, however, some sectors may not have
a history of growth in the long run. And, as
with all stock funds, the share price and
return of a fund that invests in a sector will
vary. That means if you sell your shares
during a sector downturn, you might lose
money. But if you can identify a sector that is
about to experience rapid growth you may
have the potential for above-average gains.
(checkmark)
$10,000 OVER 10 YEARS
19860228 9700.00 10000.00
19860331 10024.12 10558.00
19860430 9826.49 10438.69
19860531 10233.62 10994.03
19860630 10826.53 11179.83
19860731 11310.09 10554.88
19860831 12058.76 11338.05
19860930 10725.57 10400.39
19861031 11226.01 11000.50
19861130 11326.10 11267.81
19861231 10933.75 10980.48
19870131 11818.54 12459.55
19870228 11402.17 12951.70
19870331 11173.97 13326.01
19870430 10533.40 13207.41
19870531 10365.25 13322.31
19870630 10733.58 13995.09
19870731 10585.44 14704.64
19870831 10917.74 15253.12
19870930 10829.66 14919.08
19871031 10177.08 11705.51
19871130 9836.78 10740.97
19871231 9921.73 11558.36
19880131 10779.16 12044.97
19880229 10694.69 12606.27
19880331 10390.57 12216.73
19880430 10420.14 12352.34
19880531 10745.37 12459.80
19880630 11028.37 13031.71
19880731 10993.37 12982.19
19880831 10975.98 12540.79
19880930 11358.36 13075.03
19881031 11597.35 13438.52
19881130 11575.62 13246.35
19881231 11554.48 13478.16
19890131 12098.74 14464.76
19890228 12022.90 14104.59
19890331 12228.12 14433.22
19890430 12857.14 15182.31
19890531 13468.33 15797.19
19890630 13808.52 15707.15
19890731 14564.71 17125.50
19890831 14628.87 17461.16
19890930 14839.69 17389.57
19891031 14770.94 16986.13
19891130 15256.74 17332.65
19891231 16063.34 17748.63
19900131 15270.49 16557.70
19900228 15242.99 16771.29
19900331 15160.50 17215.73
19900430 14528.05 16785.34
19900531 15284.24 18421.91
19900630 15465.36 18296.64
19900731 15592.31 18238.09
19900831 14736.52 16589.37
19900930 14774.14 15781.47
19901031 15531.19 15713.61
19901130 15940.27 16728.71
19901231 16152.42 17195.44
19910131 16081.20 17945.16
19910228 16774.40 19228.24
19910331 16964.31 19693.56
19910430 16888.35 19740.82
19910531 16893.09 20593.63
19910630 16688.18 19650.44
19910731 17231.28 20566.15
19910831 17626.27 21053.57
19910930 18169.38 20701.97
19911031 18421.18 20979.38
19911130 18633.48 20133.91
19911231 19548.95 22437.23
19920131 18947.21 22019.90
19920229 18808.35 22306.16
19920331 18612.91 21871.19
19920430 19122.08 22514.20
19920531 19492.38 22624.52
19920630 19717.87 22287.41
19920731 20766.30 23198.97
19920831 20755.65 22723.39
19920930 20867.41 22991.53
19921031 20862.09 23072.00
19921130 21005.79 23858.75
19921231 21619.64 24152.21
19930131 21987.40 24355.09
19930228 23118.53 24686.32
19930331 23742.60 25207.20
19930430 23612.84 24597.19
19930531 23663.49 25256.39
19930630 24569.51 25329.64
19930731 24850.88 25228.32
19930831 25931.36 26184.47
19930930 25931.36 25982.85
19931031 25666.86 26520.70
19931130 24411.94 26268.75
19931231 24331.76 26586.60
19940131 24830.31 27490.55
19940228 23703.72 26745.55
19940331 22849.07 25579.45
19940430 23506.34 25906.86
19940531 23037.01 26331.74
19940630 22964.29 25686.61
19940731 23625.33 26529.13
19940831 23532.78 27616.82
19940930 22931.24 26940.21
19941031 23222.09 27546.37
19941130 22382.58 26543.13
19941231 22528.61 26936.76
19950131 23448.01 27635.23
19950228 23754.47 28712.18
19950331 23849.82 29559.47
19950430 24681.16 30430.00
19950531 25063.08 31646.29
19950630 25308.59 32381.43
19950731 25990.58 33455.20
19950831 26652.11 33539.17
19950930 27920.61 34954.52
19951031 28193.41 34829.74
19951130 28814.02 36358.76
19951231 30276.08 37059.03
19960131 30595.58 38320.52
19960229 29887.13 38675.75
Let's say you invested $10,000 in Fidelity Select Utilities Growth
Portfolio on February 28, 1986, and paid a 3% sales charge. By February 29,
1996, your investment would have grown to $29,887 - a 198.87% increase.
That compares to $10,000 invested in the S&P 500, which would have grown to
$38,676 over the same period - a 286.76% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 29, 1996
% OF FUND'S
INVESTMENTS
Ameritech Corp. 5.6
SBC Communications, Inc. 5.5
BellSouth Corp. 5.5
NYNEX Corp. 5.4
Bell Atlantic Corp. 4.9
GTE Corp. 4.8
AirTouch Communications, Inc. 4.7
AT&T Corp. 4.2
Pacific Telesis Group 3.8
U.S. West, Inc. 3.7
TOP INDUSTRIES AS OF FEBRUARY 29, 1996
Telephone Services 53.2%
Electric Power 8.6%
Gas Transmission &
Distribution 7.1%
Electric & Other Services 6.5%
Gas Transmission 5.3%
All Others 19.3% *
Row: 1, Col: 1, Value: 19.3
Row: 1, Col: 2, Value: 5.3
Row: 1, Col: 3, Value: 6.5
Row: 1, Col: 4, Value: 7.1
Row: 1, Col: 5, Value: 8.6
Row: 1, Col: 6, Value: 53.2
* INCLUDES SHORT-TERM INVESTMENTS
UTILITIES GROWTH PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
John Muresianu,
Portfolio Manager of
Fidelity Select Utilities
Growth Portfolio
Q. JOHN, HOW HAS THE FUND PERFORMED?
A. For the 12 months ended February 29, 1996, the fund had a total return
of 25.82%. The S&P 500 Index returned 34.70% during the same period.
Q. WHAT FACTORS HELPED THE FUND'S PERFORMANCE?
A. I focused the fund's investments on telephone and gas stocks, holding a
lighter position in electric utilities. The telephone and gas stocks, as
groups, did better than electrics. Telephone stocks, specifically -
including regional Bell operating companies (RBOCs) such as BellSouth and
U.S. West - did quite well in anticipation of the new telecommunications
legislation that became law in February. Individual stock selection also
helped. In the gas group, Williams Companies rebounded from the cheap
levels it had hit after acquiring Transco last year. And DQE, in the
electric utility group, benefited from solid management that used
significant free cash flow to reduce debt and make investments in
non-regulated businesses.
Q. WHAT HAS THE INVESTMENT ENVIRONMENT BEEN LIKE FOR THE UTILITIES SECTOR?
A. One of the keys to the overall investment environment has been a soft
economy that allowed the Federal Reserve Board to lower rates. Lower rates
boosted bond prices, which have, in turn, helped support stock prices.
Electric utilities are historically the highest-yielding utility stocks,
usually moving more in tandem with bonds than gas or telephone stocks do,
so they have done well in response to the bond rally. Gas stocks have done
especially well of late because of the positive influence of the bond
market and the benefit of higher gas prices. The stock prices have risen
because of higher demand due to this winter's exceptionally cold weather
across much of the country. Overall, gas stocks have done better than
electrics because of these factors. Telephone stocks have done the best,
not only because of the influence of bonds, but also because investors were
attracted by the growth opportunities implied in what was the imminent
passage of the telecommunications bill. So all three sectors have done
well, but telephone and gas have done better than electrics.
Q. LET'S TAKE A LOOK AT THE TELECOMMUNICATIONS LAW . . .
A. The new law essentially allows long distance carriers, cable operators
and the RBOCs to enter each others' business and compete. One key is that
the RBOCs will be able to get into long distance inexpensively, which has
the potential to help earnings growth. The Federal Communications
Commission is going to interpret the legislation and come out with specific
rules. While we don't know exactly the timing or the details, it looks now
that the RBOCs should benefit. The strength in the RBOCs' performance was
due to the anticipation of earnings growth that could result from the
factors I just cited.
Q. WHAT WERE SOME OF THE STOCKS THAT DIDN'T DO AS WELL AS YOU WOULD HAVE
LIKED?
A. ENSERCH was one in the gas group. It had disappointing production
results from two key offshore wells, which investors had anticipated would
drive future earnings and cash flow. In the telephone group, Pacific
Telesis embarked on an aggressive capital spending campaign on PCS -
personal communications services - an alternative lower-priced cellular
equivalent. This activity raised concern about how well the company would
be able to sustain its dividend. On the electric side, Northeast Utilities
had nuclear plant operating problems, as well as antagonistic relations
with regulators in New Hampshire.
Q. WHAT'S YOUR OUTLOOK OVER THE NEXT SIX MONTHS?
A. A lot will depend on the economy and interest rates. If the economy
accelerates, interest rates are likely to rise and utility stocks likely
will not do well. If the economy continues to slow, interest rates are
likely to fall, helping utility stocks. If there is no perceptible change
in economic growth and interest rates, the stocks should be unaffected by
these issues. I intend to continue to concentrate mostly on telephone
utility stocks, because their growth prospects appear to be the best in
this sector.
FUND FACTS
START DATE: December 10, 1981
TRADING SYMBOL: FSUTX
SIZE: as of February 29, 1996, more than
$266 million
MANAGER: John Muresianu, since 1992;
manager, Fidelity Utilities Fund, since 1992;
Fidelity Select Natural Gas Portfolio, 1993-1994;
analyst, natural gas pipelines, life insurance,
service companies, Canadian stocks, foreign
currencies, 1989-1992; pension fund manager,
1987-1989; joined Fidelity in 1986
(checkmark)
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
UTILITIES GROWTH PORTFOLIO
INVESTMENTS FEBRUARY 29, 1996
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 96.2%
SHARES VALUE (NOTE 1)
CELLULAR - 5.2%
CELLULAR & COMMUNICATION SERVICES - 5.2%
AirTouch Communications, Inc. (a) 398,300 $ 12,347,300
Vodafone Group PLC sponsored ADR 37,700 1,333,631
13,680,931
COAL - 0.4%
MAPCO, Inc. 17,700 964,650
COMMUNICATIONS EQUIPMENT - 0.0%
TELEPHONE EQUIPMENT - 0.0%
DSC Communications Corp. (a) 1,400 42,700
ELECTRIC UTILITY - 14.5%
ELECTRIC & OTHER SERVICES - 5.9%
Consolidated Edison Co. of New York, Inc. 13,700 446,963
DPL, Inc. 60,000 1,432,500
Enova Corp. 35,300 816,313
Hidroelectrica de Cantabrico SA 12,450 428,306
IES Industries, Inc. 12,100 350,900
Illinova Corp. 62,000 1,767,000
LG&E Energy Corp. 5,300 227,900
Montana Power Co. 38,700 846,563
NIPSCO Industries, Inc. 61,600 2,325,400
New York State Electric & Gas Corp. 7,200 170,100
PECO Energy Co. 32,100 906,825
PacifiCorp 54,900 1,139,175
Public Service Co. of New Mexico (a) 70,600 1,253,150
Rochester Gas & Electric Corp. 11,200 252,000
Sierra Pacific Resources 6,700 162,475
Utilicorp United, Inc. 4,515 133,193
Veba AG Ord. 56,200 2,637,531
WPL Holdings, Inc. 1,200 37,200
15,333,494
ELECTRIC POWER - 8.6%
AES Corp. (a) 152,749 3,742,351
American Electric Power Co., Inc. 37,500 1,607,813
Boston Edison Co. 27,400 756,925
Central & South West Corp. 22,500 624,375
Central Louisiana Electric Co., Inc. 41,806 1,102,633
CESC Ltd. GDR (b) 36,100 126,350
CESC Ltd. GDR (warrants) (a)(b) 18,000 180
DQE, Inc. 58,550 1,712,588
DTE Energy Co. 7,900 281,438
Dominion Resources, Inc. 10,600 418,700
Eastern Utilities Associates 82,444 1,793,157
Eletrobras PN Class B 1,400,000 389,639
Entergy Corp. 113,300 3,214,888
General Public Utilities Corp. 7,800 260,325
Great Bay Power (a) 1,929 16,397
Kansas City Power & Light Co. 10,600 268,975
Korea Electric Power Corp. sponsored ADR 24,700 598,975
New England Electric System 9,400 363,075
Northeast Utilities 12,600 280,350
Nova Scotia Power, Inc. 27,700 245,092
Ohio Edison Co. 24,700 586,625
Pinnacle West Capital Corp. 87,200 2,474,300
Portland General Corp. 24,900 762,563
TECO Energy, Inc. 8,900 222,500
Texas Utilities Co. 5,500 222,063
United Illuminating Co. 14,800 566,100
22,638,377
TOTAL ELECTRIC UTILITY 37,971,871
SHARES VALUE (NOTE 1)
GAS - 17.8%
GAS & OTHER SERVICES - 1.0%
MDU Resources Group, Inc. 58,800 $ 1,205,400
UGI Corp. 48,951 1,027,971
Western Resources, Inc. 8,200 262,400
2,495,771
GAS DISTRIBUTION - 4.4%
Energen Corp. 39,400 930,825
MCN Corp. 173,300 4,354,163
NUI Corp. 20,400 377,400
National Fuel Gas Co. 8,800 282,700
New Jersey Resources Corp. 9,800 285,425
NICOR, Inc. 19,700 529,438
Northwest Natural Gas Co. 3,500 115,500
Pacific Enterprises 147,300 3,940,275
Peoples Energy Corp. 11,200 344,400
WICOR, Inc. 12,900 425,700
11,585,826
GAS TRANSMISSION - 5.3%
Enron Corp. 105,800 3,874,925
ONEOK, Inc. 31,000 674,250
Sonat, Inc. 88,100 2,951,350
Tejas Power Corp. (a) 43,300 368,050
Williams Companies, Inc. 126,923 6,028,843
13,897,418
GAS TRANSMISSION & DISTRIBUTION - 7.1%
Bay State Gas Co. 15,600 442,650
Columbia Gas System, Inc. (The) 77,500 3,390,625
Consolidated Natural Gas Co. 19,000 817,000
El Paso Natural Gas Co. 22,700 766,125
ENSERCH Corp. 388,100 5,870,013
Equitable Resources, Inc. 21,150 605,419
Noram Energy Corp. 31,200 280,800
Questar Corp. 116,100 3,657,150
Tejas Gas Corp. (a) 6,330 302,258
Westcoat Energy, Inc. 122,200 1,939,541
Yankee Energy System, Inc. 19,400 458,325
18,529,906
TOTAL GAS 46,508,921
HOLDING COMPANIES - 0.6%
CINergy Corp. 51,606 1,541,729
INDEPENDENT POWER - 0.0%
STEAM SUPPLY - 0.0%
Bonneville Pacific Corp. (a) 11,300 -
OIL & GAS - 2.4%
CRUDE PETROLEUM & GAS - 0.1%
Nuevo Energy Corp. (a) 1,000 26,000
Occidental Petroleum Corp. 14,100 324,300
350,300
PETROLEUM REFINERS - 2.3%
Coastal Corp. (The) 159,900 5,876,325
TOTAL OIL & GAS 6,226,625
POLLUTION CONTROL - 2.1%
REFUSE SYSTEMS - 2.1%
WMX Technologies, Inc. 195,200 5,563,200
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
TELEPHONE SERVICES - 53.2%
AT&T Corp. 174,200 $ 11,083,475
ALLTEL Corp. 8,200 272,650
Ameritech Corp. 253,800 14,625,225
BCE, Inc. 162 5,645
Bell Atlantic Corp. 192,600 12,735,675
BellSouth Corp. 361,400 14,410,825
Cincinnati Bell, Inc. 11,600 379,900
Frontier Corp. 800 24,000
GTE Corp. 293,000 12,562,375
Nippon Telegraph & Telephone
Corp. Ord. 114 866,385
NYNEX Corp. 272,700 14,044,050
Pacific Telesis Group 350,500 9,901,625
SBC Communications, Inc. 262,800 14,421,150
Telebras sponsored ADR 103,000 5,407,500
Telecom Argentina Class B
sponsored ADR 42,000 1,816,500
Telefonica de Argentina SA
sponsored ADR 72,000 1,881,000
Telefonica de Espana SA Ord. 449,000 7,370,155
Telefonos de Mexico SA sponsored ADR 91,000 2,775,500
Telephone & Data Systems, Inc. 9,379 432,606
U.S. West, Inc. 293,259 9,604,232
U.S. West, Inc. (Media Group) 220,359 4,599,994
139,220,467
TOTAL COMMON STOCKS
(Cost $224,766,992) 251,721,094
PREFERRED STOCKS - 1.3%
CONVERTIBLE PREFERRED STOCKS - 0.7%
ELECTRIC UTILITY - 0.7%
COMBINATION UTILITIES - 0.7%
Citizens Utilities Trust $2.50 37,800 1,856,925
NONCONVERTIBLE PREFERRED STOCKS - 0.6%
ELECTRIC UTILITY - 0.6%
ELECTRIC & OTHER SERVICES - 0.6%
Long Island Lighting Co. $1.984 63,800 1,539,175
TOTAL PREFERRED STOCKS
(Cost $3,485,000) 3,396,100
REPURCHASE AGREEMENTS - 2.5%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations) in a joint
trading account at 5.41%, dated
2/29/96 due 3/1/96 $ 6,497,976 6,497,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $234,748,992) $ 261,614,194
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 $126,530 or 0.0% of net
assets.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $161,955,726 and $171,709,809, respectively (see Note 3 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $107,160 for the period
(see Note 4 of Notes to Financial Statements).
The maximum loan and the average daily loan balances during the periods for
which loans were outstanding amounted to $1,246,000 and $854,833,
respectively. The weighted average interest rate paid was 6.1% (see Note 5
of Notes to Financial Statements).
Distribution of investments by country of issue, as a percentage of total
value of investment in securities, is as follows:
United States 89.4%
Spain 3.0
Brazil 2.2
Argentina 1.4
Mexico 1.1
Germany 1.0
Others (individually less than 1%) 1.9
TOTAL 100.0%
INCOME TAX INFORMATION
At February 29, 1996, the aggregate cost of investment securities for
income tax purposes was $234,990,541. Net unrealized appreciation
aggregated $26,623,653, of which $30,824,993 related to appreciated
investment securities and $4,201,340 related to depreciated investment
securities.
The fund hereby designates approximately $7,862,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 100% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate shareholders
(unaudited).
The fund will notify shareholders in January 1997 of the applicable
percentage for use in preparing 1996 income tax returns.
UTILITIES GROWTH PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 29, 1996
ASSETS
Investment in $ 261,614,194
securities, at
value
(including
repurchase
agreements
of
$6,497,000)
(cost
$234,748,992
) - See
accompanyin
g schedule
Cash 366
Receivable for 7,728,303
investments
sold
Receivable for 1,110,205
fund shares
sold
Dividends 625,881
receivable
Redemption 828
fees
receivable
Other 21,047
receivables
TOTAL ASSETS 271,100,824
LIABILITIES
Payable for $ 86,500
investments
purchased
Payable for 3,886,787
fund shares
redeemed
Accrued 151,767
management
fee
Other payables 208,190
and accrued
expenses
TOTAL 4,333,244
LIABILITIES
NET ASSETS $ 266,767,580
Net Assets
consist of:
Paid in capital $ 215,314,084
Undistributed 2,165,391
net
investment
income
Accumulated 22,422,838
undistributed
net realized
gain (loss) on
investments
and foreign
currency
transactions
Net unrealized 26,865,267
appreciation
(depreciation
) on
investments
and assets
and liabilities
in foreign
currencies
NET ASSETS, for $ 266,767,580
6,198,971
shares
outstanding
NET ASSET $43.03
VALUE and
redemption
price per
share
($266,767,58
0 (divided by)
6,198,971
shares)
Maximum $44.36
offering price
per share
(100/97.00 of
$43.03)
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED FEBRUARY 29, 1996
INVESTMENT INCOME $ 10,288,689
Dividends
Interest (including income on 644,780
securities loaned of $554)
TOTAL INCOME 10,933,469
EXPENSES
Management fee $ 1,615,924
Transfer agent 1,807,073
Fees
Redemption fees (163,962
)
Accounting and security lending fees 264,748
Non-interested trustees' compensation 1,634
Custodian fees and expenses 20,273
Registration fees 83,678
Audit 28,572
Legal 1,475
Interest 873
Miscellaneous 5,183
Total expenses before reductions 3,665,471
Expense reductions (30,548 3,634,923
)
NET INVESTMENT INCOME 7,298,546
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 23,321,683
Foreign currency transactions (485 23,321,198
)
Change in net unrealized appreciation (depreciation) on:
Investment securities 27,286,421
Assets and liabilities in 65 27,286,486
foreign currencies
NET GAIN (LOSS) 50,607,684
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 57,906,230
OTHER INFORMATION $ 682,903
Sales charges paid to FDC
Deferred sales charges withheld $ 21,405
by FDC
Exchange fees withheld by FSC $ 122,813
Expense reductions $ 24,893
Directed brokerage arrangements
Custodian interest credits 1,512
Transfer agent interest credits 4,143
$ 30,548
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
FEBRUARY 29, FEBRUARY 28,
1996 1995
<TABLE>
<CAPTION>
<S> <C> <C>
Operations $ 7,298,546 $ 7,276,449
Net investment income
Net realized gain (loss) 23,321,198 (691,652
)
Change in net unrealized appreciation (depreciation) 27,286,486 (7,619,880
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 57,906,230 (1,035,083
)
Distributions to shareholders (5,508,527 (6,365,877
From net investment income ) )
From net realized gain - (4,277,985
)
TOTAL DISTRIBUTIONS (5,508,527 (10,643,862
) )
Share transactions 283,936,618 155,428,275
Net proceeds from sales of shares
Reinvestment of distributions 5,265,104 10,195,372
Cost of shares redeemed (312,698,789 (167,054,799
) )
Paid in capital portion of redemption fees 231,738 223,028
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS (23,265,329 (1,208,124
) )
TOTAL INCREASE (DECREASE) IN NET ASSETS 29,132,374 (12,887,069
)
NET ASSETS
Beginning of period 237,635,206 250,522,275
End of period (including undistributed net investment income of $2,165,391 and $1,881,976,
respectively) $ 266,767,580 $ 237,635,206
OTHER INFORMATION
Shares
Sold 6,910,440 4,450,667
Issued in reinvestment of distributions 124,287 303,279
Redeemed (7,649,316 (4,783,040
) )
Net increase (decrease) (614,589 (29,094
) )
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEAR ENDED YEARS ENDED FEBRUARY 28, TEN MONTHS YEAR ENDED
FEBRUARY 29, ENDED APRIL 30,
FEBRUARY 28,
SELECTED PER-SHARE DATA D 1996 1995 1994 1993 1992
</TABLE>
Net asset $ 34.88 $ 36.61 $ 41.49 $ 37.18 $ 35.57
value,
beginning of
period
Income from
Investment
Operations
Net 1.10 1.13 1.33 1.19 1.66
investment
income
Net realized 7.86 (1.17) (.16) 6.14 2.82
and
unrealized
gain (loss)
Total from 8.96 (.04) 1.17 7.33 4.48
investment
operations
Less (.84) (1.05) (1.13) (1.33) (1.69)
Distributions
From net
investment
income
From net - (.67) (4.94) (1.70) (1.19)
realized gain
Total (.84) (1.72) (6.07) (3.03) (2.88)
distributions
Redemption .03 .03 .02 .01 .01
fees added to
paid in
capital
Net asset $ 43.03 $ 34.88 $ 36.61 $ 41.49 $ 37.18
value, end of
period
TOTAL 25.82% .21% 2.53% 20.90% 13.23%
RETURN B, C
RATIOS AND
SUPPLEMENT
AL DATA
Net assets, $ 266,768 $ 237,635 $ 250,522 $ 290,718 $ 206,872
end of period
(000 omitted)
Ratio of 1.39% 1.43% 1.36% 1.42% A 1.51%
expenses to
average net
assets
Ratio of 1.38% 1.42% 1.35% 1.42% A 1.51%
expenses to E E E
average net
assets after
expense
reductions
Ratio of net 2.76% 3.24% 3.11% 3.71% A 4.58%
investment
income to
average net
assets
Portfolio 65% 24% 61% 34% A 45%
turnover rate
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING
THE PERIODS SHOWN (SEE NOTE 7 OF NOTES TO FINANCIAL STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE
YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES
OUTSTANDING DURING THE PERIOD.
E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES WHO EITHER
PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES (SEE NOTE 7 OF NOTES TO FINANCIAL
STATEMENTS).
</TABLE>
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 securities that have grown in value), but does not include certain
fees paid by shareholders upon exchange or redemption. If Fidelity had not
reimbursed certain expenses, the past one, five and 10 year total returns
would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 29, 1996 YEAR YEARS YEARS
BROKERAGE AND INVESTMENT 29.85%
MANAGEMENT 164.39% 106.70%
BROKERAGE AND INVESTMENT 25.95%
MANAGEMENT (INCL. 3% SALES CHARGE) 156.46% 100.49%
S&P 500 34.70% 101.14% 286.76%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one, five, or 10 years. You can compare
these figures to the performance of the S&P 500 - a common proxy for the
U.S. stock market. This benchmark includes reinvested dividends and capital
gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 29, 1996 YEAR YEARS YEARS
BROKERAGE AND INVESTMENT 29.85% 21.46% 7.53%
MANAGEMENT
BROKERAGE AND INVESTMENT 25.95% 20.73% 7.20%
MANAGEMENT (INCL. 3% SALES CHARGE)
S&P 500 34.70% 14.99% 14.47%
AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and
show you what would have happened if the fund had performed at a constant
rate each year.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of growth in the long run
and volatility in the short run. Unlike the broader
market, however, some sectors may not have
a history of growth in the long run. And, as
with all stock funds, the share price and
return of a fund that invests in a sector will
vary. That means if you sell your shares
during a sector downturn, you might lose
money. But if you can identify a sector that is
about to experience rapid growth you may
have the potential for above-average gains.
(checkmark)
$10,000 OVER 10 YEARS
19860228 9700.00 10000.00
19860331 9956.23 10558.00
19860430 9868.38 10438.69
19860531 9970.87 10994.03
19860630 9963.55 11179.83
19860731 9058.53 10554.88
19860831 9866.02 11338.05
19860930 8713.52 10400.39
19861031 9667.82 11000.50
19861130 9190.67 11267.81
19861231 8897.04 10980.48
19870131 10563.39 12459.55
19870228 10805.64 12951.70
19870331 10761.60 13326.01
19870430 9587.07 13207.41
19870531 9161.30 13322.31
19870630 9146.62 13995.09
19870731 9168.64 14704.64
19870831 9462.28 15253.12
19870930 9139.28 14919.08
19871031 5777.20 11705.51
19871130 5344.09 10740.97
19871231 5618.50 11558.36
19880131 6021.07 12044.97
19880229 6309.87 12606.27
19880331 6143.59 12216.73
19880430 6248.61 12352.34
19880531 6012.32 12459.80
19880630 6651.23 13031.71
19880731 6598.65 12982.19
19880831 6554.84 12540.79
19880930 6721.34 13075.03
19881031 6747.63 13438.52
19881130 6598.65 13246.35
19881231 6660.65 13478.16
19890131 7528.66 14464.76
19890228 7351.52 14104.59
19890331 7360.38 14433.22
19890430 7431.23 15182.31
19890531 7918.38 15797.19
19890630 7695.75 15707.15
19890731 8622.09 17125.50
19890831 8835.87 17461.16
19890930 8559.74 17389.57
19891031 7864.99 16986.13
19891130 7784.83 17332.65
19891231 7597.08 17748.63
19900131 7263.24 16557.70
19900228 7506.86 16771.29
19900331 7714.38 17215.73
19900430 7191.06 16785.34
19900531 7876.78 18421.91
19900630 7867.54 18296.64
19900731 7587.52 18238.09
19900831 6557.79 16589.37
19900930 5997.76 15781.47
19901031 5627.41 15713.61
19901130 5997.76 16728.71
19901231 6368.10 17195.44
19910131 6898.01 17945.16
19910228 7583.25 19228.24
19910331 8359.85 19693.56
19910430 8478.62 19740.82
19910531 8926.30 20593.63
19910630 8331.94 19650.44
19910731 8972.16 20566.15
19910831 9173.37 21053.57
19910930 9648.96 20701.97
19911031 10289.17 20979.38
19911130 9722.12 20133.91
19911231 11606.19 22437.23
19920131 11770.81 22019.90
19920229 11697.65 22306.16
19920331 11386.68 21871.19
19920430 10499.53 22514.20
19920531 10472.09 22624.52
19920630 10225.15 22287.41
19920731 10801.34 23198.97
19920831 10490.38 22723.39
19920930 10417.21 22991.53
19921031 10883.66 23072.00
19921130 11862.27 23858.75
19921231 12200.67 24152.21
19930131 12923.20 24355.09
19930228 13005.51 24686.32
19930331 14048.15 25207.20
19930430 14002.40 24597.19
19930531 14460.00 25256.39
19930630 15146.39 25329.64
19930731 15649.74 25228.32
19930831 16885.25 26184.47
19930930 17196.41 25982.85
19931031 16638.15 26520.70
19931130 16180.55 26268.75
19931231 18218.67 26586.60
19940131 18606.94 27490.55
19940228 17671.11 26745.55
19940331 15689.96 25579.45
19940430 15560.54 25906.86
19940531 15938.85 26331.74
19940630 16546.14 25686.61
19940731 16157.87 26529.13
19940831 16277.34 27616.82
19940930 15660.09 26940.21
19941031 15650.14 27546.37
19941130 14564.98 26543.13
19941231 15072.71 26936.76
19950131 14883.56 27635.23
19950228 15441.07 28712.18
19950331 15600.36 29559.47
19950430 16072.99 30430.00
19950531 16976.78 31646.29
19950630 17931.91 32381.43
19950731 18794.62 33455.20
19950831 18620.02 33539.17
19950930 19749.75 34954.52
19951031 18650.83 34829.74
19951130 19102.72 36358.76
19951231 18629.01 37059.03
19960131 19843.47 38320.52
19960229 20049.49 38675.75
Let's say you invested $10,000 in Fidelity Select Brokerage and Investment
Management Portfolio on February 28, 1986, and paid a 3% sales charge. By
February 29, 1996, your investment would have grown to $20,049 - a 100.49%
increase. That compares to $10,000 invested in the S&P 500, which would
have grown to $38,676 over the same period - a 286.76% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 29, 1996
% OF FUND'S
INVESTMENTS
Dean Witter Discover & Co. 4.9
Bear Stearns Companies, Inc. 4.9
Lehman Brothers Holdings, Inc. 4.2
Travelers, Inc. (The) 4.2
Advest Group, Inc. (The) 4.1
Legg Mason, Inc. 4.0
Raymond James Financial, Inc. 3.9
Jefferies Group, Inc. 3.8
Merrill Lynch & Co., Inc. 3.8
Peregrine Investments Holdings Ltd. 3.7
TOP INDUSTRIES AS OF FEBRUARY 29, 1996
Security & Commodity
Brokers 57.9%
Security Brokers & Dealers 9.3%
Financial Services 7.0%
Investment Managers 5.2%
Property-Casualty
& Reinsurance 4.2%
All Others 16.4% *
Row: 1, Col: 1, Value: 16.4
Row: 1, Col: 2, Value: 4.2
Row: 1, Col: 3, Value: 5.2
Row: 1, Col: 4, Value: 7.0
Row: 1, Col: 5, Value: 9.300000000000001
Row: 1, Col: 6, Value: 57.9
* INCLUDES SHORT-TERM INVESTMENTS
BROKERAGE AND INVESTMENT MANAGEMENT PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Louis Salemy,
Portfolio Manager of
Fidelity Select Brokerage and Investment
Management Portfolio
Note to shareholders: On December 28, 1995, Louis Salemy replaced Jeff
Feinberg as portfolio manager of the fund.
Q. HOW DID THE FUND PERFORM, LOUIS?
A. For the 12-month period ended February, 29, 1996, the fund returned
29.85%. For the same period, the S&P 500 Index returned 34.70%.
Q. WHY DID THE FUND UNDERPERFORM THE MARKET?
A. Brokerage stocks are influenced by investors' outlook for the financial
markets and current interest rate trends. For the last month of the period,
many of the fund's top holdings - such as Dean Witter Discover and The
Travelers - were down or unchanged in a very volatile February. During the
last two months of the period, we saw rising interest rates. Higher
interest rates, of course, can have a corrosive effect on corporate profits
and thus hurt stock price performance. Additionally, incremental changes in
interest rates can have a great effect on the performance of brokerage
stocks because higher interest rates reduce underwriting activity, a major
source of brokerage income.
Q. WHAT'S BEEN THE STORY WITH BROKERAGE STOCKS FOR THE MAJORITY OF THE YEAR
THEN?
A. Nineteen ninety-five was a tremendous year for most brokerage firms, and
certainly for the major wire houses like Merrill Lynch. Securities firms
took in $6.58 billion in disclosed underwriting fees in 1995, which was
more than an 18% gain from 1994. With falling interest rates and thriving
financial markets, companies sought to raise capital and the number of
common stock offerings grew throughout the year. Most notably, initial
public offerings of technology companies became a major part of the
underwriting business. Lower interest rates also were important for bond
financings, as bond deals made up about a third of underwriting fees.
Q. WHAT OTHER FACTORS WERE KEY TO THE PERFORMANCE OF BROKERAGE STOCKS?
A. Trading volume is very important to all securities firms, but especially
to the discount and deep-discount brokers - like Quick & Reilly - whose
revenues depend more on the number of trades they execute than anything
else. With such a strong market, trading volume naturally rises. In fact,
the Nasdaq Stock Market attained a record average daily volume of 400
million shares.
Q. HOW DOES THE SEC'S LIMIT ON THE AMOUNT OF OUTSTANDING EQUITY THE FUND
MAY HOLD IN ANY ONE SECURITIES FIRM AFFECT THE WAY YOU MANAGE IT?
A. The SEC limits individual holdings to 5% for each company. Therefore,
the fund has to own almost every company within its objective in order to
be close to being fully invested.
Q. WHAT HAVE YOU TRIED TO DO SINCE TAKING OVER THE FUND?
A. In general, I try to own companies that have the potential to grow
earnings and that are trading at reasonable prices. This becomes more
difficult, however, as the valuations of a lot of these firms become very
high.
Q. WHAT'S YOUR OUTLOOK?
A. As I stated above, low interest rates and strong financial markets are
very important to the performance of brokerage stocks. Given the strong
gains in the markets last year, I am maintaining a cautious stance on the
brokerage area until a clear direction emerges in the markets.
FUND FACTS
START DATE: July 29, 1985
TRADING SYMBOL: FSLBX
SIZE: as of February 29, 1996, more than
$38 million
MANAGER: Louis Salemy, since December
1995; manager, Fidelity Select Financial
Services Portfolio, since 1994; joined Fidelity
in 1992
(checkmark)
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
BROKERAGE AND INVESTMENT MANAGEMENT PORTFOLIO
INVESTMENTS FEBRUARY 29, 1996
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 87.4%
SHARES VALUE (NOTE 1)
CLOSED END INVESTMENT COMPANY - 1.0%
REGISTERED INVESTMENT COMPANIES - 1.0%
Liberty Financial Companies, Inc. 12,000 $ 378,000
CREDIT & OTHER FINANCE - 8.4%
FINANCIAL SERVICES - 7.0%
Dean Witter Discover & Co. 35,000 1,881,245
Investors Financial Services Corp. (a) 6,297 140,108
Investors Financial Services Corp.
Class A (a) 1,210 26,923
Perpetual PLC 20,000 666,137
2,714,413
MANAGEMENT & INVESTMENT OFFICES - 1.4%
Trimark Financial Corp. 16,600 545,116
TOTAL CREDIT & OTHER FINANCE 3,259,529
INSURANCE - 4.2%
PROPERTY-CASUALTY & REINSURANCE - 4.2%
Travelers, Inc. (The) 24,000 1,605,000
SECURITIES INDUSTRY - 73.8%
INVESTMENT ADVICE - 1.4%
Mutual Fund Co. Ltd. (For. Reg.) 27,600 525,506
INVESTMENT MANAGERS - 5.2%
Eaton Vance Corp. 22,500 759,375
Franklin Resources, Inc. 8,900 512,863
Price (T. Rowe) Associates, Inc. 14,000 752,500
2,024,738
SECURITY & COMMODITY BROKERS - 57.9%
Advest Group, Inc. (The) (a) 169,100 1,585,313
Alex. Brown, Inc. 28,500 1,417,875
BHC Financial, Inc. 22,000 385,000
Bear Stearns Companies, Inc. 77,460 1,878,405
Edwards (A.G.), Inc. 52,000 1,261,000
Fahnestock Viner Holdings, Inc. Class A 77,600 814,026
First Marathon, Inc. Class A (non-vtg.) 33,100 341,181
Jefferies Group, Inc. 25,900 1,476,300
Legg Mason, Inc. 51,700 1,557,463
McDonald & Co. Investments, Inc. 34,200 662,625
Merrill Lynch & Co., Inc. 25,500 1,469,438
Morgan Keegan, Inc. 91,950 1,126,388
Morgan Stanley Group, Inc. 30,000 1,406,250
Peregrine Investments Holdings Ltd. 843,000 1,439,255
Piper Jaffray, Inc. 32,600 464,550
Quick & Reilly Group, Inc. (The) 54,375 1,427,344
Raymond James Financial, Inc. 67,900 1,502,288
Schwab (Charles) Corp. 10,400 265,200
Southwest Securities Group, Inc. 60,000 667,500
Waterhouse Investor Services, Inc. 48,500 1,194,313
22,341,714
SECURITY BROKERS & DEALERS - 9.3%
Inter-Regional Financial Group, Inc. 36,250 792,969
Lehman Brothers Holdings, Inc. 65,200 1,613,700
PaineWebber Group, Inc. 59,700 1,186,538
3,593,207
TOTAL SECURITIES INDUSTRY 28,485,165
TOTAL COMMON STOCKS
(Cost $30,212,507) 33,727,694
REPURCHASE AGREEMENTS - 12.6%
MATURITY VALUE
AMOUNT (NOTE 1)
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 5.41% dated
2/29/96 due 3/1/96 $ 4,842,728 $ 4,842,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $35,054,507) $ 38,569,694
LEGEND
1. Non-income producing
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $50,733,421 and $50,431,903, respectively (see Note 3 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $18,355 for the period (see
Note 4 of Notes to Financial Statements).
The maximum loan and the average daily loan balances during the periods for
which loans were outstanding amounted to $3,294,000 and $2,502,800,
respectively. The weighted average interest rate paid was 6.2% (see Note 5
of Notes to Financial Statements).
Distribution of investments by country of issue, as a percentage of total
value of investment in securities, is as follows:
United States 88.8%
Canada 4.4
Hong Kong 3.7
United Kingdom 1.7
Thailand 1.4
TOTAL 100.0%
INCOME TAX INFORMATION
At February 29, 1996, the aggregate cost of investment securities for
income tax purposes was $35,241,254. Net unrealized appreciation aggregated
$3,328,440, of which $3,966,749 related to appreciated investment
securities and $638,309 related to depreciated investment securities.
The fund hereby designates approximately $319,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 19% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate shareholders
(unaudited).
The fund will notify shareholders in January 1997 of the applicable
percentage for use in preparing 1996 income tax returns.
BROKERAGE AND INVESTMENT MANAGEMENT PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 29, 1996
ASSETS
Investment in $ 38,569,694
securities, at
value
(including
repurchase
agreements
of
$4,842,000)
(cost
$35,054,507)
- - See
accompanyin
g schedule
Cash 417
Receivable for 294,019
fund shares
sold
Dividends 33,103
receivable
Redemption 96
fees
receivable
Other 238
receivables
TOTAL ASSETS 38,897,567
LIABILITIES
Payable for $ 454,180
fund shares
redeemed
Accrued 17,854
management
fee
Other payables 43,861
and
accrued
expenses
TOTAL 515,895
LIABILITIES
NET ASSETS $ 38,381,672
Net Assets
consist of:
Paid in capital $ 32,804,785
Undistributed 115,192
net
investment
income
Accumulated 1,946,508
undistributed
net realized
gain (loss) on
investments
and foreign
currency
transactions
Net unrealized 3,515,187
appreciation
(depreciation
) on
investments
NET ASSETS, for $ 38,381,672
2,076,265
shares
outstanding
NET ASSET $18.49
VALUE and
redemption
price per
share
($38,381,672
(divided by) 2,076,265
shares)
Maximum $19.06
offering price
per share
(100/97.00 of
$18.49)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 29, 1996
INVESTMENT $ 554,887
INCOME
Dividends
Interest 148,908
TOTAL 703,795
INCOME
EXPENSES
Management $ 204,478
fee
Transfer agent 340,997
Fees
Redemption (43,162
fees )
Accounting 47,818
fees and
expenses
Non-interested 236
trustees'
compensatio
n
Custodian fees 22,200
and
expenses
Registration 33,446
fees
Audit 17,208
Legal 247
Interest 2,146
Miscellaneous 375
Total 625,989
expenses
before
reductions
Expense (88,914 537,075
reductions )
NET 166,720
INVESTMENT
INCOME
REALIZED AND
UNREALIZED
GAIN (LOSS)
Net realized
gain (loss)
on:
Investment 5,391,467
securities
Foreign (584 5,390,883
currency )
transactions
Change in net
unrealized
appreciation
(depreciation
) on:
Investment 2,887,657
securities
Assets and (7 2,887,650
liabilities in )
foreign
currencies
NET GAIN (LOSS) 8,278,533
NET INCREASE $ 8,445,253
(DECREASE)
IN NET ASSETS
RESULTING
FROM
OPERATIONS
OTHER $ 222,268
INFORMATION
Sales
charges paid
to FDC
Deferred $ 5,017
sales
charges
withheld
by FDC
Exchange $ 30,630
fees withheld
by FSC
Expense $ 6,301
reductions
Directed
brokerage
arrangement
s
Custodian 2,398
interest
credits
Transfer 241
agent
interest
credits
FMR 79,974
reimburseme
nt
$ 88,914
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
FEBRUARY 29, FEBRUARY 28,
1996 1995
Operations $ 166,720 $ (59,459
Net )
investment
income (loss)
Net realized 5,390,883 144,552
gain (loss)
Change in 2,887,650 (6,407,629
net )
unrealized
appreciation
(depreciation
)
NET INCREASE 8,445,253 (6,322,536
(DECREASE) )
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
Distributions to (62,341 -
shareholders )
From net
investment
income
From net (1,755,263 -
realized gain )
In excess of (564,639 -
net realized )
gain
TOTAL (2,382,243 -
DISTRIBUTION )
S
Share 73,164,616 41,178,684
transactions
Net proceeds
from sales of
shares
Reinvestmen 2,335,190 -
t of
distributions
Cost of (70,682,177 (67,399,063
shares ) )
redeemed
Paid in 155,181 78,929
capital
portion of
redemption
fees
NET INCREASE 4,972,810 (26,141,450
(DECREASE) )
IN NET
ASSETS
RESULTING
FROM SHARE
TRANSACTIO
NS
TOTAL 11,035,820 (32,463,986
INCREASE )
(DECREASE)
IN NET ASSETS
NET ASSETS
Beginning of 27,345,852 59,809,838
period
End of period $ 38,381,672 $ 27,345,852
(including
undistribute
d net
investment
income of
$115,192
and $0,
respectivel
y)
OTHER
INFORMATION
Shares
Sold 4,209,639 2,575,103
Issued in 138,315 -
reinvestment
of
distributions
Redeemed (4,034,436 (4,181,828
) )
Net increase 313,518 (1,606,725
(decrease) )
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEAR ENDED YEARS ENDED FEBRUARY 28, TEN MONTHS YEAR ENDED
FEBRUARY 29, ENDED APRIL 30,
FEBRUARY 28,
SELECTED PER-SHARE DATA D 1996 1995 1994 1993 1992
</TABLE>
Net asset $ 15.51 $ 17.75 $ 14.22 $ 11.48 $ 9.28
value,
beginning of
period
Income from
Investment
Operations
Net .09 (.03) (.02) - .02
investment
income (loss)
Net realized 4.29 (2.25) 4.95 2.65 1.96
and
unrealized
gain (loss)
Total from 4.38 (2.28) 4.93 2.65 1.98
investment
operations
Less (.04) - (.01) - (.01)
Distributions
From net
investment
income
From net (1.09) - (1.47) - -
realized gain
In excess of (.35) - - - -
net realized
gain
Total (1.48) - (1.48) - (.01)
distributions
Redemption .08 .04 .08 .09 .23
fees added to
paid in
capital
Net asset $ 18.49 $ 15.51 $ 17.75 $ 14.22 $ 11.48
value, end of
period
TOTAL 29.85% (12.62)% 35.87% 23.87% 23.84%
RETURN B, C
RATIOS AND
SUPPLEMENT
AL DATA
Net assets, $ 38,382 $ 27,346 $ 59,810 $ 24,687 $ 17,915
end of period
(000 omitted)
Ratio of 1.64% 2.54% 1.79% 2.21% 2.17%
expenses to F F A
average net
assets
Ratio of 1.61% 2.54% 1.77% 2.21% 2.17%
expenses to E E A
average net
assets after
expense
reductions
Ratio of net .50% (.20)% (.14)% .02% .16%
investment A
income (loss)
to average
net assets
Portfolio 166% 139% 295% 111% 254%
turnover rate A
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING
THE PERIODS SHOWN (SEE NOTE 7 OF NOTES TO FINANCIAL STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE
YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES
OUTSTANDING DURING THE PERIOD.
E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES WHO EITHER
PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES (SEE NOTE 7 OF NOTES TO FINANCIAL
STATEMENTS).
F DURING THE PERIOD, FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES, OR
EXPENSES WERE LIMITED IN ACCORDANCE WITH A STATE EXPENSE LIMITATION. WITHOUT THIS
REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD HAVE BEEN HIGHER.
</TABLE>
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 securities that have grown in value), but does not include certain
fees paid by shareholders upon exchange or redemption.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 29, 1996 YEAR YEARS YEARS
FINANCIAL SERVICES 39.05% 234.37% 237.77%
FINANCIAL SERVICES 34.88%
(INCL. 3% SALES CHARGE) 224.34% 227.64%
S&P 500 34.70% 101.14% 286.76%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one, five, or 10 years. You can compare
these figures to the performance of the S&P 500 - a common proxy for the
U.S. stock market. This benchmark includes reinvested dividends and capital
gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 29, 1996 YEAR YEARS YEARS
FINANCIAL SERVICES 39.05% 27.30% 12.94%
FINANCIAL SERVICES 34.88% 26.53%
(INCL. 3% SALES CHARGE) 12.60%
S&P 500 34.70% 14.99% 14.47%
AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and
show you what would have happened if the fund had performed at a constant
rate each year.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of growth in the long run
and volatility in the short run. Unlike the broader
market, however, some sectors may not have
a history of growth in the long run. And, as
with all stock funds, the share price and return
of
a fund that invests in a sector will vary. That
means if you sell your shares during a sector
downturn, you might lose money. But if you
can identify a sector that is about to
experience rapid growth you may have the
potential for above-average gains.
(checkmark)
$10,000 OVER 10 YEARS
19860228 9700.00 10000.00
19860331 10328.40 10558.00
19860430 10233.10 10438.69
19860531 10653.02 10994.03
19860630 10965.74 11179.83
19860731 10181.19 10554.88
19860831 10825.26 11338.05
19860930 9667.14 10400.39
19861031 9881.83 11000.50
19861130 9785.07 11267.81
19861231 9543.16 10980.48
19870131 10214.45 12459.55
19870228 10891.79 12951.70
19870331 10477.52 13326.01
19870430 9818.33 13207.41
19870531 9748.78 13322.31
19870630 10108.62 13995.09
19870731 10226.55 14704.64
19870831 10819.21 15253.12
19870930 10435.19 14919.08
19871031 8073.59 11705.51
19871130 7580.71 10740.97
19871231 7964.80 11558.36
19880131 8564.51 12044.97
19880229 8849.78 12606.27
19880331 8697.42 12216.73
19880430 8545.06 12352.34
19880531 8629.35 12459.80
19880630 9160.98 13031.71
19880731 9099.39 12982.19
19880831 9073.46 12540.79
19880930 9449.49 13075.03
19881031 9475.42 13438.52
19881130 9083.18 13246.35
19881231 8921.72 13478.16
19890131 9378.99 14464.76
19890228 9358.96 14104.59
19890331 10043.20 14433.22
19890430 10226.77 15182.31
19890531 10867.61 15797.19
19890630 10791.89 15707.15
19890731 11655.64 17125.50
19890831 11985.01 17461.16
19890930 12233.72 17389.57
19891031 11067.48 16986.13
19891130 10916.24 17332.65
19891231 10647.40 17748.63
19900131 9748.53 16557.70
19900228 10101.29 16771.29
19900331 9945.26 17215.73
19900430 9592.49 16785.34
19900531 10437.10 18421.91
19900630 10145.39 18296.64
19900731 9494.13 18238.09
19900831 8357.82 16589.37
19900930 7112.96 15781.47
19901031 6492.23 15713.61
19901130 7408.07 16728.71
19901231 8056.90 17195.44
19910131 8789.03 17945.16
19910228 9798.74 19228.24
19910331 10267.17 19693.56
19910430 10600.27 19740.82
19910531 11412.21 20593.63
19910630 10485.77 19650.44
19910731 11315.05 20566.15
19910831 12064.53 21053.57
19910930 11991.66 20701.97
19911031 12255.37 20979.38
19911130 11346.28 20133.91
19911231 13022.24 22437.23
19920131 13670.90 22019.90
19920229 14652.65 22306.16
19920331 14323.06 21871.19
19920430 14873.54 22514.20
19920531 15511.68 22624.52
19920630 15868.60 22287.41
19920731 16322.40 23198.97
19920831 15386.22 22723.39
19920930 15865.03 22991.53
19921031 16493.91 23072.00
19921130 17733.82 23858.75
19921231 18598.37 24152.21
19930131 19771.48 24355.09
19930228 20297.10 24686.32
19930331 21359.75 25207.20
19930430 20337.20 24597.19
19930531 20344.91 25256.39
19930630 21104.42 25329.64
19930731 21671.17 25228.32
19930831 22345.86 26184.47
19930930 22862.48 25982.85
19931031 22249.48 26520.70
19931130 21258.64 26268.75
19931231 21863.20 26586.60
19940131 23347.38 27490.55
19940228 22499.91 26745.55
19940331 21472.39 25579.45
19940430 22287.78 25906.86
19940531 23239.12 26331.74
19940630 22690.44 25686.61
19940731 23482.48 26529.13
19940831 24305.50 27616.82
19940930 22473.63 26940.21
19941031 22354.16 27546.37
19941130 20938.22 26543.13
19941231 21065.74 26936.76
19950131 22155.18 27635.23
19950228 23562.17 28712.18
19950331 23977.43 29559.47
19950430 24729.78 30430.00
19950531 26102.57 31646.29
19950630 26224.70 32381.43
19950731 27104.07 33455.20
19950831 28159.31 33539.17
19950930 29766.60 34954.52
19951031 29004.48 34829.74
19951130 30958.63 36358.76
19951231 31038.31 37059.03
19960131 32489.49 38320.52
19960229 32763.77 38675.75
Let's say you invested $10,000 in Fidelity Select Financial Services
Portfolio on February 28, 1986, and paid a 3% sales charge. By February 29,
1996, your investment would have grown to $32,764 - a 227.64% increase.
That compares to $10,000 invested in the S&P 500, which would have grown to
$38,676 over the same period - a 286.76% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 29, 1996
% OF FUND'S
INVESTMENTS
American Express Co. 5.9
Fleet Financial Group, Inc. 5.6
Banc One Corp. 5.5
Beneficial Corp. 5.4
Household International, Inc. 5.4
Federal National Mortgage Association 5.3
Allstate Corp. 5.3
Citicorp 5.1
Bank of New York Co., Inc. 5.0
Federal Home Loan Mortgage Corporation 3.7
TOP INDUSTRIES AS OF FEBRUARY 29, 1996
National Commercial Banks 32.1%
Property-Casualty &
Reinsurance 16.5%
Federal & Federally Sponsored
Credit Agencies 11.4%
Personal Credit Institutions 10.7%
Financial Services 6.9%
All Others 22.4% *
Row: 1, Col: 1, Value: 22.4
Row: 1, Col: 2, Value: 6.9
Row: 1, Col: 3, Value: 10.7
Row: 1, Col: 4, Value: 11.4
Row: 1, Col: 5, Value: 16.5
Row: 1, Col: 6, Value: 32.1
* INCLUDES SHORT-TERM INVESTMENTS
FINANCIAL SERVICES PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Louis Salemy,
Portfolio Manager of
Fidelity Select Financial
Services Portfolio
Q. HOW DID THE FUND PERFORM, LOUIS?
A. For the 12-month period ended February 29, 1996, the fund had a total
return of 39.05%. For the same period, the S&P 500 Index returned 34.70%.
Q. WHAT CONTRIBUTED TO THE PERFORMANCE OF FINANCIAL STOCKS AND THE FUND?
A. Financial services stocks outperformed the overall market on the heels
of roaring stock and bond markets in 1995. With interest rates coming down
and the market's resounding response, investors regarded financial services
as the place to be.
Q. HOW DID MONEY-CENTER BANKS HELP THE FUND?
A. The fund's position in money-center banks became very important during
the period as these stocks outperformed regional banks. Money-center banks
- - such as Citicorp - are historically more sensitive to changes in interest
rates because lower rates tend to spur activity in areas money centers
specialize in, such as foreign exchange trading and bond trading.
Therefore, as interest rates have trended downward, the money-center banks
have done well. Additionally, at the beginning of 1995, money-center bank
stocks were inexpensive relative to regionals so, following the strong
performance of financial stocks in 1995, they had a better rebound than
regionals.
Q. LAST YEAR WAS A BANNER YEAR FOR MERGERS AND CONSOLIDATION IN THE BANKING
INDUSTRY. HOW DO THESE CHANGES AFFECT THE WAY YOU EVALUATE THE MARKET?
A. Nineteen ninety-five was a record in terms of the dollar value of bank
deals done in one year. As a portfolio manager, it is my task to sort
through these situations and figure out which mergers make sense and which
don't.
Q. WHAT ELSE HAS BEEN THE STORY WITH MANY OF THE FINANCIAL SERVICE
COMPANIES YOU OWN?
A. It takes more than just lower interest rates to make some of these
companies catch the eye of Wall Street. Many of the fund's largest holdings
have controlled costs effectively and sought to grow earnings through
consolidation and balance-sheet restructuring.
Q. SEVERAL OF YOUR TOP HOLDINGS ARE DEPENDENT ON CREDIT CARD BUSINESSES.
DOES THE RAPID RISE IN CONSUMER DEBT CONCERN YOU?
A. Rising consumer debt often brings a rise in delinquent accounts.
However, I believe the fund owns companies that have the ability to adapt
to the idiosyncrasies of the credit card market and manage through credit
cycles. For example, American Express, the fund's top holding at the end of
the period, has been able to achieve earnings growth with conservative
financial management.
Q. WHAT HAPPENED IN THE INSURANCE AREA DURING THE PERIOD?
A. I basically looked for companies that had generated consistent returns
and that were trading at inexpensive levels. Allstate, for example, met
this criteria.
Q. WERE THERE ANY DISAPPOINTMENTS?
A. Not really. Financial stocks performed beyond investors' expectations.
Q. WHAT'S YOUR OUTLOOK?
A. It's important for investors to recognize that 1995 was a phenomenal
year for this sector, as well as the market in general, and it may be
difficult for financial stocks to duplicate that performance in 1996.
Additionally, should the fundamentals of many of these companies weaken,
their high valuations could make for a difficult backdrop in the financial
services area. That said, I will continue to try to uncover companies that
have the potential to grow earnings in 1996 relative to 1995.
