(2_FIDELITY_LOGOS)FIDELITY
SELECT
PORTFOLIOS(REGISTERED TRADEMARK)
AIR TRANSPORTATION
AMERICAN GOLD
AUTOMOTIVE
BIOTECHNOLOGY
BROKERAGE AND INVESTMENT MANAGEMENT
BUSINESS SERVICES AND OUTSOURCING
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
MEDICAL EQUIPMENT AND SYSTEMS*
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, 1998
AND
PROSPECTUS
DATED APRIL 28, 1998
* Prospectus only
CONTENTS
PERFORMANCE OVERVIEW A-4
FUND UPDATES*
CONSUMER SECTOR A-6 CONSUMER INDUSTRIES
A-14 FOOD AND AGRICULTURE
A-20 LEISURE
A-27 MULTIMEDIA
A-33 RETAILING
CYCLICALS SECTOR A-38 AIR TRANSPORTATION
A-44 AUTOMOTIVE
A-50 CHEMICALS
A-56 CYCLICAL INDUSTRIES
A-63 CONSTRUCTION AND HOUSING
A-69 DEFENSE AND AEROSPACE
A-75 ENVIRONMENTAL SERVICES
A-81 INDUSTRIAL EQUIPMENT
A-87 INDUSTRIAL MATERIALS
A-93 PAPER AND FOREST PRODUCTS
A-98 TRANSPORTATION
FINANCIAL SERVICES SECTOR A-104 BROKERAGE AND INVESTMENT MANAGEMENT
A-110 FINANCIAL SERVICES
A-116 HOME FINANCE
A-123 INSURANCE
A-129 REGIONAL BANKS
HEALTH CARE SECTOR A-135 BIOTECHNOLOGY
A-141 HEALTH CARE
A-147 MEDICAL DELIVERY
NATURAL RESOURCES SECTOR A-153 AMERICAN GOLD
A-159 ENERGY
A-165 ENERGY SERVICE
A-171 NATURAL RESOURCES
A-178 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-184 BUSINESS SERVICES AND OUTSOURCING
A-190 COMPUTERS
A-196 DEVELOPING COMMUNICATIONS
A-202 ELECTRONICS
A-208 SOFTWARE AND COMPUTER SERVICES
A-214 TECHNOLOGY
UTILITIES SECTOR A-221 NATURAL GAS
A-227 TELECOMMUNICATIONS
A-233 UTILITIES GROWTH
A-239 MONEY MARKET
NOTES TO FINANCIAL STATEMENTS A-245 FOOTNOTES TO THE FINANCIAL STATEMENTS
REPORT OF INDEPENDENT ACCOUNTANTS A-249 THE AUDITORS' OPINION
DISTRIBUTIONS A-250
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:
A strong U.S. economy, low inflation and the Asian financial crisis
played leading roles in the direction of the U.S. stock market for the
12-month period that ended February 28, 1998. The Standard & Poor's
500 Index (S&P 500) - a large-capitalization-oriented index based on
the performance of 500 widely held stocks, often used as a measure of
the U.S. stock market - returned 35.01% during the period, well ahead
of its historical annual average return of around 11%.
Of the 38 Select equity portfolios, 17 topped the S&P 500's return for
the past 12 months, some by wide margins. To put that in perspective,
only seven Select funds had outperformed the index for the 12 months
that ended February 28, 1997. The best-performing Select fund over the
past year was Air Transportation, which generated a gain of 61.10%.
Precious Metals & Minerals - which tends to do better during periods
of higher inflation - had the worst performance during the period,
declining 47.55%. A new fund, Fidelity Select Business Services and
Outsourcing Portfolio commenced operations on February 4, 1998.
During the first five months of the period, the stock market's rise
was relatively narrow as investors focused on blue chip stocks - those
of high-quality, household-name companies. The Dow Jones Industrial
Average closed above 8000 for the first time ever in July. In August
and September, the market broadened, and small- to mid-cap stocks
started to outperform on a relative basis. Then Asia entered the
picture.
In part due to over-investment, rising debt levels, weak exports and
subsequent current account deficits, several small Asian countries
were forced to devalue their currencies in July and August. By late
October, Southeast Asia's regional foreign exchange contagion hit
larger markets, such as Hong Kong and Japan. In response, the Dow
tumbled over 550 points in one trading session, only to rise over 330
points the next day as investors began to focus on higher-quality
stocks with good liquidity and minimal international exposure.
In contrast to the Asian economies, the U.S. economy continued to
expand at a moderate-to-strong pace. That rate of growth, coupled with
low inflation and low interest rates, provided a generally favorable
backdrop for U.S. equities, and the market rebounded through January
and February of this year.
With the solid domestic economy as a backdrop, the CONSUMER sector
produced strong returns. Retailing was the top performer, as retailers
continued their efforts to improve profitability and streamline
operations. Multimedia and Leisure benefited from several trends in
the advertising industry that bolstered the performance of some of
their key investments. Consumer Industries also performed well, but
Food and Agriculture struggled.
In terms of CYCLICAL stocks - those that tend to parallel the ups and
downs of the economy - the solid U.S. economy combined with Asia's
currency crisis to produce mixed results. Air Transportation, Defense
and Aerospace, and Transportation performed very well, due mostly to
favorable supply and demand conditions, while Construction and Housing
benefited from low interest rates. The overall performance of Paper
and Forest Products, Industrial Materials, Industrial Equipment and
Cyclical Industries, however, was hurt by the volatility in Asian
markets and questions about continuing demand from that region for the
sectors' products. Weak commodity pricing trends hurt Chemicals, while
Environmental Services suffered due to concerns in the waste industry.
Automotive lagged the market's return.
As they have for the past few years, FINANCIAL SERVICES stocks
continued to perform very well. Brokerage and Investment Management,
Financial Services, Insurance and Regional Banks each rode favorable
economic conditions to post returns above that of the S&P 500. Home
Finance had good returns, but declined toward the end of the period
due to an increase in mortgage refinancing activity.
The HEALTH CARE sector registered mixed results for a variety of
reasons. While Health Care performed capably - mostly due to its
exposure to pharmaceutical stocks - Medical Delivery and Biotechnology
encountered difficulties. The two groups in which Medical Delivery
invests - managed-care companies and hospitals - both struggled.
Biotechnology lagged the index due mostly to disappointing sales
within the sector.
The performance of Select funds in the NATURAL RESOURCES area also was
mixed. Energy Service performed quite well due to the beneficial
supply/demand scenario in place for much of the period. In contrast,
however, American Gold and Precious Metals and Minerals continued to
encounter challenges caused by weak gold prices. Natural Resources and
Energy trailed the S&P, mainly due to a falloff in demand for
commodities due to the Asian situation.
Since Asia accounts for a significant portion of TECHNOLOGY demand,
investor concerns led to subpar performance for Technology,
Electronics, Computers and Developing Communications. Software and
Computer Services topped the S&P 500 during the period based on
excellent stock picking. However, the technology sector rebounded
strongly over the last two months of the period, as the overall U.S.
equity market seemed to put Asia behind it.
As the volatility in Asia was peaking in late October, investors began
to favor stocks with less global exposure, including those in the
UTILITIES group. Utilities Growth and Telecommunications each
benefited from this trend. Natural Gas, however, struggled due to weak
demand for the commodity and the influence of falling oil prices.
As the period came to a close, the U.S. equity markets were surging
yet again. Given the opportunity to digest the developments in Asia,
U.S. equities showed their resiliency, as moderate economic growth,
low inflation and low interest rates continued to provide a strong
underpinning for the markets. Investors will be monitoring
developments in China - where any currency depreciation would be a big
negative - in Japan - which has yet to implement sustainable economic
reforms - and elsewhere throughout the region.
In the pages that follow, you'll find detailed summaries for each of
the Select funds. We hope that you find them informative and useful
for evaluating your investments. Thank you very much for your
continued interest in the Fidelity Select Portfolios.
Sincerely
William R. Ebsworth
Group Leader, FMR Research
Select Group Leader
CUMULATIVE TOTAL RETURNS
FOR THE YEAR ENDED FEBRUARY 28, 1998
Row: 1, Col: 1, Value: 61.1
Row: 2, Col: 1, Value: 57.56
Row: 3, Col: 1, Value: 52.61
Row: 4, Col: 1, Value: 48.43
Row: 5, Col: 1, Value: 47.29000000000001
Row: 6, Col: 1, Value: 46.52
Row: 7, Col: 1, Value: 42.81
Row: 8, Col: 1, Value: 42.68
Row: 9, Col: 1, Value: 42.42
Row: 10, Col: 1, Value: 41.15
Row: 11, Col: 1, Value: 41.08
Row: 12, Col: 1, Value: 40.36
Row: 13, Col: 1, Value: 40.04
Row: 14, Col: 1, Value: 36.64
Row: 15, Col: 1, Value: 36.47
Row: 16, Col: 1, Value: 36.2
Row: 17, Col: 1, Value: 35.5
Row: 18, Col: 1, Value: 35.01
Row: 19, Col: 1, Value: 32.39
Row: 20, Col: 1, Value: 28.17
Row: 21, Col: 1, Value: 25.77
Row: 22, Col: 1, Value: 25.76
Row: 23, Col: 1, Value: 24.92
Row: 24, Col: 1, Value: 24.15
Row: 25, Col: 1, Value: 23.58
Row: 26, Col: 1, Value: 22.78
Row: 27, Col: 1, Value: 21.97
Row: 28, Col: 1, Value: 20.4
Row: 29, Col: 1, Value: 20.33
Row: 30, Col: 1, Value: 19.47
Row: 31, Col: 1, Value: 16.11
Row: 32, Col: 1, Value: 15.53
Row: 33, Col: 1, Value: 13.52
Row: 34, Col: 1, Value: 8.9
Row: 35, Col: 1, Value: 8.739999999999998
Row: 36, Col: 1, Value: 7.3
Row: 37, Col: 1, Value: 6.59
Row: 38, Col: 1, Value: -43.15
Row: 39, Col: 1, Value: -47.55
Row: 40, Col: 1, Value: 0.0
Air Transportation 61.10%Brokerage and Investment Management
57.56%Retailing 52.61%Energy Service 48.43%Leisure
47.29%Telecommunications 46.52%Insurance 42.81%Defense & Aerospace
42.68%Multimedia 42.42%Transportation 41.15%Financial Services
41.08%Consumer Industries 40.36%Construction and Housing
40.04%Regional Banks 36.64%Health Care 36.47%Utilities Growth
36.20%Software and Computer Services 35.50%S&P 500 35.01%Home
Finance 32.39%Developing Communications 28.17%Cyclical Industries 1
25.77%Industrial Equipment 25.76%Technology 24.92%Electronics
24.15%Food & Agriculture 23.58%Automotive 22.78%Medical Delivery
21.97%Energy 20.40%Computers 20.33%Chemicals 19.47%Biotechnology
16.11%Paper & Forest 15.53%Environmental Services 13.52%Business
Services and Outsourcing 2 8.90%Natural Gas 8.74%Natural Resources 1
7.30%Industrial Materials 6.59%American Gold -43.15%Precious Metals
& Minerals -47.55%
1. RETURNS ARE FROM INCEPTION DATE MARCH 3, 1997.
2. RETURN IS FROM INCEPTION DATE FEBRUARY 4, 1998.
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
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). Load adjusted returns include a 3.00% sales
charge and the effect of a $7.50 trading fee. 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, 1998 YEAR YEARS FUND
SELECT CONSUMER INDUSTRIES 40.36% 158.94% 269.75%
SELECT CONSUMER INDUSTRIES 36.07% 151.10% 258.58%
(LOAD ADJ.)
S&P 500 35.01% 166.84% 260.03%
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 Standard & Poor's 500 Index - a widely
recognized, unmanaged index of common stocks. This benchmark includes
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, 1998 YEAR YEARS FUND
SELECT CONSUMER INDUSTRIES 40.36% 20.96% 18.60%
SELECT CONSUMER INDUSTRIES 36.07% 20.22% 18.11%
(LOAD ADJ.)
S&P 500 35.01% 21.69% 18.19%
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 LONG-TERM GROWTH AND
SHORT-TERM VOLATILITY. UNLIKE THE BROADER MARKET,
HOWEVER, SOME SECTORS MAY NOT HAVE A HISTORY
OF GROWTH IN THE LONG RUN. AND, AS WITH ALL STOCK
FUNDS, THE SHARE PRICE AND RETURN OF A FUND THAT
INVESTS IN A SECTOR WILL VARY. THAT MEANS IF YOU
SELL YOUR SHARES DURING A SECTOR DOWNTURN, YOU
MIGHT LOSE MONEY. BUT IF YOU CAN IDENTIFY A
SECTOR THAT IS ABOUT TO EXPERIENCE RAPID GROWTH
YOU MAY HAVE THE POTENTIAL FOR ABOVE-AVERAGE
GAINS.
(CHECKMARK)
$10,000 OVER LIFE OF FUND
IMAHDR PRASUN SHR__CHT 19980228 19980305 124419 S00000000000001
Consumer Industries S&P 500
00517 SP001
1990/06/29 9700.00 10000.00
1990/07/31 9670.90 9968.00
1990/08/31 8943.40 9066.89
1990/09/30 8439.00 8625.34
1990/10/31 8749.40 8588.25
1990/11/30 9234.40 9143.05
1990/12/31 9593.72 9398.14
1991/01/31 9808.43 9807.90
1991/02/28 10569.68 10509.16
1991/03/31 11077.18 10763.48
1991/04/30 10950.31 10789.32
1991/05/31 11477.33 11255.41
1991/06/30 10911.27 10739.92
1991/07/31 11623.72 11240.40
1991/08/31 12101.94 11506.79
1991/09/30 11994.59 11314.63
1991/10/31 12375.21 11466.25
1991/11/30 11857.95 11004.16
1991/12/31 13290.07 12263.03
1992/01/31 13379.46 12034.94
1992/02/29 13836.37 12191.39
1992/03/31 13677.45 11953.66
1992/04/30 13717.18 12305.10
1992/05/31 13627.78 12365.39
1992/06/30 13015.69 12181.15
1992/07/31 13388.15 12679.36
1992/08/31 13253.65 12419.43
1992/09/30 13377.81 12565.98
1992/10/31 13595.08 12609.96
1992/11/30 14246.90 13039.96
1992/12/31 14427.78 13200.35
1993/01/31 14331.67 13311.24
1993/02/28 13851.10 13492.27
1993/03/31 14662.73 13776.96
1993/04/30 14566.61 13443.55
1993/05/31 15719.98 13803.84
1993/06/30 15730.66 13843.87
1993/07/31 15880.17 13788.50
1993/08/31 16916.07 14311.08
1993/09/30 17289.85 14200.89
1993/10/31 17823.81 14494.84
1993/11/30 17428.68 14357.14
1993/12/31 17987.73 14530.86
1994/01/31 17835.98 15024.91
1994/02/28 17789.29 14617.74
1994/03/31 16645.36 13980.40
1994/04/30 16823.06 14159.35
1994/05/31 16600.01 14391.57
1994/06/30 15684.31 14038.97
1994/07/31 16106.94 14499.45
1994/08/31 17046.12 15093.93
1994/09/30 16729.15 14724.13
1994/10/31 17057.86 15055.42
1994/11/30 16224.34 14507.10
1994/12/31 16716.09 14722.24
1995/01/31 16569.67 15103.99
1995/02/28 16972.32 15692.59
1995/03/31 17435.98 16155.68
1995/04/30 17815.10 16631.47
1995/05/31 18145.91 17296.23
1995/06/30 18133.66 17698.02
1995/07/31 18893.31 18284.88
1995/08/31 18856.56 18330.78
1995/09/30 19861.26 19104.34
1995/10/31 20755.69 19036.14
1995/11/30 21980.94 19871.82
1995/12/31 21446.67 20254.55
1996/01/31 21446.67 20944.02
1996/02/29 22065.08 21138.17
1996/03/31 22844.29 21341.73
1996/04/30 23611.12 21656.31
1996/05/31 24835.58 22214.82
1996/06/30 24711.90 22299.46
1996/07/31 22015.61 21314.27
1996/08/31 22361.92 21763.79
1996/09/30 23809.01 22988.66
1996/10/31 23994.54 23622.68
1996/11/30 24674.80 25408.32
1996/12/31 24266.64 24904.98
1997/01/31 25355.05 26461.05
1997/02/28 25552.95 26668.50
1997/03/31 24798.48 25572.69
1997/04/30 24984.00 27099.38
1997/05/31 26715.57 28749.19
1997/06/30 28026.61 30037.16
1997/07/31 29646.86 32427.21
1997/08/31 28929.50 30610.64
1997/09/30 31836.05 32287.18
1997/10/31 31205.27 31208.79
1997/11/30 32541.05 32653.45
1997/12/31 33501.90 33214.11
1998/01/31 33331.18 33581.45
1998/02/27 35858.32 36003.35
IMATRL PRASUN SHR__CHT 19980228 19980305 124422 R00000000000095
$10,000 OVER LIFE OF FUND: 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 3.00% sales charge was
paid. As the chart shows, by February 28, 1998, the value of the
investment would have grown to $35,858 - a 258.58% increase on the
initial investment, and includes the effect of a $7.50 trading fee.
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 $36,003 - a 260.03% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1998
% OF FUND'S
INVESTMENTS
COCA-COLA CO. (THE) 6.0
WAL-MART STORES, INC. 5.8
PEPSICO, INC. 5.1
PROCTER & GAMBLE CO. 4.4
GILLETTE CO. 4.2
DISNEY (WALT) CO. 3.7
PHILIP MORRIS COMPANIES, INC. 3.4
HOME DEPOT, INC. 2.2
SAFEWAY, INC. 1.8
TIME WARNER, INC. 1.6
TOP INDUSTRIES AS OF FEBRUARY 28, 1998
SOFT DRINKS 11.1%
SOAPS & DETERGENTS 7.1%
GENERAL MERCHANDISE STORES 6.8%
COSMETICS 6.0%
MOTION PICTURE PRODUCTION 4.9%
ALL OTHERS 64.1%
ROW: 1, COL: 1, VALUE: 64.09999999999999
ROW: 1, COL: 2, VALUE: 4.9
ROW: 1, COL: 3, VALUE: 6.0
ROW: 1, COL: 4, VALUE: 6.8
ROW: 1, COL: 5, VALUE: 7.1
ROW: 1, COL: 6, VALUE: 11.1
*
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
CONSUMER INDUSTRIES PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Doug Chase,
Portfolio Manager of Fidelity Select Consumer Industries Portfolio
Q. DOUG, HOW DID THE FUND PERFORM?
A. For the 12-month period that ended February 28, 1998, the fund
returned 40.36%, outperforming the Standard & Poor's 500 Index return
of 35.01% for the same time period.
Q. WHAT WAS THE MARKET ENVIRONMENT LIKE DURING THE PERIOD?
A. It was a mixed environment for consumer stocks. The strong economic
growth of the first half of the year was followed by a major market
correction in August and subsequent market aftershocks caused by
turmoil in Asia. Good but unexciting earnings reports also helped the
market lose some of its momentum, as did a strengthening of the
dollar, which hurt prospects for multinational corporations' profits.
However, the last months of the period saw a degree of recovery in
some Asian markets and good performance in many areas of consumer
industries.
Q. WHAT STRATEGY DID YOU PURSUE IN THIS ENVIRONMENT?
A. In August, when I took over the fund, its emphasis was on
small-capitalization stocks. I diversified the fund, placing greater
emphasis on large-cap stocks, particularly in August when I felt they
were undervalued. Also at that time of uncertainty in the market, I
believed there could be a "flight to quality" to large-cap companies,
because they tend to have more predictable earnings growth. I took the
opportunity to sell many of the small-cap stocks in the fund that had
performed well, and shifted assets to large-cap stocks.
Q. WHICH STOCKS PERFORMED WELL DURING THE PERIOD?
A. Wal-Mart, one of the fund's top holdings, performed well during the
period. The company has changed the way retailing works in this
country. Wal-Mart invested in information technology to hold
inventories down and keep exactly what the customer wants on the
shelf; it now allocates floor space to the categories that sell
fastest. Another strong performer, ITT Corp., recently was subject to
a potential takeover bid, and I sold the stock to take advantage of
the jump in its stock price. BET Holdings, a top holding six months
ago, also benefited from a buyout offer, and I sold it to take
profits. During the last few months of the period, Coca-Cola and
Procter & Gamble outperformed the market. A declining interest-rate
environment such as we've had is very good for steady growth companies
like the ones I just mentioned. And, when the market starts to worry
about its future prospects, there is usually a flight to quality
stocks like these two.
Q. EVEN WITH THE FUND'S GOOD PERFORMANCE, THERE MUST HAVE BEEN SOME
DISAPPOINTMENTS . . .
A. Sure. Philip Morris turned out to be a disappointment, as an
anticipated lawsuit settlement continued to be delayed. In addition,
cereal companies such as Kellogg and General Mills didn't do as well
as expected. This industry did not get attractive pricing nor much
growth, and its product mix has shifted negatively to more generics
with lower profit margins.
Q. WHAT'S HAPPENING WITH ENTERTAINMENT AND CABLE STOCKS?
A. Right now, I'm very interested in entertainment and cable
operators, as well as broadcasting and advertising stocks. Ad rates
are up, so broadcasters have profited by charging more for ads. Cable
operators are developing the capability of two-way communication, and
can raise prices and retain market share. As a result, their future is
much brighter now than when satellite TV exploded onto the scene last
year.
Q. WHAT'S YOUR OUTLOOK?
A. I'm cautious, as always. Although the U.S. economy is strong and
unemployment continues to be low, personal indebtedness is still high.
If the economy weakens, this degree of indebtedness could be a big
issue. I believe that we won't know until the spring how great the
impact of Asia's problems will be, and how intertwined the global
economy is. Some Asian competitors are now dealing with currencies
whose values have been halved; that could make them low-cost
producers. And, with the U.S. market an open one, more imports could
create problems for smaller U.S. niche companies. The challenge right
now is that stocks aren't priced as low as they were six months ago,
but my discipline - finding a balance of risk and return - tends to
remain the same, regardless of market conditions.
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, 1990
FUND NUMBER: 517
TRADING SYMBOL: FSCPX
SIZE: as of February 28, 1998, more than
$72 million
MANAGER: Doug Chase, since August 1997;
manager, Fidelity Select Automotive Portfolio,
1994-1997; Fidelity Select Industrial Materials
Portfolio, 1994-1997; joined Fidelity in 1993
(checkmark)
CONSUMER INDUSTRIES PORTFOLIO
INVESTMENTS FEBRUARY 28, 1998
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 94.9%
SHARES VALUE (NOTE 1)
ADVERTISING - 1.7%
ADVERTISING - 0.4%
Outdoor Systems, Inc. (a) 7,950 $ 236,993
ADVERTISING AGENCIES - 1.3%
Interpublic Group of Companies, Inc. 9,400 512,300
Omnicom Group, Inc. 9,500 434,625
946,925
TOTAL ADVERTISING 1,183,918
AGRICULTURE - 0.3%
CROPS - 0.3%
Pioneer Hi-Bred International, Inc. 2,300 238,625
AIR TRANSPORTATION - 0.7%
TRANSPORTATION SERVICES - 0.7%
Viad Corp. 20,700 500,681
APPAREL STORES - 2.3%
FAMILY CLOTHING STORES - 0.4%
Abercrombie & Fitch Co. (a) 6,900 238,050
Stage Stores, Inc. (a) 2,300 96,600
334,650
GENERAL APPAREL STORES - 1.4%
Gap, Inc. 14,350 641,266
TJX Companies, Inc. 9,100 351,488
992,754
SHOE STORES - 0.5%
Payless ShoeSource, Inc. (a) 5,200 349,700
TOTAL APPAREL STORES 1,677,104
AUTOS, TIRES, & ACCESSORIES - 0.5%
AUTO PARTS - RETAIL - 0.5%
Pep Boys-Manny, Moe & Jack 15,100 386,938
BEVERAGES - 11.3%
MALT BEVERAGE - 0.2%
Coors (Adolph) Co. Class B 4,200 131,250
SOFT DRINKS - 11.1%
Coca-Cola Co. (The) 63,200 4,341,050
PepsiCo, Inc. 100,700 3,681,844
8,022,894
TOTAL BEVERAGES 8,154,144
BROADCASTING - 5.5%
CABLE TV OPERATORS - 4.0%
Comcast Corp. Class A 14,100 490,856
Comcast Corp. Class A special 4,200 147,000
Cox Communications, Inc. Class A (a) 8,400 323,925
TCA Cable TV, Inc. 7,400 364,450
Tele-Communications, Inc. (TCI Group),
Series A (a) 15,700 456,281
Time Warner, Inc. 16,623 1,122,053
2,904,565
RADIO BROADCASTING - 0.9%
Chancellor Media Corp. (a) 6,600 295,350
Clear Channel Communications, Inc. (a) 3,900 353,438
648,788
TELEVISION BROADCASTING - 0.6%
CBS Corp. 9,450 292,359
Scripps E.W. Co. Class A 2,200 116,738
409,097
TOTAL BROADCASTING 3,962,450
SHARES VALUE (NOTE 1)
CELLULAR - 0.7%
CELLULAR & COMMUNICATION SERVICES - 0.7%
Centennial Cellular Corp. Class A (a) 6,500 $ 121,063
Mobile Telecommunications
Technologies, Inc. (a) 500 11,250
Nextel Communications, Inc. Class A (a) 13,500 399,094
531,407
COMPUTER SERVICES & SOFTWARE - 1.2%
COMPUTER & SOFTWARE STORES - 0.5%
CompUSA, Inc. (a) 9,400 329,000
COMPUTER SERVICES - 0.6%
America Online, Inc. (a) 2,700 327,038
Computer Learning Centers, Inc. (a) 3,800 139,888
466,926
PREPACKAGED COMPUTER SOFTWARE - 0.1%
Midway Games, Inc. (a) 2,300 50,600
TOTAL COMPUTER SERVICES & SOFTWARE 846,526
COMPUTERS & OFFICE EQUIPMENT - 0.2%
COMPUTER EQUIPMENT - WHOLESALE - 0.2%
CDW Computer Centers, Inc. (a) 1,900 130,150
CONSUMER DURABLES - 0.1%
MANUFACTURING INDUSTRIES, NEC - 0.1%
Blyth Industries, Inc. (a) 2,300 69,144
CONSUMER ELECTRONICS - 0.6%
APPLIANCES - 0.6%
Black & Decker Corp. 7,800 392,925
DRUG STORES - 2.1%
CVS Corp. 10,477 775,953
Rite Aid Corp. 3,600 116,550
Walgreen Co. 17,300 634,694
1,527,197
DRUGS & PHARMACEUTICALS - 0.2%
PHARMACEUTICAL PREPARATIONS - 0.2%
Rexall Sundown, Inc. (a) 4,700 173,900
EDUCATIONAL SERVICES - 0.3%
COLLEGES, UNIVERSITIES & PROFESSIONAL SCHOOLS - 0.2%
Apollo Group, Inc. Class A (a) 4,600 194,925
EDUCATIONAL SERVICES - 0.1%
Childrens Comprehensive Services, Inc. (a) 2,800 52,150
TOTAL EDUCATIONAL SERVICES 247,075
ENGINEERING - 0.3%
SPECIAL CONTRACTORS - 0.3%
Comfort Systems USA, Inc. 11,300 218,938
ENTERTAINMENT - 5.6%
CRUISES - 0.5%
Carnival Cruise Lines, Inc. Class A 6,100 359,138
MOTION PICTURE PRODUCTION - 4.9%
Disney (Walt) Co. 23,800 2,664,113
King World Productions, Inc. 16,600 443,013
Viacom, Inc. Class B (non-vtg.) (a) 9,200 441,600
3,548,726
RECREATIONAL SERVICES - 0.2%
Premier Parks, Inc. (a) 2,000 104,750
TOTAL ENTERTAINMENT 4,012,614
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
FOODS - 7.7%
CANDY - 0.4%
Hershey Foods Corp. 3,900 $ 260,081
CANNED SPECIALTIES - 0.8%
Campbell Soup Co. 10,200 592,238
COOKIES & CRACKERS - 0.4%
Nabisco Holdings Corp. Class A 6,400 302,000
FOOD - 3.6%
Dole Food, Inc. (a) 3,600 195,525
General Mills, Inc. 5,900 424,431
Heinz (H.J.) Co. 12,800 720,800
Kellogg Co. 6,100 260,013
Sara Lee Corp. 18,100 1,022,650
2,623,419
GENERAL FOOD PREPARATIONS - 0.2%
Sysco Corp. 2,700 127,069
GRAIN MILL PRODUCTS - 0.7%
Archer-Daniels-Midland Co. 8,900 199,694
Corn Products International, Inc. (a) 6,050 201,163
Quaker Oats Co. 2,300 123,913
524,770
MEAT & FISH - 0.9%
ConAgra, Inc. 21,100 633,000
PACKAGED & FROZEN FOODS - 0.7%
Bestfoods 4,600 484,725
TOTAL FOODS 5,547,302
GENERAL MERCHANDISE STORES - 13.1%
DEPARTMENT STORES - 3.4%
Federated Department Stores, Inc. (a) 14,100 660,938
Kohls Corp. (a) 2,800 224,525
Meyer (Fred), Inc. (a) 6,100 271,069
Nordstrom, Inc. 2,200 126,156
Penney (J.C.) Co., Inc. 11,800 834,113
Proffitts, Inc. (a) 9,325 315,884
2,432,685
GENERAL MERCHANDISE STORES - 6.8%
Dayton Hudson Corp. 9,300 719,006
Wal-Mart Stores, Inc. 89,900 4,163,494
4,882,500
VARIETY STORES - 2.9%
Consolidated Stores Corp. (a) 21,928 901,789
Costco Companies, Inc. (a) 4,700 229,713
Dollar Tree Stores (a) 5,200 225,550
Michaels Stores, Inc. (a) 13,900 472,600
99 Cents Only Stores (a) 6,925 266,613
2,096,265
TOTAL GENERAL MERCHANDISE STORES 9,411,450
GROCERY STORES - 3.1%
GROCERIES, GENERAL LINE - WHOLESALE - 0.4%
JP Foodservice, Inc. (a) 9,900 327,319
GROCERY - RETAIL - 2.7%
Albertson's, Inc. 5,600 262,150
Dominick's Supermarkets, Inc. (a) 4,200 191,100
Hannaford Brothers Co. 4,700 198,281
Safeway, Inc. (a) 36,200 1,262,475
1,914,006
TOTAL GROCERY STORES 2,241,325
SHARES VALUE (NOTE 1)
HOME FURNISHINGS - 0.4%
FURNITURE - 0.4%
Leggett & Platt, Inc. 5,600 $ 281,050
HOUSEHOLD PRODUCTS - 13.4%
COSMETICS - 6.0%
Alberto-Culver Co. Class A 6,600 174,075
Avon Products, Inc. 12,400 873,425
Gillette Co. 28,100 3,031,288
Estee Lauder Companies, Inc. 1,900 111,150
Revlon, Inc. Class A (a) 3,600 168,975
4,358,913
FABRICATED RUBBER PRODUCTS - 0.2%
Rubbermaid, Inc. 4,200 121,800
MANUFACTURED PRODUCTS - 0.1%
First Brands Corp. 2,200 56,650
SOAPS & DETERGENTS - 7.1%
Clorox Co. 8,800 772,200
Dial Corp. 2,800 66,325
Procter & Gamble Co. 37,400 3,176,663
Unilever NV ADR 16,900 1,086,881
5,102,069
TOTAL HOUSEHOLD PRODUCTS 9,639,432
LEASING & RENTAL - 0.2%
VIDEO TAPE RENTAL - 0.2%
Hollywood Entertainment Corp. (a) 13,800 151,800
LEISURE DURABLES & TOYS - 1.2%
MOTORCYCLES - 0.2%
Harley-Davidson, Inc. 4,700 136,300
SPORTING & ATHLETIC GOODS - 0.5%
Callaway Golf Co. 10,800 348,300
TOYS & GAMES - 0.5%
Mattel, Inc. 8,100 342,731
TOTAL LEISURE DURABLES & TOYS 827,331
LODGING & GAMING - 1.1%
HOTELS, MOTELS, & TOURIST COURTS - 0.7%
Promus Hotel Corp. (a) 4,700 226,775
Sun International Hotels Ltd. Ord. (a) 6,500 282,750
509,525
LODGING PLACES, OTHER THAN HOTELS - 0.4%
Anchor Gaming (a) 4,400 299,200
TOTAL LODGING & GAMING 808,725
MEDICAL FACILITIES MANAGEMENT - 0.0%
HOME HEALTH CARE AGENCIES - 0.0%
Coram Healthcare Corp.
warrants 7/11/99 (a) 216 -
PHOTOGRAPHIC EQUIPMENT - 0.1%
Polaroid Corp. 1,400 64,138
PRINTING - 0.6%
COMMERCIAL PRINTING, NEC - 0.6%
Valassis Communications, Inc. (a) 11,300 430,813
PUBLISHING - 6.4%
BOOK PUBLISHING & PRINTING - 1.7%
Dun & Bradstreet Corp. 12,500 418,750
Harcourt General, Inc. 7,200 388,800
McGraw-Hill, Inc. 3,500 264,688
Scholastic Corp. (a) 3,700 146,613
1,218,851
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
PUBLISHING - CONTINUED
GENERAL PUBLISHING - 1.8%
Thomson Corp. 21,700 $ 649,285
U S WEST Media Group (a) 19,300 621,219
1,270,504
NEWSPAPERS - 2.4%
Belo (A.H.) Corp. Class A 5,500 301,125
Central Newspapers, Inc. Class A 5,200 371,475
Dow Jones & Co., Inc. 2,100 107,888
Gannett Co., Inc. 7,900 510,044
New York Times Co. (The) Class A 3,200 209,400
Tribune Co. 4,100 264,706
1,764,638
PERIODICALS - 0.5%
Playboy Enterprises, Inc. Class B (a) 22,100 353,600
TOTAL PUBLISHING 4,607,593
REAL ESTATE - 0.2%
CEMETERY SUBDIVIDERS & DEVELOP - 0.2%
Stewart Enterprises, Inc. Class A 3,500 164,938
RESTAURANTS - 0.8%
Logan's Roadhouse, Inc. (a) 100 2,125
Outback Steakhouse, Inc. (a) 6,500 232,375
Papa John's International, Inc. (a) 3,800 141,075
PJ America, Inc. (a) 11,300 193,513
569,088
RETAIL & WHOLESALE, MISCELLANEOUS - 5.8%
BOOK STORES - RETAIL - 0.4%
Barnes & Noble, Inc. (a) 7,800 273,975
BUILDING MATERIALS - RETAIL - 2.2%
Home Depot, Inc. 24,600 1,569,788
JEWELRY STORES - 0.2%
Zale Corp. (a) 4,700 130,719
LUMBER & BUILDING MATERIALS - RETAIL - 0.7%
Lowe's Companies, Inc. 8,300 485,031
MAIL ORDER - 0.3%
Brylane, Inc. 2,800 150,150
Tele-Communications, Inc. (Liberty Media
Group), Series A (a) 3,450 94,659
244,809
MISCELLANEOUS DURABLE GOODS - WHOLESALE - 0.2%
Action Performance Companies, Inc. (a) 3,800 140,125
MUSIC, TV, & ELECTRONIC STORES - 0.5%
Best Buy Co., Inc. (a) 3,700 220,613
Tandy Corp. 4,200 186,900
407,513
RETAIL, GENERAL - 1.1%
Bed Bath & Beyond, Inc. (a) 5,600 241,850
Office Depot, Inc. (a) 5,500 151,594
Staples, Inc. (a) 19,350 408,769
802,213
STATIONERY & OFFICE SUPPLIES - WHOLESALE - 0.2%
IKON Office Solutions, Inc. 4,000 130,750
TOTAL RETAIL & WHOLESALE, MISCELLANEOUS 4,184,923
SERVICES - 1.8%
ADJUSTMENT & COLLECTION SERVICES - 0.1%
Compass International Services Corp. 3,500 36,750
SHARES VALUE (NOTE 1)
BUSINESS CONSULTING SERVICES - 0.2%
Corrections Corp. of America (a) 3,800 $ 145,350
DETECTIVE, GUARD & ARMORED CAR - 0.1%
Pittston Co. (Brinks Group) 1,400 54,075
PERSONAL SERVICES - 0.8%
Block (H & R), Inc. 3,300 155,306
Steiner Leisure Ltd. (a) 11,300 452,000
607,306
PERSONNEL SUPPLY SERVICES - 0.6%
AccuStaff, Inc. (a) 5,600 158,200
Personnel Group of America, Inc. (a) 7,200 292,500
450,700
TOTAL SERVICES 1,294,181
TEXTILES & APPAREL - 1.8%
APPAREL - 0.9%
Fruit of the Loom, Inc. Class A 4,400 141,350
Intimate Brands, Inc. Class A 100 2,713
Kellwood Co. 4,600 149,213
Liz Claiborne, Inc. 2,400 120,000
Warnaco Group, Inc. Class A 7,200 267,300
680,576
MEN'S & BOYS' CLOTHING - 0.7%
Pacific Sunwear of California, Inc. (a) 13,600 470,900
WOMEN'S & MISSES' OUTERWEAR - 0.2%
Jones Apparel Group, Inc. (a) 3,200 176,000
TOTAL TEXTILES & APPAREL 1,327,476
TOBACCO - 3.6%
TOBACCO MANUFACTURERS - 3.6%
Consolidated Cigar Holdings, Inc.
Class A (a) 6,000 139,125
Philip Morris Companies, Inc. 55,600 2,415,125
2,554,250
TOTAL COMMON STOCKS
(Cost $62,143,711) 68,359,551
CASH EQUIVALENTS - 5.1%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 5.62%, dated
2/27/98 due 3/2/98 $ 33,015 33,000
SHARES
Taxable Central Cash Fund (b) 3,649,771 3,649,771
TOTAL CASH EQUIVALENTS
(Cost $3,682,771) 3,682,771
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $65,826,482) $ 72,042,322
LEGEND
1. Non-income producing
2. At period end, the seven-day yield on the Taxable Central Cash Fund
was 5.62%. 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 $94,653,929 and $54,153,961, 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 $15,031 for the
period (see Note 4 of Notes to Financial Statements).
INCOME TAX INFORMATION
At February 28, 1998, the aggregate cost of investment securities for
income tax purposes was $65,971,271. Net unrealized appreciation
aggregated $6,071,051, of which $6,488,304 related to appreciated
investment securities and $417,253 related to depreciated investment
securities.
The fund hereby designates approximately $209,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 7% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate
shareholders (unaudited).
The fund will notify shareholders in January 1999 of this percentage
for use in preparing 1998 income tax returns.
CONSUMER INDUSTRIES PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
FEBRUARY 28, 1998
ASSETS
INVESTMENT IN SECURITIES, AT VALUE (INCLUDING REPURCHASE AGREEMENTS OF $33,000) (COST $65,826,482) - SEE $
72,042,322
ACCOMPANYING SCHEDULE
CASH
288,414
RECEIVABLE FOR INVESTMENTS SOLD
117,185
RECEIVABLE FOR FUND SHARES SOLD
357,985
DIVIDENDS RECEIVABLE
42,582
INTEREST RECEIVABLE
16,199
REDEMPTION FEES RECEIVABLE 99
OTHER RECEIVABLES
12,628
TOTAL ASSETS
72,877,414
LIABILITIES
PAYABLE FOR INVESTMENTS PURCHASED $ 462,465
PAYABLE FOR FUND SHARES REDEEMED 152,186
ACCRUED MANAGEMENT FEE 34,542
OTHER PAYABLES AND 76,145
ACCRUED EXPENSES
TOTAL LIABILITIES
725,338
NET ASSETS $
72,152,076
NET ASSETS CONSIST OF:
PAID IN CAPITAL $
62,899,832
ACCUMULATED UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS
3,036,365
NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS
6,215,879
AND ASSETS AND LIABILITIES IN
FOREIGN CURRENCIES
NET ASSETS, FOR 2,641,878 $
72,152,076
SHARES OUTSTANDING
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE ($72,152,076 (DIVIDED BY) 2,641,878 SHARES)
$27.31
MAXIMUM OFFERING PRICE PER SHARE (100/97.00 OF $27.31)
$28.15
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED FEBRUARY 28, 1998
INVESTMENT INCOME $ 190,291
DIVIDENDS
INTEREST 94,111
TOTAL INCOME 284,402
EXPENSES
MANAGEMENT FEE $ 161,119
TRANSFER AGENT FEES 225,116
ACCOUNTING FEES AND EXPENSES 61,506
NON-INTERESTED TRUSTEES' COMPENSATION 91
CUSTODIAN FEES AND EXPENSES 21,745
REGISTRATION FEES 41,066
AUDIT 21,180
LEGAL 227
MISCELLANEOUS 290
TOTAL EXPENSES BEFORE REDUCTIONS 532,340
EXPENSE REDUCTIONS (9,031) 523,309
NET INVESTMENT INCOME (LOSS) (238,907)
REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:
INVESTMENT SECURITIES 5,217,096
FOREIGN CURRENCY TRANSACTIONS 256 5,217,352
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON:
INVESTMENT SECURITIES 4,912,414
ASSETS AND LIABILITIES IN 39 4,912,453
FOREIGN CURRENCIES
NET GAIN (LOSS) 10,129,805
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 9,890,898
OTHER INFORMATION $ 84,756
SALES CHARGES PAID TO FDC
SALES CHARGES - DEALERS' PORTION $ 4,761
DEFERRED SALES CHARGES WITHHELD $ 805
BY FDC
EXCHANGE FEES WITHHELD BY FSC $ 11,445
EXPENSE REDUCTIONS $ 8,907
DIRECTED BROKERAGE ARRANGEMENTS
CUSTODIAN CREDITS 124
$ 9,031
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
FEBRUARY 28, FEBRUARY 28,
1998 1997
<TABLE>
<CAPTION>
<S> <C> <C>
OPERATIONS $ (238,907) $ (287,928)
NET INVESTMENT INCOME (LOSS)
NET REALIZED GAIN (LOSS) 5,217,352 2,053,365
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) 4,912,453 (1,279,001)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 9,890,898 486,436
DISTRIBUTIONS TO SHAREHOLDERS FROM NET REALIZED GAINS (1,876,813) -
SHARE TRANSACTIONS 75,182,201 64,681,737
NET PROCEEDS FROM SALES OF SHARES
REINVESTMENT OF DISTRIBUTIONS 1,832,262 -
COST OF SHARES REDEEMED (31,326,802) (69,290,503)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS 45,687,661 (4,608,766)
REDEMPTION FEES 58,220 152,149
TOTAL INCREASE (DECREASE) IN NET ASSETS 53,759,966 (3,970,181)
NET ASSETS
BEGINNING OF PERIOD 18,392,110 22,362,291
END OF PERIOD $ 72,152,076 $ 18,392,110
OTHER INFORMATION
SHARES
SOLD 3,007,674 3,299,962
ISSUED IN REINVESTMENT OF DISTRIBUTIONS 74,511 -
REDEEMED (1,330,685) (3,662,924)
NET INCREASE (DECREASE) 1,751,500 (362,962)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED FEBRUARY 28, YEAR ENDED YEARS ENDED FEBRUARY 28,
FEBRUARY 29,
SELECTED PER-SHARE DATA 1998 1997 1996 1995 1994
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 20.66 $ 17.84 $ 13.91 $ 15.24 $ 12.97
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) C (.22) (.22) .08 (.15) (.20)
NET REALIZED AND UNREALIZED GAIN (LOSS) 8.34 2.93 3.97 (.60) 3.84
TOTAL FROM INVESTMENT OPERATIONS 8.12 2.71 4.05 (.75) 3.64
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME - - (.02) - -
FROM NET REALIZED GAIN (1.52) - (.01) (.60) (1.40)
IN EXCESS OF NET REALIZED GAIN - - (.20) - -
TOTAL DISTRIBUTIONS (1.52) - (.23) (.60) (1.40)
REDEMPTION FEES ADDED TO PAID IN CAPITAL .05 .11 .11 .02 .03
NET ASSET VALUE, END OF PERIOD $ 27.31 $ 20.66 $ 17.84 $ 13.91 $ 15.24
TOTAL RETURN A, B 40.36% 15.81% 30.01% (4.59)% 28.43%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 72,152 $ 18,392 $ 22,362 $ 20,501 $ 8,374
RATIO OF EXPENSES TO AVERAGE NET ASSETS 2.01% 2.49% 1.53% D 2.49% D 2.48% D
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 1.97% E 2.44% E 1.48% E 2.49% 2.48%
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS (.90)% (1.13)% .46% (1.08)% (1.34)%
PORTFOLIO TURNOVER RATE 199% 340% 601% 190% 169%
AVERAGE COMMISSION RATE F $ .0273 $ .0355
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. C NET INVESTMENT INCOME (LOSS) PER
SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD. D
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. 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>
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). Load adjusted returns include a 3.00% sales
charge and the effect of a $7.50 trading fee. 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, 1998 YEAR YEARS YEARS
SELECT FOOD AND AGRICULTURE 23.58% 138.16% 496.21%
SELECT FOOD AND AGRICULTURE (LOAD ADJ.) 19.81% 130.95% 478.25%
S&P 500 35.01% 166.84% 422.55%
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 Standard & Poor's
500 Index - a widely recognized, unmanaged index of common stocks.
This benchmark includes 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, 1998 YEAR YEARS YEARS
SELECT FOOD AND AGRICULTURE 23.58% 18.95% 19.55%
SELECT FOOD AND AGRICULTURE 19.81% 18.22% 19.18%
(LOAD ADJ.)
S&P 500 35.01% 21.69% 17.98%
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 LONG-TERM GROWTH AND
SHORT-TERM VOLATILITY. UNLIKE THE BROADER MARKET,
HOWEVER, SOME SECTORS MAY NOT HAVE A HISTORY
OF GROWTH IN THE LONG RUN. AND, AS WITH ALL STOCK
FUNDS, THE SHARE PRICE AND RETURN OF A FUND THAT
INVESTS IN A SECTOR WILL VARY. THAT MEANS IF YOU
SELL YOUR SHARES DURING A SECTOR DOWNTURN, YOU
MIGHT LOSE MONEY. BUT IF YOU CAN IDENTIFY A
SECTOR THAT IS ABOUT TO EXPERIENCE RAPID GROWTH
YOU MAY HAVE THE POTENTIAL FOR ABOVE-AVERAGE
GAINS.
(CHECKMARK)
$10,000 OVER 10 YEARS
IMAHDR PRASUN SHR__CHT 19980228 19980305 131702 S00000000000001
Food & Agriculture S&P 500
00009 SP001
1988/02/29 9700.00 10000.00
1988/03/31 9767.15 9691.00
1988/04/30 9797.67 9798.57
1988/05/31 9870.93 9883.82
1988/06/30 10273.82 10337.48
1988/07/31 10347.07 10298.20
1988/08/31 10340.97 9948.06
1988/09/30 10756.07 10371.85
1988/10/31 11256.64 10660.19
1988/11/30 10994.15 10507.75
1988/12/31 11275.58 10691.63
1989/01/31 11857.11 11474.26
1989/02/28 11642.86 11188.55
1989/03/31 12083.60 11449.25
1989/04/30 12707.98 12043.46
1989/05/31 13491.52 12531.22
1989/06/30 13756.61 12459.79
1989/07/31 15068.86 13584.91
1989/08/31 14836.55 13851.18
1989/09/30 14899.33 13794.39
1989/10/31 14748.64 13474.36
1989/11/30 15307.45 13749.23
1989/12/31 15658.11 14079.22
1990/01/31 14568.97 13134.50
1990/02/28 14777.38 13303.94
1990/03/31 15416.08 13656.49
1990/04/30 15355.57 13315.08
1990/05/31 16693.47 14613.30
1990/06/30 17234.97 14513.93
1990/07/31 17228.18 14467.48
1990/08/31 15971.39 13159.62
1990/09/30 15461.88 12518.75
1990/10/31 15828.73 12464.92
1990/11/30 16480.90 13270.15
1990/12/31 17118.55 13640.39
1991/01/31 17609.85 14235.11
1991/02/28 18936.38 15252.92
1991/03/31 19862.85 15622.04
1991/04/30 19561.04 15659.53
1991/05/31 20276.95 16336.03
1991/06/30 19441.52 15587.84
1991/07/31 20255.15 16314.23
1991/08/31 21061.65 16700.88
1991/09/30 20690.52 16421.97
1991/10/31 20697.65 16642.03
1991/11/30 20554.91 15971.35
1991/12/31 22954.20 17798.47
1992/01/31 22612.05 17467.42
1992/02/29 22485.60 17694.50
1992/03/31 21987.24 17349.46
1992/04/30 21734.34 17859.53
1992/05/31 21927.74 17947.04
1992/06/30 21687.98 17679.63
1992/07/31 22525.68 18402.73
1992/08/31 22425.77 18025.47
1992/09/30 22802.36 18238.17
1992/10/31 23048.29 18302.01
1992/11/30 23932.10 18926.11
1992/12/31 24337.42 19158.90
1993/01/31 24345.28 19319.83
1993/02/28 24282.34 19582.58
1993/03/31 24943.29 19995.77
1993/04/30 23974.79 19511.88
1993/05/31 24729.64 20034.79
1993/06/30 24483.49 20092.89
1993/07/31 24179.91 20012.52
1993/08/31 25336.81 20771.00
1993/09/30 25254.76 20611.06
1993/10/31 26206.53 21037.71
1993/11/30 25902.95 20837.85
1993/12/31 26483.35 21089.99
1994/01/31 27284.31 21807.05
1994/02/28 27120.67 21216.08
1994/03/31 25854.64 20291.06
1994/04/30 25565.75 20550.78
1994/05/31 25379.98 20887.82
1994/06/30 25574.60 20376.06
1994/07/31 26432.69 21044.40
1994/08/31 28113.48 21907.22
1994/09/30 28166.56 21370.49
1994/10/31 28697.34 21851.33
1994/11/30 27998.48 21055.50
1994/12/31 28097.24 21367.76
1995/01/31 29281.73 21921.82
1995/02/28 29869.38 22776.12
1995/03/31 30548.86 23448.24
1995/04/30 31216.55 24138.79
1995/05/31 32336.76 25103.62
1995/06/30 33102.24 25686.77
1995/07/31 33466.31 26538.55
1995/08/31 33410.30 26605.16
1995/09/30 36033.46 27727.90
1995/10/31 36089.47 27628.91
1995/11/30 37508.40 28841.82
1995/12/31 38391.73 29397.31
1996/01/31 39975.09 30398.00
1996/02/29 41196.82 30679.78
1996/03/31 40502.88 30975.23
1996/04/30 39764.57 31431.81
1996/05/31 41231.37 32242.43
1996/06/30 41271.56 32365.28
1996/07/31 40708.95 30935.38
1996/08/31 39412.93 31587.81
1996/09/30 40749.14 33365.57
1996/10/31 41502.63 34285.79
1996/11/30 43592.33 36877.45
1996/12/31 43516.82 36146.91
1997/01/31 45397.89 38405.37
1997/02/28 46795.56 38706.47
1997/03/31 45576.54 37116.02
1997/04/30 47384.76 39331.84
1997/05/31 48780.09 41726.37
1997/06/30 50400.46 43595.71
1997/07/31 52212.13 47064.62
1997/08/31 49804.07 44428.06
1997/09/30 52797.27 46861.38
1997/10/31 51852.05 45296.21
1997/11/30 55396.62 47392.97
1997/12/31 56718.15 48206.71
1998/01/31 54810.56 48739.88
1998/02/27 57848.09 52255.00
IMATRL PRASUN SHR__CHT 19980228 19980305 131704 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Food and Agriculture Portfolio on February
29, 1988, and the current 3.00% sales charge was paid. As the chart
shows, by February 28, 1998, the value of the investment would have
grown to $57,825 - a 478.25% increase on the initial investment, and
includes the effect of a $7.50 trading fee. 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 $52,255 - a 422.55% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1998
% OF FUND'S
INVESTMENTS
SARA LEE CORP. 5.3
HEINZ (H.J.) CO. 5.1
PHILIP MORRIS COMPANIES, INC. 4.9
MCDONALD'S CORP. 4.6
BESTFOODS 4.1
CAMPBELL SOUP CO. 4.0
RALSTON PURINA CO. 3.4
HERSHEY FOODS CORP. 3.2
COCA-COLA CO. (THE) 3.2
PEPSICO, INC. 3.1
TOP INDUSTRIES AS OF FEBRUARY 28, 1998
FOOD 18.1%
GRAIN MILL PRODUCTS 9.1%
SOFT DRINKS 6.4%
TOBACCO MANUFACTURERS 5.9%
GROCERY - RETAIL 5.5%
ALL OTHERS 55.0%
ROW: 1, COL: 1, VALUE: 55.0
ROW: 1, COL: 2, VALUE: 5.5
ROW: 1, COL: 3, VALUE: 5.9
ROW: 1, COL: 4, VALUE: 6.4
ROW: 1, COL: 5, VALUE: 9.1
ROW: 1, COL: 6, VALUE: 18.1
*
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
FOOD AND AGRICULTURE PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Scott Offen,
Portfolio Manager
of Fidelity Select Food
and Agriculture Portfolio
Q. SCOTT, HOW DID THE FUND PERFORM?
A. For the 12 months that ended February 28, 1998, the fund had a
total return of 23.58%, while the Standard & Poor's 500 Index returned
35.01%.
Q. WHY DID THE FUND'S PERFORMANCE LAG THAT OF THE S&P 500?
A. The stocks in this sector generally are of companies that grow
their earnings in a steady manner. For that reason, they are looked at
as defensive stocks, and tend to perform best when there are questions
about the direction or strength of the economy. For most of the past
year, the economy and market have been quite strong. As a result,
stocks in this sector lagged.
Q. WHILE THE U.S. ECONOMY AND MARKET WERE STRONG, MANY QUESTIONS AROSE
ABOUT THEIR DIRECTION IN THE FOURTH QUARTER OF 1997 BECAUSE OF
PROBLEMS IN SOUTHEAST ASIA. HOW DID THAT BACKDROP AFFECT THE FUND?
A. The fund benefited enormously from a "flight to quality" in the
fourth quarter, as investors sought the safety provided by the steady
earnings growth offered by stocks in the sector. Since then, however,
investors regained some confidence that the Asian crisis might not
undermine the U.S. economy. As a result, stocks of companies with
higher earnings growth rates once again have assumed the market's
lead, and the more defensive stocks that make up the food and
agriculture sector once again have lagged the market.
Q. WHAT SORT OF STRATEGY HAVE YOU PURSUED OVER THE PAST SIX MONTHS?
A. I continued to pursue the strategy I outlined six months ago,
focusing on large-capitalization companies with some sort of catalyst
for change. For example, Sara Lee - the fund's largest investment at
the end of the period - benefited from restructuring and was able to
step up its stock repurchase program. Another top holding that fit
into this theme was HJ Heinz, which took a big restructuring charge
and named a new CEO. Overall, my strategy paid off, as many of the
fund's holdings at the end of the period - including Campbell Soup and
Hershey Foods, in addition to Sara Lee and Heinz - provided strong
stock performance for the fund. I should also point out that I
generally favored food stocks over other categories such as brewers
and supermarkets because their prospects appeared to be much more
positive.
Q. THE GOVERNMENT'S PROPOSED TOBACCO SETTLEMENT STALLED. DID THAT HURT
THE FUND'S TOBACCO HOLDINGS?
A. Certainly. Fund holdings such as Philip Morris and RJR Nabisco
dramatically underperformed the market, eating into the fund's return.
When the outcome of the settlement became less clear, investors became
more concerned about the litigation's effect on the companies. I
reduced the fund's stake in these stocks because of this added
uncertainty, but maintained investments in them because their business
prospects remain quite positive otherwise.
Q. DID THE CRISIS IN ASIA CAUSE ANY PROBLEMS OF NOTE FOR THE COMPANIES
IN THE FUND?
A. Not really. Most of the companies in the fund don't have
significant exposure to Asia. For example, the Asia Pacific region
accounts for only 6% of Ralston Purina's earnings, 6% of Bestfood's
earnings and 15% of Heinz's earnings.
Q. AT THE END OF THE PERIOD, COCA-COLA WAS IN THE FUND'S
TOP 10. WHAT WAS YOUR ATTRACTION TO THE STOCK?
A. I held off buying additional shares of Coca-Cola because the stock
had been selling at very expensive valuations. At the same time, the
company's business fundamentals are very strong and it is extremely
well-run. As a result, I added to the fund's investment in Coca-Cola
during the period.
Q. WHAT'S YOUR OUTLOOK FOR THE NEXT SIX MONTHS?
A. On an absolute basis, the stocks in the fund should do well because
the companies generally have solid fundamentals and are good at
growing their earnings steadily. However, the sector's returns
relative to alternatives in the market will depend on investors'
appetite for economically sensitive 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: July 29, 1985
FUND NUMBER: 009
TRADING SYMBOL: FDFAX
SIZE: as of February 28, 1998, more than
$250 million
MANAGER: Scott Offen, since 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, 1998
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 90.0%
SHARES VALUE (NOTE 1)
AGRICULTURE - 2.3%
CROPS - 2.1%
DEKALB Genetics Corp. Class B 37,800 $ 2,539,682
Fresh Del Monte Produce, Inc. 47,000 725,563
Pioneer Hi-Bred International, Inc. 22,800 2,365,500
5,630,745
LIVESTOCK - 0.2%
Michael Foods, Inc. 18,100 459,288
TOTAL AGRICULTURE 6,090,033
BEVERAGES - 7.7%
MALT BEVERAGE - 1.3%
Anheuser-Busch Companies, Inc. (a) 67,200 3,150,000
Coors (Adolph) Co. Class B 5,100 159,375
3,309,375
SOFT DRINKS - 6.4%
Celestial Seasonings, Inc. (a) 8,600 320,350
Coca-Cola Co. (The) 120,500 8,276,844
PepsiCo, Inc. 224,800 8,219,250
16,816,444
TOTAL BEVERAGES 20,125,819
FOODS - 56.6%
BAKERY PRODUCTS - 2.5%
Earthgrains Co. 35,900 1,554,919
Flowers Industries, Inc. 131,000 3,332,313
Interstate Bakeries Corp. 50,000 1,675,000
6,562,232
CANDY - 3.2%
Hershey Foods Corp. 124,500 8,302,594
CANNED SPECIALTIES - 4.0%
Campbell Soup Co. 180,000 10,451,250
COOKIES & CRACKERS - 3.2%
Keebler Foods Co. (a) 11,400 357,675
Nabisco Holdings Corp. Class A 173,300 8,177,594
8,535,269
DAIRY - 3.5%
Dean Foods Co. 76,500 4,207,500
Suiza Foods Corp. (a) 76,200 4,938,713
9,146,213
FOOD - 18.1%
Chiquita Brands International, Inc. 236,700 3,180,656
Dole Food, Inc. (a) 95,600 5,192,275
General Mills, Inc. 61,311 4,410,560
Heinz (H.J.) Co. 236,000 13,289,750
Kellogg Co. 60,800 2,591,600
Nestle SA ADR (Reg.) 35,900 3,141,250
Nestle SA (Reg.) 480 841,760
Sara Lee Corp. 248,100 14,017,650
Universal Foods Corp. 19,300 868,500
47,534,001
GENERAL FOOD PREPARATIONS - 0.8%
McCormick & Co., Inc. (non-vtg.) 76,400 2,191,725
GRAIN MILL PRODUCTS - 9.1%
Archer-Daniels-Midland Co. 247,785 5,559,676
Corn Products International, Inc. (a) 123,475 4,105,544
Quaker Oats Co. 95,600 5,150,450
Ralston Purina Co. 88,200 8,946,788
23,762,458
SHARES VALUE (NOTE 1)
MEAT & FISH - 5.0%
ConAgra, Inc. 191,200 $ 5,736,000
Hormel (George A) & Co. 47,600 1,767,150
IBP, Inc. 53,400 1,191,488
Smithfield Foods, Inc. (a) 32,300 1,021,488
Tyson Foods, Inc. 168,525 3,286,238
13,002,364
MISCELLANEOUS FOOD PREPS, KINDRED PRODUCTS - 0.8%
American Italian Pasta Co. Series A 71,200 2,131,550
PACKAGED & FROZEN FOODS - 4.3%
Bestfoods 103,200 10,874,700
International Home Foods, Inc. (a) 17,900 481,063
11,355,763
POULTRY SLAUGHTER & PROCESSING - 0.3%
Pilgrims Pride Corp. 81,600 877,200
SUGAR & CANDIES - 1.8%
Tootsie Roll Industries, Inc. 24,854 1,854,730
Wrigley (Wm.) Jr. Co. 36,500 2,787,688
4,642,418
TOTAL FOODS 148,495,037
GENERAL MERCHANDISE STORES - 0.4%
VARIETY STORES - 0.4%
Costco Companies, Inc. (a) 18,800 918,850
GROCERY STORES - 5.5%
GROCERY - RETAIL - 5.5%
Albertson's, Inc. 19,100 894,119
American Stores Co. 38,900 979,794
Dominick's Supermarkets, Inc. (a) 87,100 3,963,050
Hannaford Brothers Co. 19,100 805,781
Safeway, Inc. (a) 221,400 7,721,325
14,364,069
HOUSEHOLD PRODUCTS - 5.0%
SOAPS & DETERGENTS - 5.0%
Unilever:
PLC Ord. 747,100 6,909,667
NV ADR 97,700 6,283,331
13,192,998
RESTAURANTS - 4.6%
McDonald's Corp. 220,000 12,045,000
TOBACCO - 7.9%
CIGARETTES - 1.9%
RJR Nabisco Holdings Corp. 142,920 4,939,673
TOBACCO & TOBACCO PRODUCTS - WHOLESALE - 0.1%
Dimon, Inc. 12,800 224,000
TOBACCO MANUFACTURERS - 5.9%
Philip Morris Companies, Inc. 293,500 12,748,906
UST, Inc. 67,500 2,392,031
Universal Corp. 9,000 427,500
15,568,437
TOTAL TOBACCO 20,732,110
TOTAL COMMON STOCKS
(Cost $197,567,686) 235,963,916
CASH EQUIVALENTS - 10.0%
SHARES VALUE (NOTE 1)
Taxable Central Cash Fund (b)
(Cost $26,335,980) 26,335,980 $ 26,335,980
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $223,903,666) $ 262,299,896
LEGEND
1. Non-income producing
2. At period end, the seven-day yield on the Taxable Central Cash Fund
was 5.62%. 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 $169,631,917 and $183,269,961, 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 $44,060 for the
period (see Note 4 of Notes to Financial Statements).
The fund participated in the securities lending program. At the period
end, the value of securities loaned and the value of collateral
amounted to $8,177,507 and $8,318,400, respectively (see Note 6 of
Notes to Financial Statements).
INCOME TAX INFORMATION
At February 28, 1998, the aggregate cost of investment securities for
income tax purposes was $224,460,144. Net unrealized appreciation
aggregated $37,839,752, of which $39,880,565 related to appreciated
investment securities and $2,040,813 related to depreciated investment
securities.
The fund hereby designates approximately $23,192,000 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 deductions for corporate
shareholders (unaudited).
A total of 0.97% 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 (unaudited).
The fund will notify shareholders in January 1999 of these percentages
for use in preparing 1998 income tax returns.
FOOD AND AGRICULTURE PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1998
ASSETS
INVESTMENT IN $ 262,299,896
SECURITIES,
AT VALUE
(COST
$223,903
,666) -
SEE
ACCOMPAN
YING
SCHEDULE
RECEIVABLE 3,145,709
FOR
INVESTMENT
S SOLD
RECEIVABLE 420,390
FOR FUND
SHARES
SOLD
DIVIDENDS 247,899
RECEIVABLE
INTEREST 102,472
RECEIVABLE
REDEMPTION 470
FEES
RECEIVABLE
OTHER 3,623
RECEIVABLE
S
TOTAL 266,220,459
ASSETS
LIABILITIES
PAYABLE FOR $ 5,054,035
INVESTMENT
S
PURCHASED
PAYABLE FOR 1,953,727
FUND
SHARES
REDEEMED
ACCRUED 125,545
MANAGEM
ENT FEE
OTHER 202,069
PAYABLES
AND
ACCRUED
EXPENSES
COLLATERAL ON 8,318,400
SECURITIES
LOANED,
AT VALUE
TOTAL 15,653,776
LIABILITIES
NET ASSETS $ 250,566,683
NET ASSETS
CONSIST OF:
PAID IN $ 192,818,695
CAPITAL
UNDISTRIBUTE 367,788
D NET
INVESTMENT
INCOME
ACCUMULATED 18,983,990
UNDISTRIBUT
ED NET
REALIZED
GAIN (LOSS)
ON
INVESTMENT
S AND
FOREIGN
CURRENCY
TRANSACTIO
NS
NET 38,396,210
UNREALIZED
APPRECIATI
ON
(DEPRECIATI
ON) ON
INVESTMENT
S
AND ASSETS
AND
LIABILITIES
IN
FOREIGN
CURRENCIES
NET ASSETS, $ 250,566,683
FOR
5,133,34
9
SHARES
OUTSTANDIN
G
NET ASSET $48.81
VALUE AND
REDEMPTIO
N PRICE
PER SHARE
($250,56
6,683 (DIVIDED BY)
5,133,34
9 SHARES)
MAXIMUM $50.32
OFFERING
PRICE PER
SHARE
(100/97.
00 OF
$48.81)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1998
INVESTMENT $ 4,380,952
INCOME
DIVIDENDS
INTEREST 1,063,501
(INCLUDING
INCOME ON
SECURITIES
LOANED OF
$127,908
)
TOTAL 5,444,453
INCOME
EXPENSES
MANAGEMEN $ 1,473,308
T FEE
TRANSFER 1,846,640
AGENT FEES
ACCOUNTING 252,504
AND
SECURITY
LENDING
FEES
NON-INTEREST 1,205
ED
TRUSTEES'
COMPENSAT
ION
CUSTODIAN 18,925
FEES AND
EXPENSES
REGISTRATION 49,001
FEES
AUDIT 30,001
LEGAL 1,469
MISCELLANEO 3,882
US
TOTAL 3,676,935
EXPENSES
BEFORE
REDUCTIONS
EXPENSE (27,837) 3,649,098
REDUCTIONS
NET 1,795,355
INVESTMEN
T INCOME
REALIZED
AND
UNREALIZED
GAIN (LOSS)
NET REALIZED
GAIN (LOSS)
ON:
INVESTMENT 33,785,793
SECURITIES
FOREIGN 899 33,786,692
CURRENCY
TRANSACTIO
NS
CHANGE IN
NET
UNREALIZED
APPRECIATI
ON
(DEPRECIATI
ON) ON:
INVESTMENT 14,339,886
SECURITIES
ASSETS AND (24) 14,339,862
LIABILITIES
IN
FOREIGN
CURRENCIES
NET GAIN 48,126,554
(LOSS)
NET INCREASE $ 49,921,909
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
OTHER $ 682,877
INFORMATIO
N
SALES
CHARGES
PAID TO
FDC
SALES $ 17,674
CHARGES -
DEALERS'
PORTION
DEFERRED $ 5,255
SALES
CHARGES
WITHHELD
BY FDC
EXCHANGE $ 76,365
FEES
WITHHELD
BY FSC
EXPENSE $ 27,706
REDUCTIONS
DIRECTED
BROKERAGE
ARRANGEM
ENTS
CUSTODIA 131
N CREDITS
$ 27,837
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
FEBRUARY 28, FEBRUARY 28,
1998 1997
OPERATIONS $ 1,795,355 $ 2,814,245
NET
INVESTMENT
INCOME
NET 33,786,692 41,584,137
REALIZED
GAIN (LOSS)
CHANGE IN 14,339,862 (16,830,573)
NET
UNREALIZED
APPRECIATI
ON
(DEPRECIATI
ON)
NET 49,921,909 27,567,809
INCREASE
(DECREAS
E) IN NET
ASSETS
RESULTING
FROM
OPERATIO
NS
DISTRIBUTIONS (2,133,491) (1,549,005)
TO
SHAREHOLD
ERS
FROM NET
INVESTMENT
INCOME
FROM NET (27,598,622) (17,656,169)
REALIZED
GAIN
TOTAL (29,732,113) (19,205,174)
DISTRIBUTIO
NS
SHARE 212,263,562 332,131,288
TRANSACTIO
NS
NET
PROCEEDS
FROM SALES
OF SHARES
REINVESTM 29,301,818 18,966,497
ENT OF
DISTRIBUTIO
NS
COST OF (234,907,260) (437,551,907)
SHARES
REDEEMED
NET 6,658,120 (86,454,122)
INCREASE
(DECREAS
E) IN NET
ASSETS
RESULTING
FROM
SHARE
TRANSACTI
ONS
REDEMPTIO 296,205 411,716
N FEES
TOTAL 27,144,121 (77,679,771)
INCREASE
(DECREASE)
IN NET
ASSETS
NET ASSETS
BEGINNING 223,422,562 301,102,333
OF PERIOD
END OF $ 250,566,683 $ 223,422,562
PERIOD
(INCLUDIN
G
UNDISTRIB
UTED NET
INVESTME
NT
INCOME
OF
$367,7
88 AND
$1,614,
818,
RESPECTIV
ELY)
OTHER
INFORMATION
SHARES
SOLD 4,609,772 8,035,192
ISSUED IN 675,395 465,609
REINVESTME
NT OF
DISTRIBUTIO
NS
REDEEMED (5,169,172) (10,627,722)
NET 115,995 (2,126,921)
INCREASE
(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>
YEARS ENDED FEBRUARY 28, YEAR ENDED YEARS ENDED FEBRUARY 28,
FEBRUARY 29,
SELECTED PER-SHARE DATA 1998 1997 1996 1995 1994
</TABLE>
NET ASSET $ 44.53 $ 42.15 $ 32.53 $ 31.49 $ 30.86
VALUE,
BEGINNING
OF PERIOD
INCOME FROM
INVESTMENT
OPERATION
S
NET .33 .42 .37 .15 .09
INVESTMENT
INCOME C
NET 9.22 4.91 11.61 2.80 3.29
REALIZED
AND
UNREALIZED
GAIN (LOSS)
TOTAL FROM 9.55 5.33 11.98 2.95 3.38
INVESTMENT
OPERATIONS
LESS
DISTRIBUTIO
NS
FROM NET (.37) (.24) (.20) (.08) (.06)
INVESTMENT
INCOME
FROM NET (4.95) (2.77) (2.20) (1.85) (2.70)
REALIZED
GAIN
TOTAL (5.32) (3.01) (2.40) (1.93) (2.76)
DISTRIBUTIO
NS
REDEMPTION .05 .06 .04 .02 .01
FEES
ADDED TO
PAID IN
CAPITAL
NET ASSET $ 48.81 $ 44.53 $ 42.15 $ 32.53 $ 31.49
VALUE, END
OF PERIOD
TOTAL 23.58% 13.59% 37.92% 10.14% 11.69%
RETURN A, B
RATIOS AND
SUPPLEME
NTAL DATA
NET ASSETS, $ 250,567 $ 223,423 $ 301,102 $ 197,130 $ 95,010
END OF
PERIOD
(000
OMITTED)
RATIO OF 1.49% 1.52% 1.43% 1.70% 1.65%
EXPENSES
TO AVERAGE
NET ASSETS
RATIO OF 1.48% D 1.50% D 1.42% D 1.68% D 1.64% D
EXPENSES
TO AVERAGE
NET ASSETS
AFTER
EXPENSE
REDUCTIONS
RATIO OF NET .73% 1.01% .99% .49% .29%
INVESTMENT
INCOME TO
AVERAGE
NET ASSETS
PORTFOLIO 74% 91% 124% 126% 96%
TURNOVER
RATE
AVERAGE $ .0333 $ .0326
COMMISSIO
N RATE E
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
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.
C NET INVESTMENT INCOME 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>
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). Load adjusted returns include a 3.00% sales
charge and the effect of a $7.50 trading fee.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 28, 1998 YEAR YEARS YEARS
SELECT LEISURE 47.29% 180.86% 414.78%
SELECT LEISURE 42.80% 172.36% 399.26%
(LOAD ADJ.)
S&P 500 35.01% 166.84% 422.55%
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 Standard & Poor's
500 Index- a widely recognized, unmanaged index of common stocks. This
benchmark includes 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, 1998 YEAR YEARS YEARS
SELECT LEISURE 47.29% 22.94% 17.80%
SELECT LEISURE 42.80% 22.19% 17.44%
(LOAD ADJ.)
S&P 500 35.01% 21.69% 17.98%
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 LONG-TERM GROWTH AND
SHORT-TERM VOLATILITY. UNLIKE THE BROADER MARKET,
HOWEVER, SOME SECTORS MAY NOT HAVE A HISTORY
OF GROWTH IN THE LONG RUN. AND, AS WITH ALL STOCK
FUNDS, THE SHARE PRICE AND RETURN OF A FUND THAT
INVESTS IN A SECTOR WILL VARY. THAT MEANS IF YOU
SELL YOUR SHARES DURING A SECTOR DOWNTURN, YOU
MIGHT LOSE MONEY. BUT IF YOU CAN IDENTIFY A
SECTOR THAT IS ABOUT TO EXPERIENCE RAPID GROWTH
YOU MAY HAVE THE POTENTIAL FOR ABOVE-AVERAGE
GAINS.
(CHECKMARK)
$10,000 OVER 10 YEARS
IMAHDR PRASUN SHR__CHT 19980228 19980305 133522 S00000000000001
Leisure S&P 500
00062 SP001
1988/02/29 9700.00 10000.00
1988/03/31 10024.54 9691.00
1988/04/30 10087.64 9798.57
1988/05/31 9826.21 9883.82
1988/06/30 10482.51 10337.48
1988/07/31 10569.67 10298.20
1988/08/31 10156.79 9948.06
1988/09/30 10863.27 10371.85
1988/10/31 10863.27 10660.19
1988/11/30 10445.81 10507.75
1988/12/31 11069.71 10691.63
1989/01/31 12014.75 11474.26
1989/02/28 11822.07 11188.55
1989/03/31 12377.16 11449.25
1989/04/30 13079.05 12043.46
1989/05/31 13730.48 12531.22
1989/06/30 13860.68 12459.79
1989/07/31 15023.84 13584.91
1989/08/31 15144.33 13851.18
1989/09/30 15241.65 13794.39
1989/10/31 14143.36 13474.36
1989/11/30 14310.19 13749.23
1989/12/31 14524.33 14079.22
1990/01/31 12762.91 13134.50
1990/02/28 12649.75 13303.94
1990/03/31 12748.15 13656.49
1990/04/30 12251.21 13315.08
1990/05/31 13264.77 14613.30
1990/06/30 13112.24 14513.93
1990/07/31 12659.59 14467.48
1990/08/31 11198.30 13159.62
1990/09/30 10135.54 12518.75
1990/10/31 10017.46 12464.92
1990/11/30 10814.52 13270.15
1990/12/31 11287.51 13640.39
1991/01/31 11918.74 14235.11
1991/02/28 12833.27 15252.92
1991/03/31 13046.99 15622.04
1991/04/30 13081.78 15659.53
1991/05/31 13534.08 16336.03
1991/06/30 12773.63 15587.84
1991/07/31 13384.97 16314.23
1991/08/31 13524.14 16700.88
1991/09/30 13872.06 16421.97
1991/10/31 14289.56 16642.03
1991/11/30 13603.66 15971.35
1991/12/31 15005.28 17798.47
1992/01/31 15343.26 17467.42
1992/02/29 15880.05 17694.50
1992/03/31 15556.99 17349.46
1992/04/30 15730.94 17859.53
1992/05/31 15825.38 17947.04
1992/06/30 15581.84 17679.63
1992/07/31 15656.39 18402.73
1992/08/31 15432.73 18025.47
1992/09/30 15735.92 18238.17
1992/10/31 15855.20 18302.01
1992/11/30 16933.75 18926.11
1992/12/31 17440.72 19158.90
1993/01/31 17873.14 19319.83
1993/02/28 17778.70 19582.58
1993/03/31 18703.17 19995.77
1993/04/30 18281.67 19511.88
1993/05/31 19594.89 20034.79
1993/06/30 20122.25 20092.89
1993/07/31 20659.94 20012.52
1993/08/31 22081.74 20771.00
1993/09/30 23182.98 20611.06
1993/10/31 24465.18 21037.71
1993/11/30 23555.23 20837.85
1993/12/31 24339.17 21089.99
1994/01/31 24592.14 21807.05
1994/02/28 24382.23 21216.08
1994/03/31 22907.45 20291.06
1994/04/30 22953.64 20550.78
1994/05/31 22710.71 20887.82
1994/06/30 21750.85 20376.06
1994/07/31 22592.21 21044.40
1994/08/31 23492.81 21907.22
1994/09/30 23486.89 21370.49
1994/10/31 23403.94 21851.33
1994/11/30 22402.61 21055.50
1994/12/31 22675.16 21367.76
1995/01/31 23089.91 21921.82
1995/02/28 24120.87 22776.12
1995/03/31 24754.85 23448.24
1995/04/30 24974.16 24138.79
1995/05/31 25457.41 25103.62
1995/06/30 26441.82 25686.77
1995/07/31 28279.39 26538.55
1995/08/31 29186.24 26605.16
1995/09/30 29233.96 27727.90
1995/10/31 27825.96 27628.91
1995/11/30 28732.81 28841.82
1995/12/31 28787.87 29397.31
1996/01/31 29214.56 30398.00
1996/02/29 30781.29 30679.78
1996/03/31 30934.63 30975.23
1996/04/30 32204.76 31431.81
1996/05/31 33526.20 32242.43
1996/06/30 33396.78 32365.28
1996/07/31 30999.13 30935.38
1996/08/31 31768.83 31587.81
1996/09/30 33315.04 33365.57
1996/10/31 32402.30 34285.79
1996/11/30 33321.85 36877.45
1996/12/31 32646.98 36146.91
1997/01/31 34100.00 38405.37
1997/02/28 33901.54 38706.47
1997/03/31 32646.98 37116.02
1997/04/30 32954.64 39331.84
1997/05/31 36043.91 41726.37
1997/06/30 37465.72 43595.71
1997/07/31 39378.83 47064.62
1997/08/31 38746.09 44428.06
1997/09/30 43018.95 46861.38
1997/10/31 42356.43 45296.21
1997/11/30 44061.11 47392.97
1997/12/31 46126.78 48206.71
1998/01/31 46375.24 48739.88
1998/02/27 49926.44 52255.00
IMATRL PRASUN SHR__CHT 19980228 19980305 133524 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Leisure Portfolio on February 29, 1988,
and the current 3.00% sales charge was paid. As the chart shows, by
February 28, 1998, the value of the investment would have grown to
$49,926 - a 399.26% increase on the initial investment, and includes
the effect of a $7.50 trading fee. 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
$52,255 - a 422.55% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1998
% OF FUND'S
INVESTMENTS
DISNEY (WALT) CO. 5.3
TIME WARNER, INC. 3.8
COCA-COLA CO. (THE) 3.6
MICROSOFT CORP. 3.6
STARBUCKS CORP. 2.8
U.S. WEST MEDIA GROUP 2.3
KING WORLD PRODUCTIONS, INC. 2.3
MATTEL, INC. 2.1
GANNETT CO., INC. 2.0
GILLETTE CO. 1.9
TOP INDUSTRIES AS OF FEBRUARY 28, 1998
ROW: 1, COL: 1, VALUE: 63.3
ROW: 1, COL: 2, VALUE: 3.6
ROW: 1, COL: 3, VALUE: 4.8
ROW: 1, COL: 4, VALUE: 5.8
ROW: 1, COL: 5, VALUE: 11.2
ROW: 1, COL: 6, VALUE: 11.3
MOTION PICTURE PRODUCTION 11.3%
CABLE TV OPERATORS 11.1%
NEWSPAPERS 5.8%
TELEVISION BROADCASTING 4.8%
SOFT DRINKS 3.6%
ALL OTHERS 63.4%
*
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
LEISURE PORTFOLIO
FUND TALK: THE MANAGERS' OVERVIEW
NOTE TO SHAREHOLDERS: The following is an interview with Paul Antico,
who managed Fidelity Select Leisure
Portfolio for much of the period covered by this report,
with additional comments from Jeffrey Dorsey, who
became manager of the fund on January 31, 1998.
Q. HOW DID THE FUND PERFORM, PAUL?
P.A. Very well. For the 12 months that ended February 28, 1998, the
fund returned 47.29%. This compared favorably to the Standard & Poor's
500 Index, which returned 35.01% over the same time.
Q. WHAT FACTORS INFLUENCED THE FUND'S PERFORMANCE?
P.A. There were a couple. First, the fund realized positive gains from
many of its cable-related positions. Cable stocks had been somewhat
sluggish for years, but as cable companies began to focus more on
cutting costs and reducing debt - while at the same time rolling out
new services - these stocks performed well. Also, as the number of
cable channels continued to rise, leading cable TV programmers -
including Time Warner and Tele-Communications Liberty Media Group -
emerged as beneficiaries. The group also benefited tremendously from
consolidation within the industry. A number of cable companies had
been operating inefficiently for a period of time, and the merger and
acquisition activity we saw during the period resulted in several
favorable turnarounds. Lastly, advertising trends within the sector
were superb.
Q. ASIAN MARKETS EXPERIENCED PROBLEMS DURING THE PERIOD. HOW DID THIS
VOLATILITY AFFECT THE FUND?
P.A. While the volatility did hurt a few individual positions, the
overall impact on the portfolio was minimal. Most of the companies in
this sector tend to have limited business exposure to Asia. Walt
Disney - the fund's largest single position at the close of the period
- - had a slight presence in Asia but not enough to cause concern.
Liquor company Seagram's, on the other hand, declined significantly as
hard-liquor sales fell by around 50% in Asia.
Q. WHICH OTHER SUB-SECTORS APPEALED TO YOU?
P.A. Radio stocks were another positive group, as deregulation in the
industry continued to work in their favor. Radio operators were
allowed to own as many as eight stations in a single local market, as
well as to expand more aggressively across the country. All of a
sudden, operators were able to offer broader, more attractive market
exposure to their advertisers. CBS - which got out from underneath
Westinghouse's umbrella and performed well - was an example.
Q. WHY WAS ADVERTISING SO POPULAR?
P.A. The close-to-ideal economic conditions we've seen - namely low
inflation, low interest rates and moderate growth - have translated
into stronger cash flow for companies. One of the ways companies have
chosen to utilize that money - besides making logical acquisitions and
buying back stock - was to turn to advertising. With a strong economy
and higher consumer confidence, yet with little pricing power,
companies realized how important it was to make their products more
well-known. In turn, many radio and cable companies experienced
stronger advertising revenue.
Q. WHICH STOCKS PERFORMED WELL? WHICH TURNED OUT TO BE DISAPPOINTING?
P.A. Steiner Leisure, a company that operates health spas on cruise
ships, turned in a solid performance as the cruise market increased in
popularity and the company became more dominant. Other holdings that
performed well included Disney and BET Holdings, the company that runs
Black Entertainment Television. Disappointments included Hollywood
Entertainment - which had trouble in the tough video rental market
along with Blockbuster - and retail footwear stocks J. Baker and
Reebok. The fund no longer holds positions in J. Baker or Reebok.
Q. TURNING TO YOU, JEFF, WHAT'S YOUR OUTLOOK FOR THE NEXT FEW MONTHS?
A. The transition between Paul and myself should be relatively
seamless. From my vantage point, the fund has a nice balance of
broadcasting, retailing and specialty name stocks in its portfolio.
Going forward, companies that show the ability to generate solid
earnings growth over a two- or three-year time period will be a
primary focus.
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, 1998, more than
$257 million
MANAGER: Jeffrey Dorsey, since January 1998;
manager, Fidelity Select Multimedia Portfolio,
since 1997; analyst, fixed-income securities,
1991-1995; joined Fidelity in 1991
(checkmark)
LEISURE PORTFOLIO
INVESTMENTS FEBRUARY 28, 1998
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 86.2%
SHARES VALUE (NOTE 1)
ADVERTISING - 3.0%
ADVERTISING - 2.6%
Outdoor Systems, Inc. (a) 128,400 $ 3,827,925
Universal Outdoor Holdings, Inc. (a) 48,600 2,916,000
6,743,925
ADVERTISING AGENCIES - 0.4%
Interpublic Group of Companies, Inc. 1,300 70,850
Omnicom Group, Inc. 20,000 915,000
985,850
TOTAL ADVERTISING 7,729,775
AEROSPACE & DEFENSE - 0.6%
AIRCRAFT - 0.6%
Gulfstream Aerospace Corp. (a) 40,000 1,620,000
APPAREL STORES - 0.9%
GENERAL APPAREL STORES - 0.4%
TJX Companies, Inc. 27,000 1,042,875
SHOE STORES - 0.5%
Payless ShoeSource, Inc. (a) 20,000 1,345,000
TOTAL APPAREL STORES 2,387,875
BEVERAGES - 4.0%
BEVERAGES - 0.3%
Canadaigua Wine Co. Class A (a) 15,000 836,250
DISTILLED & BLENDED LIQUOR - 0.1%
Seagram Co. Ltd. 4,400 166,883
SOFT DRINKS - 3.6%
Coca-Cola Co. (The) 136,500 9,375,844
TOTAL BEVERAGES 10,378,977
BROADCASTING - 18.1%
CABLE TV OPERATORS - 11.1%
BET Holdings, Inc. Class A (a) 79,300 4,326,806
Comcast Corp. Class A special 99,300 3,475,500
Cox Communications, Inc. Class A (a) 119,500 4,608,219
TCA Cable TV, Inc. 39,800 1,960,150
Tele-Communications, Inc. (TCI Group),
Series A (a) 105,000 3,051,563
Time Warner, Inc. 144,211 9,734,243
Videotron Group Ltd. 150,000 1,580,334
28,736,815
COMMUNICATIONS SERVICES - 0.5%
CD Radio, Inc. (a) 75,000 1,190,625
RADIO BROADCASTING - 1.7%
Chancellor Media Corp. (a) 56,400 2,523,900
Clear Channel Communications, Inc. (a) 20,100 1,821,563
4,345,463
TELEVISION BROADCASTING - 4.8%
CBS Corp. 141,817 4,387,463
Hearst-Argyle Television, Inc. (a) 65,000 2,283,125
Scripps E.W. Co. Class A 17,300 917,981
Sinclair Broadcast Group, Inc.
Class A (a) 40,000 2,262,500
SHARES VALUE (NOTE 1)
Univision Communications, Inc.
Class A (a) 18,600 $ 713,775
Young Broadcasting, Inc. Class A (a) 40,000 1,770,000
12,334,844
TOTAL BROADCASTING 46,607,747
CELLULAR - 0.8%
CELLULAR & COMMUNICATION SERVICES - 0.8%
Mobile Telecommunications
Technologies, Inc. (a) 85,000 1,912,500
COMPUTER SERVICES & SOFTWARE - 6.7%
COMPUTER SERVICES - 3.1%
America Online, Inc. (a) 36,600 4,433,175
At Home Corp., Series A 75,000 2,559,375Yahoo Japan Corp. (a) 40
1,157,995
8,150,545
PREPACKAGED COMPUTER SOFTWARE - 3.6%
Microsoft Corp. (a) 108,600 9,203,850
TOTAL COMPUTER SERVICES & SOFTWARE 17,354,395
DRUG STORES - 0.3%
CVS Corp. 11,000 814,688
ELECTRONICS - 0.2%
ELECTRONIC PARTS - WHOLESALE - 0.2%
Brightpoint, Inc. (a) 25,000 512,500
ENTERTAINMENT - 13.2%
AMUSEMENT & RECREATIONAL SERVICES - 1.0%
IMAX Corp. (a) 99,900 2,711,947
MOTION PICTURE PRODUCTION - 11.3%
Cinar Films, Inc. Class B (sub-vtg.) (a) 40,200 1,476,706
Disney (Walt) Co. 122,052 13,662,196
King World Productions, Inc. 217,800 5,812,538
News Corp. Ltd. ADR 50,000 1,271,875
News Corp. Ltd. sponsored
ADR (ltd. vtg.) 165,000 3,578,438
Viacom, Inc. Class B (non-vtg.) (a) 68,700 3,297,600
29,099,353
RECREATIONAL SERVICES - 0.9%
Family Golf Centers, Inc. (a) 25,000 840,625
Premier Parks, Inc. (a) 25,900 1,356,513
2,197,138
TOTAL ENTERTAINMENT 34,008,438
GENERAL MERCHANDISE STORES - 1.5%
GENERAL MERCHANDISE STORES - 0.8%
Wal-Mart Stores, Inc. 47,500 2,199,844
VARIETY STORES - 0.7%
Consolidated Stores Corp. (a) 30,000 1,233,750
Michaels Stores, Inc. (a) 13,400 455,600
1,689,350
TOTAL GENERAL MERCHANDISE STORES 3,889,194
HOUSEHOLD PRODUCTS - 3.6%
COSMETICS - 3.0%
Avon Products, Inc. 40,000 2,817,500
Gillette Co. 46,000 4,962,250
7,779,750
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
HOUSEHOLD PRODUCTS - CONTINUED
MANUFACTURED PRODUCTS - 0.6%
First Brands Corp. 60,000 $ 1,545,000
TOTAL HOUSEHOLD PRODUCTS 9,324,750
LEASING & RENTAL - 1.2%
AUTO RENTAL & LEASING - 0.6%
Avis Rent A Car, Inc. (a) 31,200 893,100
Budget Group, Inc. Class A (a) 20,000 623,750
1,516,850
VIDEO TAPE RENTAL - 0.6%
Hollywood Entertainment Corp. (a) 140,400 1,544,400
TOTAL LEASING & RENTAL 3,061,250
LEISURE DURABLES & TOYS - 3.9%
MOTORCYCLES - 0.7%
Harley-Davidson, Inc. 60,800 1,763,200
SPORTING & ATHLETIC GOODS - 0.8%
Callaway Golf Co. 66,300 2,138,175
TOYS & GAMES - 2.1%
Mattel, Inc. 126,000 5,331,375
TRAVEL TRAILERS AND CAMPERS - 0.3%
Brunswick Corp. 22,000 698,500
TOTAL LEISURE DURABLES & TOYS 9,931,250
LODGING & GAMING - 2.1%
HOTELS, MOTELS, & TOURIST COURTS - 1.7%
Mirage Resorts, Inc. (a) 130,800 2,992,050
Sun International Hotels Ltd. Ord. (a) 29,300 1,274,550
4,266,600
RACING & GAMING - 0.4%
Dover Downs Entertainment, Inc. 42,900 1,158,300
TOTAL LODGING & GAMING 5,424,900
PHOTOGRAPHIC EQUIPMENT - 0.2%
Polaroid Corp. 10,500 481,031
PRINTING - 1.9%
COMMERCIAL PRINTING - 1.9%
Donnelley (R.R.) & Sons Co. 40,700 1,612,738
Valassis Communications, Inc. (a) 88,400 3,370,250
4,982,988
PUBLISHING - 12.1%
BOOK PUBLISHING & PRINTING - 2.5%
Dun & Bradstreet Corp. 45,600 1,527,600
Harcourt General, Inc. 26,100 1,409,400
Houghton Mifflin Co. 21,300 676,275
McGraw-Hill, Inc. 29,100 2,200,688
Reader's Digest Association, Inc.
(The) Class A (non-vtg.) 23,200 616,250
6,430,213
GENERAL PUBLISHING - 2.3%
U.S. WEST Media Group (a) 185,100 5,957,906
GREETING CARDS - 0.3%
American Greetings Corp. Class A 17,300 789,313
SHARES VALUE (NOTE 1)
NEWSPAPERS - 5.8%
Belo (A.H.) Corp. Class A 29,900 $ 1,637,025
Central Newspapers, Inc. Class A 3,100 221,456
Dow Jones & Co., Inc. 10,000 513,750
Gannett Co., Inc. 80,600 5,203,738
Knight-Ridder, Inc. 22,100 1,243,125
New York Times Co. (The) Class A 15,000 981,563
Times Mirror Co. Class A 27,800 1,711,438
Tribune Co. 34,800 2,246,775
Washington Post Co. Class B 2,400 1,184,400
14,943,270
PERIODICALS - 1.2%
Meredith Corp. 10,400 446,550
Playboy Enterprises, Inc. Class B (a) 73,500 1,176,000
World Color Press, Inc. (a) 40,200 1,298,963
2,921,513
TOTAL PUBLISHING 31,042,215
REAL ESTATE INVESTMENT TRUSTS - 0.4%
Starwood Hotels & Resorts Trust 20,000 1,131,250
RESTAURANTS - 3.2%
PJ America, Inc. (a) 50,000 856,250
Starbucks Corp. (a) 184,700 7,307,194
8,163,444
RETAIL & WHOLESALE, MISCELLANEOUS - 4.5%
BOOK STORES - RETAIL - 0.5%
Borders Group, Inc. (a) 39,700 1,322,506
MAIL ORDER - 1.5%
Tele-Communications, Inc. (Liberty Media
Group), Series A (a) 142,500 3,909,844
MISCELLANEOUS DURABLE GOODS - WHOLESALE - 0.9%
Action Performance Companies, Inc. (a) 60,500 2,230,938
MUSIC, TV, & ELECTRONICS STORES - 0.4%
Musicland Stores Corp. (a) 108,900 1,020,938
RETAIL STORES - 0.8%
Gadzooks, Inc. (a) 78,900 2,209,200
RETAIL, GENERAL - 0.4%
Petco Animal Supplies, Inc. (a) 70,000 1,001,875
TOTAL RETAIL & WHOLESALE, MISCELLANEOUS 11,695,301
SERVICES - 3.0%
MISCELLANEOUS BUSINESS SERVICES - 0.8%
Medialink Worldwide, Inc. (a) 123,600 2,008,491
PERSONAL SERVICES - 2.2%
Block (H & R), Inc. 20,000 941,250
Steiner Leisure Ltd. (a) 115,500 4,620,000
5,561,250
TOTAL SERVICES 7,569,741
TEXTILES & APPAREL - 0.8%
MEN'S & BOYS' CLOTHING - 0.8%
Pacific Sunwear of California,Inc. (a) 62,500 2,164,063
TOTAL COMMON STOCKS
(Cost $187,115,504) 222,188,272
CONVERTIBLE PREFERRED STOCKS - 1.6%
SHARES VALUE (NOTE 1)
CELLULAR - 1.6%
CELLULAR & COMMUNICATION SERVICES - 1.6%
AirTouch Communications, Inc.:
Class B $1.74 DECS 28,167 $ 1,080,909
Class C $2.125 44,034 2,961,287
TOTAL CONVERTIBLE PREFERRED STOCKS
(Cost $3,305,347) 4,042,196
CASH EQUIVALENTS - 12.2%
Taxable Central Cash Fund (b)
(Cost $31,370,800) 31,370,800 31,370,800
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $221,791,651) $ 257,601,268
SECURITY TYPE ABBREVIATIONS
DECS - Dividend Enhanced Convertible
Stock/Debt Exchangeable for
Common Stock
LEGEND
1. Non-income producing
2. At period end, the seven-day yield on the Taxable Central Cash Fund
was 5.62%. 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 $350,202,516 and $272,087,035, 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 $113,958 for the
period (see Note 4 of Notes to Financial Statements).
INCOME TAX INFORMATION
At February 28, 1998, the aggregate cost of investment securities for
income tax purposes was $222,138,138. Net unrealized appreciation
aggregated $35,463,130, of which $38,502,377 related to appreciated
investment securities and $3,039,247related to depreciated investment
securities.
The fund hereby designates approximately $9,146,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
LEISURE PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1998
ASSETS
INVESTMENT IN $ 257,601,268
SECURITIES,
AT VALUE
(COST
$221,791
,651) -
SEE
ACCOMPAN
YING
SCHEDULE
RECEIVABLE 772,887
FOR
INVESTMENT
S SOLD
RECEIVABLE 1,720,405
FOR FUND
SHARES
SOLD
DIVIDENDS 104,872
RECEIVABLE
INTEREST 113,166
RECEIVABLE
REDEMPTION 486
FEES
RECEIVABLE
OTHER 45,058
RECEIVABLE
S
TOTAL 260,358,142
ASSETS
LIABILITIES
PAYABLE FOR $ 2,866,799
FUND
SHARES
REDEEMED
ACCRUED 120,714
MANAGEM
ENT FEE
OTHER 172,112
PAYABLES
AND
ACCRUED
EXPENSES
TOTAL 3,159,625
LIABILITIES
NET ASSETS $ 257,198,517
NET ASSETS
CONSIST OF:
PAID IN $ 209,634,429
CAPITAL
ACCUMULATED 11,754,599
UNDISTRIBUT
ED NET
REALIZED
GAIN (LOSS)
ON
INVESTMENT
S AND
FOREIGN
CURRENCY
TRANSACTIO
NS
NET 35,809,489
UNREALIZED
APPRECIATI
ON
(DEPRECIATI
ON) ON
INVESTMENT
S
AND ASSETS
AND
LIABILITIES
IN
FOREIGN
CURRENCIES
NET ASSETS, $ 257,198,517
FOR
4,128,22
1
SHARES
OUTSTANDIN
G
NET ASSET $62.30
VALUE AND
REDEMPTIO
N PRICE
PER SHARE
($257,19
8,517 (DIVIDED BY)
4,128,22
1 SHARES)
MAXIMUM $64.23
OFFERING
PRICE PER
SHARE
(100/97.
00 OF
$62.30)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1998
INVESTMENT $ 511,317
INCOME
DIVIDENDS
INTEREST 811,500
TOTAL 1,322,817
INCOME
EXPENSES
MANAGEMEN $ 853,326
T FEE
TRANSFER 926,813
AGENT FEES
ACCOUNTING 143,851
FEES AND
EXPENSES
NON-INTEREST 717
ED
TRUSTEES'
COMPENSAT
ION
CUSTODIAN 18,496
FEES AND
EXPENSES
REGISTRATION 76,080
FEES
AUDIT 26,522
LEGAL 1,434
MISCELLANEO 1,009
US
TOTAL 2,048,248
EXPENSES
BEFORE
REDUCTIONS
EXPENSE (72,544) 1,975,704
REDUCTIONS
NET (652,887)
INVESTMEN
T INCOME
(LOSS)
REALIZED
AND
UNREALIZED
GAIN (LOSS)
NET REALIZED
GAIN (LOSS)
ON:
INVESTMENT 27,570,509
SECURITIES
FOREIGN 1,753 27,572,262
CURRENCY
TRANSACTIO
NS
CHANGE IN
NET
UNREALIZED
APPRECIATI
ON
(DEPRECIATI
ON) ON:
INVESTMENT 29,426,789
SECURITIES
ASSETS AND (73) 29,426,716
LIABILITIES
IN
FOREIGN
CURRENCIES
NET GAIN 56,998,978
(LOSS)
NET INCREASE $ 56,346,091
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
OTHER $ 457,999
INFORMATIO
N
SALES
CHARGES
PAID TO
FDC
SALES $ 9,897
CHARGES -
DEALERS'
PORTION
DEFERRED $ 13,069
SALES
CHARGES
WITHHELD
BY FDC
EXCHANGE $ 28,058
FEES
WITHHELD
BY FSC
EXPENSE $ 70,133
REDUCTIONS
DIRECTED
BROKERAGE
ARRANGEM
ENTS
CUSTODIA 2,411
N CREDITS
$ 72,544
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
FEBRUARY 28, FEBRUARY 28,
1998 1997
OPERATIONS $ (652,887) $ (130,873)
NET
INVESTMENT
INCOME
(LOSS)
NET 27,572,262 12,370,765
REALIZED
GAIN (LOSS)
CHANGE IN 29,426,716 (3,321,479)
NET
UNREALIZED
APPRECIATI
ON
(DEPRECIATI
ON)
NET 56,346,091 8,918,413
INCREASE
(DECREAS
E) IN NET
ASSETS
RESULTING
FROM
OPERATIO
NS
DISTRIBUTIONS (19,896,472) (6,329,218)
TO
SHAREHOLD
ERS FROM
NET
REALIZED
GAINS
SHARE 221,739,781 109,666,003
TRANSACTIO
NS
NET
PROCEEDS
FROM SALES
OF SHARES
REINVESTM 19,641,349 6,225,261
ENT OF
DISTRIBUTIO
NS
COST OF (118,975,901) (105,536,133)
SHARES
REDEEMED
NET 122,405,229 10,355,131
INCREASE
(DECREAS
E) IN NET
ASSETS
RESULTING
FROM
SHARE
TRANSACTI
ONS
REDEMPTIO 210,283 176,193
N FEES
TOTAL 159,065,131 13,120,519
INCREASE
(DECREASE)
IN NET
ASSETS
NET ASSETS
BEGINNING 98,133,386 85,012,867
OF PERIOD
END OF $ 257,198,517 $ 98,133,386
PERIOD
(INCLUDIN
G
UNDISTRIB
UTED NET
INVESTME
NT
INCOME
OF $0
AND
$376,5
79,
RESPECTIV
ELY)
OTHER
INFORMATION
SHARES
SOLD 3,893,810 2,311,420
ISSUED IN 374,739 136,974
REINVESTME
NT OF
DISTRIBUTIO
NS
REDEEMED (2,192,054) (2,238,078)
NET 2,076,495 210,316
INCREASE
(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>
YEARS ENDED FEBRUARY 28, YEAR ENDED YEARS ENDED FEBRUARY 28,
FEBRUARY 29,
SELECTED PER-SHARE DATA 1998 1997 1996 1995 1994
</TABLE>
NET ASSET $ 47.83 $ 46.17 $ 40.71 $ 45.30 $ 35.77
VALUE,
BEGINNING
OF PERIOD
INCOME FROM
INVESTMENT
OPERATION
S
NET (.25) (.06) F (.21) (.21) (.29)
INVESTMENT
INCOME
(LOSS) C
NET 21.10 4.47 10.97 (.48) 12.98
REALIZED
AND
UNREALIZED
GAIN (LOSS)
TOTAL FROM 20.85 4.41 10.76 (.69) 12.69
INVESTMENT
OPERATIONS
LESS
DISTRIBUTIO
NS
FROM NET (6.46) (2.83) (5.32) (3.93) (3.26)
REALIZED
GAIN
REDEMPTION .08 .08 .02 .03 .10
FEES
ADDED TO
PAID IN
CAPITAL
NET ASSET $ 62.30 $ 47.83 $ 46.17 $ 40.71 $ 45.30
VALUE, END
OF PERIOD
TOTAL 47.29% 10.14% 27.61% (1.07)% 37.14%
RETURN A, B
RATIOS AND
SUPPLEME
NTAL DATA
NET ASSETS, $ 257,199 $ 98,133 $ 85,013 $ 69,569 $ 105,833
END OF
PERIOD
(000
OMITTED)
RATIO OF 1.44% 1.56% 1.64% 1.64% 1.55%
EXPENSES
TO AVERAGE
NET ASSETS
RATIO OF 1.39% D 1.54% D 1.63% D 1.62% D 1.53% D
EXPENSES
TO AVERAGE
NET ASSETS
AFTER
EXPENSE
REDUCTIONS
RATIO OF NET (.46)% (.12)% (.46)% (.52)% (.69)%
INVESTMENT
INCOME
(LOSS) TO
AVERAGE
NET ASSETS
PORTFOLIO 209% 127% 141% 103% 170%
TURNOVER
RATE
AVERAGE $ .0396 $ .0370
COMMISSIO
N RATE E
<TABLE>
<CAPTION>
<S> <C>
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.
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. F INVESTMENT INCOME (LOSS) PER SHARE
REFLECTS A SPECIAL DIVIDEND 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). Load adjusted returns include a 3.00% sales
charge and the effect of a $7.50 trading fee. 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, 1998 YEAR YEARS YEARS
SELECT MULTIMEDIA 42.42% 164.67% 419.51%
SELECT MULTIMEDIA 38.08% 156.66% 403.86%
(LOAD ADJ.)
S&P 500 35.01% 166.84% 422.55%
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 Standard & Poor's
500 Index - a widely recognized, unmanaged index of common stocks.
This benchmark includes 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, 1998 YEAR YEARS YEARS
SELECT MULTIMEDIA 42.42% 21.49% 17.91%
SELECT MULTIMEDIA 38.08% 20.75% 17.55%
(LOAD ADJ.)
S&P 500 35.01% 21.69% 17.98%
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 LONG-TERM GROWTH AND
SHORT-TERM VOLATILITY. 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
Multimedia S&P 500
00503 SP001
1988/02/29 9700.00 10000.00
1988/03/31 10119.59 9691.00
1988/04/30 10243.00 9798.57
1988/05/31 10070.23 9883.82
1988/06/30 10418.05 10337.48
1988/07/31 10401.03 10298.20
1988/08/31 10009.50 9948.06
1988/09/30 10639.35 10371.85
1988/10/31 10758.51 10660.19
1988/11/30 10673.39 10507.75
1988/12/31 11344.07 10691.63
1989/01/31 12698.71 11474.26
1989/02/28 12672.49 11188.55
1989/03/31 13266.79 11449.25
1989/04/30 14158.23 12043.46
1989/05/31 14839.92 12531.22
1989/06/30 15143.79 12459.79
1989/07/31 16295.84 13584.91
1989/08/31 16278.26 13851.18
1989/09/30 16023.22 13794.39
1989/10/31 14941.52 13474.36
1989/11/30 15029.46 13749.23
1989/12/31 15035.83 14079.22
1990/01/31 13039.29 13134.50
1990/02/28 12709.96 13303.94
1990/03/31 12586.46 13656.49
1990/04/30 11989.56 13315.08
1990/05/31 13131.91 14613.30
1990/06/30 13018.70 14513.93
1990/07/31 12298.30 14467.48
1990/08/31 10703.12 13159.62
1990/09/30 9787.18 12518.75
1990/10/31 9365.23 12464.92
1990/11/30 10332.63 13270.15
1990/12/31 11094.20 13640.39
1991/01/31 11691.10 14235.11
1991/02/28 12555.59 15252.92
1991/03/31 12895.21 15622.04
1991/04/30 13337.74 15659.53
1991/05/31 13409.78 16336.03
1991/06/30 12349.76 15587.84
1991/07/31 12812.87 16314.23
1991/08/31 13214.24 16700.88
1991/09/30 14016.98 16421.97
1991/10/31 14727.09 16642.03
1991/11/30 13718.52 15971.35
1991/12/31 15293.12 17798.47
1992/01/31 15694.48 17467.42
1992/02/29 16569.26 17694.50
1992/03/31 16147.31 17349.46
1992/04/30 16394.30 17859.53
1992/05/31 16641.30 17947.04
1992/06/30 16703.05 17679.63
1992/07/31 16744.21 18402.73
1992/08/31 16517.80 18025.47
1992/09/30 16414.89 18238.17
1992/10/31 16682.46 18302.01
1992/11/30 17896.86 18926.11
1992/12/31 18580.84 19158.90
1993/01/31 18956.21 19319.83
1993/02/28 19039.62 19582.58
1993/03/31 19790.36 19995.77
1993/04/30 19278.59 19511.88
1993/05/31 20592.79 20034.79
1993/06/30 21239.30 20092.89
1993/07/31 22034.18 20012.52
1993/08/31 23910.11 20771.00
1993/09/30 24482.43 20611.06
1993/10/31 26315.96 21037.71
1993/11/30 24598.56 20837.85
1993/12/31 25645.36 21089.99
1994/01/31 26011.11 21807.05
1994/02/28 25677.63 21216.08
1994/03/31 24107.07 20291.06
1994/04/30 24118.77 20550.78
1994/05/31 25005.75 20887.82
1994/06/30 24446.83 20376.06
1994/07/31 25042.20 21044.40
1994/08/31 26548.87 21907.22
1994/09/30 26366.61 21370.49
1994/10/31 26961.99 21851.33
1994/11/30 26111.45 21055.50
1994/12/31 26672.08 21367.76
1995/01/31 26973.61 21921.82
1995/02/28 28079.18 22776.12
1995/03/31 29863.19 23448.24
1995/04/30 30554.17 24138.79
1995/05/31 30717.50 25103.62
1995/06/30 31898.46 25686.77
1995/07/31 33782.96 26538.55
1995/08/31 34850.85 26605.16
1995/09/30 35843.36 27727.90
1995/10/31 34788.04 27628.91
1995/11/30 36132.32 28841.82
1995/12/31 35653.34 29397.31
1996/01/31 35871.49 30398.00
1996/02/29 37057.66 30679.78
1996/03/31 36566.83 30975.23
1996/04/30 38269.12 31431.81
1996/05/31 39540.10 32242.43
1996/06/30 37710.45 32365.28
1996/07/31 34120.97 30935.38
1996/08/31 35391.95 31587.81
1996/09/30 37640.61 33365.57
1996/10/31 36579.13 34285.79
1996/11/30 37249.54 36877.45
1996/12/31 36036.09 36146.91
1997/01/31 35851.43 38405.37
1997/02/28 35382.69 38706.47
1997/03/31 33663.98 37116.02
1997/04/30 34415.69 39331.84
1997/05/31 37701.68 41726.37
1997/06/30 40173.45 43595.71
1997/07/31 42325.34 47064.62
1997/08/31 41496.57 44428.06
1997/09/30 44855.26 46861.38
1997/10/31 43415.82 45296.21
1997/11/30 44855.26 47392.97
1997/12/31 47181.38 48206.71
1998/01/31 47526.54 48739.88
1998/02/27 50386.00 52255.00
IMATRL PRASUN SHR__CHT 19980228 19980318 102049 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Multimedia Portfolio on February 29, 1988
and the current 3.00% sales charge was paid. As the chart shows, by
February 28, 1998, the value of the investment would have grown to
$50,386 - a 403.86% increase on the initial investment, and includes
the effect of a $7.50 trading fee. 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
$52,255 - a 422.55% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1998
% OF FUND'S
INVESTMENTS
CBS CORP. 5.8
TIME WARNER, INC. 5.3
U.S. WEST MEDIA GROUP 5.2
GANNETT CO., INC. 5.1
DISNEY (WALT) CO. 4.7
TELE-COMMUNICATIONS, INC. (TCI GROUP), SERIES A 3.2
OMNICOM GROUP, INC. 3.1
INTERPUBLIC GROUP OF COMPANIES, INC. 3.1
WORLDCOM, INC. 3.1
COX COMMUNICATIONS, INC. CLASS A 3.1
TOP INDUSTRIES AS OF FEBRUARY 28, 1998
7.7
NEWSPAPERS 16.5%
CABLE TV OPERATORS 15.2%
TELEPHONE SERVICES 10.3%
TELEVISION BROADCASTING 8.6%
MOTION PICTURE PRODUCTION 8.3%
ALL OTHERS 41.1%
ROW: 1, COL: 1, VALUE: 41.1
ROW: 1, COL: 2, VALUE: 8.300000000000001
ROW: 1, COL: 3, VALUE: 8.6
ROW: 1, COL: 4, VALUE: 10.3
ROW: 1, COL: 5, VALUE: 15.2
ROW: 1, COL: 6, VALUE: 16.5
*
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
MULTIMEDIA PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
NOTE TO SHAREHOLDERS: Jeffrey Dorsey became Portfolio Manager of
Fidelity Select Multimedia Portfolio on December 1, 1997.
Q. HOW DID THE FUND PERFORM, JEFF?
A. Quite well. For the 12 months that ended February 28, 1998, the
fund returned 42.42%. This compared favorably to the Standard & Poor's
500 Index, which returned 35.01% over the same period.
Q. WHAT FACTORS CONTRIBUTED TO THE FUND'S STRONG SHOWING?
A. Three of the major industries represented in the fund - publishing,
broadcasting and entertainment - turned in stellar performances. In
the publishing area, newspapers had one of their strongest years ever
due to healthy advertising revenues and lower newsprint costs. In the
broadcasting and entertainment fields, the fund realized strong
performances from several positions. Clear Channel, CBS and Chancellor
performed well from a broadcasting standpoint while Time Warner and
Viacom were able contributors from the entertainment side. Advertising
agency stocks - including Interpublic and Omnicom - also posted strong
gains during the period.
Q. MANY OF THE STOCKS IN THE PORTFOLIO BENEFITED FROM A STRONG
ADVERTISING CLIMATE DURING THE PERIOD. WHAT DROVE ADVERTISING DEMAND?
A. First off, a good economy helped. Companies had more money to spend
on advertising and many consumers had more money in their pockets.
Much of the advertising growth came from consumer product and auto
companies. When advertising conditions are positive, many of the
stocks in the multimedia sector benefit. Newspapers, for example,
enjoyed a sharp increase in classified advertising during the period.
As another example, CBS - which just aired the 1998 Winter Olympics -
reaped an advertising windfall and saw significant benefits in the
carryover to its evening news and late-night programming.
Q. HOW DID THE WELL-DOCUMENTED ECONOMIC CRISIS IN ASIA AFFECT THE
SECTOR? WERE ANY FUND POSITIONS NEGATIVELY AFFECTED?
A. Another reason for the solid performance we've seen was the fact
that many of the companies in this sector had minimal business
exposure to Asia. Most of them are domestic-oriented and many
performed in line with the robust U.S. economy. That being said,
however, the Asian crisis could still have negative future
implications. For instance, if softening product demand in Asia hurts
growth for U.S. companies later in 1998, U.S. companies may feel a
profit pinch and begin to cut back on their advertising. I haven't
seen any indications of this happening yet, but it's certainly worth
keeping an eye on.
Q. WHAT TYPES OF CHANGES HAVE YOU MADE TO THE PORTFOLIO SINCE TAKING
THE REINS?
A. When I took over the fund, it had a decent exposure to
technology-related stocks. When I sensed weakening business prospects
for many of these positions - partly due to the Asian crisis - I
decided to reallocate some of these assets to the broadcasting and
entertainment groups. This turned out to be a prudent strategy, as
many technology-related stocks declined significantly during the
fourth quarter of 1997. I've also made a conscious effort to keep the
fund close to its roots by focusing mainly on the broadcasting,
publishing and entertainment industries.
Q. WHICH STOCKS PERFORMED WELL DURING THE PERIOD? WERE THERE ANY
DISAPPOINTMENTS?
A. Two advertising agencies that I mentioned earlier - Interpublic and
Omnicom - were among the fund's best performers. Both companies
continued to benefit from positive advertising trends as well as from
favorable acquisitions of other companies. Entertainment giants Time
Warner and Viacom also contributed positively. On a negative note,
Times Mirror didn't perform as well as I had hoped. However, the stock
bounced back toward the end of the period as investors began to
realize the stock's value.
Q. WHAT'S YOUR OUTLOOK?
A. Going forward, my immediate goal will be to focus on long-term
growth stories. Companies that show the ability to remain strong for
the next couple of years will appeal to me. In terms of the economy, I
haven't seen any tangible evidence of a slowdown. If advertising
remains in strong demand, the stocks in this sector will continue to
benefit.
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, 1998, more than
$115 million
MANAGER: Jeffrey Dorsey, since 1997; manager,
Fidelity Select Leisure Portfolio, since January
1998; analyst, fixed-income securities, 1991-1997;
joined Fidelity in 1991
(checkmark)
MULTIMEDIA PORTFOLIO
INVESTMENTS FEBRUARY 28, 1998
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 91.8%
SHARES VALUE (NOTE 1)
ADVERTISING - 7.3%
ADVERTISING - 1.0%
Outdoor Systems, Inc. (a) 39,600 $ 1,180,575
ADVERTISING AGENCIES - 6.3%
Interpublic Group of Companies, Inc. 66,800 3,640,600
Omnicom Group, Inc. 79,800 3,650,850
7,291,450
TOTAL ADVERTISING 8,472,025
BROADCASTING - 30.1%
CABLE TV OPERATORS - 15.2%
Adelphia Communications Class A (a) 6,800 175,100
Cablevision Systems Corp. Class A (a) 5,500 537,625
Comcast Corp. Class A special 16,800 588,000
Cox Communications, Inc. Class A (a) 93,400 3,601,738
TCA Cable TV, Inc. 10,100 497,425
Tele-Communications International, Inc.,
Series A (a) 13,500 239,625
Tele-Communications, Inc. (TCI Group),
Series A (a) 126,105 3,664,927
Tele-Communications, Inc. (TCI Ventures
Group), Series A (a) 141,300 2,181,319
Time Warner, Inc. 91,800 6,196,500
17,682,259
COMMUNICATIONS SERVICE - 1.4%
CD Radio, Inc. (a) 6,000 95,250
PanAmSat Corp. (a) 27,000 1,434,375
1,529,625
RADIO BROADCASTING - 4.9%
American Radio Systems Corp. Class A (a) 2,100 125,475
Chancellor Media Corp. (a) 40,500 1,812,375
Clear Channel Communications, Inc. (a) 37,100 3,362,188
Jacor Communications, Inc. Class A (a) 6,700 387,763
5,687,801
TELEVISION BROADCASTING - 8.6%
CBS Corp. 217,750 6,736,641
Granite Broadcasting Corp. (a) 5,900 69,694
Scripps E.W. Co. Class A 29,000 1,538,813
USA Networks, Inc. (a) 17,400 896,100
Westwood One, Inc. (a) 11,300 350,300
Young Broadcasting, Inc. Class A (a) 9,900 438,075
10,029,623
TOTAL BROADCASTING 34,929,308
COMMUNICATIONS EQUIPMENT - 0.7%
TELEPHONE EQUIPMENT - 0.7%
Globalstar Telecommunications Ltd. (a) 11,300 765,575
ELECTRICAL EQUIPMENT - 2.1%
TV & RADIO COMMUNICATION EQUIPMENT - 2.1%
Loral Space & Communications Ltd. (a) 93,600 2,392,640
ENTERTAINMENT - 8.6%
MOTION PICTURE PRODUCTION - 8.3%
Disney (Walt) Co. 48,700 5,451,356
King World Productions, Inc. 41,800 1,115,538
News Corp. Ltd. ADR 23,300 592,694
Viacom, Inc. Class B (non-vtg.) (a) 52,200 2,505,600
9,665,188
SHARES VALUE (NOTE 1)
RECREATIONAL SERVICES - 0.3%
Cedar Fair LP (depositary unit) 4,500 $ 117,563
Premier Parks, Inc. (a) 4,200 219,975
337,538
TOTAL ENTERTAINMENT 10,002,726
PRINTING - 3.5%
COMMERCIAL PRINTING, LITHOGRAPHIC - 0.3%
Consolidated Graphics, Inc. (a) 8,000 425,500
COMMERCIAL PRINTING - 3.2%
Big Flower Holdings, Inc. (a) 7,500 201,563
Donnelley (R.R.) & Sons Co. 60,000 2,377,500
Valassis Communications, Inc. (a) 29,100 1,109,438
3,688,501
TOTAL PRINTING 4,114,001
PUBLISHING - 26.6%
BOOK PUBLISHING & PRINTING - 7.3%
Dun & Bradstreet Corp. 71,600 2,398,600
Harcourt General, Inc. 29,800 1,609,200
Houghton Mifflin Co. 17,600 558,800
McGraw-Hill, Inc. 38,300 2,896,438
Reader's Digest Association, Inc. (The)
Class A (non-vtg.) 23,900 634,844
Scholastic Corp. (a) 9,200 364,550
8,462,432
GENERAL PUBLISHING - 0.4%
Applied Graphics Technologies, Inc. (a) 6,900 407,963
GREETING CARDS - 0.1%
Gibson Greetings, Inc. (a) 7,100 156,200
NEWSPAPERS - 16.5%
Belo (A.H.) Corp. Class A 30,300 1,658,925
Central Newspapers, Inc. Class A 12,400 885,825
Dow Jones & Co., Inc. 33,300 1,710,788
Gannett Co., Inc. 92,000 5,939,750
Harte Hanks Communications, Inc. 20,600 894,813
Journal Register Co. 22,700 449,744
New York Times Co. (The) Class A 16,700 1,092,806
Times Mirror Co. Class A 38,900 2,394,781
Tribune Co. 42,700 2,756,819
Washington Post Co. Class B 2,900 1,431,150
19,215,401
PERIODICALS - 2.3%
CMP Media, Inc. Class A 2,300 54,338
Meredith Corp. 15,800 678,413
Playboy Enterprises, Inc. Class B (a) 95,500 1,528,000
World Color Press, Inc. (a) 14,000 452,375
2,713,126
TOTAL PUBLISHING 30,955,122
RETAIL & WHOLESALE, MISCELLANEOUS - 2.6%
MAIL ORDER - 2.6%
Tele-Communications, Inc. (Liberty Media
Group), Series A (a) 111,200 3,051,050
SERVICES - 0.0%
BUSINESS SERVICES - 0.0%
Mecklermedia Corp. (a) 1,400 38,150
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
TELEPHONE SERVICES - 10.3%
AT&T Corp. 29,500 $ 1,795,813
Tel-Save Holdings, Inc. 18,700 517,756
U.S. WEST Media Group (a) 186,600 6,006,188
WorldCom, Inc. (a) 94,600 3,612,538
11,932,295
TOTAL COMMON STOCKS
(Cost $95,713,129) 106,652,892
CASH EQUIVALENTS - 8.2%
Taxable Central Cash Fund (b)
(Cost $9,475,982) 9,475,982 9,475,982
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $105,189,111) $ 116,128,874
LEGEND
1. Non-income producing
2. At period end, the seven-day yield on the Taxable Central Cash Fund
was 5.62%. 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 $158,188,012 and $125,555,631, 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 $40,201 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 $2,952,000 and $2,610,500, respectively. The
weighted average interest rate was 5.8% (see Note 7 of Notes to
Financial Statements).
INCOME TAX INFORMATION
At February 28, 1998, the aggregate cost of investment securities for
income tax purposes was $105,226,273. Net unrealized appreciation
aggregated $10,902,601 of which $11,129,610 related to appreciated
investment securities and $227,009 related to depreciated investment
securities.
The fund hereby designates approximately $4,042,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
MULTIMEDIA PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1998
ASSETS
INVESTMENT IN $ 116,128,874
SECURITIES,
AT VALUE
(COST
$105,189
,111) -
SEE
ACCOMPAN
YING
SCHEDULE
RECEIVABLE 1,085,201
FOR
INVESTMENT
S SOLD
RECEIVABLE 519,585
FOR FUND
SHARES
SOLD
DIVIDENDS 99,879
RECEIVABLE
INTEREST 38,798
RECEIVABLE
REDEMPTION 1,967
FEES
RECEIVABLE
TOTAL 117,874,304
ASSETS
LIABILITIES
PAYABLE FOR $ 2,227,173
FUND
SHARES
REDEEMED
ACCRUED 59,963
MANAGEM
ENT FEE
OTHER 102,322
PAYABLES
AND
ACCRUED
EXPENSES
TOTAL 2,389,458
LIABILITIES
NET ASSETS $ 115,484,846
NET ASSETS
CONSIST OF:
PAID IN $ 94,581,545
CAPITAL
ACCUMULATED (1,536)
NET
INVESTMENT
LOSS
ACCUMULATED 9,965,074
UNDISTRIBUT
ED NET
REALIZED
GAIN (LOSS)
ON
INVESTMENT
S AND
FOREIGN
CURRENCY
TRANSACTIO
NS
NET 10,939,763
UNREALIZED
APPRECIATI
ON
(DEPRECIATI
ON) ON
INVESTMENT
S
NET ASSETS, $ 115,484,846
FOR
3,439,49
4
SHARES
OUTSTANDIN
G
NET ASSET $33.58
VALUE AND
REDEMPTIO
N PRICE
PER SHARE
($115,48
4,846 (DIVIDED BY)
3,439,49
4 SHARES)
MAXIMUM $34.62
OFFERING
PRICE PER
SHARE
(100/97.
00 OF
$33.58)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1998
INVESTMENT $ 392,615
INCOME
DIVIDENDS
INTEREST 273,638
TOTAL 666,253
INCOME
EXPENSES
MANAGEMEN $ 355,794
T FEE
TRANSFER 523,474
AGENT FEES
ACCOUNTING 68,383
FEES AND
EXPENSES
NON-INTEREST 227
ED
TRUSTEES'
COMPENSAT
ION
CUSTODIAN 15,021
FEES AND
EXPENSES
REGISTRATION 44,016
FEES
AUDIT 22,336
LEGAL 317
INTEREST 843
MISCELLANEO 680
US
TOTAL 1,031,091
EXPENSES
BEFORE
REDUCTIONS
EXPENSE (19,325) 1,011,766
REDUCTIONS
NET (345,513)
INVESTMEN
T INCOME
(LOSS)
REALIZED
AND
UNREALIZED
GAIN (LOSS)
NET REALIZED
GAIN (LOSS)
ON:
INVESTMENT 11,158,972
SECURITIES
FOREIGN (1,549) 11,157,423
CURRENCY
TRANSACTIO
NS
CHANGE IN 11,000,546
NET
UNREALIZED
APPRECIATI
ON
(DEPRECIATI
ON) ON
INVESTMENT
SECURITIES
NET GAIN 22,157,969
(LOSS)
NET INCREASE $ 21,812,456
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
OTHER $ 304,729
INFORMATIO
N
SALES
CHARGES
PAID TO
FDC
SALES $ 15,196
CHARGES -
DEALERS'
PORTION
DEFERRED $ 739
SALES
CHARGES
WITHHELD
BY FDC
EXCHANGE $ 21,788
FEES
WITHHELD
BY FSC
EXPENSE $ 19,061
REDUCTIONS
DIRECTED
BROKERAGE
ARRANGEM
ENTS
CUSTODIA 264
N CREDITS
$ 19,325
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
FEBRUARY 28, FEBRUARY 28,
1998 1997
OPERATIONS $ (345,513) $ 1,133,306
NET
INVESTMENT
INCOME
(LOSS)
NET 11,157,423 3,649,321
REALIZED
GAIN (LOSS)
CHANGE IN 11,000,546 (9,287,117)
NET
UNREALIZED
APPRECIATI
ON
(DEPRECIATI
ON)
NET 21,812,456 (4,504,490)
INCREASE
(DECREAS
E) IN NET
ASSETS
RESULTING
FROM
OPERATIO
NS
DISTRIBUTIONS (2,764,701) (3,347,638)
TO
SHAREHOLD
ERS FROM
NET
REALIZED
GAINS
SHARE 123,445,992 42,427,132
TRANSACTIO
NS
NET
PROCEEDS
FROM SALES
OF SHARES
REINVESTM 2,725,416 3,294,839
ENT OF
DISTRIBUTIO
NS
COST OF (84,022,531) (78,777,876)
SHARES
REDEEMED
NET 42,148,877 (33,055,905)
INCREASE
(DECREAS
E) IN NET
ASSETS
RESULTING
FROM
SHARE
TRANSACTI
ONS
REDEMPTIO 117,385 109,141
N FEES
TOTAL 61,314,017 (40,798,892)
INCREASE
(DECREASE)
IN NET
ASSETS
NET ASSETS
BEGINNING 54,170,829 94,969,721
OF PERIOD
END OF $ 115,484,846 $ 54,170,829
PERIOD
(INCLUDIN
G
UNDISTRIB
UTED NET
INVESTME
NT
INCOME
(LOSS) OF
$(1,536
) AND
$1,484,
090,
RESPECTIV
ELY)
OTHER
INFORMATION
SHARES
SOLD 4,033,610 1,577,831
ISSUED IN 101,335 127,316
REINVESTME
NT OF
DISTRIBUTIO
NS
REDEEMED (2,869,891) (3,024,499)
NET 1,265,054 (1,319,352)
INCREASE
(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>
YEARS ENDED FEBRUARY 28, YEAR ENDED YEARS ENDED FEBRUARY 28,
FEBRUARY 29,
SELECTED PER-SHARE DATA 1998 1997 1996 1995 1994
</TABLE>
NET ASSET $ 24.91 $ 27.18 $ 22.35 $ 23.87 $ 18.26
VALUE,
BEGINNING
OF PERIOD
INCOME FROM
INVESTMENT
OPERATION
S
NET (.17) .35 D .02 (.01) (.10)
INVESTMENT
INCOME
(LOSS) C
NET 10.30 (1.58) 7.00 1.67 6.28
REALIZED
AND
UNREALIZED
GAIN (LOSS)
TOTAL FROM 10.13 (1.23) 7.02 1.66 6.18
INVESTMENT
OPERATIONS
LESS
DISTRIBUTIO
NS
FROM NET - - (.02) - -
INVESTMENT
INCOME
FROM NET (1.52) (1.07) (2.19) (3.21) (.65)
REALIZED
GAIN
TOTAL (1.52) (1.07) (2.21) (3.21) (.65)
DISTRIBUTIO
NS
REDEMPTION .06 .03 .02 .03 .08
FEES
ADDED TO
PAID IN
CAPITAL
NET ASSET $ 33.58 $ 24.91 $ 27.18 $ 22.35 $ 23.87
VALUE, END
OF PERIOD
TOTAL 42.42% (4.52)% 31.98% 9.35% 34.86%
RETURN A, B
RATIOS AND
SUPPLEME
NTAL DATA
NET ASSETS, $ 115,485 $ 54,171 $ 94,970 $ 38,157 $ 49,177
END OF
PERIOD
(000
OMITTED)
RATIO OF 1.75% 1.60% 1.56% 2.05% 1.66%
EXPENSES
TO AVERAGE
NET ASSETS
RATIO OF 1.71% E 1.56% E 1.54% E 2.03% E 1.63% E
EXPENSES
TO AVERAGE
NET ASSETS
AFTER
EXPENSE
REDUCTIONS
RATIO OF NET (.59)% 1.33% .08% (.07)% (.42)%
INVESTMENT
INCOME
(LOSS) TO
AVERAGE
NET ASSETS
PORTFOLIO 219% 99% 223% 107% 340%
TURNOVER
RATE
AVERAGE $ .0363 $ .0400
COMMISSIO
N RATE F
<TABLE>
<CAPTION>
<S> <C>
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. C
NET INVESTMENT INCOME (LOSS) PER
SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD. D
INVESTMENT INCOME PER SHARE REFLECTS A
SPECIAL DIVIDEND WHICH AMOUNTED TO $.49 PER SHARE. 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>
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). Load adjusted returns include a 3.00% sales
charge and the effect of a $7.50 trading fee. 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, 1998 YEAR YEARS YEARS
SELECT RETAILING 52.61% 136.07% 575.14%
SELECT RETAILING 47.96% 128.92% 554.82%
(LOAD ADJ.)
S&P 500 35.01% 166.84% 422.55%
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 Standard & Poor's
500 Index - 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, 1998 YEAR YEARS YEARS
SELECT RETAILING 52.61% 18.74% 21.04%
SELECT RETAILING 47.96% 18.01% 20.67%
(LOAD ADJ.)
S&P 500 35.01% 21.69% 17.98%
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 LONG-TERM GROWTH AND
SHORT-TERM VOLATILITY. 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
Retailing S&P 500
00046 SP001
1988/02/29 9700.00 10000.00
1988/03/31 9822.56 9691.00
1988/04/30 10128.97 9798.57
1988/05/31 9840.07 9883.82
1988/06/30 10706.77 10337.48
1988/07/31 10610.47 10298.20
1988/08/31 10584.21 9948.06
1988/09/30 11205.78 10371.85
1988/10/31 11442.15 10660.19
1988/11/30 11284.57 10507.75
1988/12/31 11341.53 10691.63
1989/01/31 11902.37 11474.26
1989/02/28 11742.13 11188.55
1989/03/31 12302.98 11449.25
1989/04/30 12997.35 12043.46
1989/05/31 13896.49 12531.22
1989/06/30 13649.09 12459.79
1989/07/31 14749.83 13584.91
1989/08/31 15465.30 13851.18
1989/09/30 15428.61 13794.39
1989/10/31 14685.62 13474.36
1989/11/30 14777.34 13749.23
1989/12/31 14690.79 14079.22
1990/01/31 13543.40 13134.50
1990/02/28 14015.22 13303.94
1990/03/31 15162.61 13656.49
1990/04/30 14948.14 13315.08
1990/05/31 16942.66 14613.30
1990/06/30 16728.19 14513.93
1990/07/31 16041.91 14467.48
1990/08/31 13736.42 13159.62
1990/09/30 12203.00 12518.75
1990/10/31 11634.67 12464.92
1990/11/30 13221.71 13270.15
1990/12/31 13951.72 13640.39
1991/01/31 15306.05 14235.11
1991/02/28 16724.87 15252.92
1991/03/31 18466.15 15622.04
1991/04/30 18724.12 15659.53
1991/05/31 20282.67 16336.03
1991/06/30 19637.75 15587.84
1991/07/31 20895.34 16314.23
1991/08/31 22002.45 16700.88
1991/09/30 21765.98 16421.97
1991/10/31 21357.53 16642.03
1991/11/30 20949.08 15971.35
1991/12/31 23457.48 17798.47
1992/01/31 24758.23 17467.42
1992/02/29 25948.74 17694.50
1992/03/31 25430.64 17349.46
1992/04/30 24394.46 17859.53
1992/05/31 24901.53 17947.04
1992/06/30 23739.15 17679.63
1992/07/31 24795.24 18402.73
1992/08/31 24232.76 18025.47
1992/09/30 24955.95 18238.17
1992/10/31 26666.36 18302.01
1992/11/30 28686.72 18926.11
1992/12/31 28636.02 19158.90
1993/01/31 28833.59 19319.83
1993/02/28 27741.14 19582.58
1993/03/31 29879.55 19995.77
1993/04/30 28164.53 19511.88
1993/05/31 29724.59 20034.79
1993/06/30 29010.06 20092.89
1993/07/31 29152.97 20012.52
1993/08/31 30486.76 20771.00
1993/09/30 31415.66 20611.06
1993/10/31 31903.92 21037.71
1993/11/30 32213.55 20837.85
1993/12/31 32367.74 21089.99
1994/01/31 30925.74 21807.05
1994/02/28 32071.61 21216.08
1994/03/31 31402.11 20291.06
1994/04/30 32354.86 20550.78
1994/05/31 30758.36 20887.82
1994/06/30 30500.86 20376.06
1994/07/31 31015.86 21044.40
1994/08/31 32985.74 21907.22
1994/09/30 32341.99 21370.49
1994/10/31 32483.61 21851.33
1994/11/30 31350.61 21055.50
1994/12/31 30745.49 21367.76
1995/01/31 30500.86 21921.82
1995/02/28 30784.11 22776.12
1995/03/31 31131.74 23448.24
1995/04/30 29921.49 24138.79
1995/05/31 30449.36 25103.62
1995/06/30 32393.49 25686.77
1995/07/31 34376.24 26538.55
1995/08/31 33899.86 26605.16
1995/09/30 34916.99 27727.90
1995/10/31 33359.11 27628.91
1995/11/30 35032.86 28841.82
1995/12/31 34427.74 29397.31
1996/01/31 33423.49 30398.00
1996/02/29 35882.61 30679.78
1996/03/31 38547.73 30975.23
1996/04/30 40800.86 31431.81
1996/05/31 42757.86 32242.43
1996/06/30 41998.23 32365.28
1996/07/31 37981.23 30935.38
1996/08/31 41573.36 31587.81
1996/09/30 43066.86 33365.57
1996/10/31 42217.11 34285.79
1996/11/30 43839.36 36877.45
1996/12/31 41609.55 36146.91
1997/01/31 41415.96 38405.37
1997/02/28 42913.07 38706.47
1997/03/31 43455.13 37116.02
1997/04/30 44122.48 39331.84
1997/05/31 46170.14 41726.37
1997/06/30 49104.68 43595.71
1997/07/31 54412.94 47064.62
1997/08/31 52587.00 44428.06
1997/09/30 55991.07 46861.38
1997/10/31 55678.05 45296.21
1997/11/30 59734.24 47392.97
1997/12/31 58971.19 48206.71
1998/01/31 59992.00 48739.88
1998/02/27 65482.00 52255.00
IMATRL PRASUN SHR__CHT 19980228 19980318 102124 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Retailing Portfolio on February 29, 1988,
and the current 3.00% sales charge was paid. As the chart shows, by
February 28, 1998, the value of the investment would have grown to
$65,482 - a 554.82% increase on the initial investment, and includes
the effect of a $7.50 trading fee. 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
$52,255 - a 422.55% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1998
% OF FUND'S
INVESTMENTS
CONSOLIDATED STORES CORP. 7.4
CVS CORP. 6.8
WAL-MART STORES, INC. 6.7
DAYTON HUDSON CORP. 6.2
SAFEWAY, INC. 5.9
FEDERATED DEPARTMENT STORES, INC. 5.7
TJX COMPANIES, INC. 5.6
MEYER (FRED), INC. 5.1
PROFFITTS, INC. 5.0
HOME DEPOT, INC. 4.6
TOP INDUSTRIES AS OF FEBRUARY 28, 1998
DEPARTMENT STORES 21.6%
GENERAL MERCHANDISE STORES 12.9%
DRUG STORES 11.3%
GENERAL APPAREL STORES 11.3%
GROCERY-RETAIL 9.6%
ALL OTHERS 33.3%
ROW: 1, COL: 1, VALUE: 33.3
ROW: 1, COL: 2, VALUE: 9.6
ROW: 1, COL: 3, VALUE: 11.3
ROW: 1, COL: 4, VALUE: 11.3
ROW: 1, COL: 5, VALUE: 12.9
ROW: 1, COL: 6, VALUE: 21.6
*
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
RETAILING PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Ramin Arani,
Portfolio Manager
of Fidelity Select
Retailing Portfolio
Q. HOW DID THE FUND PERFORM, RAMIN?
A. For the 12-month period ending February 28, 1998, the fund returned
52.61%, outperforming the Standard & Poor's 500 Index, which returned
35.01% over the same period.
