(2_FIDELITY_LOGOS)FIDELITY
SELECT
PORTFOLIOS(REGISTERED TRADEMARK)
AIR TRANSPORTATION
AMERICAN GOLD
AUTOMOTIVE
BIOTECHNOLOGY
BROKERAGE AND INVESTMENT MANAGEMENT
CHEMICALS
COMPUTERS
CONSTRUCTION AND HOUSING
CONSUMER INDUSTRIES
DEFENSE AND AEROSPACE
DEVELOPING COMMUNICATIONS
ELECTRONICS
ENERGY
ENERGY SERVICE
ENVIRONMENTAL SERVICES
FINANCIAL SERVICES
FOOD AND AGRICULTURE
HEALTH CARE
HOME FINANCE
INDUSTRIAL EQUIPMENT
INDUSTRIAL MATERIALS
INSURANCE
LEISURE
MEDICAL DELIVERY
MONEY MARKET
MULTIMEDIA
NATURAL GAS
PAPER AND FOREST PRODUCTS
PRECIOUS METALS AND MINERALS
REGIONAL BANKS
RETAILING
SOFTWARE AND COMPUTER SERVICES
TECHNOLOGY
TELECOMMUNICATIONS
TRANSPORTATION
UTILITIES GROWTH
SEMIANNUAL REPORT
AUGUST 31, 1996
CONTENTS
PERFORMANCE OVERVIEW AND 2
MARKET RECAP
FUND UPDATES*
CONSUMER SECTOR 4 CONSUMER INDUSTRIES (FORMERLY CONSUMER
10 PRODUCTS)
16 FOOD AND AGRICULTURE
22 LEISURE
28 MULTIMEDIA
RETAILING
CYCLICALS SECTOR 34 AIR TRANSPORTATION
39 AUTOMOTIVE
45 CHEMICALS
51 CONSTRUCTION AND HOUSING
57 ENVIRONMENTAL SERVICES
63 INDUSTRIAL EQUIPMENT
69 INDUSTRIAL MATERIALS
75 PAPER AND FOREST PRODUCTS
81 TRANSPORTATION
ENERGY, UTILITIES AND 87 AMERICAN GOLD
NATURAL RESOURCES SECTOR 94 ENERGY
100 ENERGY SERVICE
106 NATURAL GAS
112 PRECIOUS METALS AND MINERALS
118 UTILITIES GROWTH
FINANCIAL SERVICES SECTOR 124 BROKERAGE AND INVESTMENT MANAGEMENT
129 FINANCIAL SERVICES
134 HOME FINANCE
140 INSURANCE
146 REGIONAL BANKS
HEALTH CARE SECTOR 152 BIOTECHNOLOGY
158 HEALTH CARE
164 MEDICAL DELIVERY
* FUND UPDATES FOR EACH SELECT PORTFOLIO INCLUDE: PERFORMANCE AND
INVESTMENT SUMMARY, MANAGER'S OVERVIEW, INVESTMENTS, AND FINANCIAL
STATEMENTS.
TECHNOLOGY SECTOR 170 COMPUTERS
176 DEFENSE AND AEROSPACE
182 DEVELOPING COMMUNICATIONS
188 ELECTRONICS
194 SOFTWARE AND COMPUTER SERVICES
200 TECHNOLOGY
207 TELECOMMUNICATIONS
213 MONEY MARKET
NOTES TO FINANCIAL STATEMENTS 220 FOOTNOTES TO THE FINANCIAL STATEMENTS
To reduce expenses and demonstrate respect for our environment, we have
initiated a project through which we will begin eliminating duplicate
copies of most financial reports and prospectuses to most households, even
if they have more than one account in the fund. If additional copies of
financial reports, prospectuses or historical account information are
needed, please call 1-800-544-6666.
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 six-month period ended August 31, 1996, provided varied returns from
different sectors for equity investors. The Standard & Poor's 500 Index
returned 2.96% during the period, including reinvested dividends. During
the six months, 18 of our 35 Select equity portfolios outperformed the S&P
500. Of the remaining 17, 11 produced negative returns. The best of the
Select portfolios was RETAILING, which generated a return of 15.86%, while
AIR TRANSPORTATION performed worst, losing 16.93%.
Confusion over the direction of interest rates made for a volatile market
in the summer months. Investors became concerned that emerging data
indicating a strengthening economy might lead the Federal Reserve Board to
increase short-term interest rates to head off inflation. Interest rate
increases tend to slow economic growth and add to corporate borrowing
costs, decreasing company earnings. Not all the news was negative, though,
as continued strong corporate earnings reports, large cash inflows into
mutual funds, wide-spread optimism and high-profile merger announcements
provided a generally favorable environment for stocks on either side of a
mid-summer stock market correction. Overall, large-capitalization stocks
tended to perform better than the smaller company stocks that make up a
preponderance of our Select portfolios.
Despite the unusual length of the current economic expansion, signs of
strength in the economy over the past six months helped many CYCLICALS -
those companies whose profitability levels tend to rise and fall with the
economy. Consumer cyclicals - dependent on upticks in people's spending
habits that result from a strong economy - had fairly solid returns, as
evidenced by the 8.83% return of AUTOMOTIVE. One notable exception in the
cyclical area was AIR TRANSPORTATION, which suffered from the fallout from
several highly publicized air disasters. Early cyclicals - those that tend
to do well at the beginning of an economic upturn - and basic industries
had mixed returns as CONSTRUCTION AND HOUSING, CHEMICALS, INDUSTRIAL
EQUIPMENT, INDUSTRIAL MATERIALS and PAPER AND FOREST PRODUCTS had returns
in a range of 1.95% to 7.92%.
The public's greater propensity to spend money during the period was one
factor that helped the CONSUMER sector. In fact, RETAILING rocketed to the
forefront and returned 15.86% as retailers' earnings jumped due to
increased consumer spending. Confusion over the direction of the economy
aided consumer nondurables, which historically grow no matter what the
economic climate. However, FOOD AND AGRICULTURE fell 4.33% during the
period, largely as a result of an unfavorable court ruling that battered
the prices of tobacco stocks.
Stocks in the HEALTH CARE sector endured a somewhat bumpy ride.
BIOTECHNOLOGY'S negative return reflected a correction of biotech stocks
from overvalued levels, particularly during the past three months.
Disappointing HMO price estimates and earnings reports - coupled with
slowing patient admission growth with respect to hospital stocks - played
key roles in the performance of both HEALTH CARE and MEDICAL DELIVERY.
News concerning semiconductor stocks and small-capitalization stocks
dominated the TECHNOLOGY sector over the past six months. After posting
solid gains through the first part of 1996, many small-company technology
stocks - including those with businesses tied to the Internet - had a
sudden fall from grace in the market's brief July correction.
Semiconductors were lackluster performers for much of the year based on a
worldwide supply glut in computer chips and faltering demand. However,
there was a mixed range of returns among the subsectors that make up the
technology area. DEFENSE AND AEROSPACE, DEVELOPING COMMUNICATIONS and
TELECOMMUNICATIONS had returns ranging from 1.51% to 6.62% versus the
- -11.29% to -1.60% range posted by TECHNOLOGY, COMPUTERS and ELECTRONICS.
The strong relative performance of software and networking companies helped
SOFTWARE AND COMPUTER SERVICES to record only a slight downturn during the
period.
While there was confusion over the direction of interest rates in the
summer, the overall interest rate environment remained generally positive
for stocks in the FINANCIAL SERVICES sector. This and other factors helped
produce positive results. The period was marked by sound fundamentals - or
business prospects - as earnings estimates came through as expected and
overall credit quality didn't deteriorate as some had feared. Banks
improved their earnings growth by implementing balance sheet restructuring,
cost-cutting and capital management measures. On the brokerage front, the
speculative nature of the market translated into dramatically high trading
volumes, generally a positive indicator. As a result of these trends, HOME
FINANCE, REGIONAL BANKS, BROKERAGE AND INVESTMENT MANAGEMENT, FINANCIAL
SERVICES and INSURANCE all outpaced the S&P 500.
The ENERGY sector received high marks, as the period was characterized by
robust demand and production, strengthening oil and gas prices and renewed
confidence in exploration. Customers also sought to utilize new
technologies put forth by oil service companies. ENERGY SERVICE, ENERGY and
NATURAL GAS benefited from these positive developments.
Several circumstances led to a glut of gold on the market. The added supply
led to declines in the price of that metal, affecting the performance of
PRECIOUS METALS AND MINERALS. At the same time, other companies in the
NATURAL RESOURCES sector that showed strong growth of production and
reserves - including many holdings in AMERICAN GOLD - fared better than
counterparts more sensitive to changes in the price of gold.
As is typical, stock performance in the UTILITIES sector closely tracked
the bond market, which struggled due to fears that the Fed would raise
interest rates. On the positive side, cool weather and tight supply helped
gas utility stocks. Uncertainty over deregulation and resulting competitive
pressures continued to affect stocks in the industry.
Domestic equities remain at excessive valuation levels, although the
market's rebound from the brief correction in July has encompassed a
greater breadth of stocks than before. The most important issue remains
whether or not corporate earnings growth will continue to support the
market at these levels. Certainly, this country's tight labor market will
eventually put pressure on profit margins if businesses are not able to
pass on higher prices to the consumer.
What follows are detailed summaries of all the portfolio. We hope you find
them useful in evaluating your investments. As always, we thank you for
your continued interest in Fidelity Select Portfolios.
Sincerely,
Robert J. Haber
Director, U.S. Equity Research
Select Group Leader
CUMULATIVE TOTAL RETURNS
FOR THE SIX MONTHS ENDED AUGUST 31, 1996
Row: 1, Col: 1, Value: 15.86
Row: 2, Col: 1, Value: 15.13
Row: 3, Col: 1, Value: 14.31
Row: 4, Col: 1, Value: 14.23
Row: 5, Col: 1, Value: 9.890000000000001
Row: 6, Col: 1, Value: 8.83
Row: 7, Col: 1, Value: 8.390000000000001
Row: 8, Col: 1, Value: 8.0
Row: 9, Col: 1, Value: 7.92
Row: 10, Col: 1, Value: 7.33
Row: 11, Col: 1, Value: 6.619999999999999
Row: 12, Col: 1, Value: 5.51
Row: 13, Col: 1, Value: 4.649999999999999
Row: 14, Col: 1, Value: 4.55
Row: 15, Col: 1, Value: 4.41
Row: 16, Col: 1, Value: 4.319999999999999
Row: 17, Col: 1, Value: 3.35
Row: 18, Col: 1, Value: 3.21
Row: 19, Col: 1, Value: 2.96
Row: 20, Col: 1, Value: 2.27
Row: 21, Col: 1, Value: 1.95
Row: 22, Col: 1, Value: 1.51
Row: 23, Col: 1, Value: 1.35
Row: 24, Col: 1, Value: 1.15
Row: 25, Col: 1, Value: 0.23
Row: 26, Col: 1, Value: -0.6100000000000001
Row: 27, Col: 1, Value: -1.2
Row: 28, Col: 1, Value: -1.6
Row: 29, Col: 1, Value: -3.1
Row: 30, Col: 1, Value: -3.58
Row: 31, Col: 1, Value: -4.33
Row: 32, Col: 1, Value: -4.49
Row: 33, Col: 1, Value: -5.119999999999999
Row: 34, Col: 1, Value: -7.37
Row: 35, Col: 1, Value: -11.29
Row: 36, Col: 1, Value: -16.93
Retailing 15.86%Energy Service 15.13%Natural Gas 14.31%Energy
14.23%Home Finance 9.89%Automotive 8.83%Regional Banks 8.39%American
Gold 8.00%Construction & Housing 7.92%Environmental Services
7.33%Defense and Aerospace 6.62%Brokerage and Investment Management
5.51%Financial Services 4.65%Chemicals 4.55%Industrial Materials
4.41%Paper and Forest Products 4.32%Insurance 3.35%Leisure 3.21%S&P 500
2.96%Developing Communications 2.27%Industrial Equipment
1.95%Telecommunications 1.51%Consumer Industries 1.35%Health Care
1.15%Utilities Growth 0.23%Software and Computer Services
- -0.61%Transportation -1.20%Electronics -1.60%Medical Delivery
- -3.10%Precious Metals and Minerals -3.58%Food and Agriculture
- -4.33%Multimedia -4.49%Computers -5.12%Biotechnology -7.37%Technology
- -11.29%Air Transportation -16.93%
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 500 INDEX
(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 INDUSTRIES PORTFOLIO (FORMERLY 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. A fund's total return includes
changes in 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 6 PAST 1 PAST 5 LIFE OF
FEBRUARY 29, 1996 MONTH YEAR YEARS FUND
S
CONSUMER INDUSTRIES 1.35% 18.59% 84.78% 130.54%
CONSUMER INDUSTRIES -1.70% 15.03% 79.24% 123.62%
(INCL. 3% SALES CHARGE)
S&P 500 2.96% 18.73% 89.14% 117.91%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one year, five years, or
since the fund started on June 29, 1990. You can compare these figures to
the performance of the S&P 500 - a widely recognized, unmanaged index of
common stocks. This benchmark reflects reinvestment of dividends and
capital gains, if any, but does not reflect any sales charges, brokerage
commissions, or other costs of investing.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
FEBRUARY 29, 1996 YEAR YEARS FUND
CONSUMER INDUSTRIES 18.59% 13.07% 14.47%
CONSUMER INDUSTRIES 15.03% 12.38% 13.91%
(INCL. 3% SALES CHARGE)
S&P 500 18.73% 13.59% 13.43%
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
IMAHDR PRASUN SHR__CHT 19960831 19960909 152106 S00000000000001
Consumer Industries SP Standard & Poor 500
00517 SP001
1990/06/29 9700.00 10000.00
1990/07/31 9670.90 9980.27
1990/08/31 8943.40 9078.05
1990/09/30 8439.00 8635.95
1990/10/31 8749.40 8598.82
1990/11/30 9234.40 9154.30
1990/12/31 9593.72 9409.71
1991/01/31 9808.43 9819.97
1991/02/28 10569.68 10522.10
1991/03/31 11077.18 10776.73
1991/04/30 10950.31 10802.60
1991/05/31 11477.33 11269.27
1991/06/30 10911.27 10753.14
1991/07/31 11623.72 11254.23
1991/08/31 12101.94 11520.96
1991/09/30 11994.59 11328.56
1991/10/31 12375.21 11480.36
1991/11/30 11857.95 11017.70
1991/12/31 13290.07 12278.13
1992/01/31 13379.46 12049.75
1992/02/29 13836.37 12206.40
1992/03/31 13677.45 11968.38
1992/04/30 13717.18 12320.25
1992/05/31 13627.78 12380.62
1992/06/30 13015.69 12196.14
1992/07/31 13388.15 12694.97
1992/08/31 13253.65 12434.72
1992/09/30 13377.81 12581.45
1992/10/31 13595.08 12625.48
1992/11/30 14246.90 13056.01
1992/12/31 14427.78 13216.60
1993/01/31 14331.67 13327.62
1993/02/28 13851.10 13508.88
1993/03/31 14662.73 13793.92
1993/04/30 14566.61 13460.10
1993/05/31 15719.98 13820.83
1993/06/30 15730.66 13860.91
1993/07/31 15880.17 13805.47
1993/08/31 16916.07 14328.70
1993/09/30 17289.85 14218.37
1993/10/31 17823.81 14512.69
1993/11/30 17428.68 14374.82
1993/12/31 17987.73 14548.75
1994/01/31 17835.98 15043.41
1994/02/28 17789.29 14635.73
1994/03/31 16645.36 13997.61
1994/04/30 16823.06 14176.78
1994/05/31 16600.01 14409.28
1994/06/30 15684.31 14056.26
1994/07/31 16106.94 14517.30
1994/08/31 17046.12 15112.51
1994/09/30 16729.15 14742.25
1994/10/31 17057.86 15073.95
1994/11/30 16224.34 14524.96
1994/12/31 16716.09 14740.37
1995/01/31 16569.67 15122.58
1995/02/28 16972.32 15711.91
1995/03/31 17435.98 16175.57
1995/04/30 17815.10 16651.94
1995/05/31 18145.91 17317.52
1995/06/30 18133.66 17719.80
1995/07/31 18893.31 18307.39
1995/08/31 18856.56 18353.34
1995/09/30 19861.26 19127.86
1995/10/31 20755.69 19059.57
1995/11/30 21980.94 19896.28
1995/12/31 21446.67 20279.49
1996/01/31 21446.67 20969.80
1996/02/29 22065.08 21164.19
1996/03/31 22844.29 21368.00
1996/04/30 23611.12 21682.97
1996/05/31 24835.58 22242.17
1996/06/30 24711.90 22326.91
1996/07/31 22015.61 21340.51
1996/08/30 22361.92 21790.58
IMATRL PRASUN SHR__CHT 19960831 19960909 152110 R00000000000077
Let's say hypothetically that $10,000 was invested in Fidelity Select
Consumer Industries Portfolio on June 29, 1990, when the fund started, and
a 3% sales charge was paid. By August 31, 1996, the investment would have
grown to $22,362 - a 123.62% increase. That compares to $10,000 invested in
the S&P 500, which would have grown to $21,791 over the same period - a
117.91% increase.
TOP TEN STOCKS AS OF AUGUST 31, 1996
% OF FUND'S
INVESTMENTS
HFS, Inc. 6.2
Lowe's Companies, Inc. 4.7
Estee Lauder Companies, Inc. 4.5
NIKE, Inc. Class B 4.4
Avon Products, Inc. 4.4
Gillette Co. 4.3
Nine West Group, Inc. 4.2
Melville Corp. 3.5
Patriot American Hospitality, Inc. 2.9
Toys "R" Us, Inc. 2.8
TOP INDUSTRIES AS OF AUGUST 31, 1996
Cosmetics 16.4%
Hotels, Motels, &
Tourist Courts 11.1%
Footwear 10.2%
Lumber & Building
Materials - Retail 4.7%
Food 3.7%
All Others 53.9%
Row: 1, Col: 1, Value: 53.9
Row: 1, Col: 2, Value: 3.7
Row: 1, Col: 3, Value: 4.7
Row: 1, Col: 4, Value: 10.2
Row: 1, Col: 5, Value: 11.1
Row: 1, Col: 6, Value: 16.4
CONSUMER INDUSTRIES PORTFOLIO
FUND TALK: THE MANAGERS' OVERVIEW
NOTE TO SHAREHOLDERS: Effective September 3, 1996, after the period ended,
Katherine Collins (right) became Portfolio Manager of Fidelity Select
Consumer Industries Portfolio. The following is an interview with Mary
English, who managed the fund during the period covered by the report, and
Katherine Collins, who discusses her outlook.
Q. HOW DID THE FUND PERFORM, MARY?
A. For the six- and 12-month periods ended August 31, 1996, the fund
returned 1.35% and 18.59%, respectively. By comparison, the Standard &
Poor's 500 Index returned 2.96% for the past six months and 18.73% for the
year.
Q. WHAT WAS THE INVESTING ENVIRONMENT LIKE DURING THE PERIOD?
A. Perceptions surrounding the health of the economy and fears about the
direction of interest rates caused a tumultuous environment. During the
past six months, it seemed like people's fears one day about recession were
confused by concerns about interest rate hikes the next day. When you're
trying to run a consumer fund in this kind of market environment, you have
to be very careful about the stocks the fund owns. For instance, if you own
defensive stocks such as food and beverage companies and the economy
strengthens, defensive stocks go out of favor and the fund can get hurt. It
was this kind of thinking that led me to decrease the fund's holdings in
the more defensive stocks, such as PepsiCo, and buy more of the top names
in traditional consumer products, such as Avon Products and Estee Lauder.
Q. WHY DID YOU LIKE THESE STOCKS?
A. There were a couple of reasons. These companies all have strong global
brand franchises that make them extremely attractive. In addition, despite
weakening economies in Europe, these companies benefited from strong
product lines and franchises that are balanced by their global nature, and
were therefore less affected by the gyrations of the U.S. economy. I more
than doubled the fund's holdings of Estee Lauder because I felt that the
company's earnings had bottomed in the second quarter. I also was impressed
by the efforts it was making on the re-launch of significant global
products as well as its cost-cutting initiatives.
Q. HOW DID THE FUND'S CONSUMER-RELATED TECHNOLOGY THEME PLAY OUT DURING THE
PERIOD?
A. The fund was adversely affected by its large holding in America Online
(AOL), a stock that the fund had owned and benefited from for some time.
AOL was the fund's top holding in July when the company reported that its
membership had dropped significantly and that its earnings would not meet
Wall Street's expectations. The situation worsened with AOL's
much-publicized day-long outage that occurred later in the summer. The fund
no longer held a position in AOL at the end of the period.
Q. HOW DO YOU FEEL ABOUT ON-LINE SERVICES NOW?
A. It's interesting to see how the demand for these types of services
changes as the industry becomes more mainstream. A couple of years ago,
on-line service providers such as AOL were dealing almost exclusively with
"early adapters" - people who were very interested in accessing the
Internet, and weren't too concerned about cost. Now, the average user is
influenced much more by the services, prices and plans of various
providers, much as they are in the retail and long-distance sector.
Q. TURNING TO YOU, KATHERINE, WHAT'S YOUR OUTLOOK FOR THE FUND?
A. There are several interesting developments in consumer industries that I
will try to capitalize on in the months ahead. First, many consumer
companies are trying to reduce the number of products that they offer,
which could help improve the companies' profitability. Second, there is
some concern over consumer debt levels, which may eventually hurt
big-ticket purchases. Third, there has been significant change in
telecommunications legislation, which may spur further changes in the
leisure and entertainment industries. I will use Fidelity's traditional
bottom-up fundamental research to find companies that will benefit from
these and other broad trends.
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.
FUND FACTS
START DATE: June 29, 1990
FUND NUMBER: 517
TRADING SYMBOL: FSCPX
SIZE: as of August 31, 1996 more than
$21 million
MANAGER: Katherine Collins, since September
1996; manager Fidelity Select Leisure
Portfolio, 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)
CONSUMER INDUSTRIES PORTFOLIO
INVESTMENTS AUGUST 31, 1996 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 100.0%
SHARES VALUE (NOTE 1)
APPAREL STORES - 6.1%
GENERAL APPAREL STORES - 2.6%
TJX Companies, Inc. 17,500 $ 560,000 87254010
WOMEN'S CLOTHING STORES - 3.5%
Melville Corp. 17,500 739,375 58574510
TOTAL APPAREL STORES 1,299,375
AUTOS, TIRES, & ACCESSORIES - 1.4%
MOTOR VEHICLES & CAR BODIES - 1.4%
Honda Motor Co. Ltd. 13,000 299,700 43812810
BEVERAGES - 3.3%
SOFT DRINKS - 3.3%
Coca-Cola Co. (The) 9,200 460,000 19121610
PepsiCo, Inc. 8,600 247,250 71344810
707,250
COMPUTER SERVICES & SOFTWARE - 2.6%
ELECTRONIC INFORMATION RETRIEVAL - 1.6%
CUC International, Inc. (a) 10,000 343,750 12654510
PREPACKAGED COMPUTER SOFTWARE - 1.0%
Netscape Communications Corp. (a) 6,200 219,325 64114910
TOTAL COMPUTER SERVICES & SOFTWARE 563,075
CONSUMER ELECTRONICS - 3.3%
APPLIANCES - 3.3%
Black & Decker Corp. 10,000 395,000 09179710
Newell Co. 10,000 311,250 65119210
706,250
ENTERTAINMENT - 3.8%
MOTION PICTURE PRODUCTION - 2.0%
Disney (Walt) Co. 7,500 427,500 25468710
RECREATIONAL SERVICES - 1.8%
MGM Grand, Inc. (a) 10,000 377,500 55295310
TOTAL ENTERTAINMENT 805,000
FOODS - 5.2%
FOOD - 3.7%
General Mills, Inc. 7,000 385,000 37033410
Kellogg Co. 6,000 405,000 48783610
790,000
GRAIN MILL PRODUCTS - 1.5%
Ralston Purina Group 5,000 312,500 75127730
TOTAL FOODS 1,102,500
GENERAL MERCHANDISE STORES - 1.0%
DEPARTMENT STORES - 1.0%
Stein Mart, Inc. (a) 10,000 208,750 85837510
HOUSEHOLD PRODUCTS - 21.7%
COSMETICS - 16.4%
Alberto-Culver Co. Class A 7,500 262,500 01306820
Avon Products, Inc. 19,600 938,350 05430310
Estee Lauder Companies, Inc. 22,500 967,500 51843910
Gillette Co. 14,400 918,000 37576610
Revlon, Inc. Class A (a) 14,000 418,250 76152550
3,504,600
SHARES VALUE (NOTE 1)
MANUFACTURED PRODUCTS - 3.2%
First Brands Corp. 12,100 $ 275,275 31935610
Luxottica Group Spa sponsored ADR 5,400 412,425 55068R20
687,700
SOAPS & DETERGENTS - 2.1%
Procter & Gamble Co. 5,000 444,375 74271810
TOTAL HOUSEHOLD PRODUCTS 4,636,675
LEISURE DURABLES & TOYS - 0.9%
TOYS & GAMES - 0.9%
Hasbro, Inc. 5,000 183,750 41805610
LODGING & GAMING - 12.4%
HOTELS, MOTELS, & TOURIST COURTS - 11.1%
HFS, Inc. (a) 22,000 1,317,250 40418110
Host Marriott Corp. (a) 28,000 385,000 44107810
La Quinta Motor Inns, Inc. 10,000 191,250 50419510
Sun International Hotels Ltd. Ord. (a) 10,000 473,750 86699N22
2,367,250
RACING & GAMING - 1.3%
Gtech Holdings Corp. (a) 10,000 277,500 40051810
TOTAL LODGING & GAMING 2,644,750
MEDICAL EQUIPMENT & SUPPLIES - 1.0%
OPHTHALMIC GOODS - 1.0%
Oakley, Inc. (a) 5,000 205,000 67366210
PACKAGING & CONTAINERS - 2.0%
SANITARY FOOD CONTAINERS - 2.0%
Tupperware Corp. 10,000 437,500 89989610
PAPER & FOREST PRODUCTS - 0.9%
PAPER - 0.9%
Kimberly-Clark Corp. 2,500 195,938 49436810
REAL ESTATE INVESTMENT TRUSTS - 2.9%
Patriot American Hospitality, Inc. 20,000 610,000 70335310
RETAIL & WHOLESALE, MISCELLANEOUS - 8.4%
HOBBY, TOY, & GAME SHOPS - 2.8%
Toys "R" Us, Inc. 20,000 590,000 89233510
LUMBER & BUILDING MATERIALS - RETAIL - 4.7%
Lowe's Companies, Inc. 27,500 993,438 54866110
RETAIL, GENERAL - 0.9%
Staples, Inc. (a) 10,000 197,500 85503010
TOTAL RETAIL & WHOLESALE, MISCELLANEOUS 1,780,938
SERVICES - 4.7%
COMMUNICATION, ECONOMY,
SOCIAL & EDUCATION RESEARCH - 2.3%
Gartner Group, Inc. Class A (a) 16,000 500,000 36665110
GENERAL SERVICES - 1.7%
Service Corp. International 13,000 366,438 81756510
PERSONAL SERVICES - 0.7%
Block (H&R), Inc. 6,200 155,000 09367110
TOTAL SERVICES 1,021,438
TEXTILES & APPAREL - 16.5%
APPAREL - 2.6%
Gucci Group NV 8,500 565,250 40156610
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
TEXTILES & APPAREL - CONTINUED
CARPETS & RUGS - 1.4%
Shaw Industries, Inc. 20,000 $ 300,000 82028610
COTTON MILLS - 0.4%
Cone Mills Corp. (a) 10,000 90,000 20681410
FOOTWEAR - 10.2%
NIKE, Inc. Class B 8,700 939,600 65410610
Nine West Group, Inc. (a) 17,500 901,250 65440D10
Wolverine World Wide, Inc. 13,500 325,687 97809710
2,166,537
TEXTILE MILL PRODUCTS - 1.9%
Westpoint Stevens, Inc. Class A (a) 15,600 407,550 96123810
TOTAL TEXTILES & APPAREL 3,529,337
TOBACCO - 1.9%
CIGARETTES - 1.9%
RJR Nabisco Holdings Corp. 15,400 406,175 74960K87
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $20,412,175) $ 21,343,401
LEGEND
1. Non-income producing
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $58,904,624 and $56,680,215, respectively (see Note 4 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $21,391 for the period (see
Note 5 of Notes to Financial Statements).
INCOME TAX INFORMATION
At August 31, 1996, the aggregate cost of investment securities for income
tax purposes was $20,423,805. Net unrealized appreciation aggregated
$919,596, of which $1,565,703 related to appreciated investment securities
and $646,107 related to depreciated investment securities.
The fund intends to elect to defer to its fiscal year ending February 28,
1997 approximately $2,016,000 of losses recognized during the period
November 1, 1995 to February 29, 1996.
CONSUMER INDUSTRIES PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS
Investment in securities, at $ 21,343,401
value (cost $20,412,175) -
See accompanying schedule
Receivable for investments sold 1,360,078
Receivable for fund shares sold 97,414
Dividends receivable 14,257
Redemption fees receivable 95
Other receivables 4,426
Prepaid expenses 9,576
TOTAL ASSETS 22,829,247
LIABILITIES
Payable to custodian bank $ 151,831
Payable for fund shares redeemed 996,313
Accrued management fee 12,551
Other payables and 56,314
accrued expenses
TOTAL LIABILITIES 1,217,009
NET ASSETS $ 21,612,238
Net Assets consist of:
Paid in capital $ 23,186,973
Accumulated net investment (loss) (122,937
)
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions (2,383,024
)
Net unrealized appreciation (depreciation) on investments 931,226
NET ASSETS, for 1,195,257 $ 21,612,238
shares outstanding
NET ASSET VALUE and redemption price per share ($21,612,238 (divided by) 1,195,257 shares) $18.08
Maximum offering price per share (100/97.00 of $18.08) $18.64
</TABLE>
STATEMENT OF OPERATIONS
SIX MONTHS ENDED AUGUST 31, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME $ 147,276
Dividends
Interest 75,715
TOTAL INCOME 222,991
EXPENSES
Management fee $ 94,652
Transfer agent fees 185,735
Accounting fees and expenses 30,139
Non-interested trustees' compensation 86
Custodian fees and expenses 10,377
Registration fees 9,817
Audit 23,155
Legal 332
Miscellaneous 178
Total expenses before reductions 354,471
Expense reductions (8,543 345,928
)
NET INVESTMENT INCOME (LOSS) (122,937
)
REALIZED AND UNREALIZED GAIN (LOSS) (309,563
Net realized gain (loss) on )
investment securities
Change in net unrealized appreciation (depreciation) on investment securities (1,651,201
)
NET GAIN (LOSS) (1,960,764
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ (2,083,701
)
OTHER INFORMATION $ 125,166
Sales charges paid to FDC
Deferred sales charges withheld $ 474
by FDC
Exchange fees withheld by FSC $ 19,928
Expense reductions $ 8,543
Directed brokerage arrangements
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS YEAR ENDED
Operations ENDED FEBRUARY 29,
AUGUST 31, 1996 1996
(UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C>
Net investment income (loss) $ (122,937 $ 160,644
)
Net realized gain (loss) (309,563 (15,575
) )
Change in net unrealized appreciation (depreciation) (1,651,201 2,287,139
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (2,083,701 2,432,208
)
Distributions to shareholders - (179,260
From net investment income )
From net realized gain - (51,276
)
In excess of net realized gain - (1,382,081
)
TOTAL DISTRIBUTIONS - (1,612,617
)
Share transactions 51,017,963 203,425,708
Net proceeds from sales of shares
Reinvestment of distributions - 1,603,782
Cost of shares redeemed (49,815,171 (204,220,866
) )
Paid in capital portion of redemption fees 130,856 232,770
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS 1,333,648 1,041,394
TOTAL INCREASE (DECREASE) IN NET ASSETS (750,053 1,860,985
)
NET ASSETS 22,362,291 20,501,306
Beginning of period
End of period (including accumulated net investment loss of $122,937 and $0, respectively) $ 21,612,238 $ 22,362,291
OTHER INFORMATION
Shares
Sold 2,614,718 11,665,407
Issued in reinvestment of distributions - 90,434
Redeemed (2,672,801 (11,976,587
) )
Net increase (decrease) (58,083) (220,746)
</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> <C>
SIX MONTHS YEAR ENDED YEARS ENDED FEBRUARY 28, TEN MONTHS YEAR ENDED
ENDED FEBRUARY 29, ENDED APRIL 30,
AUGUST 31, 1996 FEBRUARY 28,
SELECTED PER-SHARE DATA D (UNAUDITED) 1996 1995 1994 1993 1992
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 17.84 $ 13.91 $ 15.24 $ 12.97 $ 13.81 $ 11.22
Income from Investment Operations
Net investment income (loss) (.07) .08 (.15) (.20) (.09) (.07)
Net realized and unrealized gain (loss) .23 H 3.97 (.60) 3.84 .20 2.86
Total from investment operations .16 4.05 (.75) 3.64 .11 2.79
Less Distributions
From net investment income - (.02) - - - -
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 .08 .11 .02 .03 .02 .02
Net asset value, end of period $ 18.08 $ 17.84 $ 13.91 $ 15.24 $ 12.97 $ 13.81
TOTAL RETURN B, C 1.35% 30.01% (4.59)% 28.43% .98% 25.27%
RATIOS AND SUPPLEMENTAL DATA $ 21,612 $ 22,362 $ 20,501 $ 8,374 $ 7,005 $ 7,553
Net assets, end of period (000 omitted)
Ratio of expenses to average net assets 2.25% A 1.53% 2.49% 2.48% 2.47% A, 2.48%
E E E E E
Ratio of expenses to average net assets after 2.20% A, 1.48% 2.49% 2.48% 2.47% A 2.48%
expense reductions F F
Ratio of net investment income (loss) to average net (.78)% A .46% (1.08)% (1.34)% (.80)% A (.56)%
assets
Portfolio turnover rate 412% A 601% 190% 169% 215% A 140%
Average commission rate G $ .0381
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <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 9 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 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. 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
9 OF NOTES TO FINANCIAL
STATEMENTS). G FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER
1, 1995, A FUND IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE
PER SHARE FOR SECURITY TRADES ON
WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD TO
PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN
VARIOUS MARKETS WHERE
TRADING PRACTICES AND COMMISSION RATE STRUCTURES MAY DIFFER.
H THE AMOUNT SHOWN FOR A SHARE OUTSTANDING DOES NOT CORRESPOND WITH
THE AGGREGATE NET LOSS ON
INVESTMENTS FOR THE PERIOD DUE TO THE TIMING OF SALES AND
REPURCHASES OF FUND SHARES IN RELATION TO FLUCTUATING MARKET VALUES
OF THE INVESTMENTS OF THE FUND.
</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. A fund's total return includes
changes in 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 6 PAST 1 PAST 5 PAST 10
FEBRUARY 29, 1996 MONTH YEAR YEARS YEARS
S
FOOD AND AGRICULTURE -4.33% 17.97% 87.13% 340.78%
FOOD AND AGRICULTURE -7.20% 14.43% 81.52% 327.56%
(INCL. 3% SALES CHARGE)
S&P 500 2.96% 18.73% 89.14% 251.21%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one, five, or 10 years. You
can compare these figures to the performance of the S&P 500 - a widely
recognized, unmanaged index of common stocks. This benchmark reflects
reinvestment of dividends and capital gains, if any, but does not reflect
any sales charges, brokerage commissions, or other costs of investing.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 29, 1996 YEAR YEARS YEARS
FOOD AND AGRICULTURE 17.97% 13.35% 15.99%
FOOD AND AGRICULTURE 14.43% 12.66% 15.64%
(INCL. 3% SALES CHARGE)
S&P 500 18.73% 13.59% 13.34%
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
IMAHDR PRASUN SHR__CHT 19960831 19960909 164556 S00000000000001
Food & Agriculture SP Standard & Poor 500
00009 SP001
1986/08/31 9700.00 10000.00
1986/09/30 8917.13 9173.00
1986/10/31 9114.44 9702.28
1986/11/30 9222.64 9938.05
1986/12/31 8974.41 9684.63
1987/01/31 10069.16 10989.15
1987/02/28 10852.03 11423.22
1987/03/31 11183.01 11753.35
1987/04/30 11144.82 11648.74
1987/05/31 11074.80 11750.09
1987/06/30 11717.65 12343.47
1987/07/31 12144.09 12969.28
1987/08/31 12570.54 13453.04
1987/09/30 12443.24 13158.41
1987/10/31 9636.35 10324.09
1987/11/30 9209.91 9473.39
1987/12/31 9648.64 10194.31
1988/01/31 10026.11 10623.49
1988/02/29 10522.78 11118.55
1988/03/31 10595.62 10774.98
1988/04/30 10628.73 10894.59
1988/05/31 10708.20 10989.37
1988/06/30 11145.27 11493.78
1988/07/31 11224.74 11450.10
1988/08/31 11218.11 11060.80
1988/09/30 11668.43 11531.99
1988/10/31 12211.45 11852.58
1988/11/30 11926.70 11683.09
1988/12/31 12232.00 11887.54
1989/01/31 12862.86 12757.71
1989/02/28 12630.44 12440.04
1989/03/31 13108.56 12729.90
1989/04/30 13785.90 13390.58
1989/05/31 14635.90 13932.90
1989/06/30 14923.48 13853.48
1989/07/31 16347.03 15104.45
1989/08/31 16095.02 15400.50
1989/09/30 16163.13 15337.35
1989/10/31 15999.66 14981.53
1989/11/30 16605.86 15287.15
1989/12/31 16986.26 15654.04
1990/01/31 15804.74 14603.66
1990/02/28 16030.83 14792.04
1990/03/31 16723.70 15184.03
1990/04/30 16658.06 14804.43
1990/05/31 18109.44 16247.86
1990/06/30 18696.88 16137.38
1990/07/31 18689.51 16085.74
1990/08/31 17326.12 14631.59
1990/09/30 16773.40 13919.03
1990/10/31 17171.36 13859.18
1990/11/30 17878.85 14754.48
1990/12/31 18570.58 15166.13
1991/01/31 19103.56 15827.37
1991/02/28 20542.61 16959.03
1991/03/31 21547.66 17369.44
1991/04/30 21220.26 17411.13
1991/05/31 21996.89 18163.29
1991/06/30 21090.59 17331.41
1991/07/31 21973.24 18139.05
1991/08/31 22848.14 18568.95
1991/09/30 22445.53 18258.85
1991/10/31 22453.28 18503.51
1991/11/30 22298.43 17757.82
1991/12/31 24901.23 19789.32
1992/01/31 24530.05 19421.24
1992/02/29 24392.88 19673.71
1992/03/31 23852.25 19290.07
1992/04/30 23577.90 19857.20
1992/05/31 23787.70 19954.50
1992/06/30 23527.61 19657.18
1992/07/31 24436.36 20461.16
1992/08/31 24327.98 20041.71
1992/09/30 24736.50 20278.20
1992/10/31 25003.29 20349.17
1992/11/30 25962.07 21043.08
1992/12/31 26401.77 21301.91
1993/01/31 26410.31 21480.84
1993/02/28 26342.02 21772.98
1993/03/31 27059.04 22232.39
1993/04/30 26008.39 21694.37
1993/05/31 26827.27 22275.78
1993/06/30 26560.24 22340.38
1993/07/31 26230.91 22251.02
1993/08/31 27485.93 23094.33
1993/09/30 27396.92 22916.50
1993/10/31 28429.43 23390.88
1993/11/30 28100.09 23168.66
1993/12/31 28729.73 23449.00
1994/01/31 29598.63 24246.27
1994/02/28 29421.11 23589.20
1994/03/31 28047.69 22560.71
1994/04/30 27734.30 22849.48
1994/05/31 27532.77 23224.22
1994/06/30 27743.89 22655.22
1994/07/31 28674.77 23398.31
1994/08/31 30498.13 24357.64
1994/09/30 30555.71 23760.88
1994/10/31 31131.51 24295.50
1994/11/30 30373.37 23410.66
1994/12/31 30480.51 23757.84
1995/01/31 31765.47 24373.88
1995/02/28 32402.97 25323.73
1995/03/31 33140.08 26071.03
1995/04/30 33864.41 26838.83
1995/05/31 35079.64 27911.57
1995/06/30 35910.05 28559.96
1995/07/31 36305.00 29507.01
1995/08/31 36244.23 29581.07
1995/09/30 39089.90 30829.39
1995/10/31 39150.66 30719.33
1995/11/30 40689.95 32067.91
1995/12/31 41648.20 32685.54
1996/01/31 43365.87 33798.15
1996/02/29 44691.23 34111.46
1996/03/31 43938.43 34439.95
1996/04/30 43137.49 34947.60
1996/05/31 44728.71 35848.90
1996/06/30 44772.31 35985.48
1996/07/31 44161.98 34395.64
1996/08/30 42756.03 35121.05
IMATRL PRASUN SHR__CHT 19960831 19960909 164600 R00000000000123
Let's say hypothetically that $10,000 was invested in Fidelity Select Food
and Agriculture Portfolio on August 31, 1986, and a 3% sales charge was
paid. By August 31, 1996, the investment would have grown to $42,756 - a
327.56% increase. That compares to $10,000 invested in the S&P 500, which
would have grown to $35,121 over the same period - a 251.21% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST 31, 1996
% OF FUND'S
INVESTMENTS
General Mills, Inc. 8.5
Kellogg Co. 8.5
Philip Morris Companies, Inc. 8.2
Ralston Purina Group 7.2
PepsiCo, Inc. 6.3
RalCorp Holdings, Inc. 5.3
Whitman Corp. 4.3
RJR Nabisco Holdings Corp. 4.2
Nabisco Holdings Corp. Class A 4.1
Pioneer Hi-Bred International, Inc. 4.0
TOP INDUSTRIES AS OF AUGUST 31, 1996
Food 21.0%
Soft Drinks 10.0%
Tobacco Manufacturers 8.7%
Grain Mill Products 7.2%
Cereal Breakfast Foods 5.3%
All Others 47.8% *
Row: 1, Col: 1, Value: 47.8
Row: 1, Col: 2, Value: 5.3
Row: 1, Col: 3, Value: 7.2
Row: 1, Col: 4, Value: 8.699999999999999
Row: 1, Col: 5, Value: 10.0
Row: 1, Col: 6, Value: 21.0
* 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 PERFORMED, BILL?
A. For the six months ended August 31, 1996, the fund had a total return of
- -4.33%, while the Standard & Poor's 500 Index returned 2.96%. For the 12
months ended August 31, 1996, the fund returned 17.97% and the S&P 500 had
a total return of 18.73%.
Q. WHAT FACTORS INFLUENCED THE FUND'S PERFORMANCE OVER THE PAST SIX MONTHS?
A. The fund's performance was dragged down by its tobacco and food
investments. Both categories underperformed the broad market during the
past six months.
Q. LET'S TAKE A LOOK AT THE FUND'S TOBACCO INVESTMENTS. WHY HAVE THOSE
STOCKS STRUGGLED RECENTLY?
A. Even though the tobacco companies in the fund had good fundamentals - or
business prospects - stocks in this sector suffered from a jury trial
decision in Florida in August that went against a tobacco company.
Investors became concerned the outcome of the trial was a signal that
tobacco companies might face increasing problems due to litigation. In
addition, the Clinton administration took strong regulatory steps that
might affect tobacco company business prospects in the future. With this
backdrop, stocks such as Philip Morris and RJR Nabisco saw periodic share
price declines.
Q. HAVE THESE EVENTS CHANGED YOUR OUTLOOK TOWARD THESE STOCKS?
A. There's no question that I've kept an eye on the risk presented by
litigation and regulation in this sector, and have reduced the tobacco
stake somewhat. At the same time, tobacco stocks remain a significant part
of the fund, and I remain guardedly optimistic about the sector. The
industry has withstood nearly all legal challenges in the past, including a
case in Indiana that took place at roughly the same time as the one in
Florida. Even though I believe there will always be some sort of discount
placed on the value of tobacco company shares because of litigation risk, I
find tobacco companies to be strong cash flow generators and very
shareholder friendly. Philip Morris, for example, continued to post very
strong earnings growth compared to other consumer nondurable stocks -
largely on the basis of strong international sales - and offered very
attractive dividends. To me, that represents an outstanding investment
opportunity.
Q. YOU MENTIONED THAT FOOD STOCKS STRUGGLED AS WELL. WHAT WAS THE STORY
THERE?
A. While the business and earnings growth rates posted by most of the
stocks in this group have been good, the rates haven't been as attractive
as those posted in other parts of the market. In addition, valuations -
stock prices compared to other measures such as earnings - for stocks in
the group were fairly high in both absolute and relative terms. Companies
in the group will have to show investors that they're on top of their game
- - posting earnings growth at or near peak levels - in order for investors
to be willing to pay higher valuations for the stocks from here. Further,
three of the companies in the sector that have a stake in the cereal
business were involved in a price war that ate into their earnings.
Q. WHAT STOCKS WERE POSITIVE CONTRIBUTORS TO THE FUND'S PERFORMANCE OVER
THE PAST YEAR?
A. Pioneer Hi-Bred and DEKALB Genetics, two seed companies, were positive
performers. DEKALB performed particularly well because of some
groundbreaking patents on new strains of corn it developed. Campbell Soup
also was strong because of its restructuring efforts.
Q. AT THE END OF THE PERIOD, THE FUND HAD ABOUT 14% IN CASH AND SHORT-TERM
INVESTMENTS. WHY?
A. It was a momentary anomaly, a function of flows into and out of the
fund. The fund has seen strong fluctuations in its assets from time to
time, and it just so happened that on the day the period closed, the fund
held more than its 5% to 10% target amount in cash and short-term
investments. It was not an indication of any kind of defensive positioning.
Q. WHAT'S YOUR OUTLOOK?
A. Over the next six to 12 months, I believe there will be greater
differentiation between the winners and the losers, especially in the food
sector. I'll look to invest in single-product companies because a company
trying to do one thing well usually can do better than another that is
trying to compete in that and other areas at the same time.
NOTE TO SHAREHOLDERS: Daniel Pickering became manager of Fidelity Select
Food and Agriculture Portfolio on October 14, 1996.
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: July 29, 1985
FUND NUMBER: 009
TRADING SYMBOL: FDFAX
SIZE: as of August 31, 1996, more than
$312 million
MANAGER: William Mankivsky, since 1993;
manager, Fidelity Select Energy Service
Portfolio, 1991-1994; joined Fidelity in 1991
(checkmark)
FOOD AND AGRICULTURE PORTFOLIO
INVESTMENTS AUGUST 31, 1996 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 85.9%
SHARES VALUE (NOTE 1)
AGRICULTURE - 5.2%
CROPS - 5.2%
DEKALB Genetics Corp. Class B 119,200 $ 3,874,000 24487820
Pioneer Hi-Bred International, Inc. 223,400 12,314,171 72368610
Sylvan Foods Holdings, Inc. (a) 6,000 65,250 87137110
16,253,421
BEVERAGES - 10.8%
MALT BEVERAGE - 0.8%
Anheuser-Busch Companies, Inc. 28,000 2,121,000 03522910
Fomento Economico Mexicano SA
de CV Class B 36,000 108,796 34441892
Quilmes Industrial SA 28,000 266,000 74899692
Quilmes Industrial SA sponsored ADR 14,000 140,000 74838Y10
2,635,796
SOFT DRINKS - 10.0%
Celestial Seasonings, Inc. (a) 178,400 3,612,600 15101610
Coca-Cola Co. (The) 88,000 4,400,000 19121610
Coca-Cola Enterprises, Inc. 2,000 81,500 19121910
Panamerican Beverages, Inc. Class A 54,700 2,311,075 69829W10
PepsiCo, Inc. 677,800 19,486,750 71344810
Serm Suk Co. Ltd. 38,800 1,208,427 81799999
31,100,352
TOTAL BEVERAGES 33,736,148
CONGLOMERATES - 4.3%
Whitman Corp. 593,600 13,281,801 96647K10
FOODS - 48.3%
BAKERY PRODUCTS - 0.3%
Flowers Industries, Inc. 18,000 324,000 34349610
Interstate Bakeries Corp. 22,000 665,500 46072H10
989,500
CANNED SPECIALTIES - 3.0%
Campbell Soup Co. 143,000 9,312,875 13442910
CEREAL BREAKFAST FOODS - 5.3%
RalCorp Holdings, Inc. (a) 802,066 16,642,870 75102510
COOKIES & CRACKERS - 4.1%
Nabisco Holdings Corp. Class A 383,400 12,891,825 62952610
DAIRY - 0.5%
Dean Foods Co. 60,600 1,568,025 24236110
FOOD - 21.0%
Chiquita Brands International, Inc. 574,700 7,255,588 17003210
Dole Food, Inc. 57,100 2,362,513 25660510
General Mills, Inc. 482,500 26,537,500 37033410
Kellogg Co. 390,600 26,365,500 48783610
Nestle SA (Reg.) 1,280 1,496,173 64106992
Sara Lee Corp. 11,000 346,500 80311110
Universal Foods Corp. 41,100 1,176,488 91353810
65,540,262
GENERAL FOOD PREPARATIONS - 0.2%
Herdez SA de CV Class B 438,846 150,577 42799F23
McCormick & Co., Inc. (non-vtg.) 22,000 451,000 57978020
601,577
GRAIN MILL PRODUCTS - 7.2%
Ralston Purina Group 357,900 22,368,750 75127730
MEAT & FISH - 5.1%
Golden Poultry Co., Inc. 2,000 21,000 38115110
GoodMark Foods, Inc. (b) 385,200 6,259,500 38238710
SHARES VALUE (NOTE 1)
Hormel (George A.) & Co. 5,000 $ 106,250 44045210
Hudson Foods, Inc. Class A 60,000 817,500 44378210
Sanderson Farms, Inc. 28,000 304,500 80001310
Tyson Foods, Inc. 338,950 8,219,538 90249410
WLR Foods, Inc. 6,000 70,125 92928610
15,798,413
POULTRY SLAUGHTER & PROCESSING - 0.1%
Pilgrims Pride Corp. 33,000 276,375 72146710
RICE MILLING - 0.1%
Riviana Foods, Inc. 12,000 190,500 76953610
SUGAR & CANDIES - 1.4%
Grist Mill Co. (a) 240,400 1,427,375 39862920
Wrigley (Wm.) Jr. Co. 52,000 2,814,500 98252610
4,241,875
TOTAL FOODS 150,422,847
GROCERY STORES - 0.1%
GROCERY - RETAIL - 0.1%
Giant Food, Inc. Class A 12,000 403,500 37447810
HOLDING COMPANIES - 0.3%
Triarc Companies, Inc. Class A (a) 67,000 728,625 89592710
RESTAURANTS - 3.9%
Brinker International, Inc. (a) 10,000 150,000 10964110
Darden Restaurants, Inc. 111,400 891,200 23719410
McDonald's Corp. 241,000 11,176,375 58013510
12,217,575
TOBACCO - 13.0%
CIGARETTES - 4.3%
RJR Nabisco Holdings Corp. 501,220 13,219,678 74960K87
TOBACCO MANUFACTURERS - 8.7%
Philip Morris Companies, Inc. 285,400 25,614,650 71815410
UST, Inc. 51,000 1,530,000 90291110
27,144,650
TOTAL TOBACCO 40,364,328
TOTAL COMMON STOCKS
(Cost $271,059,102) 267,408,245
REPURCHASE AGREEMENTS - 14.1%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 5.25%, dated
8/30/96 due 9/3/96 $ 44,039,675 44,014,000 69899TYY
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $315,073,102) $ 311,422,245
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 VALUE
AFFILIATE COST COST INCOME
GoodMark Foods, Inc. $ - $ 445,888 $ 37,072 $ 6,259,500
Grist Mill Co. 53,000 516,638 - -
Totals $ 53,000 $ 962,526 $ 37,072 $ 6,259,500
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $143,794,800 and $123,996,148, respectively (see Note 4 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $73,109 for the period (see
Note 5 of Notes to Financial Statements).
INCOME TAX INFORMATION
At August 31, 1996, the aggregate cost of investment securities for income
tax purposes was $315,119,837. Net unrealized depreciation aggregated
$3,697,592, of which $12,813,198 related to appreciated investment
securities and $16,510,790 related to depreciated investment securities.
FOOD AND AGRICULTURE PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS
Investment in securities, at $ 311,422,245
value (including repurchase agreements of $44,014,000)
(cost $315,073,102) - See accompanying schedule
Cash 999
Receivable for investments sold 3,936,148
Receivable for fund shares sold 707,264
Dividends receivable 413,695
Redemption fees receivable 527
Other receivables 10,900
Prepaid expenses 25,720
TOTAL ASSETS 316,517,498
LIABILITIES
Payable for investments purchased $ 2,174,444
Payable for fund shares redeemed 1,886,574
Accrued management fee 164,830
Other payables and accrued expenses 284,072
TOTAL LIABILITIES 4,509,920
NET ASSETS $ 312,007,578
Net Assets consist of:
Paid in capital $ 289,761,306
Undistributed net investment income 1,373,138
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 24,523,746
Net unrealized appreciation (depreciation) on investments (3,650,612
and assets and liabilities in )
foreign currencies
NET ASSETS, for 7,953,862 $ 312,007,578
shares outstanding
NET ASSET VALUE and redemption price per share ($312,007,578 (divided by) 7,953,862 shares) $39.23
Maximum offering price per share (100/97.00 of $39.23) $40.44
</TABLE>
STATEMENT OF OPERATIONS
SIX MONTHS ENDED AUGUST 31, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME $ 2,515,900
Dividends (including $37,072 received from affiliated issuers)
Interest 985,714
TOTAL INCOME 3,501,614
EXPENSES
Management fee $ 853,089
Transfer agent fees 1,073,702
Accounting fees and expenses 141,190
Non-interested trustees' compensation 507
Custodian fees and expenses 13,917
Registration fees 32,682
Audit 19,271
Legal 1,112
Miscellaneous 1,892
Total expenses before reductions 2,137,362
Expense reductions (13,725 2,123,637
)
NET INVESTMENT INCOME 1,377,977
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities (including realized gain of $459,500 on sales of investment in affiliated
issuers) 24,776,331
Foreign currency transactions 985 24,777,316
Change in net unrealized appreciation (depreciation) on:
Investment securities (44,536,720
)
Assets and liabilities in (813 (44,537,533
foreign currencies ) )
NET GAIN (LOSS) (19,760,217
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ (18,382,240
)
OTHER INFORMATION $ 757,383
Sales charges paid to FDC
Deferred sales charges withheld $ 3,016
by FDC
Exchange fees withheld by FSC $ 74,333
Expense reductions $ 10,509
Directed brokerage arrangements
Custodian interest credits 153
Transfer agent interest credits 3,063
$ 13,725
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS YEAR ENDED
ENDED FEBRUARY 29,
AUGUST 31, 1996 1996
(UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C>
Operations $ 1,377,977 $ 2,077,785
Net investment income
Net realized gain (loss) 24,777,316 29,464,842
Change in net unrealized appreciation (depreciation) (44,537,533 31,022,063
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (18,382,240 62,564,690
)
Distributions to shareholders (360,792 (1,144,034
From net investment income ) )
From net realized gain (6,434,160 (12,658,077
) )
TOTAL DISTRIBUTIONS (6,794,952 (13,802,111
) )
Share transactions 255,626,036 355,816,771
Net proceeds from sales of shares
Reinvestment of distributions 6,704,973 13,613,779
Cost of shares redeemed (226,485,997 (314,447,812
) )
Paid in capital portion of redemption fees 237,425 227,026
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS 36,082,437 55,209,764
TOTAL INCREASE (DECREASE) IN NET ASSETS 10,905,245 103,972,343
NET ASSETS
Beginning of period 301,102,333 197,129,990
End of period (including undistributed net investment income of $1,373,138 and $1,092,171,
respectively) $ 312,007,578 $ 301,102,333
OTHER INFORMATION
Shares
Sold 6,236,634 9,278,227
Issued in reinvestment of distributions 165,595 361,809
Redeemed (5,592,642 (8,554,944
) )
Net increase (decrease) 809,587 1,085,092
</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> <C>
SIX MONTHS YEAR ENDED YEARS ENDED FEBRUARY 28, TEN MONTHS YEAR ENDED
ENDED FEBRUARY 29, ENDED APRIL 30,
AUGUST 31, 1996 FEBRUARY 28,
SELECTED PER-SHARE DATA D (UNAUDITED) 1996 1995 1994 1993 1992
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 42.15 $ 32.53 $ 31.49 $ 30.86 $ 29.22 $ 27.87
Income from Investment Operations
Net investment income .20 .37 .15 .09 .05 .13
Net realized and unrealized gain (loss) (2.02) 11.61 2.80 3.29 3.26 2.89
Total from investment operations (1.82) 11.98 2.95 3.38 3.31 3.02
Less Distributions
From net investment income (.06) (.20) (.08) (.06) (.10) (.11)
From net realized gain (1.07) (2.20) (1.85) (2.70) (1.57) (1.59)
Total distributions (1.13) (2.40) (1.93) (2.76) (1.67) (1.70)
Redemption fees added to paid in capital .03 .04 .02 .01 - .03
Net asset value, end of period $ 39.23 $ 42.15 $ 32.53 $ 31.49 $ 30.86 $ 29.22
TOTAL RETURN B, C (4.33)% 37.92% 10.14% 11.69% 11.72% 11.11%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 312,008 $ 301,102 $ 197,130 $ 95,010 $ 108,377 $ 108,922
Ratio of expenses to average net assets 1.50% A 1.43% 1.70% 1.65% 1.67% A 1.83%
Ratio of expenses to average net assets after 1.49% A, 1.42% 1.68% 1.64% 1.67% A 1.83%
expense reductions E E E E
Ratio of net investment income to average net assets .97% A .99% .49% .29% .21% A .46%
Portfolio turnover rate 99% A 124% 126% 96% 515% A 63%
Average commission rate F $ .0311
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <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 9 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 9 OF NOTES TO FINANCIAL STATEMENTS). F FOR FISCAL YEARS
BEGINNING ON OR AFTER SEPTEMBER 1, 1995,
A FUND IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER
SHARE FOR SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED.
THIS AMOUNT MAY VARY FROM PERIOD TO
PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED
IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION RATE
STRUCTURES MAY DIFFER.
</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. A fund's total return includes
changes in 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 6 PAST 1 PAST 5 PAST 10
FEBRUARY 29, 1996 MONTHS YEAR YEARS YEARS
LEISURE 3.21% 8.85% 134.90% 242.33%
LEISURE 0.11% 5.58% 127.86% 232.06%
(INCL. 3% SALES CHARGE)
S&P 500 2.96% 18.73% 89.14% 251.21%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one, five, or 10 years. You
can compare these figures to the performance of the S&P 500 - a widely
recognized, unmanaged index of common stocks. This benchmark reflects
reinvestment of dividends and capital gains, if any, but does not reflect
any sales charges, brokerage commissions, or other costs of investing.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 29, 1996 YEAR YEARS YEARS
LEISURE 8.85% 18.63% 13.10%
LEISURE 5.58% 17.91% 12.75%
(INCL. 3% SALES CHARGE)
S&P 500 18.73% 13.59% 13.34%
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
IMAHDR PRASUN SHR__CHT 19960831 19960910 135306 S00000000000001
Leisure SP Standard & Poor 500
00062 SP001
1986/08/31 9700.00 10000.00
1986/09/30 8755.41 9173.00
1986/10/31 9204.41 9702.28
1986/11/30 9090.04 9938.05
1986/12/31 8687.64 9684.63
1987/01/31 9602.58 10989.15
1987/02/28 10636.11 11423.22
1987/03/31 10763.19 11753.35
1987/04/30 10517.51 11648.74
1987/05/31 10949.56 11750.09
1987/06/30 11419.74 12343.47
1987/07/31 12262.66 12969.28
1987/08/31 12516.81 13453.04
1987/09/30 12245.72 13158.41
1987/10/31 8751.18 10324.09
1987/11/30 8141.22 9473.39
1987/12/31 9182.52 10194.31
1988/01/31 9323.86 10623.49
1988/02/29 10138.93 11118.55
1988/03/31 10478.15 10774.98
1988/04/30 10544.11 10894.59
1988/05/31 10270.85 10989.37
1988/06/30 10956.85 11493.78
1988/07/31 11047.96 11450.10
1988/08/31 10616.40 11060.80
1988/09/30 11354.84 11531.99
1988/10/31 11354.84 11852.58
1988/11/30 10918.49 11683.09
1988/12/31 11570.62 11887.54
1989/01/31 12558.42 12757.71
1989/02/28 12357.02 12440.04
1989/03/31 12937.23 12729.90
1989/04/30 13670.89 13390.58
1989/05/31 14351.79 13932.90
1989/06/30 14487.88 13853.48
1989/07/31 15703.68 15104.45
1989/08/31 15829.62 15400.50
1989/09/30 15931.34 15337.35
1989/10/31 14783.36 14981.53
1989/11/30 14957.73 15287.15
1989/12/31 15181.56 15654.04
1990/01/31 13340.44 14603.66
1990/02/28 13222.16 14792.04
1990/03/31 13325.01 15184.03
1990/04/30 12805.59 14804.43
1990/05/31 13865.01 16247.86
1990/06/30 13705.58 16137.38
1990/07/31 13232.44 16085.74
1990/08/31 11705.03 14631.59
1990/09/30 10594.18 13919.03
1990/10/31 10470.75 13859.18
1990/11/30 11303.89 14754.48
1990/12/31 11798.28 15166.13
1991/01/31 12458.07 15827.37
1991/02/28 13413.98 16959.03
1991/03/31 13637.38 17369.44
1991/04/30 13673.74 17411.13
1991/05/31 14146.51 18163.29
1991/06/30 13351.64 17331.41
1991/07/31 13990.65 18139.05
1991/08/31 14136.11 18568.95
1991/09/30 14499.78 18258.85
1991/10/31 14936.17 18503.51
1991/11/30 14219.24 17757.82
1991/12/31 15684.28 19789.32
1992/01/31 16037.55 19421.24
1992/02/29 16598.64 19673.71
1992/03/31 16260.95 19290.07
1992/04/30 16442.78 19857.20
1992/05/31 16541.49 19954.50
1992/06/30 16286.92 19657.18
1992/07/31 16364.85 20461.16
1992/08/31 16131.07 20041.71
1992/09/30 16447.97 20278.20
1992/10/31 16572.66 20349.17
1992/11/30 17700.02 21043.08
1992/12/31 18229.93 21301.91
1993/01/31 18681.91 21480.84
1993/02/28 18583.20 21772.98
1993/03/31 19549.50 22232.39
1993/04/30 19108.93 21694.37
1993/05/31 20481.57 22275.78
1993/06/30 21032.79 22340.38
1993/07/31 21594.82 22251.02
1993/08/31 23080.95 23094.33
1993/09/30 24232.02 22916.50
1993/10/31 25572.24 23390.88
1993/11/30 24621.12 23168.66
1993/12/31 25440.53 23449.00
1994/01/31 25704.95 24246.27
1994/02/28 25485.54 23589.20
1994/03/31 23944.03 22560.71
1994/04/30 23992.30 22849.48
1994/05/31 23738.38 23224.22
1994/06/30 22735.09 22655.22
1994/07/31 23614.52 23398.31
1994/08/31 24555.88 24357.64
1994/09/30 24549.69 23760.88
1994/10/31 24462.98 24295.50
1994/11/30 23416.34 23410.66
1994/12/31 23701.22 23757.84
1995/01/31 24134.74 24373.88
1995/02/28 25212.35 25323.73
1995/03/31 25875.02 26071.03
1995/04/30 26104.25 26838.83
1995/05/31 26609.38 27911.57
1995/06/30 27638.33 28559.96
1995/07/31 29559.05 29507.01
1995/08/31 30506.93 29581.07
1995/09/30 30556.82 30829.39
1995/10/31 29085.10 30719.33
1995/11/30 30032.99 32067.91
1995/12/31 30090.54 32685.54
1996/01/31 30536.53 33798.15
1996/02/29 32174.16 34111.46
1996/03/31 32334.44 34439.95
1996/04/30 33662.05 34947.60
1996/05/31 35043.28 35848.90
1996/06/30 34908.00 35985.48
1996/07/31 32401.86 34395.64
1996/08/30 33206.39 35121.05
IMATRL PRASUN SHR__CHT 19960831 19960910 135311 R00000000000123
Let's say hypothetically that $10,000 was invested in Fidelity Select
Leisure Portfolio on August 31, 1986, and a 3% sales charge was paid. By
August 31, 1996, the investment would have grown to $33,206 - a 232.06%
increase. That compares to $10,000 invested in the S&P 500, which would
have grown to $35,121 over the same period - a 251.21% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST 31, 1996
% OF FUND'S
INVESTMENTS
Disney (Walt) Co. 4.5
Infinity Broadcasting Corp. Class A 3.2
General Electric Co. 3.1
Hilton Hotels Corp. 2.9
Renaissance Communications Corp. 2.7
Omnicom Group, Inc. 2.5
Sodak Gaming, Inc. 2.3
Westinghouse Electric Corp. 2.2
Sinclair Broadcast Group, Inc. Class A 2.0
Mirage Resorts, Inc. 2.0
TOP INDUSTRIES AS OF AUGUST 31, 1996
Row: 1, Col: 1, Value: 57.1
Row: 1, Col: 2, Value: 5.3
Row: 1, Col: 3, Value: 6.2
Row: 1, Col: 4, Value: 10.0
Row: 1, Col: 5, Value: 10.5
Row: 1, Col: 6, Value: 10.9
Hotels, Motels, & Tourist
Courts 10.9%
Television Broadcasting 10.5%
Radio Broadcasting 10.0%
Advertising Agencies 6.2%
Electrical Machinery 5.3%
All Others 57.1% *
* INCLUDES SHORT-TERM INVESTMENTS
LEISURE PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Katherine Collins,
Portfolio Manager of
Fidelity Select Leisure
Portfolio
Q. HOW DID THE FUND PERFORM, KATHERINE?
A. For the six months ended August 31, 1996, the fund had a total return of
3.21%. For the past year, it returned 8.85%. For the same periods, the
Standard & Poor's 500 Index returned 2.96% and 18.73%, respectively.
Q. IN YOUR OPINION, WHAT WOULD ACCOUNT FOR THE FUND'S PERFORMANCE IN THE
PAST SIX MONTHS?
A. I think the solid performance of radio stocks and, to a lesser extent,
TV stocks had a big role in the fund's return. Broadcast companies are now
enjoying the benefits of the new telecommunications law, which eased
ownership restrictions. During the period, we saw heightened merger and
acquisition activity in the broadcast area with a prime example being
Westinghouse's agreement to acquire Infinity Broadcasting, one of the
largest radio companies in America.
Q. WHAT WERE SOME KEY DECISIONS YOU MADE DURING THE PERIOD?
A. I raised the fund's position in gaming and hotels. The gaming companies
are adding attractive new capacity and the supply/demand balance for
upscale hotels remained favorable. These factors may lead to positive
earnings comparisons in the future. I maintained small positions in large
entertainment companies and cut back on cable companies. In the
entertainment area, competition was fierce, late summer box office revenues
fell below expectations and many of the stocks became expensive relative to
historical valuation measures. As for cable companies, I was lucky to
reduce the fund's holdings quickly and avoid many of the losses these
stocks endured due to investors' concerns about competition and capital
expenditures in the industry.
Q. DID THE FUND'S HOLDINGS IN ADVERTISING FIRMS HAVE A POSITIVE IMPACT?
A. Yes. The advertising industry continued to do well because of a good
advertising environment, consolidation in the industry and globalization
over the past several years. Although there were some fears in the market
that the Olympics would only be a one-time "pop" to these companies,
business since then appears strong.
Q. WAS NBC'S ROLE AS BROADCASTER OF THE OLYMPICS A BIG PLUS FOR GENERAL
ELECTRIC?
A. Absolutely. With viewers glued to their TV sets during the Olympics, any
TV station that wasn't an NBC affiliate suffered lousy Nielsen ratings.
Meanwhile, on a more long-term basis, NBC's partnership with Microsoft to
create the news service MSNBC is a solid development for GE. Certainly,
given that Microsoft could have chosen just about any broadcaster, the fact
that it chose NBC speaks well about the level of innovation within the
network.
Q. WAS THERE A PARTICULAR COMPANY THAT DID NOT MEET EXPECTATIONS?
A. Disney would be one. I think many investors expected too much, too soon
from the company's merger with Capital Cities/ABC. During the period, the
transaction hit some snags - as any of that size and magnitude could - and
the stock suffered somewhat. Additionally, while Disney's summer animated
movie release - "The Hunchback of Notre Dame" - did well at the box office
by industry standards, it failed to reach the "blockbuster" standards
attained by the "The Lion King." That said, I added to the fund's Disney
position because I felt the market was ignoring Disney's long-term
potential. In fact, Disney has outlined an exciting upcoming film lineup
including "101 Dalmatians" and "Hercules."
Q. WHAT DO YOU SEE GOING FORWARD FOR THE FUND?
A. Near the end of the period, I began increasing some of the large
entertainment companies as their valuations became more reasonable. I
anticipate holding the fund's broadcast, hotel and gaming weightings steady
for the reasons I outlined above. I don't anticipate any near-term move
back into cable stocks, although valuations are becoming more compelling. I
will continue to try to invest in companies that either have strong
franchises or benefit from changes in consumer tastes and government
regulations.
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
FUND NUMBER: 062
TRADING SYMBOL: FDLSX
SIZE: as of August 31, 1996, more than
$93 million
MANAGER: Katherine Collins, since February
1996; manager, Fidelity Select Consumer
Industries, since September 1996; Fidelity
Select Construction and Housing Portfolio,
1992-1994; joined Fidelity in 1990
(checkmark)
LEISURE PORTFOLIO
INVESTMENTS AUGUST 31, 1996 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 92.3%
SHARES VALUE (NOTE 1)
ADVERTISING - 6.2%
ADVERTISING AGENCIES - 6.2%
ADVO, Inc. 50,000 $ 493,750 00758510
Interpublic Group of Companies, Inc. 37,400 1,692,350 46069010
Omnicom Group, Inc. 51,700 2,345,888 68191910
WPP Group PLC ADR 35,000 1,273,125 92930930
5,805,113
APPAREL STORES - 1.5%
WOMEN'S CLOTHING STORES - 1.5%
Melville Corp. 32,500 1,373,125 58574510
BEVERAGES - 2.6%
DISTILLED & BLENDED LIQUOR - 0.9%
Seagram Co. Ltd. 25,000 825,872 81185010
SOFT DRINKS - 1.7%
PepsiCo, Inc. 56,882 1,635,358 71344810
TOTAL BEVERAGES 2,461,230
BROADCASTING - 24.6%
CABLE TV OPERATORS - 3.4%
BET Holdings, Inc. Class A (a) 20,800 533,000 08658510
Gaylord Entertainment Co. Class A 23,625 578,813 36790110
Heartland Wireless
Communications, Inc. (a) 16,540 349,408 42235W10
TCI Group Class A 46,400 690,200 87924V10
Time Warner, Inc. 13,837 461,810 88731510
Turner Broadcasting System, Inc. Class B 23,100 571,725
3,184,956
COMMUNICATIONS SERVICES - 0.7%
PanAmSat Corp. (a) 23,800 660,450 69830X10
RADIO BROADCASTING - 10.0%
American Radio Systems Corp. Class A (a) 39,900 1,416,450 02916110
Chancellor Corp. Class A (a) 15,100 566,250 15891010
Clear Channel Communications, Inc. (a) 20,100 1,655,738 18450210
Emmis Broadcasting Corp. Class A (a) 9,900 517,275 29152510
Evergreen Media Corp. Class A (a) 28,287 891,041 30024810
EZ Communications, Inc. Class A (a) 25,100 1,047,925 26928810
Infinity Broadcasting Corp. Class A (a) 109,525 2,998,247 45662610
Paxson Communications Corp. (a) 30,000 315,000 70423110
9,407,926
TELEVISION BROADCASTING - 10.5%
Canwest Global Communications Corp.
(non-vtg.) (a) 29,200 266,758 13890630
Heritage Media Corp. Class A 25,100 502,000 42724120
Home Shopping Network, Inc. (a) 65,200 700,900 43735110
Jacor Communications, Inc. Class A (a) 33,200 1,112,200 46985840
Lin Television Corp (a) 25,000 893,750 53277610
Renaissance Communications Corp. (a) 71,450 2,518,613 75966110
Sinclair Broadcast Group, Inc. Class A (a) 50,300 1,886,250 82922610
Viacom, Inc. (a):
Class A 50,000 1,562,500 92552410
Class B:
(non-vtg.) 8,555 269,483 92552430
(warrants C) 122,000 30,500 92552412
(warrants E) 50,000 56,250 92552413
9,799,204
TOTAL BROADCASTING 23,052,536
CELLULAR - 2.8%
CELLULAR & COMMUNICATION SERVICES - 2.8%
AirTouch Communications, Inc. (a) 49,000 1,347,500 00949T10
International Cabletel, Inc. (a) 4,600 111,550 45921610
SHARES VALUE (NOTE 1)
360 Degrees Communications Co. (a) 40,000 $ 955,000 88557110
United States Cellular Corp. (a) 6,300 190,575 91168410
2,604,625
COMMUNICATIONS EQUIPMENT - 0.6%
DATACOMMUNICATIONS EQUIPMENT - 0.6%
Echostar Communications Corp.
Class A (a) 22,600 573,122 27876210
COMPUTER SERVICES & SOFTWARE - 2.7%
ELECTRONIC INFORMATION RETRIEVAL - 0.7%
CUC International, Inc. (a) 19,200 660,000 12654510
PREPACKAGED COMPUTER SOFTWARE - 2.0%
Microsoft Corp (a) 15,000 1,837,500 59491810
TOTAL COMPUTER SERVICES & SOFTWARE 2,497,500
CONSUMER DURABLES - 0.6%
MANUFACTURING INDUSTRIES - 0.6%
Ballantyne of Omaha, Inc. (a) 44,000 550,000 05851610
CREDIT & OTHER FINANCE - 0.6%
FINANCIAL SERVICES - 0.6%
American Express Co. 12,200 533,750 02581610
ELECTRICAL EQUIPMENT - 7.0%
ELECTRICAL MACHINERY - 5.3%
General Electric Co. 35,000 2,909,375 36960410
Westinghouse Electric Corp. 125,000 2,046,875 96040210
4,956,250
TV & RADIO COMMUNICATION EQUIPMENT - 1.2%
Avid Technology, Inc. 20,000 370,000 05367P10
Scientific-Atlanta, Inc. 57,200 772,200 80865510
1,142,200
WIRING & LIGHTING - 0.5%
Oak Industries, Inc. (a) 15,200 456,000 67140050
TOTAL ELECTRICAL EQUIPMENT 6,554,450
ENTERTAINMENT - 10.0%
AMUSEMENT PARKS - 0.8%
Premier Parks, Inc. (a) 30,000 750,000 74054020
MOTION PICTURE DISTRIBUTION - 0.2%
All American Communications, Inc.
Class B (non-vtg.) (a) 30,000 202,500 01648040
MOTION PICTURE PRODUCTION - 4.5%
Disney (Walt) Co. 73,452 4,186,764 25468710
MOVIE THEATERS - 2.5%
AMC Entertainment, Inc. (a) 16,900 310,538 00166910
Carmike Cinemas, Inc. Class A (a) 41,600 1,003,600 14343610
Regal Cinemas, Inc. (a) 27,000 1,005,750 75875410
2,319,888
RECORDS & CDS - 0.1%
PolyGram NV ADR 1,700 100,725 73173310
RECREATIONAL SERVICES - 1.9%
Cedar Fair LP (depositary unit) 1,000 37,625 15018510
MGM Grand, Inc. (a) 46,400 1,751,600 55295310
1,789,225
TOTAL ENTERTAINMENT 9,349,102
GENERAL MERCHANDISE STORES - 0.4%
DEPARTMENT STORES - 0.4%
Federated Department Stores, Inc. (a) 12,400 429,350 31410H10
HOME FURNISHINGS - 0.3%
FURNITURE STORES - 0.3%
Ethan Allen Interiors, Inc. 11,700 312,975 29760210
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
HOUSEHOLD PRODUCTS - 1.3%
COSMETICS - 1.3%
Estee Lauder Companies, Inc. 12,000 $ 516,000 51843910
Revlon, Inc. Class A (a) 22,000 657,250 76152550
1,173,250
MANUFACTURED PRODUCTS - 0.0%
Windmere-Durable Holdings, Inc. 845 12,041 97341110
TOTAL HOUSEHOLD PRODUCTS 1,185,291
LEISURE DURABLES & TOYS - 5.0%
MISCELLANEOUS TRANSPORTATION EQUIPMENT - 0.6%
Polaris Industries, Inc. 20,000 575,000 73106810
MOTORCYCLES - 0.9%
Harley Davidson, Inc. 20,700 848,700 41282210
SPORTING & ATHLETIC GOODS - 1.1%
Callaway Golf Co. 30,000 990,000 13119310
TOYS & GAMES - 2.4%
Galoob (Lewis) Toys, Inc. (a) 11,500 301,875 36409110
Hasbro, Inc. 30,000 1,102,500 41805610
Toy Biz, Inc. Class A (a) 51,200 870,400 89226110
2,274,775
TOTAL LEISURE DURABLES & TOYS 4,688,475
LODGING & GAMING - 13.0%
HOTELS, MOTELS, & TOURIST COURTS - 10.9%
Circus Circus Enterprises, Inc. (a) 46,100 1,567,400 17290910
HFS, Inc. (a) 12,000 718,500 40418110
Hilton Hotels Corp. 25,100 2,682,563 43284810
Host Marriott Corp. (a) 120,000 1,650,000 44107810
ITT Corp. (a) 24,200 1,288,650 45091210
Mirage Resorts, Inc. (a) 81,000 1,883,250 60462E10
Sun International Hotels Ltd. Ord. (a) 8,600 407,425 86699N22
10,197,788
LODGING PLACES, OTHER THAN HOTELS - 0.2%
Anchor Gaming (a) 3,300 180,263 03303710
RACING & GAMING - 1.9%
Aztar Corp. (a) 11,600 127,600 05480210
International Speedway Corp. 1,500 390,000 46033510
Speedway Motorsports (a) 11,200 315,000 84778810
WMS Industries, Inc. (a) 40,000 925,000 92929710
1,757,600
TOTAL LODGING & GAMING 12,135,651
PRINTING - 0.4%
COMMERCIAL PRINTING - 0.4%
Valassis Communications, Inc. (a) 26,000 396,500 91886610
PUBLISHING - 3.3%
NEWSPAPERS - 2.7%
Knight-Ridder, Inc. 30,000 1,012,500 49904010
Times Mirror Co. Class A 35,500 1,539,813 88736410
2,552,313
PERIODICALS - 0.6%
Meredith Corp. 12,200 $ 524,600 58943310
TOTAL PUBLISHING 3,076,913
RESTAURANTS - 0.1%
Host Marriott Services Corp. (a) 20,000 140,000 44091410
RETAIL & WHOLESALE, MISCELLANEOUS - 6.1%
DURABLE GOODS - WHOLESALE - 2.3%
Sodak Gaming, Inc. (a) 42,100 2,189,200 83377710
SHARES VALUE (NOTE 1)
HOBBY, TOY, & GAME SHOPS - 1.4%
Toys "R" Us, Inc. 43,400 $ 1,280,300 89233510
LUMBER & BUILDING MATERIALS - RETAIL - 1.0%
Lowe's Companies, Inc. 25,000 903,125 54866110
MUSIC, TV, & ELECTRONIC STORES - 0.8%
Tandy Corp. 17,100 754,538 87538210
RETAIL, GENERAL - 0.1%
Pier 1 Imports, Inc. 3,900 65,325 72027910
SPORTING GOODS & BIKES STORES - 0.5%
Cannondale Corp. (a) 27,500 501,875 13779810
TOTAL RETAIL & WHOLESALE, MISCELLANEOUS 5,694,363
TELEPHONE SERVICES - 1.1%
US West, Inc. (Media Group) (a) 55,000 996,875 91288920
TEXTILES & APPAREL - 2.1%
APPAREL - 0.9%
Warnaco Group, Inc. Class A 35,000 866,250 93439010
FOOTWEAR - 1.2%
NIKE, Inc. Class B 10,000 1,080,000 65410610
TOTAL TEXTILES & APPAREL 1,946,250
TOTAL COMMON STOCKS
(Cost $81,760,027) 86,357,196
CONVERTIBLE PREFERRED STOCKS - 0.2%
CELLULAR - 0.2%
CELLULAR & COMMUNICATION SERVICES - 0.2%
AirTouch Communications, Inc.
Class B $1.74 3,167 91,051 00949T20
Class C $2.125 2,034 96,869 00949T30
TOTAL PREFERRED STOCKS
(Cost $191,059) 187,920
REPURCHASE AGREEMENTS - 7.5%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 5.25%, dated
8/30/96 due 9/3/96 $ 7,050,110 7,046,000 69899TYY
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $88,997,086) $ 93,591,116
LEGEND
1. Non-income producing
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $62,752,777 and $52,758,212, respectively (see Note 4 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $30,948 for the period (see
Note 5 of Notes to Financial Statements).
INCOME TAX INFORMATION
At August 31, 1996, the aggregate cost of investment securities for income
tax purposes was $89,060,604. Net unrealized appreciation aggregated
$4,530,512, of which $10,327,065 related to appreciated investment
securities and $5,796,553 related to depreciated investment securities.
LEISURE PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS
Investment in securities, at $ 93,591,116
value (including repurchase agreements of $7,046,000)
(cost $88,997,086) - See accompanying schedule
Cash 533
Receivable for investments sold 1,810,494
Receivable for fund shares sold 222,707
Dividends receivable 24,525
Redemption fees receivable 93
Other receivables 49,016
Prepaid expenses 6,760
TOTAL ASSETS 95,705,244
LIABILITIES
Payable for investments purchased $ 1,765,776
Payable for fund shares redeemed 326,611
Accrued management fee 48,007
Other payables and 105,016
accrued expenses
TOTAL LIABILITIES 2,245,410
NET ASSETS $ 93,459,834
Net Assets consist of:
Paid in capital $ 82,221,756
Undistributed net investment income 237,448
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 6,406,532
Net unrealized appreciation (depreciation) on investments 4,594,098
and assets and liabilities in
foreign currencies
NET ASSETS, for 2,003,915 $ 93,459,834
shares outstanding
NET ASSET VALUE and redemption price per share ($93,459,834 (divided by) 2,003,915 shares) $46.64
Maximum offering price per share (100/97.00 of $46.64) $48.08
</TABLE>
STATEMENT OF OPERATIONS
SIX MONTHS ENDED AUGUST 31, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME $ 299,459
Dividends
Special dividend from ADVO, Inc. 500,000
Interest 235,136
TOTAL INCOME 1,034,595
EXPENSES
Management fee $ 312,963
Transfer agent fees 416,835
Accounting fees and expenses 51,829
Non-interested trustees' compensation 195
Custodian fees and expenses 10,779
Registration fees 6,760
Audit 13,032
Legal 696
Miscellaneous 837
Total expenses before reductions 813,926
Expense reductions (13,168 800,758
)
NET INVESTMENT INCOME 233,837
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 6,532,398
Foreign currency transactions (278 6,532,120
)
Change in net unrealized appreciation (depreciation) on:
Investment securities (5,110,142
)
Assets and liabilities in (12 (5,110,154
foreign currencies ) )
NET GAIN (LOSS) 1,421,966
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 1,655,803
OTHER INFORMATION $ 202,356
Sales charges paid to FDC
Deferred sales charges withheld $ 5,950
by FDC
Exchange fees withheld by FSC $ 19,058
Expense reductions $ 13,036
Directed brokerage arrangements
Custodian interest credits 132
$ 13,168
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS YEAR ENDED
ENDED FEBRUARY 29,
AUGUST 31, 1996 1996
(UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C>
Operations $ 233,837 $ (369,128
Net investment income (loss) )
Net realized gain (loss) 6,532,120 14,883,189
Change in net unrealized appreciation (depreciation) (5,110,154 3,623,038
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 1,655,803 18,137,099
Distributions to shareholders from net realized gains (2,208,246 (8,732,838
) )
Share transactions 75,638,574 62,794,252
Net proceeds from sales of shares
Reinvestment of distributions 2,174,470 8,564,535
Cost of shares redeemed (68,945,904 (65,359,698
) )
Paid in capital portion of redemption fees 132,270 40,287
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS 8,999,410 6,039,376
TOTAL INCREASE (DECREASE) IN NET ASSETS 8,446,967 15,443,637
NET ASSETS
Beginning of period 85,012,867 69,569,230
End of period (including undistributed net investment income of $237,448 and $3,611, respectively) $ 93,459,834 $ 85,012,867
OTHER INFORMATION
Shares
Sold 1,590,325 1,338,175
Issued in reinvestment of distributions 47,636 200,267
Redeemed (1,475,456 (1,405,986
) )
Net increase (decrease) 162,505 132,456
</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> <C>
SIX MONTHS YEAR ENDED YEARS ENDED FEBRUARY 28, TEN MONTHS YEAR ENDED
ENDED FEBRUARY 29, ENDED APRIL 30,
AUGUST 31, 1996 FEBRUARY 28,
SELECTED PER-SHARE DATA D (UNAUDITED) 1996 1995 1994 1993 1992
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 46.17 $ 40.71 $ 45.30 $ 35.77 $ 31.65 $ 26.32
Income from Investment Operations
Net investment income (loss) .11 G (.21) (.21) (.29) (.11) (.08)
Net realized and unrealized gain (loss) 1.29 10.97 (.48) 12.98 4.21 5.40
Total from investment operations 1.40 10.76 (.69) 12.69 4.10 5.32
Less Distributions
From net realized gain (.99) (5.32) (3.93) (3.26) - -
Redemption fees added to paid in capital .06 .02 .03 .10 .02 .01
Net asset value, end of period $ 46.64 $ 46.17 $ 40.71 $ 45.30 $ 35.77 $ 31.65
TOTAL RETURN B, C 3.21% 27.61% (1.07)% 37.14% 13.02% 20.25%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 93,460 $ 85,013 $ 69,569 $ 105,833 $ 44,824 $ 40,051
Ratio of expenses to average net assets 1.56% A 1.64% 1.64% 1.55% 1.90% A 2.21%
Ratio of expenses to average net assets after 1.53% A, 1.63% 1.62% 1.53% 1.90% A 2.21%
expense reductions E E E E
Ratio of net investment income (loss) to average net .45% A (.46)% (.52)% (.69)% (.39)% A (.28)%
assets
Portfolio turnover rate 112% A 141% 103% 170% 109% A 45%
Average commission rate F $ .0341
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <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 9 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
9 OF NOTES TO FINANCIAL STATEMENTS). F FOR FISCAL YEARS BEGINNING
ON OR AFTER SEPTEMBER 1, 1995, A
FUND IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE
FOR SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT
MAY VARY FROM PERIOD TO
PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN
VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION RATE STRUCTURES
MAY
DIFFER. G INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND
FROM ADVO, INC. WHICH AMOUNTED TO $.23 PER SHARE.
</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. A fund's total return includes
changes in 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 6 PAST 1 PAST 5 PAST 10
FEBRUARY 29, 1996 MONTH YEAR YEARS YEARS
S
MULTIMEDIA -4.49% 1.55% 167.83% 360.51%
MULTIMEDIA -7.36% -1.49% 159.80% 346.69%
(INCL. 3% SALES CHARGE)
S&P 500 2.96% 18.73% 89.14% 251.21%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one, five, or 10 years. You
can compare these figures to the performance of the S&P 500 - a widely
recognized, unmanaged index of common stocks. This benchmark reflects
reinvestment of dividends and capital gains, if any, but does not reflect
any sales charges, brokerage commissions, or other costs of investing.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 29, 1996 YEAR YEARS YEARS
MULTIMEDIA 1.55% 21.78% 16.50%
MULTIMEDIA -1.49% 21.04% 16.15%
(INCL. 3% SALES CHARGE)
S&P 500 18.73% 13.59% 13.34%
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
IMAHDR PRASUN SHR__CHT 19960831 19960910 142526 S00000000000001
Multimedia SP Standard & Poor 500
00503 SP001
1986/08/31 9700.00 10000.00
1986/09/30 9189.98 9173.00
1986/10/31 9623.02 9702.28
1986/11/30 9700.00 9938.05
1986/12/31 9411.31 9684.63
1987/01/31 10537.20 10989.15
1987/02/28 11817.06 11423.22
1987/03/31 11778.57 11753.35
1987/04/30 11595.73 11648.74
1987/05/31 12134.62 11750.09
1987/06/30 12644.64 12343.47
1987/07/31 13616.57 12969.28
1987/08/31 13606.94 13453.04
1987/09/30 13279.76 13158.41
1987/10/31 10575.69 10324.09
1987/11/30 9844.35 9473.39
1987/12/31 11287.40 10194.31
1988/01/31 11474.31 10623.49
1988/02/29 12242.73 11118.55
1988/03/31 12772.31 10774.98
1988/04/30 12928.07 10894.59
1988/05/31 12710.01 10989.37
1988/06/30 13149.01 11493.78
1988/07/31 13127.52 11450.10
1988/08/31 12633.36 11060.80
1988/09/30 13428.32 11531.99
1988/10/31 13578.71 11852.58
1988/11/30 13471.29 11683.09
1988/12/31 14317.77 11887.54
1989/01/31 16027.51 12757.71
1989/02/28 15994.42 12440.04
1989/03/31 16744.51 12729.90
1989/04/30 17869.63 13390.58
1989/05/31 18730.02 13932.90
1989/06/30 19113.54 13853.48
1989/07/31 20567.59 15104.45
1989/08/31 20545.39 15400.50
1989/09/30 20223.50 15337.35
1989/10/31 18858.25 14981.53
1989/11/30 18969.25 15287.15
1989/12/31 18977.28 15654.04
1990/01/31 16457.37 14603.66
1990/02/28 16041.71 14792.04
1990/03/31 15885.84 15184.03
1990/04/30 15132.46 14804.43
1990/05/31 16574.27 16247.86
1990/06/30 16431.39 16137.38
1990/07/31 15522.14 16085.74
1990/08/31 13508.81 14631.59
1990/09/30 12352.77 13919.03
1990/10/31 11820.21 13859.18
1990/11/30 13041.20 14754.48
1990/12/31 14002.40 15166.13
1991/01/31 14755.78 15827.37
1991/02/28 15846.87 16959.03
1991/03/31 16275.52 17369.44
1991/04/30 16834.06 17411.13
1991/05/31 16924.98 18163.29
1991/06/30 15587.09 17331.41
1991/07/31 16171.60 18139.05
1991/08/31 16678.18 18568.95
1991/09/30 17691.35 18258.85
1991/10/31 18587.60 18503.51
1991/11/30 17314.66 17757.82
1991/12/31 19302.01 19789.32
1992/01/31 19808.59 19421.24
1992/02/29 20912.68 19673.71
1992/03/31 20380.12 19290.07
1992/04/30 20691.86 19857.20
1992/05/31 21003.60 19954.50
1992/06/30 21081.54 19657.18
1992/07/31 21133.49 20461.16
1992/08/31 20847.73 20041.71
1992/09/30 20717.84 20278.20
1992/10/31 21055.56 20349.17
1992/11/30 22588.29 21043.08
1992/12/31 23451.56 21301.91
1993/01/31 23925.33 21480.84
1993/02/28 24030.61 21772.98
1993/03/31 24978.15 22232.39
1993/04/30 24332.22 21694.37
1993/05/31 25990.93 22275.78
1993/06/30 26806.91 22340.38
1993/07/31 27810.16 22251.02
1993/08/31 30177.84 23094.33
1993/09/30 30900.18 22916.50
1993/10/31 33214.35 23390.88
1993/11/30 31046.76 23168.66
1993/12/31 32367.96 23449.00
1994/01/31 32829.59 24246.27
1994/02/28 32408.70 23589.20
1994/03/31 30426.43 22560.71
1994/04/30 30441.19 22849.48
1994/05/31 31560.69 23224.22
1994/06/30 30855.25 22655.22
1994/07/31 31606.70 23398.31
1994/08/31 33508.31 24357.64
1994/09/30 33278.28 23760.88
1994/10/31 34029.72 24295.50
1994/11/30 32956.23 23410.66
1994/12/31 33663.83 23757.84
1995/01/31 34044.39 24373.88
1995/02/28 35439.78 25323.73
1995/03/31 37691.44 26071.03
1995/04/30 38563.56 26838.83
1995/05/31 38769.69 27911.57
1995/06/30 40260.23 28559.96
1995/07/31 42638.73 29507.01
1995/08/31 43986.56 29581.07
1995/09/30 45239.24 30829.39
1995/10/31 43907.27 30719.33
1995/11/30 45603.94 32067.91
1995/12/31 44999.40 32685.54
1996/01/31 45274.74 33798.15
1996/02/29 46771.85 34111.46
1996/03/31 46152.35 34439.95
1996/04/30 48300.88 34947.60
1996/05/31 49905.03 35848.90
1996/06/30 47595.75 35985.48
1996/07/31 43065.34 34395.64
1996/08/30 44669.50 35121.05
IMATRL PRASUN SHR__CHT 19960831 19960910 142531 R00000000000123
Let's say hypothetically that $10,000 was invested in Fidelity Select
Multimedia Portfolio on August 31, 1986 and a 3% sales charge was paid. By
August 31, 1996, the investment would have grown to $44,669 - a 346.69%
increase. That compares to $10,000 invested in the S&P 500, which would
have grown to $35,121 over the same period - a 251.21% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST 31, 1996
% OF FUND'S
INVESTMENTS
Meredith Corp. 6.6
Times Mirror Co. Class A 5.9
Scientific-Atlanta, Inc. 5.3
Mobile Telecommunications Technologies, Inc. 4.9
Disney (Walt) Co. 3.5
Hollinger International, Inc. Class A 3.4
Knight-Ridder, Inc. 3.4
Infinity Broadcasting Corp. Class A 3.0
360 Degrees Communications Co. 2.9
MFS Communications, Inc. 2.3
TOP INDUSTRIES AS OF AUGUST 31, 1996
7.7
Newspapers 18.0%
TV & Radio Communication
Equipment 10.2%
Cellular & Communication
Services 9.9%
Periodicals 9.3%
Cable TV Operators 7.2%
All Others 45.4% *
Row: 1, Col: 1, Value: 45.4
Row: 1, Col: 2, Value: 7.2
Row: 1, Col: 3, Value: 9.300000000000001
Row: 1, Col: 4, Value: 9.9
Row: 1, Col: 5, Value: 10.2
Row: 1, Col: 6, Value: 18.0
* INCLUDES SHORT-TERM INVESTMENTS
MULTIMEDIA PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
John Porter,
Portfolio Manager of
Fidelity Select Multimedia Portfolio
Q. HOW DID THE FUND PERFORM, JOHN?
A. For the six months ended August 31, 1996 the fund had a total return of
- -4.49%. For the past year, it returned 1.55%. For the same periods, the
Standard & Poor's 500 Index returned 2.96% and 18.73%, respectively.
Q. WHY DID THE FUND UNDERPERFORM THE MARKET?
A. I think the fund's performance is indicative of the underperformance of
the multimedia sector as a whole. If you look at some of the subsectors
that make up the multimedia market - such as regional Bell operating
companies (RBOCs) and cable companies - they significantly underperformed
the general market.
Q. MORE SPECIFICALLY, DID THE UNDERWEIGHTING OR OVERWEIGHTING OF A
PARTICULAR ASSET CLASS HURT THE FUND'S PERFORMANCE?
A. In the fund's annual report, I discussed my reservations about radio
stocks. At the time, I thought they were overvalued and faced stiff
competition for advertising revenues from other forms of media.
Unfortunately, I was wrong. Since then, radio stocks have performed well on
increased merger and acquisition activity resulting from the new
telecommunications law, which eased broadcast market restrictions. What
mergers like the recent Westinghouse/Infinity agreement say to me is that
maybe there are more economies of scale than I originally thought in
putting two broadcasting operations together.
Q. CAN YOU TELL US ABOUT THE RETURNS OF SOME OF THE OTHER MAJOR COMPONENTS
OF THE MULTIMEDIA SECTOR?
A. Publishing stocks had fair performance, but entertainment and newspaper
stocks underperformed the market. Entertainment stocks suffered from tough
competition and a lackluster summer box office. For newspapers, newsprint
prices fell - good news for their cost structures - but advertising revenue
was not as strong as expected.
Q. HOW DO YOU VIEW THE MULTIMEDIA MARKET AND WHAT ARE THE IMPLICATIONS OF
THE TELECOMMUNICATIONS LAW ON THE STOCKS THE FUND OWNS?
A. I break the multimedia market down into four segments: entertainment,
publishing, equipment and distribution. The last two of these are directly
impacted by the telecom law. The passage of the telecom law increases
competition in the distribution area because companies such as RBOCs,
long-distance phone companies, cable companies and broadcasting companies
are suddenly entering each other's markets. In general, competition can
lead to pricing pressures and increased capital spending to gain market
share. Capital spending, on the other hand, could potentially help
equipment firms including cable equipment providers such as
Scientific-Atlanta.
Q. WHAT DO YOU SEE GOING FORWARD FOR THE MULTIMEDIA INDUSTRY?
A. The size and scope of the multimedia market are changing dramatically.
We've already seen some interesting cross-industry combinations as a result
of the telecom law. For example, with companies that combine local and
long-distance telephone service with Internet service, or local telephone
service with cable service, the challenge will be to offer a better product
at lower prices in order to encourage the consumer from going out and
buying each service individually. We'll have to wait and see which
companies can offer these multi-source packages.
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: June 30, 1986
FUND NUMBER: 503
TRADING SYMBOL: FBMPX
SIZE: as of August 31, 1996, more than
$86 million
MANAGER: John Porter, since February 1996;
joined Fidelity in 1995
(checkmark)
MULTIMEDIA PORTFOLIO
INVESTMENTS AUGUST 31, 1996 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 93.5%
SHARES VALUE (NOTE 1)
ADVERTISING - 5.0%
ADVERTISING AGENCIES - 4.3%
ADVO, Inc. 210,000 $ 2,073,748 00758510
Interpublic Group of Companies, Inc. 15,000 678,750 46069010
Omnicom Group, Inc. 25,000 1,134,375 68191910
3,886,873
RADIO & TV ADVERTISING REPRESENTATIVES - 0.7%
Katz Media Group, Inc. (a) 50,000 606,250 48611210
TOTAL ADVERTISING 4,493,123
BROADCASTING - 17.0%
CABLE TV OPERATORS - 7.2%
BET Holdings, Inc. Class A (a) 12,700 325,438 08658510
CAI Wireless Systems, Inc. (a) 104,400 776,475 12476P10
Gaylord Entertainment Co. Class A 8,400 205,800 36790110
People's Choice TV Corp. (a) 150,412 1,936,555 71084710
TCI Group Class A 105,000 1,561,875 87924V10
Tele-Communications Liberty
Media Group, Series A (a) 13,750 362,656 87924V50
Videotron Holdings PLC sponsored ADR (a) 81,000 1,356,750 92659H10
6,525,549
COMMUNICATIONS SERVICES - 0.9%
PanAmSat Corp. (a) 30,000 832,500 69830X10
RADIO BROADCASTING - 4.3%
Grupo Radio Centro SA de CV
sponsored ADR 137,200 1,080,450 40049C10
Infinity Broadcasting Corp. Class A 100,000 2,737,500 45662610
3,817,950
TELEVISION BROADCASTING - 4.6%
Canwest Global Communications Corp.
(non-vtg.) (a) 75,000 685,182 13890630
Central European Media Class C (a) 25,000 703,125 15399422
Grupo Televisa SA de CV sponsored
ADR (a) 53,100 1,612,915 40049J20
Lambert Communications, Inc. (a) 150,000 - 51328G10
New World Communications
Group, Inc. Class A (a) 50,000 1,153,125 64927A10
4,154,347
TOTAL BROADCASTING 15,330,346
CELLULAR - 9.9%
CELLULAR & COMMUNICATION SERVICES - 9.9%
AirTouch Communications, Inc. (a) 43,400 1,193,500 00949T10
Arch Communications Group, Inc. (a) 50,000 681,250 03938110
Mobile Telecommunications
Technologies, Inc. (a) 320,000 4,440,000 60740610
360 Degrees Communications Co. (a) 110,000 2,626,250 88557110
8,941,000
COMMUNICATIONS EQUIPMENT - 1.4%
TELEPHONE EQUIPMENT - 1.4%
DSC Communications Corp. (a) 42,600 1,267,350 23331110
COMPUTER SERVICES & SOFTWARE - 4.3%
COMPUTER SERVICES - 1.2%
Barra, Inc. (a) 30,000 637,500 06831310
Checkfree Corp. (a) 25,000 415,625 16281210
1,053,125
SHARES VALUE (NOTE 1)
PREPACKAGED COMPUTER SOFTWARE - 3.1%
FactSet Research Systems, Inc. (a) 42,000 $ 850,500 30307510
Softkey International, Inc. 115,000 1,998,125 83402N10
2,848,625
TOTAL COMPUTER SERVICES & SOFTWARE 3,901,750
COMPUTERS & OFFICE EQUIPMENT - 2.0%
OFFICE AUTOMATION - 2.0%
Bell & Howell Co. (a) 60,000 1,800,000 07785210
CONSUMER ELECTRONICS - 0.7%
RADIOS, TELEVISIONS, STEREOS - 0.7%
Sony Corp. ADR 9,300 588,225 83569930
ELECTRICAL EQUIPMENT - 10.2%
TV & RADIO COMMUNICATION EQUIPMENT - 10.2%
California Amplifier, Inc. (a) 90,400 1,130,000 12990010
General Instrument Corp. (a) 70,600 1,932,675 37012110
Leitch Technology Corp. (a) 46,400 1,398,867 52543H10
Scientific-Atlanta, Inc. 356,900 4,818,150 80865510
9,279,692
ENTERTAINMENT - 3.6%
MOTION PICTURE PRODUCTION - 3.6%
Alliance Communications Corp.
Class A (vtg.) (a) 12,500 110,543 01855R20
Disney (Walt) Co. 55,000 3,135,000 25468710
3,245,543
PUBLISHING - 30.9%
BOOK PUBLISHING & PRINTING - 3.9%
Harcourt General, Inc. 32,000 1,532,000 41163G10
Scholastic Corp. (a) 30,000 2,032,500 80706610
3,564,500
NEWSPAPERS - 17.7%
Central Newspapers, Inc. Class A 40,000 1,460,000 15464710
Hollinger International, Inc. Class A 284,000 3,088,500 43556910
Knight-Ridder, Inc. 90,400 3,051,000 49904010
New York Times Co. (The) Class A 61,900 1,934,375 65011110
News Corp. Ltd. sponsored ADR
(ltd. vtg.) . 61,700 1,095,175 65248780
Times Mirror Co. Class A 123,200 5,343,800 88736410
15,972,850
PERIODICALS - 9.3%
K-III Communications Corp. (a) 130,000 1,430,000 48272710
Meredith Corp. 138,200 5,942,600 58943310
Playboy Enterprises, Inc. Class B (a) 80,000 1,000,000 72811730
8,372,600
TOTAL PUBLISHING 27,909,950
SERVICES - 2.6%
COMMERCIAL TESTING LABS - 0.7%
Forensic Technologies International Corp. (a) 75,000 693,750 34551810
GENERAL SERVICES - 1.9%
Flextech PLC (a) 211,100 1,687,881 33999392
TOTAL SERVICES 2,381,631
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
TELEPHONE SERVICES - 5.9%
MFS Communications, Inc. 50,000 $ 2,118,750 55272T10
Telebras sponsored ADR 25,000 1,859,375 87928710
U.S. West, Inc. (Media Group) (a) 75,000 1,359,375 91288920
5,337,500
TOTAL COMMON STOCKS
(Cost $85,122,408) 84,476,110
NONCONVERTIBLE PREFERRED STOCKS - 0.3%
PUBLISHING - 0.3%
NEWSPAPERS - 0.3%
News Corp. Ltd. (ltd. vtg.)
(Cost $178,728) 50,993 229,549 65199093
REPURCHASE AGREEMENTS - 6.2%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 5.25%, dated
8/30/96 due 9/3/96 $ 5,622,278 5,619,000 69899TYY
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $90,920,136) $ 90,324,659
LEGEND
1. Non-income producing
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $41,968,998 and $44,174,846, respectively (see Note 4 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $8,093 for the period (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 86.2%
United Kingdom 3.4
Mexico 3.0
Canada 2.4
Brazil 2.1
Australia 1.5
Others (individually less than 1%) 1.4
TOTAL 100.0%
INCOME TAX INFORMATION
At August 31, 1996, the aggregate cost of investment securities for income
tax purposes was $91,567,024. Net unrealized depreciation aggregated
$1,242,365, of which $7,873,902 related to appreciated investment
securities and $9,116,267 related to depreciated investment securities.
MULTIMEDIA PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS
Investment in securities, $ 90,324,659
at value (including repurchase agreements of $5,619,000)
(cost $90,920,136) - See accompanying schedule
Cash 824
Receivable for investments sold 729,048
Receivable for fund shares sold 206,147
Dividends receivable 39,024
Redemption fees receivable 765
Other receivables 231
Prepaid expenses 7,959
TOTAL ASSETS 91,308,657
LIABILITIES
Payable for investments purchased $ 4,541,115
Payable for fund shares redeemed 489,677
Accrued management fee 43,230
Other payables and 94,071
accrued expenses
TOTAL LIABILITIES 5,168,093
NET ASSETS $ 86,140,564
Net Assets consist of:
Paid in capital $ 82,938,103
Undistributed net investment income 1,411,855
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 2,386,553
Net unrealized appreciation (depreciation) on investments (595,947
and assets and liabilities in )
foreign currencies
NET ASSETS, for 3,399,323 $ 86,140,564
shares outstanding
NET ASSET VALUE and redemption price per share ($86,140,564 (divided by) 3,399,323 shares) $25.34
Maximum offering price per share (100/97.00 of $25.34) $26.12
</TABLE>
STATEMENT OF OPERATIONS
SIX MONTHS ENDED AUGUST 31, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME $ 335,700
Dividends
Special dividend from ADVO, Inc. 1,600,000
Interest 174,508
TOTAL INCOME 2,110,208
EXPENSES
Management fee $ 278,551
Transfer agent fees 359,285
Accounting fees and expenses 46,147
Non-interested trustees' compensation 178
Custodian fees and expenses 8,483
Registration fees 7,959
Audit 16,603
Legal 361
Miscellaneous 1,287
Total expenses before reductions 718,854
Expense reductions (20,501 698,353
)
NET INVESTMENT INCOME 1,411,855
REALIZED AND UNREALIZED GAIN (LOSS) 3,097,891
Net realized gain (loss) on
investment securities
Change in net unrealized appreciation (depreciation) on:
Investment securities (9,821,811
)
Assets and liabilities in (470 (9,822,281
foreign currencies ) )
NET GAIN (LOSS) (6,724,390
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ (5,312,535
)
OTHER INFORMATION $ 236,689
Sales charges paid to FDC
Deferred sales charges withheld $ 1,832
by FDC
Exchange fees withheld by FSC $ 14,355
Expense reductions $ 18,644
Directed brokerage arrangements
Custodian interest credits 1,593
Transfer agent interest credits 264
$ 20,501
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS YEAR ENDED
ENDED FEBRUARY 29,
AUGUST 31, 1996 1996
(UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C>
Operations $ 1,411,855 $ 79,501
Net investment income
Net realized gain (loss) 3,097,891 15,081,916
Change in net unrealized appreciation (depreciation) (9,822,281 7,021,515
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (5,312,535 22,182,932
)
Distributions to shareholders - (62,595
From net investment income )
From net realized gain (2,110,174 (6,860,366
) )
TOTAL DISTRIBUTIONS (2,110,174 (6,922,961
) )
Share transactions 29,616,559 226,094,070
Net proceeds from sales of shares
Reinvestment of distributions 2,079,894 6,804,045
Cost of shares redeemed (33,175,893 (191,430,375
) )
Paid in capital portion of redemption fees 72,992 84,905
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS (1,406,448 41,552,645
)
TOTAL INCREASE (DECREASE) IN NET ASSETS (8,829,157 56,812,616
)
NET ASSETS
Beginning of period 94,969,721 38,157,105
End of period (including undistributed net investment income of $1,411,855 and $16,907,
respectively) $ 86,140,564 $ 94,969,721
OTHER INFORMATION
Shares
Sold 1,089,078 8,957,896
Issued in reinvestment of distributions 79,295 262,403
Redeemed (1,262,842 (7,433,399
) )
Net increase (decrease) (94,469) 1,786,900
</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> <C>
SIX MONTHS YEAR ENDED YEARS ENDED FEBRUARY 28, TEN MONTHS YEAR ENDED
ENDED FEBRUARY 29, ENDED APRIL 30,
AUGUST 31, 1996 FEBRUARY 28,
SELECTED PER-SHARE DATA D (UNAUDITED) 1996 1995 1994 1993 1992
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 27.18 $ 22.35 $ 23.87 $ 18.26 $ 15.93 $ 12.96
Income from Investment Operations
Net investment income (loss) .41 H .02 (.01) (.10) (.07) (.17)
Net realized and unrealized gain (loss) (1.63) 7.00 1.67 6.28 2.61 3.08
Total from investment operations (1.22) 7.02 1.66 6.18 2.54 2.91
Less Distributions
From net investment income - (.02) - - - -
From net realized gain (.64) (2.19) (3.21) (.65) (.23) -
Total distributions (.64) (2.21) (3.21) (.65) (.23) -
Redemption fees added to paid in capital .02 .02 .03 .08 .02 .06
Net asset value, end of period $ 25.34 $ 27.18 $ 22.35 $ 23.87 $ 18.26 $ 15.93
TOTAL RETURN B, C (4.49)% 31.98% 9.35% 34.86% 16.14% 22.92%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 86,141 $ 94,970 $ 38,157 $ 49,177 $ 16,647 $ 8,393
Ratio of expenses to average net assets 1.55% A 1.56% 2.05% 1.66% 2.49% A, 2.49%
F F
Ratio of expenses to average net assets after 1.50% A, 1.54% 2.03% 1.63% 2.49% A 2.49%
expense reductions E E E E
Ratio of net investment income (loss) to average net 3.04% A .08% (.07)% (.42)% (.52)% A (1.22)%
assets
Portfolio turnover rate 95% A 223% 107% 340% 70% A 111%
Average commission rate G $ .0402
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <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 9 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 9 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. G FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A
FUND IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH
COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD TO PERIOD AND
FUND TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN VARIOUS MARKETS
WHERE TRADING
PRACTICES AND COMMISSION RATE STRUCTURES MAY DIFFER. H INVESTMENT INCOME
PER SHARE REFLECTS A SPECIAL DIVIDEND FROM ADVO, INC. WHICH AMOUNTED TO
$.46 PER SHARE.
</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. A fund's total return includes
changes in 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 6 PAST 1 PAST 5 PAST 10
FEBRUARY 29, 1996 MONTH YEAR YEARS YEARS
S
RETAILING 15.86% 22.64% 88.95% 353.58%
RETAILING 12.38% 18.96% 83.28% 339.97%
(INCL. 3% SALES CHARGE)
S&P 500 2.96% 18.73% 89.14% 251.21%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one, five, or 10 years. You
can compare these figures to the performance of the S&P 500 - a widely
recognized, unmanaged index of common stocks. This benchmark reflects
reinvestment of dividends and capital gains, if any, but does not reflect
any sales charges, brokerage commissions, or other costs of investing.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 29, 1996 YEAR YEARS YEARS
RETAILING 22.64% 13.57% 16.32%
RETAILING 18.96% 12.88% 15.97%
(INCL. 3% SALES CHARGE)
S&P 500 18.73% 13.59% 13.34%
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
IMAHDR PRASUN SHR__CHT 19960831 19960910 152717 S00000000000001
Retailing SP Standard & Poor 500
00046 SP001
1986/08/31 9700.00 10000.00
1986/09/30 8990.45 9173.00
1986/10/31 9783.48 9702.28
1986/11/30 10050.60 9938.05
1986/12/31 9341.05 9684.63
1987/01/31 10117.38 10989.15
1987/02/28 11294.41 11423.22
1987/03/31 11636.66 11753.35
1987/04/30 11277.71 11648.74
1987/05/31 11478.06 11750.09
1987/06/30 12104.13 12343.47
1987/07/31 12713.51 12969.28
1987/08/31 12997.33 13453.04
1987/09/30 12070.74 13158.41
1987/10/31 8464.54 10324.09
1987/11/30 7880.21 9473.39
1987/12/31 8653.42 10194.31
1988/01/31 9200.05 10623.49
1988/02/29 10265.51 11118.55
1988/03/31 10395.22 10774.98
1988/04/30 10719.49 10894.59
1988/05/31 10413.75 10989.37
1988/06/30 11330.97 11493.78
1988/07/31 11229.06 11450.10
1988/08/31 11201.27 11060.80
1988/09/30 11859.07 11531.99
1988/10/31 12109.23 11852.58
1988/11/30 11942.46 11683.09
1988/12/31 12002.74 11887.54
1989/01/31 12596.28 12757.71
1989/02/28 12426.70 12440.04
1989/03/31 13020.24 12729.90
1989/04/30 13755.10 13390.58
1989/05/31 14706.65 13932.90
1989/06/30 14444.84 13853.48
1989/07/31 15609.74 15104.45
1989/08/31 16366.93 15400.50
1989/09/30 16328.10 15337.35
1989/10/31 15541.79 14981.53
1989/11/30 15638.86 15287.15
1989/12/31 15547.26 15654.04
1990/01/31 14332.99 14603.66
1990/02/28 14832.31 14792.04
1990/03/31 16046.59 15184.03
1990/04/30 15819.62 14804.43
1990/05/31 17930.42 16247.86
1990/06/30 17703.45 16137.38
1990/07/31 16977.16 16085.74
1990/08/31 14537.26 14631.59
1990/09/30 12914.44 13919.03
1990/10/31 12312.98 13859.18
1990/11/30 13992.53 14754.48
1990/12/31 14765.11 15166.13
1991/01/31 16198.40 15827.37
1991/02/28 17699.93 16959.03
1991/03/31 19542.73 17369.44
1991/04/30 19815.74 17411.13
1991/05/31 21465.15 18163.29
1991/06/30 20782.63 17331.41
1991/07/31 22113.54 18139.05
1991/08/31 23285.20 18568.95
1991/09/30 23034.94 18258.85
1991/10/31 22602.68 18503.51
1991/11/30 22170.42 17757.82
1991/12/31 24825.06 19789.32
1992/01/31 26201.63 19421.24
1992/02/29 27461.55 19673.71
1992/03/31 26913.25 19290.07
1992/04/30 25816.66 19857.20
1992/05/31 26353.29 19954.50
1992/06/30 25123.14 19657.18
1992/07/31 26240.81 20461.16
1992/08/31 25645.53 20041.71
1992/09/30 26410.89 20278.20
1992/10/31 28221.02 20349.17
1992/11/30 30359.16 21043.08
1992/12/31 30305.50 21301.91
1993/01/31 30514.59 21480.84
1993/02/28 29358.45 21772.98
1993/03/31 31621.53 22232.39
1993/04/30 29806.52 21694.37
1993/05/31 31457.54 22275.78
1993/06/30 30701.35 22340.38
1993/07/31 30852.59 22251.02
1993/08/31 32264.14 23094.33
1993/09/30 33247.19 22916.50
1993/10/31 33763.92 23390.88
1993/11/30 34091.61 23168.66
1993/12/31 34254.78 23449.00
1994/01/31 32728.71 24246.27
1994/02/28 33941.39 23589.20
1994/03/31 33232.86 22560.71
1994/04/30 34241.15 22849.48
1994/05/31 32551.58 23224.22
1994/06/30 32279.07 22655.22
1994/07/31 32824.09 23398.31
1994/08/31 34908.81 24357.64
1994/09/30 34227.53 23760.88
1994/10/31 34377.41 24295.50
1994/11/30 33178.36 23410.66
1994/12/31 32537.95 23757.84
1995/01/31 32279.07 24373.88
1995/02/28 32578.83 25323.73
1995/03/31 32946.72 26071.03
1995/04/30 31665.91 26838.83
1995/05/31 32224.56 27911.57
1995/06/30 34282.03 28559.96
1995/07/31 36380.37 29507.01
1995/08/31 35876.23 29581.07
1995/09/30 36952.65 30829.39
1995/10/31 35303.95 30719.33
1995/11/30 37075.28 32067.91
1995/12/31 36434.88 32685.54
1996/01/31 35372.08 33798.15
1996/02/29 37974.57 34111.46
1996/03/31 40795.07 34439.95
1996/04/30 43179.55 34947.60
1996/05/31 45250.65 35848.90
1996/06/30 44446.73 35985.48
1996/07/31 40195.54 34395.64
1996/08/30 43997.09 35121.05
IMATRL PRASUN SHR__CHT 19960831 19960910 152722 R00000000000123
Let's say hypothetically that $10,000 was invested in Fidelity Select
Retailing Portfolio on August 31, 1986, and a 3% sales charge was paid. By
August 31, 1996, the investment would have grown to $43,997 - a 339.97%
increase. That compares to $10,000 invested in the S&P 500, which would
have grown to $35,121 over the same period - a 251.21% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST 31, 1996
% OF FUND'S
INVESTMENTS
Melville Corp. 9.9
Wal-Mart Stores, Inc. 5.6
Tandy Corp. 5.3
TJX Companies, Inc. 4.5
Lowe's Companies, Inc. 4.3
Toys "R" Us, Inc. 3.7
Gadzooks, Inc. 3.0
Federated Department Stores, Inc. 2.9
Dayton Hudson Corp. 2.7
Sears, Roebuck & Co. 2.5
TOP INDUSTRIES AS OF AUGUST 31, 1996
Women's Clothing Stores 13.9%
Department Stores 9.9%
General Merchandise
Stores 9.3%
General Apparel Stores 8.5%
Music, TV, & Electronic
Stores 5.7%
All Others 52.7% *
Row: 1, Col: 1, Value: 52.9
Row: 1, Col: 2, Value: 5.7
Row: 1, Col: 3, Value: 8.300000000000001
Row: 1, Col: 4, Value: 9.300000000000001
Row: 1, Col: 5, Value: 9.9
Row: 1, Col: 6, Value: 13.9
* INCLUDES SHORT-TERM INVESTMENTS
RETAILING PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Erin Sullivan,
Portfolio Manager of
Fidelity Select Retailing
Portfolio
Q. HOW HAS THE FUND PERFORMED, ERIN?
A. The fund has done pretty well. For the six-month period ended August 31,
1996, the fund showed a 15.86% gain. For the 12-month period, the fund
returned 22.64%. For the same six- and 12-month periods, the Standard &
Poor's 500 Index returned 2.96% and 18.73%, respectively.