FUND FACTS
START DATE: December 10, 1981
TRADING SYMBOL: FIDSX
SIZE: as of February 29, 1996, more than
$270 million
MANAGER: Louis Salemy, since 1994;
manager, Fidelity Select Brokerage and
Investment Management Portfolio, since
December 1995; joined Fidelity in 1992
(checkmark)
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
FINANCIAL SERVICES PORTFOLIO
INVESTMENTS FEBRUARY 29, 1996
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 87.6%
SHARES VALUE (NOTE 1)
BANKS - 33.5%
NATIONAL COMMERCIAL BANKS - 32.1%
Banc One Corp. 417,340 $ 14,867,738
Bank of New York Co., Inc. 260,734 13,525,576
Citicorp 175,000 13,650,000
Comerica, Inc. 84,445 3,282,799
First Bank System, Inc. 167,400 9,646,425
First Interstate Bancorp 25,000 4,084,375
First Union Corp. 1 61
Fleet Financial Group, Inc. 369,367 15,190,218
Mercantile Bancorporation, Inc. 22,050 992,250
Morgan (J.P.) & Co., Inc. 81,500 6,672,813
Republic New York Corp. 3,000 179,625
Zions Bancorporation 58,000 4,277,500
86,369,380
STATE BANKS FEDERAL RESERVE - 1.4%
Chemical Banking Corp. 48,200 3,452,325
Fifth Third Bancorp 6,600 338,250
3,790,575
TOTAL BANKS 90,159,955
COMPUTER SERVICES & SOFTWARE - 1.0%
DATA PROCESSING - 1.0%
First Data Corp. 39,647 2,745,555
CREDIT & OTHER FINANCE - 17.6%
FINANCIAL SERVICES - 6.9%
American Express Co. 348,000 16,008,000
Equitable Companies, Inc. 100,000 2,525,000
18,533,000
PERSONAL CREDIT INSTITUTIONS - 10.7%
Beneficial Corp. 278,300 14,471,600
Household International, Inc. 215,000 14,458,750
28,930,350
TOTAL CREDIT & OTHER FINANCE 47,463,350
FEDERAL SPONSORED CREDIT - 11.4%
FEDERAL & FEDERALLY SPONSORED CREDIT AGENCIES - 11.4%
Federal Home Loan Mortgage
Corporation 122,400 10,098,000
Federal National Mortgage
Association 452,400 14,307,150
Student Loan Marketing Association 76,000 6,279,500
30,684,650
INSURANCE - 22.8%
INSURANCE BROKERS & SERVICES - 3.7%
Alexander & Alexander Services, Inc. 250,000 4,656,250
ITT Hartford Group, Inc. 100,000 5,150,000
9,806,250
LIFE INSURANCE - 2.6%
Providian Corp. 96,800 4,477,000
Torchmark Corp. 55,000 2,550,625
Transport Holdings, Inc. Class A (a) 248 10,974
7,038,599
PROPERTY-CASUALTY & REINSURANCE - 16.5%
Allstate Corp. 332,900 14,273,088
American International Group, Inc. 75,000 7,246,875
Chubb Corp. (The) 103,100 10,013,588
SHARES VALUE (NOTE 1)
General Re Corp. 50,000 $ 7,193,750
NAC Re Corp. 75,000 2,521,875
Travelers, Inc. (The) 48,033 3,212,207
44,461,383
TOTAL INSURANCE 61,306,232
SAVINGS & LOANS - 1.3%
SAVINGS BANKS & SAVINGS & LOANS - 0.6%
Standard Federal Bancorporation, Inc. 39,300 1,626,035
SAVINGS BANKS, FEDERAL CHARTER - 0.7%
Ahmanson (H.F.) & Co. 82,900 1,885,975
TOTAL SAVINGS & LOANS 3,512,010
TOTAL COMMON STOCKS
(Cost $194,484,917) 235,871,752
REPURCHASE AGREEMENTS - 12.4%
MATURITY VALUE
AMOUNT (NOTE 1)
Investments in repurchase agreements
(U.S. Treasury obligations) in a joint
trading account at 5.41%, dated
2/29/96 due 3/1/96 $ 33,428,023 33,423,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $227,907,917) $ 269,294,752
LEGEND
1. Non-income producing
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $276,862,931 and $213,334,538, respectively (see Note 3 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $115,231 for the period
(see Note 4 of Notes to Financial Statements).
The maximum loan and the average daily loan balances during the periods for
which loans were outstanding amounted to $13,651,000 and $7,626,000,
respectively. The weighted average interest rate paid was 6.3% (see Note 5
of Notes to Financial Statements).
INCOME TAX INFORMATION
At February 29, 1996, the aggregate cost of investment securities for
income tax purposes was $228,650,023. Net unrealized appreciation
aggregated $40,644,729, of which $42,074,627 related to appreciated
investment securities and $1,429,898 related to depreciated investment
securities.
The fund hereby designates approximately $3,544,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 90% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate shareholders
(unaudited).
The fund will notify shareholders in January 1997 of the applicable
percentage for use in preparing 1996 income tax returns.
FINANCIAL SERVICES PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 29, 1996
ASSETS
Investment in $ 269,294,752
securities, at
value
(including
repurchase
agreements
of
$33,423,000)
(cost
$227,907,917
) - See
accompanyin
g schedule
Cash 739
Receivable for 1,902,874
fund shares
sold
Dividends 560,978
receivable
Redemption 600
fees
receivable
Other 4,825
receivables
TOTAL ASSETS 271,764,768
LIABILITIES
Payable for $ 1,001,455
fund shares
redeemed
Accrued 134,536
management
fee
Other payables 162,394
and
accrued
expenses
TOTAL 1,298,385
LIABILITIES
NET ASSETS $ 270,466,383
Net Assets
consist of:
Paid in capital $ 217,102,061
Undistributed 1,976,083
net
investment
income
Accumulated 10,001,404
undistributed
net realized
gain (loss) on
investments
and foreign
currency
transactions
Net unrealized 41,386,835
appreciation
(depreciation
) on
investments
NET ASSETS, for $ 270,466,383
4,116,814
shares
outstanding
NET ASSET $65.70
VALUE and
redemption
price per
share
($270,466,38
3 (divided by)
4,116,814
shares)
Maximum $67.73
offering price
per
share
(100/97.00 of
$65.70)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 29, 1996
INVESTMENT $ 4,695,879
INCOME
Dividends
Interest 1,561,334
(including
income on
securities
loaned of
$2,383)
TOTAL 6,257,213
INCOME
EXPENSES
Management $ 1,203,738
fee
Transfer agent 1,404,050
Fees
Redemption (155,333
fees )
Accounting and 197,289
security
lending fees
Non-interested 980
trustees'
compensatio
n
Custodian fees 15,123
and
expenses
Registration 97,601
fees
Audit 21,756
Legal 800
Interest 2,660
Miscellaneous 1,634
Total 2,790,298
expenses
before
reductions
Expense (21,665 2,768,633
reductions )
NET 3,488,580
INVESTMENT
INCOME
REALIZED AND
UNREALIZED
GAIN (LOSS)
Net realized
gain (loss)
on:
Investment 13,966,600
securities
Foreign (52 13,966,548
currency )
transactions
Change in net 35,177,894
unrealized
appreciation
(depreciation
)
on
investment
securities
NET GAIN (LOSS) 49,144,442
NET INCREASE $ 52,633,022
(DECREASE)
IN NET ASSETS
RESULTING
FROM
OPERATIONS
OTHER $ 1,419,292
INFORMATION
Sales
charges paid
to FDC
Deferred $ 10,479
sales
charges
withheld
by FDC
Exchange $ 114,300
fees withheld
by FSC
Expense $ 19,386
reductions
Directed
brokerage
arrangement
s
Custodian 526
interest
credits
Transfer 1,753
agent
interest
credits
$ 21,665
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
FEBRUARY 29, FEBRUARY 28,
1996 1995
Operations $ 3,488,580 $ 1,646,581
Net
investment
income
Net realized 13,966,548 9,348,163
gain (loss)
Change in 35,177,894 (5,791,837
net )
unrealized
appreciation
(depreciation
)
NET INCREASE 52,633,022 5,202,907
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
Distributions to (1,512,445 (1,391,905
shareholders ) )
From net
investment
income
From net (3,719,914 (6,998,318
realized gain ) )
TOTAL (5,232,359 (8,390,223
DISTRIBUTION ) )
S
Share 434,251,303 137,344,321
transactions
Net proceeds
from sales of
shares
Reinvestmen 5,143,919 8,148,541
t of
distributions
Cost of (369,962,899 (105,579,333
shares ) )
redeemed
Paid in 544,495 167,317
capital
portion of
redemption
fees
NET INCREASE 69,976,818 40,080,846
(DECREASE)
IN NET
ASSETS
RESULTING
FROM SHARE
TRANSACTIO
NS
TOTAL 117,377,481 36,893,530
INCREASE
(DECREASE)
IN NET ASSETS
NET ASSETS
Beginning of 153,088,902 116,195,372
period
End of period $ 270,466,383 $ 153,088,902
(including
undistribute
d net
investment
income of
$1,976,083
and
$304,699,
respectivel
y)
OTHER
INFORMATION
Shares
Sold 7,271,619 2,833,201
Issued in 83,493 192,390
reinvestment
of
distributions
Redeemed (6,412,630 (2,118,831
) )
Net increase 942,482 906,760
(decrease)
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEAR ENDED YEARS ENDED FEBRUARY 28, TEN MONTHS YEAR ENDED
FEBRUARY 29, ENDED APRIL 30,
FEBRUARY 28,
SELECTED PER-SHARE DATA D 1996 1995 1994 1993 1992
</TABLE>
Net asset $ 48.23 $ 51.24 $ 53.29 $ 42.42 $ 30.55
value,
beginning of
period
Income from
Investment
Operations
Net 1.03 .76 .29 .33 .54
investment
income
Net realized 17.56 .87 5.02 14.30 11.35
and
unrealized
gain (loss)
Total from 18.59 1.63 5.31 14.63 11.89
investment
operations
Less (.37) (.79) (.20) (.51) (.35)
Distributions
From net
investment
income
From net (.91) (3.93) (7.32) (3.38) -
realized gain
Total (1.28) (4.72) (7.52) (3.89) (.35)
distributions
Redemption .16 .08 .16 .13 .33
fees added to
paid in
capital
Net asset $ 65.70 $ 48.23 $ 51.24 $ 53.29 $ 42.42
value, end of
period
TOTAL 39.05% 4.72% 10.85% 36.46% 40.31%
RETURN B, C
RATIOS AND
SUPPLEMENT
AL DATA
Net assets, $ 270,466 $ 153,089 $ 116,195 $ 214,612 $ 91,700
end of period
(000 omitted)
Ratio of 1.42% 1.56% 1.64% 1.54% 1.85%
expenses to A
average net
assets
Ratio of 1.41% 1.54% 1.63% 1.54% 1.85%
expenses to E E E A
average net
assets after
expense
reductions
Ratio of net 1.78% 1.52% .53% .86% 1.49%
investment A
income to
average net
assets
Portfolio 125% 107% 93% 100% 164%
turnover rate A
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN (SEE NOTE 7 OF NOTES TO FINANCIAL STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN
ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES
OUTSTANDING DURING THE PERIOD.
E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES WHO EITHER
PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES (SEE NOTE 7 OF NOTES TO FINANCIAL
STATEMENTS).
</TABLE>
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 securities that have grown in value), but does not include certain
fees paid by shareholders upon exchange or redemption. If Fidelity had not
reimbursed certain expenses, the past 10 year total returns would have been
lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 29, 1996 YEAR YEARS YEARS
HOME FINANCE 43.24% 338.28% 439.46%
HOME FINANCE
(INCL. 3% SALES CHARGE) 38.94% 325.13% 423.28%
S&P 500 34.70% 101.14% 286.76%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one, five, or 10 years. You can compare
these figures to the performance of the S&P 500 - a common proxy for the
U.S. stock market. This benchmark includes reinvested dividends and capital
gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 29, 1996 YEAR YEARS YEARS
HOME FINANCE 43.24% 34.39% 18.36%
HOME FINANCE
(INCL. 3% SALES CHARGE) 38.94% 33.57% 18.00%
S&P 500 34.70% 14.99% 14.47%
AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and
show you what would have happened if the fund had performed at a constant
rate each year.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of growth in the long run
and volatility in the short run. Unlike the broader
market, however, some sectors may not have
a history of growth in the long run. And, as
with all stock funds, the share price and return
of
a fund that invests in a sector will vary. That
means if you sell your shares during a sector
downturn, you might lose money. But if you
can identify a sector that is about to
experience rapid growth you may have the
potential for above-average gains.
(checkmark)
$10,000 OVER 10 YEARS
19860228 9700.00 10000.00
19860331 9905.91 10558.00
19860430 9795.60 10438.69
19860531 9905.91 10994.03
19860630 10714.86 11179.83
19860731 10052.99 10554.88
19860831 10163.31 11338.05
19860930 8949.89 10400.39
19861031 9280.82 11000.50
19861130 9449.96 11267.81
19861231 9472.02 10980.48
19870131 10935.48 12459.55
19870228 11965.05 12951.70
19870331 11251.71 13326.01
19870430 10619.26 13207.41
19870531 10251.55 13322.31
19870630 10442.76 13995.09
19870731 10405.99 14704.64
19870831 11347.31 15253.12
19870930 10619.26 14919.08
19871031 8552.77 11705.51
19871130 7854.13 10740.97
19871231 8719.34 11558.36
19880131 9770.92 12044.97
19880229 9497.07 12606.27
19880331 9234.17 12216.73
19880430 9387.53 12352.34
19880531 9376.58 12459.80
19880630 9968.09 13031.71
19880731 10143.35 12982.19
19880831 9891.41 12540.79
19880930 10395.29 13075.03
19881031 10691.05 13438.52
19881130 10154.31 13246.35
19881231 10332.06 13478.16
19890131 11198.62 14464.76
19890228 11443.04 14104.59
19890331 11498.58 14433.22
19890430 12087.40 15182.31
19890531 12609.56 15797.19
19890630 12863.37 15707.15
19890731 13311.57 17125.50
19890831 14129.54 17461.16
19890930 14656.17 17389.57
19891031 12829.75 16986.13
19891130 12415.17 17332.65
19891231 11295.67 17748.63
19900131 10359.24 16557.70
19900228 10745.51 16771.29
19900331 10768.92 17215.73
19900430 10511.41 16785.34
19900531 11506.36 18421.91
19900630 11389.31 18296.64
19900731 10406.06 18238.09
19900831 9352.58 16589.37
19900930 8544.91 15781.47
19901031 7901.11 15713.61
19901130 8755.60 16728.71
19901231 9591.94 17195.44
19910131 10509.43 17945.16
19910228 11939.28 19228.24
19910331 12487.39 19693.56
19910430 12916.35 19740.82
19910531 13452.54 20593.63
19910630 12701.87 19650.44
19910731 14060.23 20566.15
19910831 14596.42 21053.57
19910930 14477.27 20701.97
19911031 14227.05 20979.38
19911130 13571.70 20133.91
19911231 15788.87 22437.23
19920131 17344.84 22019.90
19920229 18478.65 22306.16
19920331 18165.04 21871.19
19920430 18551.02 22514.20
19920531 20384.41 22624.52
19920630 20409.94 22287.41
19920731 21413.51 23198.97
19920831 20252.76 22723.39
19920930 20579.22 22991.53
19921031 20966.14 23072.00
19921130 23118.37 23858.75
19921231 24923.16 24152.21
19930131 26711.26 24355.09
19930228 27164.41 24686.32
19930331 28131.94 25207.20
19930430 26608.19 24597.19
19930531 26152.82 25256.39
19930630 26805.10 25329.64
19930731 28528.11 25228.32
19930831 30029.59 26184.47
19930930 31949.51 25982.85
19931031 32195.66 26520.70
19931130 30755.72 26268.75
19931231 31725.93 26586.60
19940131 33114.92 27490.55
19940228 32491.82 26745.55
19940331 31881.71 25579.45
19940430 33114.35 25906.86
19940531 35156.77 26331.74
19940630 35742.26 25686.61
19940731 36531.99 26529.13
19940831 37716.59 27616.82
19940930 36423.06 26940.21
19941031 34244.49 27546.37
19941130 32474.39 26543.13
19941231 32576.53 26936.76
19950131 34012.16 27635.23
19950228 36532.15 28712.18
19950331 36471.06 29559.47
19950430 38380.14 30430.00
19950531 40655.76 31646.29
19950630 41083.39 32381.43
19950731 42732.84 33455.20
19950831 46673.18 33539.17
19950930 47650.63 34954.52
19951031 46780.09 34829.74
19951130 49361.16 36358.76
19951231 50002.17 37059.03
19960131 51369.30 38320.52
19960229 52327.85 38675.75
Let's say you invested $10,000 in Fidelity Select Home Finance Portfolio on
February 28, 1986, and paid a 3% sales charge. By February 29, 1996, your
investment would have grown to $52,328 - a 423.28% increase. That compares
to $10,000 invested in the S&P 500, which would have grown to $38,676 over
the same period - a 286.76% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 29, 1996
% OF FUND'S
INVESTMENTS
Standard Federal Bancorp. Inc. 4.0
Charter One Financial Corp. 3.9
Bank of New York Co., Inc. 3.5
Astoria Financial Corp. 3.2
Federal National Mortgage Association 3.2
NationsBank Corp. 2.8
BankAmerica Corp. 2.7
First Chicago NBD Corp. 2.5
North Side Savings Bank 2.3
Greenpoint Financial Corp. 2.3
TOP INDUSTRIES AS OF FEBRUARY 29, 1996
National Commercial Banks 29.9%
Savings Banks &
Savings & Loans 24.3%
Savings Banks,
Federal Charter 11.0%
Federal & Federally Sponsored
Credit Agencies 5.3%
Financial Services 3.7%
All Others 25.8% *
Row: 1, Col: 1, Value: 25.8
Row: 1, Col: 2, Value: 3.7
Row: 1, Col: 3, Value: 5.3
Row: 1, Col: 4, Value: 11.0
Row: 1, Col: 5, Value: 24.3
Row: 1, Col: 6, Value: 29.9
* INCLUDES SHORT-TERM INVESTMENTS
HOME FINANCE PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
David Ellison,
Portfolio Manager
of Fidelity Select
Home Finance Portfolio
Q. DAVE, HOW HAS THE FUND PERFORMED?
A. It has done very well. For the 12 months ended February 29, 1996, the
fund had a total return of 43.24%. That topped the S&P 500 Index, which
returned 34.70% during the same 12-month period.
Q. WHAT HELPED THE FUND'S PERFORMANCE?
A. In late 1994 and early 1995, stocks underperformed because investors
were concerned about rising interest rates and deteriorating credit
quality. Those fears seemed to abate, causing a reassessment of company
prospects. The solid performance of these stocks began as interest rate and
credit fears were less material than expected, and continued as the
industry exceeded expectations with respect to both short- and long-term
earnings.
Q. HOW HAVE YOU STRUCTURED THE FUND?
A. The fund has changed noticeably since the summer of 1995. At that time,
I started to buy regional banks. I've typically run the fund looking for
the cheapest stocks. The savings and loans historically have been
attractive because they were cheaper than alternatives. Starting last year,
the thrifts became equally, if not more, expensive than the regional banks,
as many were perceived to be takeover targets. So I continued my method of
buying the cheapest stocks within the financial arena, but changing its mix
of investments to add more regional banks, large commercial banks -
including Bank of New York, NationsBank and BankAmerica - and specialty
mortgage finance companies. Historically, a large part of the fund also
included thrifts that were converting from mutual ownership to publicly
owned companies, because they were generally cheaper. That hasn't been the
case lately. New conversions have been as, if not more, expensive than some
of the regional banks, so I haven't added many new conversions to the fund.
Q. WHAT HAS THE INVESTING ENVIRONMENT BEEN LIKE FOR HOME FINANCE STOCKS?
A. The sectors that have done well during the period have been the regional
banks, the money centers and some of the mortgage insurers. Positive
performers included Standard Federal Bancorp. and Charter One Financial.
Regional banks' good performance was driven by the fact that earnings have
grown more than anticipated because credit didn't deteriorate as much as
expected. Companies that posted good performance were helped further by,
among other things, stock buy-backs and dividend increases. The performance
of the thrifts has been flat, to some extent because their valuations were
inflated.
Q. WHAT DO YOU LOOK FOR WHEN PICKING STOCKS?
A. I gravitate toward the cheapest group, looking for companies that try to
develop shareholder value - through acquisitions, buying back stock,
cutting costs or growing non-bank businesses - however short- or long-term
that might be. Further, I'd rather buy a stock after it becomes apparent
that the company is moving in the right direction. If a stock is at $10
going to $20, I'd rather buy it at $12 after I know management is doing
something right, rather than buying it at $10 without any inkling of what's
going to happen. I'd rather "jump into a moving car" than get into a car
that isn't moving and not know when it's going to get going. I prefer to
know what's going on, being fairly certain that it's a matter of time
before the market recognizes the value inherent in the stock, rather than
hoping it will.
Q. WHAT HAS THE MERGER AND ACQUISITION PICTURE BEEN LIKE IN THE SECTOR OVER
THE PAST SIX MONTHS?
A. There have been a lot of big bank mergers, with even more activity than
usual. But that's typical in most industries now. That's not a big part of
this fund's performance, though; I don't play that game. I don't buy a
company figuring it is for sale. Usually that's when the stock is selling
at an expensive price. Has the fund benefited from the activity? Yes, it
has owned some stocks that went up because the company was bought out or
was on the way to being so. There may be 25 deals a year and 1,000
companies. I don't want to spend my time on 25 companies when I should be
looking at all of the opportunities.
Q. WHAT DO YOU SEE LOOKING OUT OVER THE NEXT SIX MONTHS?
A. I see a continuation of earnings at or above expectations. The credit
concerns that are out there don't appear to be getting any worse. I think
there will be a continuation of consolidation, stock buy-backs and dividend
increases. Interest rate changes might have a psychological impact on stock
prices, but if the yield curve steepens - increasing the difference between
short-and long-term rates - that will help increase banks' spreads between
their assets and liabilities. All in all, though, interest rate stability
would provide the best backdrop for the stocks in the fund.
FUND FACTS
START DATE: December 16, 1985
TRADING SYMBOL: FSVLX
SIZE: as of February 29, 1996, more than
$617 million
MANAGER: David Ellison, since 1985; manager,
Fidelity Select Financial Services Portfolio,
1985-1987; Fidelity Select Brokerage and
Investment Portfolio, 1987-1990; joined Fidelity in
1985
(checkmark)
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
HOME FINANCE PORTFOLIO
INVESTMENTS FEBRUARY 29, 1996
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 89.5%
SHARES VALUE (NOTE 1)
BANKS - 32.9%
NATIONAL COMMERCIAL BANKS - 29.9%
Ambanc Holding, Inc. (a) 179,800 $ 1,775,518
Banc One Corp. 109,000 3,883,125
Bank of Boston Corp. 175,000 8,509,375
Bank of New York Co., Inc. 410,000 21,268,750
Bank of New York Co., Inc. (warrants) (a) 45,000 1,890,000
BankAmerica Corp. 232,000 16,530,000
Banknorth Group, Inc. 100,000 3,400,000
Chase Manhattan Corp. 105,000 7,822,500
Citicorp 155,490 12,128,220
CoreStates Financial Corp. 110,000 4,730,000
First Interstate Bancorp. 30,000 4,901,250
First Union Corp. 223,115 13,498,458
Fleet Financial Group, Inc. 212,000 8,718,500
KeyCorp. 239,000 8,992,375
Meridian Bancorp., Inc. 100,000 5,150,000
NationsBank Corp. 233,652 17,231,835
PNC Financial Corp. 180,000 5,512,500
Peoples Heritage Financial Group, Inc. 251,100 5,367,263
Republic New York Corp. 175,000 10,478,125
Union Bank of San Francisco 194,000 10,088,000
Wells Fargo & Co. 50,000 12,331,250
184,207,044
STATE BANKS FEDERAL RESERVE - 3.0%
Barnett Banks, Inc. 65,000 4,062,500
Chemical Banking Corp. 197,000 14,110,125
18,172,625
TOTAL BANKS 202,379,669
COMPUTER SERVICES & SOFTWARE - 0.1%
CAD/CAM/CAE - 0.1%
Ultradata Corp. 46,900 398,650
CREDIT & OTHER FINANCE - 6.5%
BANK HOLDING COMPANY OFFICES - 2.3%
Greenpoint Financial Corp. 536,690 14,222,285
FINANCIAL SERVICES - 3.7%
American Express Co. 90,000 4,140,000
Fidelity Federal Bank FSB Class A (a) 200,000 1,850,000
First Chicago NBD Corp. 349,000 15,137,875
RCSB Financial, Inc. 60,000 1,410,000
22,537,875
LOAN BROKERS - 0.1%
Imperial Thrift & Loan Association (a) 65,000 873,438
MORTGAGE BANKERS - 0.4%
Imperial Credit Industries (a) 11,000 279,125
Imperial Credit Mortgage Holdings, Inc. 36,900 553,500
North American Mortgage Co. 85,800 1,769,625
Resource Bancshares Mortgage
Group, Inc. (a) 10,000 155,000
2,757,250
TOTAL CREDIT & OTHER FINANCE 40,390,848
FEDERAL SPONSORED CREDIT - 5.3%
FEDERAL & FEDERALLY SPONSORED CREDIT AGENCIES - 5.3%
Federal Home Loan Mortgage Corp. 96,000 7,920,000
Federal National Mortgage Association 619,600 19,594,850
Student Loan Marketing Association 60,000 4,957,500
32,472,350
SHARES VALUE (NOTE 1)
INSURANCE - 2.0%
INSURANCE BROKERS & SERVICES - 0.6%
Fidelity National Financial, Inc. 163,100 $ 2,752,313
Stewart Information Services Corp. 45,600 940,500
3,692,813
LIFE INSURANCE - 0.2%
Equitable Iowa Companies 30,100 1,162,613
PROPERTY-CASUALTY & REINSURANCE - 1.2%
Allmerica Financial Corp. 61,400 1,657,800
First American Financial Corp. 105,000 2,966,250
PMI Group, Inc. 62,000 2,836,500
7,460,550
TOTAL INSURANCE 12,315,976
LODGING & GAMING - 0.2%
HOTELS, MOTELS, & TOURIST COURTS - 0.2%
Prime Hospitality Corp. 50,000 568,750
Red Lion Hotels, Inc. 26,800 502,500
1,071,250
REAL ESTATE INVESTMENT TRUSTS - 2.0%
Capstead Mortgage Corp. 398,035 9,105,051
Redwood Trust, Inc. 50,668 1,064,028
Thornburg Mortgage Asset Corp. 135,000 2,008,125
12,177,204
SAVINGS & LOANS - 37.3%
SAVINGS BANKS & SAVINGS & LOANS - 24.3%
Astoria Financial Corp. 400,000 19,750,000
Bank West Financial Corp. 85,000 881,875
Bankers Corp. 140,000 2,362,500
Bay View Capital, Inc. 76,500 2,390,625
Cameron Financial Corp. (b) 212,200 3,023,850
Charter One Financial Corp. 706,000 24,180,500
Collective Bancorp., Inc. 531,290 14,145,596
Commercial Federal Corp. 41,600 1,565,200
First Colorado Bancorp., Inc. 85,000 988,125
First Federal Savings & Loan Association 84,400 1,666,900
First Financial Corp. of Wisconsin 158,800 3,295,100
FirstFed Financial Corp. (a) 408,900 5,826,825
Glendale Federal Bank FSB (a) 427,600 6,681,250
Golden West Financial Corp. 220,800 11,178,000
Great Western Financial Corp. 286,273 6,548,495
New York Bancorp., Inc. 48,100 1,052,188
North Side Savings Bank (b) 452,292 14,247,198
Sandwich Co-operative Bank 25,000 506,250
Standard Federal Bancorp., Inc. 590,000 24,411,250
Warren Bancorp., Inc. 63,300 696,300
Webster Financial Corp. 92,700 2,769,413
Wells Financial Corp. (a)(b) 172,300 1,830,688
149,998,128
SAVINGS BANKS, NO FEDERAL CHARTER - 2.3%
Avondale Financial Corp. (a)(b) 320,400 4,645,800
BankUnited Financial Corp. Class A 40,000 320,000
Farmers & Mechanics Bank (a)(b) 87,000 1,783,500
First Mutual Bancorp., Inc. 222,500 2,864,688
Pacific Crest Cap, Inc. 50,000 400,000
Queens County Bancorp., Inc. 10,000 412,500
Springfield Institution for Savings (a) 101,800 1,832,400
Walden Bancorp., Inc. 84,600 1,670,850
13,929,738
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
SAVINGS & LOANS - CONTINUED
SAVINGS BANKS, FEDERAL CHARTER - 10.7%
Affiliated Community Bancorp., Inc. 131,700 $ 2,321,213
Ahmanson (H.F.) & Co. 330,000 7,507,500
American National Bancorp., Inc. 130,200 1,285,725
California Federal Bancorp., Inc. 65,000 983,125
Carver Federal Savings Bank (a)(b) 222,000 1,887,000
CenFed Financial Corp. 97,250 2,406,938
Dime Bancorp., Inc. (a) 245,000 2,756,250
First Defiance Financial Corp. 285,000 2,992,500
Frankfort First Bancorp., Inc. 86,800 1,280,300
Haven Bancorp., Inc. 91,500 2,276,063
Leader Financial Corp. 93,000 3,580,500
Long Island Bancorp., Inc. 331,280 9,068,790
Mississippi View Holding Co. (b) 85,000 977,500
Primary Bank 85,785 1,029,420
Roosevelt Financial Group, Inc. 41,000 768,750
SFS Bancorp., Inc. (a) 32,500 410,313
SGV Bancorp., Inc. (a)(b) 256,200 2,401,875
Standard Financial, Inc. 185,500 2,736,125
Teche Holding Co. 80,000 1,080,000
Washington Federal, Inc. 408,430 8,730,191
Washington Mutual, Inc. 321,900 9,657,000
66,137,078
TOTAL SAVINGS & LOANS 230,064,944
SECURITIES INDUSTRY - 3.0%
SECURITY & COMMODITY BROKERS - 2.6%
Merrill Lynch & Co., Inc. 105,000 6,050,625
Morgan Stanley Group, Inc. 114,100 5,348,438
Salomon, Inc. 80,000 3,050,000
Schwab (Charles) Corp. 55,000 1,402,500
15,851,563
SERVICES ALLIED WITH EXCHANGES - 0.4%
Duff & Phelps Credit Rating Co. 160,100 2,461,538
TOTAL SECURITIES INDUSTRY 18,313,101
SERVICES - 0.2%
LEGAL SERVICES - 0.2%
Lawyers Title Corp. 84,200 1,557,700
TOTAL COMMON STOCKS
(Cost $463,207,375) 551,141,692
CONVERTIBLE BONDS - 0.3%
PRINCIPAL
AMOUNT
SAVINGS & LOANS - 0.3%
SAVINGS BANKS, FEDERAL CHARTER - 0.3%
Fort Bend Holding Corp. 8%,
12/1/05 (Cost $1,600,000) $1,600,000 1,620,000
REPURCHASE AGREEMENTS - 10.2%
MATURITY VALUE
AMOUNT (NOTE 1)
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 5.41% dated
2/29/96 due 3/1/96 $ 62,972,462 $ 62,963,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $527,770,375) $ 615,724,692
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. Transactions during the period with
companies that are or were affiliates are as follows:
PURCHASES SALES DIVIDEND MARKET
AFFILIATE COST COST INCOME VALUE
Avondale Financial Corp. $ 1,476,563 $ - $ - $ 4,645,800
Cameron Financial Corp. 694,517 19,337 29,806 3,023,850
Carver Federal Savings Bank 849,318 - - 1,887,000
CenFed Financial Corp. - 1,964,010 51,165 -
Farmers & Mechanics Bank 365,750 241,400 - 1,783,500
Haven Bancorp., Inc. - 114,378 - -
Mississippi View Holding Co. 301,875 - 6,800 977,500
Monterey Bay Bancorp., Inc. 586,875 976,361 - -
North Side Savings Bank 410,413 - 469,614 14,247,198
SGV Bancorp., Inc. 1,106,437 - - 2,401,875
Wells Financial Corp. 853,438 689,033 - 1,830,688
Totals $ 6,645,186 $ 4,004,519 $ 557,385 $ 30,797,411
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $561,851,789 and $268,893,983, respectively (see Note 3 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $139,402 for the period
(see Note 4 of Notes to Financial Statements).
The maximum loan and the average daily loan balances during the periods for
which loans were outstanding amounted to $7,920,000 and $3,381,417,
respectively. The weighted average interest rate paid was 6.3% (see Note 5
of Notes to Financial Statements).
INCOME TAX INFORMATION
At February 29, 1996, the aggregate cost of investment securities for
income tax purposes was $528,082,953. Net unrealized appreciation
aggregated $87,641,739, of which $90,233,071 related to appreciated
investment securities and $2,591,332 related to depreciated investment
securities.
The fund hereby designates approximately $12,866,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 47% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate shareholders
(unaudited).
The fund will notify shareholders in January 1997 of the applicable
percentage for use in preparing 1996 income tax returns.
HOME FINANCE PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 29, 1996
ASSETS
Investment in $ 615,724,692
securities, at
value
(including
repurchase
agreements
of
$62,963,000)
(cost
$527,770,375
) - See
accompanyin
g schedule
Cash 464,252
Receivable for 320,544
investments
sold
Receivable for 3,235,077
fund shares
sold
Dividends 964,572
receivable
Interest 30,222
receivable
Redemption 571
fees
receivable
Other 1,823
receivables
TOTAL ASSETS 620,741,753
LIABILITIES
Payable for $ 962,159
investments
purchased
Payable for 2,111,580
fund shares
redeemed
Accrued 307,626
management
fee
Other payables 324,948
and
accrued
expenses
TOTAL 3,706,313
LIABILITIES
NET ASSETS $ 617,035,440
Net Assets
consist of:
Paid in capital $ 500,330,509
Undistributed 3,690,897
net
investment
income
Accumulated 25,059,717
undistributed
net realized
gain (loss) on
investments
and foreign
currency
transactions
Net unrealized 87,954,317
appreciation
(depreciation
) on
investments
NET ASSETS, for $ 617,035,440
18,532,081
shares
outstanding
NET ASSET $33.30
VALUE and
redemption
price per
share
($617,035,44
0 (divided by)
18,532,081
shares)
Maximum $34.33
offering price
per share
(100/97.00 of
$33.30)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 29, 1996
INVESTMENT $ 8,399,331
INCOME
Dividends
(including
$557,385
received
from affiliated
issuers)
Interest 3,813,133
TOTAL 12,212,464
INCOME
EXPENSES
Management $ 2,401,434
fee
Transfer agent 2,506,209
Fees
Redemption (285,416
fees )
Accounting 382,635
fees and
expenses
Non-interested 1,805
trustees'
compensatio
n
Custodian fees 14,285
and
expenses
Registration 226,990
fees
Audit 29,049
Legal 1,391
Interest 7,076
Miscellaneous 4,769
Total 5,290,227
expenses
before
reductions
Expense (110,167 5,180,060
reductions )
NET 7,032,404
INVESTMENT
INCOME
REALIZED AND 39,131,196
UNREALIZED
GAIN (LOSS)
Net realized
gain (loss) on
investment
securities
(including
realized gain
(loss) of
$1,680,255
on sales of
investment in
affiliated
issuers
Change in net 72,785,221
unrealized
appreciation
(depreciation
)
on
investment
securities
NET GAIN (LOSS) 111,916,417
NET INCREASE $ 118,948,821
(DECREASE)
IN NET ASSETS
RESULTING
FROM
OPERATIONS
OTHER $ 4,216,342
INFORMATION
Sales
charges paid
to FDC
Deferred $ 1,985
sales
charges
withheld
by FDC
Exchange $ 219,750
fees withheld
by FSC
Expense $ 20,672
reductions
Directed
brokerage
arrangement
s
Custodian 81,726
interest
credits
Transfer 7,769
agent
interest
credits
$ 110,167
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
FEBRUARY 29, FEBRUARY 28,
1996 1995
Operations $ 7,032,404 $ 1,608,322
Net
investment
income
Net realized 39,131,196 20,398,138
gain (loss)
Change in 72,785,221 (3,449,716
net )
unrealized
appreciation
(depreciation
)
NET INCREASE 118,948,821 18,556,744
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
Distributions to (3,332,255 (641,452
shareholders ) )
From net
investment
income
From net (12,803,251 (19,377,299
realized gain ) )
TOTAL (16,135,506 (20,018,751
DISTRIBUTION ) )
S
Share 936,625,637 425,502,908
transactions
Net proceeds
from sales of
shares
Reinvestmen 15,962,916 19,534,918
t of
distributions
Cost of (669,013,084 (369,762,089
shares ) )
redeemed
Paid in 722,441 547,208
capital
portion of
redemption
fees
NET INCREASE 284,297,910 75,822,945
(DECREASE)
IN NET
ASSETS
RESULTING
FROM SHARE
TRANSACTIO
NS
TOTAL 387,111,225 74,360,938
INCREASE
(DECREASE)
IN NET ASSETS
NET ASSETS
Beginning of 229,924,215 155,563,277
period
End of period $ 617,035,440 $ 229,924,215
(including
undistribute
d net
investment
income of
$3,690,897
and
$963,664,
respectivel
y)
OTHER
INFORMATION
Shares
Sold 31,755,939 16,880,752
Issued in 501,513 895,378
reinvestment
of
distributions
Redeemed (23,337,483 (14,378,596
) )
Net increase 8,919,969 3,397,534
(decrease)
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEAR ENDED YEARS ENDED FEBRUARY 28, TEN MONTHS YEAR ENDED
FEBRUARY 29, ENDED APRIL 30,
FEBRUARY 28,
SELECTED PER-SHARE DATA D 1996 1995 1994 1993 1992
</TABLE>
Net asset $ 23.92 $ 25.03 $ 22.18 $ 15.38 $ 10.84
value,
beginning of
period
Income from
Investment
Operations
Net .53 .20 .03 .09 .05
investment
income
Net realized 9.72 2.34 4.15 6.80 4.40
and
unrealized
gain (loss)
Total from 10.25 2.54 4.18 6.89 4.45
investment
operations
Less (.19) (.12) (.01) (.01) (.14)
Distributions
From net
investment
income
From net (.73) (3.60) (1.40) (.28) -
realized gain
Total (.92) (3.72) (1.41) (.29) (.14)
distributions
Redemption .05 .07 .08 .20 .23
fees added to
paid in
capital
Net asset $ 33.30 $ 23.92 $ 25.03 $ 22.18 $ 15.38
value, end of
period
TOTAL 43.24% 12.43% 19.61% 46.43% 43.62%
RETURN B, C
RATIOS AND
SUPPLEMENT
AL DATA
Net assets, $ 617,035 $ 229,924 $ 155,563 $ 337,903 $ 49,405
end of period
(000 omitted)
Ratio of 1.35% 1.47% 1.58% 1.55% 2.08%
expenses to A
average net
assets
Ratio of 1.32% 1.45% 1.58% 1.55% 2.08%
expenses to E E A
average net
assets after
expense
reductions
Ratio of net 1.80% .80% .11% .61% .40%
investment A
income to
average net
assets
Portfolio 81% 124% 95% 61% 134%
turnover rate A
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN (SEE NOTE 7 OF NOTES TO FINANCIAL STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN
ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES
OUTSTANDING DURING THE PERIOD.
E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES WHO EITHER
PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES (SEE NOTE 7 OF NOTES TO FINANCIAL
STATEMENTS).
</TABLE>
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 securities that have grown in value), but does not include certain
fees paid by shareholders upon exchange or redemption. If Fidelity had not
reimbursed certain expenses, the past five and 10 year total returns would
have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 29, 1996 YEAR YEARS YEARS
INSURANCE 29.51% 115.09% 196.66%
INSURANCE 25.63% 108.64% 187.76%
(INCL. 3% SALES CHARGE)
S&P 500 34.70% 101.14% 286.76%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one, five, or 10 years. You can compare
these figures to the performance of the S&P 500 - a common proxy for the
U.S. stock market. This benchmark includes reinvested dividends and capital
gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 29, 1996 YEAR YEARS YEARS
INSURANCE 29.51% 16.55% 11.49%
INSURANCE 25.63% 15.85%
(INCL. 3% SALES CHARGE) 11.15%
S&P 500 34.70% 14.99% 14.47%
AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and
show you what would have happened if the fund had performed at a constant
rate each year.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of growth in the long run
and volatility in the short run. Unlike the broader
market, however, some sectors may not have
a history of growth in the long run. And, as
with all stock funds, the share price and return
of
a fund that invests in a sector will vary. That
means if you sell your shares during a sector
downturn, you might lose money. But if you
can identify a sector that is about to
experience rapid growth you may have the
potential for above-average gains.
(checkmark)
$10,000 OVER 10 YEARS
19860228 9700.00 10000.00
19860331 10159.17 10558.00
19860430 9847.59 10438.69
19860531 10396.96 10994.03
19860630 10347.76 11179.83
19860731 9995.18 10554.88
19860831 10905.33 11338.05
19860930 9486.81 10400.39
19861031 9388.42 11000.50
19861130 9076.84 11267.81
19861231 8994.84 10980.48
19870131 9626.20 12459.55
19870228 10642.94 12951.70
19870331 10101.78 13326.01
19870430 9265.43 13207.41
19870531 9142.43 13322.31
19870630 9437.62 13995.09
19870731 9527.81 14704.64
19870831 10216.57 15253.12
19870930 10216.57 14919.08
19871031 8297.89 11705.51
19871130 7715.72 10740.97
19871231 7901.16 11558.36
19880131 8508.94 12044.97
19880229 8500.62 12606.27
19880331 8300.80 12216.73
19880430 8242.52 12352.34
19880531 8467.32 12459.80
19880630 8850.30 13031.71
19880731 8891.93 12982.19
19880831 8983.51 12540.79
19880930 9291.57 13075.03
19881031 9249.94 13438.52
19881130 9050.12 13246.35
19881231 9276.09 13478.16
19890131 9981.24 14464.76
19890228 10048.39 14104.59
19890331 10283.44 14433.22
19890430 10619.23 15182.31
19890531 10677.99 15797.19
19890630 10912.94 15707.15
19890731 11829.36 17125.50
19890831 12190.88 17461.16
19890930 12359.03 17389.57
19891031 12762.59 16986.13
19891130 13107.30 17332.65
19891231 12785.34 17748.63
19900131 11700.11 16557.70
19900228 12030.76 16771.29
19900331 11971.41 17215.73
19900430 11555.98 16785.34
19900531 12615.77 18421.91
19900630 12649.68 18296.64
19900731 12463.16 18238.09
19900831 11165.97 16589.37
19900930 10199.44 15781.47
19901031 9792.48 15713.61
19901130 11089.67 16728.71
19901231 11530.54 17195.44
19910131 12149.46 17945.16
19910228 13378.82 19228.24
19910331 14260.57 19693.56
19910430 14184.26 19740.82
19910531 14540.35 20593.63
19910630 13636.47 19650.44
19910731 14142.80 20566.15
19910831 14056.98 21053.57
19910930 14194.29 20701.97
19911031 14623.38 20979.38
19911130 14494.65 20133.91
19911231 15759.99 22437.23
19920131 15742.76 22019.90
19920229 16164.75 22306.16
19920331 15932.23 21871.19
19920430 15527.46 22514.20
19920531 15734.15 22624.52
19920630 16063.32 22287.41
19920731 16973.45 23198.97
19920831 16476.16 22723.39
19920930 17348.76 22991.53
19921031 18090.00 23072.00
19921130 18709.26 23858.75
19921231 19306.17 24152.21
19930131 20113.36 24355.09
19930228 20493.22 24686.32
19930331 21575.81 25207.20
19930430 21062.41 24597.19
19930531 20519.91 25256.39
19930630 20738.81 25329.64
19930731 21462.15 25228.32
19930831 22556.67 26184.47
19930930 22632.81 25982.85
19931031 21976.10 26520.70
19931130 20634.12 26268.75
19931231 20884.73 26586.60
19940131 21166.25 27490.55
19940228 20238.27 26745.55
19940331 19289.44 25579.45
19940430 19497.98 25906.86
19940531 20394.67 26331.74
19940630 20279.98 25686.61
19940731 20655.34 26529.13
19940831 21218.39 27616.82
19940930 21072.41 26940.21
19941031 20811.74 27546.37
19941130 19758.64 26543.13
19941231 20811.74 26936.76
19950131 21562.47 27635.23
19950228 22219.35 28712.18
19950331 22573.86 29559.47
19950430 22782.41 30430.00
19950531 23283.81 31646.29
19950630 24015.02 32381.43
19950731 24735.79 33455.20
19950831 25456.55 33539.17
19950930 26720.50 34954.52
19951031 25916.17 34829.74
19951130 27462.16 36358.76
19951231 28056.23 37059.03
19960131 28873.20 38320.52
19960229 28776.45 38675.75
Let's say you invested $10,000 in Fidelity Select Insurance Portfolio on
February 28, 1986, and paid a 3% sales charge. By February 29, 1996, your
investment would have grown to $28,776 - a 187.76% increase. That compares
to $10,000 invested in the S&P 500, which would have grown to $38,676 over
the same period - a 286.76% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 29, 1996
% OF FUND'S
INVESTMENTS
General Re Corp. 5.9
CIGNA Corp. 5.5
Aetna Life & Casualty Co. 4.1
Chubb Corp. (The) 3.7
MBIA, Inc. 3.7
Allstate Corp. 3.5
Equitable of Iowa Companies 3.3
American International Group, Inc. 3.0
Triad Guaranty, Inc. 2.9
Marsh & McLennan Companies, Inc. 2.7
TOP INDUSTRIES AS OF FEBRUARY 29, 1996
Row: 1, Col: 1, Value: 17.0
Row: 1, Col: 2, Value: 6.7
Row: 1, Col: 3, Value: 6.7
Row: 1, Col: 4, Value: 13.0
Row: 1, Col: 5, Value: 14.6
Row: 1, Col: 6, Value: 42.0
Property-Casualty &
Reinsurance 42.0%
Multi-Line Insurance 14.6%
Life Insurance 13.0%
Insurance Brokers & Services 6.7%
Insurance Carriers 6.7%
All Others 17.0% *
* INCLUDES SHORT-TERM INVESTMENTS
INSURANCE PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Michael Tempero,
Portfolio Manager of
Fidelity Select Insurance Portfolio
Q. MIKE, HOW DID THE FUND DO?
A. Insurance stocks had a good run, thanks to falling interest rates. But
their earnings growth wasn't quite as strong as some other sectors. The
results reflected that, with the fund returning 29.51% for the 12 months
ended February 29, 1996, compared to the S&P 500 Index's 34.70% return.
Q. WHAT WAS YOUR STRATEGY?
A. I tend to take the worm's eye view, not the bird's eye view. That means
I try to add value one stock at a time, looking at prospects for both the
individual company and the business it's in. My focus has been on cheap
stocks with either strong earnings growth or the potential for improved
earnings through restructuring. A good example is CIGNA, a multi-line
insurer that's seen a dramatic improvement in earnings power as a result of
a major restructuring effort. During the last half of the period, CIGNA's
stock price rose 22%, making it one of the fund's best performers. Aetna,
another multi-line company that's one of the fund's largest investments,
has also been through a restructuring that's redirecting capital to
higher-return businesses.
Q. DID YOU MAKE ANY MAJOR CHANGES AS A RESULT OF THIS APPROACH?
A. I cut back on Federal Home Loan Mortgage, which was the fund's biggest
investment six months ago. I did that for a couple reasons. First, the
stock went up over 30% between September and February and got closer to
reaching the price it was worth. So it made sense to take some profits, and
reallocate the money to stocks with more growth potential. Second, I had
added investments in several mortgage insurers, so I felt the fund had an
adequate stake in the mortgage business. By the end of February, there were
three new names in the fund's top 10 list: CIGNA; MBIA, a municipal bond
insurer; and Chubb, a property and casualty company. MBIA's stock price
rose as interest rates came down and more municipalities began issuing
bonds. And Chubb's stock price went up, though not as much, thanks to its
solid reputation and steady improvements in its operations.
Q. WHICH STOCKS HAVE DONE WELL RECENTLY?
A. Triad Guaranty, Allstate, American International Group (AIG) and CIGNA
are some examples within the fund. Triad Guaranty, the only mortgage
insurer in the fund's top 10 holdings, was up 33% in the six-month period
through February. As home purchases increased, companies that buy home
mortgages demanded more coverage. When this happened, Triad had the
capacity to do more business - something many of its competitors lacked.
Allstate, a property and casualty company that offers both auto and home
insurance, returned 26% in the same period. Its business benefited from
safer driver conditions, as well as fewer natural disasters in the past
year. Finally, AIG is one of the largest and best companies in the property
and casualty business. Its long string of earnings growth continued as
interest rates eased off, sending the stock up 25% in the six months
between September and February.
Q. WHAT HAPPENED WITH YOUR LARGEST INVESTMENT, GENERAL RE?
A. General Re is the largest reinsurer in the business and a very
high-quality company. On the positive side, the company has been buying
back stock and the price has been cheap. So I think it has been a good
value. On the negative side, the stock didn't do much during the period and
that was a disappointment. Investors' fears that the growth in the
reinsurance business was slowing down hurt even the best companies in the
sector. The fund still has a large stake because of my belief that the
large players can still grow business.
Q. IN THE PAST SIX MONTHS, THE FUND'S ASSETS HAVE MORE THAN DOUBLED. DID
THAT AFFECT YOUR STRATEGY?
A. Not really. To maintain liquidity, I shifted toward larger companies
that are somewhat easier to buy or sell than smaller names. And I tried to
keep the fund's cash position as low to the ground as I could so it
wouldn't hurt performance.
Q. DO YOU THINK INSURANCE STOCKS CAN KEEP CLIMBING?
A. Anything's possible. I'd say as goes the economy, so will go interest
rates and the insurance sector. Having said that, I'd be hard pressed to
say where the economy is headed. My job is to look at where individual
stocks are going. Right now, I'm finding good opportunities in solid
companies that are in out-of-favor segments like municipal bond insurance
and reinsurance. In addition, mortgage insurance continues to look
attractive as demand increases for the product.
FUND FACTS
START DATE: December 16, 1985
TRADING SYMBOL: FSPCX
SIZE: as of February 29, 1996, more than
$38 million
MANAGER: Michael Tempero, since February
1995; equity analyst, insurance industry;
analyst, domestic oil and gas exploration and
production, conglomerates and household
products, 1993-1995; joined Fidelity in 1993.
(checkmark)
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
INSURANCE PORTFOLIO
INVESTMENTS FEBRUARY 29, 1996
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 95.4%
SHARES VALUE (NOTE 1)
COMPUTER SERVICES & SOFTWARE - 2.2%
PREPACKAGED COMPUTER SOFTWARE - 2.2%
Hogan Systems, Inc. (a) 30,000 $ 367,500
Policy Management Systems Corp. (a) 10,000 511,250
878,750
CREDIT & OTHER FINANCE - 7.3%
FINANCIAL SERVICES - 4.4%
Equitable Companies, Inc. 35,000 883,750
Transamerica Corp. 11,000 829,125
1,712,875
MORTGAGE BANKERS - 2.9%
Triad Guaranty, Inc. (a) 36,400 1,132,950
TOTAL CREDIT & OTHER FINANCE 2,845,825
FEDERAL SPONSORED CREDIT - 2.1%
FEDERAL & FEDERALLY SPONSORED CREDIT AGENCIES - 2.1%
Federal Home Loan Mortgage Corp. 10,000 825,000
HOLDING COMPANIES - 0.1%
Partner Re Holdings 1,000 30,375
INSURANCE - 83.7%
ACCIDENT & HEALTH INSURANCE - 0.0%
Provident Companies, Inc. 100 3,388
INSURANCE BROKERS & SERVICES - 6.7%
Alexander & Alexander Services, Inc. 25,000 465,625
Frontier Insurance Group, Inc. 3,000 92,250
ITT Hartford Group, Inc. 15,000 772,500
Marsh & McLennan Companies, Inc. 11,000 1,068,375
Mutual Risk Management Ltd. 5,000 224,375
2,623,125
INSURANCE CARRIERS - 6.7%
AFLAC, Inc. 2,000 92,750
John Alden Financial Corp. 10,000 190,000
MBIA, Inc. 19,000 1,444,000
MGIC Investment Corp. 14,800 862,100
2,588,850
LIFE INSURANCE - 13.0%
American General Corp. 10,000 363,750
Aon Corp. 10,000 520,000
Conseco, Inc. 10,000 677,500
Delphi Financial Group, Inc. Class A 1,000 24,875
Equitable of Iowa Companies 33,000 1,274,625
Jefferson Pilot Corp. 8,000 445,000
Providian Corp. 12,000 555,000
Security-Connecticut Corp. 1,000 27,375
Torchmark Corp. 17,000 788,375
UNUM Corp. 3,000 176,625
United Wisconsin Services, Inc. 10,000 206,250
5,059,375
MULTI-LINE INSURANCE - 14.6%
Aetna Life & Casualty Co. 21,200 1,603,250
American Financial Group, Inc. 20,000 637,500
CIGNA Corp. 18,000 2,133,000
CNA Financial Corp. (a) 5,000 581,250
Masthead Insurance Underwriting PLC 25,000 39,432
Syndicate Capital Trust PLC 5,700 8,816
US Facilities Corp. 40,000 710,000
5,713,248
SHARES VALUE (NOTE 1)
PROPERTY-CASUALTY & REINSURANCE - 42.0%
Allstate Corp. 31,500 $ 1,350,562
ACE Ltd. 13,000 607,750
Allied Group, Inc. 5,000 213,750
Allmerica Financial Corp. 4,000 108,000
American International Group, Inc. 12,000 1,159,500
American Reinsurance Corp. 5,000 191,875
AVEMCO Corp. 2,000 30,500
Berkley (W.R.) Corp. 7,000 316,750
Capital RE Corp. 18,000 621,000
Chubb Corp. (The) 15,000 1,456,875
Cincinnati Financial Corp. 6,200 404,550
Enhance Financial Services Group Corp. 15,000 365,625
Executive Risk, Inc. 15,000 457,500
Exel Ltd. 5,000 348,750
Gainsco, Inc. 15,000 163,125
General Re Corp. 16,000 2,302,000
Gryphon Holdings, Inc. (a) 50,000 937,500
Guaranty National Corp. 15,000 202,500
Mercury General Corp. 4,100 179,375
NAC Re Corp. 20,000 672,500
NY Magic, Inc. 10,000 207,500
National Re Corp. 7,300 228,125
Ohio Casualty Corp. 9,100 338,975
PMI Group, Inc. 20,000 915,000
Pxre Corp. 10,000 247,500
Philadelphia Consolidated Holding
Corp. (a) 8,600 174,150
Reinsurance Group of America, Inc. (a) 10,000 395,000
SAFECO Corp. 10,000 362,500
Transatlantic Holdings, Inc. 8,000 562,000
Travelers, Inc. (The) 8,000 535,000
Trenwick Group, Inc. 3,000 154,500
Unionamerica Holdings PLC sponsored
ADR (a) 12,000 210,000
16,420,237
SURETY INSURANCE - 0.7%
Orion Capital Corp. 5,800 274,050
TOTAL INSURANCE 32,682,273
TOTAL COMMON STOCKS
(Cost $33,975,561) 37,262,223
REPURCHASE AGREEMENTS - 4.6%
MATURITY VALUE
AMOUNT (NOTE 1)
Investments in repurchase agreements
(U.S. Treasury obligations) in a joint
trading account at 5.41%, dated
2/29/96 due 3/1/96 $ 1,807,272 1,807,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $35,782,561) $ 39,069,223
LEGEND
1. Non-income producing
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $45,462,070 and $32,977,994, respectively (see Note 3 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $28,422 for the period (see
Note 4 of Notes to Financial Statements).
The maximum loan and the average daily loan balances during the periods for
which loans were outstanding amounted to $2,042,000 and $1,179,071,
respectively The weighted average interest rate paid was 6.5% (see Note 5
of Notes to Financial Statements).
INCOME TAX INFORMATION
At February 29, 1996, the aggregate cost of investment securities for
income tax purposes was $35,802,016. Net unrealized appreciation aggregated
$3,267,207, of which $3,620,326 related to appreciated investment
securities and $353,119 related to depreciated investment securities.
The fund hereby designates approximately $227,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
On October 26,1990, the fund acquired all of the assets of Life Insurance
Portfolio in a tax-free exchange for shares of Insurance Portfolio. Life
Insurance Portfolio has a capital loss carryover of approximately $12,000
available to offset future realized capital gains in Insurance Portfolio,
to the extent provided by regulations.
A total of 32% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate shareholders
(unaudited).
The fund will notify shareholders in January 1997 of the applicable
percentage for use in preparing 1996 income tax returns.