Q. WHY DID THE FUND NOTABLY OUTPERFORM THE INDEX?
A. There were two main reasons. First, the retail sector was one of
the top-performing sectors over the period. It benefited from the
strong domestic economy and from steps retailers continued to take to
improve their profitability. Specifically, the trend with retailers
was to focus on improving profit margins and reducing inventories,
rather than chasing market share by building stores at lower rates of
return.
Q. YOU NOTED THERE WAS A SECOND REASON THE FUND DID WELL . . .
A. Right. The second main reason was that the fund continued to be
overweighted versus the index and similar funds in two industries that
were exceptionally strong performers - drug-store chains and discount
stores. Drug-store chains such as top-10 holding CVS benefited from
increased third-party penetration and new acquisitions. By third-party
penetration, I mean that an increasing number of these stores'
customers belong to an HMO or third-party payer through which they pay
only a small co-payment for prescription drugs. As a result, more
customers are buying presciption drugs because they're more
affordable. The fund also continued to benefit from its investment in
discount stores - primarily Wal-Mart and Dayton Hudson's Target and
Mervyn's stores. Wal-Mart had a great year in 1997, due mostly to its
emphasis on driving its return on investment - clearly reflecting the
retail trend we just discussed.
Q. WERE THERE OTHER REASONS THAT THE FUND TURNED IN A STRONG
PERFORMANCE OVER THE PERIOD?
A. Yes. The fund benefited from its holdings in the home-improvement
industry, including companies such as Lowe's and Home Depot - a top-10
holding - which continued to benefit from robust housing trends. These
stores also were helped by the fallout of competitors from the
industry, due mostly to bankruptcy.
Q. WE'VE ALREADY DISCUSSED SEVERAL OF THE FUND'S TOP-10 STOCKS THAT
WERE SOLID PERFORMERS. WERE THERE SOME OTHER STANDOUTS?
A. Definitely. Consolidated Stores - which is made up of several
discount businesses and Kay-Bee toy stores - moved to the fund's
number-one position over the period. The stock performed well because
toy sales were strong for much of 1997. Another top-10 holding, the
department store Proffitts, saw its earnings outlook improve after
acquiring retailer Carson Perry.
Q. DID MARKET JITTERS ABOUT THE DECLINES IN SOUTHEAST ASIA NEGATIVELY
IMPACT THE FUND?
A. No. As a matter of fact, the sector actually benefited from
Southeast Asia's problems over the last few months of the period. In
November, retail companies - especially supermarkets - got a boost in
performance as investors gravitated toward domestic industries.
Q. DID YOU EXPERIENCE ANY REGRETS OVER THE PERIOD?
A. Sure. As I just noted, supermarkets were one of the big
beneficiaries of the Asian crisis. However, for much of the period, I
avoided most supermarkets because the sales environment was weak. So,
when supermarkets picked up in November, I didn't own enough of them
to benefit from their upswing. Specifically, I missed out on
Albertson's and Kroger's - two supermarket chains that turned in
strong performances.
Q. RAMIN, HOW DOES THE FUND LOOK GOING FORWARD?
A. I think the first half of 1998 will look pretty good. The economy
seems to be fairly strong and retailers are continuing to show
discipline by keeping inventories conservative and cutting costs. I'm
less certain about the second half of the year because of possible
repercussions from the Southeast Asian fallout. On the positive side,
we could see lower product costs, which could mean better profit
margins for the retailers. On the negative side, if those lower
product costs cause extreme competition among U.S. retailers, we could
actually see deflation in some retail goods. We also don't know how
Asia's troubles will affect the overall U.S. economy. Ultimately, it
is unclear whether Asia's troubles will create an environment of
opportunity or risk for the sector and the fund in the second half of
1998. Until I see more effects from Asia, I will treat Asia as a
neutral for the fund.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET AND OTHER CONDITIONS
.
FUND FACTS
START DATE: DECEMBER 16, 1985
FUND NUMBER: 046
TRADING SYMBOL: FSRPX
SIZE: AS OF FEBRUARY 28, 1998, MORE THAN
$192 MILLION
MANAGER: RAMIN ARANI, SINCE 1997; JOINED
FIDELITY IN 1992
(CHECKMARK)
RETAILING PORTFOLIO
INVESTMENTS FEBRUARY 28, 1998
SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENT IN SECURITIES
COMMON STOCKS - 92.5%
SHARES VALUE (NOTE 1)
APPAREL STORES - 17.0%
FAMILY CLOTHING STORES - 1.5%
Stage Stores, Inc. (a) 70,700 $ 2,969,400
GENERAL APPAREL STORES - 11.3%
Gap, Inc. 190,250 8,501,797
Limited, Inc. (The) 81,000 2,349,000
TJX Companies, Inc. 279,300 10,787,960
21,638,757
SHOE STORES - 4.2%
Payless ShoeSource, Inc. (a) 119,100 8,009,475
TOTAL APPAREL STORES 32,617,632
DRUG STORES - 11.3%
CVS Corp. 176,159 13,046,776
Duane Reade, Inc. (a) 100 2,238
Rite Aid Corp. 105,000 3,399,375
Walgreen Co. 144,700 5,308,681
21,757,070
GENERAL MERCHANDISE STORES - 42.5%
DEPARTMENT STORES - 21.6%
Federated Department Stores, Inc. (a) 233,300 10,935,938
Kohls Corp. (a) 30,400 2,437,700
Meyer (Fred), Inc. (a) 221,100 9,825,131
Nordstrom, Inc. 36,000 2,064,375
Penney (J.C.) Co., Inc. 93,400 6,602,213
Proffitts, Inc. (a) 284,629 9,641,807
Stein Mart, Inc. (a) 500 16,156
41,523,320
GENERAL MERCHANDISE STORES - 12.9%
Dayton Hudson Corp. 155,200 11,998,900
Wal-Mart Stores, Inc. 276,800 12,819,300
24,818,200
VARIETY STORES - 8.0%
Consolidated Stores Corp. (a) 347,158 14,276,873
Costco Companies, Inc. (a) 9,800 478,975
Michaels Stores, Inc. (a) 18,300 622,200
15,378,048
TOTAL GENERAL MERCHANDISE STORES 81,719,568
GROCERY STORES - 9.6%
GROCERY - RETAIL - 9.6%
Albertson's, Inc. 80,600 3,773,088
Dominick's Supermarkets, Inc. (a) 57,400 2,611,700
Giant Food, Inc. Class A 12,400 450,275
Quality Food Centers, Inc. (a) 3,200 267,600
Safeway, Inc. (a) 324,974 11,333,468
18,436,131
REAL ESTATE INVESTMENT TRUSTS - 0.0%
Equity Office Properties Trust 100 2,950
RETAIL & WHOLESALE, MISCELLANEOUS - 11.1%
BUILDING MATERIALS - RETAIL - 4.6%
Home Depot, Inc. 139,000 8,869,938
LUMBER & BUILDING MATERIALS - RETAIL - 2.1%
Lowe's Companies, Inc. 67,900 3,967,906
MAIL ORDER - 0.2%
Viking Office Products, Inc. (a) 13,300 292,600
MUSIC, TV, & ELECTRONIC STORES - 0.7%
Best Buy Co., Inc. (a) 17,900 1,067,288
Circuit City Stores, Inc. -
Circuit City Group 7,300 281,963
1,349,251
SHARES VALUE (NOTE 1)
RETAIL, GENERAL - 3.5%
Bed Bath & Beyond, Inc. (a) 39,400 $ 1,701,588
Office Depot, Inc. (a) 60,800 1,675,800
Staples, Inc. (a) 161,400 3,409,575
6,786,963
TOTAL RETAIL & WHOLESALE, MISCELLANEOUS 21,266,658
SERVICES - 1.0%
PERSONAL SERVICES - 1.0%
Cendant Corp. (a) 49,168 1,843,800
TEXTILES & APPAREL - 0.0%
APPAREL - 0.0%
Polo Ralph Lauren Corp. Class A 200 5,649
TOTAL COMMON STOCKS
(Cost $156,300,459) 177,649,458
CASH EQUIVALENTS - 7.5%
Taxable Central Cash Fund (b)
(Cost $14,396,961) 14,396,961 14,396,961
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $170,697,420) $ 192,046,419
LEGEND
1. Non-income producing
2. At period end, the seven-day yield on the Taxable Central Cash Fund
was 5.62%. 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 $525,718,908 and $423,554,501, 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 $132,299 for the
period (see Note 4 of Notes to Financial Statements).
The fund participated in the security lending program. At the period
end, there were no loans outstanding (see Note 6 of Notes to Financial
Statements).
The fund participated in the bank borrowing program. The maximum loan
and the average daily loan balances during the periods for which loans
were outstanding amounted to $35,549,000 and $11,612,400,
respectively. The weighted average interest rate paid was 5.9% (see
Note 7 of Notes to Financial Statements).
INCOME TAX INFORMATION
At February 28, 1998, the aggregate cost of investment securities for
income tax purposes was $172,579,940. Net unrealized appreciation
aggregated $19,466,479, of which $22,068,395 related to appreciated
investment securities and $2,601,916 related to depreciated investment
securities.
The fund hereby designates approximately $2,429,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 23% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate
shareholders (unaudited).
The fund will notify shareholders in January 1999 of this percentage
for use in preparing 1998 income tax returns.
RETAILING PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1998
ASSETS
INVESTMENT IN $ 192,046,419
SECURITIES,
AT VALUE
(COST
$170,697
,420) -
SEE
ACCOMPAN
YING
SCHEDULE
RECEIVABLE 1,798,954
FOR FUND
SHARES
SOLD
DIVIDENDS 60,743
RECEIVABLE
INTEREST 40,211
RECEIVABLE
REDEMPTION 287
FEES
RECEIVABLE
OTHER 27,473
RECEIVABLE
S
TOTAL 193,974,087
ASSETS
LIABILITIES
PAYABLE FOR $ 56,274
INVESTMENT
S
PURCHASED
PAYABLE FOR 834,761
FUND
SHARES
REDEEMED
ACCRUED 89,450
MANAGEM
ENT FEE
OTHER 132,926
PAYABLES
AND
ACCRUED
EXPENSES
TOTAL 1,113,411
LIABILITIES
NET ASSETS $ 192,860,676
NET ASSETS
CONSIST OF:
PAID IN $ 168,881,578
CAPITAL
ACCUMULATED 2,630,099
UNDISTRIBUT
ED NET
REALIZED
GAIN (LOSS)
ON
INVESTMENT
S AND
FOREIGN
CURRENCY
TRANSACTIO
NS
NET 21,348,999
UNREALIZED
APPRECIATI
ON
(DEPRECIATI
ON) ON
INVESTMENT
S
NET ASSETS, $ 192,860,676
FOR
3,854,49
7
SHARES
OUTSTANDIN
G
NET ASSET $50.04
VALUE AND
REDEMPTIO
N PRICE
PER SHARE
($192,86
0,676 (DIVIDED BY)
3,854,49
7 SHARES)
MAXIMUM $51.59
OFFERING
PRICE PER
SHARE
(100/97.
00 OF
$50.04)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1998
INVESTMENT $ 669,382
INCOME
DIVIDENDS
INTEREST 686,692
(INCLUDING
INCOME ON
SECURITIES
LOANED OF
$36,716)
TOTAL 1,356,074
INCOME
EXPENSES
MANAGEMEN $ 911,425
T FEE
TRANSFER 1,191,055
AGENT FEES
ACCOUNTING 155,711
AND
SECURITY
LENDING
FEES
NON-INTEREST 752
ED
TRUSTEES'
COMPENSAT
ION
CUSTODIAN 24,073
FEES AND
EXPENSES
REGISTRATION 133,439
FEES
AUDIT 29,467
LEGAL 931
INTEREST 39,944
MISCELLANEO 905
US
TOTAL 2,487,702
EXPENSES
BEFORE
REDUCTIONS
EXPENSE (112,475) 2,375,227
REDUCTIONS
NET (1,019,153)
INVESTMEN
T INCOME
(LOSS)
REALIZED
AND
UNREALIZED
GAIN (LOSS)
NET REALIZED
GAIN (LOSS)
ON:
INVESTMENT 6,176,964
SECURITIES
FOREIGN 505 6,177,469
CURRENCY
TRANSACTIO
NS
CHANGE IN 16,637,718
NET
UNREALIZED
APPRECIATI
ON
(DEPRECIATI
ON) ON
INVESTMENT
SECURITIES
NET GAIN 22,815,187
(LOSS)
NET INCREASE $ 21,796,034
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
OTHER $ 622,003
INFORMATIO
N
SALES
CHARGES
PAID TO
FDC
SALES $ 3,413
CHARGES -
DEALERS'
PORTION
DEFERRED $ 2,757
SALES
CHARGES
WITHHELD
BY FDC
EXCHANGE $ 127,110
FEES
WITHHELD
BY FSC
EXPENSE $ 111,486
REDUCTIONS
DIRECTED
BROKERAGE
ARRANGEM
ENTS
CUSTODIA 989
N CREDITS
$ 112,475
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
FEBRUARY 28, FEBRUARY 28,
1998 1997
OPERATIONS $ (1,019,153) $ (863,712)
NET
INVESTMENT
INCOME
(LOSS)
NET 6,177,469 7,830,939
REALIZED
GAIN (LOSS)
CHANGE IN 16,637,718 2,577,741
NET
UNREALIZED
APPRECIATI
ON
(DEPRECIATI
ON)
NET 21,796,034 9,544,968
INCREASE
(DECREAS
E) IN NET
ASSETS
RESULTING
FROM
OPERATIO
NS
DISTRIBUTIONS (3,631,382) (523,662)
TO
SHAREHOLD
ERS FROM
NET
REALIZED
GAINS
SHARE 722,604,794 606,855,160
TRANSACTIO
NS
NET
PROCEEDS
FROM SALES
OF SHARES
REINVESTM 3,609,234 520,661
ENT OF
DISTRIBUTIO
NS
COST OF (612,476,826) (601,757,660)
SHARES
REDEEMED
NET 113,737,202 5,618,161
INCREASE
(DECREAS
E) IN NET
ASSETS
RESULTING
FROM
SHARE
TRANSACTI
ONS
REDEMPTIO 1,610,457 657,715
N FEES
TOTAL 133,512,311 15,297,182
INCREASE
(DECREASE)
IN NET
ASSETS
NET ASSETS
BEGINNING 59,348,365 44,051,183
OF PERIOD
END OF $ 192,860,676 $ 59,348,365
PERIOD
OTHER
INFORMATION
SHARES
SOLD 17,451,277 19,012,106
ISSUED IN 95,408 15,768
REINVESTME
NT OF
DISTRIBUTIO
NS
REDEEMED (15,477,247) (18,823,522)
NET 2,069,438 204,352
INCREASE
(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>
YEARS ENDED FEBRUARY 28, YEAR ENDED YEARS ENDED FEBRUARY 28,
FEBRUARY 29,
SELECTED PER-SHARE DATA 1998 1997 1996 1995 1994
</TABLE>
NET ASSET $ 33.25 $ 27.87 $ 23.91 $ 24.91 $ 23.87
VALUE,
BEGINNING
OF PERIOD
INCOME FROM
INVESTMENT
OPERATION
S
NET (.27) (.13) (.14) (.18) (.22)
INVESTMENT
INCOME
(LOSS) C
NET 17.14 5.49 4.07 (.96) 3.85
REALIZED
AND
UNREALIZED
GAIN (LOSS)
TOTAL FROM 16.87 5.36 3.93 (1.14) 3.63
INVESTMENT
OPERATIONS
LESS
DISTRIBUTIO
NS
FROM NET (.51) (.08) - - (2.63)
REALIZED
GAIN
REDEMPTION .43 .10 .03 .14 .04
FEES
ADDED TO
PAID IN
CAPITAL
NET ASSET $ 50.04 $ 33.25 $ 27.87 $ 23.91 $ 24.91
VALUE, END
OF PERIOD
TOTAL 52.61% 19.59% 16.56% (4.01)% 15.61%
RETURN A, B
RATIOS AND
SUPPLEME
NTAL DATA
NET ASSETS, $ 192,861 $ 59,348 $ 44,051 $ 31,090 $ 52,790
END OF
PERIOD
(000
OMITTED)
RATIO OF 1.63% 1.45% 1.94% 2.07% 1.86%
EXPENSES
TO AVERAGE
NET ASSETS
RATIO OF 1.55% D 1.39% D 1.92% D 1.96% D 1.83% D
EXPENSES
TO AVERAGE
NET ASSETS
AFTER
EXPENSE
REDUCTIONS
RATIO OF NET (.67)% (.39)% (.53)% (.74)% (.87)%
INVESTMENT
INCOME
(LOSS) TO
AVERAGE
NET ASSETS
PORTFOLIO 308% 278% 235% 481% 154%
TURNOVER
RATE
AVERAGE $ .0405 $ .0403
COMMISSIO
N RATE E
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
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). BTOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE. CNET
INVESTMENT INCOME (LOSS) PER SHARE HAS
BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD. DFMR 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). EFOR
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). Load adjusted returns include a 3.00% sales
charge and the effect of a $7.50 trading fee. 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, 1998 YEAR YEARS YEARS
SELECT AIR TRANSPORTATION 61.10% 137.43% 325.88%
SELECT AIR TRANSPORTATION 56.20% 130.23% 313.03%
(LOAD ADJ.)
S&P 500 35.01% 166.84% 422.55%
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 Standard & Poor's
500 Index - a widely recognized, unmanaged index of common stocks.
This benchmark includes 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, 1998 YEAR YEARS YEARS
SELECT AIR TRANSPORTATION 61.10% 18.88% 15.59%
SELECT AIR TRANSPORTATION 56.20% 18.15% 15.24%
(LOAD ADJ.)
S&P 500 35.01% 21.69% 17.98%
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 LONG-TERM GROWTH AND
SHORT-TERM VOLATILITY. UNLIKE THE BROADER MARKET,
HOWEVER, SOME SECTORS MAY NOT HAVE A HISTORY
OF GROWTH IN THE LONG RUN. AND, AS WITH ALL STOCK
FUNDS, THE SHARE PRICE AND RETURN OF A FUND THAT
INVESTS IN A SECTOR WILL VARY. THAT MEANS IF YOU
SELL YOUR SHARES DURING A SECTOR DOWNTURN, YOU
MIGHT LOSE MONEY. BUT IF YOU CAN IDENTIFY A
SECTOR THAT IS ABOUT TO EXPERIENCE RAPID GROWTH
YOU MAY HAVE THE POTENTIAL FOR ABOVE-AVERAGE
GAINS.
(CHECKMARK)
$10,000 OVER 10 YEARS
IMAHDR PRASUN SHR__CHT 19980228 19980306 130028 S00000000000001
AIR TRANSPORTATION S&P 500
00034 SP001
1988/02/29 9700.00 10000.00
1988/03/31 10118.20 9691.00
1988/04/30 10002.04 9798.57
1988/05/31 9851.02 9883.82
1988/06/30 11117.25 10337.48
1988/07/31 10791.98 10298.20
1988/08/31 10187.90 9948.06
1988/09/30 10861.68 10371.85
1988/10/31 11070.78 10660.19
1988/11/30 10815.21 10507.75
1988/12/31 11245.03 10691.63
1989/01/31 12290.54 11474.26
1989/02/28 12522.87 11188.55
1989/03/31 13150.18 11449.25
1989/04/30 13672.93 12043.46
1989/05/31 14021.44 12531.22
1989/06/30 13951.35 12459.79
1989/07/31 14933.67 13584.91
1989/08/31 16068.02 13851.18
1989/09/30 15436.53 13794.39
1989/10/31 14220.32 13474.36
1989/11/30 14079.99 13749.23
1989/12/31 14206.18 14079.22
1990/01/31 12744.14 13134.50
1990/02/28 13280.22 13303.94
1990/03/31 13974.69 13656.49
1990/04/30 13462.97 13315.08
1990/05/31 14401.12 14613.30
1990/06/30 14437.67 14513.93
1990/07/31 13999.05 14467.48
1990/08/31 11781.62 13159.62
1990/09/30 10599.81 12518.75
1990/10/31 11160.26 12464.92
1990/11/30 10989.68 13270.15
1990/12/31 11623.24 13640.39
1991/01/31 12999.99 14235.11
1991/02/28 14462.03 15252.92
1991/03/31 14401.12 15622.04
1991/04/30 14047.79 15659.53
1991/05/31 14876.28 16336.03
1991/06/30 14562.60 15587.84
1991/07/31 15010.30 16314.23
1991/08/31 14823.76 16700.88
1991/09/30 14326.32 16421.97
1991/10/31 15022.74 16642.03
1991/11/30 14351.19 15971.35
1991/12/31 15930.57 17798.47
1992/01/31 16850.83 17467.42
1992/02/29 17609.43 17694.50
1992/03/31 16577.24 17349.46
1992/04/30 15719.15 17859.53
1992/05/31 15930.57 17947.04
1992/06/30 15413.26 17679.63
1992/07/31 15324.68 18402.73
1992/08/31 14679.30 18025.47
1992/09/30 15160.17 18238.17
1992/10/31 15704.32 18302.01
1992/11/30 16083.95 18926.11
1992/12/31 16976.85 19158.90
1993/01/31 17130.37 19319.83
1993/02/28 17399.04 19582.58
1993/03/31 19318.05 19995.77
1993/04/30 19536.42 19511.88
1993/05/31 20652.42 20034.79
1993/06/30 19113.11 20092.89
1993/07/31 19767.32 20012.52
1993/08/31 20947.46 20771.00
1993/09/30 20524.15 20611.06
1993/10/31 21704.29 21037.71
1993/11/30 21755.60 20837.85
1993/12/31 22220.53 21089.99
1994/01/31 23078.67 21807.05
1994/02/28 22259.54 21216.08
1994/03/31 20972.33 20291.06
1994/04/30 20834.41 20550.78
1994/05/31 19963.43 20887.82
1994/06/30 19355.13 20376.06
1994/07/31 20364.36 21044.40
1994/08/31 21138.57 21907.22
1994/09/30 18774.48 21370.49
1994/10/31 18926.55 21851.33
1994/11/30 17668.47 21055.50
1994/12/31 17389.01 21367.76
1995/01/31 17948.59 21921.82
1995/02/28 19487.44 22776.12
1995/03/31 20746.50 23448.24
1995/04/30 22411.25 24138.79
1995/05/31 22774.98 25103.62
1995/06/30 25656.83 25686.77
1995/07/31 26524.18 26538.55
1995/08/31 25502.94 26605.16
1995/09/30 26440.24 27727.90
1995/10/31 26132.47 27628.91
1995/11/30 29503.95 28841.82
1995/12/31 27742.24 29397.31
1996/01/31 27113.04 30398.00
1996/02/29 30187.56 30679.78
1996/03/31 31731.98 30975.23
1996/04/30 30403.03 31431.81
1996/05/31 30692.44 32242.43
1996/06/30 30547.73 32365.28
1996/07/31 25540.86 30935.38
1996/08/31 25077.79 31587.81
1996/09/30 24773.91 33365.57
1996/10/31 24542.38 34285.79
1996/11/30 27537.82 36877.45
1996/12/31 28087.71 36146.91
1997/01/31 26987.93 38405.37
1997/02/28 25642.15 38706.47
1997/03/31 27219.46 37116.02
1997/04/30 28709.95 39331.84
1997/05/31 30706.91 41726.37
1997/06/30 31068.68 43595.71
1997/07/31 32935.41 47064.62
1997/08/31 31676.45 44428.06
1997/09/30 34266.71 46861.38
1997/10/31 33962.83 45296.21
1997/11/30 34831.07 47392.97
1997/12/31 36834.93 48206.71
1998/01/31 38234.51 48739.88
1998/02/27 41302.99 52255.00
IMATRL PRASUN SHR__CHT 19980228 19980306 130031 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Air Transportation Portfolio on February
29, 1988, and the current 3.00% sales charge was paid. As the chart
shows, by February 28, 1998, the value of the investment would have
grown to $41,303 - a 313.03% increase on the initial investment, and
includes the effect of a $7.50 trading fee. 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 $52,255 - a 422.55% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1998
% OF FUND'S
INVESTMENTS
ALASKA AIR GROUP, INC. 7.8
ATLANTIC COAST AIRLINES, INC. 6.6
CONTINENTAL AIRLINES, INC. CLASS B 6.4
US AIRWAYS GROUP, INC. 6.1
AMR CORP. 6.1
SKYWEST, INC. 5.5
GULFSTREAM AEROSPACE CORP. 5.1
LOCKHEED MARTIN CORP. 5.1
SOUTHWEST AIRLINES CO. 5.0
AIR CANADA, INC. 4.8
TOP INDUSTRIES AS OF FEBRUARY 28, 1998
AIR TRANSPORTATION, MAJOR
NATIONAL 54.8%
AIRCRAFT 10.2%
AIR TRANSPORTATION, REGIONAL 9.6%
AIR COURIER SERVICES 5.3%
FREIGHT FORWARDING 4.5%
ALL OTHERS 15.6%
ROW: 1, COL: 1, VALUE: 20.0
ROW: 1, COL: 2, VALUE: 4.1
ROW: 1, COL: 3, VALUE: 5.3
ROW: 1, COL: 4, VALUE: 9.6
ROW: 1, COL: 5, VALUE: 10.2
ROW: 1, COL: 6, VALUE: 54.8
*
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
AIR TRANSPORTATION PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Peter Saperstone,
Portfolio Manager
of Fidelity Select Air
Transportation Portfolio
Q. HOW DID THE FUND PERFORM, PETER?
A. It was an incredibly strong year for the air transportation sector
and the fund's performance reflects that. For the 12-month period that
ended February 28, 1998, the fund returned 61.10%. This topped the
Standard & Poor's 500 Index, which returned 35.01% over the same
period.
Q. WHAT ACCOUNTED FOR THE SECTOR'S STRONG SHOWING?
A. Nearly everything lined up in favor of air transportation
companies. This industry is most successful when demand outpaces
supply, and that's exactly what occurred over the past 12 months.
Capacity - which measures the number of seats available - grew only 2%
over the past year. Meanwhile, the strong economy helped boost air
traffic by between 4% and 5%. As a consequence of this favorable
supply/demand scenario, the load factor - which is the percentage of
seats on a flight occupied by passengers - increased and the airlines
were able to increase fares. Furthermore, the second half of the year
saw the airlines' costs fall. Energy prices declined by 10% to 15% and
the airlines cut the commissions they pay to travel agents by as much
as 20%. The net result of higher revenues and falling costs translated
into very good earnings for many air carriers.
Q. WHAT FACTORS DROVE THE FUND'S PERFORMANCE?
A. In light of the expanding economic crisis in Southeast Asia and its
negative effects on airlines that serve the region, my emphasis on
domestically oriented carriers benefited the fund. While the fund had
some investments in carriers with international exposure in the first
half of the year, I had pared or eliminated the fund's stake in most
of them by mid-year to focus on predominantly domestic carriers, which
I felt offered better business fundamentals.
Q. WHICH OF THE DOMESTICALLY ORIENTED CARRIERS PERFORMED THE BEST?
A. The stock prices of many of the fund's domestic-oriented companies
- - including US Airways, Southwest Airlines, Continental Airlines,
Alaska Air Group and America West - posted significant gains. The fund
also earned good returns from some of its regional carrier holdings
including Atlantic Coast Airlines and SkyWest.
Q. ASIDE FROM AIRLINES, WHERE DID THE OTHER WINNERS COME FROM?
A. Gulfstream Aerospace - which designs and manufactures
intercontinental business-jet aircraft for clients including
corporations, governments and individuals - turned in a strong
performance. The company reported record sales and earnings in 1997
due to strong deliveries and strong free cash flow.
Q. WERE THERE ANY DISAPPOINTMENTS DURING THE PERIOD?
A. In general, I was very happy with the fund's performance. That
said, the stock price of reservations-system Sabre Group stumbled on
lower-than-expected earnings due to an increase in its costs, and was
a modest detractor from the fund's performance before I sold it.
Q. WHAT'S YOUR OUTLOOK?
A. I'm reasonably optimistic about the next six months. Strong
earnings growth drove air transportation stocks higher over the past
year, and I believe that it can do so again over the near term.
Looking further out, I'm slightly more cautious. I expect capacity
will begin to increase in 1999 by about 4% or 5% annually from the
current 2% growth rate. In order to digest that added capacity, the
economy will have to remain strong. If the economy weakens and demand
slows, earnings could suffer. Since stock prices usually anticipate
earnings six months in advance, it may be tough for air transportation
stocks to turn in the same strong returns they posted over the past
year.
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, 1998, more than
$181 million
MANAGER: Peter Saperstone, since June 1997;
manager, Fidelity Select Defense & Aerospace
Portfolio, since June 1997; Fidelity Select
Construction and Housing Portfolio, 1996-1997;
equity analyst, defense/aerospace and airlines,
since 1997; building materials and appliances,
since 1996; textile, apparel and footwear
industries, since 1995; joined Fidelity in 1995
(checkmark)
AIR TRANSPORTATION PORTFOLIO
INVESTMENTS FEBRUARY 28, 1998
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 90.7%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 11.0%
AIRCRAFT - 10.2%
Gulfstream Aerospace Corp. (a) 232,400 $ 9,412,200
Lockheed Martin Corp. 80,000 9,335,000
18,747,200
AIRCRAFT & PARTS - 0.3%
Sundstrand Corp. 7,900 477,950
AIRCRAFT ENGINES & PARTS - 0.5%
United Technologies Corp. 11,000 982,438
TOTAL AEROSPACE & DEFENSE 20,207,588
AIR TRANSPORTATION - 66.6%
AIR TRANSPORTATION MAJOR NATIONAL - 54.8%
AMR Corp. (a) 87,800 11,112,188
Air Canada, Inc. (a) 962,900 8,825,879
AirTran Holdings, Inc. (a) 1,000 5,813
Air New Zealand Ltd. Class B 455,200 678,754
Alaska Air Group, Inc. (a) 260,300 14,332,769
America West Airlines, Inc.
Class B (warrants) (a) 8,200 109,163
America West Holding Corp. Class B 261,900 6,498,394
Amtran, Inc. (a) 1,000 10,500
ASA Holdings, Inc. 10,900 438,725
Atlantic Coast Airlines, Inc. (a) 280,500 12,166,688
Atlas Air, Inc. (a) 187,300 5,572,175
British Airways PLC ADR. 5,000 475,000
Continental Airlines, Inc. Class B (a) 232,800 11,698,200
Delta Air Lines, Inc. 10,700 1,209,769
Deutsche Lufthansa AG (Reg.) (c) 12,800 245,361
Deutsche Lufthansa AG (Reg.) 15,300 293,283
Mesaba Holdings, Inc. (a) 27,200 788,800
Northwest Airlines Corp. Class A (a) 900 52,988
Pan Am Corp. (a) 5,900 -
Southwest Airlines Co. 320,800 9,202,950
Trans World Airlines, Inc. (a) 419,200 5,449,600
US Airways Group, Inc. (a) 178,000 11,269,620
100,436,619
AIR TRANSPORTATION, REGIONAL - 9.6%
Comair Holdings, Inc. 192,850 5,134,631
Midwest Express Holdings, Inc. (a) 27,300 1,327,463
SkyWest, Inc. 257,900 10,058,100
Virgin Express Holdings PLC
sponsored ADR 53,000 1,113,000
17,633,194
TRANSPORTATION SERVICES - 2.2%
Travel Services International, Inc. 143,100 4,024,688
TOTAL AIR TRANSPORTATION 122,094,501
AUTOS, TIRES, & ACCESSORIES - 0.6%
AUTO DEALERS, NEC - RETAIL - 0.6%
Aviation Sales Co. (a) 29,800 1,136,125
INDUSTRIAL MACHINERY & EQUIPMENT - 2.7%
MACHINERY - WHOLESALE - 2.7%
AVTEAM, Inc. Class A 425,900 5,004,325
SHARES VALUE (NOTE 1)
TRUCKING & FREIGHT - 9.8%
AIR COURIER SERVICES - 5.3%
Airborne Freight Corp. 134,200 $ 4,856,363
AirNet Systems, Inc. (a) 20,000 535,000
FDX Corp. (a) 67,900 4,324,381
9,715,744
FREIGHT FORWARDING - 4.5%
Air Express International Corp. 146,900 4,113,200
Eagle USA Airfreight, Inc. (a) 40,000 1,145,000
Expeditors International of
Washington, Inc. 53,300 2,158,650
Fritz Companies, Inc. (a) 10,000 138,750
Pittston Co. (Burlington Group) 30,000 661,875
8,217,475
TOTAL TRUCKING & FREIGHT 17,933,219
TOTAL COMMON STOCKS
(Cost $151,288,350) 166,375,758
CASH EQUIVALENTS - 9.3%
Taxable Central Cash Fund (b)
(Cost $16,980,033) 16,980,033 16,980,033
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $168,268,383) $ 183,355,791
LEGEND
1. Non-income producing
2. At period end, the seven-day yield on the Taxable Central Cash Fund
was 5.62%. 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 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 $245,361 or 0.1% of net assets.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $282,578,667 and $181,404,631, respectively (see Note 3 of
Notes to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company.
The commissions paid to these affiliated firms were $70,756 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 loan balances during the periods for which loans
were outstanding amounted to $9,339,000 and $3,387,091 respectively.
The weighted average interest rate paid was 5.8% (see Note 7 of Notes
to Financial Statements).
INCOME TAX INFORMATION
At February 28, 1998, the aggregate cost of investment securities for
income tax purposes was $168,515,571. Net unrealized appreciation
aggregated $14,840,220, of which $17,830,327 related to appreciated
investment securities and $2,990,107 related to depreciated investment
securities.
A total of 5% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate
shareholders (unaudited).
The fund will notify shareholders in January 1999 of this percentage
for use in preparing 1998 income tax returns.
AIR TRANSPORTATION PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1998
ASSETS
INVESTMENT IN $ 183,355,791
SECURITIES,
AT VALUE
(COST
$168,268
,383) -
SEE
ACCOMPAN
YING
SCHEDULE
CASH 428,119
RECEIVABLE 2,459,744
FOR FUND
SHARES
SOLD
DIVIDENDS 6,144
RECEIVABLE
INTEREST 68,457
RECEIVABLE
REDEMPTION 4,814
FEES
RECEIVABLE
OTHER 225
RECEIVABLE
S
TOTAL 186,323,294
ASSETS
LIABILITIES
PAYABLE FOR $ 1,643,554
INVESTMENT
S
PURCHASED
PAYABLE FOR 3,305,168
FUND
SHARES
REDEEMED
ACCRUED 73,660
MANAGEM
ENT FEE
OTHER 115,819
PAYABLES
AND
ACCRUED
EXPENSES
TOTAL 5,138,201
LIABILITIES
NET ASSETS $ 181,185,093
NET ASSETS
CONSIST OF:
PAID IN $ 161,980,415
CAPITAL
ACCUMULATED 4,117,270
UNDISTRIBUT
ED NET
REALIZED
GAIN (LOSS)
ON
INVESTMENT
S AND
FOREIGN
CURRENCY
TRANSACTIO
NS
NET 15,087,408
UNREALIZED
APPRECIATI
ON
(DEPRECIATI
ON) ON
INVESTMENT
S
NET ASSETS, $ 181,185,093
FOR
6,744,86
2
SHARES
OUTSTANDIN
G
NET ASSET $26.86
VALUE AND
REDEMPTIO
N PRICE
PER SHARE
($181,18
5,093 (DIVIDED BY)
6,744,86
2 SHARES)
MAXIMUM $27.69
OFFERING
PRICE PER
SHARE
(100/97.
00 OF
$26.86)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1998
INVESTMENT $ 345,781
INCOME
DIVIDENDS
INTEREST 295,209
TOTAL 640,990
INCOME
EXPENSES
MANAGEMEN $ 378,349
T FEE
TRANSFER 618,195
AGENT FEES
ACCOUNTING 73,865
FEES AND
EXPENSES
NON-INTEREST 235
ED
TRUSTEES'
COMPENSAT
ION
CUSTODIAN 19,880
FEES AND
EXPENSES
REGISTRATION 81,644
FEES
AUDIT 30,198
LEGAL 318
INTEREST 6,029
MISCELLANEO 633
US
TOTAL 1,209,346
EXPENSES
BEFORE
REDUCTIONS
EXPENSE (39,289) 1,170,057
REDUCTIONS
NET (529,067)
INVESTMEN
T INCOME
(LOSS)
REALIZED
AND
UNREALIZED
GAIN (LOSS)
NET REALIZED
GAIN (LOSS)
ON:
INVESTMENT 13,120,116
SECURITIES
FOREIGN (21,071) 13,099,045
CURRENCY
TRANSACTIO
NS
CHANGE IN 17,664,167
NET
UNREALIZED
APPRECIATI
ON
(DEPRECIATI
ON) ON
INVESTMENT
SECURITIES
NET GAIN 30,763,212
(LOSS)
NET INCREASE $ 30,234,145
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
OTHER $ 299,325
INFORMATIO
N
SALES
CHARGES
PAID TO
FDC
SALES $ 8,551
CHARGES -
DEALERS'
PORTION
DEFERRED $ 946
SALES
CHARGES
WITHHELD
BY FDC
EXCHANGE $ 53,730
FEES
WITHHELD
BY FSC
EXPENSE $ 35,987
REDUCTIONS
DIRECTED
BROKERAGE
ARRANGEM
ENTS
CUSTODIA 2,001
N CREDITS
TRANSFER 1,301
AGENT
CREDITS
$ 39,289
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
FEBRUARY 28, FEBRUARY 28,
1998 1997
OPERATIONS $ (529,067) $ (979,722)
NET
INVESTMENT
INCOME
(LOSS)
NET 13,099,045 (3,349,104)
REALIZED
GAIN (LOSS)
CHANGE IN 17,664,167 (6,154,936)
NET
UNREALIZED
APPRECIATI
ON
(DEPRECIATI
ON)
NET 30,234,145 (10,483,762)
INCREASE
(DECREAS
E) IN NET
ASSETS
RESULTING
FROM
OPERATIO
NS
DISTRIBUTIONS (3,545,132) (609,796)
TO
SHAREHOLD
ERS
FROM NET
REALIZED
GAIN
IN EXCESS - (1,596,628)
OF NET
REALIZED
GAIN
TOTAL (3,545,132) (2,206,424)
DISTRIBUTIO
NS
SHARE 317,061,095 442,243,515
TRANSACTIO
NS
NET
PROCEEDS
FROM SALES
OF SHARES
REINVESTM 3,512,172 2,188,450
ENT OF
DISTRIBUTIO
NS
COST OF (202,499,252) (472,146,987)
SHARES
REDEEMED
NET 118,074,015 (27,715,022)
INCREASE
(DECREAS
E) IN NET
ASSETS
RESULTING
FROM
SHARE
TRANSACTI
ONS
REDEMPTIO 464,487 1,004,107
N FEES
TOTAL 145,227,515 (39,401,101)
INCREASE
(DECREASE)
IN NET
ASSETS
NET ASSETS
BEGINNING 35,957,578 75,358,679
OF PERIOD
END OF $ 181,185,093 $ 35,957,578
PERIOD
OTHER
INFORMATION
SHARES
SOLD 13,782,585 22,183,259
ISSUED IN 154,313 96,706
REINVESTME
NT OF
DISTRIBUTIO
NS
REDEEMED (9,221,113) (23,821,393)
NET 4,715,785 (1,541,428)
INCREASE
(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>
YEARS ENDED FEBRUARY 28, YEAR ENDED YEARS ENDED FEBRUARY 28,
FEBRUARY 29,
SELECTED PER-SHARE DATA 1998 1997 1996 1995 1994
</TABLE>
NET ASSET $ 17.72 $ 21.11 $ 13.93 $ 17.12 $ 13.60
VALUE,
BEGINNING
OF PERIOD
INCOME FROM
INVESTMENT
OPERATION
S
NET (.19) (.22) (.01) (.18) (.18)
INVESTMENT
INCOME
(LOSS) C
NET 10.59 (3.12) 7.47 (2.01) 3.78
REALIZED
AND
UNREALIZED
GAIN (LOSS)
TOTAL FROM 10.40 (3.34) 7.46 (2.19) 3.60
INVESTMENT
OPERATIONS
LESS
DISTRIBUTIO
NS
FROM NET (1.43) (.07) (.46) (.92) (.22)
REALIZED
GAIN
IN EXCESS - (.20) - (.17) (.05)
OF NET
REALIZED
GAIN
TOTAL (1.43) (.27) (.46) (1.09) (.27)
DISTRIBUTIO
NS
REDEMPTION .17 .22 .18 .09 .19
FEES
ADDED TO
PAID IN
CAPITAL
NET ASSET $ 26.86 $ 17.72 $ 21.11 $ 13.93 $ 17.12
VALUE, END
OF PERIOD
TOTAL 61.10% (15.06)% 54.91% (12.45)% 27.94%
RETURN A, B
RATIOS AND
SUPPLEME
NTAL DATA
NET ASSETS, $ 181,185 $ 35,958 $ 75,359 $ 18,633 $ 11,035
END OF
PERIOD
(000
OMITTED)
RATIO OF 1.93% 1.89% 1.47% 2.50% D 2.33%
EXPENSES
TO AVERAGE
NET ASSETS
RATIO OF 1.87% E 1.80% E 1.41% E 2.50% 2.31% E
EXPENSES
TO AVERAGE
NET ASSETS
AFTER
EXPENSE
REDUCTIONS
RATIO OF NET (.84)% (1.10)% (.07)% (1.31)% (1.11)%
INVESTMENT
INCOME
(LOSS) TO
AVERAGE
NET ASSETS
PORTFOLIO 294% 469% 504% 200% 171%
TURNOVER
RATE
AVERAGE $ .0270 $ .0409
COMMISSIO
N RATE F
<TABLE>
<CAPTION>
<S> <C>
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. C NET
INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD. D 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). 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>
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). Load adjusted returns include a 3.00% sales
charge and the effect of a $7.50 trading fee. 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, 1998 YEAR YEARS YEARS
SELECT AUTOMOTIVE 22.78% 85.95% 302.42%
SELECT AUTOMOTIVE 19.02% 80.30% 290.28%
(LOAD ADJ.)
S&P 500 35.01% 166.84% 422.55%
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 Standard & Poor's
500 Index - a widely recognized, unmanaged index of common stocks.
This benchmark includes 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, 1998 YEAR YEARS YEARS
SELECT AUTOMOTIVE 22.78% 13.21% 14.94%
SELECT AUTOMOTIVE 19.02% 12.51% 14.59%
(LOAD ADJ.)
S&P 500 35.01% 21.69% 17.98%
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 LONG-TERM GROWTH AND
SHORT-TERM VOLATILITY. UNLIKE THE BROADER MARKET,
HOWEVER, SOME SECTORS MAY NOT HAVE A HISTORY
OF GROWTH IN THE LONG RUN. AND, AS WITH ALL STOCK
FUNDS, THE SHARE PRICE AND RETURN OF A FUND THAT
INVESTS IN A SECTOR WILL VARY. THAT MEANS IF YOU
SELL YOUR SHARES DURING A SECTOR DOWNTURN, YOU
MIGHT LOSE MONEY. BUT IF YOU CAN IDENTIFY A
SECTOR THAT IS ABOUT TO EXPERIENCE RAPID GROWTH
YOU MAY HAVE THE POTENTIAL FOR ABOVE-AVERAGE
GAINS.
(CHECKMARK)
$10,000 OVER 10 YEARS
IMAHDR PRASUN SHR__CHT 19980228 19980305 121412 S00000000000001
Automotive S&P 500
00502 SP001
1988/02/29 9700.00 10000.00
1988/03/31 10399.91 9691.00
1988/04/30 10579.37 9798.57
1988/05/31 10543.48 9883.82
1988/06/30 11153.65 10337.48
1988/07/31 11028.03 10298.20
1988/08/31 10516.56 9948.06
1988/09/30 10561.42 10371.85
1988/10/31 10480.67 10660.19
1988/11/30 10256.34 10507.75
1988/12/31 10471.69 10691.63
1989/01/31 10956.24 11474.26
1989/02/28 10839.59 11188.55
1989/03/31 11045.98 11449.25
1989/04/30 11539.50 12043.46
1989/05/31 11709.99 12531.22
1989/06/30 11503.61 12459.79
1989/07/31 11907.40 13584.91
1989/08/31 12024.05 13851.18
1989/09/30 11745.88 13794.39
1989/10/31 10767.81 13474.36
1989/11/30 10866.51 13749.23
1989/12/31 10901.16 14079.22
1990/01/31 10613.31 13134.50
1990/02/28 10929.01 13303.94
1990/03/31 11337.57 13656.49
1990/04/30 11300.43 13315.08
1990/05/31 11941.13 14613.30
1990/06/30 12154.96 14513.93
1990/07/31 12192.62 14467.48
1990/08/31 10441.40 13159.62
1990/09/30 9443.39 12518.75
1990/10/31 9255.09 12464.92
1990/11/30 9801.17 13270.15
1990/12/31 10168.36 13640.39
1991/01/31 10742.68 14235.11
1991/02/28 11618.29 15252.92
1991/03/31 11712.44 15622.04
1991/04/30 11844.26 15659.53
1991/05/31 12795.19 16336.03
1991/06/30 12766.94 15587.84
1991/07/31 13294.19 16314.23
1991/08/31 13727.28 16700.88
1991/09/30 13322.43 16421.97
1991/10/31 13670.79 16642.03
1991/11/30 12992.90 15971.35
1991/12/31 13963.73 17798.47
1992/01/31 15472.25 17467.42
1992/02/29 17030.39 17694.50
1992/03/31 17397.59 17349.46
1992/04/30 18509.13 17859.53
1992/05/31 18499.21 17947.04
1992/06/30 18389.15 17679.63
1992/07/31 18558.13 18402.73
1992/08/31 17405.08 18025.47
1992/09/30 17116.82 18238.17
1992/10/31 17832.50 18302.01
1992/11/30 18697.29 18926.11
1992/12/31 19774.68 19158.90
1993/01/31 20687.83 19319.83
1993/02/28 20992.21 19582.58
1993/03/31 22118.42 19995.77
1993/04/30 21990.63 19511.88
1993/05/31 23329.73 20034.79
1993/06/30 23737.74 20092.89
1993/07/31 24009.75 20012.52
1993/08/31 24846.69 20771.00
1993/09/30 25108.23 20611.06
1993/10/31 25641.78 21037.71
1993/11/30 25641.78 20837.85
1993/12/31 26771.87 21089.99
1994/01/31 28298.01 21807.05
1994/02/28 27384.47 21216.08
1994/03/31 25460.68 20291.06
1994/04/30 24942.97 20550.78
1994/05/31 24573.45 20887.82
1994/06/30 24258.26 20376.06
1994/07/31 24986.45 21044.40
1994/08/31 24573.45 21907.22
1994/09/30 23530.08 21370.49
1994/10/31 23975.69 21851.33
1994/11/30 22530.19 21055.50
1994/12/31 23357.68 21367.76
1995/01/31 22802.70 21921.82
1995/02/28 23936.80 22776.12
1995/03/31 23816.15 23448.24
1995/04/30 23743.76 24138.79
1995/05/31 24226.36 25103.62
1995/06/30 24829.60 25686.77
1995/07/31 26615.21 26538.55
1995/08/31 26373.91 26605.16
1995/09/30 26506.63 27727.90
1995/10/31 25276.00 27628.91
1995/11/30 25903.38 28841.82
1995/12/31 26494.56 29397.31
1996/01/31 26180.87 30398.00
1996/02/29 26361.85 30679.78
1996/03/31 27966.48 30975.23
1996/04/30 29379.44 31431.81
1996/05/31 30055.94 32242.43
1996/06/30 29705.60 32365.28
1996/07/31 27978.11 30935.38
1996/08/31 28690.85 31587.81
1996/09/30 28932.46 33365.57
1996/10/31 29065.35 34285.79
1996/11/30 30539.15 36877.45
1996/12/31 30752.51 36146.91
1997/01/31 31291.15 38405.37
1997/02/28 31792.21 38706.47
1997/03/31 31165.88 37116.02
1997/04/30 31862.26 39331.84
1997/05/31 33684.45 41726.37
1997/06/30 34699.67 43595.71
1997/07/31 36222.50 47064.62
1997/08/31 35949.17 44428.06
1997/09/30 37914.53 46861.38
1997/10/31 36170.44 45296.21
1997/11/30 35923.14 47392.97
1997/12/31 35912.29 48206.71
1998/01/31 35898.10 48739.88
1998/02/27 39027.60 52255.00
IMATRL PRASUN SHR__CHT 19980228 19980305 121414 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Select Automotive Portfolio on February 29, 1988, and the
current 3.00% sales charge was paid. As the chart shows, by February
28, 1998, the value of the investment would have grown to $39,028 - a
290.28% increase on the initial investment, and includes the effect of
a $7.50 trading fee. 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 $52,255 - a 422.55%
increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1998
% OF FUND'S
INVESTMENTS
FORD MOTOR CO. 6.8
GOODYEAR TIRE & RUBBER CO. 5.3
TRW, INC. 4.7
HONDA MOTOR CO. LTD. 4.5
GENERAL MOTORS CORP. 4.4
CHRYSLER CORP. 4.2
GENUINE PARTS CO. 4.2
BREED TECHNOLOGIES, INC. 3.9
EATON CORP. 3.9
DANA CORP. 3.8
TOP INDUSTRIES AS OF FEBRUARY 28, 1998
AUTO & TRUCK PARTS 44.1%
MOTOR VEHICLES & CAR BODIES 27.1%
TIRES & INNER TUBES 7.5%
AUTOS & OTHER MOTOR VEHICLES 4.2%
AUTO PARTS - RETAIL 4.1%
ALL OTHERS 13.0%
ROW: 1, COL: 1, VALUE: 13.0
ROW: 1, COL: 2, VALUE: 4.1
ROW: 1, COL: 3, VALUE: 4.2
ROW: 1, COL: 4, VALUE: 7.5
ROW: 1, COL: 5, VALUE: 27.1
ROW: 1, COL: 6, VALUE: 44.1
*
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
AUTOMOTIVE PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
NOTE TO SHAREHOLDERS: Albert Grosman became Portfolio Manager of
Fidelity Select Automotive Portfolio on December 1, 1997.
Q. HOW DID THE FUND PERFORM, ALBERT?
A. For the 12 months that ended February 28, 1998, the fund generated
a return of 22.78%. This trailed the Standard & Poor's 500 Index,
which returned 35.01% during the same period.
Q. WHAT WERE THE MAIN REASONS FOR THE FUND'S UNDERPERFORMANCE?
A. The fund's lack of exposure to the Big Three auto makers - Ford,
Chrysler and General Motors - was the most significant detractor
during the period. This underperformance, however, wasn't relegated
solely to the fund. Aside from the Big Three, the auto industry in
general performed poorly relative to the S&P 500, as investors
questioned whether sales growth rates within the industry could be
sustained.
Q. WHY WAS THE FUND'S EXPOSURE TO THE BIG AUTO MAKERS LIMITED?
A. I think many industry analysts - including the previous manager of
the fund - believed that there may be long-term overcapacity problems
in store for the Big Three. It's just a matter of when these problems
may arise. In recent years, car sales have been brisk - to the tune of
around 15 million vehicles per year in North America. As a result,
there's a common thought that future demand may have a difficult time
keeping pace with recently added production. To my way of thinking,
however, the Big Three still displayed a penchant for cutting costs
and improving profitability. Ford, for instance, announced a plan to
reduce the number of manufacturing platforms on which it makes its
vehicles. This could help shrink both design and pre-production costs.
Ford also dropped five models from its lineup due to poor sales.
Q. WHAT SORTS OF TRENDS WERE GOING ON WITHIN THE GROUP?
A. Outsourcing - or hiring outside companies to work on a specific
function - continued to be a favorable trend. Both manufacturers and
auto parts companies have come to the realization that outsourcing can
lower fixed costs. Examples of outsourcing stocks within the portfolio
included Lear and Johnson Controls, two companies that specialize in
integrating interior features into new cars.
Q. DID YOU FOLLOW ANY INVESTMENT THEMES DURING THE PERIOD?
A. Two areas that piqued my interest were car-rental agencies and
companies involved in the safety aspects of the industry. For the past
decade or so, most major car-rental agencies were owned by one member
of the Big Three or another. If the manufacturer experienced a surplus
in vehicle production, the rental agency became a sort of dumping
ground for this overspill. Now that these rental agencies have become
independent entities, many are enjoying unprecedented pricing power.
The fund's positions in both Avis and Hertz both worked out well. From
a safety perspective, I sought to take advantage of new laws requiring
safety restraints to be more of a focal point for manufacturers. Two
of the fund's largest positions at the end of the period - TRW and
Breed Technologies - were working on a sensory mechanism for linking
the different parts of a car's safety system together.
Q. WHICH STOCKS PERFORMED WELL? WHICH TURNED OUT TO BE DISAPPOINTING?
A. Aside from the names I've already mentioned, Tower Automotive was a
strong contributor to performance. The company is involved in shaping
the metal used for cars. Honda, on the other hand, was a
disappointment due to investor concerns over the company's Asian
business exposure.
Q. WHAT'S YOUR OUTLOOK?
A. I see more of the same for both the manufacturers and the auto
parts companies. Outsourcing should continue to be a common
denominator and as long as companies can continue to cut costs
effectively, a slight sag in demand may not have a huge immediate
impact on the industry. In terms of the rosy economic environment
we've witnessed - namely low inflation and low interest rates - I
don't see any reason why these conditions can't continue.
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, 1998, MORE THAN
$32 MILLION
MANAGER: ALBERT GROSMAN, SINCE 1997;
ANALYST, LATIN AMERICAN STEEL, OIL AND CABLE
INDUSTRIES, 1996-1997; AUTOMOTIVE
MANUFACTURING, AUTOMOTIVE PARTS, TIRE AND
RENTAL CAR INDUSTRIES, 1997-PRESENT; JOINED
FIDELITY IN 1996
(CHECKMARK)
AUTOMOTIVE PORTFOLIO
INVESTMENTS FEBRUARY 28, 1998
SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENT IN SECURITIES
COMMON STOCKS - 95.1%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 0.1%
AIRCRAFT EQUIPMENT - 0.1%
Simula, Inc. 1,800 $ 29,925
AUTOS, TIRES, & ACCESSORIES - 87.0%
AUTO & TRUCK PARTS - 44.1%
Amcast Industrial Corp. 2,100 46,456
Arvin Industries, Inc. 6,100 241,713
Borg-Warner Automotive, Inc. 12,000 703,500
Breed Technologies, Inc. 58,000 1,261,500
Cummins Engine Co., Inc. 10,300 596,113
Dana Corp. 22,800 1,244,025
Danaher Corp. 8,400 604,275
Eaton Corp. 13,100 1,258,419
Excel Industries, Inc. 2,700 53,663
Federal-Mogul Corp. 15,100 740,844
Gentex Corp. (a) 8,500 274,125
Hayes Lemmerz International, Inc. (a) 8,100 262,744
ITT Industries, Inc. 5,500 188,375
Intermet Corp. 6,300 124,425
Johnson Controls, Inc. 20,500 1,139,031
Magna International, Inc. Class A 15,800 951,607
Mascotech, Inc. 11,600 240,700
Modine Manufacturing Co. 7,200 252,000
SPX Corp. 8,700 649,781
Simpson Industries, Inc. 4,500 58,781
Snap-On Tools Corp. 15,500 658,750
Standard Motor Products, Inc. 3,200 66,000
Standard Products Co. 4,100 133,763
Superior Industries International, Inc. 6,900 214,331
TRW, Inc. 27,900 1,529,269
Tower Automotive, Inc. (a) 13,800 627,038
Wabash National Corp. 4,900 145,469
Walbro Corp. 2,100 27,300
Wynn's International, Inc. 4,200 106,575
14,400,572
AUTO PARTS - RETAIL - 4.1%
AutoZone, Inc. (a) 22,900 692,725
Discount Auto Parts, Inc. (a) 4,000 89,250
Monro Muffler Brake, Inc. 2,000 29,500
Pep Boys-Manny, Moe & Jack 20,500 525,313
1,336,788
AUTOS & OTHER MOTOR VEHICLES - 4.2%
Genuine Parts Co. 37,000 1,369,000
MOTOR VEHICLE SUPPLIES & NEW PARTS - 0.0%
APS Holding Corp. Class A (a) 3,100 5,425
MOTOR VEHICLES & CAR BODIES - 27.1%
Chrysler Corp. 35,200 1,370,600
Daimler Benz AG sponsored ADR 1,100 89,238
Ford Motor Co. 39,200 2,217,250
General Motors Corp. 21,000 1,447,688
Honda Motor Co. Ltd. 42,000 1,455,742
Lear Corp. (a) 18,000 951,750
Oshkosh Truck Corp. Class B 2,000 38,250
PACCAR, Inc. 12,700 804,069
Toyota Motor Corp. ADR 1,400 76,825
Volkswagen AG 400 263,957
Volvo AB ADR Class B 4,200 113,925
8,829,294
SHARES VALUE (NOTE 1)
TIRES & INNER TUBES - 7.5%
Bandag, Inc. 2,300 $ 128,944
Cooper Tire & Rubber Co. 12,700 292,894
Goodyear Tire & Rubber Co. 25,200 1,741,950
Michelin SA (Compagnie Generale
des Etablissements) Class B 4,732 292,909
2,456,697
TOTAL AUTOS, TIRES, & ACCESSORIES 28,397,776
BUILDING MATERIALS - 1.1%
GASKETS, HOSES, BELTS - 1.1%
Mark IV Industries, Inc. 15,600 362,700
CHEMICALS & PLASTICS - 0.7%
CHEMICALS - 0.4%
Quaker State Corp. 8,600 130,075
PLASTICS, NEC - 0.3%
Myers Industries, Inc. 4,500 92,250
TOTAL CHEMICALS & PLASTICS 222,325
COMMUNICATIONS EQUIPMENT - 0.2%
DATACOMMUNICATIONS EQUIPMENT - 0.2%
Lo Jack Corp. (a) 4,600 56,063
ELECTRICAL EQUIPMENT - 0.1%
MISCELLANEOUS ELECTRICAL MACHINERY, EQUIPMENT, SUPPLIES - 0.1%
Delco Remy International, Inc. Class A (a) 3,200 46,200
ELECTRONICS - 0.5%
ELECTRONICS & ELECTRONIC COMPONENTS - 0.5%
Stoneridge, Inc. 9,400 166,850
IRON & STEEL - 1.9%
FABRICATED METAL PRODUCTS - 0.9%
Barnes Group, Inc. 5,000 147,500
SPS Technologies, Inc. (a) 2,900 137,388
284,888
METAL FORGINGS & STAMPINGS - 1.0%
Linamar Corp. 5,500 344,390
TOTAL IRON & STEEL 629,278
LEASING & RENTAL - 1.7%
TRUCK RENT & LEASE, NO DRIVER - 1.7%
Hertz Corp. Class A 14,000 554,750
LEISURE DURABLES & TOYS - 0.8%
MISCELLANEOUS TRANSPORTATION EQUIPMENT - 0.2%
Arctic Cat, Inc. 5,300 53,000
MOTOR HOMES - 0.6%
Coachmen Industries, Inc. 2,000 57,125
Thor Industries, Inc. 2,000 79,750
Winnebago Industries, Inc. 6,200 74,400
211,275
TOTAL LEISURE DURABLES & TOYS 264,275
OIL & GAS - 0.4%
LUBRICATING OILS & GREASES - 0.4%
WD 40 Co. 3,900 113,100
TRUCKING & FREIGHT - 0.6%
AIR COURIER SERVICES - 0.6%
CNF Transportation, Inc. 5,000 195,625
TOTAL COMMON STOCKS
(Cost $28,378,429) 31,038,867
CASH EQUIVALENTS - 4.9%
SHARES VALUE (NOTE 1)
Taxable Central Cash Fund (b)
(Cost $1,599,572) 1,599,572 $ 1,599,572
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $29,978,001) $ 32,638,439
LEGEND
1. Non-income producing
2. At period end, the seven-day yield on the Taxable Central Cash Fund
was 5.62%. 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 $86,069,690 and $146,160,836, respectively (see Note 3 of
Notes to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company.
The commissions paid to these affiliated firms were $36,417 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 89.0%
Japan 4.7
Canada 4.0
Germany 1.1
Others (individually less than 1%) 1.2
TOTAL 100.0%
INCOME TAX INFORMATION
At February 28, 1998, the aggregate cost of investment securities for
income tax purposes was $30,144,794. Net unrealized appreciation
aggregated $2,493,645, of which $2,911,580 related to appreciated
investment securities and $417,935 related to depreciated investment
securities.
The fund hereby designates approximately $5,569,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 20% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate
shareholders (unaudited).
A total of 0.26% 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 (unaudited).
The fund will notify shareholders in January 1999 of these percentages
for use in preparing 1998 income tax returns.
AUTOMOTIVE PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1998
ASSETS
INVESTMENT IN $ 32,638,439
SECURITIES,
AT VALUE
(COST
$29,978,
001) -
SEE
ACCOMPAN
YING
SCHEDULE
FOREIGN 48
CURRENCY
HELD AT
VALUE
(COST $48)
RECEIVABLE 43,221
FOR FUND
SHARES
SOLD
DIVIDENDS 67,939
RECEIVABLE
INTEREST 7,171
RECEIVABLE
REDEMPTION 81
FEES
RECEIVABLE
OTHER 4,806
RECEIVABLE
S
TOTAL 32,761,705
ASSETS
LIABILITIES
PAYABLE FOR $ 207,558
FUND
SHARES
REDEEMED
ACCRUED 15,625
MANAGEM
ENT FEE
OTHER 49,580
PAYABLES
AND
ACCRUED
EXPENSES
TOTAL 272,763
LIABILITIES
NET ASSETS $ 32,488,942
NET ASSETS
CONSIST OF:
PAID IN $ 22,698,759
CAPITAL
UNDISTRIBUTE 52,621
D NET
INVESTMENT
INCOME
ACCUMULATED 7,077,182
UNDISTRIBUT
ED NET
REALIZED
GAIN (LOSS)
ON
INVESTMENT
S AND
FOREIGN
CURRENCY
TRANSACTIO
NS
NET 2,660,380
UNREALIZED
APPRECIATI
ON
(DEPRECIATI
ON) ON
INVESTMENT
S
AND ASSETS
AND
LIABILITIES
IN
FOREIGN
CURRENCIES
NET ASSETS, $ 32,488,942
FOR
1,181,30
9
SHARES
OUTSTANDIN
G
NET ASSET $27.50
VALUE AND
REDEMPTIO
N PRICE
PER SHARE
($32,488,
942 (DIVIDED BY)
1,181,30
9 SHARES)
MAXIMUM $28.35
OFFERING
PRICE PER
SHARE
(100/97.
00 OF
$27.50)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1998
INVESTMENT $ 785,207
INCOME
DIVIDENDS
INTEREST 294,488
TOTAL 1,079,695
INCOME
EXPENSES
MANAGEMEN $ 369,375
T FEE
TRANSFER 497,548
AGENT FEES
ACCOUNTING 65,849
FEES AND
EXPENSES
NON-INTEREST 337
ED
TRUSTEES'
COMPENSAT
ION
CUSTODIAN 11,545
FEES AND
EXPENSES
REGISTRATION 22,365
FEES
AUDIT 25,170
LEGAL 528
MISCELLANEO 2,641
US
TOTAL 995,358
EXPENSES
BEFORE
REDUCTIONS
EXPENSE (24,274) 971,084
REDUCTIONS
NET 108,611
INVESTMEN
T INCOME
REALIZED
AND
UNREALIZED
GAIN (LOSS)
NET REALIZED
GAIN (LOSS)
ON:
INVESTMENT 12,451,460
SECURITIES
FOREIGN 6,003 12,457,463
CURRENCY
TRANSACTIO
NS
CHANGE IN
NET
UNREALIZED
APPRECIATI
ON
(DEPRECIATI
ON) ON:
INVESTMENT (2,222,430)
SECURITIES
ASSETS AND 1,606 (2,220,824)
LIABILITIES
IN
FOREIGN
CURRENCIES
NET GAIN 10,236,639
(LOSS)
NET INCREASE $ 10,345,250
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
OTHER $ 70,085
INFORMATIO
N
SALES
CHARGES
PAID TO
FDC
SALES $ 263
CHARGES -
DEALERS'
PORTION
DEFERRED $ 597
SALES
CHARGES
WITHHELD
BY FDC
EXCHANGE $ 36,653
FEES
WITHHELD
BY FSC
EXPENSE $ 24,235
REDUCTIONS
DIRECTED
BROKERAGE
ARRANGEM
ENTS
CUSTODIA 39
N CREDITS
$ 24,274
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
FEBRUARY 28, FEBRUARY 28,
1998 1997
OPERATIONS $ 108,611 $ 643,042
NET
INVESTMENT
INCOME
NET 12,457,463 8,357,523
REALIZED
GAIN (LOSS)
CHANGE IN (2,220,824) 2,143,826
NET
UNREALIZED
APPRECIATI
ON
(DEPRECIATI
ON)
NET 10,345,250 11,144,391
INCREASE
(DECREAS
E) IN NET
ASSETS
RESULTING
FROM
OPERATIO
NS
DISTRIBUTIONS (202,512) (492,439)
TO
SHAREHOLD
ERS
FROM NET
INVESTMENT
INCOME
FROM NET (7,054,725) (2,049,624)
REALIZED
GAIN
TOTAL (7,257,237) (2,542,063)
DISTRIBUTIO
NS
SHARE 38,285,022 256,027,701
TRANSACTIO
NS
NET
PROCEEDS
FROM SALES
OF SHARES
REINVESTM 7,198,159 2,523,772
ENT OF
DISTRIBUTIO
NS
COST OF (102,498,033) (236,749,789)
SHARES
REDEEMED
NET (57,014,852) 21,801,684
INCREASE
(DECREAS
E) IN NET
ASSETS
RESULTING
FROM
SHARE
TRANSACTI
ONS
REDEMPTIO 69,215 189,071
N FEES
TOTAL (53,857,624) 30,593,083
INCREASE
(DECREASE)
IN NET
ASSETS
NET ASSETS
BEGINNING 86,346,566 55,753,483
OF PERIOD
END OF $ 32,488,942 $ 86,346,566
PERIOD
(INCLUDIN
G
UNDISTRIB
UTED NET
INVESTME
NT
INCOME
OF
$52,62
1 AND
$225,6
93,
RESPECTIV
ELY)
OTHER
INFORMATION
SHARES
SOLD 1,443,301 10,548,479
ISSUED IN 295,056 104,848
REINVESTME
NT OF
DISTRIBUTIO
NS
REDEEMED (3,958,616) (9,803,178)
NET (2,220,259) 850,149
INCREASE
(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>
YEARS ENDED FEBRUARY 28, YEAR ENDED YEARS ENDED FEBRUARY 28,
FEBRUARY 29,
SELECTED PER-SHARE DATA 1998 1997 1996 1995 1994
</TABLE>
NET ASSET $ 25.38 $ 21.85 $ 19.84 $ 25.48 $ 20.69
VALUE,
BEGINNING
OF PERIOD
INCOME FROM
INVESTMENT
OPERATION
S
NET .05 .13 .03 .08 .05
INVESTMENT
INCOME C
NET 5.21 4.28 1.95 (3.46) 6.00
REALIZED
AND
UNREALIZED
GAIN (LOSS)
TOTAL FROM 5.26 4.41 1.98 (3.38) 6.05
INVESTMENT
OPERATIONS
LESS
DISTRIBUTIO
NS
FROM NET (.08) (.17) - (.05) (.05)
INVESTMENT
INCOME
FROM NET (3.09) (.75) - (2.26) (1.26)
REALIZED
GAIN
TOTAL (3.17) (.92) - (2.31) (1.31)
DISTRIBUTIO
NS
REDEMPTION .03 .04 .03 .05 .05
FEES
ADDED TO
PAID IN
CAPITAL
NET ASSET $ 27.50 $ 25.38 $ 21.85 $ 19.84 $ 25.48
VALUE, END
OF PERIOD
TOTAL 22.78% 20.60% 10.13% (12.59)% 30.45%
RETURN A, B
RATIOS AND
SUPPLEME
NTAL DATA
NET ASSETS, $ 32,489 $ 86,347 $ 55,753 $ 60,075 $ 228,698
END OF
PERIOD
(000
OMITTED)
RATIO OF 1.60% 1.56% 1.81% 1.82% 1.69%
EXPENSES
TO AVERAGE
NET ASSETS
RATIO OF 1.56% D 1.52% D 1.80% D 1.80% D 1.68% D
EXPENSES
TO AVERAGE
NET ASSETS
AFTER
EXPENSE
REDUCTIONS
RATIO OF NET .17% .54% .13% .34% .22%
INVESTMENT
INCOME TO
AVERAGE
NET ASSETS
PORTFOLIO 153% 175% 61% 63% 64%
TURNOVER
RATE
AVERAGE $ .0424 $ .0495
COMMISSIO
N RATE E
<TABLE>
<CAPTION>
<S> <C>
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. C NET
INVESTMENT INCOME 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>
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). Load adjusted returns include a 3.00% sales
charge and the effect of a $7.50 trading fee. 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, 1998 YEAR YEARS YEARS
SELECT CHEMICALS 19.47% 138.08% 342.98%
SELECT CHEMICALS 15.81% 130.87% 329.62%
(LOAD ADJ.)
S&P 500 35.01% 166.84% 422.55%
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 Standard & Poor's
500 Index - a widely recognized, unmanaged index of common stocks.
This benchmark includes 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, 1998 YEAR YEARS YEARS
SELECT CHEMICALS 19.47% 18.94% 16.05%
SELECT CHEMICALS 15.81% 18.21% 15.69%
(LOAD ADJ.)
S&P 500 35.01% 21.69% 17.98%
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 LONG-TERM GROWTH AND
SHORT-TERM VOLATILITY. 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
CHEMICALS S&P 500
00069 SP001
1988/02/29 9700.00 10000.00
1988/03/31 10193.98 9691.00
1988/04/30 10313.73 9798.57
1988/05/31 9924.54 9883.82
1988/06/30 11236.83 10337.48
1988/07/31 10897.53 10298.20
1988/08/31 10423.51 9948.06
1988/09/30 10553.24 10371.85
1988/10/31 10717.90 10660.19
1988/11/30 10358.64 10507.75
1988/12/31 10827.67 10691.63
1989/01/31 11551.18 11474.26
1989/02/28 11406.48 11188.55
1989/03/31 11531.22 11449.25
1989/04/30 11860.55 12043.46
1989/05/31 12134.98 12531.22
1989/06/30 11990.09 12459.79
1989/07/31 12754.14 13584.91
1989/08/31 13338.41 13851.18
1989/09/30 12864.00 13794.39
1989/10/31 11955.13 13474.36
1989/11/30 12209.82 13749.23
1989/12/31 12702.09 14079.22
1990/01/31 11797.05 13134.50
1990/02/28 11875.98 13303.94
1990/03/31 12228.52 13656.49
1990/04/30 11944.38 13315.08
1990/05/31 12986.23 14613.30
1990/06/30 13092.23 14513.93
1990/07/31 13135.54 14467.48
1990/08/31 11381.25 13159.62
1990/09/30 10818.14 12518.75
1990/10/31 10942.68 12464.92
1990/11/30 11673.63 13270.15
1990/12/31 12177.18 13640.39
1991/01/31 12994.77 14235.11
1991/02/28 13991.03 15252.92
1991/03/31 14326.73 15622.04
1991/04/30 14213.03 15659.53
1991/05/31 15198.46 16336.03
1991/06/30 14785.42 15587.84
1991/07/31 15498.03 16314.23
1991/08/31 15802.66 16700.88
1991/09/30 15682.99 16421.97
1991/10/31 15933.22 16642.03
1991/11/30 15139.00 15971.35
1991/12/31 16885.08 17798.47
1992/01/31 17209.36 17467.42
1992/02/29 17829.97 17694.50
1992/03/31 17701.38 17349.46
1992/04/30 18344.35 17859.53
1992/05/31 18238.12 17947.04
1992/06/30 17697.52 17679.63
1992/07/31 18255.95 18402.73
1992/08/31 17632.17 18025.47
1992/09/30 17650.00 18238.17
1992/10/31 17471.77 18302.01
1992/11/30 18000.50 18926.11
1992/12/31 18388.65 19158.90
1993/01/31 18369.73 19319.83
1993/02/28 18048.12 19582.58
1993/03/31 18476.94 19995.77
1993/04/30 18819.65 19511.88
1993/05/31 19104.60 20034.79
1993/06/30 18625.36 20092.89
1993/07/31 18910.31 20012.52
1993/08/31 19836.40 20771.00
1993/09/30 19208.22 20611.06
1993/10/31 19933.54 21037.71
1993/11/30 20082.49 20837.85
1993/12/31 20734.51 21089.99
1994/01/31 22348.44 21807.05
1994/02/28 22313.20 21216.08
1994/03/31 21643.67 20291.06
1994/04/30 22690.34 20550.78
1994/05/31 23236.67 20887.82
1994/06/30 22945.76 20376.06
1994/07/31 23981.66 21044.40
1994/08/31 25372.31 21907.22
1994/09/30 25187.84 21370.49
1994/10/31 25145.26 21851.33
1994/11/30 23172.81 21055.50
1994/12/31 23798.10 21367.76
1995/01/31 23176.21 21921.82
1995/02/28 24521.23 22776.12
1995/03/31 25273.28 23448.24
1995/04/30 25815.06 24138.79
1995/05/31 26072.11 25103.62
1995/06/30 26512.76 25686.77
1995/07/31 27768.63 26538.55
1995/08/31 27886.14 26605.16
1995/09/30 28326.79 27727.90
1995/10/31 26916.70 27628.91
1995/11/30 28091.78 28841.82
1995/12/31 28902.38 29397.31
1996/01/31 30230.86 30398.00
1996/02/29 31258.85 30679.78
1996/03/31 32769.21 30975.23
1996/04/30 33110.68 31431.81
1996/05/31 33039.07 32242.43
1996/06/30 32617.32 32365.28
1996/07/31 31296.40 30935.38
1996/08/31 32680.98 31587.81
1996/09/30 34129.23 33365.57
1996/10/31 34359.99 34285.79
1996/11/30 35625.22 36877.45
1996/12/31 35121.94 36146.91
1997/01/31 35671.64 38405.37
1997/02/28 35967.64 38706.47
1997/03/31 34809.03 37116.02
1997/04/30 36096.15 39331.84
1997/05/31 37873.87 41726.37
1997/06/30 38915.10 43595.71
1997/07/31 42030.34 47064.62
1997/08/31 42157.32 44428.06
1997/09/30 42419.75 46861.38
1997/10/31 40303.42 45296.21
1997/11/30 40531.98 47392.97
1997/12/31 40909.51 48206.71
1998/01/31 40319.74 48739.88
1998/02/27 42962.00 52255.00
IMATRL PRASUN SHR__CHT 19980228 19980318 104240 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Chemicals Portfolio on February 29, 1988,
and the current 3.00% sales charge was paid. As the chart shows, by
February 28, 1998, the value of the investment would have grown to
$42,962 - a 329.62% increase on the initial investment, and includes
the effect of a $7.50 trading fee. 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
$52,255 - a 422.55% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1998
% OF FUND'S
INVESTMENTS
CYTEC INDUSTRIES, INC. 8.8
ICI (IMPERIAL CHEMICAL INDUSTRIES) PLC ADR CLASS L 7.1
W.R. GRACE & CO. 6.5
SEALED AIR CORP. 6.4
WITCO CORP. 6.1
AIR PRODUCTS & CHEMICALS, INC. 4.4
HOECHST AG ORD. 3.6
MONSANTO CO. 3.4
MINNESOTA MINING & MANUFACTURING CO. 3.4
LILLY INDUSTRIAL COATINGS, INC. CLASS A 2.6
TOP INDUSTRIES AS OF FEBRUARY 28, 1998
36
CHEMICALS 32.1%
UNSUPPORTED PLASTICS
FILM & SHEET 12.9%
INDUSTRIAL GASES 8.3%
PLASTICS & SYNTHETIC RESINS 3.8%
AGRICULTURAL CHEMICALS 3.4%
ALL OTHERS 39.5%
ROW: 1, COL: 1, VALUE: 39.5
ROW: 1, COL: 2, VALUE: 3.4
ROW: 1, COL: 3, VALUE: 3.8
ROW: 1, COL: 4, VALUE: 8.300000000000001
ROW: 1, COL: 5, VALUE: 12.9
ROW: 1, COL: 6, VALUE: 32.1
*
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
CHEMICALS PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Audra J. Barranco, Portfolio Manager
of Fidelity Select
Chemicals Portfolio
Q. HOW DID THE FUND PERFORM, AUDRA?
A. The fund did well, although not nearly as well as the overall stock
market. For the 12 months that ended February 28, 1998, the fund had a
total return of 19.47%. The Standard & Poor's 500 Index, a reflection
of the overall market, had a return of 35.01%. I think the primary
reason chemical company stocks trailed the overall market is that they
generally did not have the significant earnings growth that you could
have found in other industries.
Q. WHAT HAVE BEEN YOUR PRINCIPAL STRATEGIES IN MANAGING THE FUND?
A. I have been very consistent since taking over management of the
fund in June emphasizing specialty and diversified chemical companies,
while de-emphasizing more commodity-oriented firms. I have focused
primarily on specialty and diversified enterprises because some of
them offer double-digit earnings growth due to increasing sales and
operating margin expansion. Instead of basing my decisions on
industry-wide trends, I use a bottom-up, stock-by-stock management
style in choosing among specialty and diversified companies because
they tend to manufacture varied products for very different and
numerous markets. Among the specialty and diversified firms, I look
for those firms that have demonstrated revenue growth and profit
margin improvement. I've avoided the commodities because they are
highly affected by the manufacturing capacity in the industry.
Currently, there is significant capacity coming on, which limits the
pricing power and earnings of the commodity companies. The
overwhelming majority of my investments have been U.S. enterprises.
However, I have investments in some foreign companies, principally
European. I have justified the risk by the firms' strong operations.
Q. WHAT COMPANIES HELPED PERFORMANCE?
A. A number of the fund's largest investments did well. These included
W.R. Grace, Sealed Air Corp., Cytec Industries, Monsanto and Owens
Illinois. Each of these companies succeeded for reasons distinct to
itself. Sealed Air and W.R. Grace announced that Sealed Air, a
specialist in packaging, would merge with Grace's packaging division.
The announcement helped both stocks. Cytec is a diversified company
undergoing a cost-cutting and restructuring program that helped its
stock performance. ICI, a British chemical company, also benefited
from restructuring. Although its principal business is agricultural
chemical products, Monsanto was helped by the strong performance of
its pharmaceutical division, Searle. Searle is expected to unveil a
blockbuster anti-inflammatory drug in 1999. In addition, a wave of
consolidation hit the pharmaceutical industry, with announcements of a
number of mergers and acquisitions. The Searle division may eventually
be a part of this consolidation. Owens Illinois was helped by its
planned acquisition of the packaging division of BTR.
Q. WERE THERE ANY DISAPPOINTMENTS?
A. One disappointing stock was Minnesota Mining & Manufacturing (3M),
one of the larger investments in the portfolio. The stock price of
this diversified chemicals company was hurt in the stock market
reaction to the Asian financial crisis in the fourth quarter of 1997.
3M has operations in Asia and Brazil, and is vulnerable to economic
problems in the emerging markets.
Q. HAS THE FUND FELT ANY OTHER EFFECTS FROM THE ASIAN FINANCIAL
CRISIS?
A. Yes, it has. The impact of Asian financial problems is beginning to
show up in the earnings of some chemical companies. Some companies
have 15% to 20% of their business in Asia or in emerging markets such
as Brazil. There may be businesses whose earnings will be
significantly affected, although we haven't yet seen it in the fund.
Strategically, I have tended to invest in companies with less than 10%
of their business in Asia because of this backdrop.
Q. WHAT IS YOUR OVERALL OUTLOOK?
A. Overall, I think the specialty and diversified chemical companies
have opportunities to gain reasonable revenue and earnings growth.
Individual specialty and diversified companies will continue to have
opportunities to provide niche products to specific markets. It's my
job to find these investment opportunities. That's why I say that
managing this fund is a stock-by-stock process. I expect the fund's
basic strategy will remain as it is.
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, 1998, more than
$69 million
MANAGER: Audra Barranco, since June 1997;
equity analyst, specialty and diversified
chemicals; joined Fidelity in 1996
(checkmark)
CHEMICALS PORTFOLIO
INVESTMENTS FEBRUARY 28, 1998
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 85.8%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 1.1%
ORDNANCE - 1.1%
Primex Technologies, Inc. 18,160 $ 785,415
BUILDING MATERIALS - 3.3%
ABRASIVES AND ASBESTOS - 0.7%
Hexcel Corp. (a) 19,900 523,619
PAINT & VARNISH - 2.6%
Lilly Industrial Coatings, Inc. Class A 96,700 1,946,088
TOTAL BUILDING MATERIALS 2,469,707
CHEMICALS & PLASTICS - 67.3%
ADHESIVES & SEALANTS - 2.7%
Ferro Corp. 40,500 1,090,969
International Specialty Products, Inc. (a) 45,400 723,563
Lydall, Inc. (a) 9,800 172,113
1,986,645
AGRICULTURAL CHEMICALS - 3.4%
IMC Global, Inc. 18,340 700,359
OM Group, Inc. 25,900 1,150,931
Potash Corp. of Saskatchewan 7,400 661,387
2,512,677
CHEMICALS - 32.1%
Bayer AG 4,500 189,746
Cabot Corp. 13,700 482,925
Cytec Industries, Inc. (a) 133,713 6,535,223
du Pont (E.I.) de Nemours & Co. 2,800 171,675
Hoechst AG Ord. 69,700 2,687,488
ICI (Imperial Chemical Industries) PLC
ADR Class L 72,000 5,265,000
Monsanto Co. 50,100 2,548,838
NL Industries, Inc. (a) 18,400 273,700
Olin Corp. 23,000 1,053,688
Witco Corp. 113,600 4,522,700
23,730,983
INDUSTRIAL GASES - 8.3%
Air Products & Chemicals, Inc. 38,700 3,248,381
BOC Group PLC 45,041 703,450
L'Air Liquide 3,670 592,937
NuCo2, Inc. (a) 11,200 140,000
Praxair, Inc. 30,753 1,470,378
6,155,146
INORGANIC CHEMICALS - 2.3%
Minerals Technologies, Inc. 7,200 343,800
Valspar Corp. 39,100 1,370,944
1,714,744
MISCELLANEOUS PLASTICS PRODUCTS - 1.1%
Uniroyal Technology Corp. (a) 115,000 819,375
NITROGENOUS FERTILIZERS - 0.7%
Soc Quimica y Minera de Chile ADR 13,300 571,900
PLASTICS & SYNTHETIC RESINS - 3.8%
Geon Co. 2,000 40,000
Solutia, Inc. 38,000 1,037,875
Spartech Corp. 91,300 1,711,875
2,789,750
SHARES VALUE (NOTE 1)
UNSUPPORTED PLASTICS FILM & SHEET - 12.9%
W.R. Grace & Co. 57,500 $ 4,826,406
Sealed Air Corp. (a) 70,000 4,711,875
9,538,281
TOTAL CHEMICALS & PLASTICS 49,819,501
CONSUMER DURABLES - 3.4%
MANUFACTURING INDUSTRIES, NEC - 3.4%
Minnesota Mining & Manufacturing Co. 29,400 2,508,188
DRUGS & PHARMACEUTICALS - 1.1%
BIOTECHNOLOGY - 1.1%
Sigma Aldrich Corp. 21,200 837,400
ELECTRICAL EQUIPMENT - 1.4%
TV & RADIO COMMUNICATION EQUIPMENT - 1.4%
Loral Space & Communications Ltd. (a) 39,900 1,019,944
ELECTRONIC INSTRUMENTS - 0.0%
SEMI-CONDUCTOR CAPITAL EQUIPMENT - 0.0%
Lam Research Corp. (a) 673 19,012
ENGINEERING - 0.0%
ARCHITECTS & ENGINEERS - 0.0%
Fluor Corp. 200 9,413
INSURANCE - 1.2%
PROPERTY-CASUALTY & REINSURANCE - 1.2%
Paula Financial 35,900 857,113
PACKAGING & CONTAINERS - 3.5%
GLASS CONTAINERS - 1.8%
Owens-Illinois, Inc. (a) 34,300 1,316,263
METAL CANS & CONTAINERS - 1.7%
Silgan Holdings, Inc. 35,000 1,233,750
TOTAL PACKAGING & CONTAINERS 2,550,013
PRECIOUS METALS - 0.4%
GOLD ORES - 0.4%
Stillwater Mining Co. (a)(c) 15,300 328,950
PRINTING - 0.3%
PLATEMAKING, RELATED SERVICES - 0.3%
Schawk, Inc. Class A 21,000 242,813
RETAIL & WHOLESALE, MISCELLANEOUS - 1.4%
MISCELLANEOUS DURABLE GOODS - WHOLESALE - 1.4%
SCP Pool Corp. 45,000 1,029,375
SERVICES - 1.4%
BUILDING MAINTENANCE - 1.4%
Ecolab, Inc. 37,200 1,071,825
TOTAL COMMON STOCKS
(Cost $50,155,060) 63,548,669
CASH EQUIVALENTS - 14.2%
Taxable Central Cash Fund (b)
(Cost $10,490,140) 10,490,140 10,490,140
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $60,645,200) $ 74,038,809
LEGEND
1. Non-income producing
2. At period end, the seven-day yield on the Taxable Central Cash Fund
was 5.62%. 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 $328,950 or 0.5%
of net assets.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $24,137,064 and $81,584,971, 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 $30,186 for the
period (see Note 4 of Notes to Financial Statements).
The fund participated in the securities lending program. At the
period end, the value of securities loaned and the value of collateral
amounted to $4,711,840 and $4,620,000, 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 84.2%
United Kingdom 8.1
Germany 3.9
Bermuda 1.4
Others 2.4
TOTAL 100.0%
INCOME TAX INFORMATION
At February 28, 1998, the aggregate cost of investment securities for
income tax purposes was $60,645,200. Net unrealized appreciation
aggregated $13,393,609, of which $14,165,867 related to appreciated
investment securities and $772,258 related to depreciated investment
securities.
The fund hereby designates approximately $8,702,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 98% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate
shareholders (unaudited).
A total of .22% 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 (unaudited).
The fund will notify shareholders in January 1999 of these percentages
for use in preparing 1998 income tax returns.
CHEMICALS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1998
ASSETS
INVESTMENT IN $ 74,038,809
SECURITIES,
AT VALUE
(COST
$60,645,
200) -
SEE
ACCOMPAN
YING
SCHEDULE
RECEIVABLE 533,358
FOR
INVESTMENT
S SOLD
RECEIVABLE 118,361
FOR FUND
SHARES
SOLD
DIVIDENDS 40,181
RECEIVABLE
INTEREST 47,227
RECEIVABLE
REDEMPTION 249
FEES
RECEIVABLE
OTHER 1,658
RECEIVABLE
S
TOTAL 74,779,843
ASSETS
LIABILITIES
PAYABLE FOR $ 696,587
FUND
SHARES
REDEEMED
ACCRUED 33,620
MANAGEM
ENT FEE
OTHER 80,215
PAYABLES
AND
ACCRUED
EXPENSES
COLLATERAL ON 4,620,000
SECURITIES
LOANED,
AT VALUE
TOTAL 5,430,422
LIABILITIES
NET ASSETS $ 69,349,421
NET ASSETS
CONSIST OF:
PAID IN $ 51,258,606
CAPITAL
ACCUMULATED 4,697,379
UNDISTRIBUT
ED NET
REALIZED
GAIN (LOSS)
ON
INVESTMENT
S AND
FOREIGN
CURRENCY
TRANSACTIO
NS
NET 13,393,436
UNREALIZED
APPRECIATI
ON
(DEPRECIATI
ON) ON
INVESTMENT
S
AND ASSETS
AND
LIABILITIES
IN
FOREIGN
CURRENCIES
NET ASSETS, $ 69,349,421
FOR
1,510,90
3
SHARES
OUTSTANDIN
G
NET ASSET $45.90
VALUE AND
REDEMPTIO
N PRICE
PER SHARE
($69,349,
421 (DIVIDED BY)
1,510,90
3 SHARES)
MAXIMUM $47.32
OFFERING
PRICE PER
SHARE
(100/97.
00 OF
$45.90)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1998
INVESTMENT $ 1,010,363
INCOME
DIVIDENDS
INTEREST 341,841
(INCLUDING
INCOME ON
SECURITIES
LOANED OF
$95,201)
TOTAL 1,352,204
INCOME
EXPENSES
MANAGEMEN $ 496,851
T FEE
TRANSFER 747,690
AGENT FEES
ACCOUNTING 87,876
AND
SECURITY
LENDING
FEES
NON-INTEREST 416
ED
TRUSTEES'
COMPENSAT
ION
CUSTODIAN 12,049
FEES AND
EXPENSES
REGISTRATION 27,767
FEES
AUDIT 26,108
LEGAL 1,224
MISCELLANEO 675
US
TOTAL 1,400,656
EXPENSES
BEFORE
REDUCTIONS
EXPENSE (8,702) 1,391,954
REDUCTIONS
NET (39,750)
INVESTMEN
T INCOME
(LOSS)
REALIZED
AND
UNREALIZED
GAIN (LOSS)
NET REALIZED
GAIN (LOSS)
ON:
INVESTMENT 11,439,179
SECURITIES
FOREIGN (2,158) 11,437,021
CURRENCY
TRANSACTIO
NS
CHANGE IN
NET
UNREALIZED
APPRECIATI
ON
(DEPRECIATI
ON) ON:
INVESTMENT 2,762,490
SECURITIES
ASSETS AND 497 2,762,987
LIABILITIES
IN
FOREIGN
CURRENCIES
NET GAIN 14,200,008
(LOSS)
NET INCREASE $ 14,160,258
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
OTHER $ 84,712
INFORMATIO
N
SALES
CHARGES
PAID TO
FDC
SALES $ 168
CHARGES -
DEALERS'
PORTION
DEFERRED $ 7,955
SALES
CHARGES
WITHHELD
BY FDC
EXCHANGE $ 44,438
FEES
WITHHELD
BY FSC
EXPENSE $ 8,265
REDUCTIONS
DIRECTED
BROKERAGE
ARRANGEM
ENTS
CUSTODIA 437
N CREDITS
$ 8,702
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
FEBRUARY 28, FEBRUARY 28,
1998 1997
OPERATIONS $ (39,750) $ 822,641
NET
INVESTMENT
INCOME
(LOSS)
NET 11,437,021 14,200,355
REALIZED
GAIN (LOSS)
CHANGE IN 2,762,987 (2,755,765)
NET
UNREALIZED
APPRECIATI
ON
(DEPRECIATI
ON)
NET 14,160,258 12,267,231
INCREASE
(DECREAS
E) IN NET
ASSETS
RESULTING
FROM
OPERATIO
NS
DISTRIBUTIONS - (228,367)
TO
SHAREHOLD
ERS
FROM NET
INVESTMENT
INCOME
FROM NET (6,539,426) (6,676,304)
REALIZED
GAIN
TOTAL (6,539,426) (6,904,671)
DISTRIBUTIO
NS
SHARE 31,893,479 349,364,954
TRANSACTIO
NS
NET
PROCEEDS
FROM SALES
OF SHARES
REINVESTM 6,395,130 6,799,944
ENT OF
DISTRIBUTIO
NS
COST OF (88,066,094) (339,611,033)
SHARES
REDEEMED
NET (49,777,485) 16,553,865
INCREASE
(DECREAS
E) IN NET
ASSETS
RESULTING
FROM
SHARE
TRANSACTI
ONS
REDEMPTIO 96,792 262,393
N FEES
TOTAL (42,059,861) 22,178,818
INCREASE
(DECREASE)
IN NET
ASSETS
NET ASSETS
BEGINNING 111,409,282 89,230,464
OF PERIOD
END OF $ 69,349,421 $ 111,409,282
PERIOD
(INCLUDIN
G
UNDISTRIB
UTED NET
INVESTME
NT
INCOME
OF $0
AND
$583,8
30,
RESPECTIV
ELY)
OTHER
INFORMATION
SHARES
SOLD 706,740 8,409,682
ISSUED IN 150,551 164,313
REINVESTME
NT OF
DISTRIBUTIO
NS
REDEEMED (1,965,911) (8,211,486)
NET (1,108,620) 362,509
INCREASE
(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>
YEARS ENDED FEBRUARY 28, YEAR ENDED YEARS ENDED FEBRUARY 28,
FEBRUARY 29,
SELECTED PER-SHARE DATA 1998 1997 1996 1995 1994
</TABLE>
NET ASSET $ 42.53 $ 39.53 $ 33.91 $ 31.66 $ 28.62
VALUE,
BEGINNING
OF PERIOD
INCOME FROM
INVESTMENT
OPERATION
S
NET (.02) .28 .01 .36 .29
INVESTMENT
INCOME
(LOSS) C
NET 7.88 5.49 8.89 2.65 5.97
REALIZED
AND
UNREALIZED
GAIN (LOSS)
TOTAL FROM 7.86 5.77 8.90 3.01 6.26
INVESTMENT
OPERATIONS
LESS
DISTRIBUTIO
NS
FROM NET - (.12) (.08) (.22) (.23)
INVESTMENT
INCOME
FROM NET (4.54) F (2.74) (3.22) (.60) (3.05)
REALIZED
GAIN
TOTAL (4.54) (2.86) (3.30) (.82) (3.28)
DISTRIBUTIO
NS
REDEMPTION .05 .09 .02 .06 .06
FEES
ADDED TO
PAID IN
CAPITAL
NET ASSET $ 45.90 $ 42.53 $ 39.53 $ 33.91 $ 31.66
VALUE, END
OF PERIOD
TOTAL 19.47% 15.06% 27.48% 9.90% 23.63%
RETURN A, B
RATIOS AND
SUPPLEME
NTAL DATA
NET ASSETS, $ 69,349 $ 111,409 $ 89,230 $ 97,511 $ 62,217
END OF
PERIOD
(000
OMITTED)
RATIO OF 1.68% 1.83% 1.99% 1.52% 1.93%
EXPENSES
TO AVERAGE
NET ASSETS
RATIO OF 1.67% D 1.81% D 1.97% D 1.51% D 1.93%
EXPENSES
TO AVERAGE
NET ASSETS
AFTER
EXPENSE
REDUCTIONS
RATIO OF NET (.05)% .67% .04% 1.07% .97%
INVESTMENT
INCOME
(LOSS) TO
AVERAGE
NET ASSETS
PORTFOLIO 31% 207% 87% 106% 81%
TURNOVER
RATE
AVERAGE $ .0399 $ .0458
COMMISSIO
N RATE E
<TABLE>
<CAPTION>
<S> <C>
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. 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. F THE AMOUNT SHOWN REFLECTS CERTAIN
RECLASSIFICATIONS RELATED TO BOOK TO TAX DIFFERENCES (SEE NOTE 1 OF
NOTES TO FINANCIAL STATEMENTS).
</TABLE>
CYCLICAL INDUSTRIES 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). Load adjusted returns include a 3.00% sales
charge and the effect of a $7.50 trading fee. If Fidelity had not
reimbursed certain fund expenses, the life of fund total returns would
have been lower.
CUMULATIVE TOTAL RETURNS
PERIOD ENDED LIFE OF
FEBRUARY 28, 1998 FUND
SELECT CYCLICAL INDUSTRIES 25.77%
SELECT CYCLICAL INDUSTRIES 21.93%
(LOAD ADJ.)
S&P 500 34.22%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, since the fund started on
March 3, 1997. You can compare the fund's returns to the performance
of the Standard & Poor's 500 Index - a widely recognized, unmanaged
index of common stocks. This benchmark includes reinvestment of
dividends and capital gains, if any, and excludes the effect of sales
charges.
AVERAGE ANNUAL TOTAL RETURNS
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. Average annual total returns will appear once the fund is a
year old.
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 LONG-TERM GROWTH AND
SHORT-TERM VOLATILITY. 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
Cyclical Industries S&P 500
00515 SP001
1997/03/03 9700.00 10000.00
1997/03/31 9418.70 9533.50
1997/04/30 9738.80 10102.65
1997/05/31 10476.00 10717.70
1997/06/30 10999.80 11197.85
1997/07/31 11688.50 12088.86
1997/08/31 11504.20 11411.64
1997/09/30 11766.10 12036.66
1997/10/31 10893.10 11634.64
1997/11/30 11096.80 12173.20
1997/12/31 11118.24 12382.22
1998/01/31 11401.25 12519.16
1998/02/27 12193.00 13422.05
IMATRL PRASUN SHR__CHT 19980228 19980318 101713 R00000000000015
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity Select Cyclical Industries Portfolio on March 3,
1997, when the fund started, and the current 3.00% sales charge was
paid. As the chart shows, by February 28, 1998, the value of the
investment would have grown to $12,193 - a 21.93% increase on the
initial investment, and includes the effect of a $7.50 trading fee.
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 $13,422 - a 34.22% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1998
% OF FUND'S
INVESTMENTS
GENERAL ELECTRIC CO. 7.4
TYCO INTERNATIONAL LTD. 5.1
FORD MOTOR CO. 4.0
DEKALB GENETICS CORP. CLASS B 3.2
AMR CORP. 2.1
LOCKHEED MARTIN CORP. 2.1
HONEYWELL, INC. 1.9
EMERSON ELECTRIC CO. 1.8
XEROX CORP. 1.7
NORFOLK SOUTHERN CORP. 1.6
TOP INDUSTRIES AS OF FEBRUARY 28, 1998
ELECTRICAL MACHINERY 11.1%
GENERAL INDUSTRIAL MACHINERY 7.0%
AIR TRANSPORT, MAJOR
NATIONAL 5.4%
MOTOR VEHICLES & CAR BODIES 4.6%
CROPS 3.2%
ALL OTHERS 68.7%
ROW: 1, COL: 1, VALUE: 68.7
ROW: 1, COL: 2, VALUE: 3.2
ROW: 1, COL: 3, VALUE: 4.6
ROW: 1, COL: 4, VALUE: 5.4
ROW: 1, COL: 5, VALUE: 7.0
ROW: 1, COL: 6, VALUE: 11.1
*
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
CYCLICAL INDUSTRIES PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Albert Ruback,
Portfolio Manager of
Fidelity Select Cyclical
Industries Portfolio
Q. HOW DID THE FUND PERFORM, ALBERT?
A. Since its inception on March 3, 1997, the fund returned 25.77%. By
comparison, the Standard & Poor's 500 Index was up 34.22% over the
same time frame.
Q. WHY DID THE FUND'S PERFORMANCE LAG THAT OF THE S&P 500?
A. The biggest surprise for me was the magnitude of the impact from
concerns in the Asian Pacific. The fund's holdings in paper and
aluminum companies took a hit over concerns about diminished demand
for these products in that region. Any slight change in customer
demand can reduce commodity prices, which is then reflected in stock
performance, and so aluminum and paper stocks suffered. That's why
stocks like Aluminum Company of America and Inco were among my
disappointments. These stocks have come back lately, however. While I
have trimmed back a little in paper stocks, I have maintained my
conviction and continue to hold aluminum stocks.
Q. WHAT ARE YOU LOOKING FOR IN TODAY'S MARKET?
A. Increasingly, I am looking for stability of earnings. So, for
example, I like companies that will benefit from the health of the
aerospace sector. I want companies that have more predictable
earnings. The mainstays in aerospace have been Textron, for example,
which saw a huge improvement in demand during the period, or
Gulfstream. These companies may benefit from any improvement in the
aerospace cycle, especially in smaller niches such as business jets.
Q. YOU'RE A VALUE INVESTOR. IS IT HARDER TO BE VALUE-ORIENTED GIVEN
THE STATE OF THE MARKET TODAY?
A. It is more challenging. I have to be more selective. I have changed
my orientation toward what I consider to be a value in today's market.
Now, I look at stocks more on a relative basis to the overall market
valuation, whereas I used to look at them almost entirely on an
absolute basis. So when I analyze a stock now, I look at it relative
to its industry, to other stocks within the general sector and to the
overall market. An example of this orientation would be Textron. Over
the past seven years, the company's earnings growth has been better
than the earnings growth of the market. And yet, the stock was still
trading at a thirty percent discount to the market at the end of the
period. So even though it was at the high end of its historical range,
I did not believe it should have been trading at such a discount.
Q. I SEE THAT TWO OF YOUR LARGEST HOLDINGS - GENERAL ELECTRIC AND FORD
- - HAVEN'T CHANGED DURING THE PAST SIX MONTHS. WHY IS THAT?
A. I choose stocks for the long term. That is the case with a stock
like General Electric, which was the largest holding in the fund at
the end of the period. In terms of earnings predictability, the
company has a long history of meeting shareholder expectations.
Because GE has been very conservative financially and hedges its
currency exposure, at the end of the period it appeared to have
minimal exposure to the Asian Pacific crisis. Also, it was in the
midst of a significant cost-reduction campaign called the Six Sigma
effort aimed at potentially doubling current earnings over a couple of
years. Ford, which has also been in a major cost-reduction effort, was
a company whose stock I had been acquiring toward the end of the
period. While I am concerned about the overall auto cycle, Ford
appeared to be well-positioned because of cost-reduction efforts and
an aggressive stock buyback program. It also had plans to launch some
attractive vehicles soon. These two stocks were among my best
performers for the period.
Q. DO YOU SEE ANY OTHER SHIFTS IN STRATEGY OVER THE NEXT SIX MONTHS?
A. My overall market outlook was good at the end of the period. Demand
appeared to be strong across all domestic and European businesses.
Beyond that, I am looking for two types of companies: those that are
doing a good job of growing their unit sales, and those that are
seemingly at their capacity, which will enable them to get price
improvements.
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: March 3, 1997
TRADING SYMBOL: FCYCF
FUND NUMBER: 515
SIZE: as of February 28, 1998, more than
$3 million
MANAGER: Albert Ruback, since inception; manager,
Fidelity Select Energy Portfolio, 1994-1996; Fidelity
Select Industrial Equipment Portfolio, 1991-1994;
Select leader, cyclical industries, since 1996;
joined Fidelity in 1991
(checkmark)
CYCLICAL INDUSTRIES PORTFOLIO
INVESTMENTS FEBRUARY 28, 1998
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 90.2%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 5.3%
AIRCRAFT - 2.7%
Gulfstream Aerospace Corp. (a) 600 $ 24,300
Lockheed Martin Corp. 750 87,516
111,816
AIRCRAFT & PARTS - 2.0%
Precision Castparts Corp. 200 11,088
Sundstrand Corp. 200 12,100
Textron, Inc. 800 59,950
83,138
AIRCRAFT EQUIPMENT - 0.2%
Aviall, Inc. (a) 700 10,063
MISSILES & SPACE VEHICLES - 0.4%
Alliant Techsystems, Inc. (a) 300 18,844
TOTAL AEROSPACE & DEFENSE 223,861
AGRICULTURE - 3.2%
CROPS - 3.2%
DEKALB Genetics Corp. Class B 2,000 134,375
AIR TRANSPORTATION - 5.4%
AIR TRANSPORT, MAJOR NATIONAL - 5.4%
AMR Corp. (a) 700 88,594
America West Holding Corp. Class B (a) 1,000 24,813
Continental Airlines, Inc. Class B (a) 800 40,200
Southwest Airlines Co. 1,200 34,425
US Airways Group, Inc. (a) 600 37,988
226,020
AUTOS, TIRES, & ACCESSORIES - 8.0%
AUTO & TRUCK PARTS - 2.6%
Cummins Engine Co., Inc. 300 17,363
Eaton Corp. 200 19,213
SPX Corp. 500 37,344
TRW, Inc. 350 19,184
Wynn's International, Inc. 600 15,225
108,329
MOTOR VEHICLES & CAR BODIES - 4.6%
Ford Motor Co. 3,000 169,413
Lear Corp. (a) 400 21,150
190,563
TIRES & INNER TUBES - 0.8%
Goodyear Tire & Rubber Co. 500 34,563
TOTAL AUTOS, TIRES, & ACCESSORIES 333,455
BROADCASTING - 0.7%
TELEVISION BROADCASTING - 0.7%
CBS Corp. 1,000 30,938
BUILDING MATERIALS - 2.3%
AIRCONDITIONING EQUIPMENT - 1.0%
American Standard Companies, Inc. (a) 1,000 44,500
PAINT & VARNISH - 0.5%
Lilly Industrial Coatings, Inc. Class A 1,000 20,125
PLUMBING SUPPLIES - WHOLESALE - 0.8%
Masco Corp. 600 32,625
TOTAL BUILDING MATERIALS 97,250
SHARES VALUE (NOTE 1)
CHEMICALS & PLASTICS - 8.6%
ADHESIVES & SEALANTS - 1.3%
Ferro Corp. 1,050 $ 28,284
Nalco Chemical Co. 600 24,150
52,434
AGRICULTURAL CHEMICALS - 1.3%
IMC Global, Inc. 500 19,094
OM Group, Inc. 400 17,775
Potash Corp. of Saskatchewan 200 17,875
54,744
CHEMICALS - 3.2%
Cytec Industries, Inc. (a) 1,100 53,763
Goodrich (B.F.) Co. 280 13,878
NL Industries, Inc. (a) 1,200 17,850
Olin Corp. 350 16,034
Witco Corp. 800 31,850
133,375
INDUSTRIAL GASES - 0.8%
Air Products & Chemicals, Inc. 400 33,575
PLASTICS & SYNTHETIC RESINS - 0.5%
Solutia, Inc. 240 6,555
Spartech Corp. 800 15,000
21,555
PLASTICS - 0.4%
Hanna (M.A.) Co. 800 18,550
UNSUPPORTED PLASTICS FILM & SHEET - 1.1%
Sealed Air Corp. (a) 200 13,463
W.R. Grace & Co. 400 33,575
47,038
TOTAL CHEMICALS & PLASTICS 361,271
COMPUTERS & OFFICE EQUIPMENT - 2.1%
OFFICE AUTOMATION - 2.1%
Pitney Bowes, Inc. 400 18,750
Xerox Corp. 800 70,950
89,700
CONSTRUCTION - 2.0%
MOBILE HOMES - 0.6%
Oakwood Homes Corp. 600 23,775
OPERATIVE BUILDERS - 1.4%
Centex Corp. 150 10,959
Kaufman & Broad Home Corp. 700 18,113
Lennar Corp. 300 8,381
U.S. Home Corp. (a) 500 21,906
59,359
TOTAL CONSTRUCTION 83,134
CONSUMER DURABLES - 1.4%
MANUFACTURING INDUSTRIES - 1.4%
Minnesota Mining & Manufacturing Co. 700 59,719
CONSUMER ELECTRONICS - 0.8%
APPLIANCES - 0.8%
Black & Decker Corp. 200 10,075
Maytag Co. 500 22,500
32,575
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
DEFENSE ELECTRONICS - 2.3%
Litton Industries, Inc. (a) 300 $ 18,675
Northrop Grumman Corp. 400 55,600
Raytheon Co. Class B 400 23,525
97,800
ELECTRICAL EQUIPMENT - 11.1%
ELECTRICAL MACHINERY - 11.1%
Emerson Electric Co. 1,200 76,575
General Electric Co. 4,000 311,000
Honeywell, Inc. 1,000 79,250
466,825
ELECTRONIC INSTRUMENTS - 1.0%
MEASURING INSTRUMENTS - 1.0%
Thermo Electron Corp. (a) 1,000 41,000
ENGINEERING - 1.5%
ARCHITECTS & ENGINEERS - 1.5%
EG & G, Inc. 600 16,163
Fluor Corp. 1,000 47,063
63,226
HOLDING COMPANIES - 1.6%
HOLDING COMPANY OFFICES - 1.6%
Norfolk Southern Corp. 2,000 68,875
HOME FURNISHINGS - 0.5%
FURNITURE - 0.5%
Leggett & Platt, Inc. 400 20,075
INDUSTRIAL MACHINERY & EQUIPMENT - 9.3%
CONSTRUCTION EQUIPMENT - 0.9%
Caterpillar, Inc. 700 38,238
FARM MACHINERY & EQUIPMENT - 1.4%
Case Corp. 900 58,556
GENERAL INDUSTRIAL MACHINERY - 7.0%
Illinois Tool Works, Inc. 600 35,963
Ingersoll-Rand Co. 950 45,244
Tyco International Ltd. 4,200 213,150
294,357
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 391,151
IRON & STEEL - 2.5%
BLAST FURNACES - 0.4%
Steel Dynamics, Inc. (a) 800 15,200
FABRICATED METAL PRODUCTS - 0.7%
Aeroquip Vickers, Inc. 200 11,613
SPS Technologies, Inc. (a) 400 18,950
30,563
IRON & STEEL BLAST FURNACES, MILLS - 1.0%
Inland Steel Industries, Inc. 700 14,438
Nucor Corp. 500 25,750
40,188
IRON & STEEL FOUNDRIES - 0.4%
Dofasco, Inc. 1,000 17,524
TOTAL IRON & STEEL 103,475
METALS & MINING - 1.9%
ALUMINUM, EXTRUDED PRODUCTS - 0.6%
Alumax, Inc. (a) 700 25,944
SHARES VALUE (NOTE 1)
METAL MINING - 0.5%
Phelps Dodge Corp. 300 $ 19,050
NON-METALLIC MINERAL MINING - 0.4%
Martin Marietta Materials, Inc. 400 15,225
PRIMARY PRODUCTION OF ALUMINUM - 0.4%
Reynolds Metals Co. 300 18,694
TOTAL METALS & MINING 78,913
PACKAGING & CONTAINERS - 1.6%
GLASS CONTAINERS - 0.5%
Owens-Illinois, Inc. (a) 500 19,188
METAL CANS & CONTAINERS - 1.1%
Silgan Holdings, Inc. 1,300 45,825
TOTAL PACKAGING & CONTAINERS 65,013
PAPER & FOREST PRODUCTS - 4.9%
PAPER - 2.8%
Champion International Corp. 400 20,425
Stone Container Corp. (a) 1,600 18,000
Temple-Inland, Inc. 400 23,850
Union Camp Corp. 400 23,900
Willamette Industries, Inc. 800 29,550
115,725
PAPER MILLS - 1.8%
Bowater, Inc. 700 34,650
Fort James Corp. 887 40,248
74,898
PULP MILLS - 0.3%
Tembec, Inc. Class A (a) 2,400 14,665
TOTAL PAPER & FOREST PRODUCTS 205,288
POLLUTION CONTROL - 2.9%
POLLUTION EQUIPMENT & DESIGN - 0.6%
Ogden Corp. 900 24,750
REFUSE SYSTEMS - 1.4%
Browning-Ferris Industries, Inc. 700 23,319
Eastern Environmental Services, Inc. (a) 800 18,900
Waste Management, Inc. 600 15,000
57,219
SANITARY SERVICES - 0.9%
USA Waste Services, Inc. (a) 937 39,003
TOTAL POLLUTION CONTROL 120,972
RAILROADS - 3.0%
RAILROAD EQUIPMENT - 0.2%
Bombardier, Inc. Class B 300 6,448
RAILROADS - 2.8%
CSX Corp. 900 50,344
Canadian National Railway Co. 1,100 68,299
118,643
TOTAL RAILROADS 125,091
SERVICES - 1.0%
BUILDING MAINTENANCE - 1.0%
Ecolab, Inc. 1,400 40,600
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
SHIP BUILDING & REPAIR - 1.8%
SHIP BUILDERS - 1.8%
Avondale Industries, Inc. (a) 1,200 $ 34,500
General Dynamics Corp. 300 26,025
Newport News Shipbuilding, Inc. 600 16,350
76,875
TEXTILES & APPAREL - 0.9%
COTTON MILLS - 0.3%
Galey & Lord, Inc. (a) 600 11,888
TEXTILE MILL PRODUCTS - 0.6%
Unifi, Inc. 700 25,725
TOTAL TEXTILES & APPAREL 37,613
TRUCKING & FREIGHT - 2.6%
AIR COURIER SERVICES - 0.4%
CNF Transportation, Inc. 400 15,650
FREIGHT FORWARDING - 0.7%
Air Express International Corp. 300 8,400
Expeditors International of
Washington, Inc. 500 20,250
28,650
TRUCKING, LOCAL & LONG DISTANCE - 0.5%
Werner Enterprises, Inc. 900 22,388
TRUCKING, LONG DISTANCE - 1.0%
USFreightways Corp. 600 20,963
Yellow Corp. (a) 1,100 23,169
44,132
TOTAL TRUCKING & FREIGHT 110,820
TOTAL COMMON STOCKS
(Cost $3,316,438) 3,785,910
CASH EQUIVALENTS - 9.8%
Taxable Central Cash Fund (b)
(Cost $410,023) 410,023 410,023
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $3,726,461) $ 4,195,933
LEGEND
1. Non-income producing
2. At period end, the seven-day yield on the Taxable Central Cash Fund
was 5.62%. 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 $7,376,076 and $4,388,218 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 $470 for the
period (see Note 4 of Notes to Financial Statements).
INCOME TAX INFORMATION
At February 28, 1998, the aggregate cost of investment securities for
income tax purposes was $3,727,489. Net unrealized appreciation
aggregated $468,444, of which $521,277 related to appreciated
investment securities and $52,833 related to depreciated investment
securities.
A total of 23% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate
shareholders (unaudited).
The fund will notify shareholders in January 1999 of this percentage
for use in preparing 1998 income tax returns.
CYCLICAL INDUSTRIES PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1998
ASSETS
INVESTMENT IN $ 4,195,933
SECURITIES,
AT VALUE
(COST
$3,726,4
61) -
SEE
ACCOMPAN
YING
SCHEDULE
RECEIVABLE 1,113
FOR FUND
SHARES
SOLD
DIVIDENDS 5,239
RECEIVABLE
INTEREST 1,106
RECEIVABLE
REDEMPTION 17
FEES
RECEIVABLE
RECEIVABLE 4,109
FROM
INVESTMENT
ADVISER FOR
EXPENSE
REDUCTIONS
TOTAL 4,207,517
ASSETS
LIABILITIES
PAYABLE TO $ 24,009
CUSTODIAN
BANK
PAYABLE FOR 141,472
INVESTMENT
S
PURCHASED
PAYABLE FOR 52,023
FUND
SHARES
REDEEMED
OTHER 24,773
PAYABLES
AND
ACCRUED
EXPENSES
TOTAL 242,277
LIABILITIES
NET ASSETS $ 3,965,240
NET ASSETS
CONSIST OF:
PAID IN $ 3,345,148
CAPITAL
ACCUMULATED 150,620
UNDISTRIBUT
ED NET
REALIZED
GAIN (LOSS)
ON
INVESTMENT
S AND
FOREIGN
CURRENCY
TRANSACTIO
NS
NET 469,472
UNREALIZED
APPRECIATI
ON
(DEPRECIATI
ON) ON
INVESTMENT
S
NET ASSETS, $ 3,965,240
FOR
328,650
SHARES
OUTSTANDIN
G
NET ASSET $12.07
VALUE AND
REDEMPTIO
N PRICE
PER SHARE
($3,965,2
40 (DIVIDED BY)
328,650
SHARES)
MAXIMUM $12.44
OFFERING
PRICE PER
SHARE
(100/97.
00 OF
$12.07)
STATEMENT OF OPERATIONS
MARCH 3, 1997 (COMMENCEMENT OF OPERATIONS) TO FEBRUARY 28, 1998
INVESTMENT $ 42,778
INCOME
DIVIDENDS
INTEREST 12,881
TOTAL 55,659
INCOME
EXPENSES
MANAGEMEN $ 21,141
T FEE
TRANSFER 28,855
AGENT FEES
ACCOUNTING 59,755
FEES AND
EXPENSES
NON-INTEREST 6
ED
TRUSTEES'
COMPENSAT
ION
CUSTODIAN 14,897
FEES AND
EXPENSES
REGISTRATION 40,858
FEES
AUDIT 18,227
LEGAL 15
MISCELLANEO 14
US
TOTAL 183,768
EXPENSES
BEFORE
REDUCTIONS
EXPENSE (94,990) 88,778
REDUCTIONS
NET (33,119)
INVESTMEN
T INCOME
(LOSS)
REALIZED
AND
UNREALIZED
GAIN (LOSS)
NET REALIZED
GAIN (LOSS)
ON:
INVESTMENT 328,579
SECURITIES
FOREIGN (73) 328,506
CURRENCY
TRANSACTIO
NS
CHANGE IN 469,472
NET
UNREALIZED
APPRECIATI
ON
(DEPRECIATI
ON) ON
INVESTMENT
SECURITIES
NET GAIN 797,978
(LOSS)
NET INCREASE $ 764,859
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
OTHER $ 36,552
INFORMATIO
N
SALES
CHARGES
PAID TO
FDC
EXCHANGE $ 3,488
FEES
WITHHELD
BY FSC
EXPENSE $ 131
REDUCTIONS
DIRECTED
BROKERAGE
ARRANGEM
ENTS
CUSTODIA 39
N CREDITS
FMR 94,820
REIMBURSE
MENT
$ 94,990
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS MARCH 3, 1997
(COMMENCEMENT
OF OPERATIONS) TO
FEBRUARY 28,
1998
OPERATIONS $ (33,119)
NET
INVESTMENT
INCOME
(LOSS)
NET 328,506
REALIZED
GAIN (LOSS)
CHANGE IN 469,472
NET
UNREALIZED
APPRECIATI
ON
(DEPRECIATI
ON)
NET 764,859
INCREASE
(DECREAS
E) IN NET
ASSETS
RESULTING
FROM
OPERATIO
NS
DISTRIBUTIONS (144,767)
TO
SHAREHOLD
ERS FROM
NET
REALIZED
GAINS
SHARE 10,028,973
TRANSACTIO
NS
NET
PROCEEDS
FROM SALES
OF SHARES
REINVESTM 143,304
ENT OF
DISTRIBUTIO
NS
COST OF (6,843,907)
SHARES
REDEEMED
NET 3,328,370
INCREASE
(DECREAS
E) IN NET
ASSETS
RESULTING
FROM
SHARE
TRANSACTI
ONS
REDEMPTIO 16,778
N FEES
TOTAL 3,965,240
INCREASE
(DECREASE)
IN NET
ASSETS
NET ASSETS
BEGINNING -
OF PERIOD
END OF $ 3,965,240
PERIOD
OTHER
INFORMATION
SHARES
SOLD 908,349
ISSUED IN 13,087
REINVESTME
NT OF
DISTRIBUTIO
NS
REDEEMED (592,786)
NET 328,650
INCREASE
(DECREASE)
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
YEAR ENDED
FEBRUARY 28,
SELECTED PER-SHARE DATA 1998 E
NET ASSET $ 10.00
VALUE,
BEGINNING
OF PERIOD
INCOME FROM
INVESTMENT
OPERATION
S
NET (.11)
INVESTMENT
INCOME
(LOSS) D
NET 2.59
REALIZED
AND
UNREALIZED
GAIN (LOSS)
TOTAL FROM 2.48
INVESTMENT
OPERATIONS
LESS
DISTRIBUTIO
NS
FROM NET (.46)
REALIZED
GAIN
REDEMPTION .05
FEES
ADDED TO
PAID IN
CAPITAL
NET ASSET $ 12.07
VALUE, END
OF PERIOD
TOTAL 25.77%
RETURN B, C
RATIOS AND
SUPPLEME
NTAL DATA
NET ASSETS, $ 3,965
END OF
PERIOD
(000
OMITTED)
RATIO OF 2.50% A, F
EXPENSES
TO AVERAGE
NET ASSETS
RATIO OF NET (.93)% A
INVESTMENT
INCOME
(LOSS) TO
AVERAGE
NET ASSETS
PORTFOLIO 140% A
TURNOVER
RATE
AVERAGE $ .0220
COMMISSIO
N RATE G
ANNUALIZED
THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD
CERTAIN EXPENSES NOT BEEN REDUCED
DURING THE PERIOD SHOWN (SEE NOTE 8 OF
NOTES TO FINANCIAL STATEMENTS).
TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES
CHARGE AND FOR PERIODS OF LESS THAN ONE
YEAR ARE NOT ANNUALIZED.
NET INVESTMENT INCOME (LOSS) PER SHARE HAS
BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
FOR THE PERIOD MARCH 3, 1997
(COMMENCEMENT OF OPERATIONS) TO
FEBRUARY 28, 1998.
FMR AGREED TO REIMBURSE A PORTION OF THE
FUND'S EXPENSES DURING THE PERIOD.
WITHOUT THIS REIMBURSEMENT, THE FUND'S
EXPENSE RATIO WOULD HAVE BEEN HIGHER
(SEE NOTE 8 OF NOTES TO FINANCIAL
STATEMENTS).
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.
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). Load adjusted returns include a 3.00% sales
charge and the effect of a $7.50 trading fee. 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, 1998 YEAR YEARS YEARS
SELECT CONSTRUCTION 40.04% 125.50% 382.21%
AND HOUSING
SELECT CONSTRUCTION 35.76% 118.66% 367.67%
AND HOUSING (LOAD ADJ.)
S&P 500 35.01% 166.84% 422.55%
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 Standard & Poor's
500 Index - a widely recognized, unmanaged index of common stocks.
This benchmark includes 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, 1998 YEAR YEARS YEARS
SELECT CONSTRUCTION 40.04% 17.66% 17.04%
AND HOUSING
SELECT CONSTRUCTION 35.76% 16.94% 16.68%
AND HOUSING (LOAD ADJ.)
S&P 500 35.01% 21.69% 17.98%
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 LONG-TERM GROWTH AND
SHORT-TERM VOLATILITY. 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
CONSTRUCTION & HOUSING S&P 500
00511 SP001
1988/02/29 9700.00 10000.00
1988/03/31 10087.63 9691.00
1988/04/30 10382.97 9798.57
1988/05/31 10318.36 9883.82
1988/06/30 10927.50 10337.48
1988/07/31 10816.75 10298.20
1988/08/31 10262.99 9948.06
1988/09/30 10576.78 10371.85
1988/10/31 10650.62 10660.19
1988/11/30 10521.41 10507.75
1988/12/31 11064.76 10691.63
1989/01/31 11739.09 11474.26
1989/02/28 11596.63 11188.55
1989/03/31 11891.05 11449.25
1989/04/30 12356.44 12043.46
1989/05/31 12793.33 12531.22
1989/06/30 12785.25 12459.79
1989/07/31 13303.98 13584.91
1989/08/31 13527.75 13851.18
1989/09/30 13771.86 13794.39
1989/10/31 12998.84 13474.36
1989/11/30 13192.10 13749.23
1989/12/31 12901.19 14079.22
1990/01/31 12087.40 13134.50
1990/02/28 12336.97 13303.94
1990/03/31 13031.39 13656.49
1990/04/30 12651.63 13315.08
1990/05/31 13823.48 14613.30
1990/06/30 13573.92 14513.93
1990/07/31 12865.92 14467.48
1990/08/31 11230.22 13159.62
1990/09/30 10070.58 12518.75
1990/10/31 9716.58 12464.92
1990/11/30 10656.50 13270.15
1990/12/31 11657.46 13640.39
1991/01/31 12682.82 14235.11
1991/02/28 13793.64 15252.92
1991/03/31 14135.43 15622.04
1991/04/30 14355.15 15659.53
1991/05/31 15783.34 16336.03
1991/06/30 14977.69 15587.84
1991/07/31 15368.31 16314.23
1991/08/31 16003.06 16700.88
1991/09/30 15649.07 16421.97
1991/10/31 15380.52 16642.03
1991/11/30 14611.49 15971.35
1991/12/31 16473.72 17798.47
1992/01/31 17698.38 17467.42
1992/02/29 17988.09 17694.50
1992/03/31 17974.92 17349.46
1992/04/30 18225.12 17859.53
1992/05/31 18804.53 17947.04
1992/06/30 17460.87 17679.63
1992/07/31 17777.14 18402.73
1992/08/31 17170.95 18025.47
1992/09/30 17394.98 18238.17
1992/10/31 18001.17 18302.01
1992/11/30 19042.23 18926.11
1992/12/31 19556.17 19158.90
1993/01/31 20373.21 19319.83
1993/02/28 20742.20 19582.58
1993/03/31 21229.78 19995.77
1993/04/30 20728.84 19511.88
1993/05/31 20953.00 20034.79
1993/06/30 21203.54 20092.89
1993/07/31 21928.79 20012.52
1993/08/31 22838.64 20771.00
1993/09/30 23577.07 20611.06
1993/10/31 24434.18 21037.71
1993/11/30 24051.78 20837.85
1993/12/31 26129.17 21089.99
1994/01/31 26982.80 21807.05
1994/02/28 26435.95 21216.08
1994/03/31 24888.74 20291.06
1994/04/30 24832.43 20550.78
1994/05/31 23518.40 20887.82
1994/06/30 22941.84 20376.06
1994/07/31 23598.85 21044.40
1994/08/31 24497.22 21907.22
1994/09/30 23129.55 21370.49
1994/10/31 22445.72 21851.33
1994/11/30 21533.95 21055.50
1994/12/31 21962.99 21367.76
1995/01/31 22059.38 21921.82
1995/02/28 23119.66 22776.12
1995/03/31 23532.75 23448.24
1995/04/30 23560.29 24138.79
1995/05/31 24716.97 25103.62
1995/06/30 24951.05 25686.77
1995/07/31 26107.73 26538.55
1995/08/31 26121.50 26605.16
1995/09/30 25970.03 27727.90
1995/10/31 25956.26 27628.91
1995/11/30 27553.56 28841.82
1995/12/31 28283.32 29397.31
1996/01/31 28225.75 30398.00
1996/02/29 28153.78 30679.78
1996/03/31 29118.15 30975.23
1996/04/30 29155.11 31431.81
1996/05/31 30114.46 32242.43
1996/06/30 30294.33 32365.28
1996/07/31 29020.20 30935.38
1996/08/31 30384.27 31587.81
1996/09/30 32033.15 33365.57
1996/10/31 31553.48 34285.79
1996/11/30 32992.49 36877.45
1996/12/31 32020.28 36146.91
1997/01/31 32339.12 38405.37
1997/02/28 33401.90 38706.47
1997/03/31 32445.40 37116.02
1997/04/30 33104.56 39331.84
1997/05/31 36272.71 41726.37
1997/06/30 36916.50 43595.71
1997/07/31 40796.21 47064.62
1997/08/31 40677.61 44428.06
1997/09/30 41965.20 46861.38
1997/10/31 40338.78 45296.21
1997/11/30 41236.70 47392.97
1997/12/31 41573.29 48206.71
1998/01/31 43069.78 48739.88
1998/02/27 46767.00 52255.00
IMATRL PRASUN SHR__CHT 19980228 19980326 100057 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Construction and Housing Portfolio on
February 29, 1988, and the current 3.00% sales charge was paid. As the
chart shows, by February 28, 1998, the value of the investment would
have grown to $46,767 - a 367.67% increase on the initial investment,
and includes the effect of a $7.50 trading fee. 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 $52,255 - a 422.55% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1998
% OF FUND'S
INVESTMENTS
BLACK & DECKER CORP. 4.8
ELCOR CORP. 4.8
CENTEX CORP. 4.1
MASCO CORP. 3.8
TOLL BROTHERS, INC. 3.7
U.S. HOME CORP. 3.2
LEGGETT & PLATT, INC. 2.8
USG CORP. 2.7
LENNAR CORP. 2.7
MAYTAG CO. 2.6
TOP INDUSTRIES AS OF FEBRUARY 28, 1998
OPERATIVE BUILDERS 15.9%
APPLIANCES 8.6%
GENERAL BUILDING 6.7%
PAVING, ROOFING & SIDING 6.7%
FURNITURE 5.2%
ALL OTHERS 56.9%
ROW: 1, COL: 1, VALUE: 56.9
ROW: 1, COL: 2, VALUE: 5.2
ROW: 1, COL: 3, VALUE: 6.7
ROW: 1, COL: 4, VALUE: 6.7
ROW: 1, COL: 5, VALUE: 8.6
ROW: 1, COL: 6, VALUE: 15.9
*
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
CONSTRUCTION AND HOUSING PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
NOTE TO SHAREHOLDERS: Yolanda McGettigan became Portfolio Manager of
Fidelity Select Construction and Housing Portfolio on December 1,
1997.
Q. HOW DID THE FUND PERFORM, YOLANDA?
A. For the 12-month period that ended February 28, 1998, the fund
returned 40.04%, outperforming the Standard & Poor's 500 Index return
of 35.01% during the same time period.
Q. WHAT WAS THE ENVIRONMENT LIKE FOR CONSTRUCTION AND HOUSING STOCKS?
A. It was a good environment for these stocks. Mortgage rates dropped
to near-record lows during the period, making this the seventh
consecutive year in an up economic cycle. Other factors - including
inventory levels of less than four months' supply of homes on the
market and steadily declining interest rates - demonstrated continued
strength in the construction and housing industry. In addition, this
sector provided a relatively safe haven for investors during the
period, given all the fears about Asian economies.
Q. YOU'VE ADDED MORE HOLDINGS TO THE FUND. WHY?
A. The fund has nearly doubled in size over the past year. With new
money pouring in, I've looked for different opportunities and ideas,
adding new stocks. I've maintained a focus on mid- and
small-capitalization stocks, adding a number of large-cap companies,
thus matching the profile of this sector. The portfolio's mix has
shifted as well. I've built up its weighting in construction stocks,
increasing it from about 12% one year ago to nearly 28% at the end of
the period.
Q. WHICH STOCKS HAVE DONE WELL?
A. Black & Decker, the fund's top holding, performed very well. The
company suffered a bit at the end of 1996, as new plans for expansion
did not go as well as expected and it had to restructure. Black &
Decker projected flat earnings in 1997 and, as a result, investor
interest in the stock declined, even though it is the number one brand
in power tools, has great exposure through Home Depot sales and enjoys
a phenomenal brand presence. The momentum simply wasn't there. The
company has come back strongly, though, with a major restructuring
designed to save $100 million over the next couple of years. Another
top holding, Elcor, has also done well. It's an interesting company
that specializes in building premium roofing. Further, Masco has been
one of the most reliable companies in the portfolio and a good
defensive stock, since it was not as sensitive to changes in interest
rates as others in its industry. Masco is the category leader in
almost every aspect of its business, with two-thirds of its sales in
the repair and remodel market and little involvement in new
construction. Since Masco divested itself of a furniture company,
earnings have accelerated.
Q. WERE THERE ANY DISAPPOINTMENTS?
A. Paper companies were disappointing stocks in general. Fort James,
one of the fund's holdings, exemplified their performance. This is a
company in a cyclical industry, and during the past year this industry
entered a bad part of its business cycle, so I sold the stock during
the period. Two other holdings, Caterpillar and Deere, were purchased
as defensive plays, although they didn't turn out that way. A
significant portion of their sales are in the export market, with a
lot of exposure to Asia. Despite a strong North American market,
falling demand in Asia hurt the performance of these two companies.
These stocks were sold from the fund's portfolio. Apogee is a company
that produces glass coating and specialty glass, and its performance
was negatively affected by a project that went awry in France, hurting
earnings. I sold the fund's position in Apogee during the period as
well.
Q. YOLANDA, WHAT'S YOUR PHILOSOPHY AND OUTLOOK?
A. This is a cyclical fund in a cyclical industry, so I pay careful
attention to where we are in the economic cycle and what that means
for each of the fund's sub-industries. I also look for stellar
companies that stand out in particular industries, using Fidelity's
extensive research capabilities. My outlook for the coming year is
very positive, based on the orders that home builders are currently
receiving, low levels of home inventories, low interest rates and low
stock valuations of the home building group 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: September 29, 1986
FUND NUMBER: 511
TRADING SYMBOL: FSHOX
SIZE: As of February 28, 1998, more than
$57 million
MANAGER: Yolanda McGettigan, since
December 1997; joined Fidelity in 1997
(checkmark)
CONSTRUCTION AND HOUSING PORTFOLIO
INVESTMENTS FEBRUARY 28, 1998
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 89.0%
SHARES VALUE (NOTE 1)
AUTOS, TIRES, & ACCESSORIES - 2.5%
AUTO & TRUCK PARTS - 2.5%
Danaher Corp. 20,000 $ 1,438,750
BROADCASTING - 0.9%
CABLE TV OPERATORS - 0.9%
Time Warner, Inc. 7,500 506,250
BUILDING MATERIALS - 19.3%
CEMENT - 3.9%
Florida Rock Industries, Inc. 5,000 130,625
Giant Cement Holding, Inc. (a) 1,300 33,800
Lafarge Corp. 5,300 177,881
Lone Star Industries, Inc. 20,000 1,205,000
Medusa Corp. 15,000 709,688
2,256,994
CONCRETE, GYPSUM, PLASTER - 3.5%
CalMat Co. 14,300 411,125
USG Corp. (a) 28,800 1,573,200
1,984,325
FABRICATED STRUCTURAL METAL - 1.0%
United Dominion Industries Ltd. 20,000 573,134
PAINT & VARNISH - 0.4%
Sherwin-Williams Co. 7,100 237,406
PAVING, ROOFING & SIDING - 6.7%
Carlisle Companies, Inc. 21,500 1,041,406
Elcor Corp. 102,200 2,740,238
Owens-Corning 2,400 74,100
3,855,744
PLUMBING SUPPLIES - WHOLESALE - 3.8%
Masco Corp. 40,000 2,175,000
TOTAL BUILDING MATERIALS 11,082,603
CHEMICALS & PLASTICS - 0.2%
MISCELLANEOUS PLASTICS PRODUCTS - 0.2%
Zag Industries Ltd. (a) 10,000 110,000
CONSTRUCTION - 27.7%
CONSTRUCTION - 0.6%
Jacobs Engineering Group, Inc. 1,100 32,931
Walter Industries, Inc. (a) 15,700 299,281
332,212
GENERAL BUILDING - 6.7%
Crossman Communities, Inc. (a) 20,000 520,000
D.R. Horton, Inc. 40,000 932,500
M.D.C. Holdings, Inc. 16,600 311,250
Toll Brothers, Inc. (a) 70,000 2,100,000
3,863,750
MOBILE HOMES - 3.6%
Clayton Homes, Inc. 39,800 791,025
Fleetwood Enterprises, Inc. 10,000 468,750
Oakwood Homes Corp. 20,000 792,500
2,052,275
OPERATIVE BUILDERS - 15.9%
Centex Corp. 31,900 2,330,694
Engle Homes, Inc. 14,700 249,900
Kaufman & Broad Home Corp. 4,300 111,263
Lennar Corp. 55,000 1,536,563
M/I Schottenstein Homes, Inc. (a) 25,000 554,688
NVR, Inc. (a) 40,000 1,295,000
Pulte Corp. 20,000 910,000
SHARES VALUE (NOTE 1)
U.S. Home Corp. (a) 42,500 $ 1,862,031
Webb (Del E.) Corp. 10,000 320,000
9,170,139
PREFABRICATED METAL BUILDINGS - 0.7%
NCI Building Systems, Inc. 10,000 395,000
SINGLE-FAMILY HOUSING CONSTRUCTION - 0.2%
Beazer Homes USA, Inc. 4,400 104,500
TOTAL CONSTRUCTION 15,917,876
CONSUMER DURABLES - 1.1%
HARDWARE - 1.1%
Simpson Manufacturing, Inc. 15,000 616,875
CONSUMER ELECTRONICS - 8.6%
APPLIANCES - 8.6%
Black & Decker Corp. 55,300 2,785,738
Maytag Co. 33,100 1,489,500
Whirlpool Corp. 10,000 668,125
4,943,363
CREDIT & OTHER FINANCE - 1.6%
MORTGAGE BANKERS - 0.8%
Countrywide Credit Industries, Inc. 8,200 364,388
Money Store, Inc. (The) 4,800 119,700
484,088
PERSONAL CREDIT INSTITUTIONS - 0.8%
Green Tree Financial Corp. 20,000 458,750
TOTAL CREDIT & OTHER FINANCE 942,838
ENGINEERING - 2.0%
ARCHITECTS & ENGINEERS - 2.0%
Fluor Corp. 6,800 320,025
Stone & Webster, Inc. 20,300 838,644
1,158,669
FEDERAL SPONSORED CREDIT - 1.8%
FEDERAL & FEDERALLY SPONSORED CREDIT AGENCIES - 1.8%
Fannie Mae 16,300 1,040,144
HOME FURNISHINGS - 9.1%
FURNITURE - 5.2%
Furniture Brands International, Inc. (a) 30,000 821,250
Leggett & Platt, Inc. 32,600 1,636,113
Stanley Furniture Co, Inc. (a) 15,000 513,750
2,971,113
FURNITURE STORES - 0.9%
Heilig-Meyers Co. 35,000 542,500
NON-WOOD OFFICE FURNITURE - 3.0%
HON Industries, Inc. 2,500 164,370
Knoll, Inc. 20,000 712,500
Miller (Herman), Inc. 13,800 845,250
1,722,120
TOTAL HOME FURNISHINGS 5,235,733
HOUSEHOLD PRODUCTS - 1.6%
FABRICATED RUBBER PRODUCTS - 1.6%
Premark International, Inc. 30,000 933,751
INDUSTRIAL MACHINERY & EQUIPMENT - 1.2%
ACCESSORIES & MEASURING CUTTING TOOLS - 0.6%
Stanley Works 6,900 329,906
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
INDUSTRIAL MACHINERY & EQUIPMENT - CONTINUED
FARM MACHINERY & EQUIPMENT - 0.6%
Case Corp. 5,900 $ 383,869
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 713,775
IRON & STEEL - 1.9%
FABRICATED METAL PRODUCTS - 1.9%
Mueller Industries, Inc. (a) 20,000 1,102,500
LEISURE DURABLES & TOYS - 2.1%
MOTOR HOMES - 2.1%
Coachmen Industries, Inc. 41,400 1,182,488
METALS & MINING - 1.3%
NON-METALLIC MINERAL MINING - 1.3%
Martin Marietta Materials, Inc. 20,000 761,250
RETAIL & WHOLESALE, MISCELLANEOUS - 4.6%
BUILDING MATERIALS - RETAIL - 2.3%
Home Depot, Inc. 20,400 1,301,775
LUMBER & BUILDING MATERIALS - RETAIL - 1.5%
Lowe's Companies, Inc. 14,400 841,500
LUMBER - WHOLESALE - 0.8%
Cameron Ashley, Inc. (a) 30,000 480,000
TOTAL RETAIL & WHOLESALE, MISCELLANEOUS 2,623,275
TEXTILES & APPAREL - 1.5%
CARPETS & RUGS - 1.5%
Interface, Inc. Class A 20,000 765,000
Mohawk Industries, Inc. (a) 4,350 114,188
879,188
TOTAL COMMON STOCKS
(Cost $45,551,053) 51,189,328
CASH EQUIVALENTS - 11.0%
Taxable Central Cash Fund (b)
(Cost $6,305,720) 6,305,720 6,305,720
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $51,856,773) $ 57,495,048
LEGEND
1. Non-income producing
2. At period end, the seven-day yield on the Taxable Central Cash Fund
was 5.62%. 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 $115,268,943 and $100,525,078, 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 $46,802 for the
period (see Note 4 of Notes to Financial Statements).
