(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
CYCLICAL 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
NATURAL RESOURCES *
PAPER AND FOREST PRODUCTS
PRECIOUS METALS AND MINERALS
REGIONAL BANKS
RETAILING
SOFTWARE AND COMPUTER SERVICES
TECHNOLOGY
TELECOMMUNICATIONS
TRANSPORTATION
UTILITIES GROWTH
ANNUAL REPORT
FOR THE YEAR ENDING
FEBRUARY 28, 1997
AND
PROSPECTUS
DATED APRIL 29, 1997
* Prospectus only
CONTENTS
PERFORMANCE OVERVIEW AND A-2
MARKET RECAP
FUND UPDATES*
CONSUMER SECTOR A-4 CONSUMER INDUSTRIES (FORMERLY CONSUMER
A-10 PRODUCTS)
A-16 FOOD AND AGRICULTURE
A-22 LEISURE
A-28 MULTIMEDIA
RETAILING
CYCLICALS SECTOR A-34 AIR TRANSPORTATION
A-39 AUTOMOTIVE
A-44 CHEMICALS
A-50 CONSTRUCTION AND HOUSING
A-56 DEFENSE AND AEROSPACE
A-62 ENVIRONMENTAL SERVICES
A-68 INDUSTRIAL EQUIPMENT
A-74 INDUSTRIAL MATERIALS
A-80 PAPER AND FOREST PRODUCTS
A-86 TRANSPORTATION
FINANCIAL SERVICES SECTOR A-91 BROKERAGE AND INVESTMENT MANAGEMENT
A-97 FINANCIAL SERVICES
A-102 HOME FINANCE
A-109 INSURANCE
A-115 REGIONAL BANKS
HEALTH CARE SECTOR A-121 BIOTECHNOLOGY
A-127 HEALTH CARE
A-134 MEDICAL DELIVERY
NATURAL RESOURCES SECTOR A-140 AMERICAN GOLD
A-146 ENERGY
A-152 ENERGY SERVICE
A-158 PRECIOUS METALS AND MINERALS
* FUND UPDATES FOR EACH SELECT PORTFOLIO INCLUDE: PERFORMANCE AND
INVESTMENT SUMMARY, MANAGER'S OVERVIEW, INVESTMENTS, AND FINANCIAL
STATEMENTS.
<TABLE>
<CAPTION>
<S> <C> <C>
TECHNOLOGY SECTOR A-165 COMPUTERS
A-171 DEVELOPING COMMUNICATIONS
A-177 ELECTRONICS
A-183 SOFTWARE AND COMPUTER SERVICES
A-189 TECHNOLOGY
UTILITIES SECTOR A-196 NATURAL GAS
A-202 TELECOMMUNICATIONS
A-208 UTILITIES GROWTH
A-214 MONEY MARKET
NOTES TO FINANCIAL STATEMENTS A-221 FOOTNOTES TO THE FINANCIAL STATEMENTS
REPORT OF INDEPENDENT ACCOUNTANTS A-225 THE AUDITORS' OPINION
DISTRIBUTIONS A-226
FIDELITY SELECT PORTFOLIOS PROSPECTUS P-1
</TABLE>
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:
While the 12-month period that ended February 28, 1997, provided generally
positive returns for equity investors, the market's outstanding performance
stemmed from the strength of a narrow group of sectors. The Standard &
Poor's 500 Index (S&P 500) returned 26.16% during the period - including
reinvested dividends - well above its historical annual average of about
12%. Seven of our 35 Select equity portfolios outperformed the S&P 500.
Three produced negative returns. The best-performing portfolio was Home
Finance, which generated a return of 47.50%, while Air Transportation
performed worst, losing 15.06%.
The market's gains for the past 12 months were largely due to the robust
performance of blue chip stocks. Solid corporate earnings reports, large
cash inflows into mutual funds, widespread optimism and a generally
favorable interest rate environment propelled share prices higher.
Large-capitalization stocks thrived as investors sought their lower
volatility and higher degree of liquidity over smaller-cap stocks. While
short-term confusion over the direction of interest rates created a
volatile backdrop in the summer months, stocks rallied again when the
Federal Reserve Board left short-term interest rates unchanged. In late
February, the market lost some of its steam when Fed Chairman Alan
Greenspan testified before Congress and reiterated the Fed's bias toward
raising short-term rates as a way to pre-empt latent inflation that might
arise later in 1997 due to a tight labor market.
In general, CYCLICALS - those companies whose profitability levels tend to
rise and fall with the economy - performed well, helped by continued
economic expansion that coincided with virtually no signs of inflationary
pressures. However, Paper and Forest Products was plagued by increasing
inventories and reduced pricing power. While increased demand for
commercial aircraft helped Defense and Aerospace, stock performance trailed
off as investors became wary that the consolidation activity in the
industry might be nearing an end. Rising oil prices and two major airliner
crashes bedeviled the Air Transportation fund.
With the economy purring along, the public's steady spending helped stocks
in the CONSUMER sector. At the same time, Christmas sales reports that met,
but didn't beat, expectations caused a momentary blip for stocks in
Retailing. Price competition and investment alternatives posting stronger
earnings growth hurt the performance of stocks in Food and Agriculture.
Stocks in the HEALTH CARE sector benefited from new product introductions
and increased pharmaceutical sales. On the other hand, Biotechnology had a
difficult year, as promising research efforts have not yet produced
tangible results for many of the industry's smaller, less-developed
companies. Cost cutting and consolidation among HMOs and hospitals, as well
as the prospect of reductions in government entitlement spending for
long-term care providers, were the main factors hurting Medical Delivery's
performance.
The TECHNOLOGY sector's year could be divided into two halves. Stocks in
the sector suffered from a sharp correction in the late spring of 1996 that
arose from dampened demand and excess inventory. However, over the second
part of the period, inventories were taken down and demand spiked upward.
For Software and Computer Services, most stocks except for software giant
Microsoft didn't recover as well as the rest of the sector. Stocks in the
Developing Communications industry faced some adversity due to uncertainty
over who would win out in an increasingly competitive environment.
Companies in the FINANCIAL SERVICES sector were strong performers, helped
by low interest rates, moderate growth, subdued inflation and strong cash
flows into the capital markets. Brokerage and Investment Management reaped
the benefits of strong equity market performance. Solid business prospects
and strong earnings helped Home Finance, Regional Banks, Financial Services
and Insurance post strong returns.
Stocks in the NATURAL RESOURCES sector suffered from a sharp depreciation
in the price of gold during the second half of 1996. Energy stocks
benefited from oil and natural gas prices that were strong through much of
the year. However, energy prices tailed off in early 1997 due to winter
weather that was warmer than usual. Energy Service outpaced the S&P 500 due
to tight capacity and strong, sustained demand for fossil fuels.
The UTILITIES sector continued to lag the overall market, as uncertainty
over deregulation and resultant competitive pressures continued to cast a
shadow. In addition, utility stocks tend to track the bond market, which
markedly underperformed stocks over the 12-month period.
At the beginning of March 1997, we stand pretty much where we have over the
past two years. Domestic stocks remain at high valuations, with the
market's advance encompassing, for the most part, only the largest, most
liquid names. For the extended market rally to continue, companies will
have to report strong earnings growth and interest rates will have to
remain relatively stable. That might be difficult. Potential hikes in
short-term interest rates by the Fed could bring on higher borrowing costs
for corporations, slow the economy and make alternatives to equity
investments more attractive. In addition, a tight labor market in the U.S.
could put pressure on profit margins at a time when companies are already
facing limited pricing power. Of course, the market has overcome concerns
such as these as it has continued its relentless climb upward over the past
two years. Only time will tell.
In the pages that follow, you'll find detailed summaries of the portfolios.
We hope that you will use them to evaluate your investments. Thank you very
much for your continued interest in the Fidelity Select Portfolios.
Sincerely,
Robert J. Haber
Director, U.S. Equity Research
Select Group Leader
CUMULATIVE TOTAL RETURNS
FOR THE YEAR ENDED FEBRUARY 28, 1997
Row: 1, Col: 1, Value: 47.5
Row: 2, Col: 1, Value: 44.27
Row: 3, Col: 1, Value: 43.33
Row: 4, Col: 1, Value: 35.54
Row: 5, Col: 1, Value: 34.67
Row: 6, Col: 1, Value: 32.26000000000001
Row: 7, Col: 1, Value: 28.28
Row: 8, Col: 1, Value: 26.16
Row: 9, Col: 1, Value: 23.97
Row: 10, Col: 1, Value: 20.6
Row: 11, Col: 1, Value: 20.41
Row: 12, Col: 1, Value: 20.35
Row: 13, Col: 1, Value: 19.59
Row: 14, Col: 1, Value: 18.64
Row: 15, Col: 1, Value: 18.25
Row: 16, Col: 1, Value: 18.13
Row: 17, Col: 1, Value: 16.93
Row: 18, Col: 1, Value: 16.14
Row: 19, Col: 1, Value: 15.87
Row: 20, Col: 1, Value: 15.86
Row: 21, Col: 1, Value: 15.06
Row: 22, Col: 1, Value: 13.59
Row: 23, Col: 1, Value: 12.69
Row: 24, Col: 1, Value: 12.64
Row: 25, Col: 1, Value: 12.45
Row: 26, Col: 1, Value: 10.87
Row: 27, Col: 1, Value: 10.5
Row: 28, Col: 1, Value: 10.14
Row: 29, Col: 1, Value: 7.85
Row: 30, Col: 1, Value: 6.1
Row: 31, Col: 1, Value: 5.85
Row: 32, Col: 1, Value: 4.67
Row: 33, Col: 1, Value: 1.34
Row: 34, Col: 1, Value: -4.52
Row: 35, Col: 1, Value: -6.26
Row: 36, Col: 1, Value: -15.06
Home Finance 47.50%Brokerage and Investment Management 44.27%Regional
Banks 43.33%Financial Services 35.54%Electronics 34.67%Energy Service
32.26%Insurance 28.28%S&P 500 26.16%Computers 23.97%Automotive
20.60%Health Care 20.41%Energy 20.35%Retailing 19.59%Construction and
Housing 18.64%Industrial Equipment 18.25%Utilities Growth
18.13%Environmental Services 16.93%Software and Computer Services
16.14%Defense and Aerospace 15.87%Consumer Industries 15.81%Chemicals
15.06%Food and Agriculture 13.59%Industrial Materials 12.69%Technology
12.64%Natural Gas 12.45%Paper and Forest Products 10.87%Medical Delivery
10.50%Leisure 10.14%Telecommunications 7.85%American Gold
6.10%Biotechnology 5.85%Transportation 4.67%Developing Communications
1.34%Multimedia -4.52%Precious Metals and Minerals -6.26%Air
Transportation -15.06%
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 DO 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 FUND 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. You can
look at the total percentage change in value, the average annual percentage
change, or the growth of a hypothetical $10,000 investment. Total return
reflects the change in the value of an investment, assuming reinvestment of
the fund's dividend income and capital gains (the profits earned upon the
sale of 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 fund expenses, the past five year and life of fund total
returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
FEBRUARY 28, 1997 YEAR YEARS FUND
CONSUMER INDUSTRIES 15.81% 84.68% 163.43%
CONSUMER INDUSTRIES 12.33% 79.14% 155.53%
(INCL. 3% SALES CHARGE)
S&P 500 26.16% 118.75% 167.01%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one year, five years, or since the fund
started on June 29, 1990. You can compare the fund's returns 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, and excludes the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
FEBRUARY 28, 1997 YEAR YEARS FUND
CONSUMER INDUSTRIES 15.81% 13.05% 15.61%
CONSUMER INDUSTRIES 12.33% 12.37% 15.09%
(INCL. 3% SALES CHARGE)
S&P 500 26.16% 16.94% 15.85%
AVERAGE ANNUAL RETURNS take the fund's 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
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
1996/08/31 22361.92 21790.58
1996/09/30 23809.01 23016.95
1996/10/31 23994.54 23651.76
1996/11/30 24674.80 25439.60
1996/12/31 24266.64 24935.64
1997/01/31 25355.05 26493.62
1997/02/28 25552.95 26701.33
Let's say hypothetically that $10,000 was invested in Fidelity Select
Consumer Industries Portfolio on June 29, 1990, when the fund started, and
the current maximum 3% sales charge was paid. As the chart shows, by
February 28, 1997, the value of the investment would have grown to $25,553
- - a 155.53% increase on the initial investment. For comparison, look at how
the S&P 500 did over the same period. With dividends and capital gains, if
any, reinvested, the same $10,000 investment would have grown to $26,701 -
a 167.01% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1997
% OF FUND'S
INVESTMENTS
TJX Companies, Inc. 4.5
HFS, Inc. 4.1
CVS Corp. 3.9
MGM Grand, Inc. 3.6
Procter & Gamble Co. 3.6
Westinghouse Electric Corp. 3.4
Gillette Co. 3.2
Campbell Soup Co. 2.5
PepsiCo, Inc. 2.5
Disney (Walt) Co. 2.4
TOP INDUSTRIES AS OF FEBRUARY 28, 1997
Hotels, Motels, & Tourist Courts 9.3%
Drug Stores 6.7%
General Apparel Stores 6.1%
Electrical Machinery 5.6%
Cosmetics 5.5%
All Others 66.8% *
Row: 1, Col: 1, Value: 66.8
Row: 1, Col: 2, Value: 5.5
Row: 1, Col: 3, Value: 5.6
Row: 1, Col: 4, Value: 6.1
Row: 1, Col: 5, Value: 6.7
Row: 1, Col: 6, Value: 9.300000000000001
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
CONSUMER INDUSTRIES PORTFOLIO
FUND TALK: THE MANAGERS' OVERVIEW
NOTE TO SHAREHOLDERS: Effective January 7, 1997, Paul Antico became
Portfolio Manager of Fidelity Select Consumer Industries Portfolio. The
following is an interview with Katherine Collins, who managed the fund
during much of the period covered by the report, and Paul Antico, who
discusses his investing style and outlook.
Q. KATHERINE, HOW DID THE FUND PERFORM?
K.C. For the 12 months ending February 28, 1997, the fund returned 15.81%.
By comparison, the Standard & Poor's 500 Index returned 26.16% for the same
time period.
Q. WHAT WAS THE INVESTING ENVIRONMENT LIKE DURING THE PERIOD?
K.C. Personal care stocks performed well, as did the larger traditional
consumer companies. Retailing had mixed performance; some smaller retail
chains experienced bumps in growth, but those involved in consolidation
activity performed well. Increased demand for upscale, luxury hotels, with
little new supply, provided the opportunity to raise prices, resulting in
strong performance for certain hotel stocks. Broadcast companies took
advantage of the new telecommunications law, which eased ownership
restrictions and resulted in heightened merger and acquisition activity. A
prime example is Westinghouse's acquisition of Infinity Broadcasting, one
of the country's largest radio companies.
Q. WHAT INVESTMENT STRATEGIES HELPED THE FUND'S PERFORMANCE?
K.C. If I had to choose the biggest contributor to the fund's performance,
it would be the weighting in large-capitalization, blue chip consumer
stocks, which had exceptionally strong performance. I was able to find good
opportunities in companies such as Procter & Gamble and Gillette, as well
as large-cap entertainment stocks such as Walt Disney. The fund's
investments in personal care and hotel stocks also helped the fund's
performance. Additionally, the fund benefited by limiting its exposure to
restaurant, cable and cellular communications stocks, which performed
poorly during the period.
Q. WERE THERE ANY DISAPPOINTMENTS?
K.C. Sure. The two biggest disappointments were gaming stocks and Internet
stocks. Several gaming companies have been adding new facilities and, when
they open, I believe they will have the potential to increase earnings. In
the meantime, however, there has been some lowering of short-term earnings
expectations due to the disruptions caused by capacity additions. The fund
also had significant holdings in Internet service providers earlier in the
year. America Online, in particular, saw slowing subscriber growth and more
intense competition around mid-year.
Q. TURNING TO YOU, PAUL, WHAT IS YOUR INVESTMENT PHILOSOPHY?
P.A. Like Katherine, I'm a common sense investor, managing the fund from
the bottom up. First I evaluate the merits of each company, rather than
looking solely at industries or economic trends. My goal is to buy growth
at the right price and, although I'm sensitive to valuations, I'm not
afraid to pay more for a great company such as Gillette. In the current
environment, there are always some great buying opportunities in this
sector because of its breadth.
Q. HAVING RECENTLY TAKEN THE HELM, WHAT IS YOUR OUTLOOK?
P.A. The outlook for consumer stocks is, as a whole, tied to general
economic health. Right now, although the consumer debt level is high, so
are consumer confidence and cash flows. Regardless, I think this fund has
the ability to perform well in varying economic climates simply because of
the range of investment opportunities available. This allows me great
flexibility in managing the fund, no matter what the environment. For
example, if I see companies with strong potential for growth bolstered by
changing trends in the industry, I can take advantage of that potential.
If, on the other hand, I need to position the fund more defensively, I have
the ability to purchase more conservative stocks.
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 February 28, 1997, more than
$18 million
MANAGER: Paul Antico, since January 1997;
manager, Fidelity Select Leisure Portfolio,
since January 1997; Fidelity Advisor
Consumer Industries, since January 1997;
Fidelity Select Industrial Equipment Portfolio,
March 1996-January 1997; Fidelity Select
Developing Communications Portfolio,
1993-1996; joined Fidelity in 1991
(checkmark)
CONSUMER INDUSTRIES PORTFOLIO
INVESTMENTS FEBRUARY 28, 1997
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 97.3%
SHARES VALUE (NOTE 1)
APPAREL STORES - 10.5%
FOOTWEAR - WHOLESALE - 1.0%
Kenneth Cole Productions, Inc. Class A (a) 8,800 $ 172,700
GENERAL APPAREL STORES - 6.1%
Gymboree Corp. (a) 4,100 100,963
Ross Stores, Inc. 4,000 192,000
TJX Companies, Inc. 19,500 814,120
1,107,083
MISCELLANEOUS APPAREL, ACCESSORIES - 0.9%
Abercrombie & Fitch Co. (a) 9,700 168,538
SHOE STORES - 0.7%
Footstar, Inc. (a) 5,038 127,210
WOMEN'S ACCESSORY & SPECIALTY STORES - 0.4%
Loehmanns, Inc. (a) 5,000 79,688
WOMEN'S CLOTHING STORES - 1.4%
AnnTaylor Stores Corp. (a) 8,100 162,000
Talbots, Inc. 2,800 89,950
251,950
TOTAL APPAREL STORES 1,907,169
BEVERAGES - 6.0%
MALT BEVERAGE - 1.8%
Anheuser-Busch Companies, Inc. 7,200 320,400
Coors (Adolph) Co. Class B 200 4,275
324,675
SOFT DRINKS - 4.2%
Coca-Cola Co. (The) 5,200 317,200
PepsiCo, Inc. 13,600 447,100
764,300
TOTAL BEVERAGES 1,088,975
BROADCASTING - 4.4%
CABLE TV OPERATORS - 0.0%
Time Warner, Inc. 19 779
RADIO BROADCASTING - 4.1%
Clear Channel Communications, Inc. (a) 8,600 411,725
Evergreen Media Corp. Class A (a) 5,700 171,000
Metro Networks, Inc. (a) 1,000 22,250
Univision Communications, Inc. Class A (a) 4,500 148,500
753,475
TELEVISION BROADCASTING - 0.3%
Young Broadcasting, Inc. Class A (a) 1,500 43,688
TOTAL BROADCASTING 797,942
CELLULAR - 0.7%
CELLULAR & COMMUNICATION SERVICES - 0.7%
AirTouch Communications, Inc. (a) 5,000 136,250
COMPUTER SERVICES & SOFTWARE - 4.9%
COMPUTER & SOFTWARE STORES - 2.0%
CompUSA, Inc. 18,000 360,000
COMPUTER SERVICES - 2.9%
America Online, Inc. (a) 9,000 337,500
Computer Learning Centers, Inc. (a) 3,800 116,850
Midway Games, Inc. (a) 5,000 78,125
532,475
PREPACKAGED COMPUTER SOFTWARE - 0.0%
Spectrum Holobyte, Inc. (a) 100 825
TOTAL COMPUTER SERVICES & SOFTWARE 893,300
SHARES VALUE (NOTE 1)
DRUG STORES - 6.7%
CVS Corp. 15,500 $ 716,875
Revco (D.S.), Inc. (a) 8,000 327,000
Rite Aid Corp. 4,000 168,500
1,212,375
DRUGS & PHARMACEUTICALS - 0.7%
PHARMACEUTICAL PREPARATIONS - 0.7%
Twinlab Corp. (a) 10,000 135,000
ELECTRICAL EQUIPMENT - 5.6%
ELECTRICAL MACHINERY - 5.6%
General Electric Co. 4,000 411,500
Westinghouse Electric Corp. 35,650 614,963
1,026,463
ENTERTAINMENT - 6.1%
MOTION PICTURE PRODUCTION - 2.5%
Disney (Walt) Co. 6,000 445,500
RECREATIONAL SERVICES - 3.6%
MGM Grand, Inc. (a) 18,900 663,863
TOTAL ENTERTAINMENT 1,109,363
FOODS - 2.5%
CANNED SPECIALTIES - 2.5%
Campbell Soup Co. 5,000 450,625
GENERAL MERCHANDISE STORES - 2.0%
GENERAL MERCHANDISE STORES - 1.5%
Wal-Mart Stores, Inc. 10,000 263,750
VARIETY STORES - 0.5%
Hot Topic, Inc. 5,200 93,600
TOTAL GENERAL MERCHANDISE STORES 357,350
GROCERY STORES - 0.6%
GROCERY - RETAIL - 0.6%
Dominick's Supermarkets, Inc. (a) 6,000 111,000
HOUSEHOLD PRODUCTS - 10.5%
COSMETICS - 5.5%
Alberto-Culver Co. Class A 4,200 100,275
Avon Products, Inc. 4,000 233,000
Gillette Co. 7,400 585,525
Tambrands, Inc. 2,000 86,000
1,004,800
SOAPS & DETERGENTS - 5.0%
Clorox Co. 2,000 239,000
Procter & Gamble Co. 5,500 660,688
899,688
TOTAL HOUSEHOLD PRODUCTS 1,904,488
LEISURE DURABLES & TOYS - 4.3%
SPORTING & ATHLETIC GOODS - 0.9%
Callaway Golf Co. 5,000 159,375
TOYS & GAMES - 3.4%
Hasbro, Inc. 10,300 440,325
Nintendo Co. Ltd. Ord. 2,700 191,117
631,442
TOTAL LEISURE DURABLES & TOYS 790,817
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
LODGING & GAMING - 10.2%
HOTELS, MOTELS, & TOURIST COURTS - 9.3%
HFS, Inc. (a) 10,900 $ 746,650
Hilton Hotels Corp. 7,000 175,875
Host Marriott Corp. (a) 14,000 252,000
ITT Corp. (a) 5,000 282,500
Mirage Resorts, Inc. (a) 10,000 248,750
1,705,775
RACING & GAMING - 0.9%
WMS Industries, Inc. (a) 8,000 159,000
TOTAL LODGING & GAMING 1,864,775
PAPER & FOREST PRODUCTS - 2.3%
PAPER - 2.3%
Kimberly-Clark Corp. 3,900 413,400
PUBLISHING - 1.9%
GREETING CARDS - 0.2%
Gibson Greetings, Inc. 1,800 37,125
PERIODICALS - 1.7%
Playboy Enterprises, Inc. Class B (a) 20,600 314,150
TOTAL PUBLISHING 351,275
RESTAURANTS - 3.9%
Landry's Seafood Restaurants, Inc. 6,000 108,000
Logan's Roadhouse, Inc. (a) 3,000 70,500
Rainforest Cafe, Inc. 9,000 183,375
Starbucks Corp. (a) 10,500 353,063
714,938
RETAIL & WHOLESALE, MISCELLANEOUS - 2.6%
HOBBY, TOY, & GAME SHOPS - 1.4%
Toys "R" Us, Inc. (a) 10,100 262,600
LUMBER & BUILDING MATERIALS - RETAIL - 0.6%
Lowe's Companies, Inc. 3,000 109,500
RETAIL, GENERAL - 0.6%
Pier 1 Imports, Inc. 6,000 104,250
TOTAL RETAIL & WHOLESALE, MISCELLANEOUS 476,350
TEXTILES & APPAREL - 9.2%
APPAREL - 2.8%
Fruit of the Loom, Inc. Class A 5,000 204,375
Intimate Brands, Inc. Class A 4,000 78,000
Liz Claiborne, Inc. 5,800 234,900
517,275
CARPETS & RUGS - 0.7%
Mohawk Industries, Inc. (a) 5,000 131,875
COTTON MILLS - 0.6%
Galey & Lord, Inc. (a) 5,800 105,850
FOOTWEAR - 3.4%
NIKE, Inc. Class B 5,400 388,125
Reebok International Ltd. 4,900 229,075
617,200
KNIT OUTERWEAR MILLS - 0.4%
Tultex Corp. (a) 9,000 72,000
MEN'S & BOYS' CLOTHING - 1.3%
Tommy Hilfiger (a) 4,200 229,425
TOTAL TEXTILES & APPAREL 1,673,625
SHARES VALUE (NOTE 1)
TOBACCO - 1.7%
CIGARETTES - 1.0%
RJR Nabisco Holdings Corp. 4,900 $ 179,463
TOBACCO MANUFACTURERS - 0.7%
Philip Morris Companies, Inc. 1,000 135,125
TOTAL TOBACCO 314,588
TOTAL COMMON STOCKS
(Cost $16,426,642) 17,730,068
CASH EQUIVALENTS - 2.7%
Taxable Central Cash Fund (b)
(Cost $487,888) 487,888 487,888
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $16,914,530) $ 18,217,956
LEGEND
1. Non-income producing
2. At period end, the seven-day yield on the Taxable Central Cash Fund was
5.31%. The yield refers to the income earned by investing in the fund over
the seven-day period, expressed as an annual percentage.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $79,036,677 and $83,160,729, respectively (see Note 3 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $29,979 for the period (see
Note 4 of Notes to Financial Statements).
INCOME TAX INFORMATION
At February 28, 1997, the aggregate cost of investment securities for
income tax purposes was $16,982,694. Net unrealized appreciation aggregated
$1,235,262, of which $1,626,330 related to appreciated investment
securities and $391,068 related to depreciated investment securities.
The fund hereby designates approximately $46,000 as a capital gain dividend
for the purpose of the dividend paid deduction.
CONSUMER INDUSTRIES PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1997
ASSETS
Investment in $ 18,217,956
securities, at
value
(cost
$16,914,530)
- - See
accompanyin
g schedule
Receivable for 703,519
investments
sold
Receivable for 219,653
fund shares
sold
Dividends 8,339
receivable
Interest 6,561
receivable
Redemption 168
fees
receivable
Other 2,898
receivables
TOTAL ASSETS 19,159,094
LIABILITIES
Payable to $ 126,335
custodian
bank
Payable for 248,540
investments
purchased
Payable for 347,635
fund shares
redeemed
Accrued 9,035
management
fee
Other payables 35,439
and accrued
expenses
TOTAL 766,984
LIABILITIES
NET ASSETS $ 18,392,110
Net Assets
consist of:
Paid in capital $ 17,108,780
Accumulated (20,096
undistributed )
net realized
gain (loss) on
investments
and foreign
currency
transactions
Net unrealized 1,303,426
appreciation
(depreciation
) on
investments
NET ASSETS, for $ 18,392,110
890,378
shares
outstanding
NET ASSET $20.66
VALUE and
redemption
price per
share
($18,392,110
(divided by) 890,378
shares)
Maximum $21.30
offering price
per share
(100/97.00 of
$20.66)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1997
INVESTMENT $ 233,081
INCOME
Dividends
Interest 103,153
TOTAL 336,234
INCOME
EXPENSES
Management $ 154,434
fee
Transfer agent 346,240
fees
Accounting 60,450
fees and
expenses
Non-interested 209
trustees'
compensatio
n
Custodian fees 15,757
and
expenses
Registration 20,409
fees
Audit 37,685
Legal 423
Miscellaneous 724
Total 636,331
expenses
before
reductions
Expense (12,169 624,162
reductions )
NET (287,928
INVESTMENT )
INCOME
(LOSS)
REALIZED AND 2,053,365
UNREALIZED
GAIN (LOSS)
Net realized
gain (loss) on
investment
securities
Change in net (1,279,001
unrealized )
appreciation
(depreciation
) on
investment
securities
NET GAIN (LOSS) 774,364
NET INCREASE $ 486,436
(DECREASE)
IN NET ASSETS
RESULTING
FROM
OPERATIONS
OTHER $ 169,639
INFORMATION
Sales
charges paid
to FDC
Deferred $ 682
sales
charges
withheld
by FDC
Exchange $ 29,948
fees withheld
by FSC
Expense $ 12,169
reductions
Directed
brokerage
arrangement
s
STATEMENT OF CHANGES IN NET ASSETS
INCREASE YEAR ENDED YEAR ENDED
(DECREASE) IN FEBRUARY 28, FEBRUARY 29,
NET ASSETS 1997 1996
Operations $ (287,928 $ 160,644
Net )
investment
income (loss)
Net realized 2,053,365 (15,575
gain (loss) )
Change in (1,279,001 2,287,139
net )
unrealized
appreciation
(depreciation
)
NET INCREASE 486,436 2,432,208
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
Distributions to - (179,260
shareholders )
From net
investment
income
From net - (51,276
realized gain )
In excess of - (1,382,081
net realized )
gain
TOTAL - (1,612,617
DISTRIBUTION )
S
Share 64,681,737 203,425,708
transactions
Net proceeds
from sales of
shares
Reinvestmen - 1,603,782
t of
distributions
Cost of (69,290,503 (204,220,866
shares ) )
redeemed
Paid in 152,149 232,770
capital
portion of
redemption
fees
NET INCREASE (4,456,617 1,041,394
(DECREASE) )
IN NET
ASSETS
RESULTING
FROM SHARE
TRANSACTIO
NS
TOTAL (3,970,181 1,860,985
INCREASE )
(DECREASE)
IN NET ASSETS
NET ASSETS
Beginning of 22,362,291 20,501,306
period
End of period $ 18,392,110 $ 22,362,291
OTHER
INFORMATION
Shares
Sold 3,299,962 11,665,407
Issued in - 90,434
reinvestment
of
distributions
Redeemed (3,662,924 (11,976,587
) )
Net increase (362,962) (220,746)
(decrease)
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEAR ENDED YEAR ENDED YEARS ENDED FEBRUARY 28, TEN MONTHS
FEBRUARY 28, FEBRUARY 29, ENDED
FEBRUARY 28,
SELECTED 1997 1996 1995 1994 1993
PER-SHARE
DATA D
</TABLE>
Net asset $ 17.84 $ 13.91 $ 15.24 $ 12.97 $ 13.81
value,
beginning of
period
Income from
Investment
Operations
Net (.22) .08 (.15) (.20) (.09)
investment
income (loss)
Net realized 2.93 3.97 (.60) 3.84 .20
and
unrealized
gain (loss)
Total from 2.71 4.05 (.75) 3.64 .11
investment
operations
Less
Distributions
From net - (.02) - - -
investment
income
From net - (.01) (.60) (1.40) (.97)
realized gain
In excess of - (.20) - - -
net realized
gain
Total - (.23) (.60) (1.40) (.97)
distributions
Redemption .11 .11 .02 .03 .02
fees added to
paid in
capital
Net asset $ 20.66 $ 17.84 $ 13.91 $ 15.24 $ 12.97
value, end of
period
TOTAL 15.81% 30.01% (4.59)% 28.43% .98%
RETURN B, C
RATIOS AND
SUPPLEMENT
AL DATA
Net assets, $ 18,392 $ 22,362 $ 20,501 $ 8,374 $ 7,005
end of period
(000 omitted)
Ratio of 2.49% 1.53% E 2.49% E 2.48% E 2.47% A,
expenses to E
average net
assets
Ratio of 2.44% F 1.48% F 2.49% 2.48% 2.47% A
expenses to
average net
assets after
expense
reductions
Ratio of net (1.13)% .46% (1.08)% (1.34)% (.80)%
investment A
income (loss)
to average
net assets
Portfolio 340% 601% 190% 169% 215% A
turnover rate
Average $ .0355
commission
rate G
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
A ANNUALIZED B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 8 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 8 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>
FOOD AND AGRICULTURE PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance. You can
look at the total percentage change in value, the average annual percentage
change, or the growth of a hypothetical $10,000 investment. Total return
reflects the change in the value of an investment, assuming reinvestment of
the fund's dividend income and capital gains (the profits earned upon the
sale of 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 fund expenses, the past 10 year total returns would have
been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 28, 1997 YEAR YEARS YEARS
FOOD AND AGRICULTURE 13.59% 108.11% 367.79%
FOOD AND AGRICULTURE 10.18% 101.87% 353.76%
(INCL. 3% SALES CHARGE)
S&P 500 26.16% 118.75% 276.74%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one, five, or 10 years. You can compare
the fund's returns 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, and excludes the effect of sales
charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 28, 1997 YEAR YEARS YEARS
FOOD AND AGRICULTURE 13.59% 15.79% 16.68%
FOOD AND AGRICULTURE 10.18% 15.08% 16.33%
(INCL. 3% SALES CHARGE)
S&P 500 26.16% 16.94% 14.16%
AVERAGE ANNUAL RETURNS take the fund's 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
1987/02/28 9700.00 10000.00
1987/03/31 9995.84 10289.00
1987/04/30 9961.70 10197.43
1987/05/31 9899.12 10286.15
1987/06/30 10473.72 10805.60
1987/07/31 10854.90 11353.44
1987/08/31 11236.07 11776.92
1987/09/30 11122.29 11519.01
1987/10/31 8613.37 9037.81
1987/11/30 8232.20 8293.10
1987/12/31 8624.35 8924.20
1988/01/31 8961.75 9299.91
1988/02/29 9405.70 9733.29
1988/03/31 9470.81 9432.53
1988/04/30 9500.40 9537.23
1988/05/31 9571.43 9620.20
1988/06/30 9962.11 10061.77
1988/07/31 10033.14 10023.54
1988/08/31 10027.22 9682.74
1988/09/30 10429.73 10095.22
1988/10/31 10915.11 10375.87
1988/11/30 10660.58 10227.49
1988/12/31 10933.47 10406.47
1989/01/31 11497.36 11168.23
1989/02/28 11289.61 10890.14
1989/03/31 11716.98 11143.88
1989/04/30 12322.41 11722.25
1989/05/31 13082.18 12197.00
1989/06/30 13339.23 12127.48
1989/07/31 14611.66 13222.59
1989/08/31 14386.39 13481.75
1989/09/30 14447.28 13426.47
1989/10/31 14301.16 13114.98
1989/11/30 14843.01 13382.52
1989/12/31 15183.03 13703.71
1990/01/31 14126.93 12784.19
1990/02/28 14329.03 12949.10
1990/03/31 14948.34 13292.25
1990/04/30 14889.67 12959.95
1990/05/31 16186.98 14223.54
1990/06/30 16712.05 14126.82
1990/07/31 16705.46 14081.62
1990/08/31 15486.81 12808.64
1990/09/30 14992.76 12184.86
1990/10/31 15348.47 12132.46
1990/11/30 15980.86 12916.22
1990/12/31 16599.16 13276.58
1991/01/31 17075.56 13855.44
1991/02/28 18361.84 14846.11
1991/03/31 19260.20 15205.38
1991/04/30 18967.55 15241.87
1991/05/31 19661.73 15900.32
1991/06/30 18851.65 15172.09
1991/07/31 19640.60 15879.11
1991/08/31 20422.62 16255.44
1991/09/30 20062.75 15983.98
1991/10/31 20069.67 16198.16
1991/11/30 19931.26 15545.38
1991/12/31 22257.76 17323.77
1992/01/31 21925.98 17001.55
1992/02/29 21803.37 17222.57
1992/03/31 21320.13 16886.73
1992/04/30 21074.91 17383.20
1992/05/31 21262.43 17468.37
1992/06/30 21029.96 17208.09
1992/07/31 21842.24 17911.90
1992/08/31 21745.36 17544.71
1992/09/30 22110.52 17751.74
1992/10/31 22348.99 17813.87
1992/11/30 23205.98 18421.32
1992/12/31 23599.00 18647.90
1993/01/31 23606.63 18804.55
1993/02/28 23545.59 19060.29
1993/03/31 24186.50 19462.46
1993/04/30 23247.38 18991.47
1993/05/31 23979.33 19500.44
1993/06/30 23740.65 19556.99
1993/07/31 23446.28 19478.76
1993/08/31 24568.07 20217.01
1993/09/30 24488.51 20061.34
1993/10/31 25411.41 20476.61
1993/11/30 25117.03 20282.08
1993/12/31 25679.83 20527.49
1994/01/31 26456.49 21225.43
1994/02/28 26297.81 20650.22
1994/03/31 25070.19 19749.87
1994/04/30 24790.07 20002.67
1994/05/31 24609.93 20330.71
1994/06/30 24798.65 19832.61
1994/07/31 25630.70 20483.12
1994/08/31 27260.50 21322.93
1994/09/30 27311.97 20800.52
1994/10/31 27826.64 21268.53
1994/11/30 27148.99 20493.93
1994/12/31 27244.75 20797.85
1995/01/31 28393.30 21337.14
1995/02/28 28963.13 22168.65
1995/03/31 29621.99 22822.85
1995/04/30 30269.42 23494.98
1995/05/31 31355.64 24434.07
1995/06/30 32097.89 25001.68
1995/07/31 32450.92 25830.73
1995/08/31 32396.61 25895.57
1995/09/30 34940.18 26988.36
1995/10/31 34994.49 26892.01
1995/11/30 36370.37 28072.57
1995/12/31 37226.90 28613.25
1996/01/31 38762.22 29587.24
1996/02/29 39946.88 29861.52
1996/03/31 39274.00 30149.08
1996/04/30 38558.08 30593.48
1996/05/31 39980.39 31382.49
1996/06/30 40019.35 31502.05
1996/07/31 39473.81 30110.29
1996/08/31 38217.12 30745.32
1996/09/30 39512.78 32475.67
1996/10/31 40243.42 33371.34
1996/11/30 42269.71 35893.88
1996/12/31 42196.49 35182.83
1997/01/31 44020.49 37381.05
1997/02/28 45375.75 37674.12
Let's say hypothetically that $10,000 was invested in Fidelity Select Food
and Agriculture Portfolio on February 28, 1987, and the current maximum 3%
sales charge was paid. As the chart shows, by February 28, 1997, the value
of the investment would have grown to $45,376 - a 353.76% increase on the
initial investment. For comparison, look at how the S&P 500 did over the
same period. With dividends and capital gains, if any, reinvested, the same
$10,000 investment would have grown to $37,674 - a 276.74% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1997
% OF FUND'S
INVESTMENTS
Philip Morris Companies, Inc. 10.9
Ralston Purina Co. 8.8
Nabisco Holdings Corp. Class A 6.1
Campbell Soup Co. 6.1
RJR Nabisco Holdings Corp. 5.4
Coca-Cola Co. (The) 4.6
PepsiCo, Inc. 4.4
Kellogg Co. 4.4
General Mills, Inc. 4.1
Heinz (H.J.) Co. 3.2
TOP INDUSTRIES AS OF FEBRUARY 28, 1997
Food 18.8%
Tobacco Manufacturers 10.9%
Grain Mill Products 10.0%
Soft Drinks 9.2%
Cookies & Crackers 6.1%
All Others 45.0% *
Row: 1, Col: 1, Value: 45.0
Row: 1, Col: 2, Value: 6.1
Row: 1, Col: 3, Value: 9.199999999999999
Row: 1, Col: 4, Value: 10.0
Row: 1, Col: 5, Value: 10.9
Row: 1, Col: 6, Value: 18.8
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
FOOD AND AGRICULTURE PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
NOTE TO SHAREHOLDERS: Scott Offen became Portfolio Manager of Fidelity
Select Food and Agriculture Portfolio on November 12, 1996.
Q. SCOTT, HOW DID THE FUND PERFORM OVER THE PAST YEAR?
A. For the 12 months that ended February 28, 1997, the fund had a total
return of 13.59%, while the Standard & Poor's 500 Index returned 26.16%
over the same period.
Q. LOOKING BACK OVER THE YEAR, WHAT FACTORS AFFECTED THE SECTOR?
A. I believe the sector didn't perform as well as the overall market for
several reasons. First, the companies in it didn't experience the same kind
of explosive unit growth as the parts of the S&P 500 that led the market,
such as technology companies. Second, some of the categories, such as the
cereal group, saw intense price competition, forcing companies to cut
prices to maintain market share. Third, some companies have been slow to
restructure or take other measures to help streamline their operations.
Finally, this is a sector that, relative to the broader stock market,
generally performs best when the future of the economy is uncertain,
because many of the companies in it are capable of sustaining steady
earnings growth. Over the past year, the economy has been doing fine, and
other parts of the market were more attractive because they were able to
sustain better earnings growth.
Q. SCOTT, YOU TOOK OVER THE FUND IN NOVEMBER. WHAT CHANGES HAVE YOU MADE
SINCE THEN?
A. I've reduced the number of positions in the fund and concentrated it
more on large-capitalization stocks. For example, in the beverage area I
reduced the fund's small- and mid-cap positions and increased investments
in Coca-Cola and PepsiCo. I've pursued a large-cap bias because I felt
these companies have the resources to take costs out of their systems and
take advantage of economies of scale. By doing so, they can reinvest some
of those cost savings back into their businesses, either through capital
expenditures or marketing, to increase volume growth to help them further
their domination of their categories. That process should lead to enhanced
returns over time.
Q. WHICH STOCKS WERE SOME OF THE BEST PERFORMERS FOR THE FUND?
A. The fund's tobacco investments - Philip Morris and RJR Nabisco - did
very well, even though they struggled somewhat last summer after another
tobacco company lost a lawsuit. However, the companies have rebounded after
winning recent cases, and the stocks have been among the market's top
performers. Also, these companies had positive business prospects that have
been driven by increased consumption overseas. In addition, consumption in
the U.S. has been flat recently, where it had been declining during the
previous three years. In addition, Campbell Soup has done very well,
because it successfully pursued the kind of cost-cutting strategy I just
described above.
Q. WERE THERE DISAPPOINTMENTS?
A. As I mentioned, the cereal group, including companies such as Kellogg's
and General Mills, ran into some problems because of a difficult pricing
environment. PepsiCo suffered from the problems that have held it back over
the past few years, namely its struggling restaurant franchises. However,
the company announced that it plans to divest itself of those holdings by
the end of 1997. McDonald's faltered as well, as it fought to maintain
market share.
Q. WHAT'S YOUR OUTLOOK OVER THE NEXT FEW MONTHS?
A. I believe the sector will do well. I feel confident that I've found some
companies that will take control of their own destiny. I'll continue to
look for companies that are striving to reduce costs, increase market
share, pursue aggressive marketing tactics or introduce new products to
create new demand. By doing so, these types of companies can create real
value for shareholders.
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 February 28, 1997, more than
$223 million
MANAGER: Scott Offen, since November 1996;
manager, Fidelity Select Paper and Forest
Products Portfolio, 1993-1996; Fidelity Select
Brokerage and Investment Management
Portfolio, 1990-1993; Fidelity Select Life
Insurance Portfolio, 1988-1990; joined Fidelity
in 1985
(checkmark)
FOOD AND AGRICULTURE PORTFOLIO
INVESTMENTS FEBRUARY 28, 1997
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 90.6%
SHARES VALUE (NOTE 1)
AGRICULTURE - 3.8%
CROPS - 3.8%
DEKALB Genetics Corp. Class B 27,800 $ 1,813,950
Pioneer Hi-Bred International, Inc. 96,200 6,553,622
8,367,572
BEVERAGES - 10.3%
MALT BEVERAGE - 1.1%
Anheuser-Busch Companies, Inc. 53,200 2,367,400
SOFT DRINKS - 9.2%
Celestial Seasonings, Inc. (a) 5,600 121,100
Coca-Cola Co. (The) 166,900 10,180,900
Coca-Cola Enterprises, Inc. 6,400 395,200
PepsiCo, Inc. 300,100 9,865,788
20,562,988
TOTAL BEVERAGES 22,930,388
CONGLOMERATES - 0.6%
Whitman Corp. 51,700 1,214,950
FOODS - 56.0%
BAKERY PRODUCTS - 1.0%
Flowers Industries, Inc. 49,800 1,151,625
Interstate Bakeries Corp. 24,800 1,159,400
2,311,025
CANDY - 2.9%
Hershey Foods Corp. 139,400 6,360,125
CANNED SPECIALTIES - 6.1%
Campbell Soup Co. 150,700 13,581,838
CEREAL BREAKFAST FOODS - 0.4%
Ralcorp Holdings, Inc. (a) 72,466 769,951
COOKIES & CRACKERS - 6.1%
Nabisco Holdings Corp. Class A 332,400 13,669,950
DAIRY - 1.7%
Dean Foods Co. 51,300 1,673,663
Suiza Foods Corp. 87,800 2,205,975
3,879,638
FOOD - 18.8%
Burns Philp & Co. (a) 100,000 155,750
Chiquita Brands International, Inc. 318,500 4,299,750
Dole Food, Inc. 91,900 3,515,175
General Mills, Inc. 140,611 9,174,868
Heinz (H.J.) Co. 173,000 7,201,125
Kellogg Co. 141,600 9,699,600
Nestle SA (Reg.) 680 738,765
Sara Lee Corp. 183,100 7,095,125
41,880,158
GENERAL FOOD PREPARATIONS - 2.8%
CPC International, Inc. 62,700 5,274,638
McCormick & Co., Inc. (non-vtg.) 38,500 909,563
6,184,201
GRAIN MILL PRODUCTS - 10.0%
Quaker Oats Co. 77,600 2,783,900
Ralston Purina Co. 237,300 19,488,263
22,272,163
MEAT & FISH - 4.8%
ConAgra, Inc. 79,000 4,187,000
GoodMark Foods, Inc. 13,200 188,100
Hormel (George A) & Co. 3,200 84,000
Tyson Foods, Inc. 302,925 6,134,231
10,593,331
SHARES VALUE (NOTE 1)
POULTRY SLAUGHTER & PROCESSING - 0.0%
Pilgrims Pride Corp. 300 $ 3,338
RICE MILLING - 0.1%
Riviana Foods, Inc. 7,700 138,600
SUGAR & CANDIES - 1.3%
Tootsie Roll Industries, Inc. 21,800 921,050
Wrigley (Wm.) Jr. Co. 33,200 1,987,850
2,908,900
TOTAL FOODS 124,553,218
HOUSEHOLD PRODUCTS - 0.9%
SOAPS & DETERGENTS - 0.9%
Unilever PLC Ord. 80,000 2,053,170
RESTAURANTS - 2.7%
McDonald's Corp. 140,900 6,093,925
TOBACCO - 16.3%
CIGARETTES - 5.4%
RJR Nabisco Holdings Corp. 329,220 12,057,683
TOBACCO MANUFACTURERS - 10.9%
General Cigar Holdings, Inc. Class A 1,000 18,000
Philip Morris Companies, Inc. 179,000 24,187,375
24,205,375
TOTAL TOBACCO 36,263,058
TOTAL COMMON STOCKS
(Cost $177,419,937) 201,476,281
CASH EQUIVALENTS - 9.4%
Taxable Central Cash Fund (b)
(Cost $20,959,213) 20,959,213 20,959,213
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $198,379,150) $ 222,435,494
LEGEND
1. Non-income producing
2. At period end, the seven-day yield on the Taxable Central Cash Fund was
5.31%. The yield refers to the income earned by investing in the fund over
the seven-day period, expressed as an annual percentage.
3. An affiliated company is a company in which the fund has ownership of at
least 5% of the voting securities. Transactions during the period with
companies which are or were affiliates are as follows:
PURCHASES SALES DIVIDEND VALUE
AFFILIATE COST COST INCOME
GoodMarK Foods, Inc. $ - $ 500,511 $ 56,332 $ -
Grist Mill Co. 53,000 516,638 - -
TOTALS $ 53,000 $ 1,017,149 $ 56,332 $ -
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $224,665,594 and $315,313,469, respectively (see Note 3 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of FMR. The commissions paid to these affiliated
firms were $97,562 for the period (see Note 4 of Notes to Financial
Statements).
The fund participated in the bank borrowing program. The maximum loan and
average daily balance during the period for which loans were outstanding
amounted to $3,769,000 and $3,530,500, respectively. The weighted average
interest rate was 5.7% (see Note 7 of Notes to Financial Statements).
INCOME TAX INFORMATION
At February 28, 1997 the aggregate cost of investment securities for income
tax purposes was $199,053,524. Net unrealized appreciation aggregated
$23,381,970, of which $25,819,468 related to appreciated investment
securities and $2,437,498 related to depreciated investment securities.
The fund hereby designates approximately $18,228,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 45% of the dividends distributed during the fiscal year
qualifies for the dividends-received deduction for corporate shareholders
(unaudited).
The fund will notify shareholders in January 1998 of the applicable
percentage for use in preparing 1997 income tax returns.
FOOD AND AGRICULTURE PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1997
ASSETS
Investment in $ 222,435,494
securities, at
value
(cost
$198,379,150
) - See
accompanyin
g schedule
Receivable for 2,252,499
investments
sold
Receivable for 1,683,446
fund shares
sold
Dividends 287,457
receivable
Interest 66,867
receivable
Redemption 1,577
fees
receivable
Other 14,523
receivables
TOTAL ASSETS 226,741,863
LIABILITIES
Payable for $ 2,130,369
investments
purchased
Payable for 903,203
fund shares
redeemed
Accrued 109,196
management
fee
Other payables 176,533
and accrued
expenses
TOTAL 3,319,301
LIABILITIES
NET ASSETS $ 223,422,562
Net Assets
consist of:
Paid in capital $ 167,636,464
Undistributed 1,614,818
net
investment
income
Accumulated 30,114,932
undistributed
net realized
gain (loss) on
investments
and foreign
currency
transactions
Net unrealized 24,056,348
appreciation
(depreciation
) on
investments
and assets
and liabilities
in
foreign
currencies
NET ASSETS, for $ 223,422,562
5,017,354
shares
outstanding
NET ASSET $44.53
VALUE and
redemption
price per
share
($223,422,56
2 (divided by)
5,017,354
shares)
Maximum $45.91
offering price
per share
(100/97.00 of
$44.53)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1997
INVESTMENT $ 5,413,281
INCOME
Dividends
(including
$56,332
received
from affiliated
issuers)
Interest 1,595,063
TOTAL 7,008,344
INCOME
EXPENSES
Management $ 1,682,437
fee
Transfer agent 2,162,676
fees
Accounting 279,388
fees and
expenses
Non-interested 1,469
trustees'
compensatio
n
Custodian fees 19,482
and
expenses
Registration 54,981
fees
Audit 38,254
Legal 1,923
Interest 2,216
Miscellaneous 8,134
Total 4,250,960
expenses
before
reductions
Expense (56,861 4,194,099
reductions )
NET 2,814,245
INVESTMENT
INCOME
REALIZED AND
UNREALIZED
GAIN (LOSS)
Net realized
gain (loss)
on:
Investment 41,583,692
securities
(including
realized
gain (loss) of
$535,623
on sales of
investments
in
affiliated
issuers)
Foreign 445 41,584,137
currency
transactions
Change in net
unrealized
appreciation
(depreciation
) on:
Investment (16,829,519
securities )
Assets and (1,054 (16,830,573
liabilities in ) )
foreign
currencies
NET GAIN (LOSS) 24,753,564
NET INCREASE $ 27,567,809
(DECREASE)
IN NET ASSETS
RESULTING
FROM
OPERATIONS
OTHER $ 1,095,115
INFORMATION
Sales
charges paid
to FDC
Deferred $ 7,683
sales
charges
withheld
by FDC
Exchange $ 171,225
fees withheld
by FSC
Expense $ 52,629
reductions
Directed
brokerage
arrangement
s
Custodian 971
interest
credits
Transfer 3,261
agent
interest
credits
$ 56,861
STATEMENT OF CHANGES IN NET ASSETS
INCREASE YEAR ENDED YEAR ENDED
(DECREASE) IN FEBRUARY 28, FEBRUARY 29,
NET ASSETS 1997 1996
Operations $ 2,814,245 $ 2,077,785
Net
investment
income
Net realized 41,584,137 29,464,842
gain (loss)
Change in (16,830,573 31,022,063
net )
unrealized
appreciation
(depreciation
)
NET INCREASE 27,567,809 62,564,690
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
Distributions to (1,549,005 (1,144,034
shareholders ) )
From net
investment
income
From net (17,656,169 (12,658,077
realized gain ) )
TOTAL (19,205,174 (13,802,111
DISTRIBUTION ) )
S
Share 332,131,288 355,816,771
transactions
Net proceeds
from sales of
shares
Reinvestmen 18,966,497 13,613,779
t of
distributions
Cost of (437,551,907 (314,447,812
shares ) )
redeemed
Paid in 411,716 227,026
capital
portion of
redemption
fees
NET INCREASE (86,042,406 55,209,764
(DECREASE) )
IN NET
ASSETS
RESULTING
FROM SHARE
TRANSACTIO
NS
TOTAL (77,679,771 103,972,343
INCREASE )
(DECREASE)
IN NET ASSETS
NET ASSETS
Beginning of 301,102,333 197,129,990
period
End of period $ 223,422,562 $ 301,102,333
(including
undistribute
d net
investment
income of
$1,614,818
and
$1,092,171
,
respectivel
y)
OTHER
INFORMATION
Shares
Sold 8,035,192 9,278,227
Issued in 465,609 361,809
reinvestment
of
distributions
Redeemed (10,627,722 (8,554,944
) )
Net increase (2,126,921) 1,085,092
(decrease)
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEAR ENDED YEAR ENDED YEARS ENDED FEBRUARY 28, TEN MONTHS
FEBRUARY 28, FEBRUARY 29, ENDED
FEBRUARY 28,
SELECTED 1997 1996 1995 1994 1993
PER-SHARE
DATA D
</TABLE>
Net asset $ 42.15 $ 32.53 $ 31.49 $ 30.86 $ 29.22
value,
beginning of
period
Income from
Investment
Operations
Net .42 .37 .15 .09 .05
investment
income
Net realized 4.91 11.61 2.80 3.29 3.26
and
unrealized
gain (loss)
Total from 5.33 11.98 2.95 3.38 3.31
investment
operations
Less
Distributions
From net (.24) (.20) (.08) (.06) (.10)
investment
income
From net (2.77) (2.20) (1.85) (2.70) (1.57)
realized gain
Total (3.01) (2.40) (1.93) (2.76) (1.67)
distributions
Redemption .06 .04 .02 .01 -
fees added to
paid in
capital
Net asset $ 44.53 $ 42.15 $ 32.53 $ 31.49 $ 30.86
value, end of
period
TOTAL 13.59% 37.92% 10.14% 11.69% 11.72%
RETURN B, C
RATIOS AND
SUPPLEMENT
AL DATA
Net assets, $ 223,423 $ 301,102 $ 197,130 $ 95,010 $ 108,377
end of period
(000 omitted)
Ratio of 1.52% 1.43% 1.70% 1.65% 1.67% A
expenses to
average net
assets
Ratio of 1.50% E 1.42% E 1.68% E 1.64% E 1.67% A
expenses to
average net
assets after
expense
reductions
Ratio of net 1.01% .99% .49% .29% .21% A
investment
income to
average net
assets
Portfolio 91% 124% 126% 96% 515% A
turnover rate
Average $ .0326
commission
rate F
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
A ANNUALIZED B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 8 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 8 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. You can
look at the total percentage change in value, the average annual percentage
change, or the growth of a hypothetical $10,000 investment. Total return
reflects the change in the value of an investment, assuming reinvestment of
the fund's dividend income and capital gains (the profits earned upon the
sale of securities that have grown in value), but does not include certain
fees paid by shareholders upon exchange or redemption.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 28, 1997 YEAR YEARS YEARS
LEISURE 10.14% 113.49% 233.16%
LEISURE 6.83% 107.08% 223.17%
(INCL. 3% SALES CHARGE)
S&P 500 26.16% 118.75% 276.74%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one, five or 10 years. You can compare
the fund's returns 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, and excludes the effect of sales
charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 28, 1997 YEAR YEARS YEARS
LEISURE 10.14% 16.38% 12.79%
LEISURE 6.83% 15.67% 12.45%
(INCL. 3% SALES CHARGE)
S&P 500 26.16% 16.94% 14.16%
AVERAGE ANNUAL RETURNS take the fund's 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
1987/02/28 9700.00 10000.00
1987/03/31 9815.89 10289.00
1987/04/30 9591.84 10197.43
1987/05/31 9985.86 10286.15
1987/06/30 10414.66 10805.60
1987/07/31 11183.39 11353.44
1987/08/31 11415.17 11776.92
1987/09/30 11167.94 11519.01
1987/10/31 7980.96 9037.81
1987/11/30 7424.69 8293.10
1987/12/31 8374.34 8924.20
1988/01/31 8503.24 9299.91
1988/02/29 9246.58 9733.29
1988/03/31 9555.94 9432.53
1988/04/30 9616.10 9537.23
1988/05/31 9366.88 9620.20
1988/06/30 9992.51 10061.77
1988/07/31 10075.60 10023.54
1988/08/31 9682.02 9682.74
1988/09/30 10355.47 10095.22
1988/10/31 10355.47 10375.87
1988/11/30 9957.52 10227.49
1988/12/31 10552.26 10406.47
1989/01/31 11453.12 11168.23
1989/02/28 11269.45 10890.14
1989/03/31 11798.59 11143.88
1989/04/30 12467.68 11722.25
1989/05/31 13088.65 12197.00
1989/06/30 13212.76 12127.48
1989/07/31 14321.56 13222.59
1989/08/31 14436.41 13481.75
1989/09/30 14529.18 13426.47
1989/10/31 13482.23 13114.98
1989/11/30 13641.26 13382.52
1989/12/31 13845.39 13703.71
1990/01/31 12166.31 12784.19
1990/02/28 12058.44 12949.10
1990/03/31 12152.24 13292.25
1990/04/30 11678.53 12959.95
1990/05/31 12644.71 14223.54
1990/06/30 12499.31 14126.82
1990/07/31 12067.82 14081.62
1990/08/31 10674.84 12808.64
1990/09/30 9661.76 12184.86
1990/10/31 9549.19 12132.46
1990/11/30 10309.00 12916.22
1990/12/31 10759.88 13276.58
1991/01/31 11361.60 13855.44
1991/02/28 12233.38 14846.11
1991/03/31 12437.11 15205.38
1991/04/30 12470.28 15241.87
1991/05/31 12901.43 15900.32
1991/06/30 12176.53 15172.09
1991/07/31 12759.29 15879.11
1991/08/31 12891.96 16255.44
1991/09/30 13223.61 15983.98
1991/10/31 13621.60 16198.16
1991/11/30 12967.76 15545.38
1991/12/31 14303.87 17323.77
1992/01/31 14626.05 17001.55
1992/02/29 15137.74 17222.57
1992/03/31 14829.78 16886.73
1992/04/30 14995.61 17383.20
1992/05/31 15085.63 17468.37
1992/06/30 14853.47 17208.09
1992/07/31 14924.54 17911.90
1992/08/31 14711.33 17544.71
1992/09/30 15000.34 17751.74
1992/10/31 15114.05 17813.87
1992/11/30 16142.19 18421.32
1992/12/31 16625.46 18647.90
1993/01/31 17037.66 18804.55
1993/02/28 16947.64 19060.29
1993/03/31 17828.90 19462.46
1993/04/30 17427.10 18991.47
1993/05/31 18678.93 19500.44
1993/06/30 19181.64 19556.99
1993/07/31 19694.20 19478.76
1993/08/31 21049.53 20217.01
1993/09/30 22099.30 20061.34
1993/10/31 23321.56 20476.61
1993/11/30 22454.15 20282.08
1993/12/31 23201.44 20527.49
1994/01/31 23442.59 21225.43
1994/02/28 23242.49 20650.22
1994/03/31 21836.65 19749.87
1994/04/30 21880.67 20002.67
1994/05/31 21649.10 20330.71
1994/06/30 20734.11 19832.61
1994/07/31 21536.14 20483.12
1994/08/31 22394.65 21322.93
1994/09/30 22389.00 20800.52
1994/10/31 22309.93 21268.53
1994/11/30 21355.40 20493.93
1994/12/31 21615.21 20797.85
1995/01/31 22010.58 21337.14
1995/02/28 22993.35 22168.65
1995/03/31 23597.69 22822.85
1995/04/30 23806.75 23494.98
1995/05/31 24267.41 24434.07
1995/06/30 25205.81 25001.68
1995/07/31 26957.47 25830.73
1995/08/31 27821.93 25895.57
1995/09/30 27867.43 26988.36
1995/10/31 26525.24 26892.01
1995/11/30 27389.70 28072.57
1995/12/31 27442.19 28613.25
1996/01/31 27848.93 29587.24
1996/02/29 29342.42 29861.52
1996/03/31 29488.60 30149.08
1996/04/30 30699.36 30593.48
1996/05/31 31959.02 31382.49
1996/06/30 31835.65 31502.05
1996/07/31 29550.08 30110.29
1996/08/31 30283.80 30745.32
1996/09/30 31757.74 32475.67
1996/10/31 30887.66 33371.34
1996/11/30 31764.23 35893.88
1996/12/31 31120.90 35182.83
1997/01/31 32506.01 37381.05
1997/02/28 32316.82 37674.12
Let's say hypothetically that $10,000 was invested in Fidelity Select
Leisure Portfolio on February 28, 1987, and the current maximum 3% sales
charge was paid. As the chart shows, by February 28, 1997, the value of the
investment would have grown to $32,317 - a 223.17% increase on the initial
investment. For comparison, look at how the S&P 500 did over the same
period. With dividends and capital gains, if any, reinvested, the same
$10,000 investment would have grown to $37,674 - a 276.74% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1997
% OF FUND'S
INVESTMENTS
Disney (Walt) Co. 3.7
HFS, Inc. 3.3
Westinghouse Electric Corp. 3.3
MGM Grand, Inc. 3.3
Clear Channel Communications, Inc. 3.0
Hasbro, Inc. 2.6
America Online, Inc. 2.5
Premier Parks, Inc. 2.1
General Electric Co. 2.1
Omnicom Group, Inc. 2.1
TOP INDUSTRIES AS OF FEBRUARY 28, 1997
Row: 1, Col: 1, Value: 62.0
Row: 1, Col: 2, Value: 4.2
Row: 1, Col: 3, Value: 4.4
Row: 1, Col: 4, Value: 5.4
Row: 1, Col: 5, Value: 11.2
Row: 1, Col: 6, Value: 11.8
Radio Broadcasting 11.8%
Hotels, Motels &
Tourist Courts 11.2%
Electrical Machinery 5.4%
Advertising Agencies 4.4%
Motion Picture Production 4.2%
All Others 63.0% *
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
LEISURE PORTFOLIO
FUND TALK: THE MANAGERS' OVERVIEW
NOTE TO SHAREHOLDERS: Effective January 7, 1997, Paul Antico became
Portfolio Manager of Fidelity Select Leisure Portfolio. The following is an
interview with Katherine Collins, who managed the fund for most of the
period covered by this report, and Paul Antico, who discusses his outlook.
Q. HOW DID THE FUND PERFORM, KATHERINE?
K.C. For the 12-month period that ended February 28, 1997, the fund
returned 10.14%. By comparison, the Standard & Poor's 500 Index returned
26.16% for the same time period.
Q. WHAT WAS THE INVESTING ENVIRONMENT LIKE DURING THE PERIOD?
K.C. The environment and stock performance varied by industry. During the
year, the broadcasting, advertising and lodging industries performed well.
The Telecommunications Act liberalized broadcasting station ownership
rules, leading to significant merger and acquisition activity in the radio
industry. Advertising companies saw the benefits of their own
consolidation, as well as their customers' concentration of business. The
lodging industry was able to increase prices, especially at high-end luxury
hotels. Weaker industries in the leisure sector over the past year included
restaurants, cable and cellular stocks. Many restaurants saw negative sales
trends, which led to earnings disappointments. The cable and cellular
industries suffered from increased competition from direct broadcast
satellite and personal communications services, respectively. Several large
entertainment companies showed relatively weak cash flow growth due to
disappointing film releases and a slow retail music environment.
Q. HOW DID GAMING AND TOBACCO DO?
K.C. In gaming, it was an up and down year. During the first half of the
period, business was strong, with several new properties being planned. In
the second half of the period, business weakened for some companies;
overall, the stocks' performance was still positive for the year. The
tobacco industry did relatively well, despite corrections resulting from
litigation scares. Tobacco stocks recovered during the latter part of the
period, after the market appeared to over-discount litigation risk in these
stocks.
Q. WHAT HOLDINGS DID WELL?
K.C. Companies that performed well included advertising stocks such as
Omnicom, which returned over 20% for the year, due to the strong
advertising market, market share gains and a good job consolidating
acquisitions made in the last couple of years. Broadcasting stocks such as
Clear Channel Communications and Evergreen Media Corp. contributed to the
fund's performance. The fund's performance also was helped by its limited
exposure to restaurant, cable and cellular communications stocks.
Q. WERE THERE DISAPPOINTMENTS?
K.C. Yes, there were missed opportunities, and opportunity costs had the
greatest impact on performance. For example, I did not own enough Coca-Cola
or Microsoft, and both companies had very strong performance. If we look at
what the fund did own, the biggest disappointments were some of the large
entertainment stocks. Viacom and Time Warner both performed poorly for much
of 1996, as they reported relatively weak cash flow growth and little
progress on corporate initiatives such as debt pay-downs.
Q. TURNING TO YOU, PAUL, WHAT'S YOUR OUTLOOK?
P.A. I always have to look out for what's happening in the economy, of
course, but my main focus will be on finding those companies that I think
will do well in any scenario. In the current economic climate, I have to be
more selective. My team of analysts and I contact hundreds of companies,
and we share information constantly to find the best buying opportunities.
The economy has a part to play, but it's my job to know which industries or
companies are going to present the best opportunities in various
environments.
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: May 8, 1984
FUND NUMBER: 062
TRADING SYMBOL: FDLSX
SIZE: as of February 28, 1997, more than
$98 million
MANAGER: Paul Antico, since January 1997;
manager, Fidelity Select Consumer Industries
Portfolio, since January 1997; Fidelity Advisor
Consumer Industries, since January 1997;
Fidelity Select Industrial Equipment Portfolio,
March 1996-February 1997; Fidelity Select
Developing Communications Portfolio,
1993-1996; joined Fidelity in 1991
(checkmark)
LEISURE PORTFOLIO
INVESTMENTS FEBRUARY 28, 1997
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 91.9%
SHARES VALUE (NOTE 1)
ADVERTISING - 4.4%
ADVERTISING AGENCIES - 4.4%
ADVO, Inc. 40,000 $ 515,000
Omnicom Group, Inc. 41,700 2,069,356
WPP Group PLC ADR 40,000 1,720,000
4,304,356
AEROSPACE & DEFENSE - 1.8%
AIRCRAFT - 1.8%
Boeing Co. 17,000 1,729,750
AIR TRANSPORTATION - 1.8%
AIR TRANSPORT, MAJOR NATIONAL - 1.8%
America West Holding Corp. Class B (a) 130,000 1,803,750
BEVERAGES - 4.5%
DISTILLED & BLENDED LIQUOR - 0.6%
Seagram Co. Ltd. 15,000 584,914
MALT BEVERAGE - 1.3%
Anheuser-Busch Companies, Inc. 27,600 1,228,200
SOFT DRINKS - 2.6%
Coca-Cola Co. (The) 17,000 1,037,000
PepsiCo, Inc. 46,882 1,541,246
2,578,246
TOTAL BEVERAGES 4,391,360
BROADCASTING - 16.4%
CABLE TV OPERATORS - 2.9%
BET Holdings, Inc. Class A (a) 41,200 1,210,250
Tele-Communications Liberty Media Group,
Series A (a) 75,000 1,575,000
2,785,250
RADIO BROADCASTING - 11.8%
American Radio Systems Corp.
Class A (a) 40,100 1,343,350
Clear Channel Communications, Inc. (a) 60,900 2,915,588
Cox Radio, Inc. Class A (a) 31,000 592,875
EZ Communications, Inc. Class A (a) 30,100 1,271,725
Emmis Broadcasting Corp. Class A (a) 29,800 1,028,100
Evergreen Media Corp. Class A (a) 57,987 1,739,610
Heftel Broadcasting Corp. Class A (a) 29,200 1,178,950
Jacor Communications, Inc. Class A (a) 43,200 1,271,700
Metro Networks, Inc. (a) 1,000 22,250
Univision Communications, Inc.,
Class A (a) 7,500 247,500
11,611,648
TELEVISION BROADCASTING - 1.7%
Renaissance Communications Corp. (a) 36,550 1,306,663
Young Broadcasting, Inc. Class A (a) 13,000 378,625
1,685,288
TOTAL BROADCASTING 16,082,186
CELLULAR - 0.8%
CELLULAR & COMMUNICATION SERVICES - 0.8%
AirTouch Communications, Inc. (a) 29,300 798,425
COMPUTER SERVICES & SOFTWARE - 6.1%
COMPUTER SERVICES - 3.0%
America Online, Inc. (a) 66,600 2,497,500
Midway Games, Inc. (a) 30,000 468,750
2,966,250
SHARES VALUE (NOTE 1)
ELECTRONIC INFORMATION RETRIEVAL - 1.1%
CUC International, Inc. (a) 43,800 $ 1,045,725
PREPACKAGED COMPUTER SOFTWARE - 2.0%
Excite, Inc. 125,000 1,984,375
Yahoo, Inc. 200 6,050
1,990,425
TOTAL COMPUTER SERVICES & SOFTWARE 6,002,400
DRUG STORES - 1.3%
CVS Corp. 27,500 1,271,875
ELECTRICAL EQUIPMENT - 5.4%
ELECTRICAL MACHINERY - 5.4%
General Electric Co. 20,400 2,098,650
Westinghouse Electric Corp. 187,417 3,232,943
5,331,593
ELECTRONICS - 0.7%
ELECTRONIC PARTS - WHOLESALE - 0.7%
Brightpoint, Inc. (a) 23,800 642,600
ENTERTAINMENT - 13.5%
AMUSEMENT - 0.8%
Scientific Games Holdings Corp. (a) 30,000 742,500
AMUSEMENT & RECREATION SERVICES - 0.9%
IMAX Corp. (a) 25,000 881,665
AMUSEMENT PARKS - 2.1%
Premier Parks, Inc. (a) 69,800 2,111,450
MOTION PICTURE DISTRIBUTION - 0.3%
All American Communications, Inc.
Class B (non-vtg.) (a) 30,000 330,000
MOTION PICTURE PRODUCTION - 4.2%
Disney (Walt) Co. 48,452 3,597,561
Medialink Worldwide, Inc. 50,000 481,250
4,078,811
MOVIE THEATERS - 1.9%
AMC Entertainment, Inc. (a) 16,900 280,963
Carmike Cinemas, Inc. Class A (a) 41,600 1,066,000
Regal Cinemas, Inc. (a) 20,500 545,813
1,892,776
RECREATIONAL SERVICES - 3.3%
Cedar Fair LP (depositary unit) 1,000 40,000
MGM Grand, Inc. (a) 91,400 3,210,425
3,250,425
TOTAL ENTERTAINMENT 13,287,627
GENERAL MERCHANDISE STORES - 0.5%
VARIETY STORES - 0.5%
Consolidated Stores Corp. (a) 15,000 526,875
HOME FURNISHINGS - 1.4%
FURNITURE STORES - 1.4%
Ethan Allen Interiors, Inc. 30,300 1,390,013
HOUSEHOLD PRODUCTS - 0.6%
COSMETICS - 0.6%
Estee Lauder Companies, Inc. 12,000 558,000
LEASING & RENTAL - 0.3%
VIDEO TAPE RENTAL - 0.3%
Hollywood Entertainment Corp. 12,000 288,000
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
LEISURE DURABLES & TOYS - 6.3%
MOTORCYCLES - 0.5%
Harley-Davidson, Inc. 13,700 $ 512,038
SPORTING & ATHLETIC GOODS - 1.8%
Callaway Golf Co. 34,900 1,112,438
K2, Inc. 21,800 602,225
1,714,663
TOYS & GAMES - 4.0%
Hasbro, Inc. 59,500 2,543,625
Nintendo Co. Ltd. Ord. 20,000 1,415,679
3,959,304
TOTAL LEISURE DURABLES & TOYS 6,186,005
LODGING & GAMING - 14.2%
HOTELS, MOTELS, & TOURIST COURTS - 11.2%
HFS, Inc. (a) 47,400 3,246,900
Hilton Hotels Corp. 39,400 989,925
Host Marriott Corp. (a) 90,000 1,620,000
ITT Corp. (a) 34,200 1,932,300
La Quinta Motor Inns, Inc. 27,600 545,100
Mirage Resorts, Inc. (a) 80,900 2,012,388
Sun International Hotels Ltd. Ord. (a) 18,600 706,800
11,053,413
RACING & GAMING - 3.0%
International Game Technology Corp. 25,000 437,500
International Speedway Corp. Class B 25,500 532,313
Penn National Gaming, Inc. (a) 75,000 1,162,500
WMS Industries, Inc. (a) 40,000 795,000
2,927,313
TOTAL LODGING & GAMING 13,980,726
PRINTING - 0.5%
COMMERCIAL PRINTING, NEC - 0.5%
Valassis Communications, Inc. (a) 26,000 503,750
PUBLISHING - 3.2%
NEWSPAPERS - 1.6%
Knight-Ridder, Inc. 15,000 596,250
New York Times Co. (The) Class A 21,400 952,300
1,548,550
PERIODICALS - 1.6%
Playboy Enterprises, Inc. Class B (a) 105,300 1,605,825
TOTAL PUBLISHING 3,154,375
RESTAURANTS - 2.8%
RESTAURANTS - 2.8%
Host Marriott Services Corp. (a) 50,000 456,250
Rainforest Cafe, Inc. 20,000 407,500
Starbucks Corp. (a) 56,800 1,909,900
2,773,650
RETAIL & WHOLESALE, MISCELLANEOUS - 3.4%
DURABLE GOODS, - WHOLESALE - 0.9%
Sodak Gaming, Inc. (a) 58,100 835,188
HOBBY, TOY, & GAME SHOPS - 1.1%
Toys "R" Us, Inc. (a) 43,400 1,128,400
LUMBER & BUILDING MATERIALS-RETAIL - 0.8%
Lowe's Companies, Inc. 21,900 799,350
SHARES VALUE (NOTE 1)
SPORTING GOODS & BIKES STORES - 0.6%
Cannondale Corp. (a) 27,500 $ 560,313
TOTAL RETAIL & WHOLESALE, MISCELLANEOUS 3,323,251
TEXTILES & APPAREL - 2.0%
FOOTWEAR - 2.0%
NIKE, Inc. Class B 15,000 1,078,125
Reebok International Ltd. 19,900 930,325
2,008,450
TOTAL COMMON STOCKS
(Cost $84,003,302) 90,339,017
CONVERTIBLE PREFERRED STOCKS - 0.8%
CELLULAR - 0.8%
CELLULAR & COMMUNICATION SERVICES - 0.8%
AirTouch Communications, Inc.
Class B $1.74 23,167 680,531
Class C $2.125 2,034 98,141
TOTAL CONVERTIBLE PREFERRED STOCKS
(Cost $731,559) 778,672
CASH EQUIVALENTS - 7.3%
Taxable Central Cash Fund (b)
(Cost $7,201,868) 7,201,868 7,201,868
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $91,936,729) $ 98,319,557
LEGEND
1. Non-income producing
2. At period end, the seven-day yield on the Taxable Central Cash Fund was
5.31%. The yield refers to the income earned by investing in the fund over
the seven-day period, expressed as an annual percentage.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $130,115,797 and $123,176,399, respectively (see Note 3 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $56,198 for the period (see
Note 4 of Notes to Financial Statements).
INCOME TAX INFORMATION
At February 28, 1997, the aggregate cost of investment securities for
income tax purposes was $92,024,257. Net unrealized appreciation aggregated
$6,295,300, of which $9,141,185 related to appreciated investment
securities and $2,845,885 related to depreciated investment securities.
The fund hereby designates approximately $3,267,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 34% of the dividends distributed during the fiscal year
qualifies for the dividends-received deduction for corporate shareholders
(unaudited).
The fund will notify shareholders in January 1998 of the applicable
percentage for use in preparing 1997 income tax returns.
LEISURE PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1997
ASSETS
Investment in $ 98,319,557
securities, at
value
(cost
$91,936,729)
- - See
accompanyin
g schedule
Receivable for 2,517,223
investments
sold
Receivable for 53,351
fund shares
sold
Dividends 42,823
receivable
Interest 36,372
receivable
Redemption 204
fees
receivable
Other 51,268
receivables
TOTAL ASSETS 101,020,798
LIABILITIES
Payable for $ 2,390,531
investments
purchased
Payable for 356,302
fund shares
redeemed
Accrued 52,603
management
fee
Other payables 87,976
and accrued
expenses
TOTAL 2,887,412
LIABILITIES
NET ASSETS $ 98,133,386
Net Assets
consist of:
Paid in capital $ 83,754,553
Undistributed 376,579
net
investment
income
Accumulated 7,619,481
undistributed
net realized
gain (loss) on
investments
and foreign
currency
transactions
Net unrealized 6,382,773
appreciation
(depreciation
) on
investments
and assets
and liabilities
in
foreign
currencies
NET ASSETS, for $ 98,133,386
2,051,726
shares
outstanding
NET ASSET $47.83
VALUE and
redemption
price per
share
($98,133,386
(divided by) 2,051,726
shares)
Maximum $49.31
offering price
per share
(100/97.00 of
$47.83)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1997
INVESTMENT $ 577,251
INCOME
Dividends
Special 500,000
dividend from
ADVO, Inc.
Interest 431,607
TOTAL 1,508,858
INCOME
EXPENSES
Management $ 643,761
fee
Transfer agent 846,466
fees
Accounting 107,125
fees and
expenses
Non-interested 443
trustees'
compensatio
n
Custodian fees 13,505
and
expenses
Registration 15,522
fees
Audit 28,572
Legal 1,134
Miscellaneous 4,043
Total 1,660,571
expenses
before
reductions
Expense (20,840 1,639,731
reductions )
NET (130,873
INVESTMENT )
INCOME
(LOSS)
REALIZED AND
UNREALIZED
GAIN (LOSS)
Net realized
gain (loss)
on:
Investment 12,371,340
securities
Foreign (575 12,370,765
currency )
transactions
Change in net
unrealized
appreciation
(depreciation
) on:
Investment (3,321,344
securities )
Assets and (135 (3,321,479
liabilities in ) )
foreign
currencies
NET GAIN (LOSS) 9,049,286
NET INCREASE $ 8,918,413
(DECREASE)
IN NET ASSETS
RESULTING
FROM
OPERATIONS
OTHER $ 282,104
INFORMATION
Sales
charges paid
to FDC
Deferred $ 14,717
sales
charges
withheld
by FDC
Exchange $ 33,945
fees withheld
by FSC
Expense $ 20,659
reductions
Directed
brokerage
arrangement
s
Custodian 181
interest
credits
$ 20,840
STATEMENT OF CHANGES IN NET ASSETS
INCREASE YEAR ENDED YEAR ENDED
(DECREASE) IN FEBRUARY 28, FEBRUARY 29,
NET ASSETS 1997 1996
Operations $ (130,873 $ (369,128
Net ) )
investment
income (loss)
Net realized 12,370,765 14,883,189
gain (loss)
Change in (3,321,479 3,623,038
net )
unrealized
appreciation
(depreciation
)
NET INCREASE 8,918,413 18,137,099
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
Distributions to (6,329,218 (8,732,838
shareholders ) )
from net
realized
gains
Share 109,666,003 62,794,252
transactions
Net proceeds
from sales of
shares
Reinvestmen 6,225,261 8,564,535
t of
distributions
Cost of (105,536,133 (65,359,698
shares ) )
redeemed
Paid in 176,193 40,287
capital
portion of
redemption
fees
NET INCREASE 10,531,324 6,039,376
(DECREASE)
IN NET
ASSETS
RESULTING
FROM SHARE
TRANSACTIO
NS
TOTAL 13,120,519 15,443,637
INCREASE
(DECREASE)
IN NET ASSETS
NET ASSETS
Beginning of 85,012,867 69,569,230
period
End of period $ 98,133,386 $ 85,012,867
(including
undistribute
d net
investment
income of
$376,579
and $3,611,
respectivel
y)
OTHER
INFORMATION
Shares
Sold 2,311,420 1,338,175
Issued in 136,974 200,267
reinvestment
of
distributions
Redeemed (2,238,078 (1,405,986
) )
Net increase 210,316 132,456
(decrease)
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEAR ENDED YEAR ENDED YEARS ENDED FEBRUARY 28, TEN MONTHS
FEBRUARY 28, FEBRUARY 29, ENDED
FEBRUARY 28,
SELECTED 1997 1996 1995 1994 1993
PER-SHARE
DATA D
</TABLE>
Net asset $ 46.17 $ 40.71 $ 45.30 $ 35.77 $ 31.65
value,
beginning of
period
Income from
Investment
Operations
Net (.06) G (.21) (.21) (.29) (.11)
investment
income (loss)
Net realized 4.47 10.97 (.48) 12.98 4.21
and
unrealized
gain (loss)
Total from 4.41 10.76 (.69) 12.69 4.10
investment
operations
Less
Distributions
From net (2.83) (5.32) (3.93) (3.26) -
realized gain
Redemption .08 .02 .03 .10 .02
fees added to
paid in
capital
Net asset $ 47.83 $ 46.17 $ 40.71 $ 45.30 $ 35.77
value, end of
period
TOTAL 10.14% 27.61% (1.07)% 37.14% 13.02%
RETURN B, C
RATIOS AND
SUPPLEMENT
AL DATA
Net assets, $ 98,133 $ 85,013 $ 69,569 $ 105,833 $ 44,824
end of period
(000 omitted)
Ratio of 1.56% 1.64% 1.64% 1.55% 1.90% A
expenses to
average net
assets
Ratio of 1.54% E 1.63% E 1.62% E 1.53% E 1.90% A
expenses to
average net
assets after
expense
reductions
Ratio of net (.12)% (.46)% (.52)% (.69)% (.39)%
investment A
income (loss)
to average
net assets
Portfolio 127% 141% 103% 170% 109% A
turnover rate
Average $ .0370
commission
rate F
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
A ANNUALIZED B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 8 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 8 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
(LOSS) 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. You can
look at the total percentage change in value, the average annual percentage
change, or the growth of a hypothetical $10,000 investment. Total return
reflects the change in the value of an investment, assuming reinvestment of
the fund's dividend income and capital gains (the profits earned upon the
sale of 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 fund expenses, the past five year and past 10 year total
returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 28, 1997 YEAR YEARS YEARS
MULTIMEDIA -4.52% 113.54% 277.91%
MULTIMEDIA -7.38% 107.14% 266.57%
(INCL. 3% SALES CHARGE)
S&P 500 26.16% 118.75% 276.74%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one, five, or 10 years. You can compare
the fund's returns 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, and excludes the effect of sales
charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 28, 1997 YEAR YEARS YEARS
MULTIMEDIA -4.52% 16.39% 14.22%
MULTIMEDIA -7.38% 15.68% 13.87%
(INCL. 3% SALES CHARGE)
S&P 500 26.16% 16.94% 14.16%
AVERAGE ANNUAL RETURNS take the fund's 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
1987/02/28 9700.00 10000.00
1987/03/31 9668.40 10289.00
1987/04/30 9518.32 10197.43
1987/05/31 9960.67 10286.15
1987/06/30 10379.32 10805.60
1987/07/31 11177.12 11353.44
1987/08/31 11169.22 11776.92
1987/09/30 10900.65 11519.01
1987/10/31 8681.03 9037.81
1987/11/30 8080.70 8293.10
1987/12/31 9265.23 8924.20
1988/01/31 9418.66 9299.91
1988/02/29 10049.41 9733.29
1988/03/31 10484.11 9432.53
1988/04/30 10611.97 9537.23
1988/05/31 10432.97 9620.20
1988/06/30 10793.32 10061.77
1988/07/31 10775.69 10023.54
1988/08/31 10370.05 9682.74
1988/09/30 11022.59 10095.22
1988/10/31 11146.04 10375.87
1988/11/30 11057.86 10227.49
1988/12/31 11752.69 10406.47
1989/01/31 13156.14 11168.23
1989/02/28 13128.97 10890.14
1989/03/31 13744.68 11143.88
1989/04/30 14668.23 11722.25
1989/05/31 15374.48 12197.00
1989/06/30 15689.29 12127.48
1989/07/31 16882.84 13222.59
1989/08/31 16864.62 13481.75
1989/09/30 16600.40 13426.47
1989/10/31 15479.74 13114.98
1989/11/30 15570.85 13382.52
1989/12/31 15577.44 13703.71
1990/01/31 13508.98 12784.19
1990/02/28 13167.79 12949.10
1990/03/31 13039.84 13292.25
1990/04/30 12421.44 12959.95
1990/05/31 13604.94 14223.54
1990/06/30 13487.65 14126.82
1990/07/31 12741.30 14081.62
1990/08/31 11088.66 12808.64
1990/09/30 10139.73 12184.86
1990/10/31 9702.58 12132.46
1990/11/30 10704.83 12916.22
1990/12/31 11493.83 13276.58
1991/01/31 12112.23 13855.44
1991/02/28 13007.86 14846.11
1991/03/31 13359.71 15205.38
1991/04/30 13818.18 15241.87
1991/05/31 13892.82 15900.32
1991/06/30 12794.61 15172.09
1991/07/31 13274.41 15879.11
1991/08/31 13690.24 16255.44
1991/09/30 14521.89 15983.98
1991/10/31 15257.58 16198.16
1991/11/30 14212.68 15545.38
1991/12/31 15844.00 17323.77
1992/01/31 16259.82 17001.55
1992/02/29 17166.11 17222.57
1992/03/31 16728.96 16886.73
1992/04/30 16984.85 17383.20
1992/05/31 17240.74 17468.37
1992/06/30 17304.71 17208.09
1992/07/31 17347.36 17911.90
1992/08/31 17112.80 17544.71
1992/09/30 17006.17 17751.74
1992/10/31 17283.39 17813.87
1992/11/30 18541.53 18421.32
1992/12/31 19250.14 18647.90
1993/01/31 19639.04 18804.55
1993/02/28 19725.46 19060.29
1993/03/31 20503.24 19462.46
1993/04/30 19973.03 18991.47
1993/05/31 21334.57 19500.44
1993/06/30 22004.37 19556.99
1993/07/31 22827.88 19478.76
1993/08/31 24771.38 20217.01
1993/09/30 25364.32 20061.34
1993/10/31 27263.89 20476.61
1993/11/30 25484.64 20282.08
1993/12/31 26569.14 20527.49
1994/01/31 26948.07 21225.43
1994/02/28 26602.58 20650.22
1994/03/31 24975.44 19749.87
1994/04/30 24987.56 20002.67
1994/05/31 25906.49 20330.71
1994/06/30 25327.44 19832.61
1994/07/31 25944.26 20483.12
1994/08/31 27505.19 21322.93
1994/09/30 27316.37 20800.52
1994/10/31 27933.19 21268.53
1994/11/30 27052.02 20493.93
1994/12/31 27632.85 20797.85
1995/01/31 27945.23 21337.14
1995/02/28 29090.63 22168.65
1995/03/31 30938.90 22822.85
1995/04/30 31654.78 23494.98
1995/05/31 31823.98 24434.07
1995/06/30 33047.48 25001.68
1995/07/31 34999.87 25830.73
1995/08/31 36106.23 25895.57
1995/09/30 37134.49 26988.36
1995/10/31 36041.15 26892.01
1995/11/30 37433.85 28072.57
1995/12/31 36937.62 28613.25
1996/01/31 37163.63 29587.24
1996/02/29 38392.53 29861.52
1996/03/31 37884.02 30149.08
1996/04/30 39647.63 30593.48
1996/05/31 40964.39 31382.49
1996/06/30 39068.83 31502.05
1996/07/31 35350.05 30110.29
1996/08/31 36666.82 30745.32
1996/09/30 38996.48 32475.67
1996/10/31 37896.76 33371.34
1996/11/30 38591.32 35893.88
1996/12/31 37334.16 35182.83
1997/01/31 37142.85 37381.05
1997/02/28 36657.23 37674.12
Let's say hypothetically that $10,000 was invested in Fidelity Select
Multimedia Portfolio on February 28, 1987 and the current maximum 3% sales
charge was paid. As the chart shows, by February 28, 1997, the value of the
investment would have grown to $36,657 - a 266.57% increase on the initial
investment. For comparison, look at how the S&P 500 did over the same
period. With dividends and capital gains, if any, reinvested, the same
$10,000 investment would have grown to $37,674 - a 276.74% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1997
% OF FUND'S
INVESTMENTS
Times Mirror Co. Class A 6.9
Omnicom Group, Inc. 6.4
New York Times Co. (The) Class A 5.0
Scientific-Atlanta, Inc. 4.4
ADVO, Inc. 4.2
Harcourt General, Inc. 4.1
Mobile Telecommunications Technologies, Inc. 3.8
Gibson Greetings, Inc. 3.8
Hollinger International, Inc. Class A 3.6
Meredith Corp. 3.1
TOP INDUSTRIES AS OF FEBRUARY 28, 1997
7.7
Newspapers 18.1%
Advertising Agencies 12.4%
Book Publishing & Printing 8.2%
Cellular & Communication
Services 6.5%
Telephone Services 5.8%
All Others 49.0% *
Row: 1, Col: 1, Value: 49.0
Row: 1, Col: 2, Value: 5.8
Row: 1, Col: 3, Value: 6.5
Row: 1, Col: 4, Value: 8.199999999999999
Row: 1, Col: 5, Value: 12.4
Row: 1, Col: 6, Value: 18.1
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
MULTIMEDIA PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
John Porter,
Portfolio Manager
of Fidelity Select
Multimedia Portfolio
Q. JOHN, HOW DID THE FUND PERFORM?
A. For the 12 months that ended February 28, 1997, the fund had a return of
- -4.52%. The Standard & Poor's 500 Index had a 26.16% return over the same
period.
Q. WHAT HELD THE FUND BACK?
A. I like to break my investing universe into four groups of stocks:
entertainment, equipment, publishing and distribution. Of these four
groups, three - entertainment, equipment and distribution - experienced
major problems that led to weak performance.
Q. CAN YOU ELABORATE?
A. Sure. With the entertainment group, the problems revolved around
specific stock issues. For example, one of the group's bigger players -
Viacom - experienced disappointing results due to issues involving its
Blockbuster Video franchises. With the equipment group, it's a matter of
waiting for telecommunications reform to be implemented. As local and
long-distance markets open up to competition, infrastructures will need to
be built and equipment providers should be in demand. In the distribution
group, cable TV stocks performed poorly, as the opening of markets sparked
competitive fears and new satellite TV systems increased in popularity.
Cable companies would like to meet the demand for extra bandwidth - the
capacity for communication flow - but it would mean huge amounts of capital
spending.
Q. PUBLISHING-RELATED STOCKS PERFORMED REASONABLY WELL. WHAT WAS THE STORY
WITH THIS PARTICULAR GROUP?
A. The fund saw good results from its positions in some of its newspaper
stocks. My strategy here revolved around the price of newsprint - the only
real variable cost for newspaper companies. Market consensus was that the
cost of newsprint would rise or stay level, and I thought the price would
actually go down. The price did take a dip and, as a result, many of the
fund's newspaper stocks were positive contributors.
Q. HAVE YOU BEEN ABLE TO IDENTIFY GOOD INVESTING OPPORTUNITIES IN THE
INTERNET AREA?
A. I really haven't found a compelling theme with Internet-related stocks.
The fund has positions in companies that are doing some interesting work
from a content perspective, but much of the Internet's success will depend
on its advertising power. There are lots of advertising agencies out there
helping people put together themes for the Internet, but it's still
uncharted territory. Until the Internet can prove that it's a strong
advertising vehicle, I think it will be difficult to pinpoint any long-term
investing opportunities.
Q. WHICH INDIVIDUAL STOCKS CONTRIBUTED POSITIVELY TO THE FUND'S RETURN?
WHERE DID THE DISAPPOINTMENTS LIE?
A. As I mentioned, newspaper stocks were very strong. The fund benefited
from its positions in both Times Mirror Co. and the New York Times Co.
Omnicom, a global, diversified advertising agency and one of the fund's top
holdings at the close of the period, was also a solid performer. On the
negative side, paging company Mobile Telecommunications had problems as did
Learning Co., Inc., a children's educational software firm.
Q. WHAT'S YOUR OUTLOOK FOR THE COMING MONTHS?
A. The outlook for entertainment stocks is encouraging. Companies are
beginning to realize what they need to do in order to enhance their value.
With equipment stocks, I'm hoping that patience really is a virtue. As soon
as the markets open up to competition, I think these stocks are poised for
a good run. I'll most likely reduce the fund's positions in newspaper
stocks, reflecting my feeling that my newsprint cost strategy may have come
full circle. Lastly, the outlook for distribution stocks depends largely on
how the opening of competitive markets progresses.
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 February 28, 1997, more than
$54 million
MANAGER: John Porter, since 1996; equity
analyst, newspaper and publishing industries,
since 1996; joined Fidelity in 1995
(checkmark)
MULTIMEDIA PORTFOLIO
INVESTMENTS FEBRUARY 28, 1997
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 95.0%
SHARES VALUE (NOTE 1)
ADVERTISING - 15.3%
ADVERTISING - 0.5%
Cordiant PLC sponsored ADR 50,000 $ 243,750
ADVERTISING AGENCIES - 12.4%
ADVO, Inc. 180,000 2,317,500
Interpublic Group of Companies, Inc. 20,000 1,002,500
Omnicom Group, Inc. 70,000 3,473,750
6,793,750
RADIO & TV ADVERTISING REPRESENTATIVES - 2.4%
Katz Media Group, Inc. (a) 179,000 1,320,124
TOTAL ADVERTISING 8,357,624
BROADCASTING - 5.0%
CABLE TV OPERATORS - 0.7%
TCI Group Class A 32,500 385,938
RADIO BROADCASTING - 0.5%
Grupo Radio Centro SA de CV
sponsored ADR (a) 27,600 265,650
TELEVISION BROADCASTING - 3.8%
Central European Media Class C (a) 25,000 843,750
Grupo Televisa SA de CV
sponsored ADR (a) 23,100 565,950
HSN, Inc. (a) 25,000 643,750
2,053,450
TOTAL BROADCASTING 2,705,038
CELLULAR - 6.5%
CELLULAR & COMMUNICATION SERVICES - 6.5%
AirTouch Communications, Inc. (a) 13,400 365,150
Mobile Telecommunications
Technologies, Inc. (a) 270,000 2,092,500
360 Degrees Communications Co. (a) 50,000 1,081,250
3,538,900
COMMUNICATIONS EQUIPMENT - 0.0%
DATACOMMUNICATIONS EQUIPMENT - 0.0%
Centigram Communications Corp. (a) 2,000 22,750
COMPUTER SERVICES & SOFTWARE - 5.3%
COMPUTER SERVICES - 1.7%
Barra, Inc. (a) 30,000 907,500
CUSTOM COMPUTER PROGRAMMING SERVICES - 0.8%
Intersolv, Inc. (a) 50,000 456,250
PREPACKAGED COMPUTER SOFTWARE - 2.8%
CompuServe Corp. (a) 30,000 303,750
FactSet Research Systems, Inc. (a) 42,000 761,250
Learning Co., Inc. (a) 50,000 481,250
1,546,250
TOTAL COMPUTER SERVICES & SOFTWARE 2,910,000
COMPUTERS & OFFICE EQUIPMENT - 4.2%
COMPUTER PERIPHERALS - 1.2%
Creative Technology Corp. Ltd. 51,100 629,967
OFFICE AUTOMATION - 3.0%
Bell & Howell Co. (a) 70,000 1,662,500
TOTAL COMPUTERS & OFFICE EQUIPMENT 2,292,467
SHARES VALUE (NOTE 1)
CONSUMER ELECTRONICS - 0.7%
RADIOS, TELEVISIONS, STEREOS - 0.7%
Sony Corp. ADR 5,300 $ 381,600
ELECTRICAL EQUIPMENT - 8.0%
ELECTRICAL MACHINERY - 3.0%
Westinghouse Electric Corp. 93,250 1,608,563
TV & RADIO COMMUNICATION EQUIPMENT - 5.0%
General Instrument Corp. (a) 15,600 370,500
Scientific-Atlanta, Inc. 141,900 2,376,825
2,747,325
TOTAL ELECTRICAL EQUIPMENT 4,355,888
ELECTRONICS - 1.0%
SEMICONDUCTORS - 1.0%
Motorola, Inc. 10,000 558,750
ENTERTAINMENT - 3.4%
MOTION PICTURE PRODUCTION - 3.4%
Disney (Walt) Co. 20,000 1,485,000
Viacom, Inc. Class A (a) 10,000 348,750
1,833,750
PRINTING - 1.7%
COMMERCIAL PRINTING - 1.7%
Donnelley (R.R.) & Sons Co. 30,000 926,250
PUBLISHING - 35.4%
BOOK PUBLISHING & PRINTING - 8.2%
ACNielsen Corp. (a) 30,000 442,500
Cognizant Corp. 25,000 871,875
Harcourt General, Inc. 47,000 2,214,875
Scholastic Corp. (a) 30,000 990,000
4,519,250
GREETING CARDS - 3.8%
Gibson Greetings, Inc. (a) 100,000 2,062,500
NEWSPAPERS - 18.1%
Hollinger International, Inc. Class A 194,000 1,964,250
Knight-Ridder, Inc. 15,400 612,150
New York Times Co. (The) Class A 61,900 2,754,550
Times Mirror Co. Class A 73,200 3,769,800
Tribune Co. 20,000 785,000
9,885,750
PERIODICALS - 5.3%
Meredith Corp. 34,000 1,666,000
Playboy Enterprises, Inc. Class B (a) 80,000 1,220,000
2,886,000
TOTAL PUBLISHING 19,353,500
RETAIL & WHOLESALE, MISCELLANEOUS - 1.5%
STATIONERY & OFFICE SUPPLIES - WHOLESALE - 1.5%
Corporate Express, Inc. (a) 45,000 843,750
SERVICES - 1.2%
COMMERCIAL, ECONOMIC, SOCIAL & EDUCATIONAL RESEARCH - 0.7%
Gartner Group, Inc. Class A (a) 15,000 397,500
COMMERCIAL TESTING LABS - 0.5%
Forensic Technologies International Corp. 32,600 236,350
TOTAL SERVICES 633,850
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
TELEPHONE SERVICES - 5.8%
LCI International, Inc. (a) 30,000 $ 570,000
Telebras sponsored ADR 10,000 970,000
U S WEST Media Group (a) 15,000 275,625
WorldCom, Inc. (a) 50,000 1,331,250
3,146,875
TOTAL COMMON STOCKS
(Cost $51,921,775) 51,860,992
CASH EQUIVALENTS - 5.0%
Taxable Central Cash Fund (b)
(Cost $2,755,462) 2,755,462 2,755,462
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $54,677,237) $ 54,616,454
LEGEND
1. Non-income producing
2. At period end, the seven-day yield on the Taxable Central Cash Fund was
5.31%. The yield refers to the income earned by investing in the fund over
the seven-day period, expressed as an annual percentage.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $78,587,912 and $114,720,245, respectively (see Note 3 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $19,584 for the period (see
Note 4 of Notes to Financial Statements).
INCOME TAX INFORMATION
At February 28, 1997, the aggregate cost of investment securities for
income tax purposes was $55,379,028. Net unrealized depreciation aggregated
$762,574 of which $5,669,788 related to appreciated investment securities
and $6,432,362 related to depreciated investment securities.
The fund hereby designates approximately $1,264,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 100% of the dividends distributed during the fiscal year
qualifies for the dividends-received deduction for corporate shareholders
(unaudited).
The fund will notify shareholders in January 1998 of the applicable
percentage for use in preparing 1997 income tax returns.
MULTIMEDIA PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1997
ASSETS
Investment in $ 54,616,454
securities, at
value
(cost
$54,677,237)
- - See
accompanyin
g schedule
Receivable for 8,400
investments
sold
Receivable for 35,685
fund shares
sold
Dividends 40,716
receivable
Interest 17,158
receivable
Redemption 177
fees
receivable
Other 231
receivables
TOTAL ASSETS 54,718,821
LIABILITIES
Payable for $ 450,042
fund shares
redeemed
Accrued 31,489
management
fee
Other payables 66,461
and accrued
expenses
TOTAL 547,992
LIABILITIES
NET ASSETS $ 54,170,829
Net Assets
consist of:
Paid in capital $ 51,051,309
Undistributed 1,484,090
net
investment
income
Accumulated 1,696,213
undistributed
net realized
gain (loss) on
investments
and foreign
currency
transactions
Net unrealized (60,783
appreciation )
(depreciation
) on
investments
NET ASSETS, for $ 54,170,829
2,174,440
shares
outstanding
NET ASSET $24.91
VALUE and
redemption
price per
share
($54,170,829
(divided by) 2,174,440
shares)
Maximum $25.68
offering price
per share
(100/97.00 of
$24.91)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1997
INVESTMENT $ 575,928
INCOME
Dividends
Special 1,600,000
dividend from
ADVO, Inc.
Interest 282,395
TOTAL 2,458,323
INCOME
EXPENSES
Management $ 513,562
fee
Transfer agent 692,306
fees
Accounting 85,280
fees and
expenses
Non-interested 523
trustees'
compensatio
n
Custodian fees 10,776
and
expenses
Registration 20,220
fees
Audit 32,109
Legal 603
Miscellaneous 4,294
Total 1,359,673
expenses
before
reductions
Expense (34,656 1,325,017
reductions )
NET 1,133,306
INVESTMENT
INCOME
REALIZED AND
UNREALIZED
GAIN (LOSS)
Net realized
gain (loss)
on:
Investment 3,645,015
securities
Foreign 4,306 3,649,321
currency
transactions
Change in net (9,287,117
unrealized )
appreciation
(depreciation
) on
investment
securities
NET GAIN (LOSS) (5,637,796
)
NET INCREASE $ (4,504,490
(DECREASE) )
IN NET ASSETS
RESULTING
FROM
OPERATIONS
OTHER $ 338,283
INFORMATION
Sales
charges paid
to FDC
Deferred $ 4,261
sales
charges
withheld
by FDC
Exchange $ 36,660
fees withheld
by FSC
Expense $ 31,551
reductions
Directed
brokerage
arrangement
s
Custodian 3,105
interest
credits
$ 34,656
STATEMENT OF CHANGES IN NET ASSETS
INCREASE YEAR ENDED YEAR ENDED
(DECREASE) IN FEBRUARY 28, FEBRUARY 29,
NET ASSETS 1997 1996
Operations $ 1,133,306 $ 79,501
Net
investment
income
Net realized 3,649,321 15,081,916
gain (loss)
Change in (9,287,117 7,021,515
net )
unrealized
appreciation
(depreciation
)
NET INCREASE (4,504,490 22,182,932
(DECREASE) )
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
Distributions to - (62,595
shareholders )
From net
investment
income
From net (3,347,638 (6,860,366
realized gain ) )
TOTAL (3,347,638 (6,922,961
DISTRIBUTION ) )
S
Share 42,427,132 226,094,070
transactions
Net proceeds
from sales of
shares
Reinvestmen 3,294,839 6,804,045
t of
distributions
Cost of (78,777,876 (191,430,375
shares ) )
redeemed
Paid in 109,141 84,905
capital
portion of
redemption
fees
NET INCREASE (32,946,764 41,552,645
(DECREASE) )
IN NET
ASSETS
RESULTING
FROM SHARE
TRANSACTIO
NS
TOTAL (40,798,892 56,812,616
INCREASE )
(DECREASE)
IN NET ASSETS
NET ASSETS
Beginning of 94,969,721 38,157,105
period
End of period $ 54,170,829 $ 94,969,721
(including
undistribute
d net
investment
income of
$1,484,090
and
$16,907,
respectivel
y)
OTHER
INFORMATION
Shares
Sold 1,577,831 8,957,896
Issued in 127,316 262,403
reinvestment
of
distributions
Redeemed (3,024,499 (7,433,399
) )
Net increase (1,319,352) 1,786,900
(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>
YEAR ENDED YEAR ENDED YEARS ENDED FEBRUARY 28, TEN MONTHS
FEBRUARY 28, FEBRUARY 29, ENDED
FEBRUARY 28,
SELECTED 1997 1996 1995 1994 1993
PER-SHARE
DATA D
</TABLE>
Net asset $ 27.18 $ 22.35 $ 23.87 $ 18.26 $ 15.93
value,
beginning of
period
Income from
Investment
Operations
Net .35 E .02 (.01) (.10) (.07)
investment
income (loss)
Net realized (1.58) 7.00 1.67 6.28 2.61
and
unrealized
gain (loss)
Total from (1.23) 7.02 1.66 6.18 2.54
investment
operations
Less
Distributions
From net - (.02) - - -
investment
income
From net (1.07) (2.19) (3.21) (.65) (.23)
realized gain
Total (1.07) (2.21) (3.21) (.65) (.23)
distributions
Redemption .03 .02 .03 .08 .02
fees added to
paid in
capital
Net asset $ 24.91 $ 27.18 $ 22.35 $ 23.87 $ 18.26
value, end of
period
TOTAL (4.52)% 31.98% 9.35% 34.86% 16.14%
RETURN B, C
RATIOS AND
SUPPLEMENT
AL DATA
Net assets, $ 54,171 $ 94,970 $ 38,157 $ 49,177 $ 16,647
end of period
(000 omitted)
Ratio of 1.60% 1.56% 2.05% 1.66% 2.49% A,
expenses to G
average net
assets
Ratio of 1.56% F 1.54% F 2.03% F 1.63% F 2.49% A
expenses to
average net
assets after
expense
reductions
Ratio of net 1.33% .08% (.07)% (.42)% (.52)%
investment A
income (loss)
to average
net assets
Portfolio 99% 223% 107% 340% 70% A
turnover rate
Average $ .0400
commission
rate H
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
A ANNUALIZED B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 8 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 FROM ADVO, INC.
WHICH AMOUNTED TO $.49 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 8 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>
RETAILING PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance. You can
look at the total percentage change in value, the average annual percentage
change, or the growth of a hypothetical $10,000 investment. Total return
reflects the change in the value of an investment, assuming reinvestment of
the fund's dividend income and capital gains (the profits earned upon the
sale of securities that have grown in value), but does not include cetain
fees paid by shareholders upon exchange or redemption. If Fidelity had not
reimbursed certain fund expenses, the past 10 year total returns would have
been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 28, 1997 YEAR YEARS YEARS
RETAILING 19.59% 65.38% 302.10%
RETAILING 16.01% 60.42% 290.04%
(INCL. 3% SALES CHARGE)
S&P 500 26.16% 118.75% 276.74%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one, five, or 10 years. You can compare
the fund's returns 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, and excludes the effect of sales
charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 28, 1997 YEAR YEARS YEARS
RETAILING 19.59% 10.58% 14.93%
RETAILING 16.01% 9.91% 14.58%
(INCL. 3% SALES CHARGE)
S&P 500 26.16% 16.94% 14.16%
AVERAGE ANNUAL RETURNS take the fund's 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
1987/02/28 9700.00 10000.00
1987/03/31 9993.94 10289.00
1987/04/30 9685.66 10197.43
1987/05/31 9857.72 10286.15
1987/06/30 10395.42 10805.60
1987/07/31 10918.77 11353.44
1987/08/31 11162.53 11776.92
1987/09/30 10366.74 11519.01
1987/10/31 7269.62 9037.81
1987/11/30 6767.78 8293.10
1987/12/31 7431.83 8924.20
1988/01/31 7901.30 9299.91
1988/02/29 8816.35 9733.29
1988/03/31 8927.75 9432.53
1988/04/30 9206.24 9537.23
1988/05/31 8943.66 9620.20
1988/06/30 9731.41 10061.77
1988/07/31 9643.88 10023.54
1988/08/31 9620.01 9682.74
1988/09/30 10184.96 10095.22
1988/10/31 10399.79 10375.87
1988/11/30 10256.57 10227.49
1988/12/31 10308.34 10406.47
1989/01/31 10818.09 11168.23
1989/02/28 10672.45 10890.14
1989/03/31 11182.20 11143.88
1989/04/30 11813.32 11722.25
1989/05/31 12630.55 12197.00
1989/06/30 12405.69 12127.48
1989/07/31 13406.15 13222.59
1989/08/31 14056.45 13481.75
1989/09/30 14023.10 13426.47
1989/10/31 13347.79 13114.98
1989/11/30 13431.16 13382.52
1989/12/31 13352.49 13703.71
1990/01/31 12309.63 12784.19
1990/02/28 12738.47 12949.10
1990/03/31 13781.33 13292.25
1990/04/30 13586.40 12959.95
1990/05/31 15399.22 14223.54
1990/06/30 15204.29 14126.82
1990/07/31 14580.53 14081.62
1990/08/31 12485.06 12808.64
1990/09/30 11091.34 12184.86
1990/10/31 10574.78 12132.46
1990/11/30 12017.24 12916.22
1990/12/31 12680.75 13276.58
1991/01/31 13911.71 13855.44
1991/02/28 15201.27 14846.11
1991/03/31 16783.93 15205.38
1991/04/30 17018.39 15241.87
1991/05/31 18434.96 15900.32
1991/06/30 17848.80 15172.09
1991/07/31 18991.82 15879.11
1991/08/31 19998.08 16255.44
1991/09/30 19783.15 15983.98
1991/10/31 19411.91 16198.16
1991/11/30 19040.67 15545.38
1991/12/31 21320.56 17323.77
1992/01/31 22502.81 17001.55
1992/02/29 23584.86 17222.57
1992/03/31 23113.97 16886.73
1992/04/30 22172.18 17383.20
1992/05/31 22633.05 17468.37
1992/06/30 21576.57 17208.09
1992/07/31 22536.45 17911.90
1992/08/31 22025.21 17544.71
1992/09/30 22682.52 17751.74
1992/10/31 24237.12 17813.87
1992/11/30 26073.42 18421.32
1992/12/31 26027.34 18647.90
1993/01/31 26206.91 18804.55
1993/02/28 25213.99 19060.29
1993/03/31 27157.59 19462.46
1993/04/30 25598.80 18991.47
1993/05/31 27016.75 19500.44
1993/06/30 26367.31 19556.99
1993/07/31 26497.20 19478.76
1993/08/31 27709.49 20217.01
1993/09/30 28553.76 20061.34
1993/10/31 28997.55 20476.61
1993/11/30 29278.97 20282.08
1993/12/31 29419.11 20527.49
1994/01/31 28108.47 21225.43
1994/02/28 29149.96 20650.22
1994/03/31 28541.45 19749.87
1994/04/30 29407.41 20002.67
1994/05/31 27956.34 20330.71
1994/06/30 27722.30 19832.61
1994/07/31 28190.39 20483.12
1994/08/31 29980.81 21322.93
1994/09/30 29395.70 20800.52
1994/10/31 29524.43 21268.53
1994/11/30 28494.64 20493.93
1994/12/31 27944.64 20797.85
1995/01/31 27722.30 21337.14
1995/02/28 27979.75 22168.65
1995/03/31 28295.71 22822.85
1995/04/30 27195.71 23494.98
1995/05/31 27675.49 24434.07
1995/06/30 29442.51 25001.68
1995/07/31 31244.64 25830.73
1995/08/31 30811.66 25895.57
1995/09/30 31736.13 26988.36
1995/10/31 30320.17 26892.01
1995/11/30 31841.45 28072.57
1995/12/31 31291.45 28613.25
1996/01/31 30378.68 29587.24
1996/02/29 32613.78 29861.52
1996/03/31 35036.12 30149.08
1996/04/30 37083.99 30593.48
1996/05/31 38862.71 31382.49
1996/06/30 38172.29 31502.05
1996/07/31 34521.23 30110.29
1996/08/31 37786.12 30745.32
1996/09/30 39143.56 32475.67
1996/10/31 38371.22 33371.34
1996/11/30 39845.69 35893.88
1996/12/31 37819.01 35182.83
1997/01/31 37643.06 37381.05
1997/02/28 39003.79 37674.12
Let's say hypothetically that $10,000 was invested in Fidelity Select
Retailing Portfolio on February 28, 1987, and the current maximum 3% sales
charge was paid. As the chart shows, by February 28, 1997, the value of the
investment would have grown to $39,004 - a 290.04% increase on the initial
investment. For comparison, look at how the S&P 500 did over the same
period. With dividends and capital gains, if any, reinvested, the same
$10,000 investment would have grown to $37,674 - a 276.74% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1997
% OF FUND'S
INVESTMENTS
CVS Corp. 15.2
Consolidated Stores Corp. 7.1
Wal-Mart Stores, Inc. 6.0
Safeway, Inc. 5.9
Payless ShoeSource, Inc. 5.8
Revco (D.S.), Inc. 3.6
Proffitts, Inc. 3.6
Kroger Co. (The) 3.5
Rite Aid Corp. 3.1
Vons Companies, Inc. 2.9
TOP INDUSTRIES AS OF FEBRUARY 28, 1997
Drug Stores 22.0%
Grocery-Retail 14.9%
Variety Stores 10.1%
Shoe Stores 8.6%
General Merchandise
Stores 6.0%
All Others 38.4% *
Row: 1, Col: 1, Value: 38.4
Row: 1, Col: 2, Value: 6.0
Row: 1, Col: 3, Value: 8.6
Row: 1, Col: 4, Value: 10.1
Row: 1, Col: 5, Value: 14.9
Row: 1, Col: 6, Value: 22.0
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
RETAILING PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
NOTE TO SHAREHOLDERS: Ramin Arani became Portfolio Manager of Fidelity
Select Retailing Portfolio on January 7, 1997.