INSURANCE PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 29, 1996
ASSETS
Investment in $ 39,069,223
securities, at
value
(including
repurchase
agreements
of
$1,807,000)
(cost
$35,782,561)
- - See
accompanyin
g schedule
Cash 736
Receivable for 1,740,570
investments
sold
Receivable for 120,990
fund shares
sold
Dividends 38,212
receivable
Redemption 157
fees
receivable
Other 23
receivables
TOTAL ASSETS 40,969,911
LIABILITIES
Payable for $ 1,239,635
investments
purchased
Payable for 679,806
fund shares
redeemed
Accrued 20,459
management
fee
Other payables 36,312
and
accrued
expenses
TOTAL 1,976,212
LIABILITIES
NET ASSETS $ 38,993,699
Net Assets
consist of:
Paid in capital $ 34,642,575
Undistributed 55,083
net
investment
income
Accumulated 1,009,379
undistributed
net realized
gain (loss) on
investments
and foreign
currency
transactions
Net unrealized 3,286,662
appreciation
(depreciation
) on
investments
NET ASSETS, for $ 38,993,699
1,456,543
shares
outstanding
NET ASSET $26.77
VALUE and
redemption
price per
share
($38,993,699
(divided by) 1,456,543
shares)
Maximum $27.60
offering price
per share
(100/97.00 of
$26.77)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 29, 1996
INVESTMENT $ 333,655
INCOME
Dividends
Interest 87,695
TOTAL 421,350
INCOME
EXPENSES
Management $ 129,061
fee
Transfer agent 159,562
Fees
Redemption (20,398
fees )
Accounting 47,689
fees and
expenses
Non-interested 100
trustees'
compensatio
n
Custodian fees 14,387
and
expenses
Registration 20,274
fees
Audit 16,464
Legal 88
Interest 2,987
Miscellaneous 910
Total 371,124
expenses
before
reductions
Expense (4,575 366,549
reductions )
NET 54,801
INVESTMENT
INCOME
REALIZED AND 2,892,996
UNREALIZED
GAIN (LOSS)
Net realized
gain (loss) on
investment
securities
Change in net 1,911,651
unrealized
appreciation
(depreciation
) on
investment
securities
NET GAIN (LOSS) 4,804,647
NET INCREASE $ 4,859,448
(DECREASE)
IN NET ASSETS
RESULTING
FROM
OPERATIONS
OTHER $ 300,141
INFORMATION
Sales
charges paid
to FDC
Deferred $ 6,193
sales
charges
withheld
by FDC
Exchange $ 14,858
fees withheld
by FSC
Expense $ 3,994
reductions
Directed
brokerage
arrangement
s
Custodian 301
interest
credits
Transfer 280
agent
interest
credits
$ 4,575
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
FEBRUARY 29, FEBRUARY 28,
1996 1995
Operations $ 54,801 $ 25,733
Net
investment
income
Net realized 2,892,996 (1,038,394)
gain (loss)
Change in 1,911,651 1,757,862
net
unrealized
appreciation
(depreciation
)
NET INCREASE 4,859,448 745,201
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
Distributions to (62,008) -
shareholders
From net
investment
income
From net (753,776) -
realized gain
TOTAL (815,784) -
DISTRIBUTION
S
Share 47,521,158 33,064,318
transactions
Net proceeds
from sales of
shares
Reinvestmen 802,788 -
t of
distributions
Cost of (35,249,916) (30,429,283)
shares
redeemed
Paid in 37,695 39,347
capital
portion of
redemption
fees
NET INCREASE 13,111,725 2,674,382
(DECREASE)
IN NET
ASSETS
RESULTING
FROM SHARE
TRANSACTIO
NS
TOTAL 17,155,389 3,419,583
INCREASE
(DECREASE)
IN NET ASSETS
NET ASSETS
Beginning of 21,838,310 18,418,727
period
End of period $ 38,993,699 $ 21,838,310
(including
undistribute
d net
investment
income of
$55,083
and
$25,733,
respectivel
y)
OTHER
INFORMATION
Shares
Sold 1,872,126 1,639,929
Issued in 31,329 -
reinvestment
of
distributions
Redeemed (1,471,921) (1,564,065)
Net increase 431,534 75,864
(decrease)
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEAR ENDED YEARS ENDED FEBRUARY 28, TEN MONTHS YEAR ENDED
FEBRUARY 29, ENDED APRIL 30,
FEBRUARY 28,
SELECTED PER-SHARE DATA D 1996 1995 1994 1993 1992
</TABLE>
Net asset $ 21.31 $ 19.41 $ 21.58 $ 18.03 $ 16.73
value,
beginning of
period
Income from
Investment
Operations
Net .06 .05 - (.04) .04
investment
income (loss)
Net realized 6.15 1.78 (.24) 5.12 1.48
and
unrealized
gain (loss)
Total from 6.21 1.83 (.24) 5.08 1.52
investment
operations
Less (.07) - (.01) - (.26)
Distributions
From net
investment
income
In excess of - - - (.03) -
net
investment
income
From net (.72) - (1.96) (1.71) -
realized gain
Total (.79) - (1.97) (1.74) (.26)
distributions
Redemption .04 .07 .04 .21 .04
fees added to
paid in
capital
Net asset $ 26.77 $ 21.31 $ 19.41 $ 21.58 $ 18.03
value, end of
period
TOTAL 29.51% 9.79% (1.24)% 31.98% 9.47%
RETURN B, C
RATIOS AND
SUPPLEMENT
AL DATA
Net assets, $ 38,994 $ 21,838 $ 18,419 $ 26,367 $ 2,573
end of period
(000 omitted)
Ratio of 1.77% 2.36% 1.93% 2.49% A 2.47% F
expenses to , F
average net
assets
Ratio of 1.74% 2.34% 1.93% 2.49% A 2.47%
expenses to E E
average net
assets after
expense
reductions
Ratio of net .26% .25% (.02)% (.26)% .22%
investment A
income (loss)
to average
net assets
Portfolio 164% 265% 101% 81% A 112%
turnover rate
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING
THE PERIODS SHOWN (SEE NOTE 7 OF NOTES TO FINANCIAL STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE
YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES
OUTSTANDING DURING THE PERIOD.
E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES WHO EITHER
PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES (SEE NOTE 7 OF NOTES TO FINANCIAL
STATEMENTS).
F DURING THE PERIOD, FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES, OR
EXPENSES WERE LIMITED IN ACCORDANCE WITH A STATE EXPENSE LIMITATION. WITHOUT THIS
REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD HAVE BEEN HIGHER.
</TABLE>
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 securities that have grown in value), but does not include certain
fees paid by shareholders upon exchange or redemption. If Fidelity had not
reimbursed certain expenses the life of fund total returns would have been
lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
FEBRUARY 29, 1996 YEAR YEARS FUND
REGIONAL BANKS 40.94% 269.79% 347.30%
REGIONAL BANKS 36.71%
(INCL. 3% SALES CHARGE) 258.70% 333.88%
S&P 500 34.70% 101.14% 247.69%
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 29, 1996 YEAR YEARS FUND
REGIONAL BANKS 40.94% 29.89% 16.74%
REGIONAL BANKS 36.71% 29.11% 16.38%
(INCL. 3% SALES CHARGE)
S&P 500 34.70% 14.99% 13.74%
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
19860630 9700.00 10000.00
19860731 9040.40 9488.77
19860831 9379.90 10192.84
19860930 8361.40 9349.89
19861031 8574.80 9889.38
19861130 8545.70 10129.69
19861231 8283.80 9871.39
19870131 8894.90 11201.06
19870228 9486.60 11643.50
19870331 9506.00 11980.00
19870430 8933.70 11873.38
19870531 8982.20 11976.68
19870630 9302.30 12581.50
19870731 9302.30 13219.38
19870831 9729.10 13712.46
19870930 9476.90 13412.16
19871031 7924.90 10523.18
19871130 7672.70 9656.07
19871231 8031.30 10390.90
19880131 8599.97 10828.35
19880229 8819.46 11332.96
19880331 9019.00 10982.77
19880430 8919.23 11104.68
19880531 9078.86 11201.29
19880630 9717.37 11715.43
19880731 9767.25 11670.91
19880831 9637.56 11274.10
19880930 10006.70 11754.37
19881031 10126.42 12081.14
19881130 9877.00 11908.38
19881231 10095.78 12116.78
19890131 10736.78 13003.73
19890228 10897.03 12679.94
19890331 11794.44 12975.38
19890430 12104.25 13648.80
19890531 13033.71 14201.58
19890630 12816.91 14120.63
19890731 13957.63 15395.72
19890831 14302.00 15697.48
19890930 14420.37 15633.12
19891031 13085.95 15270.43
19891130 13064.43 15581.95
19891231 12785.92 15955.91
19900131 11633.93 14885.27
19900228 12112.98 15077.29
19900331 11816.42 15476.84
19900430 11143.48 15089.92
19900531 11919.08 16561.19
19900630 11451.44 16448.57
19900731 10755.68 16395.93
19900831 9751.97 14913.74
19900930 8565.77 14187.44
19901031 8314.84 14126.44
19901130 9421.20 15039.00
19901231 10143.16 15458.59
19910131 10816.28 16132.59
19910228 11733.11 17286.07
19910331 12394.62 17704.39
19910430 13230.21 17746.88
19910531 14089.02 18513.55
19910630 13253.42 17665.63
19910731 14355.94 18488.84
19910831 15388.83 18927.03
19910930 15087.09 18610.95
19911031 15713.78 18860.33
19911130 14994.24 18100.26
19911231 16816.65 20170.93
19920131 17868.45 19795.75
19920229 19311.63 20053.10
19920331 19042.56 19662.06
19920430 20155.52 20240.13
19920531 21011.64 20339.30
19920630 21221.29 20036.25
19920731 21245.91 20855.73
19920831 20113.45 20428.19
19920930 21048.96 20669.24
19921031 21947.54 20741.58
19921130 23744.70 21448.87
19921231 24976.49 21712.69
19930131 26017.18 21895.08
19930228 26826.61 22192.85
19930331 27970.08 22661.12
19930430 26530.16 22112.72
19930531 26270.83 22705.34
19930630 27736.08 22771.19
19930731 27813.88 22680.10
19930831 28202.89 23539.68
19930930 29175.40 23358.43
19931031 27606.41 23841.94
19931130 26737.63 23615.45
19931231 27767.00 23901.19
19940131 29386.34 24713.83
19940228 28560.79 24044.09
19940331 28084.51 22995.77
19940430 29572.73 23290.11
19940531 31050.56 23672.07
19940630 30279.52 23092.10
19940731 31082.69 23849.53
19940831 31885.86 24827.36
19940930 29990.38 24219.09
19941031 29861.87 24764.01
19941130 27934.26 23862.11
19941231 27827.58 24215.98
19950131 29229.22 24843.91
19950228 30784.69 25812.07
19950331 31041.09 26573.79
19950430 31810.28 27356.38
19950531 33895.64 28449.82
19950630 34322.96 29110.71
19950731 35656.23 30076.02
19950831 36989.49 30151.51
19950930 38664.61 31423.90
19951031 38476.59 31311.72
19951130 40681.60 32686.31
19951231 40841.91 33315.84
19960131 42177.19 34449.91
19960229 43387.85 34769.27
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 29, 1996, your investment would have grown to $43,388 - a 333.88%
increase. That compares to $10,000 invested in the S&P 500, which would
have grown to $34,769 over the same period - a 247.69% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 29, 1996
% OF FUND'S
INVESTMENTS
Fleet Financial Group, Inc. 6.7
BankAmerica Corp. 5.2
Bank of New York Co., Inc. 5.1
Chemical Banking Corp. 4.8
American Express Co. 4.6
Household International, Inc. 4.3
First Bank System, Inc. 4.0
Boatmen's Bancshares, Inc. 3.7
Chase Manhattan Corp. 3.5
Citicorp 3.4
TOP REGIONS AS OF FEBRUARY 29, 1996
Northeast 25.3%
Midwest 20.3%
West 15.7%
Mid-Atlantic 6.4%
Southeast 4.1%
All Others 28.2% *
Row: 1, Col: 1, Value: 28.2
Row: 1, Col: 2, Value: 4.1
Row: 1, Col: 3, Value: 6.4
Row: 1, Col: 4, Value: 15.7
Row: 1, Col: 5, Value: 20.3
Row: 1, Col: 6, Value: 25.3
* INCLUDES SHORT-TERM INVESTMENTS
REGIONAL BANKS PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Remy Trafelet,
Portfolio Manager of
Fidelity Select Regional Banks Portfolio
Note to shareholders: On January 3, 1996, Remy Trafelet replaced Louis
Salemy as manager of the fund.
Q. HOW DID THE FUND PERFORM, REMY?
A. For the 12 months ended February 29, 1996, the fund had a total return
of 40.94%. For the same period, the S&P 500 Index returned 34.70%.
Q. WHAT WAS THE MAJOR FACTOR IN THE FUND'S PERFORMANCE?
A. Most bank stocks began the period at very inexpensive levels relative to
the S&P 500. Since then - despite slowing loan growth and the deteriorating
credit quality of borrowers - consolidation, expense cuts and share
buy-back programs have been driving the double-digit growth of the
industry.
Q. WHY DOES A REGIONAL BANK PORTFOLIO HOLD MONEY-CENTER BANKS?
A. The fund is allowed to hold a sizable portion of its assets in
money-center banks for diversification purposes. That said, I should point
out that the distinctions between the two groups is rapidly fading. Today,
regional banks like Bank of Boston and BankAmerica have comparable domestic
and international operations to many money-center banks like Chemical or
Citicorp.
Q. MERGERS AND ACQUISITIONS IN THE BANKING MARKET WERE CERTAINLY A MAJOR
PART OF THE FINANCIAL HEADLINES IN 1995. WAS LAST YEAR'S FLURRY OF M&A
ACTIVITY A SIGNAL OF THINGS TO COME?
A. It certainly appears likely that consolidation will continue in banking.
The past year saw a record in terms of the dollar value of deals. For
example, the $10 billion proposed merger of Chemical and Chase is the
largest in banking history. On the other hand, the actual number of deals
was in line with a 10-year consolidation trend in the industry. As revenues
have slowed, many banks have sought to grow earnings through consolidation
and balance-sheet restructuring.
Q. IN ADDITION TO COST CUTTING AND RESTRUCTURING, WHAT ELSE HAVE BANKS HAD
TO DO TO GROW THEIR BUSINESSES?
A. Many of the successful banks have developed stable-growth businesses.
These include fee-based businesses like mutual funds, check processing,
order ticket processing and security clearing. Northern Trust, First
Tennessee National and First Bank System are some of the banks that run
these types of businesses.
Q. IS THE RAPID RISE IN CONSUMER CREDIT CARD DEBT A BIG CONCERN?
A. I think consumer debt is going to get worse before it gets better.
Although one can never know for sure, some banks with credit card
operations may face some problems with delinquent accounts down the road.
Q. WHAT'S YOUR OUTLOOK?
A. I believe there are still banks out there capable of generating
earnings-per-share growth of 10% to 15% a year. This kind of growth,
however, can only be achieved by continued stock buy-backs and expense
cutting measures.
FUND FACTS
START DATE: June 30, 1986
TRADING SYMBOL: FSRBX
SIZE: as of February 29, 1996, more than
$315 million
MANAGER: Remy Trafelet, since January 1996;
joined Fidelity in 1992
(checkmark)
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
REGIONAL BANKS PORTFOLIO
INVESTMENTS FEBRUARY 29, 1996
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 92.3%
SHARES VALUE (NOTE 1)
BANKS - 81.1%
MID-ATLANTIC - 6.4%
Crestar Financial Corp. 162,283 $ 9,493,556
HUBCO, Inc. 75,030 1,514,668
PNC Financial Corp. 50,000 1,531,250
Wachovia Corp. 172,600 8,025,900
20,565,374
MIDWEST - 20.3%
Boatmen's Bancshares, Inc. 299,100 11,739,675
Comerica, Inc. 257,300 10,002,538
Fifth Third Bancorp 163,200 8,364,000
First Bank System, Inc. 221,100 12,740,888
First Chicago NBD Corp. 165,000 7,156,875
Mercantile Bancorporation, Inc. 60,500 2,722,500
National City Corp. 222,209 7,721,763
Northern Trust Corp. 45,000 2,373,750
Norwest Corp. 50,000 1,825,000
River Forest Bancorp 10,000 290,000
64,936,989
NORTHEAST - 25.3%
Banc One Corp. 119,900 4,271,438
Bank of Boston Corp. 65,000 3,160,625
Bank of New York Co., Inc. 315,324 16,357,433
Chase Manhattan Corp. 150,000 11,175,000
CoreStates Financial Corp. 202,700 8,716,100
Fleet Financial Group, Inc. 518,367 21,317,839
Long Island Bancorp., Inc. 55,600 1,522,050
Morgan (J.P.) & Co., Inc. 57,500 4,707,813
Star Banc Corp. 100,000 6,300,000
U.S. Bancorp 100,000 3,087,500
80,615,798
SOUTHEAST - 4.1%
BanPonce Corp. 178,501 7,854,044
First Tennessee National Corp. 170,000 5,355,000
13,209,044
WEST - 15.7%
BankAmerica Corp. 231,800 16,515,750
California Federal Bancorp., Inc. 87,300 1,320,413
First Interstate Bancorp 55,000 8,985,625
First Security Corp. 60,000 1,612,500
Glendale Federal Bank FSB (a) 128,000 2,000,000
Sterling Financial Corp. 48,000 624,000
Union Bank of San Francisco 110,000 5,720,000
Wells Fargo & Co. 40,000 9,865,000
Zions Bancorporation 48,700 3,591,625
50,234,913
MONEY CENTER - 8.3%
Chemical Banking Corp. 215,000 15,399,375
Citicorp 140,000 10,920,000
26,319,375
MULTI-REGIONAL - 1.0%
NationsBank Corp. 40,900 3,016,375
TOTAL BANKS 258,897,868
SHARES VALUE (NOTE 1)
CREDIT & OTHER FINANCE - 11.2%
FINANCIAL SERVICES - 4.6%
American Express Co. 317,000 $ 14,582,000
PERSONAL CREDIT INSTITUTIONS - 6.6%
Beneficial Corp. 140,500 7,306,000
Household International, Inc. 203,700 13,698,825
21,004,825
TOTAL CREDIT & OTHER FINANCE 35,586,825
TOTAL COMMON STOCKS
(Cost $244,835,447) 294,484,693
REPURCHASE AGREEMENTS - 7.7%
MATURITY VALUE
AMOUNT (NOTE 1)
Investments in repurchase agreements
(U.S. Treasury obligations) in a joint
trading account at 5.41%, dated
2/29/96 due 3/1/96 $ 24,722,715 24,719,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $269,554,447) $ 319,203,693
LEGEND
1. Non-income producing
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $299,073,500 and $195,570,404, respectively (see Note 3 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $101,949 for the period
(see Note 4 of Notes to Financial Statements).
INCOME TAX INFORMATION
At February 29, 1996, the aggregate cost of investment securities for
income tax purposes was $269,930,151. Net unrealized appreciation
aggregated $49,273,542, of which $50,327,025 related to appreciated
investment securities and $1,053,483 related to depreciated investment
securities.
The fund hereby designates approximately $7,686,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 88% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate shareholders
(unaudited).
The fund will notify shareholders in January 1997 of the applicable
percentage for use in preparing 1996 income tax returns.
REGIONAL BANKS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 29, 1996
ASSETS
Investment in $ 319,203,693
securities, at
value
(including
repurchase
agreements
of
$24,719,000)
(cost
$269,554,447
) - See
accompanyin
g schedule
Cash 543
Receivable for 604,425
investments
sold
Receivable for 2,187,309
fund shares
sold
Dividends 714,589
receivable
Redemption 334
fees
receivable
Other 3,107
receivables
TOTAL ASSETS 322,714,000
LIABILITIES
Payable for $ 6,390,922
investments
purchased
Payable for 788,197
fund shares
redeemed
Accrued 156,583
management
fee
Other payables 200,700
and
accrued
expenses
TOTAL 7,536,402
LIABILITIES
NET ASSETS $ 315,177,598
Net Assets
consist of:
Paid in capital $ 250,099,147
Undistributed 2,409,873
net
investment
income
Accumulated 13,019,332
undistributed
net realized
gain (loss) on
investments
and foreign
currency
transactions
Net unrealized 49,649,246
appreciation
(depreciation
) on
investments
NET ASSETS, for $ 315,177,598
12,930,654
shares
outstanding
NET ASSET $24.37
VALUE and
redemption
price per
share
($315,177,59
8 (divided by)
12,930,654
shares)
Maximum $25.12
offering price
per share
(100/97.00 of
$24.37)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 29, 1996
INVESTMENT $ 6,230,263
INCOME
Dividends
Interest 2,558,894
TOTAL 8,789,157
INCOME
EXPENSES
Management $ 1,410,233
fee
Transfer agent 1,646,867
Fees
Redemption (138,919
fees )
Accounting 231,139
fees and
expenses
Non-interested 1,181
trustees'
compensatio
n
Custodian fees 14,374
and
expenses
Registration 58,297
fees
Audit 24,682
Legal 980
Miscellaneous 2,938
Total 3,251,772
expenses
before
reductions
Expense (28,145 3,223,627
reductions )
NET 5,565,530
INVESTMENT
INCOME
REALIZED AND 22,328,052
UNREALIZED
GAIN (LOSS)
Net realized
gain (loss) on
investment
securities
Change in net 44,057,165
unrealized
appreciation
(depreciation
)
on
investment
securities
NET GAIN (LOSS) 66,385,217
NET INCREASE $ 71,950,747
(DECREASE)
IN NET ASSETS
RESULTING
FROM
OPERATIONS
OTHER $ 2,017,787
INFORMATION
Sales
charges paid
to FDC
Deferred $ 3,130
sales
charges
withheld
by FDC
Exchange $ 98,505
fees withheld
by FSC
Expense $ 18,291
reductions
Directed
brokerage
arrangement
s
Custodian 988
interest
credits
Transfer 8,866
agent
interest
credits
$ 28,145
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
FEBRUARY 29, FEBRUARY 28,
1996 1995
Operations $ 5,565,530 $ 2,858,182
Net
investment
income
Net realized 22,328,052 6,429,187
gain (loss)
Change in 44,057,165 (2,016,821
net )
unrealized
appreciation
(depreciation
)
NET INCREASE 71,950,747 7,270,548
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
Distributions to (3,155,657 (1,863,695
shareholders ) )
From net
investment
income
From net (9,088,286 (6,217,044
realized gain ) )
TOTAL (12,243,943 (8,080,739
DISTRIBUTION ) )
S
Share 388,478,435 301,180,682
transactions
Net proceeds
from sales of
shares
Reinvestmen 11,963,979 7,855,119
t of
distributions
Cost of (309,887,067 (241,446,435
shares ) )
redeemed
Paid in 312,663 394,744
capital
portion of
redemption
fees
NET INCREASE 90,868,010 67,984,110
(DECREASE)
IN NET
ASSETS
RESULTING
FROM SHARE
TRANSACTIO
NS
TOTAL 150,574,814 67,173,919
INCREASE
(DECREASE)
IN NET ASSETS
NET ASSETS
Beginning of 164,602,784 97,428,865
period
End of period $ 315,177,598 $ 164,602,784
(including
undistribute
d net
investment
income of
$2,409,873
and
$1,047,856
,
respectivel
y)
OTHER
INFORMATION
Shares
Sold 17,599,773 16,228,773
Issued in 512,815 468,963
reinvestment
of
distributions
Redeemed (14,323,517 (12,971,096
) )
Net increase 3,789,071 3,726,640
(decrease)
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEAR ENDED YEARS ENDED FEBRUARY 28, TEN MONTHS YEAR ENDED
FEBRUARY 29, ENDED APRIL 30,
FEBRUARY 28,
SELECTED PER-SHARE DATA D 1996 1995 1994 1993 1992
</TABLE>
Net asset $ 18.01 $ 17.99 $ 20.88 $ 16.48 $ 11.40
value,
beginning of
period
Income from
Investment
Operations
Net .52 .37 .19 .16 .25
investment
income
Net realized 6.78 .87 .93 5.09 5.37
and
unrealized
gain (loss)
Total from 7.30 1.24 1.12 5.25 5.62
investment
operations
Less (.25) (.29) (.15) (.11) (.15)
Distributions
From net
investment
income
From net (.72) (.98) (3.92) (.81) (.53)
realized gain
Total (.97) (1.27) (4.07) (.92) (.68)
distributions
Redemption .03 .05 .06 .07 .14
fees added to
paid in
capital
Net asset $ 24.37 $ 18.01 $ 17.99 $ 20.88 $ 16.48
value, end of
period
TOTAL 40.94% 7.79% 6.46% 33.10% 52.34%
RETURN B, C
RATIOS AND
SUPPLEMENT
AL DATA
Net assets, $ 315,178 $ 164,603 $ 97,429 $ 315,520 $ 156,570
end of period
(000 omitted)
Ratio of 1.41% 1.58% 1.62% 1.49% 1.77%
expenses to A
average net
assets
Ratio of 1.40% 1.56% 1.60% 1.49% 1.77%
expenses to E E E A
average net
assets after
expense
reductions
Ratio of net 2.42% 1.99% .88% 1.06% 1.80%
investment A
income to
average net
assets
Portfolio 103% 106% 74% 63% 89%
turnover rate A
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING
THE PERIODS SHOWN (SEE NOTE 7 OF NOTES TO FINANCIAL STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE
YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES
OUTSTANDING DURING THE PERIOD.
E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES WHO EITHER
PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES (SEE NOTE 7 OF NOTES TO FINANCIAL
STATEMENTS).
</TABLE>
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 securities that have grown in value), but does not include certain
fees paid by shareholders upon exchange or redemption. If Fidelity had not
reimbursed certain expenses, the past one, five and 10 year total returns
would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 29, 1996 YEAR YEARS YEARS
BIOTECHNOLOGY 44.97% 81.01% 364.12%
BIOTECHNOLOGY 40.62%
(INCL. 3% SALES CHARGE) 75.58% 350.20%
S&P 500 34.70% 101.14% 286.76%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one, five, or 10 years. You can compare
these figures to the performance of the S&P 500 - a common proxy for the
U.S. stock market. This benchmark includes reinvested dividends and capital
gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 29, 1996 YEAR YEARS YEARS
BIOTECHNOLOGY 44.97% 12.60% 16.59%
BIOTECHNOLOGY 40.62% 11.92% 16.24%
(INCL. 3% SALES CHARGE)
S&P 500 34.70% 14.99% 14.47%
AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and
show you what would have happened if the fund had performed at a constant
rate each year.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of growth in the long run
and volatility in the short run. Unlike the broader
market, however, some sectors may not have
a history of growth in the long run. And, as
with all stock funds, the share price and
return of a fund that invests in a sector will
vary. That means if you sell your shares
during a sector downturn, you might lose
money. But if you can identify a sector that is
about to experience rapid growth you may
have the potential for above-average gains.
(checkmark)
$10,000 OVER 10 YEARS
19860228 9700.00 10000.00
19860331 11352.79 10558.00
19860430 11524.39 10438.69
19860531 12093.39 10994.03
19860630 12770.76 11179.83
19860731 11045.72 10554.88
19860831 11479.24 11338.05
19860930 9510.34 10400.39
19861031 10214.80 11000.50
19861130 9989.01 11267.81
19861231 9347.77 10980.48
19870131 10594.13 12459.55
19870228 12770.76 12951.70
19870331 12716.57 13326.01
19870430 12554.00 13207.41
19870531 12499.81 13322.31
19870630 12409.50 13995.09
19870731 12427.56 14704.64
19870831 12933.33 15253.12
19870930 12743.67 14919.08
19871031 8823.93 11705.51
19871130 7965.92 10740.97
19871231 9032.66 11558.36
19880131 9488.95 12044.97
19880229 9842.80 12606.27
19880331 9777.62 12216.73
19880430 9600.69 12352.34
19880531 9414.45 12459.80
19880630 9731.06 13031.71
19880731 9721.75 12982.19
19880831 9451.70 12540.79
19880930 9647.25 13075.03
19881031 9544.82 13438.52
19881130 9097.84 13246.35
19881231 9405.14 13478.16
19890131 10056.98 14464.76
19890228 9982.48 14104.59
19890331 10718.13 14433.22
19890430 11081.30 15182.31
19890531 11584.15 15797.19
19890630 11286.17 15707.15
19890731 12329.11 17125.50
19890831 12794.71 17461.16
19890930 13334.81 17389.57
19891031 13381.37 16986.13
19891130 13800.41 17332.65
19891231 13537.05 17748.63
19900131 12524.14 16557.70
19900228 13707.45 16771.29
19900331 14284.90 17215.73
19900430 14464.76 16785.34
19900531 16500.06 18421.91
19900630 17652.31 18296.64
19900731 17700.17 18238.09
19900831 17154.52 16589.37
19900930 16771.60 15781.47
19901031 16915.20 15713.61
19901130 18963.78 16728.71
19901231 19540.42 17195.44
19910131 21784.53 17945.16
19910228 24871.41 19228.24
19910331 27438.91 19693.56
19910430 26243.35 19740.82
19910531 27909.29 20593.63
19910630 26427.48 19650.44
19910731 28806.57 20566.15
19910831 30825.19 21053.57
19910930 32421.55 20701.97
19911031 35614.27 20979.38
19911130 33235.18 20133.91
19911231 38894.26 22437.23
19920131 38114.67 22019.90
19920229 35188.52 22306.16
19920331 32518.68 21871.19
19920430 29485.74 22514.20
19920531 31600.25 22624.52
19920630 31045.61 22287.41
19920731 32668.53 23198.97
19920831 30625.29 22723.39
19920930 30520.20 22991.53
19921031 32014.69 23072.00
19921130 35167.12 23858.75
19921231 34871.34 24152.21
19930131 33079.29 24355.09
19930228 27739.96 24686.32
19930331 28157.29 25207.20
19930430 28881.47 24597.19
19930531 30747.17 25256.39
19930630 30931.28 25329.64
19930731 29912.52 25228.32
19930831 31041.75 26184.47
19930930 32318.28 25982.85
19931031 34724.05 26520.70
19931130 34454.01 26268.75
19931231 35116.83 26586.60
19940131 36319.71 27490.55
19940228 33889.40 26745.55
19940331 30464.86 25579.45
19940430 29912.52 25906.86
19940531 29409.27 26331.74
19940630 28243.21 25686.61
19940731 28316.85 26529.13
19940831 30968.11 27616.82
19940930 30869.91 26940.21
19941031 29814.32 27546.37
19941130 29261.98 26543.13
19941231 28734.18 26936.76
19950131 30022.98 27635.23
19950228 31054.03 28712.18
19950331 31557.27 29559.47
19950430 32539.22 30430.00
19950531 32833.80 31646.29
19950630 34024.41 32381.43
19950731 35546.43 33455.20
19950831 36970.25 33539.17
19950930 38627.28 34954.52
19951031 38320.42 34829.74
19951130 39596.95 36358.76
19951231 42842.72 37059.03
19960131 45376.63 38320.52
19960229 45019.91 38675.75
Let's say you invested $10,000 in Fidelity Select Biotechnology Portfolio
on February 28, 1986, and paid a 3% sales charge. By February 29, 1996,
your investment would have grown to $45,020 - a 350.20% increase. That
compares to $10,000 invested in the S&P 500, which would have grown to
$38,676 over the same period - a 286.76% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 29, 1996
% OF FUND'S
INVESTMENTS
Amgen, Inc. 9.7
Biogen, Inc. 6.9
Genentech, Inc. special 6.2
Merck & Co., Inc. 4.6
Schering-Plough Corp. 3.2
Pharmacia & Upjohn, Inc. 3.0
SmithKline Beecham PLC ADR 2.8
Roche Holdings Ltd. participation certificates 2.5
Protein Design Labs, Inc. 2.0
Genetics Institute, Inc. depositary shares 1.8
TOP INDUSTRIES AS OF FEBRUARY 29, 1996
Row: 1, Col: 1, Value: 22.9
Row: 1, Col: 2, Value: 1.6
Row: 1, Col: 3, Value: 1.9
Row: 1, Col: 4, Value: 6.9
Row: 1, Col: 5, Value: 25.3
Row: 1, Col: 6, Value: 41.4
Biotechnology 41.4%
Drugs 25.3%
Pharmaceutical
Preparations 6.9%
Hosptials 1.9%
Medical Supplies &
Appliances 1.6%
All Others 22.9% *
* INCLUDES SHORT-TERM INVESTMENTS
BIOTECHNOLOGY PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Karen Firestone,
Portfolio Manager
of Fidelity Select
Biotechnology Portfolio
Q. HOW DID THE FUND PERFORM, KAREN?
A. Very well. For the 12 months ended February 29, 1996, the fund returned
44.97%. The S&P 500 Index returned 34.70% for the same time period.
Q. HOW DO YOU ACCOUNT FOR THE FUND'S STRONG SHOWING?
A. The relative performance of the biotechnology sector was very strong,
especially during the past six months. The negative sentiments that plagued
biotech stocks for nearly three years began to dissipate in early 1995.
That was partly the result of some tangible successes in the discovery of
new drugs - the lifeblood of the biotech industry. I think that the recent
successes with new drugs were heralded by the market as the coming of age
of this industry. While biotechnology has always been - and continues to be
- - an inherently risky business, the market was enamored of recent successes
in this industry and rewarded them accordingly.
Q. DID THIS KIND OF MARKET BACKDROP CAUSE YOU TO CHANGE YOUR INVESTMENT
STRATEGY?
A. No. I continue to focus on the largest names in the industry. Though
they're still risky, they do provide some stability. Large biotech
companies such as Amgen and Biogen have been the top holdings in the fund
for some time now. I have faith in them because of their strong managements
and product development cycles. Biogen performed especially well during the
period when its drug for multiple sclerosis met with approval at the Food &
Drug Administration's Advisory Committee meeting. The fund also continues
to hold relatively large positions in other solid performers, such as Roche
Holdings, Protein Design Labs and Genetics Institute.
Q. HOW LONG CAN THE BIG BIOTECH STOCKS SUSTAIN THEIR GROWTH RATES?
A. Despite the fact they're among the largest biotechnology companies in
the world, companies such as Biogen, Amgen and Genentech aren't that large
compared to many of the major drug companies. They look huge in an industry
where many companies have no sales at all. In other words, there's still
plenty of room for them to grow.
Q. WHAT PARTICULAR CHALLENGES DID YOU FACE DURING THE PAST SIX MONTHS?
A. There's no question that this was a very strong period for biotech
stocks. Many of the top names - the stocks that I like to own - performed
very well. In this kind of investing environment, the challenge is in
knowing when to sell. It can be tricky. I have to try to determine whether
a stock that's appreciated significantly has any upside potential left in
it. Naturally, in this kind of market the goal is to maximize returns while
limiting what you give back when market sentiment inevitably changes.
Q. WHERE ELSE DID YOU FIND OPPORTUNITIES?
A. Genomics is an interesting segment of the biotechnology sector. Genomics
is the discovery and categorization of genes as they relate to diseases.
This technology has really captured the public's attention and the fund's
holdings in Genome Therapeutics, Sequana Therapeutics and Human Genome
Sciences represent exposure to this emerging area.
Q. DRUG COMPANIES SEEM TO MAKE UP A LARGE PORTION OF THE FUND . . .
A. That's right. Many of the large drug companies, such as Merck and
Schering-Plough, have large biotechnology divisions. It's nearly impossible
for a fund this size to focus only on companies that are exclusively
biotech - there are just not enough good ones out there. Rather than go
lower in quality, I prefer to diversify into drug and pharmaceutical
companies. I also think this strategy helps to limit the downside in a
changing market environment.
Q. ANY DISAPPOINTMENTS DURING THE PAST SIX MONTHS?
A. As I said, this was an extremely good time for biotech stocks. Many of
the fund's holdings performed very well during the period. However, I do
wish the fund had held larger positions in Genzyme and Chiron, two
companies that did exceptionally well during the period.
Q. WHAT'S AHEAD FOR THE FUND?
A. I don't expect my strategy to change much. My goal is to pick the best
stocks in the biotechnology sector that I think will outperform the market
and other biotech companies. I also intend to watch out for stocks that
have risen so much and so fast that their upside potential could be
limited.
FUND FACTS
START DATE: December 16, 1985
TRADING SYMBOL: FBIOX
SIZE: as of February 29, 1996, more than
$1.0 billion
MANAGER: Karen Firestone, since 1992;
manager, Fidelity Select Health Care Portfolio
since February 1995; manager, Fidelity Select
Air Transportation Portfolio, 1987-1992;
Fidelity Select Leisure Portfolio, 1989-1992;
joined Fidelity in 1983
(checkmark)
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
BIOTECHNOLOGY PORTFOLIO
INVESTMENTS FEBRUARY 29, 1996
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 84.9%
SHARES VALUE (NOTE 1)
AGRICULTURE - 0.1%
CROPS - 0.1%
DEKALB Genetics Corp. Class B 23,700 $ 1,570,125
CELLULAR - 0.1%
CELLULAR & COMMUNICATION SERVICES - 0.1%
Millicom International Cellular SA (a) 26,942 1,020,428
CHEMICALS & PLASTICS - 0.7%
CHEMICALS - 0.7%
Hoechst AG Ord. 25,000 7,836,555
DRUG STORES - 1.3%
Eckerd Corp. (a) 25,800 1,157,775
Revco (D.S.), Inc. (a) 425,000 11,793,750
Rite Aid Corp. 50,000 1,575,000
14,526,525
DRUGS & PHARMACEUTICALS - 74.4%
BIOTECHNOLOGY - 41.4%
Alkermes, Inc. (a) 388,200 3,833,475
Amgen, Inc. (a) 1,816,100 108,511,975
Athena Neurosciences, Inc. (a) 499,200 6,988,800
Bio-Rad Laboratories, Inc. Class A (a) 36,000 1,390,500
Biochem Pharmaceuticals, Inc. (a) 74,000 3,415,551
Biogen, Inc. (a) 1,174,600 76,789,475
Cambridge Neuroscience, Inc. (a) 255,700 2,429,150
Cell Genesys, Inc. (a) 336,600 2,903,175
Chiron Corp. (a) 160,800 17,868,900
COR Therapeutics, Inc. (a)(c) 1,025,500 10,703,656
Creative Biomolecules, Inc. (a) 58,100 515,638
Cytogen Corp. (a) 178 1,424
Depotech Corp. (a) 1,000 20,000
Dynagen, Inc. (warrants) (a) 40,000 90,000
Genentech, Inc. special (a) 1,273,800 69,581,325
Genetics Institute, Inc. (a):
depositary shares 294,180 20,077,785
(warrants) 40,000 980,000
Genome Therapeutics Corp. (a) 550,000 7,356,250
Genzyme Corp. (a) 200,200 13,813,800
Genzyme Corp.-Tissue Repair (a) 9,539 171,702
Gilead Sciences, Inc. (a) 183,700 6,521,350
Human Genome Sciences, Inc. (a) 113,800 4,736,925
Idexx Laboratories (a) 80,000 3,840,000
Immulogic Pharmaceutical Corp. (a) 80,500 1,589,875
Insite Vision, Inc. (a)(c) 520,000 3,575,000
Interneuron Pharmaceuticals, Inc. (a) 387,400 11,331,450
Magainin Pharmaceuticals, Inc. (a) 106,700 1,373,763
NABI, Inc. (a) 187,990 2,208,883
Neurex Corp. (a) 200,000 3,125,000
Neurogen (a) 62,400 1,989,000
North American Vaccine, Inc. (a) 143,300 2,113,675
Pharmacia & Upjohn, Inc. 814,800 34,119,750
Protein Design Labs, Inc. (a)(c) 812,900 22,049,913
Quidel Corp. (a) 95,500 513,313
Sequana Therapeutics, Inc. (a) 216,800 4,986,400
Somatix Therapy Corp. (a) 689,600 3,879,000
Sugen, Inc. (a) 323,900 4,615,575
Vical, Inc. (a) 198,900 3,431,025
463,442,478
COMMERCIAL LABORATORY RESEARCH - 0.7%
Cryomedical Sciences, Inc. (a) 393,000 724,594
INCYTE Pharmaceuticals, Inc. (a) 187,600 6,003,200
SHARES VALUE (NOTE 1)
Medarex, Inc. (a) 175,000 $ 1,137,500
Medarex, Inc. (warrants) (a) 175,000 207,813
8,073,107
DRUGS - 25.3%
Allergan, Inc. 325,600 12,128,600
ALZA Corp. Class A (a) 100,000 3,325,000
Ares Serono Class B (Bearer) 12,300 9,683,992
Astra AB:
Class A Free shares 80,000 3,664,709
Class B Free shares 165,000 7,534,080
Barr Laboratories, Inc. (a) 50,000 1,843,750
Bristol-Myers Squibb Co. 100,000 8,512,500
Dura Pharmaceuticals, Inc. (a) 130,000 5,492,500
Elan Corp. PLC (a):
ADR 106,075 6,152,350
(warrants) 14,339 338,759
Glaxo Holdings PLC 47,000 649,920
Glaxo PLC sponsored ADR 100,000 2,737,500
IVAX Corp. 105,300 3,014,215
Lilly (Eli) & Co. 260,000 15,730,000
Lynx Therapeutics, Inc. (a) 193,995 -
Matrix Pharmaceutical, Inc. (a) 253,800 5,393,250
Merck & Co., Inc. 780,000 51,675,000
Mylan Laboratories, Inc. 60,100 1,171,950
Novo Industri A/S ADR 16,000 548,000
Novo-Nordisk AS Class B 15,500 2,110,974
Pfizer, Inc. 165,600 10,908,900
Roche Holdings Ltd. participation
certificates 3,650 28,311,764
Sandoz AG (Reg.) 2,500 2,342,807
Schering-Plough Corp. 640,900 35,970,513
Schering-Plough Corp. Unit (b) 6,300 1,196,370
Sequus Pharmaceuticals, Inc. (a) 684,400 11,292,600
SmithKline Beecham PLC ADR 567,900 31,092,525
Takeda Chemical Industries Ltd. 361,000 5,795,754
Watson Pharmaceuticals, Inc. (a) 218,894 9,412,442
Yamanouchi Pharmaceutical Co. Ltd. 233,000 5,201,634
283,232,358
IN VITRO, IN VIVO DIAGNOSTIC SUBSTANCES - 0.1%
Igen, Inc. (a) 173,900 978,188
Serologicals Corp. (a) 15,000 301,875
1,280,063
PHARMACEUTICAL PREPARATIONS - 6.9%
Advanced Therapeutic Systems Ltd. (a) 14,339 444,509
Alpharma, Inc. Class A 116,700 2,990,438
Arris Pharmaceutical Corp. (a)(c) 523,500 7,263,563
CIBA-GEIGY AG (Reg.) 7,400 6,595,980
Cocensys, Inc. (a) 206,000 1,364,750
Copley Pharmaceutical, Inc. (a) 301,600 5,692,700
Guilford Pharmaceuticals, Inc. (a)(c) 388,700 9,425,975
Immunex Corp. (a) 734,700 11,755,200
Inhale Therapeutic Systems (a)(c) 673,500 8,418,750
La Jolla Pharmaceutical Co. (a) 387,300 2,783,719
Ligand Pharmaceuticals, Inc. Class B (a) 957,065 11,604,413
Neurobiological Technologies, Inc. (a) 57,900 246,075
Nexstar Pharmaceuticals, Inc. (a) 125,000 3,140,625
Noven Pharmaceuticals, Inc. (a) 50,000 818,750
Procept, Inc. (a) 17,300 45,413
T Cell Sciences, Inc. (a) 394,100 1,157,669
Theratech, Inc. (a) 130,000 2,860,000
76,608,529
TOTAL DRUGS & PHARMACEUTICALS 832,636,535
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
ELECTRICAL EQUIPMENT - 0.0%
TV & RADIO COMMUNICATION EQUIPMENT - 0.0%
ASN (warrants)(a) 5,000 $ -
HOME FURNISHINGS - 0.3%
FURNITURE - 0.3%
Kinetic Concepts, Inc. 210,500 2,868,063
HOUSEHOLD PRODUCTS - 1.1%
SOAPS & DETERGENTS - 1.1%
Procter & Gamble Co. 150,000 12,300,000
MEDICAL EQUIPMENT & SUPPLIES - 3.1%
MEDICAL SUPPLIES & APPLIANCES - 1.6%
Abbott Laboratories 100,000 4,175,000
Boston Scientific Corp. (a) 129,005 6,192,240
Cygnus, Inc. 100,000 2,212,500
Exogen, Inc. (a) 213,500 4,323,375
Hemasure, Inc. (a) 51,000 637,500
17,540,615
MEDICAL TECHNOLOGY - 1.5%
Conceptus, Inc. (a) 55,000 1,086,250
Haemonetics Corp. (a) 180,700 3,071,900
Pall Corp. 300,000 8,175,000
St. Jude Medical, Inc. (a) 97,400 3,676,850
Sonus Pharmaceuticals, Inc. (a) 50,000 737,500
16,747,500
OPHTHALMIC GOODS - 0.0%
Bausch & Lomb, Inc. 16,000 622,000
TOTAL MEDICAL EQUIPMENT & SUPPLIES 34,910,115
MEDICAL FACILITIES MANAGEMENT - 3.8%
HEALTH SERVICES - 0.1%
Healthwise America, Inc. (a) 22,950 952,425
HOSPITALS - 1.9%
Columbia/HCA Healthcare Corp. 363,700 19,912,567
Vencor, Inc. (a) 24,300 908,213
20,820,780
HOSPITALS, GENERAL MEDICAL - 0.2%
Medpartners/Mullikin, Inc. 60,000 1,800,000
HMOS & OUTPATIENT CARE - 1.1%
Health Systems International, Inc. (a) 350,000 12,775,000
MEDICAL SERVICES - 0.3%
Foundation Health Corp. (a) 80,000 3,120,000
NURSING CARE & NURSING HOMES - 0.1%
ARV Assisted Living, Inc. (a) 43,000 752,500
SKILLED NURSING CARE FACILITIES - 0.1%
TheraTx, Inc. (a) 149,500 1,756,625
TOTAL MEDICAL FACILITIES MANAGEMENT 41,977,330
TOTAL COMMON STOCKS
(Cost $774,947,303) 949,645,676
REPURCHASE AGREEMENTS - 15.1%
MATURITY VALUE
AMOUNT (NOTE 1)
Investments in repurchase agreements
(U.S. Treasury obligations) in a joint
trading account at 5.41%, dated
2/29/96 due 3/1/96 $ 169,204,424 $ 169,179,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $944,126,303) $ 1,118,824,676
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 $1,196,370 or 0.1% of net
assets.
3. A company in which the fund has ownership of at least 5% of the voting
securities is an affiliated company. Transactions during the period with
companies that are or were affiliates are as follows:
PURCHASES SALES DIVIDEND MARKET
AFFILIATE COST COST INCOME VALUE
Arris Pharmaceutical Corp. $ - $ - $ - $ 7,263,563
COR Therapeutics, Inc. 485,155 260,213 - 10,703,656
Guilford Pharmaceutical Corp. 635,000 - - 9,425,975
Inhale Therapeutic Systems 1,865,813 - - 8,418,750
Insite Vision, Inc. 468,125 2,372,913 - 3,575,000
Protein Design Labs, Inc. 1,313,749 - - 22,049,913
SciGenics, Inc. - 692,994 - -
Totals $ 4,767,842 $ 3,326,120 $ - $ 61,436,857
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $734,155,417 and $323,552,102, respectively (see Note 3 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $163,549 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 $6,363,675 and $6,914,600, respectively (see Note 6
of Notes to Financial Statements).
Distribution of investments by country of issue, as a percentage of total
value of investment in securities, is as follows:
United States 88.8%
Switzerland 4.2
United Kingdom 3.1
Sweden 1.0
Japan 1.0
Others (individually less than 1%) 1.9
TOTAL 100.0%
INCOME TAX INFORMATION
At February 29, 1996, the aggregate cost of investment securities for
income tax purposes was $945,501,891. Net unrealized appreciation
aggregated $173,322,785, of which $187,952,260 related to appreciated
investment securities and $14,629,475 related to depreciated investment
securities.
The fund hereby designates approximately $905,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 100% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate shareholders
(unaudited).
The fund will notify shareholders in January 1997 of the applicable
percentage for use in preparing 1996 income tax returns.
BIOTECHNOLOGY PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 29, 1996
ASSETS
Investment in $ 1,118,824,676
securities, at
value
(including
repurchase
agreements
of
$169,179,000
) (cost
$944,126,303
) - See
accompanyin
g schedule
Cash 303,640
Receivable for 3,346,434
investments
sold
Receivable for 5,595,082
fund shares
sold
Dividends 182,722
receivable
Redemption 4,053
fees
receivable
Other 1,326,394
receivables
TOTAL ASSETS 1,129,583,001
LIABILITIES
Payable for $ 2,376,779
investments
purchased
Payable for 22,108,164
fund shares
redeemed
Accrued 585,404
management
fee
Other payables 734,257
and
accrued
expenses
Collateral on 6,914,600
securities
loaned,
at value
TOTAL 32,719,204
LIABILITIES
NET ASSETS $ 1,096,863,797
Net Assets
consist of:
Paid in capital $ 902,318,214
Undistributed 729,404
net
investment
income
Accumulated 19,117,806
undistributed
net realized
gain (loss) on
investments
and foreign
currency
transactions
Net unrealized 174,698,373
appreciation
(depreciation
) on
investments
NET ASSETS, for $ 1,096,863,797
29,970,929
shares
outstanding
NET ASSET $36.60
VALUE and
redemption
price per
share
($1,096,863,
797 (divided by)
29,970,929
shares)
Maximum $37.73
offering price
per share
(100/97.00 of
$36.60)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 29, 1996
INVESTMENT $ 2,600,332
INCOME
Dividends
Interest 8,100,147
(including
income on
securities
loaned of
$192,625)
TOTAL 10,700,479
INCOME
EXPENSES
Management $ 3,676,822
fee
Transfer agent 4,809,982
Fees
Redemption (234,230
fees )
Accounting and 538,798
security
lending fees
Non-interested 3,143
trustees'
compensatio
n
Custodian fees 53,215
and
expenses
Registration 220,812
fees
Audit 40,776
Legal 7,598
Miscellaneous 10,307
Total 9,127,223
expenses
before
reductions
Expense (545,247 8,581,976
reductions )
NET 2,118,503
INVESTMENT
INCOME
REALIZED AND
UNREALIZED
GAIN (LOSS)
Net realized
gain (loss)
on:
Investment 60,840,794
securities
(including
realized loss
of
$1,149,706
on sales of
investments
in affiliated
issuers)
Foreign 3,491 60,844,285
currency
transactions
Change in net 158,651,823
unrealized
appreciation
(depreciation
)
on
investment
securities
NET GAIN (LOSS) 219,496,108
NET INCREASE $ 221,614,611
(DECREASE)
IN NET ASSETS
RESULTING
FROM
OPERATIONS
OTHER $ 3,591,690
INFORMATION
Sales
charges paid
to FDC
Deferred $ 28,707
sales
charges
withheld
by FDC
Exchange $ 160,733
fees withheld
by FSC
Expense $ 22,133
reductions
Directed
brokerage
arrangement
s
Custodian 5,727
interest
credits
Transfer 13,625
agent
interest
credits
FMR 503,762
reimburseme
nt
$ 545,247
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
FEBRUARY 29, FEBRUARY 28,
1996 1995
Operations $ 2,118,503 $ (1,097,554)
Net
investment
income (loss)
Net realized 60,844,285 (28,000,457)
gain (loss)
Change in 158,651,823 (10,252,135)
net
unrealized
appreciation
(depreciation
)
NET INCREASE 221,614,611 (39,350,146)
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
Distributions to (1,392,589) -
shareholders
from net
investment
income
Share 886,867,937 208,388,703
transactions
Net proceeds
from sales of
shares
Reinvestmen 1,358,134 -
t of
distributions
Cost of (460,786,384) (202,202,871)
shares
redeemed
Paid in 1,005,318 214,866
capital
portion of
redemption
fees
NET INCREASE 428,445,005 6,400,698
(DECREASE)
IN NET
ASSETS
RESULTING
FROM SHARE
TRANSACTIO
NS
TOTAL 648,667,027 (32,949,448)
INCREASE
(DECREASE)
IN NET ASSETS
NET ASSETS
Beginning of 448,196,770 481,146,218
period
End of period $ 1,096,863,797 $ 448,196,770
(including
undistribute
d net
investment
income of
$729,404
and $0,
respectivel
y)
OTHER
INFORMATION
Shares
Sold 26,953,463 8,583,014
Issued in 41,419 -
reinvestment
of
distributions
Redeemed (14,737,686) (8,294,600)
Net increase 12,257,196 288,414
(decrease)
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEAR ENDED YEARS ENDED FEBRUARY 28, TEN MONTHS YEAR ENDED
FEBRUARY 29, ENDED APRIL 30,
FEBRUARY 28,
SELECTED PER-SHARE DATA D 1996 1995 1994 1993 1992
</TABLE>
Net asset $ 25.30 $ 27.61 $ 22.60 $ 27.61 $ 26.78
value,
beginning of
period
Income from
Investment
Operations
Net .11 (.06) (.18) (.08) (.11)
investment
income (loss)
Net realized 11.21 (2.26) 5.15 (1.09) 3.36
and
unrealized
gain (loss)
Total from 11.32 (2.32) 4.97 (1.17) 3.25
investment
operations
Less (.07) - - - -
Distributions
From net
investment
income
In excess of - - - - (.02)
net
investment
income
From net - - - (3.89) (2.52)
realized gain
Total (.07) - - (3.89) (2.54)
distributions
Redemption .05 .01 .04 .05 .12
fees added to
paid in
capital
Net asset $ 36.60 $ 25.30 $ 27.61 $ 22.60 $ 27.61
value, end of
period
TOTAL 44.97% (8.37)% 22.17% (5.92)% 12.36%
RETURN B, C
RATIOS AND
SUPPLEMENT
AL DATA
Net assets, $ 1,096,864 $ 448,197 $ 481,146 $ 507,993 $ 679,877
end of period
(000 omitted)
Ratio of 1.44% 1.59% 1.62% 1.50% 1.50%
expenses to F A
average net
assets
Ratio of 1.43% 1.59% 1.61% 1.50% 1.50%
expenses to E E A
average net
assets after
expense
reductions
Ratio of net .35% (.27)% (.69)% (.37)% (.34)%
investment A
income (loss)
to average
net assets
Portfolio 67% 77% 51% 79% 160%
turnover rate A
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING
THE PERIODS SHOWN (SEE NOTE 7 OF NOTES TO FINANCIAL STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE
YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES
OUTSTANDING DURING THE PERIOD.
E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES WHO EITHER
PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES (SEE NOTE 7 OF NOTES TO FINANCIAL
STATEMENTS).
F DURING THE PERIOD, FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES, OR
EXPENSES WERE LIMITED IN ACCORDANCE WITH A STATE EXPENSE LIMITATION. WITHOUT THIS
REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD HAVE BEEN HIGHER.
</TABLE>
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 securities that have grown in value), but does not include certain
fees paid by shareholders upon exchange or redemption.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 29, 1996 YEAR YEARS YEARS
HEALTH CARE 39.68% 129.56% 514.35%
HEALTH CARE 35.49% 122.67% 495.92%
(INCL. 3% SALES CHARGE)
S&P 500 34.70% 101.14% 286.76%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one, five, or 10 years. You can compare
these figures to the performance of the S&P 500 - a common proxy for the
U.S. stock market. This benchmark includes reinvested dividends and capital
gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 29, 1996 YEAR YEARS YEARS
HEALTH CARE 39.68% 18.08% 19.91%
HEALTH CARE 35.49% 17.36% 19.54%
(INCL. 3% SALES CHARGE)
S&P 500 34.70% 14.99% 14.47%
AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and
show you what would have happened if the fund had performed at a constant
rate each year.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of growth in the long run
and volatility in the short run. Unlike the broader
market, however, some sectors may not have
a history of growth in the long run. And, as
with all stock funds, the share price and
return of a fund that invests in a sector will
vary. That means if you sell your shares
during a sector downturn, you might lose
money. But if you can identify a sector that is
about to experience rapid growth you may
have the potential for above-average gains.