The fund participated in the securities lending program. At the period
end, the value of securities loaned and the value of collateral
amounted to $932,480 and $960,000, respectively (see Note 6 of Notes
to Financial Statements).
INCOME TAX INFORMATION
At February 28, 1998, the aggregate cost of investment securities for
income tax purposes was $51,935,365. Net unrealized appreciation
aggregated $5,559,683, of which $5,727,960 related to appreciated
investment securities and $168,277 related to depreciated investment
securities.
The fund hereby designates approximately $1,565,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 7% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate
shareholders (unaudited).
The fund will notify shareholders in January 1999 of this percentage
for use in preparing 1998 income tax returns.
CONSTRUCTION AND HOUSING PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1998
ASSETS
INVESTMENT IN $ 57,495,048
SECURITIES,
AT VALUE
(COST
$51,856,
773) -
SEE
ACCOMPAN
YING
SCHEDULE
CASH 32,625
RECEIVABLE 922,602
FOR
INVESTMENT
S SOLD
RECEIVABLE 948,335
FOR FUND
SHARES
SOLD
DIVIDENDS 28,017
RECEIVABLE
INTEREST 27,330
RECEIVABLE
REDEMPTION 679
FEES
RECEIVABLE
OTHER 275
RECEIVABLE
S
TOTAL 59,454,911
ASSETS
LIABILITIES
PAYABLE FOR $ 644,509
INVESTMENT
S
PURCHASED
PAYABLE FOR 286,281
FUND
SHARES
REDEEMED
ACCRUED 44,024
MANAGEM
ENT FEE
OTHER 36,030
PAYABLES
AND
ACCRUED
EXPENSES
COLLATERAL ON 960,000
SECURITIES
LOANED,
AT VALUE
TOTAL 1,970,844
LIABILITIES
NET ASSETS $ 57,484,067
NET ASSETS
CONSIST OF:
PAID IN $ 50,153,139
CAPITAL
ACCUMULATED 1,692,654
UNDISTRIBUT
ED NET
REALIZED
GAIN (LOSS)
ON
INVESTMENT
S AND
FOREIGN
CURRENCY
TRANSACTIO
NS
NET 5,638,274
UNREALIZED
APPRECIATI
ON
(DEPRECIATI
ON) ON
INVESTMENT
S
AND ASSETS
AND
LIABILITIES
IN
FOREIGN
CURRENCIES
NET ASSETS, $ 57,484,067
FOR
2,242,70
1
SHARES
OUTSTANDIN
G
NET ASSET $25.63
VALUE AND
REDEMPTIO
N PRICE
PER SHARE
($57,484,
067 (DIVIDED BY)
2,242,70
1 SHARES)
MAXIMUM $26.42
OFFERING
PRICE PER
SHARE
(100/97.
00 OF
$25.63)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1998
INVESTMENT $ 210,840
INCOME
DIVIDENDS
INTEREST 133,631
(INCLUDING
INCOME ON
SECURITIES
LOANED OF
$4,614)
TOTAL 344,471
INCOME
EXPENSES
MANAGEMEN $ 155,730
T FEE
TRANSFER 365,815
AGENT FEES
ACCOUNTING 60,507
AND
SECURITY
LENDING
FEES
NON-INTEREST 111
ED
TRUSTEES'
COMPENSAT
ION
CUSTODIAN 17,446
FEES AND
EXPENSES
REGISTRATION 34,270
FEES
AUDIT 24,683
LEGAL 201
MISCELLANEO 310
US
TOTAL 659,073
EXPENSES
BEFORE
REDUCTIONS
EXPENSE (29,091) 629,982
REDUCTIONS
NET (285,511)
INVESTMEN
T INCOME
(LOSS)
REALIZED
AND
UNREALIZED
GAIN (LOSS)
NET REALIZED
GAIN (LOSS)
ON:
INVESTMENT 3,766,390
SECURITIES
FOREIGN 1,674 3,768,064
CURRENCY
TRANSACTIO
NS
CHANGE IN
NET
UNREALIZED
APPRECIATI
ON
(DEPRECIATI
ON) ON:
INVESTMENT 4,728,367
SECURITIES
ASSETS AND (1) 4,728,366
LIABILITIES
IN
FOREIGN
CURRENCIES
NET GAIN 8,496,430
(LOSS)
NET INCREASE $ 8,210,919
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
OTHER $ 257,572
INFORMATIO
N
SALES
CHARGES
PAID TO
FDC
SALES $ 181
CHARGES -
DEALERS'
PORTION
DEFERRED $ 240
SALES
CHARGES
WITHHELD
BY FDC
EXCHANGE $ 18,090
FEES
WITHHELD
BY FSC
EXPENSE $ 18,778
REDUCTIONS
DIRECTED
BROKERAGE
ARRANGEM
ENTS
CUSTODIA 321
N CREDITS
FMR 9,992
REIMBURSE
MENT
$ 29,091
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
FEBRUARY 28, FEBRUARY 28,
1998 1997
OPERATIONS $ (285,511) $ 181,247
NET
INVESTMENT
INCOME
(LOSS)
NET 3,768,064 10,158,974
REALIZED
GAIN (LOSS)
CHANGE IN 4,728,366 (2,418,313)
NET
UNREALIZED
APPRECIATI
ON
(DEPRECIATI
ON)
NET 8,210,919 7,921,908
INCREASE
(DECREAS
E) IN NET
ASSETS
RESULTING
FROM
OPERATIO
NS
DISTRIBUTIONS (23,292) (112,820)
TO
SHAREHOLD
ERS
FROM NET
INVESTMENT
INCOME
FROM NET (4,419,906) (3,093,992)
REALIZED
GAIN
TOTAL (4,443,198) (3,206,812)
DISTRIBUTIO
NS
SHARE 96,959,375 137,278,007
TRANSACTIO
NS
NET
PROCEEDS
FROM SALES
OF SHARES
REINVESTM 4,390,230 3,185,271
ENT OF
DISTRIBUTIO
NS
COST OF (78,323,951) (157,413,712)
SHARES
REDEEMED
NET 23,025,654 (16,950,434)
INCREASE
(DECREAS
E) IN NET
ASSETS
RESULTING
FROM
SHARE
TRANSACTI
ONS
REDEMPTIO 110,066 147,951
N FEES
TOTAL 26,903,441 (12,087,387)
INCREASE
(DECREASE)
IN NET
ASSETS
NET ASSETS
BEGINNING 30,580,626 42,668,013
OF PERIOD
END OF $ 57,484,067 $ 30,580,626
PERIOD
(INCLUDIN
G
UNDISTRIB
UTED NET
INVESTME
NT
INCOME
OF $0
AND
$68,37
2,
RESPECTIV
ELY)
OTHER
INFORMATION
SHARES
SOLD 4,140,467 6,539,196
ISSUED IN 222,821 160,947
REINVESTME
NT OF
DISTRIBUTIO
NS
REDEEMED (3,510,718) (7,491,813)
NET 852,570 (791,670)
INCREASE
(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>
YEARS ENDED FEBRUARY 28, YEAR ENDED YEARS ENDED FEBRUARY 28,
FEBRUARY 29,
SELECTED PER-SHARE DATA 1998 1997 1996 1995 1994
</TABLE>
NET ASSET $ 22.00 $ 19.56 $ 16.79 $ 19.82 $ 15.74
VALUE,
BEGINNING
OF PERIOD
INCOME FROM
INVESTMENT
OPERATION
S
NET (.25) .06 .07 (.02) .01
INVESTMENT
INCOME
(LOSS) C
NET 7.67 3.38 3.55 (2.50) 4.26
REALIZED
AND
UNREALIZED
GAIN (LOSS)
TOTAL FROM 7.42 3.44 3.62 (2.52) 4.27
INVESTMENT
OPERATIONS
LESS
DISTRIBUTIO
NS
FROM NET (.02) (.02) (.07) - -
INVESTMENT
INCOME
FROM NET (3.87) (1.03) (.81) (.52) (.22)
REALIZED
GAIN
TOTAL (3.89) (1.05) (.88) (.52) (.22)
DISTRIBUTIO
NS
REDEMPTION .10 .05 .03 .01 .03
FEES
ADDED TO
PAID IN
CAPITAL
NET ASSET $ 25.63 $ 22.00 $ 19.56 $ 16.79 $ 19.82
VALUE, END
OF PERIOD
TOTAL 40.04% 18.64% 21.77% (12.54)% 27.45%
RETURN A, B
RATIOS AND
SUPPLEME
NTAL DATA
NET ASSETS, $ 57,484 $ 30,581 $ 42,668 $ 16,863 $ 80,999
END OF
PERIOD
(000
OMITTED)
RATIO OF 2.50% F 1.41% 1.43% 1.76% 1.67%
EXPENSES
TO AVERAGE
NET ASSETS
RATIO OF 2.43% D 1.35% D 1.40% D 1.74% D 1.66% D
EXPENSES
TO AVERAGE
NET ASSETS
AFTER
EXPENSE
REDUCTIONS
RATIO OF NET (1.10)% .27% .39% (.11)% .03%
INVESTMENT
INCOME
(LOSS) TO
AVERAGE
NET ASSETS
PORTFOLIO 404% 270% 139% 45% 35%
TURNOVER
RATE
AVERAGE $ .0342 $ .0410
COMMISSIO
N RATE E
<TABLE>
<CAPTION>
<S> <C>
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. 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. F FMR AGREED TO REIMBURSE A PORTION OF
THE FUND'S EXPENSES DURING THE PERIOD. WITHOUT THIS
REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD HAVE BEEN HIGHER (SEE NOTE 8 OF
NOTES TO FINANCIAL STATEMENTS).
</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). Load adjusted returns include a 3.00% sales
charge and the effect of a $7.50 trading fee. 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, 1998 YEAR YEARS YEARS
SELECT DEFENSE AND 42.68% 235.06% 317.57%
AEROSPACE
SELECT DEFENSE AND 38.33% 224.94% 304.97%
AEROSPACE (LOAD ADJ.)
S&P 500 35.01% 166.84% 422.55%
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 Standard & Poor's
500 Index - a widely recognized, unmanaged index of common stocks.
This benchmark includes 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, 1998 YEAR YEARS YEARS
SELECT DEFENSE AND 42.68% 27.36% 15.36%
AEROSPACE
SELECT DEFENSE AND 38.33% 26.58% 15.01%
AEROSPACE (LOAD ADJ.)
S&P 500 35.01% 21.69% 17.98%
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 LONG-TERM GROWTH AND
SHORT-TERM VOLATILITY. 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
Defense & Aerospace S&P 500
00067 SP001
1988/02/29 9700.00 10000.00
1988/03/31 9676.28 9691.00
1988/04/30 9613.04 9798.57
1988/05/31 9249.39 9883.82
1988/06/30 9628.85 10337.48
1988/07/31 9439.12 10298.20
1988/08/31 9209.86 9948.06
1988/09/30 9486.55 10371.85
1988/10/31 9470.74 10660.19
1988/11/30 9051.75 10507.75
1988/12/31 8972.70 10691.63
1989/01/31 9328.44 11474.26
1989/02/28 9288.92 11188.55
1989/03/31 9478.65 11449.25
1989/04/30 9818.58 12043.46
1989/05/31 9992.50 12531.22
1989/06/30 9873.92 12459.79
1989/07/31 10514.26 13584.91
1989/08/31 10783.05 13851.18
1989/09/30 10585.41 13794.39
1989/10/31 9984.60 13474.36
1989/11/30 9605.13 13749.23
1989/12/31 9763.24 14079.22
1990/01/31 9209.86 13134.50
1990/02/28 9241.48 13303.94
1990/03/31 9810.68 13656.49
1990/04/30 9407.50 13315.08
1990/05/31 10103.18 14613.30
1990/06/30 10110.44 14513.93
1990/07/31 9704.75 14467.48
1990/08/31 8853.60 13159.62
1990/09/30 8567.23 12518.75
1990/10/31 8455.86 12464.92
1990/11/30 8909.28 13270.15
1990/12/31 9315.70 13640.39
1991/01/31 10137.91 14235.11
1991/02/28 10337.47 15252.92
1991/03/31 11135.73 15622.04
1991/04/30 10952.13 15659.53
1991/05/31 11463.02 16336.03
1991/06/30 10886.28 15587.84
1991/07/31 11359.24 16314.23
1991/08/31 11239.00 16700.88
1991/09/30 10974.46 16421.97
1991/10/31 11503.54 16642.03
1991/11/30 10982.47 15971.35
1991/12/31 11824.19 17798.47
1992/01/31 11784.11 17467.42
1992/02/29 11968.49 17694.50
1992/03/31 11728.00 17349.46
1992/04/30 11519.57 17859.53
1992/05/31 10942.39 17947.04
1992/06/30 10429.34 17679.63
1992/07/31 10830.16 18402.73
1992/08/31 10621.73 18025.47
1992/09/30 10774.05 18238.17
1992/10/31 10862.23 18302.01
1992/11/30 11239.00 18926.11
1992/12/31 11824.19 19158.90
1993/01/31 12176.92 19319.83
1993/02/28 12088.74 19582.58
1993/03/31 12730.05 19995.77
1993/04/30 12770.13 19511.88
1993/05/31 13162.93 20034.79
1993/06/30 13716.07 20092.89
1993/07/31 14277.21 20012.52
1993/08/31 14253.16 20771.00
1993/09/30 14621.92 20611.06
1993/10/31 15207.12 21037.71
1993/11/30 14758.20 20837.85
1993/12/31 15236.40 21089.99
1994/01/31 15961.94 21807.05
1994/02/28 15961.94 21216.08
1994/03/31 15319.80 20291.06
1994/04/30 15402.94 20550.78
1994/05/31 15453.72 20887.82
1994/06/30 15064.42 20376.06
1994/07/31 15284.46 21044.40
1994/08/31 15969.98 21907.22
1994/09/30 15165.98 21370.49
1994/10/31 15538.35 21851.33
1994/11/30 14929.01 21055.50
1994/12/31 15504.50 21367.76
1995/01/31 15496.04 21921.82
1995/02/28 16621.64 22776.12
1995/03/31 17332.54 23448.24
1995/04/30 18288.88 24138.79
1995/05/31 19414.48 25103.62
1995/06/30 20133.85 25686.77
1995/07/31 21242.52 26538.55
1995/08/31 21234.06 26605.16
1995/09/30 21826.48 27727.90
1995/10/31 21030.94 27628.91
1995/11/30 22545.85 28841.82
1995/12/31 22846.87 29397.31
1996/01/31 23255.66 30398.00
1996/02/29 24500.20 30679.78
1996/03/31 25063.42 30975.23
1996/04/30 26270.99 31431.81
1996/05/31 27253.34 32242.43
1996/06/30 26607.79 32365.28
1996/07/31 24811.49 30935.38
1996/08/31 26121.29 31587.81
1996/09/30 27403.03 33365.57
1996/10/31 26925.89 34285.79
1996/11/30 28394.74 36877.45
1996/12/31 28564.91 36146.91
1997/01/31 27946.91 38405.37
1997/02/28 28388.34 38706.47
1997/03/31 28201.96 37116.02
1997/04/30 28955.40 39331.84
1997/05/31 31273.03 41726.37
1997/06/30 32019.04 43595.71
1997/07/31 34983.22 47064.62
1997/08/31 36912.91 44428.06
1997/09/30 39409.58 46861.38
1997/10/31 36445.41 45296.21
1997/11/30 36515.04 47392.97
1997/12/31 35297.14 48206.71
1998/01/31 36989.77 48739.88
1998/02/27 40497.00 52255.00
IMATRL PRASUN SHR__CHT 19980228 19980325 105534 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Defense and Aerospace Portfolio on
February 29, 1988, and the current 3.00% sales charge was paid. As the
chart shows, by February 28, 1998, the value of the investment would
have grown to $40,497 - a 304.97% increase on the initial investment,
and includes the effect of a $7.50 trading fee. 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 $52,255 - a 422.55% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1998
% OF FUND'S
INVESTMENTS
LORAL SPACE & COMMUNICATIONS LTD. 6.4
RAYTHEON CO. CLASS A 6.2
PANAMSAT CORP. 5.4
ALASKA AIR GROUP, INC. 5.4
NORTHROP GRUMMAN CORP. 4.7
ALLIANT TECHSYSTEMS, INC. 4.7
LOCKHEED MARTIN CORP. 4.6
GENERAL MOTORS CORP. CLASS H 4.1
AVONDALE INDUSTRIES, INC. 4.1
MAXWELL TECHNOLOGIES, INC. 3.8
TOP INDUSTRIES AS OF FEBRUARY 28, 1998
DEFENSE ELECTRONICS 16.8%
AIR TRANSPORT, MAJOR NATIONAL 13.0%
TV & RADIO COMMUNICATION
EQUIPMENT 9.6%
SHIP BUILDERS 8.2%
AIRCRAFT 7.8%
ALL OTHERS 44.6%
ROW: 1, COL: 1, VALUE: 44.6
ROW: 1, COL: 2, VALUE: 7.8
ROW: 1, COL: 3, VALUE: 8.199999999999999
ROW: 1, COL: 4, VALUE: 9.6
ROW: 1, COL: 5, VALUE: 13.0
ROW: 1, COL: 6, VALUE: 16.8
*
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
DEFENSE AND AEROSPACE PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Peter Saperstone,
Portfolio Manager of
Fidelity Select Defense
and Aerospace Portfolio
Q. HOW DID THE FUND PERFORM, PETER?
A. For the 12-month period that ended February 28, 1998, the fund
returned 42.68%. This outpaced the Standard & Poor's 500 Index, which
returned 35.01% over the same period.
Q. WHAT WAS THE INVESTING ENVIRONMENT LIKE FOR DEFENSE AND AEROSPACE
STOCKS OVER THE PAST 12 MONTHS?
A. It's best to discuss the defense and aerospace industries
separately, since they didn't perform in lockstep during the period.
In the first half of the year, aerospace companies performed very
well, driven by a worldwide increase in new jet orders. However, the
second half of the year proved less positive for these companies.
Initially, investors were concerned about an economic slowdown in Asia
- - which accounts for roughly 30% of worldwide aircraft orders. In
addition, sentiment grew more negative on news about production
problems at Boeing - which accounts for roughly 60% of global
production. Investors worried that Boeing's problems would not only
hurt that company, but many of its suppliers as well.
Q. WHAT ABOUT THE ENVIRONMENT FOR DEFENSE COMPANIES AND THEIR STOCKS?
A. In contrast to the aerospace industry, defense stocks generally
performed well throughout the entire year, thanks to a favorable
outlook for increased U.S. defense spending. In 1998, U.S. defense
spending is expected to rise for the first time in nearly a decade.
Furthermore, the consolidation that had reduced the number of major
players in the industry to only three in recent years was coming to an
end. With consolidation behind them, defense companies turned their
focus to taking advantage of the cost savings generated by all of this
merger and acquisition activity.
Q. WHAT INDIVIDUAL STOCKS CONTRIBUTED POSITIVELY TO PERFORMANCE?
A. Defense companies, including Raytheon and Litton Industries, were
strong performers during the period, primarily for the reasons I
explained earlier. The fund also saw strong gains from ship builders
Newport News Shipbuilding and Avondale Industries, both of which
benefited from the anticipated rise in defense spending.
Q. HOW DID THE FUND'S INVESTMENTS IN SATELLITE COMPANIES FARE DURING
THE YEAR?
A. Quite well. As a group, they were a significant contributor to the
fund's performance. With the demand for satellite services growing at
about a 20% annual pace, companies including Loral, PanAmSat and
Globalstar benefited.
Q. WERE THERE ANY DISAPPOINTMENTS DURING THE PERIOD?
A. Aerospace companies, including Boeing, lagged the overall
performance of the fund and were somewhat disappointing. In the second
half of the period, I reduced the fund's investments in companies such
as Boeing that were sensitive to the commercial aerospace cycle.
Q. WHAT'S YOUR OUTLOOK?
A. My outlook for defense stocks is upbeat. Defense spending is on the
rise and I think that the remaining players in this industry will see
overall improvement in profits and earnings resulting from the cost
savings derived from mergers and acquisitions. I also think they are
poised to generate strong free cash flow, which could go toward stock
buybacks - which companies undertake to help support or increase the
price of their outstanding shares - and/or a reduction of debt. I'm
also optimistic about the outlook for satellite companies. As a form
of telecommunications, satellites will continue to gain market share.
On the other hand, I'm fairly cautious about aerospace companies,
since I think demand in that industry will slow in 1999.
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, 1998, more than
$101 million
MANAGER: Peter Saperstone, since June 1997;
manager, Fidelity Select Air Transportation
Portfolio, since June 1997; Fidelity Select
Construction and Housing Portfolio,
1996-1997; equity analyst,
defense/aerospace and airlines, since 1997;
building materials and appliances, since 1996;
textile, apparel and footwear industries, since
1995; joined Fidelity in 1995
(checkmark)
DEFENSE AND AEROSPACE PORTFOLIO
INVESTMENTS FEBRUARY 28, 1998
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 91.3%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 21.2%
AIRCRAFT - 7.8%
Gulfstream Aerospace Corp. (a) 80,600 $ 3,264,298
Lockheed Martin Corp. 40,200 4,690,838
7,955,136
AIRCRAFT & PARTS - 1.5%
Sundstrand Corp. 26,200 1,585,100
AIRCRAFT ENGINES & PARTS - 3.5%
Kellstrom Industries, Inc. (a) 50,000 1,200,000
United Technologies Corp. 26,400 2,357,850
3,557,850
GUIDED MISSILES & SPACE VEHICLES - 0.3%
Rockwell International Corp. 5,000 302,500
MISSILES & SPACE VEHICLES - 7.8%
Alliant Techsystems, Inc. (a) 76,200 4,786,313
Orbital Sciences Corp. (a) 60,000 2,287,500
Thiokol Corp. 9,200 879,750
7,953,563
ORDNANCE - 0.3%
Primex Technologies, Inc. 7,300 315,725
TOTAL AEROSPACE & DEFENSE 21,669,874
AIR TRANSPORTATION - 13.0%
AIR TRANSPORT, MAJOR NATIONAL - 13.0%
AMR Corp. (a) 10,000 1,265,625
Alaska Air Group, Inc. (a) 100,100 5,511,756
Continental Airlines, Inc. Class B (a) 67,000 3,366,750
US Airways Group, Inc. (a) 50,500 3,197,281
13,341,412
BROADCASTING - 5.4%
COMMUNICATIONS SERVICES, NEC - 5.4%
PanAmSat Corp. (a) 104,700 5,562,188
CHEMICALS & PLASTICS - 1.1%
CHEMICALS - 1.1%
Goodrich (B.F.) Co. 22,300 1,105,244
COMMUNICATIONS EQUIPMENT - 3.7%
TELEPHONE EQUIPMENT - 3.7%
Globalstar Telecommunications Ltd. (a) 55,600 3,766,900
DEFENSE ELECTRONICS - 16.8%
Litton Industries, Inc. (a) 56,500 3,517,125
Northrop Grumman Corp. 34,500 4,795,500
Raytheon Co. Class A 109,952 6,377,216
Remec, Inc. (a) 93,200 2,557,175
17,247,016
DURABLES - 4.1%
CONSUMER ELECTRONICS - 4.1%
General Motors Corp. Class H 102,500 4,247,344
ELECTRICAL EQUIPMENT - 9.6%
TV & RADIO COMMUNICATION EQUIPMENT - 9.6%
Harris Corp. 40,000 2,027,500
Loral Space & Communications Ltd. (a) 256,800 6,564,450
Titan Corp. (a) 210,600 1,276,763
9,868,713
SHARES VALUE (NOTE 1)
ELECTRONICS - 5.0%
ELECTRONIC CAPACITORS - 3.8%
Maxwell Technologies, Inc. (a) 138,300 $ 3,906,975
ELECTRONIC PARTS - WHOLESALE - 1.2%
Airport Systems International, Inc. (a)(c) 223,100 1,171,275
TOTAL ELECTRONICS 5,078,250
RAILROADS - 3.2%
RAILROAD EQUIPMENT - 3.2%
Bombardier, Inc. Class B 151,800 3,262,567
SHIP BUILDING & REPAIR - 8.2%
SHIP BUILDERS - 8.2%
Avondale Industries, Inc. (a) 145,600 4,186,000
General Dynamics Corp. 31,500 2,732,625
Newport News Shipbuilding, Inc. 53,900 1,468,775
8,387,400
TOTAL COMMON STOCKS
(Cost $82,779,956) 93,536,908
CASH EQUIVALENTS - 8.7%
Taxable Central Cash Fund (b)
(Cost $8,893,082) 8,893,082 8,893,082
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $91,673,038) $ 102,429,990
LEGEND
1. Non-income producing
2. At period end, the seven-day yield on the Taxable Central Cash Fund
was 5.62%. The yield refers to the income earned by investing in the
fund over the seven-day period, expressed as an annual percentage.
3. Affiliated company (see Note 10 of Notes to Financial Statements).
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $196,087,548 and $188,826,020, respectively (see Note 3 of
Notes to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company.
The commissions paid to these affiliated firms were $60,895 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 $2,922,000 and $2,922,000, respectively. 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 86.7%
Bermuda 10.1
Canada 3.2
100.0%
Transactions during the period with companies which are or were
affiliates are as follows:
PURCHASES SALES DIVIDEND VALUE
AFFILIATE COST COST INCOME
Airport Systems
International, Inc. $ 260,138 $ 174,688 $ - $ 1,171,275
INCOME TAX INFORMATION
At February 28, 1998, the aggregate cost of investment securities for
income tax purposes was $92,198,916. Net unrealized appreciation
aggregated $10,231,074, of which $10,587,442 related to appreciated
investment securities and $356,368 related to depreciated investment
securities.
The fund hereby designates approximately $962,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 8% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate
shareholders (unaudited).
The fund will notify shareholders in January 1999 of this percentage
for use in preparing 1998 income tax returns.
DEFENSE AND AEROSPACE PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1998
ASSETS
INVESTMENT IN $ 102,429,990
SECURITIES,
AT VALUE
(COST
$91,673,
038) -
SEE
ACCOMPAN
YING
SCHEDULE
RECEIVABLE 1,534,825
FOR FUND
SHARES
SOLD
DIVIDENDS 15,200
RECEIVABLE
INTEREST 43,052
RECEIVABLE
REDEMPTION 147
FEES
RECEIVABLE
TOTAL 104,023,214
ASSETS
LIABILITIES
PAYABLE FOR $ 1,341,380
INVESTMENT
S
PURCHASED
PAYABLE FOR 766,466
FUND
SHARES
REDEEMED
ACCRUED 43,663
MANAGEM
ENT FEE
OTHER 67,084
PAYABLES
AND
ACCRUED
EXPENSES
TOTAL 2,218,593
LIABILITIES
NET ASSETS $ 101,804,621
NET ASSETS
CONSIST OF:
PAID IN $ 84,867,037
CAPITAL
ACCUMULATED 6,180,632
UNDISTRIBUT
ED NET
REALIZED
GAIN (LOSS)
ON
INVESTMENT
S AND
FOREIGN
CURRENCY
TRANSACTIO
NS
NET 10,756,952
UNREALIZED
APPRECIATI
ON
(DEPRECIATI
ON) ON
INVESTMENT
S
NET ASSETS, $ 101,804,621
FOR
2,709,61
4
SHARES
OUTSTANDIN
G
NET ASSET $37.57
VALUE AND
REDEMPTIO
N PRICE
PER SHARE
($101,80
4,621 (DIVIDED BY)
2,709,61
4 SHARES)
MAXIMUM $38.73
OFFERING
PRICE PER
SHARE
(100/97.
00 OF
$37.57)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1998
INVESTMENT $ 272,756
INCOME
DIVIDENDS
INTEREST 275,757
TOTAL 548,513
INCOME
EXPENSES
MANAGEMEN $ 381,060
T FEE
TRANSFER 583,625
AGENT FEES
ACCOUNTING 68,287
FEES AND
EXPENSES
NON-INTEREST 258
ED
TRUSTEES'
COMPENSAT
ION
CUSTODIAN 19,544
FEES AND
EXPENSES
REGISTRATION 51,075
FEES
AUDIT 23,688
LEGAL 319
INTEREST 477
MISCELLANEO 396
US
TOTAL 1,128,729
EXPENSES
BEFORE
REDUCTIONS
EXPENSE (37,858) 1,090,871
REDUCTIONS
NET (542,358)
INVESTMEN
T INCOME
(LOSS)
REALIZED
AND
UNREALIZED
GAIN (LOSS)
NET REALIZED
GAIN (LOSS)
ON:
INVESTMENT 10,620,443
SECURITIES
(INCLUDING
REALIZED
GAIN OF
$86,019
ON SALES
OF
INVESTMENT
S IN
AFFILIATED
ISSUERS)
FOREIGN 263 10,620,706
CURRENCY
TRANSACTIO
NS
CHANGE IN 9,171,056
NET
UNREALIZED
APPRECIATI
ON
(DEPRECIATI
ON) ON
INVESTMENT
SECURITIES
NET GAIN 19,791,762
(LOSS)
NET INCREASE $ 19,249,404
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
OTHER $ 312,026
INFORMATIO
N
SALES
CHARGES
PAID TO
FDC
SALES $ 2,706
CHARGES -
DEALERS'
PORTION
DEFERRED $ 1,329
SALES
CHARGES
WITHHELD
BY FDC
EXCHANGE $ 64,328
FEES
WITHHELD
BY FSC
EXPENSE $ 33,327
REDUCTIONS
DIRECTED
BROKERAGE
ARRANGEM
ENTS
CUSTODIA 4,531
N CREDITS
$ 37,858
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
FEBRUARY 28, FEBRUARY 28,
1998 1997
OPERATIONS $ (542,358) $ (173,302)
NET
INVESTMENT
INCOME
(LOSS)
NET 10,620,706 4,765,161
REALIZED
GAIN (LOSS)
CHANGE IN 9,171,056 (539,108)
NET
UNREALIZED
APPRECIATI
ON
(DEPRECIATI
ON)
NET 19,249,404 4,052,751
INCREASE
(DECREAS
E) IN NET
ASSETS
RESULTING
FROM
OPERATIO
NS
DISTRIBUTIONS (4,691,578) (2,799,166)
TO
SHAREHOLD
ERS FROM
NET
REALIZED
GAINS
SHARE 173,648,929 127,346,343
TRANSACTIO
NS
NET
PROCEEDS
FROM SALES
OF SHARES
REINVESTM 4,606,502 2,752,265
ENT OF
DISTRIBUTIO
NS
COST OF (160,032,419) (89,310,784)
SHARES
REDEEMED
NET 18,223,012 40,787,824
INCREASE
(DECREAS
E) IN NET
ASSETS
RESULTING
FROM
SHARE
TRANSACTI
ONS
REDEMPTIO 221,243 112,916
N FEES
TOTAL 33,002,081 42,154,325
INCREASE
(DECREASE)
IN NET
ASSETS
NET ASSETS
BEGINNING 68,802,540 26,648,215
OF PERIOD
END OF $ 101,804,621 $ 68,802,540
PERIOD
OTHER
INFORMATION
SHARES
SOLD 4,923,503 4,464,416
ISSUED IN 149,545 99,462
REINVESTME
NT OF
DISTRIBUTIO
NS
REDEEMED (4,740,835) (3,174,693)
NET 332,213 1,389,185
INCREASE
(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>
YEARS ENDED FEBRUARY 28, YEAR ENDED YEARS ENDED FEBRUARY 28,
FEBRUARY 29,
SELECTED PER-SHARE DATA 1998 1997 1996 1995 1994
</TABLE>
NET ASSET $ 28.94 $ 26.97 $ 19.64 $ 19.14 $ 15.08
VALUE,
BEGINNING
OF PERIOD
INCOME FROM
INVESTMENT
OPERATION
S
NET (.29) (.11) (.05) (.06) .07
INVESTMENT
INCOME
(LOSS) C
NET 11.84 4.18 9.09 .70 4.57
REALIZED
AND
UNREALIZED
GAIN (LOSS)
TOTAL FROM 11.55 4.07 9.04 .64 4.64
INVESTMENT
OPERATIONS
LESS
DISTRIBUTIO
NS
FROM NET - - - - (.10)
INVESTMENT
INCOME
FROM NET (3.04) (2.17) (1.82) (.27) (.62)
REALIZED
GAIN
TOTAL (3.04) (2.17) (1.82) (.27) (.72)
DISTRIBUTIO
NS
REDEMPTION .12 .07 .11 .13 .14
FEES
ADDED TO
PAID IN
CAPITAL
NET ASSET $ 37.57 $ 28.94 $ 26.97 $ 19.64 $ 19.14
VALUE, END
OF PERIOD
TOTAL 42.68% 15.87% 47.40% 4.13% 32.04%
RETURN A, B
RATIOS AND
SUPPLEME
NTAL DATA
NET ASSETS, $ 101,805 $ 68,803 $ 26,648 $ 4,985 $ 11,136
END OF
PERIOD
(000
OMITTED)
RATIO OF 1.77% 1.84% 1.77% F 2.49% F 2.53% F
EXPENSES
TO AVERAGE
NET ASSETS
RATIO OF 1.71% D 1.81% D 1.75% D 2.49% 2.53%
EXPENSES
TO AVERAGE
NET ASSETS
AFTER
EXPENSE
REDUCTIONS
RATIO OF NET (.85)% (.39)% (.20)% (.32)% .40%
INVESTMENT
INCOME
(LOSS) TO
AVERAGE
NET ASSETS
PORTFOLIO 311% 219% 267% 146% 324%
TURNOVER
RATE
AVERAGE $ .0320 $ .0335
COMMISSIO
N RATE E
<TABLE>
<CAPTION>
<S> <C>
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 . 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. F DURING THE PERIOD, FMR AGREED TO REIMBURSE
A PORTION OF THE FUND'S EXPENSES, OR EXPENSES WERE LIMITED
IN ACCORDANCE WITH A STATE EXPENSE LIMITATION. WITHOUT THIS REIMBURSEMENT, THE
FUND'S EXPENSE RATIO WOULD HAVE BEEN HIGHER.
</TABLE>
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). Load adjusted returns include a 3.00% sales
charge and the effect of a $7.50 trading fee.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
FEBRUARY 28, 1998 YEAR YEARS FUND
SELECT ENVIRONMENTAL 13.52% 52.98% 87.16%
SERVICES
SELECT ENVIRONMENTAL 10.04% 48.32% 81.47%
SERVICES (LOAD ADJ.)
S&P 500 35.01% 166.84% 317.19%
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 Standard & Poor's 500 Index - a widely
recognized, unmanaged index of common stocks. This benchmark includes
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, 1998 YEAR YEARS FUND
SELECT ENVIRONMENTAL 13.52% 8.88% 7.49%
SERVICES
SELECT ENVIRONMENTAL 10.04% 8.20% 7.11%
SERVICES (LOAD ADJ.)
S&P 500 35.01% 21.69% 17.90%
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 LONG-TERM GROWTH AND
SHORT-TERM VOLATILITY. UNLIKE THE BROADER MARKET,
HOWEVER, SOME SECTORS MAY NOT HAVE A HISTORY
OF GROWTH IN THE LONG RUN. AND, AS WITH ALL STOCK
FUNDS, THE SHARE PRICE AND RETURN OF A FUND THAT
INVESTS IN A SECTOR WILL VARY. THAT MEANS IF YOU
SELL YOUR SHARES DURING A SECTOR DOWNTURN, YOU
MIGHT LOSE MONEY. BUT IF YOU CAN IDENTIFY A
SECTOR THAT IS ABOUT TO EXPERIENCE RAPID GROWTH
YOU MAY HAVE THE POTENTIAL FOR ABOVE-AVERAGE
GAINS.
(CHECKMARK)
$10,000 OVER LIFE OF FUND
IMAHDR PRASUN SHR__CHT 19980228 19980305 131244 S00000000000001
Environmental Services S&P 500
00516 SP001
1989/06/29 9700.00 10000.00
1989/06/30 9573.90 9947.57
1989/07/31 10485.70 10845.83
1989/08/31 10621.50 11058.41
1989/09/30 11193.80 11013.07
1989/10/31 10941.60 10757.57
1989/11/30 11009.50 10977.02
1989/12/31 11368.64 11240.47
1990/01/31 10358.96 10486.23
1990/02/28 10562.83 10621.51
1990/03/31 11019.13 10902.98
1990/04/30 11077.38 10630.40
1990/05/31 12106.48 11666.87
1990/06/30 12485.11 11587.53
1990/07/31 12407.45 11550.45
1990/08/31 10863.80 10506.29
1990/09/30 10281.29 9994.63
1990/10/31 10135.66 9951.66
1990/11/30 10485.17 10594.53
1990/12/31 11087.09 10890.12
1991/01/31 12057.94 11364.93
1991/02/28 12611.32 12177.52
1991/03/31 12611.32 12472.22
1991/04/30 12572.49 12502.15
1991/05/31 12601.62 13042.25
1991/06/30 11650.18 12444.91
1991/07/31 12019.11 13024.84
1991/08/31 12232.69 13333.53
1991/09/30 11941.44 13110.86
1991/10/31 11494.85 13286.55
1991/11/30 10863.80 12751.10
1991/12/31 11936.55 14209.83
1992/01/31 13005.20 13945.52
1992/02/29 13146.34 14126.81
1992/03/31 11835.74 13851.34
1992/04/30 11482.88 14258.57
1992/05/31 11190.52 14328.44
1992/06/30 10592.18 14114.94
1992/07/31 10665.31 14692.25
1992/08/31 10445.94 14391.05
1992/09/30 10571.29 14560.87
1992/10/31 11072.70 14611.83
1992/11/30 11762.13 15110.10
1992/12/31 11772.58 15295.95
1993/01/31 12002.39 15424.44
1993/02/28 11866.59 15634.21
1993/03/31 11574.10 15964.09
1993/04/30 11333.85 15577.76
1993/05/31 11584.55 15995.24
1993/06/30 11438.31 16041.63
1993/07/31 10957.79 15977.46
1993/08/31 11542.77 16583.01
1993/09/30 11553.21 16455.32
1993/10/31 11877.04 16795.94
1993/11/30 11354.74 16636.38
1993/12/31 11699.45 16837.68
1994/01/31 12691.82 17410.16
1994/02/28 12462.01 16938.35
1994/03/31 11333.85 16199.84
1994/04/30 11521.87 16407.19
1994/05/31 11490.54 16676.27
1994/06/30 10801.10 16267.70
1994/07/31 11030.91 16801.28
1994/08/31 11417.41 17490.14
1994/09/30 11344.29 17061.63
1994/10/31 10957.79 17445.52
1994/11/30 10341.48 16810.15
1994/12/31 10581.74 17059.44
1995/01/31 10592.18 17501.80
1995/02/28 10727.98 18183.84
1995/03/31 11239.83 18720.45
1995/04/30 12044.17 19271.76
1995/05/31 12232.20 20042.06
1995/06/30 12733.60 20507.63
1995/07/31 13214.12 21187.67
1995/08/31 13402.14 21240.85
1995/09/30 13872.21 22137.21
1995/10/31 12890.29 22058.18
1995/11/30 13339.47 23026.53
1995/12/31 13346.83 23470.03
1996/01/31 13809.34 24268.95
1996/02/29 13677.20 24493.92
1996/03/31 14282.87 24729.80
1996/04/30 14757.09 25094.31
1996/05/31 15893.10 25741.49
1996/06/30 15606.34 25839.57
1996/07/31 13808.58 24697.98
1996/08/31 14679.89 25218.86
1996/09/30 15209.29 26638.18
1996/10/31 15054.88 27372.86
1996/11/30 15462.96 29441.97
1996/12/31 15429.87 28858.72
1997/01/31 16389.42 30661.82
1997/02/28 15992.36 30902.21
1997/03/31 15087.97 29632.44
1997/04/30 14999.73 31401.49
1997/05/31 16025.45 33313.21
1997/06/30 16918.82 34805.65
1997/07/31 17348.96 37575.13
1997/08/31 17580.57 35470.17
1997/09/30 18804.81 37412.87
1997/10/31 17437.19 36163.28
1997/11/30 17393.07 37837.28
1997/12/31 18187.18 38486.95
1998/01/31 16973.96 38912.61
1998/02/27 18146.59 41718.99
IMATRL PRASUN SHR__CHT 19980228 19980305 131246 R00000000000108
$10,000 OVER LIFE OF FUND: 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 3.00% sales charge
was paid. As the chart shows, by February 28, 1998, the value of the
investment would have grown to $18,147 - a 81.47% increase on the
initial investment, and includes the effect of a $7.50 trading fee.
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 $41,719 - a 317.19% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1998
% OF FUND'S
INVESTMENTS
USA WASTE SERVICES, INC. 10.1
ALLIED WASTE INDUSTRIES, INC. 7.4
THERMO ELECTRON CORP. 6.4
OGDEN CORP. 5.9
THERMO INSTRUMENT SYSTEMS, INC. 4.7
LAIDLAW, INC. 4.3
UNITED STATES FILTER CORP. 4.1
REPUBLIC INDUSTRIES, INC. 3.9
NEWPARK RESOURCES, INC. 3.7
NALCO CHEMICAL CO. 3.5
TOP INDUSTRIES AS OF FEBRUARY 28, 1998
REFUSE SYSTEMS 16.5%
POLLUTION EQUIPMENT & DESIGN 12.4%
SANITARY SERVICES 10.1%
MEASURING INSTRUMENTS 6.4%
BUS & TRAIN LINES 4.3%
ALL OTHERS 50.3%
ROW: 1, COL: 1, VALUE: 50.3
ROW: 1, COL: 2, VALUE: 4.3
ROW: 1, COL: 3, VALUE: 6.4
ROW: 1, COL: 4, VALUE: 10.1
ROW: 1, COL: 5, VALUE: 12.4
ROW: 1, COL: 6, VALUE: 16.5
*
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
ENVIRONMENTAL SERVICES PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
NOTE TO SHAREHOLDERS: Steven Buller became Portfolio Manager of
Fidelity Select Environmental Services Portfolio on December 1, 1997.
Q. HOW DID THE FUND PERFORM, STEVE?
A. For a number of reasons, performance was somewhat disappointing.
For the 12 months that ended February 28, 1998, the fund returned
13.52%. The Standard & Poor's 500 Index returned 35.01% over the same
period.
Q. WHAT FACTORS CONTRIBUTED TO THE FUND'S PERFORMANCE?
A. Two of the fund's major industry groups - solid waste and pollution
control - underperformed the market drastically. As a result, several
of the fund's more significant positions in these areas turned in
subpar performances. Two of the larger players in the solid waste
arena - Waste Management and Browning-Ferris Industries - are old
guard companies that encountered challenges from their smaller
competitors. In addition, Waste Management's accounting practices were
brought into question, and people took a broad brush view that the
whole industry was afflicted with questionable accounting methods.
These developments converged to make it a pretty challenging climate.
Q. WHAT TYPE OF IMPACT DID THE ECONOMIC CRISES IN ASIA HAVE ON THE
FUND AND THE SECTOR?
A. The volatility in Asia had only a minor impact on the fund. The
solid waste group had very limited business exposure to that region,
while some of the thermal instrumentation companies - which are more
technology-oriented - declined slightly. Engineering and construction
stocks such as Fluor also stumbled, but most of these positions were
small. With solid waste being the fund's largest industry weighting, a
lack of Asian exposure was a bright spot.
Q. CONSOLIDATION ACTIVITY CONTINUED TO BE A PREVALENT THEME THROUGHOUT
THE PERIOD. HOW DID THIS AFFECT THE FUND?
A. The fund's largest single position at the end of the period - USA
Waste - benefited from being an aggressive acquirer of companies. Many
industry followers, myself included, consider the company to be very
well-run. It has a knack for formulating an effective acquisition
strategy and executing its plan. By acquiring smaller, private
companies, for example, USA Waste was able to obtain more collection
routes. Having a number of disposal contracts in the same region makes
a lot of sense in this industry.
Q. WHAT TYPES OF CHANGES HAVE YOU MADE TO THE FUND SINCE TAKING OVER?
A. My primary strategy was to pare back the fund's positions in two
solid waste companies I mentioned earlier, Waste Management and
Browning-Ferris. I redeployed some of these assets into a number of
smaller waste firms that weren't suffering as much from the
perceptions that plagued the larger players.
Q. HOW WOULD YOU DESCRIBE YOUR INVESTMENT STRATEGY?
A. I take a two-pronged approach. First, a company's business
prospects typically drive its earnings growth. To get a handle on
these prospects, I look at a variety of peripheral factors such as how
the economy is performing and the type of business environment in
which the company is operating. I also like to be as familiar as
possible with a company's management team and the company's risk
profile. It's easy to be swayed by a stock that looks like it can
double or triple in value. At the same time, it's vital to consider
the risks involved as well. The second part of my process involves
valuation. If I can find a stock that offers solid business prospects
and has an attractive valuation, that's the best of both worlds.
Q. WHICH STOCKS PERFORMED WELL? WHICH TURNED OUT TO BE DISAPPOINTING?
A. Despite the problems within the waste area, Allied Waste was a
positive contributor, as was American Disposal. Safety Kleen, a
company that disposes of liquid waste, also performed well and I sold
the stock to lock in profits. On a negative note, waste-related
company Republic Industries struggled during the period, as did Philip
Services, a non-ferrous metals recycler involved in the operation of
landfill sites and waste collection. The company suffered due to an
accounting discrepancy in its inventory.
Q. WHAT'S YOUR OUTLOOK?
A. At this point, I'm comfortable with how the fund is positioned. I
remain optimistic on the solid waste stocks and don't expect the
fund's weighting in that group to change dramatically. Relative to
other sectors, the valuations in this group appear somewhat
reasonable.
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, 1998, MORE THAN
$25 MILLION
MANAGER: STEVEN BULLER, SINCE 1997; ASSOCIATE
MANAGER, FIDELITY REAL ESTATE INVESTMENT
PORTFOLIO, 1997-PRESENT; ANALYST, HIGH
INCOME GROUP, 1992-1995; JOINED FIDELITY
IN 1992
(CHECKMARK)
ENVIRONMENTAL SERVICES PORTFOLIO
INVESTMENTS FEBRUARY 28, 1998
SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENT IN SECURITIES
COMMON STOCKS - 95.8%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 3.1%
ORDNANCE - 3.1%
Harsco Corp. 18,700 $ 783,060
BUILDING MATERIALS - 0.6%
AIR CONDITIONING EQUIPMENT - 0.6%
Thermo Power Corp. (a) 12,300 141,450
CHEMICALS & PLASTICS - 6.2%
ADHESIVES & SEALANTS - 3.5%
Nalco Chemical Co. 21,400 861,350
CHEMICALS - 2.7%
Betz Dearborn, Inc. 10,500 673,969
TOTAL CHEMICALS & PLASTICS 1,535,319
CONSTRUCTION - 1.6%
Jacobs Engineering Group, Inc. (a) 13,000 389,188
ELECTRIC UTILITY - 1.8%
COGENERATION-SMALL POWER PRODUCER - 1.8%
KTI, Inc. 29,000 442,250
ELECTRONIC INSTRUMENTS - 9.6%
INDUSTRIAL MEASUREMENT INSTRUMENTS - 0.6%
TSI, Inc. 17,100 153,900
LABORATORY ANALYTICAL INSTRUMENTS - 2.5%
Thermo Optek Corp. 13,300 197,006
Thermoquest Corp. (a) 29,000 424,125
621,131
MEASURING INSTRUMENTS - 6.4%
Thermo Electron Corp. (a) 39,150 1,605,150
OPTICAL INSTRUMENTS - 0.1%
Thermo Vision Corp. 1,862 12,569
TOTAL ELECTRONIC INSTRUMENTS 2,392,750
ENERGY SERVICES - 3.7%
OIL & GAS SERVICES - 3.7%
Newpark Resources, Inc. (a) 47,400 912,450
ENGINEERING - 5.2%
ARCHITECTS & ENGINEERS - 2.5%
Fluor Corp. 13,300 625,931
SPECIAL CONTRACTORS - 2.7%
Foster Wheeler Corp. 25,000 668,750
TOTAL ENGINEERING 1,294,681
INDUSTRIAL MACHINERY & EQUIPMENT - 7.5%
GENERAL INDUSTRIAL MACHINERY - 4.1%
United States Filter Corp. (a) 30,000 1,018,125
SERVICE INDUSTRY MACHINERY, NEC - 2.0%
Ionics, Inc. (a) 7,300 313,900
Trojan Technologies Corp. (a) 8,100 190,588
504,488
SPECIAL INDUSTRIAL MACHINERY - 1.4%
Thermo Fibertek, Inc. (a) 28,475 357,717
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 1,880,330
LEASING & RENTAL - 3.9%
AUTO RENTAL & LEASING - 3.9%
Republic Industries, Inc. (a) 41,380 977,603
SHARES VALUE (NOTE 1)
MEDICAL EQUIPMENT & SUPPLIES - 2.1%
MEDICAL TECHNOLOGY - 1.3%
Thermedics, Inc. (a) 20,000 $ 327,500
X-RAY & RELATED APPARATUS - 0.8%
Trex Medical Corp. (a) 12,000 186,750
TOTAL MEDICAL EQUIPMENT & SUPPLIES 514,250
METALS & MINING - 1.7%
SECONDARY NONFERROUS SMELTING - 1.7%
IMCO Recycling, Inc. 24,700 427,619
POLLUTION CONTROL - 41.8%
HAZARDOUS WASTE MANAGEMENT - 2.8%
Laidlaw Environmental Services, Inc. (a) 52,500 252,656
Stericycle, Inc. (a) 34,000 442,000
694,656
POLLUTION EQUIPMENT & DESIGN - 12.4%
Dames & Moore, Inc. 5,200 66,950
Ogden Corp. (a) 53,500 1,471,250
Sevenson Environmental Services, Inc. 9,400 94,000
TETRA Technologies, Inc. (a) 11,400 275,025
Thermo Instrument Systems, Inc. (a) 33,500 1,176,688
3,083,913
REFUSE SYSTEMS - 16.5%
Allied Waste Industries, Inc. (a) 85,800 1,844,700
American Disposal Services, Inc. (a) 7,500 278,438
Browning-Ferris Industries, Inc. 23,400 779,513
Superior Services, Inc. (a) 20,000 528,750
Waste Industries, Inc. 25,700 452,963
Waste Management, Inc. 9,600 240,000
4,124,364
SANITARY SERVICES - 10.1%
USA Waste Services, Inc. (a) 60,240 2,507,490
TOTAL POLLUTION CONTROL 10,410,423
RETAIL & WHOLESALE, MISCELLANEOUS - 1.7%
MISCELLANEOUS DURABLE GOODS - WHOLESALE - 1.7%
Philip Services Corp. 44,619 429,345
TRUCKING & FREIGHT - 4.3%
BUS & TRAIN LINES - 4.3%
Laidlaw, Inc. 74,000 1,078,490
WATER - 1.0%
WATER SUPPLY - 1.0%
American Water Works, Inc. 8,000 240,000
TOTAL COMMON STOCKS
(Cost $22,183,778) 23,849,208
CASH EQUIVALENTS - 4.2%
Taxable Central Cash Fund (b)
(Cost $1,050,734) 1,050,734 1,050,734
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $23,234,512) $ 24,899,942
LEGEND
1. Non-income producing
2. At period end, the seven-day yield on the Taxable Central Cash Fund
was 5.62%. 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 $15,228,573 and $25,433,256, 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 $4,927 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 $2,562,000 and $2,486,500, respectively. The
weighted average interest rate was 5.9% (see Note 7 of Notes to
Financial Statements).
INCOME TAX INFORMATION
At February 28, 1998 the aggregate cost of investment securities for
income tax purposes was $23,405,064. Net unrealized appreciation
aggregated $1,494,878, of which $2,823,658 related to appreciated
investment securities and $1,328,780 related to depreciated investment
securities.
At February 28, 1998, the fund had a capital loss carryforward of
approximately $185,000, which will expire on February 28, 2005.
ENVIRONMENTAL SERVICES PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1998
ASSETS
INVESTMENT IN $ 24,899,942
SECURITIES,
AT VALUE
(COST
$23,234,
512) -
SEE
ACCOMPAN
YING
SCHEDULE
RECEIVABLE 276,932
FOR
INVESTMENT
S SOLD
RECEIVABLE 135,754
FOR FUND
SHARES
SOLD
DIVIDENDS 10,929
RECEIVABLE
INTEREST 4,725
RECEIVABLE
REDEMPTION 82
FEES
RECEIVABLE
TOTAL 25,328,364
ASSETS
LIABILITIES
PAYABLE FOR $ 84,493
FUND
SHARES
REDEEMED
ACCRUED 12,655
MANAGEM
ENT FEE
OTHER 47,992
PAYABLES
AND
ACCRUED
EXPENSES
TOTAL 145,140
LIABILITIES
NET ASSETS $ 25,183,224
NET ASSETS
CONSIST OF:
PAID IN $ 23,872,503
CAPITAL
ACCUMULATED (354,709)
UNDISTRIBUT
ED NET
REALIZED
GAIN (LOSS)
ON
INVESTMENT
S AND
FOREIGN
CURRENCY
TRANSACTIO
NS
NET 1,665,430
UNREALIZED
APPRECIATI
ON
(DEPRECIATI
ON) ON
INVESTMENT
S
NET ASSETS, $ 25,183,224
FOR
1,530,02
3
SHARES
OUTSTANDIN
G
NET ASSET $16.46
VALUE AND
REDEMPTIO
N PRICE
PER SHARE
($25,183,
224 (DIVIDED BY)
1,530,02
3 SHARES)
MAXIMUM $16.97
OFFERING
PRICE PER
SHARE
(100/97.
00 OF
$16.46)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1998
INVESTMENT $ 264,406
INCOME
DIVIDENDS
INTEREST 119,029
TOTAL 383,435
INCOME
EXPENSES
MANAGEMEN $ 165,498
T FEE
TRANSFER 334,997
AGENT FEES
ACCOUNTING 60,348
FEES AND
EXPENSES
NON-INTEREST 194
ED
TRUSTEES'
COMPENSAT
ION
CUSTODIAN 9,612
FEES AND
EXPENSES
REGISTRATION 21,532
FEES
AUDIT 22,938
LEGAL 313
INTEREST 820
MISCELLANEO 3,540
US
TOTAL 619,792
EXPENSES
BEFORE
REDUCTIONS
EXPENSE (2,620) 617,172
REDUCTIONS
NET (233,737)
INVESTMEN
T INCOME
(LOSS)
REALIZED
AND
UNREALIZED
GAIN (LOSS)
NET REALIZED
GAIN (LOSS)
ON:
INVESTMENT 491,522
SECURITIES
FOREIGN (193) 491,329
CURRENCY
TRANSACTIO
NS
CHANGE IN
NET
UNREALIZED
APPRECIATI
ON
(DEPRECIATI
ON) ON:
INVESTMENT 2,816,795
SECURITIES
ASSETS AND (66) 2,816,729
LIABILITIES
IN
FOREIGN
CURRENCIES
NET GAIN 3,308,058
(LOSS)
NET INCREASE $ 3,074,321
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
OTHER $ 42,162
INFORMATIO
N
SALES
CHARGES
PAID TO
FDC
SALES $ 44
CHARGES -
DEALERS'
PORTION
DEFERRED $ 6,428
SALES
CHARGES
WITHHELD
BY FDC
EXCHANGE $ 11,505
FEES
WITHHELD
BY FSC
EXPENSE $ 2,390
REDUCTIONS
DIRECTED
BROKERAGE
ARRANGEM
ENTS
CUSTODIA 230
N CREDITS
$ 2,620
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
FEBRUARY 28, FEBRUARY 28,
1998 1997
OPERATIONS $ (233,737) $ (244,407)
NET
INVESTMENT
INCOME
(LOSS)
NET 491,329 (600,025)
REALIZED
GAIN (LOSS)
CHANGE IN 2,816,729 (1,589,539)
NET
UNREALIZED
APPRECIATI
ON
(DEPRECIATI
ON)
NET 3,074,321 (2,433,971)
INCREASE
(DECREAS
E) IN NET
ASSETS
RESULTING
FROM
OPERATIO
NS
DISTRIBUTIONS - (48,255)
TO
SHAREHOLD
ERS
IN EXCESS
OF NET
REALIZED
GAIN
SHARE 19,043,654 138,035,351
TRANSACTIO
NS
NET
PROCEEDS
FROM SALES
OF SHARES
REINVESTM - 47,653
ENT OF
DISTRIBUTIO
NS
COST OF (29,500,558) (131,078,192)
SHARES
REDEEMED
NET (10,456,904) 7,004,812
INCREASE
(DECREAS
E) IN NET
ASSETS
RESULTING
FROM
SHARE
TRANSACTI
ONS
REDEMPTIO 40,370 415,631
N FEES
TOTAL (7,342,213) 4,938,217
INCREASE
(DECREASE)
IN NET
ASSETS
NET ASSETS
BEGINNING 32,525,437 27,587,220
OF PERIOD
END OF $ 25,183,224 $ 32,525,437
PERIOD
OTHER
INFORMATION
SHARES
SOLD 1,183,759 9,698,891
ISSUED IN - 3,673
REINVESTME
NT OF
DISTRIBUTIO
NS
REDEEMED (1,896,214) (9,681,633)
NET (712,455) 20,931
INCREASE
(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>
YEARS ENDED FEBRUARY 28, YEAR ENDED YEARS ENDED FEBRUARY 28,
FEBRUARY 29,
SELECTED PER-SHARE DATA 1998 1997 1996 1995 1994
</TABLE>
NET ASSET $ 14.50 $ 12.42 $ 10.27 $ 11.93 $ 11.36
VALUE,
BEGINNING
OF PERIOD
INCOME FROM
INVESTMENT
OPERATION
S
NET (.13) (.08) (.17) (.14) (.11)
INVESTMENT
INCOME
(LOSS) C
NET 2.07 2.04 F 2.95 (1.53) .67
REALIZED
AND
UNREALIZED
GAIN (LOSS)
TOTAL FROM 1.94 1.96 2.78 (1.67) .56
INVESTMENT
OPERATIONS
LESS
DISTRIBUTIO
NS
FROM NET - - (.65) - -
REALIZED
GAIN
IN EXCESS - (.02) - - -
OF NET
REALIZED
GAIN
TOTAL - (.02) (.65) - -
DISTRIBUTIO
NS
REDEMPTION .02 .14 .02 .01 .01
FEES
ADDED TO
PAID IN
CAPITAL
NET ASSET $ 16.46 $ 14.50 $ 12.42 $ 10.27 $ 11.93
VALUE, END
OF PERIOD
TOTAL 13.52% 16.93% 27.49% (13.91)% 5.02%
RETURN A, B
RATIOS AND
SUPPLEME
NTAL DATA
NET ASSETS, $ 25,183 $ 32,525 $ 27,587 $ 31,270 $ 65,956
END OF
PERIOD
(000
OMITTED)
RATIO OF 2.23% 2.18% 2.36% 2.04% 2.07%
EXPENSES
TO AVERAGE
NET ASSETS
RATIO OF 2.22% D 2.11% D 2.32% D 2.01% D 2.03% D
EXPENSES
TO AVERAGE
NET ASSETS
AFTER
EXPENSE
REDUCTIONS
RATIO OF NET (.84)% (.59)% (1.43)% (1.32)% (1.02)%
INVESTMENT
INCOME
(LOSS) TO
AVERAGE
NET ASSETS
PORTFOLIO 59% 252% 138% 82% 191%
TURNOVER
RATE
AVERAGE $ .0313 $ .0348
COMMISSIO
N RATE E
<TABLE>
<CAPTION>
<S> <C>
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 . 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. F 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). Load adjusted returns include a 3.00% sales
charge and the effect of a $7.50 trading fee. 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, 1998 YEAR YEARS YEARS
SELECT INDUSTRIAL EQUIPMENT 25.76% 179.57% 324.46%
SELECT INDUSTRIAL EQUIPMENT 21.91% 171.11% 311.66%
(LOAD ADJ.)
S&P 500 35.01% 166.84% 422.55%
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 Standard & Poor's
500 Index - a widely recognized, unmanaged index of common stocks.
This benchmark includes 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, 1998 YEAR YEARS YEARS
SELECT INDUSTRIAL EQUIPMENT 25.76% 22.83% 15.55%
SELECT INDUSTRIAL EQUIPMENT 21.91% 22.08% 15.20%
(LOAD ADJ.)
S&P 500 35.01% 21.69% 17.98%
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 LONG-TERM GROWTH AND
SHORT-TERM VOLATILITY. UNLIKE THE BROADER MARKET,
HOWEVER, SOME SECTORS MAY NOT HAVE A HISTORY
OF GROWTH IN THE LONG RUN. AND, AS WITH ALL STOCK
FUNDS, THE SHARE PRICE AND RETURN OF A FUND THAT
INVESTS IN A SECTOR WILL VARY. THAT MEANS IF YOU
SELL YOUR SHARES DURING A SECTOR DOWNTURN, YOU
MIGHT LOSE MONEY. BUT IF YOU CAN IDENTIFY A SECTOR
THAT IS ABOUT TO EXPERIENCE RAPID GROWTH YOU MAY
HAVE THE POTENTIAL FOR ABOVE-AVERAGE GAINS.
(CHECKMARK)
$10,000 OVER 10 YEARS
IMAHDR PRASUN SHR__CHT 19980228 19980305 133110 S00000000000001
Industrial Equipment S&P 500
00510 SP001
1988/02/29 9700.00 10000.00
1988/03/31 9844.49 9691.00
1988/04/30 10133.47 9798.57
1988/05/31 10075.67 9883.82
1988/06/30 10788.48 10337.48
1988/07/31 10220.16 10298.20
1988/08/31 9295.43 9948.06
1988/09/30 9468.82 10371.85
1988/10/31 9314.70 10660.19
1988/11/30 9016.09 10507.75
1988/12/31 9497.72 10691.63
1989/01/31 10191.26 11474.26
1989/02/28 9786.69 11188.55
1989/03/31 9931.18 11449.25
1989/04/30 10643.99 12043.46
1989/05/31 11221.95 12531.22
1989/06/30 10740.32 12459.79
1989/07/31 11424.23 13584.91
1989/08/31 11636.15 13851.18
1989/09/30 11472.39 13794.39
1989/10/31 10711.42 13474.36
1989/11/30 11010.03 13749.23
1989/12/31 11202.68 14079.22
1990/01/31 10827.01 13134.50
1990/02/28 11376.07 13303.94
1990/03/31 12050.35 13656.49
1990/04/30 11954.02 13315.08
1990/05/31 13061.77 14613.30
1990/06/30 12829.61 14513.93
1990/07/31 12587.18 14467.48
1990/08/31 10511.94 13159.62
1990/09/30 9086.43 12518.75
1990/10/31 8844.00 12464.92
1990/11/30 9134.92 13270.15
1990/12/31 9464.63 13640.39
1991/01/31 10473.15 14235.11
1991/02/28 11462.29 15252.92
1991/03/31 11365.31 15622.04
1991/04/30 11248.94 15659.53
1991/05/31 11724.11 16336.03
1991/06/30 11345.62 15587.84
1991/07/31 11442.67 16314.23
1991/08/31 11617.37 16700.88
1991/09/30 11889.12 16421.97
1991/10/31 11821.18 16642.03
1991/11/30 11258.27 15971.35
1991/12/31 12004.97 17798.47
1992/01/31 13082.09 17467.42
1992/02/29 14012.33 17694.50
1992/03/31 13601.07 17349.46
1992/04/30 13601.07 17859.53
1992/05/31 13708.78 17947.04
1992/06/30 12866.67 17679.63
1992/07/31 12984.17 18402.73
1992/08/31 12308.52 18025.47
1992/09/30 12563.12 18238.17
1992/10/31 12514.16 18302.01
1992/11/30 13111.47 18926.11
1992/12/31 13366.06 19158.90
1993/01/31 13992.75 19319.83
1993/02/28 14727.14 19582.58
1993/03/31 14991.53 19995.77
1993/04/30 15677.42 19511.88
1993/05/31 16461.29 20034.79
1993/06/30 16676.86 20092.89
1993/07/31 16912.02 20012.52
1993/08/31 18068.23 20771.00
1993/09/30 17862.46 20611.06
1993/10/31 18460.16 21037.71
1993/11/30 18440.57 20837.85
1993/12/31 19157.43 21089.99
1994/01/31 20058.25 21807.05
1994/02/28 20628.77 21216.08
1994/03/31 19437.68 20291.06
1994/04/30 19261.76 20550.78
1994/05/31 18868.04 20887.82
1994/06/30 17898.90 20376.06
1994/07/31 18746.90 21044.40
1994/08/31 20079.47 21907.22
1994/09/30 20140.05 21370.49
1994/10/31 20392.43 21851.33
1994/11/30 19403.09 21055.50
1994/12/31 19756.43 21367.76
1995/01/31 19645.38 21921.82
1995/02/28 20230.90 22776.12
1995/03/31 21906.72 23448.24
1995/04/30 22936.69 24138.79
1995/05/31 23401.28 25103.62
1995/06/30 24290.07 25686.77
1995/07/31 26572.63 26538.55
1995/08/31 26057.54 26605.16
1995/09/30 24865.76 27727.90
1995/10/31 24815.26 27628.91
1995/11/30 25663.64 28841.82
1995/12/31 25251.50 29397.31
1996/01/31 26265.97 30398.00
1996/02/29 27688.44 30679.78
1996/03/31 27886.92 30975.23
1996/04/30 28399.28 31431.81
1996/05/31 28605.65 32242.43
1996/06/30 28479.54 32365.28
1996/07/31 27057.85 30935.38
1996/08/31 28227.30 31587.81
1996/09/30 29568.73 33365.57
1996/10/31 29385.29 34285.79
1996/11/30 31770.05 36877.45
1996/12/31 31996.28 36146.91
1997/01/31 33138.55 38405.37
1997/02/28 32740.68 38706.47
1997/03/31 31418.73 37116.02
1997/04/30 32564.25 39331.84
1997/05/31 35456.38 41726.37
1997/06/30 37667.19 43595.71
1997/07/31 40378.56 47064.62
1997/08/31 40128.28 44428.06
1997/09/30 41185.02 46861.38
1997/10/31 37973.08 45296.21
1997/11/30 37903.56 47392.97
1997/12/31 37931.37 48206.71
1998/01/31 37248.07 48739.88
1998/02/27 41165.60 52255.00
IMATRL PRASUN SHR__CHT 19980228 19980305 133112 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Industrial Equipment Portfolio on February
29, 1988, and the current 3.00% sales charge was paid. As the chart
shows, by February 28, 1998, the value of the investment would have
grown to $41,166 - a 311.66% increase on the initial investment, and
includes the effect of a $7.50 trading fee. 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 $52,255 - a 422.55% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1998
% OF FUND'S
INVESTMENTS
TYCO INTERNATIONAL LTD. 3.9
PITNEY BOWES, INC. 3.8
EMERSON ELECTRIC CO. 3.2
HONEYWELL, INC. 3.1
ILLINIOS TOOL WORKS, INC. 3.1
CHICAGO MINIATURE LAMP, INC. 2.8
INGERSOLL-RAND CO. 2.6
GENERAL ELECTRIC CO. 2.4
COMSAT CORP., SERIES 1 2.2
AMETEK, INC. 2.2
TOP INDUSTRIES AS OF FEBRUARY 28, 1998
ROW: 1, COL: 1, VALUE: 62.4
ROW: 1, COL: 2, VALUE: 3.8
ROW: 1, COL: 3, VALUE: 3.8
ROW: 1, COL: 4, VALUE: 5.1
ROW: 1, COL: 5, VALUE: 9.9
ROW: 1, COL: 6, VALUE: 15.0
GENERAL INDUSTRIAL MACHINERY 15.0%
ELECTRICAL MACHINERY 9.9%
TELEPHONE SERVICES 5.1%
FARM MACHINERY & EQUIPMENT 3.8%
OFFICE AUTOMATION 3.8%
ALL OTHERS 62.4%
*
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
INDUSTRIAL EQUIPMENT PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Simon Wolf,
Portfolio Manager of Fidelity Select Industrial Equipment Portfolio
Q. HOW DID THE FUND PERFORM, SIMON?
A. For the 12-month period that ended February 28, 1998, the fund
returned 25.76%, while the Standard & Poor's 500 Index returned
35.01%.
Q. HOW WOULD YOU DESCRIBE THE INVESTMENT ENVIRONMENT DURING THE YEAR?
A. Prior to October 1997, the U.S. economy was accelerating without
any concurrent rise in inflation. The fund's performance was aided by
increased capital investment not only in the United States but also in
Asia and elsewhere, as economies throughout the world expanded
rapidly. As a result, for most of the year the fund performed better
than the S&P 500. However, with the advent of the Asian financial
crisis, the market began to fear that capital spending in Asia and
Latin America would be reduced and that worldwide economic growth
would slow, stemming future capital investment. As a result, the
market disproportionately punished equipment companies and capital
goods companies.
Q. WHAT STRATEGY DID YOU FOLLOW DURING THE YEAR?
A. In general, I look for the industry or industries that are likely
to begin a building cycle. I try to find the companies that are best
positioned to take advantage of these cycles. For most of the year, I
emphasized companies supplying the semi-conductor equipment industry,
as the demand for microchips for computers and other uses expanded.
However, the stocks of these companies fell out of favor during the
second half of the fiscal year as a result of the Asian crisis. Toward
the end of the period, I emphasized companies in the rapidly growing
area of satellites, investing in companies like Loral Space and Comsat
that have been developing, manufacturing or managing satellites.
Q. WHAT WERE SOME OF THE COMPANIES THAT HELPED SUPPORT THE FUND'S
PERFORMANCE?
A. A number of the fund's holdings did well, including the largest,
Tyco International, a conglomerate that designs and manufactures
products for a variety of markets, including the electronics and
environmental services industries. Another contributor to performance
was Pitney Bowes, an office equipment manufacturer and supplier that
has produced consistent earnings growth. Chart Industries, a
manufacturer of equipment for gas and hydrocarbon processing
companies, was a good performer, as was Chicago Miniature Lamp, a
manufacturer of light fixtures and ballasts whose stock price was
helped by its recent acquisition of Sylvania Lighting.
Q. WERE THERE ANY DISAPPOINTMENTS?
A. The Asian financial crisis was a disappointment because of its wide
effect on equipment companies. In particular, companies in the defense
electronics industry did not do well even though I had expected the
expansion in the aerospace industry to help this industry. However,
the building cycle in the aerospace industry was disrupted by the
Asian crisis, hurting the stock values of a number of defense
electronics companies, such as Titan and ECC International Corp., two
companies no longer in the portfolio.
Q. WHAT IS YOUR OUTLOOK, SIMON?
A. I'm cautiously optimistic, primarily because the U.S. economy still
seems to be accelerating and opportunities in Europe appear to be
increasing. Although the Asian crisis is real and its effects have not
been totally felt, it has not yet slowed economic growth in the United
States. In addition, many equipment companies hope growth in Europe
will offset the Asian slowdown as Europe emerges from a number of
years of fiscal restraint and pent-up demand. On the other hand, Latin
America remains somewhat uncertain because of concerns that economies
in the region may not be able to withstand pressures on their
currencies. In this environment, I will continue to look for companies
that can take advantage of changing trends and the next expansion
cycles in different industries and sectors.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET AND OTHER CONDITIONS.
FUND FACTS
START DATE: September 29, 1986
FUND NUMBER: 510
TRADING SYMBOL: FSCGX
SIZE: As of February 28, 1998, more than
$50 million
MANAGER: Simon Wolf, since August 1997;
research analyst, industrial and electrical
equipment industries, since 1997; joined
Fidelity in 1996
(checkmark)
INDUSTRIAL EQUIPMENT PORTFOLIO
INVESTMENTS FEBRUARY 28, 1998
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 82.1%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 2.4%
AIRCRAFT EQUIPMENT - 1.5%
BE Aerospace, Inc. (a) 26,200 $ 771,263
GUIDED MISSILES & SPACE VEHICLES - 0.9%
Rockwell International Corp. 7,000 423,500
TOTAL AEROSPACE & DEFENSE 1,194,763
AGRICULTURE - 2.0%
CROPS - 2.0%
DEKALB Genetics Corp. Class B 15,000 1,007,813
AIR TRANSPORTATION - 1.5%
AIR TRANSPORT, MAJOR NATIONAL - 1.5%
Alaska Air Group, Inc. (a) 13,500 743,344
America West Airlines, Inc.
Class B (warrants) 2,200 29,288
772,632
BROADCASTING - 3.2%
COMMUNICATIONS SERVICES, NEC - 1.4%
Forsoft Ltd. (a) 20,000 251,250
PanAmSat Corp. (a) 9,000 478,125
729,375
TELEVISION BROADCASTING - 1.8%
CBS Corp. 28,600 884,813
TOTAL BROADCASTING 1,614,188
BUILDING MATERIALS - 4.1%
AIRCONDITIONING EQUIPMENT - 1.0%
American Standard Companies,
Inc. (a) 11,300 502,850
PAVING, ROOFING & SIDING - 1.1%
Elcor Corp. 21,000 563,063
PLATEWORK - 2.0%
Chart Industries, Inc. 40,000 990,000
TOTAL BUILDING MATERIALS 2,055,913
CHEMICALS & PLASTICS - 2.0%
PLASTICS, NEC - 2.0%
Ivex Packaging Corp. 40,100 1,007,513
COMPUTER SERVICES & SOFTWARE - 1.6%
PREPACKAGED COMPUTER SOFTWARE - 1.6%
ModaCAD, Inc. (a) 50,000 812,500
COMPUTERS & OFFICE EQUIPMENT - 3.8%
OFFICE AUTOMATION - 3.8%
Pitney Bowes, Inc. 40,000 1,875,000
CONSTRUCTION - 0.8%
OPERATIVE BUILDERS - 0.8%
Lennar Corp. 15,000 419,063
ELECTRICAL EQUIPMENT - 18.5%
ELECTRICAL MACHINERY - 9.9%
Alcatel Alsthom Compagnie Generale
d'Electricite SA sponsored ADR 22,300 583,981
Emerson Electric Co. 25,000 1,595,313
General Electric Co. 15,500 1,205,125
Honeywell, Inc. 19,700 1,561,225
4,945,644
SHARES VALUE (NOTE 1)
ELECTRICAL, INDUSTRIAL APPARATUS - 1.5%
Baldor Electric Co. 11,866 $ 307,033
Hubbell, Inc. Class B 9,000 453,375
760,408
MOTORS & GENERATORS - 2.2%
AMETEK, Inc. 40,000 1,075,000
TV & RADIO COMMUNICATION EQUIPMENT - 2.1%
Loral Space & Communications Ltd. (a) 41,538 1,061,815
WIRING & LIGHTING - 2.8%
Chicago Miniature Lamp, Inc. (a) 30,000 1,402,500
TOTAL ELECTRICAL EQUIPMENT 9,245,367
ELECTRONICS - 1.3%
ELECTRONICS & ELECTRONIC COMPONENTS - 1.3%
Alpine Group, Inc. (a) 33,300 663,919
ENERGY SERVICES - 0.9%
OIL & GAS SERVICES - 0.9%
Dresser Industries, Inc. 10,000 446,875
ENGINEERING - 0.6%
ARCHITECTS & ENGINEERS - 0.6%
Corrpro Companies, Inc. (a) 20,000 281,250
ENTERTAINMENT - 0.9%
RECREATIONAL SERVICES - 0.9%
Bally Total Fitness Holding Corp. 16,000 438,000
INDUSTRIAL MACHINERY & EQUIPMENT - 23.9%
ACCESS & MEASURING CUTTING TOOLS - 0.6%
MSC Industrial Direct, Inc. (a) 6,500 310,781
BALL & ROLLER BEARINGS - 0.5%
Kaydon Corp. 7,000 260,313
CONSTRUCTION EQUIPMENT - 2.4%
Caterpillar, Inc. 15,000 819,366
Terex Corp. (a) 15,000 358,125
1,177,491
FARM MACHINERY & EQUIPMENT - 3.8%
AGCO Corp. 9,000 253,125
Case Corp. 15,000 975,938
Lindsay Manufacturing Co. 16,550 693,031
1,922,094
GENERAL INDUSTRIAL MACHINERY - 15.0%
Cooper Industries, Inc. 18,500 1,038,313
Dover Corp. 19,900 768,638
Harnischfeger Industries, Inc. 7,500 265,313
Illinois Tool Works, Inc. 25,500 1,528,406
Ingersoll-Rand Co. 27,000 1,285,875
Manitowoc Co., Inc. 5,250 207,047
Parker-Hannifin Corp. 10,000 466,250
Tyco International Ltd. 38,000 1,928,500
7,488,342
MACHINE TOOLS, METAL CUTTING - 0.8%
Kennametal, Inc. 7,200 378,900
PUMPING EQUIPMENT - 0.4%
IDEX Corp. 5,600 191,450
SPECIAL INDUSTRIAL MACHINERY, NEC - 0.4%
DT Industries, Inc. 5,000 176,250
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 11,905,621
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
LEASING & RENTAL - 1.5%
EQUIPMENT RENTAL & LEASING, NEC - 0.5%
Rental Service Corp. (a) 10,000 $ 235,000
HEAVY CONSTRUCTION EQUIPMENT RENTAL & LEASE - 1.0%
United Rentals, Inc. 20,000 493,750
TOTAL LEASING & RENTAL 728,750
METALS & MINING - 3.8%
NONFERROUS ROLLING & DRAWING - 2.0%
Superior Telecom, Inc. 25,000 976,563
NONFERROUS WIRE - 1.8%
AFC Cable Systems, Inc. (a) 17,000 604,563
Belden, Inc. 8,000 311,500
916,063
TOTAL METALS & MINING 1,892,626
PACKAGING & CONTAINERS - 1.5%
GLASS CONTAINERS - 1.5%
Owens-Illinois, Inc. (a) 20,000 767,500
PAPER & FOREST PRODUCTS - 1.4%
ENVELOPES - 1.4%
Mail-Well, Inc. (a) 17,000 677,875
POLLUTION CONTROL - 0.7%
POLLUTION EQUIPMENT & DESIGN - 0.7%
Thermo Instrument Systems, Inc. (a) 9,375 329,297
PRINTING - 0.6%
PLATEMAKING, RELATED SERVICES - 0.6%
Schawk, Inc. Class A 25,000 289,063
TELEPHONE SERVICES - 5.1%
Comsat Corp., Series 1 33,000 1,103,438
Telebras sponsored ADR 5,000 612,188
Teleport Communications Group, Inc.
Class A (a) 5,000 273,125
WorldCom, Inc. (a) 15,000 572,813
2,561,564
TOTAL COMMON STOCKS
(Cost $31,532,924) 40,987,092
CASH EQUIVALENTS - 17.9%
Taxable Central Cash Fund (b)
(Cost $8,930,642) 8,930,642 8,930,642
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $40,463,566) $ 49,917,734
LEGEND
1. Non-income producing
2. At period end, the seven-day yield on the Taxable Central Cash Fund
was 5.62%. 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 $64,640,918 and $135,568,899, respectively (see Note 3 of
Notes to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company.
The commissions paid to these affiliated firms were $28,906 for the
period (see Note 4 of Notes to Financial Statements).
INCOME TAX INFORMATION
At February 28, 1998, the aggregate cost of investment securities for
income tax purposes was $40,517,766. Net unrealized appreciation
aggregated $9,399,968, of which $9,676,104 related to appreciated
investment securities and $276,136 related to depreciated investment
securities.
The fund hereby designates approximately $3,438,000 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 deductions for corporate
shareholders (unaudited).
The fund will notify shareholders in January 1999 of this percentage
for use in preparing 1998 income tax returns.
INDUSTRIAL EQUIPMENT PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1998
ASSETS
INVESTMENT IN $ 49,917,734
SECURITIES,
AT VALUE
(COST
$40,463,
566) -
SEE
ACCOMPAN
YING
SCHEDULE
RECEIVABLE 347,650
FOR
INVESTMENT
S SOLD
RECEIVABLE 1,275,999
FOR FUND
SHARES
SOLD
DIVIDENDS 50,302
RECEIVABLE
INTEREST 16,756
RECEIVABLE
REDEMPTION 61
FEES
RECEIVABLE
OTHER 16,504
RECEIVABLE
S
TOTAL 51,625,006
ASSETS
LIABILITIES
PAYABLE FOR $ 838,372
INVESTMENT
S
PURCHASED
PAYABLE FOR 289,036
FUND
SHARES
REDEEMED
ACCRUED 22,958
MANAGEM
ENT FEE
OTHER 46,925
PAYABLES
AND
ACCRUED
EXPENSES
TOTAL 1,197,291
LIABILITIES
NET ASSETS $ 50,427,715
NET ASSETS
CONSIST OF:
PAID IN $ 37,904,027
CAPITAL
ACCUMULATED 3,069,520
UNDISTRIBUT
ED NET
REALIZED
GAIN (LOSS)
ON
INVESTMENT
S AND
FOREIGN
CURRENCY
TRANSACTIO
NS
NET 9,454,168
UNREALIZED
APPRECIATI
ON
(DEPRECIATI
ON) ON
INVESTMENT
S
NET ASSETS, $ 50,427,715
FOR
1,945,90
7
SHARES
OUTSTANDIN
G
NET ASSET $25.91
VALUE AND
REDEMPTIO
N PRICE
PER SHARE
($50,427,
715 (DIVIDED BY)
1,945,90
7 SHARES)
MAXIMUM $26.71
OFFERING
PRICE PER
SHARE
(100/97.
00 OF
$25.91)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1998
INVESTMENT $ 493,539
INCOME
DIVIDENDS
INTEREST 276,158
TOTAL 769,697
INCOME
EXPENSES
MANAGEMEN $ 358,194
T FEE
TRANSFER 512,016
AGENT FEES
ACCOUNTING 65,050
FEES AND
EXPENSES
NON-INTEREST 276
ED
TRUSTEES'
COMPENSAT
ION
CUSTODIAN 23,346
FEES AND
EXPENSES
REGISTRATION 18,145
FEES
AUDIT 24,221
LEGAL 667
MISCELLANEO 554
US
TOTAL 1,002,469
EXPENSES
BEFORE
REDUCTIONS
EXPENSE (42,360) 960,109
REDUCTIONS
NET (190,412)
INVESTMEN
T INCOME
(LOSS)
REALIZED
AND
UNREALIZED
GAIN (LOSS)
NET REALIZED
GAIN (LOSS)
ON:
INVESTMENT 9,534,618
SECURITIES
FOREIGN (2,131) 9,532,487
CURRENCY
TRANSACTIO
NS
CHANGE IN 4,204,137
NET
UNREALIZED
APPRECIATI
ON
(DEPRECIATI
ON) ON
INVESTMENT
SECURITIES
NET GAIN 13,736,624
(LOSS)
NET INCREASE $ 13,546,212
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
OTHER $ 60,451
INFORMATIO
N
SALES
CHARGES
PAID TO
FDC
SALES $ 234
CHARGES -
DEALERS'
PORTION
DEFERRED $ 2,151
SALES
CHARGES
WITHHELD
BY FDC
EXCHANGE $ 36,855
FEES
WITHHELD
BY FSC
EXPENSE $ 42,360
REDUCTIONS
DIRECTED
BROKERAGE
ARRANGEM
ENTS
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
FEBRUARY 28, FEBRUARY 28,
1998 1997
OPERATIONS $ (190,412) $ 227,943
NET
INVESTMENT
INCOME
(LOSS)
NET 9,532,487 20,831,090
REALIZED
GAIN (LOSS)
CHANGE IN 4,204,137 (7,537,624)
NET
UNREALIZED
APPRECIATI
ON
(DEPRECIATI
ON)
NET 13,546,212 13,521,409
INCREASE
(DECREAS
E) IN NET
ASSETS
RESULTING
FROM
OPERATIO
NS
DISTRIBUTIONS (59,949) (140,245)
TO
SHAREHOLD
ERS
FROM NET
INVESTMENT
INCOME
FROM NET (11,693,964) (13,222,285)
REALIZED
GAIN
TOTAL (11,753,913) (13,362,530)
DISTRIBUTIO
NS
SHARE 24,781,618 90,579,551
TRANSACTIO
NS
NET
PROCEEDS
FROM SALES
OF SHARES
REINVESTM 11,543,701 13,206,101
ENT OF
DISTRIBUTIO
NS
COST OF (90,632,790) (138,841,270)
SHARES
REDEEMED
NET (54,307,471) (35,055,618)
INCREASE
(DECREAS
E) IN NET
ASSETS
RESULTING
FROM
SHARE
TRANSACTI
ONS
REDEMPTIO 60,604 259,034
N FEES
TOTAL (52,454,568) (34,637,705)
INCREASE
(DECREASE)
IN NET
ASSETS
NET ASSETS
BEGINNING 102,882,283 137,519,988
OF PERIOD
END OF $ 50,427,715 $ 102,882,283
PERIOD
(INCLUDIN
G
UNDISTRIB
UTED NET
INVESTME
NT
INCOME
OF $0
AND
$126,0
09,
RESPECTIV
ELY)
OTHER
INFORMATION
SHARES
SOLD 934,187 3,535,843
ISSUED IN 497,967 542,236
REINVESTME
NT OF
DISTRIBUTIO
NS
REDEEMED (3,519,270) (5,521,656)
NET (2,087,116) (1,443,577)
INCREASE
(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>
YEARS ENDED FEBRUARY 28, YEAR ENDED YEARS ENDED FEBRUARY 28,
FEBRUARY 29,
SELECTED PER-SHARE DATA 1998 1997 1996 1995 1994
</TABLE>
NET ASSET $ 25.51 $ 25.11 $ 20.04 $ 20.61 $ 15.04
VALUE,
BEGINNING
OF PERIOD
INCOME FROM
INVESTMENT
OPERATION
S
NET (.08) .06 .04 .01 -
INVESTMENT
INCOME
(LOSS) C
NET 5.73 4.15 7.10 (.44) 5.92
REALIZED
AND
UNREALIZED
GAIN (LOSS)
TOTAL FROM 5.65 4.21 7.14 (.43) 5.92
INVESTMENT
OPERATIONS
LESS
DISTRIBUTIO
NS
FROM NET (.02) (.04) (.05) (.01) (.01)
INVESTMENT
INCOME
FROM NET (5.26) (3.84) (2.05) (.16) (.40)
REALIZED
GAIN
TOTAL (5.28) (3.88) (2.10) (.17) (.41)
DISTRIBUTIO
NS
REDEMPTION .03 .07 .03 .03 .06
FEES
ADDED TO
PAID IN
CAPITAL
NET ASSET $ 25.91 $ 25.51 $ 25.11 $ 20.04 $ 20.61
VALUE, END
OF PERIOD
TOTAL 25.76% 18.25% 36.86% (1.93)% 40.07%
RETURN A, B
RATIOS AND
SUPPLEME
NTAL DATA
NET ASSETS, $ 50,428 $ 102,882 $ 137,520 $ 109,968 $ 206,012
END OF
PERIOD
(000
OMITTED)
RATIO OF 1.67% 1.51% 1.54% 1.80% 1.69%
EXPENSES
TO AVERAGE
NET ASSETS
RATIO OF 1.60% D 1.44% D 1.53% D 1.78% D 1.68% D
EXPENSES
TO AVERAGE
NET ASSETS
AFTER
EXPENSE
REDUCTIONS
RATIO OF NET (.32)% .25% .19% .06% .01%
INVESTMENT
INCOME
(LOSS) TO
AVERAGE
NET ASSETS
PORTFOLIO 115% 261% 115% 131% 95%
TURNOVER
RATE
AVERAGE $ .0386 $ .0401
COMMISSIO
N RATE E
<TABLE>
<CAPTION>
<S> <C>
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. 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>
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). Load adjusted returns include a 3.00% sales
charge and the effect of a $7.50 trading fee. 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, 1998 YEAR YEARS YEARS
SELECT INDUSTRIAL MATERIALS 6.59% 82.77% 160.08%
SELECT INDUSTRIAL MATERIALS 3.32% 77.21% 152.20%
(LOAD ADJ.)
S&P 500 35.01% 166.84% 422.55%
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 Standard & Poor's
500 Index - a widely recognized, unmanaged index of common stocks.
This benchmark includes 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, 1998 YEAR YEARS YEARS
SELECT INDUSTRIAL MATERIALS 6.59% 12.82% 10.03%
SELECT INDUSTRIAL MATERIALS 3.32% 12.12% 9.69%
(LOAD ADJ.)
S&P 500 35.01% 21.69% 17.98%
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 LONG-TERM GROWTH AND
SHORT-TERM VOLATILITY. UNLIKE THE BROADER MARKET,
HOWEVER, SOME SECTORS MAY NOT HAVE A HISTORY
OF GROWTH IN THE LONG RUN. AND, AS WITH ALL STOCK
FUNDS, THE SHARE PRICE AND RETURN OF A FUND THAT
INVESTS IN A SECTOR WILL VARY. THAT MEANS IF YOU
SELL YOUR SHARES DURING A SECTOR DOWNTURN, YOU
MIGHT LOSE MONEY. BUT IF YOU CAN IDENTIFY A
SECTOR THAT IS ABOUT TO EXPERIENCE RAPID GROWTH
YOU MAY HAVE THE POTENTIAL FOR ABOVE-AVERAGE
GAINS.
(CHECKMARK)
$10,000 OVER 10 YEARS
IMAHDR PRASUN SHR__CHT 19980228 19980305 144918 S00000000000001
Industrial Materials S&P 500
00509 SP001
1988/02/29 9700.00 10000.00
1988/03/31 9872.95 9691.00
1988/04/30 9887.98 9798.57
1988/05/31 9647.36 9883.82
1988/06/30 10700.08 10337.48
1988/07/31 10301.55 10298.20
1988/08/31 9745.12 9948.06
1988/09/30 9827.83 10371.85
1988/10/31 9647.36 10660.19
1988/11/30 9557.13 10507.75
1988/12/31 10142.69 10691.63
1989/01/31 10754.16 11474.26
1989/02/28 10287.92 11188.55
1989/03/31 10180.91 11449.25
1989/04/30 10494.29 12043.46
1989/05/31 10631.87 12531.22
1989/06/30 10012.76 12459.79
1989/07/31 10914.67 13584.91
1989/08/31 11786.01 13851.18
1989/09/30 11067.54 13794.39
1989/10/31 10157.98 13474.36
1989/11/30 10303.20 13749.23
1989/12/31 10593.65 14079.22
1990/01/31 9783.46 13134.50
1990/02/28 9951.61 13303.94
1990/03/31 10242.06 13656.49
1990/04/30 9500.65 13315.08
1990/05/31 10073.90 14613.30
1990/06/30 9967.00 14513.93
1990/07/31 9849.37 14467.48
1990/08/31 8712.30 13159.62
1990/09/30 8092.79 12518.75
1990/10/31 7998.69 12464.92
1990/11/30 8422.15 13270.15
1990/12/31 8775.03 13640.39
1991/01/31 9088.71 14235.11
1991/02/28 9755.27 15252.92
1991/03/31 9888.58 15622.04
1991/04/30 9904.26 15659.53
1991/05/31 10751.18 16336.03
1991/06/30 10633.52 15587.84
1991/07/31 11058.86 16314.23
1991/08/31 11318.79 16700.88
1991/09/30 11169.13 16421.97
1991/10/31 11649.61 16642.03
1991/11/30 10720.16 15971.35
1991/12/31 11917.42 17798.47
1992/01/31 12437.28 17467.42
1992/02/29 13043.78 17694.50
1992/03/31 12815.36 17349.46
1992/04/30 13484.88 17859.53
1992/05/31 13642.41 17947.04
1992/06/30 13311.27 17679.63
1992/07/31 13610.76 18402.73
1992/08/31 12751.71 18025.47
1992/09/30 12578.32 18238.17
1992/10/31 12720.19 18302.01
1992/11/30 13193.05 18926.11
1992/12/31 13391.45 19158.90
1993/01/31 13676.37 19319.83
1993/02/28 13803.01 19582.58
1993/03/31 14032.53 19995.77
1993/04/30 13826.75 19511.88
1993/05/31 14396.60 20034.79
1993/06/30 14435.91 20092.89
1993/07/31 14634.43 20012.52
1993/08/31 15015.57 20771.00
1993/09/30 14547.08 20611.06
1993/10/31 15404.66 21037.71
1993/11/30 15611.11 20837.85
1993/12/31 16254.30 21089.99
1994/01/31 17572.43 21807.05
1994/02/28 17207.16 21216.08
1994/03/31 16722.79 20291.06
1994/04/30 17350.46 20550.78
1994/05/31 17525.56 20887.82
1994/06/30 17342.50 20376.06
1994/07/31 17987.17 21044.40
1994/08/31 18958.16 21907.22
1994/09/30 18719.40 21370.49
1994/10/31 18472.67 21851.33
1994/11/30 17167.41 21055.50
1994/12/31 17586.15 21367.76
1995/01/31 17089.64 21921.82
1995/02/28 18523.12 22776.12
1995/03/31 18947.56 23448.24
1995/04/30 19035.30 24138.79
1995/05/31 18842.78 25103.62
1995/06/30 19685.05 25686.77
1995/07/31 21385.64 26538.55
1995/08/31 21329.49 26605.16
1995/09/30 20727.86 27727.90
1995/10/31 19524.62 27628.91
1995/11/30 21321.46 28841.82
1995/12/31 20292.64 29397.31
1996/01/31 20606.82 30398.00
1996/02/29 21001.56 30679.78
1996/03/31 22064.93 30975.23
1996/04/30 22581.98 31431.81
1996/05/31 22442.94 32242.43
1996/06/30 21698.66 32365.28
1996/07/31 20798.98 30935.38
1996/08/31 21927.67 31587.81
1996/09/30 22410.22 33365.57
1996/10/31 22361.15 34285.79
1996/11/30 23040.00 36877.45
1996/12/31 23136.38 36146.91
1997/01/31 23239.05 38405.37
1997/02/28 23666.87 38706.47
1997/03/31 22092.50 37116.02
1997/04/30 22152.62 39331.84
1997/05/31 23556.33 41726.37
1997/06/30 23481.96 43595.71
1997/07/31 25536.40 47064.62
1997/08/31 25638.66 44428.06
1997/09/30 26307.98 46861.38
1997/10/31 24272.13 45296.21
1997/11/30 23983.95 47392.97
1997/12/31 23542.27 48206.71
1998/01/31 23986.27 48739.88
1998/02/27 25219.96 52255.00
IMATRL PRASUN SHR__CHT 19980228 19980305 144920 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Industrial Materials Portfolio on February
29, 1988, and the current 3.00% sales charge was paid. As the chart
shows, by February 28, 1998, the value of the investment would have
grown to $25,220 - a 152.20% increase on the initial investment, and
includes the effect of a $7.50 trading fee. 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 $52,255 - a 422.55% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1998
% OF FUND'S
INVESTMENTS
CYTEC INDUSTRIES, INC. 6.4
KIMBERLY-CLARK CORP. 5.8
MONSANTO CO. 4.7
MASCO CORP. 4.5
MINNESOTA MINING & MANUFACTURING CO. 4.5
DU PONT (E.I.) DE NEMOURS & CO. 3.5
OWENS-ILLINOIS, INC. 3.4
DOW CHEMICAL CO. 2.9
BURLINGTON NORTHERN SANTA FE CORP. 2.3
RAYCHEM CORP. 2.3
TOP INDUSTRIES AS OF FEBRUARY 28, 1998
CHEMICALS 24.1%
RAILROADS 8.5%
PAPER 8.0%
PLUMBING SUPPLIES -
WHOLESALE 4.5%
MANUFACTURING INDUSTRIES,
NEC 4.5%
ALL OTHERS 50.4%
ROW: 1, COL: 1, VALUE: 50.4
ROW: 1, COL: 2, VALUE: 4.5
ROW: 1, COL: 3, VALUE: 4.5
ROW: 1, COL: 4, VALUE: 8.0
ROW: 1, COL: 5, VALUE: 8.5
ROW: 1, COL: 6, VALUE: 24.1
*
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
INDUSTRIAL MATERIALS PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
James Catudal,
Portfolio Manager of
Fidelity Select Industrial
Materials Portfolio
Q. HOW DID THE FUND PERFORM, JIM?
A. The fund has just come through a rough period. For the 12 months
that ended February 28, 1998, the fund had a total return of 6.59%,
while the Standard & Poor's 500 Index returned 35.01%.
Q. WHAT FACTORS CONTRIBUTED TO THE FUND'S WEAK PERFORMANCE RELATIVE TO
THE INDEX?
A. There were two very damaging influences. First, the Asian currency
crisis resulted in increased supply and decreased demand for virtually
every industrial material considered to have "commodity" status; that
is, materials that are widely available because they are produced in a
variety of countries around the world, such as steel, paper,
chemicals, plastics and non-ferrous metals. The second negative factor
was the continuing plunge in the price of gold. While the fund
typically does not hold large positions in the stocks of companies
that mine gold and other precious metals, the severity of the decline
in gold's price resulted in correspondingly steep drops in the fund's
precious metals holdings, taking its toll on the fund's overall
performance.
Q. WHAT STRATEGY DID YOU PURSUE IN THOSE CIRCUMSTANCES?
A. My strategy was threefold. First, I emphasized companies whose
performance depends primarily on business in the United States, while
attempting to limit holdings with foreign exposure. Second, I looked
for companies that make value-added, specialty products - for example,
specialty chemicals, building materials and tissue - rather than
materials that are commonly traded on a global basis. In both cases, I
was motivated by a desire to insulate the fund as much as possible
from the supply and demand imbalances caused by the Asian turmoil.
Finally, I substantially reduced the fund's precious metals holdings.
Q. WHICH STOCKS PERFORMED WELL FOR THE FUND?
A. Cytec Industries was one of the fund's best performers and also its
largest holding for much of the period. The company is a specialty
chemical producer that has seen healthy revenue growth. The stock also
has responded positively to cost cutting and improved operating
margins attributable to plant consolidation and other restructuring
initiatives. Another stock that helped the fund was Monsanto. The
company has transformed itself, spinning off its commodity chemical
business during the period and further sharpening its focus on
products with higher profit margins, such as food ingredients,
pharmaceuticals and agricultural products. Owens-Illinois also
contributed positively to the fund's performance. The company enjoys
major market shares in both glass and plastic containers, which have
been gaining in popularity over aluminum containers. Finally, Masco,
which manufactures home improvement and building products, saw strong
increases in sales and earnings boost the company's stock price.
Q. WHAT HOLDINGS DETRACTED FROM THE FUND'S PERFORMANCE?
A. Many of the stocks that hurt performance most were in the precious
metals sector - stocks such as Newmont Mining, Newmont Gold and Golden
Knight Resources. The story behind their performance was essentially
the same in every case: The shares were hurt by the continuing decline
in gold's price. QNI is a nickel producer whose stock also performed
poorly. The nickel market has been burdened by excess supply from
nickel exports and nickel-bearing scrap coming from the former Soviet
Union, and by reduced demand from Asia. Aluminum Company of America
(Alcoa) stock also struggled. Here, too, concerns over the slowdown of
consumption in Asia fueled the stock's decline.
Q. WHAT'S YOUR OUTLOOK, JIM?
A. My outlook at this juncture remains cautious. I believe that most
of the weakness in industrial materials prices attributable to lagging
demand in Asia is behind us, but there is no way of knowing that for
certain. If the Asian economies recover, the fund could perform very
well. For now, I think the best strategy is to emphasize stocks that
can benefit from the strong U.S. economy - especially the housing
market - and stocks of companies that sell specialty or value-added
products. Conversely, I'll try to avoid companies with excessive
foreign exposure or dependence on commonly produced "commodity"
materials.
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, 1998, more than
$22 million
MANAGER: James Catudal, since August 1997;
manager, Fidelity Select Energy Service Portfolio,
since January 1998; analyst, energy service
companies, since January 1998; analyst, North
American non-ferrous metals companies 1997 to
January 1998; joined Fidelity in 1997
(checkmark)
INDUSTRIAL MATERIALS PORTFOLIO
INVESTMENTS FEBRUARY 28, 1998
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 93.4%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 0.7%
AIRCRAFT ENGINES & PARTS - 0.7%
Doncasters PLC sponsored ADR 6,000 $ 150,000
BUILDING MATERIALS - 8.6%
CEMENT - 1.1%
Lafarge Corp. 5,000 167,800
Southdown, Inc. 1,400 89,600
257,400
CONCRETE, GYPSUM, PLASTER - 0.6%
USG Corp. (a) 2,400 131,100
PAINT & VARNISH - 1.8%
Sherwin-Williams Co. 12,600 421,313
PAVING, ROOFING & SIDING - 0.6%
Elcor Corp. 5,000 134,063
PLUMBING SUPPLIES - WHOLESALE - 4.5%
Masco Corp. 19,000 1,033,125
TOTAL BUILDING MATERIALS 1,977,001
CHEMICALS & PLASTICS - 31.2%
ADHESIVES & SEALANTS - 0.3%
Fuller (H.B.) Co. 1,000 56,875
CHEMICALS - 24.1%
Cytec Industries, Inc. (a) 30,000 1,466,250
Dow Chemical Co. 7,300 667,950
du Pont (E.I.) de Nemours & Co. 13,000 797,063
Goodrich (B.F.) Co. 2,600 128,863
Hercules, Inc. 5,000 241,563
MacDermid, Inc. 3,000 104,625
Monsanto Co. 21,000 1,068,375
Raychem Corp. 12,020 522,119
Union Carbide Corp. 5,000 232,188
Witco Corp. 7,500 298,594
5,527,590
INDUSTRIAL GASES - 3.1%
Air Products & Chemicals, Inc. 5,500 461,656
Praxair, Inc. 5,000 239,063
700,719
INORGANIC CHEMICALS - 0.6%
Valspar Corp. 4,000 140,250
PLASTICS, NEC - 1.2%
Hanna (M.A.) Co. 11,900 275,931
UNSUPPORTED PLASTICS FILM & SHEET - 1.9%
W.R. Grace & Co. 5,300 444,869
TOTAL CHEMICALS & PLASTICS 7,146,234
CONSUMER DURABLES - 4.5%
MANUFACTURING INDUSTRIES, NEC - 4.5%
Minnesota Mining & Manufacturing Co. 12,000 1,023,750
ELECTRONICS - 1.4%
ELECTRONIC CAPACITORS - 0.5%
Maxwell Technologies, Inc. (a) 3,966 112,040
ELECTRONICS & ELECTRICAL COMPONENTS - 0.9%
Alpine Group, Inc. 10,000 199,375
TOTAL ELECTRONICS 311,415
HOLDING COMPANIES - 1.3%
HOLDING COMPANY OFFICES, NEC - 1.3%
Norfolk Southern Corp. 9,000 309,938
SHARES VALUE (NOTE 1)
INDUSTRIAL MACHINERY & EQUIPMENT - 1.2%
CARBON & GRAPHITE PRODUCTS - 1.2%
UCAR International, Inc. (a) 8,000 $ 275,500
IRON & STEEL - 3.0%
BLAST FURNACES - 1.8%
Allegheny Teledyne, Inc. 7,500 203,438
Steel Dynamics, Inc. (a) 10,500 199,500
402,938
IRON & STEEL BLAST FURNACES, MILLS - 1.2%
Inland Steel Industries, Inc. 4,500 92,813
Nucor Corp. 3,700 190,550
283,363
TOTAL IRON & STEEL 686,301
LEASING & RENTAL - 0.5%
EQUIPMENT RENTAL & LEASING, NEC - 0.5%
Ryder Systems, Inc. 3,300 121,069
METALS & MINING - 6.8%
ALUMINUM, EXTRUDED PRODUCTS - 0.8%
Alumax, Inc. (a) 5,000 185,313
METAL ORES - 0.3%
Pechiney SA Class A 1,454 64,458
METALS SERVICE CENTERS - WHOLESALE - 0.2%
Ryerson Tull, Inc. Class A (a) 3,000 50,813
NONFERROUS ROLLING & DRAWING - 1.0%
Essex International, Inc. 2,000 77,750
Superior Telecom, Inc. 3,750 146,484
224,234
PRIMARY PRODUCTION OF ALUMINUM - 1.2%
Reynolds Metals Co. 4,500 280,406
PRIME NONFERROUS SMELTING - 3.3%
Alcan Aluminium Ltd. 9,000 278,455
Aluminum Co. of America 5,500 403,563
Brush Wellman, Inc. 3,000 81,000
763,018
TOTAL METALS & MINING 1,568,242
PACKAGING & CONTAINERS - 5.5%
GLASS CONTAINERS - 3.3%
Owens-Illinois, Inc. (a) 20,200 775,175
METAL CANS & CONTAINERS - 2.2%
Silgan Holdings, Inc. 14,100 497,025
TOTAL PACKAGING & CONTAINERS 1,272,200
PAPER & FOREST PRODUCTS - 13.9%
CONVERTED PAPER & PAPERBOARD - 1.0%
Boise Cascade Corp. 7,087 236,086
PAPER - 8.0%
Champion International Corp. 3,000 153,188
Chesapeake Corp. 2,000 67,875
Georgia-Pacific Corp. 4,000 234,750
Kimberly-Clark Corp. 24,000 1,336,500
Stone Container Corp. (a) 3,500 39,375
1,831,688
PAPER MILLS - 2.2%
Bowater, Inc. 3,000 148,500
Fort James Corp. 7,700 349,388
497,888
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
PAPER & FOREST PRODUCTS - CONTINUED
PAPERBOARD MILLS - 2.7%
Jefferson Smurfit Corp. (a) 7,000 $ 104,563
Mead Corp. 15,000 512,813
617,376
TOTAL PAPER & FOREST PRODUCTS 3,183,038
PRECIOUS METALS - 3.3%
GOLD & SILVER ORES - 0.9%
Getchell Gold Corp. (a) 11,000 204,875
GOLD ORES - 2.4%
Golden Knight Resources, Inc. (a) 20,300 32,794
Kinross Gold Corp. (a) 17,000 60,299
Newmont Gold Co. 8,000 234,000
Newmont Mining Corp. 8,000 231,500
558,593
TOTAL PRECIOUS METALS 763,468
RAILROADS - 8.5%
Burlington Northern Santa Fe Corp. 5,300 528,013
CSX Corp. 8,000 447,500
Canadian National Railway Co. 4,200 260,776
Kansas City Southern Industries, Inc. 12,000 446,250
Wisconsin Central Transportation
Corp. (a) 9,900 268,538
1,951,077
RETAIL & WHOLESALE, MISCELLANEOUS - 0.9%
STATIONERY & OFFICE SUPPLIES - WHOLESALE - 0.9%
IKON Office Solutions, Inc. 6,000 196,125
TEXTILES & APPAREL - 0.6%
TEXTILE MILL PRODUCTS - 0.6%
Unifi, Inc. 3,500 128,625
TRUCKING & FREIGHT - 1.5%
TRUCKING, LOCAL & LONG DISTANCE - 0.4%
Heartland Express, Inc. (a) 4,000 101,000
TRUCKING, LONG DISTANCE - 1.1%
Consolidated Freightways Corp. 5,000 75,000
US Freightways Corp. 5,000 174,688
249,688
TOTAL TRUCKING & FREIGHT 350,688
TOTAL COMMON STOCKS
(Cost $19,222,451) 21,414,671
CASH EQUIVALENTS - 6.6%
Taxable Central Cash Fund (b)
(Cost $1,517,355) 1,517,355 1,517,355
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $20,739,806) $ 22,932,026
LEGEND
1. Non-income producing
2. At period end, the seven-day yield on the Taxable Central Cash Fund
was 5.62%. 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 $34,572,486 and $79,444,576, 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 $19,267 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 loan balance during the periods for which the
loan was outstanding amounted to $2,443,000. The weighted average
interest rate paid was 5.8% (see Note 7 of Notes to Financial
Statements).
INCOME TAX INFORMATION
At February 28, 1998, the aggregate cost of investment securities for
income tax purposes was $21,069,226. Net unrealized appreciation
aggregated $1,862,800 of which $2,361,255 related to appreciated
investment securities and $498,455 related to depreciated investment
securities.
The fund hereby designates approximately $1,320,000 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, 1999 approximately $513,000 of losses recognized during the period
November 1, 1997 to February 28, 1998.
A total of 0.78% 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 (unaudited).
A total of 9% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate
shareholders (unaudited).
The fund will notify shareholders in January 1999 of these percentages
for use in preparing 1998 income tax returns.
INDUSTRIAL MATERIALS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1998
ASSETS
INVESTMENT IN $ 22,932,026
SECURITIES,
AT VALUE
(COST
$20,739,
806) -
SEE
ACCOMPAN
YING
SCHEDULE
RECEIVABLE 146,138
FOR
INVESTMENT
S SOLD
RECEIVABLE 18,294
FOR FUND
SHARES
SOLD
DIVIDENDS 50,287
RECEIVABLE
INTEREST 5,132
RECEIVABLE
REDEMPTION 45
FEES
RECEIVABLE
OTHER 3,942
RECEIVABLE
S
TOTAL 23,155,864
ASSETS
LIABILITIES
PAYABLE FOR $ 258,256
INVESTMENT
S
PURCHASED
PAYABLE FOR 264,366
FUND
SHARES
REDEEMED
ACCRUED 11,294
MANAGEM
ENT FEE
OTHER 40,128
PAYABLES
AND
ACCRUED
EXPENSES
TOTAL 574,044
LIABILITIES
NET ASSETS $ 22,581,820
NET ASSETS
CONSIST OF:
PAID IN $ 19,556,540
CAPITAL
ACCUMULATED 833,093
UNDISTRIBUT
ED NET
REALIZED
GAIN (LOSS)
ON
INVESTMENT
S AND
FOREIGN
CURRENCY
TRANSACTIO
NS
NET 2,192,187
UNREALIZED
APPRECIATI
ON
(DEPRECIATI
ON) ON
INVESTMENT
S
AND ASSETS
AND
LIABILITIES
IN
FOREIGN
CURRENCIES
NET ASSETS, $ 22,581,820
FOR
903,406
SHARES
OUTSTANDIN
G
NET ASSET $25.00
VALUE AND
REDEMPTIO
N PRICE
PER SHARE
($22,581,
820 (DIVIDED BY)
903,406
SHARES)
MAXIMUM $25.77
OFFERING
PRICE PER
SHARE
(100/97.
00 OF
$25.00)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1998
INVESTMENT $ 339,780
INCOME
DIVIDENDS
INTEREST 117,356
TOTAL 457,136
INCOME
EXPENSES
MANAGEMEN $ 178,398
T FEE
TRANSFER 296,528
AGENT FEES
ACCOUNTING 60,356
FEES AND
EXPENSES
NON-INTEREST 148
ED
TRUSTEES'
COMPENSAT
ION
CUSTODIAN 15,826
FEES AND
EXPENSES
REGISTRATION 18,254
FEES
AUDIT 22,965
LEGAL 264
INTEREST 390
MISCELLANEO 584
US
TOTAL 593,713
EXPENSES
BEFORE
REDUCTIONS
EXPENSE (11,813) 581,900
REDUCTIONS
NET (124,764)
INVESTMEN
T INCOME
(LOSS)
REALIZED
AND
UNREALIZED
GAIN (LOSS)
NET REALIZED
GAIN (LOSS)
ON:
INVESTMENT 3,026,516
SECURITIES
FOREIGN (8,835) 3,017,681
CURRENCY
TRANSACTIO
NS
CHANGE IN
NET
UNREALIZED
APPRECIATI
ON
(DEPRECIATI
ON) ON:
INVESTMENT (1,218,229)
SECURITIES
ASSETS AND 7,358 (1,210,871)
LIABILITIES
IN
FOREIGN
CURRENCIES
NET GAIN 1,806,810
(LOSS)
NET INCREASE $ 1,682,046
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
OTHER $ 21,426
INFORMATIO
N
SALES
CHARGES
PAID TO
FDC
SALES $ 760
CHARGES -
DEALERS'
PORTION
DEFERRED $ 2,207
SALES
CHARGES
WITHHELD
BY FDC
EXCHANGE $ 15,008
FEES
WITHHELD
BY FSC
EXPENSE $ 11,813
REDUCTIONS
DIRECTED
BROKERAGE
ARRANGEM
ENTS
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
FEBRUARY 28, FEBRUARY 28,
1998 1997
OPERATIONS $ (124,764) $ 220,365
NET
INVESTMENT
INCOME
(LOSS)
NET 3,017,681 8,999,452
REALIZED
GAIN (LOSS)
CHANGE IN (1,210,871) 1,201,543
NET
UNREALIZED
APPRECIATI
ON
(DEPRECIATI
ON)
NET 1,682,046 10,421,360
INCREASE
(DECREAS
E) IN NET
ASSETS
RESULTING
FROM
OPERATIO
NS
DISTRIBUTIONS (37,279) (200,673)
TO
SHAREHOLD
ERS
FROM NET
INVESTMENT
INCOME
FROM NET (4,304,754) (5,508,154)
REALIZED
GAIN
TOTAL (4,342,033) (5,708,827)
DISTRIBUTIO
NS
SHARE 15,807,574 113,772,805
TRANSACTIO
NS
NET
PROCEEDS
FROM SALES
OF SHARES
REINVESTM 4,249,488 5,651,415
ENT OF
DISTRIBUTIO
NS
COST OF (61,328,959) (144,145,096)
SHARES
REDEEMED
NET (41,271,897) (24,720,876)
INCREASE
(DECREAS
E) IN NET
ASSETS
RESULTING
FROM
SHARE
TRANSACTI
ONS
REDEMPTIO 51,834 131,891
N FEES
TOTAL (43,880,050) (19,876,452)
INCREASE
(DECREASE)
IN NET
ASSETS
NET ASSETS
BEGINNING 66,461,870 86,338,322
OF PERIOD
END OF $ 22,581,820 $ 66,461,870
PERIOD
(INCLUDIN
G
UNDISTRIB
UTED NET
INVESTME
NT
INCOME
OF $0
AND
$67,75
9,
RESPECTIV
ELY)
OTHER
INFORMATION
SHARES
SOLD 605,194 4,147,616
ISSUED IN 181,274 212,018
REINVESTME
NT OF
DISTRIBUTIO
NS
REDEEMED (2,285,848) (5,268,325)
NET (1,499,380) (908,691)
INCREASE
(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>
YEARS ENDED FEBRUARY 28, YEAR ENDED YEARS ENDED FEBRUARY 28,
FEBRUARY 29,
SELECTED PER-SHARE DATA 1998 1997 1996 1995 1994
</TABLE>
NET ASSET $ 27.66 $ 26.07 $ 23.13 $ 21.67 $ 17.44
VALUE,
BEGINNING
OF PERIOD
INCOME FROM
INVESTMENT
OPERATION
S
NET (.11) .06 .12 .17 .15
INVESTMENT
INCOME
(LOSS) C
NET 1.43 3.12 2.92 1.43 4.07
REALIZED
AND
UNREALIZED
GAIN (LOSS)
TOTAL FROM 1.32 3.18 3.04 1.60 4.22
INVESTMENT
OPERATIONS
LESS
DISTRIBUTIO
NS
FROM NET (.03) (.06) (.15) (.18) (.06)
INVESTMENT
INCOME
FROM NET (4.00) (1.57) - - -
REALIZED
GAIN
TOTAL (4.03) (1.63) (.15) (.18) (.06)
DISTRIBUTIO
NS
REDEMPTION .05 .04 .05 .04 .07
FEES
ADDED TO
PAID IN
CAPITAL
NET ASSET $ 25.00 $ 27.66 $ 26.07 $ 23.13 $ 21.67
VALUE, END
OF PERIOD
TOTAL 6.59% 12.69% 13.38% 7.65% 24.66%
RETURN A, B
RATIOS AND
SUPPLEME
NTAL DATA
NET ASSETS, $ 22,582 $ 66,462 $ 86,338 $ 183,454 $ 155,721
END OF
PERIOD
(000
OMITTED)
RATIO OF 1.98% 1.54% 1.64% 1.56% 2.10%
EXPENSES
TO AVERAGE
NET ASSETS
RATIO OF 1.94% D 1.51% D 1.61% D 1.53% D 2.08% D
EXPENSES
TO AVERAGE
NET ASSETS
AFTER
EXPENSE
REDUCTIONS
RATIO OF NET (.42)% .23% .49% .77% .75%
INVESTMENT
INCOME
(LOSS) TO
AVERAGE
NET ASSETS
PORTFOLIO 118% 105% 138% 139% 185%
TURNOVER
RATE
AVERAGE $ .0214 $ .0242
COMMISSIO
N RATE E
<TABLE>
<CAPTION>
<S> <C>
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. 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>
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). Load adjusted returns include a 3.00% sales
charge and the effect of a $7.50 trading fee. 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, 1998 YEAR YEARS YEARS
SELECT PAPER AND 15.53% 96.10% 180.35%
FOREST PRODUCTS
SELECT PAPER AND 11.99% 90.15% 171.87%
FOREST PRODUCTS
(LOAD ADJ.)
S&P 500 35.01% 166.84% 422.55%
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 Standard & Poor's
500 Index - a widely recognized, unmanaged index of common stocks.
This benchmark includes 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, 1998 YEAR YEARS YEARS
SELECT PAPER AND 15.53% 14.42% 10.86%
FOREST PRODUCTS
SELECT PAPER AND 11.99% 13.71% 10.52%
FOREST PRODUCTS
(LOAD ADJ.)
S&P 500 35.01% 21.69% 17.98%
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 LONG-TERM GROWTH AND
SHORT-TERM VOLATILITY. UNLIKE THE BROADER MARKET,
HOWEVER, SOME SECTORS MAY NOT HAVE A HISTORY
OF GROWTH IN THE LONG RUN. AND, AS WITH ALL STOCK
FUNDS, THE SHARE PRICE AND RETURN OF A FUND THAT
INVESTS IN A SECTOR WILL VARY. THAT MEANS IF YOU
SELL YOUR SHARES DURING A SECTOR DOWNTURN, YOU
MIGHT LOSE MONEY. BUT IF YOU CAN IDENTIFY A
SECTOR THAT IS ABOUT TO EXPERIENCE RAPID GROWTH
YOU MAY HAVE THE POTENTIAL FOR ABOVE-AVERAGE
GAINS.
(CHECKMARK)
$10,000 OVER 10 YEARS
IMAHDR PRASUN SHR__CHT 19980228 19980305 140743 S00000000000001
Paper & Forest S&P 500
00506 SP001
1988/02/29 9700.00 10000.00
1988/03/31 9391.81 9691.00
1988/04/30 9497.24 9798.57
1988/05/31 9391.81 9883.82
1988/06/30 10365.05 10337.48
1988/07/31 9902.76 10298.20
1988/08/31 9416.14 9948.06
1988/09/30 9602.68 10371.85
1988/10/31 9391.81 10660.19
1988/11/30 9189.05 10507.75
1988/12/31 9863.17 10691.63
1989/01/31 9960.74 11474.26
1989/02/28 9668.02 11188.55
1989/03/31 9676.15 11449.25
1989/04/30 10025.79 12043.46
1989/05/31 10204.68 12531.22
1989/06/30 9554.18 12459.79
1989/07/31 10473.01 13584.91
1989/08/31 11221.08 13851.18
1989/09/30 10603.11 13794.39
1989/10/31 10123.37 13474.36
1989/11/30 10050.18 13749.23
1989/12/31 10265.43 14079.22
1990/01/31 9326.97 13134.50
1990/02/28 9417.52 13303.94
1990/03/31 9680.95 13656.49
1990/04/30 9055.31 13315.08
1990/05/31 9656.25 14613.30
1990/06/30 9425.76 14513.93
1990/07/31 9565.70 14467.48
1990/08/31 8421.44 13159.62
1990/09/30 7606.46 12518.75
1990/10/31 7367.73 12464.92
1990/11/30 8108.62 13270.15
1990/12/31 8714.58 13640.39
1991/01/31 9434.51 14235.11
1991/02/28 9886.56 15252.92
1991/03/31 10087.48 15622.04
1991/04/30 10581.39 15659.53
1991/05/31 11795.23 16336.03
1991/06/30 11493.86 15587.84
1991/07/31 11502.24 16314.23
1991/08/31 11560.83 16700.88
1991/09/30 11117.15 16421.97
1991/10/31 11535.72 16642.03
1991/11/30 10656.73 15971.35
1991/12/31 11744.22 17798.47
1992/01/31 12824.35 17467.42
1992/02/29 12884.35 17694.50
1992/03/31 12970.08 17349.46
1992/04/30 13175.81 17859.53
1992/05/31 12807.20 17947.04
1992/06/30 12722.12 17679.63
1992/07/31 12627.62 18402.73
1992/08/31 12120.80 18025.47
1992/09/30 11991.95 18238.17
1992/10/31 12576.08 18302.01
1992/11/30 13039.96 18926.11
1992/12/31 13159.98 19158.90
1993/01/31 13565.30 19319.83
1993/02/28 13867.14 19582.58
1993/03/31 13849.89 19995.77
1993/04/30 14479.92 19511.88
1993/05/31 14523.07 20034.79
1993/06/30 14212.41 20092.89
1993/07/31 14065.71 20012.52
1993/08/31 14445.40 20771.00
1993/09/30 13755.06 20611.06
1993/10/31 14290.08 21037.71
1993/11/30 15178.89 20837.85
1993/12/31 15601.73 21089.99
1994/01/31 17413.87 21807.05
1994/02/28 16922.00 21216.08
1994/03/31 15127.12 20291.06
1994/04/30 15110.21 20550.78
1994/05/31 15726.59 20887.82
1994/06/30 15568.09 20376.06
1994/07/31 16888.92 21044.40
1994/08/31 18773.29 21907.22
1994/09/30 19107.90 21370.49
1994/10/31 17919.16 21851.33
1994/11/30 17135.47 21055.50
1994/12/31 17807.55 21367.76
1995/01/31 17687.97 21921.82
1995/02/28 19444.81 22776.12
1995/03/31 19582.79 23448.24
1995/04/30 19663.76 24138.79
1995/05/31 19988.86 25103.62
1995/06/30 21800.12 25686.77
1995/07/31 22543.20 26538.55
1995/08/31 22524.62 26605.16
1995/09/30 22153.08 27727.90
1995/10/31 21827.98 27628.91
1995/11/30 22153.08 28841.82
1995/12/31 21710.03 29397.31
1996/01/31 22251.51 30398.00
1996/02/29 21229.86 30679.78
1996/03/31 22312.81 30975.23
1996/04/30 23288.40 31431.81
1996/05/31 22819.00 32242.43
1996/06/30 21538.83 32365.28
1996/07/31 20973.43 30935.38
1996/08/31 22146.91 31587.81
1996/09/30 22947.02 33365.57
1996/10/31 22904.35 34285.79
1996/11/30 23171.05 36877.45
1996/12/31 23244.04 36146.91
1997/01/31 23483.45 38405.37
1997/02/28 23537.86 38706.47
1997/03/31 22264.66 37116.02
1997/04/30 22931.01 39331.84
1997/05/31 25761.03 41726.37
1997/06/30 25962.37 43595.71
1997/07/31 27987.01 47064.62
1997/08/31 27886.34 44428.06
1997/09/30 28702.91 46861.38
1997/10/31 25906.44 45296.21
1997/11/30 26074.23 47392.97
1997/12/31 25417.89 48206.71
1998/01/31 26389.96 48739.88
1998/02/27 27186.52 52255.00
IMATRL PRASUN SHR__CHT 19980228 19980305 140745 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Paper and Forest Products Portfolio on
February 29, 1988, and the current 3.00% sales charge was paid. As the
chart shows, by February 28, 1998, the value of the investment would
have grown to $27,187 - a 171.87% increase on the initial investment,
and includes the effect of a $7.50 trading fee. 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 $52,255 - a 422.55% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1998
% OF FUND'S
INVESTMENTS
FORT JAMES CORP. 7.3
CHESAPEAKE CORP. 6.6
MAIL-WELL, INC. 6.1
IKON OFFICE SOLUTIONS, INC. 5.5
FIBERMARK, INC. 5.4
BUCKEYE TECHNOLOGIES, INC. 5.1
KIMBERLY-CLARK CORP. 5.1
ABITIBI-CONSOLIDATED, INC. 4.3
CHAMPION INTERNATIONAL CORP. 4.1
SONOCO PRODUCTS CO. 3.4
TOP INDUSTRIES AS OF FEBRUARY 28, 1998
PAPER & FOREST PRODUCTS 83.8%
RETAIL & WHOLESALE,
MISCELLANEOUS 5.9%
PACKAGING & CONTAINERS 3.8%
ALL OTHERS 6.5%
ROW: 1, COL: 1, VALUE: 6.5
ROW: 1, COL: 2, VALUE: 3.8
ROW: 1, COL: 3, VALUE: 5.9
ROW: 1, COL: 4, VALUE: 83.8
*
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
PAPER AND FOREST PRODUCTS PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
NOTE TO SHAREHOLDERS: Doug Lober became Portfolio Manager of Fidelity
Select Paper and Forest Products Portfolio on October 15, 1997.
Q. HOW DID THE FUND PERFORM, DOUG?
A. It was a challenging period. For the 12 months that ended February
28, 1998, the fund returned 15.53%. The Standard & Poor's 500 Index
returned 35.01% over the same period.
Q. WHAT FACTORS CONTRIBUTED TO THE FUND'S PERFORMANCE?
A. Paper-company stock prices generally rise and fall in conjunction
with paper prices and this period was no different. When we entered
the period, prices for major paper commodities such as containerboard,
tissue, newsprint and pulp were at very low levels. In April 1997,
however, we saw paper prices gradually begin to improve. Paper stocks
followed, doing quite well until economic and currency crises in
Southeast Asia became apparent in late October. Because paper is a
dollar-denominated commodity and 30% of global paper demand comes from
Asia, investors began to think that U.S. companies would be negatively
affected by worldwide paper price declines. This sentiment resulted in
paper stocks falling by around 25%. By December, pulp prices - pulp
being the building block for paper - had also begun to decline,
falling approximately 10%. However, the paper stocks began to show
signs of improvement in January and February, as damage from the Asian
crisis was less than expected.
Q. WITH RESPECT TO THE FUND, DID YOU PURSUE ANY STRATEGIES TO TRY TO
OFFSET THE DAMAGE WROUGHT BY THE ASIAN CRISIS?
A. When the currency problems in that region became visible, I
de-emphasized the fund's commodity-related exposure and concentrated
on companies with unique products. These companies often have pricing
power and, because most sold products that were not commodity-like in
nature, I felt they could perform well despite the Asian volatility.
Examples within the portfolio included Mail-Well, a company that makes
envelopes, and FiberMark, which makes notebooks and other specialty
paper products. Both stocks were positive performers.
Q. INDUSTRY CONSOLIDATION HAS BEEN SWEEPING THE CORPORATE LANDSCAPE IN
RECENT YEARS. WAS THIS A PREVALENT TREND WITHIN THE PAPER INDUSTRY?
A. Absolutely. A lot of companies - such as Fort James and Chesapeake,
the fund's two largest positions at the end of the period - sought to
improve operational efficiencies by either restructuring internally or
making acquisitions. This activity wasn't confined within the
boundaries of the U.S. either, as European companies got into the act.
Consolidation is a positive trend because the industry should enjoy
better pricing ability with fewer competitors. When Fort Howard and
James River joined forces to create Fort James, for instance, it meant
there were only three paper companies - Fort James, Procter & Gamble
and Kimberly-Clark - controlling around 65% of the tissue market.
Mergers can frequently make for more predictable earnings streams for
the companies as well.
Q. HOW WOULD YOU DESCRIBE YOUR INVESTING STYLE?
A. I typically look at what type of market share the company commands,
its pricing power and its ability to generate free cash flow. I'm
basically searching for high-quality companies that I feel can grow
faster than the overall market. In an industry as economically
sensitive as this, however, that can be a formidable challenge.
Q. WHICH STOCKS PERFORMED WELL? WHICH TURNED OUT TO BE DISAPPOINTING?
A. The fund's two best contributors - before they merged - were Fort
Howard and James River. Along with their strong business prospects,
these stocks received a boost when the merger was announced. Buckeye
Technologies, a specialty pulp producer, also turned in a solid
showing. Among the disappointments, Stone Container and Mercer
International were sluggish. Investors were concerned about Stone's
high level of debt, while Mercer struggled due to delays it
encountered in the process of revamping its pulp mill in Germany.
Q. WHAT'S YOUR OUTLOOK?
A. I'm optimistic. Toward the end of the period, paper prices appeared
to be on the upswing and the problems we've seen in Asia should limit
the new capacity that can lead to lower paper prices. In terms of
consolidation within the group, I think there's plenty more to follow.
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, 1998, MORE THAN
$31 MILLION
MANAGER: DOUG LOBER, SINCE 1997; MANAGER,
FIDELITY SELECT BROADCAST AND MEDIA PORTFOLIO
AND FIDELITY SELECT HOUSING PORTFOLIO, 1989;
ANALYST, ENTERTAINMENT, NEWSPAPER, MEDIA,
BROADCASTING, CABLE, HOTEL AND GAMING, TOY AND
INTERNATIONAL OIL INDUSTRIES, 1986-1989; SENIOR
ANALYST, PULP AND PAPER, OFFICE SERVICE AND
OFFICE AUTOMATION INDUSTRIES, 1997-PRESENT;
JOINED FIDELITY IN 1986
(CHECKMARK)
PAPER AND FOREST PRODUCTS PORTFOLIO
INVESTMENTS FEBRUARY 28, 1998
SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENT IN SECURITIES
COMMON STOCKS - 93.5%
SHARES VALUE (NOTE 1)
BASIC INDUSTRIES - 87.6%
PACKAGING & CONTAINERS - 3.8%
Gaylord Container Corp. Class A (a) 16,200 $ 107,325
Sonoco Products Co. 27,900 1,079,379
1,186,704
PAPER & FOREST PRODUCTS - 83.8%
Abitibi-Consolidated, Inc. 95,600 1,363,076
Alliance Forest Products, Inc. (a) 42,400 839,810
Bowater, Inc. 18,800 930,600
Buckeye Technologies, Inc. (a) 75,000 1,598,438
Caraustar Industries, Inc. 9,800 330,750
Champion International Corp. 25,200 1,286,775
Chesapeake Corp. 61,400 2,083,763
Consolidated Papers, Inc. 8,900 516,756
Domtar, Inc. 44,500 339,122
FiberMark, Inc. (a) 72,150 1,686,506
Fort James Corp. 50,300 2,282,363
Georgia-Pacific Corp. 2,600 152,588
Georgia Pacific Corp. (Timber Group) 29,200 666,125
International Paper Co. 5,800 270,425
Jefferson Smurfit Corp. (a) 51,400 767,788
Kimberly-Clark Corp. 28,560 1,590,435
Mail-Well, Inc. (a) 47,800 1,906,025
Mead Corp. 19,300 659,819
Mercer International, Inc. (SBI) 33,700 294,875
Rayonier, Inc. 13,300 563,588
Smurfit (Jefferson) Group PLC 166,500 424,719
Stone Container Corp. (a) 51,400 578,250
Stora Kopparbergs B Free shares 66,600 960,937
Svenska Cellulosa AB (SCA) Class B
Ord. 40,000 909,432
Temple-Inland, Inc. 10,900 649,913
Tembec, Inc. Class A (a) 59,300 362,360
Union Camp Corp. 16,800 1,003,800
UPM-Kymmene Corp. 9,500 246,520
Weyerhaeuser Co. 1,100 54,931
Willamette Industries, Inc. 26,600 982,538
26,303,027
TOTAL BASIC INDUSTRIES 27,489,731
RETAIL & WHOLESALE - 5.9%
RETAIL & WHOLESALE, MISCELLANEOUS - 5.9%
Boise Cascade Office Products Corp. (a) 7,700 139,081
IKON Office Solutions, Inc. 52,500 1,716,094
1,855,175
TOTAL COMMON STOCKS
(Cost $28,075,949) 29,344,906
CASH EQUIVALENTS - 6.5%
Taxable Central Cash Fund (b)
(Cost $2,028,781) 2,028,781 2,028,781
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $30,104,730) $ 31,373,687
LEGEND
1. Non-income producing
2. At period end, the seven-day yield on the Taxable Central Cash Fund
was 5.62%. 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 $61,264,377 and $53,543,858, 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 $11,543 for the
period (see Note 4 of Notes to Financial Statements).
Distribution of investments by country of issue, as a percentage of
total value of investment in securities, is as follows:
United States 81.7%
Canada 10.2
Sweden 6.0
Ireland 1.3
Others (individually less than 1%) 0.8
TOTAL 100.0%
INCOME TAX INFORMATION
At February 28, 1998, the aggregate cost of investment securities for
income tax purposes was $30,525,925. Net unrealized appreciation
aggregated $847,762, of which $1,630,671 related to appreciated
investment securities and $782,909 related to depreciated investment
securities.
The fund hereby designates approximately $1,652,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 31% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate
shareholders (unaudited).
A total of 0.23% 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. (unaudited)
The fund will notify shareholders in January 1999 of these percentages
for use in preparing 1998 income tax returns.
PAPER AND FOREST PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1998
ASSETS
INVESTMENT IN $ 31,373,687
SECURITIES,
AT VALUE
(COST
$30,104,
730) -
SEE
ACCOMPAN
YING
SCHEDULE
RECEIVABLE 13,326,238
FOR
INVESTMENT
S SOLD
RECEIVABLE 19,303
FOR FUND
SHARES
SOLD
DIVIDENDS 35,331
RECEIVABLE
INTEREST 11,256
RECEIVABLE
REDEMPTION 7,581
FEES
RECEIVABLE
TOTAL 44,773,396
ASSETS
LIABILITIES
PAYABLE FOR $ 2,713,352
INVESTMENT
S
PURCHASED
PAYABLE FOR 10,615,223
FUND
SHARES
REDEEMED
ACCRUED 20,984
MANAGEM
ENT FEE
OTHER 39,730
PAYABLES
AND
ACCRUED
EXPENSES
TOTAL 13,389,289
LIABILITIES
NET ASSETS $ 31,384,107
NET ASSETS
CONSIST OF:
PAID IN $ 29,147,650
CAPITAL
UNDISTRIBUTE 31,081
D NET
INVESTMENT
INCOME
ACCUMULATED 936,469
UNDISTRIBUT
ED NET
REALIZED
GAIN (LOSS)
ON
INVESTMENT
S AND
FOREIGN
CURRENCY
TRANSACTIO
NS
NET 1,268,907
UNREALIZED
APPRECIATI
ON
(DEPRECIATI
ON) ON
INVESTMENT
S
AND ASSETS
AND
LIABILITIES
IN
FOREIGN
CURRENCIES
NET ASSETS, $ 31,384,107
FOR
1,384,80
2
SHARES
OUTSTANDIN
G
NET ASSET $22.66
VALUE AND
REDEMPTIO
N PRICE
PER SHARE
($31,384,
107 (DIVIDED BY)
1,384,80
2 SHARES)
MAXIMUM $23.36
OFFERING
PRICE PER
SHARE
(100/97.