Q. THE PERFORMANCE OF RETAIL STOCKS HAS BEEN QUITE STRONG OVER THE PAST SIX
MONTHS. WHAT'S BEEN FUELING THAT RECENT STRENGTH?
A. Generally speaking, the earnings gains of retail companies have outpaced
the earnings gains of the stock market overall. At the end of 1995,
retailers had pared their inventories back. So coming into 1996,
inventories were relatively low. Meanwhile, demand for apparel and other
consumer goods strengthened to better-than-expected levels through the end
of the spring. Lower inventories, combined with higher sales, led to better
profit margins for many retailers. Additionally, many retailers were able
to benefit from cost-cutting and lower expenses. However, the retail sector
sold off with the rest of the market in July's down draft at the hands of
weak June retail sales results. But by August, the situation had improved,
and the retail sector was once again strong, thanks in part to better
back-to-school spending.
Q. WHICH OF THE FUND'S HOLDINGS DID PARTICULARLY WELL OVER THE PAST SIX
MONTHS?
A. Melville Corp., the fund's largest investment at the end of the period,
was a strong performer for the fund. Over the past 12 months, the company
has shed businesses to focus on its drugstore business, which operates
under the CVS flag. Wal-Mart, which is the country's largest retail company
and operates Wal-Mart stores, Sam's Clubs and Wal-Mart Supercenters
(combination supermarket and discount department stores), was also one of
the fund's top performers and one of its largest investments at the end of
the period. The company has been very focused on improving its profits,
primarily by controlling costs, and investors rewarded the company by
bidding up its stock price. Wal-mart's stock got an added boost late in the
period from better back-to-school apparel sales.
Q. SOME OF THE FUND'S LARGEST HOLDINGS ARE DEPARTMENT STORES. WHAT KIND OF
PERFORMANCE DID THEY HAVE DURING THE PAST SIX MONTHS?
A. The fund's largest department store holdings turned in mixed
performances. Federated Department Stores - which operates through
divisions including Abraham & Straus/Jordan Marsh, Bloomingdale's,
Burdines, Lazarus, Macy's, Rich/Goldsmith's and Stern's - did quite well,
improving its earnings primarily through cost-cutting measures. Dayton
Hudson also performed well, thanks to the strong returns of its Target
division. On the other hand, the stock of Sears suffered as investors
worried about rising credit card delinquencies and bankruptcies related to
the store's proprietary Sears credit card.
Q. DESPITE THE FUND'S STRONG SHOWING, THERE MUST HAVE BEEN SOME
DISAPPOINTMENTS . . .
A. Sears, as I just mentioned, was one disappointment. Also, Tandy - the
retailer of consumer electronics through Radio Shack, Computer City and
Incredible Universe stores - didn't fare as well as I had hoped. While the
stock enjoyed a run-up in the spring, it tumbled in the summer when the
company's second quarter earnings fell below expectations.
Q. WHAT'S YOUR OUTLOOK FOR THE RETAIL ENVIRONMENT?
A. I'm cautiously optimistic. I think it's encouraging that inventory
levels continue to remain low. There are some concerns that if interest
rates rise it could curtail demand. On the other hand, consumer confidence
remains high, and the recent hike in the minimum wage could stir additional
demand. The retail sector could see some additional consolidation -
although to a lesser extent than we've seen over the past year. In my view,
the retail sector will continue to be troubled by an over supply of stores
for some time. That's why I believe it's important to focus on stocks whose
fundamentals and market position are strong. As a part of that strategy,
I'll most likely focus on niche companies that concentrate on one
specialized line or product and that dominate or lead their industry.
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: December 16, 1985
FUND NUMBER: 046
TRADING SYMBOL: FSRPX
SIZE: as of August 31, 1996, more than
$261 million
MANAGER: Erin Sullivan, since 1995; equity
analyst, medical technology and hospital
supply industries, 1993-1995; analyst, initial
public offerings, 1991-1992; joined Fidelity in
1991
(checkmark)
RETAILING PORTFOLIO
INVESTMENTS AUGUST 31, 1996 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 87.3%
SHARES VALUE (NOTE 1)
APPAREL STORES - 24.3%
FAMILY CLOTHING STORES - 0.1%
Harolds Stores, Inc. (a) 19,000 $ 268,375 41335310
GENERAL APPAREL STORES - 8.3%
Gymboree Corp. (a) 80,000 2,310,000 40377710
Limited, Inc. (The) 84,700 1,566,950 53271610
Men's Wearhouse, Inc. (The) 77,300 1,681,275 58711810
Ross Stores, Inc. 109,300 4,208,050 77829610
Saks Holdings, Inc. (a) 11,000 375,375 79377R10
TJX Companies, Inc. 369,900 11,836,800 87254010
21,978,450
MENS & BOYS CLOTHING STORES - RETAIL - 0.1%
K&G Men's Center, Inc. (a) 10,000 226,250 48224510
SHOE STORES - 1.4%
Just for Feet, Inc. 900 40,275 48213P10
Payless ShoeSource, Inc. 108,600 3,814,575 70437910
3,854,850
WOMEN'S ACCESSORY & SPECIALTY STORES - 0.5%
Loehmanns, Inc. (a) 52,000 1,293,500 54041710
WOMEN'S CLOTHING STORES - 13.9%
AnnTaylor Stores Corp. 60,000 870,000 03611510
Charming Shoppes, Inc. (a) 381,900 2,553,956 16113310
Chicos Fas, Inc. (a) 46,900 410,375 16861510
Melville Corp. 619,600 26,178,100 58574510
Mothers Work (a) 64,500 1,290,000 61990310
Talbots, Inc. 163,200 5,589,600 87416110
36,892,031
TOTAL APPAREL STORES 64,513,456
AUTOS, TIRES, & ACCESSORIES - 2.0%
AUTO & TRUCK PARTS - 0.8%
Tower Automotive, Inc. (a) 85,000 2,040,000 89170710
AUTO PARTS - RETAIL - 1.2%
AutoZone, Inc. (a) 15,000 408,750 05333210
Discount Auto Parts, Inc. (a) 20,000 470,000 25464210
Monro Muffler Brake, Inc. 10,500 207,375 61023610
O'Reilly Automotive, Inc. (a) 30,900 1,120,125 68609110
Pep Boys-Manny, Moe & Jack 30,000 1,005,000 71327810
3,211,250
TOTAL AUTOS, TIRES, & ACCESSORIES 5,251,250
BROADCASTING - 0.0%
TELEVISION BROADCASTING - 0.0%
Home Shopping Network, Inc. (a) 10,000 107,500 43735110
COMPUTER SERVICES & SOFTWARE - 0.2%
COMPUTER & SOFTWARE STORES - 0.2%
CompUSA, Inc. (a) 10,200 409,275 20493210
PREPACKAGED COMPUTER SOFTWARE - 0.0%
Metromail Corp. (a) 5,900 103,250 59168010
TOTAL COMPUTER SERVICES & SOFTWARE 512,525
DRUG STORES - 3.6%
Big B, Inc. 260,000 2,697,500 08889110
Eckerd Corp. (a) 70,100 1,717,450 27876310
General Nutrition Companies, Inc. (a) 200,000 2,950,000 37047F10
Revco (D.S.), Inc. (a) 81,200 2,090,900 76133910
9,455,850
SHARES VALUE (NOTE 1)
GENERAL MERCHANDISE STORES - 21.9%
DEPARTMENT STORES - 9.9%
Dillard Department Stores, Inc. Class A 93,200 $ 3,168,800 25406310
Federated Department Stores, Inc. (a) 219,600 7,603,650 31410H10
Neiman-Marcus Group, Inc. (a) 62,700 1,857,488 64020410
Nordstrom, Inc. 50,000 1,950,000 65566410
Proffitts, Inc. (a) 64,052 2,626,132 74292510
Sears, Roebuck & Co. 153,510 6,754,440 81238710
Stein Mart, Inc. 110,400 2,304,600 85837510
26,265,110
GENERAL MERCHANDISE STORES - 9.3%
Dayton Hudson Corp. 205,000 7,072,500 23975310
Dollar General Corp. 38,750 1,249,688 25666910
Family Dollar Stores, Inc. 49,700 844,900 30700010
Price/Costco, Inc. (a) 35,300 701,588 74143W10
Wal-Mart Stores, Inc. 559,800 14,834,700 93114210
24,703,376
VARIETY STORES - 2.7%
Consolidated Stores Corp. (a) 89,100 3,385,800 21014910
Freds, Inc. Class A 29,500 280,250 35610810
Michaels Stores, Inc. (a) 10,600 148,400 59408710
Woolworth Corp. (a) 156,800 3,332,000 98088310
7,146,450
TOTAL GENERAL MERCHANDISE STORES 58,114,936
GROCERY STORES - 3.3%
GROCERIES & RELATED PRODUCTS - WHOLESALE - 0.1%
Provigo, Inc. (a) 30,000 146,903 74395110
GROCERY - RETAIL - 3.2%
Albertson's, Inc. 38,200 1,618,725 01310410
American Stores Co. 40,000 1,645,000 03009610
Great Atlantic & Pacific Tea Co., Inc. 40,000 1,070,000 39006410
Kroger Co. (The) (a) 50,000 2,118,750 50104410
Safeway, Inc. (a) 56,400 2,044,500 78651420
8,496,975
TOTAL GROCERY STORES 8,643,878
LEASING & RENTAL - 0.1%
PASSENGER CAR RENTAL - 0.1%
Team Rental Group, Inc. Class A (a) 12,000 222,000 87815610
LEISURE DURABLES & TOYS - 1.8%
TOYS & GAMES - 1.8%
Galoob (Lewis) Toys, Inc. (a) 108,200 2,840,250 36409110
Hasbro, Inc. 34,800 1,278,900 41805610
Nintendo Co. Ltd. Ord. 10,300 630,062 65443999
4,749,212
POLLUTION CONTROL - 0.5%
REFUSE SYSTEMS - 0.5%
Republic Industries, Inc. (a) 50,000 1,306,250 76051610
RESTAURANTS - 2.5%
Applebee's International, Inc. 10,000 290,000 03789910
Brinker International, Inc. (a) 33,600 504,000 10964110
Cooker Restaurant Corp. 40,000 515,000 21628420
Darden Restaurants, Inc. 90,000 720,000 23719410
McDonald's Corp. 70,000 3,246,250 58013510
Planet Hollywood International,
Inc. Class A (a) 60,000 1,462,500 72702510
6,737,750
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
RETAIL & WHOLESALE, MISCELLANEOUS - 22.2%
BOOK STORES - RETAIL - 0.2%
Borders Group, Inc. (a) 15,000 $ 485,625 09970910
BUILDING MATERIALS - RETAIL - 2.5%
BMC West Corp. (a) 60,000 825,000 05592610
Home Depot, Inc. (The) 77,200 4,101,250 43707610
Orchard Supply Hardware Corp. (a) 50,200 1,744,450 68569110
6,670,700
GIFT, NOVELTY & SOUVENIR SHOPS - 0.1%
Cole National Corp. Class A (a) 10,000 190,000 19329010
HOBBY, TOY, & GAME SHOPS - 3.7%
Brookstone, Inc. (a) 10,000 108,750 11453710
Toys "R" Us, Inc. 330,700 9,755,650 89233510
9,864,400
JEWELRY STORES - 1.2%
Marks Brothers Jewelers, Inc. (a) 62,300 1,495,200 57069810
Zale Corp. (a) 100,000 1,812,500 98885810
3,307,700
LUMBER & BUILDING MATERIALS - RETAIL - 4.3%
Lowe's Companies, Inc. 318,900 11,520,263 54866110
MAIL ORDER - 0.1%
Micro Warehouse, Inc. (a) 10,700 287,563 59501B10
MUSIC, TV, & ELECTRONIC STORES - 5.7%
Best Buy Co., Inc. (a) 13,000 285,997 08651610
Circuit City Stores, Inc. 22,700 715,050 17273710
Sound Advice, Inc. (warrants) (a) 50 - 83606611
Tandy Corp. 320,600 14,146,475 87538210
15,147,522
PAINT, VARNISH & SUPPLIES - WHOLESALE - 0.1%
Finish Line, Inc. Class A (a) 10,000 315,000 31792310
RETAIL STORES - 3.0%
Gadzooks, Inc. (a) 207,918 7,900,884 36255310
RETAIL, GENERAL - 0.8%
Officemax, Inc. (a) 55,000 770,000 67622M10
Office Depot, Inc. (a) 75,000 1,190,625 67622010
Staples, Inc. (a) 10,000 197,500 85503010
2,158,125
SEWING STORES - 0.4%
Fabri-Centers of America, Inc. (a):
Class A 35,000 472,500 30284620
Class B (non-vtg) 35,000 463,750 30284630
936,250
SPORTING GOODS & BIKES STORES - 0.1%
Cannondale Corp. 10,000 182,500 13779810
Sports Authority, Inc. 5,000 119,375 84917610
301,875
TOTAL RETAIL & WHOLESALE, MISCELLANEOUS 59,085,907
SERVICES - 0.8%
GENERAL SERVICES - 0.8%
Regis Corp. 85,500 2,137,500 75893210
TEXTILES & APPAREL - 4.1%
APPAREL - 2.0%
Designer Holdings Ltd. (a) 20,000 442,500 25057110
Fila Holding Spa sponsored ADR 25,000 2,425,000 31685010
Fruit of the Loom, Inc. Class A (a) 41,400 1,148,850 35941610
Liz Claiborne, Inc. 15,000 521,250 53932010
Russell Corp. 26,600 851,200 78235210
5,388,800
SHARES VALUE (NOTE 1)
FOOTWEAR - 1.1%
NIKE, Inc. Class B 20,900 $ 2,257,200 65410610
Wolverine World Wide, Inc. 30,000 723,750 97809710
2,980,950
FOOTWEAR, EXCEPT RUBBER - 0.2%
Adidas AG 5,000 429,681 00699D22
MEN'S & BOYS' CLOTHING - 0.2%
North Face, Inc. (a) 22,000 539,000 65931710
TEXTILE MILL PRODUCTS - 0.6%
Westpoint Stevens, Inc. Class A (a) 58,300 1,523,088 96123810
TOTAL TEXTILES & APPAREL 10,861,519
TOTAL COMMON STOCKS
(Cost $225,521,374) 231,699,533
CONVERTIBLE PREFERRED STOCKS - 0.2%
APPAREL STORES - 0.2%
GENERAL APPAREL STORES - 0.2%
TJX Companies, Inc., Series E,
$7.00 (Cost $514,020) 3,000 546,000 87254030
REPURCHASE AGREEMENTS - 12.5%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 5.25%, dated
8/30/96 due 9/3/96 $ 33,081,286 33,062,000 69899TYY
TOTAL INVESTMENTS IN SECURITIES - 100%
(Cost $259,097,394) $ 265,307,533
LEGEND
1. Non-income producing
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $438,345,103 and $253,401,951, respectively (see Note 4 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $186,550 for the period
(see Note 5 of Notes to Financial Statements).
At the period end, the value of securities loaned and the value of
collateral amounted to $783,750 and $810,000, respectively (see Note 7 of
Notes to Financial Statements).
The maximum loan and the average daily loan balances during the period for
which loans were outstanding amounted to $6,897,000 and $4,916,750,
respectively. The weighted average interest rate paid was 5.7% (see Note 6
of Notes to Financial Statements).
INCOME TAX INFORMATION
At August 31, 1996, the aggregate cost of investment securities for income
tax purposes was $259,400,465. Net unrealized appreciation aggregated
$5,907,068 of which $ 15,261,649 related to appreciated investment
securities and $9,354,581 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
AUGUST 31, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS
Investment in securities, at $ 265,307,533
value (including repurchase agreements of $33,062,000)
(cost $259,097,394) - See accompanying schedule
Cash 175,033
Receivable for investments sold 1,270,465
Receivable for fund shares sold 3,128,624
Dividends receivable 144,195
Redemption fees receivable 3,820
Other receivables 15,571
Prepaid expenses 42,748
TOTAL ASSETS 270,087,989
LIABILITIES
Payable for investments purchased $ 5,406,685
Payable for fund shares redeemed 1,765,801
Accrued management fee 120,384
Other payables and 223,513
accrued expenses
Collateral on securities loaned, 810,000
at value
TOTAL LIABILITIES 8,326,383
NET ASSETS $ 261,761,606
Net Assets consist of:
Paid in capital $ 255,512,622
Accumulated net investment (loss) (174,976
)
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 213,820
Net unrealized appreciation (depreciation) on investments 6,210,140
and assets and liabilities in
foreign currencies
NET ASSETS, for 8,107,586 $ 261,761,606
shares outstanding
NET ASSET VALUE and redemption price per share ($261,761,606 (divided by) 8,107,586 shares) $32.29
Maximum offering price per share (100/97.00 of $32.29) $33.29
</TABLE>
STATEMENT OF OPERATIONS
SIX MONTHS ENDED AUGUST 31, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME $ 866,607
Dividends
Interest (including income on securities loaned of $17,108) 609,557
TOTAL INCOME 1,476,164
EXPENSES
Management fee $ 744,389
Transfer agent fees 755,442
Accounting and security lending fees 124,692
Non-interested trustees' compensation 451
Custodian fees and expenses 14,370
Registration fees 73,300
Audit 13,549
Legal 471
Interest 3,121
Miscellaneous 721
Total expenses before reductions 1,730,506
Expense reductions (79,366 1,651,140
)
NET INVESTMENT INCOME (LOSS) (174,976
)
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 1,224,626
Foreign currency transactions (963 1,223,663
)
Change in net unrealized appreciation (depreciation) on:
Investment securities 4,076,596
Assets and liabilities in 4 4,076,600
foreign currencies
NET GAIN (LOSS) 5,300,263
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 5,125,287
OTHER INFORMATION $ 656,660
Sales charges paid to FDC
Deferred sales charges withheld $ 2,020
by FDC
Exchange fees withheld by FSC $ 80,910
Expense reductions $ 75,498
Directed brokerage arrangements
Custodian interest credits 2,642
Transfer agent interest credits 1,226
$ 79,366
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS YEAR ENDED
ENDED FEBRUARY 29,
AUGUST 31, 1996 1996
(UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C>
Operations $ (174,976 $ (197,764
Net investment income (loss) ) )
Net realized gain (loss) 1,223,663 2,253,913
Change in net unrealized appreciation (depreciation) 4,076,600 3,066,064
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 5,125,287 5,122,213
Share transactions 515,336,616 68,570,912
Net proceeds from sales of shares
Cost of shares redeemed (303,167,480 (60,782,922
) )
Paid in capital portion of redemption fees 416,000 50,523
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS 212,585,136 7,838,513
TOTAL INCREASE (DECREASE) IN NET ASSETS 217,710,423 12,960,726
NET ASSETS
Beginning of period 44,051,183 31,090,457
End of period (including accumulated net investment loss of $174,976 and $0, respectively) $ 261,761,606 $ 44,051,183
OTHER INFORMATION
Shares
Sold 16,251,876 2,635,958
Redeemed (9,724,997 (2,355,724
) )
Net increase (decrease) 6,526,879 280,234
</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> <C>
SIX MONTHS YEAR ENDED YEARS ENDED FEBRUARY 28, TEN MONTHS YEAR ENDED
ENDED FEBRUARY 29, ENDED APRIL 30,
AUGUST 31, 1996 FEBRUARY 28,
SELECTED PER-SHARE DATA D (UNAUDITED) 1996 1995 1994 1993 1992
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 27.87 $ 23.91 $ 24.91 $ 23.87 $ 22.13 $ 17.42
Income from Investment Operations
Net investment income (loss) (.02) (.14) (.18) (.22) (.08) (.03)
Net realized and unrealized gain (loss) 4.39 4.07 (.96) 3.85 2.93 5.09
Total from investment operations 4.37 3.93 (1.14) 3.63 2.85 5.06
Less Distributions
From net realized gain - - - (2.63) (1.17) (.50)
Redemption fees added to paid in capital .05 .03 .14 .04 .06 .15
Net asset value, end of period $ 32.29 $ 27.87 $ 23.91 $ 24.91 $ 23.87 $ 22.13
TOTAL RETURN B, C 15.86% 16.56% (4.01)% 15.61% 13.72% 30.28%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 261,762 $ 44,051 $ 31,090 $ 52,790 $ 74,878 $ 48,441
Ratio of expenses to average net assets 1.40% A 1.94% 2.07% 1.86% 1.77% A 1.87%
Ratio of expenses to average net assets after 1.33% A, 1.92% 1.96% 1.83% 1.77% A 1.87%
expense reductions E E E E
Ratio of net investment income (loss) to average net (.14)% A (.53)% (.74)% (.87)% (.44)% A (.13)%
assets
Portfolio turnover rate 237% A 235% 481% 154% 171% A 205%
Average commission rate F $ .0404
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
ANNUALIZED
THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN SEE (NOTE 9 OF NOTES TO FINANCIAL
STATEMENTS).
TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS
OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
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 9 OF NOTES TO
FINANCIAL STATEMENTS).
FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR SECURITY
TRADES ON WHICH
COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD TO PERIOD AND
FUND TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN VARIOUS MARKETS
WHERE
TRADING PRACTICES AND COMMISSION RATE STRUCTURES MAY DIFFER.
</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. A fund's total return includes
changes in 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 6 PAST 1 PAST 5 PAST 10
AUGUST 31, 1996 MONTH YEAR YEARS YEARS
S
AIR TRANSPORTATION -16.93% -1.67% 69.17% 152.44%
AIR TRANSPORTATION -19.42% -4.62% 64.10% 144.86%
(INCL. 3% SALES CHARGE)
S&P 500 2.96% 18.73% 89.14% 251.21%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one, five, or 10 years. You
can compare these figures to the performance of the S&P 500 - a widely
recognized, unmanaged index of common stocks. This benchmark reflects
reinvestment of dividends and capital gains, if any, but does not reflect
any sales charges, brokerage commissions, or other costs of investing.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
AUGUST 31, 1996 YEAR YEARS YEARS
AIR TRANSPORTATION -1.67% 11.09% 9.70%
AIR TRANSPORTATION -4.62% 10.41% 9.37%
(INCL. 3% SALES CHARGE)
S&P 500 18.73% 13.59% 13.34%
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
IMAHDR PRASUN SHR__CHT 19960831 19960923 100259 S00000000000001
Air Transportation SP Standard & Poor 500
00034 SP001
1986/08/31 9700.00 10000.00
1986/09/30 9898.36 9173.00
1986/10/31 10424.03 9702.28
1986/11/30 10552.97 9938.05
1986/12/31 10721.57 9684.63
1987/01/31 11683.64 10989.15
1987/02/28 12179.55 11423.22
1987/03/31 11762.99 11753.35
1987/04/30 11772.90 11648.74
1987/05/31 12477.10 11750.09
1987/06/30 12635.79 12343.47
1987/07/31 12913.50 12969.28
1987/08/31 13022.60 13453.04
1987/09/30 12546.52 13158.41
1987/10/31 8757.77 10324.09
1987/11/30 8162.68 9473.39
1987/12/31 8507.07 10194.31
1988/01/31 8745.27 10623.49
1988/02/29 9471.21 11118.55
1988/03/31 9879.55 10774.98
1988/04/30 9766.12 10894.59
1988/05/31 9618.67 10989.37
1988/06/30 10855.03 11493.78
1988/07/31 10537.43 11450.10
1988/08/31 9947.61 11060.80
1988/09/30 10605.49 11531.99
1988/10/31 10809.66 11852.58
1988/11/30 10560.11 11683.09
1988/12/31 10979.80 11887.54
1989/01/31 12000.65 12757.71
1989/02/28 12227.50 12440.04
1989/03/31 12840.01 12729.90
1989/04/30 13350.44 13390.58
1989/05/31 13690.72 13932.90
1989/06/30 13622.28 13853.48
1989/07/31 14581.44 15104.45
1989/08/31 15689.03 15400.50
1989/09/30 15072.43 15337.35
1989/10/31 13884.91 14981.53
1989/11/30 13747.89 15287.15
1989/12/31 13871.10 15654.04
1990/01/31 12443.54 14603.66
1990/02/28 12966.98 14792.04
1990/03/31 13645.07 15184.03
1990/04/30 13145.43 14804.43
1990/05/31 14061.44 16247.86
1990/06/30 14097.13 16137.38
1990/07/31 13668.86 16085.74
1990/08/31 11503.73 14631.59
1990/09/30 10349.79 13919.03
1990/10/31 10897.02 13859.18
1990/11/30 10730.47 14754.48
1990/12/31 11349.08 15166.13
1991/01/31 12693.37 15827.37
1991/02/28 14120.92 16959.03
1991/03/31 14061.44 17369.44
1991/04/30 13716.45 17411.13
1991/05/31 14525.40 18163.29
1991/06/30 14219.12 17331.41
1991/07/31 14656.26 18139.05
1991/08/31 14474.12 18568.95
1991/09/30 13988.41 18258.85
1991/10/31 14668.40 18503.51
1991/11/30 14012.69 17757.82
1991/12/31 15554.82 19789.32
1992/01/31 16453.38 19421.24
1992/02/29 17194.09 19673.71
1992/03/31 16186.24 19290.07
1992/04/30 15348.39 19857.20
1992/05/31 15554.82 19954.50
1992/06/30 15049.71 19657.18
1992/07/31 14963.22 20461.16
1992/08/31 14333.06 20041.71
1992/09/30 14802.59 20278.20
1992/10/31 15333.90 20349.17
1992/11/30 15704.59 21043.08
1992/12/31 16576.43 21301.91
1993/01/31 16726.33 21480.84
1993/02/28 16988.65 21772.98
1993/03/31 18862.40 22232.39
1993/04/30 19075.62 21694.37
1993/05/31 20165.30 22275.78
1993/06/30 18662.30 22340.38
1993/07/31 19301.07 22251.02
1993/08/31 20453.38 23094.33
1993/09/30 20040.05 22916.50
1993/10/31 21192.35 23390.88
1993/11/30 21242.45 23168.66
1993/12/31 21696.42 23449.00
1994/01/31 22534.32 24246.27
1994/02/28 21734.51 23589.20
1994/03/31 20477.66 22560.71
1994/04/30 20343.00 22849.48
1994/05/31 19492.56 23224.22
1994/06/30 18898.61 22655.22
1994/07/31 19884.03 23398.31
1994/08/31 20639.98 24357.64
1994/09/30 18331.65 23760.88
1994/10/31 18480.14 24295.50
1994/11/30 17251.73 23410.66
1994/12/31 16978.86 23757.84
1995/01/31 17525.24 24373.88
1995/02/28 19027.79 25323.73
1995/03/31 20257.16 26071.03
1995/04/30 21882.65 26838.83
1995/05/31 22237.80 27911.57
1995/06/30 25051.67 28559.96
1995/07/31 25898.56 29507.01
1995/08/31 24901.41 29581.07
1995/09/30 25816.61 30829.39
1995/10/31 25516.09 30719.33
1995/11/30 28808.05 32067.91
1995/12/31 27087.90 32685.54
1996/01/31 26473.53 33798.15
1996/02/29 29475.54 34111.46
1996/03/31 30983.53 34439.95
1996/04/30 29685.92 34947.60
1996/05/31 29968.51 35848.90
1996/06/30 29827.21 35985.48
1996/07/31 24938.43 34395.64
1996/08/30 24486.29 35121.05
IMATRL PRASUN SHR__CHT 19960831 19960923 100302 R00000000000123
Let's say hypothetically that $10,000 was invested in Fidelity Select Air
Transportation Portfolio on August 31, 1986, and a 3% sales charge was
paid. By August 31, 1996, the investment would have grown to $24,486 - a
144.86% increase. That compares to $10,000 invested in the S&P 500, which
would have grown to $35,121 over the same period - a 251.21% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST 31, 1996
% OF FUND'S
INVESTMENTS
Continental Airlines, Inc. 8.3
AMR Corp. 8.3
Atlantic Southeast Airlines, Inc. 6.7
Premier Technologies, Inc. 5.7
Northwest Airlines Corp. Class A 5.6
Comair Holdings, Inc. 4.8
America West Airlines, Inc. Class B (warrants) 4.7
Midwest Express Holdings, Inc. 4.7
UAL Corp. 4.6
America West Airlines, Inc. Class B 4.6
TOP INDUSTRIES AS OF AUGUST 31, 1996
Air Transportation,
Major National 48.1%
Air Transportation,
Regional 16.1%
Business Services 5.7%
Training Equipment
& Simulators 3.7%
Freight Forwarding 3.7%
All Others 22.7% *
Row: 1, Col: 1, Value: 22.7
Row: 1, Col: 2, Value: 3.7
Row: 1, Col: 3, Value: 3.7
Row: 1, Col: 4, Value: 5.7
Row: 1, Col: 5, Value: 16.1
Row: 1, Col: 6, Value: 48.1
* INCLUDES SHORT-TERM INVESTMENTS
AIR TRANSPORTATION PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
NOTE TO SHAREHOLDERS: Kevin Richardson became Portfolio Manager of Fidelity
Select Air Transportation Portfolio on May 24, 1996.
Q. KEVIN, HOW HAS THE FUND PERFORMED?
A. Not as well as I would have liked. For the six months ended August 31,
1996, the fund had a return of -16.93%. This trailed the 2.96% return of
the Standard & Poor's 500 Index over the same period. For the one-year
period ended August 31, 1996, the fund compiled a return of -1.67%, while
the S&P 500 returned 18.73%.
Q. CAN YOU POINT TO ANY FACTORS THAT TRIGGERED THIS UNDERPERFORMANCE?
A. The fund and the airlines sector in general suffered due to a slew of
unpredictable, negative events. These included the aviation tragedies
involving ValuJet and Trans World Airlines (TWA), legislation surrounding
the airline excise tax, an ill-timed price promotion by Southwest Airlines
and soaring jet fuel costs. Basically, everything that could have gone
wrong in the airline industry did go wrong - all in one hectic, six-week
period. With the stock market being fairly volatile during the period, the
aggressive-by-nature airline industry was even more susceptible.
Q. LET'S EXAMINE TWO OF THE EVENTS YOU MENTIONED. WHAT HAPPENED WITH THE
EXCISE TAX?
A. The excise tax - essentially a surcharge on airline tickets - is
funneled to the government to help pay the costs of running the Federal
Aviation Administration, as well as all airport traffic-related equipment.
When the tax came up for renewal in Congress, it was pushed to the back
burner by other issues and was not approved by its January 1 deadline. So
what you had was a timeframe where the excise tax was no longer in effect,
and airlines were stimulating demand by discounting their prices. Congress
eventually tacked the excise tax measure onto the minimum wage bill in May.
Investor concerns mounted because it was widely believed that Congress
would wait until January 1997 to re-institute the tax.
Q. . . . AND THE SOUTHWEST AIRLINES PROMOTION?
A. Southwest has always been a marketing-oriented airline big on splashy
promotions. To celebrate its entry into the Florida market and its 25th
year of business, Southwest ran a promotion where passengers could fly
one-way to any spot in the country for $25. One of the competitive aspects
of this industry is that airlines are a commodity; to stay profitable, an
airline has to match fares. When some of the airlines announced matching
fares, stock prices tumbled. The timing of the promotion was bad because
the industry was showing good growth signs. In retrospect, it would have
been much better if Southwest had been celebrating its 50th anniversary and
cut prices to $50.
Q. WITH THE RECENT TRAGEDIES, THERE HAS BEEN MUCH TALK OF TAKING STEPS TO
HEIGHTEN SECURITY. HOW WILL THIS AFFECT THE FUND?
A. The TWA crash really unsettled the markets. From looking at the traffic
numbers, international travel declined steadily in the weeks following the
tragedy. As a result of the crash, President Clinton announced plans to
improve traveler safety. These measures will be quite costly, but should
alleviate passenger concerns. On the other hand, an emphasis on prevention
will make those companies specializing in safety equipment potentially
attractive investments.
Q. WHAT CHARACTERISTICS MAKE A STOCK APPEALING TO YOU?
A. When I'm looking over a particular company, I like to pay close
attention to its management discipline. I look at how a company controls
its costs, its new airplane orders and its methods of capital allocation.
Sometimes it's not smart to buy more planes and take on more debt, and
sometimes it is. I also consider the growth potential as well as the
company's cost structure. Companies that make what I feel are smart capital
allocation decisions are very desirable for the portfolio.
Q. WHAT DO YOU THINK IS IN STORE FOR THE COMING MONTHS?
A. It's hard to imagine as many things going awry as we've just witnessed.
The airline industry sorely needs to see low plane orders for the next six
months and the price of jet fuel go down. Investors need to realize that
this industry is like a commodity. If you have excess supply, prices will
decline. Generally, whenever airlines order more airplanes, the increased
costs drive the stocks down. If the orders are low, fuel prices come down,
and the economy remains near its end-of-the-period level, I think the
situation could look good.
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: December 16, 1985
FUND NUMBER: 034
TRADING SYMBOL: FSAIX
SIZE: as of August 31, 1996, more than
$54 million
MANAGER: Kevin Richardson, since May 1996;
equity analyst, computer services, health care
information systems and specialty finance
industries, since 1994; joined Fidelity in 1994
(checkmark)
AIR TRANSPORTATION PORTFOLIO
INVESTMENTS AUGUST 31, 1996 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 93.9%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 7.4%
AIRCRAFT - 0.6%
Boeing Co. 2,000 $ 181,001 09702310
McDonnell Douglas Corp. 3,000 150,375 58016910
331,376
AIRCRAFT & PARTS - 0.5%
Sundstrand Corp. 7,500 280,312 86732310
AIRCRAFT ENGINES & PARTS - 2.6%
Greenwich Air Services, Inc. Class B
(non-vtg.) (a) 50,000 962,500 39678120
Kellstrom Industries, Inc. (a) 61,000 488,000 48803510
1,450,500
TRAINING EQUIPMENT & SIMULATORS - 3.7%
Flightsafety International, Inc. 46,700 2,066,475 33942310
TOTAL AEROSPACE & DEFENSE 4,128,663
AIR TRANSPORTATION - 64.2%
AIR TRANSPORTATION, MAJOR NATIONAL - 48.1%
AMR Corp. 56,200 4,608,400 00176510
Alaska Air Group, Inc. (a) 117,000 2,471,625 01165910
America West Airlines, Inc.:
Class B (warrants) (a) 400,400 2,602,600 02365011
Class B 190,800 2,551,950 02365020
Continental Airlines, Inc. (a) 204,000 4,615,500 21079530
Delta Air Lines, Inc. 29,400 2,083,725 24736110
KLM Royal Dutch Air Lines NV 10,000 278,750 48251610
Mesa Airlines, Inc. (a) 25,000 246,875 59048110
Northwest Airlines Corp. Class A (a) 82,700 3,121,925 66728010
Pan Am Corp. (a) 5,900 - 69775710
Southwest Airlines Co. 9,400 215,025
Trans World Airlines, Inc. (a) 100,900 1,349,537
UAL Corp. (a) 53,500 2,568,000 90254950
26,713,912
AIR TRANSPORTATION, REGIONAL - 16.1%
Atlantic Southeast Airlines, Inc. 160,600 3,693,800 04886910
Comair Holdings, Inc. 110,300 2,647,200 19978910
Midwest Express Holdings, Inc. (a) 86,000 2,601,500 59791110
8,942,500
TOTAL AIR TRANSPORTATION 35,656,412
COMMUNICATIONS EQUIPMENT - 0.4%
TELEPHONE EQUIPMENT - 0.4%
IPC Information Systems, Inc. 10,800 180,900 44980K10
COMPUTER SERVICES & SOFTWARE - 3.4%
COMPUTER SERVICES - 1.6%
American Management Systems, Inc. 35,000 888,125 02735210
CUSTOM COMPUTER PROGRAMMING SERVICES - 1.8%
Walsh International, Inc. (a) 115,000 1,006,250 93313110
TOTAL COMPUTER SERVICES & SOFTWARE 1,894,375
CONGLOMERATES - 0.8%
United Technologies Corp. 4,000 451,000 91301710
DEFENSE ELECTRONICS - 0.9%
Raytheon Co. 10,000 515,000 75511110
ELECTRONICS - 1.0%
ELECTRONIC PARTS - WHOLESALE - 1.0%
Airport Systems International, Inc. (a) 100,000 550,000 00949N10
SHARES VALUE (NOTE 1)
POLLUTION CONTROL - 1.2%
POLLUTION EQUIPMENT & DESIGN - 1.2%
Ogden Corp. 32,000 $ 628,000 67634610
SERVICES - 7.8%
BUSINESS SERVICES - 5.7%
Premier Technologies, Inc. (a) 150,100 3,189,625 74058F10
COMMERCIAL TESTING LABORATORIES - 2.1%
Forensic Technologies
International Corp. (a) 122,700 1,134,975 34551810
TOTAL SERVICES 4,324,600
TELEPHONE SERVICES - 0.7%
American Communications Services, Inc. 33,500 402,000 02520B10
TRUCKING & FREIGHT - 6.1%
FREIGHT FORWARDING - 3.7%
Expeditors International of Washington, Inc. 40,700 1,332,925 30213010
Pittston Co. (Burlington Group) 37,600 719,100 72570188
2,052,025
TRUCKING, LOCAL & LONG DISTANCE - 2.4%
Consolidated Freightways, Inc. 58,400 1,343,200 20923710
TOTAL TRUCKING & FREIGHT 3,395,225
TOTAL COMMON STOCKS
(Cost $58,817,359) 52,126,175
REPURCHASE AGREEMENTS - 6.1%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 5.25%, dated
8/30/96 due 9/3/96 $ 3,377,969 3,376,000 69899TYY
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $62,193,359) $ 55,502,175
LEGEND
1. Non-income producing
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $253,071,783 and $249,515,014, respectively (see Note 4 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $85,456 for the period (see
Note 5 of Notes to Financial Statements).
The maximum loan and the average daily loan balances during the period for
which loans were outstanding amounted to $4,540,000 and $2,545,111,
respectively. The weighted average interest rate paid was 5.7% (see Note 6
of Notes to Financial Statements).
INCOME TAX INFORMATION
At August 31, 1996, the aggregate cost of investment securities for income
tax purposes was $62,347,669. Net unrealized depreciation aggregated
$6,845,494 of which $1,064,579 related to appreciated investment securities
and $7,910,073 related to depreciated investment securities.
AIR TRANSPORTATION PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1996 (UNAUDITED)
ASSETS
Investment in $ 55,502,175
securities, at
value (including
repurchase
agreements of
$3,376,000)
(cost
$62,193,359) -
See
accompanying
schedule
Cash 808
Receivable for 406,976
investments
sold
Receivable for 5,216,916
fund shares sold
Dividends 23,359
receivable
Redemption fees 2,227
receivable
Other receivables 2,598
Prepaid expenses 38,533
TOTAL ASSETS 61,193,592
LIABILITIES
Payable for $ 5,616,677
investments
purchased
Payable for fund 811,539
shares
redeemed
Accrued 25,641
management
fee
Other payables 95,341
and
accrued
expenses
TOTAL LIABILITIES 6,549,198
NET ASSETS $ 54,644,394
Net Assets
consist of:
Paid in capital $ 68,564,897
Accumulated net (475,046
investment loss )
Accumulated (6,754,293
undistributed net )
realized gain
(loss) on
investments and
foreign currency
transactions
Net unrealized (6,691,164
appreciation )
(depreciation)
on investments
and assets and
liabilities in
foreign
currencies
NET ASSETS, for $ 54,644,394
3,153,728
shares
outstanding
NET ASSET VALUE $17.33
and redemption
price per share
($54,644,394 (divided by)
3,153,728
shares)
Maximum offering $17.87
price per share
(100/97.00 of
$17.33)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED AUGUST 31, 1996 (UNAUDITED)
INVESTMENT $ 163,718
INCOME
Dividends
Interest 169,077
TOTAL INCOME 332,795
EXPENSES
Management fee $ 285,763
Transfer agent 443,826
fees
Accounting fees 48,138
and expenses
Non-interested 195
trustees'
compensation
Custodian fees 16,657
and expenses
Registration fees 38,533
Audit 20,577
Legal 558
Interest 3,621
Miscellaneous 615
Total expenses 858,483
before
reductions
Expense (50,642 807,841
reductions )
NET INVESTMENT (475,046
INCOME (LOSS) )
REALIZED AND
UNREALIZED GAIN
(LOSS)
Net realized gain
(loss) on:
Investment (5,157,973
securities )
Foreign 29 (5,157,944
currency )
transactions
Change in net
unrealized
appreciation
(depreciation)
on:
Investment (10,269,361
securities )
Assets and 20 (10,269,341
liabilities in )
foreign
currencies
NET GAIN (LOSS) (15,427,285
)
NET INCREASE $ (15,902,331
(DECREASE) IN )
NET ASSETS
RESULTING FROM
OPERATIONS
OTHER $ 409,096
INFORMATION
Sales charges
paid to FDC
Deferred sales $ 678
charges
withheld
by FDC
Exchange fees $ 75,420
withheld by FSC
Expense $ 45,764
reductions
Directed
brokerage
arrangements
Custodian 4,021
interest credits
Transfer agent 857
interest credits
$ 50,642
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS YEAR ENDED
ENDED FEBRUARY 29,
AUGUST 31, 1996 1996
(UNAUDITED)
Operations $ (475,046 $ (45,385
Net investment ) )
income (loss)
Net realized (5,157,944 15,522,776
gain (loss) )
Change in net (10,269,341 2,826,938
unrealized )
appreciation
(depreciation)
NET INCREASE (15,902,331 18,304,329
(DECREASE) IN )
NET ASSETS
RESULTING
FROM
OPERATIONS
Distributions to (2,206,145 (3,187,856
shareholders ) )
from net
realized gains
Share 254,485,753 431,292,376
transactions
Net proceeds
from sales of
shares
Reinvestment of 2,188,172 3,161,234
distributions
Cost of shares (259,856,261 (393,536,104
redeemed ) )
Paid in capital 576,527 691,969
portion of
redemption fees
NET INCREASE (2,605,809 41,609,475
(DECREASE) IN )
NET ASSETS
RESULTING
FROM SHARE
TRANSACTIONS
TOTAL (20,714,285 56,725,948
INCREASE )
(DECREASE) IN
NET ASSETS
NET ASSETS
Beginning of 75,358,679 18,632,731
period
End of period $ 54,644,394 $ 75,358,679
(including
accumulated net
investment loss
of $475,046 and
$0, respectively)
OTHER
INFORMATION
Shares
Sold 11,945,645 23,122,779
Issued in 96,693 152,569
reinvestment of
distributions
Redeemed (12,459,115 (21,042,298
) )
Net increase (416,777) 2,233,050
(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> <C>
SIX MONTHS YEAR ENDED YEARS ENDED FEBRUARY 28, TEN MONTHS YEAR ENDED
ENDED FEBRUARY 29, ENDED APRIL 30,
AUGUST 31, 1996 FEBRUARY 28,
SELECTED PER-SHARE DATA D (UNAUDITED) 1996 1995 1994 1993 1992
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Net asset value, $ 21.11 $ 13.93 $ 17.12 $ 13.60 $ 12.64 $ 11.53
beginning of
period
Income from
Investment
Operations
Net investment (.11) (.01) (.18) (.18) (.09) E (.13)
income (loss)
Net realized and (3.53) 7.47 (2.01) 3.78 1.33 1.40
unrealized gain
(loss)
Total from (3.64) 7.46 (2.19) 3.60 1.24 1.27
investment
operations
Less Distributions
From net (.27) (.46) (.92) (.22) (.36) (.25)
realized gain
In excess of net - - (.17) (.05) - -
realized gain
Total (.27) (.46) (1.09) (.27) (.36) (.25)
distributions
Redemption fees .13 .18 .09 .19 .08 .09
added to paid in
capital
Net asset value, $ 17.33 $ 21.11 $ 13.93 $ 17.12 $ 13.60 $ 12.64
end of period
TOTAL RETURN B, C (16.93)% 54.91% (12.45)% 27.94% 10.69% 11.90%
RATIOS AND
SUPPLEMENTAL
DATA
Net assets, end of $ 54,644 $ 75,359 $ 18,633 $ 11,035 $ 11,868 $ 6,971
period (000
omitted)
Ratio of expenses 1.81% A 1.47% 2.50% 2.33% 2.48% A, 2.51%
to average net G G G
assets
Ratio of expenses 1.71% A, 1.41% 2.50% 2.31% 2.48% A 2.51%
to average net F F F
assets after
expense
reductions
Ratio of net (1.00)% A (.07)% (1.31)% (1.11)% (.90)% A (1.04)%
investment
income (loss) to
average net
assets
Portfolio turnover 620% A 504% 200% 171% 96% A 261%
rate
Average $ .0408
commission
rate H
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <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 9 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 9 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. H FOR FISCAL YEARS BEGINNING ON
OR AFTER SEPTEMBER 1, 1995, A FUND IS REQUIRED TO DISCLOSE ITS AVERAGE
COMMISSION RATE PER SHARE FOR SECURITY TRADES ON
WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD TO
PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF
TRADES EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND
COMMISSION RATE STRUCTURES MAY DIFFER.
</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. A fund's total return includes
changes in 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 6 PAST 1 PAST 5 PAST 10
AUGUST 31, 1996 MONTH YEAR YEARS YEARS
S
AUTOMOTIVE 8.83% 8.78% 109.01% 240.91%
AUTOMOTIVE 5.57% 5.52% 102.74% 230.69%
(INCL. 3% SALES CHARGE)
S&P 500 2.96% 18.73% 89.14% 251.21%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one, five, or 10 years. You
can compare these figures to the performance of the S&P 500 - a widely
recognized, unmanaged index of common stocks. This benchmark reflects
reinvestment of dividends and capital gains, if any, but does not reflect
any sales charges, brokerage commissions, or other costs of investing.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
AUGUST 31, 1996 YEAR YEARS YEARS
AUTOMOTIVE 8.78% 15.89% 13.05%
AUTOMOTIVE 5.52% 15.18% 12.70%
(INCL. 3% SALES CHARGE)
S&P 500 18.73% 13.59% 13.34%
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
IMAHDR PRASUN SHR__CHT 19960831 19960909 144333 S00000000000001
Automotive SP Standard & Poor 500
00502 SP001
1986/08/31 9700.00 10000.00
1986/09/30 9033.74 9173.00
1986/10/31 9494.24 9702.28
1986/11/30 9602.02 9938.05
1986/12/31 9435.45 9684.63
1987/01/31 10856.16 10989.15
1987/02/28 11826.16 11423.22
1987/03/31 12149.49 11753.35
1987/04/30 12325.86 11648.74
1987/05/31 12306.26 11750.09
1987/06/30 12492.42 12343.47
1987/07/31 13364.44 12969.28
1987/08/31 13883.74 13453.04
1987/09/30 13677.98 13158.41
1987/10/31 9572.63 10324.09
1987/11/30 9190.51 9473.39
1987/12/31 10052.73 10194.31
1988/01/31 10507.79 10623.49
1988/02/29 11180.04 11118.55
1988/03/31 11986.74 10774.98
1988/04/30 12193.59 10894.59
1988/05/31 12152.22 10989.37
1988/06/30 12855.49 11493.78
1988/07/31 12710.70 11450.10
1988/08/31 12121.19 11060.80
1988/09/30 12172.90 11531.99
1988/10/31 12079.82 11852.58
1988/11/30 11821.26 11683.09
1988/12/31 12069.48 11887.54
1989/01/31 12627.96 12757.71
1989/02/28 12493.51 12440.04
1989/03/31 12731.39 12729.90
1989/04/30 13300.21 13390.58
1989/05/31 13496.72 13932.90
1989/06/30 13258.84 13853.48
1989/07/31 13724.25 15104.45
1989/08/31 13858.70 15400.50
1989/09/30 13538.09 15337.35
1989/10/31 12410.77 14981.53
1989/11/30 12524.54 15287.15
1989/12/31 12564.47 15654.04
1990/01/31 12232.70 14603.66
1990/02/28 12596.58 14792.04
1990/03/31 13067.48 15184.03
1990/04/30 13024.67 14804.43
1990/05/31 13763.12 16247.86
1990/06/30 14009.58 16137.38
1990/07/31 14052.98 16085.74
1990/08/31 12034.56 14631.59
1990/09/30 10884.28 13919.03
1990/10/31 10667.24 13859.18
1990/11/30 11296.64 14754.48
1990/12/31 11719.86 15166.13
1991/01/31 12381.82 15827.37
1991/02/28 13391.03 16959.03
1991/03/31 13499.54 17369.44
1991/04/30 13651.47 17411.13
1991/05/31 14747.49 18163.29
1991/06/30 14714.94 17331.41
1991/07/31 15322.63 18139.05
1991/08/31 15821.81 18568.95
1991/09/30 15355.19 18258.85
1991/10/31 15756.70 18503.51
1991/11/30 14975.38 17757.82
1991/12/31 16094.33 19789.32
1992/01/31 17833.02 19421.24
1992/02/29 19628.91 19673.71
1992/03/31 20052.14 19290.07
1992/04/30 21333.28 19857.20
1992/05/31 21321.84 19954.50
1992/06/30 21194.99 19657.18
1992/07/31 21389.75 20461.16
1992/08/31 20060.77 20041.71
1992/09/30 19728.53 20278.20
1992/10/31 20553.41 20349.17
1992/11/30 21550.15 21043.08
1992/12/31 22791.93 21301.91
1993/01/31 23844.40 21480.84
1993/02/28 24195.23 21772.98
1993/03/31 25493.28 22232.39
1993/04/30 25345.99 21694.37
1993/05/31 26889.42 22275.78
1993/06/30 27359.68 22340.38
1993/07/31 27673.19 22251.02
1993/08/31 28637.83 23094.33
1993/09/30 28939.28 22916.50
1993/10/31 29554.24 23390.88
1993/11/30 29554.24 23168.66
1993/12/31 30856.76 23449.00
1994/01/31 32615.75 24246.27
1994/02/28 31562.83 23589.20
1994/03/31 29345.51 22560.71
1994/04/30 28748.81 22849.48
1994/05/31 28322.90 23224.22
1994/06/30 27959.62 22655.22
1994/07/31 28798.91 23398.31
1994/08/31 28322.90 24357.64
1994/09/30 27120.33 23760.88
1994/10/31 27633.93 24295.50
1994/11/30 25967.88 23410.66
1994/12/31 26921.63 23757.84
1995/01/31 26281.96 24373.88
1995/02/28 27589.11 25323.73
1995/03/31 27450.05 26071.03
1995/04/30 27366.61 26838.83
1995/05/31 27922.85 27911.57
1995/06/30 28618.14 28559.96
1995/07/31 30676.20 29507.01
1995/08/31 30398.08 29581.07
1995/09/30 30551.04 30829.39
1995/10/31 29132.65 30719.33
1995/11/30 29855.75 32067.91
1995/12/31 30537.14 32685.54
1996/01/31 30175.59 33798.15
1996/02/29 30384.17 34111.46
1996/03/31 32233.64 34439.95
1996/04/30 33862.19 34947.60
1996/05/31 34641.91 35848.90
1996/06/30 34238.13 35985.48
1996/07/31 32247.05 34395.64
1996/08/30 33068.54 35121.05
IMATRL PRASUN SHR__CHT 19960831 19960909 144338 R00000000000123
Let's say hypothetically that $10,000 was invested in Select Automotive
Portfolio on August 31, 1986, and a 3% sales charge was paid. By August 31,
1996, the investment would have grown to $33,069 - a 230.69% increase. That
compares to $10,000 invested in the S&P 500, which would have grown to
$35,121 over the same period - a 251.21% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST 31, 1996
% OF FUND'S
INVESTMENTS
TRW, Inc. 6.9
General Motors Corp. 5.9
Honda Motor Co. Ltd. 5.6
Lear Corp. 5.5
AutoZone, Inc. 5.2
Chrysler Corp. 5.1
Danaher Corp. 4.5
Gentex Corp. 4.3
Echlin, Inc. 3.3
Volvo AB Class B 3.2
TOP INDUSTRIES AS OF AUGUST 31, 1996
Auto & Truck Parts 37.2%
Motor Vehicles &
Car Bodies 34.2%
Auto Parts - Retail 6.2%
Tires & Inner Tubes 5.1%
Conglomerates 2.3%
All Others 15.0% *
Row: 1, Col: 1, Value: 15.0
Row: 1, Col: 2, Value: 2.3
Row: 1, Col: 3, Value: 5.1
Row: 1, Col: 4, Value: 6.2
Row: 1, Col: 5, Value: 34.2
Row: 1, Col: 6, Value: 37.2
* INCLUDES SHORT-TERM INVESTMENTS
AUTOMOTIVE PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
NOTE TO SHAREHOLDERS: Doug Chase became Portfolio Manager of Fidelity
Select Automotive Portfolio on May 24, 1996.
Q. HOW DID THE FUND PERFORM, DOUG?
A. For the six-month and 12-month periods ending August 31, 1996, the fund
returned 8.83% and 8.78%, respectively. For the same time periods, the
Standard & Poor's 500 Index returned 2.96% and 18.73%.
Q. YOU BEGAN TO MANAGE THE FUND IN MAY. HOW DOES YOUR INVESTMENT STRATEGY
DIFFER FROM THE PREVIOUS FUND MANAGER'S?
A. I have increased the fund's stake in auto manufacturers, specifically
General Motors, Honda, Chrysler and Volvo. In the automobile sector, the
manufacturers and suppliers move in tandem. You generally won't see a
situation in which the Big Three go down and the major auto suppliers go
up; the suppliers are too dependent on the manufacturers for that to
happen.
Q. WHY WERE THE MANUFACTURERS ATTRACTIVE TO YOU?
A. Let's start with the U.S. manufacturers, specifically General Motors and
Chrysler. General Motors has an extremely strong balance sheet - the best
it's had in 30 years. In fact, nearly 35% of GM's market capitalization, or
approximately $13 billion, is cash. In addition, although its international
operations were very strong, the market didn't seem to recognize the
company's value during the period. I increased the fund's holding in
General Motors because I believed the market would eventually recognize
that it's a much better, much stronger company than it was five years ago.
I increased the fund's holding in Chrysler because I think that,
eventually, the market is going to realize the value that Chrysler has
built during the past couple of years. Chrysler is the low-cost producer,
it's gaining share in almost all of the product segments in which it
competes, it pays a 5% dividend and it's planning to buy back 10% of its
stock.
Q. HOW DID THESE STOCKS PERFORM DURING THE PERIOD?
A. Given the strong financial position of the Big Three during the period,
their performance was disappointing. I believed the market was not paying
attention to how these companies have improved in recent years and how
well-positioned they are for the future.
Q. YET THE FUND DID OUTPERFORM THE S&P 500 OVER THE PAST SIX MONTHS. WHY?
A. Autos have managed to outperform the overall market. The fund did well
because of its holdings in auto suppliers, which generally outperformed
during the period. The story on the suppliers' side has been consolidation.
Because the auto makers are always looking for ways to cut costs, they are
encouraging the supplier base to consolidate to create a more manageable
"one-stop-shopping" environment for the manufacturers. Increasing profit
margins and revenues for suppliers are an immediate by-product of this
consolidation.
Q. TRW IS NEW TO THE FUND'S TOP 10 HOLDINGS. WHY WAS IT ATTRACTIVE?
A. I liked TRW for a couple of reasons. First, the breakup value of the
company is worth more than what the stock price indicates. Second, based on
my valuation of the company's growth rate and cost-cutting efforts and
expected auto production, I believe that Wall Street estimates for TRW's
earnings in 1998 were too low. And, finally, I think that some of the new
technology the company is developing has a lot of potential. TRW is best
known for being a leader in air-bag technology, but it has some satellite
communications technology in the works that could be quite exciting.
Q. WHERE ELSE DID YOU FIND OPPORTUNITIES DURING THE PERIOD?
A. Honda's numbers have been very strong, and I've increased the fund's
holding in the company based on strong sales of its Accord and Civic models
in the U.S., and because its auto sales in Japan are up nearly 30%. I've
also increased the fund's holding in Volvo. Volvo is another company whose
breakup value is quite a bit higher than its stock price at the end of the
period. Sometimes foreign investments can be more risky than domestic ones,
but I thought these were compelling stock stories.
Q. WHAT'S YOUR OUTLOOK FOR THE FUND?
A. I think the fund has the potential to outperform the market during the
next six months. I believe that the longer the Big Three stocks go without
the market recognizing their true value, the more compelling the run-up in
the stock will be when it finally happens. It's very strange when a company
announces it's going to buy back 10% of its stock, has a 5% yield and gains
market share every month, and yet its stock price is flat. But that's
what's happening with Chrysler. My goal is to seek the best values for the
fund, and I believe it will increasingly be in the auto manufacturers going
forward.
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: June 30, 1986
FUND NUMBER: 502
TRADING SYMBOL: FSAVX
SIZE: as of August 31, 1996, more than
$148 million
MANAGER: Douglas B. Chase, since May
1996; manager, Select Industrial Materials,
since 1994; equity analyst, steel, non-ferrous
metals, since 1993; joined Fidelity in 1993
(checkmark)
AUTOMOTIVE PORTFOLIO
INVESTMENTS AUGUST 31, 1996 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 87.1%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 0.6%
AIRCRAFT - 0.3%
Lockheed Martin Corp. 5,000 $ 420,625 53983010
AIRCRAFT EQUIPMENT - 0.3%
Aviall, Inc. 40,000 340,000 05366B10
Simula, Inc. (a) 10,000 165,000 82920610
505,000
TOTAL AEROSPACE & DEFENSE 925,625
AUTOS, TIRES, & ACCESSORIES - 82.3%
AUTO & TRUCK PARTS - 37.2%
Arvin Industries, Inc. 20,000 460,000 04333910
Borg-Warner Automotive, Inc. 124,200 4,657,500 09972410
Dana Corp. 81,000 2,430,000 23581110
Danaher Corp. 161,800 6,714,700 23585110
Eaton Corp. 72,700 4,025,761 27805810
Echlin, Inc. 161,600 4,928,800 27874910
Gentex Corp. (a) 267,400 6,417,600 37190110
Intermet Corp. (a) 20,000 241,250 45881K10
Johnson Controls, Inc. 39,700 2,798,850 47836610
Magna International, Inc. Class A 38,000 1,832,998 55922240
Mascotech, Inc. 51,700 749,650 57467010
SPX Corp. 20,200 563,075 78463510
Safety Components International, Inc. (a) 1,000 13,000 78647410
Smith (A.O.) Corp. Class B 16,600 402,550 83186520
Snap-on Tools Corp. 73,400 3,348,875 83303410
Standard Products Co. 44,400 1,021,200 85383610
Strattec Security Corp. (a) 25,000 343,750 86311110
TRW, Inc. 111,700 10,332,250 87264910
Titan Wheel International, Inc. 33,000 503,250 88832810
Tower Automotive, Inc. (a) 152,000 3,648,000 89170710
Wynn's International, Inc. 1,400 37,275 98319510
55,470,334
AUTO PARTS - RETAIL - 6.2%
AutoZone, Inc. (a) 282,300 7,692,675 05333210
Monro Muffler Brake, Inc. 56,206 1,110,069 61023610
O'Reilly Automotive, Inc. (a) 10,800 391,500 68609110
9,194,244
AUTOMOTIVE STAMPINGS - 0.4%
Sinter Metals, Inc. Class A (a) 25,000 546,875 82934Q10
MOTOR VEHICLE SUPPLIES & NEW PARTS - 1.5%
APS Holding Corp. Class A (a) 64,000 1,792,000 00193710
Hahn Automotive Warehouse, Inc. 51,000 408,000 40519110
2,200,000
MOTOR VEHICLES & CAR BODIES - 31.2%
Chrysler Corp. 258,600 7,531,725 17119610
General Motors Corp. 176,300 8,770,925 37044210
Honda Motor Co. Ltd. 362,000 8,345,534 43812810
Lear Corp. (a) 213,100 8,177,713 52186510
Scania AB:
Class A 2,500 66,467 80699R22
Class B 110,000 2,932,868 80699R23
Toyota Motor Corp. 193,000 4,644,409 89399999
Volkswagen AG 3,500 1,300,017 92866210
Volvo AB Class B 222,500 4,739,192 92885630
46,508,850
TIRES & INNER TUBES - 5.1%
Bandag, Inc. 33,000 1,555,125 05981510
Cooper Tire & Rubber Co. 9,300 181,350 21683110
SHARES VALUE (NOTE 1)
Goodyear Tire & Rubber Co. 100,500 $ 4,585,313 38255010
Michelin SA (Compagnie Generale
des Etablissements) Class B 26,270 1,226,175 59410020
7,547,963
TRUCK & BUS BODIES - 0.7%
Miller Industries, Inc. (a) 30,000 1,005,000 60055110
TOTAL AUTOS, TIRES, & ACCESSORIES 122,473,266
CONGLOMERATES - 2.3%
Mark IV Industries, Inc. 61,500 1,322,250 57038710
United Technologies Corp. 19,000 2,142,250 91301710
3,464,500
INDUSTRIAL MACHINERY & EQUIPMENT - 1.4%
METAL WORKING MACHINERY - 0.4%
Exco Technologies Ltd. (a) 79,500 578,129 30150P10
STORAGE BATTERIES - 1.0%
Exide Corp. 52,800 1,405,800 30205110
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 1,983,929
POLLUTION CONTROL - 0.5%
REFUSE SYSTEMS - 0.5%
Republic Industries, Inc. (a) 30,000 783,750 76051610
TOTAL COMMON STOCKS
(Cost $125,800,960) 129,631,070
NONCONVERTIBLE PREFERRED STOCKS - 3.0%
AUTOS, TIRES, & ACCESSORIES - 3.0%
MOTOR VEHICLES & CAR BODIES - 3.0%
Volkswagen AG (Cost $4,267,590) 16,000 4,451,798 92866291
REPURCHASE AGREEMENTS - 9.9%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 5.25%, dated
8/30/96 due 9/3/96 $ 14,785,620 14,777,000 69899TYY
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $144,845,550) $ 148,859,868
LEGEND
1. Non-income producing
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $167,309,048 and $86,609,161, respectively (see Note 4 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $52,367 for the period (see
Note 5 of Notes to Financial Statements).
The maximum loan and the average daily loan balance during the period for
which loans were outstanding amounted to $3,262,000. The weighted average
interest rate paid was 5.8% (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 79.8%
Japan 8.7
Sweden 5.2
Germany 3.9
Canada 1.6
Others (individually less than 1%) 0.8
TOTAL 100.0%
INCOME TAX INFORMATION
At August 31, 1996, the aggregate cost of investment securities for income
tax purposes was $145,129,974. Net unrealized appreciation aggregated
$3,729,894, of which $12,089,810 related to appreciated investment
securities and $8,359,916 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
AUGUST 31, 1996 (UNAUDITED)
ASSETS
Investment in $ 148,859,868
securities, at
value (including
repurchase
agreements of
$14,777,000)
(cost
$144,845,550)
- - See
accompanying
schedule
Cash 200
Receivable for 345,249
investments
sold
Receivable for 79,745
fund shares sold
Dividends 256,553
receivable
Redemption fees 147
receivable
Other receivables 2,405
Prepaid expenses 22,185
TOTAL ASSETS 149,566,352
LIABILITIES
Payable for fund $ 646,048
shares
redeemed
Accrued 76,792
management
fee
Other payables 139,879
and
accrued
expenses
TOTAL LIABILITIES 862,719
NET ASSETS $ 148,703,633
Net Assets
consist of:
Paid in capital $ 146,805,162
Undistributed net 522,371
investment
income
Accumulated (2,638,382
undistributed net )
realized gain
(loss) on
investments and
foreign currency
transactions
Net unrealized 4,014,482
appreciation
(depreciation)
on investments
and assets and
liabilities in
foreign
currencies
NET ASSETS, for $ 148,703,633
6,262,481
shares
outstanding
NET ASSET VALUE $23.75
and redemption
price per share
($148,703,633 (divided by)
6,262,481
shares)
Maximum offering $24.48
price per share
(100/97.00 of
$23.75)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED AUGUST 31, 1996 (UNAUDITED)
INVESTMENT $ 1,322,144
INCOME
Dividends
Interest 275,269
TOTAL INCOME 1,597,413
EXPENSES
Management fee $ 450,604
Transfer agent 487,496
fees
Accounting fees 74,583
and expenses
Non-interested 278
trustees'
compensation
Custodian fees 15,856
and expenses
Registration fees 22,185
Audit 10,008
Legal 289
Interest 527
Miscellaneous 2,160
Total expenses 1,063,986
before
reductions
Expense (22,593 1,041,393
reductions )
NET INVESTMENT 556,020
INCOME
REALIZED AND
UNREALIZED GAIN
(LOSS)
Net realized gain
(loss) on:
Investment 620,933
securities
Foreign (1,157 619,776
currency )
transactions
Change in net
unrealized
appreciation
(depreciation)
on:
Investment 1,276,823
securities
Assets and 281 1,277,104
liabilities in
foreign
currencies
NET GAIN (LOSS) 1,896,880
NET INCREASE $ 2,452,900
(DECREASE) IN
NET ASSETS
RESULTING FROM
OPERATIONS
OTHER $ 405,358
INFORMATION
Sales charges
paid to FDC
Deferred sales $ 1,435
charges
withheld
by FDC
Exchange fees $ 35,790
withheld by FSC
Expense $ 19,357
reductions
Directed
brokerage
arrangements
Custodian 520
interest credits
Transfer agent 2,716
interest credits
$ 22,593
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS YEAR ENDED
ENDED FEBRUARY 29,
AUGUST 31, 1996 1996
(UNAUDITED)
Operations $ 556,020 $ 76,016
Net investment
income
Net realized 619,776 1,307,573
gain (loss)
Change in net 1,277,104 3,088,654
unrealized
appreciation
(depreciation)
NET INCREASE 2,452,900 4,472,243
(DECREASE) IN
NET ASSETS
RESULTING
FROM
OPERATIONS
Distributions to (109,841 -
shareholders )
from net
investment
income
Share 207,091,543 79,629,136
transactions
Net proceeds
from sales of
shares
Reinvestment of 108,759 -
distributions
Cost of shares (116,708,841 (88,521,546
redeemed ) )
Paid in capital 115,630 98,432
portion of
redemption fees
NET INCREASE 90,607,091 (8,793,978
(DECREASE) IN )
NET ASSETS
RESULTING
FROM SHARE
TRANSACTIONS
TOTAL 92,950,150 (4,321,735
INCREASE )
(DECREASE) IN
NET ASSETS
NET ASSETS
Beginning of 55,753,483 60,075,218
period
End of period $ 148,703,633 $ 55,753,483
(including
undistributed
net investment
income of
$522,371 and
$76,192,
respectively)
OTHER
INFORMATION
Shares
Sold 8,576,034 3,758,408
Issued in 4,640 -
reinvestment of
distributions
Redeemed (4,869,612 (4,235,574
) )
Net increase 3,711,062 (477,166)
(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> <C>
SIX MONTHS YEAR ENDED YEARS ENDED FEBRUARY 28, TEN MONTHS YEAR ENDED
ENDED FEBRUARY 29, ENDED APRIL 30,
AUGUST 31, 1996 FEBRUARY 28,
SELECTED PER-SHARE DATA D (UNAUDITED) 1996 1995 1994 1993 1992
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Net asset value, $ 21.85 $ 19.84 $ 25.48 $ 20.69 $ 18.65 $ 12.58
beginning of
period
Income from
Investment
Operations
Net investment .09 .03 .08 .05 .13 .06
income
Net realized and 1.82 1.95 (3.46) 6.00 2.26 6.55
unrealized gain
(loss)
Total from 1.91 1.98 (3.38) 6.05 2.39 6.61
investment
operations
Less Distributions
From net (.03) - (.05) (.05) (.06) -
investment
income
From net - - (2.26) (1.26) (.36) (.70)
realized gain
Total (.03) - (2.31) (1.31) (.42) (.70)
distributions
Redemption fees .02 .03 .05 .05 .07 .16
added to paid in
capital
Net asset value, $ 23.75 $ 21.85 $ 19.84 $ 25.48 $ 20.69 $ 18.65
end of period
TOTAL RETURN B, C 8.83% 10.13% (12.59)% 30.45% 13.42% 56.27%
RATIOS AND
SUPPLEMENTAL
DATA
Net assets, end of $ 148,704 $ 55,753 $ 60,075 $ 228,698 $ 110,360 $ 178,445
period (000
omitted)
Ratio of expenses 1.42% A 1.81% 1.82% 1.69% 1.57% A 2.48%
to average net
assets
Ratio of expenses 1.39% A, 1.80% 1.80% 1.68% 1.57% A 2.48%
to average net E E E E
assets after
expense
reductions
Ratio of net .74% A .13% .34% .22% .72% A .36%
investment
income to
average net
assets
Portfolio turnover 129% A 61% 63% 64% 140% A 29%
rate
Average $ .0418
commission
rate F
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <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 9 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
9 OF NOTES TO FINANCIAL STATEMENTS). F FOR FISCAL
YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS REQUIRED TO
DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY
VARY FROM PERIOD TO PERIOD AND FUND TO FUND
DEPENDING ON THE MIX OF TRADES EXECUTED IN VARIOUS MARKETS WHERE
TRADING PRACTICES AND COMMISSION RATE STRUCTURES MAY
DIFFER.
</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. A fund's total return includes
changes in 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 6 PAST 1 PAST 5 PAST 10
AUGUST 31, 1996 MONTH YEAR YEARS YEARS
S
CHEMICALS 4.55% 17.19% 106.81% 309.02%
CHEMICALS 1.41% 13.68% 100.60% 296.75%
(INCL. 3% SALES CHARGE)
S&P 500 2.96% 18.73% 89.14% 251.21%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one, five, or 10 years. You
can compare these figures to the performance of the S&P 500 - a widely
recognized, unmanaged index of common stocks. This benchmark reflects
reinvestment of dividends and capital gains, if any, but does not reflect
any sales charges, brokerage commissions, or other costs of investing.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
AUGUST 31, 1996 YEAR YEARS YEARS
CHEMICALS 17.19% 15.64% 15.13%
CHEMICALS 13.68% 14.94% 14.78%
(INCL. 3% SALES CHARGE)
S&P 500 18.73% 13.59% 13.34%
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
IMAHDR PRASUN SHR__CHT 19960831 19960909 144946 S00000000000001
Chemicals SP Standard & Poor 500
00069 SP001
1986/08/31 9700.00 10000.00
1986/09/30 8932.46 9173.00
1986/10/31 9476.39 9702.28
1986/11/30 9639.56 9938.05
1986/12/31 9464.30 9684.63
1987/01/31 10727.41 10989.15
1987/02/28 11724.61 11423.22
1987/03/31 12081.18 11753.35
1987/04/30 12347.10 11648.74
1987/05/31 12183.93 11750.09
1987/06/30 12866.85 12343.47
1987/07/31 13706.92 12969.28
1987/08/31 14208.54 13453.04
1987/09/30 14462.37 13158.41
1987/10/31 10062.62 10324.09
1987/11/30 9724.17 9473.39
1987/12/31 10867.25 10194.31
1988/01/31 10600.72 10623.49
1988/02/29 11775.89 11118.55
1988/03/31 12375.59 10774.98
1988/04/30 12520.97 10894.59
1988/05/31 12048.48 10989.37
1988/06/30 13641.61 11493.78
1988/07/31 13229.70 11450.10
1988/08/31 12654.23 11060.80
1988/09/30 12811.73 11531.99
1988/10/31 13011.63 11852.58
1988/11/30 12575.48 11683.09
1988/12/31 13144.89 11887.54
1989/01/31 14023.24 12757.71
1989/02/28 13847.57 12440.04
1989/03/31 13999.01 12729.90
1989/04/30 14398.81 13390.58
1989/05/31 14731.97 13932.90
1989/06/30 14556.08 13853.48
1989/07/31 15483.64 15104.45
1989/08/31 16192.95 15400.50
1989/09/30 15617.02 15337.35
1989/10/31 14513.64 14981.53
1989/11/30 14822.83 15287.15
1989/12/31 15420.45 15654.04
1990/01/31 14321.73 14603.66
1990/02/28 14417.54 14792.04
1990/03/31 14845.54 15184.03
1990/04/30 14500.59 14804.43
1990/05/31 15765.40 16247.86
1990/06/30 15894.08 16137.38
1990/07/31 15946.67 16085.74
1990/08/31 13816.94 14631.59
1990/09/30 13133.32 13919.03
1990/10/31 13284.51 13859.18
1990/11/30 14171.89 14754.48
1990/12/31 14783.20 15166.13
1991/01/31 15775.76 15827.37
1991/02/28 16985.24 16959.03
1991/03/31 17392.78 17369.44
1991/04/30 17254.74 17411.13
1991/05/31 18451.07 18163.29
1991/06/30 17949.63 17331.41
1991/07/31 18814.75 18139.05
1991/08/31 19184.57 18568.95
1991/09/30 19039.29 18258.85
1991/10/31 19343.07 18503.51
1991/11/30 18378.89 17757.82
1991/12/31 20498.64 19789.32
1992/01/31 20892.32 19421.24
1992/02/29 21645.75 19673.71
1992/03/31 21489.63 19290.07
1992/04/30 22270.21 19857.20
1992/05/31 22141.25 19954.50
1992/06/30 21484.95 19657.18
1992/07/31 22162.89 20461.16
1992/08/31 21405.62 20041.71
1992/09/30 21427.25 20278.20
1992/10/31 21210.89 20349.17
1992/11/30 21852.77 21043.08
1992/12/31 22323.99 21301.91
1993/01/31 22301.02 21480.84
1993/02/28 21910.58 21772.98
1993/03/31 22431.17 22232.39
1993/04/30 22847.22 21694.37
1993/05/31 23193.15 22275.78
1993/06/30 22611.36 22340.38
1993/07/31 22957.29 22251.02
1993/08/31 24081.57 23094.33
1993/09/30 23318.95 22916.50
1993/10/31 24199.50 23390.88
1993/11/30 24380.33 23168.66
1993/12/31 25171.88 23449.00
1994/01/31 27131.21 24246.27
1994/02/28 27088.43 23589.20
1994/03/31 26275.61 22560.71
1994/04/30 27546.27 22849.48
1994/05/31 28209.52 23224.22
1994/06/30 27856.36 22655.22
1994/07/31 29113.95 23398.31
1994/08/31 30802.21 24357.64
1994/09/30 30578.26 23760.88
1994/10/31 30526.58 24295.50
1994/11/30 28132.00 23410.66
1994/12/31 28891.11 23757.84
1995/01/31 28136.13 24373.88
1995/02/28 29768.99 25323.73
1995/03/31 30681.99 26071.03
1995/04/30 31339.71 26838.83
1995/05/31 31651.77 27911.57
1995/06/30 32186.73 28559.96
1995/07/31 33711.37 29507.01
1995/08/31 33854.02 29581.07
1995/09/30 34388.98 30829.39
1995/10/31 32677.11 30719.33
1995/11/30 34103.67 32067.91
1995/12/31 35087.75 32685.54
1996/01/31 36700.54 33798.15
1996/02/29 37948.53 34111.46
1996/03/31 39782.12 34439.95
1996/04/30 40196.67 34947.60
1996/05/31 40109.72 35848.90
1996/06/30 39597.73 35985.48
1996/07/31 37994.11 34395.64
1996/08/30 39675.01 35121.05
IMATRL PRASUN SHR__CHT 19960831 19960909 144951 R00000000000123
Let's say hypothetically that $10,000 was invested in Fidelity Select
Chemicals Portfolio on August 31, 1986, and a 3% sales charge was paid. By
August 31, 1996, the investment would have grown to $39,675 - a 296.75%
increase. That compares to $10,000 invested in the S&P 500, which would
have grown to $35,121 over the same period - a 251.21% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST 31, 1996
% OF FUND'S
INVESTMENTS
Raychem Corp. 6.6
Praxair, Inc. 6.4
Monsanto Co. 6.0
du Pont (E.I.) de Nemours & Co. 5.4
Cytec Industries, Inc. 5.2
Union Carbide Corp. 4.5
IMC Global, Inc. 2.8
Potash Corp. of Saskatchewan 2.7
Witco Corp. 2.7
Great Lakes Chemical Corp. 2.5
TOP INDUSTRIES AS OF AUGUST 31, 1996
36
Chemicals 43.3%
Industrial Gases 12.6%
Agricultural Chemicals 7.3%
Chemicals, General 4.1%
Adhesives & Sealants 3.2%
All Others 29.5% *
Row: 1, Col: 1, Value: 29.5
Row: 1, Col: 2, Value: 3.2
Row: 1, Col: 3, Value: 4.1
Row: 1, Col: 4, Value: 7.3
Row: 1, Col: 5, Value: 12.6
Row: 1, Col: 6, Value: 43.3
* 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 six months ended August 31, 1996, the fund had a total return of
4.55%. For the past year, it returned 17.19%. For the same periods, the
Standard &Poor's 500 Index returned 2.96% and 18.73%, respectively.
Q. HOW DO YOU EVALUATE THE CHEMICAL MARKET, AND HOW DID YOU POSITION THE
FUND DURING THE PERIOD?
A. I look at the chemical industry in three segments: commodity, specialty
and diversified. Commodity chemical companies generally perform well in the
earlier stages of an economic expansion. Therefore, their stock prices
typically react to investors' outlook on the economy as well as the
underlying price of the raw materials - such as ethylene and methanol -
they supply. Specialty chemical companies, on the other hand, are more
broadly based companies that are less susceptible to changes in the
economy. Finally, diversifieds are exactly that - companies offering a wide
range of chemical-related products. During the period, I overweighted
commodity companies until they became too expensive relative to historical
standards. Additionally, I believe that the supply of chemical commodities
will grow faster than demand, thereby driving down profitability. I felt it
was appropriate to lower the fund's position.
Q. WHAT ABOUT SPECIALTY AND DIVERSIFIED COMPANIES?
A. I took every opportunity to raise the fund's stake in these companies.
My goal is to try to position the fund so that it has as little exposure as
possible to economic cycles. I can't predict what the economy is going to
do, but I can look at such features as a company's product line, management
philosophy, profitability and potential earnings and make sound decisions
about its attractiveness as an investment.
Q. CAN YOU GIVE SOME EXAMPLES?
A. Sure. Many of the fund's core holdings are companies that are in the
midst of going through positive changes - such as a new management team
taking over and accelerating the rate of cost cutting. du Pont - the global
chemical conglomerate - is cutting costs and managing its portfolio of
businesses to focus on high return businesses. A company such as Monsanto,
which used to be considered a pure commodity company, has since refocused
its assets on agricultural chemicals and agriculture biotech products.
Finally, Praxair positioned itself well in a high growth industry -
industrial gas.
Q. WHY DID YOU RAISE THE FUND'S STAKE IN FERTILIZER COMPANIES?
A. It made sense to own fertilizer companies such as IMC Global and Potash
given the currently low levels of grain reserves and the high level of crop
planting expected next year. This may drive up fertilizer demand and
pricing.
Q. YOU'VE SAID SPECIALTY AND DIVERSIFIED CHEMICAL COMPANIES ARE ATTRACTIVE
BECAUSE THEY ARE USUALLY NOT ECONOMICALLY SENSITIVE. IS THERE A POTENTIAL
DOWNSIDE TO THESE GROUPS?
A. While my goal is to find companies that can grow their earnings no
matter what's going on in the economy, sometimes I find that individual
companies have become more tied to the economy than they had been in the
past. Therefore, although I may like a company's long-term prospects, its
stock may encounter some price volatility when the economic outlook is
uncertain.
Q. JOHN, WHAT DO YOU SEE AHEAD FOR THE CHEMICAL SECTOR?
A. It seems clear to me that supply will outstrip demand in the commodity
chemical area and, therefore, I don't anticipate increasing the fund's
position in this segment. As for the diversified and specialty areas, I
will continue to focus on companies that I believe offer less exposure to
unpredictable economic cycles.
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: July 29, 1985
FUND NUMBER: 069
TRADING SYMBOL: FSCHX
SIZE: as of August 31, 1996, more than
$92 million
MANAGER: John Avery, since 1995;
manager, Fidelity Select Regional Banks,
since September 1996; joined Fidelity in 1994
(checkmark)
CHEMICALS PORTFOLIO
INVESTMENTS AUGUST 31, 1996 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 85.4%
SHARES VALUE (NOTE 1)
AGRICULTURE - 1.3%
CROPS - 1.3%
Delta & Pine Land Co. 42,900 $ 1,217,283 24735710
CHEMICALS & PLASTICS - 78.3%
ADHESIVES & SEALANTS - 3.2%
Ferro Corp. 30,000 783,750 31540510
Fuller (H.B.) Co. 31,104 1,100,304 35969410
International Specialty Products, Inc. (a) 26,700 293,700 46033410
Loctite Corp. 7,900 346,613 54013710
Lydall, Inc. (a) 16,500 408,375 55081910
2,932,742
AGRICULTURAL CHEMICALS - 7.3%
FMC Corp. (a) 14,200 908,800 30249130
IMC Global, Inc. 60,640 2,607,520 44966910
OM Group, Inc. 19,100 725,800 67087210
Potash Corp. of Saskatchewan 32,700 2,473,561 73755L10
6,715,681
CHEMICALS - 43.3%
Asahi Chemical Industry Co. Ltd. 142,000 952,101 04338910
BASF AG 49,000 1,458,666 05526230
Bayer AG 7,500 267,939 07273010
Crompton & Knowles Corp. 131,021 1,965,315 22711110
Cytec Industries, Inc. (a) 137,013 4,761,202 23282010
du Pont (E.I.) de Nemours & Co. 60,800 4,993,200 26353410
Ethyl Corp. 34,800 313,200 29765910
Hercules, Inc. 35,700 1,776,075 42705610
Hoechst AG Ord. 22,500 788,621 43439010
Imperial Chemical Industries
PLC ADR 35,200 1,782,000 45270450
Lyondell Petrochemical Co. 12,600 286,650 55207810
Monsanto Co. 170,100 5,464,463 61166210
NL Industries, Inc. 18,300 201,300 62915640
Olin Corp. 21,700 1,719,725 68066520
Raychem Corp. 88,300 6,059,588 75460310
Rohm & Haas Co. 4,000 250,000 77537110
Union Carbide Corp. 96,300 4,164,975 90558110
Witco Corp. 81,000 2,450,250 97738510
39,655,270
CHEMICALS, GENERAL - 4.1%
Grace (W.R.) & Co. 22,300 1,463,438 38388310
Great Lakes Chemical Corp. 40,360 2,320,700 39056810
3,784,138
INDUSTRIAL GASES - 12.6%
AGA AB Series B shares 119,400 1,938,956 00107010
Air Products & Chemicals, Inc. 23,000 1,259,250 00915810
BOC Group PLC 74,900 1,014,109 09676210
L'Air Liquide 5,700 969,304 00867810
NuCo2, Inc. (a) 18,900 491,400 62942810
Praxair, Inc. 141,953 5,837,817 74005P10
11,510,836
INORGANIC CHEMICALS - 2.2%
Minerals Technologies, Inc. 12,000 457,500 60315810
Valspar Corp. 33,100 1,563,975 92035510
2,021,475
NITROGENOUS FERTILIZERS - 0.8%
Soc Quimica y Minera de Chile ADR 14,300 754,325 83363510
ORGANIC CHEMICALS - 0.3%
Cambrex Corp. 9,450 310,669 13201110
PLASTIC FOAM PRODUCTS - 1.0%
Foamex International, Inc. (a) 58,200 905,738 34412310
SHARES VALUE (NOTE 1)
PLASTICS & SYNTHETIC RESINS - 0.6%
Geon Co. 3,300 $ 73,425 37246W10
Schulman (A.), Inc. 9,000 195,750 80819410
Spartech Corp. 25,600 252,800 84722020
521,975
PLASTICS - 2.5%
Hanna (M.A.) Co. 15,125 328,969 41052210
Sealed Air Corp. (a) 51,100 1,935,413 81211510
2,264,382
PLASTICS, RESINS & ELASTOMERS - 0.4%
AT Plastics, Inc. 37,500 369,998 00194710
TOTAL CHEMICALS & PLASTICS 71,747,229
CONSUMER DURABLES - 1.9%
MANUFACTURING INDUSTRIES - 1.9%
Minnesota Mining & Manufacturing Co. 25,600 1,760,000 60405910
DRUGS & PHARMACEUTICALS - 1.1%
BIOTECHNOLOGY - 1.1%
Sigma Aldrich Corp. 18,400 970,600 82655210
INDUSTRIAL MACHINERY & EQUIPMENT - 0.3%
PUMPING EQUIPMENT - 0.3%
Duriron Co., Inc. 8,700 234,900 26684910
IRON & STEEL - 2.0%
METAL FORGINGS & STAMPINGS - 2.0%
Hexcel Corp. (a) 106,800 1,882,350 42829110
PHOTOGRAPHIC EQUIPMENT - 0.1%
Imation Corp. (a) 2,560 60,480 45245A10
PRECIOUS METALS - 0.4%
GOLD ORES - 0.4%
Stillwater Mining Co. (a)(b) 19,400 397,700 86074Q90
TOTAL COMMON STOCKS
(Cost $75,609,253) 78,270,542
REPURCHASE AGREEMENTS - 14.6%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 5.25%, dated
8/30/96 due 9/3/96 $ 13,376,799 13,369,000 69899TYY
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $88,978,253) $ 91,639,542
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 $397,700 or 0.4% of net
assets.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $201,255,657 and $204,801,335, respectively (see Note 4 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $80,053 for the period (see
Note 5 of Notes to Financial Statements).
The maximum loan and the average daily loan balances during the period for
which loans were outstanding amounted to $7,645,000 and $4,651,750,
respectively. The weighted average interest rate paid was 5.7%. Interest
expense includes $2,934 paid under the bank borrowing program (see Note 6
of Notes to Financial Statements).
The fund participated in the interfund lending program as a borrower. The
maximum loan and the average daily balance during the period for which the
loan was outstanding amounted to $25,562,000. The weighted average interest
rate was 5.5%. Interest expense includes $3,880 paid under the interfund
lending program (see Note 8 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 86.1%
Canada 3.1
United Kingdom 3.1
Germany 2.7
Sweden 2.1
France 1.1
Japan 1.0
Chile 0.8
TOTAL 100.0%
INCOME TAX INFORMATION
At August 31, 1996, the aggregate cost of investment securities for income
tax purposes was $88,978,253. Net unrealized appreciation aggregated
$2,661,289, of which $5,511,393 related to appreciated investment
securities and $2,850,104 related to depreciated investment securities.
CHEMICALS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1996 (UNAUDITED)
ASSETS
Investment in $ 91,639,542
securities, at
value (including
repurchase
agreements of
$13,369,000)
(cost
$88,978,253) -
See
accompanying
schedule
Cash 995
Receivable for 932,724
fund shares sold
Dividends 175,138
receivable
Redemption fees 188
receivable
Other receivables 62,769
Prepaid expenses 25,053
TOTAL ASSETS 92,836,409
LIABILITIES
Payable for fund $ 454,029
shares
redeemed
Accrued 42,539
management
fee
Other payables 151,463
and
accrued
expenses
TOTAL LIABILITIES 648,031
NET ASSETS $ 92,188,378
Net Assets
consist of:
Paid in capital $ 75,866,187
Undistributed net 1,090,589
investment
income
Accumulated 12,570,151
undistributed net
realized gain
(loss) on
investments and
foreign currency
transactions
Net unrealized 2,661,451
appreciation
(depreciation)
on investments
and assets and
liabilities in
foreign
currencies
NET ASSETS, for $ 92,188,378
2,244,874
shares
outstanding
NET ASSET VALUE $41.07
and redemption
price per share
($92,188,378 (divided by)
2,244,874
shares)
Maximum offering $42.34
price per share
(100/97.00 of
$41.07)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED AUGUST 31, 1996 (UNAUDITED)
INVESTMENT $ 1,820,427
INCOME
Dividends
Interest (including 540,964
income on
securities
loaned of
$4,392)
TOTAL INCOME 2,361,391
EXPENSES
Management fee $ 447,884
Transfer agent 685,546
fees
Accounting and 74,199
security lending
fees
Non-interested 271
trustees'
compensation
Custodian fees 18,391
and expenses
Registration fees 25,053
Audit 20,161
Legal 808
Interest 6,814
Miscellaneous 1,370
Total expenses 1,280,497
before
reductions
Expense (16,875 1,263,622
reductions )
NET INVESTMENT 1,097,769
INCOME
REALIZED AND
UNREALIZED GAIN
(LOSS)
Net realized gain
(loss) on:
Investment 12,597,516
securities
Foreign (10,270 12,587,246
currency )
transactions
Change in net
unrealized
appreciation
(depreciation)
on:
Investment (10,725,028
securities )
Assets and 265 (10,724,763
liabilities in )
foreign
currencies
NET GAIN (LOSS) 1,862,483
NET INCREASE $ 2,960,252
(DECREASE) IN
NET ASSETS
RESULTING FROM
OPERATIONS
OTHER $ 437,903
INFORMATION
Sales charges
paid to FDC
Deferred sales $ 3,715
charges
withheld
by FDC
Exchange fees $ 94,328
withheld by FSC
Expense $ 15,865
reductions
Directed
brokerage
arrangements
Custodian 130
interest credits
Transfer agent 880
interest credits
$ 16,875
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS YEAR ENDED
ENDED FEBRUARY 29,
AUGUST 31, 1996 1996
(UNAUDITED)
Operations $ 1,097,769 $ 31,898
Net investment
income
Net realized 12,587,246 9,931,910
gain (loss)
Change in net (10,724,763 8,885,611
unrealized )
appreciation
(depreciation)
NET INCREASE 2,960,252 18,849,419
(DECREASE) IN
NET ASSETS
RESULTING
FROM
OPERATIONS
Distributions to - (214,329
shareholders )
From net
investment
income
From net (1,957,920 (6,011,068
realized gain ) )
TOTAL (1,957,920 (6,225,397
DISTRIBUTIONS ) )
Share 287,449,062 70,422,861
transactions
Net proceeds
from sales of
shares
Reinvestment of 1,944,433 6,107,748
distributions
Cost of shares (287,660,120 (97,475,212
redeemed ) )
Paid in capital 222,207 40,196
portion of
redemption fees
NET INCREASE 1,955,582 (20,904,407
(DECREASE) IN )
NET ASSETS
RESULTING
FROM SHARE
TRANSACTIONS
TOTAL 2,957,914 (8,280,385
INCREASE )
(DECREASE) IN
NET ASSETS
NET ASSETS
Beginning of 89,230,464 97,510,849
period
End of period $ 92,188,378 $ 89,230,464
(including
undistributed
net investment
income of
$1,090,589
and $15,890,
respectively)
OTHER
INFORMATION
Shares
Sold 6,938,320 1,900,418
Issued in 47,058 171,374
reinvestment of
distributions
Redeemed (6,997,518 (2,690,711
) )
Net increase (12,140) (618,919)
(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> <C>
SIX MONTHS YEAR ENDED YEARS ENDED FEBRUARY 28, TEN MONTHS YEAR ENDED
ENDED FEBRUARY 29, ENDED APRIL 30,
AUGUST 31, 1996 FEBRUARY 28,
SELECTED PER-SHARE DATA D (UNAUDITED) 1996 1995 1994 1993 1992
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Net asset value, $ 39.53 $ 33.91 $ 31.66 $ 28.62 $ 32.81 $ 26.25
beginning of
period
Income from
Investment
Operations
Net investment .31 .01 .36 .29 .30 .12
income
Net realized and 1.43 8.89 2.65 5.97 (.84) 7.27
unrealized gain
(loss)
Total from 1.74 8.90 3.01 6.26 (.54) 7.39
investment
operations
Less Distributions
From net - (.08) (.22) (.23) (.31) (.18)
investment
income
From net (.26) (3.22) (.60) (3.05) (3.36) (.71)
realized gain
Total (.26) (3.30) (.82) (3.28) (3.67) (.89)
distributions
Redemption fees .06 .02 .06 .06 .02 .06
added to paid in
capital
Net asset value, $ 41.07 $ 39.53 $ 33.91 $ 31.66 $ 28.62 $ 32.81
end of period
TOTAL RETURN B, C 4.55% 27.48% 9.90% 23.63% (1.61)% 29.07%
RATIOS AND
SUPPLEMENTAL
DATA
Net assets, end of $ 92,188 $ 89,230 $ 97,511 $ 62,217 $ 28,796 $ 39,566
period (000
omitted)
Ratio of expenses 1.72% A 1.99% 1.52% 1.93% 1.89% A 2.16%
to average net
assets
Ratio of expenses 1.69% A, 1.97% 1.51% 1.93% 1.89% A 2.16%
to average net E E E
assets after
expense
reductions
Ratio of net 1.47% A .04% 1.07% .97% 1.21% A .40%
investment
income to
average net
assets
Portfolio turnover 314% A 87% 106% 81% 214% A 87%
rate
Average $ .0447
commission
rate F
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <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 9 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
9 OF NOTES TO FINANCIAL STATEMENTS). F FOR FISCAL
YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS REQUIRED TO
DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY
FROM PERIOD TO PERIOD AND FUND TO FUND
DEPENDING ON THE MIX OF TRADES EXECUTED IN VARIOUS MARKETS WHERE TRADING
PRACTICES AND COMMISSION RATE STRUCTURES MAY
DIFFER.
</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. A fund's total return includes
changes in 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 6 PAST 1 PAST 5 LIFE OF
AUGUST 31, 1996 MONTH YEAR YEARS FUND
S
CONSTRUCTION AND HOUSING 7.92% 16.32% 89.87% 234.32%
CONSTRUCTION AND HOUSING 4.68% 12.83% 84.17% 224.29%
(INCL. 3% SALES CHARGE)
S&P 500 2.96% 18.73% 89.14% 281.45%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one year, five years, or
since the fund started on September 29, 1986. You can compare these figures
to the performance of the S&P 500 - a widely recognized, unmanaged index of
common stocks. This benchmark reflects reinvestment of dividends and
capital gains, if any, but does not reflect any sales charges, brokerage
commissions, or other costs of investing.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
AUGUST 31, 1996 YEAR YEARS FUND
CONSTRUCTION AND HOUSING 16.32% 13.68% 12.92%
CONSTRUCTION AND HOUSING 12.83% 12.99% 12.58%
(INCL. 3% SALES CHARGE)
S&P 500 18.73% 13.59% 14.43%
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
IMAHDR PRASUN SHR__CHT 19960831 19960909 151908 S00000000000001
Construction & Housing SP Standard & Poor 500
00511 SP001
1986/09/29 9700.00 10000.00
1986/09/30 9709.70 9962.80
1986/10/31 10262.60 10537.66
1986/11/30 10369.30 10793.72
1986/12/31 10437.20 10518.48
1987/01/31 12192.90 11935.32
1987/02/28 13483.00 12406.77
1987/03/31 14307.50 12765.32
1987/04/30 13327.80 12651.71
1987/05/31 12949.50 12761.78
1987/06/30 12804.00 13406.25
1987/07/31 13599.40 14085.95
1987/08/31 13890.40 14611.35
1987/09/30 12823.40 14291.37
1987/10/31 8749.40 11213.00
1987/11/30 8109.20 10289.05
1987/12/31 9141.24 11072.05
1988/01/31 9466.31 11538.18
1988/02/29 10352.85 12075.86
1988/03/31 10766.57 11702.72
1988/04/30 11081.79 11832.62
1988/05/31 11012.83 11935.56
1988/06/30 11662.97 12483.41
1988/07/31 11544.76 12435.97
1988/08/31 10953.73 12013.15
1988/09/30 11288.65 12524.91
1988/10/31 11367.45 12873.10
1988/11/30 11229.54 12689.01
1988/12/31 11809.46 12911.07
1989/01/31 12529.18 13856.16
1989/02/28 12377.13 13511.14
1989/03/31 12691.37 13825.95
1989/04/30 13188.08 14543.52
1989/05/31 13654.38 15132.53
1989/06/30 13645.75 15046.28
1989/07/31 14199.39 16404.95
1989/08/31 14438.22 16726.49
1989/09/30 14698.76 16657.91
1989/10/31 13873.72 16271.45
1989/11/30 14079.98 16603.39
1989/12/31 13769.49 17001.87
1990/01/31 12900.94 15861.04
1990/02/28 13167.30 16065.65
1990/03/31 13908.46 16491.39
1990/04/30 13503.14 16079.11
1990/05/31 14753.86 17646.82
1990/06/30 14487.50 17526.82
1990/07/31 13731.86 17470.73
1990/08/31 11986.06 15891.38
1990/09/30 10748.37 15117.47
1990/10/31 10370.55 15052.46
1990/11/30 11373.73 16024.85
1990/12/31 12442.05 16471.95
1991/01/31 13536.43 17190.12
1991/02/28 14722.01 18419.22
1991/03/31 15086.80 18864.96
1991/04/30 15321.31 18910.24
1991/05/31 16845.63 19727.16
1991/06/30 15985.76 18823.66
1991/07/31 16402.66 19700.84
1991/08/31 17080.14 20167.75
1991/09/30 16702.32 19830.95
1991/10/31 16415.69 20096.68
1991/11/30 15594.91 19286.79
1991/12/31 17582.47 21493.19
1992/01/31 18889.56 21093.42
1992/02/29 19198.76 21367.64
1992/03/31 19184.71 20950.97
1992/04/30 19451.75 21566.92
1992/05/31 20070.16 21672.60
1992/06/30 18636.06 21349.68
1992/07/31 18973.62 22222.88
1992/08/31 18326.63 21767.31
1992/09/30 18565.74 22024.17
1992/10/31 19212.72 22101.25
1992/11/30 20323.86 22854.91
1992/12/31 20872.39 23136.02
1993/01/31 21744.42 23330.36
1993/02/28 22138.23 23647.66
1993/03/31 22658.64 24146.62
1993/04/30 22123.98 23562.27
1993/05/31 22363.23 24193.74
1993/06/30 22630.63 24263.90
1993/07/31 23404.69 24166.85
1993/08/31 24375.78 25082.77
1993/09/30 25163.91 24889.63
1993/10/31 26078.71 25404.85
1993/11/30 25670.57 25163.50
1993/12/31 27887.78 25467.98
1994/01/31 28798.86 26333.89
1994/02/28 28215.20 25620.25
1994/03/31 26563.85 24503.20
1994/04/30 26503.76 24816.84
1994/05/31 25101.29 25223.84
1994/06/30 24485.92 24605.86
1994/07/31 25187.15 25412.93
1994/08/31 26145.98 26454.86
1994/09/30 24686.27 25806.71
1994/10/31 23956.42 26387.37
1994/11/30 22983.28 25426.34
1994/12/31 23441.19 25803.41
1995/01/31 23544.07 26472.49
1995/02/28 24675.71 27504.13
1995/03/31 25116.61 28315.77
1995/04/30 25146.00 29149.67
1995/05/31 26380.52 30314.78
1995/06/30 26630.37 31019.00
1995/07/31 27864.89 32047.59
1995/08/31 27879.58 32128.03
1995/09/30 27717.92 33483.83
1995/10/31 27703.22 33364.29
1995/11/30 29408.04 34828.98
1995/12/31 30186.91 35499.79
1996/01/31 30125.46 36708.20
1996/02/29 30048.65 37048.49
1996/03/31 31077.92 37405.26
1996/04/30 31117.38 37956.62
1996/05/31 32141.29 38935.52
1996/06/30 32333.27 39083.86
1996/07/31 30973.39 37357.14
1996/08/30 32429.26 38145.00
IMATRL PRASUN SHR__CHT 19960831 19960909 151913 R00000000000123
Let's say hypothetically that $10,000 was invested in Fidelity Select
Construction and Housing Portfolio on September 29, 1986, when the fund
started, and a 3% sales charge was paid. By August 31, 1996, the investment
would have grown to $32,429 - a 224.29% increase. That compares to $10,000
invested in the S&P 500, which would have grown to $38,145 over the same
period - a 281.45% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST 31, 1996
% OF FUND'S
INVESTMENTS
Lowe's Companies, Inc. 5.6
Home Depot, Inc. (The) 4.8
Black & Decker Corp. 3.9
Sherwin-Williams Co. 3.8
Leggett & Platt, Inc. 3.1
Belmont Homes, Inc. 3.1
Green Tree Financial Corp. 3.0
Caterpillar, Inc. 3.0
Fluor Corp. 2.6
Masco Corp. 2.5
TOP INDUSTRIES AS OF AUGUST 31, 1996
Appliances 7.6%
Lumber & Building
Materials - Retail 5.6%
Building Materials - Retail 4.8%
Furniture 4.4%
Farm Machinery
& Equipment 4.3%
All Others 73.3% *
Row: 1, Col: 1, Value: 73.3
Row: 1, Col: 2, Value: 4.3
Row: 1, Col: 3, Value: 4.4
Row: 1, Col: 4, Value: 4.8
Row: 1, Col: 5, Value: 5.6
Row: 1, Col: 6, Value: 7.6
* INCLUDES SHORT-TERM INVESTMENTS
CONSTRUCTION AND HOUSING PORTFOLIO
FUND TALK: THE MANAGERS' OVERVIEW
NOTE TO SHAREHOLDERS: Effective August 1, 1996, Peter Saperstone (right)
became Portfolio Manager of Fidelity Construction and Housing Portfolio.
The following is an interview with William Bower, who managed the fund
during most of the period covered by the report, and Peter Saperstone, who
discusses his investing style and outlook.
Q. BILL, HOW DID THE FUND PERFORM?
A. Pretty well. For the six months ended August 31, 1996, the fund had a
return of 7.92%. This compared favorably to the Standard & Poor's 500
Index, which posted a return of 2.96% over the same period. For the
12-month period ended August 31, 1996, the fund provided a return of
16.32%, while the S&P 500 posted a return of 18.73%.
Q. CAN YOU POINT TO ANY PARTICULAR FACTORS AS HAVING HAD A SIGNIFICANT
EFFECT ON THE PORTFOLIO?
A. Relative to the index, my overweighting in manufactured housing helped
performance, as this sector continued to grab market share from
"site-built," or homebuilding, stocks. This shift in market share was due
partly to continued strong job growth in the Southeast region of the U.S. A
lot of factories opened up below the Mason-Dixon line, and the blue-collar
workers in that region tend to utilize manufactured housing. Also, with
home values falling, many people don't look at homes in terms of investment
value anymore. Instead, they're seeking out more affordable alternatives
such as manufactured housing.
Q. THIS FUND IS VERY CYCLICAL - THAT IS, IT TENDS TO PARALLEL THE UPS AND
DOWNS OF THE ECONOMY. CAN YOU DESCRIBE THE ECONOMIC CONDITIONS OVER THE
PAST SIX MONTHS AND THEIR RAMIFICATIONS?
A. Sure. The economy showed its strength during the period, resulting in
increased home sales and housing starts, both key indicators of the
well-being of the sector. In this type of atmosphere, stocks such as Home
Depot and Lowe's tend to flourish because people are either in the
remodeling phase or the building phase. This sends a positive ripple
throughout the sector. The sector historically has been characterized as
having good "fundamentals" when there have been strong housing starts, low
interest rates, low unemployment and solid jobs creation. These trends, for
the most part, existed during the period.
Q. HOW DID RETAIL STOCKS PERFORM?
A. The retail sector performed well as investors showed renewed confidence
in the economy. Retail stocks in general are powerful forces within the
housing sector; they tend to benefit from industry consolidations and, in a
sense, these companies can control pricing. In terms of the portfolio, we
saw good returns from two of the fund's larger positions - Home Depot and
Lowe's - due largely to the robust economy. Both companies are trying to
improve earnings growth by expanding square footage and increasing the
profitability of existing stores. There are also a lot of investment
opportunities in the retail sector with companies that tend to be less
sensitive to the economy. Stocks such as Black & Decker and Stanley Works -
companies with established product lines - would fall into that category.
Q. WHICH INDIVIDUAL HOLDINGS PLAYED KEY ROLES?
A. Actually, I was helped by some of the stocks I avoided. I generally
steered clear of many of the paper and lumber stocks because pricing and
inventories were high. Sunbeam-Oster, an appliance manufacturer, was a good
performer.
Q. TURNING TO YOU PETER, HOW WOULD YOU EXPLAIN YOUR INVESTING STRATEGY?
A. In this sector, I'm looking for companies that can benefit from strong
secular trends, tend to be less sensitive to fluctuations in the U.S.
housing market, are internationally diversified, or are cost reduction
stories. In terms of secular trends, retail consolidation could benefit
companies such as Lowe's and Home Depot. Black & Decker and
Sherwin-Williams are companies that can perform well in a weakening housing
market, and Stanley Works continues to aggressively attack its cost
structure.
Q. WHAT'S YOUR OUTLOOK FOR THE NEXT SIX MONTHS?
A. The cyclicality of the housing market plays an integral role in the
performance of the group. If current economic conditions hold - moderate
economic growth combined with minimal inflationary pressure - the group
should continue to meet earnings expectations over the next couple of
quarters.
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.
FUND FACTS
START DATE: September 29, 1986
FUND NUMBER: 511
TRADING SYMBOL: FSHOX
SIZE: as of August 31, 1996, more than
$62 million
MANAGER: Peter Saperstone, since August
1996; equity analyst, textile, apparel and
footwear industries, since 1995; building
materials and appliances, since 1996, joined
Fidelity in 1995
(checkmark)
CONSTRUCTION AND HOUSING PORTFOLIO
INVESTMENTS AUGUST 31, 1996 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 83.6%
SHARES VALUE (NOTE 1)
APPAREL STORES - 1.9%
SHOE STORES - 1.9%
Payless ShoeSource, Inc. (a) 35,000 $ 1,229,370 70437910
AUTOS, TIRES, & ACCESSORIES - 0.6%
AUTO & TRUCK PARTS - 0.6%
Titan Wheel International, Inc. 26,900 410,225 88832810
BUILDING MATERIALS - 12.4%
CEMENT - 2.8%
Centex Construction Products, Inc. 14,300 210,925 15231R10
Medusa Corp. 20,400 606,900 58507230
Texas Industries, Inc. 5,600 364,700 88249110
Vulcan Materials Co. 9,900 572,963 92916010
1,755,488
CONCRETE, GYPSUM, PLASTER - 0.4%
CalMat Co. 13,500 243,000 13127110
FABRICATED STRUCTURAL METAL - 0.1%
United Dominion Industries Ltd. 2,600 52,988 90991410
HEATING & AIR-CONDITIONING EQUIPMENT - 2.1%
Falcon Building Products, Inc. (a) 113,400 1,332,450 30591610
PAINT & VARNISH - 3.8%
Sherwin-Williams Co. 55,000 2,406,250 82434810
PLUMBING SUPPLIES - WHOLESALE - 3.2%
Masco Corp. 53,400 1,555,275 57459910
Shelter Components Corp. 37,625 479,719 82283510
2,034,994
TOTAL BUILDING MATERIALS 7,825,170
CHEMICALS & PLASTICS - 1.8%
CHEMICALS - 1.8%
PPG Industries, Inc. 22,500 1,110,938 69350610
CONSTRUCTION - 13.3%
CONSTRUCTION - 0.8%
Walter Industries, Inc. (a) 37,200 497,550 93317Q10
GENERAL BUILDING - 1.2%
Crossman Communities, Inc. (a) 11,900 211,225 22764E10
DR Horton, Inc. 60,940 540,843 23331A10
752,068
MOBILE HOMES - 2.9%
Clayton Homes, Inc. 37,800 760,725 18419010
Oakwood Homes Corp. 46,400 1,090,400 67409810
1,851,125
OPERATIVE BUILDERS - 2.1%
Continental Homes Holding Corp. 34,700 667,975 21148C10
Lennar Corp. 21,400 478,825 52605710
Washington Homes, Inc. (a) 47,600 184,450 93886410
1,331,250
PREFABRICATED WOOD BUILDINGS - 3.0%
American Homestar Corp. (a) 56,800 1,334,800 02665110
Palm Harbor Homes, Inc. (a) 19,750 585,094 69663910
1,919,894
SINGLE-FAMILY HOUSING CONSTRUCTION - 3.3%
Beazer Homes USA, Inc. (a) 10,000 145,000 07556Q10
Belmont Homes, Inc. (a) 91,500 1,967,250 08038110
2,112,250
TOTAL CONSTRUCTION 8,464,137
SHARES VALUE (NOTE 1)
CONSUMER ELECTRONICS - 7.6%
APPLIANCES - 7.6%
Black & Decker Corp. 63,000 $ 2,488,500 09179710
Maytag Co. 17,200 346,150 57859210
Sunbeam-Oster, Inc. 56,400 1,226,700 86707110
Whirlpool Corp. 15,000 735,000 96332010
4,796,350
CREDIT & OTHER FINANCE - 3.0%
MORTGAGE BANKERS - 3.0%
Green Tree Financial Corp. 54,400 1,890,400 39350510
ENGINEERING - 3.2%
ARCHITECTS & ENGINEERS - 2.6%
Fluor Corp. 25,700 1,644,800 34386110
SPECIAL CONTRACTORS - 0.6%
Foster Wheeler Corp. 9,000 388,125 35024410
TOTAL ENGINEERING 2,032,925
FEDERAL SPONSORED CREDIT - 1.4%
FEDERAL & FEDERALLY SPONSORED CREDIT AGENCIES - 1.4%
Federal National Mortgage Association 29,400 911,400 31358610
HOME FURNISHINGS - 5.4%
FURNITURE - 4.4%
Furniture Brands International, Inc. (a) 65,600 787,200 36092110
Leggett & Platt, Inc. 69,900 1,992,150 52466010
2,779,350
FURNITURE STORES - 1.0%
Haverty Furniture Companies, Inc. 38,050 413,794 41959610
Heilig-Meyers Co. 13,153 233,466 42289310
647,260
TOTAL HOME FURNISHINGS 3,426,610
HOUSEHOLD PRODUCTS - 1.7%
FABRICATED RUBBER PRODUCTS - 1.7%
Premark International, Inc. 59,000 1,076,750 74045910
INDUSTRIAL MACHINERY & EQUIPMENT - 12.8%
ACCESS & MEASURING CUTTING TOOLS - 1.4%
Stanley Works 33,000 907,500 85461610
CONSTRUCTION EQUIPMENT - 3.3%
Caterpillar, Inc. 27,200 1,873,400 14912310
Komatsu Ltd. Ord. 23,000 196,253 50045899
2,069,653
FARM MACHINERY & EQUIPMENT - 4.3%
Allied Products Corp. 29,700 768,488 01941110
Case Corp. 17,200 782,600 14743R10
Deere & Co. 16,900 671,775 24419910
Varity Corp. (a) 9,900 497,475 92224R60
2,720,338
GENERAL INDUSTRIAL MACHINERY - 1.5%
Ingersoll-Rand Co. 22,500 961,875 45686610
LAWN, GARDEN TRACTORS, EQUIPMENT - 2.3%
Toro Co. 47,300 1,478,125 89109210
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 8,137,491
IRON & STEEL - 2.3%
METAL FORGINGS & STAMPINGS - 2.3%
TriMas Corp. 61,800 1,436,850 89621510
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
LEISURE DURABLES & TOYS - 1.8%
MOTOR HOMES - 0.4%
Thor Industries, Inc. 13,500 $ 281,813 88516010
TRAVEL TRAILERS AND CAMPERS - 1.4%
Champion Enterprises, Inc. (a) 46,600 885,400 15849610
TOTAL LEISURE DURABLES & TOYS 1,167,213
METALS & MINING - 0.9%
METAL ORES - 0.6%
Wolverine Tube, Inc. (a) 9,100 373,100 97809310
NON-METALLIC MINERAL MINING - 0.3%
Martin Marietta Materials, Inc. 9,000 198,000 57328410
TOTAL METALS & MINING 571,100
PAPER & FOREST PRODUCTS - 1.3%
PAPER - 1.3%
Champion International Corp. 10,000 430,000 15852510
Georgia-Pacific Corp. 5,000 371,875 37329810
801,875
REAL ESTATE - 0.3%
SUBDIVIDED REAL ESTATE DEVELOPMENT - 0.3%
Catellus Development Corp. (a) 18,000 171,000 14911110
RETAIL & WHOLESALE, MISCELLANEOUS - 10.4%
BUILDING MATERIALS - RETAIL - 4.8%
Home Depot, Inc. (The) 57,500 3,054,688 43707610
LUMBER & BUILDING MATERIALS - RETAIL - 5.6%
Lowe's Companies, Inc. 97,400 3,518,575 54866110
TOTAL RETAIL & WHOLESALE, MISCELLANEOUS 6,573,263
TEXTILES & APPAREL - 1.5%
APPAREL - 0.9%
Kellwood Co. 35,000 564,375 48804410
CARPETS & RUGS - 0.6%
Shaw Industries, Inc. 25,000 375,000 82028610
COTTON MILLS - 0.0%
Galey & Lord, Inc. (a) 1,000 11,625 36352K10
TOTAL TEXTILES & APPAREL 951,000
TOTAL COMMON STOCKS
(Cost $49,096,807) 52,984,067
REPURCHASE AGREEMENTS - 16.4%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 5.25%, dated
8/30/96 due 9/3/96 $ 10,416,073 10,410,000 69899TYY
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $59,506,807) $ 63,394,067
LEGEND
1. Non-income producing
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $37,072,931 and $24,292,691,respectively (see Note 4 of Notes to
Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $16,222 for the period (see
Note 5 of Notes to Financial Statements).
INCOME TAX INFORMATION
At August 31, 1996, the aggregate cost of investment securities for income
tax purposes was $59,558,365. Net unrealized appreciation aggregated
$3,835,702 of which $4,834,165 related to appreciated investment securities
and $998,463 related to depreciated investment securities.