Q. RAMIN, HOW DID THE FUND PERFORM?
A. For the 12 months that ended February 28, 1997, the fund had a total
return of 19.59%. For the same 12-month period, the Standard & Poor's 500
Index returned 26.16%.
Q. WHAT WAS THE YEAR LIKE FOR STOCKS IN THE SECTOR?
A. Stocks in the retailing sector enjoyed a good first half of 1996, as
comparable store sales - this year's retail store performance compared to
the previous year's sales for the same stores - were up solidly. Much of
that improvement came from the fact that 1995 was such a poor year for the
sector. Going into the Christmas 1996 season, there were even higher
expectations for comparable store sales, because Christmas 1995 had been a
particularly poor selling season. In addition, companies had done a better
job managing inventories through the fall. As it turned out, Christmas 1996
did show improvement over 1995. Stores met expectations, but didn't beat
them as many had hoped. The companies that suffered through disappointing
earnings at Christmas prereported that fact, hurting most of the stocks in
the group at the beginning of 1997. However, in January and February many
other companies confirmed solid earnings and comparable store sales
rebounded, helping stocks in the sector pick up a bit in February.
Q. WHAT HAVE YOU FOCUSED ON SINCE TAKING OVER THE FUND IN JANUARY?
A. I haven't made any major changes. I reduced the number of stocks in the
fund, concentrating the portfolio on those names whose stories I was most
familiar with. CVS was the fund's largest holding when I took over the fund
and remains so. It also was one of the fund's better-performing stocks. I
added shares in Revco because it is being acquired by CVS, so the fund's
investments in Revco will help increase the fund's overall stake in CVS
going forward. I also increased the fund's investment in Wal-Mart, which I
found to be attractive because of its strong cash flow. I increased
investments in supermarkets such as Safeway, Kroger and American Stores.
These companies appealed to me because of their cash flows and profit
margin improvements.
Q. WHAT HAS HELPED DRUG STORE COMPANIES, SUCH AS CVS, PERFORM WELL?
A. In the current push toward managed health care, the use of
pharmaceuticals is on the rise. This has driven strong pharmacy sales
growth at the drug stores, although that part of their business provides
lower profit margins. In addition, the stores are designed with the
pharmacies at the back. When customers walk back through the store, they're
attracted to the other merchandise, which typically is sold at high
margins. The companies have been doing a better job merchandising and
managing their inventories for products in the front of the store. These
merchandising and inventory management efforts have helped offset the
margin erosion arising from the growth in the pharmacy business. Strong
sales and overall flat margins have led to strong profit growth.
Q. WERE THERE PARTICULAR AREAS THAT YOU AVOIDED?
A. Consumer electronics continued to be a difficult area; it is very
competitive with a lot of store capacity and price cutting. Companies that
are struggling tend to try to liquidate their inventories by cutting prices
drastically, making it tough for all companies in the group. In addition,
the lack of new product offerings and the highly competitive personal
computer business hurt the group.
Q. WHAT'S YOUR OUTLOOK?
A. I don't make any forecasts related to the economy or the stock market.
I'll be looking for those companies that can expand their profit margins
and improve their cash flow by emphasizing returns on invested capital. I
think those stocks will present the best opportunity.
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 February 28, 1997, more than
$59 million
MANAGER: Ramin Arani, since January 1997;
joined Fidelity in 1992
(checkmark)
RETAILING PORTFOLIO
INVESTMENTS FEBRUARY 28, 1997
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 91.4%
SHARES VALUE (NOTE 1)
APPAREL STORES - 15.2%
GENERAL APPAREL STORES - 5.4%
Gap, Inc. 44,600 $ 1,471,800
Limited, Inc. (The) 5,500 104,500
TJX Companies, Inc. 36,600 1,528,050
3,104,350
SHOE STORES - 8.6%
Footstar, Inc. (a) 64,630 1,631,905
Payless ShoeSource, Inc. (a) 77,600 3,336,800
4,968,705
WOMEN'S CLOTHING STORES - 1.2%
AnnTaylor Stores Corp. (a) 15,000 300,000
Charming Shoppes, Inc. (a) 50,400 223,650
Talbots, Inc. 5,600 179,900
703,550
TOTAL APPAREL STORES 8,776,605
AUTOS, TIRES, & ACCESSORIES - 0.4%
MOTOR VEHICLE DEALERS (NEW & USED) - 0.4%
Cross-Continent Auto Retailers, Inc. (a) 13,000 206,375
COMPUTER SERVICES & SOFTWARE - 0.7%
COMPUTER & SOFTWARE STORES - 0.7%
CompUSA, Inc. (a) 20,400 408,000
DRUG STORES - 22.0%
CVS Corp. 190,000 8,787,500
Revco (D.S.), Inc. (a) 51,200 2,092,800
Rite Aid Corp. 43,000 1,811,375
12,691,675
GENERAL MERCHANDISE STORES - 21.5%
DEPARTMENT STORES - 5.4%
Neiman-Marcus Group, Inc. (a) 38,700 1,040,063
Proffitts, Inc. (a) 63,852 2,067,209
3,107,272
GENERAL MERCHANDISE STORES - 6.0%
Wal-Mart Stores, Inc. 130,300 3,436,663
VARIETY STORES - 10.1%
Consolidated Stores Corp. (a) 116,175 4,080,647
Costco Companies, Inc. (a) 45,000 1,153,125
Woolworth Corp. (a) 27,800 580,325
5,814,097
TOTAL GENERAL MERCHANDISE STORES 12,358,032
GROCERY STORES - 14.9%
GROCERY - RETAIL - 14.9%
American Stores Co. 34,300 1,534,925
Kroger Co. (The) (a) 38,000 2,014,000
Safeway, Inc. (a) 70,600 3,397,625
Vons Companies, Inc. (a) 24,500 1,669,063
8,615,613
RETAIL & WHOLESALE, MISCELLANEOUS - 12.6%
BUILDING MATERIALS - RETAIL - 1.6%
Home Depot, Inc. (The) 17,200 937,400
HOBBY, TOY, & GAME SHOPS - 1.5%
Toys "R" Us, Inc. (a) 32,591 847,366
JEWELRY STORES - 1.2%
Tiffany & Co., Inc. 20,000 695,000
SHARES VALUE (NOTE 1)
LUMBER & BUILDING MATERIALS - RETAIL - 2.6%
Lowe's Companies, Inc. 40,900 $ 1,492,850
MAIL ORDER - 0.9%
Viking Office Products, Inc. (a) 23,500 555,188
MUSIC, TV, & ELECTRONIC STORES - 1.8%
Circuit City Stores, Inc. 31,700 990,625
Tandy Corp. 600 30,225
1,020,850
RETAIL STORES - 1.5%
Gadzooks, Inc. (a) 34,518 845,691
RETAIL, GENERAL - 1.5%
Staples, Inc. (a) 40,000 865,000
TOTAL RETAIL & WHOLESALE, MISCELLANEOUS 7,259,345
TEXTILES & APPAREL - 4.1%
APPAREL - 3.3%
Fruit of the Loom, Inc. Class A (a) 21,400 874,725
Liz Claiborne, Inc. 25,000 1,012,500
1,887,225
FOOTWEAR - 0.8%
Reebok International Ltd. 10,000 467,500
TOTAL TEXTILES & APPAREL 2,354,725
TOTAL COMMON STOCKS
(Cost $47,959,089) 52,670,370
CASH EQUIVALENTS - 8.6%
Taxable Central Cash Fund (b)
(Cost $4,985,645) 4,985,645 4,985,645
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $52,944,734) $ 57,656,015
LEGEND
1. Non-income producing
2. At period end, the seven-day yield on the Taxable Central Cash Fund was
5.31%. The yield refers to the income earned by investing in the fund over
the seven-day period, expressed as an annual percentage.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $533,180,581 and $532,921,181, respectively (see Note 3 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $250,241 for the period
(see Note 4 of Notes to Financial Statements).
At the period end, the value of securities loaned and the value of
collateral amounted to $4,262,625 and $4,410,000, respectively (see Note 6
of Notes to Financial Statements).
The fund participated in the bank borrowing program. The maximum loan and
average daily loan balances during the period for which loans were
outstanding amounted to $6,897,000 and $4,586,667, respectively. The
weighted average interest rate paid was 5.7% (see Note 7 of Notes to
Financial Statements).
INCOME TAX INFORMATION
At February 28, 1997, the aggregate cost of investment securities for
income tax purposes was $53,883,345. Net unrealized appreciation aggregated
$3,772,670, of which $5,245,423 related to appreciated investment
securities and $1,472,753 related to depreciated investment securities.
The fund hereby designates approximately $2,146,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 100% of the dividends distributed during the fiscal year
qualifies for the dividends-received deduction for corporate shareholders
(unaudited).
The fund will notify shareholders in January 1998 of the applicable
percentage for use in preparing 1997 income tax returns.
RETAILING PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1997
ASSETS
Investment in $ 57,656,015
securities, at
value
(cost
$52,944,734)
- - See
accompanyin
g schedule
Receivable for 8,994,276
fund shares
sold
Dividends 2,813
receivable
Interest 46,907
receivable
Redemption 208
fees
receivable
Other 1,045
receivables
TOTAL ASSETS 66,701,264
LIABILITIES
Payable to $ 22,323
custodian
bank
Payable for 1,460,174
investments
purchased
Payable for 1,332,647
fund shares
redeemed
Accrued 41,153
management
fee
Other payables 86,602
and accrued
expenses
Collateral on 4,410,000
securities
loaned,
at value
TOTAL 7,352,899
LIABILITIES
NET ASSETS $ 59,348,365
Net Assets
consist of:
Paid in capital $ 49,203,362
Accumulated 5,433,722
undistributed
net realized
gain (loss) on
investments
and foreign
currency
transactions
Net unrealized 4,711,281
appreciation
(depreciation
) on
investments
NET ASSETS, for $ 59,348,365
1,785,059
shares
outstanding
NET ASSET $33.25
VALUE and
redemption
price per
share
($59,348,365
(divided by) 1,785,059
shares)
Maximum $34.28
offering price
per share
(100/97.00 of
$33.25)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1997
INVESTMENT $ 1,331,191
INCOME
Dividends
Interest 880,613
(including
income on
securities
loaned of
$64,512)
TOTAL 2,211,804
INCOME
EXPENSES
Management $ 1,338,783
fee
Transfer agent 1,497,747
fees
Accounting and 227,507
security
lending fees
Non-interested 1,013
trustees'
compensatio
n
Custodian fees 24,319
and
expenses
Registration 88,475
fees
Audit 28,788
Legal 1,358
Interest 4,377
Miscellaneous 4,352
Total 3,216,719
expenses
before
reductions
Expense (141,203 3,075,516
reductions )
NET (863,712
INVESTMENT )
INCOME
(LOSS)
REALIZED AND
UNREALIZED
GAIN (LOSS)
Net realized
gain (loss)
on:
Investment 7,832,073
securities
Foreign (1,134 7,830,939
currency )
transactions
Change in net
unrealized
appreciation
(depreciation
) on:
Investment 2,577,738
securities
Assets and 3 2,577,741
liabilities in
foreign
currencies
NET GAIN (LOSS) 10,408,680
NET INCREASE $ 9,544,968
(DECREASE)
IN NET ASSETS
RESULTING
FROM
OPERATIONS
OTHER $ 838,536
INFORMATION
Sales
charges paid
to FDC
Deferred $ 4,812
sales
charges
withheld
by FDC
Exchange $ 203,490
fees withheld
by FSC
Expense $ 136,573
reductions
Directed
brokerage
arrangement
s
Custodian 3,913
interest
credits
Transfer 717
agent
interest
credits
$ 141,203
STATEMENT OF CHANGES IN NET ASSETS
INCREASE YEAR ENDED YEAR ENDED
(DECREASE) IN FEBRUARY 28, FEBRUARY 29,
NET ASSETS 1997 1996
Operations $ (863,712 $ (197,764
Net ) )
investment
income (loss)
Net realized 7,830,939 2,253,913
gain (loss)
Change in 2,577,741 3,066,064
net
unrealized
appreciation
(depreciation
)
NET INCREASE 9,544,968 5,122,213
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
Distributions to (523,662 -
shareholders )
from net
realized
gains
Share 606,855,160 68,570,912
transactions
Net proceeds
from sales of
shares
Reinvestmen 520,661 -
t of
distributions
Cost of (601,757,660 (60,782,922
shares ) )
redeemed
Paid in 657,715 50,523
capital
portion of
redemption
fees
NET INCREASE 6,275,876 7,838,513
(DECREASE)
IN NET
ASSETS
RESULTING
FROM SHARE
TRANSACTIO
NS
TOTAL 15,297,182 12,960,726
INCREASE
(DECREASE)
IN NET ASSETS
NET ASSETS
Beginning of 44,051,183 31,090,457
period
End of period $ 59,348,365 $ 44,051,183
OTHER
INFORMATION
Shares
Sold 19,012,106 2,635,958
Issued in 15,768 -
reinvestment
of
distributions
Redeemed (18,823,522 (2,355,724
) )
Net increase 204,352 280,234
(decrease)
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEAR ENDED YEAR ENDED YEARS ENDED FEBRUARY 28, TEN MONTHS
FEBRUARY 28, FEBRUARY 29, ENDED
FEBRUARY 28,
SELECTED 1997 1996 1995 1994 1993
PER-SHARE
DATA D
</TABLE>
Net asset $ 27.87 $ 23.91 $ 24.91 $ 23.87 $ 22.13
value,
beginning of
period
Income from
Investment
Operations
Net (.13) (.14) (.18) (.22) (.08)
investment
income (loss)
Net realized 5.49 4.07 (.96) 3.85 2.93
and
unrealized
gain (loss)
Total from 5.36 3.93 (1.14) 3.63 2.85
investment
operations
Less
Distributions
From net (.08) - - (2.63) (1.17)
realized gain
Redemption .10 .03 .14 .04 .06
fees added to
paid in
capital
Net asset $ 33.25 $ 27.87 $ 23.91 $ 24.91 $ 23.87
value, end of
period
TOTAL 19.59% 16.56% (4.01)% 15.61% 13.72%
RETURN B, C
RATIOS AND
SUPPLEMENT
AL DATA
Net assets, $ 59,348 $ 44,051 $ 31,090 $ 52,790 $ 74,878
end of period
(000 omitted)
Ratio of 1.45% 1.94% 2.07% 1.86% 1.77% A
expenses to
average net
assets
Ratio of 1.39% E 1.92% E 1.96% E 1.83% E 1.77% A
expenses to
average net
assets after
expense
reductions
Ratio of net (.39)% (.53)% (.74)% (.87)% (.44)%
investment A
income (loss)
to average
net assets
Portfolio 278% 235% 481% 154% 171% A
turnover rate
Average $ .0403
commission
rate F
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
A ANNUALIZED B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN SEE (NOTE 8 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 8 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>
AIR TRANSPORTATION PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance. You can
look at the total percentage change in value, the average annual percentage
change, or the growth of a hypothetical $10,000 investment. Total return
reflects the change in the value of an investment, assuming reinvestment of
the fund's dividend income and capital gains (the profits earned upon the
sale of 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 fund expenses, the past five year and past 10 year total
returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 28, 1997 YEAR YEARS YEARS
AIR TRANSPORTATION -15.06% 45.62% 105.57%
AIR TRANSPORTATION -17.61% 41.25% 99.40%
(INCL. 3% SALES CHARGE)
S&P 500 26.16% 118.75% 276.74%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one, five, or 10 years. You can compare
the fund's returns 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, and excludes the effect of sales
charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 28, 1997 YEAR YEARS YEARS
AIR TRANSPORTATION -15.06% 7.81% 7.47%
AIR TRANSPORTATION -17.61% 7.15% 7.15%
(INCL. 3% SALES CHARGE)
S&P 500 26.16% 16.94% 14.16%
AVERAGE ANNUAL RETURNS take the fund's 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
1987/02/28 9700.00 10000.00
1987/03/31 9368.24 10289.00
1987/04/30 9376.14 10197.43
1987/05/31 9936.97 10286.15
1987/06/30 10063.36 10805.60
1987/07/31 10284.53 11353.44
1987/08/31 10371.42 11776.92
1987/09/30 9992.26 11519.01
1987/10/31 6974.84 9037.81
1987/11/30 6500.90 8293.10
1987/12/31 6775.18 8924.20
1988/01/31 6964.88 9299.91
1988/02/29 7543.03 9733.29
1988/03/31 7868.24 9432.53
1988/04/30 7777.90 9537.23
1988/05/31 7660.47 9620.20
1988/06/30 8645.13 10061.77
1988/07/31 8392.19 10023.54
1988/08/31 7922.44 9682.74
1988/09/30 8446.39 10095.22
1988/10/31 8608.99 10375.87
1988/11/30 8410.25 10227.49
1988/12/31 8744.50 10406.47
1989/01/31 9557.52 11168.23
1989/02/28 9738.19 10890.14
1989/03/31 10226.00 11143.88
1989/04/30 10632.51 11722.25
1989/05/31 10903.52 12197.00
1989/06/30 10849.02 12127.48
1989/07/31 11612.90 13222.59
1989/08/31 12495.01 13481.75
1989/09/30 12003.94 13426.47
1989/10/31 11058.18 13114.98
1989/11/30 10949.05 13382.52
1989/12/31 11047.18 13703.71
1990/01/31 9910.25 12784.19
1990/02/28 10327.12 12949.10
1990/03/31 10867.17 13292.25
1990/04/30 10469.24 12959.95
1990/05/31 11198.77 14223.54
1990/06/30 11227.19 14126.82
1990/07/31 10886.11 14081.62
1990/08/31 9161.77 12808.64
1990/09/30 8242.75 12184.86
1990/10/31 8678.57 12132.46
1990/11/30 8545.93 12916.22
1990/12/31 9038.60 13276.58
1991/01/31 10109.21 13855.44
1991/02/28 11246.14 14846.11
1991/03/31 11198.77 15205.38
1991/04/30 10924.01 15241.87
1991/05/31 11568.27 15900.32
1991/06/30 11324.35 15172.09
1991/07/31 11672.49 15879.11
1991/08/31 11527.43 16255.44
1991/09/30 11140.61 15983.98
1991/10/31 11682.16 16198.16
1991/11/30 11159.95 15545.38
1991/12/31 12388.12 17323.77
1992/01/31 13103.75 17001.55
1992/02/29 13693.66 17222.57
1992/03/31 12891.00 16886.73
1992/04/30 12223.72 17383.20
1992/05/31 12388.12 17468.37
1992/06/30 11985.85 17208.09
1992/07/31 11916.96 17911.90
1992/08/31 11415.09 17544.71
1992/09/30 11789.03 17751.74
1992/10/31 12212.18 17813.87
1992/11/30 12507.40 18421.32
1992/12/31 13201.75 18647.90
1993/01/31 13321.13 18804.55
1993/02/28 13530.05 19060.29
1993/03/31 15022.33 19462.46
1993/04/30 15192.15 18991.47
1993/05/31 16059.99 19500.44
1993/06/30 14862.97 19556.99
1993/07/31 15371.70 19478.76
1993/08/31 16289.42 20217.01
1993/09/30 15960.24 20061.34
1993/10/31 16877.95 20476.61
1993/11/30 16917.85 20282.08
1993/12/31 17279.40 20527.49
1994/01/31 17946.71 21225.43
1994/02/28 17309.73 20650.22
1994/03/31 16308.76 19749.87
1994/04/30 16201.51 20002.67
1994/05/31 15524.21 20330.71
1994/06/30 15051.17 19832.61
1994/07/31 15835.98 20483.12
1994/08/31 16438.03 21322.93
1994/09/30 14599.64 20800.52
1994/10/31 14717.89 21268.53
1994/11/30 13739.57 20493.93
1994/12/31 13522.25 20797.85
1995/01/31 13957.40 21337.14
1995/02/28 15154.06 22168.65
1995/03/31 16133.14 22822.85
1995/04/30 17427.71 23494.98
1995/05/31 17710.56 24434.07
1995/06/30 19951.57 25001.68
1995/07/31 20626.05 25830.73
1995/08/31 19831.91 25895.57
1995/09/30 20560.78 26988.36
1995/10/31 20321.45 26892.01
1995/11/30 22943.22 28072.57
1995/12/31 21573.26 28613.25
1996/01/31 21083.97 29587.24
1996/02/29 23474.82 29861.52
1996/03/31 24675.80 30149.08
1996/04/30 23642.37 30593.48
1996/05/31 23867.43 31382.49
1996/06/30 23754.90 31502.05
1996/07/31 19861.39 30110.29
1996/08/31 19501.30 30745.32
1996/09/30 19264.99 32475.67
1996/10/31 19084.94 33371.34
1996/11/30 21414.29 35893.88
1996/12/31 21841.90 35182.83
1997/01/31 20986.68 37381.05
1997/02/28 19940.16 37674.12
Let's say hypothetically that $10,000 was invested in Fidelity Select Air
Transportation Portfolio on February 28, 1987, and the current maximum 3%
sales charge was paid. As the chart shows, by February 28, 1997, the value
of the investment would have grown to $19,940 - a 99.40% increase on the
initial investment. For comparison, look at how the S&P 500 did over the
same period. With dividends and capital gains, if any, reinvested, the same
$10,000 investment would have grown to $37,674 - a 276.74% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1997
% OF FUND'S
INVESTMENTS
America West Airlines, Inc. Class B (warrants) 9.9
Sundstrand Corp. 9.5
Comair Holdings, Inc. 9.2
Boeing Co. 8.1
America West Holding Corp. Class B 7.2
Premier Technologies, Inc. 5.2
Rohr Industries, Inc. 5.0
ASA Holdings, Inc. 5.0
Alaska Air Group, Inc. 4.9
UAL Corp. 4.8
TOP INDUSTRIES AS OF FEBRUARY 28, 1997
Air Transport,
Major National 40.4%
Aircraft & Parts 17.4%
Air Transportation,
Regional 12.5%
Aircraft 11.8%
Business Services 5.2%
All Others 12.7% *
Row: 1, Col: 1, Value: 12.7
Row: 1, Col: 2, Value: 5.2
Row: 1, Col: 3, Value: 11.8
Row: 1, Col: 4, Value: 12.5
Row: 1, Col: 5, Value: 17.4
Row: 1, Col: 6, Value: 40.4
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
AIR TRANSPORTATION PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Kevin Richardson,
Portfolio Manager
of Fidelity Select Air
Transportation Portfolio
Q. HOW DID THE FUND PERFORM, KEVIN?
A. It was a disappointing period. For the 12 months that ended February 28,
1997, the fund returned -15.06%. The Standard & Poor's 500 Index had a
return of 26.16% over the same period.
Q. WHY DID THE INDUSTRY STRUGGLE?
A. The first half of the period was characterized by a chain of
unpredictable, negative events. These included airline tragedies involving
ValuJet and Trans World Airlines, excise tax legislation concerns,
ill-timed pricing promotions by some players in the group and soaring jet
fuel prices. Anything that could go wrong, did go wrong. The second half of
the period was slightly better, but we still saw some negative
developments, such as the threatened American Airlines pilot strike and an
announcement by United Airlines that it was planning to purchase additional
airplanes. As the period drew to a close, airline stocks staged a near-term
rally and began showing some signs of resuscitating.
Q. CAN YOU BE MORE SPECIFIC AS TO THE IMPACT OF THE AMERICAN AIRLINES LABOR
SITUATION AND UNITED AIRLINES' ANNOUNCEMENT?
A. Sure. Despite President Clinton's last-minute intervention to avoid the
strike, the industry witnessed a good degree of "spillage." By that, I mean
travelers who were scheduled to fly on American were forced to seek
alternative flights on other carriers. While this is a good development for
the other carriers in the short-term, it has a negative effect on American,
a big industry influencer. United's announcement that it would purchase
more planes was viewed negatively because oversupply in this industry is
detrimental. When one carrier decides to purchase more planes, it can set
off a chain reaction within the entire industry for other airlines to
follow suit. Airlines are commodities and commodities need to stay in tight
supply/demand cycles.
Q. WHAT'S THE LATEST ON THE EXCISE TAX SITUATION?
A. The excise tax - a surcharge on airline tickets that is funnelled to the
Federal Aviation Administration to cover industry costs - has been at the
epicenter of much debate. The government is still trying to determine how
much each carrier should pay. It's anyone's guess as to how this situation
will play out, but it certainly didn't help stock performance.
Q. WHICH AREAS OF THE INDUSTRY ATTRACTED YOUR ATTENTION?
A. There were a couple. I overweighted the portfolio in aircraft
manufacturing stocks, including Sundstrand, Boeing and McDonnell Douglas.
This group was in high demand, and the merger between Boeing and McDonnell
Douglas was viewed favorably by the market. Another group that caught my
eye was the regional, or commuter, airlines. These smaller planes can fly
good distances, are fuel-economical and have good pricing characteristics.
Examples included Comair and Atlantic Southeast Airlines, also known as ASA
Holdings, Inc.
Q. WHICH INDIVIDUAL STOCKS PERFORMED WELL? WHICH WERE DISAPPOINTMENTS?
A. Boeing and Sundstrand, which I mentioned previously, were good
contributors. Sundstrand is a commercial aerospace company that supplies
different products to manufacturers such as Boeing and Airbus. On a
negative note, the positions in Comair and American Airlines were
detractors to the fund's overall return.
Q. WHAT'S YOUR OUTLOOK?
A. I'm very optimistic in the near-term, but more cautious as I look out
further. We've seen some positive developments in the last two months of
the period, but the continuing short-term rally is a delicate one. Going
back to the oversupply issue, airlines need to show discipline. When they
order new planes, they need to discard older ones. In terms of portfolio
strategies, I may delve more into defense and aerospace stocks and will
look for any interesting international opportunities.
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 February 28, 1997, more than
$35 million
MANAGER: Kevin Richardson, since May 1996;
manager, Fidelity Select Defense &
Aerospace Portfolio, since January 1997;
equity analyst, computer services, health care
information systems and specialty finance
industries, since 1994; joined Fidelity in 1994
(checkmark)
AIR TRANSPORTATION PORTFOLIO
INVESTMENTS FEBRUARY 28, 1997
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 93.9%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 30.0%
AIRCRAFT - 11.8%
Boeing Co. 29,000 $ 2,950,750
McDonnell Douglas Corp. 21,700 1,377,951
4,328,701
AIRCRAFT & PARTS - 17.4%
Precision Castparts Corp. 21,900 1,073,100
Rohr Industries, Inc. (a) 101,600 1,841,500
Sundstrand Corp. 79,500 3,468,188
6,382,788
AIRCRAFT EQUIPMENT - 0.4%
BE Aerospace, Inc. 5,800 140,650
MISSILES & SPACE VEHICLES - 0.4%
Thiokol Corp. 3,000 167,250
TOTAL AEROSPACE & DEFENSE 11,019,389
AIR TRANSPORTATION - 52.9%
AIR TRANSPORT, MAJOR NATIONAL - 40.4%
AMR Corp. 15,000 1,179,375
Alaska Air Group, Inc. (a) 75,800 1,800,250
America West Airlines, Inc.
Class B (warrants) (a) 567,600 3,618,450
America West Holding Corp. Class B (a) 190,800 2,647,350
ASA Holdings, Inc. 80,800 1,828,100
Atlantic Coast Airlines, Inc. (a) 8,600 131,150
Continental Airlines, Inc. (a) 45,100 1,290,988
Delta Air Lines, Inc. 2,300 185,150
Northwest Airlines Corp. Class A 10,000 353,750
Pan Am Corp. (a) 5,900 -
Southwest Airlines Co. 1,500 35,250
UAL Corp. (a) 30,700 1,742,225
14,812,038
AIR TRANSPORTATION, REGIONAL - 12.5%
Comair Holdings, Inc. 162,800 3,357,750
Midwest Express Holdings, Inc. 35,700 1,209,338
4,567,088
TOTAL AIR TRANSPORTATION 19,379,126
CHEMICALS & PLASTICS - 0.6%
CHEMICALS - 0.6%
Goodrich (B.F.) Co. 5,000 203,125
CONGLOMERATES - 0.5%
United Technologies Corp. 2,500 188,123
POLLUTION CONTROL - 1.0%
POLLUTION EQUIPMENT & DESIGN - 1.0%
Ogden Corp. 18,200 370,825
SERVICES - 5.8%
BUSINESS SERVICES - 5.2%
Premier Technologies, Inc. (a) 102,400 1,920,000
COMMERCIAL TESTING LABS - 0.6%
Forensic Technologies International Corp. 27,700 200,825
TOTAL SERVICES 2,120,825
TRUCKING & FREIGHT - 3.1%
TRUCKING, LOCAL & LONG DISTANCE - 3.1%
Consolidated Freightways, Inc. 45,900 1,136,025
TOTAL COMMON STOCKS
(Cost $36,994,197) 34,417,438
CASH EQUIVALENTS - 6.1%
SHARES VALUE (NOTE 1)
Taxable Central Cash Fund (b)
(Cost $2,231,434) 2,231,434 $ 2,231,434
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $39,225,631) $ 36,648,872
LEGEND
1. Non-income producing
2. At period end, the seven-day yield on the Taxable Central Cash Fund was
5.31%. The yield refers to the income earned by investing in the fund over
the seven-day period, expressed as an annual percentage.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $373,535,151 and $393,610,484, respectively (see Note 3 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of FMR. The commissions paid to these affiliated
firms were $111,004 for the period (see Note 4 of Notes to Financial
Statements).
The fund participated in the bank borrowing program. The maximum loan and
average daily balances during the period for which loans were outstanding
amounted to $5,986,000, and $1,930,394, respectively. The weighted average
interest rate was 5.7% (see Note 7 of Notes to Financial Statements).
INCOME TAX INFORMATION
At February 28, 1997, the aggregate cost of investment securities for
income tax purposes was $39,552,483. Net unrealized depreciation
aggregated $2,903,611, of which $1,268,151 related to appreciated
investment securities and $4,171,762 related to depreciated investment
securities.
At February 28, 1997, the fund had a capital loss carryforward of
approximately $4,508,000 all of which will expire on February 28, 2005.
A total of 13% of the dividends distributed during the fiscal year
qualifies for the dividends-received deduction for corporate shareholders
(unaudited).
The fund will notify shareholders in January 1998 of the applicable
percentage for use in preparing 1997 income tax returns.
AIR TRANSPORTATION PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1997
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS
Investment in securities, at value $ 36,648,872
(cost $39,225,631) - See accompanying schedule
Receivable for investments sold 2,669,570
Receivable for fund shares sold 198,163
Dividends receivable 41,575
Interest receivable 1,199
Redemption fees receivable 569
Other receivables 2,313
TOTAL ASSETS 39,562,261
LIABILITIES
Payable for investments purchased $ 2,657,356
Payable for fund shares redeemed 866,001
Accrued management fee 22,397
Other payables and accrued expenses 58,929
TOTAL LIABILITIES 3,604,683
NET ASSETS $ 35,957,578
Net Assets consist of:
Paid in capital $ 43,442,014
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions (4,907,677
)
Net unrealized appreciation (depreciation) on investments (2,576,759
)
NET ASSETS, for 2,029,077 $ 35,957,578
shares outstanding
NET ASSET VALUE and redemption price per share ($35,957,578 (divided by) 2,029,077 shares) $17.72
Maximum offering price per share (100/97.00 of $17.72) $18.27
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1997
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME $ 351,810
Dividends
Interest 278,077
TOTAL INCOME 629,887
EXPENSES
Management fee $ 539,940
Transfer agent fees 901,731
Accounting fees and expenses 92,138
Non-interested trustees' compensation 535
Custodian fees and expenses 23,086
Registration fees 80,554
Audit 36,243
Legal 751
Interest 10,054
Miscellaneous 2,614
Total expenses before reductions 1,687,646
Expense reductions (78,037 1,609,609
)
NET INVESTMENT INCOME (LOSS) (979,722
)
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities (3,349,033
)
Foreign currency transactions (71 (3,349,104
) )
Change in net unrealized appreciation (depreciation) on investment securities (6,154,936
)
NET GAIN (LOSS) (9,504,040
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ (10,483,762
)
OTHER INFORMATION $ 688,390
Sales charges paid to FDC
Deferred sales charges withheld $ 1,386
by FDC
Exchange fees withheld by FSC $ 136,958
Expense reductions $ 71,154
Directed brokerage arrangements
Custodian interest credits 4,992
Transfer agent interest credits 1,891
$ 78,037
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE YEAR ENDED YEAR ENDED
(DECREASE) IN FEBRUARY 28, FEBRUARY 29,
NET ASSETS 1997 1996
Operations $ (979,722 $ (45,385
Net ) )
investment
income (loss)
Net realized (3,349,104 15,522,776
gain (loss) )
Change in (6,154,936 2,826,938
net )
unrealized
appreciation
(depreciation
)
NET INCREASE (10,483,762 18,304,329
(DECREASE) )
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
Distributions to (609,796 (3,187,856
shareholders ) )
From net
realized gain
In excess of (1,596,628 -
net realized )
gain
TOTAL (2,206,424 (3,187,856
DISTRIBUTION ) )
S
Share 442,243,515 431,292,376
transactions
Net proceeds
from sales of
shares
Reinvestmen 2,188,450 3,161,234
t of
distributions
Cost of (472,146,987 (393,536,104
shares ) )
redeemed
Paid in 1,004,107 691,969
capital
portion of
redemption
fees
NET INCREASE (26,710,915 41,609,475
(DECREASE) )
IN NET
ASSETS
RESULTING
FROM SHARE
TRANSACTIO
NS
TOTAL (39,401,101 56,725,948
INCREASE )
(DECREASE)
IN NET ASSETS
NET ASSETS
Beginning of 75,358,679 18,632,731
period
End of period $ 35,957,578 $ 75,358,679
OTHER
INFORMATION
Shares
Sold 22,183,259 23,122,779
Issued in 96,706 152,569
reinvestment
of
distributions
Redeemed (23,821,393 (21,042,298
) )
Net increase (1,541,428) 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>
YEAR ENDED YEAR ENDED YEARS ENDED FEBRUARY 28, TEN MONTHS
FEBRUARY 28, FEBRUARY 29, ENDED
FEBRUARY 28,
SELECTED 1997 1996 1995 1994 1993
PER-SHARE
DATA D
</TABLE>
Net asset $ 21.11 $ 13.93 $ 17.12 $ 13.60 $ 12.64
value,
beginning of
period
Income from
Investment
Operations
Net (.22) (.01) (.18) (.18) (.09) E
investment
income (loss)
Net realized (3.12) 7.47 (2.01) 3.78 1.33
and
unrealized
gain (loss)
Total from (3.34) 7.46 (2.19) 3.60 1.24
investment
operations
Less
Distributions
From net (.07) (.46) (.92) (.22) (.36)
realized gain
In excess of (.20) - (.17) (.05) -
net realized
gain
Total (.27) (.46) (1.09) (.27) (.36)
distributions
Redemption .22 .18 .09 .19 .08
fees added to
paid in
capital
Net asset $ 17.72 $ 21.11 $ 13.93 $ 17.12 $ 13.60
value, end of
period
TOTAL (15.06)% 54.91% (12.45)% 27.94% 10.69%
RETURN B, C
RATIOS AND
SUPPLEMENT
AL DATA
Net assets, $ 35,958 $ 75,359 $ 18,633 $ 11,035 $ 11,868
end of period
(000 omitted)
Ratio of 1.89% 1.47% 2.50% F 2.33% 2.48% A,
expenses to F
average net
assets
Ratio of 1.80% H 1.41% H 2.50% 2.31% H 2.48% A
expenses to
average net
assets after
expense
reductions
Ratio of net (1.10)% (.07)% (1.31)% (1.11)% (.90)%
investment A
income (loss)
to average
net assets
Portfolio 469% 504% 200% 171% 96% A
turnover rate
Average $ .0409
commission
rate G
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
A ANNUALIZED B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 8 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 (LOSS) PER SHARE REFLECTS A SPECIAL DIVIDEND WHICH
AMOUNTED TO $.01 PER SHARE. 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 FMR OR THE FUND HAS ENTERED
VARYING ARRANGEMENTS WITH THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE
FUND'S EXPENSES (SEE NOTE 8 OF NOTES TO FINANCIAL STATEMENTS).
</TABLE>
AUTOMOTIVE PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance. You can
look at the total percentage change in value, the average annual percentage
change, or the growth of a hypothetical $10,000 investment. Total return
reflects the change in the value of an investment, assuming reinvestment of
the fund's dividend income and capital gains (the profits earned upon the
sale of 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 fund expenses, the past 10 year total returns would have
been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 28, 1997 YEAR YEARS YEARS
AUTOMOTIVE 20.60% 86.68% 209.85%
AUTOMOTIVE 16.98% 81.08% 200.55%
(INCL. 3% SALES CHARGE)
S&P 500 26.16% 118.75% 276.74%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one, five, or 10 years. You can compare
the fund's returns 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, and excludes the effect of sales
charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 28, 1997 YEAR YEARS YEARS
AUTOMOTIVE 20.60% 13.30% 11.97%
AUTOMOTIVE 16.98% 12.61% 11.63%
(INCL. 3% SALES CHARGE)
S&P 500 26.16% 16.94% 14.16%
AVERAGE ANNUAL RETURNS take the fund's 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
1987/02/28 9700.00 10000.00
1987/03/31 9965.20 10289.00
1987/04/30 10109.86 10197.43
1987/05/31 10093.79 10286.15
1987/06/30 10246.48 10805.60
1987/07/31 10961.72 11353.44
1987/08/31 11387.66 11776.92
1987/09/30 11218.89 11519.01
1987/10/31 7851.62 9037.81
1987/11/30 7538.19 8293.10
1987/12/31 8245.40 8924.20
1988/01/31 8618.65 9299.91
1988/02/29 9170.04 9733.29
1988/03/31 9831.71 9432.53
1988/04/30 10001.37 9537.23
1988/05/31 9967.44 9620.20
1988/06/30 10544.27 10061.77
1988/07/31 10425.51 10023.54
1988/08/31 9941.99 9682.74
1988/09/30 9984.40 10095.22
1988/10/31 9908.05 10375.87
1988/11/30 9695.98 10227.49
1988/12/31 9899.57 10406.47
1989/01/31 10357.65 11168.23
1989/02/28 10247.37 10890.14
1989/03/31 10442.48 11143.88
1989/04/30 10909.04 11722.25
1989/05/31 11070.22 12197.00
1989/06/30 10875.11 12127.48
1989/07/31 11256.84 13222.59
1989/08/31 11367.12 13481.75
1989/09/30 11104.15 13426.47
1989/10/31 10179.51 13114.98
1989/11/30 10272.82 13382.52
1989/12/31 10305.57 13703.71
1990/01/31 10033.45 12784.19
1990/02/28 10331.91 12949.10
1990/03/31 10718.15 13292.25
1990/04/30 10683.03 12959.95
1990/05/31 11288.73 14223.54
1990/06/30 11490.87 14126.82
1990/07/31 11526.47 14081.62
1990/08/31 9870.93 12808.64
1990/09/30 8927.45 12184.86
1990/10/31 8749.44 12132.46
1990/11/30 9265.68 12916.22
1990/12/31 9612.81 13276.58
1991/01/31 10155.76 13855.44
1991/02/28 10983.53 14846.11
1991/03/31 11072.53 15205.38
1991/04/30 11197.14 15241.87
1991/05/31 12096.12 15900.32
1991/06/30 12069.42 15172.09
1991/07/31 12567.86 15879.11
1991/08/31 12977.29 16255.44
1991/09/30 12594.56 15983.98
1991/10/31 12923.89 16198.16
1991/11/30 12283.04 15545.38
1991/12/31 13200.82 17323.77
1992/01/31 14626.92 17001.55
1992/02/29 16099.93 17222.57
1992/03/31 16447.07 16886.73
1992/04/30 17497.89 17383.20
1992/05/31 17488.50 17468.37
1992/06/30 17384.46 17208.09
1992/07/31 17544.21 17911.90
1992/08/31 16454.15 17544.71
1992/09/30 16181.64 17751.74
1992/10/31 16858.23 17813.87
1992/11/30 17675.76 18421.32
1992/12/31 18694.29 18647.90
1993/01/31 19557.55 18804.55
1993/02/28 19845.30 19060.29
1993/03/31 20909.98 19462.46
1993/04/30 20789.17 18991.47
1993/05/31 22055.11 19500.44
1993/06/30 22440.83 19556.99
1993/07/31 22697.97 19478.76
1993/08/31 23489.19 20217.01
1993/09/30 23736.44 20061.34
1993/10/31 24240.84 20476.61
1993/11/30 24240.84 20282.08
1993/12/31 25309.19 20527.49
1994/01/31 26751.94 21225.43
1994/02/28 25888.32 20650.22
1994/03/31 24069.64 19749.87
1994/04/30 23580.21 20002.67
1994/05/31 23230.88 20330.71
1994/06/30 22932.91 19832.61
1994/07/31 23621.31 20483.12
1994/08/31 23230.88 21322.93
1994/09/30 22244.51 20800.52
1994/10/31 22665.77 21268.53
1994/11/30 21299.25 20493.93
1994/12/31 22081.54 20797.85
1995/01/31 21556.87 21337.14
1995/02/28 22629.01 22168.65
1995/03/31 22514.95 22822.85
1995/04/30 22446.52 23494.98
1995/05/31 22902.75 24434.07
1995/06/30 23473.04 25001.68
1995/07/31 25161.09 25830.73
1995/08/31 24932.97 25895.57
1995/09/30 25058.44 26988.36
1995/10/31 23895.05 26892.01
1995/11/30 24488.15 28072.57
1995/12/31 25047.03 28613.25
1996/01/31 24750.48 29587.24
1996/02/29 24921.57 29861.52
1996/03/31 26438.53 30149.08
1996/04/30 27774.29 30593.48
1996/05/31 28413.83 31382.49
1996/06/30 28082.64 31502.05
1996/07/31 26449.53 30110.29
1996/08/31 27123.33 30745.32
1996/09/30 27351.74 32475.67
1996/10/31 27477.36 33371.34
1996/11/30 28870.64 35893.88
1996/12/31 29072.35 35182.83
1997/01/31 29581.56 37381.05
1997/02/28 30067.08 37674.12
Let's say hypothetically that $10,000 was invested in Select Automotive
Portfolio on February 28, 1987, and the current maximum 3% sales charge was
paid. As the chart shows, by February 28, 1997, the value of the investment
would have grown to $30,055 - a 200.55% increase on the initial investment.
For comparison, look at how the S&P 500 did over the same period. With
dividends and capital gains, if any, reinvested, the same $10,000
investment would have grown to $37,674 - a 276.74% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1997
% OF FUND'S
INVESTMENTS
AutoZone, Inc. 11.3
Volvo AB ADR Class B 10.1
TRW, Inc. 9.0
Snap-on Tools Corp. 6.6
General Motors Corp. 6.0
Gentex Corp. 5.6
Honda Motor Co. Ltd. 5.1
Lear Corp. 4.4
Chrysler Corp. 4.4
Danaher Corp. 3.6
TOP INDUSTRIES AS OF FEBRUARY 28, 1997
Auto & Truck Parts 41.4%
Motor Vehicles & Car Bodies 31.9%
Auto Parts - Retail 11.8%
Tires & Inner Tubes 4.8%
Motor Vehicles Supplies
& New Parts 0.8%
All Others 9.3% *
Row: 1, Col: 1, Value: 9.300000000000001
Row: 1, Col: 2, Value: 0.8
Row: 1, Col: 3, Value: 4.8
Row: 1, Col: 4, Value: 11.8
Row: 1, Col: 5, Value: 31.9
Row: 1, Col: 6, Value: 41.4
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
AUTOMOTIVE PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Doug Chase,
Portfolio Manager
of Fidelity Select
Automotive Portfolio
Q. HOW DID THE FUND PERFORM, DOUG?
A. For the 12 months that ended February 28, 1997, the fund had a return of
20.60%. The Standard & Poor's 500 Index returned 26.16% over the same time
period.
Q. CAN YOU CHARACTERIZE THE GENERAL INVESTING ENVIRONMENT OVER THE PAST
YEAR?
A. Sure. What we've seen is a stock market environment where growth stocks
continue to outpace cyclical stocks - those particularly sensitive to
economic conditions - by extraordinarily wide margins. Price-to-earnings
multiples on cyclical stocks such as Chrysler did not expand, yet stocks
such as Coca-Cola did have expansion. Cyclicals aren't going to outperform
growth stocks under those conditions.
Q. DID YOU MAKE ANY CHANGES TO THE COMPOSITION OF THE PORTFOLIO AS THE
PERIOD PROGRESSED?
A. When I began managing the fund in May 1996, the portfolio was tilted
toward suppliers. In a good business market and strong economy, suppliers
have proven that they can grow their earnings faster than other segments
within the industry. When we reached the midpoint of the period, my feeling
was that the auto supply market wasn't going to get stronger and that U.S.
manufacturers could provide better investment opportunities. As we got
later into the period, I moved away from the domestic manufacturers and
began adding foreign manufacturers to the mix. These stocks were
inexpensive relative to both the U.S. and their own historical levels. The
natural tendencies of economic cycles also played a role in this strategy.
The U.S. cycle was at or near its historical high, while Europe and Japan
were close to the bottom and on their way up.
Q. WHAT WERE YOUR VIEWS ON THE U.S. AND INTERNATIONAL AUTOMOBILE
MANUFACTURING MARKETS?
A. I was optimistic on Europe and Japan, but became increasingly negative
on the U.S. auto market. In contrast, Europe and Japan continue to present
somewhat more favorable backdrops. While Europe's economy has nowhere to go
but up - albeit not quickly - and the Japanese economy should improve from
here as well, foreign investments do involve more risk than U.S.
investments. In the U.S. market, we've seen an increase in auto finance
company bankruptcies, new highs in auto retail credit losses, increased
competition and higher fuel prices.
Q. DID YOU COMPLETELY AVOID U.S. AUTO STOCKS AS A RESULT OF THESE NEGATIVE
DEVELOPMENTS?
A. Not at all. Rather than completely staying away from U.S. auto stocks, I
concentrated on finding stocks that weren't as vulnerable to the U.S.
economic cycle. An example of this was tire wholesaler Goodyear, which
generated half of its earnings from overseas sales. The negative
developments within the U.S. market also led me to look at niche companies
such as Gentex, a company that makes automatic dimmable mirrors for cars.
Q. WHICH INDIVIDUAL STOCKS CONTRIBUTED POSITIVELY TO THE FUND'S
PERFORMANCE? WHICH WERE DISAPPOINTING?
A. The fund realized gains from its positions in Tower Automotive, a parts
supplier, and General Motors, which came on strong in the latter part of
the period. On a negative note, Echlin, a manufacturer of brake pads, was a
disappointment for much of the period as its management situation became
muddled. Toward the end of the period, however, the management picture had
begun to clear up and the stock rebounded.
Q. WHAT'S YOUR OUTLOOK?
A. I'd say I'm cautious. I'll continue to look for growth prospects in the
U.S. and more cyclical stocks abroad. I'll try to combine favorable
valuations with what I perceive to be good opportunities for earnings
growth.
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 February 28, 1997, more than
$86 million
MANAGER: Doug Chase, since May 1996;
manager, Fidelity Select Industrial Materials
Portfolio, since 1994; equity analyst, steel,
non-ferrous metals, since 1993; joined Fidelity
in 1993
(checkmark)
AUTOMOTIVE PORTFOLIO
INVESTMENTS FEBRUARY 28, 1997
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 93.5%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 0.1%
AIRCRAFT EQUIPMENT - 0.1%
Simula, Inc. (a) 4,400 $ 78,095
AUTOS, TIRES, & ACCESSORIES - 91.6%
AUTO & TRUCK PARTS - 41.4%
Arvin Industries, Inc. 8,700 204,450
Borg-Warner Automotive, Inc. 54,700 2,160,650
Breed Technologies, Inc. 27,100 592,813
Danaher Corp. 71,300 3,083,725
Eaton Corp. 32,100 2,303,175
Echlin, Inc. 28,400 983,350
Gentex Corp. (a) 261,400 4,835,900
Intermet Corp. 61,600 931,700
Johnson Controls, Inc. 2,500 210,625
Mascotech, Inc. 22,800 433,200
SPX Corp. 54,000 2,477,250
Safety Components International, Inc. (a) 500 5,500
Smith (A.O.) Corp. Class B 52,400 1,761,950
Snap-on Tools Corp. 147,800 5,745,725
Standard Products Co. 19,700 462,950
TRW, Inc. 148,100 7,756,738
Titan Wheel International, Inc. 14,500 204,813
Tower Automotive, Inc. (a) 42,500 1,630,938
Wynn's International, Inc. 950 19,594
35,805,046
AUTO PARTS - RETAIL - 11.8%
AutoZone, Inc. (a) 395,100 9,778,725
Monro Muffler Brake, Inc. (a) 24,806 440,307
10,219,032
AUTOMOTIVE STAMPINGS - 0.3%
Sinter Metals, Inc. Class A (a) 11,000 276,375
MOTOR VEHICLE DEALERS (NEW & USED) - 0.0%
United Auto Group, Inc. (a) 500 11,563
MOTOR VEHICLE SUPPLIES & NEW PARTS - 0.8%
APS Holding Corp. Class A (a) 73,300 659,700
MOTOR VEHICLES & CAR BODIES - 31.9%
Chrysler Corp. 111,800 3,787,225
General Motors Corp. 89,900 5,202,963
Honda Motor Co. Ltd. 142,000 4,405,573
Lear Corp. (a) 97,200 3,790,800
Scania AB Class A 1,100 26,881
Toyota Motor Corp. 64,000 1,644,916
Volvo AB ADR Class B 352,300 8,763,463
27,621,821
TIRES & INNER TUBES - 4.8%
Bandag, Inc. 14,500 706,875
Goodyear Tire & Rubber Co. 52,600 2,774,650
Michelin SA (Compagnie Generale
des Etablissements) Class B 11,470 716,724
4,198,249
TRUCK & BUS BODIES - 0.6%
Miller Industries, Inc. (a) 39,650 505,538
TOTAL AUTOS, TIRES, & ACCESSORIES 79,297,324
CONGLOMERATES - 0.7%
Mark IV Industries, Inc. 27,100 630,075
INDUSTRIAL MACHINERY & EQUIPMENT - 0.4%
METAL WORKING MACHINERY - 0.4%
Exco Technologies Ltd. (a) 35,100 320,689
SHARES VALUE (NOTE 1)
IRON & STEEL - 0.7%
FABRICATED METAL PRODUCTS - 0.7%
SPS Technologies, Inc. (a) 9,000 $ 576,000
TOTAL COMMON STOCKS
(Cost $76,019,315) 80,902,183
CASH EQUIVALENTS - 6.5%
Taxable Central Cash Fund (b)
(Cost $5,621,494) 5,621,494 5,621,494
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $81,640,809) $ 86,523,677
LEGEND
1. Non-income producing
2. At period end, the seven-day yield on the Taxable Central Cash Fund was
5.31%. The yield refers to the income earned by investing in the fund over
the seven-day period, expressed as an annual percentage.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $205,168,550 and $186,256,883, respectively (see Note 3 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of FMR. The commissions paid to these affiliated
firms were $90,015 for the period (see Note 4 of Notes to Financial
Statements).
The fund participated in the bank borrowing program. The maximum loan and
average daily balances during the period for which loans were outstanding
amounted to $3,262,000. The weighted average interest rate was 5.8% (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 81.6%
Sweden 10.2
Japan 7.0
Others (individually less than 1%) 1.2
TOTAL 100.0%
INCOME TAX INFORMATION
At February 28, 1997, the aggregate cost of investment securities for
income tax purposes was $82,228,128. Net unrealized appreciation aggregated
$4,295,549 of which $6,574,266 related to appreciated investment securities
and $2,278,717 related to depreciated investment securities.
The fund hereby designates approximately $1,457,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 100% of the dividends distributed during the fiscal year
qualifies for the dividends-received deduction for corporate shareholders
(unaudited).
The fund will notify shareholders in January 1998 of the applicable
percentage for use in preparing 1997 income tax returns.
AUTOMOTIVE PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1997
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS
Investment in securities, at value $ 86,523,677
(cost $81,640,809) - See accompanying schedule
Receivable for investments sold 50,897
Receivable for fund shares sold 140,874
Dividends receivable 173,764
Interest receivable 29,546
Redemption fees receivable 155
Other receivables 4,808
TOTAL ASSETS 86,923,721
LIABILITIES
Payable for fund shares redeemed $ 448,801
Accrued management fee 47,615
Other payables and accrued expenses 80,739
TOTAL LIABILITIES 577,155
NET ASSETS $ 86,346,566
Net Assets consist of:
Paid in capital $ 78,187,533
Undistributed net investment income 225,693
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 3,052,136
Net unrealized appreciation (depreciation) on investments 4,881,204
and assets and liabilities in
foreign currencies
NET ASSETS, for 3,401,568 $ 86,346,566
shares outstanding
NET ASSET VALUE and redemption price per share ($86,346,566 (divided by) 3,401,568 shares) $25.38
Maximum offering price per share (100/97.00 of $25.38) $26.16
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1997
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME $ 1,925,906
Dividends
Interest 549,818
TOTAL INCOME 2,475,724
EXPENSES
Management fee $ 726,743
Transfer agent fees 921,947
Accounting fees and expenses 120,805
Non-interested trustees' compensation 548
Custodian fees and expenses 21,699
Registration fees 49,401
Audit 22,861
Legal 752
Interest 527
Miscellaneous 6,511
Total expenses before reductions 1,871,794
Expense reductions (39,112 1,832,682
)
NET INVESTMENT INCOME 643,042
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 8,359,918
Foreign currency transactions (2,395 8,357,523
)
Change in net unrealized appreciation (depreciation) on:
Investment securities 2,145,373
Assets and liabilities in (1,547 2,143,826
foreign currencies )
NET GAIN (LOSS) 10,501,349
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 11,144,391
OTHER INFORMATION $ 466,135
Sales charges paid to FDC
Deferred sales charges withheld $ 2,159
by FDC
Exchange fees withheld by FSC $ 86,168
Expense reductions $ 36,374
Directed brokerage arrangements
Custodian interest credits 528
Transfer agent interest credits 2,210
$ 39,112
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE YEAR ENDED YEAR ENDED
(DECREASE) IN FEBRUARY 28, FEBRUARY 29,
NET ASSETS 1997 1996
Operations $ 643,042 $ 76,016
Net
investment
income
Net realized 8,357,523 1,307,573
gain (loss)
Change in 2,143,826 3,088,654
net
unrealized
appreciation
(depreciation
)
NET INCREASE 11,144,391 4,472,243
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
Distributions to (492,439 -
shareholders )
From net
investment
income
From net (2,049,624 -
realized gain )
TOTAL (2,542,063 -
DISTRIBUTION )
S
Share 256,027,701 79,629,136
transactions
Net proceeds
from sales of
shares
Reinvestmen 2,523,772 -
t of
distributions
Cost of (236,749,789 (88,521,546
shares ) )
redeemed
Paid in 189,071 98,432
capital
portion of
redemption
fees
NET INCREASE 21,990,755 (8,793,978
(DECREASE) )
IN NET
ASSETS
RESULTING
FROM SHARE
TRANSACTIO
NS
TOTAL 30,593,083 (4,321,735
INCREASE )
(DECREASE)
IN NET ASSETS
NET ASSETS
Beginning of 55,753,483 60,075,218
period
End of period $ 86,346,566 $ 55,753,483
(including
undistribute
d net
investment
income of
$225,693
and
$76,192,
respectivel
y)
OTHER
INFORMATION
Shares
Sold 10,548,479 3,758,408
Issued in 104,848 -
reinvestment
of
distributions
Redeemed (9,803,178 (4,235,574
) )
Net increase 850,149 (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>
YEAR ENDED YEAR ENDED YEARS ENDED FEBRUARY 28, TEN MONTHS
FEBRUARY 28, FEBRUARY 29, ENDED
FEBRUARY 28,
SELECTED 1997 1996 1995 1994 1993
PER-SHARE
DATA D
</TABLE>
Net asset $ 21.85 $ 19.84 $ 25.48 $ 20.69 $ 18.65
value,
beginning of
period
Income from
Investment
Operations
Net .13 .03 .08 .05 .13
investment
income
Net realized 4.28 1.95 (3.46) 6.00 2.26
and
unrealized
gain (loss)
Total from 4.41 1.98 (3.38) 6.05 2.39
investment
operations
Less
Distributions
From net (.17) - (.05) (.05) (.06)
investment
income
From net (.75) - (2.26) (1.26) (.36)
realized gain
Total (.92) - (2.31) (1.31) (.42)
distributions
Redemption .04 .03 .05 .05 .07
fees added to
paid in
capital
Net asset $ 25.38 $ 21.85 $ 19.84 $ 25.48 $ 20.69
value, end of
period
TOTAL 20.60% 10.13% (12.59)% 30.45% 13.42%
RETURN B, C
RATIOS AND
SUPPLEMENT
AL DATA
Net assets, $ 86,347 $ 55,753 $ 60,075 $ 228,698 $ 110,360
end of period
(000 omitted)
Ratio of 1.56% 1.81% 1.82% 1.69% 1.57% A
expenses to
average net
assets
Ratio of 1.52% E 1.80% E 1.80% E 1.68% E 1.57% A
expenses to
average net
assets after
expense
reductions
Ratio of net .54% .13% .34% .22% .72% A
investment
income to
average net
assets
Portfolio 175% 61% 63% 64% 140% A
turnover rate
Average $ .0495
commission
rate F
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
A ANNUALIZED B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN (SEE NOTE 8 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 8 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. You can
look at the total percentage change in value, the average annual percentage
change, or the growth of a hypothetical $10,000 investment. Total return
reflects the change in the value of an investment, assuming reinvestment of
the fund's dividend income and capital gains (the profits earned upon the
sale of 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 fund expenses, the past 10 year total returns would have
been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 28, 1997 YEAR YEARS YEARS
CHEMICALS 15.06% 101.73% 272.42%
CHEMICALS 11.61% 95.67% 261.25%
(INCL. 3% SALES CHARGE)
S&P 500 26.16% 118.75% 276.74%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one, five, or 10 years. You can compare
the fund's returns 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, and excludes the effect of sales
charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 28, 1997 YEAR YEARS YEARS
CHEMICALS 15.06% 15.07% 14.05%
CHEMICALS 11.61% 14.37% 13.71%
(INCL. 3% SALES CHARGE)
S&P 500 26.16% 16.94% 14.16%
AVERAGE ANNUAL RETURNS take the fund's 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
1987/02/28 9700.00 10000.00
1987/03/31 9995.00 10289.00
1987/04/30 10215.00 10197.43
1987/05/31 10080.00 10286.15
1987/06/30 10645.00 10805.60
1987/07/31 11340.00 11353.44
1987/08/31 11755.00 11776.92
1987/09/30 11965.00 11519.01
1987/10/31 8325.00 9037.81
1987/11/30 8045.00 8293.10
1987/12/31 8990.69 8924.20
1988/01/31 8770.18 9299.91
1988/02/29 9742.42 9733.29
1988/03/31 10238.56 9432.53
1988/04/30 10358.84 9537.23
1988/05/31 9967.94 9620.20
1988/06/30 11285.97 10061.77
1988/07/31 10945.19 10023.54
1988/08/31 10469.09 9682.74
1988/09/30 10599.39 10095.22
1988/10/31 10764.78 10375.87
1988/11/30 10403.94 10227.49
1988/12/31 10875.03 10406.47
1989/01/31 11601.70 11168.23
1989/02/28 11456.37 10890.14
1989/03/31 11581.66 11143.88
1989/04/30 11912.42 11722.25
1989/05/31 12188.05 12197.00
1989/06/30 12042.53 12127.48
1989/07/31 12809.92 13222.59
1989/08/31 13396.75 13481.75
1989/09/30 12920.26 13426.47
1989/10/31 12007.42 13114.98
1989/11/30 12263.22 13382.52
1989/12/31 12757.64 13703.71
1990/01/31 11848.64 12784.19
1990/02/28 11927.92 12949.10
1990/03/31 12282.00 13292.25
1990/04/30 11996.62 12959.95
1990/05/31 13043.02 14223.54
1990/06/30 13149.48 14126.82
1990/07/31 13192.99 14081.62
1990/08/31 11431.02 12808.64
1990/09/30 10865.46 12184.86
1990/10/31 10990.53 12132.46
1990/11/30 11724.69 12916.22
1990/12/31 12230.43 13276.58
1991/01/31 13051.60 13855.44
1991/02/28 14052.22 14846.11
1991/03/31 14389.39 15205.38
1991/04/30 14275.18 15241.87
1991/05/31 15264.93 15900.32
1991/06/30 14850.08 15172.09
1991/07/31 15565.81 15879.11
1991/08/31 15871.77 16255.44
1991/09/30 15751.57 15983.98
1991/10/31 16002.90 16198.16
1991/11/30 15205.21 15545.38
1991/12/31 16958.93 17323.77
1992/01/31 17284.63 17001.55
1992/02/29 17907.95 17222.57
1992/03/31 17778.79 16886.73
1992/04/30 18424.58 17383.20
1992/05/31 18317.89 17468.37
1992/06/30 17774.92 17208.09
1992/07/31 18335.79 17911.90
1992/08/31 17709.29 17544.71
1992/09/30 17727.19 17751.74
1992/10/31 17548.18 17813.87
1992/11/30 18079.22 18421.32
1992/12/31 18469.07 18647.90
1993/01/31 18450.07 18804.55
1993/02/28 18127.05 19060.29
1993/03/31 18557.75 19462.46
1993/04/30 18901.95 18991.47
1993/05/31 19188.15 19500.44
1993/06/30 18706.82 19556.99
1993/07/31 18993.02 19478.76
1993/08/31 19923.15 20217.01
1993/09/30 19292.22 20061.34
1993/10/31 20020.72 20476.61
1993/11/30 20170.32 20282.08
1993/12/31 20825.19 20527.49
1994/01/31 22446.18 21225.43
1994/02/28 22410.79 20650.22
1994/03/31 21738.32 19749.87
1994/04/30 22789.57 20002.67
1994/05/31 23338.29 20330.71
1994/06/30 23046.11 19832.61
1994/07/31 24086.54 20483.12
1994/08/31 25483.27 21322.93
1994/09/30 25297.99 20800.52
1994/10/31 25255.24 21268.53
1994/11/30 23274.15 20493.93
1994/12/31 23902.18 20797.85
1995/01/31 23277.57 21337.14
1995/02/28 24628.47 22168.65
1995/03/31 25383.81 22822.85
1995/04/30 25927.96 23494.98
1995/05/31 26186.13 24434.07
1995/06/30 26628.71 25001.68
1995/07/31 27890.07 25830.73
1995/08/31 28008.10 25895.57
1995/09/30 28450.68 26988.36
1995/10/31 27034.42 26892.01
1995/11/30 28214.64 28072.57
1995/12/31 29028.78 28613.25
1996/01/31 30363.08 29587.24
1996/02/29 31395.56 29861.52
1996/03/31 32912.53 30149.08
1996/04/30 33255.49 30593.48
1996/05/31 33183.56 31382.49
1996/06/30 32759.97 31502.05
1996/07/31 31433.27 30110.29
1996/08/31 32823.91 30745.32
1996/09/30 34278.49 32475.67
1996/10/31 34510.26 33371.34
1996/11/30 35781.02 35893.88
1996/12/31 35275.54 35182.83
1997/01/31 35827.65 37381.05
1997/02/28 36124.94 37674.12
Let's say hypothetically that $10,000 was invested in Fidelity Select
Chemicals Portfolio on February 28, 1987, and the current maximum 3% sales
charge was paid. As the chart shows, by February 28, 1997, the value of the
investment would have grown to $36,125 - a 261.25% increase on the initial
investment. For comparison, look at how the S&P 500 did over the same
period. With dividends and capital gains, if any, reinvested, the same
$10,000 investment would have grown to $37,674 - a 276.74% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1997
% OF FUND'S
INVESTMENTS
Praxair, Inc. 6.5
Monsanto Co. 6.2
Air Products & Chemicals, Inc. 5.3
Cytec Industries, Inc. 5.3
Raychem Corp. 4.9
Union Carbide Corp. 4.4
ICI (Imperial Chemical Industries) PLC ADR Class L 4.4
du Pont (E.I.) de Nemours & Co. 3.9
Minnesota Mining & Manufacturing Co. 2.8
Sealed Air Corp. 2.5
TOP INDUSTRIES AS OF FEBRUARY 28, 1997
36
Chemicals 43.9%
Industrial Gases 15.0%
Agricultural Chemicals 4.4%
Paint & Varnish 3.1%
Manufacturing Industries 2.8%
All Others 30.8% *
Row: 1, Col: 1, Value: 30.8
Row: 1, Col: 2, Value: 2.8
Row: 1, Col: 3, Value: 3.1
Row: 1, Col: 4, Value: 4.4
Row: 1, Col: 5, Value: 15.0
Row: 1, Col: 6, Value: 43.9
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
CHEMICALS PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
John Avery,
Portfolio Manager
of Fidelity Select
Chemicals Portfolio
Q. HOW DID THE FUND PERFORM, JOHN?
A. For the 12 months that ended February 28, 1997, the fund provided a
return of 15.06%. This lagged the 26.16% return of the Standard & Poor's
500 Index over the same period.
Q. CAN YOU ISOLATE THE FACTORS THAT PLAYED SIGNIFICANT ROLES IN THE FUND'S
PERFORMANCE?
A. Sure. Chemical stocks generally performed well through the first six
months of 1996, but then certain industry groups hit a roadblock. A
significant part of the problem was the overall slowdown of earnings
growth, which had been strong for the last couple of years. While the U.S.
chemical companies were relatively solid, companies based in Europe and
parts of Asia - whose stocks tend to be more volatile than those in the
U.S. - really struggled. I think it was a case where the stocks had their
day in the sun, but became stagnant during the second half of the year. As
this became apparent, investors began seeking growth in other areas of the
market.
Q. WHAT TYPES OF CHEMICAL STOCKS PERFORMED WELL DURING THE PERIOD? WHICH
WERE DISAPPOINTMENTS?
A. I look at the chemicals universe in three parts: specialty, diversified
and commodity stocks. The two categories that performed best during the
period were specialty and diversified. Much of my specialty concentration
was in industrial gas stocks; there are only six industrial gas companies
in the world, and I owned each of them. These companies tend to perform
well in the latter stages of an economic cycle and can generate strong
earnings growth. Diversified stocks - those offering a wide range of
chemical products - performed well for the same reasons. On the downside,
commodities had an atrocious period.
Q. WHY DID COMMODITIES PERFORM SO POORLY?
A. When the supply and demand characteristics were good and profits were
up, commodity companies decided to build more plants. This brought more
supply into the picture, and the corresponding demand just couldn't keep
pace. As a result, both prices and profits dropped. I had lightened the
fund's exposure in this area, so I wasn't hurt as badly as I could have
been.
Q. FUNDS SUCH AS THIS ARE PARTICULARLY SUSCEPTIBLE TO CHANGES IN THE
ECONOMIC CYCLE. HOW DOES THIS PLAY INTO YOUR INVESTING STRATEGY?
A. It's impossible, of course, to completely limit the fund's exposure to
cyclicality. Commodity stocks are more vulnerable to cyclicality than many
other chemical stocks. With this fund, however, I have the flexibility to
go into other areas if I think a group is going to perform poorly. Thus, I
can try to limit the fund's exposure to cyclicality by the types of stocks
I buy.
Q. IT SEEMS AS THOUGH THE CURRENT ECONOMIC CYCLE JUST KEEPS PLUGGING ALONG
. . .
A. And I'm nervous about it. When the economy performs this well for such
an extended period of time, I wonder how much better it can get. Where do
we go from here? I'm not panicked, but I've been looking closely at
companies that have shown they can perform well in the late stages of a
cycle.
Q. WHICH INDIVIDUAL STOCKS PLAYED KEY ROLES WITHIN THE PORTFOLIO?
A. Industrial gas stocks - including Praxair and Air Products & Chemicals -
performed exceptionally well. Non-commodity chemical stocks such as
Monsanto and du Pont turned in solid performances as well. As far as
disappointments, U.K.-based ICI (Imperial Chemical Industries) fits the
bill. All signs indicated that ICI would experience some sort of
restructuring that would unleash value, but it hasn't happened yet. Another
restructuring play that has taken longer to work out than I anticipated was
Witco.
Q. WHAT'S YOUR OUTLOOK?
A. Chemical commodity stocks could realize a short-term rally, but I think
they're going to struggle as supply increases. I'll continue to look for
attractive risk/reward opportunities while focusing on companies that I
believe offer less exposure to uncertain 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 February 28, 1997, more than $111
million
MANAGER: John Avery, since 1995; manager,
Fidelity Select Regional Banks Portfolio, since
September 1996; joined Fidelity in 1995
(checkmark)
CHEMICALS PORTFOLIO
INVESTMENTS FEBRUARY 28, 1997
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 89.4%
SHARES VALUE (NOTE 1)
AGRICULTURE - 1.3%
CROPS - 1.3%
Delta & Pine Land Co. 42,000 $ 1,559,246
BUILDING MATERIALS - 3.1%
PAINT & VARNISH - 3.1%
Lilly Industrial Coatings, Inc. Class A 135,000 2,615,625
Sherwin-Williams Co. 20,000 1,122,500
3,738,125
CHEMICALS & PLASTICS - 74.3%
ADHESIVES & SEALANTS - 1.7%
Ferro Corp. 25,900 815,850
International Specialty Products, Inc. (a) 66,200 885,425
Lydall, Inc. (a) 14,200 319,500
2,020,775
AGRICULTURAL CHEMICALS - 4.4%
FMC Corp. (a) 25,200 1,732,500
IMC Global, Inc. 26,640 929,070
OM Group, Inc. 37,800 1,096,200
Potash Corp. of Saskatchewan 19,600 1,542,185
5,299,955
CHEMICALS - 43.9%
Asahi Chemical Industry Co. Ltd. 158,000 858,174
BASF AG 78,900 2,911,146
Bayer AG 6,500 273,512
Crompton & Knowles Corp. 130,321 2,476,099
Cytec Industries, Inc. (a) 158,313 6,273,153
du Pont (E.I.) de Nemours & Co. 43,000 4,611,750
Ethyl Corp. 30,100 274,663
Hercules, Inc. 39,500 1,836,750
Hoechst AG Ord. 59,400 2,510,033
ICI (Imperial Chemical Industries)
PLC ADR Class L 104,900 5,231,888
Lyondell Petrochemical Co. 10,800 255,150
Monsanto Co. 203,800 7,413,225
NL Industries, Inc. 26,800 304,850
Olin Corp. 33,600 1,344,000
Quaker Chemical Corp. 100,000 1,512,500
Raychem Corp. 69,000 5,873,625
Rohm & Haas Co. 3,500 322,000
Union Carbide Corp. 111,300 5,258,925
Witco Corp. 95,800 2,945,850
52,487,293
CHEMICALS, GENERAL - 1.5%
Grace (WR) & Co. 19,200 1,017,600
Great Lakes Chemical Corp. 15,960 740,145
1,757,745
INDUSTRIAL & ORGANIC CHEMICALS - 0.0%
Primex Technologies, Inc. 3,360 62,160
INDUSTRIAL GASES - 15.0%
AGA AB Series B 112,500 1,613,664
Air Products & Chemicals, Inc. 85,700 6,352,513
BOC Group PLC 65,641 1,058,924
L'Air Liquide 5,470 858,340
NuCo2, Inc. (a) 16,300 203,750
Praxair, Inc. 160,553 7,806,890
17,894,081
INORGANIC CHEMICALS - 1.7%
Minerals Technologies, Inc. 10,400 393,900
Valspar Corp. 28,500 1,631,625
2,025,525
SHARES VALUE (NOTE 1)
NITROGENOUS FERTILIZERS - 0.7%
Soc Quimica y Minera de Chile ADR 14,300 $ 832,975
ORGANIC CHEMICALS - 0.2%
Cambrex Corp. 8,150 273,025
PLASTIC FOAM PRODUCTS - 0.8%
Foamex International, Inc. (a) 50,200 934,975
PLASTICS & SYNTHETIC RESINS - 1.6%
Geon Co. 2,800 60,200
Spartech Corp. 160,200 1,862,325
1,922,525
PLASTICS - 2.5%
Sealed Air Corp. (a) 71,800 2,952,775
PLASTICS, RESINS & ELASTOMERS - 0.3%
AT Plastics, Inc. 32,300 311,632
TOTAL CHEMICALS & PLASTICS 88,775,441
CONSUMER DURABLES - 2.8%
MANUFACTURING INDUSTRIES - 2.8%
Minnesota Mining & Manufacturing Co. 37,000 3,404,000
DRUGS & PHARMACEUTICALS - 1.2%
BIOTECHNOLOGY - 1.2%
Sigma Aldrich Corp. 45,600 1,396,500
HOUSEHOLD PRODUCTS - 1.0%
COSMETICS - 1.0%
Gillette Co. 15,000 1,186,875
INDUSTRIAL MACHINERY & EQUIPMENT - 0.1%
PUMPING EQUIPMENT - 0.1%
Duriron Co., Inc. 6,500 145,438
IRON & STEEL - 2.3%
METAL FORGINGS & STAMPINGS - 2.3%
Hexcel Corp. (a) 142,200 2,737,350
METALS & MINING - 0.7%
NON-METALLIC MINERAL MINING - 0.7%
Freeport McMoRan, Inc. par $0.01 30,400 828,400
PACKAGING & CONTAINERS - 2.1%
GLASS CONTAINERS - 1.0%
Owens-Illinois, Inc. (a) 50,000 1,206,250
METAL CANS & SHIPPING CONTAINERS - 1.1%
Silgan Holdings, Inc. 51,000 1,300,500
TOTAL PACKAGING & CONTAINERS 2,506,750
PHOTOGRAPHIC EQUIPMENT - 0.1%
Imation Corp. (a) 2,260 60,173
PRECIOUS METALS - 0.4%
GOLD ORES - 0.4%
Stillwater Mining Co. (a)(c) 19,400 454,688
TOTAL COMMON STOCKS
(Cost $96,159,907) 106,792,986
NON-CONVERTIBLE PREFERRED STOCKS - 0.0%
MEDICAL FACILITIES MANAGEMENT - 0.0%
HMOS & OUTPATIENT CARE - 0.0%
Fresenius National Medical Care, Inc.
Class D (special dividends) (a)
(Cost $3,880) 19,200 1,920
CASH EQUIVALENTS - 10.6%
SHARES VALUE (NOTE 1)
Taxable Central Cash Fund (b)
(Cost $12,647,580) 12,647,580 $ 12,647,580
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $108,811,367) $ 119,442,486
LEGEND
1. Non-income producing
2. At period end, the seven-day yield on the Taxable Central Cash Fund was
5.31%. The yield refers to the income earned by investing in the fund over
the seven-day period, expressed as an annual percentage.
3. Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of these securities amounted to $454,688 or 0.4% of net
assets.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $245,863,230 and $230,467,657, respectively (see Note 3 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $102,951 for the period
(see Note 4 of Notes to Financial Statements).
The fund participated in the bank borrowing program. The maximum loan and
average daily balances during the period for which loans were outstanding
amounted to $7,645,000 and $4,651,750, respectively. The weighted average
interest rate was 5.7%. Interest expense includes $2,934 paid under the
bank borrowing program (see Note 7 of Notes to Financial Statements).
The fund participated in the interfund lending program as a borrower. The
maximum loan and 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 5 of Notes to Financial Statements).
At the period end, the value of securities loaned and the value of
collateral amounted to $6,791,138 and $6,987,900, respectively (see Note 6
of Notes to Financial Statements).
Distribution of investments by country of issue, as a percentage of total
value of investment in securities, is as follows:
United States 84.9%
United Kingdom 5.3
Germany 4.8
Canada 1.7
Sweden 1.4
Others (individually less than 1%) 1.9
TOTAL 100.0%
INCOME TAX INFORMATION
At February 28, 1997, the aggregate cost of investment securities for
income tax purposes was $109,116,037. Net unrealized appreciation
aggregated $10,326,449, of which $13,812,563 related to appreciated
investment securities and $3,486,114 related to depreciated investment
securities.
The fund hereby designates approximately $10,131,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 40% of the dividends distributed during the fiscal year
qualifies for the dividends-received deduction for corporate shareholders
(unaudited).
The fund will notify shareholders in January 1998 of the applicable
percentage for use in preparing 1997 income tax returns.
CHEMICALS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1997
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS
Investment in securities, at value $ 119,442,486
(cost $108,811,367) - See accompanying schedule
Receivable for investments sold 15,085
Receivable for fund shares sold 134,923
Dividends receivable 150,654
Interest receivable 47,329
Redemption fees receivable 516
Other receivables 62,769
TOTAL ASSETS 119,853,762
LIABILITIES
Payable to custodian bank $ 24,357
Payable for fund shares redeemed 1,261,747
Accrued management fee 57,102
Other payables and accrued expenses 113,374
Collateral on securities loaned, 6,987,900
at value
TOTAL LIABILITIES 8,444,480
NET ASSETS $ 111,409,282
Net Assets consist of:
Paid in capital $ 90,726,863
Undistributed net investment income 583,830
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 9,468,140
Net unrealized appreciation (depreciation) on investments 10,630,449
and assets and liabilities in
foreign currencies
NET ASSETS, for 2,619,523 $ 111,409,282
shares outstanding
NET ASSET VALUE and redemption price per share ($111,409,282 (divided by) 2,619,523 shares) $42.53
Maximum offering price per share (100/97.00 of $42.53) $43.85
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1997
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME $ 2,323,438
Dividends
Interest (including income on securities loaned of $8,507) 734,648
TOTAL INCOME 3,058,086
EXPENSES
Management fee $ 745,680
Transfer agent fees 1,278,656
Accounting and security lending fees 124,554
Non-interested trustees' compensation 625
Custodian fees and expenses 21,983
Registration fees 52,288
Audit 22,309
Legal 1,235
Interest 6,814
Miscellaneous 5,396
Total expenses before reductions 2,259,540
Expense reductions (24,095 2,235,445
)
NET INVESTMENT INCOME 822,641
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 14,210,798
Foreign currency transactions (10,443 14,200,355
)
Change in net unrealized appreciation (depreciation) on:
Investment securities (2,755,198
)
Assets and liabilities in (567 (2,755,765
foreign currencies ) )
NET GAIN (LOSS) 11,444,590
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 12,267,231
OTHER INFORMATION $ 579,393
Sales charges paid to FDC
Deferred sales charges withheld $ 6,478
by FDC
Exchange fees withheld by FSC $ 115,155
Expense reductions $ 23,210
Directed brokerage arrangements
Custodian interest credits 236
Transfer agent interest credits 649
$ 24,095
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE YEAR ENDED YEAR ENDED
(DECREASE) IN FEBRUARY 28, FEBRUARY 29,
NET ASSETS 1997 1996
Operations $ 822,641 $ 31,898
Net
investment
income
Net realized 14,200,355 9,931,910
gain (loss)
Change in (2,755,765 8,885,611
net )
unrealized
appreciation
(depreciation
)
NET INCREASE 12,267,231 18,849,419
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
Distributions to (228,367 (214,329
shareholders ) )
From net
investment
income
From net (6,676,304 (6,011,068
realized gain ) )
TOTAL (6,904,671 (6,225,397
DISTRIBUTION ) )
S
Share 349,364,954 70,422,861
transactions
Net proceeds
from sales of
shares
Reinvestmen 6,799,944 6,107,748
t of
distributions
Cost of (339,611,033 (97,475,212
shares ) )
redeemed
Paid in 262,393 40,196
capital
portion of
redemption
fees
NET INCREASE 16,816,258 (20,904,407
(DECREASE) )
IN NET
ASSETS
RESULTING
FROM SHARE
TRANSACTIO
NS
TOTAL 22,178,818 (8,280,385
INCREASE )
(DECREASE)
IN NET ASSETS
NET ASSETS
Beginning of 89,230,464 97,510,849
period
End of period $ 111,409,282 $ 89,230,464
(including
undistribute
d net
investment
income of
$583,830
and
$15,890,
respectivel
y)
OTHER
INFORMATION
Shares
Sold 8,409,682 1,900,418
Issued in 164,313 171,374
reinvestment
of
distributions
Redeemed (8,211,486 (2,690,711
) )
Net increase 362,509 (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>
YEAR ENDED YEAR ENDED YEARS ENDED FEBRUARY 28, TEN MONTHS
FEBRUARY 28, FEBRUARY 29, ENDED
FEBRUARY 28,
SELECTED 1997 1996 1995 1994 1993
PER-SHARE
DATA D
</TABLE>
Net asset $ 39.53 $ 33.91 $ 31.66 $ 28.62 $ 32.81
value,
beginning of
period
Income from
Investment
Operations
Net .28 .01 .36 .29 .30
investment
income
Net realized 5.49 8.89 2.65 5.97 (.84)
and
unrealized
gain (loss)
Total from 5.77 8.90 3.01 6.26 (.54)
investment
operations
Less
Distributions
From net (.12) (.08) (.22) (.23) (.31)
investment
income
From net (2.74) (3.22) (.60) (3.05) (3.36)
realized gain
Total (2.86) (3.30) (.82) (3.28) (3.67)
distributions
Redemption .09 .02 .06 .06 .02
fees added to
paid in
capital
Net asset $ 42.53 $ 39.53 $ 33.91 $ 31.66 $ 28.62
value, end of
period
TOTAL 15.06% 27.48% 9.90% 23.63% (1.61)%
RETURN B, C
RATIOS AND
SUPPLEMENT
AL DATA
Net assets, $ 111,409 $ 89,230 $ 97,511 $ 62,217 $ 28,796
end of period
(000 omitted)
Ratio of 1.83% 1.99% 1.52% 1.93% 1.89% A
expenses to
average net
assets
Ratio of 1.81% E 1.97% E 1.51% E 1.93% 1.89% A
expenses to
average net
assets after
expense
reductions
Ratio of net .67% .04% 1.07% .97% 1.21% A
investment
income to
average net
assets
Portfolio 207% 87% 106% 81% 214% A
turnover rate
Average $ .0458
commission
rate F
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
A ANNUALIZED B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 8 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 8 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. You can
look at the total percentage change in value, the average annual percentage
change, or the growth of a hypothetical $10,000 investment. Total return
reflects the change in the value of an investment, assuming reinvestment of
the fund's dividend income and capital gains (the profits earned upon the
sale of 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 fund expenses, the past 10 year total returns would have
been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 28, 1997 YEAR YEARS YEARS
CONSTRUCTION AND HOUSING 18.64% 85.69% 164.41%
CONSTRUCTION AND HOUSING 15.08% 80.12% 156.47%
(INCL. 3% SALES CHARGE)
S&P 500 26.16% 118.75% 276.74%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one, five or 10 years. You can compare
the fund's returns 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, and excludes the effect of sales
charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 28, 1997 YEAR YEARS YEARS
CONSTRUCTION AND HOUSING 18.64% 13.18% 10.21%
CONSTRUCTION AND HOUSING 15.08% 12.49% 9.88%
(INCL. 3% SALES CHARGE)
S&P 500 26.16% 16.94% 14.16%
AVERAGE ANNUAL RETURNS take the fund's 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
1987/02/28 9700.00 10000.00
1987/03/31 10293.17 10289.00
1987/04/30 9588.35 10197.43
1987/05/31 9316.19 10286.15
1987/06/30 9211.51 10805.60
1987/07/31 9783.74 11353.44
1987/08/31 9993.09 11776.92
1987/09/30 9225.47 11519.01
1987/10/31 6294.53 9037.81
1987/11/30 5833.96 8293.10
1987/12/31 6576.43 8924.20
1988/01/31 6810.29 9299.91
1988/02/29 7448.09 9733.29
1988/03/31 7745.74 9432.53
1988/04/30 7972.51 9537.23
1988/05/31 7922.90 9620.20
1988/06/30 8390.62 10061.77
1988/07/31 8305.58 10023.54
1988/08/31 7880.38 9682.74
1988/09/30 8121.33 10095.22
1988/10/31 8178.02 10375.87
1988/11/30 8078.81 10227.49
1988/12/31 8496.02 10406.47
1989/01/31 9013.80 11168.23
1989/02/28 8904.41 10890.14
1989/03/31 9130.48 11143.88
1989/04/30 9487.83 11722.25
1989/05/31 9823.29 12197.00
1989/06/30 9817.09 12127.48
1989/07/31 10215.39 13222.59
1989/08/31 10387.21 13481.75
1989/09/30 10574.65 13426.47
1989/10/31 9981.09 13114.98
1989/11/30 10129.48 13382.52
1989/12/31 9906.11 13703.71
1990/01/31 9281.25 12784.19
1990/02/28 9472.87 12949.10
1990/03/31 10006.09 13292.25
1990/04/30 9714.49 12959.95
1990/05/31 10614.29 14223.54
1990/06/30 10422.66 14126.82
1990/07/31 9879.03 14081.62
1990/08/31 8623.07 12808.64
1990/09/30 7732.64 12184.86
1990/10/31 7460.83 12132.46
1990/11/30 8182.54 12916.22
1990/12/31 8951.12 13276.58
1991/01/31 9738.44 13855.44
1991/02/28 10591.37 14846.11
1991/03/31 10853.81 15205.38
1991/04/30 11022.53 15241.87
1991/05/31 12119.16 15900.32
1991/06/30 11500.54 15172.09
1991/07/31 11800.48 15879.11
1991/08/31 12287.87 16255.44
1991/09/30 12016.05 15983.98
1991/10/31 11809.85 16198.16
1991/11/30 11219.36 15545.38
1991/12/31 12649.26 17323.77
1992/01/31 13589.61 17001.55
1992/02/29 13812.06 17222.57
1992/03/31 13801.95 16886.73
1992/04/30 13994.06 17383.20
1992/05/31 14438.96 17468.37
1992/06/30 13407.24 17208.09
1992/07/31 13650.09 17911.90
1992/08/31 13184.63 17544.71
1992/09/30 13356.65 17751.74
1992/10/31 13822.10 17813.87
1992/11/30 14621.48 18421.32
1992/12/31 15016.11 18647.90
1993/01/31 15643.46 18804.55
1993/02/28 15926.79 19060.29
1993/03/31 16301.18 19462.46
1993/04/30 15916.53 18991.47
1993/05/31 16088.65 19500.44
1993/06/30 16281.03 19556.99
1993/07/31 16837.91 19478.76
1993/08/31 17536.53 20217.01
1993/09/30 18103.53 20061.34
1993/10/31 18761.66 20476.61
1993/11/30 18468.03 20282.08
1993/12/31 20063.15 20527.49
1994/01/31 20718.61 21225.43
1994/02/28 20298.70 20650.22
1994/03/31 19110.69 19749.87
1994/04/30 19067.45 20002.67
1994/05/31 18058.48 20330.71
1994/06/30 17615.77 19832.61
1994/07/31 18120.25 20483.12
1994/08/31 18810.06 21322.93
1994/09/30 17759.91 20800.52
1994/10/31 17234.83 21268.53
1994/11/30 16534.73 20493.93
1994/12/31 16864.17 20797.85
1995/01/31 16938.18 21337.14
1995/02/28 17752.31 22168.65
1995/03/31 18069.50 22822.85
1995/04/30 18090.65 23494.98
1995/05/31 18978.79 24434.07
1995/06/30 19158.54 25001.68
1995/07/31 20046.68 25830.73
1995/08/31 20057.25 25895.57
1995/09/30 19940.95 26988.36
1995/10/31 19930.38 26892.01
1995/11/30 21156.86 28072.57
1995/12/31 21717.20 28613.25
1996/01/31 21672.99 29587.24
1996/02/29 21617.73 29861.52
1996/03/31 22358.22 30149.08
1996/04/30 22386.60 30593.48
1996/05/31 23123.23 31382.49
1996/06/30 23261.35 31502.05
1996/07/31 22283.01 30110.29
1996/08/31 23330.41 30745.32
1996/09/30 24596.49 32475.67
1996/10/31 24228.17 33371.34
1996/11/30 25333.12 35893.88
1996/12/31 24586.61 35182.83
1997/01/31 24831.42 37381.05
1997/02/28 25647.48 37674.12
Let's say hypothetically that $10,000 was invested in Fidelity Select
Construction and Housing Portfolio on February 28, 1987, and the current
maximum 3% sales charge was paid. As the chart shows, by February 28, 1997,
the value of the investment would have grown to $25,647 - a 156.47%
increase on the initial investment. For comparison, look at how the S&P 500
did over the same period. With dividends and capital gains, if any,
reinvested, the same $10,000 investment would have grown to $37,674 - a
276.74% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1997
% OF FUND'S
INVESTMENTS
Lowe's Companies, Inc. 10.6
Masco Corp. 6.5
Westpoint Stevens, Inc. Class A 4.8
Sunbeam-Oster, Inc. 4.4
Oakwood Homes Corp. 4.3
Leggett & Platt, Inc. 3.9
Case Corp. 3.8
Heilig-Meyers Co. 3.8
American Homestar Corp. 3.4
TriMas Corp. 3.1
TOP INDUSTRIES AS OF FEBRUARY 28, 1997
Lumber & Building
Materials - Retail 10.6%
Plumbing Supplies -
Wholesale 6.5%
Appliances 6.4%
Furniture 6.2%
Textile Mill Products 4.8%
All Others 65.5% *
Row: 1, Col: 1, Value: 65.5
Row: 1, Col: 2, Value: 4.8
Row: 1, Col: 3, Value: 6.2
Row: 1, Col: 4, Value: 6.4
Row: 1, Col: 5, Value: 6.5
Row: 1, Col: 6, Value: 10.6
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
CONSTRUCTION AND HOUSING PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Peter Saperstone,
Portfolio Manager of
Fidelity Select Construction and Housing Portfolio
Q. PETER, HOW DID THE FUND PERFORM?
A. For the 12 months that ended February 28, 1997, the fund returned
18.64%. The Standard & Poor's 500 Index had a return of 26.16% over the
same period.
Q. WHAT SORTS OF MARKET DEVELOPMENTS INFLUENCED THE SECTOR'S PERFORMANCE?
A. During the year, mortgage rates fluctuated between 7-8%, keeping the
housing market at historically healthy levels. After a slow first quarter,
most housing-related companies reported strong gains in both sales and
earnings for the full year and, for the most part, surpassed prior peak
earnings levels. Strong fundamentals, however, didn't necessarily translate
into strong performance for housing stocks. Rather, investors shied away
from many early cyclical groups, or groups of stocks that tend to
underperform late in an economic cycle and outperform in the early stages
of an economic recovery. This was the case with many of the housing-related
stocks.
Q. DID YOU LOOK FOR DIFFERENT WAYS TO POSITION THE PORTFOLIO WHEN INDUSTRY
SENTIMENT APPEARED TO BE ON A DOWNSWING?
A. Absolutely. Given the mixed outlook on new housing as we entered 1997
and the fact that we're in the latter stages of an economic cycle, I've
tried to position the fund in sectors that are driven more by the repair
and remodel markets. I also focused on secular segments, such as retailers
that benefited from industry consolidation and manufactured housing
companies that benefited from market share gains over site-built homes.
Lastly, I looked for company-specific stories, which could have involved
management changes and cost reduction efforts. These strategies led me to
stocks such as Lowe's, Home Depot, Oakwood Homes, Stanley Works and
Sunbeam-Oster.
Q. WHAT SPECIFIC CHANGES HAVE YOU MADE TO THE FUND SINCE TAKING OVER AS
MANAGER LAST AUGUST?
A. One change I've made is that I've tried to concentrate the fund's
investments in fewer names. When I took over the fund, the portfolio had
close to 60 different stocks. I've since cut that down to around 35. My
rationale is that I can focus my research efforts on fewer names and know
those companies better. If I don't have the time to research a stock, I'd
rather not own it. Another strategy I've employed is that I'm not making
any sub-sector bets; most of my focus has been on selecting the best
individual stocks in the housing group.
Q. WHAT TYPES OF STOCKS ATTRACTED YOUR ATTENTION DURING THE PERIOD?
A. The stocks I gravitated toward offered the most upside given the
industry's backdrop. As it turned out, many of the stocks were in the
retail and small appliances and tools areas.
Q. WHICH INDIVIDUAL STOCKS CONTRIBUTED POSITIVELY TO THE PORTFOLIO? WHICH
HURT?
A. On the positive side, the fund benefited from its stake in Masco - a
manufacturer of faucets, cabinets and other building products. Westpoint
Stevens, a sheet and towel manufacturer, continued to gain market share
from weaker competitors, while Stanley Works and Sunbeam-Oster performed
well following management changes. One of the bigger disappointments was
the fund's position in Black & Decker. Pricing became very competitive in a
few of their product categories and the stock suffered as a result.
Q. WHAT'S YOUR OUTLOOK FOR 1997?
A. Many of the key influencers of the industry - including mortgage rates
and mortgage applications - seem to signal a slight downturn for 1997, but
I don't think it will be dramatic. If interest rates stay flat, I think the
slowdown will be somewhat cushioned.
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: 511
TRADING SYMBOL: FSHOX
SIZE: as of February 28, 1997, more than
$30 million
MANAGER: Peter Saperstone, since August
1996; equity analyst, textile, apparel and
footwear industries, since 1995; equity
analyst, building materials and appliances,
since 1996; joined Fidelity in 1995
(checkmark)
CONSTRUCTION AND HOUSING PORTFOLIO
INVESTMENTS FEBRUARY 28, 1997
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 88.4%
SHARES VALUE (NOTE 1)
BUILDING MATERIALS - 16.1%
CEMENT - 3.3%
Medusa Corp. 6,700 $ 267,160
Southdown, Inc. 21,400 765,050
1,032,210
HEATING & AIR-CONDITION EQUIPMENT - 0.9%
Falcon Building Products, Inc. (a) 16,900 289,413
PAINT & VARNISH - 3.0%
Sherwin-Williams Co. 16,600 931,675
PAVING, ROOFING & SIDING - 2.4%
Elcor Corp. 31,900 773,575
PLUMBING SUPPLIES - WHOLESALE - 6.5%
Masco Corp. 58,500 2,054,813
TOTAL BUILDING MATERIALS 5,081,686
CHEMICALS & PLASTICS - 2.0%
CHEMICALS, GENERAL - 1.7%
Grace (W.R.) & Co. 10,000 530,000
PLASTIC FOAM PRODUCTS - 0.3%
Foamex International, Inc. (a) 5,000 93,125
TOTAL CHEMICALS & PLASTICS 623,125
CONSTRUCTION - 11.8%
GENERAL BUILDING - 1.4%
D.R. Horton, Inc. 36,640 458,000
MOBILE HOMES - 4.3%
Clayton Homes, Inc. 125 1,781
Oakwood Homes Corp. 68,400 1,350,900
1,352,681
PREFABRICATED WOOD BUILDINGS - 3.4%
American Homestar Corp. (a) 64,250 1,076,188
SINGLE-FAMILY HOUSING CONSTRUCTION - 2.7%
Belmont Homes, Inc. (a) 100,100 850,850
TOTAL CONSTRUCTION 3,737,719
CONSUMER DURABLES - 0.4%
MANUFACTURING INDUSTRIES - 0.4%
Samsonite Corp. (a) 2,700 128,250
CONSUMER ELECTRONICS - 6.4%
APPLIANCES - 6.4%
Maytag Co. 29,900 657,800
Sunbeam-Oster, Inc. 50,300 1,376,963
2,034,763
CREDIT & OTHER FINANCE - 2.6%
MORTGAGE BANKERS - 2.6%
Green Tree Financial Corp. 21,600 810,000
ENTERTAINMENT - 0.1%
RECREATIONAL SERVICES - 0.1%
Vail Resorts, Inc. 1,000 21,875
FEDERAL SPONSORED CREDIT - 1.9%
FEDERAL & FEDERALLY SPONSORED CREDIT AGENCIES - 1.9%
Federal National Mortgage Association 15,400 616,000
SHARES VALUE (NOTE 1)
HOME FURNISHINGS - 10.0%
FURNITURE - 6.2%
Furniture Brands International, Inc. (a) 50,300 $ 741,925
Leggett & Platt, Inc. 34,300 1,230,513
1,972,438
FURNITURE STORES - 3.8%
Heilig-Meyers Co. 85,000 1,200,625
TOTAL HOME FURNISHINGS 3,173,063
INDUSTRIAL MACHINERY & EQUIPMENT - 9.7%
ACCESS & MEASURING CUTTING TOOLS - 3.0%
Stanley Works 25,000 956,250
FARM MACHINERY & EQUIPMENT - 3.9%
Case Corp. 23,400 1,213,875
LAWN, GARDEN TRACTORS, EQUIPMENT - 1.5%
Toro Co. 13,400 463,975
SPECIAL INDUSTRIAL MACHINERY - 1.3%
Singer Co. 25,000 421,875
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 3,055,975
IRON & STEEL - 3.1%
METAL FORGINGS & STAMPINGS - 3.1%
TriMas Corp. 40,000 975,000
LEISURE DURABLES & TOYS - 3.5%
MOTOR HOMES - 2.6%
Coachmen Industries, Inc. 40,000 810,000
TRAVEL TRAILERS AND CAMPERS - 0.9%
Champion Enterprises, Inc. (a) 15,000 290,625
TOTAL LEISURE DURABLES & TOYS 1,100,625
PAPER & FOREST PRODUCTS - 2.1%
LUMBER & WOOD - 2.1%
Fibreboard Corp. (a) 20,000 667,500
REAL ESTATE - 0.7%
REAL ESTATE, GENERAL - 0.7%
Price Enterprises, Inc. 12,000 213,000
REAL ESTATE INVESTMENT TRUSTS - 0.0%
Golf Trust of America, Inc. 500 12,125
RETAIL & WHOLESALE, MISCELLANEOUS - 13.2%
BUILDING MATERIALS - RETAIL - 2.6%
Home Depot, Inc. (The) 15,000 817,500
LUMBER & BUILDING MATERIALS - RETAIL - 10.6%
Lowe's Companies, Inc. 91,800 3,350,700
TOTAL RETAIL & WHOLESALE, MISCELLANEOUS 4,168,200
TEXTILES & APPAREL - 4.8%
TEXTILE MILL PRODUCTS - 4.8%
Westpoint Stevens, Inc. Class A (a) 44,400 1,531,800
TOTAL COMMON STOCKS
(Cost $27,040,798) 27,950,706
CASH EQUIVALENTS - 11.6%
SHARES VALUE (NOTE 1)
Taxable Central Cash Fund (b)
(Cost $3,658,424) 3,658,424 $ 3,658,424
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $30,699,222) $ 31,609,130
LEGEND
1. Non-income producing
2. At period end, the seven-day yield on the Taxable Central Cash Fund was
5.31%. The yield refers to the income earned by investing in the fund over
the seven-day period, expressed as an annual percentage.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $153,685,201 and $170,804,470, respectively (see Note 3 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $63,646 for the period (see
Note 4 of Notes to Financial Statements).
At the period end, the value of securities loaned and the value of
collateral amounted to $975,000 and $1,000,000, respectively (see Note 6 of
Notes to Financial Statements).
INCOME TAX INFORMATION
At February 28, 1997, the aggregate cost of investment securities for
income tax purposes was $31,190,794. Net unrealized appreciation aggregated
$418,336, of which $2,118,542 related to appreciated investment securities
and $1,700,206 related to depreciated investment securities.
The fund hereby designates approximately $5,543,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 48% of the dividends distributed during the fiscal year
qualifies for the dividends-received deduction for corporate shareholders
(unaudited).
The fund will notify shareholders in January 1998 of the applicable
percentage for use in preparing 1997 income tax returns.
CONSTRUCTION AND HOUSING PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1997
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS
Investment in securities, at value $ 31,609,130
(cost $30,699,222) - See accompanying schedule
Receivable for investments sold 1,285,853
Receivable for fund shares sold 446,109
Dividends receivable 16,596
Interest receivable 9,786
Redemption fees receivable 114
TOTAL ASSETS 33,367,588
LIABILITIES
Payable for investments purchased $ 1,448,771
Payable for fund shares redeemed 270,536
Accrued management fee 18,159
Other payables and accrued expenses 49,496
Collateral on securities loaned, 1,000,000
at value
TOTAL LIABILITIES 2,786,962
NET ASSETS $ 30,580,626
Net Assets consist of:
Paid in capital $ 20,910,223
Undistributed net investment income 68,372
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 8,692,123
Net unrealized appreciation (depreciation) on investments 909,908
NET ASSETS, for 1,390,131 $ 30,580,626
shares outstanding
NET ASSET VALUE and redemption price per share ($30,580,626 (divided by) 1,390,131 shares) $22.00
Maximum offering price per share (100/97.00 of $22.00) $22.68
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1997
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME $ 688,635
Dividends
Interest (including income on securities loaned of $3,121) 410,186
TOTAL INCOME 1,098,821
EXPENSES
Management fee $ 408,988
Transfer agent fees 397,614
Accounting and security lending fees 76,770
Non-interested trustees' compensation 322
Custodian fees and expenses 13,190
Registration fees 27,787
Audit 29,699
Legal 342
Miscellaneous 3,000
Total expenses before reductions 957,712
Expense reductions (40,138 917,574
)
NET INVESTMENT INCOME 181,247
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 10,159,029
Foreign currency transactions (55 10,158,974
)
Change in net unrealized appreciation (depreciation) on:
Investment securities (2,418,312
)
Assets and liabilities in (1 (2,418,313
foreign currencies ) )
NET GAIN (LOSS) 7,740,661
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 7,921,908
OTHER INFORMATION $ 174,919
Sales charges paid to FDC
Deferred sales charges withheld $ 1,261
by FDC
Exchange fees withheld by FSC $ 75,683
Expense reductions $ 39,950
Directed brokerage arrangements
Custodian interest credits 188
$ 40,138
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE YEAR ENDED YEAR ENDED
(DECREASE) IN FEBRUARY 28, FEBRUARY 29,
NET ASSETS 1997 1996
Operations $ 181,247 $ 166,036
Net
investment
income
Net realized 10,158,974 4,719,847
gain (loss)
Change in (2,418,313 2,880,267
net )
unrealized
appreciation
(depreciation
)
NET INCREASE 7,921,908 7,766,150
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
Distributions to (112,820 (162,155
shareholders ) )
From net
investment
income
From net (3,093,992 (1,876,368
realized gain ) )
TOTAL (3,206,812 (2,038,523
DISTRIBUTION ) )
S
Share 137,278,007 90,250,248
transactions
Net proceeds
from sales of
shares
Reinvestmen 3,185,271 2,017,008
t of
distributions
Cost of (157,413,712 (72,254,026
shares ) )
redeemed
Paid in 147,951 64,179
capital
portion of
redemption
fees
NET INCREASE (16,802,483 20,077,409
(DECREASE) )
IN NET
ASSETS
RESULTING
FROM SHARE
TRANSACTIO
NS
TOTAL (12,087,387 25,805,036
INCREASE )
(DECREASE)
IN NET ASSETS
NET ASSETS
Beginning of 42,668,013 16,862,977
period
End of period $ 30,580,626 $ 42,668,013
(including
undistribute
d net
investment
income of
$68,372
and
$1,803,
respectivel
y)
OTHER
INFORMATION
Shares
Sold 6,539,196 4,943,241
Issued in 160,947 103,809
reinvestment
of
distributions
Redeemed (7,491,813 (3,869,788
) )
Net increase (791,670) 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>
YEAR ENDED YEAR ENDED YEARS ENDED FEBRUARY 28, TEN MONTHS
FEBRUARY 28, FEBRUARY 29, ENDED
FEBRUARY 28,
SELECTED 1997 1996 1995 1994 1993
PER-SHARE
DATA D
</TABLE>
Net asset $ 19.56 $ 16.79 $ 19.82 $ 15.74 $ 13.84
value,
beginning of
period
Income from
Investment
Operations
Net .06 .07 (.02) .01 .02
investment
income (loss)
Net realized 3.38 3.55 (2.50) 4.26 1.87
and
unrealized
gain (loss)
Total from 3.44 3.62 (2.52) 4.27 1.89
investment
operations
Less
Distributions
From net (.02) (.07) - - -
investment
income
From net (1.03) (.81) (.52) (.22) (.01)
realized gain
Total (1.05) (.88) (.52) (.22) (.01)
distributions
Redemption .05 .03 .01 .03 .02
fees added to
paid in
capital
Net asset $ 22.00 $ 19.56 $ 16.79 $ 19.82 $ 15.74
value, end of
period
TOTAL 18.64% 21.77% (12.54)% 27.45% 13.81%
RETURN B, C
RATIOS AND
SUPPLEMENT
AL DATA
Net assets, $ 30,581 $ 42,668 $ 16,863 $ 80,999 $ 31,111
end of period
(000 omitted)
Ratio of 1.41% 1.43% 1.76% 1.67% 2.02% A
expenses to
average net
assets
Ratio of 1.35% E 1.40% E 1.74% E 1.66% E 2.02% A
expenses to
average net
assets after
expense
reductions
Ratio of net .27% .39% (.11)% .03% .20% A
investment
income (loss)
to average
net assets
Portfolio 270% 139% 45% 35% 60% A
turnover rate
Average $ .0410
commission
rate F
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
A ANNUALIZED B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 8 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 8 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>
DEFENSE AND AEROSPACE PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance. You can
look at the total percentage change in value, the average annual percentage
change, or the growth of a hypothetical $10,000 investment. Total return
reflects the change in the value of an investment, assuming reinvestment of
the fund's dividend income and capital gains (the profits earned upon the
sale of 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 fund expenses, the past five year and past 10 year total
returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 28, 1997 YEAR YEARS YEARS
DEFENSE AND AEROSPACE 15.87% 137.19% 119.24%
DEFENSE AND AEROSPACE 12.39% 130.08% 112.67%
(INCL. 3% SALES CHARGE)
S&P 500 26.16% 118.75% 276.74%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one, five, or 10 years. You can compare
the fund's returns 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, and excludes the effect of sales
charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 28, 1997 YEAR YEARS YEARS
DEFENSE AND AEROSPACE 15.87% 18.86% 8.17%
DEFENSE AND AEROSPACE 12.39% 18.13% 7.84%
(INCL. 3% SALES CHARGE)
S&P 500 26.16% 16.94% 14.16%
AVERAGE ANNUAL RETURNS take the fund's 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
1987/02/28 9700.00 10000.00
1987/03/31 9518.48 10289.00
1987/04/30 9104.39 10197.43
1987/05/31 8979.59 10286.15
1987/06/30 8894.50 10805.60
1987/07/31 9132.75 11353.44
1987/08/31 9036.32 11776.92
1987/09/30 8854.80 11519.01
1987/10/31 6597.13 9037.81
1987/11/30 6256.78 8293.10
1987/12/31 6443.37 8924.20
1988/01/31 6857.92 9299.91
1988/02/29 7266.56 9733.29
1988/03/31 7248.79 9432.53
1988/04/30 7201.41 9537.23
1988/05/31 6928.99 9620.20
1988/06/30 7213.26 10061.77
1988/07/31 7071.12 10023.54
1988/08/31 6899.38 9682.74
1988/09/30 7106.66 10095.22
1988/10/31 7094.81 10375.87
1988/11/30 6780.93 10227.49
1988/12/31 6721.71 10406.47
1989/01/31 6988.21 11168.23
1989/02/28 6958.60 10890.14
1989/03/31 7100.73 11143.88
1989/04/30 7355.39 11722.25
1989/05/31 7485.68 12197.00
1989/06/30 7396.85 12127.48
1989/07/31 7876.54 13222.59
1989/08/31 8077.90 13481.75
1989/09/30 7929.84 13426.47
1989/10/31 7479.76 13114.98
1989/11/30 7195.49 13382.52
1989/12/31 7313.93 13703.71
1990/01/31 6899.38 12784.19
1990/02/28 6923.07 12949.10
1990/03/31 7349.47 13292.25
1990/04/30 7047.43 12959.95
1990/05/31 7568.59 14223.54
1990/06/30 7574.03 14126.82
1990/07/31 7270.12 14081.62
1990/08/31 6632.49 12808.64
1990/09/30 6417.96 12184.86
1990/10/31 6334.54 12132.46
1990/11/30 6674.21 12916.22
1990/12/31 6978.66 13276.58
1991/01/31 7594.60 13855.44
1991/02/28 7744.10 14846.11
1991/03/31 8342.10 15205.38
1991/04/30 8204.56 15241.87
1991/05/31 8587.28 15900.32
1991/06/30 8155.23 15172.09
1991/07/31 8509.54 15879.11
1991/08/31 8419.46 16255.44
1991/09/30 8221.29 15983.98
1991/10/31 8617.64 16198.16
1991/11/30 8227.29 15545.38
1991/12/31 8857.85 17323.77
1992/01/31 8827.83 17001.55
1992/02/29 8965.95 17222.57
1992/03/31 8785.79 16886.73
1992/04/30 8629.65 17383.20
1992/05/31 8197.27 17468.37
1992/06/30 7812.93 17208.09
1992/07/31 8113.19 17911.90
1992/08/31 7957.05 17544.71
1992/09/30 8071.16 17751.74
1992/10/31 8137.21 17813.87
1992/11/30 8419.46 18421.32
1992/12/31 8857.85 18647.90
1993/01/31 9122.09 18804.55
1993/02/28 9056.03 19060.29
1993/03/31 9536.46 19462.46
1993/04/30 9566.48 18991.47
1993/05/31 9860.74 19500.44
1993/06/30 10275.11 19556.99
1993/07/31 10695.48 19478.76
1993/08/31 10677.47 20217.01
1993/09/30 10953.71 20061.34
1993/10/31 11392.10 20476.61
1993/11/30 11055.80 20282.08
1993/12/31 11414.04 20527.49
1994/01/31 11957.56 21225.43
1994/02/28 11957.56 20650.22
1994/03/31 11476.51 19749.87
1994/04/30 11538.80 20002.67
1994/05/31 11576.84 20330.71
1994/06/30 11285.20 19832.61
1994/07/31 11450.04 20483.12
1994/08/31 11963.58 21322.93
1994/09/30 11361.28 20800.52
1994/10/31 11640.24 21268.53
1994/11/30 11183.76 20493.93
1994/12/31 11614.88 20797.85
1995/01/31 11608.54 21337.14
1995/02/28 12451.76 22168.65
1995/03/31 12984.32 22822.85
1995/04/30 13700.74 23494.98
1995/05/31 14543.96 24434.07
1995/06/30 15082.86 25001.68
1995/07/31 15913.40 25830.73
1995/08/31 15907.06 25895.57
1995/09/30 16350.86 26988.36
1995/10/31 15754.90 26892.01
1995/11/30 16889.76 28072.57
1995/12/31 17115.26 28613.25
1996/01/31 17421.50 29587.24
1996/02/29 18353.82 29861.52
1996/03/31 18775.75 30149.08
1996/04/30 19680.37 30593.48
1996/05/31 20416.28 31382.49
1996/06/30 19932.68 31502.05
1996/07/31 18587.02 30110.29
1996/08/31 19568.23 30745.32
1996/09/30 20528.42 32475.67
1996/10/31 20170.98 33371.34
1996/11/30 21271.34 35893.88
1996/12/31 21398.81 35182.83
1997/01/31 20935.86 37381.05
1997/02/28 21266.54 37674.12
Let's say hypothetically that $10,000 was invested in Fidelity Select
Defense and Aerospace Portfolio on February 28, 1987, and the current
maximum 3% sales charge was paid. As the chart shows, by February 28, 1997,
the value of the investment would have grown to $21,267 - a 112.67%
increase on the initial investment. For comparison, look at how the S&P 500
did over the same period. With dividends and capital gains, if any,
reinvested, the same $10,000 investment would have grown to $37,674 - a
276.74% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1997
% OF FUND'S
INVESTMENTS
APT Satellite Holdings Ltd. sponsored ADR 12.2
Boeing Co. 9.1
McDonnell Douglas Corp. 8.1
Northrop Grumman Corp. 5.7
Sundstrand Corp. 5.1
General Dynamics Corp. 4.9
United Technologies Corp. 4.2
Continental Airlines, Inc. 3.7
Lockheed Martin Corp. 3.6
Gulfstream Aerospace Corp. 3.3
TOP INDUSTRIES AS OF FEBRUARY 28, 1997
Row: 1, Col: 1, Value: 18.2
Row: 1, Col: 2, Value: 6.6
Row: 1, Col: 3, Value: 6.8
Row: 1, Col: 4, Value: 12.2
Row: 1, Col: 5, Value: 12.2
Row: 1, Col: 6, Value: 44.0
Aerospace & Defense 44.0%
Air Transportation 12.2%
Broadcasting 12.2%
Ship Building & Repair 6.8%
Conglomerates 6.6%
All Others 18.2% *
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
DEFENSE AND AEROSPACE PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
NOTE TO SHAREHOLDERS: Kevin Richardson became Portfolio Manager of Fidelity
Select Defense and Aerospace Portfolio on January 7, 1997.