(checkmark)
$10,000 OVER 10 YEARS
19860228 9700.00 10000.00
19860331 10996.21 10558.00
19860430 11128.81 10438.69
19860531 11818.35 10994.03
19860630 12610.66 11179.83
19860731 11708.92 10554.88
19860831 12140.97 11338.05
19860930 10483.10 10400.39
19861031 11397.44 11000.50
19861130 11229.98 11267.81
19861231 10978.79 10980.48
19870131 12616.56 12459.55
19870228 14488.78 12951.70
19870331 14401.70 13326.01
19870430 14060.08 13207.41
19870531 14197.40 13322.31
19870630 14535.67 13995.09
19870731 15091.65 14704.64
19870831 15537.09 15253.12
19870930 15245.71 14919.08
19871031 11223.28 11705.51
19871130 10134.78 10740.97
19871231 10908.68 11558.36
19880131 11719.41 12044.97
19880229 12071.30 12606.27
19880331 11771.16 12216.73
19880430 11588.31 12352.34
19880531 11557.26 12459.80
19880630 11860.86 13031.71
19880731 11843.61 12982.19
19880831 11522.76 12540.79
19880930 11909.16 13075.03
19881031 12057.50 13438.52
19881130 11705.61 13246.35
19881231 11871.78 13478.16
19890131 12710.07 14464.76
19890228 12466.58 14104.59
19890331 13124.00 14433.22
19890430 13840.55 15182.31
19890531 14271.87 15797.19
19890630 13950.17 15707.15
19890731 15678.14 17125.50
19890831 16057.45 17461.16
19890930 16173.35 17389.57
19891031 16053.94 16986.13
19891130 16745.83 17332.65
19891231 16915.92 17748.63
19900131 15945.33 16557.70
19900228 15778.24 16771.29
19900331 16407.52 17215.73
19900430 16407.52 16785.34
19900531 18665.11 18421.91
19900630 19301.07 18296.64
19900731 19567.55 18238.09
19900831 18690.40 16589.37
19900930 18127.83 15781.47
19901031 18542.35 15713.61
19901130 20515.02 16728.71
19901231 21029.26 17195.44
19910131 23105.19 17945.16
19910228 25959.11 19228.24
19910331 28273.20 19693.56
19910430 27781.01 19740.82
19910531 29289.33 20593.63
19910630 27968.61 19650.44
19910731 30443.41 20566.15
19910831 31964.73 21053.57
19910930 32608.85 20701.97
19911031 34757.35 20979.38
19911130 32858.88 20133.91
19911231 38629.18 22437.23
19920131 37361.76 22019.90
19920229 35730.30 22306.16
19920331 33550.53 21871.19
19920430 31649.41 22514.20
19920531 32301.09 22624.52
19920630 31056.08 22287.41
19920731 32924.30 23198.97
19920831 32036.29 22723.39
19920930 29818.69 22991.53
19921031 30735.81 23072.00
19921130 32419.63 23858.75
19921231 31894.47 24152.21
19930131 30181.54 24355.09
19930228 26960.81 24686.32
19930331 27704.45 25207.20
19930430 27694.19 24597.19
19930531 28801.96 25256.39
19930630 28699.38 25329.64
19930731 27765.99 25228.32
19930831 28755.80 26184.47
19930930 29653.30 25982.85
19931031 31858.57 26520.70
19931130 31750.87 26268.75
19931231 32665.25 26586.60
19940131 33312.19 27490.55
19940228 32506.08 26745.55
19940331 30385.56 25579.45
19940430 31604.56 25906.86
19940531 33389.52 26331.74
19940630 32859.69 25686.61
19940731 33518.12 26529.13
19940831 37916.21 27616.82
19940930 38188.84 26940.21
19941031 38718.67 27546.37
19941130 39557.14 26543.13
19941231 39674.76 26936.76
19950131 41776.18 27635.23
19950228 42661.58 28712.18
19950331 43821.56 29559.47
19950430 44432.37 30430.00
19950531 44860.47 31646.29
19950630 47130.53 32381.43
19950731 49828.70 33455.20
19950831 50251.16 33539.17
19950930 53067.62 34954.52
19951031 53197.17 34829.74
19951130 55439.07 36358.76
19951231 57871.55 37059.03
19960131 59941.57 38320.52
19960229 59591.62 38675.75
Let's say you invested $10,000 in Fidelity Select Health Care Portfolio on
February 28, 1986, and paid a 3% sales charge. By February 29, 1996, your
investment would have grown to $59,592 - a 495.92% increase. That compares
to $10,000 invested in the S&P 500, which would have grown to $38,676 over
the same period - a 286.76% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 29, 1996
% OF FUND'S
INVESTMENTS
Schering-Plough Corp. 6.5
Bristol-Myers Squibb Co. 5.3
SmithKline Beecham PLC ADR 5.0
Merck & Co., Inc. 4.9
Pharmacia & Upjohn, Inc. 4.2
American Home Products Corp. 3.6
Allergan, Inc. 3.3
Johnson & Johnson 3.2
Pfizer, Inc. 2.8
Amgen, Inc. 2.7
TOP INDUSTRIES AS OF FEBRUARY 29, 1996
Drugs 40.5%
Biotechnology 12.4%
Medical Supplies &
Appliances 9.9%
Medical Technology 6.6%
Hospitals 3.6%
All Others 27.0% *
Row: 1, Col: 1, Value: 27.0
Row: 1, Col: 2, Value: 3.6
Row: 1, Col: 3, Value: 6.6
Row: 1, Col: 4, Value: 9.9
Row: 1, Col: 5, Value: 12.4
Row: 1, Col: 6, Value: 40.5
* INCLUDES SHORT-TERM INVESTMENTS
HEALTH CARE PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Karen Firestone,
Portfolio Manager of Fidelity Select
Health Care Portfolio
Q. HOW DID THE FUND PERFORM, KAREN?
A. The fund did well. For the 12 months ended February 29, 1996, the fund
returned 39.68%, while the S&P 500 Index returned 34.70%.
Q. WHAT FACTORS HELPED THE FUND OUTPERFORM?
A. During the past 12 months, the entire health care sector outperformed
the market for a number of reasons. First, concerns about health care
regulation and reform that had profoundly affected the market in 1993 began
to dissipate in 1994 and were a non-issue throughout 1995 and early 1996.
Secondly, sales of drugs and medical devices grew at a much faster rate in
1995 than the market had anticipated. Finally, the weakness of the U.S.
dollar helped these companies to generate 45%-50% of their revenues
overseas. In short, the relative performance of health care to the general
economy was exceptional.
Q. WHY WERE DRUG SALES SO STRONG DURING THE PAST SIX MONTHS?
A. The top names in the industry have been able to increase earnings
consistently and grow rapidly. What's helped is that there's been an
explosion in the use of prescription drugs in the United States, a
phenomenon that has been largely driven by managed care. It's cheaper and
easier for patients to be treated with drugs than to be admitted to the
hospital. New drugs such as Merck's Fosamax and Cozaar, Bristol-Myers
Squibb's Taxol and Schering-Plough's Claritin all sold very well during the
period. Companies that can adapt to changes in the health care industry -
such as managed care and consolidation - have performed best. On average,
drug stocks went up by 50% during 1995 on strong sales both domestically
and internationally.
Q. MANY OF THE STOCKS YOU MENTIONED HAVE BEEN IN THE FUND'S TOP 10 HOLDINGS
FOR SOME TIME. WHAT CAN YOU TELL US ABOUT SOME OF THE NEW ONES?
A. The newly merged Pharmacia & Upjohn is new to the fund's top 10. With
strong sales and new products, each company was performing well on its own.
The announcement of the merger, however, caused them to go up even more. I
think that the combined company should be able to cut costs, be more
efficient and maintain higher profit margins than either one was
independently. I started buying SmithKline Beecham because it plans to
introduce more drugs over the next five years than any other major
pharmaceutical company. I saw this U.K.-based company as undervalued
relative to its U.S. counterparts which have benefitted from the surging
U.S. stock market.
Q. WHERE ELSE DID YOU FIND OPPORTUNITIES DURING THE PERIOD?
A. The fund didn't own health maintenance organizations (HMOs) in 1995, but
I've begun to buy them again. Enrollment growth is more difficult now than
it was in the early years of HMOs. But the companies that can run their
businesses efficiently should be able to meet their targeted earnings and
continue to grow. In many states, HMOs are still in the very early stages
of development. It's a rapidly changing and volatile field. Since they
didn't have a good 1995, HMOs with strong managements, such as United
Healthcare, have the potential to perform better in 1996.
Q. ANY INVESTMENT DECISIONS THAT WERE DISAPPOINTING DURING THE PAST SIX
MONTHS?
A. Yes. I wish the fund had owned more Rhone Polenc, a French drug company
that the fund did own but, in hindsight, I sold too soon. I also wish I'd
held on to Chiron and Genzyme, two biotechnology stocks that performed
well. Again, I'd owned both but sold them when I thought they were fully
valued, which turned out to be too early.
Q. WHAT'S YOUR OUTLOOK GOING FORWARD?
A. I'll continue to pick the best stocks in the health care sector that I
think will outperform the market in general and health care specifically.
Because of the very strong performance of health care in 1995, it could be
a bit more difficult to outperform the market in 1996. I still believe,
however, that there continue to be some good values.
FUND FACTS
START DATE: July 14, 1981
TRADING SYMBOL: FSPHX
SIZE: as of February 29, 1996, more than
$1.5 billion
MANAGER: Karen Firestone, since February
1995; manager Fidelity Select Biotechnology
Portfolio since 1992; manager, Fidelity Select
Air Transportation portfolio, 1987-1992;
manager, Fidelity Select Leisure Portfolio,
1989-1992; joined Fidelity in 1983
(checkmark)
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
HEALTH CARE PORTFOLIO
INVESTMENTS FEBRUARY 29, 1996
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 84.9%
SHARES VALUE (NOTE 1)
CHEMICALS & PLASTICS - 0.7%
CHEMICALS - 0.7%
Hoechst AG Ord. 34,000 $ 10,657,710
COMPUTER SERVICES & SOFTWARE - 0.1%
CAD/CAM/CAE - 0.1%
Healthdyne Information
Enterprises, Inc. 258,200 968,250
DEFENSE ELECTRONICS - 0.0%
Maxwell Laboratories, Inc. (a) 91,500 732,000
DRUG STORES - 0.9%
Eckerd Corp. (a) 74,000 3,320,750
Revco (D.S.), Inc. (a) 300,060 8,326,665
Rite Aid Corp. 50,000 1,575,000
13,222,415
DRUGS & PHARMACEUTICALS - 55.0%
BIOTECHNOLOGY - 12.4%
Amgen, Inc. (a) 690,000 41,227,500
Athena Neurosciences, Inc. (a) 100,000 1,400,000
Biochem Pharmaceuticals, Inc. (a) 31,200 1,440,070
Biogen, Inc. (a) 249,700 16,324,138
Cambridge Neuroscience, Inc. (a) 45,900 436,050
COR Therapeutics, Inc. (a) 387,100 4,040,356
Cytogen Corp. (a) 255 2,040
Depotech Corp. (a) 2,000 40,000
Elf Sanofi SA 250,000 17,319,873
Genentech, Inc. special (a) 457,400 24,985,475
Genetics Institute, Inc. depositary
shares (a) 90,000 6,142,500
Gilead Sciences, Inc. (a) 146,700 5,207,850
Human Genome Sciences, Inc. (a) 100,000 4,162,500
Magainin Pharmaceuticals, Inc. (a) 70,000 901,250
NABI, Inc. (a) 51,800 608,650
Pharmacia & Upjohn, Inc. 1,543,600 64,638,250
Sequana Therapeutics, Inc. (a) 100,000 2,300,000
191,176,502
COMMERCIAL LABORATORY RESEARCH - 0.2%
INCYTE Pharmaceuticals, Inc. (a) 100,000 3,200,000
DRUGS - 40.5%
Allergan, Inc. 1,371,500 51,088,375
ALZA Corp. Class A (a) 200,000 6,650,000
American Home Products Corp. 562,400 55,396,400
Astra AB Class A Free shares 270,000 12,368,392
Bristol-Myers Squibb Co. 961,100 81,813,638
Dura Pharmaceuticals, Inc. (a) 100,000 4,225,000
Elan Corp. PLC ADR (a) 166,350 9,648,300
Glaxo PLC sponsored ADR 195,000 5,338,125
IVAX Corp. 200,000 5,725,000
Lilly (Eli) & Co. 553,106 33,462,913
Merck & Co., Inc. 1,150,000 76,187,500
Pfizer, Inc. 663,600 43,714,650
Roche Holdings Ltd. participation
certificates 2,000 15,513,295
Sandoz AG (Reg.) 17,200 16,118,514
Schering-Plough Corp. 1,788,400 100,373,950
SmithKline Beecham PLC ADR 1,400,000 76,650,000
Takeda Chemical Industries Ltd. 361,000 5,795,754
Warner-Lambert Co. 75,900 7,504,613
Watson Pharmaceuticals, Inc. (a) 230,000 9,890,000
Yamanouchi Pharmaceutical Co. Ltd. 233,000 5,201,634
622,666,053
SHARES VALUE (NOTE 1)
IN VITRO, IN VIVO DIAGNOSTIC SUBSTANCE - 0.1%
Igen, Inc. (a) 174,000 $ 978,750
PHARMACEUTICAL PREPARATIONS - 1.8%
Advanced Therapeutic Systems Ltd. (a) 27,111 840,441
Arris Pharmaceutical Corp. (a) 250,000 3,468,750
CIBA-GEIGY AG (Reg.) 15,300 13,637,635
Copley Pharmaceutical, Inc. (a) 236,400 4,462,050
ICN Pharmaceuticals, Inc. 100,000 2,300,000
Inhale Therapeutic Systems (a) 39,000 487,500
Ligand Pharmaceuticals, Inc.
Class B (a) 232,800 2,822,700
28,019,076
TOTAL DRUGS & PHARMACEUTICALS 846,040,381
HOME FURNISHINGS - 0.1%
FURNITURE - 0.1%
Kinetic Concepts, Inc. 114,500 1,560,063
HOUSEHOLD PRODUCTS - 0.8%
SOAPS & DETERGENTS - 0.8%
Procter & Gamble Co. 150,000 12,300,000
MEDICAL EQUIPMENT & SUPPLIES - 18.4%
DRUG DISTRIBUTORS - WHOLESALE - 1.7%
Bergen Brunswig Corp. Class A 749,590 18,083,859
Cardinal Health, Inc. 147,666 8,896,877
26,980,736
MEDICAL, DENTAL, HOSPITAL EQUIPMENT - WHOLESALE - 0.2%
Sterile Concepts Holdings 215,200 3,658,400
MEDICAL SUPPLIES & APPLIANCES - 9.9%
Abbott Laboratories 260,000 10,855,000
Baxter International, Inc. 323,000 14,777,250
Becton, Dickinson & Co. 435,300 35,694,600
Boston Scientific Corp. (a) 808,668 38,816,064
Healthdyne, Inc. (a) 258,200 2,388,350
Johnson & Johnson 529,600 49,517,600
152,048,864
MEDICAL TECHNOLOGY - 5.9%
Advanced Medical, Inc. (a) 196,460 503,429
Advanced Technology Laboratories,
Inc. (a) 100 2,975
Beckman Instruments, Inc. 354,000 12,832,500
Gish Biomedical, Inc. (a) 141,700 921,050
Guidant Corp. 46,930 2,223,309
Haemonetics Corp. (a) 200,000 3,400,000
Medtronic, Inc. 50,000 2,868,750
Nellcor, Inc. (a) 91,400 6,123,800
St. Jude Medical, Inc. (a) 1,046,900 39,520,475
Sonus Pharmaceuticals, Inc. (a) 100,000 1,475,000
Spacelabs Medical, Inc. (a)(c) 574,300 15,362,525
Vital Signs, Inc. 179,300 5,289,350
90,523,163
OPHTHALMIC GOODS - 0.1%
Bausch & Lomb, Inc. 21,700 843,588
X-RAY ELECTRO-MEDICAL APPARATUS - 0.6%
Healthdyne Technologies, Inc. (a) 168,013 1,848,143
Protocol Systems, Inc. (a)(c) 541,900 7,857,550
9,705,693
TOTAL MEDICAL EQUIPMENT & SUPPLIES 283,760,444
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
MEDICAL FACILITIES MANAGEMENT - 8.7%
HOME HEALTH CARE AGENCIES - 0.1%
Sterling House Corp. (a) 105,000 $ 1,968,750
HOSPITALS - 3.6%
Columbia/HCA Healthcare Corp. 649,005 35,533,024
Tenet Healthcare Corp. 400,000 8,950,000
Vencor, Inc. (a) 288,000 10,764,000
55,247,024
HMOS & OUTPATIENT CARE - 3.3%
Health Systems International, Inc. (a) 396,900 14,486,850
Healthsource, Inc. (a) 100,000 3,787,500
Pacificare Health Systems, Inc.
Class B (a) 76,800 7,219,200
Sierra Health Services, Inc. (a) 100,000 3,475,000
United HealthCare Corp. 242,800 15,842,700
U.S. Healthcare, Inc. 134,200 6,542,250
51,353,500
MEDICAL SERVICES - 0.9%
Foundation Health Corp. (a) 200,000 7,800,000
Lincare Holdings, Inc. (a) 150,000 4,696,875
National Surgery Centers, Inc. 2,000 55,500
Syncor International Corp. (a) 107,500 685,313
13,237,688
MISCELLANEOUS HEALTH & ALLIED SERVICES - 0.1%
Sterling Healthcare Group, Inc. (a) 100,000 1,362,500
NURSING CARE & NURSING HOMES - 0.5%
ARV Assisted Living, Inc. (a) 109,000 1,907,500
Arbor Health Care Co. (a) 112,000 3,052,000
Genesis Health Ventures, Inc. (a) 50,000 2,181,250
7,140,750
SKILLED NURSING CARE FACILITIES - 0.2%
Multicare Companies, Inc. (a) 51,700 1,460,525
TheraTx, Inc. (a) 205,600 2,415,800
3,876,325
TOTAL MEDICAL FACILITIES MANAGEMENT 134,186,537
SERVICES - 0.2%
BUILDING MAINTENANCE - 0.0%
Health Care Services Group, Inc. (a) 577 5,986
PERSONNEL SUPPLY SERVICES - 0.2%
Coastal Physician Group, Inc. (a) 237,900 3,092,700
TOTAL SERVICES 3,098,686
TOTAL COMMON STOCKS
(Cost $980,713,256) 1,306,526,486
CONVERTIBLE PREFERRED STOCKS - 0.6%
MEDICAL EQUIPMENT & SUPPLIES - 0.6%
MEDICAL TECHNOLOGY - 0.6%
U.S. Surgical Corp. $2.20 (b)
(Cost $7,710,166) 332,800 9,859,200
NONCONVERTIBLE BONDS - 0.1%
PRINCIPAL
AMOUNT
MEDICAL EQUIPMENT & SUPPLIES - 0.1%
MEDICAL TECHNOLOGY - 0.1%
Advanced Medical, Inc. 15%,
7/15/99 (Cost $1,542,097) $ 2,090,000 2,090,000
REPURCHASE AGREEMENTS - 14.4%
MATURITY VALUE
AMOUNT (NOTE 1)
Investments in repurchase agreements
(U.S. Treasury obligations) in a joint
trading account at 5.41%, dated
2/29/96 due 3/1/96 $ 220,816,179 $ 220,783,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $1,210,748,519) $ 1,539,258,686
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 $9,859,200 or 0.6% of net
assets.
3. A company in which the fund has ownership of at least 5% of the voting
securities is an affiliated company. Transactions during the period with
companies that are or were affiliates are as follows:
PURCHASES SALES DIVIDEND MARKET
AFFILIATE COST COST INCOME VALUE
Protocol Systems, Inc. $ 844,400 $ - $ - $ 7,857,550
Spacelabs Medical, Inc. - - - 15,362,525
Totals $ 844,400 $ - $ - $ 23,220,075
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $674,981,721 and $515,084,328, respectively (see Note 3 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $290,110 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 $7,160,550 and $7,480,400, respectively (see Note 6
of Notes to Financial Statements).
Distribution of investments by country of issue, as a percentage of total
value of investment in securities, is as follows:
United States 87.6%
United Kingdom 5.3
Switzerland 3.0
France 1.1
Others (individually less than 1%) 3.0
TOTAL 100.0%
INCOME TAX INFORMATION
At February 29, 1996, the aggregate cost of investment securities for
income tax purposes was $1,212,211,798. Net unrealized appreciation
aggregated $327,046,888, of which $336,198,893 related to appreciated
investment securities and $9,152,005 related to depreciated investment
securities.
The fund hereby designates approximately $22,385,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 30% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate shareholders
(unaudited).
The fund will notify shareholders in January 1997 of the applicable
percentage for use in preparing 1996 income tax returns.
HEALTH CARE PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 29, 1996
ASSETS
Investment in $ 1,539,258,686
securities, at
value
(including
repurchase
agreements
of
$220,783,000
) (cost
$1,210,748,5
19) -
See
accompanyin
g schedule
Cash 297
Receivable for 2,344,227
investments
sold
Receivable for 5,033,537
fund shares
sold
Dividends 1,462,661
receivable
Interest 39,188
receivable
Redemption 898
fees
receivable
Other 882,624
receivables
TOTAL ASSETS 1,549,022,118
LIABILITIES
Payable for $ 6,738,564
investments
purchased
Payable for 7,204,263
fund shares
redeemed
Accrued 790,974
management
fee
Other payables 897,991
and accrued
expenses
Collateral on 7,480,400
securities
loaned,
at value
TOTAL 23,112,192
LIABILITIES
NET ASSETS $ 1,525,909,926
Net Assets
consist of:
Paid in capital $ 1,129,933,963
Undistributed 4,463,587
net
investment
income
Accumulated 63,002,209
undistributed
net realized
gain (loss) on
investments
and foreign
currency
transactions
Net unrealized 328,510,167
appreciation
(depreciation
) on
investments
NET ASSETS, for $ 1,525,909,926
15,188,037
shares
outstanding
NET ASSET $100.47
VALUE and
redemption
price per
share
($1,525,909,
926 (divided by)
15,188,037
shares)
Maximum $103.58
offering price
per share
(100/97.00
of $100.47)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 29, 1996
INVESTMENT $ 14,996,287
INCOME
Dividends
Interest 11,437,726
(including
income on
securities
loaned of
$153,587)
TOTAL 26,434,013
INCOME
EXPENSES
Management $ 6,868,340
fee
Transfer agent 7,038,341
Fees
Redemption (400,476
fees )
Accounting and 750,785
security
lending fees
Non-interested 5,654
trustees'
compensatio
n
Custodian fees 68,010
and
expenses
Registration 229,720
fees
Audit 77,383
Legal 8,652
Miscellaneous 10,984
Total 14,657,393
expenses
before
reductions
Expense (85,289 14,572,104
reductions )
NET 11,861,909
INVESTMENT
INCOME
REALIZED AND
UNREALIZED
GAIN (LOSS)
Net realized
gain (loss)
on:
Investment 127,573,541
securities
Foreign (9,841 127,563,700
currency )
transactions
Change in net 221,015,172
unrealized
appreciation
(depreciation
)
on
investment
securities
NET GAIN (LOSS) 348,578,872
NET INCREASE $ 360,440,781
(DECREASE)
IN NET ASSETS
RESULTING
FROM
OPERATIONS
OTHER $ 5,991,249
INFORMATION
Sales
charges paid
to FDC
Deferred $ 54,291
sales
charges
withheld
by FDC
Exchange $ 283,343
fees withheld
by FSC
Expense $ 54,152
reductions
Directed
brokerage
arrangement
s
Custodian 12,200
interest
credits
Transfer 18,937
agent
interest
credits
$ 85,289
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
FEBRUARY 29, FEBRUARY 28,
1996 1995
Operations $ 11,861,909 $ 6,943,717
Net
investment
income
Net realized 127,563,700 79,587,152
gain (loss)
Change in 221,015,172 91,979,090
net
unrealized
appreciation
(depreciation
)
NET INCREASE 360,440,781 178,509,959
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
Distributions to (7,988,345) (5,882,332)
shareholders
From net
investment
income
From net (66,667,821) (56,259,930)
realized gain
TOTAL (74,656,166) (62,142,262)
DISTRIBUTION
S
Share 1,031,303,280 608,744,670
transactions
Net proceeds
from sales of
shares
Reinvestmen 73,110,795 60,781,787
t of
distributions
Cost of (808,071,923) (366,138,010)
shares
redeemed
Paid in 642,187 495,264
capital
portion of
redemption
fees
NET INCREASE 296,984,339 303,883,711
(DECREASE)
IN NET
ASSETS
RESULTING
FROM SHARE
TRANSACTIO
NS
TOTAL 582,768,954 420,251,408
INCREASE
(DECREASE)
IN NET ASSETS
NET ASSETS
Beginning of 943,140,972 522,889,564
period
End of period $ 1,525,909,926 $ 943,140,972
(including
undistribute
d net
investment
income of
$4,463,587
and
$2,008,371
,
respectivel
y)
OTHER
INFORMATION
Shares
Sold 11,376,458 8,512,762
Issued in 771,121 871,512
reinvestment
of
distributions
Redeemed (9,348,659) (5,254,899)
Net increase 2,798,920 4,129,375
(decrease)
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEAR ENDED YEARS ENDED FEBRUARY 28, TEN MONTHS YEAR ENDED
FEBRUARY 29, ENDED APRIL 30,
FEBRUARY 28,
SELECTED PER-SHARE DATA D 1996 1995 1994 1993 1992
</TABLE>
Net asset $ 76.13 $ 63.31 $ 52.57 $ 70.42 $ 69.99
value,
beginning of
period
Income from
Investment
Operations
Net .95 .75 .15 .13 (.02)
investment
income (loss)
Net realized 28.85 18.38 10.61 (9.34) 9.47
and
unrealized
gain (loss)
Total from 29.80 19.13 10.76 (9.21) 9.45
investment
operations
Less (.59) (.62) (.07) (.16) (.34)
Distributions
From net
investment
income
From net (4.92) (5.74) - (8.51) (8.81)
realized gain
Total (5.51) (6.36) (.07) (8.67) (9.15)
distributions
Redemption .05 .05 .05 .03 .13
fees added to
paid in
capital
Net asset $ 100.47 $ 76.13 $ 63.31 $ 52.57 $ 70.42
value, end of
period
TOTAL 39.68% 31.24% 20.57% (14.81)% 13.92%
RETURN B, C
RATIOS AND
SUPPLEMENT
AL DATA
Net assets, $ 1,525,910 $ 943,141 $ 522,890 $ 536,367 $ 838,814
end of period
(000 omitted)
Ratio of 1.31% 1.39% 1.59% 1.46% 1.44%
expenses to A
average net
assets
Ratio of 1.30% 1.36% 1.55% 1.46% 1.44%
expenses to E E E A
average net
assets after
expense
reductions
Ratio of net 1.06% 1.08% .26% .24% (.02)%
investment A
income (loss)
to average
net assets
Portfolio 54% 151% 213% 112% 154%
turnover rate A
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING
THE PERIODS SHOWN (SEE NOTE 7 OF NOTES TO FINANCIAL STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE
YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES
OUTSTANDING DURING THE PERIOD.
E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES WHO EITHER PAID
OR REDUCED A PORTION OF THE FUND'S EXPENSES (SEE NOTE 7 OF NOTES TO FINANCIAL
STATEMENTS).
</TABLE>
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 securities that have grown in value), but does not include certain
fees paid by shareholders upon exchange or redemption. If Fidelity had not
reimbursed certain expenses, the life of fund total returns would have been
lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
FEBRUARY 29, 1996 YEAR YEARS FUND
MEDICAL DELIVERY 34.15% 125.14% 325.14%
MEDICAL DELIVERY
(INCL. 3% SALES CHARGE) 30.12% 118.38% 312.39%
S&P 500 34.70% 101.14% 247.69%
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 29, 1996 YEAR YEARS FUND
MEDICAL DELIVERY 34.15% 17.62% 16.13%
MEDICAL DELIVERY
(INCL. 3% SALES CHARGE) 30.12% 16.91% 15.77%
S&P 500 34.70% 14.99% 13.74%
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
19860630 9700.00 10000.00
19860731 9011.30 9488.77
19860831 9108.30 10192.84
19860930 8380.80 9349.89
19861031 9040.40 9889.38
19861130 8506.90 10129.69
19861231 7944.30 9871.39
19870131 8342.00 11201.06
19870228 8953.10 11643.50
19870331 9379.90 11980.00
19870430 8409.90 11873.38
19870531 8671.80 11976.68
19870630 9263.50 12581.50
19870731 9661.20 13219.38
19870831 9438.10 13712.46
19870930 9292.60 13412.16
19871031 6644.50 10523.18
19871130 6246.80 9656.07
19871231 6984.28 10390.90
19880131 7025.49 10828.35
19880229 7386.04 11332.96
19880331 7581.76 10982.77
19880430 7643.57 11104.68
19880531 7519.95 11201.29
19880630 7756.88 11715.43
19880731 7674.47 11670.91
19880831 7458.14 11274.10
19880930 7880.50 11754.37
19881031 8086.52 12081.14
19881130 7828.99 11908.38
19881231 8086.52 12116.78
19890131 8684.00 13003.73
19890228 9003.34 12679.94
19890331 9497.80 12975.38
19890430 10146.79 13648.80
19890531 10672.15 14201.58
19890630 10548.08 14120.63
19890731 11745.32 15395.72
19890831 12292.34 15697.48
19890930 12632.93 15633.12
19891031 12209.77 15270.43
19891130 12777.42 15581.95
19891231 12778.17 15955.91
19900131 10896.85 14885.27
19900228 11171.65 15077.29
19900331 11689.54 15476.84
19900430 11805.80 15089.92
19900531 13475.74 16561.19
19900630 14120.46 16448.57
19900731 14173.30 16395.93
19900831 13042.40 14913.74
19900930 12175.72 14187.44
19901031 12027.75 14126.44
19901130 13697.69 15039.00
19901231 14856.14 15458.59
19910131 17250.54 16132.59
19910228 18317.13 17286.07
19910331 21038.04 17704.39
19910430 20406.79 17746.88
19910531 22093.75 18513.55
19910630 20232.46 17665.63
19910731 22262.51 18488.84
19910831 22523.35 18927.03
19910930 22727.49 18610.95
19911031 23226.50 18860.33
19911130 22580.06 18100.26
19911231 26417.94 20170.93
19920131 26441.16 19795.75
19920229 25419.73 20053.10
19920331 23736.68 19662.06
19920430 22796.50 20240.13
19920531 22564.36 20339.30
19920630 21376.17 20036.25
19920731 22592.60 20855.73
19920831 22567.26 20428.19
19920930 19918.99 20669.24
19921031 20907.34 20741.58
19921130 22960.06 21448.87
19921231 22934.72 21712.69
19930131 21768.98 21895.08
19930228 18322.43 22192.85
19930331 18727.91 22661.12
19930430 18499.83 22112.72
19930531 19070.03 22705.34
19930630 19260.09 22771.19
19930731 19741.60 22680.10
19930831 19678.24 23539.68
19930930 21300.14 23358.43
19931031 22301.16 23841.94
19931130 22668.62 23615.45
19931231 24201.83 23901.19
19940131 25557.64 24713.83
19940228 25697.02 24044.09
19940331 24417.24 22995.77
19940430 25202.85 23290.11
19940531 26051.81 23672.07
19940630 24442.58 23092.10
19940731 25532.30 23849.53
19940831 28117.20 24827.36
19940930 29118.22 24219.09
19941031 30068.56 24764.01
19941130 28776.10 23862.11
19941231 29003.49 24215.98
19950131 30276.62 24843.91
19950228 30740.78 25812.07
19950331 32690.26 26573.79
19950430 31627.82 27356.38
19950531 30590.41 28449.82
19950630 31082.52 29110.71
19950731 34221.36 30076.02
19950831 34380.96 30151.51
19950930 35099.17 31423.90
19951031 34500.66 31311.72
19951130 37386.80 32686.31
19951231 38337.63 33315.84
19960131 40399.56 34449.91
19960229 41238.55 34769.27
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 29, 1996, your investment would have grown to $41,239 -
a 312.39% increase. That compares to $10,000 invested in the S&P 500, which
would have grown to $34,769 over the same period - a 247.69% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 29, 1996
% OF FUND'S
INVESTMENTS
Columbia/HCA Healthcare Corp. 8.1
HEALTHSOUTH Rehabilitation Corp. 7.6
Tenet Healthcare Corp. 6.5
United HealthCare Corp. 5.2
Oxford Health Plans, Inc. 5.1
Health Management Associates, Inc. Class A 4.4
Universal Health Services, Inc. Class B 4.1
Health Systems International, Inc. 3.4
Foundation Health Corp. 3.4
Baxter International, Inc. 3.0
TOP INDUSTRIES AS OF FEBRUARY 29, 1996
Hospitals 32.9%
HMOs & Outpatient Care 22.3%
Drug Distributors -
Wholesale 6.5%
Medical Supplies &
Appliances 5.3%
Medical Services 3.9%
All Others 29.1% *
Row: 1, Col: 1, Value: 29.1
Row: 1, Col: 2, Value: 3.9
Row: 1, Col: 3, Value: 5.3
Row: 1, Col: 4, Value: 6.5
Row: 1, Col: 5, Value: 22.3
Row: 1, Col: 6, Value: 32.9
* INCLUDES SHORT-TERM INVESTMENTS
MEDICAL DELIVERY PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Stephen Binder,
Portfolio Manager of Fidelity Select Medical
Delivery Portfolio
Q. HOW DID THE FUND PERFORM, STEVE?
A. For the 12 months ended February 29, 1996, the fund had a total return
of 34.15%. For the same period, the S&P 500 Index returned 34.70%.
Q. WHAT FACTORS CONTRIBUTED TO THE FUND'S PERFORMANCE?
A. The performance of the medical delivery market has been driven by the
returns of publicly-traded hospitals and health maintenance organizations
(HMOs). Over the past year, hospital stocks outperformed HMOs by a fairly
substantial margin.
Q. WHY WERE HOSPITAL COMPANIES FAVORED IN THE PAST YEAR?
A. Basically, the revenues of publicly traded hospitals rose as the
utilization of services exceeded expectations which, in turn, led to many
earnings surprises. Additionally, hospitals benefited from the tremendous
amount of consolidation underway in the industry. Specifically, hospital
mergers allowed companies to boost market share, cut costs and offer a
wider range of services.
Q. WHICH HOSPITAL COMPANIES DID YOU FAVOR?
A. Columbia HCA really epitomized what I was just saying about how a
hospital company can do well by cutting costs and raising market share.
Similarly, Tenet Healthcare was successful after rebuilding a reputable
network of hospitals. Health Management Associates also used the same
strategy with its non-urban chain of hospitals. By dominating smaller
markets, it was able to retain good physicians and their patients.
Q. WHAT HAPPENED IN THE HMO AREA?
A. In 1995, HMOs' profit margins were squeezed as they cut prices to boost
membership growth. Meanwhile, costs rose more than expected in reaction to
the failure of the Clinton administration's health care reform proposals. I
was encouraged, however, by the fact that many HMOs reacted to these
pressures by redoubling their efforts to control costs. In general, Wall
Street's theme in 1995 was to favor the providers (the hospitals) over the
payers (the HMOs).
Q. WERE ANY HMOS ABLE TO RISE ABOVE THE PACK?
A. Although success stories in the managed-care arena were scarce, Oxford
Health Plans continued to grow at a torrid pace. Investors bid up their
stock price as health care consumers in the New York metropolitan area were
attracted to Oxford's popular point-of-service plan. U.S. Healthcare also
rebounded after it appeared its costly drive to gain market share was
beginning to pay off. United HealthCare's stock price also revived strongly
after it acquired Metra Health, an indemnity insurance company affiliated
with The Travelers and Metlife.
Q. DID YOU MAKE ANY MAJOR CHANGES TO THE PORTFOLIO DURING THE PERIOD?
A. I established some positions in California-based HMOs. The stocks of
these HMOs had been beaten down by particularly acute pricing pressures. It
appears, however, that this situation may have stabilized.
Q. WERE THERE ANY MORE SPECIFIC DISAPPOINTMENTS?
A. The stocks of one subsector of the market, home oxygen therapy, got
clobbered when Congress considered slashing Medicare reimbursements for
this area by 20% to 40%. When the market realized these cuts were not
imminent, the stocks of these companies recovered from their lows. In
addition, a similar situation gripped the nursing home industry for a
while. However, nursing home company stocks have also rebounded.
Q. WHAT ARE SOME OF THE RISKS INVESTORS SHOULD KEEP IN MIND?
A. I think a major risk with any area of the health care industry is that
about 40% of the industry's revenues is based on government reimbursements.
Given the current budget-slashing rhetoric in Washington, lower
reimbursement levels are a distinct possibility. Additionally, the rise of
managed care presents the risk that a particular area of health care could
experience a dramatic reduction in utilization.
Q. WHAT'S YOUR OUTLOOK?
A. Obviously, America is aging and the ongoing question in this sector is
who will pay for health care and through what channel will that money be
spent. Managed care (HMOs) is clearly emerging as the preferred channel for
private employers and the government. HMOs, which are hospitals'
increasingly important customers, will demand lower prices for their
customers and cut utilization of services, thereby pressing providers to
become more efficient. Thus, both industries will compete to achieve an
equilibrium.
FUND FACTS
START DATE: June 30, 1986
TRADING SYMBOL: FSHCX
SIZE: as of February 29, 1996, more than
$295 million
MANAGER: Stephen Binder, since December
1994; joined Fidelity in 1989
(checkmark)
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
MEDICAL DELIVERY PORTFOLIO
INVESTMENTS FEBRUARY 29, 1996
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 91.6%
SHARES VALUE (NOTE 1)
DRUG STORES - 0.2%
Vitalink Pharmacy Services, Inc. (a) 40,000 $ 760,000
DRUGS & PHARMACEUTICALS - 1.7%
DRUGS - 1.5%
Lilly (Eli) & Co. 73,900 4,470,946
IN VITRO, IN VIVO DIAGNOSTIC SUBSTANCE - 0.2%
Serologicals Corp. (a) 23,600 474,950
TOTAL DRUGS & PHARMACEUTICALS 4,945,896
ELECTRICAL EQUIPMENT - 0.2%
TV & RADIO COMMUNICATION EQUIPMENT - 0.2%
Lifeline Systems, Inc. (a) 42,800 524,300
INSURANCE - 0.3%
INSURANCE BROKERS & SERVICES - 0.3%
HealthCare COMPARE Corp. (a) 16,200 789,750
MEDICAL EQUIPMENT & SUPPLIES - 16.3%
DRUG DISTRIBUTORS - WHOLESALE - 6.5%
AmeriSource Health Corp. Class A (a) 105,000 3,045,000
Bergen Brunswig Corp. Class A 303,465 7,321,093
Cardinal Health, Inc. 46,800 2,819,700
McKesson Corp. 113,100 5,909,475
19,095,268
MEDICAL SUPPLIES & APPLIANCES - 5.3%
Aequitron Medical, Inc. (a) 85,000 584,375
Baxter International, Inc. 192,200 8,793,150
Becton, Dickinson & Co. 43,000 3,526,000
Boston Scientific Corp. (a) 58,000 2,784,000
15,687,525
MEDICAL TECHNOLOGY - 3.7%
Medtronic, Inc. 42,000 2,409,750
St. Jude Medical, Inc. (a) 227,250 8,578,688
10,988,438
OPHTHALMIC GOODS - 0.3%
Cooper Companies, Inc. (a) 120,200 886,475
X-RAY ELECTRO-MEDICAL APPARATUS - 0.5%
Healthdyne Technologies, Inc. (a) 55,000 605,000
Protocol Systems, Inc. (a) 58,700 851,150
1,456,150
TOTAL MEDICAL EQUIPMENT & SUPPLIES 48,113,856
MEDICAL FACILITIES MANAGEMENT - 71.2%
HOME HEALTH CARE AGENCIES - 1.6%
Apria Healthcare Group, Inc. (a) 50,000 1,562,500
Vivra, Inc. (a) 110,000 3,245,000
4,807,500
HOSPITALS - 32.9%
Columbia/HCA Healthcare Corp. 437,982 23,979,515
Community Health Systems, Inc. (a) 75,800 3,174,125
HEALTHSOUTH Rehabilitation Corp. (a) 646,300 22,620,500
Health Management Associates, Inc.
Class A (a) 412,768 12,950,596
Tenet Healthcare Corp. (a) 854,600 19,121,675
Universal Health Services, Inc. Class B (a) 239,000 12,218,875
Vencor, Inc. (a) 82,919 3,099,098
97,164,384
SHARES VALUE (NOTE 1)
HOSPITALS, GENERAL MEDICAL - 1.4%
OrNda Healthcorp (a) 167,000 $ 4,279,375
HMOS & OUTPATIENT CARE - 22.3%
Health Systems International, Inc. (a) 273,000 9,964,500
Healthsource, Inc. (a) 40,000 1,515,000
Oxford Health Plans, Inc. (a) 184,100 15,153,731
Pacificare Health Systems, Inc. Class B (a) 32,100 3,017,400
Physicians Health Services, Inc.
Class A (a) 52,500 1,686,563
RightCHOICE Managed Care, Inc.
Class A (a) 42,800 695,500
Safeguard Health Enterprises, Inc. (a) 75,000 956,250
Sierra Health Services, Inc. (a) 233,100 8,100,225
United HealthCare Corp. 236,800 15,451,200
U.S. Healthcare, Inc. 174,100 8,487,375
Wellcare Management Group, Inc. (a) 40,000 990,000
66,017,744
MEDICAL SERVICES - 3.9%
Foundation Health Corp. (a) 255,100 9,948,900
Lincare Holdings, Inc. (a) 44,000 1,377,750
National Surgery Centers, Inc. 1,000 27,750
11,354,400
MISCELLANEOUS HEALTH & ALLIED SERVICES - 1.5%
Renal Treatment Centers, Inc. (a) 71,700 3,145,838
Sterling Healthcare Group, Inc. (a) 105,000 1,430,625
4,576,463
NURSING CARE & NURSING HOMES - 3.1%
Arbor Health Care Co. (a) 39,300 1,070,925
Genesis Health Ventures, Inc. (a) 21,400 933,575
Health Care & Retirement Corp. (a) 44,000 1,787,500
Integrated Health Services, Inc. 50,300 1,112,888
Manor Care, Inc. 75,000 2,878,125
NovaCare, Inc. 200,000 1,425,000
9,208,013
PSYCHIATRIC HOSPITALS - 0.7%
Community Psychiatric Centers 51,300 474,525
Horizon Mental Health Management
Inc. (a) 83,900 1,583,613
Magellan Health Services, Inc. (a) 2,500 59,688
2,117,826
SKILLED NURSING CARE FACILITIES - 3.6%
Living Centers of America, Inc. (a) 56,000 2,268,000
Multicare Companies, Inc. (a) 135,100 3,816,575
TheraTx, Inc. (a) 389,300 4,574,275
10,658,850
SPECIALTY HOSPITAL EXCEPT PSYCHIATRIC - 0.2%
Pediatrix Medical Group (a) 15,500 592,875
TOTAL MEDICAL FACILITIES MANAGEMENT 210,777,430
REAL ESTATE INVESTMENT TRUSTS - 1.7%
Capstone Capital Corp. 244,400 5,101,850
TOTAL COMMON STOCKS
(Cost $224,766,138) $271,013,082
REPURCHASE AGREEMENTS - 8.4%
MATURITY VALUE
AMOUNT (NOTE 1)
Investments in repurchase agreements
(U.S. Treasury obligations) in a joint
trading account at 5.41%, dated
2/29/96 due 3/1/96 $ 24,841,732 24,838,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $249,604,138) $ 295,851,082
LEGEND
1. Non-income producing
OTHER INFORMATION
A company in which the fund has ownership of at least 5% of the voting
securities is an affiliated company. Transactions during the period with
companies that are or were affiliates are as follows:
PURCHASES SALES DIVIDEND MARKET
AFFILIATE COST COST INCOME VALUE
Capstone Capital Corp. $ - $ 1,378,800 $ - $ -
Purchases and sales of securities, other than short-term securities,
aggregated $239,984,742 and $282,044,237, respectively (see Note 3 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $101,216 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 $866,250 and $945,000, respectively (see Note 6 of
Notes to Financial Statements).
The maximum loan and the average daily loan balances during the periods for
which loans were outstanding amounted to $1,760,000 and $945,700,
respectively. The weighted average interest rate paid was 6.2% (see Note 5
of Notes to Financial Statements).
INCOME TAX INFORMATION
At February 29, 1996, the aggregate cost of investment securities for
income tax purposes was $249,886,935. Net unrealized appreciation
aggregated $45,964,147, of which $48,449,971 related to appreciated
investment securities and $2,485,824 related to depreciated investment
securities.
The fund hereby designates approximately $15,560,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 19% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate shareholders
(unaudited).
The fund will notify shareholders in January 1997 of the applicable
percentage for use in preparing 1996 income tax returns.
MEDICAL DELIVERY PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 29, 1996
ASSETS
Investment in $ 295,851,082
securities, at
value
(including
repurchase
agreements
of
$24,838,000)
(cost
$249,604,138
) - See
accompanyin
g schedule
Cash 945
Receivable for 1,023,665
investments
sold
Receivable for 1,862,243
fund shares
sold
Dividends 94,570
receivable
Redemption 332
fees
receivable
Other 396,364
receivables
TOTAL ASSETS 299,229,201
LIABILITIES
Payable for $ 104,110
investments
purchased
Payable for 2,367,369
fund shares
redeemed
Accrued 149,744
management
fee
Other payables 174,179
and accrued
expenses
Collateral on 945,000
securities
loaned,
at value
TOTAL 3,740,402
LIABILITIES
NET ASSETS $ 295,488,799
Net Assets
consist of:
Paid in capital $ 221,889,748
Accumulated 27,352,107
undistributed
net realized
gain (loss) on
investments
and foreign
currency
transactions
Net unrealized 46,246,944
appreciation
(depreciation
) on
investments
NET ASSETS, for $ 295,488,799
10,190,754
shares
outstanding
NET ASSET $29.00
VALUE and
redemption
price per
share
($295,488,79
9 (divided by)
10,190,754
shares)
Maximum $29.90
offering price
per share
(100/97.00 of
$29.00)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 29, 1996
INVESTMENT $ 1,434,491
INCOME
Dividends
Interest 1,505,840
(including
income on
securities
loaned of
$140,180)
TOTAL 2,940,331
INCOME
EXPENSES
Management $ 1,208,374
fee
Transfer agent 1,924,982
Fees
Redemption (223,169
fees )
Accounting and 200,881
security
lending fees
Non-interested 1,349
trustees'
compensatio
n
Custodian fees 16,792
and
expenses
Registration 76,575
fees
Audit 39,684
Legal 2,754
Interest 1,624
Miscellaneous 3,010
Total 3,252,856
expenses
before
reductions
Expense (55,713 3,197,143
reductions )
NET (256,812
INVESTMENT )
INCOME
(LOSS)
REALIZED AND 39,973,448
UNREALIZED
GAIN (LOSS)
Net realized
gain (loss) on
investment
securities
(including
realized loss
of $177,843
on sales of
investment in
affiliated
issuers)
Change in net 14,596,764
unrealized
appreciation
(depreciation
) on
investment
securities
NET GAIN (LOSS) 54,570,212
NET INCREASE $ 54,313,400
(DECREASE)
IN NET ASSETS
RESULTING
FROM
OPERATIONS
OTHER $ 1,501,132
INFORMATION
Sales
charges paid
to FDC
Deferred $ 6,879
sales
charges
withheld
by FDC
Exchange $ 173,625
fees withheld
by FSC
Expense $ 20,048
reductions
Directed
brokerage
arrangement
s
Custodian 29,318
interest
credits
Transfer 6,347
agent
interest
credits
$ 55,713
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
FEBRUARY 29, FEBRUARY 28,
1996 1995
Operations $ (256,812 $ 620,837
Net )
investment
income (loss)
Net realized 39,973,448 25,519,856
gain (loss)
Change in 14,596,764 5,905,629
net
unrealized
appreciation
(depreciation
)
NET INCREASE 54,313,400 32,046,322
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
Distributions to - (620,837
shareholders )
From net
investment
income
From net (13,085,061 (9,893,316
realized gain ) )
TOTAL (13,085,061 (10,514,153
DISTRIBUTION ) )
S
Share 327,500,676 408,339,151
transactions
Net proceeds
from sales of
shares
Reinvestmen 12,820,140 10,314,005
t of
distributions
Cost of (385,938,068 (329,680,344
shares ) )
redeemed
Paid in 307,864 512,240
capital
portion of
redemption
fees
NET INCREASE (45,309,388 89,485,052
(DECREASE) )
IN NET
ASSETS
RESULTING
FROM SHARE
TRANSACTIO
NS
TOTAL (4,081,049 111,017,221
INCREASE )
(DECREASE)
IN NET ASSETS
NET ASSETS
Beginning of 299,569,848 188,552,627
period
End of period $ 295,488,799 $ 299,569,848
OTHER
INFORMATION
Shares
Sold 12,483,087 18,773,290
Issued in 484,557 506,086
reinvestment
of
distributions
Redeemed (15,700,950 (15,651,245
) )
Net increase (2,733,306 3,628,131
(decrease) )
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEAR ENDED YEARS ENDED FEBRUARY 28, TEN MONTHS YEAR ENDED
FEBRUARY 29, ENDED APRIL 30,
FEBRUARY 28,
SELECTED PER-SHARE DATA D 1996 1995 1994 1993 1992
</TABLE>
Net asset $ 23.18 $ 20.28 $ 14.46 $ 19.64 $ 18.75
value,
beginning of
period
Income from
Investment
Operations
Net (.03) .06 (.10) (.13) (.15)
investment
income (loss)
Net realized 7.72 3.74 5.84 (3.56) 2.16
and
unrealized
gain (loss)
Total from 7.69 3.80 5.74 (3.69) 2.01
investment
operations
Less - (.06) - - -
Distributions
From net
investment
income
From net (1.91) (.89) - (1.55) (1.24)
realized gain
Total (1.91) (.95) - (1.55) (1.24)
distributions
Redemption .04 .05 .08 .06 .12
fees added to
paid in
capital
Net asset $ 29.00 $ 23.18 $ 20.28 $ 14.46 $ 19.64
value, end of
period
TOTAL 34.15% 19.63% 40.25% (19.63)% 11.71%
RETURN B, C
RATIOS AND
SUPPLEMENT
AL DATA
Net assets, $ 295,489 $ 299,570 $ 188,553 $ 71,809 $ 129,361
end of period
(000 omitted)
Ratio of 1.65% 1.48% 1.82% 1.77% 1.69%
expenses to A
average net
assets
Ratio of 1.62% 1.45% 1.79% 1.77% 1.69%
expenses to E E E A
average net
assets after
expense
reductions
Ratio of net (.13)% .29% (.57)% (.89)% (.71)%
investment A
income (loss)
to average
net assets
Portfolio 132% 123% 164% 155% 181%
turnover rate A
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN (SEE NOTE 7 OF NOTES TO FINANCIAL STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN
ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES WHO EITHER
PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES (SEE NOTE 7 OF NOTES TO FINANCIAL
STATEMENTS).
</TABLE>
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 securities that have grown in value), but does not include certain
fees paid by shareholders upon exchange or redemption. If Fidelity had not
reimbursed certain expenses, the past 10 year total returns would have been
lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 29, 1996 YEAR YEARS YEARS
COMPUTERS 52.79% 217.33% 350.86%
COMPUTERS 48.21% 207.81% 337.34%
(INCL. 3% SALES CHARGE)
S&P 500 34.70% 101.14% 286.76%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one, five, or 10 years. You can compare
these figures to the performance of the S&P 500 - a common proxy for the
U.S. stock market. This benchmark includes reinvested dividends and capital
gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 29, 1996 YEAR YEARS YEARS
COMPUTERS 52.79% 25.98% 16.25%
COMPUTERS 48.21% 25.22% 15.90%
(INCL. 3% SALES CHARGE)
S&P 500 34.70% 14.99% 14.47%
AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and
show you what would have happened if the fund had performed at a constant
rate each year.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of growth in the long run
and volatility in the short run. Unlike the broader
market, however, some sectors may not have
a history of growth in the long run. And, as
with all stock funds, the share price and
return of a fund that invests in a sector will
vary. That means if you sell your shares
during a sector downturn, you might lose
money. But if you can identify a sector that is
about to experience rapid growth you may
have the potential for above-average gains.
(checkmark)
$10,000 OVER 10 YEARS
19860228 9700.00 10000.00
19860331 9700.00 10558.00
19860430 10670.80 10438.69
19860531 11088.01 10994.03
19860630 10349.88 11179.83
19860731 8744.21 10554.88
19860831 9597.70 11338.05
19860930 8856.94 10400.39
19861031 9726.53 11000.50
19861130 9790.94 11267.81
19861231 9831.20 10980.48
19870131 11787.78 12459.55
19870228 12963.34 12951.70
19870331 13051.91 13326.01
19870430 13365.93 13207.41
19870531 13309.56 13322.31
19870630 13035.80 13995.09
19870731 13253.20 14704.64
19870831 14163.05 15253.12
19870930 14283.83 14919.08
19871031 9243.42 11705.51
19871130 7995.40 10740.97
19871231 9206.92 11558.36
19880131 8725.40 12044.97
19880229 9514.09 12606.27
19880331 9364.66 12216.73
19880430 9846.17 12352.34
19880531 9555.60 12459.80
19880630 10460.52 13031.71
19880731 9671.83 12982.19
19880831 8750.31 12540.79
19880930 8982.76 13075.03
19881031 8260.49 13438.52
19881130 8210.68 13246.35
19881231 8742.01 13478.16
19890131 9256.73 14464.76
19890228 9090.69 14104.59
19890331 8658.99 14433.22
19890430 9630.32 15182.31
19890531 10485.43 15797.19
19890630 9240.13 15707.15
19890731 9406.17 17125.50
19890831 9547.30 17461.16
19890930 9771.45 17389.57
19891031 9447.68 16986.13
19891130 9240.13 17332.65
19891231 9339.75 17748.63
19900131 9256.73 16557.70
19900228 10095.23 16771.29
19900331 10817.51 17215.73
19900430 10526.94 16785.34
19900531 11896.77 18421.91
19900630 12112.62 18296.64
19900731 11249.21 18238.09
19900831 9464.28 16589.37
19900930 8841.63 15781.47
19901031 9173.71 15713.61
19901130 10684.67 16728.71
19901231 11058.89 17195.44
19910131 12943.93 17945.16
19910228 13781.73 19228.24
19910331 14870.86 19693.56
19910430 13907.40 19740.82
19910531 14611.14 20593.63
19910630 12621.60 19650.44
19910731 13889.80 20566.15
19910831 14752.52 21053.57
19910930 13976.07 20701.97
19911031 13700.00 20979.38
19911130 12759.63 20133.91
19911231 14459.19 22437.23
19920131 15968.95 22019.90
19920229 17064.61 22306.16
19920331 15718.76 21871.19
19920430 15209.76 22514.20
19920531 15399.56 22624.52
19920630 13915.68 22287.41
19920731 14597.23 23198.97
19920831 13760.39 22723.39
19920930 14441.94 22991.53
19921031 15580.73 23072.00
19921130 16546.97 23858.75
19921231 17634.00 24152.21
19930131 18660.64 24355.09
19930228 17383.81 24686.32
19930331 17728.90 25207.20
19930430 17225.38 24597.19
19930531 19243.57 25256.39
19930630 18473.47 25329.64
19930731 19243.57 25228.32
19930831 20385.43 26184.47
19930930 20960.79 25982.85
19931031 20960.79 26520.70
19931130 21854.81 26268.75
19931231 22724.57 26586.60
19940131 24189.77 27490.55
19940228 25216.34 26745.55
19940331 24955.03 25579.45
19940430 24796.38 25906.86
19940531 24777.71 26331.74
19940630 22743.23 25686.61
19940731 23461.84 26529.13
19940831 26270.91 27616.82
19940930 26084.26 26940.21
19941031 27064.17 27546.37
19941130 27222.82 26543.13
19941231 27372.14 26936.76
19950131 26532.22 27635.23
19950228 28622.69 28712.18
19950331 30825.16 29559.47
19950430 33274.31 30430.00
19950531 34919.12 31646.29
19950630 38738.10 32381.43
19950731 43606.36 33455.20
19950831 44580.01 33539.17
19950930 47132.30 34954.52
19951031 45421.32 34829.74
19951130 44324.78 36358.76
19951231 41559.22 37059.03
19960131 41292.75 38320.52
19960229 43733.64 38675.75
Let's say you invested $10,000 in Fidelity Select Computers Portfolio on
February 28, 1986, and paid a 3% sales charge. By February 29, 1996, your
investment would have grown to $43,734 - a 337.34% increase. That compares
to $10,000 invested in the S&P 500, which would have grown to $38,676 over
the same period - a 286.76% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 29, 1996
% OF FUND'S
INVESTMENTS
Seagate Technology 8.4
Compaq Computer Corp. 8.3
Digital Equipment Corp. 7.6
International Business Machines Corp. 5.8
Dell Computer Corp. 4.8
Gateway 2000, Inc. 3.2
Teradyne, Inc. 2.0
Sumitomo Sitix Corp. 1.9
Hutchinson Technology, Inc. 1.8
Cisco Systems, Inc. 1.8
TOP INDUSTRIES AS OF FEBRUARY 29, 1996
Mini & Micro Computers 20.7%
Computer Storage Devices 10.8%
Computers & Office
Equipment 7.9%
Prepackage Computer
Software 6.8%
Electronic Computers 6.4%
All Others 47.4% *
Row: 1, Col: 1, Value: 47.4
Row: 1, Col: 2, Value: 6.4
Row: 1, Col: 3, Value: 6.8
Row: 1, Col: 4, Value: 7.9
Row: 1, Col: 5, Value: 10.8
Row: 1, Col: 6, Value: 20.7
* INCLUDES SHORT-TERM INVESTMENTS
COMPUTERS PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Harry Lange,
Portfolio Manager of
Fidelity Select Computers Portfolio
Q. HARRY, HOW HAS THE FUND PERFORMED OVER THE PAST 12 MONTHS?
A. The fund had a total return of 52.79% during the 12 months ended
February 29, 1996. By comparison, the S&P 500 Index rose 34.70% during the
same time frame. Interestingly, the period can be split almost evenly into
two distinct halves. During the first half, the fund well outperformed the
index. During the second half, the fund lagged the index substantially.