CONSTRUCTION AND HOUSING PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1996 (UNAUDITED)
ASSETS
Investment in $ 63,394,067
securities, at
value (including
repurchase
agreements of
$10,410,000)
(cost
$59,506,807) -
See
accompanying
schedule
Cash 897
Receivable for 4,237
investments
sold
Receivable for 57,166
fund shares sold
Dividends 57,276
receivable
Redemption fees 174
receivable
Other receivables 156
Prepaid expenses 5,607
TOTAL ASSETS 63,519,580
LIABILITIES
Payable for $ 708,911
investments
purchased
Payable for fund 196,032
shares
redeemed
Accrued 29,639
management
fee
Other payables 52,960
and
accrued
expenses
TOTAL LIABILITIES 987,542
NET ASSETS $ 62,532,038
Net Assets
consist of:
Paid in capital $ 56,355,428
Undistributed net 33,283
investment
income
Accumulated 2,256,067
undistributed net
realized gain
(loss) on
investments and
foreign currency
transactions
Net unrealized 3,887,260
appreciation
(depreciation)
on investments
and assets and
liabilities in
foreign
currencies
NET ASSETS, for $ 62,532,038
3,085,221
shares
outstanding
NET ASSET VALUE $20.27
and redemption
price per share
($62,532,038 (divided by)
3,085,221
shares)
Maximum offering $20.90
price per share
(100/97.00 of
$20.27)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED AUGUST 31, 1996 (UNAUDITED)
INVESTMENT $ 246,454
INCOME
Dividends
Interest (including 129,165
income on
securities
loaned of $277)
TOTAL INCOME 375,619
EXPENSES
Management fee $ 145,334
Transfer agent 134,877
fees
Accounting and 30,114
security lending
fees
Non-interested 85
trustees'
compensation
Custodian fees 8,254
and expenses
Registration fees 5,607
Audit 14,795
Legal 182
Miscellaneous 569
Total expenses 339,817
before
reductions
Expense (5,368 334,449
reductions )
NET INVESTMENT 41,170
INCOME
REALIZED AND
UNREALIZED GAIN
(LOSS)
Net realized gain
(loss) on:
Investment 2,315,529
securities
Foreign (25 2,315,504
currency )
transactions
Change in net
unrealized
appreciation
(depreciation)
on:
Investment 559,040
securities
Assets and (1 559,039
liabilities in )
foreign
currencies
NET GAIN (LOSS) 2,874,543
NET INCREASE $ 2,915,713
(DECREASE) IN
NET ASSETS
RESULTING FROM
OPERATIONS
OTHER $ 111,412
INFORMATION
Sales charges
paid to FDC
Deferred sales $ 363
charges
withheld
by FDC
Exchange fees $ 9,435
withheld by FSC
Expense $ 5,264
reductions
Directed
brokerage
arrangements
Custodian 104
interest credits
$ 5,368
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS YEAR ENDED
ENDED FEBRUARY 29,
AUGUST 31, 1996 1996
(UNAUDITED)
Operations $ 41,170 $ 166,036
Net investment
income
Net realized 2,315,504 4,719,847
gain (loss)
Change in net 559,039 2,880,267
unrealized
appreciation
(depreciation)
NET INCREASE 2,915,713 7,766,150
(DECREASE) IN
NET ASSETS
RESULTING
FROM
OPERATIONS
Distributions to - (162,155
shareholders )
From net
investment
income
From net (1,694,411 (1,876,368
realized gain ) )
TOTAL (1,694,411 (2,038,523
DISTRIBUTIONS ) )
Share 47,409,467 90,250,248
transactions
Net proceeds
from sales of
shares
Reinvestment of 1,676,339 2,017,008
distributions
Cost of shares (30,504,402 (72,254,026
redeemed ) )
Paid in capital 61,319 64,179
portion of
redemption fees
NET INCREASE 18,642,723 20,077,409
(DECREASE) IN
NET ASSETS
RESULTING
FROM SHARE
TRANSACTIONS
TOTAL 19,864,025 25,805,036
INCREASE
(DECREASE) IN
NET ASSETS
NET ASSETS
Beginning of 42,668,013 16,862,977
period
End of period $ 62,532,038 $ 42,668,013
(including
undistributed
net investment
income of
$33,283 and
$1,803,
respectively)
OTHER
INFORMATION
Shares
Sold 2,355,875 4,943,241
Issued in 89,025 103,809
reinvestment of
distributions
Redeemed (1,541,480 (3,869,788
) )
Net increase 903,420 1,177,262
(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> <C>
SIX MONTHS YEAR ENDED YEARS ENDED FEBRUARY 28, TEN MONTHS YEAR ENDED
ENDED FEBRUARY 29, ENDED APRIL 30,
AUGUST 31, 1996 FEBRUARY 28,
SELECTED PER-SHARE DATA D (UNAUDITED) 1996 1995 1994 1993 1992
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Net asset value, $ 19.56 $ 16.79 $ 19.82 $ 15.74 $ 13.84 $ 11.76
beginning of
period
Income from
Investment
Operations
Net investment .02 .07 (.02) .01 .02 (.06)
income (loss)
Net realized and 1.44 3.55 (2.50) 4.26 1.87 2.93
unrealized gain
(loss)
Total from 1.46 3.62 (2.52) 4.27 1.89 2.87
investment
operations
Less Distributions
From net - (.07) - - - -
investment
income
From net (.78) (.81) (.52) (.22) (.01) (.88)
realized gain
Total (.78) (.88) (.52) (.22) (.01) (.88)
distributions
Redemption fees .03 .03 .01 .03 .02 .09
added to paid in
capital
Net asset value, $ 20.27 $ 19.56 $ 16.79 $ 19.82 $ 15.74 $ 13.84
end of period
TOTAL RETURN B, C 7.92% 21.77% (12.54)% 27.45% 13.81% 26.96%
RATIOS AND
SUPPLEMENTAL
DATA
Net assets, end of $ 62,532 $ 42,668 $ 16,863 $ 80,999 $ 31,111 $ 26,687
period (000
omitted)
Ratio of expenses 1.40% A 1.43% 1.76% 1.67% 2.02% A 2.50%
to average net G
assets
Ratio of expenses 1.37% A, 1.40% 1.74% 1.66% 2.02% A 2.50%
to average net E E E E
assets after
expense
reductions
Ratio of net .17% A .39% (.11)% .03% .20% A (.49)%
investment
income (loss) to
average net
assets
Portfolio turnover 113% A 139% 45% 35% 60% A 183%
rate
Average $ .0360
commission
rate F
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <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 9 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 9 OF NOTES TO FINANCIAL STATEMENTS). F FOR
FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE
FOR SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY
VARY FROM PERIOD TO PERIOD AND FUND TO FUND
DEPENDING ON THE MIX OF TRADES EXECUTED IN VARIOUS MARKETS WHERE
TRADING PRACTICES AND COMMISSION RATE STRUCTURES MAY
DIFFER. 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>
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. A fund's total return includes
changes in 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 6 PAST 1 PAST 5 LIFE OF
AUGUST 31, 1996 MONTH YEAR YEARS FUND
S
ENVIRONMENTAL SERVICES 7.33% 9.53% 20.01% 51.34%
ENVIRONMENTAL SERVICES 4.11% 6.25% 16.41% 46.80%
(INCL. 3% SALES CHARGE)
S&P 500 2.96% 18.73% 89.14% 147.46%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one year, five years, or
since the fund started on June 29, 1989. You can compare these figures to
the performance of the S&P 500 - a widely recognized, unmanaged index of
common stocks. This benchmark reflects reinvestment of dividends and
capital gains, if any, but does not reflect any sales charges, brokerage
commissions, or other costs of investing.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
AUGUST 31, 1996 YEAR YEARS FUND
ENVIRONMENTAL SERVICES 9.53% 3.71% 5.94%
ENVIRONMENTAL SERVICES 6.25% 3.08% 5.49%
(INCL. 3% SALES CHARGE)
S&P 500 18.73% 13.59% 13.45%
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
IMAHDR PRASUN SHR__CHT 19960831 19960909 155914 S00000000000001
Environmental Services SP Standard & Poor 500
00516 SP001
1989/06/29 9700.00 10000.00
1989/06/30 9573.90 9761.13
1989/07/31 10485.70 10642.57
1989/08/31 10621.50 10851.16
1989/09/30 11193.80 10806.67
1989/10/31 10941.60 10555.96
1989/11/30 11009.50 10771.30
1989/12/31 11368.64 11029.81
1990/01/31 10358.96 10289.71
1990/02/28 10562.83 10422.44
1990/03/31 11019.13 10698.64
1990/04/30 11077.38 10431.17
1990/05/31 12106.48 11448.21
1990/06/30 12485.11 11370.37
1990/07/31 12407.45 11333.98
1990/08/31 10863.80 10309.39
1990/09/30 10281.29 9807.32
1990/10/31 10135.66 9765.15
1990/11/30 10485.17 10395.98
1990/12/31 11087.09 10686.03
1991/01/31 12057.94 11151.94
1991/02/28 12611.32 11949.30
1991/03/31 12611.32 12238.47
1991/04/30 12572.49 12267.85
1991/05/31 12601.62 12797.82
1991/06/30 11650.18 12211.68
1991/07/31 12019.11 12780.74
1991/08/31 12232.69 13083.64
1991/09/30 11941.44 12865.15
1991/10/31 11494.85 13037.54
1991/11/30 10863.80 12512.13
1991/12/31 11936.55 13943.51
1992/01/31 13005.20 13684.17
1992/02/29 13146.34 13862.06
1992/03/31 11835.74 13591.75
1992/04/30 11482.88 13991.35
1992/05/31 11190.52 14059.90
1992/06/30 10592.18 13850.41
1992/07/31 10665.31 14416.89
1992/08/31 10445.94 14121.35
1992/09/30 10571.29 14287.98
1992/10/31 11072.70 14337.99
1992/11/30 11762.13 14826.91
1992/12/31 11772.58 15009.28
1993/01/31 12002.39 15135.36
1993/02/28 11866.59 15341.20
1993/03/31 11574.10 15664.90
1993/04/30 11333.85 15285.81
1993/05/31 11584.55 15695.47
1993/06/30 11438.31 15740.99
1993/07/31 10957.79 15678.02
1993/08/31 11542.77 16272.22
1993/09/30 11553.21 16146.93
1993/10/31 11877.04 16481.17
1993/11/30 11354.74 16324.60
1993/12/31 11699.45 16522.12
1994/01/31 12691.82 17083.88
1994/02/28 12462.01 16620.90
1994/03/31 11333.85 15896.23
1994/04/30 11521.87 16099.70
1994/05/31 11490.54 16363.74
1994/06/30 10801.10 15962.83
1994/07/31 11030.91 16486.41
1994/08/31 11417.41 17162.35
1994/09/30 11344.29 16741.87
1994/10/31 10957.79 17118.56
1994/11/30 10341.48 16495.11
1994/12/31 10581.74 16739.73
1995/01/31 10592.18 17173.79
1995/02/28 10727.98 17843.05
1995/03/31 11239.83 18369.60
1995/04/30 12044.17 18910.59
1995/05/31 12232.20 19666.44
1995/06/30 12733.60 20123.29
1995/07/31 13214.12 20790.58
1995/08/31 13402.14 20842.77
1995/09/30 13872.21 21722.33
1995/10/31 12890.29 21644.78
1995/11/30 13339.47 22594.99
1995/12/31 13346.83 23030.17
1996/01/31 13809.34 23814.11
1996/02/29 13677.20 24034.87
1996/03/31 14282.87 24266.33
1996/04/30 14757.09 24624.01
1996/05/31 15893.10 25259.07
1996/06/30 15606.34 25355.30
1996/07/31 13808.58 24235.11
1996/08/30 14679.89 24746.22
IMATRL PRASUN SHR__CHT 19960831 19960909 155918 R00000000000090
Let's say hypothetically that $10,000 was invested in Fidelity Select
Environmental Services Portfolio on June 29, 1989, when the fund started,
and a 3% sales charge was paid. By August 31, 1996, the investment would
have grown to $14,680 - a 46.80% increase. That compares to $10,000
invested in the S&P 500, which would have grown to $24,746 over the same
period - a 147.46% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST 31, 1996
% OF FUND'S
INVESTMENTS
WMX Technologies, Inc. 6.1
Browning-Ferris Industries, Inc. 4.2
Ogden Corp. 3.9
IMCO Recycling, Inc. 3.2
USA Waste Services, Inc. 3.2
Wheelabrator Technologies, Inc. 3.1
United Water Resources, Inc. 3.0
Fluor Corp. 3.0
United Waste Systems, Inc. 2.9
Memtec Ltd. sponsored ADR 2.7
TOP INDUSTRIES AS OF AUGUST 31, 1996
Refuse Systems 30.6%
Pollution Equipment &
Design 11.6%
Sanitary Services 6.3%
Water Supply 5.3%
Architects & Engineers 3.4%
All Others 42.8% *
Row: 1, Col: 1, Value: 42.8
Row: 1, Col: 2, Value: 3.4
Row: 1, Col: 3, Value: 5.3
Row: 1, Col: 4, Value: 6.3
Row: 1, Col: 5, Value: 11.6
Row: 1, Col: 6, Value: 30.6
* INCLUDES SHORT-TERM INVESTMENTS
ENVIRONMENTAL SERVICES PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Robert Ewing,
Portfolio Manager of
Fidelity Select Environmental Services Portfolio
Q. BOB, HOW DID THE FUND PERFORM?
A. It did well over the past six months. For the six months ended August
31, 1996, the fund had a total return of 7.33%, while the Standard & Poor's
500 Index returned 2.96%. For the 12 months ended August 31, 1996, the fund
returned 9.53%, and the S&P 500 had a total return of 18.73%.
Q. WHAT FACTORS HELPED THE FUND'S PERFORMANCE?
A. There were two main reasons the fund did well over the past six months.
First, business prospects across the industry generally were more stable
than they had been in some time and stock valuations - or stock prices
compared to other measures such as earnings - were attractive after several
years of underperformance relative to the broad market. Second, the fund
benefited from its investments in mid-capitalization, or mid-sized, solid
waste companies. There was a great deal of acquisition activity among the
companies in this group, and the fund benefited from owning the acquiring
companies as well as those that were being bought. The former included USA
Waste and United Waste, both of which were aided by the cost savings and
opportunities for improved profit margins that their acquisitions produced.
Examples of acquired companies would be Addington Resources and Sanifill.
The fund also benefited from the performance of individual stocks, such as
Memtec, a water company that manufacturers membranes and filters, and TSI,
which tests gas masks and profited from a multi-year contract with the U.S.
Army.
Q. WERE THERE ANY OTHER MAJOR THEMES IN THE SECTOR DURING THE PERIOD?
A. Companies with any significant stake in recycling had a tough time of it
over the past six months. That's because the cost of recyclable commodities
dropped precipitously. Recycled paper fiber was the prime example of this
trend, falling in price from about $180 per ton a year ago to about $40 per
ton at the end of the period. This decrease largely was due to the moderate
slowdown in the economy we saw earlier in the year. Demand for paper
dropped off, and therefore demand for fiber by paper mills did so as well.
While every solid waste company is involved in recyclable goods,
Browning-Ferris Industries suffered notably because it has about 12% of its
business generated through the value of commodities recovered from the
waste stream. However, the core prospects of the solid waste business are
favorable at this time, with about 2% or 3% volume growth and 3% to 4%
pricing growth going forward. I estimate the long-term equilibrium price of
paper at about $100 per ton and, if we approach that figure, the outlook
for solid waste companies should improve.
Q. WERE YOU PURSUING ANY OTHER STRATEGIES OF NOTE?
A. In June and July, some of the fund's solid waste stocks reached fairly
high valuations, so I tried to reduce some of the risk posed by that
situation by reducing those positions and purchasing some convertible
securities. The advantage here was one typical of convertible securities:
Their yield provided some downside protection if stocks were to fall, while
at the same time the convertibles offered the possibility of participating
in any upward swing in stock prices. I've since sold the fund's convertible
securities. I also added to the fund's position in water utilities because
they were selling at attractive valuations and contributed additional yield
to the fund.
Q. WHAT WERE SOME OF THE STOCKS THAT DIDN'T PERFORM AS WELL AS YOU WOULD
HAVE LIKED?
A. I already mentioned Browning-Ferris and its problems with commodity
prices. IMCO Recycling - a company that recycles aluminum cans - was
another disappointment. It suffered from the fall in the price of aluminum
we've seen over the past six months.
Q. WHAT'S YOUR OUTLOOK?
A. I believe there will be more opportunities offered by acquiring
companies in the solid waste sector that are consolidating their operations
and driving results through the benefits of adding to their businesses.
Companies whose prospects are sensitive to commodity prices hopefully will
see some improvement in paper and other prices. If we continue to see the
signs of economic improvement that have emerged recently, or if the economy
accelerates even more, I might increase the fund's stake in these companies
because in that environment commodity prices should improve. If the economy
weakens, I'll look more to the water group because those stocks generally
are more immune to economic trends. In general, though, I'm not structuring
the fund in anticipation of the direction of the economy. Instead, I'll
continue to focus on the business prospects of individual companies, making
minor adjustments as the economic backdrop emerges.
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: June 29, 1989
FUND NUMBER: 516
TRADING SYMBOL: FSLEX
SIZE: as of August 31, 1996, more than
$37 million
MANAGER: Robert Ewing, since January 1996;
equity analyst, restaurant, foods, specialty
retail, toy retail industries, initial public
offerings, 1990-1993; insurance, mortgage,
specialty finance industries, since 1993;
joined Fidelity in 1990
(checkmark)
ENVIRONMENTAL SERVICES PORTFOLIO
INVESTMENTS AUGUST 31, 1996 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 89.5%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 2.5%
ORDNANCE - 2.5%
Harsco Corp. 15,600 $ 949,650 41586410
BUILDING MATERIALS - 0.9%
NUTS, BOLTS, SCREWS - 0.9%
Dominion Bridge Corp. (a) 150,000 328,125 25719210
COAL - 2.5%
Addington Resources, Inc. (a) 41,000 943,000 00651610
CONSTRUCTION - 0.8%
HEAVY CONSTRUCTION - 0.8%
Emcor Group, Inc. (a) 20,000 295,000 29084Q10
DRUGS & PHARMACEUTICALS - 0.6%
COMMERCIAL LABORATORY RESEARCH - 0.6%
Energy Biosystems Corp. (a) 34,900 226,850 29265L10
ELECTRONIC INSTRUMENTS - 3.2%
INDUSTRIAL MEASUREMENT INSTRUMENTS - 2.4%
TSI, Inc. 96,000 900,000 87287610
LAB & RESEARCH EQUIPMENT - 0.8%
Microfluidics International Corp. (a) 181,400 294,775 59507310
TOTAL ELECTRONIC INSTRUMENTS 1,194,775
ENERGY SERVICES - 2.3%
OIL & GAS SERVICES - 2.3%
Newpark Resources, Inc. 21,400 773,075 65171850
Serv-Tech, Inc. (a) 26,600 93,100 81753910
866,175
ENGINEERING - 3.4%
ARCHITECTS & ENGINEERS - 3.4%
Fluor Corp. 17,600 1,126,400 34386110
Harding Lawson Associations Group, Inc. (a) 27,900 170,888 41229310
1,297,288
HOUSEHOLD PRODUCTS - 2.7%
MANUFACTURED PRODUCTS - 2.7%
Memtec Ltd. sponsored ADR 33,100 1,019,894 58626530
INDEPENDENT POWER - 2.4%
STEAM SUPPLY - 2.4%
Thermo Electron Corp. 22,950 909,394 88355610
INDUSTRIAL MACHINERY & EQUIPMENT - 4.6%
SERVICE INDUSTRY MACHINERY - 2.1%
Ionics, Inc. (a) 8,000 345,000 46221810
Trojan Technologies Corp. (a) 38,300 425,478 89692410
770,478
SPECIAL INDUSTRIAL MACHINERY - 2.5%
Thermo Fibertek, Inc. (a) 73,275 943,416 88355W10
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 1,713,894
MEDICAL EQUIPMENT & SUPPLIES - 1.7%
MEDICAL TECHNOLOGY - 1.7%
Pall Corp. 12,000 282,000 69642930
Thermedics, Inc. (a) 13,000 354,250 88390110
636,250
METALS & MINING - 3.2%
SECONDARY NONFERROUS SMELTING - 3.2%
IMCO Recycling, Inc. 75,800 1,203,325 44968110
SHARES VALUE (NOTE 1)
POLLUTION CONTROL - 51.9%
HAZARDOUS WASTE MANAGEMENT - 3.4%
GNI Group, Inc. (a) 50,000 $ 287,500 36202210
International Technology Corp. (a) 80,000 220,000 46046510
Molten Metal Technology, Inc. (a) 16,500 503,250 60871210
TRC Companies, Inc. (a) 74,900 280,875 87262510
1,291,625
POLLUTION EQUIPMENT & DESIGN - 11.6%
Calgon Carbon Corp. 27,000 310,500 12960310
Dames & Moore, Inc. 29,000 355,250 23571310
Handex Environmental Recovery, Inc. (a) 30,000 283,125 41024310
Ogden Corp. 75,400 1,479,725 67634610
Sevenson Environmental Services, Inc. 26,400 481,800 81806310
TETRA Technologies, Inc. (a) 15,900 282,225 88162F10
Thermatrix, Inc. (a) 28,000 252,000 88355010
Thermo Instrument Systems, Inc. (a) 21,200 821,500 88355910
Waste Management International PLC
sponsored ADR 10,000 93,750 94090610
4,359,875
REFUSE SYSTEMS - 30.6%
Allied Waste Industries, Inc.
par value $0.01 (a) 125,300 1,002,400 01958930
American Disposal Services, Inc. (a) 10,000 142,500 02538910
Browning-Ferris Industries, Inc. 62,000 1,581,000 11588510
Continental Waste Industries, Inc. (a) 39,400 788,000 21215T30
Eastern Environmental Services, Inc. (a) 33,000 214,500 27636910
GTS Duratek, Inc. (a) 40,500 650,531 36237J10
Laidlaw, Inc. Class B 90,000 868,262 50730K20
Rollins Environmental Services, Inc. (a) 65,000 203,125 77570910
Sanifill, Inc. (a) 18,100 839,388 80101810
Superior Services, Inc. (a) 36,000 585,000 86831610
TransAmerican Waste Industries, Inc. (a) 50,000 100,000 89351V10
United Waste Systems, Inc. (a) 37,000 1,091,500 91317410
WMX Technologies, Inc. 72,000 2,277,000 92929Q10
Wheelabrator Technologies, Inc. 79,300 1,179,586 96290130
11,522,792
SANITARY SERVICES - 6.3%
Philips Environmental, Inc. 80,000 637,310 71790610
Safety Kleen Corp. 31,100 536,475 78648410
USA Waste Services, Inc. (a) 43,270 1,189,925 90291710
2,363,710
TOTAL POLLUTION CONTROL 19,538,002
REAL ESTATE - 0.7%
REAL ESTATE, GENERAL - 0.7%
Cadiz Land, Inc. (a) 57,600 259,200 12754910
SERVICES - 0.8%
BUS CHARTER SERVICE - 0.8%
Coach USA, Inc. (a) 12,000 285,000 18975L10
WATER - 5.3%
WATER SUPPLY - 5.3%
American Water Works, Inc. 40,000 855,000 03041110
United Water Resources, Inc. 70,000 1,146,250 91319010
2,001,250
TOTAL COMMON STOCKS
(Cost $36,966,076) 33,667,072
REPURCHASE AGREEMENTS - 10.5%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 5.25%, dated
8/30/96 due 9/3/96 $ 3,951,304 $ 3,949,000 69899TYY
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $40,915,076) $ 37,616,072
LEGEND
1. Non-income producing
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $89,603,500 and $77,854,019, respectively (see Note 4 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $37,750 for the period (see
Note 5 of Notes to Financial Statements).
The maximum loan and the average daily loan balances during the period for
which loans were outstanding amounted to $3,698,000 and $2,517,750,
respectively. The weighted average interest rate paid was 5.7% (see Note 6
of Notes to Financial Statements).
INCOME TAX INFORMATION
At August 31, 1996, the aggregate cost of investment securities for income
tax purposes was $40,930,349. Net unrealized depreciation aggregated
$3,314,277, of which $1,118,946 related to appreciated investment
securities and $4,433,223 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.
ENVIRONMENTAL SERVICES PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1996 (UNAUDITED)
ASSETS
Investment in $ 37,616,072
securities, at
value (including
repurchase
agreements of
$3,949,000)
(cost
$40,915,076) -
See
accompanying
schedule
Cash 458
Receivable for 531,588
investments
sold
Receivable for 294,853
fund shares sold
Dividends 30,094
receivable
Redemption fees 7,186
receivable
Other receivables 35,811
Prepaid expenses 13,557
TOTAL ASSETS 38,529,619
LIABILITIES
Payable for $ 227,355
investments
purchased
Payable for fund 1,124,323
shares
redeemed
Accrued 18,842
management
fee
Other payables 74,282
and
accrued
expenses
TOTAL LIABILITIES 1,444,802
NET ASSETS $ 37,084,817
Net Assets
consist of:
Paid in capital $ 41,924,151
Accumulated net (62,061
investment )
(loss)
Accumulated (1,479,059
undistributed net )
realized gain
(loss) on
investments and
foreign currency
transactions
Net unrealized (3,298,214
appreciation )
(depreciation)
on investments
and assets and
liabilities in
foreign
currencies
NET ASSETS, for $ 37,084,817
2,786,127
shares
outstanding
NET ASSET VALUE $13.31
and redemption
price per share
($37,084,817 (divided by)
2,786,127
shares)
Maximum offering $13.72
price per share
(100/97.00 of
$13.31)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED AUGUST 31, 1996 (UNAUDITED)
INVESTMENT $ 237,283
INCOME
Dividends
Interest 162,688
TOTAL INCOME 399,971
EXPENSES
Management fee $ 153,094
Transfer agent 261,029
fees
Accounting fees 34,067
and expenses
Non-interested 104
trustees'
compensation
Custodian fees 10,533
and expenses
Registration fees 13,557
Audit 13,094
Legal 364
Interest 1,586
Miscellaneous 388
Total expenses 487,816
before
reductions
Expense (25,784 462,032
reductions )
NET INVESTMENT (62,061
INCOME (LOSS) )
REALIZED AND
UNREALIZED GAIN
(LOSS)
Net realized gain
(loss) on:
Investment (1,211,258
securities )
Foreign (348 (1,211,606
currency ) )
transactions
Change in net
unrealized
appreciation
(depreciation)
on:
Investment (3,736,432
securities )
Assets and (22 (3,736,454
liabilities in ) )
foreign
currencies
NET GAIN (LOSS) (4,948,060
)
NET INCREASE $ (5,010,121
(DECREASE) IN )
NET ASSETS
RESULTING FROM
OPERATIONS
OTHER $ 101,673
INFORMATION
Sales charges
paid to FDC
Deferred sales $ 4,199
charges
withheld
by FDC
Exchange fees $ 27,525
withheld by FSC
Expense $ 24,516
reductions
Directed
brokerage
arrangements
Custodian 1,268
interest credits
$ 25,784
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS YEAR ENDED
ENDED FEBRUARY 29,
AUGUST 31, 1996 1996
(UNAUDITED)
Operations $ (62,061 $ (455,922
Net investment ) )
income (loss)
Net realized (1,211,606 5,167,156
gain (loss) )
Change in net (3,736,454 2,838,058
unrealized )
appreciation
(depreciation)
NET INCREASE (5,010,121 7,549,292
(DECREASE) IN )
NET ASSETS
RESULTING
FROM
OPERATIONS
Distributions to (48,355 (1,461,704
shareholders ) )
from net
realized gains
Share 125,063,759 22,448,123
transactions
Net proceeds
from sales of
shares
Reinvestment of 47,753 1,440,232
distributions
Cost of shares (110,934,521 (33,702,230
redeemed ) )
Paid in capital 379,082 43,195
portion of
redemption fees
NET INCREASE 14,556,073 (9,770,680
(DECREASE) IN )
NET ASSETS
RESULTING
FROM SHARE
TRANSACTIONS
TOTAL 9,497,597 (3,683,092
INCREASE )
(DECREASE) IN
NET ASSETS
NET ASSETS
Beginning of 27,587,220 31,270,312
period
End of period $ 37,084,817 $ 27,587,220
(including
accumulated net
investment loss
of $62,061 and
$0, respectively)
OTHER
INFORMATION
Shares
Sold 8,794,491 1,846,010
Issued in 3,682 120,119
reinvestment of
distributions
Redeemed (8,233,593 (2,790,218
) )
Net increase 564,580 (824,089)
(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> <C>
SIX MONTHS YEAR ENDED YEARS ENDED FEBRUARY 28, TEN MONTHS YEAR ENDED
ENDED FEBRUARY 29, ENDED APRIL 30,
AUGUST 31, 1996 FEBRUARY 28,
SELECTED PER-SHARE DATA D (UNAUDITED) 1996 1995 1994 1993 1992
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Net asset value, $ 12.42 $ 10.27 $ 11.93 $ 11.36 $ 11.39 $ 12.95
beginning of
period
Income from
Investment
Operations
Net investment (.02) (.17) (.14) (.11) (.06) (.09)
income (loss)
Net realized and .83 G 2.95 (1.53) .67 .42 (1.06)
unrealized gain
(loss)
Total from .81 2.78 (1.67) .56 .36 (1.15)
investment
operations
Less Distributions
From net (.02) (.65) - - (.39) (.42)
realized gain
Redemption fees .10 .02 .01 .01 - .01
added to paid in
capital
Net asset value, $ 13.31 $ 12.42 $ 10.27 $ 11.93 $ 11.36 $ 11.39
end of period
TOTAL RETURN B, C 7.33% 27.49% (13.91)% 5.02% 3.34% (8.67)%
RATIOS AND
SUPPLEMENTAL
DATA
Net assets, end of $ 37,085 $ 27,587 $ 31,270 $ 65,956 $ 65,913 $ 65,132
period (000
omitted)
Ratio of expenses 1.92% A 2.36% 2.04% 2.07% 1.99% A 2.03%
to average net
assets
Ratio of expenses 1.82% A, 2.32% 2.01% 2.03% 1.99% A 2.03%
to average net E E E E
assets after
expense
reductions
Ratio of net (.24)% A (1.43)% (1.32)% (1.02)% (.70)% A (.74)%
investment
income (loss) to
average net
assets
Portfolio turnover 363% A 138% 82% 191% 176% A 130%
rate
Average $ .0352
commission
rate F
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <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 9 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 9 OF NOTES TO FINANCIAL STATEMENTS). F FOR
FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE
FOR SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY
VARY FROM PERIOD TO PERIOD AND FUND TO FUND
DEPENDING ON THE MIX OF TRADES EXECUTED IN VARIOUS MARKETS WHERE
TRADING PRACTICES AND COMMISSION RATE STRUCTURES MAY
DIFFER. G THE AMOUNT SHOWN FOR A SHARE OUTSTANDING DOES NOT
CORRESPOND WITH THE AGGREGATE NET LOSS ON INVESTMENTS FOR
THE PERIOD DUE TO THE TIMING OF SALES AND REPURCHASES OF FUND SHARES
IN RELATION TO FLUCTUATING MARKET VALUES OF THE
INVESTMENTS OF THE FUND.
</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. A fund's total return includes
changes in 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 6 PAST 1 PAST 5 LIFE OF
AUGUST 31, 1996 MONTH YEAR YEARS FUND
S
INDUSTRIAL EQUIPMENT 1.95% 8.33% 142.97% 200.73%
INDUSTRIAL EQUIPMENT -1.11% 5.08% 135.69% 191.71%
(INCL. 3% SALES CHARGE)
S&P 500 2.96% 18.73% 89.14% 281.45%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one year, five years, or
since the fund started on September 29, 1986. You can compare these figures
to the performance of the S&P 500 - a widely recognized, unmanaged index of
common stocks. This benchmark reflects reinvestment of dividends and
capital gains, if any, but does not reflect any sales charges, brokerage
commissions, or other costs of investing.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
AUGUST 31, 1996 YEAR YEARS FUND
INDUSTRIAL EQUIPMENT 8.33% 19.43% 11.72%
INDUSTRIAL EQUIPMENT 5.08% 18.70% 11.38%
(INCL. 3% SALES CHARGE)
S&P 500 18.73% 13.59% 14.43%
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
IMAHDR PRASUN SHR__CHT 19960831 19960910 130856 S00000000000001
Industrial Equipment SP Standard & Poor 500
00510 SP001
1986/09/29 9700.00 10000.00
1986/09/30 9729.10 9962.80
1986/10/31 10039.50 10537.66
1986/11/30 10291.70 10793.72
1986/12/31 10311.10 10518.48
1987/01/31 11804.90 11935.32
1987/02/28 12804.00 12406.77
1987/03/31 12580.90 12765.32
1987/04/30 12367.50 12651.71
1987/05/31 12357.80 12761.78
1987/06/30 12707.00 13406.25
1987/07/31 13483.00 14085.95
1987/08/31 14084.40 14611.35
1987/09/30 14414.20 14291.37
1987/10/31 8759.10 11213.00
1987/11/30 8361.40 10289.05
1987/12/31 9357.40 11072.05
1988/01/31 9188.17 11538.18
1988/02/29 10024.36 12075.86
1988/03/31 10173.68 11702.72
1988/04/30 10472.32 11832.62
1988/05/31 10412.60 11935.56
1988/06/30 11149.24 12483.41
1988/07/31 10561.92 12435.97
1988/08/31 9606.27 12013.15
1988/09/30 9785.45 12524.91
1988/10/31 9626.18 12873.10
1988/11/30 9317.58 12689.01
1988/12/31 9815.31 12911.07
1989/01/31 10532.05 13856.16
1989/02/28 10113.96 13511.14
1989/03/31 10263.28 13825.95
1989/04/30 10999.92 14543.52
1989/05/31 11597.20 15132.53
1989/06/30 11099.47 15046.28
1989/07/31 11806.25 16404.95
1989/08/31 12025.25 16726.49
1989/09/30 11856.02 16657.91
1989/10/31 11069.60 16271.45
1989/11/30 11378.20 16603.39
1989/12/31 11577.29 17001.87
1990/01/31 11189.06 15861.04
1990/02/28 11756.48 16065.65
1990/03/31 12453.31 16491.39
1990/04/30 12353.76 16079.11
1990/05/31 13498.55 17646.82
1990/06/30 13258.63 17526.82
1990/07/31 13008.09 17470.73
1990/08/31 10863.46 15891.38
1990/09/30 9390.28 15117.47
1990/10/31 9139.74 15052.46
1990/11/30 9440.38 16024.85
1990/12/31 9781.12 16471.95
1991/01/31 10823.37 17190.12
1991/02/28 11845.58 18419.22
1991/03/31 11745.36 18864.96
1991/04/30 11625.10 18910.24
1991/05/31 12116.16 19727.16
1991/06/30 11725.01 18823.66
1991/07/31 11825.31 19700.84
1991/08/31 12005.85 20167.75
1991/09/30 12286.69 19830.95
1991/10/31 12216.48 20096.68
1991/11/30 11634.74 19286.79
1991/12/31 12406.41 21493.19
1992/01/31 13519.55 21093.42
1992/02/29 14480.89 21367.64
1992/03/31 14055.88 20950.97
1992/04/30 14055.88 21566.92
1992/05/31 14167.19 21672.60
1992/06/30 13296.92 21349.68
1992/07/31 13418.36 22222.88
1992/08/31 12720.11 21767.31
1992/09/30 12983.22 22024.17
1992/10/31 12932.62 22101.25
1992/11/30 13549.91 22854.91
1992/12/31 13813.01 23136.02
1993/01/31 14460.66 23330.36
1993/02/28 15219.61 23647.66
1993/03/31 15492.84 24146.62
1993/04/30 16201.67 23562.27
1993/05/31 17011.75 24193.74
1993/06/30 17234.52 24263.90
1993/07/31 17477.55 24166.85
1993/08/31 18672.42 25082.77
1993/09/30 18459.77 24889.63
1993/10/31 19077.46 25404.85
1993/11/30 19057.21 25163.50
1993/12/31 19798.04 25467.98
1994/01/31 20728.99 26333.89
1994/02/28 21318.58 25620.25
1994/03/31 20087.67 24503.20
1994/04/30 19905.86 24816.84
1994/05/31 19498.98 25223.84
1994/06/30 18497.43 24605.86
1994/07/31 19373.79 25412.93
1994/08/31 20750.92 26454.86
1994/09/30 20813.52 25806.71
1994/10/31 21074.34 26387.37
1994/11/30 20051.92 25426.34
1994/12/31 20417.07 25803.41
1995/01/31 20302.31 26472.49
1995/02/28 20907.41 27504.13
1995/03/31 22639.27 28315.77
1995/04/30 23703.68 29149.67
1995/05/31 24183.81 30314.78
1995/06/30 25102.32 31019.00
1995/07/31 27461.20 32047.59
1995/08/31 26928.89 32128.03
1995/09/30 25697.26 33483.83
1995/10/31 25645.07 33364.29
1995/11/30 26521.82 34828.98
1995/12/31 26095.90 35499.79
1996/01/31 27144.29 36708.20
1996/02/29 28614.33 37048.49
1996/03/31 28819.45 37405.26
1996/04/30 29348.94 37956.62
1996/05/31 29562.21 38935.52
1996/06/30 29431.88 39083.86
1996/07/31 27962.65 37357.14
1996/08/30 29171.21 38145.00
IMATRL PRASUN SHR__CHT 19960831 19960910 130901 R00000000000123
Let's say hypothetically that $10,000 was invested in Fidelity Select
Industrial Equipment Portfolio on September 29, 1986, when the fund
started, and a 3% sales charge was paid. By August 31, 1996, the investment
would have grown to $29,171 - a 191.71% increase. That compares to $10,000
invested in the S&P 500, which would have grown to $38,145 over the same
period - a 281.45% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST 31, 1996
% OF FUND'S
INVESTMENTS
Pitney Bowes, Inc. 7.5
Ingersoll-Rand Co. 7.2
Case Corp. 6.6
Caterpillar, Inc. 6.2
Harnischfeger Industries, Inc. 3.8
Xerox Corp. 3.5
IMC Global, Inc. 3.3
TRINOVA Corp. 3.2
Stewart & Stevenson Services, Inc. 2.6
AMETEK, Inc. 2.3
TOP INDUSTRIES AS OF AUGUST 31, 1996
Row: 1, Col: 1, Value: 49.7
Row: 1, Col: 2, Value: 4.5
Row: 1, Col: 3, Value: 6.2
Row: 1, Col: 4, Value: 10.9
Row: 1, Col: 5, Value: 11.7
Row: 1, Col: 6, Value: 17.0
General Industrial Machinery 17.0%
Farm Machinery &
Equipment 11.7%
Office Automation 10.9%
Construction Equipment 6.2%
Conglomerates 4.5%
All Others 49.7% *
* INCLUDES SHORT-TERM INVESTMENTS
INDUSTRIAL EQUIPMENT PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
NOTE TO SHAREHOLDERS: Paul Antico became Portfolio Manager of Fidelity
Select Industrial Equipment Portfolio on March 26, 1996.
Q. HOW DID THE FUND PERFORM, PAUL?
A. For the six- and 12-month periods ended August 31, 1996, the fund
returned 1.95% and 8.33%, respectively. By comparison, the Standard &
Poor's 500 Index returned 2.96% and 18.73% for the same time period.
Q. HOW WOULD YOU DESCRIBE THE MARKET FOR INDUSTRIAL EQUIPMENT STOCKS DURING
THE PAST SIX MONTHS?
A. It's been difficult to predict. Industrial equipment stocks are cyclical
- - they tend to perform best when the economy is just beginning to improve.
Interestingly, during this period the economy was at a point where many
market observers thought it was about as strong is it could be - generally
the worst time for cyclical stocks - yet business conditions continued to
improve for many of the stocks the fund invests in. It has been a struggle,
but the fund managed to perform fairly well during the past six months
given the uncertain market for cyclical stocks.
Q. YOU BEGAN TO MANAGE THE FUND IN MARCH. HOW DOES YOUR INVESTMENT STYLE
DIFFER FROM THE PREVIOUS MANAGER'S?
A. The stocks in the fund may have changed, but the investment style
hasn't. Like the previous manager, I use a bottom-up stock selection method
to decide where best to invest the fund's assets.
Q. WHAT WAS YOUR INVESTMENT STRATEGY DURING THE PERIOD?
A. One key investment strategy that worked well during the period was
deciding to invest in companies that should perform well regardless of how
the economy behaves. Pitney Bowes and Xerox, two of the fund's largest
holdings, are good examples. Each company performed well in an uncertain
market environment, since each receives nearly 70% of its revenues from
recurring streams.
Q. WHERE ELSE DID YOU FIND OPPORTUNITIES?
A. I tried to invest in companies that I feel still have room for profit
margin expansion. Specifically, I invested in companies whose stock prices
could rise significantly if revenues increased only marginally.
Ingersoll-Rand is a good example. The company performed well because of
improving orders and increasing profit margins. Another effective strategy
was the fund's investments in aerospace suppliers. The aerospace industry
is at the beginning of what looks like a long up-trend in terms of new
commercial airline orders. The strength of the aerospace cycle drove up the
stock price of some of the fund's holdings such as TRINOVA and Parker
Hannifin. The fund took profits in Parker Hannifin before the end of the
period.
Q. IMC GLOBAL IS NEW TO THE FUND'S TOP 10 HOLDINGS. WHAT CAN YOU TELL US
ABOUT IT?
A. IMC Global isn't a strict investment in industrial equipment - it's a
fertilizer company. During the past six months, there's been a lot of talk
in the industry about farm dynamics and how the business outlook for grain
farmers is the best it's been in 20 years. I think the same positive
business prospects that have already been reflected in the stock prices of
farm equipment companies have the potential to occur in fertilizer
companies such as IMC Global.
Q. ANY PARTICULAR DISAPPOINTMENTS DURING THE PAST SIX MONTHS?
A. Yes. The fund's position in Stewart & Stevenson Services was
disappointing. The company makes gas turbine equipment, and it's been hurt
because international orders for gas turbines have slowed dramatically. The
stock was down more than 25% before rebounding. Though the situation has
begun to improve, I wish I had waited a little longer before investing. In
retrospect, I invested in this stock about three months before I should
have.
Q. WHAT'S AHEAD FOR THE FUND?
A. I expect more of the same. I don't think the questions about the economy
will be decided anytime soon. If we continue to see moderate or slow
growth, I'll want to insulate the fund by continuing to own companies that
can perform well in a questionable economy. I also expect to keep the fund
invested in companies where there is the potential for profit margin
improvement, so that if the economy remains stagnant, these companies can
still grow earnings quickly. Finally, I expect to continue investing in
companies that have cash on hand for stock buy-back programs or
acquisitions if prices are favorable.
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: September 29, 1986
FUND NUMBER: 510
TRADING SYMBOL: FSCGX
SIZE: as of August 31, 1996, more than
$77 million
MANAGER: Paul Antico, since March, 1996;
manager, Fidelity Select Developing
Communications, 1993-1996; equity
analyst, telecommunications equipment,
1992-1996, restaurant industry,
1992-1993; joined Fidelity in 1991
(checkmark)
INDUSTRIAL EQUIPMENT PORTFOLIO
INVESTMENTS AUGUST 31, 1996 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 90.6%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 4.6%
AIRCRAFT - 0.6%
Boeing Co. 5,000 $ 452,500 09702310
AIRCRAFT & PARTS - 1.9%
Sundstrand Corp. 25,000 934,375 86732310
Wyman-Gordon Co. (a) 24,500 511,438 98308510
1,445,813
AIRCRAFT ENGINES & PARTS - 0.6%
Rolls Royce PLC Ord. 140,000 483,175 77577910
GUIDED MISSILES & SPACE VEHICLES - 1.5%
Rockwell International Corp. 22,000 1,144,000 77434710
TOTAL AEROSPACE & DEFENSE 3,525,488
AUTOS, TIRES, & ACCESSORIES - 3.2%
AUTO & TRUCK PARTS - 3.2%
Cummins Engine Co., Inc. 30,000 1,128,750 23102110
Eaton Corp. 25,000 1,384,375 27805810
2,513,125
BUILDING MATERIALS - 0.9%
AIRCONDITIONING EQUIPMENT - 0.9%
York International Corp. 15,000 676,870 98667010
CHEMICALS & PLASTICS - 3.6%
ADHESIVES & SEALANTS - 0.3%
Furon Co. 10,200 224,400 36110610
AGRICULTURAL CHEMICALS - 3.3%
IMC Global, Inc. 60,100 2,584,300 44966910
TOTAL CHEMICALS & PLASTICS 2,808,700
COMMUNICATIONS EQUIPMENT - 3.1%
DATACOMMUNICATIONS EQUIPMENT - 2.0%
Cisco Systems, Inc. (a) 30,000 1,582,500 17275R10
TELEPHONE EQUIPMENT - 1.1%
DSC Communications Corp. (a) 28,400 844,900 23331110
TOTAL COMMUNICATIONS EQUIPMENT 2,427,400
COMPUTERS & OFFICE EQUIPMENT - 10.9%
OFFICE AUTOMATION - 10.9%
Pitney Bowes, Inc. 120,700 5,823,775 72447910
Xerox Corp. 49,300 2,705,338 98412110
8,529,113
CONGLOMERATES - 4.5%
AlliedSignal, Inc. 26,000 1,605,500 01951210
American Standard Companies, Inc. (a) 51,800 1,767,675 02971210
Textron, Inc. 1,400 119,525 88320310
3,492,700
CONSUMER ELECTRONICS - 0.8%
APPLIANCES - 0.8%
Black & Decker Corp. 15,000 592,500 09179710
DEFENSE ELECTRONICS - 0.8%
Ducommun, Inc. (a) 38,900 646,713 26414710
ELECTRICAL EQUIPMENT - 8.0%
ELECTRIC LAMP BULBS & TUBES - 1.3%
Advanced Lighting Technologies, Inc. (a) 60,000 1,050,000 00753C10
ELECTRICAL EQUIPMENT - WHOLESALE - 0.8%
Grainger (W.W.), Inc. 9,000 607,500 38480210
SHARES VALUE (NOTE 1)
ELECTRICAL MACHINERY - 3.2%
Emerson Electric Co. 5,000 $ 418,750 29101110
General Electric Co. 15,000 1,246,875 36960410
General Signal Corp. 20,400 818,550 37083810
2,484,175
ELECTRICAL, INDUSTRIAL APPARATUS - 2.3%
AMETEK, Inc. 92,900 1,799,938 03110510
TV & RADIO COMMUNICATION EQUIPMENT - 0.4%
Scientific-Atlanta, Inc. 21,000 283,500 80865510
TOTAL ELECTRICAL EQUIPMENT 6,225,113
ELECTRONICS - 2.3%
SEMICONDUCTORS - 2.3%
Intel Corp. 22,000 1,755,875 45814010
ENERGY SERVICES - 1.7%
OIL & GAS SERVICES - 1.7%
Dresser Industries, Inc. 46,700 1,354,300 26159710
INDUSTRIAL MACHINERY & EQUIPMENT - 41.3%
BALL & ROLLER BEARINGS - 0.7%
Kaydon Corp. 11,500 516,063 48658710
CONSTRUCTION EQUIPMENT - 6.2%
Caterpillar, Inc. 70,000 4,821,250 14912310
ENGINES & TURBINES - 2.6%
Stewart & Stevenson Services, Inc. 103,500 2,057,063 86034210
FARM MACHINERY & EQUIPMENT - 11.7%
AGCO Corp. 20,000 472,500 00108410
Allied Products Corp. 39,700 1,027,238 01941110
Case Corp. 112,300 5,109,650 14743R10
Valmont Industries, Inc. 23,500 728,500 92025310
Varity Corp. (a) 35,100 1,763,775 92224R60
9,101,663
GENERAL INDUSTRIAL MACHINERY - 17.0%
Cooper Industries, Inc. 20,300 822,150 21666910
Graco, Inc. 36,600 686,250 38410910
Harnischfeger Industries, Inc. 79,017 2,982,892 41334510
Illinois Tool Works, Inc. 10,000 691,250 45230810
Ingersoll-Rand Co. 131,100 5,604,525 45686610
TRINOVA Corp. 80,000 2,510,000 89667810
13,297,067
PUMPING EQUIPMENT - 3.1%
BW/IP Holdings, Inc. Class A 53,600 971,500 05604410
Duriron Co., Inc. 42,950 1,159,650 26684910
Goulds Pumps, Inc. 13,300 295,925 38355010
2,427,075
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 32,220,181
IRON & STEEL - 0.5%
METAL FORGINGS & STAMPINGS - 0.5%
TriMas Corp. 17,100 397,575 89621510
METALS & MINING - 1.0%
NONFERROUS ROLLING & DRAWING - 1.0%
Titanium Metals Corp. (a) 32,000 764,000 88833910
PAPER & FOREST PRODUCTS - 1.8%
PAPER - 1.8%
Albany International Corp. Class A 70,000 1,426,250 01234810
PHOTOGRAPHIC EQUIPMENT - 0.6%
Imation Corp. (a) 20,000 472,500 45245A10
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
SHIP BUILDING & REPAIR - 1.0%
SHIP BUILDERS - 1.0%
General Dynamics Corp. 12,500 $ 801,563 36955010
TOTAL COMMON STOCKS
(Cost $68,103,064) 70,629,966
REPURCHASE AGREEMENTS - 9.4%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 5.25%, dated
8/30/96 due 9/3/96 $ 7,356,289 7,352,000 69899TYY
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $75,455,064) $ 77,981,966
LEGEND
1. Non-income producing
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $88,743,771 and $138,436,925, respectively (see Note 4 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $45,477 for the period (see
Note 5 of Notes to Financial Statements).
The maximum loan and the average daily loan balances during the period for
which loans were outstanding amounted to $2,514,000 and $2,331,750,
respectively. The weighted average interest rate paid was 5.7% (see Note 6
of Notes to Financial Statements).
INCOME TAX INFORMATION
At August 31, 1996, the aggregate cost of investment securities for income
tax purposes was $75,455,064. Net unrealized appreciation aggregated
$2,526,902 of which $3,825,967 related to appreciated investment securities
and $1,299,065 related to depreciated investment securities.
On October 26,1990, the fund acquired substantially all of the assets of
Automation and Machinery Portfolio in a tax-free exchange for shares of
Industrial 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.
INDUSTRIAL EQUIPMENT PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1996 (UNAUDITED)
ASSETS
Investment in $ 77,981,966
securities, at
value (including
repurchase
agreements of
$7,352,000)
(cost
$75,455,064) -
See
accompanying
schedule
Cash 782
Receivable for 8,872
investments
sold
Receivable for 8,233
fund shares sold
Dividends 131,405
receivable
Redemption fees 228
receivable
Other receivables 10,281
Prepaid expenses 18,537
TOTAL ASSETS 78,160,304
LIABILITIES
Payable for fund $ 198,414
shares
redeemed
Accrued 39,064
management
fee
Other payables 84,784
and
accrued
expenses
TOTAL LIABILITIES 322,262
NET ASSETS $ 77,838,042
Net Assets
consist of:
Paid in capital $ 63,635,150
Undistributed net 149,682
investment
income
Accumulated 11,526,308
undistributed net
realized gain
(loss) on
investments and
foreign currency
transactions
Net unrealized 2,526,902
appreciation
(depreciation)
on investments
NET ASSETS, for $ 77,838,042
3,161,908
shares
outstanding
NET ASSET VALUE $24.62
and redemption
price per share
($77,838,042 (divided by)
3,161,908
shares)
Maximum offering $25.38
price per share
(100/97.00 of
$24.62)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED AUGUST 31, 1996 (UNAUDITED)
INVESTMENT $ 726,131
INCOME
Dividends
Interest 147,620
TOTAL INCOME 873,751
EXPENSES
Management fee $ 294,316
Transfer agent 347,740
fees
Accounting fees 48,744
and expenses
Non-interested 185
trustees'
compensation
Custodian fees 16,373
and expenses
Registration fees 18,537
Audit 12,050
Legal 498
Interest 1,468
Miscellaneous 1,997
Total expenses 741,908
before
reductions
Expense (29,760 712,148
reductions )
NET INVESTMENT 161,603
INCOME
REALIZED AND
UNREALIZED GAIN
(LOSS)
Net realized gain
(loss) on:
Investment 11,655,357
securities
Foreign 3 11,655,360
currency
transactions
Change in net (10,260,753
unrealized )
appreciation
(depreciation)
on investment
securities
NET GAIN (LOSS) 1,394,607
NET INCREASE $ 1,556,210
(DECREASE) IN
NET ASSETS
RESULTING FROM
OPERATIONS
OTHER $ 168,491
INFORMATION
Sales charges
paid to FDC
Deferred sales $ 860
charges
withheld
by FDC
Exchange fees $ 22,223
withheld by FSC
Expense $ 28,922
reductions
Directed
brokerage
arrangements
Transfer agent 838
interest credits
$ 29,760
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS YEAR ENDED
ENDED FEBRUARY 29,
AUGUST 31, 1996 1996
(UNAUDITED)
Operations $ 161,603 $ 191,568
Net investment
income
Net realized 11,655,360 16,163,635
gain (loss)
Change in net (10,260,753 13,213,429
unrealized )
appreciation
(depreciation)
NET INCREASE 1,556,210 29,568,632
(DECREASE) IN
NET ASSETS
RESULTING
FROM
OPERATIONS
Distributions to (46,012 (185,403
shareholders ) )
From net
investment
income
From net (4,144,559 (7,003,238
realized gain ) )
TOTAL (4,190,571 (7,188,641
DISTRIBUTIONS ) )
Share 32,366,961 176,105,552
transactions
Net proceeds
from sales of
shares
Reinvestment of 4,151,169 7,099,056
distributions
Cost of shares (93,775,613 (178,150,788
redeemed ) )
Paid in capital 209,898 118,239
portion of
redemption fees
NET INCREASE (57,047,585 5,172,059
(DECREASE) IN )
NET ASSETS
RESULTING
FROM SHARE
TRANSACTIONS
TOTAL (59,681,946 27,552,050
INCREASE )
(DECREASE) IN
NET ASSETS
NET ASSETS
Beginning of 137,519,988 109,967,938
period
End of period $ 77,838,042 $ 137,519,988
(including
undistributed
net investment
income of
$149,682 and
$51,339,
respectively)
OTHER
INFORMATION
Shares
Sold 1,281,980 7,343,923
Issued in 171,891 311,832
reinvestment of
distributions
Redeemed (3,768,563 (7,667,655
) )
Net increase (2,314,692) (11,900)
(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> <C>
SIX MONTHS YEAR ENDED YEARS ENDED FEBRUARY 28, TEN MONTHS YEAR ENDED
ENDED FEBRUARY 29, ENDED APRIL 30,
AUGUST 31, 1996 FEBRUARY 28,
SELECTED PER-SHARE DATA D (UNAUDITED) 1996 1995 1994 1993 1992
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Net asset value, $ 25.11 $ 20.04 $ 20.61 $ 15.04 $ 13.89 $ 11.60
beginning of
period
Income from
Investment
Operations
Net investment .04 .04 .01 - .02 (.07)
income (loss)
Net realized and .38 7.10 (.44) 5.92 1.09 2.39
unrealized gain
(loss)
Total from .42 7.14 (.43) 5.92 1.11 2.32
investment
operations
Less Distributions
From net (.01) (.05) (.01) (.01) - -
investment
income
In excess of net - - - - - (.11)
investment
income
From net (.95) (2.05) (.16) (.40) - -
realized gain
Total (.96) (2.10) (.17) (.41) - (.11)
distributions
Redemption fees .05 .03 .03 .06 .04 .08
added to paid in
capital
Net asset value, $ 24.62 $ 25.11 $ 20.04 $ 20.61 $ 15.04 $ 13.89
end of period
TOTAL RETURN B, C 1.95% 36.86% (1.93)% 40.07% 8.28% 20.91%
RATIOS AND
SUPPLEMENTAL
DATA
Net assets, end of $ 77,838 $ 137,520 $ 109,968 $ 206,012 $ 14,601 $ 7,529
period (000
omitted)
Ratio of expenses 1.51% A 1.54% 1.80% 1.69% 2.49% A, 2.49%
to average net E E
assets
Ratio of expenses 1.45% A, 1.53% 1.78% 1.68% 2.49% A 2.49%
to average net F F F F
assets after
expense
reductions
Ratio of net .33% A .19% .06% .01% .15% A (.57)%
investment
income (loss) to
average net
assets
Portfolio turnover 191% A 115% 131% 95% 407% A 167%
rate
Average $ .0396
commission
rate G
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <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 9 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 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. 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 9
OF NOTES TO FINANCIAL STATEMENTS). G FOR FISCAL YEARS
BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS REQUIRED TO DISCLOSE
ITS AVERAGE COMMISSION RATE PER SHARE FOR SECURITY
TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM
PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE
MIX OF TRADES EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND
COMMISSION RATE STRUCTURES MAY DIFFER.
</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. A fund's total return includes
changes in 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 6 PAST 1 PAST 5 LIFE OF
AUGUST 31, 1996 MONTH YEAR YEARS FUND
S
INDUSTRIAL MATERIALS 4.41% 2.80% 93.73% 192.36%
INDUSTRIAL MATERIALS 1.28% -0.28% 87.92% 183.59%
(INCL. 3% SALES CHARGE)
S&P 500 2.96% 18.73% 89.14% 281.45%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one year, five years, or
since the fund started on September 29, 1986. You can compare these figures
to the performance of the S&P 500 - a widely recognized, unmanaged index of
common stocks. This benchmark reflects reinvestment of dividends and
capital gains, if any, but does not reflect any sales charges, brokerage
commissions, or other costs of investing.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
AUGUST 31, 1996 YEAR YEARS FUND
INDUSTRIAL MATERIALS 2.80% 14.14% 11.41%
INDUSTRIAL MATERIALS -0.28% 13.45% 11.07%
(INCL. 3% SALES CHARGE)
S&P 500 18.73% 13.59% 14.43%
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
IMAHDR PRASUN SHR__CHT 19960831 19960910 134528 S00000000000001
Industrial Materials SP Standard & Poor 500
00509 SP001
1986/09/29 9700.00 10000.00
1986/09/30 9729.10 9962.80
1986/10/31 10262.60 10537.66
1986/11/30 10621.50 10793.72
1986/12/31 10233.50 10518.48
1987/01/31 12008.60 11935.32
1987/02/28 13017.40 12406.77
1987/03/31 13958.30 12765.32
1987/04/30 14123.20 12651.71
1987/05/31 13764.30 12761.78
1987/06/30 14482.10 13406.25
1987/07/31 15820.70 14085.95
1987/08/31 16363.90 14611.35
1987/09/30 16606.40 14291.37
1987/10/31 10301.40 11213.00
1987/11/30 10252.90 10289.05
1987/12/31 11834.99 11072.05
1988/01/31 11222.33 11538.18
1988/02/29 12544.89 12075.86
1988/03/31 12768.56 11702.72
1988/04/30 12788.01 11832.62
1988/05/31 12476.82 11935.56
1988/06/30 13838.28 12483.41
1988/07/31 13322.87 12435.97
1988/08/31 12603.24 12013.15
1988/09/30 12710.21 12524.91
1988/10/31 12476.82 12873.10
1988/11/30 12360.12 12689.01
1988/12/31 13117.42 12911.07
1989/01/31 13908.23 13856.16
1989/02/28 13305.24 13511.14
1989/03/31 13166.85 13825.95
1989/04/30 13572.13 14543.52
1989/05/31 13750.06 15132.53
1989/06/30 12949.38 15046.28
1989/07/31 14115.81 16404.95
1989/08/31 15242.70 16726.49
1989/09/30 14313.51 16657.91
1989/10/31 13137.19 16271.45
1989/11/30 13325.01 16603.39
1989/12/31 13700.64 17001.87
1990/01/31 12652.83 15861.04
1990/02/28 12870.30 16065.65
1990/03/31 13245.93 16491.39
1990/04/30 12287.08 16079.11
1990/05/31 13028.46 17646.82
1990/06/30 12890.20 17526.82
1990/07/31 12738.07 17470.73
1990/08/31 11267.51 15891.38
1990/09/30 10466.31 15117.47
1990/10/31 10344.61 15052.46
1990/11/30 10892.27 16024.85
1990/12/31 11348.65 16471.95
1991/01/31 11754.32 17190.12
1991/02/28 12616.37 18419.22
1991/03/31 12788.78 18864.96
1991/04/30 12809.06 18910.24
1991/05/31 13904.37 19727.16
1991/06/30 13752.20 18823.66
1991/07/31 14302.29 19700.84
1991/08/31 14638.46 20167.75
1991/09/30 14444.91 19830.95
1991/10/31 15066.30 20096.68
1991/11/30 13864.26 19286.79
1991/12/31 15412.65 21493.19
1992/01/31 16084.98 21093.42
1992/02/29 16869.37 21367.64
1992/03/31 16573.95 20950.97
1992/04/30 17439.83 21566.92
1992/05/31 17643.57 21672.60
1992/06/30 17215.31 21349.68
1992/07/31 17602.63 22222.88
1992/08/31 16491.63 21767.31
1992/09/30 16267.40 22024.17
1992/10/31 16450.86 22101.25
1992/11/30 17062.42 22854.91
1992/12/31 17319.00 23136.02
1993/01/31 17687.49 23330.36
1993/02/28 17851.26 23647.66
1993/03/31 18148.10 24146.62
1993/04/30 17881.97 23562.27
1993/05/31 18618.95 24193.74
1993/06/30 18669.79 24263.90
1993/07/31 18926.53 24166.85
1993/08/31 19419.46 25082.77
1993/09/30 18813.56 24889.63
1993/10/31 19922.66 25404.85
1993/11/30 20189.67 25163.50
1993/12/31 21021.49 25467.98
1994/01/31 22726.21 26333.89
1994/02/28 22253.82 25620.25
1994/03/31 21627.38 24503.20
1994/04/30 22439.14 24816.84
1994/05/31 22665.59 25223.84
1994/06/30 22428.85 24605.86
1994/07/31 23262.60 25412.93
1994/08/31 24518.37 26454.86
1994/09/30 24209.57 25806.71
1994/10/31 23890.48 26387.37
1994/11/30 22202.40 25426.34
1994/12/31 22743.96 25803.41
1995/01/31 22101.83 26472.49
1995/02/28 23955.73 27504.13
1995/03/31 24504.65 28315.77
1995/04/30 24618.13 29149.67
1995/05/31 24369.15 30314.78
1995/06/30 25458.44 31019.00
1995/07/31 27657.79 32047.59
1995/08/31 27585.17 32128.03
1995/09/30 26807.10 33483.83
1995/10/31 25250.96 33364.29
1995/11/30 27574.79 34828.98
1995/12/31 26244.23 35499.79
1996/01/31 26650.56 36708.20
1996/02/29 27161.06 37048.49
1996/03/31 28536.31 37405.26
1996/04/30 29205.00 37956.62
1996/05/31 29025.18 38935.52
1996/06/30 28062.61 39083.86
1996/07/31 26899.07 37357.14
1996/08/30 28358.79 38145.00
IMATRL PRASUN SHR__CHT 19960831 19960910 134533 R00000000000123
Let's say hypothetically that $10,000 was invested in Fidelity Select
Industrial Materials Portfolio on September 29, 1986, when the fund
started, and a 3% sales charge was paid. By August 31, 1996, the investment
would have grown to $28,359 - a 183.59% increase. That compares to $10,000
invested in the S&P 500, which would have grown to $38,145 over the same
period - a 281.45% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST 31, 1996
% OF FUND'S
INVESTMENTS
Monsanto Co. 10.0
Inco Ltd. 8.8
QNI Ltd. 5.7
Pechiney SA Class A 5.6
du Pont (E.I.) de Nemours & Co. 4.9
Eramet SA 4.9
Alumax, Inc. 4.6
Western Atlas, Inc. 3.8
Cytec Industries, Inc. 3.3
Huntco, Inc. Class A 3.3
TOP INDUSTRIES AS OF AUGUST 31, 1996
Chemicals 22.2%
Prime Nonferrous Smelting 12.0%
Metal Ores 11.3%
Railroads 5.1%
Metal Mining Services 4.9%
All Others 44.5% *
Row: 1, Col: 1, Value: 44.5
Row: 1, Col: 2, Value: 4.9
Row: 1, Col: 3, Value: 5.1
Row: 1, Col: 4, Value: 11.3
Row: 1, Col: 5, Value: 12.0
Row: 1, Col: 6, Value: 22.2
* 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 six and 12 months ended August 31, 1996, the fund returned 4.41%
and 2.80%, respectively. The Standard & Poor's 500 Index returned 2.96% for
the six-month period and 18.73% for the year.
Q. WHAT WAS THE INVESTING ENVIRONMENT LIKE DURING THE PERIOD?
A. Though the fund outperformed the S&P, it had a rough time between May
and July when fears surrounding the performance of the U.S. economy and the
possibility of rising interest rates were at their strongest. When
investors become worried about the strength and performance of the economy,
cyclical stocks such as metals and chemicals, which rise and fall with the
economy, went down as investors believed rising interest rates would lead
to a slowdown in the economy.
Q. WHAT CHANGES DID YOU MAKE TO THE FUND'S HOLDING DURING THE PERIOD?
A. In April, I began to think that expectations for the performance of the
U.S. economy were too high. Moreover, I began to worry that the strength
that was expected in the world economy for the second half of the year
wasn't going to happen either. So, I cut back on the fund's significant
aluminum position. It started to look like earnings for aluminum stocks
were going to be especially disappointing, and I believed that the fund's
investments in those stocks - relative to some of the other sectors in the
fund - had become too large, although Aluminum Company of America (Alcoa),
previously a top holding of the fund, has been very strong. The fund would
have been much more adversely impacted had I not reduced its overweighted
position in aluminum.
Q. ASIDE FROM ECONOMIC CONCERNS, WERE THERE OTHER PRESSURES ON METALS
STOCKS DURING THE PERIOD?
A. Yes. Some of the weakness in aluminum and nickel was triggered by the
collapse in copper. In May, a large Japanese bank announced that one of its
traders had covered up what is currently estimated to be $2.6 billion in
losses in the copper market. For several months, he may have kept the price
for copper artificially high. When he was exposed, the price for copper
dropped dramatically almost overnight. The collapse in copper prices forced
agents in the market who owned all metals to sell their positions in other
metals to raise cash for margin calls. This has put pressure on aluminum
and nickel prices, and therefore the stocks, which hurt the fund.
Fortunately, the fund owned no pure copper stocks when this happened.
Q. BASED ON THIS MARKET BACKDROP FOR METALS, WHERE DID YOU FIND INVESTMENT
OPPORTUNITIES?
A. While I cut way back on the fund's holdings in aluminum and nickel, I
increased its holdings in chemicals. At the end of the period, Monsanto was
the largest holding in the fund. It's a huge chemical conglomerate with an
extremely attractive agricultural chemical business that is performing well
and has great growth potential. Another chemical holding, du Pont, was
attractive given the likelihood it will spin out Conoco, its oil company
subsidiary, possibly greatly increasing the value of the stock.
Q. HOW HAVE THE FUND'S INTERNATIONAL HOLDINGS FARED?
A. I cut back on Australian nickel companies QNI and Western Mining when
the price of the metal dropped, although I should have sold them earlier
when the prices first started to fall. Sometimes foreign investments can be
more risky than domestic ones. However, I think the fund has benefited from
its collective group of non-U.S. holdings in the long term, and I will keep
the fund's investments in them because I have confidence in them.
Q. WHAT'S YOUR OUTLOOK GOING FORWARD?
A. I think that U.S. investors in global cyclical industries continue to be
too focused on the U.S. economy. At the beginning of the year, the U.S.
economy looked very strong, and many took it to mean that the global
outlook was strong. That wasn't the case. The fact is that what this fund
tends to invest in is global commodities - U.S. demand is just a piece of
the puzzle. I think the European and Japanese economies are beginning to
get stronger, and there are good reasons to be encouraged. I also think
that when global economies show sure signs of recovery, the stocks and
sectors that the fund is invested in have the potential to outperform.
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: September 29, 1986
FUND NUMBER: 509
TRADING SYMBOL: FSDPX
SIZE: as of August 31, 1996, more than
$97 million
MANAGER: Douglas B. Chase, since 1994;
manager, Fidelity Select Automotive Portfolio,
since May 1996; equity analyst, steel,
non-ferrous metals, since 1993; joined Fidelity
in 1993
(checkmark)
INDUSTRIAL MATERIALS PORTFOLIO
INVESTMENTS AUGUST 31, 1996 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 87.0%
SHARES VALUE (NOTE 1)
AUTOS, TIRES, & ACCESSORIES - 0.8%
AUTO & TRUCK PARTS - 0.8%
Cummins Engine Co., Inc. 20,000 $ 752,500 23102110
BUILDING MATERIALS - 2.4%
PAINT & VARNISH - 0.9%
Sherwin-Williams Co. 20,000 875,000 82434810
PLUMBING SUPPLIES - WHOLESALE - 1.5%
Masco Corp. 50,800 1,479,550 57459910
TOTAL BUILDING MATERIALS 2,354,550
CHEMICALS & PLASTICS - 25.4%
AGRICULTURAL CHEMICALS - 0.2%
OM Group, Inc. 5,000 190,000 67087210
CHEMICALS - 22.2%
Cytec Industries, Inc. (a) 93,000 3,231,750 23282010
du Pont (E.I.) de Nemours & Co. 58,000 4,763,250 26353410
Monsanto Co. 300,000 9,637,500 61166210
Raychem Corp. 40,110 2,752,549 75460310
Witco Corp. 38,000 1,149,500 97738510
21,534,549
CHEMICALS, GENERAL - 0.6%
Great Lakes Chemical Corp. 10,000 575,000 39056810
INDUSTRIAL GASES - 2.4%
Praxair, Inc. 57,000 2,344,125 74005P10
TOTAL CHEMICALS & PLASTICS 24,643,674
ENERGY SERVICES - 3.8%
OIL & GAS SERVICES - 3.8%
Western Atlas, Inc. (a) 60,000 3,645,000 95767410
INDUSTRIAL MACHINERY & EQUIPMENT - 3.9%
CONSTRUCTION EQUIPMENT - 1.0%
Caterpillar, Inc. 14,000 964,250 14912310
GENERAL INDUSTRIAL MACHINERY - 2.9%
Harnischfeger Industries, Inc. 73,300 2,767,075 41334510
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 3,731,325
IRON & STEEL - 7.0%
BLAST FURNACES - 3.3%
Huntco, Inc. Class A 189,000 3,165,750 44566110
IRON & STEEL BLAST FURNACES, MILLS - 3.7%
Birmingham Steel Corp. 183,000 2,859,375 09125010
Inland Steel Industries, Inc. 30,000 517,500 45747210
Worthington Industries, Inc. 10,000 202,500 98181110
3,579,375
TOTAL IRON & STEEL 6,745,125
METALS & MINING - 33.0%
ALUMINUM, EXTRUDED PRODUCTS - 4.5%
Alumax, Inc. (a) 133,800 4,415,400 02219710
METAL MINING SERVICES - 4.9%
Eramet SA 72,654 4,758,558 29499H22
METAL ORES - 11.3%
Pechiney SA Class A 130,475 5,456,836 70599396
QNI Ltd. 2,500,000 5,488,763 74799B92
10,945,599
PRIME NONFERROUS SMELTING - 12.0%
Aluminum Co. of America 49,400 3,068,975 02224910
Inco Ltd. 264,000 8,508,971 45325840
11,577,946
SHARES VALUE (NOTE 1)
SECONDARY NONFERROUS SMELTING - 0.3%
IMCO Recycling, Inc. 20,000 $ 317,500 44968110
TOTAL METALS & MINING 32,015,003
PACKAGING & CONTAINERS - 1.1%
METAL CANS & SHIPPING CONTAINERS - 1.1%
Crown Cork & Seal Co., Inc. 23,500 1,098,624 22825510
PRECIOUS METALS - 4.1%
GOLD ORES - 4.1%
Bre-X Minerals Ltd. (a) 80,000 1,438,334 10625K10
Stillwater Mining Co. (a)(b) 50,000 1,025,000 86074Q90
Western Mining Holdings Ltd. 219,400 1,524,786 95869410
3,988,120
RAILROADS - 5.1%
Burlington Northern Santa Fe Corp. 27,592 2,207,360 12189T10
CSX Corp. 54,000 2,733,750 12640810
4,941,110
SHIPPING - 0.4%
Kirby Corp. (a) 21,000 341,250 49726610
TOTAL COMMON STOCKS
(Cost $81,616,063) 84,256,281
REPURCHASE AGREEMENTS - 13.0%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 5.25%, dated
8/30/96 due 9/3/96 $ 12,605,349 12,598,000 69899TYY
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $94,214,063) $ 96,854,281
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 $1,025,000 or 1.1% of net
assets.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $66,243,774 and $68,526,468, respectively (see Note 4 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $27,244 for the period (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 72.0%
France 10.5
Canada 10.3
Australia 7.2
TOTAL 100.0%
INCOME TAX INFORMATION
At August 31, 1996, the aggregate cost of investment securities for income
tax purposes was $94,689,694. Net unrealized appreciation aggregated
$2,164,587, of which $4,901,190 related to appreciated investment
securities and $2,736,603 related to depreciated investment securities.
INDUSTRIAL MATERIALS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1996 (UNAUDITED)
ASSETS
Investment in $ 96,854,281
securities, at
value (including
repurchase
agreements of
$12,598,000)
(cost
$94,214,063) -
See
accompanying
schedule
Receivable for 306,907
fund shares sold
Dividends 208,525
receivable
Redemption fees 303
receivable
Other receivables 325
Prepaid expenses 8,675
TOTAL ASSETS 97,379,016
LIABILITIES
Payable for fund $ 206,632
shares
redeemed
Accrued 46,925
management
fee
Other payables 118,160
and
accrued
expenses
TOTAL LIABILITIES 371,717
NET ASSETS $ 97,007,299
Net Assets
consist of:
Paid in capital $ 91,595,507
Undistributed net 124,890
investment
income
Accumulated 2,646,131
undistributed net
realized gain
(loss) on
investments and
foreign currency
transactions
Net unrealized 2,640,771
appreciation
(depreciation)
on investments
and assets and
liabilities in
foreign
currencies
NET ASSETS, for $ 97,007,299
3,618,316
shares
outstanding
NET ASSET VALUE $26.81
and redemption
price per share
($97,007,299 (divided by)
3,618,316
shares)
Maximum offering $27.64
price per share
(100/97.00 of
$26.81)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED AUGUST 31, 1996 (UNAUDITED)
INVESTMENT $ 767,718
INCOME
Dividends
Interest 157,325
TOTAL INCOME 925,043
EXPENSES
Management fee $ 322,863
Transfer agent 399,604
fees
Accounting fees 53,483
and expenses
Non-interested 210
trustees'
compensation
Custodian fees 16,491
and expenses
Registration fees 10,159
Audit 22,117
Legal 450
Miscellaneous 1,483
Total expenses 826,860
before
reductions
Expense (26,707 800,153
reductions )
NET INVESTMENT 124,890
INCOME
REALIZED AND
UNREALIZED GAIN
(LOSS)
Net realized gain
(loss) on:
Investment 3,202,361
securities
Foreign 1,708 3,204,069
currency
transactions
Change in net
unrealized
appreciation
(depreciation)
on:
Investment 438,997
securities
Assets and 259 439,256
liabilities in
foreign
currencies
NET GAIN (LOSS) 3,643,325
NET INCREASE $ 3,768,215
(DECREASE) IN
NET ASSETS
RESULTING FROM
OPERATIONS
OTHER $ 283,422
INFORMATION
Sales charges
paid to FDC
Deferred sales $ 1,587
charges
withheld
by FDC
Exchange fees $ 22,073
withheld by FSC
Expense $ 23,176
reductions
Directed
brokerage
arrangements
Custodian 201
interest credits
Transfer agent 3,330
interest credits
$ 26,707
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS YEAR ENDED
ENDED FEBRUARY 29,
AUGUST 31, 1996 1996
(UNAUDITED)
Operations $ 124,890 $ 627,773
Net investment
income
Net realized 3,204,069 13,688,969
gain (loss)
Change in net 439,256 (3,691,387
unrealized )
appreciation
(depreciation)
NET INCREASE 3,768,215 10,625,355
(DECREASE) IN
NET ASSETS
RESULTING
FROM
OPERATIONS
Distributions to (47,896 (782,540
shareholders ) )
From net
investment
income
From net (1,963,741 -
realized gain )
TOTAL (2,011,637 (782,540
DISTRIBUTIONS ) )
Share 91,192,373 164,160,384
transactions
Net proceeds
from sales of
shares
Reinvestment of 1,998,313 774,191
distributions
Cost of shares (84,376,190 (272,164,952
redeemed ) )
Paid in capital 97,903 271,871
portion of
redemption fees
NET INCREASE 8,912,399 (106,958,506
(DECREASE) IN )
NET ASSETS
RESULTING
FROM SHARE
TRANSACTIONS
TOTAL 10,668,977 (97,115,691
INCREASE )
(DECREASE) IN
NET ASSETS
NET ASSETS
Beginning of 86,338,322 183,454,013
period
End of period $ 97,007,299 $ 86,338,322
(including
undistributed
net investment
income of
$124,890 and
$81,888,
respectively)
OTHER
INFORMATION
Shares
Sold 3,323,813 6,349,116
Issued in 72,693 30,728
reinvestment of
distributions
Redeemed (3,089,667 (10,999,650
) )
Net increase 306,839 (4,619,806)
(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> <C>
SIX MONTHS YEAR ENDED YEARS ENDED FEBRUARY 28, TEN MONTHS YEAR ENDED
ENDED FEBRUARY 29, ENDED APRIL 30,
AUGUST 31, 1996 FEBRUARY 28,
SELECTED PER-SHARE DATA D (UNAUDITED) 1996 1995 1994 1993 1992
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Net asset value, $ 26.07 $ 23.13 $ 21.67 $ 17.44 $ 17.12 $ 12.63
beginning of
period
Income from
Investment
Operations
Net investment .03 .12 .17 .15 .12 .04
income
Net realized and 1.11 2.92 1.43 4.07 .19 4.32
unrealized gain
(loss)
Total from 1.14 3.04 1.60 4.22 .31 4.36
investment
operations
Less Distributions
From net (.01) (.15) (.18) (.06) (.08) -
investment
income
In excess of net - - - - - (.06)
investment
income
From net (.41) - - - - -
realized gain
Total (.42) (.15) (.18) (.06) (.08) (.06)
distributions
Redemption fees .02 .05 .04 .07 .09 .19
added to paid in
capital
Net asset value, $ 26.81 $ 26.07 $ 23.13 $ 21.67 $ 17.44 $ 17.12
end of period
TOTAL RETURN B, C 4.41% 13.38% 7.65% 24.66% 2.36% 36.15%
RATIOS AND
SUPPLEMENTAL
DATA
Net assets, end of $ 97,007 $ 86,338 $ 183,454 $ 155,721 $ 25,041 $ 22,184
period (000
omitted)
Ratio of expenses 1.54% A 1.64% 1.56% 2.10% 2.02% A 2.47%
to average net F
assets
Ratio of expenses 1.49% A, 1.61% 1.53% 2.08% 2.02% A 2.47%
to average net E E E E
assets after
expense
reductions
Ratio of net .23% A .49% .77% .75% .86% A .25%
investment
income to
average net
assets
Portfolio turnover 134% A 138% 139% 185% 273% A 222%
rate
Average $ .0222
commission
rate G
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <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 9 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 9 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. G FOR FISCAL YEARS
BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS REQUIRED TO
DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR SECURITY
TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM
PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE
MIX OF TRADES EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND
COMMISSION RATE STRUCTURES MAY DIFFER.
</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. A fund's total return includes
changes in 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 6 PAST 1 PAST 5 PAST 10
AUGUST 31, 1996 MONTH YEAR YEARS YEARS
S
PAPER AND FOREST PRODUCTS 4.32% -1.68% 91.57% 171.80%
PAPER AND FOREST PRODUCTS 1.19% -4.63% 85.82% 163.64%
(INCL. 3% SALES CHARGE)
S&P 500 2.96% 18.73% 89.14% 251.21%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one, five, or 10 years. You
can compare these figures to the performance of the S&P 500 - a widely
recognized, unmanaged index of common stocks. This benchmark reflects
reinvestment of dividends and capital gains, if any, but does not reflect
any sales charges, brokerage commissions, or other costs of investing.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
AUGUST 31, 1996 YEAR YEARS YEARS
PAPER AND FOREST PRODUCTS -1.68% 13.88% 10.52%
PAPER AND FOREST PRODUCTS -4.63% 13.19% 10.18%
(INCL. 3% SALES CHARGE)
S&P 500 18.73% 13.59% 13.34%
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
IMAHDR PRASUN SHR__CHT 19960831 19960910 150216 S00000000000001
Paper & Forest SP Standard & Poor 500
00506 SP001
1986/08/31 9700.00 10000.00
1986/09/30 9594.37 9173.00
1986/10/31 10307.35 9702.28
1986/11/30 10738.66 9938.05
1986/12/31 10580.22 9684.63
1987/01/31 13352.90 10989.15
1987/02/28 13784.21 11423.22
1987/03/31 14840.47 11753.35
1987/04/30 13960.25 11648.74
1987/05/31 13159.26 11750.09
1987/06/30 13740.20 12343.47
1987/07/31 13907.44 12969.28
1987/08/31 14919.69 13453.04
1987/09/30 14470.78 13158.41
1987/10/31 10175.32 10324.09
1987/11/30 9823.23 9473.39
1987/12/31 10996.78 10194.31
1988/01/31 10552.66 10623.49
1988/02/29 11547.10 11118.55
1988/03/31 11180.22 10774.98
1988/04/30 11305.73 10894.59
1988/05/31 11180.22 10989.37
1988/06/30 12338.79 11493.78
1988/07/31 11788.47 11450.10
1988/08/31 11209.18 11060.80
1988/09/30 11431.24 11531.99
1988/10/31 11180.22 11852.58
1988/11/30 10938.85 11683.09
1988/12/31 11741.34 11887.54
1989/01/31 11857.49 12757.71
1989/02/28 11509.03 12440.04
1989/03/31 11518.71 12729.90
1989/04/30 11934.93 13390.58
1989/05/31 12147.88 13932.90
1989/06/30 11373.51 13853.48
1989/07/31 12467.31 15104.45
1989/08/31 13357.83 15400.50
1989/09/30 12622.18 15337.35
1989/10/31 12051.08 14981.53
1989/11/30 11963.97 15287.15
1989/12/31 12220.20 15654.04
1990/01/31 11103.04 14603.66
1990/02/28 11210.83 14792.04
1990/03/31 11524.42 15184.03
1990/04/30 10779.65 14804.43
1990/05/31 11495.02 16247.86
1990/06/30 11220.63 16137.38
1990/07/31 11387.23 16085.74
1990/08/31 10025.07 14631.59
1990/09/30 9054.90 13919.03
1990/10/31 8770.71 13859.18
1990/11/30 9652.68 14754.48
1990/12/31 10374.03 15166.13
1991/01/31 11231.06 15827.37
1991/02/28 11769.19 16959.03
1991/03/31 12008.36 17369.44
1991/04/30 12596.32 17411.13
1991/05/31 14041.31 18163.29
1991/06/30 13682.56 17331.41
1991/07/31 13692.52 18139.05
1991/08/31 13762.28 18568.95
1991/09/30 13234.11 18258.85
1991/10/31 13732.38 18503.51
1991/11/30 12686.01 17757.82
1991/12/31 13980.59 19789.32
1992/01/31 15266.39 19421.24
1992/02/29 15337.82 19673.71
1992/03/31 15439.87 19290.07
1992/04/30 15684.79 19857.20
1992/05/31 15245.98 19954.50
1992/06/30 15144.70 19657.18
1992/07/31 15032.21 20461.16
1992/08/31 14428.88 20041.71
1992/09/30 14275.49 20278.20
1992/10/31 14970.85 20349.17
1992/11/30 15523.06 21043.08
1992/12/31 15665.94 21301.91
1993/01/31 16148.44 21480.84
1993/02/28 16507.76 21772.98
1993/03/31 16487.22 22232.39
1993/04/30 17237.22 21694.37
1993/05/31 17288.59 22275.78
1993/06/30 16918.78 22340.38
1993/07/31 16744.14 22251.02
1993/08/31 17196.13 23094.33
1993/09/30 16374.34 22916.50
1993/10/31 17011.23 23390.88
1993/11/30 18069.30 23168.66
1993/12/31 18572.65 23449.00
1994/01/31 20729.87 24246.27
1994/02/28 20144.34 23589.20
1994/03/31 18007.66 22560.71
1994/04/30 17987.53 22849.48
1994/05/31 18721.29 23224.22
1994/06/30 18532.61 22655.22
1994/07/31 20104.95 23398.31
1994/08/31 22348.15 24357.64
1994/09/30 22746.47 23760.88
1994/10/31 21331.37 24295.50
1994/11/30 20398.45 23410.66
1994/12/31 21198.51 23757.84
1995/01/31 21056.17 24373.88
1995/02/28 23147.55 25323.73
1995/03/31 23311.79 26071.03
1995/04/30 23408.19 26838.83
1995/05/31 23795.19 27911.57
1995/06/30 25951.35 28559.96
1995/07/31 26835.93 29507.01
1995/08/31 26813.82 29581.07
1995/09/30 26371.53 30829.39
1995/10/31 25984.52 30719.33
1995/11/30 26371.53 32067.91
1995/12/31 25844.12 32685.54
1996/01/31 26488.70 33798.15
1996/02/29 25272.50 34111.46
1996/03/31 26561.67 34439.95
1996/04/30 27723.04 34947.60
1996/05/31 27164.26 35848.90
1996/06/30 25640.32 35985.48
1996/07/31 24967.24 34395.64
1996/08/30 26364.19 35121.05
IMATRL PRASUN SHR__CHT 19960831 19960910 150221 R00000000000123
Let's say hypothetically that $10,000 was invested in Fidelity Select Paper
and Forest Products Portfolio on August 31, 1986, and a 3% sales charge was
paid. By August 31, 1996, the investment would have grown to $26,364 - a
163.64% increase. That compares to $10,000 invested in the S&P 500, which
would have grown to $35,121 over the same period - a 251.21% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST 31, 1996
% OF FUND'S
INVESTMENTS
Boise Cascade Corp. 9.9
Champion International Corp. 9.6
Weyerhaeuser Co. 5.5
Chesapeake Corp. 4.9
Hollinger International, Inc. Class A 4.6
Mead Corp. 3.8
Willamette Industries, Inc. 3.5
Fort Howard Corp. 3.4
Rayonier, Inc. 3.4
Mercer International, Inc. SBI 3.1
TOP INDUSTRIES AS OF AUGUST 31, 1996
Paper & Forest Products 75.5%
Publishing 9.0%
Tobacco 2.1%
Insurance 2.0%
Packaging & Containers 1.3%
All Others 10.1% *
Row: 1, Col: 1, Value: 10.1
Row: 1, Col: 2, Value: 1.3
Row: 1, Col: 3, Value: 2.0
Row: 1, Col: 4, Value: 2.1
Row: 1, Col: 5, Value: 9.0
Row: 1, Col: 6, Value: 75.5
* 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
Q. HOW HAS THE FUND PERFORMED, LARRY?
A. For the six months ended August 31, 1996, the fund had a total return of
4.32%, while the Standard & Poor's 500 Index returned 2.96%. For the 12
months ended August 31, 1996, the fund returned -1.68%, while the S&P 500
had a return of 18.73%.
Q. WHAT FACTORS INFLUENCED THE FUND'S PERFORMANCE OVER THE PAST SIX MONTHS?
A. The fund performed slightly better than the S&P 500 because of
improvements we've seen in the U.S. economy recently. Economic strength is
a major factor for the performance of paper companies and paper company
stocks. They fall into the broad category known as cyclical stocks - those
that tend to move up and down with the economy. As we've seen signs of
economic improvement, stocks in the sector have attracted investor interest
because of their economic sensitivity and because their valuations - their
stock prices relative to other measures such as earnings - have been very
attractive after a rough 1995. Business prospects for companies were
improving slowly, and commodity paper prices appeared to be near a low
point from which they could rebound.
Q. WHAT SORTS OF STRATEGIES HAVE YOU BEEN PURSUING IN THIS ENVIRONMENT?
A. While we've seen some indications of an improving economy, I've pursued
a number of different strategies that provide a mix of investments offering
exposure to several potentially positive trends. First, I've invested in
companies such as Fort Howard that are involved in the production of
tissue. Tissue, which tends to have stable demand and pricing, is perceived
to be an attractive grade of paper late in an economic cycle - when
commodity paper prices tend to be falling due to production overcapacity.
Second, I've invested in companies with a component of their business
dedicated to wood. Demand for wood historically is high in the early stages
of an economic cycle, so I've increased these investments in anticipation
of continued economic growth. Unfortunately, while wood prices have
increased considerably, most share prices of companies with wood businesses
have not increased; the performance from other components of these
companies' businesses has been weak and Wall Street does not think the
higher wood prices are sustainable. Third, I've invested in companies such
as Champion International and Boise Cascade that tend to be sensitive to
the price of paper and can show solid returns if the price of paper goes
up. As I said, there are some indications that paper and paper stock prices
may be bottoming. Finally, I've invested in specialty paper companies such
as Schweitzer-Mauduit International - which makes cigarette paper - and
Specialty Paperboard. I am not completely convinced we will see marked
improvement in the economy or paper prices, and these companies and stocks
tend to perform better when paper prices remain relatively flat.
Q. WHICH STOCKS HAVE PERFORMED WELL FOR THE FUND?
A. Specialty Paperboard was one, on the strength of some positive
acquisitions the company made. Schweitzer-Mauduit International was
another, because prices for the pulp it uses to make cigarette paper went
down, helping the company improve earnings. Finally, I purchased Fort
Howard during the period when its valuation was depressed. The stock
subsequently did well because waste paper prices were weak, decreasing
costs for the company's tissue production.
Q. AND WHICH TURNED OUT TO BE DISAPPOINTMENTS?
A. Hollinger International is a company that buys newsprint to make
newspapers. Even though it was helped by falling newsprint prices, it made
an acquisition that Wall Street felt diluted its value, and so the
company's stock fell. Boise Cascade was slowed because its publicly traded
office products subsidiary did not live up to high expectations for sales
and earnings growth.
Q. WHAT'S YOUR OUTLOOK?
A. I'm fairly positive that we'll eventually see an uptick in paper prices.
However, the stock prices of paper companies may stay fairly stagnant until
we get a clearer picture of the direction of the economy and interest
rates. Conditions would be ripe for good performance if there were enough
of an economic pick-up to help push paper prices upward. If that happens,
I'll seek to reduce the fund's position in specialty paper company stocks
and increase investments in those companies that tend to be more sensitive
to the price of paper, including producers of commodity paper products such
as uncoated free sheet and liner board.
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: June 30, 1986
FUND NUMBER: 506
TRADING SYMBOL: FSPFX
SIZE: as of August 31, 1996, more than
$31 million
MANAGER: Larry Rakers, since February
1996; manager, Fidelity Select American
Gold Portfolio, since 1995; Fidelity Select
Precious Metals and Minerals Portfolio, since
July 1996; joined Fidelity in 1993
(checkmark)
PAPER AND FOREST PRODUCTS PORTFOLIO
INVESTMENTS AUGUST 31, 1996 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 90.7%
SHARES VALUE (NOTE 1)
BASIC INDUSTRIES - 76.9%
METALS & MINING - 0.5%
English China Clay PLC 36,500 $ 143,638 29321792
PACKAGING & CONTAINERS - 1.3%
Gaylord Container Corp. Class A 25,000 181,250 36814510
Mayr Melnhof Karton AG (a) 5,000 234,656 57847192
415,906
PAPER & FOREST PRODUCTS - 75.1%
Boise Cascade Corp. 94,900 3,202,875 09738310
Bowater, Inc. 2,700 97,200 10218310
Buckeye Cellulose Corp. (a) 20,000 532,500 11815H10
Champion International Corp. 71,900 3,091,700 15852510
Chesapeake Corp. 64,900 1,590,050 16515910
Crown Pacific Partners LP unit 8,400 175,350 22843910
Domtar, Inc. 14,700 117,643 25756110
Donohue, Inc. (vtg.) 9,210 129,240 25804140
Enso OY Class R 15,000 128,033 29399Q22
Fletcher Challenge Canada Ltd. Class A 7,400 106,274 33932D10
Fort Howard Corp. (a) 46,500 1,098,563 34746110
Georgia-Pacific Corp. 4,900 364,438 37329810
International Paper Co. 1,500 60,000 46014610
Jefferson Smurfit Corp. (a) 20,000 242,500 47508710
Kimberly-Clark Corp. 11,330 887,989 49436810
Louisiana-Pacific Corp. 11,900 258,825 54634710
MacMillan Bloedel Ltd. 20,000 287,959 55478320
Mead Corp. 21,600 1,236,600 58283410
Mercer International, Inc. SBI 67,000 1,005,000 58805610
Metsa-Serla Ltd. Class B 12,500 93,567 59299992
Mo Och Domsjoe AB Class B 7,000 202,499 61399792
Plum Creek Timber Co. LP depositary unit 6,000 159,750 72923710
Pope & Talbot, Inc. 31,000 496,000 73282710
Rayonier, Inc. 27,600 1,093,650 75490710
St. Joe Corp. 1,000 61,500 79014810
Slocan Forest Products Ltd. 31,800 341,648 83158C10
Specialty Paperboard, Inc. (a) 58,900 986,575 84750410
Stone Consolidated Corp. 2,400 29,381 86158K10
Stone Container Corp. 65,000 901,875 86158910
Stora Kopparbergs B Free shares 3,000 41,920 86210998
Svenska Cellulosa AB (SCA)
Class B Ord. 20,000 424,484 86958730
Temple-Inland, Inc. 5,900 291,313 87986810
Timberwest Forest Ltd. 22,300 260,771 88690810
Union Camp Corp. 3,800 184,300 90553010
UPM-Kymmene Corp. (a) 14,200 324,270 91599K22
Wausau Paper Mills Co. 46,037 822,911 94331710
Westvaco Corp. 3,700 105,913 96154810
Weyerhaeuser Co. 39,600 1,767,150 96216610
Willamette Industries, Inc. 18,100 1,117,675 96913310
24,319,891
TOTAL BASIC INDUSTRIES 24,879,435
FINANCE - 2.0%
INSURANCE - 2.0%
Arbatax International, Inc. (a) 115,600 647,360 03891910
INDUSTRIAL MACHINERY & EQUIPMENT - 0.5%
Valmet OY (b) 10,000 171,381 92029992
SHARES VALUE (NOTE 1)
MEDIA & LEISURE - 9.0%
PUBLISHING - 9.0%
Hollinger International, Inc. Class A 136,900 $ 1,488,788 43556910
Knight-Ridder, Inc. 19,200 648,000 49904010
New York Times Co. (The) Class A 11,300 353,125 65011110
Times Mirror Co. Class A 9,800 425,075 88736410
2,914,988
NONDURABLES - 2.1%
TOBACCO - 2.1%
Schweitzer-Mauduit International, Inc. 21,100 675,200 80854110
RETAIL & WHOLESALE - 0.1%
GROCERY STORES - 0.1%
Taiga Forest Products Ltd. (a) 5,000 30,696 87391010
SERVICES - 0.1%
PRINTING - 0.1%
Alco Standard Corp. 900 39,263 01378810
TOTAL COMMON STOCKS
(Cost $30,406,317) 29,358,323
CONVERTIBLE PREFERRED STOCKS - 0.4%
BASIC INDUSTRIES - 0.4%
PAPER & FOREST PRODUCTS - 0.4%
James River Corp., Series P,
$1.55 depositary shares representing
1/100 share (dividend enhanced
conversion stock) (Cost $122,507) 4,600 114,425 47034988
REPURCHASE AGREEMENTS - 8.9%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 5.25%, dated
8/30/96 due 9/3/96 $ 2,897,689 2,896,000 69899TYY
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $33,424,824) $ 32,368,748
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 $171,381 or 0.5% of net
assets.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $40,796,133 and $36,570,010, respectively (see Note 4 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $15,942 for the period (see
Note 5 of Notes to Financial Statements).
The maximum loan and the average daily loan balance during the period for
which loans were outstanding amounted to $2,916,000. The weighted average
interest rate paid was 5.9% (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 85.4%
Canada 9.1
Finland 2.2
Sweden 2.1
Others (individually less than 1%) 1.2
TOTAL 100.0%
INCOME TAX INFORMATION
At August 31, 1996, the aggregate cost of investment securities for income
tax purposes was $33,447,797. Net unrealized depreciation aggregated
$1,079,049, of which $1,064,396 related to appreciated investment
securities and $2,143,445 related to depreciated investment securities.
PAPER AND FOREST PRODUCTS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1996 (UNAUDITED)
ASSETS
Investment in $ 32,368,748
securities, at
value (including
repurchase
agreements of
$2,896,000)
(cost
$33,424,824) -
See
accompanying
schedule
Cash 11
Receivable for 171,353
fund shares sold
Dividends 48,017
receivable
Redemption fees 846
receivable
Prepaid expenses 7,154
TOTAL ASSETS 32,596,129
LIABILITIES
Payable for $ 280,450
investments
purchased
Payable for fund 332,016
shares
redeemed
Accrued 14,196
management
fee
Other payables 57,859
and
accrued
expenses
TOTAL LIABILITIES 684,521
NET ASSETS $ 31,911,608
Net Assets
consist of:
Paid in capital $ 31,991,259
Undistributed net 99,901
investment
income
Accumulated 876,521
undistributed net
realized gain
(loss) on
investments and
foreign currency
transactions
Net unrealized (1,056,073
appreciation )
(depreciation)
on investments
and assets and
liabilities in
foreign
currencies
NET ASSETS, for $ 31,911,608
1,537,389
shares
outstanding
NET ASSET VALUE $20.76
and redemption
price per share
($31,911,608 (divided by)
1,537,389
shares)
Maximum offering $21.40
price per share
(100/97.00 of
$20.76)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED AUGUST 31, 1996 (UNAUDITED)
INVESTMENT $ 394,642
INCOME
Dividends
Interest 90,173
TOTAL INCOME 484,815
EXPENSES
Management fee $ 119,694
Transfer agent 206,799
fees
Accounting fees 30,107
and expenses
Non-interested 79
trustees'
compensation
Custodian fees 11,379
and expenses
Registration fees 8,378
Audit 11,089
Legal 158
Interest 1,434
Miscellaneous 628
Total expenses 389,745
before
reductions
Expense (5,091 384,654
reductions )
NET INVESTMENT 100,161
INCOME
REALIZED AND
UNREALIZED GAIN
(LOSS)
Net realized gain
(loss) on:
Investment 1,304,260
securities
Foreign (438 1,303,822
currency )
transactions
Change in net
unrealized
appreciation
(depreciation)
on:
Investment (697,354
securities )
Assets and (41 (697,395
liabilities in ) )
foreign
currencies
NET GAIN (LOSS) 606,427
NET INCREASE $ 706,588
(DECREASE) IN
NET ASSETS
RESULTING FROM
OPERATIONS
OTHER $ 99,449
INFORMATION
Sales charges
paid to FDC
Deferred sales $ 1,391
charges
withheld
by FDC
Exchange fees $ 18,668
withheld by FSC
Expense $ 3,092
reductions
Directed
brokerage
arrangements
Custodian 108
interest credits
Transfer agent 1,891
interest credits
$ 5,091
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS YEAR ENDED
ENDED FEBRUARY 29,
AUGUST 31, 1996 1996
(UNAUDITED)
Operations $ 100,161 $ 196,357
Net investment
income
Net realized 1,303,822 10,192,650
gain (loss)
Change in net (697,395 (5,417,439
unrealized ) )
appreciation
(depreciation)
NET INCREASE 706,588 4,971,568
(DECREASE) IN
NET ASSETS
RESULTING
FROM
OPERATIONS
Distributions to (22,582 (148,185
shareholders ) )
From net
investment
income
From net (2,077,516 (4,557,795
realized gain ) )
TOTAL (2,100,098 (4,705,980
DISTRIBUTIONS ) )
Share 63,613,128 89,748,449
transactions
Net proceeds
from sales of
shares
Reinvestment of 2,072,146 4,602,520
distributions
Cost of shares (59,757,187 (161,775,476
redeemed ) )
Paid in capital 106,992 210,077
portion of
redemption fees
NET INCREASE 6,035,079 (67,214,430
(DECREASE) IN )
NET ASSETS
RESULTING
FROM SHARE
TRANSACTIONS
TOTAL 4,641,569 (66,948,842
INCREASE )
(DECREASE) IN
NET ASSETS
NET ASSETS
Beginning of 27,270,039 94,218,881
period
End of period $ 31,911,608 $ 27,270,039
(including
undistributed
net investment
income of
$99,901 and
$46,687,
respectively)
OTHER
INFORMATION
Shares
Sold 2,941,531 3,969,187
Issued in 98,486 214,948
reinvestment of
distributions
Redeemed (2,814,784 (7,328,171
) )
Net increase 225,233 (3,144,036)
(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> <C>
SIX MONTHS YEAR ENDED YEARS ENDED FEBRUARY 28, TEN MONTHS YEAR ENDED
ENDED FEBRUARY 29, ENDED APRIL 30,
AUGUST 31, 1996 FEBRUARY 28,
SELECTED PER-SHARE DATA D (UNAUDITED) 1996 1995 1994 1993 1992
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Net asset value, $ 20.78 $ 21.14 $ 19.61 $ 16.08 $ 15.37 $ 12.64
beginning of
period
Income from
Investment
Operations
Net investment .05 .08 .01 (.01) .06 .13
income (loss)
Net realized and .80 1.83 2.53 3.38 .65 2.64
unrealized gain
(loss)
Total from .85 1.91 2.54 3.37 .71 2.77
investment
operations
Less Distributions
From net (.01) (.08) - (.01) (.09) (.30)
investment
income
From net (.92) (2.27) (1.17) - - -
realized gain
Total (.93) (2.35) (1.17) (.01) (.09) (.30)
distributions
Redemption fees .06 .08 .16 .17 .09 .26
added to paid in
capital
Net asset value, $ 20.76 $ 20.78 $ 21.14 $ 19.61 $ 16.08 $ 15.37
end of period
TOTAL RETURN B, C 4.32% 9.18% 14.91% 22.03% 5.25% 24.52%
RATIOS AND
SUPPLEMENTAL
DATA
Net assets, end of $ 31,912 $ 27,270 $ 94,219 $ 66,908 $ 25,098 $ 28,957
period (000
omitted)
Ratio of expenses 1.95% A 1.91% 1.88% 2.08% 2.21% A 2.05%
to average net
assets
Ratio of expenses 1.93% A, 1.90% 1.87% 2.07% 2.21% A 2.05%
to average net E E E E
assets after
expense
reductions
Ratio of net .50% A .34% .05% (.08)% .49% A .92%
investment
income (loss) to
average net
assets
Portfolio turnover 210% A 78% 209% 176% 222% A 421%
rate
Average $ .0319
commission
rate F
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <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 9 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 9 OF NOTES TO FINANCIAL STATEMENTS). F FOR
FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE
FOR SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT
MAY VARY FROM PERIOD TO PERIOD AND FUND TO FUND
DEPENDING ON THE MIX OF TRADES EXECUTED IN VARIOUS MARKETS WHERE
TRADING PRACTICES AND COMMISSION RATE STRUCTURES MAY
DIFFER.
</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. A fund's total return includes
changes in 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 six months, one year, five year, and life of
fund total returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 6 PAST 1 PAST 5 LIFE OF
AUGUST 31, 1996 MONTH YEAR YEARS FUND
S
TRANSPORTATION -1.20% 4.24% 121.54% 262.64%
TRANSPORTATION -4.16% 1.11% 114.90% 251.76%
(INCL. 3% SALES CHARGE)
S&P 500 2.96% 18.73% 89.14% 281.45%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one year, five years, or
since the fund started on September 29, 1986. You can compare these figures
to the performance of the S&P 500 - a widely recognized, unmanaged index of
common stocks. This benchmark reflects reinvestment of dividends and
capital gains, if any, but does not reflect any sales charges, brokerage
commissions, or other costs of investing.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
AUGUST 31, 1996 YEAR YEARS FUND
TRANSPORTATION 4.24% 17.24% 13.85%
TRANSPORTATION 1.11% 16.53% 13.50%
(INCL. 3% SALES CHARGE)
S&P 500 18.73% 13.59% 14.43%
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
IMAHDR PRASUN SHR__CHT 19960831 19960910 154348 S00000000000001
Transportation SP Standard & Poor 500
00512 SP001
1986/09/29 9700.00 10000.00
1986/09/30 9748.50 9962.80
1986/10/31 10039.50 10537.66
1986/11/30 10204.40 10793.72
1986/12/31 10039.50 10518.48
1987/01/31 10737.90 11935.32
1987/02/28 11397.50 12406.77
1987/03/31 11397.50 12765.32
1987/04/30 11475.10 12651.71
1987/05/31 11649.70 12761.78
1987/06/30 11998.90 13406.25
1987/07/31 12474.20 14085.95
1987/08/31 12474.20 14611.35
1987/09/30 11795.20 14291.37
1987/10/31 7992.80 11213.00
1987/11/30 7527.20 10289.05
1987/12/31 8284.50 11072.05
1988/01/31 8698.73 11538.18
1988/02/29 9418.69 12075.86
1988/03/31 9704.70 11702.72
1988/04/30 9734.29 11832.62
1988/05/31 9675.11 11935.56
1988/06/30 10661.36 12483.41
1988/07/31 10523.29 12435.97
1988/08/31 10030.16 12013.15
1988/09/30 10690.95 12524.91
1988/10/31 11036.14 12873.10
1988/11/30 11134.76 12689.01
1988/12/31 11470.09 12911.07
1989/01/31 12456.34 13856.16
1989/02/28 12584.55 13511.14
1989/03/31 12969.19 13825.95
1989/04/30 13403.14 14543.52
1989/05/31 13975.16 15132.53
1989/06/30 13889.01 15046.28
1989/07/31 14730.77 16404.95
1989/08/31 15688.27 16726.49
1989/09/30 15383.13 16657.91
1989/10/31 14404.59 16271.45
1989/11/30 14530.85 16603.39
1989/12/31 14737.71 17001.87
1990/01/31 13812.21 15861.04
1990/02/28 14456.54 16065.65
1990/03/31 14890.01 16491.39
1990/04/30 14327.68 16079.11
1990/05/31 14854.86 17646.82
1990/06/30 14691.33 17526.82
1990/07/31 14642.53 17470.73
1990/08/31 12494.96 15891.38
1990/09/30 10884.28 15117.47
1990/10/31 10713.45 15052.46
1990/11/30 11152.72 16024.85
1990/12/31 11555.39 16471.95
1991/01/31 12543.76 17190.12
1991/02/28 13763.97 18419.22
1991/03/31 13776.18 18864.96
1991/04/30 13739.57 18910.24
1991/05/31 14825.56 19727.16
1991/06/30 14702.46 18823.66
1991/07/31 15596.12 19700.84
1991/08/31 15877.68 20167.75
1991/09/30 15583.88 19830.95
1991/10/31 16734.61 20096.68
1991/11/30 15694.05 19286.79
1991/12/31 17811.89 21493.19
1992/01/31 17971.04 21093.42
1992/02/29 18938.14 21367.64
1992/03/31 18485.20 20950.97
1992/04/30 18962.63 21566.92
1992/05/31 19354.37 21672.60
1992/06/30 18521.92 21349.68
1992/07/31 18791.24 22222.88
1992/08/31 18228.12 21767.31
1992/09/30 18950.39 22024.17
1992/10/31 19758.35 22101.25
1992/11/30 21190.65 22854.91
1992/12/31 22049.78 23136.02
1993/01/31 23037.27 23330.36
1993/02/28 23349.77 23647.66
1993/03/31 24912.25 24146.62
1993/04/30 24850.15 23562.27
1993/05/31 25778.43 24193.74
1993/06/30 25853.69 24263.90
1993/07/31 25853.69 24166.85
1993/08/31 26330.38 25082.77
1993/09/30 26393.10 24889.63
1993/10/31 26945.04 25404.85
1993/11/30 27095.57 25163.50
1993/12/31 28513.94 25467.98
1994/01/31 29763.83 26333.89
1994/02/28 29763.83 25620.25
1994/03/31 28967.19 24503.20
1994/04/30 29508.50 24816.84
1994/05/31 29034.13 25223.84
1994/06/30 29006.23 24605.86
1994/07/31 29982.87 25412.93
1994/08/31 30875.80 26454.86
1994/09/30 30052.63 25806.71
1994/10/31 30499.09 26387.37
1994/11/30 28671.38 25426.34
1994/12/31 29616.40 25803.41
1995/01/31 29416.80 26472.49
1995/02/28 31520.20 27504.13
1995/03/31 31934.73 28315.77
1995/04/30 32410.69 29149.67
1995/05/31 31443.43 30314.78
1995/06/30 31105.66 31019.00
1995/07/31 33777.12 32047.59
1995/08/31 33746.42 32128.03
1995/09/30 33439.35 33483.83
1995/10/31 33024.81 33364.29
1995/11/30 34160.95 34828.98
1995/12/31 34108.67 35499.79
1996/01/31 34628.42 36708.20
1996/02/29 35602.96 37048.49
1996/03/31 36463.79 37405.26
1996/04/30 37658.31 37956.62
1996/05/31 37707.30 38935.52
1996/06/30 37886.94 39083.86
1996/07/31 35143.40 37357.14
1996/08/30 35159.73 38145.00
IMATRL PRASUN SHR__CHT 19960831 19960910 154353 R00000000000123
Let's say hypothetically that $10,000 was invested in Fidelity Select
Transportation Portfolio on September 29, 1986, when the fund started and a
3% sales charge was paid. By August 31, 1996, the investment would have
grown to $35,176 - a 251.76% increase. That compares to $10,000 invested in
the S&P 500, which would have grown to $38,145 over the same period - a
281.45% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST 31, 1996
% OF FUND'S
INVESTMENTS
CSX Corp. 9.3
Burlington Northern Santa Fe Corp. 9.1
Hunt (J.B.) Transport Services, Inc. 8.7
Eaton Corp. 8.1
Cummins Engine Co., Inc. 5.4
Boeing Co. 5.2
AMR Corp. 4.7
M.S. Carriers, Inc. 3.8
PACCAR, Inc. 3.6
UAL Corp. 3.2
TOP INDUSTRIES AS OF AUGUST 31, 1996
Railroads 21.6%
Auto & Truck Parts 15.4%
Air Transport, Major
National 15.1%
Trucking, Long Distance 12.9%
Motor Vehicles &
Car Bodies 11.0%
All Others 24.0%*
Row: 1, Col: 1, Value: 24.0
Row: 1, Col: 2, Value: 11.0
Row: 1, Col: 3, Value: 12.9
Row: 1, Col: 4, Value: 15.1
Row: 1, Col: 5, Value: 15.4
Row: 1, Col: 6, Value: 21.6
* INCLUDES SHORT-TERM INVESTMENTS
TRANSPORTATION PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Stephen DuFour,
Portfolio Manager
of Fidelity Select
Transportation Portfolio
Q. HOW DID THE FUND PERFORM, STEVE?
A. For the six- and 12-month periods ended August 31, 1996, the fund
returned -1.20% and 4.24%, respectively. By comparison, the Standard &
Poor's 500 Index returned 2.96% and 18.73% for the same time periods.
Q. HOW DO YOU EXPLAIN THE FUND'S PERFORMANCE?
A. Simply put, the fund is divided into four key segments: railroads,
airlines, trucking and truck manufacturing. During the past six months, the
railroads, trucking and truck manufacturing stocks were average performers
and the airlines stocks were very poor performers. The fund's performance
was hurt by its exposure to airline stocks during the past six months.
Q. WHY DID THE AIRLINES PERFORM SO POORLY?
A. Airline stocks performed poorly because of the timing of a number of
unrelated events, specifically, the tragedies involving ValuJet and Trans
World Airlines. In addition, airline stocks were hurt by rising fuel costs.
Q. GIVEN THIS BACKDROP, YOU INCREASED THE FUND'S WEIGHTING IN TRUCKING AND
TRUCK MANUFACTURING STOCKS. WHY WERE THEY ATTRACTIVE?
A. The trucking industry purchased too many trucks during much of 1994 and
1995. By late 1995 and early 1996, truck orders virtually stopped causing
truck manufacturing stocks to perform poorly. During the period, I realized
that there had been a long period in which commercial trucks hadn't been
ordered, and I believed that the tide would turn and the supply/demand
balance within the trucking industry would improve. My belief was that once
that happened and trucking stocks began to post better performance results,
then more trucks would be purchased. In short, I began to envision the
beginning of the next cycle for truck and truck manufacturing stocks.
During the period, the fund held large positions in Eaton, Cummins and
PACCAR, all truck manufacturers. The fund's top trucking stocks included JB
Hunt and M.S. Carriers.
Q. HOW DID YOU VIEW RAILROAD STOCKS DURING THE PERIOD?
A. In 1995, rail stocks were good performers due to their strong revenue
growth and improved cost cutting. By early 1996, however, I believed that
the rail stocks were close to fully valued.
Q. BUT THE FUND STILL HAS A LARGE HOLDING IN RAILROAD STOCKS . . .
A. That's true. The fund's weighting in railroads is similar to what it was
six months ago. In fact, the fund's two top holdings continue to be
railroad stocks. But that has more to do with specific company dynamics
than it does with any positive trend within the rail industry. For
instance, CSX, the fund's largest holding, owns a large container shipping
subsidiary, SeaLand. SeaLand has entered into an alliance with Maersk, the
largest container shipping company in the world. I believe that by
combining their cost structures - in addition to some of the other positive
business prospects in the container shipping industry - SeaLand has the
potential to increase its profit margins.
Q. WHAT WERE THE MAJOR DISAPPOINTMENTS DURING THE PAST SIX MONTHS?
A. Certainly the fund's investment in airlines was the greatest
disappointment. While I'm pleased that I cut the fund's weighting I wish
I'd reduced it more - and much sooner.
Q. WHAT'S AHEAD FOR THE FUND?
A. As you can see by the fund's weightings, I'm very optimistic about
trucking and truck manufacturing. I'm beginning to feel better about
selected railroads, but remain uncertain about airline stocks. My goal is
to keep the fund as focused as possible on the stocks that have the best
chance to outperform the overall market.
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: September 29, 1986
FUND NUMBER: 512
TRADING SYMBOL: FSRFX
SIZE: as of August 31, 1996, more than
$10 million
MANAGER: Stephen DuFour, since 1994;
manager, Fidelity Select Energy Portfolio,
since October 1996; Fidelity Select
Multimedia Portfolio, 1993-February 1996;
equity analyst, media, 1992-1993; joined
Fidelity in 1992
(checkmark)
TRANSPORTATION PORTFOLIO
INVESTMENTS AUGUST 31, 1996 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 96.0%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 5.2%
AIRCRAFT - 5.2%
Boeing Co. 6,000 $ 543,000 09702310
AIR TRANSPORTATION - 16.6%
AIR TRANSPORTATION, MAJOR NATIONAL - 15.1%
AMR Corp. (a) 6,000 492,000 00176510
Alaska Air Group, Inc. (a) 5,000 105,620 01165910
Continental Airlines, Inc., Class B (a) 12,400 280,550 21079530
Delta Air Lines, Inc. 2,000 141,750 24736110
Northwest Airlines Corp. Class A (a) 5,900 222,725 66728010
UAL Corp. (a) 7,000 336,000 90254950
1,578,645
AIR TRANSPORTATION, REGIONAL - 1.5%
Atlantic Southeast Airlines, Inc. 5,100 117,300 04886910
Comair Holdings, Inc. 2,000 48,000 19978910
165,300
TOTAL AIR TRANSPORTATION 1,743,945
AUTOS, TIRES, & ACCESSORIES - 26.4%
AUTO & TRUCK PARTS - 15.4%
Cummins Engine Co., Inc. 14,900 560,613 23102110
Eaton Corp. 15,300 847,238 27805810
Modine Manufacturing Co. 7,900 203,425 60782810
1,611,276
MOTOR VEHICLES & CAR BODIES - 11.0%
Federal Signal Co. 1,100 24,888 31385510
Navistar International Corp. (a) 10,000 97,500 63934E10
PACCAR, Inc. 8,300 375,575 69371810
Scania AB:
Class A 10,000 265,869 80699R22
Class B 10,000 266,624 80699R23
Sime Darby Hongkong Ltd. 20,000 21,080 82899392
Volvo AB ADR Class B 5,000 105,313 92885640
1,156,849
TRUCK & BUS BODIES - 0.0%
Grupo Dina sponsored ADR, Series L (a) 11 25 21030620
TOTAL AUTOS, TIRES, & ACCESSORIES 2,768,150
RAILROADS - 21.6%
Burlington Northern Santa Fe Corp. 11,930 954,400 12189T10
CSX Corp. 19,300 977,063 12640810
Conrail, Inc. 1,000 68,125 20836810
Tranz Rail Holdings Ltd.
sponsored ADR (a) 5,000 75,000 89411610
Wisconsin Central Transportation
Corp. (a) 5,300 186,825 97659210
2,261,413
SHIPPING - 4.6%
DEEP SEA TRANSPORTATION - 1.7%
Pacific Basin Bulk Shipping Ltd. 11,010 170,655 69402710
Pacific Basin Bulk Shipping Ltd.
(warrants) (a) 1,000 938 69402711
171,593
SHIPPING - 2.9%
Bergesen Group Class B 2,000 41,496 08399011
IM Skaugen A/S (a) 50,000 26,910 45299592
Kirby Corp. (a) 12,200 198,250 49726610
SHARES VALUE (NOTE 1)
Storli, Skibs AS 2,000 $ 34,788 86229910
Storli, Skibs AS Class B (non-vtg.) 300 5,148 86229992
306,592
TOTAL SHIPPING 478,185
TRUCKING & FREIGHT - 21.6%
FREIGHT FORWARDING - 0.3%
NFC PLC sponsored ADR 2,300 32,775 62892330
TRUCKING, LOCAL & LONG DISTANCE - 8.4%
Caliber System, Inc. 3,000 52,125 12989410
Consolidated Freightways, Inc. 5,000 115,000 20923710
M.S. Carriers, Inc. (a) 18,400 400,200 55353310
Werner Enterprises, Inc. 18,000 315,000 95075510
882,325
TRUCKING, LONG DISTANCE - 12.9%
Hunt (J.B.) Transport Services, Inc. 50,500 915,313 44565810
PST Vans, Inc. (a) 9,500 29,688 69393410
US Freightways Corp. 12,900 267,675 91690610
Yellow Corp. (a) 10,000 133,750 98550910
1,346,426
TOTAL TRUCKING & FREIGHT 2,261,526
TOTAL COMMON STOCKS
(Cost $9,978,805) 10,056,219
REPURCHASE AGREEMENTS - 4.0%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 5.25%, dated
8/30/96 due 9/3/96 $ 421,246 421,000 69899TYY
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $10,399,805) $ 10,477,219
LEGEND
1. Non-income producing
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $8,835,637 and $9,026,646, respectively (see Note 4 of Notes to
Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $2,823 for the period (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 90.0%
Sweden 6.1
Bermuda 1.7
Norway 1.0
New Zealand 0.7
United Kingdom 0.3
Hong Kong 0.2
TOTAL 100.0%
INCOME TAX INFORMATION
At August 31, 1996, the aggregate cost of investment securities for income
tax purposes was $10,407,746. Net unrealized appreciation aggregated
$69,473, of which $674,916 related to appreciated investment securities and
$605,443 related to depreciated investment securities.