Q. HOW DID THE FUND PERFORM, KEVIN?
A. Not as well as I would have liked. For the 12 months that ended February
28, 1997, the fund had a return of 15.87%. The Standard & Poor's 500 Index
had a return of 26.16% over the same time frame.
Q. WERE THERE ANY INDUSTRY-WIDE FACTORS THAT AFFECTED PERFORMANCE?
A. Consolidation - namely merger and acquisition activity - was a positive
theme throughout much of the period. Earnings growth and valuation trends
within the industry were positively influenced by this consolidation.
However, with the recent Boeing/McDonnell Douglas merger, there are no more
major acquisition opportunities out there. Now that the consolidation game
has concluded in the defense sector, the dust is settling and investors are
trying to figure out what they own. Aside from the consolidation issue,
defense stocks as a group performed quite poorly.
Q. WILL CONSOLIDATION WITHIN THE ENTIRE INDUSTRY COME TO A SCREECHING HALT?
A. Not at all. I think the next consolidation wave we'll see will occur
among the boat-building stocks. As currently constituted, this industry has
far too many shipyards, and layoffs are happening everywhere. The
government has said it will endorse shipyard mergers, so the stage has been
set.
Q. HOW DID COMMERCIAL AEROSPACE STOCKS PERFORM?
A. Aerospace stocks were one of the few bright spots. Some of the companies
I owned - including United Technologies and Sundstrand - benefited from the
increased demand for aircraft building.
Q. THE FUND'S POSITION IN SATELLITE STOCKS ROSE DURING THE PERIOD. WHAT WAS
THE STORY THERE?
A. The increase in satellite stocks reflects my belief that satellite
systems are poised for growth. One of the fund's positions - APT Satellite
Holdings - has two satellites operating over China right now, and it's
scheduled to announce a third one in July. Valuations are extremely
favorable, and I think you may see satellites make the Internet hype look
small in coming years.
Q. IN TERMS OF PORTFOLIO COMPOSITION, DID YOU MAKE ANY SIGNIFICANT CHANGES
AFTER YOU TOOK OVER THE FUND?
A. My primary imprint on the portfolio has come in the form of reducing the
amount of stocks it owns and adding to existing positions. When I began
managing the fund, there were approximately 95 different stocks staring at
me from my computer screen. I've since pared that number back and have made
bigger investments in some of my top holdings. Tracking 100 names can be
cumbersome; if I do my due diligence on the companies I own, I'm confident
in my abilities to find the winners.
Q. WHICH INDIVIDUAL STOCKS PERFORMED WELL? WHERE DID THE DISAPPOINTMENTS
LIE?
A. Boeing, APT Satellite and Sundstrand all registered strong performances,
while defense stocks such as Lockheed and Northrop Grumman went through a
prolonged slump, but rebounded somewhat toward the end of the period. On a
side note, a niche stock that was interesting was Jamco, a company that
makes every toilet installed on Boeing jets.
Q. WHAT'S YOUR OUTLOOK?
A. I think we're in for more of the same. Airline stocks have recently
shown signs of life, so I'll keep an eye on potential opportunities in that
area. I may be a bit early with my satellite hunch, but I'll most likely
increase my positions there because I want to be well-positioned should
that hunch pay off. I'll also try to continue reducing the number of names
in the portfolio. I'd like to get down to exactly 30.
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 February 28, 1997, more than
$68 million
MANAGER: Kevin Richardson, since January
1997; manager, Fidelity Select Air
Transportation Portfolio, since 1996; equity
analyst, computer services, health care
information systems and specialty finance
industries, since 1994; joined Fidelity in 1994
(checkmark)
DEFENSE & AEROSPACE PORTFOLIO
INVESTMENTS FEBRUARY 28, 1997
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 95.8%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 44.0%
AIRCRAFT - 29.7%
Boeing Co. 61,900 $ 6,298,320
Gulfstream Aerospace Corp. (a) 105,100 2,285,925
Lockheed Martin Corp. 28,100 2,486,850
McDonnell Douglas Corp. 88,400 5,613,400
Northrop Grumman Corp. 54,200 3,936,275
20,620,770
AIRCRAFT & PARTS - 7.9%
Precision Castparts Corp. 20,000 980,000
Rohr Industries, Inc. (a) 34,100 618,063
Sundstrand Corp. 81,500 3,555,438
Wyman-Gordon Co. (a) 20,000 357,500
5,511,001
AIRCRAFT EQUIPMENT - 2.9%
Aviall, Inc. (a) 20,000 222,500
BE Aerospace, Inc. (a) 11,900 288,575
Jamco Corp. 110,000 1,235,184
Moog, Inc. Class A 9,900 235,125
1,981,384
MISSILES & SPACE VEHICLES - 2.2%
Orbital Sciences Corp. (a) 50,000 862,500
Thiokol Corp. 12,000 669,000
1,531,500
ORDNANCE - 1.3%
Alliant Techsystems, Inc. (a) 20,400 889,950
TOTAL AEROSPACE & DEFENSE 30,534,605
AIR TRANSPORTATION - 12.2%
AIR TRANSPORT, MAJOR NATIONAL - 9.0%
Alaska Air Group, Inc. 14,000 332,500
America West Holding Corp. Class B (a) 108,000 1,498,500
Continental Airlines, Inc. (a) 89,700 2,567,663
Northwest Airlines Corp. Class A (a) 53,000 1,874,875
6,273,538
AIR TRANSPORTATION, REGIONAL - 3.2%
Comair Holdings, Inc. 107,500 2,217,188
TOTAL AIR TRANSPORTATION 8,490,726
AUTOS, TIRES, & ACCESSORIES - 0.9%
AUTO DEALERS - RETAIL - 0.8%
Aviation Sales Co. (a) 21,700 545,213
INDUSTRIAL TRUCKS - 0.1%
ESCO Electronics Corp. (trust receipt) 10,000 116,250
TOTAL AUTOS, TIRES, & ACCESSORIES 661,463
BROADCASTING - 12.2%
COMMUNICATIONS SERVICES - 12.2%
APT Satellite Holdings Ltd.
sponsored ADR 603,700 8,451,800
CHEMICALS & PLASTICS - 1.0%
INDUSTRIAL & ORGANIC CHEMICALS - 1.0%
Primex Technologies, Inc. 37,500 693,750
COMPUTER SERVICES & SOFTWARE - 1.3%
CAD/CAM/CAE - 1.3%
Firearms Training Systems, Inc. Class A 60,000 877,500
SHARES VALUE (NOTE 1)
CONGLOMERATES - 6.6%
Harris Corp. 23,000 $ 1,696,250
United Technologies Corp. 38,500 2,897,125
4,593,375
DEFENSE ELECTRONICS - 6.2%
Doncasters PLC sponsored ADR 8,300 164,963
Litton Industries, Inc. (a) 52,500 2,257,500
Raytheon Co. 30,500 1,437,313
Tracor, Inc. (a) 17,500 417,813
4,277,589
ELECTRICAL EQUIPMENT - 0.9%
TV & RADIO COMMUNICATION EQUIPMENT - 0.9%
Loral Space & Communications Ltd. 40,000 645,000
ELECTRONICS - 2.6%
ELECTRONIC PARTS - WHOLESALE - 2.2%
Airport Systems International, Inc. (a)(b) 223,100 1,310,713
Zero Corp. 8,000 176,000
1,486,713
ELECTRONICS & ELECTRONIC COMPONENTS - 0.4%
Esterline Technologies Corp. (a) 12,000 303,000
TOTAL ELECTRONICS 1,789,713
RAILROADS - 1.1%
RAILROAD EQUIPMENT - 1.1%
Bombardier, Inc. Class B 40,000 767,460
SHIP BUILDING & REPAIR - 6.8%
SHIP BUILDERS - 6.6%
Avondale Industries, Inc. (a) 56,800 1,171,500
General Dynamics Corp. 50,200 3,375,950
4,547,450
SHIP BUILDING & REPAIRING - 0.2%
Newport News Shipbuilding, Inc. 9,900 153,450
TOTAL SHIP BUILDING & REPAIR 4,700,900
TOTAL COMMON STOCKS
(Cost $64,897,985) 66,483,881
CASH EQUIVALENTS - 4.2%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations) in a joint
trading account at 5.37%, dated
2/28/97 due 3/3/97 $ 2,939,315 2,938,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $67,835,985) $ 69,421,881
LEGEND
1. Non-income producing
2. An affiliated company is a company in which the fund has ownership of at
least 5% of the voting securities. Transactions during the period with
companies which are or were affiliates are as follows:
PURCHASE SALES DIVIDEND VALUE
AFFILIATE COST COST INCOME
Airport Systems
International, Inc. $ 6,050 $ - $ - $ 1,310,713
TOTALS $ 6,050 $ - $ - $ 1,310,713
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $130,082,549 and $92,130,148, respectively (see Note 3 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $24,182 for the period (see
Note 4 of Notes to Financial Statements).
INCOME TAX INFORMATION
At February 28, 1997, the aggregate cost of investment securities for
income tax purposes was $67,919,764. Net unrealized appreciation aggregated
$1,502,117, of which $3,693,313 related to appreciated investment
securities and $2,191,196 related to depreciated investment securities.
The fund hereby designates approximately $674,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 16% of the dividends distributed during the fiscal year
qualifies for the dividends-received deduction for corporate shareholders
(unaudited).
The fund will notify shareholders in January 1998 of the applicable
percentage for use in preparing 1997 income tax returns.
DEFENSE AND AEROSPACE PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1997
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS
Investment in securities, at $ 69,421,881
value (including repurchase agreements of $2,938,000)
(cost $67,835,985) - See accompanying schedule
Cash 576
Receivable for investments sold 2,346,657
Receivable for fund shares sold 70,511
Dividends receivable 81,968
Redemption fees receivable 163
TOTAL ASSETS 71,921,756
LIABILITIES
Payable for investments purchased $ 2,432,492
Payable for fund shares redeemed 565,644
Accrued management fee 35,834
Other payables and accrued expenses 85,246
TOTAL LIABILITIES 3,119,216
NET ASSETS $ 68,802,540
Net Assets consist of:
Paid in capital $ 64,480,380
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 2,736,264
Net unrealized appreciation (depreciation) on investments 1,585,896
NET ASSETS, for 2,377,401 $ 68,802,540
shares outstanding
NET ASSET VALUE and redemption price per share ($68,802,540 (divided by) 2,377,401 shares) $28.94
Maximum offering price per share (100/97.00 of $28.94) $29.84
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1997
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME $ 511,376
Dividends
Interest 114,569
TOTAL INCOME 625,945
EXPENSES
Management fee $ 268,010
Transfer agent fees 386,697
Accounting fees and expenses 61,443
Non-interested trustees' compensation 226
Custodian fees and expenses 20,070
Registration fees 45,791
Audit 29,206
Legal 235
Miscellaneous 937
Total expenses before reductions 812,615
Expense reductions (13,368 799,247
)
NET INVESTMENT INCOME (LOSS) (173,302
)
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 4,765,146
Foreign currency transactions 15 4,765,161
Change in net unrealized appreciation (depreciation) on investment securities (539,108
)
NET GAIN (LOSS) 4,226,053
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 4,052,751
OTHER INFORMATION $ 292,571
Sales charges paid to FDC
Deferred sales charges withheld $ 1,408
by FDC
Exchange fees withheld by FSC $ 35,265
Expense reductions $ 12,553
Directed brokerage arrangements
Transfer agent interest credits 815
$ 13,368
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE YEAR ENDED YEAR ENDED
(DECREASE) IN FEBRUARY 28, FEBRUARY 29,
NET ASSETS 1997 1996
Operations $ (173,302 $ (42,041
Net ) )
investment
income (loss)
Net realized 4,765,161 6,184,658
gain (loss)
Change in (539,108 1,844,428
net )
unrealized
appreciation
(depreciation
)
NET INCREASE 4,052,751 7,987,045
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
Distributions to (2,799,166 (1,652,319
shareholders ) )
from net
realized
gains
Share 127,346,343 82,853,410
transactions
Net proceeds
from sales of
shares
Reinvestmen 2,752,265 1,633,401
t of
distributions
Cost of (89,310,784 (69,255,038
shares ) )
redeemed
Paid in 112,916 97,064
capital
portion of
redemption
fees
NET INCREASE 40,900,740 15,328,837
(DECREASE)
IN NET
ASSETS
RESULTING
FROM SHARE
TRANSACTIO
NS
TOTAL 42,154,325 21,663,563
INCREASE
(DECREASE)
IN NET ASSETS
NET ASSETS
Beginning of 26,648,215 4,984,652
period
End of period $ 68,802,540 $ 26,648,215
OTHER
INFORMATION
Shares
Sold 4,464,416 3,489,764
Issued in 99,462 65,863
reinvestment
of
distributions
Redeemed (3,174,693 (2,821,248
) )
Net increase 1,389,185 734,379
(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>
YEAR ENDED YEAR ENDED YEARS ENDED FEBRUARY 28, TEN MONTHS
FEBRUARY 28, FEBRUARY 29, ENDED
FEBRUARY 28,
SELECTED 1997 1996 1995 1994 1993
PER-SHARE
DATA D
</TABLE>
Net asset $ 26.97 $ 19.64 $ 19.14 $ 15.08 $ 14.37
value,
beginning of
period
Income from
Investment
Operations
Net (.11) (.05) (.06) .07 (.02)
investment
income (loss)
Net realized 4.18 9.09 .70 4.57 .69
and
unrealized
gain (loss)
Total from 4.07 9.04 .64 4.64 .67
investment
operations
Less
Distributions
From net - - - (.10) -
investment
income
From net (2.17) (1.82) (.27) (.62) -
realized gain
Total (2.17) (1.82) (.27) (.72) -
distributions
Redemption .07 .11 .13 .14 .04
fees added to
paid in
capital
Net asset $ 28.94 $ 26.97 $ 19.64 $ 19.14 $ 15.08
value, end of
period
TOTAL 15.87% 47.40% 4.13% 32.04% 4.94%
RETURN B, C
RATIOS AND
SUPPLEMENT
AL DATA
Net assets, $ 68,803 $ 26,648 $ 4,985 $ 11,136 $ 1,463
end of period
(000 omitted)
Ratio of 1.84% 1.77% G 2.49% G 2.53% G 2.48% A,
expenses to G
average net
assets
Ratio of 1.81% E 1.75% E 2.49% 2.53% 2.48% A
expenses to
average net
assets after
expense
reductions
Ratio of net (.39)% (.20)% (.32)% .40% (.14)%
investment A
income (loss)
to average
net assets
Portfolio 219% 267% 146% 324% 87% A
turnover rate
Average $ .0335
commission
rate F
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
A ANNUALIZED B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 8 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 8 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. You can
look at the total percentage change in value, the average annual percentage
change, or the growth of a hypothetical $10,000 investment. Total return
reflects the change in the value of an investment, assuming reinvestment of
the fund's dividend income and capital gains (the profits earned upon the
sale of securities that have grown in value), but does not include certain
fees paid by shareholders upon exchange or redemption.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
FEBRUARY 28, 1997 YEAR YEARS FUND
ENVIRONMENTAL SERVICES 16.93% 21.65% 64.87%
ENVIRONMENTAL SERVICES 13.42% 18.00% 59.92%
(INCL. 3% SALES CHARGE)
S&P 500 26.16% 118.75% 203.23%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one year, five years or since the fund
started on June 29, 1989. You can compare the fund's returns 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, and excludes the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
FEBRUARY 28, 1997 YEAR YEARS FUND
ENVIRONMENTAL SERVICES 16.93% 4.00% 6.73%
ENVIRONMENTAL SERVICES 13.42% 3.37% 6.31%
(INCL. 3% SALES CHARGE)
S&P 500 26.16% 16.94% 15.55%
AVERAGE ANNUAL RETURNS take the fund's 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
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
1996/08/31 14679.89 24746.22
1996/09/30 15209.29 26138.94
1996/10/31 15054.88 26859.85
1996/11/30 15462.96 28890.19
1996/12/31 15429.87 28317.87
1997/01/31 16389.42 30087.18
1997/02/28 15992.36 30323.06
Let's say hypothetically that $10,000 was invested in Fidelity Select
Environmental Services Portfolio on June 29, 1989, when the fund started,
and the current maximum 3% sales charge was paid. As the chart shows, by
February 28, 1997, the value of the investment would have grown to $15,992
- - a 59.92% increase on the initial investment. For comparison, look at how
the S&P 500 did over the same period. With dividends and capital gains, if
any, reinvested, the same $10,000 investment would have grown to $30,323 -
a 203.23% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1997
% OF FUND'S
INVESTMENTS
Browning-Ferris Industries, Inc. 6.4
WMX Technologies, Inc. 6.1
USA Waste Services, Inc. 5.4
United Waste Systems, Inc. 4.0
Ogden Corp. 3.5
Safety Kleen Corp. 3.3
Thermo Electron Corp. 3.2
Allied Waste Industries, Inc. 3.0
Harsco Corp. 2.7
Wheelabrator Technologies, Inc. 2.6
TOP INDUSTRIES AS OF FEBRUARY 28, 1997
Refuse Systems 31.0%
Pollution Equipment &
Design 10.7%
Sanitary Services 10.4%
Medical Technology 3.3%
Service Industry
Machinery 3.3%
All Others 41.3% *
Row: 1, Col: 1, Value: 41.3
Row: 1, Col: 2, Value: 3.3
Row: 1, Col: 3, Value: 3.3
Row: 1, Col: 4, Value: 10.4
Row: 1, Col: 5, Value: 10.7
Row: 1, Col: 6, Value: 31.0
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S 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. For the 12 months that ended February 28, 1997, the fund had a total
return of 16.93%. During the same 12-month period, the Standard & Poor's
500 Index returned 26.16%.
Q. WHAT WERE THE MAIN FACTORS THAT DROVE STOCK PERFORMANCE IN THE SECTOR?
A. The two large-capitalization solid waste companies - Browning-Ferris
Industries and WMX Technologies, the fund's two largest holdings -
struggled through the course of the year. Both companies reached a stage
where they couldn't grow as rapidly as they had previously and were slow to
adapt to new circumstances. More recently, both companies have started to
divest themselves of underperforming assets and to raise prices, in an
attempt to respond to the new slower growth phase of their business.
Another negative factor that particularly affected Browning-Ferris was a
drop in the price of recycled paper fiber.
Q. DOES THAT MEAN THAT ALL SOLID WASTE COMPANIES STRUGGLED?
A. Not at all. The mid-sized solid waste companies performed quite well, as
they sought to acquire other companies' operations. As a matter of fact,
two of the fund's best performers during the past six months, USA Waste
Services and United Waste Systems, are mid-capitalization solid waste
companies. The two of them followed different strategies to success. USA
Waste has pursued an urban strategy, aiming to be the top or second player
in urban marketplaces with fully integrated waste collection operations.
The company has become the third largest solid waste firm in the U.S.,
establishing a national presence. United Waste, on the other hand, has
focused more on small marketplaces in rural areas, trying to win a dominant
market share and asking higher prices for its services.
Q. SOLID WASTE COMPANIES COMPRISE THE FUND'S LARGEST INDUSTRY WEIGHTING.
WHAT OTHER THEMES DID YOU PURSUE?
A. I positioned the fund to take advantage of opportunities in the water
industry. Water is becoming a more scarce commodity for both consumption
and industrial applications. In fact, in the U.S. we use about 10 times
more water each day for industrial use than for human consumption. I've
invested the fund in water supply companies and firms that make mechanical
separation technology and membranes for water clean-up, such as Ionics and
Memtec. On the whole, water stocks have become expensive, so I've been
selective in this area by remaining sensitive to the stocks' valuations.
Q. YOU MENTIONED SOME STOCKS THAT PERFORMED WELL FOR THE FUND. WHICH STOCKS
PROVED TO BE DISAPPOINTMENTS?
A. Beyond the large-cap solid waste companies I talked about earlier, I'd
mention two others. IMCO Recycling, an aluminum recycler, suffered when the
price of aluminum fell. The commodity's price has since stabilized and
moved up a bit, so the stock has recovered somewhat. Thermo Fibertek, a
company that makes blades that shave the sides of paper when it is
manufactured and placed on spindles, faltered when paper production rates
went down. The company also is a paper recycler, and struggled when
recycled paper demand and prices fell.
Q. WHAT ABOUT HAZARDOUS WASTE COLLECTION? IT APPEARS YOU'VE CONTINUED TO
DE-EMPHASIZE THAT GROUP.
A. Yes, I've avoided those stocks because there is too much industry
capacity to treat today's hazardous waste stream, which is diminishing over
time largely because commercial enterprises have re-engineered their
processes to produce less hazardous waste.
Q. WHAT'S YOUR OUTLOOK FOR 1997?
A. I believe it has the potential to be a watershed year for the group,
especially the solid waste industry that has become the most important
group in the sector. The major players such as WMX and Browning-Ferris
should see higher rates of return as they divest underperforming assets,
raise prices and improve their operations. On the other side of this
equation, the mid-cap solid waste companies should benefit from integrating
the acquisitions they've been making. I see the solid waste industry
becoming healthier as we see the solid waste operators nationwide
integrating their operations, improving returns and benefiting from better
pricing.
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 February 28, 1997, more than
$32 million
MANAGER: Robert Ewing, since 1996;
manager, Fidelity Select Energy Service
Portfolio, since November 1996; joined
Fidelity in 1990
(checkmark)
ENVIRONMENTAL SERVICES PORTFOLIO
INVESTMENTS FEBRUARY 28, 1997
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 92.7%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 2.7%
ORDNANCE - 2.7%
Harsco Corp. 25,200 $ 907,200
CHEMICALS & PLASTICS - 4.1%
ADHESIVES & SEALANTS - 2.1%
Nalco Chemical Co. 19,000 698,254
CHEMICALS - 2.0%
Betz Dearborn, Inc. 10,000 648,750
TOTAL CHEMICALS & PLASTICS 1,347,004
CONSTRUCTION - 0.8%
HEAVY CONSTRUCTION - 0.8%
Emcor Group, Inc. (a) 15,000 251,250
DRUGS & PHARMACEUTICALS - 2.7%
COMMERCIAL LABORATORY RESEARCH - 2.7%
Energy Biosystems Corp. (a) 24,900 168,075
Thermotrex Corp. (a) 26,600 711,550
879,625
EDUCATIONAL SERVICES - 0.5%
DATA PROCESSING SCHOOLS - 0.5%
New Horizons Worldwide, Inc. (a) 15,000 165,000
ELECTRONIC INSTRUMENTS - 5.6%
INDUSTRIAL MEASUREMENT INSTRUMENTS - 1.7%
TSI, Inc. 59,300 570,763
Thermedics Detection, Inc. (rights) (a) 3,500 1,094
571,857
LABORATORY & RESEARCH EQUIPMENT - 0.7%
Microfluidics International Corp. (a) 86,400 226,800
LABORATORY ANALYTICAL INSTRUMENTS - 3.2%
Thermo Electron Corp. 30,950 1,056,169
TOTAL ELECTRONIC INSTRUMENTS 1,854,826
ENERGY SERVICES - 2.2%
OIL & GAS SERVICES - 2.2%
Newpark Resources, Inc. (a) 12,400 564,200
Serv-Tech, Inc. (a) 26,600 149,625
713,825
ENGINEERING - 2.5%
ARCHITECTS & ENGINEERS - 2.5%
Fluor Corp. 10,600 642,625
Harding Lawson Associates
Group, Inc. (a) 27,900 191,813
834,438
HOUSEHOLD PRODUCTS - 2.1%
MANUFACTURED PRODUCTS - 2.1%
Memtec Ltd. sponsored ADR 35,600 709,775
INDUSTRIAL MACHINERY & EQUIPMENT - 5.9%
SERVICE INDUSTRY MACHINERY - 3.3%
Ionics, Inc. (a) 14,500 715,938
Trojan Technologies Corp. (a) 25,300 389,259
1,105,197
SPECIAL INDUSTRIAL MACHINERY - 2.6%
Thermo Fibergen, Inc. (a) 2,000 21,000
Thermo Fibergen, Inc. (rights) (a) 2,000 5,750
Thermo Fibertek, Inc. (a) 68,275 819,300
846,050
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 1,951,247
SHARES VALUE (NOTE 1)
MEDICAL EQUIPMENT & SUPPLIES - 3.3%
MEDICAL TECHNOLOGY - 3.3%
Pall Corp. 17,700 $ 384,975
Thermedics, Inc. (a) 35,000 726,250
1,111,225
METALS & MINING - 1.9%
SECONDARY NONFERROUS SMELTING - 1.9%
IMCO Recycling, Inc. 40,800 642,600
POLLUTION CONTROL - 54.7%
HAZARDOUS WASTE MANAGEMENT - 2.6%
GNI Group, Inc. (a) 35,000 214,375
International Technology Corp. (a) 25,000 215,625
Molten Metal Technology, Inc. (a) 11,500 130,813
TRC Companies, Inc. (a) 74,900 308,963
869,776
POLLUTION EQUIPMENT & DESIGN - 10.7%
Calgon Carbon Corp. 12,000 135,000
Dames & Moore, Inc. 20,000 275,000
Ogden Corp. 57,400 1,169,525
Sevenson Environmental Services, Inc. 25,300 461,725
TETRA Technologies, Inc. (a) 6,900 163,013
Thermo Instrument Systems, Inc. (a) 23,200 788,800
Waste Management International
PLC sponsored ADR (a) 72,000 540,000
3,533,063
REFUSE SYSTEMS - 31.0%
Allied Waste Industries, Inc. (a) 115,300 1,008,875
American Disposal Services, Inc. 5,000 83,750
Browning-Ferris Industries, Inc. 67,500 2,117,813
Eastern Environmental Services, Inc. (a) 30,000 408,750
GTS Duratek, Inc. (a) 25,500 309,188
Laidlaw, Inc. Class B 62,000 858,751
Republic Industries, Inc. (a) 18,280 648,940
Rollins Environmental Services, Inc. (a) 75,000 206,250
Stericycle, Inc. 15,000 140,625
Superior Services, Inc. (a) 11,300 245,775
TransAmerican Waste Industries, Inc. (a) 50,000 59,375
United Waste Systems, Inc. (a) 37,000 1,332,000
WMX Technologies, Inc. 64,000 2,024,000
Wheelabrator Technologies, Inc. 60,300 859,275
10,303,367
SANITARY SERVICES - 10.4%
Philips Environmental, Inc. 35,000 575,595
Safety Kleen Corp. 60,100 1,081,800
USA Waste Services, Inc. (a) 50,040 1,801,440
3,458,835
TOTAL POLLUTION CONTROL 18,165,041
REAL ESTATE - 0.6%
REAL ESTATE, GENERAL - 0.6%
Cadiz Land Inc. (a) 37,600 188,000
WATER - 3.1%
WATER SUPPLY - 3.1%
American Water Works, Inc. 25,000 584,375
United Water Resources, Inc. 25,000 446,875
1,031,250
TOTAL COMMON STOCKS
(Cost $31,903,671) 30,752,306
CASH EQUIVALENTS - 7.3%
SHARES VALUE (NOTE 1)
Taxable Central Cash Fund (b)
(Cost $2,439,265) 2,439,265 $ 2,439,265
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $34,342,936) $ 33,191,571
LEGEND
3. Non-income producing
4. At period end, the seven-day yield on the Taxable Central Cash Fund was
5.31%. The yield refers to the income earned by investing in the fund over
the seven-day period, expressed as an annual percentage.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $98,093,724 and $92,018,243, respectively (see Note 3 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $42,243 for the period (see
Note 4 of Notes to Financial Statements).
The fund participated in the bank borrowing program. The maximum loan and
average daily balances during the period for which loans were outstanding
amounted to $3,698,000 and $2,517,750, respectively. The weighted average
interest rate was 5.7% (see Note 7 of Notes to Financial Statements).
INCOME TAX INFORMATION
At February 28, 1997, the aggregate cost of investment securities for
income tax purposes was $34,403,056. Net unrealized depreciation aggregated
$1,211,485, of which $2,439,648 related to appreciated investment
securities and $3,651,133 related to depreciated investment securities.
At February 28, 1997, the fund had a capital loss carryforward of
approximately $797,000, which will expire on February 28, 2005.
A total of 100% of the dividends distributed during the fiscal year
qualifies for the dividends-received deduction for corporate shareholders
(unaudited).
The fund will notify shareholders in January 1998 of the applicable
percentage for use in preparing 1997 income tax returns.
ENVIRONMENTAL SERVICES PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1997
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS
Investment in securities, at value $ 33,191,571
(cost $34,342,936) - See accompanying schedule
Receivable for fund shares sold 19,815
Dividends receivable 17,620
Interest receivable 18,345
Redemption fees receivable 245
Other receivables 10,141
TOTAL ASSETS 33,257,737
LIABILITIES
Payable for fund shares redeemed $ 662,287
Accrued management fee 17,344
Other payables and accrued expenses 52,669
TOTAL LIABILITIES 732,300
NET ASSETS $ 32,525,437
Net Assets consist of:
Paid in capital $ 34,522,967
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions (846,231
)
Net unrealized appreciation (depreciation) on investments (1,151,299
and assets and liabilities in )
foreign currencies
NET ASSETS, for 2,242,478 $ 32,525,437
shares outstanding
NET ASSET VALUE and redemption price per share ($32,525,437 (divided by) 2,242,478 shares) $14.50
Maximum offering price per share (100/97.00 of $14.50) $14.95
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1997
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME $ 394,229
Dividends
Interest 238,669
TOTAL INCOME 632,898
EXPENSES
Management fee $ 252,081
Transfer agent fees 512,668
Accounting fees and expenses 64,394
Non-interested trustees' compensation 164
Custodian fees and expenses 15,760
Registration fees 28,338
Audit 27,353
Legal 624
Interest 1,586
Miscellaneous 1,783
Total expenses before reductions 904,751
Expense reductions (27,446 877,305
)
NET INVESTMENT INCOME (LOSS) (244,407
)
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities (599,664
)
Foreign currency transactions (361 (600,025
) )
Change in net unrealized appreciation (depreciation) on:
Investment securities (1,588,793
)
Assets and liabilities in (746 (1,589,539
foreign currencies ) )
NET GAIN (LOSS) (2,189,564
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ (2,433,971
)
OTHER INFORMATION $ 177,009
Sales charges paid to FDC
Deferred sales charges withheld $ 9,944
by FDC
Exchange fees withheld by FSC $ 37,545
Expense reductions $ 26,169
Directed brokerage arrangements
Custodian interest credits 1,277
$ 27,446
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE YEAR ENDED YEAR ENDED
(DECREASE) IN FEBRUARY 28, FEBRUARY 29,
NET ASSETS 1997 1996
Operations $ (244,407 $ (455,922
Net ) )
investment
income (loss)
Net realized (600,025 5,167,156
gain (loss) )
Change in (1,589,539 2,838,058
net )
unrealized
appreciation
(depreciation
)
NET INCREASE (2,433,971 7,549,292
(DECREASE) )
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
Distributions to - (1,461,704
shareholders )
From net
realized
gains
In excess of (48,255 -
net realized )
gain
TOTAL (48,255 (1,461,704
DISTRIBUTION ) )
S
Share 138,035,351 22,448,123
transactions
Net proceeds
from sales of
shares
Reinvestmen 47,653 1,440,232
t of
distributions
Cost of (131,078,192 (33,702,230
shares ) )
redeemed
Paid in 415,631 43,195
capital
portion of
redemption
fees
NET INCREASE 7,420,443 (9,770,680
(DECREASE) )
IN NET
ASSETS
RESULTING
FROM SHARE
TRANSACTIO
NS
TOTAL 4,938,217 (3,683,092
INCREASE )
(DECREASE)
IN NET ASSETS
NET ASSETS
Beginning of 27,587,220 31,270,312
period
End of period $ 32,525,437 $ 27,587,220
OTHER
INFORMATION
Shares
Sold 9,698,891 1,846,010
Issued in 3,673 120,119
reinvestment
of
distributions
Redeemed (9,681,633 (2,790,218
) )
Net increase 20,931 (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>
YEAR ENDED YEAR ENDED YEARS ENDED FEBRUARY 28, TEN MONTHS
FEBRUARY 28, FEBRUARY 29, ENDED
FEBRUARY 28,
SELECTED 1997 1996 1995 1994 1993
PER-SHARE
DATA D
</TABLE>
Net asset $ 12.42 $ 10.27 $ 11.93 $ 11.36 $ 11.39
value,
beginning of
period
Income from
Investment
Operations
Net (.08) (.17) (.14) (.11) (.06)
investment
income (loss)
Net realized 2.04 G 2.95 (1.53) .67 .42
and
unrealized
gain (loss)
Total from 1.96 2.78 (1.67) .56 .36
investment
operations
Less
Distributions
From net - (.65) - - (.39)
realized gain
In excess of (.02) - - - -
net realized
gain
Redemption .14 .02 .01 .01 -
fees added to
paid in
capital
Net asset $ 14.50 $ 12.42 $ 10.27 $ 11.93 $ 11.36
value, end of
period
TOTAL 16.93% 27.49% (13.91)% 5.02% 3.34%
RETURN B, C
RATIOS AND
SUPPLEMENT
AL DATA
Net assets, $ 32,525 $ 27,587 $ 31,270 $ 65,956 $ 65,913
end of period
(000 omitted)
Ratio of 2.18% 2.36% 2.04% 2.07% 1.99% A
expenses to
average net
assets
Ratio of 2.11% E 2.32% E 2.01% E 2.03% E 1.99% A
expenses to
average net
assets after
expense
reductions
Ratio of net (.59)% (1.43)% (1.32)% (1.02)% (.70)%
investment A
income (loss)
to average
net assets
Portfolio 252% 138% 82% 191% 176% A
turnover rate
Average $ .0348
commission
rate F
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
A ANNUALIZED B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 8 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 8 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. You can
look at the total percentage change in value, the average annual percentage
change, or the growth of a hypothetical $10,000 investment. Total return
reflects the change in the value of an investment, assuming reinvestment of
the fund's dividend income and capital gains (the profits earned upon the
sale of 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 fund expenses, the past five year and past 10 year total
returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 28, 1997 YEAR YEARS YEARS
INDUSTRIAL EQUIPMENT 18.25% 133.66% 164.26%
INDUSTRIAL EQUIPMENT 14.70% 126.65% 156.33%
(INCL. 3% SALES CHARGE)
S&P 500 26.16% 118.75% 276.74%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one, five or 10 years. You can compare
the fund's returns 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, and excludes the effect of sales
charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 28, 1997 YEAR YEARS YEARS
INDUSTRIAL EQUIPMENT 18.25% 18.50% 10.21%
INDUSTRIAL EQUIPMENT 14.70% 17.78% 9.87%
(INCL. 3% SALES CHARGE)
S&P 500 26.16% 16.94% 14.16%
AVERAGE ANNUAL RETURNS take the fund's 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
1987/02/28 9700.00 10000.00
1987/03/31 9530.98 10289.00
1987/04/30 9369.32 10197.43
1987/05/31 9361.97 10286.15
1987/06/30 9626.52 10805.60
1987/07/31 10214.39 11353.44
1987/08/31 10670.00 11776.92
1987/09/30 10919.85 11519.01
1987/10/31 6635.68 9037.81
1987/11/30 6334.39 8293.10
1987/12/31 7088.94 8924.20
1988/01/31 6960.73 9299.91
1988/02/29 7594.21 9733.29
1988/03/31 7707.34 9432.53
1988/04/30 7933.58 9537.23
1988/05/31 7888.33 9620.20
1988/06/30 8446.40 10061.77
1988/07/31 8001.45 10023.54
1988/08/31 7277.47 9682.74
1988/09/30 7413.22 10095.22
1988/10/31 7292.56 10375.87
1988/11/30 7058.77 10227.49
1988/12/31 7435.84 10406.47
1989/01/31 7978.83 11168.23
1989/02/28 7662.09 10890.14
1989/03/31 7775.21 11143.88
1989/04/30 8333.27 11722.25
1989/05/31 8785.76 12197.00
1989/06/30 8408.69 12127.48
1989/07/31 8944.13 13222.59
1989/08/31 9110.04 13481.75
1989/09/30 8981.84 13426.47
1989/10/31 8386.06 13114.98
1989/11/30 8619.85 13382.52
1989/12/31 8770.68 13703.71
1990/01/31 8476.56 12784.19
1990/02/28 8906.42 12949.10
1990/03/31 9434.32 13292.25
1990/04/30 9358.91 12959.95
1990/05/31 10226.17 14223.54
1990/06/30 10044.42 14126.82
1990/07/31 9854.61 14081.62
1990/08/31 8229.89 12808.64
1990/09/30 7113.85 12184.86
1990/10/31 6924.04 12132.46
1990/11/30 7151.81 12916.22
1990/12/31 7409.94 13276.58
1991/01/31 8199.52 13855.44
1991/02/28 8973.92 14846.11
1991/03/31 8898.00 15205.38
1991/04/30 8806.90 15241.87
1991/05/31 9178.91 15900.32
1991/06/30 8882.58 15172.09
1991/07/31 8958.57 15879.11
1991/08/31 9095.34 16255.44
1991/09/30 9308.10 15983.98
1991/10/31 9254.91 16198.16
1991/11/30 8814.20 15545.38
1991/12/31 9398.80 17323.77
1992/01/31 10242.08 17001.55
1992/02/29 10970.37 17222.57
1992/03/31 10648.39 16886.73
1992/04/30 10648.39 17383.20
1992/05/31 10732.72 17468.37
1992/06/30 10073.43 17208.09
1992/07/31 10165.42 17911.90
1992/08/31 9636.45 17544.71
1992/09/30 9835.77 17751.74
1992/10/31 9797.44 17813.87
1992/11/30 10265.08 18421.32
1992/12/31 10464.40 18647.90
1993/01/31 10955.04 18804.55
1993/02/28 11530.01 19060.29
1993/03/31 11737.00 19462.46
1993/04/30 12273.99 18991.47
1993/05/31 12887.69 19500.44
1993/06/30 13056.46 19556.99
1993/07/31 13240.57 19478.76
1993/08/31 14145.77 20217.01
1993/09/30 13984.68 20061.34
1993/10/31 14452.62 20476.61
1993/11/30 14437.28 20282.08
1993/12/31 14998.52 20527.49
1994/01/31 15703.78 21225.43
1994/02/28 16150.44 20650.22
1994/03/31 15217.93 19749.87
1994/04/30 15080.20 20002.67
1994/05/31 14771.95 20330.71
1994/06/30 14013.20 19832.61
1994/07/31 14677.11 20483.12
1994/08/31 15720.39 21322.93
1994/09/30 15767.82 20800.52
1994/10/31 15965.41 21268.53
1994/11/30 15190.85 20493.93
1994/12/31 15467.48 20797.85
1995/01/31 15380.54 21337.14
1995/02/28 15838.95 22168.65
1995/03/31 17150.96 22822.85
1995/04/30 17957.34 23494.98
1995/05/31 18321.07 24434.07
1995/06/30 19016.91 25001.68
1995/07/31 20803.94 25830.73
1995/08/31 20400.67 25895.57
1995/09/30 19467.62 26988.36
1995/10/31 19428.08 26892.01
1995/11/30 20092.29 28072.57
1995/12/31 19769.62 28613.25
1996/01/31 20563.86 29587.24
1996/02/29 21677.52 29861.52
1996/03/31 21832.91 30149.08
1996/04/30 22234.04 30593.48
1996/05/31 22395.62 31382.49
1996/06/30 22296.88 31502.05
1996/07/31 21183.83 30110.29
1996/08/31 22099.40 30745.32
1996/09/30 23149.62 32475.67
1996/10/31 23006.00 33371.34
1996/11/30 24873.05 35893.88
1996/12/31 25050.17 35182.83
1997/01/31 25944.46 37381.05
1997/02/28 25632.96 37674.12
Let's say hypothetically that $10,000 was invested in Fidelity Select
Industrial Equipment Portfolio on February 28, 1987, and the current
maximum 3% sales charge was paid. As the chart shows, by February 28, 1997,
the value of the investment would have grown to $25,633 - a 156.33%
increase on the initial investment. For comparison, look at how the S&P 500
did over the same period. With dividends and capital gains, if any,
reinvested, the same $10,000 investment would have grown to $37,674 - a
276.74% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1997
% OF FUND'S
INVESTMENTS
General Electric Co. 3.6
Pitney Bowes, Inc. 3.4
Eaton Corp. 3.0
New Holland NV 3.0
Boeing Co. 2.9
Case Corp. 2.7
Westinghouse Electric Corp. 2.5
Illinois Tool Works, Inc. 2.5
Emerson Electric Co. 2.5
Baldor Electric Co. 2.4
TOP INDUSTRIES AS OF FEBRUARY 28, 1997
Row: 1, Col: 1, Value: 57.9
Row: 1, Col: 2, Value: 5.2
Row: 1, Col: 3, Value: 5.7
Row: 1, Col: 4, Value: 9.6
Row: 1, Col: 5, Value: 10.6
Row: 1, Col: 6, Value: 11.0
Electrical Machinery 11.0%
General Industrial Machinery 10.6%
Farm Machinery & Equipment 9.6%
Electrical, Industrial Apparatus 5.7%
Office Automation 5.2%
All Others 57.9% *
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
INDUSTRIAL EQUIPMENT PORTFOLIO
FUND TALK: THE MANAGERS' OVERVIEW
NOTE TO SHAREHOLDERS: Effective February 14, 1997, Minerva Butler became
Portfolio Manager of Select Industrial Equipment Portfolio. The following
is in an interview with Paul Antico, who managed the fund during most of
the period covered by this report, and Minerva Butler, who discusses her
outlook.
Q. PAUL, HOW DID THE FUND PERFORM?
P.A. For the 12-month period ending February 28, 1997, the fund returned
18.25%, while the Standard & Poor's 500 Index returned 26.16% for the same
time period.
Q. WHAT WAS THE INVESTING ENVIRONMENT LIKE DURING THE PERIOD?
P.A. This was not the best environment for investing in capital equipment
stocks. Looking internationally, Europe was weak, and Brazil and Mexico
were weakening. Domestically, margins on U.S. business were high already,
so there wasn't margin growth here offsetting weakness in world markets.
The U.S. market was growing, but very modestly. In all, it wasn't the best
investing climate for cyclical stocks. The best environment for investing
in cyclical stocks would be when margins are growing dramatically and when
we're emerging from a recession, not in the late stages of an expansion.
Q. WHAT INVESTMENT STRATEGIES HELPED THE FUND'S PERFORMANCE?
P.A. Given the investing backdrop, I'm very pleased with the fund's
performance. It was an uncertain environment, but one where my investment
mission was made crystal clear. I only invested in capital equipment
companies with margin improvement potential and strong potential cash
flows, or in electrical equipment companies, which proved to be more stable
industries. Electrical equipment companies included General Electric,
Honeywell and Baldor Electric, companies which were not very sensitive to
the economy. Demand for their products has been very steady regardless of
where we have been in the economic cycle.
Q. HOW DID YOUR TOP HOLDINGS PERFORM?
P.A. The fund's third largest holding at the end of the period, Eaton
Corp., owns trucking and electrical equipment. Trucking was in a slump last
year, but we saw signs in the last few months of the year that the market
was improving, so I purchased the stock. The fund profited from the
investment, and I had the added benefit of owning the company's electrical
equipment side of the business that was the more stable part of the sector
in this environment. Another holding was New Holland, an agricultural
equipment company owned primarily by Fiat. It is the fourth largest of four
major agricultural equipment companies and, of the four, I believed it to
have the best global mix of business. It was up nicely over the last
several months of the period. Illinois Tool Works and Emerson Electric are
both very solid companies. For 20 years, Illinois Tool Works' year-end
stock price has been higher than the previous year-end, and its stock rose
by nearly a third over the period. Emerson also has an impressively
consistent long-term track record; during the period its stock was up by
more than 25%.
Q. WERE THERE ANY DISAPPOINTMENTS?
P.A. The biggest disappointment was Stewart & Stevenson Services. This
company buys General Electric aircraft engines and repackages them for
electric generation equipment. It sells mostly to developing countries and,
during the period, potential customers couldn't get financing, so demand
slowed dramatically.
Q. GOING FORWARD, MINERVA, WHAT'S YOUR OUTLOOK?
M.B. Fidelity's team of analysts call hundreds of companies and we share
ideas, giving me exposure to hundreds of companies each year. At this stage
of the cycle, I will focus on those companies that show good steady growth
regardless of the economic cycle, and those companies with strong demand
for their products. Industrial equipment companies typically do not offer
high revenue growth, making margin expansion important to good earnings
growth.
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: 510
TRADING SYMBOL: FSCGX
SIZE: as of February 28, 1997, more than
$102 million
MANAGER: Minerva Butler, since February
1997; manager, Fidelity Select Developing
Communications Portfolio, August 1996-
February 1997; equity analyst covering
cellular, paging, cable and wireless cable
industries, since 1995; joined Fidelity in 1995
(checkmark)
INDUSTRIAL EQUIPMENT PORTFOLIO
INVESTMENTS FEBRUARY 28, 1997
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 88.2%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 5.1%
AIRCRAFT - 2.9%
Boeing Co. 31,700 $ 3,225,475
AIRCRAFT & PARTS - 1.0%
Sundstrand Corp. 25,000 1,090,625
AIRCRAFT EQUIPMENT - 1.2%
BE Aerospace, Inc. (a) 55,000 1,333,750
TOTAL AEROSPACE & DEFENSE 5,649,850
AUTOS, TIRES, & ACCESSORIES - 5.5%
AUTO & TRUCK PARTS - 5.1%
Boyds Wheels, Inc. (a) 27,600 196,650
Cummins Engine Co., Inc. 20,000 1,012,500
Eaton Corp. 45,800 3,286,150
Snap-on Tools Corp. 30,100 1,170,138
5,665,438
MOTOR VEHICLES & CAR BODIES - 0.4%
PACCAR, Inc. 7,000 459,375
TOTAL AUTOS, TIRES, & ACCESSORIES 6,124,813
BROADCASTING - 0.5%
CABLE TV OPERATORS - 0.5%
People's Choice TV Corp. 130,000 503,750
BUILDING MATERIALS - 1.0%
SCREW MACHINE PRODUCTS - 1.0%
Fastenal Co. 31,100 1,127,375
CHEMICALS & PLASTICS - 1.2%
PLASTIC FOAM PRODUCTS - 1.2%
Foamex International, Inc. (a) 73,600 1,370,800
COMMUNICATIONS EQUIPMENT - 2.0%
DATACOMMUNICATIONS EQUIPMENT - 0.8%
Dynatech Corp. 30,000 840,000
TELEPHONE EQUIPMENT - 1.2%
Tellabs, Inc. (a) 19,800 789,525
Viasat, Inc. 60,000 600,000
1,389,525
TOTAL COMMUNICATIONS EQUIPMENT 2,229,525
COMPUTERS & OFFICE EQUIPMENT - 8.0%
COMPUTER PERIPHERALS - 2.8%
Accent Color Sciences, Inc. 70,000 665,000
SCI Systems, Inc. (a) 20,000 1,070,000
Symbol Technologies, Inc. (a) 28,000 1,407,000
3,142,000
OFFICE AUTOMATION - 5.2%
FileNet Corp. 15,000 285,000
General Binding Corp. 54,900 1,722,488
Pitney Bowes, Inc. 61,200 3,802,050
5,809,538
TOTAL COMPUTERS & OFFICE EQUIPMENT 8,951,538
CONGLOMERATES - 5.1%
American Standard Companies, Inc. (a) 57,900 2,605,500
Kysor Industrial Corp. 15,300 654,068
Tyco International Ltd. 20,000 1,180,000
United Technologies Corp. 17,000 1,279,250
5,718,818
SHARES VALUE (NOTE 1)
DEFENSE ELECTRONICS - 3.0%
BEI Electronics, Inc. 1,700 $ 19,338
Doncasters PLC sponsored ADR 1,000 19,875
Ducommun, Inc. (a) 56,400 1,353,600
NovAtel, Inc. 133,000 997,500
Raytheon Co. 20,000 942,500
3,332,813
ELECTRICAL EQUIPMENT - 22.5%
ELECTRICAL EQUIPMENT - 0.4%
BMC Industries, Inc. 5,800 166,025
Vicor Corp. 16,000 262,000
428,025
ELECTRICAL EQUIPMENT - WHOLESALE - 0.4%
Grainger (W.W.), Inc. 5,900 467,575
ELECTRICAL MACHINERY - 11.0%
Alcatel Alsthom sponsored ADR 60,000 1,230,000
Emerson Electric Co. 28,100 2,781,900
General Electric Co. 39,100 4,022,413
General Signal Corp. 15,000 654,375
Honeywell, Inc. 10,000 711,250
Westinghouse Electric Corp. 164,300 2,834,175
12,234,113
ELECTRICAL, INDUSTRIAL APPARATUS - 5.7%
AMETEK, Inc. 109,800 2,360,700
Baldor Electric Co. 108,300 2,680,425
Hubbell, Inc. Class B 30,000 1,271,250
6,312,375
FLUID METERS - 0.6%
Roper Industries, Inc. 17,000 684,250
RESIDENTIAL ELECRIC LIGHTING - 1.5%
Holophane Corp. (a) 78,600 1,699,725
TV & RADIO COMMUNICATION EQUIPMENT - 2.9%
California Amplifier, Inc. 29,300 157,488
General Instrument Corp. 40,000 950,000
Ortel Corp. 50,000 650,000
Pinnacle Systems 20,000 265,000
Scientific-Atlanta, Inc. 69,500 1,164,125
3,186,613
TOTAL ELECTRICAL EQUIPMENT 25,012,676
ELECTRONIC INSTRUMENTS - 1.4%
SEMI-CONDUCTOR CAPITAL EQUIPMENT - 1.4%
Applied Materials, Inc. (a) 30,300 1,533,938
ELECTRONICS - 3.8%
CONNECTORS - 0.9%
Thomas & Betts Corp. 21,000 937,125
ELECTRONIC CAPACITORS - 0.0%
Maxwell Technologies, Inc. 1,200 27,600
ELECTRONIC PARTS - WHOLESALE - 0.6%
Zero Corp. 26,900 591,800
ELECTRONICS & ELECRONIC COMPONENTS - 2.1%
Alpine Group, Inc. 33,300 278,888
Sanmina Corp. (a) 15,750 728,438
Solectron Corp. (a) 25,700 1,358,888
2,366,214
PRINTED CIRCUIT BOARDS - 0.2%
Elexsys International, Inc. (a) 15,000 253,125
TOTAL ELECTRONICS 4,175,864
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
ENGINEERING - 0.9%
ARCHITECTS & ENGINEERS - 0.9%
EG&G, Inc. 23,000 $ 500,250
Fluor Corp. 9,000 545,625
1,045,875
INDUSTRIAL MACHINERY & EQUIPMENT - 23.8%
BALL & ROLLER BEARINGS - 0.8%
Kaydon Corp. 20,900 903,925
CONSTRUCTION EQUIPMENT - 1.0%
JLG Industries, Inc. 60,000 1,110,000
ENGINES & TURBINES - 0.7%
Stewart & Stevenson Services, Inc. 31,100 812,488
FARM MACHINERY & EQUIPMENT - 9.6%
AGCO Corp. 40,000 1,135,000
Case Corp. 57,400 2,977,625
Deere & Co. 40,000 1,705,000
Lindsay Manufacturing Co. 33,900 1,576,350
New Holland NV (a) 142,000 3,283,750
10,677,725
GENERAL INDUSTRIAL MACHINERY - 10.6%
Cooper Industries, Inc. 12,500 553,125
Harnischfeger Industries, Inc. 53,417 2,343,671
Illinois Tool Works, Inc. 33,400 2,818,125
Ingersoll-Rand Co. 46,700 2,218,250
Manitowoc Co., Inc. 16,000 538,000
Regal-Beloit Corp. 64,400 1,440,950
TRINOVA Corp. 50,000 1,856,250
11,768,371
PUMPING EQUIPMENT - 0.9%
IDEX Corp. 39,000 989,625
SPECIAL INDUSTRIAL MACHINERY - 0.2%
ATS Automation 15,000 257,647
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 26,519,781
IRON & STEEL - 0.8%
IRON & STEEL FOUNDRIES - 0.4%
Steel of West Virginia, Inc. (a) 70,000 446,250
METAL FORGINGS & STAMPINGS - 0.4%
TriMas Corp. 17,100 416,813
TOTAL IRON & STEEL 863,063
METALS & MINING - 1.7%
NONFERROUS WIRE - 1.7%
Belden, Inc. 20,000 712,500
Superior Telecom, Inc. (a) 46,700 1,173,338
1,885,838
PAPER & FOREST PRODUCTS - 1.4%
ENVELOPES - 1.2%
Mail-Well, Inc. (a) 69,300 1,377,338
PAPER - 0.2%
Albany International Corp. Class A 10,000 217,500
TOTAL PAPER & FOREST PRODUCTS 1,594,838
PHOTOGRAPHIC EQUIPMENT - 0.5%
Imation Corp. (a) 20,100 535,163
TOTAL COMMON STOCKS
(Cost $92,926,287) 98,176,318
CASH EQUIVALENTS - 11.8%
SHARES VALUE (NOTE 1)
Taxable Central Cash Fund (b)
(Cost $13,078,852) 13,078,852 $ 13,078,852
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $106,005,139) $ 111,255,170
LEGEND
1. Non-income producing
2. At period end, the seven-day yield on the Taxable Central Cash Fund was
5.31%. The yield refers to the income earned by investing in the fund over
the seven-day period, expressed as an annual percentage.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $225,911,170 and $259,952,614, respectively (see Note 3 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $79,440 for the period (see
Note 4 of Notes to Financial Statements).
The fund participated in the bank borrowing program. The maximum loan and
average daily balances during the period for which loans were outstanding
amounted to $2,514,000 and $2,331,750, respectively. The weighted average
interest rate was 5.7% (see Note 7 of Notes to Financial Statements).
INCOME TAX INFORMATION
At February 28, 1997, the aggregate cost of investment securities for
income tax purposes was $106,120,916. Net unrealized appreciation
aggregated $5,134,254, of which $6,888,094 related to appreciated
investment securities and $1,753,840 related to depreciated investment
securities.
The fund hereby designates approximately $6,195,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 24% of the dividends distributed during the fiscal year
qualifies for the dividends-received deduction for corporate shareholders
(unaudited).
The fund will notify shareholders in January 1998 of the applicable
percentage for use in preparing 1997 income tax returns.
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 $37,000 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
FEBRUARY 28, 1997
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS
Investment in securities, at value $ 111,255,170
(cost $106,005,139) - See accompanying schedule
Cash 410,700
Receivable for investments sold 744,885
Receivable for fund shares sold 234,025
Dividends receivable 113,190
Interest receivable 72,724
Redemption fees receivable 459
Other receivables 18,463
TOTAL ASSETS 112,849,616
LIABILITIES
Payable for investments purchased $ 8,730,116
Payable for fund shares redeemed 1,114,939
Accrued management fee 55,211
Other payables and accrued expenses 67,067
TOTAL LIABILITIES 9,967,333
NET ASSETS $ 102,882,283
Net Assets consist of:
Paid in capital $ 85,922,659
Undistributed net investment income 126,009
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 11,583,584
Net unrealized appreciation (depreciation) on investments 5,250,031
NET ASSETS, for 4,033,023 $ 102,882,283
shares outstanding
NET ASSET VALUE and redemption price per share ($102,882,283 (divided by) 4,033,023 shares) $25.51
Maximum offering price per share (100/97.00 of $25.51) $26.30
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1997
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME $ 1,180,620
Dividends
Interest 382,473
TOTAL INCOME 1,563,093
EXPENSES
Management fee $ 560,442
Transfer agent fees 651,519
Accounting fees and expenses 93,288
Non-interested trustees' compensation 565
Custodian fees and expenses 20,715
Registration fees 38,023
Audit 27,558
Legal 749
Interest 1,468
Miscellaneous 6,958
Total expenses before reductions 1,401,285
Expense reductions (66,135 1,335,150
)
NET INVESTMENT INCOME 227,943
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 20,826,870
Foreign currency transactions 4,220 20,831,090
Change in net unrealized appreciation (depreciation) on investment securities (7,537,624
)
NET GAIN (LOSS) 13,293,466
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 13,521,409
OTHER INFORMATION $ 252,021
Sales charges paid to FDC
Deferred sales charges withheld $ 2,660
by FDC
Exchange fees withheld by FSC $ 35,115
Expense Reductions $ 64,879
Directed brokerage arrangements
Custodian interest credits 967
Transfer agent interest credits 289
$ 66,135
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE YEAR ENDED YEAR ENDED
(DECREASE) IN FEBRUARY 28, FEBRUARY 29,
NET ASSETS 1997 1996
Operations $ 227,943 $ 191,568
Net
investment
income
Net realized 20,831,090 16,163,635
gain (loss)
Change in (7,537,624 13,213,429
net )
unrealized
appreciation
(depreciation
)
NET INCREASE 13,521,409 29,568,632
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
Distributions to (140,245 (185,403
shareholders ) )
From net
investment
income
From net (13,222,285 (7,003,238
realized gain ) )
TOTAL (13,362,530 (7,188,641
DISTRIBUTION ) )
S
Share 90,579,551 176,105,552
transactions
Net proceeds
from sales of
shares
Reinvestmen 13,206,101 7,099,056
t of
distributions
Cost of (138,841,270 (178,150,788
shares ) )
redeemed
Paid in 259,034 118,239
capital
portion of
redemption
fees
NET INCREASE (34,796,584 5,172,059
(DECREASE) )
IN NET
ASSETS
RESULTING
FROM SHARE
TRANSACTIO
NS
TOTAL (34,637,705 27,552,050
INCREASE )
(DECREASE)
IN NET ASSETS
NET ASSETS
Beginning of 137,519,988 109,967,938
period
End of period $ 102,882,283 $ 137,519,988
(including
undistributed
net investment
income of
$126,009 and
$51,339,
respectively)
OTHER
INFORMATION
Shares
Sold 3,535,843 7,343,923
Issued in 542,236 311,832
reinvestment
of
distributions
Redeemed (5,521,656 (7,667,655
) )
Net increase (1,443,577) (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>
YEAR ENDED YEAR ENDED YEARS ENDED FEBRUARY 28, TEN MONTHS
FEBRUARY 28, FEBRUARY 29, ENDED
FEBRUARY 28,
SELECTED 1997 1996 1995 1994 1993
PER-SHARE
DATA D
</TABLE>
Net asset $ 25.11 $ 20.04 $ 20.61 $ 15.04 $ 13.89
value,
beginning of
period
Income from
Investment
Operations
Net .06 .04 .01 - .02
investment
income
Net realized 4.15 7.10 (.44) 5.92 1.09
and
unrealized
gain (loss)
Total from 4.21 7.14 (.43) 5.92 1.11
investment
operations
Less
Distributions
From net (.04) (.05) (.01) (.01) -
investment
income
From net (3.84) (2.05) (.16) (.40) -
realized gain
Total (3.88) (2.10) (.17) (.41) -
distributions
Redemption .07 .03 .03 .06 .04
fees added to
paid in
capital
Net asset $ 25.51 $ 25.11 $ 20.04 $ 20.61 $ 15.04
value, end of
period
TOTAL 18.25% 36.86% (1.93)% 40.07% 8.28%
RETURN B, C
RATIOS AND
SUPPLEMENT
AL DATA
Net assets, $ 102,882 $ 137,520 $ 109,968 $ 206,012 $ 14,601
end of period
(000 omitted)
Ratio of 1.51% 1.54% 1.80% 1.69% 2.49% A,
expenses to E
average net
assets
Ratio of 1.44% F 1.53% F 1.78% F 1.68% F 2.49% A
expenses to
average net
assets after
expense
reductions
Ratio of net .25% .19% .06% .01% .15% A
investment
income to
average net
assets
Portfolio 261% 115% 131% 95% 407% A
turnover rate
Average $ .0401
commission
rate G
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
A ANNUALIZED B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 8 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 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 8 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. You can
look at the total percentage change in value, the average annual percentage
change, or the growth of a hypothetical $10,000 investment. Total return
reflects the change in the value of an investment, assuming reinvestment of
the fund's dividend income and capital gains (the profits earned upon the
sale of 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 fund expenses, the past 10 year total returns would have
been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 28, 1997 YEAR YEARS YEARS
INDUSTRIAL MATERIALS 12.69% 81.44% 135.13%
INDUSTRIAL MATERIALS 9.31% 76.00% 128.08%
(INCL. 3% SALES CHARGE)
S&P 500 26.16% 118.75% 276.74%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one, five, or 10 years. You can compare
the fund's returns 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, and excludes the effect of sales
charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 28, 1997 YEAR YEARS YEARS
INDUSTRIAL MATERIALS 12.69% 12.65% 8.93%
INDUSTRIAL MATERIALS 9.31% 11.97% 8.59%
(INCL. 3% SALES CHARGE)
S&P 500 26.16% 16.94% 14.16%
AVERAGE ANNUAL RETURNS take the fund's 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
1987/02/28 9700.00 10000.00
1987/03/31 10401.12 10289.00
1987/04/30 10523.99 10197.43
1987/05/31 10256.56 10286.15
1987/06/30 10791.43 10805.60
1987/07/31 11788.90 11353.44
1987/08/31 12193.67 11776.92
1987/09/30 12374.37 11519.01
1987/10/31 7676.15 9037.81
1987/11/30 7640.01 8293.10
1987/12/31 8818.92 8924.20
1988/01/31 8362.39 9299.91
1988/02/29 9347.91 9733.29
1988/03/31 9514.58 9432.53
1988/04/30 9529.07 9537.23
1988/05/31 9297.18 9620.20
1988/06/30 10311.69 10061.77
1988/07/31 9927.62 10023.54
1988/08/31 9391.39 9682.74
1988/09/30 9471.10 10095.22
1988/10/31 9297.18 10375.87
1988/11/30 9210.23 10227.49
1988/12/31 9774.53 10406.47
1989/01/31 10363.80 11168.23
1989/02/28 9914.49 10890.14
1989/03/31 9811.36 11143.88
1989/04/30 10113.36 11722.25
1989/05/31 10245.95 12197.00
1989/06/30 9649.31 12127.48
1989/07/31 10518.49 13222.59
1989/08/31 11358.20 13481.75
1989/09/30 10665.81 13426.47
1989/10/31 9789.26 13114.98
1989/11/30 9929.22 13382.52
1989/12/31 10209.12 13703.71
1990/01/31 9428.34 12784.19
1990/02/28 9590.39 12949.10
1990/03/31 9870.29 13292.25
1990/04/30 9155.80 12959.95
1990/05/31 9708.24 14223.54
1990/06/30 9605.21 14126.82
1990/07/31 9491.86 14081.62
1990/08/31 8396.06 12808.64
1990/09/30 7799.04 12184.86
1990/10/31 7708.35 12132.46
1990/11/30 8116.44 12916.22
1990/12/31 8456.52 13276.58
1991/01/31 8758.81 13855.44
1991/02/28 9401.17 14846.11
1991/03/31 9529.64 15205.38
1991/04/30 9544.76 15241.87
1991/05/31 10360.93 15900.32
1991/06/30 10247.54 15172.09
1991/07/31 10657.44 15879.11
1991/08/31 10907.94 16255.44
1991/09/30 10763.72 15983.98
1991/10/31 11226.75 16198.16
1991/11/30 10331.04 15545.38
1991/12/31 11484.84 17323.77
1992/01/31 11985.83 17001.55
1992/02/29 12570.32 17222.57
1992/03/31 12350.19 16886.73
1992/04/30 12995.40 17383.20
1992/05/31 13147.22 17468.37
1992/06/30 12828.10 17208.09
1992/07/31 13116.71 17911.90
1992/08/31 12288.85 17544.71
1992/09/30 12121.76 17751.74
1992/10/31 12258.47 17813.87
1992/11/30 12714.17 18421.32
1992/12/31 12905.37 18647.90
1993/01/31 13179.95 18804.55
1993/02/28 13301.98 19060.29
1993/03/31 13523.18 19462.46
1993/04/30 13324.87 18991.47
1993/05/31 13874.03 19500.44
1993/06/30 13911.92 19556.99
1993/07/31 14103.23 19478.76
1993/08/31 14470.54 20217.01
1993/09/30 14019.05 20061.34
1993/10/31 14845.50 20476.61
1993/11/30 15044.46 20282.08
1993/12/31 15664.30 20527.49
1994/01/31 16934.58 21225.43
1994/02/28 16582.58 20650.22
1994/03/31 16115.79 19749.87
1994/04/30 16720.67 20002.67
1994/05/31 16889.41 20330.71
1994/06/30 16713.00 19832.61
1994/07/31 17334.28 20483.12
1994/08/31 18270.02 21322.93
1994/09/30 18039.92 20800.52
1994/10/31 17802.15 21268.53
1994/11/30 16544.26 20493.93
1994/12/31 16947.81 20797.85
1995/01/31 16469.32 21337.14
1995/02/28 17850.77 22168.65
1995/03/31 18259.80 22822.85
1995/04/30 18344.36 23494.98
1995/05/31 18158.83 24434.07
1995/06/30 18970.53 25001.68
1995/07/31 20609.38 25830.73
1995/08/31 20555.27 25895.57
1995/09/30 19975.48 26988.36
1995/10/31 18815.92 26892.01
1995/11/30 20547.54 28072.57
1995/12/31 19556.06 28613.25
1996/01/31 19858.83 29587.24
1996/02/29 20239.24 29861.52
1996/03/31 21264.01 30149.08
1996/04/30 21762.30 30593.48
1996/05/31 21628.30 31382.49
1996/06/30 20911.04 31502.05
1996/07/31 20044.01 30110.29
1996/08/31 21131.73 30745.32
1996/09/30 21596.77 32475.67
1996/10/31 21549.48 33371.34
1996/11/30 22203.69 35893.88
1996/12/31 22296.57 35182.83
1997/01/31 22395.52 37381.05
1997/02/28 22807.81 37674.12
Let's say hypothetically that $10,000 was invested in Fidelity Select
Industrial Materials Portfolio on February 28, 1987, and the current
maximum 3% sales charge was paid. As the chart shows, by February 28, 1997,
the value of the investment would have grown to $22,808 - a 128.08%
increase on the initial investment. For comparison, look at how the S&P 500
did over the same period. With dividends and capital gains, if any,
reinvested, the same $10,000 investment would have grown to $37,674 - a
276.74% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1997
% OF FUND'S
INVESTMENTS
Alumax, Inc. 10.3
QNI Ltd. 10.3
Pechiney SA Class A 7.0
Cytec Industries, Inc. 4.5
Monsanto Co. 4.5
Aluminum Co. of America 4.3
Raychem Corp. 4.2
Eramet SA 4.1
Newmont Mining Corp. 4.1
Boise Cascade Corp. 4.0
TOP INDUSTRIES AS OF FEBRUARY 28, 1997
Metal Ores 17.3%
Chemicals 13.2%
Gold Ores 12.6%
Aluminum, Extruded
Products 10.3%
Prime Nonferrous Smelting 7.5%
All Others 39.1% *
Row: 1, Col: 1, Value: 39.1
Row: 1, Col: 2, Value: 7.5
Row: 1, Col: 3, Value: 10.3
Row: 1, Col: 4, Value: 12.6
Row: 1, Col: 5, Value: 13.2
Row: 1, Col: 6, Value: 17.3
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S 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. Not as well as I would have liked. For the 12 months that ended February
28, 1997, the fund returned 12.69%. The Standard & Poor's 500 Index
returned 26.16% over the same period.
Q. WHAT HELD THE FUND BACK?
A. Cyclical stocks generally continued to underperform the overall stock
market while the U.S. market continued to outperform most international
markets. The fund had considerable positions in both non-ferrous metal and
international stocks, and both proved to be disappointing. In North
America, non-ferrous metals - basically non-steel metals - didn't fare too
badly relative to the strong performance of the overall stock market.
However, the fund's foreign non-ferrous holdings and its overall positions
in international stocks - which entail more risk than U.S. investments -
suffered due to pricing trends. North American stocks followed the
industry's positive fundamental characteristics - such as valuations and
earnings - while international stocks tended to track the price of
industrial materials, which fell. In addition, I underweighted the
portfolio in chemical stocks relative to the index due to what I felt were
excessive valuations. While the fund's individual chemical stocks performed
well relative to the index, an underweighting in chemical stocks hurt. This
strategy worked against the fund, but I still feel those stocks were too
rich.
Q. ANALYZING ECONOMIC CYCLES IS A KEY COMPONENT OF YOUR STOCK PICKING
STRATEGY. CAN YOU COMPARE THE U.S. AND EUROPEAN ECONOMIC CYCLES?
A. I really think U.S. investors are too bullish on how fast the European
economy will recover. I'd put Japan's economy in that category as well.
Both Europe and Japan have a litany of issues to fight through and may have
to abandon long-held social structures if they're going to be competitive
with the United States. Companies in the U.S. are succeeding by reducing
costs, either through personnel reduction or balance sheet restructuring.
In Europe, where unemployment is extremely high, it's a bit harder to cut
personnel. I'm not as optimistic that these economies will be as strong as
soon as some market followers think.
Q. THE FUND'S POSITION IN PRECIOUS METAL STOCKS ROSE FROM APPROXIMATELY 4%
TO OVER 12%. WHAT WAS THE STORY THERE?
A. When gold fell to $340 per ounce, its price was at a 12-year low and I
decided to step to the plate. The market consensus was that many central
banks in Europe were going to sell enormous amounts of gold in order to
meet European Monetary Union requirements. When gold prices fell, many of
the world's mines became uneconomical and lots of new projects faced
postponement. At the close of the period, gold prices were hovering around
$360, so this move helped. It will likely take a couple of quarters,
however, before this strategy plays out completely.
Q. WHICH INDIVIDUAL STOCKS CONTRIBUTED POSITIVELY TO PERFORMANCE? WHICH
WERE DISAPPOINTMENTS?
A. Aluminum Co. of America, also known as Alcoa, was a positive
contributor. In addition, some of the non-commodity chemical stocks I owned
- - such as Monsanto, Cytec and du Pont - realized strong performance as a
result of successful cost-cutting programs. On the flip side, Huntco, a
metals manufacturer, turned in a subpar performance, and the portfolio's
railroad stocks performed below expectations.
Q. WHAT'S YOUR OUTLOOK GOING FORWARD?
A. Toward the end of the period, I began to look more closely at paper and
forest stocks. For much of the period, the fundamental characteristics of
paper stocks didn't appeal to me. As the period drew to an end, though,
these characteristics improved and I started to nibble. I may continue this
strategy and can envision de-emphasizing chemical stocks in the process. I
don't expect to increase my international holdings, and we'll have to see
how the gold market progresses before I make any changes in that area.
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 February 28, 1997, more than
$66 million
MANAGER: Doug 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 FEBRUARY 28, 1997
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 97.0%
SHARES VALUE (NOTE 1)
AUTOS, TIRES, & ACCESSORIES - 1.2%
AUTO & TRUCK PARTS - 1.2%
Cummins Engine Co., Inc. 16,300 $ 825,184
BUILDING MATERIALS - 3.6%
PAINT & VARNISH - 1.4%
Sherwin-Williams Co. 16,300 914,838
PLUMBING SUPPLIES - WHOLESALE - 2.2%
Masco Corp. 41,500 1,457,688
TOTAL BUILDING MATERIALS 2,372,526
CHEMICALS & PLASTICS - 16.5%
AGRICULTURAL CHEMICALS - 1.5%
FMC Corp. (a) 12,300 845,625
OM Group, Inc. 6,100 176,900
1,022,525
CHEMICALS - 13.2%
Cytec Industries, Inc. (a) 76,000 3,011,500
Monsanto Co. 81,700 2,971,838
Raychem Corp. 32,810 2,792,951
8,776,289
CHEMICALS, GENERAL - 0.6%
Great Lakes Chemical Corp. 8,200 380,275
INDUSTRIAL GASES - 1.2%
Air Products & Chemicals, Inc. 11,000 815,375
TOTAL CHEMICALS & PLASTICS 10,994,464
IRON & STEEL - 6.7%
BLAST FURNACES - 3.3%
Huntco, Inc. Class A 154,500 1,776,750
LTV Corp. 28,600 357,500
Steel Dynamics, Inc. (a) 2,500 50,000
2,184,250
IRON & STEEL BLAST FURNACES, MILLS - 3.4%
Birmingham Steel Corp. 125,000 2,265,625
TOTAL IRON & STEEL 4,449,875
METALS & MINING - 41.6%
ALUMINUM, EXTRUDED PRODUCTS - 10.3%
Alumax, Inc. (a) 174,700 6,835,138
COPPER ORES - 1.6%
Freeport McMoRan Copper & Gold, Inc.
Class A 32,700 1,066,838
METAL MINING - 0.4%
Pasminco Ltd. 139,800 261,286
METAL MINING SERVICES - 4.1%
Eramet SA 55,254 2,756,894
METAL ORES - 17.3%
Pechiney SA Class A 110,475 4,660,845
QNI Ltd. 3,295,000 6,825,510
11,486,355
PRIME NONFERROUS SMELTING - 7.5%
Aluminum Co. of America 40,400 2,878,500
Inco Ltd. 60,500 2,129,207
5,007,707
SHARES VALUE (NOTE 1)
SECONDARY NONFERROUS SMELTING - 0.4%
IMCO Recycling, Inc. 16,300 $ 256,725
TOTAL METALS & MINING 27,670,943
PAPER & FOREST PRODUCTS - 10.8%
CONVERTED PAPER & PAPERBOARD - 4.1%
Boise Cascade Corp. 81,700 2,685,888
PAPER - 3.6%
Champion International Corp. 32,700 1,442,888
Chesapeake Corp. 32,700 968,738
2,411,626
PAPERBOARD MILLS - 3.1%
Jefferson Smurfit Corp. (a) 152,600 2,079,175
TOTAL PAPER & FOREST PRODUCTS 7,176,689
PRECIOUS METALS - 12.6%
GOLD ORES - 12.6%
Bre-X Minerals Ltd. (a) 65,400 936,915
Bresea Resources Ltd. (a) 57,200 432,716
Bro-X Minerals Ltd. 6,500 11,165
Golden Knight Resources, Inc. (a) 228,800 836,166
Kinross Gold Corp. (a) 119,700 853,031
Newmont Gold Co. 32,700 1,594,125
Newmont Mining Corp. 57,200 2,717,000
TVX Gold, Inc. (a) 112,400 998,180
8,379,298
RAILROADS - 3.5%
Burlington Northern Santa Fe Corp. 14,392 1,198,134
CSX Corp. 23,700 1,093,163
2,291,297
SHIPPING - 0.5%
Kirby Corp. (a) 17,200 318,200
TOTAL COMMON STOCKS
(Cost $61,068,027) 64,478,476
CASH EQUIVALENTS - 3.0%
Taxable Central Cash Fund (b)
(Cost $2,024,053) 2,024,053 2,024,053
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $63,092,080) $ 66,502,529
LEGEND
1. Non-income producing
2. At period end, the seven-day yield on the Taxable Central Cash Fund was
5.31%. The yield refers to the income earned by investing in the fund over
the seven-day period, expressed as an annual percentage.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $93,482,166 and $122,109,816, respectively (see Note 3 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $37,253 for the period (see
Note 4 of Notes to Financial Statements).
Distribution of investments by country of issue, as a percentage of total
value of investment in securities, is as follows:
United States 68.9%
France 11.1
Australia 10.7
Canada 9.3
TOTAL 100.0%
INCOME TAX INFORMATION
At February 28, 1997, the aggregate cost of investment securities for
income tax purposes was $63,320,541. Net unrealized appreciation aggregated
$3,181,988 of which $5,904,964 related to appreciated investment securities
and $2,722,976 related to depreciated investment securities.
The fund hereby designates approximately $2,683,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 61% of the dividends distributed during the fiscal year
qualifies for the dividends-received deduction for corporate shareholders
(unaudited).
The fund will notify shareholders in January 1998 of the applicable
percentage for use in preparing 1997 income tax returns.
INDUSTRIAL MATERIALS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1997
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS
Investment in securities, at value $ 66,502,529
(cost $63,092,080) - See accompanying schedule
Receivable for investments sold 264,858
Receivable for fund shares sold 212,756
Dividends receivable 171,024
Interest receivable 12,280
Redemption fees receivable 105
Other receivables 650
TOTAL ASSETS 67,164,202
LIABILITIES
Payable for fund shares redeemed $ 595,353
Accrued management fee 40,649
Other payables and accrued expenses 66,330
TOTAL LIABILITIES 702,332
NET ASSETS $ 66,461,870
Net Assets consist of:
Paid in capital $ 58,094,123
Undistributed net investment income 67,759
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 4,896,930
Net unrealized appreciation (depreciation) on investments 3,403,058
and assets and liabilities in
foreign currencies
NET ASSETS, for 2,402,786 $ 66,461,870
shares outstanding
NET ASSET VALUE and redemption price per share ($66,461,870 (divided by) 2,402,786 shares) $27.66
Maximum offering price per share (100/97.00 of $27.66) $28.52
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1997
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME $ 1,337,285
Dividends
Interest 356,908
TOTAL INCOME 1,694,193
EXPENSES
Management fee $ 590,927
Transfer agent fees 750,324
Accounting fees and expenses 98,357
Non-interested trustees' compensation 668
Custodian fees and expenses 20,877
Registration fees 16,703
Audit 25,436
Legal 708
Miscellaneous 6,391
Total expenses before reductions 1,510,391
Expense reductions (36,563 1,473,828
)
NET INVESTMENT INCOME 220,365
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 8,999,281
Foreign currency transactions 171 8,999,452
Change in net unrealized appreciation (depreciation) on:
Investment securities 1,209,228
Assets and liabilities in (7,685 1,201,543
foreign currencies )
NET GAIN (LOSS) 10,200,995
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 10,421,360
OTHER INFORMATION $ 866,268
Sales charges paid to FDC
Deferred sales charges withheld $ 4,072
by FDC
Exchange fees withheld by FSC $ 40,763
Expense reductions $ 33,612
Directed brokerage arrangements
Custodian interest credits 209
Transfer agent interest credits 2,742
$ 36,563
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE YEAR ENDED YEAR ENDED
(DECREASE) IN FEBRUARY 28, FEBRUARY 29,
NET ASSETS 1997 1996
Operations $ 220,365 $ 627,773
Net
investment
income
Net realized 8,999,452 13,688,969
gain (loss)
Change in 1,201,543 (3,691,387
net )
unrealized
appreciation
(depreciation
)
NET INCREASE 10,421,360 10,625,355
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
Distributions to (200,673 (782,540
shareholders ) )
From net
investment
income
From net (5,508,154 -
realized gain )
TOTAL (5,708,827 (782,540
DISTRIBUTION ) )
S
Share 113,772,805 164,160,384
transactions
Net proceeds
from sales of
shares
Reinvestmen 5,651,415 774,191
t of
distributions
Cost of (144,145,096 (272,164,952
shares ) )
redeemed
Paid in 131,891 271,871
capital
portion of
redemption
fees
NET INCREASE (24,588,985 (106,958,506
(DECREASE) ) )
IN NET
ASSETS
RESULTING
FROM SHARE
TRANSACTIO
NS
TOTAL (19,876,452 (97,115,691
INCREASE ) )
(DECREASE)
IN NET ASSETS
NET ASSETS
Beginning of 86,338,322 183,454,013
period
End of period $ 66,461,870 $ 86,338,322
(including
undistribute
d net
investment
income of
$67,759
and
$81,888,
respectivel
y)
OTHER
INFORMATION
Shares
Sold 4,147,616 6,349,116
Issued in 212,018 30,728
reinvestment
of
distributions
Redeemed (5,268,325 (10,999,650
) )
Net increase (908,691) (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>
YEAR ENDED YEAR ENDED YEARS ENDED FEBRUARY 28, TEN MONTHS
FEBRUARY 28, FEBRUARY 29, ENDED
FEBRUARY 28,
SELECTED 1997 1996 1995 1994 1993
PER-SHARE
DATA D
</TABLE>
Net asset $ 26.07 $ 23.13 $ 21.67 $ 17.44 $ 17.12
value,
beginning of
period
Income from
Investment
Operations
Net .06 .12 .17 .15 .12
investment
income
Net realized 3.12 2.92 1.43 4.07 .19
and
unrealized
gain (loss)
Total from 3.18 3.04 1.60 4.22 .31
investment
operations
Less
Distributions
From net (.06) (.15) (.18) (.06) (.08)
investment
income
From net (1.57) - - - -
realized gain
Total (1.63) (.15) (.18) (.06) (.08)
distributions
Redemption .04 .05 .04 .07 .09
fees added to
paid in
capital
Net asset $ 27.66 $ 26.07 $ 23.13 $ 21.67 $ 17.44
value, end of
period
TOTAL 12.69% 13.38% 7.65% 24.66% 2.36%
RETURN B, C
RATIOS AND
SUPPLEMENT
AL DATA
Net assets, $ 66,462 $ 86,338 $ 183,454 $ 155,721 $ 25,041
end of period
(000 omitted)
Ratio of 1.54% 1.64% 1.56% 2.10% 2.02% A
expenses to
average net
assets
Ratio of 1.51% E 1.61% E 1.53% E 2.08% E 2.02% A
expenses to
average net
assets after
expense
reductions
Ratio of net .23% .49% .77% .75% .86% A
investment
income to
average net
assets
Portfolio 105% 138% 139% 185% 273% A
turnover rate
Average $ .0242
commission
rate F
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
A ANNUALIZED B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 8 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 8 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>
PAPER AND FOREST PRODUCTS PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance. You can
look at the total percentage change in value, the average annual percentage
change, or the growth of a hypothetical $10,000 investment. Total return
reflects the change in the value of an investment, assuming reinvestment of
the fund's dividend income and capital gains (the profits earned upon the
sale of 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 fund expenses, the past 10 year total returns would have
been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 28, 1997 YEAR YEARS YEARS
PAPER AND FOREST PRODUCTS 10.87% 82.69% 103.28%
PAPER AND FOREST PRODUCTS 7.55% 77.21% 97.18%
(INCL. 3% SALES CHARGE)
S&P 500 26.16% 118.75% 276.74%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one, five, or 10 years. You can compare
the fund's returns 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, and excludes the effect of sales
charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 28, 1997 YEAR YEARS YEARS
PAPER AND FOREST PRODUCTS 10.87% 12.81% 7.35%
PAPER AND FOREST PRODUCTS 7.55% 12.12% 7.03%
(INCL. 3% SALES CHARGE)
S&P 500 26.16% 16.94% 14.16%
AVERAGE ANNUAL RETURNS take the fund's 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
1987/02/28 9700.00 10000.00
1987/03/31 10443.30 10289.00
1987/04/30 9823.88 10197.43
1987/05/31 9260.22 10286.15
1987/06/30 9669.03 10805.60
1987/07/31 9786.72 11353.44
1987/08/31 10499.04 11776.92
1987/09/30 10183.14 11519.01
1987/10/31 7160.41 9037.81
1987/11/30 6912.64 8293.10
1987/12/31 7738.47 8924.20
1988/01/31 7425.94 9299.91
1988/02/29 8125.74 9733.29
1988/03/31 7867.56 9432.53
1988/04/30 7955.88 9537.23
1988/05/31 7867.56 9620.20
1988/06/30 8682.85 10061.77
1988/07/31 8295.59 10023.54
1988/08/31 7887.94 9682.74
1988/09/30 8044.21 10095.22
1988/10/31 7867.56 10375.87
1988/11/30 7697.71 10227.49
1988/12/31 8262.42 10406.47
1989/01/31 8344.16 11168.23
1989/02/28 8098.94 10890.14
1989/03/31 8105.76 11143.88
1989/04/30 8398.65 11722.25
1989/05/31 8548.51 12197.00
1989/06/30 8003.58 12127.48
1989/07/31 8773.29 13222.59
1989/08/31 9399.95 13481.75
1989/09/30 8882.27 13426.47
1989/10/31 8480.39 13114.98
1989/11/30 8419.09 13382.52
1989/12/31 8599.40 13703.71
1990/01/31 7813.25 12784.19
1990/02/28 7889.10 12949.10
1990/03/31 8109.78 13292.25
1990/04/30 7585.68 12959.95
1990/05/31 8089.09 14223.54
1990/06/30 7896.00 14126.82
1990/07/31 8013.23 14081.62
1990/08/31 7054.68 12808.64
1990/09/30 6371.97 12184.86
1990/10/31 6171.98 12132.46
1990/11/30 6792.63 12916.22
1990/12/31 7300.24 13276.58
1991/01/31 7903.34 13855.44
1991/02/28 8282.02 14846.11
1991/03/31 8450.33 15205.38
1991/04/30 8864.08 15241.87
1991/05/31 9880.92 15900.32
1991/06/30 9628.47 15172.09
1991/07/31 9635.48 15879.11
1991/08/31 9684.57 16255.44
1991/09/30 9312.89 15983.98
1991/10/31 9663.53 16198.16
1991/11/30 8927.19 15545.38
1991/12/31 9838.19 17323.77
1992/01/31 10743.02 17001.55
1992/02/29 10793.28 17222.57
1992/03/31 10865.10 16886.73
1992/04/30 11037.44 17383.20
1992/05/31 10728.65 17468.37
1992/06/30 10657.38 17208.09
1992/07/31 10578.22 17911.90
1992/08/31 10153.65 17544.71
1992/09/30 10045.71 17751.74
1992/10/31 10535.05 17813.87
1992/11/30 10923.63 18421.32
1992/12/31 11024.18 18647.90
1993/01/31 11363.72 18804.55
1993/02/28 11616.57 19060.29
1993/03/31 11602.12 19462.46
1993/04/30 12129.90 18991.47
1993/05/31 12166.04 19500.44
1993/06/30 11905.81 19556.99
1993/07/31 11782.92 19478.76
1993/08/31 12100.98 20217.01
1993/09/30 11522.68 20061.34
1993/10/31 11970.87 20476.61
1993/11/30 12715.43 20282.08
1993/12/31 13069.64 20527.49
1994/01/31 14587.68 21225.43
1994/02/28 14175.64 20650.22
1994/03/31 12672.06 19749.87
1994/04/30 12657.89 20002.67
1994/05/31 13174.24 20330.71
1994/06/30 13041.47 19832.61
1994/07/31 14147.93 20483.12
1994/08/31 15726.48 21322.93
1994/09/30 16006.78 20800.52
1994/10/31 15010.97 21268.53
1994/11/30 14354.47 20493.93
1994/12/31 14917.47 20797.85
1995/01/31 14817.30 21337.14
1995/02/28 16289.01 22168.65
1995/03/31 16404.59 22822.85
1995/04/30 16472.43 23494.98
1995/05/31 16744.76 24434.07
1995/06/30 18262.06 25001.68
1995/07/31 18884.55 25830.73
1995/08/31 18868.98 25895.57
1995/09/30 18557.74 26988.36
1995/10/31 18285.41 26892.01
1995/11/30 18557.74 28072.57
1995/12/31 18186.60 28613.25
1996/01/31 18640.19 29587.24
1996/02/29 17784.35 29861.52
1996/03/31 18691.55 30149.08
1996/04/30 19508.80 30593.48
1996/05/31 19115.59 31382.49
1996/06/30 18043.19 31502.05
1996/07/31 17569.54 30110.29
1996/08/31 18552.58 30745.32
1996/09/30 19222.83 32475.67
1996/10/31 19187.08 33371.34
1996/11/30 19410.50 35893.88
1996/12/31 19471.65 35182.83
1997/01/31 19672.20 37381.05
1997/02/28 19717.78 37674.12
Let's say hypothetically that $10,000 was invested in Fidelity Select Paper
and Forest Products Portfolio on February 28, 1987, and the current maximum
3% sales charge was paid. As the chart shows, by February 28, 1997, the
value of the investment would have grown to $19,718 - a 97.18% increase on
the initial investment. For comparison, look at how the S&P 500 did over
the same period. With dividends and capital gains, if any, reinvested, the
same $10,000 investment would have grown to $37,674 - a 276.74% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1997
% OF FUND'S
INVESTMENTS
Boise Cascade Corp. 7.0
Willamette Industries, Inc. 5.7
Hollinger International, Inc. Class A 5.1
Kimberly-Clark Corp. 4.9
Chesapeake Corp. 4.8
Specialty Paperboard, Inc. 4.5
IKON Office Solutions, Inc. 4.5
Fort Howard Corp. 4.1
Jefferson Smurfit Corp. 3.8
James River Corp. of Virginia 3.8
TOP INDUSTRIES AS OF FEBRUARY 28, 1997
Paper & Forest Products 73.9%
Publishing 5.2%
Retail & Wholesale,
Miscellaneous 4.5%
Insurance 3.5%
Tobacco 3.4%
All Others 9.5% *
Row: 1, Col: 1, Value: 9.5
Row: 1, Col: 2, Value: 3.4
Row: 1, Col: 3, Value: 3.5
Row: 1, Col: 4, Value: 4.5
Row: 1, Col: 5, Value: 5.2
Row: 1, Col: 6, Value: 73.90000000000001
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S 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 DID THE FUND PERFORM, LARRY?
A. The fund was up 10.87% for the 12 months that ended February 28, 1997,
while the Standard & Poor's 500 Index gained 26.16% over the same period.
Q. WHAT CONTRIBUTED TO THE FUND'S PERFORMANCE DURING THE PERIOD?
A. The fundamentals for paper were terrible last year. Producers added a
lot of new capacity over the last several years, which depressed the prices
of commodity paper products. For example, pulp was down about 40% last
year, and paper was down about 35%. The demand for paper and forest
products is very sensitive to how fast the economy is growing. When
producers add production capacity at a faster rate than Gross Domestic
Product (GDP) growth, as they have been doing, it's a recipe for disaster.
GDP growth in 1994, 1995 and 1996 averaged somewhere around 3.5%. The
problem was that the industry added capacity at an annual rate of about 5%.
Supply outstripped demand, and the result was collapsing commodity paper
prices.
Q. WHY WOULD PAPER PRODUCERS DO THAT - CUT THEIR OWN THROATS, SO TO SPEAK?
A. When everything is going well, as it was a few years ago in the paper
industry, companies naturally want a bigger piece of the pie. So they add
capacity. But in fairness to the paper producers, planning their production
is a very difficult thing to do. They have to estimate how fast the economy
is going to grow, and how much capacity their competitors will add. No one
has that kind of forecasting down to an exact science.
Q. WHAT KIND OF STRATEGY DID YOU USE LAST YEAR?
A. I was very selective. Tissue and lumber companies were two bright spots
in this industry, so my strategy was to overweight the fund in those two
areas. In addition, I tried to retain meaningful exposure in the commodity
paper area in case the prices of pulp, paper and newsprint recovered. Most
of the companies we invested in were based in the United States, though in
a few cases, where we judged the added risk to be worthwhile, we also owned
foreign stocks.
Q. WHAT WERE SOME OF THE STOCKS THAT DID WELL FOR THE FUND DURING THE
PERIOD?
A. Tissue producers such as Kimberly-Clark, Chesapeake Corp., Fort Howard
Corp. and James River did well for us. In the lumber area, Timberwest was
put up for sale, the stock rose as a result and we took profits.
Weyerhaeuser and Slocan Forest Products were also beneficial holdings with
significant lumber components. There were a few specialty paper producers
that performed well, too. For instance, Schweitzer-Mauduit International is
a producer of cigarette paper. Specialty Paperboard was another stock that
helped the fund.
Q. HOW ABOUT STOCKS THAT DIDN'T PERFORM WELL?
A. As a category, I'd say that the commodity pulp and paper producers had
difficulty last year, including such stocks as Stone Container. Union Camp
was also a disappointment, although its return was slightly positive.
Q. WHAT ARE THE PROSPECTS FOR THE IMMEDIATE FUTURE, LARRY?
A. A lot depends on the economy. Producers have drastically scaled back how
much capacity they are adding; those numbers should be about 2.5% to 3%
this year, and about 1% in 1998 and 1999. So the big question is whether
GDP growth will continue at its current slow but steady rate. If it does,
pulp and paper prices should recover. On the other hand, if the economy
slips into recession and GDP falls or is flat, there will be continued
downward pressure on commodity paper prices and, consequently, on the
stocks of companies with exposure in that area. My own view is that the
economy will continue on a slow but positive growth path and, as a result,
there's a good chance we'll see higher commodity paper prices later on this
year or in 1998. So that bodes well for many of the fund's holdings.
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 February 28, 1997, more than
$19 million
MANAGER: Larry Rakers, since 1996; manager,
Fidelity Select Energy Portfolio, since January
1997; Fidelity Select American Gold Portfolio,
1995-February 1997; Fidelity Select Precious
Metals and Minerals Portfolio, July 1996-
February 1997; joined Fidelity in 1993
(checkmark)
PAPER AND FOREST PRODUCTS PORTFOLIO
INVESTMENTS FEBRUARY 28, 1997
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 92.5%
SHARES VALUE (NOTE 1)
BASIC INDUSTRIES - 75.9%
CHEMICALS & PLASTICS - 0.6%
Minerals Technologies, Inc. 3,200 $ 121,198
METALS & MINING - 0.4%
English China Clay PLC 21,500 74,973
PACKAGING & CONTAINERS - 1.8%
Gaylord Container Corp. Class A (a) 53,200 339,150
PAPER & FOREST PRODUCTS - 73.1%
Alliance Forest Products, Inc. (a) 19,000 409,677
Assi Doman AB Free shares 5,000 129,160
Boise Cascade Corp. 40,400 1,328,150
Bowater, Inc. 11,700 495,788
Buckeye Cellulose Corp. (a) 20,000 602,500
Caraustar Industries, Inc. 3,000 89,250
Champion International Corp. 7,900 348,588
Chesapeake Corp. 31,000 918,375
Consolidated Papers, Inc. 2,000 101,250
Crown Pacific Partners LP unit 4,400 96,800
Domtar, Inc. 14,700 133,768
Donohue, Inc. (vtg.) 12,210 234,713
Enso OY Class R 13,000 112,215
Fletcher Challenge Canada Ltd. Class A 3,400 56,412
Fort Howard Corp. (a) 26,500 788,375
Georgia-Pacific Corp. 2,400 187,200
Glatfelter (P.H.) Co. 19,100 327,088
International Paper Co. 1,500 62,625
James River Corp. of Virginia 22,000 720,500
Jefferson Smurfit Group PLC
sponsored ADR (a) 3,200 80,800
Jefferson Smurfit Corp. (a) 53,400 727,575
Kimberly-Clark Corp. 8,830 935,980
Louisiana-Pacific Corp. 1,400 29,750
Mead Corp. 5,200 302,900
Mercer International, Inc. SBI 69,000 655,500
Plum Creek Timber Co. LP depositary unit 3,000 86,625
Rayonier, Inc. 5,100 193,800
Slocan Forest Products Ltd. 12,800 137,529
Specialty Paperboard, Inc. (a) 34,900 863,775
Stone Consolidated Corp. 2,000 32,526
Stone Container Corp. 4,000 52,000
Stora Kopparbergs B Free shares 3,000 40,441
Svenska Cellulosa AB (SCA)
Class B Ord. 32,000 707,621
Temple-Inland, Inc. 400 22,050
Union Camp Corp. 2,800 135,100
UPM-Kymmene Corp. (a) 7,200 151,445
Wausau Paper Mills Co. 11,037 219,360
Westvaco Corp. 700 20,650
Weyerhaeuser Co. 6,900 319,125
Willamette Industries, Inc. 17,100 1,094,400
13,951,386
TOTAL BASIC INDUSTRIES 14,486,707
FINANCE - 3.5%
INSURANCE - 3.5%
Arbatax International, Inc. (a) 95,800 675,390
MEDIA & LEISURE - 5.2%
PUBLISHING - 5.2%
Hollinger International, Inc. Class A 96,900 981,113
SHARES VALUE (NOTE 1)
NONDURABLES - 3.4%
TOBACCO - 3.4%
Schweitzer-Mauduit International, Inc. 19,100 $ 651,788
RETAIL & WHOLESALE - 4.5%
RETAIL & WHOLESALE, MISCELLANEOUS - 4.5%
IKON Office Solutions, Inc. 20,900 862,125
TOTAL COMMON STOCKS
(Cost $17,697,838) 17,657,123
CONVERTIBLE PREFERRED STOCKS - 0.8%
BASIC INDUSTRIES - 0.8%
PAPER & FOREST PRODUCTS - 0.8%
James River Corp., Series P,
$1.55 depositary shares representing
1/100 share (dividend enhanced)
(Cost $122,507) 4,600 140,875
CASH EQUIVALENTS - 6.7%
Taxable Central Cash Fund (b)
(Cost $1,285,499) 1,285,499 1,285,499
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $19,105,844) $ 19,083,497
LEGEND
1. Non-income producing
2. At period end, the seven-day yield on the Taxable Central Cash Fund was
5.31%. The yield refers to the income earned by investing in the fund over
the seven-day period, expressed as an annual percentage.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $51,584,813 and $60,498,409, respectively (see Note 3 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
com-missions paid to these affiliated firms were $23,792 for the period
(see Note 4 of Notes to Financial Statements).
The fund participated in the bank borrowing program. The maximum loan and
average daily balances during the period for which loans were outstanding
amounted to $2,916,000. The weighted average interest rate was 5.9%. (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 81.0%
Canada 12.2
Sweden 4.6
Finland 1.4
Others (individually less than 1%) 0.8
TOTAL 100.0%
INCOME TAX INFORMATION
At February 28, 1997, the aggregate cost of investment securities for
income tax purposes was $19,211,810. Net unrealized depreciation aggregated
$128,313, of which $1,389,817 related to appreciated investment securities
and $1,518,130 related to depreciated investment securities.
The fund hereby designates approximately $716,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 35% of the dividends distributed during the fiscal year
qualifies for the dividends-received deduction for corporate shareholders
(unaudited).
The fund will notify shareholders in January 1998 of the applicable
percentage for use in preparing 1997 income tax returns.
PAPER AND FOREST PRODUCTS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1997
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS
Investment in securities, at value $ 19,083,497
(cost $19,105,844) - See accompanying schedule
Receivable for investments sold 846,137
Receivable for fund shares sold 110,945
Dividends receivable 23,332
Interest receivable 1,571
Redemption fees receivable 49
Other receivables 13,959
TOTAL ASSETS 20,079,490
LIABILITIES
Payable for investments purchased $ 281,699
Payable for fund shares redeemed 259,514
Accrued management fee 11,052
Other payables and accrued expenses 43,711
TOTAL LIABILITIES 595,976
NET ASSETS $ 19,483,514
Net Assets consist of:
Paid in capital $ 18,614,191
Distributions in excess of net investment income (45,703
)
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 937,391
Net unrealized appreciation (depreciation) on investments (22,365
and assets and liabilities in )
foreign currencies
NET ASSETS, for 900,736 $ 19,483,514
shares outstanding
NET ASSET VALUE and redemption price per share ($19,483,514 (divided by) 900,736 shares) $21.63
Maximum offering price per share (100/97.00 of $21.63) $22.30
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1997
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME $ 586,040
Dividends
Interest 124,395
TOTAL INCOME 710,435
EXPENSES
Management fee $ 194,763
Transfer agent fees 385,303
Accounting fees and expenses 60,429
Non-interested trustees' compensation 228
Custodian fees and expenses 15,959
Registration fees 18,385
Audit 25,496
Legal 246
Interest 1,434
Miscellaneous 2,693
Total expenses before reductions 704,936
Expense reductions (7,444 697,492
)
NET INVESTMENT INCOME 12,943
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 1,735,499
Foreign currency transactions (287 1,735,212
)
Change in net unrealized appreciation (depreciation) on:
Investment securities 336,375
Assets and liabilities in (62 336,313
foreign currencies )
NET GAIN (LOSS) 2,071,525
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 2,084,468
OTHER INFORMATION $ 126,407
Sales charges paid to FDC
Deferred sales charges withheld $ 2,892
by FDC
Exchange fees withheld by FSC $ 31,583
Expense reductions $ 5,585
Directed brokerage arrangements
Custodian interest credits 148
Transfer agent interest credits 1,711
$ 7,444
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE YEAR ENDED YEAR ENDED
(DECREASE) IN FEBRUARY 28, FEBRUARY 29,
NET ASSETS 1997 1996
Operations $ 12,943 $ 196,357
Net
investment
income
Net realized 1,735,212 10,192,650
gain (loss)
Change in 336,313 (5,417,439
net )
unrealized
appreciation
(depreciation
)
NET INCREASE 2,084,468 4,971,568
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
Distributions to (29,671 (148,185
shareholders ) )
From net
investment
income
In excess of (84,325 -
net )
investment
income
From net (2,413,337 (4,557,795
realized gain ) )
TOTAL (2,527,333 (4,705,980
DISTRIBUTION ) )
S
Share 84,816,161 89,748,449
transactions
Net proceeds
from sales of
shares
Reinvestmen 2,489,372 4,602,520
t of
distributions
Cost of (94,819,778 (161,775,476
shares ) )
redeemed
Paid in 170,585 210,077
capital
portion of
redemption
fees
NET INCREASE (7,343,660 (67,214,430
(DECREASE) ) )
IN NET
ASSETS
RESULTING
FROM SHARE
TRANSACTIO
NS
TOTAL (7,786,525 (66,948,842
INCREASE ) )
(DECREASE)
IN NET ASSETS
NET ASSETS
Beginning of 27,270,039 94,218,881
period
End of period $ 19,483,514 $ 27,270,039
(including
under
(over)
distribution
of net
investment
income of
$(45,703)
and
$46,687,
respectivel
y)
OTHER
INFORMATION
Shares
Sold 3,914,858 3,969,187
Issued in 118,411 214,948
reinvestment
of
distributions
Redeemed (4,444,689 (7,328,171
) )
Net increase (411,420) (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>
YEAR ENDED YEAR ENDED YEARS ENDED FEBRUARY 28, TEN MONTHS
FEBRUARY 28, FEBRUARY 29, ENDED
FEBRUARY 28,
SELECTED 1997 1996 1995 1994 1993
PER-SHARE
DATA D
</TABLE>
Net asset $ 20.78 $ 21.14 $ 19.61 $ 16.08 $ 15.37
value,
beginning of
period
Income from
Investment
Operations
Net .01 .08 .01 (.01) .06
investment
income (loss)
Net realized 2.08 1.83 2.53 3.38 .65
and
unrealized
gain (loss)
Total from 2.09 1.91 2.54 3.37 .71
investment
operations
Less
Distributions
From net (.03) (.08) - (.01) (.09)
investment
income
In excess of (.07) - - - -
net
investment
income
From net (1.25) (2.27) (1.17) - -
realized gain
Total (1.35) (2.35) (1.17) (.01) (.09)
distributions
Redemption .11 .08 .16 .17 .09
fees added to
paid in
capital
Net asset $ 21.63 $ 20.78 $ 21.14 $ 19.61 $ 16.08
value, end of
period
TOTAL 10.87% 9.18% 14.91% 22.03% 5.25%
RETURN B, C
RATIOS AND
SUPPLEMENT
AL DATA
Net assets, $ 19,484 $ 27,270 $ 94,219 $ 66,908 $ 25,098
end of period
(000 omitted)
Ratio of 2.19% 1.91% 1.88% 2.08% 2.21% A
expenses to
average net
assets
Ratio of 2.16% E 1.90% E 1.87% E 2.07% E 2.21% A
expenses to
average net
assets after
expense
reductions
Ratio of net .04% .34% .05% (.08)% .49% A
investment
income (loss)
to average
net assets
Portfolio 180% 78% 209% 176% 222% A
turnover rate
Average $ .0306
commission
rate F
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
A ANNUALIZED B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 8 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 8 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. You can
look at the total percentage change in value, the average annual percentage
change, or the growth of a hypothetical $10,000 investment. Total return
reflects the change in the value of an investment, assuming reinvestment of
the fund's dividend income and capital gains (the profits earned upon the
sale of 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 fund expenses, the total returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 28, 1997 YEAR YEARS YEARS
TRANSPORTATION 4.67% 96.78% 226.97%
TRANSPORTATION 1.53% 90.88% 217.16%
(INCL. 3% SALES CHARGE)
S&P 500 26.16% 118.75% 276.74%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one, five or 10 years. You can compare
the fund's returns 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, and excludes the effect of sales
charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 28, 1997 YEAR YEARS YEARS
TRANSPORTATION 4.67% 14.50% 12.58%
TRANSPORTATION 1.53% 13.80% 12.23%
(INCL. 3% SALES CHARGE)
S&P 500 26.16% 16.94% 14.16%
AVERAGE ANNUAL RETURNS take the fund's 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
1987/02/28 9700.00 10000.00
1987/03/31 9700.00 10289.00
1987/04/30 9766.04 10197.43
1987/05/31 9914.64 10286.15
1987/06/30 10211.83 10805.60
1987/07/31 10616.34 11353.44
1987/08/31 10616.34 11776.92
1987/09/30 10038.47 11519.01
1987/10/31 6802.38 9037.81
1987/11/30 6406.13 8293.10
1987/12/31 7050.64 8924.20
1988/01/31 7403.17 9299.91
1988/02/29 8015.90 9733.29
1988/03/31 8259.32 9432.53
1988/04/30 8284.50 9537.23
1988/05/31 8234.14 9620.20
1988/06/30 9073.50 10061.77
1988/07/31 8955.99 10023.54
1988/08/31 8536.31 9682.74
1988/09/30 9098.68 10095.22
1988/10/31 9392.46 10375.87
1988/11/30 9476.39 10227.49
1988/12/31 9761.78 10406.47
1989/01/31 10601.14 11168.23
1989/02/28 10710.26 10890.14
1989/03/31 11037.61 11143.88
1989/04/30 11406.93 11722.25
1989/05/31 11893.76 12197.00
1989/06/30 11820.43 12127.48
1989/07/31 12536.82 13222.59
1989/08/31 13351.72 13481.75
1989/09/30 13092.02 13426.47
1989/10/31 12259.22 13114.98
1989/11/30 12366.68 13382.52
1989/12/31 12542.73 13703.71
1990/01/31 11755.07 12784.19
1990/02/28 12303.44 12949.10
1990/03/31 12672.35 13292.25
1990/04/30 12193.77 12959.95
1990/05/31 12642.43 14223.54
1990/06/30 12503.26 14126.82
1990/07/31 12461.72 14081.62
1990/08/31 10634.00 12808.64
1990/09/30 9263.22 12184.86
1990/10/31 9117.83 12132.46
1990/11/30 9491.68 12916.22
1990/12/31 9834.38 13276.58
1991/01/31 10675.54 13855.44
1991/02/28 11714.02 14846.11
1991/03/31 11724.41 15205.38
1991/04/30 11693.25 15241.87
1991/05/31 12617.50 15900.32
1991/06/30 12512.74 15172.09
1991/07/31 13273.29 15879.11
1991/08/31 13512.92 16255.44
1991/09/30 13262.87 15983.98
1991/10/31 14242.22 16198.16
1991/11/30 13356.64 15545.38
1991/12/31 15159.06 17323.77
1992/01/31 15294.50 17001.55
1992/02/29 16117.57 17222.57
1992/03/31 15732.08 16886.73
1992/04/30 16138.41 17383.20
1992/05/31 16471.80 17468.37
1992/06/30 15763.34 17208.09
1992/07/31 15992.55 17911.90
1992/08/31 15513.29 17544.71
1992/09/30 16127.99 17751.74
1992/10/31 16815.62 17813.87
1992/11/30 18034.59 18421.32
1992/12/31 18765.77 18647.90
1993/01/31 19606.19 18804.55
1993/02/28 19872.14 19060.29
1993/03/31 21201.92 19462.46
1993/04/30 21149.07 18991.47
1993/05/31 21939.09 19500.44
1993/06/30 22003.14 19556.99
1993/07/31 22003.14 19478.76
1993/08/31 22408.83 20217.01
1993/09/30 22462.21 20061.34
1993/10/31 22931.95 20476.61
1993/11/30 23060.06 20282.08
1993/12/31 24267.18 20527.49
1994/01/31 25330.92 21225.43
1994/02/28 25330.92 20650.22
1994/03/31 24652.93 19749.87
1994/04/30 25113.62 20002.67
1994/05/31 24709.90 20330.71
1994/06/30 24686.15 19832.61
1994/07/31 25517.34 20483.12
1994/08/31 26277.28 21322.93
1994/09/30 25576.71 20800.52
1994/10/31 25956.68 21268.53
1994/11/30 24401.18 20493.93
1994/12/31 25205.44 20797.85
1995/01/31 25035.58 21337.14
1995/02/28 26825.70 22168.65
1995/03/31 27178.50 22822.85
1995/04/30 27583.56 23494.98
1995/05/31 26760.37 24434.07
1995/06/30 26472.90 25001.68
1995/07/31 28746.49 25830.73
1995/08/31 28720.35 25895.57
1995/09/30 28459.02 26988.36
1995/10/31 28106.23 26892.01
1995/11/30 29073.15 28072.57
1995/12/31 29028.66 28613.25
1996/01/31 29471.00 29587.24
1996/02/29 30300.39 29861.52
1996/03/31 31033.02 30149.08
1996/04/30 32049.63 30593.48
1996/05/31 32091.32 31382.49
1996/06/30 32244.20 31502.05
1996/07/31 29909.28 30110.29
1996/08/31 29937.08 30745.32
1996/09/30 30076.06 32475.67
1996/10/31 29839.79 33371.34
1996/11/30 31952.34 35893.88
1996/12/31 31787.40 35182.83
1997/01/31 32015.68 37381.05
1997/02/28 31716.07 37674.12
Let's say hypothetically that $10,000 was invested in Fidelity Select
Transportation Portfolio on February 28, 1987, and the current maximum 3%
sales charge was paid. As the chart shows, by February 28, 1997, the value
of the investment would have grown to $31,716 - a 217.16% increase on the
initial investment. For comparison, look at how the S&P 500 did over the
same period. With dividends and capital gains, if any, reinvested, the same
$10,000 investment would have grown to $37,674 - a 276.74% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1997
% OF FUND'S
INVESTMENTS
Delta Air Lines, Inc. 6.6
AMR Corp. 6.4
Burlington Northern Santa Fe Corp. 6.3
Eaton Corp. 5.4
Boeing Co. 5.3
UAL Corp. 5.3
Federal Express Corp. 4.8
Airborne Freight Corp. 4.8
Cummins Engine Co., Inc. 4.7
Union Pacific Corp. 3.7
TOP INDUSTRIES AS OF FEBRUARY 28, 1997
Row: 1, Col: 1, Value: 24.3
Row: 1, Col: 2, Value: 9.5
Row: 1, Col: 3, Value: 12.8
Row: 1, Col: 4, Value: 12.9
Row: 1, Col: 5, Value: 13.8
Row: 1, Col: 6, Value: 26.7
Air Transport,
Major National 26.7%
Railroads 13.8%
Trucking, Local &
Long Distance 12.9%
Auto & Truck Parts 12.8%
Air Courier Services 9.5%
All Others 24.3% *
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
TRANSPORTATION PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
NOTE TO SHAREHOLDERS: Jean-Marc Berteaux became Portfolio Manager of
Fidelity Select Transportation Portfolio on January 7, 1997.