00 OF
$22.66)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1998
INVESTMENT $ 298,028
INCOME
DIVIDENDS
INTEREST 100,581
TOTAL 398,609
INCOME
EXPENSES
MANAGEMEN $ 144,890
T FEE
TRANSFER 254,143
AGENT FEES
ACCOUNTING 60,338
FEES AND
EXPENSES
NON-INTEREST 93
ED
TRUSTEES'
COMPENSAT
ION
CUSTODIAN 16,127
FEES AND
EXPENSES
REGISTRATION 31,700
FEES
AUDIT 19,890
LEGAL 344
MISCELLANEO 277
US
TOTAL 527,802
EXPENSES
BEFORE
REDUCTIONS
EXPENSE (7,418) 520,384
REDUCTIONS
NET (121,775)
INVESTMEN
T INCOME
(LOSS)
REALIZED
AND
UNREALIZED
GAIN (LOSS)
NET REALIZED
GAIN (LOSS)
ON:
INVESTMENT 2,535,084
SECURITIES
FOREIGN 2,355 2,537,439
CURRENCY
TRANSACTIO
NS
CHANGE IN
NET
UNREALIZED
APPRECIATI
ON
(DEPRECIATI
ON) ON:
INVESTMENT 1,291,304
SECURITIES
ASSETS AND (32) 1,291,272
LIABILITIES
IN
FOREIGN
CURRENCIES
NET GAIN 3,828,711
(LOSS)
NET INCREASE $ 3,706,936
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
OTHER $ 82,389
INFORMATIO
N
SALES
CHARGES
PAID TO
FDC
SALES $ 1,371
CHARGES -
DEALERS'
PORTION
DEFERRED $ 2,161
SALES
CHARGES
WITHHELD
BY FDC
EXCHANGE $ 21,645
FEES
WITHHELD
BY FSC
EXPENSE $ 7,350
REDUCTIONS
DIRECTED
BROKERAGE
ARRANGEM
ENTS
CUSTODIA 68
N CREDITS
$ 7,418
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
FEBRUARY 28, FEBRUARY 28,
1998 1997
OPERATIONS $ (121,775) $ 12,943
NET
INVESTMENT
INCOME
(LOSS)
NET 2,537,439 1,735,212
REALIZED
GAIN (LOSS)
CHANGE IN 1,291,272 336,313
NET
UNREALIZED
APPRECIATI
ON
(DEPRECIATI
ON)
NET 3,706,936 2,084,468
INCREASE
(DECREAS
E) IN NET
ASSETS
RESULTING
FROM
OPERATIO
NS
DISTRIBUTIONS - (29,671)
TO
SHAREHOLD
ERS
FROM NET
INVESTMENT
INCOME
IN EXCESS (31,544) (84,325)
OF NET
INVESTMENT
INCOME
FROM NET (1,592,672) (2,413,337)
REALIZED
GAIN
TOTAL (1,624,216) (2,527,333)
DISTRIBUTIO
NS
SHARE 71,567,372 84,816,161
TRANSACTIO
NS
NET
PROCEEDS
FROM SALES
OF SHARES
REINVESTM 1,584,087 2,489,372
ENT OF
DISTRIBUTIO
NS
COST OF (63,467,979) (94,819,778)
SHARES
REDEEMED
NET 9,683,480 (7,514,245)
INCREASE
(DECREAS
E) IN NET
ASSETS
RESULTING
FROM
SHARE
TRANSACTI
ONS
REDEMPTIO 134,393 170,585
N FEES
TOTAL 11,900,593 (7,786,525)
INCREASE
(DECREASE)
IN NET
ASSETS
NET ASSETS
BEGINNING 19,483,514 27,270,039
OF PERIOD
END OF $ 31,384,107 $ 19,483,514
PERIOD
(INCLUDIN
G UNDER
(OVER)
DISTRIBUTI
ON OF NET
INVESTME
NT
INCOME
OF
$31,081
AND
$(45,70
3),
RESPECTIV
ELY)
OTHER
INFORMATION
SHARES
SOLD 3,117,317 3,914,858
ISSUED IN 75,670 118,411
REINVESTME
NT OF
DISTRIBUTIO
NS
REDEEMED (2,708,921) (4,444,689)
NET 484,066 (411,420)
INCREASE
(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>
YEARS ENDED FEBRUARY 28, YEAR ENDED YEARS ENDED FEBRUARY 28,
FEBRUARY 29,
SELECTED PER-SHARE DATA 1998 1997 1996 1995 1994
</TABLE>
NET ASSET $ 21.63 $ 20.78 $ 21.14 $ 19.61 $ 16.08
VALUE,
BEGINNING
OF PERIOD
INCOME FROM
INVESTMENT
OPERATION
S
NET (.12) .01 .08 .01 (.01)
INVESTMENT
INCOME
(LOSS) C
NET 3.13 2.08 1.83 2.53 3.38
REALIZED
AND
UNREALIZED
GAIN (LOSS)
TOTAL FROM 3.01 2.09 1.91 2.54 3.37
INVESTMENT
OPERATIONS
LESS
DISTRIBUTIO
NS
FROM NET - (.03) (.08) - (.01)
INVESTMENT
INCOME
IN EXCESS (.04) (.07) - - -
OF NET
INVESTMENT
INCOME
FROM NET (2.07) (1.25) (2.27) (1.17) -
REALIZED
GAIN
TOTAL (2.11) (1.35) (2.35) (1.17) (.01)
DISTRIBUTIO
NS
REDEMPTION .13 .11 .08 .16 .17
FEES
ADDED TO
PAID IN
CAPITAL
NET ASSET $ 22.66 $ 21.63 $ 20.78 $ 21.14 $ 19.61
VALUE, END
OF PERIOD
TOTAL 15.53% 10.87% 9.18% 14.91% 22.03%
RETURN A, B
RATIOS AND
SUPPLEME
NTAL DATA
NET ASSETS, $ 31,384 $ 19,484 $ 27,270 $ 94,219 $ 66,908
END OF
PERIOD
(000
OMITTED)
RATIO OF 2.18% 2.19% 1.91% 1.88% 2.08%
EXPENSES
TO AVERAGE
NET ASSETS
RATIO OF 2.15% D 2.16% D 1.90% D 1.87% D 2.07% D
EXPENSES
TO AVERAGE
NET ASSETS
AFTER
EXPENSE
REDUCTIONS
RATIO OF NET (.50)% .04% .34% .05% (.08)%
INVESTMENT
INCOME
(LOSS) TO
AVERAGE
NET ASSETS
PORTFOLIO 235% 180% 78% 209% 176%
TURNOVER
RATE
AVERAGE $ .0320 $ .0306
COMMISSIO
N RATE E
<TABLE>
<CAPTION>
<S> <C>
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. 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>
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). Load adjusted returns include a 3.00% sales
charge and the effect of a $7.50 trading fee. If Fidelity had not
reimbursed certain fund expenses, the past five years and
past 10 years total returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 28, 1998 YEAR YEARS YEARS
SELECT TRANSPORTATION 41.15% 125.27% 458.46%
SELECT TRANSPORTATION 36.84% 118.44% 441.64%
(LOAD ADJ.)
S&P 500 35.01% 166.84% 422.55%
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 Standard & Poor's
500 Index - a widely recognized, unmanaged index of common stocks.
This benchmark includes 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, 1998 YEAR YEARS YEARS
SELECT TRANSPORTATION 41.15% 17.64% 18.77%
SELECT TRANSPORTATION 36.84% 16.91% 18.41%
(LOAD ADJ.)
S&P 500 35.01% 21.69% 17.98%
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 LONG-TERM GROWTH AND
SHORT-TERM VOLATILITY. 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
Transportation S&P 500
00512 SP001
1988/02/29 9700.00 10000.00
1988/03/31 9994.55 9691.00
1988/04/30 10025.03 9798.57
1988/05/31 9964.08 9883.82
1988/06/30 10979.79 10337.48
1988/07/31 10837.59 10298.20
1988/08/31 10329.74 9948.06
1988/09/30 11010.26 10371.85
1988/10/31 11365.76 10660.19
1988/11/30 11467.33 10507.75
1988/12/31 11812.67 10691.63
1989/01/31 12828.38 11474.26
1989/02/28 12960.42 11188.55
1989/03/31 13356.54 11449.25
1989/04/30 13803.46 12043.46
1989/05/31 14392.57 12531.22
1989/06/30 14303.84 12459.79
1989/07/31 15170.74 13584.91
1989/08/31 16156.84 13851.18
1989/09/30 15842.58 13794.39
1989/10/31 14834.81 13474.36
1989/11/30 14964.85 13749.23
1989/12/31 15177.89 14079.22
1990/01/31 14224.74 13134.50
1990/02/28 14888.32 13303.94
1990/03/31 15334.73 13656.49
1990/04/30 14755.61 13315.08
1990/05/31 15298.54 14613.30
1990/06/30 15130.13 14513.93
1990/07/31 15079.86 14467.48
1990/08/31 12868.15 13159.62
1990/09/30 11209.36 12518.75
1990/10/31 11033.43 12464.92
1990/11/30 11485.83 13270.15
1990/12/31 11900.52 13640.39
1991/01/31 12918.41 14235.11
1991/02/28 14175.07 15252.92
1991/03/31 14187.64 15622.04
1991/04/30 14149.94 15659.53
1991/05/31 15268.36 16336.03
1991/06/30 15141.59 15587.84
1991/07/31 16061.94 16314.23
1991/08/31 16351.91 16700.88
1991/09/30 16049.33 16421.97
1991/10/31 17234.43 16642.03
1991/11/30 16162.80 15971.35
1991/12/31 18343.89 17798.47
1992/01/31 18507.79 17467.42
1992/02/29 19503.78 17694.50
1992/03/31 19037.30 17349.46
1992/04/30 19528.99 17859.53
1992/05/31 19932.43 17947.04
1992/06/30 19075.12 17679.63
1992/07/31 19352.49 18402.73
1992/08/31 18772.55 18025.47
1992/09/30 19516.39 18238.17
1992/10/31 20348.48 18302.01
1992/11/30 21823.56 18926.11
1992/12/31 22708.35 19158.90
1993/01/31 23725.34 19319.83
1993/02/28 24047.17 19582.58
1993/03/31 25656.32 19995.77
1993/04/30 25592.37 19511.88
1993/05/31 26548.37 20034.79
1993/06/30 26625.88 20092.89
1993/07/31 26625.88 20012.52
1993/08/31 27116.80 20771.00
1993/09/30 27181.39 20611.06
1993/10/31 27749.82 21037.71
1993/11/30 27904.85 20837.85
1993/12/31 29365.58 21089.99
1994/01/31 30652.80 21807.05
1994/02/28 30652.80 21216.08
1994/03/31 29832.37 20291.06
1994/04/30 30389.85 20550.78
1994/05/31 29901.31 20887.82
1994/06/30 29872.57 20376.06
1994/07/31 30878.38 21044.40
1994/08/31 31797.98 21907.22
1994/09/30 30950.23 21370.49
1994/10/31 31410.03 21851.33
1994/11/30 29527.72 21055.50
1994/12/31 30500.96 21367.76
1995/01/31 30295.41 21921.82
1995/02/28 32461.63 22776.12
1995/03/31 32888.55 23448.24
1995/04/30 33378.71 24138.79
1995/05/31 32382.57 25103.62
1995/06/30 32034.71 25686.77
1995/07/31 34785.96 26538.55
1995/08/31 34754.34 26605.16
1995/09/30 34438.10 27727.90
1995/10/31 34011.18 27628.91
1995/11/30 35181.26 28841.82
1995/12/31 35127.41 29397.31
1996/01/31 35662.69 30398.00
1996/02/29 36666.33 30679.78
1996/03/31 37552.88 30975.23
1996/04/30 38783.07 31431.81
1996/05/31 38833.53 32242.43
1996/06/30 39018.53 32365.28
1996/07/31 36193.05 30935.38
1996/08/31 36226.68 31587.81
1996/09/30 36394.87 33365.57
1996/10/31 36108.96 34285.79
1996/11/30 38665.34 36877.45
1996/12/31 38465.75 36146.91
1997/01/31 38741.99 38405.37
1997/02/28 38379.43 38706.47
1997/03/31 39553.43 37116.02
1997/04/30 41599.38 39331.84
1997/05/31 44426.52 41726.37
1997/06/30 45761.07 43595.71
1997/07/31 48956.97 47064.62
1997/08/31 47973.62 44428.06
1997/09/30 52714.79 46861.38
1997/10/31 50941.24 45296.21
1997/11/30 50712.96 47392.97
1997/12/31 50825.73 48206.71
1998/01/31 50921.30 48739.88
1998/02/27 54164.00 52255.00
IMATRL PRASUN SHR__CHT 19980228 19980316 165746 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Transportation Portfolio on February 29,
1988, and the current 3.00% sales charge was paid. As the chart shows,
by February 28, 1998, the value of the investment would have grown to
$54,164 - a 441.64% increase on the initial investment, and includes
the effect of a $7.50 trading fee. 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
$52,255 - a 422.55% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1998
% OF FUND'S
INVESTMENTS
AMR CORP. 4.9
CSX CORP. 4.7
EXPEDITORS INTERNATIONAL OF WASHINGTON, INC. 4.7
CANADIAN NATIONAL RAILWAY CO. 4.7
AIRBORNE FREIGHT CORP. 4.6
CNF TRANSPORTATION, INC. 4.2
US AIRWAYS GROUP, INC. 4.0
AIR EXPRESS INTERNATIONAL CORP. 3.9
ALASKA AIR GROUP, INC. 3.9
CONTINENTAL AIRLINES, INC. CLASS B 3.1
TOP INDUSTRIES AS OF FEBRUARY 28, 1998
ROW: 1, COL: 1, VALUE: 33.9
ROW: 1, COL: 2, VALUE: 5.2
ROW: 1, COL: 3, VALUE: 10.4
ROW: 1, COL: 4, VALUE: 12.1
ROW: 1, COL: 5, VALUE: 15.2
ROW: 1, COL: 6, VALUE: 23.2
AIR TRANSPORTATION,
MAJOR NATIONAL 23.2%
RAILROADS 15.2%
AIR COURIER SERVICES 12.1%
FREIGHT FORWARDING 11.6%
TRUCKING, LONG DISTANCE 5.2%
ALL OTHERS 32.7%
*
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
TRANSPORTATION PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Jean-Marc Berteaux,
Portfolio Manager
of Fidelity Select
Transportation Portfolio
Q. HOW DID THE FUND PERFORM, JEAN-MARC?
A. For the 12 months that ended February 28, 1998, the fund returned
41.15%, compared with 35.01% for the Standard & Poor's 500 Index.
Q. WHAT FACTORS HELPED THE FUND OUTPERFORM THE INDEX?
A. The fund's outperformance was largely the result of my
stock-picking strategy. I try to find companies that I believe have
good growth prospects, and I stick with them regardless of short-term
shifts in their valuations. I also look for opportunities to increase
the fund's position in good companies that have temporarily stumbled
for one reason or another. Of course, last year's positive economic
backdrop - including low inflation and declining fuel costs - helped
boost the earnings of many transportation-related companies, and thus
bolstered the fund's performance.
Q. ROUGHLY 23% OF THE PORTFOLIO WAS INVESTED IN AIR TRANSPORTATION
STOCKS AT THE END OF THE PERIOD. WHAT DID YOU FIND ATTRACTIVE ABOUT
THESE COMPANIES?
A. Airlines have been in a good growth period. During the year, fuel
costs came down at the same time that many carriers cut back their
routes. Demand was strong. The robust economy made air travel more
popular, and travelers - particularly those on business - were willing
to pay more for direct flights. Some of the smaller carriers benefited
from this trend by making frequent flights to fewer destinations. A
strong performer during the period was Alaska Air, a west-coast
airline with an attractive route and cost structure. Its stock gained
112% for the year. AMR and UAL - the holding companies of American and
United Airlines - and Continental Airlines also performed well.
Q. THE FUND'S EXPOSURE TO FREIGHT-FORWARDING COMPANIES INCREASED
DURING THE PERIOD. WHAT WAS THE STORY THERE?
A. Freight-forwarding is a phenomenal growth industry. Companies like
Expeditors International, Air Express, and Circle International Group
are contracted to transport goods using existing carriers. Since they
don't own the planes, trains and trucks, they don't have the high
costs associated with the fixed assets of other transportation
companies. What distinguishes good freight-forwards are quality
employees and first-rate information technology. Just-in-time
manufacturing - an approach in which equipment and labor are made
available only in the amount required and at the time required to do a
job - has made it more important than ever for companies to know
exactly where goods are in the shipping process and when they will
arrive. When the Asian crisis hit, many investors feared that
freight-forwarding companies would suffer from a lack of U.S. exports
to Asia. For a time, freight-forward stocks were sold
indiscriminately. However, investors eventually realized that shipping
volume from Asia to the U.S. and between Europe and Asia would more
than make up for the decline in U.S. exports. I used the drop in stock
prices during the fall to add to the fund's existing holdings in that
area.
Q. THE FUND ENDED ITS FISCAL YEAR WITH ABOUT 10% OF ITS ASSETS IN
CASH. DOES THIS SIGNIFY A MORE DEFENSIVE STRATEGY?
A. Generally, I like to keep the fund's cash position at around 5%.
However, I allowed cash to build up during the year because the fund
was experiencing a higher-than-usual flow of investments and
redemptions. In my view, it can be more damaging to the fund's
performance to have to buy and sell securities quickly than simply to
sit on cash. As the flow of investments returns to normal, I expect to
reduce the fund's cash position.
Q. WERE THERE ANY DISAPPOINTMENTS DURING THE PERIOD?
A. The price decline in freight-forwarding companies was severe and
hurt the fund's performance in the fall. Expeditors International fell
more than 35% to $30 per share, for example. Also, some of the fund's
railroad stocks underperformed due to higher-than-expected capital
expenditures, or when anticipated merger benefits proved late in
coming and less than expected.
Q. WHAT'S YOUR OUTLOOK FOR THE TRANSPORTATION MARKET GOING FORWARD?
A. I'm optimistic about the prospects for continued growth in this
industry. Lower fuel costs should allow earnings improvement for
companies that own infrastructure such as trains and trucks, while
service companies appear to be thriving in an increasingly
service-oriented economy. As always, stock selection will be a key
driver of performance for the fund.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET AND OTHER CONDITIONS.
FUND FACTS
START DATE: September 29, 1986
FUND NUMBER: 512
TRADING SYMBOL: FSRFX
SIZE: as of February 28, 1998, more than
$64 million
MANAGER: Jean-Marc Berteaux, since January
1997; equity analyst, European paper and
European diversified industrial industries, since
1994; joined Fidelity in 1994
(checkmark)
TRANSPORTATION PORTFOLIO
INVESTMENTS FEBRUARY 28, 1998
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 90.4%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 1.0%
AIRCRAFT & PARTS - 1.0%
AAR Corp. 21,000 $ 637,875
AIR TRANSPORTATION - 23.2%
AIR TRANSPORTATION, MAJOR NATIONAL - 23.2%
Alaska Air Group, Inc. (a) 47,000 2,587,938
AMR Corp. (a) 26,000 3,290,625
Atlas Air, Inc. (a) 12,000 357,060
Continental Airlines, Inc. Class B (a) 41,000 2,060,250
Delta Air Lines, Inc. 6,000 678,375
Kitty Hawk, Inc. (a) 29,000 659,750
Southwest Airlines Co. 56,000 1,606,500
Trans World Airlines, Inc. (a) 121,497 1,579,461
US Airways Group, Inc. (a) 42,000 2,659,125
15,479,084
AUTOS, TIRES, & ACCESSORIES - 7.2%
AUTO & TRUCK PARTS - 5.2%
Cummins Engine Co., Inc. 9,000 520,875
Eaton Corp. 20,000 1,921,250
Wabash National Corp. 34,000 1,009,375
3,451,500
MOTOR VEHICLES & CAR BODIES - 2.0%
Navistar International Corp. (a) 20,900 634,838
Oshkosh Truck Corp. Class B 5,000 95,625
PACCAR, Inc. 10,000 633,125
1,363,588
TOTAL AUTOS, TIRES, & ACCESSORIES 4,815,088
HOLDING COMPANIES - 2.7%
HOLDING COMPANY OFFICES, NEC - 2.7%
Lagardere S.C.A. (Reg.) 17,034 618,096
Norfolk Southern Corp. 34,000 1,170,875
1,788,971
LEASING & RENTAL - 4.3%
EQUIPMENT RENTAL & LEASING, NEC - 4.3%
GATX Corp. 16,000 1,240,000
Ryder Systems, Inc. 44,700 1,639,932
2,879,932
RAILROADS - 15.2%
Burlington Northern Santa Fe Corp. 19,000 1,892,875
CSX Corp. 56,000 3,132,500
Canadian National Railway Co. 50,000 3,104,478
Kansas City Southern Industries, Inc. 11,600 431,375
Tranz Rail Holdings Ltd. sponsored ADR 62,000 689,750
Wisconsin Central Transportation
Corp. (a) 33,000 895,125
10,146,103
SERVICES - 0.5%
BUS CHARTER SERVICE, NEC - 0.5%
Coach USA, Inc. (a) 10,000 372,500
SHIPPING - 2.5%
DEEP SEA TRANSPORT - 0.8%
Teekay Shipping Corp. 16,000 509,000
SHARES VALUE (NOTE 1)
SHIPPING - 1.7%
Knightsbridge Tankers Ltd. 42,000 $ 1,139,250
Peninsular & Oriental Steam
Navigation Co. 900 11,514
1,150,764
TOTAL SHIPPING 1,659,764
TRUCKING & FREIGHT - 33.8%
AIR COURIER SERVICES - 12.1%
Airborne Freight Corp. 84,000 3,039,750
AirNet Systems, Inc. (a) 43,000 1,150,250
CNF Transportation, Inc. 72,000 2,817,000
FDX Corp. (a) 17,000 1,082,688
8,089,688
FREIGHT FORWARDING - 11.6%
Air Express International Corp. 93,000 2,604,000
Circle International Group, Inc. 42,000 1,186,500
Expeditors International of
Washington, Inc. 77,000 3,118,500
Pittston Co. (Burlington Group) 36,200 798,663
7,707,663
TRUCKING, LOCAL & LONG DISTANCE - 4.9%
Knight Transportation, Inc. (a) 14,000 406,000
M.S. Carriers, Inc. (a) 4,400 116,050
Swift Transportation Co., Inc. (a) 19,300 629,663
Werner Enterprises, Inc. 51,000 1,268,625
XTRA Corp. 14,000 861,000
3,281,338
TRUCKING, LONG DISTANCE - 5.2%
Consolidated Freightways Corp. (a) 20,600 309,000
Covenant Transport, Inc. Class A (a) 31,200 651,300
MTL, Inc. 1,400 53,638
Professional Transportation Group, Inc. 41,000 108,906
Simon Transportation Services, Inc.
Class A (a) 13,000 201,500
Trimac Ltd. 48,300 347,726
US Xpress Enterprises, Inc. (a) 38,000 767,125
US Freightways Corp. 30,100 1,051,619
3,490,814
TOTAL TRUCKING & FREIGHT 22,569,503
TOTAL COMMON STOCKS
(Cost $53,040,483) 60,348,820
CASH EQUIVALENTS - 9.6%
Taxable Central Cash Fund (b)
(Cost $6,374,039) 6,374,039 6,374,039
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $59,414,522) $ 66,722,859
LEGEND
1. Non-income producing
2. At period end, the seven-day yield on the Taxable Central Cash Fund
was 5.62%. 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 $141,619,772 and $106,960,092, respectively (see Note 3 of
Notes to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company.
The commissions paid to these affiliated firms were $18,070 for the
period (see Note 4 of Notes to Financial Statements).
The fund participated in the securities lending program. At the period
end, the value of securities loaned and the value of collateral
amounted to $1,578,200 and $1,699,600, respectively (see Note 6 of
Notes to Financial Statements).
INCOME TAX INFORMATION
At February 28, 1998, the aggregate cost of investment securities for
income tax purposes was $59,601,058. Net unrealized appreciation
aggregated $7,121,801, of which $8,402,274 related to appreciated
investment securities and $1,280,473 related to depreciated investment
securities.
The fund hereby designates approximately $575,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 8% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate
shareholders (unaudited).
The fund will notify shareholders in January 1999 of this percentage
for use in preparing 1998 income tax returns.
TRANSPORTATION PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1998
ASSETS
INVESTMENT IN $ 66,722,859
SECURITIES,
AT VALUE
(COST
$59,414,
522) -
SEE
ACCOMPAN
YING
SCHEDULE
RECEIVABLE 134,645
FOR FUND
SHARES
SOLD
DIVIDENDS 48,785
RECEIVABLE
INTEREST 36,098
RECEIVABLE
REDEMPTION 1,702
FEES
RECEIVABLE
OTHER 1,604
RECEIVABLE
S
TOTAL 66,945,693
ASSETS
LIABILITIES
PAYABLE FOR $ 128,080
INVESTMENT
S
PURCHASED
PAYABLE FOR 739,266
FUND
SHARES
REDEEMED
ACCRUED 30,972
MANAGEM
ENT FEE
OTHER 66,029
PAYABLES
AND
ACCRUED
EXPENSES
COLLATERAL ON 1,699,600
SECURITIES
LOANED,
AT VALUE
TOTAL 2,663,947
LIABILITIES
NET ASSETS $ 64,281,746
NET ASSETS
CONSIST OF:
PAID IN $ 51,571,436
CAPITAL
ACCUMULATED 5,402,130
UNDISTRIBUT
ED NET
REALIZED
GAIN (LOSS)
ON
INVESTMENT
S AND
FOREIGN
CURRENCY
TRANSACTIO
NS
NET 7,308,180
UNREALIZED
APPRECIATI
ON
(DEPRECIATI
ON) ON
INVESTMENT
S
AND ASSETS
AND
LIABILITIES
IN
FOREIGN
CURRENCIES
NET ASSETS, $ 64,281,746
FOR
2,268,57
1
SHARES
OUTSTANDIN
G
NET ASSET $28.34
VALUE AND
REDEMPTIO
N PRICE
PER SHARE
($64,281,
746 (DIVIDED BY)
2,268,57
1 SHARES)
MAXIMUM $29.22
OFFERING
PRICE PER
SHARE
(100/97.
00 OF
$28.34)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1998
INVESTMENT $ 548,637
INCOME
DIVIDENDS
INTEREST 298,450
(INCLUDING
INCOME ON
SECURITIES
LOANED OF
$62,203)
TOTAL 847,087
INCOME
EXPENSES
MANAGEMEN $ 341,054
T FEE
TRANSFER 412,597
AGENT FEES
ACCOUNTING 68,148
AND
SECURITY
LENDING
FEES
NON-INTEREST 210
ED
TRUSTEES'
COMPENSAT
ION
CUSTODIAN 16,713
FEES AND
EXPENSES
REGISTRATION 44,644
FEES
AUDIT 19,194
LEGAL 381
INTEREST 515
MISCELLANEO 225
US
TOTAL 903,681
EXPENSES
BEFORE
REDUCTIONS
EXPENSE (20,535) 883,146
REDUCTIONS
NET (36,059)
INVESTMEN
T INCOME
(LOSS)
REALIZED
AND
UNREALIZED
GAIN (LOSS)
NET REALIZED
GAIN (LOSS)
ON:
INVESTMENT 10,298,777
SECURITIES
FOREIGN (415) 10,298,362
CURRENCY
TRANSACTIO
NS
CHANGE IN
NET
UNREALIZED
APPRECIATI
ON
(DEPRECIATI
ON) ON:
INVESTMENT 7,061,439
SECURITIES
ASSETS AND (157) 7,061,282
LIABILITIES
IN
FOREIGN
CURRENCIES
NET GAIN 17,359,644
(LOSS)
NET INCREASE $ 17,323,585
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
OTHER $ 168,254
INFORMATIO
N
SALES
CHARGES
PAID TO
FDC
SALES $ 1,212
CHARGES -
DEALERS'
PORTION
DEFERRED $ 925
SALES
CHARGES
WITHHELD
BY FDC
EXCHANGE $ 28,980
FEES
WITHHELD
BY FSC
EXPENSE $ 18,914
REDUCTIONS
DIRECTED
BROKERAGE
ARRANGEM
ENTS
CUSTODIA 1,621
N CREDITS
$ 20,535
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
FEBRUARY 28, FEBRUARY 28,
1998 1997
OPERATIONS $ (36,059) $ (72,506)
NET
INVESTMENT
INCOME
(LOSS)
NET 10,298,362 966,188
REALIZED
GAIN (LOSS)
CHANGE IN 7,061,282 (640,423)
NET
UNREALIZED
APPRECIATI
ON
(DEPRECIATI
ON)
NET 17,323,585 253,259
INCREASE
(DECREAS
E) IN NET
ASSETS
RESULTING
FROM
OPERATIO
NS
DISTRIBUTIONS (4,986,487) (369,344)
TO
SHAREHOLD
ERS FROM
NET
REALIZED
GAINS
SHARE 152,644,299 27,406,552
TRANSACTIO
NS
NET
PROCEEDS
FROM SALES
OF SHARES
REINVESTM 4,933,755 362,964
ENT OF
DISTRIBUTIO
NS
COST OF (114,694,116) (30,259,063)
SHARES
REDEEMED
NET 42,883,938 (2,489,547)
INCREASE
(DECREAS
E) IN NET
ASSETS
RESULTING
FROM
SHARE
TRANSACTI
ONS
REDEMPTIO 170,335 50,774
N FEES
TOTAL 55,391,371 (2,554,858)
INCREASE
(DECREASE)
IN NET
ASSETS
NET ASSETS
BEGINNING 8,890,375 11,445,233
OF PERIOD
END OF $ 64,281,746 $ 8,890,375
PERIOD
OTHER
INFORMATION
SHARES
SOLD 6,004,453 1,216,922
ISSUED IN 182,560 16,356
REINVESTME
NT OF
DISTRIBUTIO
NS
REDEEMED (4,318,403) (1,355,455)
NET 1,868,610 (122,177)
INCREASE
(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>
YEARS ENDED FEBRUARY 28, YEAR ENDED YEARS ENDED FEBRUARY 28,
FEBRUARY 29,
SELECTED PER-SHARE DATA 1998 1997 1996 1995 1994
</TABLE>
NET ASSET $ 22.23 $ 21.92 $ 20.53 $ 21.67 $ 18.68
VALUE,
BEGINNING
OF PERIOD
INCOME FROM
INVESTMENT
OPERATION
S
NET (.02) (.13) (.09) E (.17) (.20)
INVESTMENT
INCOME
(LOSS) C
NET 8.85 1.06 2.60 1.17 5.07
REALIZED
AND
UNREALIZED
GAIN (LOSS)
TOTAL FROM 8.83 .93 2.51 1.00 4.87
INVESTMENT
OPERATIONS
LESS
DISTRIBUTIO
NS
FROM NET (2.80) (.71) (1.22) (2.19) (1.96)
REALIZED
GAIN
REDEMPTION .08 .09 .10 .05 .08
FEES
ADDED TO
PAID IN
CAPITAL
NET ASSET $ 28.34 $ 22.23 $ 21.92 $ 20.53 $ 21.67
VALUE, END
OF PERIOD
TOTAL 41.15% 4.67% 12.95% 5.90% 27.47%
RETURN A, B
RATIOS AND
SUPPLEME
NTAL DATA
NET ASSETS, $ 64,282 $ 8,890 $ 11,445 $ 12,704 $ 13,077
END OF
PERIOD
(000
OMITTED)
RATIO OF 1.58 2.50% F 2.47% F 2.37% 2.40%
EXPENSES
TO AVERAGE
NET ASSETS
RATIO OF 1.54% D 2.48% D 2.44% D 2.36% D 2.39% D
EXPENSES
TO AVERAGE
NET ASSETS
AFTER
EXPENSE
REDUCTIONS
RATIO OF NET (.06)% (.58)% (.43)% (.83)% (.96)%
INVESTMENT
INCOME
(LOSS) TO
AVERAGE
NET ASSETS
PORTFOLIO 210% 148% 175% 178% 115%
TURNOVER
RATE
AVERAGE $ .0337 $ .0313
COMMISSIO
N RATE G
<TABLE>
<CAPTION>
<S> <C>
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. 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 INVESTMENT INCOME 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. 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>
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). Load adjusted returns include a 3.00% sales
charge and the effect of a $7.50 trading fee. 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, 1998 YEAR YEARS YEARS
SELECT BROKERAGE AND 57.56% 250.42% 622.27%
INVESTMENT MANAGEMENT
SELECT BROKERAGE AND 52.76% 239.84% 600.53%
INVESTMENT MANAGEMENT
(LOAD ADJ.)
S&P 500 35.01% 166.84% 422.55%
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 Standard & Poor's
500 Index - a widely recognized, unmanaged index of common stocks.
This benchmark includes 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, 1998 YEAR YEARS YEARS
SELECT BROKERAGE AND 57.56% 28.50% 21.86%
INVESTMENT MANAGEMENT
SELECT BROKERAGE AND 52.76% 27.72% 21.49%
INVESTMENT MANAGEMENT
(LOAD ADJ.)
S&P 500 35.01% 21.69% 17.98%
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 LONG-TERM GROWTH AND
SHORT-TERM VOLATILITY. UNLIKE THE BROADER MARKET,
HOWEVER, SOME SECTORS MAY NOT HAVE A HISTORY
OF GROWTH IN THE LONG RUN. AND, AS WITH ALL STOCK
FUNDS, THE SHARE PRICE AND RETURN OF A FUND THAT
INVESTS IN A SECTOR WILL VARY. THAT MEANS IF YOU
SELL YOUR SHARES DURING A SECTOR DOWNTURN, YOU
MIGHT LOSE MONEY. BUT IF YOU CAN IDENTIFY A
SECTOR THAT IS ABOUT TO EXPERIENCE RAPID GROWTH
YOU MAY HAVE THE POTENTIAL FOR ABOVE-AVERAGE
GAINS.
(CHECKMARK)
$10,000 OVER 10 YEARS
IMAHDR PRASUN SHR__CHT 19980228 19980305 122321 S00000000000001
Brokerage/Invt. Mgt S&P 500
00068 SP001
1988/02/29 9700.00 10000.00
1988/03/31 9444.38 9691.00
1988/04/30 9605.83 9798.57
1988/05/31 9242.58 9883.82
1988/06/30 10224.76 10337.48
1988/07/31 10143.93 10298.20
1988/08/31 10076.57 9948.06
1988/09/30 10332.53 10371.85
1988/10/31 10372.94 10660.19
1988/11/30 10143.93 10507.75
1988/12/31 10239.24 10691.63
1989/01/31 11573.61 11474.26
1989/02/28 11301.29 11188.55
1989/03/31 11314.91 11449.25
1989/04/30 11423.84 12043.46
1989/05/31 12172.72 12531.22
1989/06/30 11830.48 12459.79
1989/07/31 13254.52 13584.91
1989/08/31 13583.14 13851.18
1989/09/30 13158.67 13794.39
1989/10/31 12090.64 13474.36
1989/11/30 11967.40 13749.23
1989/12/31 11678.79 14079.22
1990/01/31 11165.59 13134.50
1990/02/28 11540.09 13303.94
1990/03/31 11859.11 13656.49
1990/04/30 11054.63 13315.08
1990/05/31 12108.77 14613.30
1990/06/30 12094.56 14513.93
1990/07/31 11664.10 14467.48
1990/08/31 10081.11 13159.62
1990/09/30 9220.19 12518.75
1990/10/31 8650.87 12464.92
1990/11/30 9220.19 13270.15
1990/12/31 9789.51 13640.39
1991/01/31 10604.13 14235.11
1991/02/28 11657.52 15252.92
1991/03/31 12851.37 15622.04
1991/04/30 13033.95 15659.53
1991/05/31 13722.17 16336.03
1991/06/30 12808.47 15587.84
1991/07/31 13792.66 16314.23
1991/08/31 14101.97 16700.88
1991/09/30 14833.08 16421.97
1991/10/31 15817.27 16642.03
1991/11/30 14945.56 15971.35
1991/12/31 17841.88 17798.47
1992/01/31 18094.96 17467.42
1992/02/29 17982.48 17694.50
1992/03/31 17504.44 17349.46
1992/04/30 16140.64 17859.53
1992/05/31 16098.46 17947.04
1992/06/30 15718.85 17679.63
1992/07/31 16604.62 18402.73
1992/08/31 16126.58 18025.47
1992/09/30 16014.11 18238.17
1992/10/31 16731.16 18302.01
1992/11/30 18235.55 18926.11
1992/12/31 18755.77 19158.90
1993/01/31 19866.49 19319.83
1993/02/28 19993.03 19582.58
1993/03/31 21595.84 19995.77
1993/04/30 21525.52 19511.88
1993/05/31 22228.97 20034.79
1993/06/30 23284.14 20092.89
1993/07/31 24057.93 20012.52
1993/08/31 25957.24 20771.00
1993/09/30 26435.59 20611.06
1993/10/31 25577.38 21037.71
1993/11/30 24873.93 20837.85
1993/12/31 28007.07 21089.99
1994/01/31 28603.95 21807.05
1994/02/28 27165.33 21216.08
1994/03/31 24119.75 20291.06
1994/04/30 23920.80 20550.78
1994/05/31 24502.36 20887.82
1994/06/30 25435.93 20376.06
1994/07/31 24839.06 21044.40
1994/08/31 25022.71 21907.22
1994/09/30 24073.84 21370.49
1994/10/31 24058.54 21851.33
1994/11/30 22390.36 21055.50
1994/12/31 23170.88 21367.76
1995/01/31 22880.10 21921.82
1995/02/28 23737.14 22776.12
1995/03/31 23982.01 23448.24
1995/04/30 24708.58 24138.79
1995/05/31 26097.94 25103.62
1995/06/30 27566.25 25686.77
1995/07/31 28892.46 26538.55
1995/08/31 28624.06 26605.16
1995/09/30 30360.77 27727.90
1995/10/31 28671.42 27628.91
1995/11/30 29366.11 28841.82
1995/12/31 28637.87 29397.31
1996/01/31 30504.84 30398.00
1996/02/29 30821.55 30679.78
1996/03/31 32205.10 30975.23
1996/04/30 32401.11 31431.81
1996/05/31 33474.33 32242.43
1996/06/30 33372.12 32365.28
1996/07/31 31327.89 30935.38
1996/08/31 32520.36 31587.81
1996/09/30 34189.82 33365.57
1996/10/31 35399.32 34285.79
1996/11/30 38874.52 36877.45
1996/12/31 39994.86 36146.91
1997/01/31 42912.05 38405.37
1997/02/28 44465.59 38706.47
1997/03/31 39960.34 37116.02
1997/04/30 44283.34 39331.84
1997/05/31 47587.29 41726.37
1997/06/30 50355.00 43595.71
1997/07/31 55890.42 47064.62
1997/08/31 54177.90 44428.06
1997/09/30 62083.17 46861.38
1997/10/31 58883.01 45296.21
1997/11/30 61564.22 47392.97
1997/12/31 64917.80 48206.71
1998/01/31 62099.88 48739.88
1998/02/27 70053.00 52255.00
IMATRL PRASUN SHR__CHT 19980228 19980305 122324 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Brokerage and Investment Management
Portfolio on February 29, 1988, and the current 3.00% sales charge was
paid. As the chart shows, by February 28, 1998, the value of the
investment would have grown to $70,053 - a 600.53% increase on the
initial investment, and includes the effect of a $7.50 trading fee.
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 $52,255 - a 422.55% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1998
% OF FUND'S
INVESTMENTS
PAINEWEBBER GROUP, INC. 5.6
LEHMAN BROTHERS HOLDINGS, INC. 5.3
EDWARDS (A.G.), INC. 5.1
MORGAN STANLEY, DEAN WITTER, DISCOVER AND CO. 4.9
TRAVELERS GROUP, INC. (THE) 4.9
BEAR STEARNS COMPANIES, INC. 4.7
MERRILL LYNCH & CO., INC. 4.7
FRANKLIN RESOURCES, INC. 3.4
KANSAS CITY SOUTHERN INDUSTRIES, INC. 3.0
MARSH & MCLENNAN COMPANIES, INC. 2.9
TOP INDUSTRIES AS OF FEBRUARY 28, 1998
SECURITY & COMMODITY BROKERS 29.4%
SECURITY BROKERS & DEALERS 16.0%
INVESTMENT MANAGERS 11.0%
LIFE INSURANCE 5.1%
PROPERTY-CASUALTY &
REINSURANCE 5.0%
ALL OTHERS 33.5%
ROW: 1, COL: 1, VALUE: 33.5
ROW: 1, COL: 2, VALUE: 5.0
ROW: 1, COL: 3, VALUE: 5.1
ROW: 1, COL: 4, VALUE: 11.0
ROW: 1, COL: 5, VALUE: 16.0
ROW: 1, COL: 6, VALUE: 29.4
*
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
BROKERAGE AND INVESTMENT MANAGEMENT PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Peter Fruzzetti,
Portfolio Manager
of Fidelity Select
Brokerage and Investment Management Portfolio.
Q. HOW DID THE FUND PERFORM, PETER?
A. It had a good year. For the 12 months that ended February 28, 1998,
the fund had a return of 57.56%, compared to the 35.01% return of the
Standard & Poor's 500 Index during the same period.
Q. WHAT WAS THE INVESTING ENVIRONMENT LIKE?
A. It was very favorable. Interest rates came down and the stock
market went up. A strong market encourages more underwriting of
initial public offerings and secondary stock offerings. It also
strengthens merger and acquisition activity by giving acquiring
companies better stock values to use as currency. Strong underwriting
and mergers-and-acquisitions activity are key drivers of earnings for
brokers. Additionally, stock market volumes remained strong, which is
expected in this type of environment. On average, brokerage firms saw
earnings increases of 15% to 20%. In addition, several public asset
managers benefited from strong client inflows. They saw earnings gains
of 35% to 40%.
Q. DID INDUSTRY CONSOLIDATION CONTINUE TO BE AN IMPORTANT FACTOR?
A. Yes. Mergers and acquisitions occurred in both the securities
brokerage and investment management industries. One catalyst was a
regulatory change at the end of 1996 allowing commercial banks to
increase the maximum revenues they may receive through their
securities business from 10% to 25%. This made 1997 a unique year, as
several commercial banks bought brokerage firms as a result of this
change. For example, Fleet Financial bought Quick & Reilly,
NationsBank purchased Montgomery Securities, Bank of America acquired
Robertson Stephens and Bankers Trust bought Alex Brown. In addition,
there were some broker mergers - such as Travelers and Salomon
Brothers. Moreover, there continued to be consolidation in the asset
management industry. To illustrate, Merrill Lynch purchased Mercury,
and Zurich Re, a Swiss firm, purchased Scudder. Typically, when
acquisitions occur, all of the other companies in the industry are
seen as potential takeover targets and their stocks tend to rise.
Q. WHICH INVESTMENT BANKS AND BROKERS HAD A STRONG INFLUENCE ON
PERFORMANCE?
A. They all tended to do well. Lehman Brothers was up close to 100%,
to name one major contributor. Additionally, stocks of companies such
as Salomon, Alex Brown, Quick & Reilly and Piper Jaffray - all of
which were acquired by other companies during the year - obviously
helped.
Q. HOW DID INVESTMENT MANAGERS AND MUTUAL FUND COMPANIES DO?
A. They performed exceptionally well, as would be expected in a bull
market. Assets under management for some of the publicly traded mutual
fund companies grew rapidly, and we saw stock prices increase faster
than earnings. Franklin Resources and T. Rowe Price performed very
well during the period.
Q. WERE THERE ANY DISAPPOINTMENTS?
A. Not really. I did tend to have 7% to 8% of portfolio assets
invested in life insurance and variable annuity companies. While these
companies performed admirably, they did not match the performance of
the brokerages and asset managers. Also, having an average cash
position of 8% to 10% held back performance somewhat.
Q. WHAT IS YOUR OUTLOOK, PETER?
A. Well, I would be surprised if performance again reached more than
57% over the next 12 months, so I would hope that investors temper
expectations for 1998. However, if interest rates remain stable and
the stock market continues to be strong, this fund can continue to
perform well relative to the overall market. In addition, continued
consolidation in the sector should support stock prices. Still, I tend
to be more cautious than a year ago.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET AND OTHER CONDITIONS.
FUND FACTS
START DATE: July 29, 1985
FUND NUMBER: 068
TRADING SYMBOL: FSLBX
SIZE: as of February 28, 1998, more than
$676 million
MANAGER: Peter Fruzzetti, since1997; 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, 1998
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 91.9%
SHARES VALUE (NOTE 1)
BANKS - 9.8%
INTERNATIONAL BANKS - 2.5%
Deutsche Bank AG 85,000 $ 5,728,461
Julius Baer Holding AG 4,600 10,625,043
Toronto Dominion Bank 14,443 610,689
16,964,193
NATIONAL COMMERCIAL BANKS - 4.8%
BankAmerica Corp. 40,000 3,100,000
Citicorp 65,000 8,612,500
Mellon Bank Corp. 60,000 3,738,750
NationsBank Corp. 83,200 5,699,200
Providian Financial Corp. 190,400 10,805,200
31,955,650
STATE BANKS FEDERAL RESERVE - 2.5%
Credit Suisse Group (Reg.) 91,400 16,527,465
TOTAL BANKS 65,447,308
COMPUTER SERVICES & SOFTWARE - 2.3%
DATA PROCESSING - 0.5%
DST Systems, Inc. (a) 64,100 3,389,288
ELECTRONIC INFORMATION RETRIEVAL- 1.8%
E Trade Group, Inc. (a) 450,000 12,037,500
TOTAL COMPUTER SERVICES & SOFTWARE 15,426,788
CREDIT & OTHER FINANCE - 3.8%
FINANCIAL SERVICES - 3.8%
American Express Co. 40,000 3,602,500
Equitable Companies, Inc. 356,600 18,654,638
Investors Financial Services Corp. 7,507 352,829
Perpetual PLC 20,000 1,065,312
Phoenix Duff & Phelps Corp. 225,600 1,833,000
25,508,279
INSURANCE - 14.2%
ACCIDENT & HEALTH INSURANCE - 0.1%
UICI (a) 15,000 481,875
INSURANCE BROKERS & SERVICES - 2.9%
Marsh & McLennan Companies, Inc. 222,000 19,244,625
INSURANCE CARRIERS - 1.1%
AFLAC, Inc. 120,000 7,372,500
LIFE INSURANCE - 5.1%
ARM Financial Group, Inc. Class A 400 9,100
Amerus Life Holdings, Inc. 15,500 505,688
Delphi Financial Group, Inc. Class A 20,400 897,600
Hartford Life, Inc. Class A 95,000 4,090,938
ING Groep NV 135,000 7,145,021
Liberty Financial Companies, Inc. 123,000 4,458,750
Life RE Corp. 14,300 909,838
Nationwide Financial Services, Inc.
Class A 144,000 6,336,000
Protective Life Corp. 19,000 1,313,375
SunAmerica, Inc. 149,250 6,762,891
Torchmark Corp. 41,700 1,941,656
34,370,857
PROPERTY-CASUALTY & REINSURANCE - 5.0%
Reinsurance Group of America, Inc. 30,000 1,374,375
Travelers Group, Inc. (The) 586,502 32,697,487
34,071,862
TOTAL INSURANCE 95,541,719
SHARES VALUE (NOTE 1)
RAILROADS - 3.0%
Kansas City Southern Industries, Inc. 548,900 $ 20,412,219
SAVINGS & LOANS - 0.1%
SAVINGS BANKS, FEDERAL CHARTER - 0.1%
Dime Bancorp., Inc. 20,000 610,000
SECURITIES INDUSTRY - 58.7%
INVESTMENT ADVICE - 2.3%
Conning Corp. 500 9,375
New England Investment Companies LP 159,100 5,568,500
Pilgrim America Capital Corp. (a) 46,000 1,184,500
Trimark Financial Corp. 145,400 5,290,058
United Asset Management Corp. 120,000 3,187,500
15,239,933
INVESTMENT MANAGERS - 11.0%
Alliance Capital Management LP 105,000 5,263,125
Eaton Vance Corp. 45,000 1,870,313
Franklin Resources, Inc. 448,900 22,893,900
Investors Group Inc. 239,700 7,239,403
John Nuveen Co. Class A 150,000 5,296,875
Mackenzie Financial Corp. 566,100 7,395,582
PIMCO Advisors Holdings LP units 156,200 5,554,863
Pioneer Group, Inc. 200,000 5,975,000
Price (T. Rowe) Associates, Inc. 188,600 12,518,325
74,007,386
SECURITY & COMMODITY BROKERS - 29.4%
Advest Group, Inc. (The) 305,800 7,625,888
Bear Stearns Companies, Inc. 684,072 31,894,857
Edwards (A.G.), Inc. 814,200 34,247,288
Fahnestock Viner Holdings, Inc. Class A 77,600 1,348,973
First Marathon Inc. Class A (non-vtg.) 44,700 635,768
Jefferies Group, Inc. 163,600 7,249,525
Legg Mason, Inc. 159,166 9,510,169
McDonald & Co. Investments, Inc. 156,000 3,900,000
Merrill Lynch & Co., Inc. 445,100 31,852,469
Midland Walwyn, Inc. 385,000 5,029,675
Morgan Keegan, Inc. 157,925 3,395,388
Morgan Stanley, Dean Witter, Discover
and Co. 469,865 32,743,717
Piper Jaffray Inc. 52,600 1,933,050
Raymond James Financial, Inc. 238,150 9,496,231
Schwab (Charles) Corp. 338,000 12,759,500
Southwest Securities Group, Inc. 78,540 2,110,763
Stifel Financial Corp. 110,250 1,474,594
197,207,855
SECURITY BROKERS & DEALERS - 16.0%
Dain Rauscher Corp. 188,350 11,042,019
Donaldson Lufkin & Jenrette, Inc. 159,500 13,059,063
Everen Capital Corp. 100,400 4,279,550
Hambrecht & Quist Group (a) 201,500 6,473,188
Lehman Brothers Holdings, Inc. 563,000 35,504,188
PaineWebber Group, Inc. 889,200 37,346,400
Peregrine Investments Holdings Ltd. 84,300 -
107,704,408
TOTAL SECURITIES INDUSTRY 394,159,582
TOTAL COMMON STOCKS
(Cost $468,751,347) 617,105,895
CASH EQUIVALENTS - 8.1%
SHARES VALUE (NOTE 1)
Taxable Central Cash Fund (b)
(Cost $54,721,687) 54,721,687 $ 54,721,687
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $523,473,034) $ 671,827,582
LEGEND
1. Non-income producing
2. At period end, the seven-day yield on the Taxable Central Cash Fund
was 5.62%. 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 $442,689,443 and $387,722,009, 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 $97,806 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 $11,972,000 and $8,206,500, 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 89.8%
Canada 4.1
Switzerland 4.0
Netherlands 1.1
Others (individually less than 1%) 1.0
TOTAL 100.0%
INCOME TAX INFORMATION
At February 28, 1998, the aggregate cost of investment securities for
income tax purposes was $524,642,120. Net unrealized appreciation
aggregated $147,185,462, of which $152,451,263 related to appreciated
investment securities and $5,265,801 related to depreciated investment
securities.
The fund hereby designates approximately $7,149,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 2.00% 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. (unaudited)
A total of 54% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate
shareholders (unaudited).
The fund will notify shareholders in January 1999 of these percentages
for use in preparing 1998 income tax returns.
BROKERAGE AND INVESTMENT MANAGEMENT PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1998
ASSETS
INVESTMENT IN $ 671,827,582
SECURITIES,
AT VALUE
(COST
$523,473
,034) -
SEE
ACCOMPAN
YING
SCHEDULE
RECEIVABLE 2,413,177
FOR
INVESTMENT
S SOLD
RECEIVABLE 21,418,223
FOR FUND
SHARES
SOLD
DIVIDENDS 316,041
RECEIVABLE
INTEREST 154,132
RECEIVABLE
REDEMPTION 1,123
FEES
RECEIVABLE
OTHER 4,514
RECEIVABLE
S
TOTAL 696,134,792
ASSETS
LIABILITIES
PAYABLE FOR $ 16,779,027
INVESTMENT
S
PURCHASED
PAYABLE FOR 2,682,375
FUND
SHARES
REDEEMED
ACCRUED 294,820
MANAGEM
ENT FEE
OTHER 311,182
PAYABLES
AND
ACCRUED
EXPENSES
TOTAL 20,067,404
LIABILITIES
NET ASSETS $ 676,067,388
NET ASSETS
CONSIST OF:
PAID IN $ 512,597,946
CAPITAL
UNDISTRIBUTE 675,811
D NET
INVESTMENT
INCOME
ACCUMULATED 14,435,570
UNDISTRIBUT
ED NET
REALIZED
GAIN (LOSS)
ON
INVESTMENT
S AND
FOREIGN
CURRENCY
TRANSACTIO
NS
NET 148,358,061
UNREALIZED
APPRECIATI
ON
(DEPRECIATI
ON) ON
INVESTMENT
S
AND ASSETS
AND
LIABILITIES
IN
FOREIGN
CURRENCIES
NET ASSETS, $ 676,067,388
FOR
16,996,4
60
SHARES
OUTSTANDIN
G
NET ASSET $39.78
VALUE AND
REDEMPTIO
N PRICE
PER SHARE
($676,06
7,388 (DIVIDED BY)
16,996,4
60 SHARES)
MAXIMUM $41.01
OFFERING
PRICE PER
SHARE
(100/97.
00 OF
$39.78)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1998
INVESTMENT $ 5,421,728
INCOME
DIVIDENDS
INTEREST 2,013,070
TOTAL 7,434,798
INCOME
EXPENSES
MANAGEMEN $ 2,493,991
T FEE
TRANSFER 2,546,929
AGENT FEES
ACCOUNTING 404,906
FEES AND
EXPENSES
NON-INTEREST 1,554
ED
TRUSTEES'
COMPENSAT
ION
CUSTODIAN 28,423
FEES AND
EXPENSES
REGISTRATION 35,368
FEES
AUDIT 34,377
LEGAL 1,646
INTEREST 2,595
MISCELLANEO 2,130
US
TOTAL 5,551,919
EXPENSES
BEFORE
REDUCTIONS
EXPENSE (169,894) 5,382,025
REDUCTIONS
NET 2,052,773
INVESTMEN
T INCOME
REALIZED
AND
UNREALIZED
GAIN (LOSS)
NET REALIZED
GAIN (LOSS)
ON:
INVESTMENT 24,255,799
SECURITIES
FOREIGN (17,960) 24,237,839
CURRENCY
TRANSACTIO
NS
CHANGE IN
NET
UNREALIZED
APPRECIATI
ON
(DEPRECIATI
ON) ON:
INVESTMENT 128,108,591
SECURITIES
ASSETS AND 3,513 128,112,104
LIABILITIES
IN
FOREIGN
CURRENCIES
NET GAIN 152,349,943
(LOSS)
NET INCREASE $ 154,402,716
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
OTHER $ 4,327,828
INFORMATIO
N
SALES
CHARGES
PAID TO
FDC
SALES $ 13,492
CHARGES -
DEALERS'
PORTION
DEFERRED $ 2,431
SALES
CHARGES
WITHHELD
BY FDC
EXCHANGE $ 196,358
FEES
WITHHELD
BY FSC
EXPENSE $ 164,465
REDUCTIONS
DIRECTED
BROKERAGE
ARRANGEM
ENTS
CUSTODIA 3,132
N CREDITS
TRANSFER 2,297
AGENT
CREDITS
$ 169,894
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
FEBRUARY 28, FEBRUARY 28,
1998 1997
OPERATIONS $ 2,052,773 $ 269,737
NET
INVESTMENT
INCOME
NET 24,237,839 1,506,496
REALIZED
GAIN (LOSS)
CHANGE IN 128,112,104 16,730,770
NET
UNREALIZED
APPRECIATI
ON
(DEPRECIATI
ON)
NET 154,402,716 18,507,003
INCREASE
(DECREAS
E) IN NET
ASSETS
RESULTING
FROM
OPERATIO
NS
DISTRIBUTIONS (1,439,025) (152,473)
TO
SHAREHOLD
ERS
FROM NET
INVESTMENT
INCOME
FROM NET (10,009,644) (1,573,937)
REALIZED
GAIN
TOTAL (11,448,669) (1,726,410)
DISTRIBUTIO
NS
SHARE 894,533,503 516,393,133
TRANSACTIO
NS
NET
PROCEEDS
FROM SALES
OF SHARES
REINVESTM 11,336,755 1,697,946
ENT OF
DISTRIBUTIO
NS
COST OF (832,884,965) (114,791,803)
SHARES
REDEEMED
NET 72,985,293 403,299,276
INCREASE
(DECREAS
E) IN NET
ASSETS
RESULTING
FROM
SHARE
TRANSACTI
ONS
REDEMPTIO 1,340,868 325,639
N FEES
TOTAL 217,280,208 420,405,508
INCREASE
(DECREASE)
IN NET
ASSETS
NET ASSETS
BEGINNING 458,787,180 38,381,672
OF PERIOD
END OF $ 676,067,388 $ 458,787,180
PERIOD
(INCLUDIN
G
UNDISTRIB
UTED NET
INVESTME
NT
INCOME
OF
$675,8
11 AND
$162,2
09,
RESPECTIV
ELY)
OTHER
INFORMATION
SHARES
SOLD 26,764,779 20,890,431
ISSUED IN 321,841 83,782
REINVESTME
NT OF
DISTRIBUTIO
NS
REDEEMED (27,900,822) (5,239,816)
NET (814,202) 15,734,397
INCREASE
(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>
YEARS ENDED FEBRUARY 28, YEAR ENDED YEARS ENDED FEBRUARY 28,
FEBRUARY 29,
SELECTED PER-SHARE DATA 1998 1997 1996 1995 1994
</TABLE>
NET ASSET $ 25.76 $ 18.49 $ 15.51 $ 17.75 $ 14.22
VALUE,
BEGINNING
OF PERIOD
INCOME FROM
INVESTMENT
OPERATION
S
NET .16 .08 .09 (.03) (.02)
INVESTMENT
INCOME
(LOSS) C
NET 14.46 7.80 4.29 (2.25) 4.95
REALIZED
AND
UNREALIZED
GAIN (LOSS)
TOTAL FROM 14.62 7.88 4.38 (2.28) 4.93
INVESTMENT
OPERATIONS
LESS
DISTRIBUTIO
NS
FROM NET (.09) (.06) (.04) - (.01)
INVESTMENT
INCOME
FROM NET (.61) (.65) (1.09) - (1.47)
REALIZED
GAIN
IN EXCESS - - (.35) - -
OF NET
REALIZED
GAIN
TOTAL (.70) (.71) (1.48) - (1.48)
DISTRIBUTIO
NS
REDEMPTION .10 .10 .08 .04 .08
FEES
ADDED TO
PAID IN
CAPITAL
NET ASSET $ 39.78 $ 25.76 $ 18.49 $ 15.51 $ 17.75
VALUE, END
OF PERIOD
TOTAL 57.56% 44.27% 29.85% (12.62)% 35.87%
RETURN A, B
RATIOS AND
SUPPLEME
NTAL DATA
NET ASSETS, $ 676,067 $ 458,787 $ 38,382 $ 27,346 $ 59,810
END OF
PERIOD
(000
OMITTED)
RATIO OF 1.33% 1.94% 1.64% D 2.54% D 1.79%
EXPENSES
TO AVERAGE
NET ASSETS
RATIO OF 1.29% E 1.93% E 1.61% E 2.54% 1.77% E
EXPENSES
TO AVERAGE
NET ASSETS
AFTER
EXPENSE
REDUCTIONS
RATIO OF NET .49% .37% .50% (.20)% (.14)%
INVESTMENT
INCOME
(LOSS) TO
AVERAGE
NET ASSETS
PORTFOLIO 100% 16% 166% 139% 295%
TURNOVER
RATE
AVERAGE $ .0460 $ .0392
COMMISSIO
N RATE F
<TABLE>
<CAPTION>
<S> <C>
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. C NET
INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED
ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD. D 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. 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>
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). Load adjusted returns include a 3.00% sales
charge and the effect of a $7.50 trading fee.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 28, 1998 YEAR YEARS YEARS
SELECT FINANCIAL SERVICES 41.08% 208.67% 607.94%
SELECT FINANCIAL SERVICES 36.78% 199.34% 586.63%
(LOAD ADJ.)
S&P 500 35.01% 166.84% 422.55%
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 Standard & Poor's
500 Index - a widely recognized, unmanaged index of common stocks.
This benchmark includes 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, 1998 YEAR YEARS YEARS
SELECT FINANCIAL SERVICES 41.08% 25.29% 21.62%
SELECT FINANCIAL SERVICES 36.78% 24.52% 21.25%
(LOAD ADJ.)
S&P 500 35.01% 21.69% 17.98%
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 LONG-TERM GROWTH AND
SHORT-TERM VOLATILITY. 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
Financial Services S&P 500
00066 SP001
1988/02/29 9700.00 10000.00
1988/03/31 9533.00 9691.00
1988/04/30 9366.01 9798.57
1988/05/31 9458.39 9883.82
1988/06/30 10041.10 10337.48
1988/07/31 9973.59 10298.20
1988/08/31 9945.16 9948.06
1988/09/30 10357.33 10371.85
1988/10/31 10385.75 10660.19
1988/11/30 9955.82 10507.75
1988/12/31 9778.85 10691.63
1989/01/31 10280.05 11474.26
1989/02/28 10258.10 11188.55
1989/03/31 11008.07 11449.25
1989/04/30 11209.28 12043.46
1989/05/31 11911.69 12531.22
1989/06/30 11828.69 12459.79
1989/07/31 12775.43 13584.91
1989/08/31 13136.44 13851.18
1989/09/30 13409.04 13794.39
1989/10/31 12130.76 13474.36
1989/11/30 11964.99 13749.23
1989/12/31 11670.32 14079.22
1990/01/31 10685.09 13134.50
1990/02/28 11071.75 13303.94
1990/03/31 10900.73 13656.49
1990/04/30 10514.07 13315.08
1990/05/31 11439.81 14613.30
1990/06/30 11120.08 14513.93
1990/07/31 10406.25 14467.48
1990/08/31 9160.77 13159.62
1990/09/30 7796.32 12518.75
1990/10/31 7115.96 12464.92
1990/11/30 8119.78 13270.15
1990/12/31 8830.94 13640.39
1991/01/31 9633.41 14235.11
1991/02/28 10740.13 15252.92
1991/03/31 11253.56 15622.04
1991/04/30 11618.66 15659.53
1991/05/31 12508.60 16336.03
1991/06/30 11493.16 15587.84
1991/07/31 12402.11 16314.23
1991/08/31 13223.60 16700.88
1991/09/30 13143.73 16421.97
1991/10/31 13432.77 16642.03
1991/11/30 12436.34 15971.35
1991/12/31 14273.32 17798.47
1992/01/31 14984.29 17467.42
1992/02/29 16060.37 17694.50
1992/03/31 15699.11 17349.46
1992/04/30 16302.48 17859.53
1992/05/31 17001.93 17947.04
1992/06/30 17393.14 17679.63
1992/07/31 17890.53 18402.73
1992/08/31 16864.41 18025.47
1992/09/30 17389.22 18238.17
1992/10/31 18078.52 18302.01
1992/11/30 19437.55 18926.11
1992/12/31 20385.16 19158.90
1993/01/31 21670.98 19319.83
1993/02/28 22247.09 19582.58
1993/03/31 23411.84 19995.77
1993/04/30 22291.05 19511.88
1993/05/31 22299.50 20034.79
1993/06/30 23131.98 20092.89
1993/07/31 23753.17 20012.52
1993/08/31 24492.68 20771.00
1993/09/30 25058.94 20611.06
1993/10/31 24387.04 21037.71
1993/11/30 23301.01 20837.85
1993/12/31 23963.65 21089.99
1994/01/31 25590.42 21807.05
1994/02/28 24661.53 21216.08
1994/03/31 23535.30 20291.06
1994/04/30 24429.03 20550.78
1994/05/31 25471.76 20887.82
1994/06/30 24870.37 20376.06
1994/07/31 25738.50 21044.40
1994/08/31 26640.59 21907.22
1994/09/30 24632.72 21370.49
1994/10/31 24501.77 21851.33
1994/11/30 22949.80 21055.50
1994/12/31 23089.58 21367.76
1995/01/31 24283.69 21921.82
1995/02/28 25825.85 22776.12
1995/03/31 26281.00 23448.24
1995/04/30 27105.63 24138.79
1995/05/31 28610.30 25103.62
1995/06/30 28744.17 25686.77
1995/07/31 29708.02 26538.55
1995/08/31 30864.64 26605.16
1995/09/30 32626.35 27727.90
1995/10/31 31791.01 27628.91
1995/11/30 33932.90 28841.82
1995/12/31 34020.23 29397.31
1996/01/31 35610.83 30398.00
1996/02/29 35911.46 30679.78
1996/03/31 36337.81 30975.23
1996/04/30 35934.52 31431.81
1996/05/31 36769.55 32242.43
1996/06/30 37307.56 32365.28
1996/07/31 36494.94 30935.38
1996/08/31 37582.17 31587.81
1996/09/30 40076.07 33365.57
1996/10/31 42614.80 34285.79
1996/11/30 46274.38 36877.45
1996/12/31 44946.73 36146.91
1997/01/31 47622.75 38405.37
1997/02/28 48673.21 38706.47
1997/03/31 45017.15 37116.02
1997/04/30 48808.38 39331.84
1997/05/31 50410.68 41726.37
1997/06/30 53091.44 43595.71
1997/07/31 59038.42 47064.62
1997/08/31 55685.93 44428.06
1997/09/30 59254.12 46861.38
1997/10/31 58465.30 45296.21
1997/11/30 60443.51 47392.97
1997/12/31 63816.58 48206.71
1998/01/31 63131.74 48739.88
1998/02/27 68663.00 52255.00
IMATRL PRASUN SHR__CHT 19980228 19980325 100216 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Financial Services Portfolio on February
29, 1988, and the current 3.00% sales charge was paid. As the chart
shows, by February 28, 1998, the value of the investment would have
grown to $68,663 - a 586.63% increase on the initial investment, and
includes the effect of a $7.50 trading fee. 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 $52,255 - a 422.55% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1998
% OF FUND'S
INVESTMENTS
NATIONSBANK CORP. 6.4
CITICORP 4.6
BANC ONE CORP. 4.4
BANK OF NEW YORK CO., INC. 3.8
AMERICAN INTERNATIONAL GROUP, INC. 3.6
AMERICAN EXPRESS CO. 3.3
U.S. BANCORP 3.2
MBNA CORP. 3.0
LEHMAN BROTHERS HOLDINGS, INC. 2.8
BANKAMERICA CORP. 2.7
TOP INDUSTRIES AS OF FEBRUARY 28, 1998
NATIONAL COMMERCIAL BANKS 36.1%
PROPERTY-CASUALTY &
REINSURANCE 13.6%
PERSONAL CREDIT INSTITUTIONS 9.7%
FINANCIAL SERVICES 6.4%
FEDERAL & FEDERALLY SPONSORED
CREDIT AGENCIES 5.8%
ALL OTHERS 28.4%
ROW: 1, COL: 1, VALUE: 28.4
ROW: 1, COL: 2, VALUE: 5.8
ROW: 1, COL: 3, VALUE: 6.4
ROW: 1, COL: 4, VALUE: 9.699999999999999
ROW: 1, COL: 5, VALUE: 13.6
ROW: 1, COL: 6, VALUE: 36.1
*
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
FINANCIAL SERVICES PORTFOLIO
FUND TALK: THE MANAGERS' OVERVIEW
NOTE TO SHAREHOLDERS: Effective January 31, 1998, Robert Ewing (right)
became Portfolio Manager of Fidelity Select Financial Services
Portfolio. The following is an
interview with Louis Salemy, who managed the fund
during most of the period covered by the report, and
Robert Ewing, who discusses his investment philosophy, outlook and
recent changes to the fund.
Q. HOW DID THE FUND PERFORM, LOUIS?
L.S. It did very well. For the 12 months that ended February 28, 1998,
the fund had a total return of 41.08%. The Standard & Poor's 500 Index
had a return of 35.01% during the same period.
Q. HOW WOULD YOU DESCRIBE THE INVESTMENT ENVIRONMENT FOR FINANCIAL
SERVICES STOCKS DURING THE YEAR?
L.S. It was a very favorable period. The sector had faster earnings
growth than the market, as measured by the S&P 500; merger and
acquisition activity increased; and the yield on the 30-year Treasury
bond went from above 7% to under 6%. These declining interest rates
were positive for the market overall and financial service company
stocks in particular. In addition, consolidation and speculation about
potential takeovers helped support stock valuations, leading to
share-price appreciation. The financial crisis in Asia was another
important factor. In the finance sector, the only companies exposed to
this crisis were the large, multinational money center banks. On the
other hand, many domestic-based financial services stocks performed
well because they were perceived as safe havens from the volatility.
Q. WHAT FINANCIAL SERVICE STOCKS WERE SOME OF THE MAJOR CONTRIBUTORS
TO PERFORMANCE DURING THE PERIOD?
L.S. American Express was a solid performer, helped by increasing its
market share in the credit card business. In addition, the company
continued to buy back its own shares, supporting the price of the
stock. Allstate, the fund's largest insurance company investment for
much of the year, also did well. Finally, Barnett Banks, was an
outstanding investment for the fund. Barnett was taken over by
NationsBank, the fund's top holding at the end of the fiscal year.
Q. WERE THERE ANY DISAPPOINTMENTS OVER THE PERIOD?
L.S. Citicorp was a disappointment, although not for anything that the
company did wrong. The stock of this money center bank declined
dramatically as a result of the Asian crisis. I think the market's
perception of Citicorp's Asian problems was worse than the reality.
Q. TURNING TO YOU BOB, HAVE YOU MADE ANY CHANGES IN THE FIRST MONTH
SINCE TAKING OVER THE FUND?
R.E. I've tried to take a fresh look at the fund and incorporate a
broader range of opportunities in financial services. I've reduced the
cash equivalent position from about 15% to about 8%, using the money
to buy more stocks in brokerage and asset management companies, as
well as real estate investment trusts and related financial services
companies. I also have increased the number of holdings in the fund
and decreased the overall concentration for wider diversification and
less risk.
Q. HOW WOULD YOU DESCRIBE YOUR INVESTMENT STYLE AND OUTLOOK, BOB?
R.E. I tend to view myself more as a value investor than a growth or
momentum investor. I do well by buying stocks that are cheap when
compared to stocks of similar companies and owning them as their stock
prices appreciate. At the same time, I pay careful attention to growth
opportunities and will pay a fair price for a growing company. As for
my outlook, current valuations of financial stocks are high by most
historic standards and the American economy is fairly late in its
current economic cycle. The high valuations and longevity of the
economic cycle can mean a challenging environment, complicated by the
unfolding story in Asia. The challenge, however, also plays to the
strength of Fidelity's team of financial analysts, as we try to
distinguish between good and bad investment opportunities.
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 10, 1981
FUND NUMBER: 066
TRADING SYMBOL: FIDSX
SIZE: as of February 28, 1998, more than
$604 million
MANAGER: Robert Ewing, since January 1998;
manager, Fidelity Advisor Financial Services Fund
since January 1998; Fidelity Select Environmental
Services Portfolio, 1996-1997; Fidelity Select
Energy Services Portfolio, 1996-January 1998;
joined Fidelity in 1990
(checkmark)
FINANCIAL SERVICES PORTFOLIO
INVESTMENTS FEBRUARY 28, 1998
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 92.4%
SHARES VALUE (NOTE 1)
BANKS - 38.2%
NATIONAL COMMERCIAL BANKS - 36.1%
Banc One Corp. 473,219 $ 26,736,864
Bank of New York Co., Inc. 395,468 23,159,595
BankAmerica Corp. 212,000 16,430,000
Chase Manhattan Corp. 50,000 6,203,125
Citicorp 211,000 27,957,500
Comerica, Inc. 153,445 15,469,174
Marshall & Ilsley Corp. 30,000 1,758,750
Mellon Bank Corp. 170,000 10,593,125
National City Corp. 135,500 8,841,375
NationsBank Corp. 565,400 38,729,900
Providian Financial Corp. 61,800 3,507,150
Republic New York Corp. 3,000 363,000
U.S. Bancorp 170,163 19,579,380
Wachovia Corp. 69,500 5,525,250
Wells Fargo & Co. 42,000 13,524,000
218,378,188
STATE BANKS FEDERAL RESERVE - 2.1%
Crestar Financial Corp. 20,000 1,105,000
Northern Trust Corp. 155,000 11,789,688
12,894,688
TOTAL BANKS 231,272,876
CREDIT & OTHER FINANCE - 18.2%
BANK HOLDING COMPANY OFFICES - 1.5%
Fleet Financial Group, Inc. 114,767 9,045,074
FINANCIAL SERVICES - 6.4%
American Express Co. 224,300 20,201,019
Equitable Companies, Inc. 54,200 2,835,338
First Chicago NBD Corp. 85,000 6,985,938
Transamerica Corp. 75,000 8,732,813
38,755,108
MORTGAGE BANKERS - 0.6%
Money Store, Inc. (The) 135,000 3,366,563
PERSONAL CREDIT INSTITUTIONS - 9.7%
Associates First Capital Corp. 75,100 6,008,000
Beneficial Corp. 136,800 16,142,400
Green Tree Financial Corp. 85,000 1,949,688
Household International, Inc. 124,300 16,143,463
MBNA Corp. 515,000 18,443,438
58,686,989
TOTAL CREDIT & OTHER FINANCE 109,853,734
FEDERAL SPONSORED CREDIT - 5.8%
FEDERAL & FEDERALLY SPONSORED CREDIT AGENCIES - 5.8%
Freddie Mac 234,600 11,084,850
Fannie Mae 255,000 16,272,188
SLM Holding Corp. 186,000 7,684,125
35,041,163
INSURANCE - 21.3%
INSURANCE BROKERS & SERVICES - 0.8%
Marsh & McLennan Companies, Inc. 55,000 4,767,813
SHARES VALUE (NOTE 1)
INSURANCE CARRIERS - 3.3%
AFLAC, Inc. 211,000 $ 12,963,313
AMBAC, Inc. 25,000 1,331,250
Blanch E.W. Holdings, Inc. 35,000 1,257,813
MBIA, Inc. 40,000 2,927,500
MGIC Investment Corp. 20,000 1,473,750
19,953,626
LIFE INSURANCE - 3.6%
American Bankers Insurance Group, Inc. 7,800 438,750
Aon Corp. 72,500 4,336,406
Hartford Life, Inc. Class A 25,000 1,076,563
Nationwide Financial Services, Inc.
Class A 35,000 1,540,000
SunAmerica, Inc. 200,000 9,062,500
Torchmark Corp. 10,000 465,625
UNUM Corp. 95,000 4,886,563
21,806,407
PROPERTY-CASUALTY & REINSURANCE - 13.6%
ACE Ltd. 15,000 1,483,125
Aegon NV (Reg.) 18,470 2,077,875
Allstate Corp. 143,900 13,418,675
American International Group, Inc. 180,000 21,633,750
General Re Corp. 10,500 2,236,500
Hartford Financial Services Group, Inc. 95,000 9,333,750
Old Republic International Corp. 20,000 843,750
PMI Group, Inc. 173,400 12,614,850
Progressive Corp. 30,000 3,476,250
SAFECO Corp. 40,000 2,097,500
Travelers Group, Inc. (The) 217,000 12,097,750
Vesta Insurance Group Corp. 20,000 1,146,250
82,460,025
TOTAL INSURANCE 128,987,871
REAL ESTATE INVESTMENT TRUSTS - 0.8%
Crescent Real Estate Equities, Inc. 20,000 681,250
Imperial Credit Commercial Mortgage
Investment Corp. 85,100 1,308,413
Ocwen Asset Investment Corp. 71,900 1,415,531
Public Storage, Inc. 15,000 462,188
Starwood Hotels & Resorts Trust 20,000 1,131,250
4,998,632
SAVINGS & LOANS - 2.8%
SAVINGS BANKS & SAVINGS & LOANS - 0.2%
Astoria Financial Corp. 25,000 1,396,875
SAVINGS BANKS, FEDERAL CHARTER - 2.6%
Ahmanson (H.F.) & Co. 41,000 2,559,938
Dime Bancorp., Inc. 115,000 3,507,500
Golden State Bancorp (a) 50,000 1,781,250
RedFed Bancorp, Inc. (a) 122,600 2,429,013
Washington Mutual, Inc. 80,000 5,370,000
15,647,701
TOTAL SAVINGS & LOANS 17,044,576
SECURITIES INDUSTRY - 5.3%
SECURITY & COMMODITY BROKERS - 2.5%
Merrill Lynch & Co., Inc. 90,000 6,440,625
Midland Walwyn, Inc. 150,000 1,959,614
Morgan Stanley, Dean Witter, Discover
and Co. 95,000 6,620,313
15,020,552
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
SECURITIES INDUSTRY - CONTINUED
SECURITY BROKERS & DEALERS - 2.8%
Lehman Brothers Holdings, Inc. 265,600 $ 16,749,400
TOTAL SECURITIES INDUSTRY 31,769,952
TOTAL COMMON STOCKS
(Cost $430,126,733) 558,968,804
CASH EQUIVALENTS - 7.6%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 5.62%, dated
2/27/98 due 3/2/98 $ 15,743,370 15,736,000
SHARES
Taxable Central Cash Fund (b) 30,129,522 30,129,522
TOTAL CASH EQUIVALENTS
(Cost $45,865,522) 45,865,522
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $475,992,255) $ 604,834,326
LEGEND
1. Non-income producing
2. At period end, the seven-day yield on the Taxable Central Cash Fund
was 5.62%. 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 $374,840,415 and $359,833,387, 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 $58,925 for the
period (see Note 4 of Notes to Financial Statements).
The fund participated in the securities lending program. At the period
end, the value of securities loaned and the value of collateral
amounted to $623,425 and $650,000 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 $5,445,000 and $4,251,000, respectively. The
weighted average interest rate was 5.9%. Interest expense includes
$1,387 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 $21,034,000. The weighted average
interest rate was 5.8%. Interest expense includes $3,363 paid under
the interfund lending program (see Note 5 of Notes to Financial
Statements).
INCOME TAX INFORMATION
At February 28, 1998, the aggregate cost of investment securities for
income tax purposes was $476,035,078. Net unrealized appreciation
aggregated $128,799,248, of which $129,691,850 related to appreciated
investment securities and $892,602related to depreciated investment
securities.
The fund hereby designates approximately $43,282,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 0.74% 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 (unaudited).
A total of 39% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate
shareholders (unaudited).
The fund will notify shareholders in January 1999 of these percentages
for use in preparing 1998 income tax returns.
FINANCIAL SERVICES PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1998
ASSETS
INVESTMENT IN $ 604,834,326
SECURITIES,
AT VALUE
(INCLUDING
REPURCHAS
E
AGREEMENT
S OF
$15,736,
000) (COST
$475,992
,255) -
SEE
ACCOMPAN
YING
SCHEDULE
CASH 57
RECEIVABLE 3,756,105
FOR FUND
SHARES
SOLD
DIVIDENDS 529,567
RECEIVABLE
INTEREST 122,334
RECEIVABLE
REDEMPTION 1,079
FEES
RECEIVABLE
OTHER 7,065
RECEIVABLE
S
TOTAL 609,250,533
ASSETS
LIABILITIES
PAYABLE FOR $ 1,172,683
INVESTMENT
S
PURCHASED
PAYABLE FOR 1,916,729
FUND
SHARES
REDEEMED
ACCRUED 281,704
MANAGEM
ENT FEE
OTHER 321,801
PAYABLES
AND
ACCRUED
EXPENSES
COLLATERAL ON 650,000
SECURITIES
LOANED,
AT VALUE
TOTAL 4,342,917
LIABILITIES
NET ASSETS $ 604,907,616
NET ASSETS
CONSIST OF:
PAID IN $ 402,172,409
CAPITAL
UNDISTRIBUTE 1,378,882
D NET
INVESTMENT
INCOME
ACCUMULATED 72,514,254
UNDISTRIBUT
ED NET
REALIZED
GAIN (LOSS)
ON
INVESTMENT
S AND
FOREIGN
CURRENCY
TRANSACTIO
NS
NET 128,842,071
UNREALIZED
APPRECIATI
ON
(DEPRECIATI
ON) ON
INVESTMENT
S
NET ASSETS, $ 604,907,616
FOR
5,857,20
8
SHARES
OUTSTANDIN
G
NET ASSET $103.28
VALUE AND
REDEMPTIO
N PRICE
PER SHARE
($604,90
7,616 (DIVIDED BY)
5,857,20
8 SHARES)
MAXIMUM $106.47
OFFERING
PRICE PER
SHARE
(100/97.
00 OF
$103.28)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1998
INVESTMENT $ 7,328,652
INCOME
DIVIDENDS
INTEREST 2,360,948
(INCLUDING
INCOME ON
SECURITIES
LOANED OF
$10,780)
TOTAL 9,689,600
INCOME
EXPENSES
MANAGEMEN $ 2,799,557
T FEE
TRANSFER 2,694,188
AGENT FEES
ACCOUNTING 466,466
AND
SECURITY
LENDING
FEES
NON-INTEREST 2,141
ED
TRUSTEES'
COMPENSAT
ION
CUSTODIAN 13,248
FEES AND
EXPENSES
REGISTRATION 100,883
FEES
AUDIT 35,690
LEGAL 2,406
INTEREST 4,750
MISCELLANEO 3,470
US
TOTAL 6,122,799
EXPENSES
BEFORE
REDUCTIONS
EXPENSE (67,147) 6,055,652
REDUCTIONS
NET 3,633,948
INVESTMEN
T INCOME
REALIZED
AND
UNREALIZED
GAIN (LOSS)
NET REALIZED
GAIN (LOSS)
ON:
INVESTMENT 108,049,075
SECURITIES
FOREIGN (2,044) 108,047,031
CURRENCY
TRANSACTIO
NS
CHANGE IN 47,345,052
NET
UNREALIZED
APPRECIATI
ON
(DEPRECIATI
ON) ON
INVESTMENT
SECURITIES
NET GAIN 155,392,083
(LOSS)
NET INCREASE $ 159,026,031
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
OTHER $ 2,098,142
INFORMATIO
N
SALES
CHARGES
PAID TO
FDC
SALES $ 10,561
CHARGES -
DEALERS'
PORTION
DEFERRED $ 8,343
SALES
CHARGES
WITHHELD
BY FDC
EXCHANGE $ 122,468
FEES
WITHHELD
BY FSC
EXPENSE $ 66,065
REDUCTIONS
DIRECTED
BROKERAGE
ARRANGEM
ENTS
CUSTODIA 51
N CREDITS
TRANSFER 1,031
AGENT
CREDITS
$ 67,147
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
FEBRUARY 28, FEBRUARY 28,
1998 1997
OPERATIONS $ 3,633,948 $ 2,811,616
NET
INVESTMENT
INCOME
NET 108,047,031 37,306,366
REALIZED
GAIN (LOSS)
CHANGE IN 47,345,052 40,110,184
NET
UNREALIZED
APPRECIATI
ON
(DEPRECIATI
ON)
NET 159,026,031 80,228,166
INCREASE
(DECREAS
E) IN NET
ASSETS
RESULTING
FROM
OPERATIO
NS
DISTRIBUTIONS (3,089,281) (2,448,822)
TO
SHAREHOLD
ERS
FROM NET
INVESTMENT
INCOME
FROM NET (50,526,464) (17,755,935)
REALIZED
GAIN
TOTAL (53,615,745) (20,204,757)
DISTRIBUTIO
NS
SHARE 474,752,061 393,395,549
TRANSACTIO
NS
NET
PROCEEDS
FROM SALES
OF SHARES
REINVESTM 52,640,022 19,821,424
ENT OF
DISTRIBUTIO
NS
COST OF (455,053,591) (317,821,398)
SHARES
REDEEMED
NET 72,338,492 95,395,575
INCREASE
(DECREAS
E) IN NET
ASSETS
RESULTING
FROM
SHARE
TRANSACTI
ONS
REDEMPTIO 734,651 538,820
N FEES
TOTAL 178,483,429 155,957,804
INCREASE
(DECREASE)
IN NET
ASSETS
NET ASSETS
BEGINNING 426,424,187 270,466,383
OF PERIOD
END OF $ 604,907,616 $ 426,424,187
PERIOD
(INCLUDIN
G
UNDISTRIB
UTED NET
INVESTME
NT
INCOME
OF
$1,378,
882 AND
$1,356,
398,
RESPECTIV
ELY)
OTHER
INFORMATION
SHARES
SOLD 5,332,883 5,282,928
ISSUED IN 604,501 276,585
REINVESTME
NT OF
DISTRIBUTIO
NS
REDEEMED (5,221,709) (4,534,794)
NET 715,675 1,024,719
INCREASE
(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>
YEARS ENDED FEBRUARY 28, YEAR ENDED YEARS ENDED FEBRUARY 28,
FEBRUARY 29,
SELECTED PER-SHARE DATA 1998 1997 1996 1995 1994
</TABLE>
NET ASSET $ 82.94 $ 65.70 $ 48.23 $ 51.24 $ 53.29
VALUE,
BEGINNING
OF PERIOD
INCOME FROM
INVESTMENT
OPERATION
S
NET .70 .74 1.03 .76 .29
INVESTMENT
INCOME C
NET 30.65 21.55 17.56 .87 5.02
REALIZED
AND
UNREALIZED
GAIN (LOSS)
TOTAL FROM 31.35 22.29 18.59 1.63 5.31
INVESTMENT
OPERATIONS
LESS
DISTRIBUTIO
NS
FROM NET (.64) (.63) (.37) (.79) (.20)
INVESTMENT
INCOME
FROM NET (10.51) (4.56) (.91) (3.93) (7.32)
REALIZED
GAIN
TOTAL (11.15) (5.19) (1.28) (4.72) (7.52)
DISTRIBUTIO
NS
REDEMPTION .14 .14 .16 .08 .16
FEES
ADDED TO
PAID IN
CAPITAL
NET ASSET $ 103.28 $ 82.94 $ 65.70 $ 48.23 $ 51.24
VALUE, END
OF PERIOD
TOTAL 41.08% 35.54% 39.05% 4.72% 10.85%
RETURN A, B
RATIOS AND
SUPPLEME
NTAL DATA
NET ASSETS, $ 604,908 $ 426,424 $ 270,466 $ 153,089 $ 116,195
END OF
PERIOD
(000
OMITTED)
RATIO OF 1.31% 1.45% 1.42% 1.56% 1.64%
EXPENSES
TO AVERAGE
NET ASSETS
RATIO OF 1.29% D 1.43% D 1.41% D 1.54% D 1.63% D
EXPENSES
TO AVERAGE
NET ASSETS
AFTER
EXPENSE
REDUCTIONS
RATIO OF NET .78% 1.03% 1.78% 1.52% .53%
INVESTMENT
INCOME TO
AVERAGE
NET ASSETS
PORTFOLIO 84% 80% 125% 107% 93%
TURNOVER
RATE
AVERAGE $ .0452 $ .0433
COMMISSIO
N RATE E
<TABLE>
<CAPTION>
<S> <C>
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. C NET
INVESTMENT INCOME 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>
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). Load adjusted returns include a 3.00% sales
charge and the effect of a $7.50 trading fee. 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, 1998 YEAR YEARS YEARS
SELECT HOME FINANCE 32.39% 276.17% 975.96%
SELECT HOME FINANCE 28.35% 264.81% 943.60%
(LOAD ADJ.)
S&P 500 35.01% 166.84% 422.55%
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 Standard & Poor's
500 Index - a widely recognized, unmanaged index of common stocks.
This benchmark includes 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, 1998 YEAR YEARS YEARS
SELECT HOME FINANCE 32.39% 30.34% 26.82%
SELECT HOME FINANCE 28.35% 29.54% 26.43%
(LOAD ADJ.)
S&P 500 35.01% 21.69% 17.98%
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 LONG-TERM GROWTH AND
SHORT-TERM VOLATILITY. UNLIKE THE BROADER MARKET,
HOWEVER, SOME SECTORS MAY NOT HAVE A HISTORY
OF GROWTH IN THE LONG RUN. AND, AS WITH ALL STOCK
FUNDS, THE SHARE PRICE AND RETURN OF A FUND THAT
INVESTS IN A SECTOR WILL VARY. THAT MEANS IF YOU
SELL YOUR SHARES DURING A SECTOR DOWNTURN, YOU
MIGHT LOSE MONEY. BUT IF YOU CAN IDENTIFY A
SECTOR THAT IS ABOUT TO EXPERIENCE RAPID GROWTH
YOU MAY HAVE THE POTENTIAL FOR ABOVE-AVERAGE
GAINS.
(CHECKMARK)
$10,000 OVER 10 YEARS
IMAHDR PRASUN SHR__CHT 19980228 19980305 132056 S00000000000001
HOME FINANCE S&P 500
00098 SP001
1988/02/29 9700.00 10000.00
1988/03/31 9431.49 9691.00
1988/04/30 9588.12 9798.57
1988/05/31 9576.93 9883.82
1988/06/30 10181.08 10337.48
1988/07/31 10360.09 10298.20
1988/08/31 10102.77 9948.06
1988/09/30 10617.42 10371.85
1988/10/31 10919.49 10660.19
1988/11/30 10371.28 10507.75
1988/12/31 10552.83 10691.63
1989/01/31 11437.91 11474.26
1989/02/28 11687.55 11188.55
1989/03/31 11744.28 11449.25
1989/04/30 12345.68 12043.46
1989/05/31 12879.00 12531.22
1989/06/30 13138.23 12459.79
1989/07/31 13596.01 13584.91
1989/08/31 14431.45 13851.18
1989/09/30 14969.34 13794.39
1989/10/31 13103.90 13474.36
1989/11/30 12680.45 13749.23
1989/12/31 11537.03 14079.22
1990/01/31 10580.59 13134.50
1990/02/28 10975.12 13303.94
1990/03/31 10999.03 13656.49
1990/04/30 10736.01 13315.08
1990/05/31 11752.23 14613.30
1990/06/30 11632.67 14513.93
1990/07/31 10628.41 14467.48
1990/08/31 9552.42 13159.62
1990/09/30 8727.49 12518.75
1990/10/31 8069.94 12464.92
1990/11/30 8942.69 13270.15
1990/12/31 9796.89 13640.39
1991/01/31 10733.99 14235.11
1991/02/28 12194.40 15252.92
1991/03/31 12754.22 15622.04
1991/04/30 13192.34 15659.53
1991/05/31 13739.99 16336.03
1991/06/30 12973.28 15587.84
1991/07/31 14360.66 16314.23
1991/08/31 14908.32 16700.88
1991/09/30 14786.62 16421.97
1991/10/31 14531.05 16642.03
1991/11/30 13861.69 15971.35
1991/12/31 16126.24 17798.47
1992/01/31 17715.46 17467.42
1992/02/29 18873.49 17694.50
1992/03/31 18553.18 17349.46
1992/04/30 18947.41 17859.53
1992/05/31 20819.97 17947.04
1992/06/30 20846.06 17679.63
1992/07/31 21871.07 18402.73
1992/08/31 20685.51 18025.47
1992/09/30 21018.95 18238.17
1992/10/31 21414.14 18302.01
1992/11/30 23612.36 18926.11
1992/12/31 25455.71 19158.90
1993/01/31 27282.02 19319.83
1993/02/28 27744.85 19582.58
1993/03/31 28733.06 19995.77
1993/04/30 27176.74 19511.88
1993/05/31 26711.65 20034.79
1993/06/30 27377.87 20092.89
1993/07/31 29137.69 20012.52
1993/08/31 30671.25 20771.00
1993/09/30 32632.20 20611.06
1993/10/31 32883.61 21037.71
1993/11/30 31412.90 20837.85
1993/12/31 32403.84 21089.99
1994/01/31 33822.51 21807.05
1994/02/28 33186.10 21216.08
1994/03/31 32562.95 20291.06
1994/04/30 33821.93 20550.78
1994/05/31 35907.99 20887.82
1994/06/30 36505.99 20376.06
1994/07/31 37312.60 21044.40
1994/08/31 38522.51 21907.22
1994/09/30 37201.34 21370.49
1994/10/31 34976.21 21851.33
1994/11/30 33168.30 21055.50
1994/12/31 33272.62 21367.76
1995/01/31 34738.92 21921.82
1995/02/28 37312.76 22776.12
1995/03/31 37250.36 23448.24
1995/04/30 39200.23 24138.79
1995/05/31 41524.48 25103.62
1995/06/30 41961.25 25686.77
1995/07/31 43645.94 26538.55
1995/08/31 47670.48 26605.16
1995/09/30 48668.81 27727.90
1995/10/31 47779.67 27628.91
1995/11/30 50415.90 28841.82
1995/12/31 51070.60 29397.31
1996/01/31 52466.94 30398.00
1996/02/29 53445.98 30679.78
1996/03/31 54665.77 30975.23
1996/04/30 53967.84 31431.81
1996/05/31 55170.79 32242.43
1996/06/30 55417.97 32365.28
1996/07/31 56406.69 30935.38
1996/08/31 58730.19 31587.81
1996/09/30 61696.36 33365.57
1996/10/31 66030.27 34285.79
1996/11/30 70973.89 36877.45
1996/12/31 69903.37 36146.91
1997/01/31 74444.77 38405.37
1997/02/28 78831.94 38706.47
1997/03/31 71531.42 37116.02
1997/04/30 73675.41 39331.84
1997/05/31 78612.71 41726.37
1997/06/30 85323.77 43595.71
1997/07/31 93351.45 47064.62
1997/08/31 89493.04 44428.06
1997/09/30 97520.72 46861.38
1997/10/31 96752.69 45296.21
1997/11/30 97301.28 47392.97
1997/12/31 101883.81 48206.71
1998/01/31 96094.29 48739.88
1998/02/27 104360.33 52255.00
IMATRL PRASUN SHR__CHT 19980228 19980305 132059 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Home Finance Portfolio on February 29,
1988, and the current 3.00% sales charge was paid. As the chart shows,
by February 28, 1998, the value of the investment would have grown to
$104,360 - a 943.60% increase on the initial investment, and includes
the effect of a $7.50 trading fee. 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
$52,255 - a 422.55% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1998
% OF FUND'S
INVESTMENTS
WASHINGTON MUTUAL, INC. 5.3
DIME BANCORP., INC. 4.6
AHMANSON (H.F.) & CO. 3.6
CHARTER ONE FINANCIAL CORP. 3.6
GREENPOINT FINANCIAL CORP. 3.5
TCF FINANCIAL CORP. 2.8
ASTORIA FINANCIAL CORP. 2.4
PEOPLES HERITAGE FINANCIAL GROUP, INC. 2.3
COMMERCIAL FEDERAL CORP. 2.1
BANK UNITED CORP. CLASS A 1.9
TOP INDUSTRIES AS OF FEBRUARY 28, 1998
SAVINGS BANKS, FEDERAL CHARTER 27.6%
SAVINGS BANKS & SAVINGS &
LOANS 15.7%
NATIONAL COMMERCIAL BANKS 13.7%
MORTGAGE BANKERS 7.4%
BANK HOLDING COMPANY OFFICES 4.5%
PERSONAL CREDIT INSTITUTIONS 4.1%
ALL OTHERS 27.0%
ROW: 1, COL: 1, VALUE: 27.0
ROW: 1, COL: 2, VALUE: 4.1
ROW: 1, COL: 3, VALUE: 4.5
ROW: 1, COL: 4, VALUE: 7.4
ROW: 1, COL: 5, VALUE: 13.7
ROW: 1, COL: 6, VALUE: 15.7
ROW: 1, COL: 7, VALUE: 27.6
*
* 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. For the 12 months that ended February 28, 1998, the fund had a
total return of 32.39%. Over the same period, the Standard & Poor's
500 Index returned 35.01%.
Q. WHAT FACTORS CONTRIBUTED TO THE FUND'S STRONG PERFORMANCE?
A. The economic environment was favorable for mortgage finance
companies, with solid growth in U.S. gross domestic product, declining
interest rates, low inflation, excellent credit quality, a strong
housing market and near-full employment. In addition, many companies
in the sector benefited from a "virtuous circle" of favorable events.
The better companies have become more adept at lowering expenses and
managing credit risk and interest-rate risk, which has resulted in
improved earnings growth and higher stock prices. Higher share prices
position these companies to make acquisitions that contribute further
to their profitability and growth prospects.
Q. AND YET, THE FUND'S PERFORMANCE SLIGHTLY TRAILED THAT OF THE S&P
500.
A. Early in January 1998, the fund's performance suffered a brief but
substantial downdraft. As long-term interest rates continued to fall,
consumers responded by refinancing with fixed-rate mortgages in an
attempt to lock in lower rates. This trend was perceived by investors
as negative for savings and loans, which offer primarily variable-rate
mortgage products. In addition, the fourth quarter of 1997 saw
weakness in the stocks of sub-prime home equity lenders, which
specialize in providing loans to people with less than "prime" credit
records. In that case, the widespread prepayment of loans triggered by
falling interest rates sparked concerns that the "gain-on-sale"
accounting method commonly used by these companies might have resulted
in overstating their earnings and assets.
Q. WHAT STOCKS PERFORMED WELL DURING THE PERIOD?
A. As has been typical of this sector, the best performers were key
players in the trend toward greater industry consolidation. Dime
Bancorp was one of the fund's top holdings and strongest performers.
Investors responded positively to the company's acquisition of North
American Mortgage. This union dramatically enhances Dime's ability to
originate mortgage loans and also improves the company's servicing
capabilities. Ahmanson also helped the fund's performance. The
company's acquisition of Coast Savings was expected to help reduce
costs as well as substantially increase Ahmanson's share of the
California market. Another standout performer - and the fund's largest
holding during most of the period - was Washington Mutual, which
appeared to be smoothly integrating last summer's acquisition of Great
Western. Washington Mutual has been successful with its strategy of
aggressively selling low-cost checking accounts, reaping the fees from
overdrafts and services and then cross-selling consumer and mortgage
loans to these customers. This strategy was applied to former Great
Western customers - apparently with similarly beneficial results.
Freddie Mac and Charter One Financial were two other positive
contributors.
Q. WHAT STOCKS DISAPPOINTED YOU?
A. Most of the disappointments were in the sub-prime home equity
lending category I mentioned earlier. Aames Financial, Green Tree
Financial and Cityscape Financial are good examples. All three
companies sustained charges to assets and equity because of
higher-than-expected loan prepayments caused by greater competition
and falling interest rates. In Cityscape's case, there were also
regulatory problems that negatively affected the company's formerly
lucrative lending business in the United Kingdom.
Q. WHAT'S YOUR OUTLOOK, BILL?
A. As long as interest rates don't increase dramatically, I believe
that banks and thrifts will continue to enjoy earnings-per-share
growth that is well above the average for stocks in the S&P 500.
Credit quality should remain excellent. Strong earnings growth -
combined with accelerating industry consolidation and
price-to-earnings ratios that are typically 20% to 30% below that of
the average S&P 500 stock - should result in continued strong investor
interest in mortgage finance stocks. I also believe that the shares of
sub-prime home equity lenders were beaten down excessively. I used
their recent weakness to increase the fund's position in those stocks,
and the group has already begun to rebound. I look for this trend to
continue.
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, 1998, MORE THAN
$1.6 BILLION
MANAGER: BILL RUBIN, SINCE 1996; MANAGER,
FIDELITY SELECT DEFENSE AND AEROSPACE PORTFOLIO,
1994-1997; EQUITY ANALYST, VARIOUS INDUSTRY
SECTORS SINCE 1994; JOINED FIDELITY IN 1994
(CHECKMARK)
HOME FINANCE PORTFOLIO
INVESTMENTS FEBRUARY 28, 1998
SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENT IN SECURITIES
COMMON STOCKS - 94.1%
SHARES VALUE (NOTE 1)
AUTOS, TIRES, & ACCESSORIES - 0.9%
AUTO DEALERS, GAS STATIONS - RETAIL - 0.9%
Ugly Duckling Corp. (a)(c) 1,454,000 $ 14,540,000
BANKS - 20.2%
INTERNATIONAL BANKS - 3.0%
Australia & New Zealand Banking
Group Ltd. (a) 865,725 5,941,859
BANACCI SA de CV Class B (a) 529,000 1,331,813
Barclays PLC Ord. 275,000 8,155,884
HSBC Holdings PLC Ord. 200,000 6,135,408
Lloyds TSB Group PLC 766,300 11,514,546
Societe Generale Class A 40,000 6,029,062
Union Bank of Switzerland Ord. (Bearer) 3,500 5,459,570
Westpac Banking Corp. 750,000 5,188,364
49,756,506
NATIONAL COMMERCIAL BANKS - 13.7%
BB&T Corp. 50,000 3,103,125
Banc One Corp. 110,220 6,227,430
BPI-SGPS SA (Reg.) 23,000 825,451
Bank of New York Co., Inc. 309,500 18,125,094
BankBoston Corp. 103,848 10,352,348
BankAmerica Corp. 339,200 26,288,000
Chase Manhattan Corp. 245,100 30,407,719
Comerica, Inc. 30,000 3,024,375
First Savings Bank of Washington
Bancorp, Inc. 87,000 2,218,500
First Tennessee National Corp. 90,000 2,868,750
National City Corp. 58,346 3,807,077
NationsBank Corp. 202,700 13,884,950
Norwest Corp. 160,000 6,550,000
PNC Financial Corp. 165,000 9,157,500
Peoples Heritage Financial Group, Inc. 813,500 37,878,594
Providian Financial Corp. 122,500 6,951,875
Republic New York Corp. 45,800 5,541,800
SouthTrust Corp. 60,000 2,452,500
TF Financial Corp. 34,425 895,050
U.S. Bancorp 69,400 7,985,338
Union Planters Corp. 196,741 12,161,053
UnionBanCal Corp. 91,900 8,558,188
Wells Fargo & Co. 25,000 8,050,000
227,314,717
STATE BANKS FEDERAL RESERVE - 3.5%
Acadiana Bancshares, Inc. (c) 153,300 3,391,763
Crestar Financial Corp. 102,028 5,637,047
North Fork Bancorp., Inc. 812,416 27,774,472
R&G Financial Corp. Class B (c) 283,000 7,711,750
T R Financial Corp. 284,300 9,373,016
UST Corp. 183,240 5,016,195
58,904,243
TOTAL BANKS 335,975,466
CREDIT & OTHER FINANCE - 17.4%
BANK HOLDING COMPANY OFFICES - 4.5%
Fleet Financial Group, Inc. 193,200 15,226,575
Greenpoint Financial Corp. 773,900 57,462,075
Little Falls Bancorp, Inc. 110,000 2,200,000
74,888,650
SHARES VALUE (NOTE 1)
BUSINESS CREDIT - 0.3%
Allied Capital Corp. 50,000 $ 1,175,000
Federal Agricultural Mortgage Corp.
Class C (non-vtg.) (a) 60,000 3,765,000
4,940,000
FINANCIAL SERVICES - 1.1%
ContiFinancial Corp. (a) 536,700 14,557,988
Wilshire Financial Services Group, Inc. (a) 151,300 3,338,056
17,896,044
MORTGAGE BANKERS - 7.4%
Aames Financial Corp. 1,347,650 18,024,819
Cityscape Financial Corp. (a) 2,042,600 1,148,963
Countrywide Credit Industries, Inc. 219,600 9,758,475
Delta Financial Corp. (a) 562,700 7,772,294
Doral Financial Corp. 100,000 2,700,000
First Alliance Mortgage Co. (a) 370,750 6,488,125
IMC Mortgage Co. (a) 660,000 7,755,000
Imperial Credit Industries (a) 372,000 7,858,500
Life Financial Corp. 286,700 4,587,200
Long Beach Financial Corp. 1,140,800 13,547,000
Money Store, Inc. (The) 1,010,700 25,204,331
New Century Financial Corp. 310,900 2,817,531
Resource Bancshares Mortgage
Group, Inc. 217,875 3,390,680
Southern Pacific Funding Corp. (a) 481,000 7,425,438
United Companies Financial Corp. 319,500 5,012,156
123,490,512
PERSONAL CREDIT INSTITUTIONS - 4.1%
Associates First Capital Corp. 50,000 4,000,000
Beneficial Corp. 86,200 10,171,600
Emergent Group, Inc. (a) 464,900 4,561,831
FIRSTPLUS Financial Group, Inc. (a) 825,600 27,244,800
Green Tree Financial Corp. 938,700 21,531,431
67,509,662
TOTAL CREDIT & OTHER FINANCE 288,724,868
FEDERAL SPONSORED CREDIT - 3.0%
FEDERAL & FEDERALLY SPONSORED CREDIT AGENCIES - 3.0%
Freddie Mac 668,100 31,567,725
Fannie Mae 287,400 18,339,713
49,907,438
INDUSTRIAL MACHINERY & EQUIPMENT - 0.1%
INDUSTRIAL MACHINERY - WHOLESALE - 0.1%
Linc Capital, Inc. (a) 100,000 1,750,000
INSURANCE - 3.3%
INSURANCE CARRIERS - 0.6%
MGIC Investment Corp. 135,500 9,984,656
LIFE INSURANCE - 0.4%
SunAmerica, Inc. 151,950 6,885,234
PROPERTY-CASUALTY & REINSURANCE - 1.8%
PMI Group, Inc. 407,840 29,670,360
SURETY INSURANCE - 0.5%
CMAC Investments 120,000 8,040,000
TOTAL INSURANCE 54,580,250
REAL ESTATE INVESTMENT TRUSTS - 3.3%
Capstead Mortgage Corp. 405,635 7,707,065
Criimi Mae, Inc. 399,400 6,240,625
INMC Mortgage Holdings, Inc. 150,000 3,946,875
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
REAL ESTATE INVESTMENT TRUSTS - CONTINUED
Imperial Credit Mortgage Holdings, Inc. 266,700 $ 4,367,213
Imperial Credit Commercial Mortgage
Investment Corp. 150,000 2,306,250
Novastar Financial, Inc . 111,000 2,025,750
Ocwen Asset Investment Corp. 580,000 11,418,750
Redwood Trust, Inc . 632,822 12,340,029
Thornburg Mortgage Asset Corp. 305,000 4,727,500
55,080,057
SAVINGS & LOANS - 44.6%
SAVINGS BANKS & SAVINGS & LOANS - 15.7%
Andover Bancorp., Inc. 160,000 6,380,000
Astoria Financial Corp. 723,900 40,447,913
Bay View Capital, Inc. 374,902 13,027,845
Cameron Financial Corp. 47,500 950,000
Charter One Financial Corp. 991,522 60,080,036
Commercial Federal Corp. 980,825 34,696,684
First Federal Savings & Loan
Association 118,400 4,558,400
First Essex Bancorp Inc. 40,000 945,000
FirstFed Financial Corp. (a) 346,800 14,002,050
GA Financial, Inc. 242,700 4,762,988
MAF Bancorp., Inc. 80,000 2,980,000
Sovereign Bancorp., Inc. 1,096,313 21,241,064
TCF Financial Corp. 1,419,200 46,922,300
Webster Financial Corp. 135,500 8,705,875
Westcorp, Inc. 90,900 1,550,981
261,251,136
SAVINGS BANKS, NO FEDERAL CHARTER - 1.3%
Dime Financial Corp. (c) 262,800 8,212,500
Downey Financial Corp. 84,250 2,464,313
ITLA Capital Corp. (a) 158,000 3,189,625
People's Bancshares, Inc. 102,500 2,293,438
SIS Bancorp., Inc. 134,200 5,049,275
21,209,151
SAVINGS BANKS, FEDERAL CHARTER - 27.6%
Affiliated Community Bancorp., Inc. 163,750 6,120,156
Ahmanson (H.F.) & Co. 962,429 60,091,661
Albank Financial Corp. 240,000 11,670,000
Bank Plus Corp. (a) 518,000 7,640,500
Bank United Corp. Class A 675,400 31,828,225
Carver Bancorp, Inc. (c) 142,000 2,165,500
Catskill Financial Corp. 80,000 1,470,000
CenFed Financial Corp. 176,676 7,508,730
Citizens First Financial Corp. (a)(c) 174,700 3,625,025
Coast Federal Litigation Contingent Payment
Rights Trust (a) 269,400 4,108,350
Coastal Bancorp, Inc. 30,000 939,375
D & N Financial Corp. 69,000 1,811,250
Dime Community Bancorp, Inc. 467,800 11,753,475
Dime Bancorp., Inc. 2,523,584 76,969,312
First Bergen Bancorp (c) 175,500 3,466,125
First Defiance Financial Corp. 227,900 3,475,475
First Federal Bancshares of
Arkansas, Inc 62,500 1,625,000
First Palm Beach Bancorp, Inc. 40,000 1,515,000
Flagstar Bancorp, Inc. 395,000 8,936,875
Flushing Financial Corp. 12,500 318,750
Golden State Bancorp (a) 586,750 20,902,969
HF Bancorp, Inc. (a) 115,000 2,055,625
Haven Bancorp., Inc. 371,600 9,104,200
Long Island Bancorp., Inc. 318,400 19,163,700
SHARES VALUE (NOTE 1)
ML Bancorp, Inc. 158,900 $ 4,965,625
Ocean Financial Corp. 235,600 8,304,900
Ocwen Financial Corp. (a) 230,000 6,900,000
PFF Bancorp, Inc. (a) 485,800 9,412,375
Provident Financial Holdings, Inc. (a) 180,000 4,095,000
Quaker City Bancorp (a) 112,500 2,250,000
RedFed Bancorp, Inc. (a)(c) 550,500 10,906,781
SGV Bancorp., Inc. (a)(c) 140,000 2,520,000
Washington Federal, Inc. 807,928 22,319,011
Washington Mutual, Inc. 1,299,915 87,256,794
Yonkers Financial Corp. 85,000 1,588,438
458,784,202
TOTAL SAVINGS & LOANS 741,244,489
SECURITIES INDUSTRY - 1.0%
SECURITY & COMMODITY BROKERS - 1.0%
Advest Group, Inc. (The) 120,900 3,014,944
Edwards (A.G.), Inc. 100,000 4,206,250
McDonald & Co. Investments, Inc. 198,600 4,965,000
Morgan Keegan, Inc. 194,900 4,190,350
16,376,544
SERVICES - 0.3%
MANAGEMENT CONSULTING SERVICES - 0.3%
AMRESCO, Inc. (a) 171,000 5,771,250
Firstmark Corp. (a) 103,400 54,931
5,826,181
TOTAL COMMON STOCKS
(Cost $1,155,699,063) 1,564,005,293
CONVERTIBLE PREFERRED STOCKS - 0.5%
REAL ESTATE INVESTMENT TRUSTS - 0.5%
Criimi Mae, Inc. $2.7188 167,300 5,886,869
Walden Residential Properties, Inc.,
Series B, $2.29 80,000 2,320,000
TOTAL CONVERTIBLE PREFERRED STOCKS
(Cost $7,668,750) 8,206,869
CASH EQUIVALENTS - 5.4%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a
joint trading account at 5.62%,
dated 2/27/98 due 3/2/98 $ 6,528,056 6,525,000
SHARES
Taxable Central Cash Fund (b) 82,984,693 82,984,693
TOTAL CASH EQUIVALENTS
(Cost $89,509,693) 89,509,693
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $1,252,877,506) $1,661,721,855
LEGEND
1. Non-income producing
2. At period end, the seven-day yield on the Taxable Central Cash Fund
was 5.62%. The yield refers to the income earned by investing in the
fund over the seven-day period, expressed as an annual percentage.
3. Affiliated company (see Note 10 of Notes to Financial Statements)
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $803,124,153 and $686,703,368, 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 $233,476 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 $6,191,000 and $3,951,400, respectively. The
weighted average interest rate was 5.8% (see Note 7 of Notes to
Financial Statements).
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. $ - $ - $ 58,254 $ 3,391,763
Avondale Financial Corp. 667,400 3,298,475 - -
Carver Bancorp, Inc. - - 7,100 2,165,500
Citizens First Financial Corp. - - - 3,625,025
Dime Financial Corp. - 96,563 113,004 8,212,500
First Bergen Bancorp - 566,812 37,600 3,466,125
First Defiance Financial Corp. - 622,188 154,307 -
Flagstar Bancorp, Inc. 270,000 - - -
R&G Financial Corp. Class B 985,625 489,583 39,350 7,711,750
RedFed Bancorp, Inc. 3,565,225 - - 10,906,781
SGV Bancorp., Inc. - - - 2,520,000
TF Financial Corp. - 1,389,375 49,080 -
Ugly Duckling Corp. 4,388,026 - - 14,540,000
Wilshire Financial Services
Group, Inc. - - - -
Totals $ 9,876,276 $ 6,462,996 $ 458,695 $ 56,539,444
INCOME TAX INFORMATION
At February 28, 1998, the aggregate cost of investment securities for
income tax purposes was $1,255,014,466. Net unrealized appreciation
aggregated $406,707,389, of which $466,347,040 related to appreciated
investment securities and $59,639,651 related to depreciated
investment securities.
The fund hereby designates approximately $125,545,000 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 deductions for corporate
shareholders (unaudited).
A total of 0.44% 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 (unaudited).
The fund will notify shareholders in January 1999 of these percentages
for use in preparing 1998 income tax returns.
HOME FINANCE PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1998
ASSETS
INVESTMENT IN $ 1,661,721,855
SECURITIES,
AT VALUE
(INCLUDING
REPURCHAS
E
AGREEMENT
S OF
$6,525,0
00) (COST
$1,252,8
77,506)
- -
SEE
ACCOMPAN
YING
SCHEDULE
CASH 527,337
RECEIVABLE 24,449,788
FOR
INVESTMENT
S SOLD
RECEIVABLE 9,113,532
FOR FUND
SHARES
SOLD
DIVIDENDS 1,655,055
RECEIVABLE
INTEREST 320,182
RECEIVABLE
REDEMPTION 2,030
FEES
RECEIVABLE
OTHER 5,461
RECEIVABLE
S
TOTAL 1,697,795,240
ASSETS
LIABILITIES
PAYABLE FOR $ 18,292,863
INVESTMENT
S
PURCHASED
PAYABLE FOR 9,286,181
FUND
SHARES
REDEEMED
ACCRUED 796,358
MANAGEM
ENT FEE
OTHER 809,590
PAYABLES
AND
ACCRUED
EXPENSES
TOTAL 29,184,992
LIABILITIES
NET ASSETS $ 1,668,610,248
NET ASSETS
CONSIST OF:
PAID IN $ 1,176,527,940
CAPITAL
UNDISTRIBUTE 4,200,147
D NET
INVESTMENT
INCOME
ACCUMULATED 79,036,819
UNDISTRIBUT
ED
NET
REALIZED
GAIN (LOSS)
ON
INVESTMENT
S AND
FOREIGN
CURRENCY
TRANSACTIO
NS
NET 408,845,342
UNREALIZED
APPRECIATI
ON
(DEPRECIATI
ON) ON
INVESTMENT
S
AND ASSETS
AND
LIABILITIES
IN FOREIGN
CURRENCIES
NET ASSETS, $ 1,668,610,248
FOR
31,269,3
47
SHARES
OUTSTANDIN
G
NET ASSET $53.36
VALUE AND
REDEMPTIO
N PRICE
PER SHARE
($1,668,6
10,248 (DIVIDED BY)
31,269,3
47 SHARES)
MAXIMUM $55.01
OFFERING
PRICE PER
SHARE
(100/97.
00 OF
$53.36)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1998
INVESTMENT $ 21,373,587
INCOME
DIVIDENDS
(INCLUDING
$458,695
RECEIVED
FROM
AFFILIATED
ISSUERS)
INTEREST 3,415,621
TOTAL 24,789,208
INCOME
EXPENSES
MANAGEMEN $ 7,971,664
T FEE
TRANSFER 6,918,034
AGENT FEES
ACCOUNTING 791,859
FEES AND
EXPENSES
NON-INTEREST 5,683
ED
TRUSTEES'
COMPENSAT
ION
CUSTODIAN 189,845
FEES AND
EXPENSES
REGISTRATION 218,409
FEES
AUDIT 60,496
LEGAL 6,672
INTEREST 3,195
MISCELLANEO 12,307
US
TOTAL 16,178,164
EXPENSES
BEFORE
REDUCTIONS
EXPENSE (315,705) 15,862,459
REDUCTIONS
NET 8,926,749
INVESTMEN
T INCOME
REALIZED
AND
UNREALIZED
GAIN (LOSS)
NET REALIZED
GAIN (LOSS)
ON:
INVESTMENT 177,780,776
SECURITIES
(INCLUDING
REALIZED
GAIN OF
$2,890,9
62
ON SALES OF
INVESTMENT
S IN
AFFILIATED
ISSUERS)
FOREIGN (32,517) 177,748,259
CURRENCY
TRANSACTIO
NS
CHANGE IN
NET
UNREALIZED
APPRECIATI
ON
(DEPRECIATI
ON) ON:
INVESTMENT 165,001,998
SECURITIES
ASSETS AND 993 165,002,991
LIABILITIES
IN
FOREIGN
CURRENCIES
NET GAIN 342,751,250
(LOSS)
NET INCREASE $ 351,677,999
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
OTHER $ 9,770,117
INFORMATIO
N
SALES
CHARGES
PAID TO
FDC
SALES $ 18,454
CHARGES -
DEALERS'
PORTION
DEFERRED $ 5,349
SALES
CHARGES
WITHHELD
BY FDC
EXCHANGE $ 249,255
FEES
WITHHELD
BY FSC
EXPENSE $ 309,062
REDUCTIONS
DIRECTED
BROKERAGE
ARRANGEM
ENTS
TRANSFER 6,643
AGENT
CREDITS
$ 315,705
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
FEBRUARY 28, FEBRUARY 28,
1998 1997
OPERATIONS $ 8,926,749 $ 9,748,801
NET
INVESTMENT
INCOME
NET 177,748,259 116,726,321
REALIZED
GAIN (LOSS)
CHANGE IN 165,002,991 155,888,034
NET
UNREALIZED
APPRECIATI
ON
(DEPRECIATI
ON)
NET 351,677,999 282,363,156
INCREASE
(DECREAS
E) IN NET
ASSETS
RESULTING
FROM
OPERATIO
NS
DISTRIBUTIONS (7,530,670) (6,671,424)
TO
SHAREHOLD
ERS
FROM NET
INVESTMENT
INCOME
FROM NET (153,895,241) (44,835,125)
REALIZED
GAIN
TOTAL (161,425,911) (51,506,549)
DISTRIBUTIO
NS
SHARE 1,194,996,073 1,276,779,331
TRANSACTIO
NS
NET
PROCEEDS
FROM SALES
OF SHARES
REINVESTM 158,982,280 50,762,550
ENT OF
DISTRIBUTIO
NS
COST OF (1,054,168,696) (999,588,979)
SHARES
REDEEMED
NET 299,809,657 327,952,902
INCREASE
(DECREAS
E) IN NET
ASSETS
RESULTING
FROM
SHARE
TRANSACTI
ONS
REDEMPTIO 1,720,473 983,081
N FEES
TOTAL 491,782,218 559,792,590
INCREASE
(DECREASE)
IN NET
ASSETS
NET ASSETS
BEGINNING 1,176,828,030 617,035,440
OF PERIOD
END OF $ 1,668,610,248 $ 1,176,828,030
PERIOD
(INCLUDIN
G
UNDISTRIB
UTED NET
INVESTME
NT
INCOME
OF
$4,200,
147 AND
$4,942,
441,
RESPECTIV
ELY)
OTHER
INFORMATION
SHARES
SOLD 24,323,664 32,961,709
ISSUED IN 3,484,445 1,354,504
REINVESTME
NT OF
DISTRIBUTIO
NS
REDEEMED (22,121,347) (27,265,709)
NET 5,686,762 7,050,504
INCREASE
(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>
YEARS ENDED FEBRUARY 28, YEAR ENDED YEARS ENDED FEBRUARY 28,
FEBRUARY 29,
SELECTED PER-SHARE DATA 1998 1997 1996 1995 1994
</TABLE>
NET ASSET $ 46.00 $ 33.30 $ 23.92 $ 25.03 $ 22.18
VALUE,
BEGINNING
OF PERIOD
INCOME FROM
INVESTMENT
OPERATION
S
NET .33 .53 .53 .20 .03
INVESTMENT
INCOME C
NET 13.10 14.60 9.72 2.34 4.15
REALIZED
AND
UNREALIZED
GAIN (LOSS)
TOTAL FROM 13.43 15.13 10.25 2.54 4.18
INVESTMENT
OPERATIONS
LESS
DISTRIBUTIO
NS
FROM NET (.29) (.32) (.19) (.12) (.01)
INVESTMENT
INCOME
FROM NET (5.84) (2.16) (.73) (3.60) (1.40)
REALIZED
GAIN
TOTAL (6.13) (2.48) (.92) (3.72) (1.41)
DISTRIBUTIO
NS
REDEMPTION .06 .05 .05 .07 .08
FEES
ADDED TO
PAID IN
CAPITAL
NET ASSET $ 53.36 $ 46.00 $ 33.30 $ 23.92 $ 25.03
VALUE, END
OF PERIOD
TOTAL 32.39% 47.50% 43.24% 12.43% 19.61%
RETURN A, B
RATIOS AND
SUPPLEME
NTAL DATA
NET ASSETS, $ 1,668,610 $ 1,176,828 $ 617,035 $ 229,924 $ 155,563
END OF
PERIOD
(000
OMITTED)
RATIO OF 1.21% 1.38% 1.35% 1.47% 1.58%
EXPENSES
TO AVERAGE
NET ASSETS
RATIO OF 1.19% D 1.34% D 1.32% D 1.45% D 1.58%
EXPENSES
TO AVERAGE
NET ASSETS
AFTER
EXPENSE
REDUCTIONS
RATIO OF NET .67% 1.41% 1.80% .80% .11%
INVESTMENT
INCOME TO
AVERAGE
NET ASSETS
PORTFOLIO 54% 78% 81% 124% 95%
TURNOVER
RATE
AVERAGE $ .0382 $ .0417
COMMISSIO
N RATE E
<TABLE>
<CAPTION>
<S> <C>
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. C NET INVESTMENT
INCOME 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>
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). Load adjusted returns include a 3.00% sales
charge and the effect of a $7.50 trading fee. 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, 1998 YEAR YEARS YEARS
SELECT INSURANCE 42.81% 157.24% 520.14%
SELECT INSURANCE 38.45% 149.44% 501.46%
(LOAD ADJ.)
S&P 500 35.01% 166.84% 422.55%
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 Standard & Poor's
500 Index - a widely recognized, unmanaged index of common stocks.
This benchmark includes 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, 1998 YEAR YEARS YEARS
SELECT INSURANCE 42.81% 20.80% 20.02%
SELECT INSURANCE 38.45% 20.06% 19.65%
(LOAD ADJ.)
S&P 500 35.01% 21.69% 17.98%
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 LONG-TERM GROWTH AND
SHORT-TERM VOLATILITY. UNLIKE THE BROADER MARKET,
HOWEVER, SOME SECTORS MAY NOT HAVE A HISTORY
OF GROWTH IN THE LONG RUN. AND, AS WITH ALL STOCK
FUNDS, THE SHARE PRICE AND RETURN OF A FUND THAT
INVESTS IN A SECTOR WILL VARY. THAT MEANS IF YOU
SELL YOUR SHARES DURING A SECTOR DOWNTURN, YOU
MIGHT LOSE MONEY. BUT IF YOU CAN IDENTIFY A
SECTOR THAT IS ABOUT TO EXPERIENCE RAPID GROWTH
YOU MAY HAVE THE POTENTIAL FOR ABOVE-AVERAGE
GAINS.
(CHECKMARK)
$10,000 OVER 10 YEARS
IMAHDR PRASUN SHR__CHT 19980228 19980305 133459 S00000000000001
Insurance S&P 500
00045 SP001
1988/02/29 9700.00 10000.00
1988/03/31 9471.99 9691.00
1988/04/30 9405.48 9798.57
1988/05/31 9662.00 9883.82
1988/06/30 10099.02 10337.48
1988/07/31 10146.52 10298.20
1988/08/31 10251.03 9948.06
1988/09/30 10602.55 10371.85
1988/10/31 10555.04 10660.19
1988/11/30 10327.03 10507.75
1988/12/31 10584.88 10691.63
1989/01/31 11389.52 11474.26
1989/02/28 11466.16 11188.55
1989/03/31 11734.37 11449.25
1989/04/30 12117.53 12043.46
1989/05/31 12184.59 12531.22
1989/06/30 12452.68 12459.79
1989/07/31 13498.40 13584.91
1989/08/31 13910.93 13851.18
1989/09/30 14102.81 13794.39
1989/10/31 14563.31 13474.36
1989/11/30 14956.65 13749.23
1989/12/31 14589.26 14079.22
1990/01/31 13350.92 13134.50
1990/02/28 13728.22 13303.94
1990/03/31 13660.50 13656.49
1990/04/30 13186.45 13315.08
1990/05/31 14395.77 14613.30
1990/06/30 14434.47 14513.93
1990/07/31 14221.63 14467.48
1990/08/31 12741.42 13159.62
1990/09/30 11638.52 12518.75
1990/10/31 11174.14 12464.92
1990/11/30 12654.35 13270.15
1990/12/31 13157.42 13640.39
1991/01/31 13863.67 14235.11
1991/02/28 15266.48 15252.92
1991/03/31 16272.64 15622.04
1991/04/30 16185.57 15659.53
1991/05/31 16591.90 16336.03
1991/06/30 15560.49 15587.84
1991/07/31 16138.26 16314.23
1991/08/31 16040.33 16700.88
1991/09/30 16197.01 16421.97
1991/10/31 16686.64 16642.03
1991/11/30 16539.75 15971.35
1991/12/31 17983.62 17798.47
1992/01/31 17963.96 17467.42
1992/02/29 18445.49 17694.50
1992/03/31 18180.16 17349.46
1992/04/30 17718.28 17859.53
1992/05/31 17954.13 17947.04
1992/06/30 18329.75 17679.63
1992/07/31 19368.29 18402.73
1992/08/31 18800.84 18025.47
1992/09/30 19796.55 18238.17
1992/10/31 20642.38 18302.01
1992/11/30 21349.01 18926.11
1992/12/31 22030.14 19158.90
1993/01/31 22951.23 19319.83
1993/02/28 23384.68 19582.58
1993/03/31 24620.01 19995.77
1993/04/30 24034.18 19511.88
1993/05/31 23415.13 20034.79
1993/06/30 23664.92 20092.89
1993/07/31 24490.32 20012.52
1993/08/31 25739.27 20771.00
1993/09/30 25826.15 20611.06
1993/10/31 25076.78 21037.71
1993/11/30 23545.46 20837.85
1993/12/31 23831.43 21089.99
1994/01/31 24152.67 21807.05
1994/02/28 23093.76 21216.08
1994/03/31 22011.05 20291.06
1994/04/30 22249.01 20550.78
1994/05/31 23272.23 20887.82
1994/06/30 23141.35 20376.06
1994/07/31 23569.67 21044.40
1994/08/31 24212.16 21907.22
1994/09/30 24045.59 21370.49
1994/10/31 23748.14 21851.33
1994/11/30 22546.46 21055.50
1994/12/31 23748.14 21367.76
1995/01/31 24604.79 21921.82
1995/02/28 25354.35 22776.12
1995/03/31 25758.88 23448.24
1995/04/30 25996.86 24138.79
1995/05/31 26569.01 25103.62
1995/06/30 27403.38 25686.77
1995/07/31 28225.84 26538.55
1995/08/31 29048.30 26605.16
1995/09/30 30490.59 27727.90
1995/10/31 29572.77 27628.91
1995/11/30 31336.89 28841.82
1995/12/31 32014.78 29397.31
1996/01/31 32947.01 30398.00
1996/02/29 32836.62 30679.78
1996/03/31 32468.63 30975.23
1996/04/30 32065.91 31431.81
1996/05/31 32713.96 32242.43
1996/06/30 33299.69 32365.28
1996/07/31 32564.41 30935.38
1996/08/31 33935.28 31587.81
1996/09/30 35592.79 33365.57
1996/10/31 37462.15 34285.79
1996/11/30 39767.71 36877.45
1996/12/31 39604.36 36146.91
1997/01/31 41231.40 38405.37
1997/02/28 42122.40 38706.47
1997/03/31 39849.71 37116.02
1997/04/30 42201.53 39331.84
1997/05/31 45301.99 41726.37
1997/06/30 48619.08 43595.71
1997/07/31 52721.45 47064.62
1997/08/31 50000.08 44428.06
1997/09/30 53195.32 46861.38
1997/10/31 51787.24 45296.21
1997/11/30 52816.22 47392.97
1997/12/31 56424.70 48206.71
1998/01/31 55653.13 48739.88
1998/02/27 60146.46 52255.00
IMATRL PRASUN SHR__CHT 19980228 19980305 133502 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Insurance Portfolio on February 29, 1988,
and the current 3.00% sales charge was paid. As the chart shows, by
February 28, 1998, the value of the investment would have grown to
$60,146 - a 501.46% increase on the initial investment, and includes
the effect of a $7.50 trading fee. 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
$52,255 - a 422.55% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1998
% OF FUND'S
INVESTMENTS
SUNAMERICA, INC. 4.6
PROGRESSIVE CORP. 4.0
TRANSAMERICA CORP. 3.9
ALLSTATE CORP. 3.9
MARSH & MCLENNAN COMPANIES, INC. 3.5
PROVIDIAN FINANCIAL CORP. 3.2
HARTFORD FINANCIAL SERVICES GROUP, INC. 2.8
AMERICAN INTERNATIONAL GROUP, INC. 2.5
AON CORP. 2.5
UNUM CORP. 2.4
TOP INDUSTRIES AS OF FEBRUARY 28, 1998
ROW: 1, COL: 1, VALUE: 16.3
ROW: 1, COL: 2, VALUE: 6.2
ROW: 1, COL: 3, VALUE: 6.9
ROW: 1, COL: 4, VALUE: 7.8
ROW: 1, COL: 5, VALUE: 19.9
ROW: 1, COL: 6, VALUE: 42.9
PROPERTY-CASUALTY &
REINSURANCE 42.9%
LIFE INSURANCE 19.9%
INSURANCE CARRIERS 7.8%
INSURANCE BROKERS & SERVICES 6.9%
FINANCIAL SERVICES 6.2%
ALL OTHERS 16.3%
*
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
INSURANCE PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Thomas Allen,
Portfolio Manager
of Fidelity Select
Insurance Portfolio
Q. HOW DID THE FUND PERFORM, TOM?
A. The fund did very well. For the 12 months that ended February 28,
1998, the fund had a total return of 42.81%, compared to the 35.01%
return of the Standard & Poor's 500 Index.
Q. WHAT WAS THE INVESTMENT ENVIRONMENT LIKE DURING THE YEAR?
A. It was a very good year for insurance stocks. Stock performance was
aided by a variety of factors, including consolidation within the
industry, double-digit earnings growth rates and a positive
interest-rate environment.
Q. WHAT STRATEGIES DID YOU FOLLOW DURING THE YEAR?
A. I tried to maintain investments representative of the insurance
industry as a whole, including property and casualty insurers, life
insurance companies, financial guarantee companies, insurance brokers
and companies with health care exposure. I also tried to focus on
niche and specialty mid-capitalization and smaller insurance companies
that either had superior earnings growth rates or were potential
acquisition targets by larger companies. As I mentioned, consolidation
continued and helped support fund performance. In addition, I also
allocated a portion of the portfolio, almost 10%, to foreign insurance
companies. The great majority of those investments were in Bermuda, a
base for many insurance companies. However, I also have invested in
foreign insurance companies outside Bermuda that I believe offer an
opportunity for good performance. While the fund can invest in foreign
companies, I don't expect foreign investments ever to become a
dominant theme.
Q. THE TWO BIGGEST COMPONENTS OF THE INDUSTRY ARE PROPERTY AND
CASUALTY COMPANIES, AS WELL AS LIFE INSURANCE COMPANIES. HOW DID
PROPERTY AND CASUALTY INSURERS DO?
A. They did very well, helped by weather and improvements in auto
insurance profitability. The weather was the best in years, helping
limit property and casualty insurers' loss costs. Recent tornado
damage in Florida and ice damage in the Northeast did and will produce
claims, but probably not at the extraordinary levels of some of the
catastrophes of recent years. In addition, recent flood damage in
California has not appeared to create large losses for the insurance
industry so far. This may be due to the fact that private carriers
typically do not provide flood insurance. On the auto side, insurers
appear to have made significant gains controlling bodily injury costs,
including soft-tissue injuries that can't be detected by x-rays and
that can be difficult to disprove.
Q. HOW DID LIFE INSURERS FARE DURING THE YEAR?
A. Life insurance companies had healthy business fundamentals, which
contributed to double-digit earnings growth. The stable-to-declining
interest-rate environment helped. The prices of life insurance stocks
also have been supported by the consolidation trend.
Q. WHAT WERE SOME OF THE STRONG CONTRIBUTORS TO PERFORMANCE?
A. Integon, an auto insurer acquired by General Motors Corporation,
was a good investment for the fund, as was American Bankers, a former
holding which was the subject of a bidding war between Cendant and
American International Group (AIG). Capmac, a municipal bond insurer
acquired by MBIA, was another merger-and-acquisition stock that
helped. Providian, a credit card company that was a spinout of an
insurance company, was a solid contributor in 1997. Allstate was also
a strong performer.
Q. WERE THERE ANY DISAPPOINTMENTS?
A. Yes. The stock performance of Frontier, a property and casualty
specialty insurer, was hurt by the announcement of the illness and
subsequent death of its CEO, as well as by earnings growth below the
expectations of analysts. In addition, the fund would have been helped
if it had owned more of Cincinnati Financial, whose stock price rose
steadily and then jumped after the announcement that it would join the
S&P 500 Index.
Q. WHAT IS YOUR OUTLOOK?
A. I remain cautious on the property and casualty area, primarily
because the pricing environment is very difficult. The industry has an
excess of capital, so pricing is very competitive. The fundamentals
among the life insurance companies remain fine, although a dramatic
change in interest rates or underwriting problems can always surprise
investors negatively.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET AND OTHER CONDITIONS.
FUND FACTS
START DATE: DECEMBER 16, 1985
FUND NUMBER: 045
TRADING SYMBOL: FSPCX
SIZE: AS OF FEBRUARY 28, 1998, MORE THAN
$125 MILLION
MANAGER: THOMAS ALLEN, SINCE FEBRUARY 1997;
ANALYST, PROPERTY, CASUALTY AND MULTI-LINE
INSURANCE, SINCE 1995; JOINED FIDELITY IN 1995
(CHECKMARK)
INSURANCE PORTFOLIO
INVESTMENTS FEBRUARY 28, 1998
SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENT IN SECURITIES
COMMON STOCKS - 93.5%
SHARES VALUE (NOTE 1)
BANKS - 3.2%
NATIONAL COMMERCIAL BANKS - 3.2%
Providian Financial Corp. 72,700 $ 4,125,717
CREDIT & OTHER FINANCE - 6.2%
FINANCIAL SERVICES - 6.2%
Equitable Companies, Inc. 54,500 2,851,031
Transamerica Corp. 42,900 4,995,169
7,846,200
INSURANCE - 84.1%
ACCIDENT & HEALTH INSURANCE - 1.6%
Provident Companies, Inc. 34,300 1,234,800
UICI (a) 25,700 825,613
2,060,413
INSURANCE BROKERS & SERVICES - 6.9%
Gallagher (Arthur J.) & Co. 26,200 1,082,388
Marsh & McLennan Companies, Inc. 51,800 4,490,413
Mutual Risk Management Ltd. 41,200 1,318,400
Sedgwick Group PLC 222,280 541,090
Stirling Cooke Brown Holdings Ltd. (a) 51,000 1,262,250
8,694,541
INSURANCE CARRIERS - 7.8%
AFLAC, Inc. 40,500 2,488,219
AMBAC, Inc. 47,000 2,502,750
Blanch E.W. Holdings, Inc. 26,600 955,938
MBIA, Inc. 19,900 1,456,431
MGIC Investment Corp. 34,100 2,512,744
9,916,082
LIFE INSURANCE - 19.9%
Amerus Life Holdings, Inc. 16,999 554,592
Aon Corp. 52,700 3,152,119
Hartford Life, Inc. Class A 29,600 1,274,650
Irish Life PLC 32,000 247,784
Istituto Nazionale Delle
Assicurazioni Spa 540,000 1,467,171
Jefferson Pilot Corp. 22,200 1,862,025
Life RE Corp. 27,300 1,736,963
Nationwide Financial Services, Inc.