Q. WHAT HAPPENED RECENTLY TO ALTER THE UPWARD COURSE OF THE FUND'S RETURNS?
A. Essentially, we experienced a fundamental change within the
semiconductor, or computer microchip, industry. During the past three years
or so, semiconductor demand was such that manufacturers couldn't make
nearly enough to fill demand. As a result, the manufacturers were able to
maintain strong prices for their products. That fueled strong earnings
growth and powerful stock performance not only for semiconductor companies,
but also for end-users such as computer and cellular phone manufacturers.
However, as semiconductor companies continued to build new plants, the
supply of chips finally caught up with demand. Semiconductor pricing fell
under pressure, earnings expectations were reduced and the stock prices
dropped substantially.
Q. HOW DID THAT AFFECT COMPUTER MANUFACTURERS?
A. Because of the relative shortage of semiconductors in recent years,
computer makers were constrained in their manufacturing. In other words,
they could have produced and sold far more computers had they had the
components to do so. However, with the increase in chip availability,
computer manufacturers quickly began to overbuild, resulting in excess
inventories, which put pressure on profit margins. The other element that
depressed computer stock prices recently was the relatively weak worldwide
economy. The slowdown in economic growth in the U.S. and overseas
definitely put a crimp in the demand for personal computers.
Q. DID THESE CHANGES IN THE INVESTMENT LANDSCAPE CAUSE YOU TO RESTRUCTURE
THE FUND?
A. They did. I greatly reduced the fund's exposure to semiconductor
manufacturers. Nevertheless, to the extent that the fund continued to hold
some of these stocks, overall performance suffered. At the same time, I
increased the fund's investment in computer companies, which I believed
were in a better position to weather the oversupply of semiconductors. In
fact, the fund's large stakes in some of the bigger computer companies and
companies that make computer-related equipment recently helped offset some
of the weaker performance of the semiconductor stocks.
Q. CAN YOU GIVE US A FEW EXAMPLES?
A. Sure. Seagate Technology continued to perform well right through the
slump. The company has been the largest manufacturer of disk drives in the
world, and recently acquired one of its largest competitors. Traditionally,
investors have viewed the stock as very volatile - prone to wide swings in
either direction. But because the company has sustained consistent earnings
growth, investors have rewarded the stock with a higher valuation - or
stock price relative to earnings. In addition, IBM and Digital Equipment
were excellent performers during the period. Both of these companies had
cut costs and restructured, which helped their bottom lines. However, as
the cost cutting in both companies wound down, a lot of investors thought
that's where the story ended. Surprising to many, both companies turned in
exceedingly strong earnings figures in the fourth quarter of 1995.
Note to Shareholders: As of March 26, 1996, Jason Weiner became manager of
the portfolio.
Q. JASON, LET'S DISCUSS YOUR OUTLOOK. WHAT DO YOU SEE ON THE HORIZON?
A. It's important to maintain perspective in a couple of areas. First,
despite the recent dip, the fund is up more than 50% over the past 12
months. Second, the earnings prospects for many companies in the computer
industry aren't as bright as they were a year ago. Therefore, it's not
likely we'll see a 50-plus percent rise in the fund over the next 12
months. That said, there continue to be selected companies that are
experiencing very strong growth relative to the broad market. I believe
that the oversupply of semiconductors - and corresponding growth in PC
inventories - could lead to a price war among PC manufacturers, which could
have the effect of strengthening PC sales. One thing appears certain. It'll
be more of a stock picker's market going forward.
FUND FACTS
START DATE: July 29, 1985
TRADING SYMBOL: FDCPX
SIZE: as of February 29, 1996, more than
$527 million
MANAGER: Harry Lange, since 1992; manager,
Fidelity Select Technology Portfolio since
1993; Fidelity Select Electronics Portfolio,
1994-1995; research director, Fidelity
Investments Far East, 1988-1992; manager,
Fidelity Select Capital Goods and Fidelity
Select Automation and Machinery
Portfolios, 1988; joined Fidelity in 1987
(checkmark)
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGERS
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGERS' VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
COMPUTERS PORTFOLIO
INVESTMENTS FEBRUARY 29, 1996
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 82.9%
SHARES VALUE (NOTE 1)
BROADCASTING - 0.7%
CABLE TV OPERATORS - 0.7%
CAI Wireless Systems, Inc. (a) 170,000 $ 1,508,744
Heartland Wireless
Communications, Inc.(a) 50,000 1,262,500
Wireless One, Inc. (a) 50,300 741,925
3,513,169
COMMUNICATIONS EQUIPMENT - 4.6%
DATACOMMUNICATIONS EQUIPMENT - 2.8%
Cisco Systems, Inc. (a) 197,600 9,386,000
General DataComm Industries, Inc. (a) 100,000 1,212,500
Jabil Circuit, Inc. (a) 514,000 3,983,500
14,582,000
TELEPHONE EQUIPMENT - 1.6%
DSC Communications Corp. (a) 7,400 225,700
Global Village Communication (a) 23,500 384,813
Natural Microsystems (a) 84,000 2,236,500
Network Equipment Technologies (a) 61,700 1,835,575
Newbridge Networks Corp. (a) 13,900 679,363
Target Technologies, Inc. (a) 145,000 1,178,125
U.S. Robotics Corp. (a) 16,064 1,991,936
8,532,012
TELEPHONE INTERCONNECT SYSTEMS - 0.2%
General Instrument Corp. (a) 50,000 1,362,500
TOTAL COMMUNICATIONS EQUIPMENT 24,476,512
COMPUTER SERVICES & SOFTWARE - 10.3%
CAD/CAM/CAE - 0.7%
Ascend Communications, Inc. (a) 62,000 2,805,500
Brooktrout Technology (a) 25,650 628,425
Cylink Corp. 2,000 47,000
3,480,925
COMPUTER & SOFTWARE STORES - 1.6%
Inacom Corp. (a) 236,300 4,282,938
MicroAge, Inc. (a) 412,800 4,024,800
8,307,738
COMPUTER RELATED SERVICES - 0.4%
Inso Corp. (a) 41,600 2,048,800
COMPUTER SERVICES - 0.7%
CompuCom Systems, Inc. (a) 138,000 1,017,750
Visioneer, Inc. (a) 163,800 2,784,600
3,802,350
CUSTOM COMPUTER PROGRAMMING SERVICES - 0.2%
Softdesk, Inc. (a) 83,900 1,258,500
PREPACKAGED COMPUTER SOFTWARE - 6.7%
Broderbund Software, Inc. (a) 20,000 905,000
CBT Group PLC sponsored ADR (a) 21,000 1,186,500
Electronics for Imaging, Inc. 107,600 4,922,700
Fuji Soft, Inc. 13,000 366,789
GT Interactive Software, Inc. 99,900 1,286,213
Globalink, Inc. (a) 174,300 1,176,525
Insignia Solutions PLC
sponsored ADR (a)(c) 217,400 1,250,050
Microsoft Corp. (a) 20,000 1,973,750
National Instrument Corp. (a) 51,000 962,625
Oracle Systems Corp. (a) 30,000 1,560,000
STB Systems, Inc. (a) 2,800 28,875
Smith Micro Software, Inc. (a) 46,400 382,800
Softkey International, Inc. (a) 278,900 6,724,105
Spectrum Holobyte, Inc. (a) 300,000 2,437,500
SHARES VALUE (NOTE 1)
Symantec Corp. (a) 506,100 $ 6,452,775
Systems & Computer Technology
Corp. (a) 106,400 1,915,200
Wonderware Corp. (a) 100,000 1,900,000
35,431,407
TOTAL COMPUTER SERVICES & SOFTWARE 54,329,720
COMPUTERS & OFFICE EQUIPMENT - 50.3%
COMPUTER EQUIPMENT - 0.5%
GVC Corp. GDR (a)(b) 323,060 2,422,950
COMPUTER EQUIPMENT - WHOLESALE - 1.0%
Tech Data Corp. (a) 358,900 5,428,363
COMPUTER PERIPHERALS - 1.7%
In Focus Systems, Inc. (a) 50,000 1,875,000
SCI Systems, Inc. (a) 190,000 7,041,875
8,916,875
COMPUTER RENTAL & LEASING - 1.7%
Comdisco, Inc. 445,800 9,138,900
COMPUTER STORAGE DEVICES - 10.8%
ADAPTEC, Inc. (a) 51,800 2,904,038
Hutchinson Technology, Inc. (a) 222,100 9,439,250
Read Rite Corp. (a) 10,300 193,125
Seagate Technology (a) 684,200 44,644,050
57,180,463
COMPUTERS & OFFICE EQUIPMENT - 7.9%
Canon, Inc. 15,000 275,020
Canon, Inc. ADR 20,000 1,850,000
Diebold, Inc. 52,500 2,060,625
Hewlett-Packard Co. 70,000 7,052,500
International Business Machines Corp. 250,000 30,656,250
41,894,395
ELECTRONIC COMPUTERS - 4.4%
ADI Corp. GDR (a)(b) 57,000 954,750
Bay Networks, Inc. (a) 135,000 5,484,375
Gateway 2000, Inc. (a) 570,800 16,838,600
Ross Technology, Inc. (a) 21,000 267,750
23,545,475
GRAPHICS WORKSTATIONS - 1.3%
Silicon Graphics, Inc. (a) 58,000 1,450,000
Sun Microsystems, Inc. (a) 100,000 5,250,000
6,700,000
MAGNETIC & OPTICAL RECORDING MEDIA - 0.3%
Boca Research, Inc. (a) 73,000 1,478,250
MINI & MICRO COMPUTERS - 20.7%
Compaq Computer Corp. (a) 871,900 44,139,938
Dell Computer Corp. (a) 731,900 25,159,063
Digital Equipment Corp. (a) 556,400 40,060,800
109,359,801
TOTAL COMPUTERS & OFFICE EQUIPMENT 266,065,472
ELECTRICAL EQUIPMENT - 2.2%
CURRENT-CARRYING WIRING DEVICE - 0.2%
Adflex Solutions 69,400 1,093,050
MISCELLANEOUS ELECTRICAL MACHINERY EQUIPMENT AND SUPPLIES - 1.2%
Energy Conversion Devices, Inc. (a) 300,000 6,262,500
RELAYS & INDUSTRIAL CONTROLS - 0.7%
C.P. Clare Corp. (a)(c) 210,000 3,832,500
TV & RADIO COMMUNICATION EQUIPMENT - 0.1%
Leitch Technology (a) 20,000 620,279
TOTAL ELECTRICAL EQUIPMENT 11,808,329
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
ELECTRONIC INSTRUMENTS - 5.4%
ELECTRONIC EQUIPMENT - 5.2%
Cohu, Inc. 100,000 $ 3,112,500
Fluke Corp. 99,800 3,605,275
LTX Corp. (a) 990,000 9,033,750
Mosaid Technologies, Inc. (a) 64,900 1,355,685
Teradyne, Inc. (a) 516,547 10,524,645
27,631,855
SEMICONDUCTOR CAPITAL EQUIPMENT - 0.2%
Electro Scientific Industries, Inc. (a) 49,500 1,064,250
TOTAL ELECTRONIC INSTRUMENTS 28,696,105
ELECTRONICS - 6.1%
ELECTRONIC CAPACITORS - 0.1%
AVX Corp. 32,000 784,000
ELECTRONIC COMPUTERS & ACCESSORIES - 0.1%
Benchmarq Microelectronics, Inc. (a) 42,700 288,225
ELECTRONIC PARTS - WHOLESALE - 0.1%
Pioneer Standard Electronics, Inc. 7,425 103,950
Sterling Electronics Corp. (a) 34,440 542,430
646,380
ELECTRONICS & ELECTRONIC COMPONENTS - 1.0%
Photronics, Inc. (a) 65,000 1,430,000
Sanmina Corp. (a) 10,000 535,000
Smartflex Systems, Inc. (a) 132,000 1,749,000
Solectron Corp. (a) 30,800 1,493,800
5,207,800
SEMICONDUCTORS - 4.8%
Act Manufacturing, Inc. (a) 13,000 162,500
Austria Mikro Systeme International 12,000 1,749,288
Electroglas, Inc. (a) 41,200 782,800
Geotek Industries, Inc. (a) 80,000 770,000
International Rectifier Corp. (a) 8,000 164,000
Linear Technology Corp. 70,000 3,255,000
Logic Devices, Inc. (a) 30,000 187,500
MEMC Electronic Materials, Inc. (a) 50,000 1,700,000
Micro Linear Corp. (a) 118,300 1,116,456
Mylex Corp. (a) 43,000 1,032,000
S-3, Inc. (a) 144,800 2,470,650
Samsung Electronics Co. Ltd.:
GDR (vtg.) (a) 1,761 159,371
GDS (b) 41,509 2,199,977
GDS (vtg.) (b) 2,759 249,690
GDS (non-vtg.) (Reg.) 45,000 2,385,000
Siliconix, Inc. (a) 600 22,350
Supertex, Inc. (a) 20,000 255,000
Uniphase Corp. (a) 14,300 557,700
Xilinx, Inc. (a) 150,000 5,793,750
25,013,032
TOTAL ELECTRONICS 31,939,437
INDUSTRIAL MACHINERY & EQUIPMENT - 1.4%
GENERAL INDUSTRIAL MACHINERY - 0.2%
Robotic Vision Systems, Inc. (a) 50,000 775,000
SPECIAL INDUSTRIAL MACHINERY - 1.2%
Fuji Machine Manufacturing Co. Ltd. Ord. 90,000 2,641,904
Tylan General, Inc. (a) 175,000 2,012,500
Veeco Instruments, Inc. (a) 110,800 1,662,000
6,316,404
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 7,091,404
SHARES VALUE (NOTE 1)
METALS & MINING - 1.9%
METAL ORES - 1.9%
Sumitomo Sitix Corp. 500,000 $ 10,212,322
SERVICES - 0.0%
ELECTRICAL REPAIR SHOPS - 0.0%
Cerplex Group, Inc. (a) 20,000 125,000
TOTAL COMMON STOCKS
(Cost $372,381,808) 438,257,470
NONCONVERTIBLE PREFERRED STOCKS - 0.1%
COMPUTER SERVICES & SOFTWARE - 0.1%
PREPACKAGED COMPUTER SOFTWARE - 0.1%
SAP AG (Cost $122,656) 2,000 313,327
CONVERTIBLE BONDS - 2.5%
PRINCIPAL
AMOUNT
COMPUTERS & OFFICE EQUIPMENT - 2.1%
ELECTRONIC COMPUTERS - 2.0%
Acer, Inc. 4%, 6/10/01 $ 3,890,000 10,503,000
OFFICE EQUIPMENT - WHOLESALE - 0.1%
Kinpo Electronics, Inc. euro 3%,
7/21/01 950,000 745,750
TOTAL COMPUTERS & OFFICE EQUIPMENT 11,248,750
ELECTRONICS - 0.4%
SEMICONDUCTORS - 0.4%
United Microelectronics Corp. :
1 1/4%, 6/8/04 (b) 1,070,000 1,118,150
euro 1 1/4%, 6/8/04 1,063,000 1,110,835
2,228,985
TOTAL CONVERTIBLE BONDS
(Cost $13,333,126) 13,477,735
REPURCHASE AGREEMENTS - 14.5%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 5.41% dated
2/29/96 due 3/1/96 $ 76,631,514 76,620,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $462,457,590) $ 528,668,532
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 $6,945,517 or 1.3% of net
assets.
3. A company in which the fund has ownership of at least 5% of the voting
securities is an affiliated company. Transactions during the period with
companies that are or were affiliates are as follows:
PURCHASES SALES DIVIDEND MARKET
AFFILIATE COST COST INCOME VALUE
C.P. Clare Corp. $ - $ - $ - $ 3,832,500
Insignia Solutions PLC sponsored ADR - - - 1,250,050
Totals $ - $ - $ - $ 5,082,550
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $639,486,773 and $550,315,523, respectively (see Note 3 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $88,690 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 $7,708,750 and $8,265,400, respectively (see Note 6
of Notes to Financial Statements).
INCOME TAX INFORMATION
At February 29, 1996, the aggregate cost of investment securities for
income tax purposes was $463,524,007. Net unrealized appreciation
aggregated $65,144,525, of which $90,211,253 related to appreciated
investment securities and $25,066,728 related to depreciated investment
securities.
The fund hereby designates approximately $33,599,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 1% of the dividends distributed during the fiscal year qualifies
for the dividends-received deductions for corporate shareholders
(unaudited).
The fund will notify shareholders in January 1997 of the applicable
percentage for use in preparing 1996 income tax returns.
COMPUTERS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 29, 1996
ASSETS
Investment in $ 528,668,532
securities, at
value
(including
repurchase
agreements
of
$76,620,000)
(cost
$462,457,590
) - See
accompanyin
g schedule
Cash 314
Receivable for 2,145,262
investments
sold
Receivable for 9,992,931
fund shares
sold
Dividends 112,022
receivable
Interest 122,028
receivable
Redemption 3,437
fees
receivable
Other 47,838
receivables
TOTAL ASSETS 541,092,364
LIABILITIES
Payable for $ 2,001,186
investments
purchased
Payable for 2,763,753
fund shares
redeemed
Accrued 256,438
management
fee
Other payables 468,744
and accrued
expenses
Collateral on 8,265,400
securities
loaned,
at value
TOTAL 13,755,521
LIABILITIES
NET ASSETS $ 527,336,843
Net Assets
consist of:
Paid in capital $ 422,069,550
Accumulated 39,056,375
undistributed
net realized
gain (loss) on
investments
and foreign
currency
transactions
Net unrealized 66,210,918
appreciation
(depreciation
) on
investments
and assets
and liabilities
in
foreign
currencies
NET ASSETS, for $ 527,336,843
12,851,491
shares
outstanding
NET ASSET $41.03
VALUE and
redemption
price per
share
($527,336,84
3 (divided by)
12,851,491
shares)
Maximum $42.30
offering price
per share
(100/97.00 of
$41.03)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 29, 1996
INVESTMENT $ 755,004
INCOME
Dividends
Interest 3,161,111
(including
income on
securities
loaned of
$62,996)
TOTAL 3,916,115
INCOME
EXPENSES
Management $ 2,922,505
fee
Transfer agent 3,291,858
Fees
Redemption (339,329
fees )
Accounting and 465,210
security
lending fees
Non-interested 1,920
trustees'
compensatio
n
Custodian fees 45,861
and
expenses
Registration 244,959
fees
Audit 32,990
Legal 2,174
Miscellaneous 4,872
Total 6,673,020
expenses
before
reductions
Expense (87,073 6,585,947
reductions )
NET (2,669,832
INVESTMENT )
INCOME
(LOSS)
REALIZED AND
UNREALIZED
GAIN (LOSS)
Net realized
gain (loss)
on:
Investment 102,860,989
securities
Foreign (350 102,860,639
currency )
transactions
Change in net
unrealized
appreciation
(depreciation
) on:
Investment 47,678,675
securities
Assets and (52 47,678,623
liabilities in )
foreign
currencies
NET GAIN (LOSS) 150,539,262
NET INCREASE $ 147,869,430
(DECREASE)
IN NET ASSETS
RESULTING
FROM
OPERATIONS
OTHER $ 7,703,101
INFORMATION
Sales
charges paid
to FDC
Deferred $ 10,256
sales
charges
withheld
by FDC
Exchange $ 241,845
fees withheld
by FSC
Expense $ 79,391
reductions
Directed
brokerage
arrangement
s
Custodian 2,147
interest
credits
Transfer 5,535
agent
interest
credits
$ 87,073
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
FEBRUARY 29, FEBRUARY 28,
1996 1995
Operations $ (2,669,832 $ (1,469,757
Net ) )
investment
income (loss)
Net realized 102,860,639 3,564,127
gain (loss)
Change in 47,678,623 2,952,740
net
unrealized
appreciation
(depreciation
)
NET INCREASE 147,869,430 5,047,110
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
Distributions to (63,147,066 -
shareholders )
from net
realized
gains
Share 837,037,606 529,347,764
transactions
Net proceeds
from sales of
shares
Reinvestmen 62,103,715 -
t of
distributions
Cost of (672,703,503 (441,147,769
shares ) )
redeemed
Paid in 1,162,861 1,332,121
capital
portion of
redemption
fees
NET INCREASE 227,600,679 89,532,116
(DECREASE)
IN NET
ASSETS
RESULTING
FROM SHARE
TRANSACTIO
NS
TOTAL 312,323,043 94,579,226
INCREASE
(DECREASE)
IN NET ASSETS
NET ASSETS
Beginning of 215,013,800 120,434,574
period
End of period $ 527,336,843 $ 215,013,800
(including
accumulate
d net
investment
loss of $0
and
$21,983,
respectivel
y)
OTHER
INFORMATION
Shares
Sold 20,220,825 18,730,329
Issued in 1,547,662 -
reinvestment
of
distributions
Redeemed (15,928,239 (16,175,513
) )
Net increase 5,840,248 2,554,816
(decrease)
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEAR ENDED YEARS ENDED FEBRUARY 28, TEN MONTHS YEAR ENDED
FEBRUARY 29, ENDED APRIL 30,
FEBRUARY 28,
SELECTED PER-SHARE DATA D 1996 1995 1994 1993 1992
</TABLE>
Net asset $ 30.67 $ 27.02 $ 20.15 $ 17.63 $ 16.60
value,
beginning of
period
Income from
Investment
Operations
Net (.23) (.31) (.21) G (.15) (.03) F
investment
income (loss)
Net realized 16.10 3.68 8.66 2.44 1.18
and
unrealized
gain (loss)
Total from 15.87 3.37 8.45 2.29 1.15
investment
operations
Less - - - - (.27)
Distributions
In excess of
net
investment
income
From net (5.61) - (1.80) - (.22)
realized gain
Total (5.61) - (1.80) - (.49)
distributions
Redemption .10 .28 .22 .23 .37
fees added to
paid in
capital
Net asset $ 41.03 $ 30.67 $ 27.02 $ 20.15 $ 17.63
value, end of
period
TOTAL 52.79% 13.51% 45.06% 14.29% 9.36%
RETURN B, C
RATIOS AND
SUPPLEMENT
AL DATA
Net assets, $ 527,337 $ 215,014 $ 120,435 $ 47,596 $ 32,810
end of period
(000 omitted)
Ratio of 1.40% 1.71% 1.90% 1.81% 2.17%
expenses to A
average net
assets
Ratio of 1.38% 1.69% 1.89% 1.81% 2.17%
expenses to E E E A
average net
assets after
expense
reductions
Ratio of net (.56)% (1.12)% (.91)% (.98)% (.18)%
investment A
income (loss)
to average
net assets
Portfolio 129% 189% 145% 254% 568%
turnover rate A
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING
THE PERIODS SHOWN (SEE NOTE 7 OF NOTES TO FINANCIAL STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE
YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES
OUTSTANDING DURING THE PERIOD.
E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES WHO EITHER
PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES (SEE NOTE 7 OF NOTES TO FINANCIAL
STATEMENTS).
F INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND WHICH AMOUNTED TO $.22 PER
SHARE RELATING TO A NONRECURRING INITIATIVE TO INVEST IN DIVIDEND INCOME PRODUCING
SECURITIES WHICH WAS IN EFFECT FOR A PORTION OF 1992.
G INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND WHICH AMOUNTED TO $.07 PER
SHARE.
</TABLE>
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 securities that have grown in value), but does not include certain
fees paid by shareholders upon exchange or redemption. If Fidelity had not
reimbursed certain expenses, the past one, five, and 10 year total returns
would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 29, 1996 YEAR YEARS YEARS
DEFENSE AND AEROSPACE 47.40% 137.00% 120.23%
DEFENSE AND AEROSPACE
(INCL. 3% SALES CHARGE) 42.98% 129.89% 113.63%
S&P 500 34.70% 101.14% 286.76%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one, five, or 10 years. You can compare
these figures to the performance of the S&P 500 - a common proxy for the
U.S. stock market. This benchmark includes reinvested dividends and capital
gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 29, 1996 YEAR YEARS YEARS
DEFENSE AND AEROSPACE 47.40% 18.84% 8.22%
DEFENSE AND AEROSPACE
(INCL. 3% SALES CHARGE) 42.98% 18.12% 7.89%
S&P 500 34.70% 14.99% 14.47%
AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and
show you what would have happened if the fund had performed at a constant
rate each year.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of growth in the long run
and volatility in the short run. Unlike the broader
market, however, some sectors may not have
a history of growth in the long run. And, as
with all stock funds, the share price and return
of
a fund that invests in a sector will vary. That
means if you sell your shares during a sector
downturn, you might lose money. But if you
can identify a sector that is about to
experience rapid growth you may have the
potential for above-average gains.
(checkmark)
$10,000 OVER 10 YEARS
19860228 9700.00 10000.00
19860331 10253.36 10558.00
19860430 10331.48 10438.69
19860531 10585.37 10994.03
19860630 10806.71 11179.83
19860731 10134.72 10554.88
19860831 10656.31 11338.05
19860930 9798.00 10400.39
19861031 9930.04 11000.50
19861130 10246.96 11267.81
19861231 9764.98 10980.48
19870131 10616.70 12459.55
19870228 11290.14 12951.70
19870331 11078.87 13326.01
19870430 10596.89 13207.41
19870531 10451.64 13322.31
19870630 10352.60 13995.09
19870731 10629.90 14704.64
19870831 10517.66 15253.12
19870930 10306.38 14919.08
19871031 7678.62 11705.51
19871130 7282.47 10740.97
19871231 7499.64 11558.36
19880131 7982.16 12044.97
19880229 8457.78 12606.27
19880331 8437.10 12216.73
19880430 8381.96 12352.34
19880531 8064.88 12459.80
19880630 8395.74 13031.71
19880731 8230.31 12982.19
19880831 8030.41 12540.79
19880930 8271.67 13075.03
19881031 8257.88 13438.52
19881130 7892.55 13246.35
19881231 7823.62 13478.16
19890131 8133.81 14464.76
19890228 8099.34 14104.59
19890331 8264.77 14433.22
19890430 8561.18 15182.31
19890531 8712.82 15797.19
19890630 8609.43 15707.15
19890731 9167.76 17125.50
19890831 9402.13 17461.16
19890930 9229.80 17389.57
19891031 8705.93 16986.13
19891130 8375.06 17332.65
19891231 8512.92 17748.63
19900131 8030.41 16557.70
19900228 8057.98 16771.29
19900331 8554.28 17215.73
19900430 8202.74 16785.34
19900531 8809.33 18421.91
19900630 8815.66 18296.64
19900731 8461.92 18238.09
19900831 7719.77 16589.37
19900930 7470.08 15781.47
19901031 7372.97 15713.61
19901130 7768.32 16728.71
19901231 8122.69 17195.44
19910131 8839.61 17945.16
19910228 9013.61 19228.24
19910331 9709.64 19693.56
19910430 9549.56 19740.82
19910531 9995.02 20593.63
19910630 9492.14 19650.44
19910731 9904.53 20566.15
19910831 9799.69 21053.57
19910930 9569.02 20701.97
19911031 10030.35 20979.38
19911130 9576.01 20133.91
19911231 10309.94 22437.23
19920131 10274.99 22019.90
19920229 10435.76 22306.16
19920331 10226.06 21871.19
19920430 10044.33 22514.20
19920531 9541.06 22624.52
19920630 9093.72 22287.41
19920731 9443.21 23198.97
19920831 9261.47 22723.39
19920930 9394.28 22991.53
19921031 9471.17 23072.00
19921130 9799.69 23858.75
19921231 10309.94 24152.21
19930131 10617.49 24355.09
19930228 10540.60 24686.32
19930331 11099.79 25207.20
19930430 11134.74 24597.19
19930531 11477.24 25256.39
19930630 11959.53 25329.64
19930731 12448.82 25228.32
19930831 12427.85 26184.47
19930930 12749.38 25982.85
19931031 13259.63 26520.70
19931130 12868.21 26268.75
19931231 13285.17 26586.60
19940131 13917.79 27490.55
19940228 13917.79 26745.55
19940331 13357.88 25579.45
19940430 13430.38 25906.86
19940531 13474.66 26331.74
19940630 13135.21 25686.61
19940731 13327.07 26529.13
19940831 13924.80 27616.82
19940930 13223.76 26940.21
19941031 13548.45 27546.37
19941130 13017.14 26543.13
19941231 13518.93 26936.76
19950131 13511.55 27635.23
19950228 14493.01 28712.18
19950331 15112.87 29559.47
19950430 15946.73 30430.00
19950531 16928.19 31646.29
19950630 17555.43 32381.43
19950731 18522.12 33455.20
19950831 18514.74 33539.17
19950930 19031.29 34954.52
19951031 18337.64 34829.74
19951130 19658.54 36358.76
19951231 19921.01 37059.03
19960131 20277.45 38320.52
19960229 21362.61 38675.75
Let's say you invested $10,000 in Fidelity Select Defense and Aerospace
Portfolio on February 28, 1986, and paid a 3% sales charge. By February 29,
1996, your investment would have grown to $21,363 - a 113.63% increase.
That compares to $10,000 invested in the S&P 500, which would have grown to
$38,676 over the same period - a 286.76% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 29, 1996
% OF FUND'S
INVESTMENTS
United Technologies Corp. 4.2
McDonnell Douglas Corp. 4.0
Flir Systems, Inc. 2.5
Bombardier, Inc. Class B 2.4
Boeing Co. 2.2
Tracor, Inc. 2.1
Lockheed Martin Corp. 2.1
Esterline Corp. 2.0
General Dynamics Corp. 2.0
Raytheon Co. 2.0
TOP INDUSTRIES AS OF FEBRUARY 29, 1996
Aerospace & Defense 30.2%
Defense Electronics 16.0%
Electronics 13.0%
Conglomerates 10.3%
Electrical Equipment 3.7%
All Others 26.8% *
Row: 1, Col: 1, Value: 26.8
Row: 1, Col: 2, Value: 3.7
Row: 1, Col: 3, Value: 10.3
Row: 1, Col: 4, Value: 13.0
Row: 1, Col: 5, Value: 16.0
Row: 1, Col: 6, Value: 30.2
* INCLUDES SHORT-TERM INVESTMENTS
DEFENSE AND AEROSPACE PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Bill Rubin,
Portfolio Manager of
Fidelity Select Defense and Aerospace Portfolio
Q. BILL, HOW DID THE FUND PERFORM?
A. The fund had an excellent year. For the 12 months ended February 29,
1996, the fund had a total return of 47.40%. That beat the S&P 500 Index,
which had a return of 34.70% over the same 12-month period.
Q. WHAT FACTORS HELPED THE FUND POST SUCH A STRONG RETURN?
A. Two industries - defense and commercial aircraft - made up the bulk of
the investments in the fund, and both had strong performances. Defense
contractors posted stronger-than-expected earnings driven by continued
operating margin increases. They used their ample cash flow to make
acquisitions and buy back their stock, helping to boost earnings per share.
Also, new orders for commercial aircraft increased significantly. Boeing,
for example, received orders in the year ended December 31, 1995, for 364
planes worth $31 billion, up from 1994's orders for 120 planes worth $8
billion. This kind of activity helped Boeing, as well as most of its
suppliers, outperform the S&P 500.
Q. WHY DID DEFENSE CONTRACTORS DO SO WELL?
A. First, they were helped by the benefits of industry consolidation that
has been driven by years of declining defense budgets and little prospect
for increased defense spending. In addition, investors were surprised
throughout the year by the increased profits and improving fundamentals of
the industry. Order backlogs have stopped declining as much, and the
defense budget is expected to rise modestly. The real key here, however, is
that the government is pumping money into existing defense production
programs. In contrast, when funds are allocated to develop new research and
development programs, it tends to be more risky for contractors and
involves increased spending for research and development and capital
equipment, hurting their profitability. Because an increasing percentage of
the defense budget now calls for expenditures within existing programs,
defense contractors can continue to implement what I call a "harvest"
strategy. They don't have to invest much - since the infrastructure is
there - and can reap the rewards of previous investments and continued cost
reductions, helping their profit margins and cash flow. McDonnell Douglas,
Northrop Grumman, General Dynamics, Raytheon and Lockheed Martin were among
the fund's holdings that benefited from this trend during the period.
Q. WHAT'S BEEN BEHIND THE UPSWING IN THE COMMERCIAL AEROSPACE STOCKS?
A. The first step for such an upturn in business is that the economy has to
be relatively strong, or improving, which leads to greater air traffic
growth. That leads to greater profitability for the airlines. They then
usually proceed with orders for more planes. Overseas airlines - especially
those in Asia - need the new planes to keep up with passenger growth. On
the domestic side, demand comes for new planes to replace older models that
cost the airlines too much to operate. New noise regulations that are due
to take effect by 1999 also are a factor. Western countries are requiring
planes to be made quieter through "hush kits," or to be replaced.
Additionally, many airlines are opting to buy new planes that can provide
better operating efficiency and greater passenger comfort and service.
Boeing was an especially strong performer for the fund from this sector, as
were United Technologies, Sundstrand, Precision Castparts and Rohr.
Q. WHICH STOCKS DIDN'T TURN OUT THE WAY YOU WOULD HAVE LIKED?
A. Two stocks come to mind. The stock price of Safety Components dropped
because the defense portion of its business lost out on a defense
ammunition contract they had been expected to win, and due to delays
completing new strategic relationships, as well as negative market
sentiment. The second stock, Watkins-Johnson, performed poorly because
investors lowered the valuation that they were willing to pay for the
stock, the same thing that happened to many of its peers in the
semiconductor equipment industry.
Q. BILL, WHAT'S YOUR OUTLOOK?
A. In general, the outlook for both commercial aerospace and defense
contractors is positive, for the same reasons that drove the stocks higher
in 1995. If I have one concern, it's valuations. Both sectors are presently
near historically high valuations. I would not be surprised if stocks in
the two sectors took a short breather, allowing earnings and cash flow to
catch up with stock prices. But, given the improving fundamentals of the
companies and the industries, I'm still optimistic about prospects in these
sectors over the next 12 to 18 months.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
FUND FACTS
START DATE: May 8, 1984
TRADING SYMBOL: FSDAX
SIZE: as of February 29, 1996, more than
$26 million
MANAGER: Bill Rubin, since 1994; equity
analyst, defense electronics, aerospace, and
electronic connectors industries, since 1994;
joined Fidelity in 1994
(checkmark)
DEFENSE AND AEROSPACE PORTFOLIO
INVESTMENTS FEBRUARY 29, 1996
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 93.2%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 30.2%
AIRCRAFT - 9.2%
Boeing Co. 7,100 $ 575,978
Lockheed Martin Corp. 7,250 552,813
McDonnell Douglas Corp. 11,900 1,050,175
Northrop Grumman Corp. 3,800 234,650
2,413,616
AIRCRAFT & PARTS - 4.0%
Precision Castparts Corp. 7,200 282,600
Rohr Industries, Inc. (a) 10,400 187,200
Sundstrand Corp. 4,400 331,650
Wyman-Gordon Co. (a) 13,100 232,525
1,033,975
AIRCRAFT ENGINES & PARTS - 1.5%
UNC, Inc. (a) 55,000 405,625
AIRCRAFT EQUIPMENT - 4.4%
Aviall, Inc. 67,000 485,750
BE Aerospace, Inc. (a) 5,000 64,375
Moog, Inc. Class A 25,000 434,375
Transtechnology Corp. 11,200 154,000
1,138,500
GUIDED MISSILES & SPACE VEHICLES - 1.3%
Rockwell International Corp. 5,900 336,300
MISSILES & SPACE VEHICLES - 4.7%
Orbital Sciences Corp. (a) 35,500 508,094
Special Devices, Inc. (a) 18,600 330,150
Thiokol Corp. 9,500 389,500
1,227,744
ORDNANCE - 1.5%
Alliant Techsystems, Inc. (a) 7,600 380,000
TRAINING EQUIPMENT & SIMULATORS - 3.6%
BVR Technologies Ltd. (a) 20,800 195,000
C A E Industries Ltd. 53,100 421,398
Flightsafety International, Inc. 6,300 336,263
952,661
TOTAL AEROSPACE & DEFENSE 7,888,421
AIR TRANSPORTATION - 1.5%
AIR TRANSPORT, MAJOR NATIONAL - 0.3%
KLM Royal Dutch Airlines 2,458 81,729
AIR TRANSPORTATION, REGIONAL - 1.2%
Atlantic Southeast Airlines, Inc. 11,400 299,250
TOTAL AIR TRANSPORTATION 380,979
AUTOS, TIRES, & ACCESSORIES - 5.0%
AUTO & TRUCK PARTS - 3.8%
Safety Components International, Inc. (a) 31,500 444,938
Sparton Corp. (a) 20,200 78,275
Standard Products Co. 7,000 145,250
TRW, Inc. 3,800 329,175
997,638
AUTO PARTS - RETAIL - 0.7%
Discount Auto Parts, Inc. (a) 7,000 176,750
MOTOR VEHICLE SUPPLIES & NEW PARTS - 0.5%
Hahn Automotive Warehouse, Inc. 15,000 123,750
TOTAL AUTOS, TIRES, & ACCESSORIES 1,298,138
SHARES VALUE (NOTE 1)
BROADCASTING - 0.2%
TELEVISION BROADCASTING - 0.2%
U.S. Satellite Broadcasting Co.,
Inc. Class A (a) 2,000 $ 65,000
CHEMICALS & PLASTICS - 0.8%
CHEMICALS - 0.8%
Goodrich (B.F.) Company 2,900 220,763
COMMUNICATIONS EQUIPMENT - 0.2%
TELEPHONE EQUIPMENT - 0.2%
Tadiran Ltd. 2,000 49,250
COMPUTER SERVICES & SOFTWARE - 1.8%
CAD/CAM/CAE - 0.4%
Dynamics Research Corp. (a) 15,000 106,875
COMPUTER SERVICES - 0.9%
Verity, Inc. (a) 5,000 237,500
CUSTOM COMPUTER PROGRAMMING SERVICES - 0.5%
CACI International, Inc. Class A (a) 11,500 115,000
TOTAL COMPUTER SERVICES & SOFTWARE 459,375
COMPUTERS & OFFICE EQUIPMENT - 0.4%
COMPUTER PERIPHERALS - 0.3%
Miltope Group, Inc. (a) 34,900 82,888
GRAPHICS WORKSTATIONS - 0.1%
Scitex Ltd. Ord. 2,200 36,575
TOTAL COMPUTERS & OFFICE EQUIPMENT 119,463
CONGLOMERATES - 10.3%
Allied-Signal, Inc. 3,600 200,250
Coltec Industries, Inc. (a) 25,000 343,750
GenCorp, Inc. 10,000 130,000
Harris Corp. 6,700 445,550
Sequa Corp. Class A (a) 6,000 202,500
Textron, Inc. 3,400 267,750
United Technologies Corp. 10,100 1,085,750
2,675,550
DEFENSE ELECTRONICS - 16.0%
EDO Corp. (a) 26,000 143,000
ESCO Electronics Corp. (trust receipt) (a) 21,000 259,875
Flir Systems, Inc. (a) 52,100 651,250
Geodynamics Corp. 12,500 139,063
Litton Industries, Inc. (a) 3,700 186,850
Loral Corp. 1,700 80,113
Nichols Research Corp. (a) 8,200 190,650
Raytheon Co. 10,500 526,313
Remec, Inc. (a) 22,000 211,750
Tracor, Inc. (a) 34,900 554,038
Trimble Navigation Ltd. (a) 16,300 332,113
Watkins-Johnson Co. 13,900 510,825
Whittaker Corp. (a) 15,400 377,300
4,163,140
ELECTRICAL EQUIPMENT - 3.7%
CURRENT-CARRYING WIRING DEVICE - 1.3%
Adflex Solutions (a) 22,300 351,225
TV & RADIO COMMUNICATION EQUIPMENT - 1.9%
C-COR Electronics, Inc. (a) 8,000 134,000
Ortel Corp. (a) 16,600 190,900
Scientific-Atlanta, Inc. 4,000 67,000
TSX Corp. (a) 5,000 91,250
483,150
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
ELECTRICAL EQUIPMENT - CONTINUED
WIRING & LIGHTING - 0.5%
Oak Industries, Inc. (a) 5,300 $ 126,538
TOTAL ELECTRICAL EQUIPMENT 960,913
ELECTRONICS - 13.0%
CONNECTORS - 3.0%
AMP, Inc. 10,000 426,250
Augat, Inc. 21,000 370,125
796,375
ELECTRONIC CAPACITORS - 2.5%
AVX Corp. 17,500 428,750
Kemet Corp. (a) 9,200 216,200
644,950
ELECTRONIC PARTS - WHOLESALE - 1.9%
Anicom, Inc. (a) 20,000 237,500
Zero Corp. 15,000 266,250
503,750
ELECTRONICS & ELECTRONIC COMPONENTS - 5.1%
Alpine Group, Inc. 21,100 92,313
Esterline Corp. (a) 23,900 531,775
Molex, Inc. 8,875 295,094
Signal Technology Corp. (a) 9,900 70,538
Vishay Intertechnology, Inc. 12,500 329,688
1,319,408
SEMICONDUCTORS - 0.5%
Semtech Corp. (a) 7,000 126,000
TOTAL ELECTRONICS 3,390,483
INDUSTRIAL MACHINERY & EQUIPMENT - 1.2%
FLUID POWER CYLINDERS & ACTUATORS - 1.2%
Power Control Technologies, Inc. (a) 35,000 306,250
METALS & MINING - 3.3%
NONFERROUS ROLLING & DRAWING - 1.8%
Oregon Metallurgical Corp. (a) 15,000 260,625
RMI Titanium Co. (a) 16,600 205,425
466,050
NONFERROUS WIRE - 0.7%
Cable Design Technology Corp. 5,000 196,250
PRIME NONFERROUS SMELTING - 0.8%
Tremont Corp. (a) 8,100 199,463
TOTAL METALS & MINING 861,763
RAILROADS - 2.4%
RAILROAD EQUIPMENT - 2.4%
Bombardier, Inc. Class B 42,400 634,291
SHIP BUILDING & REPAIR - 2.5%
SHIP BUILDERS - 2.5%
Avondale Industries, Inc. (a) 7,000 111,125
General Dynamics Corp. 8,900 530,663
641,788
TELEPHONE SERVICES - 0.7%
Globalstar Telecommunications Ltd. (a) 3,500 189,875
TOTAL COMMON STOCKS
(Cost $22,180,438) 24,305,442
REPURCHASE AGREEMENTS - 6.8%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations) in a joint
trading account at 5.41%, dated
2/29/96 due 3/1/96 $ 1,773,266 $ 1,773,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $23,953,438) $ 26,078,442
LEGEND
1. Non-income producing
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $64,453,602 and $52,445,383, respectively (see Note 3 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $36,879 for the period (see
Note 4 of Notes to Financial Statements).
The maximum loan and the average daily loan balances during the periods for
which loans were outstanding amounted to $4,697,000 and $1,821,478,
respectively. The weighted average interest rate paid was 6.2% (see Note 5
of Notes to Financial Statements).
INCOME TAX INFORMATION
At February 29, 1996, the aggregate cost of investment securities for
income tax purposes was $24,083,922. Net unrealized appreciation aggregated
$1,994,520, of which $2,751,788 related to appreciated investment
securities and $757,268 related to depreciated investment securities.
The fund hereby designates approximately $405,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 13% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate shareholders
(unaudited).
The fund will notify shareholders in January 1997 of the applicable
percentage for use in preparing 1996 income tax returns.
DEFENSE AND AEROSPACE PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 29, 1996
ASSETS
Investment in $ 26,078,442
securities, at
value
(including
repurchase
agreements
of
$1,773,000)
(cost
$23,953,438)
- - See
accompanyin
g schedule
Cash 779
Receivable for 1,744,466
investments
sold
Receivable for 930,249
fund shares
sold
Dividends 25,160
receivable
Redemption 61
fees
receivable
Other 88
receivables
TOTAL ASSETS 28,779,245
LIABILITIES
Payable for $ 1,728,928
investments
purchased
Payable for 360,185
fund shares
redeemed
Accrued 12,118
management
fee
Other payables 29,799
and
accrued
expenses
TOTAL 2,131,030
LIABILITIES
NET ASSETS $ 26,648,215
Net Assets
consist of:
Paid in capital $ 20,344,168
Accumulated 4,179,043
undistributed
net realized
gain (loss) on
investments
and foreign
currency
transactions
Net unrealized 2,125,004
appreciation
(depreciation
) on
investments
NET ASSETS, for $ 26,648,215
988,216
shares
outstanding
NET ASSET $26.97
VALUE and
redemption
price per
share
($26,648,215
(divided by) 988,216
shares)
Maximum $27.80
offering price
per share
(100/97.00 of
$26.97)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 29, 1996
INVESTMENT $ 245,034
INCOME
Dividends
Interest 88,321
TOTAL 333,355
INCOME
EXPENSES
Management $ 131,560
fee
Transfer agent 195,299
Fees
Redemption (34,320
fees )
Accounting 47,698
fees and
expenses
Non-interested 88
trustees'
compensatio
n
Custodian fees 17,114
and
expenses
Registration 20,967
fees
Audit 17,681
Legal 105
Interest 7,250
Miscellaneous 91
Total 403,533
expenses
before
reductions
Expense (28,137 375,396
reductions )
NET (42,041
INVESTMENT )
INCOME
(LOSS)
REALIZED AND
UNREALIZED
GAIN (LOSS)
Net realized
gain (loss)
on:
Investment 6,185,785
securities
Foreign (1,127 6,184,658
currency )
transactions
Change in net 1,844,428
unrealized
appreciation
(depreciation
)
on
investment
securities
NET GAIN (LOSS) 8,029,086
NET INCREASE $ 7,987,045
(DECREASE)
IN NET ASSETS
RESULTING
FROM
OPERATIONS
OTHER $ 256,417
INFORMATION
Sales
charges paid
to FDC
Deferred $ 4,056
sales
charges
withheld
by FDC
Exchange $ 28,245
fees withheld
by FSC
Expense $ 2,766
reductions
Directed
brokerage
arrangement
s
Custodian 916
interest
credits
FMR 24,455
reimburseme
nt
$ 28,137
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
FEBRUARY 29, FEBRUARY 28,
1996 1995
Operations $ (42,041 $ (16,833
Net ) )
investment
income (loss)
Net realized 6,184,658 (307,440
gain (loss) )
Change in 1,844,428 (46,619
net )
unrealized
appreciation
(depreciation
)
NET INCREASE 7,987,045 (370,892
(DECREASE) )
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
Distributions to (1,652,319 (145,443
shareholders ) )
from net
realized
gains
Share 82,853,410 13,049,647
transactions
Net proceeds
from sales of
shares
Reinvestmen 1,633,401 142,332
t of
distributions
Cost of (69,255,038 (18,865,024
shares ) )
redeemed
Paid in 97,064 38,135
capital
portion of
redemption
fees
NET INCREASE 15,328,837 (5,634,910
(DECREASE) )
IN NET
ASSETS
RESULTING
FROM SHARE
TRANSACTIO
NS
TOTAL 21,663,563 (6,151,245
INCREASE )
(DECREASE)
IN NET ASSETS
NET ASSETS
Beginning of 4,984,652 11,135,897
period
End of period $ 26,648,215 $ 4,984,652
OTHER
INFORMATION
Shares
Sold 3,489,764 690,722
Issued in 65,863 7,812
reinvestment
of
distributions
Redeemed (2,821,248 (1,026,621
) )
Net increase 734,379 (328,087
(decrease) )
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEAR ENDED YEARS ENDED FEBRUARY 28, TEN MONTHS YEAR ENDED
FEBRUARY 29, ENDED APRIL 30,
FEBRUARY 28,
SELECTED PER-SHARE DATA D 1996 1995 1994 1993 1992
</TABLE>
Net asset $ 19.64 $ 19.14 $ 15.08 $ 14.37 $ 13.72
value,
beginning of
period
Income from
Investment
Operations
Net (.05) (.06) .07 (.02) (.01)
investment
income (loss)
Net realized 9.09 .70 F 4.57 .69 .67
and
unrealized
gain (loss)
Total from 9.04 .64 4.64 .67 .66
investment
operations
Less - - (.10) - (.04)
Distributions
From net
investment
income
In excess of - - - - (.02)
net
investment
income
From net (1.82) (.27) (.62) - -
realized gain
Total (1.82) (.27) (.72) - (.06)
distributions
Redemption .11 .13 .14 .04 .05
fees added to
paid in
capital
Net asset $ 26.97 $ 19.64 $ 19.14 $ 15.08 $ 14.37
value, end of
period
TOTAL 47.40% 4.13% 32.04% 4.94% 5.18%
RETURN B, C
RATIOS AND
SUPPLEMENT
AL DATA
Net assets, $ 26,648 $ 4,985 $ 11,136 $ 1,463 $ 1,280
end of period
(000 omitted)
Ratio of 1.77% 2.49% 2.53% 2.48% A 2.46%
expenses to G G G , G G
average net
assets
Ratio of 1.75% 2.49% 2.53% 2.48% A 2.46%
expenses to E
average net
assets after
expense
reductions
Ratio of net (.20)% (.32)% .40% (.14)% (.10)%
investment A
income (loss)
to average
net assets
Portfolio 267% 146% 324% 87% A 32%
turnover rate
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING
THE PERIODS SHOWN (SEE NOTE 7 OF NOTES TO FINANCIAL STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE
YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES
OUTSTANDING DURING THE PERIOD.
E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES WHO EITHER
PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES (SEE NOTE 7 OF NOTES TO FINANCIAL
STATEMENTS).
F THE AMOUNT SHOWN FOR A SHARE OUTSTANDING DOES NOT CORRESPOND WITH THE AGGREGATE NET
GAIN (LOSS) ON INVESTMENTS FOR THE PERIOD ENDED DUE TO THE TIMING OF SALES AND
REPURCHASES OF FUND SHARES IN RELATION TO FLUCTUATING MARKET VALUES OF THE INVESTMENTS OF
THE FUND.
G DURING THE PERIOD, FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES, OR
EXPENSES WERE LIMITED IN ACCORDANCE WITH A STATE EXPENSE LIMITATION. WITHOUT THIS
REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD HAVE BEEN HIGHER.
</TABLE>
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 securities that have grown in value), but does not include certain
fees paid by shareholders upon exchange or redemption. If Fidelity had not
reimbursed certain expenses, the life of fund total returns would have been
lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
FEBRUARY 29, 1996 YEAR YEARS FUND
DEVELOPING COMMUNICATIONS 21.84% 186.46% 218.26%
DEVELOPING COMMUNICATIONS 18.19% 177.87%
(INCL. 3% SALES CHARGE) 208.71%
S&P 500 34.70% 101.14% 111.64%
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 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 PAST 5 LIFE OF
FEBRUARY 29, 1996 YEAR YEARS FUND
DEVELOPING COMMUNICATIONS 21.84% 23.43% 22.62%
DEVELOPING COMMUNICATIONS 18.19% 22.68%
(INCL. 3% SALES CHARGE) 21.96%
S&P 500 34.70% 14.99% 14.12%
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
19900629 9700.00 10000.00
19900731 8953.10 9980.27
19900831 7866.70 9078.05
19900930 6751.20 8635.95
19901031 7081.00 8598.82
19901130 8235.30 9154.30
19901231 8759.10 9409.71
19910131 10146.20 9819.97
19910228 10776.70 10522.10
19910331 11494.50 10776.73
19910430 11591.50 10802.60
19910531 11766.10 11269.27
19910630 10841.06 10753.14
19910731 11963.62 11254.23
19910831 12670.42 11520.96
19910930 12815.94 11328.56
19911031 13564.32 11480.36
19911130 12888.70 11017.70
19911231 14135.99 12278.13
19920131 14510.18 12049.75
19920229 14998.70 12206.40
19920331 14260.72 11968.38
19920430 14073.63 12320.25
19920531 14011.26 12380.62
19920630 13512.35 12196.14
19920731 14104.81 12694.97
19920831 13574.71 12434.72
19920930 14032.05 12581.45
19921031 14655.70 12625.48
19921130 15986.14 13056.01
19921231 16569.33 13216.60
19930131 17017.15 13327.62
19930228 17121.30 13508.88
19930331 17735.75 13793.92
19930430 17206.93 13460.10
19930531 18365.83 13820.83
19930630 19160.51 13860.91
19930731 19535.77 13805.47
19930831 21323.79 14328.70
19930930 21621.79 14218.37
19931031 22372.32 14512.69
19931130 20672.60 14374.82
19931231 21833.52 14548.75
19940131 22673.27 15043.41
19940228 22298.78 14635.73
19940331 20744.11 13997.61
19940430 21598.03 14176.78
19940531 20440.78 14409.28
19940630 18918.07 14056.26
19940731 20879.32 14517.30
19940831 22657.83 15112.51
19940930 22962.38 14742.25
19941031 25021.07 15073.95
19941130 24314.54 14524.96
19941231 25138.57 14740.37
19950131 24467.87 15122.58
19950228 25337.29 15711.91
19950331 25473.91 16175.57
19950430 26593.13 16651.94
19950531 27505.97 17317.52
19950630 30405.58 17719.80
19950731 33318.60 18307.39
19950831 33399.15 18353.34
19950930 34285.14 19127.86
19951031 30875.42 19059.57
19951130 31023.08 19896.28
19951231 29504.05 20279.49
19960131 28582.05 20969.80
19960229 30871.16 21164.19
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 29, 1996, your investment would have grown to $30,871 -
a 208.71% increase. That compares to $10,000 invested in the S&P 500, which
would have grown to $21,164 over the same period - a 111.64% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 29, 1996
% OF FUND'S
INVESTMENTS
Glenayre Technologies, Inc. 8.0
AirTouch Communications, Inc. 7.2
United States Cellular Corp. 4.1
Cisco Systems, Inc. 4.0
Vanguard Cellular Systems, Inc. Class A 3.5
Dynatech Corp. 3.0
U.S. Robotics Corp. 2.9
Palmer Wireless, Inc. 2.7
Arch Communications Group, Inc. 2.1
California Microwave Corp. 2.0
TOP INDUSTRIES AS OF FEBRUARY 29, 1996
Row: 1, Col: 1, Value: 34.8
Row: 1, Col: 2, Value: 7.5
Row: 1, Col: 3, Value: 8.0
Row: 1, Col: 4, Value: 12.0
Row: 1, Col: 5, Value: 14.6
Row: 1, Col: 6, Value: 23.1
Cellular & Communication
Services 23.1%
TV & Radio Communication
Equipment 14.6%
Telephone Equipment 12.0%
Datacommunications
Equipment 8.0%
Telephone Services 7.5%
All Others 34.8% *
* 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. Not as well as I would have liked. For the 12 months ended February 29,
1996, the fund had a total return of 21.84%. By comparison, the S&P 500
Index posted a return of 34.70% during the same period.
Q. WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE?
A. I've worked on two strategies with the fund. Half of my focus has been
on what I call the "broadband revolution." That describes the equipment
upgrade that's happening in telecommunications networks as people and
companies look for more bandwidth to send data, to get on to the Internet
or even for video conferencing. Stocks in this sector were hit hard in the
fourth quarter of 1995. For the first time in a while, it seemed as if
equipment customers such as telephone companies weren't purchasing as much
as usual. That wasn't really the case; I believe it was just a change in
spending patterns. Nevertheless, it raised fears about the group. The other
area I've concentrated on has been cellular service providers. These stocks
performed poorly in 1995, as investors were concerned about how the
introduction of PCS - personal communication services, a competing mobile
communications system - would affect cellular pricing and subscriber
acquisition. At the beginning of 1996, the cellular operators rebounded
somewhat as their subscriber accounts continued to grow.