Q. HOW DID THE FUND PERFORM, JEAN-MARC?
A. For the 12 months that ended February 28, 1997, the fund returned 4.67%.
The Standard & Poor's 500 Index had a return of 26.16% over the same
period.
Q. CAN YOU HIGHLIGHT ANY FACTORS THAT CONTRIBUTED TO PERFORMANCE?
A. Two factors simply involved timing. One of the key groups in the
portfolio was truck manufacturing stocks. The fund's considerable position
in these stocks reflected the belief that truck orders would accelerate
during the period. Orders did indeed pick up, but not until three or four
months later than anticipated. Also, companies were engaging in a decent
amount of restructuring activity designed to increase earnings potential.
The market looks favorably upon such activity, but we didn't begin to see
the benefits of these restructurings until late in the fourth quarter. Two
additional issues I'd point to would be the widespread speculation and
ensuing uncertainty over possible mergers and acquisitions, and the subpar
performance of both airline and railroad stocks.
Q. WITH RESPECT TO MERGERS AND ACQUISITIONS, WAS THERE A GOOD AMOUNT OF
CONSOLIDATION GOING ON DURING THE PERIOD?
A. There weren't a lot of significant deals finalized, but, as I mentioned,
there was no shortage of speculation. In the railroad sector, for instance,
much investor attention was paid to a potential merger between CSX and
Conrail - two of the biggest players in the industry. The possibility of
this deal becoming reality resulted in a slew of questions. What was true
and fair value? Would the deal fuel other takeover possibilities? Who else
might be considered takeover targets? This speculation certainly had a
negative effect on the fundamental characteristics of rail stocks. In terms
of other segments within the transportation industry, consolidation talk
also had an impact on the regional, less-than-truckload (LTL) truck market,
air freight forwarders and companies specializing in logistics planning.
Q. CAN YOU EXPLAIN WHAT LTLS ARE?
A. Sure. Trucking companies can be split into two groups: those that make
one stop, fill the truck up completely and deliver the goods to one
destination, and those that make two or three stops, fill the truck up with
goods from different manufacturers and then deliver the products to the
respective outlets. We refer to the latter group as less-than-truckloads,
or LTLs. I've built a significant position in LTL and truckload stocks
because I've felt they have good growth potential and, as I mentioned
earlier, I think consolidation will occur in this area.
Q. CAN YOU ISOLATE SOME OF THE CHANGES YOU'VE MADE SINCE YOU BEGAN MANAGING
THE FUND?
A. My main focus was on reducing a few of my larger positions and using
that money to broaden the number of stocks in the portfolio. In doing so,
I'm making less of an industry bet than an individual stock bet, and I'm
also spreading out my risk exposure.
Q. WHICH INDIVIDUAL STOCKS PERFORMED WELL? WHICH WERE DISAPPOINTMENTS?
A. Yellow Corp., one of the bigger companies in the trucking business, was
a very good stock. The company restructured itself and improved its
earnings potential in the process. On the other hand, J.B. Hunt, another
trucking firm, was a disappointment. The company announced an unforeseen
increase in pay to its drivers - about a 35% hike - that had a negative
impact on the stock price. Another negative concerned the fund's position
in Federal Express. The price of the stock appeared too expensive, but in
hindsight the portfolio would have benefited from holding a higher stake in
the company because the stock did quite well.
Q. WHAT'S YOUR OUTLOOK?
A. I'll continue to emphasize truck manufacturing stocks, based on
favorable valuations, earnings prospects and expected new truck demand.
Pricing trends in the trucking sector are encouraging as well. While
airlines were a drag on performance during this past period, I think the
group is poised to rebound so I'll look for opportunities there.
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 February 28, 1997, more than
$8 million
MANAGER: Jean-Marc Berteaux, since January
1997; equity analyst, trucking, air freight and
shipping industries, since 1997; equity analyst,
European conglomerates, 1996; equity
analyst, European paper, 1994-1995; joined
Fidelity in 1994
(checkmark)
TRANSPORTATION PORTFOLIO
INVESTMENTS FEBRUARY 28, 1997
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 96.9%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 8.6%
AIRCRAFT - 8.6%
Boeing Co. 4,500 $ 457,875
McDonnell Douglas Corp. 4,500 285,750
743,625
AIR TRANSPORTATION - 26.7%
AIR TRANSPORT, MAJOR NATIONAL - 26.7%
AMR Corp. (a) 7,000 550,375
ASA Holdings, Inc. 3,200 72,400
Continental Airlines, Inc. Class B (a) 10,000 286,250
Delta Air Lines, Inc. 7,000 563,500
Northwest Airlines Corp. Class A (a) 9,000 318,375
Southwest Airlines Co. 2,000 47,000
UAL Corp. (a) 8,000 454,000
2,291,900
AUTOS, TIRES, & ACCESSORIES - 13.8%
AUTO & TRUCK PARTS - 12.8%
Cummins Engine Co., Inc. 8,000 405,000
Eaton Corp. 6,500 466,375
Modine Manufacturing Co. 8,200 225,500
1,096,875
MOTOR VEHICLES & CAR BODIES - 1.0%
Navistar International Corp. (a) 9,600 92,400
TOTAL AUTOS, TIRES, & ACCESSORIES 1,189,275
INDUSTRIAL MACHINERY & EQUIPMENT - 0.4%
ENGINES & TURBINES - 0.4%
Detroit Diesel Corp. 2,000 34,750
RAILROADS - 13.8%
Burlington Northern Santa Fe Corp. 6,500 541,125
CSX Corp. 1,600 73,800
Illinois Central Corp., Series A 2,000 68,750
Union Pacific Corp. 5,300 319,325
Wisconsin Central Transportation Corp. (a) 5,000 179,375
1,182,375
SHIPPING - 3.8%
DEEP SEA TRANSPORT - 0.0%
Pacific Basin Bulk Shipping Ltd.
(warrants) (a) 1,000 -
SHIPPING - 3.8%
Kirby Corp. (a) 11,500 212,750
Knightsbridge Tankers Ltd. 5,000 110,625
TOTAL SHIPPING 323,375
TRUCKING & FREIGHT - 29.8%
AIR COURIER SERVICES - 9.5%
Airborne Freight Corp. 15,000 410,625
Federal Express Corp. (a) 8,000 412,000
822,625
FREIGHT FORWARDING - 0.6%
Eagle USA Airfreight, Inc. (a) 1,500 50,250
TRUCKING, LOCAL & LONG DISTANCE - 12.9%
Consolidated Freightways Corp. 3,600 30,600
Consolidated Freightways, Inc. 10,600 262,350
Heartland Express, Inc. 5,000 105,000
Knight Transportation, Inc. (a) 4,500 104,625
M.S. Carriers, Inc. (a) 11,900 205,275
Swift Transportation Co., Inc. (a) 3,600 95,850
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
Werner Enterprises, Inc. 6,600 $ 115,500
XTRA Corp. 4,700 190,350
1,109,550
TRUCKING, LONG DISTANCE - 6.8%
Hunt (J.B.) Transport Services, Inc. 7,200 99,900
Simon Transportation Services, Inc.
Class A (a) 6,000 102,000
USFreightways Corp. 10,800 260,550
Yellow Corp. (a) 7,600 118,750
581,200
TOTAL TRUCKING & FREIGHT 2,563,625
TOTAL COMMON STOCKS
(Cost $8,082,027) 8,328,925
CASH EQUIVALENTS - 3.1%
Taxable Central Cash Fund (b)
(Cost $266,673) 266,673 266,673
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $8,348,700) $ 8,595,598
LEGEND
1. Non-income producing
2. At period end, the seven-day yield on the Taxable Central Cash Fund was
5.31%. The yield refers to the income earned by investing in the fund over
the seven-day period, expressed as an annual percentage.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $17,241,655 and $19,693,750, respectively (see Note 3 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of FMR. The commissions paid to these affiliated
firms were $4,045 for the period (see Note 4 of Notes to Financial
Statements).
INCOME TAX INFORMATION
At February 28, 1997, the aggregate cost of investment securities for
income tax purposes was $8,413,216. Net unrealized appreciation aggregated
$182,382, of which $467,647 related to appreciated investment securities
and $285,265 related to depreciated investment securities.
The fund hereby designates approximately $436,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 100% of the dividends distributed during the fiscal year
qualifies for the dividends-received deduction for corporate shareholders
(unaudited).
The fund will notify shareholders in January 1998 of the applicable
percentage for use in preparing 1997 income tax returns.
TRANSPORTATION PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1997
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS
Investment in securities, at value $ 8,595,598
(cost $8,348,700) - See accompanying schedule
Receivable for investments sold 917,769
Receivable for fund shares sold 7,695
Dividends receivable 10,303
Interest receivable 1,830
Redemption fees receivable 25
Other receivables 7,738
Receivable from investment adviser for expense reductions 385
TOTAL ASSETS 9,541,343
LIABILITIES
Payable for investments purchased $ 472,184
Payable for fund shares redeemed 148,193
Other payables and accrued expenses 30,591
TOTAL LIABILITIES 650,968
NET ASSETS $ 8,890,375
Net Assets consist of:
Paid in capital $ 8,081,169
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 562,308
Net unrealized appreciation (depreciation) on investments 246,898
NET ASSETS, for 399,961 $ 8,890,375
shares outstanding
NET ASSET VALUE and redemption price per share ($8,890,375 (divided by) 399,961 shares) $22.23
Maximum offering price per share (100/97.00 of $22.23) $22.92
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1997
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME $ 198,398
Dividends
Interest 42,100
TOTAL INCOME 240,498
EXPENSES
Management fee $ 75,979
Transfer agent fees 155,420
Accounting fees and expenses 60,368
Non-interested trustees' compensation 52
Custodian fees and expenses 10,715
Registration fees 9,500
Audit 27,340
Legal 137
Miscellaneous 704
Total expenses before reductions 340,215
Expense reductions (27,211 313,004
)
NET INVESTMENT INCOME (LOSS) (72,506
)
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 966,297
Foreign currency transactions (109 966,188
)
Change in net unrealized appreciation (depreciation) on investment securities (640,423
)
NET GAIN (LOSS) 325,765
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 253,259
OTHER INFORMATION $ 101,332
Sales charges paid to FDC
Deferred sales charges withheld $ 682
by FDC
Exchange fees withheld by FSC $ 13,643
Expense reductions $ 1,476
Directed brokerage arrangements
Custodian interest credits 124
FMR reimbursement 25,611
$ 27,211
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
FEBRUARY 28, FEBRUARY 29,
1997 1996
Operations $ (72,506 $ (46,898
Net ) )
investment
income (loss)
Net realized 966,188 1,654,188
gain (loss)
Change in (640,423 (414,468
net ) )
unrealized
appreciation
(depreciation
)
NET INCREASE 253,259 1,192,822
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
Distributions to (369,344 (578,339
shareholders ) )
from net
realized
gains
Share 27,406,552 23,608,416
transactions
Net proceeds
from sales of
shares
Reinvestmen 362,964 567,930
t of
distributions
Cost of (30,259,063 (26,101,274
shares ) )
redeemed
Paid in 50,774 51,261
capital
portion of
redemption
fees
NET INCREASE (2,438,773 (1,873,667
(DECREASE) ) )
IN NET
ASSETS
RESULTING
FROM SHARE
TRANSACTIO
NS
TOTAL (2,554,858 (1,259,184
INCREASE ) )
(DECREASE)
IN NET ASSETS
NET ASSETS
Beginning of 11,445,233 12,704,417
period
End of period $ 8,890,375 $ 11,445,233
OTHER
INFORMATION
Shares
Sold 1,216,922 1,097,987
Issued in 16,356 26,954
reinvestment
of
distributions
Redeemed (1,355,455 (1,221,676
) )
Net increase (122,177) (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>
YEAR ENDED YEAR ENDED YEARS ENDED FEBRUARY 28, TEN MONTHS
FEBRUARY 28, FEBRUARY 29, ENDED
FEBRUARY 28,
SELECTED 1997 1996 1995 1994 1993
PER-SHARE
DATA D
</TABLE>
Net asset $ 21.92 $ 20.53 $ 21.67 $ 18.68 $ 15.49
value,
beginning of
period
Income from
Investment
Operations
Net (.13) (.09) E (.17) (.20) (.07)
investment
income (loss)
Net realized 1.06 2.60 1.17 5.07 3.55
and
unrealized
gain (loss)
Total from .93 2.51 1.00 4.87 3.48
investment
operations
Less
Distributions
From net (.71) (1.22) (2.19) (1.96) (.36)
realized gain
Redemption .09 .10 .05 .08 .07
fees added to
paid in
capital
Net asset $ 22.23 $ 21.92 $ 20.53 $ 21.67 $ 18.68
value, end of
period
TOTAL 4.67% 12.95% 5.90% 27.47% 23.14%
RETURN B, C
RATIOS AND
SUPPLEMENT
AL DATA
Net assets, $ 8,890 $ 11,445 $ 12,704 $ 13,077 $ 10,780
end of period
(000 omitted)
Ratio of 2.50% F 2.47% F 2.37% 2.40% 2.48% A,
expenses to F
average net
assets
Ratio of 2.48% G 2.44% G 2.36% G 2.39% G 2.48% A
expenses to
average net
assets after
expense
reductions
Ratio of net (.58)% (.43)% (.83)% (.96)% (.53)%
investment A
income (loss)
to average
net assets
Portfolio 148% 175% 178% 115% 116% A
turnover rate
Average $ .0313
commission
rate H
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
A ANNUALIZED B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 8 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 (LOSS) PER SHARE REFLECTS A SPECIAL DIVIDEND WHICH
AMOUNTED TO $.05 PER SHARE. 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 (SEE NOTE 8 OF NOTES TO FINANCIAL STATEMENTS). G 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 8 OF NOTES TO FINANCIAL STATEMENTS). 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>
BROKERAGE AND INVESTMENT MANAGEMENT PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance. You can
look at the total percentage change in value, the average annual percentage
change, or the growth of a hypothetical $10,000 investment. Total return
reflects the change in the value of an investment, assuming reinvestment of
the fund's dividend income and capital gains (the profits earned upon the
sale of 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 fund expenses, the past five year and past 10 year total
returns would have been lower.
CUMULATIVE TOTAL RETURNS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 28, 1997 YEAR YEARS YEARS
BROKERAGE AND INVESTMENT MANAGEMENT 44.27% 147.27% 167.68%
BROKERAGE AND INVESTMENT MANAGEMENT (INCL. 3% SALES CHARGE) 39.94% 139.85% 159.65%
S&P 500 26.16% 118.75% 276.74%
</TABLE>
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one, five, or 10 years. You can compare
the fund's returns 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, and excludes the effect of sales
charges.
AVERAGE ANNUAL TOTAL RETURNS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 28, 1997 YEAR YEARS YEARS
BROKERAGE AND INVESTMENT MANAGEMENT 44.27% 19.85% 10.35%
BROKERAGE AND INVESTMENT MANAGEMENT (INCL. 3% SALES CHARGE) 39.94% 19.12% 10.01%
S&P 500 26.16% 16.94% 14.16%
</TABLE>
AVERAGE ANNUAL RETURNS take the fund's 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
1987/02/28 9700.00 10000.00
1987/03/31 9660.46 10289.00
1987/04/30 8606.11 10197.43
1987/05/31 8223.91 10286.15
1987/06/30 8210.73 10805.60
1987/07/31 8230.50 11353.44
1987/08/31 8494.09 11776.92
1987/09/30 8204.14 11519.01
1987/10/31 5186.07 9037.81
1987/11/30 4797.28 8293.10
1987/12/31 5043.61 8924.20
1988/01/31 5404.99 9299.91
1988/02/29 5664.24 9733.29
1988/03/31 5514.98 9432.53
1988/04/30 5609.25 9537.23
1988/05/31 5397.14 9620.20
1988/06/30 5970.67 10061.77
1988/07/31 5923.47 10023.54
1988/08/31 5884.14 9682.74
1988/09/30 6033.60 10095.22
1988/10/31 6057.20 10375.87
1988/11/30 5923.47 10227.49
1988/12/31 5979.13 10406.47
1989/01/31 6758.33 11168.23
1989/02/28 6599.31 10890.14
1989/03/31 6607.26 11143.88
1989/04/30 6670.86 11722.25
1989/05/31 7108.17 12197.00
1989/06/30 6908.32 12127.48
1989/07/31 7739.88 13222.59
1989/08/31 7931.77 13481.75
1989/09/30 7683.91 13426.47
1989/10/31 7060.24 13114.98
1989/11/30 6988.28 13382.52
1989/12/31 6819.74 13703.71
1990/01/31 6520.06 12784.19
1990/02/28 6738.75 12949.10
1990/03/31 6925.04 13292.25
1990/04/30 6455.27 12959.95
1990/05/31 7070.83 14223.54
1990/06/30 7062.53 14126.82
1990/07/31 6811.16 14081.62
1990/08/31 5886.79 12808.64
1990/09/30 5384.06 12184.86
1990/10/31 5051.61 12132.46
1990/11/30 5384.06 12916.22
1990/12/31 5716.51 13276.58
1991/01/31 6192.21 13855.44
1991/02/28 6807.32 14846.11
1991/03/31 7504.46 15205.38
1991/04/30 7611.08 15241.87
1991/05/31 8012.96 15900.32
1991/06/30 7479.41 15172.09
1991/07/31 8054.12 15879.11
1991/08/31 8234.74 16255.44
1991/09/30 8661.67 15983.98
1991/10/31 9236.38 16198.16
1991/11/30 8727.35 15545.38
1991/12/31 10418.63 17323.77
1992/01/31 10566.42 17001.55
1992/02/29 10500.73 17222.57
1992/03/31 10221.59 16886.73
1992/04/30 9425.21 17383.20
1992/05/31 9400.58 17468.37
1992/06/30 9178.91 17208.09
1992/07/31 9696.14 17911.90
1992/08/31 9417.00 17544.71
1992/09/30 9351.32 17751.74
1992/10/31 9770.03 17813.87
1992/11/30 10648.52 18421.32
1992/12/31 10952.29 18647.90
1993/01/31 11600.89 18804.55
1993/02/28 11674.78 19060.29
1993/03/31 12610.73 19462.46
1993/04/30 12569.67 18991.47
1993/05/31 12980.44 19500.44
1993/06/30 13596.60 19556.99
1993/07/31 14048.45 19478.76
1993/08/31 15157.54 20217.01
1993/09/30 15436.87 20061.34
1993/10/31 14935.72 20476.61
1993/11/30 14524.95 20282.08
1993/12/31 16354.52 20527.49
1994/01/31 16703.06 21225.43
1994/02/28 15862.99 20650.22
1994/03/31 14084.55 19749.87
1994/04/30 13968.37 20002.67
1994/05/31 14307.97 20330.71
1994/06/30 14853.13 19832.61
1994/07/31 14504.59 20483.12
1994/08/31 14611.83 21322.93
1994/09/30 14057.74 20800.52
1994/10/31 14048.80 21268.53
1994/11/30 13074.68 20493.93
1994/12/31 13530.46 20797.85
1995/01/31 13360.66 21337.14
1995/02/28 13861.13 22168.65
1995/03/31 14004.12 22822.85
1995/04/30 14428.39 23494.98
1995/05/31 15239.70 24434.07
1995/06/30 16097.11 25001.68
1995/07/31 16871.54 25830.73
1995/08/31 16714.81 25895.57
1995/09/30 17728.94 26988.36
1995/10/31 16742.47 26892.01
1995/11/30 17148.12 28072.57
1995/12/31 16722.87 28613.25
1996/01/31 17813.07 29587.24
1996/02/29 17998.02 29861.52
1996/03/31 18805.93 30149.08
1996/04/30 18920.39 30593.48
1996/05/31 19547.09 31382.49
1996/06/30 19487.40 31502.05
1996/07/31 18293.69 30110.29
1996/08/31 18990.02 30745.32
1996/09/30 19964.89 32475.67
1996/10/31 20671.17 33371.34
1996/11/30 22700.49 35893.88
1996/12/31 23354.70 35182.83
1997/01/31 25058.18 37381.05
1997/02/28 25965.35 37674.12
Let's say hypothetically that $10,000 was invested in Fidelity Select
Brokerage and Investment Management Portfolio on February 28, 1987, and the
current maximum 3% sales charge was paid. As the chart shows, by February
28, 1997, the value of the investment would have grown to $25,965 - a
159.65% increase on the initial investment. For comparison, look at how the
S&P 500 did over the same period. With dividends and capital gains, if any,
reinvested, the same $10,000 investment would have grown to $37,674 - a
276.74% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1997
% OF FUND'S
INVESTMENTS
Bear Stearns Companies, Inc. 4.5
Schwab (Charles) Corp. 4.5
Alex Brown, Inc. 4.3
Travelers Group, Inc. (The) 4.3
Merrill Lynch & Co., Inc. 4.1
Marsh & McLennan Companies, Inc. 3.6
Equitable Companies, Inc. 3.6
Morgan Stanley Group, Inc. 3.5
Salomon, Inc. 3.4
Morgan (J.P.) & Co., Inc. 2.6
TOP INDUSTRIES AS OF FEBRUARY 28, 1997
Security & Commodity Brokers 32.5%
National Commercial Banks 11.9%
Financial Services 8.1%
Security Brokers & Dealers 6.0%
Investment Managers 5.3%
All Others 36.2% *
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
% OF FUND'S INVESTMENTS
BROKERAGE AND INVESTMENT MANAGEMENT PORTFOLIO
FUND TALK: THE MANAGERS' OVERVIEW
NOTE TO SHAREHOLDERS: Effective February 14, 1997, Peter Fruzzetti (right)
became Portfolio Manager of Fidelity Select Brokerage and Investment
Management Portfolio. The following is an interview with Louis Salemy, who
managed the fund during most of the period covered by the report, and Peter
Fruzzetti, who discusses his investing style and outlook.
Q. HOW DID THE FUND PERFORM, LOUIS?
L.S. Very well. For the 12 months that ended February 28, 1997, the fund
had a return of 44.27%. That beat the 26.16% return of the Standard &
Poor's 500 Index for the same period.
Q. WHY WAS IT SUCH A FAVORABLE PERIOD FOR BROKERAGE STOCKS?
L.S. There were a number of reasons. During the first half of 1996,
interest rates rose and brokerage stocks suffered. In August, however,
investor perceptions changed, rates declined and this group of stocks did
very well. Initial public offerings (IPOs) as well as mergers and
acquisitions also played significant roles.
Q. WHAT FACTORS DROVE THIS IPO AND MERGER/ACQUISITION ACTIVITY?
L.S. One of the trends I noticed during the period was the enormous amount
of money being poured into mutual funds. This money needed to be put to
work, and companies realized that their IPOs would help satisfy that
demand. With the economy progressing at moderate speed and with low
interest rates throughout the period, consolidation became a prevalent
theme. One transaction involved the acquisition of Dean Witter by Morgan
Stanley.
Q. WHICH INDIVIDUAL STOCKS MADE POSITIVE CONTRIBUTIONS TO THE PORTFOLIO?
WERE THERE ANY DISAPPOINTMENTS?
L.S. Merrill Lynch and Bear Stearns were good performers and contributed to
the fund's return. PaineWebber was also a good stock, with much of its
strong performance occurring due to takeover speculation. In terms of
disappointments, I can't think of a stock that performed poorly. It was
really a banner period for this group.
Q. TURNING TO YOU PETER, THE FUND HAD A SIGNIFICANT CASH POSITION -
APPROXIMATELY 20% - AT THE END OF THE PERIOD. WHY?
P.F. The fund's cash position had more to do with timing than anything
else. From the end of 1996 through February 28, 1997, assets in the
portfolio increased dramatically, from around $120 million to over $400
million. Much of this inflow came in January and February and I hadn't put
that new money to work yet. The 20% cash position is not a fund policy, nor
is it indicative of the way I manage.
Q. WHAT SORTS OF STRATEGIES WILL YOU EMPLOY IN MANAGING THE FUND?
P.F. Going forward, I think the consolidation theme is going to get more
and more popular. Commercial banks may join the fray, particularly
considering a rule proposal put forth that would allow commercial banks to
derive 25% of their revenues from investment banks. I'll continue to look
for opportunities in these areas.
Q. WHAT'S YOUR OUTLOOK?
P.F. 1996 was a great year for the industry as brokerage and investment
management stocks posted strong results. Although business conditions
remain solid, few are anticipating that 1997 will be as robust as this past
year. However, with consolidation expected to occur, stock valuations in
many cases are likely to benefit.
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 29, 1985
FUND NUMBER: 068
TRADING SYMBOL: FSLBX
SIZE: as of February 28, 1997, more than
$458 million
MANAGER: Peter Fruzzetti, since February
1997; equity analyst, insurance and health
care industries, 1993-1996; equity analyst,
insurance industry, since 1996; joined Fidelity
in 1993
(checkmark)
BROKERAGE AND INVESTMENT MANAGEMENT PORTFOLIO
INVESTMENTS FEBRUARY 28, 1997
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 80.9%
SHARES VALUE (NOTE 1)
BANKS - 14.5%
INTERNATIONAL BANKS - 0.1%
Toronto Dominion Bank 14,443 $ 406,426
NATIONAL COMMERCIAL BANKS - 11.9%
BankAmerica Corp. 70,000 7,962,500
Chase Manhattan Corp. 95,000 9,511,875
Citicorp 110,000 12,842,500
Mellon Bank Corp. 115,000 9,243,125
Morgan (J.P.) & Co., Inc. 125,000 13,140,625
NationsBank Corp. 130,000 7,783,750
60,484,375
STATE BANKS FEDERAL RESERVE - 2.5%
Bankers Trust New York Corp. 140,000 12,705,000
TOTAL BANKS 73,595,801
COMPUTER SERVICES & SOFTWARE - 0.1%
ELECTRONIC INFORMATION RETRIEVAL - 0.1%
E Trade Group, Inc. 20,000 480,000
CREDIT & OTHER FINANCE - 8.1%
FINANCIAL SERVICES - 8.1%
American Express Co. 40,000 2,615,000
Dean Witter, Discover & Co. 285,000 10,936,875
Equitable Companies, Inc. 575,000 18,040,625
First Chicago NBD Corp. 140,000 8,190,000
Investors Financial Services Corp. 6,297 199,930
Investors Financial Services Corp.
Class A 1,210 34,485
Perpetual PLC 20,000 844,081
Phoenix Duff & Phelps Corp. 30,000 240,000
41,100,996
MORTGAGE BANKERS - 0.0%
Homeside, Inc. 3,000 54,375
TOTAL CREDIT & OTHER FINANCE 41,155,371
INSURANCE - 10.7%
INSURANCE BROKERS & SERVICES - 3.6%
Marsh & McLennan Companies, Inc. 155,000 18,135,000
INSURANCE CARRIERS - 0.7%
AFLAC, Inc. 90,000 3,633,750
LIFE INSURANCE - 2.0%
Amerus Life Holdings, Inc. 15,500 325,500
Conseco, Inc. 50,000 1,962,500
Delphi Financial Group, Inc. Class A 20,000 680,000
Equitable of Iowa Companies 30,000 1,593,750
Liberty Financial Companies, Inc. 12,000 513,000
Life RE Corp. 7,600 326,800
Protective Life Corp. 8,900 382,700
SunAmerica, Inc. 95,000 4,358,125
10,142,375
PROPERTY-CASUALTY & REINSURANCE - 4.4%
Reinsurance Group of America, Inc. 10,000 490,000
Travelers Group, Inc. (The) 404,000 21,664,500
22,154,500
TOTAL INSURANCE 54,065,625
SHARES VALUE (NOTE 1)
SAVINGS & LOANS - 0.8%
SAVINGS BANKS, FEDERAL CHARTER - 0.8%
Dime Bancorp., Inc. (a) 220,000 $ 3,850,000
SECURITIES INDUSTRY - 46.7%
INVESTMENT ADVICE - 2.9%
Mutual Fund Co. Ltd. (For. Reg.) 27,600 111,926
New England Investment Companies LP 94,100 2,317,213
Oppenheimer Capital L P unit (a) 50,000 1,881,250
PIMCO Advisors LP Class A unit 72,700 1,781,150
Trimark Financial Corp. 33,200 1,019,186
United Asset Management Corp. 290,000 7,830,000
14,940,725
INVESTMENT MANAGERS - 5.3%
Alliance Capital Management LP 20,000 560,000
Eaton Vance Corp. 22,500 995,625
Franklin Resources, Inc. 188,350 11,018,475
John Nuveen Co. Class A 50,000 1,518,750
Pioneer Group, Inc. 150,000 3,506,250
Price (T. Rowe) Associates, Inc. 208,000 9,178,000
26,777,100
SECURITY & COMMODITY BROKERS - 32.5%
Advest Group, Inc. (The) (a) 235,800 3,212,775
Alex Brown, Inc. 374,500 21,767,813
BHC Financial, Inc. 45,000 900,000
Bear Stearns Companies, Inc. 763,172 22,895,160
Edwards (A.G.), Inc. 347,000 12,318,500
Fahnestock Viner Holdings, Inc. Class A 77,600 1,361,254
First Marathon, Inc. Class A (non-vtg.) 33,100 453,624
Jefferies Group, Inc. 61,800 2,726,925
Legg Mason, Inc. 76,700 3,413,150
McDonald & Co. Investments, Inc. 48,000 1,854,000
Merrill Lynch & Co., Inc. 219,000 21,024,000
Morgan Keegan, Inc. 91,950 1,712,569
Morgan Stanley Group, Inc. 281,100 17,744,438
Nomura Securities Co. Ltd. 160,000 2,142,649
Peregrine Investments Holdings Ltd.
(warrants) (a) 84,300 29,122
Piper Jaffray Inc. 32,600 554,200
Quick & Reilly Group, Inc. (The) 129,375 4,528,125
Raymond James Financial, Inc. 147,900 4,936,163
Salomon, Inc. 314,000 17,466,250
Schwab (Charles) Corp. 605,400 22,702,500
Southwest Securities Group, Inc. 60,000 975,000
164,718,217
SECURITY BROKERS & DEALERS - 6.0%
Donaldson Lufkin & Jenrette, Inc. 120,000 5,160,000
Everen Capital Corp. 20,000 522,500
Interra Financial, Inc. 56,250 2,299,219
Lehman Brothers Holdings, Inc. 373,600 12,562,300
PaineWebber Group, Inc. 295,700 9,647,213
30,191,232
TOTAL SECURITIES INDUSTRY 236,627,274
TOTAL COMMON STOCKS
(Cost $389,528,114) 409,774,071
CASH EQUIVALENTS - 19.1%
MATURITY VALUE
AMOUNT (NOTE 1)
Investments in repurchase agreements
(U.S. Treasury obligations) in a joint
trading account at 5.37%, dated
2/28/97 due 3/3/97 $2,005,897 $ 2,005,000
SHARES
Taxable Central Cash Fund (b) 94,915,476 94,915,476
TOTAL CASH EQUIVALENTS
(Cost $96,920,476) 96,920,476
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $486,448,590) $ 506,694,547
LEGEND
1. Non-income producing
2. At period end, the seven-day yield on the Taxable Central Cash Fund was
5.31%. The yield refers to the income earned by investing in the fund over
the seven-day period, expressed as an annual percentage.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $369,502,797 and $11,693,904, respectively (see Note 3 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $61,662 for the period (see
Note 4 of Notes to Financial Statements).
INCOME TAX INFORMATION
At February 28, 1997, the aggregate cost of investment securities for
income tax purposes was $486,519,928. Net unrealized appreciation
aggregated $20,174,619, of which $31,741,241 related to appreciated
investment securities and $11,566,622 related to depreciated investment
securities.
The fund hereby designates approximately $532,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 29% of the dividends distributed during the fiscal year
qualifies for the dividends-received deduction for corporate shareholders
(unaudited).
The fund will notify shareholders in January 1998 of the applicable
percentage for use in preparing 1997 income tax returns.
BROKERAGE AND INVESTMENT MANAGEMENT PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1997
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS
Investment in securities, at value (including repurchase agreements of $2,005,000) (cost $486,448,590) - See $ 506,694,547
accompanying schedule
Cash 1,275,037
Receivable for fund shares sold 5,602,027
Dividends receivable 211,646
Interest receivable 229,908
Redemption fees receivable 36,662
Other receivables 4,752
TOTAL ASSETS 514,054,579
LIABILITIES
Payable for investments purchased $ 43,817,088
Payable for fund shares redeemed 10,909,356
Accrued management fee 157,357
Other payables and 383,598
accrued expenses
TOTAL LIABILITIES 55,267,399
NET ASSETS $ 458,787,180
Net Assets consist of:
Paid in capital $ 437,740,159
Undistributed net investment income 162,209
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 638,855
Net unrealized appreciation (depreciation) on investments 20,245,957
NET ASSETS, for 17,810,662 $ 458,787,180
shares outstanding
NET ASSET VALUE and redemption price per share ($458,787,180 (divided by) 17,810,662 shares) $25.76
Maximum offering price per share (100/97.00 of $25.76) $26.56
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1997
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME $ 928,425
Dividends
Interest 739,269
TOTAL INCOME 1,667,694
EXPENSES
Management fee $ 448,938
Transfer agent fees 523,823
Accounting fees and expenses 88,697
Non-interested trustees' compensation 218
Custodian fees and expenses 7,000
Registration fees 309,323
Audit 26,537
Legal 259
Miscellaneous 1,633
Total expenses before reductions 1,406,428
Expense reductions (8,471 1,397,957
)
NET INVESTMENT INCOME 269,737
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 1,506,713
Foreign currency transactions (217 1,506,496
)
Change in net unrealized appreciation (depreciation) 16,730,770
on investment securities
NET GAIN (LOSS) 18,237,266
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 18,507,003
OTHER INFORMATION $ 903,649
Sales charges paid to FDC
Deferred sales charges withheld $ 1,311
by FDC
Exchange fees withheld by FSC $ 38,168
Expense reductions $ 8,471
Directed brokerage arrangement
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE YEAR ENDED YEAR ENDED
(DECREASE) IN FEBRUARY 28, FEBRUARY 29,
NET ASSETS 1997 1996
Operations $ 269,737 $ 166,720
Net
investment
income
Net realized 1,506,496 5,390,883
gain (loss)
Change in 16,730,770 2,887,650
net
unrealized
appreciation
(depreciation
)
NET INCREASE 18,507,003 8,445,253
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
Distributions to (152,473 (62,341
shareholders ) )
From net
investment
income
From net (1,573,937 (1,755,263
realized gain ) )
In excess of - (564,639
net realized )
gain
TOTAL (1,726,410 (2,382,243
DISTRIBUTION ) )
S
Share 516,393,133 73,164,616
transactions
Net proceeds
from sales of
shares
Reinvestmen 1,697,946 2,335,190
t of
distributions
Cost of (114,791,803 (70,682,177
shares ) )
redeemed
Paid in 325,639 155,181
capital
portion of
redemption
fees
NET INCREASE 403,624,915 4,972,810
(DECREASE)
IN NET
ASSETS
RESULTING
FROM SHARE
TRANSACTIO
NS
TOTAL 420,405,508 11,035,820
INCREASE
(DECREASE)
IN NET ASSETS
NET ASSETS
Beginning of 38,381,672 27,345,852
period
End of period $ 458,787,180 $ 38,381,672
(including
undistribute
d net
investment
income of
$162,209
and
$115,192,
respectivel
y)
OTHER
INFORMATION
Shares
Sold 20,890,431 4,209,639
Issued in 83,782 138,315
reinvestment
of
distributions
Redeemed (5,239,816 (4,034,436
) )
Net increase 15,734,397 313,518
(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>
YEAR ENDED YEAR ENDED YEARS ENDED FEBRUARY 28, TEN MONTHS
FEBRUARY 28, FEBRUARY 29, ENDED
FEBRUARY 28,
SELECTED 1997 1996 1995 1994 1993
PER-SHARE
DATA D
</TABLE>
Net asset $ 18.49 $ 15.51 $ 17.75 $ 14.22 $ 11.48
value,
beginning of
period
Income from .08 .09 (.03) (.02) -
Investment
Operations
Net
investment
income
Net realized 7.80 4.29 (2.25) 4.95 2.65
and
unrealized
gain (loss)
Total from 7.88 4.38 (2.28) 4.93 2.65
investment
operations
Less (.06) (.04) - (.01) -
Distributions
From net
investment
income
From net (.65) (1.09) - (1.47) -
realized gain
In excess of - (.35) - - -
net realized
gain
Total (.71) (1.48) - (1.48) -
distributions
Redemption .10 .08 .04 .08 .09
fees added to
paid in
capital
Net asset $ 25.76 $ 18.49 $ 15.51 $ 17.75 $ 14.22
value, end of
period
TOTAL 44.27% 29.85% (12.62)% 35.87% 23.87%
RETURN B, C
RATIOS AND
SUPPLEMENT
AL DATA
Net assets, $ 458,787 $ 38,382 $ 27,346 $ 59,810 $ 24,687
end of period
(000 omitted)
Ratio of 1.94% 1.64% E 2.54% E 1.79% 2.21% A
expenses to
average net
assets
Ratio of 1.93% F 1.61% F 2.54% 1.77% F 2.21% A
expenses to
average net
assets after
expense
reductions
Ratio of net .37% .50% (.20)% (.14)% .02% A
investment
income (loss)
to average
net assets
Portfolio 16% 166% 139% 295% 111% A
turnover rate
Average $ .0392
commission
rate G
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
A ANNUALIZED B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 8 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 8 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. You can
look at the total percentage change in value, the average annual percentage
change, or the growth of a hypothetical $10,000 investment. Total return
reflects the change in the value of an investment, assuming reinvestment of
the fund's dividend income and capital gains (the profits earned upon the
sale of securities that have grown in value), but does not include certain
fees paid by shareholders upon exchange or redemption.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 28, 1997 YEAR YEARS YEARS
FINANCIAL SERVICES 35.54% 203.06% 307.71%
FINANCIAL SERVICES 31.47% 193.97% 295.48%
(INCL. 3% SALES CHARGE)
S&P 500 26.16% 118.75% 276.74%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one, five, or 10 years. You can compare
the fund's returns 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, and excludes the effect of sales
charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 28, 1997 YEAR YEARS YEARS
FINANCIAL SERVICES 35.54% 24.83% 15.09%
FINANCIAL SERVICES 31.47% 24.07% 14.74%
(INCL. 3% SALES CHARGE)
S&P 500 26.16% 16.94% 14.16%
AVERAGE ANNUAL RETURNS take the fund's 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
1987/02/28 9700.00 10000.00
1987/03/31 9331.07 10289.00
1987/04/30 8744.00 10197.43
1987/05/31 8682.07 10286.15
1987/06/30 9002.53 10805.60
1987/07/31 9107.55 11353.44
1987/08/31 9635.37 11776.92
1987/09/30 9293.36 11519.01
1987/10/31 7190.17 9037.81
1987/11/30 6751.22 8293.10
1987/12/31 7093.29 8924.20
1988/01/31 7627.38 9299.91
1988/02/29 7881.43 9733.29
1988/03/31 7745.74 9432.53
1988/04/30 7610.06 9537.23
1988/05/31 7685.12 9620.20
1988/06/30 8158.58 10061.77
1988/07/31 8103.73 10023.54
1988/08/31 8080.63 9682.74
1988/09/30 8415.52 10095.22
1988/10/31 8438.62 10375.87
1988/11/30 8089.29 10227.49
1988/12/31 7945.50 10406.47
1989/01/31 8352.74 11168.23
1989/02/28 8334.90 10890.14
1989/03/31 8944.26 11143.88
1989/04/30 9107.75 11722.25
1989/05/31 9678.47 12197.00
1989/06/30 9611.03 12127.48
1989/07/31 10380.27 13222.59
1989/08/31 10673.60 13481.75
1989/09/30 10895.10 13426.47
1989/10/31 9856.47 13114.98
1989/11/30 9721.78 13382.52
1989/12/31 9482.35 13703.71
1990/01/31 8681.84 12784.19
1990/02/28 8996.00 12949.10
1990/03/31 8857.04 13292.25
1990/04/30 8542.88 12959.95
1990/05/31 9295.06 14223.54
1990/06/30 9035.27 14126.82
1990/07/31 8455.27 14081.62
1990/08/31 7443.30 12808.64
1990/09/30 6334.66 12184.86
1990/10/31 5781.85 12132.46
1990/11/30 6597.47 12916.22
1990/12/31 7175.31 13276.58
1991/01/31 7827.33 13855.44
1991/02/28 8726.56 14846.11
1991/03/31 9143.73 15205.38
1991/04/30 9440.38 15241.87
1991/05/31 10163.48 15900.32
1991/06/30 9338.41 15172.09
1991/07/31 10076.95 15879.11
1991/08/31 10744.42 16255.44
1991/09/30 10679.53 15983.98
1991/10/31 10914.38 16198.16
1991/11/30 10104.76 15545.38
1991/12/31 11597.34 17323.77
1992/01/31 12175.02 17001.55
1992/02/29 13049.35 17222.57
1992/03/31 12755.82 16886.73
1992/04/30 13246.07 17383.20
1992/05/31 13814.39 17468.37
1992/06/30 14132.25 17208.09
1992/07/31 14536.39 17911.90
1992/08/31 13702.65 17544.71
1992/09/30 14129.07 17751.74
1992/10/31 14689.14 17813.87
1992/11/30 15793.37 18421.32
1992/12/31 16563.33 18647.90
1993/01/31 17608.08 18804.55
1993/02/28 18076.18 19060.29
1993/03/31 19022.56 19462.46
1993/04/30 18111.89 18991.47
1993/05/31 18118.76 19500.44
1993/06/30 18795.17 19556.99
1993/07/31 19299.90 19478.76
1993/08/31 19900.77 20217.01
1993/09/30 20360.86 20061.34
1993/10/31 19814.93 20476.61
1993/11/30 18932.51 20282.08
1993/12/31 19470.92 20527.49
1994/01/31 20792.70 21225.43
1994/02/28 20037.95 20650.22
1994/03/31 19122.87 19749.87
1994/04/30 19849.04 20002.67
1994/05/31 20696.28 20330.71
1994/06/30 20207.64 19832.61
1994/07/31 20913.02 20483.12
1994/08/31 21645.98 21322.93
1994/09/30 20014.55 20800.52
1994/10/31 19908.15 21268.53
1994/11/30 18647.14 20493.93
1994/12/31 18760.72 20797.85
1995/01/31 19730.95 21337.14
1995/02/28 20983.99 22168.65
1995/03/31 21353.81 22822.85
1995/04/30 22023.83 23494.98
1995/05/31 23246.41 24434.07
1995/06/30 23355.18 25001.68
1995/07/31 24138.33 25830.73
1995/08/31 25078.10 25895.57
1995/09/30 26509.52 26988.36
1995/10/31 25830.80 26892.01
1995/11/30 27571.12 28072.57
1995/12/31 27642.08 28613.25
1996/01/31 28934.47 29587.24
1996/02/29 29178.74 29861.52
1996/03/31 29525.15 30149.08
1996/04/30 29197.47 30593.48
1996/05/31 29875.95 31382.49
1996/06/30 30313.10 31502.05
1996/07/31 29652.83 30110.29
1996/08/31 30536.22 30745.32
1996/09/30 32562.56 32475.67
1996/10/31 34625.32 33371.34
1996/11/30 37598.80 35893.88
1996/12/31 36520.06 35182.83
1997/01/31 38694.38 37381.05
1997/02/28 39543.13 37674.12
Let's say hypothetically that $10,000 was invested in Fidelity Select
Financial Services Portfolio on February 28, 1987, and the current maximum
3% sales charge was paid. As the chart shows, by February 28, 1997, the
value of the investment would have grown to $39,548 - a 295.48% increase on
the initial investment. For comparison, look at how the S&P 500 did over
the same period. With dividends and capital gains, if any, reinvested, the
same $10,000 investment would have grown to $37,674 - a 276.74% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1997
% OF FUND'S
INVESTMENTS
First Chicago NBD Corp. 4.9
Wachovia Corp. 4.8
National City Corp. 4.7
Household International, Inc. 4.7
American Express Co. 4.5
Bank of New York Co., Inc. 4.4
Barnett Banks, Inc. 4.3
Associates First Capital Corp. 4.2
Allstate Corp. 4.2
Citicorp 4.2
TOP INDUSTRIES AS OF FEBRUARY 28, 1997
National Commercial Banks 31.4%
Personal Credit Institutions 15.6%
Financial Services 10.9%
Property-Casualty &
Reinsurance 9.2%
Federal & Federally Sponsored
Credit Agencies 7.7%
All Others 25.2% *
Row: 1, Col: 1, Value: 25.2
Row: 1, Col: 2, Value: 7.7
Row: 1, Col: 3, Value: 9.199999999999999
Row: 1, Col: 4, Value: 10.9
Row: 1, Col: 5, Value: 15.6
Row: 1, Col: 6, Value: 31.4
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
FINANCIAL SERVICES PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Louis Salemy,
Portfolio Manager of
Fidelity Select Financial
Services Portfolio
Q. HOW DID THE FUND PERFORM, LOUIS?
A. Very well. For the 12 months that ended February 28, 1997, the fund
provided a total return of 35.54%. The Standard & Poor's 500 Index had a
return of 26.16% over the same time period.
Q. IT WAS A STRONG PERIOD FOR FINANCIAL SERVICE STOCKS. WHAT FACTORS WERE
CONDUCIVE TO THIS PERFORMANCE?
A. The main factor I'd point to was the friendly investing environment. The
interest rate situation stayed fairly moderate throughout the period -
rates weren't going down and they weren't going up. This climate typically
leads to strong performance in the financial service sector. Additionally,
there was a decent amount of takeover activity going on, and the market
reacted favorably to some of those deals.
Q. WHY WERE COMPANIES ENGAGING IN TAKEOVER ACTIVITY, AND WHY DOES THE
MARKET LOOK FAVORABLY UPON THOSE TRANSACTIONS?
A. In an economy like we've seen, scale - or size - becomes an overriding
factor. By that, I mean companies are of the mindset that bigger is better.
Companies also needed to become more competitive; if a company was to run
its business on a daily basis without doing anything proactively, its
returns would most likely be on the down slope. In seeking to gain a
competitive edge, the bigger is better mentality took shape. To answer the
second part of the question, the market thinks highly of takeovers if it
feels the deal is logical. In such instances, both sides in the transaction
can come out winners.
Q. VALUATIONS THROUGHOUT THE EQUITY MARKETS WERE QUITE HIGH DURING THE
PERIOD. HOW DID THIS AFFECT YOUR INVESTING UNIVERSE?
A. Stocks were quite expensive, and this was true of the overall market. In
that kind of environment, I try to consider the share price relative to
where the market is. On an absolute basis, I've never seen such high
valuation levels. In selecting stocks for the portfolio, I'm willing to pay
a higher price, but I need to see positive future return prospects.
Q. WITHIN THE FINANCIAL SERVICE SECTOR, BANKS PERFORMED QUITE WELL. WHAT
WAS GOING ON IN THIS AREA?
A. Overall, the performance of the larger-capitalization banks exceeded
that of the smaller caps. The fund had more of a bias toward the larger-cap
banks, which worked in my favor. When looking at bank stocks, I tend to
gravitate toward the ones that are taking proactive steps to improve their
businesses. During the period, the larger banks fell into this category
more so than their smaller counterparts.
Q. WHICH INDIVIDUAL STOCKS PERFORMED WELL? WHICH WOULD YOU IDENTIFY AS
DISAPPOINTMENTS?
A. American Express was a very solid contributor to the fund's overall
performance. There was some speculation during the period that American
Express was going to merge with Citicorp, and this may have fueled an
uptick in the share price. Household International, a consumer credit
company, also performed well. In terms of disappointments, Mercury Finance,
a consumer credit company no longer owned by the fund, was a disappointment
due to the company's internal accounting problems. I also could have owned
more large-cap regional banks, but valuations and my perception of overall
business prospects in that area kept me conservative.
Q. WHAT'S YOUR OUTLOOK?
A. I'll continue to seek out stocks of companies that are taking steps to
increase their returns. If interest rates were to rise and credit losses
increased, this would have a negative effect on the financial service
sector as a whole.
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 February 28, 1997, more than
$426 million
MANAGER: Louis Salemy, since 1994;
manager, Fidelity Select Brokerage and
Investment Management Portfolio, 1995-
February 1997; joined Fidelity in 1992
(checkmark)
FINANCIAL SERVICES PORTFOLIO
INVESTMENTS FEBRUARY 28, 1997
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 89.4%
SHARES VALUE (NOTE 1)
BANKS - 37.1%
NATIONAL COMMERCIAL BANKS - 31.4%
Bank of New York Co., Inc. 494,468 $ 19,160,632
BankAmerica Corp. 100,000 11,375,000
Capital One Financial Corp. 400,000 15,900,000
Citicorp 155,000 18,096,250
Comerica, Inc. 109,445 6,580,381
First Bank System, Inc. 100,000 7,850,000
First Union Corp. 1 88
Mercantile Bancorp., Inc. 22,050 1,276,144
National City Corp. 405,000 20,452,500
NationsBank Corp. 120,000 7,185,000
Republic New York Corp. 3,000 278,625
U.S. Bancorp 152,000 7,505,000
Wachovia Corp. 344,500 20,971,438
136,631,058
STATE BANKS FEDERAL RESERVE - 5.7%
Barnett Banks, Inc. 405,600 18,759,000
Northern Trust Corp. 140,000 5,950,000
24,709,000
TOTAL BANKS 161,340,058
CREDIT & OTHER FINANCE - 29.6%
BANK HOLDING COMPANY OFFICES - 3.1%
Fleet Financial Group, Inc. 224,167 13,674,187
FINANCIAL SERVICES - 10.9%
American Express Co. 297,300 19,435,988
Equitable Companies, Inc. 44,200 1,386,775
First Chicago NBD Corp. 367,000 21,469,500
First USA, Inc. 100,000 4,862,500
47,154,763
PERSONAL CREDIT INSTITUTIONS - 15.6%
Associates First Capital Corp. 379,000 18,286,750
Beneficial Corp. 211,800 14,640,675
Household International, Inc. 209,300 20,275,938
MBNA Corp. 450,000 14,400,000
67,603,363
TOTAL CREDIT & OTHER FINANCE 128,432,313
FEDERAL SPONSORED CREDIT - 7.7%
FEDERAL & FEDERALLY SPONSORED CREDIT AGENCIES - 7.7%
Federal Home Loan Mortgage
Corporation 369,600 10,995,600
Federal National Mortgage Association 229,900 9,196,000
Student Loan Marketing Association 126,000 13,340,250
33,531,850
INSURANCE - 12.4%
INSURANCE CARRIERS - 2.0%
AMBAC, Inc. 92,400 6,167,700
MGIC Investment Corp. 35,000 2,751,875
8,919,575
LIFE INSURANCE - 1.2%
American Bankers Insurance Group, Inc. 6,400 352,800
Aon Corp. 50,000 3,168,750
Conseco, Inc. 694 27,240
Providian Corp. 21,800 1,218,075
Torchmark Corp. 5,000 294,375
5,061,240
SHARES VALUE (NOTE 1)
PROPERTY-CASUALTY & REINSURANCE - 9.2%
Allstate Corp. 286,400 $ 18,150,600
Berkley (W.R.) Corp. 50,000 2,568,750
Chubb Corp. (The) 31,200 1,829,100
General Re Corp. 70,000 11,873,750
PMI Group, Inc. 50,000 2,737,500
Progressive Corp. 40,000 2,645,000
39,804,700
TOTAL INSURANCE 53,785,515
SAVINGS & LOANS - 0.5%
SAVINGS BANKS & SAVINGS & LOANS - 0.5%
Standard Federal Bancorp., Inc. 39,300 2,264,663
SECURITIES INDUSTRY - 2.1%
SECURITY BROKERS & DEALERS - 2.1%
Lehman Brothers Holdings, Inc. 274,000 9,213,250
TOTAL COMMON STOCKS
(Cost $307,070,630) 388,567,649
CASH EQUIVALENTS - 10.6%
Taxable Central Cash Fund (a)
(Cost $46,014,339) 46,014,339 46,014,339
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $353,084,969) $ 434,581,988
LEGEND
1. At period end, the seven-day yield on the Taxable Central Cash Fund was
5.31%. The yield refers to the income earned by investing in the fund over
the seven-day period, expressed as an annual percentage.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $279,579,444 and $204,300,098, respectively. (see Note 3 of
Notes to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of FMR. The commissions paid to these affiliated
firms were $77,580 for the period (see Note 4 of Notes to Financial
Statements).
INCOME TAX INFORMATION
At February 28, 1997, the aggregate cost of investment securities for
income tax purposes was $353,308,112. Net unrealized appreciation
aggregated $81,273,876, of which $84,222,602 related to appreciated
investment securities and $2,948,726 related to depreciated investment
securities.
The fund hereby designates approximately $9,742,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 44% of the dividends distributed during the fiscal year
qualifies for the dividends-received deduction for corporate shareholders
(unaudited).
The fund will notify shareholders in January 1998 of the applicable
percentage for use in preparing 1997 income tax returns.
FINANCIAL SERVICES PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1997
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS
Investment in securities, at value $ 434,581,988
(cost $353,084,969) - See accompanying schedule
Receivable for fund shares sold 3,382,642
Dividends receivable 642,019
Interest receivable 139,755
Redemption fees receivable 5,774
Other receivables 9,347
TOTAL ASSETS 438,761,525
LIABILITIES
Payable for investments purchased $ 8,601,972
Payable for fund shares redeemed 3,270,342
Accrued management fee 203,721
Other payables and accrued expenses 261,303
TOTAL LIABILITIES 12,337,338
NET ASSETS $ 426,424,187
Net Assets consist of:
Paid in capital $ 319,358,050
Undistributed net investment income 1,356,398
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 24,212,720
Net unrealized appreciation (depreciation) on investments 81,497,019
NET ASSETS, for 5,141,533 $ 426,424,187
shares outstanding
NET ASSET VALUE and redemption price per share ($426,424,187 (divided by) 5,141,533 shares) $82.94
Maximum offering price per share (100/97.00 of $82.94) $85.51
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1997
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME $ 5,424,124
Dividends
Interest 1,294,392
TOTAL INCOME 6,718,516
EXPENSES
Management fee $ 1,661,452
Transfer agent fees 1,891,458
Accounting fees and expenses 276,349
Non-interested trustees' compensation 1,304
Custodian fees and expenses 8,058
Registration fees 71,847
Audit 41,756
Legal 1,735
Miscellaneous 7,536
Total expenses before reductions 3,961,495
Expense reductions (54,595 3,906,900
)
NET INVESTMENT INCOME 2,811,616
REALIZED AND UNREALIZED GAIN (LOSS) 37,306,366
Net realized gain (loss) on
investment securities
Change in net unrealized appreciation (depreciation) on investment securities 40,110,184
NET GAIN (LOSS) 77,416,550
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 80,228,166
OTHER INFORMATION $ 1,400,884
Sales charges paid to FDC
Deferred sales charges withheld $ 8,487
by FDC
Exchange fees withheld by FSC $ 97,155
Expense reductions $ 54,119
Directed brokerage arrangements
Custodian interest credits 66
Transfer agent interest credits 410
$ 54,595
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE YEAR ENDED YEAR ENDED
(DECREASE) IN FEBRUARY 28, FEBRUARY 29,
NET ASSETS 1997 1996
Operations $ 2,811,616 $ 3,488,580
Net
investment
income
Net realized 37,306,366 13,966,548
gain (loss)
Change in 40,110,184 35,177,894
net
unrealized
appreciation
(depreciation
)
NET INCREASE 80,228,166 52,633,022
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
Distributions to (2,448,822 (1,512,445
shareholders ) )
From net
investment
income
From net (17,755,935 (3,719,914
realized gain ) )
TOTAL (20,204,757 (5,232,359
DISTRIBUTION ) )
S
Share 393,395,549 434,251,303
transactions
Net proceeds
from sales of
shares
Reinvestmen 19,821,424 5,143,919
t of
distributions
Cost of (317,821,398 (369,962,899
shares ) )
redeemed
Paid in 538,820 544,495
capital
portion of
redemption
fees
NET INCREASE 95,934,395 69,976,818
(DECREASE)
IN NET
ASSETS
RESULTING
FROM SHARE
TRANSACTIO
NS
TOTAL 155,957,804 117,377,481
INCREASE
(DECREASE)
IN NET ASSETS
NET ASSETS
Beginning of 270,466,383 153,088,902
period
End of period $ 426,424,187 $ 270,466,383
(including
undistribute
d net
investment
income of
$1,356,398
and
$1,976,083
,
respectivel
y)
OTHER
INFORMATION
Shares
Sold 5,282,928 7,271,619
Issued in 276,585 83,493
reinvestment
of
distributions
Redeemed (4,534,794 (6,412,630
) )
Net increase 1,024,719 942,482
(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>
YEAR ENDED YEAR ENDED YEARS ENDED FEBRUARY 28, TEN MONTHS
FEBRUARY 28, FEBRUARY 29, ENDED
FEBRUARY 28,
SELECTED 1997 1996 1995 1994 1993
PER-SHARE
DATA D
</TABLE>
Net asset $ 65.70 $ 48.23 $ 51.24 $ 53.29 $ 42.42
value,
beginning of
period
Income from
Investment
Operations
Net .74 1.03 .76 .29 .33
investment
income
Net realized 21.55 17.56 .87 5.02 14.30
and
unrealized
gain (loss)
Total from 22.29 18.59 1.63 5.31 14.63
investment
operations
Less
Distributions
From net (.63) (.37) (.79) (.20) (.51)
investment
income
From net (4.56) (.91) (3.93) (7.32) (3.38)
realized gain
Total (5.19) (1.28) (4.72) (7.52) (3.89)
distributions
Redemption .14 .16 .08 .16 .13
fees added to
paid in
capital
Net asset $ 82.94 $ 65.70 $ 48.23 $ 51.24 $ 53.29
value, end of
period
TOTAL 35.54% 39.05% 4.72% 10.85% 36.46%
RETURN B, C
RATIOS AND
SUPPLEMENT
AL DATA
Net assets, $ 426,424 $ 270,466 $ 153,089 $ 116,195 $ 214,612
end of period
(000 omitted)
Ratio of 1.45% 1.42% 1.56% 1.64% 1.54% A
expenses to
average net
assets
Ratio of 1.43% E 1.41% E 1.54% E 1.63% E 1.54% A
expenses to
average net
assets after
expense
reductions
Ratio of net 1.03% 1.78% 1.52% .53% .86% A
investment
income to
average net
assets
Portfolio 80% 125% 107% 93% 100% A
turnover rate
Average $ .0433
commission
rate F
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
A ANNUALIZED B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 8 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 8 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. You can
look at the total percentage change in value, the average annual percentage
change, or the growth of a hypothetical $10,000 investment. Total return
reflects the change in the value of an investment, assuming reinvestment of
the fund's dividend income and capital gains (the profits earned upon the
sale of 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 fund expenses, the past 10 year total returns would have
been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 28, 1997 YEAR YEARS YEARS
HOME FINANCE 47.50% 317.69% 545.07%
HOME FINANCE 43.07% 305.16% 525.72%
(INCL. 3% SALES CHARGE)
S&P 500 26.16% 118.75% 276.74%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one, five, or 10 years. You can compare
the fund's returns 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, and excludes the effect of sales
charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 28, 1997 YEAR YEARS YEARS
HOME FINANCE 47.50% 33.10% 20.49%
HOME FINANCE 43.07% 32.29% 20.13%
(INCL. 3% SALES CHARGE)
S&P 500 26.16% 16.94% 14.16%
AVERAGE ANNUAL RETURNS take the fund's 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
1987/02/28 9700.00 10000.00
1987/03/31 9121.70 10289.00
1987/04/30 8608.97 10197.43
1987/05/31 8310.88 10286.15
1987/06/30 8465.89 10805.60
1987/07/31 8436.08 11353.44
1987/08/31 9199.20 11776.92
1987/09/30 8608.97 11519.01
1987/10/31 6933.68 9037.81
1987/11/30 6367.30 8293.10
1987/12/31 7068.72 8924.20
1988/01/31 7921.23 9299.91
1988/02/29 7699.22 9733.29
1988/03/31 7486.09 9432.53
1988/04/30 7610.42 9537.23
1988/05/31 7601.54 9620.20
1988/06/30 8081.08 10061.77
1988/07/31 8223.16 10023.54
1988/08/31 8018.91 9682.74
1988/09/30 8427.41 10095.22
1988/10/31 8667.17 10375.87
1988/11/30 8232.04 10227.49
1988/12/31 8376.15 10406.47
1989/01/31 9078.66 11168.23
1989/02/28 9276.81 10890.14
1989/03/31 9321.84 11143.88
1989/04/30 9799.19 11722.25
1989/05/31 10222.50 12197.00
1989/06/30 10428.26 12127.48
1989/07/31 10791.62 13222.59
1989/08/31 11454.74 13481.75
1989/09/30 11881.68 13426.47
1989/10/31 10401.01 13114.98
1989/11/30 10064.91 13382.52
1989/12/31 9157.33 13703.71
1990/01/31 8398.18 12784.19
1990/02/28 8711.33 12949.10
1990/03/31 8730.31 13292.25
1990/04/30 8521.54 12959.95
1990/05/31 9328.14 14223.54
1990/06/30 9233.25 14126.82
1990/07/31 8436.13 14081.62
1990/08/31 7582.08 12808.64
1990/09/30 6927.31 12184.86
1990/10/31 6405.39 12132.46
1990/11/30 7098.12 12916.22
1990/12/31 7776.13 13276.58
1991/01/31 8519.93 13855.44
1991/02/28 9679.11 14846.11
1991/03/31 10123.46 15205.38
1991/04/30 10471.21 15241.87
1991/05/31 10905.90 15900.32
1991/06/30 10297.34 15172.09
1991/07/31 11398.55 15879.11
1991/08/31 11833.24 16255.44
1991/09/30 11736.64 15983.98
1991/10/31 11533.79 16198.16
1991/11/30 11002.50 15545.38
1991/12/31 12799.95 17323.77
1992/01/31 14061.37 17001.55
1992/02/29 14980.54 17222.57
1992/03/31 14726.30 16886.73
1992/04/30 15039.21 17383.20
1992/05/31 16525.53 17468.37
1992/06/30 16546.23 17208.09
1992/07/31 17359.82 17911.90
1992/08/31 16418.80 17544.71
1992/09/30 16683.46 17751.74
1992/10/31 16997.13 17813.87
1992/11/30 18741.94 18421.32
1992/12/31 20205.07 18647.90
1993/01/31 21654.67 18804.55
1993/02/28 22022.04 19060.29
1993/03/31 22806.41 19462.46
1993/04/30 21571.11 18991.47
1993/05/31 21201.95 19500.44
1993/06/30 21730.75 19556.99
1993/07/31 23127.58 19478.76
1993/08/31 24344.82 20217.01
1993/09/30 25901.30 20061.34
1993/10/31 26100.84 20476.61
1993/11/30 24933.49 20282.08
1993/12/31 25720.04 20527.49
1994/01/31 26846.08 21225.43
1994/02/28 26340.94 20650.22
1994/03/31 25846.32 19749.87
1994/04/30 26845.62 20002.67
1994/05/31 28501.40 20330.71
1994/06/30 28976.05 19832.61
1994/07/31 29616.29 20483.12
1994/08/31 30576.63 21322.93
1994/09/30 29527.98 20800.52
1994/10/31 27761.82 21268.53
1994/11/30 26326.81 20493.93
1994/12/31 26409.62 20797.85
1995/01/31 27573.47 21337.14
1995/02/28 29616.41 22168.65
1995/03/31 29566.89 22822.85
1995/04/30 31114.57 23494.98
1995/05/31 32959.40 24434.07
1995/06/30 33306.08 25001.68
1995/07/31 34643.28 25830.73
1995/08/31 37837.69 25895.57
1995/09/30 38630.10 26988.36
1995/10/31 37924.36 26892.01
1995/11/30 40016.82 28072.57
1995/12/31 40536.49 28613.25
1996/01/31 41644.81 29587.24
1996/02/29 42421.90 29861.52
1996/03/31 43390.09 30149.08
1996/04/30 42836.12 30593.48
1996/05/31 43790.94 31382.49
1996/06/30 43987.14 31502.05
1996/07/31 44771.92 30110.29
1996/08/31 46616.16 30745.32
1996/09/30 48970.52 32475.67
1996/10/31 52410.49 33371.34
1996/11/30 56334.40 35893.88
1996/12/31 55484.70 35182.83
1997/01/31 59089.36 37381.05
1997/02/28 62571.61 37674.12
Let's say hypothetically that $10,000 was invested in Fidelity Select Home
Finance Portfolio on February 28, 1987, and the current maximum 3% sales
charge was paid. As the chart shows, by February 28, 1997, the value of the
investment would have grown to $62,572 - a 525.72% increase on the initial
investment. For comparison, look at how the S&P 500 did over the same
period. With dividends and capital gains, if any, reinvested, the same
$10,000 investment would have grown to $37,674 - a 276.74% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1997
% OF FUND'S
INVESTMENTS
Charter One Financial Corp. 3.5
Student Loan Marketing Association 2.9
Greenpoint Financial Corp. 2.7
TCF Financial Corp. 2.3
Washington Mutual, Inc. 2.1
Peoples Heritage Financial Group, Inc. 2.1
Aames Financial Corp. 1.9
Chase Manhattan Corp. 1.9
Bank United Corp. Class A 1.9
Dime Bancorp., Inc. 1.8
TOP INDUSTRIES AS OF FEBRUARY 28, 1997
Savings Banks &
Savings & Loans 21.8%
National Commercial
Banks 21.4%
Savings Banks, Federal
Charter 15.6%
Federal & Federally Sponsored
Credit Agencies 6.2%
Mortgage Bankers 5.4%
All Others 29.6% *
Row: 1, Col: 1, Value: 29.6
Row: 1, Col: 2, Value: 5.4
Row: 1, Col: 3, Value: 6.2
Row: 1, Col: 4, Value: 15.6
Row: 1, Col: 5, Value: 21.4
Row: 1, Col: 6, Value: 21.8
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
HOME FINANCE PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Bill Rubin,
Portfolio Manager of
Fidelity Select Home
Finance Portfolio
Q. HOW DID THE FUND PERFORM, BILL?
A. Very well. For the 12 months that ended February 28, 1997, the portfolio
had a return of 47.50%. This topped the 26.16% return of the Standard &
Poor's 500 Index over the same period.
Q. CAN YOU POINT TO ANY OF THE FACTORS THAT INFLUENCED THIS STRONG
PERFORMANCE?
A. I believe it's helpful first to look at the investing climate over the
past year from a macroeconomic standpoint. In terms of interest rates, we
saw long-term rates climb during much of the first half of the period. As a
result, financial services stocks didn't perform too well. By the midpoint
of the period, rates started to come down and financial services stocks
fared better. The financial services sector also benefited from a
relatively strong economy. In periods of good economic growth, housing
starts rise, consumer income and confidence levels are high, housing prices
are typically stable to up, and demand increases for mortgages. With this
backdrop, plus improving profitability and earnings growth, savings and
loan institutions, or thrifts - which make up about 40% of the portfolio -
and banks performed exceptionally well.
Q. HOW HAVE THE MUCH-MALIGNED THRIFTS MANAGED TO RIGHT THEIR SHIP?
A. The mid-1990s have revealed that the thrift industry is much healthier
than any time in the last 20 years. Four themes - balance sheet
restructuring, improved asset quality, industry consolidation and stock
buybacks - have played leading roles in this turnaround. In the liability
column of the balance sheet, many thrifts are reducing their cost of
deposits by increasing the percentage of low-cost checking accounts and
decreasing the percentage of high-cost CDs. This shift also generates more
non-interest fee income. On the asset side, thrifts are increasing the
percentage of higher-yielding consumer and commercial loans and decreasing
the percentage of lower-yielding mortgage loans. These actions have
resulted in increased net interest margins and increased return on assets
and equity. Companies also are redeploying excess capital into stock
buybacks and acquisitions, boosting earnings per share growth.
Q. HOW DID THE REGIONAL BANKS STACK UP DURING THE PERIOD?
A. Regional banks, which account for approximately 26% of the portfolio,
were trading at higher multiples than thrifts. Overall, the banks are
operating quite efficiently and effectively. They have been driving down
operating expenses. Their returns have steadily improved, earnings have
been strong, and they've been using their excess capital to buy back stock
and make acquisitions.
Q. SINCE YOU TOOK OVER THE FUND IN OCTOBER 1996, YOU SEEM TO BE MAKING
SMALLER BETS IN THE TOP HOLDINGS . . .
A. I've made a conscious effort to do that. By spreading out and
diversifying as much as I can within the industry, I feel that I can get a
little extra boost in overall performance with a bit less portfolio risk.
I've added about 40 companies to the fund's list of holdings and, while
this was partly driven by the need to put increased cash inflows to work,
it also reflects my strategy of broadening out. While I'm underweighted
relative to my benchmarks in some of the larger companies, I'm heavily
overweighted in many of the smaller ones that may be currently overlooked
or undervalued. Also, by diversifying the fund's positions, I'm able to
reduce overall portfolio risk.
Q. WHICH INDIVIDUAL STOCKS CONTRIBUTED POSITIVELY TO THE FUND'S RETURN?
WERE THERE ANY DISAPPOINTMENTS?
A. One of the best contributors was Washington Mutual, a thrift that has
been a very aggressive acquiror of other companies and has enjoyed strong
earnings growth. Another stock that generated good earnings was Greenpoint
Financial, driven by very strong loan originations. BankAmerica, Charter
One Financial, Nationsbank and Astoria Financial also contributed
handsomely. In terms of disappointments, most of the stocks within the
portfolio did well. There were no positions that were significant
detractors.
Q. WHAT'S YOUR OUTLOOK?
A. While the stocks in this group should perform well, we most likely won't
equal the performance levels we saw during the period. Company fundamentals
should continue to improve and, as consolidation progresses, valuations
should remain at elevated levels. We may start to see selected banks join
thrifts in terms of consolidation activity. The overall credit and asset
quality outlook is 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: December 16, 1985
FUND NUMBER: 098
TRADING SYMBOL: FSVLX
SIZE: as of February 28, 1997, more than
$1.1 billion
MANAGER: Bill Rubin, since October 1996;
manager, Fidelity Select Defense &
Aerospace Portfolio, 1994 - January 1997;
equity analyst, various industry sectors
since 1994; joined Fidelity in 1994
(checkmark)
HOME FINANCE PORTFOLIO
INVESTMENTS FEBRUARY 28, 1997
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 92.7%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 0.2%
MISSILES & SPACE VEHICLES - 0.2%
Orbital Sciences Corp. (a) 165,100 $ 2,847,975
BANKS - 25.9%
COMMERCIAL BANKS - 0.1%
Norwalk Savings Society 35,000 883,750
NATIONAL COMMERCIAL BANKS - 21.4%
Bank of Boston Corp. 199,648 15,048,457
Bank of New York Co., Inc. 450,800 17,468,500
Bank of New York Co., Inc.
(warrants) (a) 32,500 3,055,000
BankAmerica Corp. 166,900 18,984,875
Chase Manhattan Corp. 221,300 22,157,663
Citicorp 166,100 19,392,175
Comerica, Inc. 85,000 5,110,625
CoreStates Financial Corp. 100,000 5,262,500
First Bank System, Inc. 75,000 5,887,500
First Savings Bank of Washington
Bancorp, Inc. 70,000 1,382,500
First Tennessee National Corp. 45,000 2,103,750
First Union Corp. 103,930 9,119,858
KeyCorp 95,000 5,082,500
Mellon Bank Corp. 77,800 6,253,175
National City Corp. 90,387 4,564,544
NationsBank Corp. 343,000 20,537,125
Norwest Corp. 70,000 3,482,500
PNC Financial Corp. 130,000 5,508,750
Peoples Heritage Financial
Group, Inc. 795,800 24,968,225
Republic New York Corp. 149,900 13,921,963
Riggs National Corp. 270,000 5,383,125
St. Francis Capital Corp. 10,000 290,000
SouthTrust Corp. 40,000 1,585,000
TF Financial Corp. (c) 250,400 4,695,000
UnionBanCal Corp. 134,400 8,097,600
Union Planters Corp. 252,421 11,295,839
Wachovia Corp. 149,200 9,082,550
Wells Fargo & Co. 17,000 5,172,250
254,893,549
STATE BANKS FEDERAL RESERVE - 4.4%
Bank Plus Corp. (a) 353,000 4,765,500
Crestar Financial Corp. 90,000 3,307,500
Dime Community Bancorp, Inc. 580,900 10,746,650
North Fork Bancorp., Inc. 483,708 19,650,638
R&G Financial Corp. Class B 102,000 2,728,500
TR Financial Corp. 190,000 6,709,375
UST Corp. 208,240 4,307,965
52,216,128
TOTAL BANKS 307,993,427
COMMUNICATIONS EQUIPMENT - 0.4%
DATACOMMUNICATIONS EQUIPMENT - 0.4%
3Com Corp. (a) 150,000 4,966,406
COMPUTER SERVICES & SOFTWARE - 0.0%
CAD/CAM/CAE - 0.0%
Ultradata Corp. 91,000 341,250
SHARES VALUE (NOTE 1)
CREDIT & OTHER FINANCE - 12.0%
BANK HOLDING COMPANY OFFICES - 3.4%
Fleet Financial Group, Inc. 114,800 $ 7,002,800
Greenpoint Financial Corp. 534,300 32,058,000
Little Falls Bancorp, Inc. 135,000 1,788,750
40,849,550
BUSINESS CREDIT - 0.1%
Federal Agricultural Mortgage Corporation:
Class A (vtg.) 10,000 270,000
Class C (non-vtg.) (a) 29,000 913,500
1,183,500
FINANCIAL SERVICES - 2.4%
Delta Financial Corp. (a) 176,600 3,708,600
First Chicago NBD Corp. 240,300 14,057,550
RAC Financial Group, Inc. (a) 235,000 7,666,875
RCSB Financial, Inc. 55,000 1,849,375
Wilshire Financial Services
Group, Inc. (a)(c) 81,300 1,361,775
28,644,175
MORTGAGE BANKERS - 5.4%
Aames Financial Corp. 738,750 22,254,844
Cityscape Financial Corp. (a) 207,000 5,666,625
Countrywide Credit Industries, Inc. 50,000 1,456,250
First Alliance Mortgage Co. (a) 20,000 545,000
Green Tree Financial Corp. 50,000 1,875,000
Homeside, Inc. 116,000 2,102,500
Imperial Credit Industries 40,000 965,000
Imperial Credit Mortgage
Holdings, Inc. 177,800 4,289,425
Money Store, Inc. 220,000 5,692,500
North American Mortgage Co. 120,000 2,445,000
PFF Bancorp, Inc. 737,500 11,984,375
Resource Bancshares Mortgage
Group, Inc. 47,500 712,500
Southern Pacific Funding Corp. (a) 110,000 2,406,250
United Companies Financial Corp. 80,000 2,080,000
64,475,269
PERSONAL CREDIT INSTITUTIONS - 0.7%
Associates First Capital Corp. 50,000 2,412,500
Beneficial Corp. 80,700 5,578,388
7,990,888
TOTAL CREDIT & OTHER FINANCE 143,143,382
ELECTRICAL EQUIPMENT - 2.2%
CURRENT-CARRYING WIRING DEVICE - 0.1%
Adflex Solutions (a) 109,800 1,482,300
ELECTRICAL EQUIPMENT - WHOLESALE - 0.2%
Antec Corp. (a) 274,300 2,331,550
ELECTRICAL MACHINERY - 0.2%
Amphenol Corp. Class A (a) 118,400 3,019,200
TV & RADIO COMMUNICATION EQUIPMENT - 1.1%
C-COR Electronics, Inc. (a) 128,100 1,761,375
California Amplifier, Inc. (a) 438,400 2,356,400
General Instrument Corp. (a) 190,700 4,529,125
Ortel Corp. (a) 174,700 2,271,100
Scientific-Atlanta, Inc. 118,000 1,976,500
12,894,500
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
ELECTRICAL EQUIPMENT - CONTINUED
WIRING & LIGHTING - 0.6%
Oak Industries, Inc. (a) 345,000 $ 6,986,250
TOTAL ELECTRICAL EQUIPMENT 26,713,800
ELECTRONICS - 0.6%
CONNECTORS - 0.4%
AMP, Inc. 104,100 4,046,888
ELECTRONIC PARTS - WHOLESALE - 0.2%
Harmonic Lightwaves, Inc. (a) 163,000 2,730,250
TOTAL ELECTRONICS 6,777,138
FEDERAL SPONSORED CREDIT - 6.2%
FEDERAL & FEDERALLY SPONSORED CREDIT AGENCIES - 6.2%
Federal Home Loan
Mortgage Corporation 683,800 20,343,050
Federal National Mortgage Association 463,900 18,556,000
Student Loan Marketing Association 328,200 34,748,175
73,647,225
INSURANCE - 0.8%
INSURANCE BROKERS & SERVICES - 0.1%
Fidelity National Financial, Inc. 79,750 1,056,688
Stewart Information Services Corp. 12,900 259,613
1,316,301
PROPERTY-CASUALTY & REINSURANCE - 0.7%
PMI Group, Inc. 140,000 7,665,000
TOTAL INSURANCE 8,981,301
METALS & MINING - 0.4%
NONFERROUS WIRE - 0.4%
Cable Design Technology Corp. (a) 188,300 4,989,950
REAL ESTATE INVESTMENT TRUSTS - 1.7%
Capstead Mortgage Corp. 451,402 10,946,499
Criimi Mae, Inc. 320,000 5,160,000
Redwood Trust, Inc. 10,000 477,500
Thornburg Mortgage Asset Corp. 162,000 3,483,000
20,066,999
SAVINGS & LOANS - 40.4%
SAVINGS BANKS & SAVINGS & LOANS - 21.8%
Andover Bancorp., Inc. 42,500 1,195,313
Astoria Financial Corp. 494,400 21,259,200
Bankers Corp. 79,500 1,957,688
Bay View Capital, Inc. 151,780 8,499,680
BostonFed Bancorp, Inc. 79,700 1,295,125
Cameron Financial Corp. 110,000 1,828,750
Charter One Financial Corp. 872,800 41,567,100
Coast Savings Financial, Inc. (a) 235,800 11,023,650
Collective Bancorp., Inc. 530,990 21,836,964
Commercial Federal Corp. 607,650 21,799,444
Eagle Financial Corp. 10,000 295,000
First Bell Bancorp, Inc. 182,400 2,941,200
First Federal Savings & Loan Association 118,400 3,019,200
First Financial Corp. 358,925 9,601,244
FirstFed Financial Corp. (a) 442,400 11,502,400
GA Financial, Inc. 277,700 4,477,913
Glendale Federal Bank FSB (a) 574,500 15,296,063
Golden West Financial Corp. 82,300 5,575,825
Great Western Financial Corp. 471,873 20,703,428
SHARES VALUE (NOTE 1)
Greater New York Savings Bank 255,000 $ 4,016,250
MAF Bancorp., Inc. 100,000 4,062,500
Pamrapo Bancorp, Inc. 35,000 695,625
Sovereign Bancorp., Inc. 797,520 10,068,690
Statewide Financial Corp. 215,000 3,762,500
TCF Financial Corp. 598,700 27,166,013
Webster Financial Corp. 108,600 4,262,550
259,709,315
SAVINGS BANKS, NO FEDERAL CHARTER - 3.0%
Acadiana Bancshares, Inc. (c) 153,300 2,663,588
Avondale Financial Corp. (a)(c) 360,500 6,669,250
Century Bancorp, Inc. Class A (non-vtg.) 35,000 463,750
Dime Financial Corp. (c) 270,300 5,574,938
Downey Financial Corp. 75,000 1,771,875
First Mutual Bancorp., Inc. 67,500 1,080,000
ITLA Capital Corp. (a) 158,000 2,587,250
Ocean Financial Corp. (a) 345,000 10,479,375
People's Bancshares, Inc. 87,500 1,121,094
SIS Bancorp., Inc. 114,200 3,026,300
35,437,420
SAVINGS BANKS, FEDERAL CHARTER - 15.6%
Affiliated Community Bancorp., Inc. 85,000 2,093,125
Ahmanson (H.F.) & Co. 425,000 17,478,125
Albank Financial Corp. 232,500 8,166,563
American National Bancorp., Inc. 70,200 921,375
Bank United Corp. Class A 672,800 22,034,200
Carver Bancorp, Inc. (a)(c) 142,000 1,402,250
Catskill Financial Corp. 80,000 1,270,000
CenFed Financial Corp. 137,629 4,679,386
Citizens First Financial Corp. (a)(c) 174,700 2,707,850
Coastal Bancorp, Inc. 30,000 813,750
Dime Bancorp., Inc. (a) 1,251,800 21,906,500
First Bergen Bancorp (c) 235,000 3,436,875
First Defiance Financial Corp. 482,900 6,307,881
First Federal Bancshares of
Arkansas, Inc. 75,000 1,415,625
First Palm Beach Bancorp, Inc. 40,000 1,180,000
HF Bancorp, Inc. (a) 100,000 1,337,500
Haven Bancorp., Inc. 180,000 5,985,000
Interwest Bancorp., Inc. 27,000 945,000
Long Island Bancorp., Inc. 501,300 18,360,113
ML Bancorp, Inc. 138,900 2,361,300
Provident Financial Holdings, Inc. 190,000 3,040,000
Quaker City Bancorp (a) 90,000 1,755,000
RedFed Bancorp, Inc. (a) 350,000 4,987,500
Roosevelt Financial Group, Inc. 265,000 6,095,000
SGV Bancorp., Inc. (a)(c) 140,000 1,907,500
Teche Holding Co. 10,000 150,000
Washington Federal, Inc. 630,680 16,082,340
Washington Mutual, Inc. 472,500 24,983,438
Yonkers Financial Corp. 85,000 1,147,500
184,950,696
TOTAL SAVINGS & LOANS 480,097,431
SECURITIES INDUSTRY - 1.6%
SECURITY & COMMODITY BROKERS - 1.6%
Advest Group, Inc. (The) (a) 97,400 1,327,075
Alex Brown, Inc. 151,050 8,779,781
Edwards (A.G.), Inc. 100,000 3,550,000
McDonald & Co. Investments, Inc. 99,300 3,835,463
Morgan Keegan, Inc. 112,000 2,086,000
19,578,319
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
SERVICES - 0.3%
MANAGEMENT CONSULTING SERVICES - 0.3%
Aresco, Inc. (a) 141,000 $ 2,890,500
Firstmark Corp. (a) 103,400 258,500
3,149,000
TOTAL COMMON STOCKS
(Cost $860,680,002) 1,103,293,603
CONVERTIBLE PREFERRED STOCKS - 0.8%
REAL ESTATE INVESTMENT TRUSTS - 0.8%
Criimi Mae, Inc. $2.7188 200,000 7,375,000
Walden Residential Properties, Inc.,
Series B, $2.29 80,000 2,340,000
TOTAL CONVERTIBLE PREFERRED STOCKS
(Cost $8,486,250) 9,715,000
CASH EQUIVALENTS - 6.5%
MATURITY VALUE
AMOUNT (NOTE 1)
Investments in repurchase agreements
(U.S. Treasury obligations) in a joint
trading account 5.39%, dated
2/28/97 due 3/3/97 $ 2,519,131 2,518,000
SHARES
Taxable Central Cash Fund (b) 74,171,983 74,171,983
TOTAL CASH EQUIVALENTS
(Cost $76,689,983) 76,689,983
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $945,856,235) $ 1,189,698,586
LEGEND
1. Non-income producing
2. At period end, the seven-day yield on the Taxable Central Cash Fund was
5.31%. The yield refers to the income earned by investing in the fund over
the seven-day period, expressed as an annual percentage.
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
Acadiana Bancshares, Inc. $ - $ 118,000 $ 28,494 $ 2,663,588
Avondale Financial Corp. 1,491,614 602,263 - 6,669,250
Cameron Financial Corp. - 1,061,406 22,204 -
Carver Bancorp, Inc. - 603,477 - 1,402,250
Citizens First Financial Corp. - - - 2,707,850
Dime Financial Corp. - - 45,951 5,574,938
Farmers & Mechanics Bank - 72,600 - -
First Bergen Bancorp - - - 3,436,875
Mississippi View Holding Co. - 309,375 - -
North Side Savings Bank 515,650 920,416 206,125 -
SGV Bancorp., Inc. - 1,163,938 - 1,907,500
TF Financial Corp. 565,779 - - 4,695,000
Wells Financial Corp. - 1,074,813 - -
Wilshire Financial Services
Group, Inc. - - - 1,361,775
Totals $ 2,573,043 $ 5,926,288 $ 302,774 $ 30,419,026
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $788,129,655 and $500,497,099, respectively (see Note 3 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $201,617 for the period
(see Note 4 of Notes to Financial Statements).
The fund participated in the bank borrowing program.The maximum loan and
the average daily balances during the period for which loans were
outstanding amounted to $7,933,000 and $4,429,000, respectively. The
weighted average interest rate was 5.6% (see Note 7 of Notes to Financial
Statements).
INCOME TAX INFORMATION
At February 28, 1997, the aggregate cost of investment securities for
income tax purposes was $946,282,633. Net unrealized appreciation
aggregated $243,415,953, of which $253,216,475 related to appreciated
investment securities and $9,800,522 related to depreciated investment
securities.
The fund hereby designates approximately $32,867,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 46% of the dividends distributed during the fiscal year
qualifies for the dividends-received deduction for corporate shareholders
(unaudited).
The fund will notify shareholders in January 1998 of the applicable
percentage for use in preparing 1997 income tax returns.
HOME FINANCE PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1997
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS
Investment in securities, at $ 1,189,698,586
value (including repurchase agreements of $2,518,000)
(cost $945,856,235) - See accompanying schedule
Cash 833
Receivable for fund shares sold 19,872,119
Dividends receivable 928,412
Interest receivable 253,221
Redemption fees receivable 11,685
Other receivables 31,812
TOTAL ASSETS 1,210,796,668
LIABILITIES
Payable for investments purchased $ 24,182,300
Payable for fund shares redeemed 8,624,153
Accrued management fee 526,094
Other payables and accrued expenses 636,091
TOTAL LIABILITIES 33,968,638
NET ASSETS $ 1,176,828,030
Net Assets consist of:
Paid in capital $ 842,131,589
Undistributed net investment income 4,942,441
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 85,911,649
Net unrealized appreciation (depreciation) on investments 243,842,351
NET ASSETS, for 25,582,585 $ 1,176,828,030
shares outstanding
NET ASSET VALUE and redemption price per share ($1,176,828,030 (divided by) 25,582,585 shares) $46.00
Maximum offering price per share (100/97.00 of $46.00) $47.42
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1997
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME $ 15,114,348
Dividends (including $302,774 received from affiliated issuers)
Interest 3,898,863
TOTAL INCOME 19,013,211
EXPENSES
Management fee $ 4,201,147
Transfer agent fees 4,319,789
Accounting fees and expenses 596,198
Non-interested trustees' compensation 3,399
Custodian fees and expenses 21,561
Registration fees 284,637
Audit 62,420
Legal 4,231
Interest 2,753
Miscellaneous 17,893
Total expenses before reductions 9,514,028
Expense reductions (249,618 9,264,410
)
NET INVESTMENT INCOME 9,748,801
REALIZED AND UNREALIZED GAIN (LOSS) 116,726,321
Net realized gain (loss) on investment securities (including realized gain (loss) of $3,720,046 on sales of
investments in affiliated issuers)
Change in net unrealized appreciation (depreciation) on investment securities 155,888,034
NET GAIN (LOSS) 272,614,355
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 282,363,156
OTHER INFORMATION $ 5,869,188
Sales charges paid to FDC
Deferred sales charges withheld $ 4,653
by FDC
Exchange fees withheld by FSC $ 242,828
Expense reductions $ 241,830
Directed brokerage arrangements
Custodian interest credits 2,076
Transfer agent interest credits 5,712
$ 249,618
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE YEAR ENDED YEAR ENDED
(DECREASE) IN FEBRUARY 28, FEBRUARY 29,
NET ASSETS 1997 1996
Operations $ 9,748,801 $ 7,032,404
Net
investment
income
Net realized 116,726,321 39,131,196
gain (loss)
Change in 155,888,034 72,785,221
net
unrealized
appreciation
(depreciation
)
NET INCREASE 282,363,156 118,948,821
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
Distributions to (6,671,424) (3,332,255)
shareholders
From net
investment
income
From net (44,835,125) (12,803,251)
realized gain
TOTAL (51,506,549) (16,135,506)
DISTRIBUTION
S
Share 1,276,779,331 936,625,637
transactions
Net proceeds
from sales of
shares
Reinvestmen 50,762,550 15,962,916
t of
distributions
Cost of (999,588,979) (669,013,084)
shares
redeemed
Paid in 983,081 722,441
capital
portion of
redemption
fees
NET INCREASE 328,935,983 284,297,910
(DECREASE)
IN NET
ASSETS
RESULTING
FROM SHARE
TRANSACTIO
NS
TOTAL 559,792,590 387,111,225
INCREASE
(DECREASE)
IN NET ASSETS
NET ASSETS
Beginning of 617,035,440 229,924,215
period
End of period $ 1,176,828,030 $ 617,035,440
(including
undistribute
d net
investment
income of
$4,942,441
and
$3,690,897
,
respectivel
y)
OTHER
INFORMATION
Shares
Sold 32,961,709 31,755,939
Issued in 1,354,504 501,513
reinvestment
of
distributions
Redeemed (27,265,709) (23,337,483)
Net increase 7,050,504 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>
YEAR ENDED YEAR ENDED YEARS ENDED FEBRUARY 28, TEN MONTHS
FEBRUARY 28, FEBRUARY 29, ENDED
FEBRUARY 28,
SELECTED 1997 1996 1995 1994 1993
PER-SHARE
DATA D
</TABLE>
Net asset $ 33.30 $ 23.92 $ 25.03 $ 22.18 $ 15.38
value,
beginning of
period
Income from
Investment
Operations
Net .53 .53 .20 .03 .09
investment
income
Net realized 14.60 9.72 2.34 4.15 6.80
and
unrealized
gain (loss)
Total from 15.13 10.25 2.54 4.18 6.89
investment
operations
Less
Distributions
From net (.32) (.19) (.12) (.01) (.01)
investment
income
From net (2.16) (.73) (3.60) (1.40) (.28)
realized gain
Total (2.48) (.92) (3.72) (1.41) (.29)
distributions
Redemption .05 .05 .07 .08 .20
fees added to
paid in
capital
Net asset $ 46.00 $ 33.30 $ 23.92 $ 25.03 $ 22.18
value, end of
period
TOTAL 47.50% 43.24% 12.43% 19.61% 46.43%
RETURN B, C
RATIOS AND
SUPPLEMENT
AL DATA
Net assets, $ 1,176,828 $ 617,035 $ 229,924 $ 155,563 $ 337,903
end of period
(000 omitted)
Ratio of 1.38% 1.35% 1.47% 1.58% 1.55% A
expenses to
average net
assets
Ratio of 1.34% E 1.32% E 1.45% E 1.58% 1.55% A
expenses to
average net
assets after
expense
reductions
Ratio of net 1.41% 1.80% .80% .11% .61% A
investment
income to
average net
assets
Portfolio 78% 81% 124% 95% 61% A
turnover rate
Average $ .0417
commission
rate F
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
A ANNUALIZED B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 8 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 8 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. You can
look at the total percentage change in value, the average annual percentage
change, or the growth of a hypothetical $10,000 investment. Total return
reflects the change in the value of an investment, assuming reinvestment of
the fund's dividend income and capital gains (the profits earned upon the
sale of 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 fund expenses, the past five and past 10 year total
returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 28, 1997 YEAR YEARS YEARS
INSURANCE 28.28% 128.36% 246.84%
INSURANCE 24.43% 121.51% 236.44%
(INCL. 3% SALES CHARGE)
S&P 500 26.16% 118.75% 276.74%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one, five, or 10 years. You can compare
the fund's returns 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, and excludes the effect of sales
charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 28, 1997 YEAR YEARS YEARS
INSURANCE 28.28% 17.96% 13.24%
INSURANCE 24.43% 17.24% 12.90%
(INCL. 3% SALES CHARGE)
S&P 500 26.16% 16.94% 14.16%
AVERAGE ANNUAL RETURNS take the fund's 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
1987/02/28 9700.00 10000.00
1987/03/31 9206.78 10289.00
1987/04/30 8444.53 10197.43
1987/05/31 8332.43 10286.15
1987/06/30 8601.46 10805.60
1987/07/31 8683.67 11353.44
1987/08/31 9311.40 11776.92
1987/09/30 9311.40 11519.01
1987/10/31 7562.71 9037.81
1987/11/30 7032.13 8293.10
1987/12/31 7201.14 8924.20
1988/01/31 7755.07 9299.91
1988/02/29 7747.48 9733.29
1988/03/31 7565.37 9432.53
1988/04/30 7512.25 9537.23
1988/05/31 7717.13 9620.20
1988/06/30 8066.18 10061.77
1988/07/31 8104.12 10023.54
1988/08/31 8187.59 9682.74
1988/09/30 8468.35 10095.22
1988/10/31 8430.41 10375.87
1988/11/30 8248.30 10227.49
1988/12/31 8454.25 10406.47
1989/01/31 9096.92 11168.23
1989/02/28 9158.13 10890.14
1989/03/31 9372.35 11143.88
1989/04/30 9678.39 11722.25
1989/05/31 9731.95 12197.00
1989/06/30 9946.08 12127.48
1989/07/31 10781.30 13222.59
1989/08/31 11110.80 13481.75
1989/09/30 11264.05 13426.47
1989/10/31 11631.85 13114.98
1989/11/30 11946.02 13382.52
1989/12/31 11652.58 13703.71
1990/01/31 10663.50 12784.19
1990/02/28 10964.86 12949.10
1990/03/31 10910.77 13292.25
1990/04/30 10532.14 12959.95
1990/05/31 11498.04 14223.54
1990/06/30 11528.95 14126.82
1990/07/31 11358.95 14081.62
1990/08/31 10176.69 12808.64
1990/09/30 9295.79 12184.86
1990/10/31 8924.89 12132.46
1990/11/30 10107.15 12916.22
1990/12/31 10508.96 13276.58
1991/01/31 11073.04 13855.44
1991/02/28 12193.48 14846.11
1991/03/31 12997.11 15205.38
1991/04/30 12927.57 15241.87
1991/05/31 13252.11 15900.32
1991/06/30 12428.31 15172.09
1991/07/31 12889.78 15879.11
1991/08/31 12811.56 16255.44
1991/09/30 12936.71 15983.98
1991/10/31 13327.78 16198.16
1991/11/30 13210.46 15545.38
1991/12/31 14363.68 17323.77
1992/01/31 14347.99 17001.55
1992/02/29 14732.59 17222.57
1992/03/31 14520.67 16886.73
1992/04/30 14151.76 17383.20
1992/05/31 14340.14 17468.37
1992/06/30 14640.14 17208.09
1992/07/31 15469.64 17911.90
1992/08/31 15016.41 17544.71
1992/09/30 15811.70 17751.74
1992/10/31 16487.26 17813.87
1992/11/30 17051.66 18421.32
1992/12/31 17595.69 18647.90
1993/01/31 18331.36 18804.55
1993/02/28 18677.56 19060.29
1993/03/31 19664.24 19462.46
1993/04/30 19196.33 18991.47
1993/05/31 18701.89 19500.44
1993/06/30 18901.40 19556.99
1993/07/31 19560.65 19478.76
1993/08/31 20558.20 20217.01
1993/09/30 20627.59 20061.34
1993/10/31 20029.06 20476.61
1993/11/30 18805.98 20282.08
1993/12/31 19034.39 20527.49
1994/01/31 19290.97 21225.43
1994/02/28 18445.21 20650.22
1994/03/31 17580.44 19749.87
1994/04/30 17770.50 20002.67
1994/05/31 18587.75 20330.71
1994/06/30 18483.22 19832.61
1994/07/31 18825.32 20483.12
1994/08/31 19338.48 21322.93
1994/09/30 19205.44 20800.52
1994/10/31 18967.87 21268.53
1994/11/30 18008.07 20493.93
1994/12/31 18967.87 20797.85
1995/01/31 19652.08 21337.14
1995/02/28 20250.76 22168.65
1995/03/31 20573.86 22822.85
1995/04/30 20763.94 23494.98
1995/05/31 21220.92 24434.07
1995/06/30 21887.34 25001.68
1995/07/31 22544.25 25830.73
1995/08/31 23201.16 25895.57
1995/09/30 24353.12 26988.36
1995/10/31 23620.05 26892.01
1995/11/30 25029.07 28072.57
1995/12/31 25570.51 28613.25
1996/01/31 26315.09 29587.24
1996/02/29 26226.92 29861.52
1996/03/31 25933.01 30149.08
1996/04/30 25611.35 30593.48
1996/05/31 26128.95 31382.49
1996/06/30 26596.78 31502.05
1996/07/31 26009.50 30110.29
1996/08/31 27104.43 30745.32
1996/09/30 28428.30 32475.67
1996/10/31 29921.38 33371.34
1996/11/30 31762.85 35893.88
1996/12/31 31632.38 35182.83
1997/01/31 32931.91 37381.05
1997/02/28 33633.25 37674.12
Let's say hypothetically that $10,000 was invested in Fidelity Select
Insurance Portfolio on February 28, 1987, and the current maximum 3% sales
charge was paid. As the chart shows, by February 28, 1997, the value of the
investment would have grown to $33,644 - a 236.44% increase on the initial
investment. For comparison, look at how the S&P 500 did over the same
period. With dividends and capital gains, if any, reinvested, the same
$10,000 investment would have grown to $37,674 - a 276.74% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1997
% OF FUND'S
INVESTMENTS
Travelers Group, Inc. (The) 4.8
Allstate Corp. 4.4
CIGNA Corp. 4.0
Marsh & McLennan Companies, Inc. 3.4
General Re Corp. 3.4
American International Group, Inc. 2.8
UNUM Corp. 2.7
Aetna, Inc. 2.7
Progressive Corp. 2.6
AFLAC, Inc. 2.5
TOP INDUSTRIES AS OF FEBRUARY 28, 1997
Row: 1, Col: 1, Value: 19.7
Row: 1, Col: 2, Value: 5.6
Row: 1, Col: 3, Value: 8.1
Row: 1, Col: 4, Value: 9.800000000000001
Row: 1, Col: 5, Value: 22.0
Row: 1, Col: 6, Value: 34.8
Property-Casualty &
Reinsurance 34.8%
Life Insurance 22.0%
Multi-Line Insurance 9.8%
Insurance Carriers 8.1%
Insurance Brokers & Services 5.6%
All Others 19.7% *
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
INSURANCE PORTFOLIO
FUND TALK: THE MANAGERS' OVERVIEW
Effective February 14, 1997, Thomas Allen (right) became Portfolio Manager
of Fidelity Select Insurance Portfolio. The following is an interview with
Michael Tempero, who managed the portfolio during most of the period
covered by this report, and Tom Allen, who discusses his outlook.
Q. HOW DID THE FUND PERFORM OVER THE PAST YEAR, MIKE?
M.T. The fund did well, although the second half of the period saw far
better returns than the first half. For the 12 months that ended February
28, 1997, the fund was up 28.28%, compared to an increase of 26.16% for the
Standard & Poor's 500 Index.
Q. WHAT WERE THE KEY FACTORS BEHIND THE STRONG PERFORMANCE?
M.T. In the first half of the year, there were several issues. First, some
of the commercial carriers were facing larger-than-expected price decreases
in their lines of business. That, in turn, prompted some of these carriers
to hold onto their business, rather than spreading some of it to
re-insurers; so the re-insurers had a more difficult time generating
business. Third, the bond market was down during the first half of the
year, and that always weighs upon these stocks because insurance companies
have huge bond portfolios. The past six months, in contrast, have been
great. While the bond market has rebounded, it still hasn't reached its
previous highs; many insurance stocks, however, reached and then surpassed
their earlier peaks.
Q. WHAT TOP HOLDINGS PLAYED A SIGNIFICANT ROLE IN THE PERFORMANCE STORY?
M.T. Our second-largest holding, Allstate, has been a long-time favorite of
the fund and continued to generate better results, particularly in their
auto insurance line. Travelers, the fund's largest holding and up over 60%
during the past six months, saw good results from its Smith Barney
brokerage subsidiary and its property/casualty business. CIGNA and Aetna
both have been positioning themselves as life and health insurance
companies. After a flat first half of the period, CIGNA was up about 30%
over the past six months. Aetna was down during the first six months, but
was up over 20% since late last summer.
Q. LET'S TAKE A BRIEF LOOK AT THE DIFFERENT SEGMENTS WITHIN THE INSURANCE
INDUSTRY . . .
M.T. Sure. In the disability market, many of these companies had severe
problems a couple of years ago, but have been turning their businesses
around, raising prices to get them back in line with the liabilities they
were facing. As an example, UNUM and Provident, both top holdings within
the fund, performed well over the past six months. The auto insurance
industry did well, led by Allstate. The re-insurers had a tough go of it
over the past year, although some of the companies in the portfolio were
bought out, to the fund's benefit. Other than the firms that were bought
out, the rest of the re-insurers we owned, such as one of my top 10
holdings, General Re, had slower growth rates and didn't help the fund's
performance.
Q. TURNING TO YOU, TOM, WHAT'S YOUR OUTLOOK FOR THE INSURANCE INDUSTRY?
T.A. You have to look at it in two pieces - the life insurers on the one
hand, and the property and casualty insurers on the other. The life
insurers are less cyclical - less sensitive to the economy's strength - as
a rule, and there's been a lot of consolidation going on, particularly with
the smaller-cap names. I expect this consolidation to continue with the
small-cap life names. With the property and casualty companies, the
fundamental outlook is not very good. There's excess capacity globally and
poor pricing as a result. A key determinant will be how the insurance
companies use their capital; they've been over-capitalized for some time. I
think those companies that can achieve a better return on equity by using
their capital wisely will tend to perform better. In general, insurance
stocks - both life and property/casualty - are very interest rate
sensitive. I would expect them to underperform if interest rates rise
significantly.
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: 045
TRADING SYMBOL: FSPCX
SIZE: as of February 28, 1997, more than
$42 million
MANAGER: Tom Allen, since February 1997;
analyst, property, casualty and multi-line
insurance, since 1995; joined Fidelity in 1995
(checkmark)
INSURANCE PORTFOLIO
INVESTMENTS FEBRUARY 28, 1997
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 91.6%
SHARES VALUE (NOTE 1)
CREDIT & OTHER FINANCE - 7.0%
BUSINESS CREDIT - 0.4%
Granite Financial, Inc. 10,000 $ 115,000
HealthCare Financial Partners, Inc. 3,000 54,750
169,750
FINANCIAL SERVICES - 2.5%
AmeriCredit Corp. (a) 15,000 292,494
Transamerica Corp. 9,200 806,150
1,098,644
MORTGAGE BANKERS - 4.1%
Aames Financial Corp. 24,000 723,000
Cityscape Financial Corp. (a) 38,500 1,053,938
1,776,938
TOTAL CREDIT & OTHER FINANCE 3,045,332
HOLDING COMPANIES - 0.5%
HOLDING COMPANY OFFICES - 0.5%
Leucadia National Corp. 8,000 213,000
INSURANCE - 84.1%
ACCIDENT & HEALTH INSURANCE - 2.5%
Provident Companies, Inc. 20,200 1,100,900
INSURANCE BROKERS & SERVICES - 5.6%
Frontier Insurance Group, Inc. 22,240 961,880
Marsh & McLennan Companies, Inc. 12,600 1,474,200
2,436,080
INSURANCE CARRIERS - 8.1%
AFLAC, Inc. 27,300 1,102,238
AMBAC, Inc. 10,000 667,500
MBIA, Inc. 10,000 976,250
MGIC Investment Corp. 9,400 739,075
3,485,063
LIFE INSURANCE - 22.0%
American Bankers Insurance Group, Inc. 6,500 358,313
Amerus Life Holdings, Inc. 3,000 63,000
Aon Corp. 7,000 443,625
Conseco, Inc. 21,400 839,950
Equitable of Iowa Companies 4,900 260,313
Jefferson Pilot Corp. 10,900 643,100
Life RE Corp. 7,900 339,700
Life USA Holding, Inc. (a) 64,500 674,227
Penn Treaty American Corp. (a) 500 14,000
Penncorp Financial Group, Inc. 4,800 168,000
Protective Life Corp. 17,300 743,900
Providian Corp. 14,000 782,250
Reliastar Financial Corp. 4,711 292,082
SunAmerica, Inc. 18,300 839,513
Torchmark Corp. 10,200 600,525
UICI (a) 20,700 610,650
UNUM Corp. 15,000 1,153,125
USLIFE Corp. 3,900 185,738
Western National Corp. 21,500 494,500
9,506,511
MULTI-LINE INSURANCE - 9.8%
Aetna, Inc. 13,900 1,151,963
American Financial Group, Inc. 6,500 243,750
CIGNA Corp. 11,200 1,712,200
CNA Financial Corp. (a) 3,600 400,500
SHARES VALUE (NOTE 1)
Lincoln National Corp. 6,000 $ 348,750
US Facilities Corp. 16,000 306,000
Unitrin, Inc. 1,800 97,200
4,260,363
PROPERTY-CASUALTY& REINSURANCE - 34.8%
Acceptance Insurance Co., Inc. (a) 14,000 295,750
ACE Ltd. 5,200 338,000
Allmerica Financial Corp. 2,900 108,388
Allstate Corp. 30,200 1,913,925
American International Group, Inc. 10,000 1,210,000
Berkley (W.R.) Corp. 2,900 148,988
Capital Re Corp. 3,800 164,350
Chubb Corp. (The) 16,000 938,000
Enhance Financial Services Group Corp. 31,300 1,079,850
Everest Reinsurance Holdings, Inc. 7,000 220,500
Fremont General Corp. 7,700 222,338
General Re Corp. 8,600 1,458,775
HCC Insurance Holdings Inc. 11,700 288,113
Mercury General Corp. 17,500 1,074,063
PMI Group, Inc. 16,700 914,325
Progressive Corp. 16,900 1,117,513
Reinsurance Group of America, Inc. 4,700 230,300
Terra Nova Holdings Ltd. 4,900 100,450
Transatlantic Holdings, Inc. 7,000 590,625
Travelers Group, Inc. (The) 38,866 2,084,189
Unionamerica Holdings PLC
sponsored ADR 8,800 143,000
Vesta Insurance Group Corp. 10,000 391,250
15,032,692
SURETY INSURANCE - 1.3%
MMI Companies, Inc. 24,000 546,000
TOTAL INSURANCE 36,367,609
TOTAL COMMON STOCKS
(Cost $34,243,480) 39,625,941
CASH EQUIVALENTS - 8.4%
Taxable Central Cash Fund (b)
(Cost $3,633,885) 3,633,885 3,633,885
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $37,877,365) $ 43,259,826
LEGEND
1. Non-income producing
2. At period end, the seven-day yield on the Taxable Central Cash Fund was
5.31%. The yield refers to the income earned by investing in the fund over
the seven-day period, expressed as an annual percentage.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $44,979,901 and $50,061,462, respectively (see Note 3 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $12,029 for the period (see
Note 4 of Notes to Financial Statements).