TRANSPORTATION PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1996 (UNAUDITED)
ASSETS
Investment in $ 10,477,219
securities, at
value (including
repurchase
agreements of
$421,000)
(cost
$10,399,805) -
See
accompanying
schedule
Cash 506
Receivable for 94,431
fund shares sold
Dividends 15,380
receivable
Redemption fees 8
receivable
Other receivables 6,938
Prepaid expenses 4,330
TOTAL ASSETS 10,598,812
LIABILITIES
Payable for fund $ 30,801
shares
redeemed
Accrued 1,044
management
fee
Other payables 33,622
and
accrued
expenses
TOTAL LIABILITIES 65,467
NET ASSETS $ 10,533,345
Net Assets
consist of:
Paid in capital $ 9,919,429
Accumulated net (21,281
investment )
(loss)
Accumulated 557,783
undistributed net
realized gain
(loss) on
investments and
foreign currency
transactions
Net unrealized 77,414
appreciation
(depreciation)
on investments
NET ASSETS, for $ 10,533,345
488,986
shares
outstanding
NET ASSET VALUE $21.54
and redemption
price per share
($10,533,345 (divided by)
488,986 shares)
Maximum offering $22.21
price per share
(100/97.00 of
$21.54)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED AUGUST 31, 1996 (UNAUDITED)
INVESTMENT $ 132,835
INCOME
Dividends
Interest 20,196
TOTAL INCOME 153,031
EXPENSES
Management fee $ 42,012
Transfer agent 81,050
fees
Accounting fees 30,067
and expenses
Non-interested 26
trustees'
compensation
Custodian fees 8,173
and expenses
Registration fees 4,330
Audit 13,345
Legal 84
Miscellaneous 175
Total expenses 179,262
before
reductions
Expense (4,950 174,312
reductions )
NET INVESTMENT (21,281
INCOME (LOSS) )
REALIZED AND
UNREALIZED GAIN
(LOSS)
Net realized gain
(loss) on:
Investment 601,988
securities
Foreign (109 601,879
currency )
transactions
Change in net (809,907
unrealized )
appreciation
(depreciation)
on investment
securities
NET GAIN (LOSS) (208,028
)
NET INCREASE $ (229,309
(DECREASE) IN )
NET ASSETS
RESULTING FROM
OPERATIONS
OTHER $ 84,756
INFORMATION
Sales charges
paid to FDC
Deferred sales $ 241
charges
withheld
by FDC
Exchange fees $ 7,560
withheld by FSC
Expense $ 463
reductions
Directed
brokerage
arrangements
Custodian 70
interest credits
FMR 4,417
reimbursement
$ 4,950
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS YEAR ENDED
ENDED FEBRUARY 29,
AUGUST 31, 1996 1996
(UNAUDITED)
Operations $ (21,281 $ (46,898
Net investment ) )
income (loss)
Net realized 601,879 1,654,188
gain (loss)
Change in net (809,907 (414,468
unrealized ) )
appreciation
(depreciation)
NET INCREASE (229,309 1,192,822
(DECREASE) IN )
NET ASSETS
RESULTING
FROM
OPERATIONS
Distributions to (82,067 (578,339
shareholders ) )
from net
realized gains
Share 16,302,923 23,608,416
transactions
Net proceeds
from sales of
shares
Reinvestment of 81,051 567,930
distributions
Cost of shares (17,020,320 (26,101,274
redeemed ) )
Redemption 35,834 51,261
fees
NET INCREASE (600,512 (1,873,667
(DECREASE) IN ) )
NET ASSETS
RESULTING
FROM SHARE
TRANSACTIONS
TOTAL (911,888 (1,259,184
INCREASE ) )
(DECREASE) IN
NET ASSETS
NET ASSETS
Beginning of 11,445,233 12,704,417
period
End of period $ 10,533,345 $ 11,445,233
(including
accumulated net
investment loss
of $21,281 and
$0, respectively)
OTHER
INFORMATION
Shares
Sold 715,787 1,097,987
Issued in 3,675 26,954
reinvestment of
distributions
Redeemed (752,614 (1,221,676
) )
Net increase (33,152) (96,735)
(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> <C>
SIX MONTHS YEAR ENDED YEARS ENDED FEBRUARY 28, TEN MONTHS YEAR ENDED
ENDED FEBRUARY 29, ENDED APRIL 30,
AUGUST 31, 1996 FEBRUARY 28,
SELECTED PER-SHARE DATA D (UNAUDITED) 1996 1995 1994 1993 1992
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Net asset value, $ 21.92 $ 20.53 $ 21.67 $ 18.68 $ 15.49 $ 11.26
beginning of
period
Income from
Investment
Operations
Net investment (.03) (.09) F (.17) (.20) (.07) (.05)
income (loss)
Net realized and (.29) 2.60 1.17 5.07 3.55 4.18
unrealized gain
(loss)
Total from (.32) 2.51 1.00 4.87 3.48 4.13
investment
operations
Less Distributions
From net - - - - - (.04)
investment
income
From net (.12) (1.22) (2.19) (1.96) (.36) -
realized gain
Total (.12) (1.22) (2.19) (1.96) (.36) (.04)
distributions
Redemption fees .06 .10 .05 .08 .07 .14
added to paid in
capital
Net asset value, $ 21.54 $ 21.92 $ 20.53 $ 21.67 $ 18.68 $ 15.49
end of period
TOTAL RETURN B, C (1.20)% 12.95% 5.90% 27.47% 23.14% 38.01%
RATIOS AND
SUPPLEMENTAL
DATA
Net assets, end of $ 10,533 $ 11,445 $ 12,704 $ 13,077 $ 10,780 $ 2,998
period (000
omitted)
Ratio of expenses 2.50% A, 2.47% 2.37% 2.40% 2.48% A, 2.43%
to average net G G G G
assets
Ratio of expenses 2.49% A, 2.44% 2.36% 2.39% 2.48% A 2.43%
to average net E E E E
assets after
expense
reductions
Ratio of net (.30)% A (.43)% (.83)% (.96)% (.53)% A (.34)%
investment
income (loss) to
average net
assets
Portfolio turnover 137% A 175% 178% 115% 116% A 423%
rate
Average $ .0350
commission
rate H
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <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 9 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 9 OF NOTES TO FINANCIAL
STATEMENTS). F INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL
DIVIDEND 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. H FOR FISCAL YEARS
BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS REQUIRED TO DISCLOSE
ITS AVERAGE COMMISSION RATE PER SHARE FOR SECURITY
TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM
PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE
MIX OF TRADES EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND
COMMISSION RATE STRUCTURES MAY DIFFER.
</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. A fund's total return includes
changes in 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 6 PAST 1 PAST 5 PAST 10
AUGUST 31, 1996 MONTH YEAR YEARS YEARS
S
AMERICAN GOLD 8.00% 29.73% 123.17% 163.40%
AMERICAN GOLD 4.76% 25.84% 116.48% 155.50%
(INCL. 3% SALES CHARGE)
S&P 500 2.96% 18.73% 89.14% 251.21%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one, five, or 10 years. You
can compare these figures to the performance of the S&P 500 - a widely
recognized, unmanaged index of common stocks. This benchmark reflects
reinvestment of dividends and capital gains, if any, but does not reflect
any sales charges, brokerage commissions, or other costs of investing.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
AUGUST 31, 1996 YEAR YEARS YEARS
AMERICAN GOLD 29.73% 17.42% 10.17%
AMERICAN GOLD 25.84% 16.70% 9.83%
(INCL. 3% SALES CHARGE)
S&P 500 18.73% 13.59% 13.34%
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
IMAHDR PRASUN SHR__CHT 19960831 19960909 143939 S00000000000001
American Gold SP Standard & Poor 500
00041 SP001
1986/08/31 9700.00 10000.00
1986/09/30 10172.96 9173.00
1986/10/31 10026.77 9702.28
1986/11/30 10190.16 9938.05
1986/12/31 10172.96 9684.63
1987/01/31 11720.83 10989.15
1987/02/28 12933.33 11423.22
1987/03/31 15048.76 11753.35
1987/04/30 15986.08 11648.74
1987/05/31 15134.75 11750.09
1987/06/30 14661.79 12343.47
1987/07/31 17499.56 12969.28
1987/08/31 17207.18 13453.04
1987/09/30 17938.12 13158.41
1987/10/31 12701.15 10324.09
1987/11/30 14730.59 9473.39
1987/12/31 14293.42 10194.31
1988/01/31 12146.79 10623.49
1988/02/29 12469.65 11118.55
1988/03/31 13717.49 10774.98
1988/04/30 13804.75 10894.59
1988/05/31 13717.49 10989.37
1988/06/30 13988.00 11493.78
1988/07/31 13953.10 11450.10
1988/08/31 13132.84 11060.80
1988/09/30 12565.64 11531.99
1988/10/31 12696.53 11852.58
1988/11/30 12871.06 11683.09
1988/12/31 12513.28 11887.54
1989/01/31 12967.04 12757.71
1989/02/28 13647.68 12440.04
1989/03/31 13167.74 12729.90
1989/04/30 12530.74 13390.58
1989/05/31 12076.98 13932.90
1989/06/30 12757.62 13853.48
1989/07/31 12888.51 15104.45
1989/08/31 13542.97 15400.50
1989/09/30 13621.50 15337.35
1989/10/31 13761.12 14981.53
1989/11/30 15515.08 15287.15
1989/12/31 15270.74 15654.04
1990/01/31 15942.66 14603.66
1990/02/28 15497.62 14792.04
1990/03/31 14895.52 15184.03
1990/04/30 13281.18 14804.43
1990/05/31 14450.49 16247.86
1990/06/30 13525.52 16137.38
1990/07/31 14467.94 16085.74
1990/08/31 14206.16 14631.59
1990/09/30 14197.43 13919.03
1990/10/31 11867.55 13859.18
1990/11/30 11719.21 14754.48
1990/12/31 12644.18 15166.13
1991/01/31 10890.22 15827.37
1991/02/28 11876.28 16959.03
1991/03/31 11832.65 17369.44
1991/04/30 11413.79 17411.13
1991/05/31 11806.47 18163.29
1991/06/30 12600.55 17331.41
1991/07/31 12460.93 18139.05
1991/08/31 11448.70 18568.95
1991/09/30 11256.72 18258.85
1991/10/31 12120.61 18503.51
1991/11/30 12094.43 17757.82
1991/12/31 11867.55 19789.32
1992/01/31 12155.51 19421.24
1992/02/29 11780.29 19673.71
1992/03/31 10977.48 19290.07
1992/04/30 10419.01 19857.20
1992/05/31 11160.73 19954.50
1992/06/30 11885.00 19657.18
1992/07/31 12635.45 20461.16
1992/08/31 12399.84 20041.71
1992/09/30 12330.04 20278.20
1992/10/31 11963.54 20349.17
1992/11/30 10951.31 21043.08
1992/12/31 11501.05 21301.91
1993/01/31 11282.90 21480.84
1993/02/28 12347.49 21772.98
1993/03/31 13734.94 22232.39
1993/04/30 15471.45 21694.37
1993/05/31 17190.49 22275.78
1993/06/30 18194.00 22340.38
1993/07/31 19642.54 22251.02
1993/08/31 18612.86 23094.33
1993/09/30 16640.75 22916.50
1993/10/31 19127.70 23390.88
1993/11/30 19145.15 23168.66
1993/12/31 20550.06 23449.00
1994/01/31 20558.78 24246.27
1994/02/28 19773.43 23589.20
1994/03/31 20253.37 22560.71
1994/04/30 18543.05 22849.48
1994/05/31 19345.85 23224.22
1994/06/30 18394.70 22655.22
1994/07/31 18124.19 23398.31
1994/08/31 18979.35 24357.64
1994/09/30 20637.32 23760.88
1994/10/31 19145.15 24295.50
1994/11/30 16876.35 23410.66
1994/12/31 17373.74 23757.84
1995/01/31 15558.71 24373.88
1995/02/28 16091.00 25323.73
1995/03/31 18560.50 26071.03
1995/04/30 18490.69 26838.83
1995/05/31 18874.64 27911.57
1995/06/30 19136.42 28559.96
1995/07/31 19651.27 29507.01
1995/08/31 19694.90 29581.07
1995/09/30 19686.17 30829.39
1995/10/31 17312.66 30719.33
1995/11/30 18918.27 32067.91
1995/12/31 19319.67 32685.54
1996/01/31 22749.05 33798.15
1996/02/29 23656.56 34111.46
1996/03/31 24223.76 34439.95
1996/04/30 24799.69 34947.60
1996/05/31 27504.79 35848.90
1996/06/30 23621.66 35985.48
1996/07/31 23185.35 34395.64
1996/08/30 25550.14 35121.05
IMATRL PRASUN SHR__CHT 19960831 19960909 143944 R00000000000123
Let's say hypothetically that $10,000 was invested in Fidelity Select
American Gold Portfolio on August 31, 1986, and a 3% sales charge was paid.
By August 31, 1996, the investment would have grown to $25,550 - a 155.50%
increase. That compares to $10,000 invested in the S&P 500, which would
have grown to $35,121 over the same period - a 251.21% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST 31, 1996
% OF FUND'S
INVESTMENTS
Newmont Mining Corp. 8.7
Getchell Gold Corp. 7.9
Bre-X Minerals Ltd. 7.5
Euro-Nevada Mining Corp. Ltd. 6.2
Greenstone Resources Ltd. 4.2
Franco Nevada Mining Corp. 4.0
Agnico Eagle Mines Ltd. 3.9
Barrick Gold Corp. 3.5
Golden Star Resources Ltd. 3.1
Newmont Gold Co. 3.0
TOP INDUSTRIES AS OF AUGUST 31, 1996
Gold Ores 79.0%
Gold & Silver Ores 5.2%
Investment Managers 1.8%
Copper Ores 1.8%
Silver Ores 0.8%
All Others 11.4% *
Row: 1, Col: 1, Value: 11.4
Row: 1, Col: 2, Value: 0.8
Row: 1, Col: 3, Value: 1.8
Row: 1, Col: 4, Value: 1.8
Row: 1, Col: 5, Value: 5.2
Row: 1, Col: 6, Value: 79.0
* 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 DID THE FUND PERFORM?
A. It did well. For the six months ended August 31, 1996, the fund had a
total return of 8.00%, while the Standard & Poor's 500 Index returned
2.96%. For the 12 months ended August 31, 1996, the fund returned 29.73%
and the S&P 500 returned 18.73%.
Q. WHAT FACTORS HELPED THE FUND POST THOSE KINDS OF PERFORMANCE NUMBERS?
A. During the period, the price of gold fell substantially. This kind of
drop can have a negative effect on the performance of gold stocks, because
gold stocks tend to ride along with the price of gold. Fortunately, this
fund bucked that trend, having been insulated from that downward move
through its focus on stocks of companies that showed strong growth of
production and reserves. These stocks generally have seen some capital
appreciation because they have been successful in finding gold through
exploration.
Q. WAS YOUR FOCUS ON COMPANIES SHOWING STRONG GROWTH OF PRODUCTION AND
RESERVES TYPICAL OF YOUR STOCK PICKING STRATEGY?
A. Yes it was. My investment approach is based on the premise that over the
long term the price of gold goes up, but you can't tell when. You also
can't predict the price of gold over short periods of time. As a result, I
focus on looking for companies that can post solid growth of production and
reserves.
Q. WHAT WERE SOME OF THE STOCKS THAT HELPED THE FUND'S PERFORMANCE?
A. The stocks that showed strong growth of production and reserves included
Getchell Gold, which has benefited from a number of new finds and the
positive influence of a new, mining-based management team. In addition,
Euro-Nevada and Franco Nevada have entered the exploration business,
posting strong resource growth, after having focused exclusively on making
money by buying interests in gold mines in the past. The fund also
benefited over the past few years from applying a growth strategy in my
selection of established producers. That is, I structured the fund to
include large positions in gold companies with significant production and
reserves in order to decrease risk and increase liquidity. The fund's
investments in Newmont Mining, Barrick and Placer Dome helped the fund over
the past few years because they have grown production reserves faster than
other established companies.
Q. WERE THERE SOME HOLDINGS THAT DETRACTED FROM PERFORMANCE?
A. I bought Pioneer Group because it had an attractive valuation with good
long-term growth potential. Unfortunately, the stock hasn't performed that
well as operating results from its gold operations have been poor and
management has cut back on exploration. Ashanti Goldfields also stumbled
because it engaged in a few acquisitions that diluted the company's
short-term earnings and cash flow. TVI Pacific, an exploration company,
didn't produce any meaningful results during the period. Although this and
other of the fund's foreign investments involved greater risks than U.S.
investments, I felt the potential gains made them worth the additional
risk.
Q. INVESTORS OFTEN LOOK TO GOLD AS A HEDGE AGAINST INFLATION. WE'VE SEEN
SIGNS OF IMPROVING ECONOMIC GROWTH LATELY, AND MUCH OF THE MARKET IS
ANTICIPATING INTEREST-RATE INCREASES BY THE FEDERAL RESERVE BOARD TO HEAD
OFF POSSIBLE FUTURE INFLATION. WHAT'S YOUR READ ON THE SITUATION,
ESPECIALLY CONCERNING INFLATION AND MOVES IN THE PRICE OF GOLD?
A. Most of the time, the price of gold doesn't respond to moderate, slow
moves in inflation. Since inflation has been modest and generally under
control, I don't anticipate that it will have a marked effect on the demand
for and price of gold. Historically, the price of gold only moves sharply
when the rate of inflation is high.
Q. WHAT'S YOUR OUTLOOK?
A. First, I'd like to make it clear to shareholders that they shouldn't
expect the kind of returns the fund posted over the past six months should
a similar environment of falling gold prices occur again. It was very
unusual for the fund to perform as well as it did; I was very fortunate in
my stock selection. That being said, I believe seasonal gold trends will be
in our favor. As a result, the wind may be at our backs in terms of gold
price increases. In any event, I intend to pursue the same strategy,
looking for growth companies. My aim is to help investors benefit when the
price of gold goes up, and hopefully to help them see some capital
appreciation through growth in exploration if the price of gold does not
increase.
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: December 16, 1985
FUND NUMBER: 041
TRADING SYMBOL: FSAGX
SIZE: as of August 31, 1996 more than
$459 million
MANAGER: Larry Rakers, since 1995; manager,
Fidelity Select Paper and Forest Products
Portfolio, since February 1996; Fidelity Select
Precious Metals and Minerals Portfolio, since
July, 1996; joined Fidelity in 1993
(checkmark)
AMERICAN GOLD PORTFOLIO
INVESTMENTS AUGUST 31, 1996 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 90.8%
SHARES VALUE (NOTE 1)
CANADA - 56.7%
HOLDING COMPANIES - 0.1%
HOLDING COMPANY OFFICES - 0.1%
Bolivar Goldfields Ltd. (a) 596,700 $ 610,546 09760Q10
MEDICAL EQUIPMENT & SUPPLIES - 0.0%
DRUG DISTRIBUTORS - WHOLESALE - 0.0%
Gran Colombia Resources, Inc. (a) 75,000 150,740 38490410
METALS & MINING - 1.8%
METAL MINING - 0.7%
Argosy Mining Corp. unit (a)(b) 375,000 739,996 04022W96
Dayton Mining Corp. (a) 10,000 72,355 23990210
First Dynasty Mines Ltd. (a) 120,000 403,435 31997410
Morgain Minerals, Inc. (a) 390,000 262,233 61688E10
Romarco Minerals, Inc. (a) 50,000 215,604 77590310
Southernera Resources Ltd. (a) 253,900 1,688,646 84390110
3,382,269
METAL MINING SERVICES - 0.6%
Da Capo Resources Ltd. (a)(d) 667,800 2,049,889 23335T10
Pentland Firth Ventures Ltd. (a) 447,300 588,445 70963W10
2,638,334
MISCELLANEOUS NONMETAL MINERALS - 0.5%
DIA Metropolitan Minerals Ltd. (a):
Class A 42,450 620,501 25243K20
Class B 91,500 1,404,349 25243K30
Winspear Resources Ltd. (a) 165,000 84,414 97551E10
2,109,264
TOTAL METALS & MINING 8,129,867
OIL & GAS - 0.6%
OIL & GAS EXPLORATION - 0.6%
Southwestern Gold Corp. (a) 159,000 2,876,119 84548W10
PRECIOUS METALS - 54.2%
GOLD & SILVER ORES - 5.0%
Banro Resources Corp. (a) 16,000 78,933 06690910
GoldCorp, Inc. Class A (a) 110,000 1,077,289 38095610
Greenstone Resources Ltd. (a) 1,267,300 19,496,923 39573W10
Mentor Exploration &
Development Co. Ltd. (a)(d) 188,000 2,129,728 58719310
Minorca Resources Ltd. (a) 353,300 761,728 60393110
23,544,601
GOLD ORES - 48.5%
Agnico Eagle Mines Ltd. 1,058,700 18,492,914 00847410
Aber Resources Ltd. (a) 49,900 811,456 00291610
Barrick Gold Corp. 605,100 16,340,906 06790110
Brazilian Resources, Inc. 750,000 356,295 10591310
Bre-X Minerals Ltd. (a) 1,956,800 35,181,641 10625K10
Bresea Resources Ltd. (a) 571,900 6,060,698 10734F10
Cambior, Inc. 897,800 13,648,266 13201L10
Campbell Resources, Inc. (a) 490,800 559,582 13442210
Canaarc Resources Corp. 280,000 409,282 13722D10
Canarc Resources Corp.
(warrants) (a)(b) 250,000 328,887 13722D96
Cartaway Resources Corp. (a) 110,400 150,078 14590210
Cathedral Gold Corp. (a) 201,000 440,709 14890710
Crown Resources Corp. (a) 254,600 1,527,600 22856910
SHARES VALUE (NOTE 1)
Crystallex International Corp. (a) 561,500 $ 1,227,031 22942F10
Eldorado Gold Corp. (a) 100,000 628,540 28490110
Euro-Nevada Mining Corp. Ltd. 1,159,600 28,815,202 29870P10
Franco Nevada Mining Corp. 561,200 18,867,312 35186010
Geomaque Explorations Ltd. (a) 38,300 103,570 37247E10
Golden Knight Resources, Inc. (a) 196,300 1,248,171 38109010
Golden Queen Mining Co. Ltd. (a) 125,900 207,035 38115J10
Golden Star Resources Ltd. (a) 802,100 14,303,848 38119T10
Iamgold International African
Mining Gold Corp. (a) 100,000 551,800 45091310
Indochina Goldfields Ltd. (a)(b) 40,000 333,272 45591392
International Pursuit Corp. (a) 300,000 1,074,366 46022D10
International Pursuit Corp. (warrants) (a) 150,000 - 46022D92
Kinross Gold Corp. (a) 1,432,400 11,358,699 49690210
Meridian Gold, Inc. (c) 2,538,000 6,492,235 58997520
Metallica Resources, Inc. (a) 264,500 985,894 59125J10
Minvita Enterprises Ltd. (a) 44,000 42,127 60454T10
Mountain Province Mining, Inc. (a) 565,800 2,108,957 62426E10
Naxos Resources Ltd. (a) 10,000 61,027 63934H10
Nevsun Resources Ltd. (a) 552,100 4,842,098 64156L10
Oliver Gold Corp. (a) 373,800 994,432 68085H10
Oliver Gold Corp. (warrants) (a) 50,000 43,486 68085H92
Orvana Minerals Corp. (a) 1,033,400 6,306,516 68759M10
Placer Dome, Inc. 465,300 11,222,291 72590610
Prime Resources Group, Inc. 301,200 2,333,433 74157L10
Queenston Mining, Inc. 4,000 7,016 74832E10
Rayrock Yellowknife Resources Inc. (a) 264,400 1,555,578 75509N10
Repadre Capital Corp. (a) 26,900 132,706 76026J10
Repadre Capital Corp. (warrants) (a)(b) 155,000 688,197 76026J93
Rio Narcea Gold Mines Ltd. (a) 50,000 157,135 76690910
Silver Standard Resources, Inc. (a) 161,700 886,351 82823L10
Sudbury Contact Mines Ltd. (a)(d) 606,500 5,651,654 86462610
TVI Pacific, Inc. (a) 3,103,000 3,787,327 87291710
TVI Pacific, Inc. (a)(b) 96,000 117,172 87291792
Teuton Resources Corp. (a) 95,000 99,287 88162H10
Valerie Gold Resources Ltd.
(special warrants) (a)(b) 50,000 493,331 91890895
Viceroy Resources Corp. (a) 65,824 368,027 92564C10
War Eagle Mining, Inc. (a) 490,000 734,149 93390110
Wharf Resources Ltd. 463,000 2,740,946 96226010
William Resources, Inc. (a)(b) 1,000,000 1,388,635 76093310
227,267,167
SILVER ORES - 0.7%
Pan American Silver Corp. (a) 357,700 2,875,718 69790010
Pan American Silver Corp. (warrants) (a) 87,500 - 69790092
Rea Gold Corp. (a) 95,000 183,994 75490010
3,059,712
TOTAL PRECIOUS METALS 253,871,480
TOTAL CANADA 265,638,752
FRANCE - 1.1%
PRECIOUS METALS - 1.1%
GOLD ORES - 1.1%
Guyanor Resources SA Class B (a) 498,440 5,191,135 40299D23
GHANA - 1.8%
PRECIOUS METALS - 1.8%
GOLD ORES - 1.8%
Ashanti Goldfields Co. Ltd. GDR 457,452 8,520,044 04374320
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
PERU - 3.0%
PRECIOUS METALS - 3.0%
GOLD ORES - 2.9%
Compania de Minas Buenaventura SA 278,182 $ 2,353,848 17999B23
Compania de Minas Buenaventura
SA Class B 92,846 866,437 17999B27
Compania de Minas Buenaventura
SA Class T 1,208,703 10,276,422 17999B22
13,496,707
SILVER ORES - 0.1%
Compania de Minas Buenaventura
SA Class B sponsored ADR 27,000 509,625 20444810
TOTAL PERU 14,006,332
SWEDEN - 0.2%
PRECIOUS METALS - 0.2%
GOLD & SILVER ORES - 0.2%
Terra Mining AB (b) 50,000 929,031 90699E23
UNITED STATES OF AMERICA - 28.0%
METALS & MINING - 1.8%
COPPER ORES - 1.8%
Freeport McMoRan Copper & Gold, Inc.:
Class A 85,000 2,390,625 35671D10
Class B 200,000 5,875,000 35671D85
8,265,625
PRECIOUS METALS - 24.4%
GOLD ORES - 24.4%
Canyon Resources Corp. (a) 519,834 1,494,523 13886910
Getchell Gold Corp. (a) 841,148 36,800,225 37426510
Newmont Gold Co. 260,200 14,018,275 65163710
Newmont Mining Corp. 771,690 40,803,109 65163910
Santa Fe Pacific Gold Corp. 360,000 4,680,000 80217610
Stillwater Mining Co. (a) 340,600 6,982,300 86074Q10
Stillwater Mining Co. (a)(b) 460,600 9,442,300 86074Q90
114,220,732
SECURITIES INDUSTRY - 1.8%
INVESTMENT MANAGERS - 1.8%
Pioneer Group, Inc. 325,600 8,506,300 72368410
TOTAL UNITED STATES OF AMERICA 130,992,657
TOTAL COMMON STOCKS
(Cost $308,256,206) 425,277,951
BULLION - 1.1%
TROY OUNCES
Silver Bullion
(Cost $5,263,749) 1,000,332 5,191,725 83799692
CONVERTIBLE BONDS - 0.3%
MOODY'S PRINCIPAL VALUE
RATINGS AMOUNT (NOTE 1)
CANADA - 0.3%
PRECIOUS METALS - 0.3%
GOLD ORES - 0.3%
Pegasus Gold, Inc. euro
6 1/4%, 4/30/02 (b)
(Cost $1,560,600) Baa3 $ 1,360,000 $ 1,377,000 70556KAA
REPURCHASE AGREEMENTS - 7.8%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 5.25%, dated
8/30/96 due 9/3/96 $ 36,668,377 36,647,000 69899TYY
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $351,727,555) $ 468,493,676
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 $15,837,821 or 3.4% of net
assets.
3. Purchased on an installment basis. Market value reflects only those
payments made through August 31, 1996. The remaining installment
aggregating 6,345,000 CAD is due July 31, 1997.
4. 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 VALUE
AFFILIATE COST COST INCOME
Da Capo Resources Ltd. $ 6,520 $ - $ - $ 2,049,889
Mentor Exploration &
Development Co. Ltd. - - - 2,129,728
Silver Standard Resources, Inc. - - - -
Southernera Resources Ltd. - - - -
Sudbury Contact Mines Ltd. 11,343 - - 5,651,654
Winspear Resources Ltd. 71,799 - - -
Totals $ 89,662 $ - $ - $ 9,831,271
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $140,983,299 and $153,846,374, respectively (see Note 4 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $55,949 for the period (see
Note 5 of Notes to Financial Statements).
The maximum loan and the average daily loan balance during the period for
which the loan was outstanding amounted to $9,652,000. The weighted average
interest rate paid was 5.69% (see Note 6 of Notes to Financial Statements).
At the period end, the value of securities loaned and the value of
collateral amounted to $1,025,000 and $1,100,000, respectively (see Note 7
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 57.0%
United States (including silver bullion) 36.9
Peru 3.0
Ghana 1.8
France 1.1
Sweden 0.2
TOTAL 100.0%
INCOME TAX INFORMATION
At August 31, 1996, the aggregate cost of investment securities for income
tax purposes was $351,818,951. Net unrealized appreciation aggregated
$116,674,725, of which $132,951,620 related to appreciated investment
securities and $16,276,895 related to depreciated investment securities.
At February 29, 1996, the fund had a capital loss carryforward of
approximately $10,621,000 of which $2,282,000 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
AUGUST 31, 1996 (UNAUDITED)
ASSETS
Investment in $ 468,493,676
securities, at
value (including
repurchase
agreements of
$36,647,000)
(cost
$351,727,555)
- - See
accompanying
schedule
Receivable for 251,023
investments
sold
Receivable for 5,102,912
fund shares sold
Dividends 228,635
receivable
Interest receivable 28,333
Redemption fees 20,049
receivable
Other receivables 3,500
Prepaid expenses 29,293
TOTAL ASSETS 474,157,421
LIABILITIES
Payable to $ 185,890
custodian bank
Payable for 3,047,428
investments
purchased
Payable for fund 9,750,520
shares
redeemed
Accrued 209,902
management
fee
Other payables 343,727
and accrued
expenses
Collateral on 1,100,000
securities
loaned,
at value
TOTAL LIABILITIES 14,637,467
NET ASSETS $ 459,519,954
Net Assets
consist of:
Paid in capital $ 337,126,058
Accumulated net (1,584,347
investment )
(loss)
Accumulated 7,212,042
undistributed net
realized gain
(loss) on
investments and
foreign currency
transactions
Net unrealized 116,766,201
appreciation
(depreciation)
on investments
and assets and
liabilities in
foreign
currencies
NET ASSETS, for $ 459,519,954
15,692,666
shares
outstanding
NET ASSET VALUE $29.28
and redemption
price per share
($459,519,954 (divided by)
15,692,666
shares)
Maximum offering $30.19
price per share
(100/97.00 of
$29.28)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED AUGUST 31, 1996 (UNAUDITED)
INVESTMENT $ 1,110,040
INCOME
Dividends
Interest (including 853,659
income on
securities
loaned of
$6,664)
TOTAL INCOME 1,963,699
EXPENSES
Management fee $ 1,358,101
Transfer agent 1,429,222
fees
Accounting and 226,264
security lending
fees
Non-interested 841
trustees'
compensation
Custodian fees 53,165
and expenses
Registration fees 29,293
Audit 15,246
Legal 1,587
Interest 1,525
Reports to 25,842
shareholders
Miscellaneous 2,127
Total expenses 3,143,213
before
reductions
Expense (53,835 3,089,378
reductions )
NET INVESTMENT (1,125,679
INCOME (LOSS) )
REALIZED AND
UNREALIZED GAIN
(LOSS)
Net realized gain
(loss) on:
Investment 18,496,345
securities
(including
realized (loss)
of $(364,591)
on sale of
investments in
precious metals)
Foreign (2,813 18,493,532
currency )
transactions
Change in net
unrealized
appreciation
(depreciation)
on:
Investment 10,822,866
securities
Assets and 80 10,822,946
liabilities in
foreign
currencies
NET GAIN (LOSS) 29,316,478
NET INCREASE $ 28,190,799
(DECREASE) IN
NET ASSETS
RESULTING FROM
OPERATIONS
OTHER $ 675,999
INFORMATION
Sales charges
paid to FDC
Deferred sales $ 23,149
charges
withheld
by FDC
Exchange fees $ 112,808
withheld by FSC
Expense $ 51,916
reductions
Directed
brokerage
arrangements
Custodian 1,725
interest credits
Transfer agent 194
interest credits
$ 53,835
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS YEAR ENDED
ENDED FEBRUARY 29,
AUGUST 31, 1996 1996
(UNAUDITED)
Operations $ (1,125,679 $ (952,464
Net investment ) )
income (loss)
Net realized 18,493,532 25,985,654
gain (loss)
Change in net 10,822,946 105,571,674
unrealized
appreciation
(depreciation)
NET INCREASE 28,190,799 130,604,864
(DECREASE) IN
NET ASSETS
RESULTING
FROM
OPERATIONS
Share 436,516,956 656,288,557
transactions
Net proceeds
from sales of
shares
Cost of shares (458,007,490 (615,297,920
redeemed ) )
Paid in capital 1,326,594 1,700,313
portion of
redemption fees
NET INCREASE (20,163,940 42,690,950
(DECREASE) IN )
NET ASSETS
RESULTING
FROM SHARE
TRANSACTIONS
TOTAL 8,026,859 173,295,814
INCREASE
(DECREASE) IN
NET ASSETS
NET ASSETS
Beginning of 451,493,095 278,197,281
period
End of period $ 459,519,954 $ 451,493,095
(including
accumulated
net investment
loss of
$1,584,347
and $458,668,
respectively)
OTHER
INFORMATION
Shares
Sold 15,335,521 28,496,378
Redeemed (16,298,933 (26,927,012
) )
Net increase (963,412) 1,569,366
(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> <C>
SIX MONTHS YEAR ENDED YEARS ENDED FEBRUARY 28, TEN MONTHS YEAR ENDED
ENDED FEBRUARY 29, ENDED APRIL 30,
AUGUST 31, 1996 FEBRUARY 28,
SELECTED PER-SHARE DATA D (UNAUDITED) 1996 1995 1994 1993 1992
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Net asset value, $ 27.11 $ 18.44 $ 22.66 $ 14.15 $ 11.94 $ 13.08
beginning of
period
Income from
Investment
Operations
Net investment (.07) (.06) (.05) (.11) (.05) (.06)
income (loss)
Net realized and 2.16 8.62 (4.25) 8.44 2.16 (1.17)
unrealized gain
(loss)
Total from 2.09 8.56 (4.30) 8.33 2.11 (1.23)
investment
operations
Redemption fees .08 .11 .08 .18 .10 .09
added to paid in
capital
Net asset value, $ 29.28 $ 27.11 $ 18.44 $ 22.66 $ 14.15 $ 11.94
end of period
TOTAL RETURN B, C 8.00% 47.02% (18.62)% 60.14% 18.51% (8.72)%
RATIOS AND
SUPPLEMENTAL
DATA
Net assets, end of $ 459,520 $ 451,493 $ 278,197 $ 347,406 $ 168,033 $ 130,407
period (000
omitted)
Ratio of expenses 1.39% A 1.39% 1.41% 1.50% 1.59% A 1.75%
to average net
assets
Ratio of expenses 1.36% A, 1.39% 1.41% 1.49% 1.59% A 1.75%
to average net E E
assets after
expense
reductions
Ratio of net (.50)% A (.27)% (.22)% (.51)% (.44)% A (.47)%
investment
income (loss) to
average net
assets
Portfolio turnover 66% A 56% 34% 39% 30% A 40%
rate
Average $ .0258
commission
rate F
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <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 9 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 9 OF NOTES TO FINANCIAL
STATEMENTS).
F FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND
IS REQUIRED TO DISCLOSE ITS AVERAGE
COMMISSION RATE PER SHARE FOR SECURITY TRADES ON WHICH COMMISSIONS
ARE CHARGED. THIS AMOUNT MAY
VARY FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE
MIX OF TRADES EXECUTED IN VARIOUS MARKETS
WHERE TRADING PRACTICES AND COMMISSION RATE STRUCTURES MAY DIFFER.
</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. A fund's total return includes
changes in 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 6 PAST 1 PAST 5 PAST 10
AUGUST 31, 1996 MONTH YEAR YEARS YEARS
S
ENERGY 14.23% 25.55% 55.88% 165.31%
ENERGY 10.80% 21.79% 51.20% 157.35%
(INCL. 3% SALES CHARGE)
S&P 500 2.96% 18.73% 89.14% 251.21%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one, five, or 10 years. You
can compare these figures to the performance of the S&P 500 - a widely
recognized, unmanaged index of common stocks. This benchmark reflects
reinvestment of dividends and capital gains, if any, but does not reflect
any sales charges, brokerage commissions, or other costs of investing.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
AUGUST 31, 1996 YEAR YEARS YEARS
ENERGY 25.55% 9.28% 10.25%
ENERGY 21.79% 8.62% 9.91%
(INCL. 3% SALES CHARGE)
S&P 500 18.73% 13.59% 13.34%
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
IMAHDR PRASUN SHR__CHT 19960831 19960909 154937 S00000000000001
Energy SP Standard & Poor 500
00060 SP001
1986/08/31 9700.00 10000.00
1986/09/30 9594.66 9173.00
1986/10/31 9849.23 9702.28
1986/11/30 10051.13 9938.05
1986/12/31 10121.36 9684.63
1987/01/31 11192.31 10989.15
1987/02/28 11411.76 11423.22
1987/03/31 12359.82 11753.35
1987/04/30 12008.69 11648.74
1987/05/31 12430.05 11750.09
1987/06/30 12860.18 12343.47
1987/07/31 13527.33 12969.28
1987/08/31 13448.33 13453.04
1987/09/30 13158.64 13158.41
1987/10/31 9682.44 10324.09
1987/11/30 9278.64 9473.39
1987/12/31 9939.20 10194.31
1988/01/31 10309.32 10623.49
1988/02/29 10679.45 11118.55
1988/03/31 11437.75 10774.98
1988/04/30 11871.07 10894.59
1988/05/31 11437.75 10989.37
1988/06/30 11564.13 11493.78
1988/07/31 11636.35 11450.10
1988/08/31 11194.01 11060.80
1988/09/30 11067.63 11531.99
1988/10/31 11166.93 11852.58
1988/11/30 11194.01 11683.09
1988/12/31 11523.72 11887.54
1989/01/31 12394.48 12757.71
1989/02/28 12199.95 12440.04
1989/03/31 12903.97 12729.90
1989/04/30 13339.35 13390.58
1989/05/31 13496.83 13932.90
1989/06/30 13774.73 13853.48
1989/07/31 14349.07 15104.45
1989/08/31 14664.02 15400.50
1989/09/30 14895.61 15337.35
1989/10/31 14793.71 14981.53
1989/11/30 15349.52 15287.15
1989/12/31 16458.81 15654.04
1990/01/31 15723.96 14603.66
1990/02/28 16213.86 14792.04
1990/03/31 16223.28 15184.03
1990/04/30 15676.85 14804.43
1990/05/31 16628.39 16247.86
1990/06/30 16236.49 16137.38
1990/07/31 17342.39 16085.74
1990/08/31 17654.05 14631.59
1990/09/30 17603.78 13919.03
1990/10/31 16698.96 13859.18
1990/11/30 16517.99 14754.48
1990/12/31 15719.42 15166.13
1991/01/31 14701.24 15827.37
1991/02/28 16072.67 16959.03
1991/03/31 15854.49 17369.44
1991/04/30 16031.11 17411.13
1991/05/31 16124.61 18163.29
1991/06/30 15406.25 17331.41
1991/07/31 16197.38 18139.05
1991/08/31 16509.67 18568.95
1991/09/30 16343.12 18258.85
1991/10/31 16832.37 18503.51
1991/11/30 15583.21 17757.82
1991/12/31 15724.95 19789.32
1992/01/31 14883.48 19421.24
1992/02/29 14904.52 19673.71
1992/03/31 14473.27 19290.07
1992/04/30 15461.99 19857.20
1992/05/31 16198.28 19954.50
1992/06/30 15396.73 19657.18
1992/07/31 15808.01 20461.16
1992/08/31 16092.74 20041.71
1992/09/30 16187.65 20278.20
1992/10/31 15491.64 20349.17
1992/11/30 15133.08 21043.08
1992/12/31 15349.36 21301.91
1993/01/31 15928.18 21480.84
1993/02/28 16978.63 21772.98
1993/03/31 17846.85 22232.39
1993/04/30 18190.15 21694.37
1993/05/31 18737.14 22275.78
1993/06/30 18983.83 22340.38
1993/07/31 18844.40 22251.02
1993/08/31 20335.22 23094.33
1993/09/30 20217.24 22916.50
1993/10/31 19927.65 23390.88
1993/11/30 17514.46 23168.66
1993/12/31 18289.46 23449.00
1994/01/31 19269.05 24246.27
1994/02/28 18623.41 23589.20
1994/03/31 17721.74 22560.71
1994/04/30 19075.44 22849.48
1994/05/31 19277.30 23224.22
1994/06/30 19176.37 22655.22
1994/07/31 19467.94 23398.31
1994/08/31 19142.73 24357.64
1994/09/30 18996.94 23760.88
1994/10/31 20073.51 24295.50
1994/11/30 18839.94 23410.66
1994/12/31 18364.89 23757.84
1995/01/31 17925.15 24373.88
1995/02/28 18631.05 25323.73
1995/03/31 19649.39 26071.03
1995/04/30 20253.27 26838.83
1995/05/31 20775.86 27911.57
1995/06/30 20171.98 28559.96
1995/07/31 20648.12 29507.01
1995/08/31 20497.15 29581.07
1995/09/30 20508.76 30829.39
1995/10/31 19626.16 30719.33
1995/11/30 20752.63 32067.91
1995/12/31 22291.85 32685.54
1996/01/31 22636.26 33798.15
1996/02/29 22529.38 34111.46
1996/03/31 24037.67 34439.95
1996/04/30 25201.69 34947.60
1996/05/31 25462.14 35848.90
1996/06/30 25933.44 35985.48
1996/07/31 24767.61 34395.64
1996/08/30 25735.00 35121.05
IMATRL PRASUN SHR__CHT 19960831 19960909 154942 R00000000000123
Let's say hypothetically that $10,000 was invested in Fidelity Select
Energy Portfolio on August 31, 1986, and a 3% sales charge was paid. By
August 31, 1996, the investment would have grown to $25,735 - a 157.35%
increase. That compares to $10,000 invested in the S&P 500, which would
have grown to $35,121 over the same period - a 251.21% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST 31, 1996
% OF FUND'S
INVESTMENTS
Royal Dutch Petroleum Co. ADR 5.8
British Petroleum PLC ADR 5.2
Schlumberger Ltd. 4.7
Total SA sponsored ADR 4.3
Amerada Hess Corp. 4.2
Kerr-McGee Corp. 4.2
Phillips Petroleum Co. 4.1
Occidental Petroleum Corp. 4.0
Unocal Corp. 4.0
Atlantic Richfield Co. 3.8
TOP INDUSTRIES AS OF AUGUST 31, 1996
Crude Petroleum & Gas 38.0%
Oil & Gas Exploration 22.9%
Drilling 12.3%
Oil & Gas Services 9.4%
Holding Companies 3.5%
All Others 13.9% *
Row: 1, Col: 1, Value: 13.9
Row: 1, Col: 2, Value: 3.5
Row: 1, Col: 3, Value: 9.4
Row: 1, Col: 4, Value: 12.3
Row: 1, Col: 5, Value: 22.9
Row: 1, Col: 6, Value: 38.0
* INCLUDES SHORT-TERM INVESTMENTS
ENERGY PORTFOLIO
FUND TALK: THE MANAGERS' OVERVIEW
NOTE TO SHAREHOLDERS: Effective October 1, 1996, after the period ended,
Stephen DuFour (right) became Portfolio Manager of Fidelity Select Energy
Portfolio. The following is an interview with Albert Ruback, who managed
the fund during the period covered by this report, and Stephen DuFour, who
discusses his outlook.
Q. ALBERT, HOW DID THE FUND PERFORM?
A. It did very well. For the six months ended August 31, 1996, the fund had
a total return of 14.23%, while the Standard & Poor's 500 Index returned
2.96%. For the 12 months ended August 31, 1996, the fund returned 25.55%,
and the S&P 500 had a total return of 18.73%.
Q. WHAT HELPED THE FUND'S PERFORMANCE OVER THE PAST SIX MONTHS?
A. The fund was helped by a generally stronger environment for prices of
both natural gas and oil. Natural gas prices stayed firm during the summer
- - typically the season when they would weaken - because of very low storage
levels that required producers to keep producing at very high levels. Oil
prices also remained firm because of two reasons. First, there were some
delays in production coming on stream from non-OPEC (Organization of
Petroleum Exporting Countries) sources. Second, there was uncertainty about
Iraq's re-entry into the world oil market. It was also significant that
world oil demand increased at a good clip, requiring that production remain
high.
Q. HOW HAS THE RECENT CONFLICT BETWEEN THE U.S. AND IRAQ AFFECTED THE
FUND'S HOLDINGS?
A. It hasn't, really, even though I don't think Iraq will produce oil
during the rest of 1996 and perhaps 1997, which will probably keep oil
prices at present levels. That's because I've chosen stocks for the fund
not for their sensitivity to commodity prices, but because of fundamental
considerations such as lower cost structures or good production profiles. A
higher oil price will be a "tide that lifts all boats." The stocks I've
picked are those that I thought would have gone up anyway, even though some
of them should be among the biggest beneficiaries of higher-than-expected
oil prices.
Q. WHAT WERE SOME OF THE STOCKS WHOSE PERFORMANCE HELPED THE FUND?
A. Royal Dutch Petroleum and Shell Transport have done very well due to big
cost-cutting programs and positive production profiles for the next few
years. The future benefits of these cost-reduction programs became evident
in the first quarter of 1996, and the stocks responded. British Petroleum
has continued to lower its costs through restructuring and has increased
its production profile as well. Although these and other foreign
investments involve greater risks than U.S. investments, I felt the
potential gains made them worth taking on the additional risk.
Domestically, Unocal has cut costs and sold off marginally profitable oil
fields. Its stock reacted favorably since the completion of these
transactions.
Q. AND WHICH STOCKS DIDN'T PERFORM AS WELL AS YOU WOULD HAVE LIKED?
A. Stocks in the fund generally performed well, so the stocks that remained
flat were the weaker performers. Among those was Amerada Hess, which
suffered from negative inventory and accounting issues tied to its
restructuring, and negative sentiment toward the company's refining and
marketing business. Occidental Petroleum also wavered, largely because
prices for chemicals - where Occidental has a significant stake - were
weak.
Q. STEVE, LET'S DISCUSS YOUR OUTLOOK. WHAT DO YOU SEE ON THE HORIZON?
A. The outlook for the energy industry is rapidly changing. Two months ago,
the consensus view on oil stocks was that they were overvalued given that
oil prices were headed lower. Following recent events in Iraq, oil prices
have firmed and the short-term outlook for the stocks has improved. My
strategy will be to focus on the energy service and exploration and
production sectors. The large oil companies have used the recent strength
in commodity prices to improve their balance sheets and are now looking to
increase production. At the same time, I'll underweight the fund in
commodity chemical and integrated oil companies. The commodity chemical
industry has expanded too rapidly, to the point where supply currently
exceeds demand. There are a number of very good stories in the integrated
oil industry, but, taken as a whole, they do not currently offer the same
positive prospects as the smaller exploration and production companies.
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.
FUND FACTS
START DATE: July 14, 1981
FUND NUMBER: 060
TRADING SYMBOL: FSENX
SIZE: as of August 31, 1996, more than
$138 million
MANAGER: Stephen Dufour, since October 1996;
manager, Fidelity Select Transportation
Portfolio, since 1994; Fidelity Select Multimedia
Portfolio, 1993-February 1996; equity analyst,
media, 1992-1993; joined Fidelity in 1992
(checkmark)
ENERGY PORTFOLIO
INVESTMENTS AUGUST 31, 1996 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 95.1%
SHARES VALUE (NOTE 1)
CHEMICALS & PLASTICS - 0.4%
PLASTICS & SYNTHETIC RESINS - 0.4%
ARCO Chemical Co. 12,800 $ 614,400 00192010
COAL - 0.4%
MAPCO, Inc. 10,000 538,750 56509710
CONGLOMERATES - 0.1%
Suncor, Inc. 5,000 176,500 86722910
CONSTRUCTION - 1.3%
HEAVY CONSTRUCTION - 1.3%
McDermott (J. Ray) SA 79,200 1,841,400 58099A22
ENERGY SERVICES - 21.7%
DRILLING - 12.3%
British Petroleum PLC ADR 63,429 7,468,765 11088940
Falcon Drilling, Inc. (a) 20,000 452,500 30591410
Royal Dutch Petroleum Co. ADR 55,700 8,320,188 78025770
Transocean Drilling AS (a) 50,000 1,329,890 93499492
17,571,343
OIL & GAS SERVICES - 9.4%
BJ Services Co. (a) 15,000 564,375 05548210
Dresser Industries, Inc. 15,000 435,000 26159710
Halliburton Co. 64,200 3,378,525 40621610
Schlumberger Ltd. 79,500 6,707,813 80685710
Tidewater, Inc. 16,000 614,000 88642310
Weatherford Enterra, Inc. (a) 10,000 287,500 94707110
Western Atlas, Inc. (a) 22,800 1,385,100 95767410
13,372,313
TOTAL ENERGY SERVICES 30,943,656
GAS - 4.1%
GAS DISTRIBUTION - 0.5%
Aquila Gas Pipeline Corp. 57,900 709,275 03839B10
GAS TRANSMISSION - 1.8%
Enron Corp. 50,900 2,042,363 29356110
Williams Companies, Inc. 10,000 498,750 96945710
2,541,113
GAS TRANSMISSION & DISTRIBUTION - 1.8%
Gas Natural SDG SA, Series E 4,700 900,347 36699692
Questar Corp. 47,500 1,721,875 74835610
2,622,222
TOTAL GAS 5,872,610
HOLDING COMPANIES - 3.5%
Shell Transport & Trading Co. PLC ADR 55,000 4,812,500 82270360
INSURANCE - 0.1%
PROPERTY-CASUALTY & REINSURANCE - 0.1%
Highlands Insurance Group, Inc. (a) 6,120 116,280 43103210
OIL & GAS - 63.3%
CRUDE PETROLEUM & GAS - 38.0%
Anadarko Petroleum Corp. 31,700 1,672,175 03251110
Apache Corp. 9,015 264,816 03741110
Atlantic Richfield Co. 45,800 5,347,150 04882510
Bellwether Exploration Co. (a) 47,000 252,625 07989520
Brown (Tom), Inc. (a) 150,000 2,400,000 11566020
Burlington Resources, Inc. 93,700 3,993,963 12201410
Cairn Energy USA, Inc. (a) 40,000 410,000 12776210
Canada Occidental Petroleum Ltd. 40,000 665,083 13642010
SHARES VALUE (NOTE 1)
Chesapeake Energy Corp. (a) 68,100 $ 3,660,375 16516710
Coho Resources, Inc. (a) 47,000 287,875 19248110
Elan Energy, Inc. (a) 20,000 178,330 28390410
Flores & Rucks, Inc. (a) 80,700 2,653,013 34039C10
Forcenergy Gas Exploration, Inc. (a) 10,000 216,250 34520610
Global Natural Resources, Inc. (a) 102,400 1,561,600 37935510
NGC Corp. 1,198 18,120 62912110
Norsk Hydro AS ADR 77,700 3,545,063 65653160
Occidental Petroleum Corp. 246,600 5,733,450 67459910
Paramount Resources Ltd. 29,200 386,274 69932010
Renaissance Energy Ltd. (a) 102,208 2,875,942 75966610
Renaissance Energy Ltd. (a)(b) 10,300 291,705 75966692
Rio Alto Exploration Ltd. (a) 262,500 1,371,734 76689210
Santa Fe Energy Resources, Inc. (a) 319,000 3,748,250 80201210
Stone Energy Corp. (a) 10,000 196,250 86164210
Swift Energy Co. (a) 75,000 1,865,625 87073810
Total SA sponsored ADR 164,800 6,118,200 89151E10
Tullow Oil PLC (a) 846,360 1,500,150 89999C22
Ulster Petroleums Ltd. (a) 79,400 496,159 90384030
Vintage Petroleum, Inc. 95,700 2,416,425 92746010
54,126,602
OIL & GAS EXPLORATION - 22.9%
Amerada Hess Corp. 117,600 5,982,900 02355110
Chieftain International, Inc. (a) 116,200 2,335,465 16867C10
Kerr-McGee Corp. 103,700 5,949,788 49238610
Louisiana Land & Exploration Co. 35,400 2,013,375 54626810
Petro-Canada 10,000 129,362 71644E10
Phillips Petroleum Co. 144,300 5,844,150 71850710
Saga Petroleum AS Class B 20,000 276,118 84099794
USX-Marathon Group 190,100 3,968,338 90290582
Union Pacific Resources Group, Inc. 19,200 523,200 90783410
Unocal Corp. 164,915 5,648,339 91528910
32,671,035
OIL FIELD EQUIPMENT - 0.2%
Cooper Cameron Corp. (a) 5,600 295,400 21664010
PETROLEUM REFINERS - 2.2%
Coastal Corp. (The) 10,000 396,250 19044110
Pennzoil Co. 50,000 2,668,750 70990310
3,065,000
TOTAL OIL & GAS 90,158,037
POLLUTION CONTROL - 0.2%
SANITARY SERVICES - 0.2%
USA Waste Services, Inc. (a) 10,000 275,000 90291710
TOTAL COMMON STOCKS
(Cost $116,463,383) 135,349,133
REPURCHASE AGREEMENTS - 4.9%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 5.25%, dated
8/30/96 due 9/3/96 $ 7,016,090 7,012,000 69899TYY
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $123,475,383) $ 142,361,133
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 $291,705 or 0.2% of net
assets.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $51,368,801 and $50,479,400, respectively (see Note 4 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $17,593 for the period (see
Note 5 of Notes to Financial Statements).
At the period end, the value of securities loaned and the value of
collateral amounted to $3,655,000 and $3,808,000, respectively (see Note 7
of Notes to Financial Statements).
The maximum loan and the average daily loan balances during the period for
which loans were outstanding amounted to $2,721,000 and $2,678,500,
respectively. The weighted average interest rate paid was 5.6% (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 68.4%
United Kingdom 8.6
Canada 6.3
Netherlands 5.8
France 4.3
Norway 3.6
Panama 1.3
Ireland 1.1
Others (individually less than 1%) 0.6
TOTAL 100.0%
INCOME TAX INFORMATION
At August 31, 1996, the aggregate cost of investment securities for income
tax purposes was $123,964,905. Net unrealized appreciation aggregated
$18,396,228, of which $20,465,682 related to appreciated investment
securities and $2,069,454 related to depreciated investment securities.
ENERGY PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1996 (UNAUDITED)
ASSETS
Investment in $ 142,361,133
securities, at
value (including
repurchase
agreements of
$7,012,000)
(cost
$123,475,383)
- - See
accompanying
schedule
Cash 425
Receivable for 524,356
fund shares sold
Dividends 323,846
receivable
Redemption fees 607
receivable
Prepaid expenses 12,257
TOTAL ASSETS 143,222,624
LIABILITIES
Payable for fund $ 783,382
shares
redeemed
Accrued 69,576
management
fee
Other payables 157,734
and
accrued
expenses
Collateral on 3,808,000
securities
loaned,
at value
TOTAL LIABILITIES 4,818,692
NET ASSETS $ 138,403,932
Net Assets
consist of:
Paid in capital $ 113,520,048
Undistributed net 757,563
investment
income
Accumulated 5,240,769
undistributed net
realized gain
(loss) on
investments and
foreign currency
transactions
Net unrealized 18,885,552
appreciation
(depreciation)
on investments
and assets and
liabilities in
foreign
currencies
NET ASSETS, for $ 138,403,932
6,670,262
shares
outstanding
NET ASSET VALUE $20.75
and redemption
price per share
($138,403,932 (divided by)
6,670,262
shares)
Maximum offering $21.39
price per share
(100/97.00 of
$20.75)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED AUGUST 31, 1996 (UNAUDITED)
INVESTMENT $ 1,675,685
INCOME
Dividends
Interest (including 208,785
income on
securities
loaned of
$8,639)
TOTAL INCOME 1,884,470
EXPENSES
Management fee $ 433,877
Transfer agent 592,762
fees
Accounting and 72,361
security lending
fees
Non-interested 264
trustees'
compensation
Custodian fees 8,797
and expenses
Registration fees 12,257
Audit 14,448
Legal 482
Interest 833
Miscellaneous 1,065
Total expenses 1,137,146
before
reductions
Expense (10,689 1,126,457
reductions )
NET INVESTMENT 758,013
INCOME
REALIZED AND
UNREALIZED GAIN
(LOSS)
Net realized gain
(loss) on:
Investment 5,760,491
securities
Foreign (35 5,760,456
currency )
transactions
Change in net
unrealized
appreciation
(depreciation)
on:
Investment 9,548,512
securities
Assets and (14 9,548,498
liabilities in )
foreign
currencies
NET GAIN (LOSS) 15,308,954
NET INCREASE $ 16,066,967
(DECREASE) IN
NET ASSETS
RESULTING FROM
OPERATIONS
OTHER $ 308,577
INFORMATION
Sales charges
paid to FDC
Deferred sales $ 6,472
charges
withheld
by FDC
Exchange fees $ 38,528
withheld by FSC
Expense $ 10,523
reductions
Directed
brokerage
arrangements
Custodian 82
interest credits
Transfer agent 84
interest credits
$ 10,689
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS YEAR ENDED
ENDED FEBRUARY 29,
AUGUST 31, 1996 1996
(UNAUDITED)
Operations $ 758,013 $ 1,171,293
Net investment
income
Net realized 5,760,456 9,827,602
gain (loss)
Change in net 9,548,498 9,441,160
unrealized
appreciation
(depreciation)
NET INCREASE 16,066,967 20,440,055
(DECREASE) IN
NET ASSETS
RESULTING
FROM
OPERATIONS
Distributions to (348,530 (687,111
shareholders ) )
From net
investment
income
From net (5,671,012 (2,283,890
realized gain ) )
TOTAL (6,019,542 (2,971,001
DISTRIBUTIONS ) )
Share 123,938,431 161,715,061
transactions
Net proceeds
from sales of
shares
Reinvestment of 5,913,439 2,918,567
distributions
Cost of shares (121,426,029 (158,608,994
redeemed ) )
Paid in capital 255,149 159,215
portion of
redemption fees
NET INCREASE 8,680,990 6,183,849
(DECREASE) IN
NET ASSETS
RESULTING
FROM SHARE
TRANSACTIONS
TOTAL 18,728,415 23,652,903
INCREASE
(DECREASE) IN
NET ASSETS
NET ASSETS
Beginning of 119,675,517 96,022,614
period
End of period $ 138,403,932 $ 119,675,517
(including
undistributed
net investment
income of
$757,563 and
$486,372,
respectively)
OTHER
INFORMATION
Shares
Sold 6,067,115 8,981,770
Issued in 301,091 162,874
reinvestment of
distributions
Redeemed (6,007,492 (8,799,673
) )
Net increase 360,714 344,971
(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> <C>
SIX MONTHS YEAR ENDED YEARS ENDED FEBRUARY 28, TEN MONTHS YEAR ENDED
ENDED FEBRUARY 29, ENDED APRIL 30,
AUGUST 31, 1996 FEBRUARY 28,
SELECTED PER-SHARE DATA D (UNAUDITED) 1996 1995 1994 1993 1992
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Net asset value, $ 18.97 $ 16.10 $ 16.73 $ 15.84 $ 14.70 $ 15.43
beginning of
period
Income from
Investment
Operations
Net investment .11 .18 .07 .06 .23 .17
income
Net realized and 2.50 3.13 (.11) 1.35 1.16 (.75)
unrealized gain
(loss)
Total from 2.61 3.31 (.04) 1.41 1.39 (.58)
investment
operations
Less Distributions
From net (.05) (.11) (.08) (.03) (.27) (.16)
investment
income
From net (.82) (.36) (.54) (.57) - (.02)
realized gain
Total (.87) (.47) (.62) (.60) (.27) (.18)
distributions
Redemption fees .04 .03 .03 .08 .02 .03
added to paid in
capital
Net asset value, $ 20.75 $ 18.97 $ 16.10 $ 16.73 $ 15.84 $ 14.70
end of period
TOTAL RETURN B, C 14.23% 20.92% .04% 9.69% 9.81% (3.55)%
RATIOS AND
SUPPLEMENTAL
DATA
Net assets, end of $ 138,404 $ 119,676 $ 96,023 $ 145,490 $ 179,133 $ 77,334
period (000
omitted)
Ratio of expenses 1.57% A 1.63% 1.85% 1.67% 1.71% A 1.78%
to average net
assets
Ratio of expenses 1.55% A, 1.63% 1.85% 1.66% 1.71% A 1.78%
to average net E E
assets after
expense
reductions
Ratio of net 1.05% A 1.04% .42% .37% 1.88% A 1.16%
investment
income to
average net
assets
Portfolio turnover 74% A 97% 106% 157% 72% A 81%
rate
Average $ .0418
commission
rate F
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <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 9 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 9 OF NOTES
TO FINANCIAL STATEMENTS). F FOR FISCAL YEARS BEGINNING ON OR
AFTER SEPTEMBER 1, 1995, A FUND IS REQUIRED TO
DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR SECURITY TRADES
ON WHICH COMMISSIONS ARE CHARGED. THIS
AMOUNT MAY VARY FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON
THE MIX OF TRADES EXECUTED IN VARIOUS
MARKETS WHERE TRADING PRACTICES AND COMMISSION RATE STRUCTURES
MAY DIFFER.
</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. A fund's total return includes
changes in 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 6 PAST 1 PAST 5 PAST 10
AUGUST 31, 1996 MONTH YEAR YEARS YEARS
S
ENERGY SERVICE 15.13% 32.25% 70.06% 134.30%
ENERGY SERVICE 11.68% 28.28% 64.96% 127.27%
(INCL. 3% SALES CHARGE)
S&P 500 2.96% 18.73% 89.14% 251.21%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one, five, or 10 years. You
can compare these figures to the performance of the S&P 500 - a widely
recognized, unmanaged index of common stocks. This benchmark reflects
reinvestment of dividends and capital gains, if any, but does not reflect
any sales charges, brokerage commissions, or other costs of investing.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
AUGUST 31, 1996 YEAR YEARS YEARS
ENERGY SERVICE 32.25% 11.20% 8.89%
ENERGY SERVICE 28.28% 10.53% 8.56%
(INCL. 3% SALES CHARGE)
S&P 500 18.73% 13.59% 13.34%
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
IMAHDR PRASUN SHR__CHT 19960831 19960909 155539 S00000000000001
Energy Service SP Standard & Poor 500
00043 SP001
1986/08/31 9700.00 10000.00
1986/09/30 9542.64 9173.00
1986/10/31 9205.45 9702.28
1986/11/30 9520.16 9938.05
1986/12/31 9621.32 9684.63
1987/01/31 10700.35 10989.15
1987/02/28 11149.94 11423.22
1987/03/31 12206.49 11753.35
1987/04/30 12206.49 11648.74
1987/05/31 13150.64 11750.09
1987/06/30 14443.22 12343.47
1987/07/31 15387.37 12969.28
1987/08/31 14218.42 13453.04
1987/09/30 13757.59 13158.41
1987/10/31 8845.77 10324.09
1987/11/30 7879.14 9473.39
1987/12/31 8486.10 10194.31
1988/01/31 8823.29 10623.49
1988/02/29 9598.84 11118.55
1988/03/31 10160.83 10774.98
1988/04/30 10363.15 10894.59
1988/05/31 9655.04 10989.37
1988/06/30 9104.29 11493.78
1988/07/31 8958.17 11450.10
1988/08/31 9126.77 11060.80
1988/09/30 8733.37 11531.99
1988/10/31 8441.14 11852.58
1988/11/30 8081.46 11683.09
1988/12/31 8452.38 11887.54
1989/01/31 8969.41 12757.71
1989/02/28 9070.57 12440.04
1989/03/31 9643.80 12729.90
1989/04/30 10104.63 13390.58
1989/05/31 10284.47 13932.90
1989/06/30 10621.67 13853.48
1989/07/31 11217.38 15104.45
1989/08/31 11745.65 15400.50
1989/09/30 11577.06 15337.35
1989/10/31 11003.82 14981.53
1989/11/30 11947.97 15287.15
1989/12/31 13476.59 15654.04
1990/01/31 12611.12 14603.66
1990/02/28 13802.55 14792.04
1990/03/31 14465.70 15184.03
1990/04/30 13701.39 14804.43
1990/05/31 16005.56 16247.86
1990/06/30 15185.05 16137.38
1990/07/31 16612.51 16085.74
1990/08/31 16320.28 14631.59
1990/09/30 16005.56 13919.03
1990/10/31 13993.63 13859.18
1990/11/30 14207.18 14754.48
1990/12/31 13713.10 15166.13
1991/01/31 13093.87 15827.37
1991/02/28 15199.25 16959.03
1991/03/31 14017.09 17369.44
1991/04/30 14084.64 17411.13
1991/05/31 14456.18 18163.29
1991/06/30 12564.71 17331.41
1991/07/31 13510.44 18139.05
1991/08/31 13364.08 18568.95
1991/09/30 12136.88 18258.85
1991/10/31 12317.02 18503.51
1991/11/30 10842.13 17757.82
1991/12/31 10493.11 19789.32
1992/01/31 10346.75 19421.24
1992/02/29 10560.66 19673.71
1992/03/31 9806.33 19290.07
1992/04/30 10616.96 19857.20
1992/05/31 11461.36 19954.50
1992/06/30 10797.10 19657.18
1992/07/31 11247.45 20461.16
1992/08/31 11821.64 20041.71
1992/09/30 12181.92 20278.20
1992/10/31 11551.43 20349.17
1992/11/30 11315.00 21043.08
1992/12/31 10853.39 21301.91
1993/01/31 11281.22 21480.84
1993/02/28 12395.83 21772.98
1993/03/31 13375.34 22232.39
1993/04/30 14096.35 21694.37
1993/05/31 14749.89 22275.78
1993/06/30 14671.02 22340.38
1993/07/31 14873.84 22251.02
1993/08/31 15392.17 23094.33
1993/09/30 14941.45 22916.50
1993/10/31 14727.36 23390.88
1993/11/30 13172.37 23168.66
1993/12/31 13127.88 23449.00
1994/01/31 13252.26 24246.27
1994/02/28 13184.42 23589.20
1994/03/31 12200.68 22560.71
1994/04/30 12838.58 22849.48
1994/05/31 13410.48 23224.22
1994/06/30 13818.98 22655.22
1994/07/31 14075.75 23398.31
1994/08/31 13515.52 24357.64
1994/09/30 14029.07 23760.88
1994/10/31 14589.29 24295.50
1994/11/30 13830.65 23410.66
1994/12/31 13202.37 23757.84
1995/01/31 13285.33 24373.88
1995/02/28 14186.03 25323.73
1995/03/31 14968.22 26071.03
1995/04/30 15880.77 26838.83
1995/05/31 16295.57 27911.57
1995/06/30 15738.56 28559.96
1995/07/31 16520.74 29507.01
1995/08/31 17184.42 29581.07
1995/09/30 17231.82 30829.39
1995/10/31 15738.56 30719.33
1995/11/30 16627.40 32067.91
1995/12/31 18598.72 32685.54
1996/01/31 19003.57 33798.15
1996/02/29 19739.67 34111.46
1996/03/31 21297.74 34439.95
1996/04/30 22899.38 34947.60
1996/05/31 22566.25 35848.90
1996/06/30 22615.61 35985.48
1996/07/31 21369.47 34395.64
1996/08/30 22726.65 35121.05
IMATRL PRASUN SHR__CHT 19960831 19960909 155544 R00000000000123
Let's say hypothetically that $10,000 was invested in Fidelity Select
Energy Service Portfolio on August 31, 1986, and a 3% sales charge was
paid. By August 31, 1996, the investment would have grown to $22,727 - a
127.27% increase. That compares to $10,000 invested in the S&P 500, which
would have grown to $35,121 over the same period - a 251.21% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST 31, 1996
% OF FUND'S
INVESTMENTS
Schlumberger Ltd. 7.5
Halliburton Co. 6.7
Western Atlas, Inc. 6.4
BJ Services Co. 5.6
Weatherford Enterra, Inc. 5.3
Dresser Industries, Inc. 4.5
Baker Hughes, Inc. 4.0
Transocean Drilling AS 3.8
McDermott (J. Ray) SA 2.8
Sonat Offshore Drilling, Inc. 2.6
TOP INDUSTRIES AS OF AUGUST 31, 1996
Oil & Gas Services 50.3%
Drilling 18.4%
Oil Field Equipment 3.0%
Heavy Construction 2.8%
Crude Petroleum & Gas 0.9%
All Others 24.6% *
Row: 1, Col: 1, Value: 24.6
Row: 1, Col: 2, Value: 0.9
Row: 1, Col: 3, Value: 2.8
Row: 1, Col: 4, Value: 3.0
Row: 1, Col: 5, Value: 18.4
Row: 1, Col: 6, Value: 50.3
* INCLUDES SHORT-TERM INVESTMENTS
ENERGY SERVICE PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Dan Pickering,
Portfolio Manager of
Fidelity Select Energy
Service Portfolio
Q. HOW DID THE FUND PERFORM, DAN?
A. The fund did well. For the six- and 12-months ended August 31, 1996, the
fund returned 15.13% and 32.25%, respectively. By comparison, the Standard
& Poor's 500 Index returned 2.96% for the six-month period and 18.73% for
the year.
Q. WHAT WAS THE INVESTING ENVIRONMENT LIKE DURING THE PERIOD?
A. During the past six months, we've seen the positive scenario for energy
service continue. Fairly strong commodity prices for oil and gas generated
a lot of confidence in the industry and have encouraged increased oil and
gas exploration. In addition, customers are using technology developed by
the oil service companies, such as horizontal and directional drilling, to
reach new pools of oil and gas. This increased level of activity has
boosted the revenues and profits of the service companies.
Q. HAVE YOU MADE ANY SIGNIFICANT CHANGES TO THE FUND'S AREAS OF EMPHASIS
DURING THE PAST SIX MONTHS?
A. No, not really. You'll notice that the top holdings in the fund as of
August 31, 1996, were very similar to the fund's top holdings six months
earlier. I maintained a high weighting in international service companies
such as Schlumberger and Halliburton, and they were solid performers. I
continued to believe that these companies were well-positioned to benefit
from the increased level of activity mentioned above. I also believed that
Wall Street expectations were too low and that the market didn't fully
appreciate the leverage these companies had to grow their revenues. I also
continued to keep the fund focused on the deep water industry. There is a
mini-boom occurring in offshore areas where water depths are 1,000 feet or
more. New technology is allowing companies to drill where they previously
could not.
Q. WHERE ELSE DID YOU FIND OPPORTUNITIES?
A. I've increased the fund's investments in the offshore construction
industry because of the increase in offshore construction and deep water
drilling activity. Specifically, I increased the fund's holdings in J. Ray
McDermott and Coflexip, two companies that are involved in the construction
and installation of offshore pipelines and platforms.
Q. WHAT WERE YOU SELLING?
A. Six months ago the fund had a decent position in oil companies such as
Royal Dutch, British Petroleum, Exxon and Mobil. During the period, I took
the opportunity to sell these companies in order to increase the fund's
exposure to the energy service sector.
Q. WHAT INVESTMENTS PROVED DISAPPOINTING?
A. The fund's holding in Weatherford Enterra was a bit disappointing; the
stock was down as much as 20% during the period. Although I have tremendous
confidence in the company, its stock didn't perform as well as I had hoped.
Last year's merger with Enterra hasn't progressed as smoothly as either the
company or I had expected. In addition, there have been some internal
problems that have depressed earnings. Another regret was that since
service companies outperformed oil companies, I wish I'd moved more quickly
to shift the fund's investments out of the oils and into the service
companies.
Q. WHAT'S YOUR OUTLOOK GOING FORWARD?
A. I remain optimistic about the industry. In the past couple of years, the
energy service sector has undergone a shift; it's become more consolidated,
which I think is good for pricing power. In addition, I still think that
the stocks in the sector are conservatively valued, and that there's a
potential for strong revenue and earnings growth. I think that oil
companies are going to spend more money in 1997 than they did in 1996, and
that business trends for service companies will continue to strengthen. My
goal is to position this fund so it can participate in as much of the
upside potential as possible.
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: December 16, 1985
FUND NUMBER: 043
TRADING SYMBOL: FSESX
SIZE: as of August 31, 1996, more than
$343 million
MANAGER: Daniel Pickering, since 1994;
manager, Fidelity Select Natural Gas Portfolio,
since February 1995; equity analyst, energy
services and hotel industry since 1994;
joined Fidelity in 1994
(checkmark)
ENERGY SERVICE PORTFOLIO
INVESTMENTS AUGUST 31, 1996 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 79.3%
SHARES VALUE (NOTE 1)
BUILDING MATERIALS - 0.9%
FABRICATED PIPE & FITTINGS - 0.9%
Coflexip Sponsored ADR 157,000 $ 3,120,371 19238410
COMPUTER SERVICES & SOFTWARE - 0.1%
CAD/CAM/CAE - 0.1%
Landmark Graphics Corp. (a) 7,700 229,075 51491310
CONSTRUCTION - 2.8%
HEAVY CONSTRUCTION - 2.8%
McDermott (J. Ray) SA 434,100 10,092,825 58099A22
ENERGY SERVICES - 68.4%
DRILLING - 18.4%
Cliffs Drilling Co. (a) 200,000 5,700,000 18682C10
Diamond Offshore Drilling, Inc. (a) 10,000 510,000 25271C10
ENSCO International, Inc. (a) 176,600 5,165,550 26874Q10
Falcon Drilling, Inc. (a) 128,800 2,914,100 30591410
Global Marine, Inc. (a) 37,200 534,750 37935240
Helmerich & Payne, Inc. 114,200 4,510,900 42345210
Marine Drilling Companies, Inc. (a) 97,900 856,625 56824020
Nabors Industries, Inc. (a) 602,700 8,965,163 62956810
Noble Drilling Corp. (a) 332,650 4,740,263 65504210
Patterson Energy, Inc. (a) 20,168 398,318 70341410
Rowan Companies, Inc. (a) 60,000 922,500 77938210
Smedvig AS 302,900 5,859,258 79799892
Smedvig Series B 75,725 1,429,375 79799897
Sonat Offshore Drilling, Inc. 168,000 9,177,000 83542010
Transocean Drilling AS (a) 502,400 13,362,744 93499492
UTI Energy Corp. (a) 17,800 264,775 90338710
65,311,321
OIL & GAS SERVICES - 50.0%
BJ Services Co. (a) 527,788 19,858,024 05548210
Baker Hughes, Inc. 474,500 14,353,625 05722410
Carbo Ceramics, Inc. 15,700 294,375 14078110
Dawson Geophysical Co. (a) 69,500 642,875 23935910
Dreco Energy Services Ltd. Class A (a) 40,000 1,030,000 26152820
Dresser Industries, Inc. 544,500 15,790,500 26159710
Energy Ventures, Inc. (a) 197,600 6,496,100 29274010
Global Industries Ltd. (a) 190,400 2,522,800 37933610
Gulfmark International, Inc. (a) 27,500 990,000 40262810
Halliburton Co. 451,100 23,739,138 40621610
Input/Output, Inc. (a) 34,600 1,223,975 45765210
Lone Star Technologies, Inc. (a) 55,100 902,263 54231210
McDermott International, Inc. 165,800 3,440,350 58003710
Numar Corp. (a) 40,000 615,000 67052E10
Oceaneering International, Inc. (a) 2,000 34,250 67523210
Pool Energy Services Co. (a) 217,500 2,528,438 73278810
Pride Petroleum Services, Inc. (a) 35,600 511,750 74154110
RPC Energy Services, Inc. (a) 6,000 66,750 74966010
Schlumberger Ltd. 316,400 26,696,250 80685710
Seacor Holdings, Inc. (a) 65,300 2,971,150 81190410
Smith International, Inc. (a) 30,800 1,070,300 83211010
Tidewater, Inc. 211,265 8,107,294 88642310
Varco International, Inc. (a) 117,000 1,886,625 92212610
Weatherford Enterra, Inc. (a) 659,600 18,963,500 94707110
Western Atlas, Inc. (a) 372,400 22,623,300 95767410
177,358,632
TOTAL ENERGY SERVICES 242,669,953
SHARES VALUE (NOTE 1)
ENGINEERING - 0.7%
ARCHITECTS & ENGINEERS - 0.7%
Stolt Comex Seaway SA (a) 198,500 $ 2,357,188 86199A22
GAS - 1.2%
GAS DISTRIBUTION - 0.2%
Aquila Gas Pipeline Corp. 46,600 570,850 03839B10
K N Energy, Inc. 10,000 343,750 48262010
914,600
GAS TRANSMISSION - 0.3%
Enron Corp. 26,300 1,055,288 29356110
GAS TRANSMISSION & DISTRIBUTION - 0.7%
Tejas Gas Corp. (a) 70,100 2,435,975 87907510
TOTAL GAS 4,405,863
OIL & GAS - 4.3%
CRUDE PETROLEUM & GAS - 0.9%
Anadarko Petroleum Corp. 32,900 1,735,475 03251110
Unit Corp. (a) 220,400 1,405,050 90921810
3,140,525
OIL & GAS EXPLORATION - 0.4%
Petroleum Geo-Services AS
sponsored ADR (a) 60,400 1,645,900 71659710
OIL FIELD EQUIPMENT - 3.0%
Camco International, Inc. 25,700 870,588 13263210
Cooper Cameron Corp. (a) 145,788 7,690,317 21664010
Dailey Petroleum Services Corp. 60,000 547,500 23380G10
Drilex International, Inc. (a) 100,000 1,400,000 26204410
10,508,405
TOTAL OIL & GAS 15,294,830
RAILROADS - 0.3%
RAILROAD EQUIPMENT - 0.3%
Trinity Industries, Inc. 35,000 1,133,125 89652210
SHIPPING - 0.6%
DEEP SEA DOMESTIC TRANSPORT - 0.4%
Trico Marine Services, Inc. (a) 55,000 1,292,500 89610610
SHIPPING - 0.2%
Hvide Marine, Inc. 50,000 593,750 44851510
TOTAL SHIPPING 1,886,250
TOTAL COMMON STOCKS
(Cost $268,057,451) 281,189,480
NONCONVERTIBLE BONDS - 0.3%
MOODY'S PRINCIPAL VALUE
RATINGS AMOUNT (NOTE 1)
ENERGY SERVICES - 0.3%
OIL & GAS SERVICES - 0.3%
Tuboscope Vetco International, Inc.
10 3/4%, 4/15/03
(Cost $900,000) B $ 900,000 938,250 898602AA
REPURCHASE AGREEMENTS - 20.4%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 5.25%, dated
8/30/96 due 9/3/96 (Note 3) $ 72,560,302 $ 72,518,000 69899TYY
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $341,475,451) $ 354,645,730
LEGEND
1. Non-income producing
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $432,592,501 and $420,393,243 respectively (see Note 4 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $199,604 for the period
(see Note 5 of Notes to Financial Statements).
At the period end, the value of securities loaned and the value of
collateral amounted to $9,177,000 and $9,408,000, respectively (see Note 7
of Notes to Financial Statements).
The fund participated in the interfund lending program as a borrower and a
lender. As a borrower, the maximum loan and the average daily loan balance
during the period for which the loan was outstanding amounted to
$18,905,000 and $6,781,250, respectively. The weighted average interest
rate was 5.4%. As a lender, the maximum loan and the average daily loan
balance during the period for which the loan was outstanding amounted to
$16,745,000. The weighted average interest rate was 5.6%. Interest earned
from the interfund lending program amounted to $2,594 and is included in
interest income on the statement of operations (see Note 8 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%
Norway 6.5
Panama 2.9
France 1.6
Canada 0.3
TOTAL 100.0%
INCOME TAX INFORMATION
At August 31, 1996, the aggregate cost of investment securities for income
tax purposes was $341,653,456. Net unrealized appreciation aggregated
$12,992,274 of which $20,960,932 related to appreciated investment
securities and $7,968,658 related to depreciated investment securities.
ENERGY SERVICE PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1996 (UNAUDITED)
ASSETS
Investment in $ 354,645,730
securities, at
value (including
repurchase
agreements of
$72,518,000)
(cost
$341,475,451)
- - See
accompanying
schedule
Cash 194
Receivable for 1,588,366
fund shares sold
Dividends 227,657
receivable
Interest receivable 36,281
Redemption fees 7,732
receivable
Other receivables 336,000
Prepaid expenses 41,038
TOTAL ASSETS 356,882,998
LIABILITIES
Payable for fund $ 3,599,752
shares
redeemed
Accrued 162,441
management
fee
Other payables 361,029
and
accrued
expenses
Collateral on 9,408,000
securities
loaned,
at value
TOTAL LIABILITIES 13,531,222
NET ASSETS $ 343,351,776
Net Assets
consist of:
Paid in capital $ 283,877,512
Undistributed net 40,932
investment
income
Accumulated 46,263,053
undistributed net
realized gain
(loss) on
investments and
foreign currency
transactions
Net unrealized 13,170,279
appreciation
(depreciation)
on investments
NET ASSETS, for $ 343,351,776
18,641,829
shares
outstanding
NET ASSET VALUE $18.42
and redemption
price per share
($343,351,776 (divided by)
18,641,829
shares)
Maximum offering $18.99
price per share
(100/97.00 of
$18.42)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED AUGUST 31, 1996 (UNAUDITED)
INVESTMENT $ 1,715,820
INCOME
Dividends
Interest (including 1,085,951
income on
securities
loaned of
$18,783)
TOTAL INCOME 2,801,771
EXPENSES
Management fee $ 1,173,586
Transfer agent 1,324,330
fees
Accounting and 193,714
security lending
fees
Non-interested 691
trustees'
compensation
Custodian fees 25,599
and expenses
Registration fees 48,567
Audit 20,477
Legal 952
Interest 4,099
Miscellaneous 1,707
Total expenses 2,793,722
before
reductions
Expense (32,883 2,760,839
reductions )
NET INVESTMENT 40,932
INCOME
REALIZED AND
UNREALIZED GAIN
(LOSS)
Net realized gain
(loss) on:
Investment 47,677,931
securities
Foreign (1,911 47,676,020
currency )
transactions
Change in net (13,504,173
unrealized )
appreciation
(depreciation)
on investment
securities
NET GAIN (LOSS) 34,171,847
NET INCREASE $ 34,212,779
(DECREASE) IN
NET ASSETS
RESULTING FROM
OPERATIONS
OTHER $ 1,325,992
INFORMATION
Sales charges
paid to FDC
Deferred sales $ 4,334
charges
withheld
by FDC
Exchange fees $ 187,860
withheld by FSC
Expense $ 26,338
reductions
Directed
brokerage
arrangements
Custodian 757
interest credits
Transfer agent 5,788
interest credits
$ 32,883
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS YEAR ENDED
Operations ENDED FEBRUARY 29,
AUGUST 31, 1996 1996
(UNAUDITED)
Net investment $ 40,932 $ 963,116
income
Net realized 47,676,020 18,797,151
gain (loss)
Change in net (13,504,173 27,955,663
unrealized )
appreciation
(depreciation)
NET INCREASE 34,212,779 47,715,930
(DECREASE) IN
NET ASSETS
RESULTING
FROM
OPERATIONS
Distributions to - (345,905
shareholders )
From net
investment
income
From net (2,253,610 (4,150,860
realized gain ) )
TOTAL (2,253,610 (4,496,765
DISTRIBUTIONS ) )
Share 731,301,262 762,157,835
transactions
Net proceeds
from sales of
shares
Reinvestment of 2,237,839 4,455,875
distributions
Cost of shares (697,277,271 (600,660,872
redeemed ) )
Paid in capital 1,325,514 838,814
portion of
redemption fees
NET INCREASE 37,587,344 166,791,652
(DECREASE) IN
NET ASSETS
RESULTING
FROM SHARE
TRANSACTIONS
TOTAL 69,546,513 210,010,817
INCREASE
(DECREASE) IN
NET ASSETS
NET ASSETS
Beginning of 273,805,263 63,794,446
period
End of period $ 343,351,776 $ 273,805,263
(including
undistributed
net investment
income of
$40,932 and
$619,525,
respectively)
OTHER
INFORMATION
Shares
Sold 40,556,724 54,578,475
Issued in 127,223 301,480
reinvestment of
distributions
Redeemed (39,062,219 (43,190,194
) )
Net increase 1,621,728 11,689,761
(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> <C>
SIX MONTHS YEAR ENDED YEARS ENDED FEBRUARY 28, TEN MONTHS YEAR ENDED
ENDED FEBRUARY 29, ENDED APRIL 30,
AUGUST 31, 1996 FEBRUARY 28,
SELECTED PER-SHARE DATA D (UNAUDITED) 1996 1995 1994 1993 1992
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Net asset value, $ 16.09 $ 11.97 $ 11.66 $ 11.01 $ 9.43 $ 12.51
beginning of
period
Income from
Investment
Operations
Net investment - .08 G .02 .03 .01 (.12)
income (loss)
Net realized and 2.37 4.49 .67 .51 1.47 (3.11)
unrealized gain
(loss)
Total from 2.37 4.57 .69 .54 1.48 (3.23)
investment
operations
Less Distributions
From net - (.04) (.01) (.05) - -
investment
income
In excess of net - - (.01) - - -
investment
income
From net (.10) (.48) (.35) - - -
realized gain
In excess of net - - (.13) - - -
realized gain
Total (.10) (.52) (.50) (.05) - -
distributions
Redemption fees .06 .07 .12 .16 .10 .15
added to paid in
capital
Net asset value, $ 18.42 $ 16.09 $ 11.97 $ 11.66 $ 11.01 $ 9.43
end of period
TOTAL RETURN B, C 15.13% 39.15% 7.60% 6.36% 16.76% (24.62)%
RATIOS AND
SUPPLEMENTAL
DATA
Net assets, end of $ 343,352 $ 273,805 $ 63,794 $ 40,857 $ 85,234 $ 41,322
period (000
omitted)
Ratio of expenses 1.42% A 1.59% 1.81% 1.66% 1.76% A 2.07%
to average net
assets
Ratio of expenses 1.41% A, 1.58% 1.79% 1.65% 1.76% A 2.07%
to average net E E E E
assets after
expense
reductions
Ratio of net .02% A .60% .19% .23% .13% A (1.13)%
investment
income (loss) to
average net
assets
Portfolio turnover 244% A 223% 209% 137% 236% A 89%
rate
Average $ .0367
commission
rate F
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <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 9 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 9 OF NOTES TO FINANCIAL STATEMENTS). F
FOR FISCAL YEARS BEGINNING ON OR AFTER
SEPTEMBER 1, 1995, A FUND IS REQUIRED TO DISCLOSE ITS AVERAGE
COMMISSION RATE PER SHARE FOR SECURITY TRADES
ON WHICH COMMISSIONS ARE CHARGED. THIS MAY VARY FROM PERIOD TO
PERIOD AND FUND TO FUND DEPENDING ON THE
MIX OF TRADES EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES
AND COMMISSION RATE STRUCTURES MAY
DIFFER. G 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. A fund's total return includes
changes in 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 6 PAST 1 LIFE OF
AUGUST 31, 1996 MONTHS YEAR FUND
NATURAL GAS 14.31% 29.30% 32.65%
NATURAL GAS 10.88% 25.42% 28.67%
(INCL. 3% SALES CHARGE)
S&P 500 2.96% 18.73% 60.17%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one year, or since the fund
started on April 21, 1993. You can compare these figures to the performance
of the S&P 500 - a widely recognized, unmanaged index of common stocks.
This benchmark reflects reinvestment of dividends and capital gains, if
any, but does not reflect any sales charges, brokerage commissions, or
other costs of investing.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 LIFE OF
AUGUST 31, 1996 YEAR FUND
NATURAL GAS 29.30% 8.75%
NATURAL GAS 25.42% 7.78%
(INCL. 3% SALES CHARGE)
S&P 500 18.73% 15.02%
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
IMAHDR PRASUN SHR__CHT 19960831 19960910 150011 S00000000000001
Natural Gas SP Standard & Poor 500
00513 SP001
1993/04/21 9700.00 10000.00
1993/04/30 9515.70 9893.80
1993/05/31 9670.90 10158.96
1993/06/30 9952.20 10188.42
1993/07/31 9913.40 10147.66
1993/08/31 10767.00 10532.26
1993/09/30 10582.70 10451.16
1993/10/31 10010.40 10667.50
1993/11/30 9156.80 10566.16
1993/12/31 9209.91 10694.01
1994/01/31 9672.37 11057.61
1994/02/28 9327.98 10757.95
1994/03/31 8993.44 10288.90
1994/04/30 9692.05 10420.60
1994/05/31 9613.33 10591.50
1994/06/30 9662.53 10332.00
1994/07/31 9603.49 10670.89
1994/08/31 9288.63 11108.40
1994/09/30 9229.59 10836.24
1994/10/31 9554.30 11080.06
1994/11/30 8717.93 10676.52
1994/12/31 8580.06 10834.86
1995/01/31 8313.78 11115.81
1995/02/28 8856.20 11548.99
1995/03/31 9378.89 11889.80
1995/04/30 9536.79 12239.95
1995/05/31 9902.07 12729.18
1995/06/30 9665.13 13024.88
1995/07/31 9665.13 13456.79
1995/08/31 9951.43 13490.56
1995/09/30 10237.73 14059.87
1995/10/31 9793.47 14009.67
1995/11/30 10632.63 14624.70
1995/12/31 11187.09 14906.37
1996/01/31 11236.63 15413.78
1996/02/29 11256.45 15556.67
1996/03/31 11761.80 15706.48
1996/04/30 12587.74 15937.99
1996/05/31 12687.64 16349.03
1996/06/30 13356.99 16411.32
1996/07/31 12397.92 15686.27
1996/08/30 12867.47 16017.09
IMATRL PRASUN SHR__CHT 19960831 19960910 150014 R00000000000044
Let's say hypothetically that $10,000 was invested in Fidelity Select
Natural Gas Portfolio on April 21, 1993, when the fund started, and a 3%
sales charge was paid. By August 31, 1996, the investment would be valued
at $12,867 - a 28.67% increase. That compares to $10,000 invested in the
S&P 500, which would have grown to $16,017 over the same period - a 60.17%
increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST 31, 1996
% OF FUND'S
INVESTMENTS
Enron Corp. 5.3
Chesapeake Energy Corp. 5.0
Anadarko Petroleum Corp. 4.9
Belco Oil & Gas Corp. 4.5
Louisiana Land & Exploration Co. 4.3
Enron Oil & Gas Co. 3.6
United Meridian Corp. 2.9
Burlington Resources, Inc. 2.8
Sonat, Inc. 2.7
Noble Affiliates, Inc. 2.3
TOP INDUSTRIES AS OF AUGUST 31, 1996
Crude Petroleum & Gas 52.6%
Oil & Gas Exploration 10.6%
Gas Transmission 10.6%
Gas Transmission
& Distribution 2.9%
Oil & Gas Services 2.3%
All Others 21.0% *
Row: 1, Col: 1, Value: 21.0
Row: 1, Col: 2, Value: 2.3
Row: 1, Col: 3, Value: 2.9
Row: 1, Col: 4, Value: 10.6
Row: 1, Col: 5, Value: 10.6
Row: 1, Col: 6, Value: 52.6
* INCLUDES SHORT-TERM INVESTMENTS
NATURAL GAS PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Dan Pickering,
Portfolio Manager of
Fidelity Select Natural
Gas Portfolio
Q. HOW DID THE FUND PERFORM, DAN?
A. The fund did well. For the six and 12 months ended August 31, 1996, the
fund returned 14.31% and 29.30%, respectively. By comparison, the Standard
& Poor's 500 Index returned 2.96% for the six- month period and 18.73% for
the year.
Q. CAN YOU DESCRIBE THE MARKET BACKDROP FOR NATURAL GAS THAT EXISTED DURING
THE PERIOD?
A. Sure. Natural gas prices were extremely volatile during the period.
Prices went as high as $2.50 per thousand cubic feet but tapered off to
about $1.80. The relatively mild summer months set the stage for a
lower-than-normal demand for cooling and therefore a lower-than-normal
electric utility demand for gas. Fortunately, there were relatively few new
gas wells drilled during the past year, limiting the amount of new supply.
Q. GIVEN THIS CHALLENGING ENVIRONMENT, HOW DID THE FUND MANAGE TO
OUTPERFORM THE MARKET?
A. It's worth noting that, in general, oil and gas stocks trade somewhat
independently of the overall stock market, and the fund's heavy weighting
in them insulated it from the volatility in the market during the past six
months. That said, I continued to focus the fund's investment on two
particular themes: exploration and production companies with a bias toward
fast-growing, mid-cap stocks; and natural gas and power marketing. I made
very few changes to the top holdings in this sector but have emphasized
exploration and production companies over the larger integrated oil and gas
companies. I like the business prospects for these companies and believe
further upward earnings revisions are likely since prices for oil and gas
increased during the period.
Q. WHAT DO YOU MEAN BY "POWER MARKETING"?
A. One of the best ways for utilities to compete is to bring low cost
sources of power, such as gas-generated power, to market. One of the trends
I foresee is that as the electric utilities deregulate, the customer is
going to have the freedom to buy his electricity from a number of competing
sources. Many gas companies are positioning themselves not only to have
physical gas assets such as pipelines and gas production, but also
financial exposure to the gas market through trading and marketing
operations. In addition, gas companies are beginning to establish a
physical and financial presence in the electric industry as well.
Ultimately, they'll have the ability to produce gas in one region, run it
into a power plant in another area and create electricity and sell it in
yet another region. That is my thinking behind some stocks the fund owns
such as PanEnergy and NGC Corp. However, Enron, which I think is positioned
to be a long-term winner in this area and is the largest holding in the
fund, somewhat underperformed its peers during the period.
Q. WHERE ELSE DID YOU FIND OPPORTUNITIES?
A. A couple of the fund's holdings in smaller, fast-growing exploration and
production companies performed well during the period. Belco Oil and Gas
was an initial public offering that was up substantially during the period.
Rutherford-Moran, a natural gas exploration company, was another IPO that
contributed to the fund's results.
Q. THE FUND DOESN'T SEEM TO HAVE A LARGE FOREIGN EXPOSURE . . .
A. That's right. I've found a way to give the fund some international
flavor through domestic holdings such as Pogo and Rutherford without taking
on the currency and other risks that come from investing overseas. In
general, I prefer tilting the fund toward U.S. companies.
Q. WHAT INVESTMENTS PROVED DISAPPOINTING?
A. The fund's holding in TransTexas continued to be a disappointment. Its
fields have been less prolific than I expected and I thought the stock -
which had been down for some time - would bounce back. It hasn't. For the
most part, however, I've been pretty comfortable with the stocks the fund
owns.
Q. WHAT'S YOUR OUTLOOK, DAN?
A. I continue to expect more turbulence. The market for natural gas has
been very volatile and I've focused on growth companies to reduce the
commodity price risk. I've also tried to make the fund less interest rate
sensitive than it was six months ago by cutting the fund's exposure to
local distribution companies. I'd much rather analyze the specific business
prospects of oil and production companies than figure out how interest
rates will behave; I think it's the best way to manage the fund.
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: April 21, 1993
FUND NUMBER: 513
TRADING SYMBOL: FSNGX
SIZE: as of August 31, 1996, more than
$104 million
MANAGER: Daniel Pickering, since 1995;
manager, Fidelity Select Energy Service
Portfolio, since 1994; equity analyst, energy
service and hotel industries, since 1994;
joined Fidelity in 1994
(checkmark)
NATURAL GAS PORTFOLIO
INVESTMENTS AUGUST 31, 1996 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 82.3%
SHARES VALUE (NOTE 1)
ELECTRIC UTILITY - 0.0%
ELECTRIC POWER - 0.0%
AES Corp. (warrants) (a) 188 $ 2,350 00130H11
ENERGY SERVICES - 2.9%
DRILLING - 0.6%
Cliffs Drilling Co. (a) 20,000 570,000 18682C10
UTI Energy Corp. (a) 1,500 22,312 90338710
592,312
OIL & GAS SERVICES - 2.3%
BJ Services Co. (a) 44,300 1,666,788 05548210
Weatherford Enterra, Inc. (a) 26,800 770,500 94707110
2,437,288
TOTAL ENERGY SERVICES 3,029,600
GAS - 15.2%
GAS DISTRIBUTION - 1.7%
Aquila Gas Pipeline Corp. 79,100 968,975 03839B10
K N Energy, Inc. 26,500 910,938 48262010
Public Service Co. of North Carolina, Inc. 150 2,569 74451610
1,882,482
GAS TRANSMISSION - 10.6%
Enron Corp. 140,510 5,637,964 29356110
Leviathan Gas Pipeline Partners LP unit 24,800 998,200 52736710
Sonat, Inc. 65,900 2,907,838 83541510
Williams Companies, Inc. 35,900 1,790,513 96945710
11,334,515
GAS TRANSMISSION & DISTRIBUTION - 2.9%
PanEnergy Corp. 57,650 1,909,655 69792610
Tejas Gas Corp. (a) 34,505 1,199,048 87907510
3,108,703
TOTAL GAS 16,325,700
OIL & GAS - 64.2%
CRUDE PETROLEUM & GAS - 52.6%
Anadarko Petroleum Corp. 99,475 5,247,306 03251110
Apache Corp. 22,525 661,672 03741110
Barrett Resources Corp. (a) 56,600 1,874,875 06848020
Basin Exploration, Inc. (a) 43,500 293,625 07010710
Beau Canada Exploration Ltd. (a) 393,000 574,456 07428010
Belco Oil & Gas Corp. (a) 177,400 4,878,500 07741010
Belden & Blake Corp. (a) 20,000 410,000 07744710
Brown (Tom), Inc. (a) 16,300 260,800 11566020
Burlington Resources, Inc. 69,557 2,964,867 12201410
Chesapeake Energy Corp. (a) 99,300 5,337,375 16516710
Coho Resources, Inc. (a) 25,000 153,125 19248110
Comstock Resources, Inc. (a) 112,500 1,181,250 20576820
Devon Energy Corp. 47,300 1,076,075 25179910
Elan Energy, Inc. (a) 42,700 380,735 28390410
Enron Oil & Gas Co. 147,900 3,826,913 29356210
Flores & Rucks, Inc. (a) 44,100 1,449,788 34039C10
Fortune Petroleum Corp. (a) 100,000 250,000 34968730
HS Resources, Inc. (a) 500 6,375 40429710
Harcor Energy, Inc. (a) 11,000 48,125 41162820
Key Production Co., Inc. (a) 40,000 350,000 49313810
NGC Corp. 81,923 1,239,085 62912110
Noble Affiliates, Inc. 60,450 2,425,556 65489410
Northstar Energy Corp. (a)(b) 20,000 193,678 66703R92
Parker & Parsley Petroleum Co. 30,000 742,500 70101810
Petroleum Securities Australia Ltd. (a) 152,000 666,233 71699M22
SHARES VALUE (NOTE 1)
Petroleum Securities Australia Ltd.
sponsored ADR (a) 15,500 $ 344,875 71667810
Plains Resources, Inc. (a) 82,000 1,117,250 72654050
Pogo Producing Co. 16,700 569,888 73044810
Renaissance Energy Ltd. (a) 73,300 2,062,525 75966610
Rutherford-Moran Oil Corp. (a) 80,100 1,952,438 78328610
Santa Fe Energy Resources, Inc. (a) 53,300 626,275 80201210
Stone Energy Corp. (a) 39,500 775,188 86164210
Swift Energy Co. (a) 63,900 1,589,512 87073810
Texas Meridian Resources Corp. (a) 89,400 1,151,025 88254510
TransTexas Gas Corp. (a) 63,800 701,800 89389510
Triton Energy Ltd. Class A (a) 1,900 87,163 89699W22
Union Texas Petroleum Holdings, Inc. 70,000 1,452,500 90864010
Unit Corp. (a) 137,200 874,650 90921810
United Meridian Corp. (a) 77,500 3,080,625 91086510
Vastar Resources, Inc. 62,700 2,186,662 92238010
Vintage Petroleum, Inc. 44,100 1,113,525 92746010
Wascana Energy, Inc. (a) 21,500 190,919 93690110
56,369,734
OIL & GAS EXPLORATION - 10.6%
Abacan Resource Corp. (a) 275,000 1,478,125 00291910
Chieftain International, Inc. (a) 67,200 1,350,630 16867C10
Cross Timbers Oil Co. 20,000 455,000 22757310
Denbury Resources, Inc. (a) 185,000 1,176,320 24791610
Louisiana Land & Exploration Co. 80,300 4,567,063 54626810
Petro-Canada 1st installment receipt (c) 45,900 313,660 71644E30
Union Pacific Resources Group, Inc. 61,600 1,678,600 90783410
Unocal Corp. 410 14,042 91528910
Zydeco Energy, Inc. (a) 69,500 330,125 98985410
11,363,565
OIL FIELD EQUIPMENT - 0.4%
Drilex International, Inc. (a) 34,000 476,000 26204410
PETROLEUM REFINERS - 0.6%
Coastal Corp. (The) 16,900 669,662 19044110
TOTAL OIL & GAS 68,878,961
TOTAL COMMON STOCKS
(Cost $87,069,581) 88,236,611
REPURCHASE AGREEMENTS - 17.7%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 5.25%, dated
8/30/96 due 9/3/96 $ 19,022,090 19,011,000 69899TYY
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $106,080,581) $ 107,247,611
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 $193,678 or 0.2% of net
assets.
3. Purchased on an installment basis. Market value reflects only those
payments made through August 31, 1996. The remaining installments
aggregating CAD 390,150 are due September 23, 1996 and March 24, 1997.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $229,360,603 and $201,042,228, respectively (see Note 4 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $51,816 for the period (see
Note 5 of Notes to Financial Statements).
The maximum loan and the average daily loan balances during the period for
which loans were outstanding amounted to $12,125,000 and $4,468,400,
respectively. The weighted average interest rate paid was 5.7% (see Note 6
of Notes to Financial Statements).
INCOME TAX INFORMATION
At August 31, 1996, the aggregate cost of investment securities for income
tax purposes was $106,111,972. Net unrealized appreciation aggregated
$1,135,639 of which $5,479,204 related to appreciated investment securities
and $4,343,565 related to depreciated investment securities.
NATURAL GAS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1996 (UNAUDITED)
ASSETS
Investment in $ 107,247,611
securities, at
value (including
repurchase
agreements of
$19,011,000)
(cost
$106,080,581)
- - See
accompanying
schedule
Cash 393
Receivable for 75,219
investments
sold
Receivable for 1,336,469
fund shares sold
Dividends 90,942
receivable
Redemption fees 20,032
receivable
Prepaid expenses 58,746
TOTAL ASSETS 108,829,412
LIABILITIES
Payable for fund $ 4,098,206
shares
redeemed
Accrued 54,801
management
fee
Other payables 209,368
and
accrued
expenses
TOTAL LIABILITIES 4,362,375
NET ASSETS $ 104,467,037
Net Assets
consist of:
Paid in capital $ 100,221,213
Accumulated net (133,398
investment )
(loss)
Accumulated 3,212,194
undistributed net
realized gain
(loss) on
investments and
foreign currency
transactions
Net unrealized 1,167,028
appreciation
(depreciation)
on investments
and assets and
liabilities in
foreign
currencies
NET ASSETS, for $ 104,467,037
8,109,238
shares
outstanding
NET ASSET VALUE $12.88
and redemption
price per share
($104,467,037 (divided by)
8,109,238
shares)
Maximum offering $13.28
price per share
(100/97.00 of
$12.88)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED AUGUST 31, 1996 (UNAUDITED)
INVESTMENT $ 460,267
INCOME
Dividends
Interest 247,713
TOTAL INCOME 707,980
EXPENSES
Management fee $ 294,782
Transfer agent 412,401
fees
Accounting fees 49,198
and expenses
Non-interested 162
trustees'
compensation
Custodian fees 10,169
and expenses
Registration fees 66,433
Audit 25,258
Legal 256
Interest 3,548
Miscellaneous 689
Total expenses 862,896
before
reductions
Expense (19,262 843,634
reductions )
NET INVESTMENT (135,654
INCOME (LOSS) )
REALIZED AND
UNREALIZED GAIN
(LOSS)
Net realized gain
(loss) on:
Investment 3,465,619
securities
Foreign 85 3,465,704
currency
transactions
Change in net
unrealized
appreciation
(depreciation)
on:
Investment (4,398,919
securities )
Assets and (12 (4,398,931
liabilities in ) )
foreign
currencies
NET GAIN (LOSS) (933,227
)
NET INCREASE $ (1,068,881
(DECREASE) IN )
NET ASSETS
RESULTING FROM
OPERATIONS
OTHER $ 311,935
INFORMATION
Sales charges
paid to FDC
Deferred sales $ 1,038
charges
withheld
by FDC
Exchange fees $ 62,948
withheld by FSC
Expense $ 18,559
reductions
Directed
brokerage
arrangements
Custodian 210
interest credits
Transfer agent 493
interest credits
$ 19,262
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS YEAR ENDED
Operations ENDED FEBRUARY 29,
AUGUST 31, 1996 1996
(UNAUDITED)
Net investment $ (135,654 $ 320,851
income (loss) )
Net realized 3,465,704 9,256,256
gain (loss)
Change in net (4,398,931 7,236,487
unrealized )
appreciation
(depreciation)
NET INCREASE (1,068,881 16,813,594
(DECREASE) IN )
NET ASSETS
RESULTING FROM
OPERATIONS
Distributions to (52,511 (323,738
shareholders ) )
From net
investment
income
From net (465,719 -
realized gain )
TOTAL (518,230 (323,738
DISTRIBUTIONS ) )
Share 319,652,649 96,403,538
transactions
Net proceeds
from sales of
shares
Reinvestment of 508,434 314,856
distributions
Cost of shares (275,755,809 (132,986,230
redeemed ) )
Paid in capital 1,420,792 112,239
portion of
redemption fees
NET INCREASE 45,826,066 (36,155,597
(DECREASE) IN )
NET ASSETS
RESULTING FROM
SHARE
TRANSACTIONS
TOTAL 44,238,955 (19,665,741
INCREASE )
(DECREASE) IN
NET ASSETS
NET ASSETS
Beginning of 60,228,082 79,893,823
period
End of period $ 104,467,037 $ 60,228,082
(including
accumulated
undistributed net
investment
(loss) income of
$(133,398)
and $56,526,
respectively)
OTHER
INFORMATION
Shares
Sold 24,271,473 9,263,323
Issued in 41,777 30,032
reinvestment of
distributions
Redeemed (21,507,408 (12,883,616
) )
Net increase 2,805,842 (3,590,261)
(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>
SIX MONTHS YEAR ENDED YEAR ENDED APRIL 21, 1993
ENDED FEBRUARY 29, FEBRUARY 28, (COMMENCEMEN
AUGUST 31, 1996 T OF OPERATIONS)
TO FEBRUARY 28,
SELECTED PER-SHARE DATA D (UNAUDITED) 1996 1995 1994
</TABLE>
Net asset value, $ 11.36 $ 8.98 $ 9.48 $ 10.00
beginning of
period
Income from
Investment
Operations
Net investment (.02) .05 .03 .02
income (loss)
Net realized and 1.46 G 2.36 (.53) (.46)
unrealized gain
(loss)
Total from 1.44 2.41 (.50) (.44)
investment
operations
Less Distributions
From net (.01) (.05) (.02) -
investment
income
From net (.09) - - (.07)
realized gain
In excess of net - - - (.06)
realized gain
Total (.10) (.05) (.02) (.13)
distributions
Redemption fees .18 .02 .02 .05
added to paid in
capital
Net asset value, $ 12.88 $ 11.36 $ 8.98 $ 9.48
end of period
TOTAL RETURN B, C 14.31% 27.10% (5.06) (3.84)%
%
RATIOS AND $ 104,467 $ 60,228 $ 79,894 $ 63,073
SUPPLEMENTAL
DATA
Net assets, end of
period (000
omitted)
Ratio of expenses 1.74% A 1.68% 1.70% 1.94% A
to average net
assets
Ratio of expenses 1.70% A 1.67% 1.66% 1.93% A,
to average net , E E E E
assets after
expense
reductions
Ratio of net (.27)% .46% .30% .17% A
investment A
income (loss) to
average net
assets
Portfolio turnover 493% A 79% 177% 44% A
rate
Average $ .0377
commission
rate F
<TABLE>
<CAPTION>
<S> <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 9 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 9 OF NOTES TO FINANCIAL STATEMENTS). F FOR FISCAL YEARS
BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS REQUIRED TO DISCLOSE
ITS AVERAGE COMMISSION RATE PER SHARE FOR SECURITY TRADES ON WHICH
COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD TO PERIOD
AND FUND TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN VARIOUS
MARKETS WHERE TRADING PRACTICES AND COMMISSION RATE STRUCTURES MAY
DIFFER. G THE AMOUNT SHOWN FOR A SHARE OUTSTANDING DOES NOT
CORRESPOND WITH THE AGGREGATE NET LOSS ON INVESTMENTS FOR THE PERIOD
ENDED DUE TO THE TIMING OF SALES AND REPURCHASES OF FUND SHARES IN
RELATION TO FLUCTUATING MARKET VALUES OF THE INVESTMENTS OF THE FUND.
</TABLE>
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. A fund's total return includes
changes in 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 6 PAST 1 PAST 5 PAST
AUGUST 31, 1996 MONTH YEAR YEARS 10
S YEARS
PRECIOUS METALS AND -3.58% 13.36% 98.88% 134.89%
MINERALS
PRECIOUS METALS AND -6.47% 9.96% 92.91% 127.84%
MINERALS
(INCL. 3% SALES CHARGE)
S&P 500 2.96% 18.73% 89.14% 251.21%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one, five, or 10 years. You
can compare these figures to the performance of the S&P 500 - a widely
recognized, unmanaged index of common stocks. This benchmark reflects
reinvestment of dividends and capital gains, if any, but does not reflect
any sales charges, brokerage commissions, or other costs of investing.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
AUGUST 31, 1996 YEAR YEARS YEARS
PRECIOUS METALS AND MINERALS 13.36% 14.74% 8.91%
PRECIOUS METALS AND MINERALS 9.96% 14.04% 8.58%
(INCL. 3% SALES CHARGE)
S&P 500 18.73% 13.59% 13.34%
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
IMAHDR PRASUN SHR__CHT 19960831 19960910 150529 S00000000000001
Precious Metals SP Standard & Poor 500
00061 SP001
1986/08/31 9700.00 10000.00
1986/09/30 10967.78 9173.00
1986/10/31 10004.66 9702.28
1986/11/30 11036.58 9938.05
1986/12/31 10957.95 9684.63
1987/01/31 12274.87 10989.15
1987/02/28 13139.72 11423.22
1987/03/31 16893.92 11753.35
1987/04/30 18063.42 11648.74
1987/05/31 16451.67 11750.09
1987/06/30 16215.81 12343.47
1987/07/31 19517.93 12969.28
1987/08/31 19006.89 13453.04
1987/09/30 19596.56 13158.41
1987/10/31 14191.29 10324.09
1987/11/30 15979.94 9473.39
1987/12/31 15068.08 10194.31
1988/01/31 12420.71 10623.49
1988/02/29 12440.62 11118.55
1988/03/31 13475.68 10774.98
1988/04/30 13027.82 10894.59
1988/05/31 13097.48 10989.37
1988/06/30 12619.76 11493.78
1988/07/31 12699.38 11450.10
1988/08/31 11942.99 11060.80
1988/09/30 11136.84 11531.99
1988/10/31 11544.89 11852.58
1988/11/30 11972.85 11683.09
1988/12/31 11472.85 11887.54
1989/01/31 11950.02 12757.71
1989/02/28 12333.83 12440.04
1989/03/31 12333.83 12729.90
1989/04/30 11773.67 13390.58
1989/05/31 11213.52 13932.90
1989/06/30 12095.25 13853.48
1989/07/31 12427.19 15104.45
1989/08/31 12676.15 15400.50
1989/09/30 13122.20 15337.35
1989/10/31 13111.83 14981.53
1989/11/30 14781.93 15287.15
1989/12/31 15162.81 15654.04
1990/01/31 16370.37 14603.66
1990/02/28 14963.30 14792.04
1990/03/31 14312.26 15184.03
1990/04/30 12842.19 14804.43
1990/05/31 13577.22 16247.86
1990/06/30 12590.17 16137.38
1990/07/31 13356.71 16085.74
1990/08/31 13493.22 14631.59
1990/09/30 13188.70 13919.03
1990/10/31 11708.12 13859.18
1990/11/30 11498.11 14754.48
1990/12/31 11967.47 15166.13
1991/01/31 10668.51 15827.37
1991/02/28 11626.76 16959.03
1991/03/31 11403.17 17369.44
1991/04/30 11371.23 17411.13
1991/05/31 12010.06 18163.29
1991/06/30 12797.95 17331.41
1991/07/31 12797.95 18139.05
1991/08/31 11456.40 18568.95
1991/09/30 11690.64 18258.85
1991/10/31 12478.54 18503.51
1991/11/30 12872.48 17757.82
1991/12/31 12151.47 19789.32
1992/01/31 12409.33 19421.24
1992/02/29 11764.69 19673.71
1992/03/31 11302.70 19290.07
1992/04/30 10636.57 19857.20
1992/05/31 11334.93 19954.50
1992/06/30 11398.88 19657.18
1992/07/31 11549.57 20461.16
1992/08/31 11032.91 20041.71
1992/09/30 10580.83 20278.20
1992/10/31 9902.71 20349.17
1992/11/30 9321.46 21043.08
1992/12/31 9494.43 21301.91
1993/01/31 9724.40 21480.84
1993/02/28 10797.59 21772.98
1993/03/31 12265.01 22232.39
1993/04/30 14247.12 21694.37
1993/05/31 16130.68 22275.78
1993/06/30 16393.50 22340.38
1993/07/31 18528.93 22251.02
1993/08/31 16667.27 23094.33
1993/09/30 15353.16 22916.50
1993/10/31 17532.39 23390.88
1993/11/30 17499.54 23168.66
1993/12/31 20092.51 23449.00
1994/01/31 19261.32 24246.27
1994/02/28 18419.05 23589.20
1994/03/31 18230.65 22560.71
1994/04/30 18231.39 22849.48
1994/05/31 18264.65 23224.22
1994/06/30 18630.61 22655.22
1994/07/31 19340.35 23398.31
1994/08/31 20715.47 24357.64
1994/09/30 22301.29 23760.88
1994/10/31 21436.29 24295.50
1994/11/30 19140.74 23410.66
1994/12/31 19863.25 23757.84
1995/01/31 16402.91 24373.88
1995/02/28 17155.65 25323.73
1995/03/31 18897.05 26071.03
1995/04/30 19054.34 26838.83
1995/05/31 18818.41 27911.57
1995/06/30 19043.11 28559.96
1995/07/31 19829.55 29507.01
1995/08/31 20099.19 29581.07
1995/09/30 20155.36 30829.39
1995/10/31 17638.75 30719.33
1995/11/30 18874.59 32067.91
1995/12/31 19199.96 32685.54
1996/01/31 23224.85 33798.15
1996/02/29 23630.72 34111.46
1996/03/31 23495.43 34439.95
1996/04/30 24027.38 34947.60
1996/05/31 25417.49 35848.90
1996/06/30 21880.06 35985.48
1996/07/31 21608.82 34395.64
1996/08/30 22784.20 35121.05
IMATRL PRASUN SHR__CHT 19960831 19960910 150534 R00000000000123
Let's say hypothetically that $10,000 was invested in Fidelity Select
Precious Metals and Minerals Portfolio on August 31, 1986, and a 3% sales
charge was paid. By August 31, 1996, the investment would have grown to
$22,784 - a 127.84% increase. That compares to $10,000 invested in the S&P
500, which would have grown to $35,121 over the same period - a 251.21%
increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST 31, 1996
% OF FUND'S
INVESTMENTS
Newmont Mining Corp. 9.6
Bre-X Minerals Ltd. 8.3
Vaal Reefs Exploration & Mining Co. Ltd. ADR 5.3
Barrick Gold Corp. 5.1
Getchell Gold Corp. 5.0
Euro-Nevada Mining Corp. Ltd. 4.6
Agnico Eagle Mines Ltd. 4.4
Western Deep Levels Ltd. ADR 4.2
De Beers Consolidated Mines Ltd. ADR 4.1
Gold Fields of South Africa Ltd. sponsored ADR 3.6
TOP INDUSTRIES AS OF AUGUST 31, 1996
Gold Ores (South Africa) 33.7%
Gold Ores (Canada) 32.4%
Gold Ores (U.S.) 18.1%
Gold & Silver Ores
(Australia) 4.5%
Gold Ores (Australia) 2.1%
All Others 9.2% *
Row: 1, Col: 1, Value: 9.199999999999999
Row: 1, Col: 2, Value: 2.1
Row: 1, Col: 3, Value: 4.5
Row: 1, Col: 4, Value: 18.1
Row: 1, Col: 5, Value: 32.4
Row: 1, Col: 6, Value: 33.7
* INCLUDES SHORT-TERM INVESTMENTS
PRECIOUS METALS AND MINERALS PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
NOTE TO SHAREHOLDERS: Larry Rakers became Portfolio Manager of Fidelity
Select Precious Metals and Minerals Portfolio on July 1, 1996.
Q. LARRY, HOW HAS THE FUND PERFORMED?
A. For the six months ended August 31, 1996, the fund had a total return of
- -3.58%, while the Standard & Poor's 500 Index returned 2.96%. For the 12
months ended August 31, 1996, the fund returned 13.36% and the S&P 500
returned 18.73%.
Q. WHAT FACTORS CONTRIBUTED TO THE FUND'S PERFORMANCE OVER THE PAST SIX
MONTHS?
A. The fund had a negative return during the period mainly because of the
poor performance of its South African gold stocks. These stocks are
sensitive in terms of profit and cash flow to the price of gold because
they are high-cost producers. Unfortunately, the price of gold fell during
much of 1996. In addition, there were some operations problems for some
companies, such as Driefontein, which had a fire in the shaft of one of its
mines.
Q. WHAT WERE THE REASONS BEHIND THE DROP IN THE PRICE OF GOLD?
A. First of all, summer historically is a season when the price of gold
tends to be weak. Second, there was a big central bank sale of gold in
February and March. Specifically, Belgium sold the equivalent of one-tenth
of the world's usual annual mine supply. The added supply dampened gold
prices. The Belgian government said it was trying to bring its gold
holdings as a percentage of total reserves in line with neighboring
countries, as part of the process of creating a European monetary union.
Q. AT THE SAME TIME, THERE MUST HAVE BEEN SOME STOCKS THAT TURNED IN GOOD
PERFORMANCE FOR THE FUND . . .
A. The stocks that did well were exploration companies that showed strong
growth in production and reserves. Among those were Getchell Gold. Over the
past few quarters, this company announced new finds, and as a result the
stock has gone up. This Nevada-based company used to be run by a fertilizer
company, but installed a new management team with a mining background that
has come in and started to turn the company around. Euro-Nevada and Franco
Nevada also have done well. These companies used to focus exclusively on
buying interests in gold mines, but they've expanded into the exploration
business and have posted strong resource growth.
Q. WHAT CHANGES HAVE YOU MADE SINCE TAKING OVER THE FUND?
A. I've maintained a similar strategy to the one employed by the previous
manager, including a substantial stake in South Africa. Going forward, I
may reduce South African investments, looking to hold on to those companies
that are pursuing some kind of restructuring or cost-cutting strategy. I'll
probably try to avoid the very high-cost producers in South Africa because
they are especially susceptible to any labor price pressure. If I do reduce
the fund's investments in South Africa, I'll probably replace them with
more Australian growth stocks, because that's a region that might hold some
promise. Although the fund's foreign investments involve greater risks than
U.S. investments, I feel the potential gains make them worth the additional
risk.