Q. WHAT EFFECT DID THE NEW TELECOMMUNICATIONS LAW HAVE ON THE SECTOR AND
THE FUND?
A. It helped focus investor attention on the sector. I don't expect any
near-term effects though. In the latter part of 1995 and beginning of 1996,
concern over the proposed legislation may have caused operators to spend
money on more basic, core products rather than the high value-added next
generation products provided by the companies I seek for the fund. Now that
all the players know what the ground rules are, it is apparent that they'll
purchase the kind of equipment that will help them gradually improve and
adapt their networks and expand into new areas.
Q. WHICH STOCKS POSTED POSITIVE PERFORMANCE FOR THE FUND OVER THE PAST SIX
MONTHS?
A. Glenayre was one. Paging growth worldwide has been very strong. In many
places, it's a basic means of communication, with customers using paging
code books because no telephones are available. Paging also is taking off
in the U.S., because it is the cheapest, longest battery-life mobile
service you can get. U.S. Robotics, the world's largest modem vendor, also
performed well, having benefited from demand caused by the Internet and
remote-access boom. Finally, Sanmina, which makes circuit boards for
telecommunications equipment companies, prospered because it expanded and
faced little competitive threat.
Q. WHICH STOCKS DIDN'T TURN OUT AS WELL AS YOU WOULD HAVE LIKED?
A. DSC, which had been one of the fund's largest investments, was one. The
temporary slowdown in business - while investors were waiting to see the
final shape the telecommunications law would take - hurt the company. In
addition, an acquisition in Europe hasn't gone as well as expected for the
company. AirTouch stock stalled as investors were slow to appreciate the
value in the company. Also, Vanguard Cellular, a strong basic cellular
operator, lagged over concerns about competition from PCS and declines in
its average monthly revenues.
Q. WHAT'S YOUR OUTLOOK?
A. Overall, I'm cautiously optimistic. It remains difficult to find the
right investment at the right price, and that's the key. Many of the
equipment stocks are expensive or have some near-term negative issues. On
the cellular side, I think the current operators will benefit when PCS
comes out, as investors will be able to more clearly see the differences
between the two different types of mobile telecommunications services. PCS
has been delayed and until it is brought to market, investors are going to
doubt the prospects of the cellular group. At the moment, my main focus is
to balance the strong long-term investments like the cellular companies
with the equipment companies that can provide the short-term boost. I've
tended to look less at growth and more at value, as I'm trying to limit the
portfolio's downside risk while maintaining a good potential for positive
performance. But I think 1996 may be a more difficult year than 1995.
FUND FACTS
START DATE: June 29, 1990
TRADING SYMBOL: FSDCX
SIZE: as of February 29, 1996, more than
$333 million
MANAGER: Paul Antico, since 1993; equity
analyst, telecommunications equipment since
1992, restaurant industry 1992-1993, and
wireless communications since 1993; joined
Fidelity in 1991
(checkmark)
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
DEVELOPING COMMUNICATIONS PORTFOLIO
INVESTMENTS FEBRUARY 29, 1996
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 85.3%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 1.5%
GUIDED MISSILES & SPACE VEHICLES - 1.5%
Rockwell International Corp. 84,300 $ 4,805,100
BROADCASTING - 3.5%
CABLE TV OPERATORS - 3.5%
American Telecasting, Inc. (a) 131,100 2,146,763
CAI Wireless Systems, Inc. (a) 7,300 64,784
Cablevision Systems Corp. 33,000 1,918,125
Heartland Wireless
Communications, Inc. (a) 81,600 2,060,400
Nynex CableComms Group PLC
ADR Unit (a) 113,000 1,737,375
Videotron Holdings PLC
sponsored ADR (a) 221,000 3,729,375
11,656,822
TELEVISION BROADCASTING - 0.0%
U.S. Satellite Broadcasting Co., Inc.
Class A (a) 2,000 65,000
TOTAL BROADCASTING 11,721,822
CELLULAR - 23.1%
CELLULAR & COMMUNICATION SERVICES - 23.1%
AirTouch Communications, Inc. (a) 763,525 23,669,275
Arch Communications Group, Inc. (a) 265,787 6,893,850
BCE Mobile Communications, Inc. (a) 39,500 1,297,114
Cellular Communications Puerto
Rico, Inc. (a) 96,900 2,531,513
Millicom International Cellular SA (a) 23,400 886,275
Mobile Telecommunications
Technologies, Inc. (a) 160,000 2,300,000
Nera AS sponsored ADR (a) 50,000 1,893,750
Nera AS 27,300 1,034,494
Paging Network, Inc. (a) 39,700 1,052,050
Palmer Wireless, Inc. (a) 434,600 9,017,950
Rural Cellular Corp. Class A (a) 26,500 278,250
United States Cellular Corp. (a) 374,800 13,492,800
Vanguard Cellular Systems, Inc. Class A (a) 527,850 11,612,700
75,960,021
COMMUNICATIONS EQUIPMENT - 21.4%
DATACOMMUNICATIONS EQUIPMENT - 8.0%
Broadband Technologies, Inc. 5,000 122,500
Cisco Systems, Inc. (a) 275,000 13,062,500
Digital Link Corp. 25,000 278,125
Dynatech Corp. (a) 401,750 10,043,750
Microcom, Inc. (a) 88,600 2,680,150
26,187,025
TELEPHONE EQUIPMENT - 12.0%
ADC Telecommunications, Inc. 108,800 4,324,800
Brite Voice Systems, Inc. (a) 182,400 3,100,800
DSC Communications Corp. (a) 68,900 2,101,450
DSP Communications, Inc. (a) 64,300 3,086,400
Filtronic Comtek PLC 150,000 976,236
Inter-Tel, Inc. (a) 255,200 4,561,700
InterVoice, Inc. (a) 80,600 1,924,325
Network Equipment Technologies (a) 58,900 1,752,275
Newbridge Networks Corp. (a) 113,000 5,522,875
Pairgain Technologies, Inc. 7,000 414,750
U.S. Robotics Corp. 76,700 9,510,800
Westell Technologies, Inc. Class A (a) 60,500 2,359,500
39,635,911
SHARES VALUE (NOTE 1)
TELEPHONE INTERCONNECT SYSTEMS - 1.4%
P-COM, Inc. 286,700 $ 4,587,200
TOTAL COMMUNICATIONS EQUIPMENT 70,410,136
COMPUTER SERVICES & SOFTWARE - 4.2%
CAD/CAM/CAE - 0.5%
Brooktrout Technology, Inc. (a) 67,500 1,653,750
ECI Telecom Ltd. 6,500 165,750
1,819,500
COMPUTER SERVICES - 0.5%
America Online, Inc. 35,000 1,719,375
DATA PROCESSING - 0.9%
General Motors Corp. Class E 50,000 2,856,250
PREPACKAGED COMPUTER SOFTWARE - 2.3%
Black Box Corp. (a) 121,300 2,092,425
Microsoft Corp. (a) 15,000 1,480,313
Netscape Communications Corp. (a) 30,000 1,530,000
Oracle Systems Corp. (a) 35,000 1,820,000
Vantive Corp. (a) 24,600 510,450
7,433,188
TOTAL COMPUTER SERVICES & SOFTWARE 13,828,313
COMPUTERS & OFFICE EQUIPMENT - 1.1%
ELECTRONIC COMPUTERS - 1.1%
Bay Networks, Inc. (a) 90,000 3,656,250
CONGLOMERATES - 0.4%
Harris Corp. 22,000 1,463,000
DEFENSE ELECTRONICS - 1.1%
Datum, Inc. (a) 53,300 533,000
Whittaker Corp. (a) 123,600 3,028,200
3,561,200
ELECTRICAL EQUIPMENT - 15.1%
TV & RADIO COMMUNICATION EQUIPMENT - 14.6%
Allen Group, Inc. (The) 207,100 3,857,238
California Amplifier, Inc. (a) 39,200 1,830,150
California Microwave Corp. (a) 350,600 6,573,750
Glenayre Technologies, Inc. 599,725 26,462,866
Leitch Technology Corp. (a) 100,100 3,104,499
Omnipoint Corp. (a) 32,000 864,000
Scientific-Atlanta, Inc. 297,900 4,989,825
Vertex Communications Corp. (a) 15,000 251,250
47,933,578
WIRING & LIGHTING - 0.5%
Oak Industries, Inc. 74,500 1,778,688
TOTAL ELECTRICAL EQUIPMENT 49,712,266
ELECTRONICS - 4.7%
ELECTRONIC PARTS - WHOLESALE - 2.4%
Audiovox Corp. Class A (a) 326,900 1,716,225
Brightpoint, Inc. 173,900 3,043,250
Harmonic Lightwaves, Inc. (a) 210,000 3,045,000
Zero Corp. 19,500 346,125
8,150,600
ELECTRONICS & ELECTRONIC COMPONENTS - 2.1%
Sanmina Corp. (a) 79,900 4,274,650
Solectron Corp. (a) 54,200 2,628,700
6,903,350
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
ELECTRONICS - CONTINUED
SEMICONDUCTORS - 0.2%
Geotek Industries, Inc. (a) 60,000 $ 577,500
TOTAL ELECTRONICS 15,631,450
ENGINEERING - 0.0%
ARCHITECTS & ENGINEERS - 0.0%
DSP Group, Inc. (a) 10,000 95,000
IRON & STEEL - 1.2%
STEEL PIPES & TUBES - 1.2%
Mannesmann AG Ord. 11,000 3,920,312
RESTAURANTS - 0.5%
Starbucks Corp. (a) 95,000 1,674,375
TELEPHONE SERVICES - 7.5%
AT&T Corp. 40,000 2,545,000
Ameritech Corp. 75,100 4,327,638
DDI Corp. Ord. 150 1,098,656
MFS Communications, Inc. 10,000 605,000
NYNEX Corp. 50,000 2,575,000
SBC Communications, Inc. 30,000 1,646,250
Telecom Italia Mobile Spa (a) 675,000 1,238,513
Telefonica del Peru SA (CPT) Class B 390,000 825,668
Telephone & Data Systems, Inc. 68,000 3,136,500
Winstar Communications, Inc. (a) 90,000 1,507,500
WorldCom, Inc. (a) 132,800 5,229,000
24,734,725
TOTAL COMMON STOCKS
(Cost $260,265,459) $ 281,173,970
REPURCHASE AGREEMENTS - 14.7%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations) in a joint
trading account at 5.41%, dated
2/29/96 due 3/1/96 $ 48,578,299 48,571,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $308,836,459) $ 329,744,970
LEGEND
1. Non-income producing
OTHER INFORMATION
A company in which the fund has ownership of at least 5% of the voting
securities is an affiliated company. Transactions during the period with
companies that are or were affiliates are as follows:
PURCHASES SALES DIVIDEND MARKET
AFFILIATE COST COST INCOME VALUE
ARC International Corp. $ - $ 128,268 $ - $ -
Datum, Inc. 1,066,951 1,431,575 - -
Totals $ 1,066,951 $ 1,559,843 $ - $ -
Purchases and sales of securities, other than short-term securities,
aggregated $745,581,729 and $766,526,283, respectively (see Note 3 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $200,227 for the period
(see Note 4 of Notes to Financial Statements).
The maximum loan and the average daily loan balances during the periods for
which loans were outstanding amounted to $7,540,000 and $6,838,500,
respectively. The weighted average interest rate paid was 6.3% (see Note 5
of Notes to Financial Statements).
INCOME TAX INFORMATION
At February 29, 1996, the aggregate cost of investment securities for
income tax purposes was $311,428,496. Net unrealized appreciation
aggregated $18,316,474, of which $28,555,318 related to appreciated
investment securities and $10,238,844 related to depreciated investment
securities.
The fund hereby designates approximately $17,067,000 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,
1997 approximately $20,116,000 of losses recognized during the period
November 1, 1995 to February 29, 1996.
A total of 1% of the dividends distributed during the fiscal year qualifies
for the dividends-received deductions for corporate shareholders
(unaudited).
The fund will notify shareholders in January 1997 of the applicable
percentage for use in preparing 1996 income tax returns.
DEVELOPING COMMUNICATIONS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 29, 1996
ASSETS
Investment in $ 329,744,970
securities, at
value
(including
repurchase
agreements
of
$48,571,000)
(cost
$308,836,459
) - See
accompanyin
g schedule
Cash 455
Receivable for 6,136,498
investments
sold
Receivable for 2,307,762
fund shares
sold
Dividends 33,777
receivable
Redemption 784
fees
receivable
Other 20,333
receivables
TOTAL ASSETS 338,244,579
LIABILITIES
Payable for $ 3,564,436
investments
purchased
Payable for 1,038,086
fund shares
redeemed
Accrued 159,774
management
fee
Other payables 296,794
and
accrued
expenses
TOTAL 5,059,090
LIABILITIES
NET ASSETS $ 333,185,489
Net Assets
consist of:
Paid in capital $ 310,570,427
Accumulated 1,706,543
undistributed
net realized
gain (loss) on
investments
and foreign
currency
transactions
Net unrealized 20,908,519
appreciation
(depreciation
) on
investments
and assets
and liabilities
in
foreign
currencies
NET ASSETS, for $ 333,185,489
17,156,307
shares
outstanding
NET ASSET $19.42
VALUE and
redemption
price per
share
($333,185,48
9 (divided by)
17,156,307
shares)
Maximum $20.02
offering price
per share
(100/97.00 of
$19.42)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 29, 1996
INVESTMENT $ 831,671
INCOME
Dividends
Interest 1,601,863
TOTAL 2,433,534
INCOME
EXPENSES
Management $ 2,034,963
fee
Transfer agent 2,736,313
Fees
Redemption (251,923
fees )
Accounting 333,332
fees and
expenses
Non-interested 1,942
trustees'
compensatio
n
Custodian fees 45,694
and
expenses
Registration 147,961
fees
Audit 38,849
Legal 2,108
Interest 2,400
Miscellaneous 3,568
Total 5,095,207
expenses
before
reductions
Expense (64,413 5,030,794
reductions )
NET (2,597,260
INVESTMENT )
INCOME
(LOSS)
REALIZED AND
UNREALIZED
GAIN (LOSS)
Net realized
gain (loss)
on:
Investment 52,234,057
securities
(including
realized loss
of $587,085
on sales of
investments
in affiliated
issuers)
Foreign (21,347 52,212,710
currency )
transactions
Change in net
unrealized
appreciation
(depreciation
) on:
Investment 9,525,005
securities
Assets and 8 9,525,013
liabilities in
foreign
currencies
NET GAIN (LOSS) 61,737,723
NET INCREASE $ 59,140,463
(DECREASE)
IN NET ASSETS
RESULTING
FROM
OPERATIONS
OTHER $ 2,513,224
INFORMATION
Sales
charges paid
to FDC
Deferred $ 4,453
sales
charges
withheld
by FDC
Exchange $ 190,455
fees withheld
by FSC
Expense $ 28,221
reductions
Directed
brokerage
arrangement
s
Custodian 31,041
interest
credits
Transfer 5,151
agent
interest
credits
$ 64,413
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
FEBRUARY 29, FEBRUARY 28,
1996 1995
Operations $ (2,597,260 $ (1,840,119
Net ) )
investment
income (loss)
Net realized 52,212,710 30,202,368
gain (loss)
Change in 9,525,013 (4,667,340
net )
unrealized
appreciation
(depreciation
)
NET INCREASE 59,140,463 23,694,909
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
Distributions to (64,709,372 (19,859,395
shareholders ) )
from net
realized
gains
Share 436,869,315 296,420,644
transactions
Net proceeds
from sales of
shares
Reinvestmen 63,769,821 19,590,893
t of
distributions
Cost of (416,608,338 (287,865,261
shares ) )
redeemed
Paid in 297,961 334,629
capital
portion of
redemption
fees
NET INCREASE 84,328,759 28,480,905
(DECREASE)
IN NET
ASSETS
RESULTING
FROM SHARE
TRANSACTIO
NS
TOTAL 78,759,850 32,316,419
INCREASE
(DECREASE)
IN NET ASSETS
NET ASSETS
Beginning of 254,425,639 222,109,220
period
End of period $ 333,185,489 $ 254,425,639
OTHER
INFORMATION
Shares
Sold 19,756,179 15,233,264
Issued in 3,380,520 1,085,216
reinvestment
of
distributions
Redeemed (18,449,215 (15,155,323
) )
Net increase 4,687,484 1,163,157
(decrease)
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEAR ENDED YEARS ENDED FEBRUARY 28, TEN MONTHS YEAR ENDED
FEBRUARY 29, ENDED APRIL 30,
FEBRUARY 28,
SELECTED PER-SHARE DATA D 1996 1995 1994 1993 1992
</TABLE>
Net asset $ 20.40 $ 19.65 $ 16.44 $ 13.54 $ 11.95
value,
beginning of
period
Income from
Investment
Operations
Net (.17) (.16) (.16) (.07) (.08) F
investment
income (loss)
Net realized 4.17 2.55 4.82 2.98 2.42
and
unrealized
gain (loss)
Total from 4.00 2.39 4.66 2.91 2.34
investment
operations
Less (5.00) (1.67) (1.47) (.03) (.79)
Distributions
From net
realized gain
Redemption .02 .03 .02 .02 .04
fees added to
paid in
capital
Net asset $ 19.42 $ 20.40 $ 19.65 $ 16.44 $ 13.54
value, end of
period
TOTAL 21.84% 13.63% 30.24% 21.66% 21.41%
RETURN B, C
RATIOS AND
SUPPLEMENT
AL DATA
Net assets, $ 333,185 $ 254,426 $ 222,109 $ 83,383 $ 39,261
end of period
(000 omitted)
Ratio of 1.53% 1.58% 1.56% 1.88% 2.50%
expenses to A
average net
assets
Ratio of 1.51% 1.56% 1.56% 1.88% 2.50%
expenses to E E A
average net
assets after
expense
reductions
Ratio of net (.78)% (.83)% (.88)% (.59)% (.61)%
investment A
income (loss)
to average
net assets
Portfolio 249% 266% 280% 77% 25%
turnover rate A
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
<C>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE
PERIODS SHOWN (SEE NOTE 7 OF NOTES TO FINANCIAL STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT
ANNUALIZED.
D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING
DURING THE PERIOD.
E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES WHO EITHER PAID OR
REDUCED A PORTION OF THE FUND'S EXPENSES (SEE NOTE 7 OF NOTES TO FINANCIAL STATEMENTS).
F INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND WHICH AMOUNTED TO $.06 PER SHARE.
</TABLE>
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 securities that have grown in value), but does not include certain
fees paid by shareholders upon exchange or redemption. If Fidelity had not
reimbursed certain expenses, the past 10 year total returns would have been
lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 29, 1996 YEAR YEARS YEARS
ELECTRONICS 72.75% 298.27% 253.79%
ELECTRONICS 67.56% 286.32% 243.18%
(INCL. 3% SALES CHARGE)
S&P 500 34.70% 101.14% 286.76%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one, five, or 10 years. You can compare
these figures to the performance of the S&P 500 - a common proxy for the
U.S. stock market. This benchmark includes reinvested dividends and capital
gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 29, 1996 YEAR YEARS YEARS
ELECTRONICS 72.75% 31.84% 13.47%
ELECTRONICS 67.56% 31.04% 13.12%
(INCL. 3% SALES CHARGE)
S&P 500 34.70% 14.99% 14.47%
AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and
show you what would have happened if the fund had performed at a constant
rate each year.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of growth in the long run
and volatility in the short run. Unlike the broader
market, however, some sectors may not have
a history of growth in the long run. And, as
with all stock funds, the share price and
return of a fund that invests in a sector will
vary. That means if you sell your shares
during a sector downturn, you might lose
money. But if you can identify a sector that is
about to experience rapid growth you may
have the potential for above-average gains.
(checkmark)
$10,000 OVER 10 YEARS
19860228 9700.00 10000.00
19860331 9513.46 10558.00
19860430 10293.53 10438.69
19860531 9488.02 10994.03
19860630 8563.81 11179.83
19860731 7537.85 10554.88
19860831 8182.26 11338.05
19860930 7275.00 10400.39
19861031 7300.44 11000.50
19861130 7300.44 11267.81
19861231 7173.25 10980.48
19870131 8360.31 12459.55
19870228 9030.16 12951.70
19870331 8886.01 13326.01
19870430 9148.86 13207.41
19870531 8962.33 13322.31
19870630 8767.31 13995.09
19870731 9038.64 14704.64
19870831 9691.52 15253.12
19870930 9683.04 14919.08
19871031 6393.18 11705.51
19871130 5392.66 10740.97
19871231 6206.64 11558.36
19880131 5850.52 12044.97
19880229 6469.49 12606.27
19880331 6376.22 12216.73
19880430 6664.51 12352.34
19880531 6435.58 12459.80
19880630 7063.02 13031.71
19880731 6630.59 12982.19
19880831 5969.23 12540.79
19880930 6062.50 13075.03
19881031 5621.59 13438.52
19881130 5341.78 13246.35
19881231 5680.94 13478.16
19890131 5884.44 14464.76
19890228 5799.65 14104.59
19890331 5757.26 14433.22
19890430 6206.64 15182.31
19890531 6800.17 15797.19
19890630 6130.33 15707.15
19890731 6198.16 17125.50
19890831 6410.14 17461.16
19890930 6588.20 17389.57
19891031 6291.43 16986.13
19891130 6308.39 17332.65
19891231 6571.24 17748.63
19900131 6791.70 16557.70
19900228 7334.35 16771.29
19900331 7690.47 17215.73
19900430 7724.39 16785.34
19900531 8860.58 18421.91
19900630 8996.24 18296.64
19900731 8572.29 18238.09
19900831 7232.60 16589.37
19900930 6138.81 15781.47
19901031 5918.36 15713.61
19901130 6528.85 16728.71
19901231 6952.88 17195.44
19910131 7920.68 17945.16
19910228 8616.82 19228.24
19910331 9075.25 19693.56
19910430 9126.19 19740.82
19910531 9423.32 20593.63
19910630 8277.24 19650.44
19910731 8846.03 20566.15
19910831 9211.08 21053.57
19910930 8506.45 20701.97
19911031 8922.44 20979.38
19911130 8379.11 20133.91
19911231 9406.34 22437.23
19920131 10518.46 22019.90
19920229 11095.75 22306.16
19920331 10221.33 21871.19
19920430 10026.07 22514.20
19920531 10043.05 22624.52
19920630 9312.96 22287.41
19920731 9805.34 23198.97
19920831 9907.22 22723.39
19920930 10263.78 22991.53
19921031 11036.32 23072.00
19921130 11757.92 23858.75
19921231 11987.14 24152.21
19930131 12394.63 24355.09
19930228 12122.97 24686.32
19930331 12547.45 25207.20
19930430 12326.27 24597.19
19930531 13563.16 25256.39
19930630 13810.54 25329.64
19930731 14202.93 25228.32
19930831 15422.77 26184.47
19930930 15678.67 25982.85
19931031 15380.11 26520.70
19931130 15260.69 26268.75
19931231 15832.59 26586.60
19940131 16926.22 27490.55
19940228 17728.89 26745.55
19940331 17538.26 25579.45
19940430 17488.09 25906.86
19940531 17437.92 26331.74
19940630 16504.82 25686.61
19940731 16845.96 26529.13
19940831 18491.42 27616.82
19940930 17959.66 26940.21
19941031 18692.09 27546.37
19941130 18451.29 26543.13
19941231 18551.62 26936.76
19950131 18019.86 27635.23
19950228 19865.99 28712.18
19950331 21912.79 29559.47
19950430 24360.92 30430.00
19950531 26136.82 31646.29
19950630 29859.18 32381.43
19950731 34324.01 33455.20
19950831 34775.51 33539.17
19950930 35397.58 34954.52
19951031 34424.34 34829.74
19951130 33561.48 36358.76
19951231 31346.36 37059.03
19960131 32405.85 38320.52
19960229 34317.81 38675.75
Let's say you invested $10,000 in Fidelity Select Electronics Portfolio on
February 28, 1986, and paid a 3% sales charge. By February 29, 1996, your
investment would have grown to $34,318 - a 243.18% increase. That compares
to $10,000 invested in the S&P 500, which would have grown to $38,676 over
the same period - a 286.76% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 29, 1996
% OF FUND'S
INVESTMENTS
Analog Devices, Inc. 6.2
International Business Machines Corp. 5.0
U.S. Robotics Corp. 4.6
Compaq Computer Corp. 4.0
Maxim Integrated Products, Inc. 4.0
Adaptec, Inc. 3.5
Hewlett-Packard Co. 3.3
Cisco Systems, Inc. 3.2
Seagate Technology 2.9
Tencor Instruments 2.5
TOP INDUSTRIES AS OF FEBRUARY 29, 1996
Semiconductors 28.0%
Computers & Office
Equipment 8.2%
Computer Storage Devices 6.9%
Datacommunications
Equipment 5.1%
Telephone Equipment 5.0%
All Others 46.8% *
Row: 1, Col: 1, Value: 46.8
Row: 1, Col: 2, Value: 5.0
Row: 1, Col: 3, Value: 5.1
Row: 1, Col: 4, Value: 6.9
Row: 1, Col: 5, Value: 8.199999999999999
Row: 1, Col: 6, Value: 28.0
* INCLUDES SHORT-TERM INVESTMENTS
ELECTRONICS PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Marc Kaufman,
Portfolio Manager of
Fidelity Select Electronics Portfolio
Q. HOW DID THE FUND PERFORM, MARC?
A. The fund did extremely well. For the 12-month period ending February 29,
1996, it returned 72.75%, while the S&P 500 Index returned 34.70%.
Q. WHAT WERE THE KEY CONTRIBUTORS TO THE FUND'S PERFORMANCE?
A. There were really two fairly distinct stories comprising the fund's
performance over the past year. From the beginning of the period early last
year through mid-to-late summer, the top contributors were commodity
semiconductor stocks that benefited from the tight supply-demand existing
in the semiconductor market. These stocks included Micron Technology, a
chip manufacturer, and Applied Materials and Silicon Valley Group, which
are both equipment suppliers to the semiconductor industry. In the second
half of the year, the commodity semiconductor environment was much more
difficult as supply exceeded demand. So I moved the fund out of those
commodity companies and more into suppliers of proprietary components,
including Analog Devices and Maxim Integrated Products.
Q. WHAT PROMPTED YOUR MOVE OUT OF THE COMMODITY SEMICONDUCTOR SUPPLIERS?
A. The supply-demand environment was clearly loosening up at that time. The
Japanese, Taiwanese and Koreans all were adding semiconductor production
capacity aggressively, as were American companies. So it was clear to me
that there was going to be excess capacity, which would entail price cuts
and hurt the performance of the commodity manufacturers. As it turned out,
this happened even sooner than I had anticipated. For example, the
Philadelphia Semiconductor Index, which includes the stocks of 16
semiconductor companies, went down more than 30% between August 1995 and
the end of the reporting period.
Q. SO YOU SHIFTED OUT OF THE COMMODITY SUPPLIERS AND MOVED INTO THE
SUPPLIERS OF PROPRIETARY COMPONENTS. WHAT WAS BEHIND THIS STRATEGY?
A. Manufacturers of proprietary components - where they are the only
company that is producing a specific part - have an advantage during times
of looser supply-demand for commodity semiconductors. So even if there's
excess supply in the semiconductor industry, if you're the only company
making a specific product, you're not as affected by commodity pricing
pressures. At the same time, I increased the fund's investments in the
systems companies that I felt could benefit from the lower electronic
component prices. Some examples include networking companies such as Cisco
Systems, and more diversified computer manufacturers such as
Hewlett-Packard and IBM.
Q. THE FUND'S HOLDINGS INCLUDED MORE THAN 17% CASH AT THE END OF THE
PERIOD. WHAT'S THE STORY THERE?
A. My strategy is to keep the fund invested as much as possible in the
stocks of electronics companies. The fund's cash holdings at the end of the
period were just a temporary result of selling some positions that had
appreciated greatly over the previous few months and whose valuations, I
felt, were too high at that point. There were also some big inflows of
investors' money into the fund toward the end of the period. I was in cash
temporarily as I analyzed where to invest the proceeds of those stock sales
and the inflows of new funds.
Q. THERE NEVER SEEMS TO BE A DULL MOMENT IN YOUR SECTOR. WHAT'S YOUR
OUTLOOK FOR THE NEXT SEVERAL MONTHS?
A. I think it's going to be a very selective market going forward, based on
the supply-demand environment for commodity semiconductors. With chip
prices low, I'll continue to favor the proprietary manufacturers and the
systems companies. Should there be a pick-up in demand due to the low
prices of chips, I'll move the fund more into the commodity semiconductor
suppliers.
FUND FACTS
START DATE: July 29, 1985
TRADING SYMBOL: FSELX
SIZE: as of February 29, 1996, more than
$1.1 billion
MANAGER: Marc Kaufman, since March 1995;
analyst, semiconductor industry, 1992-1995;
joined Fidelity in 1992
(checkmark)
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
ELECTRONICS PORTFOLIO
INVESTMENTS FEBRUARY 29, 1996
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 80.2%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 1.7%
AIRCRAFT - 1.4%
McDonnell Douglas Corp. 180,000 $ 15,885,000
GUIDED MISSILES & SPACE VEHICLE - 0.3%
Rockwell International Corp. 70,000 3,990,000
TOTAL AEROSPACE & DEFENSE 19,875,000
CELLULAR - 0.3%
CELLULAR & COMMUNICATION SERVICES - 0.3%
AirTouch Communications, Inc. (a) 100,000 3,100,000
COMMUNICATIONS EQUIPMENT - 10.3%
DATACOMMUNICATIONS EQUIPMENT - 5.1%
Cabletron Systems, Inc. (a) 197,800 14,859,725
Cisco Systems, Inc. (a) 769,600 36,556,000
3Com Corp. (a) 150,000 7,331,250
58,746,975
TELEPHONE EQUIPMENT - 5.0%
ADC Telecommunications, Inc. 3,700 147,075
Octel Communications Corp. (a) 30,000 1,196,250
Pairgain Technologies, Inc. 47,900 2,838,075
U.S. Robotics Corp. 430,000 53,320,000
57,501,400
TELEPHONE INTERCONNECT SYSTEMS - 0.2%
General Instrument Corp. (a) 80,000 2,180,000
TOTAL COMMUNICATIONS EQUIPMENT 118,428,375
COMPUTER SERVICES & SOFTWARE - 5.3%
CAD/CAM/CAE - 2.1%
Ascend Communications, Inc. (a) 230,700 10,439,175
Cylink Corp. 400 9,400
Parametric Technology Corp. (a) 5,000 371,875
Stratacom, Inc. (a) 255,000 10,200,000
Synopsys, Inc. (a) 100,000 3,275,000
24,295,450
COMPUTER & SOFTWARE STORES - 0.2%
CompUSA, Inc. (a) 60,000 2,400,000
COMPUTER SERVICES - 0.2%
America Online, Inc. (a) 21,800 1,070,925
Verity, Inc. (a) 20,000 950,000
2,020,925
DATA PROCESSING - 0.3%
Ceridian Corp. (a) 87,400 3,758,200
PREPACKAGED COMPUTER SOFTWARE - 2.5%
Adobe Systems, Inc. 50,000 1,675,000
Electronic Arts, Inc. 20,000 500,000
Electronics for Imaging, Inc. (a) 320,600 14,667,450
Intuit, Inc. 10,900 727,575
Netscape Communications Corp. (a) 30,000 1,530,000
Oracle Systems Corp. (a) 49,200 2,558,400
Phoenix Technologies Ltd. 40,000 535,000
Softkey International, Inc. (a) 147,200 3,548,900
Symantec Corp. (a) 200,000 2,550,000
28,292,325
TOTAL COMPUTER SERVICES & SOFTWARE 60,766,900
COMPUTERS & OFFICE EQUIPMENT - 25.7%
COMPUTER PERIPHERALS - 0.5%
EMC Corp. (a) 170,000 3,740,000
Fore Systems, Inc. (a) 25,000 1,650,000
5,390,000
SHARES VALUE (NOTE 1)
COMPUTER STORAGE DEVICES - 6.9%
Adaptec, Inc. (a) 710,890 $ 39,854,271
Hutchinson Technology, Inc. (a) 42,600 1,810,500
Read Rite Corp. (a) 71,300 1,336,875
Seagate Technology (a) 509,300 33,231,825
Trident Microsystems, Inc. (a) 195,000 3,315,000
79,548,471
COMPUTERS & OFFICE EQUIPMENT - 8.2%
Hewlett-Packard Co. 374,100 37,690,575
International Business Machines Corp. 466,600 57,216,825
94,907,400
ELECTRONIC COMPUTERS - 2.6%
Bay Networks, Inc. (a) 450,000 18,281,250
Gateway 2000, Inc. (a) 404,400 11,929,800
30,211,050
GRAPHICS WORKSTATIONS - 3.1%
Intergraph Corp. (a) 500 9,250
Silicon Graphics, Inc. (a) 376,000 9,400,000
Sun Microsystems, Inc. (a) 508,000 26,670,000
36,079,250
MINI & MICRO COMPUTERS - 4.4%
Compaq Computer Corp. (a) 917,700 46,458,563
Dell Computer Corp. (a) 57,000 1,959,375
Digital Equipment Corp. (a) 25,900 1,864,800
50,282,738
TOTAL COMPUTERS & OFFICE EQUIPMENT 296,418,909
CONGLOMERATES - 0.6%
Harris Corp. 20,000 1,330,000
United Technologies Corp. 50,000 5,375,000
6,705,000
DEFENSE ELECTRONICS - 0.1%
Litton Industries, Inc. (a) 29,700 1,499,850
ELECTRICAL EQUIPMENT - 0.7%
TV & RADIO COMMUNICATION EQUIPMENT - 0.7%
Allen Group, Inc. (The) 50,000 931,250
California Microwave Corp. (a) 23,500 440,625
Glenayre Technologies, Inc. 43,900 1,937,088
Scientific-Atlanta, Inc. 310,900 5,207,575
8,516,538
ELECTRONIC INSTRUMENTS - 2.0%
ELECTRONIC EQUIPMENT - 0.8%
Credence Systems Corp. (a) 480,500 9,129,500
SEMICONDUCTOR CAPITAL EQUIPMENT - 1.2%
Novellus System, Inc. (a) 270,000 14,141,250
TOTAL ELECTRONIC INSTRUMENTS 23,270,750
ELECTRONICS - 30.1%
CONNECTORS - 1.7%
AMP, Inc. 471,600 20,101,950
ELECTRONIC CAPACITORS - 0.3%
AVX Corp. 66,200 1,621,900
Kemet Corp. 83,600 1,964,600
3,586,500
ELECTRONIC PARTS - WHOLESALE - 0.5%
Avnet, Inc. 88,800 4,428,900
Wyle Electronics 25,000 818,750
5,247,650
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
ELECTRONICS - CONTINUED
ELECTRONICS & ELECTRONIC COMPONENTS - 0.4%
Cascade Communications Corp. (a) 30,000 $ 2,036,250
Hadco Corp. (a) 11,000 363,000
Microsemi Corp. (a) 118,400 1,021,200
Vishay Intertechnology, Inc. 50,000 1,318,750
4,739,200
SEMICONDUCTORS - 27.2%
Actel Corp. (a)(c) 1,310,000 21,942,500
Altera Corp. (a) 153,420 10,010,655
Analog Devices, Inc. (a) 2,664,300 71,603,063
Atmel Corp. (a) 611,300 16,352,275
Burr-Brown Corp. (a) 165,800 3,771,950
C-Cube Microsystems, Inc. (a) 250,000 17,500,000
Cyrix Corp. (a) 808,800 18,703,500
International Rectifier Corp. (a) 578,700 11,863,350
Lattice Semiconductor Corp. (a) 384,500 12,640,438
Linear Technology Corp. 229,600 10,676,400
MEMC Electronic Materials, Inc. (a) 70,000 2,380,000
Maxim Integrated Products, Inc. (a) 1,275,800 46,247,750
Samsung Electronics Co. Ltd.
GDS (vtg.) (b) 941 85,161
Sierra Semiconductor Corp. (a) 253,400 5,828,200
Siliconix, Inc. (a) 114,400 4,261,400
Tencor Instruments (a) 1,373,500 28,500,125
Unitrode Corp. (a)(c) 656,300 18,294,363
VLSI Technology, Inc. (a) 310,000 3,720,000
Xilinx, Inc. (a) 221,200 8,543,850
Zilog, Inc. (a) 21,500 733,688
313,658,668
TOTAL ELECTRONICS 347,333,968
INDUSTRIAL MACHINERY & EQUIPMENT - 0.0%
SPECIAL INDUSTRIAL MACHINERY - 0.0%
Ferrofluidics Corp. (a) 20,000 210,000
LEISURE DURABLES & TOYS - 0.1%
TOYS & GAMES - 0.1%
Hasbro, Inc. 50,000 1,725,000
MEDICAL EQUIPMENT & SUPPLIES - 3.2%
MEDICAL SUPPLIES & APPLIANCES - 0.8%
Baxter International, Inc. 38,800 1,775,100
Becton, Dickinson & Co. 40,000 3,280,000
Boston Scientific Corp. (a) 90,000 4,320,000
9,375,100
MEDICAL TECHNOLOGY - 2.4%
Guidant Corp. 70,000 3,316,250
Medtronic, Inc. 185,000 10,614,371
St. Jude Medical, Inc. (a) 368,600 13,914,650
27,845,271
TOTAL MEDICAL EQUIPMENT & SUPPLIES 37,220,371
TOBACCO - 0.1%
TOBACCO MANUFACTURERS - 0.1%
Philip Morris Companies, Inc. 9,300 920,700
TOTAL COMMON STOCKS
(Cost $842,573,101) 925,991,361
CONVERTIBLE BONDS - 2.6%
PRINCIPAL VALUE (NOTE 1)
AMOUNT
COMPUTERS & OFFICE EQUIPMENT - 1.8%
COMPUTERS - 0.0%
Acer, Inc. euro 4%, 6/10/01 $ 110,000 $ 297,000
MAINFRAME COMPUTERS - 1.8%
Unisys Corp. 8 1/4%, 8/1/00 23,000,000 20,815,000
TOTAL COMPUTERS & OFFICE EQUIPMENT 21,112,000
ELECTRONICS - 0.8%
SEMICONDUCTORS - 0.8%
United Microelectronics Corp.:
euro 1 1/4%, 6/8/04 1,010,000 1,055,450
1 1/4%, 6/8/04 (b) 1,120,000 1,170,400
VLSI Technology, Inc. 8 1/4%,
10/1/05 6,800,000 6,256,000
8,481,850
TOTAL CONVERTIBLE BONDS
(Cost $31,833,770) 29,593,850
REPURCHASE AGREEMENTS - 17.2%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations) in a joint
trading account at 5.41%, dated
2/29/96 due 3/1/96 $ 199,146,923 199,117,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $1,073,523,871) $ 1,154,702,211
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 $1,255,561 or 0.1% of net
assets.
3. A company in which the fund has ownership of at least 5% of the voting
securities is an affiliated company. Transactions during the period with
companies that are or were affiliates are as follows:
PURCHASES SALES DIVIDEND MARKET
AFFILIATE COST COST INCOME VALUE
Actel Corp. $ 6,967,704 $ 2,440,308 $ - $ 21,942,500
Burr-Brown Corp. 1,020,163 75,152,681 - -
Integrated Silicon Solution - 730,000 - -
Unitrode Corp. 1,979,289 1,684,574 - 18,294,363
Totals $ 9,967,156 $ 80,007,563 $ - $ 40,236,863
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $3,318,056,698 and $2,898,266,871, respectively (see Note 3 of
Notes to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $395,989 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 $17,441,470 and $17,863,600, respectively (see Note
6 of Notes to Financial Statements).
The maximum loan and the average daily loan balances during the periods for
which loans were outstanding amounted to $8,528,000 and $7,079,000,
respectively. The weighted average interest rate paid was 6.2% (see Note 5
of Notes to Financial Statements).
INCOME TAX INFORMATION
At February 29, 1996, the aggregate cost of investment securities for
income tax purposes was $1,092,697,903. Net unrealized appreciation
aggregated $62,004,308, of which $88,909,911 related to appreciated
investment securities and $26,905,603 related to depreciated investment
securities.
The fund hereby designates approximately $22,330,000 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,
1997 approximately $62,667,000 of losses recognized during the period
November 1, 1995 to February 29, 1996.
A total of 1% of the dividends distributed during the fiscal year qualifies
for the dividends-received deductions for corporate shareholders
(unaudited).
The fund will notify shareholders in January 1997 of the applicable
percentage for use in preparing 1996 income tax returns.
ELECTRONICS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 29, 1996
ASSETS
Investment in $ 1,154,702,211
securities, at
value
(including
repurchase
agreements
of
$199,117,000
) (cost
$1,073,523,8
71) - See
accompanyin
g schedule
Cash 7,834,640
Receivable for 29,321,571
investments
sold
Receivable for 18,026,308
fund shares
sold
Dividends 174,088
receivable
Interest 435,754
receivable
Redemption 40,842
fees
receivable
Other 37,401
receivables
TOTAL ASSETS 1,210,572,815
LIABILITIES
Payable for $ 46,644,657
investments
purchased
Payable for 11,392,566
fund shares
redeemed
Accrued 531,057
management
fee
Other payables 779,141
and
accrued
expenses
Collateral on 17,863,600
securities
loaned,
at value
TOTAL 77,211,021
LIABILITIES
NET ASSETS $ 1,133,361,794
Net Assets
consist of:
Paid in capital $ 945,205,454
Accumulated 106,978,000
undistributed
net realized
gain (loss) on
investments
and foreign
currency
transactions
Net unrealized 81,178,340
appreciation
(depreciation
) on
investments
NET ASSETS, for $ 1,133,361,794
40,224,535
shares
outstanding
NET ASSET $28.18
VALUE and
redemption
price per
share
($1,133,361,
794 (divided by)
40,224,535
shares)
Maximum $29.05
offering price
per share
(100/97.00 of
$28.18)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 29, 1996
INVESTMENT $ 1,405,932
INCOME
Dividends
Interest 7,203,540
(including
income on
securities
loaned of
$183,930)
TOTAL 8,609,472
INCOME
EXPENSES
Management $ 5,626,255
fee
Transfer agent 5,209,355
Fees
Redemption (787,118
fees )
Accounting and 663,326
security
lending fees
Non-interested 3,235
trustees'
compensatio
n
Custodian fees 76,495
and
expenses
Registration 589,770
fees
Audit 45,307
Legal 3,360
Interest 2,458
Miscellaneous 8,405
Total 11,440,848
expenses
before
reductions
Expense (234,923 11,205,925
reductions )
NET (2,596,453
INVESTMENT )
INCOME
(LOSS)
REALIZED AND
UNREALIZED
GAIN (LOSS)
Net realized
gain on:
Investment 270,469,377
securities
(including
realized
gain of
$8,207,613
on sales of
investments
in
affiliated
issuers)
Foreign 6,313 270,475,690
currency
transactions
Change in net 60,817,847
unrealized
appreciation
(depreciation
)
on
investment
securities
NET GAIN (LOSS) 331,293,537
NET INCREASE $ 328,697,084
(DECREASE)
IN NET ASSETS
RESULTING
FROM
OPERATIONS
OTHER $ 15,086,139
INFORMATION
Sales
charges paid
to FDC
Deferred $ 18,130
sales
charges
withheld
by FDC
Exchange $ 588,998
fees withheld
by FSC
Expense $ 217,371
reductions
Directed
brokerage
arrangement
s
Custodian 4,417
interest
credits
Transfer 13,135
agent
interest
credits
$ 234,923
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
FEBRUARY 29, FEBRUARY 28,
1996 1995
Operations $ (2,596,453) $ (1,534,580)
Net
investment
income (loss)
Net realized 270,475,690 (9,362,352)
gain (loss)
Change in 60,817,847 8,764,347
net
unrealized
appreciation
(depreciation
)
NET INCREASE 328,697,084 (2,132,585)
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
Distributions to (151,485,297) -
shareholders
from net
realized
gains
Share 2,894,540,424 612,603,897
transactions
Net proceeds
from sales of
shares
Reinvestmen 148,005,751 -
t of
distributions
Cost of (2,308,922,665) (506,775,203)
shares
redeemed
Paid in 6,093,960 1,742,948
capital
portion of
redemption
fees
NET INCREASE 739,717,470 107,571,642
(DECREASE)
IN NET
ASSETS
RESULTING
FROM SHARE
TRANSACTIO
NS
TOTAL 916,929,257 105,439,057
INCREASE
(DECREASE)
IN NET ASSETS
NET ASSETS
Beginning of 216,432,537 110,993,480
period
End of period $ 1,133,361,794 $ 216,432,537
OTHER
INFORMATION
Shares
Sold 99,523,034 33,789,699
Issued in 6,026,277 -
reinvestment
of
distributions
Redeemed (76,257,043) (29,140,209)
Net increase 29,292,268 4,649,490
(decrease)
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEAR ENDED YEARS ENDED FEBRUARY 28, TEN MONTHS YEAR ENDED
FEBRUARY 29, ENDED APRIL 30,
FEBRUARY 28,
SELECTED PER-SHARE DATA D 1996 1995 1994 1993 1992
</TABLE>
Net asset $ 19.80 $ 17.67 $ 14.28 $ 11.81 $ 10.75
value,
beginning of
period
Income from
Investment
Operations
Net (.08) (.18) (.09) (.05) (.12)
investment
income (loss)
Net realized 13.51 2.11 F 6.09 2.33 1.00
and
unrealized
gain (loss)
Total from 13.43 1.93 6.00 2.28 .88
investment
operations
Less (5.25) - (2.75) - -
Distributions
From net
realized gain
Redemption .20 .20 .14 .19 .18
fees added to
paid in
capital
Net asset $ 28.18 $ 19.80 $ 17.67 $ 14.28 $ 11.81
value, end of
period
TOTAL 72.75% 12.05% 46.24% 20.91% 9.86%
RETURN B, C
RATIOS AND
SUPPLEMENT
AL DATA
Net assets, $ 1,133,362 $ 216,433 $ 110,993 $ 48,027 $ 34,222
end of period
(000 omitted)
Ratio of 1.25% 1.72% 1.67% 1.69% 2.16%
expenses to A
average net
assets
Ratio of 1.22% E 1.71% 1.67% 1.69% 2.16%
expenses to E A
average net
assets after
expense
reductions
Ratio of net (.28)% (.98)% (.52)% (.50)% (1.07)%
investment A
income (loss)
to average
net assets
Portfolio 366% 205% 163% 293% 299%
turnover rate A
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN (SEE NOTE 7 OF NOTES TO FINANCIAL STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN
ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES WHO EITHER
PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES (SEE NOTE 7 OF NOTES TO FINANCIAL
STATEMENTS).
F THE AMOUNT SHOWN FOR A SHARE OUTSTANDING DOES NOT CORRESPOND WITH THE AGGREGATE
NET GAIN (LOSS) ON INVESTMENTS FOR THE PERIOD ENDED DUE TO THE TIMING OF SALES AND
REPURCHASES OF FUND SHARES IN RELATION TO FLUCTUATING MARKET VALUES OF THE INVESTMENTS
OF THE FUND.
</TABLE>
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 securities that have grown in value), but does not include certain
fees paid by shareholders upon exchange or redemption. If Fidelity had not
reimbursed certain expenses, the past 10 year total returns would have been
lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 29, 1996 YEAR YEARS YEARS
SOFTWARE AND COMPUTER SERVICES 40.17% 219.64% 452.70%
SOFTWARE AND COMPUTER SERVICES 35.97% 210.05% 436.12%
(INCL. 3% SALES CHARGE)
S&P 500 34.70% 101.14% 286.76%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one, five, or 10 years. You can compare
these figures to the performance of the S&P 500 - a common proxy for the
U.S. stock market. This benchmark includes reinvested dividends and capital
gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 29, 1996 YEAR YEARS YEARS
SOFTWARE AND COMPUTER SERVICES 40.17% 26.16% 18.64%
SOFTWARE AND COMPUTER SERVICES 35.97% 25.40% 18.28%
(INCL. 3% SALES CHARGE)
S&P 500 34.70% 14.99% 14.47%
AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and
show you what would have happened if the fund had performed at a constant
rate each year.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of growth in the long run
and volatility in the short run. Unlike the broader
market, however, some sectors may not have
a history of growth in the long run. And, as
with all stock funds, the share price and
return of a fund that invests in a sector will
vary. That means if you sell your shares
during a sector downturn, you might lose
money. But if you can identify a sector that is
about to experience rapid growth you may
have the potential for above-average gains.
(checkmark)
$10,000 OVER 10 YEARS
19860228 9700.00 10000.00
19860331 9763.92 10558.00
19860430 10674.79 10438.69
19860531 11106.26 10994.03
19860630 10826.61 11179.83
19860731 9252.55 10554.88
19860831 10019.60 11338.05
19860930 9252.55 10400.39
19861031 10115.49 11000.50
19861130 10339.21 11267.81
19861231 10107.50 10980.48
19870131 12256.84 12459.55
19870228 13407.41 12951.70
19870331 13631.14 13326.01
19870430 13862.85 13207.41
19870531 13926.77 13322.31
19870630 13439.37 13995.09
19870731 13399.42 14704.64
19870831 14342.26 15253.12
19870930 14494.07 14919.08
19871031 10658.81 11705.51
19871130 9644.07 10740.97
19871231 11061.72 11558.36
19880131 10742.06 12044.97
19880229 11625.32 12606.27
19880331 11726.26 12216.73
19880430 12079.57 12352.34
19880531 11751.50 12459.80
19880630 12676.81 13031.71
19880731 12045.92 12982.19
19880831 11213.13 12540.79
19880930 11936.56 13075.03
19881031 11305.67 13438.52
19881130 11137.43 13246.35
19881231 12062.74 13478.16
19890131 12962.82 14464.76
19890228 12382.40 14104.59
19890331 12079.57 14433.22
19890430 13248.83 15182.31
19890531 13728.31 15797.19
19890630 12368.70 15707.15
19890731 12003.63 17125.50
19890831 12551.23 17461.16
19890930 12803.30 17389.57
19891031 13072.75 16986.13
19891130 13455.19 17332.65
19891231 13516.21 17748.63
19900131 13035.71 16557.70
19900228 13373.84 16771.29
19900331 13907.73 17215.73
19900430 13863.23 16785.34
19900531 15607.26 18421.91
19900630 15972.08 18296.64
19900731 14512.80 18238.09
19900831 12484.03 16589.37
19900930 11051.44 15781.47
19901031 11273.89 15713.61
19901130 12724.28 16728.71
19901231 13631.88 17195.44
19910131 15633.96 17945.16
19910228 16772.91 19228.24
19910331 17725.01 19693.56
19910430 17591.54 19740.82
19910531 17911.87 20593.63
19910630 16599.06 19650.44
19910731 17618.73 20566.15
19910831 19050.19 21053.57
19910930 18422.70 20701.97
19911031 19344.33 20979.38
19911130 17226.55 20133.91
19911231 19881.40 22437.23
19920131 23072.62 22019.90
19920229 23765.92 22306.16
19920331 22624.01 21871.19
19920430 22053.06 22514.20
19920531 22399.71 22624.52
19920630 21186.43 22287.41
19920731 22685.18 23198.97
19920831 20992.72 22723.39
19920930 22511.86 22991.53
19921031 24326.67 23072.00
19921130 26447.36 23858.75
19921231 26946.94 24152.21
19930131 28333.54 24355.09
19930228 28160.21 24686.32
19930331 28761.75 25207.20
19930430 28277.72 24597.19
19930531 31467.02 25256.39
19930630 33090.46 25329.64
19930731 32088.76 25228.32
19930831 34253.34 26184.47
19930930 34944.17 25982.85
19931031 34863.57 26520.70
19931130 34000.04 26268.75
19931231 35766.90 26586.60
19940131 37013.22 27490.55
19940228 37506.56 26745.55
19940331 33481.97 25579.45
19940430 33655.19 25906.86
19940531 30287.04 26331.74
19940630 27629.36 25686.61
19940731 28984.51 26529.13
19940831 32129.00 27616.82
19940930 33589.41 26940.21
19941031 35655.03 27546.37
19941130 34839.31 26543.13
19941231 35905.01 26936.76
19950131 35312.95 27635.23
19950228 38246.93 28712.18
19950331 40430.96 29559.47
19950430 41694.02 30430.00
19950531 42825.51 31646.29
19950630 46614.68 32381.43
19950731 49430.24 33455.20
19950831 49772.32 33539.17
19950930 51824.79 34954.52
19951031 52443.16 34829.74
19951130 53929.88 36358.76
19951231 52516.18 37059.03
19960131 50502.03 38320.52
19960229 53612.12 38675.75
Let's say you invested $10,000 in Fidelity Select Software and Computer
Services Portfolio on February 28, 1986, and paid a 3% sales charge. By
February 29, 1996, your investment would have grown to $53,612 - a 436.12%
increase. That compares to $10,000 invested in the S&P 500, which would
have grown to $38,676 over the same period - a 286.76% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 29, 1996
% OF FUND'S
INVESTMENTS
Electronics for Imaging, Inc. 6.8
Oracle Systems Corp. 6.8
FileNet Corp. 3.9
SunGard Data Systems, Inc. 3.6
Parametric Technology Corp. 3.3
Peoplesoft, Inc. 3.2
HBO & Co. 2.9
Sybase, Inc. 2.8
Nintendo Co. Ltd. Ord 2.6
General Motors Corp. Class E 2.6
TOP INDUSTRIES AS OF FEBRUARY 29, 1996
Row: 1, Col: 1, Value: 44.5
Row: 1, Col: 2, Value: 4.1
Row: 1, Col: 3, Value: 4.9
Row: 1, Col: 4, Value: 5.8
Row: 1, Col: 5, Value: 7.5
Row: 1, Col: 6, Value: 33.2
Prepackaged
Computer Software 33.2%
Computer Services 7.5%
CAD/CAM/CAE 5.8%
Data Processing 4.9%
Datacommunications
Equipment 4.1%
All Others 44.5% *
* INCLUDES SHORT-TERM INVESTMENTS
SOFTWARE AND COMPUTER SERVICES PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
John Hurley,
Portfolio Manager of
Fidelity Select Software and
Computer Services Portfolio
Q. HOW HAS THE FUND PERFORMED, JOHN?
A. It did pretty well during the period, although the sector as a whole
faced a significant amount of volatility. For the 12-month period ended
February 29, 1996, the fund was up 40.17%, compared with the S&P 500
Index's return of 34.70% for the same period.
Q. WHAT WERE THE KEYS TO THE FUND'S PERFORMANCE?
A. It depends on what time period you're talking about. In roughly the
first half of the period, the technology sector as a whole enjoyed a
healthy rally and the fund's share price rose significantly. Microsoft,
which posted large gains as a result of its dominant position in supplying
operating systems for the PC market and in anticipation of its Windows 95
launch, was one of the fund's best performers. Semiconductor stocks, such
as Micron, also were big winners for the fund. But in the second half of
the period, I positioned the fund more defensively.
Q. WHY DID YOU OPT FOR A MORE DEFENSIVE STRATEGY IN THE SECOND HALF AND HOW
DID THAT STRATEGY CONTRIBUTE TO THE FUND'S PERFORMANCE?
A. To answer the first part of your question, I felt that valuations for
many of the fund's software, Internet-related and semiconductor stocks had
reached unrealistic, and in some cases, ridiculously high levels. In other
words, the prices that these stocks commanded could no longer be justified
by their underlying company fundamentals. So, I pared back or sold some of
these positions. I kept some of the proceeds from the sale of these stocks
in cash and used the remainder to buy more defensive positions such as
computer service stocks. For example, I purchased HBO and Company, which
provides software to help automate hospitals, as well as such data
processing companies as Automatic Data Processing. In response to the
second part of your question, the fund's more defensive stance helped
insulate it from the correction in technology stocks that occurred in late
1995 and early 1996.
Q. OTHER THAN THE DATA PROCESSING COMPANIES, WHICH STOCKS DID WELL DURING
THE PAST SIX MONTHS?
A. Oracle Systems, a producer of relational database and applications
software for the client-server market did quite well, despite posting weak
first quarter results. PeopleSoft, which provides businesses with software
packages to manage human resource and financial functions, was another good
performer.
Q. WERE THERE DISAPPOINTMENTS?
A. FTP Software, a provider of Internet networking software, performed
poorly in light of intense competitive pressure. I have eliminated the
position from the fund. Another disappointment was Symantec. The company's
main line of products - which includes the Norton anti-virus software -
failed to enjoy an anticipated boost from the introduction of Windows 95.
So far, U.S. corporations have been slow to adopt that new operating system
and investors were disappointed when Windows 95 failed to live up to
expectations.
Q. WHY DID THE FUND HAVE VERY LITTLE EXPOSURE TO PERSONAL COMPUTING-RELATED
STOCKS?