INCOME TAX INFORMATION
At February 28, 1997, the aggregate cost of investment securities for
income tax purposes was $37,911,795. Net unrealized appreciation aggregated
$5,348,031, of which $5,749,615 related to appreciated investment
securities and $401,584 related to depreciated investment securities.
The fund hereby designates approximately $1,624,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 38% of the dividends distributed during the fiscal year
qualifies for the dividends-received deduction for corporate shareholders
(unaudited).
The fund will notify shareholders in January 1998 of the applicable
percentage for use in preparing 1997 income tax returns.
INSURANCE PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1997
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS
Investment in securities, at value $ 43,259,826
(cost $37,877,365) - See accompanying schedule
Receivable for fund shares sold 1,144,401
Dividends receivable 34,027
Interest receivable 13,730
Redemption fees receivable 290
TOTAL ASSETS 44,452,274
LIABILITIES
Payable for investments purchased $ 1,891,038
Payable for fund shares redeemed 132,129
Accrued management fee 19,034
Other payables and accrued expenses 43,200
TOTAL LIABILITIES 2,085,401
NET ASSETS $ 42,366,873
Net Assets consist of:
Paid in capital $ 32,854,226
Undistributed net investment income 5,935
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 4,124,251
Net unrealized appreciation (depreciation) on investments 5,382,461
NET ASSETS, for 1,298,993 $ 42,366,873
shares outstanding
NET ASSET VALUE and redemption price per share ($42,366,873 (divided by) 1,298,993 shares) $32.62
Maximum offering price per share (100/97.00 of $32.62) $33.63
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1997
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME $ 476,091
Dividends
Interest 140,572
TOTAL INCOME 616,663
EXPENSES
Management fee $ 204,881
Transfer agent fees 289,430
Accounting fees and expenses 60,415
Non-interested trustees' compensation 154
Custodian fees and expenses 12,589
Registration fees 18,901
Audit 27,995
Legal 215
Miscellaneous 1,783
Total expenses before reductions 616,363
Expense reductions (17,062 599,301
)
NET INVESTMENT INCOME 17,362
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 5,349,480
Foreign currency transactions 8 5,349,488
Change in net unrealized appreciation (depreciation) on investment securities 2,095,799
NET GAIN (LOSS) 7,445,287
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 7,462,649
OTHER INFORMATION $ 248,750
Sales charges paid to FDC
Deferred sales charges withheld $ 1,364
by FDC
Exchange fees withheld by FSC $ 26,445
Expense Reductions $ 16,749
Directed brokerage arrangements
Custodian interest credits 313
$ 17,062
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE YEAR ENDED YEAR ENDED
(DECREASE) IN FEBRUARY 28, FEBRUARY 29,
NET ASSETS 1997 1996
Operations $ 17,362 $ 54,801
Net
investment
income
Net realized 5,349,488 2,892,996
gain (loss)
Change in 2,095,799 1,911,651
net
unrealized
appreciation
(depreciation
)
NET INCREASE 7,462,649 4,859,448
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
Distributions to (35,964 (62,008
shareholders ) )
From net
investment
income
From net (1,652,709 (753,776
realized gain ) )
TOTAL (1,688,673 (815,784
DISTRIBUTION ) )
S
Share 82,947,138 47,521,158
transactions
Net proceeds
from sales of
shares
Reinvestmen 1,660,671 802,788
t of
distributions
Cost of (87,137,695 (35,249,916
shares ) )
redeemed
Paid in 129,084 37,695
capital
portion of
redemption
fees
NET INCREASE (2,400,802 13,111,725
(DECREASE) )
IN NET
ASSETS
RESULTING
FROM SHARE
TRANSACTIO
NS
TOTAL 3,373,174 17,155,389
INCREASE
(DECREASE)
IN NET ASSETS
NET ASSETS
Beginning of 38,993,699 21,838,310
period
End of period $ 42,366,873 $ 38,993,699
(including
undistribute
d net
investment
income of
$5,935 and
$55,083,
respectivel
y)
OTHER
INFORMATION
Shares
Sold 2,922,405 1,872,126
Issued in 58,747 31,329
reinvestment
of
distributions
Redeemed (3,138,702 (1,471,921
) )
Net increase (157,550) 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>
YEAR ENDED YEAR ENDED YEARS ENDED FEBRUARY 28, TEN MONTHS
FEBRUARY 28, FEBRUARY 29, ENDED
FEBRUARY 28,
SELECTED 1997 1996 1995 1994 1993
PER-SHARE
DATA D
</TABLE>
Net asset $ 26.77 $ 21.31 $ 19.41 $ 21.58 $ 18.03
value,
beginning of
period
Income from
Investment
Operations
Net .01 .06 .05 - (.04)
investment
income (loss)
Net realized 7.21 6.15 1.78 (.24) 5.12
and
unrealized
gain (loss)
Total from 7.22 6.21 1.83 (.24) 5.08
investment
operations
Less
Distributions
From net (.03) (.07) - (.01) -
investment
income
In excess of - - - - (.03)
net
investment
income
From net (1.45) (.72) - (1.96) (1.71)
realized gain
Total (1.48) (.79) - (1.97) (1.74)
distributions
Redemption .11 .04 .07 .04 .21
fees added to
paid in
capital
Net asset $ 32.62 $ 26.77 $ 21.31 $ 19.41 $ 21.58
value, end of
period
TOTAL 28.28% 29.51% 9.79% (1.24)% 31.98%
RETURN B, C
RATIOS AND
SUPPLEMENT
AL DATA
Net assets, $ 42,367 $ 38,994 $ 21,838 $ 18,419 $ 26,367
end of period
(000 omitted)
Ratio of 1.82% 1.77% 2.36% 1.93% 2.49% A,
expenses to F
average net
assets
Ratio of 1.77% E 1.74% E 2.34% E 1.93% 2.49% A
expenses to
average net
assets after
expense
reductions
Ratio of net .05% .26% .25% (.02)% (.26)%
investment A
income (loss)
to average
net assets
Portfolio 142% 164% 265% 101% 81% A
turnover rate
Average $ .0261
commission
rate G
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
A ANNUALIZED B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 8 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 8 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. You can
look at the total percentage change in value, the average annual percentage
change, or the growth of a hypothetical $10,000 investment. Total return
reflects the change in the value of an investment, assuming reinvestment of
the fund's dividend income and capital gains (the profits earned upon the
sale of 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 fund expenses, the past 10 year total returns would have
been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 28, 1997 YEAR YEARS YEARS
REGIONAL BANKS 43.33% 222.02% 555.53%
REGIONAL BANKS 39.03% 212.36% 535.86%
(INCL. 3% SALES CHARGE)
S&P 500 26.16% 118.75% 276.74%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one, five, or 10 years. You can compare
the fund's returns 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, and excludes the effect of sales
charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 28, 1997 YEAR YEARS YEARS
REGIONAL BANKS 43.33% 26.35% 20.69%
REGIONAL BANKS 39.03% 25.58% 20.32%
(INCL. 3% SALES CHARGE)
S&P 500 26.16% 16.94% 14.16%
AVERAGE ANNUAL RETURNS take the fund's 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
1987/02/28 9700.00 10000.00
1987/03/31 9719.84 10289.00
1987/04/30 9134.66 10197.43
1987/05/31 9184.25 10286.15
1987/06/30 9511.55 10805.60
1987/07/31 9511.55 11353.44
1987/08/31 9947.96 11776.92
1987/09/30 9690.08 11519.01
1987/10/31 8103.17 9037.81
1987/11/30 7845.30 8293.10
1987/12/31 8211.96 8924.20
1988/01/31 8793.43 9299.91
1988/02/29 9017.85 9733.29
1988/03/31 9221.88 9432.53
1988/04/30 9119.87 9537.23
1988/05/31 9283.09 9620.20
1988/06/30 9935.96 10061.77
1988/07/31 9986.97 10023.54
1988/08/31 9854.35 9682.74
1988/09/30 10231.80 10095.22
1988/10/31 10354.21 10375.87
1988/11/30 10099.18 10227.49
1988/12/31 10322.88 10406.47
1989/01/31 10978.31 11168.23
1989/02/28 11142.16 10890.14
1989/03/31 12059.75 11143.88
1989/04/30 12376.54 11722.25
1989/05/31 13326.90 12197.00
1989/06/30 13105.23 12127.48
1989/07/31 14271.61 13222.59
1989/08/31 14623.72 13481.75
1989/09/30 14744.76 13426.47
1989/10/31 13380.32 13114.98
1989/11/30 13358.31 13382.52
1989/12/31 13073.54 13703.71
1990/01/31 11895.64 12784.19
1990/02/28 12385.46 12949.10
1990/03/31 12082.23 13292.25
1990/04/30 11394.15 12959.95
1990/05/31 12187.20 14223.54
1990/06/30 11709.04 14126.82
1990/07/31 10997.63 14081.62
1990/08/31 9971.34 12808.64
1990/09/30 8758.45 12184.86
1990/10/31 8501.88 12132.46
1990/11/30 9633.13 12916.22
1990/12/31 10371.33 13276.58
1991/01/31 11059.59 13855.44
1991/02/28 11997.05 14846.11
1991/03/31 12673.44 15205.38
1991/04/30 13527.83 15241.87
1991/05/31 14405.95 15900.32
1991/06/30 13551.56 15172.09
1991/07/31 14678.88 15879.11
1991/08/31 15735.00 16255.44
1991/09/30 15426.47 15983.98
1991/10/31 16067.26 16198.16
1991/11/30 15331.54 15545.38
1991/12/31 17194.94 17323.77
1992/01/31 18270.40 17001.55
1992/02/29 19746.04 17222.57
1992/03/31 19470.92 16886.73
1992/04/30 20608.91 17383.20
1992/05/31 21484.29 17468.37
1992/06/30 21698.66 17208.09
1992/07/31 21723.83 17911.90
1992/08/31 20565.90 17544.71
1992/09/30 21522.45 17751.74
1992/10/31 22441.25 17813.87
1992/11/30 24278.84 18421.32
1992/12/31 25538.34 18647.90
1993/01/31 26602.44 18804.55
1993/02/28 27430.07 19060.29
1993/03/31 28599.26 19462.46
1993/04/30 27126.96 18991.47
1993/05/31 26861.78 19500.44
1993/06/30 28360.00 19556.99
1993/07/31 28439.55 19478.76
1993/08/31 28837.31 20217.01
1993/09/30 29831.70 20061.34
1993/10/31 28227.41 20476.61
1993/11/30 27339.09 20282.08
1993/12/31 28391.61 20527.49
1994/01/31 30047.38 21225.43
1994/02/28 29203.26 20650.22
1994/03/31 28716.27 19749.87
1994/04/30 30237.96 20002.67
1994/05/31 31749.04 20330.71
1994/06/30 30960.65 19832.61
1994/07/31 31781.89 20483.12
1994/08/31 32603.13 21322.93
1994/09/30 30665.01 20800.52
1994/10/31 30533.61 21268.53
1994/11/30 28562.64 20493.93
1994/12/31 28453.56 20797.85
1995/01/31 29886.73 21337.14
1995/02/28 31477.19 22168.65
1995/03/31 31739.35 22822.85
1995/04/30 32525.85 23494.98
1995/05/31 34658.12 24434.07
1995/06/30 35095.06 25001.68
1995/07/31 36458.31 25830.73
1995/08/31 37821.56 25895.57
1995/09/30 39534.37 26988.36
1995/10/31 39342.12 26892.01
1995/11/30 41596.73 28072.57
1995/12/31 41760.64 28613.25
1996/01/31 43125.96 29587.24
1996/02/29 44363.86 29861.52
1996/03/31 45674.57 30149.08
1996/04/30 45284.52 30593.48
1996/05/31 46050.16 31382.49
1996/06/30 45695.35 31502.05
1996/07/31 45770.05 30110.29
1996/08/31 48085.63 30745.32
1996/09/30 50457.23 32475.67
1996/10/31 53687.83 33371.34
1996/11/30 58225.62 35893.88
1996/12/31 56747.10 35182.83
1997/01/31 60931.93 37381.05
1997/02/28 63586.20 37674.12
Let's say hypothetically that $10,000 was invested in Fidelity Select
Regional Banks Portfolio on February 28, 1987, and the current maximum 3%
sales charge was paid. As the chart shows, by February 28, 1997, the value
of the investment would have grown to $63,586 - a 535.86% increase on the
initial investment. For comparison, look at how the S&P 500 did over the
same period. With dividends and capital gains, if any, reinvested, the same
$10,000 investment would have grown to $37,674 - a 276.74% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1997
% OF FUND'S
INVESTMENTS
NationsBank Corp. 4.9
BankAmerica Corp. 4.9
Wells Fargo & Co. 4.6
Citicorp 4.2
First Chicago NBD Corp. 3.2
National City Corp. 3.2
Bank of New York Co., Inc. 3.0
Comerica, Inc. 3.0
Chase Manhattan Corp. 3.0
First Union Corp. 2.9
TOP REGIONS AS OF FEBRUARY 28, 1997
Northeast 15.1%
Midwest 14.1%
West 14.1%
Southeast 10.6%
Multi-Regional 4.9%
All Others 41.2% *
Row: 1, Col: 1, Value: 41.2
Row: 1, Col: 2, Value: 4.9
Row: 1, Col: 3, Value: 10.6
Row: 1, Col: 4, Value: 14.1
Row: 1, Col: 5, Value: 14.1
Row: 1, Col: 6, Value: 15.1
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
REGIONAL BANKS PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
John Avery,
Portfolio Manager of
Fidelity Select Regional Banks Portfolio
Q. JOHN, HOW DID THE FUND PERFORM?
A. Very well. For the 12 months that ended February 28, 1997, the fund had
a return of 43.33%. This outdistanced the Standard & Poor's 500 Index,
which returned 26.16% over the same period.
Q. CAN YOU ISOLATE SOME OF THE FACTORS THAT LED TO THE STRONG PERFORMANCE
OF BANK STOCKS?
A. Ideal economic conditions and strong fundamental characteristics, such
as valuations and earnings, converged and resulted in a very favorable
climate for bank stocks. Much of the strong performance within the industry
can be attributed to valuation upgrades, meaning that at some point in 1996
investors came to the realization that bank stocks as a group could
generate higher earnings growth than the S&P 500. This demand led to share
price increases. Also, banks generally are being better managed than they
have been in the past.
Q. IT SEEMS THAT BANKS HAVE BEEN DELVING INTO OTHER TYPES OF BUSINESSES,
SUCH AS OFFERING MUTUAL FUNDS AND CREDIT CARD SERVICES. HOW HAS THIS TREND
AFFECTED THE INDUSTRY?
A. As a whole, I feel the banking industry is overcapitalized - there are
too many branches and too much capital. As a result, banks have been taking
that excess capital and trying to reinvest in fee-driven businesses. From
an investing standpoint, I try to determine if a bank has sufficient
knowledge to take on a new area of business. The Barnett Bank chain in
Florida, for instance, has been the top auto lender in that state for 30
years. That made its recent purchase of an auto financing company perfectly
logical.
Q. WITH REGARD TO VALUATION, WHICH YOU MENTIONED EARLIER, ARE INVESTORS
WORRIED THAT THE CARRIAGE MAY TURN BACK INTO THE PUMPKIN?
A. I think people are nervous about the high valuations, but I think you
have to look at the whole stock market. On a relative basis, valuations
within the banking industry aren't that much higher than what we've seen in
the general market. If you look back over the past 30 years, bank stocks on
average have traded in a range between 60-70% of the market. As the period
closed, bank stocks were trading at 75% of the market. I still think
there's upside over the long-term.
Q. WERE THERE ANY PARTICULAR REGIONS OR STOCKS THAT PERFORMED WELL? WERE
THERE ANY DISAPPOINTMENTS?
A. The Southeast and, interestingly, California have done quite well.
California's economy has taken longer to recover than that of the U.S., but
it has been showing recent signs of life. Stocks of California-based
companies such as BankAmerica and Wells Fargo turned in strong showings. In
the Southeast, banks such as Barnett and First Union each generated
higher-than-average revenue growth. There hasn't been a lot of growth in
the Northeast corridor, but some restructurings have helped turn that
around. In general, smaller- and medium-cap stocks stayed fairly flat as
large-cap stocks rallied.
Q. THE 1996 EQUITY MARKET WILL BE REMEMBERED FOR THE STRENGTH OF THE
LARGE-CAP STOCKS. DID THIS TREND SEEP INTO THE BANK STOCKS AS WELL?
A. Absolutely. Much of the fund's strong return can be traced to the
big-cap move. Well-known banks such as NationsBank, which is the fund's top
holding, Citicorp and Bank of America all posted healthy earnings. This
development also contributed to the rise in valuations.
Q. WHAT'S YOUR OUTLOOK?
A. The key is earnings growth. Earnings growth among bank stocks has been
moving at a quicker pace than that of the S&P 500. If earnings targets
continue to be met, I don't see why this pace can't continue. Credit
quality is a concern, simply because it's been so good. It's hard to
improve upon the credit quality situation, so I think investors may need to
show some caution. If the Federal Reserve Board follows through on its
threat to raise interest rates, that might have a short-term negative
impact.
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: 507
TRADING SYMBOL: FSRBX
SIZE: as of February 28, 1997, more than
$837 million
MANAGER: John Avery, since September 1996;
manager, Fidelity Select Chemicals Portfolio,
since 1995; joined Fidelity in 1994
(checkmark)
REGIONAL BANKS PORTFOLIO
INVESTMENTS FEBRUARY 28, 1997
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 83.9%
SHARES VALUE (NOTE 1)
AUTOS, TIRES, & ACCESSORIES - 0.2%
MOTOR VEHICLE DEALERS (NEW & USED) - 0.2%
Ugly Duckling Corp. (a) 103,300 $ 2,156,388
CLOSED END INVESTMENT COMPANY - 0.2%
REGISTERED INVESTMENT COMPANIES - 0.2%
Sirrom Capital Corp. 48,900 1,980,450
COMPUTER SERVICES & SOFTWARE - 0.1%
COMPUTER SERVICES - 0.1%
DST Systems, Inc. (a) 20,000 657,500
BANKS - 68.7%
INTERNATIONAL - 4.2%
Allied Irish Bank sponsored ADR 100,000 4,350,000
Barclays PLC Ord. 99,178 1,790,645
Canadian Imperial Bank of Commerce 409,700 19,853,898
HSBC Holdings PLC 210,720 5,270,702
National Bank of Canada 19,600 226,349
Royal Bank of Canada 100,100 4,035,022
35,526,616
MID-ATLANTIC - 1.2%
Crestar Financial Corp. 43,566 1,601,051
HUBCO, Inc. 25,265 663,206
PNC Financial Corp. 176,200 7,466,475
Signet Banking Corp. 9,800 311,150
10,041,882
MIDWEST - 14.1%
Banc One Corp. 77,600 3,424,100
Charter One Financial Corp. 30,800 1,466,850
Comerica, Inc. 418,900 25,186,363
Commercial Federal Corp. 29,400 1,054,725
Corus Bankshares, Inc. 9,800 338,100
Fifth Third Bancorp 25,200 2,101,050
First Bank System, Inc. 307,100 24,107,350
KeyCorp 48,900 2,616,150
National City Corp. 529,409 26,735,155
Northern Trust Corp. 255,600 10,863,000
Norwest Corp. 229,400 11,412,650
Pinnacle Financial Services, Inc. 48,900 1,356,975
Star Banc Corp. 207,300 8,136,525
118,798,993
NORTHEAST - 15.1%
Bank of Boston Corp. 154,100 11,615,288
Bank of New York Co., Inc. 654,848 25,375,360
Bankers Trust New York Corp. 19,800 1,796,850
Chase Manhattan Corp. 250,100 25,041,263
Dime Bancorp., Inc. (a) 17,100 299,250
Eastern Bancorp 36,700 940,438
Long Island Bancorp., Inc. 98,500 3,607,563
Mellon Bank Corp. 257,200 20,672,450
North Fork Bancorp., Inc. 159,800 6,491,875
Norwalk Savings Society 29,400 742,350
ONBANCorp, Inc. 33,100 1,477,088
State Street Boston Corp. 98,900 7,949,088
U.S. Bancorp 399,800 19,740,125
Webster Financial Corp. 44,749 1,756,398
127,505,386
SHARES VALUE (NOTE 1)
SOUTHEAST - 10.6%
BanPonce Corp. 329,902 $ 11,876,472
Barnett Banks, Inc. 200,000 9,250,000
First Tennessee National Corp. 199,900 9,345,325
First Union Corp. 278,900 24,473,475
Meritor Savings Bank (a) 664,300 1,743,788
SouthTrust Corp. 10,900 431,913
SunTrust Banks, Inc. 60,700 3,118,463
Synovus Financial Corp. 79,200 2,762,100
Union Planters Corp. 76,800 3,436,800
Wachovia Corp. 381,900 23,248,163
89,686,499
SOUTHWEST - 0.3%
FirstFed Financial Corp. (a) 24,500 637,000
Texas Regional Bancshares, Inc.
Class A (vtg) 59,300 1,934,663
2,571,663
WEST - 14.1%
BankAmerica Corp. 364,100 41,416,375
California Federal Bank FSB secondary
contingent litigation recovery
participation interest (a) 8,550 160,313
Coast Savings Financial, Inc. (a) 58,700 2,744,225
First Regional Bancorp (a) 24,500 180,688
First Security Corp. 20,000 697,500
Glendale Federal Bank FSB (a) 125,300 3,336,113
Great Western Financial Corp. 200,000 8,775,000
ITLA Capital Corp. (a) 9,800 160,475
Quaker City Bancorp (a) 24,500 477,750
Silicon Valley Bancshares (a) 83,200 3,140,800
Sterling Financial Corp. (a) 66,600 1,140,525
UnionBanCal Corp. 25,500 1,536,375
Washington Mutual, Inc. 40,000 2,115,000
Wells Fargo & Co. 128,766 39,177,056
Westcorp, Inc. 8,800 162,800
Zions Bancorp 107,600 13,396,200
118,617,195
MONEY CENTER - 4.2%
Citicorp 300,800 35,118,400
MULTI-REGIONAL - 4.9%
NationsBank Corp. 697,236 41,747,006
TOTAL BANKS 579,613,640
CREDIT & OTHER FINANCE - 14.5%
BANK HOLDING COMPANY OFFICES - 1.3%
Fleet Financial Group, Inc. 183,367 11,185,387
FINANCE LESSORS - 0.0%
Onyx Acceptance Corp. 16,200 129,600
FINANCIAL SERVICES - 7.0%
American Express Co. 261,400 17,089,025
First Chicago NBD Corp. 457,900 26,787,150
First USA, Inc. 284,000 13,809,500
RCSB Financial, Inc. 39,200 1,318,100
59,003,775
MORTGAGE BANKERS - 1.1%
Aames Financial Corp. 17,550 528,694
Cityscape Financial Corp. (a) 44,800 1,226,400
Newcourt Credit Group, Inc. 88,100 3,300,168
Newcourt Credit Group, Inc. (c) 58,700 2,198,853
North American Mortgage Co. 88,100 1,795,038
9,049,153
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
CREDIT & OTHER FINANCE - CONTINUED
PERSONAL CREDIT INSTITUTIONS - 5.1%
Associates First Capital Corp. 203,800 $ 9,833,350
Beneficial Corp. 190,300 13,154,488
Household International, Inc. 170,000 16,468,750
MBNA Corp. 100,000 3,200,000
Union Acceptance Corp. Class A (a) 19,600 352,800
43,009,388
TOTAL CREDIT & OTHER FINANCE 122,377,303
INSURANCE - 0.2%
MULTI-LINE INSURANCE - 0.2%
US Facilities Corp. 67,200 1,285,200
PROPERTY-CASUALTY & REINSURANCE - 0.0%
First Central Financial Corp. 3,700 8,325
TOTAL INSURANCE 1,293,525
TOTAL COMMON STOCKS
(Cost $534,061,575) 708,078,806
CASH EQUIVALENTS - 16.1%
Taxable Central Cash Fund (b)
(Cost 135,894,978) 135,894,978 135,894,978
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $669,956,553) $ 843,973,784
LEGEND
1. Non-income producing
2. At period end, the seven-day yield on the Taxable Central Cash Fund was
5.31%. The yield refers to the income earned by investing in the fund over
the seven-day period, expressed as an annual percentage.
3. Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of these securities amounted to $2,198,853 or 0.3% of net
assets.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $432,627,554 and $171,029,679, respectively (see Note 3 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $86,165 for the period (see
Note 4 of Notes to Financial Statements).
At the period end, the value of securities loaned and the value of
collateral amounted to $3,382,788 and $3,527,000, respectively (see Note 6
of Notes to Financial Statements).
The fund participated in the bank borrowing program. The maximum loan and
the average daily balances during the period for which loans were
outstanding amounted to $2,363,000 and $1,558,400, respectively. The
weighted average interest rate was 5.7% (see Note 7 of Notes to Financial
Statements).
INCOME TAX INFORMATION
At February 28, 1997, the aggregate cost of investment securities for
income tax purposes was $670,450,803. Net unrealized appreciation
aggregated $173,522,981, of which $176,902,785 related to appreciated
investment securities and $3,379,804 related to depreciated investment
securities.
The fund hereby designates approximately $11,170,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 59% of the dividends distributed during the fiscal year
qualifies for the dividends-received deduction for corporate shareholders
(unaudited).
The fund will notify shareholders in January 1998 of the applicable
percentage for use in preparing 1997 income tax returns.
REGIONAL BANKS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1997
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS
Investment in securities, at value $ 843,973,784
(cost $669,956,553) - See accompanying schedule
Receivable for fund shares sold 13,462,336
Dividends receivable 1,047,713
Interest receivable 388,746
Redemption fees receivable 11,704
Other receivables 94
TOTAL ASSETS 858,884,377
LIABILITIES
Payable for investments purchased $ 9,597,596
Payable for fund shares redeemed 6,916,739
Accrued management fee 365,656
Other payables and accrued expenses 525,710
Collateral on securities loaned, 3,527,000
at value
TOTAL LIABILITIES 20,932,701
NET ASSETS $ 837,951,676
Net Assets consist of:
Paid in capital $ 649,302,594
Undistributed net investment income 2,586,443
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 12,045,276
Net unrealized appreciation (depreciation) on investments 174,017,363
and assets and liabilities in
foreign currencies
NET ASSETS, for 25,528,360 $ 837,951,676
shares outstanding
NET ASSET VALUE and redemption price per share ($837,951,676 (divided by) 25,528,360 shares) $32.82
Maximum offering price per share (100/97.00 of $32.82) $33.84
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1997
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME $ 9,813,650
Dividends
Interest (including income on securities loaned of $54,838) 1,896,747
TOTAL INCOME 11,710,397
EXPENSES
Management fee $ 2,534,699
Transfer agent fees 2,777,054
Accounting and security lending fees 412,710
Non-interested trustees' compensation 1,863
Custodian fees and expenses 18,860
Registration fees 279,085
Audit 46,974
Legal 2,286
Interest 1,239
Miscellaneous 11,146
Total expenses before reductions 6,085,916
Expense reductions (49,887 6,036,029
)
NET INVESTMENT INCOME 5,674,368
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 27,628,253
Foreign currency transactions 2,967 27,631,220
Change in net unrealized appreciation (depreciation) on:
Investment securities 124,367,985
Assets and liabilities in 132 124,368,117
foreign currencies
NET GAIN (LOSS) 151,999,337
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 157,673,705
OTHER INFORMATION $ 3,497,512
Sales charges paid to FDC
Deferred sales charges withheld $ 3,702
by FDC
Exchange fees withheld by FSC $ 129,713
Expense reductions $ 46,524
Directed brokerage arrangements
Custodian interest credits 4
Transfer agent interest credits 3,359
$ 49,887
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE YEAR ENDED YEAR ENDED
(DECREASE) IN FEBRUARY 28, FEBRUARY 29,
NET ASSETS 1997 1996
Operations $ 5,674,368 $ 5,565,530
Net
investment
income
Net realized 27,631,220 22,328,052
gain (loss)
Change in 124,368,117 44,057,165
net
unrealized
appreciation
(depreciation
)
NET INCREASE 157,673,705 71,950,747
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
Distributions to (4,305,859 (3,155,657
shareholders ) )
From net
investment
income
From net (22,112,110 (9,088,286
realized gain ) )
TOTAL (26,417,969 (12,243,943
DISTRIBUTION ) )
S
Share 797,514,088 388,478,435
transactions
Net proceeds
from sales of
shares
Reinvestmen 25,807,948 11,963,979
t of
distributions
Cost of (432,510,460 (309,887,067
shares ) )
redeemed
Paid in 706,766 312,663
capital
portion of
redemption
fees
NET INCREASE 391,518,342 90,868,010
(DECREASE)
IN NET
ASSETS
RESULTING
FROM SHARE
TRANSACTIO
NS
TOTAL 522,774,078 150,574,814
INCREASE
(DECREASE)
IN NET ASSETS
NET ASSETS
Beginning of 315,177,598 164,602,784
period
End of period $ 837,951,676 $ 315,177,598
(including
undistribute
d net
investment
income of
$2,586,443
and
$2,409,873
,
respectivel
y)
OTHER
INFORMATION
Shares
Sold 27,686,494 17,599,773
Issued in 968,599 512,815
reinvestment
of
distributions
Redeemed (16,057,387 (14,323,517
) )
Net increase 12,597,706 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>
YEAR ENDED YEAR ENDED YEARS ENDED FEBRUARY 28, TEN MONTHS
FEBRUARY 28, FEBRUARY 29, ENDED
FEBRUARY 28,
SELECTED 1997 1996 1995 1994 1993
PER-SHARE
DATA D
</TABLE>
Net asset $ 24.37 $ 18.01 $ 17.99 $ 20.88 $ 16.48
value,
beginning of
period
Income from
Investment
Operations
Net .37 .52 .37 .19 .16
investment
income
Net realized 9.70 6.78 .87 .93 5.09
and
unrealized
gain (loss)
Total from 10.07 7.30 1.24 1.12 5.25
investment
operations
Less
Distributions
From net (.27) (.25) (.29) (.15) (.11)
investment
income
From net (1.40) (.72) (.98) (3.92) (.81)
realized gain
Total (1.67) (.97) (1.27) (4.07) (.92)
distributions
Redemption .05 .03 .05 .06 .07
fees added to
paid in
capital
Net asset $ 32.82 $ 24.37 $ 18.01 $ 17.99 $ 20.88
value, end of
period
TOTAL 43.33% 40.94% 7.79% 6.46% 33.10%
RETURN B, C
RATIOS AND
SUPPLEMENT
AL DATA
Net assets, $ 837,952 $ 315,178 $ 164,603 $ 97,429 $ 315,520
end of period
(000 omitted)
Ratio of 1.46% 1.41% 1.58% 1.62% 1.49% A
expenses to
average net
assets
Ratio of 1.45% E 1.40% E 1.56% E 1.60% E 1.49% A
expenses to
average net
assets after
expense
reductions
Ratio of net 1.36% 2.42% 1.99% .88% 1.06% A
investment
income to
average net
assets
Portfolio 43% 103% 106% 74% 63% A
turnover rate
Average $ .0384
commission
rate F
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
A ANNUALIZED B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 8 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 8 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. You can
look at the total percentage change in value, the average annual percentage
change, or the growth of a hypothetical $10,000 investment. Total return
reflects the change in the value of an investment, assuming reinvestment of
the fund's dividend income and capital gains (the profits earned upon the
sale of 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 fund expenses, the past five year and past 10 year total
returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 28, 1997 YEAR YEARS YEARS
BIOTECHNOLOGY 5.85% 35.42% 273.14%
BIOTECHNOLOGY 2.67% 31.36% 261.95%
(INCL. 3% SALES CHARGE)
S&P 500 26.16% 118.75% 276.74%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one, five, or 10 years. You can compare
the fund's returns 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, and excludes the effect of sales
charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 28, 1997 YEAR YEARS YEARS
BIOTECHNOLOGY 5.85% 6.25% 14.07%
BIOTECHNOLOGY 2.67% 5.61% 13.73%
(INCL. 3% SALES CHARGE)
S&P 500 26.16% 16.94% 14.16%
AVERAGE ANNUAL RETURNS take the fund's 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
1987/02/28 9700.00 10000.00
1987/03/31 9658.84 10289.00
1987/04/30 9535.36 10197.43
1987/05/31 9494.20 10286.15
1987/06/30 9425.60 10805.60
1987/07/31 9439.32 11353.44
1987/08/31 9823.48 11776.92
1987/09/30 9679.42 11519.01
1987/10/31 6702.19 9037.81
1987/11/30 6050.50 8293.10
1987/12/31 6860.73 8924.20
1988/01/31 7207.31 9299.91
1988/02/29 7476.08 9733.29
1988/03/31 7426.57 9432.53
1988/04/30 7292.18 9537.23
1988/05/31 7150.72 9620.20
1988/06/30 7391.20 10061.77
1988/07/31 7384.13 10023.54
1988/08/31 7179.01 9682.74
1988/09/30 7327.54 10095.22
1988/10/31 7249.74 10375.87
1988/11/30 6910.24 10227.49
1988/12/31 7143.65 10406.47
1989/01/31 7638.75 11168.23
1989/02/28 7582.17 10890.14
1989/03/31 8140.93 11143.88
1989/04/30 8416.77 11722.25
1989/05/31 8798.71 12197.00
1989/06/30 8572.38 12127.48
1989/07/31 9364.55 13222.59
1989/08/31 9718.19 13481.75
1989/09/30 10128.42 13426.47
1989/10/31 10163.79 13114.98
1989/11/30 10482.07 13382.52
1989/12/31 10282.03 13703.71
1990/01/31 9512.68 12784.19
1990/02/28 10411.46 12949.10
1990/03/31 10850.06 13292.25
1990/04/30 10986.67 12959.95
1990/05/31 12532.57 14223.54
1990/06/30 13407.76 14126.82
1990/07/31 13444.12 14081.62
1990/08/31 13029.67 12808.64
1990/09/30 12738.83 12184.86
1990/10/31 12847.89 12132.46
1990/11/30 14403.89 12916.22
1990/12/31 14841.88 13276.58
1991/01/31 16546.38 13855.44
1991/02/28 18891.01 14846.11
1991/03/31 20841.15 15205.38
1991/04/30 19933.07 15241.87
1991/05/31 21198.43 15900.32
1991/06/30 20072.92 15172.09
1991/07/31 21879.95 15879.11
1991/08/31 23413.19 16255.44
1991/09/30 24625.70 15983.98
1991/10/31 27050.73 16198.16
1991/11/30 25243.69 15545.38
1991/12/31 29542.04 17323.77
1992/01/31 28949.90 17001.55
1992/02/29 26727.35 17222.57
1992/03/31 24699.48 16886.73
1992/04/30 22395.82 17383.20
1992/05/31 24001.89 17468.37
1992/06/30 23580.61 17208.09
1992/07/31 24813.30 17911.90
1992/08/31 23261.36 17544.71
1992/09/30 23181.54 17751.74
1992/10/31 24316.67 17813.87
1992/11/30 26711.10 18421.32
1992/12/31 26486.44 18647.90
1993/01/31 25125.29 18804.55
1993/02/28 21069.82 19060.29
1993/03/31 21386.79 19462.46
1993/04/30 21936.85 18991.47
1993/05/31 23353.93 19500.44
1993/06/30 23493.78 19556.99
1993/07/31 22719.97 19478.76
1993/08/31 23577.68 20217.01
1993/09/30 24547.27 20061.34
1993/10/31 26374.56 20476.61
1993/11/30 26169.46 20282.08
1993/12/31 26672.89 20527.49
1994/01/31 27586.54 21225.43
1994/02/28 25740.60 20650.22
1994/03/31 23139.50 19749.87
1994/04/30 22719.97 20002.67
1994/05/31 22337.73 20330.71
1994/06/30 21452.06 19832.61
1994/07/31 21507.99 20483.12
1994/08/31 23521.74 21322.93
1994/09/30 23447.16 20800.52
1994/10/31 22645.39 21268.53
1994/11/30 22225.86 20493.93
1994/12/31 21824.97 20797.85
1995/01/31 22803.88 21337.14
1995/02/28 23587.01 22168.65
1995/03/31 23969.25 22822.85
1995/04/30 24715.08 23494.98
1995/05/31 24938.83 24434.07
1995/06/30 25843.15 25001.68
1995/07/31 26999.20 25830.73
1995/08/31 28080.66 25895.57
1995/09/30 29339.25 26988.36
1995/10/31 29106.18 26892.01
1995/11/30 30075.76 28072.57
1995/12/31 32541.08 28613.25
1996/01/31 34465.70 29587.24
1996/02/29 34194.76 29861.52
1996/03/31 33652.87 30149.08
1996/04/30 34379.47 30593.48
1996/05/31 34780.67 31382.49
1996/06/30 32679.12 31502.05
1996/07/31 30281.44 30110.29
1996/08/31 31676.11 30745.32
1996/09/30 33529.29 32475.67
1996/10/31 32363.89 33371.34
1996/11/30 32554.94 35893.88
1996/12/31 34366.15 35182.83
1997/01/31 35941.23 37381.05
1997/02/28 36194.93 37674.12
Let's say hypothetically that $10,000 was invested in Fidelity Select
Biotechnology Portfolio on February 28, 1987, and the current maximum 3%
sales charge was paid. As the chart shows, by February 28, 1997, the value
of the investment would have grown to $36,195 - a 261.95% increase on the
initial investment. For comparison, look at how the S&P 500 did over the
same period. With dividends and capital gains, if any, reinvested, the same
$10,000 investment would have grown to $37,674 - a 276.74% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1997
% OF FUND'S
INVESTMENTS
Amgen, Inc. 9.8
Genentech, Inc. special 8.6
Immunex Corp. 3.7
Biogen, Inc. 3.7
Schering-Plough Corp. 2.9
Protein Design Labs, Inc. 2.8
Guilford Pharmaceuticals, Inc. 2.1
Gilead Sciences, Inc. 1.9
Interneuron Pharmaceuticals, Inc. 1.9
Alkermes, Inc. 1.8
TOP INDUSTRIES AS OF FEBRUARY 28, 1997
Biotechnology 46.9%
Drugs 18.8%
Pharmaceutical
Preparations 17.0%
Commercial Laboratory
Research 3.6%
Medical Supplies &
Appliances 1.5%
All Others 12.2% *
Row: 1, Col: 1, Value: 12.2
Row: 1, Col: 2, Value: 1.5
Row: 1, Col: 3, Value: 3.6
Row: 1, Col: 4, Value: 17.0
Row: 1, Col: 5, Value: 18.8
Row: 1, Col: 6, Value: 46.9
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
BIOTECHNOLOGY PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Karen Firestone,
Portfolio Manager
of Fidelity Select
Biotechnology Portfolio
Q. KAREN, HOW DID THE FUND PERFORM?
A. For the one-year period that ended February 28, 1997, the fund returned
5.85%. By comparison, the Standard & Poor's 500 Index returned 26.16% over
the same time period.
Q. WHAT WAS THE ENVIRONMENT LIKE FOR BIOTECHNOLOGY COMPANIES DURING THE
PERIOD?
A. Quite weak. During 1996, the industry was not favored by Wall Street,
which liked companies with earnings momentum. That ruled out the
biotechnology industry since many biotech companies don't have any
earnings. That's because a large portion of biotech firms are in the
process of developing a new drug or product, but have not yet marketed it.
So in 1996, the biotech industry dropped by 8% to 10%. Given the industry's
downturn, I think the fund's return over the past year was respectable and
can be traced to a couple of factors. First, the stocks I picked tended to
outperform other biotech stocks, and, second, the fund benefited from its
sizable holdings in large drug companies - some of 1996's strongest stocks.
Without these companies, especially excellent performers such as
Schering-Plough, the fund would have turned in a negative performance. I
should point out that biotech stocks picked up during the first two months
of 1997. So, I have dropped some of the fund's drug stocks and added more
biotech companies.
Q. A YEAR AGO, THE FUND RETURNED 44.97% FOR THE ONE-YEAR PERIOD ENDING
FEBRUARY 29, 1996, BUT RETURNED LESS THAN 6% FOR THE PAST YEAR. THAT'S A
LOT OF MOVEMENT UP AND DOWN. IS BIOTECHNOLOGY CONSIDERED ONE OF THE MOST
VOLATILE INDUSTRIES?
A. Definitely. A major reason this industry is so volatile is that it is
quite difficult to determine the value of research and development
companies that are introducing their first drug or product. The market has
to value what each company's potential future revenue is going to be. When
the market is optimistic about biotech, as it has been since the beginning
of 1997, you tend to get higher valuations. When it's pessimistic, like it
was in 1996, valuations are lower. As a result, there's a huge range of
potential value that one could give the same company.
Q. SO, HOW DO YOU MAKE INVESTMENT DECISIONS IN SUCH A VOLATILE ENVIRONMENT?
A. The way I manage the fund is to have a combination of large, established
biotech companies with earnings momentum, such as Amgen, Genentech and
Biogen, and companies that I consider to be late-stage, pre-earnings
companies. By this I mean companies in the late stage of clinical
development that I believe will be successful.
Q. WHAT ARE SOME EXAMPLES OF LATE-STAGE COMPANIES THE FUND OWNED DURING THE
PERIOD?
A. The best example is Protein Design Labs. This company has been around
for about 10 years, and it looked good over the period because it was
frugal about spending and had five drugs in various stages of development.
Most notably, the company has a new drug that studies show can lessen the
chance of a transplanted kidney being rejected by up to 40%. The company
expects this drug to be on the market in 1998. Another interesting story is
Guilford Pharmaceuticals, which has a drug for brain cancer that's been
approved but hasn't been launched yet.
Q. WERE THERE ANY INVESTMENT DECISIONS YOU WISH YOU HAD MADE DIFFERENTLY
OVER THE PERIOD?
A. Sure. I wish I had owned more of several little names that turned in
strong performances. For instance, I could have bought Pathogenisis, a
small biotech company, which I thought was too highly valued at 10 times
earnings. Over the period, it went as high as 30 times earnings.
Q. HOW DOES THE INDUSTRY LOOK GOING FORWARD?
A. I think it looks good. As I said earlier, biotech has picked up in 1997.
So right now, investors like biotech stocks, and I think the fund is
well-positioned. I will continue to try to put the fund in the right place.
However, as we've discussed, the biotech industry is very volatile. So even
though it looks good today, I need to keep in mind that the industry can
change very quickly.
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: 042
TRADING SYMBOL: FBIOX
SIZE: as of February 28, 1997, more than
$674 million
MANAGER: Karen Firestone, since 1992;
manager, Fidelity Advisor Health Care Fund,
since September 1996; 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)
BIOTECHNOLOGY PORTFOLIO
INVESTMENTS FEBRUARY 28, 1997
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 91.3%
SHARES VALUE (NOTE 1)
AGRICULTURE - 0.7%
CROPS - 0.7%
DEKALB Genetics Corp. Class B 71,100 $ 4,639,273
CHEMICALS & PLASTICS - 0.8%
CHEMICALS - 0.7%
Hoechst AG Ord. 125,000 5,282,055
CHEMICALS, GENERAL - 0.1%
Ciba Specialty Chemicals Holding, Inc.
(rights) (a) 8,686 548,512
TOTAL CHEMICALS & PLASTICS 5,830,567
DRUGS & PHARMACEUTICALS - 86.3%
BIOTECHNOLOGY - 46.9%
Advanced Tissue Sciences Corp. Class A (a) 50,000 643,750
Alkermes, Inc. (a) 495,900 12,335,513
Amgen, Inc. (a) 1,092,600 66,785,175
Amylin Pharmaceuticals, Inc. (a) 163,100 2,426,113
Biochem Pharmaceuticals, Inc. (a) 54,000 2,867,449
Biogen, Inc. (a) 505,800 24,910,650
Cambridge Neuroscience, Inc. (a) 108,100 1,351,250
Cell Genesys, Inc. (a) 592,600 4,518,575
Cephalon, Inc. (a) 70,000 1,653,750
Chiron Corp. (a) 446,400 9,262,800
COR Therapeutics, Inc. (a) 945,500 11,641,469
Creative Biomolecules, Inc. (a) 200,000 2,125,000
Genentech, Inc. special (a) 1,063,800 58,641,975
Genome Therapeutics Corp. (a) 670,000 6,281,250
Genzyme Corp. (a) 330,000 8,497,500
Gilead Sciences, Inc. (a) 423,100 12,904,550
Human Genome Sciences, Inc. (a) 322,000 12,236,000
Idexx Laboratories, Inc. (a) 80,000 2,980,000
Imclone Systems, Inc. (a) 200,000 1,712,500
Interneuron Pharmaceuticals, Inc. (a) 470,600 12,882,675
Magainin Pharmaceuticals, Inc. (a) 529,800 4,304,625
Medimmune, Inc. (a) 230,000 3,335,000
Molecular Biosystems, Inc. (a) 200,000 2,225,000
Neurex Corp. (a) 350,000 5,075,000
Neurogen Corp. (a) 167,700 2,934,750
North American Vaccine, Inc. (a) 100,000 2,262,500
Protein Design Labs, Inc. (a) 513,400 19,252,500
Regeneron Pharmaceuticals, Inc. (a) 449,900 4,499,000
Sepracor, Inc. (a) 228,000 5,500,500
Sequana Therapeutics, Inc. (a)(c) 370,900 5,656,225
Sugen, Inc. (a) 343,900 4,384,725
Vical, Inc. (a) 118,900 2,080,750
Virus Research Institute, Inc. 50,000 400,000
318,568,519
COMMERCIAL LABORATORY RESEARCH - 3.6%
Arqule, Inc. (c) 161,400 3,187,650
INCYTE Pharmaceuticals, Inc. (a) 87,600 4,642,800
Intercardia, Inc. 225,000 6,131,250
Medarex, Inc. (a) 204,750 1,817,156
Millennium Pharmaceuticals, Inc. (a) 525,300 8,798,775
24,577,631
DRUGS - 18.8%
Allergan, Inc. 101,600 3,454,400
Anesta Corp. (a) 346,900 6,244,200
Ares Serono Class B (Bearer) 11,400 11,721,969
Barr Laboratories, Inc. (a) 54,100 1,961,125
Bristol-Myers Squibb Co. 60,000 7,830,000
Dura Pharmaceuticals, Inc. (a) 160,000 5,380,000
SHARES VALUE (NOTE 1)
Elan Corp. PLC (a):
ADR 157,276 $ 5,445,682
ADR (warrants) 14,339 449,886
Merck & Co., Inc. 50,000 4,600,000
Novo-Nordisk AS Class B 88,000 8,434,374
Novo Industri A/S ADR 16,000 770,000
Pfizer, Inc. 75,600 6,926,850
Roche Holding AG participation
certificates 1,280 10,750,008
Schering-Plough Corp. 260,900 19,991,463
Sequus Pharmaceuticals, Inc. (a) 729,400 8,388,100
Takeda Chemical Industries Ltd. 361,000 7,266,542
Vertex Pharmaceuticals, Inc. (a) 81,000 3,746,250
Warner-Lambert Co. 25,000 2,100,000
Watson Pharmaceuticals, Inc. (a) 178,894 7,804,251
Yamanouchi Pharmaceutical Co. Ltd. 233,000 4,883,843
128,148,943
PHARMACEUTICAL PREPARATIONS - 17.0%
Alpharma, Inc. Class A 216,700 2,898,363
Ariad Pharmaceuticals, Inc. (a)(c) 1,029,100 7,203,700
Arris Pharmaceutical Corp. (a) 573,500 7,527,188
Astra AB:
Class A Free shares 20,000 956,245
Class B Free shares 143,000 6,666,224
GelTex Pharmaceuticals, Inc. (a) 100,000 2,100,000
Guilford Pharmaceuticals, Inc. (a) 550,550 14,176,663
Houghten Pharmaceuticals, Inc. 100,000 687,500
Ilex Oncology, Inc. 100,000 1,287,500
Immunex Corp. (a) 893,200 25,232,900
Inhale Therapeutic Systems (a) 427,500 8,443,125
Ligand Pharmaceuticals, Inc. Class B (a) 907,065 10,998,163
NPS Pharmaceuticals, Inc. (a) 365,000 4,288,750
NeXstar Pharmaceuticals, Inc. 350,800 5,218,150
Novartis AG (Reg.) (a) 8,686 9,906,711
Noven Pharmaceuticals, Inc. (a) 50,000 675,000
Sangstat Medical Corp. (a) 136,900 4,380,800
T Cell Sciences, Inc. (a) 247,100 467,173
Theratech, Inc. (a) 195,000 2,535,000
115,649,155
TOTAL DRUGS & PHARMACEUTICALS 586,944,248
ELECTRICAL EQUIPMENT - 0.0%
TV & RADIO COMMUNICATION EQUIPMENT - 0.0%
ASN (warrants) (a) 5,000 -
MEDICAL EQUIPMENT & SUPPLIES - 2.2%
MEDICAL SUPPLIES & APPLIANCES - 1.5%
Cygnus, Inc. (a) 100,000 1,537,500
Johnson & Johnson 150,000 8,643,750
10,181,250
MEDICAL TECHNOLOGY - 0.7%
Conceptus, Inc. 132,000 1,683,000
Sonus Pharmaceuticals, Inc. (a) 70,000 2,021,250
Stryker Corp. 30,000 870,000
4,574,250
TOTAL MEDICAL EQUIPMENT & SUPPLIES 14,755,500
MEDICAL FACILITIES MANAGEMENT - 1.3%
HOSPITALS - 1.0%
Columbia/HCA Healthcare Corp. 155,550 6,533,100
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
MEDICAL FACILITIES MANAGEMENT - CONTINUED
SKILLED NURSING CARE FACILITIES - 0.3%
TheraTx, Inc. (a) 128,200 $ 2,115,300
TOTAL MEDICAL FACILITIES MANAGEMENT 8,648,400
TOTAL COMMON STOCKS
(Cost $528,351,231) 620,817,988
CASH EQUIVALENTS - 8.7%
Taxable Central Cash Fund (b)
(Cost $58,929,873) 58,929,873 58,929,873
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $587,281,104) $ 679,747,861
LEGEND
1. Non-income producing
2. At period end, the seven-day yield on the Taxable Central Cash Fund was
5.31%. The yield refers to the income earned by investing in the fund over
the seven-day period, expressed as an annual percentage.
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
Ariad Pharmaceuticals, Inc. $ 266,250 $ - $ - $ 7,203,700
Arqule, Inc. 180,409 - - 3,187,650
Arris Pharmaceutical Corp. 1,962,500 475,000 - -
COR Therapeutics, Inc. - 144,375 - -
Guilford Pharmaceuticals, Inc. 1,000,000 - - -
Inhale Therapeutic Systems - 822,515 - -
Insite Vision, Inc. - 82,613 - -
Protein Design Labs, Inc. - 1,014,182 - -
Sequana Therapeutics,Inc. - - - 5,656,225
Totals $ 3,409,159 $ 2,538,685 $ - $ 16,047,575
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $272,190,274 and $626,553,296, respectively (see Note 3 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $64,458 for the period (see
Note 4 of Notes to Financial Statements).
At the period end, the value of securities loaned and the value of
collateral amounted to $5,443,050 and $5,502,000, respectively (see Note 6
of Notes to Financial Statements).
The fund participated in the bank borrowing program. The maximum loan and
average daily balance during the period for which the loan was outstanding
amounted to $10,839,000. The weighted average interest rate was 5.65% (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 88.5%
Switzerland 4.8
Japan 1.8
Denmark 1.4
Sweden 1.1
Others (individually less than 1%) 2.4
TOTAL 100.0%
INCOME TAX INFORMATION
At February 28, 1997, the aggregate cost of investment securities for
income tax purposes was $587,865,580. Net unrealized appreciation
aggregated $91,882,281, of which $121,701,367 related to appreciated
investment securities and $29,819,086 related to depreciated investment
securities.
The fund hereby designates approximately $37,190,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 17% of the dividends distributed during the fiscal year
qualifies for the dividends-received deduction for corporate shareholders
(unaudited).
The fund will notify shareholders in January 1998 of the applicable
percentage for use in preparing 1997 income tax returns.
BIOTECHNOLOGY PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1997
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS
Investment in securities, at value $ 679,747,861
(cost $587,281,104) - See accompanying schedule
Receivable for investments sold 5,743,901
Receivable for fund shares sold 2,450,829
Dividends receivable 94,500
Interest receivable 374,058
Redemption fees receivable 4,661
Other receivables 293,211
TOTAL ASSETS 688,709,021
LIABILITIES
Payable to custodian bank $ 263
Payable for fund shares redeemed 7,417,420
Accrued management fee 352,724
Other payables and accrued expenses 534,250
Collateral on securities loaned, 5,502,000
at value
TOTAL LIABILITIES 13,806,657
NET ASSETS $ 674,902,364
Net Assets consist of:
Paid in capital $ 535,512,409
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 46,923,198
Net unrealized appreciation (depreciation) on investments 92,466,757
NET ASSETS, for 19,712,465 $ 674,902,364
shares outstanding
NET ASSET VALUE and redemption price per share ($674,902,364 (divided by) 19,712,465 shares) $34.24
Maximum offering price per share (100/97.00 of $34.24) $35.30
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1997
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME $ 3,261,708
Dividends
Interest (including income on securities loaned of $154,561) 3,699,384
TOTAL INCOME 6,961,092
EXPENSES
Management fee $ 4,324,960
Transfer agent fees 6,104,217
Accounting and security lending fees 621,995
Non-interested trustees' compensation 3,081
Custodian fees and expenses 60,081
Registration fees 30,500
Audit 56,516
Legal 14,803
Interest 1,701
Miscellaneous 26,913
Total expenses before reductions 11,244,767
Expense reductions (52,739 11,192,028
)
NET INVESTMENT INCOME (LOSS) (4,230,936
)
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities (including 107,766,950
realized gain of $1,782,746
on sales of investments
in affiliated issuers)
Foreign currency transactions (8,785 107,758,165
)
Change in net unrealized appreciation (depreciation) on investment securities (82,231,616
)
NET GAIN (LOSS) 25,526,549
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 21,295,613
OTHER INFORMATION $ 1,854,442
Sales charges paid to FDC
Deferred sales charges withheld $ 41,551
by FDC
Exchange fees withheld by FSC $ 327,173
Expense reductions $ 45,667
Directed brokerage arrangements
Custodian interest credits 1,812
Transfer agent interest credits 5,260
$ 52,739
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE YEAR ENDED YEAR ENDED
(DECREASE) IN FEBRUARY 28, FEBRUARY 29,
NET ASSETS 1997 1996
Operations $ (4,230,936) $ 2,118,503
Net
investment
income (loss)
Net realized 107,758,165 60,844,285
gain (loss)
Change in (82,231,616) 158,651,823
net
unrealized
appreciation
(depreciation
)
NET INCREASE 21,295,613 221,614,611
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
Distributions to (758,609) (1,392,589)
shareholders
From net
investment
income
From net (74,788,474) -
realized gain
TOTAL (75,547,083) (1,392,589)
DISTRIBUTION
S
Share 434,127,456 886,867,937
transactions
Net proceeds
from sales of
shares
Reinvestmen 73,785,664 1,358,134
t of
distributions
Cost of (876,553,990) (460,786,384)
shares
redeemed
Paid in 930,907 1,005,318
capital
portion of
redemption
fees
NET INCREASE (367,709,963) 428,445,005
(DECREASE)
IN NET
ASSETS
RESULTING
FROM SHARE
TRANSACTIO
NS
TOTAL (421,961,433) 648,667,027
INCREASE
(DECREASE)
IN NET ASSETS
NET ASSETS
Beginning of 1,096,863,797 448,196,770
period
End of period $ 674,902,364 $ 1,096,863,797
(including
undistribute
d net
investment
income of
$0 and
$729,404,
respectivel
y)
OTHER
INFORMATION
Shares
Sold 12,636,024 26,953,463
Issued in 2,313,606 41,419
reinvestment
of
distributions
Redeemed (25,208,094) (14,737,686)
Net increase (10,258,464) 12,257,196
(decrease)
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEAR ENDED YEAR ENDED YEARS ENDED FEBRUARY 28, TEN MONTHS
FEBRUARY 28, FEBRUARY 29, ENDED
FEBRUARY 28,
SELECTED 1997 1996 1995 1994 1993
PER-SHARE
DATA D
</TABLE>
Net asset $ 36.60 $ 25.30 $ 27.61 $ 22.60 $ 27.61
value,
beginning of
period
Income from
Investment
Operations
Net (.20) .11 (.06) (.18) (.08)
investment
income (loss)
Net realized 1.89 11.21 (2.26) 5.15 (1.09)
and
unrealized
gain (loss)
Total from 1.69 11.32 (2.32) 4.97 (1.17)
investment
operations
Less
Distributions
From net (.03) (.07) - - -
investment
income
From net (4.06) - - - (3.89)
realized gain
Total (4.09) (.07) - - (3.89)
distributions
Redemption .04 .05 .01 .04 .05
fees added to
paid in
capital
Net asset $ 34.24 $ 36.60 $ 25.30 $ 27.61 $ 22.60
value, end of
period
TOTAL 5.85% 44.97% (8.37)% 22.17% (5.92)%
RETURN B, C
RATIOS AND
SUPPLEMENT
AL DATA
Net assets, $ 674,902 $ 1,096,864 $ 448,197 $ 481,146 $ 507,993
end of period
(000 omitted)
Ratio of 1.57% 1.44% F 1.59% 1.62% 1.50% A
expenses to
average net
assets
Ratio of 1.56% E 1.43% E 1.59% 1.61% E 1.50% A
expenses to
average net
assets after
expense
reductions
Ratio of net (.59)% .35% (.27)% (.69)% (.37)%
investment A
income (loss)
to average
net assets
Portfolio 41% 67% 77% 51% 79% A
turnover rate
Average $ .0376
commission
rate G
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
A ANNUALIZED B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 8 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 8 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. You can
look at the total percentage change in value, the average annual percentage
change, or the growth of a hypothetical $10,000 investment. Total return
reflects the change in the value of an investment, assuming reinvestment of
the fund's dividend income and capital gains (the profits earned upon the
sale of securities that have grown in value), but does not include certain
fees paid by shareholders upon exchange or redemption.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 28, 1997 YEAR YEARS YEARS
HEALTH CARE 20.41% 100.83% 395.25%
HEALTH CARE 16.80% 94.80% 380.39%
(INCL. 3% SALES CHARGE)
S&P 500 26.16% 118.75% 276.74%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one, five, or 10 years. You can compare
the fund's returns 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, and excludes the effect of sales
charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 28, 1997 YEAR YEARS YEARS
HEALTH CARE 20.41% 14.96% 17.35%
HEALTH CARE 16.80% 14.27% 16.99%
(INCL. 3% SALES CHARGE)
S&P 500 26.16% 16.94% 14.16%
AVERAGE ANNUAL RETURNS take the fund's 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
1987/02/28 9700.00 10000.00
1987/03/31 9641.70 10289.00
1987/04/30 9412.99 10197.43
1987/05/31 9504.92 10286.15
1987/06/30 9731.39 10805.60
1987/07/31 10103.61 11353.44
1987/08/31 10401.83 11776.92
1987/09/30 10206.75 11519.01
1987/10/31 7513.80 9037.81
1987/11/30 6785.07 8293.10
1987/12/31 7303.18 8924.20
1988/01/31 7845.95 9299.91
1988/02/29 8081.54 9733.29
1988/03/31 7880.60 9432.53
1988/04/30 7758.18 9537.23
1988/05/31 7737.40 9620.20
1988/06/30 7940.65 10061.77
1988/07/31 7929.10 10023.54
1988/08/31 7714.30 9682.74
1988/09/30 7972.98 10095.22
1988/10/31 8072.30 10375.87
1988/11/30 7836.71 10227.49
1988/12/31 7947.96 10406.47
1989/01/31 8509.18 11168.23
1989/02/28 8346.17 10890.14
1989/03/31 8786.30 11143.88
1989/04/30 9266.02 11722.25
1989/05/31 9554.78 12197.00
1989/06/30 9339.41 12127.48
1989/07/31 10496.25 13222.59
1989/08/31 10750.20 13481.75
1989/09/30 10827.79 13426.47
1989/10/31 10747.84 13114.98
1989/11/30 11211.05 13382.52
1989/12/31 11324.93 13703.71
1990/01/31 10675.14 12784.19
1990/02/28 10563.27 12949.10
1990/03/31 10984.56 13292.25
1990/04/30 10984.56 12959.95
1990/05/31 12495.98 14223.54
1990/06/30 12921.75 14126.82
1990/07/31 13100.15 14081.62
1990/08/31 12512.91 12808.64
1990/09/30 12136.28 12184.86
1990/10/31 12413.80 12132.46
1990/11/30 13734.47 12916.22
1990/12/31 14078.74 13276.58
1991/01/31 15468.54 13855.44
1991/02/28 17379.19 14846.11
1991/03/31 18928.44 15205.38
1991/04/30 18598.92 15241.87
1991/05/31 19608.72 15900.32
1991/06/30 18724.52 15172.09
1991/07/31 20381.35 15879.11
1991/08/31 21399.85 16255.44
1991/09/30 21831.09 15983.98
1991/10/31 23269.47 16198.16
1991/11/30 21998.47 15545.38
1991/12/31 25861.59 17323.77
1992/01/31 25013.08 17001.55
1992/02/29 23920.84 17222.57
1992/03/31 22461.52 16886.73
1992/04/30 21188.75 17383.20
1992/05/31 21625.04 17468.37
1992/06/30 20791.53 17208.09
1992/07/31 22042.27 17911.90
1992/08/31 21447.76 17544.71
1992/09/30 19963.12 17751.74
1992/10/31 20577.12 17813.87
1992/11/30 21704.41 18421.32
1992/12/31 21352.82 18647.90
1993/01/31 20206.04 18804.55
1993/02/28 18049.81 19060.29
1993/03/31 18547.67 19462.46
1993/04/30 18540.80 18991.47
1993/05/31 19282.43 19500.44
1993/06/30 19213.76 19556.99
1993/07/31 18588.87 19478.76
1993/08/31 19251.53 20217.01
1993/09/30 19852.39 20061.34
1993/10/31 21328.79 20476.61
1993/11/30 21256.68 20282.08
1993/12/31 21868.84 20527.49
1994/01/31 22301.96 21225.43
1994/02/28 21762.28 20650.22
1994/03/31 20342.63 19749.87
1994/04/30 21158.73 20002.67
1994/05/31 22353.73 20330.71
1994/06/30 21999.02 19832.61
1994/07/31 22439.82 20483.12
1994/08/31 25384.27 21322.93
1994/09/30 25566.80 20800.52
1994/10/31 25921.51 21268.53
1994/11/30 26482.85 20493.93
1994/12/31 26561.59 20797.85
1995/01/31 27968.46 21337.14
1995/02/28 28561.22 22168.65
1995/03/31 29337.81 22822.85
1995/04/30 29746.73 23494.98
1995/05/31 30033.34 24434.07
1995/06/30 31553.11 25001.68
1995/07/31 33359.48 25830.73
1995/08/31 33642.32 25895.57
1995/09/30 35527.89 26988.36
1995/10/31 35614.62 26892.01
1995/11/30 37115.54 28072.57
1995/12/31 38744.04 28613.25
1996/01/31 40129.88 29587.24
1996/02/29 39895.60 29861.52
1996/03/31 40034.58 30149.08
1996/04/30 39866.98 30593.48
1996/05/31 40590.19 31382.49
1996/06/30 40618.96 31502.05
1996/07/31 39032.82 30110.29
1996/08/31 40355.97 30745.32
1996/09/30 43133.76 32475.67
1996/10/31 42287.27 33371.34
1996/11/30 44559.63 35893.88
1996/12/31 44733.57 35182.83
1997/01/31 47434.46 37381.05
1997/02/28 48039.35 37674.12
Let's say hypothetically that $10,000 was invested in Fidelity Select
Health Care Portfolio on February 28, 1987, and the current maximum 3%
sales charge was paid. As the chart shows, by February 28, 1997, the value
of the investment would have grown to $48,039 - a 380.39% increase on the
initial investment. For comparison, look at how the S&P 500 did over the
same period. With dividends and capital gains, if any, reinvested, the same
$10,000 investment would have grown to $37,674 - a 276.74% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1997
% OF FUND'S
INVESTMENTS
Schering-Plough Corp. 6.2
Pfizer, Inc. 5.9
Merck & Co., Inc. 4.7
Bristol-Myers Squibb Co. 4.5
Warner-Lambert Co. 4.4
American Home Products Corp. 4.1
Johnson & Johnson 3.3
Abbott Laboratories 2.2
SmithKline Beecham PLC ADR 1.9
Lilly (Eli) & Co. 1.9
TOP INDUSTRIES AS OF FEBRUARY 28, 1997
Drugs 40.3%
Medical Supplies &
Appliances 10.5%
Medical Technology 8.2%
Biotechnology 6.2%
Pharmaceutical
Preparations 5.6%
All Others 29.2% *
Row: 1, Col: 1, Value: 29.2
Row: 1, Col: 2, Value: 5.6
Row: 1, Col: 3, Value: 6.2
Row: 1, Col: 4, Value: 8.199999999999999
Row: 1, Col: 5, Value: 10.5
Row: 1, Col: 6, Value: 40.3
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
HEALTH CARE PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Karen Firestone,
Portfolio Manager of
Fidelity Select Health
Care Portfolio
Q. KAREN, HOW DID THE FUND PERFORM?
A. For the one-year period that ended February 28, 1997, the fund returned
20.41%. By comparison, the Standard & Poor's 500 Index returned 26.16% over
the same time period.
Q. WHY DID THE FUND UNDERPERFORM THE S&P 500 INDEX?
A. There were several reasons. Health care companies showed solid growth
and steady profits during the period, but they certainly did not perform as
well as technology and financial services stocks, which led the market and
made up a notable part of the index. I did try to take advantage of the
technology trend by buying some medical equipment and supplies companies,
which make products such as defibrillators and pacemakers. However, these
companies underperformed the overall health care sector. Also, while the
health care sector turned in a strong performance during the first part of
1996, it underperformed the index for much of the rest of the period. This
was due to a market rotation out of health care and into cyclical - or more
economically sensitive - stocks, which also made up a significant portion
of the index. I should note that health care companies picked up
tremendously in February of 1997, turning in average returns of 5% to 10%
and beating the overall market. In fact, it was one of the sector's best
months in a long time.
Q. WERE THERE REASONS FOR THE FUND'S PERFORMANCE THAT WERE MORE SPECIFIC TO
THE FUND ITSELF?
A. Yes. As I mentioned, medical equipment and supplies companies - which
made up about 22% of the fund at the end of the period - underperformed.
One example was St. Jude Medical, a fairly large holding of the fund during
the period, which fell on rough times soon after it acquired a company
called Ventrotechs. That's because Ventrotechs almost immediately announced
that two patients who used its cardiac device had died. Another company,
Medtronic, the leading defibrillator maker, slowed in 1996 when the demand
for medical equipment and supplies lessened somewhat. When I purchased
these companies, their pricing was attractive and they looked like solid
values. The fund was also hurt by its holdings in HMOs and hospitals. HMOs
were weak performers for most of the period because they did not meet
earnings expectations, and hospitals underperformed during much of 1996 due
mostly to pricing issues.
Q. CERTAINLY THE PRIMARY FOCUS OF THE FUND WAS DRUG STOCKS, WHICH MADE UP
ABOUT 40% OF ITS TOTAL INVESTMENTS AT THE END OF THE PERIOD. WHY WERE THEY
SO ATTRACTIVE?
A. Drug companies turned in excellent performance in terms of revenue
growth and earnings growth over the period, and many are expected to do
well in the upcoming year. Schering-Plough, the fund's top holding at the
end of the period, was a real growth machine. It turned in its strong
performance largely because of Claritin, the company's billion dollar
antihistamine. Another top 10 stock during the period, Warner-Lambert, also
had two hot new drugs: Lipitor, which helps lower cholesterol, and a new
diabetes drug, Rezulin.
Q. IF DRUG STOCKS WERE PERFORMING SO WELL, WHY DIDN'T YOU OWN MORE OF THEM?
A. That's a good question. Basically, I thought it was too risky. If the
fund had a bigger weighting in pharmaceuticals and the bet didn't work,
shareholders could have really been whipsawed. Having a heavier weighting
means that I would have had about 50% of the fund in a handful of big
names. If there had been a disappointment in one big holding, the fund
could have lost a notable portion of its return. Clearly, this point is
hard to see when the stocks are going up, but it's very easy to see when
they're going down.
Q. HOW DOES THE FUND LOOK GOING FORWARD?
A. I think health care is a good place to be right now. There's a lot of
uncertainty in both the economy and the market, and it's not clear where
interest rates are going. I will stick to my approach of trying to buy
companies that have strong sales and earnings momentum. The stocks that
tend to look good going forward are those that have proven themselves
winners in the past. I'll also continue to look for smaller and newer
companies with great product potential.
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 February 28, 1997, more than
$1.3 billion
MANAGER: Karen Firestone, since 1995;
manager, Fidelity Advisor Health Care Fund,
since September 1996; 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 FEBRUARY 28, 1997
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 86.3%
SHARES VALUE (NOTE 1)
CHEMICALS & PLASTICS - 0.7%
CHEMICALS - 0.6%
Hoechst AG Ord. 210,000 $ 8,873,849
CHEMICALS, GENERAL - 0.1%
Ciba Specialty Chemicals
Holding, Inc. (rights) (a) 15,900 1,004,069
TOTAL CHEMICALS & PLASTICS 9,877,918
COMPUTER SERVICES & SOFTWARE - 0.1%
CAD/CAM/CAE - 0.1%
Healthdyne Information
Enterprises, Inc. (a) 258,200 1,226,450
DEFENSE ELECTRONICS - 0.0%
BEI Electronics, Inc. 21,800 247,975
DRUGS & PHARMACEUTICALS - 52.9%
BIOTECHNOLOGY - 6.2%
Alkermes, Inc. (a) 179,400 4,462,575
Amgen, Inc. (a) 307,600 18,802,050
Amylin Pharmaceuticals, Inc. (a) 1,100 16,363
COR Therapeutics, Inc. (a) 337,100 4,150,544
Cytyc Corp. (a) 150,000 4,106,250
Elf Sanofi SA 70,000 6,914,186
Genentech, Inc. special (a) 397,400 21,906,675
Gilead Sciences, Inc. (a) 100,000 3,050,000
Human Genome Sciences, Inc. (a) 100,000 3,800,000
IGI, Inc. (a) 100,000 568,750
Idexx Laboratories, Inc. (a) 143,300 5,337,925
Interneuron Pharmaceuticals, Inc. (a) 100,000 2,737,500
Perseptive Biosystem, Inc.
Class G (warrants) (a) 390 414
Pharmacia & Upjohn, Inc. 168,800 6,224,500
Regeneron Pharmaceuticals, Inc. (a) 119,600 1,196,000
Sequana Therapeutics, Inc. (a) 100,000 1,525,000
Sugen, Inc. (a) 50,000 637,500
85,436,232
COMMERCIAL LABORATORY RESEARCH - 0.8%
Arqule, Inc. (c) 150,000 2,962,500
INCYTE Pharmaceuticals, Inc. (a) 70,000 3,710,000
Millennium Pharmaceuticals, Inc. 217,100 3,636,425
10,308,925
DRUGS - 40.3%
Allergan, Inc. 143,300 4,872,200
ALZA Corp. Class A (a) 240,000 6,810,000
American Home Products Corp. 869,100 55,622,400
Barr Laboratories, Inc. (a) 287,500 10,421,875
Bristol-Myers Squibb Co. 471,100 61,478,550
Dura Pharmaceuticals, Inc. (a) 122,900 4,132,513
Elan Corp. PLC ADR (a) 198,520 6,873,755
Glaxo PLC sponsored ADR 260,000 8,807,500
Glaxo Holdings PLC 220,000 3,724,711
Lilly (Eli) & Co. 291,806 25,496,549
Merck & Co., Inc. 703,100 64,685,200
Mylan Laboratories, Inc. 300,000 5,025,000
Novo-Nordisk AS Class B 80,000 7,667,613
Pfizer, Inc. 883,600 80,959,850
Roche Holding AG
participation certificates 1,930 16,208,997
Schering-Plough Corp. 1,108,400 84,931,150
SmithKline Beecham PLC ADR 345,000 25,616,250
Takeda Chemical Industries Ltd. 361,000 7,266,542
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
Warner-Lambert Co. 722,500 $ 60,690,000
Watson Pharmaceuticals, Inc. (a) 136,200 5,941,725
Yamanouchi Pharmaceutical Co. Ltd. 233,000 4,883,843
552,116,223
PHARMACEUTICAL PREPARATIONS - 5.6%
Alpharma, Inc. Class A 325,000 4,346,875
Andrx Corp. 248,500 4,845,750
Arris Pharmaceutical Corp. (a) 200,000 2,625,000
Astra AB Class A Free shares 510,000 24,384,251
Ilex Oncology, Inc. 100,000 1,287,500
Inhale Therapeutic Systems (a) 39,000 770,250
Ligand Pharmaceuticals, Inc. Class B (a) 332,800 4,035,200
Novartis AG (Reg.) (a) 15,900 18,134,551
Rhone Poulenc Rorer, Inc. 108,200 7,682,200
Sangstat Medical Corp. (a) 50,000 1,600,000
Zeneca Group PLC Ord. 240,000 7,051,172
76,762,749
TOTAL DRUGS & PHARMACEUTICALS 724,624,129
ELECTRONICS - 0.3%
ELECTRONIC CAPACITORS - 0.3%
Maxwell Technologies, Inc. (a) 199,100 4,579,300
MEDICAL EQUIPMENT & SUPPLIES - 22.3%
DENTAL EQUIPMENT - 0.6%
Sybron International Corp. (a) 282,300 8,398,425
DRUG DISTRIBUTORS - WHOLESALE - 2.8%
Allegiance Corp. 124,600 3,286,325
AmeriSource Health Corp. Class A (a) 43,900 2,211,463
Bergen Brunswig Corp. Class A 609,590 19,583,079
Cardinal Health, Inc. 211,499 13,007,189
38,088,056
MEDICAL SUPPLIES & APPLIANCES - 10.5%
Abbott Laboratories 530,000 29,812,500
Bard (C.R.), Inc. 100,000 2,737,500
Baxter International, Inc. 273,000 12,558,000
Becton, Dickinson & Co. 373,700 18,404,725
Boston Scientific Corp. (a) 228,668 15,149,255
Closure Medical Corp. 75,000 1,275,000
Depuy, Inc. (a) 200,000 4,300,000
Johnson & Johnson 794,000 45,754,250
Sofamor/Danek Group, Inc. (a) 350,500 13,888,563
143,879,793
MEDICAL TECHNOLOGY - 8.2%
Arterial Vascular Engineering, Inc. (a) 157,000 2,472,750
Beckman Instruments, Inc. 315,000 13,072,500
Biomet, Inc. 10,000 152,500
Cardiac Pathways Corp. 252,500 2,398,750
Cardiogenesis Corp. 97,900 1,492,975
Datascope Corp. (a) 192,600 4,044,600
Guidant Corp. 151,830 10,172,610
Heartport, Inc. (a) 166,900 4,944,413
InControl, Inc. (a) 502,200 4,519,800
Medtronic, Inc. 370,000 23,957,500
Micro Therapeutics, Inc. (c) 100,000 700,000
Nellcor, Inc. (a) 182,800 3,176,150
St. Jude Medical, Inc. (a) 333,100 13,157,450
Sonus Pharmaceuticals, Inc. (a) 206,600 5,965,575
Stryker Corp. 220,000 6,380,000
U.S. Surgical Corp. 350,000 14,918,750
Ventana Medical Systems, Inc. 67,000 1,206,000
112,732,323
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
MEDICAL EQUIPMENT & SUPPLIES - CONTINUED
X-RAY & RELATED APPARATUS - 0.1%
Axogen Ltd. unit (a) 50,000 $ 1,225,000
X-RAY ELECTRO-MEDICAL APPARATUS - 0.1%
Fischer Imaging Corp. (a) 100,000 662,500
TOTAL MEDICAL EQUIPMENT & SUPPLIES 304,986,097
MEDICAL FACILITIES MANAGEMENT - 10.0%
HEALTH PRACTITIONERS - 0.2%
FPA Medical Management, Inc. (a) 95,100 2,448,825
HOME HEALTH CARE AGENCIES - 0.2%
Matria Healthcare, Inc. (a) 258,200 1,484,650
Sunrise Assisted Living, Inc. (a) 47,100 1,318,800
2,803,450
HOSPITALS - 4.5%
Columbia/HCA Healthcare Corp. 583,507 24,507,294
HEALTHSOUTH Rehabilitation Corp. (a) 389,300 15,669,325
Health Management Associates, Inc.
Class A (a) 203,900 5,403,350
Tenet Healthcare Corp. (a) 611,800 16,595,075
62,175,044
HMO'S & OUTPATIENT CARE - 3.3%
Oxford Health Plans, Inc. (a) 322,900 18,001,675
PacifiCare Health Systems
Class B 118,800 9,949,500
Trigon Healthcare, Inc. 61,500 1,099,313
United HealthCare Corp. 321,690 16,044,289
45,094,777
MEDICAL LABORATORIES - 0.1%
Cambridge Heart, Inc. 100,000 1,362,500
MEDICAL SERVICES - 0.8%
Carematrix Corp. (a) 74,300 1,290,963
Lincare Holdings, Inc. (a) 176,800 7,624,500
Physician Reliance Network, Inc. (a) 400,000 2,525,000
11,440,463
NURSING CARE & NURSING HOMES - 0.1%
ARV Assisted Living, Inc. (a) 109,000 1,035,500
NURSING, PERSONAL CARE FACILITIES - 0.2%
Integrated Living Communities, Inc. (a)(c) 373,800 2,476,425
SKILLED NURSING CARE FACILITIES - 0.2%
Beverly Enterprises, Inc. (a) 188,400 2,708,250
SPECIALTY HOSPITAL EXCEPT PSYCHIATRIC - 0.4%
Vencor, Inc. (a) 138,000 4,778,250
TOTAL MEDICAL FACILITIES MANAGEMENT 136,323,484
TOTAL COMMON STOCKS
(Cost $911,710,463) 1,181,865,353
CONVERTIBLE PREFERRED STOCKS - 0.6%
MEDICAL EQUIPMENT & SUPPLIES - 0.6%
MEDICAL TECHNOLOGY - 0.6%
U.S. Surgical Corp. $2.20 (d)
(Cost $4,652,386) 197,200 7,961,950
CASH EQUIVALENTS - 13.1%
SHARES VALUE (NOTE 1)
Taxable Central Cash Fund (b)
(Cost $179,225,337) 179,225,337 $179,225,337
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $1,095,588,186) $ 1,369,052,640
LEGEND
1. Non-income producing
2. At period end, the seven-day yield on the Taxable Central Cash Fund was
5.31%. The yield refers to the income earned by investing in the fund over
the seven-day period, expressed as an annual percentage.
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
Arqule, Inc. $ - $ - $ - $ 2,962,500
Integrated Living Communities, Inc. 363,150 - - 2,476,425
Micro Therapeutics, Inc. - - - 700,000
Protocol Systems, Inc. - 977,901 - -
Spacelabs Medical, Inc. - 2,270,615 - -
Totals $ 363,150 $ 3,248,516 $ - $ 6,138,925
4. Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of these securities amounted to $7,961,950 or 0.6% of net
assets.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $679,358,509 and $1,029,114,229, respectively (see Note 3 of
Notes to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $227,981 for the period
(see Note 4 of Notes to Financial Statements).
At the period end, the value of securities loaned and the value of
collateral amounted to $12,576,075 and $12,738,000, respectively (see Note
6 of Notes to Financial Statements).
Distribution of investments by country of issue, as a percentage of total
value of investment in securities, is as follows:
United States 88.6%
United Kingdom 3.3
Switzerland 2.6
Sweden 1.8
France 1.1
Others (individually less than 1%) 2.6
TOTAL 100.0%
INCOME TAX INFORMATION
At February 28, 1997, the aggregate cost of investment securities for
income tax purposes was $1,096,569,759. Net unrealized appreciation
aggregated $272,482,881, of which $288,820,437 related to appreciated
investment securities and $16,337,556 related to depreciated investment
securities.
The fund hereby designates approximately $50,739,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 30% of the dividends distributed during the fiscal year
qualifies for the dividends-received deduction for corporate shareholders
(unaudited).
The fund will notify shareholders in January 1998 of the applicable
percentage for use in preparing 1997 income tax returns.
HEALTH CARE PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1997
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS
Investment in securities, at value $ 1,369,052,640
(cost $1,095,588,186) -
See accompanying schedule
Receivable for investments sold 16,169,937
Receivable for fund shares sold 4,654,617
Dividends receivable 1,724,163
Interest receivable 523,247
Redemption fees receivable 10,893
Other receivables 761,125
TOTAL ASSETS 1,392,896,622
LIABILITIES
Payable for investments purchased $ 1,158,124
Payable for fund shares redeemed 4,986,423
Accrued management fee 672,924
Other payables and accrued expenses 786,709
Collateral on securities loaned, 12,738,000
at value
TOTAL LIABILITIES 20,342,180
NET ASSETS $ 1,372,554,442
Net Assets consist of:
Paid in capital $ 967,141,664
Undistributed net investment income 1,993,284
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 129,963,171
Net unrealized appreciation (depreciation) on investments 273,456,323
and assets and liabilities in
foreign currencies
NET ASSETS, for 13,397,524 $ 1,372,554,442
shares outstanding
NET ASSET VALUE and redemption $102.45
price per share ($1,372,554,442 (divided by) 13,397,524 shares)
Maximum offering price per share (100/97.00 of $102.45) $105.62
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1997
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME $ 15,986,852
Dividends
Interest (including income on securities loaned of $245,947) 7,324,244
TOTAL INCOME 23,311,096
EXPENSES
Management fee $ 7,661,331
Transfer agent fees 8,040,876
Accounting and security lending fees 813,015
Non-interested trustees' compensation 6,309
Custodian fees and expenses 89,305
Registration fees 98,543
Audit 88,357
Legal 20,372
Miscellaneous 38,510
Total expenses before reductions 16,856,618
Expense reductions (182,396 16,674,222
)
NET INVESTMENT INCOME 6,636,874
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities (including 276,153,050
realized gain of $1,743,407
on sales of investments in
affiliated issuers)
Foreign currency transactions (14,987 276,138,063
)
Change in net unrealized appreciation (depreciation) on:
Investment securities (55,045,713
)
Assets and liabilities in (8,131 (55,053,844)
foreign currencies )
NET GAIN (LOSS) 221,084,219
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 227,721,093
OTHER INFORMATION $ 2,553,184
Sales charges paid to FDC
Deferred sales charges withheld $ 69,909
by FDC
Exchange fees withheld by FSC $ 286,088
Expense Reductions $ 171,822
Directed brokerage arrangements
Custodian interest credits 3,836
Transfer agent interest credits 6,738
$ 182,396
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE YEAR ENDED YEAR ENDED
(DECREASE) IN FEBRUARY 28, FEBRUARY 29,
NET ASSETS 1997 1996
Operations $ 6,636,874 $ 11,861,909
Net
investment
income
Net realized 276,138,063 127,563,700
gain (loss)
Change in (55,053,844) 221,015,172
net
unrealized
appreciation
(depreciation
)
NET INCREASE 227,721,093 360,440,781
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
Distributions to (7,843,463) (7,988,345)
shareholders
From net
investment
income
From net (188,056,633) (66,667,821)
realized gain
TOTAL (195,900,096) (74,656,166)
DISTRIBUTION
S
Share 445,765,805 1,031,303,280
transactions
Net proceeds
from sales of
shares
Reinvestmen 191,246,667 73,110,795
t of
distributions
Cost of (822,846,541) (808,071,923)
shares
redeemed
Paid in 657,588 642,187
capital
portion of
redemption
fees
NET INCREASE (185,176,481) 296,984,339
(DECREASE)
IN NET
ASSETS
RESULTING
FROM SHARE
TRANSACTIO
NS
TOTAL (153,355,484) 582,768,954
INCREASE
(DECREASE)
IN NET ASSETS
NET ASSETS
Beginning of 1,525,909,926 943,140,972
period
End of period $ 1,372,554,442 $ 1,525,909,926
(including
undistributed
net
investment
income of
$1,993,284
and
$4,463,587,
respectively)
OTHER
INFORMATION
Shares
Sold 4,420,102 11,376,458
Issued in 2,023,821 771,121
reinvestment
of
distributions
Redeemed (8,234,436) (9,348,659)
Net increase (1,790,513) 2,798,920
(decrease)
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEAR ENDED YEAR ENDED YEARS ENDED FEBRUARY 28, TEN MONTHS
FEBRUARY 28, FEBRUARY 29, ENDED
FEBRUARY 28,
SELECTED 1997 1996 1995 1994 1993
PER-SHARE
DATA D
Net asset $ 100.47 $ 76.13 $ 63.31 $ 52.57 $ 70.42
value,
beginning of
period
Income from
Investment
Operations
Net .52 .95 .75 .15 .13
investment
income
Net realized 18.01 28.85 18.38 10.61 (9.34)
and
unrealized
gain (loss)
Total from 18.53 29.80 19.13 10.76 (9.21)
investment
operations
Less
Distributions
From net (.65) (.59) (.62) (.07) (.16)
investment
income
From net (15.95) (4.92) (5.74) - (8.51)
realized gain
Total (16.60) (5.51) (6.36) (.07) (8.67)
distributions
Redemption .05 .05 .05 .05 .03
fees added to
paid in
capital
Net asset $ 102.45 $ 100.47 $ 76.13 $ 63.31 $ 52.57
value, end of
period
TOTAL 20.41% 39.68% 31.24% 20.57% (14.81)%
RETURN B, C
RATIOS AND
SUPPLEMENT
AL DATA
Net assets, $ 1,372,554 $ 1,525,910 $ 943,141 $ 522,890 $ 536,367
end of period
(000 omitted)
Ratio of 1.33% 1.31% 1.39% 1.59% 1.46% A
expenses to
average net
assets
Ratio of 1.32% E 1.30% E 1.36% E 1.55% E 1.46% A
expenses to
average net
assets after
expense
reductions
Ratio of net .52% 1.06% 1.08% .26% .24% A
investment
income to
average net
assets
Portfolio 59% 54% 151% 213% 112% A
turnover rate
Average $ .0466
commission
rate F
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
A ANNUALIZED B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 8 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 8 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. You can
look at the total percentage change in value, the average annual percentage
change, or the growth of a hypothetical $10,000 investment. Total return
reflects the change in the value of an investment, assuming reinvestment of
the fund's dividend income and capital gains (the profits earned upon the
sale of 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 fund expenses, the past 10 year total returns would have
been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 28, 1997 YEAR YEARS YEARS
MEDICAL DELIVERY 10.50% 79.27% 408.97%
MEDICAL DELIVERY 7.19% 73.89% 393.70%
(INCL. 3% SALES CHARGE)
S&P 500 26.16% 118.75% 276.74%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one, five, or 10 years. You can compare
the fund's returns 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, and excludes the effect of sales
charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 28, 1997 YEAR YEARS YEARS
MEDICAL DELIVERY 10.50% 12.38% 17.67%
MEDICAL DELIVERY 7.19% 11.70% 17.31%
(INCL. 3% SALES CHARGE)
S&P 500 26.16% 16.94% 14.16%
AVERAGE ANNUAL RETURNS take the fund's 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
1987/02/28 9700.00 10000.00
1987/03/31 10162.41 10289.00
1987/04/30 9111.48 10197.43
1987/05/31 9395.23 10286.15
1987/06/30 10036.29 10805.60
1987/07/31 10467.17 11353.44
1987/08/31 10225.46 11776.92
1987/09/30 10067.82 11519.01
1987/10/31 7198.81 9037.81
1987/11/30 6767.93 8293.10
1987/12/31 7566.94 8924.20
1988/01/31 7611.58 9299.91
1988/02/29 8002.21 9733.29
1988/03/31 8214.26 9432.53
1988/04/30 8281.22 9537.23
1988/05/31 8147.29 9620.20
1988/06/30 8403.99 10061.77
1988/07/31 8314.70 10023.54
1988/08/31 8080.33 9682.74
1988/09/30 8537.92 10095.22
1988/10/31 8761.13 10375.87
1988/11/30 8482.11 10227.49
1988/12/31 8761.13 10406.47
1989/01/31 9408.45 11168.23
1989/02/28 9754.43 10890.14
1989/03/31 10290.14 11143.88
1989/04/30 10993.27 11722.25
1989/05/31 11562.46 12197.00
1989/06/30 11428.04 12127.48
1989/07/31 12725.16 13222.59
1989/08/31 13317.81 13481.75
1989/09/30 13686.81 13426.47
1989/10/31 13228.35 13114.98
1989/11/30 13843.36 13382.52
1989/12/31 13844.17 13703.71
1990/01/31 11805.90 12784.19
1990/02/28 12103.63 12949.10
1990/03/31 12664.72 13292.25
1990/04/30 12790.68 12959.95
1990/05/31 14599.93 14223.54
1990/06/30 15298.44 14126.82
1990/07/31 15355.69 14081.62
1990/08/31 14130.44 12808.64
1990/09/30 13191.47 12184.86
1990/10/31 13031.15 12132.46
1990/11/30 14840.40 12916.22
1990/12/31 16095.49 13276.58
1991/01/31 18689.64 13855.44
1991/02/28 19845.21 14846.11
1991/03/31 22793.11 15205.38
1991/04/30 22109.20 15241.87
1991/05/31 23936.89 15900.32
1991/06/30 21920.32 15172.09
1991/07/31 24119.73 15879.11
1991/08/31 24402.33 16255.44
1991/09/30 24623.50 15983.98
1991/10/31 25164.14 16198.16
1991/11/30 24463.77 15545.38
1991/12/31 28621.82 17323.77
1992/01/31 28646.97 17001.55
1992/02/29 27540.33 17222.57
1992/03/31 25716.88 16886.73
1992/04/30 24698.27 17383.20
1992/05/31 24446.76 17468.37
1992/06/30 23159.45 17208.09
1992/07/31 24477.35 17911.90
1992/08/31 24449.90 17544.71
1992/09/30 21580.71 17751.74
1992/10/31 22651.51 17813.87
1992/11/30 24875.47 18421.32
1992/12/31 24848.01 18647.90
1993/01/31 23585.02 18804.55
1993/02/28 19850.96 19060.29
1993/03/31 20290.26 19462.46
1993/04/30 20043.15 18991.47
1993/05/31 20660.92 19500.44
1993/06/30 20866.84 19556.99
1993/07/31 21388.51 19478.76
1993/08/31 21319.87 20217.01
1993/09/30 23077.08 20061.34
1993/10/31 24161.61 20476.61
1993/11/30 24559.72 20282.08
1993/12/31 26220.83 20527.49
1994/01/31 27689.75 21225.43
1994/02/28 27840.76 20650.22
1994/03/31 26454.21 19749.87
1994/04/30 27305.36 20002.67
1994/05/31 28225.15 20330.71
1994/06/30 26481.67 19832.61
1994/07/31 27662.29 20483.12
1994/08/31 30462.84 21322.93
1994/09/30 31547.37 20800.52
1994/10/31 32576.98 21268.53
1994/11/30 31176.71 20493.93
1994/12/31 31423.07 20797.85
1995/01/31 32802.41 21337.14
1995/02/28 33305.29 22168.65
1995/03/31 35417.40 22822.85
1995/04/30 34266.33 23494.98
1995/05/31 33142.37 24434.07
1995/06/30 33675.53 25001.68
1995/07/31 37076.23 25830.73
1995/08/31 37249.15 25895.57
1995/09/30 38027.27 26988.36
1995/10/31 37378.83 26892.01
1995/11/30 40505.74 28072.57
1995/12/31 41535.90 28613.25
1996/01/31 43769.84 29587.24
1996/02/29 44678.82 29861.52
1996/03/31 45110.20 30149.08
1996/04/30 45623.84 30593.48
1996/05/31 45527.48 31382.49
1996/06/30 44451.53 31502.05
1996/07/31 39633.80 30110.29
1996/08/31 43295.27 30745.32
1996/09/30 46394.67 32475.67
1996/10/31 42893.80 33371.34
1996/11/30 45318.72 35893.88
1996/12/31 46106.82 35182.83
1997/01/31 48288.25 37381.05
1997/02/28 49352.79 37674.12
Let's say hypothetically that $10,000 was invested in Fidelity Select
Medical Delivery Portfolio on February 28, 1987, and the current maximum 3%
sales charge was paid. As the chart shows, by February 28, 1997, the value
of the investment would have grown to $49,370 - a 393.70% increase on the
initial investment. For comparison, look at how the S&P 500 did over the
same period. With dividends and capital gains, if any, reinvested, the same
$10,000 investment would have grown to $37,674 - a 276.74% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1997
% OF FUND'S
INVESTMENTS
Tenet Healthcare Corp. 9.3
HEALTHSOUTH Rehabilitation Corp. 6.9
PacifiCare Health Systems, Inc. Class A 6.4
United HealthCare Corp. 5.8
Health Management Associates, Inc. Class A 5.6
Lincare Holdings, Inc. 4.9
Universal Health Services, Inc. Class B 4.4
Oxford Health Plans, Inc. 4.2
Columbia/HCA Healthcare Corp. 3.2
HealthCare COMPARE Corp. 2.0
TOP INDUSTRIES AS OF FEBRUARY 28, 1997
Hospitals 29.4%
HMOs & Outpatient Care 21.3%
Medical Services 5.7%
Drugs 2.6%
Drug Distributors -
Wholesale 2.6%
All Others 38.4% *
Row: 1, Col: 1, Value: 38.4
Row: 1, Col: 2, Value: 2.6
Row: 1, Col: 3, Value: 2.6
Row: 1, Col: 4, Value: 5.7
Row: 1, Col: 5, Value: 21.3
Row: 1, Col: 6, Value: 29.4
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
MEDICAL DELIVERY PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
NOTE TO SHAREHOLDERS: Deborah Wheeler became Portfolio Manager of Fidelity
Select Medical Delivery Portfolio on November 1, 1996.
Q. HOW DID THE FUND PERFORM?
A. The fund had a total return of 10.50% for the 12 months ended February
28, 1997, compared to a 26.16% return for the Standard & Poor's 500 Index
over the same time period.
Q. WHAT ACCOUNTED FOR THE DIFFERENCE BETWEEN THE PERFORMANCES OF THE FUND
AND THE BROADER INDEX?
A. The medical delivery market is driven largely by shares of managed care
companies, hospitals and outpatient service providers. Managed care
companies and outpatient service providers both significantly trailed the
market during the recent period.
Q. WHAT OCCURRED IN THE GROUP?
A. The managed care industry, which includes providers of HMOs and other
types of managed care, suffered because the companies' 1996 price increases
failed to keep up with medical cost inflation. For example, managed care
firms experienced 15% to 20% increases in drug costs per member, in part
due to a proliferation of new and more expensive drugs. But the stocks
rebounded late in the period, as managed care companies began to implement
higher price increases for 1997. They are currently negotiating for further
price hikes in 1998.
Q. WHAT ABOUT HOSPITALS?
A. For-profit hospitals continued to acquire non-profit hospitals, a trend
that allows the for-profits to consolidate industry capacity and make cost
reductions that offset declining acute care utilization. As a result,
hospital companies reported solid earnings growth during 1996. However, the
federal budget for 1998 currently being negotiated by President Clinton and
Congress may include cuts in Medicare reimbursements, which account for
almost half of the typical hospital's revenues. Concerns about such cuts
also affected the stocks.
Q. WHAT CHANGES HAVE YOU MADE SINCE YOU TOOK OVER THE PORTFOLIO IN
NOVEMBER?
A. I altered the weightings of the fund's top holdings, reflecting changes
in the outlook for various companies. For example, hospital management firm
Columbia/HCA fell from first place when I took over the fund in November to
ninth place among the fund's largest investments. With 325 hospitals,
Columbia has a large base and, consequently, will grow at a slower rate
than in the past. The fund's largest holding at the end of the period was
Tenet Healthcare, the nation's second-largest hospital management company
with 75 hospitals. During the period, Tenet acquired Ornda, the
third-biggest hospital chain, and has since accelerated its acquisition of
non-profit hospitals, and consequently its growth rate. The decisions to
reduce the fund's investment in Columbia and increase its stake in Tenet
have worked out well.
Q. YOU ALSO BOOSTED THE FUND'S INVESTMENT IN SOME MANAGED CARE FIRMS.
A. That's right. Managed care stocks climbed from a low of around 19% of
the fund's total assets to around 21% at the end of the period. United
HealthCare, which sells HMO and other health insurance products, became the
fund's fourth-largest investment. After taking over the portfolio, I also
doubled the fund's investment in Oxford Health, a managed care company that
operates primarily in New York City. Oxford is now the fund's
eighth-largest holding. Those moves helped the fund participate in the
managed care rally late in the period.
Q. WHAT'S AHEAD FOR THE MEDICAL DELIVERY MARKET?
A. Profit margins should continue to improve in 1997 and 1998 at managed
care companies as they increase prices to offset medical cost inflation. I
believe these firms' shares could perform more strongly during the year
ahead, justifying a reasonably large investment in the group. Hospital
shares may fluctuate with political news until a federal budget is
approved, which probably won't happen until late summer. Cuts to Medicare
are not likely to be as bad as Clinton's current proposal calls for, and
long-term opportunities for consolidation in the hospital industry remain
good. Finally, the industry and the fund should benefit from growth among
niche providers that serve the aging population.
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 February 28, 1997, more than
$192 million
MANAGER: Deborah Wheeler, since November
1996; manager, Fidelity Select Construction
and Housing Portfolio, 1986-1988; Fidelity
Select Retail Portfolio, 1990-1991; Fidelity
Select Food and Agriculture Portfolio, 1991-
1993; Fidelity Select Leisure Portfolio, 1991-
1996; assistant, Fidelity Magellan Fund,
1988-1990; joined Fidelity in 1986
(checkmark)
MEDICAL DELIVERY PORTFOLIO
INVESTMENTS FEBRUARY 28, 1997
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 76.5%
SHARES VALUE (NOTE 1)
COMPUTER SERVICES & SOFTWARE - 0.1%
CAD/CAM/CAE - 0.1%
Apache Medical Systems, Inc. 30,000 $ 202,498
DRUG STORES - 0.3%
Vitalink Pharmacy Services, Inc. (a) 35,000 739,375
DRUGS & PHARMACEUTICALS - 4.8%
BIOTECHNOLOGY - 1.9%
Idexx Laboratories, Inc. (a) 100,000 3,725,000
DRUGS - 2.6%
Bristol-Myers Squibb Co. 10,000 1,305,000
Lilly (Eli) & Co. 5,000 436,875
Pfizer, Inc. 10,000 916,250
Schering-Plough Corp. 20,000 1,532,500
SmithKline Beecham PLC ADR 15,000 1,113,750
5,304,375
IN VITRO, IN VIVO DIAGNOSTIC SUBSTANCE - 0.3%
Serologicals Corp. (a) 18,600 511,500
TOTAL DRUGS & PHARMACEUTICALS 9,540,875
INSURANCE - 0.3%
INSURANCE BROKERS & SERVICES - 0.0%
CRA Managed Care, Inc. (a) 1,000 39,750
MULTI-LINE INSURANCE - 0.3%
Aetna, Inc. 6,400 530,400
TOTAL INSURANCE 570,150
MEDICAL EQUIPMENT & SUPPLIES - 5.3%
DRUG DISTRIBUTORS - WHOLESALE - 2.6%
AmeriSource Health Corp. Class A (a) 49,800 2,508,675
Cardinal Health, Inc. 42,600 2,619,900
5,128,575
MEDICAL SUPPLIES & APPLIANCES - 1.2%
Abbott Laboratories 5,000 281,250
Baxter International, Inc. 20,000 920,000
Becton, Dickinson & Co. 5,000 246,250
Boston Scientific Corp. (a) 10,600 702,250
Johnson & Johnson 5,000 288,125
2,437,875
MEDICAL TECHNOLOGY - 0.9%
Medtronic, Inc. 11,400 738,150
St. Jude Medical, Inc. (a) 29,650 1,171,175
1,909,325
OPHTHALMIC GOODS - 0.6%
Cooper Companies, Inc. (a) 53,500 1,116,813
TOTAL MEDICAL EQUIPMENT & SUPPLIES 10,592,588
MEDICAL FACILITIES MANAGEMENT - 62.9%
HEALTH SERVICES - 0.4%
Rotech Medical Corp. (a) 40,000 740,000
HOME HEALTH CARE AGENCIES - 1.2%
American Homepatient, Inc. (a) 1,700 40,375
Home Health Corp. of America, Inc. (a) 47,900 529,894
Vivra, Inc. (a) 59,200 1,761,200
2,331,469
HOSPITALS - 29.4%
Columbia/HCA Healthcare Corp. 153,523 6,447,966
HEALTHSOUTH Rehabilitation Corp. (a) 344,600 13,870,150
SHARES VALUE (NOTE 1)
Health Management Associates, Inc.
Class A (a) 422,652 $ 11,200,278
Tenet Healthcare Corp. (a) 684,400 18,564,350
Universal Health Services, Inc. Class B (a) 257,200 8,776,950
58,859,694
HMOS & OUTPATIENT CARE - 21.3%
Health Systems International, Inc. (a) 34,200 1,004,625
Healthsource, Inc. 10,000 208,750
Humana, Inc. (a) 10,000 196,250
Maxicare Health Plans, Inc. (a) 1,000 22,125
Oxford Health Plans, Inc. (a) 151,000 8,418,250
PacifiCare Health Systems, Inc.:
Class A 159,000 12,720,000
Class B 31,300 2,621,375
Safeguard Health Enterprises, Inc. (a) 21,400 315,650
Sierra Health Services, Inc. (a) 114,400 3,017,300
Trigon Healthcare, Inc. 8,400 150,150
United HealthCare Corp. 231,100 11,526,113
Wellpoint Health Networks, Inc. 55,000 2,358,125
42,558,713
KIDNEY DIALYSIS CENTERS - 1.5%
Fresenius Medical Care AG
sponsored ADR (a) 50,000 1,575,000
Renal Care Group, Inc. (a) 40,000 1,440,000
3,015,000
MEDICAL SERVICES - 5.7%
Carematrix Corp. 4,900 85,138
Foundation Health Corp. (a) 9,900 373,725
Lincare Holdings, Inc. (a) 226,600 9,772,125
National Surgery Centers, Inc. (a) 32,500 983,125
Total Renal Care Holdings, Inc. (a) 5,000 174,375
11,388,488
MISCELLANEOUS HEALTH & ALLIED SERVICES - 1.2%
Renal Treatment Centers, Inc. (a) 95,300 2,477,800
NURSING CARE & NURSING HOMES - 0.5%
Health Care & Retirement Corp. (a) 40,000 1,085,000
NURSING, PERSONAL CARE FACILITIES - 0.3%
NovaCare, Inc. (a) 45,000 562,500
PSYCHIATRIC HOSPITALS - 0.6%
Magellan Health Services, Inc. (a) 45,000 1,108,125
SKILLED NURSING CARE FACILITIES - 0.8%
Multicare Companies, Inc. (a) 63,950 1,183,075
TheraTx, Inc. (a) 27,675 456,638
1,639,713
TOTAL MEDICAL FACILITIES MANAGEMENT 125,766,502
REAL ESTATE INVESTMENT TRUSTS - 0.5%
Capstone Capital Corp. 41,900 995,125
RETAIL & WHOLESALE, MISCELLANEOUS - 0.3%
RETAIL, GENERAL - 0.3%
Gulf South Medical Supply, Inc. (a) 26,800 566,150
SERVICES - 2.0%
MANAGEMENT CONSULTING SERVICES - 2.0%
HealthCare COMPARE Corp. (a) 93,700 3,999,819
TOTAL COMMON STOCKS
(Cost $127,376,372) 152,973,082
CASH EQUIVALENTS - 23.5%
MATURITY VALUE
AMOUNT (NOTE 1)
Investments in repurchase agreements
(U.S. Treasury obligations) in a joint
trading account dated 2/28/97
due 3/3/97:
at 5.37%, $ 6,105,731 $ 6,103,000
at 5.39%, 2,125,954 2,125,000
8,228,000
SHARES
Taxable Central Cash Fund (b) 38,752,502 38,752,502
TOTAL CASH EQUIVALENTS
(Cost $46,980,502) 46,980,502
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $174,356,874) $ 199,953,584
LEGEND
1. Non-income producing
2. At period end, the seven-day yield on the Taxable Central Cash Fund was
5.31%. The yield refers to the income earned by investing in the fund over
the seven-day period, expressed as an annual percentage.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $157,705,195 and $294,151,683, respectively (see Note 3 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $62,985 for the period (see
Note 4 of Notes to Financial Statements).
At the period end, the value of securities loaned and the value of
collateral amounted to $7,991,025 and $8,188,500, respectively (see Note 6
of Notes to Financial Statements).
INCOME TAX INFORMATION
At February 28, 1997, the aggregate cost of investment securities for
income tax purposes was $174,614,201. Net unrealized appreciation
aggregated $25,339,383, of which $27,292,502 related to appreciated
investment securities and $1,953,119 related to depreciated investment
securities.
The fund hereby designates approximately $11,872,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 6% of the dividends distributed during the fiscal year qualifies
for the dividends-received deduction for corporate shareholders
(unaudited).
The fund will notify shareholders in January 1998 of the applicable
percentage for use in preparing 1997 income tax returns.