Class A 30,200 1,328,800
Penn Treaty American Corp. (a) 14,300 446,875
Protective Life Corp. 16,600 1,147,475
Reliastar Financial Corp. 25,692 1,221,976
SunAmerica, Inc. 127,800 5,790,938
Torchmark Corp. 41,800 1,946,313
UNUM Corp. 58,900 3,029,669
25,207,350
MULTI-LINE INSURANCE - 4.0%
CIGNA Corp. 5,500 1,050,500
Exel Ltd. 25,200 1,667,925
Lincoln National Corp. 16,100 1,348,375
Willis Corroon PLC ADR 88,100 1,035,175
5,101,975
PROPERTY-CASUALTY & REINSURANCE - 42.9%
ACE Ltd. 28,800 2,847,600
Allmerica Financial Corp. 6,373 391,940
Allstate Corp. 52,700 4,914,275
American International Group, Inc. 26,700 3,209,006
Chartwell Re Corp. 25,800 790,125
Chubb Corp. (The) 7,700 614,556
Cincinnati Financial Corp. 4,400 594,000
Enhance Financial Services Group Corp. 37,000 2,296,313
SHARES VALUE (NOTE 1)
Fremont General Corp. 20,200 $ 1,185,488
General Re Corp. 8,600 1,831,800
HCC Insurance Holdings Inc. 104,600 2,144,300
HSB Group, Inc. 30,000 1,893,750
Hartford Financial Services Group, Inc. 36,100 3,546,825
Horace Mann Educators Corp. 33,400 1,185,700
Mercury General Corp. 18,600 1,055,550
Old Republic International Corp. 45,600 1,923,750
Orion Capital Corp. 27,700 1,352,106
PMI Group, Inc. 29,000 2,109,750
Paula Financial 54,700 1,305,963
Philadelphia Consolidated
Holding Corp. (a) 57,100 1,156,275
Progressive Corp. 44,100 5,110,088
Reinsurance Group of America, Inc. 40,300 1,846,244
RenaissanceRe Holdings Ltd. 33,200 1,440,050
SAFECO Corp. 34,400 1,803,850
Transatlantic Holdings, Inc. 9,100 688,188
Travelers Group, Inc. (The) 27,299 1,521,919
USF&G Corp. 106,100 2,592,819
Terra Nova (Bermuda) Holdings Ltd. 64,198 1,833,655
Vesta Insurance Group Corp. 22,700 1,300,994
54,486,879
SURETY INSURANCE - 1.0%
FPIC Insurance Group, Inc. (a) 45,400 1,316,600
TOTAL INSURANCE 106,783,840
TOTAL COMMON STOCKS
(Cost $98,886,076) 118,755,757
CASH EQUIVALENTS - 6.5%
Taxable Central Cash Fund (b)
(Cost $8,212,727) 8,212,727 8,212,727
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $107,098,803) $ 126,968,484
LEGEND
1. Non-income producing
2. At period end, the seven-day yield on the Taxable Central Cash Fund
was 5.62%. 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 $200,487,247 and $158,927,397, 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 $45,832 for the
period (see Note 4 of Notes to Financial Statements).
INCOME TAX INFORMATION
At February 28, 1998, the aggregate cost of investment securities for
income tax purposes was $107,483,107. Net unrealized appreciation
aggregated $19,485,377, of which $19,540,158 related to appreciated
investment securities and $54,781 related to depreciated investment
securities.
The fund hereby designates approximately $4,638,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 22% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate
shareholders (unaudited).
The fund will notify shareholders in January 1999 of this percentage
for use in preparing 1998 income tax returns.
INSURANCE PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1998
ASSETS
INVESTMENT IN $ 126,968,484
SECURITIES,
AT VALUE
(COST
$107,098
,803) -
SEE
ACCOMPAN
YING
SCHEDULE
RECEIVABLE 1,122,636
FOR FUND
SHARES
SOLD
DIVIDENDS 103,633
RECEIVABLE
INTEREST 39,939
RECEIVABLE
REDEMPTION 194
FEES
RECEIVABLE
OTHER 83
RECEIVABLE
S
TOTAL 128,234,969
ASSETS
LIABILITIES
PAYABLE TO $ 398
CUSTODIAN
BANK
PAYABLE FOR 2,511,004
INVESTMENT
S
PURCHASED
PAYABLE FOR 412,595
FUND
SHARES
REDEEMED
ACCRUED 60,312
MANAGEM
ENT FEE
OTHER 100,060
PAYABLES
AND
ACCRUED
EXPENSES
TOTAL 3,084,369
LIABILITIES
NET ASSETS $ 125,150,600
NET ASSETS
CONSIST OF:
PAID IN $ 87,211,248
CAPITAL
UNDISTRIBUTE 27,193
D NET
INVESTMENT
INCOME
ACCUMULATED 18,042,425
UNDISTRIBUT
ED NET
REALIZED
GAIN (LOSS)
ON
INVESTMENT
S AND
FOREIGN
CURRENCY
TRANSACTIO
NS
NET 19,869,734
UNREALIZED
APPRECIATI
ON
(DEPRECIATI
ON) ON
INVESTMENT
S
AND ASSETS
AND
LIABILITIES
IN
FOREIGN
CURRENCIES
NET ASSETS, $ 125,150,600
FOR
2,972,90
3
SHARES
OUTSTANDIN
G
NET ASSET $42.10
VALUE AND
REDEMPTIO
N PRICE
PER SHARE
($125,15
0,600 (DIVIDED BY)
2,972,90
3 SHARES)
MAXIMUM $43.40
OFFERING
PRICE PER
SHARE
(100/97.
00 OF
$42.10)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1998
INVESTMENT $ 1,168,404
INCOME
DIVIDENDS
INTEREST 438,686
TOTAL 1,607,090
INCOME
EXPENSES
MANAGEMEN $ 657,447
T FEE
TRANSFER 729,868
AGENT FEES
ACCOUNTING 114,165
FEES AND
EXPENSES
NON-INTEREST 405
ED
TRUSTEES'
COMPENSAT
ION
CUSTODIAN 13,511
FEES AND
EXPENSES
REGISTRATION 64,973
FEES
AUDIT 23,605
LEGAL 517
MISCELLANEO 662
US
TOTAL 1,605,153
EXPENSES
BEFORE
REDUCTIONS
EXPENSE (23,534) 1,581,619
REDUCTIONS
NET 25,471
INVESTMEN
T INCOME
REALIZED
AND
UNREALIZED
GAIN (LOSS)
NET REALIZED
GAIN (LOSS)
ON:
INVESTMENT 23,082,746
SECURITIES
FOREIGN 1,722 23,084,468
CURRENCY
TRANSACTIO
NS
CHANGE IN
NET
UNREALIZED
APPRECIATI
ON
(DEPRECIATI
ON) ON:
INVESTMENT 14,487,220
SECURITIES
ASSETS AND 53 14,487,273
LIABILITIES
IN
FOREIGN
CURRENCIES
NET GAIN 37,571,741
(LOSS)
NET INCREASE $ 37,597,212
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
OTHER $ 686,986
INFORMATIO
N
SALES
CHARGES
PAID TO
FDC
SALES $ 22,704
CHARGES -
DEALERS'
PORTION
DEFERRED $ 786
SALES
CHARGES
WITHHELD
BY FDC
EXCHANGE $ 68,625
FEES
WITHHELD
BY FSC
EXPENSE $ 23,335
REDUCTIONS
DIRECTED
BROKERAGE
ARRANGEM
ENTS
CUSTODIA 199
N CREDITS
$ 23,534
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
FEBRUARY 28, FEBRUARY 28,
1998 1997
OPERATIONS $ 25,471 $ 17,362
NET
INVESTMENT
INCOME
NET 23,084,468 5,349,488
REALIZED
GAIN (LOSS)
CHANGE IN 14,487,273 2,095,799
NET
UNREALIZED
APPRECIATI
ON
(DEPRECIATI
ON)
NET 37,597,212 7,462,649
INCREASE
(DECREAS
E) IN NET
ASSETS
RESULTING
FROM
OPERATIO
NS
DISTRIBUTIONS - (35,964)
TO
SHAREHOLD
ERS
FROM NET
INVESTMENT
INCOME
FROM NET (6,676,096) (1,652,709)
REALIZED
GAIN
TOTAL (6,676,096) (1,688,673)
DISTRIBUTIO
NS
SHARE 244,332,955 82,947,138
TRANSACTIO
NS
NET
PROCEEDS
FROM SALES
OF SHARES
REINVESTM 6,593,993 1,660,671
ENT OF
DISTRIBUTIO
NS
COST OF (199,288,742) (87,137,695)
SHARES
REDEEMED
NET 51,638,206 (2,529,886)
INCREASE
(DECREAS
E) IN NET
ASSETS
RESULTING
FROM
SHARE
TRANSACTI
ONS
REDEMPTIO 224,405 129,084
N FEES
TOTAL 82,783,727 3,373,174
INCREASE
(DECREASE)
IN NET
ASSETS
NET ASSETS
BEGINNING 42,366,873 38,993,699
OF PERIOD
END OF $ 125,150,600 $ 42,366,873
PERIOD
(INCLUDIN
G
UNDISTRIB
UTED NET
INVESTME
NT
INCOME
OF
$27,19
3 AND
$5,935,
RESPECTIV
ELY)
OTHER
INFORMATION
SHARES
SOLD 6,761,043 2,922,405
ISSUED IN 185,836 58,747
REINVESTME
NT OF
DISTRIBUTIO
NS
REDEEMED (5,272,969) (3,138,702)
NET 1,673,910 (157,550)
INCREASE
(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>
YEARS ENDED FEBRUARY 28, YEAR ENDED YEARS ENDED FEBRUARY 28,
FEBRUARY 29,
SELECTED PER-SHARE DATA 1998 1997 1996 1995 1994
</TABLE>
NET ASSET $ 32.62 $ 26.77 $ 21.31 $ 19.41 $ 21.58
VALUE,
BEGINNING
OF PERIOD
INCOME FROM
INVESTMENT
OPERATION
S
NET .01 .01 .06 .05 -
INVESTMENT
INCOME
(LOSS) C
NET 12.93 7.21 6.15 1.78 (.24)
REALIZED
AND
UNREALIZED
GAIN (LOSS)
TOTAL FROM 12.94 7.22 6.21 1.83 (.24)
INVESTMENT
OPERATIONS
LESS
DISTRIBUTIO
NS
FROM NET - (.03) (.07) - (.01)
INVESTMENT
INCOME
FROM NET (3.54) (1.45) (.72) - (1.96)
REALIZED
GAIN
TOTAL (3.54) (1.48) (.79) - (1.97)
DISTRIBUTIO
NS
REDEMPTION .08 .11 .04 .07 .04
FEES
ADDED TO
PAID IN
CAPITAL
NET ASSET $ 42.10 $ 32.62 $ 26.77 $ 21.31 $ 19.41
VALUE, END
OF PERIOD
TOTAL 42.81% 28.28% 29.51% 9.79% (1.24)%
RETURN A, B
RATIOS AND
SUPPLEME
NTAL DATA
NET ASSETS, $ 125,151 $ 42,367 $ 38,994 $ 21,838 $ 18,419
END OF
PERIOD
(000
OMITTED)
RATIO OF 1.45% 1.82% 1.77% 2.36% 1.93%
EXPENSES
TO AVERAGE
NET ASSETS
RATIO OF 1.43% D 1.77% D 1.74% D 2.34% D 1.93%
EXPENSES
TO AVERAGE
NET ASSETS
AFTER
EXPENSE
REDUCTIONS
RATIO OF NET .02% .05% .26% .25% (.02)%
INVESTMENT
INCOME
(LOSS) TO
AVERAGE
NET ASSETS
PORTFOLIO 157% 142% 164% 265% 101%
TURNOVER
RATE
AVERAGE $ .0325 $ .0261
COMMISSIO
N RATE E
<ERROR: WIDE TABLE>
ERROR: THE FOLLOWING TABLE: "ASSETS" IS TOO WIDE!
TABLE WIDTH IS 170 CHARACTERS.
<TABLE>
<CAPTION>
<S> <C>
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. 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>
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). Load adjusted returns include a 3.00% sales
charge and the effect of a $7.50 trading fee. 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, 1998 YEAR YEARS YEARS
SELECT REGIONAL BANKS 36.64% 216.75% 863.48%
SELECT REGIONAL BANKS 32.47% 207.18% 834.50%
(LOAD ADJ.)
S&P 500 35.01% 166.84% 422.55%
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 Standard & Poor's
500 Index - a widely recognized, unmanaged index of common stocks.
This benchmark includes 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, 1998 YEAR YEARS YEARS
SELECT REGIONAL BANKS 36.64% 25.93% 25.43%
SELECT REGIONAL BANKS 32.47% 25.16% 25.04%
(LOAD ADJ.)
S&P 500 35.01% 21.69% 17.98%
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 LONG-TERM GROWTH AND
SHORT-TERM VOLATILITY. UNLIKE THE BROADER MARKET,
HOWEVER, SOME SECTORS MAY NOT HAVE A HISTORY
OF GROWTH IN THE LONG RUN. AND, AS WITH ALL STOCK
FUNDS, THE SHARE PRICE AND RETURN OF A FUND THAT
INVESTS IN A SECTOR WILL VARY. THAT MEANS IF YOU
SELL YOUR SHARES DURING A SECTOR DOWNTURN, YOU
MIGHT LOSE MONEY. BUT IF YOU CAN IDENTIFY A
SECTOR THAT IS ABOUT TO EXPERIENCE RAPID GROWTH
YOU MAY HAVE THE POTENTIAL FOR ABOVE-AVERAGE
GAINS.
(CHECKMARK)
$10,000 OVER 10 YEARS
IMAHDR PRASUN SHR__CHT 19980228 19980305 141526 S00000000000001
REGIONAL BANKS S&P 500
00507 SP001
1988/02/29 9700.00 10000.00
1988/03/31 9919.46 9691.00
1988/04/30 9809.73 9798.57
1988/05/31 9985.29 9883.82
1988/06/30 10687.56 10337.48
1988/07/31 10742.42 10298.20
1988/08/31 10599.77 9948.06
1988/09/30 11005.77 10371.85
1988/10/31 11137.44 10660.19
1988/11/30 10863.12 10507.75
1988/12/31 11103.75 10691.63
1989/01/31 11808.75 11474.26
1989/02/28 11985.00 11188.55
1989/03/31 12972.00 11449.25
1989/04/30 13312.75 12043.46
1989/05/31 14335.00 12531.22
1989/06/30 14096.56 12459.79
1989/07/31 15351.17 13584.91
1989/08/31 15729.92 13851.18
1989/09/30 15860.11 13794.39
1989/10/31 14392.46 13474.36
1989/11/30 14368.79 13749.23
1989/12/31 14062.47 14079.22
1990/01/31 12795.47 13134.50
1990/02/28 13322.34 13303.94
1990/03/31 12996.18 13656.49
1990/04/30 12256.05 13315.08
1990/05/31 13109.08 14613.30
1990/06/30 12594.76 14513.93
1990/07/31 11829.54 14467.48
1990/08/31 10725.61 13159.62
1990/09/30 9420.98 12518.75
1990/10/31 9145.00 12464.92
1990/11/30 10361.82 13270.15
1990/12/31 11155.86 13640.39
1991/01/31 11896.18 14235.11
1991/02/28 12904.55 15252.92
1991/03/31 13632.11 15622.04
1991/04/30 14551.12 15659.53
1991/05/31 15495.67 16336.03
1991/06/30 14576.65 15587.84
1991/07/31 15789.25 16314.23
1991/08/31 16925.25 16700.88
1991/09/30 16593.39 16421.97
1991/10/31 17282.65 16642.03
1991/11/30 16491.27 15971.35
1991/12/31 18495.63 17798.47
1992/01/31 19652.45 17467.42
1992/02/29 21239.71 17694.50
1992/03/31 20943.78 17349.46
1992/04/30 22167.85 17859.53
1992/05/31 23109.45 17947.04
1992/06/30 23340.03 17679.63
1992/07/31 23367.11 18402.73
1992/08/31 22121.58 18025.47
1992/09/30 23150.50 18238.17
1992/10/31 24138.79 18302.01
1992/11/30 26115.38 18926.11
1992/12/31 27470.16 19158.90
1993/01/31 28614.75 19319.83
1993/02/28 29504.98 19582.58
1993/03/31 30762.62 19995.77
1993/04/30 29178.94 19511.88
1993/05/31 28893.72 20034.79
1993/06/30 30505.26 20092.89
1993/07/31 30590.83 20012.52
1993/08/31 31018.67 20771.00
1993/09/30 32088.28 20611.06
1993/10/31 30362.65 21037.71
1993/11/30 29407.13 20837.85
1993/12/31 30539.26 21089.99
1994/01/31 32320.28 21807.05
1994/02/28 31412.31 21216.08
1994/03/31 30888.48 20291.06
1994/04/30 32525.28 20550.78
1994/05/31 34150.66 20887.82
1994/06/30 33302.64 20376.06
1994/07/31 34186.00 21044.40
1994/08/31 35069.35 21907.22
1994/09/30 32984.63 21370.49
1994/10/31 32843.29 21851.33
1994/11/30 30723.23 21055.50
1994/12/31 30605.90 21367.76
1995/01/31 32147.47 21921.82
1995/02/28 33858.25 22776.12
1995/03/31 34140.24 23448.24
1995/04/30 34986.23 24138.79
1995/05/31 37279.79 25103.62
1995/06/30 37749.78 25686.77
1995/07/31 39216.16 26538.55
1995/08/31 40682.54 26605.16
1995/09/30 42524.91 27727.90
1995/10/31 42318.11 27628.91
1995/11/30 44743.27 28841.82
1995/12/31 44919.58 29397.31
1996/01/31 46388.18 30398.00
1996/02/29 47719.71 30679.78
1996/03/31 49129.57 30975.23
1996/04/30 48710.02 31431.81
1996/05/31 49533.57 32242.43
1996/06/30 49151.92 32365.28
1996/07/31 49232.27 30935.38
1996/08/31 51723.01 31587.81
1996/09/30 54274.01 33365.57
1996/10/31 57748.99 34285.79
1996/11/30 62630.04 36877.45
1996/12/31 61039.67 36146.91
1997/01/31 65541.06 38405.37
1997/02/28 68396.11 38706.47
1997/03/31 63790.52 37116.02
1997/04/30 67250.01 39331.84
1997/05/31 69618.12 41726.37
1997/06/30 73578.93 43595.71
1997/07/31 81500.56 47064.62
1997/08/31 76554.78 44428.06
1997/09/30 82359.78 46861.38
1997/10/31 81144.29 45296.21
1997/11/30 84874.58 47392.97
1997/12/31 88847.77 48206.71
1998/01/31 86055.72 48739.88
1998/02/27 93450.39 52255.00
IMATRL PRASUN SHR__CHT 19980228 19980305 141529 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Regional Banks Portfolio on February 29,
1988, and the current 3.00% sales charge was paid. As the chart shows,
by February 28, 1998, the value of the investment would have grown to
$93,450 - a 834.50% increase on the initial investment, and includes
the effect of a $7.50 trading fee. 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
$52,255 - a 422.55% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1998
% OF FUND'S
INVESTMENTS
BANKAMERICA CORP. 6.4
U.S. BANCORP 6.0
NATIONSBANK CORP. 5.7
BANK OF NEW YORK CO., INC. 5.3
WELLS FARGO & CO. 4.7
BANC ONE CORP. 4.6
FIRST CHICAGO NBD CORP. 4.4
NORWEST CORP. 4.2
AMERICAN EXPRESS CO. 4.1
COMERICA, INC. 4.0
TOP REGIONS AS OF FEBRUARY 28, 1998
MIDWEST 23.8%
WEST 22.5%
NORTHEAST 15.6%
SOUTHEAST 12.4%
INTERNATIONAL 3.7%
ALL OTHERS 22.0%
ROW: 1, COL: 1, VALUE: 22.0
ROW: 1, COL: 2, VALUE: 3.7
ROW: 1, COL: 3, VALUE: 12.4
ROW: 1, COL: 4, VALUE: 15.6
ROW: 1, COL: 5, VALUE: 22.5
ROW: 1, COL: 6, VALUE: 23.8
*
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
REGIONAL BANKS PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
NOTE TO SHAREHOLDERS: Christine Schaulat became Portfolio Manager of
Fidelity Select Regional Banks Portfolio on January 31, 1998.
Q. HOW DID THE FUND PERFORM, CHRIS?
A. The fund continued to perform well. For the 12 months that ended
February 28, 1998, the fund generated a return of 36.64%. The Standard
& Poor's 500 Index returned 35.01% over the same period.
Q. HOW HAVE BANK STOCKS BEEN ABLE TO SUSTAIN THEIR STRONG PERFORMANCE?
A. Banks continued to thrive due to a favorable economic backdrop of
low interest rates and low inflation. These conditions were conducive
to better borrowing demand from both businesses and consumers, and
continued to result in increased cash flows within the industry. Banks
also have been able to maintain strong earnings growth rates by
cutting costs effectively. Along the same lines, credit quality -
which can have a big impact on a bank's income statement - has been
fantastic throughout the sector. Since the economy has been so
healthy, banks haven't had to cope with rising loan defaults. These
factors combined to make bank stocks attractive during the period.
Q. THE BIG STORY DURING THE FOURTH QUARTER OF 1997 WAS THE ECONOMIC
AND CURRENCY DILEMMA THAT ENVELOPED SOUTHEAST ASIA. HOW WERE BANK
STOCKS - AND, IN PARTICULAR, THE FUND - AFFECTED BY THIS TURMOIL?
A. With the exception of the two money-center banks the fund held
during the period - Citicorp and Chase Manhattan - the fund's direct
exposure to that region was limited. Unlike regional banks,
money-center banks have a larger business scope that often expands
into international markets. Both Citicorp and Chase Manhattan derive a
portion of their revenues from Southeast Asia and both stocks declined
during this volatile period. Banks overall were concerned about
indirect exposure to Asia. Some of the regional banks lend to
companies that derive a portion of their revenues from Asia. As a
result, many banks scrutinized their loan books to determine which
companies would be most vulnerable to the weak Asian markets.
Q. INDUSTRY CONSOLIDATION - VIA MERGERS AND ACQUISITIONS - CONTINUED
TO BE A PREVALENT THEME WITHIN THE SECTOR . . .
A. Consolidation in the banking industry will continue as long as the
potential for substantial cost savings exists. We saw several
acquisitions during the period in which the acquirer announced it
would be able to cut the expenses of the acquired company by 50% or
more by closing overlapping branches and reducing headcount. While
consolidation has been a recurring theme within the sector, I think
there's still plenty of room for more activity.
Q. WHICH STOCKS PERFORMED WELL DURING THE PERIOD? WERE THERE ANY
DISAPPOINTMENTS?
A. The fund's two largest positions - BankAmerica and U.S. Bancorp -
continued to perform positively. Both banks benefited from the sector
trends I discussed earlier. Other stocks that did well included
Comerica and Bank of New York. In terms of negatives, both Chase
Manhattan and BankBoston proved to be disappointing due to their
global lending exposure.
Q. WHAT'S YOUR OUTLOOK?
A. Bank stocks are certainly interest-rate sensitive, so a rapid
increase in rates could be detrimental to earnings. The cornerstone
for the performance of bank stocks, however, is credit quality
conditions. If the sector can maintain the level of quality we
witnessed during the period, bank stocks should continue to be
attractive investments in the future.
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, 1998, more than
$1.3 billion
MANAGER: Christine Schaulat, since January
1998; analyst, regional banks securities; joined
Fidelity in 1997
(checkmark)
REGIONAL BANKS PORTFOLIO
INVESTMENTS FEBRUARY 28, 1998
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 92.6%
SHARES VALUE (NOTE 1)
BANKS - 81.8%
INTERNATIONAL - 3.7%
Allied Irish Bank sponsored ADR 88,900 $ 6,900,863
Bank of Nova Scotia 366,000 9,023,073
Canadian Imperial Bank of Commerce 399,700 12,717,408
HSBC Holdings PLC 194,825 5,608,318
National Bank of Canada 300,000 4,993,854
Royal Bank of Canada 188,600 11,034,507
50,278,023
MID-ATLANTIC - 0.9%
Crestar Financial Corp. 99,466 5,495,497
HUBCO, Inc. 5,731 209,182
PNC Financial Corp. 100,000 5,550,000
11,254,679
MIDWEST - 23.8%
Banc One Corp. 1,090,400 61,607,600
Comerica, Inc. 535,900 54,025,419
Fifth Third Bancorp 18,950 1,497,050
First Chicago NBD Corp. 719,300 59,117,469
First of America Bank Corp. (a) 90,000 6,991,875
Marshall & Ilsley Corp. 228,000 13,366,500
National City Corp. 369,809 24,130,037
Northern Trust Corp. 243,500 18,521,219
Norwest Corp. 1,381,400 56,551,063
Star Banc Corp. 423,300 24,921,788
320,730,020
NORTHEAST - 15.6%
BankBoston Corp. 232,400 23,167,375
Bank of New York Co., Inc. 1,214,848 71,144,536
Fleet Financial Group, Inc. 350,767 27,644,824
Mellon Bank Corp. 851,000 53,027,938
North Fork Bancorp., Inc. 495,200 16,929,650
State Street Corp. 297,800 18,407,763
210,322,086
SOUTHEAST - 12.4%
Compass Bancshares, Inc. 15,800 727,788
First Commerce Corp. 95,000 7,505,000
First Tennessee National Corp. 379,400 12,093,375
First Union Corp. 596,600 31,433,363
NationsBank Corp. 1,115,136 76,386,816
Regions Financial Corp. 25,000 993,750
SunTrust Banks, Inc. 215,900 15,922,625
Synovus Financial Corp. 131,450 4,617,181
Union Planters Corp. 66,200 4,091,988
Wachovia Corp. 165,000 13,117,500
166,889,386
WEST - 22.5%
BankAmerica Corp. 1,109,200 85,963,000
First Security Corp. 337,875 7,834,477
Silicon Valley Bancshares (a) 25,400 1,447,800
UnionBanCal Corp. 16,900 1,573,813
U.S. Bancorp 699,232 80,455,382
Washington Mutual, Inc. 400,600 26,890,275
Wells Fargo & Co. 197,166 63,487,452
Westamerica Bancorporation 495,000 16,891,875
Zions Bancorp 427,300 18,373,900
302,917,974
MONEY CENTER - 2.9%
Citicorp 296,700 39,312,750
TOTAL BANKS 1,101,704,918
SHARES VALUE (NOTE 1)
CREDIT & OTHER FINANCE - 10.8%
FINANCIAL SERVICES - 4.1%
American Express Co. 611,400 $ 55,063,220
PERSONAL CREDIT INSTITUTIONS - 6.7%
Associates First Capital Corp. 493,700 39,496,000
Beneficial Corp. 200,400 23,647,200
Household International, Inc. 176,600 22,935,925
MBNA Corp. 126,000 4,512,375
90,591,500
TOTAL CREDIT & OTHER FINANCE 145,654,720
TOTAL COMMON STOCKS
(Cost $830,525,393) 1,247,359,638
CASH EQUIVALENTS - 7.4%
Taxable Central Cash Fund (b) 67,506,850 67,506,850
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 5.62%, dated
2/27/98 due 3/2/98 $ 32,141,046 32,126,000
TOTAL CASH EQUIVALENTS
(Cost $99,632,850) 99,632,850
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $930,158,243) $ 1,346,992,488
LEGEND
1. Non-income producing
2. At period end, the seven-day yield on the Taxable Central Cash Fund
was 5.62%. 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 $478,026,464 and $240,300,338, respectively (see Note 3 of
Notes to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company.
The commissions paid to these affiliated firms were $70,122 for the
period (see Note 4 of Notes to Financial Statements).
The fund participated in the securities lending program. At the end of
the period, there were no loans outstanding (see Note 6 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 the loans were outstanding amounted to $35,549,000 and
22,433,143, respectively. The weighted average interest rate was 5.9%.
Interest earned from the interfund lending program amounted to $25,738
and is included in the interest income on the statement of operations.
(see Note 5 of Notes to Financial Statements).
INCOME TAX INFORMATION
At February 28, 1998, the aggregate cost of investment securities for
income tax purposes was $930,620,054 Net unrealized appreciation
aggregated $416,372,434, of which $417,329,756 related to appreciated
investment securities and $957,322 related to depreciated investment
securities.
The fund hereby designates approximately $35,016,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 1.57% 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(unaudited).
A total of 99% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate
shareholders (unaudited).
The fund will notify shareholders in January 1999 of these percentages
for use in preparing 1998 income tax returns.
REGIONAL BANKS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1998
ASSETS
INVESTMENT IN $ 1,346,992,488
SECURITIES,
AT
VALUE
(INCLUDING
REPURCHAS
E
AGREEMENT
S OF
$32,126,
000)
(COST
$930,158
,243) -
SEE
ACCOMPAN
YING
SCHEDULE
CASH 970
RECEIVABLE 6,103,141
FOR
INVESTMENT
S SOLD
RECEIVABLE 10,817,409
FOR FUND
SHARES
SOLD
DIVIDENDS 1,737,843
RECEIVABLE
INTEREST 280,436
RECEIVABLE
REDEMPTION 2,024
FEES
RECEIVABLE
OTHER 114
RECEIVABLE
S
TOTAL 1,365,934,425
ASSETS
LIABILITIES
PAYABLE FOR $ 5,939,488
INVESTMENT
S
PURCHASED
PAYABLE FOR 19,757,415
FUND
SHARES
REDEEMED
ACCRUED 647,537
MANAGEM
ENT FEE
OTHER 694,350
PAYABLES
AND
ACCRUED
EXPENSES
TOTAL 27,038,790
LIABILITIES
NET ASSETS $ 1,338,895,635
NET ASSETS
CONSIST OF:
PAID IN $ 891,744,135
CAPITAL
UNDISTRIBUTE 3,805,982
D NET
INVESTMENT
INCOME
ACCUMULATED 26,511,273
UNDISTRIBUT
ED NET
REALIZED
GAIN (LOSS)
ON
INVESTMENT
S AND
FOREIGN
CURRENCY
TRANSACTIO
NS
NET 416,834,245
UNREALIZED
APPRECIATI
ON
(DEPRECIATI
ON) ON
INVESTMENT
S
NET ASSETS, $ 1,338,895,635
FOR
31,008,4
55
SHARES
OUTSTANDIN
G
NET ASSET $43.18
VALUE AND
REDEMPTIO
N PRICE
PER SHARE
($1,338,8
95,635 (DIVIDED BY)
31,008,4
55 SHARES)
MAXIMUM $44.52
OFFERING
PRICE PER
SHARE
(100/97.
00 OF
$43.18)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1998
INVESTMENT $ 19,823,409
INCOME
DIVIDENDS
INTEREST 4,187,128
(INCLUDING
INCOME ON
SECURITIES
LOANED OF
$32,838)
TOTAL 24,010,537
INCOME
EXPENSES
MANAGEMEN $ 6,188,500
T FEE
TRANSFER 5,796,441
AGENT FEES
ACCOUNTING 751,851
AND
SECURITY
LENDING
FEES
NON-INTEREST 4,381
ED
TRUSTEES'
COMPENSAT
ION
CUSTODIAN 33,962
FEES AND
EXPENSES
REGISTRATION 137,014
FEES
AUDIT 49,719
LEGAL 4,650
MISCELLANEO 9,576
US
TOTAL 12,976,094
EXPENSES
BEFORE
REDUCTIONS
EXPENSE (89,877) 12,886,217
REDUCTIONS
NET 11,124,320
INVESTMEN
T INCOME
REALIZED
AND
UNREALIZED
GAIN (LOSS)
NET REALIZED
GAIN (LOSS)
ON:
INVESTMENT 58,737,693
SECURITIES
FOREIGN (14,831) 58,722,862
CURRENCY
TRANSACTIO
NS
CHANGE IN
NET
UNREALIZED
APPRECIATI
ON
(DEPRECIATI
ON) ON:
INVESTMENT 242,817,014
SECURITIES
ASSETS AND (132) 242,816,882
LIABILITIES
IN
FOREIGN
CURRENCIES
NET GAIN 301,539,744
(LOSS)
NET INCREASE $ 312,664,064
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
OTHER $ 7,288,315
INFORMATIO
N
SALES
CHARGES
PAID TO
FDC
SALES $ 26,311
CHARGES -
DEALERS'
PORTION
DEFERRED $ 4,790
SALES
CHARGES
WITHHELD
BY FDC
EXCHANGE $ 235,725
FEES
WITHHELD
BY FSC
EXPENSE $ 82,710
REDUCTIONS
DIRECTED
BROKERAGE
ARRANGEM
ENTS
CUSTODIA 1,079
N CREDITS
TRANSFER 6,088
AGENT
CREDITS
$ 89,877
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
FEBRUARY 28, FEBRUARY 28,
1998 1997
OPERATIONS $ 11,124,320 $ 5,674,368
NET
INVESTMENT
INCOME
NET 58,722,862 27,631,220
REALIZED
GAIN (LOSS)
CHANGE IN 242,816,882 124,368,117
NET
UNREALIZED
APPRECIATI
ON
(DEPRECIATI
ON)
NET 312,664,064 157,673,705
INCREASE
(DECREAS
E) IN NET
ASSETS
RESULTING
FROM
OPERATIO
NS
DISTRIBUTIONS (7,980,022) (4,305,859)
TO
SHAREHOLD
ERS
FROM NET
INVESTMENT
INCOME
FROM NET (35,012,104) (22,112,110)
REALIZED
GAIN
TOTAL (42,992,126) (26,417,969)
DISTRIBUTIO
NS
SHARE 1,093,335,837 797,514,088
TRANSACTIO
NS
NET
PROCEEDS
FROM SALES
OF SHARES
REINVESTM 42,239,518 25,807,948
ENT OF
DISTRIBUTIO
NS
COST OF (905,908,084) (432,510,460)
SHARES
REDEEMED
NET 229,667,271 390,811,576
INCREASE
(DECREAS
E) IN NET
ASSETS
RESULTING
FROM
SHARE
TRANSACTI
ONS
REDEMPTIO 1,604,750 706,766
N FEES
TOTAL 500,943,959 522,774,078
INCREASE
(DECREASE)
IN NET
ASSETS
NET ASSETS
BEGINNING 837,951,676 315,177,598
OF PERIOD
END OF $ 1,338,895,635 $ 837,951,676
PERIOD
(INCLUDIN
G
UNDISTRIB
UTED NET
INVESTME
NT
INCOME
OF
$3,805,
982 AND
$2,586,
443,
RESPECTIV
ELY)
OTHER
INFORMATION
SHARES
SOLD 29,339,423 27,686,494
ISSUED IN 1,067,874 968,599
REINVESTME
NT OF
DISTRIBUTIO
NS
REDEEMED (24,927,202) (16,057,387)
NET 5,480,095 12,597,706
INCREASE
(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>
YEARS ENDED FEBRUARY 28, YEAR ENDED YEARS ENDED FEBRUARY 28,
FEBRUARY 29,
SELECTED PER-SHARE DATA 1998 1997 1996 1995 1994
</TABLE>
NET ASSET $ 32.82 $ 24.37 $ 18.01 $ 17.99 $ 20.88
VALUE,
BEGINNING
OF PERIOD
INCOME FROM
INVESTMENT
OPERATION
S
NET .40 .37 .52 .37 .19
INVESTMENT
INCOME C
NET 11.41 9.70 6.78 .87 .93
REALIZED
AND
UNREALIZED
GAIN (LOSS)
TOTAL FROM 11.81 10.07 7.30 1.24 1.12
INVESTMENT
OPERATIONS
LESS
DISTRIBUTIO
NS
FROM NET (.28) (.27) (.25) (.29) (.15)
INVESTMENT
INCOME
FROM NET (1.23) (1.40) (.72) (.98) (3.92)
REALIZED
GAIN
TOTAL (1.51) (1.67) (.97) (1.27) (4.07)
DISTRIBUTIO
NS
REDEMPTION .06 .05 .03 .05 .06
FEES
ADDED TO
PAID IN
CAPITAL
NET ASSET $ 43.18 $ 32.82 $ 24.37 $ 18.01 $ 17.99
VALUE, END
OF PERIOD
TOTAL 36.64% 43.33% 40.94% 7.79% 6.46%
RETURN A, B
RATIOS AND
SUPPLEME
NTAL DATA
NET ASSETS, $ 1,338,896 $ 837,952 $ 315,178 $ 164,603 $ 97,429
END OF
PERIOD
(000
OMITTED)
RATIO OF 1.25% 1.46% 1.41% 1.58% 1.62%
EXPENSES
TO AVERAGE
NET ASSETS
RATIO OF 1.24% D 1.45% D 1.40% D 1.56% D 1.60% D
EXPENSES
TO AVERAGE
NET ASSETS
AFTER
EXPENSE
REDUCTIONS
RATIO OF NET 1.07% 1.36% 2.42% 1.99% .88%
INVESTMENT
INCOME TO
AVERAGE
NET ASSETS
PORTFOLIO 25% 43% 103% 106% 74%
TURNOVER
RATE
AVERAGE $ .0400 $ .0384
COMMISSIO
N RATE E
<TABLE>
<CAPTION>
<S> <C>
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.
C NET INVESTMENT INCOME 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>
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). Load adjusted returns include a 3.00% sales
charge and the effect of a $7.50 trading fee. 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, 1998 YEAR YEARS YEARS
SELECT BIOTECHNOLOGY 16.11% 99.46% 462.13%
SELECT BIOTECHNOLOGY 12.56% 93.40% 445.20%
(LOAD ADJ.)
S&P 500 35.01% 166.84% 422.55%
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 Standard & Poor's
500 Index - a widely recognized, unmanaged index of common stocks.
This benchmark includes 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, 1998 YEAR YEARS YEARS
SELECT BIOTECHNOLOGY 16.11% 14.81% 18.85%
SELECT BIOTECHNOLOGY 12.56% 14.10% 18.48%
(LOAD ADJ.)
S&P 500 35.01% 21.69% 17.98%
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 LONG-TERM GROWTH AND
SHORT-TERM VOLATILITY. 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
BIOTECHNOLOGY S&P 500
00042 SP001
1988/02/29 9700.00 10000.00
1988/03/31 9635.76 9691.00
1988/04/30 9461.40 9798.57
1988/05/31 9277.86 9883.82
1988/06/30 9589.88 10337.48
1988/07/31 9580.70 10298.20
1988/08/31 9314.57 9948.06
1988/09/30 9507.28 10371.85
1988/10/31 9406.34 10660.19
1988/11/30 8965.85 10507.75
1988/12/31 9268.68 10691.63
1989/01/31 9911.07 11474.26
1989/02/28 9837.65 11188.55
1989/03/31 10562.63 11449.25
1989/04/30 10920.53 12043.46
1989/05/31 11416.08 12531.22
1989/06/30 11122.42 12459.79
1989/07/31 12150.24 13584.91
1989/08/31 12609.08 13851.18
1989/09/30 13141.34 13794.39
1989/10/31 13187.23 13474.36
1989/11/30 13600.19 13749.23
1989/12/31 13340.65 14079.22
1990/01/31 12342.43 13134.50
1990/02/28 13508.57 13303.94
1990/03/31 14077.65 13656.49
1990/04/30 14254.90 13315.08
1990/05/31 16260.66 14613.30
1990/06/30 17396.20 14513.93
1990/07/31 17443.37 14467.48
1990/08/31 16905.63 13159.62
1990/09/30 16528.27 12518.75
1990/10/31 16669.78 12464.92
1990/11/30 18688.65 13270.15
1990/12/31 19256.92 13640.39
1991/01/31 21468.47 14235.11
1991/02/28 24510.56 15252.92
1991/03/31 27040.81 15622.04
1991/04/30 25862.60 15659.53
1991/05/31 27504.37 16336.03
1991/06/30 26044.05 15587.84
1991/07/31 28388.63 16314.23
1991/08/31 30377.96 16700.88
1991/09/30 31951.16 16421.97
1991/10/31 35097.56 16642.03
1991/11/30 32752.99 15971.35
1991/12/31 38329.97 17798.47
1992/01/31 37561.68 17467.42
1992/02/29 34677.99 17694.50
1992/03/31 32046.88 17349.46
1992/04/30 29057.94 17859.53
1992/05/31 31141.78 17947.04
1992/06/30 30595.18 17679.63
1992/07/31 32194.56 18402.73
1992/08/31 30180.96 18025.47
1992/09/30 30077.40 18238.17
1992/10/31 31550.21 18302.01
1992/11/30 34656.90 18926.11
1992/12/31 34365.41 19158.90
1993/01/31 32599.36 19319.83
1993/02/28 27337.50 19582.58
1993/03/31 27748.77 19995.77
1993/04/30 28462.45 19511.88
1993/05/31 30301.07 20034.79
1993/06/30 30482.52 20092.89
1993/07/31 29478.53 20012.52
1993/08/31 30591.38 20771.00
1993/09/30 31849.39 20611.06
1993/10/31 34220.26 21037.71
1993/11/30 33954.14 20837.85
1993/12/31 34607.33 21089.99
1994/01/31 35792.77 21807.05
1994/02/28 33397.71 21216.08
1994/03/31 30022.86 20291.06
1994/04/30 29478.53 20550.78
1994/05/31 28982.58 20887.82
1994/06/30 27833.44 20376.06
1994/07/31 27906.02 21044.40
1994/08/31 30518.81 21907.22
1994/09/30 30422.04 21370.49
1994/10/31 29381.76 21851.33
1994/11/30 28837.43 21055.50
1994/12/31 28317.29 21367.76
1995/01/31 29587.40 21921.82
1995/02/28 30603.48 22776.12
1995/03/31 31099.43 23448.24
1995/04/30 32067.12 24138.79
1995/05/31 32357.43 25103.62
1995/06/30 33530.77 25686.77
1995/07/31 35030.70 26538.55
1995/08/31 36433.87 26605.16
1995/09/30 38066.86 27727.90
1995/10/31 37764.45 27628.91
1995/11/30 39022.46 28841.82
1995/12/31 42221.14 29397.31
1996/01/31 44718.28 30398.00
1996/02/29 44366.74 30679.78
1996/03/31 43663.66 30975.23
1996/04/30 44606.40 31431.81
1996/05/31 45126.95 32242.43
1996/06/30 42400.25 32365.28
1996/07/31 39289.32 30935.38
1996/08/31 41098.86 31587.81
1996/09/30 43503.32 33365.57
1996/10/31 41991.24 34285.79
1996/11/30 42239.12 36877.45
1996/12/31 44589.12 36146.91
1997/01/31 46632.73 38405.37
1997/02/28 46961.91 38706.47
1997/03/31 42120.33 37116.02
1997/04/30 40272.96 39331.84
1997/05/31 45392.76 41726.37
1997/06/30 46581.79 43595.71
1997/07/31 46861.56 47064.62
1997/08/31 47183.29 44428.06
1997/09/30 53394.20 46861.38
1997/10/31 51449.79 45296.21
1997/11/30 50540.54 47392.97
1997/12/31 51399.40 48206.71
1998/01/31 51825.89 48739.88
1998/02/27 54520.00 52255.00
IMATRL PRASUN SHR__CHT 19980228 19980318 101657 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Biotechnology Portfolio on February 29,
1988, and the current 3.00% sales charge was paid. As the chart shows,
by February 28, 1998, the value of the investment would have grown to
$54,520 - a 445.20% increase on the initial investment, and includes
the effect of a $7.50 trading fee. 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
$52,255 - a 422.55% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1998
% OF FUND'S
INVESTMENTS
GENENTECH, INC. SPECIAL 10.4
CHIRON CORP. 6.2
GENZYME CORP. 5.8
MERCK & CO., INC. 5.7
SCHERING-PLOUGH CORP. 4.4
FOREST LABORATORIES, INC. 3.5
PHARMERICA, INC. 3.3
AMGEN, INC. 3.3
MASTEC, INC. 3.3
BEVERLY ENTERPRISES, INC. 3.3
TOP INDUSTRIES AS OF FEBRUARY 28, 1998
BIOTECHNOLOGY 43.4%
DRUGS 17.2%
PHARMACEUTICAL
PREPARATIONS 7.1%
DRUG DISTRIBUTORS-WHOLESALE 4.0%
WATER & SEWER PIPES 3.3%
ALL OTHERS 25.0%
ROW: 1, COL: 1, VALUE: 25.0
ROW: 1, COL: 2, VALUE: 3.3
ROW: 1, COL: 3, VALUE: 4.0
ROW: 1, COL: 4, VALUE: 7.1
ROW: 1, COL: 5, VALUE: 17.2
ROW: 1, COL: 6, VALUE: 43.4
*
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
BIOTECHNOLOGY PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
James Harmon,
Portfolio Manager
of Fidelity Select
Biotechnology Portfolio
Q. HOW DID THE FUND PERFORM, JAMIE?
A. For the 12-month period that ended February 28, 1998, the fund
returned 16.11%, underperforming the Standard & Poor's 500 Index,
which returned 35.01%.
Q. WHY DID THE FUND UNDERPERFORM THE INDEX OVER THE PERIOD?
A. There were two general trends that negatively affected how the
entire biotechnology sector performed - overall poor results in
clinical trials for emerging biotech companies and disappointing sales
for more mature biotech companies. In terms of emerging biotechnology
companies, a number of high-profile product failures over the period
increased investors' concerns about the likelihood of clinical success
for the entire sector.
Q. YOU ALSO MENTIONED THAT MATURE BIOTECH COMPANIES HAD SOME
PERFORMANCE PROBLEMS . . .
A. Yes. A number of established companies turned in disappointing
sales over the period. For example, Amgen saw lower-than-expected
sales of its lead product, Epogen - a drug used to promote red blood
cell growth - due to changes in government regulations. I should note,
though, that the fund did own a top-10 position in Amgen at the end of
the period because the company's stock had become very inexpensive.
Despite the overall problems in the biotechnology sector, the fund
actually performed quite well relative to competitive biotech funds,
mostly due to good stock picking.
Q. WHAT WERE SOME OF YOUR BEST STOCK PICKS?
A. Most of the fund's top-10 holdings did very well over the period.
One standout stock outside of the top 10 was Alkermes, which has
compelling late-phase data on a human growth hormone called Prolease.
Alkermes is working on introducing this drug in conjunction with
Genentech, the fund's top holding. Genentech also was a very strong
performer because investors started to see the value of its pipeline
of upcoming products, including Prolease and Rituxan, an approved
treatment for non-Hodgkin's lymphoma. Pharmaceutical giants
Schering-Plough and Merck also were outstanding performers. Both
companies benefited from strong industry fundamentals, increased drug
usage due to an aging population and the increasingly popular
philosophy that it's cheaper to treat people with drugs instead of
surgery.
Q. DID YOU SEE ANY TRENDS IN THE TYPES OF COMPANIES THAT LOOKED GOOD?
A. Yes. Some generic drug companies began pursuing a biotechnology
strategy. That is, instead of manufacturing only generic drugs, they
also were developing proprietary pharmaceuticals that have higher
margins and sales potential. Two good examples were ICN
Pharmaceuticals - which has developed a therapy for Hepatitis C called
Ribaviron - and Forest Laboratories - which is introducing a
Prozac-like drug called Citalopram. Both companies were among some of
the fund's strongest performers over the period.
Q. DID YOU EXPERIENCE ANY REGRETS OVER THE PERIOD?
A. Sure. I wish I'd owned more Immunex throughout the period. It went
up 50% over the past six months. Immunex profited from Enbrel, its
drug for rheumatoid arthritis.
Q. JAMIE, HOW DOES THE FUND LOOK GOING FORWARD?
A. The most exciting thing about the biotechnology sector is that one
successful drug can create a very valuable company. On the other hand,
the most frustrating thing is that it is very hard to find a
successful drug. Going forward, the fund will continue to try to
invest in those companies that, in my opinion, have the highest
likelihood of finding successful drugs.
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, 1998, more than
$579 million
MANAGER: James Harmon since June 1997;
research associate covering nursing homes,
non-technology Initial Public Offerings and
petroleum refining, 1995-1996; research
analyst covering biotechnology, since 1997;
joined Fidelity in 1995
(checkmark)
BIOTECHNOLOGY PORTFOLIO
INVESTMENTS FEBRUARY 28, 1998
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 85.3%
SHARES VALUE (NOTE 1)
DRUGS & PHARMACEUTICALS - 68.0%
BIOTECHNOLOGY - 43.4%
Alkermes, Inc. (a) 786,500 $ 18,236,963
Amgen, Inc. 385,800 20,495,625
Ariad Pharmaceuticals, Inc. (a) 130,300 553,775
Aviron (a) 550,000 13,818,750
Biogen, Inc. (a) 403,000 17,782,375
CV Therapeutics, Inc. (a) 25,000 217,188
Cell Genesys, Inc. (a) 108,700 740,519
Chiron Corp. (a) 1,995,900 38,296,331
Creative Biomolecules, Inc. (a) 651,000 6,265,875
Cytyc Corp. (a) 620,600 14,273,800
Genentech, Inc. special (a) 946,600 63,954,663
Genzyme Corp. 1,206,200 35,658,288
Hyseq, Inc. 186,400 2,469,800
International Murex Technologies Corp. (a) 374 3,693
LeukoSite, Inc. (a) 450,000 4,050,000
Magainin Pharmaceuticals, Inc. (a)(c) 1,302,600 9,525,263
Medimmune, Inc. (a) 200,100 10,380,188
Molecular Biosystems, Inc. (a) 246,200 2,123,475
Neurex Corp. (a) 140,000 2,782,500
Sepracor, Inc. (a) 120,400 4,846,100
266,475,171
COMMERCIAL LABORATORY RESEARCH - 0.3%
Scios, Inc. (a) 205,000 2,050,000
DRUGS - 17.2%
Agouron Pharmaceuticals, Inc. (a) 197,500 7,282,813
Alliance Pharmaceutical Corp. (a) 737,500 6,914,063
Alteon, Inc. (a) 260,000 3,152,500
Anesta Corp. (a) 239,000 4,794,938
Forest Laboratories, Inc. (a) 339,300 21,227,457
Merck & Co., Inc. 273,700 34,913,856
Schering-Plough Corp. 352,800 26,834,850
Sequus Pharmaceuticals, Inc. (a) 64,000 624,000
105,744,477
PHARMACEUTICAL PREPARATIONS - 7.1%
AXYS Pharmaceuticals, Inc. (a) 863,900 7,343,150
Cellegy Pharmaceuticals, Inc. (a) 293,800 2,350,400
ICN Pharmaceuticals, Inc. 127,400 7,357,350
Inhale Therapeutic Systems (a) 169,500 5,063,813
NPS Pharmaceuticals, Inc. (a) 375,500 3,050,938
NeXstar Pharmaceuticals, Inc. (a) 246,100 2,891,675
T Cell Sciences, Inc. (a) 359,300 718,600
Theratech, Inc. (a) 322,000 2,857,750
ViroPharma, Inc. (a)(c) 599,100 11,832,225
43,465,901
TOTAL DRUGS & PHARMACEUTICALS 417,735,549
ELECTRICAL EQUIPMENT - 0.0%
TV & RADIO COMMUNICATION EQUIPMENT - 0.0%
American Satellite Network
ASN warrants 6/30/99 (a) 5,000 -
ELECTRONIC INSTRUMENTS - 1.1%
LAB ANALYTICAL INSTRUMENTS - 1.1%
Waters Corp. (a) 137,900 6,817,431
ENGINEERING - 3.3%
WATER & SEWER PIPES - 3.3%
MasTec, Inc. (a) 718,000 20,104,000
SHARES VALUE (NOTE 1)
MEDICAL EQUIPMENT & SUPPLIES - 6.0%
DRUG DISTRIBUTORS - WHOLESALE - 4.0%
Allegiance Corp. 117,900 $ 4,111,763
PharMerica, Inc. (a) 1,581,583 20,560,579
24,672,342
MEDICAL SUPPLIES & APPLIANCES - 0.4%
Cygnus, Inc. (a) 114,800 2,044,875
Resmed, Inc. (a) 14,800 503,200
2,548,075
MEDICAL TECHNOLOGY - 1.4%
Ballard Medical Products 334,300 8,399,288
OPHTHALMIC GOODS - 0.2%
Cooper Companies, Inc. (a) 22,300 1,042,525
TOTAL MEDICAL EQUIPMENT & SUPPLIES 36,662,230
MEDICAL FACILITIES MANAGEMENT - 3.6%
MEDICAL SERVICES - 0.2%
Carematrix Corp. (a) 47,300 1,182,500
NURSING CARE & NURSING HOMES - 0.1%
Integrated Health Services, Inc. 18,800 638,025
SKILLED NURSING CARE FACILITIES - 3.3%
Beverly Enterprises, Inc. 1,320,900 20,061,169
TOTAL MEDICAL FACILITIES MANAGEMENT 21,881,694
SERVICES - 3.3%
MANAGEMENT CONSULTING SERVICES - 0.7%
Boron LePore & Associates, Inc. 127,600 4,274,600
MANAGEMENT SERVICES - 2.6%
Medpartners, Inc. (a) 1,349,800 16,197,600
TOTAL SERVICES 20,472,200
TOTAL COMMON STOCKS
(Cost $491,088,371) 523,673,104
CASH EQUIVALENTS - 14.7%
Taxable Central Cash Fund (b)
(Cost $90,189,945) 90,189,945 90,189,945
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $581,278,316) $ 613,863,049
LEGEND
1. Non-income producing
2. At period end, the seven-day yield on the Taxable Central Cash Fund
was 5.62%. The yield refers to the income earned by investing in the
fund over the seven-day period, expressed as an annual percentage.
3. Affiliated company (see Note 10 of Notes to Financial Statements)
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $861,562,840 and $1,034,833,837, 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 $129,840 for the
period (see Note 4 of Notes to Financial Statements).
The fund participated in the securities lending program. At the period
end, the value of securities loaned and the value of collateral
amounted to $18,050,879 and $18,753,800, respectively (see Note 6 of
Notes to Financial Statements).
Transactions during the period with companies that are or were
affiliates are as follows:
PURCHASES SALES DIVIDEND VALUE
AFFILIATE COST COST INCOME
Alkermes, Inc. $ 3,406,381 $ 2,779,173 $ - $ -
Arqule, Inc. - - - -
Ariad Pharmaceuticals, Inc. - 327,813 - -
LeukoSite, Inc. - - - -
Magainin Pharmaceuticals, Inc. 1,238,558 - - 9,525,263
Sequana Therapeutics, Inc. - 387,900 - -
ViroPharma, Inc 186,688 - - 11,832,225
TOTALS $ 4,831,627 $ 3,494,886 $ - $ 21,357,488
INCOME TAX INFORMATION
At February 28, 1998, the aggregate cost of investment securities for
income tax purposes was $581,434,806. Net unrealized appreciation
aggregated $32,428,243, of which $58,477,962 related to appreciated
investment securities and $26,049,719 related to depreciated
investment securities.
The fund hereby designates approximately $96,641,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 78% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate
shareholders (unaudited).
The fund will notify shareholders in January 1999 of this percentage
for use in preparing 1998 income tax returns.
BIOTECHNOLOGY PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1998
ASSETS
INVESTMENT IN $ 613,863,049
SECURITIES,
AT VALUE
(COST
$581,278
,316) -
SEE
ACCOMPAN
YING
SCHEDULE
CASH 517,075
RECEIVABLE 27,619,896
FOR
INVESTMENT
S SOLD
RECEIVABLE 943,214
FOR FUND
SHARES
SOLD
INTEREST 431,573
RECEIVABLE
REDEMPTION 1,022
FEES
RECEIVABLE
OTHER 238,163
RECEIVABLE
S
TOTAL 643,613,992
ASSETS
LIABILITIES
PAYABLE FOR $ 41,581,745
INVESTMENT
S
PURCHASED
PAYABLE FOR 3,020,396
FUND
SHARES
REDEEMED
ACCRUED 286,436
MANAGEM
ENT FEE
OTHER 429,714
PAYABLES
AND
ACCRUED
EXPENSES
COLLATERAL ON 18,753,800
SECURITIES
LOANED,
AT VALUE
TOTAL 64,072,091
LIABILITIES
NET ASSETS $ 579,541,901
NET ASSETS
CONSIST OF:
PAID IN $ 480,071,181
CAPITAL
ACCUMULATED 66,885,987
UNDISTRIBUT
ED NET
REALIZED
GAIN (LOSS)
ON
INVESTMENT
S AND
FOREIGN
CURRENCY
TRANSACTIO
NS
NET 32,584,733
UNREALIZED
APPRECIATI
ON
(DEPRECIATI
ON) ON
INVESTMENT
S
NET ASSETS, $ 579,541,901
FOR
16,786,2
25
SHARES
OUTSTANDIN
G
NET ASSET $34.52
VALUE AND
REDEMPTIO
N PRICE
PER SHARE
($579,54
1,901 (DIVIDED BY)
16,786,2
25 SHARES)
MAXIMUM $35.59
OFFERING
PRICE PER
SHARE
(100/97.
00 OF
$34.52)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1998
INVESTMENT $ 1,210,685
INCOME
DIVIDENDS
INTEREST 2,649,872
(INCLUDING
INCOME ON
SECURITIES
LOANED OF
$176,503
)
TOTAL 3,860,557
INCOME
EXPENSES
MANAGEMEN $ 3,442,469
T FEE
TRANSFER 4,445,089
AGENT FEES
ACCOUNTING 547,314
AND
SECURITY
LENDING
FEES
NON-INTEREST 2,744
ED
TRUSTEES'
COMPENSAT
ION
CUSTODIAN 45,903
FEES AND
EXPENSES
REGISTRATION 68,209
FEES
AUDIT 40,921
LEGAL 6,845
MISCELLANEO 8,422
US
TOTAL 8,607,916
EXPENSES
BEFORE
REDUCTIONS
EXPENSE (98,071) 8,509,845
REDUCTIONS
NET (4,649,288)
INVESTMEN
T INCOME
(LOSS)
REALIZED
AND
UNREALIZED
GAIN (LOSS)
NET REALIZED
GAIN (LOSS)
ON:
INVESTMENT 136,616,575
SECURITIES
(INCLUDING
REALIZED
GAIN
OF
$2,099,4
10 ON
SALES OF
INVESTMENT
S IN
AFFILIATED
ISSUERS)
FOREIGN 2,118 136,618,693
CURRENCY
TRANSACTIO
NS
CHANGE IN (59,882,024)
NET
UNREALIZED
APPRECIATI
ON
(DEPRECIATI
ON) ON
INVESTMENT
SECURITIES
NET GAIN 76,736,669
(LOSS)
NET INCREASE $ 72,087,381
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
OTHER $ 1,105,374
INFORMATIO
N
SALES
CHARGES
PAID TO
FDC
SALES $ 5,947
CHARGES -
DEALERS'
PORTION
DEFERRED $ 31,256
SALES
CHARGES
WITHHELD
BY FDC
EXCHANGE $ 160,688
FEES
WITHHELD
BY FSC
EXPENSE $ 91,488
REDUCTIONS
DIRECTED
BROKERAGE
ARRANGEM
ENTS
CUSTODIA 5,197
N CREDITS
TRANSFER 1,386
AGENT
CREDITS
$ 98,071
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
FEBRUARY 28, FEBRUARY 28,
1998 1997
OPERATIONS $ (4,649,288) $ (4,230,936)
NET
INVESTMENT
INCOME
(LOSS)
NET 136,618,693 107,758,165
REALIZED
GAIN (LOSS)
CHANGE IN (59,882,024) (82,231,616)
NET
UNREALIZED
APPRECIATI
ON
(DEPRECIATI
ON)
NET 72,087,381 21,295,613
INCREASE
(DECREAS
E) IN NET
ASSETS
RESULTING
FROM
OPERATIO
NS
DISTRIBUTIONS - (758,609)
TO
SHAREHOLD
ERS
FROM NET
INVESTMENT
INCOME
FROM NET (74,816,933) (74,788,474)
REALIZED
GAIN
TOTAL (74,816,933) (75,547,083)
DISTRIBUTIO
NS
SHARE 370,670,921 434,127,456
TRANSACTIO
NS
NET
PROCEEDS
FROM SALES
OF SHARES
REINVESTM 72,734,215 73,785,664
ENT OF
DISTRIBUTIO
NS
COST OF (536,988,307) (876,553,990)
SHARES
REDEEMED
NET (93,583,171) (368,640,870)
INCREASE
(DECREAS
E) IN NET
ASSETS
RESULTING
FROM
SHARE
TRANSACTI
ONS
REDEMPTIO 952,260 930,907
N FEES
TOTAL (95,360,463) (421,961,433)
INCREASE
(DECREASE)
IN NET
ASSETS
NET ASSETS
BEGINNING 674,902,364 1,096,863,797
OF PERIOD
END OF $ 579,541,901 $ 674,902,364
PERIOD
OTHER
INFORMATION
SHARES
SOLD 10,542,169 12,636,024
ISSUED IN 2,304,448 2,313,606
REINVESTME
NT OF
DISTRIBUTIO
NS
REDEEMED (15,772,857) (25,208,094)
NET (2,926,240) (10,258,464)
INCREASE
(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>
YEARS ENDED FEBRUARY 28, YEAR ENDED YEARS ENDED FEBRUARY 28,
FEBRUARY 29,
SELECTED PER-SHARE DATA 1998 1997 1996 1995 1994
</TABLE>
NET ASSET $ 34.24 $ 36.60 $ 25.30 $ 27.61 $ 22.60
VALUE,
BEGINNING
OF PERIOD
INCOME FROM
INVESTMENT
OPERATION
S
NET (.27) (.20) .11 (.06) (.18)
INVESTMENT
INCOME
(LOSS) C
NET 5.20 1.89 11.21 (2.26) 5.15
REALIZED
AND
UNREALIZED
GAIN (LOSS)
TOTAL FROM 4.93 1.69 11.32 (2.32) 4.97
INVESTMENT
OPERATIONS
LESS
DISTRIBUTIO
NS
FROM NET - (.03) (.07) - -
INVESTMENT
INCOME
FROM NET (4.71) (4.06) - - -
REALIZED
GAIN
TOTAL (4.71) (4.09) (.07) - -
DISTRIBUTIO
NS
REDEMPTION .06 .04 .05 .01 .04
FEES
ADDED TO
PAID IN
CAPITAL
NET ASSET $ 34.52 $ 34.24 $ 36.60 $ 25.30 $ 27.61
VALUE, END
OF PERIOD
TOTAL 16.11% 5.85% 44.97% (8.37)% 22.17%
RETURN A, B
RATIOS AND
SUPPLEME
NTAL DATA
NET ASSETS, $ 579,542 $ 674,902 $ 1,096,864 $ 448,197 $ 481,146
END OF
PERIOD
(000
OMITTED)
RATIO OF 1.49% 1.57% 1.44% E 1.59% 1.62%
EXPENSES
TO AVERAGE
NET ASSETS
RATIO OF 1.47% D 1.56% D 1.43% D 1.59% 1.61% D
EXPENSES
TO AVERAGE
NET ASSETS
AFTER
EXPENSE
REDUCTIONS
RATIO OF NET (.81)% (.59)% .35% (.27)% (.69)%
INVESTMENT
INCOME
(LOSS) TO
AVERAGE
NET ASSETS
PORTFOLIO 162% 41% 67% 77% 51%
TURNOVER
RATE
AVERAGE $ .0454 $ .0376
COMMISSIO
N RATE F
<TABLE>
<CAPTION>
<S> <C>
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. 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 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 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). Load adjusted returns include a 3.00% sales
charge and the effect of a $7.50 trading fee.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 28, 1998 YEAR YEARS YEARS
SELECT HEALTH CARE 36.47% 263.22% 711.23%
SELECT HEALTH CARE 32.31% 252.25% 686.82%
(LOAD ADJ.)
S&P 500 35.01% 166.84% 422.55%
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 Standard &
Poor's 500 Index - a widely recognized, unmanaged index of common
stocks. This benchmark includes 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, 1998 YEAR YEARS YEARS
SELECT HEALTH CARE 36.47% 29.43% 23.29%
SELECT HEALTH CARE 32.31% 28.64% 22.91%
(LOAD ADJ.)
S&P 500 35.01% 21.69% 17.98%
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 LONG-TERM GROWTH AND
SHORT-TERM VOLATILITY. UNLIKE THE BROADER MARKET,
HOWEVER, SOME SECTORS MAY NOT HAVE A HISTORY
OF GROWTH IN THE LONG RUN. AND, AS WITH ALL STOCK
FUNDS, THE SHARE PRICE AND RETURN OF A FUND THAT
INVESTS IN A SECTOR WILL VARY. THAT MEANS IF YOU
SELL YOUR SHARES DURING A SECTOR DOWNTURN, YOU
MIGHT LOSE MONEY. BUT IF YOU CAN IDENTIFY A
SECTOR THAT IS ABOUT TO EXPERIENCE RAPID GROWTH
YOU MAY HAVE THE POTENTIAL FOR ABOVE-AVERAGE
GAINS.
(CHECKMARK)
$10,000 OVER 10 YEARS
IMAHDR PRASUN SHR__CHT 19980228 19980305 132025 S00000000000001
Health Care S&P 500
00063 SP001
1988/02/29 9700.00 10000.00
1988/03/31 9458.82 9691.00
1988/04/30 9311.89 9798.57
1988/05/31 9286.94 9883.82
1988/06/30 9530.89 10337.48
1988/07/31 9517.03 10298.20
1988/08/31 9259.22 9948.06
1988/09/30 9569.71 10371.85
1988/10/31 9688.91 10660.19
1988/11/30 9406.14 10507.75
1988/12/31 9539.67 10691.63
1989/01/31 10213.29 11474.26
1989/02/28 10017.63 11188.55
1989/03/31 10545.90 11449.25
1989/04/30 11121.69 12043.46
1989/05/31 11468.29 12531.22
1989/06/30 11209.78 12459.79
1989/07/31 12598.30 13584.91
1989/08/31 12903.10 13851.18
1989/09/30 12996.24 13794.39
1989/10/31 12900.28 13474.36
1989/11/30 13456.25 13749.23
1989/12/31 13592.93 14079.22
1990/01/31 12813.01 13134.50
1990/02/28 12678.74 13303.94
1990/03/31 13184.40 13656.49
1990/04/30 13184.40 13315.08
1990/05/31 14998.51 14613.30
1990/06/30 15509.54 14513.93
1990/07/31 15723.67 14467.48
1990/08/31 15018.83 13159.62
1990/09/30 14566.78 12518.75
1990/10/31 14899.87 12464.92
1990/11/30 16485.02 13270.15
1990/12/31 16898.24 13640.39
1991/01/31 18566.38 14235.11
1991/02/28 20859.66 15252.92
1991/03/31 22719.17 15622.04
1991/04/30 22323.67 15659.53
1991/05/31 23535.70 16336.03
1991/06/30 22474.42 15587.84
1991/07/31 24463.06 16314.23
1991/08/31 25685.54 16700.88
1991/09/30 26203.13 16421.97
1991/10/31 27929.57 16642.03
1991/11/30 26404.04 15971.35
1991/12/31 31040.81 17798.47
1992/01/31 30022.37 17467.42
1992/02/29 28711.39 17694.50
1992/03/31 26959.82 17349.46
1992/04/30 25432.16 17859.53
1992/05/31 25955.82 17947.04
1992/06/30 24955.38 17679.63
1992/07/31 26456.60 18402.73
1992/08/31 25743.04 18025.47
1992/09/30 23961.07 18238.17
1992/10/31 24698.03 18302.01
1992/11/30 26051.08 18926.11
1992/12/31 25629.08 19158.90
1993/01/31 24252.64 19319.83
1993/02/28 21664.59 19582.58
1993/03/31 22262.15 19995.77
1993/04/30 22253.91 19511.88
1993/05/31 23144.06 20034.79
1993/06/30 23061.64 20092.89
1993/07/31 22311.60 20012.52
1993/08/31 23106.97 20771.00
1993/09/30 23828.16 20611.06
1993/10/31 25600.23 21037.71
1993/11/30 25513.69 20837.85
1993/12/31 26248.44 21089.99
1994/01/31 26768.30 21807.05
1994/02/28 26120.54 21216.08
1994/03/31 24416.58 20291.06
1994/04/30 25396.12 20550.78
1994/05/31 26830.44 20887.82
1994/06/30 26404.69 20376.06
1994/07/31 26933.77 21044.40
1994/08/31 30467.90 21907.22
1994/09/30 30686.98 21370.49
1994/10/31 31112.72 21851.33
1994/11/30 31786.48 21055.50
1994/12/31 31881.00 21367.76
1995/01/31 33569.61 21921.82
1995/02/28 34281.08 22776.12
1995/03/31 35213.19 23448.24
1995/04/30 35704.02 24138.79
1995/05/31 36048.02 25103.62
1995/06/30 37872.15 25686.77
1995/07/31 40040.28 26538.55
1995/08/31 40379.76 26605.16
1995/09/30 42642.94 27727.90
1995/10/31 42747.05 27628.91
1995/11/30 44548.55 28841.82
1995/12/31 46503.18 29397.31
1996/01/31 48166.56 30398.00
1996/02/29 47885.36 30679.78
1996/03/31 48052.18 30975.23
1996/04/30 47851.01 31431.81
1996/05/31 48719.06 32242.43
1996/06/30 48753.58 32365.28
1996/07/31 46849.80 30935.38
1996/08/31 48437.93 31587.81
1996/09/30 51772.01 33365.57
1996/10/31 50756.01 34285.79
1996/11/30 53483.45 36877.45
1996/12/31 53692.22 36146.91
1997/01/31 56934.01 38405.37
1997/02/28 57660.04 38706.47
1997/03/31 54497.04 37116.02
1997/04/30 57216.81 39331.84
1997/05/31 61574.52 41726.37
1997/06/30 66155.24 43595.71
1997/07/31 68626.42 47064.62
1997/08/31 63846.80 44428.06
1997/09/30 67806.71 46861.38
1997/10/31 67782.60 45296.21
1997/11/30 69681.19 47392.97
1997/12/31 70415.48 48206.71
1998/01/31 75482.19 48739.88
1998/02/27 78688.90 52255.00
IMATRL PRASUN SHR__CHT 19980228 19980305 132027 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Health Care Portfolio on February 29,
1988, and the current 3.00% sales charge was paid. As the chart shows,
by February 28, 1998, the value of the investment would have grown to
$78,682 - a 686.82% increase on the initial investment, and includes
the effect of a $7.50 trading fee. 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
$52,255 - a 422.55% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1998
% OF FUND'S
INVESTMENTS
AMERICAN HOME PRODUCTS CORP. 7.9
WARNER-LAMBERT CO. 7.6
MERCK & CO., INC. 5.9
BRISTOL-MYERS SQUIBB CO. 4.9
SCHERING-PLOUGH CORP. 4.9
LILLY (ELI) & CO. 4.2
ABBOTT LABORATORIES 3.7
JOHNSON & JOHNSON 2.8
MEDTRONIC, INC. 2.0
BAXTER INTERNATIONAL, INC. 1.9
TOP INDUSTRIES AS OF FEBRUARY 28, 1998
DRUGS 42.4%
MEDICAL SUPPLIES &
APPLIANCES 12.4%
HOSPITALS 4.1%
MEDICAL TECHNOLOGY 3.7%
BIOTECHNOLOGY 3.6%
ALL OTHERS 33.8%
ROW: 1, COL: 1, VALUE: 33.8
ROW: 1, COL: 2, VALUE: 3.6
ROW: 1, COL: 3, VALUE: 3.7
ROW: 1, COL: 4, VALUE: 4.1
ROW: 1, COL: 5, VALUE: 12.4
ROW: 1, COL: 6, VALUE: 42.4
*
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
HEALTH CARE PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Beso Sikharulidze,
Portfolio Manager
of Fidelity Select
Health Care Portfolio
Q. HOW DID THE FUND PERFORM, BESO?
A. For the 12 months that ended February 28, 1998, the fund returned
36.47%, compared to a return of 35.01% by the Standard & Poor's 500
Index.
Q. HOW WAS THE FUND ABLE TO OUTPACE THE S&P 500 OVER THE PAST 12
MONTHS?
A. The fund had a substantial weighting in large-capitalization
pharmaceutical stocks, which did well for two reasons. First, they
exhibited strong business prospects and steady earnings growth.
Second, their share prices benefited from a "flight to quality" during
the financial crisis in Southeast Asia. Investors generally took their
money out of technology stocks and other securities that had some
exposure to the Asian markets and reinvested it in large-cap companies
that were presumed to be "safe." The "safe" companies included
pharmaceutical names such as Eli Lilly and Merck. Consequently, the
fund's overexposure to pharmaceuticals helped performance during the
period.
Q. WHICH INDIVIDUAL STOCKS HELPED PERFORMANCE?
A. Almost all of the major contributors were pharmaceutical stocks.
In fact, six of the fund's top 10 holdings as of February 28, 1998,
were pharmaceutical companies - the best-performing of which were
Schering-Plough and Warner-Lambert. Not only did these companies get a
boost from their solid earnings and the recent market environment, but
they reaped the benefits of accelerated review by the Food and Drug
Administration (FDA). Because drugs are moving through the FDA review
process more quickly, they're coming to market sooner. And that's good
news for pharmaceutical companies that are spending many of their
budget dollars on research and development.
Q. WHAT HAPPENED WITH HEALTH MAINTENANCE ORGANIZATIONS (HMOS)?
A. New competition created by employers forming their own health care
plans has created a situation where HMOs cannot raise prices to offset
cost increases. Because of this loss of pricing power, HMOs
underperformed other health care stocks during the period.
Q. WHAT ABOUT DEVICE MAKERS?
A. Many device makers did not fare well during the second half of the
period because of the volatility of their business. As good as these
companies and their technologies are, the product life cycles are
short. These devices, such as heart defibrillators, are protected by
patents, but competitors may still develop similar products very
quickly. This volatile environment makes device makers much more like
technology companies than pharmaceutical firms.
Q. WERE THERE ANY DISAPPOINTMENTS DURING THE PERIOD?
A. The fund's small exposure to Oxford Health Plans detracted from
performance. The company's stock plummeted more than 60% in one day
after the company announced that an accounting error had caused it to
severely misstate its quarterly earnings. The stock continued to
flounder after warning of disappointing fourth-quarter earnings. The
fund sold its position in Oxford Health by the end of the period.
Columbia/HCA Healthcare, a large hospital operator, was another
detractor. The company continued to struggle as investigations into
its billing practices progressed. Columbia/HCA Healthcare announced a
massive restructuring toward the end of 1997, but still later hinted
at disappointing earnings amidst the widening probes.
Q. WHAT IS YOUR OUTLOOK FOR THE HEALTH CARE SECTOR?
A. I'm optimistic about the business prospects of most health care
stocks, especially pharmaceuticals. I expect that solid management
teams, new products and a favorable regulatory environment will
provide pharmaceutical companies with the stamina they need to
continue their bull run. In addition, medical device makers should do
reasonably well as they branch off into new areas, such as spinal, hip
and knee devices. I expect that HMOs and service providers will
continue to writhe under intense competition and resultant downward
pricing pressures amidst increased costs. Finally, biotechnology
companies - especially those with promising new products - could
benefit if pharmaceutical companies continue their acquisition spree
that we witnessed at the end of the period.
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, 1998, more than
$2.2 billion
MANAGER: Beso Sikharulidze, since 1997;
manager, Fidelity Advisor Health Care Fund,
since 1997; Fidelity Select Transportation
Portfolio, 1993-1994; security analyst, appliance,
trucking and shipping industries, 1992-1993;
joined Fidelity in 1992
(checkmark)
HEALTH CARE PORTFOLIO
INVESTMENTS FEBRUARY 28, 1998
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 83.0%
SHARES VALUE (NOTE 1)
AGRICULTURE - 0.4%
CROPS - 0.4%
DEKALB Genetics Corp. Class B 150,000 $ 10,078,125
CHEMICALS & PLASTICS - 0.9%
CHEMICALS - 0.9%
Hoechst AG Ord. 524,200 20,212,061
COMPUTER SERVICES & SOFTWARE - 1.4%
COMPUTER SERVICES - 0.8%
HBO & Co. 365,300 19,771,863
CAD/CAM/CAE - 0.6%
Shared Medical Systems Corp. 175,000 13,376,563
TOTAL COMPUTER SERVICES & SOFTWARE 33,148,426
DRUG STORES - 3.0%
CVS Corp. 270,000 19,996,875
Rite Aid Corp. 400,000 12,950,000
Walgreen Co. 1,000,000 36,687,500
69,634,375
DRUGS & PHARMACEUTICALS - 48.5%
BIOTECHNOLOGY - 3.6%
Amgen, Inc. 500,000 26,562,500
Chiron Corp. (a) 450,000 8,634,375
Cytyc Corp. (a) 114,500 2,633,500
Genentech, Inc. special (a) 397,400 26,849,338
Medimmune, Inc. (a) 250,000 12,968,750
Zonagen, Inc. (a) 294,900 5,437,219
83,085,682
DRUGS - 42.4%
ALZA Corp. Class A 170,500 6,372,438
American Home Products Corp. 1,948,000 182,625,000
Barr Laboratories, Inc. (a) 438,600 14,912,400
Bristol-Myers Squibb Co. 1,129,700 113,181,819
Elan Corp. PLC ADR (a) 297,020 18,433,804
Forest Laboratories, Inc. (a) 340,000 21,271,250
Lilly (Eli) & Co. (a) 1,467,512 96,580,634
Merck & Co., Inc. 1,062,400 135,522,400
Pfizer, Inc. 449,500 39,780,750
Roche Holding AG 1,875 21,980,553
Sankyo Co. Ltd. 432,000 11,615,482
Schering-Plough Corp. 1,477,100 112,351,919
SmithKline Beecham PLC ADR 42,300 2,617,313
Takeda Chemical Industries Ltd. 448,000 12,436,548
Warner-Lambert Co. 1,204,400 176,143,500
Watson Pharmaceuticals, Inc. (a) 252,800 9,069,200
Yamanouchi Pharmaceutical Co. Ltd. 233,000 5,673,461
980,568,471
PHARMACEUTICAL PREPARATIONS - 2.5%
Astra AB Class A Free shares 877,200 17,697,414
Immunex Corp. (a) 75,500 4,463,938
Medicis Pharmaceutical Corp.
Class A 200,000 8,587,500
Novartis AG (Reg.) 14,600 26,669,533
Xoma, Inc. (a)(b) 1,476 5,867
57,424,252
TOTAL DRUGS & PHARMACEUTICALS 1,121,078,405
SHARES VALUE (NOTE 1)
ELECTRONIC INSTRUMENTS - 0.5%
LAB ANALYTICAL INSTRUMENTS - 0.5%
Waters Corp. (a) 213,200 $ 10,540,075
ELECTRONICS - 0.2%
ELECTRONIC CAPACITORS - 0.2%
Maxwell Technologies, Inc. (a) 171,800 4,853,350
HOUSEHOLD PRODUCTS - 1.2%
COSMETICS - 0.9%
Avon Products, Inc. 300,000 21,131,250
FABRICATED RUBBER PRODUCTS - 0.3%
Safeskin Corp. (a) 100,000 6,137,500
TOTAL HOUSEHOLD PRODUCTS 27,268,750
MEDICAL EQUIPMENT & SUPPLIES - 19.7%
DENTAL EQUIPMENT - 0.7%
Sybron International Corp. (a) 564,600 15,420,638
DRUG DISTRIBUTORS - WHOLESALE - 1.6%
Cardinal Health, Inc. 231,300 18,937,688
McKesson Corp. 362,400 18,890,100
37,827,788
MEDICAL, DENTAL, HOSPITAL EQUIPMENT - WHOLESALE - 0.3%
ESC Medical Systems Ltd. (a) 190,000 6,483,750
MEDICAL SUPPLIES & APPLIANCES - 12.4%
Abbott Laboratories 1,139,900 85,278,769
Baxter International, Inc. 764,600 43,295,475
Becton, Dickinson & Co. 590,600 37,576,925
Boston Scientific Corp. (a) 377,968 22,583,588
Johnson & Johnson 856,500 64,665,750
Omnicare, Inc. 100,000 3,700,000
Sofamor/Danek Group, Inc. (a) 400,500 30,137,625
287,238,132
MEDICAL TECHNOLOGY - 3.7%
Arterial Vascular Engineering, Inc. (a) 62,100 5,084,438
Biomet, Inc. 300,000 8,943,750
Medtronic, Inc. 882,400 46,877,500
St. Jude Medical, Inc. (a) 439,400 16,038,100
Sonus Pharmaceuticals, Inc. (a) 258,200 6,519,550
U.S. Surgical Corp. 105,931 3,244,137
86,707,475
X-RAY ELECTRO-MEDICAL APPARATUS - 1.0%
ADAC Laboratories (a) 133,000 3,541,125
Coherent, Inc. (a) 18,100 846,175
Guidant Corp. 255,460 18,632,614
23,019,914
TOTAL MEDICAL EQUIPMENT & SUPPLIES 456,697,697
MEDICAL FACILITIES MANAGEMENT - 6.3%
HOME HEALTH CARE AGENCIES - 0.0%
Coram Healthcare Corp.
warrants 7/11/99 (a) 19,069 -
HOSPITALS - 4.1%
Columbia/HCA Healthcare Corp. 1,118,800 30,347,450
HEALTHSOUTH Corp. (a) 466,000 12,582,000
Health Management Associates, Inc.
Class A (a) 511,500 14,226,094
Tenet Healthcare Corp. (a) 582,700 21,741,994
Universal Health Services, Inc. Class B (a) 300,000 15,675,000
94,572,538
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
MEDICAL FACILITIES MANAGEMENT - CONTINUED
HMO'S & OUTPATIENT CARE - 1.7%
Humana, Inc. (a) 511,500 $ 13,011,281
United HealthCare Corp. 325,890 19,777,449
Wellpoint Health Networks, Inc. 114,500 6,691,094
39,479,824
NURSING CARE & NURSING HOMES - 0.2%
Health Care & Retirement Corp. (a) 94,700 4,154,963
SKILLED NURSING CARE FACILITIES - 0.3%
Beverly Enterprises, Inc. (a) 433,100 6,577,706
TOTAL MEDICAL FACILITIES MANAGEMENT 144,785,031
SERVICES - 0.9%
MANAGEMENT SERVICES - 0.9%
Medpartners, Inc. (a) 1,800,000 21,600,000
TOTAL COMMON STOCKS
(Cost $1,445,348,655) 1,919,896,295
CASH EQUIVALENTS - 17.0%
Taxable Central Cash Fund (c)
(Cost $394,357,052) 394,357,052 394,357,052
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $1,839,705,707) $ 2,314,253,347
LEGEND
1. Non-income producing
2. Security exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt
from registration, normally to qualified institutional buyers. At the
period end, the value of these securities amounted to $5,867 or 0.0%
of net assets.
3. At period end, the seven-day yield on the Taxable Central Cash Fund
was 5.62%. 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 $1,380,141,053 and $1,156,072,551, 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 $241,726 for the
period (see Note 4 of Notes to Financial Statements).
The fund participated in the securities lending program. At the period
end, the value of securities loaned and the value of collateral
amounted to $44,982,660 and $46,251,900, respectively (see Note 6 of
Notes to Financial Statements).
Transactions during the period with companies that are or were
affiliates are as follows:
PURCHASES SALES DIVIDEND VALUE
AFFILIATE COST COST INCOME
Arqule, Inc. $ - $ 349,200 $ - $ -
Intergrated Living Communities, Inc. 249,320 2,560,000 - -
Micro Therapeutics, Inc. - 166,200 - -
TOTALS $ 249,320 $ 3,075,400 $ - $ -
INCOME TAX INFORMATION
At February 28, 1998, the aggregate cost of investment securities for
income tax purposes was $1,841,898,311. Net unrealized appreciation
aggregated $472,355,036, of which $493,077,375 related to appreciated
investment securities and $20,722,339 related to depreciated
investment securities.
The fund hereby designates approximately $258,954,000 as a capital
gain dividend for the purpose of the dividend paid deduction.
A total of 0.36% 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(unaudited).
A total of 24% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate
shareholders (unaudited).
The fund will notify shareholders in January 1999 of these percentages
for use in preparing 1998 income tax returns.
HEALTH CARE PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1998
ASSETS
INVESTMENT IN $ 2,314,253,347
SECURITIES,
AT VALUE
(COST
$1,839,7
05,707)
- -
SEE
ACCOMPAN
YING
SCHEDULE
RECEIVABLE 12,376,932
FOR
INVESTMENT
S SOLD
RECEIVABLE 7,084,451
FOR FUND
SHARES
SOLD
DIVIDENDS 2,201,993
RECEIVABLE
INTEREST 1,641,630
RECEIVABLE
REDEMPTION 5,667
FEES
RECEIVABLE
OTHER 198,111
RECEIVABLE
S
TOTAL 2,337,762,131
ASSETS
LIABILITIES
PAYABLE FOR $ 54,949,174
INVESTMENT
S
PURCHASED
PAYABLE FOR 10,293,640
FUND
SHARES
REDEEMED
ACCRUED 1,054,210
MANAGEM
ENT FEE
OTHER 1,194,024
PAYABLES
AND
ACCRUED
EXPENSES
COLLATERAL ON 46,251,900
SECURITIES
LOANED,
AT VALUE
TOTAL 113,742,948
LIABILITIES
NET ASSETS $ 2,224,019,183
NET ASSETS
CONSIST OF:
PAID IN $ 1,647,003,813
CAPITAL
UNDISTRIBUTE 2,734,330
D NET
INVESTMENT
INCOME
ACCUMULATED 99,734,802
UNDISTRIBUT
ED NET
REALIZED
GAIN (LOSS)
ON
INVESTMENT
S AND
FOREIGN
CURRENCY
TRANSACTIO
NS
NET 474,546,238
UNREALIZED
APPRECIATI
ON
(DEPRECIATI
ON) ON
INVESTMENT
S
AND ASSETS
AND
LIABILITIES
IN FOREIGN
CURRENCIES
NET ASSETS, $ 2,224,019,183
FOR
19,535,9
29
SHARES
OUTSTANDIN
G
NET ASSET $113.84
VALUE AND
REDEMPTIO
N PRICE
PER SHARE
($2,224,0
19,183 (DIVIDED BY)
19,535,9
29 SHARES)
MAXIMUM $117.36
OFFERING
PRICE PER
SHARE
(100/97.
00 OF
$113.84)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1998
INVESTMENT $ 15,685,392
INCOME
DIVIDENDS
INTEREST 8,070,877
(INCLUDING
INCOME ON
SECURITIES
LOANED OF
$232,366
)
TOTAL 23,756,269
INCOME
EXPENSES
MANAGEMEN $ 9,512,189
T FEE
TRANSFER 8,116,801
AGENT FEES
ACCOUNTING 808,692
AND
SECURITY
LENDING
FEES
NON-INTEREST 7,673
ED
TRUSTEES'
COMPENSAT
ION
CUSTODIAN 88,799
FEES AND
EXPENSES
REGISTRATION 448,531
FEES
AUDIT 65,894
LEGAL 18,458
MISCELLANEO 13,453
US
TOTAL 19,080,490
EXPENSES
BEFORE
REDUCTIONS
EXPENSE (297,522) 18,782,968
REDUCTIONS
NET 4,973,301
INVESTMEN
T INCOME
REALIZED
AND
UNREALIZED
GAIN (LOSS)
NET REALIZED
GAIN (LOSS)
ON:
INVESTMENT 304,917,304
SECURITIES
(INCLUDING
REALIZED
GAIN OF
$1,097,8
16
ON SALES OF
INVESTMENT
S OF
AFFILIATED
ISSUERS)
FOREIGN (88,247) 304,829,057
CURRENCY
TRANSACTIO
NS
CHANGE IN
NET
UNREALIZED
APPRECIATI
ON
(DEPRECIATI
ON) ON:
INVESTMENT 201,083,186
SECURITIES
ASSETS AND 6,729 201,089,915
LIABILITIES
IN
FOREIGN
CURRENCIES
NET GAIN 505,918,972
(LOSS)
NET INCREASE $ 510,892,273
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
OTHER $ 4,316,495
INFORMATIO
N
SALES
CHARGES
PAID TO
FDC
SALES $ 41,137
CHARGES -
DEALERS'
PORTION
DEFERRED $ 56,845
SALES
CHARGES
WITHHELD
BY FDC
EXCHANGE $ 206,798
FEES
WITHHELD
BY FSC
EXPENSE $ 288,401
REDUCTIONS
DIRECTED
BROKERAGE
ARRANGEM
ENTS
CUSTODIA 1,323
N CREDITS
TRANSFER 7,798
AGENT
CREDITS
$ 297,522
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
FEBRUARY 28, FEBRUARY 28,
1998 1997
OPERATIONS $ 4,973,301 $ 6,636,874
NET
INVESTMENT
INCOME
NET 304,829,057 276,138,063
REALIZED
GAIN (LOSS)
CHANGE IN 201,089,915 (55,053,844)
NET
UNREALIZED
APPRECIATI
ON
(DEPRECIATI
ON)
NET 510,892,273 227,721,093
INCREASE
(DECREAS
E) IN NET
ASSETS
RESULTING
FROM
OPERATIO
NS
DISTRIBUTIONS (3,399,542) (7,843,463)
TO
SHAREHOLD
ERS
FROM NET
INVESTMENT
INCOME
FROM NET (285,151,308) (188,056,633)
REALIZED
GAIN
TOTAL (288,550,850) (195,900,096)
DISTRIBUTIO
NS
SHARE 1,156,162,920 445,765,805
TRANSACTIO
NS
NET
PROCEEDS
FROM SALES
OF SHARES
REINVESTM 281,663,060 191,246,667
ENT OF
DISTRIBUTIO
NS
COST OF (810,127,873) (822,846,541)
SHARES
REDEEMED
NET 627,698,107 (185,834,069)
INCREASE
(DECREAS
E) IN NET
ASSETS
RESULTING
FROM
SHARE
TRANSACTI
ONS
REDEMPTIO 1,425,211 657,588
N FEES
TOTAL 851,464,741 (153,355,484)
INCREASE
(DECREASE)
IN NET
ASSETS
NET ASSETS
BEGINNING 1,372,554,442 1,525,909,926
OF PERIOD
END OF $ 2,224,019,183 $ 1,372,554,442
PERIOD
(INCLUDIN
G
UNDISTRIB
UTED NET
INVESTME
NT
INCOME
OF
$2,734,
330 AND
$1,993,
284,
RESPECTIV
ELY)
OTHER
INFORMATION
SHARES
SOLD 10,761,631 4,420,102
ISSUED IN 2,916,990 2,023,821
REINVESTME
NT OF
DISTRIBUTIO
NS
REDEEMED (7,540,216) (8,234,436)
NET 6,138,405 (1,790,513)
INCREASE
(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>
YEARS ENDED FEBRUARY 28, YEAR ENDED YEARS ENDED FEBRUARY 28,
FEBRUARY 29,
SELECTED PER-SHARE DATA 1998 1997 1996 1995 1994
</TABLE>
NET ASSET $ 102.45 $ 100.47 $ 76.13 $ 63.31 $ 52.57
VALUE,
BEGINNING
OF PERIOD
INCOME FROM
INVESTMENT
OPERATION
S
NET .33 .52 .95 .75 .15
INVESTMENT
INCOME C
NET 31.94 18.01 28.85 18.38 10.61
REALIZED
AND
UNREALIZED
GAIN (LOSS)
TOTAL FROM 32.27 18.53 29.80 19.13 10.76
INVESTMENT
OPERATIONS
LESS
DISTRIBUTIO
NS
FROM NET (.25) (.65) (.59) (.62) (.07)
INVESTMENT
INCOME
FROM NET (20.73) (15.95) (4.92) (5.74) -
REALIZED
GAIN
TOTAL (20.98) (16.60) (5.51) (6.36) (.07)
DISTRIBUTIO
NS
REDEMPTION .10 .05 .05 .05 .05
FEES
ADDED TO
PAID IN
CAPITAL
NET ASSET $ 113.84 $ 102.45 $ 100.47 $ 76.13 $ 63.31
VALUE, END
OF PERIOD
TOTAL 36.47% 20.41% 39.68% 31.24% 20.57%
RETURN A, B
RATIOS AND
SUPPLEME
NTAL DATA
NET ASSETS, $ 2,224,019 $ 1,372,554 $ 1,525,910 $ 943,141 $ 522,890
END OF
PERIOD
(000
OMITTED)
RATIO OF 1.20% 1.33% 1.31% 1.39% 1.59%
EXPENSES
TO AVERAGE
NET ASSETS
RATIO OF 1.18% D 1.32% D 1.30% D 1.36% D 1.55% D
EXPENSES
TO AVERAGE
NET ASSETS
AFTER
EXPENSE
REDUCTIONS
RATIO OF NET .31% .52% 1.06% 1.08% .26%
INVESTMENT
INCOME TO
AVERAGE
NET ASSETS
PORTFOLIO 79% 59% 54% 151% 213%
TURNOVER
RATE
AVERAGE $ .0490 $ .0466
COMMISSIO
N RATE E
<TABLE>
<CAPTION>
<S> <C>
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. C NET INVESTMENT
INCOME 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>
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). Load adjusted returns include a 3.00% sales
charge and the effect of a $7.50 trading fee. 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, 1998 YEAR YEARS YEARS
SELECT MEDICAL DELIVERY 21.97% 203.35% 652.53%
SELECT MEDICAL DELIVERY 18.24% 194.18% 629.88%
(LOAD ADJ.)
S&P 500 35.01% 166.84% 422.55%
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 Standard & Poor's
500 Index - a widely recognized, unmanaged index of common stocks.
This benchmark includes 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, 1998 YEAR YEARS YEARS
SELECT MEDICAL DELIVERY 21.97% 24.85% 22.36%
SELECT MEDICAL DELIVERY 18.24% 24.09% 21.99%
(LOAD ADJ.)
S&P 500 35.01% 21.69% 17.98%
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 LONG-TERM GROWTH AND
SHORT-TERM VOLATILITY. UNLIKE THE BROADER MARKET,
HOWEVER, SOME SECTORS MAY NOT HAVE A HISTORY
OF GROWTH IN THE LONG RUN. AND, AS WITH ALL STOCK
FUNDS, THE SHARE PRICE AND RETURN OF A FUND THAT
INVESTS IN A SECTOR WILL VARY. THAT MEANS IF YOU
SELL YOUR SHARES DURING A SECTOR DOWNTURN, YOU
MIGHT LOSE MONEY. BUT IF YOU CAN IDENTIFY A
SECTOR THAT IS ABOUT TO EXPERIENCE RAPID GROWTH
YOU MAY HAVE THE POTENTIAL FOR ABOVE-AVERAGE
GAINS.
(CHECKMARK)
$10,000 OVER 10 YEARS
IMAHDR PRASUN SHR__CHT 19980228 19980305 144319 S00000000000001
Medical Delivery S&P 500
00505 SP001
1988/02/29 9700.00 10000.00
1988/03/31 9957.04 9691.00
1988/04/30 10038.21 9798.57
1988/05/31 9875.87 9883.82
1988/06/30 10187.03 10337.48
1988/07/31 10078.80 10298.20
1988/08/31 9794.70 9948.06
1988/09/30 10349.37 10371.85
1988/10/31 10619.94 10660.19
1988/11/30 10281.73 10507.75
1988/12/31 10619.94 10691.63
1989/01/31 11404.60 11474.26
1989/02/28 11823.99 11188.55
1989/03/31 12473.36 11449.25
1989/04/30 13325.66 12043.46
1989/05/31 14015.62 12531.22
1989/06/30 13852.68 12459.79
1989/07/31 15425.00 13584.91
1989/08/31 16143.39 13851.18
1989/09/30 16590.69 13794.39
1989/10/31 16034.95 13474.36
1989/11/30 16780.45 13749.23
1989/12/31 16781.43 14079.22
1990/01/31 14310.71 13134.50
1990/02/28 14671.60 13303.94
1990/03/31 15351.74 13656.49
1990/04/30 15504.43 13315.08
1990/05/31 17697.54 14613.30
1990/06/30 18544.24 14513.93
1990/07/31 18613.64 14467.48
1990/08/31 17128.44 13159.62
1990/09/30 15990.24 12518.75
1990/10/31 15795.92 12464.92
1990/11/30 17989.02 13270.15
1990/12/31 19510.41 13640.39
1991/01/31 22654.94 14235.11
1991/02/28 24055.69 15252.92
1991/03/31 27629.02 15622.04
1991/04/30 26800.01 15659.53
1991/05/31 29015.48 16336.03
1991/06/30 26571.07 15587.84
1991/07/31 29237.11 16314.23
1991/08/31 29579.68 16700.88
1991/09/30 29847.77 16421.97
1991/10/31 30503.11 16642.03
1991/11/30 29654.15 15971.35
1991/12/31 34694.40 17798.47
1992/01/31 34724.88 17467.42
1992/02/29 33383.45 17694.50
1992/03/31 31173.13 17349.46
1992/04/30 29938.40 17859.53
1992/05/31 29633.53 17947.04
1992/06/30 28073.09 17679.63
1992/07/31 29670.61 18402.73
1992/08/31 29637.33 18025.47
1992/09/30 26159.40 18238.17
1992/10/31 27457.38 18302.01
1992/11/30 30153.20 18926.11
1992/12/31 30119.91 19158.90
1993/01/31 28588.96 19319.83
1993/02/28 24062.65 19582.58
1993/03/31 24595.16 19995.77
1993/04/30 24295.62 19511.88
1993/05/31 25044.46 20034.79
1993/06/30 25294.07 20092.89
1993/07/31 25926.42 20012.52
1993/08/31 25843.22 20771.00
1993/09/30 27973.25 20611.06
1993/10/31 29287.87 21037.71
1993/11/30 29770.46 20837.85
1993/12/31 31784.00 21089.99
1994/01/31 33564.57 21807.05
1994/02/28 33747.62 21216.08
1994/03/31 32066.89 20291.06
1994/04/30 33098.62 20550.78
1994/05/31 34213.56 20887.82
1994/06/30 32100.17 20376.06
1994/07/31 33531.29 21044.40
1994/08/31 36926.02 21907.22
1994/09/30 38240.64 21370.49
1994/10/31 39488.71 21851.33
1994/11/30 37791.34 21055.50
1994/12/31 38089.97 21367.76
1995/01/31 39761.96 21921.82
1995/02/28 40371.54 22776.12
1995/03/31 42931.77 23448.24
1995/04/30 41536.48 24138.79
1995/05/31 40174.05 25103.62
1995/06/30 40820.33 25686.77
1995/07/31 44942.54 26538.55
1995/08/31 45152.14 26605.16
1995/09/30 46095.36 27727.90
1995/10/31 45309.34 27628.91
1995/11/30 49099.68 28841.82
1995/12/31 50348.40 29397.31
1996/01/31 53056.30 30398.00
1996/02/29 54158.14 30679.78
1996/03/31 54681.05 30975.23
1996/04/30 55303.66 31431.81
1996/05/31 55186.86 32242.43
1996/06/30 53882.62 32365.28
1996/07/31 48042.74 30935.38
1996/08/31 52481.05 31587.81
1996/09/30 56238.04 33365.57
1996/10/31 51994.39 34285.79
1996/11/30 54933.80 36877.45
1996/12/31 55889.11 36146.91
1997/01/31 58533.37 38405.37
1997/02/28 59844.92 38706.47
1997/03/31 56058.34 37116.02
1997/04/30 57336.35 39331.84
1997/05/31 62652.91 41726.37
1997/06/30 63088.32 43595.71
1997/07/31 67144.49 47064.62
1997/08/31 64829.95 44428.06
1997/09/30 66754.92 46861.38
1997/10/31 64554.96 45296.21
1997/11/30 66090.35 47392.97
1997/12/31 67144.27 48206.71
1998/01/31 65185.36 48739.88
1998/02/27 72987.73 52255.00
IMATRL PRASUN SHR__CHT 19980228 19980305 144322 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Medical Delivery Portfolio on February 29,
1988, and the current 3.00% sales charge was paid. As the chart shows,
by February 28, 1998, the value of the investment would have grown to
$72,988 - a 629.88% increase on the initial investment, and includes
the effect of a $7.50 trading fee. 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
$52,255 - a 422.55% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1998
% OF FUND'S
INVESTMENTS
UNITED HEALTHCARE CORP. 8.2
HEALTH MANAGEMENT ASSOCIATES, INC. CLASS A 8.0
HEALTHSOUTH CORP. 6.9
COLUMBIA/HCA HEALTHCARE CORP. 5.7
TENET HEALTHCARE CORP. 5.6
HUMANA, INC. 5.5
UNIVERSAL HEALTH SERVICES, INC. CLASS B 4.7
LINCARE HOLDINGS, INC. 4.2
QUORUM HEALTH GROUP, INC. 4.0
TOTAL RENAL CARE HOLDINGS, INC. 2.8
TOP INDUSTRIES AS OF FEBRUARY 28, 1998
HOSPITALS 35.3%
HMO'S & OUTPATIENT CARE 23.7%
MEDICAL SERVICES 5.8%
NURSING CARE &
NURSING HOMES 3.8%
MISCELLANEOUS HEALTH & ALLIED
SERVICES, NEC 3.7%
ALL OTHERS 27.7%
ROW: 1, COL: 1, VALUE: 27.7
ROW: 1, COL: 2, VALUE: 3.7
ROW: 1, COL: 3, VALUE: 3.8
ROW: 1, COL: 4, VALUE: 5.8
ROW: 1, COL: 5, VALUE: 23.7
ROW: 1, COL: 6, VALUE: 35.3
*
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
MEDICAL DELIVERY PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
NOTE TO SHAREHOLDERS: John Porter became Portfolio Manager of Fidelity
Select Medical Delivery Portfolio on January 31, 1998
Q. HOW DID THE FUND PERFORM, JOHN?
A. It was a mixed bag. For the 12 months that ended February 28, 1998,
the fund returned 21.97%. This trailed the Standard & Poor's 500
Index, which returned 35.01% over the same period.
Q. WHY DID THE FUND'S PERFORMANCE LAG THAT OF THE INDEX?
A. The fund invests primarily in two areas: managed-care companies and
hospitals. For the past year - and even longer - managed-care
companies have performed poorly as pricing and cost trends have been
out of line. The cost trends - particularly in the pharmaceuticals
area - have been growing at a very fast pace, and many companies have
been unable to raise their prices to keep up. Hospitals, on the other
hand, have come under increased government scrutiny. When the
government decided to investigate certain business practices of
Columbia/HCA Healthcare, for example, its decision to do so cast a
pall across the hospital sector. For better or worse, investors took
an individual situation and applied it to the whole sector. As a
result, hospitals also showed mixed results.
Q. WHAT TYPES OF CHANGES HAVE YOU MADE TO THE FUND SINCE TAKING OVER?
A. I haven't really made any significant adjustments. I've been
spending a lot of time familiarizing myself with each of the fund's
holdings and as I get more acquainted with these stocks, I may make
some changes. The one strategy that I will try to execute is to look
for opportunities that can offset other negative trends within the
industry. For example, while the rising cost of prescription drugs has
been bad for managed-care companies, pharmaceutical stocks have done
quite well and I've invested in that area. Examples within the fund
included Merck and Bristol-Myers Squibb.
Q. YOU MENTIONED THE GOVERNMENT'S SCRUTINY OF COLUMBIA/HCA HEALTHCARE,
THE FUND'S FOURTH-LARGEST POSITION AT THE END OF THE PERIOD. WHAT
EXACTLY HAPPENED?
A. Throughout the course of the period, the government has been
investigating Columbia's billing practices, as well as other aspects
of its business dealings. As a result, investors have shied away from
the stock. While it was still very uncertain what would happen to
Columbia as a result of the investigation, we began to see trickles of
good news toward the end of the period.
Q. WHICH STOCKS PERFORMED WELL DURING THE PERIOD? WHICH WERE
DISAPPOINTING?
A. Health Management Associates, HEALTHSOUTH and Tenet - all hospital
companies - turned in strong performances as each company benefited
from well-thought-out acquisition strategies. Tenet may have been a
beneficiary of Columbia/HCA Healthcare's problems, since the company
was able to make a number of favorable acquisitions. Columbia didn't
have the luxury to consider making acquisitions as the company had to
concentrate more on internal matters. For reasons I've already
mentioned, Columbia/HCA Healthcare was disappointing, as was the
fund's stake in Idexx, a company that manufactures biotechnology-based
detection systems for specialized health and quality control
applications.
Q. WHAT'S YOUR OUTLOOK?
A. In terms of the managed-care sector, I'm pretty optimistic. I think
the companies in the sector - in general - have a good idea as to
what has gone wrong on both the cost and pricing issues. Starting in
1998, we may begin to see the benefits of some managed-care companies
being more rational in their pricing to try to offset the spiraling
costs. At the same time, managed-care companies may have a better
handle on their own cost structures. In the hospital group, I think
the trends look good. Many companies may be beneficiaries of continued
merger and acquisition activity and the leading companies in the
sector should continue to perform well.
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, 1998, more than
$155 million
MANAGER: John Porter, since January 1998;
manager, Fidelity Select Software and Computer
Services Portfolio, since 1997; Fidelity Select
Multimedia Portfolio, 1996-1997; joined Fidelity
in 1995
(checkmark)
MEDICAL DELIVERY PORTFOLIO
INVESTMENTS FEBRUARY 28, 1998
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 90.7%
SHARES VALUE (NOTE 1)
COMPUTER SERVICES & SOFTWARE - 1.2%
COMPUTER SERVICES - 1.2%
HBO & Co. 35,600 $ 1,926,850
DRUGS & PHARMACEUTICALS - 2.9%
COMMERCIAL LABORATORY RESEARCH - 0.4%
Transkaryotic Therapies, Inc. (a) 20,400 647,700
DRUGS - 2.5%
Bristol-Myers Squibb Co. 6,800 681,275
Lilly (Eli) & Co. (a) 5,000 329,063
Merck & Co., Inc. 17,300 2,206,831
Pfizer, Inc. 3,400 300,900
Schering-Plough Corp. 4,600 349,888
3,867,957
TOTAL DRUGS & PHARMACEUTICALS 4,515,657
INSURANCE - 2.0%
ACCIDENT & HEALTH INSURANCE - 0.3%
Aetna, Inc. 6,400 559,200
INSURANCE BROKERS & SERVICES - 0.9%
First Health Group Corp. (a) 28,300 1,409,694
LIFE INSURANCE - 0.3%
United Wisconsin Services, Inc. 13,100 406,100
MULTI-LINE INSURANCE - 0.5%
CIGNA Corp. 3,900 744,900
TOTAL INSURANCE 3,119,894
MEDICAL EQUIPMENT & SUPPLIES - 5.4%
DRUG DISTRIBUTORS - WHOLESALE - 1.6%
Cardinal Health, Inc. 31,100 2,546,313
MEDICAL SUPPLIES & APPLIANCES - 2.3%
Abbott Laboratories 14,400 1,077,300
Baxter International, Inc. 9,400 532,275
Boston Scientific Corp. (a) 20,000 1,195,000
Johnson & Johnson 10,000 755,000
3,559,575
MEDICAL TECHNOLOGY - 0.8%
Medtronic, Inc. 13,500 717,188
St. Jude Medical, Inc. (a) 12,350 450,775
1,167,963
OPHTHALMIC GOODS - 0.4%
Cooper Companies, Inc. (a) 14,200 663,850
X-RAY ELECTRO-MEDICAL APPARATUS - 0.3%
Guidant Corp. 5,500 401,156
TOTAL MEDICAL EQUIPMENT & SUPPLIES 8,338,857
MEDICAL FACILITIES MANAGEMENT - 79.2%
HOME HEALTH CARE AGENCIES - 2.0%
Alternative Living Services, Inc. (a) 30,000 1,027,500
Apria Healthcare Group, Inc. (a) 135,100 1,840,738
Coram Healthcare Corp.
warrants 7/11/99 (a) 9,740 -
Home Health Corp. of America, Inc. (a) 35,000 140,000
3,008,238
HOSPITALS - 35.3%
Columbia/HCA Healthcare Corp. 324,223 8,794,549
HEALTHSOUTH Corp. (a) 397,800 10,740,600
SHARES VALUE (NOTE 1)
Health Management Associates, Inc.
Class A (a) 444,478 $ 12,362,044
Magellan Health Services, Inc. (a) 34,800 783,000
Quorum Health Group, Inc. (a) 225,100 6,239,491
Tenet Healthcare Corp. 233,200 8,701,275
Universal Health Services, Inc. Class B (a) 138,500 7,236,625
54,857,584
HMO'S & OUTPATIENT CARE - 23.7%
Compdent Corp. (a) 32,300 448,163
Coventry Corp. (a) 135,600 2,195,025
Foundation Health Systems, Inc.
Class A (a) 39,870 1,103,901
Humana, Inc. (a) 338,400 8,608,050
Maxicare Health Plans, Inc. (a) 34,800 400,200
Mid-Atlantic Medical Services,Inc. (a) 72,900 856,575
Oxford Health Plans, Inc. (a) 48,100 826,719
PacifiCare Health Systems, Inc.: (a)
Class A 5,900 359,900
Class B 23,100 1,443,750
Sierra Health Services, Inc. (a) 113,800 4,167,925
Trigon Healthcare, Inc. (a) 68,400 2,120,400
United HealthCare Corp. 208,900 12,677,619
Wellpoint Health Networks, Inc. (a) 27,300 1,595,344
36,803,571
MEDICAL SERVICES - 5.8%
Carematrix Corp. (a) 49,300 1,232,500
Lincare Holdings, Inc. (a) 100,000 6,490,625
Physician Reliance Network, Inc. (a) 104,400 1,246,275
8,969,400
MISCELLANEOUS HEALTH & ALLIED SERVICES, NEC - 3.7%
Renal Care Group, Inc. (a) 39,100 1,471,138
Total Renal Care Holdings, Inc. 132,966 4,279,838
5,750,976
NURSING CARE & NURSING HOMES - 3.8%
Genesis Health Ventures, Inc. (a) 38,100 1,104,900
Health Care & Retirement Corp. 15,000 658,125
Integrated Health Services, Inc. 35,100 1,191,206
Manor Care, Inc. 80,000 3,005,000
5,959,231
NURSING, PERSONAL CARE FACILITIES - 1.4%
NovaCare, Inc. (a) 156,700 2,193,800
SKILLED NURSING CARE FACILITIES - 1.2%
Mariner Health Group, Inc. (a) 43,800 665,213
Vencor, Inc. (a) 41,700 1,196,269
1,861,482
SPECIALTY HOSPITAL, EXCEPT PSYCHIATRIC - 0.5%
Pediatrix Medical Group (a) 17,800 734,250
SPECIALTY OUTPATIENT CLINICS - 1.8%
Phycor, Inc. (a) 67,900 1,746,303
Sun Healthcare Group (a) 55,200 1,086,750
2,833,053
TOTAL MEDICAL FACILITIES MANAGEMENT 122,971,585
TOTAL COMMON STOCKS
(Cost $116,925,627) 140,872,843
CASH EQUIVALENTS - 9.3%
SHARES VALUE (NOTE 1)
Taxable Central Cash Fund (b)
(Cost $14,462,533) 14,462,533 $ 14,462,533
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $131,388,160) $ 155,335,376
LEGEND
1. Non-income producing
2. At period end, the seven-day yield on the Taxable Central Cash Fund
was 5.62%. 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 $156,253,610 and $196,852,235, 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 $54,751 for the
period (see Note 4 of Notes to Financial Statements).
The fund participated in the securities lending program. At the period
end, the value of securities loaned and the value of collateral
amounted to $1,125,000 and $1,125,000, respectively (see Note 6 of
Notes to Financial Statements).
INCOME TAX INFORMATION
At February 28, 1998, the aggregate cost of investment securities for
income tax purposes was $132,318,178. Net unrealized appreciation
aggregated $23,017,198, of which $26,375,336 related to appreciated
investment securities and $3,358,138 related to depreciated investment
securities.
The fund hereby designates approximately $28,321,000 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 deductions for corporate
shareholders (unaudited).
The fund will notify shareholders in January 1999 of this percentage
for use in preparing 1998 income tax returns.
MEDICAL DELIVERY PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1998
ASSETS
INVESTMENT IN $ 155,335,376
SECURITIES,
AT VALUE
(COST
$131,388
,160) -
SEE
ACCOMPAN
YING
SCHEDULE
RECEIVABLE 1,954,079
FOR FUND
SHARES
SOLD
DIVIDENDS 11,887
RECEIVABLE
INTEREST 60,074
RECEIVABLE
REDEMPTION 149
FEES
RECEIVABLE
OTHER 106,583
RECEIVABLE
S
TOTAL 157,468,148
ASSETS
LIABILITIES
PAYABLE FOR $ 610,263
FUND
SHARES
REDEEMED
ACCRUED 71,486
MANAGEM
ENT FEE
OTHER 118,956
PAYABLES
AND
ACCRUED
EXPENSES
COLLATERAL ON 1,125,000
SECURITIES
LOANED,
AT VALUE
TOTAL 1,925,705
LIABILITIES
NET ASSETS $ 155,542,443
NET ASSETS
CONSIST OF:
PAID IN $ 118,740,114
CAPITAL
ACCUMULATED 12,855,113
UNDISTRIBUT
ED NET
REALIZED
GAIN (LOSS)
ON
INVESTMENT
S AND
FOREIGN
CURRENCY
TRANSACTIO
NS
NET 23,947,216
UNREALIZED
APPRECIATI
ON
(DEPRECIATI
ON) ON
INVESTMENT
S
NET ASSETS, $ 155,542,443
FOR
5,492,63
4
SHARES
OUTSTANDIN
G
NET ASSET $28.32
VALUE AND
REDEMPTIO
N PRICE
PER SHARE
($155,54
2,443 (DIVIDED BY)
5,492,63
4 SHARES)
MAXIMUM $29.20
OFFERING
PRICE PER
SHARE
(100/97.
00 OF
$28.32)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1998
INVESTMENT $ 259,685
INCOME
DIVIDENDS
INTEREST 775,378
(INCLUDING
INCOME ON
SECURITIES
LOANED OF
$22,504)
TOTAL 1,035,063
INCOME
EXPENSES
MANAGEMEN $ 949,169
T FEE
TRANSFER 1,283,754
AGENT FEES
ACCOUNTING 162,468
AND
SECURITY
LENDING
FEES
NON-INTEREST 838
ED
TRUSTEES'
COMPENSAT
ION
CUSTODIAN 26,526
FEES AND
EXPENSES
REGISTRATION 34,679
FEES
AUDIT 25,828
LEGAL 5,537
MISCELLANEO 1,833
US
TOTAL 2,490,632
EXPENSES
BEFORE
REDUCTIONS
EXPENSE (52,426) 2,438,206
REDUCTIONS
NET (1,403,143)
INVESTMEN
T INCOME
(LOSS)
REALIZED 30,147,880
AND
UNREALIZED
GAIN (LOSS)
NET REALIZED
GAIN (LOSS)
ON
INVESTMENT
SECURITIES
CHANGE IN (1,649,494)
NET
UNREALIZED
APPRECIATI
ON
(DEPRECIATI
ON) ON
INVESTMENT
SECURITIES
NET GAIN 28,498,386
(LOSS)
NET INCREASE $ 27,095,243
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
OTHER $ 212,167
INFORMATIO
N
SALES
CHARGES
PAID TO
FDC
SALES $ 3,181
CHARGES -
DEALERS'
PORTION
DEFERRED $ 6,095
SALES
CHARGES
WITHHELD
BY FDC
EXCHANGE $ 52,448
FEES
WITHHELD
BY FSC
EXPENSE $ 49,199
REDUCTIONS
DIRECTED
BROKERAGE
ARRANGEM
ENTS
CUSTODIA 895
N CREDITS
TRANSFER 2,332
AGENT
CREDITS
$ 52,426
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
FEBRUARY 28, FEBRUARY 28,
1998 1997
OPERATIONS $ (1,403,143) $ (1,815,979)
NET
INVESTMENT
INCOME
(LOSS)
NET 30,147,880 39,056,721
REALIZED
GAIN (LOSS)
CHANGE IN (1,649,494) (20,650,234)
NET
UNREALIZED
APPRECIATI
ON
(DEPRECIATI
ON)
NET 27,095,243 16,590,508
INCREASE
(DECREAS
E) IN NET
ASSETS
RESULTING
FROM
OPERATIO
NS
DISTRIBUTIONS (27,697,433) (25,354,918)
TO
SHAREHOLD
ERS FROM
NET
REALIZED
GAINS
SHARE 114,716,005 213,043,160
TRANSACTIO
NS
NET
PROCEEDS
FROM SALES
OF SHARES
REINVESTM 27,235,291 24,874,771
ENT OF
DISTRIBUTIO
NS
COST OF (178,502,092) (332,613,257)
SHARES
REDEEMED
NET (36,550,796) (94,695,326)
INCREASE
(DECREAS
E) IN NET
ASSETS
RESULTING
FROM
SHARE
TRANSACTI
ONS
REDEMPTIO 310,663 355,703
N FEES
TOTAL (36,842,323) (103,104,033)
INCREASE
(DECREASE)
IN NET
ASSETS
NET ASSETS
BEGINNING 192,384,766 295,488,799
OF PERIOD
END OF $ 155,542,443 $ 192,384,766
PERIOD
OTHER
INFORMATION
SHARES
SOLD 4,089,783 7,704,445
ISSUED IN 1,085,517 921,317
REINVESTME
NT OF
DISTRIBUTIO
NS
REDEEMED (6,483,186) (12,015,996)
NET (1,307,886) (3,390,234)
INCREASE
(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>
YEARS ENDED FEBRUARY 28, YEAR ENDED YEARS ENDED FEBRUARY 28,
FEBRUARY 29,
SELECTED PER-SHARE DATA 1998 1997 1996 1995 1994
</TABLE>
NET ASSET $ 28.29 $ 29.00 $ 23.18 $ 20.28 $ 14.46
VALUE,
BEGINNING
OF PERIOD
INCOME FROM
INVESTMENT
OPERATION
S
NET (.24) (.23) (.03) .06 (.10)
INVESTMENT
INCOME
(LOSS) C
NET 5.45 2.92 7.72 3.74 5.84
REALIZED
AND
UNREALIZED
GAIN (LOSS)
TOTAL FROM 5.21 2.69 7.69 3.80 5.74
INVESTMENT
OPERATIONS
LESS
DISTRIBUTIO
NS
FROM NET - - - (.06) -
INVESTMENT
INCOME
FROM NET (5.23) (3.45) (1.91) (.89) -
REALIZED
GAIN
TOTAL (5.23) (3.45) (1.91) (.95) -
DISTRIBUTIO
NS
REDEMPTION .05 .05 .04 .05 .08
FEES
ADDED TO
PAID IN
CAPITAL
NET ASSET $ 28.32 $ 28.29 $ 29.00 $ 23.18 $ 20.28
VALUE, END
OF PERIOD
TOTAL 21.97% 10.50% 34.15% 19.63% 40.25%
RETURN A, B
RATIOS AND
SUPPLEME
NTAL DATA
NET ASSETS, $ 155,542 $ 192,385 $ 295,489 $ 299,570 $ 188,553
END OF
PERIOD
(000
OMITTED)
RATIO OF 1.57% 1.57% 1.65% 1.48% 1.82%
EXPENSES
TO AVERAGE
NET ASSETS
RATIO OF 1.53% D 1.53% D 1.62% D 1.45% D 1.79% D
EXPENSES
TO AVERAGE
NET ASSETS
AFTER
EXPENSE
REDUCTIONS
RATIO OF NET (.88)% (.84)% (.13)% .29% (.57)%
INVESTMENT
INCOME
(LOSS) TO
AVERAGE
NET ASSETS
PORTFOLIO 109% 78% 132% 123% 164%
TURNOVER
RATE
AVERAGE $ .0422 $ .0434
COMMISSIO
N RATE E
<TABLE>
<CAPTION>
<S> <C>
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. 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>
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). Load adjusted returns include a 3.00% sales
charge and the effect of a $7.50 trading fee.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 28, 1998 YEAR YEARS YEARS
SELECT AMERICAN GOLD -43.15% 15.56% 14.43%
SELECT AMERICAN GOLD -44.93% 12.03% 10.93%
(LOAD ADJ.)
S&P 500 35.01% 166.84% 422.55%
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 Standard & Poor's
500 index - a widely recognized, unmanaged index of common stocks.
This benchmark includes 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, 1998 YEAR YEARS YEARS
SELECT AMERICAN GOLD -43.15% 2.94% 1.36%
SELECT AMERICAN GOLD -44.93% 2.30% 1.04%
(LOAD ADJ.)
S&P 500 35.01% 21.69% 17.98%
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 LONG-TERM GROWTH AND
SHORT-TERM VOLATILITY. 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
AMERICAN GOLD S&P 500
00041 SP001
1988/02/29 9700.00 10000.00
1988/03/31 10670.68 9691.00
1988/04/30 10738.56 9798.57
1988/05/31 10670.68 9883.82
1988/06/30 10881.11 10337.48
1988/07/31 10853.95 10298.20
1988/08/31 10215.89 9948.06
1988/09/30 9774.67 10371.85
1988/10/31 9876.49 10660.19
1988/11/30 10012.25 10507.75
1988/12/31 9733.94 10691.63
1989/01/31 10086.91 11474.26
1989/02/28 10616.38 11188.55
1989/03/31 10243.04 11449.25
1989/04/30 9747.52 12043.46
1989/05/31 9394.54 12531.22
1989/06/30 9924.00 12459.79
1989/07/31 10025.82 13584.91
1989/08/31 10534.92 13851.18
1989/09/30 10596.01 13794.39
1989/10/31 10704.62 13474.36
1989/11/30 12069.00 13749.23
1989/12/31 11878.94 14079.22
1990/01/31 12401.61 13134.50
1990/02/28 12055.42 13303.94
1990/03/31 11587.05 13656.49
1990/04/30 10331.28 13315.08
1990/05/31 11240.87 14613.30
1990/06/30 10521.34 14513.93
1990/07/31 11254.44 14467.48
1990/08/31 11050.80 13159.62
1990/09/30 11044.02 12518.75
1990/10/31 9231.63 12464.92
1990/11/30 9116.24 13270.15
1990/12/31 9835.76 13640.39
1991/01/31 8471.38 14235.11
1991/02/28 9238.42 15252.92
1991/03/31 9204.48 15622.04
1991/04/30 8878.66 15659.53
1991/05/31 9184.11 16336.03
1991/06/30 9801.82 15587.84
1991/07/31 9693.21 16314.23
1991/08/31 8905.81 16700.88
1991/09/30 8756.47 16421.97
1991/10/31 9428.48 16642.03
1991/11/30 9408.12 15971.35
1991/12/31 9231.63 17798.47
1992/01/31 9455.63 17467.42
1992/02/29 9163.75 17694.50
1992/03/31 8539.26 17349.46
1992/04/30 8104.83 17859.53
1992/05/31 8681.81 17947.04
1992/06/30 9245.21 17679.63
1992/07/31 9828.97 18402.73
1992/08/31 9645.70 18025.47
1992/09/30 9591.39 18238.17
1992/10/31 9306.30 18302.01
1992/11/30 8518.89 18926.11
1992/12/31 8946.54 19158.90
1993/01/31 8776.84 19319.83
1993/02/28 9604.97 19582.58
1993/03/31 10684.25 19995.77
1993/04/30 12035.06 19511.88
1993/05/31 13372.29 20034.79
1993/06/30 14152.90 20092.89
1993/07/31 15279.71 20012.52
1993/08/31 14478.73 20771.00
1993/09/30 12944.65 20611.06
1993/10/31 14879.22 21037.71
1993/11/30 14892.79 20837.85
1993/12/31 15985.65 21089.99
1994/01/31 15992.44 21807.05
1994/02/28 15381.53 21216.08
1994/03/31 15754.86 20291.06
1994/04/30 14424.42 20550.78
1994/05/31 15048.92 20887.82
1994/06/30 14309.03 20376.06
1994/07/31 14098.60 21044.40
1994/08/31 14763.82 21907.22
1994/09/30 16053.53 21370.49
1994/10/31 14892.79 21851.33
1994/11/30 13127.92 21055.50
1994/12/31 13514.84 21367.76
1995/01/31 12102.94 21921.82
1995/02/28 12517.00 22776.12
1995/03/31 14438.00 23448.24
1995/04/30 14383.69 24138.79
1995/05/31 14682.37 25103.62
1995/06/30 14886.00 25686.77
1995/07/31 15286.49 26538.55
1995/08/31 15320.43 26605.16
1995/09/30 15313.65 27727.90
1995/10/31 13467.32 27628.91
1995/11/30 14716.31 28841.82
1995/12/31 15028.55 29397.31
1996/01/31 17696.22 30398.00
1996/02/29 18402.17 30679.78
1996/03/31 18843.39 30975.23
1996/04/30 19291.39 31431.81
1996/05/31 21395.66 32242.43
1996/06/30 18375.02 32365.28
1996/07/31 18035.62 30935.38
1996/08/31 19875.16 31587.81
1996/09/30 19508.61 33365.57
1996/10/31 18972.36 34285.79
1996/11/30 18157.80 36877.45
1996/12/31 18022.31 36146.91
1997/01/31 17254.07 38405.37
1997/02/28 19524.17 38706.47
1997/03/31 16423.55 37116.02
1997/04/30 15431.41 39331.84
1997/05/31 16316.76 41726.37
1997/06/30 14919.23 43595.71
1997/07/31 14685.09 47064.62
1997/08/31 14824.11 44428.06
1997/09/30 16089.94 46861.38
1997/10/31 13624.13 45296.21
1997/11/30 10412.00 47392.97
1997/12/31 10924.18 48206.71
1998/01/31 11531.49 48739.88
1998/02/27 11093.00 52255.00
IMATRL PRASUN SHR__CHT 19980228 19980318 101231 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select American Gold Portfolio on February 29,
1988, and the current 3.00% sales charge was paid. As the chart shows,
by February 28, 1998, the value of the investment would have grown to
$11,093 - a 10.93% increase on the initial investment, and includes
the effect of a $7.50 trading fee. 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
$52,255 - a 422.55% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1998
% OF FUND'S
INVESTMENTS
EURO-NEVADA MINING LTD. 11.8
GETCHELL GOLD CORP. 8.4
FRANCO-NEVADA MINING CORP. 6.4
PLACER DOME, INC. 5.7
MERIDIAN GOLD, INC. 5.3
GREENSTONE RESOURCES LTD. 5.2
NORMANDY MINING LTD. 5.1
NEWMONT GOLD CO. 4.8
PRIME RESOURCES GROUP, INC. 4.1
PIONEER GROUP, INC. 3.4
TOP INDUSTRIES AS OF FEBRUARY 28, 1998
GOLD ORES 70.1%
GOLD & SILVER ORES 15.3%
SILVER ORES 4.3%
MISCELLANEOUS NONMETAL
MINERALS 3.8%
INVESTMENT MANAGERS 3.4%
ALL OTHERS 3.1%
ROW: 1, COL: 1, VALUE: 3.1
ROW: 1, COL: 2, VALUE: 3.4
ROW: 1, COL: 3, VALUE: 3.8
ROW: 1, COL: 4, VALUE: 4.3
ROW: 1, COL: 5, VALUE: 15.3
ROW: 1, COL: 6, VALUE: 71.8
*
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
AMERICAN GOLD PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
George Domolky,
Portfolio Manager
of Fidelity Select
American Gold Portfolio
Q. HOW DID THE FUND PERFORM, GEORGE?
A. The period just completed was an extremely difficult one for the
fund and the gold market. For the 12 months that ended February 28,
1998, the fund lost 43.15%, while the Standard & Poor's 500 Index
gained 35.01%.
Q. WHAT FACTORS HURT THE FUND'S PERFORMANCE?
A. The primary factor was the price of gold, which continued to
decline during the period. The price of an ounce of gold dipped under
$280 early in 1998 before stabilizing around $300 at the end of the
period. The litany of negative influences on gold will probably be
familiar to many investors - periodic central bank sales, low
inflation and a strong dollar were all part of the problem. In the
fall of 1997, the currency crisis in Southeast Asia added still more
muscle to the forces pushing down gold prices, as a number of
countries in the region were forced to sell gold as a means of raising
cash to offset their depreciating currencies.
Q. WHAT STRATEGY DID YOU EMPLOY IN SUCH AN UNFAVORABLE ENVIRONMENT?
A. The fund increased its holdings of certain choice companies, such
as Euro-Nevada Mining and Franco-Nevada Mining - the fund's number one
and number three stocks, respectively, at the end of the period. At
the same time, in order to help insulate the fund from declining gold
prices, I attempted to diversify it further into diamonds, platinum,
palladium and silver. Finally, I tried to invest the fund's assets in
companies with cash flows and cost structures that allow them to be
profitable despite low commodity prices. The bulk of the fund's
holdings remain domiciled in the United States and Canada, with a
sprinkling of holdings based in South America, Australia and
elsewhere. As always, foreign investments carry greater risk than U.S.
investments, but I felt that there was sufficient profit potential in
the fund's foreign holdings to justify the added risks.
Q. WHAT HOLDINGS HELPED THE FUND'S PERFORMANCE?
A. Pioneer Group stands out as the most positive contributor to the
fund's performance. This U.S.-based company owns gold properties in
the Republic of Ghana that investors judged to be undervalued. Another
helpful holding, Mountain Province Mining, benefited from the
exploration potential of its diamond mining operations in Canada.
Southernera Resources and DIA Metropolitan Minerals are further
examples of the fund's diversification into diamond mining equities.
Finally, Pan American Silver is a silver mining stock that helped the
fund's performance.
Q. WHAT HOLDINGS WERE DISAPPOINTMENTS?
A. Getchell Gold stock struggled and, because it was one of the fund's
largest holdings, badly hurt performance. During the period, investors
favored companies with established production operations over firms -
like Getchell Gold - whose primary appeal is the potential
profitability represented by successful exploration activities.
Greenstone Resources is another exploration company whose stock did
poorly for similar reasons. Newmont Mining also dragged down
performance. The company has a policy of not hedging its production,
which means that, unlike many of its competitors, Newmont does not
protect itself against falling gold prices by selling forward or
futures contracts for later delivery. Consequently, the company tends
to be hurt more by severe declines in precious metals prices of the
sort we have experienced lately.
Q. WHAT'S YOUR OUTLOOK, GEORGE?
A. Gold and other precious metals may be close to an important bottom.
However, gold market participants will be waiting eagerly to hear what
level of gold reserves the European Economic Community central bank
decides to carry as it pursues a unified European currency. That
decision should be made by the summer of 1998. On other fronts, the
current low gold price will result in the closing of unprofitable
mines, curtailing gold supplies somewhat. The mines that remain open
will be forced to take all reasonable steps to cut costs further,
setting the stage for increased profits when gold prices rebound. At
the same time, increasing demand for gold jewelry in India and China
is a hopeful sign. Furthermore, if the gold market turns upward even a
modest amount, the exploration companies that have been spurned in
favor of more defensive purchases should be star performers.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET AND OTHER CONDITIONS.
FUND FACTS
START DATE: December 16, 1985
FUND NUMBER: 041
TRADING SYMBOL: FSAGX
SIZE: as of February 28, 1998, more than
$219 million
MANAGER: George Domolky, since 1997;
manager, Fidelity Select Precious Metals and
Minerals Portfolio, since 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, 1998
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 99.3%
SHARES VALUE (NOTE 1)
AUSTRALIA - 5.1%
PRECIOUS METALS - 5.1%
GOLD & SILVER ORES - 5.1%
Normandy Mining Ltd. 10,752,500 $ 10,668,018
CANADA - 62.8%
METALS & MINING - 5.5%
METAL MINING - 1.4%
Dayton Mining Corp. (a) 50,000 79,017
Morgain Minerals, Inc. (a) 295,000 258,999
Romarco Minerals, Inc. (a) 5,000 9,658
Southernera Resources Ltd. (a) 303,500 2,526,058
2,873,732
METAL MINING SERVICES - 0.3%
Minefinders Corp., Ltd. (a) 497,600 698,999
MISCELLANEOUS NONMETAL MINERALS - 3.8%
Aber Resources Ltd. (a) 307,300 3,583,095
Archangel Diamond Corp. (a) 19,600 15,143
Camphor Ventures, Inc. (a) 14,100 19,708
DIA Metropolitan Minerals Ltd.: (a)
Class A 50,650 889,377
Class B 172,400 3,511,572
8,018,895
TOTAL METALS & MINING 11,591,626
OIL & GAS - 0.3%
OIL & GAS EXPLORATION - 0.3%
Southwestern Gold Corp. (a) 207,500 668,955
PRECIOUS METALS - 57.0%
GOLD & SILVER ORES - 0.9%
GoldCorp, Inc. Class A (a) 104,500 484,425
Mentor Exploration & Development
Co. Ltd. (a)(d) 188,000 1,016,752
Richmont Mines, Inc. (a) 187,300 493,327
1,994,504
GOLD ORES - 55.6%
Argosy Mining Corp. (a) 55,000 16,611
Argosy Mining Corp. (a)(c) 375,000 113,258
Argosy Mining Corp. warrants
6/14/98 (a)(c) 187,500 -
Agnico Eagle Mines Ltd. 40,000 248,639
Barrick Gold Corp. 19,100 366,237
Brazilian Resources, Inc. (a) 580,000 69,254
Cambior, Inc. 694,500 4,365,777
Canarc Resources Corp. (a) 530,000 204,742
Canarc Resources Corp.
warrants 6/22/98 (a) 125,000 -
Cathedral Gold Corp. (a) 79,000 10,820
Crown Resources Corp. (a) 307,700 1,288,494
Euro-Nevada Mining Ltd. 1,626,000 24,839,684
Franco-Nevada Mining Corp. 628,900 13,494,571
Franco-Nevada Mining Corp. (c) 6,900 148,056
Franco-Nevada Mining Ltd. Unit (a)(c) 100,000 2,438,399
Francisco Gold Corp. (a) 182,200 1,503,670
Francisco Gold Corp. (a)(c) 144,500 1,192,537
Geomaque Explorations Ltd. (a) 678,100 1,143,066
Golden Knight Resources, Inc. (a) 843,200 1,362,149
Golden Queen Mining Co. Ltd. (a) 120,800 58,544
Greenstone Resources Ltd. (a) 1,919,800 10,922,128
Greenstone Resources Ltd. (a)(c) 120,000 682,704
High River Gold Mines Ltd. (a) 60,000 54,785
SHARES VALUE (NOTE 1)
Iamgold International African Mining
Gold Corp. (a) 175,200 $ 602,971
Indochina Goldfields Ltd. (a) 20,000 35,821
Indochina Goldfields Ltd. (a)(c) 100,000 179,104
Kinross Gold Corp. (a) 1,423,100 5,047,694
Kinross Gold Corp. right 4/15/98 (a) 320,000 1,135,031
Meridian Gold, Inc. (a) 3,664,700 11,196,801
Metallica Resources, Inc. (a)(d) 1,042,100 1,903,045
Metallica Resources, Inc. (a)(c) 100,000 182,616
Mountain Province Mining, Inc. (a) 874,900 3,471,947
Nevsun Resources Ltd. (a) 612,000 1,590,448
Oliver Gold Corp. (a) 273,800 53,847
Oliver Gold Corp. warrants 3/18/98 (a) 50,000 -
Orvana Minerals Corp. (a) 3,600 4,678
Placer Dome, Inc. 950,400 12,048,969
Prime Resources Group, Inc. 1,116,900 8,746,925
Queenston Mining, Inc. (a) 254,000 151,642
Repadre Capital Corp. (a) 156,200 630,834
Repadre Capital Corp. (a)(c) 155,000 625,988
Rio Narcea Gold Mines Ltd. (a) 193,000 460,896
Samax Gold, Inc. (a) 75,000 255,487
Samax Gold, Inc. (a)(c) 240,000 817,559
Silver Standard Resources, Inc. 170,000 728,358
Sudbury Contact Mines Ltd. (a) 114,800 262,054
Sutton Resources Ltd. (a) 71,700 589,212
TVI Pacific, Inc. (a) 1,917,000 107,715
TVI Pacific, Inc. (a)(c) 96,000 5,394
TVX Gold, Inc. 57,900 166,557
Teck Corp. sub. Class B (Sub. vtg) 96,000 1,378,894
Vengold, Inc. (a) 202,500 200,544
Viceroy Resources Corp. (a) 130,000 223,705
117,328,861
SILVER ORES - 0.5%
Pan American Silver Corp. warrants
4/30/98 (a) 87,500 -
Pan American Silver Corp. (a)(c) 100,000 983,320
983,320
TOTAL PRECIOUS METALS 120,306,685
TOTAL CANADA 132,567,266
FRANCE - 0.5%
PRECIOUS METALS - 0.5%
GOLD ORES - 0.5%
Guyanor Resources SA Class B (a) 493,440 970,418
GHANA - 1.4%
PRECIOUS METALS - 1.4%
GOLD ORES - 1.4%
Ashanti Goldfields Co. Ltd. GDR 314,152 3,004,079
MEXICO - 0.9%
PRECIOUS METALS - 0.9%
GOLD & SILVER ORES - 0.9%
Industrias Penoles SA 470,000 1,985,915
PERU - 3.8%
PRECIOUS METALS - 3.8%
SILVER ORES - 3.8%
Compania de Minas Buenaventura SA :
Class A 274,445 1,641,686
Class T 1,146,549 5,825,620
Class B sponsored ADR 34,200 461,700
7,929,006
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
UNITED STATES OF AMERICA - 24.8%
PRECIOUS METALS - 21.0%
GOLD & SILVER ORES - 8.4%
Getchell Gold Corp. (a) 947,648 $ 17,649,944
GOLD ORES - 12.6%
Battle Mountain Gold Co. 203,400 1,220,400
Homestake Mining Co. 480,000 4,800,000
Newmont Gold Co. 348,000 10,179,000
Newmont Mining Corp. 40,440 1,170,233
Stillwater Mining Co. (a) 305,600 6,570,400
Stillwater Mining Co. (a)(c) 124,600 2,678,900
26,618,933
TOTAL PRECIOUS METALS 44,268,877
SECURITIES INDUSTRY - 3.4%
INVESTMENT MANAGERS - 3.4%
Pioneer Group, Inc. 237,500 7,095,313
SERVICES - 0.4%
JEWELRY, PRECIOUS METAL - 0.4%
Lazare Kaplan International, Inc. (a) 85,300 959,625
TOTAL UNITED STATES OF AMERICA 52,323,815
TOTAL COMMON STOCKS
(Cost $246,839,489) 209,448,517
CASH EQUIVALENTS - 0.7%
Taxable Central Cash Fund (b)
(Cost $1,513,651) 1,513,651 1,513,651
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $248,353,140) $ 210,962,168
LEGEND
1. Non-income producing
2. At period end, the seven-day yield on the Taxable Central Cash Fund
was 5.62%. 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 $10,047,835 or
4.6% of net assets.