Q. HOW WOULD YOU DESCRIBE YOUR STOCK PICKING APPROACH?
A. For this fund, my approach is two-pronged. First, as I have mentioned in
regards to the fund's South African investments, I look for companies that
are pursuing some kind of restructuring or cost-cutting program. For
example, some companies presently are talking about merging adjacent mines,
combining the infrastructures to lower costs. In the U.S., Australia and
elsewhere, I tend to look for those companies that are growing production
and reserves. By doing so, I hope to insulate the fund somewhat from
fluctuations in the price of gold. How do I go about finding companies that
are doing this? By visiting the properties and asking company geologists
about the properties' exploration potential, comparing them and choosing
those I believe will post the strongest growth.
Q. WHAT'S YOUR OUTLOOK FOR THE NEXT SIX MONTHS?
A. I believe seasonal gold trends will be in our favor. As a result, the
wind may be more at our backs in terms of gold price increases. I'll be
looking closely at what's going on in South Africa, especially efforts
there to restructure mining methods and techniques. I'm leaning toward
reducing the fund's stake there because there is an element of political
risk and a lack of growth one doesn't see elsewhere. Without growth, these
stocks might not do well if the price of gold doesn't resume an upward
trend.
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: July 14, 1981
FUND NUMBER: 061
TRADING SYMBOL: FDPMX
SIZE: as of August 31, 1996, more than
$339 million
MANAGER: Larry Rakers, since July 1996;
manager, Fidelity Select American Gold
Portfolio, since 1995; Fidelity Select Paper
and Forest Products Portfolio, since February
1996; joined Fidelity in 1993
(checkmark)
PRECIOUS METALS AND MINERALS PORTFOLIO
INVESTMENTS AUGUST 31, 1996 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 97.1%
SHARES VALUE (NOTE 1)
AUSTRALIA - 7.3%
METALS & MINING - 0.7%
METAL MINING SERVICES - 0.7%
Acacia Resources Ltd. (a) 1,050,000 $ 2,321,865 00399822
PRECIOUS METALS - 6.6%
GOLD & SILVER ORES - 4.5%
Normandy Mining Ltd. 4,995,786 7,890,844 65699J23
North Flinders Mines, Ltd. 499,060 3,310,714 65940091
Plutonic Resources Ltd. 625,000 3,134,320 72999192
Sons of Gwalia NL 100,000 646,805 83568810
14,982,683
GOLD ORES - 2.1%
Great Central Mines NL
sponsored ADR 90,000 821,250 39029010
Great Central Mines NL 1,805,000 5,559,445 39029092
Leo Shield Exploration NL 12,000 5,307 52699L22
Metex Resources NL (a) 300,000 52,124 59199K22
Menzies Gold NL (a) 1,000,000 450,158 61899H22
Ross Mining NL 100,000 108,986 77899722
6,997,270
TOTAL PRECIOUS METALS 21,979,953
TOTAL AUSTRALIA 24,301,818
CANADA - 33.8%
HOLDING COMPANIES - 0.0%
Bolivar Goldfields Ltd. (a) 124,000 126,870 09760Q10
METALS & MINING - 1.0%
COPPER ORES - 0.7%
Arequipa Resources Ltd. (a) 105,000 2,294,537 03990710
METAL MINING - 0.3%
Dayton Mining Corp. (a) 72,500 524,575 23990210
First Dynasty Mines Ltd. (a) 100,000 336,196 31997410
860,771
TOTAL METALS & MINING 3,155,308
PRECIOUS METALS - 32.8%
GOLD & SILVER ORES - 0.4%
Greenstone Resources Ltd. (a) 51,700 795,385 39573W10
Minorca Resources Ltd. (a) 282,000 608,003 60393110
1,403,388
GOLD ORES - 32.4%
Agnico Eagle Mines Ltd. 841,100 14,691,972 00847410
Barrick Gold Corp. 635,000 17,148,365 06790110
Bre-X Minerals Ltd. (a) 1,550,000 27,867,714 10625K10
Cartaway Resources Corp. (a) 150,000 203,910 14590210
Eldorado Gold Corp. (a) 200,000 1,257,080 28490110
Euro-Nevada Mining Corp. Ltd. 618,400 15,366,782 29870P10
Franco Nevada Mining Corp. 256,000 8,606,614 35186010
Geomaque Explorations Ltd. (a) 32,900 88,968 37247E10
Indochina Goldfields Ltd. (a)(b) 34,000 283,282 45591392
Kinross Gold Corp. (a) 725,000 5,749,132 49690210
Meridian Gold, Inc. Installment Receipt (c) 2,212,000 5,658,323 58997520
Metallica Resources, Inc. (a) 177,500 661,612 59125J10
Mountain Province Mining, Inc. (a) 200,000 745,478 62426E10
Nevsun Resources Ltd. (a) 101,300 888,434 64156L10
SHARES VALUE (NOTE 1)
Orvana Minerals Corp. (a) 647,800 $ 3,953,320 68759M10
Prime Resources Group, Inc. 288,000 2,231,171 74157L10
South Pacific Resources, Inc. (a) 85,000 444,181 83890320
Sudbury Contact Mines Ltd. (a) 172,600 1,608,368 86462610
TVI Pacific, Inc. (a) 1,025,000 1,251,051 87291710
108,705,757
TOTAL PRECIOUS METALS 110,109,145
TOTAL CANADA 113,391,323
GHANA - 1.3%
PRECIOUS METALS - 1.3%
GOLD ORES - 1.3%
Ashanti Goldfields Co. Ltd. GDR 236,300 4,401,088 04374320
SOUTH AFRICA - 35.0%
METALS & MINING - 1.3%
METAL MINING - 0.4%
Target Exploration Co. Ltd. Class R (a) 390,000 1,258,905 91499N22
MISCELLANEOUS METAL ORES - 0.9%
Anglo American Platinum Ltd. 316,800 2,045,236 03499K22
Impala Platinum Holdings Ltd. ADR 88,300 1,147,900 45255320
3,193,136
TOTAL METALS & MINING 4,452,041
PRECIOUS METALS - 33.7%
GOLD ORES - 33.7%
Buffelsfontein Gold Mines Ltd.
sponsored ADR (a) 176,300 881,500 11987140
Buffelsfontein Gold Mines Ltd. (a)(d) 893,200 4,652,912 11987192
De Beers Consolidated Mines Ltd. ADR 442,500 13,662,188 24025330
Driefontein Consolidated Ltd.:
ADR 773,500 9,958,813 26202650
Ord. 136,500 1,747,273 26202630
Free State Consolidated Gold
Mines Ltd. ADR 854,100 9,501,863 35614220
Gold Fields of South Africa Ltd. 10,000 291,630 38059730
Gold Fields of South Africa Ltd.
sponsored ADR 415,000 12,138,750 38059750
Harmony Gold Mining Co. Ltd. Class R 100,000 1,001,781 41321610
Hartebeesfontein Gold Mining Co. Ltd.
Class R 717,500 2,148,347 41619830
Kloof Gold Mining Co. Ltd.
sponsored ADR 760,000 7,220,000 49874660
Oryx Gold Holdings Ltd. (a) 900,000 1,803,206 68799L22
Rustenberg Platinum Holdings Ltd. ADR (a) 317,708 5,281,896 78307820
Unisel Gold Mines Ltd. 123,800 485,058 90917010
Vaal Reefs Exploration & Mining Co.
Ltd. ADR 2,118,500 17,742,438 91850640
Western Areas Gold Mining Ltd. Ord. 580,000 7,747,106 95765410
Western Deep Levels Ltd.:
ADR 376,000 14,006,000 95807720
Ord. 50,000 1,875,557 95807710
Winkelhaak Mines Ltd. ADR 94,000 716,750 97420420
112,863,068
TOTAL SOUTH AFRICA 117,315,109
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
UNITED STATES OF AMERICA - 19.7%
PRECIOUS METALS - 18.1%
GOLD ORES - 18.1%
Getchell Gold Corp. (a) 383,000 $ 16,756,250 37426510
Newmont Mining Corp. 610,000 32,253,750 65163910
Stillwater Mining Co. (a) 206,900 4,241,450 86074Q10
Stillwater Mining Co. (a)(b) 366,600 7,515,300 86074Q90
60,766,750
SECURITIES INDUSTRY - 1.6%
INVESTMENT MANAGERS - 1.6%
Pioneer Group, Inc. 200,000 5,225,000 72368410
TOTAL UNITED STATES OF AMERICA 65,991,750
TOTAL COMMON STOCKS
(Cost $271,445,444) 325,401,088
REPURCHASE AGREEMENTS - 2.9%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 5.25%, dated
8/30/96 due 9/3/96 $ 9,795,711 9,790,000 69899TYY
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $281,235,444) $ 335,191,088
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 $7,798,582 or 2.3% of net
assets.
3. Purchased on an installment basis. Market value reflects only those
payments made through August 31, 1996. The remaining installment
aggregating CAD 5,530,000 is due July 31, 1997.
4. 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 VALUE
AFFILIATE COST COST INCOME
Buffelsfontein Gold Mines Ltd. $ 1,073,541 $ - $ - $ 4,652,912
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $51,158,663 and $139,513,970, respectively (see Note 4 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $25,270 for the period (see
Note 5 of Notes to Financial Statements).
The maximum loan and the average daily loan balances during the period for
which loans were outstanding amounted to $6,590,000 and $4,105,250,
respectively. The weighted average interest rate paid was 5.7% (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:
South Africa 35.0%
Canada 33.8
United States 22.6
Australia 7.3
Ghana 1.3
TOTAL 100.0%
INCOME TAX INFORMATION
At August 31, 1996, the aggregate cost of investment securities for income
tax purposes was $282,849,757. Net unrealized appreciation aggregated
$52,341,331, of which $75,627,788 related to appreciated investment
securities and $23,286,457 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.
PRECIOUS METALS AND MINERALS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1996 (UNAUDITED)
ASSETS
Investment in $ 335,191,088
securities, at
value (including
repurchase
agreements of
$9,790,000)
(cost
$281,235,444)
- - See
accompanying
schedule
Cash 278
Receivable for 846,062
investments
sold
Receivable for 5,473,341
fund shares sold
Dividends 1,453,713
receivable
Redemption fees 5,768
receivable
Prepaid expenses 37,553
TOTAL ASSETS 343,007,803
LIABILITIES
Payable for fund $ 2,755,974
shares
redeemed
Accrued 167,612
management
fee
Other payables 341,627
and
accrued
expenses
TOTAL LIABILITIES 3,265,213
NET ASSETS $ 339,742,590
Net Assets
consist of:
Paid in capital $ 293,581,826
Distributions in (78,296
excess of net )
investment
income
Accumulated (7,716,971
undistributed net )
realized gain
(loss) on
investments and
foreign currency
transactions
Net unrealized 53,956,031
appreciation
(depreciation)
on investments
and assets and
liabilities in
foreign
currencies
NET ASSETS, for $ 339,742,590
16,848,780
shares
outstanding
NET ASSET VALUE $20.16
and redemption
price per share
($339,742,590 (divided by)
16,848,780
shares)
Maximum offering $20.78
price per share
(100/97.00 of
$20.16)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED AUGUST 31, 1996 (UNAUDITED)
INVESTMENT $ 2,748,228
INCOME
Dividends
Interest (including 313,213
income on
securities
loaned of $282)
TOTAL INCOME 3,061,441
EXPENSES
Management fee $ 1,153,208
Transfer agent 1,483,094
fees
Accounting and 191,202
security lending
fees
Non-interested 733
trustees'
compensation
Custodian fees 53,874
and expenses
Registration fees 37,553
Audit 15,162
Legal 1,505
Interest 2,579
Reports to 29,042
shareholders
Miscellaneous 2,559
Total expenses 2,970,511
before
reductions
Expense (7,211 2,963,300
reductions )
NET INVESTMENT 98,141
INCOME
REALIZED AND
UNREALIZED GAIN
(LOSS)
Net realized gain
(loss) on:
Investment 10,417,924
securities
(including
realized loss of
$467,365 on
sale of
investments in
precious metals)
Foreign 878 10,418,802
currency
transactions
Change in net
unrealized
appreciation
(depreciation)
on:
Investment (26,800,875
securities )
Assets and 821 (26,800,054
liabilities in )
foreign
currencies
NET GAIN (LOSS) (16,381,252
)
NET INCREASE $ (16,283,111
(DECREASE) IN )
NET ASSETS
RESULTING FROM
OPERATIONS
OTHER $ 407,211
INFORMATION
Sales charges
paid to FDC
Deferred sales $ 21,749
charges
withheld
by FDC
Exchange fees $ 88,245
withheld by FSC
Expense $ 4,559
reductions
Directed
brokerage
arrangements
Custodian 2,180
interest credits
Transfer agent 472
interest credits
$ 7,211
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS YEAR ENDED
ENDED FEBRUARY 29,
AUGUST 31, 1996 1996
(UNAUDITED)
Operations $ 98,141 $ 1,477,464
Net investment
income
Net realized 10,418,802 29,509,771
gain (loss)
Change in net (26,800,054 86,598,754
unrealized )
appreciation
(depreciation)
NET INCREASE (16,283,111 117,585,989
(DECREASE) IN )
NET ASSETS
RESULTING
FROM
OPERATIONS
Distributions to (511,993 (1,115,809
shareholders ) )
From net
investment
income
In excess of net (511,039 -
investment )
income
TOTAL (1,023,032 (1,115,809
DISTRIBUTIONS ) )
Share 235,281,248 820,033,799
transactions
Net proceeds
from sales of
shares
Reinvestment of 1,004,449 1,089,810
distributions
Cost of shares (347,629,361 (837,693,561
redeemed ) )
Paid in capital 1,196,512 3,091,710
portion of
redemption fees
NET INCREASE (110,147,152 (13,478,242
(DECREASE) IN ) )
NET ASSETS
RESULTING
FROM SHARE
TRANSACTIONS
TOTAL (127,453,295 102,991,938
INCREASE )
(DECREASE) IN
NET ASSETS
NET ASSETS
Beginning of 467,195,885 364,203,947
period
End of period $ 339,742,590 $ 467,195,885
(including
(over) under
distribution of
net investment
income of
$(78,296) and
$846,595,
respectively)
OTHER
INFORMATION
Shares
Sold 11,477,545 44,966,074
Issued in 48,974 63,583
reinvestment of
distributions
Redeemed (16,963,978 (46,598,892
) )
Net increase (5,437,459) (1,569,235)
(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> <C>
SIX MONTHS YEAR ENDED YEARS ENDED FEBRUARY 28, TEN MONTHS YEAR ENDED
ENDED FEBRUARY 29, ENDED APRIL 30,
AUGUST 31, 1996 FEBRUARY 28,
SELECTED PER-SHARE DATA D (UNAUDITED) 1996 1995 1994 1993 1992
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Net asset value, $ 20.96 $ 15.27 $ 16.62 $ 9.86 $ 9.90 $ 10.68
beginning of
period
Income from
Investment
Operations
Net investment .01 .07 .17 .21 .09 .10
income
Net realized and (.82) 5.54 (1.42) 6.48 (.05) (.91)
unrealized gain
(loss)
Total from (.81) 5.61 (1.25) 6.69 .04 (.81)
investment
operations
Less Distributions
From net (.03) (.06) (.18) (.19) (.17) (.10)
investment
income
In excess of net (.02) - (.05) (.02) - -
investment
income
Total (.05) (.06) (.23) (.21) (.17) (.10)
distributions
Redemption fees .06 .14 .13 .28 .09 .13
added to paid in
capital
Net asset value, $ 20.16 $ 20.96 $ 15.27 $ 16.62 $ 9.86 $ 9.90
end of period
TOTAL RETURN B, C (3.58)% 37.74% (6.86)% 70.58% 1.51% (6.46)%
RATIOS AND
SUPPLEMENTAL
DATA
Net assets, end of $ 339,743 $ 467,196 $ 364,204 $ 409,212 $ 137,922 $ 130,002
period (000
omitted)
Ratio of expenses 1.54% A 1.52% 1.46% 1.55% 1.73% A 1.81%
to average net
assets
Ratio of net .05% A .39% .99% 1.38% 1.12% A .92%
investment
income to
average net
assets
Portfolio turnover 27% A 53% 43% 73% 36% A 44%
rate
Average $ .0152
commission
rate E
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <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 9 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 FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND
IS REQUIRED TO DISCLOSE ITS AVERAGE
COMMISSION RATE PER SHARE FOR SECURITY TRADES ON WHICH COMMISSIONS
ARE CHARGED. THIS AMOUNT MAY
VARY FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE
MIX OF TRADES EXECUTED IN VARIOUS MARKETS
WHERE TRADING PRACTICES AND COMMISSION RATE STRUCTURES MAY DIFFER.
</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. A fund's total return includes
changes in 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 6 PAST 1 PAST 5 PAST 10
AUGUST 31, 1996 MONTH YEAR YEARS YEARS
S
UTILITIES GROWTH 0.23% 12.40% 69.96% 148.42%
UTILITIES GROWTH -2.77% 9.03% 64.86% 140.97%
(INCL. 3% SALES CHARGE)
S&P 500 2.96% 18.73% 89.14% 251.21%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one, five, or 10 years. You
can compare these figures to the performance of the S&P 500 - a widely
recognized, unmanaged index of common stocks. This benchmark reflects
reinvestment of dividends and capital gains, if any, but does not reflect
any sales charges, brokerage commissions, or other costs of investing.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
AUGUST 31, 1996 YEAR YEARS YEARS
UTILITIES GROWTH 12.40% 11.19% 9.53%
UTILITIES GROWTH 9.03% 10.52% 9.19%
(INCL. 3% SALES CHARGE)
S&P 500 18.73% 13.59% 13.34%
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
IMAHDR PRASUN SHR__CHT 19960831 19960910 154806 S00000000000001
Utilities Growth SP Standard & Poor 500
00065 SP001
1986/08/31 9700.00 10000.00
1986/09/30 8627.59 9173.00
1986/10/31 9030.15 9702.28
1986/11/30 9110.66 9938.05
1986/12/31 8795.05 9684.63
1987/01/31 9506.77 10989.15
1987/02/28 9171.85 11423.22
1987/03/31 8988.28 11753.35
1987/04/30 8473.01 11648.74
1987/05/31 8337.75 11750.09
1987/06/30 8634.03 12343.47
1987/07/31 8514.87 12969.28
1987/08/31 8782.17 13453.04
1987/09/30 8711.32 13158.41
1987/10/31 8186.39 10324.09
1987/11/30 7912.65 9473.39
1987/12/31 7980.99 10194.31
1988/01/31 8670.70 10623.49
1988/02/29 8602.75 11118.55
1988/03/31 8358.12 10774.98
1988/04/30 8381.91 10894.59
1988/05/31 8643.52 10989.37
1988/06/30 8871.16 11493.78
1988/07/31 8843.00 11450.10
1988/08/31 8829.02 11060.80
1988/09/30 9136.61 11531.99
1988/10/31 9328.85 11852.58
1988/11/30 9311.37 11683.09
1988/12/31 9294.36 11887.54
1989/01/31 9732.16 12757.71
1989/02/28 9671.16 12440.04
1989/03/31 9836.23 12729.90
1989/04/30 10342.22 13390.58
1989/05/31 10833.85 13932.90
1989/06/30 11107.50 13853.48
1989/07/31 11715.77 15104.45
1989/08/31 11767.39 15400.50
1989/09/30 11936.97 15337.35
1989/10/31 11881.67 14981.53
1989/11/30 12272.44 15287.15
1989/12/31 12921.27 15654.04
1990/01/31 12283.50 14603.66
1990/02/28 12261.38 14792.04
1990/03/31 12195.02 15184.03
1990/04/30 11686.28 14804.43
1990/05/31 12294.56 16247.86
1990/06/30 12440.25 16137.38
1990/07/31 12542.37 16085.74
1990/08/31 11853.98 14631.59
1990/09/30 11884.24 13919.03
1990/10/31 12493.20 13859.18
1990/11/30 12822.27 14754.48
1990/12/31 12992.92 15166.13
1991/01/31 12935.63 15827.37
1991/02/28 13493.23 16959.03
1991/03/31 13646.00 17369.44
1991/04/30 13584.90 17411.13
1991/05/31 13588.71 18163.29
1991/06/30 13423.88 17331.41
1991/07/31 13860.75 18139.05
1991/08/31 14178.48 18568.95
1991/09/30 14615.35 18258.85
1991/10/31 14817.90 18503.51
1991/11/30 14988.67 17757.82
1991/12/31 15725.07 19789.32
1992/01/31 15241.04 19421.24
1992/02/29 15129.33 19673.71
1992/03/31 14972.12 19290.07
1992/04/30 15381.70 19857.20
1992/05/31 15679.57 19954.50
1992/06/30 15860.95 19657.18
1992/07/31 16704.30 20461.16
1992/08/31 16695.74 20041.71
1992/09/30 16785.64 20278.20
1992/10/31 16781.36 20349.17
1992/11/30 16896.94 21043.08
1992/12/31 17390.73 21301.91
1993/01/31 17686.55 21480.84
1993/02/28 18596.42 21772.98
1993/03/31 19098.42 22232.39
1993/04/30 18994.04 21694.37
1993/05/31 19034.78 22275.78
1993/06/30 19763.58 22340.38
1993/07/31 19989.92 22251.02
1993/08/31 20859.04 23094.33
1993/09/30 20859.04 22916.50
1993/10/31 20646.29 23390.88
1993/11/30 19636.83 23168.66
1993/12/31 19572.34 23449.00
1994/01/31 19973.37 24246.27
1994/02/28 19067.15 23589.20
1994/03/31 18379.67 22560.71
1994/04/30 18908.37 22849.48
1994/05/31 18530.84 23224.22
1994/06/30 18472.35 22655.22
1994/07/31 19004.09 23398.31
1994/08/31 18929.64 24357.64
1994/09/30 18445.77 23760.88
1994/10/31 18679.73 24295.50
1994/11/30 18004.43 23410.66
1994/12/31 18121.89 23757.84
1995/01/31 18861.45 24373.88
1995/02/28 19107.97 25323.73
1995/03/31 19184.66 26071.03
1995/04/30 19853.40 26838.83
1995/05/31 20160.61 27911.57
1995/06/30 20358.10 28559.96
1995/07/31 20906.69 29507.01
1995/08/31 21438.82 29581.07
1995/09/30 22459.19 30829.39
1995/10/31 22678.62 30719.33
1995/11/30 23177.84 32067.91
1995/12/31 24353.92 32685.54
1996/01/31 24610.92 33798.15
1996/02/29 24041.05 34111.46
1996/03/31 23828.74 34439.95
1996/04/30 24790.85 34947.60
1996/05/31 24808.79 35848.90
1996/06/30 25191.57 35985.48
1996/07/31 24091.08 34395.64
1996/08/30 24097.06 35121.05
IMATRL PRASUN SHR__CHT 19960831 19960910 154811 R00000000000123
Let's say hypothetically that $10,000 was invested in Fidelity Select
Utilities Growth Portfolio on August 31, 1986, and a 3% sales charge was
paid. By August 31, 1996, the investment would have grown to $24,097 - a
140.97% increase. That compares to $10,000 invested in the S&P 500, which
would have grown to $35,121 over the same period - a 251.21% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST 31, 1996
% OF FUND'S
INVESTMENTS
Pacific Telesis Group 5.6
SBC Communications, Inc. 5.5
BellSouth Corp. 5.5
Ameritech Corp. 5.4
AirTouch Communications, Inc. 5.3
GTE Corp. 5.0
AT&T Corp. 5.0
NYNEX Corp. 4.9
Bell Atlantic Corp. 4.5
U.S. West, Inc. 3.7
TOP INDUSTRIES AS OF AUGUST 31, 1996
Telephone Services
52.3%
Gas Transmission 8.9%
Gas Transmission
& Distribution 8.7%
Gas Distribution 7.0%
Cellular & Communication
Services 5.8%
All Others 17.3% *
Row: 1, Col: 1, Value: 17.3
Row: 1, Col: 2, Value: 5.8
Row: 1, Col: 3, Value: 7.0
Row: 1, Col: 4, Value: 8.699999999999999
Row: 1, Col: 5, Value: 8.9
Row: 1, Col: 6, Value: 52.3
* 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 six and 12 months ended August 31, 1996, the fund had total
returns of 0.23% and 12.40%, respectively, while the Standard & Poor's 500
Index returned 2.96% and 18.73%, respectively.
Q. LET'S TALK ABOUT THE INVESTING ENVIRONMENT FOR UTILITY STOCKS OVER THE
PAST SIX MONTHS.
A. In general, interest rates and the bond market tend to influence utility
stocks fairly strongly. When bonds do well, so do stocks in the utility
sectors. When bonds falter, utility stocks often do, too. The past six
months have seen a difficult bond market environment. At the beginning of
the year, sentiment in the market reflected the belief that the economy was
slowing, that inflation posed little threat and that - most importantly -
the Federal Reserve Board would continue the reductions in interest rates
it had pursued through much of 1995 and the beginning of 1996. However,
starting in February, statistics indicating stronger-than-expected economic
growth started to change that sentiment. The market reflected the fear that
economic strength would encourage the Fed to increase interest rates
instead. As a result, yields in the bond market rose, bond prices fell and
utility stocks dropped along with bonds. Especially affected were electric
utility stocks, which are historically the highest-yielding utility stocks
and typically move more in tandem with bonds than do gas or telephone
stocks.
Q. AT THE SAME TIME, THERE MUST HAVE BEEN OTHER FACTORS THAT AFFECTED THE
INDIVIDUAL UTILITY SECTORS . . .
A. Deregulation remains a major influence on utility companies and their
stocks. The gas, electric and phone sectors all are undergoing some form of
deregulation. One of the main concerns is timing. When will the rules
change within these sectors? Another question is about what the specific
rules will be. In the phone sector, for instance, there has been
uncertainty as to the timing and specific rules that will govern the entry
of long-distance companies into local service - and of regional Bell
operating companies (RBOCs or Baby Bells) into long-distance service. This
uncertainty affected telephone stocks over the period, and probably will
going forward. Gas stocks weren't as affected by deregulation concerns and
bucked the negative trend because of a sharp increase in the price of
natural gas. The increase resulted from a cold winter and concerns about
adequate supplies going forward.
Q. CAN YOU GIVE US EXAMPLES OF GAS STOCKS THAT BENEFITED FROM THIS POSITIVE
TREND?
A. Sonat was a particular beneficiary of the higher gas prices because its
exploration and production subsidiary made it the most sensitive to the
price of natural gas. Also, it had remarkable exploratory success during
the period. ENSERCH was another gas stock that did well during the period.
Despite disappointing results from its exploration and production division
offshore in the Gulf of Mexico, ENSERCH stock did well during the period
because the company sold its distribution and transmission business to
Texas Utilities.
Q. TELEPHONE SERVICE STOCKS CONTINUED TO COMPRISE THE LARGEST WEIGHTING AT
THE END OF THE PERIOD. WHY THE CONTINUED INTEREST IN PHONE STOCKS?
A. I continued to concentrate on telephone stocks over gas and electrics
because their growth prospects remained the best in the utility sector.
While the pace and structure of deregulation cast a cloud of uncertainty
over the telephone industry, the new telecommunications law enacted early
this year should create opportunities for growth that surpass alternatives
in the utility sector. Long-distance carriers, cable operators and the
RBOCs will be able to enter each others' business and compete with one
another. RBOCs, specifically, have the potential for strong earnings
growth, because they should be able to enter the long-distance business
inexpensively.
Q. WHAT'S YOUR OUTLOOK?
A. It's very difficult to predict the direction of the economy and interest
rates. Witness the past six months, when the market sentiment shifted
rapidly from an expectation of economic weakness and falling interest rates
to a fear of rapid economic growth and rising interest rates. While I'll
keep an eye on the economy and interest rates, my strategy will continue to
be based on individual stock picking. I intend to continue to look for
those companies poised to post the best earnings growth. For the moment, it
appears that more of these prospects are in the telephone industry, so I'll
probably continue to favor telephone stocks over gas and electric utility
stocks.
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: December 10, 1981
FUND NUMBER: 065
TRADING SYMBOL: FSUTX
SIZE: as of August 31, 1996, more than
$213 million
MANAGER: John Muresianu, since 1992;
manager, Fidelity Utilities Fund, since 1992;
Fidelity Select Natural Gas Portfolio, 1993-1994;
joined Fidelity in 1986
(checkmark)
UTILITIES GROWTH PORTFOLIO
INVESTMENTS AUGUST 31, 1996 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 97.1%
SHARES VALUE (NOTE 1)
BROADCASTING - 0.0%
CABLE TV OPERATORS - 0.0%
TCI Group Class A 4,500 $ 66,937 87924V10
CELLULAR - 5.8%
CELLULAR & COMMUNICATION SERVICES - 5.8%
AirTouch Communications, Inc. (a) 409,800 11,269,500 00949T10
Telephone & Data Systems, Inc. 8,020 341,852 87943310
Vodafone Group PLC sponsored ADR 15,200 575,700 92857T10
12,187,052
COAL - 0.3%
MAPCO, Inc. 11,300 608,787 56509710
ELECTRIC UTILITY - 9.3%
ELECTRIC & OTHER SERVICES - 4.1%
DPL, Inc. 33,300 786,713 23329310
Enova Corp. 28,300 647,363 29355210
Hidroelectrica de Cantabrico SA 10,650 341,724 42899999
IES Industries, Inc. 10,100 335,825 44949M10
LG&E Energy Corp. 8,700 197,925 50191710
Montana Power Co. 30,600 661,725 61208510
NIPSCO Industries, Inc. 26,300 973,100 62914010
PacifiCorp 44,800 901,600 69511410
Public Service Co. of New Mexico 32,200 627,900 74449910
Rochester Gas & Electric Corp. 8,800 163,900 77136710
Sierra Pacific Resources 5,400 137,700 82642510
Utilicorp United, Inc. 3,776 109,032 91800510
Veba AG Ord. 50,700 2,658,690 92239110
WPL Holdings, Inc. 900 27,450 92930510
8,570,647
ELECTRIC POWER - 5.2%
AES Corp. (a) 133,949 4,755,190 00130H10
American Electric Power Co., Inc. 14,900 618,350 02553710
Boston Edison Co. 10,000 231,250 10059910
Central Louisiana Electric Co., Inc. 37,706 994,496 15389760
CESC Ltd. GDR (b) 34,300 68,600 15712810
DQE, Inc. 28,050 778,388 23329J10
Centrais Electircas Brasileiras SA 1,182,600 323,458 69699993
Entergy Corp. 15,200 385,700 29364G10
Great Bay Power Corp. (a) 1,729 14,264 39013910
Kansas City Power & Light Co. 8,500 233,750 48513410
Korea Electric Power Corp.
sponsored ADR 20,000 425,000 50063110
Pinnacle West Capital Corp. 22,700 652,625 72348410
Portland General Corp. 30,300 1,098,374 73650610
TECO Energy, Inc. 7,000 167,125 87237510
United Illuminating Co. 8,000 277,000 91063710
11,023,570
TOTAL ELECTRIC UTILITY 19,594,217
GAS - 25.7%
GAS & OTHER SERVICES - 1.1%
MDU Resources Group, Inc. 51,900 1,135,312 55269010
UGI Corp. 43,251 1,010,992 90268110
Western Resources, Inc. 6,500 190,938 95942510
2,337,242
GAS DISTRIBUTION - 7.0%
Energen Corp. 34,900 820,150 29265N10
K N Energy, Inc. 57,000 1,959,375 48262010
MCN Corp. 212,600 5,687,050 55267J10
NUI Corp. 17,500 328,125 62943010
SHARES VALUE (NOTE 1)
National Fuel Gas Co. 7,800 $ 288,600 63618010
New Jersey Resources Corp. 8,600 246,175 64602510
NICOR, Inc. 17,000 533,375 65408610
Northwest Natural Gas Co. 2,900 102,950 66765510
Pacific Enterprises 133,400 3,985,325 69423210
Peoples Energy Corp. 9,700 329,800 71103010
WICOR, Inc. 11,800 423,325 92925310
14,704,250
GAS TRANSMISSION - 8.9%
Enron Corp. 195,400 7,840,425 29356110
ONEOK, Inc. 28,200 771,975 68267810
Sonat, Inc. 95,000 4,191,874 83541510
TPC Corp. (a) 39,000 302,250 87261610
USX-Delhi Group 5,700 76,950 90336X10
Williams Companies, Inc. 112,023 5,587,147 96945710
18,770,621
GAS TRANSMISSION & DISTRIBUTION - 8.7%
Bay State Gas Co. 14,100 384,225 07261260
Columbia Gas System, Inc. (The) 73,500 4,134,374 19764810
Consolidated Natural Gas Co. 17,500 951,563 20961510
ENSERCH Corp. 206,100 4,147,763 29356710
Equitable Resources, Inc. 18,450 528,131 29454910
Noram Energy Corp. 78,100 1,142,213 65541910
Panenergy Corp. 44,100 1,460,813 69792610
Questar Corp. 113,000 4,096,250 74835610
Tejas Gas Corp. (a) 35,895 1,247,351 87907510
Yankee Energy System, Inc. 16,500 367,125 98477910
18,459,808
TOTAL GAS 54,271,921
HOLDING COMPANIES - 0.6%
CINergy Corp. 44,406 1,332,180 17247410
INDEPENDENT POWER - 0.0%
STEAM SUPPLY - 0.0%
Bonneville Pacific Corp. (a) 11,300 11,300 09890410
OIL & GAS - 3.1%
CRUDE PETROLEUM & GAS - 0.1%
Nuevo Energy Corp. (a) 800 29,900 67050910
Occidental Petroleum Corp. 12,100 281,325 67459910
311,225
PETROLEUM REFINERS - 3.0%
Coastal Corp. (The) 159,900 6,336,037 19044110
TOTAL OIL & GAS 6,647,262
TELEPHONE SERVICES - 52.3%
AT&T Corp. 201,000 10,552,500 00195710
ALLTEL Corp. 7,400 209,050 02003910
Ameritech Corp. 221,600 11,440,100 03095410
BCE, Inc. 32,464 1,281,240 05534B10
Bell Atlantic Corp. 168,100 9,455,625 07785310
BellSouth Corp. 322,300 11,683,375 07986010
Cincinnati Bell, Inc. 10,000 477,500 17187010
Frontier Corp. 800 23,600 35906P10
GTE Corp. 269,400 10,607,625 36232010
NYNEX Corp. 239,900 10,345,688 67076810
Pacific Telesis Group 365,600 11,836,300 69489010
SBC Communications, Inc. 250,600 11,684,225 78387G10
Telecom Argentina Class B
sponsored ADR 36,000 1,399,500 87927320
Telebras sponsored ADR 88,100 6,552,438 87928710
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
TELEPHONE SERVICES - CONTINUED
Telefonica de Argentina SA
sponsored ADR 61,600 $ 1,470,700 87937820
U.S. West, Inc. 268,159 7,910,691 91288910
U.S. West, Inc. (Media Group) (a) 192,359 3,486,507 91288920
110,416,664
TOTAL COMMON STOCKS
(Cost $187,086,043) 205,136,320
CONVERTIBLE PREFERRED STOCKS - 0.8%
ELECTRIC UTILITY - 0.8%
COMBINATION UTILITIES - 0.8%
Citizens Utilities Trust 5.10%
(Cost $1,705,000) 34,100 1,653,850
REPURCHASE AGREEMENTS - 2.1%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 5.25%, dated
8/30/96 due 9/3/96 $ 4,330,525 4,328,000 69899TYY
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $193,119,043) $ 211,118,170
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 $68,600 or 0.0% of net
assets.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $18,935,340 and $65,011,538, respectively (see Note 4 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $18,605 for the period (see
Note 5 of Notes to Financial Statements).
At the period end, the value of securities loaned and the value of
collateral amounted to $1,473,363 and $1,478,100, respectively (see Note 7
of Notes to Financial Statements).
INCOME TAX INFORMATION
At August 31, 1996, the aggregate cost of investment securities for income
tax purposes was $193,299,093. Net unrealized appreciation aggregated
$17,819,077, of which $25,244,396 related to appreciated investment
securities and $7,425,319 related to depreciated investment securities.
UTILITIES GROWTH PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1996 (UNAUDITED)
ASSETS
Investment in $ 211,118,170
securities, at
value (including
repurchase
agreements of
$4,328,000)
(cost
$193,119,043)
- - See
accompanying
schedule
Cash 767
Receivable for 4,978,178
investments
sold
Receivable for 109,025
fund shares sold
Dividends 433,812
receivable
Redemption fees 273
receivable
Other receivables 20,400
Prepaid expenses 6,084
TOTAL ASSETS 216,666,709
LIABILITIES
Payable for fund $ 1,268,322
shares
redeemed
Accrued 112,329
management
fee
Other payables 215,040
and
accrued
expenses
Collateral on 1,478,100
securities
loaned,
at value
TOTAL LIABILITIES 3,073,791
NET ASSETS $ 213,592,918
Net Assets
consist of:
Paid in capital $ 186,470,029
Undistributed net 2,680,802
investment
income
Accumulated 6,443,452
undistributed net
realized gain
(loss) on
investments and
foreign currency
transactions
Net unrealized 17,998,635
appreciation
(depreciation)
on investments
and assets and
liabilities in
foreign
currencies
NET ASSETS, for $ 213,592,918
5,301,323
shares
outstanding
NET ASSET VALUE $40.29
and redemption
price per share
($213,592,918 (divided by)
5,301,323
shares)
Maximum offering $41.54
price per share
(100/97.00 of
$40.29)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED AUGUST 31, 1996 (UNAUDITED)
INVESTMENT $ 4,093,426
INCOME
Dividends
Interest (including 197,011
income on
securities
loaned of
$10,287)
TOTAL INCOME 4,290,437
EXPENSES
Management fee $ 722,931
Transfer agent 886,180
fees
Accounting and 120,068
security lending
fees
Non-interested 471
trustees'
compensation
Custodian fees 13,580
and expenses
Registration fees 6,084
Audit 16,306
Legal 1,201
Miscellaneous 2,947
Total expenses 1,769,768
before
reductions
Expense (19,035 1,750,733
reductions )
NET INVESTMENT 2,539,704
INCOME
REALIZED AND
UNREALIZED GAIN
(LOSS)
Net realized gain
(loss) on:
Investment 6,615,249
securities
Foreign (428 6,614,821
currency )
transactions
Change in net
unrealized
appreciation
(depreciation)
on:
Investment (8,866,075
securities )
Assets and (557 (8,866,632
liabilities in ) )
foreign
currencies
NET GAIN (LOSS) (2,251,811
)
NET INCREASE $ 287,893
(DECREASE) IN
NET ASSETS
RESULTING FROM
OPERATIONS
OTHER $ 130,726
INFORMATION
Sales charges
paid to FDC
Deferred sales $ 16,403
charges
withheld
by FDC
Exchange fees $ 39,563
withheld by FSC
Expense $ 18,511
reductions
Directed
brokerage
arrangements
Custodian 21
interest credits
Transfer agent 503
interest credits
$ 19,035
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS YEAR ENDED
ENDED FEBRUARY 29,
AUGUST 31, 1996 1996
(UNAUDITED)
Operations $ 2,539,704 $ 7,298,546
Net investment
income
Net realized 6,614,821 23,321,198
gain (loss)
Change in net (8,866,632 27,286,486
unrealized )
appreciation
(depreciation)
NET INCREASE 287,893 57,906,230
(DECREASE) IN
NET ASSETS
RESULTING
FROM
OPERATIONS
Distributions to (1,403,382 (5,508,527
shareholders ) )
From net
investment
income
From net (15,353,364 -
realized gain )
TOTAL (16,756,746 (5,508,527
DISTRIBUTIONS ) )
Share 46,907,892 283,936,618
transactions
Net proceeds
from sales of
shares
Reinvestment of 16,197,747 5,265,104
distributions
Cost of shares (99,940,564 (312,698,789
redeemed ) )
Paid in capital 129,116 231,738
portion of
redemption fees
NET INCREASE (36,705,809 (23,265,329
(DECREASE) IN ) )
NET ASSETS
RESULTING
FROM SHARE
TRANSACTIONS
TOTAL (53,174,662 29,132,374
INCREASE )
(DECREASE) IN
NET ASSETS
NET ASSETS
Beginning of 266,767,580 237,635,206
period
End of period $ 213,592,918 $ 266,767,580
(including
undistributed
net investment
income of
$2,680,802
and
$2,165,391,
respectively)
OTHER
INFORMATION
Shares
Sold 1,124,586 6,910,440
Issued in 399,254 124,287
reinvestment of
distributions
Redeemed (2,421,488 (7,649,316
) )
Net increase (897,648) (614,589)
(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> <C>
SIX MONTHS YEAR ENDED YEARS ENDED FEBRUARY 28, TEN MONTHS YEAR ENDED
ENDED FEBRUARY 29, ENDED APRIL 30,
AUGUST 31, 1996 FEBRUARY 28,
SELECTED PER-SHARE DATA D (UNAUDITED) 1996 1995 1994 1993 1992
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Net asset value, $ 43.03 $ 34.88 $ 36.61 $ 41.49 $ 37.18 $ 35.57
beginning of
period
Income from
Investment
Operations
Net investment .44 1.10 1.13 1.33 1.19 1.66
income
Net realized and (.34) 7.86 (1.17) (.16) 6.14 2.82
unrealized gain
(loss)
Total from .10 8.96 (.04) 1.17 7.33 4.48
investment
operations
Less Distributions
From net (.24) (.84) (1.05) (1.13) (1.33) (1.69)
investment
income
From net (2.62) - (.67) (4.94) (1.70) (1.19)
realized gain
Total (2.86) (.84) (1.72) (6.07) (3.03) (2.88)
distributions
Redemption fees .02 .03 .03 .02 .01 .01
added to paid in
capital
Net asset value, $ 40.29 $ 43.03 $ 34.88 $ 36.61 $ 41.49 $ 37.18
end of period
TOTAL RETURN B, C .23% 25.82% .21% 2.53% 20.90% 13.23%
RATIOS AND
SUPPLEMENTAL
DATA
Net assets, end of $ 213,593 $ 266,768 $ 237,635 $ 250,522 $ 290,718 $ 206,872
period (000
omitted)
Ratio of expenses 1.47% A 1.39% 1.43% 1.36% 1.42% A 1.51%
to average net
assets
Ratio of expenses 1.45% A, 1.38% 1.42% 1.35% E 1.42% A 1.51%
to average net E E E
assets after
expense
reductions
Ratio of net 2.10% A 2.76% 3.24% 3.11% 3.71% A 4.58%
investment
income to
average net
assets
Portfolio turnover 16% A 65% 24% 61% 34% A 45%
rate
Average $ .0348
commission
rate F
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <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 9 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 9 OF NOTES TO FINANCIAL STATEMENTS). F
FOR FISCAL YEARS BEGINNING ON OR AFTER
SEPTEMBER 1, 1995, A FUND IS REQUIRED TO DISCLOSE ITS AVERAGE
COMMISSION RATE PER SHARE FOR SECURITY TRADES
ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM
PERIOD TO PERIOD AND FUND TO FUND
DEPENDING ON THE MIX OF TRADES EXECUTED IN VARIOUS MARKETS
WHERE TRADING PRACTICES AND COMMISSION RATE
STRUCTURES MAY DIFFER.
</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. A fund's total return includes
changes in 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 6 PAST 1 PAST 5 PAST 10
AUGUST 31, 1996 MONTH YEAR YEARS YEARS
S
BROKERAGE AND INVESTMENT 5.51% 13.61% 130.61% 114.42%
MANAGEMENT
BROKERAGE AND INVESTMENT 2.35% 10.20% 123.69% 107.99%
MANAGEMENT
(INCL. 3% SALES CHARGE)
S&P 500 2.96% 18.73% 89.14% 251.21%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one, five, or 10 years. You
can compare these figures to the performance of the S&P 500 - a widely
recognized, unmanaged index of common stocks. This benchmark reflects
reinvestment of dividends and capital gains, if any, but does not reflect
any sales charges, brokerage commissions, or other costs of investing.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
AUGUST 31, 1996 YEAR YEARS YEARS
BROKERAGE AND INVESTMENT 13.61% 18.19% 7.93%
MANAGEMENT
BROKERAGE AND INVESTMENT 10.20% 17.47% 7.60%
MANAGEMENT (INCL. 3% SALES CHARGE)
S&P 500 18.73% 13.59% 13.34%
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
IMAHDR PRASUN SHR__CHT 19960831 19960909 144728 S00000000000001
Brokerage/Invt. Mgt SP Standard & Poor 500
00068 SP001
1986/08/31 9700.00 10000.00
1986/09/30 8566.89 9173.00
1986/10/31 9505.13 9702.28
1986/11/30 9036.01 9938.05
1986/12/31 8747.32 9684.63
1987/01/31 10385.64 10989.15
1987/02/28 10623.81 11423.22
1987/03/31 10580.51 11753.35
1987/04/30 9425.74 11648.74
1987/05/31 9007.14 11750.09
1987/06/30 8992.71 12343.47
1987/07/31 9014.36 12969.28
1987/08/31 9303.05 13453.04
1987/09/30 8985.49 13158.41
1987/10/31 5679.99 10324.09
1987/11/30 5254.17 9473.39
1987/12/31 5523.96 10194.31
1988/01/31 5919.75 10623.49
1988/02/29 6203.70 11118.55
1988/03/31 6040.21 10774.98
1988/04/30 6143.46 10894.59
1988/05/31 5911.15 10989.37
1988/06/30 6539.31 11493.78
1988/07/31 6487.61 11450.10
1988/08/31 6444.54 11060.80
1988/09/30 6608.23 11531.99
1988/10/31 6634.08 11852.58
1988/11/30 6487.61 11683.09
1988/12/31 6548.57 11887.54
1989/01/31 7401.98 12757.71
1989/02/28 7227.81 12440.04
1989/03/31 7236.52 12729.90
1989/04/30 7306.19 13390.58
1989/05/31 7785.14 13932.90
1989/06/30 7566.25 13853.48
1989/07/31 8477.01 15104.45
1989/08/31 8687.18 15400.50
1989/09/30 8415.71 15337.35
1989/10/31 7732.64 14981.53
1989/11/30 7653.83 15287.15
1989/12/31 7469.24 15654.04
1990/01/31 7141.02 14603.66
1990/02/28 7380.54 14792.04
1990/03/31 7584.56 15184.03
1990/04/30 7070.06 14804.43
1990/05/31 7744.24 16247.86
1990/06/30 7735.15 16137.38
1990/07/31 7459.85 16085.74
1990/08/31 6447.44 14631.59
1990/09/30 5896.83 13919.03
1990/10/31 5532.72 13859.18
1990/11/30 5896.83 14754.48
1990/12/31 6260.94 15166.13
1991/01/31 6781.94 15827.37
1991/02/28 7455.64 16959.03
1991/03/31 8219.17 17369.44
1991/04/30 8335.95 17411.13
1991/05/31 8776.10 18163.29
1991/06/30 8191.74 17331.41
1991/07/31 8821.18 18139.05
1991/08/31 9019.00 18568.95
1991/09/30 9486.59 18258.85
1991/10/31 10116.03 18503.51
1991/11/30 9558.53 17757.82
1991/12/31 11410.88 19789.32
1992/01/31 11572.74 19421.24
1992/02/29 11500.80 19673.71
1992/03/31 11195.08 19290.07
1992/04/30 10322.85 19857.20
1992/05/31 10295.87 19954.50
1992/06/30 10053.09 19657.18
1992/07/31 10619.59 20461.16
1992/08/31 10313.86 20041.71
1992/09/30 10241.92 20278.20
1992/10/31 10700.51 20349.17
1992/11/30 11662.66 21043.08
1992/12/31 11995.37 21301.91
1993/01/31 12705.74 21480.84
1993/02/28 12786.66 21772.98
1993/03/31 13811.76 22232.39
1993/04/30 13766.78 21694.37
1993/05/31 14216.67 22275.78
1993/06/30 14891.51 22340.38
1993/07/31 15386.40 22251.02
1993/08/31 16601.11 23094.33
1993/09/30 16907.04 22916.50
1993/10/31 16358.17 23390.88
1993/11/30 15908.28 23168.66
1993/12/31 17912.10 23449.00
1994/01/31 18293.83 24246.27
1994/02/28 17373.76 23589.20
1994/03/31 15425.94 22560.71
1994/04/30 15298.69 22849.48
1994/05/31 15670.64 23224.22
1994/06/30 16267.71 22655.22
1994/07/31 15885.98 23398.31
1994/08/31 16003.43 24357.64
1994/09/30 15396.57 23760.88
1994/10/31 15386.79 24295.50
1994/11/30 14319.89 23410.66
1994/12/31 14819.08 23757.84
1995/01/31 14633.11 24373.88
1995/02/28 15181.24 25323.73
1995/03/31 15337.85 26071.03
1995/04/30 15802.52 26838.83
1995/05/31 16691.10 27911.57
1995/06/30 17630.16 28559.96
1995/07/31 18478.35 29507.01
1995/08/31 18306.69 29581.07
1995/09/30 19417.42 30829.39
1995/10/31 18336.99 30719.33
1995/11/30 18781.28 32067.91
1995/12/31 18315.53 32685.54
1996/01/31 19509.56 33798.15
1996/02/29 19712.11 34111.46
1996/03/31 20596.97 34439.95
1996/04/30 20722.33 34947.60
1996/05/31 21408.72 35848.90
1996/06/30 21343.35 35985.48
1996/07/31 20035.94 34395.64
1996/08/30 20798.60 35121.05
IMATRL PRASUN SHR__CHT 19960831 19960909 144733 R00000000000123
Let's say hypothetically that $10,000 was invested in Fidelity Select
Brokerage and Investment Management Portfolio on August 31, 1986, and a 3%
sales charge was paid. By August 31, 1996, the investment would have grown
to $20,799 - a 107.99% increase. That compares to $10,000 invested in the
S&P 500, which would have grown to $35,121 over the same period - a 251.21%
increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST 31, 1996
% OF FUND'S
INVESTMENTS
Bear Stearns Companies, Inc. 5.0
Alex Brown, Inc. 4.7
Morgan Stanley Group, Inc. 4.7
Lehman Brothers Holdings, Inc. 4.3
Legg Mason, Inc 4.2
Advest Group, Inc. (The) 4.1
Quick & Reilly Group, Inc. (The) 3.9
Raymond James Financial, Inc. 3.9
Jefferies Group, Inc. 3.9
Schwab (Charles) Corp. 3.7
TOP INDUSTRIES AS OF AUGUST 31, 1996
Security & Commodity Brokers 61.6%
Security Brokers & Dealers 10.2%
Investment Managers 5.4%
Investment Advice 2.4%
Financial Services 2.2
%
All Others 18.2% *
Row: 1, Col: 1, Value: 18.2
Row: 1, Col: 2, Value: 2.2
Row: 1, Col: 3, Value: 2.4
Row: 1, Col: 4, Value: 5.4
Row: 1, Col: 5, Value: 10.2
Row: 1, Col: 6, Value: 61.6
* 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
Q. HOW DID THE FUND PERFORM, LOUIS?
A. Reasonably well. For the six months ended August 31, 1996, the fund
compiled a return of 5.51%. This compares favorably to the Standard &
Poor's 500 Index, which had a return of 2.96% over the same period. For a
longer-term perspective, the fund had a one-year return of 13.61% as of
August 31, 1996, while the S&P 500 returned 18.73%.
Q. IN TERMS OF PERFORMANCE, WERE THERE ANY PARTICULAR FACTORS THAT DICTATED
THE DIRECTION OF THE SECTOR DURING THE PERIOD?
A. The large number of initial public offerings (IPOs) during the first
three months of the period produced positive results. From March through
the beginning of July, a large amount of mutual fund cash flooded the
market. This influx created a favorable environment for companies
interested in raising money through IPOs. IPOs are popular because they can
be quite profitable to the issuing firm. The IPO activity during the last
three months, however, had become somewhat quiet.
Q. CAN YOU POINT TO ANY OTHER FACTORS AS HAVING PLAYED A KEY ROLE IN
PERFORMANCE?
A. Trading volume is a good indicator of the pulse of the market. Trading
volume - the number of trades executed - is very important to all
securities firms, especially discount brokerage houses whose revenues are
largely volume-driven. Due to the speculative nature of the market over the
past six months, trading volume was off-the-charts. The high-volume trading
going on throughout the industry results in increased profits.
Q. WERE THERE ANY INDIVIDUAL STOCKS THAT HAD EITHER POSITIVE OR NEGATIVE
RAMIFICATIONS ON THE PORTFOLIO?
A. With this type of fund, the stocks in the portfolio tend to trade as a
group. Because of this, there usually isn't one stock which stands out
above the rest. That being said, however one disappointment was the fund's
position in Lehman Brothers Holdings.
Q. THE FUND'S LARGEST HOLDING SIX MONTHS AGO IS NO LONGER ON THE RADAR
SCREEN. WHAT'S THE STORY THERE?
A. That's right. Dean Witter Discover, a credit card-related position, was
reduced because credit card charges exploded and delinquencies were on the
rise. I sold the stock before most of the bad news hit, somewhat minimizing
the effect.
Q. DID YOU NOTICE ANY SIGNIFICANT TRENDS WITHIN THE INDUSTRY DURING THE
PERIOD?
A. One potentially negative development is the rapidly increasing
popularity of electronic, or on-line, trading. Many investors are
discovering that it can be cheaper to conduct transactions over vehicles
such as the Internet than with the traditional, full-service brokers or the
discount brokerage firms. If you can trade a stock electronically for $15,
you're certainly not going to pay companies $100 to execute the trade in
the more traditional manner. Of course, there are issues that need to be
settled, particularly concerning the methods of execution and the level of
confidentiality.
Q. THE BROKERAGE SECTOR KEEPS A VERY CLOSE EYE ON INTEREST RATES. WHAT WAS
THE STORY THERE?
A. Interest rates increased the first half of the year, and stocks went up.
This was different than what I had expected to see, but the amount of money
coming into the market dwarfed the impact of the rise in rates.
Q. WHAT IS YOUR BASIC INVESTING STRATEGY?
A. I tend to focus on stocks that I feel are cheap on a price-to-book
basis. My feeling is that stocks that fall into this category have limited
downside. Because of the scarcity of names, the number of investing
opportunities are very limited within the brokerage universe.
Q. WHAT'S YOUR OUTLOOK FOR THE COMING MONTHS?
A. I'd have to say it's a bit negative. The strong mutual fund inflow and
positive performance it spawned has created an expectation level for
brokerage stocks that could be difficult to meet. If interest rates are
lowered and stocks get a bit cheaper, it would be a positive for the fund.
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: July 29, 1985
FUND NUMBER: 068
TRADING SYMBOL: FSLBX
SIZE: as of August 31, 1996, more than
$40 million
MANAGER: Louis Salemy, since 1995;
manager, Fidelity Select Financial Services
Portfolio, since 1994; joined Fidelity in 1992
(checkmark)
BROKERAGE AND INVESTMENT MANAGEMENT PORTFOLIO
INVESTMENTS AUGUST 31, 1996 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 84.6%
SHARES VALUE (NOTE 1)
CREDIT & OTHER FINANCE - 2.2%
FINANCIAL SERVICES - 2.2%
Investors Financial Services Corp. 6,297 $ 142,465 46191510
Investors Financial Services Corp.
Class A 1,210 18,453 46191520
Perpetual PLC 20,000 726,167 71499822
887,085
INSURANCE - 2.8%
LIFE INSURANCE - 0.9%
Liberty Financial Companies, Inc. 12,000 366,000 53051210
PROPERTY-CASUALTY & REINSURANCE - 1.9%
Travelers, Inc. (The) 18,000 780,750 89419010
TOTAL INSURANCE 1,146,750
SECURITIES INDUSTRY - 79.6%
INVESTMENT ADVICE - 2.4%
Mutual Fund Co., Ltd. (For. Reg.) 27,600 226,900 65499B23
Trimark Financial Corp. 33,200 736,430 89621H10
963,330
INVESTMENT MANAGERS - 5.4%
Eaton Vance Corp. 22,500 863,438 27826510
Franklin Resources, Inc. 8,900 529,550 35461310
Price (T. Rowe) Associates, Inc. 28,000 812,000 74147710
2,204,988
SECURITY & COMMODITY BROKERS - 61.6%
Advest Group, Inc. (The) (a) 169,100 1,669,863 00756610
Alex Brown, Inc. 38,500 1,925,000 01390210
BHC Financial, Inc. 22,000 313,500 05544W10
Bear Stearns Companies, Inc. 86,583 2,023,878 07390210
Edwards (A.G.), Inc. 52,000 1,456,000 28176010
Fahnestock Viner Holdings, Inc. Class A 77,600 1,091,760 30292110
First Marathon Inc. Class A (non-vtg.) 33,100 349,567 32076L20
Jefferies Group, Inc. 51,800 1,566,950 47231810
Legg Mason, Inc. 56,700 1,722,263 52490110
McDonald & Co. Investments, Inc. 34,200 679,725 58004710
Merrill Lynch & Co., Inc. 21,900 1,341,375 59018810
Morgan Keegan, Inc. 91,950 1,149,375 61741010
Morgan Stanley Group, Inc. 40,000 1,910,000 61744610
Peregrine Investments Holdings Ltd. 843,000 1,188,322 71399492
Peregrine Investments Holdings Ltd.
(warrants) (a) 84,300 13,737 71399497
Piper Jaffray, Inc. 32,600 387,125 72408110
Quick & Reilly Group, Inc. (The) 54,375 1,590,469 74837610
Raymond James Financial, Inc. 67,900 1,578,675 75473010
Schwab (Charles) Corp. 60,400 1,510,000 80851310
Southwest Securities Group, Inc. 60,000 705,000 84522410
Waterhouse Investor Services, Inc. 23,500 878,313 94154710
25,050,897
SECURITY BROKERS & DEALERS - 10.2%
Inter-Regional Financial Group, Inc. 36,250 965,156 45835110
Lehman Brothers Holdings, Inc. 83,100 1,755,488 52490810
PaineWebber Group, Inc. 69,700 1,437,563 69562910
4,158,207
TOTAL SECURITIES INDUSTRY 32,377,422
TOTAL COMMON STOCKS
(Cost $30,194,097) 34,411,257
REPURCHASE AGREEMENTS - 15.4%
MATURITY VALUE
AMOUNT (NOTE 1)
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 5.25%, dated
8/30/96 due 9/3/96 $ 6,269,655 $ 6,266,000 69899TYY
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $36,460,097) $ 40,677,257
LEGEND
1. Non-income producing
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $8,126,332 and $8,814,149, respectively (see Note 4 of Notes to
Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $1,159 for the period (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 89.2%
Canada 5.4
Hong Kong 3.0
United Kingdom 1.8
Thailand 0.6
TOTAL 100.0%
INCOME TAX INFORMATION
At August 31, 1996, the aggregate cost of investment securities for income
tax purposes was $36,558,784. Net unrealized appreciation aggregated
$4,118,473, of which $5,374,140 related to appreciated investment
securities and $1,255,667 related to depreciated investment securities.
BROKERAGE AND INVESTMENT MANAGEMENT PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1996 (UNAUDITED)
ASSETS
Investment in $ 40,677,257
securities, at
value (including
repurchase
agreements of
$6,266,000)
(cost
$36,460,097) -
See
accompanying
schedule
Cash 510
Receivable for 103,016
fund shares sold
Dividends 30,527
receivable
Redemption fees 1,077
receivable
Other receivables 238
Prepaid expenses 3,550
TOTAL ASSETS 40,816,175
LIABILITIES
Payable for fund $ 687,263
shares
redeemed
Accrued 20,576
management
fee
Other payables 56,091
and
accrued
expenses
TOTAL LIABILITIES 763,930
NET ASSETS $ 40,052,245
Net Assets
consist of:
Paid in capital $ 35,305,258
Undistributed net 57,691
investment
income
Accumulated 472,136
undistributed net
realized gain
(loss) on
investments and
foreign currency
transactions
Net unrealized 4,217,160
appreciation
(depreciation)
on investments
NET ASSETS, for $ 40,052,245
2,098,283
shares
outstanding
NET ASSET VALUE $19.09
and redemption
price per share
($40,052,245 (divided by)
2,098,283
shares)
Maximum offering $19.68
price per share
(100/97.00 of
$19.09)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED AUGUST 31, 1996 (UNAUDITED)
INVESTMENT $ 292,176
INCOME
Dividends
Interest 127,284
TOTAL INCOME 419,460
EXPENSES
Management fee $ 120,117
Transfer agent 192,092
fees
Accounting fees 30,099
and expenses
Non-interested 73
trustees'
compensation
Custodian fees 6,843
and expenses
Registration fees 3,550
Audit 11,794
Legal 131
Miscellaneous 309
Total expenses 365,008
before
reductions
Expense (3,240 361,768
reductions )
NET INVESTMENT 57,692
INCOME
REALIZED AND
UNREALIZED GAIN
(LOSS)
Net realized gain
(loss) on:
Investment 669,417
securities
Foreign (116 669,301
currency )
transactions
Change in net 701,973
unrealized
appreciation
(depreciation)
on investment
securities
NET GAIN (LOSS) 1,371,274
NET INCREASE $ 1,428,966
(DECREASE) IN
NET ASSETS
RESULTING FROM
OPERATIONS
OTHER $ 83,504
INFORMATION
Sales charges
paid to FDC
Deferred sales $ 412
charges
withheld
by FDC
Exchange fees $ 15,315
withheld by FSC
Expense $ 3,240
reductions
Directed
brokerage
arrangements
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS YEAR ENDED
Operations ENDED FEBRUARY 29,
AUGUST 31, 1996 1996
(UNAUDITED)
Net investment $ 57,692 $ 166,720
income
Net realized 669,301 5,390,883
gain (loss)
Change in net 701,973 2,887,650
unrealized
appreciation
(depreciation)
NET INCREASE 1,428,966 8,445,253
(DECREASE) IN
NET ASSETS
RESULTING
FROM
OPERATIONS
Distributions to (45,162 (62,341
shareholders ) )
From net
investment
income
From net (903,245 (1,755,263
realized gain ) )
In excess of net - (564,639
realized gain )
TOTAL (948,407 (2,382,243
DISTRIBUTIONS ) )
Share 39,946,309 73,164,616
transactions
Net proceeds
from sales of
shares
Reinvestment of 930,656 2,335,190
distributions
Cost of shares (39,782,012 (70,682,177
redeemed ) )
Paid in capital 95,061 155,181
portion of
redemption fees
NET INCREASE 1,190,014 4,972,810
(DECREASE) IN
NET ASSETS
RESULTING
FROM SHARE
TRANSACTIONS
TOTAL 1,670,573 11,035,820
INCREASE
(DECREASE) IN
NET ASSETS
NET ASSETS
Beginning of 38,381,672 27,345,852
period
End of period $ 40,052,245 $ 38,381,672
(including
undistributed
net investment
income of
$57,691 and
$115,192,
respectively)
OTHER
INFORMATION
Shares
Sold 2,089,987 4,209,639
Issued in 48,649 138,315
reinvestment of
distributions
Redeemed (2,116,618 (4,034,436
) )
Net increase 22,018 313,518
(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> <C>
SIX MONTHS YEAR ENDED YEARS ENDED FEBRUARY 28, TEN MONTHS YEAR ENDED
ENDED FEBRUARY 29, ENDED APRIL 30,
AUGUST 31, 1996 FEBRUARY 28,
SELECTED PER-SHARE DATA D (UNAUDITED) 1996 1995 1994 1993 1992
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Net asset value, $ 18.49 $ 15.51 $ 17.75 $ 14.22 $ 11.48 $ 9.28
beginning of
period
Income from
Investment
Operations
Net investment .03 .09 (.03) (.02) - .02
income (loss)
Net realized and .94 4.29 (2.25) 4.95 2.65 1.96
unrealized gain
(loss)
Total from .97 4.38 (2.28) 4.93 2.65 1.98
investment
operations
Less Distributions
From net (.02) (.04) - (.01) - (.01)
investment
income
From net (.40) (1.09) - (1.47) - -
realized gain
In excess of net - (.35) - - - -
realized gain
Total (.42) (1.48) - (1.48) - (.01)
distributions
Redemption fees .05 .08 .04 .08 .09 .23
added to paid in
capital
Net asset value, $ 19.09 $ 18.49 $ 15.51 $ 17.75 $ 14.22 $ 11.48
end of period
TOTAL RETURN B, C 5.51% 29.85% (12.62)% 35.87% 23.87% 23.84%
RATIOS AND
SUPPLEMENTAL
DATA
Net assets, end of $ 40,052 $ 38,382 $ 27,346 $ 59,810 $ 24,687 $ 17,915
period (000
omitted)
Ratio of expenses 1.82% A 1.64% 2.54% 1.79% 2.21% A 2.17%
to average net E E
assets
Ratio of expenses 1.80% A, 1.61% 2.54% 1.77% 2.21% A 2.17%
to average net F F F
assets after
expense
reductions
Ratio of net .29% A .50% (.20)% (.14)% .02% A .16%
investment
income (loss) to
average net
assets
Portfolio turnover 46% A 166% 139% 295% 111% A 254%
rate
Average $ .0462
commissions
rate G
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <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 9 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 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. 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 9 OF NOTES TO
FINANCIAL STATEMENTS). G FOR FISCAL YEARS BEGINNING ON OR AFTER
SEPTEMBER 1, 1995, A FUND IS REQUIRED
TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR SECURITY
TRADES ON WHICH COMMISSIONS ARE
CHARGED. THIS AMOUNT MAY VARY FROM PERIOD TO PERIOD AND FUND TO
FUND DEPENDING ON THE MIX OF TRADES
EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION
RATE STRUCTURES MAY DIFFER.
</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. A fund's total return includes
changes in 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 6 PAST 1 PAST 5 PAST 10
AUGUST 31, 1996 MONTH YEAR YEARS YEARS
S
FINANCIAL SERVICES 4.65% 21.76% 184.21% 216.74%
FINANCIAL SERVICES 1.51% 18.11% 175.68% 207.24%
(INCL. 3% SALES CHARGE)
S&P 500 2.96% 18.73% 89.14% 251.21%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one, five, or 10 years. You
can compare these figures to the performance of the S&P 500 - a widely
recognized, unmanaged index of common stocks. This benchmark reflects
reinvestment of dividends and capital gains, if any, but does not reflect
any sales charges, brokerage commissions, or other costs of investing.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
AUGUST 31, 1996 YEAR YEARS YEARS
FINANCIAL SERVICES 21.76% 23.23% 12.22%
FINANCIAL SERVICES 18.11% 22.48% 11.88%
(INCL. 3% SALES CHARGE)
S&P 500 18.73% 13.59% 13.34%
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
IMAHDR PRASUN SHR__CHT 19960831 19960909 160149 S00000000000001
Financial Services SP Standard & Poor 500
00066 SP001
1986/08/31 9700.00 10000.00
1986/09/30 8662.26 9173.00
1986/10/31 8854.64 9702.28
1986/11/30 8767.93 9938.05
1986/12/31 8551.17 9684.63
1987/01/31 9152.68 10989.15
1987/02/28 9759.61 11423.22
1987/03/31 9388.41 11753.35
1987/04/30 8797.74 11648.74
1987/05/31 8735.42 11750.09
1987/06/30 9057.85 12343.47
1987/07/31 9163.52 12969.28
1987/08/31 9694.58 13453.04
1987/09/30 9350.47 13158.41
1987/10/31 7234.36 10324.09
1987/11/30 6792.71 9473.39
1987/12/31 7136.88 10194.31
1988/01/31 7674.25 10623.49
1988/02/29 7929.87 11118.55
1988/03/31 7793.34 10774.98
1988/04/30 7656.82 10894.59
1988/05/31 7732.35 10989.37
1988/06/30 8208.72 11493.78
1988/07/31 8153.53 11450.10
1988/08/31 8130.29 11060.80
1988/09/30 8467.24 11531.99
1988/10/31 8490.48 11852.58
1988/11/30 8139.01 11683.09
1988/12/31 7994.33 11887.54
1989/01/31 8404.06 12757.71
1989/02/28 8386.12 12440.04
1989/03/31 8999.23 12729.90
1989/04/30 9163.72 13390.58
1989/05/31 9737.95 13932.90
1989/06/30 9670.09 13853.48
1989/07/31 10444.06 15104.45
1989/08/31 10739.20 15400.50
1989/09/30 10962.05 15337.35
1989/10/31 9917.04 14981.53
1989/11/30 9781.52 15287.15
1989/12/31 9540.63 15654.04
1990/01/31 8735.19 14603.66
1990/02/28 9051.28 14792.04
1990/03/31 8911.47 15184.03
1990/04/30 8595.38 14804.43
1990/05/31 9352.18 16247.86
1990/06/30 9090.80 16137.38
1990/07/31 8507.23 16085.74
1990/08/31 7489.04 14631.59
1990/09/30 6373.59 13919.03
1990/10/31 5817.38 13859.18
1990/11/30 6638.01 14754.48
1990/12/31 7219.40 15166.13
1991/01/31 7875.43 15827.37
1991/02/28 8780.19 16959.03
1991/03/31 9199.92 17369.44
1991/04/30 9498.40 17411.13
1991/05/31 10225.93 18163.29
1991/06/30 9395.79 17331.41
1991/07/31 10138.88 18139.05
1991/08/31 10810.45 18568.95
1991/09/30 10745.16 18258.85
1991/10/31 10981.45 18503.51
1991/11/30 10166.86 17757.82
1991/12/31 11668.61 19789.32
1992/01/31 12249.84 19421.24
1992/02/29 13129.54 19673.71
1992/03/31 12834.21 19290.07
1992/04/30 13327.47 19857.20
1992/05/31 13899.28 19954.50
1992/06/30 14219.10 19657.18
1992/07/31 14625.72 20461.16
1992/08/31 13786.86 20041.71
1992/09/30 14215.90 20278.20
1992/10/31 14779.41 20349.17
1992/11/30 15890.43 21043.08
1992/12/31 16665.12 21301.91
1993/01/31 17716.28 21480.84
1993/02/28 18187.26 21772.98
1993/03/31 19139.46 22232.39
1993/04/30 18223.20 21694.37
1993/05/31 18230.11 22275.78
1993/06/30 18910.67 22340.38
1993/07/31 19418.50 22251.02
1993/08/31 20023.06 23094.33
1993/09/30 20485.98 22916.50
1993/10/31 19936.69 23390.88
1993/11/30 19048.85 23168.66
1993/12/31 19590.57 23449.00
1994/01/31 20920.48 24246.27
1994/02/28 20161.09 23589.20
1994/03/31 19240.39 22560.71
1994/04/30 19971.02 22849.48
1994/05/31 20823.47 23224.22
1994/06/30 20331.82 22655.22
1994/07/31 21041.53 23398.31
1994/08/31 21779.00 24357.64
1994/09/30 20137.54 23760.88
1994/10/31 20030.49 24295.50
1994/11/30 18761.74 23410.66
1994/12/31 18876.01 23757.84
1995/01/31 19852.20 24373.88
1995/02/28 21112.94 25323.73
1995/03/31 21485.03 26071.03
1995/04/30 22159.17 26838.83
1995/05/31 23389.27 27911.57
1995/06/30 23498.70 28559.96
1995/07/31 24286.66 29507.01
1995/08/31 25232.22 29581.07
1995/09/30 26672.43 30829.39
1995/10/31 25989.53 30719.33
1995/11/30 27740.55 32067.91
1995/12/31 27811.95 32685.54
1996/01/31 29112.28 33798.15
1996/02/29 29358.05 34111.46
1996/03/31 29706.59 34439.95
1996/04/30 29376.90 34947.60
1996/05/31 30059.55 35848.90
1996/06/30 30499.38 35985.48
1996/07/31 29835.05 34395.64
1996/08/30 30723.87 35121.05
IMATRL PRASUN SHR__CHT 19960831 19960909 160154 R00000000000123
Let's say hypothetically that $10,000 was invested in Fidelity Select
Financial Services Portfolio on August 31, 1986, and a 3% sales charge was
paid. By August 31, 1996, the investment would have grown to $30,724 - a
207.24% increase. That compares to $10,000 invested in the S&P 500, which
would have grown to $35,121 over the same period - a 251.21% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST 31, 1996
% OF FUND'S
INVESTMENTS
Allstate Corp. 5.7
Bank of New York Co., Inc. 5.6
Federal National Mortgage Association 5.4
Household International, Inc. 4.9
Associates First Capital Corp. 4.6
American Express Co. 4.6
Beneficial Corp. 4.6
Fleet Financial Group, Inc. 4.3
Citicorp 4.3
Alex Brown, Inc. 4.2
TOP INDUSTRIES AS OF AUGUST 31, 1996
National Commercial Banks 27.3%
Personal Credit Institutions 14.1%
Property-Casualty &
Reinsurance 11.3%
Federal & Federally Sponsored
Credit Agencies 10.3%
Financial Services 6.1%
All Others 30.9% *
Row: 1, Col: 1, Value: 31.0
Row: 1, Col: 2, Value: 6.0
Row: 1, Col: 3, Value: 10.3
Row: 1, Col: 4, Value: 11.3
Row: 1, Col: 5, Value: 14.1
Row: 1, Col: 6, Value: 27.3
* INCLUDES SHORT-TERM INVESTMENTS
FINANCIAL SERVICES PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Louis Salemy,
Portfolio Manager of
Fidelity Select Financial
Services Portfolio
Q. LOUIS, HOW HAS THE FUND PERFORMED?
A. All things considered, pretty well. For the six months ended August 31,
1996, the fund compiled a return of 4.65%, while the Standard & Poor's 500
Index had a return of 2.96%. For the one-year period ended August 31, 1996,
the fund posted a return of 21.76%, while the S&P 500 had a return of
18.73%.
Q. HOW WOULD YOU CHARACTERIZE THE OVERALL INVESTING ENVIRONMENT DURING THE
PERIOD?
A. From March through the beginning of July, the markets went through a
pretty rough time. Investors were concerned that the Federal Reserve Board
was going to raise interest rates, and this made for a stagnant atmosphere.
Things began to turn around, though, when the government released the
unemployment figures issued in July. The market had anticipated the figures
to be much worse than they actually were and, accordingly, had already
begun discounting bond prices. This sent the bond market off on a nice
rally and resulted in positive gains within the financial services sector.
Q. MERGERS AND ACQUISITIONS ARE TYPICALLY STRONG DRIVERS OF PERFORMANCE IN
THIS SECTOR. WERE THERE ANY SIGNIFICANT DEVELOPMENTS IN THIS AREA?
A. It was an extremely quiet period in terms of mergers and acquisitions,
especially with the bank-related stocks. There were some minor transactions
in the insurance area, but these involved mostly small-cap stocks that
didn't have much of an impact on the fund. I think this lack of activity
can be traced to a couple of factors. First, a number of the "target"
stocks - those believed to be ripe for a takeover - were trading at
expensive levels, and no one wanted to pay those prices. Second, some of
the institutions that wanted to expand had their hands full with other
management issues.
Q. DID "MONEY-CENTER" BANKS CONTINUE TO BE POSITIVE CONTRIBUTORS?
A. Money-center bank stocks turned in a stronger performance than the
regional banks during the period. Money-center banks - larger banks
situated in the major financial centers of the world - tend to have a broad
domestic and/or international focus. Regional banks, on the other hand,
focus on a particular region of the country. Stocks such as Citicorp and
Bank of New York were positive contributors to the fund.
Q. WHAT WAS YOUR STRATEGY WITH RESPECT TO COMPANIES IN THE INSURANCE AND
CREDIT CARD SECTORS?
A. In the insurance field, Allstate continued to be my biggest holding.
I've felt that Allstate's business is going to become more stable over time
and returns may increase. With credit card-related stocks, we've seen
consumer debt rise dramatically over the last six months. As a result, I've
reduced my holdings in these types of companies.
Q. WHAT MAKES A PARTICULAR STOCK APPEALING TO YOU?
A. The first thing I look at is whether returns have been on the upswing
over the past year. If returns have been increasing, I'll give the stock
every consideration. I also consider valuations to be pivotal and focus on
price-to-book values. If the numbers seem out of whack, I'll stay away. If
they look good, it's a potential buy.
Q. DOES THE "CHEMISTRY" OF THE FUND COME INTO PLAY WHEN MAKING AN
INVESTMENT DECISION?
A. Not too much. The mix of the fund is really a residual of my
stockpicking. I won't choose a stock solely because it's in a certain
sector, nor will I avoid a stock for the same reason.
Q. WHAT'S YOUR OUTLOOK FOR THE COMING MONTHS?
A. The financial services sector has been on a roll over the past year or
so. This leads me to believe that we may see some kind of correction within
the sector. If the Fed decides to raise rates, the investing environment
could be tougher.
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: December 10, 1981
FUND NUMBER: 066
TRADING SYMBOL: FIDSX
SIZE: as of August 31, 1996, more than
$254 million
MANAGER: Louis Salemy, since 1994;
manager, Fidelity Select Brokerage and
Investment Management Portfolio, since
1995; joined Fidelity in 1992
(checkmark)
FINANCIAL SERVICES PORTFOLIO
INVESTMENTS AUGUST 31, 1996 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 83.1%
SHARES VALUE (NOTE 1)
BANKS - 27.3%
NATIONAL COMMERCIAL BANKS - 27.3%
Bank of New York Co., Inc. 521,468 $ 14,535,919 06405710
Citicorp 135,000 11,238,750 17303410
Comerica, Inc. 109,445 5,335,444 20034010
First Bank System, Inc. 87,400 5,615,450 31927910
First Union Corp. 1 64 33735810
Fleet Financial Group, Inc. 269,367 11,246,072 33891510
Mercantile Bancorp., Inc. 22,050 1,077,694 58734210
National City Corp. 200,000 7,525,000 63540510
Norwest Corp. 232,900 8,762,863 66938010
Republic New York Corp. 3,000 198,375 76071910
Wells Fargo & Co. 10,000 2,487,500 94974010
Zions Bancorp. 33,000 2,846,250 98970110
70,869,381
COMPUTER SERVICES & SOFTWARE - 1.2%
DATA PROCESSING - 1.2%
First Data Corp. 39,647 3,092,466 31996310
CREDIT & OTHER FINANCE - 20.2%
FINANCIAL SERVICES - 6.1%
American Express Co. 273,000 11,943,750 02581610
Equitable Companies, Inc. 44,200 1,088,425 29444G10
First USA, Inc. 50,000 2,650,000 33743H10
15,682,175
PERSONAL CREDIT INSTITUTIONS - 14.1%
Associates First Capital Corp. 304,000 12,008,000 04600810
Beneficial Corp. 211,800 11,940,225 08172110
Household International, Inc. 159,300 12,624,525 44181510
Mercury Finance Co. 5,800 67,425 58939510
36,640,175
TOTAL CREDIT & OTHER FINANCE 52,322,350
FEDERAL SPONSORED CREDIT - 10.3%
FEDERAL & FEDERALLY SPONSORED CREDIT AGENCIES - 10.3%
Federal Home Loan Mortgage
Corporation 122,400 10,817,100 31340030
Federal National Mortgage
Association 452,400 14,024,400 31358610
Student Loan Marketing Association 26,000 1,914,250 86387150
26,755,750
INSURANCE - 17.1%
INSURANCE BROKERS & SERVICES - 4.6%
Alexander & Alexander Services, Inc. 250,000 3,937,500 01447610
ITT Hartford Group, Inc. 150,000 7,912,500 45068H10
11,850,000
LIFE INSURANCE - 1.2%
Providian Corp. 21,800 901,975 74406110
Torchmark Corp. 55,000 2,337,500 89102710
Transport Holdings, Inc. Class A (a) 248 12,152 89385510
3,251,627
PROPERTY-CASUALTY & REINSURANCE - 11.3%
Allstate Corp. 332,900 14,855,663 02000210
Chubb Corp. (The) 31,200 1,384,500 17123210
General Re Corp. 70,000 10,141,250 37056310
NAC Re Corp. 75,000 2,831,250 62890710
29,212,663
TOTAL INSURANCE 44,314,290
SHARES VALUE (NOTE 1)
SAVINGS & LOANS - 0.6%
SAVINGS BANKS & SAVINGS & LOANS - 0.6%
Standard Federal Bancorp., Inc. 39,300 $ 1,645,688 85338610
SECURITIES INDUSTRY - 6.4%
SECURITY & COMMODITY BROKERS - 4.2%
Alex Brown, Inc. 217,000 10,850,000 01390210
SECURITY BROKERS & DEALERS - 2.2%
Lehman Brothers Holdings, Inc. 274,000 5,788,250 52490810
TOTAL SECURITIES INDUSTRY 16,638,250
TOTAL COMMON STOCKS
(Cost $181,544,976) 215,638,175
REPURCHASE AGREEMENTS - 16.9%
MATURITY VALUE
AMOUNT (NOTE 1)
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 5.25%, dated
8/30/96 due 9/3/96 $ 43,830,553 43,805,000 69899TYY
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $225,349,976) $ 259,443,175
LEGEND
1. Non-income producing
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $70,798,321 and $96,536,292, respectively (see Note 4 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $24,607 for the period (see
Note 5 of Notes to Financial Statements).
INCOME TAX INFORMATION
At August 31, 1996, the aggregate cost of investment securities for income
tax purposes was $225,675,310. Net unrealized appreciation aggregated
$33,767,865, of which $37,978,596 related to appreciated investment
securities and $4,210,731 related to depreciated investment securities.
FINANCIAL SERVICES PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1996 (UNAUDITED)
ASSETS
Investment in $ 259,443,175
securities, at
value (including
repurchase
agreements of
$43,805,000)
(cost
$225,349,976)
- - See
accompanying
schedule
Cash 565
Receivable for 585,824
fund shares sold
Dividends 500,026
receivable
Redemption fees 1,052
receivable
Other receivables 4,825
Prepaid expenses 11,890
TOTAL ASSETS 260,547,357
LIABILITIES
Payable for $ 3,781,967
investments
purchased
Payable for fund 2,163,271
shares
redeemed
Accrued 124,661
management
fee
Other payables 207,824
and
accrued
expenses
TOTAL LIABILITIES 6,277,723
NET ASSETS $ 254,269,634
Net Assets
consist of:
Paid in capital $ 206,727,757
Undistributed net 1,417,166
investment
income
Accumulated 12,031,512
undistributed net
realized gain
(loss) on
investments
Net unrealized 34,093,199
appreciation
(depreciation)
on investments
NET ASSETS, for $ 254,269,634
3,791,451
shares
outstanding
NET ASSET VALUE $67.06
and redemption
price per share
($254,269,634 (divided by)
3,791,451
shares)
Maximum offering $69.13
price per share
(100/97.00 of
$67.06)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED AUGUST 31, 1996 (UNAUDITED)
INVESTMENT $ 2,548,452
INCOME
Dividends
Interest 609,072
TOTAL INCOME 3,157,524
EXPENSES
Management fee $ 710,805
Transfer agent 872,869
fees
Accounting fees 117,982
and expenses
Non-interested 446
trustees'
compensation
Custodian fees 6,529
and expenses
Registration fees 11,890
Audit 22,049
Legal 1,057
Miscellaneous 1,453
Total expenses 1,745,080
before
reductions
Expense (11,991 1,733,089
reductions )
NET INVESTMENT 1,424,435
INCOME
REALIZED AND 12,798,030
UNREALIZED GAIN
(LOSS)
Net realized gain
(loss) on
investment
securities
Change in net (7,293,636
unrealized )
appreciation
(depreciation)
on investment
securities
NET GAIN (LOSS) 5,504,394
NET INCREASE $ 6,928,829
(DECREASE) IN
NET ASSETS
RESULTING FROM
OPERATIONS
OTHER $ 331,569
INFORMATION
Sales charges
paid to FDC
Deferred sales $ 4,291
charges
withheld
by FDC
Exchange fees $ 53,535
withheld by FSC
Expense $ 11,912
reductions
Directed
brokerage
arrangements
Custodian 58
interest credits
Transfer agent 21
interest credits
$ 11,991
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS YEAR ENDED
ENDED FEBRUARY 29,
AUGUST 31, 1996 1996
(UNAUDITED)
Operations $ 1,424,435 $ 3,488,580
Net investment
income
Net realized 12,798,030 13,966,548
gain (loss)
Change in net (7,293,636 35,177,894
unrealized )
appreciation
(depreciation)
NET INCREASE 6,928,829 52,633,022
(DECREASE) IN
NET ASSETS
RESULTING
FROM
OPERATIONS
Distributions to (1,000,873 (1,512,445
shareholders ) )
From net
investment
income
From net (5,428,808 (3,719,914
realized gain ) )
TOTAL (6,429,681 (5,232,359
DISTRIBUTIONS ) )
Share 131,603,618 434,251,303
transactions
Net proceeds
from sales of
shares
Reinvestment of 6,322,372 5,143,919
distributions
Cost of shares (154,907,276 (369,962,899
redeemed ) )
Paid in capital 285,389 544,495
portion of
redemption fees
NET INCREASE (16,695,897 69,976,818
(DECREASE) IN )
NET ASSETS
RESULTING
FROM SHARE
TRANSACTIONS
TOTAL (16,196,749 117,377,481
INCREASE )
(DECREASE) IN
NET ASSETS
NET ASSETS
Beginning of 270,466,383 153,088,902
period
End of period $ 254,269,634 $ 270,466,383
(including
undistributed
net investment
income of
$1,417,166
and
$1,976,083,
respectively)
OTHER
INFORMATION
Shares
Sold 1,976,334 7,271,619
Issued in 95,779 83,493
reinvestment of
distributions
Redeemed (2,397,476 (6,412,630
) )
Net increase (325,363) 942,482
(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> <C>
SIX MONTHS YEAR ENDED YEARS ENDED FEBRUARY 28, TEN MONTHS YEAR ENDED
ENDED FEBRUARY 29, ENDED APRIL 30,
AUGUST 31, 1996 FEBRUARY 28,
SELECTED PER-SHARE DATA D (UNAUDITED) 1996 1995 1994 1993 1992
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Net asset value, $ 65.70 $ 48.23 $ 51.24 $ 53.29 $ 42.42 $ 30.55
beginning of
period
Income from
Investment
Operations
Net investment .40 1.03 .76 .29 .33 .54
income
Net realized and 2.55 17.56 .87 5.02 14.30 11.35
unrealized gain
(loss)
Total from 2.95 18.59 1.63 5.31 14.63 11.89
investment
operations
Less Distributions
From net (.26) (.37) (.79) (.20) (.51) (.35)
investment
income
From net (1.41) (.91) (3.93) (7.32) (3.38) -
realized gain
Total (1.67) (1.28) (4.72) (7.52) (3.89) (.35)
distributions
Redemption fees .08 .16 .08 .16 .13 .33
added to paid in
capital
Net asset value, $ 67.06 $ 65.70 $ 48.23 $ 51.24 $ 53.29 $ 42.42
end of period
TOTAL RETURN B, C 4.65% 39.05% 4.72% 10.85% 36.46% 40.31%
RATIOS AND
SUPPLEMENTAL
DATA
Net assets, end of $ 254,270 $ 270,466 $ 153,089 $ 116,195 $ 214,612 $ 91,700
period (000
omitted)
Ratio of expenses 1.47% A 1.42% 1.56% 1.64% 1.54% A 1.85%
to average net
assets
Ratio of expenses 1.46% A, 1.41% 1.54% 1.63% 1.54% A 1.85%
to average net E E E E
assets after
expense
reductions
Ratio of net 1.20% A 1.78% 1.52% .53% .86% A 1.49%
investment
income to
average net
assets
Portfolio turnover 65% A 125% 107% 93% 100% A 164%
rate
Average $ .0443
commission
rate F
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <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 9 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 9 OF NOTES TO FINANCIAL
STATEMENTS). F FOR FISCAL YEARS BEGINNING ON
OR AFTER SEPTEMBER 1, 1995, A FUND IS REQUIRED TO DISCLOSE ITS
AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT
MAY VARY FROM PERIOD TO PERIOD AND
FUND TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN VARIOUS
MARKETS WHERE TRADING PRACTICES AND
COMMISSION RATE STRUCTURES MAY DIFFER.
</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. A fund's total return includes
changes in 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 6 PAST 1 PAST 5 PAST 10
AUGUST 31, 1996 MONTH YEAR YEARS YEARS
S
HOME FINANCE 9.89% 23.20% 293.94% 465.78%
HOME FINANCE 6.59% 19.50% 282.12% 448.80%
(INCL. 3% SALES CHARGE)
S&P 500 2.96% 18.73% 89.14% 251.21%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one, five, or 10 years. You
can compare these figures to the performance of the S&P 500 - a widely
recognized, unmanaged index of common stocks. This benchmark reflects
reinvestment of dividends and capital gains, if any, but does not reflect
any sales charges, brokerage commissions, or other costs of investing.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
AUGUST 31, 1996 YEAR YEARS YEARS
HOME FINANCE 23.20% 31.55% 18.92%
HOME FINANCE 19.50% 30.75% 18.56%
(INCL. 3% SALES CHARGE)
S&P 500 18.73% 13.59% 13.34%
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
IMAHDR PRASUN SHR__CHT 19960831 19960916 090330 S00000000000001
Home Finance SP Standard & Poor 500
00098 SP001
1986/08/31 9700.00 10000.00
1986/09/30 8541.90 9173.00
1986/10/31 8857.74 9702.28
1986/11/30 9019.18 9938.05
1986/12/31 9040.23 9684.63
1987/01/31 10436.98 10989.15
1987/02/28 11419.61 11423.22
1987/03/31 10738.78 11753.35
1987/04/30 10135.17 11648.74
1987/05/31 9784.23 11750.09
1987/06/30 9966.71 12343.47
1987/07/31 9931.62 12969.28
1987/08/31 10830.03 13453.04
1987/09/30 10135.17 13158.41
1987/10/31 8162.88 10324.09
1987/11/30 7496.09 9473.39
1987/12/31 8321.86 10194.31
1988/01/31 9325.50 10623.49
1988/02/29 9064.13 11118.55
1988/03/31 8813.22 10774.98
1988/04/30 8959.59 10894.59
1988/05/31 8949.13 10989.37
1988/06/30 9513.68 11493.78
1988/07/31 9680.96 11450.10
1988/08/31 9440.50 11060.80
1988/09/30 9921.41 11531.99
1988/10/31 10203.69 11852.58
1988/11/30 9691.41 11683.09
1988/12/31 9861.06 11887.54
1989/01/31 10688.12 12757.71
1989/02/28 10921.39 12440.04
1989/03/31 10974.41 12729.90
1989/04/30 11536.38 13390.58
1989/05/31 12034.74 13932.90
1989/06/30 12276.98 13853.48
1989/07/31 12704.75 15104.45
1989/08/31 13485.43 15400.50
1989/09/30 13988.05 15337.35
1989/10/31 12244.89 14981.53
1989/11/30 11849.21 15287.15
1989/12/31 10780.74 15654.04
1990/01/31 9887.00 14603.66
1990/02/28 10255.67 14792.04
1990/03/31 10278.01 15184.03
1990/04/30 10032.23 14804.43
1990/05/31 10981.83 16247.86
1990/06/30 10870.11 16137.38
1990/07/31 9931.69 16085.74
1990/08/31 8926.23 14631.59
1990/09/30 8155.38 13919.03
1990/10/31 7540.93 13859.18
1990/11/30 8356.47 14754.48
1990/12/31 9154.68 15166.13
1991/01/31 10030.34 15827.37
1991/02/28 11395.01 16959.03
1991/03/31 11918.14 17369.44
1991/04/30 12327.54 17411.13
1991/05/31 12839.29 18163.29
1991/06/30 12122.84 17331.41
1991/07/31 13419.28 18139.05
1991/08/31 13931.03 18568.95
1991/09/30 13817.31 18258.85
1991/10/31 13578.49 18503.51
1991/11/30 12953.02 17757.82
1991/12/31 15069.12 19789.32
1992/01/31 16554.15 19421.24
1992/02/29 17636.28 19673.71
1992/03/31 17336.97 19290.07
1992/04/30 17705.35 19857.20
1992/05/31 19455.16 19954.50
1992/06/30 19479.53 19657.18
1992/07/31 20437.35 20461.16
1992/08/31 19329.51 20041.71
1992/09/30 19641.09 20278.20
1992/10/31 20010.37 20349.17
1992/11/30 22064.49 21043.08
1992/12/31 23787.01 21301.91
1993/01/31 25493.60 21480.84
1993/02/28 25926.09 21772.98
1993/03/31 26849.52 22232.39
1993/04/30 25395.22 21694.37
1993/05/31 24960.61 22275.78
1993/06/30 25583.16 22340.38
1993/07/31 27227.63 22251.02
1993/08/31 28660.66 23094.33
1993/09/30 30493.06 22916.50
1993/10/31 30727.98 23390.88
1993/11/30 29353.68 23168.66
1993/12/31 30279.67 23449.00
1994/01/31 31605.34 24246.27
1994/02/28 31010.64 23589.20
1994/03/31 30428.34 22560.71
1994/04/30 31604.80 22849.48
1994/05/31 33554.11 23224.22
1994/06/30 34112.91 22655.22
1994/07/31 34866.64 23398.31
1994/08/31 35997.24 24357.64
1994/09/30 34762.68 23760.88
1994/10/31 32683.41 24295.50
1994/11/30 30994.01 23410.66
1994/12/31 31091.50 23757.84
1995/01/31 32461.68 24373.88
1995/02/28 34866.79 25323.73
1995/03/31 34808.48 26071.03
1995/04/30 36630.54 26838.83
1995/05/31 38802.42 27911.57
1995/06/30 39210.56 28559.96
1995/07/31 40784.81 29507.01
1995/08/31 44545.53 29581.07
1995/09/30 45478.42 30829.39
1995/10/31 44647.56 30719.33
1995/11/30 47110.98 32067.91
1995/12/31 47722.77 32685.54
1996/01/31 49027.57 33798.15
1996/02/29 49942.43 34111.46
1996/03/31 51082.26 34439.95
1996/04/30 50430.08 34947.60
1996/05/31 51554.17 35848.90
1996/06/30 51785.15 35985.48
1996/07/31 52709.06 34395.64
1996/08/30 54880.25 35121.05
IMATRL PRASUN SHR__CHT 19960831 19960916 090336 R00000000000123
Let's say hypothetically that $10,000 was invested in Fidelity Select Home
Finance Portfolio on August 31, 1986, and a 3% sales charge was paid. By
August 31, 1996, the investment would have grown to $54,880 - a 448.80%
increase. That compares to $10,000 invested in the S&P 500, which would
have grown to $35,121 over the same period - a 251.21% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST 31, 1996
% OF FUND'S
INVESTMENTS
Chase Manhattan Corp. 3.4
Standard Federal Bancorp., Inc. 3.2
Charter One Financial Corp. 3.1
Bank of New York Co., Inc. 2.9
NationsBank Corp. 2.7
BankAmerica Corp. 2.4
Bank of Boston Corp. 2.3
Federal National Mortgage Association 2.3
Astoria Financial Corp. 2.2
North Side Savings Bank 2.2
TOP INDUSTRIES AS OF AUGUST 31, 1996
National Commercial Banks 27.2%
Savings Banks &
Savings & Loans 22.2%
Savings Banks,
Federal Charter 9.7%
Federal and Federally
Sponsored Credit Agencies 3.8%
Savings Banks,
no Federal Charter 3.3%
All Others 33.8% *
Row: 1, Col: 1, Value: 33.8
Row: 1, Col: 2, Value: 3.3
Row: 1, Col: 3, Value: 3.8
Row: 1, Col: 4, Value: 9.6
Row: 1, Col: 5, Value: 22.2
Row: 1, Col: 6, Value: 27.3
* INCLUDES SHORT-TERM INVESTMENTS
HOME FINANCE PORTFOLIO
FUND TALK: THE MANAGERS' OVERVIEW
NOTE TO SHAREHOLDERS: Effective October 1, 1996, after the period ended,
Bill Rubin (right) became Portfolio Manager of Fidelity Select Home Finance
Portfolio. The following is an interview with David Ellison, who managed
the fund during the period covered by the report, and Bill Rubin, who
discusses his investment style and outlook.
Q. DAVID, HOW DID THE FUND PERFORM?
A. It has done well. For the six months ended August 31, 1996, the fund
posted a total return of 9.89%. That topped the Standard & Poor's 500
Index, which returned 2.96% over the same period. For the 12-month period
ended August 31, 1996, the fund returned 23.20% compared to 18.73% for the
S&P 500.
Q. WHAT FACTORS DROVE THE FUND'S PERFORMANCE?
A. A combination of sound market fundamentals and a better-than-expected
investing environment as a whole helped. Short-term interest rates didn't
climb as some had feared, earnings came through strongly, credit quality
didn't suffer, and we saw a continuation in the home finance sector of
mergers/acquisitions and stock buybacks. These factors combined to create a
favorable atmosphere.
Q. DID YOU FOLLOW ANY SPECIFIC STRATEGIES IN TERMS OF PORTFOLIO STRUCTURE?
A. I typically try to keep the number of different stocks within the
portfolio to approximately 100. Over the past year, I've steadily added to
the number of regional banks I own as they have performed well. I also
continued to scrutinize stocks that I felt had cheap valuations relative to
the financial arena.
Q. WERE THERE ANY REGULATORY DEVELOPMENTS - EITHER PLACED IN EFFECT OR
PENDING - THAT HAD RAMIFICATIONS ON THE HOME FINANCE SECTOR?
A. Yes. Legislation passed that eliminated the possibility of taxes on
pre-1988 bad debt reserves, but this had a minimal impact within the
industry. Two pending developments, however, affected the sector during the
period and will do so going forward. The first involves the Bank Insurance
Fund/Savings Association Insurance Fund resolution. Under the proposed
merger of these two entities, thrifts will take a one-time charge in order
to get their insurance premiums down to what Bank Insurance Fund members
are paying. This consolidation will be favorable to earnings. Another
significant development is the likelihood of banks being able to offer
insurance to their customers. Once this happens, you'll be able to go to
the bank or thrift for your car loan and get insurance coverage for the car
at the same time. This will change the channels of insurance distribution
and should have a positive effect on the sector.
Q. YOU MENTIONED MERGERS AND ACQUISITIONS EARLIER. WHY DO HOME FINANCE
INVESTORS LOOK UPON THESE TRANSACTIONS SO FAVORABLY?
A. It's basically a win-win situation. The selling institution receives a
premium compared to its current market price, and the acquiring institution
can reap future operational, market and financial benefits. There's good
news to be had on both ends.
Q. TURNING TO YOU, BILL, WHAT'S YOUR STRATEGY WITH RESPECT TO INTEREST
RATES?
A. Following rates is important on an absolute basis, but I don't make any
moves based solely on interest rates. Unless rates rise quickly and
substantially, thrifts should be able to react in time to avoid any
significant earnings problems. I'll focus on companies' internal operating
strategies, execution, and outlook.
Q. WHAT'S YOUR OUTLOOK FOR THE COMING MONTHS?
A. Earnings have been good, and I'm anticipating that this will continue in
the third and fourth quarters. The stocks that will perform best will be
those that produce earnings greater than expected, make logical
acquisitions that will boost earnings, and/or get acquired themselves.
Excess capital should continue to be re-deployed into stock buybacks,
higher dividends, and additional acquisitions. Credit quality and
non-performing assets should also continue to improve. If the Federal
Reserve Board lowers interest rates, I think the initial reaction will be
positive. If rates go up, the market's initial reaction could be negative.
A gradual increase, though, could allow thrifts to increase interest
spreads.
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.
FUND FACTS
START DATE: December 16, 1985
FUND NUMBER: 098
TRADING SYMBOL: FSVLX
SIZE: as of August 31, 1996, more than
$752 million
MANAGER: Bill Rubin, since October 1996;
manager, Fidelity Select Defense and
Aerospace Portfolio, since 1994; equity
analyst, savings & loans, aerospace,
defense electronics, cable equipment and
electronic connectors industries, since 1994;
joined Fidelity in 1994
(checkmark)
HOME FINANCE PORTFOLIO
INVESTMENTS AUGUST 31, 1996 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 78.0%
SHARES VALUE (NOTE 1)
BANKS - 29.5%
NATIONAL COMMERCIAL BANKS - 27.2%
Ambanc Holding, Inc. (a) 187,700 $ 1,853,530 02316110
Bank of Boston Corp. 331,659 17,495,013 06071610
Bank of New York Co., Inc. 804,000 22,411,500 06405710
Bank of New York Co., Inc.
(warrants) (a) 32,500 1,616,875 06405711
BankAmerica Corp. 240,000 18,600,000 06605010
Chase Manhattan Corp. 350,000 26,031,250 16161A10
Citicorp 60,000 4,995,000 17303410
Comerica, Inc. 65,000 3,168,750 20034010
CoreStates Financial Corp. 100,000 4,137,500 21869510
First Bank System, Inc. 35,000 2,248,750 31927910
First Savings Bank of Washington
Bancorp, Inc. 70,000 1,198,750 33620W10
First Tennessee National Corp. 45,000 1,535,625 33716210
First Union Corp. 155,974 9,962,839 33735810
Fleet Financial Group, Inc. 150,000 6,262,500 33891510
KeyCorp. 75,000 3,009,375 49326710
Mellon Bank Corp. 80,000 4,430,000 58550910
National City Corp. 39,200 1,474,900 63540510
NationsBank Corp. 240,000 20,430,000 63858510
PNC Financial Corp. 125,000 3,906,250 69347510
Peoples Heritage Financial Group, Inc. 454,800 10,005,600 71114710
Republic New York Corp. 240,000 15,870,000 76071910
TF Financial Corp. 100,000 1,450,000 87239110
Union Planters Corp. 205,000 6,739,375 90806810
UnionBanCal Corp. 249,000 12,014,250 90890610
Wachovia Corp. 95,000 4,346,250 92977110
Wells Fargo & Co. 12,000 2,985,000 94974010
208,178,882
STATE BANKS FEDERAL RESERVE - 2.3%
Crestar Financial Corp. 45,000 2,615,625 22609110
Dime Community Bancorp, Inc. (a) 550,000 7,356,250 25392210
R&G Financial Corp Class B 50,000 887,500 74913610
SouthTrust Corp. 40,000 1,180,000 84473010
T R Financial Corp. 185,000 5,249,375 87263010
17,288,750
TOTAL BANKS 225,467,632
COMPUTER SERVICES & SOFTWARE - 0.1%
CAD/CAM/CAE - 0.1%
Ultradata Corp. (a) 91,000 602,875 90388N10
CREDIT & OTHER FINANCE - 6.6%
BANK HOLDING COMPANY OFFICES - 2.1%
Greenpoint Financial Corp. 410,000 14,606,250 39538410
Little Falls Bancorp, Inc. 135,000 1,451,250 53710110
16,057,500
FINANCIAL SERVICES - 2.0%
First Chicago NBD Corp. 331,500 14,130,188 31945A10
RCSB Financial, Inc. 30,000 806,250 74937110
14,936,438
LOAN BROKERS - 0.3%
Imperial Thrift & Loan Association (a) 158,000 2,152,750 45310510
MORTGAGE BANKERS - 1.5%
First Alliance Mortgage Co. (a) 5,000 123,750 31793610
Imperial Credit Mortgage Holdings, Inc. 36,000 639,000 45292210
North American Mortgage Co. 70,000 1,198,750 65703710
PFF Bancorp, Inc. (a) 830,000 9,545,000 69331W10
11,506,500
SHARES VALUE (NOTE 1)
PERSONAL CREDIT INSTITUTIONS - 0.7%
Beneficial Corp. 100,000 $ 5,637,500 08172110
TOTAL CREDIT & OTHER FINANCE 50,290,688
FEDERAL SPONSORED CREDIT - 3.8%
FEDERAL & FEDERALLY SPONSORED CREDIT AGENCIES - 3.8%
Federal Home Loan Mortgage
Corporation 90,000 7,953,750 31340030
Federal National Mortgage Association 560,000 17,360,000 31358610
Student Loan Marketing Association 53,700 3,953,663 86387150
29,267,413
INSURANCE - 0.9%
INSURANCE BROKERS & SERVICES - 0.2%
Fidelity National Financial, Inc. 72,500 1,096,563 31632610
Stewart Information Services Corp. 12,900 267,675 86037210
1,364,238
PROPERTY-CASUALTY & REINSURANCE - 0.4%
PMI Group, Inc. 59,300 2,898,288 69344M10
SURETY INSURANCE - 0.3%
CMAC Investments 41,600 2,600,000 12566210
TOTAL INSURANCE 6,862,526
REAL ESTATE INVESTMENT TRUSTS - 1.9%
Capstead Mortgage Corp. 578,865 12,083,807 14067E10
Thornburg Mortgage Asset Corp. 162,000 2,652,750 88521810
14,736,557
SAVINGS & LOANS - 35.2%
SAVINGS BANKS & SAVINGS & LOANS - 22.2%
Astoria Financial Corp. 633,000 16,972,313 04626510
Bankers Corp. 79,500 1,530,375 06612010
Bay View Capital, Inc. 66,298 2,453,026 07262L10
BostonFed Bancorp, Inc. 79,700 1,006,213 10117810
Cameron Financial Corp. 110,000 1,567,500 13342510
Charter One Financial Corp. 620,000 23,598,750 16090310
Collective Bancorp., Inc. 531,290 13,946,363 19390110
Commercial Federal Corp. 210,600 8,213,400 20164710
Eagle Financial Corp. 10,000 242,500 26951310
First Bell Bancorp, Inc. 267,400 3,676,750 31930110
First Federal Savings & Loan Association 118,400 2,368,000 31994410
First Financial Corp. of Wisconsin 295,000 7,006,250 32022710
FirstFed Financial Corp. (a) 291,400 5,354,475 33790710
GA Financial, Inc. (a) 274,700 3,262,063 36143710
Glendale Federal Bank FSB (a) 379,600 6,737,900 37850750
Golden West Financial Corp. 120,000 6,660,000 38131710
Great Western Financial Corp. 561,273 13,891,507 39144210
North Side Savings Bank (b) 361,200 16,795,800 66248810
Pamrapo Bancorp, Inc. 35,000 686,875 69773810
Sovereign Bancorp., Inc. 100,000 1,068,750 84590510
Standard Federal Bancorp., Inc. 591,300 24,760,688 85338610
Statewide Financial Corp. 195,000 2,461,875 85791410
Webster Financial Corp. 158,600 5,114,850 94789010
169,376,223
SAVINGS BANKS, NO FEDERAL CHARTER - 3.3%
Acadiana Bancshares, Inc. (a) 163,300 2,163,725 00428010
Avondale Financial Corp. (a)(b) 272,300 3,846,238 05434110
Dime Financial Corp. (a) 270,300 4,189,650 25432H10
First Mutual Bancorp., Inc. 67,500 869,063 32094110
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
SAVINGS & LOANS - CONTINUED
SAVINGS BANKS, NO FEDERAL CHARTER - CONTINUED
Ocean Financial Corp. (a) 395,000 $ 8,986,250 67490410
People's Bancshares, Inc. 87,500 896,875 70979510
SIS Bancorp., Inc. (a) 60,000 1,290,000 78427E10
Walden Bancorp., Inc. 109,600 3,096,200 93119210
25,338,001
SAVINGS BANKS, FEDERAL CHARTER - 9.7%
Affiliated Community Bancorp., Inc. 90,000 1,912,500 00818810
Ahmanson (H.F.) & Co. 120,000 3,030,000 00867710
Albank Financial Corp. 167,500 4,878,438 01204610
American National Bancorp., Inc. 70,200 807,300 02772210
Bank United Corp. Class A (a) 331,800 8,004,675 06541210
Carver Federal Savings Bank (a)(b) 142,000 1,118,250 14700510
Catskill Financial Corp. (a) 55,000 605,000 14934810
CenFed Financial Corp. 47,295 1,140,992 15131U10
Citizens First Financial Corp. (a) 174,700 1,899,863 17462310
Dime Bancorp., Inc. (a) 150,000 1,968,750 25429Q10
First Bergen Bancorp. (a) 235,000 2,408,750 31891510
First Defiance Financial Corp. 110,000 1,168,750 32006W10
First Federal Bancshares of
Arkansas, Inc. 75,000 1,125,000 32020F10
First Palm Beach Bancorp., Inc. 15,000 339,375 33589B10
Leader Financial Corp. 110,000 5,472,500 52190610
Long Island Bancorp., Inc. 235,000 6,580,000 54266210
Quaker City Bancorp. (a) 115,000 1,681,875 74731K10
RedFed Bancorp, Inc. (a) 116,000 1,189,000 75734110
Roosevelt Financial Group, Inc. 175,000 3,084,375 77649310
SGV Bancorp., Inc. (a)(b) 140,000 1,260,000 78422T10
Teche Holding Co. 17,900 232,700 87833010
Washington Federal, Inc. 322,100 7,126,463 93882410
Washington Mutual, Inc. 433,000 15,696,250 93932210
Yonkers Financial Corp. 85,000 935,000 98607310
73,665,806
TOTAL SAVINGS & LOANS 268,380,030
TOTAL COMMON STOCKS
(Cost $503,495,956) 595,607,721
CONVERTIBLE PREFERRED STOCKS - 0.5%
REAL ESTATE INVESTMENT TRUSTS - 0.5%
Criimi Mae, Inc. $2.71875 70,000 1,872,500 22660320
Walden Residential Properties, Inc.,
Series B, $2.29 80,000 2,040,000 93121030
TOTAL CONVERTIBLE PREFERRED STOCKS
(Cost $3,750,000) 3,912,500
REPURCHASE AGREEMENTS - 21.5%
MATURITY VALUE
AMOUNT (NOTE 1)
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 5.25%, dated
8/30/96 due 9/3/96 (Note 3) $ 164,273,771 164,178,000 69899TYY
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $671,423,956) $ 763,698,221
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 VALUE
AFFILIATE COST COST INCOME
Avondale Financial Corp. $ - $ 602,263 $ - $ 3,846,238
Cameron Financial Corp - 1,061,406 22,204 -
Carver Federal Savings Bank - 603,477 - 1,118,250
Farmers & Mechanics Bank - 72,600 - -
Mississippi View Holding Co. - 309,375 - -
North Side Savings Bank 515,650 920,416 206,125 16,795,800
SGV Bancorp., Inc. - 1,163,938 - 1,260,000
Wells Financial Corp. - 1,074,813 - -
Totals $ 515,650 $ 5,808,288 $ 228,329 $ 23,020,288
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $256,311,491 and $251,749,349, respectively (see Note 4 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $92,535 for the period (see
Note 5 of Notes to Financial Statements).
INCOME TAX INFORMATION
At August 31, 1996, the aggregate cost of investment securities for income
tax purposes was $671,620,314. Net unrealized appreciation aggregated
$92,077,907, of which $95,661,782 related to appreciated investment
securities and $3,583,875 related to depreciated investment securities.
HOME FINANCE PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1996 (UNAUDITED)
ASSETS
Investment in $ 763,698,221
securities, at
value (including
repurchase
agreements of
$164,178,000)
(cost
$671,423,956)
- - See
accompanying
schedule
Receivable for 2,645,168
fund shares sold
Dividends 740,737
receivable
Redemption fees 6,395
receivable
Other receivables 30,726
Prepaid expenses 15,507
TOTAL ASSETS 767,136,754
LIABILITIES
Payable to $ 108,514
custodian bank
Payable for 4,950,056
investments
purchased
Payable for fund 8,357,111
shares
redeemed
Accrued 352,078
management
fee
Other payables 465,556
and
accrued
expenses
TOTAL LIABILITIES 14,233,315
NET ASSETS $ 752,903,439
Net Assets
consist of:
Paid in capital $ 618,917,475
Undistributed net 4,230,042
investment
income
Accumulated 37,481,657
undistributed net
realized gain
(loss) on
investments and
foreign currency
transactions
Net unrealized 92,274,265
appreciation
(depreciation)
on investments
NET ASSETS, for $ 752,903,439
21,127,092
shares
outstanding
NET ASSET VALUE $35.64
and redemption
price per share
($752,903,439 (divided by)
21,127,092
shares)
Maximum offering $36.74
price per share
(100/97.00 of
$35.64)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED AUGUST 31, 1996 (UNAUDITED)
INVESTMENT $ 6,387,323
INCOME
Dividends
(including
$228,329
received from
affiliated
issuers)
Interest 1,757,044
TOTAL INCOME 8,144,367
EXPENSES
Management fee $ 1,679,402
Transfer agent 1,920,714
fees
Accounting fees 230,876
and expenses
Non-interested 1,002
trustees'
compensation
Custodian fees 13,940
and expenses
Registration fees 36,796
Audit 38,642
Legal 2,462
Miscellaneous 3,528
Total expenses 3,927,362
before
reductions
Expense (22,252 3,905,110
reductions )
NET INVESTMENT 4,239,257
INCOME
REALIZED AND 37,876,439
UNREALIZED GAIN
(LOSS)
Net realized gain
(loss) on
investment
securities
(including
realized gain of
$3,693,051 on
sale of
investments in
affiliated
issuers)
Change in net 4,319,948
unrealized
appreciation
(depreciation)
on investment
securities
NET GAIN (LOSS) 42,196,387
NET INCREASE $ 46,435,644
(DECREASE) IN
NET ASSETS
RESULTING FROM
OPERATIONS
OTHER $ 1,773,155
INFORMATION
Sales charges
paid to FDC
Deferred sales $ 2,819
charges
withheld
by FDC
Exchange fees $ 120,863
withheld by FSC
Expense $ 17,126
reductions
Directed
brokerage
arrangements
Custodian 1,546
interest credits
Transfer agent 3,580
interest credits
$ 22,252
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS YEAR ENDED
ENDED FEBRUARY 29,
AUGUST 31, 1996 1996
(UNAUDITED)
Operations $ 4,239,257 $ 7,032,404
Net investment
income
Net realized 37,876,439 39,131,196
gain (loss)
Change in net 4,319,948 72,785,221
unrealized
appreciation
(depreciation)
NET INCREASE 46,435,644 118,948,821
(DECREASE) IN
NET ASSETS
RESULTING
FROM
OPERATIONS
Distributions to (1,990,900 (3,332,255
shareholders ) )
From net
investment
income
From net (14,298,615 (12,803,251
realized gain ) )
TOTAL (16,289,515 (16,135,506
DISTRIBUTIONS ) )
Share 472,666,405 936,625,637
transactions
Net proceeds
from sales of
shares
Reinvestment of 16,010,879 15,962,916
distributions
Cost of shares (383,377,769 (669,013,084
redeemed ) )
Paid in capital 422,355 722,441
portion of
redemption fees
NET INCREASE 105,721,870 284,297,910
(DECREASE) IN
NET ASSETS
RESULTING
FROM SHARE
TRANSACTIONS
TOTAL 135,867,999 387,111,225
INCREASE
(DECREASE) IN
NET ASSETS
NET ASSETS
Beginning of 617,035,440 229,924,215
period
End of period $ 752,903,439 $ 617,035,440
(including
undistributed
net investment
income of
$4,230,042
and
$3,690,897,
respectively)
OTHER
INFORMATION
Shares
Sold 13,736,739 31,755,939
Issued in 475,383 501,513
reinvestment of
distributions
Redeemed (11,617,111 (23,337,483
) )
Net increase 2,595,011 8,919,969
(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> <C>
SIX MONTHS YEAR ENDED YEARS ENDED FEBRUARY 28, TEN MONTHS YEAR ENDED
ENDED FEBRUARY 29, ENDED APRIL 30,
AUGUST 31, 1996 FEBRUARY 28,
SELECTED PER-SHARE DATA D (UNAUDITED) 1996 1995 1994 1993 1992
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Net asset value, $ 33.30 $ 23.92 $ 25.03 $ 22.18 $ 15.38 $ 10.84
beginning of
period
Income from
Investment
Operations
Net investment .26 .53 .20 .03 .09 .05
income
Net realized and 2.95 9.72 2.34 4.15 6.80 4.40
unrealized gain
(loss)
Total from 3.21 10.25 2.54 4.18 6.89 4.45
investment
operations
Less Distributions
From net (.11) (.19) (.12) (.01) (.01) (.14)
investment
income
From net (.79) (.73) (3.60) (1.40) (.28) -
realized gain
Total (.90) (.92) (3.72) (1.41) (.29) (.14)
distributions
Redemption fees .03 .05 .07 .08 .20 .23
added to paid in
capital
Net asset value, $ 35.64 $ 33.30 $ 23.92 $ 25.03 $ 22.18 $ 15.38
end of period
TOTAL RETURN B, C 9.89% 43.24% 12.43% 19.61% 46.43% 43.62%
RATIOS AND
SUPPLEMENTAL
DATA
Net assets, end of $ 752,903 $ 617,035 $ 229,924 $ 155,563 $ 337,903 $ 49,405
period (000
omitted)
Ratio of expenses 1.40% A 1.35% 1.47% 1.58% 1.55% A 2.08%
to average net
assets
Ratio of expenses 1.39% A, 1.32% 1.45% 1.58% 1.55% A 2.08%
to average net E E E
assets
after expense
reductions
Ratio of net 1.51% A 1.80% .80% .11% .61% A .40%
investment
income to
average net
assets
Portfolio turnover 99% A 81% 124% 95% 61% A 134%
rate
Average $ .0403
commission
rate F
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <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 9 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 9 OF NOTES TO FINANCIAL
STATEMENTS). F FOR FISCAL YEARS BEGINNING ON
OR AFTER SEPTEMBER 1, 1995, A FUND IS REQUIRED TO DISCLOSE ITS
AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT
MAY VARY FROM PERIOD TO PERIOD AND
FUND TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN
VARIOUS MARKETS WHERE TRADING PRACTICES AND
COMMISSION RATE STRUCTURES MAY DIFFER.