MEDICAL DELIVERY PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1997
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS
Investment in securities, at $ 199,953,584
value (including repurchase agreements of $8,228,000)
(cost $174,356,874) - See accompanying schedule
Cash 994
Receivable for investments sold 6,230,417
Receivable for fund shares sold 1,942,263
Dividends receivable 17,991
Interest receivable 134,987
Redemption fees receivable 2,130
Other receivables 367,293
TOTAL ASSETS 208,649,659
LIABILITIES
Payable for investments purchased $ 6,032,500
Payable for fund shares redeemed 1,795,350
Accrued management fee 89,285
Other payables and accrued expenses 159,258
Collateral on securities loaned, 8,188,500
at value
TOTAL LIABILITIES 16,264,893
NET ASSETS $ 192,384,766
Net Assets consist of:
Paid in capital $ 143,109,135
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 23,678,921
Net unrealized appreciation (depreciation) on investments 25,596,710
NET ASSETS, for 6,800,520 $ 192,384,766
shares outstanding
NET ASSET VALUE and redemption price per share ($192,384,766 (divided by) 6,800,520 shares) $28.29
Maximum offering price per share (100/97.00 of $28.29) $29.16
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1997
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME $ 669,533
Dividends
Interest (including income on securities loaned of $203,955) 818,231
TOTAL INCOME 1,487,764
EXPENSES
Management fee $ 1,307,251
Transfer agent fees 1,771,354
Accounting and security lending fees 224,725
Non-interested trustees' compensation 1,089
Custodian fees and expenses 25,708
Registration fees 30,031
Audit 27,142
Legal 6,792
Miscellaneous 8,595
Total expenses before reductions 3,402,687
Expense reductions (98,944 3,303,743
)
NET INVESTMENT INCOME (LOSS) (1,815,979
)
REALIZED AND UNREALIZED GAIN (LOSS) 39,056,721
Net realized gain (loss) on investment securities
Change in net unrealized appreciation (depreciation) on investment securities (20,650,234
)
NET GAIN (LOSS) 18,406,487
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 16,590,508
OTHER INFORMATION $ 567,463
Sales charges paid to FDC
Deferred sales charges withheld $ 6,016
by FDC
Exchange fees withheld by FSC $ 109,463
Expense reductions $ 92,830
Directed brokerage arrangement
Custodian interest credits 2,514
Transfer agent interest credits 3,600
$ 98,944
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE YEAR ENDED YEAR ENDED
(DECREASE) IN FEBRUARY 28, FEBRUARY 29,
NET ASSETS 1997 1996
Operations $ (1,815,979 $ (256,812
Net ) )
investment
income (loss)
Net realized 39,056,721 39,973,448
gain (loss)
Change in (20,650,234 14,596,764
net )
unrealized
appreciation
(depreciation
)
NET INCREASE 16,590,508 54,313,400
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
Distributions to (25,354,918 (13,085,061
shareholders ) )
from net
realized
gains
Share 213,043,160 327,500,676
transactions
Net proceeds
from sales of
shares
Reinvestmen 24,874,771 12,820,140
t of
distributions
Cost of (332,613,257 (385,938,068
shares ) )
redeemed
Paid in 355,703 307,864
capital
portion of
redemption
fees
NET INCREASE (94,339,623 (45,309,388
(DECREASE) ) )
IN NET
ASSETS
RESULTING
FROM SHARE
TRANSACTIO
NS
TOTAL (103,104,033 (4,081,049
INCREASE ) )
(DECREASE)
IN NET ASSETS
NET ASSETS
Beginning of 295,488,799 299,569,848
period
End of period $ 192,384,766 $ 295,488,799
OTHER
INFORMATION
Shares
Sold 7,704,445 12,483,087
Issued in 921,317 484,557
reinvestment
of
distributions
Redeemed (12,015,996 (15,700,950
) )
Net increase (3,390,234) (2,733,306)
(decrease)
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEAR ENDED YEAR ENDED YEARS ENDED FEBRUARY 28, TEN MONTHS
FEBRUARY 28, FEBRUARY 29, ENDED
FEBRUARY 28,
SELECTED 1997 1996 1995 1994 1993
PER-SHARE
DATA D
</TABLE>
Net asset $ 29.00 $ 23.18 $ 20.28 $ 14.46 $ 19.64
value,
beginning of
period
Income from
Investment
Operations
Net (.23) (.03) .06 (.10) (.13)
investment
income (loss)
Net realized 2.92 7.72 3.74 5.84 (3.56)
and
unrealized
gain (loss)
Total from 2.69 7.69 3.80 5.74 (3.69)
investment
operations
Less
Distributions
From net - - (.06) - -
investment
income
From net (3.45) (1.91) (.89) - (1.55)
realized gain
Total (3.45) (1.91) (.95) - (1.55)
distributions
Redemption .05 .04 .05 .08 .06
fees added to
paid in
capital
Net asset $ 28.29 $ 29.00 $ 23.18 $ 20.28 $ 14.46
value, end of
period
TOTAL 10.50% 34.15% 19.63% 40.25% (19.63)%
RETURN B, C
RATIOS AND
SUPPLEMENT
AL DATA
Net assets, $ 192,385 $ 295,489 $ 299,570 $ 188,553 $ 71,809
end of period
(000 omitted)
Ratio of 1.57% 1.65% 1.48% 1.82% 1.77% A
expenses to
average net
assets
Ratio of 1.53% E 1.62% E 1.45% E 1.79% E 1.77% A
expenses to
average net
assets after
expense
reductions
Ratio of net (.84)% (.13)% .29% (.57)% (.89)%
investment A
income (loss)
to average
net assets
Portfolio 78% 132% 123% 164% 155% A
turnover rate
Average $ .0434
commission
rate F
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
A ANNUALIZED. B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 8 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 8 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>
AMERICAN GOLD PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance. You can
look at the total percentage change in value, the average annual percentage
change, or the growth of a hypothetical $10,000 investment. Total return
reflects the change in the value of an investment, assuming reinvestment of
the fund's dividend income and capital gains (the profits earned upon the
sale of securities that have grown in value), but does not include certain
fees paid by shareholders upon exchange or redemption.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 28, 1997 YEAR YEARS YEARS
AMERICAN GOLD 6.10% 113.06% 94.06%
AMERICAN GOLD 2.91% 106.67% 88.24%
(INCL. 3% SALES CHARGE)
S&P 500 26.16% 118.75% 276.74%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one, five, or 10 years. You can compare
the fund's returns 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, and excludes the effect of sales
charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 28, 1997 YEAR YEARS YEARS
AMERICAN GOLD 6.10% 16.33% 6.85%
AMERICAN GOLD 2.91% 15.63% 6.53%
(INCL. 3% SALES CHARGE)
S&P 500 26.16% 16.94% 14.16%
AVERAGE ANNUAL RETURNS take the fund's 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
1987/02/28 9700.00 10000.00
1987/03/31 11286.57 10289.00
1987/04/30 11989.56 10197.43
1987/05/31 11351.06 10286.15
1987/06/30 10996.34 10805.60
1987/07/31 13124.67 11353.44
1987/08/31 12905.39 11776.92
1987/09/30 13453.59 11519.01
1987/10/31 9525.86 9037.81
1987/11/30 11047.94 8293.10
1987/12/31 10720.06 8924.20
1988/01/31 9110.09 9299.91
1988/02/29 9352.24 9733.29
1988/03/31 10288.12 9432.53
1988/04/30 10353.56 9537.23
1988/05/31 10288.12 9620.20
1988/06/30 10491.00 10061.77
1988/07/31 10464.82 10023.54
1988/08/31 9849.63 9682.74
1988/09/30 9424.23 10095.22
1988/10/31 9522.40 10375.87
1988/11/30 9653.29 10227.49
1988/12/31 9384.96 10406.47
1989/01/31 9725.28 11168.23
1989/02/28 10235.76 10890.14
1989/03/31 9875.81 11143.88
1989/04/30 9398.05 11722.25
1989/05/31 9057.73 12197.00
1989/06/30 9568.21 12127.48
1989/07/31 9666.38 13222.59
1989/08/31 10157.23 13481.75
1989/09/30 10216.13 13426.47
1989/10/31 10320.84 13114.98
1989/11/30 11636.31 13382.52
1989/12/31 11453.06 13703.71
1990/01/31 11956.99 12784.19
1990/02/28 11623.22 12949.10
1990/03/31 11171.64 13292.25
1990/04/30 9960.89 12959.95
1990/05/31 10837.87 14223.54
1990/06/30 10144.14 14126.82
1990/07/31 10850.95 14081.62
1990/08/31 10654.62 12808.64
1990/09/30 10648.07 12184.86
1990/10/31 8900.66 12132.46
1990/11/30 8789.40 12916.22
1990/12/31 9483.13 13276.58
1991/01/31 8167.67 13855.44
1991/02/28 8907.21 14846.11
1991/03/31 8874.48 15205.38
1991/04/30 8560.34 15241.87
1991/05/31 8854.85 15900.32
1991/06/30 9450.41 15172.09
1991/07/31 9345.70 15879.11
1991/08/31 8586.52 16255.44
1991/09/30 8442.54 15983.98
1991/10/31 9090.46 16198.16
1991/11/30 9070.82 15545.38
1991/12/31 8900.66 17323.77
1992/01/31 9116.63 17001.55
1992/02/29 8835.22 17222.57
1992/03/31 8233.11 16886.73
1992/04/30 7814.26 17383.20
1992/05/31 8370.55 17468.37
1992/06/30 8913.75 17208.09
1992/07/31 9476.59 17911.90
1992/08/31 9299.88 17544.71
1992/09/30 9247.53 17751.74
1992/10/31 8972.65 17813.87
1992/11/30 8213.48 18421.32
1992/12/31 8625.79 18647.90
1993/01/31 8462.17 18804.55
1993/02/28 9260.62 19060.29
1993/03/31 10301.21 19462.46
1993/04/30 11603.58 18991.47
1993/05/31 12892.87 19500.44
1993/06/30 13645.50 19556.99
1993/07/31 14731.91 19478.76
1993/08/31 13959.64 20217.01
1993/09/30 12480.56 20061.34
1993/10/31 14345.77 20476.61
1993/11/30 14358.86 20282.08
1993/12/31 15412.54 20527.49
1994/01/31 15419.09 21225.43
1994/02/28 14830.07 20650.22
1994/03/31 15190.03 19749.87
1994/04/30 13907.28 20002.67
1994/05/31 14509.39 20330.71
1994/06/30 13796.03 19832.61
1994/07/31 13593.14 20483.12
1994/08/31 14234.52 21322.93
1994/09/30 15477.99 20800.52
1994/10/31 14358.86 21268.53
1994/11/30 12657.27 20493.93
1994/12/31 13030.31 20797.85
1995/01/31 11669.03 21337.14
1995/02/28 12068.25 22168.65
1995/03/31 13920.37 22822.85
1995/04/30 13868.02 23494.98
1995/05/31 14155.98 24434.07
1995/06/30 14352.32 25001.68
1995/07/31 14738.45 25830.73
1995/08/31 14771.17 25895.57
1995/09/30 14764.63 26988.36
1995/10/31 12984.50 26892.01
1995/11/30 14188.70 28072.57
1995/12/31 14489.75 28613.25
1996/01/31 17061.78 29587.24
1996/02/29 17742.42 29861.52
1996/03/31 18167.82 30149.08
1996/04/30 18599.77 30593.48
1996/05/31 20628.59 31382.49
1996/06/30 17716.24 31502.05
1996/07/31 17389.01 30110.29
1996/08/31 19162.60 30745.32
1996/09/30 18809.19 32475.67
1996/10/31 18292.17 33371.34
1996/11/30 17506.82 35893.88
1996/12/31 17376.18 35182.83
1997/01/31 16635.49 37381.05
1997/02/28 18824.19 37674.12
Let's say hypothetically that $10,000 was invested in Fidelity Select
American Gold Portfolio on February 28, 1987, and the current maximum 3%
sales charge was paid. As the chart shows, by February 28, 1997, the value
of the investment would have grown to $18,824 - an 88.24% increase on the
initial investment. For comparison, look at how the S&P 500 did over the
same period. With dividends and capital gains, if any, reinvested, the same
$10,000 investment would have grown to $37,674 - a 276.74% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1997
% OF FUND'S
INVESTMENTS
Getchell Gold Corp. 10.0
Euro-Nevada Mining Ltd. 9.1
Barrick Gold Corp. 8.2
Newmont Mining Corp. 6.9
Franco-Nevada Mining Corp. 5.9
Newmont Gold Co. 4.5
Greenstone Resources Ltd. 3.6
Agnico Eagle Mines Ltd. 2.8
Freeport McMoRan Copper & Gold, Inc. Class A 2.6
Stillwater Mining Co. 2.5
TOP INDUSTRIES AS OF FEBRUARY 28, 1997
Gold Ores 85.4%
Copper Ores 3.4%
Investment Managers 1.5%
Silver Ores 0.8%
Gold & Silver Ores 0.7%
All Others 8.2% *
Row: 1, Col: 1, Value: 8.199999999999999
Row: 1, Col: 2, Value: 0.7000000000000001
Row: 1, Col: 3, Value: 0.8
Row: 1, Col: 4, Value: 1.5
Row: 1, Col: 5, Value: 3.4
Row: 1, Col: 6, Value: 85.40000000000001
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
AMERICAN GOLD PORTFOLIO
FUND TALK: THE MANAGERS' OVERVIEW
NOTE TO SHAREHOLDERS: Effective February 14, 1997, George Domolky (right)
became Portfolio Manager of Fidelity Select American Gold Portfolio. The
following is an interview with Lawrence Rakers, who managed the fund during
most of the period covered by this report, and George Domolky, who
discusses his outlook.
Q. LARRY, HOW DID THE FUND PERFORM?
L.R. It did well given the investment climate in 1996. In the face of
sharply falling gold prices, the fund actually gained 6.10% over the
12-month period ending February 28, 1997, compared to a gain of 26.16% for
the Standard & Poor's 500 Index over the same period.
Q. HOW WERE YOU ABLE TO POST A GAIN IN SUCH A CHALLENGING ENVIRONMENT?
L.R. The fund's emphasis on low-cost producers that are increasing
production and reserves stood us in good stead during the period. We try to
stay away from high-cost, no-growth companies precisely because they are so
sensitive to the price of gold. When the price of gold goes up, those
companies do extremely well because they can mine their high-cost
facilities at a profit. But when gold goes down, they get hurt badly. In
contrast, when a company actively engaged in exploration finds a new lode
of ore, the stock price may go up even when the price of gold drops. That's
what happened with some of our better performers last year. Our
shareholders should realize, though, that some of our stocks performed
extraordinarily well in 1996. Achieving a positive return for the fund when
gold drops as it did over the past period is extremely difficult.
Q. WHAT WERE SOME OF THE FUND'S PROFITABLE HOLDINGS?
L.R. Our best holdings were great examples of the high-growth strategy I
mentioned before. Getchell Gold was spun off of a chemical company and
installed a new management team that includes experienced mining people,
while also substantially increasing its exploration budget. Euro-Nevada and
Franco-Nevada are sister companies that derive a lot of their revenue from
royalties on other companies' properties. They also recently discovered the
Midas Property, a potentially very large find in Nevada. Greenstone
Resources added low-cost capacity in Nicaragua, Panama and Honduras. And
Golden Star benefited from improvements in its diverse portfolio of
exploration properties.
Q. WHAT HOLDINGS DETRACTED FROM THE FUND'S PERFORMANCE?
L.R. We had high hopes for Stillwater Mining, but increases in its reserves
couldn't overcome falling platinum and palladium prices. TVI Pacific was an
exploration play in the Philippines. Unfortunately, the political situation
in the Philippines has deteriorated in the last year, making investors
hesitant to keep their money there. The company also disappointed investors
with a lack of significant exploration news. TVI is a good example of the
rule that foreign investments have more risk than U.S. investments.
Q. TURNING TO YOU, GEORGE, WHAT'S YOUR OUTLOOK FOR THE FUND?
G.D. The charter of this fund requires it to focus on gold companies based
on the American continents and/or registered in the U.S. or Canada. The
advantage of such a policy is that the fund can concentrate its holdings in
the United States and Canada, which are both very stable politically and
socially, and contain many fertile areas for gold mining. In particular,
Nevada is the third largest gold-producing area in the world. I feel
comfortable with this asset allocation because I like the prospects for
Nevada, and for the U.S. and Canada generally. I expect the recent trend of
increasing demand for gold jewelry from such areas as the Far East, the
Gulf countries, China and India to continue. The positive picture for gold
is somewhat clouded by central bank selling and producer forward selling.
However, I will try to minimize our reliance on gold price increases by
seeking out companies actively engaged in exploration and the discovery of
new reserves, which will put more ounces of gold on the books.
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: 041
TRADING SYMBOL: FSAGX
SIZE: as of February 28, 1997, more than
$428 million
MANAGER: George Domolky, since February 1997;
manager, Fidelity Select Precious Metals and
Minerals Portfolio, since February 1997; Fidelity
Canada Fund, 1987-1996; Fidelity Select Food and
Agriculture Portfolio, 1985-1987; joined Fidelity in
1981
(checkmark)
AMERICAN GOLD PORTFOLIO
INVESTMENTS FEBRUARY 28, 1997
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 92.7%
SHARES VALUE (NOTE 1)
CANADA - 55.5%
HOLDING COMPANIES - 0.1%
HOLDING COMPANY OFFICES - 0.1%
Bolivar Goldfields Ltd. (a) 546,700 $ 339,652
METALS & MINING - 1.0%
METAL MINING - 0.5%
Morgain Minerals, Inc. (a) 295,000 862,479
Southernera Resources Ltd. (a) 248,900 1,564,551
2,427,030
METAL MINING SERVICES - 0.1%
Pentland Firth Ventures Ltd. (a) 447,300 441,366
MISCELLANEOUS NONMETAL MINERALS - 0.4%
DIA Metropolitan Minerals Ltd. (a):
Class A 27,450 413,310
Class B 81,500 1,370,098
1,783,408
TOTAL METALS & MINING 4,651,804
OIL & GAS - 0.5%
OIL & GAS EXPLORATION - 0.5%
Southwestern Gold Corp. (a) 192,500 2,251,215
PRECIOUS METALS - 53.9%
GOLD & SILVER ORES - 0.7%
Mentor Exploration & Development
Co. Ltd. (a)(f) 188,000 1,758,871
Minorca Resources Ltd. (a) 261,100 1,135,508
2,894,379
GOLD ORES - 52.5%
Aber Resources Ltd. (a) 39,900 772,832
Agnico Eagle Mines Ltd. 866,900 12,387,454
Argosy Mining Corp. (a) 25,000 28,506
Argosy Mining Corp. (warrants) (a)(d) 187,500 -
Argosy Mining Corp. (a)(d) 375,000 427,586
Barrick Gold Corp. 1,265,700 35,802,061
Bema Gold Corp. 43,500 362,460
Brazilian Resources, Inc. (a) 750,000 208,310
Bre-X Minerals Ltd. (a) 746,800 10,698,593
Bresea Resources Ltd. (a) 508,300 3,845,269
Bro-X Minerals Ltd. 190,680 327,521
Cambior, Inc. 607,800 9,729,065
Canaarc Resources Corp. (a) 530,000 770,895
Canaarc Resources Corp.
(warrants) (a) 125,000 -
Cathedral Gold Corp. (a) 201,000 267,384
Crown Resources Corp. (a) 214,600 1,475,375
Crystallex International Corp. (a) 561,500 1,703,194
Eldorado Gold Corp. (a) 211,100 1,465,812
Euro-Nevada Mining Ltd. 1,215,400 39,798,209
First Dynasty Mines Ltd. (a) 120,000 394,694
Franco-Nevada Mining Corp. 548,100 25,799,540
Golden Knight Resources, Inc. (a) 576,300 2,106,129
Golden Queen Mining Co. Ltd. (a) 120,800 326,689
Golden Star Resources Ltd. (a) 730,100 10,405,986
Greenstone Resources Ltd. (a) 1,303,300 15,860,794
Iamgold International African Mining
Gold Corp. (a) 100,000 453,167
Indochina Goldfields Ltd. (a) 175,500 2,417,991
Indochina Goldfields Ltd. (a)(d) 33,900 467,065
Indochina Goldfields Ltd.
(special warrants) 100,000 1,329,551
SHARES VALUE (NOTE 1)
International Pursuit Corp. (a) 300,000 $ 1,030,589
International Pursuit Corp. (warrants) (a) 150,000 -
Java Gold Corp. (a) 108,000 78,940
Kinross Gold Corp. (a) 1,078,100 7,682,984
Meridian Gold, Inc. 50,000 230,238
Meridian Gold, Inc.
Installment Receipt (e) 2,538,000 7,049,227
Metallica Resources, Inc. (a) 489,500 1,735,245
Mountain Province Mining, Inc. (a) 565,800 1,819,625
Nelson Gold Ltd. (a) 525,000 441,289
Nevsun Resources Ltd. (a) 562,000 3,491,576
Oliver Gold Corp. (a) 273,800 606,376
Oliver Gold Corp. (warrants)(a) 50,000 21,927
Oliver Gold Corp. (d) 100,000 221,467
Orvana Minerals Corp. (a) 959,200 5,959,288
Prime Resources Group, Inc. 251,200 2,267,529
Queenston Mining, Inc. (a) 204,000 341,454
Rayrock Yellowknife Resources Inc. (a) 183,800 792,618
Repadre Capital Corp. (a) 21,900 141,662
Repadre Capital Corp. (a)(d) 255,000 1,649,490
Samax Gold, Inc. (a)(d) 240,000 1,078,829
Silver Standard Resources, Inc. (a) 157,700 847,199
Sudbury Contact Mines Ltd. (a)(f) 603,600 3,970,617
TVI Pacific, Inc. (a) 3,153,000 2,903,761
TVI Pacific, Inc. (a)(d) 96,000 88,411
TVX Gold, Inc. 250,000 2,220,151
Valerie Gold Resources Ltd. (a)(d) 50,000 237,547
Valerie Gold Resources Ltd.
(warrants) (a)(d) 25,000 -
Vista Gold Corp. (a) 1,335,600 1,561,934
War Eagle Mining, Inc. (a) 493,900 721,997
William Resources, Inc. (a) 950,000 1,041,552
William Resources, Inc. (a)(d) 442,000 484,596
230,350,250
SILVER ORES - 0.7%
Pan American Silver Corp. (a) 182,700 1,602,456
Pan American Silver Corp. (warrants) (a) 87,500 -
Pan American Silver Corp. (d) 175,000 1,534,920
3,137,376
TOTAL PRECIOUS METALS 236,382,005
TOTAL CANADA 243,624,676
FRANCE - 0.5%
PRECIOUS METALS - 0.5%
GOLD ORES - 0.5%
Guyanor Resources SA Class B (a) 493,440 2,434,470
GHANA - 1.6%
PRECIOUS METALS - 1.6%
GOLD ORES - 1.6%
Ashanti Goldfields Co. Ltd. GDR 452,452 6,843,337
PERU - 3.1%
PRECIOUS METALS - 3.1%
GOLD ORES - 3.0%
Compania de Minas Buenaventura SA:
Class A 278,182 2,260,787
Class B 92,846 890,381
Class T 1,208,703 10,051,584
13,202,752
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
PERU - CONTINUED
PRECIOUS METALS - CONTINUED
SILVER ORES - 0.1%
Compania de Minas Buenaventura SA
Class B sponsored ADR 27,000 $ 526,500
TOTAL PERU 13,729,252
UNITED STATES OF AMERICA - 32.0%
METALS & MINING - 3.4%
COPPER ORES - 3.4%
Freeport McMoRan Copper & Gold, Inc.:
Class A 350,000 11,418,751
Class B 100,000 3,400,000
14,818,751
PRECIOUS METALS - 27.1%
GOLD ORES - 27.1%
Canyon Resources Corp. (a) 519,834 1,786,929
Getchell Gold Corp. (a) 849,948 43,772,322
Newmont Gold Co. 402,000 19,597,500
Newmont Mining Corp. 634,190 30,124,025
Santa Fe Pacific Gold Corp. 325,000 6,093,750
Stillwater Mining Co. (a) 292,300 6,850,781
Stillwater Mining Co. (a)(d) 460,600 10,795,313
119,020,620
SECURITIES INDUSTRY - 1.5%
INVESTMENT MANAGERS - 1.5%
Pioneer Group, Inc. 272,600 6,372,025
TOTAL UNITED STATES OF AMERICA 140,211,396
TOTAL COMMON STOCKS
(Cost $317,329,988) 406,843,131
CONVERTIBLE BONDS - 0.7%
PRINCIPAL
AMOUNT
CANADA - 0.7%
PRECIOUS METALS - 0.7%
GOLD ORES - 0.7%
Pegasus Gold, Inc. euro 6 1/4%,
4/30/02 (d) $ 1,360,000 1,203,600
William Resources, Inc. 9.66%,
1/23/02 (c) 2,250,000 1,825,458
TOTAL CONVERTIBLE BONDS
(Cost $3,250,931) 3,029,058
CASH EQUIVALENTS - 6.6%
SHARES
Taxable Central Cash Fund (b)
(Cost $28,857,834) 28,857,834 28,857,834
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $349,438,753) $ 438,730,023
CURRENCY ABBREVIATIONS
CAD - Canadian dollar
LEGEND
1. Non-income producing
2. At period end, the seven-day yield on the Taxable Central Cash Fund was
5.31%. The yield refers to the income earned by investing in the fund over
the seven-day period, expressed as an annual percentage.
3. Debt obligation initially issued at one coupon which converts to a
higher coupon at a specified date.
4. Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of these securities amounted to $18,188,824 or 4.2% of net
assets.
5. Purchased on an installment basis. Market value reflects only those
payments made through February 28, 1997. The remaining installment
aggregating CAD 6,345,000 is due July 31, 1997.
6. 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 $ - $ - $ -
Mentor Exploration & Development
Co. Ltd. - - - 1,758,871
Silver Standard Resources, Inc. - - - -
Southernera Resources Ltd. - - - -
Sudbury Contact Mines Ltd. 11,343 9,334 - 3,970,617
Winspear Resources Ltd. 71,799 - - -
Totals $ 89,662 $ 9,334 $ - $ 5,729,488
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $251,273,781 and $276,071,243, respectively (see Note 3 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $82,611 for the period (see
Note 4 of Notes to Financial Statements).
At the period end, the value of securities loaned and the value of
collateral amounted to $3,567,111 and $3,805,000, respectively (see Note 6
of Notes to Financial Statements).
The fund participated in the bank borrowing program. The maximum loan and
average daily balance during the period for which the loan was outstanding
amounted to $9,652,000. The weighted average interest rate was 5.7% (see
Note 7 of Notes to Financial Statements).
INCOME TAX INFORMATION
At February 28, 1997, the aggregate cost of investment securities for
income tax purposes was $350,158,713. Net unrealized appreciation
aggregated $88,571,310, of which $112,390,352 related to appreciated
investment securities and $23,819,042 related to depreciated investment
securities.
The fund hereby designates approximately $717,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
AMERICAN GOLD PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1997
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS
Investment in securities, at value (cost $349,438,753) - See accompanying schedule $ 438,730,023
Receivable for investments sold 9,944,814
Receivable for fund shares sold 13,376,785
Dividends receivable 90,035
Interest receivable 135,875
Redemption fees receivable 42,094
Other receivables 3,500
TOTAL ASSETS 462,323,126
LIABILITIES
Payable for investments purchased $ 21,795,209
Payable for fund shares redeemed 8,174,011
Accrued management fee 176,648
Other payables and accrued expenses 269,283
Collateral on securities loaned, 3,805,000
at value
TOTAL LIABILITIES 34,220,151
NET ASSETS $ 428,102,975
Net Assets consist of:
Paid in capital $ 325,028,542
Accumulated net investment (loss) (3,491,165
)
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 17,274,621
Net unrealized appreciation (depreciation) on investments 89,290,977
and assets and liabilities in
foreign currencies
NET ASSETS, for 15,177,663 $ 428,102,975
shares outstanding
NET ASSET VALUE and redemption price per share ($428,102,975 (divided by) 15,177,663 shares) $28.21
Maximum offering price per share (100/97.00 of $28.21) $29.08
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1997
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME $ 2,058,827
Dividends
Interest (including income on securities loaned of $25,324) 1,352,691
TOTAL INCOME 3,411,518
EXPENSES
Management fee $ 2,501,556
Transfer agent fees 2,756,985
Accounting and security lending fees 419,475
Non-interested trustees' compensation 1,764
Custodian fees and expenses 96,582
Registration fees 103,545
Audit 33,832
Legal 2,744
Interest 1,525
Reports to shareholders 35,727
Miscellaneous 3,670
Total expenses before reductions 5,957,405
Expense reductions (84,046 5,873,359
)
NET INVESTMENT INCOME (LOSS) (2,461,841
)
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities (including 35,931,097
realized gain (loss) of $10,989
and $(546,651) on sales of
investments in affiliated issuers
and precious metals, respectively)
Foreign currency transactions (6,030 35,925,067
)
Change in net unrealized appreciation (depreciation) on:
Investment securities (16,651,985
)
Assets and liabilities in (293 (16,652,278
foreign currencies ) )
NET GAIN (LOSS) 19,272,789
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 16,810,948
OTHER INFORMATION $ 1,162,696
Sales charges paid to FDC
Deferred sales charges withheld $ 43,678
by FDC
Exchange fees withheld by FSC $ 214,508
Expense reductions $ 80,704
Directed brokerage arrangements
Custodian interest credits 1,812
Transfer agent interest credits 1,530
$ 84,046
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE YEAR ENDED YEAR ENDED
(DECREASE) IN FEBRUARY 28, FEBRUARY 29,
NET ASSETS 1997 1996
Operations $ (2,461,841 $ (952,464
Net ) )
investment
income (loss)
Net realized 35,925,067 25,985,654
gain (loss)
Change in (16,652,278 105,571,674
net )
unrealized
appreciation
(depreciation
)
NET INCREASE 16,810,948 130,604,864
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
Distributions to (6,827,284 -
shareholders )
from net
realized
gains
Share 757,145,884 656,288,557
transactions
Net proceeds
from sales of
shares
Reinvestmen 6,693,065 -
t of
distributions
Cost of (799,571,083 (615,297,920
shares ) )
redeemed
Paid in 2,358,350 1,700,313
capital
portion of
redemption
fees
NET INCREASE (33,373,784 42,690,950
(DECREASE) )
IN NET
ASSETS
RESULTING
FROM SHARE
TRANSACTIO
NS
TOTAL (23,390,120 173,295,814
INCREASE )
(DECREASE)
IN NET ASSETS
NET ASSETS
Beginning of 451,493,095 278,197,281
period
End of period $ 428,102,975 $ 451,493,095
(including
accumulate
d net
investment
loss of
$3,491,165
and
$458,668,
respectivel
y)
OTHER
INFORMATION
Shares
Sold 27,099,046 28,496,378
Issued in 262,370 -
reinvestment
of
distributions
Redeemed (28,839,831 (26,927,012
) )
Net increase (1,478,415) 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>
YEAR ENDED YEAR ENDED YEARS ENDED FEBRUARY 28, TEN MONTHS
FEBRUARY 28, FEBRUARY 29, ENDED
FEBRUARY 28,
SELECTED 1997 1996 1995 1994 1993
PER-SHARE
DATA D
</TABLE>
Net asset $ 27.11 $ 18.44 $ 22.66 $ 14.15 $ 11.94
value,
beginning of
period
Income from
Investment
Operations
Net (.16) (.06) (.05) (.11) (.05)
investment
income (loss)
Net realized 1.60 8.62 (4.25) 8.44 2.16
and
unrealized
gain (loss)
Total from 1.44 8.56 (4.30) 8.33 2.11
investment
operations
Less
Distributions
From net (.50) - - - -
realized gain
Redemption .16 .11 .08 .18 .10
fees added to
paid in
capital
Net asset $ 28.21 $ 27.11 $ 18.44 $ 22.66 $ 14.15
value, end of
period
TOTAL 6.10% 47.02% (18.62)% 60.14% 18.51%
RETURN B, C
RATIOS AND
SUPPLEMENT
AL DATA
Net assets, $ 428,103 $ 451,493 $ 278,197 $ 347,406 $ 168,033
end of period
(000 omitted)
Ratio of 1.44% 1.39% 1.41% 1.50% 1.59% A
expenses to
average net
assets
Ratio of 1.42% E 1.39% 1.41% 1.49% E 1.59% A
expenses to
average net
assets after
expense
reductions
Ratio of net (.59)% (.27)% (.22)% (.51)% (.44)%
investment A
income (loss)
to average
net assets
Portfolio 63% 56% 34% 39% 30% A
turnover rate
Average $ .0270
commission
rate F
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
A ANNUALIZED B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 8 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 8 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. You can
look at the total percentage change in value, the average annual percentage
change, or the growth of a hypothetical $10,000 investment. Total return
reflects the change in the value of an investment, assuming reinvestment of
the fund's dividend income and capital gains (the profits earned upon the
sale of securities that have grown in value), but does not include certain
fees paid by shareholders upon exchange or redemption.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 28, 1997 YEAR YEARS YEARS
ENERGY 20.35% 81.91% 137.59%
ENERGY 16.74% 76.46% 130.46%
(INCL. 3% SALES CHARGE)
S&P 500 26.16% 118.75% 276.74%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one, five or 10 years. You can compare
the fund's returns 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, and excludes the effect of sales
charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 28, 1997 YEAR YEARS YEARS
ENERGY 20.35% 12.71% 9.04%
ENERGY 16.74% 12.03% 8.71%
(INCL. 3% SALES CHARGE)
S&P 500 26.16% 16.94% 14.16%
AVERAGE ANNUAL RETURNS take the fund's 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
1987/02/28 9700.00 10000.00
1987/03/31 10505.85 10289.00
1987/04/30 10207.38 10197.43
1987/05/31 10565.54 10286.15
1987/06/30 10931.15 10805.60
1987/07/31 11498.23 11353.44
1987/08/31 11431.08 11776.92
1987/09/30 11184.85 11519.01
1987/10/31 8230.08 9037.81
1987/11/30 7886.85 8293.10
1987/12/31 8448.32 8924.20
1988/01/31 8762.92 9299.91
1988/02/29 9077.53 9733.29
1988/03/31 9722.09 9432.53
1988/04/30 10090.41 9537.23
1988/05/31 9722.09 9620.20
1988/06/30 9829.51 10061.77
1988/07/31 9890.90 10023.54
1988/08/31 9514.91 9682.74
1988/09/30 9407.48 10095.22
1988/10/31 9491.89 10375.87
1988/11/30 9514.91 10227.49
1988/12/31 9795.16 10406.47
1989/01/31 10535.31 11168.23
1989/02/28 10369.96 10890.14
1989/03/31 10968.37 11143.88
1989/04/30 11338.45 11722.25
1989/05/31 11472.31 12197.00
1989/06/30 11708.52 12127.48
1989/07/31 12196.71 13222.59
1989/08/31 12464.42 13481.75
1989/09/30 12661.27 13426.47
1989/10/31 12574.65 13114.98
1989/11/30 13047.09 13382.52
1989/12/31 13989.99 13703.71
1990/01/31 13365.36 12784.19
1990/02/28 13781.78 12949.10
1990/03/31 13789.79 13292.25
1990/04/30 13325.32 12959.95
1990/05/31 14134.13 14223.54
1990/06/30 13801.02 14126.82
1990/07/31 14741.03 14081.62
1990/08/31 15005.94 12808.64
1990/09/30 14963.21 12184.86
1990/10/31 14194.11 12132.46
1990/11/30 14040.29 12916.22
1990/12/31 13361.51 13276.58
1991/01/31 12496.06 13855.44
1991/02/28 13661.77 14846.11
1991/03/31 13476.31 15205.38
1991/04/30 13626.44 15241.87
1991/05/31 13705.92 15900.32
1991/06/30 13095.31 15172.09
1991/07/31 13767.77 15879.11
1991/08/31 14033.22 16255.44
1991/09/30 13891.65 15983.98
1991/10/31 14307.51 16198.16
1991/11/30 13245.73 15545.38
1991/12/31 13366.21 17323.77
1992/01/31 12650.96 17001.55
1992/02/29 12668.84 17222.57
1992/03/31 12302.28 16886.73
1992/04/30 13142.70 17383.20
1992/05/31 13768.54 17468.37
1992/06/30 13087.22 17208.09
1992/07/31 13436.81 17911.90
1992/08/31 13678.83 17544.71
1992/09/30 13759.50 17751.74
1992/10/31 13167.89 17813.87
1992/11/30 12863.12 18421.32
1992/12/31 13046.96 18647.90
1993/01/31 13538.95 18804.55
1993/02/28 14431.83 19060.29
1993/03/31 15169.82 19462.46
1993/04/30 15461.63 18991.47
1993/05/31 15926.57 19500.44
1993/06/30 16136.25 19556.99
1993/07/31 16017.74 19478.76
1993/08/31 17284.93 20217.01
1993/09/30 17184.65 20061.34
1993/10/31 16938.51 20476.61
1993/11/30 14887.29 20282.08
1993/12/31 15546.04 20527.49
1994/01/31 16378.69 21225.43
1994/02/28 15829.90 20650.22
1994/03/31 15063.48 19749.87
1994/04/30 16214.13 20002.67
1994/05/31 16385.71 20330.71
1994/06/30 16299.92 19832.61
1994/07/31 16547.75 20483.12
1994/08/31 16271.32 21322.93
1994/09/30 16147.40 20800.52
1994/10/31 17062.49 21268.53
1994/11/30 16013.95 20493.93
1994/12/31 15610.15 20797.85
1995/01/31 15236.38 21337.14
1995/02/28 15836.39 22168.65
1995/03/31 16701.98 22822.85
1995/04/30 17215.28 23494.98
1995/05/31 17659.48 24434.07
1995/06/30 17146.18 25001.68
1995/07/31 17550.90 25830.73
1995/08/31 17422.57 25895.57
1995/09/30 17432.45 26988.36
1995/10/31 16682.24 26892.01
1995/11/30 17639.74 28072.57
1995/12/31 18948.07 28613.25
1996/01/31 19240.82 29587.24
1996/02/29 19149.97 29861.52
1996/03/31 20432.02 30149.08
1996/04/30 21421.44 30593.48
1996/05/31 21642.82 31382.49
1996/06/30 22043.42 31502.05
1996/07/31 21052.47 30110.29
1996/08/31 21874.75 30745.32
1996/09/30 23034.37 32475.67
1996/10/31 23972.62 33371.34
1996/11/30 25300.91 35893.88
1996/12/31 25101.17 35182.83
1997/01/31 25674.36 37381.05
1997/02/28 23046.36 37674.12
Let's say hypothetically that $10,000 was invested in Fidelity Select
Energy Portfolio on February 28, 1987, and the current maximum 3% sales
charge was paid. As the chart shows, by February 28, 1997, the value of the
investment would have grown to $23,046 - a 130.46% increase on the initial
investment. For comparison, look at how the S&P 500 did over the same
period. With dividends and capital gains, if any, reinvested, the same
$10,000 investment would have grown to $37,674 - a 276.74% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1997
% OF FUND'S
INVESTMENTS
Total SA sponsored ADR 5.9
British Petroleum PLC ADR 4.4
du Pont (E.I.) de Nemours & Co. 4.1
Unocal Corp. 3.9
Royal Dutch Petroleum Co. ADR 3.7
Schlumberger Ltd. 3.5
Transocean Offshore, Inc. 3.4
Halliburton Co. 2.8
Diamond Offshore Drilling, Inc. 2.7
Burlington Resources, Inc. 2.5
TOP INDUSTRIES AS OF FEBRUARY 28, 1997
Crude Petroleum & Gas 34.7%
Oil & Gas Exploration 16.5%
Petroleum Refiners 16.1%
Oil & Gas Services 10.3%
Drilling 9.6%
All Others 12.8% *
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
% OF FUND'S INVESTMENTS
ENERGY PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
NOTE TO SHAREHOLDERS: Lawrence Rakers became Portfolio Manager of Fidelity
Select Energy Portfolio on January 7, 1997.
Q. HOW DID THE FUND PERFORM, LARRY?
A. We had a respectable year. For the 12 months that ended February 28,
1997, the fund was up 20.35%, compared to a rise of 26.16% in the Standard
& Poor's 500 Index over the same period.
Q. WHAT FACTORS CONTRIBUTED TO THE FUND'S PERFORMANCE DURING THE PERIOD?
A. We benefited from favorable oil and gas prices - largely the result of
the cold winter in 1995-96 and healthy economic growth. These two factors
put upward pressure on oil prices at a time when inventories were at their
lowest levels in several years. So when Iraq re-entered the oil market last
fall, demand was robust enough to easily absorb the extra supply.
Q. WHAT ABOUT THE OTHER PRODUCERS? DO THEY HAVE A LOT OF EXCESS CAPACITY?
A. The overall operating rate for the world's oil and gas fields is about
96%. That means there is relatively little unused capacity in the world. If
demand should increase sharply or supply be disrupted for any reason, as it
was during the Gulf War, there's not a lot of supply to fill the gap. The
most dominant player in the Arab world in terms of excess oil supply
continues to be Saudi Arabia. With about 2,000,000 barrels a day of unused
capacity, the Saudis have the ability to control prices under normal
circumstances. Of course, lower oil prices hurt their revenues, so there's
an incentive not to let prices drop too low.
Q. ARE THERE ANY OTHER FACTORS AFFECTING THIS MARKET?
A. Yes. Supply in the energy markets is also limited by the number of rigs
that are available to drill oil and natural gas wells. Current capacity
utilization of this equipment is running at around 80% to 95%, and there
are virtually no new drill rigs under construction. This type of equipment
tends to have a long manufacturing cycle, and presently the rental rate is
low enough that building new ones is not economically justifiable. This
means that there is no room for surprises on either the supply or the
demand side that would suddenly necessitate a lot more drill rigs; they
simply aren't available right now.
Q. THE SCENARIO YOU'RE PAINTING SOUNDS BULLISH. ASIDE FROM THE SAUDIS, WHO
OR WHAT COULD RUIN IT?
A. Unusually warm winter weather or deterioration in the world economy
could reduce demand.
Q. AGAINST THE BACKDROP YOU'VE DESCRIBED, WHAT WERE SOME OF YOUR STANDOUT
PERFORMERS DURING THE PERIOD?
A. As you can imagine, energy service companies - the companies that assist
exploration and production activities - did well last year. Some of our
holdings in that area included Schlumberger, Halliburton and Transocean
Offshore. And projections are that rental prices for drill rigs could
increase substantially from current levels before it would make economic
sense to build new ones. So we expect these types of stocks to continue to
do well. In the category of high-growth oil producers, the fund's holdings
in United Meridian Corp. and Vintage Petroleum did well for us. Total SA
and British Petroleum both are implementing extensive cost-cutting measures
and are expected to have robust earnings growth.
Q. WHAT WERE WEAK AREAS FOR THE FUND?
A. The disappointments were in refining and chemical production. As the
price of oil rises, those kinds of companies tend to experience declining
profit margins.
Q. WHAT'S YOUR OUTLOOK FOR THE REST OF THE CURRENT PERIOD, LARRY?
A. I expect demand for oil - and especially for drilling equipment - to
remain strong. So my strategy going forward will be pretty much the same -
to overweight the fund with energy service stocks while also looking for
high-growth oil and natural gas producers. In addition, I expect that we'll
continue to hold some integrated oil companies, such as Exxon and Atlantic
Richfield, for their stable growth in earnings and cash flow. We will
continue to look for investment opportunities both in U.S. stocks and,
where we can justify the added risk, in selected foreign securities.
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: 060
TRADING SYMBOL: FSENX
SIZE: as of February 28, 1997, more than
$203 million
MANAGER: Larry Rakers, since January 1997;
manager, Fidelity Select Paper and Forest
Products Portfolio, since 1996; Fidelity Select
American Gold Portfolio, 1995-February 1997;
Fidelity Select Precious Metals and Minerals
Portfolio, 1996-February 1997; joined Fidelity in
1993
(checkmark)
ENERGY PORTFOLIO
INVESTMENTS FEBRUARY 28, 1997
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 94.2%
SHARES VALUE (NOTE 1)
CHEMICALS & PLASTICS - 4.1%
CHEMICALS - 4.1%
du Pont (E.I.) de Nemours & Co. 78,000 $ 8,365,500
COAL - 0.3%
MAPCO, Inc. 20,000 635,000
CONSTRUCTION - 0.9%
HEAVY CONSTRUCTION - 0.9%
McDermott (J. Ray) SA 79,200 1,821,600
ENERGY SERVICES - 19.9%
DRILLING - 9.6%
Atwood Oceanics, Inc. (a) 10,000 525,000
Cliffs Drilling Co. (a) 19,200 890,400
Diamond Offshore Drilling, Inc. (a) 94,100 5,551,900
Falcon Drilling, Inc. (a) 80,300 2,720,163
Nabors Industries, Inc. (a) 90,000 1,383,750
Noble Drilling Corp. (a) 83,500 1,482,125
Transocean Offshore, Inc. 122,466 6,842,788
19,396,126
OIL & GAS SERVICES - 10.3%
BJ Services Co. (a) 27,500 1,093,125
Eni Spa sponsored ADR 40,000 1,990,000
Energy Ventures, Inc. (a) 45,000 2,295,000
Halliburton Co. 86,900 5,615,913
Schlumberger Ltd. 69,500 6,993,438
Weatherford Enterra, Inc. (a) 15,000 450,000
Western Atlas, Inc. (a) 37,800 2,301,075
20,738,551
TOTAL ENERGY SERVICES 40,134,677
GAS - 0.7%
GAS & OTHER SERVICES - 0.1%
Enron Global Power & Pipelines 10,000 287,500
GAS TRANSMISSION - 0.6%
Enron Corp. 27,900 1,112,513
TOTAL GAS 1,400,013
OIL & GAS - 68.3%
CRUDE PETROLEUM & GAS - 34.7%
Alberta Energy Co. Ltd. 25,000 525,344
Amber Energy, Inc. (a) 51,400 1,051,931
Amber Energy, Inc. (a)(c) 21,000 429,777
Anadarko Petroleum Corp. 31,700 1,783,125
Apache Corp. 4,015 129,986
Atlantic Richfield Co. 14,800 1,850,000
Barrett Resources Corp. (a) 22,100 726,538
Burlington Resources, Inc. 115,300 5,058,788
Canadian Natural Resources Ltd. (a) 25,000 595,695
Canada Occidental Petroleum Ltd. 50,000 844,206
Cavell Energy Corp. (a) 120,800 525,352
Chesapeake Energy Corp. (a) 126,200 2,618,650
Comstock Resources, Inc. (a) 100,000 900,000
Devon Energy Corp. 50,000 1,562,500
Enron Oil & Gas Co. 49,300 998,325
Flores & Rucks, Inc. (a) 80,700 3,631,500
Forcenergy Gas Exploration, Inc. (a) 110,000 2,860,000
Gulf Canada Corp. (a) 100,000 701,677
Noble Affiliates, Inc. 20,000 780,000
SHARES VALUE (NOTE 1)
Occidental Petroleum Corp. 168,600 $ 4,299,300
Oryx Energy Co. (a) 110,000 2,200,000
Pogo Producing Co. 24,500 842,188
Renaissance Energy Ltd. (a) 92,208 2,611,600
Renaissance Energy Ltd. (a)(c) 10,300 291,726
Rio Alto Exploration Ltd. (a) 237,500 1,466,853
Saga Petroleum AS Class B 13,100 201,218
Santa Fe Energy Resources, Inc. (a) 369,000 4,750,875
Stone Energy Corp. (a) 35,000 770,000
Swift Energy Co. (a) 75,000 1,612,500
Total SA sponsored ADR 300,200 11,895,425
Tullow Oil PLC (a) 846,360 1,275,708
Ulster Petroleums Ltd. (a) 48,500 352,721
United Meridian Corp. (a) 160,500 4,835,063
Vastar Resources, Inc. 44,800 1,299,200
Vintage Petroleum, Inc. 125,700 3,786,713
70,064,484
GENERAL PETROLEUM PRODUCTS - 1.0%
KCS Group, Inc. 55,000 1,980,000
OIL & GAS EXPLORATION - 16.5%
Abacan Resource Corp. (a) 200,000 1,837,500
Amerada Hess Corp. 66,600 3,554,775
Anderson Exploration Ltd. (a) 60,000 712,641
Chieftain International, Inc. (a) 108,700 2,196,802
Exxon Corp. 10,000 998,750
Kerr-McGee Corp. 62,700 3,926,588
Louisiana Land & Exploration Co. 45,400 2,167,850
Phillips Petroleum Co. 48,300 1,998,413
Total Petroleum (North America) Ltd. 30,000 306,984
USX-Marathon Group 140,100 3,730,163
Union Pacific Resources Group, Inc. 169,200 4,124,250
Unocal Corp. 201,774 7,793,521
33,348,237
PETROLEUM REFINERS - 16.1%
British Petroleum PLC ADR 67,561 8,943,381
Coastal Corp. 75,000 3,412,500
Murphy Oil Corp. 38,400 1,780,800
Pennzoil Co. 37,600 2,157,300
Royal Dutch Petroleum Co. ADR 42,700 7,387,100
Shell Transport & Trading Co. PLC
ADR 36,000 3,649,500
Tosco Corp. 104,100 2,901,788
Valero Energy Corp. 75,000 2,362,500
32,594,869
TOTAL OIL & GAS 137,987,590
TOTAL COMMON STOCKS
(Cost $183,363,109) 190,344,380
CASH EQUIVALENTS - 5.8%
Taxable Central Cash Fund (b)
(Cost $11,700,753) 11,700,753 11,700,753
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $195,063,862) $ 202,045,133
LEGEND
1. Non-income producing
2. At period end, the seven-day yield on the Taxable Central Cash Fund was
5.31%. The yield refers to the income earned by investing in the fund over
the seven-day period, expressed as an annual percentage.
3. Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of these securities amounted to $721,503 or 0.4% of net
assets.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $197,125,029 and $144,218,739, respectively (see Note 3 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of FMR. The commissions paid to these affiliated
firms were $53,327 for the period (see Note 4 of Notes to Financial
Statements).
At the period end, the value of securities loaned and the value of
collateral amounted to $2,618,650 and $2,776,400, respectively (see Note 6
of Notes to Financial Statements).
The fund participated in the bank borrowing program. The maximum loan and
average daily balances during the period for which loans were outstanding
amounted to $2,721,000 and $2,678,500, respectively. The weighted average
interest rate was 5.6% (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 74.4%
Canada 7.2
United Kingdom 6.2
France 5.9
Netherlands 3.7
Italy 1.0
Others (individually less than 1%) 1.6
TOTAL 100.0%
INCOME TAX INFORMATION
At February 28, 1997, the aggregate cost of investment securities for
income tax purposes was $195,369,213. Net unrealized appreciation
aggregated $6,675,920, of which $18,939,028 related to appreciated
investment securities and $12,263,108 related to depreciated investment
securities.
The fund hereby designates approximately $6,259,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 29% of the dividends distributed during the fiscal year
qualifies for the dividends-received deduction for corporate shareholders
(unaudited).
The fund will notify shareholders in January 1998 of the applicable
percentage for use in preparing 1997 income tax returns.
ENERGY PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1997
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS
Investment in securities, at value $ 202,045,133
(cost $195,063,862) - See accompanying schedule
Receivable for investments sold 6,537,201
Receivable for fund shares sold 336,391
Dividends receivable 372,572
Interest receivable 64,137
Redemption fees receivable 1,298
Other receivables 36,323
TOTAL ASSETS 209,393,055
LIABILITIES
Payable for fund shares redeemed $ 3,042,532
Accrued management fee 120,272
Other payables and 189,293
accrued expenses
Collateral on securities loaned, 2,776,400
at value
TOTAL LIABILITIES 6,128,497
NET ASSETS $ 203,264,558
Net Assets consist of:
Paid in capital $ 179,721,354
Undistributed net investment income 428,529
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 16,133,404
Net unrealized appreciation (depreciation) on investments 6,981,271
NET ASSETS, for 9,537,827 $ 203,264,558
shares outstanding
NET ASSET VALUE and redemption price per share ($203,264,558 (divided by) 9,537,827 shares) $21.31
Maximum offering price per share (100/97.00 of $21.31) $21.97
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1997
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME $ 3,092,351
Dividends
Interest (including income on 722,840
securities loaned of $115,247)
TOTAL INCOME 3,815,191
EXPENSES
Management fee $ 1,066,783
Transfer agent fees 1,422,758
Accounting and security lending fees 180,001
Non-interested trustees' compensation 636
Custodian fees and expenses 13,455
Registration fees 44,116
Audit 31,609
Legal 969
Interest 833
Miscellaneous 5,278
Total expenses before reductions 2,766,438
Expense reductions (37,917 2,728,521
)
NET INVESTMENT INCOME 1,086,670
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 20,643,327
Foreign currency transactions (6,136 20,637,191
)
Change in net unrealized appreciation (depreciation) on:
Investment securities (2,355,967
)
Assets and liabilities in 184 (2,355,783
foreign currencies )
NET GAIN (LOSS) 18,281,408
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 19,368,078
OTHER INFORMATION $ 1,029,850
Sales charges paid to FDC
Deferred sales charges withheld $ 14,667
by FDC
Exchange fees withheld by FSC $ 95,265
Expense Reductions $ 31,750
Directed brokerage arrangements
Custodian interest credits 5,079
Transfer agent interest credits 1,088
$ 37,917
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE YEAR ENDED YEAR ENDED
(DECREASE) IN FEBRUARY 28, FEBRUARY 29,
NET ASSETS 1997 1996
Operations $ 1,086,670 $ 1,171,293
Net
investment
income
Net realized 20,637,191 9,827,602
gain (loss)
Change in (2,355,783 9,441,160
net )
unrealized
appreciation
(depreciation
)
NET INCREASE 19,368,078 20,440,055
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
Distributions to (1,000,086 (687,111
shareholders ) )
From net
investment
income
From net (9,661,247 (2,283,890
realized gain ) )
TOTAL (10,661,333 (2,971,001
DISTRIBUTION ) )
S
Share 338,291,399 161,715,061
transactions
Net proceeds
from sales of
shares
Reinvestmen 10,462,236 2,918,567
t of
distributions
Cost of (274,385,798 (158,608,994
shares ) )
redeemed
Paid in 514,459 159,215
capital
portion of
redemption
fees
NET INCREASE 74,882,296 6,183,849
(DECREASE)
IN NET
ASSETS
RESULTING
FROM SHARE
TRANSACTIO
NS
TOTAL 83,589,041 23,652,903
INCREASE
(DECREASE)
IN NET ASSETS
NET ASSETS
Beginning of 119,675,517 96,022,614
period
End of period $ 203,264,558 $ 119,675,517
(including
undistribute
d net
investment
income of
$428,529
and
$486,372,
respectivel
y)
OTHER
INFORMATION
Shares
Sold 15,419,263 8,981,770
Issued in 507,572 162,874
reinvestment
of
distributions
Redeemed (12,698,556 (8,799,673
) )
Net increase 3,228,279 344,971
(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>
YEAR ENDED YEAR ENDED YEARS ENDED FEBRUARY 28, TEN MONTHS
FEBRUARY 28, FEBRUARY 29, ENDED
FEBRUARY 28,
SELECTED 1997 1996 1995 1994 1993
PER-SHARE
DATA D
</TABLE>
Net asset $ 18.97 $ 16.10 $ 16.73 $ 15.84 $ 14.70
value,
beginning of
period
Income from
Investment
Operations
Net .13 .18 .07 .06 .23
investment
income
Net realized 3.59 3.13 (.11) 1.35 1.16
and
unrealized
gain (loss)
Total from 3.72 3.31 (.04) 1.41 1.39
investment
operations
Less
Distributions
From net (.13) (.11) (.08) (.03) (.27)
investment
income
From net (1.31) (.36) (.54) (.57) -
realized gain
Total (1.44) (.47) (.62) (.60) (.27)
distributions
Redemption .06 .03 .03 .08 .02
fees added to
paid in
capital
Net asset $ 21.31 $ 18.97 $ 16.10 $ 16.73 $ 15.84
value, end of
period
TOTAL 20.35% 20.92% .04% 9.69% 9.81%
RETURN B, C
RATIOS AND
SUPPLEMENT
AL DATA
Net assets, $ 203,265 $ 119,676 $ 96,023 $ 145,490 $ 179,133
end of period
(000 omitted)
Ratio of 1.57% 1.63% 1.85% 1.67% 1.71% A
expenses to
average net
assets
Ratio of 1.55% E 1.63% 1.85% 1.66% E 1.71% A
expenses to
average net
assets after
expense
reductions
Ratio of net .62% 1.04% .42% .37% 1.88% A
investment
income to
average net
assets
Portfolio 87% 97% 106% 157% 72% A
turnover rate
Average $ .0399
commission
rate F
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
A ANNUALIZED B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 8 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 8 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. You can
look at the total percentage change in value, the average annual percentage
change, or the growth of a hypothetical $10,000 investment. Total return
reflects the change in the value of an investment, assuming reinvestment of
the fund's dividend income and capital gains (the profits earned upon the
sale of 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 fund expenses, the past 10 year total returns would have
been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 28, 1997 YEAR YEARS YEARS
ENERGY SERVICE 32.26% 147.21% 134.15%
ENERGY SERVICE 28.29% 139.80% 127.12%
(INCL. 3% SALES CHARGE)
S&P 500 26.16% 118.75% 276.74%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one, five, or 10 years. You can compare
the fund's returns 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, and excludes the effect of sales
charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 28, 1997 YEAR YEARS YEARS
ENERGY SERVICE 32.26% 19.84% 8.88%
ENERGY SERVICE 28.29% 19.12% 8.55%
(INCL. 3% SALES CHARGE)
S&P 500 26.16% 16.94% 14.16%
AVERAGE ANNUAL RETURNS take the fund's 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
1987/02/28 9700.00 10000.00
1987/03/31 10619.15 10289.00
1987/04/30 10619.15 10197.43
1987/05/31 11440.52 10286.15
1987/06/30 12565.02 10805.60
1987/07/31 13386.39 11353.44
1987/08/31 12369.46 11776.92
1987/09/30 11968.55 11519.01
1987/10/31 7695.46 9037.81
1987/11/30 6854.54 8293.10
1987/12/31 7382.56 8924.20
1988/01/31 7675.91 9299.91
1988/02/29 8350.60 9733.29
1988/03/31 8839.52 9432.53
1988/04/30 9015.52 9537.23
1988/05/31 8399.50 9620.20
1988/06/30 7920.36 10061.77
1988/07/31 7793.25 10023.54
1988/08/31 7939.92 9682.74
1988/09/30 7597.68 10095.22
1988/10/31 7343.45 10375.87
1988/11/30 7030.54 10227.49
1988/12/31 7353.23 10406.47
1989/01/31 7803.02 11168.23
1989/02/28 7891.03 10890.14
1989/03/31 8389.72 11143.88
1989/04/30 8790.63 11722.25
1989/05/31 8947.08 12197.00
1989/06/30 9240.42 12127.48
1989/07/31 9758.67 13222.59
1989/08/31 10218.25 13481.75
1989/09/30 10071.57 13426.47
1989/10/31 9572.88 13114.98
1989/11/30 10394.25 13382.52
1989/12/31 11724.09 13703.71
1990/01/31 10971.17 12784.19
1990/02/28 12007.66 12949.10
1990/03/31 12584.58 13292.25
1990/04/30 11919.66 12959.95
1990/05/31 13924.19 14223.54
1990/06/30 13210.38 14126.82
1990/07/31 14452.22 14081.62
1990/08/31 14197.98 12808.64
1990/09/30 13924.19 12184.86
1990/10/31 12173.89 12132.46
1990/11/30 12359.68 12916.22
1990/12/31 11929.85 13276.58
1991/01/31 11391.14 13855.44
1991/02/28 13222.73 14846.11
1991/03/31 12194.30 15205.38
1991/04/30 12253.07 15241.87
1991/05/31 12576.29 15900.32
1991/06/30 10930.79 15172.09
1991/07/31 11753.54 15879.11
1991/08/31 11626.21 16255.44
1991/09/30 10558.60 15983.98
1991/10/31 10715.31 16198.16
1991/11/30 9432.22 15545.38
1991/12/31 9128.58 17323.77
1992/01/31 9001.25 17001.55
1992/02/29 9187.35 17222.57
1992/03/31 8531.11 16886.73
1992/04/30 9236.33 17383.20
1992/05/31 9970.92 17468.37
1992/06/30 9393.04 17208.09
1992/07/31 9784.82 17911.90
1992/08/31 10284.35 17544.71
1992/09/30 10597.78 17751.74
1992/10/31 10049.28 17813.87
1992/11/30 9843.59 18421.32
1992/12/31 9442.01 18647.90
1993/01/31 9814.21 18804.55
1993/02/28 10783.87 19060.29
1993/03/31 11636.01 19462.46
1993/04/30 12263.25 18991.47
1993/05/31 12831.81 19500.44
1993/06/30 12763.19 19556.99
1993/07/31 12939.64 19478.76
1993/08/31 13390.57 20217.01
1993/09/30 12998.46 20061.34
1993/10/31 12812.21 20476.61
1993/11/30 11459.43 20282.08
1993/12/31 11420.73 20527.49
1994/01/31 11528.94 21225.43
1994/02/28 11469.91 20650.22
1994/03/31 10614.10 19749.87
1994/04/30 11169.05 20002.67
1994/05/31 11666.58 20330.71
1994/06/30 12021.96 19832.61
1994/07/31 12245.34 20483.12
1994/08/31 11757.96 21322.93
1994/09/30 12204.72 20800.52
1994/10/31 12692.10 21268.53
1994/11/30 12032.11 20493.93
1994/12/31 11485.53 20797.85
1995/01/31 11557.70 21337.14
1995/02/28 12341.28 22168.65
1995/03/31 13021.75 22822.85
1995/04/30 13815.63 23494.98
1995/05/31 14176.49 24434.07
1995/06/30 13691.91 25001.68
1995/07/31 14372.38 25830.73
1995/08/31 14949.75 25895.57
1995/09/30 14990.99 26988.36
1995/10/31 13691.91 26892.01
1995/11/30 14465.17 28072.57
1995/12/31 16180.13 28613.25
1996/01/31 16532.34 29587.24
1996/02/29 17172.71 29861.52
1996/03/31 18528.17 30149.08
1996/04/30 19921.54 30593.48
1996/05/31 19631.73 31382.49
1996/06/30 19674.67 31502.05
1996/07/31 18590.57 30110.29
1996/08/31 19771.27 30745.32
1996/09/30 20511.89 32475.67
1996/10/31 22798.14 33371.34
1996/11/30 23721.23 35893.88
1996/12/31 24121.98 35182.83
1997/01/31 25465.18 37381.05
1997/02/28 22701.09 37674.12
Let's say hypothetically that $10,000 was invested in Fidelity Select
Energy Service Portfolio on February 28, 1987, and the current maximum 3%
sales charge was paid. As the chart shows, by February 28, 1997, the value
of the investment would have grown to $22,712 - a 127.12% increase on the
initial investment. For comparison, look at how the S&P 500 did over the
same period. With dividends and capital gains, if any, reinvested, the same
$10,000 investment would have grown to $37,674 - a 276.74% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1997
% OF FUND'S
INVESTMENTS
Schlumberger Ltd. 7.6
Halliburton Co. 6.0
Baker Hughes, Inc. 5.9
Western Atlas, Inc. 5.6
Weatherford Enterra, Inc. 4.6
BJ Services Co. 4.0
Cooper Cameron Corp. 3.9
Dresser Industries, Inc. 3.4
McDermott (J. Ray) SA 3.3
Transocean Offshore, Inc. 3.2
TOP INDUSTRIES AS OF FEBRUARY 28, 1997
Oil & Gas Services 51.3%
Drilling 22.5%
Oil Field Equipment 5.6%
Crude Petroleum & Gas 3.7%
Heavy Construction 3.3%
All Others 13.6% *
Row: 1, Col: 1, Value: 13.6
Row: 1, Col: 2, Value: 3.3
Row: 1, Col: 3, Value: 3.7
Row: 1, Col: 4, Value: 5.6
Row: 1, Col: 5, Value: 22.5
Row: 1, Col: 6, Value: 51.3
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
ENERGY SERVICE PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
NOTE TO SHAREHOLDERS: Robert Ewing became Portfolio Manager of Fidelity
Select Energy Service Portfolio on November 12, 1996.
Q. BOB, HOW DID THE FUND PERFORM?
A. For the 12 months that ended February 28, 1997, the fund had a total
return of 32.26%. The Standard & Poor's 500 Index posted a return of 26.16%
during the same 12-month period.
Q. WHAT HELPED THE FUND BEAT THE S&P 500?
A. Stocks in the energy service group benefited from a positive supply and
demand backdrop. On the supply side, the industry is operating at a very
high rate; at the end of the period, roughly 95% of possible oil and gas
production facilities were operating. At the same time, demand worldwide
remained quite strong, having grown at about 2% to 3% over the past four
years, even though demand in the former Soviet republics has decreased by
50 percent over the same time period. Worldwide demand has been driven by
increased consumption in the developing world, especially the Far East and
Latin America, and by economic stability in the developed world. The
combination of high operating rates and robust worldwide demand helped push
the price of oil from the high teens to as much as $26 a barrel, and
natural gas from $1.80 to almost $4.00 per thousand cubic feet. These price
increases were very helpful, because they increased the cash flow for
exploration and production companies, encouraging them to look for more oil
and gas. And when they do so, they need the help of energy service
companies.
Q. WHAT THEMES HAVE YOU PURSUED SINCE TAKING OVER THE FUND?
A. I've tried to invest in companies that have the opportunity to increase
their prices, and avoid those that are reaching the point where prices have
gone up so much that added capacity may come on line and hurt the
supply/demand dynamic. For example, the day rate for supply boats has
reached a point where many companies are considering taking advantage of
the higher prices and investing in more boats. What happens if they do so?
More boats eventually lead to overcapacity and lower day rates. On the
other hand, I've added to investments in offshore construction and shallow
water drilling companies because they have more potential to increase day
rates going forward.
Q. WHICH STOCKS WERE GOOD PERFORMERS FOR THE FUND?
A. I'd mention Schlumberger, Halliburton and Cliffs Drilling. Schlumberger
is considered the premier energy service company, and has ridden the wave
of higher commodity prices to post strong performance. It owns one of the
largest offshore drilling fleets, which is benefiting from heightened
demand for drilling capacity and higher prices. Halliburton performed well
on the strength of a solid reorganization. Its biggest oil service business
is pressure pumping, where it has been able to drive prices higher for its
services. Cliffs Drilling, a shallow water drilling company, benefited from
increasing utilization rates and positive pricing dynamics.
Q. WHAT WERE THE DISAPPOINTMENTS?
A. In a sector that showed such strength, most of the fund's laggards were
among its smaller holdings. For example, Drilex International, a
specialized onshore drilling company, suffered from cost overruns. Another
disappointment since I took over the fund was United Meridian, which hit a
couple of dry holes while exploring in Africa.
Q. WHAT'S YOUR OUTLOOK FOR 1997?
A. I believe it will be a more challenging year. We'll have to see
commodity price stabilization or commodity price increases for the stocks
to continue to outperform so dramatically. That being said, the sector
fundamentally is in very good shape. Overall, operating rates are running
at 93% of current available capacity. That's a constructive backdrop for
keeping commodity prices reasonably stable. As a result, I believe the
group will do well in 1997.
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 February 28, 1997, more than
$439 million
MANAGER: Robert Ewing, since November
1996; manager, Fidelity Select Environmental
Services Portfolio, since January 1996; joined
Fidelity in 1990
(checkmark)
ENERGY SERVICE PORTFOLIO
INVESTMENTS FEBRUARY 28, 1997
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 96.6%
SHARES VALUE (NOTE 1)
BUILDING MATERIALS - 2.4%
FABRICATED PIPE & FITTINGS - 2.4%
Coflexip sponsored ADR (a) 382,000 $ 10,624,372
CONSTRUCTION - 3.3%
HEAVY CONSTRUCTION - 3.3%
McDermott (J. Ray) SA 640,400 14,729,200
ENERGY SERVICES - 73.8%
DRILLING - 22.5%
Atwood Oceanics, Inc. (a) 70,000 3,675,000
Cliffs Drilling Co. (a) 246,000 11,408,250
Diamond Offshore Drilling, Inc. (a) 173,300 10,224,700
ENSCO International, Inc. (a) 263,000 11,407,625
Falcon Drilling, Inc. (a) 394,100 13,350,138
Helmerich & Payne, Inc. 34,100 1,440,725
Marine Drilling Companies, Inc. (a) 128,800 1,948,100
Nabors Industries, Inc. (a) 718,900 11,053,088
Noble Drilling Corp. (a) 779,250 13,831,688
Smedvig AS 182,900 4,505,862
Smedvig AS, Series B (a) 75,725 1,843,059
Transocean Offshore, Inc. 255,777 14,291,540
UTI Energy Corp. (a) 37,800 897,750
99,877,525
OIL & GAS SERVICES - 51.3%
BJ Services Co. (a) 447,088 17,771,748
Baker Hughes, Inc. 734,500 26,074,750
Carbo Ceramics, Inc. 15,700 298,300
Computalog Ltd. (a) 15,400 182,348
Dawson Geophysical Co. (a) 69,500 868,750
Dreco Energy Services Ltd. Class A (a) 125,000 4,375,000
Dresser Industries, Inc. 502,600 15,266,475
Energy Ventures, Inc. (a) 242,600 12,372,600
Global Industries Ltd. (a) 190,400 3,474,800
Gulfmark International, Inc. (a) 17,000 1,003,000
Halliburton Co. 410,419 26,523,328
Input/Output, Inc. (a) 109,600 2,342,700
Lone Star Technologies, Inc. (a) 35,100 552,825
McDermott International, Inc. 281,600 6,265,600
Numar Corp. (a) 40,000 670,000
Oceaneering International, Inc. (a) 290,000 4,603,750
Pool Energy Services Co. (a) 265,000 3,676,875
Pride Petroleum Services, Inc. (a) 35,600 596,300
Schlumberger Ltd. 336,400 33,850,250
Seacor Holdings, Inc. (a) 125,300 5,810,788
Smith International, Inc. (a) 30,800 1,251,250
Tidewater, Inc. 271,565 11,677,295
Varco International, Inc. (a) 138,000 3,105,000
Weatherford Enterra, Inc. (a) 678,600 20,358,000
Western Atlas, Inc. (a) 406,800 24,763,950
227,735,682
TOTAL ENERGY SERVICES 327,613,207
ENGINEERING - 1.8%
ARCHITECTS & ENGINEERS - 1.8%
Stolt Comex Seaway SA (a)(c) 450,000 7,987,500
GAS - 0.0%
GAS DISTRIBUTION - 0.0%
Aquila Gas Pipeline Corp. 8,500 111,563
SHARES VALUE (NOTE 1)
GAS TRANSMISSION & DISTRIBUTION - 0.0%
Tejas Gas Corp. (a) 200 $ 8,750
TOTAL GAS 120,313
INDUSTRIAL MACHINERY & EQUIPMENT - 0.4%
ENGINES & TURBINES - 0.4%
Stewart & Stevenson Services, Inc. 60,000 1,567,500
OIL & GAS - 13.0%
CRUDE PETROLEUM & GAS - 3.7%
Anadarko Petroleum Corp. 71,600 4,027,500
Flores & Rucks, Inc. (a) 74,500 3,352,500
Houston Exploration Co. (a) 140,000 1,960,000
Total SA sponsored ADR 50,000 1,981,250
Unit Corp. (a) 320,400 2,523,150
United Meridian Corp. (a) 78,000 2,349,750
16,194,150
OIL & GAS EXPLORATION - 1.6%
Petroleum Geo-Services AS
sponsored ADR (a) 60,400 2,536,800
Union Pacific Resources Group, Inc. 189,900 4,628,813
7,165,613
OIL FIELD EQUIPMENT - 5.6%
Camco International, Inc. 25,700 992,663
Cooper Cameron Corp. (a) 265,888 17,415,664
Dailey Petroleum Services Corp. 60,000 600,000
Drilex International, Inc. 120,000 1,320,000
National-Oilwell, Inc. (a) 143,200 4,403,400
24,731,727
PETROLEUM REFINERS - 2.1%
Murphy Oil Corp. 25,000 1,159,375
Royal Dutch Petroleum Co. ADR 48,100 8,321,300
9,480,675
TOTAL OIL & GAS 57,572,165
SERVICES - 0.3%
MANAGEMENT SERVICES - 0.3%
Metzler Group, Inc. 55,900 1,341,600
SHIP BUILDING & REPAIR - 0.1%
Halter Marine Group, Inc. (a) 12,000 196,500
SHIPPING - 1.5%
DEEP SEA DOMESTIC TRANSPORT - 1.0%
Trico Marine Services, Inc. (a) 112,300 4,548,150
SHIPPING - 0.5%
Hvide Marine, Inc. 105,900 2,197,425
TOTAL SHIPPING 6,745,575
TOTAL COMMON STOCKS
(Cost $418,068,967) 428,497,932
CASH EQUIVALENTS - 3.4%
Taxable Central Cash Fund (b) (Cost $15,284,242) 15,284,242
15,284,242
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $433,353,209) $ 443,782,174
LEGEND
1. Non-income producing
2. At period end, the seven-day yield on the Taxable Central Cash Fund was
5.31%. The yield refers to the income earned by investing in the fund over
the seven-day period, expressed as an annual percentage.
3. An affiliated company is a company in which the fund has ownership of at
least 5% of the voting securities. Transactions during the period with
companies which are or were affiliates are as follows:
PURCHASES SALES DIVIDEND VALUE
AFFILIATE COST COST INCOME
Stolt Comex Seaway SA $ 3,765,492 $ - $ - $ 7,987,500
TOTALS $ 3,765,492 $ - $ - $ 7,987,500
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $791,388,003 and $672,450,989, respectively (see Note 3 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of FMR. The commissions paid to these affiliated
firms were $264,406 for the period (see Note 4 of Notes to Financial
Statements).
At the period end, the value of securities loaned and the value of
collateral amounted to $596,300 and $640,800, respectively (see Note 6 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 5 of Notes to
Financial Statements).
Distribution of investments by country of issue, as a percentage of total
value of investment in securities, is as follows:
United States 87.2%
France 4.6
Panama 3.3
Norway 2.0
Netherland 1.9
Canada 1.0
TOTAL 100.0%
INCOME TAX INFORMATION
At February 28, 1997, the aggregate cost of investment securities for
income tax purposes was $434,079,862. Net unrealized appreciation
aggregated $9,702,312, of which $34,395,708 related to appreciated
investment securities and $24,693,396 related to depreciated investment
securities.
The fund hereby designates approximately $27,919,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 16% of the dividends distributed during the fiscal year
qualifies for the dividends-received deduction for corporate shareholders
(unaudited).
The fund will notify shareholders in January 1998 of the applicable
percentage for use in preparing 1997 income tax returns.
ENERGY SERVICE PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1997
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS
Investment in securities, at value $ 443,782,174
(cost $433,353,209) -
See accompanying schedule
Receivable for investments sold 9,646,227
Receivable for fund shares sold 2,488,164
Dividends receivable 308,272
Interest receivable 171,314
Redemption fees receivable 5,076
Other receivables 359
TOTAL ASSETS 456,401,586
LIABILITIES
Payable for fund shares redeemed $ 15,532,189
Accrued management fee 290,627
Other payables and accrued expenses 434,261
Collateral on securities loaned, 640,800
at value
TOTAL LIABILITIES 16,897,877
NET ASSETS $ 439,503,709
Net Assets consist of:
Paid in capital $ 356,442,100
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 72,632,644
Net unrealized appreciation (depreciation) on investments 10,428,965
NET ASSETS, for 21,485,542 $ 439,503,709
shares outstanding
NET ASSET VALUE and redemption price per share ($439,503,709 (divided by) 21,485,542 shares) $20.46
Maximum offering price per share (100/97.00 of $20.46) $21.09
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1997
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME $ 3,234,859
Dividends
Interest (including income on securities loaned of $24,314) 3,109,422
TOTAL INCOME 6,344,281
EXPENSES
Management fee $ 2,790,650
Transfer agent fees 3,169,285
Accounting and security lending fees 446,857
Non-interested trustees' compensation 2,012
Custodian fees and expenses 34,707
Registration fees 266,294
Audit 41,363
Legal 1,950
Interest 4,099
Miscellaneous 8,535
Total expenses before reductions 6,765,752
Expense reductions (77,340 6,688,412
)
NET INVESTMENT INCOME (LOSS) (344,131
)
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 90,051,691
Foreign currency transactions (4,033 90,047,658
)
Change in net unrealized appreciation (depreciation) on investment securities (16,245,487
)
NET GAIN (LOSS) 73,802,171
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 73,458,040
OTHER INFORMATION $ 4,165,989
Sales charges paid to FDC
Deferred sales charges withheld $ 10,974
by FDC
Exchange fees withheld by FSC $ 405,398
Expense reductions $ 63,322
Directed brokerage arrangements
Custodian interest credits 2,975
Transfer agent interest credits 11,043
$ 77,340
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE YEAR ENDED YEAR ENDED
(DECREASE) IN FEBRUARY 28, FEBRUARY 29,
NET ASSETS 1997 1996
Operations $ (344,131) $ 963,116
Net
investment
income (loss)
Net realized 90,047,658 18,797,151
gain (loss)
Change in (16,245,487) 27,955,663
net
unrealized
appreciation
(depreciation
)
NET INCREASE 73,458,040 47,715,930
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
Distributions to - (345,905)
shareholders
From net
investment
income
From net (17,911,527) (4,150,860)
realized gain
TOTAL (17,911,527) (4,496,765)
DISTRIBUTION
S
Share 1,555,976,986 762,157,835
transactions
Net proceeds
from sales of
shares
Reinvestmen 17,660,042 4,455,875
t of
distributions
Cost of (1,466,322,715) (600,660,872)
shares
redeemed
Paid in 2,837,620 838,814
capital
portion of
redemption
fees
NET INCREASE 110,151,933 166,791,652
(DECREASE)
IN NET
ASSETS
RESULTING
FROM SHARE
TRANSACTIO
NS
TOTAL 165,698,446 210,010,817
INCREASE
(DECREASE)
IN NET ASSETS
NET ASSETS
Beginning of 273,805,263 63,794,446
period
End of period $ 439,503,709 $ 273,805,263
(including
undistribute
d net
investment
income of
$0 and
$619,525,
respectivel
y)
OTHER
INFORMATION
Shares
Sold 78,524,862 54,578,475
Issued in 891,837 301,480
reinvestment
of
distributions
Redeemed (74,951,258) (43,190,194)
Net increase 4,465,441 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>
YEAR ENDED YEAR ENDED YEARS ENDED FEBRUARY 28, TEN MONTHS
FEBRUARY 28, FEBRUARY 29, ENDED
FEBRUARY 28,
SELECTED 1997 1996 1995 1994 1993
PER-SHARE
DATA D
</TABLE>
Net asset $ 16.09 $ 11.97 $ 11.66 $ 11.01 $ 9.43
value,
beginning of
period
Income from
Investment
Operations
Net (.01) .08 E .02 .03 .01
investment
income (loss)
Net realized 5.05 4.49 .67 .51 1.47
and
unrealized
gain (loss)
Total from 5.04 4.57 .69 .54 1.48
investment
operations
Less
Distributions
From net - (.04) (.01) (.05) -
investment
income
In excess of - - (.01) - -
net
investment
income
From net (.79) H (.48) (.35) - -
realized gain
In excess of - - (.13) - -
net realized
gain
Total (.79) (.52) (.50) (.05) -
distributions
Redemption .12 .07 .12 .16 .10
fees added to
paid in
capital
Net asset $ 20.46 $ 16.09 $ 11.97 $ 11.66 $ 11.01
value, end of
period
TOTAL 32.26% 39.15% 7.60% 6.36% 16.76%
RETURN B, C
RATIOS AND
SUPPLEMENT
AL DATA
Net assets, $ 439,504 $ 273,805 $ 63,794 $ 40,857 $ 85,234
end of period
(000 omitted)
Ratio of 1.47% 1.59% 1.81% 1.66% 1.76% A
expenses to
average net
assets
Ratio of 1.45% F 1.58% F 1.79% F 1.65% F 1.76% A
expenses to
average net
assets after
expense
reductions
Ratio of net (.07)% .60% .19% .23% .13% A
investment
income (loss)
to average
net assets
Portfolio 167% 223% 209% 137% 236% A
turnover rate
Average $ .0374
commission
rate G
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
A ANNUALIZED B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 8 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 $.02 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 8
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 AMOUNTS SHOWN REFLECT CERTAIN RECLASSIFICATIONS RELATED TO BOOK TO TAX
DIFFERENCES (SEE NOTE 1 OF NOTES TO FINANCIAL STATEMENTS).
</TABLE>
PRECIOUS METALS AND MINERALS PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance. You can
look at the total percentage change in value, the average annual percentage
change, or the growth of a hypothetical $10,000 investment. Total return
reflects the change in the value of an investment, assuming reinvestment of
the fund's dividend income and capital gains (the profits earned upon the
sale of securities that have grown in value), but does not include certain
fees paid by shareholders upon exchange or redemption.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST
FEBRUARY 28, 1997 YEAR YEARS 10
YEARS
PRECIOUS METALS AND -6.26% 88.29% 68.58%
MINERALS
PRECIOUS METALS AND -9.07% 82.64% 63.53%
MINERALS
(INCL. 3% SALES CHARGE)
S&P 500 26.16% 118.75% 276.74%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one, five, or 10 years. You can compare
the fund's returns 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, and excludes the effect of sales
charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 28, 1997 YEAR YEARS YEARS
PRECIOUS METALS AND MINERALS -6.26% 13.49% 5.36%
PRECIOUS METALS AND MINERALS -9.07% 12.80% 5.04%
(INCL. 3% SALES CHARGE)
S&P 500 26.16% 16.94% 14.16%
AVERAGE ANNUAL RETURNS take the fund's 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
1987/02/28 9700.00 10000.00
1987/03/31 12471.43 10289.00
1987/04/30 13334.78 10197.43
1987/05/31 12144.95 10286.15
1987/06/30 11970.83 10805.60
1987/07/31 14408.53 11353.44
1987/08/31 14031.26 11776.92
1987/09/30 14466.57 11519.01
1987/10/31 10476.29 9037.81
1987/11/30 11796.71 8293.10
1987/12/31 11123.55 8924.20
1988/01/31 9169.22 9299.91
1988/02/29 9183.91 9733.29
1988/03/31 9948.01 9432.53
1988/04/30 9617.39 9537.23
1988/05/31 9668.82 9620.20
1988/06/30 9316.16 10061.77
1988/07/31 9374.94 10023.54
1988/08/31 8816.56 9682.74
1988/09/30 8221.44 10095.22
1988/10/31 8522.67 10375.87
1988/11/30 8838.60 10227.49
1988/12/31 8469.49 10406.47
1989/01/31 8821.74 11168.23
1989/02/28 9105.08 10890.14
1989/03/31 9105.08 11143.88
1989/04/30 8691.56 11722.25
1989/05/31 8278.04 12197.00
1989/06/30 8928.95 12127.48
1989/07/31 9174.00 13222.59
1989/08/31 9357.79 13481.75
1989/09/30 9687.07 13426.47
1989/10/31 9679.41 13114.98
1989/11/30 10912.31 13382.52
1989/12/31 11193.49 13703.71
1990/01/31 12084.94 12784.19
1990/02/28 11046.20 12949.10
1990/03/31 10565.60 13292.25
1990/04/30 9480.36 12959.95
1990/05/31 10022.98 14223.54
1990/06/30 9294.32 14126.82
1990/07/31 9860.19 14081.62
1990/08/31 9960.96 12808.64
1990/09/30 9736.16 12184.86
1990/10/31 8643.17 12132.46
1990/11/30 8488.14 12916.22
1990/12/31 8834.63 13276.58
1991/01/31 7875.71 13855.44
1991/02/28 8583.11 14846.11
1991/03/31 8418.05 15205.38
1991/04/30 8394.47 15241.87
1991/05/31 8866.07 15900.32
1991/06/30 9447.70 15172.09
1991/07/31 9447.70 15879.11
1991/08/31 8457.35 16255.44
1991/09/30 8630.27 15983.98
1991/10/31 9211.90 16198.16
1991/11/30 9502.72 15545.38
1991/12/31 8970.46 17323.77
1992/01/31 9160.81 17001.55
1992/02/29 8684.93 17222.57
1992/03/31 8343.88 16886.73
1992/04/30 7852.13 17383.20
1992/05/31 8367.67 17468.37
1992/06/30 8414.88 17208.09
1992/07/31 8526.12 17911.90
1992/08/31 8144.71 17544.71
1992/09/30 7810.98 17751.74
1992/10/31 7310.38 17813.87
1992/11/30 6881.29 18421.32
1992/12/31 7008.98 18647.90
1993/01/31 7178.75 18804.55
1993/02/28 7971.00 19060.29
1993/03/31 9054.27 19462.46
1993/04/30 10517.51 18991.47
1993/05/31 11907.99 19500.44
1993/06/30 12102.01 19556.99
1993/07/31 13678.42 19478.76
1993/08/31 12304.11 20217.01
1993/09/30 11334.01 20061.34
1993/10/31 12942.76 20476.61
1993/11/30 12918.51 20282.08
1993/12/31 14832.69 20527.49
1994/01/31 14219.09 21225.43
1994/02/28 13597.31 20650.22
1994/03/31 13458.23 19749.87
1994/04/30 13458.77 20002.67
1994/05/31 13483.33 20330.71
1994/06/30 13753.49 19832.61
1994/07/31 14277.43 20483.12
1994/08/31 15292.57 21322.93
1994/09/30 16463.25 20800.52
1994/10/31 15824.70 21268.53
1994/11/30 14130.07 20493.93
1994/12/31 14663.45 20797.85
1995/01/31 12108.96 21337.14
1995/02/28 12664.64 22168.65
1995/03/31 13950.18 22822.85
1995/04/30 14066.30 23494.98
1995/05/31 13892.13 24434.07
1995/06/30 14058.00 25001.68
1995/07/31 14638.57 25830.73
1995/08/31 14837.62 25895.57
1995/09/30 14879.09 26988.36
1995/10/31 13021.28 26892.01
1995/11/30 13933.59 28072.57
1995/12/31 14173.80 28613.25
1996/01/31 17145.05 29587.24
1996/02/29 17444.67 29861.52
1996/03/31 17344.80 30149.08
1996/04/30 17737.49 30593.48
1996/05/31 18763.70 31382.49
1996/06/30 16152.30 31502.05
1996/07/31 15952.06 30110.29
1996/08/31 16819.75 30745.32
1996/09/30 16118.93 32475.67
1996/10/31 15985.44 33371.34
1996/11/30 15184.49 35893.88
1996/12/31 14942.54 35182.83
1997/01/31 14300.12 37381.05
1997/02/28 16344.19 37674.12
Let's say hypothetically that $10,000 was invested in Fidelity Select
Precious Metals and Minerals Portfolio on February 28, 1987, and the
current maximum 3% sales charge was paid. As the chart shows, by February
28, 1997, the value of the investment would have grown to $16,353 - a
63.53% increase on the initial investment. For comparison, look at how the
S&P 500 did over the same period. With dividends and capital gains, if any,
reinvested, the same $10,000 investment would have grown to $37,674 - a
276.74% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1997
% OF FUND'S
INVESTMENTS
Barrick Gold Corp. 8.9
Newmont Mining Corp. 7.8
Getchell Gold Corp. 6.0
Euro-Nevada Mining Ltd. 5.7
Vaal Reefs Exploration & Mining ADR 3.8
Franco-Nevada Mining Corp. 3.5
Western Deep Levels Ltd. ADR 3.0
JCI Ltd. 2.9
Western Areas Gold Mining Ltd. Ord. 2.6
Stillwater Mining Co. 2.5
TOP INDUSTRIES AS OF FEBRUARY 28, 1997
Gold Ores (Canada) 33.1%
Gold Ores (South Africa) 23.1%
Gold Ores (U.S.) 19.3%
Gold Ores (Australia) 5.4%
Metal Mining (South Africa) 2.9%
All Others 16.2% *
Row: 1, Col: 1, Value: 16.2
Row: 1, Col: 2, Value: 2.9
Row: 1, Col: 3, Value: 5.4
Row: 1, Col: 4, Value: 19.3
Row: 1, Col: 5, Value: 23.4
Row: 1, Col: 6, Value: 33.1
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
PRECIOUS METALS AND MINERALS PORTFOLIO
FUND TALK: THE MANAGERS' OVERVIEW
NOTE TO SHAREHOLDERS: Effective February 14, 1997, George Domolky (right)
became Portfolio Manager of Fidelity Select Precious Metals and Minerals
Portfolio. The following is an interview with Larry Rakers, who managed the
fund during most of the period covered by the report, and George Domolky,
who discusses his outlook.
Q. HOW DID THE FUND PERFORM, LARRY?
L.R. This year's performance was disappointing. For the 12 months that
ended February 28, 1997, the fund was down 6.26% versus a gain of 26.16%
for the Standard & Poor's 500 Index.
Q. THE SHARP DECLINE IN THE PRICE OF GOLD WAS OBVIOUSLY A MAJOR FACTOR,
RIGHT?
L.R. Absolutely. Gold fell from $410 an ounce near the beginning of the
year to around $370 by the end of 1996. That's about a 10% decline. And the
average gold stock falls or rises much faster than gold itself. So we were
swimming against a strong current and, viewed from that perspective, our
performance was very respectable.
Q. WHAT'S BEEN THE SUPPLY/DEMAND PICTURE FOR GOLD RECENTLY?
L.R. The world is actually consuming about 15% to 20% more gold than is
mined each year. So based purely on consumption and production, there is an
annual deficit of gold. However, European central banks have been selling
gold because at the present time they consider it more advantageous to own
U.S. dollars than gold bullion. The fact that the U.S. dollar has been so
strong has exacerbated the problem. If the dollar should begin to weaken,
we could see central banks switch from selling gold to buying it. But even
if they don't make any new gold purchases and simply stop selling it, that
would be bullish for gold because of the imbalance I mentioned earlier.
Q. SO WHAT HAS YOUR STRATEGY BEEN IN THIS KIND OF ENVIRONMENT?
L.R. My strategy has always been "gold price-neutral" as much as possible.
That is, I've tried to position the fund to benefit whether gold goes up or
not. The way you do that is by buying companies that are expanding their
production and reserves, and by staying away
from producers that have high-cost, no-growth profiles. At the same time,
the central purpose of the fund is to provide an investment vehicle for
those who are bullish on the price of precious metals. In line with that
mandate, the fund holds many South African mining stocks that are sensitive
to gold's ups and downs. While it's true that foreign investments involve
greater risk than U.S. investments, we continue to feel that their
potential justifies the added risk.
Q. WHAT ARE SOME OF THE STOCKS THAT PERFORMED WELL FOR YOU LAST YEAR?
L.R. The stocks that did well were the ones that were able to generate the
most rapid growth in their production and reserves - companies such as
Getchell Gold Corp., Euro-Nevada Mining Ltd. and Franco-Nevada Mining Corp.
Q. AND THE DISAPPOINTMENTS?
L.R. As a group, the South African mining stocks were weak because they are
so sensitive to the price of gold. And Stillwater Mining was a
disappointment because even though the company had great growth in reserves
last year, that growth was offset by declines in the prices of platinum and
palladium.
Q. GEORGE, WHAT'S YOUR OUTLOOK FOR THE FUND?
G.D. During the last four years, gold has remained in a range of $335 to
$410 per ounce. At the current price of around $360, it is trading near the
low end of that range. If gold should rally even as far as the range's
midpoint in the $370 to $375 area, that would create a very favorable
environment for gold stocks. In any event, my strategy will not be based on
second-guessing the price of gold. The fund will continue to focus on
companies offering the prospect of consistently increasing production and
reserves.
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: 061
TRADING SYMBOL: FDPMX
SIZE: as of February 28, 1997, more than
$325 million
MANAGER: George Domolky, since February
1997; manager, Fidelity Select American Gold
Portfolio, since February 1997; Fidelity Canada
Fund, 1987-1996; Fidelity Select Food and
Agriculture Portfolio, 1985-1987; joined Fidelity
in 1981
(checkmark)
PRECIOUS METALS AND MINERALS PORTFOLIO
INVESTMENTS FEBRUARY 28, 1997
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 89.7%
SHARES VALUE (NOTE 1)
AUSTRALIA - 8.6%
METALS & MINING - 0.8%
METAL MINING - 0.2%
Panorama Resources NL (warrants) (a) 2,650,000 $ 823,406
METAL MINING SERVICES - 0.5%
Acacia Resources Ltd. (a) 900,000 1,555,943
MISCELLANEOUS METAL ORES - 0.1%
Helix Resources NL 150,000 381,977
TOTAL METALS & MINING 2,761,326
PRECIOUS METALS - 7.8%
GOLD & SILVER ORES - 2.4%
Normandy Mining Ltd. 2,000,000 2,772,350
North Flinders Mines Ltd. 349,060 1,984,362
Plutonic Resources Ltd. 625,000 2,487,133
Sons of Gwalia NL 150,000 838,714
8,082,559
GOLD ORES - 5.4%
Centaur Mining & Exploration Ltd. (a) 4,500,000 6,693,356
Great Central Mines NL 3,094,600 8,025,033
Great Central Mines NL sponsored ADR. 90,000 703,125
Leo Shield Exploration NL 412,000 221,383
Resolute Samantha Ltd. 1,000,000 2,336,250
Ross Mining NL 414,285 380,697
18,359,844
TOTAL PRECIOUS METALS 26,442,403
TOTAL AUSTRALIA 29,203,729
CANADA - 33.7%
OIL & GAS - 0.6%
CRUDE PETROLEUM & GAS - 0.1%
Solomon Resources Ltd. (a) 200,000 233,892
OIL & GAS EXPLORATION - 0.5%
Southwestern Gold Corp. 135,000 1,578,774
TOTAL OIL & GAS 1,812,666
PRECIOUS METALS - 33.1%
GOLD & SILVER ORES - 0.6%
Consolidated Nevada
Goldfields Corp. (a) 743,000 651,683
Consolidated Nevada Goldfields
(warrants) (a) 371,500 3
Minorca Resources Ltd. (a) 342,000 1,487,337
2,139,023
GOLD ORES - 32.4%
Agnico Eagle Mines Ltd. 587,200 8,390,717
Argosy Mining Corp. (a) 169,200 192,926
Barrick Gold Corp. 1,070,000 30,266,418
Bema Gold Corp. 33,400 278,303
Bre-X Minerals Ltd. (a) 431,300 6,178,767
Bresea Resources Ltd. (a) 111,100 840,467
Bro-X Minerals Ltd. 150,000 257,647
Cambior, Inc. 60,000 960,421
Eldorado Gold Corp. (a) 200,000 1,388,737
Euro-Nevada Mining Ltd. 588,400 19,267,127
First Dynasty Mines Ltd. (a) 100,000 328,911
Franco-Nevada Mining Corp. 250,200 11,777,130
Greenstone Resources Ltd. (a) 83,000 1,010,087
Indochina Goldfields Ltd. (a) 156,900 2,161,726
Indochina Goldfields Ltd. (a)(c) 34,000 468,443
SHARES VALUE (NOTE 1)
Indochina Goldfields Ltd.
(special warrants) (a) 70,000 $ 930,686
Kinross Gold Corp. (a) 238,500 1,699,649
Meridian Gold, Inc. 50,000 230,238
Meridian Gold, Inc. Install-
ment Receipt (d) 2,212,000 6,143,771
Metallica Resources, Inc. (a) 177,500 629,226
Mountain Province Mining, Inc. (a) 200,000 643,204
Nelson Gold Ltd. (a) 1,048,900 881,654
Nevsun Resources Ltd. (a) 108,600 674,707
Orvana Minerals Corp. (a) 597,900 3,714,615
Prime Resources Group, Inc. 283,100 2,555,484
Repadre Capital Corp. (c) 100,000 646,859
Rio Narcea Gold Mines Ltd. (a) 700,000 2,941,929
South Pacific Resources, Inc. (a) 59,500 163,085
Sudbury Contact Mines Ltd. (a) 172,600 1,135,402
Sutton Resources (a) 30,000 592,040
TVI Pacific, Inc. (a) 1,318,000 1,213,814
TVX Gold, Inc. (a) 170,000 1,509,703
William Resources, Inc. (a)(c) 328,000 359,610
110,433,503
SILVER ORES - 0.1%
Pan American Silver Corp. (a) 30,000 263,129
TOTAL PRECIOUS METALS 112,835,655
TOTAL CANADA 114,648,321
GHANA - 0.5%
PRECIOUS METALS - 0.5%
GOLD ORES - 0.5%
Ashanti Goldfields Co. Ltd. GDR 122,548 1,853,539
SOUTH AFRICA - 26.1%
METALS & MINING - 3.0%
METAL MINING - 2.9%
JCI Ltd. 912,500 9,935,092
MISCELLANEOUS METAL ORES - 0.1%
Potgietersrust Platinums Ltd. (a) 72,000 450,251
TOTAL METALS & MINING 10,385,343
PRECIOUS METALS - 23.1%
GOLD ORES - 23.1%
Avgold Ltd. (a) 686,605 1,527,322
Buffelsfontein Gold
Mines Ltd. (a) 373,900 1,503,116
Consolidated Mining
Corporation Ltd. (a) 33,000,000 8,402,011
De Beers Consolidated
Mines Ltd. ADR 73,300 2,549,466
Driefontein Consolidated Ltd.:
ADR 280,000 3,220,000
Ord. 275,900 3,157,984
Durban Roodepoort Deep Ltd (a):
sponsored ADR 25,000 223,438
(Reg.) 278,700 2,396,415
East Daggafontein Mining unit (a) 300,000 931,323
Gold Fields of South Africa Ltd. 24,400 697,532
Gold Fields of South Africa Ltd.
sponsored ADR 163,700 4,685,913
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
PRECIOUS METALS - CONTINUED
GOLD ORES - CONTINUED
Harmony Gold Mining Co.
Ltd. Class R (a) 858,200 $ 7,398,441
Oryx Gold Holdings Ltd. (a) 833,600 1,169,181
Randex Ltd. (a) 400,000 244,779
Randgold & Exploration Co. Ltd. (a) 553,000 4,662,367
Rustenberg Platinum Holdings Ltd.
ADR (a) 30,204 502,142
Vaal Reefs Exploration & Mining
ADR 1,662,000 12,880,500
(Reg.) 29,300 2,231,446West Rand Consolidated Mines Ltd.
(Reg.) 14,000 40,648
Western Areas Gold Mining
Ltd. Ord. 628,000 8,695,924
Western Deep Levels Ltd.:
ADR 290,500 10,122,109
Ord. 45,500 1,585,260
TOTAL PRECIOUS METALS 78,827,317
TOTAL SOUTH AFRICA 89,212,660
UNITED KINGDOM - 0.1%
PRECIOUS METALS - 0.1%
GOLD ORES - 0.1%
Bakyrchik Gold PLC (a) 70,900 232,218
UNITED STATES OF AMERICA - 20.7%
METALS & MINING - 0.2%
COPPER ORES - 0.2%
Freeport McMoRan Copper & Gold,
Inc. Class A 20,000 652,500
PRECIOUS METALS - 19.3%
GOLD ORES - 19.3%
Getchell Gold Corp. (a) 394,600 20,321,900
Newmont Gold Co. 49,000 2,388,750
Newmont Mining Corp. 561,600 26,676,000
Santa Fe Pacific Gold Corp. 257,000 4,818,750
Stillwater Mining Co. (a) 132,900 3,114,844
Stillwater Mining Co. (a)(c) 366,600 8,592,188
TOTAL PRECIOUS METALS 65,912,432
SECURITIES INDUSTRY - 1.2%
INVESTMENT MANAGERS - 1.2%
Pioneer Group, Inc. 170,000 3,973,750
TOTAL UNITED STATES OF AMERICA 70,538,682
TOTAL COMMON STOCKS
(Cost $268,294,534) 305,689,149
CORPORATE BONDS - 0.7%
PRINCIPAL VALUE (NOTE 1)
AMOUNT
CANADA - 0.7%
PRECIOUS METALS - 0.7%
GOLD ORES - 0.7%
William Resources, Inc. 9.66%,
1/23/02 (f) $ 2,250,000 $ 1,825,459
Randgold Financial 7%, 9/30/01 (c) 500,000 552,500
TOTAL CORPORATE BONDS
(Cost $2,190,331) 2,377,959
CASH EQUIVALENTS - 9.6%
SHARES
Taxable Central Cash Fund (b)
(Cost $32,625,058) 32,625,058 32,625,058
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $303,109,923) $ 340,692,166
CURRENCY ABBREVIATIONS
CAD - Canadian dollar
LEGEND
1. Non-income producing
2. At period end, the seven-day yield on the Taxable Central Cash Fund was
5.31%. The yield refers to the income earned by investing in the fund over
the seven-day period, expressed as an annual percentage.
3. Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of these securities amounted to $10,619,600 or 3.3% of net
assets.
4. Purchased on an installment basis. Market value reflects only those
payments made through February 28, 1997. The remaining installment
aggregating CAD 5,530,000 is due July 31, 1997.
5. An affiliated company is a company in which the fund has ownership of at
least 5% of the voting securities. Transactions during the period with
companies which are or were affiliates are as follows:
PURCHASES SALES DIVIDEND VALUE
AFFILIATE COST COST INCOME
Buffelsfonstein Gold Mines Ltd. $ 1,073,541 $ 1,255,425 $ - $ -
TOTALS $ 1,073,541 $ 1,255,425 $ - $ -
6. Debt obligation initially issued at one coupon which converts to a
higher coupon at a specified date.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $175,532,403 and $272,617,295, respectively (see Note 3 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of FMR. The commissions paid to these affiliated
firms were $43,075 for the period (see Note 4 of Notes to Financial
Statements).
At the period end, the value of securities loaned and the value of
collateral amounted to $2,343,700 and $2,500,000, respectively (see Note 6
of Notes to Financial Statements).
The fund participated in the bank borrowing program. The maximum loan and
average daily balances during the period for which loans were outstanding
amounted to $6,590,000 and $4,105,250, respectively. The weighted average
interest rate was 5.7% (see Note 7 of Notes to Financial Statements).
INCOME TAX INFORMATION
At February 28, 1997, the aggregate cost of investment securities for
income tax purposes was $303,803,712. Net unrealized appreciation
aggregated $36,888,454 of which $54,884,084 related to appreciated
investment securities and $17,995,630 related to depreciated investment
securities.
At February 28, 1997, the fund had a capital loss carryforward of
approximately $1,376,000 which will expire on February 28, 2001.
A total of 35% of the dividends distributed during the fiscal year
qualifies for the dividends-received deduction for corporate shareholders
(unaudited).
The fund will notify shareholders in January 1998 of the applicable
percentage for use in preparing 1997 income tax returns.
PRECIOUS METALS AND MINERALS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1997
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS
Investment in securities, at value $ 340,692,166
(cost $303,109,923) - See accompanying schedule
Receivable for investments sold 8,387,739
Receivable for fund shares sold 12,495,132
Dividends receivable 787,264
Interest receivable 98,928
Redemption fees receivable 20,055
TOTAL ASSETS 362,481,284
LIABILITIES
Payable for investments purchased $ 28,275,047
Payable for fund shares redeemed 5,749,348
Accrued management fee 132,653
Other payables and 237,891
accrued expenses
Collateral on securities loaned, 2,500,000
at value
TOTAL LIABILITIES 36,894,939
NET ASSETS $ 325,586,345
Net Assets consist of:
Paid in capital $ 290,084,509
Distributions in excess of net investment income (44,636
)
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions (2,036,173
)
Net unrealized appreciation (depreciation) on investments 37,582,645
and assets and liabilities in
foreign currencies
NET ASSETS, for 16,610,630 $ 325,586,345
shares outstanding
NET ASSET VALUE and redemption price per share ($325,586,345 (divided by) 16,610,630 shares) $19.60
Maximum offering price per share (100/97.00 of $19.60) $20.21
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1997
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME $ 4,551,720
Dividends
Interest (including income on 624,578
securities loaned of $6,008)
TOTAL INCOME 5,176,298
EXPENSES
Management fee $ 2,005,219
Transfer agent fees 2,756,564
Accounting and security lending fees 333,834
Non-interested trustees' compensation 1,519
Custodian fees and expenses 109,106
Registration fees 99,822
Audit 23,859
Legal 2,393
Interest 2,579
Reports to shareholders 40,158
Miscellaneous 3,961
Total expenses before reductions 5,379,014
Expense reductions (21,297 5,357,717
)
NET INVESTMENT INCOME (LOSS) (181,419
)
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities (including 16,412,355
realized gain/(loss) of
$467,365 and $558,714 on
sale of investments in precious
metals and affiliated issuers,
respectively)
Foreign currency transactions 440 16,412,795
Change in net unrealized appreciation (depreciation) on:
Investment securities (43,174,276
)
Assets and liabilities in 836 (43,173,440
foreign currencies )
NET GAIN (LOSS) (26,760,645
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ (26,942,064
)
OTHER INFORMATION $ 669,762
Sales charges paid to FDC
Deferred sales charges withheld $ 45,427
by FDC
Exchange fees withheld by FSC $ 151,170
Expense reductions $ 18,764
Directed brokerage arrangements
Custodian interest credits 2,224
Transfer agent interest credits 309
$ 21,297
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE YEAR ENDED YEAR ENDED
(DECREASE) IN FEBRUARY 28, FEBRUARY 29,
NET ASSETS 1997 1996
Operations $ (181,419 $ 1,477,464
Net )
investment
income (loss)
Net realized 16,412,795 29,509,771
gain (loss)
Change in (43,173,440 86,598,754
net )
unrealized
appreciation
(depreciation
)
NET INCREASE (26,942,064 117,585,989
(DECREASE) )
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
Distributions to (846,595 (1,115,809
shareholders ) )
From net
investment
income
In excess of (176,411 -
net )
investment
income
TOTAL (1,023,006 (1,115,809
DISTRIBUTION ) )
S
Share 435,994,024 820,033,799
transactions
Net proceeds
from sales of
shares
Reinvestmen 1,004,423 1,089,810
t of
distributions
Cost of (552,635,513 (837,693,561
shares ) )
redeemed
Paid in 1,992,596 3,091,710
capital
portion of
redemption
fees
NET INCREASE (113,644,470 (13,478,242
(DECREASE) ) )
IN NET
ASSETS
RESULTING
FROM SHARE
TRANSACTIO
NS
TOTAL (141,609,540 102,991,938
INCREASE )
(DECREASE)
IN NET ASSETS
NET ASSETS
Beginning of 467,195,885 364,203,947
period
End of period $ 325,586,345 $ 467,195,885
(including
under
(over)
distribution
of net
investment
income of
$(44,636)
and
$846,595,
respectivel
y)
OTHER
INFORMATION
Shares
Sold 22,221,455 44,966,074
Issued in 48,973 63,583
reinvestment
of
distributions
Redeemed (27,946,037 (46,598,892
) )
Net increase (5,675,609) (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>
YEAR ENDED YEAR ENDED YEARS ENDED FEBRUARY 28, TEN MONTHS
FEBRUARY 28, FEBRUARY 29, ENDED
FEBRUARY 28,
SELECTED 1997 1996 1995 1994 1993
PER-SHARE
DATA D
</TABLE>
Net asset $ 20.96 $ 15.27 $ 16.62 $ 9.86 $ 9.90
value,
beginning of
period
Income from
Investment
Operations
Net (.01) .07 .17 .21 .09
investment
income (loss)
Net realized (1.42) 5.54 (1.42) 6.48 (.05)
and
unrealized
gain (loss)
Total from (1.43) 5.61 (1.25) 6.69 .04
investment
operations
Less
Distributions
From net (.04) (.06) (.18) (.19) (.17)
investment
income
In excess of (.01) - (.05) (.02) -
net
investment
income
Total (.05) (.06) (.23) (.21) (.17)
distributions
Redemption .12 .14 .13 .28 .09
fees added to
paid in
capital
Net asset $ 19.60 $ 20.96 $ 15.27 $ 16.62 $ 9.86
value, end of
period
TOTAL (6.26)% 37.74% (6.86)% 70.58% 1.51%
RETURN B, C
RATIOS AND
SUPPLEMENT
AL DATA
Net assets, $ 325,586 $ 467,196 $ 364,204 $ 409,212 $ 137,922
end of period
(000 omitted)
Ratio of 1.62% 1.52% 1.46% 1.55% 1.73%
expenses to A
average net
assets
Ratio of 1.61% 1.52% 1.46% 1.55% 1.73%
expenses to E A
average net
assets after
expense
reductions
Ratio of net (.05)% .39% .99% 1.38% 1.12%
investment A
income (loss)
to average
net assets
Portfolio 54% 53% 43% 73% 36%
turnover rate A
Average $ .0141
commission
rate F
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
A ANNUALIZED B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 8 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 8 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. You can
look at the total percentage change in value, the average annual percentage
change, or the growth of a hypothetical $10,000 investment. Total return
reflects the change in the value of an investment, assuming reinvestment of
the fund's dividend income and capital gains (the profits earned upon the
sale of 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 fund expenses, the past 10 year total returns would have
been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 28, 1997 YEAR YEARS YEARS
COMPUTERS 23.97% 217.71% 318.23%
COMPUTERS 20.25% 208.18% 305.68%
(INCL. 3% SALES CHARGE)
S&P 500 26.16% 118.75% 276.74%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one, five, or 10 years. You can compare
the fund's returns 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, and excludes the effect of sales
charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 28, 1997 YEAR YEARS YEARS
COMPUTERS 23.97% 26.01% 15.38%
COMPUTERS 20.25% 25.25% 15.03%
(INCL. 3% SALES CHARGE)
S&P 500 26.16% 16.94% 14.16%
AVERAGE ANNUAL RETURNS take the fund's 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
1987/02/28 9700.00 10000.00
1987/03/31 9766.27 10289.00
1987/04/30 10001.24 10197.43
1987/05/31 9959.07 10286.15
1987/06/30 9754.22 10805.60
1987/07/31 9916.89 11353.44
1987/08/31 10597.70 11776.92
1987/09/30 10688.07 11519.01
1987/10/31 6916.52 9037.81
1987/11/30 5982.67 8293.10
1987/12/31 6889.21 8924.20
1988/01/31 6528.91 9299.91
1988/02/29 7119.05 9733.29
1988/03/31 7007.24 9432.53
1988/04/30 7367.54 9537.23
1988/05/31 7150.11 9620.20
1988/06/30 7827.23 10061.77
1988/07/31 7237.08 10023.54
1988/08/31 6547.54 9682.74
1988/09/30 6721.48 10095.22
1988/10/31 6181.03 10375.87
1988/11/30 6143.76 10227.49
1988/12/31 6541.33 10406.47
1989/01/31 6926.48 11168.23
1989/02/28 6802.24 10890.14
1989/03/31 6479.21 11143.88
1989/04/30 7206.02 11722.25
1989/05/31 7845.87 12197.00
1989/06/30 6914.05 12127.48
1989/07/31 7038.30 13222.59
1989/08/31 7143.90 13481.75
1989/09/30 7311.63 13426.47
1989/10/31 7069.36 13114.98
1989/11/30 6914.05 13382.52
1989/12/31 6988.60 13703.71
1990/01/31 6926.48 12784.19
1990/02/28 7553.90 12949.10
1990/03/31 8094.35 13292.25
1990/04/30 7876.93 12959.95
1990/05/31 8901.92 14223.54
1990/06/30 9063.44 14126.82
1990/07/31 8417.38 14081.62
1990/08/31 7081.78 12808.64
1990/09/30 6615.87 12184.86
1990/10/31 6864.36 12132.46
1990/11/30 7994.96 12916.22
1990/12/31 8274.97 13276.58
1991/01/31 9685.48 13855.44
1991/02/28 10312.37 14846.11
1991/03/31 11127.33 15205.38
1991/04/30 10406.41 15241.87
1991/05/31 10932.99 15900.32
1991/06/30 9444.29 15172.09
1991/07/31 10393.24 15879.11
1991/08/31 11038.78 16255.44
1991/09/30 10457.79 15983.98
1991/10/31 10251.22 16198.16
1991/11/30 9547.57 15545.38
1991/12/31 10819.29 17323.77
1992/01/31 11948.99 17001.55
1992/02/29 12768.83 17222.57
1992/03/31 11761.79 16886.73
1992/04/30 11380.92 17383.20
1992/05/31 11522.93 17468.37
1992/06/30 10412.60 17208.09
1992/07/31 10922.58 17911.90
1992/08/31 10296.40 17544.71
1992/09/30 10806.38 17751.74
1992/10/31 11658.50 17813.87
1992/11/30 12381.51 18421.32
1992/12/31 13194.89 18647.90
1993/01/31 13963.09 18804.55
1993/02/28 13007.68 19060.29
1993/03/31 13265.90 19462.46
1993/04/30 12889.13 18991.47
1993/05/31 14399.27 19500.44
1993/06/30 13823.03 19556.99
1993/07/31 14399.27 19478.76
1993/08/31 15253.69 20217.01
1993/09/30 15684.21 20061.34
1993/10/31 15684.21 20476.61
1993/11/30 16353.17 20282.08
1993/12/31 17003.98 20527.49
1994/01/31 18100.33 21225.43
1994/02/28 18868.48 20650.22
1994/03/31 18672.95 19749.87
1994/04/30 18554.24 20002.67
1994/05/31 18540.27 20330.71
1994/06/30 17017.95 19832.61
1994/07/31 17555.65 20483.12
1994/08/31 19657.58 21322.93
1994/09/30 19517.91 20800.52
1994/10/31 20251.15 21268.53
1994/11/30 20369.86 20493.93
1994/12/31 20481.59 20797.85
1995/01/31 19853.11 21337.14
1995/02/28 21417.33 22168.65
1995/03/31 23065.36 22822.85
1995/04/30 24897.97 23494.98
1995/05/31 26128.72 24434.07
1995/06/30 28986.33 25001.68
1995/07/31 32629.07 25830.73
1995/08/31 33357.62 25895.57
1995/09/30 35267.41 26988.36
1995/10/31 33987.14 26892.01
1995/11/30 33166.64 28072.57
1995/12/31 31097.27 28613.25
1996/01/31 30897.88 29587.24
1996/02/29 32724.32 29861.52
1996/03/31 29956.75 30149.08
1996/04/30 33249.52 30593.48
1996/05/31 34398.56 31382.49
1996/06/30 31898.17 31502.05
1996/07/31 29761.92 30110.29
1996/08/31 31048.53 30745.32
1996/09/30 34859.80 32475.67
1996/10/31 36696.66 33371.34
1996/11/30 41689.34 35893.88
1996/12/31 40929.72 35182.83
1997/01/31 46176.26 37381.05
1997/02/28 40568.18 37674.12
Let's say hypothetically that $10,000 was invested in Fidelity Select
Computers Portfolio on February 28, 1987, and the current maximum 3% sales
charge was paid. As the chart shows, by February 28, 1997, the value of the
investment would have grown to $40,568 - a 305.68% increase on the initial
investment. For comparison, look at how the S&P 500 did over the same
period. With dividends and capital gains, if any, reinvested, the same
$10,000 investment would have grown to $37,674 - a 276.74% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1997
% OF FUND'S
INVESTMENTS
Seagate Technology 11.3
Intel Corp. 6.7
Applied Magnetics Corp. 4.7
Ascend Communications, Inc. 4.1
Quantum Corp. 3.9
Read-Rite Corp. 3.4
Silicon Graphics, Inc. 3.4
Western Digital Corp. 3.4
Atmel Corp. 2.8
International Business Machines Corp. 2.6
TOP INDUSTRIES AS OF FEBRUARY 28, 1997
Row: 1, Col: 1, Value: 33.4
Row: 1, Col: 2, Value: 3.7
Row: 1, Col: 3, Value: 8.800000000000001
Row: 1, Col: 4, Value: 12.2
Row: 1, Col: 5, Value: 19.7
Row: 1, Col: 6, Value: 22.2
Semiconductors 22.2%
Computer Storage Devices 19.7%
Computer Peripherals 12.2%
Telephone Equipment 8.8%
Computers & Office
Equipment 3.7%
All Others 33.4% *
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
COMPUTERS PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
NOTE TO SHAREHOLDERS: Michael Tempero became Portfolio Manager of Fidelity
Select Computers Portfolio on January 17, 1997.