A. In my opinion, we've seen some signs that personal computer demand has
slowed and that a PC price war is beginning to break out. However, I
purchased Seagate, a disk drive manufacturer. I liked it because I believed
it could increase earnings as a result of the efficiencies it achieved from
acquiring a major competitor and consolidating the two operations.
Q. WHAT'S YOUR VIEW OF THE INDUSTRY AS YOU LOOK OUT SIX MONTHS OR SO?
A. I'm feeling more optimistic than I was at the end of 1995. I take it as
an extraordinarily healthy sign that the technology sector has gone through
a correction. In my view, it's a positive that we've shaken out some of the
high valuations. However, I believe that we could see some further
consolidation in the technology sector, especially if second quarter
earnings are lower than expected. But if that happens, I'll view it as an
opportunity. The fund's relatively large cash position affords me the
ability to buy good stocks at cheaper prices.
FUND FACTS
START DATE: July 29, 1985
TRADING SYMBOL: FSCSX
SIZE: as of February 29, 1996, more than
$337 million
MANAGER: John Hurley, since 1994; analyst,
PC software, database software and mainframe
software industries, since 1994; joined Fidelity
in 1993
(checkmark)
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
SOFTWARE & COMPUTER SERVICES PORTFOLIO
INVESTMENTS FEBRUARY 29, 1996
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 78.2%
SHARES VALUE (NOTE 1)
COMMUNICATIONS EQUIPMENT - 4.1%
DATACOMMUNICATIONS EQUIPMENT - 4.1%
Cabletron Systems, Inc. 50,000 $ 3,756,250
Cisco Systems, Inc (a). 125,000 5,937,500
Network General Corp. 100,000 4,025,000
13,718,750
TELEPHONE EQUIPMENT - 0.0%
Inter-Tel, Inc. (a) 100 1,788
TOTAL COMMUNICATIONS EQUIPMENT 13,720,538
COMPUTER SERVICES & SOFTWARE - 54.1%
CAD/CAM/CAE - 5.8%
Parametric Technology Corp. (a) 150,000 11,156,250
Ascend Communications, Inc. (a) 182,000 8,235,500
19,391,750
COMPUTER SERVICES - 7.5%
Cerner Corp. (a) 30,000 705,000
Computer Sciences Corp. (a) 35,000 2,555,000
HBO & Co. 100,000 9,900,000
SunGard Data Systems, Inc. (a) 350,000 11,987,500
25,147,500
CUSTOM COMPUTER PROGRAMMING SERVICES - 0.3%
Epic Design Technology (a) 32,500 1,074,531
DATA PROCESSING - 4.9%
Automatic Data Processing, Inc. 206,200 7,990,250
General Motors Corp. Class E 150,000 8,568,746
16,558,996
ELECTRONIC INFORMATION RETRIEVAL - 2.4%
CUC International, Inc. 250,000 8,093,750
PREPACKAGED COMPUTER SOFTWARE - 33.2%
Arbor Software Corp. (a) 200 8,600
BMC Software, Inc. (a) 130,000 7,247,500
Boole & Babbage, Inc. 152,250 3,463,688
Business Objects SA sponsored ADR (a) 19,900 1,487,525
Computron Software, Inc. (a) 500 3,938
Electronics for Imaging, Inc. (a) 501,000 22,920,750
General Magic, Inc. (a) 89,400 648,150
Intuit 50,000 3,337,500
Marcam Corp. (a) 72,500 933,438
Mercury Interactive Group Corp. (a) 224,400 3,646,500
Metrowerks, Inc. (a) 108,300 1,244,737
Microsoft Corp. (a) 30,000 2,960,625
Oracle Systems Corp. (a) 440,200 22,890,400
Peoplesoft, Inc. (a) 198,000 10,692,000
Policy Management Systems Corp. (a) 100,000 5,112,500
Remedy Corp. (a) 6,000 462,000
Sanctuary Woods Multimedia Corp. (a) 53,300 58,343
Sierra On-Line, Inc. (a) 112,700 4,296,688
Sterling Software, Inc. (a) 100,000 6,662,500
Sybase, Inc. (a) 300,000 9,412,500
Vantive Corp. (a) 56,000 1,162,000
VMark Software, Inc. (a) 366,000 3,019,500
111,671,382
TOTAL COMPUTER SERVICES & SOFTWARE 181,937,909
SHARES VALUE (NOTE 1)
COMPUTERS & OFFICE EQUIPMENT - 11.1%
COMPUTER PERIPHERALS - 1.5%
Fore Systems, Inc. 75,000 $ 4,950,000
COMPUTER STORAGE DEVICES - 1.9%
Seagate Technology (a) 100,500 6,557,625
ELECTRONIC COMPUTERS - 2.2%
Bay Networks, Inc (a). 185,000 7,515,625
MINI & MICRO COMPUTERS - 1.6%
Dell Computer Corp. (a) 150,000 5,156,250
Digital Equipment Corp. (a) 2,300 165,600
5,321,850
OFFICE AUTOMATION - 3.9%
FileNet Corp. (a) 205,300 13,036,550
TOTAL COMPUTERS & OFFICE EQUIPMENT 37,381,650
ELECTRICAL EQUIPMENT - 0.9%
TV & RADIO COMMUNICATION EQUIPMENT - 0.9%
Glenayre Technologies, Inc. 66,100 2,916,663
ELECTRONICS - 0.1%
ELECTRONIC PARTS - WHOLESALE - 0.1%
ARC International Corp. (a) 133,500 308,719
GENERAL MERCHANDISE STORES - 2.0%
DEPARTMENT STORES - 2.0%
Sears, Roebuck & Co. 150,000 6,806,250
LEISURE DURABLES & TOYS - 2.6%
TOYS & GAMES - 2.6%
Nintendo Co. Ltd. Ord. 129,000 8,700,898
PHOTOGRAPHIC EQUIPMENT - 1.1%
3D Systems Corp. (a) 189,000 3,839,063
SERVICES - 1.7%
CREDIT REPORTING AGENCIES - 1.7%
PMT Services, Inc. (a) 304,000 5,624,000
TELEPHONE SERVICES - 0.5%
Frontier Corp. 52,400 1,572,000
TOTAL COMMON STOCKS
(Cost $219,268,409) 262,807,690
PREFERRED STOCKS - 1.2%
PUBLISHING - 1.2%
BOOK PUBLISHING & PRINTING - 1.2%
Houghton Mifflin Co. $4.08
(stock appreciation income linked)
(Cost $2,937,600) 43,200 3,974,400
CONVERTIBLE BONDS - 3.2%
PRINCIPAL
AMOUNT
BROADCASTING - 3.2%
CABLE TV OPERATORS - 3.2%
Time Warner, Inc. liquid yield
option 0%, 6/22/13
(Cost $10,741,814) $ 25,000,000 10,625,000
REPURCHASE AGREEMENTS - 17.4%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations) in a joint
trading account at 5.41%, dated
2/29/96 due 3/1/96 $ 58,609,806 $ 58,601,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $291,548,823) $ 336,008,090
LEGEND
1. Non-income producing
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $498,450,719 and $533,726,759, respectively (see Note 3 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $42,554 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 $410,350 and $452,800, respectively (see Note 6 of
Notes to Financial Statements).
The maximum loan and the average daily loan balances during the periods for
which loans were outstanding amounted to $9,520,000 and $7,454,000,
respectively. The weighted average interest rate paid was 6.2% (see Note 5
of Notes to Financial Statements).
INCOME TAX INFORMATION
At February 29, 1996, the aggregate cost of investment securities for
income tax purposes was $293,003,442. Net unrealized appreciation
aggregated $43,004,648, of which $49,092,322 related to appreciated
investment securities and $6,087,674 related to depreciated investment
securities.
The fund hereby designates approximately $16,984,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 2% of the dividends distributed during the fiscal year qualifies
for the dividends-received deductions for corporate shareholders
(unaudited).
The fund will notify shareholders in January 1997 of the applicable
percentage for use in preparing 1996 income tax returns.
SOFTWARE AND COMPUTER SERVICES PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 29, 1996
ASSETS
Investment in $ 336,008,090
securities, at
value
(including
repurchase
agreements
of
$58,601,000)
(cost
$291,548,823
) - See
accompanyin
g schedule
Cash 919
Receivable for 11,430,303
investments
sold
Receivable for 1,896,651
fund shares
sold
Dividends 49,500
receivable
Redemption 756
fees
receivable
Other 58,075
receivables
TOTAL ASSETS 349,444,294
LIABILITIES
Payable for $ 9,522,715
investments
purchased
Payable for 1,400,039
fund shares
redeemed
Accrued 167,068
management
fee
Other payables 268,375
and accrued
expenses
Collateral on 452,800
securities
loaned,
at value
TOTAL 11,810,997
LIABILITIES
NET ASSETS $ 337,633,297
Net Assets
consist of:
Paid in capital $ 267,026,862
Accumulated 26,147,168
undistributed
net realized
gain (loss) on
investments
and foreign
currency
transactions
Net unrealized 44,459,267
appreciation
(depreciation
) on
investments
NET ASSETS, for $ 337,633,297
9,327,220
shares
outstanding
NET ASSET $36.20
VALUE and
redemption
price per
share
($337,633,29
7 (divided by)
9,327,220
shares)
Maximum $37.32
offering price
per share
(100/97.00 of
$36.20)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 29, 1996
INVESTMENT $ 519,307
INCOME
Dividends
Interest 2,356,508
(including
income on
securities
loaned of
$62,413)
TOTAL 2,875,815
INCOME
EXPENSES
Management $ 1,899,182
fee
Transfer agent 2,421,146
Fees
Redemption (228,087
fees )
Accounting and 312,884
security
lending fees
Non-interested 1,650
trustees'
compensatio
n
Custodian fees 22,494
and
expenses
Registration 95,907
fees
Audit 34,287
Legal 2,054
Interest 5,127
Miscellaneous 3,826
Total 4,570,470
expenses
before
reductions
Expense (16,985 4,553,485
reductions )
NET (1,677,670
INVESTMENT )
INCOME
(LOSS)
REALIZED AND
UNREALIZED
GAIN (LOSS)
Net realized
gain (loss)
on:
Investment 78,787,592
securities
Foreign (99 78,787,493
currency )
transactions
Change in net 11,995,871
unrealized
appreciation
(depreciation
) on
investment
securities
NET GAIN (LOSS) 90,783,364
NET INCREASE $ 89,105,694
(DECREASE)
IN NET ASSETS
RESULTING
FROM
OPERATIONS
OTHER $ 3,293,250
INFORMATION
Sales
charges paid
to FDC
Deferred $ 6,803
sales
charges
withheld
by FDC
Exchange $ 157,478
fees withheld
by FSC
Expense $ 12,974
reductions
Directed
brokerage
arrangement
s
Custodian 811
interest
credits
Transfer 3,200
agent
interest
credits
$ 16,985
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
FEBRUARY 29, FEBRUARY 28,
1996 1995
Operations $ (1,677,670 $ (1,835,964
Net ) )
investment
income (loss)
Net realized 78,787,493 (7,382,123
gain (loss) )
Change in 11,995,871 17,246,063
net
unrealized
appreciation
(depreciation
)
NET INCREASE 89,105,694 8,027,976
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
Distributions to (42,462,985 (2,015,425
shareholders ) )
from net
realized
gains
Share 441,404,241 367,638,603
transactions
Net proceeds
from sales of
shares
Reinvestmen 41,961,776 1,989,953
t of
distributions
Cost of (429,413,822 (317,960,229
shares ) )
redeemed
Paid in 593,307 730,383
capital
portion of
redemption
fees
NET INCREASE 54,545,502 52,398,710
(DECREASE)
IN NET
ASSETS
RESULTING
FROM SHARE
TRANSACTIO
NS
TOTAL 101,188,211 58,411,261
INCREASE
(DECREASE)
IN NET ASSETS
NET ASSETS
Beginning of 236,445,086 178,033,825
period
End of period $ 337,633,297 $ 236,445,086
OTHER
INFORMATION
Shares
Sold 12,357,143 14,345,417
Issued in 1,146,186 80,950
reinvestment
of
distributions
Redeemed (12,309,713 (12,454,413
) )
Net increase 1,193,616 1,971,954
(decrease)
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEAR ENDED YEARS ENDED FEBRUARY 28, TEN MONTHS YEAR ENDED
FEBRUARY 29, ENDED APRIL 30,
FEBRUARY 28,
SELECTED PER-SHARE DATA D 1996 1995 1994 1993 1992
</TABLE>
Net asset $ 29.07 $ 28.89 $ 27.62 $ 21.63 $ 19.77
value,
beginning of
period
Income from
Investment
Operations
Net (.19) (.26) (.34) (.07) E (.28)
investment
income (loss)
Net realized 11.85 .67 7.92 5.88 4.37
and
unrealized
gain (loss)
Total from 11.66 .41 7.58 5.81 4.09
investment
operations
Less (4.60) (.33) (6.48) - (2.50)
Distributions
From net
realized gain
Redemption .07 .10 .17 .18 .27
fees added to
paid in
capital
Net asset $ 36.20 $ 29.07 $ 28.89 $ 27.62 $ 21.63
value, end of
period
TOTAL 40.17% 1.97% 33.19% 27.69% 25.36%
RETURN B, C
RATIOS AND
SUPPLEMENT
AL DATA
Net assets, $ 337,633 $ 236,445 $ 178,034 $ 151,212 $ 89,571
end of period
(000 omitted)
Ratio of 1.48% 1.52% 1.57% 1.64% 1.98%
expenses to A
average net
assets
Ratio of 1.47% 1.50% 1.57% 1.64% 1.98%
expenses to F F A
average net
assets after
expense
reductions
Ratio of net (.54)% (1.01)% (1.19) (.37)% (1.30)%
investment % A
income (loss)
to average
net assets
Portfolio 183% 164% 376% 402% 348%
turnover rate A
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING
THE PERIODS SHOWN (SEE NOTE 7 OF NOTES TO FINANCIAL STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE
YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES
OUTSTANDING DURING THE PERIOD.
E INVESTMENT INCOME PER SHARE REFLECTS DIVIDENDS RECEIVED IN ARREARS WHICH AMOUNTED TO
$.03 PER SHARE.
F FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES WHO EITHER
PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES (SEE NOTE 7 OF NOTES TO FINANCIAL
STATEMENTS).
</TABLE>
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 securities that have grown in value), but does not include certain
fees paid by shareholders upon exchange or redemption.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 29, 1996 YEAR YEARS YEARS
TECHNOLOGY 50.71% 208.36% 261.21%
TECHNOLOGY 46.19% 250.37%
(INCL. 3% SALES CHARGE) 199.11%
S&P 500 34.70% 101.14% 286.76%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one, five, or 10 years. You can compare
these figures to the performance of the S&P 500 - a common proxy for the
U.S. stock market. This benchmark includes reinvested dividends and capital
gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 29, 1996 YEAR YEARS YEARS
TECHNOLOGY 50.71% 25.26% 13.70%
TECHNOLOGY 46.19% 24.50% 13.36%
(INCL. 3% SALES CHARGE)
S&P 500 34.70% 14.99% 14.47%
AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and
show you what would have happened if the fund had performed at a constant
rate each year.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of growth in the long run
and volatility in the short run. Unlike the broader
market, however, some sectors may not have
a history of growth in the long run. And, as
with all stock funds, the share price and
return of a fund that invests in a sector will
vary. That means if you sell your shares
during a sector downturn, you might lose
money. But if you can identify a sector that is
about to experience rapid growth you may
have the potential for above-average gains.
(checkmark)
$10,000 OVER 10 YEARS
19860228 9700.00 10000.00
19860331 9720.49 10558.00
19860430 10216.35 10438.69
19860531 9900.80 10994.03
19860630 9286.10 11179.83
19860731 8095.90 10554.88
19860831 8503.16 11338.05
19860930 7750.34 10400.39
19861031 8194.63 11000.50
19861130 8519.61 11267.81
19861231 8338.61 10980.48
19870131 9893.61 12459.55
19870228 11012.56 12951.70
19870331 10387.27 13326.01
19870430 10687.57 13207.41
19870531 10930.28 13322.31
19870630 10605.29 13995.09
19870731 10712.25 14704.64
19870831 11341.66 15253.12
19870930 11399.25 14919.08
19871031 7388.33 11705.51
19871130 6425.71 10740.97
19871231 7356.51 11558.36
19880131 6959.80 12044.97
19880229 7649.74 12606.27
19880331 7567.81 12216.73
19880430 7856.72 12352.34
19880531 7641.12 12459.80
19880630 8343.99 13031.71
19880731 7723.05 12982.19
19880831 7011.54 12540.79
19880930 7201.28 13075.03
19881031 6903.74 13438.52
19881130 6696.76 13246.35
19881231 7158.16 13478.16
19890131 7735.98 14464.76
19890228 7524.69 14104.59
19890331 7386.70 14433.22
19890430 7921.40 15182.31
19890531 8568.23 15797.19
19890630 7809.29 15707.15
19890731 7947.28 17125.50
19890831 8119.76 17461.16
19890930 8313.81 17389.57
19891031 8253.44 16986.13
19891130 8275.00 17332.65
19891231 8374.18 17748.63
19900131 8201.69 16557.70
19900228 8663.09 16771.29
19900331 9068.43 17215.73
19900430 8658.78 16785.34
19900531 9775.63 18421.91
19900630 9861.87 18296.64
19900731 9335.79 18238.09
19900831 8063.71 16589.37
19900930 7378.07 15781.47
19901031 7589.37 15713.61
19901130 8727.77 16728.71
19901231 9253.86 17195.44
19910131 10814.85 17945.16
19910228 11362.49 19228.24
19910331 12272.36 19693.56
19910430 11668.66 19740.82
19910531 12315.48 20593.63
19910630 11120.73 19650.44
19910731 12352.04 20566.15
19910831 12959.02 21053.57
19910930 13024.05 20701.97
19911031 13375.23 20979.38
19911130 12937.34 20133.91
19911231 14710.98 22437.23
19920131 15270.45 22019.90
19920229 15508.98 22306.16
19920331 14277.29 21871.19
19920430 14069.11 22514.20
19920531 14207.89 22624.52
19920630 13192.16 22287.41
19920731 13864.31 23198.97
19920831 13154.29 22723.39
19920930 13798.04 22991.53
19921031 14612.20 23072.00
19921130 15795.56 23858.75
19921231 15994.37 24152.21
19930131 16481.91 24355.09
19930228 16387.25 24686.32
19930331 16600.25 25207.20
19930430 16552.65 24597.19
19930531 18222.58 25256.39
19930630 19112.51 25329.64
19930731 18604.72 25228.32
19930831 19599.35 26184.47
19930930 19902.97 25982.85
19931031 19510.36 26520.70
19931130 19321.90 26268.75
19931231 20576.77 26586.60
19940131 21612.78 27490.55
19940228 22223.76 26745.55
19940331 21474.65 25579.45
19940430 21042.12 25906.86
19940531 21075.30 26331.74
19940630 19289.53 25686.61
19940731 20035.90 26529.13
19940831 22147.86 27616.82
19940930 22037.28 26940.21
19941031 22861.06 27546.37
19941130 22545.92 26543.13
19941231 22866.58 26936.76
19950131 21976.47 27635.23
19950228 23248.06 28712.18
19950331 24663.40 29559.47
19950430 26522.31 30430.00
19950531 27548.32 31646.29
19950630 30107.64 32381.43
19950731 33151.46 33455.20
19950831 34177.47 33539.17
19950930 35750.68 34954.52
19951031 35214.88 34829.74
19951130 35032.48 36358.76
19951231 32883.72 37059.03
19960131 33216.97 38320.52
19960229 35037.08 38675.75
Let's say you invested $10,000 in Fidelity Select Technology Portfolio on
February 28, 1986, and paid a 3% sales charge. By February 29, 1996, your
investment would have grown to $35,037 - a 250.37% increase. That compares
to $10,000 invested in the S&P 500, which would have grown to $38,676 over
the same period - a 286.76% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 29, 1996
% OF FUND'S
INVESTMENTS
Compaq Computer Corp. 7.1
Digital Equipment Corp. 6.2
Cisco Systems, Inc. 4.8
International Business Machines Corp. 4.8
Seagate Technology 4.6
Dell Computer Corp. 3.3
Symantec Corp. 2.1
Gateway 2000, Inc. 2.1
Bay Networks, Inc. 1.9
Oracle Systems Corp. 1.8
TOP INDUSTRIES AS OF FEBRUARY 29, 1996
Mini & Micro Computers 16.6%
Prepackaged Computer
Software 10.5%
Computers & Office
Equipment 8.1%
Data Communications
Equipment 6.7%
Computer Storage Devices 5.5%
All Others 52.6% *
Row: 1, Col: 1, Value: 52.6
Row: 1, Col: 2, Value: 5.5
Row: 1, Col: 3, Value: 6.7
Row: 1, Col: 4, Value: 8.1
Row: 1, Col: 5, Value: 10.5
Row: 1, Col: 6, Value: 16.6
* 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. Better in the first half of the period than in the second. Nonetheless,
the fund finished the 12 months ended February 29, 1996, with a total
return of 50.71%. That topped the total return of the S&P 500 Index, which
rose 34.70% during the same period.
Q. HOW DID THE INVESTING ENVIRONMENT FOR TECHNOLOGY STOCKS CHANGE DURING
THE PERIOD?
A. At first, technology companies continued to produce strong earnings
growth and their stocks continued to make strong gains. This was an
extension of the previous couple of years, when demand exceeded supply for
most every type of technology product. Companies simply couldn't make
enough personal computers, cellular phones or semiconductors. However, a
fundamental change occurred when supply, or capacity as we call it, finally
caught up to demand in the semiconductor industry. That put immense
pressure on the profit margins of semiconductor manufacturers, which had a
negative effect on their stock prices. To a lesser extent, the build-up in
computer chip capacity also hurt the earnings prospects for end-users such
as PC and cellular phone manufacturers. In addition, weakening economies
worldwide didn't help the situation; many technology companies derive a
large portion of their sales from overseas.
Q. DIDN'T SOME TECHNOLOGY STOCKS REBOUND NEAR THE END OF THE PERIOD?
A. A great number did. I think many of the stocks had been oversold. By
that I mean that their valuations - or prices relative to earnings - more
than reflected the downward revisions that already had been made to their
earnings forecasts. In the midst of a technology-stock slowdown, it's easy
to forget that many of these companies still offer some of the strongest
growth prospects in the market.
Q. DESPITE THE BROAD CORRECTION IN THE SECTOR, DID ANY COMPANIES STAND OUT
OVER THE PAST SEVERAL MONTHS?
A. Interestingly, some of the best performers were the big computer
companies whose best days many people believed were behind them.
Specifically, both IBM and Digital Equipment have cut costs and
restructured in recent years. That boosted earnings at both companies over
the past year or two, but many investors felt that once the initial cost
cutting was over, earnings would slow. That didn't happen. Both companies
reported surprisingly strong earnings late in the period, which boosted
their stocks.
Q. HAVE YOU MADE ANY SIGNIFICANT CHANGES TO THE FUND DUE TO THE CHANGING
BUSINESS PROSPECTS OF THE SECTOR?
A. I have. Because of the weakening earnings prospects for the
semiconductor industry, I lowered the fund's investment in chip companies
and in companies that make equipment used to manufacture chips. Conversely,
I increased the fund's investment in companies that manufacture computer
networking equipment and computer service companies. The prospects of these
companies are more dependent upon the already installed base of personal
computers, and not as directly tied to the strength of PC prices.
Q. WHAT HAS MADE NETWORKING COMPANIES ATTRACTIVE?
A. Essentially, there has been no deterioration in their business
prospects, unlike many other technology companies. Strong growth in the
personal computer industry has resulted in continued strong demand for the
equipment that ties computers together. Cisco Systems is an example of a
networking company that has produced strong earnings growth in recent
months, and boosted the fund's performance.
Note to shareholders: As of March 26, 1996, Adam Hetnarski became manager
of the portfolio.
Q. WHAT'S YOUR OUTLOOK FOR THE NEXT SIX MONTHS, ADAM?
A. I think it's fair to say I'm not as optimistic as I would have been a
year ago. Earnings expectations for many technology stocks have been
downgraded recently. In addition, it's important to bear in mind just how
much the fund has risen in recent years. Despite their bright prospects for
excellent earnings growth over the long term, technology stocks - as we've
seen in recent months - don't move up in a straight line. Going forward, I
think a lot will depend on what happens to economic growth in the U.S. and
around the world. Technology remains a huge component of overall capital
spending in the U.S., and strengthening economic growth generally allows
companies to spend more to upgrade existing systems or purchase new ones.
I'll try to seek out those companies whose particular business allows them
to continue to grow earnings in the face of a sluggish economy.
FUND FACTS
START DATE: July 14, 1981
TRADING SYMBOL: FSPTX
SIZE: as of February 29, 1996, more than
$483 million
MANAGER: Harry Lange, since 1993; manager,
Fidelity Select Computers Portfolio, since
1992; research director, Fidelity Investments
Far East, 1988 -1992; manager, Fidelity
Select Capital Goods Portfolio and Fidelity
Select Automation and Machinery Portfolio,
1988; joined Fidelity in 1987
(checkmark)
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
TECHNOLOGY PORTFOLIO
INVESTMENTS FEBRUARY 29, 1996
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 83.3%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 0.0%
AIRCRAFT & PARTS - 0.0%
Hong Kong Aircraft & Engineering Co. 50,000 $ 145,832
BROADCASTING - 1.4%
CABLE TV OPERATORS - 1.1%
CAI Wireless Systems, Inc. (a) 385,000 3,416,870
Heartland Wireless Communications,
Inc. (a) 50,000 1,262,500
Wireless One, Inc. (a) 50,500 744,875
5,424,245
TELEVISION BROADCASTING - 0.3%
Scandinavian Broadcasting Corp. (a) 60,000 1,260,000
TOTAL BROADCASTING 6,684,245
BUILDING MATERIALS - 0.4%
AIRCONDITIONING EQUIPMENT - 0.4%
ICC Technologies, Inc. 300,000 2,100,000
CELLULAR - 0.1%
CELLULAR & COMMUNICATION SERVICES - 0.1%
Advanced Information Services
(For. Reg.) 7,500 139,825
Millicom International Cellular SA (a) 2,800 106,050
245,875
COMMUNICATIONS EQUIPMENT - 10.4%
DATACOMMUNICATIONS EQUIPMENT - 6.7%
Broadband Technologies, Inc. (a) 20,000 490,000
Cisco Systems, Inc. (a) 491,200 23,332,000
General DataComm Industries, Inc. (a) 115,000 1,394,375
Jabil Circuit, Inc. (a) 291,000 2,255,250
Network General Corp. (a) 127,500 5,131,875
32,603,500
TELEPHONE EQUIPMENT - 2.9%
Brite Voice Systems, Inc. (a) 100,000 1,700,000
DSC Communications Corp. (a) 135,600 4,135,800
Global Village Communication (a) 22,700 371,713
Network Equipment Technologies (a) 158,050 4,701,988
Target Technologies, Inc. (a)(c) 269,700 2,191,313
Telechips Corp. (a)(c) 100,000 750,000
Telechips Corp. (warrants) (a) 100,000 375,000
Teledata Communications Ltd. 7,300 66,613
14,292,427
TELEPHONE INTERCONNECT SYSTEMS - 0.8%
General Instrument Corp. (a) 150,000 4,087,500
TOTAL COMMUNICATIONS EQUIPMENT 50,983,427
COMPUTER SERVICES & SOFTWARE - 14.3%
CAD/CAM/CAE - 1.1%
Ascend Communications, Inc. (a) 93,000 4,208,250
Brooktrout Technology, Inc. (a) 26,850 657,825
Cylink Corp. 2,000 47,000
Healthdyne Information Enterprises, Inc. 25,000 93,750
Network Peripherals, Inc. (a) 14,300 204,669
4th Dimension Software Ltd. (a) 38,000 247,000
5,458,494
COMPUTER & SOFTWARE STORES - 1.4%
Inacom Corp. (a) 231,000 4,186,875
MicroAge, Inc. (a) 238,000 2,320,500
Software Spectrum, Inc. (a) 8,000 150,000
6,657,375
SHARES VALUE (NOTE 1)
COMPUTER SERVICES - 0.5%
Advant Corp. 7,500 $ 163,125
CompuCom Systems, Inc. (a) 58,400 430,700
Visioneer, Inc. (a) 108,200 1,839,400
2,433,225
CUSTOM COMPUTER PROGRAMMING SERVICES - 0.6%
Softdesk, Inc. (a) 183,600 2,754,000
ELECTRONIC INFORMATION RETRIEVAL - 0.2%
Data Broadcasting Corp. (a) 15,000 171,563
PsiNet, Inc. (a) 100,000 1,012,500
Quickresponse Services, Inc. (a) 1,500 36,750
1,220,813
PREPACKAGED COMPUTER SOFTWARE - 10.5%
Acclaim Entertainment, Inc. (a) 20,000 251,250
Brock International, Inc. (a) 82,400 793,100
Broderbund Software, Inc. (a) 10,000 452,500
CBT Group PLC sponsored ADR (a) 19,000 1,073,500
EICON Technology Corp. (a) 21,000 162,823
Electronics for Imaging, Inc. (a) 97,600 4,465,200
Fourth Shift Corp. (a) 54,000 249,750
GT Interactive Software, Inc. 100,100 1,288,788
Globalink, Inc. (a) 162,600 1,097,550
Insignia Solutions PLC sponsored ADR (a) 150,000 862,500
MDL Information Systems, Inc. (a) 16,000 372,000
Media Logic, Inc. (a) 65,000 438,750
Microsoft Corp. (a) 52,100 5,141,619
National Instrument Corp. (a) 51,000 962,625
Novell, Inc. (a) 101,400 1,235,813
Oracle Systems Corp. (a) 165,700 8,616,400
STB Systems, Inc. (a) 2,200 22,688
Softkey International, Inc. (a) 160,200 3,862,322
Spectrum Holobyte, Inc. (a) 510,900 4,151,063
Symantec Corp. (a) 806,100 10,277,775
Systems & Computer Technology Corp.(a) 215,000 3,870,000
Wonderware Corp. (a) 89,000 1,691,000
51,339,016
TOTAL COMPUTER SERVICES & SOFTWARE 69,862,923
COMPUTERS & OFFICE EQUIPMENT - 36.7%
COMPUTER EQUIPMENT - 0.1%
GVC Corp. GDR (a)(b) 89,739 673,043
COMPUTER EQUIPMENT - WHOLESALE - 0.4%
Tech Data Corp. (a) 133,700 2,022,213
COMPUTER PERIPHERALS - 1.7%
General Scanning, Inc. 135,000 1,957,500
SCI Systems, Inc. (a) 172,900 6,408,106
8,365,606
COMPUTER RENTAL & LEASING - 0.2%
Comdisco, Inc. 34,950 716,475
COMPUTER STORAGE DEVICES - 5.5%
Hutchinson Technology, Inc. (a) 100,000 4,250,000
Read Rite Corp. (a) 1,200 22,500
Seagate Technology (a) 340,900 22,243,725
26,516,225
COMPUTERS & OFFICE EQUIPMENT - 7.9%
Canon, Inc. ADR 10,000 925,000
Diebold, Inc. 37,500 1,471,875
Fujitsu Ltd. 50,000 512,991
Hewlett-Packard Co. 65,000 6,548,750
International Business Machines Corp. 190,000 23,298,750
OKI Electric Industry Co. Ltd. (a) 639,000 5,542,270
38,299,636
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
COMPUTERS & OFFICE EQUIPMENT - CONTINUED
ELECTRONIC COMPUTERS - 4.2%
ADI Corp. GDR (a)(b) 57,000 $ 954,750
Bay Networks, Inc. (a) 225,000 9,140,625
Gateway 2000, Inc. (a) 340,000 10,030,000
Ross Technology, Inc. (a) 16,000 204,000
TSL Holding, Inc. (a) 10,864 -
Tricord Systems, Inc. (a) 40,500 156,938
20,486,313
GRAPHICS WORKSTATIONS - 0.1%
Silicon Graphics, Inc. (a) 27,400 685,000
MINI & MICRO COMPUTERS - 16.6%
Compaq Computer Corp. (a) 682,300 34,541,438
Dell Computer Corp. (a) 473,100 16,262,813
Digital Equipment Corp. (a) 419,300 30,189,600
80,993,851
TOTAL COMPUTERS & OFFICE EQUIPMENT 178,758,362
CONSUMER DURABLES - 0.4%
MANUFACTURING INDUSTRIES - 0.4%
NUR Advanced Technologies Ltd. (a) 125,000 609,375
Wireless Telecom Group, Inc. 100,000 1,487,500
2,096,875
CONSUMER ELECTRONICS - 1.1%
APPLIANCES - 1.1%
Sanyo Electric Co. Ltd. 868,000 5,211,381
DRUGS & PHARMACEUTICALS - 2.1%
BIOTECHNOLOGY - 0.5%
Amgen, Inc. (a) 20,000 1,195,000
Genentech, Inc. special (a) 20,000 1,092,500
2,287,500
DRUGS - 1.6%
Pfizer, Inc. 40,000 2,635,000
Schering-Plough Corp. 60,000 3,367,500
Warner-Lambert Co. 20,000 1,977,500
Watson Pharmaceuticals, Inc. (a) 400 17,200
7,997,200
PHARMACEUTICAL PREPARATIONS - 0.0%
Alpharma, Inc. Class A 5,000 128,125
TOTAL DRUGS & PHARMACEUTICALS 10,412,825
ELECTRICAL EQUIPMENT - 2.0%
CURRENT-CARRYING WIRING DEVICE - 0.2%
Adflex Solutions 64,000 1,008,000
ELECTRICAL EQUIPMENT - 0.7%
IEC Electronics Corp. (a) 5,000 48,125
Shinko Electric Industries Co. Ltd. 84,000 3,367,501
3,415,626
MISCELLANEOUS ELECTRICAL MACHINERY, EQUIPMENT SUPPLIES - 0.9%
Energy Conversion Devices Inc. (a) 200,000 4,175,000
MOTORS & GENERATORS - 0.1%
Zoltek Cos. Inc. (a) 20,000 490,000
TV & RADIO COMMUNICATION EQUIPMENT - 0.1%
Allen Group, Inc. (The) 2,400 44,700
Leitch Technology Corp. (a) 20,000 620,279
664,979
TOTAL ELECTRICAL EQUIPMENT 9,753,605
SHARES VALUE (NOTE 1)
ELECTRONIC INSTRUMENTS - 1.7%
ELECTRONIC EQUIPMENT - 1.3%
Cohu, Inc. 50,000 $ 1,556,250
LTX Corp. (a) 50,000 456,250
Teradyne, Inc. (a) 210,000 4,278,750
6,291,250
SEMICONDUCTOR CAPITAL EQUIPMENT - 0.4%
Electro Scientific Industries, Inc. (a) 32,300 694,450
KLA Instruments Corp. (a) 50,000 1,200,000
1,894,450
TOTAL ELECTRONIC INSTRUMENTS 8,185,700
ELECTRONICS - 5.8%
CONNECTORS - 0.0%
Thomas & Betts Corp. 2,000 144,000
ELECTRONIC COMPONENTS & ACCESSORIES - 0.1%
Benchmarq Microelectronics, Inc. (a) 35,000 236,250
ELECTRONIC PARTS - WHOLESALE - 0.2%
Pioneer Standard Electronics, Inc. 7,650 107,100
Sterling Electronics Corp. (a) 42,000 661,500
768,600
ELECTRONICS & ELECTRONIC COMPONENTS - 1.8%
CTS Corp. 2,800 105,350
Hadco Corp. (a) 145,800 4,811,400
Hitachi Ltd. ADR 10,800 1,088,100
Rada Electronics Industries Ltd. (a) 100,000 350,000
Smartflex Systems, Inc. (a) 100,000 1,325,000
Toshiba Corp. 50,000 386,168
Vishay Intertechnology, Inc. 25,000 659,375
8,725,393
SEMICONDUCTORS - 3.7%
Geotek Industries, Inc. (a) 99,000 952,875
Interpoint Corp. (a) 10,000 105,000
Linear Technology Corp. 90,000 4,185,000
MEMC Electronic Materials, Inc. (a) 20,000 680,000
Micro Linear Corp. (a) 90,300 852,206
Samsung Electronics Co. Ltd.:
GDR (vtg) (a) 462 41,811
GDS (b) 90,139 4,777,367
GDS (vtg.) (b) 10,505 950,703
Sierra Semiconductor Corp. (a) 100,000 2,300,000
Uniphase Corp. (a) 17,000 663,000
Xilinx, Inc. (a) 70,000 2,703,750
18,211,712
TOTAL ELECTRONICS 28,085,955
INDUSTRIAL MACHINERY & EQUIPMENT - 0.9%
GENERAL INDUSTRIAL MACHINERY - 0.2%
Robotic Vision Systems, Inc. (a) 50,000 775,000
SPECIAL INDUSTRIAL MACHINERY - 0.7%
Fuji Machine Manufacturing Co.
Ltd. Ord. 90,000 2,641,904
Gasonics International Corp. (a) 15,000 158,438
Veeco Instruments, Inc. (a) 40,400 606,000
3,406,342
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 4,181,342
LEISURE DURABLES & TOYS - 0.4%
MOTORCYCLES - 0.4%
Harley Davidson, Inc. 50,000 1,793,750
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
MEDICAL EQUIPMENT & SUPPLIES - 1.0%
MEDICAL SUPPLIES & APPLIANCES - 0.4%
Healthdyne, Inc. (a) 25,000 $ 231,250
Johnson & Johnson 17,300 1,617,550
Medical Technology Systems, Inc. (a) 9,800 4,900
1,853,700
MEDICAL TECHNOLOGY - 0.6%
Mallinckrodt Group, Inc. 11,900 467,075
Medtronic, Inc. 40,000 2,295,000
2,762,075
X-RAY ELECTRO-MEDICAL APPARATUS - 0.0%
Healthdyne Technologies, Inc. (a) 16,267 178,937
TOTAL MEDICAL EQUIPMENT & SUPPLIES 4,794,712
MEDICAL FACILITIES MANAGEMENT - 0.3%
HOME HEALTH CARE AGENCIES - 0.1%
Apria Healthcare Group, Inc. (a) 12,325 385,156
HOSPITALS - 0.2%
Health Management Associates, Inc.
Class A (a) 29,362 921,233
PSYCHIATRIC HOSPITALS - 0.0%
Magellan Health Services, Inc. (a) 5,000 119,375
TOTAL MEDICAL FACILITIES MANAGEMENT 1,425,764
METALS & MINING - 1.0%
METAL ORES - 1.0%
Sumitomo Sitix Corp. 250,000 5,106,161
PHOTOGRAPHIC EQUIPMENT - 0.5%
Nikon Corp. 184,000 2,517,076
POLLUTION CONTROL - 0.7%
HAZARDOUS WASTE MANAGEMENT - 0.7%
Molten Metal Technology, Inc. (a) 100,000 3,600,000
RETAIL & WHOLESALE, MISCELLANEOUS - 0.9%
MAIL ORDER - 0.9%
Micro Warehouse, Inc. (a) 87,400 4,151,500
SERVICES - 0.4%
BUSINESS SERVICES - 0.4%
Zebra Technologies Corp. Class A (a) 70,000 2,152,500
ELECTRICAL REPAIR SHOPS - 0.0%
Cerplex Group, Inc. (a) 10,000 62,500
TOTAL SERVICES 2,215,000
TELEPHONE SERVICES - 0.8%
Japan Telecom Co. Ltd. (b) 6 113,428
MFS Communications, Inc. (a) 3,300 199,650
SBC Communications, Inc. 10,000 548,750
Tel-Save Holdings, Inc. (a) 6,800 119,000
Telebras PN (Pfd. Reg.) 48,000,000 2,506,042
U.S. Long Distance Corp. (a) 12,500 229,688
3,716,558
TOTAL COMMON STOCKS
(Cost $330,163,986) 406,028,868
NONCONVERTIBLE PREFERRED STOCKS - 0.3%
TELEPHONE SERVICES - 0.3%
Stet (Societa Finanziaria Telefonica) Spa
(Cost $970,657) 635,100 1,432,649
CONVERTIBLE BONDS - 1.5%
PRINCIPAL VALUE
AMOUNT (NOTE 1)
COMPUTERS & OFFICE EQUIPMENT - 1.1%
COMPUTERS & OFFICE EQUIPMENT - 0.2%
Data General Corp. 7 3/4%,
6/1/01 $ 770,000 $ 812,350
ELECTRONIC COMPUTERS - 0.8%
Acer, Inc. euro 4%, 6/10/01 1,410,000 3,807,000
OFFICE EQUIPMENT - WHOLESALE - 0.1%
Kinpo Electronics, Inc.
euro 3%, 7/21/01 860,000 675,100
TOTAL COMPUTERS & OFFICE EQUIPMENT 5,294,450
ELECTRONICS - 0.4%
SEMICONDUCTORS - 0.4%
United Microelectronics Corp.:
1 1/4%, 6/8/04 (b) 870,000 909,150
euro 1 1/4%, 6/8/04 905,000 945,725
1,854,875
TOTAL CONVERTIBLE BONDS
(Cost $7,517,276) 7,149,325
REPURCHASE AGREEMENTS - 14.9%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations) in a joint
trading account at 5.41%, dated
2/29/96 due 3/1/96 $ 72,978,965 72,968,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $411,619,919) $ 487,578,842
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 $8,378,441 or 1.7% of net
assets.
3. A company in which the fund has ownership of at least 5% of the voting
securities is an affiliated company. Transactions during the period with
companies that are or were affiliates are as follows:
PURCHASES SALES DIVIDEND MARKET
AFFILIATE COST COST INCOME VALUE
Target Technologies, Inc. $ 406,763 $ 142,500 $ - $ 2,191,313
Telechips Corp. - - - 750,000
Totals $ 406,763 $ 142,500 $ - $ 2,941,313
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $452,328,612 and $389,305,243, respectively (see Note 3 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $56,567 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 $3,304,532 and $3,502,200, respectively (see Note 6
of Notes to Financial Statements).
The maximum loan and the average daily loan balances during the periods for
which loans were outstanding amounted to $6,151,000 and $4,922,889,
respectively. The weighted average interest rate paid was 6.4% (see Note 5
of Notes to Financial Statements).
Distribution of investments by country of issue, as a percentage of total
value of investment in securities, is as follows:
United States 89.9%
Japan 5.6
Free China 1.6
Korea 1.1
Others (individually less than 1%) 1.8
TOTAL 100.0%
INCOME TAX INFORMATION
At February 29, 1996, the aggregate cost of investment securities for
income tax purposes was $413,330,166. Net unrealized appreciation
aggregated $74,248,676, of which $93,446,505 related to appreciated
investment securities and $19,197,829 related to depreciated investment
securities.
The fund hereby designates approximately $28,980,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 2% of the dividends distributed during the fiscal year qualifies
for the dividends-received deductions for corporate shareholders
(unaudited).
The fund will notify shareholders in January 1997 of the applicable
percentage for use in preparing 1996 income tax returns.
TECHNOLOGY PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 29, 1996
ASSETS
Investment in $ 487,578,842
securities, at
value
(including
repurchase
agreements
of
$72,968,000)
(cost
$411,619,919
) - See
accompanyin
g schedule
Receivable for 4,598,280
investments
sold
Receivable for 2,870,551
fund shares
sold
Dividends 120,856
receivable
Interest 74,935
receivable
Redemption 3,099
fees
receivable
Other 186,766
receivables
TOTAL ASSETS 495,433,329
LIABILITIES
Payable to $ 798,062
custodian
bank
Payable for 4,546,060
investments
purchased
Payable for 2,894,059
fund shares
redeemed
Accrued 230,170
management
fee
Other payables 436,743
and
accrued
expenses
Collateral on 3,502,200
securities
loaned,
at value
TOTAL 12,407,294
LIABILITIES
NET ASSETS $ 483,026,035
Net Assets
consist of:
Paid in capital $ 375,394,666
Accumulated 31,673,087
undistributed
net realized
gain (loss) on
investments
and foreign
currency
transactions
Net unrealized 75,958,282
appreciation
(depreciation
) on
investments
and assets
and liabilities
in
foreign
currencies
NET ASSETS, for $ 483,026,035
8,835,284
shares
outstanding
NET ASSET $54.67
VALUE and
redemption
price per
share
($483,026,03
5 (divided by)
8,835,284
shares)
Maximum $56.36
offering price
per share
(100/97.00 of
$54.67)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 29, 1996
INVESTMENT $ 875,963
INCOME
Dividends
Interest 2,473,355
(including
income on
securities
loaned of
$151,472)
TOTAL 3,349,318
INCOME
EXPENSES
Management $ 2,349,322
fee
Transfer agent 2,658,884
Fees
Redemption (227,795
fees )
Accounting and 390,528
security
lending fees
Non-interested 1,931
trustees'
compensatio
n
Custodian fees 44,760
and
expenses
Registration 114,922
fees
Audit 31,820
Legal 2,455
Interest 7,895
Miscellaneous 3,357
Total 5,378,079
expenses
before
reductions
Expense (45,677 5,332,402
reductions )
NET (1,983,084
INVESTMENT )
INCOME
(LOSS)
REALIZED AND
UNREALIZED
GAIN (LOSS)
Net realized
gain (loss)
on:
Investment 81,894,122
securities
(including
realized loss
of $21,250
on sales
of
investments
in affiliated
issuers)
Foreign (613 81,893,509
currency )
transactions
Change in net
unrealized
appreciation
(depreciation
) on:
Investment 45,608,079
securities
Assets and (641 45,607,438
liabilities in )
foreign
currencies
NET GAIN (LOSS) 127,500,947
NET INCREASE $ 125,517,863
(DECREASE)
IN NET ASSETS
RESULTING
FROM
OPERATIONS
OTHER $ 3,609,138
INFORMATION
Sales
charges paid
to FDC
Deferred $ 41,004
sales
charges
withheld
by FDC
Exchange $ 160,695
fees withheld
by FSC
Expense $ 39,857
reductions
Directed
brokerage
arrangement
s
Custodian 1,865
interest
credits
Transfer 3,955
agent
interest
credits
$ 45,677
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
FEBRUARY 29, FEBRUARY 28,
1996 1995
Operations $ (1,983,084 $ (2,016,455
Net ) )
investment
income (loss)
Net realized 81,893,509 11,157,808
gain (loss)
Change in 45,607,438 (4,708,436
net )
unrealized
appreciation
(depreciation
)
NET INCREASE 125,517,863 4,432,917
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
Distributions to (54,900,757 (7,172,823
shareholders ) )
from net
realized
gains
Share 586,067,139 291,385,384
transactions
Net proceeds
from sales of
shares
Reinvestmen 53,878,429 6,939,366
t of
distributions
Cost of (458,176,007 (269,114,732
shares ) )
redeemed
Paid in 878,697 815,900
capital
portion of
redemption
fees
NET INCREASE 182,648,258 30,025,918
(DECREASE)
IN NET
ASSETS
RESULTING
FROM SHARE
TRANSACTIO
NS
TOTAL 253,265,364 27,286,012
INCREASE
(DECREASE)
IN NET ASSETS
NET ASSETS
Beginning of 229,760,671 202,474,659
period
End of period $ 483,026,035 $ 229,760,671
OTHER
INFORMATION
Shares
Sold 10,597,931 7,232,669
Issued in 1,032,983 187,906
reinvestment
of
distributions
Redeemed (8,259,673 (6,796,592
) )
Net increase 3,371,241 623,983
(decrease)
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEAR ENDED YEARS ENDED FEBRUARY 28, TEN MONTHS YEAR ENDED
FEBRUARY 29, ENDED APRIL 30,
FEBRUARY 28,
SELECTED PER-SHARE DATA D 1996 1995 1994 1993 1992
</TABLE>
Net asset $ 42.05 $ 41.83 $ 34.62 $ 32.44 $ 27.06
value,
beginning of
period
Income from
Investment
Operations
Net (.28) (.39) (.24) F .13 G (.26)
investment
income (loss)
Net realized 20.83 1.95 11.04 4.68 5.56
and
unrealized
gain (loss)
Total from 20.55 1.56 10.80 4.81 5.30
investment
operations
Less - - (.13) - -
Distributions
From net
investment
income
In excess of - - - - (.16)
net
investment
income
From net (8.05) (1.50) (3.70) (2.75) -
realized gain
Total (8.05) (1.50) (3.83) (2.75) (.16)
distributions
Redemption .12 .16 .24 .12 .24
fees added to
paid in
capital
Net asset $ 54.67 $ 42.05 $ 41.83 $ 34.62 $ 32.44
value, end of
period
TOTAL 50.71% 4.61% 35.62% 16.48% 20.57%
RETURN B, C
RATIOS AND
SUPPLEMENT
AL DATA
Net assets, $ 483,026 $ 229,761 $ 202,475 $ 132,689 $ 105,954
end of period
(000 omitted)
Ratio of 1.40% 1.57% 1.55% 1.64% 1.72%
expenses to A
average net
assets
Ratio of 1.39% 1.56% 1.54% 1.64% 1.72%
expenses to E E E A
average net
assets after
expense
reductions
Ratio of net (.52)% (.98)% (.65)% .52% (.84)%
investment A
income (loss)
to average
net assets
Portfolio 112% 102% 213% 259% 353%
turnover rate A
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING
THE PERIODS SHOWN (SEE NOTE 7 OF NOTES TO FINANCIAL STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE
YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES
OUTSTANDING DURING THE PERIOD.
E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES WHO EITHER
PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES (SEE NOTE 7 OF NOTES TO FINANCIAL
STATEMENTS).
F INVESTMENT INCOME PER SHARE REFLECTS DIVIDENDS RECEIVED IN ARREARS WHICH AMOUNTED TO
$.03 PER SHARE.
G INVESTMENT INCOME PER SHARE REFLECTS DIVIDENDS RECEIVED IN ARREARS WHICH AMOUNTED TO
$.10 PER SHARE.
</TABLE>
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 securities that have grown in value), but does not include certain
fees paid by shareholders upon exchange or redemption. If Fidelity had not
reimbursed certain expenses, the past 10 year total returns would have been
lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 29, 1996 YEAR YEARS YEARS
TELECOMMUNICATIONS 25.79% 145.52% 435.41%
TELECOMMUNICATIONS 22.02% 138.16% 419.35%
(INCL. 3% SALES CHARGE)
S&P 500 34.70% 101.14% 286.76%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one, five, or 10 years. You can compare
these figures to the performance of the S&P 500 - a common proxy for the
U.S. stock market. This benchmark includes reinvested dividends and capital
gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 29, 1996 YEAR YEARS YEARS
TELECOMMUNICATIONS 25.79% 19.68% 18.27%
TELECOMMUNICATIONS 22.02% 18.95% 17.91%
(INCL. 3% SALES CHARGE)
S&P 500 34.70% 14.99% 14.47%
AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and
show you what would have happened if the fund had performed at a constant
rate each year.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of growth in the long run
and volatility in the short run. Unlike the broader
market, however, some sectors may not have
a history of growth in the long run. And, as
with all stock funds, the share price and
return of a fund that invests in a sector will
vary. That means if you sell your shares
during a sector downturn, you might lose
money. But if you can identify a sector that is
about to experience rapid growth you may
have the potential for above-average gains.
(checkmark)
$10,000 OVER 10 YEARS
19860228 9700.00 10000.00
19860331 9901.92 10558.00
19860430 10281.52 10438.69
19860531 10539.97 10994.03
19860630 10588.43 11179.83
19860731 10071.52 10554.88
19860831 10758.03 11338.05
19860930 10095.75 10400.39
19861031 10612.66 11000.50
19861130 10798.42 11267.81
19861231 10644.96 10980.48
19870131 11985.68 12459.55
19870228 12995.25 12951.70
19870331 12833.72 13326.01
19870430 12639.88 13207.41
19870531 13124.48 13322.31
19870630 13625.23 13995.09
19870731 14053.29 14704.64
19870831 14715.57 15253.12
19870930 15014.40 14919.08
19871031 12373.36 11705.51
19871130 11525.31 10740.97
19871231 12264.50 11558.36
19880131 12837.07 12044.97
19880229 13218.78 12606.27
19880331 13276.86 12216.73
19880430 13708.36 12352.34
19880531 13882.62 12459.80
19880630 14604.55 13031.71
19880731 14397.10 12982.19
19880831 13866.02 12540.79
19880930 14720.72 13075.03
19881031 15019.45 13438.52
19881130 15152.22 13246.35
19881231 15669.41 13478.16
19890131 16941.04 14464.76
19890228 17007.97 14104.59
19890331 17702.34 14433.22
19890430 19040.89 15182.31
19890531 20446.37 15797.19
19890630 19946.87 15707.15
19890731 21461.18 17125.50
19890831 21974.36 17461.16
19890930 22782.00 17389.57
19891031 21974.36 16986.13
19891130 22529.61 17332.65
19891231 23642.28 17748.63
19900131 21078.35 16557.70
19900228 20999.86 16771.29
19900331 21488.23 17215.73
19900430 20223.70 16785.34
19900531 22351.60 18421.91
19900630 21906.83 18296.64
19900731 20903.93 18238.09
19900831 18470.81 16589.37
19900930 17276.05 15781.47
19901031 17877.79 15713.61
19901130 18898.13 16728.71
19901231 19765.76 17195.44
19910131 20468.19 17945.16
19910228 21152.83 19228.24
19910331 21748.56 19693.56
19910430 22210.92 19740.82
19910531 22442.10 20593.63
19910630 21508.49 19650.44
19910731 22726.62 20566.15
19910831 23402.38 21053.57
19910930 23704.69 20701.97
19911031 24638.29 20979.38
19911130 23695.80 20133.91
19911231 25863.84 22437.23
19920131 25899.78 22019.90
19920229 26223.19 22306.16
19920331 25297.88 21871.19
19920430 26250.14 22514.20
19920531 25944.70 22624.52
19920630 25342.15 22287.41
19920731 26702.02 23198.97
19920831 26386.82 22723.39
19920930 26900.14 22991.53
19921031 27170.32 23072.00
19921130 28584.22 23858.75
19921231 29825.69 24152.21
19930131 29733.94 24355.09
19930228 31366.97 24686.32
19930331 32651.38 25207.20
19930430 32720.26 24597.19
19930531 34037.35 25256.39
19930630 35504.97 25329.64
19930731 36539.82 25228.32
19930831 39296.30 26184.47
19930930 39860.77 25982.85
19931031 41008.52 26520.70
19931130 37649.94 26268.75
19931231 38688.58 26586.60
19940131 39471.83 27490.55
19940228 38235.11 26745.55
19940331 37039.62 25579.45
19940430 37700.74 25906.86
19940531 37479.34 26331.74
19940630 37447.71 25686.61
19940731 39524.62 26529.13
19940831 40673.78 27616.82
19940930 40199.36 26940.21
19941031 42118.13 27546.37
19941130 39883.08 26543.13
19941231 40359.59 26936.76
19950131 40919.54 27635.23
19950228 41285.66 28712.18
19950331 41802.54 29559.47
19950430 43101.78 30430.00
19950531 44278.28 31646.29
19950630 46411.38 32381.43
19950731 49358.13 33455.20
19950831 50820.51 33539.17
19950930 52491.81 34954.52
19951031 50292.74 34829.74
19951130 51403.27 36358.76
19951231 52328.67 37059.03
19960131 52699.06 38320.52
19960229 51935.14 38675.75
Let's say you invested $10,000 in Fidelity Select Telecommunications
Portfolio on February 28, 1986, and paid a 3% sales charge. By February 29,
1996, your investment would have grown to $51,935 - a 419.35% increase.
That compares to $10,000 invested in the S&P 500, which would have grown to
$38,676 over the same period - a 286.76% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 29, 1996
% OF FUND'S
INVESTMENTS
Cisco Systems, Inc. 5.0
Frontier Corp. 4.9
GTE Corp. 4.3
BellSouth Corp. 4.1
Ameritech Corp. 4.0
NYNEX Corp. 4.0
WorldCom, Inc. 3.2
LCI International, Inc. 3.0
AT&T Corp. 2.5
HBO & Co. 2.4
TOP INDUSTRIES AS OF FEBRUARY 29, 1996
Telephone Services 53.8%
Data Communications
Equipment 5.7%
Cellular & Communication
Services 4.1%
Computer Services 3.0%
Telephone Equipment 2.3%
All Others 31.1% *
Row: 1, Col: 1, Value: 31.1
Row: 1, Col: 2, Value: 2.3
Row: 1, Col: 3, Value: 3.0
Row: 1, Col: 4, Value: 4.1
Row: 1, Col: 5, Value: 5.7
Row: 1, Col: 6, Value: 53.8
* INCLUDES SHORT-TERM INVESTMENTS
TELECOMMUNICATIONS PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
David Felman,
Portfolio Manager of
Fidelity Select Telecommunications Portfolio
Q. DAVID, HOW DID THE FUND PERFORM?
A. Fidelity Select Telecommunications had a total return of 25.79% for the
year that ended February 29, 1996. During the same period, the S&P 500
Index had a total return of 34.70%.