</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. A fund's total return includes
changes in 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 6 PAST 1 PAST 5 PAST 10
AUGUST 31, 1996 MONTH YEAR YEARS YEARS
S
INSURANCE 3.35% 16.82% 111.56% 172.70%
INSURANCE 0.25% 13.32% 105.22% 164.52%
(INCL. 3% SALES CHARGE)
S&P 500 2.96% 18.73% 89.14% 251.21%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one, five, or 10 years. You
can compare these figures to the performance of the S&P 500 - a widely
recognized, unmanaged index of common stocks. This benchmark reflects
reinvestment of dividends and capital gains, if any, but does not reflect
any sales charges, brokerage commissions, or other costs of investing.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
AUGUST 31, 1996 YEAR YEARS YEARS
INSURANCE 16.82% 16.17% 10.55%
INSURANCE 13.32% 15.46% 10.22%
(INCL. 3% SALES CHARGE)
S&P 500 18.73% 13.59% 13.34%
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
IMAHDR PRASUN SHR__CHT 19960831 19960910 135040 S00000000000001
Insurance SP Standard & Poor 500
00045 SP001
1986/08/31 9700.00 10000.00
1986/09/30 8438.27 9173.00
1986/10/31 8350.75 9702.28
1986/11/30 8073.61 9938.05
1986/12/31 8000.68 9684.63
1987/01/31 8562.26 10989.15
1987/02/28 9466.62 11423.22
1987/03/31 8985.26 11753.35
1987/04/30 8241.35 11648.74
1987/05/31 8131.95 11750.09
1987/06/30 8394.51 12343.47
1987/07/31 8474.74 12969.28
1987/08/31 9087.37 13453.04
1987/09/30 9087.37 13158.41
1987/10/31 7380.75 10324.09
1987/11/30 6862.93 9473.39
1987/12/31 7027.88 10194.31
1988/01/31 7568.48 10623.49
1988/02/29 7561.08 11118.55
1988/03/31 7383.34 10774.98
1988/04/30 7331.50 10894.59
1988/05/31 7531.45 10989.37
1988/06/30 7872.11 11493.78
1988/07/31 7909.14 11450.10
1988/08/31 7990.60 11060.80
1988/09/30 8264.61 11531.99
1988/10/31 8227.58 11852.58
1988/11/30 8049.84 11683.09
1988/12/31 8250.84 11887.54
1989/01/31 8878.05 12757.71
1989/02/28 8937.78 12440.04
1989/03/31 9146.85 12729.90
1989/04/30 9445.53 13390.58
1989/05/31 9497.79 13932.90
1989/06/30 9706.77 13853.48
1989/07/31 10521.90 15104.45
1989/08/31 10843.47 15400.50
1989/09/30 10993.03 15337.35
1989/10/31 11351.99 14981.53
1989/11/30 11658.60 15287.15
1989/12/31 11372.22 15654.04
1990/01/31 10406.94 14603.66
1990/02/28 10701.05 14792.04
1990/03/31 10648.26 15184.03
1990/04/30 10278.74 14804.43
1990/05/31 11221.39 16247.86
1990/06/30 11251.56 16137.38
1990/07/31 11085.65 16085.74
1990/08/31 9931.84 14631.59
1990/09/30 9072.14 13919.03
1990/10/31 8710.15 13859.18
1990/11/30 9863.97 14754.48
1990/12/31 10256.11 15166.13
1991/01/31 10806.62 15827.37
1991/02/28 11900.11 16959.03
1991/03/31 12684.40 17369.44
1991/04/30 12616.53 17411.13
1991/05/31 12933.26 18163.29
1991/06/30 12129.29 17331.41
1991/07/31 12579.65 18139.05
1991/08/31 12503.32 18568.95
1991/09/30 12625.45 18258.85
1991/10/31 13007.11 18503.51
1991/11/30 12892.61 17757.82
1991/12/31 14018.09 19789.32
1992/01/31 14002.77 19421.24
1992/02/29 14378.12 19673.71
1992/03/31 14171.30 19290.07
1992/04/30 13811.27 19857.20
1992/05/31 13995.11 19954.50
1992/06/30 14287.90 19657.18
1992/07/31 15097.43 20461.16
1992/08/31 14655.11 20041.71
1992/09/30 15431.26 20278.20
1992/10/31 16090.58 20349.17
1992/11/30 16641.40 21043.08
1992/12/31 17172.33 21301.91
1993/01/31 17890.31 21480.84
1993/02/28 18228.18 21772.98
1993/03/31 19191.11 22232.39
1993/04/30 18734.46 21694.37
1993/05/31 18251.92 22275.78
1993/06/30 18446.63 22340.38
1993/07/31 19090.02 22251.02
1993/08/31 20063.57 23094.33
1993/09/30 20131.29 22916.50
1993/10/31 19547.16 23390.88
1993/11/30 18353.51 23168.66
1993/12/31 18576.42 23449.00
1994/01/31 18826.82 24246.27
1994/02/28 18001.41 23589.20
1994/03/31 17157.45 22560.71
1994/04/30 17342.94 22849.48
1994/05/31 18140.53 23224.22
1994/06/30 18038.51 22655.22
1994/07/31 18372.38 23398.31
1994/08/31 18873.20 24357.64
1994/09/30 18743.36 23760.88
1994/10/31 18511.50 24295.50
1994/11/30 17574.79 23410.66
1994/12/31 18511.50 23757.84
1995/01/31 19179.25 24373.88
1995/02/28 19763.53 25323.73
1995/03/31 20078.85 26071.03
1995/04/30 20264.36 26838.83
1995/05/31 20710.34 27911.57
1995/06/30 21360.73 28559.96
1995/07/31 22001.83 29507.01
1995/08/31 22642.93 29581.07
1995/09/30 23767.18 30829.39
1995/10/31 23051.75 30719.33
1995/11/30 24426.87 32067.91
1995/12/31 24955.28 32685.54
1996/01/31 25681.95 33798.15
1996/02/29 25595.90 34111.46
1996/03/31 25309.05 34439.95
1996/04/30 24995.13 34947.60
1996/05/31 25500.28 35848.90
1996/06/30 25956.86 35985.48
1996/07/31 25383.71 34395.64
1996/08/30 26452.29 35121.05
IMATRL PRASUN SHR__CHT 19960831 19960910 135045 R00000000000123
Let's say hypothetically that $10,000 was invested in Fidelity Select
Insurance Portfolio on August 31, 1986, and a 3% sales charge was paid. By
August 31, 1996, the investment would have grown to $26,452 - a 164.52%
increase. That compares to $10,000 invested in the S&P 500, which would
have grown to $35,121 over the same period - a 251.21% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST 31, 1996
% OF FUND'S
INVESTMENTS
Allstate Corp. 4.6
CIGNA Corp. 4.3
Progressive Corp. 3.7
General Re Corp. 3.5
Aetna, Inc. 3.5
Transamerica Corp. 3.4
MBIA, Inc. 3.1
American International Group, Inc. 2.9
UNUM Corp. 2.8
Travelers, Inc. (The) 2.5
TOP INDUSTRIES AS OF AUGUST 31, 1996
Row: 1, Col: 1, Value: 27.6
Row: 1, Col: 2, Value: 4.3
Row: 1, Col: 3, Value: 5.9
Row: 1, Col: 4, Value: 11.7
Row: 1, Col: 5, Value: 14.5
Row: 1, Col: 6, Value: 36.0
Property-Casualty
& Reinsurance 36.0%
Life Insurance 14.5%
Multi-Line Insurance 11.7%
Insurance Carriers 5.9%
Financial Services 4.3%
All Others 27.6% *
* INCLUDES SHORT-TERM INVESTMENTS
INSURANCE PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Michael Tempero,
Portfolio Manager of
Fidelity Select Insurance Portfolio
Q. MIKE, HOW HAS THE FUND PERFORMED?
A. For the six- and 12-month periods ended August 31, 1996, the fund
returned 3.35% and 16.82%, respectively. The Standard & Poor's 500 Index
returned 2.96% and 18.73% for the same six- and 12-month periods.
Q. INSURANCE STOCKS HAD A GOOD RUN - THANKS IN PART TO FALLING INTEREST
RATES DURING THE LAST SEVERAL MONTHS OF 1995. WERE RISING INTEREST RATES
THE REASON WHY INSURANCE STOCKS HAD A TOUGHER TIME DURING THE MOST RECENT
SIX-MONTH PERIOD?
A. That's part of the reason. Insurance companies typically invest the
premiums they collect in bonds. As interest rates rose, the value of the
insurance companies' bond portfolios dropped, and insurance companies had a
lower implied liquidation value. But in late summer, interest rates
stabilized somewhat. Insurance stock prices responded positively to that
development. Additionally, insurance stocks had a strong run in the
previous six months, with many stocks gaining 20%, 25% or more in just half
a year. So in my view, it wasn't all that surprising that they took a break
during the past six months.
Q. WHICH STOCKS HAVE DONE WELL OVER THE PAST SIX MONTHS?
A. Allstate, the fund's largest holding at the end of the period, was a
good performer. The company is one of the largest property-liability
insurers in the United States, based on premiums earned. On the expenditure
side, Allstate has done a good job of cutting costs, and, on the revenue
side, it grew its business through market share gains. Other strong
performers included municipal bond insurers - most notably MBIA. The
business of providing insurance for municipal bonds was very stable. These
companies also expanded their businesses by insuring asset-backed
securities. In addition to MBIA, other municipal bond insurers including
AMBAC, Capital Re and Enhance Financial, benefited from those trends and
helped the fund's performance.
Q. WHICH STOCKS DIDN'T FARE AS WELL OVER THE PAST SIX MONTHS?
A. Multi-line insurer CIGNA proved to be a disappointment. You may recall
that six months ago CIGNA was one of the fund's top performers. The stock
had a great run-up the spring, and I think it just took time out to rest in
the summer. The company continued to post strong earnings as it
restructured some of its businesses and took charges to put some of its
asbestos and environmental liability behind it. In my view, the stock
continued to represent a good value, selling at about eight or nine times
earnings, compared to the insurance stock group, which sells at about 10 to
11 times earnings. Another lackluster performer was Aetna, which recently
purchased U.S. Healthcare - one of the country's largest health maintenance
organizations (HMOs). Within the HMO sector, costs were rising faster than
HMOs could raise prices. These unfavorable cost trends meant that profit
margins were squeezed. Finally, there was American International Group
(AIG), which specializes in commercial- and industrial-insurance coverage.
AIG derives a significant portion of its revenue from overseas, and when
the dollar rose, its premium growth was somewhat eroded.
Q. A NEW ADDITION TO THE FUND'S TOP 10 HOLDINGS WAS UNUM. WHAT MADE THAT
STOCK SO ATTRACTIVE?
A. One factor was the anticipation of a better competitive environment. The
number two and number three players within the disability insurance arena
are merging. That could help to create more pricing power for disability
insurance providers. If so, UNUM, the top pro-
vider of individual and group disability coverage, should be a prime
beneficiary of that trend.
Q. WHAT'S YOUR OUTLOOK?
A. It's mixed. Insurance companies that supply coverage to commercial
entities could be negatively affected by a more competitive environment.
That could put a strain on their profitability. However, I think that there
will be segments of the industry where things will be better. So my focus
will be on trying to add value, one stock at a time, looking for the best
companies in what I believe to be the strongest segments in the insurance
sector.
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: December 16, 1985
FUND NUMBER: 045
TRADING SYMBOL: FSPCX
SIZE: as of August 31, 1996, more than
$41 million
MANAGER: Michael Tempero, since 1995;
manager, Fidelity Select Natural Gas Portfolio,
1994-1995; analyst, oil and gas exploration
and production, conglomerates and household
products; joined Fidelity in 1993
(checkmark)
INSURANCE PORTFOLIO
INVESTMENTS AUGUST 31, 1996 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 79.0%
SHARES VALUE (NOTE 1)
CREDIT & OTHER FINANCE - 5.7%
FINANCIAL SERVICES - 4.3%
Equitable Companies, Inc. 14,200 $ 349,675 29444G10
Transamerica Corp. 21,200 1,444,250 89348510
1,793,925
MORTGAGE BANKERS - 1.4%
Southern Pacific Funding Corp. 2,000 51,500 84357610
Triad Guaranty, Inc. (a) 20,150 554,125 89592510
605,625
TOTAL CREDIT & OTHER FINANCE 2,399,550
GAS - 0.1%
GAS TRANSMISSION & DISTRIBUTION - 0.1%
Consolidated Natural Gas Co. 1,000 54,374 20961510
INSURANCE - 73.2%
ACCIDENT & HEALTH INSURANCE - 0.7%
Provident Companies, Inc. 7,400 273,800 74386210
INSURANCE BROKERS & SERVICES - 4.2%
Alexander & Alexander Services, Inc. 6,800 107,100 01447610
Frontier Insurance Group, Inc. 4,640 180,960 35908110
ITT Hartford Group, Inc. 7,700 406,175 45068H10
Marsh & McLennan Companies, Inc. 10,400 967,200 57174810
Mutual Risk Management Ltd. 4,000 126,000 62835110
1,787,435
INSURANCE CARRIERS - 5.9%
AFLAC, Inc. 15,000 515,625 00105510
AMBAC, Inc. 6,000 326,250 02313910
MBIA, Inc. 15,800 1,287,700 55262C10
MGIC Investment Corp. 5,700 361,237 55284810
2,490,812
LIFE INSURANCE - 14.5%
American General Corp. 28,000 1,022,000 02635110
Aon Corp. 1,300 65,650 03738910
Conseco, Inc. 6,200 260,400 20846410
Equitable of Iowa Companies 4,100 150,675 29451030
Jefferson Pilot Corp. 15,700 806,587 47507010
Penncorp Financial Group, Inc. 5,000 152,500 70809410
Protective Life Corp. 5,000 176,250 74367410
Providian Corp. 21,000 868,875 74406110
Reliastar Financial Corp. 10,134 447,163 75952U10
SunAmerica, Inc. 27,800 946,938 86693010
UNUM Corp. 18,900 1,200,150 90319210
6,097,188
MULTI-LINE INSURANCE - 11.7%
Aetna, Inc. 22,100 1,461,362 00811710
American Financial Group, Inc. 10,000 311,250 02608W10
CIGNA Corp. 15,600 1,811,550 12550910
CNA Financial Corp. (a) 8,000 804,000 12611710
Masthead Insurance Underwriting PLC 25,000 42,555 57699F22
Syndicate Capital Trust PLC 9,500 16,171 87199B22
US Facilities Corp. 29,300 498,100 91182210
4,944,988
PROPERTY-CASUALTY & REINSURANCE - 36.0%
ACE Ltd. 11,800 550,175 00499G92
Acceptance Insurance Co., Inc. 20,000 345,000 00430810
Allmerica Financial Corp. 3,100 95,713 01975410
Allstate Corp. 43,300 1,932,263 02000210
American International Group, Inc. 12,800 1,216,000 02687410
American Reinsurance Corp. 10,000 631,250 02916310
Berkley (W.R.) Corp. 3,100 141,050 08442310
SHARES VALUE (NOTE 1)
Capital Re Corp. 8,200 $ 311,600 14043210
CapMAC Holdings, Inc. 5,000 146,250 14064910
Chartwell Re Corp. 10,000 252,500 16139W10
Chubb Corp. (The) 19,000 843,125 17123210
Cincinnati Financial Corp. 11,410 618,992 17206210
Commerce Group, Inc. 3,000 62,625 20064110
Enhance Financial Services Group Corp. 9,000 258,750 29331010
Everest Reinsurance Holdings, Inc. 5,400 131,625 29980810
Executive Risk, Inc. 2,000 68,750 30158610
Fremont General Corp. 3,100 84,088 35728810
General Re Corp. 10,100 1,463,238 37056310
Gryphon Holdings, Inc. (a) 48,300 603,750 40051510
Harleysville Group, Inc. 3,100 77,500 41282410
Hartford Steam Boiler Inspection &
Insurance Co. 3,000 133,875 41670410
Integon Corp. 3,000 61,125 45810F10
NY Magic, Inc. 6,200 116,250 62948410
PMI Group, Inc. 15,800 772,225 69344M10
PXRE Corp. 2,500 58,125 69367410
Progressive Corp. 28,400 1,544,250 74331510
Reinsurance Group of America, Inc. 8,200 329,025 75935110
SAFECO Corp. 10,000 331,250 78642910
St. Paul Companies, Inc. (The) 4,000 207,000 79286010
TIG Holdings, Inc. 8,000 230,000 87246910
Terra Nova (Bermuda) Holdings Ltd. 2,400 43,800 90699Q22
Travelers, Inc. (The) 24,700 1,071,362 89419010
USF&G Corp. 18,000 290,250 90329010
Unionamerica Holdings PLC
sponsored ADR 9,300 173,213 90904810
15,195,994
SURETY INSURANCE - 0.2%
Financial Security Assurance
Holdings Ltd. 2,400 68,700 31769P10
TOTAL INSURANCE 30,858,917
TOTAL COMMON STOCKS
(Cost $31,909,907) 33,312,841
REPURCHASE AGREEMENTS - 21.0%
MATURITY VALUE
AMOUNT (NOTE 1)
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 5.25%, dated
8/30/96 due 9/3/96 (Note 3) $ 8,861,166 8,856,000 69899TYY
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $40,765,907) $ 42,168,841
LEGEND
1. Non-income producing
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $20,999,384 and $25,036,390, respectively (see Note 4 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $10,567 for the period (see
Note 5 of Notes to Financial Statements).
INCOME TAX INFORMATION
At August 31, 1996, the aggregate cost of investment securities for income
tax purposes was $40,767,623. Net unrealized appreciation aggregated
$1,401,218 of which $2,181,449 related to appreciated investment securities
and $780,231 related to depreciated investment securities.
On October 26, 1990, the fund acquired all 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.
INSURANCE PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1996 (UNAUDITED)
ASSETS
Investment in $ 42,168,841
securities, at
value (including
repurchase
agreements of
$8,856,000)
(cost
$40,765,907) -
See
accompanying
schedule
Cash 495
Receivable for 234,338
investments
sold
Receivable for 99,016
fund shares sold
Dividends 31,725
receivable
Redemption fees 851
receivable
Prepaid expenses 5,608
TOTAL ASSETS 42,540,874
LIABILITIES
Payable for fund $ 1,093,722
shares
redeemed
Accrued 17,997
management
fee
Other payables 48,424
and
accrued
expenses
TOTAL LIABILITIES 1,160,143
NET ASSETS $ 41,380,731
Net Assets
consist of:
Paid in capital $ 38,003,804
Undistributed net 33,696
investment
income
Accumulated 1,940,287
undistributed net
realized gain
(loss) on
investments and
foreign currency
transactions
Net unrealized 1,402,944
appreciation
(depreciation)
on investments
and assets and
liabilities in
foreign
currencies
NET ASSETS, for $ 41,380,731
1,519,500
shares
outstanding
NET ASSET VALUE $27.23
and redemption
price per share
($41,380,731 (divided by)
1,519,500
shares)
Maximum offering $28.07
price per share
(100/97.00 of
$27.23)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED AUGUST 31, 1996 (UNAUDITED)
INVESTMENT $ 246,728
INCOME
Dividends
Interest 66,670
TOTAL INCOME 313,398
EXPENSES
Management fee $ 97,182
Transfer agent 135,852
fees
Accounting fees 30,091
and expenses
Non-interested 58
trustees'
compensation
Custodian fees 8,968
and expenses
Registration fees 6,203
Audit 13,629
Legal 131
Miscellaneous 580
Total expenses 292,694
before
reductions
Expense (13,372 279,322
reductions )
NET INVESTMENT 34,076
INCOME
REALIZED AND
UNREALIZED GAIN
(LOSS)
Net realized gain
(loss) on:
Investment 1,971,351
securities
Foreign (1 1,971,350
currency )
transactions
Change in net
unrealized
appreciation
(depreciation)
on:
Investment (1,883,728
securities )
Assets and 10 (1,883,718
liabilities in )
foreign
currencies
NET GAIN (LOSS) 87,632
NET INCREASE $ 121,708
(DECREASE) IN
NET ASSETS
RESULTING FROM
OPERATIONS
OTHER $ 115,718
INFORMATION
Sales charges
paid to FDC
Deferred sales $ 857
charges
withheld
by FDC
Exchange fees $ 16,305
withheld by FSC
Expense $ 13,368
reductions
Directed
brokerage
arrangements
Custodian 4
interest credits
$ 13,372
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS YEAR ENDED
Operations ENDED FEBRUARY 29,
AUGUST 31, 1996 1996
(UNAUDITED)
Net investment $ 34,076 $ 54,801
income
Net realized 1,971,350 2,892,996
gain (loss)
Change in net (1,883,718 1,911,651
unrealized )
appreciation
(depreciation)
NET INCREASE 121,708 4,859,448
(DECREASE) IN
NET ASSETS
RESULTING
FROM
OPERATIONS
Distributions to (16,906 (62,008
shareholders ) )
From net
investment
income
In excess of net (8,002 -
investment )
income
From net (469,749 (753,776
realized gain ) )
TOTAL (494,657 (815,784
DISTRIBUTIONS ) )
Share 47,891,150 47,521,158
transactions
Net proceeds
from sales of
shares
Reinvestment of 482,962 802,788
distributions
Cost of shares (45,716,701 (35,249,916
redeemed ) )
Paid in capital 102,570 37,695
portion of
redemption fees
NET INCREASE 2,759,981 13,111,725
(DECREASE) IN
NET ASSETS
RESULTING
FROM SHARE
TRANSACTIONS
TOTAL 2,387,032 17,155,389
INCREASE
(DECREASE) IN
NET ASSETS
NET ASSETS
Beginning of 38,993,699 21,838,310
period
End of period $ 41,380,731 $ 38,993,699
(including
undistributed
net investment
income of
$33,696 and
$55,083,
respectively)
OTHER
INFORMATION
Shares
Sold 1,789,641 1,872,126
Issued in 19,318 31,329
reinvestment of
distributions
Redeemed (1,746,002 (1,471,921
) )
Net increase 62,957 431,534
(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> <C>
SIX MONTHS YEAR ENDED YEARS ENDED FEBRUARY 28, TEN MONTHS YEAR ENDED
ENDED FEBRUARY 29, ENDED APRIL 30,
AUGUST 31, 1996 FEBRUARY 28,
SELECTED PER-SHARE DATA D (UNAUDITED) 1996 1995 1994 1993 1992
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Net asset value, $ 26.77 $ 21.31 $ 19.41 $ 21.58 $ 18.03 $ 16.73
beginning of
period
Income from
Investment
Operations
Net investment .03 .06 .05 - (.04) .04
income (loss)
Net realized and .75 6.15 1.78 (.24) 5.12 1.48
unrealized gain
(loss)
Total from .78 6.21 1.83 (.24) 5.08 1.52
investment
operations
Less Distributions
From net (.01) (.07) - (.01) - (.26)
investment
income
In excess of net (.01) - - - (.03) -
investment
income
From net (.38) (.72) - (1.96) (1.71) -
realized gain
Total (.40) (.79) - (1.97) (1.74) (.26)
distributions
Redemption fees .08 .04 .07 .04 .21 .04
added to paid in
capital
Net asset value, $ 27.23 $ 26.77 $ 21.31 $ 19.41 $ 21.58 $ 18.03
end of period
TOTAL RETURN B, C 3.35% 29.51% 9.79% (1.24)% 31.98% 9.47%
RATIOS AND $ 41,381 $ 38,994 $ 21,838 $ 18,419 $ 26,367 $ 2,573
SUPPLEMENTAL
DATA
Net assets, end of
period (000
omitted)
Ratio of expenses 1.80% A 1.77% 2.36% 1.93% 2.49% A, 2.47%
to average net F F
assets
Ratio of expenses 1.72% A, 1.74% 2.34% 1.93% 2.49% A 2.47%
to average net E E E
assets after
expense
reductions
Ratio of net .21% A .26% .25% (.02)% (.26)% A .22%
investment
income (loss) to
average net
assets
Portfolio turnover 141% A 164% 265% 101% 81% A 112%
rate
Average $ .0257
commission
rate G
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <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 9 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 9 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. G FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER
1, 1995, A FUND IS REQUIRED TO
DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR SECURITY
TRADES ON WHICH COMMISSIONS ARE CHARGED.
THIS AMOUNT MAY VARY FROM PERIOD TO PERIOD AND FUND TO FUND
DEPENDING ON THE MIX OF TRADES EXECUTED
IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION RATE
STRUCTURES MAY DIFFER.
</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. A fund's total return includes
changes in 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 6 PAST 1 PAST 5 PAST 10
AUGUST 31, 1996 MONTH YEAR YEARS YEARS
S
REGIONAL BANKS 8.39% 27.14% 205.60% 401.37%
REGIONAL BANKS 5.14% 23.32% 196.43% 386.33%
(INCL. 3% SALES CHARGE)
S&P 500 2.96% 18.73% 89.14% 251.21%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one, five, or 10 years. You
can compare these figures to the performance of the S&P 500 - a widely
recognized, unmanaged index of common stocks. This benchmark reflects
reinvestment of dividends and capital gains, if any, but does not reflect
any sales charges, brokerage commissions, or other costs of investing.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
AUGUST 31, 1996 YEAR YEARS YEARS
REGIONAL BANKS 27.14% 25.03% 17.49%
REGIONAL BANKS 23.32% 24.28% 17.14%
(INCL. 3% SALES CHARGE)
S&P 500 18.73% 13.59% 13.34%
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
IMAHDR PRASUN SHR__CHT 19960831 19960910 152255 S00000000000001
Regional Banks SP Standard & Poor 500
00507 SP001
1986/08/31 9700.00 10000.00
1986/09/30 8646.74 9173.00
1986/10/31 8867.43 9702.28
1986/11/30 8837.33 9938.05
1986/12/31 8566.49 9684.63
1987/01/31 9198.45 10989.15
1987/02/28 9810.34 11423.22
1987/03/31 9830.40 11753.35
1987/04/30 9238.57 11648.74
1987/05/31 9288.73 11750.09
1987/06/30 9619.75 12343.47
1987/07/31 9619.75 12969.28
1987/08/31 10061.12 13453.04
1987/09/30 9800.31 13158.41
1987/10/31 8195.35 10324.09
1987/11/30 7934.54 9473.39
1987/12/31 8305.37 10194.31
1988/01/31 8893.46 10623.49
1988/02/29 9120.44 11118.55
1988/03/31 9326.78 10774.98
1988/04/30 9223.61 10894.59
1988/05/31 9388.68 10989.37
1988/06/30 10048.99 11493.78
1988/07/31 10100.57 11450.10
1988/08/31 9966.45 11060.80
1988/09/30 10348.19 11531.99
1988/10/31 10471.99 11852.58
1988/11/30 10214.06 11683.09
1988/12/31 10440.31 11887.54
1989/01/31 11103.19 12757.71
1989/02/28 11268.91 12440.04
1989/03/31 12196.93 12729.90
1989/04/30 12517.33 13390.58
1989/05/31 13478.50 13932.90
1989/06/30 13254.31 13853.48
1989/07/31 14433.95 15104.45
1989/08/31 14790.07 15400.50
1989/09/30 14912.49 15337.35
1989/10/31 13532.53 14981.53
1989/11/30 13510.27 15287.15
1989/12/31 13222.25 15654.04
1990/01/31 12030.95 14603.66
1990/02/28 12526.35 14792.04
1990/03/31 12219.67 15184.03
1990/04/30 11523.77 14804.43
1990/05/31 12325.83 16247.86
1990/06/30 11842.23 16137.38
1990/07/31 11122.73 16085.74
1990/08/31 10084.77 14631.59
1990/09/30 8858.08 13919.03
1990/10/31 8598.59 13859.18
1990/11/30 9742.71 14754.48
1990/12/31 10489.31 15166.13
1991/01/31 11185.40 15827.37
1991/02/28 12133.52 16959.03
1991/03/31 12817.60 17369.44
1991/04/30 13681.71 17411.13
1991/05/31 14569.82 18163.29
1991/06/30 13705.71 17331.41
1991/07/31 14845.86 18139.05
1991/08/31 15913.99 18568.95
1991/09/30 15601.95 18258.85
1991/10/31 16250.03 18503.51
1991/11/30 15505.94 17757.82
1991/12/31 17390.53 19789.32
1992/01/31 18478.23 19421.24
1992/02/29 19970.66 19673.71
1992/03/31 19692.41 19290.07
1992/04/30 20843.35 19857.20
1992/05/31 21728.68 19954.50
1992/06/30 21945.49 19657.18
1992/07/31 21970.95 20461.16
1992/08/31 20799.84 20041.71
1992/09/30 21767.28 20278.20
1992/10/31 22696.53 20349.17
1992/11/30 24555.02 21043.08
1992/12/31 25828.85 21301.91
1993/01/31 26905.05 21480.84
1993/02/28 27742.09 21772.98
1993/03/31 28924.59 22232.39
1993/04/30 27435.54 21694.37
1993/05/31 27167.35 22275.78
1993/06/30 28682.60 22340.38
1993/07/31 28763.06 22251.02
1993/08/31 29165.34 23094.33
1993/09/30 30171.04 22916.50
1993/10/31 28548.51 23390.88
1993/11/30 27650.08 23168.66
1993/12/31 28714.58 23449.00
1994/01/31 30389.18 24246.27
1994/02/28 29535.46 23589.20
1994/03/31 29042.93 22560.71
1994/04/30 30581.93 22849.48
1994/05/31 32110.20 23224.22
1994/06/30 31312.84 22655.22
1994/07/31 32143.42 23398.31
1994/08/31 32974.00 24357.64
1994/09/30 31013.83 23760.88
1994/10/31 30880.94 24295.50
1994/11/30 28887.55 23410.66
1994/12/31 28777.23 23757.84
1995/01/31 30226.70 24373.88
1995/02/28 31835.25 25323.73
1995/03/31 32100.40 26071.03
1995/04/30 32895.84 26838.83
1995/05/31 35052.36 27911.57
1995/06/30 35494.28 28559.96
1995/07/31 36873.04 29507.01
1995/08/31 38251.80 29581.07
1995/09/30 39984.09 30829.39
1995/10/31 39789.65 30719.33
1995/11/30 42069.91 32067.91
1995/12/31 42235.69 32685.54
1996/01/31 43616.54 33798.15
1996/02/29 44868.51 34111.46
1996/03/31 46194.13 34439.95
1996/04/30 45799.65 34947.60
1996/05/31 46573.99 35848.90
1996/06/30 46215.15 35985.48
1996/07/31 46290.70 34395.64
1996/08/30 48632.62 35121.05
IMATRL PRASUN SHR__CHT 19960831 19960910 152300 R00000000000123
Let's say hypothetically that $10,000 was invested in Fidelity Select
Regional Banks Portfolio on August 31, 1986, and a 3% sales charge was
paid. By August 31, 1996, the investment would have grown to $48,633 - a
386.33% increase. That compares to $10,000 invested in the S&P 500, which
would have grown to $35,121 over the same period - a 251.21% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST 31, 1996
% OF FUND'S
INVESTMENTS
BankAmerica Corp. 4.9
Chase Manhattan Corp. 4.9
NationsBank Corp. 4.7
Bank of New York Co., Inc. 4.0
Citicorp 3.9
Wells Fargo & Co. 3.9
Comerica, Inc. 3.7
First Chicago NBD Corp. 3.5
Household International, Inc. 3.2
Canadian Imperial Bank of Commerce 3.1
TOP REGIONS AS OF AUGUST 31, 1996
Northeast 18.4%
Midwest 14.7%
West 13.3%
Southeast 5.8%
Multi-Regional 4.7%
All Others 43.1% *
Row: 1, Col: 1, Value: 43.1
Row: 1, Col: 2, Value: 4.7
Row: 1, Col: 3, Value: 5.8
Row: 1, Col: 4, Value: 13.3
Row: 1, Col: 5, Value: 14.7
Row: 1, Col: 6, Value: 18.4
* INCLUDES SHORT-TERM INVESTMENTS
REGIONAL BANKS PORTFOLIO
FUND TALK: THE MANAGERS' OVERVIEW
NOTE TO SHAREHOLDERS: Effective September 23, after the period ended, John
Avery (right) became manager of Fidelity Select Regional Bank Portfolio.
The following is an interview with Remy Trafelet, who managed the fund
during the period covered by the report, and John Avery, who discusses his
outlook.
Q. HOW DID THE FUND PERFORM, REMY?
A. For the six months ended August 31, 1996 the fund had a total return of
8.39%. For the past year, it returned 27.14%. For the same periods, the
Standard & Poor's 500 Index returned 2.96% and 18.73%, respectively.
Q. WHAT'S HAPPENED IN THE REGIONAL BANK MARKET OVER THE PAST SIX MONTHS?
A. It's been a good year for banks as they continued to drive earnings
growth through balance sheet restructuring, cost cutting and capital
management. These internal factors have offset a weakening external
environment as loan growth continues to slow and credit costs are
increasing. Although consolidation of the industry will continue, the first
half of 1996 had very few acquisitions. The anticipation of acquisition
activity led to outperformance by the traditional acquisition-oriented
banks such as NationsBank and BankAmerica.
Q. WHAT SIZE BANKS PERFORMED THE BEST IN THE FIRST HALF OF 1996? WHICH
REGIONS DID WELL?
A. The larger banks outperformed the smaller banks in the first half of the
year for several reasons. First, despite many potential takeover targets
trading at substantial takeover premiums, the valuations of the larger
banks were very cheap relative to the rest of the banking industry. The
larger banks also began to focus on cost reduction and increasing returns
by restructuring their balance sheets; one example of this was BankAmerica.
Some of the larger banks - such as NationsBank - also announced significant
share repurchase programs. As for regions, the West and the Southeast did
well as loan demand was still positive and credit was solid.
Q. IT SEEMS BANKING STOCKS HAVE BEEN IMPROVING FOR SOME TIME . . .
A. Bank stocks have done very well since 1991, but the reasons for their
continued performance have changed. The banks were recovering from
undercapitalization and slowly decreasing levels of non-performing assets.
Coming out of the 1990-91 recession with sturdier balance sheets, the banks
then entered a period characterized by increasing loan demand and
decreasing credit costs. While both the external factors of loan growth and
credit costs are now working against the banks, the companies have been
able to continue earnings growth through cost cutting, balance sheet
restructuring and capital management. While the fund is focused on these
themes, it is also positioned to take advantage of the increased percentage
of revenues that banks are now generating from fee businesses rather than
the traditional spread businesses, such as lending. Focusing on banks with
larger exposure to fee businesses can give the fund some protection against
the rising credit costs affecting the industry - especially from consumer
credit.
Q. WAS THERE A PARTICULAR STOCK OR SECTOR OF THE BANKING MARKET THAT DIDN'T
PERFORM AS WELL AS EXPECTED?
A. The stocks that underperformed my expectations were those that had
announced acquisitions with significant cost savings but were unable to
return the efficiencies to shareholders through stock repurchases. This was
because of SEC pooling regulations, which delayed several company's buyback
programs. First Chicago NBD is a good example of this.
Q. TURNING TO YOU, JOHN, HOW ARE YOU POSITIONING THE FUND GOING FORWARD?
A. Primarily I'm looking for banks that have solid fundamentals and have
demonstrated the ability to grow earnings over time. Additionally, I'm
looking for regional banks that have strong franchises in respect to their
geography and market position.
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.
FUND FACTS
START DATE: June 30, 1986
FUND NUMBER: 507
TRADING SYMBOL: FSRBX
SIZE: as of August 31, 1996, more than
$416 million
MANAGER: John Avery, since September 1996;
manager, Select Chemicals Portfolio, since
1995; joined Fidelity in 1994
(checkmark)
REGIONAL BANKS PORTFOLIO
INVESTMENTS AUGUST 31, 1996 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 84.2%
SHARES VALUE (NOTE 1)
AUTOS, TIRES, & ACCESSORIES - 0.2%
MOTOR VEHICLE DEALERS (NEW & USED) - 0.2%
Ugly Duckling Corp. (a) 70,500 $ 643,313 90351210
CLOSED END INVESTMENT COMPANY - 0.3%
Sirrom Capital Corp. 50,000 1,350,000 82990510
BANKS - 67.0%
INTERNATIONAL - 4.3%
Barclays PLC Ord. 100,000 1,421,102 06738E10
Canadian Imperial Bank of Commerce 390,300 13,021,880 13606910
HSBC Holdings PLC 208,000 3,579,552 42199192
National Bank of Canada 20,000 168,829 63306710
18,191,363
MID-ATLANTIC - 1.5%
Crestar Financial Corp. 22,283 1,295,199 22609110
HUBCO, Inc. 25,030 519,373 40438210
PNC Financial Corp. 140,000 4,375,000 69347510
Signet Banking Corp. 10,000 241,250 82668110
6,430,822
MIDWEST - 14.7%
Banc One Corp. 10,000 383,750 05943810
Boatmen's Bancshares, Inc. 56,400 3,003,300 09665010
Comerica, Inc. 325,800 15,882,750 20034010
Commercial Federal Corp. 20,000 780,000 20164710
Corus Bankshares, Inc. 10,000 305,000 22087310
Fifth Third Bancorp 25,700 1,362,100 31677310
First Bank System, Inc. 191,100 12,278,175 31927910
KeyCorp. 50,000 2,006,250 49326710
National City Corp. 305,809 11,506,064 63540510
Northern Trust Corp. 105,000 6,890,625 66585910
Norwest Corp. 30,000 1,128,750 66938010
Pinnacle Financial Services, Inc. 50,000 1,100,000 72346210
Star Banc Corp. 70,600 5,559,750 85508310
62,186,514
NORTHEAST - 18.4%
Bank of Boston Corp. 127,400 6,720,350 06071610
Bank of New York Co., Inc. 604,648 16,854,563 06405710
Bankers Trust New York Corp. 20,200 1,570,550 06636510
Chase Manhattan Corp. 281,000 20,899,375 16161A10
DS Bancor, Inc. 40,000 1,490,000 23290710
Dime Bancorp., Inc. (a) 17,500 229,688 25429Q10
Eastern Bancorp 37,500 665,625 27626910
Fleet Financial Group, Inc. 115,567 4,824,922 33891510
Long Island Bancorp., Inc. 100,600 2,816,800 54266210
Mellon Bank Corp. 65,000 3,599,375 58550910
Morgan (J.P.) & Co., Inc. 87,500 7,667,188 61688010
North Fork Bancorp., Inc. 20,200 626,200 65942410
Norwalk Savings Society 30,000 648,750 66920410
ONBANCorp, Inc. 33,800 1,090,050 68230310
State Street Boston Corp. 50,000 2,706,250 85747310
U.S. Bancorp 153,000 5,852,250 91159610
78,261,936
SOUTHEAST - 5.8%
BanPonce Corp. 337,002 8,762,052 06670410
First Tennessee National Corp. 204,200 6,968,325 33716210
First Union Corp. 50,000 3,193,750 33735810
Meritor Savings Bank (a) 678,600 1,314,788 59000710
SouthTrust Corp. 1,200 35,400 84473010
SunTrust Banks, Inc. 10,000 383,750 86791410
SHARES VALUE (NOTE 1)
Synovus Financial Corp. 20,000 $ 477,500 87161C10
Union Planters Corp. 58,500 1,923,188 90806810
Wachovia Corp. 32,600 1,491,450 92977110
24,550,203
SOUTHWEST - 0.4%
Texas Regional Bancshares, Inc.
Class A (vtg.) 60,600 1,742,250 88267310
WEST - 13.3%
BankAmerica Corp. 269,800 20,909,500 06605010
California Federal Bancorp., Inc. (a) 87,300 1,986,075 12802610
Coast Savings Financial, Inc. (a) 60,000 1,852,500 19039M10
First Regional Bancorp (a) 25,000 134,375 33615C10
First Security Corp. 20,400 555,900 33629410
Glendale Federal Bank FSB (a) 128,000 2,272,000 37850750
Quaker City Bancorp (a) 25,000 365,625 74731K10
Sterling Financial Corp. 68,000 918,000 85931910
UnionBanCal Corp. 26,000 1,254,500 90890610
Wells Fargo & Co. 65,666 16,334,418 94974010
Westcorp, Inc. 9,000 189,000 95790710
Zions Bancorp 109,900 9,478,875 98970110
56,250,768
MONEY CENTER - 3.9%
Citicorp 200,000 16,650,000 17303410
MULTI-REGIONAL - 4.7%
NationsBank Corp. 233,500 19,876,688 63858510
TOTAL BANKS 284,140,544
CREDIT & OTHER FINANCE - 16.4%
FINANCE LESSORS - 0.1%
Onyx Acceptance Corp. 16,500 251,625 68291410
FINANCIAL SERVICES - 8.4%
American Express Co. 267,000 11,681,250 02581610
First Chicago NBD Corp. 350,300 14,931,538 31945A10
First Merchants Acceptance Corp. 20,000 382,500 32081610
First USA, Inc. 145,100 7,690,300 33743H10
RCSB Financial, Inc. 40,000 1,075,000 74937110
35,760,588
LOAN BROKERS - 0.5%
Aames Financial Corp. 38,100 1,862,138 00253A10
Imperial Thrift & Loan Association (a) 10,000 136,250 45310510
1,998,388
MORTGAGE BANKERS - 1.0%
Cityscape Financial Corp. (a) 45,800 1,259,500 17877810
Newcourt Credit Group, Inc. 59,600 1,555,066 65090510
North American Mortgage Co. 90,000 1,541,250 65703710
4,355,816
PERSONAL CREDIT INSTITUTIONS - 6.4%
Associates First Capital Corp. 106,000 4,187,000 04600810
Beneficial Corp. 140,500 7,920,688 08172110
Household International, Inc. 173,700 13,765,725 44181510
Olympic Financial Ltd. 40,000 980,000 68159310
Union Acceptance Corp. Class A 20,000 345,000 90483210
27,198,413
TOTAL CREDIT & OTHER FINANCE 69,564,830
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
INSURANCE - 0.3%
MULTI-LINE INSURANCE - 0.3%
US Facilities Corp. 68,600 $ 1,166,200 91182210
TOTAL COMMON STOCKS
(Cost $304,219,466) 356,864,887
REPURCHASE AGREEMENTS - 15.8%
MATURITY VALUE
AMOUNT (NOTE 1)
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 5.25%, dated
8/30/96 due 9/3/96 $ 67,023,074 66,984,000 69899TYY
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $371,203,466) $ 423,848,887
LEGEND
1. Non-income producing
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $163,263,949 and $121,500,199, respectively (see Note 4 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $40,907 for the period (see
Note 5 of Notes to Financial Statements).
The maximum loan and the average daily loan balances during the period for
which loans were outstanding amounted to $2,363,000 and $1,558,400,
respectively. The weighted average interest rate paid was 5.7% (see Note 6
of Notes to Financial Statements).
At the period end, the value of securities loaned and the value of
collateral amounted to $3,153,250 and $3,298,200, respectively (see Note 7
of Notes to Financial Statements).
INCOME TAX INFORMATION
At August 31, 1996, the aggregate cost of investment securities for income
tax purposes was $371,555,744. Net unrealized appreciation aggregated
$52,293,143, of which $54,697,042 related to appreciated investment
securities and $2,403,899 related to depreciated investment securities.
REGIONAL BANKS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1996 (UNAUDITED)
ASSETS
Investment in $ 423,848,887
securities, at
value (including
repurchase
agreements of
$66,984,000)
(cost
$371,203,466)
- - See
accompanying
schedule
Cash 733,923
Receivable for 2,535,340
investments
sold
Receivable for 2,462,061
fund shares sold
Dividends 521,321
receivable
Redemption fees 3,971
receivable
Other receivables 3,107
Prepaid expenses 18,700
TOTAL ASSETS 430,127,310
LIABILITIES
Payable for $ 3,908,321
investments
purchased
Payable for fund 5,920,937
shares
redeemed
Accrued 193,035
management
fee
Other payables 302,136
and
accrued
expenses
Collateral on 3,298,200
securities
loaned,
at value
TOTAL LIABILITIES 13,622,629
NET ASSETS $ 416,504,681
Net Assets
consist of:
Paid in capital $ 344,444,612
Undistributed net 2,286,239
investment
income
Accumulated 17,128,258
undistributed net
realized gain
(loss) on
investments and
foreign currency
transactions
Net unrealized 52,645,572
appreciation
(depreciation)
on investments
and assets and
liabilities in
foreign
currencies
NET ASSETS, for $ 416,504,681
16,174,498
shares
outstanding
NET ASSET VALUE $25.75
and redemption
price per share
($416,504,681 (divided by)
16,174,498
shares)
Maximum offering $26.55
price per share
(100/97.00 of
$25.75)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED AUGUST 31, 1996 (UNAUDITED)
INVESTMENT $ 4,218,178
INCOME
Dividends
Interest (including 436,026
income on
securities
loaned of
$13,322)
TOTAL INCOME 4,654,204
EXPENSES
Management fee $ 981,392
Transfer agent 1,177,528
fees
Accounting and 162,532
security lending
fees
Non-interested 592
trustees'
compensation
Custodian fees 10,598
and expenses
Registration fees 23,906
Audit 25,104
Legal 1,279
Interest 1,239
Miscellaneous 2,419
Total expenses 2,386,589
before
reductions
Expense (22,555 2,364,034
reductions )
NET INVESTMENT 2,290,170
INCOME
REALIZED AND
UNREALIZED GAIN
(LOSS)
Net realized gain
(loss) on:
Investment 17,620,269
securities
Foreign (836 17,619,433
currency )
transactions
Change in net
unrealized
appreciation
(depreciation)
on:
Investment 2,996,175
securities
Assets and 151 2,996,326
liabilities in
foreign
currencies
NET GAIN (LOSS) 20,615,759
NET INCREASE $ 22,905,929
(DECREASE) IN
NET ASSETS
RESULTING FROM
OPERATIONS
OTHER $ 757,787
INFORMATION
Sales charges
paid to FDC
Deferred sales $ 1,601
charges
withheld
by FDC
Exchange fees $ 56,640
withheld by FSC
Expense $ 20,655
reductions
Directed
brokerage
arrangements
Custodian 1,046
interest credits
Transfer agent 854
interest credits
$ 22,555
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS YEAR ENDED
ENDED FEBRUARY 29,
AUGUST 31, 1996 1996
(UNAUDITED)
Operations $ 2,290,170 $ 5,565,530
Net investment
income
Net realized 17,619,433 22,328,052
gain (loss)
Change in net 2,996,326 44,057,165
unrealized
appreciation
(depreciation)
NET INCREASE 22,905,929 71,950,747
(DECREASE) IN
NET ASSETS
RESULTING
FROM
OPERATIONS
Distributions to (1,218,898 (3,155,657
shareholders ) )
From net
investment
income
From net (7,020,305 (9,088,286
realized gain ) )
TOTAL (8,239,203 (12,243,943
DISTRIBUTIONS ) )
Share 236,569,764 388,478,435
transactions
Net proceeds
from sales of
shares
Reinvestment of 8,038,419 11,963,979
distributions
Cost of shares (158,282,272 (309,887,067
redeemed ) )
Paid in capital 334,446 312,663
portion of
redemption fees
NET INCREASE 86,660,357 90,868,010
(DECREASE) IN
NET ASSETS
RESULTING
FROM SHARE
TRANSACTIONS
TOTAL 101,327,083 150,574,814
INCREASE
(DECREASE) IN
NET ASSETS
NET ASSETS
Beginning of 315,177,598 164,602,784
period
End of period $ 416,504,681 $ 315,177,598
(including
undistributed
net investment
income of
$2,286,239
and
$2,409,873,
respectively)
OTHER
INFORMATION
Shares
Sold 9,404,116 17,599,773
Issued in 340,034 512,815
reinvestment of
distributions
Redeemed (6,500,306 (14,323,517
) )
Net increase 3,243,844 3,789,071
(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> <C>
SIX MONTHS YEAR ENDED YEARS ENDED FEBRUARY 28, TEN MONTHS YEAR ENDED
ENDED FEBRUARY 29, ENDED APRIL 30,
AUGUST 31, 1996 FEBRUARY 28,
SELECTED PER-SHARE DATA D (UNAUDITED) 1996 1995 1994 1993 1992
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Net asset value, $ 24.37 $ 18.01 $ 17.99 $ 20.88 $ 16.48 $ 11.40
beginning of
period
Income from
Investment
Operations
Net investment .17 .52 .37 .19 .16 .25
income
Net realized and 1.79 6.78 .87 .93 5.09 5.37
unrealized gain
(loss)
Total from 1.96 7.30 1.24 1.12 5.25 5.62
investment
operations
Less Distributions
From net (.09) (.25) (.29) (.15) (.11) (.15)
investment
income
From net (.52) (.72) (.98) (3.92) (.81) (.53)
realized gain
Total (.61) (.97) (1.27) (4.07) (.92) (.68)
distributions
Redemption fees .03 .03 .05 .06 .07 .14
added to paid in
capital
Net asset value, $ 25.75 $ 24.37 $ 18.01 $ 17.99 $ 20.88 $ 16.48
end of period
TOTAL RETURN B, C 8.39% 40.94% 7.79% 6.46% 33.10% 52.34%
RATIOS AND
SUPPLEMENTAL
DATA
Net assets, end of $ 416,505 $ 315,178 $ 164,603 $ 97,429 $ 315,520 $ 156,570
period (000
omitted)
Ratio of expenses 1.46% A 1.41% 1.58% 1.62% 1.49% A 1.77%
to average net
assets
Ratio of expenses 1.44% A, 1.40% 1.56% 1.60% E 1.49% A 1.77%
to average net E E E
assets after
expense
reductions
Ratio of net 1.40% A 2.42% 1.99% .88% 1.06% A 1.80%
investment
income to
average net
assets
Portfolio turnover 77% A 103% 106% 74% 63% A 89%
rate
Average $ .0365
commission
rate F
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <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 9 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 9 OF NOTES TO FINANCIAL
STATEMENTS). F FOR FISCAL YEARS BEGINNING ON
OR AFTER SEPTEMBER 1, 1995, A FUND IS REQUIRED TO DISCLOSE
ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT
MAY VARY FROM PERIOD TO PERIOD AND
FUND TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN VARIOUS
MARKETS WHERE TRADING PRACTICES AND
COMMISSION RATE STRUCTURES MAY DIFFER.
</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. A fund's total return includes
changes in 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 6 PAST 1 PAST 5 PAST 10
AUGUST 31, 1996 MONTH YEAR YEARS YEARS
S
BIOTECHNOLOGY -7.37% 12.80% 35.29% 263.30%
BIOTECHNOLOGY -10.14% 9.42% 31.23% 252.40%
(INCL. 3% SALES CHARGE)
S&P 500 2.96% 18.73% 89.14% 251.21%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six month, one, five, or 10 years. You
can compare these figures to the performance of the S&P 500 - a widely
recognized, unmanaged index of common stocks. This benchmark reflects
reinvestment of dividends and capital gains, if any, but does not reflect
any sales charges, brokerage commissions, or other costs of investing.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
AUGUST 31, 1996 YEAR YEARS YEARS
BIOTECHNOLOGY 12.80% 6.23% 13.77%
BIOTECHNOLOGY 9.42% 5.59% 13.42%
(INCL. 3% SALES CHARGE)
S&P 500 18.73% 13.59% 13.34%
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
IMAHDR PRASUN SHR__CHT 19960831 19960909 144533 S00000000000001
Biotechnology SP Standard & Poor 500
00042 SP001
1986/08/31 9700.00 10000.00
1986/09/30 8036.27 9173.00
1986/10/31 8631.55 9702.28
1986/11/30 8440.76 9938.05
1986/12/31 7898.90 9684.63
1987/01/31 8952.08 10989.15
1987/02/28 10791.35 11423.22
1987/03/31 10745.55 11753.35
1987/04/30 10608.18 11648.74
1987/05/31 10562.39 11750.09
1987/06/30 10486.07 12343.47
1987/07/31 10501.34 12969.28
1987/08/31 10928.72 13453.04
1987/09/30 10768.45 13158.41
1987/10/31 7456.25 10324.09
1987/11/30 6731.24 9473.39
1987/12/31 7632.63 10194.31
1988/01/31 8018.20 10623.49
1988/02/29 8317.21 11118.55
1988/03/31 8262.13 10774.98
1988/04/30 8112.62 10894.59
1988/05/31 7955.25 10989.37
1988/06/30 8222.78 11493.78
1988/07/31 8214.92 11450.10
1988/08/31 7986.72 11060.80
1988/09/30 8151.97 11531.99
1988/10/31 8065.41 11852.58
1988/11/30 7687.71 11683.09
1988/12/31 7947.38 11887.54
1989/01/31 8498.19 12757.71
1989/02/28 8435.24 12440.04
1989/03/31 9056.87 12729.90
1989/04/30 9363.74 13390.58
1989/05/31 9788.65 13932.90
1989/06/30 9536.86 13853.48
1989/07/31 10418.15 15104.45
1989/08/31 10811.58 15400.50
1989/09/30 11267.97 15337.35
1989/10/31 11307.31 14981.53
1989/11/30 11661.40 15287.15
1989/12/31 11438.86 15654.04
1990/01/31 10582.95 14603.66
1990/02/28 11582.85 14792.04
1990/03/31 12070.80 15184.03
1990/04/30 12222.78 14804.43
1990/05/31 13942.61 16247.86
1990/06/30 14916.27 16137.38
1990/07/31 14956.71 16085.74
1990/08/31 14495.63 14631.59
1990/09/30 14172.07 13919.03
1990/10/31 14293.41 13859.18
1990/11/30 16024.47 14754.48
1990/12/31 16511.73 15166.13
1991/01/31 18408.01 15827.37
1991/02/28 21016.44 16959.03
1991/03/31 23185.98 17369.44
1991/04/30 22175.74 17411.13
1991/05/31 23583.46 18163.29
1991/06/30 22331.32 17331.41
1991/07/31 24341.66 18139.05
1991/08/31 26047.41 18568.95
1991/09/30 27396.34 18258.85
1991/10/31 30094.20 18503.51
1991/11/30 28083.86 17757.82
1991/12/31 32865.81 19789.32
1992/01/31 32207.05 19421.24
1992/02/29 29734.44 19673.71
1992/03/31 27478.41 19290.07
1992/04/30 24915.57 19857.20
1992/05/31 26702.34 19954.50
1992/06/30 26233.66 19657.18
1992/07/31 27605.03 20461.16
1992/08/31 25878.49 20041.71
1992/09/30 25789.69 20278.20
1992/10/31 27052.54 20349.17
1992/11/30 29716.36 21043.08
1992/12/31 29466.42 21301.91
1993/01/31 27952.13 21480.84
1993/02/28 23440.38 21772.98
1993/03/31 23793.02 22232.39
1993/04/30 24404.96 21694.37
1993/05/31 25981.48 22275.78
1993/06/30 26137.06 22340.38
1993/07/31 25276.19 22251.02
1993/08/31 26230.40 23094.33
1993/09/30 27309.08 22916.50
1993/10/31 29341.96 23390.88
1993/11/30 29113.78 23168.66
1993/12/31 29673.86 23449.00
1994/01/31 30690.30 24246.27
1994/02/28 28636.67 23589.20
1994/03/31 25742.93 22560.71
1994/04/30 25276.19 22849.48
1994/05/31 24850.95 23224.22
1994/06/30 23865.62 22655.22
1994/07/31 23927.85 23398.31
1994/08/31 26168.17 24357.64
1994/09/30 26085.20 23760.88
1994/10/31 25193.22 24295.50
1994/11/30 24726.49 23410.66
1994/12/31 24280.50 23757.84
1995/01/31 25369.54 24373.88
1995/02/28 26240.78 25323.73
1995/03/31 26666.02 26071.03
1995/04/30 27495.77 26838.83
1995/05/31 27744.69 27911.57
1995/06/30 28750.76 28559.96
1995/07/31 30036.87 29507.01
1995/08/31 31240.01 29581.07
1995/09/30 32640.21 30829.39
1995/10/31 32380.91 30719.33
1995/11/30 33459.58 32067.91
1995/12/31 36202.27 32685.54
1996/01/31 38343.43 33798.15
1996/02/29 38042.00 34111.46
1996/03/31 37439.15 34439.95
1996/04/30 38247.50 34947.60
1996/05/31 38693.84 35848.90
1996/06/30 36355.84 35985.48
1996/07/31 33688.40 34395.64
1996/08/30 35239.98 35121.05
IMATRL PRASUN SHR__CHT 19960831 19960909 144538 R00000000000123
Let's say hypothetically that $10,000 was invested in Fidelity Select
Biotechnology Portfolio on August 31, 1986, and a 3% sales charge was paid.
By August 31, 1996, the investment would have grown to $35,240 - a 252.40%
increase. That compares to $10,000 invested in the S&P 500, which would
have grown to $35,121 over the same period - a 251.21% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST 31, 1996
% OF FUND'S
INVESTMENTS
Amgen, Inc. 9.9
Genentech, Inc. special 8.8
Schering-Plough Corp. 3.8
Pharmacia & Upjohn, Inc. 3.6
Interneuron Pharmaceuticals, Inc. 2.2
Biogen, Inc. 2.2
Ares Serono Class B (Bearer) 2.0
Protein Design Labs, Inc. 1.7
Ligand Pharmaceuticals, Inc. Class B 1.6
COR Therapeutics, Inc. 1.5
TOP INDUSTRIES AS OF AUGUST 31, 1996
Row: 1, Col: 1, Value: 14.4
Row: 1, Col: 2, Value: 2.8
Row: 1, Col: 3, Value: 3.0
Row: 1, Col: 4, Value: 12.7
Row: 1, Col: 5, Value: 21.5
Row: 1, Col: 6, Value: 45.6
Biotechnology 45.6%
Drugs 21.5%
Pharmaceutical
Preparations 12.7%
Commercial
Laboratory Research 3.0%
Medical Technology 2.8%
All Others 14.4% *
* 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. For the six- and 12-month periods ended August 31, 1996, the fund
returned -7.37% and 12.80%, respectively. By comparison, the Standard &
Poor's 500 Index returned 2.96% and 18.73% for the same time period.
Q. HOW DO EXPLAIN THE FUND'S BELOW-MARKET PERFORMANCE?
A. The relative performance of the biotechnology sector was very weak,
especially during the past three months. When compared to the S&P 500, the
fund's performance was poor, as the biotech industry performed much worse
than the overall market did. Stocks in this sector had an extended period
from June 1995 to May 1996 during which they were very strong performers.
Eventually, they became overvalued and, ultimately, they corrected. I think
it was inevitable.
Q. DID THE CHALLENGES BROUGHT ON BY THE BIOTECH CORRECTION CAUSE YOU TO
CHANGE YOUR INVESTMENT STRATEGY?
A. No. I had positioned the portfolio rather conservatively in anticipation
of such a correction. In fact, the top holdings in the fund reflect a more
offensive approach to pure biotechnology stocks going forward. Since many
of the stocks corrected by more than 30% during the period, I became a bit
more aggressive and recently began to buy the ones I thought were too
expensive three and six months ago. Specifically, I increased the fund's
position in Interneuron Pharmaceuticals, a biotech firm that recently
received the Food and Drug Administration's approval for a new obesity
drug.
Q. WHAT OTHER STRATEGIES DID YOU FOLLOW IN THIS PARTICULARLY CHALLENGING
MARKET ENVIRONMENT?
A. I've continued to add to the fund's exposure to genomics. Genomics is
the discovery and categorization of genes as they relate to diseases. I've
increased the fund's holdings in Human Genome Sciences and initiated a
position in Millennium Pharmaceuticals, which is also involved with
genetics.
Q. IT LOOKS LIKE YOU REDUCED THE FUND'S HOLDINGS IN DRUG STOCKS DURING THE
PERIOD. WHAT WAS YOUR THINKING?
A. That's true, and the fund's holdings had been fairly large in this area.
Drug stocks performed well on a price basis during the period - and the
fund's holdings in them helped to reduce the effects of the correction in
biotech on the fund. But I began to sell them when their prices got a
little too high and focused more of the fund's assets back toward biotech.
Q. WHERE ELSE DID YOU FIND OPPORTUNITIES?
A. I continued to steer the fund toward stocks where I thought there were
definite near-term business prospects. I'm especially interested in
companies where I expect a positive announcement about clinical results or
where there's other tangible evidence of success.
Q. DO YOU REGRET ANY INVESTMENTS YOU MADE DURING THE PAST SIX MONTHS?
A. As I said, I think the fund was well-positioned to weather the
inevitable correction in biotech stocks so, no, I don't have any regrets
with respect to the fund's specific investments. I am disappointed in the
industry, though, in that there hasn't been faster success for companies on
the clinical front. It is an extremely slow and costly process to develop
new drugs, and sometimes it can be frustrating.
Q. WHAT'S AHEAD FOR THE FUND?
A. I don't expect my strategy to change much, and my outlook for the
industry remains positive. New products are constantly being researched and
new therapies go into clinical trials on a weekly basis for everything from
cancer to arthritis. I also think the biotech industry was given a boost by
the success of the AIDS inhibitors treatment that was developed using
biotechnology techniques. My goal continues to be to pick the best stocks
in the biotech sector that I think will outperform the market and other
biotech companies.
FUND FACTS
START DATE: December 16, 1985
FUND NUMBER: 042
TRADING SYMBOL: FBIOX
SIZE: as of August 31, 1996, more than
$645 million
MANAGER: Karen Firestone, since 1992;
manager, Fidelity Select Health Care Portfolio,
since 1995; 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 AUGUST 31, 1996 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 90.0%
SHARES VALUE (NOTE 1)
AGRICULTURE - 0.4%
CROPS - 0.4%
DEKALB Genetics Corp. Class B 71,100 $ 2,310,750 24487820
CHEMICALS & PLASTICS - 1.3%
Hoechst AG Ord. 250,000 8,762,450 43439010
DRUGS & PHARMACEUTICALS - 83.0%
BIOTECHNOLOGY - 45.6%
Advanced Tissue Sciences Corp. Class A 50,000 687,500 00755F10
Alkermes, Inc. (a) 434,200 5,753,150 01642T10
Amgen, Inc. (a) 1,110,200 64,669,150 03116210
Biochem Pharmaceuticals, Inc. (a) 254,000 8,854,961 09058T10
Biogen, Inc. (a) 202,900 14,152,275 09059710
COR Therapeutics, Inc. (a)(c) 1,025,500 10,062,719 21775310
Cambridge Neuroscience, Inc. (a) 108,100 959,388 13242610
Cell Genesys, Inc. (a) 336,600 2,272,050 15092110
Cephalon, Inc. 120,000 2,010,000 15670810
Chiron Corp. (a) 296,400 5,816,850 17004010
Depotech Corp. (a) 32,500 613,438 24967310
Dynagen, Inc. (warrants) (a) 40,000 41,250 26791712
Genentech, Inc. special (a) 1,093,800 57,424,500 36871030
Genetics Institute, Inc. (a) 109,280 6,775,360 37185530
Genome Therapeutics Corp. (a) 670,000 6,113,750 37243010
Genzyme Corp. (a) 270,000 6,446,250 37291710
Gilead Sciences, Inc. (a) 273,100 6,622,675 37555810
Human Genome Sciences, Inc. (a) 223,800 7,637,175 44490310
Idexx Laboratories (a) 80,000 3,100,000 45168D10
Imclone Systems, Inc. 200,000 1,750,000 45245W10
Interneuron Pharmaceuticals, Inc. (a) 470,600 14,706,250 46057310
Magainin Pharmaceuticals, Inc. (a) 394,800 4,466,175 55903610
Medimmune, Inc. 230,000 3,220,000 58469910
Molecular Biosystems, Inc. 200,000 1,550,000 60851310
Neurex Corp. (a) 250,000 4,578,125 64123810
Neurogen Corp. (a) 62,400 1,435,200 64124E10
North American Vaccine, Inc. (a) 73,300 1,594,275 65720110
Pharmacia & Upjohn, Inc. 559,800 23,511,600 71694110
Protein Design Labs, Inc. (a) 743,400 11,243,925 74369L10
Regeneron Pharmaceuticals, Inc. 200,000 3,350,000 75886F10
Sepracor, Inc. (a) 228,000 3,021,000 81731510
Sequana Therapeutics, Inc. (a) 370,900 6,119,850 81732210
Somatix Therapy Corp. (a) 427,900 2,059,269 83444710
Sugen, Inc. (a) 293,900 3,563,538 86504110
Vical, Inc. (a) 118,900 1,575,425 92560210
Virus Research Institute, Inc. 50,000 325,000 92792010
298,082,073
COMMERCIAL LABORATORY RESEARCH - 3.0%
Cryomedical Sciences, Inc. (a) 393,000 736,875 22904910
INCYTE Pharmaceuticals, Inc. (a) 127,600 5,183,750 45337C10
Intercardia, Inc. 225,000 4,781,250 45844M10
Medarex, Inc. (a) 379,400 2,513,525 58391610
Millennium Pharmaceuticals, Inc. 330,100 6,024,325 59990210
19,239,725
DRUGS - 21.5%
Allergan, Inc. 155,600 6,048,950 01849010
Anesta Corp. 176,900 2,056,463 03460310
Ares Serono Class B (Bearer) 12,300 12,893,511 03999392
Astra AB Class B Free shares 165,000 6,829,510 04632299
Barr Laboratories, Inc. (a) 75,000 1,931,250 06830610
Bristol-Myers Squibb Co. 70,000 6,142,500 11012210
Dura Pharmaceuticals, Inc. (a) 160,000 5,560,000 26632S10
Elan Corp. PLC (a):
ADR 267,276 8,385,785 28413120
(warrants) 14,339 394,323 28413114
SHARES VALUE (NOTE 1)
Glaxo Wellcome PLC sponsored ADR (a) 100,000 $ 2,850,000 37733W10
IVAX Corp. 85,900 1,385,138 46582310
Lilly (Eli) & Co. 51,300 2,936,925 53245710
Lynx Therapeutics, Inc. (a) 19,399 96,995 55181230
Matrix Pharmaceutical, Inc. (a) 125,400 1,583,175 57684410
Merck & Co., Inc. 50,000 3,281,250 58933110
Novo Industri A/S ADR 16,000 616,000 67010020
Novo-Nordisk AS Class B 44,000 6,761,420 67010010
Pfizer, Inc. 105,600 7,497,600 71708110
Roche Holdings Ltd. participation
certificates 700 5,325,706 77157092
Schering-Plough Corp. 440,900 24,635,288 80660510
Schering-Plough Corp. unit (b) 6,300 1,000,125 80660540
Sequus Pharmaceuticals, Inc. (a) 599,400 8,691,300 81747110
Takeda Chemical Industries Ltd. 361,000 6,233,571 87405810
Warner-Lambert Co. 100,000 5,950,000 93448810
Watson Pharmaceuticals, Inc. (a) 238,894 6,927,926 94268310
Yamanouchi Pharmaceutical Co. Ltd. 233,000 4,793,754 98414010
140,808,465
IN VITRO, IN VIVO DIAGNOSTIC SUBSTANCES - 0.2%
Igen, Inc. (a) 173,900 1,195,563 44953610
PHARMACEUTICAL PREPARATIONS - 12.7%
Alpharma, Inc. Class A 216,700 3,413,025 02081310
Ariad Pharmaceuticals, Inc. (c) 979,100 3,549,238 04033A10
Arris Pharmaceutical Corp. (a) 623,500 6,702,624 04269W10
CIBA-GEIGY AG (Reg.) 7,400 9,326,955 17199492
Cocensys, Inc. (a) 156,000 1,092,000 19126310
Copley Pharmaceutical, Inc. (a) 257,400 2,831,400 21745K10
Guilford Pharmaceuticals, Inc. (a) 283,700 7,872,675 40182910
Houghten Pharmaceuticals, Inc. 100,000 500,000 44150210
Ibah, Inc. 30,000 172,500 45073110
Immunex Corp. (a) 734,700 9,642,938 45252810
Inhale Therapeutic Systems (a) 477,500 7,162,500 45719110
La Jolla Pharmaceutical Co. (a) 87,300 469,238 50345910
Ligand Pharmaceuticals, Inc. Class B (a) 857,065 10,445,480 53220K20
NPS Pharmaceuticals, Inc. 415,000 5,031,875 62936P10
Nexstar Pharmaceuticals, Inc. 220,800 4,857,600 65333B10
Noven Pharmaceuticals, Inc. (a) 50,000 656,250 67000910
Sandoz AG (Reg.) 2,500 2,970,050 80005292
T Cell Sciences, Inc. (a) 494,100 1,142,606 87234210
Theratech, Inc. (a) 195,000 2,096,250 88338310
Vivus, Inc. 95,500 3,342,500 92855110
83,277,704
TOTAL DRUGS & PHARMACEUTICALS 542,603,530
ELECTRICAL EQUIPMENT - 0.0%
TV & RADIO COMMUNICATION EQUIPMENT - 0.0%
ASN (warrants) (a) 5,000 - 04599F22
HOME FURNISHINGS - 0.5%
FURNITURE - 0.5%
Kinetic Concepts, Inc. 210,500 3,131,187 49460W10
MEDICAL EQUIPMENT & SUPPLIES - 3.2%
MEDICAL SUPPLIES & APPLIANCES - 0.4%
Cygnus, Inc. (a) 100,000 1,725,000 23256010
Exogen, Inc. (a) 213,500 1,014,124 30209210
2,739,124
MEDICAL TECHNOLOGY - 2.8%
Conceptus, Inc. (a) 132,000 1,369,500 20601610
Haemonetics Corp. (a) 130,700 2,679,350 40502410
Metra Biosystems, Inc. 300,000 1,537,500 59159110
Pall Corp. 300,000 7,050,000 69642930
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
MEDICAL EQUIPMENT & SUPPLIES - CONTINUED
MEDICAL TECHNOLOGY - CONTINUED
St. Jude Medical, Inc. (a) 97,400 $ 3,494,225 79084910
Sonus Pharmaceuticals, Inc. (a) 70,000 1,417,500 83569210
Stryker Corp. 30,000 733,125 86366710
18,281,200
TOTAL MEDICAL EQUIPMENT & SUPPLIES 21,020,324
MEDICAL FACILITIES MANAGEMENT - 1.6%
HOSPITALS - 0.9%
Columbia/HCA Healthcare Corp. 103,700 5,846,088 19767710
HOSPITALS, GENERAL MEDICAL - 0.2%
Medpartners/Mullikin, Inc. 60,000 1,245,000 58496810
HMOS & OUTPATIENT CARE - 0.1%
United HealthCare Corp. 14,860 573,967 91058110
NURSING CARE & NURSING HOMES - 0.1%
ARV Assisted Living, Inc. (a) 43,000 623,500 00204C10
SKILLED NURSING CARE FACILITIES - 0.3%
TheraTx, Inc. (a) 149,500 2,317,250 88338410
TOTAL MEDICAL FACILITIES MANAGEMENT 10,605,805
TOTAL COMMON STOCKS
(Cost $560,936,891) 588,434,046
REPURCHASE AGREEMENTS - 10.0%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 5.25%, dated
8/30/96 due 9/3/96 $ 65,328,086 65,290,000 69899TYY
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $626,226,891) $ 653,724,046
LEGEND
1. Non-income producing
2. Security exempt from registration under Rule 144A of the Securities Act
of 1993. 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 $1,000,125 or 0.2% of net
assets.
(c) 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 VALUE AFFILIATE COST COST INCOME
Ariad Pharmaceuticals, Inc. $ 85,000 $ - $ - $ 3,549,238
Arris Pharmaceutical Corp. 1,962,500 475,000 - -
COR Therapeutics, Inc. - - - 10,062,719
Guilford Pharmaceuticals, Inc. 1,000,000 - - -
Inhale Therapeutic Systems - 822,515 - -
Insite Vision, Inc. - 82,613 - -
Protein Design Labs, Inc. - 1,014,182 - -
Totals $ 3,047,500 $ 2,394,310 $ - $ 13,611,957
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $150,848,181 and $450,314,607, respectively (see Note 4 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $50,803 for the period (see
Note 5 of Notes to Financial Statements).
The maximum loan and the average daily loan balances during the period for
which loans were outstanding amounted to $10,839,000. The weighted average
interest rate paid was 5.7% (see Note 6 of Notes to Financial Statements).
At the period end, the value of securities loaned and the value of
collateral amounted to $8,941,850 and $9,508,100, respectively (see Note 7
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 86.8%
Switzerland 4.7
Japan 1.7
Canada 1.6
Ireland 1.3
Germany 1.3
Denmark 1.1
Sweden 1.0
Others (individually less than 1%) 0.5
TOTAL 100.0%
INCOME TAX INFORMATION
At August 31, 1996, the aggregate cost of investment securities for income
tax purposes was $626,929,147. Net unrealized appreciation aggregated
$26,794,899 of which $79,598,399 related to appreciated investment
securities and $52,803,500 related to depreciated investment securities.
BIOTECHNOLOGY PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS
Investment in securities, at $ 653,724,046
value (including repurchase agreements of $65,290,000)
(cost $626,226,891) - See accompanying schedule
Cash 227
Receivable for investments sold 2,420,025
Receivable for fund shares sold 1,098,751
Dividends receivable 213,129
Redemption fees receivable 2,050
Other receivables 1,292,060
Prepaid expenses 9,845
TOTAL ASSETS 658,760,133
LIABILITIES
Payable for investments purchased $ 82,892
Payable for fund shares redeemed 2,326,787
Accrued management fee 321,308
Other payables and 704,942
accrued expenses
Collateral on securities loaned, 9,508,100
at value
TOTAL LIABILITIES 12,944,029
NET ASSETS $ 645,816,104
Net Assets consist of:
Paid in capital $ 534,630,667
Accumulated net investment (loss) (1,543,871
)
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 85,230,528
Net unrealized appreciation (depreciation) on investments 27,498,780
and assets and liabilities in
foreign currencies
NET ASSETS, for 19,474,838 $ 645,816,104
shares outstanding
NET ASSET VALUE and redemption price per share ($645,816,104 (divided by) 19,474,838 shares) $33.16
Maximum offering price per share (100/97.00 of $33.16) $34.19
</TABLE>
STATEMENT OF OPERATIONS
SIX MONTHS ENDED AUGUST 31, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME $ 2,594,669
Dividends
Interest (including income on securities loaned of $103,347) 1,909,865
TOTAL INCOME 4,504,534
EXPENSES
Management fee $ 2,392,734
Transfer agent fees 3,211,380
Accounting and security lending fees 329,759
Non-interested trustees' compensation 1,547
Custodian fees and expenses 35,413
Registration fees 9,845
Audit 26,334
Legal 11,775
Interest 1,701
Miscellaneous 6,308
Total expenses before reductions 6,026,796
Expense reductions (38,931 5,987,865
)
NET INVESTMENT INCOME (LOSS) (1,483,331
)
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities (including realized gain of $1,771,496 85,456,015
on sale of investments in
affiliated issuers)
Foreign currency transactions (2,401 85,453,614
)
Change in net unrealized appreciation (depreciation) on:
Investment securities (147,201,218
)
Assets and liabilities in 1,625 (147,199,593
foreign currencies )
NET GAIN (LOSS) (61,745,979
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ (63,229,310
)
OTHER INFORMATION $ 1,161,324
Sales charges paid to FDC
Deferred sales charges withheld $ 15,996
by FDC
Exchange fees withheld by FSC $ 206,723
Expense reductions $ 34,550
Directed brokerage arrangements
Custodian interest credits 632
Transfer agent interest credits 3,749
$ 38,931
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS YEAR ENDED
Operations ENDED FEBRUARY 29,
AUGUST 31, 1996 1996
(UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C>
Net investment income (loss) $ (1,483,331) $ 2,118,503
Net realized gain (loss) 85,453,614 60,844,285
Change in net unrealized appreciation (depreciation) (147,199,593) 158,651,823
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (63,229,310) 221,614,611
Distributions to shareholders (756,797) (1,392,589)
From net investment income
From net realized gain (18,469,880) -
TOTAL DISTRIBUTIONS (19,226,677) (1,392,589)
Share transactions 198,596,743 886,867,937
Net proceeds from sales of shares
Reinvestment of distributions 18,832,280 1,358,134
Cost of shares redeemed (586,578,191) (460,786,384)
Paid in capital portion of redemption fees 557,462 1,005,318
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS (368,591,706) 428,445,005
TOTAL INCREASE (DECREASE) IN NET ASSETS (451,047,693) 648,667,027
NET ASSETS
Beginning of period 1,096,863,797 448,196,770
End of period (including accumulated undistributed net investment (loss) income of $(1,543,871)
and $ 645,816,104 $ 1,096,863,797
$729,404, respectively)
OTHER INFORMATION
Shares
Sold 5,591,988 26,953,463
Issued in reinvestment of distributions 548,886 41,419
Redeemed (16,636,965) (14,737,686)
Net increase (decrease) (10,496,091) 12,257,196
</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> <C>
SIX MONTHS YEAR ENDED YEARS ENDED FEBRUARY 28, TEN MONTHS YEAR ENDED
ENDED FEBRUARY 29, ENDED APRIL 30,
AUGUST 31, 1996 FEBRUARY 28,
SELECTED PER-SHARE DATA D (UNAUDITED) 1996 1995 1994 1993 1992
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 36.60 $ 25.30 $ 27.61 $ 22.60 $ 27.61 $ 26.78
Income from Investment Operations
Net investment income (loss) (.07) .11 (.06) (.18) (.08) (.11)
Net realized and unrealized gain (loss) (2.62) 11.21 (2.26) 5.15 (1.09) 3.36
Total from investment operations (2.69) 11.32 (2.32) 4.97 (1.17) 3.25
Less Distributions
From net investment income (.03) (.07) - - - -
In excess of net investment income - - - - - (.02)
From net realized gain (.74) - - - (3.89) (2.52)
Total distributions (.77) (.07) - - (3.89) (2.54)
Redemption fees added to paid in capital .02 .05 .01 .04 .05 .12
Net asset value, end of period $ 33.16 $ 36.60 $ 25.30 $ 27.61 $ 22.60 $ 27.61
TOTAL RETURN B, C (7.37)% 44.97% (8.37)% 22.17% (5.92)% 12.36%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 645,816 $ 1,096,864 $ 448,197 $ 481,146 $ 507,993 $ 679,877
Ratio of expenses to average net assets 1.51% A 1.44% 1.59% 1.62% 1.50% A 1.50%
F
Ratio of expenses to average net assets after 1.50% A, 1.43% 1.59% 1.61% 1.50% A 1.50%
expense reductions E E E
Ratio of net investment income (loss) to average net (.37)% A .35% (.27)% (.69)% (.37)% (.34)%
assets A
Portfolio turnover rate 41% A 67% 77% 51% 79% A 160%
Average commission rate G $ .0363
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <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 9 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
9 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. G FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1,
1995, A FUND IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER
SHARE FOR SECURITY TRADES ON
WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD TO
PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN
VARIOUS MARKETS WHERE
TRADING PRACTICES AND COMMISSION RATE STRUCTURES MAY DIFFER.
</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. A fund's total return includes
changes in 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 6 PAST 1 PAST 5 PAST 10
AUGUST 31, 1996 MONTH YEAR YEARS YEARS
S
HEALTH CARE 1.15% 19.96% 88.58% 396.49%
HEALTH CARE -1.88% 16.36% 82.92% 381.60%
(INCL. 3% SALES CHARGE)
S&P 500 2.96% 18.73% 89.14% 251.21%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one, five, or 10 years. You
can compare these figures to the performance of the S&P 500 - a widely
recognized, unmanaged index of common stocks. This benchmark reflects
reinvestment of dividends and capital gains, if any, but does not reflect
any sales charges, brokerage commissions, or other costs of investing.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
AUGUST 31, 1996 YEAR YEARS YEARS
HEALTH CARE 19.96% 13.53% 17.38%
HEALTH CARE 16.36% 12.84% 17.02%
(INCL. 3% SALES CHARGE)
S&P 500 18.73% 13.59% 13.34%
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
IMAHDR PRASUN SHR__CHT 19960831 19960910 104724 S00000000000001
Health Care SP Standard & Poor 500
00063 SP001
1986/08/31 9700.00 10000.00
1986/09/30 8375.45 9173.00
1986/10/31 9105.96 9702.28
1986/11/30 8972.17 9938.05
1986/12/31 8771.48 9684.63
1987/01/31 10079.97 10989.15
1987/02/28 11575.78 11423.22
1987/03/31 11506.21 11753.35
1987/04/30 11233.27 11648.74
1987/05/31 11342.98 11750.09
1987/06/30 11613.24 12343.47
1987/07/31 12057.43 12969.28
1987/08/31 12413.32 13453.04
1987/09/30 12180.52 13158.41
1987/10/31 8966.81 10324.09
1987/11/30 8097.16 9473.39
1987/12/31 8715.46 10194.31
1988/01/31 9363.19 10623.49
1988/02/29 9644.34 11118.55
1988/03/31 9404.54 10774.98
1988/04/30 9258.45 10894.59
1988/05/31 9233.65 10989.37
1988/06/30 9476.20 11493.78
1988/07/31 9462.42 11450.10
1988/08/31 9206.08 11060.80
1988/09/30 9514.79 11531.99
1988/10/31 9633.31 11852.58
1988/11/30 9352.17 11683.09
1988/12/31 9484.93 11887.54
1989/01/31 10154.68 12757.71
1989/02/28 9960.15 12440.04
1989/03/31 10485.39 12729.90
1989/04/30 11057.87 13390.58
1989/05/31 11402.48 13932.90
1989/06/30 11145.46 13853.48
1989/07/31 12526.01 15104.45
1989/08/31 12829.06 15400.50
1989/09/30 12921.66 15337.35
1989/10/31 12826.25 14981.53
1989/11/30 13379.04 15287.15
1989/12/31 13514.93 15654.04
1990/01/31 12739.49 14603.66
1990/02/28 12605.98 14792.04
1990/03/31 13108.75 15184.03
1990/04/30 13108.75 14804.43
1990/05/31 14912.44 16247.86
1990/06/30 15420.55 16137.38
1990/07/31 15633.45 16085.74
1990/08/31 14932.65 14631.59
1990/09/30 14483.19 13919.03
1990/10/31 14814.37 13859.18
1990/11/30 16390.43 14754.48
1990/12/31 16801.28 15166.13
1991/01/31 18459.84 15827.37
1991/02/28 20739.97 16959.03
1991/03/31 22588.80 17369.44
1991/04/30 22195.57 17411.13
1991/05/31 23400.64 18163.29
1991/06/30 22345.45 17331.41
1991/07/31 24322.69 18139.05
1991/08/31 25538.14 18568.95
1991/09/30 26052.77 18258.85
1991/10/31 27769.30 18503.51
1991/11/30 26252.52 17757.82
1991/12/31 30862.69 19789.32
1992/01/31 29850.09 19421.24
1992/02/29 28546.64 19673.71
1992/03/31 26805.12 19290.07
1992/04/30 25286.22 19857.20
1992/05/31 25806.88 19954.50
1992/06/30 24812.18 19657.18
1992/07/31 26304.79 20461.16
1992/08/31 25595.31 20041.71
1992/09/30 23823.57 20278.20
1992/10/31 24556.30 20349.17
1992/11/30 25901.59 21043.08
1992/12/31 25482.01 21301.91
1993/01/31 24113.47 21480.84
1993/02/28 21540.27 21772.98
1993/03/31 22134.40 22232.39
1993/04/30 22126.21 21694.37
1993/05/31 23011.25 22275.78
1993/06/30 22929.31 22340.38
1993/07/31 22183.57 22251.02
1993/08/31 22974.38 23094.33
1993/09/30 23691.43 22916.50
1993/10/31 25453.33 23390.88
1993/11/30 25367.29 23168.66
1993/12/31 26097.82 23449.00
1994/01/31 26614.69 24246.27
1994/02/28 25970.66 23589.20
1994/03/31 24276.47 22560.71
1994/04/30 25250.39 22849.48
1994/05/31 26676.48 23224.22
1994/06/30 26253.17 22655.22
1994/07/31 26779.22 23398.31
1994/08/31 30293.07 24357.64
1994/09/30 30510.88 23760.88
1994/10/31 30934.19 24295.50
1994/11/30 31604.08 23410.66
1994/12/31 31698.06 23757.84
1995/01/31 33376.98 24373.88
1995/02/28 34084.36 25323.73
1995/03/31 35011.13 26071.03
1995/04/30 35499.14 26838.83
1995/05/31 35841.17 27911.57
1995/06/30 37654.83 28559.96
1995/07/31 39810.52 29507.01
1995/08/31 40148.05 29581.07
1995/09/30 42398.25 30829.39
1995/10/31 42501.76 30719.33
1995/11/30 44292.91 32067.91
1995/12/31 46236.33 32685.54
1996/01/31 47890.17 33798.15
1996/02/29 47610.58 34111.46
1996/03/31 47776.44 34439.95
1996/04/30 47576.43 34947.60
1996/05/31 48439.49 35848.90
1996/06/30 48473.82 35985.48
1996/07/31 46580.96 34395.64
1996/08/30 48159.98 35121.05
IMATRL PRASUN SHR__CHT 19960831 19960910 104729 R00000000000123
Let's say hypothetically that $10,000 was invested in Fidelity Select
Health Care Portfolio on August 31, 1986, and a 3% sales charge was paid.
By August 31, 1996, the investment would have grown to $48,160 - a 381.60%
increase. That compares to $10,000 invested in the S&P 500, which would
have grown to $35,121 over the same period - a 251.21% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST 31, 1996
% OF FUND'S
INVESTMENTS
Bristol-Myers Squibb Co. 5.8
Schering-Plough Corp. 5.4
SmithKline Beecham PLC ADR 5.3
Pharmacia & Upjohn, Inc. 5.2
Pfizer, Inc. 3.9
St. Jude Medical, Inc. 3.0
American Home Products Corp. 2.9
Allergan, Inc. 2.7
Amgen, Inc. 2.7
Merck & Co., Inc. 2.6
TOP INDUSTRIES AS OF AUGUST 31, 1996
Drugs 41.0%
Biotechnology 13.7%
Medical Technology 9.5%
Medical Supplies &
Appliances 6.4%
Pharmaceutical Preparations 5.0%
All Others 24.4% *
Row: 1, Col: 1, Value: 24.4
Row: 1, Col: 2, Value: 5.0
Row: 1, Col: 3, Value: 6.4
Row: 1, Col: 4, Value: 9.5
Row: 1, Col: 5, Value: 13.7
Row: 1, Col: 6, Value: 41.0
* 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 returned 1.15% for the six months and 19.96% for the year ended
August 31, 1996. By comparison, the Standard & Poor's 500 Index returned
2.96% and 18.73% for the same time periods, respectively.
Q. WHAT WAS THE INVESTMENT ENVIRONMENT LIKE DURING THE PERIOD?
A. Health care stocks tend to move up when the market gets defensive and
tend to underperform in a rising long-term interest rate environment such
as the one we experienced during the past six months. Although they are
growth companies and not cyclical ones, health care stocks still move up
and down quite a bit.
Q. SO, WHAT WAS YOUR INVESTMENT STRATEGY DURING THE PERIOD?
A. It's the same as it's always been. I am most interested in owning the
companies that I feel fairly confident will have a positive earnings
picture. This philosophy is reflected in some of the fund's largest
holdings, such as Bristol-Myers Squibb, Schering-Plough and SmithKline
Beecham.
Q. BESIDES THE MAJOR DRUG COMPANIES, WHERE ELSE DID YOU FIND OPPORTUNITIES?
A. During the period, I added to the fund's position in medical device
companies such as Medtronic. Medtronic is the leader in developing,
manufacturing and distributing implantable medical devices for use with
cardiac patients. Medical device companies underperformed recently, and I
think they may be ready to move higher. Again, while making these
investments, I'm looking for sustainable earnings growth and successful
product introductions.
Q. HEALTH MAINTENANCE ORGANIZATION (HMO) STOCKS ENDURED A TOUGH COUPLE OF
MONTHS. HOW DID THAT AFFECT THE FUND?
A. The HMO industry is well-known as a rapidly changing and volatile field.
The fund had limited exposure to HMOs in 1995, and I began buying them
selectively again in early 1996. As a group, HMOs performed rather poorly
during the past six months. HMOs have grown in popularity so quickly during
the past couple of years that it recently resulted in a couple of negative
trends in the business. For instance, many HMOs have grown so fast that
they've been unable to control costs, which hurt stock prices, especially
during the past couple of months. However, I still think that companies
that can run their businesses efficiently should be able to meet their
targeted earnings and continue to grow. I've begun to add to the fund's
holdings in HMOs and hospitals as I find attractive buying opportunities.
Q. WERE THERE ANY INVESTMENT DECISIONS THAT YOU REGRET MAKING DURING THE
PAST SIX MONTHS?
A. Yes. I wish the fund had owned more long-term-care nursing homes and
assisted living organizations. It's only been in recent years that these
types of stocks have been available in the marketplace - and they are only
beginning to get over some early growing pains and come into their own as
investments. They performed well during the period and, in hindsight, the
fund didn't have as large a position in them as I would have liked.
Q. WHAT'S YOUR OUTLOOK GOING FORWARD?
A. While the first portion of 1996 was tough, I think the health care
industry has the potential to outperform for the rest of the year. I think
the industry's earnings momentum is strongly in place versus other sectors
of the economy. I'll continue to pick the stocks in the health care sector
that I think have the best chances of outperforming based on growth
fundamentals, strong balance sheets, product flow and innovation. I'll also
be watching for companies that are buying back stock - a trend that
recently began to surface in the sector.
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: July 14, 1981
FUND NUMBER: 063
TRADING SYMBOL: FSPHX
SIZE: as of August 31, 1996, more than
$1.1 billion
MANAGER: Karen Firestone, since 1995;
manager, Fidelity Select Biotechnology
Portfolio since 1992; Fidelity Select Air
Transportation portfolio, 1987-1992; Fidelity
Select Leisure Portfolio, 1989-1992; joined
Fidelity in 1983
(checkmark)
HEALTH CARE PORTFOLIO
INVESTMENTS AUGUST 31, 1996 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 86.8%
SHARES VALUE (NOTE 1)
CHEMICALS & PLASTICS - 1.0%
CHEMICALS - 1.0%
Hoechst AG Ord. 340,000 $ 11,916,934 43439010
COMPUTER SERVICES & SOFTWARE - 0.1%
CAD/CAM/CAE - 0.1%
Healthdyne Information Enterprises, Inc. 258,200 1,323,275 42220410
DEFENSE ELECTRONICS - 0.1%
Maxwell Laboratories, Inc. (a) 91,500 1,555,500 57776310
DRUG STORES - 0.3%
Eckerd Corp. (a) 148,000 3,626,000 27876310
DRUGS & PHARMACEUTICALS - 60.0%
BIOTECHNOLOGY - 13.7%
Amgen, Inc. (a) 550,000 32,037,500 03116210
Biochem Pharmaceuticals, Inc. (a) 71,200 2,482,178 09058T10
Biogen, Inc. (a) 76,500 5,335,875 09059710
COR Therapeutics, Inc. (a) 387,100 3,798,419 21775310
Elf Sanofi SA 165,000 13,026,830 91399A92
Genentech, Inc. special (a) 397,400 20,863,500 36871030
Genetics Institute, Inc. (a) 90,000 5,580,000 37185530
Human Genome Sciences, Inc.(a) 100,000 3,412,495 44490310
Idexx Laboratories (a) 150,000 5,812,500 45168D10
IGI, Inc. (a) 100,000 556,250 44957510
Interneuron Pharmaceuticals, Inc. 100,000 3,125,000 46057310
Magainin Pharmaceuticals, Inc. (a) 70,000 791,875 55903610
Pharmacia & Upjohn, Inc. 1,493,600 62,731,200 71694110
Regeneron Pharmaceuticals, Inc. (a) 155,900 2,611,325 75886F10
Ribozyme Pharmaceuticals, Inc. (a) 80,500 955,938 76256710
Sequana Therapeutics, Inc. (a) 100,000 1,650,000 81732210
Virus Research Institute, Inc. (a) 35,000 227,500 92792010
164,998,385
COMMERCIAL LABORATORY RESEARCH - 0.3%
INCYTE Pharmaceuticals, Inc. (a) 80,000 3,250,000 45337C10
DRUGS - 41.0%
ALZA Corp. Class A (a) 140,000 3,832,500 02261510
Allergan, Inc. 851,500 33,102,063 01849010
American Home Products Corp. 584,800 34,649,400 02660910
Astra AB Class A Free shares 270,000 11,420,285 04632292
Barr Laboratories, Inc. (a) 105,600 2,719,200 06830610
Bristol-Myers Squibb Co. 791,100 69,419,025 11012210
Dura Pharmaceuticals, Inc. (a) 200,000 6,950,000 26632S10
Elan Corp. PLC ADR (a) 391,820 12,293,353 28413120
Glaxo Wellcome PLC sponsored ADR 295,000 8,407,500 37733W10
Glaxo Wellcome PLC 240,000 3,440,627 37733W92
Lilly (Eli) & Co. 491,806 28,155,894 53245710
Merck & Co., Inc. 471,800 30,961,875 58933110
Novo-Nordisk AS Class B 92,000 14,137,515 67010010
Pfizer, Inc. 663,600 47,115,600 71708110
Roche Holdings Ltd. participation
certificates 1,900 14,455,491 77157092
Schering-Plough Corp. 1,168,400 65,284,350 80660510
SmithKline Beecham PLC ADR 1,100,000 64,075,000 83237830
Takeda Chemical Industries Ltd. 361,000 6,233,571 87405810
Warner-Lambert Co. 335,600 19,968,200 93448810
Watson Pharmaceuticals, Inc. (a) 440,000 12,760,000 94268310
Yamanouchi Pharmaceutical Co. Ltd. 233,000 4,793,754 98414010
494,175,203
SHARES VALUE (NOTE 1)
PHARMACEUTICAL PREPARATIONS - 5.0%
Alpharma, Inc. Class A 225,000 $ 3,543,750 02081310
Andrx Corp. (a) 198,500 2,878,250 03455110
Arris Pharmaceutical Corp. (a) 250,000 2,687,500 04269W10
CIBA-GEIGY AG (Reg.) 15,300 19,284,110 17199492
Copley Pharmaceutical, Inc. (a) 210,600 2,316,600 21745K10
Inhale Therapeutic Systems (a) 39,000 585,000 45719110
Ligand Pharmaceuticals, Inc. Class B (a) 232,800 2,837,250 53220K20
Rhone Poulenc Rorer, Inc. 8,200 577,075 76242T10
Sandoz AG (Reg.) 17,200 20,433,943 80005292
Zeneca Group PLC Ord. 240,000 5,726,883 98934D92
60,870,361
TOTAL DRUGS & PHARMACEUTICALS 723,293,949
ELECTRICAL EQUIPMENT - 0.2%
ELECTRICAL MACHINERY - 0.2%
VWR Corp. 121,800 2,101,050 91843510
MEDICAL EQUIPMENT & SUPPLIES - 17.6%
DENTAL EQUIPMENT - 0.5%
Sybron Corp. (a) 232,300 6,388,250 87114F10
DRUG DISTRIBUTORS - WHOLESALE - 2.3%
Bergen Brunswig Corp. Class A 714,290 19,910,834 08373910
Cardinal Health, Inc. 107,666 7,899,993 14149Y10
27,810,827
MEDICAL SUPPLIES & APPLIANCES - 6.4%
Abbott Laboratories 100,000 4,512,500 00282410
Baxter International, Inc. 273,000 12,182,625 07181310
Becton, Dickinson & Co. 260,600 10,652,025 07588710
Boston Scientific Corp. (a) 368,668 16,912,645 10113710
Exactech, Inc. (a) 38,100 257,175 30064E10
Johnson & Johnson 499,200 24,585,600 47816010
Omnicare, Inc. 200,000 4,900,000 68190410
Sofamor/Danek Group, Inc. (a) 110,500 3,176,875 83400510
77,179,445
MEDICAL TECHNOLOGY - 8.3%
Beckman Instruments, Inc. 405,000 14,934,375 07581610
Biomet, Inc. 10,000 156,250 09061310
Conmed Corp. (a) 5,000 85,000 20741010
Datascope Corp. (a) 122,600 2,176,150 23811310
Guidant Corp. 151,930 7,710,448 40169810
InControl, Inc. (a) 100,000 993,750 45336L10
Medtronic, Inc. 420,000 21,840,000 58505510
Nellcor, Inc. (a) 182,800 4,707,100 64027510
St. Jude Medical, Inc. (a) 1,009,000 36,197,875 79084910
Sonus Pharmaceuticals, Inc. (a) 115,000 2,328,750 83569210
Stryker Corp. 120,000 2,932,500 86366710
U.S. Surgical Corp. 50,000 1,825,000 91270710
Vital Signs, Inc. 179,300 3,653,238 92846910
99,540,436
X-RAY ELECTRO-MEDICAL APPARATUS - 0.1%
Healthdyne Technologies, Inc. (a) 96,813 871,317 42220610
TOTAL MEDICAL EQUIPMENT & SUPPLIES 211,790,275
MEDICAL FACILITIES MANAGEMENT - 7.3%
HOME HEALTH CARE AGENCIES - 0.3%
Matria Healthcare, Inc. (a) 258,200 1,904,225 57681710
Sterling House Corp. (a) 105,000 1,680,000 85933110
3,584,225
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
MEDICAL FACILITIES MANAGEMENT - CONTINUED
HOSPITALS - 2.2%
Columbia/HCA Healthcare Corp. 319,005 $ 17,983,907 19767710
Tenet Healthcare Corp. (a) 400,000 8,400,000 88033G10
26,383,907
HMOS & OUTPATIENT CARE - 3.0%
Health Systems International, Inc. (a) 476,900 11,684,050 42194910
Oxford Health Plans, Inc. (a) 202,900 9,282,675 69147110
PacifiCare Health Systems, Inc. Class B (a) 110,700 8,911,350 69511020
United HealthCare Corp. 162,800 6,288,150 91058110
36,166,225
MEDICAL SERVICES - 0.6%
Lincare Holdings, Inc. (a) 126,800 4,731,225 53279110
Physician Reliance Network, Inc. (a) 200,000 2,850,000 71940G10
7,581,225
NURSING CARE & NURSING HOMES - 0.3%
ARV Assisted Living, Inc. (a) 109,000 1,580,500 00204C10
Arbor Health Care Co. (a) 112,000 2,408,000 03876L10
3,988,500
SKILLED NURSING CARE FACILITIES - 0.9%
Multicare Companies, Inc. (a) 77,550 1,463,756 62543V10
Vencor, Inc. (a) 288,000 9,036,000 92260210
10,499,756
TOTAL MEDICAL FACILITIES MANAGEMENT 88,203,838
SERVICES - 0.2%
MANAGEMENT SERVICES - 0.2%
Sterling Healthcare Group, Inc. (a) 100,000 2,075,000 85932610
TOTAL COMMON STOCKS
(Cost $848,991,737) 1,045,885,821
CONVERTIBLE PREFERRED STOCKS - 1.0%
MEDICAL EQUIPMENT & SUPPLIES - 1.0%
MEDICAL TECHNOLOGY - 1.0%
U.S. Surgical Corp. $2.20 (c)
(Cost $7,710,166) 332,800 11,980,800 91270720
NONCONVERTIBLE BONDS - 0.2%
MOODY'S PRINCIPAL
RATINGS AMOUNT
MEDICAL EQUIPMENT & SUPPLIES - 0.2%
MEDICAL TECHNOLOGY - 0.2%
Advanced Medical, Inc. 15%,
7/15/99 (Cost $1,542,097) - $ 2,090,000 2,090,000 00754CAC
REPURCHASE AGREEMENTS - 12.0%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 5.25%, dated
8/30/96 due 9/3/96 $ 145,157,626 145,073,000 69899TYY
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $1,003,317,000) $ 1,205,029,621
LEGEND
1. Non-income producing
(c) 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 VALUE AFFILIATE COST COST INCOME
Protocol Systems, Inc. $ - $ 977,901 $ - $ -
Spacelabs Medical, Inc. - 2,270,615 - -
Totals $ - $ 3,248,516 $ - $ -
(c) 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 $11,980,800 or 1.0% of net
assets
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $250,901,674 and $516,577,546 respectively (see Note 4 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $111,825 for the period
(see Note 5 of Notes to Financial Statements).
At the period end, the value of securities loaned and the value of
collateral amounted to $24,791,850 and $25,918,400, respectively (see Note
7 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 82.3%
United Kingdom 6.8
Switzerland 4.5
Denmark 1.2
France 1.1
Ireland 1.0
Germany 1.0
Others (individually less than 1%) 2.1
TOTAL 100.0%
INCOME TAX INFORMATION
At August 31, 1996, the aggregate cost of investment securities for income
tax purposes was $1,004,244,869. Net unrealized appreciation aggregated
$200,784,752 of which $225,979,432 related to appreciated investment
securities and $25,194,680 related to depreciated investment securities.
HEALTH CARE PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS
Investment in securities, at $ 1,205,029,621
value (including repurchase agreements of $145,073,000) (cost $1,003,317,000) - See accompanying
schedule
Cash 303
Receivable for investments sold 15,093,697
Receivable for fund shares sold 1,267,762
Dividends receivable 2,113,586
Interest receivable 39,188
Redemption fees receivable 1,264
Other receivables 1,431,435
Prepaid expenses 24,260
TOTAL ASSETS 1,225,001,116
LIABILITIES
Payable for investments purchased $ 10,799,015
Payable for fund shares redeemed 2,291,935
Accrued management fee 600,602
Other payables and 984,174
accrued expenses
Collateral on securities loaned, 25,918,400
at value
TOTAL LIABILITIES 40,594,126
NET ASSETS $ 1,184,406,990
Net Assets consist of:
Paid in capital $ 843,828,359
Undistributed net investment income 5,503,042
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 133,357,473
Net unrealized appreciation (depreciation) on investments 201,718,116
and assets and liabilities in
foreign currencies
NET ASSETS, for 12,059,868 $ 1,184,406,990
shares outstanding
NET ASSET VALUE and redemption price per share ($1,184,406,990 (divided by) 12,059,868 shares) $98.21
Maximum offering price per share (100/97.00 of $98.21) $101.25
</TABLE>
STATEMENT OF OPERATIONS
SIX MONTHS ENDED AUGUST 31, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME $ 9,733,179
Dividends
Interest (including income on securities loaned of $104,604) 4,237,577
TOTAL INCOME 13,970,756
EXPENSES
Management fee $ 3,857,415
Transfer agent fees 4,093,716
Accounting and security lending fees 404,479
Non-interested trustees' compensation 2,471
Custodian fees and expenses 47,216
Registration fees 24,260
Audit 44,290
Legal 13,010
Miscellaneous 8,845
Total expenses before reductions 8,495,702
Expense reductions (79,673 8,416,029
)
NET INVESTMENT INCOME 5,554,727
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities (including realized gain of 1,743,407 133,954,353
on sale of investments in
affiliated issuers)
Foreign currency transactions (3,601 133,950,752
)
Change in net unrealized appreciation (depreciation) on:
Investment securities (126,797,546
)
Assets and liabilities in 5,495 (126,792,051
foreign currencies )
NET GAIN (LOSS) 7,158,701
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 12,713,428
OTHER INFORMATION $ 1,539,180
Sales charges paid to FDC
Deferred sales charges withheld $ 29,641
by FDC
Exchange fees withheld by FSC $ 195,105
Expense reductions $ 75,485
Directed brokerage arrangements
Custodian interest credits 103
Transfer agent interest credits 4,085
$ 79,673
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS ENDED YEAR ENDED
AUGUST 31, 1996 FEBRUARY 29,
(UNAUDITED) 1996
<TABLE>
<CAPTION>
<S> <C> <C>
Operations $ 5,554,727 $ 11,861,909
Net investment income
Net realized gain (loss) 133,950,752 127,563,700
Change in net unrealized appreciation (depreciation) (126,792,051) 221,015,172
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 12,713,428 360,440,781
Distributions to shareholders (3,046,964) (7,988,345)
From net investment income
From net realized gain (42,679,614) (66,667,821)
TOTAL DISTRIBUTIONS (45,726,578) (74,656,166)
Share transactions 176,483,560 1,031,303,280
Net proceeds from sales of shares
Reinvestment of distributions 44,717,766 73,110,795
Cost of shares redeemed (530,111,629) (808,071,923)
Paid in capital portion of redemption fees 420,517 642,187
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS (308,489,786) 296,984,339
TOTAL INCREASE (DECREASE) IN NET ASSETS (341,502,936) 582,768,954
NET ASSETS
Beginning of period 1,525,909,926 943,140,972
End of period (including undistributed net investment income of $5,503,042 and $4,463,587,
respectively) $ 1,184,406,990 $ 1,525,909,926
OTHER INFORMATION
Shares
Sold 1,783,679 11,376,458
Issued in reinvestment of distributions 451,284 771,121
Redeemed (5,363,132) (9,348,659)
Net increase (decrease) (3,128,169) 2,798,920
</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> <C>
SIX MONTHS YEAR ENDED YEARS ENDED FEBRUARY 28, TEN MONTHS YEAR ENDED
ENDED FEBRUARY 29, ENDED APRIL 30,
AUGUST 31, 1996 FEBRUARY 28,
SELECTED PER-SHARE DATA D (UNAUDITED) 1996 1995 1994 1993 1992
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 100.47 $ 76.13 $ 63.31 $ 52.57 $ 70.42 $ 69.99
Income from Investment Operations
Net investment income (loss) .43 .95 .75 .15 .13 (.02)
Net realized and unrealized gain (loss) .73 28.85 18.38 10.61 (9.34) 9.47
Total from investment operations 1.16 29.80 19.13 10.76 (9.21) 9.45
Less Distributions
From net investment income (.23) (.59) (.62) (.07) (.16) (.34)
From net realized gain (3.22) (4.92) (5.74) - (8.51) (8.81)
Total distributions (3.45) (5.51) (6.36) (.07) (8.67) (9.15)
Redemption fees added to paid in capital .03 .05 .05 .05 .03 .13
Net asset value, end of period $ 98.21 $ 100.47 $ 76.13 $ 63.31 $ 52.57 $ 70.42
TOTAL RETURN B, C 1.15% 39.68% 31.24% 20.57% (14.81)% 13.92%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 1,184,407 $ 1,525,910 $ 943,141 $ 522,890 $ 536,367 $ 838,814
Ratio of expenses to average net assets 1.32% A 1.31% 1.39% 1.59% 1.46% A 1.44%
Ratio of expenses to average net assets after 1.31% A, 1.30% 1.36% 1.55% 1.46% A 1.44%
expense reductions E E E E
Ratio of net investment income (loss) to average net .86% A 1.06% 1.08% .26% .24% A (.02)%
assets
Portfolio turnover rate 44% A 54% 151% 213% 112% A 154%
Average commission rate F $ .0437
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <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 9 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
9 OF NOTES TO FINANCIAL STATEMENTS). F FOR FISCAL YEARS BEGINNING ON OR
AFTER SEPTEMBER 1,
1995, A FUND IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER
SHARE FOR SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT
MAY VARY FROM
PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES
EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION RATE
STRUCTURES MAY DIFFER.
</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. A fund's total return includes
changes in 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 6 PAST 1 PAST 5 PAST 10
AUGUST 31, 1996 MONTH YEAR YEARS YEARS
S
MEDICAL DELIVERY -3.10% 16.23% 77.42% 338.74%
MEDICAL DELIVERY -6.00% 12.74% 72.10% 325.58%
(INCL. 3% SALES CHARGE)
S&P 500 2.96% 18.73% 89.14% 251.21%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one, five, or 10 years. You
can compare these figures to the performance of the S&P 500 - a widely
recognized, unmanaged index of common stocks. This benchmark reflects
reinvestment of dividends and capital gains, if any, but does not reflect
any sales charges, brokerage commissions, or other costs of investing.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
AUGUST 31, 1996 YEAR YEARS YEARS
MEDICAL DELIVERY 16.23% 12.15% 15.94%
MEDICAL DELIVERY 12.74% 11.47% 15.58%
(INCL. 3% SALES CHARGE)
S&P 500 18.73% 13.59% 13.34%
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
IMAHDR PRASUN SHR__CHT 19960831 19960910 140720 S00000000000001
Medical Delivery SP Standard & Poor 500
00505 SP001
1986/08/31 9700.00 10000.00
1986/09/30 8925.24 9173.00
1986/10/31 9627.69 9702.28
1986/11/30 9059.53 9938.05
1986/12/31 8460.38 9684.63
1987/01/31 8883.92 10989.15
1987/02/28 9534.72 11423.22
1987/03/31 9989.24 11753.35
1987/04/30 8956.23 11648.74
1987/05/31 9235.14 11750.09
1987/06/30 9865.28 12343.47
1987/07/31 10288.82 12969.28
1987/08/31 10051.22 13453.04
1987/09/30 9896.27 13158.41
1987/10/31 7076.14 10324.09
1987/11/30 6652.61 9473.39
1987/12/31 7438.00 10194.31
1988/01/31 7481.89 10623.49
1988/02/29 7865.85 11118.55
1988/03/31 8074.29 10774.98
1988/04/30 8140.12 10894.59
1988/05/31 8008.47 10989.37
1988/06/30 8260.79 11493.78
1988/07/31 8173.03 11450.10
1988/08/31 7942.65 11060.80
1988/09/30 8392.44 11531.99
1988/10/31 8611.85 11852.58
1988/11/30 8337.58 11683.09
1988/12/31 8611.85 11887.54
1989/01/31 9248.14 12757.71
1989/02/28 9588.22 12440.04
1989/03/31 10114.81 12729.90
1989/04/30 10805.95 13390.58
1989/05/31 11365.44 13932.90
1989/06/30 11233.32 13853.48
1989/07/31 12508.33 15104.45
1989/08/31 13090.88 15400.50
1989/09/30 13453.60 15337.35
1989/10/31 13002.95 14981.53
1989/11/30 13607.48 15287.15
1989/12/31 13608.27 15654.04
1990/01/31 11604.74 14603.66
1990/02/28 11897.39 14792.04
1990/03/31 12448.92 15184.03
1990/04/30 12572.74 14804.43
1990/05/31 14351.16 16247.86
1990/06/30 15037.76 16137.38
1990/07/31 15094.04 16085.74
1990/08/31 13889.67 14631.59
1990/09/30 12966.69 13919.03
1990/10/31 12809.11 13859.18
1990/11/30 14587.53 14754.48
1990/12/31 15821.24 15166.13
1991/01/31 18371.18 15827.37
1991/02/28 19507.06 16959.03
1991/03/31 22404.73 17369.44
1991/04/30 21732.47 17411.13
1991/05/31 23529.02 18163.29
1991/06/30 21546.82 17331.41
1991/07/31 23708.74 18139.05
1991/08/31 23986.53 18568.95
1991/09/30 24203.93 18258.85
1991/10/31 24735.36 18503.51
1991/11/30 24046.92 17757.82
1991/12/31 28134.12 19789.32
1992/01/31 28158.85 19421.24
1992/02/29 27071.06 19673.71
1992/03/31 25278.68 19290.07
1992/04/30 24277.43 19857.20
1992/05/31 24030.20 19954.50
1992/06/30 22764.83 19657.18
1992/07/31 24060.27 20461.16
1992/08/31 24033.29 20041.71
1992/09/30 21212.98 20278.20
1992/10/31 22265.54 20349.17
1992/11/30 24451.61 21043.08
1992/12/31 24424.62 21301.91
1993/01/31 23183.15 21480.84
1993/02/28 19512.71 21772.98
1993/03/31 19944.52 22232.39
1993/04/30 19701.63 21694.37
1993/05/31 20308.87 22275.78
1993/06/30 20511.28 22340.38
1993/07/31 21024.06 22251.02
1993/08/31 20956.59 23094.33
1993/09/30 22683.86 22916.50
1993/10/31 23749.91 23390.88
1993/11/30 24141.24 23168.66
1993/12/31 25774.05 23449.00
1994/01/31 27217.93 24246.27
1994/02/28 27366.37 23589.20
1994/03/31 26003.45 22560.71
1994/04/30 26840.09 22849.48
1994/05/31 27744.21 23224.22
1994/06/30 26030.44 22655.22
1994/07/31 27190.94 23398.31
1994/08/31 29943.77 24357.64
1994/09/30 31009.82 23760.88
1994/10/31 32021.89 24295.50
1994/11/30 30645.48 23410.66
1994/12/31 30887.64 23757.84
1995/01/31 32243.47 24373.88
1995/02/28 32737.79 25323.73
1995/03/31 34813.91 26071.03
1995/04/30 33682.45 26838.83
1995/05/31 32577.65 27911.57
1995/06/30 33101.72 28559.96
1995/07/31 36444.47 29507.01
1995/08/31 36614.44 29581.07
1995/09/30 37379.31 30829.39
1995/10/31 36741.92 30719.33
1995/11/30 39815.55 32067.91
1995/12/31 40828.15 32685.54
1996/01/31 43024.03 33798.15
1996/02/29 43917.52 34111.46
1996/03/31 44341.55 34439.95
1996/04/30 44846.44 34947.60
1996/05/31 44751.72 35848.90
1996/06/30 43694.10 35985.48
1996/07/31 38958.47 34395.64
1996/08/30 42557.55 35121.05
IMATRL PRASUN SHR__CHT 19960831 19960910 140725 R00000000000123
Let's say hypothetically that $10,000 was invested in Fidelity Select
Medical Delivery Portfolio on August 31, 1986, and a 3% sales charge was
paid. By August 31, 1996, the investment would have grown to $42,558 - a
325.58% increase. That compares to $10,000 invested in the S&P 500, which
would have grown to $35,121 over the same period - a 251.21% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST 31, 1996
% OF FUND'S
INVESTMENTS
HEALTHSOUTH Rehabilitation Corp. 7.8
Columbia/HCA Healthcare Corp. 7.5
Tenet Healthcare Corp. 6.0
Oxford Health Plans, Inc. 5.8
PacifiCare Health Systems, Inc. Class B 4.2
Health Management Associates, Inc. Class A 4.1
Universal Health Services, Inc. Class B 4.1
OrNda Healthcorp 3.9
Bergen Brunswig Corp. Class A 3.2
Sierra Health Services, Inc. 3.1
TOP INDUSTRIES AS OF AUGUST 31, 1996
Hospitals 30.7%
HMOs & Outpatient Care 19.3%
Drug Distributors -
Wholesale 6.1%
Skilled Nursing Care
Facilities 4.7%
Hospitals, General Medical 3.9%
All Others 35.3% *
Row: 1, Col: 1, Value: 35.3
Row: 1, Col: 2, Value: 3.9
Row: 1, Col: 3, Value: 4.7
Row: 1, Col: 4, Value: 6.1
Row: 1, Col: 5, Value: 19.3
Row: 1, Col: 6, Value: 30.7
* 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 six months ended August 31, 1996, the fund had a total return of
- -3.10%. For the past year, the fund returned 16.23%. For the same periods,
the Standard & Poor's 500 Index returned, respectively, 2.96% and 18.73%.
Q. IN YOUR LAST REPORT, YOU SAID HEALTH CARE PROVIDERS AND HEALTH
MAINTENANCE ORGANIZATIONS (HMOS) DRIVE THE MEDICAL DELIVERY MARKET. WAS
THAT THE CASE IN THE PAST SIX MONTHS?
A. That's right. Providers - mainly publicly traded hospitals - and HMO
stocks are the main forces behind this sector's returns. Over the past six
months, hospital stocks outperformed HMOs by a substantial margin.
Q. WHAT WAS THE STORY WITH HMOS?
A. HMOs renew their contracts with customers to determine their revenue
each January. Therefore, investors attempt to predict what prices will be
set at. In the second half of 1995, the market was somewhat optimistic that
HMOs would be able to set prices above their anticipated cost trends. As
quarterly reports began coming in this year, however, it became clear that
the companies' pricing was not up to expectations. After poor earnings
reports during July, HMO stocks tanked, and the fund's performance was
dragged down with them. In August, however, many HMO stocks rebounded
somewhat on the anticipation of better pricing expectations for 1997 and
merger and acquisition activity.
Q. . . . AND HOSPITALS?
A. Hospital stocks did well relative to HMOs, but on their own they've had
somewhat of an up and down six months. Hospitals rallied in the first
quarter but fell in unison on news of slowing patient admission growth. One
company that bucked the trend was Columbia/HCA, which saw strong admission
growth despite the industry trend. In general, I look for hospital
companies that are consolidating capacity, contracting with managed-care
providers(HMOs) and controlling costs.
Q. WHERE DOES HEALTHSOUTH - YOUR TOP HOLDING - FIT INTO THE PICTURE?
A. HEALTHSOUTH is the nation's largest provider of medical rehabilitative
and outpatient surgery services. By combining these services, they can
service patients who would otherwise go to two different places for these
services. Additionally, they provide some of the more profitable procedures
in orthopedic care. Thus, they were able to improve revenue per case and
improve profit margin.
Q. LET'S LOOK AT SOME OF THE SPECIALTY AREAS IN THE PORTFOLIO. WHAT
HAPPENED IN THE NURSING HOME MARKET?
A. During the period, nursing home stocks struggled. Occupancy softened as
a result of more competition from acute care hospitals. Assisted living
facilities have also siphoned away private paying patients from the nursing
homes.
Q. HOW ABOUT HOME OXYGEN THERAPY?
A. This subsector of the medical delivery market had a good first half of
1996 when it became clear Congress and the president would not be able to
agree on major budget cuts. Therefore, investors knew there wouldn't be
draconian cuts in the government reimbursements that these companies depend
on.
Q. WHY DID UNITED HEALTHCARE FALL OUT OF YOUR TOP 10 HOLDINGS?
A. United HealthCare was a big disappointment during the period. The
company's acquisition of indemnity insurance company Metra Health didn't
provide the immediate benefits I expected. Meanwhile, United's costs grew
at a 3% to 4% rate and - like many other HMOs - pricing remained flat.
Q. WHAT DO YOU SEE AHEAD FOR THE MEDICAL DELIVERY MARKET?
A. As one can see, pricing plays a big part in the performance of HMO
stocks. Therefore, any sustained rebound in HMO stocks will depend on
pricing improvements when contracts are renegotiated in January. Meanwhile,
the demands of managed care on the provider industry will pressure
providers' revenue and force consolidation. Finally, we'll have to wait
until the November elections to get a sense of the outlook for Medicare and
Medicaid reimbursements.