4. Affiliated company (see Note 10 of Notes to Financial Statements).
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $241,184,490 and $276,290,096, respectively (see Note 3 of
Notes to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company.
The commissions paid to these affiliated firms were $91,784 for the
period (see Note 4 of Notes to Financial Statements).
The fund participated in the securities lending program. At the period
end, there were no loans outstanding (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 $6,243,000. The weighted average interest rate
was 5.9% (see Note 7 of Notes to Financial Statements).
Transactions during the period with companies which are or were
affiliates are as follows:
PURCHASES SALES DIVIDEND VALUE
AFFILIATE COST COST INCOME
Mentor Exploration & Development
Co. Ltd. $ - $ - $ - $ 1,016,752
Metallica Resources, Inc. - - - 1,903,045
Sudbury Contact Mines Ltd. - 454,796 - -
TVI Pacific, Inc. 1,480,536 3,968,550 - -
TOTALS $ 1,480,536 $ 4,423,346 $ - $ 2,919,797
INCOME TAX INFORMATION
At February 28, 1998, the aggregate cost of investment securities for
income tax purposes was $249,912,189. Net unrealized depreciation
aggregated $38,950,021, of which $26,554,712 related to appreciated
investment securities and $65,504,733 related to depreciated
investment securities.
At February 28, 1998, the fund had a capital loss carryforward of
approximately $35,849,000 which will expire on February 28, 2006.
The fund intends to elect to defer to its fiscal year ending February
28, 1999 approximately $7,830,000 of losses recognized during the
period November 1, 1997 to February 28, 1998.
AMERICAN GOLD PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1998
ASSETS
INVESTMENT IN $ 210,962,168
SECURITIES,
AT VALUE
(COST
$248,353
,140) -
SEE
ACCOMPAN
YING
SCHEDULE
RECEIVABLE 2,747,790
FOR
INVESTMENT
S SOLD
RECEIVABLE 9,034,925
FOR FUND
SHARES
SOLD
DIVIDENDS 209,774
RECEIVABLE
INTEREST 33,443
RECEIVABLE
REDEMPTION 913
FEES
RECEIVABLE
OTHER 3,500
RECEIVABLE
S
TOTAL 222,992,513
ASSETS
LIABILITIES
PAYABLE FOR $ 1,703,167
INVESTMENT
S
PURCHASED
PAYABLE FOR 1,387,340
FUND
SHARES
REDEEMED
ACCRUED 110,023
MANAGEM
ENT FEE
OTHER 123,721
PAYABLES
AND
ACCRUED
EXPENSES
TOTAL 3,324,251
LIABILITIES
NET ASSETS $ 219,668,262
NET ASSETS
CONSIST OF:
PAID IN $ 304,960,794
CAPITAL
ACCUMULATED (2,671,127)
NET
INVESTMENT
(LOSS)
ACCUMULATED (45,233,950)
UNDISTRIBUT
ED NET
REALIZED
GAIN (LOSS)
ON
INVESTMENT
S AND
FOREIGN
CURRENCY
TRANSACTIO
NS
NET (37,387,455)
UNREALIZED
APPRECIATI
ON
(DEPRECIATI
ON) ON
INVESTMENT
S
AND ASSETS
AND
LIABILITIES
IN
FOREIGN
CURRENCIES
NET ASSETS, $ 219,668,262
FOR
14,476,8
03 SHARES
OUTSTANDIN
G
NET ASSET $15.17
VALUE AND
REDEMPTIO
N PRICE
PER SHARE
($219,66
8,262 (DIVIDED BY)
14,476,8
03 SHARES)
MAXIMUM $15.64
OFFERING
PRICE PER
SHARE
(100/97.
00 OF
$15.17)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1998
INVESTMENT $ 1,627,565
INCOME
DIVIDENDS
INTEREST 628,077
(INCLUDING
INCOME ON
SECURITIES
LOANED OF
$16,599)
TOTAL 2,255,642
INCOME
EXPENSES
MANAGEMEN $ 1,664,398
T FEE
TRANSFER 2,194,181
AGENT FEES
ACCOUNTING 281,299
AND
SECURITY
LENDING
FEES
NON-INTEREST 205
ED
TRUSTEES'
COMPENSAT
ION
CUSTODIAN 95,091
FEES AND
EXPENSES
REGISTRATION 76,285
FEES
AUDIT 30,511
LEGAL 1,923
INTEREST 1,019
MISCELLANEO 1,172
US
TOTAL 4,346,084
EXPENSES
BEFORE
REDUCTIONS
EXPENSE (211,046) 4,135,038
REDUCTIONS
NET (1,879,396)
INVESTMEN
T INCOME
(LOSS)
REALIZED
AND
UNREALIZED
GAIN (LOSS)
NET REALIZED
GAIN (LOSS)
ON:
INVESTMENT (42,268,327)
SECURITIES
(INCLUDING
REALIZED
LOSS OF
$3,200,0
49
ON SALES
OF
INVESTMENT
S IN
AFFILIATED
ISSUERS)
FOREIGN (62,365) (42,330,692)
CURRENCY
TRANSACTIO
NS
CHANGE IN
NET
UNREALIZED
APPRECIATI
ON
(DEPRECIATI
ON) ON:
INVESTMENT (126,682,242)
SECURITIES
ASSETS AND 3,810 (126,678,432)
LIABILITIES
IN
FOREIGN
CURRENCIES
NET GAIN (169,009,124)
(LOSS)
NET INCREASE $ (170,888,520)
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
OTHER $ 916,845
INFORMATIO
N
SALES
CHARGES
PAID TO
FDC
SALES $ 14,845
CHARGES -
DEALERS'
PORTION
DEFERRED $ 27,084
SALES
CHARGES
WITHHELD
BY FDC
EXCHANGE $ 150,383
FEES
WITHHELD
BY FSC
EXPENSE $ 210,465
REDUCTIONS
DIRECTED
BROKERAGE
ARRANGEM
ENTS
CUSTODIA 311
N CREDITS
TRANSFER 270
AGENT
CREDITS
$ 211,046
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
FEBRUARY 28, FEBRUARY 28,
1998 1997
OPERATIONS $ (1,879,396) $ (2,461,841)
NET
INVESTMENT
INCOME
(LOSS)
NET (42,330,692) 35,925,067
REALIZED
GAIN (LOSS)
CHANGE IN (126,678,432) (16,652,278)
NET
UNREALIZED
APPRECIATI
ON
(DEPRECIATI
ON)
NET (170,888,520) 16,810,948
INCREASE
(DECREAS
E) IN NET
ASSETS
RESULTING
FROM
OPERATIO
NS
DISTRIBUTIONS (17,386,044) (6,827,284)
TO
SHAREHOLD
ERS FROM
NET
REALIZED
GAINS
SHARE 510,192,668 757,145,884
TRANSACTIO
NS
NET
PROCEEDS
FROM SALES
OF SHARES
REINVESTM 17,026,797 6,693,065
ENT OF
DISTRIBUTIO
NS
COST OF (549,713,586) (799,571,083)
SHARES
REDEEMED
NET (22,494,121) (35,732,134)
INCREASE
(DECREAS
E) IN NET
ASSETS
RESULTING
FROM
SHARE
TRANSACTI
ONS
REDEMPTIO 2,333,972 2,358,350
N FEES
TOTAL (208,434,713) (23,390,120)
INCREASE
(DECREASE)
IN NET
ASSETS
NET ASSETS
BEGINNING 428,102,975 451,493,095
OF PERIOD
END OF $ 219,668,262 $ 428,102,975
PERIOD
(INCLUDIN
G
ACCUMUL
ATED NET
INVESTME
NT LOSS OF
$2,671,
127 AND
$3,491,
165,
RESPECTIV
ELY)
OTHER
INFORMATION
SHARES
SOLD 26,655,922 27,099,046
ISSUED IN 755,071 262,370
REINVESTME
NT OF
DISTRIBUTIO
NS
REDEEMED (28,111,853) (28,839,831)
NET (700,860) (1,478,415)
INCREASE
(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>
YEARS ENDED FEBRUARY 28, YEAR ENDED YEARS ENDED FEBRUARY 28,
FEBRUARY 29,
SELECTED PER-SHARE DATA 1998 1997 1996 1995 1994
</TABLE>
NET ASSET $ 28.21 $ 27.11 $ 18.44 $ 22.66 $ 14.15
VALUE,
BEGINNING
OF PERIOD
INCOME FROM
INVESTMENT
OPERATION
S
NET (.13) (.16) (.06) (.05) (.11)
INVESTMENT
INCOME
(LOSS) C
NET (11.78) 1.60 8.62 (4.25) 8.44
REALIZED
AND
UNREALIZED
GAIN (LOSS)
TOTAL FROM (11.91) 1.44 8.56 (4.30) 8.33
INVESTMENT
OPERATIONS
LESS
DISTRIBUTIO
NS
FROM NET (1.29) (.50) - - -
REALIZED
GAIN
REDEMPTION .16 .16 .11 .08 .18
FEES
ADDED TO
PAID IN
CAPITAL
NET ASSET $ 15.17 $ 28.21 $ 27.11 $ 18.44 $ 22.66
VALUE, END
OF PERIOD
TOTAL (43.15)% 6.10% 47.02% (18.62)% 60.14%
RETURN A, B
RATIOS AND
SUPPLEME
NTAL DATA
NET ASSETS, $ 219,668 $ 428,103 $ 451,493 $ 278,197 $ 347,406
END OF
PERIOD
(000
OMITTED)
RATIO OF 1.55% 1.44% 1.39% 1.41% 1.50%
EXPENSES
TO AVERAGE
NET ASSETS
RATIO OF 1.48% D 1.42% D 1.39% 1.41% 1.49% D
EXPENSES
TO AVERAGE
NET ASSETS
AFTER
EXPENSE
REDUCTIONS
RATIO OF NET (.67)% (.59)% (.27)% (.22)% (.51)%
INVESTMENT
INCOME
(LOSS) TO
AVERAGE
NET ASSETS
PORTFOLIO 89% 63% 56% 34% 39%
TURNOVER
RATE
AVERAGE $ .0193 $ .0270
COMMISSIO
N RATE E
<TABLE>
<CAPTION>
<S> <C>
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. 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>
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). Load adjusted returns include a 3.00% sales
charge and the effect of a $7.50 trading fee.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 28, 1998 YEAR YEARS YEARS
SELECT ENERGY 20.40% 92.27% 205.67%
SELECT ENERGY 16.71% 86.42% 196.43%
(LOAD ADJ.)
S&P 500 35.01% 166.84% 422.55%
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 Standard & Poor's
500 Index - a widely recognized, unmanaged index of common stocks.
This benchmark included 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, 1998 YEAR YEARS YEARS
SELECT ENERGY 20.40% 13.97% 11.82%
SELECT ENERGY 16.71% 13.27% 11.48%
(LOAD ADJ.)
S&P 500 35.01% 21.69% 17.98%
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 LONG-TERM GROWTH AND
SHORT-TERM VOLATILITY. UNLIKE THE BROADER MARKET,
HOWEVER, SOME SECTORS MAY NOT HAVE A HISTORY
OF GROWTH IN THE LONG RUN. AND, AS WITH ALL STOCK
FUNDS, THE SHARE PRICE AND RETURN OF A FUND THAT
INVESTS IN A SECTOR WILL VARY. THAT MEANS IF YOU
SELL YOUR SHARES DURING A SECTOR DOWNTURN, YOU
MIGHT LOSE MONEY. BUT IF YOU CAN IDENTIFY A
SECTOR THAT IS ABOUT TO EXPERIENCE RAPID GROWTH
YOU MAY HAVE THE POTENTIAL FOR ABOVE-AVERAGE
GAINS.
(CHECKMARK)
$10,000 OVER 10 YEARS
IMAHDR PRASUN SHR__CHT 19980228 19980305 130549 S00000000000001
Energy S&P 500
00060 SP001
1988/02/29 9700.00 10000.00
1988/03/31 10388.76 9691.00
1988/04/30 10782.33 9798.57
1988/05/31 10388.76 9883.82
1988/06/30 10503.55 10337.48
1988/07/31 10569.15 10298.20
1988/08/31 10167.37 9948.06
1988/09/30 10052.58 10371.85
1988/10/31 10142.77 10660.19
1988/11/30 10167.37 10507.75
1988/12/31 10466.84 10691.63
1989/01/31 11257.74 11474.26
1989/02/28 11081.05 11188.55
1989/03/31 11720.51 11449.25
1989/04/30 12115.96 12043.46
1989/05/31 12258.99 12531.22
1989/06/30 12511.41 12459.79
1989/07/31 13033.07 13584.91
1989/08/31 13319.14 13851.18
1989/09/30 13529.48 13794.39
1989/10/31 13436.93 13474.36
1989/11/30 13941.76 13749.23
1989/12/31 14949.32 14079.22
1990/01/31 14281.86 13134.50
1990/02/28 14726.83 13303.94
1990/03/31 14735.39 13656.49
1990/04/30 14239.07 13315.08
1990/05/31 15103.35 14613.30
1990/06/30 14747.39 14513.93
1990/07/31 15751.86 14467.48
1990/08/31 16034.94 13159.62
1990/09/30 15989.28 12518.75
1990/10/31 15167.44 12464.92
1990/11/30 15003.07 13270.15
1990/12/31 14277.74 13640.39
1991/01/31 13352.94 14235.11
1991/02/28 14598.59 15252.92
1991/03/31 14400.42 15622.04
1991/04/30 14560.84 15659.53
1991/05/31 14645.77 16336.03
1991/06/30 13993.29 15587.84
1991/07/31 14711.87 16314.23
1991/08/31 14995.51 16700.88
1991/09/30 14844.24 16421.97
1991/10/31 15288.62 16642.03
1991/11/30 14154.03 15971.35
1991/12/31 14282.77 17798.47
1992/01/31 13518.47 17467.42
1992/02/29 13537.58 17694.50
1992/03/31 13145.88 17349.46
1992/04/30 14043.93 17859.53
1992/05/31 14712.68 17947.04
1992/06/30 13984.64 17679.63
1992/07/31 14358.20 18402.73
1992/08/31 14616.82 18025.47
1992/09/30 14703.03 18238.17
1992/10/31 14070.85 18302.01
1992/11/30 13745.18 18926.11
1992/12/31 13941.62 19158.90
1993/01/31 14467.36 19319.83
1993/02/28 15421.46 19582.58
1993/03/31 16210.06 19995.77
1993/04/30 16521.87 19511.88
1993/05/31 17018.70 20034.79
1993/06/30 17242.76 20092.89
1993/07/31 17116.12 20012.52
1993/08/31 18470.21 20771.00
1993/09/30 18363.05 20611.06
1993/10/31 18100.02 21037.71
1993/11/30 15908.15 20837.85
1993/12/31 16612.07 21089.99
1994/01/31 17501.82 21807.05
1994/02/28 16915.39 21216.08
1994/03/31 16096.42 20291.06
1994/04/30 17325.97 20550.78
1994/05/31 17509.32 20887.82
1994/06/30 17417.64 20376.06
1994/07/31 17682.47 21044.40
1994/08/31 17387.09 21907.22
1994/09/30 17254.67 21370.49
1994/10/31 18232.51 21851.33
1994/11/30 17112.07 21055.50
1994/12/31 16680.58 21367.76
1995/01/31 16281.18 21921.82
1995/02/28 16922.33 22776.12
1995/03/31 17847.28 23448.24
1995/04/30 18395.78 24138.79
1995/05/31 18870.44 25103.62
1995/06/30 18321.94 25686.77
1995/07/31 18754.41 26538.55
1995/08/31 18617.29 26605.16
1995/09/30 18627.83 27727.90
1995/10/31 17826.18 27628.91
1995/11/30 18849.34 28841.82
1995/12/31 20247.39 29397.31
1996/01/31 20560.22 30398.00
1996/02/29 20463.13 30679.78
1996/03/31 21833.10 30975.23
1996/04/30 22890.36 31431.81
1996/05/31 23126.93 32242.43
1996/06/30 23555.00 32365.28
1996/07/31 22496.09 30935.38
1996/08/31 23374.76 31587.81
1996/09/30 24613.90 33365.57
1996/10/31 25616.48 34285.79
1996/11/30 27035.86 36877.45
1996/12/31 26822.43 36146.91
1997/01/31 27434.92 38405.37
1997/02/28 24626.71 38706.47
1997/03/31 25308.54 37116.02
1997/04/30 25082.62 39331.84
1997/05/31 27366.17 41726.37
1997/06/30 27767.01 43595.71
1997/07/31 29588.99 47064.62
1997/08/31 29892.66 44428.06
1997/09/30 32091.18 46861.38
1997/10/31 31204.48 45296.21
1997/11/30 29406.80 47392.97
1997/12/31 29580.50 48206.71
1998/01/31 28000.07 48739.88
1998/02/27 29642.93 52255.00
IMATRL PRASUN SHR__CHT 19980228 19980305 130552 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Energy Portfolio on February 29, 1988, and
the current 3.00% sales charge was paid. As the chart shows, by
February 28, 1998, the value of the investment would have grown to
$29,643 - a 196.43% increase on the initial investment, and includes
the effect of a $7.50 trading fee. 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
$52,255 - a 422.55% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1998
% OF FUND'S
INVESTMENTS
USX-MARATHON GROUP 7.7
TOTAL SA SPONSORED ADR 7.6
TEXACO, INC. 6.0
BRITISH PETROLEUM PLC ADR 5.5
ROYAL DUTCH PETROLEUM CO. 4.5
COASTAL CORP. (THE) 4.4
VALERO ENERGY CORP. 4.0
ELF AQUITAINE SA SPONSORED ADR 3.5
PETRO-CANADA 3.3
NOBLE DRILLING CORP. 3.1
TOP INDUSTRIES AS OF FEBRUARY 28, 1998
OIL & GAS EXPLORATION 29.0%
CRUDE PETROLEUM & GAS 26.2%
PETROLEUM REFINERS 23.5%
DRILLING 6.9%
OIL & GAS SERVICES 2.1%
ALL OTHERS 12.3%
ROW: 1, COL: 1, VALUE: 12.3
ROW: 1, COL: 2, VALUE: 2.1
ROW: 1, COL: 3, VALUE: 6.9
ROW: 1, COL: 4, VALUE: 23.5
ROW: 1, COL: 5, VALUE: 26.2
ROW: 1, COL: 6, VALUE: 29.0
*
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
ENERGY PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Lawrence Rakers,
Portfolio Manager
of Fidelity Select
Energy Portfolio
Q. HOW DID THE FUND PERFORM, LARRY?
A. For the 12 months that ended February 28, 1998, the fund returned
20.40%, compared to the 35.01% return of the Standard & Poor's 500
Index.
Q. WHAT FACTORS HURT THE FUND'S PERFORMANCE RELATIVE TO THE
S&P 500 DURING THE PERIOD?
A. The prices of oil and natural gas tanked toward the end of 1997
and remained in the doldrums throughout the beginning of 1998.
Financial turmoil in Southeast Asia during the second half of the
period was the major cause of the decline. Asia is responsible for
about half of the growth in demand for most energy commodities.
Therefore, slowing Asian economies meant that the consumption of
energy was going to fall. In fact, most energy stocks underperformed
the S&P 500 over the latest six months.
Q. DESPITE THIS ENVIRONMENT OF DECLINING ENERGY PRICES, WHICH STOCKS
IN THE PORTFOLIO WERE ABLE TO OUTPERFORM THE S&P 500?
A. Energy service stocks, such as Halliburton and Schlumberger, and
equipment companies, including EVI Incorporated and McDermott
International, churned up very strong returns. Most impressive was
EVI's 180% gain between March and October 1997. EVI's stock, which
took a hit with the rest of the sector in late 1997, more than doubled
over the 12-month period. Also boosting performance was Wainoco Oil, a
position I increased during the second half of the period. Wainoco is
a refiner that is undergoing a restructuring and benefits somewhat
when oil prices decline slightly.
Q. THE FUND WAS HEAVILY INVESTED IN INTEGRATED OIL COMPANIES AT THE
END OF THE PERIOD. WHAT WAS YOUR STRATEGY BEHIND THIS POSITIONING?
A. The price of oil was below trend - or below a normal range of $18
to $20 a barrel - over the past several months. Historically, the
price of oil doesn't hover below trend very often or for periods
longer than about six to nine months. For that reason, I felt it would
be better to own larger positions in integrated oil companies because
if oil returned to the trend range, these stocks would outperform.
Integrated oil companies - such as USX-Marathon, Total and Texaco -
look for oil, process it in their refineries and make chemicals out of
it or make gasoline and sell it to consumers at gasoline stations. I
felt the integrated oil companies had the least downside risk in case
my assumption was incorrect and the oil price stayed below trend for a
long period of time. Most integrated oil companies have strong balance
sheets and stock repurchase programs, pay regular dividends and
generate solid cash flows from the diversification of their business.
Q. HOW DID THE POLITICAL SITUATION IN IRAQ AFFECT OIL PRICES AT THE
END OF THE PERIOD?
A. The price of oil hit a low of about $14 a barrel after the United
Nations announced a resolution barring a military strike against Iraq
at the end of the period. Most analysts believe that the potential for
conflict in Iraq supported the price of oil - keeping it in a range of
$16 to $18 a barrel - at the end of 1997. Once any chance of
destroying Iraqi oilfields in a military action was quashed - which
was unlikely in any case because of the U.N.'s oil-for-food agreement
with Iraq - the price of oil dropped even further below trend due to
the continued financial problems in Asia.
Q. WHAT'S YOUR OUTLOOK FOR THE ENERGY SECTOR?
A. I'm optimistic about the long-term prospects for energy companies.
The short term, on the other hand, depends on what happens to supply
and demand in the market. The Organization of Petroleum Exporting
Countries (OPEC) could agree in the next few months to cut production,
which would reduce the supply of oil and bolster prices. On the demand
side, if normal weather patterns return for the remainder of the
winter season from the unusually warm patterns we've seen across the
U.S., or if the Asian situation improves, demand for oil and natural
gas would grow, also helping the price of oil. During the period, most
energy companies were punished as commodities prices plummeted, which
in turn slowed capacity additions. This situation is setting the
sector up for a great run sometime - the question is when.
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, 1998, more than
$147 million
MANAGER: Lawrence Rakers, since 1997;
manager, Fidelity Select Natural Resources
Portfolio, since 1997; Fidelity Select Paper and
Forest Products Portfolio, 1996-1997; Fidelity
Select American Gold Portfolio, 1995-1997;
Fidelity Select Precious Metals and Minerals
Portfolio, 1996-1997; joined Fidelity in 1993
(checkmark)
ENERGY PORTFOLIO
INVESTMENTS FEBRUARY 28, 1998
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 94.6%
SHARES VALUE (NOTE 1)
AUTOS, TIRES, & ACCESSORIES - 0.3%
PETROLEUM - WHOLESALE - 0.3%
World Fuel Services Corp. 25,000 $ 484,363
CHEMICALS & PLASTICS - 2.7%
CHEMICALS - 0.8%
Sasol, Ltd. 39,500 336,986
Witco Corp. 20,500 816,156
1,153,142
UNSUPPORTED PLASTICS FILM & SHEET - 1.9%
W.R. Grace & Co. 32,000 2,686,000
TOTAL CHEMICALS & PLASTICS 3,839,142
ELECTRICAL EQUIPMENT - 0.1%
MOTORS & GENERATORS - 0.1%
NQL Drilling Tools, Inc. Class A (a) 15,000 113,784
ENERGY SERVICES - 9.0%
DRILLING - 6.9%
Artisan Corp. 20,000 129,939
Diamond Offshore Drilling, Inc. 29,800 1,350,313
Noble Drilling Corp. (a) 158,600 4,500,275
Ryan Energy Technologies, Inc. (a) 32,900 214,904
Transocean Offshore, Inc. 86,632 3,725,176
9,920,607
OIL & GAS SERVICES - 2.1%
Halliburton Co. 20,000 930,000
McDermott International, Inc. 10,700 421,313
Schlumberger Ltd. 10,200 768,825
Weatherford Enterra, Inc. (a) 28,500 986,813
3,106,951
TOTAL ENERGY SERVICES 13,027,558
GAS - 1.8%
GAS DISTRIBUTION - 1.1%
MCN Energy Group, Inc. 45,000 1,656,563
GAS TRANSMISSION - 0.7%
Enron Corp. 20,000 940,000
TOTAL GAS 2,596,563
HOLDING COMPANIES - 0.5%
HOLDING COMPANY OFFICES, NEC - 0.5%
Norfolk Southern Corp. 21,800 750,738
INDUSTRIAL MACHINERY & EQUIPMENT - 0.1%
INDUSTRIAL MACHINERY - WHOLESALE - 0.1%
CE Franklin Ltd. (a) 29,600 213,099
OIL & GAS - 79.8%
CRUDE PETROLEUM & GAS - 26.2%
Anadarko Petroleum Corp. 11,800 761,100
Atlantic Richfield Co. (a) 10,000 777,500
Brown (Tom), Inc. (a) 30,800 610,225
Burlington Resources, Inc. 12,825 573,919
Cabot Oil & Gas Corp. Class A 50,000 1,050,000
Canadian Natural Resources Ltd. 10,000 200,176
EEX Corp. (a) 96,000 822,000
Elf Aquitaine SA sponsored ADR 87,400 4,998,188
Enron Oil & Gas Co. 40,000 855,000
SHARES VALUE (NOTE 1)
HS Resources, Inc. (a) 33,800 $ 473,200
Lomak Petroleum, Inc. 42,200 698,938
Louis Dreyfus Natural Gas Corp. (a) 31,800 574,388
Magnum Hunter Resources, Inc. (a) 88,300 419,425
Nuevo Energy Corp. (a) 32,900 1,180,288
Occidental Petroleum Corp. 65,900 1,684,569
Ocean Energy, Inc. (a) 14,600 682,550
Paramount Resources Ltd. (c) 70,300 728,306
Penn West Petroleum Ltd. (a) 15,000 168,042
Petrobras PN (Pfd. Reg.) 17,500,000 3,964,602
Plains Resources, Inc. (a) 44,400 702,075
Rio Alto Exploration Ltd. (a) 164,600 1,734,153
Santa Fe Energy Resources, Inc. 10,500 117,469
Total SA sponsored ADR 198,600 10,985,063
Ulster Petroleums Ltd. (a) 26,800 237,176
Vastar Resources, Inc. 35,000 1,301,563
YPF Sociedad Anonima sponsored ADR
representing Class D shares 48,400 1,530,650
37,830,565
GENERAL PETROLEUM PRODUCTS - 0.3%
KCS Group, Inc. 23,500 417,125
OIL & GAS EXPLORATION - 29.0%
Abacan Resource Corp. (a) 137,200 270,113
Amerada Hess Corp. 50,800 3,013,075
Amoco Corp. 10,000 850,000
Chevron Corp. 48,100 3,902,113
Exxon Corp. 45,000 2,874,375
Kerr-McGee Corp. 27,500 1,859,688
Mobil Corp. 20,000 1,448,750
Petro-Canada 257,900 4,782,132
Phillips Petroleum Co. 53,100 2,601,900
Texaco, Inc. 154,600 8,628,613
USX-Marathon Group 320,400 11,073,825
Unocal Corp. 15,000 565,313
41,869,897
OIL FIELD EQUIPMENT - 0.8%
Cooper Cameron Corp. (a) 11,400 611,325
EVI, Inc. (a) 11,100 544,594
1,155,919
PETROLEUM REFINERS - 23.5%
British Petroleum PLC ADR 95,808 7,922,124
Coastal Corp. (The) 99,100 6,305,238
Royal Dutch Petroleum Co. 119,200 6,474,050
Shell Transport & Trading Co. PLC
ADR 38,700 1,647,169
Tesoro Petroleum Corp. (a) 63,000 1,043,438
Tosco Corp. 60,100 2,231,213
Ultramar Diamond Shamrock Corp. 25,200 899,325
Valero Energy Corp. 164,100 5,825,550
Wainoco Oil Corp. (a) 193,000 1,640,500
33,988,607
TOTAL OIL & GAS 115,262,113
RAILROADS - 0.3%
Canadian National Railway Co. 7,500 465,672
TOTAL COMMON STOCKS
(Cost $128,701,381) 136,753,032
CASH EQUIVALENTS - 5.4%
MATURITY VALUE (NOTE 1)
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 5.62%, dated
2/27/98 due 3/2/98 $ 46,022 $ 46,000
SHARES
Taxable Central Cash Fund (b) 7,686,635 7,686,635
TOTAL CASH EQUIVALENTS
(Cost $7,732,635) 7,732,635
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $136,434,016) $ 144,485,667
LEGEND
1. Non-income producing
2. At period end, the seven-day yield on the Taxable Central Cash Fund
was 5.62%. 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 $728,306 or 0.5%
of net assets.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $199,954,328 and $289,869,736, 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 $56,921 for the
period
(see Note 4 of Notes to Financial Statements).
The fund participated in the securities lending program. At the period
end, there were no loans outstanding (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 66.9%
France 11.1
United Kingdom 6.6
Canada 6.4
Netherlands 4.5
Brazil 2.7
Argentina 1.0
Others (individually less than 1%) 0.8
TOTAL 100.0%
INCOME TAX INFORMATION
At February 28, 1998, the aggregate cost of investment securities for
income tax purposes was $136,713,481. Net unrealized appreciation
aggregated $7,772,186, of which $14,227,909 related to appreciated
investment securities and $6,455,723 related to depreciated investment
securities.
The fund hereby designates approximately $31,281,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 18% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate
shareholders (unaudited).
A total of 0.43% 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 (unaudited).
The fund will notify shareholders in January 1999 of these percentages
for use in preparing 1998 income tax returns.
ENERGY PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1998
ASSETS
INVESTMENT IN $ 144,485,667
SECURITIES,
AT VALUE
(INCLUDING
REPURCHAS
E
AGREEMENT
S OF
$46,000)
(COST
$136,434
,016) -
SEE
ACCOMPAN
YING
SCHEDULE
CASH 863
RECEIVABLE 1,960,808
FOR
INVESTMENT
S SOLD
RECEIVABLE 1,077,049
FOR FUND
SHARES
SOLD
DIVIDENDS 522,057
RECEIVABLE
INTEREST 37,948
RECEIVABLE
REDEMPTION 518
FEES
RECEIVABLE
TOTAL 148,084,910
ASSETS
LIABILITIES
PAYABLE FOR $ 871,793
FUND
SHARES
REDEEMED
ACCRUED 71,123
MANAGEM
ENT FEE
OTHER 118,504
PAYABLES
AND
ACCRUED
EXPENSES
TOTAL 1,061,420
LIABILITIES
NET ASSETS $ 147,023,490
NET ASSETS
CONSIST OF:
PAID IN $ 124,261,109
CAPITAL
UNDISTRIBUTE 431,333
D NET
INVESTMENT
INCOME
ACCUMULATED 14,279,425
UNDISTRIBUT
ED NET
REALIZED
GAIN (LOSS)
ON
INVESTMENT
S AND
FOREIGN
CURRENCY
TRANSACTIO
NS
NET 8,051,623
UNREALIZED
APPRECIATI
ON
(DEPRECIATI
ON) ON
INVESTMENT
S
AND ASSETS
AND
LIABILITIES
IN
FOREIGN
CURRENCIES
NET ASSETS, $ 147,023,490
FOR
6,935,87
8
SHARES
OUTSTANDIN
G
NET ASSET $21.20
VALUE AND
REDEMPTIO
N PRICE
PER SHARE
($147,02
3,490 (DIVIDED BY)
6,935,87
8 SHARES)
MAXIMUM $21.86
OFFERING
PRICE PER
SHARE
(100/97.
00 OF
$21.20)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1998
INVESTMENT $ 3,057,600
INCOME
DIVIDENDS
INTEREST 768,313
(INCLUDING
INCOME ON
SECURITIES
LOANED OF
$24,270)
TOTAL 3,825,913
INCOME
EXPENSES
MANAGEMEN $ 1,137,325
T FEE
TRANSFER 1,565,975
AGENT FEES
ACCOUNTING 191,991
AND
SECURITY
LENDING
FEES
NON-INTEREST 869
ED
TRUSTEES'
COMPENSAT
ION
CUSTODIAN 37,329
FEES AND
EXPENSES
REGISTRATION 36,284
FEES
AUDIT 31,440
LEGAL 1,361
MISCELLANEO 12,316
US
TOTAL 3,014,890
EXPENSES
BEFORE
REDUCTIONS
EXPENSE (88,120) 2,926,770
REDUCTIONS
NET 899,143
INVESTMEN
T INCOME
REALIZED
AND
UNREALIZED
GAIN (LOSS)
NET REALIZED
GAIN (LOSS)
ON:
INVESTMENT 35,253,681
SECURITIES
FOREIGN (25,617) 35,228,064
CURRENCY
TRANSACTIO
NS
CHANGE IN
NET
UNREALIZED
APPRECIATI
ON
(DEPRECIATI
ON) ON:
INVESTMENT 1,070,380
SECURITIES
ASSETS AND (28) 1,070,352
LIABILITIES
IN
FOREIGN
CURRENCIES
NET GAIN 36,298,416
(LOSS)
NET INCREASE $ 37,197,559
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
OTHER $ 600,122
INFORMATIO
N
SALES
CHARGES
PAID TO
FDC
SALES $ 7,342
CHARGES -
DEALERS'
PORTION
DEFERRED $ 14,514
SALES
CHARGES
WITHHELD
BY FDC
EXCHANGE $ 92,370
FEES
WITHHELD
BY FSC
EXPENSE $ 88,120
REDUCTIONS
DIRECTED
BROKERAGE
ARRANGEM
ENTS
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
FEBRUARY 28, FEBRUARY 28,
1998 1997
OPERATIONS $ 899,143 $ 1,086,670
NET
INVESTMENT
INCOME
NET 35,228,064 20,637,191
REALIZED
GAIN (LOSS)
CHANGE IN 1,070,352 (2,355,783)
NET
UNREALIZED
APPRECIATI
ON
(DEPRECIATI
ON)
NET 37,197,559 19,368,078
INCREASE
(DECREAS
E) IN NET
ASSETS
RESULTING
FROM
OPERATIO
NS
DISTRIBUTIONS (711,215) (1,000,086)
TO
SHAREHOLD
ERS
FROM NET
INVESTMENT
INCOME
FROM NET (31,012,994) (9,661,247)
REALIZED
GAIN
TOTAL (31,724,209) (10,661,333)
DISTRIBUTIO
NS
SHARE 138,864,076 338,291,399
TRANSACTIO
NS
NET
PROCEEDS
FROM SALES
OF SHARES
REINVESTM 31,069,131 10,462,236
ENT OF
DISTRIBUTIO
NS
COST OF (231,915,098) (274,385,798)
SHARES
REDEEMED
NET (61,981,891) 74,367,837
INCREASE
(DECREAS
E) IN NET
ASSETS
RESULTING
FROM
SHARE
TRANSACTI
ONS
REDEMPTIO 267,473 514,459
N FEES
TOTAL (56,241,068) 83,589,041
INCREASE
(DECREASE)
IN NET
ASSETS
NET ASSETS
BEGINNING 203,264,558 119,675,517
OF PERIOD
END OF $ 147,023,490 $ 203,264,558
PERIOD
(INCLUDIN
G
UNDISTRIB
UTED NET
INVESTME
NT
INCOME
OF
$431,3
33 AND
$428,5
29,
RESPECTIV
ELY)
OTHER
INFORMATION
SHARES
SOLD 5,967,396 15,419,263
ISSUED IN 1,509,439 507,572
REINVESTME
NT OF
DISTRIBUTIO
NS
REDEEMED (10,078,784) (12,698,556)
NET (2,601,949) 3,228,279
INCREASE
(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>
YEARS ENDED FEBRUARY 28, YEAR ENDED YEARS ENDED FEBRUARY 28,
FEBRUARY 29,
SELECTED PER-SHARE DATA 1998 1997 1996 1995 1994
</TABLE>
NET ASSET $ 21.31 $ 18.97 $ 16.10 $ 16.73 $ 15.84
VALUE,
BEGINNING
OF PERIOD
INCOME FROM
INVESTMENT
OPERATION
S
NET .11 .13 .18 .07 .06
INVESTMENT
INCOME C
NET 3.93 3.59 3.13 (.11) 1.35
REALIZED
AND
UNREALIZED
GAIN (LOSS)
TOTAL FROM 4.04 3.72 3.31 (.04) 1.41
INVESTMENT
OPERATIONS
LESS
DISTRIBUTIO
NS
FROM NET (.09) (.13) (.11) (.08) (.03)
INVESTMENT
INCOME
FROM NET (4.09) (1.31) (.36) (.54) (.57)
REALIZED
GAIN
TOTAL (4.18) (1.44) (.47) (.62) (.60)
DISTRIBUTIO
NS
REDEMPTION .03 .06 .03 .03 .08
FEES
ADDED TO
PAID IN
CAPITAL
NET ASSET $ 21.20 $ 21.31 $ 18.97 $ 16.10 $ 16.73
VALUE, END
OF PERIOD
TOTAL 20.40% 20.35% 20.92% .04% 9.69%
RETURN A, B
RATIOS AND
SUPPLEME
NTAL DATA
NET ASSETS, $ 147,023 $ 203,265 $ 119,676 $ 96,023 $ 145,490
END OF
PERIOD
(000
OMITTED)
RATIO OF 1.58% 1.57% 1.63% 1.85% 1.67%
EXPENSES
TO AVERAGE
NET ASSETS
RATIO OF 1.53% D 1.55% D 1.63% 1.85% 1.66% D
EXPENSES
TO AVERAGE
NET ASSETS
AFTER
EXPENSE
REDUCTIONS
RATIO OF NET .47% .62% 1.04% .42% .37%
INVESTMENT
INCOME TO
AVERAGE
NET ASSETS
PORTFOLIO 115% 87% 97% 106% 157%
TURNOVER
RATE
AVERAGE $ .0142 $ .0399
COMMISSIO
N RATE E
<TABLE>
<CAPTION>
<S> <C>
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. C NET INVESTMENT
INCOME 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>
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). Load adjusted returns include a 3.00% sales
charge and the effect of a $7.50 trading fee. 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, 1998 YEAR YEARS YEARS
SELECT ENERGY SERVICE 48.43% 212.61% 303.70%
SELECT ENERGY SERVICE 43.90% 203.16% 291.51%
(LOAD ADJ.)
S&P 500 35.01% 166.84% 422.55%
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 Standard & Poor's
500 Index - a widely recognized, unmanaged index of common stocks.
This benchmark includes 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, 1998 YEAR YEARS YEARS
SELECT ENERGY SERVICE 48.43% 25.60% 14.98%
SELECT ENERGY SERVICE 43.90% 24.83% 14.62%
(LOAD ADJ.)
S&P 500 35.01% 21.69% 17.98%
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 LONG-TERM GROWTH AND
SHORT-TERM VOLATILITY. UNLIKE THE BROADER MARKET,
HOWEVER, SOME SECTORS MAY NOT HAVE A HISTORY
OF GROWTH IN THE LONG RUN. AND, AS WITH ALL STOCK
FUNDS, THE SHARE PRICE AND RETURN OF A FUND THAT
INVESTS IN A SECTOR WILL VARY. THAT MEANS IF YOU
SELL YOUR SHARES DURING A SECTOR DOWNTURN, YOU
MIGHT LOSE MONEY. BUT IF YOU CAN IDENTIFY A
SECTOR THAT IS ABOUT TO EXPERIENCE RAPID GROWTH
YOU MAY HAVE THE POTENTIAL FOR ABOVE-AVERAGE
GAINS.
(CHECKMARK)
$10,000 OVER 10 YEARS
IMAHDR PRASUN SHR__CHT 19980228 19980305 131210 S00000000000001
Energy Service S&P 500
00043 SP001
1988/02/29 9700.00 10000.00
1988/03/31 10267.92 9691.00
1988/04/30 10472.37 9798.57
1988/05/31 9756.79 9883.82
1988/06/30 9200.23 10337.48
1988/07/31 9052.58 10298.20
1988/08/31 9222.95 9948.06
1988/09/30 8825.41 10371.85
1988/10/31 8530.09 10660.19
1988/11/30 8166.63 10507.75
1988/12/31 8541.45 10691.63
1989/01/31 9063.93 11474.26
1989/02/28 9166.16 11188.55
1989/03/31 9745.43 11449.25
1989/04/30 10211.12 12043.46
1989/05/31 10392.86 12531.22
1989/06/30 10733.61 12459.79
1989/07/31 11335.60 13584.91
1989/08/31 11869.44 13851.18
1989/09/30 11699.06 13794.39
1989/10/31 11119.79 13474.36
1989/11/30 12073.89 13749.23
1989/12/31 13618.62 14079.22
1990/01/31 12744.03 13134.50
1990/02/28 13948.01 13303.94
1990/03/31 14618.15 13656.49
1990/04/30 13845.78 13315.08
1990/05/31 16174.24 14613.30
1990/06/30 15345.08 14513.93
1990/07/31 16787.59 14467.48
1990/08/31 16492.27 13159.62
1990/09/30 16174.24 12518.75
1990/10/31 14141.10 12464.92
1990/11/30 14356.91 13270.15
1990/12/31 13857.62 13640.39
1991/01/31 13231.86 14235.11
1991/02/28 15359.43 15252.92
1991/03/31 14164.81 15622.04
1991/04/30 14233.07 15659.53
1991/05/31 14608.52 16336.03
1991/06/30 12697.13 15587.84
1991/07/31 13652.83 16314.23
1991/08/31 13504.92 16700.88
1991/09/30 12264.79 16421.97
1991/10/31 12446.83 16642.03
1991/11/30 10956.39 15971.35
1991/12/31 10603.70 17798.47
1992/01/31 10455.79 17467.42
1992/02/29 10671.96 17694.50
1992/03/31 9909.68 17349.46
1992/04/30 10728.85 17859.53
1992/05/31 11582.15 17947.04
1992/06/30 10910.88 17679.63
1992/07/31 11365.98 18402.73
1992/08/31 11946.22 18025.47
1992/09/30 12310.30 18238.17
1992/10/31 11673.17 18302.01
1992/11/30 11434.24 18926.11
1992/12/31 10967.77 19158.90
1993/01/31 11400.11 19319.83
1993/02/28 12526.47 19582.58
1993/03/31 13516.30 19995.77
1993/04/30 14244.90 19511.88
1993/05/31 14905.34 20034.79
1993/06/30 14825.63 20092.89
1993/07/31 15030.59 20012.52
1993/08/31 15554.39 20771.00
1993/09/30 15098.91 20611.06
1993/10/31 14882.56 21037.71
1993/11/30 13311.18 20837.85
1993/12/31 13266.23 21089.99
1994/01/31 13391.93 21807.05
1994/02/28 13323.37 21216.08
1994/03/31 12329.26 20291.06
1994/04/30 12973.88 20550.78
1994/05/31 13551.81 20887.82
1994/06/30 13964.61 20376.06
1994/07/31 14224.09 21044.40
1994/08/31 13657.96 21907.22
1994/09/30 14176.91 21370.49
1994/10/31 14743.05 21851.33
1994/11/30 13976.41 21055.50
1994/12/31 13341.51 21367.76
1995/01/31 13425.34 21921.82
1995/02/28 14335.53 22776.12
1995/03/31 15125.96 23448.24
1995/04/30 16048.13 24138.79
1995/05/31 16467.30 25103.62
1995/06/30 15904.42 25686.77
1995/07/31 16694.85 26538.55
1995/08/31 17365.52 26605.16
1995/09/30 17413.42 27727.90
1995/10/31 15904.42 27628.91
1995/11/30 16802.63 28841.82
1995/12/31 18794.72 29397.31
1996/01/31 19203.84 30398.00
1996/02/29 19947.70 30679.78
1996/03/31 21522.19 30975.23
1996/04/30 23140.71 31431.81
1996/05/31 22804.07 32242.43
1996/06/30 22853.94 32365.28
1996/07/31 21594.67 30935.38
1996/08/31 22966.16 31587.81
1996/09/30 23826.45 33365.57
1996/10/31 26482.15 34285.79
1996/11/30 27554.40 36877.45
1996/12/31 28019.92 36146.91
1997/01/31 29580.16 38405.37
1997/02/28 26382.31 38706.47
1997/03/31 28239.12 37116.02
1997/04/30 27912.69 39331.84
1997/05/31 31786.80 41726.37
1997/06/30 33867.58 43595.71
1997/07/31 39192.76 47064.62
1997/08/31 41971.71 44428.06
1997/09/30 46352.32 46861.38
1997/10/31 48118.25 45296.21
1997/11/30 42231.81 47392.97
1997/12/31 42554.92 48206.71
1998/01/31 36531.55 48739.88
1998/02/27 39151.41 52255.00
IMATRL PRASUN SHR__CHT 19980228 19980305 131212 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Energy Service Portfolio on February 29,
1988, and the current 3.00% sales charge was paid. As the chart shows,
by February 28, 1998, the value of the investment would have grown to
$39,151 - a 291.51% increase on the initial investment and includes
the effect of a $7.50 trading fee. 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
$52,255 - a 422.55% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1998
% OF FUND'S
INVESTMENTS
COOPER CAMERON CORP. 6.1
HALLIBURTON CO. 4.5
BAKER HUGHES, INC. 4.5
NOBLE DRILLING CORP. 4.3
R&B FALCON CORP. 4.3
SCHLUMBERGER LTD. 4.2
WESTERN ATLAS, INC. 4.2
TRANSOCEAN OFFSHORE, INC. 4.2
MCDERMOTT (J. RAY) SA 4.1
EVI, INC. 4.0
TOP INDUSTRIES AS OF FEBRUARY 28, 1998
OIL & GAS SERVICES 41.5%
DRILLING 25.4%
OIL FIELD EQUIPMENT 12.7%
HEAVY CONSTRUCTION, NEC 4.1%
FABRICATED PIPE & FITTINGS 3.7%
ALL OTHERS 12.6%
ROW: 1, COL: 1, VALUE: 12.6
ROW: 1, COL: 2, VALUE: 3.7
ROW: 1, COL: 3, VALUE: 4.1
ROW: 1, COL: 4, VALUE: 12.7
ROW: 1, COL: 5, VALUE: 25.4
ROW: 1, COL: 6, VALUE: 41.5
*
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
ENERGY SERVICE PORTFOLIO
FUND TALK: THE MANAGERS' OVERVIEW
NOTE TO SHAREHOLDERS: On January 31, 1998, James Catudal (right)
became Portfolio Manager of
Fidelity Select Energy Service Portfolio. The following is
an interview with Robert Ewing, who managed the fund
for most of the period covered by the report, and James Catudal, who
adds his outlook.
Q. HOW DID THE FUND PERFORM, BOB?
R.E. For the 12 months that ended February 28, 1998, the fund had a
total return of 48.43%. In comparison, the Standard & Poor's 500 Index
returned 35.01% over the same period.
Q. WHAT FACTORS CONTRIBUTED TO THIS STRONG PERFORMANCE?
R.E. Tight supply and strong demand resulted in firm oil and gas
prices for much of the period, which encouraged exploration and
production, and provided a supportive backdrop for the energy service
group. However, the latter half of the period brought three important
developments that resulted in lower oil and gas prices. First was the
Asian currency crisis. The dramatic decrease in the value of many of
that region's currencies relative to the U.S. dollar brought slower
economic growth and reduced demand for oil and gas.
Q. WHAT WERE THE OTHER TWO FACTORS CONTRIBUTING TO LOWER ENERGY
PRICES?
R.E. In the fall of 1997, the Organization of Petroleum Exporting
Countries (OPEC) announced an increase in the production quotas of its
member countries. This increase added supply to a market that was
already struggling to adjust to the problems in Asia. Finally, there
was the El Nino weather pattern, which triggered one of the warmest
winters in the last half-century and further reduced the demand for
oil and gas. Oil prices were especially hard-hit, with the price of
crude oil dipping to about $15 dollars a barrel by the end of the
period, considerably below its recent average of approximately $18 a
barrel. With weak energy prices, there is little incentive to explore
for oil and gas, and this put some downward pressure on the prices of
energy service stocks near the end of the period.
Q. WHAT STRATEGY DID YOU ADOPT IN THOSE CIRCUMSTANCES?
R.E. I tried to position the fund in stocks that were not as sensitive
to the gyrations of oil and gas prices. Three categories worthy of
mention here are deep water drilling, sub-sea construction and
integrated services. The economics of deep water drilling allow for
profitable exploration even at the low oil prices we've seen recently.
Sub-sea construction enables companies to extract oil from deep water
sites without building expensive new platforms. Burgeoning demand for
the technological advances offered by deep water drilling and sub-sea
construction companies made them more resistant to commodity price
changes than other energy service companies. Finally, I tried to
exploit the trend among exploration and production companies toward
working with integrated service companies - that is, firms capable of
providing related services, such as reservoir imaging, drilling,
production and maintenance.
Q. WHAT STOCKS DID WELL FOR THE FUND?
R.E. Schlumberger and Halliburton are the only two fully integrated
service companies in the industry. Both stocks benefited from greater
demand for integrated services and the increased pricing flexibility
that comes with it. Stolt Comex and Coflexip are examples of the
strong sub-sea construction group I mentioned earlier. And Cooper
Cameron - the fund's largest holding - is a leading manufacturer of
equipment used in deep water drilling that also did well.
Q. WHAT STOCKS DIDN'T PERFORM UP TO YOUR EXPECTATIONS?
R.E. Rowan Companies is a shallow water driller that the fund acquired
last September, shortly before the entire energy service sector
peaked. Although part of a generally weak group, the stock
outperformed most of its peers, and the fund still holds this stock.
Bouygues Offshore is a manufacturer of platforms and floating
construction systems that suffered from project postponements and a
declining backlog of work.
Q. TURNING TO YOU, JIM, WHAT'S YOUR OUTLOOK?
J.C. Lower energy prices should reduce the cash flows of oil and gas
companies, likely prompting cutbacks in spending for exploration.
Without knowing how long the recent price weakness will continue, I
think it makes sense to focus on companies involved more in
production, reducing exposure to the exploration side of the business.
In addition, I concur with Bob's favorable assessment of deep water
drillers. Finally, I plan to focus on companies that provide services
to natural gas companies. Although historically oil and gas prices
have been closely correlated, more recently gas prices have held up
well even in the face of weak oil prices.
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: 043
TRADING SYMBOL: FSESX
SIZE: as of February 28, 1998, more than
$919 million
MANAGER: James Catudal, since January 1998;
manager, Fidelity Select Industrial Materials Portfolio,
since August 1997; analyst, energy service
companies, since January 1998; analyst,
North American non-ferrous metals companies,
1997 to January 1998; joined Fidelity in 1997
(checkmark)
ENERGY SERVICE PORTFOLIO
INVESTMENTS FEBRUARY 28, 1998
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 97.2%
SHARES VALUE (NOTE 1)
BUILDING MATERIALS - 3.7%
FABRICATED PIPE & FITTINGS - 3.7%
Coflexip sponsored ADR 675,300 $ 33,807,201
CONSTRUCTION - 5.0%
CONSTRUCTION - 0.3%
Willbros Group, Inc. (a) 134,500 2,160,406
HEAVY CONSTRUCTION, NEC - 4.1%
McDermott (J. Ray) SA (a) 884,000 37,570,000
HIGHWAY & STREET CONSTRUCTION - 0.6%
Bouygues Offshore SA sponsored ADR (a) 296,900 5,641,100
TOTAL CONSTRUCTION 45,371,506
ELECTRICAL EQUIPMENT - 0.5%
MOTORS & GENERATORS - 0.5%
NQL Drilling Tools, Inc. Class A (a) 664,700 5,042,149
ENERGY SERVICES - 66.9%
DRILLING - 25.4%
Atwood Oceanics, Inc. (a) 95,000 4,666,875
Cliffs Drilling Co. (a) 132,100 5,118,875
Diamond Offshore Drilling, Inc. 684,900 31,034,531
ENSCO International, Inc. 446,000 12,989,750
Helmerich & Payne, Inc. 529,000 15,307,938
Marine Drilling Companies, Inc. (a) 653,800 11,727,538
Nabors Industries, Inc. (a) 621,300 14,212,238
Noble Drilling Corp. (a) 1,386,550 39,343,356
Parker Drilling Co. (a) 169,900 1,868,900
R&B Falcon Corp. (a) 1,467,918 38,899,827
Rowan Companies, Inc. (a) 540,000 15,221,250
Ryan Energy Technologies, Inc. (a) 538,500 3,517,507
Transocean Offshore, Inc. 892,054 38,358,322
232,266,907
OIL & GAS SERVICES - 41.5%
BJ Services Co. (a) 704,176 24,206,050
Baker Hughes, Inc. 999,756 40,927,511
CAL. Dive International, Inc. 279,900 7,557,300
Carbo Ceramics, Inc. 15,700 455,300
Daniel Industries, Inc. 274,500 5,146,875
Dawson Geophysical Co. (a) 99,500 1,703,938
Dresser Industries, Inc. 413,600 18,482,750
Global Industries Ltd. (a) 1,487,000 25,650,750
Halliburton Co. 882,467 41,034,716
Input/Output, Inc. (a) 114,600 2,471,063
Lone Star Technologies, Inc. (a) 63,800 1,977,800
McDermott International, Inc. 715,000 28,153,125
Oceaneering International, Inc. (a) 586,000 9,705,625
Offshore Logistics, Inc. (a) 208,500 3,674,813
Pool Energy Services Co. (a) 344,000 8,127,000
Schlumberger Ltd. 512,400 38,622,150
SEACOR SMIT, Inc. (a) 134,300 7,512,406
Smith International, Inc. (a) 45,800 2,438,850
Superior Energy Services, Inc. (a) 300,000 2,662,500
Tidewater, Inc. 76,565 3,407,143
Tuboscope, Inc. (a) 450,000 8,803,125
Varco International, Inc. (a) 1,133,800 28,203,275
Weatherford Enterra, Inc. (a) 863,700 29,905,613
Western Atlas, Inc. 508,500 38,614,219
379,443,897
TOTAL ENERGY SERVICES 611,710,804
SHARES VALUE (NOTE 1)
ENGINEERING - 2.4%
ARCHITECTS & ENGINEERS - 2.4%
Stolt Comex Seaway SA (a) 895,000 $ 21,591,875
IRON & STEEL - 0.2%
FABRICATED METAL PRODUCTS - 0.2%
Prudential Steel Ltd. 184,100 1,849,082
OIL & GAS - 17.7%
CRUDE PETROLEUM & GAS - 0.3%
Ocean Energy, Inc. (a) 50,400 2,356,200
OIL & GAS EXPLORATION - 2.3%
Companie Generale de Geophsique SA 199,700 4,218,663
Petroleum Geo-Services AS
sponsored ADR (a) 110,400 6,265,200
Veritas DGC, Inc. (a) 251,500 10,390,094
20,873,957
OIL FIELD EQUIPMENT - 12.7%
Camco International, Inc. 321,010 18,779,085
Cooper Cameron Corp. (a) 1,046,276 56,106,551
EVI, Inc. (a) 743,300 36,468,156
National-Oilwell, Inc. (a) 175,400 4,911,200
116,264,992
PETROLEUM REFINERS - 2.4%
British Petroleum PLC ADR 1,302 107,659
Royal Dutch Petroleum Co. 400,000 21,725,000
21,832,659
TOTAL OIL & GAS 161,327,808
SHIP BUILDING & REPAIR - 0.8%
SHIP BUILDERS - 0.8%
Dril-Quip, Inc. 96,300 2,925,113
Halter Marine Group, Inc. (a) 228,450 4,483,331
7,408,444
TOTAL COMMON STOCKS
(Cost $865,105,531) 888,108,869
CASH EQUIVALENTS - 2.8%
Taxable Central Cash Fund (b)
(Cost $25,552,996) 25,552,996 25,552,996
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $890,658,527) $ 913,661,865
LEGEND
1. Non-income producing
2. At period end, the seven-day yield on the Taxable Central Cash Fund
was 5.62%. 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 $951,386,798 and $661,699,216, 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 $208,445 for the
period (see Note 4 of Notes to Financial Statements).
The fund participated in the securities lending program. At the period
end, there were no loans outstanding (see Note 6 of Notes to Financial
Statements).
Transactions during the period with companies which are or were
affiliates are as follows:
PURCHASES SALES DIVIDEND VALUE
AFFILIATE COST COST INCOME
Gulf Island Fabrication, Inc. $ 811,813 $ - $ - $ -
Stolt Comex Seaway SA 2,063,124 - - -
TOTALS $ 2,874,937 $ - $ - $ -
INCOME TAX INFORMATION
At February 28, 1998, the aggregate cost of investment securities for
income tax purposes was $892,102,047. Net unrealized appreciation
aggregated $21,559,818, of which $121,943,336 related to appreciated
investment securities and $100,383,518 related to depreciated
investment securities.
The fund hereby designates approximately $68,493,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 7% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate
shareholders (unaudited).
The fund will notify shareholders in January 1999 of this percentage
for use in preparing 1998 income tax returns.
ENERGY SERVICE PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1998
ASSETS
INVESTMENT IN $ 913,661,865
SECURITIES,
AT VALUE
(COST
$890,658
,527) -
SEE
ACCOMPAN
YING
SCHEDULE
RECEIVABLE 9,707,973
FOR
INVESTMENT
S SOLD
RECEIVABLE 11,311,071
FOR FUND
SHARES
SOLD
DIVIDENDS 362,544
RECEIVABLE
INTEREST 285,365
RECEIVABLE
REDEMPTION 9,560
FEES
RECEIVABLE
TOTAL 935,338,378
ASSETS
LIABILITIES
PAYABLE FOR $ 15,251,153
FUND
SHARES
REDEEMED
ACCRUED 462,783
MANAGEM
ENT FEE
OTHER 622,666
PAYABLES
AND
ACCRUED
EXPENSES
TOTAL 16,336,602
LIABILITIES
NET ASSETS $ 919,001,776
NET ASSETS
CONSIST OF:
PAID IN $ 768,008,422
CAPITAL
ACCUMULATED 127,990,184
UNDISTRIBUT
ED NET
REALIZED
GAIN (LOSS)
ON
INVESTMENT
S AND
FOREIGN
CURRENCY
TRANSACTIO
NS
NET 23,003,170
UNREALIZED
APPRECIATI
ON
(DEPRECIATI
ON) ON
INVESTMENT
S
AND ASSETS
AND
LIABILITIES
IN
FOREIGN
CURRENCIES
NET ASSETS, $ 919,001,776
FOR
32,795,0
68 SHARES
OUTSTANDIN
G
NET ASSET $28.02
VALUE AND
REDEMPTIO
N PRICE
PER SHARE
($919,00
1,776 (DIVIDED BY)
32,795,0
68 SHARES)
MAXIMUM $28.89
OFFERING
PRICE PER
SHARE
(100/97.
00 OF
$28.02)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1998
INVESTMENT $ 3,357,488
INCOME
DIVIDENDS
INTEREST 5,054,028
(INCLUDING
INCOME ON
SECURITIES
LOANED OF
$66,512)
TOTAL 8,411,516
INCOME
EXPENSES
MANAGEMEN $ 5,735,646
T FEE
TRANSFER 5,144,326
AGENT FEES
ACCOUNTING 682,437
AND
SECURITY
LENDING
FEES
NON-INTEREST 3,989
ED
TRUSTEES'
COMPENSAT
ION
CUSTODIAN 44,345
FEES AND
EXPENSES
REGISTRATION 364,688
FEES
AUDIT 49,821
LEGAL 4,021
MISCELLANEO 6,332
US
TOTAL 12,035,605
EXPENSES
BEFORE
REDUCTIONS
EXPENSE (259,593) 11,776,012
REDUCTIONS
NET (3,364,496)
INVESTMEN
T INCOME
(LOSS)
REALIZED
AND
UNREALIZED
GAIN (LOSS)
NET REALIZED
GAIN (LOSS)
ON:
INVESTMENT 157,398,877
SECURITIES
FOREIGN (2,410) 157,396,467
CURRENCY
TRANSACTIO
NS
CHANGE IN
NET
UNREALIZED
APPRECIATI
ON
(DEPRECIATI
ON) ON:
INVESTMENT 12,574,373
SECURITIES
ASSETS AND (168) 12,574,205
LIABILITIES
IN
FOREIGN
CURRENCIES
NET GAIN 169,970,672
(LOSS)
NET INCREASE $ 166,606,176
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
OTHER $ 10,530,278
INFORMATIO
N
SALES
CHARGES
PAID TO
FDC
SALES $ 29,034
CHARGES -
DEALERS'
PORTION
DEFERRED $ 11,289
SALES
CHARGES
WITHHELD
BY FDC
EXCHANGE $ 477,248
FEES
WITHHELD
BY FSC
EXPENSE $ 250,269
REDUCTIONS
DIRECTED
BROKERAGE
ARRANGEM
ENTS
CUSTODIA 5,768
N CREDITS
TRANSFER 3,556
AGENT
CREDITS
$ 259,593
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
FEBRUARY 28, FEBRUARY 28,
1998 1997
OPERATIONS $ (3,364,496) $ (344,131)
NET
INVESTMENT
INCOME
(LOSS)
NET 157,396,467 90,047,658
REALIZED
GAIN (LOSS)
CHANGE IN 12,574,205 (16,245,487)
NET
UNREALIZED
APPRECIATI
ON
(DEPRECIATI
ON)
NET 166,606,176 73,458,040
INCREASE
(DECREAS
E) IN NET
ASSETS
RESULTING
FROM
OPERATIO
NS
DISTRIBUTIONS (52,135,101) (17,911,527)
TO
SHAREHOLD
ERS FROM
NET
REALIZED
GAINS
SHARE 2,385,855,385 1,555,976,986
TRANSACTIO
NS
NET
PROCEEDS
FROM SALES
OF SHARES
REINVESTM 51,297,776 17,660,042
ENT OF
DISTRIBUTIO
NS
COST OF (2,077,124,405) (1,466,322,715)
SHARES
REDEEMED
NET 360,028,756 107,314,313
INCREASE
(DECREAS
E) IN NET
ASSETS
RESULTING
FROM
SHARE
TRANSACTI
ONS
REDEMPTIO 4,998,236 2,837,620
N FEES
TOTAL 479,498,067 165,698,446
INCREASE
(DECREASE)
IN NET
ASSETS
NET ASSETS
BEGINNING 439,503,709 273,805,263
OF PERIOD
END OF $ 919,001,776 $ 439,503,709
PERIOD
OTHER
INFORMATION
SHARES
SOLD 81,787,357 78,524,862
ISSUED IN 2,167,528 891,837
REINVESTME
NT OF
DISTRIBUTIO
NS
REDEEMED (72,645,359) (74,951,258)
NET 11,309,526 4,465,441
INCREASE
(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>
YEARS ENDED FEBRUARY 28, YEAR ENDED YEARS ENDED FEBRUARY 28,
FEBRUARY 29,
SELECTED PER-SHARE DATA 1998 1997 1996 1995 1994
</TABLE>
NET ASSET $ 20.46 $ 16.09 $ 11.97 $ 11.66 $ 11.01
VALUE,
BEGINNING
OF PERIOD
INCOME FROM
INVESTMENT
OPERATION
S
NET (.10) (.01) .08 D .02 .03
INVESTMENT
INCOME
(LOSS) C
NET 9.36 5.05 4.49 .67 .51
REALIZED
AND
UNREALIZED
GAIN (LOSS)
TOTAL FROM 9.26 5.04 4.57 .69 .54
INVESTMENT
OPERATIONS
LESS
DISTRIBUTIO
NS
FROM NET - - (.04) (.01) (.05)
INVESTMENT
INCOME
IN EXCESS - - - (.01) -
OF NET
INVESTMENT
INCOME
FROM NET (1.85) (.79) G (.48) (.35) -
REALIZED
GAIN
IN EXCESS - - - (.13) -
OF NET
REALIZED
GAIN
TOTAL (1.85) (.79) (.52) (.50) (.05)
DISTRIBUTIO
NS
REDEMPTION .15 .12 .07 .12 .16
FEES
ADDED TO
PAID IN
CAPITAL
NET ASSET $ 28.02 $ 20.46 $ 16.09 $ 11.97 $ 11.66
VALUE, END
OF PERIOD
TOTAL 48.43% 32.26% 39.15% 7.60% 6.36%
RETURN A, B
RATIOS AND
SUPPLEME
NTAL DATA
NET ASSETS, $ 919,002 $ 439,504 $ 273,805 $ 63,794 $ 40,857
END OF
PERIOD
(000
OMITTED)
RATIO OF 1.25% 1.47% 1.59% 1.81% 1.66%
EXPENSES
TO AVERAGE
NET ASSETS
RATIO OF 1.22% E 1.45% E 1.58% E 1.79% E 1.65% E
EXPENSES
TO AVERAGE
NET ASSETS
AFTER
EXPENSE
REDUCTIONS
RATIO OF NET (.35)% (.07)% .60% .19% .23%
INVESTMENT
INCOME
(LOSS) TO
AVERAGE
NET ASSETS
PORTFOLIO 78% 167% 223% 209% 137%
TURNOVER
RATE
AVERAGE $ .0395 $ .0374
COMMISSIO
N RATE F
<TABLE>
<CAPTION>
<S> <C>
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. C NET INVESTMENT
INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED
ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD. D INVESTMENT INCOME PER SHARE REFLECTS
A SPECIAL DIVIDEND WHICH AMOUNTED TO $.02 PER
SHARE. 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 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 AMOUNTS
SHOWN REFLECT CERTAIN RECLASSIFICATIONS RELATED TO BOOK TO TAX DIFFERENCES (SEE NOTE 1
OF NOTES TO FINANCIAL STATEMENTS).
</TABLE>
NATURAL RESOURCES 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). Load adjusted returns include a 3.00% sales
charge and the effect of a $7.50 trading fee. If Fidelity had not
reimbursed certain fund expenses, the life of fund total returns would
have been lower.
CUMULATIVE TOTAL RETURNS
PERIOD ENDED LIFE OF
FEBRUARY 28, 1998 FUND
SELECT NATURAL RESOURCES 7.30%
SELECT NATURAL RESOURCES 4.01%
(LOAD ADJ.)
S&P 500 34.22%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, since the fund started on
March 3, 1997. You can compare the fund's returns to the performance
of the Standard & Poor's 500 Index - a widely recognized, unmanaged
index of common stocks. This benchmark includes reinvestment of
dividends and capital gains, if any, and excludes the effect of sales
charges.
AVERAGE ANNUAL TOTAL RETURNS
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. Average annual total returns will appear once the fund is a
year old.
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 LONG-TERM GROWTH AND
SHORT-TERM VOLATILITY. UNLIKE THE BROADER MARKET,
HOWEVER, SOME SECTORS MAY NOT HAVE A HISTORY
OF GROWTH IN THE LONG RUN. AND, AS WITH ALL STOCK
FUNDS, THE SHARE PRICE AND RETURN OF A FUND THAT
INVESTS IN A SECTOR WILL VARY. THAT MEANS IF YOU
SELL YOUR SHARES DURING A SECTOR DOWNTURN, YOU
MIGHT LOSE MONEY. BUT IF YOU CAN IDENTIFY A
SECTOR THAT IS ABOUT TO EXPERIENCE RAPID GROWTH
YOU MAY HAVE THE POTENTIAL FOR ABOVE-AVERAGE
GAINS.
(CHECKMARK)
$10,000 OVER LIFE OF FUND
IMAHDR PRASUN SHR__CHT 19980228 19980306 141751 S00000000000001
Natural Resources S&P 500
00514 SP001
1997/03/03 9700.00 10000.00
1997/03/31 9438.10 9533.50
1997/04/30 9428.40 10102.65
1997/05/31 10262.60 10717.70
1997/06/30 10320.80 11197.85
1997/07/31 10931.90 12088.86
1997/08/31 10980.40 11411.64
1997/09/30 11785.50 12036.66
1997/10/31 11145.30 11634.64
1997/11/30 10233.50 12173.20
1997/12/31 10328.82 12382.22
1998/01/31 10010.40 12519.16
1998/02/27 10400.93 13422.05
IMATRL PRASUN SHR__CHT 19980228 19980306 141753 R00000000000015
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity Select Natural Resources Portfolio on March 3,
1997 when the fund started, and the current 3.00% sales charge was
paid. As the chart shows, by February 28, 1998, the value of the
investment would have grown to $10,401 - a 4.01% increase on the
initial investment, and includes the effect of a $7.50 trading fee.
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 $13,422 - a 34.22% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1998
% OF FUND'S
INVESTMENTS
TOTAL SA SPONSORED ADR 5.2
TEXACO, INC. 4.3
USX-MARATHON GROUP 4.2
TOSCO CORP. 3.8
COASTAL CORP. (THE) 3.7
PHILLIPS PETROLEUM CO. 3.3
ELF AQUITAINE SA SPONSORED ADR 3.0
BRITISH PETROLEUM PLC ADR 2.9
ROYAL DUTCH PETROLEUM 2.6
VALERO ENERGY CORP. 2.4
TOP INDUSTRIES AS OF FEBRUARY 28, 1998
ROW: 1, COL: 1, VALUE: 31.6
ROW: 1, COL: 2, VALUE: 5.0
ROW: 1, COL: 3, VALUE: 5.9
ROW: 1, COL: 4, VALUE: 18.2
ROW: 1, COL: 5, VALUE: 19.4
ROW: 1, COL: 6, VALUE: 19.9
OIL & GAS EXPLORATION 19.9%
CRUDE PETROLEUM & GAS 19.4%
PETROLEUM REFINERS 18.2%
GOLD ORES 5.9%
DRILLING 5.0%
ALL OTHERS 31.6%
*
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
Lawrence Rakers, Portfolio Manager
of Fidelity Select Natural Resources Portfolio
Q. HOW DID THE FUND PERFORM, LARRY?
A. From its inception on March 3, 1997, through February 28, 1998, the
fund returned 7.30%. During the same period, the Standard & Poor's 500
Index returned 34.22%.
Q. WHAT FACTORS HURT THE FUND'S PERFORMANCE?
A. The financial turmoil in Southeast Asia during the second half of
the period was the major factor. Asia is responsible for about half of
the growth in demand for almost all of the commodities in the natural
resources sector. Therefore, slowing Asian economies meant that the
consumption of natural resources was going to decline. Consequently,
most commodity prices - oil, natural gas, gold and many base metals -
tanked toward the end of 1997 and remained in the doldrums throughout
the beginning of 1998. In fact, most stocks in the natural resources
sector underperformed the S&P 500 index during the last six months of
the period.
Q. IN SPITE OF THIS NEGATIVE ENVIRONMENT, WHICH STOCKS IN THE
PORTFOLIO WERE ABLE TO OUTPERFORM THE S&P 500 IN THE LAST 12 MONTHS?
A. Many energy service stocks and drillers enjoyed a healthy run-up
through October 1997, helping them to outpace the S&P 500 during the
period. Churning up impressive gains were service stocks such as
Halliburton and Schlumberger, and drillers including EVI Incorporated,
Noble Drilling and TransOcean. The fund reduced its holdings in all of
these stocks by the end of the period, as the oil price was declining.
Also boosting performance was Wainoco Oil, a refiner that is
undergoing a restructuring and benefits somewhat when oil prices
decline slightly. The fund increased its stake in Wainoco during the
second half of the period. In addition, some silver companies, such as
Pan American Silver, profited from a run-up in the silver price at the
end of the period after billionaire investor Warren Buffett went on a
silver-buying spree.
Q. THE FUND'S WEIGHTING IN THE OIL AND GAS SECTOR INCREASED OVER THE
PAST SIX MONTHS. WHY?
A. The oil price was below trend - or below a normal range of $18 to
$20 a barrel - over the past several months. Historically, the oil
price doesn't hover below trend very often or for periods longer than
about six to nine months. For that reason, I felt that it would be
better to own more oil stocks because if oil returned to the trend
range, these stocks would outperform. Most of all, I invested in
integrated oil companies, such as Total and Texaco, which look for
oil, process it in their refineries and make chemicals out of it or
make gasoline and sell it to consumers at gasoline stations. I felt
the integrated oil companies had the least downside risk in case my
assumption was incorrect and the oil price stayed below trend for a
long period of time. Most integrated oil companies have strong balance
sheets and stock repurchase programs, pay regular dividends and
generate solid cash flows from the diversification of their business.
Q. WHAT WAS YOUR STRATEGY FOR GOLD?
A. The gold price hovered in record-low territory during much of 1997.
Gold started the year at about $375 an ounce and fell to a range as
low as $270 to $280. I bought positions in gold company stocks at
these lows. My strategy was to sell into rallies - meaning when the
price hit $300 to $305. In addition, the central banks in Europe - as
a part of the move toward the European Monetary Union (EMU) - are
expected to announce a policy on gold in May. The fear in recent
months was that the central banks would sell a lot of gold into the
market, depressing prices. This fear kept the gold price low during
the period, but I think once the central banks formally announce their
EMU policy, the uncertainty could be gone and gold prices may rebound.
Q. WHAT'S YOUR OUTLOOK FOR THE NATURAL RESOURCES SECTOR?
A. I'm optimistic about the long-term prospects for natural resource
companies. The short term, on the other hand, depends on what happens
in Asia. Most natural resource companies have been punished as
commodities prices plummeted, which in turn slowed capacity additions.
This situation is setting the sector up for a great run sometime - the
question is when. If Southeast Asia rebounds quickly, we could see a
spike in natural resource stocks as soon as late 1998.
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: March 3, 1997
FUND NUMBER: 514
TRADING SYMBOL: FNATF
SIZE: as of February 28, 1998, more than
$7 million
MANAGER: Lawrence Rakers, since inception;
manager, Fidelity Select Energy Portfolio, since
1997; Fidelity Select Paper and Forest Products
Portfolio, 1996-1997; Fidelity Select American
Gold Portfolio, 1995-1997; Fidelity Select
Precious Metals and Minerals Portfolio,
1996-1997; joined Fidelity in 1993
(checkmark)
NATURAL RESOURCES PORTFOLIO
INVESTMENTS FEBRUARY 28, 1998
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 99.8%
SHARES VALUE (NOTE 1)
CHEMICALS & PLASTICS - 1.7%
AGRICULTURAL CHEMICALS - 0.6%
Potash Corp. of Saskatchewan 500 $ 44,679
CHEMICALS - 0.5%
Sasol, Ltd. 3,600 30,713
UNSUPPORTED PLASTICS, FILM & SHEETS - 0.6%
W.R. Grace & Co. 500 41,969
TOTAL CHEMICALS & PLASTICS 117,361
ENERGY SERVICES - 7.1%
DRILLING - 5.0%
Diamond Offshore Drilling, Inc. 1,300 58,906
Noble Drilling Corp. (a) 5,400 153,225
Transocean Offshore, Inc. 3,200 137,600
349,731
OIL & GAS SERVICES - 2.1%
Halliburton Co. 600 27,900
McDermott International, Inc. 400 15,750
Schlumberger Ltd. 600 45,225
Weatherford Enterra, Inc. (a) 1,700 58,863
147,738
TOTAL ENERGY SERVICES 497,469
ENGINEERING - 0.1%
ARCHITECTS & ENGINEERS - 0.1%
Stolt Comex Seaway SA (a) 200 4,825
GAS - 1.5%
GAS DISTRIBUTION - 1.2%
MCN Energy Group, Inc. 2,200 80,988
GAS TRANSMISSION - 0.3%
Enron Corp. 500 23,500
TOTAL GAS 104,488
HOLDING COMPANIES - 1.3%
HOLDING COMPANY OFFICES, NEC - 1.3%
Norfolk Southern Corp. 2,600 89,538
INDUSTRIAL MACHINERY & EQUIPMENT - 0.1%
SPECIAL INDUSTRIAL MACHINERY, NEC - 0.1%
Gasonics International Corp. (a) 600 8,775
MEDICAL EQUIPMENT & SUPPLIES - 0.5%
MEDICAL TECHNOLOGY - 0.5%
Nitinol Medical Technologies, Inc. (a) 4,000 38,500
METALS & MINING - 3.8%
ALUMINUM, EXTRUDED PRODUCTS - 0.5%
Alumax, Inc. (a) 900 33,356
METAL MINING - 0.5%
Breakwater Resources Ltd. (a) 13,700 29,156
Columbia Metals Ltd. (a) 20,100 4,518
33,674
MISCELLANEOUS NONMETAL MINERALS - 0.3%
Camphor Ventures, Inc. (a) 16,400 22,923
PRIMARY PRODUCTION OF ALUMINUM - 0.7%
Reynolds Metals Co. 800 49,850
PRIME NONFERROUS SMELTING - 1.8%
Alcan Aluminium Ltd. 1,400 43,315
Aluminum Co. of America 1,200 88,050
131,365
TOTAL METALS & MINING 271,168
SHARES VALUE (NOTE 1)
OIL & GAS - 59.1%
CRUDE PETROLEUM & GAS - 19.4%
Anadarko Petroleum Corp. 900 $ 58,050
Beau Canada Exploration Ltd. (a) 8,200 14,859
Brown (Tom), Inc. (a) 1,300 25,756
Burlington Resources, Inc. 857 38,351
Cabot Oil & Gas Corp. Class A 900 18,900
Canadian Natural Resources Ltd. 500 10,009
EEX Corp. (a) 6,300 53,944
Elf Aquitaine SA sponsored ADR 3,700 211,594
Enron Oil & Gas Co. 1,000 21,375
HS Resources, Inc. (a) 1,100 15,400
Lomak Petroleum, Inc. 1,200 19,875
Louis Dreyfus Natural Gas Corp. (a) 1,400 25,288
Magnum Hunter Resources, Inc. (a) 3,600 17,100
Nuevo Energy Corp. (a) 1,100 39,463
Occidental Petroleum Corp. 2,200 56,238
Ocean Energy, Inc. (a) 1,000 46,750
Paramount Resources Ltd. (b) 3,500 36,260
Petrobras PN (Pfd. Reg.) 622,000 140,913
Plains Resources, Inc. (a) 1,600 25,300
Rio Alto Exploration Ltd. (a) 2,400 25,285
Total SA sponsored ADR 6,600 365,063
Vastar Resources, Inc. 600 22,313
YPF Sociedad Anonima sponsored ADR
representing Class D shares 1,900 60,088
YPF Sociedad Anonima Class D 600 19,082
1,367,256
OIL & GAS EXPLORATION - 19.9%
Abacan Resource Corp. (a) 9,600 18,900
Amerada Hess Corp. 1,600 94,900
Amoco Corp. 1,000 85,000
Berkley Petroleum Corp. (a) 100 1,001
Chevron Corp. 200 16,225
Exxon Corp. 2,000 127,750
Kerr-McGee Corp. 800 54,100
Mobil Corp. 600 43,463
Petro-Canada 6,500 120,527
Phillips Petroleum Co. 4,700 230,300
Texaco, Inc. 5,400 301,388
USX-Marathon Group 8,500 293,781
Unocal Corp. 300 11,306
1,398,641
OIL FIELD EQUIPMENT - 1.6%
Cooper Cameron Corp. (a) 1,000 53,625
EVI, Inc. (a) 1,200 58,875
112,500
PETROLEUM REFINERS - 18.2%
British Petroleum PLC ADR 2,430 200,931
Coastal Corp. (The) 4,100 260,863
Royal Dutch Petroleum Co. 3,400 184,663
Shell Transport & Trading Co. PLC ADR 500 21,281
Tesoro Petroleum Corp. (a) 2,600 43,063
Tosco Corp. 7,200 267,300
Ultramar Diamond Shamrock Corp. 1,200 42,825
Valero Energy Corp. 4,700 166,850
Wainoco Oil Corp. (a) 11,400 96,900
1,284,676
TOTAL OIL & GAS 4,163,073
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
PACKAGING & CONTAINERS - 0.8%
GLASS CONTAINERS - 0.8%
Owens-Illinois, Inc. (a) 1,400 $ 53,725
PAPER & FOREST PRODUCTS - 9.2%
CONVERTED PAPER & PAPERBOARD - 1.8%
Boise Cascade Corp. 3,800 126,588
ENVELOPES - 2.2%
Mail-Well, Inc. (a) 3,950 157,506
PAPER - 1.6%
Chesapeake Corp. 700 23,756
Mercer International, Inc. (SBI) 4,700 41,125
Stone Container Corp. (a) 1,300 14,625
Willamette Industries, Inc. 800 29,550
109,056
PAPER MILLS - 2.1%
Alliance Forest Products, Inc. (a) 2,000 39,614
Fort James Corp. 2,400 108,900
148,514
PAPERBOARD MILLS - 0.3%
Jefferson Smurfit Corp. (a) 1,500 22,406
PULP MILLS - 1.2%
Buckeye Technologies, Inc. (a) 4,000 85,250
TOTAL PAPER & FOREST PRODUCTS 649,320
PRECIOUS METALS - 9.3%
GOLD & SILVER ORES - 3.0%
Getchell Gold Corp. (a) 8,800 163,900
Industrias Penoles SA 10,500 44,366
208,266
GOLD ORES - 5.9%
Euro-Nevada Mining Ltd. 10,500 160,404
Franco-Nevada Mining Corp. 2,700 57,935
Greenstone Resources Ltd. (a) 11,300 64,288
Greenstone Resources Ltd. (a)(b) 1,500 8,534
Indochina Goldfields Ltd. (a) 4,300 7,701
Meridian Gold, Inc. (a) 13,400 40,941
Mountain Province Mining, Inc. (a) 1,500 5,953
Queenston Mining, Inc. (a) 6,000 3,582
Resources William, Inc. (a) 105,000 28,393
Resources William, Inc. (a)(b) 10,500 2,839
Resources William, Inc. warrants
12/31/02 (a)(b) 15,750 -
Stillwater Mining Co. (a) 1,800 38,700
419,270
SILVER ORES - 0.4%
Compania de Minas Buenaventura SA
Class B sponsored ADR 1,200 16,200
Pan American Silver Corp. (a) 1,500 14,750
30,950
TOTAL PRECIOUS METALS 658,486
RAILROADS - 2.1%
CSX Corp. 2,600 145,438
RETAIL & WHOLESALE, MISCELLANEOUS - 0.1%
STATIONERY & OFFICE SUPPLIES - WHOLESALE - 0.1%
Boise Cascade Office Products Corp. (a) 200 3,613
SHARES VALUE (NOTE 1)
SERVICES - 0.1%
BUSINESS SERVICES - 0.1%
Zebra Technologies Corp. Class A (a) 200 $ 5,775
SHIPPING - 0.1%
DEEP SEA TRANSPORT - 0.1%
Stolt-Nielsen SA Class B sponsored ADR 500 9,063
TRUCKING & FREIGHT - 2.9%
AIR COURIER SERVICES - 2.0%
Airborne Freight Corp. 1,000 36,188
CNF Transportation, Inc. 2,700 105,638
141,826
FREIGHT FORWARDING - 0.8%
Expeditors International of
Washington, Inc. 1,400 56,700
TRUCKING, LONG DISTANCE - 0.1%
Consolidated Freightways Corp. (a) 600 9,000
TOTAL TRUCKING & FREIGHT 207,526
TOTAL COMMON STOCKS
(Cost $7,261,453) 7,028,143
CONVERTIBLE BONDS - 0.2%
MOODY'S RATINGS PRINCIPAL
(UNAUDITED) AMOUNT
METALS & MINING - 0.2%
METAL MINING - 0.2%
Dayton Mining Corp.
7%, 4/1/02 (b)
(Cost $16,750) - $ 25,000 15,750
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $7,278,203) $ 7,043,893
LEGEND
1. Non-income producing
2. Security exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt
from registration, normally to qualified institutional buyers. At the
period end, the value of these securities amounted to $63,383 or 0.8%
of net assets.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $16,143,193 and $9,337,151, 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 $1,465 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 68.6%
Canada 12.3
France 8.2
United Kingdom 3.2
Netherlands 2.6
Brazil 2.0
Argentina 1.1
Others (individually less than 1%) 2.0
TOTAL 100.0%
INCOME TAX INFORMATION
At February 28, 1998, the aggregate cost of investment securities for
income tax purposes was $7,301,002. Net unrealized depreciation
aggregated $257,109, of which $419,489 related to appreciated
investment securities and $676,598 related to depreciated investment
securities.
A total of 18% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate
shareholders (unaudited).
The fund will notify shareholders in January 1999 of this percentage
for use in preparing 1998 income tax returns.
NATURAL RESOURCES PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1998
ASSETS
INVESTMENT IN $ 7,043,893
SECURITIES,
AT VALUE
(COST
$7,278,2
03) -
SEE
ACCOMPAN
YING
SCHEDULE
RECEIVABLE 962,835
FOR
INVESTMENT
S SOLD
RECEIVABLE 182,639
FOR FUND
SHARES
SOLD
DIVIDENDS 18,714
RECEIVABLE
INTEREST 2,875
RECEIVABLE
REDEMPTION 49
FEES
RECEIVABLE
TOTAL 8,211,005
ASSETS
LIABILITIES
PAYABLE TO $ 547,839
CUSTODIAN
BANK
PAYABLE FOR 6,441
INVESTMENT
S
PURCHASED
PAYABLE FOR 103,797
FUND
SHARES
REDEEMED
ACCRUED 1,927
MANAGEM
ENT FEE
OTHER 31,142
PAYABLES
AND
ACCRUED
EXPENSES
TOTAL 691,146
LIABILITIES
NET ASSETS $ 7,519,859
NET ASSETS
CONSIST OF:
PAID IN $ 7,670,965
CAPITAL
ACCUMULATED (908)
NET
INVESTMENT
(LOSS)
ACCUMULATED 84,141
UNDISTRIBUT
ED NET
REALIZED
GAIN (LOSS)
ON
INVESTMENT
S AND
FOREIGN
CURRENCY
TRANSACTIO
NS
NET (234,339)
UNREALIZED
APPRECIATI
ON
(DEPRECIATI
ON) ON
INVESTMENT
S
AND ASSETS
AND
LIABILITIES
IN
FOREIGN
CURRENCIES
NET ASSETS, $ 7,519,859
FOR
719,038
SHARES
OUTSTANDIN
G
NET ASSET $10.46
VALUE AND
REDEMPTIO
N PRICE
PER SHARE
($7,519,8
59 (DIVIDED BY)
719,038
SHARES)
MAXIMUM $10.78
OFFERING
PRICE PER
SHARE
(100/97.
00 OF
$10.46)
STATEMENT OF OPERATIONS
MARCH 3, 1997 (COMMENCEMENT OF OPERATIONS) TO
FEBRUARY 28, 1998
INVESTMENT $ 73,678
INCOME
DIVIDENDS
INTEREST 30,444
TOTAL 104,122
INCOME
EXPENSES
MANAGEMEN $ 38,241
T FEE
TRANSFER 48,803
AGENT FEES
ACCOUNTING 59,758
FEES AND
EXPENSES
NON-INTEREST 14
ED
TRUSTEES'
COMPENSAT
ION
CUSTODIAN 36,476
FEES AND
EXPENSES
REGISTRATION 42,652
FEES
AUDIT 16,753
LEGAL 24
MISCELLANEO 430
US
TOTAL 243,151
EXPENSES
BEFORE
REDUCTIONS
EXPENSE (83,761) 159,390
REDUCTIONS
NET (55,268)
INVESTMEN
T INCOME
(LOSS)
REALIZED
AND
UNREALIZED
GAIN (LOSS)
NET REALIZED
GAIN (LOSS)
ON:
INVESTMENT 325,103
SECURITIES
FOREIGN 2,634 327,737
CURRENCY
TRANSACTIO
NS
CHANGE IN
NET
UNREALIZED
APPRECIATI
ON
(DEPRECIATI
ON) ON:
INVESTMENT (234,310)
SECURITIES
ASSETS AND (29) (234,339)
LIABILITIES
IN
FOREIGN
CURRENCIES
NET GAIN 93,398
(LOSS)
NET INCREASE $ 38,130
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
OTHER $ 81,304
INFORMATIO
N
SALES
CHARGES
PAID TO
FDC
DEFERRED $ 26
SALES
CHARGES
WITHHELD
BY FDC
EXCHANGE $ 5,280
FEES
WITHHELD
BY FSC
EXPENSE $ 954
REDUCTIONS
DIRECTED
BROKERAGE
ARRANGEM
ENTS
CUSTODIA 32
N CREDITS
FMR 82,775
REIMBURSE
MENT
$ 83,761
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS MARCH 3, 1997
(COMMENCEMENT
OF OPERATIONS) TO
FEBRUARY 28, 1998
OPERATIONS $ (55,268)
NET
INVESTMENT
INCOME
(LOSS)
NET 327,737
REALIZED
GAIN (LOSS)
CHANGE IN (234,339)
NET
UNREALIZED
APPRECIATI
ON
(DEPRECIATI
ON)
NET 38,130
INCREASE
(DECREAS
E) IN NET
ASSETS
RESULTING
FROM
OPERATIO
NS
DISTRIBUTIONS (189,236)
TO
SHAREHOLD
ERS FROM
NET
REALIZED
GAINS
SHARE 19,111,951
TRANSACTIO
NS
NET
PROCEEDS
FROM SALES
OF SHARES
REINVESTM 187,981
ENT OF
DISTRIBUTIO
NS
COST OF (11,661,561)
SHARES
REDEEMED
NET 7,638,371
INCREASE
(DECREAS
E) IN NET
ASSETS
RESULTING
FROM
SHARE
TRANSACTI
ONS
REDEMPTIO 32,594
N FEES
TOTAL 7,519,859
INCREASE
(DECREASE)
IN NET
ASSETS
NET ASSETS
BEGINNING -
OF PERIOD
END OF $ 7,519,859
PERIOD
(INCLUDING
ACCUMULAT
ED NET
INVESTMENT
LOSS OF
$908)
OTHER
INFORMATION
SHARES
SOLD 1,783,337
ISSUED IN 18,686
REINVESTME
NT OF
DISTRIBUTIO
NS
REDEEMED (1,082,985)
NET 719,038
INCREASE
(DECREASE)
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
MARCH 3, 1997
(COMMENCEMENT
OF OPERATIONS) TO
FEBRUARY 28, 1998
SELECTED PER-SHARE DATA
NET ASSET $ 10.00
VALUE,
BEGINNING
OF PERIOD
INCOME FROM
INVESTMENT
OPERATION
S
NET (.09)
INVESTMENT
INCOME
(LOSS) C
NET .76
REALIZED
AND
UNREALIZED
GAIN (LOSS)
TOTAL FROM .67
INVESTMENT
OPERATIONS
LESS
DISTRIBUTIO
NS
FROM NET (.26)
REALIZED
GAIN
REDEMPTION .05
FEES
ADDED TO
PAID IN
CAPITAL
NET ASSET $ 10.46
VALUE, END
OF PERIOD
TOTAL 7.30%
RETURN A, B
RATIOS AND
SUPPLEME
NTAL DATA
NET ASSETS, $ 7,520
END OF
PERIOD
(000
OMITTED)
RATIO OF 2.50% D, G
EXPENSES
TO AVERAGE
NET ASSETS
RATIO OF 2.48% F, G
EXPENSES
TO AVERAGE
NET ASSETS
AFTER
EXPENSE
REDUCTIONS
RATIO OF NET (.86)% G
INVESTMENT
INCOME
(LOSS) TO
AVERAGE
NET ASSETS
PORTFOLIO 165% G
TURNOVER
RATE
AVERAGE $ .0111
COMMISSIO
N RATE E
A THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD
CERTAIN EXPENSES NOT BEEN REDUCED DURING
THE PERIOD SHOWN (SEE NOTE 8 OF NOTES TO
FINANCIAL STATEMENTS). B TOTAL RETURNS DO NOT
INCLUDE THE ONE TIME SALES CHARGE. C NET
INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN
CALCULATED BASED ON AVERAGE SHARES OUTSTANDING
DURING THE PERIOD. D FMR AGREED TO REIMBURSE
A PORTION OF THE FUND'S EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S
EXPENSE RATIO WOULD HAVE BEEN HIGHER (SEE
NOTE 8 OF NOTES TO FINANCIAL
STATEMENTS). E 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. 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 ANNUALIZED
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). Load adjusted returns include a 3.00% sales
charge and the effect of a $7.50 trading fee.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 28, 1998 YEAR YEARS YEARS
SELECT PRECIOUS METALS AND MINERALS -47.55% 7.60% -6.61%
SELECT PRECIOUS METALS AND MINERALS -49.20% 4.30% -9.49%
(LOAD ADJ.)
S&P 500 35.01% 166.84% 422.55%
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 Standard &
Poor's 500 Index - a widely recognized, unmanaged index of common
stocks. This benchmark includes 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, 1998 YEAR YEARS YEARS
SELECT PRECIOUS METALS AND MINERALS -47.55% 1.48% -0.68%
SELECT PRECIOUS METALS AND MINERALS -49.20% 0.84% -0.99%
(LOAD ADJ.)
S&P 500 35.01% 21.69% 17.98%
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 LONG-TERM GROWTH AND
SHORT-TERM VOLATILITY. UNLIKE THE BROADER MARKET,
HOWEVER, SOME SECTORS MAY NOT HAVE A HISTORY
OF GROWTH IN THE LONG RUN. AND, AS WITH ALL STOCK
FUNDS, THE SHARE PRICE AND RETURN OF A FUND THAT
INVESTS IN A SECTOR WILL VARY. THAT MEANS IF YOU
SELL YOUR SHARES DURING A SECTOR DOWNTURN, YOU
MIGHT LOSE MONEY. BUT IF YOU CAN IDENTIFY A
SECTOR THAT IS ABOUT TO EXPERIENCE RAPID GROWTH
YOU MAY HAVE THE POTENTIAL FOR ABOVE-AVERAGE
GAINS.
(CHECKMARK)
$10,000 OVER 10 YEARS
IMAHDR PRASUN SHR__CHT 19980228 19980305 141511 S00000000000001
PRECIOUS METALS&MINERALS S&P 500
00061 SP001
1988/02/29 9700.00 10000.00
1988/03/31 10507.04 9691.00
1988/04/30 10157.84 9798.57
1988/05/31 10212.16 9883.82
1988/06/30 9839.68 10337.48
1988/07/31 9901.76 10298.20
1988/08/31 9312.00 9948.06
1988/09/30 8683.44 10371.85
1988/10/31 9001.60 10660.19
1988/11/30 9335.28 10507.75
1988/12/31 8945.43 10691.63
1989/01/31 9317.48 11474.26
1989/02/28 9616.74 11188.55
1989/03/31 9616.74 11449.25
1989/04/30 9179.98 12043.46
1989/05/31 8743.22 12531.22
1989/06/30 9430.71 12459.79
1989/07/31 9689.53 13584.91
1989/08/31 9883.64 13851.18
1989/09/30 10231.43 13794.39
1989/10/31 10223.34 13474.36
1989/11/30 11525.53 13749.23
1989/12/31 11822.50 14079.22
1990/01/31 12764.05 13134.50
1990/02/28 11666.94 13303.94
1990/03/31 11159.33 13656.49
1990/04/30 10013.10 13315.08
1990/05/31 10586.22 14613.30
1990/06/30 9816.61 14513.93
1990/07/31 10414.28 14467.48
1990/08/31 10520.72 13159.62
1990/09/30 10283.28 12518.75
1990/10/31 9128.87 12464.92
1990/11/30 8965.12 13270.15
1990/12/31 9331.08 13640.39
1991/01/31 8318.28 14235.11
1991/02/28 9065.43 15252.92
1991/03/31 8891.10 15622.04
1991/04/30 8866.19 15659.53
1991/05/31 9364.29 16336.03
1991/06/30 9978.62 15587.84
1991/07/31 9978.62 16314.23
1991/08/31 8932.60 16700.88
1991/09/30 9115.24 16421.97
1991/10/31 9729.57 16642.03
1991/11/30 10036.73 15971.35
1991/12/31 9474.55 17798.47
1992/01/31 9675.60 17467.42
1992/02/29 9172.98 17694.50
1992/03/31 8812.76 17349.46
1992/04/30 8293.38 17859.53
1992/05/31 8837.89 17947.04
1992/06/30 8887.75 17679.63
1992/07/31 9005.25 18402.73
1992/08/31 8602.40 18025.47
1992/09/30 8249.91 18238.17
1992/10/31 7721.18 18302.01
1992/11/30 7267.98 18926.11
1992/12/31 7402.85 19158.90
1993/01/31 7582.15 19319.83
1993/02/28 8418.92 19582.58
1993/03/31 9563.08 19995.77
1993/04/30 11108.54 19511.88
1993/05/31 12577.15 20034.79
1993/06/30 12782.08 20092.89
1993/07/31 14447.08 20012.52
1993/08/31 12995.54 20771.00
1993/09/30 11970.92 20611.06
1993/10/31 13670.08 21037.71
1993/11/30 13644.46 20837.85
1993/12/31 15666.21 21089.99
1994/01/31 15018.13 21807.05
1994/02/28 14361.41 21216.08
1994/03/31 14214.51 20291.06
1994/04/30 14215.08 20550.78
1994/05/31 14241.02 20887.82
1994/06/30 14526.36 20376.06
1994/07/31 15079.75 21044.40
1994/08/31 16151.93 21907.22
1994/09/30 17388.40 21370.49
1994/10/31 16713.96 21851.33
1994/11/30 14924.11 21055.50
1994/12/31 15487.46 21367.76
1995/01/31 12789.42 21921.82
1995/02/28 13376.33 22776.12
1995/03/31 14734.11 23448.24
1995/04/30 14856.75 24138.79
1995/05/31 14672.79 25103.62
1995/06/30 14847.99 25686.77
1995/07/31 15461.18 26538.55
1995/08/31 15671.41 26605.16
1995/09/30 15715.21 27727.90
1995/10/31 13753.00 27628.91
1995/11/30 14716.59 28841.82
1995/12/31 14970.29 29397.31
1996/01/31 18108.51 30398.00
1996/02/29 18424.97 30679.78
1996/03/31 18319.48 30975.23
1996/04/30 18734.25 31431.81
1996/05/31 19818.12 32242.43
1996/06/30 17059.97 32365.28
1996/07/31 16848.48 30935.38
1996/08/31 17764.93 31587.81
1996/09/30 17024.72 33365.57
1996/10/31 16883.73 34285.79
1996/11/30 16037.78 36877.45
1996/12/31 15782.24 36146.91
1997/01/31 15103.71 38405.37
1997/02/28 17271.46 38706.47
1997/03/31 14707.18 37116.02
1997/04/30 13729.05 39331.84
1997/05/31 13958.16 41726.37
1997/06/30 12513.00 43595.71
1997/07/31 12019.53 47064.62
1997/08/31 12081.21 44428.06
1997/09/30 12645.18 46861.38
1997/10/31 10521.49 45296.21
1997/11/30 8124.64 47392.97
1997/12/31 8697.41 48206.71
1998/01/31 9578.61 48739.88
1998/02/27 9051.20 52255.00
IMATRL PRASUN SHR__CHT 19980228 19980305 141515 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Precious Metals and Minerals Portfolio on
February 29, 1988, and the current 3.00% sales charge was paid. As the
chart shows, by February 28, 1998, the value of the investment would
have been $9,051 - a 9.49% decrease on the initial investment, and
includes the effect of a $7.50 trading fee. 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 $52,255 - a 422.55% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1998
% OF FUND'S
INVESTMENTS
EURO-NEVADA MINING LTD. 11.0
NORMANDY MINING LTD. 9.5
GETCHELL GOLD CORP. 7.9
FRANCO-NEVADA MINING CORP. 6.9
MERIDIAN GOLD, INC. 6.0
PLACER DOME, INC. 3.8
PIONEER GROUP, INC. 3.3
PRIME RESOURCES GROUP, INC. 2.5
LIHIR GOLD LTD. 2.3
STILLWATER MINING CO. 2.2
TOP INDUSTRIES AS OF FEBRUARY 28, 1998
GOLD ORES (CANADA) 43.0%
GOLD & SILVER ORES (AUSTRALIA) 11.4%
GOLD ORES (AUSTRALIA) 9.4%
GOLD ORES (SOUTH AFRICA) 9.2%
GOLD & SILVER ORES (U.S.) 7.9%
ALL OTHERS 19.1%
ROW: 1, COL: 1, VALUE: 18.7
ROW: 1, COL: 2, VALUE: 7.9
ROW: 1, COL: 3, VALUE: 9.199999999999999
ROW: 1, COL: 4, VALUE: 9.4
ROW: 1, COL: 5, VALUE: 11.4
ROW: 1, COL: 6, VALUE: 43.4
*
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
PRECIOUS METALS AND MINERALS PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
George Domolky, Portfolio Manager of Fidelity Select Precious Metals
and Minerals Portfolio
Q. HOW DID THE FUND PERFORM, GEORGE?
A. We've just come through an extremely difficult period for the fund
and the gold market. For the 12 months that ended February 28, 1998,
the fund lost 47.55%, while the Standard & Poor's 500 Index gained
35.01%.
Q. WHAT FACTORS HURT THE FUND'S PERFORMANCE?
A. Continuing weakness in the price of gold was the primary factor
driving the poor performance of precious metals shares. Early in 1998,
gold edged under $280 per ounce before stabilizing around $300 per
ounce at the end of the period. Periodic central bank sales, low
inflation and a strong dollar all contributed to gold's weakness. The
currency crisis in Southeast Asia only exacerbated the problem, as a
number of countries in the region were forced to sell gold as a means
of raising cash to offset their depreciated currencies.
Q. WHAT KIND OF STRATEGY DID YOU EMPLOY IN THAT ENVIRONMENT?
A. The fund maintained its major holdings in the U.S. and Canadian
markets. However, with respect to the fund's other important
geographical allocations, I made a strategic shift toward Australia
and away from South Africa. This shift stemmed from my belief that
Australian equities offered good potential returns with a lower risk
profile than South African mining shares, which tend to be more
volatile because of the higher operating costs of South African firms.
I increased Australian holdings from 13.5% six months ago to 22.7% of
the fund's assets at the end of the period, while reducing South
African shares from 20.8% to 9.2% of the fund's holdings. The South
African holdings that remain in the fund are companies with very
strong balance sheets and reserves. As always, foreign investments
carry greater risk than U.S. investments, but I felt that the mix of
holdings resulting from this shift positioned the fund appropriately
for an environment of weak gold prices, while allowing it to
participate meaningfully should the gold market begin to recover.
Finally, regardless of location, I tried to invest the fund's assets
in companies with cash flows and cost structures that allow them to be
profitable despite low commodity prices.
Q. WHAT HOLDINGS HELPED THE FUND'S PERFORMANCE?
A. Pioneer Group was the holding that was most helpful to performance.
This U.S.-based company owns undervalued gold properties in the
Republic of Ghana. Among the Australian holdings, Delta Gold proved to
be a solid performer due to expanding gold reserves and platinum
exposure.
Q. WHAT WERE SOME OF YOUR DISAPPOINTMENTS?
A. The performance of Getchell Gold, a major holding for the fund, was
disappointing. During the period, investors favored companies with
established production operations over firms - like Getchell Gold -
whose primary appeal is the potential profitability represented by
successful exploration activities. Newmont Mining is another holding
that dragged down performance. The company has a policy of not hedging
its production, which means that, unlike many of its competitors,
Newmont does not protect itself against falling gold prices by selling
forward or futures contracts for later delivery. Consequently, the
company tends to be hurt more by severe declines in precious metals
prices of the sort we have experienced lately.
Q. WHAT'S YOUR OUTLOOK, GEORGE?
A. I believe that gold and other precious metals are close to an
important bottom. However, a crucial milestone for the gold market
will come in the next few months, when the central bank of the
European Economic Community decides what level of gold reserves to
carry. On other fronts, the current low gold price will result in the
closing of unprofitable mines, curtailing gold supplies somewhat. The
mines that remain open will be forced to take all reasonable steps to
cut costs further, setting the stage for increased profits when gold
prices rebound. At the same time, increasing demand for gold jewelry
in India and China is a hopeful sign. Furthermore, if the gold market
turns up even a modest amount, the exploration companies that have
been spurned in favor of more defensive purchases should be star
performers.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET AND OTHER CONDITIONS.
FUND FACTS
START DATE: July 14, 1981
FUND NUMBER: 061
TRADING SYMBOL: FDPMX
SIZE: as of February 28, 1998, more than
$165 million
MANAGER: George Domolky, since 1997; manager,
Fidelity Select American Gold Portfolio, since 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, 1998
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 98.0%
SHARES VALUE (NOTE 1)
AUSTRALIA - 22.7%
METALS & MINING - 1.9%
METAL MINING SERVICES - 1.9%
Acacia Resources Ltd. 2,200,000 $ 3,034,870
MISCELLANEOUS METAL ORES, NEC - 0.0%
Helix Resources NL (a) 150,000 40,773
TOTAL METALS & MINING 3,075,643
PRECIOUS METALS - 20.8%
GOLD & SILVER ORES - 11.4%
Normandy Mining Ltd. 15,443,597 15,322,257
Plutonic Resources Ltd. 885,000 2,736,378
Sons of Gwalia NL 75,000 229,348
18,287,983
GOLD ORES - 9.4%
Centaur Mining & Exploration Ltd. (a) 6,048,350 3,041,516
Delta Gold (a) 2,025,190 2,601,052
Great Central Mines NL sponsored ADR 90,000 371,250
Great Central Mines NL 2,384,206 3,159,365
Leo Shield Exploration NL (a) 412,000 41,996
Lihir Gold Ltd. (a) 3,145,000 3,633,214
Normandy NFM Ltd. 349,060 1,328,341
Resolute Samantha Ltd. 950,000 916,713
Ross Mining NL 100,000 54,364
15,147,811
TOTAL PRECIOUS METALS 33,435,794
TOTAL AUSTRALIA 36,511,437
CANADA - 45.0%
METALS & MINING - 1.2%
METAL MINING - 0.4%
Dayton Mining Corp. (a) 140,000 221,247
Southernera Resources Ltd. (a) 53,000 441,124
662,371
METAL MINING SERVICES - 0.2%
Minefinders Corp. Ltd. (a) 190,200 267,182
MISCELLANEOUS NONMETAL MINERALS - 0.6%
Aber Resources Ltd (a). 168,500 1,964,601
Archangel Diamond Corp. (a) 30,000 23,178
DIA Metropolitan
Minerals Ltd. Class B (a) 19,500 397,191
2,384,970
TOTAL METALS & MINING 3,314,523
OIL & GAS - 0.3%
CRUDE PETROLEUM & GAS - 0.0%
Solomon Resources Ltd. (a) 200,000 36,523
OIL & GAS EXPLORATION - 0.3%
Southwestern Gold Corp. (a) 135,000 435,224
TOTAL OIL & GAS 471,747
PRECIOUS METALS - 43.5%
GOLD & SILVER ORES - 0.4%
GoldCorp, Inc. Class A (a) 120,000 556,277
GOLD ORES - 43.0%
Agnico Eagle Mines Ltd. 102,000 634,030
Argosy Mining Corp. (a) 169,200 51,102
SHARES VALUE (NOTE 1)
Cambior, Inc. 113,000 $ 710,342
Crown Resources Corp. (a) 81,900 342,956
Euro-Nevada Mining Ltd. 1,158,600 17,699,421
Franco Nevada Mining Ltd. Unit (a)(c) 75,000 1,828,799
Franco-Nevada Mining Corp. 519,600 11,149,275
Franco-Nevada Mining Corp. (c) 5,200 111,579
Francisco Gold Corp. (a) 9,500 78,402
Francisco Gold Corp. (a)(c) 54,500 449,781
Geomaque Explorations Ltd. (a) 367,100 618,817
Golden Knight Resources, Inc. (a) 299,300 483,505
Greenstone Resources Ltd. (a) 365,900 2,081,679
Greenstone Resources Ltd. (a)(c) 80,000 455,136
High River Gold Mines Ltd. (a) 60,000 54,785
Iamgold International African Mining
Gold Corp. (a) 69,800 240,225
Indochina Goldfields Ltd. (a) 20,000 35,821
Indochina Goldfields Ltd. (a)(c) 70,000 125,373
Kinross Gold Corp. (a) 850,000 3,014,925
Metallica Resources, Inc. (a) 386,900 706,543
Metallica Resources, Inc. (a)(c) 100,000 182,616
Mountain Province Mining, Inc. (a) 336,700 1,336,158
Meridian Gold, Inc. (a) 3,173,300 9,695,413
Nevsun Resources Ltd. (a) 108,600 282,227
Orvana Minerals Corp. (a) 4,000 5,198
Placer Dome, Inc. 482,700 6,119,568
Prime Resources Group, Inc. 516,900 4,048,067
Repadre Capital Corp. (a) 126,200 509,675
Rio Narcea Gold Mines Ltd. (a) 999,700 2,387,343
Samax Gold, Inc. (a) 15,000 51,097
South Pacific Resources, Inc. (a) 59,500 7,731
Sudbury Contact Mines Ltd. (a) 50,000 114,135
Sutton Resources Ltd. (a) 100,000 821,773
TVI Pacific, Inc. (a) 1,146,800 64,438
TVX Gold, Inc. (a) 350,000 1,007,902
Vengold, Inc. (a) 169,600 167,962
Viceroy Resources Corp. (a) 105,000 180,685
67,854,484
SILVER ORES - 0.1%
Pan American Silver Corp. (a) 20,000 196,664
TOTAL PRECIOUS METALS 68,607,425
TOTAL CANADA 72,393,695
GHANA - 1.3%
PRECIOUS METALS - 1.3%
GOLD ORES - 1.3%
Ashanti Goldfields Co. Ltd. GDR 224,154 2,143,473
MEXICO - 0.5%
PRECIOUS METALS - 0.5%
GOLD & SILVER ORES - 0.5%
Industrias Penoles SA 180,000 760,563
PERU - 1.1%
PRECIOUS METALS - 1.1%
SILVER ORES - 1.1%
Compania de Minas Buenaventura
SA Class B sponsored ADR 124,400 1,679,400
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
SOUTH AFRICA - 9.2%
PRECIOUS METALS - 9.2%
GOLD ORES - 9.2%
Anglo American Corp. of South Africa
Ltd. (Reg.) (a) 75,000 $ 3,138,583
De Beers Consolidated Mines Ltd. ADR 75,000 1,495,313
Gold Fields of South Africa
Ltd. sponsored ADR 73,700 1,004,163
Randfontein Estates Gold Mining
warrants 7/1/02 (a) 52,463 20,152
Vaal Reefs Exploration & Mining Co. Ltd.:
(Reg.) 28,200 1,157,303
ADR 479,500 2,067,844
Western Areas Gold
Mining Ltd. Ord. (a) 403,564 2,284,402
Western Deep Levels Ltd.:
Ord. 56,200 1,090,711
ADR 121,500 2,551,500
14,809,971
SECURITIES INDUSTRY - 0.0%
SECURITY BROKERS & DEALERS - 0.0%
Genbel Securities Ltd. 234 2,957
TOTAL SOUTH AFRICA 14,812,928
UNITED KINGDOM - 0.0%
PRECIOUS METALS - 0.0%
GOLD ORES - 0.0%
Bakyrchik Gold PLC (a) 70,900 6,994
UNITED STATES OF AMERICA - 18.2%
PRECIOUS METALS - 14.8%
GOLD & SILVER ORES - 7.9%
Getchell Gold Corp. (a) 684,700 12,752,538
GOLD ORES - 6.9%
Battle Mountain Gold Co. 30,000 180,000
Homestake Mining Co. 124,000 1,240,000
Newmont Gold Co. 39,000 1,140,750
Newmont Mining Corp. 88,610 2,564,152
Stillwater Mining Co. (a) 166,100 3,571,150
Stillwater Mining Co. (a)(c) 109,000 2,343,500
11,039,552
TOTAL PRECIOUS METALS 23,792,090
SECURITIES INDUSTRY - 3.3%
INVESTMENT MANAGERS - 3.3%
Pioneer Group, Inc. 179,600 5,365,550
SERVICES - 0.1%
JEWELRY, PRECIOUS METAL - 0.1%
Lazare Kaplan International, Inc. (a) 10,000 112,500
TOTAL UNITED STATES OF AMERICA 29,270,140
TOTAL COMMON STOCKS
(Cost $185,515,830) 157,578,630
CASH EQUIVALENTS - 2.0%
SHARES VALUE (NOTE 1)
Taxable Central Cash Fund (b)
(Cost $3,222,550) 3,222,550 $ 3,222,550
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $188,738,380) $ 160,801,180
LEGEND
1. Non-income producing
2. At period end, the seven-day yield on the Taxable Central Cash Fund
was 5.62%. 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 $5,496,784 or
3.3% of net assets.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $160,631,088 and $180,250,336, 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 $34,762 for the
period (see Note 4 of Notes to Financial Statements).
The fund participated in the securities lending program. At the period
end, there were no loans outstanding (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 $5,198,000. The weighted average interest rate
was 5.9% (see Note 7 of Notes to Financial Statements).
INCOME TAX INFORMATION
At February 28, 1998, the aggregate cost of investment securities for
income tax purposes was $191,429,838. Net unrealized depreciation
aggregated $30,628,658, of which $20,733,288 related to appreciated
investment securities and $51,361,946 related to depreciated
investment securities.
At February 28, 1998, the fund had a capital loss carryforward of
approximately $57,071,000 of which $1,376,000, and $55,695,000 will
expire on February 28, 2000, and 2006, respectively.
The fund intends to elect to defer to its fiscal year ending February
28, 1999 approximately $10,491,000 of losses recognized during the
period November 1, 1997 to February 28, 1998.
PRECIOUS METALS AND MINERALS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1998
ASSETS
INVESTMENT IN $ 160,801,180
SECURITIES,
AT VALUE
(COST
$188,738
,380) -
SEE
ACCOMPAN
YING
SCHEDULE
FOREIGN 45,515
CURRENCY
HELD AT
VALUE
(COST
$45,593)
RECEIVABLE 7,719,428
FOR FUND
SHARES
SOLD
DIVIDENDS 637,553
RECEIVABLE
INTEREST 20,549
RECEIVABLE
REDEMPTION 409
FEES
RECEIVABLE
TOTAL 169,224,634
ASSETS
LIABILITIES
PAYABLE FOR $ 332,082
INVESTMENT
S
PURCHASED
PAYABLE FOR 2,695,680
FUND
SHARES
REDEEMED
ACCRUED 82,281
MANAGEM
ENT FEE
OTHER 154,383
PAYABLES
AND
ACCRUED
EXPENSES
TOTAL 3,264,426
LIABILITIES
NET ASSETS $ 165,960,208
NET ASSETS
CONSIST OF:
PAID IN $ 265,453,015
CAPITAL
ACCUMULATED (1,339,643)
NET
INVESTMENT
(LOSS)
ACCUMULATED (70,218,808)
UNDISTRIBUT
ED NET
REALIZED
GAIN (LOSS)
ON
INVESTMENT
S AND
FOREIGN
CURRENCY
TRANSACTIO
NS
NET (27,934,356)
UNREALIZED
APPRECIATI
ON
(DEPRECIATI
ON) ON
INVESTMENT
S
AND ASSETS
AND
LIABILITIES
IN
FOREIGN
CURRENCIES
NET ASSETS, $ 165,960,208
FOR
16,149,2
67
SHARES
OUTSTANDIN
G
NET ASSET $10.28
VALUE AND
REDEMPTIO
N PRICE
PER SHARE
($165,96
0,208 (DIVIDED BY)
16,149,2
67 SHARES)
MAXIMUM $10.60
OFFERING
PRICE PER
SHARE
(100/97.
00 OF
$10.28)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1998
INVESTMENT $ 2,411,995
INCOME
DIVIDENDS
INTEREST 505,256
(INCLUDING
INCOME ON
SECURITIES
LOANED OF
$10,154)
TOTAL 2,917,251
INCOME
EXPENSES
MANAGEMEN $ 1,160,570
T FEE
TRANSFER 1,964,979
AGENT FEES
ACCOUNTING 196,088
AND
SECURITY
LENDING
FEES
CUSTODIAN 101,900
FEES AND
EXPENSES
REGISTRATION 79,383
FEES
AUDIT 35,162
LEGAL 1,319
INTEREST 857
MISCELLANEO 2,752
US
TOTAL 3,543,010
EXPENSES
BEFORE
REDUCTIONS
EXPENSE (114,077) 3,428,933
REDUCTIONS
NET (511,682)
INVESTMEN
T INCOME
(LOSS)
REALIZED
AND
UNREALIZED
GAIN (LOSS)
NET REALIZED
GAIN (LOSS)
ON:
INVESTMENT (66,528,058)
SECURITIES
FOREIGN (79,298) (66,607,356)
CURRENCY
TRANSACTIO
NS
CHANGE IN
NET
UNREALIZED
APPRECIATI
ON
(DEPRECIATI
ON) ON:
INVESTMENT (65,516,952)
SECURITIES
ASSETS AND (49) (65,517,001)
LIABILITIES
IN
FOREIGN
CURRENCIES
NET GAIN (132,124,357)
(LOSS)
NET INCREASE $ (132,636,039)
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
OTHER $ 590,860
INFORMATIO
N
SALES
CHARGES
PAID TO
FDC
SALES $ 2,251
CHARGES -
DEALERS'
PORTION
DEFERRED $ 30,793
SALES
CHARGES
WITHHELD
BY FDC
EXCHANGE $ 100,313
FEES
WITHHELD
BY FSC
EXPENSE $ 112,274
REDUCTIONS
DIRECTED
BROKERAGE
ARRANGEM
ENTS
CUSTODIA 46
N CREDITS
TRANSFER 1,757
AGENT
CREDITS
$ 114,077
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
FEBRUARY 28, FEBRUARY 28,
1998 1997
OPERATIONS $ (511,682) $ (181,419)
NET
INVESTMENT
INCOME
(LOSS)
NET (66,607,356) 16,412,795
REALIZED
GAIN (LOSS)
CHANGE IN (65,517,001) (43,173,440)
NET
UNREALIZED
APPRECIATI
ON
(DEPRECIATI
ON)
NET (132,636,039) (26,942,064)
INCREASE
(DECREAS
E) IN NET
ASSETS
RESULTING
FROM
OPERATIO
NS
DISTRIBUTIONS - (846,595)
TO
SHAREHOLD
ERS
FROM NET
INVESTMENT
INCOME
IN EXCESS - (176,411)
OF NET
INVESTMENT
INCOME
TOTAL - (1,023,006)
DISTRIBUTIO
NS
SHARE 372,321,003 435,994,024
TRANSACTIO
NS
NET
PROCEEDS
FROM SALES
OF SHARES
REINVESTM - 1,004,423
ENT OF
DISTRIBUTIO
NS
COST OF (401,322,827) (552,635,513)
SHARES
REDEEMED
NET (29,001,824) (115,637,066)
INCREASE
(DECREAS
E) IN NET
ASSETS
RESULTING
FROM
SHARE
TRANSACTI
ONS
REDEMPTIO 2,011,726 1,992,596
N FEES
TOTAL (159,626,137) (141,609,540)
INCREASE
(DECREASE)
IN NET
ASSETS
NET ASSETS
BEGINNING 325,586,345 467,195,885
OF PERIOD
END OF $ 165,960,208 $ 325,586,345
PERIOD
(INCLUDIN
G
ACCUMUL
ATED NET
INVESTME
NT LOSS OF
$1,339,
643 AND
$44,63
6,
RESPECTIV
ELY)
OTHER
INFORMATION
SHARES
SOLD 30,945,409 22,221,455
ISSUED IN - 48,973
REINVESTME
NT OF
DISTRIBUTIO
NS
REDEEMED (31,406,772) (27,946,037)
NET (461,363) (5,675,609)
INCREASE
(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>
YEARS ENDED FEBRUARY 28, YEAR ENDED YEARS ENDED FEBRUARY 28,
FEBRUARY 29,
SELECTED PER-SHARE DATA 1998 1997 1996 1995 1994
</TABLE>
NET ASSET $ 19.60 $ 20.96 $ 15.27 $ 16.62 $ 9.86
VALUE,
BEGINNING
OF PERIOD
INCOME FROM
INVESTMENT
OPERATION
S
NET (.04) (.01) .07 .17 .21
INVESTMENT
INCOME
(LOSS) C
NET (9.42) (1.42) 5.54 (1.42) 6.48
REALIZED
AND
UNREALIZED
GAIN (LOSS)
TOTAL FROM (9.46) (1.43) 5.61 (1.25) 6.69
INVESTMENT
OPERATIONS
LESS
DISTRIBUTIO
NS
FROM NET - (.04) (.06) (.18) (.19)
INVESTMENT
INCOME
IN EXCESS - (.01) - (.05) (.02)
OF NET
INVESTMENT
INCOME
TOTAL - (.05) (.06) (.23) (.21)
DISTRIBUTIO
NS
REDEMPTION .14 .12 .14 .13 .28
FEES
ADDED TO
PAID IN
CAPITAL
NET ASSET $ 10.28 $ 19.60 $ 20.96 $ 15.27 $ 16.62
VALUE, END
OF PERIOD
TOTAL (47.55)% (6.26)% 37.74% (6.86)% 70.58%
RETURN A, B
RATIOS AND
SUPPLEME
NTAL DATA
NET ASSETS, $ 165,960 $ 325,586 $ 467,196 $ 364,204 $ 409,212
END OF
PERIOD
(000
OMITTED)
RATIO OF 1.82% 1.62% 1.52% 1.46% 1.55%
EXPENSES
TO AVERAGE
NET ASSETS
RATIO OF 1.76% D 1.61% D 1.52% 1.46% 1.55%
EXPENSES
TO AVERAGE
NET ASSETS
AFTER
EXPENSE
REDUCTIONS
RATIO OF NET (.26)% (.05)% .39% .99% 1.38%
INVESTMENT
INCOME
(LOSS) TO
AVERAGE
NET ASSETS
PORTFOLIO 84% 54% 53% 43% 73%
TURNOVER
RATE
AVERAGE $ .0096 $ .0141
COMMISSIO
N RATE E
<TABLE>
<CAPTION>
<S> <C>
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. 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>
BUSINESS SERVICES AND OUTSOURCING 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). Load adjusted returns include a 3.00% sales
charge and the effect of a $7.50 trading fee. If Fidelity had not
reimbursed certain fund expenses, the life of fund total returns would
have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED LIFE OF
FEBRUARY 28, 1998 FUND
SELECT BUSINESS SERVICES AND OUTSOURCING 8.90%
SELECT BUSINESS SERVICES AND OUTSOURCING 5.56%
(LOAD ADJ.)
S&P 500 4.35%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, since the fund started on
February 4, 1998. You can compare the fund's returns to the
performance of the Standard & Poor's 500 Index - a widely recognized,
unmanaged index of common stocks. This benchmark includes reinvestment
of dividends and capital gains, if any, and excludes the effect of
sales charges.
AVERAGE ANNUAL TOTAL RETURNS
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. These numbers will be reported once the fund is a year old.
In addition, the growth of the hypothetical $10,000 investment in the
fund will appear in the fund's next report six months from now.
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 long-term growth and
short-term volatility. 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)
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1998
% OF FUND'S
INVESTMENTS
COGNIZANT CORP. 7.2
FIRST DATA CORP. 5.8
EQUIFAX, INC. 4.1
AFFILIATED COMPUTER SERVICES, INC. CLASS A 3.1
USCS INTERNATIONAL, INC. 2.8
CERIDIAN CORP. 2.8
ELECTRONIC DATA SYSTEMS CORP. 2.4
ROBERT HALF INTERNATIONAL, INC. 2.3
AUTOMATIC DATA PROCESSING, INC. 2.2
OMNICOM GROUP, INC. 2.2
TOP INDUSTRIES AS OF FEBRUARY 28, 1998
% OF FUND'S INVESTMENTS
DATA PROCESSING 17.5%
COMPUTER SERVICES 14.3%
BOOK PUBLISHING & PRINTING 10.7%
CAD/CAM/CAE 5.6%
ENGINEERING, ARCHITECTURE &
RELATED SERVICES 4.2%
ALL OTHERS 47.7%
ROW: 1, COL: 1, VALUE: 47.7
ROW: 1, COL: 2, VALUE: 4.2
ROW: 1, COL: 3, VALUE: 5.6
ROW: 1, COL: 4, VALUE: 10.7
ROW: 1, COL: 5, VALUE: 14.3
ROW: 1, COL: 6, VALUE: 17.5
*
* INCLUDES SHORT-TERM INVESTMENTS
BUSINESS SERVICES AND OUTSOURCING PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
NOTE TO SHAREHOLDERS: Fidelity Select Business Services and
Outsourcing Portfolio commenced
operations on February 4, 1998. The following is an interview with the
fund's Portfolio Manager, Michael Tarlowe, who discusses
the fund's concept and
his investment strategy.
Q. HOW DID THE FUND PERFORM, MICHAEL?
A. The fund has only been up and running a short time. From its
inception on February 4, 1998, through February 28, 1998, the fund
returned 8.90%. The Standard & Poor's 500 Index returned 4.35% over
the same period.
Q. CAN YOU DESCRIBE THE TYPES OF COMPANIES IN WHICH THE FUND WILL
INVEST?
A. Companies in the business services sector provide services - rather
than products - to businesses and other organizations. Business
services encompass a variety of fields, including data processing,
information systems management, consulting, advertising and market
research. One of the attractions to these stocks is that there is
typically an ongoing relationship between the business service
provider and its client - due to multi-year contracts - that can
result in recurring revenue streams. The other area I'll focus on is
outsourcing, or those companies that provide a service that other
businesses and organizations need but can't or don't want to provide
for themselves. For example, a company may choose to farm out its
payroll processing to another company that specializes in that area,
allowing it to focus on its core business.
Q. THE STRONG ECONOMIC CONDITIONS WE'VE SEEN - NAMELY LOW INFLATION
AND LOW INTEREST RATES - HAVE BOOSTED STOCKS LATELY. HOW SENSITIVE ARE
OUTSOURCING STOCKS TO SHIFTS IN THE ECONOMY?
A. I think outsourcing stocks provide a good opportunity in either an
up or down economy. Companies have realized how beneficial it is to
hire outside help for certain functions, especially since it allows
them to gain access to highly specialized help. The company can then
focus its energies on running its business. One of the main advantages
to outsourcing is the potential for cost savings. Companies have been
entrenched in a cost-cutting mode over the past few years, despite the
healthy economy. If the economy should take a slide, companies would
look even harder at finding ways to cut costs.
Q. HOW WOULD YOU DESCRIBE YOUR INVESTMENT STRATEGY?
A. I look at a number of factors when considering a potential
investment. I typically am interested in companies with recurring
revenue streams, because these streams can often lead to relatively
predictable financial results. I also try to find companies with
strong prospects for future earnings growth as well as companies that
can generate strong cash flow. Companies often use this cash flow to
make acquisitions or buy back their stock, both of which can help
support a company's stock price. I also look at the environment in
which a company is operating. If a company is involved in a market
that I feel is somewhat undiscovered, that could hold some positive
weight.
Q. COGNIZANT AND FIRST DATA ARE THE FUND'S TWO LARGEST POSITIONS . . .
WHAT'S THE APPEAL?
A. Many of Cognizant's businesses, including Nielsen Media Research,
which provides television ratings - enjoy dominant market shares and
high profit margins. Cognizant has sustained steady earnings growth
over the years and the company was well-positioned to see that trend
continue. First Data is the world's largest credit-card processor. I
like the stock because the credit and debit card market is still
experiencing attractive growth, as these forms of payment steadily
replace cash and checks to a greater degree. First Data may well
benefit from more cards being issued and more cards being used for
retail purchases. Additionally, I felt the stock's valuation was
attractive.
Q. WHAT ARE SOME OF THE TRENDS YOU'LL LOOK TO CAPITALIZE ON?
A. One well-documented trend is the potentially problematic year 2000
issue. Many of the world's computer systems are encoded in such a way
that when the year 2000 hits, the year will actually be read by the
computer as 1900. In anticipation of this, companies are spending
increasing sums of money to hire programmers or to outsource the
maintenance of their systems. US Airways, for instance, recently hired
Sabre Group to oversee the airline's information technology structure
and mentioned that the year 2000 issue was one of its motivations for
turning to outside help.
Q. WHAT'S YOUR OUTLOOK?
A. I'm excited about the future. Valuations within the group were
fairly attractive toward the end of the period and the potential for
increased consolidation activity was evident. Outsourcing may become
even more popular as the year 2000 approaches. All in all, I think
these stocks should do well as companies continue to generate
consistent 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: February 4, 1998
FUND NUMBER: 353
TRADING SYMBOL: FBSOX
SIZE: as of February 28, 1998, more than
$15 million
MANAGER: Michael Tarlowe, since inception;
analyst, transportation, telecommunications
equipment, computer services and internet
securities, 1994-present; joined Fidelity in 1994
(checkmark)
BUSINESS SERVICES AND OUTSOURCING PORTFOLIO
INVESTMENTS FEBRUARY 28, 1998
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 86.9%
SHARES VALUE (NOTE 1)
ADVERTISING - 6.9%
ADVERTISING - 0.4%
Outdoor Systems, Inc. (a) 2,300 $ 68,563
ADVERTISING AGENCIES - 3.9%
Interpublic Group of Companies, Inc. 5,500 299,750
Omnicom Group, Inc. 8,000 366,000
665,750
COMMERCIAL ART SERVICES - 0.6%
Getty Images, Inc. (a) 3,900 97,500
DIRECT MAIL ADVERTISING SERVICES - 1.1%
CMG Information Services, Inc. (a) 3,700 177,138
OUTDOOR ADVERTISING SERVICES - 0.9%
Lamar Advertising Co. Class A (a) 3,100 156,356
TOTAL ADVERTISING 1,165,307
AIR TRANSPORTATION - 1.8%
TRANSPORTATION SERVICES - 1.8%
Viad Corp. 12,700 307,181
BROADCASTING - 0.4%
COMMUNICATIONS SERVICES, NEC - 0.4%
Forsoft Ltd. (a) 5,100 64,069
COMPUTER SERVICES & SOFTWARE - 45.4%
COMPUTER RELATED SERVICES, NEC - 1.0%
Ciber, Inc. (a) 2,400 160,200
COMPUTER SERVICES - 14.3%
Bisys Group, Inc. (The) (a) 900 33,413
Electronic Data Systems Corp. 9,200 403,075
Equifax, Inc. 19,200 690,000
Galileo International, Inc. 900 35,550
HBO & Co. 6,700 362,638
IntelliQuest Information Group, Inc. (a) 2,800 36,050
Metro Information Services, Inc. (a) 2,000 66,000
National Data Corp. 2,400 105,600
Paychex, Inc. 6,700 345,888
Pegasus Systems, Inc. 3,100 68,975
SunGard Data Systems, Inc. (a) 5,500 188,031
Technology Solutions, Inc. (a) 2,300 74,750
2,409,970
CUSTOM COMPUTER PROGRAMMING SERVICES - 2.2%
Keane, Inc. (a) 6,800 316,200
Saville Systems Ireland PLC
sponsored ADR (a) 1,000 46,875
363,075
CAD/CAM/CAE - 5.6%
Cambridge Technology Partners
Massachusetts, Inc. (a) 5,000 227,500
Melita International Corp. 13,800 174,225
Sabre Group Holdings, Inc. Class A (a) 7,300 240,900
Shared Medical Systems Corp. 4,000 305,750
948,375
DATA PROCESSING - 17.5%
Acxiom Corp. (a) 500 10,500
Affiliated Computer Services, Inc.
Class A (a) 16,300 524,656
Automatic Data Processing, Inc. 6,200 378,588
Ceridian Corp. (a) 10,000 465,625
DST Systems, Inc. (a) 5,800 306,675
First Data Corp. 29,000 986,000
Fiserv, Inc. (a) 3,400 186,150
Total Systems Services, Inc. 3,700 97,125
2,955,319
SHARES VALUE (NOTE 1)
ELECTRONIC INFORMATION RETRIEVAL- 0.9%
Quickresponse Services, Inc. (a) 3,500 $ 151,813
PREPACKAGED COMPUTER SOFTWARE - 3.9%
Policy Management Systems Corp. (a) 1,600 115,800
USCS International, Inc. (a) 22,600 480,250
Whittman-Hart, Inc. (a) 2,000 66,000
662,050
TOTAL COMPUTER SERVICES & SOFTWARE 7,650,802
COMPUTERS & OFFICE EQUIPMENT - 0.9%
ELECTRONIC COMPUTERS - 0.9%
Wang Laboratories, Inc. (a) 5,700 158,888
CREDIT & OTHER FINANCE - 0.2%
FUNCTIONS RELATED TO DEPOSITARY BANKS, NEC - 0.2%
Concord EFS, Inc. (a) 1,300 40,463
ENGINEERING - 4.2%
ENGINEERING, ARCHITECTURE & RELATED SERVICES - 4.2%
Billing Information Concepts Corp. (a) 300 8,700
Forrester Research, Inc. (a) 9,300 231,338
Market Facts, Inc. (a) 12,100 237,463
NFO Worldwide, Inc. 12,300 230,625
708,126
PRINTING - 0.4%
COMMERCIAL PRINTING, NEC - 0.4%
Valassis Communications, Inc. 1,800 68,625
PUBLISHING - 10.7%
BOOK PUBLISHING & PRINTING - 10.7%
ACNielsen Corp. (a) 4,600 115,000
Cognizant Corp. 24,300 1,213,481
Dun & Bradstreet Corp. 9,200 308,200
Reader's Digest Association, Inc. (The)
Class A (non-vtg.) 6,100 162,031
1,798,712
RAILROADS - 0.4%
Kansas City Southern Industries, Inc. 1,900 70,656
SERVICES - 11.2%
ADJUSTMENT & COLLECTION SERVICES - 0.0%
Compass International Services Corp. 500 5,250
BUSINESS CONSULTING SERVICES - 0.9%
Corrections Corp. of America (a) 4,000 153,000
BUSINESS SERVICES - 4.2%
ABR Information Services, Inc. (a) 4,800 136,200
Cintas Corp. 3,500 148,750
Robert Half International, Inc. (a) 8,500 384,625
Snyder Communications, Inc. (a) 800 32,850
702,425
COMMERCIAL, ECONOMIC, SOCIAL & EDUCATION RESEARCH - 0.4%
Gartner Group, Inc. Class A (a) 1,700 67,788
CREDIT REPORTING AGENCIES - 0.2%
Paymentech, Inc. (a) 1,600 26,400
LINEN SUPPLY - 1.3%
G & K Services Inc. Class A 5,000 220,000
MANAGEMENT CONSULTING SERVICES - 0.5%
Data Processing Resources Corp. (a) 2,600 83,850
PERSONNEL SUPPLY SERVICES - 3.7%
AccuStaff, Inc. (a) 1,200 33,900
Computer Horizons Corp. (a) 4,500 234,844
Manpower, Inc. 3,300 139,219
Olsten Corp. 4,300 69,338
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
SERVICES - CONTINUED
PERSONNEL SUPPLY SERVICES - CONTINUED
On Assignment, Inc. (a) 2,600 $ 76,375
Personnel Group of America, Inc. (a) 1,700 69,063
622,739
TOTAL SERVICES 1,881,452
TELEPHONE SERVICES - 0.8%
Mastech Corp. (a) 2,600 136,825
TEXTILES & APPAREL - 0.5%
COTTON MILLS - 0.5%
Galey & Lord, Inc. (a) 3,900 77,269
TRUCKING & FREIGHT - 3.1%
FREIGHT FORWARDING - 3.1%
Air Express International Corp. 5,600 156,800
Expeditors International of
Washington, Inc. 9,000 364,500
521,300
TOTAL COMMON STOCKS
(Cost $14,023,645) 14,649,675
CASH EQUIVALENTS - 13.1%
Taxable Central Cash Fund (b)
(Cost $2,218,004) 2,218,004 2,218,004
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $16,241,649) $ 16,867,679
LEGEND
1. Non-income producing
2. At period end, the seven-day yield on the Taxable Central Cash Fund
was 5.62%. 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 $14,175,506 and $168,569, 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 $45 for the period
(see Note 4 of Notes to Financial Statements).