Q. WHAT WERE SOME OF THE FACTORS THAT DROVE PERFORMANCE?
A. The fund had a very strong first half, outperforming the broader market,
but a lackluster second half. That's a reflection of the sector's
volatility in a year dominated by the debate over the Telecommunications
Act, which was signed into law in February. Across the sector, companies
scrambled to carve out a competitive position for themselves in an
uncertain future. The buzzword was packaging, as companies sought, through
mergers and acquisitions, to set themselves up as one-stop providers of the
four major communications services: entertainment, including cable and
satellite television; local telephone; long-distance telephone; and
cellular. As the perceived advantage shifted among subsectors, stock prices
rose and fell. Before the measure passed, for example, many analysts
believed that the regional Bell operating companies would be among the
prime beneficiaries, and those stocks did very well. Once the Act passed,
however, the perception shifted, and the Baby Bells and GTE seemed to lose
some favor with investors. Together the Baby Bells totaled 18.4% of the
fund's investments at the end of the period.
Q. HOW DID THE LONG-DISTANCE PROVIDERS FARE?
A. In general, the major long-distance carriers, including MCI and Sprint,
were thought to be more vulnerable to competition in their established
markets than the Baby Bells were in theirs, and that was a drag on
performance all year. AT&T got a boost last fall when it spun off two
divisions into separate companies. Eventually, though, analysts decided
there was not as much value in the breakup as they had originally thought,
and the stock slumped. AT&T was also hurt by the need to revise its
earnings downward, the result of an aggressive but expensive acquisition
strategy designed to help it enter new markets. The same broad trends
influenced MCI and Sprint to a lesser extent, taking some of the shine off
what might otherwise have been an outstanding year for both of them.
Q. HOW DID CHANGES IN THE INDUSTRY AFFECT LONG-DISTANCE RESELLERS?
A. Resellers purchase long-distance minutes in bulk mainly from AT&T, then
resell them at a discount to end users. Lately, they've profited from the
sense among industry analysts that, as new players enter the long-distance
market, they'll need capacity, which they can get from resellers. They've
also benefited from the growing popularity of the Internet, which has
increased demand for long-distance minutes. Led by top 10 holdings Frontier
and WorldCom, resellers were among the fund's leading performers all year.
Together they totaled 8.1% of the fund's net investments.
Q. WHAT ABOUT CELLULAR STOCKS?
A. Equipment suppliers such as Ericsson - formerly the fund's largest
holding - and Nokia were among the fund's top performers early in the
period, only to fall off sharply later on. Both were hurt by a decline in
cellular subscription growth in the United States, which led to a collapse
in handset prices. The fund managed to reduce its position in Nokia in time
to avoid losses, but held on to Ericsson in the belief that U.S. handset
sales were not a major factor for the company. However, the fund suffered
as Ericsson got caught in the sector-wide downdraft. By the end of the
period, neither Nokia nor Ericsson stocks were held by the fund.
Q. WHAT'S THE OUTLOOK?
A. There's a lot of uncertainty in the telecommunications industry today,
probably more than there was six months ago. No one knows for sure who's
going to buy whom, who's going to build what or where prices are going to
end up. On the other hand, there's a strong sense of growth and opportunity
pervading the industry. To take just one example, demand for phone service
continues to grow as consumers see the need for more than one phone line.
As a result, the average residential consumer pays more for telephone
services today than five years ago, even after accounting for inflation. So
despite the short-term volatility, the underlying trends were positive at
the end of the period.
FUND FACTS
START DATE: July 29, 1985
TRADING SYMBOL: FSTCX
SIZE: As of February 29, 1996, more than
$468 million
MANAGER: David Felman, since 1994; manager,
Fidelity Select Chemicals Portfolio, January
1995 - July 1995; analyst, specialty chemicals,
construction and engineering industries; joined
Fidelity in 1992
(checkmark)
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
TELECOMMUNICATIONS PORTFOLIO
INVESTMENTS FEBRUARY 29, 1996
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 78.2%
SHARES VALUE (NOTE 1)
ADVERTISING - 0.4%
ADVERTISING AGENCIES - 0.4%
ADVO-Systems, Inc. 79,500 $ 1,739,064
APPLIANCE STORES - 0.4%
ELECTRIC APPLIANCES - WHOLESALE - 0.4%
Cellstar Corp. (a) 115,000 2,041,250
BROADCASTING - 2.1%
CABLE TV OPERATORS - 2.0%
Gaylord Entertainment Co. Class A 60,270 1,612,223
Viacom, Inc. (a):
Class A 88,628 3,445,414
Class B (non-vtg.) 122,285 4,799,686
9,857,323
TELEVISION BROADCASTING - 0.1%
Heritage Media Corp. Class A (a) 19,700 711,663
TOTAL BROADCASTING 10,568,986
CELLULAR - 3.8%
CELLULAR & COMMUNICATION SERVICES - 3.8%
AirTouch Communications, Inc. (a) 60,200 1,866,200
BCE Mobile Communications, Inc. (a) 30,000 985,150
Cellular Communications, Inc.
Series A (a) 13,000 669,500
Century Telephone Enterprises, Inc. 180,887 6,082,325
Nextel Communications, Inc. Class A (a) 116,155 1,756,844
Rogers Cantel Mobile Communications,
Inc. Class B (sub-vtg.) (a) 120,600 2,926,223
Rogers Communications, Inc. Class B (a) 149,900 1,504,087
Vanguard Cellular Systems, Inc.
Class A (a) 9,300 204,600
Vodafone Group PLC sponsored ADR 74,000 2,617,750
18,612,679
COMMUNICATIONS EQUIPMENT - 7.8%
DATACOMMUNICATIONS EQUIPMENT - 5.7%
Cabletron Systems, Inc. (a) 49,500 3,718,688
Cisco Systems, Inc. (a) 512,200 24,329,500
28,048,188
TELEPHONE EQUIPMENT - 2.1%
ADC Telecommunications, Inc. (a) 6,600 262,350
DSC Communications Corp. (a) 291,200 8,881,600
InterVoice, Inc. (a) 10,000 238,750
Newbridge Networks Corp. (a) 18,400 899,300
10,282,000
TOTAL COMMUNICATIONS EQUIPMENT 38,330,188
COMPUTER SERVICES & SOFTWARE - 7.7%
CAD/CAM/CAE - 1.8%
CSG Systems International, Inc. 12,000 264,000
ECI Telecom Ltd. 310,000 7,905,000
EIS International, Inc. (a) 55,500 912,281
9,081,281
COMPUTER SERVICES - 3.0%
American Management Systems, Inc. 50,000 1,200,000
HBO & Co. 120,300 11,909,700
Saville Systems Ireland PLC
sponsored ADR (a) 80,000 1,400,000
14,509,700
SHARES VALUE (NOTE 1)
DATA PROCESSING - 2.1%
Automatic Data Processing, Inc. 20,000 $ 775,000
Ceridian Corp. (a) 70,000 3,010,000
First Data Corp. 50,000 3,462,500
General Motors Corp. Class E 50,000 2,856,250
10,103,750
PREPACKAGED COMPUTER SOFTWARE - 0.8%
Netscape Communications Corp. (a) 61,000 3,111,000
Sybase, Inc. (a) 30,000 941,250
4,052,250
TOTAL COMPUTER SERVICES & SOFTWARE 37,746,981
COMPUTERS & OFFICE EQUIPMENT - 1.7%
COMPUTER PERIPHERALS - 0.2%
Norand Corp. (a) 65,000 1,170,000
ELECTRONIC COMPUTERS - 1.5%
Bay Networks, Inc. (a) 175,000 7,109,375
TOTAL COMPUTERS & OFFICE EQUIPMENT 8,279,375
ELECTRICAL EQUIPMENT - 1.9%
ELECTRICAL MACHINERY - 0.7%
Philips Electronics NV 85,800 3,549,975
TV & RADIO COMMUNICATION EQUIPMENT - 1.2%
Glenayre Technologies, Inc. 100,500 4,434,563
Ortel Corp. (a) 115,000 1,322,500
5,757,063
TOTAL ELECTRICAL EQUIPMENT 9,307,038
ELECTRONIC INSTRUMENTS - 0.1%
ELECTRONIC EQUIPMENT - 0.1%
Teradyne, Inc. (a) 15,400 313,775
ELECTRONICS - 0.8%
ELECTRONIC PARTS - WHOLESALE - 0.0%
Marshall Industries (a) 4,800 154,200
SEMICONDUCTORS - 0.8%
Motorola, Inc. 68,000 3,689,000
TOTAL ELECTRONICS 3,843,200
SERVICES - 0.1%
PUBLIC RELATIONS SERVICES - 0.1%
True North Communications 14,700 301,350
TELEPHONE SERVICES - 51.4%
AT&T Corp. 195,000 12,406,875
Ameritech Corp. 343,500 19,794,188
Bell Atlantic Corp. 129,600 8,569,800
BellSouth Corp. 508,600 20,280,425
British Telecommunications PLC ADR 5,000 284,375
Cincinnati Bell, Inc. 254,100 8,321,775
Comsat Corp., Series 1 41,750 965,469
DDI Corp. Ord. 797 5,837,524
Frontier Corp. 797,600 23,928,000
GTE Corp. 487,773 20,913,267
Incomnet, Inc. (a) 119,000 658,219
Koninklijke Ptt Nederland NV 166,000 6,651,270
Koninklijke Ptt Nederland NV (a)(b) 44,200 1,771,001
LCI International, Inc. (a) 648,800 14,760,200
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
TELEPHONE SERVICES - CONTINUED
MFS Communications, Inc. (a) 138,684 $ 8,390,382
Nippon Telegraph & Telephone
Corp. Ord. 144 1,094,381
NYNEX Corp. 382,700 19,709,050
Royal Ptt Nederland NV
sponsored ADR 20,000 797,500
SBC Communications, Inc. 205,600 11,282,300
Southern New England
Telecommunications Corp. 58,800 2,403,450
Sprint Corp. 225,600 9,700,800
Tel-Save Holdings, Inc. (a) 1,000 17,500
Telebras PN (Pfd. Reg.) 126,221,131 6,589,904
Telecom Argentina Stet France
Telecom SA 53,500 230,154
Telecom Italia Spa 350,000 586,183
Telecom Italia Mobile Spa (a) 350,000 642,192
Tele Danmark AS:
Class B 30,000 1,760,829
Class B ADR 217,700 6,422,150
Telefonica de Argentina SA Class B 191,000 493,002
Telefonica de Espana SA:
sponsored ADR 20,000 982,500
Ord. 150,000 2,462,190
Telephone & Data Systems, Inc. 108,724 5,014,895
U.S. West, Inc. 321,700 10,535,675
U.S. West, Inc. (Media Group) 96,700 2,018,613
WorldCom, Inc. (a) 399,212 15,718,973
251,995,011
TOTAL COMMON STOCKS
(Cost $349,263,149) 383,078,897
PREFERRED STOCKS - 2.8%
CONVERTIBLE PREFERRED STOCKS - 1.8%
CELLULAR - 0.3%
CELLULAR & COMMUNICATION SERVICES - 0.3%
Cellular Communications, Inc.
$0.01 (a) 31,188 1,574,994
TELEPHONE SERVICES - 1.5%
LCI International, Inc. exchangeable 10,000 596,250
MFS Communications, Inc., Series A,
$2.68 depository shares representing
1/100 share (dividend enhanced
conversion stock) 90,000 4,803,750
Philippine Long Distance
Telephone GDR 34,000 1,921,000
7,321,000
TOTAL CONVERTIBLE PREFERRED STOCKS 8,895,994
NONCONVERTIBLE PREFERRED STOCKS - 1.0%
TELEPHONE SERVICES - 1.0%
Stet (Societa Finanziaria
Telefonica) Spa 945,200 2,132,169
Telecom Italia Mobile Spa (a) 1,000,000 1,116,967
Telecom Italia Ord. 1,000,000 1,379,821
TOTAL NONCONVERTIBLE PREFERRED STOCKS 4,628,957
TOTAL PREFERRED STOCKS
(Cost $10,603,662) 13,524,951
CONVERTIBLE BONDS - 0.2%
PRINCIPAL VALUE
AMOUNT (NOTE 1)
COMMUNICATIONS EQUIPMENT - 0.2%
TELEPHONE EQUIPMENT - 0.2%
Ericsson (L.M.) Telephone Co.
4 1/4%, 6/30/00
(Cost $480,442) $ 345,700 $ 1,044,014
REPURCHASE AGREEMENTS - 18.8%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 5.41% dated
2/29/96 due 3/1/96 $ 92,159,847 92,146,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $452,493,253) $ 489,793,862
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 $1,771,001 or 0.4% of net
assets.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $351,894,042 and $340,420,852, respectively (see Note 3 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $114,849 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 $26,063,603 and $27,486,500, respectively (see Note
6 of Notes to Financial Statements).
The maximum loan and the average daily loan balances during the periods for
which loans were outstanding amounted to $4,178,000 and $4,178,000,
respectively. The weighted average interest rate paid was 6.4% (see Note 5
of Notes to Financial Statements).
Distribution of investments by country of issue, as a percentage of total
value of investment in securities, is as follows:
United States 86.6%
Netherlands 2.6
Denmark 1.7
Israel 1.6
Japan 1.4
Brazil 1.3
Canada 1.3
Italy 1.2
Others (individually less than 1%) 2.3
TOTAL 100.0%
INCOME TAX INFORMATION
At February 29, 1996, the aggregate cost of investment securities for
income tax purposes was $453,556,313. Net unrealized appreciation
aggregated $36,237,549, of which $53,373,648 related to appreciated
investment securities and $17,136,099 related to depreciated investment
securities.
The fund hereby designates approximately $4,493,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 52% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate shareholders
(unaudited).
The fund will notify shareholders in January 1997 of the applicable
percentage for use in preparing 1996 income tax returns.
TELECOMMUNICATIONS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 29, 1996
ASSETS
Investment in $ 489,793,862
securities, at
value
(including
repurchase
agreements
of
$92,146,000)
(cost
$452,493,253
) - See
accompanyin
g schedule
Cash 688
Receivable for 9,619,675
investments
sold
Receivable for 1,648,284
fund shares
sold
Dividends 343,761
receivable
Interest 15,304
receivable
Redemption 2,207
fees
receivable
Other 17,219
receivables
TOTAL ASSETS 501,441,000
LIABILITIES
Payable for $ 2,419,463
investments
purchased
Payable for 2,520,755
fund shares
redeemed
Accrued 245,509
management
fee
Other payables 468,828
and
accrued
expenses
Collateral on 27,486,500
securities
loaned,
at value
TOTAL 33,141,055
LIABILITIES
NET ASSETS $ 468,299,945
Net Assets
consist of:
Paid in capital $ 391,705,689
Undistributed 1,251,216
net
investment
income
Accumulated 38,042,405
undistributed
net realized
gain (loss) on
investments
and foreign
currency
transactions
Net unrealized 37,300,635
appreciation
(depreciation
) on
investments
and assets
and liabilities
in
foreign
currencies
NET ASSETS, for $ 468,299,945
10,435,711
shares
outstanding
NET ASSET $44.87
VALUE and
redemption
price per
share
($468,299,94
5 (divided by)
10,435,711
shares)
Maximum $46.26
offering price
per share
(100/97.00 of
$44.87)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 29, 1996
INVESTMENT $ 8,875,241
INCOME
Dividends
Interest 2,469,880
(including
income on
securities
loaned of
$158,246)
TOTAL 11,345,121
INCOME
EXPENSES
Management $ 2,590,151
fee
Transfer agent 3,296,708
Fees
Redemption (135,917
fees )
Accounting and 429,757
security
lending fees
Non-interested 2,683
trustees'
compensatio
n
Custodian fees 47,869
and
expenses
Registration 149,772
fees
Audit 39,792
Legal 2,781
Interest 2,241
Miscellaneous 8,488
Total 6,434,325
expenses
before
reductions
Expense (26,413 6,407,912
reductions )
NET 4,937,209
INVESTMENT
INCOME
REALIZED AND
UNREALIZED
GAIN (LOSS)
Net realized
gain (loss)
on:
Investment 57,175,205
securities
Foreign (19,166 57,156,039
currency )
transactions
Change in net
unrealized
appreciation
(depreciation
) on:
Investment 28,357,990
securities
Assets and 26 28,358,016
liabilities in
foreign
currencies
NET GAIN (LOSS) 85,514,055
NET INCREASE $ 90,451,264
(DECREASE)
IN NET ASSETS
RESULTING
FROM
OPERATIONS
OTHER $ 2,050,876
INFORMATION
Sales
charges paid
to FDC
Deferred $ 25,598
sales
charges
withheld
by FDC
Exchange $ 86,798
fees withheld
by FSC
Expense $ 19,795
reductions
Directed
brokerage
arrangement
s
Custodian 530
interest
credits
Transfer 6,088
agent
interest
credits
$ 26,413
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
FEBRUARY 29, FEBRUARY 28,
1996 1995
Operations $ 4,937,209 $ 2,874,925
Net
investment
income
Net realized 57,156,039 13,108,456
gain (loss)
Change in 28,358,016 10,501,018
net
unrealized
appreciation
(depreciation
)
NET INCREASE 90,451,264 26,484,399
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
Distributions to (3,666,827 (3,125,414
shareholders ) )
From net
investment
income
From net (25,859,291 (12,275,476
realized gain ) )
TOTAL (29,526,118 (15,400,890
DISTRIBUTION ) )
S
Share 183,961,070 199,692,240
transactions
Net proceeds
from sales of
shares
Reinvestmen 28,851,878 15,044,524
t of
distributions
Cost of (175,053,917 (227,502,551
shares ) )
redeemed
Paid in 139,366 133,502
capital
portion of
redemption
fees
NET INCREASE 37,898,397 (12,632,285
(DECREASE) )
IN NET
ASSETS
RESULTING
FROM SHARE
TRANSACTIO
NS
TOTAL 98,823,543 (1,548,776
INCREASE )
(DECREASE)
IN NET ASSETS
NET ASSETS
Beginning of 369,476,402 371,025,178
period
End of period $ 468,299,945 $ 369,476,402
(including
undistribute
d net
investment
income of
$1,251,216
and $0,
respectivel
y)
OTHER
INFORMATION
Shares
Sold 4,122,731 5,395,122
Issued in 677,781 417,307
reinvestment
of
distributions
Redeemed (4,001,104 (6,175,717
) )
Net increase 799,408 (363,288
(decrease) )
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEAR ENDED YEARS ENDED FEBRUARY 28, TEN MONTHS YEAR ENDED
FEBRUARY 29, ENDED APRIL 30,
FEBRUARY 28,
SELECTED PER-SHARE DATA D 1996 1995 1994 1993 1992
</TABLE>
Net asset $ 38.34 $ 37.10 $ 34.19 $ 29.22 $ 24.98
value,
beginning of
period
Income from
Investment
Operations
Net .51 .29 .25 .29 .36
investment
income
Net realized 9.15 2.54 7.00 5.29 4.13
and
unrealized
gain (loss)
Total from 9.66 2.83 7.25 5.58 4.49
investment
operations
Less (.39) (.33) (.20) (.18) (.28)
Distributions
From net
investment
income
From net (2.75) (1.27) (4.18) (.48) -
realized gain
Total (3.14) (1.60) (4.38) (.66) (.28)
distributions
Redemption .01 .01 .04 .05 .03
fees added to
paid in
capital
Net asset $ 44.87 $ 38.34 $ 37.10 $ 34.19 $ 29.22
value, end of
period
TOTAL 25.79% 7.98% 21.90% 19.49% 18.19%
RETURN B, C
RATIOS AND
SUPPLEMENT
AL DATA
Net assets, $ 468,300 $ 369,476 $ 371,025 $ 134,338 $ 78,533
end of period
(000 omitted)
Ratio of 1.52% 1.56% 1.54% 1.74% 1.90%
expenses to A
average net
assets
Ratio of 1.52% 1.55% 1.53% 1.74% 1.90%
expenses to E E A
average net
assets after
expense
reductions
Ratio of net 1.17% .77% .64% 1.16% 1.32%
investment A
income to
average net
assets
Portfolio 89% 107% 241% 115% 20%
turnover rate A
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING
THE PERIODS SHOWN (SEE NOTE 7 OF NOTES TO FINANCIAL STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE
YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES
OUTSTANDING DURING THE PERIOD.
E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES WHO EITHER PAID
OR REDUCED A PORTION OF THE FUND'S EXPENSES (SEE NOTE 7 OF NOTES TO FINANCIAL
STATEMENTS).
</TABLE>
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 PAST 10
FEBRUARY 29, 1996 YEAR YEARS YEARS
MONEY MARKET 5.56% 22.87% 74.42%
MONEY MARKET
(INCL. 3% SALES CHARGE) 2.40% 19.19% 69.18%
All Taxable
Money Market Funds Average 5.44% 22.45% 73.09%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one year, five years, or 10 years. For
example, if you invested $1,000 in a fund that had a 5% return over the
past year, the value of your investment would be $1,050 without including
the effect of the 3% sales charge. To measure how the fund's performance
stacked up against its peers, you can compare it to the all taxable money
market funds average, which reflects the performance of 772 all taxable
money market funds with similar objectives tracked by IBC/Donoghue's MONEY
FUND REPORT(registered trademark) over the past year.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 29, 1996 YEAR YEARS YEARS
MONEY MARKET 5.56% 4.21% 5.72%
MONEY MARKET
(INCL. 3% SALES CHARGE) 2.40% 3.57% 5.40%
All Taxable
Money Market Funds Average 5.44% 4.13% 5.63%
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: 5.85
Row: 1, Col: 2, Value: 5.49
Row: 1, Col: 3, Value: 2.88
Row: 2, Col: 1, Value: 5.970000000000001
Row: 2, Col: 2, Value: 5.51
Row: 2, Col: 3, Value: 2.89
Row: 3, Col: 1, Value: 5.41
Row: 3, Col: 2, Value: 5.25
Row: 3, Col: 3, Value: 2.84
Row: 4, Col: 1, Value: 5.19
Row: 4, Col: 2, Value: 5.26
Row: 4, Col: 3, Value: 2.86
Row: 5, Col: 1, Value: 5.31
Row: 5, Col: 2, Value: 4.78
Row: 5, Col: 3, Value: 2.76
6% -
4% -
2% -
0%
Money Market
All Taxable
Money Market
Funds Average
MMDA
2/28/95 5/30/95 8/29/95 11/28/95 2/27/96
MONEY MARKET 5.85% 5.97% 5.41% 5.19% 5.31%
All Taxable
Money Market
Funds Average 5.49% 5.51% 5.25% 5.26% 4.78%
3/1/95 5/31/95 8/30/95 11/29/95 2/28/96
MMDA 2.88% 2.89% 2.84% 2.86% 2.76%
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. You can
compare these yields to the all taxable money market funds average and the
bank money market deposit account average (MMDA). Figures for the all
taxable money market funds average are from the IBC/Donoghue's MONEY FUND
REPORT.(registered trademark) The MMDA average is supplied by BANK RATE
MONITOR.(Trademark)
COMPARING PERFORMANCE
There are some important differences between
a bank money market deposit account (MMDA)
and a money market fund. First, the U.S.
government neither insures nor guarantees a
money market fund. In fact, there is no
assurance that a money fund will maintain a $1
share price. Second, a money market fund
returns to its shareholders income earned by the
fund's investments after expenses. This is in
contrast to banks, which set their MMDA rates
periodically based on current interest rates,
competitors' rates, and internal criteria.
(checkmark)
MONEY MARKET PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
John Todd, Portfolio Manager of Fidelity Select Money Market Portfolio
Q. JOHN, WHAT KIND OF MARKET ENVIRONMENT HAVE YOU BEEN OPERATING IN FOR THE
PAST YEAR?
A. It's hard to talk about what happened last year without referring to an
event that took place just before the period began. In early February 1995,
the Federal Reserve raised the federal funds rate one-half percentage point
to 6.00%. It was the seventh rate increase in 12 months. By raising
interest rates, the Fed was seeking to slow down the growth rate in the
economy and prevent any inflationary pressures from developing. During the
early months of the current period, it became increasingly obvious that the
Fed had achieved its goal. After expanding at an annual rate of more than
3% during the fourth quarter of 1994, growth slowed to 0.6% during the
first quarter of 1995, and 0.5% during the second quarter. In July, fearful
of having overshot its goal of a soft landing for the economy, the Fed made
a tentative move in the opposite direction, lowering the federal funds rate
one-quarter percentage point.
Q. WHAT'S HAPPENED SINCE THEN?
A. During the third quarter of 1995, the economy rebounded with a strength
that surprised many market participants, expanding at an annual rate of
3.6%. Among the main drivers of growth during that period were housing,
automobiles and other interest-rate-sensitive sectors of the economy. It
didn't last, though. Growth slowed appreciably during the fourth quarter
and the Fed responded with two more quarter-point rate cuts - the first in
late December and the second on the last day of January 1996.
Q. SO HOW WOULD YOU SUMMARIZE DEVELOPMENTS DURING THE FUND'S FISCAL YEAR?
A. In retrospect, we can fairly say that economic growth decelerated
dramatically during 1995 in response to numerous factors, most importantly
the sharp increase in short-term interest rates during 1994. The Fed has
targeted an annual real growth rate of around 2.25%. As long as the economy
was expanding faster than that, the Fed, attempting to preempt inflation,
tapped the brakes. Once it became clear that growth had fallen appreciably
below the target rate, the Fed took its foot off the brakes and tapped the
accelerator. Lately, the economy has been giving off mixed signals. It's
hard to explain, for example, why unemployment has remained under 6% all
year, despite aggressive corporate downsizing and an uninterrupted flow of
layoffs. The one constant all year has been the relative absence of
inflationary pressures.
Q. HOW DID YOU POSITION THE FUND DURING THE PERIOD?
A. When the period began, the fund's average maturity was 31 days. Once it
became clear that the Fed was through raising rates and instead was
preparing for an eventual rate cut, I began buying longer-term securities
and moving the fund's average maturity out toward 60 days. After the rate
cut in July, the economy seemed to pick up steam, and I let the fund's
average maturity roll back down to around 35 days. When the economy turned
sluggish again late in the year, I moved the fund back out, approaching 60
days again at the end of December. The fund ended the period at 48 days,
only because by then the market had already discounted the impact of the
next Fed rate cut and I saw little point in being overly aggressive.
Q. HOW DID THE FUND PERFORM?
A. Better than its peers. The fund's seven-day yield on February 29, 1996
was 5.21%, compared to 5.85% on February 28, 1995. The fund's one-year
total return was 5.56%, compared to 5.44% for the all taxable money market
funds average, according to IBC/Donoghue.
Q. WHAT'S THE OUTLOOK?
A. Despite conflicting signals on the strength of the economy, the
possibility still exists for the Fed to lower rates again sometime during
the next six months. After the last rate cut in January, there was
speculation that the Fed had another rate cut planned for early spring.
Those hopes all but died with the stronger than anticipated economic data
released late in the period. Now it seems more likely the Fed will sit
tight for awhile. My plan is to keep the fund's average maturity between 40
and 50 days, until such time as the economic outlook becomes clearer, then
move the average maturity in the appropriate direction.
FUND FACTS
START DATE: August 30, 1985
TRADING SYMBOL: FSMMKT
SIZE: as of February 29, 1996, more than
$610 million
MANAGER: John Todd, since 1991; manager
Spartan Money Market Fund, since 1989,
Daily Money Fund: Money Market and Fidelity
Institutional Cash Portfolios: Money Market,
since 1992; joined Fidelity in 1982
(checkmark)
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
MONEY MARKET PORTFOLIO
INVESTMENTS FEBRUARY 29, 1996
Showing Percentage of Total Value of Investment in Securities
CERTIFICATES OF DEPOSIT - 21.9%
ANNUALIZED YIELD
DUE AT TIME OF PRINCIPAL VALUE
DATE PURCHASE AMOUNT (NOTE 1)
DOMESTIC CERTIFICATES OF DEPOSIT - 1.7%
FIRST TENNESSEE BANK, N.A. MEMPHIS
3/25/96 5.47% $ 10,000,000 $ 10,000,000
NEW YORK BRANCH, YANKEE DOLLAR, FOREIGN BANKS - 11.1%
BANQUE NATIONALE DE PARIS
8/29/96 5.11 2,000,000 2,000,000
CANADIAN IMPERIAL BANK OF COMMERCE
6/4/96 5.19 3,000,000 3,000,000
DEUTSCHE BANK, A.G.
7/29/96 5.18 20,000,000 20,000,000
SOCIETE GENERALE
4/4/96 5.47 9,000,000 9,000,000
9/3/96 5.13 6,000,000 6,000,000
SWISS BANK CORP.
3/7/96 5.70 17,000,000 17,000,000
7/29/96 5.20 5,000,000 5,000,000
WESTPAC BANKING CORP.
4/3/96 5.68 4,000,000 4,002,975
66,002,975
LONDON BRANCH, EURODOLLAR, DOMESTIC BANKS - 2.5%
BANK OF AMERICA NATIONAL TRUST & SAVINGS ASSOC.
6/20/96 5.05 5,000,000 5,000,000
CHEMICAL BANKING CORP.
3/4/96 5.81 10,000,000 10,000,000
15,000,000
LONDON BRANCH, EURODOLLAR, FOREIGN BANKS - 6.6%
ABBEY NATIONAL (UK), PLC
3/13/96 5.75 4,000,000 4,000,000
4/23/96 5.75 5,000,000 5,000,000
BANQUE NATIONALE DE PARIS
5/13/96 5.30 10,000,000 10,001,973
BAYERISCHE VEREINSBANK A.G.
5/7/96 5.30 5,000,000 5,000,995
DEUTSCHE BANK, A.G.
4/24/96 5.73 10,000,000 10,000,000
LANDESBANK HESSEN - THURINGEN
3/14/96 5.71 5,000,000 5,000,009
39,002,977
TOTAL CERTIFICATES OF DEPOSIT 130,005,952
COMMERCIAL PAPER - 50.3%
ABN-AMRO BANK
8/26/96 5.10 3,000,000 2,926,278
ABN-AMRO NORTH AMERICA FINANCE, INC.
8/26/96 5.16 6,500,000 6,338,341
AMERICAN HOME FOOD PRODUCTS, INC.
4/19/96 5.24 5,575,000 5,535,541
AMERICAN TELEPHONE & TELEGRAPH CO.
3/13/96 5.75 5,000,000 4,990,617
3/18/96 5.71 5,000,000 4,986,919
ASSET SECURITIZATION COOPERATIVE CORPORATION
3/4/96 5.45 9,000,000 8,995,913
4/4/96 5.43 13,000,000 12,934,068
ASSOCIATES CORP. OF NORTH AMERICA
3/15/96 5.75 3,000,000 2,993,385
3/20/96 5.74 10,000,000 9,970,181
ANNUALIZED YIELD
DUE AT TIME OF PRINCIPAL VALUE
DATE PURCHASE AMOUNT (NOTE 1)
BANK OF SCOTLAND TREASURY SERVICES
4/9/96 5.45% $ 10,400,000 $ 10,339,385
BEAR STEARNS COS., INC.
3/1/96 5.50 10,000,000 10,000,000
CHEMICAL BANKING CORP.
4/15/96 5.45 8,000,000 7,946,300
CHRYSLER FINANCIAL CORPORATION
3/27/96 5.38 1,000,000 996,143
4/10/96 5.33 4,000,000 3,976,533
CIT GROUP HOLDINGS, INC.
3/1/96 5.40 (a) 10,000,000 9,995,045
CORESTATES CAPITAL CORP.
3/5/96 5.29 (a) 15,000,000 15,000,000
DRESDNER U.S. FINANCE INC.
8/26/96 5.13 4,000,000 3,901,111
DU PONT (E.I.) DE NEMOURS & CO.
3/28/96 5.70 2,000,000 1,991,630
EIGER CAPITAL CORP.
3/18/96 5.28 10,000,000 9,975,208
FORD MOTOR CREDIT CORP.
3/27/96 5.76 20,000,000 19,918,678
4/4/96 5.77 5,000,000 4,973,414
GENERALE BANK
6/7/96 5.13 8,000,000 7,890,022
GENERAL ELECTRIC CAPITAL CORP.
3/28/96 5.80 7,000,000 6,970,390
3/29/96 5.80 5,000,000 4,978,067
4/24/96 5.76 10,000,000 9,916,000
4/29/96 5.73 5,000,000 4,954,357
GENERAL MOTORS ACCEPTANCE CORP.
5/20/96 5.24 3,000,000 2,965,533
5/22/96 5.24 2,000,000 1,976,448
6/12/96 5.15 3,000,000 2,956,568
GOLDMAN SACHS GROUP, L.P. (THE)
3/13/96 5.75 5,000,000 4,990,583
3/14/96 5.75 7,000,000 6,985,718
HOUSEHOLD FINANCE CORP.
5/29/96 5.22 4,000,000 3,949,072
MERRILL LYNCH & CO., INC.
3/8/96 5.75 15,000,000 14,983,696
MORGAN (J.P.) & CO.
9/5/96 5.11 5,000,000 4,869,967
MORGAN STANLEY GROUP, INC.
3/28/96 5.58 10,000,000 9,958,750
NATIONAL AUSTRALIA FUNDING, INC.
4/8/96 5.45 4,300,000 4,275,581
SEARS ROEBUCK ACCEPTANCE CORP.
4/25/96 5.25 15,000,000 14,880,833
SOCIETE GENERALE NORTH AMERICA, INC.
3/4/96 5.75 10,000,000 9,995,300
SOUTHERN COMPANY GROUP
5/13/96 5.16 20,000,000 19,793,167
WCP FUNDING, INC.
3/1/96 5.65 2,800,000 2,800,000
TOTAL COMMERCIAL PAPER 298,774,742
FEDERAL AGENCIES (A) - 6.6%
ANNUALIZED YIELD
DUE AT TIME OF PRINCIPAL VALUE
DATE PURCHASE AMOUNT (NOTE 1)
FEDERAL HOME LOAN BANK - AGENCY COUPONS - 2.2%
3/13/96 5.69% $ 4,000,000 $ 3,998,026
3/20/96 5.69 4,000,000 3,997,978
4/2/96 5.51 5,000,000 4,997,392
12,993,396
FEDERAL NATIONAL MORTGAGE ASSOC. - AGENCY COUPONS - 2.7%
3/20/96 5.69 11,000,000 10,993,157
4/17/96 5.45 5,000,000 4,996,590
15,989,747
STUDENT LOAN MARKETING ASSOC. - AGENCY COUPONS - 1.7%
4/16/96 5.60 10,000,000 10,000,000
TOTAL FEDERAL AGENCIES 38,983,143
U.S. TREASURY OBLIGATIONS - 2.5%
U.S. TREASURY NOTES
9/30/96 4.92 15,000,000 15,115,474
BANK NOTES (A) - 5.0%
BANK OF AMERICA NATIONAL TRUST & SAVINGS ASSOC.
3/1/96 5.44 3,000,000 2,999,115
BANK OF NEW YORK - DELAWARE
4/30/96 5.65 4,000,000 4,000,000
BAYERISCHE LANDESBANK GIROZENTALE
4/30/96 5.61 5,000,000 5,000,000
BOATMEN'S NATIONAL BANK OF ST. LOUIS
3/12/96 5.34 4,000,000 3,999,775
COMERICA BANK-DETROIT
3/1/96 5.83 5,000,000 4,998,130
4/27/96 5.55 5,000,000 4,998,340
PNC BANK, N.A.
3/20/96 5.31 4,000,000 3,998,442
TOTAL BANK NOTES 29,993,802
MASTER NOTES (A) - 1.4%
J.P. MORGAN SECURITIES
3/18/96 5.31 3,000,000 3,000,000
3/20/96 5.31 5,000,000 5,000,000
TOTAL MASTER NOTES 8,000,000
MEDIUM-TERM NOTES (A) - 5.9%
ABBEY NATIONAL TREASURY SERVICES (B)
3/9/96 5.69 8,000,000 8,000,000
BENEFICIAL CORP.
5/3/96 5.85 3,000,000 2,998,607
GENERAL ELECTRIC CAPITAL CORP.
3/1/96 5.53 5,000,000 4,999,897
GENERAL MOTORS ACCEPTANCE CORP.
4/28/96 5.55 2,000,000 2,006,301
5/1/96 5.43 5,000,000 5,000,000
GOLDMAN SACHS GROUP, L.P. (THE) (B)
3/1/96 5.91 4,000,000 4,000,000
NORWEST CORP.
3/10/96 5.83 8,000,000 8,000,000
TOTAL MEDIUM-TERM NOTES 35,004,805
SHORT-TERM NOTES (A) (B) - 4.0%
ANNUALIZED YIELD
DUE AT TIME OF PRINCIPAL VALUE
DATE PURCHASE AMOUNT (NOTE 1)
SMM TRUST COMPANY (1995-D)
4/27/96 5.55% $ 1,000,000 $ 1,000,000
SMM TRUST COMPANY (1995-I)
3/29/96 5.36 6,000,000 5,999,575
SMM TRUST COMPANY (1995-J)
3/15/96 5.33 14,000,000 14,000,000
SMM TRUST COMPANY (1995-N)
5/8/96 5.30 3,000,000 3,000,000
TOTAL SHORT-TERM NOTES 23,999,575
REPURCHASE AGREEMENTS - 2.4%
MATURITY
AMOUNT
In a joint trading account
(U.S. Treasury Obligations)
dated 2/29/96 due 3/1/96:
At 5.43% $ 14,059,120 14,057,000
TOTAL INVESTMENTS - 100% $ 593,934,493
TOTAL COST FOR INCOME TAX PURPOSES - $593,934,493
LEGEND
1. The coupon rate shown on floating or adjustable rate securities
represents the rate at period end. The due date on these types of
securities reflects the next interest rate reset date or, when applicable,
the final maturity date.
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 $35,999,575 or 5.9% of net
assets.
INCOME TAX INFORMATION
A total of 1.71% of the dividends distributed during the fiscal year was
derived from interest on U.S. Government securities which is generally
exempt from state income tax.
The fund will notify shareholders in January 1997 of the applicable
percentage for use in preparing 1996 income tax returns.
MONEY MARKET PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 29, 1996
ASSETS
Investment in $ 593,934,493
securities,
at
value
(including
repurchase
agreements
of
$14,057,000)
- - See
accompanyin
g schedule
Cash 492
Receivable for 54,221,208
fund shares
sold
Interest 3,238,639
receivable
TOTAL ASSETS 651,394,832
LIABILITIES
Payable for $ 13,869,967
investments
purchased
Payable for 26,439,364
fund shares
redeemed
Accrued 93,298
management
fee
Other payables 170,769
and
accrued
expenses
TOTAL 40,573,398
LIABILITIES
NET ASSETS $ 610,821,434
Net Assets
consist of:
Paid in capital $ 610,818,316
Accumulated 3,118
net realized
gain (loss) on
investments
NET ASSETS, for $ 610,821,434
610,813,058
shares
outstanding
NET ASSET $1.00
VALUE,
offering price
and
redemption
price per
share
($610,821,43
4 (divided by)
610,813,058
shares)
Maximum $1.03
offering price
per share
(100/97 of
$1.00)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 29, 1996
INTEREST $ 39,079,007
INCOME
EXPENSES
Management $ 1,558,005
fee
Transfer agent 1,661,958
fees
Accounting 99,064
fees and
expenses
Non-interested 3,565
trustees'
compensatio
n
Custodian fees 39,047
and
expenses
Registration 387,350
fees
Audit 62,494
Legal 4,048
Reports to 8,943
shareholders
Miscellaneous 1,309
TOTAL 3,825,783
EXPENSES
NET INTEREST 35,253,224
INCOME
NET REALIZED 33,656
GAIN (LOSS)
ON
INVESTMENTS
NET INCREASE $ 35,286,880
IN NET ASSETS
RESULTING
FROM
OPERATIONS
OTHER
INFORMATION
Sales charges $ 4,472,949
paid to FDC
Deferred sales $ 76,760
charges
withheld
by FDC
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
FEBRUARY 29, FEBRUARY 28,
1996 1995
Operations $ 35,253,224 $ 28,489,953
Net interest
income
Net realized 33,656 34,131
gain (loss)
NET INCREASE 35,286,880 28,524,084
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
Distributions to (35,253,224) (28,489,953)
shareholders
from net
interest
income
Share 6,107,173,652 4,782,122,991
transactions
at net asset
value of
$1.00 per
share
Proceeds
from sales of
shares
Reinvestmen 32,687,547 26,192,515
t of
distributions
from net
interest
income
Cost of (6,102,217,401) (4,753,862,525)
shares
redeemed
NET INCREASE 37,643,798 54,452,981
(DECREASE)
IN NET
ASSETS AND
SHARES
RESULTING
FROM SHARE
TRANSACTIO
NS
TOTAL 37,677,454 54,487,112
INCREASE
(DECREASE)
IN NET ASSETS
NET ASSETS
Beginning of 573,143,980 518,656,868
period
End of period $ 610,821,434 $ 573,143,980
SEE
ACCOMPANYING
NOTES WHICH ARE
AN INTEGRAL PART
OF THE FINANCIAL
STATEMENTS.
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
YEAR ENDED YEARS ENDED FEBRUARY 28, TEN MONTHS YEAR ENDED
FEBRUARY 29, ENDED APRIL 30,
FEBRUARY 28,
SELECTED PER-SHARE DATA 1996 1995 1994 1993 1992
</TABLE>
Net asset $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
value,
beginning of
period
Income from .054 .042 .026 .026 .048
Investment
Operations
Net interest
income
Less (.054) (.042) (.026) (.026) (.048)
Distributions
From net
interest
income
Net asset $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
value, end of
period
TOTAL RETURN B 5.56% 4.28 2.62 2.63% 4.93%
% %
RATIOS AND
SUPPLEMENT
AL DATA
Net assets, $ 610,821 $ 573,144 $ 518,657 $ 431,133 $ 542,620
end of period
(000 omitted)
Ratio of .59% .65 .72 .56%A .64%
expenses to % %
average net
assets
Ratio of net 5.39% 4.19 2.59 3.09%A 4.84%
interest % %
income to
average net
assets
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
A ANNUALIZED
B 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 29, 1996
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 (collectively, with the money market fund,
referred to as 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 financial statements have been
prepared in conformity with generally accepted accounting principles which
permit management to make certain estimates and assumptions at the date of
the financial statements. 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 of their purchase date are valued at amortized cost or original
cost plus accrued interest, both of which approximate current value. Direct
investments in precious metals in the form of bullion are valued at the
most recent bid price quoted by a major bank on the New York Commodities
Exchange.
MONEY MARKET FUND. As permitted under Rule 2a-7 of the 1940 Act, and
certain conditions therein, securities are valued initially at cost and
thereafter assume a constant amortization to maturity of any discount or
premium.
FOREIGN CURRENCY TRANSLATION. The accounting records of each fund are
maintained in U.S. dollars. Investment securities and other assets and
liabilities denominated in a foreign currency are translated into U.S.
dollars at the prevailing rates of exchange at period end. Purchases and
sales of securities, income receipts, and expense payments are translated
into U.S. dollars at the prevailing exchange rate on the respective dates
of the transactions.
Net realized gains and losses on foreign currency transactions represent
net gains and losses from sales and maturities of forward currency
contracts, disposition of foreign currencies, currency gains and losses
realized between the trade and settlement dates on securities transactions,
and the difference between the amount of net investment income accrued and
the U.S. dollar amount actually received. The effects of changes in foreign
currency exchange rates on investments in securities are included with the
net realized and unrealized gain or loss on investment securities.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, each fund is not subject to income taxes to
the extent that it distributes substantially 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. Investment income is recorded net of
foreign taxes withheld where recovery of such taxes is uncertain.
MONEY MARKET FUND. Interest income, which includes amortization of premium
and accretion of discount, is accrued as earned.
EXPENSES. Most expenses of the trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned between the
funds in the trust.
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, which may result in distribution
reclassifications, are primarily due to differing treatments for litigation
proceeds, foreign currency transactions, passive foreign investment
companies (PFIC), partnerships, non-taxable dividends, net operating
losses, capital loss carryforwards, expiring capital loss carryforwards and
losses deferred due to wash sales and excise tax regulations. Some of 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.
Undistributed net investment income and accumulated undistributed net
realized gain (loss) on investments and foreign currency transactions may
include temporary book and tax basis differences which will reverse in a
subsequent period. Any taxable income or gain remaining at fiscal year end
is distributed in the following year.
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
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. During the period, the long-term redemption fee and the
first $7.50 of the short-term redemption fee were accounted for as a
reduction of transfer agent expenses. This portion of the redemption fee
was 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 was accounted for as an addition to paid in
capital. Effective March 1, 1996, the entire long- and short-term
redemption fees are accounted for as a direct addition to paid in capital.
There is a $7.50 fee for shares exchanged into another Fidelity fund (see
Note 4). This is in addition to the applicable redemption fees.
SECURITY TRANSACTIONS. Security transactions are accounted for as of trade
date. Gains and losses on securities sold are determined on the basis of
identified cost.
2. OPERATING POLICIES.
FORWARD FOREIGN CURRENCY CONTRACTS. The equity funds may use forward
foreign currency contracts to facilitate transactions in foreign securities
and to manage each fund's currency exposure. Contracts to buy generally are
used to acquire exposure to foreign currencies, while contracts to sell are
used to hedge a fund's investments against currency fluctuations. Also, a
contract to buy or sell can offset a previous contract. Losses may arise
from changes in the value of the foreign currency or if the counterparties
do not perform under the contracts' terms.
The U.S. dollar value of forward foreign currency contracts is determined
using forward currency exchange rates supplied by a quotation service.
Purchases and sales of forward foreign currency contracts having the same
settlement date and broker are offset and any realized gain (loss) is
recognized on the date of offset; otherwise, gain (loss) is recognized on
settlement date.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, the funds, along with other affiliated
entities of Fidelity Management & Research Company (FMR), may transfer
uninvested cash balances into one or more joint trading accounts. These
balances are invested in one or more repurchase agreements that mature in
60 days or less from the date of purchase, and are collateralized by U.S.
Treasury or Federal Agency obligations.
REPURCHASE AGREEMENTS. The funds, through their custodian, receive delivery
of the underlying U.S. Treasury or Federal Agency Securities, the market
value of which is required to be at least equal to the repurchase price.
For term repurchase agreement transactions, the underlying securities are
marked-to-market daily and maintained at a value at least equal to the
repurchase price. FMR, the funds' investment adviser, is responsible for
determining that the value of the underlying securities remains in
accordance with the market value requirements stated above.
3. PURCHASES AND SALES OF INVESTMENTS.
Information regarding purchases and sales of securities (other than
short-term securities) is included under the caption "Other Information" at
the end of each equity fund's schedule of investments.
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 and is based on the monthly average net assets of all the mutual
funds advised by FMR. The rates ranged from .2500% to .5200% for the
period. In the event that these rates were lower than the contractual rates
in effect during the period, FMR voluntarily implemented the above rates,
as they resulted in the same or a lower management fee. The annual
individual fund fee rate is .30%. For the period, the management fee was
equivalent to an annual rate of .61% of average net assets for each equity
fund.
For the money market fund, FMR receives a monthly fee that is calculated on
the basis of a group fee rate plus a fixed individual fund fee rate applied
to the average net assets of the fund and an income-based fee. The group
fee rate is the weighted average of a series of rates and is based on the
monthly average net assets of all the mutual funds advised by FMR. The
rates ranged from .1100% to .3700% for the period. In the event that these
rates were lower than the contractual rates in effect during the period,
FMR voluntarily implemented the above rates, as they resulted in the same
or a lower management fee. The annual individual fund fee rate is .03%. The
income-based fee is added only when the fund's gross 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 .24% of average net assets. For the period, the
management fee was equivalent to an annual rate of .24% of the fund's
average net assets.
SUB-ADVISER FEE. 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.
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
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
SALES LOAD - CONTINUED
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 FEES. Fidelity Service Co. (FSC), an affiliate of FMR, is
the funds' transfer, dividend disbursing and shareholder servicing agent.
FSC receives account fees and asset-based fees that vary according to
account size and type of account. 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" at the end of each fund's schedule of investments.
5. BANK BORROWINGS.
Each fund is permitted to have bank borrowings for temporary or emergency
purposes to fund shareholder redemptions. The funds have 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.
6. SECURITY LENDING.
Certain equity funds loaned securities to certain brokers who paid the fund
negotiated lenders' fees during the period. These fees are included in
interest income. Each fund receives U.S. Treasury obligations and/or cash
as collateral against the loaned securities, in an amount at least equal to
102% of the market value of the loaned securities at the inception of each
loan. This collateral must be maintained at not less than 100% of the
market value of the loaned securities during the period of the loan. For
funds with loans outstanding at the period end, the value of the securities
loaned and the value of collateral held are shown under the caption "Other
Information" on each fund's schedule of investments.
7. EXPENSE REDUCTIONS.
FMR voluntarily agreed to reimburse the funds' operating expenses
(excluding interest, taxes, brokerage commissions and extraordinary
expenses) above an annual rate of 2.50% of average net assets. In addition,
FMR agreed to reimburse each fund's expenses 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. The lowest limitation
applicable to the fund is 2.50% of the first $30 million of average net
assets, 2% of the next $70 million and 1.50% of the excess. FMR retains the
ability to be repaid by the fund for these expense reductions in the amount
that expenses fall below the limit prior to the end of the fiscal year. In
addition, FMR agreed to reimburse an additional portion of some of the
funds' operating expenses.
FMR has directed certain portfolio trades to brokers who paid a portion of
the funds' expenses. In addition, each fund has entered into certain
arrangements with its custodian and transfer agent whereby interest earned
on uninvested cash balances was used to offset a portion of each fund's
expenses.
For the period, the aggregate reductions under these arrangements are shown
under the caption "Other Information" on each fund's Statement of
Operations.
8. BENEFICIAL INTEREST.
At the end of the period, certain shareholders were record owners of more
than 25% of the total outstanding shares of the following funds:
BENEFICIAL INTEREST
NUMBER OF %
FUND SHAREHOLDERS OWNERSHIP
Automotive 1 38.3
Construction and Housing 1 61.9
Industrial Materials 1 41.3
9. LITIGATION.
In December 1995, several individuals who purchased shares of Apple
Computer, Inc. ("Apple") in September 1995 filed purported class action
complaints against Select Technology Portfolio, Select Computers Portfolio,
FMR, FMR Corp. and Harry Lange, the funds' portfolio manager at that time.
The complaints allege that, in violation of a federal securities law, the
funds' portfolio manager made misleading statements regarding Apple and the
funds' holdings of Apple. The defendants deny the allegations in the
complaints and intend to defend the lawsuits vigorously.
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, 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
29, 1996, the results of each of their operations for the year then ended,
the changes in each of 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 the
Fidelity Select Portfolios' management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with 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 at February 29, 1996 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 LLP
Boston, Massachusetts
April 19, 1996
DISTRIBUTIONS
The Board of Trustees of Fidelity Select Portfolios voted to pay to
shareholders of record at the opening of business on record date, the
following distributions derived from capital gains realized from sales of
portfolio securities, and dividends derived from net investment income for
each of the following funds:
AMOUNTS PER SHARE
REINVESTMENT
FUND RECORD & EX-DATE PAY DATE DIVIDENDS CAPITAL GAINS TOTAL PRICE
Air Transportation 4/4/96 4/8/96 $ - $.27 $.27 $22.63
Automotive 4/4/96 4/8/96 .03 - .03 23.44
Biotechnology 4/12/96 4/15/96 .03 .74 .77 34.31
Brokerage and Investment Management 4/4/96 4/8/96 .02 .40 .42 19.13
Chemicals 4/4/96 4/8/96 - .26 .26 41.32
Computers 4/12/96 4/15/96 - .55 .55 37.76
Construction and Housing 4/12/96 4/15/96 - .78 .78 18.83
Defense and Aerospace 4/4/96 4/8/96 - .81 .81 27.10
Energy 4/4/96 4/8/96 .05 .82 .87 19.64
Energy Service 4/4/96 4/8/96 - .10 .10 17.59
Environmental Services 4/12/96 4/15/96 - .02 .02 12.97
Financial Services 4/4/96 4/8/96 .26 1.41 1.67 66.01
Food and Agriculture 4/4/96 4/8/96 .06 1.07 1.13 40.49
Health Care 4/4/96 4/8/96 .23 3.22 3.45 99.09
Home Finance 4/4/96 4/8/96 .11 .79 .90 33.68
Industrial Equipment 4/12/96 4/15/96 .01 .95 .96 24.15
Industrial Materials 4/12/96 4/15/96 .01 .41 .42 27.49
Insurance 4/12/96 4/15/96 .02 .38 .40 25.00
Leisure 4/4/96 4/8/96 - .99 .99 45.66
Medical Delivery 4/4/96 4/8/96 - 1.20 1.20 28.33
Multimedia 4/4/96 4/8/96 - .64 .64 26.23
Natural Gas 4/12/96 4/15/96 .01 .09 .10 12.17
Paper and Forest Products 4/12/96 4/15/96 .01 .92 .93 21.04
Precious Metals and Minerals 4/4/96 4/8/96 .05 - .05 20.51
Regional Banks 4/12/96 4/15/96 .09 .52 .61 23.64
Software and Computer Services 4/4/96 4/8/96 - 1.16 1.16 34.54
Technology 4/12/96 4/15/96 - .53 .53 49.21
Telecommunications 4/12/96 4/15/96 .10 3.17 3.27 40.59
Transportation 4/12/96 4/15/96 - .12 .12 22.06
Utilities Growth 4/4/96 4/8/96 .24 2.62 2.86 40.57
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. If you receive additional shares, the amount received should be
treated as an additional purchase and added to your cost basis.
The reinvestment price is the 10:00 A.M. price on each fund's ex-date.
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 1996.
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
INVESTMENT SUB-ADVISERS
FMR Texas Inc., Irving, TX
Fidelity Management & Research
(U.K.) Inc., London, England
Fidelity Management & Research
(Far East) Inc., Tokyo, Japan
OFFICERS
Edward C. Johnson 3d, PRESIDENT
J. Gary Burkhead, SENIOR VICE PRESIDENT
William J. Hayes, VICE PRESIDENT
Fred L. Henning, Jr., VICE PRESIDENT, MONEY MARKET FUND
Arthur S. Loring, SECRETARY
Kenneth A. Rathgeber, TREASURER
Robert H. Morrison, MANAGER, SECURITY TRANSACTIONS
Thomas D. Maher, ASSISTANT VICE PRESIDENT, MONEY MARKET FUND
John H. Costello, ASSISTANT TREASURER
Leonard M. Rush, ASSISTANT TREASURER
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox *
Phyllis Burke Davis *
Richard J. Flynn *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Edward H. Malone *
Marvin L. Mann *
Gerald C. McDonough *
Thomas R. Williams *
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Co.
Boston, MA
CUSTODIANS
Brown Brothers Harriman & Co.
Boston, MA
and
The Bank of New York
New York, NY
CORPORATE HEADQUARTERS
82 Devonshire Street
Boston, MA 02109
1-800-544-8888
* INDEPENDENT TRUSTEES
FIDELITY SELECT PORTFOLIOS
CONSUMER SECTOR
Consumer Products
Food and Agriculture
Leisure
Multimedia
Retailing
CYCLICALS SECTOR
Air Transportation
Automotive
Chemicals
Construction and Housing
Environmental Services
Industrial Equipment
Industrial Materials
Paper and Forest Products
Transportation
ENERGY, UTILITIES & NATURAL RESOURCES SECTOR
American Gold
Energy
Energy Service
Natural Gas
Precious Metals and Minerals
Utilities Growth
FINANCIAL SERVICES SECTOR
Brokerage and Investment Management
Financial Services
Home Finance
Insurance
Regional Banks
HEALTH CARE SECTOR
Biotechnology
Health Care
Medical Delivery
TECHNOLOGY SECTOR
Computers
Defense and Aerospace
Developing Communications
Electronics
Software and Computer Services
Technology
Telecommunications
Money Market
THE FIDELITY TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Account Balances 1-800-544-7544
Exchanges/Redemptions 1-800-544-7777
Mutual Fund Quotes 1-800-544-8544
Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774
(8 a.m. - 9 p.m.)
TDD Service 1-800-544-0111
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
AUTOMATED LINES FOR QUICKEST SERVICE
BULK RATE
U.S. Postage
PAID
Fidelity
Investments
(registered trademark)
P.O. Box 193
Boston, MA 02101