Q. HOW DID THE FUND PERFORM, MIKE?
A. The fund performed pretty well over the course of the year, posting
strong growth during the second half after a trying first six months. For
the 12 months that ended February 28, 1997, the fund was up 23.97%,
slightly below the 26.16% rise in the Standard & Poor's 500 Index over the
same time frame.
Q. WHAT FACTORS CONTRIBUTED TO THE FUND'S PERFORMANCE OVER THE PAST YEAR?
A. There were different circumstances affecting the industry during each
half of the period. Over the first six months, we saw some disappointing
earnings reports from a couple of key computer companies, as well as a
downturn in the sector during the late spring. During that downturn, the
technology sector, which had high valuations and is generally one of the
most volatile sectors of the market, was hurt quite badly. Another
important factor was that PC manufacturers had high inventory levels of
component parts. This affected the business of the component suppliers,
particularly the manufacturers of PC disk drives. During the second half of
the period, the overly high inventory levels were reduced, and demand
picked up again for the component suppliers, led by the disk drive
companies. In short, the story of the fund's performance over the past six
months has been the story of the outstanding performance of the disk drive
manufacturers and their suppliers - including Seagate, Applied Magnetics,
Quantum and Read-Rite. Shareholders should note that computers remain a
most volatile industry; while the fund appreciated more than 30% during the
second half of the period, it was down over 14% in February due to a
downturn in the broader technology sector. Volatility comes with this
territory, and sometimes there are no safe havens.
Q. WHILE SEVEN OF THE FUND'S TOP 10 HOLDINGS AT THE END OF THE PERIOD WERE
DIFFERENT THAN SIX MONTHS AGO, SEAGATE REMAINS ONE OF THE LARGEST
INVESTMENTS. WHAT'S THE STORY THERE?
A. Seagate represented more than 11% of the fund's investments on February
28, more than twice its position six months ago and a stake that helped the
fund's performance quite a bit; its stock price almost doubled over the
period. There's been a shortage of supply in the disk drive market lately
and Seagate, one of the industry leaders, has been able to command premium
prices for its products. Of the two other holdovers, Intel, the industry's
leading semiconductor manufacturer, was up over 70% during the past six
months and more than doubled during the past year; Ascend Communications, a
networking company, performed well, but has retreated recently following
some key mergers and earnings disappointments in its market.
Q. LET'S LOOK AT SOME OF THE NEW TOP 10 HOLDINGS. TWO OF THEM, APPLIED
MAGNETICS AND READ-RITE, ARE IN POTENTIAL MERGER DISCUSSIONS. WHAT EFFECT
HAS THIS HAD ON THEIR STOCKS?
A. These two companies make the heads for the disk drives I mentioned
earlier, and the stocks of both more than doubled over the past six months.
Applied Magnetics' stock has retreated significantly during the past month
over what I believe are investor concerns about the dilution of its stock
should the merger take place; Read-Rite's stock has held on to its gains.
Another new large holding is EMC, a leader in storage devices for larger
systems. Its stock almost doubled over the past six months as it continued
both to take market share from its competitors and to introduce new
products.
Q. WHAT WERE THE DISAPPOINTMENTS OVER THE PERIOD?
A. The fund lost a lot of ground in February as the market began to feel
that the shortage in disk drives, as well as the premium prices disk drive
manufacturers have been commanding, was coming to an end. I believe the
market is incorrect in its assessment, but the fund did see some of its top
holdings drop in price during the last month of the period.
Q. WHAT'S YOUR OUTLOOK FOR THE FUTURE?
A. That's a tough question. I think PC demand will continue to be strong.
There could be pressures on this market in 1997, including the fear that
corporate capital spending - which represents about 70% of the PC market -
might slow. On the other hand, there's the feeling that corporations need
to upgrade their systems. While things might not be as good as they were in
the second half of 1996, I don't think they'll be poor.
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 February 28, 1997, more than
$604 million
MANAGER: Michael Tempero, since January
1997; manager, Fidelity Select Insurance
Portfolio, 1995-February 1997; Fidelity Select
Natural Gas Portfolio, 1994-1995; analyst, oil
and gas exploration and production,
conglomerates and household products; joined
Fidelity in 1993
(checkmark)
COMPUTERS PORTFOLIO
INVESTMENTS FEBRUARY 28, 1997
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 90.2%
SHARES VALUE (NOTE 1)
COMMUNICATIONS EQUIPMENT - 10.5%
DATACOMMUNICATIONS EQUIPMENT - 1.7%
Cisco Systems, Inc. (a) 102,900 $ 5,723,809
Dynatech Corp. (a) 900 25,200
3Com Corp. (a) 145,500 4,817,414
10,566,423
TELEPHONE EQUIPMENT - 8.8%
Ascend Communications, Inc. (a) 493,100 25,764,475
Lucent Technologies, Inc. 57,500 3,097,813
Nokia Corp. AB sponsored ADR 200,000 11,700,000
Northern Telecom Ltd. 200,000 14,377,079
54,939,367
TOTAL COMMUNICATIONS EQUIPMENT 65,505,790
COMPUTER SERVICES & SOFTWARE - 7.7%
COMPUTER & SOFTWARE STORES - 0.1%
Intelligent Electronics, Inc. (a) 100,000 350,000
COMPUTER SERVICES - 2.0%
BDM International, Inc. (a) 27,800 1,167,600
Clarify, Inc. (a) 36,500 935,313
CompuCom Systems, Inc. (a) 887,800 6,658,500
Computer Learning Centers, Inc. (a) 128,000 3,936,000
12,697,413
CUSTOM COMPUTER PROGRAMMING SERVICES - 0.3%
Analysts International Corp. 33,400 901,800
CACI International, Inc. Class A (a) 50,000 843,750
1,745,550
DATA PROCESSING - 2.7%
First Data Corp. 60,000 2,197,500
NCR Corp. (a) 450,000 14,850,000
17,047,500
ELECTRONIC INFORMATION RETRIEVE - 0.0%
Ontrack Data International, Inc. (a) 4,000 73,500
PREPACKAGED COMPUTER SOFTWARE - 2.6%
Electronic Arts, Inc. (a) 110,200 3,443,750
Electronics for Imaging, Inc. (a) 289,200 11,134,200
Fuji Soft, Inc. 900 24,180
Remedy Corp. (a) 2,800 107,450
Scopus Technology, Inc. (a) 19,800 433,125
Vantive Corp. (a) 35,000 778,750
15,921,455
TOTAL COMPUTER SERVICES & SOFTWARE 47,835,418
COMPUTERS & OFFICE EQUIPMENT - 44.1%
COMPUTER EQUIPMENT - 0.7%
GVC Corp. GDR (a)(c) 113,071 1,158,978
Stratus Computer, Inc. (a) 87,600 2,967,450
4,126,428
COMPUTER EQUIPMENT - WHOLESALE - 0.6%
Pomeroy Computer Resources, Inc. (a) 161,800 4,004,550
COMPUTER PERIPHERALS - 12.2%
Applied Magnetics Corp. (a) 757,600 29,451,700
Creative Technology Corp. Ltd. 452,600 5,579,709
EMC Corp. (a) 439,500 15,822,000
Procom Technology, Inc. (d) 162,200 2,493,825
Sigma Designs, Inc. (a) 305,100 1,525,500
Stormedia, Inc. Class A (a) 15,600 222,300
Western Digital Corp. (a) 354,200 20,897,800
75,992,834
SHARES VALUE (NOTE 1)
COMPUTER RENTAL & LEASING - 1.1%
Comdisco, Inc. 213,800 $ 6,654,525
COMPUTER STORAGE DEVICES - 19.7%
Adaptec, Inc. (a) 148,700 5,659,894
Apex PC Solutions, Inc. 100,000 925,000
Quantum Corp. (a) 619,400 24,621,150
Read-Rite Corp. (a) 700,000 21,481,250
Seagate Technology (a) 1,487,200 70,270,200
122,957,494
COMPUTERS & OFFICE EQUIPMENT - 3.7%
Canon, Inc. 46,000 964,192
Data General Corp. (a) 250,000 4,843,750
Diebold, Inc. 18,150 762,300
International Business Machines Corp. 114,300 16,430,625
23,000,867
ELECTRONIC COMPUTERS - 0.8%
Micron Electronics, Inc. (a) 250,000 4,843,750
GRAPHICS WORKSTATIONS - 3.5%
Silicon Graphics, Inc. (a) 868,900 20,962,213
Sun Microsystems, Inc. (a) 33,400 1,031,225
21,993,438
MAINFRAME COMPUTERS - 0.6%
Amdahl Corp. (a) 392,300 3,873,963
MINI & MICRO COMPUTERS - 1.2%
Compaq Computer Corp. (a) 73,200 5,801,100
Sequent Computer Systems, Inc. (a) 100,000 1,718,750
7,519,850
TOTAL COMPUTERS & OFFICE EQUIPMENT 274,967,699
ELECTRICAL EQUIPMENT - 1.2%
American Power Conversion Corp. (a) 350,000 7,306,250
ELECTRONICS - 23.4%
ELECTRONIC PARTS - WHOLESALE - 0.1%
PC Service Source, Inc. (a) 49,000 373,625
ELECTRONICS & ELECTRONIC COMPONENTS - 1.1%
Photronics, Inc. (a) 83,200 2,870,400
TDK Corp. 60,000 4,032,439
6,902,839
SEMICONDUCTORS - 22.2%
Advanced Micro Devices, Inc. (a) 100,000 3,587,500
Altera Corp. (a) 150,000 6,806,250
Analog Devices, Inc. (a) 185,000 4,301,250
Atmel Corp. (a) 462,200 17,274,725
Chips & Technologies, Inc. (a) 39,400 502,350
Etec Systems, Inc. (a) 195,000 7,068,750
Integrated Device Technology, Inc. (a) 494,800 5,442,800
Intel Corp. 292,400 41,484,250
Linear Technology Corp. 264,500 12,034,750
Maxim Integrated Products, Inc. (a) 195,900 9,721,538
Motorola, Inc. 71,000 3,967,125
National Semiconductor Corp. (a) 331,300 8,655,213
SGS Thomson Microelectronics NV (a) 120,000 7,920,000
Storage Technology Corp. (a) 100 4,175
Unitrode Corp. (a) 44,700 1,631,550
VLSI Technology, Inc. (a) 50,000 934,375
Vitesse Semiconductor Corp. (a) 50,000 2,096,875
Zilog, Inc. (a) 216,400 5,112,450
138,545,926
TOTAL ELECTRONICS 145,822,390
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
MEDICAL EQUIPMENT & SUPPLIES - 0.7%
OPHTHALMIC GOODS - 0.7%
Hoya Corp. 102,000 $ 4,360,824
PHOTOGRAPHIC EQUIPMENT - 0.1%
Minolta Camera Co. Ltd. 154,000 954,294
PRINTING - 1.4%
COMMERCIAL PRINTING, LITHOGRAPHIC - 1.4%
ASM Lithography Holding NV (a) 137,000 9,110,500
RETAIL & WHOLESALE, MISCELLANEOUS - 0.3%
MAIL ORDER - 0.3%
Global Directmail Corp. (a) 50,000 1,675,000
TELEPHONE SERVICES - 0.8%
WorldCom, Inc. (a) 200,000 5,325,000
TOTAL COMMON STOCKS
(Cost $488,532,134) 562,863,165
CASH EQUIVALENTS - 9.8%
Taxable Central Cash Fund (b)
(Cost $60,931,333) 60,931,333 60,931,333
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $549,463,467) $ 623,794,498
LEGEND
1. Non-income producing
2. At period end, the seven-day yield on the Taxable Central Cash Fund was
5.31%. The yield refers to the income earned by investing in the fund over
the seven-day period, expressed as an annual percentage.
3. Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of these securities amounted to $1,158,978 or 0.2% of net
assets.
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
C.P. Clare Corp. $ - $ - $ - $ -
Insignia Solutions PLC sponsored ADR - - - -
Procom Technology, Inc. 60,888 - - 2,493,825
Totals $ 60,888 $ - $ - $ 2,493,825
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $1,295,474,250 and $1,297,209,430, respectively (see Note 3 of
Notes to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $198,215 for the period
(see Note 4 of Notes to Financial Statements).
At the period end, the value of securities loaned and the value of
collateral amounted to $27,960,672 and $28,453,500, respectively (see Note
6 of Notes to Financial Statements).
The fund participated in the bank borrowing program. The maximum loan and
average daily balance during the period for which the loan was outstanding
amounted to $4,844,000. The weighted average interest rate was 5.60% (see
Note 7 of Notes to Financial Statements).
INCOME TAX INFORMATION
At February 28, 1997, the aggregate cost of investment securities for
income tax purposes was $550,640,034. Net unrealized appreciation
aggregated $73,154,464, of which $106,399,791 related to appreciated
investment securities and $33,245,327 related to depreciated investment
securities.
The fund hereby designates approximately $29,796,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 6% of the dividends distributed during the fiscal year qualifies
for the dividends-received deduction for corporate shareholders
(unaudited).
The fund will notify shareholders in January 1998 of the applicable
percentage for use in preparing 1997 income tax returns.
COMPUTERS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1997
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS
Investment in securities, at value $ 623,794,498
(cost $549,463,467) - See accompanying schedule
Receivable for investments sold 16,057,076
Receivable for fund shares sold 5,065,740
Dividends receivable 76,668
Interest receivable 351,072
Redemption fees receivable 6,265
Other receivables 52,187
TOTAL ASSETS 645,403,506
LIABILITIES
Payable for investments purchased $ 196,071
Payable for fund shares redeemed 11,642,455
Accrued management fee 354,151
Other payables and accrued expenses 470,850
Collateral on securities loaned, 28,453,500
at value
TOTAL LIABILITIES 41,117,027
NET ASSETS $ 604,286,479
Net Assets consist of:
Paid in capital $ 456,253,076
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 73,702,512
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies 74,330,891
NET ASSETS, for 12,523,508 shares outstanding $ 604,286,479
NET ASSET VALUE and redemption price per share ($604,286,479 (divided by) 12,523,508 shares) $48.25
Maximum offering price per share (100/97.00 of $48.25) $49.74
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1997
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME $ 731,493
Dividends
Interest (including income on 2,618,872
securities loaned of $136,306)
TOTAL INCOME 3,350,365
EXPENSES
Management fee $ 3,309,228
Transfer agent fees 4,038,434
Accounting and security lending fees 526,894
Non-interested trustees' compensation 3,231
Custodian fees and expenses 32,244
Registration fees 51,988
Audit 57,762
Legal 24,291
Interest 2,261
Miscellaneous 19,458
Total expenses before reductions 8,065,791
Expense reductions (198,933 7,866,858
)
NET INVESTMENT INCOME (LOSS) (4,516,493
)
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 104,429,723
Foreign currency transactions (888 104,428,835
)
Change in net unrealized appreciation (depreciation) on:
Investment securities 8,120,089
Assets and liabilities in (116 8,119,973
foreign currencies )
NET GAIN (LOSS) 112,548,808
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 108,032,315
OTHER INFORMATION $ 2,540,952
Sales charges paid to FDC
Deferred sales charges withheld $ 5,155
by FDC
Exchange fees withheld by FSC $ 196,275
Expense Reductions $ 192,125
Directed brokerage arrangements
Custodian interest credits 3,562
Transfer agent interest credits 3,246
$ 198,933
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE YEAR ENDED YEAR ENDED
(DECREASE) IN FEBRUARY 28, FEBRUARY 29,
NET ASSETS 1997 1996
Operations $ (4,516,493 $ (2,669,832
Net ) )
investment
income (loss)
Net realized 104,428,835 102,860,639
gain (loss)
Change in 8,119,973 47,678,623
net
unrealized
appreciation
(depreciation
)
NET INCREASE 108,032,315 147,869,430
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
Distributions to (31,596,668 (63,147,066
shareholders ) )
from net
realized
gains
Share 659,275,361 837,037,606
transactions
Net proceeds
from sales of
shares
Reinvestmen 31,233,988 62,103,715
t of
distributions
Cost of (691,302,094 (672,703,503
shares ) )
redeemed
Paid in 1,306,734 1,162,861
capital
portion of
redemption
fees
NET INCREASE 513,989 227,600,679
(DECREASE)
IN NET
ASSETS
RESULTING
FROM SHARE
TRANSACTIO
NS
TOTAL 76,949,636 312,323,043
INCREASE
(DECREASE)
IN NET ASSETS
NET ASSETS
Beginning of 527,336,843 215,013,800
period
End of period $ 604,286,479 $ 527,336,843
OTHER
INFORMATION
Shares
Sold 14,415,549 20,220,825
Issued in 674,688 1,547,662
reinvestment
of
distributions
Redeemed (15,418,220 (15,928,239
) )
Net increase (327,983) 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>
YEAR ENDED YEAR ENDED YEARS ENDED FEBRUARY 28, TEN MONTHS
FEBRUARY 28, FEBRUARY 29, ENDED
FEBRUARY 28,
SELECTED 1997 1996 1995 1994 1993
PER-SHARE
DATA D
</TABLE>
Net asset $ 41.03 $ 30.67 $ 27.02 $ 20.15 $ 17.63
value,
beginning of
period
Income from
Investment
Operations
Net (.36) (.23) (.31) (.21) F (.15)
investment
income (loss)
Net realized 9.94 16.10 3.68 8.66 2.44
and
unrealized
gain (loss)
Total from 9.58 15.87 3.37 8.45 2.29
investment
operations
Less (2.47) (5.61) - (1.80) -
distributions
from net
realized gain
Redemption .11 .10 .28 .22 .23
fees added to
paid in
capital
Net asset $ 48.25 $ 41.03 $ 30.67 $ 27.02 $ 20.15
value, end of
period
TOTAL 23.97% 52.79% 13.51% 45.06% 14.29%
RETURN B, C
RATIOS AND
SUPPLEMENT
AL DATA
Net assets, $ 604,286 $ 527,337 $ 215,014 $ 120,435 $ 47,596
end of period
(000 omitted)
Ratio of 1.48% 1.40% 1.71% 1.90% 1.81% A
expenses to
average net
assets
Ratio of 1.44% E 1.38% E 1.69% E 1.89% E 1.81% A
expenses to
average net
assets after
expense
reductions
Ratio of net (.83)% (.56)% (1.12)% (.91)% (.98)%
investment A
income (loss)
to average
net assets
Portfolio 255% 129% 189% 145% 254% A
turnover rate
Average $ .0432
commission
rate G
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
A ANNUALIZED B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 8 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 8 OF NOTES TO
FINANCIAL STATEMENTS). F INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND
WHICH AMOUNTED TO $.07 PER SHARE. 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>
DEVELOPING COMMUNICATIONS PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance. You can
look at the total percentage change in value, the average annual percentage
change, or the growth of a hypothetical $10,000 investment. Total return
reflects the change in the value of an investment, assuming reinvestment of
the fund's dividend income and capital gains (the profits earned upon the
sale of 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 fund expenses, the life of fund total returns would have
been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
FEBRUARY 28, 1997 YEAR YEARS FUND
DEVELOPING COMMUNICATIONS 1.34% 108.58% 222.52%
DEVELOPING COMMUNICATIONS -1.70% 102.32% 212.84%
(INCL. 3% SALES CHARGE)
S&P 500 26.16% 118.75% 167.01%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one year, five years, or since the fund
started on June 29, 1990. You can compare the fund's returns 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, and excludes the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
FEBRUARY 28, 1997 YEAR YEARS FUND
DEVELOPING COMMUNICATIONS 1.34% 15.84% 19.17%
DEVELOPING COMMUNICATIONS -1.70% 15.14% 18.63%
(INCL. 3% SALES CHARGE)
S&P 500 26.16% 16.94% 15.85%
AVERAGE ANNUAL RETURNS take the fund's 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
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
1996/08/31 31570.61 21790.58
1996/09/30 34416.10 23016.95
1996/10/31 32969.51 23651.76
1996/11/30 34527.37 25439.60
1996/12/31 33796.13 24935.64
1997/01/31 35226.82 26493.62
1997/02/28 31252.68 26701.33
Let's say hypothetically that $10,000 was invested in Fidelity Select
Developing Communications Portfolio on June 29, 1990, when the fund
started, and the current maximum 3% sales charge was paid. As the chart
shows, by February 28, 1997, the value of the investment would have grown
to $31,284 - a 212.84% increase on the initial investment. For comparison,
look at how the S&P 500 did over the same period. With dividends and
capital gains, if any, reinvested, the same $10,000 investment would have
grown to $26,701 - a 167.01% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1997
% OF FUND'S
INVESTMENTS
Oracle Systems Corp. 5.6
Nokia Corp. AB sponsored ADR 5.3
WorldCom, Inc. 4.0
Brightpoint, Inc. 3.6
Alcatel Alsthom Compagnie Generale d'Electricite SA 3.4
Ascend Communications, Inc. 3.3
ASM Lithography Holding NV 3.2
Lucent Technologies, Inc. 3.1
AccuStaff, Inc. 2.9
Unitrode Corp. 2.6
TOP INDUSTRIES AS OF FEBRUARY 28, 1997
Row: 1, Col: 1, Value: 51.0
Row: 1, Col: 2, Value: 4.3
Row: 1, Col: 3, Value: 5.4
Row: 1, Col: 4, Value: 9.6
Row: 1, Col: 5, Value: 10.5
Row: 1, Col: 6, Value: 19.2
Telephone Equipment 19.2%
Semiconductors 10.5%
Prepackaged Computer
Software 9.6%
Telephone Services 5.4%
Electrical Machinery 4.3%
All Others 51.0%*
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
DEVELOPING COMMUNICATIONS PORTFOLIO
FUND TALK: THE MANAGERS' OVERVIEW
NOTE TO SHAREHOLDERS: Effective February 14, 1997, Nicholas Romano (right)
became Portfolio Manager of Fidelity Select Developing Communications
Portfolio. The following is an interview with Minerva Butler, who managed
the fund during most of the period covered by the report, and Nicholas
Romano, who discusses his outlook.
Q. HOW DID THE FUND PERFORM, MINERVA?
M.B. It was a disappointing period. For the 12 months that ended February
28, 1997, the fund returned 1.34%. The Standard & Poor's 500 Index had a
return of 26.16% over the same time period.
Q. WHAT HELD DEVELOPING COMMUNICATIONS STOCKS BACK?
M.B. I break the developing communications universe into two areas: service
providers and infrastructure companies. Service provider stocks continued
to underperform in all key categories during the period. Exposure to
cellular-related stocks hurt the fund as cellular stocks continued to
suffer from widespread fear of personal communications services (PCS)
competition and its impact on growth prospects, prices and profitability.
However, there's still room for growth. The U.S. has an approximate
penetration rate of 14%, meaning only 14% of people own cellular phones.
Other regions of the world - Scandinavia, for instance - have higher
penetration rates. The fund's limited investments in paging, PCS, cable TV
service and satellite companies all helped performance. The bankruptcy of
one of the largest paging companies, Mobilemedia, had a negative impact on
the paging group. There was also concern that PCS, which will provide for
increased communication flow, will displace paging. While I don't think
that's the case, I remained cautious on paging stocks. While I was bullish
on wireless stocks, I stayed away from many of the PCS providers. These
companies should be large consumers of capital as infrastructures need to
be built and their business plans are not yet clear. While cable valuations
were at attractive levels relative to their history, I believe tough times
are ahead for these stocks. Cable operators will be faced with increased
competition from direct broadcast satellite systems and will need to spend
large amounts of capital to upgrade their infrastructures.
Q. WERE THERE ANY THEMES DURING THE PERIOD?
M.B. The broad, recurring theme from my analysis of the service providers
was the level of spending required by all the players. Cellular service
providers continue to expand network capacity, and PCS is in the early
stages of having its network built. Capital expenditure budgets remained at
very high levels for most cable companies, as they continue to enhance
their networks to provide more channels, cable modems and telephony.
Q. WHICH STOCKS CONTRIBUTED POSITIVELY TO THE FUND'S RETURN? WHICH WERE
DISAPPOINTMENTS?
M.B. Stocks such as Newbridge Networks, Lucent Technologies, Allen Group
and Alcatel, which stand to benefit from increased infrastructure demand,
helped performance. Brightpoint, which acts as a sort of "middle man" for
cellular phone order fulfillment, also contributed. On the other hand,
cable equipment stocks Oak Industries and Antec, both of which the fund no
longer owns, and Scientific-Atlanta hurt performance.
Q. TURNING TO YOU, NICK, WHAT EFFECT DO YOU SEE DEREGULATION HAVING ON THE
INDUSTRY?
N.R. I think it's important to realize that telecommunications deregulation
isn't just happening in the U.S.; it's also taking place in Europe. Asia
and Latin America are experiencing rapid network buildup as well. As such,
a number of European countries will have basic infrastructure needs. I
believe the service providers will continue to experience significant
competition, which should benefit the equipment suppliers.
Q. WHAT'S YOUR OUTLOOK FOR THE FORESEEABLE FUTURE?
N.R. While consolidation among service providers and legislative delays in
the U.S. could have a negative effect on carrier spending patterns, I'm
pretty optimistic on the industry as a whole. Wireless communications are
clearly growing, and I'll consider the different ways in which to play that
trend. I may also look at component suppliers, such as semiconductor
stocks, and networking stocks that deal more with data transfer. Valuations
may remain at their high levels, but I'm bullish on the long-term outlook.
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 February 28, 1997, more than
$220 million
MANAGER: Nicholas Romano, since February
1997; equity analyst, telecommunications
equipment industry and conglomerates, since
1995; joined Fidelity in 1995
(checkmark)
DEVELOPING COMMUNICATIONS PORTFOLIO
INVESTMENTS FEBRUARY 28, 1997
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 94.6%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 1.7%
MISSILES & SPACE VEHICLES - 1.7%
Orbital Sciences Corp. (a) 211,200 $ 3,643,198
APPLIANCE STORES - 2.5%
ELECTRIC APPLIANCES - WHOLESALE - 2.5%
Cellstar Corp. (a) 200,000 5,175,000
BROADCASTING - 0.9%
COMMUNICATIONS SERVICES - 0.9%
APT Satellite Holdings Ltd.
sponsored ADR 105,500 1,477,000
Metro One Telecommunications, Inc. 60,500 491,563
1,968,563
CELLULAR - 3.3%
CELLULAR & COMMUNICATION SERVICES - 3.3%
AirTouch Communications, Inc. (a) 79,525 2,167,056
Arch Communications Group, Inc. (a) 76,887 562,236
Boston Communications Group, Inc. 99,000 445,500
Lightbridge, Inc. 120,000 1,050,000
Palmer Wireless, Inc. (a) 185,700 2,785,500
7,010,292
COMMUNICATIONS EQUIPMENT - 21.3%
DATACOMMUNICATIONS EQUIPMENT - 2.1%
Dynatech Corp. (a) 155,950 4,366,600
TELEPHONE EQUIPMENT - 19.2%
ADC Telecommunications, Inc. 52,600 1,420,200
Andrew Corp. (a) 40,000 2,200,000
Ascend Communications, Inc. (a) 133,000 6,949,250
Brooktrout Technology, Inc. (a) 100,000 1,862,500
DSP Communications, Inc. (a) 21,600 252,450
Lucent Technologies, Inc. 121,760 6,559,820
Newbridge Networks Corp. (a) 140,000 4,462,500
Nokia Corp. AB sponsored ADR 191,900 11,226,150
Tellabs, Inc. (a) 100,800 4,019,400
Viasat, Inc. 147,500 1,475,000
40,427,270
TOTAL COMMUNICATIONS EQUIPMENT 44,793,870
COMPUTER SERVICES & SOFTWARE - 12.4%
COMPUTER SERVICES - 1.8%
America Online, Inc. 35,000 1,312,500
Clarify, Inc. (a) 92,800 2,378,000
3,690,500
CUSTOM COMPUTER PROGRAMMING SERVICES - 1.0%
Keane, Inc. (a) 62,800 2,213,700
PREPACKAGED COMPUTER SOFTWARE - 9.6%
Black Box Corp. (a) 110,700 3,348,675
Microsoft Corp. (a) 25,000 2,437,500
Oracle Systems Corp. (a) 300,500 11,794,625
Sykes Enterprises, Inc. (a) 25,000 809,375
Vantive Corp. (a) 51,900 1,154,775
Wind River Systems, Inc. (a) 19,600 735,000
20,279,950
TOTAL COMPUTER SERVICES & SOFTWARE 26,184,150
COMPUTERS & OFFICE EQUIPMENT - 5.0%
COMPUTER COMMUNICATIONS EQUIPMENT - 0.6%
Proxim, Inc. (a) 70,000 1,330,000
SHARES VALUE (NOTE 1)
COMPUTER PERIPHERALS - 1.9%
Applied Magnetics Corp. (a) 100,000 $ 3,887,500
COMPUTER STORAGE DEVICES - 2.5%
Adaptec, Inc. (a) 62,200 2,367,488
Quantum Corp. 12,500 496,875
Seagate Technology 50,000 2,362,500
5,226,863
TOTAL COMPUTERS & OFFICE EQUIPMENT 10,444,363
CONSUMER ELECTRONICS - 0.3%
RADIOS, TELEVISIONS, STEREOS - 0.3%
Powerwave Technologies, Inc. 25,500 567,375
DEFENSE ELECTRONICS - 1.0%
Remec, Inc. 75,000 2,043,750
ELECTRICAL EQUIPMENT - 6.1%
ELECTRICAL EQUIPMENT - 0.6%
AML Communications, Inc. (a) 132,500 1,192,500
ELECTRICAL MACHINERY - 4.3%
Alcatel Alsthom Compagnie Generale
d'Electricite SA 70,000 7,171,629
Amphenol Corp. Class A (a) 75,800 1,932,900
9,104,529
TV & RADIO COMMUNICATION EQUIPMENT - 1.2%
Allen Group, Inc. (The) 66,800 1,394,450
Ortel Corp. (a) 12,100 157,300
Scientific-Atlanta, Inc. 65,400 1,095,450
2,647,200
TOTAL ELECTRICAL EQUIPMENT 12,944,229
ELECTRONIC INSTRUMENTS - 4.2%
SEMI-CONDUCTOR CAPITAL EQUIPMENT - 4.2%
Applied Materials, Inc. 50,000 2,531,250
KLA Instruments Corp. 50,000 2,075,000
Novellus System, Inc. (a) 51,000 4,169,250
8,775,500
ELECTRONICS - 15.9%
ELECTRONIC CAPACITORS - 0.3%
Maxwell Technologies, Inc. (a) 24,900 572,700
ELECTRONIC PARTS - WHOLESALE - 3.8%
Brightpoint, Inc. (a) 279,250 7,539,750
Intellicell Corp. 70,000 560,000
8,099,750
ELECTRONICS & ELECTRONIC COMPONENTS - 1.3%
Sanmina Corp. (a) 45,900 2,122,875
Solectron Corp. (a) 12,000 634,500
2,757,375
SEMICONDUCTORS - 10.5%
Atmel Corp. (a) 65,000 2,429,375
Intel Corp. 26,500 3,759,688
MEMC Electronic Materials, Inc. (a) 35,000 857,500
Motorola, Inc. 84,000 4,693,500
Tencor Instruments (a) 103,400 4,142,463
Unitrode Corp. (a) 151,500 5,529,750
Zilog, Inc. 24,800 585,900
21,998,176
TOTAL ELECTRONICS 33,428,001
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
METALS & MINING - 2.3%
NONFERROUS WIRE - 2.3%
Superior Telecom, Inc. (a) 192,600 $ 4,839,075
PRINTING - 3.1%
COMMERCIAL PRINTING, LITHOGRAPHIC - 3.1%
ASM Lithography Holding NV (a) 100,000 6,650,000
SERVICES - 9.2%
BUSINESS SERVICES - 4.1%
Premier Technologies, Inc. (a) 30,100 564,375
Sitel Corp. (a) 286,900 4,769,713
Teletech Holdings, Inc. (a) 133,700 3,267,294
8,601,382
MISCELLANEOUS BUSINESS SERVICES - 2.2%
APAC Teleservices, Inc. (a) 155,000 4,611,250
PERSONNEL SUPPLY SERVICES - 2.9%
AccuStaff, Inc. (a) 293,000 6,079,750
TOTAL SERVICES 19,292,382
TELEPHONE SERVICES - 5.4%
ALLTEL Corp. 80,600 2,851,225
WorldCom, Inc. (a) 319,170 8,497,901
11,349,126
TOTAL COMMON STOCKS
(Cost $188,385,406) 199,108,874
CASH EQUIVALENTS - 5.4%
Taxable Central Cash Fund (b)
(Cost $11,401,870) 11,401,870 $ 11,401,870
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $199,787,276) $ 210,510,744
LEGEND
1. Non-income producing
2. At period end, the seven-day yield on the Taxable Central Cash Fund was
5.31%. The yield refers to the income earned by investing in the fund over
the seven-day period, expressed as an annual percentage.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $553,605,632 and $645,628,505, respectively (see Note 3 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $116,574 for the period
(see Note 4 of Notes to Financial Statements).
INCOME TAX INFORMATION
At February 28, 1997, the aggregate cost of investment securities for
income tax purposes was $200,733,661. Net unrealized appreciation
aggregated $9,777,083, of which $21,991,559 related to appreciated
investment securities and $12,214,476 related to depreciated investment
securities.
At February 28,1997, the fund had a capital loss carryforward of
approximately $1,633,000 which will expire on February 28, 2005.
DEVELOPING COMMUNICATIONS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1997
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS
Investment in securities, at value $ 210,510,744
(cost $199,787,276) - See accompanying schedule
Receivable for investments sold 23,844,527
Receivable for fund shares sold 304,741
Dividends receivable 69,571
Interest receivable 71,798
Redemption fees receivable 1,033
Other receivables 35,088
TOTAL ASSETS 234,837,502
LIABILITIES
Payable for investments purchased $ 11,654,484
Payable for fund shares redeemed 2,471,387
Accrued management fee 124,479
Other payables and accrued expenses 227,430
TOTAL LIABILITIES 14,477,780
NET ASSETS $ 220,359,722
Net Assets consist of:
Paid in capital $ 212,183,100
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions (2,544,171
)
Net unrealized appreciation (depreciation) on investments 10,720,793
and assets and liabilities in
foreign currencies
NET ASSETS, for 11,199,603 shares outstanding $ 220,359,722
NET ASSET VALUE and redemption price per share ($220,359,722 (divided by) 11,199,603 shares) $19.68
Maximum offering price per share (100/97.00 of $19.68) $20.29
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1997
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME $ 739,868
Dividends
Interest 1,597,559
TOTAL INCOME 2,337,427
EXPENSES
Management fee $ 1,856,888
Transfer agent fees 2,791,043
Accounting fees and expenses 308,377
Non-interested trustees' compensation 1,964
Custodian fees and expenses 29,755
Registration fees 9,041
Audit 33,524
Legal 2,168
Miscellaneous 13,636
Total expenses before reductions 5,046,396
Expense reductions (63,570 4,982,826
)
NET INVESTMENT INCOME (LOSS) (2,645,399
)
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 20,142,820
Foreign currency transactions 66 20,142,886
Change in net unrealized appreciation (depreciation) on:
Investment securities (10,185,043
)
Assets and liabilities in (2,683 (10,187,726
foreign currencies ) )
NET GAIN (LOSS) 9,955,160
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 7,309,761
OTHER INFORMATION $ 733,692
Sales charges paid to FDC
Deferred sales charges withheld $ 7,987
by FDC
Exchange fees withheld by FSC $ 117,788
Expense reductions $ 61,494
Directed brokerage arrangements
Custodian interest credits 2,076
$ 63,570
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE YEAR ENDED YEAR ENDED
(DECREASE) IN FEBRUARY 28, FEBRUARY 29,
NET ASSETS 1997 1996
Operations $ (2,645,399 $ (2,597,260
Net ) )
investment
income (loss)
Net realized 20,142,886 52,212,710
gain (loss)
Change in (10,187,726 9,525,013
net )
unrealized
appreciation
(depreciation
)
NET INCREASE 7,309,761 59,140,463
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
Distributions to - (64,709,372
shareholders )
from net
realized
gains
Share 146,934,555 436,869,315
transactions
Net proceeds
from sales of
shares
Reinvestmen - 63,769,821
t of
distributions
Cost of (267,415,417 (416,608,338
shares ) )
redeemed
Paid in 345,334 297,961
capital
portion of
redemption
fees
NET INCREASE (120,135,528 84,328,759
(DECREASE) )
IN NET
ASSETS
RESULTING
FROM SHARE
TRANSACTIO
NS
TOTAL (112,825,767 78,759,850
INCREASE )
(DECREASE)
IN NET ASSETS
NET ASSETS
Beginning of 333,185,489 254,425,639
period
End of period $ 220,359,722 $ 333,185,489
OTHER
INFORMATION
Shares
Sold 7,119,930 19,756,179
Issued in - 3,380,520
reinvestment
of
distributions
Redeemed (13,076,634 (18,449,215
) )
Net increase (5,956,704) 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>
YEAR ENDED YEAR ENDED YEARS ENDED FEBRUARY 28, TEN MONTHS
FEBRUARY 28, FEBRUARY 29, ENDED
FEBRUARY 28,
SELECTED 1997 1996 1995 1994 1993
PER-SHARE
DATA D
</TABLE>
Net asset $ 19.42 $ 20.40 $ 19.65 $ 16.44 $ 13.54
value,
beginning of
period
Income from
Investment
Operations
Net (.18) (.17) (.16) (.16) (.07)
investment
income (loss)
Net realized .42 4.17 2.55 4.82 2.98
and
unrealized
gain (loss)
Total from .24 4.00 2.39 4.66 2.91
investment
operations
Less
Distributions
From net - (5.00) (1.67) (1.47) (.03)
realized gain
Redemption .02 .02 .03 .02 .02
fees added to
paid in
capital
Net asset $ 19.68 $ 19.42 $ 20.40 $ 19.65 $ 16.44
value, end of
period
TOTAL 1.34% 21.84% 13.63% 30.24% 21.66%
RETURN B, C
RATIOS AND
SUPPLEMENT
AL DATA
Net assets, $ 220,360 $ 333,185 $ 254,426 $ 222,109 $ 83,383
end of period
(000 omitted)
Ratio of 1.64% 1.53% 1.58% 1.56% 1.88% A
expenses to
average net
assets
Ratio of 1.62% E 1.51% E 1.56% E 1.56% 1.88% A
expenses to
average net
assets after
expense
reductions
Ratio of net (.86)% (.78)% (.83)% (.88)% (.59)%
investment A
income (loss)
to average
net assets
Portfolio 202% 249% 266% 280% 77% A
turnover rate
Average $ .0346
commission
rate F
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
A ANNUALIZED B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 8 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 8 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>
ELECTRONICS PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance. You can
look at the total percentage change in value, the average annual percentage
change, or the growth of a hypothetical $10,000 investment. Total return
reflects the change in the value of an investment, assuming reinvestment of
the fund's dividend income and capital gains (the profits earned upon the
sale of 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 fund expenses, the past 10 year total returns would have
been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 28, 1997 YEAR YEARS YEARS
ELECTRONICS 34.67% 316.52% 411.79%
ELECTRONICS 30.63% 304.02% 396.44%
(INCL. 3% SALES CHARGE)
S&P 500 26.16% 118.75% 276.74%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one, five, or 10 years. You can compare
the fund's returns 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, and excludes the effect of sales
charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 28, 1997 YEAR YEARS YEARS
ELECTRONICS 34.67% 33.02% 17.74%
ELECTRONICS 30.63% 32.22% 17.38%
(INCL. 3% SALES CHARGE)
S&P 500 26.16% 16.94% 14.16%
AVERAGE ANNUAL RETURNS take the fund's 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
1987/02/28 9700.00 10000.00
1987/03/31 9545.16 10289.00
1987/04/30 9827.51 10197.43
1987/05/31 9627.14 10286.15
1987/06/30 9417.65 10805.60
1987/07/31 9709.11 11353.44
1987/08/31 10410.42 11776.92
1987/09/30 10401.31 11519.01
1987/10/31 6867.42 9037.81
1987/11/30 5792.68 8293.10
1987/12/31 6667.04 8924.20
1988/01/31 6284.51 9299.91
1988/02/29 6949.39 9733.29
1988/03/31 6849.20 9432.53
1988/04/30 7158.87 9537.23
1988/05/31 6912.96 9620.20
1988/06/30 7586.95 10061.77
1988/07/31 7122.44 10023.54
1988/08/31 6412.02 9682.74
1988/09/30 6512.21 10095.22
1988/10/31 6038.59 10375.87
1988/11/30 5738.03 10227.49
1988/12/31 6102.35 10406.47
1989/01/31 6320.94 11168.23
1989/02/28 6229.86 10890.14
1989/03/31 6184.32 11143.88
1989/04/30 6667.04 11722.25
1989/05/31 7304.60 12197.00
1989/06/30 6585.07 12127.48
1989/07/31 6657.93 13222.59
1989/08/31 6885.63 13481.75
1989/09/30 7076.90 13426.47
1989/10/31 6758.12 13114.98
1989/11/30 6776.34 13382.52
1989/12/31 7058.69 13703.71
1990/01/31 7295.49 12784.19
1990/02/28 7878.40 12949.10
1990/03/31 8260.94 13292.25
1990/04/30 8297.37 12959.95
1990/05/31 9517.84 14223.54
1990/06/30 9663.57 14126.82
1990/07/31 9208.17 14081.62
1990/08/31 7769.11 12808.64
1990/09/30 6594.18 12184.86
1990/10/31 6357.37 12132.46
1990/11/30 7013.15 12916.22
1990/12/31 7468.63 13276.58
1991/01/31 8508.22 13855.44
1991/02/28 9256.00 14846.11
1991/03/31 9748.44 15205.38
1991/04/30 9803.15 15241.87
1991/05/31 10122.33 15900.32
1991/06/30 8891.23 15172.09
1991/07/31 9502.22 15879.11
1991/08/31 9894.34 16255.44
1991/09/30 9137.45 15983.98
1991/10/31 9584.29 16198.16
1991/11/30 9000.66 15545.38
1991/12/31 10104.09 17323.77
1992/01/31 11298.70 17001.55
1992/02/29 11918.81 17222.57
1992/03/31 10979.53 16886.73
1992/04/30 10769.79 17383.20
1992/05/31 10788.03 17468.37
1992/06/30 10003.78 17208.09
1992/07/31 10532.69 17911.90
1992/08/31 10642.12 17544.71
1992/09/30 11025.13 17751.74
1992/10/31 11854.98 17813.87
1992/11/30 12630.11 18421.32
1992/12/31 12876.33 18647.90
1993/01/31 13314.05 18804.55
1993/02/28 13022.23 19060.29
1993/03/31 13478.20 19462.46
1993/04/30 13240.61 18991.47
1993/05/31 14569.26 19500.44
1993/06/30 14834.98 19556.99
1993/07/31 15256.49 19478.76
1993/08/31 16566.80 20217.01
1993/09/30 16841.69 20061.34
1993/10/31 16520.99 20476.61
1993/11/30 16392.70 20282.08
1993/12/31 17007.03 20527.49
1994/01/31 18181.78 21225.43
1994/02/28 19043.99 20650.22
1994/03/31 18839.22 19749.87
1994/04/30 18785.33 20002.67
1994/05/31 18731.44 20330.71
1994/06/30 17729.12 19832.61
1994/07/31 18095.56 20483.12
1994/08/31 19863.09 21322.93
1994/09/30 19291.87 20800.52
1994/10/31 20078.64 21268.53
1994/11/30 19819.98 20493.93
1994/12/31 19927.75 20797.85
1995/01/31 19356.54 21337.14
1995/02/28 21339.61 22168.65
1995/03/31 23538.24 22822.85
1995/04/30 26167.97 23494.98
1995/05/31 28075.60 24434.07
1995/06/30 32074.09 25001.68
1995/07/31 36870.11 25830.73
1995/08/31 37355.10 25895.57
1995/09/30 38023.31 26988.36
1995/10/31 36977.89 26892.01
1995/11/30 36051.02 28072.57
1995/12/31 33671.58 28613.25
1996/01/31 34809.67 29587.24
1996/02/29 36863.45 29861.52
1996/03/31 34705.02 30149.08
1996/04/30 38668.69 30593.48
1996/05/31 39689.04 31382.49
1996/06/30 36353.27 31502.05
1996/07/31 34600.36 30110.29
1996/08/31 36274.79 30745.32
1996/09/30 41167.24 32475.67
1996/10/31 41494.27 33371.34
1996/11/30 47721.03 35893.88
1996/12/31 47721.03 35182.83
1997/01/31 55177.44 37381.05
1997/02/28 49644.00 37674.12
Let's say hypothetically that $10,000 was invested in Fidelity Select
Electronics Portfolio on February 28, 1987, and the current maximum 3%
sales charge was paid. As the chart shows, by February 28, 1997, the value
of the investment would have grown to $49,644 - a 396.44% increase on the
initial investment. For comparison, look at how the S&P 500 did over the
same period. With dividends and capital gains, if any, reinvested, the same
$10,000 investment would have grown to $37,674 - a 276.74% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1997
% OF FUND'S
INVESTMENTS
Texas Instruments, Inc. 6.8
Atmel Corp. 5.9
ASM Lithography Holding NV 5.5
Seagate Technology 4.5
Altera Corp. 3.3
Intel Corp. 2.7
LSI Logic Corp. 2.6
Applied Magnetics Corp. 2.5
Read-Rite Corp. 2.4
Maxim Integrated Products, Inc. 2.1
TOP INDUSTRIES AS OF FEBRUARY 28, 1997
Semiconductors 45.2%
Computer Storage Devices 9.8%
Commercial Printing,
Lithographic 5.5%
Computer Peripherals 4.7%
Semiconductor Capital
Equipment 3.5%
All Others 31.3% *
Row: 1, Col: 1, Value: 31.3
Row: 1, Col: 2, Value: 3.5
Row: 1, Col: 3, Value: 4.7
Row: 1, Col: 4, Value: 5.5
Row: 1, Col: 5, Value: 9.800000000000001
Row: 1, Col: 6, Value: 45.2
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
ELECTRONICS PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Andrew Kaplan, Portfolio Manager of Fidelity Select Electronics Portfolio
Q. HOW DID THE FUND PERFORM, ANDY?
A. The fund had an excellent year, although like most technology funds it
had a much stronger second half than first half. For the period ending
February 28, 1997, the fund had a return of 34.67%, compared to a 26.16%
increase in the Standard & Poor's 500 Index over the same time.
Q. WHAT WAS THE INVESTMENT ENVIRONMENT LIKE OVER THE PAST YEAR?
A. There were two dramatically different investing environments during the
past year, as evidenced by the fund's return of -1.60% during the first six
months of the period, and more than 36% over the second six months.
Performance during the spring and early summer of 1996 was governed by
dramatic oversupply of commodity semiconductors, a major inventory
correction that hurt even proprietary semiconductor suppliers and a harsh
correction in the technology sector. In the most recent six months, by far
the single most important factor affecting the fund's performance was the
decline in memory chip prices, which reduced the price of the average PC by
about $300.
Q. WHAT TYPES OF COMPANIES BENEFITED FROM THE DROP IN MEMORY PRICES?
A. The pricing windfall helped the PC manufacturers and most other
companies involved in the PC "food chain," most notably the chip,
semiconductor capital equipment and component suppliers. With memory so
much cheaper, PC manufacturers could cut prices - stimulating demand for
their products, while still improving their gross margins and helping their
earnings. They could also increase the amount of storage in the systems
they sold, which improved the landscape for the disk drive companies.
Finally, proprietary, value-added chip manufacturers, such as
industry-leader Intel, could slow down the price cuts they traditionally
make during the winter, which improved their earnings.
Q. GIVEN THE CHANGE IN THE INVESTMENT ENVIRONMENT FROM SIX MONTHS AGO, IT'S
NOT SURPRISING THAT NINE OF THE FUND'S 10 LARGEST HOLDINGS HAVE CHANGED
SINCE THE END OF AUGUST. HOW DID THE TOP HOLDINGS PERFORM?
A. The fund's largest holdings at the end of the period all performed
extremely well. Texas Instruments, the fund's largest holding, was up more
than 60% over the past six months. It's been undergoing a successful
transition from a commodity supplier of memory to a proprietary supplier of
digital signal processors, or DSPs; these are the microprocessors in such
high bandwith communications devices as cellular phones, pagers and modems.
Altera, another proprietary chip company, more than doubled over the past
six months based on strong demand for its products from the networking and
communications industries. ASM Lithography, a Dutch semiconductor cap
equipment company, also was up over 60% over the past six months based on
the competitive edge in its products for manufacturing integrated circuits.
Seagate, which manufactures disk drives for high-end PCs and workstations,
had a terrific six months. Intel was up more than 70% over the past six
months - and more than doubled over the past year, the largest increase in
market capitalization of any company in history.
Q. DID YOU HAVE ANY REGRETS OVER THE PAST SIX MONTHS?
A. Even though the fund did great, I probably could have invested even more
in the semiconductor equipment companies. While ASM Lithography and Applied
Materials were big positions for the fund, this whole segment of the
electronics industry recovered very strongly since last summer. In
hindsight, I probably could have been more aggressive in owning them.
Q. WHAT'S YOUR OUTLOOK FOR THE FUTURE?
A. I'm more cautious than I was in my last report to shareholders at the
end of August. The past six-month period - because of the drop in memory
prices - was unusual in the profit opportunities for just about every
company in the PC industry. I see the next six months as a period of
digestion for this sector, as earnings catch up to the tremendous gains in
share prices. Going forward, I think the opportunities will be on a
stock-by-stock basis, rather than across industry segments.
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 February 28, 1997, more than
$1.7 billion
MANAGER: Andrew Kaplan, since August 1996;
analyst, semiconductor equipment companies
and producers; joined Fidelity in 1995
(checkmark)
ELECTRONICS PORTFOLIO
INVESTMENTS FEBRUARY 28, 1997
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 89.6%
SHARES VALUE (NOTE 1)
ADVERTISING - 0.4%
ADVERTISING AGENCIES - 0.4%
Snyder Communications, Inc. (a) 260,000 $ 7,020,000
COMMUNICATIONS EQUIPMENT - 3.5%
DATACOMMUNICATIONS EQUIPMENT - 0.8%
Cisco Systems, Inc. (a) 127,100 7,069,938
Davox Corp. (a) 66,300 1,897,838
Dynatech Corp. (a) 3,800 106,400
Level One Communications, Inc. (a) 179,300 5,894,488
14,968,664
TELEPHONE EQUIPMENT - 2.7%
Ascend Communications, Inc. (a) 318,900 16,662,525
Lucent Technologies, Inc. 131,300 7,073,788
Newbridge Networks Corp. (a) 400,400 12,762,750
Nokia Corp. AB sponsored ADR 200,000 11,700,000
48,199,063
TOTAL COMMUNICATIONS EQUIPMENT 63,167,727
COMPUTER SERVICES & SOFTWARE - 2.8%
CAD/CAM/CAE - 0.3%
Parametric Technology Corp. (a) 91,700 5,169,588
Quickturn Design Systems, Inc. (a) 40,000 637,500
5,807,088
COMPUTER & SOFTWARE STORES - 0.0%
MicroAge, Inc. (a) 200 2,600
COMPUTER SERVICES - 0.1%
Clarify, Inc. (a) 71,000 1,819,375
DATA PROCESSING - 0.7%
NCR Corp. (a) 382,200 12,612,600
PREPACKAGED COMPUTER SOFTWARE - 1.7%
Cadence Design Systems, Inc. (a) 57,300 2,112,938
Electronics for Imaging, Inc. (a) 165,600 6,375,600
McAfee Associates, Inc. (a) 312,500 14,335,938
Oracle Systems Corp. (a) 105,100 4,125,175
Remedy Corp. (a) 50,000 1,918,750
Vantive Corp. (a) 100,000 2,225,000
31,093,401
TOTAL COMPUTER SERVICES & SOFTWARE 51,335,064
COMPUTERS & OFFICE EQUIPMENT - 18.3%
COMPUTER PERIPHERALS - 4.7%
Applied Magnetics Corp. (a) 1,185,000 46,066,875
Creative Technology Corp. Ltd. (a) 1,000,500 12,334,289
EMC Corp. (a) 500,000 18,000,000
Sigma Designs, Inc. (a) 247,400 1,237,000
Western Digital Corp. (a) 125,000 7,375,000
85,013,164
COMPUTER STORAGE DEVICES - 9.8%
Adaptec, Inc. (a) 753,980 28,698,364
Hutchinson Technology, Inc. (a) 85,900 2,759,538
Quantum Corp. (a) 385,600 15,327,600
Read-Rite Corp. (a) 1,451,400 44,539,838
Seagate Technology (a) 1,728,600 81,676,350
Trident Microsystems, Inc. (a) 248,000 5,549,000
178,550,690
COMPUTERS & OFFICE EQUIPMENT - 0.8%
International Business Machines Corp. 100,700 14,475,625
SHARES VALUE (NOTE 1)
ELECTRONIC COMPUTERS - 1.1%
Gateway 2000, Inc. (a) 200,000 $ 11,750,000
Micron Electronics, Inc. 400,000 7,750,000
19,500,000
MINI & MICRO COMPUTERS - 1.9%
Compaq Computer Corp. (a) 63,900 5,064,075
Dell Computer Corp. (a) 371,300 26,408,713
Sequent Computer Systems, Inc. (a) 225,000 3,867,188
35,339,976
TOTAL COMPUTERS & OFFICE EQUIPMENT 332,879,455
CONGLOMERATES - 0.4%
Harris Corp. 100,000 7,375,000
CONSUMER DURABLES - 0.0%
PRESSED & BLOWN GLASS - 0.0%
Ciena Corp. 1,000 39,250
ELECTRICAL EQUIPMENT - 0.3%
ELECTRICAL EQUIPMENT - 0.3%
Vicor Corporation (a) 294,100 4,815,877
ELECTRONIC INSTRUMENTS - 4.9%
ELECTRONIC EQUIPMENT - 1.0%
Anadigics, Inc. (a) 225,000 5,793,750
Helix Technology Corp. 156,500 5,438,375
Smart Modular Technologies, Inc. (a) 111,400 3,244,525
Teradyne, Inc. (a) 100,000 2,725,000
17,201,650
MEASURING INSTRUMENTS - 0.4%
Perkin-Elmer Corp. 103,400 7,341,400
SEMICONDUCTOR CAPITAL EQUIPMENT - 3.5%
Applied Materials, Inc. (a) 650,000 32,906,250
KLA Instruments Corp. (a) 300,000 12,450,000
Kulicke & Soffa Industries, Inc. (a) 362,000 9,593,000
Novellus System, Inc. (a) 74,400 6,082,200
Silicon Valley Group, Inc. (a) 135,500 2,896,313
63,927,763
TOTAL ELECTRONIC INSTRUMENTS 88,470,813
ELECTRONICS - 50.3%
ELECTRONIC CAPACITORS - 1.2%
KEMET Corp. (a) 1,017,900 22,648,275
ELECTRONIC COMPONENTS & ACCESSORIES - 0.3%
Benchmarq Microelectronics, Inc. (a) 300,000 5,325,000
ELECTRONIC PARTS - WHOLESALE - 0.3%
Brightpoint, Inc. (a) 212,250 5,730,750
ELECTRONICS & ELECTRONIC COMPONENTS - 3.1%
Hadco Corp. (a) 273,600 11,080,800
Photronics, Inc. (a) (c) 706,500 24,374,250
Sanmina Corp. (a) 65,000 3,006,250
Sipex Corp. (c) 473,300 15,027,275
Solectron Corp. (a) 50,800 2,686,050
56,174,625
PRINTED CIRCUIT BOARDS - 0.2%
Altron Inc. (a) 72,500 1,341,250
Flextronics International (a) 100,000 2,262,500
3,603,750
SEMICONDUCTORS - 45.2%
Actel Corp. (a) (c) 987,000 19,246,500
Altera Corp. (a) 1,307,000 59,305,125
Analog Devices, Inc. (a) 325,900 7,577,175
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
ELECTRONICS - CONTINUED
SEMICONDUCTORS - CONTINUED
Atmel Corp. (a) 2,881,900 $ 107,711,013
Burr-Brown Corp. 114,700 3,756,425
CFM Technologies, Inc. 45,500 1,820,000
Chips & Technologies, Inc. (a) 34,700 442,425
Dallas Semiconductor Corp. 689,900 17,937,400
ESS Technology, Inc. (a) 597,800 15,729,613
Etec Systems, Inc. (a) 490,700 17,787,875
Integrated Device Technology, Inc. (a) 733,000 8,063,000
Integrated Silicon Solution (a) 73,800 673,425
Intel Corp. 347,400 49,287,375
Intel Corp. (warrants) (a) 84,500 8,596,555
International Rectifier Corp. (a) 900,000 12,150,000
LSI Logic Corp. (a) 1,350,000 46,575,000
Lattice Semiconductor Corp. (a) 683,900 32,656,225
Linear Technology Corp. 526,810 23,969,855
Maxim Integrated Products, Inc. (a) 755,100 37,471,838
Micrel, Inc. (a) (c) 525,000 17,850,000
Microchip Technology, Inc. (a) 81,050 3,029,244
Micron Technology, Inc. 800,000 30,000,000
Motorola, Inc. 461,500 25,786,313
National Semiconductor Corp. (a) 1,150,000 30,043,750
Speedfam International, Inc. (a) 300,000 11,175,000
Storage Technology Corp. (a) 35,300 1,473,775
Tencor Instruments (a) 729,900 29,241,619
Texas Instruments, Inc. 1,600,000 123,400,000
Tower Semiconductor Ltd. (a) 266,100 2,594,475
Triquint Semiconductor, Inc. (a) (c) 529,500 16,613,063
Uniphase Corp. (a) 262,200 8,587,050
Unitrode Corp. (a) 414,300 15,121,950
Vitesse Semiconductor Corp. (a) 266,700 11,184,731
Zilog, Inc. (a) (c) 1,079,100 25,493,738
822,351,532
TOTAL ELECTRONICS 915,833,932
ENGINEERING - 0.6%
ARCHITECTS & ENGINEERS - 0.6%
EG & G, Inc. 500,000 10,875,000
INDUSTRIAL MACHINERY & EQUIPMENT - 1.0%
SPECIAL INDUSTRIAL MACHINERY - 1.0%
Gasonics International Corp. (a) 262,500 4,396,875
PRI Automation, Inc. (a) 285,700 14,106,438
18,503,313
PRINTING - 5.5%
COMMERCIAL PRINTING, LITHOGRAPHIC - 5.5%
ASM Lithography Holding NV (a) 1,514,400 100,707,600
SERVICES - 1.3%
BUSINESS SERVICES - 0.4%
Sitel Corp. (a) 400,000 6,650,000
PERSONNEL SUPPLY SERVICES - 0.9%
AccuStaff, Inc. (a) 800,000 16,600,000
TOTAL SERVICES 23,250,000
TELEPHONE SERVICES - 0.3%
WorldCom, Inc. (a) 231,300 6,158,363
TOTAL COMMON STOCKS
(Cost $1,485,230,214) 1,630,431,394
CASH EQUIVALENTS - 10.4%
SHARES VALUE (NOTE 1)
Taxable Central Cash Fund (b)
(Cost $189,972,529) 189,972,529 $189,972,529
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $1,675,202,743) $ 1,820,403,923
LEGEND
1. Non-income producing
2. At period end, the seven-day yield on the Taxable Central Cash Fund was
5.31%. The yield refers to the income earned by investing in the fund over
the seven-day period, expressed as an annual percentage.
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
Actel Corp. $ 13,732,776 $ 13,752,950 $ - $ 19,246,500
Micrel, Inc. 1,501,564 - - 17,850,000
Photronics, Inc. 7,551,067 3,552,248 - 24,374,250
Sipex Corp. 2,267,813 - - 15,027,275
Triquint Semiconductor, Inc. 2,957,130 - - 16,613,063
Unitrode Corp. - 1,808,487 - -
Zilog, Inc. 1,806,250 - - 25,493,738
Totals $ 29,816,600 $ 19,113,685 $ - $ 118,604,826
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $4,443,321,532 and $4,104,602,801, respectively (see Note 3 of
Notes to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $595,711 for the period
(see Note 4 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 5 of Notes to Financial Statements).
At the period end, the value of securities loaned and the value of
collateral amounted to $52,160,625 and $53,065,000, respectively (see Note
6 of Notes to Financial Statements).
The fund participated in the bank borrowing program. The maximum loan and
average daily balance during the period for which the loan was outstanding
amounted to $5,338,000. The weighted average interest rate was 5.8%. (see
Note 7 of Notes to Financial Statements).
INCOME TAX INFORMATION
At February 28, 1997, the aggregate cost of investment securities for
income tax purposes was $1,680,852,555. Net unrealized appreciation
aggregated $139,551,368, of which $203,524,257 related to appreciated
investment securities and $63,972,889 related to depreciated investment
securities.
The fund hereby designates approximately $169,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
ELECTRONICS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1997
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS
Investment in securities, at value $ 1,820,403,923
(cost $1,675,202,743) -
See accompanying schedule
Receivable for investments sold 72,178,225
Receivable for fund shares sold 21,475,150
Dividends receivable 126,747
Interest receivable 880,097
Redemption fees receivable 60,090
Other receivables 30,978
TOTAL ASSETS 1,915,155,210
LIABILITIES
Payable for investments purchased $ 42,035,482
Payable for fund shares redeemed 73,834,256
Accrued management fee 995,677
Other payables and accrued expenses 1,208,282
Collateral on securities loaned, 53,065,000
at value
TOTAL LIABILITIES 171,138,697
NET ASSETS $ 1,744,016,513
Net Assets consist of:
Paid in capital $ 1,415,316,374
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 183,498,959
Net unrealized appreciation (depreciation) on investments 145,201,180
NET ASSETS, for 45,957,428 $ 1,744,016,513
shares outstanding
NET ASSET VALUE and redemption price per share ($1,744,016,513 (divided by) 45,957,428 shares) $37.95
Maximum offering price per share (100/97.00 of $37.95) $39.12
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1997
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME $ 2,114,290
Dividends
Interest (including income on securities loaned of $330,076) 7,700,604
TOTAL INCOME 9,814,894
EXPENSES
Management fee $ 7,859,173
Transfer agent fees 7,986,832
Accounting and security lending fees 813,448
Non-interested trustees' compensation 7,215
Custodian fees and expenses 60,669
Registration fees 396,388
Audit 81,957
Legal 7,397
Interest 853
Miscellaneous 36,268
Total expenses before reductions 17,250,200
Expense reductions (471,050 16,779,150
)
NET INVESTMENT INCOME (LOSS) (6,964,256
)
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities (including 272,104,613
realized gain (loss) of $8,239,809
on sale of investments in
affiliated issuers)
Foreign currency transactions (741 272,103,872
)
Change in net unrealized appreciation (depreciation) on investment securities 64,022,840
NET GAIN (LOSS) 336,126,712
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 329,162,456
OTHER INFORMATION $ 9,021,074
Sales charges paid to FDC
Deferred sales charges withheld $ 9,923
by FDC
Exchange fees withheld by FSC $ 431,003
Expense reductions $ 436,181
Directed brokerage arrangements
Custodian interest credits 24,246
Transfer agent interest credits 10,623
$ 471,050
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE YEAR ENDED YEAR ENDED
(DECREASE) IN FEBRUARY 28, FEBRUARY 29,
NET ASSETS 1997 1996
Operations $ (6,964,256) $ (2,596,453)
Net
investment
income (loss)
Net realized 272,103,872 270,475,690
gain (loss)
Change in 64,022,840 60,817,847
net
unrealized
appreciation
(depreciation
)
NET INCREASE 329,162,456 328,697,084
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
Distributions to - (151,485,297)
shareholders
from net
realized
gains
Share 2,439,060,498 2,894,540,424
transactions
Net proceeds
from sales of
shares
Reinvestmen - 148,005,751
t of
distributions
Cost of (2,163,322,518) (2,308,922,665)
shares
redeemed
Paid in 5,754,283 6,093,960
capital
portion of
redemption
fees
NET INCREASE 281,492,263 739,717,470
(DECREASE)
IN NET
ASSETS
RESULTING
FROM SHARE
TRANSACTIO
NS
TOTAL 610,654,719 916,929,257
INCREASE
(DECREASE)
IN NET ASSETS
NET ASSETS
Beginning of 1,133,361,794 216,432,537
period
End of period $ 1,774,016,513 $ 1,133,361,794
OTHER
INFORMATION
Shares
Sold 73,288,709 99,523,034
Issued in - 6,026,277
reinvestment
of
distributions
Redeemed (67,555,816) (76,257,043)
Net increase 5,732,893 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>
YEAR ENDED YEAR ENDED YEARS ENDED FEBRUARY 28, TEN MONTHS
FEBRUARY 28, FEBRUARY 29, ENDED
FEBRUARY 28,
SELECTED 1997 1996 1995 1994 1993
PER-SHARE
DATA D
</TABLE>
Net asset $ 28.18 $ 19.80 $ 17.67 $ 14.28 $ 11.81
value,
beginning of
period
Income from
Investment
Operations
Net (.17) (.08) (.18) (.09) (.05)
investment
income (loss)
Net realized 9.80 13.51 2.11 6.09 2.33
and
unrealized
gain (loss)
Total from 9.63 13.43 1.93 6.00 2.28
investment
operations
Less
Distributions
From net - (5.25) - (2.75) -
realized gain
Redemption .14 .20 .20 .14 .19
fees added to
paid in
capital
Net asset $ 37.95 $ 28.18 $ 19.80 $ 17.67 $ 14.28
value, end of
period
TOTAL 34.67% 72.75% 12.05% 46.24% 20.91%
RETURN B, C
RATIOS AND
SUPPLEMENT
AL DATA
Net assets, $ 1,744,017 $ 1,133,362 $ 216,433 $ 110,993 $ 48,027
end of period
(000 omitted)
Ratio of 1.33% 1.25% 1.72% 1.67% 1.69% A
expenses to
average net
assets
Ratio of 1.29% E 1.22% E 1.71% E 1.67% 1.69% A
expenses to
average net
assets after
expense
reductions
Ratio of net (.54)% (.28)% (.98)% (.52)% (.50)%
investment A
income (loss)
to average
net assets
Portfolio 341% 366% 205% 163% 293% A
turnover rate
Average $ .0421
commission
rate F
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
A ANNUALIZED A THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 8 OF NOTES TO FINANCIAL
STATEMENTS). B TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. C NET INVESTMENT INCOME (LOSS)
PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING DURING THE
PERIOD. D 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 8 OF NOTES TO
FINANCIAL STATEMENTS). 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>
SOFTWARE AND COMPUTER SERVICES PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance. You can
look at the total percentage change in value, the average annual percentage
change, or the growth of a hypothetical $10,000 investment. Total return
reflects the change in the value of an investment, assuming reinvestment of
the fund's dividend income and capital gains (the profits earned upon the
sale of securities that have grown in value). If Fidelity had not
reimbursed certain fund expenses, the past 10 year total returns would have
been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 28, 1997 YEAR YEARS YEARS
SOFTWARE AND COMPUTER SERVICES 16.14% 162.00% 364.43%
SOFTWARE AND COMPUTER SERVICES 12.66% 154.14% 350.50%
(INCL. 3% SALES CHARGE)
S&P 500 26.16% 118.75% 276.74%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one, five, or 10 years. You can compare
the fund's returns 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, and excludes the effect of sales
charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 28, 1997 YEAR YEARS YEARS
SOFTWARE AND COMPUTER SERVICES 16.14% 21.24% 16.60%
SOFTWARE AND COMPUTER SERVICES 12.66% 20.51% 16.24%
(INCL. 3% SALES CHARGE)
S&P 500 26.16% 16.94% 14.16%
AVERAGE ANNUAL RETURNS take the fund's 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
1987/02/28 9700.00 10000.00
1987/03/31 9861.86 10289.00
1987/04/30 10029.50 10197.43
1987/05/31 10075.74 10286.15
1987/06/30 9723.12 10805.60
1987/07/31 9694.22 11353.44
1987/08/31 10376.34 11776.92
1987/09/30 10486.17 11519.01
1987/10/31 7711.44 9037.81
1987/11/30 6977.29 8293.10
1987/12/31 8002.94 8924.20
1988/01/31 7771.67 9299.91
1988/02/29 8410.69 9733.29
1988/03/31 8483.72 9432.53
1988/04/30 8739.33 9537.23
1988/05/31 8501.98 9620.20
1988/06/30 9171.43 10061.77
1988/07/31 8714.98 10023.54
1988/08/31 8112.48 9682.74
1988/09/30 8635.87 10095.22
1988/10/31 8179.43 10375.87
1988/11/30 8057.71 10227.49
1988/12/31 8727.16 10406.47
1989/01/31 9378.35 11168.23
1989/02/28 8958.42 10890.14
1989/03/31 8739.33 11143.88
1989/04/30 9585.27 11722.25
1989/05/31 9932.16 12197.00
1989/06/30 8948.51 12127.48
1989/07/31 8684.39 13222.59
1989/08/31 9080.57 13481.75
1989/09/30 9262.93 13426.47
1989/10/31 9457.88 13114.98
1989/11/30 9734.57 13382.52
1989/12/31 9778.71 13703.71
1990/01/31 9431.08 12784.19
1990/02/28 9675.71 12949.10
1990/03/31 10061.97 13292.25
1990/04/30 10029.78 12959.95
1990/05/31 11291.55 14223.54
1990/06/30 11555.49 14126.82
1990/07/31 10499.72 14081.62
1990/08/31 9031.95 12808.64
1990/09/30 7995.50 12184.86
1990/10/31 8156.44 12132.46
1990/11/30 9205.77 12916.22
1990/12/31 9862.40 13276.58
1991/01/31 11310.86 13855.44
1991/02/28 12134.87 14846.11
1991/03/31 12823.70 15205.38
1991/04/30 12727.13 15241.87
1991/05/31 12958.88 15900.32
1991/06/30 12009.09 15172.09
1991/07/31 12746.80 15879.11
1991/08/31 13782.44 16255.44
1991/09/30 13328.46 15983.98
1991/10/31 13995.24 16198.16
1991/11/30 12463.07 15545.38
1991/12/31 14383.80 17323.77
1992/01/31 16692.58 17001.55
1992/02/29 17194.17 17222.57
1992/03/31 16368.03 16886.73
1992/04/30 15954.95 17383.20
1992/05/31 16205.75 17468.37
1992/06/30 15327.97 17208.09
1992/07/31 16412.28 17911.90
1992/08/31 15187.82 17544.71
1992/09/30 16286.89 17751.74
1992/10/31 17599.87 17813.87
1992/11/30 19134.14 18421.32
1992/12/31 19495.58 18647.90
1993/01/31 20498.76 18804.55
1993/02/28 20373.36 19060.29
1993/03/31 20808.56 19462.46
1993/04/30 20458.37 18991.47
1993/05/31 22765.77 19500.44
1993/06/30 23940.29 19556.99
1993/07/31 23215.59 19478.76
1993/08/31 24781.62 20217.01
1993/09/30 25281.42 20061.34
1993/10/31 25223.11 20476.61
1993/11/30 24598.36 20282.08
1993/12/31 25876.65 20527.49
1994/01/31 26778.34 21225.43
1994/02/28 27135.26 20650.22
1994/03/31 24223.55 19749.87
1994/04/30 24348.87 20002.67
1994/05/31 21912.08 20330.71
1994/06/30 19989.30 19832.61
1994/07/31 20969.73 20483.12
1994/08/31 23244.70 21322.93
1994/09/30 24301.28 20800.52
1994/10/31 25795.71 21268.53
1994/11/30 25205.55 20493.93
1994/12/31 25976.57 20797.85
1995/01/31 25548.23 21337.14
1995/02/28 27670.90 22168.65
1995/03/31 29251.01 22822.85
1995/04/30 30164.80 23494.98
1995/05/31 30983.41 24434.07
1995/06/30 33724.80 25001.68
1995/07/31 35761.81 25830.73
1995/08/31 36009.29 25895.57
1995/09/30 37494.21 26988.36
1995/10/31 37941.59 26892.01
1995/11/30 39017.21 28072.57
1995/12/31 37994.43 28613.25
1996/01/31 36537.22 29587.24
1996/02/29 38787.32 29861.52
1996/03/31 37801.56 30149.08
1996/04/30 41607.18 30593.48
1996/05/31 43057.94 31382.49
1996/06/30 40909.48 31502.05
1996/07/31 37764.30 30110.29
1996/08/31 38550.59 30745.32
1996/09/30 43589.52 32475.67
1996/10/31 43744.57 33371.34
1996/11/30 47210.91 35893.88
1996/12/31 46263.92 35182.83
1997/01/31 49977.17 37381.05
1997/02/28 45061.20 37674.12
Let's say hypothetically that $10,000 was invested in Fidelity Select
Software and Computer Services Portfolio on February 28, 1987, and the
current maximum 3% sales charge was paid. As the chart shows, by February
28, 1997, the value of the investment would have grown to $45,050 - a
350.50% increase on the initial investment. For comparison, look at how the
S&P 500 did over the same period. With dividends and capital gains, if any,
reinvested, the same $10,000 investment would have grown to $37,674 - a
276.74% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1997
% OF FUND'S
INVESTMENTS
Microsoft Corp. 7.5
Electronics for Imaging, Inc. 6.8
Dell Computer Corp. 4.6
Parametric Technology Corp. 4.4
Adaptec, Inc. 4.2
SunGard Data Systems, Inc. 3.8
Baan Co. NV 3.4
BMC Software, Inc. 3.2
Teradyne, Inc. 3.1
Scopus Technology, Inc. 3.0
TOP INDUSTRIES AS OF FEBRUARY 28, 1997
Row: 1, Col: 1, Value: 39.0
Row: 1, Col: 2, Value: 4.7
Row: 1, Col: 3, Value: 5.2
Row: 1, Col: 4, Value: 5.3
Row: 1, Col: 5, Value: 5.7
Row: 1, Col: 6, Value: 40.1
Prepackaged Computer
Software 40.1%
CAD/CAM/CAE 5.7%
Computer Storage
Devices 5.3%
Computer Services 5.2%
Mini & Micro Computers 4.7%
All Others 39.0% *
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
SOFTWARE AND COMPUTER SERVICES PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
NOTE TO SHAREHOLDERS: Erin Sullivan became Portfolio Manager of Fidelity
Select Software and Computer Services Portfolio on January 7, 1997.
Q. HOW DID THE FUND PERFORM, ERIN?
A. For the 12-month period ending February 28, 1997, the portfolio returned
16.14%, compared to a 26.16% increase in the Standard & Poor's 500 Index.
Q. WHAT WAS THE INVESTING ENVIRONMENT LIKE OVER THE PAST YEAR AND HOW DID
IT AFFECT THE FUND'S PERFORMANCE?
A. The fund's returns were flat for the first half of the period, with all
of its one-year performance coming in the second half after the technology
sector rebounded from a late spring correction. On the whole, I'd say the
past year was a very difficult period for many software companies,
primarily because of the competitive pressures they faced. A few companies
did well, with PC software leader Microsoft, the fund's largest holding at
the end of the period, doubling during the past year and up close to 60% in
the past six months alone. By and large though, the software segment didn't
perform as well as many of the other segments of the broader technology
sector. As an example, the Standard & Poor's Computer Software Index was up
47% on a market capitalization-weighted basis during the period with
Microsoft, which makes up the bulk of the index, included, but up only
about 6% without Microsoft.
Q. WHY SUCH A DISPARITY?
A. Microsoft is a dominant company that has been very successful. Based on
the features it includes in a new software product, for example, Microsoft
can have a major impact on its competitors. For instance, it announced
recently that it would soon be including - or "bundling" - in its products
features similar to those found in products sold by Citrix Systems. After
the announcement, Citrix's stock dropped by more than 70% in a matter of
days, a pretty good example of Microsoft's influence in the industry.
Q. GIVEN THIS ENVIRONMENT, WHERE DOES ONE FIND INVESTMENT OPPORTUNITIES?
A. One area of opportunity is companies that have staked out good niches
for themselves in places where Microsoft isn't. The "help desk" companies -
those that sell software to improve customer service and sales automation -
are good examples. Scopus, whose stock almost doubled since the last report
to you, as well as Remedy fall into this category. Also doing well were
companies that provide enterprise-wide or client-server software, including
PeopleSoft and Baan, a Dutch company up about 40% over the last six months.
Q. WHAT WERE THE DISAPPOINTMENTS OVER THE PAST SIX MONTHS?
A. Other than the overall competitive pressures affecting many of the
smaller companies within this sector, I'd point to BMC, which makes
mainframe software, as a negative for the fund. One of the fund's top
holdings at the end of the period, its stock went down, largely as a result
of disappointing earnings during one of its quarters.
Q. HAVE YOU MADE ANY SIGNIFICANT CHANGES TO THE FUND'S HOLDINGS SINCE
TAKING OVER IN EARLY JANUARY?
A. I added more Microsoft to the fund because I felt that its business
fundamentals - meaning its prospects for earnings and growth - were very
strong, it has a dominant position in its market and its Windows NT
operating system appears to be selling well. I also added to our holdings
in Parametric, a developer of automated design and manufacturing software
for the automobile and other industries. I liked its dominant market
position, high operating margins and upcoming products.
Q. WHAT'S YOUR OUTLOOK FOR THE FUTURE?
A. I think it will continue to be a very competitive sector, particularly
for the smaller companies that don't have a well-defined niche. However,
despite the downturn among technology stocks in February, I don't have the
fund positioned defensively. I believe stock prices follow earnings growth,
and I'll continue to pick stocks for the long term based on earnings
outlook, as well as product pipelines and management quality.
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 February 28, 1997, more than
$389 million
MANAGER: Erin Sullivan, since January 1997;
manager, Fidelity Select Retailing Portfolio,
1995-January 1997; equity analyst, medical
technology and hospital supply industries,
1993-1995; analyst, initial public offerings,
1991-1992; joined Fidelity in 1991
(checkmark)
SOFTWARE AND COMPUTER SERVICES PORTFOLIO
INVESTMENTS FEBRUARY 28, 1997
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 85.7%
SHARES VALUE (NOTE 1)
COMMUNICATIONS EQUIPMENT - 2.5%
TELEPHONE EQUIPMENT - 2.5%
Ascend Communications, Inc. 10,000 $ 522,500
DSC Communications Corp. (a) 420,000 8,820,000
Pairgain Technologies, Inc. (a) 30,000 886,875
10,229,375
COMPUTER SERVICES & SOFTWARE - 55.1%
CAD/CAM/CAE - 5.7%
Forte Software, Inc. (a) 215,800 5,502,900
New Dimension Software Ltd. (a) 7,500 100,313
Parametric Technology Corp. (a) 325,000 18,321,875
23,925,088
COMPUTER & SOFTWARE STORES - 1.2%
CompUSA, Inc. (a) 238,800 4,776,000
COMPUTER SERVICES - 5.2%
American Management Systems, Inc. (a) 11,400 199,500
Equifax, Inc. 50,000 1,487,500
Metro Information Services, Inc. 1,000 18,375
Midway Games, Inc. (a) 158,700 2,479,682
Paychex, Inc. 33,750 1,468,125
SunGard Data Systems, Inc. (a) 315,100 15,991,325
21,644,507
DATA PROCESSING - 2.4%
Affiliated Computer Services, Inc.
Class A (a) 7,700 158,813
Ceridian Corp. (a) 30,000 1,173,750
First Data Corp. 80,000 2,930,000
Fiserv, Inc. (a) 180,000 5,895,000
10,157,563
ELECTRONIC INFORMATION RETRIEVAL - 0.5%
CUC International, Inc. (a) 80,000 1,910,000
E Trade Group, Inc. 10,000 240,000
2,150,000
PREPACKAGED COMPUTER SOFTWARE - 40.1%
Arbor Software Corp. 50,000 1,643,750
Aspect Development, Inc. (a) 2,000 49,500
Aurum Software, Inc. 500 9,188
BMC Software, Inc. (a) 309,800 13,263,313
Boole & Babbage, Inc. (a) 228,375 5,994,844
Baan Co. NV (a) 315,000 13,978,125
Business Objects SA sponsored ADR (a) 559,900 6,543,831
Cadence Design Systems, Inc. (a) 170,000 6,268,750
Eidos PLC sponsored ADR 200,000 3,300,000
Electronics for Imaging, Inc. (a) 741,000 28,528,500
General Magic, Inc. (a) 89,400 106,163
Infinium Software, Inc. 50,000 350,000
I2 Technologies, Inc. 10,000 291,250
Legato Systems, Inc. 20,000 405,000
Maxis, Inc. (a) 100,000 1,037,500
McAfee Associates, Inc. 6,500 298,188
Metrowerks, Inc. (a) 108,300 926,148
Microsoft Corp. (a) 320,000 31,200,000
Openvision Technologies, Inc. (a) 62,000 682,000
Oracle Systems Corp. (a) 127,800 5,016,150
PeopleSoft, Inc. (a) 286,000 11,404,250
Platinum Technology, Inc. 20,000 297,500
Policy Management Systems Corp. (a) 139,200 5,985,600
Rational Software Corp. (a) 52,700 1,363,613
Red Brick Systems, Inc. 10,000 197,500
Remedy Corp. (a) 50,400 1,934,100
SHARES VALUE (NOTE 1)
Restrac, Inc. 110,000 $ 412,500
Scopus Technology, Inc. (a) 564,900 12,357,188
Spectrum Holobyte, Inc. (a) 302,800 2,498,100
Sybase, Inc. (a) 70,200 1,149,525
Symantec Corp. (a) 10,000 156,250
Trusted Information Systems, Inc. (a) 600 8,925
Vantive Corp. (a) 389,100 8,657,475
Veritas Software Corp. (a) 20,000 635,000
166,949,726
TOTAL COMPUTER SERVICES & SOFTWARE 229,602,884
COMPUTERS & OFFICE EQUIPMENT - 17.7%
COMPUTER EQUIPMENT - WHOLESALE - 1.8%
CDW Computer Centers, Inc. 10,000 525,625
Ingram Micro, Inc. Class A (a) 12,000 273,000
Tech Data Corp. (a) 275,400 6,609,600
7,408,225
COMPUTER PERIPHERALS - 3.0%
Applied Magnetics Corp. (a) 200,000 7,775,000
Western Digital Corp. (a) 80,000 4,720,000
12,495,000
COMPUTER STORAGE DEVICES - 5.3%
Adaptec, Inc. (a) 460,800 17,539,200
Quantum Corp. (a) 24,700 981,825
Seagate Technology (a) 75,000 3,543,750
22,064,775
COMPUTERS & OFFICE EQUIPMENT - 0.1%
MICROS Systems, Inc. (a) 10,000 386,250
ELECTRONIC COMPUTERS - 1.4%
Auspex Systems, Inc. (a) 250,000 2,906,250
Gateway 2000, Inc. (a) 10,000 587,500
Wang Laboratories, Inc. (a) 110,000 2,413,125
5,906,875
GRAPHICS WORKSTATIONS - 1.4%
Silicon Graphics, Inc. (a) 148,000 3,570,500
Sun Microsystems, Inc. (a) 80,000 2,470,000
6,040,500
MINI & MICRO COMPUTERS - 4.7%
Dell Computer Corp. (a) 270,000 19,203,750
Sequent Computer Systems, Inc. (a) 20,000 343,750
19,547,500
TOTAL COMPUTERS & OFFICE EQUIPMENT 73,849,125
ELECTRONIC INSTRUMENTS - 3.1%
Teradyne, Inc. (a) 470,000 12,807,500
ELECTRONICS - 2.4%
SEMICONDUCTORS - 2.4%
Integrated Device Technology, Inc. (a) 147,000 1,617,000
Intel Corp. 10,000 1,418,750
Intel Corp. (warrants) (a) 41,500 4,221,977
LSI Logic Corp. (a) 20,000 690,000
Micro Linear Corp. (a) 20,000 265,000
Micron Technology, Inc. 10,000 375,000
Texas Instruments, Inc. 20,000 1,542,500
10,130,227
LODGING & GAMING - 0.7%
RACING & GAMING - 0.7%
WMS Industries, Inc. (a) 147,100 2,923,613
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
PRINTING - 0.3%
COMMERCIAL PRINTING, LITHOGRAPHIC - 0.3%
ASM Lithography Holding NV (a) 20,000 $ 1,330,000
RETAIL & WHOLESALE, MISCELLANEOUS - 2.0%
RETAIL, GENERAL - 2.0%
Office Depot, Inc. (a) 50,000 950,000
Staples, Inc. (a) 332,700 7,194,638
8,144,638
SERVICES - 1.9%
ACCOUNTING & BOOKKEEPING SERVICES - 0.2%
NCO Group, Inc. 37,000 999,000
MANAGEMENT CONSULTING SERVICES - 1.7%
Registry, Inc. 170,000 6,927,500
TOTAL SERVICES 7,926,500
TOTAL COMMON STOCKS
(Cost $321,590,445) 356,943,862
CASH EQUIVALENTS - 14.3%
Taxable Central Cash Fund (b)
(Cost $59,676,806) 59,676,806 59,676,806
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $381,267,251) $ 416,620,668
LEGEND
1. Non-income producing
2. At period end, the seven-day yield on the Taxable Central Cash Fund was
5.31%. The yield refers to the income earned by investing in the fund over
the seven-day period, expressed as an annual percentage.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $1,057,054,943 and $1,029,695,461, respectively (see Note 3 of
Notes to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $86,634 for the period (see
Note 4 of Notes to Financial Statements).
The fund participated in the interfund lending program as a lender. The
maximum loan and 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 5 of Notes to Financial Statements).
At the period end, the value of securities loaned and the value of
collateral amounted to $32,589,625 and $34,517,400, respectively (see Note
6 of Notes to Financial Statements).
INCOME TAX INFORMATION
At February 28, 1997, the aggregate cost of investment securities for
income tax purposes was $381,507,021. Net unrealized appreciation
aggregated $35,113,647, of which $58,121,276 related to appreciated
investment securities and $23,007,629 related to depreciated investment
securities.
The fund hereby designates approximately $12,796,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
The fund intends to elect to defer to its fiscal year ending February 28,
1998 approximately $2,232,000 of losses recognized during the period
November 1, 1996 to February 28, 1997.
A total of 4% of the dividends distributed during the fiscal year qualifies
for the dividends-received deduction for corporate shareholders
(unaudited).
The fund will notify shareholders in January 1998 of the applicable
percentage for use in preparing 1997 income tax returns.
SOFTWARE AND COMPUTER SERVICES PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1997
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS
Investment in securities, at value $ 416,620,668
(cost $381,267,251) - See accompanying schedule
Cash 582,463
Receivable for investments sold 13,978,226
Receivable for fund shares sold 1,652,951
Dividends receivable 6,625
Interest receivable 246,196
Redemption fees receivable 1,765
Other receivables 95,918
TOTAL ASSETS 433,184,812
LIABILITIES
Payable for investments purchased $ 4,826,784
Payable for fund shares redeemed 3,554,152
Accrued management fee 211,187
Other payables and accrued expenses 376,433
Collateral on securities loaned, 34,517,400
at value
TOTAL LIABILITIES 43,485,956
NET ASSETS $ 389,698,856
Net Assets consist of:
Paid in capital $ 318,889,040
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 35,456,399
Net unrealized appreciation (depreciation) on investments 35,353,417
NET ASSETS, for 10,100,162 $ 389,698,856
shares outstanding
NET ASSET VALUE and redemption price per share ($389,698,856 (divided by) 10,100,162 shares) $38.58
Maximum offering price per share (100/97.00 of $38.58) $39.77
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1997
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME $ 571,975
Dividends
Interest (including income on securities loaned of $260,631) 3,009,667
TOTAL INCOME 3,581,642
EXPENSES
Management fee $ 2,546,782
Transfer agent fees 3,288,164
Accounting and security lending fees 425,626
Non-interested trustees' compensation 2,327
Custodian fees and expenses 22,682
Registration fees 123,547
Audit 43,292
Legal 3,194
Miscellaneous 13,810
Total expenses before reductions 6,469,424
Expense reductions (90,683 6,378,741
)
NET INVESTMENT INCOME (LOSS) (2,797,099
)
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 61,215,387
Foreign currency transactions (4,419 61,210,968
)
Change in net unrealized appreciation (depreciation) on investment securities (9,105,850
)
NET GAIN (LOSS) 52,105,118
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 49,308,019
OTHER INFORMATION $ 1,921,006
Sales charges paid to FDC
Deferred sales charges withheld $ 5,034
by FDC
Exchange fees withheld by FSC $ 156,188
Expense reductions $ 86,927
Directed brokerage arrangements
Custodian interest credits 3,171
Transfer agent interest credits 585
$ 90,683
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE YEAR ENDED YEAR ENDED
(DECREASE) IN FEBRUARY 28, FEBRUARY 29,
NET ASSETS 1997 1996
Operations $ (2,797,099 $ (1,677,670
Net ) )
investment
income (loss)
Net realized 61,210,968 78,787,493
gain (loss)
Change in (9,105,850 11,995,871
net )
unrealized
appreciation
(depreciation
)
NET INCREASE 49,308,019 89,105,694
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
Distributions to (32,120,784 (42,462,985
shareholders ) )
from net
realized
gains
Share 568,629,736 441,404,241
transactions
Net proceeds
from sales of
shares
Reinvestmen 31,720,922 41,961,776
t of
distributions
Cost of (566,265,440 (429,413,822
shares ) )
redeemed
Paid in 793,106 593,307
capital
portion of
redemption
fees
NET INCREASE 34,878,324 54,545,502
(DECREASE)
IN NET
ASSETS
RESULTING
FROM SHARE
TRANSACTIO
NS
TOTAL 52,065,559 101,188,211
INCREASE
(DECREASE)
IN NET ASSETS
NET ASSETS
Beginning of 337,633,297 236,445,086
period
End of period $ 389,698,856 $ 337,633,297
OTHER
INFORMATION
Shares
Sold 14,976,546 12,357,143
Issued in 840,597 1,146,186
reinvestment
of
distributions
Redeemed (15,044,201 (12,309,713
) )
Net increase 772,942 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>
YEAR ENDED YEAR ENDED YEARS ENDED FEBRUARY 28, TEN MONTHS
FEBRUARY 28, FEBRUARY 29, ENDED
FEBRUARY 28,
SELECTED 1997 1996 1995 1994 1993
PER-SHARE
DATA D
</TABLE>
Net asset $ 36.20 $ 29.07 $ 28.89 $ 27.62 $ 21.63
value,
beginning of
period
Income from
Investment
Operations
Net (.25) (.19) (.26) (.34) (.07) E
investment
income (loss)
Net realized 5.87 11.85 .67 7.92 5.88
and
unrealized
gain (loss)
Total from 5.62 11.66 .41 7.58 5.81
investment
operations
Less
Distributions
From net (3.31) (4.60) (.33) (6.48) -
realized gain
Redemption .07 .07 .10 .17 .18
fees added to
paid in
capital
Net asset $ 38.58 $ 36.20 $ 29.07 $ 28.89 $ 27.62
value, end of
period
TOTAL 16.14% 40.17% 1.97% 33.19% 27.69%
RETURN B, C
RATIOS AND
SUPPLEMENT
AL DATA
Net assets, $ 389,699 $ 337,633 $ 236,445 $ 178,034 $ 151,212
end of period
(000 omitted)
Ratio of 1.54% 1.48% 1.52% 1.57% 1.64% A
expenses to
average net
assets
Ratio of 1.51% F 1.47% F 1.50% F 1.57% 1.64% A
expenses to
average net
assets after
expense
reductions
Ratio of net (.66)% (.54)% (1.01)% (1.19)% (.37)%
investment A
income (loss)
to average
net assets
Portfolio 279% 183% 164% 376% 402% A
turnover rate
Average $ .0427
commission
rate G
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
A ANNUALIZED B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 8 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 8 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. You can
look at the total percentage change in value, the average annual percentage
change, or the growth of a hypothetical $10,000 investment. Total return
reflects the change in the value of an investment, assuming reinvestment of
the fund's dividend income and capital gains (the profits earned upon the
sale of securities that have grown in value), but does not include certain
fees paid by shareholders upon exchange or redemption.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 28, 1997 YEAR YEARS YEARS
TECHNOLOGY 12.64% 154.48% 258.38%
TECHNOLOGY 9.26% 146.84% 247.63%
(INCL. 3% SALES CHARGE)
S&P 500 26.16% 118.75% 276.74%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one, five, or 10 years. You can compare
the fund's returns 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, and excludes the effect of sales
charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 28, 1997 YEAR YEARS YEARS
TECHNOLOGY 12.64% 20.54% 13.61%
TECHNOLOGY 9.26% 19.81% 13.27%
(INCL. 3% SALES CHARGE)
S&P 500 26.16% 16.94% 14.16%
AVERAGE ANNUAL RETURNS take the fund's 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
1987/02/28 9700.00 10000.00
1987/03/31 9149.23 10289.00
1987/04/30 9413.75 10197.43
1987/05/31 9627.53 10286.15
1987/06/30 9341.28 10805.60
1987/07/31 9435.49 11353.44
1987/08/31 9989.88 11776.92
1987/09/30 10040.61 11519.01
1987/10/31 6507.73 9037.81
1987/11/30 5659.84 8293.10
1987/12/31 6479.71 8924.20
1988/01/31 6130.28 9299.91
1988/02/29 6737.99 9733.29
1988/03/31 6665.82 9432.53
1988/04/30 6920.30 9537.23
1988/05/31 6730.39 9620.20
1988/06/30 7349.50 10061.77
1988/07/31 6802.56 10023.54
1988/08/31 6175.86 9682.74
1988/09/30 6342.98 10095.22
1988/10/31 6080.90 10375.87
1988/11/30 5898.59 10227.49
1988/12/31 6304.99 10406.47
1989/01/31 6813.95 11168.23
1989/02/28 6627.84 10890.14
1989/03/31 6506.30 11143.88
1989/04/30 6977.27 11722.25
1989/05/31 7547.00 12197.00
1989/06/30 6878.52 12127.48
1989/07/31 7000.06 13222.59
1989/08/31 7151.99 13481.75
1989/09/30 7322.91 13426.47
1989/10/31 7269.73 13114.98
1989/11/30 7288.72 13382.52
1989/12/31 7376.08 13703.71
1990/01/31 7224.16 12784.19
1990/02/28 7630.56 12949.10
1990/03/31 7987.59 13292.25
1990/04/30 7626.76 12959.95
1990/05/31 8610.49 14223.54
1990/06/30 8686.46 14126.82
1990/07/31 8223.08 14081.62
1990/08/31 7102.61 12808.64
1990/09/30 6498.70 12184.86
1990/10/31 6684.81 12132.46
1990/11/30 7687.53 12916.22
1990/12/31 8150.91 13276.58
1991/01/31 9525.86 13855.44
1991/02/28 10008.23 14846.11
1991/03/31 10809.65 15205.38
1991/04/30 10277.90 15241.87
1991/05/31 10847.63 15900.32
1991/06/30 9795.28 15172.09
1991/07/31 10879.83 15879.11
1991/08/31 11414.46 16255.44
1991/09/30 11471.75 15983.98
1991/10/31 11781.07 16198.16
1991/11/30 11395.37 15545.38
1991/12/31 12957.62 17323.77
1992/01/31 13450.41 17001.55
1992/02/29 13660.51 17222.57
1992/03/31 12575.61 16886.73
1992/04/30 12392.25 17383.20
1992/05/31 12514.49 17468.37
1992/06/30 11619.82 17208.09
1992/07/31 12211.86 17911.90
1992/08/31 11586.47 17544.71
1992/09/30 12153.49 17751.74
1992/10/31 12870.61 17813.87
1992/11/30 13912.93 18421.32
1992/12/31 14088.04 18647.90
1993/01/31 14517.48 18804.55
1993/02/28 14434.09 19060.29
1993/03/31 14621.71 19462.46
1993/04/30 14579.79 18991.47
1993/05/31 16050.68 19500.44
1993/06/30 16834.54 19556.99
1993/07/31 16387.27 19478.76
1993/08/31 17263.35 20217.01
1993/09/30 17530.79 20061.34
1993/10/31 17184.97 20476.61
1993/11/30 17018.97 20282.08
1993/12/31 18124.28 20527.49
1994/01/31 19036.81 21225.43
1994/02/28 19574.97 20650.22
1994/03/31 18915.14 19749.87
1994/04/30 18534.17 20002.67
1994/05/31 18563.39 20330.71
1994/06/30 16990.47 19832.61
1994/07/31 17647.88 20483.12
1994/08/31 19508.11 21322.93
1994/09/30 19410.72 20800.52
1994/10/31 20136.31 21268.53
1994/11/30 19858.73 20493.93
1994/12/31 20141.18 20797.85
1995/01/31 19357.15 21337.14
1995/02/28 20477.19 22168.65
1995/03/31 21723.84 22822.85
1995/04/30 23361.19 23494.98
1995/05/31 24264.91 24434.07
1995/06/30 26519.19 25001.68
1995/07/31 29200.23 25830.73
1995/08/31 30103.95 25895.57
1995/09/30 31489.65 26988.36
1995/10/31 31017.71 26892.01
1995/11/30 30857.05 28072.57
1995/12/31 28964.39 28613.25
1996/01/31 29257.93 29587.24
1996/02/29 30861.10 29861.52
1996/03/31 28473.28 30149.08
1996/04/30 30925.31 30593.48
1996/05/31 31764.06 31382.49
1996/06/30 29504.57 31502.05
1996/07/31 26354.98 30110.29
1996/08/31 27376.32 30745.32
1996/09/30 30885.37 32475.67
1996/10/31 30662.85 33371.34
1996/11/30 34445.78 35893.88
1996/12/31 33546.03 35182.83
1997/01/31 37516.37 37381.05
1997/02/28 34763.04 37674.12
Let's say hypothetically that $10,000 was invested in Fidelity Select
Technology Portfolio on February 28, 1987, and the current maximum 3% sales
charge was paid. As the chart shows, by February 28, 1997, the value of the
investment would have grown to $34,763 - a 247.63% increase on the initial
investment. For comparison, look at how the S&P 500 did over the same
period. With dividends and capital gains, if any, reinvested, the same
$10,000 investment would have grown to $37,674 - a 276.74% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1997
% OF FUND'S
INVESTMENTS
Applied Materials, Inc. 6.8
Electronic Arts, Inc. 5.0
ASM Lithography Holding NV 4.4
Lattice Semiconductor Corp. 3.6
Altera Corp. 3.3
Ciena Corp. 3.2
Ascend Communications, Inc. 3.0
Teradyne, Inc. 2.9
Texas Instruments, Inc. 2.6
Tencor Instruments 2.1
TOP INDUSTRIES AS OF FEBRUARY 28, 1997
Row: 1, Col: 1, Value: 50.0
Row: 1, Col: 2, Value: 4.0
Row: 1, Col: 3, Value: 4.4
Row: 1, Col: 4, Value: 8.699999999999999
Row: 1, Col: 5, Value: 9.300000000000001
Row: 1, Col: 6, Value: 23.6
Semiconductors 23.6%
Semiconductor Capital
Equipment 9.3%
Prepackaged Computer
Software 8.7%
Commercial Printing,
Lithographic 4.4%
Telephone Equipment 4.0%
All Others 50.0% *
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
TECHNOLOGY PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Adam Hetnarski,
Portfolio Manager of
Fidelity Select Technology Portfolio
Q. HOW DID THE FUND PERFORM, ADAM?
A. The first six months were very difficult, while the past six months of
the period experienced excellent performance. During the 12 months ending
February 28, 1997, the fund was up 12.64%, compared to a rise of 26.16% by
the Standard & Poor's 500 Index over the same time.
Q. WHAT FACTORS AFFECTED THE FUND'S RETURNS OVER THE PAST 12 MONTHS?
A. Shareholders might want to look at the past year as two rather distinct
six-month periods. During the first half of the year, the fund suffered
because of a market correction in technology stocks in May and June. This
downturn had a major impact on the fund's large holdings in networking
companies as well as its overall performance, with the fund's net asset
value actually dropping over the period's first six months. Since the
summer, the fund has rebounded thanks to strong stock selection and an
emphasis on certain top-performing industries of the technology market,
including semiconductor capital equipment companies and proprietary chip
manufacturers. Relative to the S&P 500, though, the fund's 27% appreciation
over the past six months could not offset the disappointing first half.
Q. YOU MENTIONED SEMICONDUCTOR CAPITAL EQUIPMENT COMPANIES AND PROPRIETARY
CHIP MANUFACTURERS AS TOP-PERFORMING SECTORS. COULD YOU GO INTO MORE
DETAIL?
A. Sure. Among semiconductor capital equipment companies, four of the
fund's top holdings - Applied Materials, Teradyne, Tencor Instruments and
Novellus - took off over the past six months, with their stocks more than
doubling in price in some cases. These companies benefited from three
factors: their customers - mostly communications and computer companies -
had reduced inventories, thereby creating new demand for their products;
their business fundamentals - as seen in their balance sheets and income
statements - were improving; and they had proprietary technologies their
competitors would have difficulty matching.
Q. AND THE PROPRIETARY CHIP COMPANIES? WHAT HAPPENED THERE?
A. Intel, another of the fund's larger holdings, chose not to make price
cuts late in the year, a departure from its recent history. As a result,
its margins were great, its earnings were huge and the stock was a home
run, up over 70% since my previous report to shareholders. Lattice
Semiconductor and Altera Corp., whose stocks were either flat or down
during the first half of the period, had tremendous gains over the past six
months. Altera has done well with its proprietary programmable logic
devices, seeing enormous unit volume growth.
Q. WHAT WERE THE DISAPPOINTMENTS, ADAM?
A. The first half of the period was a real disappointment, given the market
correction in technology stocks in the late spring. But technology had a
great rally before the correction, and the sector has bounced back since
then. As far as the fund's larger holdings during the past six months,
neither Electronic Arts, the video and computer game company, nor Ascend
Communications, the networking company, did as well as I hoped. I continued
to believe in the business prospects of these companies, however, and they
remained among the fund's biggest investments as of the end of the period.
Q. THE FUND HAD ABOUT 18% OF ITS INVESTMENTS IN CASH AND CASH EQUIVALENTS
AT THE PERIOD'S END. THAT SEEMS HIGH . . .
A. It certainly is high for this fund, and it's not typical of my
investment approach in general or how I manage Select Technology. Generally
speaking, the fund will hold 5%-10% in cash week to week. Occasionally, I
may hold more cash than that if I'm waiting to invest in a specific
opportunity I've been following, or if I see an impending event that might
drive the technology market down. These are rare occasions, though. As a
rule I try to have the fund as fully invested as possible in the market,
and I see the cash position at the end of the period as an aberration.
Q. WHAT'S YOUR OUTLOOK FOR THE FUTURE?
A. I think we'll exit 1997 on a more positive note than we did leaving
1996, with the additional software being written for 32-bit PC platforms
and video-capable PCs driving demand on both the hardware and software
sides. I also see good demand for networking products for corporate
infrastructures. On the whole, I'm fairly positive about the opportunities
ahead for the technology 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: 064
TRADING SYMBOL: FSPTX
SIZE: as of February 28, 1997, more than
$478 million
MANAGER: Adam Hetnarski, since 1996; joined
Fidelity in 1991
(checkmark)
TECHNOLOGY PORTFOLIO
INVESTMENTS FEBRUARY 28, 1997
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 81.9%
SHARES VALUE (NOTE 1)
AIR TRANSPORTATION - 1.8%
AIR TRANSPORT, MAJOR NATIONAL - 1.3%
America West Holding Corp. Class B (a) 132,500 $ 1,838,424
AMR Corp. (a) 60,000 4,717,500
6,555,924
AIR TRANSPORTATION, REGIONAL - 0.5%
Comair Holdings, Inc. 112,200 2,314,125
TOTAL AIR TRANSPORTATION 8,870,049
BANKS - 0.9%
NATIONAL COMMERCIAL BANKS - 0.9%
Capital One Financial Corp. 109,800 4,364,550
COMMUNICATIONS EQUIPMENT - 4.2%
DATACOMMUNICATIONS EQUIPMENT - 0.2%
Amati Communications Corp. (a) 100 1,388
Cisco Systems, Inc. (a) 4,900 272,563
Dynatech Corp. (a) 100 2,800
Level One Communications, Inc. 21,700 713,388
3Com Corp. (a) 100 3,311
993,450
TELEPHONE EQUIPMENT - 4.0%
Ascend Communications, Inc. (a) 291,500 15,230,875
DSC Communications Corp. (a) 100 2,100
Ericsson (L.M.) Telephone Co.