INCOME TAX INFORMATION
At February 28, 1998, the aggregate cost of investment securities for
income tax purposes was $16,241,649. Net unrealized appreciation
aggregated $626,030, of which $687,104 related to appreciated
investment securities and $61,074 related to depreciated investment
securities.
BUSINESS SERVICES AND OUTSOURCING PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
FEBRUARY 28, 1998
ASSETS
INVESTMENT IN SECURITIES, AT VALUE $ 16,867,679
(COST $16,241,649) -
SEE ACCOMPANYING SCHEDULE
RECEIVABLE FOR INVESTMENTS SOLD 84,529
RECEIVABLE FOR FUND SHARES SOLD 1,942,520
DIVIDENDS RECEIVABLE 3,729
INTEREST RECEIVABLE 3,356
REDEMPTION FEES RECEIVABLE 83
PREPAID EXPENSES 20,426
RECEIVABLE FROM INVESTMENT ADVISER FOR EXPENSE REDUCTIONS 20,663
TOTAL ASSETS 18,942,985
LIABILITIES
PAYABLE TO CUSTODIAN BANK $ 3,399
PAYABLE FOR INVESTMENTS PURCHASED 2,953,882
PAYABLE FOR FUND SHARES REDEEMED 18,209
OTHER PAYABLES AND 52,339
ACCRUED EXPENSES
TOTAL LIABILITIES 3,027,829
NET ASSETS $ 15,915,156
NET ASSETS CONSIST OF:
PAID IN CAPITAL $ 15,274,621
ACCUMULATED UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON INVESTMENTS 14,505
NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS 626,030
NET ASSETS, FOR 1,461,020 $ 15,915,156
SHARES OUTSTANDING
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE ($15,915,156 (DIVIDED BY) 1,461,020 SHARES) $10.89
MAXIMUM OFFERING PRICE PER SHARE (100/97.00 OF $10.89) $11.23
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
FEBRUARY 4, 1998 (COMMENCEMENT OF OPERATIONS) TO FEBRUARY 28, 1998
INVESTMENT INCOME $ 3,819
DIVIDENDS
INTEREST 5,294
TOTAL INCOME 9,113
EXPENSES
MANAGEMENT FEE $ 2,948
TRANSFER AGENT FEES 4,938
ACCOUNTING FEES AND EXPENSES 5,000
CUSTODIAN FEES AND EXPENSES 6,207
REGISTRATION FEES 14,165
AUDIT 1,669
TOTAL EXPENSES BEFORE REDUCTIONS 34,927
EXPENSE REDUCTIONS (23,611) 11,316
NET INVESTMENT INCOME (LOSS) (2,203)
REALIZED AND UNREALIZED GAIN (LOSS) 16,708
NET REALIZED GAIN (LOSS) ON INVESTMENT SECURITIES
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) 626,030
ON INVESTMENT SECURITIES
NET GAIN (LOSS) 642,738
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 640,535
OTHER INFORMATION $ 61,937
SALES CHARGES PAID TO FDC
SALES CHARGES - DEALERS' PORTION $ 150
EXCHANGE FEES WITHHELD BY FSC $ 23
EXPENSE REDUCTIONS $ 23,611
FMR REIMBURSEMENT
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS FEBRUARY 4, 1998
(COMMENCEMENT
OF OPERATIONS) TO
FEBRUARY 28, 1998
<TABLE>
<CAPTION>
<S> <C>
OPERATIONS $ (2,203)
NET INVESTMENT INCOME (LOSS)
NET REALIZED GAIN (LOSS) 16,708
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) 626,030
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 640,535
SHARE TRANSACTIONS 15,378,163
NET PROCEEDS FROM SALES OF SHARES
COST OF SHARES REDEEMED (103,682)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS 15,274,481
REDEMPTION FEES 140
TOTAL INCREASE (DECREASE) IN NET ASSETS 15,915,156
NET ASSETS
BEGINNING OF PERIOD -
END OF PERIOD $ 15,915,156
OTHER INFORMATION
SHARES
SOLD 1,470,842
REDEEMED (9,822)
NET INCREASE (DECREASE) 1,461,020
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
SELECTED PER-SHARE DATA FEBRUARY 4, 1998
(COMMENCEMENT
OF OPERATIONS) TO
FEBRUARY 28, 1998
<TABLE>
<CAPTION>
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) F -
NET REALIZED AND UNREALIZED GAIN (LOSS) .89
TOTAL FROM INVESTMENT OPERATIONS .89
NET ASSET VALUE, END OF PERIOD $ 10.89
TOTAL RETURN B, C 8.90%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 15,915
RATIO OF EXPENSES TO AVERAGE NET ASSETS 2.50% A, D
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET
ASSETS (.49)% A
PORTFOLIO TURNOVER RATE 36% A
AVERAGE COMMISSION RATE E $ .0153
A ANNUALIZED B THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIOD SHOWN (SEE NOTE 8 OF NOTES TO FINANCIAL STATEMENTS). C
TOTAL RETURN DOES NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED. D FMR AGREED TO REIMBURSE A PORTION OF THE
FUND'S EXPENSES DURING THE PERIOD. WITHOUT THIS REIMBURSEMEENT, THE FUND'S EXPENSE
RATIO WOULD HAVE BEEN HIGHER (SEE NOTE 8 OF NOTES TO FINANCIAL STATEMENTS).
E 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. F NET INVESTMENT INCOME
(LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
</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). Load adjusted returns include a 3.00% sales
charge and the effect of a $7.50 trading fee. 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, 1998 YEAR YEARS YEARS
SELECT COMPUTERS 20.33% 275.27% 585.68%
SELECT COMPUTERS 16.64% 263.94% 565.04%
(LOAD ADJ.)
S&P 500 35.01% 166.84% 422.55%
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 Standard & Poor's
500 Index - a widely recognized, unmanaged index of common stocks.
This benchmark includes 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, 1998 YEAR YEARS YEARS
SELECT COMPUTERS 20.33% 30.28% 21.23%
SELECT COMPUTERS 16.64% 29.48% 20.86%
(LOAD ADJ.)
S&P 500 35.01% 21.69% 17.98%
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 LONG-TERM GROWTH AND
SHORT-TERM VOLATILITY. UNLIKE THE BROADER MARKET,
HOWEVER, SOME SECTORS MAY NOT HAVE A HISTORY
OF GROWTH IN THE LONG RUN. AND, AS WITH ALL STOCK
FUNDS, THE SHARE PRICE AND RETURN OF A FUND THAT
INVESTS IN A SECTOR WILL VARY. THAT MEANS IF YOU
SELL YOUR SHARES DURING A SECTOR DOWNTURN, YOU
MIGHT LOSE MONEY. BUT IF YOU CAN IDENTIFY A
SECTOR THAT IS ABOUT TO EXPERIENCE RAPID GROWTH
YOU MAY HAVE THE POTENTIAL FOR ABOVE-AVERAGE
GAINS.
(CHECKMARK)
$10,000 OVER 10 YEARS
IMAHDR PRASUN SHR__CHT 19980228 19980305 123903 S00000000000001
Computers S&P 500
00007 SP001
1988/02/29 9700.00 10000.00
1988/03/31 9547.64 9691.00
1988/04/30 10038.57 9798.57
1988/05/31 9742.32 9883.82
1988/06/30 10664.92 10337.48
1988/07/31 9860.82 10298.20
1988/08/31 8921.29 9948.06
1988/09/30 9158.29 10371.85
1988/10/31 8421.90 10660.19
1988/11/30 8371.12 10507.75
1988/12/31 8912.83 10691.63
1989/01/31 9437.61 11474.26
1989/02/28 9268.32 11188.55
1989/03/31 8828.18 11449.25
1989/04/30 9818.50 12043.46
1989/05/31 10690.31 12531.22
1989/06/30 9420.68 12459.79
1989/07/31 9589.97 13584.91
1989/08/31 9733.86 13851.18
1989/09/30 9962.39 13794.39
1989/10/31 9632.29 13474.36
1989/11/30 9420.68 13749.23
1989/12/31 9522.25 14079.22
1990/01/31 9437.61 13134.50
1990/02/28 10292.50 13303.94
1990/03/31 11028.88 13656.49
1990/04/30 10732.64 13315.08
1990/05/31 12129.23 14613.30
1990/06/30 12349.30 14513.93
1990/07/31 11469.02 14467.48
1990/08/31 9649.21 13159.62
1990/09/30 9014.40 12518.75
1990/10/31 9352.97 12464.92
1990/11/30 10893.46 13270.15
1990/12/31 11274.99 13640.39
1991/01/31 13196.86 14235.11
1991/02/28 14051.03 15252.92
1991/03/31 15161.44 15622.04
1991/04/30 14179.15 15659.53
1991/05/31 14896.65 16336.03
1991/06/30 12868.23 15587.84
1991/07/31 14161.21 16314.23
1991/08/31 15040.78 16700.88
1991/09/30 14249.16 16421.97
1991/10/31 13967.70 16642.03
1991/11/30 13008.96 15971.35
1991/12/31 14741.73 17798.47
1992/01/31 16280.99 17467.42
1992/02/29 17398.05 17694.50
1992/03/31 16025.91 17349.46
1992/04/30 15506.96 17859.53
1992/05/31 15700.47 17947.04
1992/06/30 14187.59 17679.63
1992/07/31 14882.46 18402.73
1992/08/31 14029.27 18025.47
1992/09/30 14724.14 18238.17
1992/10/31 15885.18 18302.01
1992/11/30 16870.31 18926.11
1992/12/31 17978.57 19158.90
1993/01/31 19025.27 19319.83
1993/02/28 17723.50 19582.58
1993/03/31 18075.33 19995.77
1993/04/30 17561.97 19511.88
1993/05/31 19619.59 20034.79
1993/06/30 18834.44 20092.89
1993/07/31 19619.59 20012.52
1993/08/31 20783.77 20771.00
1993/09/30 21370.37 20611.06
1993/10/31 21370.37 21037.71
1993/11/30 22281.86 20837.85
1993/12/31 23168.61 21089.99
1994/01/31 24662.44 21807.05
1994/02/28 25709.07 21216.08
1994/03/31 25442.66 20291.06
1994/04/30 25280.91 20550.78
1994/05/31 25261.88 20887.82
1994/06/30 23187.64 20376.06
1994/07/31 23920.29 21044.40
1994/08/31 26784.25 21907.22
1994/09/30 26593.95 21370.49
1994/10/31 27593.01 21851.33
1994/11/30 27754.76 21055.50
1994/12/31 27907.00 21367.76
1995/01/31 27050.66 21921.82
1995/02/28 29181.99 22776.12
1995/03/31 31427.49 23448.24
1995/04/30 33924.50 24138.79
1995/05/31 35601.44 25103.62
1995/06/30 39495.05 25686.77
1995/07/31 44458.44 26538.55
1995/08/31 45451.11 26605.16
1995/09/30 48053.28 27727.90
1995/10/31 46308.86 27628.91
1995/11/30 45190.90 28841.82
1995/12/31 42371.30 29397.31
1996/01/31 42099.62 30398.00
1996/02/29 44588.21 30679.78
1996/03/31 40817.28 30975.23
1996/04/30 45303.82 31431.81
1996/05/31 46869.44 32242.43
1996/06/30 43462.56 32365.28
1996/07/31 40551.83 30935.38
1996/08/31 42304.88 31587.81
1996/09/30 47497.90 33365.57
1996/10/31 50000.69 34285.79
1996/11/30 56803.43 36877.45
1996/12/31 55768.41 36146.91
1997/01/31 62917.03 38405.37
1997/02/28 55275.80 38706.47
1997/03/31 50922.47 37116.02
1997/04/30 53700.10 39331.84
1997/05/31 57570.60 41726.37
1997/06/30 57196.04 43595.71
1997/07/31 70393.20 47064.62
1997/08/31 71816.55 44428.06
1997/09/30 74488.44 46861.38
1997/10/31 64025.60 45296.21
1997/11/30 62839.48 47392.97
1997/12/31 55825.24 48206.71
1998/01/31 60277.66 48739.88
1998/02/27 66503.54 52255.00
IMATRL PRASUN SHR__CHT 19980228 19980305 123907 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Computers Portfolio on February 29, 1988,
and the current 3.00% sales charge was paid. As the chart shows, by
February 28, 1998, the value of the investment would have grown to
$66,504 - a 565.04% increase on the initial investment, and includes
the effect of a $7.50 trading fee. 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
$52,255 - a 422.55% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1998
% OF FUND'S
INVESTMENTS
DELL COMPUTER CORP. 10.1
EMC CORP. 7.7
QUANTUM CORP. 5.9
COMPAQ COMPUTER CORP. 4.1
MICROSOFT CORP. 4.1
CISCO SYSTEMS, INC. 3.9
SUN MICROSYSTEMS, INC. 3.7
TEXAS INSTRUMENTS, INC. 3.1
LINEAR TECHNOLOGY CORP. 2.8
INTEL CORP. 2.7
TOP INDUSTRIES AS OF FEBRUARY 28, 1998
ROW: 1, COL: 1, VALUE: 48.0
ROW: 1, COL: 2, VALUE: 5.8
ROW: 1, COL: 3, VALUE: 6.1
ROW: 1, COL: 4, VALUE: 8.4
ROW: 1, COL: 5, VALUE: 15.4
ROW: 1, COL: 6, VALUE: 16.3
SEMICONDUCTORS 16.3%
MINI & MICRO COMPUTERS 15.4%
COMPUTER PERIPHERALS 8.4%
COMPUTER STORAGE DEVICES 6.1%
PREPACKAGED COMPUTER
SOFTWARE 5.8%
ALL OTHERS 48.0%
*
*
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
COMPUTERS PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Michael Tempero,
Portfolio Manager
of Fidelity Select
Computers Portfolio
Q. HOW DID THE FUND PERFORM, MIKE?
A. For the 12-month period that ended February 28, 1998, the fund
returned 20.33%, compared to the 35.01% return of the Standard &
Poor's 500 Index.
Q. WHAT WAS THE INVESTING ENVIRONMENT LIKE OVER THE PAST YEAR?
A. In a word, mixed. Technology stocks performed extremely well during
the first half of the year, thanks in large part to the strength of
the global economy, which translated into growing demand for computers
and related products and services. But the second half of the year was
an entirely different story. Economic problems in Southeast Asia
prompted investors to worry that demand for computers was in danger of
slowing. Investors also became concerned that multi-national U.S. and
European companies with significant exports to Southeast Asia would
curtail their spending on technology.
Q. DESPITE PROBLEMS IN SOUTHEAST ASIA, DELL - THE FUND'S LARGEST
HOLDING AT THE END OF PERIOD AT 10.1% OF INVESTMENTS - CONTINUED TO
PERFORM WELL. WHY WAS THAT?
A. I think there were two primary reasons why Dell's stock bucked the
trend by nearly quadrupling over the past year. First, Asia accounts
for only a small portion of its sales and, despite the region's recent
woes, Dell continues to do extremely well there. Second, and more
importantly, the company is extremely efficient. It is very difficult
for computer makers to forecast demand, and there are a lot of
inefficiencies that come from trying to do so. Dell virtually
eliminates these forecasting-related inefficiencies by building
computers when orders for them come in, rather than producing them in
advance. Contrast that with Compaq, another of the fund's top
holdings. Although it has been working very hard to improve its
distribution and become more efficient, Compaq has to deal with a lot
of inventory that currently exists in various channels. That helps to
explain why the company reported that it would post no profits for its
most recent quarterly reporting period. Even so, Compaq's stock nearly
doubled during the past 12 months as its market share grew.
Q. ASIDE FROM PERSONAL COMPUTER STOCKS, WHERE DID OTHER WINNERS COME
FROM?
A. EMC Corp., which develops and services computer storage and
retrieval products, was another of the fund's holdings that performed
very well during the period. Its products are unique because they can
communicate with most types of computers, as opposed to most storage
systems that can be used with only one type of machine. The company
has benefited from the substantial market that wants to centralize
computer storage.
Q. AT THE END OF THE PERIOD, ROUGHLY 20% OF THE FUND'S INVESTMENTS
WERE IN CASH AND OTHER SHORT-TERM SECURITIES. DID THAT SIGNIFY THAT
YOU WERE BECOMING MORE DEFENSIVE?
A. No. The very end of the period happened to be a point at which I
didn't think that there were a lot of opportunities to buy stocks that
I felt were reasonably priced. Rather than buy stocks that I thought
were too expensive, I wanted to wait for more reasonably priced stocks
to emerge.
Q. WERE THERE ANY DISAPPOINTMENTS DURING THE PERIOD?
A. The fund's disk-drive holdings were disappointing throughout much
of the year. First there was Seagate, which suffered a loss of market
share stemming from increased competition. Later, Western Digital also
faced competitive challenges and struggled with too much inventory as
a result. By the end of the period, I had eliminated the fund's
position in both holdings.
Q. WHAT'S YOUR OUTLOOK?
A. I think we'll see a continuation of the environment that existed at
the end of the period. With weak economies in Asia and no big
developments on the horizon that would spur computer upgrades, I
expect to see decelerating demand for personal computers. As far as
the fund goes, I'll continue to focus on companies that produce at
very low costs and can gain market share. I also plan to put the
fund's cash to work as soon as attractively priced opportunities
present themselves.
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, 1998, more than
$785 million
MANAGER: Michael Tempero, since 1997;
manager, Fidelity Select Insurance Portfolio,
1995-1997; Fidelity Select Natural Gas
Portfolio, 1994-1995; joined Fidelity in 1993
(checkmark)
COMPUTERS PORTFOLIO
INVESTMENTS FEBRUARY 28, 1998
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 79.6%
SHARES VALUE (NOTE 1)
COMMUNICATIONS EQUIPMENT - 5.9%
DATACOMMUNICATIONS EQUIPMENT - 5.4%
Cisco Systems, Inc. (a) 493,000 $ 32,476,375
3Com Corp. (a) 350,000 12,512,500
44,988,875
TELEPHONE EQUIPMENT - 0.5%
Ascend Communications, Inc. (a) 100,000 3,743,750
TOTAL COMMUNICATIONS EQUIPMENT 48,732,625
COMPUTER SERVICES & SOFTWARE - 10.7%
CAD/CAM/CAE - 0.0%
JetFax, Inc. 100,000 406,250
Structural Dynamics Research Corp. (a) 763 21,936
428,186
COMPUTER & SOFTWARE STORES - 0.8%
Inacom Corp. (a) 200,000 6,550,000
COMPUTER RELATED SERVICES - 0.2%
Security Dynamics Technologies, Inc. (a) 50,000 1,781,250
COMPUTER SERVICES - 2.3%
Computer Learning Centers, Inc. (a) 276,600 10,182,338
Electronic Data Systems Corp. 200,000 8,762,500
18,944,838
DATA PROCESSING - 1.6%
Ceridian Corp. (a) 290,000 13,503,125
PREPACKAGED COMPUTER SOFTWARE - 5.8%
Electronics for Imaging, Inc. (a) 415,400 9,164,763
Microsoft Corp. (a) 400,000 33,900,000
Oracle Corp. (a) 200,000 4,925,000
47,989,763
TOTAL COMPUTER SERVICES & SOFTWARE 89,197,162
COMPUTERS & OFFICE EQUIPMENT - 44.5%
COMPUTER EQUIPMENT - WHOLESALE - 2.4%
CDW Computer Centers, Inc. (a) 50,000 3,425,000
CHS Electronics, Inc. (a) 100,000 2,062,500
Ingram Micro, Inc. Class A (a) 50,000 1,931,250
Insight Enterprises, Inc. (a) 197,500 7,850,625
Tech Data Corp. (a) 100,000 4,650,000
19,919,375
COMPUTER PERIPHERALS - 8.4%
EMC Corp. (a) 1,679,000 64,221,750
Fore Systems, Inc. (a) 200,000 3,212,500
Symbol Technologies, Inc. 50,000 2,553,125
69,987,375
COMPUTER STORAGE DEVICES - 6.1%
Advanced Digital Information Corp. (a) 100,700 1,586,025
Quantum Corp. (a) 1,947,000 48,918,375
50,504,400
COMPUTERS & OFFICE EQUIPMENT - 4.5%
Diebold, Inc. 100,000 5,137,500
Hewlett-Packard Co. 250,000 16,750,000
International Business Machines Corp. 150,000 15,665,625
37,553,125
ELECTRONIC COMPUTERS - 1.6%
Gateway 2000, Inc. (a) 250,000 11,000,000
Micron Electronics, Inc. (a) 150,000 1,931,250
12,931,250
SHARES VALUE (NOTE 1)
GRAPHICS WORKSTATIONS - 3.7%
Sun Microsystems, Inc. (a) 650,000 $ 30,956,250
MAGNETIC & OPTICAL RECORDING MEDIA - 0.1%
HMT Technology Corp. (a) 100,000 1,100,000
MAINFRAME COMPUTERS - 0.4%
Unisys Corp. (a) 200,000 3,575,000
MINI & MICRO COMPUTERS - 15.4%
Compaq Computer Corp. 1,064,600 34,133,738
Dell Computer Corp. (a) 600,000 83,925,000
Digital Equipment Corp. (a) 150,000 8,540,625
Sequent Computer Systems, Inc. (a) 81,700 1,731,019
128,330,382
OFFICE AUTOMATION - 1.9%
Pitney Bowes, Inc. 3,400 159,375
Xerox Corp. 175,000 15,520,313
15,679,688
TOTAL COMPUTERS & OFFICE EQUIPMENT 370,536,845
ELECTRONIC INSTRUMENTS - 0.7%
SEMICONDUCTOR CAPITAL EQUIPMENT - 0.7%
Applied Materials, Inc. (a) 100,000 3,681,250
Lam Research Corp. (a) 62,400 1,762,800
5,444,050
ELECTRONICS - 16.3%
SEMICONDUCTORS - 16.3%
Altera Corp. (a) 292,000 12,592,500
Analog Devices, Inc. (a) 200,000 6,450,000
Intel Corp. 250,800 22,493,623
LSI Logic Corp. (a) 300,000 7,106,250
Lattice Semiconductor Corp. (a) 100,000 5,356,250
Linear Technology Corp. 306,400 23,209,800
Maxim Integrated Products, Inc. (a) 383,200 15,471,700
Microchip Technology, Inc. (a) 200,000 4,837,500
Micron Technology, Inc. (a) 136,350 4,525,116
National Semiconductor Corp. (a) 250,000 5,968,750
Texas Instruments, Inc. 440,000 25,465,000
VLSI Technology, Inc. (a) 100,000 1,931,250
Vitesse Semiconductor Corp. (a) 9,000 457,031
135,864,770
INDUSTRIAL MACHINERY & EQUIPMENT - 0.8%
SPECIAL INDUSTRIAL MACHINERY - 0.8%
PRI Automation, Inc. 200,000 6,956,250
RETAIL & WHOLESALE, MISCELLANEOUS - 0.7%
MUSIC, TV, & ELECTRONIC STORES - 0.7%
Best Buy Co., Inc. (a) 65,100 3,881,588
Tandy Corp. 50,000 2,225,000
6,106,588
TOTAL COMMON STOCKS
(Cost $566,261,515) 662,838,290
CASH EQUIVALENTS - 20.4%
MATURITY VALUE
AMOUNT (NOTE 1)
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 5.62%, dated
2/27/98 due 3/2/98 $ 12,291,754 $ 12,286,000
SHARES
Taxable Central Cash Fund (b) 157,492,686 157,492,686
TOTAL CASH EQUIVALENTS
(Cost $169,778,686) 169,778,686
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $736,040,201) $ 832,616,976
LEGEND
1. Non-income producing
2. At period end, the seven-day yield on the Taxable Central Cash Fund
was 5.62%. 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 $1,963,547,913 and $1,975,072,971, 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 $240,381 for the
period (see Note 4 of Notes to Financial Statements).
The fund participated in the securities lending program. At the period
end, the value of securities loaned and the value of collateral
amounted to $51,569,374 and $51,311,100, respectively (see Note 6 of
Notes to Financial Statements).
Transactions during the period with companies which are or were
affiliates are as follows:
PURCHASES SALES DIVIDEND VALUE
AFFILIATE COST COST INCOME
Allstar Systems, Inc. $ - $ - $ - $ -
Procom Technology, Inc. - 105,300 - -
TOTALS $ - $ 105,300 $ - $ -
INCOME TAX INFORMATION
At February 28, 1998, the aggregate cost of investment securities for
income tax purposes was $745,738,376. Net unrealized appreciation
aggregated $86,878,600, of which $117,324,640 related to appreciated
investment securities and $30,446,040 related to depreciated
investment securities.
The fund hereby designates approximately $24,534,000 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, 1999 approximately $78,590,000 of losses recognized during the
period November 1, 1997 to February 28, 1998.
COMPUTERS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1998
ASSETS
INVESTMENT IN $ 832,616,976
SECURITIES,
AT
VALUE
(INCLUDING
REPURCHAS
E
AGREEMENT
S OF
$12,286,
000)
(COST
$736,040
,201) -
SEE
ACCOMPAN
YING
SCHEDULE
CASH 543
RECEIVABLE 7,794,955
FOR FUND
SHARES
SOLD
DIVIDENDS 71,289
RECEIVABLE
INTEREST 471,846
RECEIVABLE
REDEMPTION 3,563
FEES
RECEIVABLE
OTHER 39,464
RECEIVABLE
S
TOTAL 840,998,636
ASSETS
LIABILITIES
PAYABLE FOR $ 3,333,622
FUND
SHARES
REDEEMED
ACCRUED 356,232
MANAGEM
ENT FEE
OTHER 532,992
PAYABLES
AND
ACCRUED
EXPENSES
COLLATERAL ON 51,311,100
SECURITIES
LOANED,
AT VALUE
TOTAL 55,533,946
LIABILITIES
NET ASSETS $ 785,464,690
NET ASSETS
CONSIST OF:
PAID IN $ 727,677,185
CAPITAL
ACCUMULATED (38,789,270)
UNDISTRIBUT
ED NET
REALIZED
GAIN (LOSS)
ON
INVESTMENT
S AND
FOREIGN
CURRENCY
TRANSACTIO
NS
NET 96,576,775
UNREALIZED
APPRECIATI
ON
(DEPRECIATI
ON) ON
INVESTMENT
S
NET ASSETS, $ 785,464,690
FOR
19,118,7
26
SHARES
OUTSTANDIN
G
NET ASSET $41.08
VALUE AND
REDEMPTIO
N PRICE
PER SHARE
($785,46
4,690 (DIVIDED BY)
19,118,7
26 SHARES)
MAXIMUM $42.35
OFFERING
PRICE PER
SHARE
(100/97.
00 OF
$41.08)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1998
INVESTMENT $ 697,384
INCOME
DIVIDENDS
INTEREST 3,747,980
(INCLUDING
INCOME ON
SECURITIES
LOANED OF
$372,145
)
TOTAL 4,445,364
INCOME
EXPENSES
MANAGEMEN $ 3,921,116
T FEE
TRANSFER 4,403,412
AGENT FEES
ACCOUNTING 590,621
AND
SECURITY
LENDING
FEES
NON-INTEREST 2,646
ED
TRUSTEES'
COMPENSAT
ION
CUSTODIAN 38,454
FEES AND
EXPENSES
REGISTRATION 215,935
FEES
AUDIT 45,760
LEGAL 16,221
MISCELLANEO 6,406
US
TOTAL 9,240,571
EXPENSES
BEFORE
REDUCTIONS
EXPENSE (418,948) 8,821,623
REDUCTIONS
NET (4,376,259)
INVESTMEN
T INCOME
(LOSS)
REALIZED
AND
UNREALIZED
GAIN (LOSS)
NET REALIZED
GAIN (LOSS)
ON:
INVESTMENT 89,254,439
SECURITIES
(INCLUDING
REALIZED
GAIN OF
$32,708
ON SALES OF
INVESTMENT
S IN
AFFILIATED
ISSUERS)
FOREIGN 972 89,255,411
CURRENCY
TRANSACTIO
NS
CHANGE IN
NET
UNREALIZED
APPRECIATI
ON
(DEPRECIATI
ON) ON:
INVESTMENT 22,245,744
SECURITIES
ASSETS AND 140 22,245,884
LIABILITIES
IN
FOREIGN
CURRENCIES
NET GAIN 111,501,295
(LOSS)
NET INCREASE $ 107,125,036
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
OTHER $ 3,518,068
INFORMATIO
N
SALES
CHARGES
PAID TO
FDC
SALES $ 24,034
CHARGES -
DEALERS'
PORTION
DEFERRED $ 6,144
SALES
CHARGES
WITHHELD
BY FDC
EXCHANGE $ 208,673
FEES
WITHHELD
BY FSC
EXPENSE $ 416,885
REDUCTIONS
DIRECTED
BROKERAGE
ARRANGEM
ENTS
CUSTODIA 616
N CREDITS
TRANSFER 1,447
AGENT
CREDITS
$ 418,948
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
FEBRUARY 28, FEBRUARY 28,
1998 1997
OPERATIONS $ (4,376,259) $ (4,516,493)
NET
INVESTMENT
INCOME
(LOSS)
NET 89,255,411 104,428,835
REALIZED
GAIN (LOSS)
CHANGE IN 22,245,884 8,119,973
NET
UNREALIZED
APPRECIATI
ON
(DEPRECIATI
ON)
NET 107,125,036 108,032,315
INCREASE
(DECREAS
E) IN NET
ASSETS
RESULTING
FROM
OPERATIO
NS
DISTRIBUTIONS (132,918,806) (31,596,668)
TO
SHAREHOLD
ERS
FROM NET
REALIZED
GAINS
IN EXCESS (34,413,012) -
OF NET
REALIZED
GAINS
TOTAL (167,331,818) (31,596,668)
DISTRIBUT
IONS
SHARE 808,411,253 659,275,361
TRANSACTIO
NS
NET
PROCEEDS
FROM SALES
OF SHARES
REINVESTM 165,233,207 31,233,988
ENT OF
DISTRIBUTIO
NS
COST OF (733,889,159) (691,302,094)
SHARES
REDEEMED
NET 239,755,301 (792,745)
INCREASE
(DECREAS
E) IN NET
ASSETS
RESULTING
FROM
SHARE
TRANSACTI
ONS
REDEMPTIO 1,629,692 1,306,734
N FEES
TOTAL 181,178,211 76,949,636
INCREASE
(DECREASE)
IN NET
ASSETS
NET ASSETS
BEGINNING 604,286,479 527,336,843
OF PERIOD
END OF $ 785,464,690 $ 604,286,479
PERIOD
OTHER
INFORMATION
SHARES
SOLD 17,046,061 14,415,549
ISSUED IN 4,788,686 674,688
REINVESTME
NT OF
DISTRIBUTIO
NS
REDEEMED (15,239,529) (15,418,220)
NET 6,595,218 (327,983)
INCREASE
(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>
YEARS ENDED FEBRUARY 28, YEAR ENDED YEARS ENDED FEBRUARY 28,
FEBRUARY 29,
SELECTED PER-SHARE DATA 1998 1997 1996 1995 1994
</TABLE>
NET ASSET $ 48.25 $ 41.03 $ 30.67 $ 27.02 $ 20.15
VALUE,
BEGINNING
OF PERIOD
INCOME FROM
INVESTMENT
OPERATION
S
NET (.32) (.36) (.23) (.31) (.21) E
INVESTMENT
INCOME
(LOSS) C
NET 6.42 9.94 16.10 3.68 8.66
REALIZED
AND
UNREALIZED
GAIN (LOSS)
TOTAL FROM 6.10 9.58 15.87 3.37 8.45
INVESTMENT
OPERATIONS
LESS
DISTRIBUTIO
NS
FROM NET (10.64) (2.47) (5.61) - (1.80)
REALIZED
GAIN
IN EXCESS (2.75) - - - -
OF NET
REALIZED
GAIN
TOTAL (13.39) (2.47) (5.61) - (1.80)
DISTRIBUTIO
NS
REDEMPTION .12 .11 .10 .28 .22
FEES
ADDED TO
PAID IN
CAPITAL
NET ASSET $ 41.08 $ 48.25 $ 41.03 $ 30.67 $ 27.02
VALUE, END
OF PERIOD
TOTAL 20.33% 23.97% 52.79% 13.51% 45.06%
RETURN A, B
RATIOS AND
SUPPLEME
NTAL DATA
NET ASSETS, $ 785,465 $ 604,286 $ 527,337 $ 215,014 $ 120,435
END OF
PERIOD
(000
OMITTED)
RATIO OF 1.40% 1.48% 1.40% 1.71% 1.90%
EXPENSES
TO AVERAGE
NET ASSETS
RATIO OF 1.34% D 1.44% D 1.38% D 1.69% D 1.89% D
EXPENSES
TO AVERAGE
NET ASSETS
AFTER
EXPENSE
REDUCTIONS
RATIO OF NET (.67)% (.83)% (.56)% (1.12)% (.91)%
INVESTMENT
INCOME
(LOSS) TO
AVERAGE
NET ASSETS
PORTFOLIO 333% 255% 129% 189% 145%
TURNOVER
RATE
AVERAGE $ .0444 $ .0432
COMMISSIO
N RATE F
<TABLE>
<CAPTION>
<S> <C>
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. 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 INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL
DIVIDEND WHICH AMOUNTED TO $.07 PER SHARE. 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>
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). Load adjusted returns include a 3.00% sales
charge and the effect of a $7.50 trading fee. 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, 1998 YEAR YEARS FUND
SELECT DEVELOPING 28.17% 134.20% 313.39%
COMMUNICATIONS
SELECT DEVELOPING 24.25% 127.10% 300.91%
COMMUNICATIONS (LOAD ADJ.)
S&P 500 35.01% 166.84% 260.03%
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 Standard & Poor's 500 Index - a widely
recognized, unmanaged index of common stocks. This benchmark includes
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, 1998 YEAR YEARS FUND
SELECT DEVELOPING 28.17% 18.55% 20.34%
COMMUNICATIONS
SELECT DEVELOPING 24.25% 17.83% 19.83%
COMMUNICATIONS
(LOAD ADJ.)
S&P 500 35.01% 21.69% 18.19%
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 LONG-TERM GROWTH AND
SHORT-TERM VOLATILITY. UNLIKE THE BROADER MARKET,
HOWEVER, SOME SECTORS MAY NOT HAVE A HISTORY
OF GROWTH IN THE LONG RUN. AND, AS WITH ALL STOCK
FUNDS, THE SHARE PRICE AND RETURN OF A FUND THAT
INVESTS IN A SECTOR WILL VARY. THAT MEANS IF YOU
SELL YOUR SHARES DURING A SECTOR DOWNTURN, YOU
MIGHT LOSE MONEY. BUT IF YOU CAN IDENTIFY A
SECTOR THAT IS ABOUT TO EXPERIENCE RAPID GROWTH
YOU MAY HAVE THE POTENTIAL FOR ABOVE-AVERAGE
GAINS.
(CHECKMARK)
$10,000 OVER LIFE OF FUND
IMAHDR PRASUN SHR__CHT 19980228 19980305 130017 S00000000000001
Developing Communications S&P 500
00518 SP001
1990/06/29 9700.00 10000.00
1990/07/31 8953.10 9968.00
1990/08/31 7866.70 9066.89
1990/09/30 6751.20 8625.34
1990/10/31 7081.00 8588.25
1990/11/30 8235.30 9143.05
1990/12/31 8759.10 9398.14
1991/01/31 10146.20 9807.90
1991/02/28 10776.70 10509.16
1991/03/31 11494.50 10763.48
1991/04/30 11591.50 10789.32
1991/05/31 11766.10 11255.41
1991/06/30 10841.06 10739.92
1991/07/31 11963.62 11240.40
1991/08/31 12670.42 11506.79
1991/09/30 12815.94 11314.63
1991/10/31 13564.32 11466.25
1991/11/30 12888.70 11004.16
1991/12/31 14135.99 12263.03
1992/01/31 14510.18 12034.94
1992/02/29 14998.70 12191.39
1992/03/31 14260.72 11953.66
1992/04/30 14073.63 12305.10
1992/05/31 14011.26 12365.39
1992/06/30 13512.35 12181.15
1992/07/31 14104.81 12679.36
1992/08/31 13574.71 12419.43
1992/09/30 14032.05 12565.98
1992/10/31 14655.70 12609.96
1992/11/30 15986.14 13039.96
1992/12/31 16569.33 13200.35
1993/01/31 17017.15 13311.24
1993/02/28 17121.30 13492.27
1993/03/31 17735.75 13776.96
1993/04/30 17206.93 13443.55
1993/05/31 18365.83 13803.84
1993/06/30 19160.51 13843.87
1993/07/31 19535.77 13788.50
1993/08/31 21323.79 14311.08
1993/09/30 21621.79 14200.89
1993/10/31 22372.32 14494.84
1993/11/30 20672.60 14357.14
1993/12/31 21833.52 14530.86
1994/01/31 22673.27 15024.91
1994/02/28 22298.78 14617.74
1994/03/31 20744.11 13980.40
1994/04/30 21598.03 14159.35
1994/05/31 20440.78 14391.57
1994/06/30 18918.07 14038.97
1994/07/31 20879.32 14499.45
1994/08/31 22657.83 15093.93
1994/09/30 22962.38 14724.13
1994/10/31 25021.07 15055.42
1994/11/30 24314.54 14507.10
1994/12/31 25138.57 14722.24
1995/01/31 24467.87 15103.99
1995/02/28 25337.29 15692.59
1995/03/31 25473.91 16155.68
1995/04/30 26593.13 16631.47
1995/05/31 27505.97 17296.23
1995/06/30 30405.58 17698.02
1995/07/31 33318.60 18284.88
1995/08/31 33399.15 18330.78
1995/09/30 34285.14 19104.34
1995/10/31 30875.42 19036.14
1995/11/30 31023.08 19871.82
1995/12/31 29504.05 20254.55
1996/01/31 28582.05 20944.02
1996/02/29 30871.16 21138.17
1996/03/31 30569.12 21341.73
1996/04/30 32572.09 21656.31
1996/05/31 34416.10 22214.82
1996/06/30 32921.82 22299.46
1996/07/31 30060.43 21314.27
1996/08/31 31570.61 21763.79
1996/09/30 34416.10 22988.66
1996/10/31 32969.51 23622.68
1996/11/30 34527.37 25408.32
1996/12/31 33796.13 24904.98
1997/01/31 35226.82 26461.05
1997/02/28 31284.47 26668.50
1997/03/31 28566.15 25572.69
1997/04/30 29742.50 27099.38
1997/05/31 33907.41 28749.19
1997/06/30 35099.65 30037.16
1997/07/31 39566.59 32427.21
1997/08/31 39407.62 30610.64
1997/09/30 42110.04 32287.18
1997/10/31 37198.00 31208.79
1997/11/30 37500.03 32653.45
1997/12/31 35837.88 33214.11
1998/01/31 35758.25 33581.45
1998/02/27 40091.11 36003.35
IMATRL PRASUN SHR__CHT 19980228 19980305 130019 R00000000000095
$10,000 OVER LIFE OF FUND: 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 3.00% sales
charge was paid. As the chart shows, by February 28, 1998, the value
of the investment would have grown to $40,091 - a 300.91% increase on
the initial investment, and includes the effect of a $7.50 trading
fee. 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 $36,003 - a 260.03% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1998
% OF FUND'S
INVESTMENTS
CELLSTAR CORP. 9.7
BRIGHTPOINT, INC. 7.3
ANICOM, INC. 6.8
ALCATEL ALSTHOM COMPAGNIE GENERALE D'ELECTRICITE SA 5.5
NOKIA CORP. AB SPONSORED ADR 4.3
WORLDCOM, INC. 4.3
JDS FITEL, INC. 3.8
DSC COMMUNICATIONS CORP. 2.8
AT&T CORP. 2.6
NEXTEL COMMUNICATIONS, INC. CLASS A 2.5
TOP INDUSTRIES AS OF FEBRUARY 28, 1998
TELEPHONE EQUIPMENT 13.7%
TELEPHONE SERVICES 12.0%
ELECTRIC APPLIANCES -
WHOLESALE 9.7%
ELECTRONIC PARTS - WHOLESALE 7.5%
ELECTRICAL EQUIPMENT -
WHOLESALE 6.8%
ALL OTHERS 50.3%
ROW: 1, COL: 1, VALUE: 50.3
ROW: 1, COL: 2, VALUE: 6.8
ROW: 1, COL: 3, VALUE: 7.5
ROW: 1, COL: 4, VALUE: 9.699999999999999
ROW: 1, COL: 5, VALUE: 12.0
ROW: 1, COL: 6, VALUE: 13.7
*
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
DEVELOPING COMMUNICATIONS PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
NOTE TO SHAREHOLDERS: Effective March 27,1998 - after the period
covered by this report - Andrew Kaplan became Portfolio Manager of
Fidelity Select Developing Communications Portfolio.
Q. HOW DID THE FUND PERFORM, ANDY?
A. For the 12-month period that ended February 28, 1998, the fund
returned 28.17%, while the Standard & Poor's 500 Index returned 35.01%
for the same time period.
Q. WHAT WAS THE MARKET ENVIRONMENT LIKE DURING THE PERIOD?
A. The market went through two stages during the year. The first half
was very positive for the market in general, and technology stocks
made an even stronger showing; as a result, the fund outperformed the
S&P 500. The second half was just the opposite, with currency
devaluations causing concerns about Asian economies, subsequently
triggering a downturn in the stock market beginning in August and
accelerating into October. Since many technology companies have higher
exposure to Asia, technology stocks sold off more than the market,
hurting the fund's performance.
Q. WHAT WAS THE FUND'S STRATEGY DURING THE PERIOD?
A. When technology stocks sold off late in the year, the fund
concentrated more on telecommunication companies, including Nokia and
Ericsson. These stocks bounced back when the market recognized that
the problems in Asia didn't extend to China, a major customer. While
the vast majority of the fund's holdings are stocks of U.S.-based
companies, in some cases the added risk of foreign investments seemed
justified by the potential profitability. Nokia and Ericsson are two
examples of the fund's foreign holdings. During the second half of the
period, the fund was focused on start-up wireless service providers
with good prospects for performance, such as Intermedia
Communications, RCN Corp., ICG Communications and McLeod USA. These
stocks did very well through most of the period for two reasons: They
took market share from the established "incumbents" such as AT&T; and
they were being bought up by other companies. AT&T and WorldCom were
added to the fund as a defensive move, because the stock market was
getting very expensive. These companies have little exposure to Asia
and looked like they would fare relatively well in case of another
downturn.
Q. WHICH STOCKS PERFORMED WELL?
A. Wire line companies had little exposure to Asia and generally
performed well. These companies included Tellabs and Lucent, which
have been sold from the portfolio, and Advanced Fibre Communication.
And, as part of a long-term strategy for the fund, larger positions in
companies were established when they appeared to offer the potential
for good performance. Two examples were Cellstar and Brightpoint, the
fund's two largest positions at the end of the period. They provide a
worldwide distribution channel for large handset manufacturers, and,
with virtually no competition, have been building market share.
Brightpoint performed strongly during the year, while Cellstar's price
declined because of temporary problems, which allowed the fund to buy
more shares.
Q. WERE THERE DISAPPOINTMENTS?
A. Certainly. Asia's problems put a damper on the entire technology
market, and those companies with more exposure to Asia had very
disappointing performance. Examples included Sawtek, which makes
filters for handsets, with main markets in the U.S. and South Korea.
Micron Technology, a maker of DRAM memory chips, was a disappointment
due to oversupply of its product. It was sold from the fund's
portfolio during the period. JDS Fitel met but did not exceed
expectations, disappointing the markets. Its stock performance was
also quite disappointing. It remained in the portfolio because it's a
strong competitor in a high growth market.
Q. WHAT'S YOUR OUTLOOK?
A. I think this area has significant growth potential over the next
several years. I am optimistic about long-term prospects, because
increasing competition in local U.S. markets and deregulation in
foreign markets could lead to expansion of new services that would
benefit many of the industries in which the fund invests. In the short
term, consolidation among U.S. carriers such as AT&T's purchase of
Teleport and WorldCom's purchase of MCI may have a negative impact on
capital spending plans, as these companies try to cut costs. I will
continue my focus on finding those companies whose fundamental
valuations show improvement and whose growth prospects look most
attractive.
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, 1990
FUND NUMBER: 518
TRADING SYMBOL: FSDCX
SIZE: as of February 28, 1998, more than
$238 million
MANAGER: Andrew Kaplan, since March 1998;
manager, Fidelity Select Electronics Portfolio,
since 1996; analyst, semiconductor equipment
companies and producers, since 1995; joined
Fidelity in 1995
(checkmark)
DEVELOPING COMMUNICATIONS PORTFOLIO
INVESTMENTS FEBRUARY 28, 1998
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 86.5%
SHARES VALUE (NOTE 1)
APPLIANCE STORES - 9.7%
ELECTRIC APPLIANCES - WHOLESALE - 9.7%
Cellstar Corp. (a) 698,650 $ 22,575,125
BROADCASTING - 1.9%
CABLE TV OPERATORS - 1.9%
RCN Corp. 74,600 4,382,750
CELLULAR - 4.2%
CELLULAR & COMMUNICATION SERVICES - 4.2%
Metromedia Fiber Network, Inc. Class A 100,000 3,675,000
Mobile Telecommunications
Technologies, Inc. (a) 11,000 247,500
Nextel Communications, Inc. Class A (a) 200,000 5,912,500
9,835,000
COMMUNICATIONS EQUIPMENT - 17.1%
DATACOMMUNICATIONS EQUIPMENT - 1.5%
Tekelec (a) 87,500 3,576,563
TELEPHONE EQUIPMENT - 13.7%
Advanced Fibre Communication, Inc. (a) 9,300 278,419
Ascend Communications, Inc. (a) 70,000 2,620,625
DSC Communications Corp. (a) 336,900 6,611,663
DSP Communications, Inc. (a) 293,500 5,191,281
Ericsson (L.M.) Telephone Co.
Class B ADR 125,000 5,664,063
Nokia Corp. AB sponsored ADR 100,000 10,075,000
Teledata Communications Ltd. (a) 80,200 1,413,525
31,854,576
TELEPHONE INTERCONNECT SYSTEMS - 1.9%
Intermedia Communications, Inc. (a) 58,300 4,452,663
TOTAL COMMUNICATIONS EQUIPMENT 39,883,802
COMPUTER SERVICES & SOFTWARE - 8.0%
CAD/CAM/CAE - 4.1%
Dataworks Corp. (a) 205,000 5,176,250
ICG Communications, Inc. (a) 130,000 4,371,250
9,547,500
CUSTOM COMPUTER PROGRAMMING SERVICES - 3.4%
Keane, Inc. (a) 100,000 4,650,000
Saville Systems Ireland PLC
sponsored ADR (a) 70,000 3,281,250
7,931,250
PREPACKAGED COMPUTER SOFTWARE - 0.5%
Citrix Systems, Inc. (a) 25,000 1,051,563
TOTAL COMPUTER SERVICES & SOFTWARE 18,530,313
COMPUTERS & OFFICE EQUIPMENT - 3.3%
COMPUTER PERIPHERALS - 1.6%
EMC Corp. (a) 95,000 3,633,750
COMPUTERS & OFFICE EQUIPMENT - 1.4%
Hewlett-Packard Co. 50,000 3,350,000
ELECTRONIC COMPUTERS - 0.1%
Digital Lightwave, Inc. 40,100 150,375
OFFICE AUTOMATION - 0.2%
FileNet Corp. (a) 12,600 420,525
TOTAL COMPUTERS & OFFICE EQUIPMENT 7,554,650
SHARES VALUE (NOTE 1)
ELECTRICAL EQUIPMENT - 13.2%
ELECTRICAL EQUIPMENT - WHOLESALE - 6.8%
Anicom, Inc. (a)(c)(d) 1,105,000 $ 15,884,375
ELECTRICAL MACHINERY - 5.5%
Alcatel Alsthom Compagnie Generale
d'Electricite SA 98,500 12,808,801
TV & RADIO COMMUNICATION EQUIPMENT - 0.9%
Omnipoint Corp. (a) 75,000 2,100,000
TOTAL ELECTRICAL EQUIPMENT 30,793,176
ELECTRONIC INSTRUMENTS - 6.3%
ELECTRONIC EQUIPMENT - 2.5%
Sawtek, Inc. (a) 225,000 5,765,625
INDUSTRIAL MEASUREMENT INSTRUMENTS - 3.8%
JDS Fitel, Inc. (a) 178,000 8,814,047
SEMI-CONDUCTOR CAPITAL EQUIPMENT - 0.0%
Novellus Systems, Inc. (a) 2,200 105,463
TOTAL ELECTRONIC INSTRUMENTS 14,685,135
ELECTRONICS - 8.6%
ELECTRONIC PARTS - WHOLESALE - 7.5%
Applied Digital Access, Inc. (a) 85,000 648,125
Brightpoint, Inc. (a) 823,100 16,873,550
17,521,675
ELECTRONICS & ELECTRIC COMPONENTS - 0.1%
Voxware, Inc. (a) 104,400 254,475
SEMICONDUCTORS - 1.0%
PMC-Sierra, Inc. 10,200 367,200
VLSI Technology, Inc. 100,000 1,931,250
RF Micro Devices, Inc. 200 2,963
2,301,413
TOTAL ELECTRONICS 20,077,563
SERVICES - 2.2%
PERSONNEL SUPPLY SERVICES - 2.2%
Computer Horizons Corp. (a) 95,700 4,994,344
TELEPHONE SERVICES - 12.0%
AT&T Corp. 100,000 6,087,500
EXCEL Communications, Inc. (a) 50,000 1,053,125
MCI Communications Corp. 100,000 4,781,250
McLeod USA, Inc. Class A (a) 75,000 2,922,656
Winstar Communications, Inc. (a) 76,100 3,200,956
WorldCom, Inc. (a) 260,000 9,928,750
27,974,237
TOTAL COMMON STOCKS
(Cost $174,714,642) 201,286,095
CASH EQUIVALENTS - 13.5%
Taxable Central Cash Fund (b)
(Cost $31,317,760) 31,317,760 31,317,760
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $206,032,402) $ 232,603,855
LEGEND
1. Non-income producing
2. At period end, the seven-day yield on the Taxable Central Cash Fund
was 5.62%. 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 $15,884,375 or
6.7% of net assets.
4. Affiliated company (see Note 10 of Notes to Financial Statements).
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $797,165,303 and $857,882,240, 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 $103,994 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 the loan was
outstanding amounted to $3,558,000 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 82.0%
France 5.5
Finland 4.3
Canada 3.8
Sweden 2.4
Ireland 1.4
Others (individually less than 1%) 0.6
TOTAL 100.0%
Transactions during the period with companies which are or were
affiliates are as follows:
PURCHASES SALES DIVIDEND VALUE
AFFILIATE COST COST INCOME
Anicom, Inc. $ - $ 5,135,000 $ - $ 15,884,375
INCOME TAX INFORMATION
At February 28, 1998, the aggregate cost of investment securities for
income tax purposes was $209,433,366. Net unrealized appreciation
aggregated $23,170,489, of which $32,965,652 related to appreciated
investment securities and $9,795,163 related to depreciated investment
securities.
The fund intends to elect to defer to its fiscal year ending February
28, 1999 approximately $15,529,000 of losses recognized during the
period November 1, 1997 to February 28, 1998.
The fund hereby designates approximately $7,828,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 1% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate
shareholders (unaudited).
The fund will notify shareholders in January 1999 of this percentage
for use in preparing 1998 income tax returns.
DEVELOPING COMMUNICATIONS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1998
ASSETS
INVESTMENT IN $ 232,603,855
SECURITIES,
AT VALUE
(COST
$206,032
,402) -
SEE
ACCOMPAN
YING
SCHEDULE
CASH 1,872
RECEIVABLE 11,317,513
FOR
INVESTMENT
S SOLD
RECEIVABLE 1,760,885
FOR FUND
SHARES
SOLD
DIVIDENDS 65,185
RECEIVABLE
INTEREST 78,228
RECEIVABLE
REDEMPTION 640
FEES
RECEIVABLE
OTHER 13,310
RECEIVABLE
S
TOTAL 245,841,488
ASSETS
LIABILITIES
PAYABLE FOR $ 5,814,563
INVESTMENT
S
PURCHASED
PAYABLE FOR 1,395,056
FUND
SHARES
REDEEMED
ACCRUED 112,073
MANAGEM
ENT FEE
OTHER 164,011
PAYABLES
AND
ACCRUED
EXPENSES
TOTAL 7,485,703
LIABILITIES
NET ASSETS $ 238,355,785
NET ASSETS
CONSIST OF:
PAID IN $ 212,551,023
CAPITAL
ACCUMULATED (763,030)
UNDISTRIBUT
ED NET
REALIZED
GAIN (LOSS)
ON
INVESTMENT
S AND
FOREIGN
CURRENCY
TRANSACTIO
NS
NET 26,567,792
UNREALIZED
APPRECIATI
ON
(DEPRECIATI
ON) ON
INVESTMENT
S
AND ASSETS
AND
LIABILITIES
IN
FOREIGN
CURRENCIES
NET ASSETS, $ 238,355,785
FOR
11,837,1
24
SHARES
OUTSTANDIN
G
NET ASSET $20.14
VALUE AND
REDEMPTIO
N PRICE
PER SHARE
($238,35
5,785 (DIVIDED BY)
11,837,1
24 SHARES)
MAXIMUM $20.76
OFFERING
PRICE PER
SHARE
(100/97.
00 OF
$20.14)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1998
INVESTMENT $ 419,558
INCOME
DIVIDENDS
INTEREST 1,323,191
TOTAL 1,742,749
INCOME
EXPENSES
MANAGEMEN $ 1,420,790
T FEE
TRANSFER 2,084,706
AGENT FEES
ACCOUNTING 239,077
FEES AND
EXPENSES
NON-INTEREST 1,002
ED
TRUSTEES'
COMPENSAT
ION
CUSTODIAN 27,667
FEES AND
EXPENSES
REGISTRATION 29,295
FEES
AUDIT 25,167
LEGAL 1,822
INTEREST 587
MISCELLANEO 3,573
US
TOTAL 3,833,686
EXPENSES
BEFORE
REDUCTIONS
EXPENSE (138,388) 3,695,298
REDUCTIONS
NET (1,952,549)
INVESTMEN
T INCOME
(LOSS)
REALIZED
AND
UNREALIZED
GAIN (LOSS)
NET REALIZED
GAIN (LOSS)
ON:
INVESTMENT 43,721,493
SECURITIES
(INCLUDING
REALIZED
GAIN OF
$980,238
ON SALE
OF
INVESTMENT
S IN
AFFILIATED
ISSUERS)
FOREIGN (843) 43,720,650
CURRENCY
TRANSACTIO
NS
CHANGE IN
NET
UNREALIZED
APPRECIATI
ON
(DEPRECIATI
ON) ON:
INVESTMENT 15,847,985
SECURITIES
ASSETS AND (986) 15,846,999
LIABILITIES
IN
FOREIGN
CURRENCIES
NET GAIN 59,567,649
(LOSS)
NET INCREASE $ 57,615,100
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
OTHER $ 479,806
INFORMATIO
N
SALES
CHARGES
PAID TO
FDC
SALES $ 1,958
CHARGES -
DEALERS'
PORTION
DEFERRED $ 6,980
SALES
CHARGES
WITHHELD
BY FDC
EXCHANGE $ 81,000
FEES
WITHHELD
BY FSC
EXPENSE $ 136,777
REDUCTIONS
DIRECTED
BROKERAGE
ARRANGEM
ENTS
CUSTODIA 1,611
N CREDITS
$ 138,388
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
FEBRUARY 28, FEBRUARY 28,
1998 1997
OPERATIONS $ (1,952,549) $ (2,645,399)
NET
INVESTMENT
INCOME
(LOSS)
NET 43,720,650 20,142,886
REALIZED
GAIN (LOSS)
CHANGE IN 15,846,999 (10,187,726)
NET
UNREALIZED
APPRECIATI
ON
(DEPRECIATI
ON)
NET 57,615,100 7,309,761
INCREASE
(DECREAS
E) IN NET
ASSETS
RESULTING
FROM
OPERATIO
NS
DISTRIBUTIONS (39,986,959) -
TO
SHAREHOLD
ERS FROM
NET
REALIZED
GAINS
SHARE 191,485,848 146,934,555
TRANSACTIO
NS
NET
PROCEEDS
FROM SALES
OF SHARES
REINVESTM 39,302,908 -
ENT OF
DISTRIBUTIO
NS
COST OF (230,874,543) (267,415,417)
SHARES
REDEEMED
NET (85,787) (120,480,862)
INCREASE
(DECREAS
E) IN NET
ASSETS
RESULTING
FROM
SHARE
TRANSACTI
ONS
REDEMPTIO 453,709 345,334
N FEES
TOTAL 17,996,063 (112,825,767)
INCREASE
(DECREASE)
IN NET
ASSETS
NET ASSETS
BEGINNING 220,359,722 333,185,489
OF PERIOD
END OF $ 238,355,785 $ 220,359,722
PERIOD
OTHER
INFORMATION
SHARES
SOLD 8,748,662 7,119,930
ISSUED IN 2,281,074 -
REINVESTME
NT OF
DISTRIBUTIO
NS
REDEEMED (10,392,215) (13,076,634)
NET 637,521 (5,956,704)
INCREASE
(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>
YEARS ENDED FEBRUARY 28, YEAR ENDED YEARS ENDED FEBRUARY 28,
FEBRUARY 29,
SELECTED PER-SHARE DATA 1998 1997 1996 1995 1994
</TABLE>
NET ASSET $ 19.68 $ 19.42 $ 20.40 $ 19.65 $ 16.44
VALUE,
BEGINNING
OF PERIOD
INCOME FROM
INVESTMENT
OPERATION
S
NET (.18) (.18) (.17) (.16) (.16)
INVESTMENT
INCOME
(LOSS) C
NET 4.95 .42 4.17 2.55 4.82
REALIZED
AND
UNREALIZED
GAIN (LOSS)
TOTAL FROM 4.77 .24 4.00 2.39 4.66
INVESTMENT
OPERATIONS
LESS
DISTRIBUTIO
NS
FROM NET (4.35) - (5.00) (1.67) (1.47)
REALIZED
GAIN
REDEMPTION .04 .02 .02 .03 .02
FEES
ADDED TO
PAID IN
CAPITAL
NET ASSET $ 20.14 $ 19.68 $ 19.42 $ 20.40 $ 19.65
VALUE, END
OF PERIOD
TOTAL 28.17% 1.34% 21.84% 13.63% 30.24%
RETURN A, B
RATIOS AND
SUPPLEME
NTAL DATA
NET ASSETS, $ 238,356 $ 220,360 $ 333,185 $ 254,426 $ 222,109
END OF
PERIOD
(000
OMITTED)
RATIO OF 1.61% 1.64% 1.53% 1.58% 1.56%
EXPENSES
TO AVERAGE
NET ASSETS
RATIO OF 1.55% D 1.62% D 1.51% D 1.56% D 1.56%
EXPENSES
TO AVERAGE
NET ASSETS
AFTER
EXPENSE
REDUCTIONS
RATIO OF NET (.82)% (.86)% (.78)% (.83)% (.88)%
INVESTMENT
INCOME
(LOSS) TO
AVERAGE
NET ASSETS
PORTFOLIO 383% 202% 249% 266% 280%
TURNOVER
RATE
AVERAGE $ .0437 $ .0346
COMMISSIO
N RATE E
<TABLE>
<CAPTION>
<S> <C>
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.
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>
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). Load adjusted returns include a 3.00% sales
charge and the effect of a $7.50 trading fee. 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, 1998 YEAR YEARS YEARS
SELECT ELECTRONICS 24.15% 373.28% 786.86%
SELECT ELECTRONICS 20.35% 359.00% 760.18%
(LOAD ADJ.)
S&P 500 35.01% 166.84% 422.55%
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 Standard & Poor's
500 Index - a widely recognized, unmanaged index of common stocks.
This benchmark includes 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, 1998 YEAR YEARS YEARS
SELECT ELECTRONICS 24.15% 36.47% 24.39%
SELECT ELECTRONICS 20.35% 35.63% 24.01%
(LOAD ADJ.)
S&P 500 35.01% 21.69% 17.98%
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 LONG-TERM GROWTH AND
SHORT-TERM VOLATILITY. UNLIKE THE BROADER MARKET,
HOWEVER, SOME SECTORS MAY NOT HAVE A HISTORY
OF GROWTH IN THE LONG RUN. AND, AS WITH ALL STOCK
FUNDS, THE SHARE PRICE AND RETURN OF A FUND THAT
INVESTS IN A SECTOR WILL VARY. THAT MEANS IF YOU
SELL YOUR SHARES DURING A SECTOR DOWNTURN, YOU
MIGHT LOSE MONEY. BUT IF YOU CAN IDENTIFY A
SECTOR THAT IS ABOUT TO EXPERIENCE RAPID GROWTH
YOU MAY HAVE THE POTENTIAL FOR ABOVE-AVERAGE
GAINS.
(CHECKMARK)
$10,000 OVER 10 YEARS
IMAHDR PRASUN SHR__CHT 19980228 19980305 130546 S00000000000001
Electronics S&P 500
00008 SP001
1988/02/29 9700.00 10000.00
1988/03/31 9560.16 9691.00
1988/04/30 9992.40 9798.57
1988/05/31 9649.15 9883.82
1988/06/30 10589.91 10337.48
1988/07/31 9941.55 10298.20
1988/08/31 8949.93 9948.06
1988/09/30 9089.78 10371.85
1988/10/31 8428.70 10660.19
1988/11/30 8009.17 10507.75
1988/12/31 8517.69 10691.63
1989/01/31 8822.80 11474.26
1989/02/28 8695.67 11188.55
1989/03/31 8632.11 11449.25
1989/04/30 9305.90 12043.46
1989/05/31 10195.81 12531.22
1989/06/30 9191.48 12459.79
1989/07/31 9293.18 13584.91
1989/08/31 9611.01 13851.18
1989/09/30 9877.98 13794.39
1989/10/31 9433.03 13474.36
1989/11/30 9458.45 13749.23
1989/12/31 9852.56 14079.22
1990/01/31 10183.09 13134.50
1990/02/28 10996.72 13303.94
1990/03/31 11530.67 13656.49
1990/04/30 11581.52 13315.08
1990/05/31 13285.06 14613.30
1990/06/30 13488.47 14513.93
1990/07/31 12852.82 14467.48
1990/08/31 10844.17 13159.62
1990/09/30 9204.19 12518.75
1990/10/31 8873.66 12464.92
1990/11/30 9788.99 13270.15
1990/12/31 10424.76 13640.39
1991/01/31 11875.83 14235.11
1991/02/28 12919.58 15252.92
1991/03/31 13606.93 15622.04
1991/04/30 13683.30 15659.53
1991/05/31 14128.80 16336.03
1991/06/30 12410.43 15587.84
1991/07/31 13263.25 16314.23
1991/08/31 13810.59 16700.88
1991/09/30 12754.11 16421.97
1991/10/31 13377.81 16642.03
1991/11/30 12563.18 15971.35
1991/12/31 14103.35 17798.47
1992/01/31 15770.80 17467.42
1992/02/29 16636.35 17694.50
1992/03/31 15325.30 17349.46
1992/04/30 15032.54 17859.53
1992/05/31 15057.99 17947.04
1992/06/30 13963.33 17679.63
1992/07/31 14701.59 18402.73
1992/08/31 14854.34 18025.47
1992/09/30 15388.94 18238.17
1992/10/31 16547.25 18302.01
1992/11/30 17629.18 18926.11
1992/12/31 17972.85 19158.90
1993/01/31 18583.83 19319.83
1993/02/28 18176.51 19582.58
1993/03/31 18812.95 19995.77
1993/04/30 18481.33 19511.88
1993/05/31 20335.86 20034.79
1993/06/30 20706.76 20092.89
1993/07/31 21295.09 20012.52
1993/08/31 23124.04 20771.00
1993/09/30 23507.74 20611.06
1993/10/31 23060.09 21037.71
1993/11/30 22881.03 20837.85
1993/12/31 23738.51 21089.99
1994/01/31 25378.24 21807.05
1994/02/28 26581.72 21216.08
1994/03/31 26295.89 20291.06
1994/04/30 26220.67 20550.78
1994/05/31 26145.46 20887.82
1994/06/30 24746.42 20376.06
1994/07/31 25257.89 21044.40
1994/08/31 27725.01 21907.22
1994/09/30 26927.71 21370.49
1994/10/31 28025.88 21851.33
1994/11/30 27664.84 21055.50
1994/12/31 27815.28 21367.76
1995/01/31 27017.97 21921.82
1995/02/28 29785.96 22776.12
1995/03/31 32854.82 23448.24
1995/04/30 36525.41 24138.79
1995/05/31 39188.10 25103.62
1995/06/30 44769.20 25686.77
1995/07/31 51463.52 26538.55
1995/08/31 52140.48 26605.16
1995/09/30 53073.17 27727.90
1995/10/31 51613.96 27628.91
1995/11/30 50320.22 28841.82
1995/12/31 46999.00 29397.31
1996/01/31 48587.54 30398.00
1996/02/29 51454.23 30679.78
1996/03/31 48441.47 30975.23
1996/04/30 53973.99 31431.81
1996/05/31 55398.20 32242.43
1996/06/30 50742.12 32365.28
1996/07/31 48295.40 30935.38
1996/08/31 50632.57 31587.81
1996/09/30 57461.48 33365.57
1996/10/31 57917.96 34285.79
1996/11/30 66609.30 36877.45
1996/12/31 66609.30 36146.91
1997/01/31 77017.01 38405.37
1997/02/28 69293.40 38706.47
1997/03/31 64472.99 37116.02
1997/04/30 70480.77 39331.84
1997/05/31 78225.02 41726.37
1997/06/30 77743.52 43595.71
1997/07/31 91245.81 47064.62
1997/08/31 94696.62 44428.06
1997/09/30 98207.61 46861.38
1997/10/31 83641.99 45296.21
1997/11/30 83040.11 47392.97
1997/12/31 75748.25 48206.71
1998/01/31 76977.53 48739.88
1998/02/27 86017.53 52255.00
IMATRL PRASUN SHR__CHT 19980228 19980305 130549 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Electronics Portfolio on February 29,
1988, and the current 3.00% sales charge was paid. As the chart shows,
by February 28, 1998, the value of the investment would have grown to
$86,018 - a 760.18% increase on the initial investment, and includes
the effect of a $7.50 trading fee. 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
$52,255 - a 422.55% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1998
% OF FUND'S
INVESTMENTS
GATEWAY 2000, INC. 6.0
HEWLETT-PACKARD CO. 5.9
MICROSOFT CORP. 4.5
ASM LITHOGRAPHY HOLDING NV 4.5
TEXAS INSTRUMENTS, INC. 3.3
NOKIA CORP. AB SPONSORED ADR 3.0
SEAGATE TECHNOLOGY 2.7
INTEL CORP. 2.6
VITESSE SEMICONDUCTOR CORP. 2.5
LINEAR TECHNOLOGY CORP. 2.1
TOP INDUSTRIES AS OF FEBRUARY 28, 1998
ROW: 1, COL: 1, VALUE: 42.2
ROW: 1, COL: 2, VALUE: 5.8
ROW: 1, COL: 3, VALUE: 6.0
ROW: 1, COL: 4, VALUE: 6.4
ROW: 1, COL: 5, VALUE: 10.8
ROW: 1, COL: 6, VALUE: 28.8
SEMICONDUCTORS 28.8%
PREPACKAGED COMPUTER
SOFTWARE 10.8%
TELEPHONE EQUIPMENT 6.4%
ELECTRONIC COMPUTERS 6.0%
COMPUTERS & OFFICE
EQUIPMENT 5.8%
ALL OTHERS 42.2%
*
* 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. For the 12 months that ended February 28, 1998, the fund returned
24.15%, compared to the 35.01% return of the Standard & Poor's 500
Index.
Q. WHY DID THE FUND UNDERPERFORM THE S&P 500?
A. Many of the fund's technology holdings - which performed extremely
well through October 1997 - faltered at the end of 1997 and throughout
early 1998 when financial turmoil in Southeast Asia began to spread
globally and semiconductor prices fell. The same investments in
semiconductor capital equipment companies that helped the fund
tremendously in the first half of 1997 hurt the fund's performance
later. Not only does the region produce a large portion of technology
equipment, but an increasing proportion of the end-demand for
technology is coming out of Asian countries. Therefore, technology
stocks suffered from a sell-off amidst widespread fear that a slowdown
in these economies would lead to a severe cut in demand. Considering
this essentially is a technology fund, it was difficult to shield the
fund's assets from the encompassing effects that the Asian crisis had
on technology stocks.
Q. LOOKING MORE CLOSELY, WHICH INDIVIDUAL HOLDINGS DETRACTED FROM THE
FUND'S RETURN?
A. Micron Technology shares performed poorly from late 1997 through
early 1998, after many analysts cut their fiscal 1998 earnings
estimates for the company because of the low levels of DRAM (dynamic
random access memory) chip prices. Another detractor from performance
was VLSI Technology. The stock fell sharply at the end of 1997 after
the company warned of a first-quarter earnings shortfall partly due to
a wireless order cancellation. The company's excess inventory caused
revenue weakness in the midst of slowing demand for cellular phones.
Q. ON THE POSITIVE SIDE, WHICH INDIVIDUAL HOLDINGS HELPED PERFORMANCE?
A. Texas Instruments - one of the fund's top holdings - benefited from
the second act in its turnaround story. Originally, the company sold
off its defense operations to refocus its business on semiconductors,
which improved its return on capital. More recently, the company
shifted its focus away from DRAMs and toward DSPs (digital signal
processors), which are used in cellular phones, modems and other
electronic systems. Considering DRAMs suffered from weak pricing
during the period and demand for DSPs grew at a robust clip, the
company's profit margins improved as a result of this transition.
Another contributor was Microsoft, one of the few computer-related
stocks that didn't suffer from a reduction in the average selling
price of personal computers (PCs). The company generated pricing power
by driving a transition in the corporate world from its Windows 95
operating system to its Windows NT system. Finally, ASM Lithography
established a record backlog after garnering several large contracts,
resulting in strong earnings throughout the period. ASM Lithography
was one of the best-positioned semiconductor capital equipment
companies during the period, which allowed it to weather the Asian
storm fairly well.
Q. WHAT WAS YOUR BIGGEST DISAPPOINTMENT IN THE LAST 12 MONTHS?
A. The inability to liquidate many of the fund's holdings in
semiconductor capital equipment companies when conditions began to
change in September. As I said, this group of stocks was the hardest
hit by the Asian downturn. I did begin reducing the fund's positions
in these stocks in the summer, but many of them had poor liquidity -
or relatively few shares outstanding - and were difficult to buy and
sell.
Q. WHAT'S YOUR OUTLOOK FOR THE ELECTRONICS MARKET?
A. The good news is that valuations are somewhat more reasonable than
they were six months ago. However, I'm still somewhat cautious -
especially about owning the more sensitive semiconductor capital
equipment stocks - because I don't think the downturn in the Asian
economies has been felt on a worldwide basis yet. However, I see a few
positive points of outlook. First, consumers and corporations are
responding to lower prices for PCs. This is especially good news since
many analysts were concerned that corporations wouldn't invest in
information technology above and beyond finding solutions for their
year 2000 problems. Many computers read two-digit sequences as the
year, and upgrades are needed so that systems do not read "00" as 1900
rather than 2000. Second, a significant reduction in capital spending
in Asia should help to more quickly balance pricing in the memory
market. Specifically, I am predicting a recovery in the DRAM market in
the next several months.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET AND OTHER CONDITIONS.
FUND FACTS
START DATE: July 29, 1985
FUND NUMBER: 008
TRADING SYMBOL: FSELX
SIZE: as of February 28, 1998, more than
$2.6 billion
MANAGER: Andrew Kaplan, since 1996; manager,
Fidelity Select Developing Communications
Portfolio, since March 1998; analyst,
semiconductor equipment companies and
producers, since 1995; joined Fidelity in 1995
(checkmark)
ELECTRONICS PORTFOLIO
INVESTMENTS FEBRUARY 28, 1998
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 89.4%
SHARES VALUE (NOTE 1)
APPLIANCE STORES - 0.6%
ELECTRICAL APPLIANCES - WHOLESALE - 0.6%
Cellstar Corp. (a) 492,900 $ 15,926,831
COMMUNICATIONS EQUIPMENT - 8.9%
DATACOMMUNICATIONS EQUIPMENT - 2.5%
Level One Communications, Inc. (a) 569,850 25,607,634
3Com Corp. (a) 1,176,300 42,052,717
67,660,351
TELEPHONE EQUIPMENT - 6.4%
Advanced Fibre Communication, Inc. (a) 53,300 1,595,669
Ascend Communications, Inc. (a) 1,000,000 37,437,500
DSP Communications, Inc. (a) 910,200 16,099,163
Dialogic Corp. (a) 300,000 13,012,500
Nokia Corp. AB sponsored ADR 780,000 78,585,000
Xylan Corp. (a) 870,000 20,988,750
167,718,582
TOTAL COMMUNICATIONS EQUIPMENT 235,378,933
COMPUTER SERVICES & SOFTWARE - 13.2%
COMPUTER FACILITIES MANAGEMENT - 0.1%
International Telecommunications Data
Systems, Inc. 90,300 3,657,150
COMPUTER SERVICES - 0.4%
IDT Corp. (a) 300,000 10,387,500
CUSTOM COMPUTER PROGRAMMING SERVICES - 0.2%
Engineering Animation, Inc. (a) 10,000 612,500
Saville Systems Ireland PLC
sponsored ADR (a) 115,800 5,428,125
6,040,625
CAD/CAM/CAE - 1.5%
BroadVision, Inc. (a) 400,000 5,050,000
ICG Communications, Inc. (a) 580,000 19,502,500
Parametric Technology Corp. (a) 72,400 4,384,725
Synopsys, Inc. (a) 294,190 10,278,263
39,215,488
ELECTRONIC INFORMATION RETRIEVAL - 0.2%
Quickresponse Services, Inc. (a) 111,100 4,818,963
PREPACKAGED COMPUTER SOFTWARE - 10.8%
Advant Corp. (a) 1,380,000 19,320,000
BMC Software, Inc. (a) 100,000 7,650,000
Cadence Design Systems, Inc. (a) 1,246,600 43,553,088
Check Point Software Technologies Ltd. (a) 1,400,000 53,987,500
Citrix Systems, Inc. (a) 393,600 16,555,800
Microsoft Corp. (a) 1,400,000 118,650,000
Siebel Systems, Inc. (a) 390,300 24,003,450
283,719,838
TOTAL COMPUTER SERVICES & SOFTWARE 347,839,564
COMPUTERS & OFFICE EQUIPMENT - 22.6%
COMPUTER PERIPHERALS - 4.4%
Creative Technology Ltd. (a) 1,772,200 41,203,650
EMC Corp. (a) 1,430,400 54,712,800
Eltron International, Inc. (a) 20,000 430,000
Lexmark International Group, Inc. (a) 299,200 12,790,800
SCI Systems, Inc. (a) 138,900 6,250,500
115,387,750
COMPUTER STORAGE DEVICES - 3.3%
Quantum Corp. (a) 645,500 16,218,188
Seagate Technology (a) 2,899,500 70,494,094
86,712,282
SHARES VALUE (NOTE 1)
COMPUTERS & OFFICE EQUIPMENT - 5.8%
Hewlett-Packard Co. 2,300,000 $ 154,100,000
ELECTRONIC COMPUTERS - 6.0%
Gateway 2000, Inc. (a) 3,564,500 156,838,000
MINI & MICRO COMPUTERS - 3.1%
Compaq Computer Corp. 1,248,100 40,017,206
Dell Computer Corp. (a) 300,000 41,962,500
81,979,706
TOTAL COMPUTERS & OFFICE EQUIPMENT 595,017,738
DEFENSE ELECTRONICS - 0.9%
Litton Industries, Inc. (a) 220,500 13,726,125
Remec, Inc. (a) 310,300 8,513,856
22,239,981
ELECTRICAL EQUIPMENT - 2.1%
ELECTRICAL EQUIPMENT, NEC - 1.5%
Vicor Corp. (a) 1,423,600 40,216,700
ELECTRICAL MACHINERY - 0.3%
Alcatel Alsthom Compagnie Generale
d'Electricite SA sponsored ADR 281,400 7,369,163
TV & RADIO COMMUNICATION EQUIPMENT - 0.3%
Loral Space & Communications Ltd. (a) 280,700 7,175,394
TOTAL ELECTRICAL EQUIPMENT 54,761,257
ELECTRONIC INSTRUMENTS - 5.2%
ELECTRONIC EQUIPMENT - 3.2%
Credence Systems Corp. (a) 590,000 19,691,250
Sawtek, Inc. (a) 494,900 12,681,813
Teradyne, Inc. (a) 346,900 16,369,344
Varian Associates, Inc. 621,000 36,018,000
84,760,407
INDUSTRIAL MEASUREMENT INSTRUMENTS - 0.8%
JDS Fitel, Inc. (a) 415,800 20,589,219
SEMI-CONDUCTOR CAPITAL EQUIPMENT - 1.2%
Applied Materials, Inc. (a) 253,000 9,313,563
KLA-Tencor Corp. (a) 200,000 9,231,250
Lam Research Corp. (a) 341,627 9,650,963
Novellus Systems, Inc. (a) 73,700 3,532,994
31,728,770
TOTAL ELECTRONIC INSTRUMENTS 137,078,396
ELECTRONICS - 30.0%
ELECTRONIC CAPACITORS - 0.1%
Maxwell Technologies, Inc. (a) 69,000 1,949,250
ELECTRONICS & ELECTRONIC COMPONENTS - 1.1%
Genesis Microchip, Inc. 96,400 1,271,275
Sanmina Corp. (a) 65,000 5,179,688
Solectron Corp. (a) 499,500 24,163,313
30,614,276
SEMICONDUCTORS - 28.8%
Altera Corp. (a) 592,200 25,538,625
Analog Devices, Inc. (a) 180,500 5,821,125
Applied Micro Circuits Corp. 780,000 14,625,000
Benchmarq Microelectronics, Inc. (a)(c) 418,800 6,805,500
CFM Technologies, Inc. (a) 53,500 936,250
Cree Research, Inc. (a) 292,500 4,753,125
Cypress Semiconductor Corp. (a) 495,300 4,674,394
Dallas Semiconductor Corp. 48,500 2,303,750
Etec Systems, Inc. (a) 117,700 6,171,894
Elantec Semiconductor, Inc. (a) 172,500 1,563,281
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
ELECTRONICS - CONTINUED
SEMICONDUCTORS - CONTINUED
Galileo Technology Ltd. (c) 1,094,400 $ 43,776,000
Integrated Device Technology, Inc. (a) 1,351,900 20,362,994
Intel Corp. 755,700 67,776,844
International Rectifier Corp. (a) 998,500 14,540,656
Lattice Semiconductor Corp. (a) 630,100 33,749,731
Linear Technology Corp. 729,210 55,237,658
Maxim Integrated Products, Inc. (a) 220,200 8,890,575
Micrel, Inc. (a) 350,700 12,866,306
Microchip Technology, Inc. (a) 1,677,550 40,575,741
Micron Technology, Inc. (a) 1,329,850 44,134,397
NeoMagic Corp. 1,000,000 18,500,000
PMC-Sierra, Inc. (a) 974,400 35,078,400
RF Micro Devices, Inc. 500,000 7,406,250
Semtech Corp. (a) 190,400 5,474,000
Sipex Corp. (a) 302,000 10,400,125
Speedfam International, Inc. (a) 725,000 19,348,438
Texas Instruments, Inc. 1,513,600 87,599,600
3D Labs, Inc. Ltd. (a)(c) 904,300 24,642,175
Uniphase Corp. (a) 274,400 10,993,150
Unitrode Corp. (a) 442,000 8,315,125
VLSI Technology, Inc. (a) 2,265,400 43,750,538
Vitesse Semiconductor Corp. (a) 1,294,150 65,718,555
Xilinx, Inc. (a) 136,200 5,975,775
758,305,977
TOTAL ELECTRONICS 790,869,503
INDUSTRIAL MACHINERY & EQUIPMENT - 5.2%
SPECIAL INDUSTRIAL MACHINERY, NEC - 5.2%
ASM Lithography Holding NV (a) 1,268,300 118,427,513
PRI Automation, Inc. 536,600 18,663,619
137,091,132
PUBLISHING - 0.5%
GENERAL PUBLISHING - 0.5%
Applied Graphics Technologies, Inc. (a) 196,900 11,641,713
SERVICES - 0.2%
PERSONNEL SUPPLY SERVICES - 0.2%
Computer Horizons Corp. (a) 106,100 5,537,093
TOTAL COMMON STOCKS
(Cost $2,094,248,513) 2,353,382,141
CASH EQUIVALENTS - 10.6%
Taxable Central Cash Fund (b)
(Cost $280,090,502) 280,090,502 280,090,502
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $2,374,339,015) $ 2,633,472,643
LEGEND
1. Non-income producing
2. At period end, the seven-day yield on the Taxable Central Cash Fund
was 5.62%. The yield refers to the income earned by investing in the
fund over the seven-day period, expressed as an annual percentage.
3. Affiliated company (see Note 10 of Notes to Financial Statements)
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $9,488,929,781 and $9,166,596,624, 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 $1,038,942 for the
period (see Note 4 of Notes to Financial Statements).
The fund participated in the securities lending program. At the period
end, the value of securities loaned and the value of collateral
amounted to $37,753,638 and $39,492,800, 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 $10,536,000 and $9,468,000, respectively. 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 84.7%
Netherlands 4.5
Israel 3.7
Finland 3.0
Singapore 1.6
Bermuda 1.2
Others (individually less than 1%) 1.3
TOTAL 100.0%
Transactions during the period with companies that are or were
affiliates are as follows:
PURCHASES SALES DIVIDEND VALUE
AFFILIATE COST COST INCOME
Actel Corp. $ 12,337,016 $ 14,094,480 $ - $ -
Advant Corp. 6,120,392 - - -
Benchmarq Microelectronics, Inc. 2,363,998 1,022,850 - 6,805,500
DSP Communications, Inc. 577,765 2,956,125 - -
Galileo Technology Ltd. 4,618,682 - - 43,776,000
Helix Technology Corp. 9,431,309 8,993,582 221,620 -
International Rectifier Corp. 16,466,535 15,266,865 - -
Micrel, Inc. 14,215,494 16,008,213 - -
Photronics, Inc. - 4,435,876 - -
Sipex Corp. 9,793,050 13,095,651 - -
3D Labs, Inc. Ltd. 1,635,936 - - 24,642,175
Triquint Semiconductor, Inc. 8,204,770 10,899,837 - -
Unitrode Corp. 23,264,696 15,934,531 - -
VLSI Technology, Inc. 8,390,460 10,143,574 - -
Zilog, Inc. - 1,546,962 - -
TOTALS $ 117,420,103 $ 114,398,546 $ 221,620 $ 75,223,675
INCOME TAX INFORMATION
At February 28, 1998, the aggregate cost of investment securities for
income tax purposes was $2,415,146,868. Net unrealized appreciation
aggregated $218,325,775, of which $300,785,714 related to appreciated
investment securities and $82,459,939 related to depreciated
investment securities.
The fund hereby designates approximately $5,061,000 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, 1999 approximately $309,105,000 of losses recognized during the
period November 1, 1997 to February 28, 1998.
ELECTRONICS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1998
ASSETS
INVESTMENT IN $ 2,633,472,643
SECURITIES,
AT VALUE
(COST
$2,374,3
39,015)
- -
SEE
ACCOMPAN
YING
SCHEDULE
CASH 572,500
RECEIVABLE 125,637,502
FOR
INVESTMENT
S SOLD
RECEIVABLE 19,056,805
FOR FUND
SHARES
SOLD
DIVIDENDS 69,463
RECEIVABLE
INTEREST 1,293,362
RECEIVABLE
REDEMPTION 22,948
FEES
RECEIVABLE
OTHER 54,803
RECEIVABLE
S
TOTAL 2,780,180,026
ASSETS
LIABILITIES
PAYABLE FOR $ 55,537,172
INVESTMENT
S
PURCHASED
PAYABLE FOR 13,595,520
FUND
SHARES
REDEEMED
ACCRUED 1,254,330
MANAGEM
ENT FEE
OTHER 1,550,469
PAYABLES
AND
ACCRUED
EXPENSES
COLLATERAL ON 39,492,800
SECURITIES
LOANED,
AT VALUE
TOTAL 111,430,291
LIABILITIES
NET ASSETS $ 2,668,749,735
NET ASSETS
CONSIST OF:
PAID IN $ 2,565,018,312
CAPITAL
ACCUMULATED (155,399,269)
UNDISTRIBUT
ED
NET
REALIZED
GAIN (LOSS)
ON
INVESTMENT
S AND
FOREIGN
CURRENCY
TRANSACTIO
NS
NET 259,130,692
UNREALIZED
APPRECIATI
ON
(DEPRECIATI
ON) ON
INVESTMENT
S
AND ASSETS
AND
LIABILITIES
IN FOREIGN
CURRENCIES
NET ASSETS, $ 2,668,749,735
FOR
76,269,7
26
SHARES
OUTSTANDIN
G
NET ASSET $34.99
VALUE AND
REDEMPTIO
N PRICE
PER SHARE
($2,668,7
49,735 (DIVIDED BY)
76,269,7
26 SHARES)
MAXIMUM $36.07
OFFERING
PRICE PER
SHARE
(100/97.
00 OF
$34.99)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1998
INVESTMENT $ 2,695,181
INCOME
DIVIDENDS
(INCLUDING
$221,620
RECEIVED
FROM
AFFILIATED
ISSUERS)
INTEREST 13,783,333
(INCLUDING
INCOME ON
SECURITIES
LOANED OF
$801,243
)
TOTAL 16,478,514
INCOME
EXPENSES
MANAGEMEN $ 14,146,742
T FEE
TRANSFER 12,158,944
AGENT FEES
ACCOUNTING 833,360
AND
SECURITY
LENDING
FEES
NON-INTEREST 9,502
ED
TRUSTEES'
COMPENSAT
ION
CUSTODIAN 122,508
FEES AND
EXPENSES
REGISTRATION 657,790
FEES
AUDIT 96,858
LEGAL 11,941
INTEREST 3,064
MISCELLANEO 26,007
US
TOTAL 28,066,716
EXPENSES
BEFORE
REDUCTIONS
EXPENSE (1,497,900) 26,568,816
REDUCTIONS
NET (10,090,302)
INVESTMEN
T INCOME
(LOSS)
REALIZED
AND
UNREALIZED
GAIN (LOSS)
NET REALIZED
GAIN (LOSS)
ON:
INVESTMENT 286,685,140
SECURITIES
(INCLUDIN
G REALIZED
GAIN OF
$21,15
1,912 ON
SALES OF
INVESTME
NTS IN
AFFILIATED
ISSUERS)
FOREIGN 72,906 286,758,046
CURRENCY
TRANSACTIO
NS
CHANGE IN
NET
UNREALIZED
APPRECIATI
ON
(DEPRECIATI
ON) ON:
INVESTMENT 113,932,448
SECURITIES
ASSETS AND (2,936) 113,929,512
LIABILITIES
IN
FOREIGN
CURRENCIES
NET GAIN 400,687,558
(LOSS)
NET INCREASE $ 390,597,256
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
OTHER $ 20,665,782
INFORMATIO
N
SALES
CHARGES
PAID TO
FDC
SALES $ 70,440
CHARGES -
DEALERS'
PORTION
DEFERRED $ 10,101
SALES
CHARGES
WITHHELD
BY FDC
EXCHANGE $ 550,118
FEES
WITHHELD
BY FSC
EXPENSE $ 1,459,899
REDUCTIONS
DIRECTED
BROKERAGE
ARRANGEM
ENTS
CUSTODIA 16,201
N CREDITS
TRANSFER 21,800
AGENT
CREDITS
$ 1,497,900
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
FEBRUARY 28, FEBRUARY 28,
1998 1997
OPERATIONS $ (10,090,302) $ (6,964,256)
NET
INVESTMENT
INCOME
(LOSS)
NET 286,758,046 272,103,872
REALIZED
GAIN (LOSS)
CHANGE IN 113,929,512 64,022,840
NET
UNREALIZED
APPRECIATI
ON
(DEPRECIATI
ON)
NET 390,597,256 329,162,456
INCREASE
(DECREAS
E) IN NET
ASSETS
RESULTING
FROM
OPERATIO
NS
DISTRIBUTIONS
TO
SHAREHOLD
ERS
FROM NET (424,271,823) -
REALIZED
GAIN
IN EXCESS (145,162,086) -
OF NET
REALIZED
GAIN
TOTAL (569,433,909) -
DISTRIBUTIO
NS
SHARE 3,020,162,765 2,439,060,498
TRANSACTIO
NS
NET
PROCEEDS
FROM SALES
OF SHARES
REINVESTM 559,329,509 -
ENT OF
DISTRIBUTIO
NS
COST OF (2,481,381,434) (2,163,322,518)
SHARES
REDEEMED
NET 1,098,110,840 275,737,980
INCREASE
(DECREAS
E) IN NET
ASSETS
RESULTING
FROM
SHARE
TRANSACTI
ONS
REDEMPTIO 5,459,035 5,754,283
N FEES
TOTAL 924,733,222 610,654,719
INCREASE
(DECREASE)
IN NET
ASSETS
NET ASSETS
BEGINNING 1,744,016,513 1,133,361,794
OF PERIOD
END OF $ 2,668,749,735 $ 1,744,016,513
PERIOD
OTHER
INFORMATION
SHARES
SOLD 75,772,884 73,288,709
ISSUED IN 17,854,821 -
REINVESTME
NT OF
DISTRIBUTIO
NS
REDEEMED (63,315,407) (67,555,816)
NET 30,312,298 5,732,893
INCREASE
(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>
YEARS ENDED FEBRUARY 28, YEAR ENDED YEARS ENDED FEBRUARY 28,
FEBRUARY 29,
SELECTED PER-SHARE DATA 1998 1997 1996 1995 1994
</TABLE>
NET ASSET $ 37.95 $ 28.18 $ 19.80 $ 17.67 $ 14.28
VALUE,
BEGINNING
OF PERIOD
INCOME FROM
INVESTMENT
OPERATION
S
NET (.17) (.17) (.08) (.18) (.09)
INVESTMENT
INCOME
(LOSS) C
NET 7.32 9.80 13.51 2.11 6.09
REALIZED
AND
UNREALIZED
GAIN (LOSS)
TOTAL FROM 7.15 9.63 13.43 1.93 6.00
INVESTMENT
OPERATIONS
LESS
DISTRIBUTIO
NS
FROM NET (7.60) - (5.25) - (2.75)
REALIZED
GAIN
IN EXCESS (2.60) - - - -
OF NET
REALIZED
GAIN
TOTAL (10.20) - (5.25) - (2.75)
DISTRIBUTIO
NS
REDEMPTION .09 .14 .20 .20 .14
FEES
ADDED TO
PAID IN
CAPITAL
NET ASSET $ 34.99 $ 37.95 $ 28.18 $ 19.80 $ 17.67
VALUE, END
OF PERIOD
TOTAL 24.15% 34.67% 72.75% 12.05% 46.24%
RETURN A, B
RATIOS AND
SUPPLEME
NTAL DATA
NET ASSETS, $ 2,668,750 $ 1,744,017 $ 1,133,362 $ 216,433 $ 110,993
END OF
PERIOD
(000
OMITTED)
RATIO OF 1.18% 1.33% 1.25% 1.72% 1.67%
EXPENSES
TO AVERAGE
NET ASSETS
RATIO OF 1.12% D 1.29% D 1.22% D 1.71% D 1.67%
EXPENSES
TO AVERAGE
NET ASSETS
AFTER
EXPENSE
REDUCTIONS
RATIO OF NET (.42)% (.54)% (.28)% (.98)% (.52)%
INVESTMENT
INCOME
(LOSS) TO
AVERAGE
NET ASSETS
PORTFOLIO 435% 341% 366% 205% 163%
TURNOVER
RATE
AVERAGE $ .0442 $ .0421
COMMISSIO
N RATE E
<TABLE>
<CAPTION>
<S> <C>
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. 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). Load adjusted returns include a 3.00% sales
charge and the effect of a $7.50 trading fee. 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, 1998 YEAR YEARS YEARS
SELECT SOFTWARE AND 35.50% 199.63% 625.79%
COMPUTER SERVICES
SELECT SOFTWARE AND 31.36% 190.56% 603.94%
COMPUTER SERVICES
(LOAD ADJ.)
S&P 500 35.01% 166.84% 422.55%
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 Standard & Poor's
500 Index - a widely recognized, unmanaged index of common stocks.
This benchmark includes 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, 1998 YEAR YEARS YEARS
SELECT SOFTWARE AND 35.50% 24.54% 21.92%
COMPUTER SERVICES
SELECT SOFTWARE AND 31.36% 23.78% 21.55%
COMPUTER SERVICES
(LOAD ADJ.)
S&P 500 35.01% 21.69% 17.98%
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 LONG-TERM GROWTH AND
SHORT-TERM VOLATILITY. UNLIKE THE BROADER MARKET,
HOWEVER, SOME SECTORS MAY NOT HAVE A HISTORY
OF GROWTH IN THE LONG RUN. AND, AS WITH ALL STOCK
FUNDS, THE SHARE PRICE AND RETURN OF A FUND THAT
INVESTS IN A SECTOR WILL VARY. THAT MEANS IF YOU
SELL YOUR SHARES DURING A SECTOR DOWNTURN, YOU
MIGHT LOSE MONEY. BUT IF YOU CAN IDENTIFY A
SECTOR THAT IS ABOUT TO EXPERIENCE RAPID GROWTH
YOU MAY HAVE THE POTENTIAL FOR ABOVE-AVERAGE
GAINS.
(CHECKMARK)
$10,000 OVER 10 YEARS
IMAHDR PRASUN SHR__CHT 19980228 19980305 143022 S00000000000001
Software/Computer Svcs S&P 500
00028 SP001
1988/02/29 9700.00 10000.00
1988/03/31 9784.23 9691.00
1988/04/30 10079.02 9798.57
1988/05/31 9805.28 9883.82
1988/06/30 10577.35 10337.48
1988/07/31 10050.94 10298.20
1988/08/31 9356.08 9948.06
1988/09/30 9959.70 10371.85
1988/10/31 9433.29 10660.19
1988/11/30 9292.91 10507.75
1988/12/31 10064.98 10691.63
1989/01/31 10815.99 11474.26
1989/02/28 10331.69 11188.55
1989/03/31 10079.02 11449.25
1989/04/30 11054.63 12043.46
1989/05/31 11454.70 12531.22
1989/06/30 10320.26 12459.79
1989/07/31 10015.66 13584.91
1989/08/31 10472.56 13851.18
1989/09/30 10682.89 13794.39
1989/10/31 10907.71 13474.36
1989/11/30 11226.82 13749.23
1989/12/31 11277.73 14079.22
1990/01/31 10876.81 13134.50
1990/02/28 11158.94 13303.94
1990/03/31 11604.41 13656.49
1990/04/30 11567.28 13315.08
1990/05/31 13022.48 14613.30
1990/06/30 13326.88 14513.93
1990/07/31 12109.27 14467.48
1990/08/31 10416.50 13159.62
1990/09/30 9221.16 12518.75
1990/10/31 9406.77 12464.92
1990/11/30 10616.96 13270.15
1990/12/31 11374.25 13640.39
1991/01/31 13044.75 14235.11
1991/02/28 13995.08 15252.92
1991/03/31 14789.49 15622.04
1991/04/30 14678.13 15659.53
1991/05/31 14945.41 16336.03
1991/06/30 13850.02 15587.84
1991/07/31 14700.82 16314.23
1991/08/31 15895.21 16700.88
1991/09/30 15371.64 16421.97
1991/10/31 16140.63 16642.03
1991/11/30 14373.59 15971.35
1991/12/31 16588.75 17798.47
1992/01/31 19251.46 17467.42
1992/02/29 19829.94 17694.50
1992/03/31 18877.15 17349.46
1992/04/30 18400.75 17859.53
1992/05/31 18689.99 17947.04
1992/06/30 17677.65 17679.63
1992/07/31 18928.19 18402.73
1992/08/31 17516.02 18025.47
1992/09/30 18783.57 18238.17
1992/10/31 20297.83 18302.01
1992/11/30 22067.29 18926.11
1992/12/31 22484.14 19158.90
1993/01/31 23641.10 19319.83
1993/02/28 23496.48 19582.58
1993/03/31 23998.39 19995.77
1993/04/30 23594.52 19511.88
1993/05/31 26255.63 20034.79
1993/06/30 27610.20 20092.89
1993/07/31 26774.40 20012.52
1993/08/31 28580.50 20771.00
1993/09/30 29156.91 20611.06
1993/10/31 29089.66 21037.71
1993/11/30 28369.15 20837.85
1993/12/31 29843.39 21089.99
1994/01/31 30883.30 21807.05
1994/02/28 31294.93 21216.08
1994/03/31 27936.88 20291.06
1994/04/30 28081.41 20550.78
1994/05/31 25271.07 20887.82
1994/06/30 23053.54 20376.06
1994/07/31 24184.26 21044.40
1994/08/31 26807.98 21907.22
1994/09/30 28026.52 21370.49
1994/10/31 29750.05 21851.33
1994/11/30 29069.42 21055.50
1994/12/31 29958.63 21367.76
1995/01/31 29464.62 21921.82
1995/02/28 31912.69 22776.12
1995/03/31 33735.02 23448.24
1995/04/30 34788.89 24138.79
1995/05/31 35732.99 25103.62
1995/06/30 38894.62 25686.77
1995/07/31 41243.88 26538.55
1995/08/31 41529.31 26605.16
1995/09/30 43241.86 27727.90
1995/10/31 43757.82 27628.91
1995/11/30 44998.32 28841.82
1995/12/31 43818.75 29397.31
1996/01/31 42138.16 30398.00
1996/02/29 44733.18 30679.78
1996/03/31 43596.32 30975.23
1996/04/30 47985.31 31431.81
1996/05/31 49658.47 32242.43
1996/06/30 47180.66 32365.28
1996/07/31 43553.34 30935.38
1996/08/31 44460.17 31587.81
1996/09/30 50271.54 33365.57
1996/10/31 50450.35 34285.79
1996/11/30 54448.07 36877.45
1996/12/31 53355.90 36146.91
1997/01/31 57638.38 38405.37
1997/02/28 51955.35 38706.47
1997/03/31 49288.90 37116.02
1997/04/30 52179.44 39331.84
1997/05/31 56597.51 41726.37
1997/06/30 56626.39 43595.71
1997/07/31 63470.06 47064.62
1997/08/31 63166.86 44428.06
1997/09/30 65144.89 46861.38
1997/10/31 62170.63 45296.21
1997/11/30 63542.26 47392.97
1997/12/31 61366.76 48206.71
1998/01/31 63052.83 48739.88
1998/02/27 70394.08 52255.00
IMATRL PRASUN SHR__CHT 19980228 19980305 143025 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Software and Computer Services Portfolio
on February 29, 1988, and the current 3.00% sales charge was paid. As
the chart shows, by February 28, 1998, the value of the investment
would have grown to $70,394 - a 603.94% increase on the initial
investment, and includes the effect of a $7.50 trading fee. 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 $52,255 - a 422.55% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1998
% OF FUND'S
INVESTMENTS
MIRCOSOFT CORP. 11.2
PEOPLESOFT, INC. 7.5
BMC SOFTWARE, INC. 6.8
SIEBEL SYSTEMS, INC. 4.0
COMPUWARE CORP. 3.3
HBO & CO. 3.2
DELL COMPUTER CORP. 3.1
AUTOMATIC DATA PROCESSING, INC. 2.9
ORACLE CORP. 2.7
ELECTRONIC DATA SYSTEMS CORP. 2.6
TOP INDUSTRIES AS OF FEBRUARY 28, 1998
ROW: 1, COL: 1, VALUE: 21.2
ROW: 1, COL: 2, VALUE: 3.6
ROW: 1, COL: 3, VALUE: 4.0
ROW: 1, COL: 4, VALUE: 6.4
ROW: 1, COL: 5, VALUE: 10.4
ROW: 1, COL: 6, VALUE: 54.4
PREPACKAGED COMPUTER
SOFTWARE 54.4%
COMPUTER SERVICES 10.4%
DATA PROCESSING 6.4%
MINI & MICRO COMPUTERS 4.0%
CAD/CAM/CAE 3.6%
ALL OTHERS 21.2%
*
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
SOFTWARE AND COMPUTER SERVICES PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
John Porter,
Portfolio Manager
of Fidelity Select
Software and Computer Services Portfolio
Q. HOW DID THE FUND PERFORM, JOHN?
A. The fund fared well. For the 12 months that ended February 28,
1998, the fund returned 35.50%. This topped the 35.01% return of the
Standard & Poor's 500 Index over the same period.
Q. WHAT FACTORS CONTRIBUTED TO THE FUND'S SOLID PERFORMANCE?
A. Similar to many other technology-related groups, software stocks
were influenced heavily by earnings announcements during the period.
Through the first half of the period, the fund's performance - and
that of the overall software sector - was boosted by a number of
positive earnings surprises. The fund also realized extremely strong
performances from its top three period-ending positions - Microsoft,
PeopleSoft and BMC. In the second half of the year, though, several
software companies experienced earnings disappointments due primarily
to Asian volatility.
Q. TECHNOLOGY STOCKS IN GENERAL WERE HURT BY ECONOMIC PROBLEMS IN ASIA
DURING THE PERIOD. WITHIN THIS SECTOR, WHICH TYPES OF STOCKS SUFFERED
THE MOST?
A. Within the technology group, software is one of the least sensitive
areas to Asian concerns. Most software companies have little business
exposure to that region due to the fact that hardware infrastructures
in Asia - for the most part - are behind the curve. Software companies
are also concerned about piracy rates in Asia, whereby certain
products are duplicated without the company's consent. That being
said, one of the harder hit areas within the group was the database
market. Many of these companies caught their own form of the "Asian
flu" late in the year, as Oracle and Sybase - among others - referred
to the Asian crisis in explaining their respective earnings
shortfalls.
Q. WERE YOU ATTRACTED TO ANY PARTICULAR SEGMENTS WITHIN THE SOFTWARE
OR COMPUTER SERVICES INDUSTRIES?
A. One software sector that continued to grow and perform well was
enterprise applications. Enterprise applications help corporations
automate the various aspects of their human resources, financial and
manufacturing activities. Enterprise application-related stocks -
including the large German software company, SAP, and PeopleSoft -
benefited from the rapid growth within this area. Enterprise
applications is also an area that is still in the early stages of
growth, as a lot of companies still have not gotten around to
upgrading their mainframe infrastructures.
Q. THE FUND HISTORICALLY HAS BEEN TILTED MUCH MORE TOWARD SOFTWARE
STOCKS THAN COMPUTER SERVICES STOCKS. WHY?
A. Perhaps because the trends within the software group tend to be
more riveting. Even the slower growing software companies still can
generate impressive returns. However, I did add to the fund's computer
services exposure during the period, due to the fact that I don't want
the fund to be dramatically underweighted - relative to the index - in
the stocks and also because they can provide a nice dampening effect
to the volatility that is inherent in the software group. Some of the
computer services-related stocks within the fund included Electronic
Data Systems and Automatic Data Processing.
Q. WHICH STOCKS WERE DISAPPOINTING?
A. Oracle was a negative performer, for many of the reasons I
discussed earlier. Electronics for Imaging was another disappointment
as the company encountered two problems. First, the company
experienced delays in the introduction of a new product that they had
hoped would be a significant revenue producer. Second, the company
suffered as one of its larger clients decided to delay its ordering
cycle.
Q. WHAT'S YOUR OUTLOOK FOR THE NEXT FEW MONTHS?
A. This group is quite difficult to predict, so I won't even try. I'll
continue to follow my basic investing philosophy of looking for the
best opportunities for the fund. In terms of business prospects for
both the software and computer services industries, I think both
groups will continue to be attractive. I may continue to try to strike
a better balance between software names and computer services names.
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, 1998, more than
$503 million
MANAGER: John Porter, since 1997; manager,
Fidelity Select Medical Delivery Portfolio, since
January 1998; Fidelity Select Multimedia Portfolio,
1996-1997; joined Fidelity in 1995
(checkmark)
SOFTWARE AND COMPUTER SERVICES PORTFOLIO
INVESTMENTS FEBRUARY 28, 1998
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 90.5%
SHARES VALUE (NOTE 1)
COMMUNICATIONS EQUIPMENT - 1.1%
DATACOMMUNICATIONS EQUIPMENT - 0.6%
Cisco Systems, Inc. (a) 45,000 $ 2,964,375
TELEPHONE EQUIPMENT - 0.5%
Ericsson (L.M.) Telephone Co.
Class B ADR 20,000 906,250
Nokia Corp. AB sponsored ADR 18,400 1,853,800
2,760,050
TOTAL COMMUNICATIONS EQUIPMENT 5,724,425
COMPUTER SERVICES & SOFTWARE - 75.7%
CAD/CAM/CAE - 3.6%
Cambridge Technology Partners
Massachusetts, Inc. (a) 140,000 6,370,000
Dataworks Corp. (a) 100,000 2,525,000
JDA Software Group, Inc. (a) 100,000 4,837,500
Parametric Technology Corp. (a) 80,000 4,845,000
18,577,500
COMPUTER RELATED SERVICES, NEC - 1.6%
Ciber, Inc. (a) 30,000 2,002,500
Security Dynamics Technologies, Inc. (a) 165,000 5,878,125
7,880,625
COMPUTER SERVICES - 10.4%
America Online, Inc. (a) 35,000 4,239,375
Computer Sciences Corp. (a) 15,000 1,570,313
Electronic Data Systems Corp. 305,000 13,362,813
Equifax, Inc. 100,000 3,593,750
Galileo International, Inc. 60,000 2,370,000
HBO & Co. 300,000 16,237,500
Paychex, Inc. 35,625 1,839,141
SunGard Data Systems, Inc. (a) 245,200 8,382,775
Technology Solutions, Inc. (a) 30,000 975,000
Yahoo, Inc. (a) 5,000 365,938
52,936,605
CUSTOM COMPUTER PROGRAMMING SERVICES - 0.7%
Keane, Inc. (a) 75,000 3,487,500
DATA PROCESSING - 6.4%
Affiliated Computer Services, Inc.
Class A (a) 50,000 1,609,375
Automatic Data Processing, Inc. 245,000 14,960,313
First Data Corp. 350,000 11,900,000
Fiserv, Inc. (a) 80,000 4,380,000
32,849,688
PREPACKAGED COMPUTER SOFTWARE - 53.0%
Arbor Software Corp. (a) 15,000 675,000
Aspect Development, Inc. (a) 100,000 4,775,000
BMC Software, Inc. (a) 454,800 34,792,200
BEA Systems, Inc. 250,000 6,718,750
Boole & Babbage, Inc. 50,000 1,675,000
Business Objects SA sponsored ADR (a) 189,900 2,682,338
Cadence Design Systems, Inc. (a) 170,000 5,939,375
CheckFree Holdings Corp. (a) 40,000 860,000
Check Point Software
Technologies Ltd. (a) 100,000 3,856,250
Citrix Systems, Inc. (a) 165,000 6,940,313
Computer Associates
International, Inc. (a) 234,150 11,034,319
Compuware Corp. (a) 396,200 16,689,925
Cybermedia, Inc. (a) 75,000 693,750
Deltek Systems, Inc. (a) 50,000 1,012,500
SHARES VALUE (NOTE 1)
Dr Solomons Group PLC
sponsored ADR (a) 20,000 $ 790,000
Electronic Arts, Inc. (a) 19,152 845,082
Electronics for Imaging, Inc. (a) 57,300 1,264,181
Industrial-Matematik
International Corp. (a) 248,400 6,862,050
I2 Technologies, Inc. (a) 20,000 1,131,250
Macromedia, Inc. (a) 20,000 250,000
Mapix, Inc. 60,000 930,000
Manugistics Group, Inc. (a) 137,600 5,486,800
Microsoft Corp. (a) 677,000 57,375,750
Midway Games, Inc. (a) 78,700 1,731,400
Networks Associates, Inc. (a) 40,000 2,585,000
New Era of Networks, Inc. 74,000 1,387,500
Oracle Corp. (a) 550,600 13,558,525
PeopleSoft, Inc. (a) 852,000 38,073,750
Platinum Technology, Inc. (a) 100,000 2,537,500
Policy Management Systems Corp. (a) 59,200 4,284,600
Scopus Technology, Inc. (a) 184,900 2,611,713
Siebel Systems, Inc. (a) 328,400 20,196,600
Symantec Corp. (a) 100,000 2,518,750
Systems Software Associates, Inc. (a) 275,000 2,045,313
Vantive Corp. (a) 162,100 4,437,488
Veritas Software Corp. (a) 16,608 944,580
Visio Corp. (a) 11,800 424,800
270,617,352
TOTAL COMPUTER SERVICES & SOFTWARE 386,349,270
COMPUTERS & OFFICE EQUIPMENT - 6.3%
COMPUTER EQUIPMENT - WHOLESALE - 1.0%
CDW Computer Centers, Inc. (a) 25,700 1,760,450
Tech Data Corp. (a) 69,600 3,236,400
4,996,850
COMPUTER STORAGE DEVICES - 0.3%
Adaptec, Inc. (a) 49,800 1,316,588
GRAPHICS WORKSTATIONS - 1.0%
Sun Microsystems, Inc. (a) 110,000 5,238,750
MINI & MICRO COMPUTERS - 4.0%
Compaq Computer Corp. 137,500 4,408,594
Dell Computer Corp. (a) 115,000 16,085,625
20,494,219
TOTAL COMPUTERS & OFFICE EQUIPMENT 32,046,407
CONSUMER ELECTRONICS - 0.3%
RADIOS, TELEVISIONS, STEREOS - 0.3%
Philips Electronics NV 20,000 1,557,500
ELECTRONIC INSTRUMENTS - 0.2%
ELECTRONIC EQUIPMENT - 0.2%
Teradyne, Inc. (a) 25,900 1,222,156
ELECTRONICS - 2.1%
SEMICONDUCTORS - 2.1%
Altera Corp. (a) 27,800 1,198,875
Intel Corp. 37,000 3,318,438
Micron Technology, Inc. (a) 175,000 5,807,813
VLSI Technology, Inc. (a) 20,000 386,250
10,711,376
LODGING & GAMING - 0.3%
RACING & GAMING - 0.3%
WMS Industries, Inc. 57,100 1,520,288
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
PUBLISHING - 1.0%
BOOK PUBLISHING & PRINTING - 1.0%
Cognizant Corp. 100,000 $ 4,993,750
SERVICES - 2.6%
PERSONAL SERVICES - 1.5%
Cendant Corp. (a) 200,155 7,505,813
PERSONNEL SUPPLY SERVICES - 1.1%
Computer Horizons Corp. (a) 81,300 4,242,844
Renaissance Worldwide, Inc. 21,700 1,288,438
5,531,282
TOTAL SERVICES 13,037,095
TELEPHONE SERVICES - 0.9%
MCI Communications Corp. 100,000 4,781,250
TOTAL COMMON STOCKS
(Cost $352,616,450) 461,943,517
NONCONVERTIBLE PREFERRED STOCKS - 1.4%
COMPUTER SERVICES & SOFTWARE - 1.4%
PREPACKAGED COMPUTER SOFTWARE - 1.4%
SAP AG (Systeme Anwendungen
Produkte) (Cost $4,584,921) 18,000 7,387,582
CASH EQUIVALENT - 8.1%
Taxable Central Cash Fund (b)
(Cost $41,371,199) 41,371,199 41,371,199
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $398,572,570) $ 510,702,298
LEGEND
1. Non-income producing
2. At period end, the seven-day yield on the Taxable Central Cash Fund
was 5.62%. 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 $578,286,462 and $599,014,360, 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 $71,604 for the
period (see Note 4 of Notes to Financial Statements).
The fund participated in the securities lending program. At the period
end, the value of securities loaned and the value of collateral
amounted to $3,491,850 and $3,609,100, respectively (see Note 6 of
Notes to Financial Statements).
INCOME TAX INFORMATION
At February 28, 1998, the aggregate cost of investment securities for
income tax purposes was $401,737,135. Net unrealized appreciation
aggregated $108,965,163, of which $121,960,756 related to appreciated
investment securities and $12,995,593 related to depreciated
investment securities.
The fund hereby designates approximately $11,924,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
SOFTWARE AND COMPUTER SERVICES PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1998
ASSETS
INVESTMENT IN $ 510,702,298
SECURITIES,
AT VALUE
(COST
$398,572
,570) -
SEE
ACCOMPAN
YING
SCHEDULE
RECEIVABLE 3,809,699
FOR FUND
SHARES
SOLD
DIVIDENDS 38,610
RECEIVABLE
INTEREST 175,141
RECEIVABLE
REDEMPTION 813
FEES
RECEIVABLE
OTHER 64,440
RECEIVABLE
S
TOTAL 514,791,001
ASSETS
LIABILITIES
PAYABLE FOR $ 6,081,591
INVESTMENT
S
PURCHASED
PAYABLE FOR 1,180,334
FUND
SHARES
REDEEMED
ACCRUED 231,481
MANAGEM
ENT FEE
OTHER 321,598
PAYABLES
AND
ACCRUED
EXPENSES
COLLATERAL ON 3,609,100
SECURITIES
LOANED,
AT VALUE
TOTAL 11,424,104
LIABILITIES
NET ASSETS $ 503,366,897
NET ASSETS
CONSIST OF:
PAID IN $ 383,217,532
CAPITAL
ACCUMULATED 8,019,637
UNDISTRIBUT
ED NET
REALIZED
GAIN (LOSS)
ON
INVESTMENT
S AND
FOREIGN
CURRENCY
TRANSACTIO
NS
NET 112,129,728
UNREALIZED
APPRECIATI
ON
(DEPRECIATI
ON) ON
INVESTMENT
S
NET ASSETS, $ 503,366,897
FOR
11,372,9
27 SHARES
OUTSTANDIN
G
NET ASSET $44.26
VALUE AND
REDEMPTIO
N PRICE
PER SHARE
($503,36
6,897 (DIVIDED BY)
11,372,9
27 SHARES)
MAXIMUM $45.63
OFFERING
PRICE PER
SHARE
(100/97.
00 OF
$44.26)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1998
INVESTMENT $ 314,106
INCOME
DIVIDENDS
INTEREST 2,360,834
(INCLUDING
INCOME ON
SECURITIES
LOANED OF
$630,717
)
TOTAL 2,674,940
INCOME
EXPENSES
MANAGEMEN $ 2,593,824
T FEE
TRANSFER 3,063,071
AGENT FEES
ACCOUNTING 454,866
AND
SECURITY
LENDING
FEES
NON-INTEREST 1,874
ED
TRUSTEES'
COMPENSAT
ION
CUSTODIAN 32,966
FEES AND
EXPENSES
REGISTRATION 65,849
FEES
AUDIT 35,040
LEGAL 3,819
MISCELLANEO 6,490
US
TOTAL 6,257,799
EXPENSES
BEFORE
REDUCTIONS
EXPENSE (64,814) 6,192,985
REDUCTIONS
NET (3,518,045)
INVESTMEN
T INCOME
(LOSS)
REALIZED
AND
UNREALIZED
GAIN (LOSS)
NET REALIZED
GAIN (LOSS)
ON:
INVESTMENT 56,333,867
SECURITIES
FOREIGN (713) 56,333,154
CURRENCY
TRANSACTIO
NS
CHANGE IN 76,776,311
NET
UNREALIZED
APPRECIATI
ON
(DEPRECIATI
ON) ON
INVESTMENT
SECURITIES
NET GAIN 133,109,465
(LOSS)
NET INCREASE $ 129,591,420
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
OTHER $ 1,272,908
INFORMATIO
N
SALES
CHARGES
PAID TO
FDC
SALES $ 14,857
CHARGES -
DEALERS'
PORTION
DEFERRED $ 5,910
SALES
CHARGES
WITHHELD
BY FDC
EXCHANGE $ 102,803
FEES
WITHHELD
BY FSC
EXPENSE $ 55,374
REDUCTIONS
DIRECTED
BROKERAGE
ARRANGEM
ENTS
CUSTODIA 9,440
N CREDITS
$ 64,814
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
FEBRUARY 28, FEBRUARY 28,
1998 1997
OPERATIONS $ (3,518,045) $ (2,797,099)
NET
INVESTMENT
INCOME
(LOSS)
NET 56,333,154 61,210,968
REALIZED
GAIN (LOSS)
CHANGE IN 76,776,311 (9,105,850)
NET
UNREALIZED
APPRECIATI
ON
(DEPRECIATI
ON)
NET 129,591,420 49,308,019
INCREASE
(DECREAS
E) IN NET
ASSETS
RESULTING
FROM
OPERATIO
NS
DISTRIBUTIONS (67,010,560) (32,120,784)
TO
SHAREHOLD
ERS FROM
NET
REALIZED
GAINS
SHARE 284,940,442 568,629,736
TRANSACTIO
NS
NET
PROCEEDS
FROM SALES
OF SHARES
REINVESTM 66,130,192 31,720,922
ENT OF
DISTRIBUTIO
NS
COST OF (300,538,798) (566,265,440)
SHARES
REDEEMED
NET 50,531,836 34,085,218
INCREASE
(DECREAS
E) IN NET
ASSETS
RESULTING
FROM
SHARE
TRANSACTI
ONS
REDEMPTIO 555,345 793,106
N FEES
TOTAL 113,668,041 52,065,559
INCREASE
(DECREASE)
IN NET
ASSETS
NET ASSETS
BEGINNING 389,698,856 337,633,297
OF PERIOD
END OF $ 503,366,897 $ 389,698,856
PERIOD
OTHER
INFORMATION
SHARES
SOLD 6,972,295 14,976,546
ISSUED IN 1,737,307 840,597
REINVESTME
NT OF
DISTRIBUTIO
NS
REDEEMED (7,436,837) (15,044,201)
NET 1,272,765 772,942
INCREASE
(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>
YEARS ENDED FEBRUARY 28, YEAR ENDED YEARS ENDED FEBRUARY 28,
FEBRUARY 29,
SELECTED PER-SHARE DATA 1998 1997 1996 1995 1994
</TABLE>
NET ASSET $ 38.58 $ 36.20 $ 29.07 $ 28.89 $ 27.62
VALUE,
BEGINNING
OF PERIOD
INCOME FROM
INVESTMENT
OPERATION
S
NET (.33) (.25) (.19) (.26) (.34)
INVESTMENT
INCOME
(LOSS)C
NET 12.57 5.87 11.85 .67 7.92
REALIZED
AND
UNREALIZED
GAIN (LOSS)
TOTAL FROM 12.24 5.62 11.66 .41 7.58
INVESTMENT
OPERATIONS
LESS
DISTRIBUTIO
NS
FROM NET (6.61) (3.31) (4.60) (.33) (6.48)
REALIZED
GAIN
REDEMPTION .05 .07 .07 .10 .17
FEES
ADDED TO
PAID IN
CAPITAL
NET ASSET $ 44.26 $ 38.58 $ 36.20 $ 29.07 $ 28.89
VALUE, END
OF PERIOD
TOTAL 35.50% 16.14% 40.17% 1.97% 33.19%
RETURN A, B
RATIOS AND
SUPPLEME
NTAL DATA
NET ASSETS, $ 503,367 $ 389,699 $ 337,633 $ 236,445 $ 178,034
END OF
PERIOD
(000
OMITTED)
RATIO OF 1.44% 1.54% 1.48% 1.52% 1.57%
EXPENSES
TO AVERAGE
NET ASSETS
RATIO OF 1.42% D 1.51% D 1.47% D 1.50% D 1.57%
EXPENSES
TO AVERAGE
NET ASSETS
AFTER
EXPENSE
REDUCTIONS
RATIO OF NET (.81)% (.66)% (.54)% (1.01)% (1.19)%
INVESTMENT
INCOME
(LOSS) TO
AVERAGE
NET ASSETS
PORTFOLIO 145% 279% 183% 164% 376%
TURNOVER
RATE
AVERAGE $ .0366 $ .0427
COMMISSIO
N RATE E
<TABLE>
<CAPTION>
<S> <C>
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. 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>
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). Load adjusted returns include a 3.00% sales
charge and the effect of a $7.50 trading fee.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 28, 1998 YEAR YEARS YEARS
SELECT TECHNOLOGY 24.92% 200.87% 544.51%
SELECT TECHNOLOGY 21.10% 191.76% 525.10%
(LOAD ADJ.)
S&P 500 35.01% 166.84% 422.55%
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 Standard & Poor's
500 Index - a widely recognized, unmanaged index of common stocks.
This benchmark includes 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, 1998 YEAR YEARS YEARS
SELECT TECHNOLOGY 24.92% 24.64% 20.48%
SELECT TECHNOLOGY 21.10% 23.88% 20.11%
(LOAD ADJ.)
S&P 500 35.01% 21.69% 17.98%
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 LONG-TERM GROWTH AND
SHORT-TERM VOLATILITY. UNLIKE THE BROADER MARKET,
HOWEVER, SOME SECTORS MAY NOT HAVE A HISTORY
OF GROWTH IN THE LONG RUN. AND, AS WITH ALL STOCK
FUNDS, THE SHARE PRICE AND RETURN OF A FUND THAT
INVESTS IN A SECTOR WILL VARY. THAT MEANS IF YOU
SELL YOUR SHARES DURING A SECTOR DOWNTURN, YOU
MIGHT LOSE MONEY. BUT IF YOU CAN IDENTIFY A
SECTOR THAT IS ABOUT TO EXPERIENCE RAPID GROWTH
YOU MAY HAVE THE POTENTIAL FOR ABOVE-AVERAGE
GAINS.
(CHECKMARK)
$10,000 OVER 10 YEARS
IMAHDR PRASUN SHR__CHT 19980228 19980305 143349 S00000000000001
TECHNOLOGY S&P 500
00064 SP001
1988/02/29 9700.00 10000.00
1988/03/31 9596.11 9691.00
1988/04/30 9962.46 9798.57
1988/05/31 9689.06 9883.82
1988/06/30 10580.33 10337.48
1988/07/31 9792.95 10298.20
1988/08/31 8890.76 9948.06
1988/09/30 9131.34 10371.85
1988/10/31 8754.06 10660.19
1988/11/30 8491.60 10507.75
1988/12/31 9076.66 10691.63
1989/01/31 9809.36 11474.26
1989/02/28 9541.43 11188.55
1989/03/31 9366.46 11449.25
1989/04/30 10044.48 12043.46
1989/05/31 10864.66 12531.22
1989/06/30 9902.31 12459.79
1989/07/31 10077.28 13584.91
1989/08/31 10296.00 13851.18
1989/09/30 10542.05 13794.39
1989/10/31 10465.50 13474.36
1989/11/30 10492.84 13749.23
1989/12/31 10618.60 14079.22
1990/01/31 10399.89 13134.50
1990/02/28 10984.95 13303.94
1990/03/31 11498.93 13656.49
1990/04/30 10979.48 13315.08
1990/05/31 12395.66 14613.30
1990/06/30 12505.02 14513.93
1990/07/31 11837.94 14467.48
1990/08/31 10224.92 13159.62
1990/09/30 9355.52 12518.75
1990/10/31 9623.45 12464.92
1990/11/30 11066.97 13270.15
1990/12/31 11734.05 13640.39
1991/01/31 13713.42 14235.11
1991/02/28 14407.84 15252.92
1991/03/31 15561.56 15622.04
1991/04/30 14796.05 15659.53
1991/05/31 15616.23 16336.03
1991/06/30 14101.28 15587.84
1991/07/31 15662.59 16314.23
1991/08/31 16432.25 16700.88
1991/09/30 16514.72 16421.97
1991/10/31 16960.02 16642.03
1991/11/30 16404.76 15971.35
1991/12/31 18653.78 17798.47
1992/01/31 19363.19 17467.42
1992/02/29 19665.66 17694.50
1992/03/31 18103.84 17349.46
1992/04/30 17839.87 17859.53
1992/05/31 18015.85 17947.04
1992/06/30 16727.88 17679.63
1992/07/31 17580.18 18402.73
1992/08/31 16679.86 18025.47
1992/09/30 17496.15 18238.17
1992/10/31 18528.51 18302.01
1992/11/30 20029.04 18926.11
1992/12/31 20281.13 19158.90
1993/01/31 20899.35 19319.83
1993/02/28 20779.31 19582.58
1993/03/31 21049.40 19995.77
1993/04/30 20989.05 19511.88
1993/05/31 23106.54 20034.79
1993/06/30 24234.98 20092.89
1993/07/31 23591.11 20012.52
1993/08/31 24852.31 20771.00
1993/09/30 25237.31 20611.06
1993/10/31 24739.46 21037.71
1993/11/30 24500.50 20837.85
1993/12/31 26091.69 21089.99
1994/01/31 27405.37 21807.05
1994/02/28 28180.11 21216.08
1994/03/31 27230.22 20291.06
1994/04/30 26681.77 20550.78
1994/05/31 26723.83 20887.82
1994/06/30 24459.46 20376.06
1994/07/31 25405.87 21044.40
1994/08/31 28083.86 21907.22
1994/09/30 27943.65 21370.49
1994/10/31 28988.21 21851.33
1994/11/30 28588.61 21055.50
1994/12/31 28995.22 21367.76
1995/01/31 27866.54 21921.82
1995/02/28 29478.94 22776.12
1995/03/31 31273.61 23448.24
1995/04/30 33630.74 24138.79
1995/05/31 34931.74 25103.62
1995/06/30 38177.00 25686.77
1995/07/31 42036.62 26538.55
1995/08/31 43337.62 26605.16
1995/09/30 45332.48 27727.90
1995/10/31 44653.07 27628.91
1995/11/30 44421.78 28841.82
1995/12/31 41697.11 29397.31
1996/01/31 42119.69 30398.00
1996/02/29 44427.62 30679.78
1996/03/31 40990.10 30975.23
1996/04/30 44520.05 31431.81
1996/05/31 45727.51 32242.43
1996/06/30 42474.76 32365.28
1996/07/31 37940.61 30935.38
1996/08/31 39410.92 31587.81
1996/09/30 44462.55 33365.57
1996/10/31 44142.21 34285.79
1996/11/30 49588.11 36877.45
1996/12/31 48292.84 36146.91
1997/01/31 54008.53 38405.37
1997/02/28 50044.84 38706.47
1997/03/31 46731.65 37116.02
1997/04/30 49455.61 39331.84
1997/05/31 54712.39 41726.37
1997/06/30 55719.85 43595.71
1997/07/31 62103.80 47064.62
1997/08/31 63839.43 44428.06
1997/09/30 66412.96 46861.38
1997/10/31 56986.67 45296.21
1997/11/30 55989.18 47392.97
1997/12/31 53280.75 48206.71
1998/01/31 56175.42 48739.88
1998/02/27 62510.30 52255.00
IMATRL PRASUN SHR__CHT 19980228 19980305 143352 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Technology Portfolio on February 29, 1988,
and the current 3.00% sales charge was paid. As the chart shows, by
February 28, 1998, the value of the investment would have grown to
$62,510 - a 525.10% increase on the initial investment, and includes
the effect of a $7.50 trading fee. 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
$52,255 - a 422.55% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1998
% OF FUND'S
INVESTMENTS
MICROSOFT CORP. 9.7
SOLECTRON CORP. 4.2
DELL COMPUTER CORP. 4.0
MERCK & CO., INC. 2.8
MICRON TECHNOLOGY, INC. 2.7
HBO & CO. 2.4
SCI SYSTEMS, INC. 2.3
INTERNATIONAL BUSINESS MACHINES CORP. 2.2
MCI COMMUNICATIONS CORP. 2.1
3COM CORP. 1.9
TOP INDUSTRIES AS OF FEBRUARY 28, 1998
ROW: 1, COL: 1, VALUE: 58.3
ROW: 1, COL: 2, VALUE: 5.1
ROW: 1, COL: 3, VALUE: 5.1
ROW: 1, COL: 4, VALUE: 5.2
ROW: 1, COL: 5, VALUE: 10.4
ROW: 1, COL: 6, VALUE: 15.9
PREPACKAGED COMPUTER
SOFTWARE 15.9%
SEMICONDUCTORS 10.4%
MINI & MICRO COMPUTERS 5.2%
COMPUTER PERIPHERALS 5.1%
COMPUTER SERVICES 5.1%
ALL OTHERS 58.3%
*
* 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. For the 12 months that ended February 28, 1998, the fund returned
24.92%, compared to the 35.01% return of the Standard & Poor's 500
Index.
Q. WHY DID THE FUND UNDERPERFORM THE S&P 500?
A. Mostly because of the difficult environment for technology stocks
during the second half of the period. I became bearish - or somewhat
pessimistic - about the steady-growing, larger-capitalization
technology stocks toward the end of July. I felt their multiples - or
price-to-earnings ratios (P/Es) - could not expand much further,
especially after several companies began to report disappointing
earnings but their multiples weren't reduced. This thought process led
me to purchase shares of higher-growth companies - stocks of companies
that have shown or are expected to show rapid earnings and revenue
growth. By late October, financial turmoil in Southeast Asia and
falling semiconductor prices forced the multiples of many technology
stocks to contract rapidly. Unfortunately, the growth stocks were the
hardest hit.
Q. LOOKING MORE CLOSELY, WHICH INDIVIDUAL HOLDINGS DETRACTED FROM THE
FUND'S RETURN?
A. MicroProse, a software game company, was scheduled to merge with GT
Interactive Software, but the merger fell through - sending MicroProse
shares tumbling. On top of that, the company "took its eye off of the
ball" during merger negotiations and, subsequently, its earnings
numbers came in far below expectations. Altera, which was hurt by a
slowdown in the semiconductor market, was another detractor. Finally,
the fund lost out by not holding more shares of Cisco Systems, a large
computer networking company, throughout the year. I felt that Cisco's
products were becoming commodities and that its stock would be
penalized as a result. That didn't happen. In fact, the company
strengthened its market position and even expanded into the emerging
market for voice-over-Internet transmission by making an acquisition
at the end of the period.
Q. ON THE POSITIVE SIDE, WHICH INDIVIDUAL HOLDINGS HELPED PERFORMANCE?
A. Personal computer (PC) manufacturers racked up impressive gains
through October 1997. One notable example was Dell Computer, whose
stock doubled in the past 12 months on healthy consumer demand for PCs
and the continued strength of the company's direct marketing program.
Yahoo, an Internet services company, historically has enjoyed a
seasonal boost in the fourth quarter, and that was the case this year
as well. More businesses advertise on the Internet during the
Christmas quarter and Yahoo derives all of its revenues from
advertising. HBO & Co. was another contributor to performance. The
company dominated its competitors by increasing sales of software and
services to health care providers.
Q. MICROSOFT REPRESENTED 9.7% OF THE FUND AT THE END OF PERIOD. WHAT
DID YOU FIND ATTRACTIVE ABOUT THIS STOCK, AND DID IT CONTRIBUTE TO
PERFORMANCE?
A. Microsoft helped performance during the first half of the period
and - to the fund's benefit - it remained fairly steady during the
volatile environment we saw in the fourth quarter of 1997. I found the
stock attractive during the period because of the company's plans to
introduce two new operating systems in late 1998 or early 1999 -
Windows 98 and NT 5.0. I felt the impending upgrade cycle at
corporations boded well for future profits.
Q. WHAT'S YOUR OUTLOOK FOR THE TECHNOLOGY MARKET?
A. I expect more bad news as a result of the fallout from Asia -
meaning U.S. technology exports may fall as Asian goods become
cheaper. I also anticipate more earnings disappointments, which should
continue to eat away at the multiples of many technology stocks. I
believe that 1999 may be a better year for the technology market with
the expected release of Microsoft's new operating systems. These new
product introductions should drive the requirement for more powerful
PCs and expanded bandwidth in the corporate environment.
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, 1998, more than
$691 million
MANAGER: Adam Hetnarski, since 1996; manager,
Fidelity Advisor Technology Fund, since 1996;
analyst, networking, electronics, CAD/CAM, and
technology sectors, since 1994; structured equity
analyst and portfolio manager, Fidelity
Management Trust Company, 1992-1994; joined
Fidelity in 1991
(checkmark)
TECHNOLOGY PORTFOLIO
INVESTMENTS FEBRUARY 28, 1998
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 85.9%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 1.0%
AIRCRAFT - 1.0%
Gulfstream Aerospace Corp. (a) 172,100 $ 6,970,050
AIR TRANSPORTATION - 1.1%
AIR TRANSPORT, MAJOR NATIONAL - 1.1%
Alaska Air Group, Inc. (a) 41,100 2,263,069
Southwest Airlines Co. 186,500 5,350,219
7,613,288
APPLIANCE STORES - 0.9%
ELECTRIC APPLIANCES - WHOLESALE - 0.9%
Cellstar Corp. (a) 199,000 6,430,188
COMMUNICATIONS EQUIPMENT - 8.1%
DATACOMMUNICATIONS EQUIPMENT - 3.7%
Cisco Systems, Inc. (a) 98,950 6,518,331
IFR Systems, Inc. 134,200 2,717,550
Level One Communications, Inc. (a) 59,700 2,682,769
3Com Corp. (a) 359,400 12,848,550
Xircom, Inc. (a) 41,400 533,025
25,300,225
TELEPHONE EQUIPMENT - 4.4%
Ascend Communications, Inc. (a) 234,700 8,786,581
DSC Communications Corp. (a) 112,400 2,205,850
DSP Communications, Inc. (a) 368,300 6,514,306
Nokia Corp. AB sponsored ADR 125,900 12,684,425
30,191,162
TOTAL COMMUNICATIONS EQUIPMENT 55,491,387
COMPUTER SERVICES & SOFTWARE - 24.0%
CAD/CAM/CAE - 1.0%
Synopsys, Inc. (a) 189,356 6,615,625
COMPUTER & SOFTWARE STORES - 0.4%
Inacom Corp. (a) 60,300 1,974,825
MicroAge, Inc. (a) 75,500 972,063
2,946,888
COMPUTER SERVICES - 5.1%
Computer Sciences Corp. (a) 38,100 3,988,594
Electronic Data Systems Corp. 192,200 8,420,763
Equifax, Inc. 99,300 3,568,594
HBO & Co. 296,984 16,074,259
PsiNet, Inc. (a) 66,800 515,613
Yahoo, Inc. (a) 28,800 2,107,800
34,675,623
CUSTOM COMPUTER PROGRAMMING SERVICES - 0.1%
Keane, Inc. (a) 20,600 957,900
DATA PROCESSING - 1.2%
Affiliated Computer Services, Inc.