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: June 30, 1986
FUND NUMBER: 505
TRADING SYMBOL: FSHCX
SIZE: as of August 31, 1996, more than
$215 million
MANAGER: Stephen Binder, since 1994; joined
Fidelity in 1989
(checkmark)
MEDICAL DELIVERY PORTFOLIO
INVESTMENTS AUGUST 31, 1996 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 88.8%
SHARES VALUE (NOTE 1)
DRUG STORES - 0.4%
Vitalink Pharmacy Services, Inc. (a) 35,000 $ 813,750 92846E10
DRUGS & PHARMACEUTICALS - 2.0%
DRUGS - 1.6%
Lilly (Eli) & Co. 63,900 3,658,275 53245710
IN VITRO, IN VIVO DIAGNOSTIC SUBSTANCE - 0.4%
Serologicals Corp. (a) 28,600 836,550 81752310
TOTAL DRUGS & PHARMACEUTICALS 4,494,825
HOUSEHOLD PRODUCTS - 0.3%
FABRICATED RUBBER PRODUCTS - 0.3%
Safeskin Corp. 19,800 643,500 78645410
INSURANCE - 3.1%
INSURANCE BROKERS & SERVICES - 1.2%
HealthCare COMPARE Corp. (a) 63,100 2,697,525 42192810
MULTI-LINE INSURANCE - 1.9%
Aetna, Inc. 65,000 4,298,125 00811710
TOTAL INSURANCE 6,995,650
MEDICAL EQUIPMENT & SUPPLIES - 12.7%
DRUG DISTRIBUTORS - WHOLESALE - 6.1%
AmeriSource Health Corp. Class A (a) 105,500 4,022,188 03071P10
Bergen Brunswig Corp. Class A 259,765 7,240,946 08373910
Cardinal Health, Inc. 31,800 2,333,325 14149Y10
13,596,459
MEDICAL SUPPLIES & APPLIANCES - 1.4%
Boston Scientific Corp. (a) 68,000 3,119,500 10113710
MEDICAL TECHNOLOGY - 3.8%
Medtronic, Inc. 52,000 2,704,000 58505510
St. Jude Medical, Inc. (a) 162,250 5,820,719 79084910
8,524,719
OPHTHALMIC GOODS - 1.4%
Cooper Companies, Inc. (a) 240,200 3,122,600 21664840
TOTAL MEDICAL EQUIPMENT & SUPPLIES 28,363,278
MEDICAL FACILITIES MANAGEMENT - 69.1%
HOME HEALTH CARE AGENCIES - 1.3%
Vivra, Inc. (a) 100,000 3,012,500 92855M10
HOSPITALS - 30.7%
Columbia/HCA Healthcare Corp. 297,982 16,798,735 19767710
HEALTHSOUTH Rehabilitation Corp. (a) 540,300 17,492,213 42192410
Health Management Associates, Inc.
Class A (a) 406,652 9,251,333 42193310
Quorum Health Group, Inc. 100,000 2,525,000 74908410
Tenet Healthcare Corp. (a) 633,000 13,293,000 88033G10
Universal Health Services, Inc.
Class B (a) 355,600 9,067,800 91390310
68,428,081
HOSPITALS, GENERAL MEDICAL - 3.9%
OrNda Healthcorp (a) 339,100 8,731,825 68685710
HMOS & OUTPATIENT CARE - 19.3%
Health Systems International, Inc. (a) 234,600 5,747,700 42194910
Oxford Health Plans, Inc. (a) 283,200 12,956,400 69147110
PacifiCare Health Systems, Inc.
Class B (a) 117,000 9,418,500 69511020
Physician Corp. of America (a) 135,000 1,788,750 71940P10
Rightchoice Managed Care, Inc.
Class A (a) 31,400 349,325 76657K10
SHARES VALUE (NOTE 1)
Safeguard Health Enterprises, Inc. (a) 101,000 $ 1,868,500 78644410
Sierra Health Services, Inc. (a) 218,100 6,897,413 82632210
United HealthCare Corp. 103,000 3,978,375 91058110
43,004,963
MEDICAL SERVICES - 3.9%
American Oncology Resources, Inc. (a) 170,000 1,721,250 02891010
Foundation Health Corp. (a) 153,200 4,596,000 35040110
Lincare Holdings, Inc. (a) 63,100 2,354,419 53279110
National Surgery Centers, Inc. (a) 1,500 39,750 63804410
8,711,419
MISCELLANEOUS HEALTH & ALLIED SERVICES - 1.9%
Renal Treatment Centers, Inc. (a) 133,100 4,342,388 75967110
NURSING CARE & NURSING HOMES - 1.2%
Arbor Health Care Co. (a) 24,800 533,200 03876L10
Health Care & Retirement Corp. 45,000 1,113,750 42193710
Integrated Health Services, Inc. 41,800 961,400 45812C10
2,608,350
NURSING, PERSONAL CARE FACILITIES - 0.8%
NovaCare, Inc. (a) 200,000 1,800,000 66993010
SKILLED NURSING CARE FACILITIES - 4.7%
Multicare Companies, Inc. (a) 143,550 2,709,506 62543V10
TheraTx, Inc. (a) 350,575 5,433,913 88338410
Vencor, Inc. (a) 72,919 2,287,834 92260210
10,431,253
SPECIALTY OUTPATIENT CLINICS - 1.4%
Sun Healthcare Group (a) 239,800 3,237,300 86693310
TOTAL MEDICAL FACILITIES MANAGEMENT 154,308,079
REAL ESTATE INVESTMENT TRUSTS - 0.7%
Capstone Capital Corp. 71,900 1,482,938 14066R10
RETAIL & WHOLESALE, MISCELLANEOUS - 0.5%
RETAIL, GENERAL - 0.5%
Gulf South Medical Supply, Inc. (a) 47,000 1,022,250 40252G10
TOTAL COMMON STOCKS
(Cost $174,352,788) 198,124,270
REPURCHASE AGREEMENTS - 11.2%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 5.25%, dated
8/30/96 due 9/3/96 $ 25,026,590 25,012,000 69899TYY
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $199,364,788) $ 223,136,270
LEGEND
1. Non-income producing
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $61,833,275 and $128,568,872, respectively (see Note 4 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $23,465 for the period (see
Note 5 of Notes to Financial Statements).
At the period end, the value of securities loaned and the value of
collateral amounted to $6,689,550 and $6,897,300, respectively (see Note 7
of Notes to Financial Statements).
INCOME TAX INFORMATION
At August 31, 1996, the aggregate cost of investment securities for income
tax purposes was $199,364,788. Net unrealized appreciation aggregated
$23,771,482, of which $31,415,735 related to appreciated investment
securities and $7,644,253 related to depreciated investment securities.
MEDICAL DELIVERY PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS
Investment in securities, at $ 223,136,270
value (including repurchase agreements of $25,012,000)
(cost $199,364,788) - See accompanying schedule
Cash 207
Receivable for investments sold 157,247
Receivable for fund shares sold 1,341,761
Dividends receivable 61,997
Redemption fees receivable 1,237
Other receivables 601,076
Prepaid expenses 11,349
TOTAL ASSETS 225,311,144
LIABILITIES
Payable for investments purchased $ 1,505,625
Payable for fund shares redeemed 886,133
Accrued management fee 102,942
Other payables and 221,282
accrued expenses
Collateral on securities loaned, 6,897,300
at value
TOTAL LIABILITIES 9,613,282
NET ASSETS $ 215,697,862
Net Assets consist of:
Paid in capital $ 176,583,110
Accumulated net investment (loss) (1,002,883
)
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 16,346,153
Net unrealized appreciation (depreciation) on investments 23,771,482
NET ASSETS, for 7,999,746 $ 215,697,862
shares outstanding
NET ASSET VALUE and redemption price per share ($215,697,862 (divided by) 7,999,746 shares) $26.96
Maximum offering price per share (100/97.00 of $26.96) $27.79
</TABLE>
STATEMENT OF OPERATIONS
SIX MONTHS ENDED AUGUST 31, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME $ 526,180
Dividends
Interest (including income on securities loaned of $8,696) 265,112
TOTAL INCOME 791,292
EXPENSES
Management fee $ 731,863
Transfer agent fees 927,108
Accounting and security lending fees 121,418
Non-interested trustees' compensation 462
Custodian fees and expenses 23,792
Registration fees 11,349
Audit 12,952
Legal 4,470
Miscellaneous 2,064
Total expenses before reductions 1,835,478
Expense reductions (41,303 1,794,175
)
NET INVESTMENT INCOME (LOSS) (1,002,883
)
REALIZED AND UNREALIZED GAIN (LOSS) 16,322,247
Net realized gain (loss) on
investment securities
Change in net unrealized appreciation (depreciation) on investment securities (22,475,462
)
NET GAIN (LOSS) (6,153,215
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ (7,156,098
)
OTHER INFORMATION $ 419,722
Sales charges paid to FDC
Deferred sales charges withheld $ 2,677
by FDC
Exchange fees withheld by FSC $ 52,365
Expense reductions $ 40,198
Directed brokerage arrangements
Custodian interest credits 78
Transfer agent interest credits 1,027
$ 41,303
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS YEAR ENDED
ENDED FEBRUARY 29,
AUGUST 31, 1996 1996
(UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C>
Operations $ (1,002,883 $ (256,812
Net investment income (loss) ) )
Net realized gain (loss) 16,322,247 39,973,448
Change in net unrealized appreciation (depreciation) (22,475,462 14,596,764
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (7,156,098 54,313,400
)
Distributions to shareholders from net realized gains (11,769,192 (13,085,061
) )
Share transactions 88,107,953 327,500,676
Net proceeds from sales of shares
Reinvestment of distributions 11,505,591 12,820,140
Cost of shares redeemed (160,603,740 (385,938,068
) )
Paid in capital portion of redemption fees 124,549 307,864
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS (60,865,647 (45,309,388
) )
TOTAL INCREASE (DECREASE) IN NET ASSETS (79,790,937 (4,081,049
) )
NET ASSETS
Beginning of period 295,488,799 299,569,848
End of period (including accumulated net investment loss of $1,002,883 and $0, respectively) $ 215,697,862 $ 295,488,799
OTHER INFORMATION
Shares
Sold 3,164,132 12,483,087
Issued in reinvestment of distributions 406,127 484,557
Redeemed (5,761,267 (15,700,950
) )
Net increase (decrease) (2,191,008) (2,733,306)
</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> <C>
SIX MONTHS YEAR ENDED YEARS ENDED FEBRUARY 28, TEN MONTHS YEAR ENDED
ENDED FEBRUARY 29, ENDED APRIL 30,
AUGUST 31, 1996 FEBRUARY 28,
SELECTED PER-SHARE DATA D (UNAUDITED) 1996 1995 1994 1993 1992
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 29.00 $ 23.18 $ 20.28 $ 14.46 $ 19.64 $ 18.75
Income from Investment Operations
Net investment income (loss) (.12) (.03) .06 (.10) (.13) (.15)
Net realized and unrealized gain (loss) (.73) 7.72 3.74 5.84 (3.56) 2.16
Total from investment operations (.85) 7.69 3.80 5.74 (3.69) 2.01
Less Distributions
From net investment income - - (.06) - - -
From net realized gain (1.20) (1.91) (.89) - (1.55) (1.24)
Total distributions (1.20) (1.91) (.95) - (1.55) (1.24)
Redemption fees added to paid in capital .01 .04 .05 .08 .06 .12
Net asset value, end of period $ 26.96 $ 29.00 $ 23.18 $ 20.28 $ 14.46 $ 19.64
TOTAL RETURN B, C (3.10)% 34.15% 19.63% 40.25% (19.63)% 11.71%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 215,698 $ 295,489 $ 299,570 $ 188,553 $ 71,809 $ 129,361
Ratio of expenses to average net assets 1.50% A 1.65% 1.48% 1.82% 1.77% A 1.69%
Ratio of expenses to average net assets after 1.47% A, 1.62% 1.45% 1.79% 1.77% A 1.69%
expense reductions E E E E
Ratio of net investment income (loss) to average net (.82)% A (.13)% .29% (.57)% (.89)% (.71)%
assets A
Portfolio turnover rate 53% A 132% 123% 164% 155% A 181%
Average commission rate F $ .0427
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <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 9 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 9
OF NOTES TO FINANCIAL STATEMENTS). F FOR FISCAL YEARS BEGINNING ON OR
AFTER SEPTEMBER 1,
1995, A FUND IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER
SHARE FOR SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS
AMOUNT MAY VARY FROM
PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES
EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION RATE
STRUCTURES MAY DIFFER.
</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. A fund's total return includes
changes in 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 6 PAST 1 PAST 5 PAST 10
AUGUST 31, 1996 MONTH YEAR YEARS YEARS
S
COMPUTERS -5.12% -6.92% 181.27% 332.33%
COMPUTERS -7.97% -9.71% 172.83% 319.36%
(INCL. 3% SALES CHARGE)
S&P 500 2.96% 18.73% 89.14% 251.21%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one, five, or 10 years. You
can compare these figures to the performance of the S&P 500 - a widely
recognized, unmanaged index of common stocks. This benchmark reflects
reinvestment of dividends and capital gains, if any, but does not reflect
any sales charges, brokerage commissions, or other costs of investing.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
AUGUST 31, 1996 YEAR YEARS YEARS
COMPUTERS -6.92% 22.98% 15.77%
COMPUTERS -9.71% 22.23% 15.41%
(INCL. 3% SALES CHARGE)
S&P 500 18.73% 13.59% 13.34%
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
IMAHDR PRASUN SHR__CHT 19960831 19960909 145151 S00000000000001
Computers SP Standard & Poor 500
00007 SP001
1986/08/31 9700.00 10000.00
1986/09/30 8951.34 9173.00
1986/10/31 9830.20 9702.28
1986/11/30 9895.30 9938.05
1986/12/31 9935.99 9684.63
1987/01/31 11913.42 10989.15
1987/02/28 13101.51 11423.22
1987/03/31 13191.02 11753.35
1987/04/30 13508.39 11648.74
1987/05/31 13451.43 11750.09
1987/06/30 13174.75 12343.47
1987/07/31 13394.46 12969.28
1987/08/31 14314.01 13453.04
1987/09/30 14436.07 13158.41
1987/10/31 9341.95 10324.09
1987/11/30 8080.62 9473.39
1987/12/31 9305.05 10194.31
1988/01/31 8818.40 10623.49
1988/02/29 9615.50 11118.55
1988/03/31 9464.47 10774.98
1988/04/30 9951.12 10894.59
1988/05/31 9657.45 10989.37
1988/06/30 10572.02 11493.78
1988/07/31 9774.92 11450.10
1988/08/31 8843.58 11060.80
1988/09/30 9078.51 11531.99
1988/10/31 8348.54 11852.58
1988/11/30 8298.19 11683.09
1988/12/31 8835.18 11887.54
1989/01/31 9355.39 12757.71
1989/02/28 9187.59 12440.04
1989/03/31 8751.28 12729.90
1989/04/30 9732.97 13390.58
1989/05/31 10597.19 13932.90
1989/06/30 9338.61 13853.48
1989/07/31 9506.42 15104.45
1989/08/31 9649.06 15400.50
1989/09/30 9875.61 15337.35
1989/10/31 9548.38 14981.53
1989/11/30 9338.61 15287.15
1989/12/31 9439.30 15654.04
1990/01/31 9355.39 14603.66
1990/02/28 10202.83 14792.04
1990/03/31 10932.81 15184.03
1990/04/30 10639.14 14804.43
1990/05/31 12023.57 16247.86
1990/06/30 12241.72 16137.38
1990/07/31 11369.11 16085.74
1990/08/31 9565.16 14631.59
1990/09/30 8935.87 13919.03
1990/10/31 9271.49 13859.18
1990/11/30 10798.56 14754.48
1990/12/31 11176.77 15166.13
1991/01/31 13081.90 15827.37
1991/02/28 13928.62 16959.03
1991/03/31 15029.36 17369.44
1991/04/30 14055.63 17411.13
1991/05/31 14766.88 18163.29
1991/06/30 12756.13 17331.41
1991/07/31 14037.84 18139.05
1991/08/31 14909.76 18568.95
1991/09/30 14125.03 18258.85
1991/10/31 13846.02 18503.51
1991/11/30 12895.63 17757.82
1991/12/31 14613.31 19789.32
1992/01/31 16139.16 19421.24
1992/02/29 17246.49 19673.71
1992/03/31 15886.30 19290.07
1992/04/30 15371.87 19857.20
1992/05/31 15563.70 19954.50
1992/06/30 14064.00 19657.18
1992/07/31 14752.81 20461.16
1992/08/31 13907.06 20041.71
1992/09/30 14595.87 20278.20
1992/10/31 15746.80 20349.17
1992/11/30 16723.34 21043.08
1992/12/31 17821.96 21301.91
1993/01/31 18859.54 21480.84
1993/02/28 17569.10 21772.98
1993/03/31 17917.87 22232.39
1993/04/30 17408.98 21694.37
1993/05/31 19448.68 22275.78
1993/06/30 18670.37 22340.38
1993/07/31 19448.68 22251.02
1993/08/31 20602.71 23094.33
1993/09/30 21184.21 22916.50
1993/10/31 21184.21 23390.88
1993/11/30 22087.76 23168.66
1993/12/31 22966.78 23449.00
1994/01/31 24447.60 24246.27
1994/02/28 25485.11 23589.20
1994/03/31 25221.02 22560.71
1994/04/30 25060.68 22849.48
1994/05/31 25041.81 23224.22
1994/06/30 22985.65 22655.22
1994/07/31 23711.91 23398.31
1994/08/31 26550.92 24357.64
1994/09/30 26362.28 23760.88
1994/10/31 27352.64 24295.50
1994/11/30 27512.98 23410.66
1994/12/31 27663.89 23757.84
1995/01/31 26815.02 24373.88
1995/02/28 28927.77 25323.73
1995/03/31 31153.71 26071.03
1995/04/30 33628.97 26838.83
1995/05/31 35291.31 27911.57
1995/06/30 39151.00 28559.96
1995/07/31 44071.14 29507.01
1995/08/31 45055.17 29581.07
1995/09/30 47634.67 30829.39
1995/10/31 45905.45 30719.33
1995/11/30 44797.22 32067.91
1995/12/31 42002.19 32685.54
1996/01/31 41732.87 33798.15
1996/02/29 44199.79 34111.46
1996/03/31 40461.71 34439.95
1996/04/30 44909.16 34947.60
1996/05/31 46461.15 35848.90
1996/06/30 43083.94 35985.48
1996/07/31 40198.57 34395.64
1996/08/30 41936.35 35121.05
IMATRL PRASUN SHR__CHT 19960831 19960909 145156 R00000000000123
Let's say hypothetically that $10,000 was invested in Fidelity Select
Computers Portfolio on August 31, 1986, and a 3% sales charge was paid. By
August 31, 1996, the investment would have grown to $41,936 - a 319.36%
increase. That compares to $10,000 invested in the S&P 500, which would
have grown to $35,121 over the same period - a 251.21% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST 31, 1996
% OF FUND'S
INVESTMENTS
Intel Corp. 8.5
Compaq Computer Corp. 7.6
Microsoft Corp. 6.1
Cisco Systems, Inc. 5.2
Seagate Technology 4.8
Oracle Systems Corp. 4.4
Dell Computer Corp. 4.2
Ascend Communications, Inc. 4.0
Vanstar Corp. 3.1
Electronics for Imaging, Inc. 2.5
TOP INDUSTRIES AS OF AUGUST 31, 1996
Semiconductors 16.2%
Prepackaged Computer
Software 13.8%
Mini & Micro
Computers 11.8%
Computer Services 8.1%
Computer Storage Devices 7.7%
All Others 42.4% *
Row: 1, Col: 1, Value: 42.4
Row: 1, Col: 2, Value: 7.7
Row: 1, Col: 3, Value: 8.1
Row: 1, Col: 4, Value: 11.8
Row: 1, Col: 5, Value: 13.8
Row: 1, Col: 6, Value: 16.2
* INCLUDES SHORT-TERM INVESTMENTS
COMPUTERS PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
NOTE TO SHAREHOLDERS: Jason Weiner became Portfolio Manager of Fidelity
Select Computers Portfolio on March 26, 1996
Q. JASON, HOW HAS THE FUND PERFORMED?
A. For the six months ended August 31, 1996, the fund had a total return of
- -5.12%, while the Standard & Poor's 500 Index returned 2.96%. For the 12
months ended August 31, 1996, the fund returned -6.92% and the S&P 500 had
a total return of 18.73%.
Q. WHAT FACTORS AFFECTED THE FUND'S SIX-MONTH PERFORMANCE?
A. It was a difficult period for most of the technology sector. There was a
slowdown in the overall demand for personal computers attributed to the
consumer market in the U.S. and Europe. While this downturn was occurring,
semiconductor manufacturers overspent on capacity which led to excess
inventory and falling prices. There was a massive inventory sell-off by
retailers, manufacturers and component suppliers, too, as semiconductor
prices began to fall. In addition, after a strong two-year run, most
technology stock valuations - stock prices relative to other measures such
as earnings - were high. When investors saw a drop in growth in the
technology sector, they started to look elsewhere for more positive growth
trends and cheaper valuations. Lastly, the summer months typically are weak
ones for the technology sector.
Q. WHAT KIND OF STRATEGIES DID YOU PURSUE IN THIS KIND OF ENVIRONMENT?
A. In general, I stuck with the fund's investments in PC manufacturers,
moved the fund away from commodity semiconductor stocks and gravitated
toward what I would call safe stocks. By safe stocks, I mean those
companies that have a high level of recurring revenues and are dominant
factors in their markets, and have good growth trends and strong profit
margins. On the opposite end of the spectrum would be those companies with
high fixed costs in a commodity-related industry such as semiconductors.
Q. WHAT OTHER KINDS OF STOCKS WERE APPEALING TO YOU?
A. Networking stocks, because there has been strong demand within all
sectors of networking. The Internet and remote access to corporate data -
with more people working on the road telecommuting - have been among the
hottest trends. There have been a number of strong product introductions
that have posted significant growth. Among the fund's holdings in
networking stocks at the end of the period were Ascend Communications and
Cisco Systems.
Q. WHILE IT HAS BEEN A TOUGH PERIOD, THERE MUST HAVE BEEN SOME STOCKS THAT
TURNED IN PERFORMANCES THAT HELPED THE FUND . . .
A. Sure there were. Some of the companies in the fund benefited from the
fact that semiconductors and other components became cheaper. Dell and
Intel were two examples. I believed Intel was able to command a greater
proportion of the dollars spent per PC as other components of PCs fell in
price. Sun Microsystems performed well on the strength of some new high-end
products. Microsoft continued to make inroads with Windows NT, its next
generation operating system.
Q. JASON, THE SWING WE'VE SEEN IN THE TECHNOLOGY SECTOR OVER THE PAST YEAR
POINTS TO THE FACT THAT IT IS A VOLATILE SECTOR. HOW DO YOU TRY TO CONTROL
VOLATILITY WHILE MANAGING THE FUND?
A. First of all, I try to diversify the fund by exposing it to a broad
range of stocks in the hardware industry. Second, I try to focus on the
reality of each stock's potential by analyzing the company's business
prospects. When I talk about the reality of a stock's potential, I'm
speaking to the difference between a company's actual prospects and the
market's perception of them. The volatility inherent in the technology
sector is a reflection of this difference. I think it's important for me to
remain steady when a stock starts to go down if I feel that its prospects
are positive. I also try to take advantage of volatility by buying more of
a stock I believe in when investors overreact to bad news and send its
share price lower.
Q. WHAT'S YOUR OUTLOOK?
A. I think that between now and the end of the year we'll see alternating
euphoria over how strong the PC market is and fear of a PC slowdown at the
retail level. Ultimately, though, I think the growth outlook for the sector
is fairly positive, especially among those companies that are introducing
new products.
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: July 29, 1985
FUND NUMBER: 007
TRADING SYMBOL: FDCPX
SIZE: As of August 31, 1996, more than
$443 million
MANAGER: Jason Weiner, since March 1996;
manager, Fidelity Select Air Transportation
Portfolio, 1994-1996; joined Fidelity in 1991
(checkmark)
COMPUTERS PORTFOLIO
INVESTMENTS AUGUST 31, 1996 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 93.6%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 1.6%
TRAINING EQUIPMENT & SIMULATORS - 1.6%
Flightsafety International, Inc. 164,500 $ 7,279,123 33942310
AIR TRANSPORTATION - 4.2%
AIR TRANSPORTATION, MAJOR NATIONAL - 4.2%
AMR Corp. 100,000 8,200,000 00176510
Delta Air Lines, Inc. 150,000 10,631,250 24736110
18,831,250
COMMUNICATIONS EQUIPMENT - 11.9%
DATACOMMUNICATIONS EQUIPMENT - 6.8%
Cisco Systems, Inc. (a) 444,300 23,436,825 17275R10
3Com Corp. (a) 150,000 7,012,500 88553510
30,449,325
TELEPHONE EQUIPMENT - 5.1%
Ascend Communications, Inc. (a) 341,400 17,880,825 04349110
Lucent Technologies, Inc. 130,000 4,793,750 54946310
22,674,575
TOTAL COMMUNICATIONS EQUIPMENT 53,123,900
COMPUTER SERVICES & SOFTWARE - 23.9%
COMPUTER SERVICES - 8.1%
American Management Systems, Inc. (a) 200,000 5,075,000 02735210
BDM International, Inc. (a) 27,800 1,473,400 05537W20
Computer Learning Centers, Inc. (a) 99,600 2,888,400 20519910
Computer Sciences Corp. (a) 132,800 9,296,000 20536310
Electronic Data Systems Corp. 74,600 4,065,700 28566110
Vanstar Corp. (a) 651,400 13,760,825 92208M10
36,559,325
CUSTOM COMPUTER PROGRAMMING SERVICES - 1.1%
Analysts International Corp. 16,700 613,725 03268110
CACI International, Inc. Class A (a) 50,000 837,500 12719030
Keane, Inc. (a) 74,600 3,357,000 48666510
4,808,225
DATA PROCESSING - 0.9%
First Data Corp. 50,000 3,900,000 31996310
PREPACKAGED COMPUTER SOFTWARE - 13.8%
Electronics for Imaging, Inc. (a) 177,000 11,195,250 28608210
Fuji Soft, Inc. 900 29,346 36399G22
Microsoft Corp. (a) 225,000 27,562,500 59491810
Netscape Communications Corp. (a) 100,000 3,537,500 64114910
Oracle Systems Corp. (a) 560,000 19,740,000 68389X10
62,064,596
TOTAL COMPUTER SERVICES & SOFTWARE 107,332,146
COMPUTERS & OFFICE EQUIPMENT - 33.3%
COMPUTER EQUIPMENT - 2.3%
GVC Corp. GDR (a)(b) 113,071 819,765 36237Y10
Stratus Computer, Inc. (a) 500,000 9,375,000 86315510
10,194,765
COMPUTER EQUIPMENT - WHOLESALE - 1.9%
Pomeroy Computer Resources, Inc. 58,300 1,311,750 73182210
Tech Data Corp. (a) 276,700 7,332,550 87823710
8,644,300
COMPUTER PERIPHERALS - 1.8%
EMC Corp. (a) 200,000 3,850,000 26864810
SCI Systems, Inc. (a) 91,700 4,092,113 78389010
7,942,113
SHARES VALUE (NOTE 1)
COMPUTER RENTAL & LEASING - 1.2%
Comdisco, Inc. 212,400 $ 5,522,400 20033610
COMPUTER STORAGE DEVICES - 7.7%
Exabyte Corp. (a) 548,200 8,085,950 30061510
Quantum Corp. 300,000 4,612,500 74790610
Seagate Technology (a) 449,500 21,576,000 81180410
34,274,450
COMPUTERS & OFFICE EQUIPMENT - 3.0%
Diebold, Inc. 172,900 8,882,738 25365110
Hewlett-Packard Co. 105,200 4,602,500 42823610
13,485,238
ELECTRONIC COMPUTERS - 1.6%
Bay Networks, Inc. (a) 260,000 7,150,000 07251010
GRAPHICS WORKSTATIONS - 2.0%
Silicon Graphics, Inc. (a) 272,300 6,330,975 82705610
Sun Microsystems, Inc. (a) 48,700 2,648,063 86681010
8,979,038
MINI & MICRO COMPUTERS - 11.8%
Compaq Computer Corp. (a) 601,200 34,042,950 20449310
Dell Computer Corp. (a) 282,200 18,942,675 24702510
52,985,625
TOTAL COMPUTERS & OFFICE EQUIPMENT 149,177,929
CONSUMER ELECTRONICS - 0.7%
RADIOS, TELEVISIONS, STEREOS - 0.7%
Harman International Industries, Inc. 69,200 3,036,150 41308610
ELECTRONICS - 17.1%
ELECTRONIC PARTS - WHOLESALE - 0.1%
PC Service Source, Inc. (a) 49,000 686,000 69325810
ELECTRONICS & ELECTRONIC COMPONENTS - 0.8%
Cascade Communications Corp. (a) 50,000 3,406,250 14718410
SEMICONDUCTORS - 16.2%
Actel Corp. (a) 100,000 1,600,000 00493410
Altera Corp. (a) 100,000 4,400,000 02144110
Intel Corp. 480,300 38,333,944 45814010
Intel Corp. (warrants) (a) 100,000 4,187,500 45814014
Linear Technology Corp. 150,000 5,100,000 53567810
S-3, Inc. (a) 201,300 2,969,175 78484910
Storage Technology Corp. (a) 240,000 9,090,000 86211120
Xilinx, Inc. (a) 200,000 7,000,000 98391910
72,680,619
TOTAL ELECTRONICS 76,772,869
TELEPHONE SERVICES - 0.9%
MFS Communications, Inc. (a) 100,000 4,237,500 55272T10
TOTAL COMMON STOCKS
(Cost $404,263,198) 419,790,867
CONVERTIBLE BONDS - 1.8%
MOODY'S PRINCIPAL VALUE
RATINGS AMOUNT (NOTE 1)
COMPUTERS & OFFICE EQUIPMENT - 1.8%
COMPUTERS - 1.8%
Acer, Inc. euro 4%, 6/10/01
(Cost $9,039,392) - $ 3,510,000 $ 7,897,500 004993AC
REPURCHASE AGREEMENTS - 4.6%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 5.25%, dated
8/30/96 due 9/3/96 $ 20,813,134 20,801,000 69899TYY
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $434,103,590) $ 448,489,367
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 $819,765 or 0.2% of net
assets.
3. A company in which the fund has ownership of at least 5% of the voting
securities is an affiliated company. Transactions during the period with
companies that are or were affiliates are as follows:
PURCHASES SALES DIVIDEND VALUE
AFFILIATE COST COST INCOME
C.P. Clare Corp. $ - $ - $ - $ -
Insignia Solutions PLC sponsored ADR - - - -
Totals $ - $ - $ - $ -
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $665,585,929 and $662,602,870, respectively (see Note 4 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $117,805 for the period
(see Note 5 of Notes to Financial Statements).
At the period end, the value of securities loaned and the value of
collateral amounted to $3,537,500 and $3,700,000, respectively (see Note 7
of Notes to Financial Statements).
INCOME TAX INFORMATION
At August 31, 1996 the aggregate cost of investment securities for income
tax purposes was $434,115,531. Net unrealized appreciation aggregated
$14,373,836, of which $33,829,886 related to appreciated investment
securities and $19,456,050 related to depreciated investment securities.
COMPUTERS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1996 (UNAUDITED)
ASSETS
Investment in $ 448,489,367
securities, at
value (including
repurchase
agreements of
$20,801,000)
(cost
$434,103,590)
- - See
accompanying
schedule
Cash 310
Receivable for 847,717
investments
sold
Receivable for 564,877
fund shares sold
Dividends 134,993
receivable
Interest receivable 11,700
Redemption fees 1,518
receivable
Other receivables 67,344
Prepaid expenses 18,960
TOTAL ASSETS 450,136,786
LIABILITIES
Payable for $ 21,826
investments
purchased
Payable for fund 2,356,487
shares
redeemed
Accrued 226,485
management
fee
Other payables 452,182
and
accrued
expenses
Collateral on 3,700,000
securities
loaned,
at value
TOTAL LIABILITIES 6,756,980
NET ASSETS $ 443,379,806
Net Assets
consist of:
Paid in capital $ 407,311,844
Accumulated net (1,695,347
investment )
(loss)
Accumulated 23,377,532
undistributed net
realized gain
(loss) on
investments and
foreign currency
transactions
Net unrealized 14,385,777
appreciation
(depreciation)
on investments
and assets and
liabilities in
foreign currency
NET ASSETS, for $ 443,379,806
11,556,365
shares
outstanding
NET ASSET VALUE $38.37
and redemption
price per share
($443,379,806 (divided by)
11,556,365
shares)
Maximum offering $39.56
price per share
(100/97.00 of
$38.37)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED AUGUST 31, 1996 (UNAUDITED)
INVESTMENT $ 503,118
INCOME
Dividends
Interest (including 1,390,640
income on
securities
loaned of
$41,580)
TOTAL INCOME 1,893,758
EXPENSES
Management fee $ 1,423,992
Transfer agent 1,913,669
fees
Accounting and 240,431
security lending
fees
Non-interested 918
trustees'
compensation
Custodian fees 19,727
and expenses
Registration fees 18,960
Audit 32,114
Legal 2,342
Miscellaneous 4,792
Total expenses 3,656,945
before
reductions
Expense (67,840 3,589,105
reductions )
NET INVESTMENT (1,695,347
INCOME (LOSS) )
REALIZED AND
UNREALIZED GAIN
(LOSS)
Net realized gain
(loss) on:
Investment 24,481,941
securities
Foreign (880 24,481,061
currency )
transactions
Change in net
unrealized
appreciation
(depreciation)
on:
Investment (51,825,165
securities )
Assets and 24 (51,825,141
liabilities in )
foreign
currencies
NET GAIN (LOSS) (27,344,080
)
NET INCREASE $ (29,039,427
(DECREASE) IN )
NET ASSETS
RESULTING FROM
OPERATIONS
OTHER $ 878,830
INFORMATION
Sales charges
paid to FDC
Deferred sales $ 3,034
charges
withheld
by FDC
Exchange fees $ 89,588
withheld by FSC
Expense $ 65,228
reductions
Directed
brokerage
arrangements
Custodian 1,015
interest credits
Transfer agent 1,597
interest credits
$ 67,840
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS YEAR ENDED
ENDED FEBRUARY 29,
AUGUST 31, 1996 1996
(UNAUDITED)
Operations $ (1,695,347 $ (2,669,832
Net investment ) )
income (loss)
Net realized 24,481,061 102,860,639
gain (loss)
Change in net (51,825,141 47,678,623
unrealized )
appreciation
(depreciation)
NET INCREASE (29,039,427 147,869,430
(DECREASE) IN )
NET ASSETS
RESULTING
FROM
OPERATIONS
Distributions to (6,490,368 (63,147,066
shareholders ) )
from net
realized gains
Share 188,811,235 837,037,606
transactions
Net proceeds
from sales of
shares
Reinvestment of 6,403,480 62,103,715
distributions
Cost of shares (244,129,184 (672,703,503
redeemed ) )
Paid in capital 487,227 1,162,861
portion of
redemption fees
NET INCREASE (48,427,242 227,600,679
(DECREASE) IN )
NET ASSETS
RESULTING
FROM SHARE
TRANSACTIONS
TOTAL (83,957,037 312,323,043
INCREASE )
(DECREASE) IN
NET ASSETS
NET ASSETS
Beginning of 527,336,843 215,013,800
period
End of period $ 443,379,806 $ 527,336,843
(including
accumulated net
investment loss
of $1,695,347
and $0,
respectively)
OTHER
INFORMATION
Shares
Sold 4,818,068 20,220,825
Issued in 169,585 1,547,662
reinvestment of
distributions
Redeemed (6,282,779 (15,928,239
) )
Net increase (1,295,126) 5,840,248
(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> <C>
SIX MONTHS YEAR ENDED YEARS ENDED FEBRUARY 28, TEN MONTHS YEAR ENDED
ENDED FEBRUARY 29, ENDED APRIL 30,
AUGUST 31, 1996 FEBRUARY 28,
SELECTED PER-SHARE DATA D (UNAUDITED) 1996 1995 1994 1993 1992
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Net asset value, $ 41.03 $ 30.67 $ 27.02 $ 20.15 $ 17.63 $ 16.60
beginning of
period
Income from
Investment
Operations
Net investment (.14) (.23) (.31) (.21) G (.15) (.03) F
income (loss)
Net realized and (2.01) 16.10 3.68 8.66 2.44 1.18
unrealized gain
(loss)
Total from (2.15) 15.87 3.37 8.45 2.29 1.15
investment
operations
Less Distributions
In excess of net - - - - - (.27)
investment
income
From net (.55) (5.61) - (1.80) - (.22)
realized gain
Total (.55) (5.61) - (1.80) - (.49)
distributions
Redemption fees .04 .10 .28 .22 .23 .37
added to paid in
capital
Net asset value, $ 38.37 $ 41.03 $ 30.67 $ 27.02 $ 20.15 $ 17.63
end of period
TOTAL RETURN B, C (5.12)% 52.79% 13.51% 45.06% 14.29% 9.36%
RATIOS AND
SUPPLEMENTAL
DATA
Net assets, end of $ 443,380 $ 527,337 $ 215,014 $ 120,435 $ 47,596 $ 32,810
period (000
omitted)
Ratio of expenses 1.54% A 1.40% 1.71% 1.90% 1.81% A 2.17%
to average net
assets
Ratio of expenses 1.51% A, 1.38% 1.69% 1.89% 1.81% A 2.17%
to average net E E E E
assets after
expense
reductions
Ratio of net (.71)% A (.56)% (1.12)% (.91)% (.98)% (.18)%
investment A
income (loss) to
average
net assets
Portfolio turnover 299% A 129% 189% 145% 254% A 568%
rate
Average $ .0419
commission
rate H
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <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 9 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
9 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. H FOR FISCAL YEARS BEGINNING ON OR
AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS
ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD TO PERIOD AND
FUND TO FUND DEPENDING ON THE MIX OF
TRADES EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND
COMMISSION RATE STRUCTURES MAY
DIFFER.
</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. A fund's total return includes
changes in 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 6 PAST 1 PAST 5 PAST 10
AUGUST 31, 1996 MONTH YEAR YEARS YEARS
S
DEFENSE AND AEROSPACE 6.62% 23.02% 132.42% 113.73%
DEFENSE AND AEROSPACE 3.42% 19.33% 125.44% 107.32%
(INCL. 3% SALES CHARGE)
S&P 500 2.96% 18.73% 89.14% 251.21%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one, five, or 10 years. You
can compare these figures to the performance of the S&P 500 - a widely
recognized, unmanaged index of common stocks. This benchmark reflects
reinvestment of dividends and capital gains, if any, but does not reflect
any sales charges, brokerage commissions, or other costs of investing.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
AUGUST 31, 1996 YEAR YEARS YEARS
DEFENSE AND AEROSPACE 23.02% 18.37% 7.89%
DEFENSE AND AEROSPACE 19.33% 17.65% 7.56%
(INCL. 3% SALES CHARGE)
S&P 500 18.73% 13.59% 13.34%
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
IMAHDR PRASUN SHR__CHT 19960831 19960909 153107 S00000000000001
Defense & Aerospace SP Standard & Poor 500
00067 SP001
1986/08/31 9700.00 10000.00
1986/09/30 8918.71 9173.00
1986/10/31 9038.91 9702.28
1986/11/30 9327.39 9938.05
1986/12/31 8888.66 9684.63
1987/01/31 9663.94 10989.15
1987/02/28 10276.95 11423.22
1987/03/31 10084.63 11753.35
1987/04/30 9645.91 11648.74
1987/05/31 9513.69 11750.09
1987/06/30 9423.54 12343.47
1987/07/31 9675.96 12969.28
1987/08/31 9573.79 13453.04
1987/09/30 9381.47 13158.41
1987/10/31 6989.53 10324.09
1987/11/30 6628.93 9473.39
1987/12/31 6826.62 10194.31
1988/01/31 7265.83 10623.49
1988/02/29 7698.77 11118.55
1988/03/31 7679.94 10774.98
1988/04/30 7629.75 10894.59
1988/05/31 7341.12 10989.37
1988/06/30 7642.30 11493.78
1988/07/31 7491.71 11450.10
1988/08/31 7309.75 11060.80
1988/09/30 7529.36 11531.99
1988/10/31 7516.81 11852.58
1988/11/30 7184.26 11683.09
1988/12/31 7121.52 11887.54
1989/01/31 7403.87 12757.71
1989/02/28 7372.50 12440.04
1989/03/31 7523.08 12729.90
1989/04/30 7792.88 13390.58
1989/05/31 7930.92 13932.90
1989/06/30 7836.81 13853.48
1989/07/31 8345.04 15104.45
1989/08/31 8558.37 15400.50
1989/09/30 8401.51 15337.35
1989/10/31 7924.65 14981.53
1989/11/30 7623.47 15287.15
1989/12/31 7748.96 15654.04
1990/01/31 7309.75 14603.66
1990/02/28 7334.85 14792.04
1990/03/31 7786.61 15184.03
1990/04/30 7466.61 14804.43
1990/05/31 8018.77 16247.86
1990/06/30 8024.53 16137.38
1990/07/31 7702.54 16085.74
1990/08/31 7026.99 14631.59
1990/09/30 6799.70 13919.03
1990/10/31 6711.31 13859.18
1990/11/30 7071.18 14754.48
1990/12/31 7393.75 15166.13
1991/01/31 8046.33 15827.37
1991/02/28 8204.72 16959.03
1991/03/31 8838.29 17369.44
1991/04/30 8692.57 17411.13
1991/05/31 9098.05 18163.29
1991/06/30 8640.30 17331.41
1991/07/31 9015.69 18139.05
1991/08/31 8920.25 18568.95
1991/09/30 8710.29 18258.85
1991/10/31 9130.21 18503.51
1991/11/30 8716.65 17757.82
1991/12/31 9384.71 19789.32
1992/01/31 9352.90 19421.24
1992/02/29 9499.24 19673.71
1992/03/31 9308.36 19290.07
1992/04/30 9142.94 19857.20
1992/05/31 8684.84 19954.50
1992/06/30 8277.64 19657.18
1992/07/31 8595.76 20461.16
1992/08/31 8430.34 20041.71
1992/09/30 8551.22 20278.20
1992/10/31 8621.21 20349.17
1992/11/30 8920.25 21043.08
1992/12/31 9384.71 21301.91
1993/01/31 9664.67 21480.84
1993/02/28 9594.68 21772.98
1993/03/31 10103.68 22232.39
1993/04/30 10135.49 21694.37
1993/05/31 10447.26 22275.78
1993/06/30 10886.27 22340.38
1993/07/31 11331.65 22251.02
1993/08/31 11312.56 23094.33
1993/09/30 11605.23 22916.50
1993/10/31 12069.70 23390.88
1993/11/30 11713.40 23168.66
1993/12/31 12092.94 23449.00
1994/01/31 12668.79 24246.27
1994/02/28 12668.79 23589.20
1994/03/31 12159.13 22560.71
1994/04/30 12225.12 22849.48
1994/05/31 12265.43 23224.22
1994/06/30 11956.44 22655.22
1994/07/31 12131.08 23398.31
1994/08/31 12675.17 24357.64
1994/09/30 12037.04 23760.88
1994/10/31 12332.60 24295.50
1994/11/30 11848.97 23410.66
1994/12/31 12305.73 23757.84
1995/01/31 12299.01 24373.88
1995/02/28 13192.39 25323.73
1995/03/31 13756.62 26071.03
1995/04/30 14515.65 26838.83
1995/05/31 15409.03 27911.57
1995/06/30 15979.98 28559.96
1995/07/31 16859.92 29507.01
1995/08/31 16853.20 29581.07
1995/09/30 17323.40 30829.39
1995/10/31 16691.99 30719.33
1995/11/30 17894.36 32067.91
1995/12/31 18133.27 32685.54
1996/01/31 18457.73 33798.15
1996/02/29 19445.50 34111.46
1996/03/31 19892.52 34439.95
1996/04/30 20850.95 34947.60
1996/05/31 21630.63 35848.90
1996/06/30 21118.27 35985.48
1996/07/31 19692.56 34395.64
1996/08/30 20732.14 35121.05
IMATRL PRASUN SHR__CHT 19960831 19960909 153112 R00000000000123
Let's say hypothetically that $10,000 was invested in Fidelity Select
Defense and Aerospace Portfolio on August 31, 1986, and a 3% sales charge
was paid. By August 31, 1996, the investment would have grown to $20,732 -
a 107.32% increase. That compares to $10,000 invested in the S&P 500, which
would have grown to $35,121 over the same period - a 251.21% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST 31, 1996
% OF FUND'S
INVESTMENTS
United Technologies Corp. 4.3
Boeing Co. 4.0
Raytheon Co. 3.5
Alliant Techsystems, Inc. 3.5
Lockheed Martin Corp. 3.4
Harris Corp. 3.1
Bombardier, Inc. Class B 2.9
McDonnell Douglas Corp. 2.8
Sundstrand Corp. 2.5
Thiokol Corp. 2.5
TOP INDUSTRIES AS OF AUGUST 31, 1996
Row: 1, Col: 1, Value: 22.3
Row: 1, Col: 2, Value: 8.9
Row: 1, Col: 3, Value: 9.4
Row: 1, Col: 4, Value: 9.5
Row: 1, Col: 5, Value: 15.2
Row: 1, Col: 6, Value: 34.7
Aerospace & Defense 34.7%
Defense Electronics 15.2%
Electronics 9.5%
Conglomerates 9.4%
Electrical Equipment 8.9%
All Others 22.3% *
* 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. WHAT WAS THE FUND'S RETURN, BILL?
A. For the six months ended August 31, 1996 the fund had a total return of
6.62%. For the past year, it returned 23.02%. For the same periods, the
Standard & Poor's 500 Index returned 2.96% and 18.73%, respectively.
Q. OVER THE PAST SIX MONTHS, WHICH GROUP IN THE FUND PERFORMED BETTER -
COMMERCIAL AEROSPACE STOCKS OR DEFENSE CONTRACTORS?
A. Commercial aerospace stocks outperformed all other market segments in
the fund due to a variety of factors. Commercial aerospace companies
generally enjoyed good fundamentals in an environment of strong demand for
aircraft as new plane orders surged and order backlogs increased. In fact,
order backlogs have been on an upward trend for some time - a positive sign
about the industry's health. At the same time, many of these companies
continued aggressively to cut costs and generate stronger cash flows. The
best example is Boeing, whose commercial order backlog has been up the past
five quarters and cash flows have been very strong.
Q. WHAT ABOUT DEFENSE CONTRACTORS?
A. Defense stocks performed well, although not as well as commercial
aerospace stocks. Earnings-per-share growth continued to be strong -
generally in the 10%-to-15% range - and in some cases higher. The U.S.
defense budget fell slightly in nominal terms. However, the reduction was
modest compared to the dramatic reductions in defense spending we've seen
over the past 10 years. Profit margins continued to improve and cash flows
remained strong. Cash redeployment into stock buybacks, debt reduction,
increased dividends and acquisitions continued to boost stock performances.
Valuations of defense contractor stocks during the period looked more
expensive relative to historical ranges, although they were still
undervalued relative to the general market.
Q. WERE THERE ANY MAJOR CONTRACTS AWARDED DURING THE PERIOD?
A. During the past six months, there were several large contracts. British
Aerospace won contracts from the U.K. for a maritime patrol aircraft
replacement program and for a conventional standoff missile program.
Alliant Techsystems won a large contract from the U.S. for a lightweight
hybrid torpedo program. Lockheed Martin and McDonnell Douglas won the
contract for a new joint services standoff missile program. Additionally,
General Dynamics won the contract for an advanced amphibious assault
vehicle program for the Marines. There are also several very large
contracts on the horizon. The Navy will select a winner for the $8 billion
LPD-17 ship program. Also, the Pentagon will choose two contractors from
three to compete for the mammoth $50 billion contract to build the Joint
Strike Fighter, the latest joint services all-purpose fighter aircraft. The
final winner, however, will not be known for a few years.
Q. ALTHOUGH THE STRIKE AT MCDONNELL DOUGLAS WAS RECENTLY RESOLVED, DO YOU
THINK LABOR IS A BIG CONCERN FOR THE INDUSTRY?
A. From a cost standpoint, not really. Raw materials represent a much
greater proportion of defense and aerospace companies' costs than does
labor. Additionally, approximately half of defense contracts are structured
as "cost plus" - meaning that the government will pay for, among other
things, any costs above original estimates. Furthermore, many companies
have already negotiated contracts with the major unions, so labor problems
should not arise for some time.
Q. WAS THERE ONE STOCK THAT DID NOT LIVE UP TO EXPECTATIONS?
A. Litton Industries was a significant underperformer. The company
continues successfully to implement its strategy of acquiring small- to
medium-sized companies and integrating them in a way that adds value for
shareholders. Although the company grew earnings slightly more than
expected and the stock was priced cheaply relative to its cash flow, the
market has so far chosen not to recognize its value.
Q. WHAT DO YOU SEE GOING FORWARD?
A. In commercial aerospace, barring any significant downturn in demand,
stocks should continue to perform well, as many of these companies can
continue to grow their order backlogs and increase their production rates
and profitability. As for defense contractors' stocks, my outlook is mixed.
While they have shown they can generate strong cash flows and improve
profit margins, I'm less sanguine about their historically high valuations.
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
FUND NUMBER: 067
TRADING SYMBOL: FSDAX
SIZE: as of August 31, 1996, more than $32 million
MANAGER: Bill Rubin, since 1994; manager,
Select Home Finance Portfolio since October
1996; equity analyst, savings & loans,
aerospace, defense electronics, cable
equipment and electronic industries, since
1994; joined Fidelity in 1994
(checkmark)
DEFENSE AND AEROSPACE PORTFOLIO
INVESTMENTS AUGUST 31, 1996 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 99.6%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 34.7%
AIRCRAFT - 11.1%
Boeing Co. 14,400 $ 1,303,188 09702310
British Aerospace PLC 18,500 288,039 11042010
Lockheed Martin Corp. 13,350 1,123,069 53983010
McDonnell Douglas Corp. 18,700 937,338 58016910
3,651,634
AIRCRAFT & PARTS - 7.6%
AAR Corp. 14,300 309,238 00036110
Banner Aerospace, Inc. (a) 28,100 221,288 06652510
Precision Castparts Corp. 5,500 268,813 74018910
Rohr Industries, Inc. (a) 20,200 421,675 77542210
Sundstrand Corp. 22,000 822,250 86732310
Wyman-Gordon Co. (a) 21,500 448,813 98308510
2,492,077
AIRCRAFT ENGINES & PARTS - 1.8%
General Motors Corp. Class H 4,500 251,438 37044250
Rolls Royce PLC Ord. 30,000 103,537 77577910
UNC, Inc. (a) 28,900 234,813 90307010
589,788
AIRCRAFT EQUIPMENT - 2.6%
Aviall, Inc. 37,500 318,750 05366B10
BE Aerospace, Inc. (a) 11,900 196,350 07330210
Moog, Inc. Class A 11,300 220,350 61539420
Transtechnology Corp. 6,200 110,050 89388910
845,500
GUIDED MISSILES & SPACE VEHICLES - 2.2%
Rockwell International Corp. 14,300 743,600 77434710
MISSILES & SPACE VEHICLES - 4.7%
Orbital Sciences Corp. (a) 30,100 541,800 68556410
Special Devices, Inc. (a) 12,700 193,675 84740910
Thiokol Corp. 18,100 812,238 88410310
1,547,713
ORDNANCE - 3.4%
Alliant Techsystems, Inc. (a) 22,100 1,140,913 01880410
TRAINING EQUIPMENT & SIMULATORS - 1.3%
C A E Industries Ltd. 25,500 198,483 12476510
Flightsafety International, Inc. 5,000 221,250 33942310
419,733
TOTAL AEROSPACE & DEFENSE 11,430,958
AIR TRANSPORTATION - 0.6%
AIR TRANSPORT, MAJOR NATIONAL - 0.6%
AMR Corp. 2,600 213,200 00176510
AUTOS, TIRES, & ACCESSORIES - 3.9%
AUTO & TRUCK PARTS - 2.7%
Safety Components International, Inc. (a) 36,200 470,600 78647410
Sparton Corp. (a) 29,900 183,138 84723510
TRW, Inc. 2,700 249,750 87264910
903,488
AUTO DEALERS - RETAIL - 0.6%
Aviation Sales Co. (a) 9,700 191,575 05367210
MOTOR VEHICLE SUPPLIES & NEW PARTS - 0.6%
Hahn Automotive Warehouse, Inc. 23,800 190,400 40519110
TOTAL AUTOS, TIRES, & ACCESSORIES 1,285,463
SHARES VALUE (NOTE 1)
BROADCASTING - 0.6%
COMMUNICATIONS SERVICES - 0.6%
Asia Satellite Telecommunications
Holdings Ltd. Sponsored ADR (a) 6,000 $ 157,500 04516X10
Asia Satellite Telecommunications
Holdings Ltd. (a) 12,500 32,735 04699K22
190,235
BUILDING MATERIALS - 0.2%
AIRCONDITIONING EQUIPMENT - 0.2%
Engineered Support Systems, Inc. (a) 8,600 74,175 29286610
CELLULAR - 0.6%
CELLULAR & COMMUNICATION SERVICES - 0.6%
Commet Cellular, Inc. (a) 6,200 198,400 20260410
CHEMICALS & PLASTICS - 0.6%
CHEMICALS - 0.6%
Goodrich (B.F.) Co. 5,500 206,250 38238810
COMMUNICATIONS EQUIPMENT - 1.9%
DATACOMMUNICATIONS EQUIPMENT - 0.2%
Echostar Communications Corp.
Class A (a) 3,100 78,614 27876210
TELEPHONE EQUIPMENT - 1.0%
DSC Communications Corp. (a) 4,700 139,825 23331110
Globalstar Telecommunications Ltd. (a) 4,200 181,650 37999822
321,475
TELEPHONE INTERCONNECT SYSTEMS - 0.7%
General Instrument Corp. (a) 7,700 210,788 37012110
TOTAL COMMUNICATIONS EQUIPMENT 610,877
COMPUTER SERVICES & SOFTWARE - 0.6%
CUSTOM COMPUTER PROGRAMMING SERVICES - 0.6%
CACI International, Inc. Class A (a) 10,900 182,575 12719030
COMPUTERS & OFFICE EQUIPMENT - 0.4%
COMPUTER PERIPHERALS - 0.4%
Miltope Group, Inc. (a) 42,400 121,900 60219110
CONGLOMERATES - 9.4%
AlliedSignal, Inc. 3,400 209,950 01951210
Harris Corp. 16,600 1,020,900 41387510
Sequa Corp. Class A (a) 4,600 201,250 81732010
Textron, Inc. 3,000 256,125 88320310
United Technologies Corp. 12,500 1,409,375 91301710
3,097,600
DEFENSE ELECTRONICS - 15.2%
Ducommun, Inc. (a) 13,600 226,100 26414710
ESCO Electronics Corp. (trust receipt) (a) 40,100 471,175 26903020
Flir Systems, Inc. (a) 47,800 657,250 30244510
KVH Industries, Inc. (a) 12,100 101,338 48273810
Litton Industries, Inc. (a) 9,200 428,950 53802110
Logicon, Inc. 9,700 287,363 54140910
Nichols Research Corp. 13,000 419,250 65381810
Raytheon Co. 22,500 1,158,750 75511110
Remec, Inc. (a) 15,400 223,300 75954310
Tracor, Inc. (a) 34,300 664,563 89234920
Trimble Navigation Ltd. (a) 11,300 203,400 89623910
Whittaker Corp. (a) 12,200 170,800 96668040
5,012,239
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
ELECTRICAL EQUIPMENT - 8.9%
CURRENT-CARRYING WIRING DEVICE - 0.9%
Adflex Solutions (a) 27,200 $ 285,600 00686610
ELECTRIC COILS & TRANSFORMERS - 0.6%
Spectrum Control, Inc. (a) 54,000 212,625 84761510
ELECTRICAL EQUIPMENT - WHOLESALE - 0.6%
Antec Corp. (a) 13,300 184,538 03664P10
ELECTRICAL MACHINERY - 1.6%
Amphenol Corp. Class A (a) 10,500 206,063 03209420
Honeywell, Inc. 5,800 337,125 43850610
543,188
TV & RADIO COMMUNICATION EQUIPMENT - 4.5%
C-COR Electronics, Inc. (a) 15,200 235,600 12501010
California Amplifier, Inc. (a) 15,200 190,000 12990010
Gilat Satellite Networks Ltd. (a) 12,900 253,163 40199892
NII Norsat International, Inc. (a) 76,400 139,594 62913L10
Ortel Corp. (a) 11,900 296,013 68749W10
Scientific-Atlanta, Inc. 8,500 114,750 80865510
TSX Corp. (a) 20,450 250,513 87302710
1,479,633
WIRING & LIGHTING - 0.7%
Oak Industries, Inc. (a) 7,400 222,000 67140050
TOTAL ELECTRICAL EQUIPMENT 2,927,584
ELECTRONIC INSTRUMENTS - 0.7%
ELECTRONIC EQUIPMENT - 0.7%
Berg Electronics Corp. (a) 9,300 225,526 08372L10
ELECTRONICS - 9.5%
CONNECTORS - 2.0%
AMP, Inc. 6,000 229,500 03189710
Augat, Inc. 11,700 223,763 05104210
PCD, Inc. (a) 16,900 198,575 69318P10
651,838
ELECTRONIC CAPACITORS - 1.1%
AVX Corp. 9,200 172,500 00244410
Kemet Corp. (a) 11,800 200,600 48836010
373,100
ELECTRONIC PARTS - WHOLESALE - 3.2%
Anicom, Inc. (a) 11,700 190,125 03525010
Harmonic Lightwaves, Inc. (a) 12,400 248,000 41316010
Kent Electronics Corp. (a) 18,000 398,250 49055310
Zero Corp. 10,400 210,600 98948410
1,046,975
ELECTRONICS & ELECTRONIC COMPONENTS - 3.2%
Alpine Group, Inc. (a) 12,500 70,313 02082510
Esterline Technologies Corp. 37,000 763,125 29742510
Vishay Intertechnology, Inc. 11,100 223,388 92829810
1,056,826
TOTAL ELECTRONICS 3,128,739
INDUSTRIAL MACHINERY & EQUIPMENT - 1.7%
FLUID POWER CYLINDERS & ACTUATORS - 0.6%
Power Control Technologies, Inc. (a) 24,500 189,875 73922810
GENERAL INDUSTRIAL MACHINERY - 0.5%
Park Ohio Industries, Inc. (a) 11,700 169,650 70067710
MACHINE TOOLS, METAL CUTTING - 0.1%
Devlieg-Bullard, Inc. (a) 19,400 43,650 25178210
SHARES VALUE (NOTE 1)
STORAGE BATTERIES - 0.5%
Exide Corp. 6,200 $ 165,075 30205110
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 568,250
IRON & STEEL - 0.2%
METAL FORGINGS & STAMPINGS - 0.2%
Hexcel Corp. (a) 4,000 70,500 42829110
METALS & MINING - 3.9%
NONFERROUS ROLLING & DRAWING - 1.5%
Oregon Metallurgical Corp. (a) 9,600 285,600
RMI Titanium Co. (a) 10,400 211,900 74961H20
497,500
NONFERROUS WIRE - 1.8%
Cable Design Technology Corp. (a) 16,300 578,650 12692410
PRIME NONFERROUS SMELTING - 0.6%
Tremont Corp. (a) 6,500 207,188 89474520
TOTAL METALS & MINING 1,283,338
RAILROADS - 2.9%
RAILROAD EQUIPMENT - 2.9%
Bombardier, Inc. Class B 67,400 950,718 09775120
SHIP BUILDING & REPAIR - 3.1%
Avondale Industries, Inc. (a) 33,700 530,775 05435010
General Dynamics Corp. 7,700 493,763 36955010
1,024,538
TOTAL COMMON STOCKS
(Cost $31,754,509) 32,803,065
REPURCHASE AGREEMENTS - 0.4%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 5.25%, dated
8/30/96 due 9/3/96 $ 139,081 139,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $31,893,509) $ 32,942,065
LEGEND
1. Non-income producing
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $54,411,779 and $47,082,079, respectively (see Note 4 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $15,956 for the period (see
Note 5 of Notes to Financial Statements).
INCOME TAX INFORMATION
At August 31, 1996, the aggregate cost of investment securities for income
tax purposes was $31,948,578. Net unrealized appreciation aggregated
$993,487 of which $2,793,902 related to appreciated investment securities
and $1,800,415 related to depreciated investment securities.
DEFENSE AND AEROSPACE PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1996 (UNAUDITED)
ASSETS
Investment in $ 32,942,065
securities, at
value (including
repurchase
agreements of
$139,000)
(cost
$31,893,509) -
See
accompanying
schedule
Cash 517
Receivable for 269,920
fund shares sold
Dividends 36,867
receivable
Redemption fees 111
receivable
Prepaid expenses 12,776
TOTAL ASSETS 33,262,256
LIABILITIES
Payable for fund $ 234,715
shares
redeemed
Accrued 16,447
management
fee
Other payables 48,911
and
accrued
expenses
TOTAL LIABILITIES 300,073
NET ASSETS $ 32,962,183
Net Assets
consist of:
Paid in capital $ 29,919,943
Accumulated net (106,135
investment )
(loss)
Accumulated 2,099,819
undistributed net
realized gain
(loss) on
investments and
foreign currency
transactions
Net unrealized 1,048,556
appreciation
(depreciation)
on investments
NET ASSETS, for $ 32,962,183
1,180,419
shares
outstanding
NET ASSET VALUE $27.92
and redemption
price per share
($32,962,183 (divided by)
1,180,419
shares)
Maximum offering $28.78
price per share
(100/97.00 of
$27.92)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED AUGUST 31, 1996 (UNAUDITED)
INVESTMENT $ 198,924
INCOME
Dividends
Interest 48,189
TOTAL INCOME 247,113
EXPENSES
Management fee $ 128,577
Transfer agent 162,153
fees
Accounting fees 30,156
and expenses
Non-interested 83
trustees'
compensation
Custodian fees 9,819
and expenses
Registration fees 14,009
Audit 14,887
Legal 114
Miscellaneous 200
Total expenses 359,998
before
reductions
Expense (6,750 353,248
reductions )
NET INVESTMENT (106,135
INCOME (LOSS) )
REALIZED AND
UNREALIZED GAIN
(LOSS)
Net realized gain
(loss) on:
Investment 2,244,371
securities
Foreign (28 2,244,343
currency )
transactions
Change in net (1,076,448
unrealized )
appreciation
(depreciation)
on investment
securities
NET GAIN (LOSS) 1,167,895
NET INCREASE $ 1,061,760
(DECREASE) IN
NET ASSETS
RESULTING FROM
OPERATIONS
OTHER $ 143,379
INFORMATION
Sales charges
paid to FDC
Deferred sales $ 886
charges
withheld
by FDC
Exchange fees $ 17,865
withheld by FSC
Expense $ 6,750
reductions
Directed
brokerage
arrangements
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS YEAR ENDED
ENDED FEBRUARY 29,
AUGUST 31, 1996 1996
(UNAUDITED)
Operations $ (106,135 $ (42,041
Net investment ) )
income (loss)
Net realized 2,244,343 6,184,658
gain (loss)
Change in net (1,076,448 1,844,428
unrealized )
appreciation
(depreciation)
NET INCREASE 1,061,760 7,987,045
(DECREASE) IN
NET ASSETS
RESULTING
FROM
OPERATIONS
Distributions to (1,088,127 (1,652,319
shareholders ) )
from net
realized gains
Share 57,637,845 82,853,410
transactions
Net proceeds
from sales of
shares
Reinvestment of 1,073,164 1,633,401
distributions
Cost of shares (52,441,499 (69,255,038
redeemed ) )
Paid in capital 70,825 97,064
portion of
redemption fees
NET INCREASE 6,340,335 15,328,837
(DECREASE) IN
NET ASSETS
RESULTING
FROM SHARE
TRANSACTIONS
TOTAL 6,313,968 21,663,563
INCREASE
(DECREASE) IN
NET ASSETS
NET ASSETS
Beginning of 26,648,215 4,984,652
period
End of period 32,962,183 26,648,215
(including
accumulated net
investment loss
of $106,135 and
$0, respectively)
OTHER
INFORMATION
Shares
Sold 2,060,864 3,489,764
Issued in 39,600 65,863
reinvestment of
distributions
Redeemed (1,908,261 (2,821,248
) )
Net increase 192,203 734,379
(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> <C>
SIX MONTHS YEAR ENDED YEARS ENDED FEBRUARY 28, TEN MONTHS YEAR ENDED
ENDED FEBRUARY 29, ENDED APRIL 30,
AUGUST 31, 1996 FEBRUARY 28,
SELECTED PER-SHARE DATA D (UNAUDITED) 1996 1995 1994 1993 1992
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Net asset value, $ 26.97 $ 19.64 $ 19.14 $ 15.08 $ 14.37 $ 13.72
beginning of
period
Income from
Investment
Operations
Net investment (.07) (.05) (.06) .07 (.02) (.01)
income (loss)
Net realized and 1.78 9.09 .70 4.57 .69 .67
unrealized gain
(loss)
Total from 1.71 9.04 .64 4.64 .67 .66
investment
operations
Less Distributions
From net - - - (.10) - (.04)
investment
income
In excess of net - - - - - (.02)
investment
income
From net (.81) (1.82) (.27) (.62) - -
realized gain
Total (.81) (1.82) (.27) (.72) - (.06)
distributions
Redemption fees .05 .11 .13 .14 .04 .05
added to paid in
capital
Net asset value, $ 27.92 $ 26.97 $ 19.64 $ 19.14 $ 15.08 $ 14.37
end of period
TOTAL RETURN B, C 6.62% 47.40% 4.13% 32.04% 4.94% 5.18%
RATIOS AND
SUPPLEMENTAL
DATA
Net assets, end of $ 32,962 $ 26,648 $ 4,985 $ 11,136 $ 1,463 $ 1,280
period (000
omitted)
Ratio of expenses 1.68% A 1.77% 2.49% 2.53% 2.48% A, 2.46%
to average net G G G G G
assets
Ratio of expenses 1.65% A, 1.75% 2.49% 2.53% 2.48% A 2.46%
to average net E E
assets after
expense
reductions
Ratio of net (.50)% A (.20)% (.32)% .40% (.14)% A (.10)%
investment
income (loss) to
average net
assets
Portfolio turnover 242% A 267% 146% 324% 87% A 32%
rate
Average $ .0319
commission
rate F
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <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 9 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
9 OF NOTES TO FINANCIAL STATEMENTS). F FOR
FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND
IS REQUIRED TO DISCLOSE ITS AVERAGE
COMMISSION RATE PER SHARE FOR SECURITY TRADES ON WHICH
COMMISSIONS ARE CHARGED. THIS AMOUNT MAY
VARY FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING
ON THE MIX OF TRADES EXECUTED IN VARIOUS
MARKETS WHERE TRADING PRACTICES AND COMMISSION RATE
STRUCTURES MAY DIFFER. 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. A fund's total return includes
changes in 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 6 PAST 1 PAST 5 LIFE OF
AUGUST 31, 1996 MONTH YEAR YEARS FUND
S
DEVELOPING COMMUNICATIONS 2.27% -5.47% 149.17% 225.47%
DEVELOPING COMMUNICATIONS -0.80% -8.31% 141.69% 215.71%
(INCL. 3% SALES CHARGE)
S&P 500 2.96% 18.73% 89.14% 117.91%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one year, five years, or
since the fund started on June 29, 1990. You can compare these figures to
the performance of the S&P 500 - a widely recognized, unmanaged index of
common stocks. This benchmark reflects reinvestment of dividends and
capital gains, if any, but does not reflect any sales charges, brokerage
commissions, or other costs of investing.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
AUGUST 31, 1996 YEAR YEARS FUND
DEVELOPING COMMUNICATIONS -5.47% 20.03% 21.04%
DEVELOPING COMMUNICATIONS -8.31% 19.30% 20.44%
(INCL. 3% SALES CHARGE)
S&P 500 18.73% 13.59% 13.43%
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
IMAHDR PRASUN SHR__CHT 19960831 19960909 154202 S00000000000001
Developing Communications SP Standard & Poor 500
00518 SP001
1990/06/29 9700.00 10000.00
1990/07/31 8953.10 9980.27
1990/08/31 7866.70 9078.05
1990/09/30 6751.20 8635.95
1990/10/31 7081.00 8598.82
1990/11/30 8235.30 9154.30
1990/12/31 8759.10 9409.71
1991/01/31 10146.20 9819.97
1991/02/28 10776.70 10522.10
1991/03/31 11494.50 10776.73
1991/04/30 11591.50 10802.60
1991/05/31 11766.10 11269.27
1991/06/30 10841.06 10753.14
1991/07/31 11963.62 11254.23
1991/08/31 12670.42 11520.96
1991/09/30 12815.94 11328.56
1991/10/31 13564.32 11480.36
1991/11/30 12888.70 11017.70
1991/12/31 14135.99 12278.13
1992/01/31 14510.18 12049.75
1992/02/29 14998.70 12206.40
1992/03/31 14260.72 11968.38
1992/04/30 14073.63 12320.25
1992/05/31 14011.26 12380.62
1992/06/30 13512.35 12196.14
1992/07/31 14104.81 12694.97
1992/08/31 13574.71 12434.72
1992/09/30 14032.05 12581.45
1992/10/31 14655.70 12625.48
1992/11/30 15986.14 13056.01
1992/12/31 16569.33 13216.60
1993/01/31 17017.15 13327.62
1993/02/28 17121.30 13508.88
1993/03/31 17735.75 13793.92
1993/04/30 17206.93 13460.10
1993/05/31 18365.83 13820.83
1993/06/30 19160.51 13860.91
1993/07/31 19535.77 13805.47
1993/08/31 21323.79 14328.70
1993/09/30 21621.79 14218.37
1993/10/31 22372.32 14512.69
1993/11/30 20672.60 14374.82
1993/12/31 21833.52 14548.75
1994/01/31 22673.27 15043.41
1994/02/28 22298.78 14635.73
1994/03/31 20744.11 13997.61
1994/04/30 21598.03 14176.78
1994/05/31 20440.78 14409.28
1994/06/30 18918.07 14056.26
1994/07/31 20879.32 14517.30
1994/08/31 22657.83 15112.51
1994/09/30 22962.38 14742.25
1994/10/31 25021.07 15073.95
1994/11/30 24314.54 14524.96
1994/12/31 25138.57 14740.37
1995/01/31 24467.87 15122.58
1995/02/28 25337.29 15711.91
1995/03/31 25473.91 16175.57
1995/04/30 26593.13 16651.94
1995/05/31 27505.97 17317.52
1995/06/30 30405.58 17719.80
1995/07/31 33318.60 18307.39
1995/08/31 33399.15 18353.34
1995/09/30 34285.14 19127.86
1995/10/31 30875.42 19059.57
1995/11/30 31023.08 19896.28
1995/12/31 29504.05 20279.49
1996/01/31 28582.05 20969.80
1996/02/29 30871.16 21164.19
1996/03/31 30569.12 21368.00
1996/04/30 32572.09 21682.97
1996/05/31 34416.10 22242.17
1996/06/30 32921.82 22326.91
1996/07/31 30060.43 21340.51
1996/08/30 31570.61 21790.58
IMATRL PRASUN SHR__CHT 19960831 19960909 154205 R00000000000077
Let's say hypothetically that $10,000 was invested in Fidelity Select
Developing Communications Portfolio on June 29, 1990, when the fund
started, and a 3% sales charge was paid. By August 31, 1996, the investment
would have grown to $31,571 - a 215.71% increase. That compares to $10,000
invested in the S&P 500, which would have grown to $21,791 over the same
period - a 117.91% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST 31, 1996
% OF FUND'S
INVESTMENTS
Newbridge Networks Corp. 3.5
Cisco Systems, Inc. 3.3
360 Degrees Communications Co. 3.2
Microsoft Corp. 2.9
Dynatech Corp. 2.7
3Com Corp. 2.4
Scientific-Atlanta, Inc. 2.4
DSC Communications Corp. 2.4
AirTouch Communications, Inc. 2.4
Palmer Wireless, Inc. 2.4
TOP INDUSTRIES AS OF AUGUST 31, 1996
Row: 1, Col: 1, Value: 42.6
Row: 1, Col: 2, Value: 7.5
Row: 1, Col: 3, Value: 8.5
Row: 1, Col: 4, Value: 9.199999999999999
Row: 1, Col: 5, Value: 15.5
Row: 1, Col: 6, Value: 16.7
Telephone Equipment 16.7%
Cellular & Communication
Services 15.5%
Prepackaged Computer
Software 9.2%
Datacommunications
Equipment 8.5%
TV & Radio Communication
Equipment 7.5%
All Others 42.6%*
* INCLUDES SHORT-TERM INVESTMENTS
DEVELOPING COMMUNICATIONS PORTFOLIO
FUND TALK: THE MANAGERS' OVERVIEW
NOTE TO SHAREHOLDERS: Effective August 13, 1996,
Minerva Butler became Portfolio Manager of Fidelity Select Developing
Communications Portfolio. The following is a discussion with Paul Antico,
who discusses the period covered by the report, and Minerva Butler, who
discusses her investment style and outlook.
Q. PAUL, HOW DID THE FUND PERFORM?
A. For the six-month period ended August 31, 1996, the fund compiled a
return of 2.27%. This lagged the Standard & Poor's 500 Index, which
provided a return of 2.96% during the same period. For the 12 months ended
August 31, 1996, the fund had a return of -5.47%, while the S&P 500 posted
a return of 18.73%.
Q. HOW WOULD YOU SUM UP THE INVESTING ENVIRONMENT DURING THE PERIOD?
A. I would describe it as swimming against the tide. The industry as a
whole suffered as wireless service stocks turned in a subpar performance -
partly due to confusion in the market over the pending unveiling of
personal communications services (PCS). Though cellular stocks continued to
have excellent business prospects, investor sentiment remained cautious due
to the uncertainty surrounding PCS.
Q. WHAT EXACTLY IS PCS AND WHY IS IT SO VITAL TO THE HEALTH OF THE
DEVELOPING COMMUNICATIONS SECTOR?
A. Since 1984, there have been only two cellular service providers located
in each major market of the U.S. When - and it will happen fairly soon -
PCS is implemented, it will allow for the introduction of three additional
competing companies in each region of the country. Market uncertainty
concerning PCS is based on the premise that these new, inexperienced
competitors will significantly reduce industry pricing, and the cash flows
of the incumbent companies will be slowed. I think market worries will be
pacified as soon as PCS is up and running. People will see the benefit of
the added competition in increased wireless industry awareness and
subscriber growth for all players.
Q. WHICH INDIVIDUAL HOLDINGS OR SECTORS MADE SIGNIFICANT CONTRIBUTIONS TO
THE PORTFOLIO?
A. While wireless service provider stocks dragged, we saw fairly strong
performance from selected telecommunications equipment-related holdings. I
like to think of the equipment companies as being the bullet suppliers in
the war. If a service provider wants to improve its competitive position in
this new era of deregulation, that provider will have to spend large
amounts of capital on new equipment. The fund also enjoyed strong
performances from its positions in Black Box Corp., a catalog distributor
of networking products, and Vantive, a company with a computer help desk
theme.
Q. WHAT OTHER INDIVIDUAL STORIES ARE WORTH NOTING?
A. DSP Communications is an interesting stock. DSP manufactures a large
portion of the chips that go inside Japanese-made cellular phones. While
its market has been growing rapidly, Japanese companies are also beginning
to realize that the phone business in the U.S. is becoming increasingly
commodity-like. As a result, Japan is attempting to tap into the U.S.
market via retail distribution. If this next wave of cellular distribution
occurs, and I think it's likely, DSP could become a beneficiary.
Q. TURNING TO YOU, MINERVA, WHAT'S YOUR OUTLOOK FOR THE FUND AND THE SECTOR
IN THE COMING MONTHS?
A. I'm cautiously optimistic on the telecommunications sector. Some details
of the recent legislation need to be worked out, and a fair amount of
uncertainty remains regarding the outcome. On the cellular side, the
well-positioned cellular operators should benefit when PCS is rolled out
and its effect comes into focus. Until then, however, investors will remain
cautious on the cellular names. Lastly, I agree with Paul that the
equipment suppliers will be vital in the upcoming telecommunications battle
for the customer. In terms of positioning the fund, I'll try to strike a
balance between large companies with proven track records and the
faster-growing, smaller- to mid-sized companies with strong balance sheets,
proven technologies and good product niches. I'll continue to look for
young companies with new yet proven technologies.
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.
FUND FACTS
START DATE: June 29, 1990
FUND NUMBER: 518
TRADING SYMBOL: FSDCX
SIZE: as of August 31, 1996, more than
$306 million
MANAGER: Minerva Butler, since August 1996;
equity analyst, cellular, paging, cable and
wireless cable industries, since 1995; joined Fidelity
in 1995
(checkmark)
DEVELOPING COMMUNICATIONS PORTFOLIO
INVESTMENTS AUGUST 31, 1996 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 89.1%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 2.4%
GUIDED MISSILES & SPACE VEHICLES - 1.2%
Rockwell International Corp. 69,300 $ 3,602,344 77434710
MISSILES & SPACE VEHICLES - 1.2%
Orbital Sciences Corp. (a) 217,600 3,916,800 68556410
TOTAL AEROSPACE & DEFENSE 7,519,144
APPAREL STORES - 0.5%
WOMEN'S CLOTHING STORES - 0.5%
Melville Corp. 40,000 1,690,000 58574510
BROADCASTING - 9.0%
CABLE TV OPERATORS - 6.7%
American Telecasting, Inc. (a) 237,900 2,379,000 03015110
Comcast UK Cable Partners
PLC Class A (a) 200,100 2,151,075 20099622
General Cable PLC sponsored ADR (a) 265,000 3,610,625 36930Q10
Heartland Wireless
Communications, Inc. (a) 224,700 4,746,788 42235W10
International Cabletel, Inc. (a) 65,800 1,595,650 45921610
Nynex CableComms Group
PLC ADR Unit (a) 161,500 2,624,375 67076410
TCI Group Class A 100,000 1,487,500 87924V10
Telewest Communications PLC (a) 1,250,000 2,713,367 87956P92
21,308,380
COMMUNICATIONS SERVICES - 0.4%
Metro One Telecommunications, Inc. 100,000 1,125,000 59163F10
TELEVISION BROADCASTING - 1.9%
Home Shopping Network, Inc. (a) 50,000 537,500 43735110
Viacom, Inc. Class A (a) 178,100 5,565,625 92552410
6,103,125
TOTAL BROADCASTING 28,536,505
CELLULAR - 15.5%
CELLULAR & COMMUNICATION SERVICES - 15.5%
AirTouch Communications, Inc. (a) 273,925 7,532,938 00949T10
Arch Communications Group, Inc. (a) 345,387 4,705,898 03938110
Cellular Communications
Puerto Rico, Inc. (a) 60,000 1,605,000 15091910
Geotek Industries, Inc. (a) 60,000 547,500 37365410
Nextel Communications, Inc. Class A (a) 290,000 4,748,750 65332V10
Paging Network, Inc. (a) 148,000 2,608,500 69554210
Palmer Wireless, Inc. (a) 384,600 7,499,700 69703310
Telephone & Data Systems, Inc. 62,131 2,648,334 87943310
360 Degrees Communications Co. (a) 420,000 10,027,500 88557110
United States Cellular Corp. (a) 235,600 7,126,900 91168410
Vanguard Cellular Systems, Inc.
Class A 10,000 191,250 92202210
49,242,270
COMMUNICATIONS EQUIPMENT - 25.2%
DATACOMMUNICATIONS EQUIPMENT - 8.5%
Cisco Systems, Inc. (a) 200,500 10,576,375 17275R10
Dynatech Corp. (a) 217,650 8,542,763 26813810
3Com Corp. (a) 165,000 7,713,750 88553510
26,832,888
TELEPHONE EQUIPMENT - 16.7%
Andrew Corp. (a) 55,000 2,447,500 03442510
Ascend Communications, Inc. (a) 120,000 6,285,000 04349110
Brite Voice Systems, Inc. (a) 104,000 1,313,000 11041110
Brooktrout Technology, Inc. (a) 150,000 3,750,000 11458010
SHARES VALUE (NOTE 1)
DSC Communications Corp. (a) 255,200 $ 7,592,200 23331110
DSP Communications, Inc. (a) 23,300 1,185,388 23332K10
Dialogic Corp. (a) 136,800 4,873,500 25249910
Inter-Tel, Inc. (a) 170,200 3,552,925 45837210
InterVoice, Inc. (a) 340,100 4,633,863 46114210
Newbridge Networks Corp. (a) 195,000 11,236,875 65090110
Tadiran Ltd. sponsored ADR 32,000 816,000 87359310
Tellabs, Inc. (a) 81,600 5,171,400 87966410
52,857,651
TOTAL COMMUNICATIONS EQUIPMENT 79,690,539
COMPUTER SERVICES & SOFTWARE - 14.8%
CAD/CAM/CAE - 0.2%
TCSI Corp. (a) 25,500 612,000 87233R10
COMPUTER SERVICES - 3.7%
America Online, Inc. (a) 113,500 3,433,375 02364J10
Clarify, Inc. (a) 50,900 2,128,256 18049210
Electronic Data Systems Corp. 115,000 6,267,500 28566110
11,829,131
CUSTOM COMPUTER PROGRAMMING SERVICES - 1.6%
Data Dimensions, Inc. (a) 33,200 1,112,200 23765420
Keane, Inc. (a) 90,400 4,068,000 48666510
5,180,200
DATA PROCESSING - 0.1%
Automatic Data Processing, Inc. 10,000 422,500 05301510
PREPACKAGED COMPUTER SOFTWARE - 9.2%
Black Box Corp. (a) 257,700 6,796,838 09182610
Metromail Corp. (a) 23,600 413,000 59168010
Microsoft Corp. (a) 74,000 9,065,000 59491810
Oracle Systems Corp. (a) 152,500 5,375,625 68389X10
Sykes Enterprises, Inc. (a) 38,100 1,712,119 87123710
Vantive Corp. (a) 120,800 5,315,200 92209110
Wind River Systems, Inc. 10,000 342,500 97314910
29,020,282
TOTAL COMPUTER SERVICES & SOFTWARE 47,064,113
COMPUTERS & OFFICE EQUIPMENT - 1.9%
COMPUTER COMMUNICATIONS EQUIPMENT - 0.8%
Comverse Technology, Inc. (a) 75,000 2,643,750 20586240
COMPUTER STORAGE DEVICES - 0.4%
Adaptec, Inc. (a) 23,600 1,177,050 00651F10
COMPUTERS & OFFICE EQUIPMENT - 0.7%
Hewlett-Packard Co. 50,000 2,187,500 42823610
TOTAL COMPUTERS & OFFICE EQUIPMENT 6,008,300
DEFENSE ELECTRONICS - 0.1%
Remec, Inc. (a) 13,600 197,200 75954310
ELECTRICAL EQUIPMENT - 9.3%
ELECTRICAL EQUIPMENT - WHOLESALE - 0.9%
Antec Corp. (a) 211,200 2,930,400 03664P10
ELECTRICAL MACHINERY - 0.2%
Amphenol Corp. Class A 30,800 604,450 03209420
TV & RADIO COMMUNICATION EQUIPMENT - 7.5%
Allen Group, Inc. (The) 250,300 3,910,938 01763410
California Amplifier, Inc. 13,000 162,500 12990010
California Microwave Corp. (a) 211,500 3,093,188 13044210
General Instrument Corp. (a) 190,500 5,214,938 37012110
Ortel Corp. (a) 80,000 1,990,000 68749W10
Scientific-Atlanta, Inc. 562,400 7,592,400 80865510
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
ELECTRICAL EQUIPMENT - CONTINUED
TV & RADIO COMMUNICATION EQUIPMENT - CONTINUED
TSX Corp. (a) 115,750 $ 1,417,938 87302710
Vertex Communications Corp. (a) 19,200 345,300 92532010
23,727,202
WIRING & LIGHTING - 0.7%
Oak Industries, Inc. (a) 74,600 2,238,000 67140050
TOTAL ELECTRICAL EQUIPMENT 29,500,052
ELECTRONICS - 4.2%
ELECTRONIC PARTS - WHOLESALE - 1.0%
Brightpoint, Inc. 139,500 3,051,563 10947310
ELECTRONICS & ELECTRONIC COMPONENTS - 1.3%
Sanmina Corp. (a) 119,800 4,193,000 80090710
SEMICONDUCTORS - 1.9%
Intel Corp. 76,500 6,105,656 45814010
TOTAL ELECTRONICS 13,350,219
ENGINEERING - 0.4%
WATER & SEWER PIPES - 0.4%
MasTec, Inc. (a) 37,700 1,112,150 57632310
SERVICES - 0.0%
BUSINESS SERVICES - 0.0%
Premier Technologies, Inc. 2,000 42,500 74058F10
TELEPHONE SERVICES - 5.8%
AT&T Corp. 72,700 3,816,750 00195710
ALLTEL Corp. 95,000 2,683,750 02003910
BCE, Inc. 50,000 1,973,324 05534B10
DDI Corp. Ord. 250 1,986,223 23399J22
MFS Communications, Inc. (a) 115,200 4,881,600 55272T10
Telecom Italia Mobile Spa 1,475,000 3,039,082 89799F22
18,380,729
TOTAL COMMON STOCKS
(Cost $272,803,276) 282,333,721
REPURCHASE AGREEMENTS - 10.9%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 5.25%, dated
8/30/96 due 9/3/96 $ 34,561,149 34,541,000 69899TYY
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $307,344,276) $ 316,874,721
LEGEND
1. Non-income producing
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $326,745,423 and $330,131,656 respectively (see Note 4 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $58,710 for the period (see
Note 5 of Notes to Financial Statements).
INCOME TAX INFORMATION
At August 31, 1996, the aggregate cost of investment securities for income
tax purposes was $309,213,176. Net unrealized appreciation aggregated
$7,661,545, of which $26,648,593 related to appreciated investment
securities and $18,987,048 related to depreciated investment securities.
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.
DEVELOPING COMMUNICATIONS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1996 (UNAUDITED)
ASSETS
Investment in $ 316,874,721
securities, at
value (including
repurchase
agreements of
$34,541,000)
(cost
$307,344,276)
- - See
accompanying
schedule
Cash 936
Receivable for 1,634,541
investments
sold
Receivable for 522,731
fund shares sold
Dividends 94,548
receivable
Redemption fees 223
receivable
Other receivables 3,160
Prepaid expenses 3,349
TOTAL ASSETS 319,134,209
LIABILITIES
Payable for $ 11,241,347
investments
purchased
Payable for fund 1,016,384
shares
redeemed
Accrued 153,859
management
fee
Other payables 294,290
and
accrued
expenses
TOTAL LIABILITIES 12,705,880
NET ASSETS $ 306,428,329
Net Assets
consist of:
Paid in capital $ 304,621,117
Accumulated net (960,271
investment )
(loss)
Accumulated (6,763,299
undistributed net )
realized gain
(loss) on
investments and
foreign currency
transactions
Net unrealized 9,530,782
appreciation
(depreciation)
on investments
and assets and
liabilities in
foreign
currencies
NET ASSETS, for $ 306,428,329
15,430,635
shares
outstanding
NET ASSET VALUE $19.86
and redemption
price per share
($306,428,329 (divided by)
15,430,635
shares)
Maximum offering $20.47
price per share
(100/97.00 of
$19.86)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED AUGUST 31, 1996 (UNAUDITED)
INVESTMENT $ 481,197
INCOME
Dividends
Interest 1,137,029
TOTAL INCOME 1,618,226
EXPENSES
Management fee $ 985,842
Transfer agent 1,448,758
fees
Accounting fees 142,851
and expenses
Non-interested 629
trustees'
compensation
Custodian fees 17,457
and expenses
Registration fees 3,349
Audit 14,780
Legal 1,296
Miscellaneous 3,057
Total expenses 2,618,019
before
reductions
Expense (39,522 2,578,497
reductions )
NET INVESTMENT (960,271
INCOME (LOSS) )
REALIZED AND
UNREALIZED GAIN
(LOSS)
Net realized gain
(loss) on:
Investment 15,924,050
securities
Foreign (358 15,923,692
currency )
transactions
Change in net
unrealized
appreciation
(depreciation)
on:
Investment (11,378,066
securities )
Assets and 329 (11,377,737
liabilities in )
foreign
currencies
NET GAIN (LOSS) 4,545,955
NET INCREASE $ 3,585,684
(DECREASE) IN
NET ASSETS
RESULTING FROM
OPERATIONS
OTHER $ 574,583
INFORMATION
Sales charges
paid to FDC
Deferred sales $ 2,621
charges
withheld
by FDC
Exchange fees $ 55,028
withheld by FSC
Expense $ 36,821
reductions
Directed
brokerage
arrangements
Custodian 1,966
interest credits
Transfer agent 735
interest credits
$ 39,522
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS YEAR ENDED
ENDED FEBRUARY 29,
AUGUST 31, 1996 1996
(UNAUDITED)
Operations $ (960,271 $ (2,597,260
Net investment ) )
income (loss)
Net realized 15,923,692 52,212,710
gain (loss)
Change in net (11,377,737 9,525,013
unrealized )
appreciation
(depreciation)
NET INCREASE 3,585,684 59,140,463
(DECREASE) IN
NET ASSETS
RESULTING
FROM
OPERATIONS
Distributions to - (64,709,372
shareholders )
from net
realized gains
Share 112,615,702 436,869,315
transactions
Net proceeds
from sales of
shares
Reinvestment of - 63,769,821
distributions
Cost of shares (143,187,387 (416,608,338
redeemed ) )
Paid in capital 228,841 297,961
portion of
redemption fees
NET INCREASE (30,342,844 84,328,759
(DECREASE) IN )
NET ASSETS
RESULTING
FROM SHARE
TRANSACTIONS
TOTAL (26,757,160 78,759,850
INCREASE )
(DECREASE) IN
NET ASSETS
NET ASSETS
Beginning of 333,185,489 254,425,639
period
End of period $ 306,428,329 $ 333,185,489
(including
accumulated net
investment loss
of $960,271 and
$0, respectively)
OTHER
INFORMATION
Shares
Sold 5,516,071 19,756,179
Issued in - 3,380,520
reinvestment of
distributions
Redeemed (7,241,743 (18,449,215
) )
Net increase (1,725,672) 4,687,484
(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> <C>
SIX MONTHS YEAR ENDED YEARS ENDED FEBRUARY 28, TEN MONTHS YEAR ENDED
ENDED FEBRUARY 29, ENDED APRIL 30,
AUGUST 31, 1996 FEBRUARY 28,
SELECTED PER-SHARE DATA D (UNAUDITED) 1996 1995 1994 1993 1992
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Net asset value, $ 19.42 $ 20.40 $ 19.65 $ 16.44 $ 13.54 $ 11.95
beginning of
period
Income from
Investment
Operations
Net investment (.06) (.17) (.16) (.16) (.07) (.08) E
income (loss)
Net realized and .49 4.17 2.55 4.82 2.98 2.42
unrealized gain
(loss)
Total from .43 4.00 2.39 4.66 2.91 2.34
investment
operations
Less Distributions
From net - (5.00) (1.67) (1.47) (.03) (.79)
realized gain
Redemption fees .01 .02 .03 .02 .02 .04
added to paid in
capital
Net asset value, $ 19.86 $ 19.42 $ 20.40 $ 19.65 $ 16.44 $ 13.54
end of period
TOTAL RETURN B, C 2.27% 21.84% 13.63% 30.24% 21.66% 21.41%
RATIOS AND
SUPPLEMENTAL
DATA
Net assets, end of $ 306,428 $ 333,185 $ 254,426 $ 222,109 $ 83,383 $ 39,261
period (000
omitted)
Ratio of expenses 1.59% A 1.53% 1.58% 1.56% 1.88% A 2.50%
to average net
assets
Ratio of expenses 1.57% A, 1.51% 1.56% 1.56% 1.88% A 2.50%
to average net F F F
assets after
expense
reductions
Ratio of net (.58)% A (.78)% (.83)% (.88)% (.59)% A (.61)%
investment
income (loss) to
average net
assets
Portfolio turnover 226% A 249% 266% 280% 77% A 25%
rate
Average $ .0317
commission
rate G
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <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 9 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 $.06 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 9 OF NOTES
TO FINANCIAL STATEMENTS). G FOR FISCAL
YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS REQUIRED
TO DISCLOSE ITS AVERAGE COMMISSION
RATE PER SHARE FOR SECURITY TRADES ON WHICH COMMISSIONS ARE
CHARGED. THIS AMOUNT MAY VARY FROM
PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES
EXECUTED IN VARIOUS MARKETS WHERE
TRADING PRACTICES AND COMMISSION RATE STRUCTURES MAY DIFFER.
</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. A fund's total return includes
changes in 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 6 PAST 1 PAST 5 PAST 10
AUGUST 31, 1996 MONTHS YEAR YEARS YEARS
ELECTRONICS -1.60% -2.89% 266.62% 312.72%
ELECTRONICS -4.55% -5.81% 255.62% 300.34%
(INCL. 3% SALES CHARGE)
S&P 500 2.96% 18.73% 89.14% 251.21%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one, five, or 10 years. You
can compare these figures to the performance of the S&P 500 - a widely
recognized, unmanaged index of common stocks. This benchmark reflects
reinvestment of dividends and capital gains, if any, but does not reflect
any sales charges, brokerage commissions, or other costs of investing.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
AUGUST 31, 1996 YEAR YEARS YEARS
ELECTRONICS -2.89% 29.67% 15.23%
ELECTRONICS -5.81% 28.88% 14.88%
(INCL. 3% SALES CHARGE)
S&P 500 18.73% 13.59% 13.34%
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
IMAHDR PRASUN SHR__CHT 19960831 19960909 154358 S00000000000001
Electronics SP Standard & Poor 500
00008 SP001
1986/08/31 9700.00 10000.00
1986/09/30 8624.46 9173.00
1986/10/31 8654.61 9702.28
1986/11/30 8654.61 9938.05
1986/12/31 8503.83 9684.63
1987/01/31 9911.09 10989.15
1987/02/28 10705.18 11423.22
1987/03/31 10534.30 11753.35
1987/04/30 10845.91 11648.74
1987/05/31 10624.77 11750.09
1987/06/30 10393.58 12343.47
1987/07/31 10715.23 12969.28
1987/08/31 11489.22 13453.04
1987/09/30 11479.17 13158.41
1987/10/31 7579.07 10324.09
1987/11/30 6392.95 9473.39
1987/12/31 7357.93 10194.31
1988/01/31 6935.75 10623.49
1988/02/29 7669.53 11118.55
1988/03/31 7558.96 10774.98
1988/04/30 7900.73 10894.59
1988/05/31 7629.33 10989.37
1988/06/30 8373.16 11493.78
1988/07/31 7860.52 11450.10
1988/08/31 7076.48 11060.80
1988/09/30 7187.05 11531.99
1988/10/31 6664.35 11852.58
1988/11/30 6332.64 11683.09
1988/12/31 6734.72 11887.54
1989/01/31 6975.96 12757.71
1989/02/28 6875.44 12440.04
1989/03/31 6825.18 12729.90
1989/04/30 7357.93 13390.58
1989/05/31 8061.55 13932.90
1989/06/30 7267.46 13853.48
1989/07/31 7347.88 15104.45
1989/08/31 7599.17 15400.50
1989/09/30 7810.26 15337.35
1989/10/31 7458.45 14981.53
1989/11/30 7478.55 15287.15
1989/12/31 7790.16 15654.04
1990/01/31 8051.50 14603.66
1990/02/28 8694.82 14792.04
1990/03/31 9116.99 15184.03
1990/04/30 9157.20 14804.43
1990/05/31 10504.15 16247.86
1990/06/30 10664.97 16137.38
1990/07/31 10162.38 16085.74
1990/08/31 8574.20 14631.59
1990/09/30 7277.51 13919.03
1990/10/31 7016.17 13859.18
1990/11/30 7739.90 14754.48
1990/12/31 8242.59 15166.13
1991/01/31 9389.91 15827.37
1991/02/28 10215.17 16959.03
1991/03/31 10758.64 17369.44
1991/04/30 10819.02 17411.13
1991/05/31 11171.27 18163.29
1991/06/30 9812.60 17331.41
1991/07/31 10486.90 18139.05
1991/08/31 10919.67 18568.95
1991/09/30 10084.34 18258.85
1991/10/31 10577.48 18503.51
1991/11/30 9933.37 17757.82
1991/12/31 11151.14 19789.32
1992/01/31 12469.55 19421.24
1992/02/29 13153.92 19673.71
1992/03/31 12117.31 19290.07
1992/04/30 11885.83 19857.20
1992/05/31 11905.96 19954.50
1992/06/30 11040.44 19657.18
1992/07/31 11624.16 20461.16
1992/08/31 11744.93 20041.71
1992/09/30 12167.63 20278.20
1992/10/31 13083.47 20349.17
1992/11/30 13938.93 21043.08
1992/12/31 14210.66 21301.91
1993/01/31 14693.74 21480.84
1993/02/28 14371.69 21772.98
1993/03/31 14874.90 22232.39
1993/04/30 14612.70 21694.37
1993/05/31 16079.02 22275.78
1993/06/30 16372.29 22340.38
1993/07/31 16837.47 22251.02
1993/08/31 18283.57 23094.33
1993/09/30 18586.95 22916.50
1993/10/31 18233.01 23390.88
1993/11/30 18091.43 23168.66
1993/12/31 18769.41 23449.00
1994/01/31 20065.91 24246.27
1994/02/28 21017.46 23589.20
1994/03/31 20791.47 22560.71
1994/04/30 20731.99 22849.48
1994/05/31 20672.52 23224.22
1994/06/30 19566.34 22655.22
1994/07/31 19970.75 23398.31
1994/08/31 21921.44 24357.64
1994/09/30 21291.03 23760.88
1994/10/31 22159.33 24295.50
1994/11/30 21873.86 23410.66
1994/12/31 21992.80 23757.84
1995/01/31 21362.40 24373.88
1995/02/28 23550.97 25323.73
1995/03/31 25977.44 26071.03
1995/04/30 28879.68 26838.83
1995/05/31 30984.99 27911.57
1995/06/30 35397.83 28559.96
1995/07/31 40690.85 29507.01
1995/08/31 41226.10 29581.07
1995/09/30 41963.55 30829.39
1995/10/31 40809.79 30719.33
1995/11/30 39786.87 32067.91
1995/12/31 37160.87 32685.54
1996/01/31 38416.89 33798.15
1996/02/29 40683.50 34111.46
1996/03/31 38301.39 34439.95
1996/04/30 42675.80 34947.60
1996/05/31 43801.89 35848.90
1996/06/30 40120.45 35985.48
1996/07/31 38185.89 34395.64
1996/08/30 40019.39 35121.05
IMATRL PRASUN SHR__CHT 19960831 19960909 154403 R00000000000123
Let's say hypothetically that $10,000 was invested in Fidelity Select
Electronics Portfolio on August 31, 1986, and a 3% sales charge was paid.
By August 31, 1996, the investment would have grown to $40,034 - a 300.34%
increase. That compares to $10,000 invested in the S&P 500, which would
have grown to $35,121 over the same period - a 251.21% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST 31, 1996
% OF FUND'S
INVESTMENTS
Intel Corp. 9.0
Cisco Systems, Inc. 6.9
International Business Machines Corp. 5.6
Compaq Computer Corp. 5.1
Linear Technology Corp. 4.3
Microsoft Corp. 3.8
Adaptec, Inc. 3.8
Electronic Data Systems Corp. 3.1
Cascade Communications Corp. 3.0
Tellabs, Inc. 2.6
TOP INDUSTRIES AS OF AUGUST 31, 1996
Semiconductors 24.9%
Datacommunications
Equipment 10.9%
Prepackaged Computer
Software 8.2%
Telephone Equipment 7.9%
Mini & Micro Computers 6.8%
All Others 41.3%*
Row: 1, Col: 1, Value: 41.3
Row: 1, Col: 2, Value: 6.8
Row: 1, Col: 3, Value: 7.9
Row: 1, Col: 4, Value: 8.199999999999999
Row: 1, Col: 5, Value: 10.9
Row: 1, Col: 6, Value: 24.9
* INCLUDES SHORT-TERM INVESTMENTS
ELECTRONICS PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
NOTE TO SHAREHOLDERS: Andrew Kaplan became Portfolio Manager of Fidelity
Select Electronics Portfolio on August 26, 1996.
Q. ANDY, HOW DID THE FUND PERFORM?
A. For the six- and 12-month periods ended August 31, 1996, the fund
returned -1.60% and -2.89%, respectively. By comparison, the Standard &
Poor's 500 Index returned 2.96% for the past six months and 18.73% for the
year.
Q. JUDGING BY THE NUMBERS, IT WAS A PRETTY ROUGH PERIOD FOR ELECTRONICS
STOCKS. WHAT FACTORS ACCOUNTED FOR THE SECTOR'S PERFORMANCE OVER THE PAST
SIX MONTHS?
A. Two events had a negative effect on the electronics sector. The first
was a dramatic over-supply of commodity semiconductors, which caused a
major price drop for these components. Nowhere was this more evident than
in the price of D-RAM, which fell roughly 75% in the first five months of
1996. The drop in semiconductor chip prices not only hurt the stock prices
of commodity semiconductor manufacturers, but the companies that make
semiconductor equipment as well. The second event was a major inventory
correction that affected even the high-quality, proprietary semiconductor
companies, which typically can weather severe downturns. Proprietary
companies are the only manufacturer producing a given product and, as such,
aren't typically affected by commodity pricing pressures. But during the
period, even these manufacturers suffered. In late 1995, computer and
telecommunications equipment manufacturers began to stockpile chips because
parts and shortages crept up. However, what transpired in 1996 was that the
demand for semiconductors actually cooled a bit. Not only did we see demand
slow, but computer and telecom companies started to draw down their own
stockpiles. Consequently, the number of new orders slumped.
Q. WHICH STOCKS WERE MOST ADVERSELY AFFECTED BY THE INVENTORY CORRECTION?
A. Manufacturers of proprietary components in the programmable logic device
area were poor performers and hurt the fund's performance over the past six
months. Stocks such as Actel and Altera suffered losses because the
inventory correction in this particular segment of the semiconductor arena
took longer than expected to work itself through.
Q. WASN'T INTEL - THE FUND'S LARGEST HOLDING AT THE END OF AUGUST - ALSO
NEGATIVELY AFFECTED?
A. Intel was practically the only semiconductor stock that was able to
weather the inventory correction relatively unscathed. Intel's parts
remained in tight enough supply so that the market never became flooded
with them. The market continued to push the price of Intel's stock higher
throughout the period in anticipation of two new products. The first is the
multi-media extension (MMX) architecture, which will improve the quality of
computer-based video and graphics. The other is the Pentium Pro, or the 686
chip, which has been well-received among workstation and server users.
Other companies in this arena failed to offer up competing products, and in
my view, that helped solidify Intel's dominance.
Q. SOME COMPANIES KNOWN LARGELY FOR THEIR PERSONAL COMPUTERS - INCLUDING
DELL AND COMPAQ - WERE AMONG THE FUND'S LARGEST HOLDINGS AT THE END OF
AUGUST. DOES THEIR PRESENCE MEAN YOU'RE OPTIMISTIC ABOUT FUTURE PC DEMAND?
A. Yes, that's part of their attraction, but there is another factor. With
the collapse in commodity semiconductor chip prices - which is the major
cost of goods for those companies - their input costs fell very rapidly.
Because the PC makers didn't immediately pass on these savings to the
consumer, there was a period in which Dell and Compaq were able to enjoy
expanded profit margins. In my view, that situation could continue until
1997. Likewise Cisco Systems, which produces network equipment and
software, benefited from the dramatic fall in D-RAM prices I mentioned
previously.
Q. ANDY, WHAT'S YOUR OUTLOOK?
A. I'm optimistic. In my view, the worst of the inventory correction is
behind the electronics industry. As I mentioned earlier, I believe that
demand for personal computers will be strong. PC demand across Asia has
continued to be extremely robust. In Europe, demand seems to be improving,
admittedly from a somewhat weak level. While they don't represent a very
large part of global PC sales, emerging countries have rapidly increased
their demand. I believe that the holiday sales of PCs in the U.S. will be
good, if consumer confidence remains high and shoppers are lured by the
favorable financing options that retailers are expected to offer. I'll most
likely focus on finding high-quality companies that I believe can best
benefit from these trends.
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: July 29, 1985
FUND NUMBER: 008
TRADING SYMBOL: FSELX
SIZE: as of August 31, 1996, more than
$1.0 billion
MANAGER: Andrew Kaplan, since August,
1996; analyst, semiconductor equipment
companies and producers; joined Fidelity in
1995
(checkmark)
ELECTRONICS PORTFOLIO
INVESTMENTS AUGUST 31, 1996 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 93.5%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 2.3%
AIRCRAFT - 2.3%
Lockheed Martin Corp. 172,700 $ 14,528,380 53983010
McDonnell Douglas Corp. 192,200 9,634,025 58016910
24,162,405
COMMUNICATIONS EQUIPMENT - 18.8%
DATACOMMUNICATIONS EQUIPMENT - 10.9%
Cabletron Systems, Inc. (a) 288,300 17,586,300 12692010
Cisco Systems, Inc. (a) 1,375,000 72,531,250 17275R10
Level One Communications, Inc. 100,000 2,150,000 52729510
3Com Corp. (a) 497,700 23,267,475 88553510
115,535,025
TELEPHONE EQUIPMENT - 7.9%
Andrew Corp. (a) 60,000 2,670,000 03442510
Ascend Communications, Inc. (a) 243,900 12,774,263 04349110
DSC Communications Corp. (a) 560,000 16,660,000 23331110
Newbridge Networks Corp. (a) 165,200 9,519,650 65090110
Pairgain Technologies, Inc. (a) 169,600 11,236,000 69593410
Tellabs, Inc. (a) 435,100 27,574,463 87966410
Xylan Corp. (a) 60,000 2,535,000 98415110
82,969,376
TOTAL COMMUNICATIONS EQUIPMENT 198,504,401
COMPUTER SERVICES & SOFTWARE - 13.5%
CAD/CAM/CAE - 1.2%
Cambridge Technology
Partners Mass., Inc. (a) 60,000 1,695,000 13252410
Parametric Technology Corp. (a) 241,700 10,944,478 69917310
12,639,478
COMPUTER & SOFTWARE STORES - 0.2%
MicroAge, Inc. (a) 138,200 2,073,000 59492810
COMPUTER SERVICES - 3.6%
America Online, Inc. (a) 100,000 3,025,000 02364J10
Computer Sciences Corp. (a) 35,000 2,450,000 20536310
Electronic Data Systems Corp. 602,700 32,847,150 28566110
38,322,150
DATA PROCESSING - 0.3%
Ceridian Corp. (a) 87,400 3,725,425 15677T10
PREPACKAGED COMPUTER SOFTWARE - 8.2%
Adobe Systems, Inc. 90,000 3,138,750 00724F10
BMC Software, Inc. (a) 60,700 4,522,150 05592110
Cadence Design Systems, Inc. (a) 157,300 4,660,013 12738710
Computer Associates International, Inc. 75,000 3,937,500 20491210
Electronics for Imaging, Inc. (a) 237,800 15,040,850 28608210
McAfee Associates, Inc. (a) 25,000 1,490,625 57905710
Microsoft Corp. (a) 330,000 40,425,000 59491810
Oracle Systems Corp. (a) 355,100 12,517,275 68389X10
Phoenix Technologies Ltd. (a) 50,000 856,250 71915310
86,588,413
TOTAL COMPUTER SERVICES & SOFTWARE 143,348,466
COMPUTERS & OFFICE EQUIPMENT - 23.4%
COMPUTER PERIPHERALS - 0.7%
Centennial Technologies, Inc. (a) 99,300 3,401,025 15139210
SCI Systems, Inc. (a) 12,000 535,500 78389010
Western Digital Corp. (a) 100,000 3,512,500 95810210
7,449,025
SHARES VALUE (NOTE 1)
COMPUTER STORAGE DEVICES - 6.5%
Adaptec, Inc. (a) 796,690 $ 39,734,914 00651F10
Hutchinson Technology, Inc. (a) 68,200 2,548,975 44840710
Quantum Corp. (a) 64,500 991,688 74790610
Read Rite Corp. (a) 143,500 1,901,375 75524610
Seagate Technology (a) 489,300 23,486,400 81180410
68,663,352
COMPUTERS & OFFICE EQUIPMENT - 5.6%
International Business Machines Corp. 520,700 59,555,063 45920010
ELECTRONIC COMPUTERS - 1.2%
Bay Networks, Inc. (a) 450,000 12,375,000 07251010
GRAPHICS WORKSTATIONS - 2.0%
Silicon Graphics, Inc. (a) 302,200 7,026,150 82705610
Sun Microsystems, Inc. (a) 258,600 14,061,375 86681010
21,087,525
MAGNETIC & OPTICAL RECREATION MEDIA - 0.1%
Caere Corp. (a) 175,000 1,569,531 12764610
MINI & MICRO COMPUTERS - 6.8%
Compaq Computer Corp. (a) 959,800 54,348,675 20449310
Dell Computer Corp. (a) 260,000 17,452,500 24702510
71,801,175
OFFICE AUTOMATION - 0.5%
Pitney Bowes, Inc. 100,000 4,825,000 72447910
TOTAL COMPUTERS & OFFICE EQUIPMENT 247,325,671
DEFENSE ELECTRONICS - 0.7%
Raytheon Co. 100,000 5,150,000 75511110
Tracor, Inc. (a) 100,000 1,937,500 89234920
7,087,500
ELECTRICAL EQUIPMENT - 1.6%
ELECTRICAL EQUIPMENT - 0.3%
Cyberoptics Corp. 115,500 1,501,500 23251710
Vicor Corp. (a) 55,000 1,354,375 92581510
2,855,875
TV & RADIO COMMUNICATION EQUIPMENT - 1.3%
General Instrument Corp. (a) 327,400 8,962,575 37012110
Scientific-Atlanta, Inc. 378,600 5,111,100 80865510
14,073,675
TOTAL ELECTRICAL EQUIPMENT 16,929,550
ELECTRONIC INSTRUMENTS - 1.3%
ELECTRONIC EQUIPMENT - 0.1%
Anadigics, Inc. (a) 50,000 1,600,000 03251510
MEASURING INSTRUMENTS - 1.2%
Perkin-Elmer Corp. 234,700 12,175,063 71404110
TOTAL ELECTRONIC INSTRUMENTS 13,775,063
ELECTRONICS - 28.5%
ELECTRONICS & ELECTRONIC COMPONENTS - 3.6%
Cascade Communications Corp. (a) 459,300 31,289,813 14718410
Cirrus Logic, Inc. 205,000 3,177,500 17275510
Sanmina Corp. (a) 65,000 2,275,000 80090710
Solectron Corp. (a) 50,800 1,898,650 83418210
38,640,963
SEMICONDUCTORS - 24.9%
Actel Corp. (a)(b) 1,484,000 23,744,000 00493410
Altera Corp. (a) 291,000 12,804,000 02144110
Analog Devices, Inc. (a) 290,000 6,996,250 03265410
Burr-Brown Corp. (a) 5,000 96,250 12257410
CFM Technologies, Inc. (a) 40,000 440,000 12525K10
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
ELECTRONICS - CONTINUED
SEMICONDUCTORS - CONTINUED
Intel Corp. 1,197,400 95,567,488 45814010
Intel Corp. (warrants) (a) 534,500 $ 22,382,188 45814014
Lattice Semiconductor Corp. (a) 360,000 10,215,000 51841510
Linear Technology Corp. 1,334,710 45,380,140 53567810
Maxim Integrated Products, Inc. (a) 129,300 3,967,894 57772K10
Mylex Corp. (a) 78,400 1,293,600 62854610
S-3, Inc. (a) 1,460,500 21,542,375 78484910
Sierra Semiconductor Corp. 279,500 3,249,188 82648510
Storage Technology Corp. (a) 35,300 1,336,988 86211120
Triquint Semiconductor, Inc. (a) 207,000 4,165,875 89674K10
Vitesse Semiconductor Corp. (a) 85,000 2,709,375 92849710
Xilinx, Inc. (a) 199,700 6,989,500 98391910
262,880,111
TOTAL ELECTRONICS 301,521,074
LEISURE DURABLES & TOYS - 0.3%
TOYS & GAMES - 0.3%
Nintendo Co. Ltd. Ord. 50,700 3,101,374 65443999
MEDICAL EQUIPMENT & SUPPLIES - 0.7%
MEDICAL TECHNOLOGY - 0.7%
Medtronic, Inc. 65,600 3,411,200 58505510
St. Jude Medical, Inc. (a) 99,900 3,583,913 79084910
6,995,113
TELEPHONE SERVICES - 2.4%
LCI International, Inc. (a) 234,900 8,309,588 50181310
MFS Communications, Inc. 100,000 4,237,500 55272T10
WorldCom, Inc. (a) 625,100 13,127,100 98155K10
25,674,188
TOTAL COMMON STOCKS
(Cost $946,341,075) 988,424,805
CONVERTIBLE BONDS - 0.8%
MOODY'S PRINCIPAL
RATINGS AMOUNT
COMPUTERS & OFFICE EQUIPMENT - 0.8%
COMPUTERS - 0.0%
Acer, Inc. euro 4%, 6/10/01 - $ 100,000 225,000 004993AC
MAINFRAME COMPUTERS - 0.8%
Unisys Corp. 8 1/4%, 8/1/00 B3 9,375,000 8,648,438 909214AX
TOTAL CONVERTIBLE BONDS
(Cost $9,269,206) 8,873,438
REPURCHASE AGREEMENTS - 5.7%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 5.25%, dated
8/30/96 due 9/3/96 $ 59,989,974 59,955,000 69899TYY
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $1,015,565,281) $ 1,057,253,243
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 VALUE
AFFILIATE COST COST INCOME
Actel Corp.. $ 9,989,485 $ 4,633,792 $ - $ 23,744,000
Unitrode Corp.. - 1,808,487 - -
Totals $ 9,989,485 $ 6,442,279 $ - $ 23,744,000
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $1,971,295,013 and $1,891,864,674, respectively (see Note 4 of
Notes to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $235,835 for the period
(see Note 5 of Notes to Financial Statements).
The maximum loan and the average daily loan balance during the period for
which the loan was outstanding amounted to $5,338,000. The weighted average
interest rate paid was 5.8% (see Note 6 of Notes to Financial Statements).
At the period end, the value of securities loaned and the value of
collateral amounted to $2,535,000 and $2,640,000, respectively (see Note 7
of Notes to Financial Statements).
The fund participated in the interfund lending program as a lender. The
maximum loan and average daily balances during the period for which loans
were outstanding amounted to $18,905,000 and $6,781,250, respectively. The
weighted average interest rate was 5.4%. Interest earned from the interfund
lending program amounted to $4,099 and is included in interest income on
the Statement of Operations (see Note 8 of Notes to Financial Statements.)
INCOME TAX INFORMATION
At August 31, 1996, the aggregate cost of investment securities for income
tax purposes was $1,016,526,418. Net unrealized appreciation aggregated
$40,726,825 of which $67,221,782 related to appreciated investment
securities and $26,494,957 related to depreciated investment securities.
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.
ELECTRONICS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1996 (UNAUDITED)
ASSETS
Investment in $ 1,057,253,243
securities, at
value (including
repurchase
agreements of
$59,955,000)
(cost
$1,015,565,281)
- - See
accompanying
schedule
Cash 695
Receivable for 43,504,356
investments
sold
Receivable for 2,951,195
fund shares sold
Dividends 437,855
receivable
Interest receivable 62,638
Redemption fees 7,502
receivable
Other receivables 41,886
Prepaid expenses 44,328
TOTAL ASSETS 1,104,303,698
LIABILITIES
Payable for $ 31,239,575
investments
purchased
Payable for fund 8,082,195
shares
redeemed
Accrued 545,407
management
fee
Other payables 805,380
and
accrued
expenses
Collateral on 2,640,000
securities
loaned,
at value
TOTAL LIABILITIES 43,312,557
NET ASSETS $ 1,060,991,141
Net Assets
consist of:
Paid in capital $ 1,100,186,633
Accumulated net (1,015,866)
investment
(loss)
Accumulated (79,867,588)
undistributed net
realized gain
(loss) on
investments and
foreign currency
transactions
Net unrealized 41,687,962
appreciation
(depreciation)
on investments
NET ASSETS, for $ 1,060,991,141
38,265,235
shares
outstanding
NET ASSET VALUE $27.73
and redemption
price per share
($1,060,991,141
(divided by) 38,265,235
shares)
Maximum offering $28.59
price per share
(100/97.00 of
$27.73)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED AUGUST 31, 1996 (UNAUDITED)
INVESTMENT $ 1,450,117
INCOME
Dividends
Interest (including 4,880,975
income on
securities
loaned of
$96,848)
TOTAL INCOME 6,331,092
EXPENSES
Management fee $ 3,323,685
Transfer agent 3,678,853
fees
Accounting and 399,509
security lending
fees
Non-interested 2,081
trustees'
compensation
Custodian fees 30,300
and expenses
Registration fees 44,328
Audit 56,710
Legal 4,200
Interest 853
Miscellaneous 8,568
Total expenses 7,549,087
before
reductions
Expense (202,129 7,346,958
reductions )
NET INVESTMENT (1,015,866
INCOME (LOSS) )
REALIZED AND 1,773,071
UNREALIZED GAIN
(LOSS)
Net realized gain
(loss) on
investment
securities
(including
realized gain
(loss) of
$2,845,939 on
sale of
investments in
affiliated
issuers)
Change in net (39,490,378
unrealized )
appreciation
(depreciation)
on investment
securities
NET GAIN (LOSS) (37,717,307
)
NET INCREASE $ (38,733,173
(DECREASE) IN )
NET ASSETS
RESULTING FROM
OPERATIONS
OTHER $ 2,823,293
INFORMATION
Sales charges
paid to FDC
Deferred sales $ 3,867
charges
withheld
by FDC
Exchange fees $ 180,323
withheld by FSC
Expense $ 183,529
reductions
Directed
brokerage
arrangements
Custodian 14,367
interest credits
Transfer agent 4,233
interest credits
$ 202,129
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS YEAR ENDED
ENDED FEBRUARY 29,
AUGUST 31, 1996 1996
(UNAUDITED)
Operations $ (1,015,866) $ (2,596,453)
Net investment
income (loss)
Net realized 1,773,071 270,475,690
gain (loss)
Change in net (39,490,378) 60,817,847
unrealized
appreciation
(depreciation)
NET INCREASE (38,733,173) 328,697,084
(DECREASE) IN
NET ASSETS
RESULTING
FROM
OPERATIONS
Distributions to - (151,485,297)
shareholders
from net
realized gains
Share 795,086,087 2,894,540,424
transactions
Net proceeds
from sales of
shares
Reinvestment of - 148,005,751
distributions
Cost of shares (830,868,415) (2,308,922,665)
redeemed
Paid in capital 2,144,848 6,093,960
portion of
redemption fees
NET INCREASE (33,637,480) 739,717,470
(DECREASE) IN
NET ASSETS
RESULTING
FROM SHARE
TRANSACTIONS
TOTAL (72,370,653) 916,929,257
INCREASE
(DECREASE) IN
NET ASSETS
NET ASSETS
Beginning of 1,133,361,794 216,432,537
period
End of period $ 1,060,991,141 $ 1,133,361,794
(including
accumulated net
investment loss
of $1,015,866
and $0,
respectively)
OTHER
INFORMATION
Shares
Sold 28,185,788 99,523,034
Issued in - 6,026,277
reinvestment of
distributions
Redeemed (30,145,088) (76,257,043)
Net increase (1,959,300) 29,292,268
(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> <C>
SIX MONTHS YEAR ENDED YEARS ENDED FEBRUARY 28, TEN MONTHS YEAR ENDED
ENDED FEBRUARY 29, ENDED APRIL 30,
AUGUST 31, 1996 FEBRUARY 28,
SELECTED PER-SHARE DATA D (UNAUDITED) 1996 1995 1994 1993 1992
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Net asset value, $ 28.18 $ 19.80 $ 17.67 $ 14.28 $ 11.81 $ 10.75
beginning of
period
Income from
Investment
Operations
Net investment (.03) (.08) (.18) (.09) (.05) (.12)
income (loss)
Net realized and (.47) 13.51 2.11 6.09 2.33 1.00
unrealized gain
(loss)
Total from (.50) 13.43 1.93 6.00 2.28 .88
investment
operations
Less Distributions
From net - (5.25) - (2.75) - -
realized gain
Redemption fees .05 .20 .20 .14 .19 .18
added to paid in
capital
Net asset value, $ 27.73 $ 28.18 $ 19.80 $ 17.67 $ 14.28 $ 11.81
end of period
TOTAL RETURN B, C (1.60)% 72.75% 12.05% 46.24% 20.91% 9.86%
RATIOS AND
SUPPLEMENTAL
DATA
Net assets, end of $ 1,060,991 $ 1,133,362 $ 216,433 $ 110,993 $ 48,027 $ 34,222
period (000
omitted)
Ratio of expenses 1.36% A 1.25% 1.72% 1.67% 1.69% A 2.16%
to average net
assets
Ratio of expenses 1.32% A, 1.22% 1.71% 1.67% 1.69% A 2.16%
to average net E E E
assets after
expense
reductions
Ratio of net (.18)% A (.28)% (.98)% (.52)% (.50)% A (1.07)%
investment
income (loss) to
average net
assets
Portfolio turnover 379% A 366% 205% 163% 293% A 299%
rate
Average $ .0411
commission
rate F
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <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 9 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 9 OF NOTES TO FINANCIAL STATEMENTS).