Class B ADR 31,700 1,000,036
Nokia Corp. AB sponsored ADR 34,600 2,024,100
Pairgain Technologies, Inc. (a) 31,900 943,044
U.S. Robotics Corp. 100 5,581
Yurie Systems, Inc. 55,500 707,625
19,913,361
TOTAL COMMUNICATIONS EQUIPMENT 20,906,811
COMPUTER SERVICES & SOFTWARE - 13.9%
CAD/CAM/CAE - 0.0%
Parametric Technology Corp. (a) 100 5,638
COMPUTER FACILITIES MANAGEMENT - 0.1%
Alternative Resources Corp. (a) 40,000 615,000
COMPUTER SERVICES - 2.6%
America Online, Inc. (a) 52,400 1,965,000
Clarify, Inc. (a) 21,800 558,625
HBO & Co. 1,600 92,200
Midway Games, Inc. (a)(c) 276,800 4,325,000
SunGard Data Systems, Inc. (a) 33,400 1,695,050
Viasoft, Inc. (a) 122,800 4,420,800
13,056,675
CUSTOM COMP PROGRAMMING SERVICES - 2.5%
Keane, Inc. (a) 120,200 4,237,050
Softdesk, Inc. (a)(c) 577,200 8,008,650
Walsh International, Inc. 34,900 292,288
12,537,988
PREPACKAGED COMPUTER SOFTWARE - 8.7%
Activision, Inc. (a) 361,000 4,828,375
Autodesk, Inc. 100 3,388
Baan Co. NV (a) 100 4,438
Cadence Design Systems, Inc. (a) 7,000 258,125
Eagle Point Software Corp. (a) 80,200 310,775
Electronic Arts, Inc. (a) 794,100 24,815,625
IONA Technologies PLC sponsored ADR 500 10,063
SHARES VALUE (NOTE 1)
Lycos, Inc. 94,900 $ 1,779,375
Maxis, Inc. (a) 100 1,038
Microsoft Corp. (a) 2,000 195,000
Netscape Communications Corp. (a) 100 2,913
Oracle Systems Corp. (a) 150 5,888
Peerless Systems Corp. 67,500 1,096,875
Rational Software Corp. (a) 37,700 975,488
Scopus Technology, Inc. (a) 8,250 180,469
Spectrum Holobyte, Inc. (a) 765,500 6,315,375
Symantec Corp. (a) 111,400 1,740,625
Vantive Corp. (a) 7,900 175,775
Yahoo, Inc. 27,900 843,975
43,543,585
TOTAL COMPUTER SERVICES & SOFTWARE 69,758,886
COMPUTERS & OFFICE EQUIPMENT - 3.5%
COMPUTER EQUIPMENT - WHOLESALE - 0.0%
Ingram Micro, Inc. Class A (a) 100 2,275
COMPUTER PERIPHERALS - 2.9%
Applied Magnetics Corp. (a) 59,700 2,320,838
Creative Technology Corp. Ltd. (a) 37,400 461,072
EMC Corp. (a) 193,700 6,973,200
Fore Systems, Inc. (a) 39,100 1,309,850
SCI Systems, Inc. (a) 60,000 3,210,000
Sigma Designs, Inc. (a) 66,300 331,500
Western Digital Corp. (a) 100 5,900
14,612,360
COMPUTER RENTAL & LEASING - 0.2%
Comdisco, Inc. 36,850 1,146,956
COMPUTER STORAGE DEVICES - 0.4%
Adaptec, Inc. (a) 100 3,806
Quantum Corp. 7,100 282,225
Seagate Technology (a) 34,600 1,634,850
1,920,881
MINI & MICRO COMPUTERS - 0.0%
Compaq Computer Corp. (a) 100 7,925
Dell Computer Corp. (a) 100 7,113
15,038
TOTAL COMPUTERS & OFFICE EQUIPMENT 17,697,510
CONSUMER DURABLES - 3.9%
MANUFACTURING INDUSTRIES - 0.3%
Wireless Telecom Group, Inc. 160,000 1,720,000
PRESSED & BLOWN GLASS - 3.6%
Ciena Corp. (c) 404,900 15,892,325
Dupont Photomasks, Inc. (a) 39,100 1,837,700
17,730,025
TOTAL CONSUMER DURABLES 19,450,025
CREDIT & OTHER FINANCE - 0.3%
MORTGAGE BANKERS - 0.3%
Imperial Credit Industries (a) 60,000 1,447,500
DRUGS & PHARMACEUTICALS - 5.2%
BIOTECHNOLOGY - 1.8%
Biogen, Inc. (a) 115,400 5,683,450
COR Therapeutics, Inc. (a) 100 1,231
Protein Design Labs, Inc. (a) 43,600 1,635,000
Sepracor, Inc. (a) 70,500 1,700,813
9,020,494
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
DRUGS & PHARMACEUTICALS - CONTINUED
COMMERCIAL LABORATORY RESEARCH - 0.6%
Integrated Process Equipment Corp. (a) 115,000 $ 2,903,750
Millennium Pharmaceuticals, Inc. 100 1,675
2,905,425
DRUGS - 2.8%
Merck & Co., Inc. 54,700 5,032,400
Pfizer, Inc. 50,000 4,581,250
Warner-Lambert Co. 50,000 4,200,000
13,813,650
TOTAL DRUGS & PHARMACEUTICALS 25,739,569
ELECTRONIC INSTRUMENTS - 13.0%
ELECTRONIC EQUIPMENT - 3.7%
Advantest Corp. (a) 79,200 4,492,776
Credence Systems Corp. (a) 100 2,325
Teradyne, Inc. (a) 523,900 14,276,275
18,771,376
SEMICONDUCTOR CAPITAL EQUIPMENT - 9.3%
Applied Materials, Inc. (a) 667,700 33,802,313
Kulicke & Soffa Industries, Inc. (a) 6,200 164,300
Lam Research Corp. (a) 44,500 1,696,563
Novellus System, Inc. (a) 121,800 9,957,150
Silicon Valley Group, Inc. (a) 35,300 754,538
46,374,864
TOTAL ELECTRONIC INSTRUMENTS 65,146,240
ELECTRONICS - 25.6%
ELECTRONIC PARTS - WHOLESALE - 0.6%
Brightpoint, Inc. (a) 103,200 2,786,400
ELECTRONICS & ELECTRONIC COMPONENTS - 1.3%
Photronics, Inc. (a) 167,100 5,764,950
Sipex Corp. 29,100 923,925
6,688,875
PRINTED CIRCUIT BOARDS - 0.1%
Elexsys International, Inc. (a) 42,400 715,500
SEMICONDUCTORS - 23.6%
Actel Corp. (a) 101,000 1,969,500
Altera Corp. (a) 365,000 16,561,875
Atmel Corp. (a) 79,500 2,971,313
Chips & Technologies, Inc. (a) 100 1,275
Cypress Semiconductor Corp. (a) 100 1,325
Dallas Semiconductor Corp. 50,500 1,313,000
ESS Technology, Inc. 42,600 1,120,913
Etec Systems, Inc. (a) 111,600 4,045,500
Integrated Device Technology, Inc. (a) 52,700 579,700
Integrated Silicon Solution (a) 58,100 530,163
Intel Corp. 75,000 10,640,625
Intel Corp. (warrants) (a) 10,000 1,017,344
LSI Logic Corp. (a) 138,100 4,764,450
Lattice Semiconductor Corp. (a) 374,800 17,896,700
Linear Technology Corp. 117,600 5,350,800
Maxim Integrated Products, Inc. (a) 74,800 3,711,950
Micrel, Inc. (a) 74,700 2,539,800
Micro Linear Corp. (a) 127,300 1,686,725
Microchip Technology, Inc. (a) 15,250 569,969
Micron Technology, Inc. 47,300 1,773,750
Motorola, Inc. 58,400 3,263,100
Speedfam International, Inc. (a) 110,100 4,101,225
Tencor Instruments (a) 267,100 10,700,694
Texas Instruments, Inc. 165,800 12,787,325
SHARES VALUE (NOTE 1)
Tokyo Electron Ltd. 82,000 $ 2,878,270
Uniphase Corp. (a) 100 3,275
Unitrode Corp. (a) 58,800 2,146,200
Xilinx, Inc. (a) 5,300 239,163
Zilog, Inc. (a) 123,100 2,908,238
118,074,167
TOTAL ELECTRONICS 128,264,942
ENERGY SERVICES - 0.0%
DRILLING - 0.0%
Cliffs Drilling Co. (a) 100 4,638
Falcon Drilling, Inc. (a) 100 3,388
8,026
ENGINEERING - 0.3%
ARCHITECTS & ENGINEERS - 0.3%
EG & G, Inc. 77,900 1,694,325
INDUSTRIAL MACHINERY & EQUIPMENT - 0.7%
SPECIAL INDUSTRIAL MACHINERY, - 0.7%
PRI Automation, Inc. (a) 74,300 3,668,563
LEISURE DURABLES & TOYS - 0.0%
TOYS & GAMES - 0.0%
Nintendo Co. Ltd. Ord. 2,500 176,960
LODGING & GAMING - 0.8%
RACING & GAMING - 0.8%
WMS Industries, Inc. (a) 204,375 4,061,953
MEDICAL EQUIPMENT & SUPPLIES - 0.5%
MEDICAL, DENTAL, HOSPITAL EQUIPMENT - WHOLESALE - 0.5%
ESC Medical Systems Ltd. (a) 70,000 2,397,500
MEDICAL TECHNOLOGY - 0.0%
Medtronic, Inc. 100 6,475
TOTAL MEDICAL EQUIPMENT & SUPPLIES 2,403,975
PACKAGING & CONTAINERS - 0.0%
METAL CANS & SHIPPING CONTAINERS - 0.0%
Silgan Holdings, Inc. 1,300 33,150
PRINTING - 4.4%
COMMERCIAL PRINTING, LITHOGRAPHIC - 4.4%
ASM Lithography Holding NV (a) 329,900 21,938,350
RETAIL & WHOLESALE, MISCELLANEOUS - 1.0%
BUILDING MATERIALS - RETAIL - 0.5%
Home Depot, Inc. (The) 40,000 2,180,000
RETAIL STORES - 0.5%
Gadzooks, Inc. (a) 112,000 2,744,000
RETAIL, GENERAL - 0.0%
Staples, Inc. (a) 100 2,163
TOTAL RETAIL & WHOLESALE, MISCELLANEOUS 4,926,163
SERVICES - 0.2%
MANAGEMENT CONSULTING SERVICES - 0.2%
Registry, Inc. 18,600 757,950
TELEPHONE SERVICES - 1.7%
LCI International, Inc. (a) 20,000 380,000
Tel-Save Holdings, Inc. (a) 40,000 715,000
WorldCom, Inc. (a) 271,000 7,215,375
8,310,375
TOTAL COMMON STOCKS
(Cost $398,461,300) 409,625,872
CASH EQUIVALENTS - 18.1%
SHARES VALUE (NOTE 1)
Taxable Central Cash Fund (b)
(Cost $90,653,406) 90,653,406 $ 90,653,406
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $489,114,706) $ 500,279,278
LEGEND
1. Non-income producing
2. At period end, the seven-day yield on the Taxable Central Cash Fund was
5.31%. The yield refers to the income earned by investing in the fund over
the seven-day period, expressed as an annual percentage.
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
Ciena Corp. $ 4,457,725 $ - $ - $ 15,892,325
Midway Games, Inc. 283,938 - - 4,325,000
Softdesk, Inc. 3,164,378 122,278 - 8,008,650
Target Technologies, Inc. - 441,075 - -
Telechips Corp. - - - -
Totals $ 7,906,041 $ 563,353 $ - $ 28,225,975
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $2,316,984,876 and $2,376,300,491, respectively (see Note 3 of
Notes to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $339,803 for the period
(see Note 4 of Notes to Financial Statements).
At the period end, the value of securities loaned and the value of
collateral amounted to $18,652,763 and $19,378,100, respectively (see Note
6 of Notes to Financial Statements).
INCOME TAX INFORMATION
At February 28, 1997, the aggregate cost of investment securities for
income tax purposes was $493,247,122. Net unrealized appreciation
aggregated $7,032,156, of which $28,627,470 related to appreciated
investment securities and $21,595,314 related to depreciated investment
securities.
The fund hereby designates approximately $32,750,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 13% of the dividends distributed during the fiscal year
qualifies for the dividends-received deduction for corporate shareholders
(unaudited).
The fund will notify shareholders in January 1998 of the applicable
percentage for use in preparing 1997 income tax returns.
TECHNOLOGY PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1997
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS
Investment in securities, at value $ 500,279,278
(cost $489,114,706) - See accompanying schedule
Receivable for investments sold 42,820,414
Receivable for fund shares sold 4,423,750
Dividends receivable 41,538
Interest receivable 306,989
Redemption fees receivable 2,504
Other receivables 54,079
TOTAL ASSETS 547,928,552
LIABILITIES
Payable to custodian bank $ 151,064
Payable for investments purchased 32,168,532
Payable for fund shares redeemed 17,121,464
Accrued management fee 260,380
Other payables and accrued expenses 404,809
Collateral on securities loaned, 19,378,100
at value
TOTAL LIABILITIES 69,484,349
NET ASSETS $ 478,444,203
Net Assets consist of:
Paid in capital $ 379,270,691
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 88,008,940
Net unrealized appreciation (depreciation) on investments 11,164,572
NET ASSETS, for 8,291,694 $ 478,444,203
shares outstanding
NET ASSET VALUE and redemption price per share ($478,444,203 (divided by) 8,291,694 shares) $57.70
Maximum offering price per share (100/97.00 of $57.70) $59.48
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1997
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME $ 757,234
Dividends
Interest (including income on securities loaned of $294,362) 2,572,217
TOTAL INCOME 3,329,451
EXPENSES
Management fee $ 2,800,144
Transfer agent fees 3,384,527
Accounting and security lending fees 482,779
Non-interested trustees' compensation 2,423
Custodian fees and expenses 60,403
Registration fees 71,854
Audit 47,030
Legal 30,673
Miscellaneous 14,319
Total expenses before reductions 6,894,152
Expense reductions (239,984 6,654,168
)
NET INVESTMENT INCOME (LOSS) (3,324,717
)
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities (including 119,124,997
realized gain (loss) of
$(88,619) on sales of
investments in affiliated issuers)
Foreign currency transactions (10,018 119,114,979
)
Change in net unrealized appreciation (depreciation) on:
Investment securities (64,794,351
)
Assets and liabilities in 641 (64,793,710
foreign currencies )
NET GAIN (LOSS) 54,321,269
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 50,996,552
OTHER INFORMATION $ 1,543,709
Sales charges paid to FDC
Deferred sales charges withheld $ 36,252
by FDC
Exchange fees withheld by FSC $ 154,238
Expense reductions $ 225,797
Directed brokerage arrangements
Custodian interest credits 12,047
Transfer agent interest credits 2,140
$ 239,984
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE YEAR ENDED YEAR ENDED
(DECREASE) IN FEBRUARY 28, FEBRUARY 29,
NET ASSETS 1997 1996
Operations $ (3,324,717 $ (1,983,084
Net ) )
investment
income (loss)
Net realized 119,114,979 81,893,509
gain (loss)
Change in (64,793,710 45,607,438
net )
unrealized
appreciation
(depreciation
)
NET INCREASE 50,996,552 125,517,863
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
Distributions to (30,475,050 (54,900,757
shareholders ) )
from net
realized
gains
Share 480,116,219 586,067,139
transactions
Net proceeds
from sales of
shares
Reinvestmen 29,879,560 53,878,429
t of
distributions
Cost of (536,349,238 (458,176,007
shares ) )
redeemed
Paid in 1,250,125 878,697
capital
portion of
redemption
fees
NET INCREASE (25,103,334 182,648,258
(DECREASE) )
IN NET
ASSETS
RESULTING
FROM SHARE
TRANSACTIO
NS
TOTAL (4,581,832 253,265,364
INCREASE )
(DECREASE)
IN NET ASSETS
NET ASSETS
Beginning of 483,026,035 229,760,671
period
End of period $ 478,444,203 483,026,035
OTHER
INFORMATION
Shares
Sold 8,803,236 10,597,931
Issued in 541,096 1,032,983
reinvestment
of
distributions
Redeemed (9,887,922 (8,259,673
) )
Net increase (543,590) 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>
YEAR ENDED YEAR ENDED YEARS ENDED FEBRUARY 28, TEN MONTHS
FEBRUARY 28, FEBRUARY 29, ENDED
FEBRUARY 28,
SELECTED 1997 1996 1995 1994 1993
PER-SHARE
DATA D
</TABLE>
Net asset $ 54.67 $ 42.05 $ 41.83 $ 34.62 $ 32.44
value,
beginning of
period
Income from
Investment
Operations
Net (.39) (.28) (.39) (.24) F .13 G
investment
income (loss)
Net realized 6.95 20.83 1.95 11.04 4.68
and
unrealized
gain (loss)
Total from 6.56 20.55 1.56 10.80 4.81
investment
operations
Less
Distributions
From net - - - (.13) -
investment
income
From net (3.68) (8.05) (1.50) (3.70) (2.75)
realized gain
Total (3.68) (8.05) (1.50) (3.83) (2.75)
distributions
Redemption .15 .12 .16 .24 .12
fees added to
paid in
capital
Net asset $ 57.70 $ 54.67 $ 42.05 $ 41.83 $ 34.62
value, end of
period
TOTAL 12.64% 50.71% 4.61% 35.62% 16.48%
RETURN B, C
RATIOS AND
SUPPLEMENT
AL DATA
Net assets, $ 478,444 $ 483,026 $ 229,761 $ 202,475 $ 132,689
end of period
(000 omitted)
Ratio of 1.49% 1.40% 1.57% 1.55% 1.64% A
expenses to
average net
assets
Ratio of 1.44% E 1.39% E 1.56% E 1.54% E 1.64% A
expenses to
average net
assets after
expense
reductions
Ratio of net (.72)% (.52)% (.98)% (.65)% .52% A
investment
income (loss)
to average
net assets
Portfolio 549% 112% 102% 213% 259% A
turnover rate
Average $ .0191
commission
rate H
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
A ANNUALIZED B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 8 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 8 OF NOTES TO FINANCIAL
STATEMENTS). F INVESTMENT INCOME (LOSS) 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>
NATURAL GAS PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance. You can
look at the total percentage change in value, the average annual percentage
change, or the growth of a hypothetical $10,000 investment. Total return
reflects the change in the value of an investment, assuming reinvestment of
the fund's dividend income and capital gains (the profits earned upon the
sale of securities that have grown in value), but does not include certain
fees paid by shareholders upon exchange or redemption.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 LIFE OF
FEBRUARY 28, 1997 YEAR FUND
NATURAL GAS 12.45% 30.49%
NATURAL GAS 9.07% 26.58%
(INCL. 3% SALES CHARGE)
S&P 500 26.16% 96.27%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one year, or since the fund started on
April 21, 1993. You can compare the fund's returns 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, and
excludes the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 LIFE OF
FEBRUARY 28, 1997 YEAR FUND
NATURAL GAS 12.45% 7.13%
NATURAL GAS 9.07% 6.29%
(INCL. 3% SALES CHARGE)
S&P 500 26.16% 19.07%
AVERAGE ANNUAL RETURNS take the fund's 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
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
1996/08/31 12867.47 16017.09
1996/09/30 13406.94 16918.54
1996/10/31 14376.00 17385.15
1996/11/30 15195.20 18699.29
1996/12/31 15026.99 18328.86
1997/01/31 14794.09 19474.05
1997/02/28 12657.51 19626.72
Let's say hypothetically that $10,000 was invested in Fidelity Select
Natural Gas Portfolio on April 21, 1993, when the fund started, and the
current maximum 3% sales charge was paid. As the chart shows, by February
28, 1997, the value of the investment would have grown to $12,658 - a
26.58% increase on the initial investment. For comparison, look at how the
S&P 500 did over the same period. With dividends and capital gains, if any,
reinvested, the same $10,000 investment would have grown to $19,627 - a
96.27% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1997
% OF FUND'S
INVESTMENTS
Coastal Corp. (The) 5.2
Burlington Resources, Inc. 5.1
Louisiana Land & Exploration Co. 4.6
Chesapeake Energy Corp. 4.5
Anadarko Petroleum Corp. 4.3
Flores & Rucks, Inc. 4.0
Noble Affiliates, Inc. 3.1
Cabot Oil & Gas Corp. Class A 3.1
Renaissance Energy Ltd. 3.0
Questar Corp. 3.0
TOP INDUSTRIES AS OF FEBRUARY 28, 1997
Crude Petroleum & Gas 61.8%
Oil & Gas Exploration 12.1%
Gas Transmission 7.2%
Petroleum Refiners 5.3%
Gas Transmission
& Distribution 4.0%
All Others 9.6% *
Row: 1, Col: 1, Value: 9.6
Row: 1, Col: 2, Value: 4.0
Row: 1, Col: 3, Value: 5.3
Row: 1, Col: 4, Value: 7.2
Row: 1, Col: 5, Value: 12.1
Row: 1, Col: 6, Value: 61.8
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
NATURAL GAS PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
NOTE TO SHAREHOLDERS: Stephen Binder became Portfolio Manager of Fidelity
Select Natural Gas Portfolio on November 1, 1996.
Q. STEVE, HOW DID THE FUND PERFORM?
A. For the 12-month period that ended February 28, 1997, the fund returned
12.45%. By comparison, the Standard & Poor's 500 Index was up 26.16% over
the same time period.
Q. HOW WOULD YOU DESCRIBE THE NATURAL GAS ENVIRONMENT DURING THE ONE-YEAR
PERIOD?
A. One of the most important factors in determining how this sector and the
fund perform is the weather. How cold a winter is or how hot a summer is
strongly influences the demand for and price of natural gas. The winter of
1995/1996 was unusually cold, and that triggered higher demand and
increased prices of natural gas. At the end of that winter, inventories of
natural gas were at record lows. Even though the summer of 1996 was cooler
than normal, and demand and prices dropped somewhat, natural gas
inventories remained at very low levels. Inventories were so low in fact
that when there was a period of extremely cold weather in November and
December, the market panicked about the small supply of natural gas and bid
its price up to a five-year high. Then, in January and February of 1997,
gas prices dropped significantly because of milder-than-normal winter
weather across the U.S. Overall, the fund outperformed the S&P 500 index
during 1996, but the index beat the fund in early 1997.
Q. IS THERE ANYTHING YOU COULD HAVE DONE DIFFERENTLY TO OFFSET HOW THE DROP
IN NATURAL GAS PRICES AFFECTED THE FUND IN EARLY 1997?
A. Yes. I could have reduced the fund's holdings in the exploration and
production (E&P) industry, which made up a majority of the fund at the end
of the period. E&P stocks, such as Louisiana Land & Exploration, were
strongly leveraged to the price of gas, so they performed well for most of
1996, but dropped dramatically this January and February. In hindsight, I
wish I'd owned more integrated pipeline companies, local distribution
companies and gas utilities over those two months. These types of
businesses were off their highs in early 1997, but not nearly as much as
E&P companies.
Q. WHAT HAVE BEEN THE MAJOR TRENDS IN THE NATURAL GAS SECTOR DURING THIS
PERIOD?
A. As a result of upcoming deregulation in the gas and electric industries,
one major trend we're seeing is the convergence of natural gas and
electricity distribution companies. The basic idea behind convergence is
that when gas and electricity are freely tradable, consumers can take
advantage of whichever commodity is the most cost effective. In addition,
convergence allows one company to market all of its customers' energy
needs. Another trend, at least over the past six months, was that Western
gas prices improved dramatically relative to the East. One of the fund's
top 10 stocks, Burlington Resources, a New Mexico company, was helped by
this trend in 1996.
Q. HOW DID YOU TAKE ADVANTAGE OF THE CONVERGENCE TREND?
A. During the period, the fund built up a heavy weighting in Enron Corp., a
company that's been at the forefront of the convergence of gas and electric
distribution companies. However, I sold it when I thought it was too
expensive and replaced it with additional shares of Coastal Corporation, a
very reasonably priced peer. Questar, an integrated gas, pipeline and local
distribution company, also benefited from this convergence theme.
Q. HOW DOES THE INDUSTRY LOOK GOING FORWARD?
A. I expect the natural gas supply and demand balance to maintain a
delicate equilibrium throughout 1997 and 1998. However, recent high gas
prices have induced a lot of new drilling. As a result, it is unclear
whether the industry will suffer from too much new gas supply.
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 February 28, 1997, more than
$81 million
MANAGER: Stephen Binder, since November
1996; manager, Fidelity Select Medical Delivery
Portfolio, 1994-1996; Fidelity Select Financial
Services Portfolio, 1993-1994; Fidelity Select
Defense and Aerospace Portfolio, 1992-1994;
Fidelity Select Regional Banks Portfolio,
1990-1994; joined Fidelity in 1989
(checkmark)
NATURAL GAS PORTFOLIO
INVESTMENTS FEBRUARY 28, 1997
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 98.3%
SHARES VALUE (NOTE 1)
AUTOS, TIRES, & ACCESSORIES - 1.4%
PETROLEUM - WHOLESALE - 1.4%
NGC Corp. 55,023 $ 1,086,697
ENERGY SERVICES - 3.1%
DRILLING - 1.3%
Cliffs Drilling Co. (a) 8,900 412,738
Noble Drilling Corp. (a) 35,600 631,900
1,044,638
OIL & GAS SERVICES - 1.8%
BJ Services Co. (a) 13,800 548,550
Weatherford Enterra, Inc. (a) 27,800 834,000
1,382,550
TOTAL ENERGY SERVICES 2,427,188
GAS - 13.8%
GAS DISTRIBUTION - 2.6%
Aquila Gas Pipeline Corp. 70,300 922,688
K N Energy, Inc. 28,000 1,106,000
2,028,688
GAS TRANSMISSION - 7.2%
Leviathan Gas Pipeline Partners LP unit 35,200 704,000
ONEOK, Inc. 34,297 977,465
Sonat, Inc. 39,900 1,835,400
Williams Companies, Inc. 47,850 2,093,438
5,610,303
GAS TRANSMISSION & DISTRIBUTION - 4.0%
Questar Corp. 64,600 2,341,750
Tejas Gas Corp. (a) 17,405 761,469
3,103,219
TOTAL GAS 10,742,210
OIL & GAS - 79.6%
CRUDE PETROLEUM & GAS - 61.8%
Anadarko Petroleum Corp. 60,075 3,379,219
Apache Corp. 25,325 819,897
Barrett Resources Corp. (a) 43,200 1,420,200
Belco Oil & Gas Corp. (a) 92,800 1,902,400
Burlington Resources, Inc. 90,257 3,960,026
Cabot Oil & Gas Corp. Class A 150,800 2,393,950
Canadian Natural Resources Ltd. (a) 41,900 998,385
Chesapeake Energy Corp. (a) 168,500 3,496,375
Comstock Resources, Inc. (a) 82,200 739,800
DLB Oil & Gas, Inc. (a) 6,100 79,300
Devon Energy Corp. 37,200 1,162,500
Enron Oil & Gas Co. 76,800 1,555,200
Flores & Rucks, Inc. (a) 68,700 3,091,500
Forcenergy Gas Exploration, Inc. (a) 26,700 694,200
Forest Oil Corp. (a) 17,700 236,738
Fortune Petroleum Corp. (a) 50,000 125,000
Houston Exploration Co. (a) 85,200 1,192,800
Monterey Resources, Inc. (a) 53,300 839,475
Noble Affiliates, Inc. 62,850 2,451,150
Oryx Energy Co. (a) 75,600 1,512,000
Parker & Parsley Petroleum Co. 46,200 1,362,900
Petroleum Securities Australia Ltd. (a) 79,823 341,892
Pogo Producing Co. 29,700 1,020,938
Renaissance Energy Ltd. (a) 82,800 2,345,138
Rio Alto Exploration Ltd. (a) 123,500 762,764
Rutherford-Moran Oil Corp. (a) 56,900 1,159,338
SHARES VALUE (NOTE 1)
Santa Fe Energy Resources, Inc. (a) 65,200 $ 839,450
Snyder Oil Corp. 82,300 1,316,800
Swift Energy Co. (a) 45,200 971,800
Texas Meridian Resources Corp. (a) 51,900 733,088
Union Texas Petroleum Holdings, Inc. 40,000 740,000
Unit Corp. (a) 117,500 925,313
United Meridian Corp. (a) 59,000 1,777,375
Vastar Resources, Inc. 64,000 1,856,000
48,202,911
GENERAL PETROLEUM PRODUCTS - 0.4%
KCS Group, Inc. 8,700 313,200
OIL & GAS EXPLORATION - 12.1%
Abacan Resource Corp. (a) 222,200 2,041,463
Chieftain International, Inc. (a) 61,700 1,246,943
Cross Timbers Oil Co. 42,800 1,155,600
Denbury Resources, Inc. (a) 42,400 523,744
Louisiana Land & Exploration Co. 75,000 3,581,250
Forcenergy AB Class B Free shares 86,600 914,370
9,463,370
PETROLEUM REFINERS - 5.3%
Coastal Corp. (The) 89,900 4,090,450
TOTAL OIL & GAS 62,069,931
SERVICES - 0.4%
MANAGEMENT SERVICES - 0.4%
Metzler Group, Inc. 14,100 338,400
TOTAL COMMON STOCKS
(Cost $79,532,015) 76,664,426
CASH EQUIVALENTS - 1.7%
Taxable Central Cash Fund (b)
(Cost $1,317,933) 1,317,933 1,317,933
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $80,849,948) $ 77,982,359
LEGEND
1. Non-income producing
2. At period end, the seven-day yield on the Taxable Central Cash Fund was
5.31%. The yield refers to the income earned by investing in the fund over
the seven-day period, expressed as an annual percentage.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $292,395,114 and $275,955,815, respectively (see Note 3 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $76,807 for the period (see
Note 4 of Notes to Financial Statements).
The fund participated in the bank borrowing program. The maximum loan and
average daily balances during the period for which loans were outstanding
amounted to $12,125,000 and $2,170,000, respectively. The weighted average
interest rate was 5.7% (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 88.2%
Canada 10.2
Sweden 1.2
Australia 0.4
TOTAL 100.0%
INCOME TAX INFORMATION
At February 28, 1997, the aggregate cost of investment securities for
income tax purposes was $82,165,526. Net unrealized depreciation aggregated
$4,183,167, of which $4,767,931 related to appreciated investment
securities and $8,951,098 related to depreciated investment securities.
The fund hereby designates approximately $4,048,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 100% of the dividends distributed during the fiscal year
qualifies for the dividends-received deduction for corporate shareholders
(unaudited).
The fund will notify shareholders in January 1998 of the applicable
percentage for use in preparing 1997 income tax returns.
NATURAL GAS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1997
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS
Investment in securities, at value $ 77,982,359
(cost $80,849,948) - See accompanying schedule
Receivable for investments sold 4,856,490
Receivable for fund shares sold 1,053,403
Dividends receivable 55,028
Interest receivable 2,999
Redemption fees receivable 1,495
Other receivables 84
TOTAL ASSETS 83,951,858
LIABILITIES
Payable for fund shares redeemed $ 2,224,457
Accrued management fee 50,703
Other payables and accrued expenses 110,535
TOTAL LIABILITIES 2,385,695
NET ASSETS $ 81,566,163
Net Assets consist of:
Paid in capital $ 79,461,231
Unistributed net investment income 168,814
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 4,803,707
Net unrealized appreciation (depreciation) on investments (2,867,589
)
NET ASSETS, for 6,522,783 $ 81,566,163
shares outstanding
NET ASSET VALUE and redemption price per share ($81,566,163 (divided by) 6,522,783 shares) $12.50
Maximum offering price per share (100/97.00 of $12.50) $12.89
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1997
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME $ 816,231
Dividends
Interest 544,750
TOTAL INCOME 1,360,981
EXPENSES
Management fee $ 679,330
Transfer agent fees 993,719
Accounting fees and expenses 113,435
Non-interested trustees' compensation 591
Custodian fees and expenses 18,851
Registration fees 74,515
Audit 28,434
Legal 516
Interest 4,460
Miscellaneous 3,390
Total expenses before reductions 1,917,241
Expense reductions (42,055 1,875,186
)
NET INVESTMENT INCOME (LOSS) (514,205
)
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 7,807,128
Foreign currency transactions (334 7,806,794
)
Change in net unrealized appreciation (depreciation) on:
Investment securities (8,433,538
)
Assets and liabilities in (10 (8,433,548
foreign currencies ) )
NET GAIN (LOSS) (626,754
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ (1,140,959
)
OTHER INFORMATION $ 682,901
Sales charges paid to FDC
Deferred sales charges withheld $ 2,332
by FDC
Exchange fees withheld by FSC $ 126,578
Expense reductions $ 37,173
Directed brokerage arrangements
Custodian interest credits 4,165
Transfer agent interest credits 717
$ 42,055
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE YEAR ENDED YEAR ENDED
(DECREASE) IN FEBRUARY 28, FEBRUARY 29,
NET ASSETS 1997 1996
Operations $ (514,205 $ 320,851
Net )
investment
income (loss)
Net realized 7,806,794 9,256,256
gain (loss)
Change in (8,433,548 7,236,487
net )
unrealized
appreciation
(depreciation
)
NET INCREASE (1,140,959 16,813,594
(DECREASE) )
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
Distributions to (52,511 (323,738
shareholders ) )
From net
investment
income
From net (2,534,533 -
realized gain )
TOTAL (2,587,044 (323,738
DISTRIBUTION ) )
S
Share 455,349,313 96,403,538
transactions
Net proceeds
from sales of
shares
Reinvestmen 2,542,586 314,856
t of
distributions
Cost of (434,506,274 (132,986,230
shares ) )
redeemed
Paid in 1,680,459 112,239
capital
portion of
redemption
fees
NET INCREASE 25,066,084 (36,155,597
(DECREASE) )
IN NET
ASSETS
RESULTING
FROM SHARE
TRANSACTIO
NS
TOTAL 21,338,081 (19,665,741
INCREASE )
(DECREASE)
IN NET ASSETS
NET ASSETS
Beginning of 60,228,082 79,893,823
period
End of period $ 81,566,163 $ 60,228,082
(including
undistribute
d net
investment
income of
$168,814
and
$56,526,
respectivel
y)
OTHER
INFORMATION
Shares
Sold 33,713,794 9,263,323
Issued in 179,967 30,032
reinvestment
of
distributions
Redeemed (32,674,374 (12,883,616
) )
Net increase 1,219,387 (3,590,261)
(decrease)
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
YEAR ENDED YEAR ENDED YEARS ENDED APRIL 21, 1993
FEBRUARY 28, FEBRUARY 29, FEBRUARY 28, (COMMENCEMENT
OF OPERATIONS) TO
FEBRUARY 28,
SELECTED 1997 1996 1995 1994
PER-SHARE
DATA D
Net asset $ 11.36 $ 8.98 $ 9.48 $ 10.00
value,
beginning of
period
Income from
Investment
Operations
Net (.06) .05 .03 .02
investment
income (loss)
Net realized 1.30 G 2.36 (.53) (.46)
and
unrealized
gain (loss)
Total from 1.24 2.41 (.50) (.44)
investment
operations
Less
Distributions
From net (.01) (.05) (.02) -
investment
income
From net (.29) - - (.07)
realized gain
In excess of - - - (.06)
net realized
gain
Total (.30) (.05) (.02) (.13)
distributions
Redemption .20 .02 .02 .05
fees added to
paid in
capital
Net asset $ 12.50 $ 11.36 $ 8.98 $ 9.48
value, end of
period
TOTAL 12.45% 27.10% (5.06)% (3.84)%
RETURN B, C
RATIOS AND $ 81,566 $ 60,228 $ 79,894 $ 63,073
SUPPLEMENT
AL DATA
Net assets,
end of period
(000 omitted)
Ratio of 1.70% 1.68% 1.70% 1.94% A
expenses to
average net
assets
Ratio of 1.66% E 1.67% E 1.66% E 1.93% A,
expenses to E
average net
assets after
expense
reductions
Ratio of net (.46)% .46% .30% .17% A
investment
income (loss)
to average
net assets
Portfolio 283% 79% 177% 44% A
turnover rate
Average $ .0361
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 8 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 8 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>
TELECOMMUNICATIONS PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance. You can
look at the total percentage change in value, the average annual percentage
change, or the growth of a hypothetical $10,000 investment. Total return
reflects the change in the value of an investment, assuming reinvestment of
the fund's dividend income and capital gains (the profits earned upon the
sale of 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 fund expenses, the past 10 year total returns would have
been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 28, 1997 YEAR YEARS YEARS
TELECOMMUNICATIONS 7.85% 113.60% 331.02%
TELECOMMUNICATIONS 4.61% 107.19% 318.09%
(INCL. 3% SALES CHARGE)
S&P 500 26.16% 118.75% 276.74%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one, five, or 10 years. You can compare
the fund's returns 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, and excludes the effect of sales
charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 28, 1997 YEAR YEARS YEARS
TELECOMMUNICATIONS 7.85% 16.39% 15.73%
TELECOMMUNICATIONS 4.61% 15.68% 15.38%
(INCL. 3% SALES CHARGE)
S&P 500 26.16% 16.94% 14.16%
AVERAGE ANNUAL RETURNS take the fund's 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
1987/02/28 9700.00 10000.00
1987/03/31 9579.43 10289.00
1987/04/30 9434.74 10197.43
1987/05/31 9796.46 10286.15
1987/06/30 10170.23 10805.60
1987/07/31 10489.75 11353.44
1987/08/31 10984.09 11776.92
1987/09/30 11207.15 11519.01
1987/10/31 9235.80 9037.81
1987/11/30 8602.80 8293.10
1987/12/31 9154.55 8924.20
1988/01/31 9581.92 9299.91
1988/02/29 9866.84 9733.29
1988/03/31 9910.20 9432.53
1988/04/30 10232.28 9537.23
1988/05/31 10362.35 9620.20
1988/06/30 10901.22 10061.77
1988/07/31 10746.37 10023.54
1988/08/31 10349.97 9682.74
1988/09/30 10987.93 10095.22
1988/10/31 11210.91 10375.87
1988/11/30 11310.02 10227.49
1988/12/31 11696.06 10406.47
1989/01/31 12645.24 11168.23
1989/02/28 12695.19 10890.14
1989/03/31 13213.49 11143.88
1989/04/30 14212.62 11722.25
1989/05/31 15261.71 12197.00
1989/06/30 14888.87 12127.48
1989/07/31 16019.19 13222.59
1989/08/31 16402.24 13481.75
1989/09/30 17005.08 13426.47
1989/10/31 16402.24 13114.98
1989/11/30 16816.70 13382.52
1989/12/31 17647.22 13703.71
1990/01/31 15733.43 12784.19
1990/02/28 15674.85 12949.10
1990/03/31 16039.38 13292.25
1990/04/30 15095.50 12959.95
1990/05/31 16683.82 14223.54
1990/06/30 16351.84 14126.82
1990/07/31 15603.24 14081.62
1990/08/31 13787.10 12808.64
1990/09/30 12895.30 12184.86
1990/10/31 13344.45 12132.46
1990/11/30 14106.06 12916.22
1990/12/31 14753.69 13276.58
1991/01/31 15278.00 13855.44
1991/02/28 15789.03 14846.11
1991/03/31 16233.70 15205.38
1991/04/30 16578.82 15241.87
1991/05/31 16751.37 15900.32
1991/06/30 16054.51 15172.09
1991/07/31 16963.75 15879.11
1991/08/31 17468.15 16255.44
1991/09/30 17693.80 15983.98
1991/10/31 18390.67 16198.16
1991/11/30 17687.17 15545.38
1991/12/31 19305.45 17323.77
1992/01/31 19332.28 17001.55
1992/02/29 19573.68 17222.57
1992/03/31 18883.00 16886.73
1992/04/30 19593.80 17383.20
1992/05/31 19365.80 17468.37
1992/06/30 18916.05 17208.09
1992/07/31 19931.09 17911.90
1992/08/31 19695.82 17544.71
1992/09/30 20078.98 17751.74
1992/10/31 20280.64 17813.87
1992/11/30 21336.01 18421.32
1992/12/31 22262.68 18647.90
1993/01/31 22194.20 18804.55
1993/02/28 23413.13 19060.29
1993/03/31 24371.85 19462.46
1993/04/30 24423.27 18991.47
1993/05/31 25406.38 19500.44
1993/06/30 26501.84 19556.99
1993/07/31 27274.29 19478.76
1993/08/31 29331.80 20217.01
1993/09/30 29753.13 20061.34
1993/10/31 30609.84 20476.61
1993/11/30 28102.91 20282.08
1993/12/31 28878.17 20527.49
1994/01/31 29462.81 21225.43
1994/02/28 28539.70 20650.22
1994/03/31 27647.35 19749.87
1994/04/30 28140.82 20002.67
1994/05/31 27975.57 20330.71
1994/06/30 27951.96 19832.61
1994/07/31 29502.22 20483.12
1994/08/31 30359.98 21322.93
1994/09/30 30005.86 20800.52
1994/10/31 31438.08 21268.53
1994/11/30 29769.78 20493.93
1994/12/31 30125.46 20797.85
1995/01/31 30543.42 21337.14
1995/02/28 30816.71 22168.65
1995/03/31 31202.52 22822.85
1995/04/30 32172.30 23494.98
1995/05/31 33050.47 24434.07
1995/06/30 34642.67 25001.68
1995/07/31 36842.21 25830.73
1995/08/31 37933.77 25895.57
1995/09/30 39181.27 26988.36
1995/10/31 37539.82 26892.01
1995/11/30 38368.75 28072.57
1995/12/31 39059.50 28613.25
1996/01/31 39335.97 29587.24
1996/02/29 38765.75 29861.52
1996/03/31 38584.32 30149.08
1996/04/30 40385.76 30593.48
1996/05/31 41281.98 31382.49
1996/06/30 41702.08 31502.05
1996/07/31 38546.65 30110.29
1996/08/31 39349.51 30745.32
1996/09/30 40507.12 32475.67
1996/10/31 39704.26 33371.34
1996/11/30 40908.55 35893.88
1996/12/31 41168.58 35182.83
1997/01/31 41448.64 37381.05
1997/02/28 41808.72 37674.12
Let's say hypothetically that $10,000 was invested in Fidelity Select
Telecommunications Portfolio on February 28, 1987, and the current maximum
3% sales charge was paid. As the chart shows, by February 28, 1997, the
value of the investment would have grown to $41,809 - a 318.09% increase on
the initial investment. For comparison, look at how the S&P 500 did over
the same period. With dividends and capital gains, if any, reinvested, the
same $10,000 investment would have grown to $37,674 - a 276.74% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1997
% OF FUND'S
INVESTMENTS
WorldCom, Inc. 16.9
Tel-Save Holdings, Inc. 12.1
MCI Communications Corp. 10.1
APT Satellite Holdings Ltd. sponsored ADR 3.8
LCI International, Inc. 3.7
Viatel, Inc. 3.4
Alcatel Alsthom Compagnie Generale
d'Electricite SA 3.4
Telebras PN (Pfd. Reg.) 3.2
Newbridge Networks Corp. 3.1
Nokia Corp. AB sponsored ADR 2.5
TOP INDUSTRIES AS OF FEBRUARY 28, 1997
Row: 1, Col: 1, Value: 16.5
Row: 1, Col: 2, Value: 3.4
Row: 1, Col: 3, Value: 3.8
Row: 1, Col: 4, Value: 6.2
Row: 1, Col: 5, Value: 9.300000000000001
Row: 1, Col: 6, Value: 60.8
Telephone Services 60.8%
Telephone Equipment 9.3%
Cellular & Communication
Services 6.2%
Communications Services 3.8%
Electrical Machinery 3.4%
All Others 16.5% *
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
TELECOMMUNICATIONS PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Nick Thakore, Portfolio Manager of Fidelity Select Telecommunications
Portfolio
Q. HOW DID THE FUND PERFORM, NICK?
A. It was a tough period for telecommunications stocks. For the 12 months
that ended February 28, 1997, the fund returned 7.85%. The Standard &
Poor's 500 Index had a return of 26.16% over the same time frame.
Q. CAN YOU PINPOINT THE REASONS BEHIND THIS UNDERPERFORMANCE?
A. The telecommunications industry as a whole suffered from competitive
fears. This was reflected in the performance of many of the industry's
bellwether stocks, including AT&T and the regional Bell operating companies
(RBOCs). These companies make up a considerable portion of the industry,
and their results were very disappointing.
Q. WHAT WERE THE PRIMARY FACTORS BEHIND THESE COMPETITIVE FEARS?
A. The fear is that as both local and long-distance markets continue to
open, the increased level of competition will hurt earnings. Uncertainty
related to timing and competition guidelines, combined with the earnings
growth disappointments of some of the larger stocks in the industry, made
for rough going.
Q. IT SEEMS THAT THERE IS ALWAYS SOME TYPE OF FEDERAL LEGISLATION THAT
DICTATES THE PERFORMANCE OF TELECOMMUNICATION STOCKS . . .
A. Legislative action is really a huge issue with these stocks. There were
rulings during the period where we're still awaiting the outcomes and there
are a number of rulings on the table for 1997. To give an example, the
Federal Communications Commission (FCC) issued the "rules of competition"
back in August. These guidelines were drawn up in anticipation of the local
and long-distance competition I mentioned above. The RBOCs weren't happy
with the rules and an appeals court delayed their implementation. The issue
is still hanging in the balance and any resolution will have a significant
impact on the telecommunications industry.
Q. DID YOU PLAY ANY THEMES AS YOU SOUGHT ATTRACTIVE INVESTMENT
OPPORTUNITIES?
A. I tried to shift out of some of the bigger companies that I thought
might be adversely affected by the local/long-distance competition.
Instead, I focused on smaller growth names with strong market positions. I
also began emphasizing equipment providers. As service companies spend
large sums of money in order to compete, equipment providers should be in
high demand when the markets open up and infrastructures need to be built.
While competitive fears have hurt the industry, I've tried to find segments
of the industry that may have an advantage in that type of environment.
Q. WERE THERE ANY NOTEWORTHY MERGERS OR ACQUISITIONS DURING THE YEAR?
A. There's been an increased amount of consolidation within the industry,
which has been a positive sign. One of the more significant deals -
involving two of the fund's holdings - was the acquisition of MFS by
WorldCom. While WorldCom's stock price sagged immediately after the
transaction, the stock bounced back and, with facilities in both local and
long-distance markets, I think the company is well-positioned for the
future.
Q. WHICH INDIVIDUAL STOCKS PERFORMED WELL? WERE THERE ANY DISAPPOINTMENTS?
A. As a whole, the fund's international holdings, including French-based
Alcatel, did well. I'd point out to shareholders, however, that foreign
investments involve greater risks than U.S. investments. Tel-Save, a
company that joined forces with America Online, also performed well. On the
negative side, LCI International was a disappointment.
Q. WHAT'S YOUR OUTLOOK?
A. While I'm still cautious on the outlook for the larger service
providers, I think opportunities can be found through sound individual
security selection. I'll also continue to emphasize the equipment provider
theme.
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 February 28, 1997, more than
$388 million
MANAGER: Nick Thakore, since July 1996; equity
analyst, telecommunications and gaming
industries, since 1996; equity analyst, furniture,
carpet, appliance, textile and apparel
industries, 1993-1995; joined Fidelity in 1993
(checkmark)
TELECOMMUNICATIONS PORTFOLIO
INVESTMENTS FEBRUARY 28, 1997
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 97.2%
SHARES VALUE (NOTE 1)
ADVERTISING - 1.3%
ADVERTISING AGENCIES - 1.3%
Snyder Communications, Inc. (a) 180,000 $ 4,860,000
BROADCASTING - 3.8%
COMMUNICATIONS SERVICES - 3.8%
APT Satellite Holdings Ltd.
sponsored ADR 1,023,200 14,324,800
RADIO BROADCASTING - 0.0%
Jacor Communications, Inc.
Class A (a) 800 23,551
TOTAL BROADCASTING 14,348,351
CELLULAR - 6.2%
CELLULAR & COMMUNICATION SERVICES - 6.2%
Associated Group, Inc. Class A (a) 9,300 378,975
McLeod, Inc. 278,200 4,972,825
Millicom International Cellular SA (a) 140,000 5,390,000
Mobile Telecommunications
Technologies, Inc. (a) 94,200 730,050
Rogers Communications, Inc.
Class B (a) 149,900 1,024,423
Telephone & Data Systems, Inc. 310 12,400
Vodafone Group PLC sponsored ADR 152,000 7,220,000
Vodafone Group PLC 825,000 3,918,744
23,647,417
COMMUNICATIONS EQUIPMENT - 10.9%
DATACOMMUNICATIONS EQUIPMENT - 0.5%
Dynatech Corp. (a) 65,500 1,834,000
TELEPHONE EQUIPMENT - 9.3%
Ascend Communications, Inc. 100,000 5,225,000
DSC Communications Corp. (a) 400,000 8,400,000
Newbridge Networks Corp. (a) 375,000 11,953,125
Nokia Corp. AB sponsored ADR 165,000 9,652,500
35,230,625
TELEPHONE INTERCONNECT SYSTEMS - 1.1%
P-COM, Inc. (a) 130,000 4,176,250
TOTAL COMMUNICATIONS EQUIPMENT 41,240,875
DEFENSE ELECTRONICS - 0.3%
Remec, Inc. 40,000 1,090,000
ELECTRICAL EQUIPMENT - 5.4%
ELECTRICAL MACHINERY - 3.4%
Alcatel Alsthom Compagnie Generale
d'Electricite SA 125,000 12,806,480
TV & RADIO COMMUNICATION EQUIPMENT - 2.0%
Allen Group, Inc. (The) 92,000 1,920,500
California Amplifier, Inc. (a)(d) 654,300 3,516,863
Omnipoint Corp. (a) 130,000 2,226,250
7,663,613
TOTAL ELECTRICAL EQUIPMENT 20,470,093
ELECTRONICS - 3.5%
ELECTRONIC PARTS - WHOLESALE - 1.1%
Brightpoint, Inc. (a) 165,000 4,455,000
SHARES VALUE (NOTE 1)
SEMICONDUCTORS - 2.4%
LSI Logic Corp. (a) 150,000 $ 5,175,000
Motorola, Inc. 71,000 3,967,125
9,142,125
TOTAL ELECTRONICS 13,597,125
LODGING & GAMING - 0.0%
HOTELS, MOTELS, & TOURIST CENTERS - 0.0%
ITT Corp. (a) 300 16,950
PRINTING - 2.1%
COMMERCIAL PRINTING, LITHOGRAPHIC - 2.1%
ASM Lithography Holding NV (a)(c) 120,000 7,969,711
SERVICES - 2.9%
BUSINESS SERVICES - 2.9%
ABR Information Services, Inc. (a) 90,000 2,103,750
Premier Technologies, Inc. (a) 149,800 2,808,750
Sitel Corp. (a) 150,000 2,493,750
Teletech Holdings, Inc. (a) 150,000 3,665,625
11,071,875
TELEPHONE SERVICES - 60.8%
Brooks Fiber Properties, Inc. 80,000 1,700,000
C-TEC Corp. (a) 101,300 2,887,050
Cable & Wireless PLC Ord. 1,100,000 8,998,099
Cincinnati Bell, Inc. 140,400 8,704,800
LCI International, Inc. (a) 732,700 13,921,300
MCI Communications Corp. 1,075,000 38,431,250
Primus Telecommunications
Group, Inc. (d) 457,300 3,772,725
Smartalk Teleservices, Inc. (a) 100,300 1,429,275
Sprint Corp. 175,600 7,989,800
Tel-Save Holdings, Inc. (a) 2,577,200 46,067,450
Telco Communications Group, Inc. 207,500 3,760,938
Telebras PN (Pfd. Reg.) 126,221,131 12,321,871
Telus Corp. 150,000 2,269,488
Viatel, Inc. (a)(d) 1,656,000 12,834,000
Winstar Communications, Inc. (a) 124,300 1,678,050
WorldCom, Inc. (a) 2,408,845 64,135,498
230,901,594
TOTAL COMMON STOCKS
(Cost $343,898,632) 369,213,991
CONVERTIBLE PREFERRED STOCKS - 0.0%
CELLULAR - 0.0%
CELLULAR & COMMUNICATION SERVICES - 0.0%
AirTouch Communications, Inc.
Class C $2.125 (Cost $92,160) 1,920 92,640
CASH EQUIVALENTS - 2.8%
Taxable Central Cash Fund (b)
(Cost $10,456,813) 10,456,813 10,456,813
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $354,447,605) $ 379,763,444
LEGEND
1. Non-income producing
2. At period end, the seven-day yield on the Taxable Central Cash Fund was
5.31%. The yield refers to the income earned by investing in the fund over
the seven-day period, expressed as an annual percentage.
3. Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of these securities amounted to $7,969,711 or 2.1% of net
assets.
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
California Amplifier, Inc. $ 617,317 $ - $ - $ 3,516,863
Primus Telecommunications Group, Inc. 86,185 1,584,535 - 3,772,725
Viatel, Inc. 1,550,564 471,316 - 12,834,000
Totals $ 2,254,066 $ 2,055,851 $ - $ 20,123,588
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $769,439,169 and $831,227,181, respectively (see Note 3 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $162,456 for the period
(see Note 4 of Notes to Financial Statements).
At the period end, the value of securities loaned and the value of
collateral amounted to $3,665,550 and $3,900,000, respectively (see Note 6
of Notes to Financial Statements).
Distribution of investments by country of issue, as a percentage of total
value of investment in securities, is as follows:
United States 73.8%
United Kingdom 5.3
Canada 4.0
Bermuda 3.8
France 3.4
Brazil 3.2
Netherland 2.6
Finland 2.5
Luxembourg 1.4
TOTAL 100.0%
INCOME TAX INFORMATION
At February 28, 1997, the aggregate cost of investment securities for
income tax purposes was $354,648,622. Net unrealized appreciation
aggregated $25,114,822, of which $56,089,610 related to appreciated
investment securities and $30,974,788 related to depreciated investment
securities.
The fund hereby designates approximately $8,694,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 94% of the dividends distributed during the fiscal year
qualifies for the dividends-received deduction for corporate shareholders
(unaudited).
The fund will notify shareholders in January 1998 of the applicable
percentage for use in preparing 1997 income tax returns.
TELECOMMUNICATIONS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1997
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS
Investment in securities, at value $ 379,763,444
(cost $354,447,605) - See accompanying schedule
Receivable for investments sold 13,672,637
Receivable for fund shares sold 2,700,234
Dividends receivable 5,547
Interest receivable 120,079
Redemption fees receivable 1,100
Other receivables 79,951
TOTAL ASSETS 396,342,992
LIABILITIES
Payable for fund shares redeemed $ 3,381,054
Accrued management fee 205,344
Other payables and accrued expenses 321,363
Collateral on securities loaned, 3,900,000
at value
TOTAL LIABILITIES 7,807,761
NET ASSETS $ 388,535,231
Net Assets consist of:
Paid in capital $ 346,680,508
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 16,538,884
Net unrealized appreciation (depreciation) on investments 25,315,839
NET ASSETS, for 9,296,172 $ 388,535,231
shares outstanding
NET ASSET VALUE and redemption price per share ($388,535,231 (divided by) 9,296,172 shares) $41.80
Maximum offering price per share (100/97.00 of $41.80) $43.09
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1997
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME $ 5,665,837
Dividends
Special dividend from ADVO, Inc. 795,000
Interest (including income on securities loaned of $259,248) 1,851,981
TOTAL INCOME 8,312,818
EXPENSES
Management fee $ 2,878,937
Transfer agent fees 3,696,269
Accounting and security lending fees 490,123
Non-interested trustees' compensation 2,602
Custodian fees and expenses 57,470
Audit 39,701
Legal 3,470
Miscellaneous 22,675
Total expenses before reductions 7,191,247
Expense reductions (169,746 7,021,501
)
NET INVESTMENT INCOME 1,291,317
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities (including 45,431,551
realized gain of $370,018
on sales of investments in
affiliated issuers)
Foreign currency transactions (6,870 45,424,681
)
Change in net unrealized appreciation (depreciation) on:
Investment securities (11,984,770
)
Assets and liabilities in (26 (11,984,796
foreign currencies ) )
NET GAIN (LOSS) 33,439,885
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 34,731,202
OTHER INFORMATION $ 1,182,016
Sales charges paid to FDC
Deferred sales charges withheld $ 30,536
by FDC
Exchange fees withheld by FSC $ 135,135
Expense reductions $ 167,497
Directed brokerage arrangements
Custodian interest credits 2,062
Transfer agent interest credits 187
$ 169,746
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE YEAR ENDED YEAR ENDED
(DECREASE) IN FEBRUARY 28, FEBRUARY 29,
NET ASSETS 1997 1996
Operations $ 1,291,317 $ 4,937,209
Net
investment
income
Net realized 45,424,681 57,156,039
gain (loss)
Change in (11,984,796 28,358,016
net )
unrealized
appreciation
(depreciation
)
NET INCREASE 34,731,202 90,451,264
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
Distributions to (1,643,666 (3,666,827
shareholders ) )
From net
investment
income
From net (63,334,526 (25,859,291
realized gain ) )
TOTAL (64,978,192 (29,526,118
DISTRIBUTION ) )
S
Share 194,213,580 183,961,070
transactions
Net proceeds
from sales of
shares
Reinvestmen 63,659,054 28,851,878
t of
distributions
Cost of (307,709,801 (175,053,917
shares ) )
redeemed
Paid in 319,443 139,366
capital
portion of
redemption
fees
NET INCREASE (49,517,724 37,898,397
(DECREASE) )
IN NET
ASSETS
RESULTING
FROM SHARE
TRANSACTIO
NS
TOTAL (79,764,714 98,823,543
INCREASE )
(DECREASE)
IN NET ASSETS
NET ASSETS
Beginning of 468,299,945 369,476,402
period
End of period $ 388,535,231 $ 468,299,945
(including
undistribute
d net
investment
income of
$0 and
$1,251,216
,
respectivel
y)
OTHER
INFORMATION
Shares
Sold 4,489,283 4,122,731
Issued in 1,575,164 677,781
reinvestment
of
distributions
Redeemed (7,203,986 (4,001,104
) )
Net increase (1,139,539) 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>
YEAR ENDED YEAR ENDED YEARS ENDED FEBRUARY 28, TEN MONTHS
FEBRUARY 28, FEBRUARY 29, ENDED
FEBRUARY 28,
SELECTED 1997 1996 1995 1994 1993
PER-SHARE
DATA D
</TABLE>
Net asset $ 44.87 $ 38.34 $ 37.10 $ 34.19 $ 29.22
value,
beginning of
period
Income from
Investment
Operations
Net .12 E .51 .29 .25 .29
investment
income
Net realized 2.92 9.15 2.54 7.00 5.29
and
unrealized
gain (loss)
Total from 3.04 9.66 2.83 7.25 5.58
investment
operations
Less
Distributions
From net (.16) H (.39) (.33) (.20) (.18)
investment
income
From net (5.98) H (2.75) (1.27) (4.18) (.48)
realized gain
Total (6.14) (3.14) (1.60) (4.38) (.66)
distributions
Redemption .03 .01 .01 .04 .05
fees added to
paid in
capital
Net asset $ 41.80 $ 44.87 $ 38.34 $ 37.10 $ 34.19
value, end of
period
TOTAL 7.85% 25.79% 7.98% 21.90% 19.49%
RETURN B, C
RATIOS AND
SUPPLEMENT
AL DATA
Net assets, $ 388,535 $ 468,300 $ 369,476 $ 371,025 $ 134,338
end of period
(000 omitted)
Ratio of 1.51% 1.52% 1.56% 1.54% 1.74% A
expenses to
average net
assets
Ratio of 1.47% F 1.52% 1.55% F 1.53% F 1.74% A
expenses to
average net
assets after
expense
reductions
Ratio of net .27% 1.17% .77% .64% 1.16% A
investment
income to
average net
assets
Portfolio 175% 89% 107% 241% 115% A
turnover rate
Average $ .0321
commission
rate G
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
A ANNUALIZED B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 8 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 INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND FROM ADVO, INC.
WHICH AMOUNTED TO $.07 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 8 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 AMOUNTS SHOWN REFLECT CERTAIN RECLASSIFICATIONS RELATED
TO BOOK TO TAX DIFFERENCES (SEE NOTE 1 OF NOTES TO FINANCIAL STATEMENTS).
</TABLE>
UTILITIES GROWTH PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance. You can
look at the total percentage change in value, the average annual percentage
change, or the growth of a hypothetical $10,000 investment. Total return
reflects the change in the value of an investment, assuming reinvestment of
the fund's dividend income and capital gains (the profits earned upon the
sale of securities that have grown in value), but does not include certain
fees paid by shareholders upon exchange or redemption.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 28, 1997 YEAR YEARS YEARS
UTILITIES GROWTH 18.13% 87.72% 209.65%
UTILITIES GROWTH 14.59% 82.09% 200.36%
(INCL. 3% SALES CHARGE)
S&P 500 26.16% 118.75% 276.74%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one, five, or 10 years. You can compare
the fund's returns 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, and excludes the effect of sales
charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 28, 1997 YEAR YEARS YEARS
UTILITIES GROWTH 18.13% 13.42% 11.97%
UTILITIES GROWTH 14.59% 12.73% 11.63%
(INCL. 3% SALES CHARGE)
S&P 500 26.16% 16.94% 14.16%
AVERAGE ANNUAL RETURNS take the fund's 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
1987/02/28 9700.00 10000.00
1987/03/31 9505.86 10289.00
1987/04/30 8960.92 10197.43
1987/05/31 8817.87 10286.15
1987/06/30 9131.21 10805.60
1987/07/31 9005.20 11353.44
1987/08/31 9287.89 11776.92
1987/09/30 9212.96 11519.01
1987/10/31 8657.79 9037.81
1987/11/30 8368.29 8293.10
1987/12/31 8440.57 8924.20
1988/01/31 9170.00 9299.91
1988/02/29 9098.13 9733.29
1988/03/31 8839.42 9432.53
1988/04/30 8864.57 9537.23
1988/05/31 9141.25 9620.20
1988/06/30 9382.00 10061.77
1988/07/31 9352.22 10023.54
1988/08/31 9337.44 9682.74
1988/09/30 9662.73 10095.22
1988/10/31 9866.04 10375.87
1988/11/30 9847.56 10227.49
1988/12/31 9829.57 10406.47
1989/01/31 10292.58 11168.23
1989/02/28 10228.06 10890.14
1989/03/31 10402.64 11143.88
1989/04/30 10937.77 11722.25
1989/05/31 11457.71 12197.00
1989/06/30 11747.11 12127.48
1989/07/31 12390.42 13222.59
1989/08/31 12445.00 13481.75
1989/09/30 12624.35 13426.47
1989/10/31 12565.86 13114.98
1989/11/30 12979.14 13382.52
1989/12/31 13665.33 13703.71
1990/01/31 12990.84 12784.19
1990/02/28 12967.44 12949.10
1990/03/31 12897.26 13292.25
1990/04/30 12359.23 12959.95
1990/05/31 13002.53 14223.54
1990/06/30 13156.61 14126.82
1990/07/31 13264.62 14081.62
1990/08/31 12536.58 12808.64
1990/09/30 12568.59 12184.86
1990/10/31 13212.62 12132.46
1990/11/30 13560.63 12916.22
1990/12/31 13741.11 13276.58
1991/01/31 13680.52 13855.44
1991/02/28 14270.23 14846.11
1991/03/31 14431.80 15205.38
1991/04/30 14367.17 15241.87
1991/05/31 14371.21 15900.32
1991/06/30 14196.88 15172.09
1991/07/31 14658.91 15879.11
1991/08/31 14994.93 16255.44
1991/09/30 15456.96 15983.98
1991/10/31 15671.18 16198.16
1991/11/30 15851.79 15545.38
1991/12/31 16630.59 17323.77
1992/01/31 16118.68 17001.55
1992/02/29 16000.55 17222.57
1992/03/31 15834.28 16886.73
1992/04/30 16267.44 17383.20
1992/05/31 16582.46 17468.37
1992/06/30 16774.29 17208.09
1992/07/31 17666.20 17911.90
1992/08/31 17657.15 17544.71
1992/09/30 17752.22 17751.74
1992/10/31 17747.70 17813.87
1992/11/30 17869.94 18421.32
1992/12/31 18392.16 18647.90
1993/01/31 18705.01 18804.55
1993/02/28 19667.28 19060.29
1993/03/31 20198.19 19462.46
1993/04/30 20087.80 18991.47
1993/05/31 20130.89 19500.44
1993/06/30 20901.65 19556.99
1993/07/31 21141.02 19478.76
1993/08/31 22060.20 20217.01
1993/09/30 22060.20 20061.34
1993/10/31 21835.19 20476.61
1993/11/30 20767.61 20282.08
1993/12/31 20699.40 20527.49
1994/01/31 21123.52 21225.43
1994/02/28 20165.12 20650.22
1994/03/31 19438.05 19749.87
1994/04/30 19997.20 20002.67
1994/05/31 19597.93 20330.71
1994/06/30 19536.07 19832.61
1994/07/31 20098.42 20483.12
1994/08/31 20019.69 21322.93
1994/09/30 19507.95 20800.52
1994/10/31 19755.39 21268.53
1994/11/30 19041.20 20493.93
1994/12/31 19165.43 20797.85
1995/01/31 19947.57 21337.14
1995/02/28 20208.29 22168.65
1995/03/31 20289.40 22822.85
1995/04/30 20996.64 23494.98
1995/05/31 21321.54 24434.07
1995/06/30 21530.40 25001.68
1995/07/31 22110.58 25830.73
1995/08/31 22673.35 25895.57
1995/09/30 23752.49 26988.36
1995/10/31 23984.56 26892.01
1995/11/30 24512.52 28072.57
1995/12/31 25756.32 28613.25
1996/01/31 26028.13 29587.24
1996/02/29 25425.43 29861.52
1996/03/31 25200.90 30149.08
1996/04/30 26218.41 30593.48
1996/05/31 26237.38 31382.49
1996/06/30 26642.20 31502.05
1996/07/31 25478.35 30110.29
1996/08/31 25484.67 30745.32
1996/09/30 25946.42 32475.67
1996/10/31 27034.37 33371.34
1996/11/30 28305.76 35893.88
1996/12/31 28683.76 35182.83
1997/01/31 29546.23 37381.05
1997/02/28 30036.28 37674.12
Let's say hypothetically that $10,000 was invested in Fidelity Select
Utilities Growth Portfolio on February 28, 1987, and the current maximum 3%
sales charge was paid. As the chart shows, by February 28, 1997, the value
of the investment would have grown to $30,036 - a 200.36% increase on the
initial investment. For comparison, look at how the S&P 500 did over the
same period. With dividends and capital gains, if any, reinvested, the same
$10,000 investment would have grown to $37,674 - a 276.74% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1997
% OF FUND'S
INVESTMENTS
WorldCom, Inc. 8.1
Sprint Corp. 6.2
MCI Communications Corp. 4.8
BellSouth Corp. 4.7
SBC Communications, Inc. 4.4
Pacific Telesis Group 4.3
Ameritech Corp. 4.2
AirTouch Communications, Inc. 4.0
GTE Corp. 4.0
NYNEX Corp. 3.7
TOP INDUSTRIES AS OF FEBRUARY 28, 1997
Telephone Services 55.6%
Gas Transmission
& Distribution 9.1%
Gas Distribution 7.2%
Electric Power 6.3%
Gas Transmission 6.0%
All Others 15.8% *
Row: 1, Col: 1, Value: 15.8
Row: 1, Col: 2, Value: 6.0
Row: 1, Col: 3, Value: 6.3
Row: 1, Col: 4, Value: 7.2
Row: 1, Col: 5, Value: 9.1
Row: 1, Col: 6, Value: 55.6
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
UTILITIES GROWTH PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
John Muresianu,
Portfolio Manager of
Fidelity Select Utilities Growth Portfolio
Q. JOHN, HOW DID THE FUND PERFORM?
A. For the 12 months that ended February 28, 1997, the fund had a total
return of 18.13%, while the Standard & Poor's 500 Index posted a return of
26.16%.
Q. WHAT FACTORS AFFECTED THE SECTOR'S PERFORMANCE?
A. The utilities sector underperformed the broad market as investors became
concerned about how ongoing deregulation would affect utilities companies,
especially the telephone and electric industries. In addition, utilities
stocks tend to trade in concert with the bond market, which underperformed
the stock market significantly during the period. The stock market, as
represented by the S&P 500, performed well largely on the basis of the
strong technology and financial services stock sectors.
Q. CAN YOU GIVE US A MORE DETAILED OVERVIEW OF THE RECENT INVESTING
ENVIRONMENT FOR THE THREE UTILITY INDUSTRIES - GAS, TELEPHONE AND ELECTRIC?
A. Gas stocks performed the best because prices spiked upward as a result
of very cold weather. In addition, there was a significant amount of
consolidation that helped stocks in the group. Further, the supply and
demand dynamic improved, partially due to a slowdown in Canadian imports
because of restricted pipeline capacity. On the telephone side, there
continued to be broad concern over the impact of increasing competition in
the cellular and local telephone service areas. At the same time, however,
telephone companies reported steady revenue and earnings growth; over the
near term, business prospects for telephone companies looked fine, helping
the telephone utility industry post modest gains.
Q. WHAT ABOUT ELECTRIC UTILITY STOCKS?
A. Electrics struggled. While all utility stocks are sensitive to what
happens in the bond market, electrics are more attuned than the telephone
and gas stocks. That's because they have the highest yields, are the most
income-oriented and have less prospects for earnings growth. The bond
market has had its ups and downs and utility stocks, as a result, bounced
around as well. Electric utility stocks also were negatively affected by
continued evidence that the Nuclear Regulatory Commission has been getting
tougher on nuclear operations. While deregulation has been a concern among
all utility sectors, especially telephones, it hasn't affected electrics
too negatively thus far. Regulators appear more likely to create a
transition to competition that is friendlier to utility companies than was
feared a few years ago.
Q. WHICH STOCKS TURNED IN STRONG PERFORMANCES FOR THE FUND?
A. CINergy has done very well. It is a low-cost electric producer and
appears to be a winner under deregulation over the long term. It also has a
very growth-oriented management team. On the gas side, Sonat has been a
very strong performer. And in the telephone arena, Pacific Telesis has done
very well.
Q. AT THE SAME TIME, THERE MUST HAVE BEEN SOME DISAPPOINTMENTS . . .
A. AirTouch Communications was one. This stock lagged because of concern
about slowing cellular subscriber growth and increased price competition.
Enron was another disappointment. Even though it saw some stock price
appreciation, it lagged the gas group because of contract litigation in the
United Kingdom and a slowdown in earnings growth related to heavy spending
in anticipation of a fully competitive retail electricity market.
Q. WHAT'S YOUR OUTLOOK?
A. It's important for me to reiterate that my strategy will continue to be
based on individual stock picking. That's because it's nearly impossible to
predict the direction of the economy and interest rates. I will continue to
look for those companies that are able to show the best earnings growth.
For some time, most of these prospects have been in gas and telephone
companies. As a result, I'll probably continue to favor them over 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 February 28, 1997, more than
$256 million
MANAGER: John Muresianu, since 1992;
manager, Fidelity Utilities Fund, since 1992;
Fidelity Advisor Utilities Growth Fund, since
1996; Fidelity Select Natural Gas Portfolio,
1993- 1994; joined Fidelity in 1986
(checkmark)
UTILITIES GROWTH PORTFOLIO
INVESTMENTS FEBRUARY 28, 1997
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 98.0%
SHARES VALUE (NOTE 1)
BROADCASTING - 0.0%
CABLE TV OPERATORS - 0.0%
TCI Group Class A 4,500 $ 53,430
TELEVISION BROADCASTING - 0.0%
TCI Satellite Entertainment, Inc.
Class A (a) 450 3,600
TOTAL BROADCASTING 57,030
CELLULAR - 4.5%
CELLULAR & COMMUNICATION SERVICES - 4.5%
AirTouch Communications, Inc. (a) 381,600 10,398,600
Cellnet Data Systems, Inc. (a) 25,000 225,000
Telephone & Data Systems, Inc. 8,063 322,520
Vodafone Group PLC sponsored ADR 15,200 722,000
11,668,120
COAL - 0.3%
MAPCO, Inc. 22,600 717,550
COMMUNICATIONS EQUIPMENT - 1.2%
TELEPHONE EQUIPMENT - 1.2%
Lucent Technologies, Inc. 55,256 2,976,917
COMPUTER SERVICES & SOFTWARE - 0.1%
DATA PROCESSING - 0.1%
NCR Corp. (a) 10,656 351,648
ELECTRIC UTILITY - 9.5%
ELECTRIC & OTHER SERVICES - 3.2%
DPL, Inc. 33,300 820,013
Enova Corp. 28,300 633,213
Hidroelectrica de Cantabrico SA 10,650 362,651
IES Industries, Inc. 10,100 306,788
LG&E Energy Corp. 8,700 215,325
Montana Power Co. 30,600 669,375
NIPSCO Industries, Inc. 26,300 1,048,713
PECO Energy Co. 30,000 675,000
PacifiCorp. 44,800 924,000
Public Service Co. of New Mexico 32,200 591,675
Rochester Gas & Electric Corp. 8,800 174,900
Sierra Pacific Resources 5,400 157,950
Utilicorp United, Inc. 3,907 105,001
Veba AG Ord. 25,000 1,432,188
WPL Holdings, Inc. 900 24,975
8,141,767
ELECTRIC POWER - 6.3%
AES Corp. (a) 133,949 8,756,916
American Electric Power Co., Inc. 14,900 622,075
Baycorp Holdings Ltd. (a) 1,729 14,048
Boston Edison Co. 10,000 267,500
CESC Ltd. GDR (c) 34,300 41,160
Central & South West Corp. 40,000 975,000
Central Louisiana Electric Co., Inc. 37,706 1,003,922
DQE, Inc. 28,050 830,981
Entergy Corp. 15,200 400,900
Kansas City Power & Light Co. 8,500 242,250
Korea Electric Power Corp.
sponsored ADR 20,000 360,000
Pinnacle West Capital Corp. 22,700 709,375
Portland General Corp. 30,300 1,185,488
Southern Co. 20,000 435,000
SHARES VALUE (NOTE 1)
TECO Energy, Inc. 7,000 $ 170,625
United Illuminating Co. 8,000 233,000
16,248,240
TOTAL ELECTRIC UTILITY 24,390,007
GAS - 23.2%
GAS & OTHER SERVICES - 0.9%
MDU Resources Group, Inc. 51,900 1,102,875
UGI Corp. 43,251 1,075,869
Western Resources, Inc. 6,500 196,625
2,375,369
GAS DISTRIBUTION - 7.2%
Eastern Enterprises Co. 69,000 2,320,125
Energen Corp. 33,600 1,008,000
K N Energy, Inc. 60,600 2,393,700
MCN Corp. 212,600 6,431,150
NUI Corp. 17,500 367,500
National Fuel Gas Co. 7,800 335,400
New Jersey Resources Corp. 8,600 247,250
NICOR, Inc. 17,000 569,500
Northwest Natural Gas Co. 4,350 105,488
Pacific Enterprises 133,400 4,068,700
Peoples Energy Corp. 9,700 328,588
WICOR, Inc. 11,800 414,475
18,589,876
GAS TRANSMISSION - 6.0%
Enron Corp. 105,400 4,202,825
ONEOK, Inc. 28,200 803,700
Sonat, Inc. 124,700 5,736,200
TPC Corp. (a) 39,000 404,625
USX-Delhi Group 5,700 85,500
Williams Companies, Inc. 93,034 4,070,238
15,303,088
GAS TRANSMISSION & DISTRIBUTION - 9.1%
Bay State Gas Co. 14,100 375,413
Columbia Gas System, Inc. 73,500 4,318,125
Consolidated Natural Gas Co. 17,300 882,300
ENSERCH Corp. 206,100 4,328,100
Equitable Resources, Inc. 18,450 546,581
Noram Energy Corp. 78,471 1,177,065
PanEnergy Corp. 114,100 4,863,513
Questar Corp. 133,000 4,821,250
Tejas Gas Corp. (a) 35,895 1,570,406
Yankee Energy System, Inc. 16,500 381,563
23,264,316
TOTAL GAS 59,532,649
HOLDING COMPANIES - 0.6%
CINergy Corp. 44,406 1,532,007
INDEPENDENT POWER - 0.0%
STEAM SUPPLY - 0.0%
Bonneville Pacific Corp. (a) 11,300 7,063
OIL & GAS - 3.0%
CRUDE PETROLEUM & GAS - 0.2%
Nuevo Energy Corp. (a) 800 33,200
Occidental Petroleum Corp. 12,100 308,550
341,750
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
OIL & GAS - CONTINUED
PETROLEUM REFINERS - 2.8%
Coastal Corp. 159,900 $ 7,275,450
TOTAL OIL & GAS 7,617,200
TELEPHONE SERVICES - 55.6%
AT&T Corp. 170,500 6,798,688
ALLTEL Corp. 7,400 261,775
Ameritech Corp. 170,700 10,882,125
BCE, Inc. 33,573 1,629,388
Bell Atlantic Corp. 119,700 8,274,263
BellSouth Corp. 258,200 12,103,125
Cincinnati Bell, Inc. 14,000 868,000
Frontier Corp. 800 17,700
GTE Corp. 218,800 10,228,900
MCI Communications Corp. 346,500 12,387,375
NYNEX Corp. 182,800 9,414,200
Pacific Telesis Group 271,200 11,051,400
SBC Communications, Inc. 196,300 11,287,250
Sprint Corp. 350,000 15,925,000
U.S. West Communications Group 209,159 7,529,724
U.S. West Media Group (a) 192,359 3,534,597
WorldCom, Inc. (a) 777,000 20,687,625
142,881,135
TOTAL COMMON STOCKS
(Cost $203,091,776) 251,731,326
CONVERTIBLE PREFERRED STOCKS - 0.7%
ELECTRIC UTILITY - 0.7%
COMBINATION UTILITIES - 0.7%
Citizens Utilities Trust $2.50
(Cost $1,705,000) 34,100 1,722,050
CASH EQUIVALENTS - 1.3%
Taxable Central Cash Fund (b)
(Cost $3,493,627) 3,493,627 3,493,627
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $208,290,403) $ 256,947,003
LEGEND
1. Non-income producing
2. At period end, the seven-day yield on the Taxable Central Cash Fund was
5.31%. The yield refers to the income earned by investing in the fund over
the seven-day period, expressed as an annual percentage.
3. Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of these securities amounted to $41,160 or 0.0% of net
assets.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $72,761,217 and $108,817,571, respectively (see Note 3 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of FMR. The commissions paid to these affiliated
firms were $26,333 for the period (see Note 4 of Notes to Financial
Statements).
INCOME TAX INFORMATION
At February 28, 1997, the aggregate cost of investment securities for
income tax purposes was $208,443,537. Net unrealized appreciation
aggregated $48,503,466, of which $52,024,627 related to appreciated
investment securities and $3,521,161 related to depreciated investment
securities.
The fund hereby designates approximately $3,803,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 100% of the dividends distributed during the fiscal year
qualifies for the dividends-received deduction for corporate shareholders
(unaudited).
The fund will notify shareholders in January 1998 of the applicable
percentage for use in preparing 1997 income tax returns.
UTILITIES GROWTH PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1997
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS
Investment in securities, at value $ 256,947,003
(cost $208,290,403) - See accompanying schedule
Receivable for fund shares sold 424,621
Dividends receivable 391,211
Interest receivable 22,695
Redemption fees receivable 400
TOTAL ASSETS 257,785,930
LIABILITIES
Payable to custodian bank $ 11,622
Payable for fund shares redeemed 619,770
Accrued management fee 130,697
Other payables and accrued expenses 179,465
TOTAL LIABILITIES 941,554
NET ASSETS $ 256,844,376
Net Assets consist of:
Paid in capital $ 198,908,551
Undistributed net investment income 1,654,360
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 7,624,901
Net unrealized appreciation (depreciation) on investments 48,656,564
and assets and liabilities in
foreign currencies
NET ASSETS, for 5,586,895 $ 256,844,376
shares outstanding
NET ASSET VALUE and redemption price per share ($256,844,376 (divided by) 5,586,895 shares) $45.97
Maximum offering price per share (100/97.00 of $45.97) $47.39
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1997
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME $ 7,189,433
Dividends
Interest (including income on securities loaned of $12,011) 405,654
TOTAL INCOME 7,595,087
EXPENSES
Management fee $ 1,440,039
Transfer agent fees 1,743,986
Accounting and security lending fees 240,183
Non-interested trustees' compensation 803
Custodian fees and expenses 16,816
Registration fees 15,337
Audit 36,433
Legal 1,846
Miscellaneous 12,137
Total expenses before reductions 3,507,580
Expense reductions (23,250 3,484,330
)
NET INVESTMENT INCOME 4,110,757
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 12,601,138
Foreign currency transactions (2,297 12,598,841
)
Change in net unrealized appreciation (depreciation) on:
Investment securities 21,791,398
Assets and liabilities in (101 21,791,297
foreign currencies )
NET GAIN (LOSS) 34,390,138
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 38,500,895
OTHER INFORMATION $ 238,618
Sales charges paid to FDC
Deferred sales charges withheld $ 38,523
by FDC
Exchange fees withheld by FSC $ 61,523
Expense reductions $ 22,741
Directed brokerage arrangements
Custodian interest credits 56
Transfer agent interest credits 453
$ 23,250
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE YEAR ENDED YEAR ENDED
(DECREASE) IN FEBRUARY 28, FEBRUARY 29,
NET ASSETS 1997 1996
Operations $ 4,110,757 $ 7,298,546
Net
investment
income
Net realized 12,598,841 23,321,198
gain (loss)
Change in 21,791,297 27,286,486
net
unrealized
appreciation
(depreciation
)
NET INCREASE 38,500,895 57,906,230
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
Distributions to (3,870,074 (5,508,527
shareholders ) )
From net
investment
income
From net (20,286,738 -
realized gain )
TOTAL (24,156,812 (5,508,527
DISTRIBUTION ) )
S
Share 128,552,346 283,936,618
transactions
Net proceeds
from sales of
shares
Reinvestmen 23,344,588 5,265,104
t of
distributions
Cost of (176,372,790 (312,698,789
shares ) )
redeemed
Paid in 208,569 231,738
capital
portion of
redemption
fees
NET INCREASE (24,267,287 (23,265,329
(DECREASE) ) )
IN NET
ASSETS
RESULTING
FROM SHARE
TRANSACTIO
NS
TOTAL (9,923,204 29,132,374
INCREASE )
(DECREASE)
IN NET ASSETS
NET ASSETS
Beginning of 266,767,580 237,635,206
period
End of period $ 256,844,376 $ 266,767,580
(including
undistribute
d net
investment
income of
$1,654,360
and
$2,165,391
,
respectivel
y)
OTHER
INFORMATION
Shares
Sold 2,986,768 6,910,440
Issued in 570,027 124,287
reinvestment
of
distributions
Redeemed (4,168,871 (7,649,316
) )
Net increase (612,076) (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>
YEAR ENDED YEAR ENDED YEARS ENDED FEBRUARY 28, TEN MONTHS
FEBRUARY 28, FEBRUARY 29, ENDED
FEBRUARY 28,
SELECTED 1997 1996 1995 1994 1993
PER-SHARE
DATA D
</TABLE>
Net asset $ 43.03 $ 34.88 $ 36.61 $ 41.49 $ 37.18
value,
beginning of
period
Income from
Investment
Operations
Net .73 1.10 1.13 1.33 1.19
investment
income
Net realized 6.41 7.86 (1.17) (.16) 6.14
and
unrealized
gain (loss)
Total from 7.14 8.96 (.04) 1.17 7.33
investment
operations
Less
Distributions
From net (.70) (.84) (1.05) (1.13) (1.33)
investment
income
From net (3.54) - (.67) (4.94) (1.70)
realized gain
Total (4.24) (.84) (1.72) (6.07) (3.03)
distributions
Redemption .04 .03 .03 .02 .01
fees added to
paid in
capital
Net asset $ 45.97 $ 43.03 $ 34.88 $ 36.61 $ 41.49
value, end of
period
TOTAL 18.13% 25.82% .21% 2.53% 20.90%
RETURN B, C
RATIOS AND
SUPPLEMENT
AL DATA
Net assets, $ 256,844 $ 266,768 $ 237,635 $ 250,522 $ 290,718
end of period
(000 omitted)
Ratio of 1.47% 1.39% 1.43% 1.36% 1.42% A
expenses to
average net
assets
Ratio of 1.46% E 1.38% E 1.42% E 1.35% E 1.42% A
expenses to
average net
assets after
expense
reductions
Ratio of net 1.73% 2.76% 3.24% 3.11% 3.71% A
investment
income to
average net
assets
Portfolio 31% 65% 24% 61% 34% A
turnover rate
Average $ .0287
commission
rate F
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
A ANNUALIZED B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 8 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 8 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 evaluate a money market fund's performance, you can look at either total
return or yield. Total return reflects the change in value of an
investment, assuming reinvestment of the fund's dividend income. Yield
measures the income paid by a fund. Since a money market fund tries to
maintain a $1 share price, yield is an important measure of performance.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST
FEBRUARY 28, 1997 YEAR YEARS 10
YEARS
MONEY MARKET 5.02% 22.53% 72.59%
MONEY MARKET 1.87% 18.85% 67.41%
(INCL. 3% SALES CHARGE)
All Taxable 4.91% 22.12% 71.83%
Money Market Funds Average
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one year, five years, or 10 years. For
example, if you invested $1,000 in a fund that had a 5% return over the
past year, the value of your investment would be $1,050 without including
the effect of the 3% sales charge. To measure how the fund's performance
stacked up against its peers, you can compare it to the all taxable money
market funds average, which reflects the performance of 823 all taxable
money market funds with similar objectives tracked by IBC Financial Data,
Inc. over the past one year.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 28, 1997 YEAR YEARS YEARS
MONEY MARKET 5.02% 4.15% 5.61%
MONEY MARKET 1.87% 3.51% 5.29%
(INCL. 3% SALES CHARGE)
All Taxable 4.91% 4.08% 5.56%
Money Market Funds Average
AVERAGE ANNUAL TOTAL RETURNS take the fund's 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: 4.71
Row: 1, Col: 2, Value: 4.84
Row: 1, Col: 3, Value: 2.63
Row: 2, Col: 1, Value: 4.819999999999999
Row: 2, Col: 2, Value: 4.88
Row: 2, Col: 3, Value: 2.65
Row: 3, Col: 1, Value: 4.87
Row: 3, Col: 2, Value: 4.83
Row: 3, Col: 3, Value: 2.68
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: 5.31
Row: 5, Col: 2, Value: 4.78
Row: 5, Col: 3, Value: 2.76
6% -
4% -
2% -
0%
Money Market
All Taxable
Money Market
Funds Average
MMDA
2/25/97 12/3/96 9/3/96 5/28/96 2/27/96
MONEY MARKET 4.71% 4.82% 4.87% 4.86% 5.31%
All Taxable
Money Market
Funds Average 4.84% 4.88% 4.83% 4.74% 4.78%
2/26/97 11/27/96 8/28/96 5/29/96 2/28/96
MMDA 2.63% 2.65% 2.68% 2.66% 2.76%
YIELD refers to the income paid by the fund over a given period. Yields for
money market funds are usually for seven-day periods, expressed as annual
percentage rates. A yield that assumes income earned is reinvested or
compounded is called an effective yield. The chart above shows the fund's
current seven-day yield at quarterly intervals over the past year. You can
compare these yields to the all taxable money market funds average and the
bank money market deposit account average (MMDA). Figures for the all
taxable money market funds average are from 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 market 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 HAS THE INVESTING ENVIRONMENT BEEN LIKE OVER THE PAST YEAR?
A. At the beginning of the period, we had just emerged from six or seven
months during which the Federal Reserve Board had been lowering the rate
banks charge each other for overnight loans - known as the fed funds rate.
It had done so in order to stimulate the economy, which had generally been
weak for most of 1995. Investors expected this more accommodating Fed
policy to continue; however, in the spring it became evident that the
economy was bouncing back, and the market adjusted to reflect the sentiment
that rates were not likely to decline further. As we moved through the
spring and summer, the economy appeared to pick up even more steam, and
investors started to look for the Fed to raise the fed funds rate to head
off potential inflation pressures that economic strength can produce.
During the rest of 1996, overall interest rates fluctuated. They tended to
rise prior to Fed meetings in anticipation of rate increase announcements,
then drop after the meetings when the Fed, each time, decided to keep
official rates unchanged at the 5.25% level it had maintained since January
1996. As we moved into 1997, the markets became complacent as it appeared
the economy was slowing and that the Fed would continue to stand pat.
Toward the end of the period, however, it became clear that the economy
remained strong, and market sentiment again shifted to reflect the belief
that the Fed might indeed raise the fed funds rate in 1997.
Q. HOW DID YOU POSITION THE FUND OVER THE COURSE OF THE YEAR?
A. At the beginning of the period, the fund's average maturity ranged from
the mid 50- to the mid 60-day range as a hedge against further rate
declines. When it became evident that the interest rate environment had
shifted and rates were no longer likely to decline, I brought the average
maturity back in to the low 40-day range. In the fourth quarter of 1996, I
lengthened the maturity again as I was able to find attractive yield
opportunities in longer-term securities. The fund's maturity was extended
even further at the end of the period to 66 days, as, again, the fund was
being adequately compensated with additional yield for buying the longer
maturities.
Q. HOW DID THE FUND PERFORM?
A. The fund's seven-day yield on February 28, 1997, was 4.75%, compared to
5.21% 12 months ago. The fund's total return during the 12-month period was
5.02%, compared to 4.91% for the all taxable money market funds average,
according to IBC Financial Data, Inc.
Q. JUST BEFORE THE END OF THE PERIOD, FED CHAIRMAN ALAN GREENSPAN INDICATED
TO CONGRESS THAT THE FED MIGHT RAISE THE FED FUNDS RATE AT SOME POINT IN
1997. WHAT'S YOUR OUTLOOK GIVEN THE FED'S STANCE?
A. I believe that the Fed will begin to raise rates at some point in the
first half of 1997. These rate increases will probably be moderate -
probably two but perhaps three moves of .25% each - because Greenspan, in
his comments, explained that the Fed would like to make only small
adjustments to interest rates in order to pre-empt inflation before we have
any real problems. He was fairly adamant about defending this notion in his
February testimony, suggesting that the Fed probably will start to raise
rates sooner rather than later. Greenspan pointed out that while we don't
see any price pressures on goods or services at this time, wages have begun
to accelerate. Forces that in the past tended to moderate wage increases -
such as corporate downsizing and reductions in health care benefits in the
overall compensation scheme - appear to be subsiding. If these business
costs start to rise, companies may start to pass them on to the consumer in
the form of price increases. At the same time, Greenspan mentioned that the
situation is not similar to 1994, when the Fed doubled the fed funds rate
to prevent the economy from overheating. At that point, the real fed funds
rate - the stated fed funds rate minus the rate of inflation - was
essentially at zero. At the end of February, the real fed funds rate was
somewhere around 2.0%, close to its long-term average, because inflation
has remained fairly low. Given that, it seems only a modest adjustment is
called for at this time. As far as the fund is concerned, I'll likely keep
its maturity out toward the 60-day range as long as I can maximize the
fund's yield by doing so. If we get into a situation where yields on
longer-term securities become less attractive, I'll probably bring the
fund's maturity back to around 45-50 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 February 28, 1997, more than
$848 million
MANAGER: John Todd, since 1991; manager
various Fidelity and Spartan taxable money
market funds; joined Fidelity in 1982
(checkmark)
MONEY MARKET PORTFOLIO
INVESTMENTS FEBRUARY 28, 1997
Showing Percentage of Total Value of Investment in Securities
BANKERS' ACCEPTANCES - 0.2%
ANNUALIZED YIELD
DUE AT TIME OF PRINCIPAL VALUE
DATE PURCHASE AMOUNT (NOTE 1)
DOMESTIC BANKERS' ACCEPTANCES
CHASE MANHATTAN BANK
4/28/97 5.40% $ 1,887,976 $ 1,871,733
CERTIFICATES OF DEPOSIT - 46.3%
DOMESTIC CERTIFICATES OF DEPOSIT - 3.2%
WACHOVIA BANK OF NORTH CAROLINA, NA
3/12/97 5.30 25,000,000 25,000,152
NEW YORK BRANCH, YANKEE DOLLAR, FOREIGN BANKS - 36.0%
ABN-AMRO BANK
3/3/97 5.77 25,000,000 25,000,000
BANK OF TOKYO - MITSUBISHI LTD.
5/5/97 5.60 3,000,000 3,000,000
5/7/97 5.48 2,000,000 2,000,294
5/27/97 5.48 4,000,000 4,000,000
5/30/97 5.48 2,000,000 2,000,000
6/3/97 5.53 4,000,000 4,000,000
BANQUE NATIONALE DE PARIS
3/26/97 5.40 25,000,000 25,000,000
BARCLAYS BANK, PLC
5/12/97 5.37 35,000,000 35,000,000
BAYERISCHE LANDESBANK GIROZENTRALE
4/22/97 5.58 (a) 4,000,000 4,000,000
CAISSE NATIONALE DE CREDIT AGRICOLE
3/24/97 5.62 10,000,000 10,000,000
6/16/97 5.50 10,000,000 10,000,000
COMMERZBANK, GERMANY
3/13/97 5.30 15,000,000 15,000,000
3/14/97 5.30 15,000,000 15,000,000
DEUTSCHE BANK, GERMANY
5/28/97 5.34 14,000,000 14,000,000
LANDESBANK HESSEN - THURINGEN
4/29/97 5.90 14,000,000 13,993,677
1/27/98 5.80 6,000,000 5,997,253
NATIONAL WESTMINSTER BANK PLC
5/1/97 5.42 2,000,000 2,000,055
RABOBANK NEDERLAND, N.V.
3/3/97 5.30 5,000,000 5,000,040
7/29/97 5.50 25,000,000 25,000,000
ROYAL BANK OF CANADA
1/14/98 5.80 17,000,000 16,997,852
SANWA BANK, LTD.
3/26/97 5.42 4,000,000 4,000,113
3/27/97 5.71 2,000,000 2,000,000
4/18/97 5.50 4,000,000 4,000,000
SOCIETE GENERALE, FRANCE
4/9/97 5.42 2,000,000 2,000,000
7/28/97 5.55 15,000,000 15,000,000
8/7/97 5.52 5,000,000 5,000,000
SUMITOMO BANK, LTD.
3/6/97 5.57 2,000,000 2,000,000
4/1/97 5.51 2,000,000 2,000,000
4/3/97 5.60 1,000,000 1,000,000
4/8/97 5.58 2,000,000 2,000,000
5/19/97 5.52 3,000,000 3,000,000
5/19/97 5.54 1,000,000 1,000,000
5/27/97 5.50 1,000,000 1,000,000
ANNUALIZED YIELD
DUE AT TIME OF PRINCIPAL VALUE
DATE PURCHASE AMOUNT (NOTE 1)
SWISS BANK CORP.
7/16/97 5.40% $ 5,000,000 $ 5,000,000
285,989,284
LONDON BRANCH, EURODOLLAR, FOREIGN BANKS - 7.1%
ABBEY NATIONAL, TREASURY SERVICES
3/17/97 5.43 10,000,000 10,000,000
BANCO BILBAO VIZCAYA, S.A.
5/19/97 5.39 5,000,000 5,000,108
BANK OF NOVA SCOTIA
3/6/97 5.40 10,000,000 10,000,000
BANK OF TOKYO - MITSUBISHI LTD.
3/3/97 5.48 3,000,000 3,000,002
BAYERISCHE HYPOTHEKEN-UND WESCHEL
4/7/97 5.37 5,000,000 5,000,051
BAYERISCHE VEREINSBANK A.G.
8/26/97 5.44 15,000,000 14,999,940
CANADIAN IMPERIAL BANK OF COMMERCE
3/19/97 5.45 5,000,000 5,000,000
SANWA BANK, LTD.
4/11/97 5.54 3,000,000 3,000,068
56,000,169
TOTAL CERTIFICATES OF DEPOSIT 366,989,605
COMMERCIAL PAPER - 33.3%
AMERICAN BRANDS, INC.
4/2/97 5.41 4,346,000 4,325,294
ASSOCIATES CORP. OF NORTH AMERICA
3/25/97 5.49 4,000,000 3,985,573
BMW U.S. CAPITAL CORP.
4/24/97 5.34 21,381,000 21,211,342
BEAR STEARNS COS., INC.
5/21/97 5.37 2,000,000 1,976,195
CIT GROUP HOLDINGS, INC.
3/17/97 5.48 6,000,000 5,985,573
CHRYSLER FINANCIAL CORPORATION
3/12/97 5.49 1,000,000 998,335
3/24/97 5.38 5,000,000 4,982,926
4/21/97 5.45 1,000,000 992,350
4/29/97 5.45 1,000,000 991,150
CITIBANK CREDIT CARD MASTER TRUST I (DAKOTA CERTIFICATE PROGRAM)
3/5/97 5.37 4,367,000 4,364,404
3/6/97 5.36 5,000,000 4,996,292
3/12/97 5.47 4,724,000 4,716,205
COMMONWEALTH BANK OF AUSTRALIA
3/5/97 5.38 7,000,000 6,995,870
DEN DANSKE BANK A/S
3/17/97 5.50 5,000,000 4,988,044
ELECTRICITE DE FRANCE
7/28/97 5.47 8,000,000 7,823,518
FORD MOTOR CREDIT CORP.
4/23/97 5.37 20,000,000 19,843,650
GTE CORP.
3/10/97 5.36 3,000,000 2,995,995
COMMERCIAL PAPER - CONTINUED
ANNUALIZED YIELD
DUE AT TIME OF PRINCIPAL VALUE
DATE PURCHASE AMOUNT (NOTE 1)
GENERAL ELECTRIC CAPITAL CORP.
3/5/97 5.76% $ 10,000,000 $ 9,993,778
3/12/97 5.76 4,000,000 3,993,156
5/29/97 5.34 10,000,000 9,869,714
6/3/97 5.44 15,000,000 14,792,808
GENERAL ELECTRIC CO.
3/10/97 5.33% 10,000,000 9,986,750
GENERAL MOTORS ACCEPTANCE CORP.
4/28/97 5.50 10,000,000 9,913,000
8/27/97 5.50 3,000,000 2,920,196
GOLDMAN SACHS GROUP, L.P. (THE)
4/29/97 5.50 10,000,000 9,912,320
IBM CREDIT CORP.
3/3/97 5.39 2,000,000 1,999,411
MERRILL LYNCH & CO., INC.
3/12/97 5.68 1,000,000 998,312
MONSANTO CO.
6/16/97 5.40 8,300,000 8,169,252
MORGAN STANLEY GROUP, INC.
4/15/97 5.40 10,000,000 9,933,250
5/21/97 5.35 9,000,000 8,893,080
NATIONAL BANK OF CANADA
3/3/97 5.43 3,000,000 2,999,107
NATIONWIDE BUILDING SOCIETY
5/13/97 5.38 15,000,000 14,838,488
NORFOLK SOUTHERN CORP.
5/12/97 5.42 3,000,000 2,967,900
5/19/97 5.43 2,000,000 1,976,520
PREFERRED RECEIVABLES FUNDING CORP.
4/22/97 5.36 1,467,000 1,455,748
SBC FINANCE (DELAWARE), INC.
3/11/97 5.76 20,000,000 19,968,889
TEXTRON, INC.
3/4/97 5.50 1,000,000 999,544
WOOL INTERNATIONAL
3/7/97 5.65 15,000,000 14,986,249
TOTAL COMMERCIAL PAPER 263,740,188
FEDERAL AGENCIES (A) - 4.4%
FEDERAL NATIONAL MORTGAGE ASSOC. - AGENCY COUPONS
3/2/97 5.38 25,000,000 24,996,702
3/13/97 5.43 5,000,000 4,996,902
3/29/97 5.31 5,000,000 4,999,176
TOTAL FEDERAL AGENCIES 34,992,780
U.S. TREASURY OBLIGATIONS - 3.0%
U.S. TREASURY BILLS (NOTE)
3/5/98 5.36 25,000,000 23,643,847
BANK NOTES (A) - 0.8%
PNC BANK
3/10/97 5.44 3,000,000 2,998,539
3/11/97 5.35 3,000,000 2,999,559
TOTAL BANK NOTES 5,998,098
MASTER NOTES (A) - 2.0%
ANNUALIZED YIELD
DUE AT TIME OF PRINCIPAL VALUE
DATE PURCHASE AMOUNT (NOTE 1)
J.P. MORGAN SECURITIES
3/7/97 5.41% $ 3,000,000 $ 3,000,000
3/7/97 5.44 13,000,000 13,000,000
TOTAL MASTER NOTES 16,000,000
MEDIUM-TERM NOTES (A) - 1.1%
GENERAL MOTORS ACCEPTANCE CORP.
5/1/97 5.56 5,000,000 5,000,000
NORWEST CORP.
4/22/97 5.55 4,000,000 4,000,000
TOTAL MEDIUM-TERM NOTES 9,000,000
SHORT-TERM NOTES (A)(B) - 2.5%
SMM TRUST (1996-I)
3/31/97 5.43 7,000,000 7,000,000
SMM TRUST (1996-P)
3/17/97 5.46 5,000,000 5,000,000
SMM TRUST (1996-V)
3/26/97 5.64 8,000,000 8,000,000
TOTAL SHORT-TERM NOTES 20,000,000
TIME DEPOSITS - 0.4%
BANK OF TOKYO - MITSUBISHI LTD.
4/3/97 5.50 3,000,000 3,000,000
REPURCHASE AGREEMENTS - 6.0%
MATURITY
AMOUNT
In a joint trading account
(U.S. Government Obligations):
dated 2/28/97 due 3/3/97
At 5.43% $ 2,894,309 2,893,000
dated 2/25/97 due 3/4/97
At 5.37% 25,026,104 25,000,000
dated 2/19/97 due 3/12/97
At 5.30% 20,061,833 20,000,000
TOTAL REPURCHASE AGREEMENTS 47,893,000
TOTAL INVESTMENTS - 100% $ 793,129,251
TOTAL COST FOR INCOME TAX PURPOSES - $793,129,251
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 $20,000,000 or 2.4% of net
assets.
INCOME TAX INFORMATION
A total of 2.7% of the dividends distributed during the fiscal year was
derived from interest on U.S. Government securities which is generally
exempt from state income tax.
The fund will notify shareholders in January 1998 of the applicable
percentage for use in preparing 1997 income tax returns.
MONEY MARKET PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1997
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS
Investment in securities, at $ 793,129,251
value (including repurchase agreements of $47,893,000) - See accompanying schedule
Receivable for fund shares sold 142,610,719
Interest receivable 3,917,317
TOTAL ASSETS 939,657,287
LIABILITIES
Payable for investments purchased $ 56,812,267
Payable for fund shares redeemed 34,331,836
Accrued management fee 115,104
Other payables and accrued expenses 230,196
TOTAL LIABILITIES 91,489,403
NET ASSETS $ 848,167,884
Net Assets consist of:
Paid in capital $ 848,155,015
Accumulated net realized gain (loss) on investments 12,869
NET ASSETS, for 848,149,757 $ 848,167,884
shares outstanding
NET ASSET VALUE and redemption price per share ($848,167,884 (divided by) 848,149,757 shares) $1.00
Maximum offering price per share (100/97.00 of $1.00) $1.03
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1997
<TABLE>
<CAPTION>
<S> <C> <C>
INTEREST INCOME $ 42,743,060
EXPENSES
Management fee $ 1,584,080
Transfer agent fees 1,976,166
Accounting fees and expenses 108,892
Non-interested trustees' compensation 2,158
Custodian fees and expenses 17,070
Registration fees 616,029
Audit 24,503
Legal 4,826
Miscellaneous 31,877
Total expenses before reductions 4,365,601
Expense reductions (521 4,365,080
)
NET INTEREST INCOME 38,377,980
NET REALIZED GAIN (LOSS) 9,751
ON INVESTMENTS
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 38,387,731
OTHER INFORMATION $ 2,788,424
Sales charges paid to FDC
Deferred sales charges withheld $ 97,630
by FDC
Expense reductions $ 521
Custodian interest credits
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE YEAR ENDED YEAR ENDED
(DECREASE) IN FEBRUARY 28, FEBRUARY 29,
NET ASSETS 1997 1996
Operations $ 38,377,980 $ 35,253,224
Net interest
income
Net realized 9,751 33,656
gain (loss)
NET INCREASE 38,387,731 35,286,880
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
Distributions to (38,377,980) (35,253,224)
shareholders
from net
interest
income
Share 7,030,225,686 6,107,173,652
transactions
at net asset
value of
$1.00 per
share
Proceeds
from sales of
shares
Reinvestmen 35,577,810 32,687,547
t of
distributions
from net
interest
income
Cost of (6,828,466,797) (6,102,217,401)
shares
redeemed
NET INCREASE 237,336,699 37,643,798
(DECREASE)
IN NET
ASSETS
RESULTING
FROM SHARE
TRANSACTIO
NS
TOTAL 237,346,450 37,677,454
INCREASE
(DECREASE)
IN NET ASSETS
NET ASSETS
Beginning of 610,821,434 573,143,980
period
End of period $ 848,167,884 $ 610,821,434
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEAR ENDED YEAR ENDED YEARS ENDED FEBRUARY 28, TEN MONTHS
FEBRUARY 28, FEBRUARY 29, ENDED
FEBRUARY 28,
SELECTED 1997 1996 1995 1994 1993
PER-SHARE
DATA
</TABLE>
Net asset $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
value,
beginning of
period
Income from .049 .054 .042 .026 .026
Investment
Operations
Net interest
income
Less
Distributions
From net (.049) (.054) (.042) (.026) (.026)
interest
income
Net asset $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
value, end of
period
TOTAL RETURN B 5.02% 5.56% 4.28% 2.62% 2.63%
RATIOS AND
SUPPLEMENT
AL DATA
Net assets, $ 848,168 $ 610,821 $ 573,144 $ 518,657 $ 431,133
end of period
(000 omitted)
Ratio of .56% .59% .65% .72% .56% A
expenses to
average net
assets
Ratio of net 4.92% 5.39% 4.19% 2.59% 3.09% A
interest
income to
average net
assets
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
A ANNUALIZED
B TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS
THAN ONE YEAR ARE NOT ANNUALIZED.
</TABLE>
NOTES TO FINANCIAL STATEMENTS
For the period ended February 28, 1997
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Select Portfolios (the trust) is registered under the Investment
Company Act of 1940, as amended (the 1940 Act), as an open-end management
investment company organized as a Massachusetts business trust. The trust
has thirty-five equity funds (the fund or the funds) which invest primarily
in securities of companies whose principal business activities fall within
specific industries, and a money market fund which invests in high quality
money market instruments. Each fund is authorized to issue an unlimited
number of shares. The American Gold Portfolio and the Precious Metals and
Minerals Portfolio may also invest in certain precious metals. The
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 with remaining maturities
of sixty days or less for which quotations are not readily available 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 the funds 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. Income receipts
and expense payments are translated into U.S. dollars at the prevailing
exchange rate on the respective dates of the transactions. Purchases and
sales of securities are translated into U.S. dollars at the contractual
currency exchange rates established at the time of each trade.
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, 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. Non-cash dividends included in dividend income, if any,
are recorded at the fair market value of the securities received. 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. Shareholders are also subject to an
additional $7.50 fee for shares exchanged into another Fidelity fund (see
Note 4).
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.
FOREIGN CURRENCY CONTRACTS. Certain funds use foreign currency contracts to
facilitate transactions in foreign-denominated securities. 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 foreign
currency contracts is determined using contractual currency exchange rates
established at the time of each trade. The cost of the foreign currency
contracts is included in the cost basis of the associated investment.
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 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.
TAXABLE CENTRAL CASH FUND. Pursuant to an Exemptive Order issued by the
SEC, the funds may invest in the Taxable Central Cash Fund (the Cash Fund)
managed by FMR Texas, an affiliate of FMR. The Cash Fund is an open-end
money market fund available only to investment companies and other accounts
managed by FMR and its affiliates. The Cash Fund seeks preservation of
capital, liquidity, and current income by investing in U.S. Treasury
securities and repurchase agreements for these securities, and may be
utilized by the funds as an additional cash management option. Dividends
from the Cash Fund are declared daily and paid monthly from net interest
income. Income distributions received by the funds are recorded as interest
income.
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. 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.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As each fund's investment adviser, FMR receives a monthly
fee.
For each equity fund, the monthly fee is calculated on the basis of a group
fee rate plus a fixed individual fund fee rate applied to the average net
assets of each fund. The group fee rate is the weighted average of a series
of rates and is based on the monthly average net assets of all the mutual
funds advised by FMR. The rates ranged from .2500% to .5200% for the
period. In the event that these rates were lower than the contractual rates
in effect during the period, FMR voluntarily implemented the above rates,
as they resulted in the same or a lower management fee. The annualized
individual fund fee rate is .30%. For the period, the management fee was
equivalent to an annual rate which ranged between .60% and .62% of average
net assets for the equity funds.
For the money market fund, FMR receives a monthly fee that is calculated on
the basis of a group fee rate plus a fixed individual fund fee rate applied
to the average net assets of the fund and an income-based fee. The group
fee rate is the weighted average of a series of rates and is based on the
monthly average net assets of all the mutual funds advised by FMR. The
rates ranged from .1100% to .3700% for the period. In the event that these
rates were lower than the contractual rates in effect during the period,
FMR voluntarily implemented the above rates, as they resulted in the same
or a lower management fee. The annual individual fund fee rate is .03%. The
income-based fee is added only when the fund's gross yield exceeds 5%. At
that time, the fee would equal 6% of that portion of the fund's gross
income that represents a gross yield of more than 5% per year. The maximum
income-based component is .24% of average net assets. For the period, the
management fee was equivalent to an annual rate of .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.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
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 each fund's accounting
records and administers the 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 receives the proceeds of $7.50 to cover administrative
costs associated with exchanges out of an equity fund to any other Fidelity
Select fund or to any other Fidelity fund. The exchange fees retained by
FSC are shown under the caption "Other Information" on each fund's
Statement of Operations.
BROKERAGE COMMISSIONS. 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.
5. 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.
6. SECURITY LENDING.
Certain equity funds loaned securities to certain brokers who paid the fund
negotiated lenders' fees. These fees are included in interest income. Each
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.
7. 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.
8. 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 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 $25,611 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.
9. 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
Consumer Industries 1 10.3
Retailing 1 13.3
Transportation 1 10.5
10. 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.
11. LITIGATION.
In December 1995, a single individual who purchased shares of Apple
Computer, Inc. ("Apple") in September 1995 filed a purported class action
complaint in the United States District Court in Boston 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.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees and the Shareholders of Fidelity Select Portfolios:
In our opinion, the accompanying statements of assets and liabilities,
including the schedules of investments, and the related statements of
operations and of changes in net assets and the financial highlights
present fairly, in all material respects, the financial position of each of
the thirty-six funds constituting Fidelity Select Portfolios at February
28, 1997, the results of each of their operations for the year then ended,
and the changes in each of their net assets and the financial highlights
for the periods indicated, in conformity with generally accepted accounting
principles. These financial statements and financial highlights (hereafter
referred to as "financial statements") are the responsibility of the
Fidelity Select Portfolios' management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant
estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits, which included
confirmation of securities at February 28, 1997 by correspondence with the
custodians and brokers and the application of alternative auditing
procedures where confirmations from brokers were not received, provide a
reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
Boston, Massachusetts
April 18, 1997
DISTRIBUTIONS
The Board of Trustees of Fidelity Select Portfolios voted to pay to
shareholders of record at the opening of business on record date, the
following distributions derived from capital gains realized from sales of
portfolio securities, and dividends derived from net investment income for
each of the following funds:
AMOUNTS PER SHARE
RECORD & REINVESTMENT
FUND EX-DATE PAY DATE DIVIDENDS CAPITAL GAINS TOTAL PRICE
American Gold 4/4/97 4/7/97 $ - $ 1.29 $ 1.29 $ 22.55
Automotive 4/4/97 4/7/97 .06 .86 .92 23.56
Biotechnology 4/4/97 4/7/97 - .59 .59 29.64
Brokerage and Investment Management 4/4/97 4/7/97 .01 .04 .05 23.52
Chemicals 4/4/97 4/7/97 .01 .03 .04 40.65
Computers 4/4/97 4/7/97 - 3.79 3.79 42.18
Construction and Housing 4/4/97 4/7/97 .02 2.17 2.19 18.90
Defense and Aerospace 4/4/97 4/7/97 - .39 .39 27.82
Electronics 4/4/97 4/7/97 - 3.25 3.25 32.90
Energy 4/4/97 4/7/97 .03 1.00 1.03 20.17
Energy Service 4/4/97 4/7/97 - 1.21 1.21 19.63
Financial Services 4/4/97 4/7/97 .19 3.46 3.65 72.81
Food and Agriculture 4/4/97 4/7/97 .14 2.68 2.82 39.84
Health Care 4/4/97 4/7/97 .10 6.28 6.38 89.96
Home Finance 4/11/97 4/14/97 .14 2.49 2.63 39.23
Industrial Equipment 4/11/97 4/14/97 .02 1.86 1.88 22.55
Industrial Materials 4/11/97 4/14/97 .03 2.00 2.03 23.48
Insurance 4/11/97 4/14/97 - 1.44 1.44 29.70
Leisure 4/11/97 4/14/97 - 2.21 2.21 43.99
Medical Delivery 4/11/97 4/14/97 - 2.03 2.03 24.37
Multimedia 4/11/97 4/14/97 - .55 .55 23.28
Natural Gas 4/11/97 4/14/97 - .33 .33 11.71
Paper and Forest Products 4/11/97 4/14/97 .04 .51 .55 19.70
Regional Banks 4/11/97 4/14/97 .03 .14 .17 30.30
Retailing 4/11/97 4/14/97 - .35 .35 33.16
Software and Computer Services 4/11/97 4/14/97 - 2.46 2.46 34.11
Technology 4/11/97 4/14/97 - 7.16 7.16 47.71
Telecommunications 4/11/97 4/14/97 - 1.04 1.04 38.15
Transportation 4/11/97 4/14/97 - .39 .39 22.81
Utilities Growth 4/11/97 4/14/97 .19 .89 1.08 42.09
FEDERAL TAX STATUS
Dividend and capital gain distributions will be taxable regardless of
whether you take them in cash or in additional shares. You will be notified
at a later date as to the tax treatment of these distributions and
dividends. If you receive additional shares, the amount received should be
treated as an additional purchase and added to your cost basis.
The reinvestment price is the 10:00 A.M. price on each fund's ex-date.
NOTE: IF YOUR ACCOUNT IS A FIDELITY PROTOTYPE RETIREMENT PLAN SUCH AS AN
INDIVIDUAL RETIREMENT ACCOUNT (IRA), A KEOGH PLAN, A 403(B), OR A QUALIFIED
PENSION OR PROFIT SHARING PLAN, THE ABOVE DATA IS PROVIDED FOR
INFORMATIONAL PURPOSES ONLY AND IS NOT REPORTABLE FOR TAX PURPOSES IN 1997.
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
INVESTMENT SUB-ADVISERS
FMR Texas Inc., Irving, TX, MONEY MARKET FUND
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 *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Marvin L. Mann *
William O. McCoy *
Gerald C. McDonough *
Thomas R. Williams *
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Company, Inc.
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
Cyclical Industries * *
Construction and Housing
Defense and Aerospace
Environmental Services
Industrial Equipment
Industrial Materials
Paper and Forest Products
Transportation
FINANCIAL SERVICES SECTOR
Brokerage and Investment Management
Financial Services
Home Finance
Insurance
Regional Banks
HEALTH CARE SECTOR
Biotechnology
Health Care
Medical Delivery
NATURAL RESOURCES SECTOR
American Gold
Energy
Energy Service
Natural Resources * *
Precious Metals and Minerals
TECHNOLOGY SECTOR
Computers
Developing Communications
Electronics
Software and Computer Services
Technology
UTILITIES SECTOR
Natural Gas
Telecommunications
Utilities Growth
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
* * FUND LAUNCHED 3/3/97
BULK RATE
U.S. Postage
PAID
Fidelity
Investments
(registered trademark)
P.O. Box 193
Boston, MA 02101