Class A (a) 66,500 2,140,469
First Data Corp. 172,800 5,875,200
8,015,669
ELECTRONIC INFORMATION RETRIEVAL - 0.3%
E Trade Group, Inc. (a) 80,500 2,153,375
PREPACKAGED COMPUTER SOFTWARE - 15.9%
Avant! Corp. 89,700 1,255,800
BMC Software, Inc. (a) 24,600 1,881,900
Broderbund Software, Inc. (a) 49,900 1,235,025
CBT Group PLC sponsored ADR 8,300 759,450
Cadence Design Systems, Inc. (a) 120,000 4,192,500
Computer Associates International, Inc. 68,800 3,242,200
Compuware Corp. (a) 122,500 5,160,313
SHARES VALUE (NOTE 1)
Industrial-Matematik International
Corp. (a) 24,800 $ 685,100
Intuit, Inc. (a) 33,000 1,534,500
i2 Technologies, Inc. (a) 6,500 367,656
Manugistics Group, Inc. (a) 68,000 2,711,500
Microsoft Corp. (a) 777,440 65,888,040
MicroProse, Inc. (a) 1,430,900 2,817,084
PeopleSoft, Inc. (a) 187,700 8,387,844
Platinum Technology, Inc. (a) 109,900 2,788,713
Remedy Corp. (a) 24,800 475,850
Siebel Systems, Inc. (a) 57,100 3,511,650
Systems Software Associates, Inc. (a) 107,400 798,788
USCS International, Inc. (a) 45,800 973,250
108,667,163
TOTAL COMPUTER SERVICES & SOFTWARE 164,032,243
COMPUTERS & OFFICE EQUIPMENT - 16.6%
COMPUTER EQUIPMENT - WHOLESALE - 1.0%
Ingram Micro, Inc. Class A (a) 135,800 5,245,275
Tech Data Corp. (a) 40,000 1,860,000
7,105,275
COMPUTER PERIPHERALS - 5.1%
Creative Technology Ltd. (a) 37,100 862,575
EMC Corp. (a) 283,400 10,840,050
Fore Systems, Inc. (a) 449,800 7,224,913
Madge NV (a) 113,500 737,750
SCI Systems, Inc. (a) 343,100 15,439,500
35,104,788
COMPUTER STORAGE DEVICES - 2.5%
Quantum Corp. (a) 323,500 8,127,938
SanDisk Corp. (a) 29,700 755,494
Seagate Technology (a) 341,300 8,297,856
17,181,288
COMPUTERS & OFFICE EQUIPMENT - 2.7%
Hewlett-Packard Co. 49,200 3,296,400
International Business Machines Corp. 144,200 15,059,888
18,356,288
ELECTRONIC COMPUTERS - 0.1%
Gateway 2000, Inc. (a) 8,200 360,800
MINI & MICRO COMPUTERS - 5.2%
Apple Computer, Inc. 33,200 784,350
Compaq Computer Corp. 223,500 7,165,969
Dell Computer Corp. (a) 195,200 27,303,600
35,253,919
TOTAL COMPUTERS & OFFICE EQUIPMENT 113,362,358
CONSUMER ELECTRONICS - 0.6%
RADIOS, TELEVISIONS, STEREOS - 0.6%
General Motors Corp. Class H 94,300 3,907,556
DRUGS & PHARMACEUTICALS - 3.9%
DRUGS - 3.9%
Barr Laboratories, Inc. (a) 61,800 2,101,200
Bristol-Myers Squibb Co. 18,700 1,873,506
Merck & Co., Inc. 150,900 19,249,181
Schering-Plough Corp. 41,400 3,148,988
26,372,875
ELECTRICAL EQUIPMENT - 2.5%
ELECTRICAL MACHINERY - 0.8%
General Electric Co. 74,300 5,776,825
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
ELECTRICAL EQUIPMENT - CONTINUED
TV & RADIO COMMUNICATION EQUIPMENT - 1.7%
Loral Space & Communications Ltd. (a) 450,400 $ 11,513,350
TOTAL ELECTRICAL EQUIPMENT 17,290,175
ELECTRONIC INSTRUMENTS - 2.5%
ELECTRONIC EQUIPMENT - 1.3%
Sawtek, Inc. (a) 57,100 1,463,188
Teradyne, Inc. (a) 153,000 7,219,688
8,682,876
SEMICONDUCTOR CAPITAL EQUIPMENT - 1.2%
Applied Materials, Inc. (a) 4,100 150,931
KLA-Tencor Corp. (a) 30,300 1,398,534
Lam Research Corp. (a) 233,182 6,587,392
Novellus Systems, Inc. (a) 3,300 158,194
8,295,051
TOTAL ELECTRONIC INSTRUMENTS 16,977,927
ELECTRONICS - 16.4%
CONNECTORS - 1.4%
AMP, Inc. 216,500 9,566,594
ELECTRONIC CAPACITORS - 0.3%
Maxwell Technologies, Inc. (a) 67,100 1,895,575
ELECTRONIC PARTS - WHOLESALE - 0.1%
Brightpoint, Inc. (a) 35,600 729,800
ELECTRONICS & ELECTRONIC COMPONENTS - 4.2%
Genesis Microchip, Inc. 800 10,550
Solectron Corp. (a) 599,200 28,986,300
28,996,850
SEMICONDUCTORS - 10.4%
Altera Corp. (a) 69,700 3,005,813
Applied Micro Circuits Corp. 19,100 358,125
Integrated Device Technology, Inc. (a) 127,400 1,918,963
Intel Corp. 70,100 6,287,094
Linear Technology Corp. 127,100 9,627,825
Maxim Integrated Products, Inc. (a) 222,800 8,995,550
Microchip Technology, Inc. (a) 91,400 2,210,738
Micron Technology, Inc. (a) 562,100 18,654,694
Motorola, Inc. 86,300 4,811,225
RF Micro Devices, Inc. 28,900 428,081
Texas Instruments, Inc. 79,400 4,595,275
3D Labs, Inc. Ltd. (a) 65,200 1,776,700
VLSI Technology, Inc. (a) 78,500 1,516,031
Vitesse Semiconductor Corp. (a) 127,100 6,454,297
70,640,411
TOTAL ELECTRONICS 111,829,230
INDUSTRIAL MACHINERY & EQUIPMENT - 1.9%
GENERAL INDUSTRIAL MACHINERY - 1.8%
Manitowoc Co., Inc. 73,700 2,906,544
Tyco International Ltd. 189,120 9,597,840
12,504,384
SPECIAL INDUSTRIAL MACHINERY - 0.1%
ASM Lithography Holding NV (a) 3,800 354,825
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 12,859,209
LEASING & RENTAL - 0.0%
VIDEO TAPE RENTAL - 0.0%
Hollywood Entertainment Corp. (a) 2,700 29,700
SHARES VALUE (NOTE 1)
LODGING & GAMING - 0.1%
HOTELS, MOTELS, & TOURIST COURTS - 0.1%
Sun International Hotels Ltd. Ord. (a) 9,500 $ 413,250
MEDICAL EQUIPMENT & SUPPLIES - 1.0%
MEDICAL TECHNOLOGY - 0.8%
Medtronic, Inc. 77,900 4,138,438
St. Jude Medical, Inc. (a) 42,200 1,540,300
5,678,738
X-RAY ELECTRO-MEDICAL APPARATUS - 0.2%
Guidant Corp. 19,200 1,400,400
TOTAL MEDICAL EQUIPMENT & SUPPLIES 7,079,138
METALS & MINING - 0.7%
NONFERROUS WIRE - 0.7%
AFC Cable Systems, Inc. (a) 137,500 4,889,844
PUBLISHING - 0.3%
BOOK PUBLISHING & PRINTING - 0.3%
Cognizant Corp. 40,600 2,027,463
RETAIL & WHOLESALE, MISCELLANEOUS - 1.3%
BUILDING MATERIALS - RETAIL - 0.4%
Home Depot, Inc. 41,700 2,660,981
MAIL ORDER - 0.3%
Micro Warehouse, Inc. (a) 165,000 2,268,750
RETAIL, GENERAL - 0.6%
Staples, Inc. (a) 187,200 3,954,600
TOTAL RETAIL & WHOLESALE, MISCELLANEOUS 8,884,331
SERVICES - 0.9%
BUSINESS SERVICES - 0.3%
Robert Half International, Inc. (a) 37,400 1,692,350
MANAGEMENT CONSULTING SERVICES - 0.3%
Hagler Bailly, Inc. 89,400 2,201,475
PERSONAL SERVICES - 0.0%
Cendant Corp. (a) 8,300 311,240
PERSONNEL SUPPLY SERVICES - 0.3%
Computer Horizons Corp. (a) 34,300 1,790,031
TOTAL SERVICES 5,995,096
TELEPHONE SERVICES - 2.1%
MCI Communications Corp. 292,700 13,994,719
TOTAL COMMON STOCKS
(Cost $505,333,018) 586,450,027
CONVERTIBLE BONDS - 0.3%
MOODY'S RATINGS PRINCIPAL
(UNAUDITED) (D) AMOUNT
ELECTRONIC INSTRUMENTS - 0.3%
SEMICONDUCTOR CAPITAL EQUIPMENT - 0.3%
Lam Research Corp. 5%, 9/1/02 (c)
(Cost $2,752,200) B $ 2,640,000 2,237,400
CASH EQUIVALENTS - 13.8%
SHARES
Taxable Central Cash Fund (b)
(Cost $93,924,174) 93,924,174 93,924,174
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $602,009,392) $ 682,611,601
LEGEND
1. Non-income producing
2. At period end, the seven-day yield on the Taxable Central Cash Fund
was 5.62%. 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 $2,237,400 or
0.3% of net assets.
4. Standard & Poor's credit ratings are used in the absence of a
rating by Moody's Investors Service, Inc.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $2,768,739,160 and $2,717,239,934, 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 $349,497 for the
period (see Note 4 of Notes to Financial Statements).
The fund participated in the security lending program. At the period
end, the value of securities loaned and the value of collateral
amounted to $12,546,912 and $13,481,100, 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 $4,141,000. The weighted average interest rate
was 5.9% (see Note 7 of Notes to Financial Statements).
Transactions during the period with companies that are or were
affiliates are as follows:
PURCHASES SALES DIVIDEND VALUE
AFFILIATE COST COST INCOME
Ciena Corp. $ 3,855,911 $ 9,674,051 $ - $ -
Midway Games, Inc. 908,129 1,298,355 - -
Quality Semiconductor, Inc. 132,825 32,056 - -
Softdesk, Inc. - - - -
RF Micro Devices, Inc. 1,280,701 - - -
TOTALS $ 6,177,566 $ 11,004,462 $ - $ -
INCOME TAX INFORMATION
At February 28, 1998, the aggregate cost of investment securities for
income tax purposes was $606,664,414. Net unrealized appreciation
aggregated $75,947,187, of which $90,672,248 related to appreciated
investment securities and $14,725,061 related to depreciated
investment securities.
The fund hereby designates approximately $10,489,000 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, 1999 approximately $49,633,000 of losses recognized during the
period November 1, 1997 to February 28, 1998.
A total of 1% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate
shareholders (unaudited).
The fund will notify shareholders in January 1999 of this percentage
for use in preparing 1998 income tax returns.
TECHNOLOGY PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1998
ASSETS
INVESTMENT IN $ 682,611,601
SECURITIES,
AT VALUE
(COST
$602,009
,392) -
SEE
ACCOMPAN
YING
SCHEDULE
RECEIVABLE 12,282,476
FOR
INVESTMENT
S SOLD
RECEIVABLE 18,263,134
FOR FUND
SHARES
SOLD
DIVIDENDS 118,857
RECEIVABLE
INTEREST 397,138
RECEIVABLE
REDEMPTION 2,458
FEES
RECEIVABLE
OTHER 55,933
RECEIVABLE
S
TOTAL 713,731,597
ASSETS
LIABILITIES
PAYABLE FOR $ 5,202,526
INVESTMENT
S
PURCHASED
PAYABLE FOR 2,360,302
FUND
SHARES
REDEEMED
ACCRUED 311,945
MANAGEM
ENT FEE
OTHER 451,298
PAYABLES
AND
ACCRUED
EXPENSES
COLLATERAL ON 13,481,100
SECURITIES
LOANED,
AT VALUE
TOTAL 21,807,171
LIABILITIES
NET ASSETS $ 691,924,426
NET ASSETS
CONSIST OF:
PAID IN $ 643,663,845
CAPITAL
ACCUMULATED (32,341,339)
UNDISTRIBUT
ED NET
REALIZED
GAIN (LOSS)
ON
INVESTMENT
S AND
FOREIGN
CURRENCY
TRANSACTIO
NS
NET 80,601,920
UNREALIZED
APPRECIATI
ON
(DEPRECIATI
ON) ON
INVESTMENT
S
AND ASSETS
AND
LIABILITIES
IN
FOREIGN
CURRENCIES
NET ASSETS, $ 691,924,426
FOR
13,022,7
81
SHARES
OUTSTANDIN
G
NET ASSET $53.13
VALUE AND
REDEMPTIO
N PRICE
PER SHARE
($691,92
4,426 (DIVIDED BY)
13,022,7
81 SHARES)
MAXIMUM $54.77
OFFERING
PRICE PER
SHARE
(100/97.
00 OF
$53.13)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1998
INVESTMENT $ 1,095,932
INCOME
DIVIDENDS
INTEREST 3,618,703
(INCLUDING
INCOME ON
SECURITIES
LOANED OF
$333,659
)
TOTAL 4,714,635
INCOME
EXPENSES
MANAGEMEN $ 3,293,787
T FEE
TRANSFER 3,418,061
AGENT FEES
ACCOUNTING 545,316
AND
SECURITY
LENDING
FEES
NON-INTEREST 2,293
ED
TRUSTEES'
COMPENSAT
ION
CUSTODIAN 73,149
FEES AND
EXPENSES
REGISTRATION 202,472
FEES
AUDIT 40,605
LEGAL 16,364
INTEREST 676
MISCELLANEO 4,846
US
TOTAL 7,597,569
EXPENSES
BEFORE
REDUCTIONS
EXPENSE (412,589) 7,184,980
REDUCTIONS
NET (2,470,345)
INVESTMEN
T INCOME
(LOSS)
REALIZED
AND
UNREALIZED
GAIN (LOSS)
NET REALIZED
GAIN (LOSS)
ON:
INVESTMENT 56,871,492
SECURITIES
(INCLUDING
REALIZED
LOSS OF
$648,214
ON SALES
OF
INVESTMENT
S IN
AFFILIATED
ISSUERS)
FOREIGN (252) 56,871,240
CURRENCY
TRANSACTIO
NS
CHANGE IN
NET
UNREALIZED
APPRECIATI
ON
(DEPRECIATI
ON) ON:
INVESTMENT 69,437,637
SECURITIES
ASSETS AND (289) 69,437,348
LIABILITIES
IN
FOREIGN
CURRENCIES
NET GAIN 126,308,588
(LOSS)
NET INCREASE $ 123,838,243
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
OTHER $ 2,082,341
INFORMATIO
N
SALES
CHARGES
PAID TO
FDC
SALES $ 9,476
CHARGES -
DEALERS'
PORTION
DEFERRED $ 22,926
SALES
CHARGES
WITHHELD
BY FDC
EXCHANGE $ 126,270
FEES
WITHHELD
BY FSC
EXPENSE $ 393,643
REDUCTIONS
DIRECTED
BROKERAGE
ARRANGEM
ENTS
CUSTODIA 18,010
N CREDITS
TRANSFER 936
AGENT
CREDITS
$ 412,589
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
FEBRUARY 28, FEBRUARY 28,
1998 1997
OPERATIONS $ (2,470,345) $ (3,324,717)
NET
INVESTMENT
INCOME
(LOSS)
NET 56,871,240 119,114,979
REALIZED
GAIN (LOSS)
CHANGE IN 69,437,348 (64,793,710)
NET
UNREALIZED
APPRECIATI
ON
(DEPRECIATI
ON)
NET 123,838,243 50,996,552
INCREASE
(DECREAS
E) IN NET
ASSETS
RESULTING
FROM
OPERATIO
NS
DISTRIBUTIONS
TO
SHAREHOLD
ERS
FROM NET (112,130,367) (30,475,050)
REALIZED
GAIN
IN EXCESS (29,870,994) -
OF NET
REALIZED
GAIN
TOTAL (142,001,361) (30,475,050)
DISTRIBUTIO
NS
SHARE 519,887,482 480,116,219
TRANSACTIO
NS
NET
PROCEEDS
FROM SALES
OF SHARES
REINVESTM 139,074,837 29,879,560
ENT OF
DISTRIBUTIO
NS
COST OF (428,139,579) (536,349,238)
SHARES
REDEEMED
NET 230,822,740 (26,353,459)
INCREASE
(DECREAS
E) IN NET
ASSETS
RESULTING
FROM
SHARE
TRANSACTI
ONS
REDEMPTIO 820,601 1,250,125
N FEES
TOTAL 213,480,223 (4,581,832)
INCREASE
(DECREASE)
IN NET
ASSETS
NET ASSETS
BEGINNING 478,444,203 483,026,035
OF PERIOD
END OF $ 691,924,426 $ 478,444,203
PERIOD
OTHER
INFORMATION
SHARES
SOLD 9,533,953 8,803,236
ISSUED IN 2,923,252 541,096
REINVESTME
NT OF
DISTRIBUTIO
NS
REDEEMED (7,726,118) (9,887,922)
NET 4,731,087 (543,590)
INCREASE
(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>
YEARS ENDED FEBRUARY 28, YEAR ENDED YEARS ENDED FEBRUARY 28,
FEBRUARY 29,
SELECTED PER-SHARE DATA 1998 1997 1996 1995 1994
</TABLE>
NET ASSET $ 57.70 $ 54.67 $ 42.05 $ 41.83 $ 34.62
VALUE,
BEGINNING
OF PERIOD
INCOME FROM
INVESTMENT
OPERATION
S
NET (.25) (.39) (.28) (.39) (.24) E
INVESTMENT
INCOME
(LOSS) C
NET 11.29 6.95 20.83 1.95 11.04
REALIZED
AND
UNREALIZED
GAIN (LOSS)
TOTAL FROM 11.04 6.56 20.55 1.56 10.80
INVESTMENT
OPERATIONS
LESS
DISTRIBUTIO
NS
FROM NET - - - - (.13)
INVESTMENT
INCOME
FROM NET (12.39) (3.68) (8.05) (1.50) (3.70)
REALIZED
GAIN
IN EXCESS (3.30) - - - -
OF NET
REALIZED
GAIN
TOTAL (15.69) (3.68) (8.05) (1.50) (3.83)
DISTRIBUTIO
NS
REDEMPTION .08 .15 .12 .16 .24
FEES
ADDED TO
PAID IN
CAPITAL
NET ASSET $ 53.13 $ 57.70 $ 54.67 $ 42.05 $ 41.83
VALUE, END
OF PERIOD
TOTAL 24.92% 12.64% 50.71% 4.61% 35.62%
RETURN A, B
RATIOS AND
SUPPLEME
NTAL DATA
NET ASSETS, $ 691,924 $ 478,444 $ 483,026 $ 229,761 $ 202,475
END OF
PERIOD
(000
OMITTED)
RATIO OF 1.38% 1.49% 1.40% 1.57% 1.55%
EXPENSES
TO AVERAGE
NET ASSETS
RATIO OF 1.30% D 1.44% D 1.39% D 1.56% D 1.54% D
EXPENSES
TO AVERAGE
NET ASSETS
AFTER
EXPENSE
REDUCTIONS
RATIO OF NET (.45)% (.72)% (.52)% (.98)% (.65)%
INVESTMENT
INCOME
(LOSS) TO
AVERAGE
NET ASSETS
PORTFOLIO 556% 549% 112% 102% 213%
TURNOVER
RATE
AVERAGE $ .0436 $ .0191
COMMISSIO
N RATE F
<TABLE>
<CAPTION>
<S> <C>
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. 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 INVESTMENT INCOME (LOSS) PER SHARE REFLECTS DIVIDENDS
RECEIVED IN ARREARS WHICH AMOUNTED TO $.03 PER SHARE. 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>
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). Load adjusted returns include a 3.00% sales
charge and the effect of a $7.50 trading fee.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 LIFE OF
FEBRUARY 28, 1998 YEAR FUND
SELECT NATURAL GAS 8.74% 41.90%
SELECT NATURAL GAS 5.40% 37.56%
(LOAD ADJ.)
S&P 500 35.01% 165.83%
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 Standard & Poor's 500 Index - a widely recognized,
unmanaged index of common stocks. This benchmark includes 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, 1998 YEAR FUND
SELECT NATURAL GAS 8.74% 7.47%
SELECT NATURAL GAS 5.40% 6.78%
(LOAD ADJ.)
S&P 500 35.01% 22.28%
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 LONG-TERM GROWTH AND
SHORT-TERM VOLATILITY. UNLIKE THE BROADER MARKET,
HOWEVER, SOME SECTORS MAY NOT HAVE A HISTORY
OF GROWTH IN THE LONG RUN. AND, AS WITH ALL STOCK
FUNDS, THE SHARE PRICE AND RETURN OF A FUND THAT
INVESTS IN A SECTOR WILL VARY. THAT MEANS IF YOU
SELL YOUR SHARES DURING A SECTOR DOWNTURN, YOU
MIGHT LOSE MONEY. BUT IF YOU CAN IDENTIFY A
SECTOR THAT IS ABOUT TO EXPERIENCE RAPID GROWTH
YOU MAY HAVE THE POTENTIAL FOR ABOVE-AVERAGE
GAINS.
(CHECKMARK)
$10,000 OVER LIFE OF FUND
IMAHDR PRASUN SHR__CHT 19980228 19980306 101249 S00000000000001
NATURAL GAS S&P 500
00513 SP001
1993/04/21 9700.00 10000.00
1993/04/30 9515.70 9926.17
1993/05/31 9670.90 10192.20
1993/06/30 9952.20 10221.75
1993/07/31 9913.40 10180.87
1993/08/31 10767.00 10566.72
1993/09/30 10582.70 10485.36
1993/10/31 10010.40 10702.40
1993/11/30 9156.80 10600.73
1993/12/31 9209.91 10729.00
1994/01/31 9672.37 11093.79
1994/02/28 9327.98 10793.14
1994/03/31 8993.44 10322.56
1994/04/30 9692.05 10454.69
1994/05/31 9613.33 10626.15
1994/06/30 9662.53 10365.81
1994/07/31 9603.49 10705.81
1994/08/31 9288.63 11144.75
1994/09/30 9229.59 10871.70
1994/10/31 9554.30 11116.31
1994/11/30 8717.93 10711.46
1994/12/31 8580.06 10870.31
1995/01/31 8313.78 11152.17
1995/02/28 8856.20 11586.77
1995/03/31 9378.89 11928.70
1995/04/30 9536.79 12280.00
1995/05/31 9902.07 12770.83
1995/06/30 9665.13 13067.50
1995/07/31 9665.13 13500.82
1995/08/31 9951.43 13534.70
1995/09/30 10237.73 14105.87
1995/10/31 9793.47 14055.51
1995/11/30 10632.63 14672.55
1995/12/31 11187.09 14955.14
1996/01/31 11236.63 15464.21
1996/02/29 11256.45 15607.57
1996/03/31 11761.80 15757.87
1996/04/30 12587.74 15990.14
1996/05/31 12687.64 16402.52
1996/06/30 13356.99 16465.02
1996/07/31 12397.92 15737.59
1996/08/31 12867.47 16069.50
1996/09/30 13406.94 16973.89
1996/10/31 14376.00 17442.03
1996/11/30 15195.20 18760.47
1996/12/31 15026.99 18388.83
1997/01/31 14794.09 19537.76
1997/02/28 12657.51 19690.94
1997/03/31 12617.00 18881.84
1997/04/30 12431.17 20009.08
1997/05/31 13607.66 21227.24
1997/06/30 13097.50 22178.22
1997/07/31 13670.13 23942.94
1997/08/31 14721.67 22601.65
1997/09/30 15252.65 23839.55
1997/10/31 14825.79 23043.31
1997/11/30 13826.30 24109.98
1997/12/31 13815.88 24523.95
1998/01/31 13107.91 24795.18
1998/02/27 13756.33 26583.41
IMATRL PRASUN SHR__CHT 19980228 19980306 101250 R00000000000062
$10,000 OVER LIFE OF FUND: 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 3.00% sales charge was paid. As
the chart shows, by February 28, 1998, the value of the investment
would have grown to $13,756 - a 37.56% increase on the initial
investment, and includes the effect of a $7.50 trading fee. 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 $26,583 - a 165.83% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1998
% OF FUND'S
INVESTMENTS
BURLINGTON RESOURCES, INC. 5.9
COASTAL CORP. (THE) 5.3
ENRON OIL & GAS CO. 4.9
OCEAN ENERGY, INC. 4.9
WILLIAMS COMPANIES, INC. 4.7
ANADARKO PETROLEUM CORP. 4.6
VASTAR RESOURCES, INC. 4.0
ENRON CORP. 4.0
MCN CORP. 3.0
RIO ALTO EXPLORATION LTD. 2.9
TOP INDUSTRIES AS OF FEBRUARY 28, 1998
CRUDE PETROLEUM & GAS 52.5%
GAS TRANSMISSION 12.0%
GAS DISTRIBUTION 8.1%
GAS TRANSMISSION &
DISTRIBUTION 7.2%
PETROLEUM REFINERS 6.5%
ALL OTHERS 13.7%
ROW: 1, COL: 1, VALUE: 13.7
ROW: 1, COL: 2, VALUE: 6.5
ROW: 1, COL: 3, VALUE: 7.2
ROW: 1, COL: 4, VALUE: 8.1
ROW: 1, COL: 5, VALUE: 12.0
ROW: 1, COL: 6, VALUE: 52.5
*
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
NATURAL GAS PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
NOTE TO SHAREHOLDERS: Victor Thay became Portfolio Manager of Fidelity
Select Natural Gas Portfolio on December 1, 1997.
Q. HOW DID THE FUND PERFORM, VICTOR?
A. Performance was disappointing. For the 12 months that ended
February 28, 1998, the fund returned 8.74%. The Standard & Poor's 500
Index returned 35.01% over the same period.
Q. WHAT FACTORS CONTRIBUTED TO THE FUND'S SLUGGISH PERFORMANCE?
A. Weak demand, weather patterns and falling oil prices were key
factors. A cool summer followed by a warm El Ni<UNDEF>o winter reduced
demand for natural gas in the cooling and heating of homes.
Historically, oil and gas prices have been closely correlated, so
declining oil prices over the past six months also hurt many natural
gas stocks, particularly those companies involved in exploration and
production (E&P). In terms of the portfolio, the biggest detractor to
performance relative to the index was an overweighting in E&P stocks.
As I mentioned, mild weather resulted in weak demand for many E&P
companies' products. Additionally, increases in service and drilling
costs raised replacement costs. This drove down returns as well.
Q. WHAT TRIGGERED THE DOWNSLIDE IN OIL PRICES?
A. The main culprit was the economic disruption we saw in Asia during
the period. Asia accounts for a considerable portion of the world's
oil demand growth. When demand growth trailed off in that region
because of economic problems, oil prices were negatively affected. One
silver lining is that lower oil prices should present well-positioned
companies a number of inexpensive yet attractive acquisition
opportunities.
Q. HOW DID THE TURMOIL IN ASIA AFFECT THE FUND ITSELF?
A. Some individual positions suffered - particularly some of the E&P
companies that were involved in energy projects in Thailand or
Indonesia. One such position was Rutherford-Moran Oil Corp., an
independent energy company with significant exposure to that region.
Two others were Santa Fe Resources and Pogo Producing. While the
overall portfolio had limited exposure to Southeast Asia, the subpar
performance of these stocks played a negative role. The fund no longer
owned Rutherford-Moran and Pogo Producing at the end of the period.
Q. CAN YOU HIGHLIGHT SOME OF THE CHANGES YOU'VE MADE SINCE TAKING OVER
THE FUND?
A. One decision I made was to emphasize long-life gas reserve
companies in the E&P arena. These companies tend to be less
susceptible to short-term commodity price swings. With commodity
prices as volatile as they were, my hunch was that these types of
companies would offer a degree of stability. I also increased the
fund's holdings in local gas distribution companies and integrated
pipelines, many of which have more domestically oriented business
exposure. The fund's stake in MCN Corp. was an example of this
strategy.
Q. WHICH STOCKS PERFORMED WELL? WHICH TURNED OUT TO BE DISAPPOINTING?
A. The fund's second-largest position at the end of the period -
pipeline company Coastal Corp. - contributed positive gains. The
company benefited from rapid production growth in its E&P division and
the potential earnings power of its refineries. Exploration and
production company Anadarko Petroleum also performed well. On the
other side of the coin, Chesapeake Energy subtracted from performance.
The company built its production up rapidly based on high success
rates in the short reserve life of Austin Chalk - an exploration basin
located in Texas and Louisiana. However, when success rates slipped
and wells began to perform worse, the economics of the Chalk
deteriorated and the stock fell. The fund no longer owned Chesapeake
at the end of the period.
Q. WHAT'S YOUR OUTLOOK FOR THE NEXT FEW MONTHS?
A. In terms of the E&P sector, the big question will be gas demand
since supply appears fairly static. Demand is a function of weather
and the North American economy. For oil prices to recover, both Saudi
Arabia and Venezuela need to agree to slash production. From a
portfolio perspective, I may reduce the fund's weighting in local
distribution companies. Increased merger and acquisition speculation
in this area has resulted in high valuations.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET AND OTHER CONDITIONS.
FUND FACTS
START DATE: APRIL 21, 1993
FUND NUMBER: 513
TRADING SYMBOL: FSNGX
SIZE: AS OF FEBRUARY 28, 1998, MORE THAN
$59 MILLION
MANAGER: VICTOR THAY, SINCE DECEMBER 1997;
ANALYST, CANADIAN EQUITIES, 1995-1996; U.S.
AND CANADIAN EXPLORATION AND PRODUCTION
INDUSTRY, 1996-PRESENT; JOINED FIDELITY IN 1995
(CHECKMARK)
NATURAL GAS PORTFOLIO
INVESTMENTS FEBRUARY 28, 1998
SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENT IN SECURITIES
COMMON STOCKS - 96.5%
SHARES VALUE (NOTE 1)
AUTOS, TIRES, & ACCESSORIES - 1.3%
PETROLEUM - WHOLESALE - 1.3%
NGC Corp. 50,000 $ 774,997
ENERGY SERVICES - 3.4%
DRILLING - 3.4%
Diamond Offshore Drilling, Inc. 18,800 851,875
Noble Drilling Corp. (a) 40,600 1,152,025
2,003,900
GAS - 27.3%
GAS DISTRIBUTION - 8.1%
Aquila Gas Pipeline Corp. 16,200 195,413
Atmos Energy Corp. 40,000 1,147,500
MCN Corp. 48,400 1,781,725
NUI Corp. 3,400 89,888
National Fuel Gas Co. 12,400 578,150
Pacific Enterprises 26,800 973,175
4,765,851
GAS TRANSMISSION - 12.0%
Enron Corp. 50,000 2,350,000
Leviathan Gas Pipeline Partners LP unit 30,100 876,663
Nova Corp. 36,700 404,699
TransCanada PipeLines Ltd. 27,100 608,144
Williams Companies, Inc. 84,800 2,771,900
7,011,406
GAS TRANSMISSION & DISTRIBUTION - 7.2%
Consolidated Natural Gas Co. 29,200 1,679,000
El Paso Natural Gas Co. 20,400 1,354,050
Equitable Resources, Inc. 23,900 752,850
Midcoast Energy Resources, Inc. 17,930 415,752
4,201,652
TOTAL GAS 15,978,909
OIL & GAS - 64.5%
CRUDE PETROLEUM & GAS - 52.5%
Anadarko Petroleum Corp. 42,175 2,720,288
Apache Corp. 31,225 1,061,650
Brown (Tom), Inc. 35,900 711,269
Burlington Resources, Inc. 77,072 3,448,972
Cabot Oil & Gas Corp. Class A 47,900 1,005,900
Canadian Natural Resources Ltd. 32,900 658,578
Devon Energy Corp. 13,600 463,250
Enron Oil & Gas Co. 135,000 2,885,625
HS Resources, Inc. (a) 51,000 714,000
Louis Dreyfus Natural Gas Corp. (a) 40,000 722,500
Magnum Hunter Resources, Inc. (a) 60,000 285,000
Newfield Exploration Co. (a) 31,100 746,400
Nuevo Energy Corp. (a) 16,200 581,175
Ocean Energy, Inc. (a) 61,000 2,851,750
Oryx Energy Co. (a) 52,100 1,325,294
Paramount Resources Ltd. 59,400 615,382
Penn West Petroleum Ltd. (a) 36,700 411,143
Petrobras PN (Pfd. Reg.) 1,500,000 339,823
Plains Resources, Inc. (a) 30,000 474,375
Renaissance Energy Ltd. (a) 38,700 788,270
Rio Alto Exploration Ltd. (a) 160,000 1,685,689
St. Mary Land & Exploration Co. 10,000 362,500
Santa Fe Energy Resources, Inc. 51,300 573,919
Suncor, Inc. 7,500 275,241
Ulster Petroleums Ltd. (a) 181,900 1,609,791
SHARES VALUE (NOTE 1)
Vastar Resources, Inc. 63,400 $ 2,357,688
Vintage Petroleum, Inc. 55,700 1,117,481
30,792,953
OIL & GAS EXPLORATION - 5.5%
Anderson Exploration Ltd. (a) 62,900 742,209
Berkley Petroleum Corp. (a) 30,000 300,263
Denbury Resources, Inc. (a) 21,200 355,877
Phillips Petroleum Co. 17,000 833,000
USX-Marathon Group 28,400 981,575
3,212,924
PETROLEUM REFINERS - 6.5%
Coastal Corp. (The) 48,700 3,098,538
Royal Dutch Petroleum Co. 11,400 619,163
Ultramar Diamond Shamrock Corp. 3,000 107,063
3,824,764
TOTAL OIL & GAS 37,830,641
TOTAL COMMON STOCKS
(Cost $54,027,252) 56,588,447
CASH EQUIVALENTS - 3.5%
Taxable Central Cash Fund (b)
(Cost $2,041,362) 2,041,362 2,041,362
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $56,068,614) $ 58,629,809
LEGEND
1. Non-income producing
2. At period end, the seven-day yield on the Taxable Central Cash Fund
was 5.62%. 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 $87,645,816 and $114,269,216, 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 $38,095 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 the loan was
outstanding amounted to $2,919,000. The weighted average interest rate
was 6.0%. (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 83.9%
Canada 14.4
Netherlands 1.1
Others (individually less than 1%) 0.6
TOTAL 100.0%
INCOME TAX INFORMATION
At February 28, 1998, the aggregate cost of investment securities for
income tax purposes was $56,282,498. Net unrealized appreciation
aggregated $2,347,311, of which $4,711,768 related to appreciated
investment securities and $2,364,457 related to depreciated investment
securities.
The fund hereby designates approximately $2,028,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 100% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate
shareholders (unaudited).
The fund will notify shareholders in January 1999 of this percentage
for use in preparing 1998 income tax returns.
NATURAL GAS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1998
ASSETS
INVESTMENT IN $ 58,629,809
SECURITIES,
AT VALUE
(COST
$56,068,
614) -
SEE
ACCOMPAN
YING
SCHEDULE
RECEIVABLE 1,590,224
FOR
INVESTMENT
S SOLD
RECEIVABLE 160,783
FOR FUND
SHARES
SOLD
DIVIDENDS 60,457
RECEIVABLE
INTEREST 11,251
RECEIVABLE
REDEMPTION 210
FEES
RECEIVABLE
TOTAL 60,452,734
ASSETS
LIABILITIES
PAYABLE FOR $ 492,429
FUND
SHARES
REDEEMED
ACCRUED 29,524
MANAGEM
ENT FEE
OTHER 64,916
PAYABLES
AND
ACCRUED
EXPENSES
TOTAL 586,869
LIABILITIES
NET ASSETS $ 59,865,865
NET ASSETS
CONSIST OF:
PAID IN $ 57,216,079
CAPITAL
UNDISTRIBUTE 297,648
D NET
INVESTMENT
INCOME
ACCUMULATED (209,057)
UNDISTRIBUT
ED NET
REALIZED
GAIN (LOSS)
ON
INVESTMENT
S AND
FOREIGN
CURRENCY
TRANSACTIO
NS
NET 2,561,195
UNREALIZED
APPRECIATI
ON
(DEPRECIATI
ON) ON
INVESTMENT
S
NET ASSETS, $ 59,865,865
FOR
4,529,09
7
SHARES
OUTSTANDIN
G
NET ASSET $13.22
VALUE AND
REDEMPTIO
N PRICE
PER SHARE
($59,865,
865 (DIVIDED BY)
4,529,09
7 SHARES)
MAXIMUM $13.63
OFFERING
PRICE PER
SHARE
(100/97.
00 OF
$13.22)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1998
INVESTMENT $ 761,498
INCOME
DIVIDENDS
INTEREST 398,084
TOTAL 1,159,582
INCOME
EXPENSES
MANAGEMEN $ 489,011
T FEE
TRANSFER 846,496
AGENT FEES
ACCOUNTING 82,484
FEES AND
EXPENSES
NON-INTEREST 356
ED
TRUSTEES'
COMPENSAT
ION
CUSTODIAN 19,428
FEES AND
EXPENSES
REGISTRATION 31,951
FEES
AUDIT 24,222
LEGAL 509
INTEREST 487
MISCELLANEO 1,861
US
TOTAL 1,496,805
EXPENSES
BEFORE
REDUCTIONS
EXPENSE (30,700) 1,466,105
REDUCTIONS
NET (306,523)
INVESTMEN
T INCOME
(LOSS)
REALIZED
AND
UNREALIZED
GAIN (LOSS)
NET REALIZED
GAIN (LOSS)
ON:
INVESTMENT 1,118,644
SECURITIES
FOREIGN 1,182 1,119,826
CURRENCY
TRANSACTIO
NS
CHANGE IN 5,428,784
NET
UNREALIZED
APPRECIATI
ON
(DEPRECIATI
ON) ON
INVESTMENT
SECURITIES
NET GAIN 6,548,610
(LOSS)
NET INCREASE $ 6,242,087
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
OTHER $ 288,000
INFORMATIO
N
SALES
CHARGES
PAID TO
FDC
SALES $ 1,145
CHARGES -
DEALERS'
PORTION
DEFERRED $ 2,018
SALES
CHARGES
WITHHELD
BY FDC
EXCHANGE $ 54,930
FEES
WITHHELD
BY FSC
EXPENSE $ 30,700
REDUCTIONS
DIRECTED
BROKERAGE
ARRANGEM
ENTS
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
FEBRUARY 28, FEBRUARY 28,
1998 1997
OPERATIONS $ (306,523) $ (514,205)
NET
INVESTMENT
INCOME
(LOSS)
NET 1,119,826 7,806,794
REALIZED
GAIN (LOSS)
CHANGE IN 5,428,784 (8,433,548)
NET
UNREALIZED
APPRECIATI
ON
(DEPRECIATI
ON)
NET 6,242,087 (1,140,959)
INCREASE
(DECREAS
E) IN NET
ASSETS
RESULTING
FROM
OPERATIO
NS
DISTRIBUTIONS - (52,511)
TO
SHAREHOLDE
RS
FROM NET
INVESTMENT
INCOME
FROM NET (1,875,328) (2,534,533)
REALIZED
GAIN
IN EXCESS (210,862) -
OF NET
REALIZED
GAIN
TOTAL (2,086,190) (2,587,044)
DISTRIBUTIO
NS
SHARE 108,990,438 455,349,313
TRANSACTION
S
NET
PROCEEDS
FROM SALES
OF SHARES
REINVESTME 2,046,549 2,542,586
NT OF
DISTRIBUTION
S
COST OF (137,149,165) (434,506,274)
SHARES
REDEEMED
NET (26,112,178) 23,385,625
INCREASE
(DECREAS
E) IN NET
ASSETS
RESULTING
FROM
SHARE
TRANSACTI
ONS
REDEMPTIO 255,983 1,680,459
N FEES
TOTAL (21,700,298) 21,338,081
INCREASE
(DECREASE)
IN NET
ASSETS
NET ASSETS
BEGINNING 81,566,163 60,228,082
OF PERIOD
END OF $ 59,865,865 $ 81,566,163
PERIOD
(INCLUDIN
G
UNDISTRIB
UTED NET
INVESTME
NT
INCOME
OF
$297,64
8 AND
$168,81
4,
RESPECTIV
ELY)
OTHER
INFORMATION
SHARES
SOLD 8,021,019 33,713,794
ISSUED IN 174,767 179,967
REINVESTME
NT OF
DISTRIBUTION
S
REDEEMED (10,189,472) (32,674,374)
NET (1,993,686) 1,219,387
INCREASE
(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>
YEARS ENDED FEBRUARY 28, YEAR ENDED YEAR ENDED APRIL 21, 1993
FEBRUARY 29, FEBRUARY 28, (COMMENCEMENT
OF OPERATIONS) TO
FEBRUARY 28,
SELECTED PER-SHARE DAT A 1998 1997 1996 1995 1994
</TABLE>
NET ASSET $ 12.50 $ 11.36 $ 8.98 $ 9.48 $ 10.00
VALUE,
BEGINNING
OF PERIOD
INCOME FROM
INVESTMENT
OPERATION
S
NET (.05) (.06) .05 .03 .02
INVESTMENT
INCOME
(LOSS) D
NET 1.06 1.30 F 2.36 (.53) (.46)
REALIZED
AND
UNREALIZED
GAIN (LOSS)
TOTAL FROM 1.01 1.24 2.41 (.50) (.44)
INVESTMENT
OPERATIONS
LESS
DISTRIBUTIO
NS
FROM NET - (.01) (.05) (.02) -
INVESTMENT
INCOME
FROM NET (.30) (.29) - - (.07)
REALIZED
GAIN
IN EXCESS (.03) - - - (.06)
OF NET
REALIZED
GAIN
TOTAL (.33) (.30) (.05) (.02) (.13)
DISTRIBUTIO
NS
REDEMPTION .04 .20 .02 .02 .05
FEES
ADDED TO
PAID IN
CAPITAL
NET ASSET $ 13.22 $ 12.50 $ 11.36 $ 8.98 $ 9.48
VALUE, END
OF PERIOD
TOTAL 8.74% 12.45% 27.10% (5.06)% (3.84)%
RETURN B, C
RATIOS AND
SUPPLEME
NTAL DATA
NET ASSETS, $ 59,866 $ 81,566 $ 60,228 $ 79,894 $ 63,073
END OF
PERIOD
(000
OMITTED)
RATIO OF 1.82% 1.70% 1.68% 1.70% 1.94% A
EXPENSES
TO AVERAGE
NET ASSETS
RATIO OF 1.78% E 1.66% E 1.67% E 1.66% E 1.93% A, E
EXPENSES
TO AVERAGE
NET ASSETS
AFTER
EXPENSE
REDUCTIONS
RATIO OF NET (.37)% (.46)% .46% .30% .17% A
INVESTMENT
INCOME
(LOSS) TO
AVERAGE
NET ASSETS
PORTFOLIO 118% 283% 79% 177% 44% A
TURNOVER
RATE
AVERAGE $ .0285 $ .0361
COMMISSIO
N RATE G
<TABLE>
<CAPTION>
<S> <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 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. 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>
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). Load adjusted returns include a 3.00% sales
charge and the effect of a $7.50 trading fee. 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, 1998 YEAR YEARS YEARS
SELECT TELECOMMUNICATIONS 46.52% 161.65% 520.86%
SELECT TELECOMMUNICATIONS 42.06% 153.73% 502.17%
(LOAD ADJ.)
S&P 500 35.01% 166.84% 422.55%
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 Standard &
Poor's 500 Index - a widely recognized, unmanaged index of common
stocks. This benchmark includes 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, 1998 YEAR YEARS YEARS
SELECT TELECOMMUNICATIONS 46.52% 21.21% 20.03%
SELECT TELECOMMUNICATIONS 42.06% 20.47% 19.67%
(LOAD ADJ.)
S&P 500 35.01% 21.69% 17.98%
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 LONG-TERM GROWTH AND
SHORT-TERM VOLATILITY. 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
TELECOMMUNICATIONS S&P 500
00096 SP001
1988/02/29 9700.00 10000.00
1988/03/31 9742.62 9691.00
1988/04/30 10059.26 9798.57
1988/05/31 10187.13 9883.82
1988/06/30 10716.89 10337.48
1988/07/31 10564.66 10298.20
1988/08/31 10174.95 9948.06
1988/09/30 10802.13 10371.85
1988/10/31 11021.34 10660.19
1988/11/30 11118.77 10507.75
1988/12/31 11498.29 10691.63
1989/01/31 12431.41 11474.26
1989/02/28 12480.52 11188.55
1989/03/31 12990.06 11449.25
1989/04/30 13972.29 12043.46
1989/05/31 15003.64 12531.22
1989/06/30 14637.10 12459.79
1989/07/31 15748.31 13584.91
1989/08/31 16124.89 13851.18
1989/09/30 16717.54 13794.39
1989/10/31 16124.89 13474.36
1989/11/30 16532.34 13749.23
1989/12/31 17348.82 14079.22
1990/01/31 15467.39 13134.50
1990/02/28 15409.80 13303.94
1990/03/31 15768.16 13656.49
1990/04/30 14840.25 13315.08
1990/05/31 16401.71 14613.30
1990/06/30 16075.33 14513.93
1990/07/31 15339.40 14467.48
1990/08/31 13553.96 13159.62
1990/09/30 12677.24 12518.75
1990/10/31 13118.80 12464.92
1990/11/30 13867.54 13270.15
1990/12/31 14504.21 13640.39
1991/01/31 15019.65 14235.11
1991/02/28 15522.05 15252.92
1991/03/31 15959.20 15622.04
1991/04/30 16298.48 15659.53
1991/05/31 16468.12 16336.03
1991/06/30 15783.03 15587.84
1991/07/31 16676.90 16314.23
1991/08/31 17172.77 16700.88
1991/09/30 17394.61 16421.97
1991/10/31 18079.69 16642.03
1991/11/30 17388.09 15971.35
1991/12/31 18979.01 17798.47
1992/01/31 19005.38 17467.42
1992/02/29 19242.70 17694.50
1992/03/31 18563.70 17349.46
1992/04/30 19262.47 17859.53
1992/05/31 19038.34 17947.04
1992/06/30 18596.19 17679.63
1992/07/31 19594.07 18402.73
1992/08/31 19362.77 18025.47
1992/09/30 19739.45 18238.17
1992/10/31 19937.71 18302.01
1992/11/30 20975.23 18926.11
1992/12/31 21886.23 19158.90
1993/01/31 21818.91 19319.83
1993/02/28 23017.23 19582.58
1993/03/31 23959.73 19995.77
1993/04/30 24010.28 19511.88
1993/05/31 24976.77 20034.79
1993/06/30 26053.71 20092.89
1993/07/31 26813.09 20012.52
1993/08/31 28835.81 20771.00
1993/09/30 29250.02 20611.06
1993/10/31 30092.24 21037.71
1993/11/30 27627.70 20837.85
1993/12/31 28389.86 21089.99
1994/01/31 28964.61 21807.05
1994/02/28 28057.11 21216.08
1994/03/31 27179.85 20291.06
1994/04/30 27664.98 20550.78
1994/05/31 27502.51 20887.82
1994/06/30 27479.30 20376.06
1994/07/31 29003.35 21044.40
1994/08/31 29846.61 21907.22
1994/09/30 29498.48 21370.49
1994/10/31 30906.48 21851.33
1994/11/30 29266.39 21055.50
1994/12/31 29616.05 21367.76
1995/01/31 30026.95 21921.82
1995/02/28 30295.61 22776.12
1995/03/31 30674.90 23448.24
1995/04/30 31628.28 24138.79
1995/05/31 32491.61 25103.62
1995/06/30 34056.88 25686.77
1995/07/31 36219.23 26538.55
1995/08/31 37292.33 26605.16
1995/09/30 38518.73 27727.90
1995/10/31 36905.04 27628.91
1995/11/30 37719.96 28841.82
1995/12/31 38399.02 29397.31
1996/01/31 38670.82 30398.00
1996/02/29 38110.25 30679.78
1996/03/31 37931.88 30975.23
1996/04/30 39702.86 31431.81
1996/05/31 40583.92 32242.43
1996/06/30 40996.92 32365.28
1996/07/31 37894.85 30935.38
1996/08/31 38684.13 31587.81
1996/09/30 39822.17 33365.57
1996/10/31 39032.88 34285.79
1996/11/30 40216.81 36877.45
1996/12/31 40472.45 36146.91
1997/01/31 40747.77 38405.37
1997/02/28 41101.75 38706.47
1997/03/31 37640.55 37116.02
1997/04/30 38818.18 39331.84
1997/05/31 44343.43 41726.37
1997/06/30 46787.88 43595.71
1997/07/31 47737.37 47064.62
1997/08/31 45404.04 44428.06
1997/09/30 51292.93 46861.38
1997/10/31 50050.50 45296.21
1997/11/30 52121.21 47392.97
1997/12/31 50925.63 48206.71
1998/01/31 55213.63 48739.88
1998/02/27 60217.00 52255.00
IMATRL PRASUN SHR__CHT 19980228 19980318 102209 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Telecommunications Portfolio on February
29, 1988, and the current 3.00% sales charge was paid. As the chart
shows, by February 28, 1998, the value of the investment would have
grown to $60,217 - a 502.17% increase on the initial investment, and
includes the effect of a $7.50 trading fee. 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 $52,255 - a 422.55% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1998
% OF FUND'S
INVESTMENTS
WORLDCOM, INC. 8.6
MCI COMMUNICATIONS CORP. 7.5
TEL-SAVE HOLDINGS, INC. 6.6
AT&T CORP. 5.0
GLOBAL TELESYSTEMS GROUP, INC. 3.6
CISCO SYSTEMS, INC. 3.5
LORAL SPACE & COMMUNICATIONS LTD. 3.4
ALCATEL ALSTHOM COMPAGNIE GENERALE 3.3
D'ELECTRICITE SA
NEXTEL COMMUNICATIONS, INC. CLASS A 3.0
SUPERIOR TELECOM, INC. 2.4
TOP INDUSTRIES AS OF FEBRUARY 28, 1998
ROW: 1, COL: 1, VALUE: 33.0
ROW: 1, COL: 2, VALUE: 3.9
ROW: 1, COL: 3, VALUE: 4.8
ROW: 1, COL: 4, VALUE: 4.9
ROW: 1, COL: 5, VALUE: 6.5
ROW: 1, COL: 6, VALUE: 46.9
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 46.9%
DATACOMMUNICATIONS
EQUIPMENT 6.5%
TV & RADIO COMMUNICATION
EQUIPMENT 4.9%
CELLULAR & COMMUNICATION
SERVICES 4.8%
CABLE TV OPERATORS 3.9%
ALL OTHERS 33.0%
*
* 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. For the 12 months that ended February 28, 1998, the fund had a
total return of 46.52%, while the Standard & Poor's 500 Index returned
35.01%.
Q. WHAT FACTORS ENABLED THE FUND TO BEAT THE INDEX BY SUCH A WIDE
MARGIN?
A. Telecommunications stocks in general - and many of the fund's core
holdings in particular - enjoyed a strong rally in the fourth quarter
of 1997, benefiting from investors' preference for the stocks of
companies perceived to have minimal exposure to earnings disruptions
due to the Asian currency crisis. In contrast, the general market
faltered in the fourth quarter after advancing sharply from April
through the end of July. Moreover, deregulation has created a
favorable business environment for telecommunications firms -
especially newer companies, which tend to have more to gain and less
to lose than established firms. This scenario certainly was reflected
in the long-distance telephone service market, as the industry
continued to consolidate, further solidifying the competitive position
of one of the most dominant newcomers - and the fund's largest holding
for much of the period - WorldCom. In addition, 1997 was a good year
for competitive local exchange companies (CLECs) - low cost providers
of phone services to small and medium-sized businesses. Many of them
were able to increase their market share at the expense of the
incumbent local service providers - the regional Bell operating
companies (RBOCs).
Q. THE TELECOMMUNICATIONS SECTOR ALSO INCLUDES EQUIPMENT AND CELLULAR
COMPANIES. WHAT WAS YOUR VIEW ON THOSE AREAS?
A. The fund owned some equipment companies, but I wasn't guided by any
overriding themes there. I just looked for companies with compelling
stories. With respect to cellular companies, I limited the fund's
exposure because of my concerns about the extremely intense
competition for that business.
Q. AT THE END OF THE PERIOD, THE FUND HAD APPROXIMATELY 15% OF ITS
HOLDINGS IN CASH AND SHORT-TERM INVESTMENTS. WHY WAS THAT NUMBER SO
HIGH?
A. The fund has performed well recently, attracting large cash
inflows. I plan to be patient and invest the money gradually, as I see
opportunities arise. Until the new cash reserves are fully invested,
the fund will maintain a higher-than-normal cash level.
Q. WHAT STOCKS DID WELL FOR THE FUND DURING THE PERIOD?
A. WorldCom performed well. The company has grown its market share and
reduced costs through internal growth and acquisitions, most notably
MCI Communications. Tel-Save Holdings is another stock that helped the
fund's performance. Investors were enthusiastic about the company's
competitive position in light of its exclusive right to provide
long-distance phone service through the popular America Online
network. Brooks Fiber Properties also did well, benefiting from rapid
growth and increased investor interest in the CLEC sector. McLeodUSA
performed well based on the company's ability to rapidly gain market
share from incumbents US WEST Communications and Ameritech.
Q. WHAT STOCKS WERE DISAPPOINTMENTS?
A. Motorola had a series of disappointing earnings announcements
throughout the period. Since stock prices tend to follow earnings,
Motorola stock struggled. APT Satellite Holdings was a victim of the
instability in Asia. The company is based in Asia, as are most of its
customers, and many investors were concerned about possible
disruptions to the company's revenue stream. While the vast majority
of the fund's holdings were stocks of U.S.- based companies, in some
cases the added risk of a foreign investment seemed justified by the
potential profitability. APT was one of those cases.
Q. WHAT'S YOUR OUTLOOK, NICK?
A. I believe that new entrants in the telecommunications sector will
continue to have a big advantage over the incumbents - both because of
their ability to grow more rapidly than the older, more established
firms, and also because they are more likely to be acquired. Both of
these scenarios bode well for a company's stock price. The theme of
pursuing young, aggressive companies, more than any other, will
characterize how I manage the fund's assets.
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, 1998, MORE THAN
$643 MILLION
MANAGER: NICK THAKORE, SINCE 1996; MANAGER
FIDELITY UTILITIES FUND, FIDELITY ADVISOR UTILITIES
GROWTH FUND AND FIDELITY SELECT UTILITIES GROWTH
PORTFOLIO, SINCE AUGUST 1997; ANALYST, VARIOUS
INDUSTRIES, 1993-1996; JOINED FIDELITY IN 1993
(CHECKMARK)
TELECOMMUNICATIONS PORTFOLIO
INVESTMENTS FEBRUARY 28, 1998
SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENT IN SECURITIES
COMMON STOCKS - 84.8%
SHARES VALUE (NOTE 1)
BROADCASTING - 5.6%
CABLE TV OPERATORS - 3.9%
Alphanet Telecom, Inc. (a) 333,500 $ 3,982,090
Cable Michigan, Inc. (a) 26,275 643,738
Cox Communications, Inc. Class A (a) 162,200 6,254,838
RCN Corp. 118,900 6,985,375
Tele-Communications, Inc. (a):
(TCI Group), Series A 157,500 4,577,344
(TCI Ventures Group), Series A 352,200 5,437,088
27,880,473
COMMUNICATIONS SERVICES, NEC - 1.7%
APT Satellite Holdings Ltd.
sponsored ADR (a) 1,096,000 12,193,000
TOTAL BROADCASTING 40,073,473
CELLULAR - 4.8%
CELLULAR & COMMUNICATION SERVICES - 4.8%
Cellular Communications
International, Inc. (a) 52,500 2,506,875
Mobile Telecommunications
Technologies, Inc. (a) 105,000 2,362,500
Nextel Communications, Inc. Class A (a) 715,500 21,151,969
Teleglobe, Inc. 149,600 5,400,836
Vodafone Group PLC sponsored ADR 33,100 2,929,350
34,351,530
COMMUNICATIONS EQUIPMENT - 9.4%
DATACOMMUNICATIONS EQUIPMENT - 6.5%
Cabletron Systems, Inc. (a) 77,700 1,204,350
Cisco Systems, Inc. (a) 378,900 24,960,038
Davox Corp. (a) 194,400 6,220,800
3Com Corp. (a) 385,100 13,767,325
46,152,513
TELEPHONE EQUIPMENT - 2.9%
Advanced Fibre Communication, Inc. (a) 56,200 1,682,488
Dialogic Corp. (a) 68,700 2,979,863
Inter-Tel, Inc. 400 8,850
Lucent Technologies, Inc. 150,000 16,256,250
20,927,451
TELEPHONE INTERCONNECT SYSTEMS - 0.0%
Intermedia Communications, Inc. 1,200 91,650
TOTAL COMMUNICATIONS EQUIPMENT 67,171,614
COMPUTER SERVICES & SOFTWARE - 2.1%
COMPUTER SERVICES - 1.0%
America Online, Inc. (a) 38,600 4,675,425
Concentric Network Corp. 137,100 1,987,950
Electric Lightwave, Inc. Class A (a) 48,600 722,925
7,386,300
CAD/CAM/CAE - 1.1%
ICG Communications, Inc. (a) 223,400 7,511,825
TOTAL COMPUTER SERVICES & SOFTWARE 14,898,125
CONSTRUCTION - 0.1%
Kiewit Peter Son's, Inc. Class D 19,200 950,400
DEFENSE ELECTRONICS - 0.1%
DBA Systems, Inc. (a) 75,000 614,063
SHARES VALUE (NOTE 1)
ELECTRICAL EQUIPMENT - 8.3%
ELECTRICAL MACHINERY - 3.4%
Alcatel Alsthom Compagnie Generale
d'Electricite SA 183,080 $ 23,807,464
TV & RADIO COMMUNICATION EQUIPMENT - 4.9%
California Amplifier, Inc. (a)(c) 635,700 1,748,175
Globecomm Systems, Inc. 80,300 1,124,200
Loral Space & Communications Ltd. (a) 949,800 24,279,263
Titan Corp. (a)(c) 1,304,000 7,905,500
35,057,138
TOTAL ELECTRICAL EQUIPMENT 58,864,602
ELECTRONICS - 3.8%
ELECTRONIC CAPACITORS - 0.6%
Maxwell Technologies, Inc. (a) 148,100 4,183,825
ELECTRONICS & ELECTRONIC COMPONENTS - 1.1%
Alpine Group, Inc. (a) 406,400 8,102,600
SEMICONDUCTORS - 2.1%
Intel Corp. warrants 3/14/98 (a) 14,900 1,020,650
Motorola, Inc. 245,700 13,697,775
14,718,425
TOTAL ELECTRONICS 27,004,850
METALS & MINING - 2.4%
NONFERROUS ROLLING & DRAWING - 2.4%
Superior Telecom, Inc. 443,500 17,324,219
SERVICES - 0.2%
BUSINESS SERVICES - 0.2%
Sitel Corp. (a) 138,800 1,405,350
MANAGEMENT CONSULTING SERVICES - 0.0%
Hagler Bailly, Inc. 300 7,388
TOTAL SERVICES 1,412,738
PUBLISHING - 1.1%
GENERAL PUBLISHING - 1.1%
U S WEST Media Group (a) 231,000 7,435,313
TELEPHONE SERVICES - 46.9%
AT&T Corp. 585,200 35,624,050
Advanced Communications Group, Inc. 50,000 768,750
AMNEX, Inc. (a) 1,503,400 3,711,519
BCE, Inc. 403,200 14,301,387
BC Telecom, Inc. 88,000 2,982,265
Cincinnati Bell, Inc. 313,400 10,028,800
Commonwealth Telephone
Enterprises, Inc. (a) 70,100 1,962,800
Compania Anonima Nacional Telefonos
de Venezuela sponsored ADR 147,000 5,209,313
EXCEL Communications, Inc. (a) 575,119 12,113,444
France Telecom SA 3,500 169,584
GTE Corp. 284,000 15,371,500
Global Telesystems Group, Inc. (a) 695,000 25,454,375
ITC Deltacom, Inc. 600 16,200
LCI International, Inc. 49,900 1,646,700
MCI Communications Corp. 1,120,300 53,564,344
Maritime Telegraph &
Telephone Co., Ltd. 18,400 467,835
McLeodUSA, Inc. Class A (a) 228,200 8,892,669
Newtel Enterprises Ltd. 33,200 817,320
NEXTLINK Communications, Inc.
Class A (a) 400 12,050
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
TELEPHONE SERVICES - CONTINUED
Qwest Communications
International, Inc. 2,400 $ 84,300
STAR Telecommunications, Inc. 11,400 426,075
Startec Global Communications Corp. 1,900 47,144
Tel-Save Holdings, Inc. (a) 1,692,000 46,847,250
Telegroup, Inc. 245,000 4,287,500
Teleport Communications Group, Inc.
Class A (a) 194,300 10,613,629
Telus Corp. 106,700 2,682,957
Viatel, Inc. (a)(c) 1,682,200 15,139,800
WorldCom, Inc. (a) 1,609,305 61,455,335
334,698,895
TOTAL COMMON STOCKS
(Cost $503,846,655) 604,799,822
CASH EQUIVALENTS - 15.2%
Taxable Central Cash Fund (b)
(Cost $108,580,072) 108,580,072 108,580,072
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $612,426,727) $ 713,379,894
LEGEND
1. Non-income producing
2. At period end, the seven-day yield on the Taxable Central Cash Fund
was 5.62%. The yield refers to the income earned by investing in the
fund over the seven-day period, expressed as an annual percentage.
3. Affiliated company (see Note 10 of Notes to Financial Statements).
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $691,191,157and $621,374,405 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 $81,847 for the period (see Note 4 of Notes to
Financial Statements).
The fund participated in the securities lending program. At the period
end, the value of securities loaned and the value of collateral
amounted to $61,782,580 and $63,075,000 respectively (see Note 6 of
Notes to Financial Statements).
The fund participated in the bank borrowing program. The maximum loan
and the average daily loan balances during the periods for which loans
were outstanding amounted to $5,808,000 and $4,092,143, respectively.
The weighted average interest rate paid 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 86.1%
Canada 4.3
Bermuda 3.4
France 3.4
Hong Kong 1.7
Others 1.1
TOTAL 100.0%
Transactions during the period with companies which are or were
affiliates are as follows:
PURCHASES SALES DIVIDEND VALUE
AFFILIATE COST COST INCOME
California Amplifier, Inc. $ 74,849 $ 916,275 $ - $ 1,748,175
Primus Telecommunications Group, Inc. - - - -
Titan Corp. 2,811,222 - - 7,905,500
Viatel, Inc. 518,700 643,200 - 15,139,800
TOTALS $ 3,404,771 $ 1,559,475 $ - $ 24,793,475
INCOME TAX INFORMATION
At February 28, 1998, the aggregate cost of investment securities for
income tax purposes was $616,368,089. Net unrealized appreciation
aggregated $97,011,805, of which $119,975,690 related to appreciated
investment securities and $22,963,885 related to depreciated
investment securities.
The fund hereby designates approximately $38,258,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
TELECOMMUNICATIONS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1998
ASSETS
INVESTMENT IN $ 713,379,894
SECURITIES,
AT VALUE
(COST
$612,426
,727) -
SEE
ACCOMPAN
YING
SCHEDULE
CASH 318,052
RECEIVABLE 1,519,226
FOR
INVESTMENT
S SOLD
RECEIVABLE 7,042,153
FOR FUND
SHARES
SOLD
DIVIDENDS 288,566
RECEIVABLE
INTEREST 361,416
RECEIVABLE
REDEMPTION 4,950
FEES
RECEIVABLE
OTHER 62,732
RECEIVABLE
S
TOTAL 722,976,989
ASSETS
LIABILITIES
PAYABLE FOR $ 12,330,466
INVESTMENT
S
PURCHASED
PAYABLE FOR 3,350,673
FUND
SHARES
REDEEMED
ACCRUED 293,858
MANAGEM
ENT FEE
OTHER 477,693
PAYABLES
AND
ACCRUED
EXPENSES
COLLATERAL ON 63,075,000
SECURITIES
LOANED,
AT VALUE
TOTAL 79,527,690
LIABILITIES
NET ASSETS $ 643,449,299
NET ASSETS
CONSIST OF:
PAID IN $ 503,574,138
CAPITAL
ACCUMULATED 38,929,166
UNDISTRIBUT
ED NET
REALIZED
GAIN (LOSS)
ON
INVESTMENT
S AND
FOREIGN
CURRENCY
TRANSACTIO
NS
NET 100,945,995
UNREALIZED
APPRECIATI
ON
(DEPRECIATI
ON) ON
INVESTMENT
S
AND ASSETS
AND
LIABILITIES
IN
FOREIGN
CURRENCIES
NET ASSETS, $ 643,449,299
FOR
12,057,2
60
SHARES
OUTSTANDIN
G
NET ASSET $53.37
VALUE AND
REDEMPTIO
N PRICE
PER SHARE
($643,44
9,299 (DIVIDED BY)
12,057,2
60 SHARES)
MAXIMUM $55.02
OFFERING
PRICE PER
SHARE
(100/97.
00 OF
$53.37)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1998
INVESTMENT $ 2,100,755
INCOME
DIVIDENDS
INTEREST 1,808,231
(INCLUDING
INCOME ON
SECURITIES
LOANED OF
$310,303
)
TOTAL 3,908,986
INCOME
EXPENSES
MANAGEMEN $ 2,473,329
T FEE
TRANSFER 3,082,190
AGENT FEES
ACCOUNTING 421,436
AND
SECURITY
LENDING
FEES
NON-INTEREST 2,024
ED
TRUSTEES'
COMPENSAT
ION
CUSTODIAN 75,169
FEES AND
EXPENSES
REGISTRATION 100,361
FEES
AUDIT 33,604
LEGAL 3,370
INTEREST 4,667
MISCELLANEO 42,921
US
TOTAL 6,239,071
EXPENSES
BEFORE
REDUCTIONS
EXPENSE (121,889) 6,117,182
REDUCTIONS
NET (2,208,196)
INVESTMEN
T INCOME
(LOSS)
REALIZED
AND
UNREALIZED
GAIN (LOSS)
NET REALIZED
GAIN (LOSS)
ON:
INVESTMENT 89,987,943
SECURITIES
(INCLUDING
REALIZED
LOSS OF
$1,187,7
87 ON
SALES OF
INVESTMENT
S IN
AFFILIATED
ISSUERS)
FOREIGN (218,023) 89,769,920
CURRENCY
TRANSACTIO
NS
CHANGE IN
NET
UNREALIZED
APPRECIATI
ON
(DEPRECIATI
ON) ON:
INVESTMENT 75,637,328
SECURITIES
ASSETS AND (7,172) 75,630,156
LIABILITIES
IN
FOREIGN
CURRENCIES
NET GAIN 165,400,076
(LOSS)
NET INCREASE $ 163,191,880
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
OTHER $ 1,091,356
INFORMATIO
N
SALES
CHARGES
PAID TO
FDC
SALES $ 7,304
CHARGES -
DEALERS'
PORTION
DEFERRED $ 16,675
SALES
CHARGES
WITHHELD
BY FDC
EXCHANGE $ 98,430
FEES
WITHHELD
BY FSC
EXPENSE $ 119,821
REDUCTIONS
DIRECTED
BROKERAGE
ARRANGEM
ENTS
CUSTODIA 2,068
N CREDITS
$ 121,889
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
FEBRUARY 28, FEBRUARY 28,
1998 1997
OPERATIONS $ (2,208,196) $ 1,291,317
NET
INVESTMENT
INCOME
(LOSS)
NET 89,769,920 45,424,681
REALIZED
GAIN (LOSS)
CHANGE IN 75,630,156 (11,984,796)
NET
UNREALIZED
APPRECIATI
ON
(DEPRECIATI
ON)
NET 163,191,880 34,731,202
INCREASE
(DECREAS
E) IN NET
ASSETS
RESULTING
FROM
OPERATIO
NS
DISTRIBUTIONS - (1,643,666)
TO
SHAREHOLD
ERS
FROM NET
INVESTMENT
INCOME
FROM NET (57,660,802) (63,334,526)
REALIZED
GAIN
TOTAL (57,660,802) (64,978,192)
DISTRIBUTIO
NS
SHARE 394,333,392 194,213,580
TRANSACTIO
NS
NET
PROCEEDS
FROM SALES
OF SHARES
REINVESTM 56,532,142 63,659,054
ENT OF
DISTRIBUTIO
NS
COST OF (302,046,680) (307,709,801)
SHARES
REDEEMED
NET 148,818,854 (49,837,167)
INCREASE
(DECREAS
E) IN NET
ASSETS
RESULTING
FROM
SHARE
TRANSACTI
ONS
REDEMPTIO 564,136 319,443
N FEES
TOTAL 254,914,068 (79,764,714)
INCREASE
(DECREASE)
IN NET
ASSETS
NET ASSETS
BEGINNING 388,535,231 468,299,945
OF PERIOD
END OF $ 643,449,299 $ 388,535,231
PERIOD
OTHER
INFORMATION
SHARES
SOLD 8,067,245 4,489,283
ISSUED IN 1,266,807 1,575,164
REINVESTME
NT OF
DISTRIBUTIO
NS
REDEEMED (6,572,964) (7,203,986)
NET 2,761,088 (1,139,539)
INCREASE
(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>
YEARS ENDED FEBRUARY 28, YEAR ENDED YEARS ENDED FEBRUARY 28,
FEBRUARY 29,
SELECTED PER-SHARE DATA 1998 1997 1996 1995 1994
</TABLE>
NET ASSET $ 41.80 $ 44.87 $ 38.34 $ 37.10 $ 34.19
VALUE,
BEGINNING
OF PERIOD
INCOME FROM
INVESTMENT
OPERATION
S
NET (.25) .12 F .51 .29 .25
INVESTMENT
INCOME
(LOSS) C
NET 18.20 2.92 9.15 2.54 7.00
REALIZED
AND
UNREALIZED
GAIN (LOSS)
TOTAL FROM 17.95 3.04 9.66 2.83 7.25
INVESTMENT
OPERATIONS
LESS
DISTRIBUTIO
NS
FROM NET - (.16) G (.39) (.33) (.20)
INVESTMENT
INCOME
FROM NET (6.44) (5.98) G (2.75) (1.27) (4.18)
REALIZED
GAIN
TOTAL (6.44) (6.14) (3.14) (1.60) (4.38)
DISTRIBUTIO
NS
REDEMPTION .06 .03 .01 .01 .04
FEES
ADDED TO
PAID IN
CAPITAL
NET ASSET $ 53.37 $ 41.80 $ 44.87 $ 38.34 $ 37.10
VALUE, END
OF PERIOD
TOTAL 46.52% 7.85% 25.79% 7.98% 21.90%
RETURN A, B
RATIOS AND
SUPPLEME
NTAL DATA
NET ASSETS, $ 643,449 $ 388,535 $ 468,300 $ 369,476 $ 371,025
END OF
PERIOD
(000
OMITTED)
RATIO OF 1.51% 1.51% 1.52% 1.56% 1.54%
EXPENSES
TO AVERAGE
NET ASSETS
RATIO OF 1.48% D 1.47% D 1.52% 1.55% D 1.53% D
EXPENSES
TO AVERAGE
NET ASSETS
AFTER
EXPENSE
REDUCTIONS
RATIO OF NET (.53)% .27% 1.17% .77% .64%
INVESTMENT
INCOME
(LOSS) TO
AVERAGE
NET ASSETS
PORTFOLIO 157% 175% 89% 107% 241%
TURNOVER
RATE
AVERAGE $ .0065 $ .0321
COMMISSIO
N RATE E
<TABLE>
<CAPTION>
<S> <C>
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. 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. F INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL
DIVIDEND WHICH AMOUNTED TO $.07 PER SHARE. G THE
AMOUNTS SHOWN REFLECT CERTAIN RECLASSIFICATIONS RELATED TO BOOK TO TAX DIFFERENCES.
</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). Load adjusted returns include a 3.00% sales
charge and the effect of a $7.50 trading fee.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 28, 1998 YEAR YEARS YEARS
SELECT UTILITIES GROWTH 36.20% 108.01% 349.64%
SELECT UTILITIES GROWTH 32.04% 101.70% 336.09%
(LOAD ADJ.)
S&P 500 35.01% 166.84% 422.55%
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 Standard & Poor's
500 Index - a widely recognized, unmanaged index of common stocks.
This benchmark includes 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, 1998 YEAR YEARS YEARS
SELECT UTILITIES GROWTH 36.20% 15.78% 16.22%
SELECT UTILITIES GROWTH 32.04% 15.06% 15.87%
(LOAD ADJ.)
S&P 500 35.01% 21.69% 17.98%
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 LONG-TERM GROWTH AND
SHORT-TERM VOLATILITY. 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
Utilities Growth S&P 500
00065 SP001
1988/02/29 9700.00 10000.00
1988/03/31 9424.17 9691.00
1988/04/30 9450.99 9798.57
1988/05/31 9745.97 9883.82
1988/06/30 10002.65 10337.48
1988/07/31 9970.90 10298.20
1988/08/31 9955.13 9948.06
1988/09/30 10301.95 10371.85
1988/10/31 10518.71 10660.19
1988/11/30 10499.00 10507.75
1988/12/31 10479.82 10691.63
1989/01/31 10973.46 11474.26
1989/02/28 10904.68 11188.55
1989/03/31 11090.81 11449.25
1989/04/30 11661.33 12043.46
1989/05/31 12215.67 12531.22
1989/06/30 12524.22 12459.79
1989/07/31 13210.08 13584.91
1989/08/31 13268.27 13851.18
1989/09/30 13459.48 13794.39
1989/10/31 13397.13 13474.36
1989/11/30 13837.74 13749.23
1989/12/31 14569.33 14079.22
1990/01/31 13850.21 13134.50
1990/02/28 13825.27 13303.94
1990/03/31 13750.45 13656.49
1990/04/30 13176.82 13315.08
1990/05/31 13862.68 14613.30
1990/06/30 14026.96 14513.93
1990/07/31 14142.11 14467.48
1990/08/31 13365.91 13159.62
1990/09/30 13400.03 12518.75
1990/10/31 14086.67 12464.92
1990/11/30 14457.70 13270.15
1990/12/31 14650.12 13640.39
1991/01/31 14585.52 14235.11
1991/02/28 15214.25 15252.92
1991/03/31 15386.50 15622.04
1991/04/30 15317.60 15659.53
1991/05/31 15321.91 16336.03
1991/06/30 15136.05 15587.84
1991/07/31 15628.64 16314.23
1991/08/31 15986.89 16700.88
1991/09/30 16479.48 16421.97
1991/10/31 16707.87 16642.03
1991/11/30 16900.43 15971.35
1991/12/31 17730.75 17798.47
1992/01/31 17184.97 17467.42
1992/02/29 17059.03 17694.50
1992/03/31 16881.76 17349.46
1992/04/30 17343.58 17859.53
1992/05/31 17679.44 17947.04
1992/06/30 17883.96 17679.63
1992/07/31 18834.87 18402.73
1992/08/31 18825.22 18025.47
1992/09/30 18926.58 18238.17
1992/10/31 18921.76 18302.01
1992/11/30 19052.09 18926.11
1992/12/31 19608.85 19158.90
1993/01/31 19942.40 19319.83
1993/02/28 20968.33 19582.58
1993/03/31 21534.36 19995.77
1993/04/30 21416.66 19511.88
1993/05/31 21462.60 20034.79
1993/06/30 22284.35 20092.89
1993/07/31 22539.56 20012.52
1993/08/31 23519.54 20771.00
1993/09/30 23519.54 20611.06
1993/10/31 23279.65 21037.71
1993/11/30 22141.44 20837.85
1993/12/31 22068.72 21089.99
1994/01/31 22520.90 21807.05
1994/02/28 21499.09 21216.08
1994/03/31 20723.93 20291.06
1994/04/30 21320.07 20550.78
1994/05/31 20894.39 20887.82
1994/06/30 20828.44 20376.06
1994/07/31 21427.99 21044.40
1994/08/31 21344.05 21907.22
1994/09/30 20798.46 21370.49
1994/10/31 21062.26 21851.33
1994/11/30 20300.83 21055.50
1994/12/31 20433.28 21367.76
1995/01/31 21267.16 21921.82
1995/02/28 21545.12 22776.12
1995/03/31 21631.60 23448.24
1995/04/30 22385.63 24138.79
1995/05/31 22732.02 25103.62
1995/06/30 22954.70 25686.77
1995/07/31 23573.26 26538.55
1995/08/31 24173.26 26605.16
1995/09/30 25323.78 27727.90
1995/10/31 25571.20 27628.91
1995/11/30 26134.09 28841.82
1995/12/31 27460.17 29397.31
1996/01/31 27749.96 30398.00
1996/02/29 27107.39 30679.78
1996/03/31 26868.01 30975.23
1996/04/30 27952.83 31431.81
1996/05/31 27973.06 32242.43
1996/06/30 28404.66 32365.28
1996/07/31 27163.81 30935.38
1996/08/31 27170.55 31587.81
1996/09/30 27662.85 33365.57
1996/10/31 28822.77 34285.79
1996/11/30 30178.27 36877.45
1996/12/31 30581.27 36146.91
1997/01/31 31500.80 38405.37
1997/02/28 32023.26 38706.47
1997/03/31 30323.52 37116.02
1997/04/30 31408.83 39331.84
1997/05/31 33473.70 41726.37
1997/06/30 34495.42 43595.71
1997/07/31 35317.08 47064.62
1997/08/31 33730.92 44428.06
1997/09/30 36703.18 46861.38
1997/10/31 36803.21 45296.21
1997/11/30 39032.41 47392.97
1997/12/31 39849.12 48206.71
1998/01/31 41389.93 48739.88
1998/02/27 43609.00 52255.00
IMATRL PRASUN SHR__CHT 19980228 19980318 102229 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Utilities Growth Portfolio on February 29,
1988, and the current 3.00% sales charge was paid. As the chart shows,
by February 28, 1998, the value of the investment would have grown to
$43,609 - a 336.09% increase on the initial investment, and includes
the effect of a $7.50 trading fee. 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
$52,255 - a 422.55% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1998
% OF FUND'S
INVESTMENTS
WORLDCOM, INC. 10.3
MCI COMMUNICATIONS CORP. 7.6
AT&T CORP. 6.9
TEL-SAVE HOLDINGS, INC. 5.8
U.S. WEST COMMUNICATIONS GROUP 3.7
COASTAL CORP. 3.3
TELEPORT COMMUNICATIONS GROUP, INC. CLASS A 2.9
AMERITECH CORP. 2.7
EXCEL COMMUNICATIONS, INC. 2.3
DUKE ENERGY CORP. 1.9
TOP INDUSTRIES AS OF FEBRUARY 28, 1998
TELEPHONE SERVICES 56.7%
ELECTRIC POWER 6.9%
ELECTRIC & OTHER SERVICES 5.2%
PETROLEUM REFINERS 3.3%
GAS DISTRIBUTION 3.0%
ALL OTHERS 24.9%
ROW: 1, COL: 1, VALUE: 24.9
ROW: 1, COL: 2, VALUE: 3.0
ROW: 1, COL: 3, VALUE: 3.3
ROW: 1, COL: 4, VALUE: 5.2
ROW: 1, COL: 5, VALUE: 6.9
ROW: 1, COL: 6, VALUE: 56.7
*
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
UTILITIES GROWTH PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Nick Thakore,
Portfolio Manager
of Fidelity Select
Utilities Growth Portfolio
Q. HOW DID THE FUND PERFORM, NICK?
A. For the 12 months that ended February 28, 1998, the fund had a
total return of 36.20%, while the Standard & Poor's 500 Index returned
35.01%.
Q. WHAT CONTRIBUTED TO THE FUND'S STRONG PERFORMANCE?
A. Utility stocks - including many of the telephone utility stocks
that form the fund's core holdings - were strong in the fourth quarter
of 1997. They benefited from a "flight to quality," as investors
preferred the stocks of companies perceived to have minimal exposure
to earnings disruptions stemming from the Asian currency crisis.
However, the overall market, as reflected by the S&P 500, also
advanced sharply over the period. Thus, the fund's performance was
about in line with that of the overall market.
Q. WHAT OTHER FACTORS MADE TELEPHONE UTILITIES ATTRACTIVE TO
INVESTORS?
A. Deregulation has created many opportunities both for established
telephone utility companies and especially for a number of relative
newcomers who are claiming increasingly larger shares of the
long-distance telephone service market. Looking ahead, once the
regulatory issues are sorted out, many of these companies will be in a
position to offer their customers integrated packages of
long-distance, local and cellular phone service. Investors have
responded to the potential growth in earnings that these changes might
bring, as well as the healthy earnings trends already in place at many
companies.
Q. YOU CUT BACK THE FUND'S POSITION IN GAS UTILITIES FROM ALMOST 20%
SIX MONTHS AGO TO ABOUT 7% AT THE END OF THE PERIOD. CAN YOU EXPLAIN
WHY?
A. I was not confident about the near-term direction of natural gas
prices and felt that there were more compelling opportunities in the
telephone utility sector, so I shifted some of the fund's assets from
gas utility stocks to telephone utility shares.
Q. ON THE OTHER HAND, THE FUND'S HOLDINGS OF ELECTRIC UTILITIES
REMAINED ROUGHLY UNCHANGED FROM WHAT THEY WERE SIX MONTHS AGO . . .
A. Electric utility stocks benefited from the flight to quality I
mentioned earlier. Furthermore, the sector strengthened in sympathy
with the bond market, which advanced sharply in the fourth quarter as
long-term interest rates accelerated their decline. While all utility
stocks are sensitive to interest rates, electric utilities tend to be
even more so, and they responded well to this development. However,
both of these beneficial influences may be relatively short-term in
nature. I have not seen evidence that would justify any major change
in the fund's holdings of electric utilities.
Q. WHAT STOCKS DID WELL FOR THE FUND?
A. WorldCom - the fund's largest position at 10.3% of investments -
performed extremely well. The company grew its market share and
reduced costs through internal growth and acquisitions, most notably
MCI Communications. U.S. WEST Communications - the fund's number five
holding - is a regional Bell operating company (RBOC) that benefited
from a vigorous fourth-quarter rally in the stocks of local telephone
service providers. Another stock in the top 10 that helped the fund's
performance was AT&T, which was helped by improved earnings trends and
investors' confidence in the abilities of the company's new CEO.
Q. WHICH OF THE FUND'S HOLDINGS PROVED TO BE DISAPPOINTMENTS?
A. The fund's relatively large position in Bell Canada International,
combined with the stock's lackluster performance, proved to be a drag
on performance. Bell Canada suffered along with its subsidiary,
Northern Telecom, which was part of a generally weak
telecommunications equipment group. In addition, EXCEL Communications
posted earnings that were short of Wall Street's expectations,
primarily because of higher-than-expected marketing costs. The stock
suffered as a result.
Q. WHAT'S YOUR OUTLOOK, NICK?
A. I don't foresee much change for the fund's positioning. I will
continue to emphasize telephone utility stocks because, based on
current and projected price-to-earnings multiples, I think they offer
better growth potential than the shares of electric and gas companies.
Within the telephone utility group, I will maintain my strategy of
favoring newer companies over established ones because of the
newcomers' greater potential for growth in earnings and share prices.
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, 1998, MORE THAN
$401 MILLION
MANAGER: NICK THAKORE, SINCE AUGUST 1997;
MANAGER FIDELITY SELECT TELECOMMUNICATIONS
PORTFOLIO, SINCE 1996; FIDELITY UTILITIES FUND
AND FIDELITY ADVISOR UTILITIES GROWTH FUND,
SINCE AUGUST 1997; ANALYST, VARIOUS INDUSTRIES,
1993-1996; JOINED FIDELITY IN 1993
(CHECKMARK)
UTILITIES GROWTH PORTFOLIO
INVESTMENTS FEBRUARY 28, 1998
SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENT IN SECURITIES
COMMON STOCKS - 88.4%
SHARES VALUE (NOTE 1)
BROADCASTING - 0.4%
CABLE TV OPERATORS - 0.4%
Tele-Communications, Inc. (a):
(TCI Group), Series A 2,736 $ 79,516
(TCI Ventures Group), Series A 103,128 1,592,026
TCI Satellite Entertainment, Inc.
Class A (a) 450 3,009
1,674,551
CELLULAR - 1.0%
CELLULAR & COMMUNICATION SERVICES - 1.0%
AirTouch Communications, Inc. (a) 12,300 552,731
Cellnet Data Systems, Inc. (a) 23,700 207,375
Teleglobe, Inc. 50,000 1,805,092
Telephone & Data Systems, Inc. 7,743 337,304
Vodafone Group PLC sponsored ADR 14,400 1,274,400
4,176,902
COAL - 0.3%
MAPCO, Inc. 21,500 1,156,969
COMMUNICATIONS EQUIPMENT - 1.5%
TELEPHONE EQUIPMENT - 1.3%
Lucent Technologies, Inc. 52,456 5,684,919
TELEPHONE INTERCONNECTING SYSTEMS - 0.2%
Intermedia Communications, Inc. (a) 11,300 863,038
TOTAL COMMUNICATIONS EQUIPMENT 6,547,957
COMPUTER SERVICES & SOFTWARE - 1.6%
COMPUTER SERVICES - 0.2%
Electric Lightwave, Inc. Class A (a) 50,000 743,750
CAD/CAM/CAE - 1.3%
ICG Communications, Inc. (a) 174,200 5,857,475
DATA PROCESSING - 0.1%
NCR Corp. (a) 10,156 318,645
TOTAL COMPUTER SERVICES & SOFTWARE 6,919,870
ELECTRIC UTILITY - 12.8%
COMBINATION UTILITIES, NEC - 0.7%
Citizens Utilities Co. Class B 307,364 2,881,538
ELECTRIC & OTHER SERVICES - 5.2%
CMS Energy Corp. 41,700 1,845,225
Consolidated Edison, Inc. 140,900 5,988,250
DPL, Inc. 47,400 862,088
Enova Corp. 26,900 685,950
Hidroelectrica de Cantabrico SA 10,150 433,727
IES Industries, Inc. 9,600 347,400
LG&E Energy Corp. 8,300 198,681
Montana Power Co. 85,800 2,745,600
NIPSCO Industries, Inc. 50,000 1,284,375
New York State Electric & Gas Corp. 112,700 4,233,294
PECO Energy Co. 30,000 592,500
PacifiCorp. 42,500 1,027,969
Public Service Co. of New Mexico 30,600 713,363
Rochester Gas & Electric Corp. 38,400 1,197,600
Sierra Pacific Resources 5,100 182,963
Utilicorp United, Inc. 3,951 142,236
WPL Holdings, Inc. 900 28,688
22,509,909
ELECTRIC POWER - 6.9%
AES Corp. (a) 41,398 1,821,512
American Electric Power Co., Inc. (a) 46,500 2,232,000
Baycorp Holdings Ltd. (a) 1,629 10,487
SHARES VALUE (NOTE 1)
Boston Edison Co. 53,100 $ 2,060,944
Central & South West Corp. 38,000 1,018,875
Central Louisiana Electric Co., Inc. 35,806 1,163,695
CESC Ltd. GDR (c) 32,600 8,150
Compania Energertica Minas Gerais 21,007,000 901,629
DQE, Inc. 28,050 930,909
Duke Energy Corp. 144,008 8,001,445
Entergy Corp. 7,700 222,819
GPU, Inc. 97,300 3,910,244
Houston Industries, Inc. 9,636 249,332
Kansas City Power & Light Co. 8,100 244,013
Korea Electric Power Corp.
sponsored ADR 19,000 203,063
New England Electric System 39,400 1,659,725
Pinnacle West Capital Corp. 64,200 2,620,163
Southern Co. 19,000 469,063
TECO Energy, Inc. 6,600 173,663
Texas Utilities Co. 39,757 1,607,674
United Illuminating Co. 7,600 350,075
29,859,480
TOTAL ELECTRIC UTILITY 55,250,927
ELECTRICAL EQUIPMENT - 1.8%
ELECTRICAL MACHINERY - 1.8%
Alcatel Alsthom Compagnie Generale
d'Electricite SA 59,000 7,672,276
GAS - 6.7%
GAS & OTHER SERVICES - 0.6%
MDU Resources Group, Inc. 49,300 1,525,219
UGI Corp. 30,751 880,247
Western Resources, Inc. 6,200 254,200
2,659,666
GAS DISTRIBUTION - 3.0%
Eastern Enterprises Co. 65,500 2,902,469
Energen Corp. 16,000 621,000
K N Energy, Inc. 48,500 2,518,969
MCN Energy Group, Inc. 91,200 3,357,300
National Fuel Gas Co. 7,400 345,025
NICOR, Inc. 8,000 329,000
Pacific Enterprises 63,300 2,298,581
Peoples Energy Corp. 9,200 332,350
WICOR, Inc. 5,600 267,750
12,972,444
GAS TRANSMISSION - 1.3%
Enron Corp. 62,696 2,946,712
Williams Companies, Inc. 74,068 2,421,098
5,367,810
GAS TRANSMISSION & DISTRIBUTION - 1.8%
Columbia Gas System, Inc. (a) 32,500 2,480,156
Consolidated Natural Gas Co. 13,000 747,500
Equitable Resources, Inc. 8,750 275,625
ONEOK, Inc. 14,483 506,905
Questar Corp. 87,300 3,710,250
7,720,436
TOTAL GAS 28,720,356
HOLDING COMPANIES - 0.3%
HOLDING COMPANY OFFICES, NEC - 0.3%
CINergy Corp. 42,206 1,469,296
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
INDEPENDENT POWER - 0.0%
STEAM SUPPLY - 0.0%
Bonneville Pacific Corp. (a) 10,700 $ 14,713
OIL & GAS - 3.9%
CRUDE PETROLEUM & GAS - 0.6%
EEX Corp. (a) 264,962 2,268,737
Nuevo Energy Corp. (a) 800 28,700
Occidental Petroleum Corp. 11,500 293,969
2,591,406
PETROLEUM REFINERS - 3.3%
Coastal Corp. (The) 223,300 14,207,463
TOTAL OIL & GAS 16,798,869
PUBLISHING - 1.4%
GENERAL PUBLISHING - 1.4%
U.S. WEST Media Group (a) 192,359 6,191,555
TELEPHONE SERVICES - 56.7%
ACC Corp. (a) 1,000 50,000
AT&T Corp. 490,500 29,859,188
Advanced Communications Group, Inc. 50,000 768,750
ALLTEL Corp. 7,000 319,813
American Communication
Services, Inc. (a) 2,100 29,400
Ameritech Corp. 283,800 11,830,913
AMNEX, Inc. (a) 1,121,700 2,769,197
BCE, Inc. 206,359 7,319,494
BC Telecom, Inc. 9,300 315,171
BellSouth Corp. 43,600 2,659,600
Cincinnati Bell, Inc. 201,500 6,448,000
Compania Anonima Nacional Telefonos
de Venezuela sponsored ADR 200,000 7,087,500
EXCEL Communications, Inc. (a) 477,700 10,061,556
France Telecom SA 2,000 96,905
Frontier Corp. 800 22,150
GST Telecommunications, Inc. (a) 64,800 926,640
GTE Corp. 43,600 2,359,850
ITC Deltacom, Inc. 300 8,100
LCI International, Inc. 31,800 1,049,400
MCI Communications Corp. 683,100 32,660,719
Maritime Telegraph & Telephone
Co., Ltd. 19,000 483,090
McLeodUSA, Inc. Class A (a) 191,500 7,462,516
Newtel Enterprises Ltd. 6,400 157,556
NEXTLINK Communications, Inc. Class A 200 6,025
SBC Communications, Inc. 25,000 1,890,625
Tel-Save Holdings, Inc. (a) 897,300 24,843,994
Telebras sponsored ADR 43,000 5,264,813
Telefonos de Mexico SA sponsored ADR
representing Ord. Class L shares 44,900 2,275,869
Teleport Communications Group, Inc.
Class A (a) 225,000 12,290,625
Telus Corp. 100,000 2,514,486
Telecom Italia Mobile Spa 700,000 3,223,818
U.S. WEST Communications Group 304,159 15,835,278
Winstar Communications, Inc. (a) 164,200 6,906,663
WorldCom, Inc. (a) 1,159,295 44,270,578
244,068,282
TOTAL COMMON STOCKS
(Cost $297,704,407) 380,662,523
CONVERTIBLE PREFERRED STOCKS - 0.4%
SHARES VALUE (NOTE 1)
ELECTRIC UTILITY - 0.4%
COMBINATION UTILITIES, NEC - 0.4%
Citizens Utilities Trust $2.50 EPPICS
(Cost $1,620,000) 32,400 $ 1,539,000
CASH EQUIVALENTS - 11.2%
Taxable Central Cash Fund (b)
(Cost $48,264,834) 48,264,834 48,264,834
TOTAL INVESTMENT IN SECURITIES - 100.0%
(Cost $347,589,241) $ 430,466,357
SECURITY TYPE ABBREVIATIONS
EPPICS - Equity Providing Preferred Income Convertible Securities
LEGEND
1. Non-income producing
2. At period end, the seven-day yield on the Taxable Central Cash Fund
was 5.62%. 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 $8,150 or 0.0%
of net assets.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $244,558,499 and $202,897,481 respectively (see Note 3 of
Notes to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of FMR. The commissions paid to these
affiliated firms were $31,628 for the period (see Note 4 of Notes to
Financial Statements).
The fund participated in the securities lending program. At the period
end, the value of securities loaned and the value of collateral
amounted to $18,064,729 and $18,602,800, respectively (see Note 6 of
Notes to Financial Statements).
INCOME TAX INFORMATION
At February 28, 1998, the aggregate cost of investment securities for
income tax purposes was $347,631,395. Net unrealized appreciation
aggregated $82,834,962 of which $86,040,940 related to appreciated
investment securities and $3,205,978 related to depreciated investment
securities.
The fund hereby designates approximately $40,954,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 50% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate
shareholders (unaudited).
A total of 0.83% 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 (unaudited).
The fund will notify shareholders in January 1999 of these percentages
for use in preparing 1998 income tax returns.
UTILITIES GROWTH PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1998
ASSETS
INVESTMENT IN $ 430,466,357
SECURITIES,
AT VALUE
(COST
$347,589
,241) -
SEE
ACCOMPAN
YING
SCHEDULE
CASH 337,878
RECEIVABLE 1,391,294
FOR
INVESTMENT
S SOLD
RECEIVABLE 1,149,490
FOR FUND
SHARES
SOLD
DIVIDENDS 358,475
RECEIVABLE
INTEREST 247,921
RECEIVABLE
REDEMPTION 531
FEES
RECEIVABLE
TOTAL 433,951,946
ASSETS
LIABILITIES
PAYABLE FOR $ 11,000,532
INVESTMENT
S
PURCHASED
PAYABLE FOR 1,962,474
FUND
SHARES
REDEEMED
ACCRUED 198,953
MANAGEM
ENT FEE
OTHER 259,960
PAYABLES
AND
ACCRUED
EXPENSES
COLLATERAL ON 18,602,800
SECURITIES
LOANED,
AT VALUE
TOTAL 32,024,719
LIABILITIES
NET ASSETS $ 401,927,227
NET ASSETS
CONSIST OF:
PAID IN $ 304,047,254
CAPITAL
UNDISTRIBUTE 677,487
D NET
INVESTMENT
INCOME
ACCUMULATED 14,325,370
UNDISTRIBUT
ED NET
REALIZED
GAIN (LOSS)
ON
INVESTMENT
S AND
FOREIGN
CURRENCY
TRANSACTIO
NS
NET 82,877,116
UNREALIZED
APPRECIATI
ON
(DEPRECIATI
ON) ON
INVESTMENT
S
NET ASSETS, $ 401,927,227
FOR
7,513,27
9 SHARES
OUTSTANDIN
G
NET ASSET $53.50
VALUE AND
REDEMPTIO
N PRICE
PER SHARE
($401,92
7,227 (DIVIDED BY)
7,513,27
9 SHARES)
MAXIMUM $55.15
OFFERING
PRICE PER
SHARE
(100/97.
00 OF
$53.50)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1998
INVESTMENT $ 5,421,489
INCOME
DIVIDENDS
INTEREST 1,186,244
(INCLUDING
INCOME ON
SECURITIES
LOANED OF
$48,060)
TOTAL 6,607,733
INCOME
EXPENSES
MANAGEMEN $ 1,639,699
T FEE
TRANSFER 1,573,271
AGENT FEES
ACCOUNTING 277,270
AND
SECURITY
LENDING
FEES
NON-INTEREST 1,594
ED
TRUSTEES'
COMPENSAT
ION
CUSTODIAN 22,417
FEES AND
EXPENSES
REGISTRATION 83,884
FEES
AUDIT 28,737
LEGAL 1,288
MISCELLANEO 5,455
US
TOTAL 3,633,615
EXPENSES
BEFORE
REDUCTIONS
EXPENSE (66,340) 3,567,275
REDUCTIONS
NET 3,040,458
INVESTMEN
T INCOME
REALIZED
AND
UNREALIZED
GAIN (LOSS)
NET REALIZED
GAIN (LOSS)
ON:
INVESTMENT 52,866,613
SECURITIES
FOREIGN (30,750) 52,835,863
CURRENCY
TRANSACTIO
NS
CHANGE IN
NET
UNREALIZED
APPRECIATI
ON
(DEPRECIATI
ON) ON:
INVESTMENT 34,220,516
SECURITIES
ASSETS AND 36 34,220,552
LIABILITIES
IN
FOREIGN
CURRENCIES
NET GAIN 87,056,415
(LOSS)
NET INCREASE $ 90,096,873
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
OTHER $ 629,220
INFORMATIO
N
SALES
CHARGES
PAID TO
FDC
SALES $ 27,336
CHARGES -
DEALERS'
PORTION
DEFERRED $ 22,382
SALES
CHARGES
WITHHELD
BY FDC
EXCHANGE $ 54,030
FEES
WITHHELD
BY FSC
EXPENSE $ 64,735
REDUCTIONS
DIRECTED
BROKERAGE
ARRANGEM
ENTS
CUSTODIA 1,301
N CREDITS
TRANSFER $ 304
AGENT
CREDITS
$ 66,340
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
FEBRUARY 28, FEBRUARY 28,
1998 1997
OPERATIONS $ 3,040,458 $ 4,110,757
NET
INVESTMENT
INCOME
NET 52,835,863 12,598,841
REALIZED
GAIN (LOSS)
CHANGE IN 34,220,552 21,791,297
NET
UNREALIZED
APPRECIATI
ON
(DEPRECIATI
ON)
NET 90,096,873 38,500,895
INCREASE
(DECREAS
E) IN NET
ASSETS
RESULTING
FROM
OPERATIO
NS
DISTRIBUTIONS (3,324,884) (3,870,074)
TO
SHAREHOLD
ERS
FROM NET
INVESTMENT
INCOME
FROM NET (43,053,193) (20,286,738)
REALIZED
GAIN
TOTAL (46,378,077) (24,156,812)
DISTRIBUTIO
NS
SHARE 235,594,493 128,552,346
TRANSACTIO
NS
NET
PROCEEDS
FROM SALES
OF SHARES
REINVESTM 45,039,264 23,344,588
ENT OF
DISTRIBUTIO
NS
COST OF (179,495,059) (176,372,790)
SHARES
REDEEMED
NET 101,138,698 (24,475,856)
INCREASE
(DECREAS
E) IN NET
ASSETS
RESULTING
FROM
SHARE
TRANSACTI
ONS
REDEMPTIO 225,357 208,569
N FEES
TOTAL 145,082,851 (9,923,204)
INCREASE
(DECREASE)
IN NET
ASSETS
NET ASSETS
BEGINNING 256,844,376 266,767,580
OF PERIOD
END OF $ 401,927,227 $ 256,844,376
PERIOD
(INCLUDIN
G
UNDISTRIB
UTED NET
INVESTME
NT
INCOME
OF
$677,4
87 AND
$1,654,
360,
RESPECTIV
ELY)
OTHER
INFORMATION
SHARES
SOLD 4,622,639 2,986,768
ISSUED IN 950,425 570,027
REINVESTME
NT OF
DISTRIBUTIO
NS
REDEEMED (3,646,680) (4,168,871)
NET 1,926,384 (612,076)
INCREASE
(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>
YEARS ENDED FEBRUARY 28, YEAR ENDED YEARS ENDED FEBRUARY 28,
FEBRUARY 29,
SELECTED PER-SHARE DATA 1998 1997 1996 1995 1994
</TABLE>
NET ASSET $ 45.97 $ 43.03 $ 34.88 $ 36.61 $ 41.49
VALUE,
BEGINNING
OF PERIOD
INCOME FROM
INVESTMENT
OPERATION
S
NET .54 .73 1.10 1.13 1.33
INVESTMENT
INCOME C
NET 14.83 6.41 7.86 (1.17) (.16)
REALIZED
AND
UNREALIZED
GAIN (LOSS)
TOTAL FROM 15.37 7.14 8.96 (.04) 1.17
INVESTMENT
OPERATIONS
LESS
DISTRIBUTIO
NS
FROM NET (.58) (.70) (.84) (1.05) (1.13)
INVESTMENT
INCOME
FROM NET (7.30) (3.54) - (.67) (4.94)
REALIZED
GAIN
TOTAL (7.88) (4.24) (.84) (1.72) (6.07)
DISTRIBUTIO
NS
REDEMPTION .04 .04 .03 .03 .02
FEES
ADDED TO
PAID IN
CAPITAL
NET ASSET $ 53.50 $ 45.97 $ 43.03 $ 34.88 $ 36.61
VALUE, END
OF PERIOD
TOTAL 36.20% 18.13% 25.82% .21% 2.53%
RETURN A, B
RATIOS AND
SUPPLEME
NTAL DATA
NET ASSETS, $ 401,927 $ 256,844 $ 266,768 $ 237,635 $ 250,522
END OF
PERIOD
(000
OMITTED)
RATIO OF 1.33% 1.47% 1.39% 1.43% 1.36%
EXPENSES
TO AVERAGE
NET ASSETS
RATIO OF 1.30% D 1.46% D 1.38% D 1.42% D 1.35% D
EXPENSES
TO AVERAGE
NET ASSETS
AFTER
EXPENSE
REDUCTIONS
RATIO OF NET 1.11% 1.73% 2.76% 3.24% 3.11%
INVESTMENT
INCOME TO
AVERAGE
NET ASSETS
PORTFOLIO 78% 31% 65% 24% 61%
TURNOVER
RATE
AVERAGE $ .0106 $ .0287
COMMISSIO
N RATE E
<TABLE>
<CAPTION>
<S> <C>
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. C NET INVESTMENT
INCOME 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>
MONEY MARKET PORTFOLIO
PERFORMANCE
PERFORMANCE
To evaluate a money market fund's historical performance, you can look
at either total return or yield. Total return reflects the change in
the 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. Load adjusted returns include a
3.00% sales charge.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 28, 1998 YEAR YEARS YEARS
SELECT MONEY MARKET 5.26% 24.88% 71.10%
SELECT MONEY MARKET 2.10% 21.13% 65.97%
(LOAD ADJ.)
ALL TAXABLE 5.14% 24.44% 69.99%
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 had 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 885
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, 1998 YEAR YEARS YEARS
SELECT MONEY MARKET 5.26% 4.54% 5.52%
SELECT MONEY MARKET 2.10% 3.91% 5.20%
(LOAD ADJ.)
ALL TAXABLE 5.14% 4.47% 5.44%
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: 5.270000000000001
ROW: 1, COL: 2, VALUE: 5.07
ROW: 1, COL: 3, VALUE: 2.58
ROW: 2, COL: 1, VALUE: 5.45
ROW: 2, COL: 2, VALUE: 5.09
ROW: 2, COL: 3, VALUE: 2.62
ROW: 3, COL: 1, VALUE: 5.09
ROW: 3, COL: 2, VALUE: 5.04
ROW: 3, COL: 3, VALUE: 2.67
ROW: 4, COL: 1, VALUE: 5.119999999999999
ROW: 4, COL: 2, VALUE: 5.02
ROW: 4, COL: 3, VALUE: 2.66
ROW: 5, COL: 1, VALUE: 4.71
ROW: 5, COL: 2, VALUE: 4.8
ROW: 5, COL: 3, VALUE: 2.63
6% -
4% -
2% -
0%
MONEY MARKET
ALL TAXABLE
MONEY MARKET
FUNDS AVERAGE
MMDA
3/3/98 12/2/97 9/2/97 6/3/97 2/25/97
SELECT
MONEY MARKET 5.27% 5.45% 5.09% 5.12% 4.71%
All Taxable
Money Market
Funds Average 5.07% 5.09% 5.04% 5.02% 4.80%
2/25/98 12/3/97 9/3/97 5/28/97 2/26/97
MMDA 2.58% 2.62% 2.67% 2.66% 2.63%
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 12
MONTHS?
A. The economy was very strong at the beginning of the period. In
fact, most market observers expected the Federal Reserve Board to
raise short-term interest rates to slow the economy in order to head
off inflation - and it did. At the end of March 1997, the Fed raised
the target for the fed funds rate - the rate banks charge each other
for overnight loans - to 5.50% from 5.25%. However, the economy began
to show some signs of cooling off in the middle of 1997 and most of
the inflation indicators, such as the producer price index (PPI) - a
measure of wholesale prices - and the consumer price index (CPI), were
trending down. At that point, many market observers began to take this
data as evidence that the Fed would not raise interest rates further.
However, when a true economic slowdown failed to materialize in the
late summer months, prices for money market securities began to price
in higher rates. And just when market observers again began to expect
an interest-rate hike, news of currency crises and bank failures in
several Southeast Asian countries emerged. The general fear that the
localized financial turmoil in Asia would spread globally caused a
major sell-off in U.S. equity markets in late October. Consequently,
rates generally fell and the prospects of further interest-rate
increases were priced out of the market.
Q. WHAT HAPPENED NEXT?
A. Talk of an interest-rate cut actually began to circulate, as fears
of a slowdown in exports emerged following the drastic cheapening of
Asian goods. This sentiment prevailed until the end of February 1998,
when Fed Chairman Alan Greenspan said the risks were balanced -
meaning the strong economy and tight labor market, along with the
global effects of the Asian financial crisis, created a state of
equilibrium. Greenspan's comments disposed of the notion of lower
interest rates and left a reality of steady monetary policy for the
near future.
Q. WHAT WAS YOUR STRATEGY?
A. At the beginning of the period, the fund's average maturity was 66
days - longer than the average of its peers - because I was buying
six-month and one-year securities to lock in attractive longer-term
rates. As the yield curve flattened - meaning little difference
existed between short-term and long-term money market rates - I
shortened the fund's maturity by investing in one-month and two- month
securities because the longer-term notes weren't offering attractive
yields. At that point, the fund's average maturity dropped to about 48
days. Finally, when short-term rates started to fall early in 1998, I
again purchased attractive longer-term securities, leaving the fund's
average maturity at 70 days at the end of the period.
Q. HOW DID THE FUND PERFORM?
A. The fund's seven-day yield on February 28, 1998, was 5.26%,
compared to 4.75% 12 months ago. For the 12 months that ended February
28, 1998, the fund had a total return of 5.26%, compared to 5.14% for
the all taxable money market funds average, according to IBC Financial
Data, Inc.
Q. WHAT'S YOUR OUTLOOK?
A. I believe that we will see a continuance of stable interest rates
throughout the first half of 1998. However, when all is said and done,
I think the effect of Asia's financial difficulties on the U.S.
economy will likely be marginal. As such, a prolonged tight labor
market should emerge as the stronger of the two factors in influencing
monetary policy. Consequently, I expect market sentiment will shift
back toward expectations of higher interest rates later in 1998.
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, 1998, more than
$584 million
MANAGER: John Todd, since 1991; manager,
Fidelity Daily Income Trust, since 1997; Fidelity
Cash Reserves, since 1997; Spartan Money
Market Fund, since 1989; short-term and money
market investments for the Fidelity Asset Manager
funds, since 1996; joined Fidelity in 1981
(checkmark)
MONEY MARKET PORTFOLIO
INVESTMENTS FEBRUARY 28, 1998
Showing Percentage of Total Value of Investment in Securities
CERTIFICATES OF DEPOSIT - 41.0%
ANNUALIZED YIELD
DUE AT TIME OF PRINCIPAL VALUE
DATE PURCHASE AMOUNT (NOTE 1)
DOMESTIC CERTIFICATES OF DEPOSIT - 0.8%
WACHOVIA BANK, NA
9/17/98 5.56% (a) $ 5,000,000 $ 4,997,954
NEW YORK BRANCH, YANKEE DOLLAR, FOREIGN BANKS - 36.7%
ABN-AMRO BANK NV
3/2/98 5.68 5,000,000 5,000,000
BANK OF MONTREAL, CANADA
5/4/98 5.52 5,000,000 5,000,000
BANK OF TOKYO - MITSUBISHI LTD.
4/20/98 6.03 7,000,000 7,000,000
BANQUE NATIONALE DE PARIS
6/4/98 5.52 5,000,000 5,000,000
BARCLAYS BANK, PLC
3/2/98 5.80 10,000,000 10,000,000
5/20/98 5.52 10,000,000 10,000,000
BAYERISCHE LANDESBANK GIROZENTRALE
3/26/98 5.53 25,000,000 25,000,000
7/17/98 5.90 5,000,000 4,999,259
BAYERISCHE VEREINSBANK AG
5/4/98 5.66 5,000,000 5,000,000
12/18/98 5.60 15,000,000 15,024,636
CANADIAN IMPERIAL BANK OF COMMERCE
8/11/98 5.52 9,000,000 9,007,684
10/6/98 5.52 20,000,000 20,020,482
CREDIT AGRICOLE INDOSUEZ
5/20/98 5.52 3,000,000 3,000,000
10/19/98 5.97 5,000,000 4,997,874
DEUTSCHE BANK, AG
4/14/98 6.25 25,000,000 24,997,127
10/26/98 6.00 15,000,000 14,994,369
LANDESBANK HESSEN-THURINGEN
6/30/98 5.79 17,000,000 17,003,429
RABOBANK NEDERLAND, COOP CENTRAL
3/20/98 6.00 5,000,000 4,999,925
3/24/98 6.05 5,000,000 4,999,819
ROYAL BANK OF CANADA
9/17/98 5.53 5,000,000 5,006,352
SANWA BANK LTD. JAPAN
4/20/98 6.20 4,000,000 4,000,000
4/27/98 6.25 2,000,000 2,000,000
SOCIETE GENERALE, FRANCE
3/9/98 5.81 5,000,000 5,000,000
3/9/98 5.85 5,000,000 5,000,000
8/24/98 5.55 5,000,000 5,000,000
SWISS BANK CORP.
8/19/98 5.91 5,000,000 4,999,104
8/28/98 5.97 5,000,000 4,998,821
232,048,881
LONDON BRANCH, EURODOLLAR, DOMESTIC BANKS - 0.8%
NATIONSBANK, NA
9/14/98 5.55 5,000,000 5,000,000
LONDON BRANCH, EURODOLLAR, FOREIGN BANKS - 2.7%
DEN DANSKE BANK GROUP A/S
4/3/98 5.75 10,000,000 10,002,362
RABOBANK NEDERLAND, COOP CENTRAL
3/9/98 5.96 5,000,000 4,999,948
ANNUALIZED YIELD
DUE AT TIME OF PRINCIPAL VALUE
DATE PURCHASE AMOUNT (NOTE 1)
WESTPAC BANKING CORP.
3/9/98 5.81% $ 2,000,000 $ 2,000,007
17,002,317
TOTAL CERTIFICATES OF DEPOSIT 259,049,152
COMMERCIAL PAPER - 29.5%
ASSOCIATES CORP. OF NORTH AMERICA
5/20/98 5.53 5,000,000 4,939,333
BANK OF MONTREAL, CANADA
5/13/98 5.53 10,000,000 9,889,385
BMW U.S. CAPITAL CORP.
4/21/98 5.52 5,000,000 4,961,467
CITIBANK CREDIT CARD MASTER TRUST I (DAKOTA CERTIFICATE PROGRAM)
3/2/98 5.70 15,000,000 14,997,625
5/20/98 5.55 5,000,000 4,939,222
COMMONWEALTH BANK OF AUSTRALIA
3/16/98 5.70 2,000,000 1,995,383
7/28/98 5.51 25,000,000 24,445,389
DAIMLER-BENZ NORTH AMERICA CORP.
5/7/98 5.52 2,000,000 1,979,695
DRESDNER U.S. FINANCE, INC.
3/2/98 5.53 5,000,000 4,999,235
EIGER CAPITAL CORP.
3/24/98 5.53 5,000,000 4,982,431
ENTERPRISE FUNDING CORP.
3/30/98 5.87 5,000,000 4,976,719
FORD MOTOR CREDIT CO.
5/11/98 5.53 5,000,000 4,946,158
GENERAL ELECTRIC CAPITAL CORP.
8/4/98 5.54 10,000,000 9,766,433
GENERAL ELECTRIC CO.
3/16/98 5.53 5,000,000 4,988,542
GENERAL MOTORS ACCEPTANCE CORP.
3/9/98 5.84 10,000,000 9,987,267
5/27/98 5.57 5,000,000 4,933,783
5/28/98 5.57 5,000,000 4,933,022
MATTERHORN CAPITAL CORP. (LOC UNION BANK OF SWITZERLAND)
3/24/98 5.53 5,000,000 4,982,431
3/24/98 5.55 6,126,000 6,104,396
MERRILL LYNCH & CO., INC.
3/16/98 5.73 2,000,000 1,995,358
NEW CENTER ASSET TRUST
3/19/98 5.83 5,000,000 4,985,625
5/18/98 5.55 5,000,000 4,940,742
NORFOLK SOUTHERN CORP.
3/4/98 5.68 2,000,000 1,999,058
4/1/98 5.68 2,000,000 1,990,269
NORWEST CORP.
3/2/98 5.68 20,000,000 19,996,845
TEXTRON, INC.
3/31/98 5.65 1,500,000 1,493,000
UBS FINANCE (DELAWARE), INC.
3/2/98 5.68 14,980,000 14,977,637
TOTAL COMMERCIAL PAPER 186,126,450
FEDERAL AGENCIES - 5.5%
ANNUALIZED YIELD
DUE AT TIME OF PRINCIPAL VALUE
DATE PURCHASE AMOUNT (NOTE 1)
FANNIE MAE - AGENCY COUPONS - 0.8%
3/13/98 5.84% (a) $ 5,000,000 $ 4,999,318
FREDDIE MAC - DISCOUNT NOTES - 4.7%
3/10/98 5.65 (a) 29,605,000 29,563,627
TOTAL FEDERAL AGENCIES 34,562,945
BANK NOTES - 5.2%
BANC ONE, NA
3/3/98 5.68 (a) 6,000,000 5,998,848
KEY BANK NATIONAL ASSOCIATION
3/24/98 5.58 (a) 4,000,000 3,999,072
MORGAN GUARANTY TRUST CO., NY
3/2/98 5.75 (a) 5,000,000 4,999,801
NATIONSBANK, NA
10/19/98 5.54 5,000,000 5,000,000
12/22/98 5.54 5,000,000 5,010,285
PNC BANK, NA
3/27/98 5.59 (a) 3,000,000 2,999,583
4/16/98 5.58 (a) 5,000,000 4,997,445
TOTAL BANK NOTES 33,005,034
MASTER NOTES (A) - 2.1%
J.P. MORGAN SECURITIES, INC.
3/6/98 5.60 13,000,000 13,000,000
MEDIUM-TERM NOTES (A) - 1.9%
MERRILL LYNCH & CO., INC.
3/2/98 5.74 3,000,000 2,999,825
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
3/2/98 5.89 5,000,000 5,000,000
NORWEST CORP.
4/22/98 5.67 4,000,000 4,000,000
TOTAL MEDIUM-TERM NOTES 11,999,825
SHORT-TERM NOTES (A) - 5.5%
LIQUID ASSET BACKED SECURITIES TRUST (1997-5) (B)
3/17/98 5.61 6,000,000 6,000,000
SMM TRUST (1997-P) (B)
3/16/98 5.63 2,000,000 2,000,000
SMM TRUST (1997-X) (B)
3/12/98 5.63 6,000,000 6,000,000
STRATEGIC MONEY MARKET TRUST (1997-A) (B)
3/23/98 5.91 17,000,000 17,000,000
STRATEGIC MONEY MARKET TRUST (1998-B) (B)
3/5/98 5.63 4,000,000 4,000,000
TOTAL SHORT-TERM NOTES 35,000,000
TIME DEPOSITS - 1.7%
ANNUALIZED YIELD
DUE AT TIME OF PRINCIPAL VALUE
DATE PURCHASE AMOUNT (NOTE 1)
SUMITOMO BANK, LTD.
3/2/98 5.97% $ 5,000,000 $ 5,000,000
3/13/98 5.84 1,000,000 1,000,000
4/3/98 6.25 5,000,000 5,000,000
TOTAL TIME DEPOSITS 11,000,000
REPURCHASE AGREEMENTS - 7.6%
MATURITY VALUE
AMOUNT (NOTE 1)
In a joint trading account
(U.S. Government Obligations):
dated 2/27/98 due 3/2/98
At 5.70% $ 47,981,785 47,959,000
TOTAL INVESTMENTS - 100% $ 631,702,406
TOTAL COST FOR INCOME TAX PURPOSES - $631,702,406
LEGEND
1.The coupon rate shown on floating or adjustable rate securities
represents the rate at period end. The due dates on these types of
securities reflects the next interest rate reset date or, when
applicable, the final maturity date.
2.Security exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt
from registration, normally to qualified institutional buyers. At the
period end, the value of these securities amounted to $35,000,000 or
6.0% of net assets.
OTHER INFORMATION
The fund participated in the interfund lending program as a lender.
The maximum loan and average daily balances during the period for
which the loan was outstanding amounted to $21,034,000. The weighted
average interest rate was 5.8%. Interest income includes $3,363 earned
under the interfund lending program (see Note 5 of Notes to Financial
Statements).
INCOME TAX INFORMATION
At February 28, 1998, the fund had a capital loss carryforward of
approximately $5,400 all of which will expire on February 28, 2006.
MONEY MARKET PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1998
ASSETS
INVESTMENT IN $ 631,702,406
SECURITIES, AT VALUE
(INCLUDING
REPURCHASE
AGREEMENTS OF
$47,959,000) -
SEE ACCOMPANYING
SCHEDULE
RECEIVABLE FOR 4,740,903
INVESTMENTS SOLD
RECEIVABLE FOR FUND 32,922,484
SHARES SOLD
INTEREST RECEIVABLE 6,818,835
TOTAL ASSETS 676,184,628
LIABILITIES
PAYABLE TO CUSTODIAN $ 143
BANK
PAYABLE FOR 9,740,903
INVESTMENTS
PURCHASED
PAYABLE FOR FUND 81,322,499
SHARES REDEEMED
ACCRUED MANAGEMENT 105,389
FEE
OTHER PAYABLES AND 97,152
ACCRUED EXPENSES
TOTAL LIABILITIES 91,266,086
NET ASSETS $ 584,918,542
NET ASSETS CONSIST OF:
PAID IN CAPITAL $ 584,924,774
ACCUMULATED NET (6,232)
REALIZED GAIN (LOSS)
ON INVESTMENTS
NET ASSETS, FOR $ 584,918,542
584,906,647
SHARES OUTSTANDING
NET ASSET VALUE, $1.00
OFFERING PRICE
AND REDEMPTION
PRICE PER SHARE
($584,918,542 (DIVIDED BY)
584,906,647
SHARES)
MAXIMUM OFFERING $1.03
PRICE PER SHARE
(100/97.00 OF
$1.00)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1998
INTEREST INCOME $ 46,435,228
EXPENSES
MANAGEMENT FEE $ 1,715,272
TRANSFER AGENT FEES 1,978,153
ACCOUNTING FEES AND 111,447
EXPENSES
NON-INTERESTED 5,594
TRUSTEES'
COMPENSATION
CUSTODIAN FEES AND 32,618
EXPENSES
REGISTRATION FEES 693,752
AUDIT 41,578
LEGAL 4,494
MISCELLANEOUS 14,006
TOTAL EXPENSES 4,596,914
BEFORE REDUCTIONS
EXPENSE REDUCTIONS (3,763) 4,593,151
NET INTEREST INCOME 41,842,077
NET REALIZED GAIN (6,232)
(LOSS)
ON INVESTMENTS
NET INCREASE IN NET $ 41,835,845
ASSETS RESULTING
FROM OPERATIONS
OTHER INFORMATION, $ 2,402,715
SALES CHARGES PAID
TO FDC
SALES CHARGES - $ 179,402
DEALERS PORTION
DEFERRED SALES $ 95,881
CHARGES WITHHELD
BY FDC
EXPENSE REDUCTIONS $ 3,763
TRANSFER AGENT
CREDITS
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
FEBRUARY 28, FEBRUARY 28,
1998 1997
OPERATIONS $ 41,842,077 $ 38,377,980
NET INTEREST INCOME
NET REALIZED GAIN (6,232) 9,751
(LOSS)
NET INCREASE 41,835,845 38,387,731
(DECREASE) IN NET
ASSETS RESULTING
FROM OPERATIONS
DISTRIBUTIONS TO (41,842,077) (38,377,980)
SHAREHOLDERS FROM
NET INTEREST INCOME
SHARE TRANSACTIONS AT 7,445,369,611 7,030,225,686
NET ASSET VALUE OF
$1.00 PER SHARE
PROCEEDS FROM SALES
OF SHARES
REINVESTMENT OF 38,682,466 35,577,810
DISTRIBUTIONS FROM
NET INTEREST INCOME
COST OF SHARES (7,747,295,187) (6,828,466,797)
REDEEMED
NET INCREASE (263,243,110) 237,336,699
(DECREASE) IN NET
ASSETS AND
SHARES RESULTING
FROM SHARE
TRANSACTIONS
TOTAL INCREASE (263,249,342) 237,346,450
(DECREASE) IN NET
ASSETS
NET ASSETS
BEGINNING OF PERIOD 848,167,884 610,821,434
END OF PERIOD $ 584,918,542 $ 848,167,884
SEE ACCOMPANYING
NOTES WHICH ARE AN
INTEGRAL PART OF THE
FINANCIAL STATEMENTS.
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED YEAR ENDED YEARS ENDED
FEBRUARY 28, FEBRUARY 29, FEBRUARY 28,
SELECTED PER-SHARE DATA 1998 1997 1996 1995 1994
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
SELECTED PER-SHARE
DATA
NET ASSET VALUE, $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
BEGINNING OF PERIOD
INCOME FROM .051 .049 .054 .042 .026
INVESTMENT
OPERATIONS
NET INTEREST INCOME
LESS DISTRIBUTIONS
FROM NET INTEREST (.051) (.049) (.054) (.042) (.026)
INCOME
NET ASSET VALUE, END $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
OF PERIOD
TOTAL RETURN A 5.26% 5.02% 5.56% 4.28% 2.62%
RATIOS AND
SUPPLEMENTAL DATA
NET ASSETS, END OF $ 584,919 $ 848,168 $ 610,821 $ 573,144 $ 518,657
PERIOD (000
OMITTED)
RATIO OF EXPENSES TO .56% .56% .59% .65% .72%
AVERAGE NET ASSETS
RATIO OF NET INTEREST 5.13% 4.92% 5.39% 4.19% 2.59%
INCOME TO AVERAGE
NET ASSETS
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
A TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE.
</TABLE>
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD ENDED FEBRUARY 28, 1998
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-eight 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. Purchases
and sales of securities, income receipts and expense payments are
translated into U.S. dollars at the prevailing exchange rate on the
respective dates of the transactions.
Net realized gains and losses on foreign currency transactions
represent net gains and losses from sales and maturities of forward
currency contracts, disposition of foreign currencies, and the
difference between the amount of net investment income accrued and the
U.S. dollar amount actually received, and gains and losses between
trade date and settlement date on purchases and sales of securities.
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 (except for
Cyclical Industries Portfolio, Natural Resources Portfolio and
Business Services and Outsourcing Portfolio) is not subject to U.S.
federal income taxes to the extent that it distributes substantially
all of its taxable income for its fiscal year.
Cyclical Industries Portfolio, Natural Resources Portfolio and
Business Services and Outsourcing Portfolio intend to qualify as
regulated investment companies under Subchapter M of the Internal
Revenue Code. By so qualifying, each fund will not be subject to
income taxes to the extent that it distributes substantially all of
its taxable income for its fiscal year. The schedule of investments
includes 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
among the funds in the trust.
PREPAID EXPENSES. Fidelity Management & Research Company (FMR) bears
all organizational expenses except for registering and qualifying,
Business Services and Outsourcing Portfolio and shares of Business
Services and Outsourcing Portfolio for distribution under federal and
state securities law. These expenses are borne by Business Services
and Outsourcing Portfolio and amortized over one year.
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
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
DISTRIBUTIONS TO SHAREHOLDERS - CONTINUED
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, accumulated net investment loss,
distributions in excess of 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.
REDEMPTION(TRADING) FEES. Shares redeemed (including exchanges) from
an equity fund are subject to redemption(trading) fees. Shares held
less than 30 days are subject to a short-term redemption(trading) 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(trading) 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.
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 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 Fidelity Investments Money Management, Inc.
(FIMM) (formerly FMR Texas, Inc.) 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. Income distributions from the Cash Fund are declared
daily and paid monthly from net interest income. Income distributions
earned by the funds are recorded as interest income in the
accompanying statements.
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.
RESTRICTED SECURITIES. Certain funds are permitted to invest in
securities that are subject to legal or contractual restrictions on
resale. These securities generally may be resold in transactions
exempt from registration or to the public if the securities are
registered. Disposal of these securities may involve time-consuming
negotiations and expense, and prompt sale at an acceptable price may
be difficult. Information regarding restricted securities is included
under the caption "Other Information" at the end of each applicable
fund's schedule of investments.
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 annual individual fund fee rate is
.30%. For the period, the management fee was equivalent to an annual
rate that ranged from .59% to .61% 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
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
MANAGEMENT FEE - CONTINUED
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
.21% of the fund's average net assets.
SUB-ADVISER FEE. As the money market fund's investment sub-adviser,
FIMM, a wholly owned subsidiary of FMR, receives a fee from FMR of 50%
of the management fee payable to FMR. The fee is paid prior to any
voluntary expense reimbursements which may be in effect.
SALES LOAD. Fidelity Distributors Corporation (FDC), an affiliate of
FMR, is the general distributor of each fund. FDC received a sales
charge of up to 3% for selling shares of each fund. Prior to October
12, 1990, FDC received a sales charge of up to 2% and a 1% deferred
sales charge. Shares purchased before October 12, 1990 are subject to
a 1% 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, a portion of which was
paid to securities dealers, banks and other financial institutions
("Dealers' Portion"), are shown under the caption "Other Information"
on each fund's Statement of Operations.
TRANSFER AGENT FEES. Fidelity Service Company, Inc. (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 brokers who paid the funds
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. The borrower must increase the collateral whenever the
market value of the securities loaned (determined on a daily basis)
rises above the value of the collateral. Information regarding the
value of the securities loaned and the value of collateral at period
end 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 a 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. 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 $9,992 for Construction and Housing Portfolio, $94,820 for
Cyclical Industries Portfolio, $82,775 for Natural Resources Portfolio
and $23,611 for Business Services and Outsourcing Portfolio.
FMR has directed certain portfolio trades to brokers who paid a
portion of certain equity fund's expenses. In addition, certain funds
have entered into arrangements with their custodian and transfer agent
whereby credits realized as a result of uninvested cash
8. EXPENSE REDUCTIONS - CONTINUED
balances were used to reduce 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, FMR Capital, an affiliate of FMR, was record
owner of more than 5% of the outstanding shares, and certain
unaffiliated shareholders were record owners of 10% or more of the
total outstanding shares of the following funds:
BENEFICIAL INTEREST
NUMBER OF
FMR CAPITAL UNAFFILIATED % OF UNAFFILIATED
FUND % OF OWNERSHIP SHAREHOLDERS OWNERSHIP
Air Transportation - 1 13.1%
Business Services
and Outsourcing 7.3% 1 11.0%
Cyclical Industries 31.3% - -
Natural Resources 14.5% - -
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 transactions
with affiliated companies is shown under the caption "Other
Information" at the end of each applicable fund's schedule of
investments.
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-nine funds constituting Fidelity Select Portfolios
at February 28, 1998, the results of each of their operations for the
period 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 Portfolio's
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, 1998 by
correspondence with the custodians and the application of alternative
auditing procedures where securities purchased were not yet received
by the custodians, provide a reasonable basis for the opinion
expressed above.
/s/Price Waterhouse LLP
Price Waterhouse LLP
Boston, Massachusetts
April 13, 1998
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:
LONG TERM
SHORT TERM LONG TERM CAPITAL GAINS BREAK DOWN
PAY DATE RECORD DATE DIVIDENDS CAPITAL GAINS CAPITAL GAINS 28% RATE
20% RATE
Air Transportation 12/22/97 12/19/97 - $1.43 - - -
4/6/98 4/3/98 - $0.21 - - -
American Gold 4/7/97 4/4/97 - - $1.29 100.00% -
Automotive 4/7/97 4/4/97 $0.06 - $0.86 100.00% -
12/22/97 12/19/97 $0.02 $1.47 $0.76 97.35% 2.65%
4/13/98 4/9/98 $0.02 $1.37 $0.79 68.23% 31.77%
Biotechnology 4/7/97 4/4/97 - $0.07 $0.52 100.00% -
12/15/97 12/12/97 - - $4.12 27.86% 72.14%
4/6/98 4/3/98 - $0.63 $1.46 22.19% 77.81%
Brokerage & Investment 4/7/97 4/4/97 $0.01 $0.01 $0.03 100.00% -
12/22/97 12/19/97 $0.08 $0.28 $0.29 82.85% 17.15%
4/6/98 4/3/98 $0.01 $0.32 $0.20 75.00% 25.00%
Business Services & Outsourcing 4/13/98 4/9/98 - $0.01 - - -
Chemicals 4/7/97 4/4/97 $0.01 $0.01 $0.02 100.00% -
12/22/97 12/19/97 - $0.55 $3.95 12.46% 87.54%
4/6/98 4/3/98 - $0.09 $0.91 38.02% 61.98%
Computers 4/7/97 4/4/97 - $3.14 $0.65 100.00% -
12/22/97 12/19/97 - $8.64 $0.96 79.36% 20.64%
Construction & Housing 4/7/97 4/4/97 $0.02 $1.13 $1.04 100.00% -
12/22/97 12/19/97 - $1.66 $0.04 100.00% -
4/13/98 4/9/98 - $0.06 - - -
Consumer Industries 12/22/97 12/19/97 - $1.45 $0.07 30.34% 69.66%
4/13/98 4/9/98 - $0.66 $0.08 91.25% 8.75%
Cyclical Industries 12/15/97 12/12/97 - $0.46 - - -
4/13/98 4/9/98 - $0.09 - - -
Defense & Aerospace 4/7/97 4/4/97 - $0.33 $0.06 100.00% -
12/22/97 12/19/97 - $2.45 $0.20 16.61% 83.39%
Developing Communications 12/22/97 12/19/97 - $3.75 $0.60 54.28%
45.72%
4/13/98 4/9/98 - $0.06 $0.01 50.00% 50.00%
Electronics 4/7/97 4/4/97 - $3.24 $0.01 100.00% -
12/15/97 12/12/97 - $6.90 $0.05 83.15% 16.85%
Energy 4/7/97 4/4/97 $0.03 $0.12 $0.88 100.00% -
12/15/97 12/12/97 $0.06 $1.09 $2.00 19.94% 80.06%
4/6/98 4/3/98 $0.01 $0.11 $0.30 22.67% 77.33%
Energy Service 4/7/97 4/4/97 - $0.83 $0.38 100.00% -
12/15/97 12/12/97 - $0.31 $0.33 55.68% 44.32%
4/6/98 4/3/98 - $0.64 $1.07 48.22% 51.78%
Financial Services 4/7/97 4/4/97 $0.19 $1.23 $2.23 100.00% -
12/15/97 12/12/97 $0.45 $2.10 $4.95 60.26% 39.74%
4/6/98 4/3/98 $0.19 $2.27 $7.77 29.96% 70.04%
LONG TERM
SHORT TERM LONG TERM CAPITAL GAINS BREAK DOWN
PAY DATE RECORD DATE DIVIDENDS CAPITAL GAINS CAPITAL GAINS 28% RATE
20% RATE
Food & Agriculture 4/7/97 4/4/97 $0.14 $1.09 $1.59 100.00% -
12/15/97 12/12/97 $0.23 $0.62 $1.65 25.08% 74.92%
4/6/98 4/3/98 $0.05 $0.44 $2.42 37.98% 62.02%
Health Care 4/7/97 4/4/97 $0.10 $1.38 $4.90 100.00% -
12/15/97 12/12/97 $0.15 $2.40 $12.05 31.15% 68.85%
4/6/98 4/3/98 $0.09 $1.28 $1.99 38.64% 61.36%
Home Finance 4/14/97 4/11/97 $0.14 $0.76 $1.73 100.00% -
12/22/97 12/19/97 $0.15 $1.20 $2.15 71.04% 28.96%
4/13/98 4/9/98 $0.07 $0.50 $0.88 62.16% 37.84%
Industrial Equipment 4/14/97 4/11/97 $0.02 $1.29 $0.57 100.00% -
12/15/97 12/12/97 - $2.80 $0.60 57.18% 42.82%
Industrial Materials 4/14/97 4/11/97 $0.03 $1.56 $0.44 100.00% -
12/15/97 12/12/97 - $1.55 $0.45 90.95% 9.05%
Insurance 4/14/97 4/11/97 - $1.01 $0.43 100.00% -
12/15/97 12/12/97 - $1.35 $0.75 73.23% 26.77%
4/13/98 4/9/98 - $2.26 $0.82 74.51% 25.49%
Leisure 4/14/97 4/11/97 - $1.05 $1.16 100.00% -
12/15/97 12/12/97 - $2.75 $1.50 67.01% 32.99%
4/6/98 4/3/98 - $1.13 $0.39 43.33% 56.67%
Medical Delivery 4/14/97 4/11/97 - $0.29 $1.74 100.00% -
12/15/97 12/12/97 - $0.45 $2.75 38.14% 61.86%
4/13/98 4/9/98 - $0.23 $1.11 29.37% 70.63%
Multimedia 4/14/97 4/11/97 - - $0.55 100.00% -
12/15/97 12/12/97 - - $0.97 44.67% 55.33%
4/13/98 4/9/98 - $0.84 $1.35 33.85% 66.15%
Natural Gas 4/14/97 4/11/97 - $0.01 $0.32 100.00% -
Paper & Forest Products 4/14/97 4/11/97 $0.04 $0.26 $0.25 100.00% -
12/8/97 12/5/97 - $0.61 $0.95 47.09% 52.91%
4/13/98 4/9/98 - $0.19 $0.25 27.20% 72.80%
Regional Banks 4/14/97 4/11/97 $0.03 $0.06 $0.08 100.00% -
12/8/97 12/5/97 $0.25 $0.27 $0.82 19.71% 80.29%
4/13/98 4/9/98 $0.08 $0.02 $0.53 10.19% 89.81%
Retailing 4/14/97 4/11/97 - $0.24 $0.11 100.00% -
12/8/97 12/5/97 - $0.08 $0.08 100.00% -
4/13/98 4/9/98 - $0.03 $0.66 69.39% 30.61%
Software & Computer Services 4/14/97 4/11/97 - $2.22 $0.24 100.00% -
12/8/97 12/5/97 - $3.58 $0.57 47.01% 52.99%
4/6/98 4/3/98 - $0.11 $0.08 12.50% 87.50%
Technology 4/14/97 4/11/97 - $6.05 $1.11 100.00% -
12/8/97 12/5/97 - $8.42 $0.11 48.15% 51.85%
Telecommunications 4/14/97 4/11/97 - - $1.04 100.00% -
12/8/97 12/5/97 - $2.90 $2.50 52.92% 47.08%
4/6/98 4/3/98 - $0.88 $0.81 80.74% 19.26%
LONG TERM
SHORT TERM LONG TERM CAPITAL GAINS BREAK DOWN
PAY DATE RECORD DATE DIVIDENDS CAPITAL GAINS CAPITAL GAINS 28% RATE
20% RATE
Transportation 4/14/97 4/11/97 - $0.14 $0.25 100.00% -
12/8/97 12/5/97 - $2.26 $0.15 4.95% 95.05%
4/13/98 4/9/98 - $0.71 $0.03 - 100.00%
Utilities Growth 4/14/97 4/11/97 $0.19 $0.33 $0.56 100.00% -
12/15/97 12/12/97 $0.39 $0.96 $5.45 29.71% 70.29%
4/6/98 4/3/98 $0.05 $0.12 $0.95 9.37% 90.63%
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
INVESTMENT SUB-ADVISERS
Fidelity Investments Money Management, Inc.
Merrimack, NH, 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
Robert C. Pozen, SENIOR VICE PRESIDENT
Eric D. Roiter, SECRETARY
Richard A. Silver, TREASURER
Fred L. Henning Jr., VICE PRESIDENT, MONEY MARKET FUND
Boyce I. Greer, VICE PRESIDENT, MONEY MARKET FUND
John Todd, VICE PRESIDENT, MONEY MARKET FUND
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
Ralph F. Cox *
Phyllis Burke Davis *
Robert M. Gates *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Marvin L. Mann *
William O. McCoy *
Gerald C. McDonough *
Robert C. Pozen
Thomas R. Williams *
ADVISORY BOARD
J. Gary Burkhead
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
Medical Equipment and Systems* *
NATURAL RESOURCES SECTOR
American Gold
Energy
Energy Service
Natural Resources
Precious Metals and Minerals
TECHNOLOGY SECTOR
Business Services and Outsourcing
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 WILL COMMENCE OPERATIONS ON OR ABOUT 4/28/98
BULK RATE
U.S. Postage
PAID
Fidelity
Investments
(registered trademark)
P.O. Box 193
Boston, MA 02101