F FOR FISCAL YEARS BEGINNING ON
OR AFTER SEPTEMBER 1, 1995, A FUND IS REQUIRED TO DISCLOSE ITS
AVERAGE COMMISSION RATE PER SHARE FOR SECURITY
TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM
PERIOD TO PERIOD AND FUND TO FUND
DEPENDING ON THE MIX OF TRADES EXECUTED IN VARIOUS MARKETS WHERE
TRADING PRACTICES AND COMMISSION RATE
STRUCTURES MAY DIFFER.
</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. A fund's total return includes
changes in 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 6 PAST 1 PAST 5 PAST 10
AUGUST 31, 1996 MONTHS YEAR YEARS YEARS
SOFTWARE AND -0.61% 7.06% 179.71% 431.81%
COMPUTER SERVICES
SOFTWARE AND -3.59% 3.85% 171.32% 415.85%
COMPUTER SERVICES
(INCL. 3% SALES CHARGE)
S&P 500 2.96% 18.73% 89.14% 251.21%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one, five, or 10 years. You
can compare these figures to the performance of the S&P 500 - a widely
recognized, unmanaged index of common stocks. This benchmark reflects
reinvestment of dividends and capital gains, if any, but does not reflect
any sales charges, brokerage commissions, or other costs of investing.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
AUGUST 31, 1996 YEAR YEARS YEARS
SOFTWARE AND COMPUTER SERVICES 7.06% 22.84% 18.19%
SOFTWARE AND COMPUTER SERVICES 3.85% 22.09% 17.83%
(INCL. 3% SALES CHARGE)
S&P 500 18.73% 13.59% 13.34%
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
IMAHDR PRASUN SHR__CHT 19960831 19960910 152925 S00000000000001
Software/Computer Svcs SP Standard & Poor 500
00028 SP001
1986/08/31 9700.00 10000.00
1986/09/30 8957.42 9173.00
1986/10/31 9792.82 9702.28
1986/11/30 10009.41 9938.05
1986/12/31 9785.09 9684.63
1987/01/31 11865.87 10989.15
1987/02/28 12979.74 11423.22
1987/03/31 13196.33 11753.35
1987/04/30 13420.65 11648.74
1987/05/31 13482.54 11750.09
1987/06/30 13010.69 12343.47
1987/07/31 12972.01 12969.28
1987/08/31 13884.77 13453.04
1987/09/30 14031.74 13158.41
1987/10/31 10318.82 10324.09
1987/11/30 9336.44 9473.39
1987/12/31 10708.87 10194.31
1988/01/31 10399.42 10623.49
1988/02/29 11254.50 11118.55
1988/03/31 11352.22 10774.98
1988/04/30 11694.25 10894.59
1988/05/31 11376.65 10989.37
1988/06/30 12272.45 11493.78
1988/07/31 11661.68 11450.10
1988/08/31 10855.46 11060.80
1988/09/30 11555.81 11531.99
1988/10/31 10945.04 11852.58
1988/11/30 10782.17 11683.09
1988/12/31 11677.97 11887.54
1989/01/31 12549.33 12757.71
1989/02/28 11987.42 12440.04
1989/03/31 11694.25 12729.90
1989/04/30 12826.22 13390.58
1989/05/31 13290.40 13932.90
1989/06/30 11974.16 13853.48
1989/07/31 11620.74 15104.45
1989/08/31 12150.87 15400.50
1989/09/30 12394.90 15337.35
1989/10/31 12655.75 14981.53
1989/11/30 13026.00 15287.15
1989/12/31 13085.07 15654.04
1990/01/31 12619.90 14603.66
1990/02/28 12947.24 14792.04
1990/03/31 13464.10 15184.03
1990/04/30 13421.03 14804.43
1990/05/31 15109.42 16247.86
1990/06/30 15462.61 16137.38
1990/07/31 14049.87 16085.74
1990/08/31 12085.82 14631.59
1990/09/30 10698.92 13919.03
1990/10/31 10914.28 13859.18
1990/11/30 12318.40 14754.48
1990/12/31 13197.06 15166.13
1991/01/31 15135.27 15827.37
1991/02/28 16237.89 16959.03
1991/03/31 17159.62 17369.44
1991/04/30 17030.40 17411.13
1991/05/31 17340.52 18163.29
1991/06/30 16069.58 17331.41
1991/07/31 17056.73 18139.05
1991/08/31 18442.53 18568.95
1991/09/30 17835.06 18258.85
1991/10/31 18727.28 18503.51
1991/11/30 16677.06 17757.82
1991/12/31 19247.22 19789.32
1992/01/31 22336.65 19421.24
1992/02/29 23007.83 19673.71
1992/03/31 21902.35 19290.07
1992/04/30 21349.61 19857.20
1992/05/31 21685.20 19954.50
1992/06/30 20510.63 19657.18
1992/07/31 21961.57 20461.16
1992/08/31 20323.09 20041.71
1992/09/30 21793.78 20278.20
1992/10/31 23550.70 20349.17
1992/11/30 25603.74 21043.08
1992/12/31 26087.39 21301.91
1993/01/31 27429.76 21480.84
1993/02/28 27261.96 21772.98
1993/03/31 27844.31 22232.39
1993/04/30 27375.72 21694.37
1993/05/31 30463.29 22275.78
1993/06/30 32034.94 22340.38
1993/07/31 31065.20 22251.02
1993/08/31 33160.73 23094.33
1993/09/30 33829.52 22916.50
1993/10/31 33751.50 23390.88
1993/11/30 32915.51 23168.66
1993/12/31 34626.01 23449.00
1994/01/31 35832.58 24246.27
1994/02/28 36310.18 23589.20
1994/03/31 32413.97 22560.71
1994/04/30 32581.66 22849.48
1994/05/31 29320.95 23224.22
1994/06/30 26748.04 22655.22
1994/07/31 28059.97 23398.31
1994/08/31 31104.15 24357.64
1994/09/30 32517.98 23760.88
1994/10/31 34517.71 24295.50
1994/11/30 33728.01 23410.66
1994/12/31 34759.72 23757.84
1995/01/31 34186.54 24373.88
1995/02/28 37026.93 25323.73
1995/03/31 39141.30 26071.03
1995/04/30 40364.07 26838.83
1995/05/31 41459.46 27911.57
1995/06/30 45127.77 28559.96
1995/07/31 47853.52 29507.01
1995/08/31 48184.69 29581.07
1995/09/30 50171.68 30829.39
1995/10/31 50770.33 30719.33
1995/11/30 52209.63 32067.91
1995/12/31 50841.03 32685.54
1996/01/31 48891.12 33798.15
1996/02/29 51902.01 34111.46
1996/03/31 50582.95 34439.95
1996/04/30 55675.31 34947.60
1996/05/31 57616.61 35848.90
1996/06/30 54741.71 35985.48
1996/07/31 50533.09 34395.64
1996/08/30 51585.24 35121.05
IMATRL PRASUN SHR__CHT 19960831 19960910 152930 R00000000000123
Let's say hypothetically that $10,000 was invested in Fidelity Select
Software and Computer Services Portfolio on August 31, 1986, and a 3% sales
charge was paid. By August 31, 1996, the investment would have grown to
$51,585 - a 415.85% increase. That compares to $10,000 invested in the S&P
500, which would have grown to $35,121 over the same period - a 251.21%
increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST 31, 1996
% OF FUND'S
INVESTMENTS
Microsoft Corp. 7.4
Electronics for Imaging, Inc. 7.3
Oracle Systems Corp. 7.1
Cisco Systems, Inc. 5.8
Intel Corp. 4.6
BMC Software, Inc. 3.6
Tech Data Corp. 3.4
International Business Machines Corp. 3.0
Electronic Arts, Inc. 2.8
SunGard Data Systems, Inc. 2.8
TOP INDUSTRIES AS OF AUGUST 31, 1996
Row: 1, Col: 1, Value: 31.3
Row: 1, Col: 2, Value: 3.4
Row: 1, Col: 3, Value: 6.8
Row: 1, Col: 4, Value: 7.0
Row: 1, Col: 5, Value: 7.2
Row: 1, Col: 6, Value: 44.3
Prepackaged Computer
Software 44.3%
Computer Services 7.2%
Datacommunications
Equipment 7.0%
Semiconductors 6.8%
Retail, General 3.4%
All Others 31.3% *
* 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 DID THE FUND PERFORM, JOHN?
A. For the six months ended August 31, 1996, the fund had a total return of
- -0.61%, while the Standard & Poor's 500 Index returned 2.96%. For the 12
months ended August 31, 1996, the fund returned 7.06% and the S&P 500 had a
total return of 18.73%.
Q. WHAT CAUSED THE FUND TO UNDERPERFORM THE MARKET?
A. The entire technology sector - including software and computer services
stocks - lagged the market primarily due to its weakening business
prospects, including disappointing news on the earnings front. Fidelity's
internal analysis found that in June and July alone, the sector
underperformed the S&P 500 by more than 10% on a market capitalization
weighted basis. The decline in technology stocks was broad-based, with
every sector underperforming the market. In short, there was no place to
hide during the decline. However, software and computer services stocks
rebounded and outperformed the market as a whole in August.
Q. WHICH OF THE FUND'S HOLDINGS WERE HURT MOST DURING THE SUMMER DECLINE?
A. Broderbund Software, a leading publisher and distributor of
entertainment, educational and personal productivity software, was one of
the fund's holdings hardest hit. Its poorer-than-expected financial results
led to dramatic declines in its stock price.
Q. WHICH HOLDINGS WERE BETTER ABLE TO WEATHER THE DOWNTURN?
A. One of the fund's best performers over the past six months was
Electronics for Imaging, Inc. (EFII), which makes a computer server that
allows customers to print documents from computer networks using high-end
color copiers. Early this year, EFII began selling this technology to color
printer vendors including Canon and Digital Equipment Corp. In my view, the
company's management has done a brilliant job, evidenced by earnings which
were significantly higher than many Wall Street analysts had anticipated.
Other top performers included: Oracle Systems, a producer of relational
database and applications software for the client-server market;
PeopleSoft, which provides businesses with software packages to manage
human resource and financial functions; and SunGard Data, which specializes
in proprietary investment-support systems and comprehensive computer
disaster-recovery services. All three managed to deliver
stronger-than-expected revenue growth and increasing profit margins,
despite brutally competitive operating environments.
Q. WHAT WAS THE ATTRACTION TO MICROSOFT, THE FUND'S LARGEST HOLDING AT THE
END OF THE PERIOD?
A. With the introduction of Windows 95 about a year ago, Microsoft
successfully overwhelmed all of its key competitors and became the dominant
leader in many areas. A year ago, Apple's MacIntosh still had some life
left, as did IBM's OS/2 operating system. Likewise, Word Perfect's
applications business and Novell's networking business looked like they may
cause some competition for Microsoft. Despite a slower-than-expected
acceptance of Windows 95, Microsoft currently enjoys almost complete
control of desktop operating systems and productivity applications, and is
rapidly penetrating the server operating system and database markets with
Windows NT Server and NT SQL Software.
Q. WHAT OTHER STOCKS DID YOU FIND ATTRACTIVE?
A. I added Intel to the fund's holdings for two reasons. First, demand for
personal computers was showing signs of strengthening, which translated
into increased demand for Intel's products. Second, like Microsoft, Intel
did a good job fending off competitors. With recent problems at two of its
largest competitors, Intel was able to raise prices, which helped its
revenues. A new addition to the fund's top ten holdings during the period
was Tech Data Corporation, which resells computers, networking, software
and peripherals to value-added resellers and retail stores. The company's
management team has delivered outstanding results over the past year,
growing revenues more than 50% and sharply increasing operating margins.
Q. WHAT'S YOUR OUTLOOK?
A. The sharp decline in technology stocks in June and July did take some
hot air out of the inflated valuations - stock prices compared to other
measures, such as earnings - of many software names, and seemed to cool the
past year's frenzy over technology initial public offerings (IPOs). The
50-60% declines in several of these stocks this summer did not make them
cheap, but the correction was certainly a step in the right direction. In
many cases, the revaluation was short-lived, with many high-quality names
climbing back up in August. Still, somewhat better valuations and
measurably better business prospects leave me more optimistic about the
success of technology and client-server computing for the months ahead.
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: July 29, 1985
FUND NUMBER: 028
TRADING SYMBOL: FSCSX
SIZE: as of August 31, 1996, more than
$367 million
MANAGER: John Hurley, since 1994; analyst,
PC software, database software and
mainframe software industries, since 1994;
joined Fidelity in 1993
(checkmark)
SOFTWARE AND COMPUTER SERVICES PORTFOLIO
INVESTMENTS AUGUST 31, 1996 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 94.2%
SHARES VALUE (NOTE 1)
COMMUNICATIONS EQUIPMENT - 7.0%
DATACOMMUNICATIONS EQUIPMENT - 7.0%
Cisco Systems, Inc. (a) 420,000 $ 22,155,000 17275R10
3Com Corp. 100,000 4,675,000 88553510
26,830,000
COMPUTER SERVICES & SOFTWARE - 55.1%
CAD/CAM/CAE - 0.0%
New Dimension Software Ltd. (a) 7,500 42,188 64399A22
COMPUTER SERVICES - 7.2%
American Management Systems, Inc. (a) 150,000 3,806,247 02735210
Electronic Data Systems Corp. 150,000 8,175,000 28566110
Paychex, Inc. 93,750 5,015,625 70432610
SunGard Data Systems, Inc. (a) 250,000 10,687,500 86736310
27,684,372
DATA PROCESSING - 1.8%
Fiserv, Inc. (a) 200,000 6,775,000 33773810
ELECTRONIC INFORMATION RETRIEVAL - 1.8%
CUC International, Inc. (a) 199,307 6,851,178 12654510
PREPACKAGED COMPUTER SOFTWARE - 44.3%
Arbor Software Corp. (a) 200 8,400 03891810
Aspect Development, Inc. (a) 2,000 52,500 04523410
BMC Software, Inc. (a) 185,000 13,782,500 05592110
Boole & Babbage, Inc. (a) 152,250 3,615,938 09858610
Broderbund Software, Inc. (a) 201,600 6,073,200 11201410
Business Objects SA sponsored ADR (a) 19,900 353,225 12328X10
Check Point Software
Technologies Ltd. (a) 2,000 49,000 16299A22
Cheyenne Software, Inc. (a) 300,000 5,550,000 16688810
Electronic Arts, Inc. (a) 350,000 10,806,250 28551210
Electronics for Imaging, Inc. (a) 441,000 27,893,250 28608210
General Magic, Inc. (a) 89,400 368,775 37025310
Hyperion Software, Inc. (a) 37,600 498,200 44914Q10
Mercury Interactive Group Corp. (a) 474,400 6,641,600 58940510
Metrowerks, Inc. (a) 108,300 1,147,707 59266R10
Microsoft Corp. (a) 230,000 28,175,000 59491810
OneWave, Inc. (a) 2,000 30,000 68272R10
Openvision Technologies, Inc. (a) 2,000 18,750 68371610
Oracle Systems Corp. (a) 772,800 27,241,200 68389X10
PeopleSoft, Inc. (a) 113,000 8,672,750 71271310
Policy Management Systems Corp. (a) 129,200 4,554,300 73110810
Remedy Corp. (a) 9,000 409,500 75954810
Restrac, Inc. (a) 110,000 1,416,250 76126W10
Scopus Technology, Inc. (a) 365,000 6,661,250 80917210
Software 2000, Inc. (a) 50,000 556,250 83404710
Spectrum Holobyte, Inc. (a) 342,800 1,756,850 84762J10
Sybase, Inc. (a) 269,200 4,336,644 87113010
Vantive Corp. (a) 135,400 5,957,600 92209110
VMARK Software, Inc. (a) 356,000 2,759,000 92856110
169,385,889
TOTAL COMPUTER SERVICES & SOFTWARE 210,738,627
COMPUTERS & OFFICE EQUIPMENT - 14.9%
COMPUTER EQUIPMENT - WHOLESALE - 3.4%
Tech Data Corp. (a) 490,000 12,985,000 87823710
COMPUTER PERIPHERALS - 2.3%
Fore Systems, Inc. 250,000 8,875,000 34544910
COMPUTER STORAGE DEVICES - 1.0%
Adaptec, Inc. (a) 79,100 3,945,113 00651F10
SHARES VALUE (NOTE 1)
COMPUTERS & OFFICE EQUIPMENT - 3.0%
International Business Machines Corp. 100,000 $ 11,437,500 45920010
ELECTRONIC COMPUTERS - 1.9%
Auspex Systems, Inc. (a) 250,000 3,937,500 05211610
Bay Networks, Inc. 125,000 3,437,500 07251010
7,375,000
MINI & MICRO COMPUTERS - 3.3%
Compaq Computer Corp. (a) 100,000 5,662,500 20449310
Dell Computer Corp. 100,000 6,712,500 24702510
12,375,000
TOTAL COMPUTERS & OFFICE EQUIPMENT 56,992,613
ELECTRICAL EQUIPMENT - 1.5%
TV & RADIO COMMUNICATION EQUIPMENT - 1.5%
Avid Technology, Inc. (a) 300,000 5,550,000 05367P10
ELECTRONICS - 9.5%
ELECTRONICS & ELECTRONIC COMPONENTS - 2.7%
Cascade Communications Corp. (a) 150,000 10,218,750 14718410
SEMICONDUCTORS - 6.8%
Intel Corp. 220,000 17,558,750 45814010
Intel Corp. (warrants) (a) 117,000 4,899,375 45814014
S-3, Inc. 250,000 3,687,500 78484910
26,145,625
TOTAL ELECTRONICS 36,364,375
LEISURE DURABLES & TOYS - 2.1%
TOYS & GAMES - 2.1%
Nintendo Co. Ltd. Ord. 129,800 7,940,005 65443999
PHOTOGRAPHIC EQUIPMENT - 0.7%
3D Systems Corp. (a) 186,600 2,810,663 88554D20
RETAIL & WHOLESALE, MISCELLANEOUS - 3.4%
RETAIL, GENERAL - 3.4%
Office Depot, Inc. 200,000 3,175,000 67622010
Staples, Inc. (a) 500,000 9,875,000 85503010
13,050,000
TOTAL COMMON STOCKS
(Cost $338,592,466) 360,276,283
REPURCHASE AGREEMENTS - 5.8%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 5.25%, dated
8/30/96 due 9/3/96 $ 22,027,842 22,015,000 69899TYY
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $360,607,466) $ 382,291,283
LEGEND
1. Non-income producing
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $652,433,006 and $558,974,429, respectively (see Note 4 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $48,561 for the period (see
Note 5 of Notes to Financial Statements).
The fund participated in the interfund lending program as a lender. The
maximum loan and the average daily balance during the period for which the
loan was outstanding amounted to $25,562,000. The weighted average interest
rate was 5.5%. Interest earned from the interfund lending program amounted
to $3,880 and is included in interest income on the statement of operations
(see Note 8 of Notes to Financial Statements).
INCOME TAX INFORMATION
At August 31, 1996, the aggregate cost of investment securities for income
tax purposes was $360,607,466. Net unrealized appreciation aggregated
$21,683,817, of which $38,078,278 related to appreciated investment
securities and $16,394,461 related to depreciated investment securities.
SOFTWARE AND COMPUTER SERVICES PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1996 (UNAUDITED)
ASSETS
Investment in $ 382,291,283
securities, at
value (including
repurchase
agreements of
$22,015,000)
(cost
$360,607,466)
- - See
accompanying
schedule
Cash 81
Receivable for 15,612,901
investments
sold
Receivable for 492,296
fund shares sold
Dividends 57,500
receivable
Redemption fees 583
receivable
Other receivables 85,117
Prepaid expenses 55,341
TOTAL ASSETS 398,595,102
LIABILITIES
Payable for $ 29,114,968
investments
purchased
Payable for fund 1,427,962
shares
redeemed
Accrued 189,552
management
fee
Other payables 374,838
and
accrued
expenses
TOTAL LIABILITIES 31,107,320
NET ASSETS $ 367,487,782
Net Assets
consist of:
Paid in capital $ 336,117,919
Accumulated net (994,107
investment )
(loss)
Accumulated 10,680,153
undistributed net
realized gain
(loss) on
investments and
foreign currency
transactions
Net unrealized 21,683,817
appreciation
(depreciation)
on investments
NET ASSETS, for $ 367,487,782
10,557,374
shares
outstanding
NET ASSET VALUE $34.81
and redemption
price per share
($367,487,782 (divided by)
10,557,374
shares)
Maximum offering $35.89
price per share
(100/97.00 of
$34.81)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED AUGUST 31, 1996 (UNAUDITED)
INVESTMENT $ 455,850
INCOME
Dividends
Interest 1,713,490
TOTAL INCOME 2,169,340
EXPENSES
Management fee $ 1,281,909
Transfer agent 1,619,839
fees
Accounting and 210,296
security lending
fees
Non-interested 838
trustees'
compensation
Custodian fees 13,325
and expenses
Registration fees 64,607
Audit 21,585
Legal 1,818
Miscellaneous 3,138
Total expenses 3,217,355
before
reductions
Expense (53,908 3,163,447
reductions )
NET INVESTMENT (994,107
INCOME (LOSS) )
REALIZED AND
UNREALIZED GAIN
(LOSS)
Net realized gain
(loss) on:
Investment 12,118,314
securities
Foreign (1,790 12,116,524
currency )
transactions
Change in net (22,775,450
unrealized )
appreciation
(depreciation)
on investment
securities
NET GAIN (LOSS) (10,658,926
)
NET INCREASE $ (11,653,033
(DECREASE) IN )
NET ASSETS
RESULTING FROM
OPERATIONS
OTHER $ 1,134,204
INFORMATION
Sales charges
paid to FDC
Deferred sales $ 2,681
charges
withheld
by FDC
Exchange fees $ 92,370
withheld by FSC
Expense $ 52,836
reductions
Directed
brokerage
arrangements
Custodian 390
interest credits
Transfer agent 682
interest credits
$ 53,908
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS YEAR ENDED
ENDED FEBRUARY 29,
AUGUST 31, 1996 1996
(UNAUDITED)
Operations $ (994,107 $ (1,677,670
Net investment ) )
income (loss)
Net realized 12,116,524 78,787,493
gain (loss)
Change in net (22,775,450 11,995,871
unrealized )
appreciation
(depreciation)
NET INCREASE (11,653,033 89,105,694
(DECREASE) IN )
NET ASSETS
RESULTING
FROM
OPERATIONS
Distributions to (10,599,684 (42,462,985
shareholders ) )
from net
realized gains
Share 403,125,681 441,404,241
transactions
Net proceeds
from sales of
shares
Reinvestment of 10,437,700 41,961,776
distributions
Cost of shares (361,989,918 (429,413,822
redeemed ) )
Paid in capital 533,739 593,307
portion of
redemption fees
NET INCREASE 52,107,202 54,545,502
(DECREASE) IN
NET ASSETS
RESULTING
FROM SHARE
TRANSACTIONS
TOTAL 29,854,485 101,188,211
INCREASE
(DECREASE) IN
NET ASSETS
NET ASSETS
Beginning of 337,633,297 236,445,086
period
End of period $ 367,487,782 $ 337,633,297
(including
accumulated net
investment loss
of $994,107 and
$0, respectively)
OTHER
INFORMATION
Shares
Sold 10,856,798 12,357,143
Issued in 302,192 1,146,186
reinvestment of
distributions
Redeemed (9,928,836 (12,309,713
) )
Net increase 1,230,154 1,193,616
(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> <C>
SIX MONTHS YEAR ENDED YEARS ENDED FEBRUARY 28, TEN MONTHS YEAR ENDED
ENDED FEBRUARY 29, ENDED APRIL 30,
AUGUST 31, 1996 FEBRUARY 28,
SELECTED PER-SHARE DATA D (UNAUDITED) 1996 1995 1994 1993 1992
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Net asset value, $ 36.20 $ 29.07 $ 28.89 $ 27.62 $ 21.63 $ 19.77
beginning of
period
Income from
Investment
Operations
Net investment (.09) (.19) (.26) (.34) (.07) E (.28)
income (loss)
Net realized and (.19) 11.85 .67 7.92 5.88 4.37
unrealized gain
(loss)
Total from (.28) 11.66 .41 7.58 5.81 4.09
investment
operations
Less Distributions
From net (1.16) (4.60) (.33) (6.48) - (2.50)
realized gain
Redemption fees .05 .07 .10 .17 .18 .27
added to paid in
capital
Net asset value, $ 34.81 $ 36.20 $ 29.07 $ 28.89 $ 27.62 $ 21.63
end of period
TOTAL RETURN B, C (.61)% 40.17% 1.97% 33.19% 27.69% 25.36%
RATIOS AND
SUPPLEMENTAL
DATA
Net assets, end of $ 367,488 $ 337,633 $ 236,445 $ 178,034 $ 151,212 $ 89,571
period (000
omitted)
Ratio of expenses 1.51% A 1.48% 1.52% 1.57% 1.64% A 1.98%
to average net
assets
Ratio of expenses 1.48% A, 1.47% 1.50% 1.57% 1.64% A 1.98%
to average net F F F
assets after
expense
reductions
Ratio of net (.47)% A (.54)% (1.01)% (1.19)% (.37)% (1.30)%
investment A
income (loss) to
average net
assets
Portfolio turnover 307% A 183% 164% 376% 402% A 348%
rate
Average $ .0446
commission
rate G
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <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 9 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 9 OF NOTES TO FINANCIAL
STATEMENTS). G FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER
1, 1995, A FUND IS REQUIRED TO
DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR SECURITY TRADES
ON WHICH COMMISSIONS ARE
CHARGED. THIS AMOUNT MAY VARY FROM PERIOD TO PERIOD AND FUND TO
FUND DEPENDING ON THE MIX OF
TRADES EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND
COMMISSION RATE STRUCTURES MAY
DIFFER.
</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. A fund's total return includes
changes in 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 6 PAST 1 PAST 5 PAST 10
AUGUST 31, 1996 MONTH YEAR YEARS YEARS
S
TECHNOLOGY -11.29% -9.06% 139.84% 265.52%
TECHNOLOGY -13.95% -11.79% 132.64% 254.55%
(INCL. 3% SALES CHARGE)
S&P 500 2.96% 18.73% 89.14% 251.21%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one, five, or 10 years. You
can compare these figures to the performance of the S&P 500 - a widely
recognized, unmanaged index of common stocks. This benchmark reflects
reinvestment of dividends and capital gains, if any, but does not reflect
any sales charges, brokerage commissions, or other costs of investing.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
AUGUST 31, 1996 YEAR YEARS YEARS
TECHNOLOGY -9.06% 19.12% 13.84%
TECHNOLOGY -11.79% 18.40% 13.49%
(INCL. 3% SALES CHARGE)
S&P 500 18.73% 13.59% 13.34%
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
IMAHDR PRASUN SHR__CHT 19960831 19960916 104737 S00000000000001
Technology SP Standard & Poor 500
00064 SP001
1986/08/31 9700.00 10000.00
1986/09/30 8841.22 9173.00
1986/10/31 9348.04 9702.28
1986/11/30 9718.77 9938.05
1986/12/31 9512.29 9684.63
1987/01/31 11286.16 10989.15
1987/02/28 12562.60 11423.22
1987/03/31 11849.30 11753.35
1987/04/30 12191.87 11648.74
1987/05/31 12468.75 11750.09
1987/06/30 12098.02 12343.47
1987/07/31 12220.03 12969.28
1987/08/31 12938.03 13453.04
1987/09/30 13003.73 13158.41
1987/10/31 8428.25 10324.09
1987/11/30 7330.14 9473.39
1987/12/31 8391.96 10194.31
1988/01/31 7939.41 10623.49
1988/02/29 8726.46 11118.55
1988/03/31 8633.00 10774.98
1988/04/30 8962.58 10894.59
1988/05/31 8716.62 10989.37
1988/06/30 9518.43 11493.78
1988/07/31 8810.08 11450.10
1988/08/31 7998.43 11060.80
1988/09/30 8214.87 11531.99
1988/10/31 7875.46 11852.58
1988/11/30 7639.34 11683.09
1988/12/31 8165.68 11887.54
1989/01/31 8824.84 12757.71
1989/02/28 8583.81 12440.04
1989/03/31 8426.40 12729.90
1989/04/30 9036.36 13390.58
1989/05/31 9774.22 13932.90
1989/06/30 8908.47 13853.48
1989/07/31 9065.88 15104.45
1989/08/31 9262.64 15400.50
1989/09/30 9484.00 15337.35
1989/10/31 9415.13 14981.53
1989/11/30 9439.73 15287.15
1989/12/31 9552.87 15654.04
1990/01/31 9356.10 14603.66
1990/02/28 9882.44 14792.04
1990/03/31 10344.84 15184.03
1990/04/30 9877.53 14804.43
1990/05/31 11151.57 16247.86
1990/06/30 11249.95 16137.38
1990/07/31 10649.82 16085.74
1990/08/31 9198.69 14631.59
1990/09/30 8416.56 13919.03
1990/10/31 8657.59 13859.18
1990/11/30 9956.23 14754.48
1990/12/31 10556.36 15166.13
1991/01/31 12337.07 15827.37
1991/02/28 12961.79 16959.03
1991/03/31 13999.72 17369.44
1991/04/30 13311.05 17411.13
1991/05/31 14048.91 18163.29
1991/06/30 12686.00 17331.41
1991/07/31 14090.62 18139.05
1991/08/31 14783.03 18568.95
1991/09/30 14857.22 18258.85
1991/10/31 15257.83 18503.51
1991/11/30 14758.30 17757.82
1991/12/31 16781.59 19789.32
1992/01/31 17419.81 19421.24
1992/02/29 17691.91 19673.71
1992/03/31 16286.85 19290.07
1992/04/30 16049.37 19857.20
1992/05/31 16207.69 19954.50
1992/06/30 15048.99 19657.18
1992/07/31 15815.75 20461.16
1992/08/31 15005.79 20041.71
1992/09/30 15740.15 20278.20
1992/10/31 16668.90 20349.17
1992/11/30 18018.83 21043.08
1992/12/31 18245.62 21301.91
1993/01/31 18801.79 21480.84
1993/02/28 18693.79 21772.98
1993/03/31 18936.78 22232.39
1993/04/30 18882.48 21694.37
1993/05/31 20787.45 22275.78
1993/06/30 21802.64 22340.38
1993/07/31 21223.38 22251.02
1993/08/31 22358.00 23094.33
1993/09/30 22704.36 22916.50
1993/10/31 22256.49 23390.88
1993/11/30 22041.51 23168.66
1993/12/31 23473.00 23449.00
1994/01/31 24654.83 24246.27
1994/02/28 25351.81 23589.20
1994/03/31 24497.26 22560.71
1994/04/30 24003.85 22849.48
1994/05/31 24041.70 23224.22
1994/06/30 22004.58 22655.22
1994/07/31 22856.01 23398.31
1994/08/31 25265.22 24357.64
1994/09/30 25139.09 23760.88
1994/10/31 26078.81 24295.50
1994/11/30 25719.32 23410.66
1994/12/31 26085.11 23757.84
1995/01/31 25069.71 24373.88
1995/02/28 26520.29 25323.73
1995/03/31 28134.84 26071.03
1995/04/30 30255.39 26838.83
1995/05/31 31425.81 27911.57
1995/06/30 34345.36 28559.96
1995/07/31 37817.61 29507.01
1995/08/31 38988.04 29581.07
1995/09/30 40782.68 30829.39
1995/10/31 40171.46 30719.33
1995/11/30 39963.39 32067.91
1995/12/31 37512.18 32685.54
1996/01/31 37892.35 33798.15
1996/02/29 39968.64 34111.46
1996/03/31 36876.13 34439.95
1996/04/30 40051.80 34947.60
1996/05/31 41138.07 35848.90
1996/06/30 38211.78 35985.48
1996/07/31 34132.70 34395.64
1996/08/30 35455.45 35121.05
IMATRL PRASUN SHR__CHT 19960831 19960916 104743 R00000000000123
Let's say hypothetically that $10,000 was invested in Fidelity Select
Technology Portfolio on August 31, 1986, and a 3% sales charge was paid. By
August 31, 1996, the investment would have grown to $35,455 - a 254.55%
increase. That compares to $10,000 invested in the S&P 500, which would
have grown to $35,121 over the same period - a 251.21% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST 31, 1996
% OF FUND'S
INVESTMENTS
Ascend Communications, Inc. 10.0
Cisco Systems, Inc. 6.6
Compaq Computer Corp. 4.4
Intel Corp. 4.0
Bay Networks, Inc. 3.2
Dell Computer Corp. 2.4
Intel Corp. (warrants) 2.2
Electronic Arts, Inc. 2.1
Tellabs, Inc. 1.9
Computer Sciences Corp. 1.8
TOP INDUSTRIES AS OF AUGUST 31, 1996
Telephone Equipment 14.8%
Prepackaged Computer
Software 10.6%
Semiconductors 9.5%
Datacommunications
Equipment 9.5%
Mini & Micro Computers 6.8%
All Others 48.8% *
Row: 1, Col: 1, Value: 48.8
Row: 1, Col: 2, Value: 6.8
Row: 1, Col: 3, Value: 9.5
Row: 1, Col: 4, Value: 9.5
Row: 1, Col: 5, Value: 10.6
Row: 1, Col: 6, Value: 14.8
* INCLUDES SHORT-TERM INVESTMENTS
TECHNOLOGY PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
NOTE TO SHAREHOLDERS: Adam Hetnarski became Portfolio Manager of Fidelity
Select Technology Portfolio on March 26, 1996
Q. ADAM, HOW DID THE FUND PERFORM?
A. The fund had a total return of -11.29% for the six months ended August
31, 1996. That compares with 2.96% for the Standard & Poor's 500 Index. For
the 12 months ended August 31, 1996, the fund's total return was -9.06%,
while the S&P 500 returned 18.73%.
Q. WHAT CAUSED THE FUND TO UNDERPERFORM THE MARKET?
A. Well, technology stocks had a dramatic correction during the period,
particularly from May through June of this year. Much of the volatility in
the technology sector occurred in networking companies, where the
portfolio's significant investments in both data and voice networking
stocks hurt performance over the period.
Q. THE FUND'S MOVE INTO NETWORKING STOCKS HAD ALREADY STARTED BEFORE YOU
BEGAN MANAGING THE PORTFOLIO . . .
A. That's right, and I continued to add to those positions during the
period. As a group, their growth rates compared to price-earnings ratios
have been strong, and many of them have been trading at or below the
mid-point of their historical price average. I believed that justified the
valuations of companies such as 3Com and Cisco Systems, despite the fact
that their volatility caused them to fall further than the overall tech
market.
Q. WHERE ELSE DID YOU FIND OPPORTUNITIES FOR THE FUND?
A. Although I didn't make dramatic changes to the portfolio's direction, I
did focus some of the fund's investments in telecommunications equipment
stocks. I believed that those stocks could benefit from the advent of
personal communications services (PCS). PCS will integrate data and voice
transmission, and that could stimulate significant growth in digital and
cellular capabilities. Now, because data traffic is proving to be more
band-width intensive than was previously thought, I believe that we could
see greater demand for telecommunications equipment for central office
sites. In turn, that could help the equipment stocks, such as Tellabs,
Lucent Technologies and Ascend Communications, that I've added to or
increased in the fund.
Q. LET'S COVER YOUR THOUGHTS BEHIND A COUPLE OF THE OTHER TOP 10 HOLDINGS
IN THE FUND.
A. Sure. While I've reduced the fund's holdings in some semiconductor
stocks, Intel became an important position in the portfolio. It was my
belief that, should personal computer prices remain fairly stable through
the year, companies that produce proprietary products, such as
computer-chipmaker Intel, may find opportunities to sustain their margins
and garner a greater percentage of the total PC sale. Electronic Arts
became a top holding during the period, based on my analysis that makers of
both cartridge and PC-based 32- and 64-bit computer games have shrugged off
the lethargy that's affected them since the end of the previous 16-bit
cycle in 1993.
Q. WHAT PARTICULAR STOCKS OR AREAS WERE DISAPPOINTMENTS DURING THE PERIOD?
A. Ascend Communications was one. The problem there was that, even though
it's had strong recent earnings growth, the rate of growth has slowed
somewhat from exceptionally high levels. Also in the area of computer
services, Electronic Data Systems (EDS) and Computer Sciences Corp. both
garnered their fair share of some of the big service deals that have
happened recently, but their stock prices did not get the boost I might
have expected. As a result, they were also relative underperformers within
the technology sector.
Q. WHAT'S THE OUTLOOK, ADAM?
A. I'd say that I'm more optimistic now than I was earlier in the year. I'm
looking forward to a good Christmas season for PC units, which could create
a ripple effect throughout many of the technology areas, from software and
semiconductors to games and equipment.
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: July 14, 1981
FUND NUMBER: 064
TRADING SYMBOL: FSPTX
SIZE: as of August 31, 1996, more than
$417 million
MANAGER: Adam Hetnarski, since March 1996;
joined Fidelity in 1991
(checkmark)
TECHNOLOGY PORTFOLIO
INVESTMENTS AUGUST 31, 1996 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 94.4%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 0.9%
AIRCRAFT - 0.9%
Boeing Co. 30,000 $ 2,715,000 09702310
Lockheed Martin Corp. 10,100 849,663 53983010
McDonnell Douglas Corp. 1,000 50,110 53983010
3,614,773
AIR TRANSPORTATION - 0.2%
AIR TRANSPORT, MAJOR NATIONAL - 0.2%
AMR Corp. 10,000 820,000 00176510
CELLULAR - 2.0%
CELLULAR & COMMUNICATION SERVICES - 2.0%
AirTouch Communications, Inc. 114,200 3,140,500 00949T10
Arch Communications Group, Inc. 192,900 2,628,263 03938110
Paging Network, Inc. 40,000 705,000 69554210
360 Degrees Communications Co. 31,100 742,513 88557110
Vanguard Cellular Systems, Inc.
Class A 54,540 1,043,078 92202210
8,259,354
COMMUNICATIONS EQUIPMENT - 25.1%
DATACOMMUNICATIONS EQUIPMENT - 9.5%
Amati Communications Corp. 218,500 3,796,438 02311510
Cabletron Systems, Inc. 10,500 640,500 12692010
Cisco Systems, Inc. (a) 527,200 27,809,800 17275R10
Digital Link Corp. 144,800 2,244,400 25385610
Dynatech Corp. 10,000 392,500 26813810
Network General Corp. (a) 118,800 2,019,600 64121010
Olicom A/S 74,300 984,475 68099A92
3Com Corp. 43,000 2,010,250 88553510
39,897,963
TELEPHONE EQUIPMENT - 14.8%
Ascend Communications, Inc. (a) 803,200 42,067,600 04349110
DSC Communications Corp. 100 2,975 23331110
Dialogic Corp. 100 3,563 25249910
Ericsson (L.M.) Telephone Co.
Class B ADR 75,000 1,729,688 29482140
Lucent Technologies, Inc. 55,000 2,028,125
Octel Communications Corp. 20,000 582,500 67572410
Pairgain Technologies, Inc. 105,400 6,982,750 69593410
Tellabs, Inc. (a) 125,300 7,940,888 87966410
Xylan Corp. 20,000 845,000 98415110
62,183,089
TELEPHONE INTERCONNECT SYSTEMS - 0.8%
ACT Networks, Inc. 143,400 3,549,150 00097510
TOTAL COMMUNICATIONS EQUIPMENT 105,630,202
COMPUTER SERVICES & SOFTWARE - 21.1%
CAD/CAM/CAE - 2.3%
BBN Corp. 62,800 1,153,950 05528310
Broadway & Seymour, Inc. 385,800 4,677,825 11143310
Cambridge Technology Partners
Mass., Inc. 3,500 98,875 13252410
Computer Data Systems, Inc. 9,500 210,188 20501710
Interlink Computer Sciences, Inc. 26,000 250,250 45874710
Parametric Technology Corp. 17,500 792,422 69917310
Viewlogic Systems, Inc. 183,600 2,363,850 92672110
9,547,360
SHARES VALUE (NOTE 1)
COMPUTER & SOFTWARE STORES - 0.4%
MicroAge, Inc. (a) 107,500 $ 1,612,500 59492810
COMPUTER SERVICES - 4.9%
America Online, Inc. 100 3,025 02364J10
American Management Systems, Inc. 101,500 2,575,563 02735210
Computer Sciences Corp. 110,000 7,700,000 20536310
Electronic Data Systems Corp. 20,000 1,090,000 28566110
HBO & Co. 82,400 4,501,100 40410010
IDX Systems Corp. 9,000 261,000 44949110
SunGard Data Systems, Inc. 28,400 1,214,100 86736310
Technology Solutions, Inc. 112,300 3,312,850 87872T10
Visioneer, Inc. 9,200 67,850 92830V10
20,725,488
CUSTOM COMPUTER PROGRAMMING SERVICES - 1.7%
Analysts International Corp. 49,700 1,826,475 03268110
CACI International, Inc. Class A 131,100 2,195,925 12719030
Softdesk, Inc. (a)(b) 439,200 3,184,200 83402010
7,206,600
DATA PROCESSING - 0.3%
Ceridian Corp. 30,900 1,317,113 15677T10
ELECTRONIC INFORMATION RETRIEVAL - 0.9%
CUC International, Inc. 112,500 3,867,188 12654510
PREPACKAGED COMPUTER SOFTWARE - 10.6%
Acclaim Entertainment, Inc. (a) 125,000 1,015,625 00432520
Arbor Software Corp. 10,100 424,200 03891810
Baan Co. NV 55,000 1,753,125 11499523
Broderbund Software, Inc. (a) 4,500 135,563 11201410
Business Objects SA sponsored ADR 100 1,775 12328X10
Cadence Design Systems, Inc. 90,000 2,666,250 12738710
Citrix Systems, Inc. 32,800 1,377,600 17737610
Computer Associates International, Inc. 55,000 2,887,500 20491210
Electronic Arts, Inc. 290,900 8,981,538 28551210
GT Interactive Software, Inc. 39,100 664,700 36236E10
HPR, Inc. 117,500 2,026,875 40391210
Maxis, Inc. 200 2,300 57772X10
Microsoft Corp. (a) 28,200 3,454,500 59491810
Netscape Communications Corp. 6,100 215,788 64114910
Optika Imaging Systems, Inc. 30,000 213,750 68397310
Oracle Systems Corp. (a) 210,950 7,435,988 68389X10
PeopleSoft, Inc. 36,800 2,824,400 71271310
Raptor Systems, Inc. 50,000 850,000 75381710
Softkey International, Inc. (a) 199,672 3,469,301 83402N10
Spectrum Holobyte, Inc. (a) 709,900 3,638,238 84762J10
Vantive Corp. 6,200 272,800 92209110
44,311,816
TOTAL COMPUTER SERVICES & SOFTWARE 88,588,065
COMPUTERS & OFFICE EQUIPMENT - 20.6%
COMPUTER PERIPHERALS - 1.2%
Applied Magnetics Corp. 130,000 1,901,250 03821310
Fore Systems, Inc. 31,900 1,132,450 34544910
SCI Systems, Inc. (a) 10,100 450,713 78389010
Safeguard Scientifics, Inc. 10,000 322,500 78644910
Western Digital Corp. 35,200 1,236,400 95810210
5,043,313
COMPUTER RENTAL & LEASING - 1.0%
Comdisco, Inc. 164,350 4,273,100 20033610
COMPUTER STORAGE DEVICES - 4.2%
Adaptec, Inc. 124,400 6,204,450 00651F10
Exabyte Corp. 171,800 2,534,050 30061510
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
COMPUTERS & OFFICE EQUIPMENT - CONTINUED
COMPUTER STORAGE DEVICES - CONTINUED
Hutchinson Technology, Inc. (a) 105,300 $ 3,935,588 44840710
Read Rite Corp. (a) 204,500 2,709,625 75524610
Seagate Technology (a) 44,700 2,145,600 81180410
17,529,313
COMPUTERS & OFFICE EQUIPMENT - 2.5%
Diebold, Inc. 22,500 1,155,938 25365110
Hewlett-Packard Co. 160,200 7,008,750 42823610
International Business Machines Corp. 22,300 2,550,563 45920010
10,715,251
ELECTRONIC COMPUTERS - 3.2%
Bay Networks, Inc. (a) 490,000 13,475,000 07251010
GRAPHICS WORKSTATIONS - 0.1%
Intergraph Corp. 32,200 293,825 45868310
Sun Microsystems, Inc. 6,000 326,250 86681010
620,075
MAINFRAME COMPUTERS - 0.7%
Amdahl Corp. 95,000 944,063 02390510
Unisys Corp. 306,000 1,797,750 90921410
2,741,813
MINI & MICRO COMPUTERS - 6.8%
Compaq Computer Corp. (a) 324,500 18,374,813 20449310
Dell Computer Corp. (a) 149,200 10,015,050 24702510
28,389,863
OFFICE AUTOMATION - 0.9%
FileNet Corp. 154,600 3,710,400 31686910
Pitney Bowes, Inc. 100 4,825 72447910
Telxon Corp. 100 1,175 87970010
3,716,400
TOTAL COMPUTERS & OFFICE EQUIPMENT 86,504,128
CONSUMER DURABLES - 0.2%
MANUFACTURING INDUSTRIES - 0.2%
Wireless Telecom Group, Inc. 110,000 983,125 97652410
PRESSED & BLOWN GLASS - 0.0%
Dupont Photomasks, Inc. 2,000 46,000 26613X10
TOTAL CONSUMER DURABLES 1,029,125
DRUGS & PHARMACEUTICALS - 7.1%
BIOTECHNOLOGY - 2.4%
Alkermes, Inc. 85,000 1,126,250 01642T10
Amgen, Inc. (a) 17,300 1,007,725 03116210
Biogen, Inc. 53,900 3,759,525 09059710
COR Therapeutics, Inc. 194,800 1,911,475 21775310
Genentech, Inc. special (a) 15,000 787,500 36871030
Protein Design Labs, Inc. 90,000 1,361,250 74369L10
9,953,725
COMMERCIAL LABORATORY RESEARCH - 0.6%
Millennium Pharmaceuticals, Inc. 137,300 2,505,725 59990210
DRUGS - 3.9%
Lilly (Eli) & Co. 118,100 6,761,225 53245710
Pfizer, Inc. 90,000 6,390,000 71708110
Schering-Plough Corp. 28,800 1,609,200 80660510
Warner-Lambert Co. 30,000 1,785,000 93448810
16,545,425
SHARES VALUE (NOTE 1)
PHARMACEUTICAL PREPARATIONS - 0.2%
Guilford Pharmaceuticals, Inc. 5,000 $ 138,750 40182910
Inhale Therapeutic Systems 34,600 519,000 45719110
657,750
TOTAL DRUGS & PHARMACEUTICALS 29,662,625
ELECTRICAL EQUIPMENT - 2.2%
ELECTRICAL TRANSMISSION EQUIPMENT - 0.9%
Adtran, Inc. 60,000 3,780,000 00738A10
MISCELLANEOUS ELECTRICAL MACHINERY,
EQUIPMENT SUPPLIES - 0.1%
Energy Conversion Devices, Inc. (a) 19,000 345,563 29265910
TV & RADIO COMMUNICATION EQUIPMENT - 1.2%
Avid Technology, Inc. 100 1,850 05367P10
General Instrument Corp. (a) 40,000 1,095,000 37012110
Glenayre Technologies, Inc. 40,000 1,470,000 37789910
Ortel Corp. 45,000 1,119,375 68749W10
Spectrain Corp. 100,000 1,450,000 84760810
5,136,225
TOTAL ELECTRICAL EQUIPMENT 9,261,788
ELECTRONIC INSTRUMENTS - 0.5%
ELECTRONIC EQUIPMENT - 0.5%
Teradyne, Inc. (a) 8,600 133,300 88077010
Wandel & Goltermann Technologies, Inc. 127,500 1,992,188 93369210
2,125,488
ELECTRONICS - 11.0%
ELECTRONICS & ELECTRONIC COMPONENTS - 1.5%
Cascade Communications Corp. 75,000 5,109,375 14718410
Cirrus Logic, Inc. 75,800 1,174,900 17275510
Solectron Corp. 100 3,738 83418210
6,288,013
SEMICONDUCTORS - 9.5%
Actel Corp. 10,100 161,600 00493410
Altera Corp. 5,100 224,400 02144110
Atmel Corp. 200 5,175 04951310
ESS Technology, Inc. 25,800 322,500 26915110
Intel Corp. 209,500 16,720,719 45814010
Intel Corp. (warrants) (a) 224,000 9,380,000 45814014
Linear Technology Corp. 205,100 6,973,400 53567810
Maxim Integrated Products, Inc. 55,700 1,709,294 57772K10
Micro Linear Corp. (a) 20,300 154,788 59485010
S-3, Inc. 110,000 1,622,500 78484910
Sierra Semiconductor Corp. 170,200 1,978,575 82648510
Vitesse Semiconductor Corp. 1,000 31,875 92849710
Xilinx, Inc. (a) 21,000 735,000 98391910
40,019,826
TOTAL ELECTRONICS 46,307,839
LEISURE DURABLES & TOYS - 0.6%
TOYS & GAMES - 0.6%
Nintendo Co. Ltd. Ord. 41,300 2,526,365 65443999
LODGING & GAMING - 0.5%
HOTELS, MOTELS, & TOURIST CENTERS - 0.3%
HFS, Inc. 20,000 1,197,500 40418110
RACING & GAMING - 0.2%
WMS Industries, Inc. 40,000 925,000 92929710
TOTAL LODGING & GAMING 2,122,500
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
MEDICAL EQUIPMENT & SUPPLIES - 1.3%
MEDICAL SUPPLIES & APPLIANCES - 0.1%
Boston Scientific Corp. 10,000 $ 458,750 10113710
MEDICAL TECHNOLOGY - 1.2%
Biomet, Inc. 1,300 20,313 09061310
Medtronic, Inc. 10,000 520,000 58505510
St. Jude Medical, Inc. 123,000 4,412,625 79084910
4,952,938
TOTAL MEDICAL EQUIPMENT & SUPPLIES 5,411,688
MEDICAL FACILITIES MANAGEMENT - 0.6%
MEDICAL SERVICES - 0.0%
Lincare Holdings, Inc. 1,300 48,506 53279110
NURSING, PERSONAL CARE FACILITIES - 0.6%
NovaCare, Inc. 258,200 2,323,800 66993010
TOTAL MEDICAL FACILITIES MANAGEMENT 2,372,306
RETAIL & WHOLESALE, MISCELLANEOUS - 0.2%
LUMBER & BUILDING MATERIALS - RETAIL - 0.1%
Lowe's Companies, Inc. 10,000 361,250 54866110
RETAIL, GENERAL - 0.1%
Staples, Inc. 25,500 503,625 85503010
TOTAL RETAIL & WHOLESALE, MISCELLANEOUS 864,875
SERVICES - 0.3%
HCIA, Inc. 100 5,663 40390810
Medaphis Corp. 100,000 1,262,500 58402810
1,268,163
TELEPHONE SERVICES - 0.0%
WorldCom, Inc. 10,000 210,000 98155K10
TOTAL COMMON STOCKS
(Cost $403,861,961) 396,579,284
CONVERTIBLE BONDS - 0.7%
MOODY'S PRINCIPAL
RATINGS AMOUNT
COMPUTERS & OFFICE EQUIPMENT - 0.7%
Acer, Inc. euro 4%, 6/10/01
(Cost $3,305,711) - $ 1,270,000 2,857,500 004993AC
REPURCHASE AGREEMENTS - 4.9%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 5.25%, dated
8/30/96 due 9/3/96 $ 20,693,064 20,681,000 69899TYY
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $427,848,672) $ 420,117,784
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 VALUE
AFFILIATE COST COST INCOME
Softdesk, Inc. $ 1,672,584 $ 122,278 $ - $ 3,184,200
Target Technologies, Inc. - 441,075 - -
Telechips Corp. - - - -
Totals $ 1,672,584 $ 563,353 $ - $ 3,184,200
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $1,182,629,625 and $1,143,196,049, respectively (see Note 4 of
Notes to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $180,921 for the period
(see Note 5 of Notes to Financial Statements).
At the period end, the value of securities loaned and the value of
collateral amounted to $215,788 and $225,700, respectively (see Note 7 of
Notes to Financial Statements).
INCOME TAX INFORMATION
At August 31, 1996, the aggregate cost of investment securities for income
tax purposes was $427,849,044. Net unrealized depreciation aggregated
$7,731,260, of which $17,885,804 related to appreciated investment
securities and $25,617,064 related to depreciated investment securities.
TECHNOLOGY PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1996 (UNAUDITED)
ASSETS
Investment in $ 420,117,784
securities, at
value (including
repurchase
agreements of
$20,681,000)
(cost
$427,848,672)
- - See
accompanying
schedule
Cash 889,581
Receivable for 16,145,951
investments
sold
Receivable for 778,933
fund shares sold
Dividends 110,972
receivable
Interest receivable 4,233
Redemption fees 1,548
receivable
Other receivables 179,110
Prepaid expenses 25,987
TOTAL ASSETS 438,254,099
LIABILITIES
Payable for $ 17,646,846
investments
purchased
Payable for fund 2,408,945
shares
redeemed
Accrued 214,770
management
fee
Other payables 400,558
and
accrued
expenses
Collateral on 225,700
securities
loaned,
at value
TOTAL LIABILITIES 20,896,819
NET ASSETS $ 417,357,280
Net Assets
consist of:
Paid in capital $ 398,554,262
Accumulated net (960,492
investment )
(loss)
Accumulated 27,494,398
undistributed net
realized gain
(loss) on
investments and
foreign currency
transactions
Net unrealized (7,730,888
appreciation )
(depreciation)
on investments
and assets and
liabilities in
foreign
currencies
NET ASSETS, for $ 417,357,280
8,697,914
shares
outstanding
NET ASSET VALUE $47.98
and redemption
price per share
($417,357,280 (divided by)
8,697,914
shares)
Maximum offering $49.46
price per share
(100/97.00 of
$47.98)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED AUGUST 31, 1996 (UNAUDITED)
INVESTMENT $ 564,342
INCOME
Dividends
Interest (including 1,691,085
income on
securities
loaned of
$131,191)
TOTAL INCOME 2,255,427
EXPENSES
Management fee $ 1,331,999
Transfer agent 1,666,891
fees
Accounting and 229,858
security lending
fees
Non-interested 844
trustees'
compensation
Custodian fees 30,528
and expenses
Registration fees 25,987
Audit 23,996
Legal 2,750
Miscellaneous 3,179
Total expenses 3,316,032
before
reductions
Expense (100,113 3,215,919
reductions )
NET INVESTMENT (960,492
INCOME (LOSS) )
REALIZED AND
UNREALIZED GAIN
(LOSS)
Net realized gain
(loss) on:
Investment 29,082,177
securities
(including
realized loss of
$88,619 on sale
of investments in
affiliated issuers)
Foreign (9,563 29,072,614
currency )
transactions
Change in net
unrealized
appreciation
(depreciation)
on:
Investment (83,689,811
securities )
Assets and 641 (83,689,170
liabilities in )
foreign
currencies
NET GAIN (LOSS) (54,616,556
)
NET INCREASE $ (55,577,048
(DECREASE) IN )
NET ASSETS
RESULTING FROM
OPERATIONS
OTHER $ 831,111
INFORMATION
Sales charges
paid to FDC
Deferred sales $ 16,656
charges
withheld
by FDC
Exchange fees $ 73,343
withheld by FSC
Expense $ 91,199
reductions
Directed
brokerage
arrangements
Custodian 8,187
interest credits
Transfer agent 727
interest credits
$ 100,113
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS YEAR ENDED
ENDED FEBRUARY 29,
AUGUST 31, 1996 1996
(UNAUDITED)
Operations $ (960,492 $ (1,983,084
Net investment ) )
income (loss)
Net realized 29,072,614 81,893,509
gain (loss)
Change in net (83,689,170 45,607,438
unrealized )
appreciation
(depreciation)
NET INCREASE (55,577,048 125,517,863
(DECREASE) IN )
NET ASSETS
RESULTING
FROM
OPERATIONS
Distributions to (4,271,944 (54,900,757
shareholders ) )
from net
realized gains
Share 221,414,399 586,067,139
transactions
Net proceeds
from sales of
shares
Reinvestment of 4,181,610 53,878,429
distributions
Cost of shares (232,025,914 (458,176,007
redeemed ) )
Paid in capital 610,142 878,697
portion of
redemption fees
NET INCREASE (5,819,763 182,648,258
(DECREASE) IN )
NET ASSETS
RESULTING
FROM SHARE
TRANSACTIONS
TOTAL (65,668,755 253,265,364
INCREASE )
(DECREASE) IN
NET ASSETS
NET ASSETS
Beginning of 483,026,035 229,760,671
period
End of period $ 417,357,280 $ 483,026,035
(including
accumulated net
investment loss
of $960,492 and
$0, respectively)
OTHER
INFORMATION
Shares
Sold 4,316,244 10,597,931
Issued in 84,975 1,032,983
reinvestment of
distributions
Redeemed (4,538,589 (8,259,673
) )
Net increase (137,370) 3,371,241
(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> <C>
SIX MONTHS YEAR ENDED YEARS ENDED FEBRUARY 28, TEN MONTHS YEAR ENDED
ENDED FEBRUARY 29, ENDED APRIL 30,
AUGUST 31, 1996 FEBRUARY 28,
SELECTED PER-SHARE DATA D (UNAUDITED) 1996 1995 1994 1993 1992
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Net asset value, $ 54.67 $ 42.05 $ 41.83 $ 34.62 $ 32.44 $ 27.06
beginning of
period
Income from
Investment
Operations
Net investment (.11) (.28) (.39) (.24) F .13 G (.26)
income (loss)
Net realized and (6.12) 20.83 1.95 11.04 4.68 5.56
unrealized gain
(loss)
Total from (6.23) 20.55 1.56 10.80 4.81 5.30
investment
operations
Less Distributions
From net - - - (.13) - -
investment
income
In excess of net - - - - - (.16)
investment
income
From net (.53) (8.05) (1.50) (3.70) (2.75) -
realized gain
Total (.53) (8.05) (1.50) (3.83) (2.75) (.16)
distributions
Redemption fees .07 .12 .16 .24 .12 .24
added to paid in
capital
Net asset value, $ 47.98 $ 54.67 $ 42.05 $ 41.83 $ 34.62 $ 32.44
end of period
TOTAL RETURN B, C (11.29)% 50.71% 4.61% 35.62% 16.48% 20.57%
RATIOS AND
SUPPLEMENTAL
DATA
Net assets, end of $ 417,357 $ 483,026 $ 229,761 $ 202,475 $ 132,689 $ 105,954
period (000
omitted)
Ratio of expenses 1.49% A 1.40% 1.57% 1.55% 1.64% A 1.72%
to average net
assets
Ratio of expenses 1.45% A, 1.39% 1.56% 1.54% E 1.64% A 1.72%
to average net E E E
assets after
expense
reductions
Ratio of net (.43)% A (.52)% (.98)% (.65)% .52% A (.84)%
investment
income (loss) to
average net
assets
Portfolio turnover 570% A 112% 102% 213% 259% A 353%
rate
Average $ .0120
commission
rate H
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <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 9 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
9 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. H FOR FISCAL YEARS BEGINNING ON
OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS
ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD TO PERIOD AND
FUND TO FUND DEPENDING ON THE MIX OF
TRADES EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND
COMMISSION RATE STRUCTURES MAY DIFFER.
</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. A fund's total return includes
changes in 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 6 PAST 1 PAST 5 PAST 10
AUGUST 31, 1996 MONTH YEAR YEARS YEARS
S
TELECOMMUNICATIONS 1.51% 3.73% 125.26% 390.03%
TELECOMMUNICATIONS -1.54% 0.62% 118.51% 375.33%
(INCL. 3% SALES CHARGE)
S&P 500 2.96% 18.73% 89.14% 251.21%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one, five, or 10 years. You
can compare these figures to the performance of the S&P 500 - a widely
recognized, unmanaged index of common stocks. This benchmark reflects
reinvestment of dividends and capital gains, if any, but does not reflect
any sales charges, brokerage commissions, or other costs of investing.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
AUGUST 31, 1996 YEAR YEARS YEARS
TELECOMMUNICATIONS 3.73% 17.64% 17.23%
TELECOMMUNICATIONS 0.62% 16.92% 16.87%
(INCL. 3% SALES CHARGE)
S&P 500 18.73% 13.59% 13.34%
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
IMAHDR PRASUN SHR__CHT 19960831 19960910 162127 S00000000000001
Telecommunications SP Standard & Poor 500
00096 SP001
1986/08/31 9700.00 10000.00
1986/09/30 9102.85 9173.00
1986/10/31 9568.92 9702.28
1986/11/30 9736.41 9938.05
1986/12/31 9598.05 9684.63
1987/01/31 10806.91 10989.15
1987/02/28 11717.19 11423.22
1987/03/31 11571.55 11753.35
1987/04/30 11396.77 11648.74
1987/05/31 11833.71 11750.09
1987/06/30 12285.21 12343.47
1987/07/31 12671.17 12969.28
1987/08/31 13268.32 13453.04
1987/09/30 13537.76 13158.41
1987/10/31 11156.46 10324.09
1987/11/30 10391.82 9473.39
1987/12/31 11058.31 10194.31
1988/01/31 11574.56 10623.49
1988/02/29 11918.73 11118.55
1988/03/31 11971.11 10774.98
1988/04/30 12360.17 10894.59
1988/05/31 12517.29 10989.37
1988/06/30 13168.22 11493.78
1988/07/31 12981.17 11450.10
1988/08/31 12502.32 11060.80
1988/09/30 13272.96 11531.99
1988/10/31 13542.31 11852.58
1988/11/30 13662.02 11683.09
1988/12/31 14128.35 11887.54
1989/01/31 15274.91 12757.71
1989/02/28 15335.26 12440.04
1989/03/31 15961.34 12729.90
1989/04/30 17168.25 13390.58
1989/05/31 18435.50 13932.90
1989/06/30 17985.13 13853.48
1989/07/31 19350.51 15104.45
1989/08/31 19813.22 15400.50
1989/09/30 20541.43 15337.35
1989/10/31 19813.22 14981.53
1989/11/30 20313.86 15287.15
1989/12/31 21317.10 15654.04
1990/01/31 19005.33 14603.66
1990/02/28 18934.56 14792.04
1990/03/31 19374.90 15184.03
1990/04/30 18234.73 14804.43
1990/05/31 20153.35 16247.86
1990/06/30 19752.33 16137.38
1990/07/31 18848.06 16085.74
1990/08/31 16654.23 14631.59
1990/09/30 15576.98 13919.03
1990/10/31 16119.54 13859.18
1990/11/30 17039.53 14754.48
1990/12/31 17821.83 15166.13
1991/01/31 18455.18 15827.37
1991/02/28 19072.49 16959.03
1991/03/31 19609.63 17369.44
1991/04/30 20026.51 17411.13
1991/05/31 20234.95 18163.29
1991/06/30 19393.17 17331.41
1991/07/31 20491.50 18139.05
1991/08/31 21100.79 18568.95
1991/09/30 21373.37 18258.85
1991/10/31 22215.16 18503.51
1991/11/30 21365.35 17757.82
1991/12/31 23320.18 19789.32
1992/01/31 23352.58 19421.24
1992/02/29 23644.18 19673.71
1992/03/31 22809.87 19290.07
1992/04/30 23668.48 19857.20
1992/05/31 23393.08 19954.50
1992/06/30 22849.79 19657.18
1992/07/31 24075.92 20461.16
1992/08/31 23791.72 20041.71
1992/09/30 24254.56 20278.20
1992/10/31 24498.16 20349.17
1992/11/30 25773.01 21043.08
1992/12/31 26892.38 21301.91
1993/01/31 26809.66 21480.84
1993/02/28 28282.08 21772.98
1993/03/31 29440.17 22232.39
1993/04/30 29502.28 21694.37
1993/05/31 30689.84 22275.78
1993/06/30 32013.11 22340.38
1993/07/31 32946.19 22251.02
1993/08/31 35431.58 23094.33
1993/09/30 35940.53 22916.50
1993/10/31 36975.40 23390.88
1993/11/30 33947.13 23168.66
1993/12/31 34883.62 23449.00
1994/01/31 35589.84 24246.27
1994/02/28 34474.75 23589.20
1994/03/31 33396.84 22560.71
1994/04/30 33992.93 22849.48
1994/05/31 33793.31 23224.22
1994/06/30 33764.79 22655.22
1994/07/31 35637.44 23398.31
1994/08/31 36673.58 24357.64
1994/09/30 36245.82 23760.88
1994/10/31 37975.88 24295.50
1994/11/30 35960.64 23410.66
1994/12/31 36390.29 23757.84
1995/01/31 36895.17 24373.88
1995/02/28 37225.29 25323.73
1995/03/31 37691.33 26071.03
1995/04/30 38862.79 26838.83
1995/05/31 39923.58 27911.57
1995/06/30 41846.89 28559.96
1995/07/31 44503.84 29507.01
1995/08/31 45822.40 29581.07
1995/09/30 47329.32 30829.39
1995/10/31 45346.53 30719.33
1995/11/30 46347.84 32067.91
1995/12/31 47182.23 32685.54
1996/01/31 47516.19 33798.15
1996/02/29 46827.40 34111.46
1996/03/31 46608.24 34439.95
1996/04/30 48784.30 34947.60
1996/05/31 49866.89 35848.90
1996/06/30 50374.36 35985.48
1996/07/31 46562.73 34395.64
1996/08/30 47532.55 35121.05
IMATRL PRASUN SHR__CHT 19960831 19960910 162132 R00000000000123
Let's say hypothetically that $10,000 was invested in Fidelity Select
Telecommunications Portfolio on August 31, 1986, and a 3% sales charge was
paid. By August 31, 1996, the investment would have grown to $47,533 - a
375.33% increase. That compares to $10,000 invested in the S&P 500, which
would have grown to $35,121 over the same period - a 251.21% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST 31, 1996
% OF FUND'S
INVESTMENTS
MFS Communications, Inc. 10.0
MCI Communications Corp. 4.1
WorldCom, Inc. 4.1
Cincinnati Bell, Inc. 3.4
360 Degrees Communications Co. 3.0
GTE Corp. 2.7
Sprint Corp. 2.7
DSP Communications, Inc. 2.6
Brooks Fiber Properties, Inc. 2.4
LCI International, Inc. 2.3
TOP INDUSTRIES AS OF AUGUST 31, 1996
Telephone Services 55.1%
Hotels, Motels, &
Tourist Centers 6.9%
Telephone Equipment 6.8%
Cellular & Communication
Services 5.7%
Computer Services 3.0%
All Others 22.5% *
Row: 1, Col: 1, Value: 22.5
Row: 1, Col: 2, Value: 3.0
Row: 1, Col: 3, Value: 6.8
Row: 1, Col: 4, Value: 5.7
Row: 1, Col: 5, Value: 6.9
Row: 1, Col: 6, Value: 55.1
* INCLUDES SHORT-TERM INVESTMENTS
TELECOMMUNICATIONS PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
NOTE TO SHAREHOLDERS: Nick Thakore became Portfolio Manager of Fidelity
Select Telecommunications Portfolio on July 1, 1996.
Q. NICK, HOW DID THE FUND PERFORM?
A. For the six months ended August 31, 1996, the fund's total return was
1.51%, compared to 2.96% for the Standard & Poor's 500 Index. For the 12
months ended August 31, 1996, the fund returned 3.73%, while the S&P 500
returned 18.73%.
Q. HOW WOULD YOU CHARACTERIZE THE PAST SIX MONTHS?
A. The telecomm industry is approaching a period of dramatic change as
local and long distance markets open up to competition. Concerns over
increased competition and uncertainty related to regulatory decisions
weighed negatively on the group, causing it to underperform the broader
market. Although business was strong for the regional Bell operating
companies (RBOCs), their performance was hurt by the August FCC ruling that
determined interconnection rules that will set the tone for local telephone
competition. As for the long distance companies, AT&T reported an earnings
disappointment for the second quarter of 1996, with revenue growth slowing
substantially, and the fall in its share price produced a ripple effect for
other carriers.
Q. THE OTHER BIG STORY DURING THE PERIOD WAS THE ANNOUNCEMENT OF THE MERGER
BETWEEN LONG DISTANCE PROVIDER WORLDCOM AND COMPETITIVE ACCESS PROVIDER MFS
. . .
A. That's right. In fact, both of these were top 10 holdings at the time of
the merger announcement, so that had quite an impact on the fund.
Unfortunately, the market bid the buyer, WorldCom, down as a result.
Q. WHY WAS THAT?
A. In the near term, the acquisition causes significant earnings dilution.
However, I continued to hold large positions at the end of the period
because I felt that the combined entity is well positioned for the new
landscape in telecommunications, as it owns both local and long distance
networks, and that the near term dilution would more than be made up
through longer term synergies and growth.
Q. THERE WAS CONSIDERABLE CHANGE AMONG THE REST OF THE FUND'S TOP 10
HOLDINGS AS WELL . . .
A. Yes, the RBOCs became a smaller part of the portfolio during the period,
down from about 18% to about 10% of the fund. I increased significantly the
holdings in MCI and Sprint, long distance companies whose business was
strong and whose valuations were beaten down coincident with AT&T's
earnings disappointment. I also increased or added holdings in cellular
operators whose growth prospects remained strong while valuations have
gotten cheaper, such as 360 Communications.
Q. DID ANY AREAS PROVE ESPECIALLY DISAPPOINTING OVER THE PERIOD?
A. As I mentioned, the fund's positions in RBOCs and long-distance
companies were hurt by uncertainty about the FCC and the AT&T earnings
disappointment, respectively. But there weren't many areas of
telecommunications that did well outside of there, either. The equipment
and cellular stocks represent only about 15% of the portfolio, so the fund
wasn't badly affected by their weak showing during the period. I would say
that the biggest disappointment was the large position in WorldCom, which
was bought as a stand-alone investment, but that at least initially has
been hurt by the market's valuation of the deal.
Q. NICK, WHAT'S YOUR OUTLOOK FOR THE NEXT SEVERAL MONTHS?
A. I think this period will continue to be dominated by FCC rulings
regarding the opening of new markets and, especially, in the area of access
reform. We should also see the first effects of the entry into local
markets by the major long-distance providers. With current valuations for
many telecommunications stocks near the low end of their historical range
and prospects for near-term business fairly solid, my outlook is cautiously
optimistic right now.
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: July 29, 1985
FUND NUMBER: 096
TRADING SYMBOL: FSTCX
SIZE: as of August 31, 1996, more than
$479 million
MANAGER: Nick Thakore, since July 1996;
joined Fidelity in 1993
(checkmark)
TELECOMMUNICTIONS PORTFOLIO
INVESTMENTS AUGUST 31, 1996 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 93.8%
SHARES VALUE (NOTE 1)
BROADCASTING - 0.8%
CABLE TV OPERATORS - 0.8%
Viacom, Inc. Class B (non-vtg.) (a) 122,285 $ 3,851,978 92552430
CELLULAR - 5.7%
CELLULAR & COMMUNICATION SERVICES - 5.7%
Century Telephone Enterprises, Inc. 180,887 6,127,541 15668610
McLeod, Inc. 41,800 1,206,975 58226610
Rogers Communications, Inc. Class B (a) 149,900 1,084,604 77510920
Telephone & Data Systems, Inc. 109,222 4,655,588 87943310
360 Degrees Communications Co. (a) 625,200 14,926,650 88557110
28,001,358
COMMUNICATIONS EQUIPMENT - 8.8%
DATACOMMUNICATIONS EQUIPMENT - 2.0%
Cisco Systems, Inc. (a) 187,200 9,874,800 17275R10
TELEPHONE EQUIPMENT - 6.8%
DSC Communications Corp. (a) 366,200 10,894,450 23331110
DSP Communications, Inc. (a) 250,000 12,718,750 23332K10
Lucent Technologies 271,900 10,026,313 23332K10
33,639,513
TOTAL COMMUNICATIONS EQUIPMENT 43,514,313
COMPUTER SERVICES & SOFTWARE - 6.4%
CAD/CAM/CAE - 1.3%
ECI Telecom Ltd. 310,000 6,393,750 26825810
COMPUTER SERVICES - 3.0%
Electronic Data Systems Corp. 200,000 10,900,000 28566110
HBO & Co. 75,000 4,096,875 40410010
14,996,875
DATA PROCESSING - 1.4%
Ceridian Corp. (a) 70,000 2,983,750 15677T10
First Data Corp. 50,000 3,900,000 31996310
6,883,750
PREPACKAGED COMPUTER SOFTWARE - 0.7%
Sterling Software, Inc. (a) 50,000 3,393,750 85954710
TOTAL COMPUTER SERVICES & SOFTWARE 31,668,125
COMPUTERS & OFFICE EQUIPMENT - 1.1%
COMPUTER PERIPHERALS - 0.1%
Norand Corp. (a) 16,900 285,188 65542110
ELECTRONIC COMPUTERS - 1.0%
Bay Networks, Inc. (a) 175,000 4,812,500 07251010
TOTAL COMPUTERS & OFFICE EQUIPMENT 5,097,688
ELECTRICAL EQUIPMENT - 2.4%
TV & RADIO COMMUNICATION EQUIPMENT - 2.4%
California Amplifier, Inc. (a)(b) 654,300 8,178,750 12990010
Glenayre Technologies, Inc. (a) 100,500 3,693,375 37789910
11,872,125
ENTERTAINMENT - 1.5%
RECREATIONAL SERVICES - 1.5%
MGM Grand, Inc. (a) 200,000 7,550,000 55295310
LODGING & GAMING - 11.9%
HOTELS, MOTELS, & TOURIST CENTERS - 6.9%
Hilton Hotels Corp. 85,000 9,084,375 43284810
ITT Corp. (a) 140,000 7,455,000 45091210
SHARES VALUE (NOTE 1)
Mirage Resorts, Inc. (a) 350,000 $ 8,137,500 60462E10
Sun International Hotels Ltd. Ord. (a) 200,000 9,475,000 86699N22
34,151,875
LODGING PLACES, OTHER THAN HOTELS- 2.0%
Anchor Gaming 181,590 9,919,354 03303710
RACING & GAMING - 3.0%
Aztar Corp. (a) 400,000 4,400,000 05480210
International Game Technology Corp. 500,000 10,187,500 45990210
14,587,500
TOTAL LODGING & GAMING 58,658,729
RETAIL & WHOLESALE, MISCELLANEOUS - 0.1%
DURABLE GOODS, WHOLESALE - 0.1%
Sodak Gaming, Inc. (a) 11,400 592,800 83377710
TELEPHONE SERVICES - 55.1%
AT&T Corp. 210,900 11,072,250 00195710
Ameritech Corp. 68,500 3,536,313 03095410
BCE, Inc. 100,000 3,946,647 05534B10
Bell Atlantic Corp. 74,600 4,196,250 07785310
BellSouth Corp. 203,600 7,380,500 07986010
Brooks Fiber Properties, Inc. 400,000 12,000,000 11439910
Cincinnati Bell, Inc. 354,100 16,908,275 17187010
DDI Corp. Ord. 797 6,332,078 23399J22
Frontier Corp. 372,600 10,991,700 35906P10
GTE Corp. 337,773 13,299,812 36232010
Incomnet, Inc. (a) 21,600 102,600 45336520
LCI International, Inc. (a) 320,800 11,348,300 50181310
MCI Communications Corp. 800,000 20,100,000 55267310
MFS Communications, Inc. (a) 1,168,391 49,510,569 55272T10
NYNEX Corp. 227,700 9,819,563 67076810
Pacific Gateway Exchange, Inc. (a) 100,000 2,387,500 69432710
Pacific Telesis Group 280,000 9,065,000 69489010
Royal Ptt Nederland NV 166,000 5,814,746 72699422
SBC Communications, Inc. 55,600 2,592,350 78387G10
Sprint Corp. 325,600 13,227,500 85206110
Telebras PN (Pfd. Reg.) 126,221,131 9,375,933 95499792
Telefonica de Espana SA Ord. 150,000 2,783,653 87938210
Teleport Communications Group, Inc.
Class A 200,000 4,625,000 87946310
U.S. West, Inc. 251,700 7,425,150 91288910
U.S. West, Inc. (Media Group) (a) 613,700 11,123,313 91288920
Winstar Communications, Inc. 151,200 2,929,500 97551510
WorldCom, Inc. (a) 953,524 20,024,004 98155K10
271,918,506
TOTAL COMMON STOCKS
(Cost $449,393,644) 462,725,622
CONVERTIBLE PREFERRED STOCKS - 0.0%
CELLULAR - 0.0%
CELLULAR & COMMUNICATION SERVICES - 0.0%
AirTouch Communications, Inc.:
Class B $1.74 2,991 85,991 00949T20
Class C $2.125 1,921 91,488 00949T30
TOTAL CONVERTIBLE PREFERRED STOCKS
(Cost $180,443) 177,479
REPURCHASE AGREEMENTS - 6.2%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 5.25%, dated
8/30/96 due 9/3/96 $ 30,600,840 $ 30,583,000 69899TYY
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $480,157,087) $ 493,486,101
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 VALUE
AFFILIATE COST COST INCOME
California Amplifier, Inc. $ 617,317 $ - $ - $ 8,178,750
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $315,504,209 and $254,376,180, respectively (see Note 4 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $59,487 for the period (see
Note 5 of Notes to Financial Statements).
INCOME TAX INFORMATION
At August 31, 1996, the aggregate cost of investment securities for income
tax purposes was $480,421,586. Net unrealized appreciation aggregated
$13,064,515 of which $41,898,014 related to appreciated investment
securities and $28,833,499 related to depreciated investment securities.
TELECOMMUNICATIONS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1996 (UNAUDITED)
ASSETS
Investment in $ 493,486,101
securities, at
value (including
repurchase
agreements of
$30,583,000)
(cost
$480,157,087)
- - See
accompanying
schedule
Cash 658
Receivable for 5,183,091
investments
sold
Receivable for 352,385
fund shares sold
Dividends 333,554
receivable
Redemption fees 369
receivable
Other receivables 17,219
TOTAL ASSETS 499,373,377
LIABILITIES
Payable for $ 17,184,685
investments
purchased
Payable for fund 1,821,870
shares
redeemed
Accrued 248,308
management
fee
Other payables 470,129
and
accrued
expenses
TOTAL LIABILITIES 19,724,992
NET ASSETS $ 479,648,385
Net Assets
consist of:
Paid in capital $ 436,257,281
Undistributed net 3,027,787
investment
income
Accumulated 27,034,172
undistributed net
realized gain
(loss) on
investments and
foreign currency
transactions
Net unrealized 13,329,145
appreciation
(depreciation)
on investments
and assets and
liabilities in
foreign
currencies
NET ASSETS, for $ 479,648,385
11,378,467
shares
outstanding
NET ASSET VALUE $42.15
and redemption
price per share
($479,648,385 (divided by)
11,378,467
shares)
Maximum offering $43.45
price per share
(100/97.00 of
$42.15)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED AUGUST 31, 1996 (UNAUDITED)
INVESTMENT $ 5,445,847
INCOME
Dividends
Interest (including 1,302,756
income on
securities
loaned of
$161,468)
TOTAL INCOME 6,748,603
EXPENSES
Management fee $ 1,528,014
Transfer agent 1,923,021
fees
Accounting and 258,175
security lending
fees
Non-interested 953
trustees'
compensation
Custodian fees 31,564
and expenses
Registration fees 3,007
Audit 18,119
Legal 1,937
Miscellaneous 5,249
Total expenses 3,770,039
before
reductions
Expense (54,876 3,715,163
reductions )
NET INVESTMENT 3,033,440
INCOME
REALIZED AND
UNREALIZED GAIN
(LOSS)
Net realized gain
(loss) on:
Investment 28,098,805
securities
Foreign (6,391 28,092,414
currency )
transactions
Change in net
unrealized
appreciation
(depreciation)
on:
Investment (23,971,595
securities )
Assets and 105 (23,971,490
liabilities in )
foreign
currencies
NET GAIN (LOSS) 4,120,924
NET INCREASE $ 7,154,364
(DECREASE) IN
NET ASSETS
RESULTING FROM
OPERATIONS
OTHER $ 873,332
INFORMATION
Sales charges
paid to FDC
Deferred sales $ 10,627
charges
withheld
by FDC
Exchange fees $ 49,320
withheld by FSC
Expense $ 53,046
reductions
Directed
brokerage
arrangements
Custody 1,031
interest credits
Transfer agent 799
interest credits
$ 54,876
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS YEAR ENDED
ENDED FEBRUARY 29,
AUGUST 31, 1996 1996
(UNAUDITED)
Operations $ 3,033,440 $ 4,937,209
Net investment
income
Net realized 28,092,414 57,156,039
gain (loss)
Change in net (23,971,490 28,358,016
unrealized )
appreciation
(depreciation)
NET INCREASE 7,154,364 90,451,264
(DECREASE) IN
NET ASSETS
RESULTING
FROM
OPERATIONS
Distributions to (1,102,279 (3,666,827
shareholders ) )
From net
investment
income
From net (34,762,694 (25,859,291
realized gain ) )
TOTAL (35,864,973 (29,526,118
DISTRIBUTIONS ) )
Share 134,760,905 183,961,070
transactions
Net proceeds
from sales of
shares
Reinvestment of 35,118,095 28,851,878
distributions
Cost of shares (129,967,696 (175,053,917
redeemed ) )
Paid in capital 147,745 139,366
portion of
redemption fees
NET INCREASE 40,059,049 37,898,397
(DECREASE) IN
NET ASSETS
RESULTING
FROM SHARE
TRANSACTIONS
TOTAL 11,348,440 98,823,543
INCREASE
(DECREASE) IN
NET ASSETS
NET ASSETS
Beginning of 468,299,945 369,476,402
period
End of period $ 479,648,385 $ 468,299,945
(including
undistributed
net investment
income of
$3,027,787
and
$1,251,216,
respectively)
OTHER
INFORMATION
Shares
Sold 3,087,663 4,122,731
Issued in 865,191 677,781
reinvestment of
distributions
Redeemed (3,010,098 (4,001,104
) )
Net increase 942,756 799,408
(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> <C>
SIX MONTHS YEAR ENDED YEARS ENDED FEBRUARY 28, TEN MONTHS YEAR ENDED
ENDED FEBRUARY 29, ENDED APRIL 30,
AUGUST 31, 1996 FEBRUARY 28,
SELECTED PER-SHARE DATA D (UNAUDITED) 1996 1995 1994 1993 1992
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Net asset value, $ 44.87 $ 38.34 $ 37.10 $ 34.19 $ 29.22 $ 24.98
beginning of
period
Income from
Investment
Operations
Net investment .26 .51 .29 .25 .29 .36
income (loss)
Net realized and .28 9.15 2.54 7.00 5.29 4.13
unrealized gain
(loss)
Total from .54 9.66 2.83 7.25 5.58 4.49
investment
operations
Less Distributions
From net (.10) (.39) (.33) (.20) (.18) (.28)
investment
income
From net (3.17) (2.75) (1.27) (4.18) (.48) -
realized gain
Total (3.27) (3.14) (1.60) (4.38) (.66) (.28)
distributions
Redemption fees .01 .01 .01 .04 .05 .03
added to paid in
capital
Net asset value, $ 42.15 $ 44.87 $ 38.34 $ 37.10 $ 34.19 $ 29.22
end of period
TOTAL RETURN B, C 1.51% 25.79% 7.98% 21.90% 19.49% 18.19%
RATIOS AND
SUPPLEMENTAL
DATA
Net assets, end of $ 479,648 $ 468,300 $ 369,476 $ 371,025 $ 134,338 $ 78,533
period (000
omitted)
Ratio of expenses 1.48% A 1.52% 1.56% 1.54% 1.74% A 1.90%
to average net
assets
Ratio of expenses 1.46% A, 1.52% 1.55% 1.53% 1.74% A 1.90%
to average net E E E
assets after
expense
reductions
Ratio of net 1.19% A 1.17% .77% .64% 1.16% A 1.32%
investment
income to
average net
assets
Portfolio turnover 109% A 89% 107% 241% 115% A 20%
rate
Average $ .0343
commission
rate F
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <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 9 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
9 OF NOTES TO FINANCIAL
STATEMENTS). F FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER
1, 1995, A FUND IS REQUIRED TO
DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR SECURITY TRADES
ON WHICH COMMISSIONS ARE
CHARGED. THIS AMOUNT MAY VARY FROM PERIOD TO PERIOD AND FUND TO
FUND DEPENDING ON THE MIX OF
TRADES EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND
COMMISSION RATE STRUCTURES MAY
DIFFER.
</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 6 PAST 1 PAST 5 PAST
AUGUST 31, 1996 MONTH YEAR YEARS 10
S YEARS
MONEY MARKET 2.48% 5.18% 22.36% 72.94%
MONEY MARKET -0.59% 2.03% 18.69% 67.75%
(INCL. 3% SALES CHARGE)
All Taxable 2.43% 5.07% 21.99% 72.26%
Money Market Funds Average
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one year, five years, or 10
years. 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 818
all taxable money market funds with similar objectives tracked by IBC
Financial Data, Inc. over the past six months.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
AUGUST 31, 1996 YEAR YEARS YEARS
MONEY MARKET 5.18% 4.12% 5.63%
MONEY MARKET 2.03% 3.49% 5.31%
(INCL. 3% SALES CHARGE)
All Taxable 5.07% 4.05% 5.58%
Money Market Funds Average
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: 5.41
Row: 1, Col: 2, Value: 5.25
Row: 1, Col: 3, Value: 2.84
Row: 2, Col: 1, Value: 5.19
Row: 2, Col: 2, Value: 5.26
Row: 2, Col: 3, Value: 2.86
Row: 3, Col: 1, Value: 5.31
Row: 3, Col: 2, Value: 4.78
Row: 3, Col: 3, Value: 2.76
Row: 4, Col: 1, Value: 4.859999999999999
Row: 4, Col: 2, Value: 4.74
Row: 4, Col: 3, Value: 2.66
Row: 5, Col: 1, Value: 4.87
Row: 5, Col: 2, Value: 4.83
Row: 5, Col: 3, Value: 2.68
6% -
4% -
2% -
0%
Money Market
All Taxable
Money Market
Funds Average
MMDA
8/29/95 11/28/95 2/27/96 5/28/96 9/3/96
MONEY MARKET 5.41% 5.19% 5.31% 4.86% 4.87%
All Taxable
Money Market
Funds Average 5.25% 5.26% 4.78% 4.74%% 4.83%
8/30/95 11/29/95 2/28/96 5/31/96 8/28/96
MMDA 2.84% 2.86% 2.76% 2.66% 2.68%
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 Financial Data, Inc.
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 INVESTMENT CLIMATE HAVE YOU BEEN OPERATING IN FOR THE
PAST SIX MONTHS?
A. The only way to appreciate how much the climate has changed is to go
back to the third quarter of 1995, well before the period began. The
economy was starting to rebound from a slowdown caused mainly by a buildup
of excess inventories; from July through September, the gross domestic
product expanded at an annual rate of 3.8%. During the fourth quarter,
however, the recovery seemed to lose momentum, overwhelmed by severe winter
weather and a budget standoff that twice resulted in government shutdowns.
Rather than risk continued deterioration in economic activity, the Federal
Reserve took steps to ease short-term interest rates. In December 1995 and
again on the last day of January 1996, the Fed lowered the rate banks
charge each other for overnight loans - known as the federal funds rate - a
total of one-half percentage point, to 5.25%. That brings us to the start
of the current reporting period, when forecasts of continued economic
weakness suggested that further rate cuts were likely. Within a week,
however, the mood shifted again.
Q. WHAT CAUSED THE TURNAROUND IN MARKET SENTIMENT?
A. The February employment report came as a big surprise to most market
participants. It showed that the economy was generating new jobs at a rate
about three times greater than the previous quarter. That slammed the door
on the possibility of another Fed rate cut and set the tone for the rest of
the period. In the months that followed, subsequent jobs reports confirmed
that the February employment report was indeed a turning point, and marked
the beginning of a healthier trend. In fact, during 1996 the economy has
produced an average of about 237,000 new jobs a month, compared to 185,000
in 1995. As market participants adjusted to the new reality, many assumed
the Fed would eventually have to raise interest rates. Such speculation
increased during the second quarter, when the economy expanded at an annual
rate of 4.8%, and continued to build through the end of August. So far,
however, inflationary pressures have remained mild and the Fed has stayed
on the sidelines.
Q. HOW DID YOU RESPOND TO CHANGING CONDITIONS?
A. Ordinarily, my preference would be to aggressively extend the fund's
average maturity when interest rates are stable or falling, and shorten the
fund's average maturity when rates are rising. That's not always possible
with Select Money Market, only because so many shareholders use the fund as
a temporary parking place for their cash, and the asset base is constantly
changing. That said, at the end of February the fund's average maturity was
48 days. As the economy gained strength, I gradually let the fund's average
maturity roll down, reaching a low of about 30 days at the end of July.
Since then, I've taken advantage of buying opportunities to extend the
fund's average maturity, while remaining somewhat defensive. At the end of
the period, the fund's average maturity was 40 days.
Q. HOW DID THE FUND PERFORM?
A. The fund's seven-day yield on August 31, 1996, was 5.08%, compared to
5.21% six months ago. The fund's total return during the six-month period
was 2.48%. That beat the total return of 2.43% for the all taxable money
market funds average during the same period, according to IBC Financial
Data, Inc.
Q. WHAT CAN WE EXPECT IN THE MONTHS AHEAD?
A. The outlook is uncertain. Many market participants assume that having
already waited this long, the Fed will wait until after the November
election to raise interest rates. I'm not willing to make that assumption.
We know that the Fed governors adopted a bias in favor of a rate increase
over the summer, and I'm not sure they wouldn't act before the election if
they thought it necessary to prevent an outbreak of inflation. In any case,
a rate increase seems likely before year-end. One of the factors inhibiting
inflation thus far has been the weak economic climate in the rest of the
developed world. Now that Japan's and Europe's economies appear to have
bottomed out, inflationary pressures are likely to build, especially as we
move into 1997, adding to upward pressure on rates. Accordingly, I'll
probably aim for an average maturity in the neutral to defensive range in
the months ahead, or between 35 and 45 days.
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: August 30, 1985
FUND NUMBER: 085
TRADING SYMBOL: FSMMKT
SIZE: as of August 31, 1996, more than
$902 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)
MONEY MARKET PORTFOLIO
INVESTMENTS AUGUST 31, 1996 (UNAUDITED)
Showing Percentage of Total Value of Investments
BANKERS' ACCEPTANCES - 0.4%
ANNUALIZED YIELD
DUE AT TIME OF PRINCIPAL VALUE
DATE PURCHASE AMOUNT (NOTE 1)
DOMESTIC BANKERS' ACCEPTANCES
CHASE MANHATTAN BANK
9/10/96 5.46% $ 27,711 $ 27,674 161999QM
9/13/96 5.46 201,477 201,118 161999NW
9/17/96 5.47 56,809 56,674 161999PA
9/23/96 5.47 61,337 61,137 161999PE
9/24/96 5.47 126,617 126,185 161999PH
10/24/96 5.50 629,355 624,398 161999QC
12/18/96 5.59 2,632,052 2,588,782 161999UB
TOTAL BANKERS' ACCEPTANCES 3,685,968
CERTIFICATES OF DEPOSIT - 23.8%
DOMESTIC CERTIFICATES OF DEPOSIT - 2.4%
U.S. NATIONAL BANK OF OREGON
9/24/96 5.29 20,000,000 19,999,809 91199CAM
CHICAGO BRANCH, YANKEE DOLLAR, FOREIGN BANKS - 0.6%
ABN-AMRO BANK
12/2/96 5.51 5,000,000 5,000,000 032993NW
NEW YORK BRANCH, YANKEE DOLLAR, FOREIGN BANKS - 13.3%
BANQUE NATIONALE DE PARIS
9/4/96 5.42 5,000,000 5,000,009 055992SG
BAYERISCHE LANDESBANK GIROZENTRALE
10/30/96 5.74 (a) 5,000,000 5,000,000 072990FF
4/22/97 5.85 4,000,000 4,000,000 072990GE
COMMERZBANK, GERMANY
9/16/96 5.42 5,940,000 5,939,629 202990TD
LANDESBANK HESSEN - THURINGEN
9/6/96 5.40 7,000,000 6,999,650 514998BC
4/29/97 5.90 14,000,000 13,974,280 514998BG
NATIONAL WESTMINSTER BANK, PLC
9/9/96 5.40 15,000,000 15,000,000 638990MG
SANWA BANK, LTD.
9/3/96 5.49 5,000,000 5,000,000 8049992B
11/4/96 5.69 7,000,000 7,000,000 8049992D
SOCIETE GENERALE
9/3/96 5.13 6,000,000 6,000,000 833991YU
9/3/96 5.43 25,000,000 25,000,048 8339916L
11/6/96 5.36 3,000,000 3,000,104 8339919P
12/2/96 5.52 5,000,000 5,000,000 8339914K
SUMITOMO BANK, LTD.
10/15/96 5.50 2,000,000 2,000,000 86699EPL
11/14/96 5.50 2,000,000 2,000,000 86699EPP
110,913,720
LONDON BRANCH, EURODOLLAR, FOREIGN BANKS - 7.5%
AUSTRALIA & NEW ZEALAND BANKING
10/1/96 5.36 13,000,000 12,999,526 0525289G
BANCO BILBAO VIZCAYA, S.A.
10/28/96 5.36 3,000,000 2,999,830 05999MBQ
BAYERISCHE HYPOTHEKEN-UND WESCHEL
9/23/96 5.41 10,000,000 9,999,867 07299GBG
KREDIETBANK, N.V.
10/15/96 5.38 5,000,000 5,000,091 5007999J
ANNUALIZED YIELD
DUE AT TIME OF PRINCIPAL VALUE
DATE PURCHASE AMOUNT (NOTE 1)
SWISS BANK CORP.
9/11/96 5.40% $ 11,000,000 $ 11,000,243 8709903D
10/11/96 5.55 20,000,000 20,000,438 8709903E
61,999,995
TOTAL CERTIFICATES OF DEPOSITS 197,913,524
COMMERCIAL PAPER - 49.7%
A.H. ROBINS COMPANY, INCORPORATED
9/25/96 5.35 2,000,000 1,992,907 770998EP
AMERICAN EXPRESS CREDIT CORP.
10/21/96 5.35 15,000,000 14,889,583 025990PL
ASSET SECURITIZATION COOPERATIVE CORPORATION
9/17/96 5.46 12,500,000 12,469,944 04599RCL
10/15/96 5.33 2,000,000 1,987,069 04599RCU
10/21/96 5.35 5,000,000 4,963,195 04599RCS
ASSOCIATES CORP. OF NORTH AMERICA
10/21/96 5.35 4,000,000 3,970,555 04699JBT
10/30/96 5.37 15,000,000 14,869,217 04699JCH
BEAR STEARNS COS., INC.
11/20/96 5.40 4,000,000 3,952,711 07399HPM
BENEFICIAL CORP.
9/19/96 5.33 10,000,000 9,973,500 08199BDU
9/24/96 5.33 10,000,000 9,966,139 08199BDV
CIESCO, L.P.
10/2/96 5.50 8,000,000 7,962,456 177996VP
CAISSE D'AMORTISSEMENT DE LA DETTE SOCIALE
9/25/96 5.50 10,000,000 9,963,867 12799FAH
10/24/96 5.51 20,000,000 19,840,117 12799FAR
12/20/96 5.64 7,000,000 6,882,789 12799FAD
CAISSE DES DEPOTS ET CONSIGNATIONS
10/8/96 5.33 2,707,000 2,692,282 12799EBC
COMMERCIAL CREDIT CO.
9/16/96 5.39 15,000,000 14,966,563 201997AG
COMPAGNIE BANCAIRE
11/25/96 5.38 4,400,000 4,344,835 20499FCL
CORESTATES CAPITAL CORP. (A)
9/5/96 5.42 15,000,000 15,000,000 218995AP
EIGER CAPITAL CORP.
10/15/96 5.34 2,000,000 1,987,044 278997FA
ELECTRICITE DE FRANCE
9/18/96 5.47 12,100,000 12,069,145 2850399A
ELECTRONIC DATA SYSTEMS CORP.
9/16/96 5.33 15,000,000 14,966,875 2856619M
ENTERPRISE FUNDING CORP.
9/18/96 5.46 6,939,000 6,921,272 29399HLR
11/7/96 5.39 5,840,000 5,782,069 29399HNN
GTE CORP.
9/26/96 5.40 2,000,000 1,992,555 362991KR
GENERALE BANK
9/12/96 5.45 10,000,000 9,983,500 371995DX
GENERAL ELECTRIC CO.
10/22/96 5.35 5,000,000 4,962,458 369999EL
COMMERCIAL PAPER - CONTINUED
ANNUALIZED YIELD
DUE AT TIME OF PRINCIPAL VALUE
DATE PURCHASE AMOUNT (NOTE 1)
GENERAL MOTORS ACCEPTANCE CORP.
9/24/96 5.36% $ 5,000,000 $ 4,982,973 6389987E
11/26/96 5.68 2,000,000 1,973,579 6389985Y
2/20/97 5.70 2,000,000 1,947,014 6389987G
2/24/97 5.71 2,000,000 1,945,733 6389987F
2/25/97 5.71 3,000,000 2,918,137 6389987H
GOLDMAN SACHS GROUP, L.P. (THE)
9/19/96 5.33 20,000,000 19,947,000 696992QP
9/24/96 5.33 9,000,000 8,969,525 696992QS
HOUSEHOLD FINANCE CORP.
10/30/96 5.39 5,000,000 4,956,242 44199DNX
IBM CORP.
9/13/96 5.32 6,100,000 6,089,223 45499EEV
KREDIETBANK, N.A. FINANCE CORP.
10/24/96 5.51 5,000,000 4,960,029 50099DAV
MORGAN STANLEY GROUP, INC.
10/15/96 5.35 25,000,000 24,838,055 61799EQU
MORGAN (J.P.) & CO.
9/5/96 5.11 5,000,000 4,997,233 61799HDF
NATIONWIDE BUILDING SOCIETY
9/4/96 5.39 25,000,000 24,988,917 638993JN
10/22/96 5.50 30,000,000 29,769,225 638993JY
NEW CENTER ASSET TRUST
9/27/96 5.43 5,000,000 4,980,897 643995KJ
2/19/97 5.63 2,000,000 1,947,940 643995LN
NEW ENGLAND POWER COMPANY
9/10/96 5.28 5,900,000 5,892,241 644997BL
PREFERRED RECEIVABLES FUNDING CORP.
9/17/96 5.33 9,000,000 8,978,800 74099SCD
9/19/96 5.31 3,000,000 2,992,065 74099SCH
SHERWOOD MEDICAL COMPANY
9/16/96 5.49 4,000,000 3,990,933 82599UDE
SMITH BARNEY, INC.
10/3/96 5.37 10,000,000 9,952,533 83199HCT
TEXTRON, INC.
9/11/96 5.50 1,000,000 998,477 88599CPV
UNIFUNDING, INC.
9/9/96 5.33 6,000,000 5,992,907 90499AAQ
10/16/96 5.33 5,000,000 4,966,938 90499AAP
TOTAL COMMERCIAL PAPER 413,329,263
FEDERAL AGENCIES - 11.2%
FEDERAL HOME LOAN BANK - AGENCY COUPONS (A) - 1.6%
9/13/96 5.49 4,000,000 3,999,292 567995QC
9/20/96 5.44 4,000,000 3,999,243 567995QB
10/2/96 5.46 5,000,000 4,999,624 567995QF
12,998,159
FEDERAL NATIONAL MORTGAGE ASSOC. - AGENCY COUPONS (A) - 5.5%
9/2/96 5.41 25,000,000 24,987,075 31364CAB
9/20/96 5.44 11,000,000 10,997,440 9950286B
9/29/96 5.35 5,000,000 4,996,649 995030LU
10/17/96 5.56 5,000,000 4,998,538 995029EJ
45,979,702
ANNUALIZED YIELD
DUE AT TIME OF PRINCIPAL VALUE
DATE PURCHASE AMOUNT (NOTE 1)
FEDERAL NATIONAL MORTGAGE ASSOC. - DISCOUNT NOTES - 2.9%
2/3/97 5.62% $ 25,000,000 $ 24,412,292 31359k9Q
STUDENT LOAN MARKETING ASSOC. - AGENCY COUPONS (A) - 1.2%
10/16/96 5.68 10,000,000 10,000,000 863990QB
TOTAL FEDERAL AGENCIES 93,390,153
BANK NOTES - 4.7%
BANK OF AMERICA NATIONAL TRUST & SAVINGS ASSOC. (A)
9/3/96 5.43 % 3,000,000 2,999,992 06399AEY
BANK OF NEW YORK - DELAWARE (A)
10/30/96 5.78 4,000,000 4,000,000 0640629E
COMERICA BANK - DETROIT (A)
9/1/96 5.45 5,000,000 4,999,980 226990BU
10/27/96 5.68 5,000,000 4,999,606 226990BX
FIRST NATIONAL BANK OF CHICAGO
9/3/96 5.40 15,000,000 15,000,000 995990YT
PNC BANK, N.A. (A)
9/9/96 5.44 3,000,000 2,998,386 69399EBC
9/20/96 5.44 4,000,000 3,999,417 69399EAX
TOTAL BANK NOTES 38,997,381
MASTER NOTES (A)- 1.9%
J.P. MORGAN SECURITIES
9/6/96 5.43 16,000,000 16,000,000 61899FKH
MEDIUM-TERM NOTES (A) - 4.3%
ABBEY NATIONAL TREASURY SERVICES (B)
9/9/96 5.57 8,000,000 8,000,000 010998AJ
BENEFICIAL CORP.
11/3/96 5.65 3,000,000 2,999,534 08199BCN
CIT GROUP HOLDINGS, INC.
9/3/96 5.40 10,000,000 9,999,407 172990WV
GENERAL MOTORS ACCEPTANCE CORP.
10/23/96 5.67 2,000,000 2,001,388 6389985G
11/1/96 5.68 5,000,000 5,000,000 6389984L
NORWEST CORP.
9/10/96 5.61 8,000,000 8,000,000 66899CBK
TOTAL MEDIUM-TERM NOTES 36,000,329
SHORT-TERM NOTES (A)(B) - 2.3%
SMM TRUST (1995-D)
10/27/96 5.68 1,000,000 1,000,000 83199GBB
SMM TRUST (1995-N)
11/8/96 5.55 3,000,000 3,000,000 83199GBC
SMM TRUST (1996-I)
9/30/96 5.46 7,000,000 7,000,000 83199GBS
SMM TRUST (1996-V)
9/26/96 5.62 8,000,000 8,000,000
TOTAL SHORT-TERM NOTES 19,000,000
TIME DEPOSITS - 1.3%
ANNUALIZED YIELD
DUE AT TIME OF PRINCIPAL VALUE
DATE PURCHASE AMOUNT (NOTE 1)
SANWA BANK, LTD.
10/4/96 5.44% $ 3,000,000 $ 3,000,000 8049992J
SUMITOMO BANK, LTD.
9/12/96 5.50 5,000,000 5,000,000 86699EPH
9/30/96 5.41 3,000,000 3,000,000 86699EPS
TOTAL TIME DEPOSITS 11,000,000
REPURCHASE AGREEMENTS - 0.4%
MATURITY
AMOUNT
In a joint trading account
(U.S. Treasury Obligations)
dated 8/30/96 due 9/3/96
At 5.27% $ 2,961,735 2,960,000 69899T2A
TOTAL INVESTMENTS - 100% $ 832,276,618
Total Cost for Income Tax Purposes - $828,276,618
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 $27,000,000 or 3.0% of net
assets.
MONEY MARKET PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS
Investment in securities, at $ 832,276,618
value (including repurchase agreements of $2,960,000) -
See accompanying schedule
Receivable for fund shares sold 87,302,975
Interest receivable 4,346,613
TOTAL ASSETS 923,926,206
LIABILITIES
Payable for investments purchased $ 3,000,000
Payable for fund shares redeemed 18,400,338
Accrued management fee 170,400
Other payables and 307,623
accrued expenses
TOTAL LIABILITIES 21,878,361
NET ASSETS $ 902,047,845
Net Assets consist of:
Paid in capital $ 902,034,381
Accumulated net realized gain (loss) on investments 13,464
NET ASSETS, for 902,029,123 $ 902,047,845
shares outstanding
NET ASSET VALUE, offering price $1.00
and redemption price per share ($902,047,845 (divided by) 902,029,123 shares)
Maximum offering price per share $1.03
(100/97 of $1.00)
</TABLE>
STATEMENT OF OPERATIONS
SIX MONTHS ENDED AUGUST 31, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C>
INTEREST INCOME $ 21,210,270
EXPENSES
Management fee $ 787,919
Transfer agent fees 1,045,692
Accounting fees and expenses 54,280
Non-interested trustees' compensation 2,445
Custodian fees and expenses 5,995
Registration fees 269,465
Audit 9,512
Legal 2,560
Reports to shareholders 3,707
Miscellaneous 3,801
TOTAL EXPENSES BEFORE EXPENSE REDUCTIONS 2,185,376
EXPENSE REDUCTIONS (9,449 2,175,927
)
NET INTEREST INCOME 19,034,343
NET REALIZED GAIN (LOSS) 10,346
ON INVESTMENTS
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 19,044,689
OTHER INFORMATION $ 1,787,169
Sales charges paid to FDC
Deferred sales charges withheld $ 47,109
by FDC
Expenses reductions
Custodian interest credits $ 723
Transfer agent interest credits 8,726
$ 9,449
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS ENDED YEAR ENDED
AUGUST 31, 1996 FEBRUARY 29,
(UNAUDITED) 1996
<TABLE>
<CAPTION>
<S> <C> <C>
Operations $ 19,034,343 $ 35,253,224
Net interest income
Net realized gain (loss) 10,346 33,656
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 19,044,689 35,286,880
Distributions to shareholders from net interest income (19,034,343) (35,253,224)
Share transactions at net asset value of $1.00 per share 3,752,838,724 6,107,173,652
Proceeds from sales of shares
Reinvestment of distributions from net interest income 17,726,183 32,687,547
Cost of shares redeemed (3,479,348,842) (6,102,217,401)
NET INCREASE (DECREASE) IN NET ASSETS AND SHARES RESULTING FROM SHARE TRANSACTIONS 291,216,065 37,643,798
TOTAL INCREASE (DECREASE) IN NET ASSETS 291,226,411 37,677,454
NET ASSETS
Beginning of period 610,821,434 573,143,980
End of period $ 902,047,845 $ 610,821,434
</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> <C>
SIX MONTHS YEAR ENDED YEARS ENDED FEBRUARY 28, TEN MONTHS YEAR ENDED
ENDED FEBRUARY 29, ENDED APRIL 30,
AUGUST 31, 1996 FEBRUARY 28,
SELECTED PER-SHARE DATA (UNAUDITED) 1996 1995 1994 1993 1992
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Income from Investment Operations .025 .054 .042 .026 .026 .048
Net interest income
Less Distributions (.025) (.054) (.042) (.026) (.026) (.048)
From net interest income
Net asset value, end of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
TOTAL RETURN B 2.48% 5.56% 4.28% 2.62% 2.63% 4.93%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 902,048 $ 610,821 $ 573,144 $ 518,657 $ 431,133 $ 542,620
Ratio of expenses to average net assets .56% A .59% .65% .72% .56% A .64%
Ratio of net interest income to average net assets 4.88% A 5.39% 4.19% 2.59% 3.09% A 4.84%
</TABLE>
<ERROR: WIDE TABLE>
ERROR: The Following Table: "Assets" is Too Wide!
Table Width is 150 characters.
<TABLE>
<CAPTION>
<S> <C> <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 August 31, 1996 (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Select Portfolios (the trust) is registered under the Investment
Company Act of 1940, as amended (the 1940 Act), as an open-end management
investment company organized as a Massachusetts business trust. The trust
has thirty-five equity funds (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 under 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 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. Certain 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. The fees, which are retained by the fund, are accounted
for as an addition to paid in capital.
There is a $7.50 fee for shares exchanged into another Fidelity fund (see
Note 5). 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 SEC), 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 for U.S. Treasury or
Federal Agency obligations.
REPURCHASE AGREEMENTS. The underlying U.S. Treasury or Federal Agency
Securities are transferred to an account of the funds, or to the Joint
Trading Account, at a bank custodian. The securities are marked-to-market
daily and maintained at a value at least equal to the principal amount of
the repurchase agreement (including accrued interest). 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.
INTERFUND LENDING PROGRAM. Pursuant to an Exemptive Order issued by the
SEC, the funds, along with other registered investment companies having
management contracts with FMR, may participate in an interfund lending
program. This program provides an alternative credit facility allowing the
funds to borrow from, or lend money to, other participating funds.
3. JOINT TRADING ACCOUNT.
At the end of the period, the following funds had 20% or more of their
total investments in repurchase agreements through a joint trading account.
These repurchase agreements were with entities whose creditworthiness has
been reviewed and found satisfactory by FMR. The maturity values of the
joint trading account investments were $164,273,771 for Home Finance
Portfolio, $72,560,302 for Energy Service Portfolio, and $8,861,166 for
Insurance Portfolio, at 5.25% for each fund. The investments in repurchase
agreements through the joint trading account are summarized as follows:
SUMMARY OF JOINT TRADING
Dated August 30, 1996, due September 3, 1996
Number of dealers or banks 26
Maximum amount with one dealer or bank 14.0%
Aggregate principal amount of agreements $24,642,654,000
Aggregate maturity amount of agreements $24,657,021,088
Aggregate market value of transferred assets $25,171,106,668
Coupon rates of transferred assets 0.0% to 13.88%
Maturity dates of transferred assets 8/31/96 to 8/15/26
4. PURCHASES AND SALES OF INVESTMENTS.
Information regarding purchases and sales of securities (other than
short-term securities) is included under the caption "Other Information" at
the end of each applicable fund's schedule of investments.
5. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As each fund's investment adviser, FMR receives a monthly
fee.
For each equity fund, the monthly fee is calculated on the basis of a group
fee rate plus a fixed individual fund fee rate applied to the average net
assets of each fund. The group fee rate is the weighted average of a series
of rates and is based on the monthly average net assets of all the mutual
funds advised by FMR. The rates ranged from .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 annualized
individual fund fee rate is .30%. For the period, the management fee was
equivalent to an annualized rate of .61% of average net assets for each
equity fund.
5. FEES AND OTHER TRANSACTIONS WITH
AFFILIATES - CONTINUED
MANAGEMENT FEE - CONTINUED
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% (annualized) of average net assets. For the
period, the management fee was equivalent to an annualized rate of .20% of
the fund's average net assets.
SUB-ADVISER FEE. As the money market fund's investment sub- adviser, FMR
Texas Inc., a wholly owned subsidiary of FMR, receives a fee from FMR of
50% of the management fee payable to FMR. The fee is paid prior to any
voluntary expense reimbursements which may be in effect.
SALES LOAD. Fidelity Distributors Corporation (FDC), an affiliate of FMR,
is the general distributor of each fund. FDC is paid a 3% sales charge on
sales of shares of each fund. Prior to October 12, 1990, FDC was paid a 2%
sales charge and a 1% deferred sales charge. Shares purchased before
October 12, 1990 are subject to the deferred sales charge upon redemption
or exchange to any other Fidelity fund (other than Select funds). The
amounts received by FDC for sales charges and deferred sales charges are
shown under the caption "Other Information" on each fund's Statement of
Operations.
TRANSFER AGENT 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 each applicable fund's 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 applicable
fund's Statement of Operations.
BROKERAGE COMMISSIONS. Certain funds placed a portion of their 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 applicable fund's schedule of
investments.
6. BANK BORROWINGS.
Each fund is permitted to have bank borrowings for temporary or emergency
purposes to fund shareholder redemptions. Each fund has established
borrowing arrangements with certain banks. Under the most restrictive
arrangement, each fund must pledge to the bank securities having a market
value in excess of 220% of the total bank borrowings. The interest rate on
the borrowings is the bank's base rate, as revised from time to time.
Information regarding each applicable fund's participation in the program
is included under the caption "Other Information" at the end of each
applicable fund's schedule of investments.
7. SECURITY LENDING.
Certain equity funds loaned securities to certain brokers who paid the fund
negotiated lenders' fees. These fees are included in interest income. Each
applicable 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" at the end of each applicable fund's schedule of investments.
8. INTERFUND LENDING PROGRAM.
Each fund is permitted to participate in the interfund lending program.
Information regarding each fund's participation in the program is included
under the caption "Other Information" at the end of each applicable fund's
schedule of investments.
9. 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, 2.0% of
9. EXPENSE REDUCTIONS - CONTINUED
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. For the period,
the reimbursement reduced expenses by $4,417 for Select Transportation
Portfolio.
FMR has directed certain portfolio trades to brokers who paid a portion of
each equity fund's expenses. In addition, certain funds have entered into
arrangements with their custodian and transfer agent whereby interest
earned on uninvested cash balances was used to offset a portion of each
applicable fund's expenses. For the period, the reductions under these
arrangements are shown under the caption "Other Information" on each
applicable fund's Statement of Operations.
10. BENEFICIAL INTEREST.
At the end of the period, certain unaffiliated shareholders were record
owners of 10% or more of the total outstanding shares of the following
funds:
BENEFICIAL INTEREST
FUND NUMBER OF SHAREHOLDERS % OWNERSHIP
Automotive 1 18.0
Construction and Housing 1 32.9
Industrial Equipment 1 29.2
Industrial Materials 1 41.4
Multimedia 1 24.2
11. TRANSACTIONS WITH AFFILIATED COMPANIES.
An affiliated company is a company in which a fund has ownership of at
least 5% of the voting securities. Information regarding affiliated
companies is included in the "Legend" following each applicable fund's
schedule of investments.
12. LITIGATION.
A single individual who purchased shares of Apple Computer, Inc. ("Apple")
in September 1995 filed a purported class action complaint against Select
Technology Portfolio, Select Computers Portfolio and others. The complaint
alleges that, in violation of a federal securities law and state common
law, the funds' portfolio manager made misleading statements regarding
Apple and the funds' holdings of Apple. The defendants deny the allegations
in the complaint and intend to defend the lawsuits vigorously.
PROXY VOTING RESULTS
A special meeting of the shareholders of American Gold Portfolio and
Precious Metals and Minerals Portfolio was held on April 17, 1996. The
results of votes taken among shareholders on proposals before them are
listed below.
PROPOSAL 1
To modify certain fundamental investment policies to permit American Gold
Portfolio to invest up to 20% of its assets in precious metals other than
gold.
# OF % OF
SHARES VOTED SHARES VOTED
Affirmative 8,257,166.102 88.378
Against 855,026.679 9.152
Abstain 230,780.897 2.470
TOTAL 9,342,973.678 100.000
PROPOSAL 2
To modify a certain fundamental investment policy for Precious Metals and
Minerals Portfolio.
# OF % OF
SHARES VOTED SHARES VOTED
Affirmative 11,509,554.245 90.705
Against 526,777.649 4.151
Abstain 652,691.714 5.144
TOTAL 12,689,023.608 100.000
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
Sarah H. Zenoble, 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
Thomas J. Simpson, ASSISTANT TREASURER, MONEY MARKET FUND
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 *
ADVISORY BOARD
William O. McCoy
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 Industries
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
Exchanges/Redemptions 1-800-544-7777
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)
TouchTone Xpress 1-800-544-5555
SM
AUTOMATED LINE FOR QUICKEST SERVICE
BULK RATE
U.S. Postage
PAID
Fidelity
Investments
(registered trademark)
P.O. Box 193
Boston, MA 02101
